As filed with the Securities and Exchange Commission on December ___, 2001
                                                        Reg. No. 333-___________
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM S-4


                             REGISTRATION STATEMENT
                        UNDER THE SECURITIES ACT OF 1933

                            MACATAWA BANK CORPORATION
             (Exact Name of Registrant as Specified in its Charter)

  Michigan                          6712                         38-3391345
(State or Other               (Primary Standard                (IRS Employer
Jurisdiction of                  Industrial                  Identification No.)
Incorporation or               Classification
Organization)                   Code Number)

                             348 South Waverly Road
                             Holland, Michigan 49423
                                 (616) 820-1444
    (Address, Including Zip Code, and Telephone Number, Including Area Code,
                  of Registrant's Principal Executive Offices)

                               Benj. A. Smith, III
                      Chairman and Chief Executive Officer
                                106 E. 8th Street
                             Holland, Michigan 49423
                                 (616) 396-0119
 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
                              of Agent For Service)

                          Copies of communications to:

          Donald L. Johnson                             Gordon R. Lewis
Varnum, Riddering, Schmidt & Howlett, LLP         Warner Norcross & Judd LLP
    333 Bridge Street, Ste. 1700                111 Lyon Street, N.W., Suite 900
    Grand Rapids, Michigan 49504               Grand Rapids, Michigan 49503-2487
          (616) 336-6000                                (616) 752-2000

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

If the securities  being registered on this form are being offered in connection
with the  formation of a holding  company and there is  compliance  with General
Instruction G, check the following box. [ ]

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(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. [ ]

                         CALCULATION OF REGISTRATION FEE
------------------------------------------------------------------------------------------------------------------------------------
       Title of Each                                          Proposed Maximum              Proposed
    Class of Securities       Amount to be Registered(1)       Offering Price          Maximum Aggregate             Amount of
      Being Registered                                          Per Share(2)           Offering Price(2)        Registration Fee(2)
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                          
        Common Stock
       (no par value)                 2,459,905                    $6.74                 $16,569,692                 $3,961
------------------------------------------------------------------------------------------------------------------------------------

(1)  Represents  a bona fide estimate  of the maximum  amount of  Macatawa  Bank
     Corporation  Common  Stock to be  offered  based on the  amount and form of
     consideration  to be issued  pursuant to the proposed  transaction  and the
     number  of  options  to  purchase  Common  Stock  of Grand  Bank  Financial
     Corporation outstanding as of December 26, 2001.

(2)  The registration fee has been computed pursuant to Rule 457(f)(2). Pursuant
     to that rule, and solely for purposes of calculating the registration  fee,
     the Maximum  Officer Price Per Share and Maximum  Aggregate  Offering Price
     have been  calculated on the basis of the book value of the common stock of
     Grand Bank Fianncial Corporation at September 30, 2001.

We hereby  amend  this  registration  statement  on this date or dates as may be
necessary to delay its  effective  date until we 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
Securities and Exchange  Commission,  acting  pursuant to said Section 8(a), may
determine.




                             ________________, 2002

The information in this Prospectus and Joint Proxy Statement is not complete and
may be  changed.  We may  not  sell  these  securities  until  the  Registration
Statement filed with the Securities and Exchange Commission is effective.


                                                        GRAND
        MACATAWA BANK                                    GB
        CORPORATION                                     BANK






                      Prospectus and Joint Proxy Statement

                       Special Meetings of Shareholders of

                        Grand Bank Financial Corporation
                                       and
                            Macatawa Bank Corporation

                     In Connection with an Offering of up to
                       2,459,905 Shares of Common Stock of

                            Macatawa Bank Corporation

     The  boards of  directors  of  Macatawa  Bank  Corporation  and Grand  Bank
Financial  Corporation  are furnishing this prospectus and joint proxy statement
to you as a  shareholder  of either  Macatawa or Grand to solicit  your proxy to
vote at a  special  meeting  of  Macatawa  or Grand  shareholders  to be held on
____________, 2002 and _____________, 2002, respectively, and at any adjournment
or postponement of these meetings.  At the Macatawa  special  meeting,  Macatawa
shareholders  will vote upon  approval of the  Agreement and Plan of Merger with
Grand and the issuance of shares of Macatawa  common stock  pursuant to the Plan
of Merger. At the Grand special meeting,  Grand  shareholders will vote upon the
approval of the Agreement and Plan of Merger with Macatawa.

     If the Merger is  completed as  proposed,  Grand will merge with  Macatawa.
Macatawa will issue 17.5979 shares of Macatawa common stock in exchange for each
outstanding share of Grand's common stock and pay cash for any fractional shares
of Grand common stock.

     Austin Associates,  LLC, Grand's financial advisor, has furnished the Board
of Directors of Grand with its written  opinion that the terms of the  Agreement
and Plan of Merger are fair from a financial  point of view.  Donnelly,  Penman,
French, Haggarty & Co., Macatawa's financial advisor, has furnished the Board of
Directors  of  Macatawa  with its written  opinion  that the  exchange  ratio of
17.5979 a share of Macatawa  common  stock in exchange for each share of Grand's
common stock is fair from a financial point of view.

     After  careful  consideration,  Macatawa's  Board of Directors  and Grand's
Board of Directors  have each  determined the Merger to be in the best interests
of its shareholders.  Macatawa's Board of Directors unanimously  recommends that
its  shareholders  vote FOR approval of the Merger Agreement and the issuance of
shares of Macatawa common stock in connection with the Merger.  Grand's Board of
Directors  recommends  that Grand  shareholders  vote FOR approval of the Merger
Agreement.

     The Merger  cannot be completed  unless,  among other  conditions,  Grand's
shareholders approve the Merger Agreement,  Macatawa's  shareholders approve the
Merger Agreement and the issuance of shares of Macatawa common stock pursuant to
the Merger Agreement, and Macatawa obtains regulatory approval of the Merger.

     This  prospectus  and joint proxy  statement and the  accompanying  form of
proxy are being mailed on or about  ____________,  2002. Your vote is important.
Even if you expect to attend the special meeting in person, please sign and date
the enclosed proxy card and mail it promptly in the enclosed envelope. Returning
a proxy will not prevent you from later voting in person at the special meeting.

                             _______________, 2002

     Macatawa common stock is traded on The Nasdaq Stock Market under the symbol
"MCBC."  Macatawa  common  stock is not a  savings  account,  deposit,  or other
obligation  of any bank or nonbank  subsidiary of Macatawa and is not insured by
the Federal  Deposit  Insurance  Corporation or any other  governmental  agency.
Macatawa common stock is subject to investment risks, including possible loss of
value.



--------------------------------------------------------------------------------
Neither  the  Securities  and  Exchange  Commission  nor  any  state  securities
regulator  has approved or  disapproved  of these  securities or passed upon the
adequacy  or  accuracy  of  this  prospectus  and  joint  proxy  statement.  Any
representation to the contrary is a criminal offense.
--------------------------------------------------------------------------------




                               ____________, 2002

                                Table of Contents

SUMMARY.....................................................1
     The Companies..........................................1
     The Merger.............................................1
     Historical Selected Financial Data (Unaudited).........5
     Unaudited Pro Forma Combined Condensed Financial
        Information.........................................6
     Comparative Per Share Information......................7
SPECIAL MEETING OF MACATAWA SHAREHOLDERS....................8
     Date, Time, and Place of the Special Meeting...........8
     Purpose of the Special Meeting.........................8
     Shareholder Special Meeting Record Date................8
     Vote Required for the Approval of the Merger
        Agreement and Issuance of Shares....................8
     Proxies and Effect on Vote.............................9
     Revocation of Proxies..................................9
     Solicitation of Proxies................................9
SPECIAL MEETING OF GRAND SHAREHOLDERS......................10
     Date, Time, and Place of the Special Meeting..........10
     Purpose of the Special Meeting........................10
     Shareholder Special Meeting Record Date...............10
     Vote Required for the Approval of the Merger
        Agreement..........................................10
     Proxies and Effect on Vote............................10
     Revocation of Proxies.................................11
     Solicitation of Proxies...............................11
THE MERGER AND MERGER AGREEMENT............................12
     What Grand Shareholders Will Receive in the Merger....12
     Structure of the Merger...............................12
     Background of the Merger..............................12
     Merger Recommendation and Reasons for the Merger......15
     Opinion of Grand's Financial Advisor..................16
     Opinion of Macatawa's Financial Advisor...............21
     Closing and Effective Time of the Merger..............26
     Regulatory Approvals..................................27
     Distribution of Macatawa Common Stock.................27
     Exclusive Commitment to Macatawa......................28
     Conduct of Grand Pending the Completion of
        the Merger.........................................28
     Management of Macatawa After the Merger...............31
     Conditions to Closing the Merger......................31
     Termination...........................................33
     Description of Macatawa Common Stock..................34
     Comparison of Rights of Macatawa and Grand
        Shareholders.......................................34
     Restrictions on Grand Affiliates......................39
     Material Federal Income Tax Consequences..............40
     No Dissenters' Rights.................................41
     Unaudited Pro Forma Condensed Combined
        Financial Statements...............................42
     Notes to Unaudited Pro Forma Condensed Combined
        Balance Sheets and Statements of Income............46
GRAND BANK FINANCIAL CORPORATION...........................48
     Description of Business...............................48
     Grand Common Stock....................................48
     Selected Financial Data...............................49
     Grand's Management's Discussion and Analysis of
        Financial Condition and Results of Operations
        for the Periods Ended September 30, 2001 and
        2000...............................................50
     Grand's Discussion and Analysis of Financial
        Condition and Results of Operations as of
        December 31, 2000 and 1999 and for the Years
        Ended December 31, 2000, 1999 and 1998.............53
     Financial Statements..................................56
VOTING AND MANAGEMENT INFORMATION..........................86
     Voting Securities and Principal Shareholders of
        Grand..............................................86
     Interests of Certain Persons in the Merger............88
GENERAL INFORMATION........................................90
     Experts...............................................90
     Legal Opinions........................................90
     Sources of Information................................90
WHERE YOU CAN FIND MORE INFORMATION........................91
FORWARD-LOOKING STATEMENTS.................................92

Agreement and Plan of Merger.......................Appendix A
Fairness Opinion of Grand's Financial Advisor......Appendix B
Fairness Opinion of Macatawa's Financial Advisor...Appendix C

                                       i

                                   Summary

     This summary highlights selected information from this prospectus and joint
proxy statement and may not contain all of the information  that is important to
you.  For a more  complete  description  of the  legal  terms of the  Merger  of
Macatawa  and Grand,  you should read  carefully  this entire  document  and the
documents that are incorporated by reference in this document. In this document,
"you" and "your" refer to each holder of Macatawa  common stock and Grand common
stock.


                                  The Companies

Macatawa  Bank Corporation
348 South Waverly Road
Holland, Michigan 49423
(616) 820-1444

Macatawa Bank  Corporation is a bank holding company  headquartered  in Holland,
Michigan  and  owns  Macatawa  Bank.  Macatawa  Bank  provides  a wide  range of
commercial  and  consumer  banking  services  through 14 full  service  branches
located in Ottawa County,  northern Allegan County and southwestern Kent County,
Michigan.  Macatawa offers commercial and personal banking  services,  including
checking and savings  accounts,  certificates  of deposit,  safe deposit  boxes,
travelers'  checks,  money orders,  trust services and commercial,  mortgage and
consumer loans. Since its formation in November 1997, Macatawa has grown rapidly
while  maintaining asset quality and attaining and improving  profitability.  At
September  30, 2001,  Macatawa  had, on a  consolidated  basis,  total assets of
$633.8 million, total deposits of $502.5 million, total loans of $506.7 million,
approximately  49,000  deposit  accounts,  and  shareholders'  equity  of  $65.8
million.

Grand Bank Financial Corporation
126 Ottawa Avenue NW
Grand Rapids, Michigan 49503
(616) 235-7000

Grand Bank Financial  Corporation  is a bank holding  company  headquartered  in
Grand  Rapids,  Michigan  and owns Grand Bank.  Grand Bank  operates its banking
business in Grand  Rapids,  Michigan  and the  surrounding  area.  Grand  offers
commercial  and  personal  banking  services,  including  checking  and  savings
accounts,  certificates of deposit, safe deposit boxes, travelers' checks, money
orders,  trust  services and  commercial,  mortgage and  consumer  loans.  As of
September 30, 2001, Grand had, on a consolidated  basis,  total assets of $251.9
million,  total  deposits of $212.7  million,  total  portfolio  loans of $217.9
million and shareholders' equity of $16.6 million.

                                   The Merger

What Grand Shareholders Will Receive in the Merger (See Page 11)

If the Merger is completed as planned,  you will receive 17.5979 (referred to as
the "Exchange  Ratio")  shares of Macatawa  common stock for each share of Grand
common stock that you own. The Exchange  Ratio is fixed and will not be adjusted
to reflect changes in the market price of Macatawa's common stock.  The Exchange
Ratio will be  adjusted if either  Grand or  Macatawa  declares a stock split or
stock dividend before the completion of the Merger. No certificates representing
fractional shares will be issued.  Instead,  you will receive a check in payment
for any fractional shares, based on the market value of Macatawa common stock.

Example: If you own 10 shares of Grand common stock, you will receive 175 shares
of Macatawa common stock.  In addition,  you will receive a check equal to 0.979
(your  fractional  share)  multiplied  by the average of the closing  prices per
share of Macatawa  common  stock  reported on The Nasdaq  Stock Market for the 5
consecutive full trading days ending on the business day prior to the closing of
the Merger.

You should not send in your Grand stock  certificates  until Macatawa  instructs
you to do so after the Merger is completed.

Recommendation to Shareholders to Approve the Merger (See Page 14)

Macatawa  Shareholders.   After  careful  consideration,   Macatawa's  Board  of
Directors has  determined  the Merger to be in the best  interests of Macatawa's
shareholders. Macatawa's Board of Directors unanimously recommends that you vote
FOR the proposal to approve the Merger  Agreement  and the issuance of shares of
Macatawa common stock pursuant to the Merger Agreement.

Grand Shareholders. After careful consideration,  Grand's Board of Directors has
determined  the  Merger to be in the best  interests  of  Grand's  shareholders.
Grand's Board of Directors  recommends that you vote FOR the proposal to approve
the Merger Agreement.

                                       1


Grand's  Financial  Advisor's Opinion that the Financial Terms of the Merger are
Fair (See Page 15)

In deciding to approve the Merger,  Grand's  Board of Directors  considered  the
opinion of its financial advisor, Austin Associates,  LLC, that the terms of the
Agreement  and Plan of Merger are fair to Grand  shareholders  from a  financial
point of view.  The  written  opinion of Austin  Associates,  LLC is attached as
Appendix B to this document.

Macatawa's Financial Advisor's Opinion that the Exchange Ratio is Fair (See Page
21)

Macatawa's  Board of Directors has received the written opinion of its financial
advisor,  Donnelly,  Penman, French,  Haggarty & Co., that the Exchange Ratio is
fair to Macatawa  shareholders  from a  financial  point of view.  That  written
opinion is attached as Appendix C to this document.

Time and Location of the Macatawa Shareholder Meeting (See Page 8)

Macatawa will hold a special meeting of its shareholders to vote on the approval
of the  Merger  Agreement  and the  issuance  of shares  pursuant  to the Merger
Agreement. The special meeting will be held:

       __________, ____________, 2002
       ___________ local time
       _____________
       _________________
       Holland, Michigan 49423

Time and Location of the Grand Shareholder Meeting (See Page 10)

Grand will hold a special meeting of its shareholders to vote on the approval of
the Merger Agreement. This special meeting will be held:

       __________, _________________, 2002
       ___________ local time
       _____________
       ________________
       Grand Rapids, Michigan ____________


Vote Required to Approve the Merger and Issuance of Shares

Macatawa  Shareholders.  (See Page 8) Only holders of record of Macatawa  common
stock on ______________, 2002 have the right to vote on the Merger Agreement and
the  issuance  of  shares  of  Macatawa  common  stock  pursuant  to the  Merger
Agreement.

To approve the Merger  Agreement  and the issuance of shares of Macatawa  common
stock  pursuant to the Merger  Agreement,  the holders of at least a majority of
the shares of  Macatawa  common  stock that are present and voted at the special
meeting  must vote FOR  approval  of the Merger  Agreement  and the  issuance of
shares of Macatawa common stock pursuant to the Merger Agreement.

As of the record  date,  Macatawa's  directors,  executive  officers,  and their
affiliates  beneficially owned shares (excluding shares subject to options),  or
approximately  % of the shares of Macatawa  common stock entitled to vote on the
Merger Agreement and the issuance of shares of Macatawa common stock pursuant to
the  Merger  Agreement.  Macatawa's  directors,  executive  officers  and  their
affiliates  are expected to vote these shares in favor of approval of the Merger
Agreement  and the issuance of shares of Macatawa  common stock  pursuant to the
Merger Agreement.

As of the record  date,  Macatawa's  directors,  executive  officers,  and their
affiliates did not own any Grand common stock.

Grand  Shareholders.  (See Page 10) Only holders of record of Grand common stock
on  ______________,  2002  have the  right  to vote on  approval  of the  Merger
Agreement.

To  approve  the Merger  Agreement,  the  holders of at least a majority  of the
shares of Grand common stock issued and  outstanding  as of the record date must
vote FOR approval of the Merger Agreement.

As of  the  record  date,  Grand's  directors,  executive  officers,  and  their
affiliates  beneficially  owned  47,142  shares  (excluding  shares  subject  to
options),  or approximately  33.85% of the shares of Grand common stock entitled
to vote on the Merger Agreement. Grand's directors, executive officers and their
affiliates  are expected to vote these shares in favor of approval of the Merger
Agreement.

As of  the  record  date,  Grand's  directors,  executive  officers,  and  their
affiliates beneficially owned ___ shares of Macatawa common stock.

How to Cast Your Vote By Proxy

Macatawa  Shareholders.  (See Page 9) Please mail your signed  proxy card in the
enclosed  return  envelope  as soon as  possible so that your shares of Macatawa
common stock may be represented at Macatawa's  special meeting.  If you properly
sign and return a proxy card but do not include instructions on how to vote your
shares, they will be voted FOR approval of the Merger Agreement and the issuance
of shares of Macatawa common stock pursuant to the Merger Agreement.

                                       2

Grand  Shareholders.  (See Page 10) Please  mail your  signed  proxy card in the
enclosed return envelope as soon as possible so that your shares of Grand common
stock may be represented at Grand's  special  meeting.  If you properly sign and
return a proxy card but do not include  instructions on how to vote your shares,
they will be voted FOR approval of the Merger Agreement.

How to Cast Your Vote If Your  Shares  Are Held By a Broker or Other  Nominee in
Street Name

If your shares are held by your  broker or other  nominee in street  name,  your
broker  does not have  authority  to vote your shares  unless you  provide  your
broker  instructions on how you want to vote. Your broker should send you a form
to give such instructions or you may request forms from your broker.

Macatawa  Shareholders.  With  respect to the  proposal  to  approve  the Merger
Agreement  and the issuance of shares of Macatawa  common stock  pursuant to the
Merger  Agreement,  your  shares  will not be voted if you do not  provide  your
broker with voting instructions.  Failure to vote your shares on the proposal to
approve the Merger Agreement and the issuance of shares of Macatawa common stock
pursuant to the Merger  Agreement will not  necessarily  have the same effect as
voting  against  the Merger  Agreement  and the  issuance  of shares of Macatawa
common stock pursuant to the Merger Agreement.

Grand Shareholders.  If you do not provide your broker with voting instructions,
your  shares  will not be voted at the  special  meeting.  Failure to vote Grand
shares  will have the same  effect  as voting  against  approval  of the  Merger
Agreement.

How to Change Your Vote

If you want to change  your vote,  you may send the  Secretary  of  Macatawa  or
Grand,  as  appropriate,  a  later-dated,  signed  proxy card before the special
meeting  or attend  and vote at your  company's  special  meeting.  You may also
revoke your proxy by sending  written  notice of  revocation to the Secretary of
Macatawa or Grand, as appropriate, before your company's special meeting.

Macatawa  Shareholders.  (See Page 9)  Macatawa's  shareholders  should send any
later-dated proxy or notice of revocation to:

    Macatawa Bank Corporation
    348 South Waverly Road
    Holland, Michigan 49423
    Attention: Secretary

Grand  Shareholders.   (See  Page  11)  Grand's  shareholders  should  send  any
later-dated proxy or notice of revocation to:

    Grand Bank Financial Corporation
    126 Ottawa Avenue NW
    Grand Rapids, Michigan 49503
    Attention: Secretary

Bank Regulators Must Approve the Merger (See Page 22)

The Board of Governors of the Federal Reserve System, referred to as the Federal
Reserve  Board,  must approve the Merger.  Macatawa  filed its  application  for
approval with the Federal Reserve Board on or about December 21, 2001.

Certain Conditions Must Be Met Before the Completion of the Merger (See Page 26)

There are a number of conditions that must be met before Macatawa and Grand will
be required to complete  the Merger.  These  conditions  include the  following,
among others:

o   Macatawa shareholders  owning  at least a majority of the shares of Macatawa
    common stock present and voting on the Merger Agreement must vote to approve
    the Merger Agreement and the  issuance of shares  of Macatawa  common  stock
    pursuant to the Merger Agreement;

o   Grand shareholders owning at least  a majority of the issued and outstanding
    shares of Grand common stock must vote to approve the Merger Agreement;

o   the Federal Reserve Board must approve the Merger; and

o   Macatawa's tax counsel must  provide  an opinion  that  the Merger will be a
    tax-free reorganization.

Certain  conditions  to the Merger may be waived by the party for whose  benefit
they are  provided.  In addition,  Macatawa  and Grand have certain  termination
rights discussed below.

If Macatawa's and Grand's  shareholders  have approved the Merger  Agreement and
all regulatory  approvals  have been received,  the closing will take place at a
time and date agreed to by Macatawa and Grand. In the absence of agreement,  the
closing will take place on the  earliest  date  specified by either  Macatawa or
Grand upon five business days' written notice to the other.

Federal Income Tax Consequences of the Merger (See Page 35)

The Merger is  structured  so that  Grand's  shareholders  are not  expected  to
recognize  any gain or loss for  federal  income tax  purposes  from the Merger,
except  to the

                                       3

extent that they receive cash in lieu of fractional shares.  However, due to the
complexities of federal,  state, and local income tax laws,  Grand  shareholders
are  strongly  advised  to consult  their own tax  advisors  concerning  the tax
consequences to them of the Merger.

No Dissenters' Rights (See Page 36)

Macatawa  Shareholders.  Under Michigan law, you are not entitled to dissenters'
rights  with  respect to  approval of the  proposed  Merger and the  issuance of
shares of Macatawa common stock pursuant to the Merger Agreement.

Grand  Shareholders.  Under  Michigan  law, you are not entitled to  dissenters'
rights with respect to approval of the proposed Merger.

Interests of Grand Officers and Directors in the Merger (See Page 79)

Certain  directors and officers of Grand may be considered to have  interests in
the Merger in addition to their  interests  generally as  shareholders of Grand.
Such  interests  include the right of certain  directors and officers to receive
severance  payments  and  extended  insurance  benefits  pursuant to  employment
agreements.

Upon the completion of the Merger,  Macatawa will assume all the rights, duties,
and  obligations  under  Grand's  stock option plans.  Each  unexercised  option
outstanding  will  become an option to  purchase a number of shares of  Macatawa
common stock equal to the number of shares of Grand common stock subject to each
option multiplied by the Exchange Ratio under the Merger Agreement. The exercise
price per share for Macatawa  common stock under these  options will be equal to
the  exercise  price per share of Grand  common  stock  divided by the  Exchange
Ratio. As of November 20, 2001,  executive  officers and directors of Grand as a
group held options to purchase a total of 4,404 shares of Grand common stock.

In  addition,  one  member  of  Grand's  Board  of  Directors  will be  added to
Macatawa's Board of Directors.  This member will be selected by Grand's Board of
Directors and approved by Macatawa's Board of Directors.

Comparative Market Prices of Macatawa and Grand Stock

Macatawa  common  stock is traded on The Nasdaq  Stock  Market  under the symbol
"MCBC." There is no established public trading market for Grand common stock.

The following  table sets forth the closing prices per share of Macatawa  common
stock  (1)  on  November  20,  2001,  the  business  day  preceding  the  public
announcement that Macatawa and Grand had entered into the Merger Agreement,  and
(2) on ______________,  2002, the last full trading day for which closing prices
were available at the time of the printing of this document.

The  following  table  also sets forth the  equivalent  price per share of Grand
common stock on the dates indicated.  The equivalent price per share is equal to
the closing price of a share of Macatawa common stock on that date multiplied by
17.5979,  the number of shares of Macatawa common stock to be issued in exchange
for each share of Grand common stock.

                    Macatawa
                     Common      Equivalent
      Date           Stock       per Share
----------------- ------------- -------------
                            
Nov. 20, 2001        $16.75       $294.76
Dec. 17, 2001        $17.55       $308.84


This equivalent per share price reflects the dollar value of the Macatawa common
stock that Grand shareholders would receive for each share of their Grand common
stock, based on the prices stated.

                                       4

Historical Selected Financial Data (Unaudited)

     The following financial information is provided to aid you in your analysis
of the  financial  aspects of the  Merger.  This  information  is  derived  from
Macatawa's and Grand's  audited  financial  statements for 1996 through 2000 and
their  unaudited  financial  statements for the nine months ended  September 30,
2001. This information is only a summary. You should read it in conjunction with
the  historical   financial   statements   (and  related  notes)   contained  or
incorporated by reference in Macatawa's  annual reports on Form 10-K,  quarterly
reports on Form  10-Q,  and other  information  filed  with the  Securities  and
Exchange  Commission  and  in  Grand's  financial  statements,   related  notes,
Management's Discussion and Analysis, and other statistical information included
in this  Prospectus  and Joint  Proxy  Statement.  See  "Where You Can Find More
Information" below.

                                             Nine Months                         Year Ended December 31
                                                Ended       -----------------------------------------------------------------
                                           Sept. 30, 2001        2000              1999              1998          1997(1)
                                         ------------------ ----------------------------------------------------------------
Macatawa Bank Corporation                               (unaudited; dollars in thousands, except per share amounts)
   Income Statement Data:
                                                                                                       
        Net interest income                     $15,702         $16,599            $10,573          $3,614            $71
        Provision for loan losses                (1,589)         (1,931)            (1,967)         (2,023)            (8)
        Net income (loss)                        $3,644          $3,349               $693         $(2,489)         $(166)
   Balance Sheet Data (period end):
        Assets                                 $633,799        $499,813           $344,921        $189,229        $10,722
        Deposits                                502,488         398,617            279,390         166,989          2,712
        Loans                                   506,669         410,676            285,374         137,882            498
        FHLB advances                            62,588          51,000             30,000               -              -
        Shareholders' equity                     65,828          38,128             34,526          19,611          7,972

Common Share Summary: (2)
   Diluted earnings (loss) per share               $.84            $.90               $.22          $(1.18)        $(0.17)
   Dividends per share                              .21             .07                  0               0              0
   Book value per share                           12.40           10.31               9.34            7.82           8.23
   Weighted average diluted shares
       outstanding                            4,363,065       3,711,051          3,216,625       2,103,178        968,329


                                          Nine Months                           Year Ended December 31
                                             Ended        --------------------------------------------------------------------
                                         Sept. 30, 2001       2000          1999         1998          1997          1996
                                        ----------------- --------------------------------------------------------------------
Grand Bank Financial Corporation                         (unaudited; dollars in thousands, except per share amounts)
   Income Statement Data:
        Net interest income                     $6,152         $7,836       $6,470       $6,022        $4,664        $3,947
        Provision for loan losses                 (528)          (490)        (304)        (543)         (204)         (135)
        Net income                               1,871          2,251        1,777        1,564         1,145        $1,008
   Balance Sheet Data (period end):
        Assets                                $251,904       $223,930     $178,665     $149,022      $131,752      $112,932
        Deposits                               212,685        193,587      152,066      124,419       117,744       100,317
        Portfolio loans                        217,909        180,850      149,503      123,347        94,560        81,341
        FHLB advances                           15,293         10,043       10,298        8,476         2,841         2,900
        Notes payable                            4,000          2,500        1,500        1,500             -             -
        Shareholders' equity                    16,570         14,865       12,727       11,313         9,785         8,625

Common Share Summary:
   Diluted earnings per share                   $13.57         $16.35       $12.95       $11.86         $8.83         $7.84
   Dividends per share                            1.50           2.00         1.88         1.76          1.60          1.36
   Book value per share                         122.78         110.14        94.30        83.88         75.20         68.16
   Weighted average diluted shares
        outstanding                            137,883        137,664      137,232      131,938       129,579       128,555

(1)      Macatawa  data  includes  period  from May 21, 1997 (date of inception)
         through December 31, 1997.
(2)      Restated to reflect the 3% stock dividend paid on May 4, 2001.

                                       5

Unaudited Pro Forma Combined Condensed Financial Information

     Macatawa  and Grand  expect  that the  Merger  will be  accounted  for as a
purchase.  The pro forma combined condensed  financial  information  attempts to
estimate the effect of the Merger on Macatawa's and Grand's historical financial
positions  as of the  dates  listed  below.  The pro  forma  combined  condensed
financial  information  has been derived from, and should be read in conjunction
with, the historical  consolidated financial statements,  and the notes to those
financial  statements.  Macatawa's relevant financial statements are included in
or as exhibits to Macatawa's Form 10-K and 10-Q filings and are  incorporated by
reference.  Grand's financial  statements and related notes are included in this
prospectus and joint proxy statement. The pro forma combined condensed financial
information  may not be  indicative  of the  results  that  actually  would have
occurred if the Merger had been in effect on the dates  indicated or that may be
attained in the future.  In  addition,  Macatawa  will incur  restructuring  and
Merger related  expenses as a result of the  transaction  and  anticipated  cost
savings after the Merger.  These  restructuring  and Merger related expenses and
anticipated  cost  savings  are  not  reflected  in  the  historical   financial
information.   In  preparing  the  pro  forma   combined   condensed   financial
information,  the fact that the Merger will be accounted  for under the purchase
method of accounting has been given effect.

                                                                     Nine Months                Year
                                                                        Ended                  Ended
                                                                 September 30, 2001      December 31, 2000
                                                                ----------------------  ---------------------
                                                                           (dollars in thousands)
Income Statement Data:
                                                                                      
    Net interest income                                              $  21,854              $24,435
    Provision for loan losses                                            2,117                2,421
    Net income                                                           5,298                5,310
Balance Sheet Data (period end)(1):
     Assets                                                            911,543
     Deposits                                                          715,174
     Loans, including loans held for sale                              727,168
     FHLB advances                                                      77,881

     Shareholders' equity                                              106,624


(1)  The pro forma combined condensed balance sheet data assumes the issuance of
     2,374,995  shares  of  Macatawa  common  stock in  exchange  for all of the
     outstanding  shares of Grand common  stock,  assuming an Exchange  Ratio of
     17.5979  shares of  Macatawa  common  stock for each share of Grand  common
     stock  and  that  none  of the  outstanding  Grand  stock  options  will be
     exercised before completion of the Merger.

     Under the "risk-based" capital guidelines presently in effect for banks and
bank holding  companies,  minimum capital levels are based on the perceived risk
in the various asset categories.  Certain off-balance-sheet instruments, such as
loan  commitments  and  letters of credit,  require  capital  allocations.  Bank
holding companies such as Macatawa and Grand and banks such as Macatawa Bank and
Grand  Bank  are  required  to  maintain  minimum   risk-based  capital  ratios.
Macatawa's and Grand's ratios are above the  regulatory  minimum  guidelines and
Macatawa Bank and Grand Bank met the  regulatory  criteria to be  categorized as
"well-capitalized"  institutions  at September 30, 2001. The  "well-capitalized"
classification  may  permit  banks  to  minimize  the  cost of  Federal  Deposit
Insurance  Corporation insurance assessments by being charged a lesser rate than
those  that do not meet this  definition.  Designation  as a  "well-capitalized"
institution does not constitute a recommendation by federal bank regulators. The
following table shows capital ratios and requirements as of September 30, 2001:

                                                                                     Risk-based Capital
                                                               Leverage            Tier 1             Total
                                                                  %                  %                  %
                                                                                             
Macatawa's capital ratios                                        10.37             12.35              13.60
Macatawa Bank's capital ratios                                    7.70              9.14              10.39
Grand's capital ratios                                            6.82              7.09               8.34
Grand Bank's capital ratios                                       6.82              7.09              10.05
Pro forma combined capital ratios                                 9.34             10.66              11.91
Regulatory capital ratios - "well-capitalized" definition         5.00              6.00              10.00
Regulatory capital ratios minimum requirement                     4.00              4.00               8.00

                                       6

Comparative Per Share Information

     The following  summarizes the per share  information for Macatawa and Grand
on a historical,  unaudited pro forma combined,  and equivalent basis. The Grand
"equivalent  pro forma" amounts are calculated by multiplying  the Macatawa "Pro
forma  combined" per share amounts by 17.5979,  which is the number of shares of
Macatawa common stock that Grand  shareholders will receive in exchange for each
of their shares of Grand common stock.

     The pro forma data does not show the  results of future  operations  or the
actual results that would have occurred had the Merger occurred at the beginning
of the period  presented,  giving effect to the proposed  transaction  under the
purchase method of accounting.  In addition,  Macatawa will incur  restructuring
and Merger related  expenses as a result of the transaction and anticipates cost
savings after the Merger.  These  restructuring  and Merger related expenses and
anticipated savings are not reflected in the historical  financial  information.
As a result, the pro forma combined financial condition and results of operation
of  Macatawa  as of and  after  the  Effective  Time  of the  Merger  may not be
indicative  of the results that  actually  would have occurred if the Merger had
been in effect during the periods  presented.  The pro forma per share data have
been  included  in  accordance  with the rules of the  Securities  and  Exchange
Commission and are provided for comparative purposes only.


                                                         Nine Months
                                                            Ended                 Year Ended
                                                        Sept. 30, 2001          Dec. 31, 2000
                                                    ----------------------- -----------------------
           Macatawa Common Stock
           Earnings per share - basic (2):
                                                                             
                Historical (1)                              $0.84                  $0.91
                Pro forma combined (3)                       0.79                   0.87

           Earnings per share - diluted (2):
                Historical(1)                                0.84                   0.90
                Pro forma combined (3)                       0.78                   0.87

           Book value per share - end of period:
                Historical(1)                               12.40                  10.31
                Pro forma combined (4)                      13.88                  13.00

           Cash dividends declared per share:
                Historical(1)                                0.21                   0.07
                Pro forma combined (5)                       0.21                   0.07

           Grand Common Stock

           Earnings per share - basic (2):
                Historical                                  13.86                  16.68
                Equivalent pro forma (6)                    13.90                  15.31

           Earnings per share - diluted (2):
                Historical                                  13.57                  16.35
                Equivalent pro forma (6)                    13.72                  15.31

           Book value per share - end of period:
                Historical                                 122.78                 110.14
                Equivalent pro forma (4)                   244.26                 228.77

           Cash dividends declared per share:
                 Historical                                  1.50                   2.00
                 Equivalent pro forma (4)                    3.70                   1.23

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

                                       7

(1)  Restated to reflect the 3% stock dividend paid on May 4, 2001.

(2)  In  calculating  pro forma  earnings per share,  no  adjustments to the pro
     forma  amounts  have been made to  reflect  potential  expense  reductions,
     revenue enhancements or Merger expenses that may result from the Merger.

(3)  Gives effect to the Merger as if it had  occurred at the  beginning of each
     period presented.

(4)  Gives  effect to the Merger as if it had occurred at the end of each period
     presented.  The pro forma book value per share does not  include the impact
     of merger-related charges that may result from the proposed Merger.

(5)  The Macatawa  pro forma  combined  dividends  per share  amounts  represent
     historical per share dividends on Macatawa common stock only.

(6)  The equivalent pro forma  computations  assume that for each share of Grand
     common stock outstanding, Grand shareholders will receive 17.5979 shares of
     Macatawa common stock.

                    Special Meeting of Macatawa Shareholders

Date, Time, and Place of the Special Meeting

     The special  meeting of shareholders of Macatawa is scheduled to be held as
follows:

                          __________, ___________, 2002
                          __________ local time
                          _______________________
                          _______________________
                          Holland, Michigan 49423

Purpose of the Special Meeting

     The Macatawa special meeting is being held so that shareholders of Macatawa
may  consider and vote upon (1) a proposal to approve the Merger  Agreement  and
the  issuance  of  shares  of  Macatawa  common  stock  pursuant  to the  Merger
Agreement,  and (2) any other  business that  properly  comes before the special
meeting or any  adjournment  or  postponement  of that meeting.  Approval of the
Merger Agreement and the issuance of shares of Macatawa common stock pursuant to
the Merger Agreement,  will also constitute approval of the Merger and the other
transactions contemplated by the Merger Agreement.

Shareholder Special Meeting Record Date

     Macatawa  has fixed the close of business on  ___________________,  2002 as
the record date for determination of its common shareholders entitled to receive
notice of and to vote at the special  meeting.  On the record  date,  there were
__________  shares of Macatawa common stock  outstanding,  held by approximately
__________ holders of record.

Vote Required for the Approval of the Merger Agreement and Issuance of Shares

     The Michigan  Business  Corporation  Act does not require  that  Macatawa's
shareholders approve the Merger.  However, the rules of the National Association
of Securities  Dealers,  Inc., which govern companies traded on The Nasdaq Stock
Market,  require that Macatawa's  shareholders approve the issuance of shares of
Macatawa common stock pursuant to the Merger  Agreement.  Under those rules, the
affirmative  vote of a majority of the shares of Macatawa  common stock  present
and voting at the special  meeting is  sufficient  to approve the Merger and the
issuance of shares of Macatawa  common stock  pursuant to the Merger  Agreement.
Approval of the Merger  Agreement by Macatawa's  shareholders is not required by
law, but is requested as a  ratification  and approval of adoption of the Merger
Agreement by Macatawa's Board of Directors and is a condition to the Merger. The
affirmative  vote of a majority of shares present and voting is considered to be
sufficient  for this  purpose.  You are  entitled  to one vote for each share of
Macatawa  common  stock  held  by  you on  the  record  date  on  each  proposed
shareholder action.

                                       8

     As of the record  date for the special  meeting,  directors  and  executive
officers of Macatawa and their affiliates  beneficially  owned __________ shares
of Macatawa common stock, which represents approximately ___% of all outstanding
shares of Macatawa common stock entitled to vote at the special meeting.

Proxies and Effect on Vote

     All shares of Macatawa  common  stock  represented  by  properly  completed
proxies  received before or at the special meeting and not revoked will be voted
according  to the  instructions  indicated  on the  proxy  card.  If a  properly
completed  proxy is returned and no  instructions  are  indicated,  the Macatawa
common  stock  represented  by the proxy will be (1)  considered  present at the
special  meeting  for  purposes  of  determining  a quorum and for  purposes  of
calculating the vote and (2) voted FOR approval of the Merger  Agreement and the
issuance of shares of Macatawa  common stock  pursuant to the Merger  Agreement.
You are urged to mark the box on the proxy to indicate how to vote your shares.

     If  a  properly  completed  proxy  is  returned  and  the  shareholder  has
specifically  abstained  from  voting on the  proposal  to  approve  the  Merger
Agreement  and the issuance of shares of Macatawa  common stock  pursuant to the
Merger  Agreement,  the Macatawa  common stock  represented by the proxy will be
considered  present and entitled to vote at the special  meeting for purposes of
determining  the existence of a quorum,  but will not be considered to have been
voted in favor of or against the proposal.  If a broker or other nominee holding
shares of Macatawa  common  stock in street name signs and returns a proxy,  but
indicates  on the proxy that it does not have  discretionary  authority  to vote
certain  shares on the  proposal,  those shares will be  considered  present and
entitled to vote at the special meeting.  They will,  therefore,  be counted for
purposes of  determining  the presence of a quorum but will not be considered to
have been voted for or against approval of the proposal.

     Because  approval  of the Merger  Agreement  and the  issuance of shares of
Macatawa common stock pursuant to the Merger Agreement, requires the affirmative
vote of a majority of the shares of Macatawa  common stock present and voting at
the special  meeting,  abstentions,  failures to vote, and broker non-votes will
not be counted as shares voted,  and the number of shares of which a majority is
required will be reduced by the number of shares not voted.

     Macatawa  does not expect  that any matter  other than the  approval of the
Merger Agreement and the issuance of shares of Macatawa common stock pursuant to
the Merger  Agreement will be brought before the special  meeting.  If, however,
other  matters are  presented,  the persons  named as proxies  will  (subject to
applicable  law) vote in  accordance  with their  judgment with respect to those
matters.

Revocation of Proxies

     You may  revoke  your proxy at any time  before it is voted at the  special
meeting by:

   o   notifying the Secretary of Macatawa in writing that the proxy is revoked;

   o   sending a  later-dated  proxy  to  the Secretary of Macatawa or  giving a
       later-dated proxy to a person who attends the special meeting; or

   o   appearing in person and voting at the special meeting.

Attendance  at  the  special  meeting  will  not in  and  of  itself  constitute
revocation  of a proxy.  You  should  send any  later-dated  proxy or  notice of
revocation of a proxy to:

                         Macatawa Bank Corporation
                         Attention:  Secretary
                         348 South Waverly Road
                         Holland, Michigan 49423

Solicitation of Proxies

     For Macatawa  shareholders,  the proxy that  accompanies  this  document is
being solicited by Macatawa's  Board of Directors.  In addition to solicitations
by  mail,  directors,  officers,  and  regular  employees  of  Macatawa  and its
subsidiaries may solicit proxies from shareholders personally or by telephone or
other  electronic  means.  Such  individuals  will not  receive  any  additional
compensation  for doing  so.  Macatawa  will  bear its own  costs of  soliciting
proxies, which Macatawa

                                       9

expects  will be less than $7,500.  Macatawa  also will make  arrangements  with
brokers and other custodians,  nominees and fiduciaries to send this document to
beneficial  owners of Macatawa  common stock and, upon request,  will  reimburse
those brokers and other custodians for their  reasonable  expenses in forwarding
these materials.

                      Special Meeting of Grand Shareholders

Date, Time, and Place of the Special Meeting

         The special meeting of shareholders of Grand is scheduled to be held as
follows:

                      __________, ______________, 2002
                      ___:00 ___.m. local time
                      ___________________________
                      Grand Rapids, Michigan __________

Purpose of the Special Meeting

     The Grand special  meeting is being held so that  shareholders of Grand may
consider  and vote upon the  proposal  to approve the Merger  Agreement  and any
other business that properly comes before the special meeting or any adjournment
or  postponement  of that meeting.  Approval of the Merger  Agreement  will also
constitute approval of the Merger and the other transactions contemplated by the
Merger Agreement.

Shareholder Special Meeting Record Date

     Grand  has fixed the close of  business  on  ________________,  2002 as the
record date for the  determination  of Grand's common  shareholders  entitled to
receive notice of and to vote at the special meeting.  On the record date, there
were 134,959 shares of Grand common stock outstanding, held by approximately 122
holders of record.

Vote Required for the Approval of the Merger Agreement

     A majority of the outstanding shares of Grand common stock entitled to vote
at the special  meeting must be  represented,  either in person or by proxy,  to
constitute  a  quorum  at the  special  meeting.  Under  the  Michigan  Business
Corporation  Act, the affirmative  vote of the holders of at least a majority of
the shares of Grand common stock outstanding and entitled to vote at the special
meeting is  required to approve the Merger  Agreement.  You are  entitled to one
vote for each share of Grand common stock held by you on the record date.

     As of the record  date for the special  meeting,  directors  and  executive
officers of Grand beneficially owned approximately 47,142 shares of Grand common
stock, which represents  approximately 33.85% of all outstanding shares of Grand
common stock entitled to vote at the special meeting.

Proxies and Effect on Vote

     All shares of Grand common stock represented by properly  completed proxies
received  before or at the  special  meeting  and not  revoked  will be voted in
accordance  with the  instructions  indicated  on the proxy card.  If a properly
completed proxy is returned and no instructions are indicated,  the Grand common
stock  represented  by the proxy will be (1)  considered  present at the special
meeting for purposes of determining a quorum and for purposes of calculating the
vote, and (2) voted FOR approval of the Merger Agreement.

     If  a  properly  completed  proxy  is  returned  and  the  shareholder  has
specifically  abstained  from  voting on the  proposal  to  approve  the  Merger
Agreement,  the common stock represented by the proxy will be considered present
and  entitled to vote at the special  meeting for  purposes of  determining  the
presence of a quorum and will not be  considered to have been voted for approval
of the Merger  Agreement.  If a broker or other nominee  holding shares of Grand
common stock in street name signs and returns a proxy but indicates on the proxy
that it does not have  discretionary  authority  to vote  certain  shares on the
approval of the Merger  Agreement,  those shares will be considered  present for
purposes of  determining  the presence of a quorum but will not be considered to
have voted for approval of the Merger Agreement.

                                       10

     Because approval of the Merger  Agreement  requires the affirmative vote of
at least a majority of all shares of Grand common stock outstanding and entitled
to vote as of the  record  date,  abstentions,  failures  to  vote,  and  broker
non-votes  will have the same  effect as a vote  against  approval of the Merger
Agreement.

     Grand does not expect that any matter other than the approval of the Merger
Agreement will be brought before the special meeting. If, however, other matters
are  presented,  the persons named as proxies will  (subject to applicable  law)
vote in accordance with their judgment with respect to those matters.

Revocation of Proxies

     You may  revoke  your proxy at any time  before it is voted at the  special
meeting by:

     o    notifying the Secretary of Grand in writing that the proxy is revoked;

     o    sending a later-dated proxy to  the  Secretary  of  Grand  or giving a
          later-dated proxy to a person who attends the special meeting; or

     o    appearing in person and voting at the special meeting.

Attendance  at  the  special  meeting  will  not in  and  of  itself  constitute
revocation  of a proxy.  You  should  send any  later-dated  proxy or  notice of
revocation of a proxy to:

                        Grand Bank Financial Corporation
                        Attention:  Secretary
                        126 Ottawa Avenue, N.W., Suite 100
                        Grand Rapids, Michigan 49503

Solicitation of Proxies

     For Grand  shareholders,  the proxy that accompanies this document is being
solicited by Grand's Board of Directors.  In addition to  solicitations by mail,
directors,  officers,  and regular  employees  of Grand and its  subsidiary  may
solicit proxies from shareholders personally or by telephone or other electronic
means.  Such individuals will not receive any additional  compensation for doing
so. Grand will bear its own costs of soliciting  proxies,  which Grand estimates
will be less than  $2,500.  Grand also will make  arrangements  with brokers and
other  custodians,  nominees and fiduciaries to send this document to beneficial
owners of Grand common stock and, upon request, will reimburse those brokers and
other custodians for their reasonable expenses in forwarding these materials.

     You  should  not  send in any  stock  certificates  with  your  proxies.  A
transmittal  form  with  instructions  for  the  exchange  of your  Grand  stock
certificates  will be mailed to you as soon as practicable  after  completion of
the Merger.

                                       11

                         The Merger and Merger Agreement

     The  Agreement  and Plan of Merger,  attached as Appendix A (referred to as
the "Merger  Agreement")  is  incorporated  in this  prospectus  and joint proxy
statement by reference and should be carefully considered. Various provisions of
the Merger Agreement have been summarized in this document for your information.
However, the Merger Agreement,  not this summary, is the definitive statement of
the terms of the Merger.

What Grand Shareholders Will Receive in the Merger

     If Macatawa's and Grand's shareholders approve the Merger Agreement and the
Merger is  completed,  Grand will merge with and into Macatawa and, as a result,
Macatawa will own Grand Bank and all of the assets of Grand. In exchange,  Grand
shareholders  will receive  17.5979 shares of Macatawa  common stock for each of
their  shares of Grand  common  stock  (referred  to as the  "Exchange  Ratio").
Macatawa  will not issue  fractional  shares  of  Macatawa  common  stock in the
Merger. Instead, if a Grand shareholder would otherwise be entitled to receive a
fraction of a share of Macatawa common stock,  the  shareholder  will receive an
amount of cash determined by multiplying  the amount of the fractional  share by
the average closing price per share of Macatawa common stock on The Nasdaq Stock
Market for the five  consecutive  trading days ending on the business day before
the date of the closing of the Merger.

     The Exchange Ratio is fixed and will not be adjusted to reflect  changes in
the market price of Macatawa's  common stock.  The Exchange  Ratio is subject to
certain  upward or downward  adjustments  based upon the  occurrence  of certain
events  between the date of this  prospectus  and joint proxy  statement and the
completion of the Merger that would result in changes in the number of shares of
Macatawa or Grand common stock  outstanding.  The purpose of any such adjustment
is to prevent  dilution  of the  respective  interests  of the  shareholders  of
Macatawa and Grand. If Macatawa declares a stock dividend or stock split and the
record date occurs before the completion of the Merger,  the parties will adjust
the  Exchange  Ratio by  multiplying  it by (1) the  total  number  of shares of
Macatawa  common stock that are  outstanding as of the record date for the stock
dividend or split plus the  additional  number of shares to be issued as part of
the  stock  dividend  or split,  (2)  divided  by the total  number of shares of
Macatawa  common stock  outstanding as of the record date for the stock dividend
or split.

     The Merger  Agreement also provides that the Exchange Ratio may be adjusted
for other transactions, such as a reclassification, consolidation, or merger. If
one of these types of transactions  occurs,  Grand shareholders will be entitled
to  an   adjustment  in  the  Exchange   Ratio  that  is  equitable   under  the
circumstances.  Macatawa  and Grand do not expect that any events  necessitating
such an adjustment to the Exchange Ratio will occur.

     At the Effective Time of the Merger,  Macatawa will assume all  outstanding
options to purchase shares of Grand common stock. As a result, such options will
then represent the right to purchase a number of shares of Macatawa common stock
equal to the number of shares of Grand  common  stock that were  subject to such
option  multiplied by the Exchange Ratio and rounded to the nearest whole share.
The  exercise  price per share of Macatawa  common  stock under each such option
shall be equal to the  exercise  price per share of the Grand  common stock that
could have been  purchased  under that  option  divided  by the  Exchange  Ratio
(rounded to the nearest  whole cent).  This right to purchase the amount  stated
above only applies to those options that are  outstanding  at the Effective Time
of the Merger and that remain  unexercised  at and after the  completion  of the
Merger.

Structure of the Merger

     Grand  will be  merged  with and into  Macatawa  with  Macatawa  being  the
surviving  corporation in accordance with the Merger  Agreement and the Michigan
Business Corporation Act.

Background of the Merger

     Grand Bank was formed in 1987 and reorganized as a holding company in 1988.
Grand's  Board  of  Directors  has  periodically   reviewed  Grand's   strategic
alternatives  for enhancing  profitability  and  maximizing  shareholder  value,
giving  consideration to the changes and ongoing  consolidation of the financial
services industry.

     In April 2001, Benj. A. Smith, III, Chairman and Chief Executive Officer of
Macatawa,  contacted  Thomas  Wesholski,  President  of Grand,  to inquire as to
Grand's  interest in an affiliation with Macatawa.  Mr. Wesholski  discussed

                                       12

the question with Charles  Stoddard,  Chairman of Grand, who in turn brought the
matter to the attention of Grand's Board of Directors.

     In May  2001,  Mr.  Smith  met  with Mr.  Stoddard  and Mr.  Wesholski  and
expressed  Macatawa's  interest in pursuing a business  combination.  On June 5,
2001,  the  Executive  Committee  of Grand's  Board of  Directors  delivered  to
Macatawa a list of issues that would be important to Grand.  Macatawa  responded
to this list on  approximately  June 13, 2001 and sent a formal written proposal
to Grand on July 12, 2001.

     On July 26, 2002,  Grand  engaged  Austin  Associates,  LLC (referred to as
"Austin  Associates")  to advise the Board of Directors in  connection  with its
consideration  of a  strategic  merger  with  Macatawa.  Austin  Associates  had
provided on-going  consulting and investment banking services to Grand.  Grand's
Board of Directors  was familiar  with the  experience  and  expertise of Austin
Associates  in  advising  companies  on  strategic  alternatives,   as  well  as
responding to business  combination  proposals such as the strategic merger with
Macatawa.

     On July 31, 2001,  Macatawa and Grand  entered into mutual  confidentiality
agreements.

     On August 8, 2001, the Board of Directors reviewed information concerning a
possible  affiliation  with  Macatawa as well as other  strategic  alternatives,
including  continuing  Grand's current niche strategy but  accelerating  growth,
expanding by establishing  multiple branch facilities,  growing by acquisitions,
and reducing the number of  shareholders.  The Board of Directors  also reviewed
the  potential  purchaser  list  prepared by Austin  Associates,  merger-pricing
information,  information on Macatawa's  performance  and an analysis of Grand's
historical performance and projections. The Board of Directors authorized Austin
Associates to respond to Macatawa  outlining the financial  terms by which Grand
would be willing to enter into further merger discussions.

     By letter  dated  August  9,  2001,  Austin  Associates  presented  Grand's
financial  terms to Macatawa.  On August 22, 2001,  Austin  Associates  met with
representatives  of  Macatawa  to  discuss  the terms of the  potential  merger.
Various telephone conferences and correspondence  resulted in a revised proposal
from Macatawa on August 27, 2001.

     Discussions  continued  during August and September  2001. On September 18,
2001,  Macatawa  provided a letter  outlining new pricing terms for the proposed
Merger.

     In late September 2001, Grand received an unsolicited  inquiry from another
bank holding  company  (referred to as the "Other  Bidder")  with an interest in
expanding  its Kent County  presence  through the  acquisition  of Grand.  After
preliminary  discussions  and a review of financial  information  on Grand,  the
Other Bidder verbally  communicated a range of pricing and other terms to Austin
Associates.

     The  range of terms  from the Other  Bidder  and the  revised  terms of the
September  18,  2001  Macatawa  letter were  discussed  with  Grand's  Executive
Committee at a meeting held on October 9, 2001. Austin  Associates  presented an
analysis,  which included information on and proposals by Macatawa and the Other
Bidder as well as comparisons of their relative financial and stock performance.
At this time,  the  Executive  Committee  concluded  that the  Macatawa  merger,
including the financial terms, were superior. The Executive Committee determined
to pursue  discussions  with Macatawa and to cease further  discussions with the
Other Bidder.

     At the  request  of Austin  Associates,  Macatawa  made a  revised  written
proposal to Grand on October 10, 2001. Grand's Board of Directors met on October
17, 2001 to consider this revised proposal. As a result of this meeting, another
meeting was scheduled  between  certain  directors of Grand and Macatawa,  and a
representative of Austin Associates.  This meeting was held on October 29, 2001,
at which time a number of social and pricing issues were  discussed.  Subsequent
to this  meeting,  and acting at the direction of Grand's  Executive  Committee,
Austin Associates  delivered a letter dated October 31, 2001,  outlining revised
terms  under which  Grand's  Board of  Directors  would be willing to consider a
merger with Macatawa.

     By letter dated November 6, 2001, Macatawa increased its proposal to one in
which  Grand  shareholders  would  receive  approximately  2,375,000  shares  of
Macatawa  common stock for all of the shares of Grand common  stock.  This offer
represented  an exchange  ratio of 17.5979  shares of Macatawa  common stock for
every  share of Grand  common  stock.  On November  7, 2001,  Austin  Associates
presented the updated proposal to the Board of Directors. Austin Associates also
presented a detailed analysis of Macatawa which included an economic evaluation,
business  and  financial  information  concerning  the  characteristics  of  the
combined organizations, and an evaluation of the prospective future value of the
separate and combined organizations.  Based on reports of efforts made by Austin
Associates and the Executive

                                       13

Committee,  the Grand Board of  Directors  determined  that  Macatawa's  revised
proposal  represented  the highest and best offer  available  from  Macatawa and
authorized management to negotiate a definitive agreement.

     Negotiations  continued and the parties reached  agreement on the key terms
of the transaction, on or about November 9, 2001. At this time, Macatawa's legal
counsel  began  preparing the Agreement and Plan of Merger and due diligence was
performed by both parties.  Throughout the week of November 12 through  November
19, 2001,  details were negotiated and finalized.  Macatawa's Board of Directors
met during the  afternoon of November 20, 2001,  reviewed the Merger  Agreement,
authorized the Merger, and adopted the Merger Agreement with Grand.

     The  Executive  Committee  of Grand met on November  19, 2001 to review the
Merger  Agreement  and the  terms of the  proposed  transaction.  The  Executive
Committee  determined  to recommend  the Merger  Agreement  to Grand's  Board of
Directors.

     On November 20, 2001, Grand's management,  along with Austin Associates and
legal  counsel,  presented to the Grand Board of Directors  the proposed form of
Merger Agreement by and between Macatawa and Grand pursuant to which Grand would
be merged with and into Macatawa. Legal counsel reviewed the fiduciary duties of
the Board of Directors  when  considering  such  proposals  and the  obligations
imposed  upon the Board of  Directors  under  Article XI of Grand's  articles of
incorporation.  Grand's  legal  counsel  then  presented  a detailed  review and
analysis of the proposed Merger  Agreement.  At this meeting,  Austin Associates
provided the Board of Directors  with a  comprehensive  analysis of the proposed
Merger.  The proposed  combination  with  Macatawa was  contrasted  with Grand's
likely future prospects on a stand alone basis.  Austin Associates  concluded by
advising the Board of Directors  that it was that firm's  opinion that the terms
of the  proposed  Agreement  and  Plan of  Merger  were  fair to  Grand  and its
shareholders  from a financial  point of view.  Grand's Board of Directors  then
discussed the proposed  Merger and voted to approve and authorize the Merger and
the Merger Agreement and all incidental actions.

     The Merger  Agreement  was  executed on November  20,  2001.  A joint press
release regarding the Merger was issued prior to the opening of the stock market
on November 21, 2001.

     The  decision  of the Board of  Directors  of Grand to select the  Macatawa
proposal and to authorize and approve the Merger, the Merger Agreement,  and the
related   agreements  was  the  result  of  extensive   discussion  and  lengthy
deliberation.  As required by Article XI of Grand's  articles of  incorporation,
the Board of Directors  evaluated the proposal and determined,  in its judgement
that the proposal would be in substantial  compliance with all applicable  laws.
In reaching  that  judgment,  the Board of Directors  sought and relied upon the
advice of legal  counsel.  The Board of Directors  also  considered  each factor
required to be  considered  by Article XI of its articles of  incorporation.  In
brief summary,  these factors include:  the fairness of the  consideration to be
received by the  shareholders  of Grand;  possible social and economic impact of
the proposed offer and its consummation on Grand, Grand's employees,  customers,
and suppliers,  and the communities in which Grand and its subsidiaries operate;
the business and financial  conditions and earnings  prospects of Macatawa;  the
competence,  experience,  and integrity of Macatawa and its management;  and the
intentions of Macatawa regarding the use of the assets of Grand.

     In reaching its decision,  the Board of Directors of Grand gave  particular
consideration to the following factors:

     o    the financial value of Macatawa's  proposal and the premium that value
          represents over the then recent sales of Grand common stock;

     o    the  social  and  economic  impact  of  Macatawa's  proposal  and  its
          consummation  on the  corporation  and its employees,  customers,  and
          suppliers,   and  the   communities  in  which  the   corporation  and
          subsidiaries operate;

     o    Macatawa's  agreement to retain Grand's  separate charter and name for
          two years after the Merger;

     o    Grand's   imminent  need  to  raise  capital  if  it  were  to  remain
          independent and continue to grow, and Macatawa's relative abundance of
          capital; and

                                       14

     o    the Board of Directors'  perception  of the strategic and  synergistic
          business opportunities for the combined Macatawa-Grand organization to
          grow  into  an  organization   that  provides  greater  value  to  its
          shareholders than the sum of the two previously separate corporations.

     Based  on this  consideration,  the  Board  of  Directors  determined  that
Macatawa's   proposal   would  be  in  the  best  interests  of  Grand  and  its
shareholders.  In  the  proposed  Merger,  Grand's  shareholders  would  receive
approximately  2,375,000  shares of Macatawa common stock,  based on an exchange
ratio of 17.5979 shares of Macatawa  common stock for each share of Grand common
stock.  This exchange  ratio was equivalent to  approximately  $294.76 in market
value per Grand share based on  Macatawa's  closing  price of $16.75 on November
20, 2001.

Merger Recommendation and Reasons for the Merger

Grand

     The Grand Board of Directors,  with the assistance of outside financial and
legal  advisors,  evaluated  the  financial,  legal,  and market  considerations
impacting  the  decision to proceed  with the  Merger.  The terms of the Merger,
including  the  Exchange  Ratio,  are the  result of  arm's-length  negotiations
between the  representatives of Grand and Macatawa.  In deciding to proceed with
the transaction,  the Board of Directors considered a number of material factors
with a view to maximizing  shareholder  value in the intermediate and long-term,
including the following:

     o    the future  prospects of Grand if it were to continue to operate as an
          independent, stand-alone entity;

     o    the fact that the market value of the  consideration to be received by
          Grand's  shareholders in the Merger  represented a premium over prices
          in  sales  of  Grand's  common  stock  in  transactions  known  to its
          management;

     o    the fact that Grand  shareholders  would  benefit  from the  increased
          liquidity of the shares to be received;

     o    the fact that Grand shareholders should not recognize any gain or loss
          for federal  income tax purposes  upon the receipt of Macatawa  common
          stock in the Merger;

     o    the  historical  performance  of  Macatawa  and its  perceived  future
          prospects;

     o    the apparent competence,  experience, community banking philosophy and
          integrity of Macatawa's management; and

     o    the  opinion  of Austin  Associates  that the  financial  terms of the
          Merger are fair to Grand shareholders from a financial point of view.

     The Board of Directors of Grand also  believes  that, by becoming part of a
larger  organization with greater resources,  Grand will be able to better serve
its  customers  and  communities  and provide a broader  array of  products  and
services that will be  competitive  with other  financial  service  providers in
Western Michigan.

                 Grand's Board of Directors recommends that you
                 vote FOR the approval of the Merger Agreement.

Macatawa

     Macatawa  believes the proposed  Merger with Grand will enable  Macatawa to
establish a prominent  position in the Grand Rapids,  Michigan  banking  market.
Macatawa  believes that this more rapid  expansion  into the Grand Rapids market
will allow  Macatawa to  capitalize  on the  opportunities  in the Grand  Rapids
market due to the customer dislocation associated with the recent acquisition of
the bank  holding  company  with the  largest  market  share  in the  area.  The
expansion  will also help Macatawa be more  accessible to its current and future
customers and increase its  opportunity  and capacity to invest in technology to
better compete in the increasingly competitive financial services markets.

                                       15

   Macatawa's Board of Directors recommends that you vote FOR the approval of
    the Merger Agreement and the issuance of shares of Macatawa common stock
                        pursuant to the Merger Agreement.

Opinion of Grand's Financial Advisor

     Grand retained Austin Associates to provide financial  advisory services in
connection  with the Merger.  Austin  Associates  is an  investment  banking and
consulting firm specializing in community bank mergers and  acquisitions.  Grand
selected  Austin  Associates  as its  financial  advisor  on the basis of Austin
Associates' past relationship with Grand, and Austin Associates'  experience and
expertise in representing community banks in similar transactions.

     In  conjunction  with  Grand's  board  meeting held on November 20, 2001 to
consider the Merger and approve the  Agreement,  Austin  Associates  rendered an
oral opinion  (subsequently  confirmed in writing) to Grand's Board of Directors
that the terms provided for in the Merger  Agreement were fair, from a financial
point of view, to the shareholders of Grand.

     The preparation of a fairness opinion involves various determinations as to
the most appropriate  methods of financial analysis and the application of those
methods  to  the  particular  circumstances.   It  is,  therefore,  not  readily
susceptible  to partial  analysis  or  summary  description.  Austin  Associates
believes that a partial  review of the analyses and the facts  considered in its
analyses  could create an incomplete or inaccurate  view of the process used and
the  conclusions  reached by Austin  Associates  in rendering  its opinion.  You
should consider the following when reading the discussion of Austin  Associates'
opinion:

     o    The opinion should be read in its entirety for a full understanding of
          the procedures  followed,  assumptions  made,  matters  considered and
          qualifications  and  limitations  of the review  undertaken  by Austin
          Associates  in  connection  with its  opinion.  The  summary of Austin
          Associates'  opinion  set forth in this  prospectus  and  joint  proxy
          statement  is  qualified in its entirety by reference to the full text
          of the opinion that is attached as Appendix B to this document.

     o    Austin  Associates  expressed  no  opinion  as to the  price  at which
          Macatawa common stock would actually be trading at any time.

     o    Austin Associates' opinion rendered in connection with the Merger does
          not constitute a recommendation  to any Grand shareholder as to how he
          or she should vote at the special meeting.

     o    No limitations were imposed on Austin Associates by the Grand Board of
          Directors or its management with respect to the investigations made or
          the procedures followed by Austin Associates in rendering its opinion.

     In performing its analyses,  Austin  Associates  made numerous  assumptions
with respect to industry  performance,  business and  economic  conditions,  and
other  matters,  many of which are beyond the control of Grand and  Macatawa and
may not be realized.  Any estimates contained in Austin Associates'  analyses do
not  purport to be  appraisals  or  necessarily  reflect the prices at which the
companies or their  securities may actually be sold.  Except as described below,
none of the  analyses  performed  by Austin  Associates  was  assigned a greater
significance  by Austin  Associates  than any other.  The summaries of financial
analyses include  information  presented in tabular format. The tables should be
read together with the text of those summaries.

     Austin Associates has relied,  without independent  verification,  upon the
accuracy  and  completeness  of the  information  it reviewed for the purpose of
rendering its opinion.  Austin  Associates  did not  undertake  any  independent
evaluation  or  appraisal  of the assets and  liabilities  of Grand or Macatawa.
Austin  Associates  has not  reviewed  any  individual  credit files of Grand or
Macatawa and has assumed that Grand's and Macatawa's  loan loss reserves are, in
the aggregate,  adequate to cover losses. Austin Associates' opinion is based on
economic,  market and other conditions existing on the date of its opinion,  and
on  information  as of various  earlier dates made available to it which may not
necessarily be indicative of current market conditions.

In rendering its opinion, Austin Associates made the following assumptions:

     o    the  Merger  will  be  accounted  for  using  purchase  accounting  in
          accordance with generally accepted accounting principles;

                                       16

     o    all material governmental, regulatory and other consents and approvals
          necessary for the consummation of the Merger would be obtained without
          any adverse effect on Grand,  Macatawa or on the anticipated  benefits
          of the Merger;

     o    Grand and Macatawa had provided all of the  information  that might be
          material to Austin Associates in its review; and

     o    management's financial projections were reasonably prepared on a basis
          reflecting the best currently  available estimates and judgment of the
          management  of Grand  and  Macatawa  as to the  future  operating  and
          financial performance of Grand and Macatawa, respectively.

In connection with its opinion, Austin Associates reviewed:

     o    the Merger Agreement;

     o    audited  financial  statements  of Macatawa  for the three years ended
          December 31, 2000 and unaudited  financial  statement  summaries as of
          September 30, 2001;

     o    audited  financial  statements  of  Grand  for the  five  years  ended
          December 31, 2000 and unaudited  financial  statement  summaries as of
          September 30, 2001;

     o    financial  and  operating  information  with respect to the  business,
          operations and prospects of Grand and Macatawa.

In addition, Austin Associates:

     o    reviewed the  historical  market  prices and trading  activity for the
          common  stock  of  Macatawa,  and  compared  the  market  activity  of
          Macatawa's common stock with that of certain publicly traded companies
          which it deemed to be relevant;

     o    compared the results of  operations  of Macatawa with those of certain
          financial institutions which it deemed to be relevant;

     o    compared the financial  terms of the Merger with the financial  terms,
          to  the  extent   publicly   available,   of  other  recent   business
          combinations of financial institutions;

     o    analyzed the  pro forma equivalent  financial  impact of the Merger to
          Grand per share data; and

     o    conducted such other studies, analyses, inquiries and examinations, as
          Austin Associates deemed appropriate.

     The  following  is a summary of all material  analyses  performed by Austin
Associates  in  connection  with its  opinion  provided  to the  Grand  Board of
Directors as of November 20, 2001. The summary does not purport to be a complete
description of the analyses performed by Austin Associates.


     Summary of Financial  Terms of Agreement.  Austin  Associates  reviewed the
financial   terms  of  the   proposed   transaction,   including   the  form  of
consideration,  the exchange  ratio,  and the resulting price per share to Grand
common  shareholders  pursuant to the  proposed  Merger.  Under the terms of the
Merger  Agreement,  each  outstanding  share  of  Grand  common  stock  shall be
converted into 17.5979 shares of Macatawa common stock. The exchange ratio shall
remain fixed  through  closing and is not subject to  adjustment  based on price
movements in Macatawa's  stock. The Merger Agreement further provides that stock
options  previously  granted by Grand be  converted  into and become  options to
purchase Macatawa common stock. The exchange ratio was the result of negotiation
between  Macatawa  and  Grand  and was not  proposed  or  recommended  by Austin
Associates.

     Contribution  Analysis.  Based on  134,959  shares  of Grand  common  stock
outstanding as of the date of the Merger  Agreement and the fixed exchange ratio
of 17.5979,  the number of shares  issued to common  stock  holders  would equal
approximately  2,375,000.  Without  consideration of the stock options,  Grand's
shareholders would own, in the aggregate,

                                       17

30.9 percent of the resulting company. On a fully-diluted basis (by assuming the
exercise of all outstanding stock options at both Grand and Macatawa), ownership
to Grand would  approximate  31.5 percent.  Austin  Associates  compared the pro
forma ownership interest in Macatawa that Grand  shareholders would receive,  in
the  aggregate,  to Grand's  contribution  of certain  balance  sheet and income
statement measures.

     The following  table compares the pro forma ownership of Grand and Macatawa
shareholders  in  the  combined  company,  on a  fully-diluted  basis,  to  each
company's respective contribution of various selected measures:


                                                                  Fully Diluted Basis(1)               Ratio of
                                                                  ----------------------             Ownership to
                                                                Grand              Macatawa          Contribution
                                                                -----              --------          ------------
                                                                                                
     Pro Forma Ownership                                        31.5%               68.5%                100%

     Income Statement(2)                                              % Contribution
                                                                      --------------
      3rd Quarter 2001 Actual Core Net Income                   32.4%               67.6%                97.2%
      Estimated 2001 Core Net Income                            32.9%               67.1%                95.7%
      Estimated 2002 Core Net Income                            30.8%               69.2%               102.2%

     Balance Sheet as of September 30, 2001
      Total Assets                                              28.4%               71.6%               110.9%
      Total Deposits                                            29.7%               70.3%               106.1%
      Shareholders' Equity                                      20.1%               79.9%               156.7%


     (1)  Considers  exercise  of  outstanding  stock  options of both Grand and
Macatawa.
     (2)  Core net income adjusted  for  nonrecurring  income and  expense and a
portion of Grand's charitable contributions.

     Merger  Value.  In  rendering  its opinion on  November  20,  2001,  Austin
Associates  considered the stock trading values of Macatawa and the Merger value
to Grand's shareholders. Based on Macatawa's closing stock price on November 19,
2001 of $16.36,  the value per share to Grand  common  shareholders  was $287.90
($16.36 multiplied by 17.5979).  The aggregate value to common shareholders,  as
of November 19, 2001,  equaled  $38.9  million  ($287.90  multiplied  by 134,959
shares outstanding at Grand).

     In addition,  Macatawa  agreed to assume and convert the 4,825  outstanding
options of Grand into options of Macatawa.  These options are  exercisable  at a
weighted average price of $79.21 per share.  Based on the $16.36 per share value
to  Grand  shareholders,  the  "in-the-money"  value  of  the  options  measures
approximately $1.0 million in the aggregate. Therefore, when including the value
of  consideration  for  the  options  of  Grand,  the  aggregate  value  of  the
transaction at November 19, 2001 was approximately $39.9 million.

     Austin  Associates  calculated  that the  indicated  value of $39.9 million
represented:

    o    241 percent of book value at September 30, 2001;
    o    16.0 times net income for the last twelve months ended September 30,
         2001; and
    o    9.2 percent premium over tangible equity as a percent of total assets.

     Comparable   Transaction  Analysis.   Austin  Associates  reviewed  certain
information relating to bank sale transactions nationally announced from January
1, 2000 to November 19, 2001. The following  chart  highlights the criteria used
to select transactions for comparison to the Merger.


                                                                  Seller              Seller
              Key Seller Criteria                                Group 1              Group 2
              -------------------                                -------              -------
                                                                              
              Seller's Asset Size ($mils)                      $100 - $500          $100 - $500
              YTD ROAA                                            > 0.0%                 -
              YTD ROAE                                              -                 > 15.0%
              Most Recent Annual Asset Growth                       -                 > 10.0%
              # of Transactions Included                           113                  11

                                       18

         Austin Associates compared the prices paid in these transactions as
compared to the transaction multiples being paid by Macatawa for Grand.

                                                                   Seller         Seller        Macatawa/
              Key Median Results                                   Group 1        Group 2         Grand
              ------------------                                   -------        -------       ---------
                                                                                         
              Price/Earnings Multiple                              17.6 x         16.6 x          16.0x
              Price/Tangible Book Value Ratio                       210%           241%            241%
              Premium over Tangible Equity/Assets                   9.1%           12.3%           9.2%


     Austin  Associates  concluded  that the  multiples  proposed  to be paid by
Macatawa for Grand either  approximate  or exceed the median  multiples paid for
comparable bank transactions since January 1, 2000.

     Comparative Analysis of Macatawa Financial Performance.  In connection with
rendering its opinion, Austin Associates compared selected results of Macatawa's
operating  performance  to those of four  selective  peer groups.  The following
chart highlights the criteria used to selective companies for each peer group:


                                                     Peer              Peer            Peer          Peer
         Key Criteria for Selection (1)            Group 1           Group 2         Group 3       Group 4
         ------------------------------            -------           -------         -------       -------
                                                                                      
         Date Formed                              1995-1999             -               -             -
         Asset Size ($Billions)                       -             $0.3-$1.0       $0.5-$1.0     $0.5-$1.0
         LTM Core ROAA                              > 0.0%         0.75%-1.50%        > 0.0%        > 0.0%
         LTM Core ROAE                                -              < 12.0%            -             -
         1999-2000 Core EPS Growth                  > 0.0%              -            > 10.0%       > 10.0%
         Tangible Equity/Assets                       -               > 9.0%            -             -
         1999-2000 Asset Growth                       -                 -               -          > 15.0%
         # of Companies Included                      25                35              63            27


          (1)  Core = Net income excluding nonrecurring income and expenses.
               LTM  = Last twelve months.

     Austin Associates noted the following  selected  financial measures for the
peer group banks as compared to Macatawa:

                                                               Median Results
                                                -------------------------------------------
         Key Performance Measures               Peer 1      Peer 2       Peer 3      Peer 4       Macatawa
         ------------------------               ------      ------       ------      ------       --------
                                                                                      
         Asset Size ($mils)                      $150         $450        $665         $649          $634
         LTM Core ROAA                          0.69%        1.12%       1.01%        1.03%         0.87%
         LTM Core ROAE                          6.95%        9.94%      13.14%       13.24%        10.11%
         99-00 Core E.P.S. Growth               69.4%         3.6%       11.4%        28.4%        328.6%
         LTM Efficiency Ratio                   67.7%        60.1%       62.0%        61.9%         61.8%
         Tangible Equity/Assets                 9.25%       11.16%       7.60%        7.72%        10.39%
         NonperformingAssets/Assets             0.32%        0.53%       0.54%        0.41%         0.10%


     Austin   Associates  noted  that  Macatawa  had  performed  better  than  a
comparable  group  of  banks  formed  during  1995 to 1999  (Peer 1) in terms of
growth,  profitability  and  asset  quality.  Compared  with  Peer  Groups  2-4,
Macatawa's  relatively  high asset growth has resulted in a slightly  lower ROAA
result.  While  Macatawa's  higher capital  position has resulted in a lower ROE
result,  Macatawa's  ROE is higher than the median for peer group 2.  Macatawa's
asset  quality  measures  compare  very  favorably  to each peer  group.  Austin
Associates concluded that Macatawa's financial performance compared favorably to
the industry and is particularly  favorable to banks formed within the last five
years.

                                       19

     Comparative  Analysis of Macatawa's Stock  Performance.  Austin  Associates
also reviewed stock trading information for Macatawa, as of November 19, 2001 to
each of the previously defined peer groups.  The following  represents a summary
of this review:

                                                                                                 Macatawa
         Key Stock                                              Median Results                   @$16.36
         Performance Measures                      Peer 1      Peer 2     Peer 3      Peer 4     Per Share
         --------------------                      ------      ------     ------      ------     ---------
                                                                                    
         Market Price to Core EPS                  16.7 x      13.2 x     12.2 x      12.0 x       14.6x
         Market Price to Tangible BVPS              129%        132%       151%        163%         132%
         Dividend Yield                             0.0%        3.7%       2.0%        1.7%         1.8%
         Avg. Daily Trading Volume                   351        956        3,563      5,542        8,356


     Austin  Associates noted that Macatawa's  market price to core EPS is above
three  of the  peer  groups.  The  disparity  in  P/E  multiples  is  considered
reasonable  given the higher EPS growth rate at  Macatawa.  The market  price to
tangible book ratio  approximates  peer groups 1-2 and is below peer groups 3-4.
Macatawa's  recent stock  offering has resulted in a lower  price/book  multiple
than most of the peer companies.  Macatawa's stock trading volume is higher than
the  median  results  for each peer  group.  Austin  Associates  concluded  that
Macatawa's stock price was in a reasonable range for the financial condition and
performance of the company, relative to other comparable banking companies.

     Pro Forma Merger Analysis.  Austin Associates  performed a pro forma merger
analysis by combining  the  projected  balance  sheets and income  statements to
determine the financial impact of the Merger on Grand and Macatawa shareholders.
Austin Associates made certain assumptions  regarding the accounting  treatment,
acquisition  adjustments and cost savings to calculate the financial  impact the
Merger would have on key performance  measures of the pro forma company. The pro
forma merger analysis was based in part on published earnings estimates,  Austin
Associates'  long-term  estimated earnings and growth rates, and on management's
estimates of earnings  growth and the expected cost savings.  Austin  Associates
assumed 100 percent of the expected cost savings would be achieved in 2002.  The
following chart highlights the key results:

                                             Stand-Alone   Stand-Alone                   Equivalent         %
                                              Grand(1)      Macatawa      Pro Forma    Per Share to    Change to
2002 Projected Performance Results                                        Company(2)        Grand         Grand
----------------------------------           -----------   ------------   ----------   -------------   ----------
                                                                                           
ROAA                                            1.11%         0.98%          1.08%            -             -
ROAE                                           16.92%        10.29%          9.98%            -             -
Net Income ($mils)                              $3.2          $7.2           $10.9            -             -
Basic Earnings Per Share                       $23.45         $1.35          $1.42         $25.06          6.9%
Dividends Per Share                             $2.35         $0.34          $0.34          $5.95         153.2%
Book Value Per Share                           $149.19       $13.65         $14.80         $260.53        74.6%
Tangible Book Value Per Share                  $149.19       $13.65         $11.99         $211.00        41.4%


  (1)    Excludes portion of charitable contributions in calculating net income.
  (2)    Includes estimated cost savings and amortization expense.

     Pro Forma Equivalent  Earnings and Book Value. This analysis indicates that
the Merger is expected to increase Grand's equivalent  stand-alone 2002 earnings
per share by 6.9 percent.  Grand's equivalent 2002 tangible book value per share
would  equal  $211.00  in the pro  forma  company  representing  a 41.4  percent
increase over its stand-alone projection of $149.19.

     Pro Forma Equivalent  Dividends.  Austin Associates  reviewed the projected
cash  dividends to be paid by Macatawa and Grand.  Based on the exchange  ratio,
Grand's estimated equivalent dividends from Macatawa would equal $5.95 per share
in 2002,  compared to estimated  stand-alone  dividends of $2.35 for 2002.  This
represents a 153 percent increase over the stand-alone 2002 dividend of Grand.

     Discounted Cash Flow Analysis. The discounted cash flow value analysis is a
widely used valuation methodology but relies on numerous assumptions,  including
asset and  earnings  growth  rates,  implied  price to  earnings  multiples  and
discount  rates.  The analysis  does not purport to be  indicative of the actual
values or expected values of Grand's or Macatawa's common stock.

                                       20

     Austin Associates estimated the present value of future cash flows assuming
that Grand would remain  independent and the shareholder held the stock for five
years and sold it at the end of that period.  Austin  Associates  also estimated
the  present  value of  future  cash  flows  that  would  accrue  to a holder of
Macatawa.  Finally,  Austin Associates estimated the equivalent present value of
future cash flows in the pro forma company to Grand  shareholders,  assuming the
Merger were to close at year-end  2001,  and assuming the  shareholder  held the
stock through 2006 and sold it at the end of 2006.

     The  following  chart  highlights  the key  assumptions  and results of the
discounted cash flow analyses:

                                                    Stand-Alone   Stand-Alone    Equivalent DCF       % Change
                                                       Grand        Macatawa     Value to Grand       to Grand
Discounted Cash Flow Key Assumptions                                                                Shareholders
------------------------------------                -----------   -----------    --------------     ------------
                                                                                           
Annual Growth Rate in Earnings                           16%           19%             -
Dividend Growth Rate                                     16%           20%             -
Discount Rate                                          12.5%         13.0%           13.0%
Implied Price/EPS Multiple                             11.1 x        11.1 x          11.1 x
Discounted Cash Flow Value                            $262.79        $17.63         $293.10            11.5%


     Projected cash flows were discounted at rates between 12.5 percent and 13.0
percent.  These rates were selected based on Austin  Associates'  experience and
the expected  risk-adjusted  rate of return that investors in Grand and Macatawa
would  require.  Based on the results from the  discounted  cash flow  analysis,
Grand  shareholders  would receive an approximate 11.5 percent increase in value
with the pro forma company as compared to remaining independent.

     Additional Limiting Conditions.  The opinion expressed by Austin Associates
was based on market,  economic and other relevant considerations as they existed
and could be evaluated as of the date of the opinion. Events occurring after the
date of issuance of the opinion, including but not limited to, changes affecting
the  securities  markets,  the results of operations or material  changes in the
financial  condition  of either  Macatawa or Grand could  materially  affect the
assumptions used in preparing this opinion.

     Grand has agreed to pay Austin  Associates a cash fee of .75 percent of the
aggregate  merger value with  $60,000  paid through the  execution of the Merger
Agreement. In addition,  Grand has agreed to reimburse Austin Associates for its
reasonable  out-of-pocket  expenses,  and to indemnify Austin Associates against
certain  liabilities,  including  liabilities  under securities laws. During the
past two  years,  Grand  engaged  Austin  Associates  on one prior  occasion  in
connection with an earlier  consideration by Grand of acquisition  prospects and
strategic alternatives.  On that occasion,  Grand paid Austin Associates a total
of $12,246.81 for its services. Except for the foregoing,  Austin Associates has
not had any material relationship with Grand,  Macatawa, any of their affiliates
and no future relationship is now mutually contemplated.

Opinion of Macatawa's Financial Advisor

     Macatawa retained Donnelly,  Penman, French, Haggarty & Co. ("DPFH") to act
as  Macatawa's  financial  advisor in  connection  with the  Merger and  related
matters based upon its qualifications,  expertise and reputation, as well as its
general familiarity with Macatawa.

     At the  November  20, 2001  special  meeting of the Board of  Directors  of
Macatawa,  the Board of  Directors  conditioned  its approval of the Merger upon
receipt of an opinion dated as of the date of the Merger Agreement  stating that
the terms of the Merger are fair to  Macatawa's  shareholders  from a  financial
point of view.  On December 28, 2001,  DPFH  rendered its oral opinion to senior
management  of  Macatawa,  that,  as of the date of the  Merger  Agreement,  the
Exchange Ratio pursuant to the Merger  Agreement was fair to the shareholders of
Macatawa  from a  financial  point of view.  DPFH  intends to  confirm  its oral
opinion  with a  written  opinion  to the Board of  Directors  of  Macatawa.  No
limitations were imposed by Macatawa on the scope of DPFH's  investigation or on
the procedures followed by DPFH in rendering its opinion.

                                       21

     DPFH was  retained  by the  Macatawa  Board to express an opinion as to the
fairness,  from a financial  point of view,  to the  holders of Macatawa  common
stock of the Exchange Ratio. DPFH did not address Macatawa's underlying business
decision to proceed with the Merger and did not make any  recommendation  to the
Macatawa Board of Directors or to the  shareholders  of Macatawa with respect to
any approval of the Merger.

     The full text of the  opinion of DPFH,  which will set forth,  among  other
things,  assumptions made, procedures followed, matters considered and limits on
the review of stock  undertaken by DPFH,  will be attached as Appendix C to this
prospectus and joint proxy statement. Holders of Macatawa common stock are urged
to read the opinion in its  entirety.  DPFH's  opinion is  directed  only to the
Exchange  Ratio in the Merger and does not  constitute a  recommendation  to any
Macatawa  shareholder  as to how such  shareholder  should vote at the  Macatawa
Shareholder  Meeting.  The summary set forth in this  prospectus and joint proxy
statement  of the opinion of DPFH is  qualified  in its entirety by reference to
the full text of the opinion to be attached hereto as Appendix C.

     In arriving at its opinion, DPFH reviewed:  (i) the Merger Agreement;  (ii)
certain  publicly-available  information  for  Macatawa,  including  each of the
Annual Reports on Form 10-K for the years ended December 31, 1998,  December 31,
1999 and  December  31, 2000 of Macatawa  and each of the  quarterly  reports of
Macatawa on Form 10-Q for each of the quarters  ended March 31,  2001,  June 30,
2001 and September 30, 2001; (iii) audited financial statements of Grand for the
fives years ended December 31, 2000 and unaudited  financial statement summaries
as  of  September  30,  2001  (iv)  certain  information,   including  financial
forecasts,  relating to earnings,  assets, liabilities and prospects of Macatawa
and Grand furnished to DPFH by senior  management of Macatawa and Grand, as well
as the amount and timing of the cost  savings,  revenue  enhancements  and other
synergies expected to result from the Merger ("Expected Synergies") furnished to
DPFH by senior  management  of  Macatawa;  (v)  certain  third  party  analysts'
estimates  as to the future  financial  performance  of  Macatawa  and  internal
estimates as to the financial  performance of Grand;  (vi) discussions that DPFH
had with  certain  members  of the  management  of each of  Macatawa  and  Grand
concerning the historical and current business operations,  financial conditions
and  prospects  of  Macatawa  and Grand and such other  matters  as DPFH  deemed
relevant;  (vii) the  respective  financial  conditions of Macatawa and Grand as
compared to the financial conditions of certain other companies that DPFH deemed
relevant;  (viii)  certain  financial  terms of the  Merger as  compared  to the
financial  terms of  selected  other  business  combinations  that  DPFH  deemed
relevant;  and (ix) such other  information,  financial  studies,  analyses  and
investigations and such other factors that DPFH deemed relevant for the purposes
of its opinion.

     In conducting its review and arriving at its opinion, as contemplated under
the terms of its  engagement  by Macatawa,  DPFH,  with the consent of Macatawa,
relied, without independent investigation, upon the accuracy and completeness of
all  financial  and  other  information  provided  to it by  Macatawa  or Grand,
respectively,  or publicly  available  information.  DPFH did not  undertake any
responsibility  for the  accuracy,  completeness  or  reasonableness  of, or any
obligation  independently to verify, such information.  DPFH further relied upon
the assurance of management of Macatawa that they were unaware of any facts that
would make the  information  provided or  available  to Macatawa  incomplete  or
misleading in any respect.  With respect to the financial  forecast  information
and Expected Synergies furnished to or discussed with DPFH by Macatawa or Grand,
DPFH has assumed  that they have been  reasonably  prepared and reflect the best
currently available estimates and judgments of the senior management of Macatawa
and Grand as to the  future  financial  performance  of  Macatawa,  Grand or the
combined entity, as the case may be. DPFH did not make or obtain any independent
evaluations,  valuations or appraisals of the assets or  liabilities of Macatawa
or Grand, nor was DPFH furnished with such materials.  DPFH has not reviewed any
individual  credit  files  of  Grand  or  Macatawa  and  has  assumed,   without
independent  verification,  that the aggregate  allowances for credit losses for
Macatawa  and Grand were  adequate  to cover such  losses.  DPFH's  opinion  was
necessarily based upon economic and market conditions and other circumstances as
they existed and  evaluated  by DPFH on the date of its  opinion.  DPFH does not
have any  obligation  to update its  opinion,  unless  requested  by Macatawa in
writing to do so, and DPFH expressly  disclaimed any  responsibility to do so in
the absence of any such request.

                                       22

     In  connection  with  rendering  its opinion to the Board of  Directors  of
Macatawa,  DPFH performed a variety of financial analyses,  which are summarized
below.  DPFH  believes  that its analyses must be considered as a whole and that
selecting  portions of its analyses and the factors  considered  by it,  without
consideration of all factors and analyses, could create a misleading view of the
analyses  and the  processes  underlying  DPFH's  opinion.  DPFH  arrived at its
opinion  based on the  results of all the  analyses it  undertook  assessed as a
whole,  and it did not draw conclusions from or with regard to any one method of
analysis.  The preparation of a fairness opinion is a complex process  involving
subjective judgments,  and is not necessarily susceptible to partial analysis or
summary  description.  With  respect  to the  comparable  company  analysis  and
comparable  merger  transaction  analysis  summarized  below,  no public company
utilized as a comparison  is identical to Macatawa or Grand,  and such  analyses
necessarily  involve  complex   considerations  and  judgments   concerning  the
differences  in  financial  and  operating   characteristics  of  the  financial
institutions  and other  factors  that could  affect the  acquisition  or public
trading values of the financial institutions  concerned.  The financial forecast
information and Expected Synergies  furnished by management of Macatawa or Grand
contained in or underlying  DPFH's  analyses are not  necessarily  indicative of
future results or values, which may be significantly more or less favorable than
such forecasts and estimates. The forecasts and estimates were based on numerous
variables and  assumptions  that are  inherently  uncertain,  including  without
limitation  factors related to general economic and competitive  conditions.  In
that  regard,  DPFH  assumed,   with  Macatawa's  consent,  that  the  financial
forecasts,  including,  without  limitation,  the  Expected  Synergies  had been
reasonably prepared on a basis reflecting the best currently available judgments
of Macatawa and Grand,  and that such  forecasts will be realized in the amounts
and at the times contemplated  thereby. The estimates contained in such analyses
and the range of  valuations  resulting  from any  particular  analysis  are not
necessarily  indicative  of  actual  values  or  future  results,  which  may be
significantly  more or less  favorable  than those  suggested by such  analyses.
Estimates  of values of  financial  institutions  or assets do not purport to be
appraisals or necessarily reflect the prices at which financial  institutions or
their securities  actually may be sold.  Accordingly,  actual results could vary
significantly  from  those  assumed  and the  financial  forecasts  and  related
analyses.  None of the  analyses  performed  by DPFH  were  assigned  a  greater
significance by DPFH than any other.

     The  following  is a brief  summary of the  analyses  performed  by DPFH in
connection with its oral opinion  delivered to Macatawa's  senior  management on
December 28, 2001, which DPFH intends to confirm later in writing.:

 Analysis of Comparable Merger Transactions

     DPFH analyzed Midwest bank acquisition transactions announced and completed
since January 1, 1999  ("Midwest  Transactions")  in which each selling bank had
total assets of between $150 million and $1 billion,  a return on average assets
between 1.0% and 1.5%, a return on average  equity between 10.0% and 17.0% and a
total  shareholders  equity  to total  assets  ratio of less  than  10.0%.  This
analysis also showed that the Exchange Ratio represented a multiple of: (i) 2.4x
Grand's  reported  book value per share,  compared to a high multiple of 4.2x, a
mean  multiple of 2.9x,  a median  multiple of 3.0x and a low  multiple of 1.1x;
(ii) 2.4x Grand's tangible book value per share,  compared to a high multiple of
4.2x, a mean  multiple of 3.6x, a median  multiple of 3.6x and a low multiple of
3.1x; (iii) 16.3x Grand's latest 12 months fully diluted normalized earnings per
share,  compared to a high multiple of 32.5x, a mean multiple of 23.9x, a median
multiple of 27.2x and a low  multiple  of 9.0x;  and  represented  (iv) 18.8% of
Grand's total  deposits,  compared to a high of 40.3%, a mean of 30.7%, a median
of 33.5% and a low of 15.3%.  DPFH recognized  that no transaction  reviewed was
identical  to the Merger  and that,  accordingly,  any  analysis  of  comparable
transactions   necessarily   involves  complex   considerations   and  judgments
concerning differences in financial and operating characteristics of the parties
to the transactions being compared.

                                       23

     DPFH also analyzed  national bank  acquisition  transactions  announced and
completed since January 1, 1999 ("National  Transactions") in which each selling
bank had total  assets  between  $150  million  and $1  billion  and a return on
average  assets  between  1.0% and 1.5% and a return on average  equity  between
10.0% and 17.0% and a total  shareholders  equity to total  assets ratio of less
than 10.0%.  This  analysis  also showed that the Exchange  Ratio  represented a
multiple of: (i) 2.4x Grand's reported book value per share,  compared to a high
multiple of 4.3x, a mean  multiple of 2.6x, a median  multiple of 2.6x and a low
multiple of 1.1x; (ii) 2.4x Grand's tangible book value per share, compared to a
high multiple of 4.4x, a mean multiple of 2.8x, a median  multiple of 2.7x and a
low  multiple  of 1.4x;  (iii)  16.3x  Grand's  latest 12 months  fully  diluted
normalized  earnings  per share,  compared to a high  multiple of 32.5x,  a mean
multiple of 21.1x,  a median  multiple of 20.2x and a low multiple of 9.0x;  and
represented (iv) 18.8% of Grand's total deposits, compared to a high of 40.3%, a
mean of 26.0%,  a median of 25.9% and a low of 12.1%.  DPFH  recognized  that no
transaction  reviewed  was  identical to the Merger and that,  accordingly,  any
analysis of comparable transactions  necessarily involves complex considerations
and judgments concerning differences in financial and operating  characteristics
of the parties to the transactions being compared.

     DPFH also analyzed  national merger of equal bank acquisition  transactions
completed  since  January 1, 1999 ("Merger of Equal  Transactions")  with a deal
value between $12 million and $90 million.  For purposes of this  analysis,  the
data refers to the selling  institutions in each Merger of Equal Transactions as
the  "seller."  This  analysis   showed:   (i)  Grand's  (the  seller)  earnings
contribution  of 32.9%  compared  to the high of 87.6%,  the mean of 55.3%,  the
median of 52.2% and the low of 32.3%;  (ii) Grand's pro forma ownership of 31.5%
compared  to the high of 64.7%,  the mean of 50.0%,  the median of 48.0% and the
low of 30.9%;  and (iii)  Grand's  ownership to earnings  contribution  of 95.7%
compared to the high of 132.5%,  the mean of 96.0%,  the median of 96.2% and the
low of 47.8%.  DPFH  recognized  that the  Merger may not be  considered  a true
Merger of Equals and that no  transaction  reviewed was  identical to the Merger
and that,  accordingly,  any  analysis of  comparable  transactions  necessarily
involves  complex   considerations  and  judgments  concerning   differences  in
financial and operating characteristics of the parties to the transactions being
compared.

Analysis of Selected Comparable Companies

     DPFH compared  selected  operating results of Grand to two groups including
the following:  13 banks from 13 selected  Midwestern  states whose total assets
were between $150 million and $1 billion;  return on average  assets was between
1.0% and 1.5%;  return on average equity was between  10.05% and 17.0%;  and the
total shareholder equity divided by total assets ratio was less than 10.0%. This
group is referred to as the  "Midwest  Companies."  DPFH  applied the exact same
criteria to all banks  nationally.  This group is  referred to as the  "National
Companies." This comparison showed, among other things, that for the nine months
ended September 30, 2001 (i) Grand's net interest margin was 3.8%, compared with
a mean of 4.3% for the Midwest  Companies  and 4.5% for the National  Companies,
(ii) Grand's  efficiency ratio was 61.5%,  compared with a mean of 58.0% for the
Midwest Companies and 59.3% for the National Companies, (iii) Grand's annualized
return on average  assets was 1.1%,  compared  to a mean of 1.2% for the Midwest
Companies and 1.2% for the National Companies and (iv) Grand's annualized return
on  average  equity  was  15.9%,  compared  to a mean of 14.0%  for the  Midwest
Companies and 14.0% for the National  Companies.  This comparison also indicated
that (i) at September 30, 2001,  Grand's ratio of nonperforming  assets to total
assets was .24%, compared with a mean of .44% for the Midwest Companies and .42%
for the National Companies.

     No financial  institution  used in the above  analyses as a  comparison  is
identical  to Grand.  Accordingly,  an analysis of the results of the  foregoing
necessarily involves complex considerations and judgments concerning differences
in financial  and operating  characteristics  of the companies and other factors
that  could  affect  the  public  trading  values  of  Grand  and the  financial
institutions to which it is being compared.

                                       24

Discounted Cash Flow Analysis

     DPFH  prepared  a  discounted  dividend  stream  analysis  of Grand,  which
estimated the future after tax cash flows ("net income available for dividends")
that Grand might  produce over the period from January 1, 2002 through  December
31, 2006 assuming Grand  continued to operate as an independent  company.  These
estimates were derived from  discussions  with Grand  management and were deemed
reasonable by Grand management.  The estimates assumed that Grand would grow its
earnings at a compound rate of  approximately  14% annually,  from 2002 to 2006.
DPFH  further  assumed,  with Grand  management's  consent,  that a 12% dividend
payout  ratio  would be  utilized.  This  payout  ratio was  utilized in part to
maintain certain minimum capital levels deemed  appropriate by Grand management.
These  dividend  cash  flows  were  then  discounted  to a present  value  using
different  discount rates (ranging from 12% to 14%) chosen to reflect  different
required rates of return of holders or prospective  buyers of Grand common stock
assumed to be  reasonable.  DPFH also  estimated  the terminal  values for Grand
common  stock  (ranging  from 15.3 to 19.3  times  Grand's  2006  estimated  net
income).  This  range of  multiples  was  chosen  based on recent  multiples  of
selected mergers and acquisitions  transactions for banks with assets of between
$250 million and $1 billion, as reported by SNL Securities,  LP. This discounted
dividend  analysis  indicated  an implied  value range of $305.43 to $373.23 per
share for Grand common  stock,  compared to the Exchange  Ratio value of $294.76
per share for Grand.  The  analysis was based upon Grand and  Macatawa's  senior
management's  projections of Grand's future  performance on a stand alone basis,
which were based upon many factors and  assumptions  deemed  reasonable by Grand
and  Macatawa  management.  This  analysis did not purport to be  indicative  of
actual values or actual future results and did not purport to reflect the prices
at which any  securities  may trade at the present or at any time in the future.
DPFH included this analysis  because it is a widely used valuation  methodology,
but noted that the results of such  methodology  are highly  dependent  upon the
numerous  assumptions  that  must be  made,  including  earnings  growth  rates,
dividend payout rates, terminal values and discount rates.

Pro Forma Merger Analysis

     DPFH analyzed the financial impact of the Merger on the holders of Macatawa
common  stock and Grand common  stock.  This  analysis  showed that the Exchange
Ratio would result in a pro forma ownership, including converted options, of the
combined  entity  of  approximately   68.5%  by  shareholders  of  Macatawa  and
approximately 31.5% by shareholders of Grand.

Accretion/(Dilution) Analyses

     DPFH  analyzed the pro forma  financial  impact of the Merger on Macatawa's
earnings per share and cash earnings per share.  For purposes of these analyses,
DPFH utilized financial forecasts, relating to earnings, assets, liabilities and
prospects  of  Macatawa  and Grand  furnished  to DPFH by senior  management  of
Macatawa  and  Grand,  as well as the  amount  and  timing of the cost  savings,
revenue  enhancements  and other  synergies  expected  to result from the Merger
furnished  to DPFH by senior  management  of  Macatawa.  DPFH's  analyses of the
Merger from Macatawa's perspective showed that the Merger, compared to continued
operation of Macatawa on a stand-alone  basis,  would be accretive to Macatawa's
estimated  earnings and cash  earnings  starting in 2002  assuming the financial
forecast  (including  Expected Synergies) provided to DPFH by Grand and Macatawa
would be achieved,  although there is no assurance that such financial forecasts
will be achieved.

                                       25

Summary Contribution Analysis

     DPFH  computed  the  contribution  of each of  Macatawa  and  Grand  to the
combined  entity's income  statement,  balance sheet and market  capitalization,
excluding any Merger  related  adjustment.  This  analysis  showed that Macatawa
contributed  66.1% and Grand  contributed  33.9% to the  combined  entity's  net
income  for  the  nine  months  ended  September  30,  2001  and  that  Macatawa
contributed   67.3%  and  Grand  contributed  32.7%  to  the  combined  entity's
forecasted net income for 2001. This analysis  further showed that, at September
30,  2001,  Macatawa  contributed  71.6% of combined  assets,  70.3% of combined
deposits  and  79.9% of  combined  equity of the  combined  entity,  before  any
purchase accounting adjustments are made.

     The Macatawa Board  retained DPFH based upon the recognized  experience and
expertise  of  DPFH's  financial   institutions  group.  DPFH  is  a  recognized
investment  banking and advisory firm. DPFH, as a part of its investment banking
and advisory business, is continually engaged in the valuation of businesses and
securities   in   connection   with   mergers   and   acquisitions,   negotiated
underwritings,  competitive  biddings,  secondary  distributions  of listed  and
unlisted securities, private placements and valuations for estate, corporate and
other purposes.  Macatawa  selected DPFH as its financial adviser because of its
reputation and because of its substantial experience in transactions such as the
Merger.

Closing and Effective Time of the Merger

     Macatawa  and Grand have agreed to schedule  the closing of the Merger on a
mutually agreed upon date and anticipate that the closing will occur in March or
April 2002.  If they cannot  agree upon a date,  either  party may  schedule the
closing by giving the other party five business  days' prior  written  notice of
the desired closing date. However, neither party may give such notice unless and
until (1) all applicable consents to or government  approvals of the Merger have
been obtained (including the expiration of any applicable waiting periods),  and
(2) Grand's shareholders have approved the Merger Agreement,  and (3) Macatawa's
shareholders  have  approved the Merger  Agreement  and the issuance of Macatawa
common stock pursuant to such agreement.

     The  "Effective  Time of the  Merger"  is the date and time  following  the
closing that the Merger is legally  completed.  The Effective Time of the Merger
will be specified in the  Certificate of Merger filed with the state of Michigan
and will be a time and date  selected by  Macatawa.  The  Effective  Time of the
Merger may not be later than three business days after the closing occurs.

                                       26

Regulatory Approvals

     Before  Macatawa and Grand may complete the Merger,  Macatawa  must receive
the approval of the Federal Reserve Board. In addition,  if and when the Federal
Reserve Board approves the Merger, Macatawa and Grand must wait an additional 30
days before  completing  the Merger to allow the U.S.  Department  of Justice to
take further action to delay or block the Merger.  However, if the Department of
Justice does not issue adverse comments during the first 15 days of this period,
Macatawa  and Grand may  complete  the Merger at that time.  Macatawa  filed its
application  for  approval of the Merger with the  Federal  Reserve  Board on or
about December 21, 2001. While Macatawa expects to receive Federal Reserve Board
approval,  no assurance  can be made as to whether or when the approval  will be
given.

Distribution of  Macatawa Common Stock

     At the Effective Time of the Merger, Grand's shareholders will cease to own
shares of Grand. Old Grand stock  certificates that represented  shares of Grand
common stock outstanding  immediately  before the Merger will then represent the
right to receive  (1) shares of  Macatawa  common  stock and (2) cash in lieu of
fractional shares.

     If Macatawa  declares a dividend on the Macatawa  common  stock  payable to
shareholders of record of Macatawa as of a record date after the Merger, holders
of the old Grand stock  certificates  will be entitled to receive that dividend.
However,  holders of old Grand  stock  certificates  will not  actually  receive
dividends payable to holders of record of Macatawa common stock after the Merger
until they  physically  deliver the old Grand stock  certificates  with properly
submitted transmittal  materials.  Upon physical exchange of the old Grand stock
certificates,  former  Grand  shareholders  will be  entitled  to  receive  from
Macatawa an amount equal to all such dividends declared and paid with respect to
those shares  (without  interest and less the amount of taxes,  if any, that may
have been imposed or paid).

     As soon as practicable after the Merger,  Macatawa will cause Registrar and
Transfer Company or another bank or trust company that Macatawa may designate as
the Exchange Agent to send former Grand shareholders transmittal materials to be
used to  exchange  the old Grand  stock  certificates.  Holders of the old Grand
stock  certificates  may  then  elect  (1)  to  receive  Macatawa  common  stock
certificates;  or (2) to enroll in Macatawa's dividend  reinvestment program. If
you elect to enroll in Macatawa's dividend  reinvestment program, your shares of
Macatawa  common  stock will be  credited  to your  account  under the  dividend
reinvestment  program and any cash payable to you for fractional  shares will be
invested in Macatawa common stock at the next regular  investment date under the
dividend   reinvestment   program.   The  transmittal   materials  will  contain
instructions  with respect to the surrender of old Grand stock  certificates and
the selection of these exchange options. In the absence of a selection by you of
any of these options,  you will receive  Macatawa common stock  certificates for
your old Grand stock  certificates  without  enrolling  in  Macatawa's  dividend
reinvestment program. Macatawa will deliver to the Exchange Agent that number of
shares of Macatawa  common  stock  issuable in the Merger and the amount of cash
payable for fractional shares in the Merger.

     Promptly  after former  Grand  shareholders  deliver  their old Grand stock
certificates to the Exchange Agent,  the Exchange Agent will register the shares
of  Macatawa  common  stock  issuable  to them in the  name  and at the  address
appearing  on Grand's  stock  records as of the time of the Merger or such other
name or  address  as is  requested  by them in the  transmittal  materials.  The
Exchange  Agent will not be required to register the shares in that manner until
it has  received  all of your old Grand stock  certificates  (or an affidavit of
loss and indemnity  bond for such  certificate or  certificates),  together with
properly  executed  transmittal  materials.  Such old Grand stock  certificates,
transmittal materials, and affidavits must be in a form and condition reasonably
acceptable  to Macatawa and the  Exchange  Agent.  The Exchange  Agent will have
discretion to determine reasonable rules and procedures relating to the exchange
(or lack thereof) of old Grand stock certificates and the payment for fractional
shares.

     After the  Merger,  ownership  of  shares  represented  by old Grand  stock
certificates  may be transferred only on the stock transfer records of Macatawa.
After the Merger,  Macatawa  will not  transfer any shares of Grand common stock
that were  issued  and  outstanding  immediately  before the Merger on the stock
transfer  books of Grand.  If,  after the  Merger,  a former  Grand  shareholder
properly  presents  old  Grand  stock  certificates  to the  Exchange  Agent for
transfer,  the  Exchange  Agent will  cancel and  exchange  the old Grand  stock
certificates  for shares of  Macatawa  common  stock as  provided  in the Merger
Agreement.

                                       27

Exclusive Commitment to Macatawa

Board Recommendation

     In the  Merger  Agreement,  the Board of  Directors  of Grand has agreed to
recommend  approval  of the  Merger  Agreement  and the  Board of  Directors  of
Macatawa  has  agreed to  recommend  approval  of the Merger  Agreement  and the
issuance of Macatawa  common  stock  pursuant to the Merger  Agreement  to their
respective  shareholders.  However,  Grand's Board of Directors may abstain from
recommending  the  approval of the Merger  Agreement  to its  shareholders  if a
"Superior  Proposal"  has been  received  in  writing  and is still  pending.  A
"Superior  Proposal"  means  any  bona  fide  unsolicited  offer,  proposal,  or
expression  of  interest  made by a third party on terms that the Grand Board of
Directors  determines in good faith,  having  considered  the written  advice of
Austin Associates or another financial advisor of recognized  reputation,  to be
materially more favorable to Grand shareholders than the Merger Agreement from a
financial point of view.

     Withdrawal or modification of the Grand Board of Directors'  recommendation
of the  Merger  will not be a breach of the  Merger  Agreement  if a  "Fiduciary
Event" has occurred  and Grand  provides  Macatawa at least ten  business  days'
advance notice.  A "Fiduciary  Event" will be considered to have occurred if and
when the Grand Board of Directors has:

  o  received in writing a Superior Proposal that is then still pending;

  o  determined in good faith (having  considered  the advice of legal  counsel)
     that its fiduciary  duties to Grand's  shareholders  under  applicable  law
     would require the Board of Directors to so withdraw,  modify, or change its
     recommendation; and

  o  determined  to  accept  and  recommend  the  Superior   Proposal  to  Grand
     shareholders.

If Grand  terminates  the Merger  Agreement  after the occurrence of a Fiduciary
Event,  Macatawa will have the right to be paid a $2,000,000 fee pursuant to the
Merger  Agreement.  The existence of such a right under the Merger Agreement may
reduce the  likelihood  that a Superior  Proposal will be received (see "Payment
after Certain Events" below).

No Negotiations with Third Parties

     In  addition  to the  commitment  of the  Board  of  Directors  of Grand to
recommend  the Merger to its  shareholders,  Grand has  agreed  that it (and its
directors, officers, employees, attorneys, investment bankers, and other agents)
will not directly or indirectly invite, initiate, solicit or encourage any other
party to make any proposal  involving the sale of Grand or Grand Bank.  Further,
Grand has agreed that it (and its  directors,  officers,  employees,  attorneys,
investment  bankers,  and other agents) will not negotiate  with any other party
regarding a possible  sale of Grand or,  except as required by  applicable  law,
provide any nonpublic information about itself or any of Grand's subsidiaries to
any party other than  Macatawa,  unless a Fiduciary  Event has  occurred  and is
continuing or there is a reasonable  likelihood  that a Superior  Proposal would
result.  Before  disclosing any information to a party other than Macatawa under
such  circumstances,  Grand  must  obtain  from  such  party  a  confidentiality
agreement  with  terms  no  less  favorable  to  Grand  than  the  terms  of the
confidentiality  agreement  between Macatawa and Grand, and Grand can provide to
such person only information that has been previously disclosed to Macatawa.

Payment after Certain Events

     If, after the Plan of Merger is  executed,  the Board of Directors of Grand
or the  shareholders  of Grand  accept or approve  any  Acquisition  Proposal or
Superior  Proposal  which  competes  or  is  otherwise   inconsistent  with  the
transactions  contemplated  by the Merger  Agreement  or  terminates  the Merger
Agreement due to a Fiduciary Event,  then Grand shall promptly pay to Macatawa a
fee of $2,000,000.

Conduct of Grand Pending the Completion of the Merger

     In the Merger Agreement,  Grand made certain  covenants to Macatawa.  These
covenants,  which  remain in effect  until the Merger is  completed or until the
Merger Agreement has been terminated, are summarized below.

                                       28


Ordinary Course of Business

     Grand has agreed to conduct its  business,  and manage its property only in
the usual,  regular,  and ordinary  course in  substantially  the same manner as
before the Merger Agreement was signed. In particular,  Grand has agreed,  among
other things, to:

  o  refrain from taking any action that would be inconsistent  with or contrary
     to the Merger Agreement;

  o  comply in all material  respects with all laws,  regulations  and court and
     administrative orders;

  o  make no change in its articles of  incorporation,  bylaws, or capital stock
     except as effected by the Merger Agreement;

  o  use all  reasonable  efforts to maintain  its  property and assets in their
     present condition and to preserve its business organization intact; to keep
     available  the  services of their  present  officers and  employees  and to
     preserve its goodwill;

  o  use all  reasonable  efforts to maintain  and keep in full force and effect
     insurance coverage on the assets, properties, premises, personnel and other
     business operations;

  o  charge off loans and maintain its  allowance  for loan losses in accordance
     with its prior practices and regulatory and accounting standards;

  o  make no material  change in any policies and  procedures  applicable to the
     conduct of its business, including any loan and underwriting policies, loan
     loss  and  charge-off  policies  (except  as  contemplated  by  the  Merger
     Agreement or required by law or regulatory  agency),  investment  policies,
     and employment policies;

  o  except to reelect incumbent officers and directors at annual meetings,  not
     increase  the  number of  directors  or elect or  appoint  any person to an
     executive office without first consulting Macatawa;

  o  take no action to increase  the  salary,  severance  or other  compensation
     payable  to, or fringe  benefits  of, or pay any bonus to,  any  officer or
     director,  or any other  class or group of  employees  as a class or group,
     except as  previously  disclosed  and  described  in the  Grand  Disclosure
     Statement  furnished to Macatawa prior to execution of the Merger Agreement
     and  increases,  agreements and payments which are reasonable in amount and
     consistent with the prior year;

  o  take  no  action  to  enter  into  any  employment  agreement  that  is not
     terminable  by Grand or its  subsidiaries  without  cost or penalty upon 30
     days or less notice, except as approved by Macatawa in writing;

  o  take no action to borrow money  except in the ordinary  course of business;
     take no  action  to sell,  mortgage,  or  otherwise  dispose  of any of its
     property or assets unless the property or asset(s)  individually has a fair
     market value of less than $25,000 or  collectively  have an aggregate  fair
     market value of less than $75,000;

  o  maintain its books, accounts, and records in the usual and ordinary course;

  o  notify Macatawa of the threat or  commencement  of any material  lawsuit or
     other proceeding  against or relating to Grand or its  subsidiaries,  their
     directors,  officers,  or  employees  in their  capacities  as such,  their
     assets, liabilities,  businesses or operations, or the Merger or the Merger
     Agreement;

  o  take no action to introduce or change any pension,  profit  sharing plan or
     employee benefit plan, fringe benefit program or other plan for the benefit
     of its  employees  unless  required  by law or this  Merger  Agreement,  or
     necessary  or  advisable  in the  opinion of counsel to  reinforce  any tax
     qualified status;

  o  refrain  from  entering  into  any  new  service  agreements  that  are not
     terminable by Grand or its  subsidiary  Grand Bank without  penalty upon 30
     days or less notice,  except for contracts for services which do not exceed
     $25,000 in the  aggregate,  excepting  the  renewal of  contracts  for data
     processing and other services  reasonably  believed to be necessary for the
     conduct of business in the ordinary course; or

                                       29

  o  take no action to open,  enlarge or  materially  remodel  any bank or other
     facility or to lease,  purchase or otherwise  acquire any real property for
     use as a branch bank,  or apply for  regulatory  approval of any new branch
     bank,  except for prior  commitments  made by Grand that were  disclosed to
     Macatawa before entering into the Merger Agreement.

Dividends

     Grand may not pay any  dividends  or other  distributions,  or  purchase or
redeem  any shares of Grand  common  stock,  other  than the  payment of regular
quarterly  cash  dividends  in an amount per share not to exceed $0.50 per share
per quarter,  payable in a manner and on dates  consistent  with  Grand's  prior
practice. Macatawa and Grand have agreed that they will cooperate to assure that
the  then-former  shareholders  of  Grand  will not  receive  a  duplication  of
dividends,  and not fail to receive a dividend,  for any  calendar  quarter with
respect to their Grand  common  stock and  Macatawa  common  stock that any such
holder receives in exchange for shares of Grand common stock.

Environmental Investigation

     Grand has agreed to permit Macatawa to conduct an environmental  assessment
of each parcel of Grand's  currently  owned real  property,  and any real estate
acquired by Grand in satisfaction of a debt previously contracted.

     If any environmental  conditions are found,  reasonably suspected, or would
tend to be  indicated by the report of the  consultant  which may be contrary to
the  representations  and warranties set forth in the Merger Agreement,  without
regard  to  any  exceptions  that  may be  contained  in  the  Grand  Disclosure
Statement,  then  Macatawa  shall  obtain from one or more  mutually  acceptable
consultants  or  contractors,  as  appropriate,  an  estimate of the cost of any
further environmental investigation,  sampling, analysis,  remediation, or other
follow-up  work that may be necessary to address those  conditions in accordance
with applicable  environmental  laws.  Macatawa shall forward copies of any such
estimates to Grand upon receipt.

     Upon  receipt of the  estimate  of the costs of all  follow-up  work or any
subsequent  investigation  that may be  conducted,  the parties shall attempt to
agree upon a course of action for further  investigation  and remediation of any
environmental  condition  suspected,  found to exist,  or that  would tend to be
indicated  by the report of the  consultant.  All work plans for any  removal or
remediation actions that may be performed, shall be mutually satisfactory to the
parties.  If the work plans or removal or  remediation  actions  would  entail a
material  cost to  complete,  the parties  shall  discuss a mutually  acceptable
modification to the Merger Agreement.

     If  Macatawa  and Grand are  unable  to agree  upon a course of action  for
further  investigation  and remediation of an  environmental  condition or issue
raised by an environmental  assessment and/or a mutually acceptable modification
to the Merger Agreement,  and the condition or issue is not one for which it can
be determined to a reasonable  degree of certainty  that the risk and expense to
which Macatawa and its subsidiaries (after the Merger) would be subject as owner
or operator of the property  involved can be quantified and limited to an amount
which would not have a material  adverse  effect on the  business  or  financial
condition of Grand and its subsidiaries on a consolidated  basis,  then Macatawa
may abandon the Merger Agreement.

Accrual of Transaction Expenses

     Grand shall  immediately  prior to the Effective  Time of the Merger accrue
and charge  against  its  earnings  all  transaction  expenses  which  Grand has
incurred  or will  incur as a result  of the  transactions  contemplated  by the
Merger  Agreement  (including,  without  limitation,  any retention or change of
control payments approved by Macatawa, and Grand's legal, accounting, actuarial,
tax services, and investment advisor's fees).

Charitable Giving

     Grand shall be permitted to make  charitable  contributions,  authorized by
its Board of Directors,  with respect to Grand's 2001 fiscal year (some of which
will be payable in 2002) in an amount  equal to 10% of pretax  profits for 2001,
provided such charitable  contributions  are properly  accrued as an expense for
the year ended on or before December 31, 2001.

                                       30

Insurance and Indemnification

     Macatawa  has  agreed to honor any and all  rights to  indemnification  and
advancement  of expenses  existing,  at the time of the Merger,  in favor of the
present and former  directors and officers of Grand and its  subsidiaries  under
their  articles  of  incorporation  or  existing   bylaws.   These   enforceable
contractual  rights will remain in effect  following  the Merger with respect to
acts or omissions  occurring before the Merger with the same force and effect as
before the Merger.

     In addition, Macatawa has agreed to use all reasonable efforts to cause the
officers and  directors of Grand  immediately  prior to the Merger to be covered
for a period of at least  six  years  immediately  following  the  Merger by the
directors' and officers'  liability  insurance  policy  maintained by Grand with
respect to acts or omissions  occurring before the Merger that were committed by
such officers and directors in their capacities as such. Macatawa may substitute
for Grand's  current  coverage new coverage under policies  offering  comparable
coverage and amounts to Macatawa's  policies for its own officers and directors.
However,  in no event will  Macatawa be required to pay,  directly or indirectly
through Grand or its subsidiaries,  more than $96,000 in the aggregate either to
maintain or to procure insurance  coverage pursuant to the Merger Agreement.  If
Macatawa  does not advise  Grand in writing  before  the  scheduled  date of the
meeting of Grand  shareholders for the purpose of adopting the Merger Agreement,
that it has procured  comparable  or better  coverage  for the six-year  period,
Grand will be  permitted,  after  giving  Macatawa  three  business  days' prior
written  notice and an additional  two business days' to purchase such coverage,
in lieu of receiving the foregoing insurance coverage, to purchase tail coverage
for past acts and  omissions  for a single  premium  amount not in excess of the
limit of $96,000.

Management of Macatawa After the Merger

     Upon completion of the Merger,  Macatawa's Board of Directors and executive
officers will remain the same,  except that one person nominated by Grand,  with
the approval of Macatawa's Board of Directors, will be added to Macatawa's Board
of Directors.  The person to be so nominated has not yet been selected as of the
date of this prospectus and joint proxy statement.

Conditions to Closing the Merger

Mutual Conditions to Close

     The  obligations  of each of Macatawa  and Grand to complete the Merger are
subject to the fulfillment of certain conditions, including the following:

  o  the  shareholders  of Macatawa must have approved the Merger  Agreement and
     the issuance of Macatawa common stock pursuant to the Merger  Agreement and
     the shareholder's of Grand must have approved the Merger Agreement;

  o  each  company's  representations  and warranties to the other in the Merger
     Agreement  must have been true in all material  respects or, if one or more
     representations  or warranties shall then be untrue,  the cumulative effect
     of all untrue  representations  and warranties shall not then be materially
     adverse  relative  to the  business,  income,  or  financial  condition  or
     prospects of the company and its subsidiaries on a consolidated basis;

  o  there must not be any  action,  suit,  proceeding,  claim,  arbitration  or
     investigation  pending or  threatened:  (i)  against or  relating to either
     Grand  or  Macatawa  or  their  subsidiaries  or  any of  their  respective
     properties  or  businesses  which may result in any  liability to either of
     them or its  subsidiaries  which could have a Material  Adverse  Effect (as
     defined  below)  on  the  financial   condition,   net  income,   business,
     properties, operations or prospects  of either of them and its subsidiaries
     on a consolidated  basis, or (ii) which challenges the Merger or the Merger
     Agreement;

  o  each  company  must have  performed  in all  material  respects  all of the
     agreements,  conditions,  and  covenants  to be  completed at or before the
     closing made by that company in the Merger Agreement;

  o  Macatawa and Grand must not be subject to any order,  decree, or injunction
     by any court or  governmental  authority  that  enjoins  or  prohibits  the
     completion of the Merger;

                                       31

  o  the  registration  statement  of which  this  prospectus  and  joint  proxy
     statement is a part must have been declared effective by the Securities and
     Exchange  Commission  and must not be subject to a stop order or threatened
     stop order;

  o  each  company's  legal  counsel must have  provided an opinion to the other
     company with respect to certain legal matters; and

  o  each  governmental  agency  having  jurisdiction  over the Merger must have
     approved or consented to the Merger.

     The term "Material  Adverse Effect" is defined to mean any change or effect
that, individually or when taken together with all other such changes or effects
that have occurred  before the date of  determination  of the  occurrence of the
Material Adverse Effect, has had or could have a material negative impact on the
business,  assets,  financial  condition,  results  of  operations,  or value of
Macatawa and its  subsidiaries,  taken as a whole, or, as the case may be, Grand
and its subsidiaries,  taken as a whole; or the ability of Macatawa or Grand, as
the case may be, to satisfy the applicable  closing conditions or consummate the
Merger.  The following will not be included in any  determination  of a Material
Adverse Effect: (1) changes in generally accepted accounting principles that are
generally applicable to financial institutions and their holding companies;  (2)
actions and  omissions  of a party (or any of its  subsidiaries)  taken with the
prior  written  consent of the other party;  (3) changes in economic  conditions
(including  a  change  in the  level  of  interest  rates)  generally  affecting
financial  institutions;  and (4) fees and  expenses  reasonably  related to the
Merger (such as any additional  insurance  coverages,  employment and consulting
services,  legal,  accounting,  and  investment  banking fees and expenses,  and
severance  and  retention  provisions)  incurred or paid without  violating  the
representations, warranties or covenants contained in the Merger Agreement.

Macatawa's Conditions to Close

     In addition, Macatawa's obligation to complete the Merger is subject to the
fulfillment of additional conditions, including the following:


  o  Grand must have  obtained the consent or waiver of any  material  rights of
     the  other  party  or  the  loss  of any  material  rights  under  material
     agreements  containing  a  provision  triggered  by a change of  control of
     Grand;

  o  Macatawa must have received a tax opinion from Varnum, Riddering, Schmidt &
     Howlett LLP to the effect  that,  among other  matters,  Macatawa  will not
     recognize  gain or loss on its  receipt of the assets of Grand in  exchange
     for the shares of Macatawa  common stock to be issued in the Merger (see "-
     Material Federal Income Tax Consequences" below);

  o  Macatawa  must  have  received  one or more  certificates  dated  as of the
     closing and signed by the Secretary of Grand certifying the total number of
     shares of capital stock of Grand issued and outstanding on the business day
     immediately preceding the closing;

  o  Macatawa's financial advisor,  Donnelly,  Penman,  French,  Haggarty & Co.,
     must have delivered an opinion reasonably acceptable to Macatawa,  dated as
     of the date of the Merger Agreement and renewed as of a date  approximately
     the date of this prospectus and joint proxy  statement,  to the effect that
     the  terms  of the  Merger  are  fair  to  Macatawa's  shareholders  from a
     financial  point of view and that opinion  must not have been  subsequently
     withdrawn;

  o  The  amended  and  restated  employment  agreements  described  in  Grand's
     disclosure  statement  shall  have  been  executed  and shall not have been
     terminated, cancelled, or amended; and

  o  Grand shall not have issued any stock  options after the date of the Merger
     Agreement.

Grand's Conditions to Close

     In addition,  Grand's  obligation  to complete the Merger is subject to the
fulfillment of additional conditions, including the following:

                                       32

  o  Grand must have  received a tax opinion from Varnum,  Riddering,  Schmidt &
     Howlett LLP to the effect that,  among other matters,  no gain or loss will
     be  recognized  by the  shareholders  of Grand upon the receipt of Macatawa
     common stock in exchange for their shares of Grand common stock  (except to
     the  extent of any cash  received  in lieu of  fractional  shares)  and the
     shareholders  of Grand will have the same tax basis and  holding  period in
     the  Macatawa  common  stock they  receive in the Merger as they had in the
     shares of Grand common stock surrendered in exchange for such stock (see "-
     Material Federal Income Tax Consequences" below);

  o  Grand must have received one or more  certificates  dated as of the closing
     and signed by the Secretary of Macatawa and the transfer agent for Macatawa
     common  stock  certifying  the total  number of shares of capital  stock of
     Macatawa issued and  outstanding on the business day immediately  preceding
     the closing;

  o  Grand's  financial  advisor,  Austin  Associates,  must have  delivered  an
     opinion reasonably  acceptable to Grand, dated as of the date of the Merger
     Agreement  and  renewed  as  of a  date  approximately  the  date  of  this
     prospectus and joint proxy  statement,  to the effect that the terms of the
     Merger Agreement are fair to Grand's shareholders from a financial point of
     view and that opinion must not have been subsequently withdrawn; and

  o  the  Macatawa  common  stock to be  issued  in the  Merger  must  have been
     authorized for listing on The Nasdaq Stock Market.


Termination

     Prior to the Merger,  the Merger Agreement may be terminated by Macatawa or
Grand by mutual consent or may be terminated by either of them if the Merger has
not been completed on or before June 30, 2002.

Macatawa's Right to Terminate

     In addition,  Macatawa may terminate  the Merger  Agreement and abandon the
Merger on its own action upon the occurrence of additional  events  specified in
the Merger Agreement including, among others, the following:

  o  any of the  conditions  precedent to Macatawa's  obligation to complete the
     Merger  have  not been  met or  waived  by  Macatawa  at such  time as such
     condition can no longer be satisfied,  notwithstanding  Grand's  reasonable
     efforts to comply with the covenants and satisfy the conditions of Grand in
     the Merger Agreement;

  o  certain environmental risks exist for which the parties are unable to agree
     on a  course  of  action  for  further  investigation  and  it  can  not be
     determined to a reasonable degree of certainty that the risk and expense to
     which Macatawa and its subsidiaries  (after the Merger) would be subject as
     owner or operator of the property involved can be quantified and limited to
     an amount  which would have a Material  Adverse  Effect on the  business or
     financial condition of Grand and its subsidiaries on a consolidated basis;

  o  an event that caused or is  reasonably  likely to cause a Material  Adverse
     Effect on Grand has occurred;

  o  a Fiduciary Event has occurred;

  o  either Macatawa or Grand  shareholders fail to approve the Merger Agreement
     by the requisite vote of approval at the applicable special meeting; or

  o  Grand,  prior to the closing,  receives  from the Federal  Reserve  Board a
     rating lower than  "Satisfactory"  under an examination for compliance with
     the Community  Reinvestment  Act, or if the report of  examination is still
     pending on the  scheduled  closing  date and  Macatawa is unable to satisfy
     itself that Grand will receive at least a "Satisfactory" rating.

                                       33

Grand's Right to Terminate

     In  addition,  Grand may  terminate  the Merger  Agreement  and abandon the
Merger on its own action upon the occurrence of additional  events  specified in
the Merger Agreement including, among others, the following:

  o  any of the  conditions  precedent  to Grand's  obligation  to complete  the
     Merger have not been met or waived by Grand at such time as such  condition
     can no longer be satisfied,  notwithstanding  Macatawa's reasonable efforts
     to comply with the covenants given by Macatawa in the Merger Agreement;

  o  either Macatawa or Grand  shareholders fail to approve the Merger Agreement
     by the requisite vote of approval at the applicable special meeting;

  o  an event that caused or is  reasonably  likely to cause a Material  Adverse
     Effect on Macatawa has occurred; or

  o  any of Macatawa's  banking  subsidiaries,  prior to the  scheduled  closing
     date,  received  from  the  Federal  Reserve  Board a rating  lower  than "
     Satisfactory"  under an  examination  for  compliance  with  the  Community
     Reinvestment  Act, or if the report of the  examination is still pending on
     the scheduled  closing date and Grand is unable to satisfy itself that such
     bank or banks will receive at least a "Satisfactory" rating.

Effect of Termination

     If either Macatawa or Grand  terminates the Merger  Agreement in accordance
with  its  terms,   neither  Macatawa,   Grand,  nor  any  of  their  respective
subsidiaries,  officers,  directors,  or  employees  will be liable to the other
party,  except as provided in the Merger  Agreement.  Certain  provisions of the
Merger Agreement including provisions regarding  confidentiality,  expenses, and
payments after certain events will survive  termination of the Merger Agreement.
In addition,  neither  company will be released from  liability to the other for
any liabilities or damages  arising out of its knowing or intentional  breach of
any provision of the Merger Agreement.

Description of Macatawa Common Stock

     Macatawa's  authorized  capital  stock  consists of 9.5  million  shares of
common  stock,  no par value per share.  As of November 20,  2001,  Macatawa had
5,307,201 shares of Macatawa common stock outstanding. Macatawa expects to issue
not more than 2,459,905 shares of Macatawa common stock in the Merger.

     Holders of Macatawa  common stock are  entitled to  dividends  out of funds
legally available for that purpose when, as, and if declared by Macatawa's Board
of Directors.  Each holder of Macatawa  common stock is entitled to one vote for
each share held on each matter submitted for shareholder action. Macatawa common
stock has no preemptive rights,  cumulative voting rights,  conversion rights or
redemption provisions.

     In the case of any liquidation, dissolution or winding up of the affairs of
Macatawa,  holders of Macatawa  common  stock would be entitled to receive,  pro
rata,  any assets  distributable  to common  shareholders  in  proportion to the
number of shares held by them.

     All  outstanding  shares of  Macatawa  common  stock are,  and shares to be
issued   pursuant  to  the  Merger  will  be,  when   issued,   fully  paid  and
non-assessable.

Comparison of Rights of Macatawa and Grand Shareholders

     If the Merger is  completed,  holders  of Grand  common  stock will  become
holders of Macatawa common stock. Holders of Macatawa common stock will continue
to be holders of Macatawa common stock after the Merger.

     Because both Grand and Macatawa are incorporated  under Michigan law, their
respective   shareholders'   rights  are  governed  by  the  Michigan   Business
Corporation Act. As a Grand  shareholder,  your rights are currently governed by
Grand's  Articles  of  Incorporation,  as amended,  and Bylaws and the  Michigan
Business Corporation Act. However, after the Merger your rights will be governed
by Macatawa's  Restated  Articles of  Incorporation  and Bylaws and the Michigan

                                       34

Business  Corporation Act. The following discussion compares Grand's Articles of
Incorporation,  as  amended,  and  Bylaws to  Macatawa's  Restated  Articles  of
Incorporation and Bylaws.

     The following  comparison of Macatawa's  Restated Articles of Incorporation
and Bylaws and Grand's Articles of Incorporation,  as amended, and Bylaws is not
intended  to be complete  and is  qualified  in its  entirety  by  reference  to
Macatawa's  Articles  of  Incorporation,  as  amended,  and Bylaws  and  Grand's
Restated  Articles of  Incorporation  and Bylaws.  Copies of these documents are
available upon request. See "Where You Can Find More Information" below.

Anti-Takeover Provisions - In General

     Grand's  Articles of  Incorporation,  as amended,  contain  provisions that
could  prevent  or delay the  acquisition  of Grand by means of a tender  offer,
proxy contest,  or otherwise.  These provisions  could also limit  shareholders'
participation  in certain types of business  combinations or other  transactions
that might be proposed in the future,  regardless of whether those  transactions
were  favored by a majority of  shareholders,  and could  enhance the ability of
officers and directors to retain their positions.

     Macatawa's  Restated  Articles of  Incorporation  contain  similar types of
provisions. Material differences in the companies' organizational documents with
respect to such  anti-takeover  provisions  are discussed  below under  separate
sections,  such as "- Size and  Classification  of the Board of  Directors,"  "-
Removal of Directors," and "- Evaluation of Proposed Offers."

Authorized Capital

     The total  authorized  shares of capital stock of Macatawa  consists of 9.5
million shares of common stock and 0.5 million shares of preferred  stock. As of
November 20, 2001,  there were 5,307,201  shares of Macatawa common stock and no
shares of Macatawa preferred stock outstanding.  Macatawa's Restated Articles of
Incorporation  authorize  Macatawa's Board of Directors to issue preferred stock
from time to time and to fix the rights,  preferences  and  limitations  of each
series of preferred  stock.  This includes the designation of the series and the
number of shares in it, the  dividend  rate,  whether  and when  shares  will be
redeemable,  the  prices  at  which  shares  will  be  redeemable,  rights  upon
liquidation, any sinking fund provisions, any conversion or exchange privileges,
voting  rights,   any   restrictions  on  the  payment  of  dividends  or  other
distributions  on other  classes of stock and any other rights,  preferences  or
limitations.

     The issuance of shares of Macatawa  preferred stock could adversely  affect
the rights of the  holders of Macatawa  common  stock and  adversely  affect the
availability  of earnings  for  distribution  to the holders of Macatawa  common
stock.

     The total  authorized  capital stock of Grand consists of 250,000 shares of
common  stock,  no par value.  No share of Grand common stock is entitled to any
preferences  and all shares are equal.  Grand's  Articles of  Incorporation,  as
amended, do not authorize any other shares or classes of capital stock.

Size and Classification of the Board of Directors

     Under Macatawa's  Restated Articles of  Incorporation,  Macatawa's Board of
Directors is divided into three classes,  as nearly equal in number as possible.
The term of office of one class of directors  expires  each year.  The number of
directors  shall be determined  from time to time by  resolution  adopted by the
affirmative  vote of at least 80% of the directors of Macatawa and a majority of
the  Continuing   Directors  as  defined  in  Macatawa's  Restated  Articles  of
Incorporation.  Currently,  Macatawa's  Board of  Directors  is composed of five
members.  Because of the  classification  of Macatawa's  Board of Directors,  it
would  normally take at least two annual  meetings of  shareholders  to change a
majority of the members of Macatawa's Board of Directors.

     Grand's Articles of Incorporation,  as amended,  contain similar provisions
to Macatawa's  Restated Articles of Incorporation.  Pursuant to Grand's Articles
of Incorporation,  as amended,  Grand's Board of Directors is divided into three
classes, as nearly equal in number as possible.  The term of office of one class
of  directors  expires each year.  The number of directors  may not be less than
three with the exact number to be fixed by resolution adopted by the affirmative
vote of at least 2/3 of the  directors  of Grand.  Currently,  Grand's  Board of
Directors  is  composed of fifteen  members.  Because of the  classification  of
Grand's Board of Directors,  it would normally take at least two annual meetings
of  shareholders  to  change a  majority  of the  members  of  Grand's  Board of
Directors.

                                       35

Limitation of Personal Liability of Directors

     Both Macatawa's  Restated Articles of Incorporation and Grand's Articles of
Incorporation, as amended, as modified by the Michigan Business Corporation Act,
provide that a director will not be  personally  liable to the  corporation  for
money damages for breach of the director's fiduciary duty. However, a director's
liability  cannot  be  limited  for:  (1) the  amount of any  financial  benefit
received  by a  director  to which he or she is not  entitled;  (2)  intentional
infliction  of harm  on the  corporation  or its  shareholders;  (3) an  illegal
dividend,  distribution  or loan to an  officer,  director  or  employee  of the
corporation that is contrary to the Michigan Business Corporation Act; or (4) an
intentional criminal act.

Removal of Directors

     Under  Macatawa's  Bylaws,  any one or more  directors  may be removed from
office  at any  time,  with  or  without  cause,  but  only  by  either  (1) the
affirmative  vote of a majority of the continuing  directors and at least 80% of
the  Board  of  Directors  or (2) 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  entitled to vote
generally in the election of directors voting together as a single class.

     Under  Grand's  Articles of  Incorporation,  as amended,  a director may be
removed from office at any time,  but only for cause.  Except as may be provided
otherwise by law,  "cause" for removal of a director exists if: (1) the director
has been  convicted  of a felony  by a court  and the  conviction  is no  longer
subject to direct  appeal;  (2) a court has found the  director to be liable for
negligence  or misconduct  in the  performance  of his or her duty to Grand in a
matter of substantial  importance to Grand and that  determination  is no longer
subject to a direct appeal;  (3) the director has become  mentally  incompetent,
whether or not so determined by a court,  and the mental  incompetency  directly
affects his or her ability as a director of Grand; (4) the director's actions or
failure to act are  considered by Grand's Board of Directors to be in derogation
of  the  director's  duties;  or (5)  the  director's  removal  is  required  or
recommended by the Federal Reserve Board.  Removal for cause must be approved by
at least two-thirds of the total number of directors (excluding the director who
is being  removed).  Whether cause for removal exists shall be determined by the
affirmative  vote  of  2/3  of  the  total  number  of  directors,  except  such
director(s)  subject  to such  removal  determination.  Any  action  to remove a
director  under (1) or (2) above must be taken within one year of the conviction
or court judgment

Shareholder Nominations of Directors

     Under Macatawa's  Restated Articles of  Incorporation,  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 Macatawa (a)
with respect to an election to be held at an annual meeting of shareholders, not
later  than 60 nor more  than 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 20 days from such  anniversary  date,  within 10 days after
the date Macatawa mails or otherwise  gives 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 10th day following the date on which notice of the special meeting was first
mailed to the shareholders by Macatawa.

     A Macatawa  shareholder's  notice of intent to make a nomination  shall set
forth:  (1) the name(s) and  address(es) of the  shareholder who intends to make
the  nomination   and  of  the  person  or  persons  to  be  nominated;   (2)  a
representation  that the  shareholder  (a) is a  holder  of  record  of stock of
Macatawa 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; (3) 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;
(4) 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;  and (5) the consent of each nominee to serve as a director of
Macatawa if so elected.

     Under  Grand's  Articles  of  Incorporation,  as  amended,  nominations  of
candidates  for election for directors of the  corporation at any annual meeting
of shareholders or at any special meeting of shareholders called for election of
directors (referred to as an "election meeting") may be made by Grand's Board of
Directors,  or by a shareholder  who is entitled to vote at an election  meeting
under the limited  circumstances  described in the next  paragraph.  Nominations
made by Grand's

                                       36

Board of Directors are made at a meeting of the board,  or by written consent of
directors in lieu of a meeting,  at least 20 days before the date of an election
meeting.

     A Grand  shareholder  may make a nomination at an election  meeting if, and
only if,  the  shareholder  has  delivered  a notice to the  Secretary  of Grand
setting forth with respect to each  proposed  nominee:  (1) the nominee's  name,
age,  business  address,  and residence  address;  (2) the  nominee's  principal
occupation or  employment;  (3) the number of shares of Grand capital stock that
are  beneficially  owned by the  nominee;  (4) a  statement  that the nominee is
willing to be nominated;  and (5) such other information  concerning the nominee
as would be required under the rules of the  Securities and Exchange  Commission
to be included in a proxy statement  soliciting  proxies for the election of the
nominee.  The notice must be delivered not less than 120 days before the date of
the  election  meeting in the case of an annual  meeting and not more than seven
days  following  the date of notice  of the  election  meeting  in the case of a
special meeting.

Shareholder Proposals

     Under Macatawa's Bylaws, a shareholder who wishes to present a proposal for
action at a shareholders'  meeting must follow certain  procedures.  In order to
present the proposal,  the shareholder  must give timely notice of the matter in
writing to  Macatawa.  For  annual  meetings,  to be timely  the notice  must be
delivered to or mailed to and received by Macatawa not less than 60 no more than
90 days prior to the first  anniversary of the preceding  year's annual meeting.
However, if the date of the upcoming annual meeting changes by more than 20 days
from such  anniversary  date,  then the notice must be received  within ten days
after the date  Macatawa  mails or  otherwise  gives  notice of the date of such
meeting. For special meetings of shareholders,  the shareholder's notice must be
received  not more than ten days after the date on which  notice of the  meeting
was first mailed to shareholders by Macatawa.

     The  notice  by  the  Macatawa   shareholder  must  include  the  following
information: (1) the shareholder's name and record address; (2) a representation
that the  shareholder  (a) is a holder of record of Macatawa  stock  entitled to
vote at such  meeting,  (b) will  continue  to hold such stock until the date of
such meeting, and (c) intends to appear in person or by proxy  at the meeting to
submit the proposal to shareholder  vote; (3) a brief  description of the matter
to be acted on; and (4) any financial or other interest that the shareholder has
in the proposal.

     Furthermore,  if the shareholder  wants Macatawa to include the proposal in
Macatawa's proxy materials,  the proposal must comply with applicable Securities
and  Exchange  Commission  rules,  including  Rule  14a-8  under the  Securities
Exchange Act of 1934.

     Neither  Grand's  Articles of  Incorporation,  as  amended,  nor its Bylaws
contain provisions specifically dealing with shareholder proposals.

State Anti-Takeover Laws

     Fair Price Act. Certain provisions of the Michigan Business Corporation Act
establish  a  statutory  scheme  similar  to the  supermajority  and fair  price
provisions  found in many  corporate  charters  (referred  to as the "Fair Price
Act"). The Fair Price Act applies to both Macatawa and Grand. The Fair Price Act
provides that a supermajority  vote of 90% of the  shareholders and no less than
two-thirds of the votes of noninterested  shareholders  must approve a "business
combination."  The Fair Price Act  defines a "business  combination"  to include
nearly  any  merger,  consolidation,  share  exchange,  sale  of  assets,  stock
issuance,   liquidation,   or  reclassification   of  securities   involving  an
"interested  shareholder" or certain "affiliates" of an interested  shareholder.
An "interested  shareholder" is generally any person who owns 10% or more of the
outstanding  voting shares of the  corporation.  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:  (1) the purchase  price to be paid for the shares of common stock
in the business  combination must be at least equal to the highest of either (a)
the market  value of the shares on the date that the  business  combination  was
announced  or on the date  that  the  interested  shareholder  first  became  an
interested shareholder,  whichever is higher, or (b) the highest per share price
paid by an  interested  shareholder  within the two-year  period  preceding  the
announcement  of the business  combination  or in the  transaction  in which the
shareholder  first became an interested  shareholder,  whichever is higher;  (2)
once  becoming  an  interested  shareholder,  the  person  may  not  become  the
beneficial owner of any additional  shares of the corporation  except as part of
the  transaction  that  resulted  in  the  interested  shareholder  becoming  an
interested  shareholder  or by virtue  of  proportionate  stock  splits or stock
dividends;  and (3) at  least  five  years  have  passed  between  the  date the
interested  shareholder first became an interested  shareholder and the date the

                                       37

business combination is completed. 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  before the time that the interested  shareholder  first became an
interested shareholder.

     Control Share Act.  Certain portions of the Michigan  Business  Corporation
Act also regulate the  acquisition  of "control  shares" of widely held Michigan
corporations  (referred to as the "Control  Share Act").  The Control  Share Act
applies to Macatawa  and Grand and their  shareholders.  The  Control  Share Act
establishes  procedures  governing "control share acquisitions." A control share
acquisition is defined as an acquisition  of shares by an acquiror  which,  when
combined  with  other  shares  held by that  person or  entity,  would  give the
acquiror  voting power in the election of  directors  of the  corporation  at or
above any of the  following  thresholds:  20%,  33%, and 50%.  Under the Control
Share Act, an acquiror may not vote  "control  shares"  that were  acquired in a
control share acquisition  unless the corporation's  disinterested  shareholders
(defined to exclude the acquiring person, officers of the target corporation and
directors of the target  corporation who are also employees of the  corporation)
vote to confer voting rights on the control  shares.  The Control Share Act does
not affect the voting  rights of shares owned by an acquiring  person before 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.

Evaluation of Proposed Offers

     Each of Macatawa's  Restated Articles of Incorporation and Grand's Articles
of  Incorporation,  as  amended,  provide  that the  Board of  Directors  cannot
initiate,  approve, adopt, or recommend any proposal of any party other than the
corporation  to make a tender or exchange  offer for any equity  security of the
corporation,  or engage  in any  merger or  consolidation  with or into  another
entity,  any  sale,  exchange,  lease,  mortgage,  pledge,  transfer,  or  other
disposition of all or substantially all assets,  any liquidation or dissolution,
or any  reorganization  or  recapitalization  that  would  result in a change of
control,  unless it has first  evaluated  the  proposal and  determined,  in its
judgment,  that the proposal would be in compliance with all applicable laws. If
either Macatawa's or Grand's Board of Directors makes that  determination,  such
Board of Directors  must then  evaluate the proposal and  determine  whether the
proposal is in the best interests of the  corporation and its  shareholders.  In
evaluating  a  proposed  offer  to  determine  whether  it  would be in the best
interests of the corporation  and its  shareholders,  each  respective  Board of
Directors  must  consider  all factors  that it  considers  relevant  including,
without limitation:  (1) the fairness of the consideration to be received by the
corporation's  shareholders  under the proposed offer; (2) the possible economic
and social impact of the proposed  offer and its  completion on the  corporation
and its  employees,  customers,  and  suppliers;  (3) the possible  economic and
social impact of the proposed  offer and its  completion on the  communities  in
which the  corporation  and its  subsidiaries  operate or are  located;  (4) the
business and financial  condition  and earning  prospects of the offering party;
(5) the  competence,  experience,  and  integrity of the offering  party and its
management;  and (6) the intentions of the offering  party  regarding the use of
the assets of the corporation to finance the transaction.

Shareholder Approval of Certain Proposed Offers

     Grand's Articles of Incorporation, as amended, provide that the affirmative
vote of the  holders of not less than 2/3 of the  outstanding  shares of capital
stock shall be required for the approval of: (1) any merger or  consolidation of
Grand with or into  another  person or entity;  (2) the sale,  exchange,  lease,
mortgage,  pledge,  transfer or other disposition (in a single  transaction or a
series of  related  transaction)  of all or  substantially  all of the assets of
Grand;  (3) adoption of any plan or proposal for the  liquidation or dissolution
of Grand; or (4) any  transaction,  series of related  transactions,  agreement,
contract or other arrangement having directly or indirectly,  the same effect as
or providing for any of the foregoing.  The super-majority  vote described above
shall not apply to any transaction  which shall have been approved by a majority
of the Board of Directors of Grand and one or more  directors  for each class of
directors.

     Macatawa's  Restated  Articles of  Incorporation do not contain any similar
provisions.

Amendments to Articles of Incorporation and Bylaws

     Under the Michigan  Business  Corporation Act, a corporation's  articles of
incorporation  may be amended by the  affirmative  vote of the  majority  of the
outstanding   shares   entitled  to  vote.  In  addition,   an  amendment  to  a
corporation's articles of incorporation may require the approval of the majority
of the  outstanding  shares of a class or series of stock if the amendment would
(1) increase or decrease the authorized number of shares of that class or series
or (2) alter or change the powers,  preferences  or special rights of that class
or series so as to affect them directly.  However,  a corporation's  articles of

                                       38

incorporation  may specify that an amendment  to one or more  provisions  of the
articles must be approved by higher percentages.

     Macatawa's Restated Articles of Incorporation provide that no amendment may
be made to Article  VIII (which deals with the Board of  Directors),  Article IX
(which deals with submitting  proposals for  shareholder  vote) Article X (which
deals with  shareholder  actions) or Article XI (which deals with  amendments to
Macatawa's Restated Articles of Incorporation)  unless the amendment is approved
by at least 80% of the outstanding  shares entitled to voting as a single class.
However, this "supermajority" vote requirement does not apply to amendments that
have first been approved by at least 80% of Macatawa's  Board of Directors  then
holding office and by a majority of the continuing directors.

     Grand's Articles of  Incorporation,  as amended,  provide that no amendment
may be made to Article VII (which  deals with the Board of  Directors),  Article
VIII (which deals with limitations on directors' personal liability), Article IX
(which deals with indemnification), Article X (which deals with certain business
combinations),  Article XI (which deals with the  evaluation of exchange  offers
and  business  combinations)  or Article  XII (which  deals with  amendments  to
Grand's Articles of  Incorporation)  or Grand's Bylaws,  unless the amendment is
approved by at least 80% of the outstanding  shares  entitled to vote.  However,
this  "supermajority"  vote  requirement  does not apply to amendments that have
first been  approved by at least  two-thirds  (2/3)  Grand's Board of Directors,
including  at least  one  member of each of the  three  classes  of the Board of
Directors.

     Under the Michigan Business  Corporation Act, a corporation's bylaws may be
amended  by either  the  board of  directors  or the  shareholders,  unless  the
corporation's  articles  of  incorporation  or  bylaws  provide  that  only  the
shareholders  may amend the  bylaws or any  particular  bylaw.  Both  Macatawa's
Bylaws  and  Grand's  Bylaws  provide  that  they may be  amended  either by the
shareholders  or the Board of  Directors,  provided  that  Grand's  Articles  of
Incorporation,  as amended, mandates a "supermajority" vote for the shareholders
to amend the Bylaws of Grand.

Indemnification Provisions

     Under the Michigan Business Corporation Act, a corporation is permitted to,
and in some circumstances must, indemnify its officers, directors, employees and
agents,  as well as persons who were serving in similar  positions  with another
entity at the corporation's request, in a variety of situations.

     The  indemnification  provisions  in both  Macatawa's  and Grand's  charter
documents are somewhat more limited. Generally,  Macatawa's Restated Articles of
Incorporation  and Grand's Articles of Incorporation,  as amended,  provide that
directors of the corporation will be indemnified to the fullest extent permitted
by the  Michigan  Business  Corporation  Act. In addition,  Macatawa's  Restated
Articles  of  Incorporation,   provide  that  its  executive  officers  will  be
indemnified to the fullest extent permitted by the Michigan Business Corporation
Act. Persons who are not directors of Grand, or directors or executive  officers
in the  case  of  Macatawa,  may  be  similarly  indemnified,  but  only  if the
indemnification  is  approved  by the  Board of  Directors  or  required  by the
Michigan Business Corporation Act.

Shareholder Action by Written Consent

     Under  the  Michigan  Business  Corporation  Act,  the  shareholders  of  a
corporation  may take an action  either at a meeting or without a meeting if all
of the  shareholders  sign a written consent  authorizing  the action.  However,
unanimous  approval  by written  consent is not  required  if the  corporation's
articles  of  incorporation  allow the  shareholders  holding a majority  of the
voting power (or such higher level as may be required) to take action by written
consent.  In that case,  certain other conditions must be met, such as providing
notice of the action to all shareholders who did not sign the consent.

     Neither Macatawa's  Restated Articles of Incorporation nor Grand's Articles
of  Incorporation,  as amended,  allow  shareholders  to take  action  without a
meeting.

Public Markets for Macatawa's and Grand's Shares

     Macatawa's  common stock is listed on The Nasdaq Stock Market.  There is no
established public trading market for Grand's common stock.

Restrictions on Grand Affiliates

     All shares of Macatawa  common stock received by Grand  shareholders in the
Merger will be freely transferable,  except that shares of Macatawa common stock
received by persons who are deemed to be  "affiliates"  (as such term is defined
under the  Securities Act of 1933) of Grand before the Merger may only be resold
in transactions permitted by the

                                       39

resale provisions of Rule 145 under the Securities Act or as otherwise permitted
under the  Securities  Act.  Persons who may be deemed to be affiliates of Grand
generally  include  individuals or entities that control,  are controlled by, or
are  under  common  control  with,  Grand  and  may  include  certain  officers,
directors, and principal shareholders of Grand.

     This prospectus and joint proxy  statement  covers Macatawa common stock to
be issued in  connection  with the  Merger.  It does not  cover any  resales  of
Macatawa  common  stock to be  received by  affiliates  upon  completion  of the
Merger, and no person is authorized to make any use of this prospectus and joint
proxy statement in connection with any such resale.

     Pursuant to the Merger  Agreement,  each person  identified  by Grand as an
affiliate has executed a written  agreement to the effect that such persons will
not offer or sell or otherwise  dispose of any of the shares of Macatawa  common
stock issued to such persons in the Merger in violation of the  Securities  Act.
Macatawa  may  place  a  legend  reflecting  the  transfer  restrictions  on the
certificates representing the shares of Macatawa common stock.

     Each  affiliate  has also  agreed  not to  invite,  initiate,  solicit,  or
encourage or negotiate  any proposals  from any other party  concerning a tender
offer, exchange offer, merger, consolidation,  sale of shares, sale of assets or
assumption  of  liabilities  not in  the  ordinary  course,  or  other  business
combination  involving  Grand or Grand's  subsidiaries  Grand's  affiliates have
agreed  not to  purchase  or sell or  otherwise  dispose  of any shares of Grand
common stock or any shares of Macatawa  common  stock  without  Grand's  consent
until the Effective Time of the Merger.

Material Federal Income Tax Consequences

     The following general discussion summarizes the material federal income tax
consequences  of the  Merger  and is based on the  Internal  Revenue  Code,  the
regulations  issued under the Internal  Revenue  Code,  existing  administrative
interpretations,   and  court  decisions.   Future   legislation,   regulations,
administrative  interpretations,  or court decisions could significantly  change
such authorities  either  prospectively or retroactively.  This summary does not
address all aspects of federal  income  taxation that may be important to you in
light of your particular  circumstances  or if you are subject to special rules,
such as rules  regarding  shareholders  who are not citizens or residents of the
United  States,  or who are  institutions,  or  tax-exempt  organizations.  This
discussion  also  assumes  that Grand  shareholders  hold their  shares of Grand
capital  stock as  capital  assets  within the  meaning  of Section  1221 of the
Internal Revenue Code.

     It is a condition to the  obligations of Grand and Macatawa to complete the
Merger  that they  receive  from  Varnum,  Riddering,  Schmidt & Howlett  LLP an
opinion  regarding  material  federal  income tax  consequences  of the  Merger.
Macatawa and Grand believe, based on this opinion, that the Merger will have the
following federal income tax consequences:

  o  Grand  shareholders  will not recognize any gain or loss for federal income
     tax purposes if they exchange their Grand common stock for Macatawa  common
     stock pursuant to the Merger, except to the extent that cash is received in
     lieu of fractional shares;

  o  Grand  shareholders'  tax basis in the Macatawa  common stock received as a
     result of the  Merger  will be the same as their  tax basis in their  Grand
     common stock surrendered in the exchange; and

  o  the holding period of the Macatawa common stock held by a Grand shareholder
     as a result of the exchange  will include the period during which he or she
     held the Grand common stock.

                                       40

     In addition:  (1) the Merger will constitute a "reorganization"  within the
meaning of Section 368(a)(1) of the Internal Revenue Code and Macatawa and Grand
will each be a "party to a reorganization" within the meaning of Section 368(b);
(2) the basis of the Grand's assets in the hands of Macatawa will be the same as
the  basis  of  those  assets  in the  hands of  Grand  immediately  before  the
reorganization;  (3) no gain  or loss  will be  recognized  by  Macatawa  on the
receipt by Macatawa of the assets of Grand in exchange for Macatawa common stock
and the assumption by Macatawa of the liabilities of Grand;  and (4) the holding
period of the assets of Grand in the hands of Macatawa  will include the holding
period during which such assets were held by Grand.

     The tax opinion assumes the absence of changes in existing facts and relies
on  assumptions,  representations,  and covenants,  including those contained in
certificates  of officers of Macatawa and Grand.  The tax opinion  neither binds
nor precludes the Internal Revenue Service from adopting a contrary position. An
opinion of counsel sets forth such  counsel's  legal judgment and has no binding
effect  or  official  status  of any kind  and no  assurance  can be given  that
contrary  positions will not be  successfully  asserted by the Internal  Revenue
Service or adopted by a court if the issues are litigated.  Accordingly, you are
strongly  urged to consult  with your tax advisor to  determine  the  particular
United States federal, state, local, or foreign income or other tax consequences
of the Merger to you.

No Dissenters' Rights

     Macatawa Shareholders.  You are not entitled to exercise dissenters' rights
as a result of approval of the Merger or the issuance of shares, and you are not
entitled  to  demand  payment  for  your  shares  under  the  Michigan  Business
Corporation Act.

     Grand Shareholders.  You are not entitled to exercise dissenters' rights as
a result of approval of the Merger,  and you are not entitled to demand  payment
for your shares under the Michigan Business Corporation Act.


                                       41

Unaudited Pro Forma Condensed Combined Financial Statements

     The following  unaudited pro forma condensed  combined  balance sheet as of
and for the  nine-month  period ended  September 30, 2001, and the unaudited pro
forma condensed  combined  statements of income for the nine-month  period ended
September 30, 2001 as well as for the year ended December 31, 2000,  give effect
to the Merger.  This pro forma financial  information is based on the historical
consolidated  financial  statements of Macatawa and Grand and their subsidiaries
under the assumptions and adjustments set forth in the accompanying notes to the
unaudited pro forma condensed combined financial  statements.  The unaudited pro
forma  condensed  combined  balance sheets assume the Merger was  consummated on
September 30, 2001.  The unaudited pro forma  condensed  combined  statements of
income give effect to the Merger as if the Merger  occurred at the  beginning of
each period  covered by such  statements of income.  Pro forma per share amounts
are based on the Exchange Ratio of 17.5979  shares of Macatawa  common stock for
each share of Grand common stock.

     The  unaudited pro forma  condensed  combined  financial  statements do not
reflect  restructuring and other Merger related expenses expected to be incurred
by Macatawa and Grand, or the  anticipated  cost savings.  As a result,  the pro
forma combined  financial  condition and results of operations of Macatawa as of
and after the Effective  Time of the Merger may not be indicative of the results
that  actually  would have  occurred if the Merger had been in effect during the
periods presented or of the results that may be attained in the future.

     This pro forma financial information should be read in conjunction with the
historical  consolidated  financial statements of Macatawa and Grand,  including
the  respective  notes to those  financial  statements,  that  are  included  or
incorporated by reference in this prospectus and joint proxy  statement,  and in
conjunction  with the pro forma  financial  data,  appearing  elsewhere  in this
prospectus and joint proxy statement. See "Where You Can Find More Information."

                                       42


              Unaudited Pro Forma Condensed Combined Balance Sheet
                               September 30, 2001
                             (Dollars in Thousands)

                                                     Macatawa            Grand          Pro Forma      Pro Forma
                                                    Historical        Historical       Adjustments      Combined
                                                 ----------------- ------------------ -------------- ---------------
Assets
                                                                                             
   Cash and due from banks                              $30,996             $9,775    $         -        $40,771
   Federal funds sold                                     7,500              2,300              -          9,800
   Short-term investments                                 8,000              5,000              -         13,000
                                                 ---------------   ----------------   ------------   ------------
                                                         46,496             17,075              -         63,571


   Securities available for sale                         64,921              6,083              -         71,004
   Securities held to maturity                                -              5,721              -          5,721
   Federal Home Loan Bank stock                           3,129                794              -          3,923

   Loans held for sale                                        -              2,590              -          2,590

   Loans                                                506,669            217,909              -        724,578
   Allowance for loan losses                             (7,177)            (2,913)             -        (10,090)

   Premises and equipment - net                          14,232                757              -         14,989
   Accrued interest receivable                            3,567                886              -          4,453
   Goodwill                                                   -                  -         22,180         22,180
   Core deposit intangibles                                   -                  -          3,660          3,660
   Other assets                                           1,962              3,002              -          4,964
                                                 ---------------   ----------------   ------------   ------------

     Total Assets                                      $633,799           $251,904        $25,840       $911,543
                                                 ===============   ================   ============   ============

Liabilities and shareholders' equity

   Deposits
     Noninterest-bearing                                $58,951           $ 21,022    $         -      $  79,973
     Interest-bearing                                   443,538            191,663              -        635,201
                                                 ---------------   ----------------   ------------   ------------
                                                        502,489            212,685              -        715,174


   Federal Home Loan Bank advances                       62,588             15,293              -         77,881
   Note payable                                               -              4,000              -          4,000

   Accrued expenses and other liabilities                 2,894              3,356          1,614          7,864
                                                 ---------------   ----------------   ------------   ------------

     Total liabilities                                  567,971            235,334          1,614        804,919

   Shareholders' equity
      Common stock                                       62,334              5,773         35,023        103,130
      Retained earnings                                   2,133             10,740       (10,740)          2,133
      Accumulated other comprehensive income              1,361                 57           (57)          1,361
                                                 ---------------   ----------------   ------------   ------------

     Total shareholders' equity                          65,828             16,570         24,226        106,624
                                                 ---------------   ----------------   ------------   ------------

     Total liabilities and shareholders' equity        $633,799           $251,904        $25,840       $911,543
                                                 ===============   ================   ============   ============


     See notes to unaudited pro forma condensed combined financial statements.

                                       43


           Unaudited Pro Forma Condensed Combined Statements of Income
                      Nine Months Ended September 30, 2001
                (Dollars in Thousands, Except Per Share Amounts)


                                                     Macatawa            Grand            Pro Forma          Pro Forma
                                                    Historical        Historical         Adjustments          Combined
                                                 ----------------- ------------------ ------------------- -----------------
Interest income
                                                                                                    
   Loans, including fees                                $29,215            $11,824      $           -           $41,039
   Securities                                             2,813              1,094                  -             3,907
                                                 ---------------   ----------------   ----------------    --------------
         Total interest income                           32,028             12,918                  -            44,946

Interest expense
   Deposits                                              13,396              6,110                  -            19,506
    Other                                                 2,930                656                  -             3,586
                                                 ---------------   ----------------   ----------------    --------------

         Total interest expense                          16,326              6,766                  -            23,092
                                                 ---------------   ----------------   ----------------    --------------

         Net interest income                             15,702              6,152                               21,854

   Provision for loan losses                              1,589                528                  -             2,117
                                                 ---------------   ----------------   ----------------    --------------

    Net interest income after provision for
      loan losses                                        14,113              5,624                  -            19,737


Noninterest income
   Service charges on deposit accounts                    1,149                226                  -             1,375
   Gain on sale of loans                                    709                  -                  -               709
   Mortgage origination fees                                  -                787                  -               787
   Trust fees                                               507              1,165                  -             1,672
   Other                                                    224                183                  -               407
                                                 ---------------   ----------------   ----------------    --------------
       Total noninterest income                           2,689              2,361                  -             4,950

Noninterest expense
   Salaries and benefits                                  6,138              3,270                  -             9,408
   Occupancy                                              1,995                379                  -             2,374
   Legal and professional fees                              236                461                  -               697
   Advertising                                              344                100                  -               444
   Data processing                                          309                117                  -               426
   Other expense                                          2,256                772                329             3,357
                                                 ---------------   ----------------   ----------------    --------------

     Total noninterest expenses                          11,278              5,099                329            16,706
                                                 ---------------   ----------------   ----------------    --------------

   Income before federal income tax                       5,424              2,886               (329)            7,981

   Federal income tax                                     1,780              1,015               (112)            2,683
                                                 ---------------   ----------------   ----------------    --------------

   Net income                                           $ 3,644            $ 1,871           $   (217)           $5,298
                                                 ===============   ================   ================    ==============

   Basic income per share                             $     .84          $   13.86                              $  0.79
                                                 ===============   ================                       ==============

   Diluted income per share                           $     .84          $   13.57                              $  0.78
                                                 ===============   ================                       ==============

     See notes to unaudited pro forma condensed combined financial statements.

                                       44


           Unaudited Pro Forma Condensed Combined Statements of Income
                          Year Ended December 31, 2000
                (Dollars in Thousands, Except Per Share Amounts)

                                                        Macatawa            Grand            Pro Forma            Pro Forma
                                                       Historical        Historical         Adjustments           Combined
                                                    ----------------- ------------------ ------------------- -----------------
Interest income
                                                                                                       
   Loans, including fees                                  $31,787            $15,242       $           -           $47,029
    Securities                                              2,551              1,751                   -             4,302
                                                    ----------------- ------------------ ------------------- -----------------
       Total interest income                               34,338             16,993                                51,331

Interest expense
   Deposits                                                15,213              8,375                   -            23,588
   Other                                                    2,526                782                   -             3,308
                                                    ----------------- ------------------ ------------------- -----------------
        Total interest expense                             17,739              9,157                   -            26,896
                                                    ----------------- ------------------ ------------------- -----------------

        Net interest income                                16,599              7,836                   -            24,435

   Provision for loan losses                                1,931                490                   -             2,421
                                                    ----------------- ------------------ ------------------- -----------------

    Net interest income after provision for
      loan losses                                          14,668              7,346                   -            22,014


Noninterest income
   Service charges on deposit accounts                      1,144                255                   -             1,399
   Gain on sales of loans                                     361                  -                   -               361
   Mortgage origination fees                                    -                515                   -               515
   Trust fees                                                 531              1,589                   -             2,120
   Other                                                       16                123                   -               139
                                                    ----------------- ------------------ ------------------- -----------------
     Total noninterest income                               2,052              2,482                   -             4,534

Noninterest Expense
   Salaries and benefits                                    6,865              3,811                   -            10,676
   Occupancy                                                2,338                498                   -             2,836
   Legal and professional fees                                248                677                   -               925
   Advertising                                                366                128                   -               494
   Data processing fees                                       561                169                   -               730
   Other expense                                            2,294              1,077                 439             3,810
                                                    ----------------- ------------------ ------------------- -----------------
     Total noninterest expenses                            12,672              6,360                 439            19,471
                                                    ----------------- ------------------ ------------------- -----------------

   Income before federal income tax                         4,048              3,468               (439)             7,077

     Federal income tax                                       699              1,217               (149)             1,767
                                                    ----------------- ------------------ ------------------- -----------------

        Net income                                         $3,349            $ 2,251         $     (290)           $ 5,310
                                                    ================= ================== =================== =================

   Basic earnings (loss) per share                          $ .91            $ 16.68                                $ 0.87
                                                    ================= ==================                     =================

      Diluted earnings (loss) per share                     $ .90            $ 16.35                                $ 0.87
                                                    ================= ==================                     =================

     See notes to unaudited pro forma condensed combined financial statements.

                                       45

             Notes to Unaudited Pro Forma Condensed Combined Balance
                         Sheets and Statements of Income
--------------------------------------------------------------------------------

NOTE 1

A comparison  of the purchase  price to the  historical  net assets  acquired is
summarized below:

                                                                                        
Shares of Grand as of September 30, 2001                                                       134,959
Exchange ratio of Macatawa shares for Grand shares                                             17.5979
                                                                                           -----------
Shares to be issued                                                                          2,374,995
                                                                                           ===========

Shares issued at market value of $16.75 per share                                          $39,781,000
Fair market value of Macatawa stock options issued to replace Grand stock options            1,015,000
Historical net assets acquired                                                             (16,570,000)
                                                                                           -----------

Excess of purchase price over historical net assets acquired                               $24,226,000
                                                                                           ===========


Each share of Grand  common  stock that is issued  and  outstanding  immediately
prior to the  Effective  Time of the Merger will be canceled and  converted,  by
virtue of the Merger and without any further  action,  into the right to receive
17.5979  shares  of  Macatawa  common  stock,  except  that  rather  than  issue
fractional shares, Macatawa will pay cash or cash equivalent for such fractional
shares. The value of the converted options is dependent upon the price per share
of Macatawa common stock, the weighted average  converted  exercise price of the
options,  interest rates and the amount of variability in the price per share of
Macatawa  common stock.

NOTE 2

Since the final  determination  of adjustments to assets and liabilities will be
made based on the fair values as of the  Effective  Time of the Merger and after
evaluations  of the values are  complete,  the final amounts may differ from the
estimates provided herein.

NOTE 3

The calculation of good will is as follows:

                                                                                            
Shares to be issued                                                                             2,374,995
Market price                                                                                 $      16.75
                                                                                           ---------------
                                                                                               39,781,000

Value of converted Grand stock options                                                          1,015,000
                                                                                           ---------------
Proceeds                                                                                       40,796,000

Add:
     Settlement of Grand phantom stock plan (net of tax)                                          370,000

Less:
     Core deposit intangible, net of tax                                                       (2,416,000)
     Book value of Grand                                                                      (16,570,000)
                                                                                           ---------------
Goodwill                                                                                      $22,180,000
                                                                                         =================


A pro forma adjustment for $370,000 has been recorded to goodwill to reflect the
increased  value of benefits  under the Grand  phantom stock plan as a result of
the increased value of Grand's common shares due to the Merger.  A corresponding
liability has also been recorded.

NOTE 4

The pro forma  adjustment  for core  deposit  intangibles  is  $3,660,000.  This
estimate was  determined  based on the estimated  lives of Grand's core deposits
and the  underlying  interest  rates  and  prevailing  market  rates.  A related
deferred tax liability

                                       46

has been  established  in the  amount of  $1,244,000.  The  amortization  period
assumed for the core deposit  intangibles is ten years with $439,000 in year one
(tax effect of $112,000).

NOTE 5

The pro forma adjustments impacting shareholders' equity are as follows:

                                                                                              
Elimination of Grand equity                                                                  $(16,570,000)
Issuance of 2,374,995 Macatawa common shares at a market value of $16.75                       39,781,000
Fair market value of Macatawa stock options issued to replace Grand stock options               1,015,000
                                                                                         -----------------
                                                                                              $24,226,000
                                                                                         =================


NOTE 6

A  reconciliation  of the  numerators  and  denominators  of pro forma basic and
diluted  earnings per share for the nine months ended September 30, 2001 and the
year ended December 31, 2000 are as follows:

                                                                                         2001                2000
                                                                                         ----                ----
Pro forma basic earnings per share
                                                                                                     
     Pro forma net income                                                             $5,298,000           $5,310,000
                                                                                  ---------------    -----------------
     Pro forma weighted average common shares outstanding                              6,702,703            6,071,342
                                                                                  ---------------    -----------------
     Pro forma basic earnings per share                                           $          .79     $            .87
                                                                                  ===============    =================

Pro forma diluted earnings per share
     Pro forma net income                                                             $5,298,000           $5,310,000
                                                                                  ---------------    -----------------
     Pro forma weighted average common shares outstanding                              6,702,703            6,071,342
     Add:  Dilutive effects of assumed exercises of stock options                         61,084               54,344
                                                                                  ---------------    -----------------
     Pro forma weighted average common and dilutive potential
          common shares outstanding                                                    6,763,787            6,125,686
                                                                                  ---------------    -----------------

     Pro forma diluted earnings per share                                         $          .78     $            .87
                                                                                  ===============    =================


NOTE 7

Income tax expense on pro forma adjustments is reflected using a 34% tax rate.

NOTE 8

Share and per share  amounts  for the year  ended  December  31,  2000 have been
adjusted to reflect Macatawa's 3% stock dividend paid on May 4, 2001.

                                       47

                        Grand Bank Financial Corporation

Description of Business

     Grand  Bank  Financial  Corporation  ("Grand") is a  bank  holding  company
headquartered in Grand Rapids, Michigan and owns Grand Bank. Grand Bank operates
its banking business in Grand Rapids,  Michigan and the surrounding  area. Grand
offers commercial and personal banking services,  including checking and savings
accounts,  certificates of deposit, safe deposit boxes, travelers' checks, money
orders,  trust  services and  commercial,  mortgage and  consumer  loans.  As of
September 30, 2001, Grand had, on a consolidated  basis,  total assets of $251.9
million,  total  deposits of $212.7  million,  total  portfolio  loans of $217.9
million and shareholders' equity of $16.6 million.

Grand Common Stock

     As of December  ___,  2001,  Grand had 134,959  shares of its common  stock
outstanding,  held by  approximately  122  shareholders  of record.  There is no
established  public  trading  market  for  Grand  common  stock.  It is  Grand's
established  practice to pay regular  quarterly  cash  dividends.  The following
table shows the cash dividends  declared per share in each quarter of 1999, 2000
and 2001 to date.

Quarter Ended                           1999                       2000                      2001
                                ----------------------     ---------------------     ---------------------
                                                                                    
March 31                                 $.44                      $.50                      $.50
June 30                                   .48                       .50                       .50
September 30                              .48                       .50                       .50
December 31                               .48                       .50                       .50



                                       48

Selected Financial Data

                        GRAND BANK FINANCIAL CORPORATION

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

FINANCIAL HIGHLIGHTS
As of and for the years ended December 31, 1996 through 2000 (In thousands,
except for per share information)

(unaudited)
Income Statement Information                      2000          1999           1998          1997           1996
--------------------------------------------------------------------------------------------------------------------
                                                                                      
Net interest income                        $     7,836   $     6,470    $     6,022    $    4,664    $     3,947
Provision for loan losses                          490           304            543           204            135
Other income                                     2,482         2,457          2,327         1,062            889
Other expenses                                   6,360         5,865          5,431         3,773          3,159
Net income                                       2,251         1,777          1,564         1,145          1,008
Dividends declared                                 270           254            231           203            172
--------------------------------------------------------------------------------------------------------------------

Per share information                             2000          1999           1998          1997           1996
--------------------------------------------------------------------------------------------------------------------

Net income - basic                         $     16.68   $     13.16    $     11.94    $     9.03    $      7.97
Net income - diluted                             16.35         12.95          11.86          8.83           7.84
Dividends declared                                2.00          1.88           1.76          1.60           1.36
Book value                                      110.14         94.30          83.88         75.20          68.16
--------------------------------------------------------------------------------------------------------------------

Balance Sheet Information                         2000          1999           1998          1997           1996
--------------------------------------------------------------------------------------------------------------------

Investment securities                      $    14,433   $    11,834    $    14,938    $   17,232    $    18,408
Gross portfolio loans                          180,850       149,503        123,347        94,560         81,341
Deposits                                       193,587       152,066        124,419       117,744        100,317
Stockholders' equity                            14,865        12,727         11,313         9,785          8,625
Total assets                                   223,930       178,665        149,022       131,752        112,932
--------------------------------------------------------------------------------------------------------------------

Ratios                                            2000          1999           1998          1997           1996
--------------------------------------------------------------------------------------------------------------------

Return on average assets                          1.12%         1.06%          1.11%         1.00%          1.00%
Return on average equity                         15.50         14.76          14.93         12.50          12.40
Allowance for loan losses as a
     percentage of total portfolio loans          1.30          1.31           1.34          1.17           1.14
Net interest income as a percentage of
     average earning assets                       4.02          4.01           4.44          4.21           4.18
Dividends declared as a percentage of
     earnings                                    11.99         14.28          14.79         17.72          17.07
Stockholders' equity as a percentage of
     total assets                                 6.64          7.12           7.59          7.43           7.64
--------------------------------------------------------------------------------------------------------------------


                                       49

Grand's Management's  Discussion and Analysis of Financial Condition and Results
of Operations for the Periods Ended September 30, 2001 and 2000.

     The following  discussion and analysis is intended to cover the significant
factors  affecting  Grand's  balance sheets and income  statements.  It provides
shareholders  with a more  comprehensive  review of the  operating  results  and
financial  position than could be obtained from an  examination of the unaudited
financial statements alone.

     Results of  Operations.  For the nine months ended  September 30, 2001, net
income was  $1,871,000 as compared to $1,633,000 for the same period in 2000, an
increase of $238,000,  or 14.6%.  Diluted earnings per share for the nine months
ended  September  30,  2001 was $13.57  compared  to $12.09  for the  comparable
nine-month period in 2000.

     An  analysis  of the  components  affecting  net income for the nine months
ended  September 30, 2001 and 2000 is facilitated  by  segregating  amounts into
categories  of interest  income,  interest  expense,  provision for loan losses,
other  income,  other  expenses and federal  income tax expense.  To improve the
comparability of the interest income  component,  interest income,  shown in the
following  table, is expressed on a fully taxable  equivalent  (FTE) basis.  For
this  purpose,  tax-exempt  interest  earned has been adjusted as if it had been
subject to federal income taxes at a rate of 34%.

                                                                                     Nine months ended
                                                                                       September 30,
                                                                                  2001             2000
                                                                                  ----             ----
                                                                                  (dollars in thousands)

                                                                                              
         Interest income                                                      $   12,918        $   12,316
              Plus taxable equivalent adjustment                                      43                38
         Interest income (FTE basis)                                              12,961            12,354
              Less interest expense                                                6,766             6,539

         Net interest income (FTE basis)                                      $    6,195        $    5,815


     As shown above, net interest income, on a FTE basis, increased by $380,000,
or 6.5%,  for the nine months ended  September  30, 2001 over the same period in
2000. The $380,000  increase resulted from an increase in net interest income of
$1,535,000   attributable  to  increased  earning  assets  and  interest-bearing
liabilities  being  partially  offset  by the  $1,155,000  effect  of  decreased
interest rates during 2001. Both interest income and interest  expense grew at a
slower pace during the nine months  ended  September  30, 2001 when  compared to
recent  years due to the  decrease  in interest  rates  during  2001.  The prime
lending rate  averaged  7.52% and 9.15% for the nine months ended  September 30,
2001 and 2000,  respectively,  a decrease  of 163 basis  points.  Interest  rate
decreases had a more profound affect during the three months ended September 30,
2001, when interest income,  on a FTE basis,  decreased by $127,000 and interest
expense  decreased by $208,000.  During  these  three-month  periods in 2001 and
2000, the prime lending rate averaged 6.17% and 9.50%, respectively,  a decrease
of 333 basis points.  Net interest income, on a FTE basis,  increased by $81,000
during the 2001 three-month period compared to the comparable period in 2000.

     Grand's net interest  margin (net interest  income divided by total earning
assets),  on a FTE basis,  was 3.67% and 4.08% for the 2001 and 2000  nine-month
periods,  while net interest  spread  (average  yield earned minus  average rate
paid),  on a FTE  basis,  was 3.05%  and 3.35% for the 2001 and 2000  nine-month
periods.  The reduced net  interest  margin and spread were due to the fact that
the average  rate earned on  interest-earning  assets  decreased  more (98 basis
points)  than  the  decrease  in  the  average  rate  paid  on  interest-bearing
liabilities (68 basis points).  This was primarily due to the higher balance and
cost of brokered time deposits and market  competition  for deposits  during the
nine months ended September 30, 2001, as discussed in the "Financial  Condition"
section below. The average rate paid on total time deposits decreased by only 21
basis  points in 2001,  while the  average  rate paid on other  interest-bearing
liabilities (excluding time deposits) decreased by 91 basis points.

     The  provision  for loan losses  amounted to $528,000  and $401,000 for the
nine months ended  September 30, 2001 and 2000,  respectively.  Net  charge-offs
(recoveries)  were not  significant,  amounting to ($32,000) and $58,000 for the
nine months ended September 30, 2001 and 2000, respectively. For the three-month
periods  ended  September  30,  2001 and 2000,  the  provision  for loan  losses
amounted  to $250,000  and  $164,000,  respectively.  For both  three-month  and
nine-month  periods  in 2001 and  2000,  Grand  provided,  through  a charge  to
expense,  an amount  considered  necessary  to maintain the  allowance  for loan
losses at a level  considered  adequate to absorb  estimated  losses in the loan
portfolio at the

                                       50

balance sheet date. The provision  resulted largely from Grand's loan growth and
concern for general economic conditions and the potential affect on borrowers.

     Other income  amounted to $2,361,000 and $1,821,000  during the nine months
ended  September  30,  2001 and  2000,  respectively.  The  $540,000,  or 29.7%,
increase was  primarily  attributable  to a $411,000  increase in mortgage  loan
origination  fees.  The increased fees were due to higher volumes of residential
mortgage financing activity as a result of the lower interest rate market during
2001 as compared to 2000.  During the three  months  ended  September  30, 2001,
other income  increased by $160,000  from $612,000 in the  comparable  period in
2000 to $772,000 in 2001. The increase was primarily due to a $135,000  increase
in  mortgage  loan  origination  fees  resulting  from  the 2001  interest  rate
environment.

     Other expenses amounted to $5,097,000 and $4,696,000,  respectively, during
the  nine  months  ended  September  30,  2001  and  2000,  and  $1,664,000  and
$1,569,000,  respectively,  during the  three-month  periods  then ended.  These
totals,  the largest  component  being salaries,  commissions and benefits,  are
reflective  of the  overall  increase  in Grand's  operations  during the recent
nine-month  and  three-month  periods,  as well as increases in incentive  based
compensation.

     The effective  federal income tax rates for the nine-month and  three-month
periods ending  September 30, 2001 and 2000 were comparable to the 34% statutory
federal income tax rate.

     Financial  Condition.  Total assets were $251.9  million at  September  30,
2001,  compared to $223.9  million at December  31,  2000.  Changes in the major
asset and liability  categories  during the nine months were driven primarily by
loan  demand as Grand  continues  to attract  new  customers  despite the strong
competition  from  other  local  community  banks  and  larger  regional  banks.
Portfolio loans increased by $37.1 million, or 20.5%, during the 2001 nine-month
period.  Funding for these loans came from several sources  including  increased
time  deposits  and  other  borrowings  as well as  reductions  in cash and cash
equivalents  and investment  securities.  The ratio of portfolio  loans to total
deposits  increased to 102.5% at September 30, 2001,  from 93.4% at December 31,
2000.

     The  primary  source of new  funds was  increased  time  deposits  of $21.5
million.  During the 2001 nine-month  period,  Grand became more reliant on time
deposits of $100,000 or more,  particularly  brokered time deposits, as a source
of funds.  Time  deposits of $100,000 or more at September  30, 2001 amounted to
$62.2 million  (including $38.2 million of brokered time deposits),  or 29.2% of
total deposits,  compared to $41.3 million  (including $10.0 million of brokered
time  deposits),  or  21.3% of total  deposits,  at  December  31,  2000.  As an
additional  source of funds,  FHLB  advances  increased by $5.3  million,  notes
payable increased by $1.5 million,  cash and cash equivalents  decreased by $9.8
million and investment  securities decreased by $1.8 million. A portion of these
funds was used to fund the increase in loans held for sale, which increased from
$148,000 at December 31,  2000,  to $2.6  million at  September  30,  2001.  The
increase in loans held for sale is  attributable  to the  increased  residential
mortgage financing activity as previously discussed.

     The allowance for loan losses at September 30, 2001 amounted to $2,914,000,
or 1.34% of total portfolio loans,  comparable to the December 31, 2000 ratio of
1.30%.

     Premises and  equipment  increased by $229,000 to $757,000 at September 30,
2001, from $528,000 at December 31, 2000, due to capital  additions of $420,000,
partially  offset by  depreciation of $191,000.  The primary  capital  additions
related to a new mainframe  computer and leasehold  improvements  related to the
trust  department  expansion  and the  relocation of the  operations  department
within the current facilities.

     Liquidity  and Capital  Resources.  Cash and cash  equivalents  amounted to
$17.1 million at September  30, 2001,  compared to $26.9 million at December 31,
2000,  and  securities  available-for-sale  decreased  to $6.1 million from $7.4
million during the nine-month  period.  In addition to the decrease in liquidity
due to reduced liquid assets, Grand became more reliant on brokered deposits and
increased  other  borrowings,  as  discussed  above,  to fund  the  increase  in
portfolio  loans  during this  period.  Management  believes  Grand's  liquidity
position at  September  30, 2001,  along with other  sources of  liquidity,  was
adequate to fund loan demand and depositor needs.

     Shareholders'  equity  was  $16.6  million,  or 6.6% of  total  assets,  at
September 30, 2001, and $14.9 million,  or 6.6% of total assets, at December 31,
2000.

                                       51

     Grand's  and Grand  Bank's  capital to assets  ratios,  as  compared to the
regulatory  minimums  for  capital  adequacy  purposes,  are  as  follows  as of
September 30, 2001:

                                                          Regulatory
                                                           Minimum              Grand            Grand Bank
                                                                                            
Total capital (to risk-weighted assets)                      8.0%                8.3%                10.1%
Tier 1 capital (to risk-weighted assets)                     4.0%                7.1%                 7.1%
Tier 1 capital (to average assets)                           4.0%                6.8%                 6.8%


     At  September  30,  2001,   Grand  Bank  met  the  definition  of  a  "well
capitalized" institution set forth by federal regulatory authorities.



                                       52

Grand's Discussion and Analysis of Financial Condition and Results of Operations
as of December 31, 2000 and 1999 and for the Years Ended December 31, 2000, 1999
and 1998.


     The following  discussion and analysis is intended to cover the significant
factors  affecting  Grand's  balance sheets and income  statements.  It provides
shareholders  with a more  comprehensive  review of the  operating  results  and
financial  position than could be obtained from an  examination of the financial
statements alone.

     Results  of  Operations.  Net income for 2000 was  $2,251,000  compared  to
$1,777,000 in 1999 and $1,564,000 in 1998.  Diluted  earnings per share for 2000
were $16.35 compared  to $12.95 in 1999 and $11.86 in 1998.  Net income for 2000
increased 26.7% over 1999 while 1999 net income  reflected a 13.6% increase over
1998.

     The  strong  increase  in  2000  net  income  resulted   primarily  from  a
$1,366,000,  or 21.1%,  increase in net interest income. Net interest income for
1999  increased  by  $448,000,  or 7.4%,  over 1998.  As  indicated  below,  the
provision  for loan  losses for 1999  decreased  by  $240,000  compared to 1998,
contributing to the higher percentage increase in 1999 net income over 1998 when
compared to the percentage increase in net interest income. See the "Analysis of
Net Interest Income" below for additional  information  regarding the changes in
net interest income over the three-year period.

     The provision for loan losses  amounted to $490,000,  $304,000 and $543,000
for 2000, 1999 and 1998, respectively.  As indicated later in this analysis, net
charge-offs  (loans charged off less recoveries) were not significant during the
three-year  period. Net charge-offs for 2000 were $92,000 compared to recoveries
(no  charge-offs)  of $3,000 in 1999 and net  charge-offs of $4,000 in 1998. For
each of the three years, Grand provided,  through a charge to expense, an amount
considered  necessary  to  maintain  the  allowance  for loan  losses at a level
considered  adequate to absorb  estimated  losses in the loan  portfolio  at the
balance sheet date.  By  maintaining a ratio of the allowance for loan losses to
total loans in the 1.30% range for each year,  the  provision  resulted  largely
from Grand's loan growth over the three-year period.

     Other income,  which is primarily derived from trust fees,  service charges
on deposit  accounts  and mortgage  origination  fees,  amounted to  $2,482,000,
$2,457,000  and $2,327,000 for 2000,  1999 and 1998,  respectively.  While these
totals remained relatively constant during the three-year period, the components
varied.  Trust fee income for 2000  increased by $197,000,  or 14.2%,  over 1999
while 1999 increased by $343,000,  or 32.6%,  over 1998. These increases reflect
increases in trust assets  combined  with a change in mix of account types (more
profitable accounts) over the three-year period. Service charge income increased
steadily over the three-year period, reflective of the increase in deposits. The
increases  in trust fees and service  charges  during 2000 and 1999 were largely
offset by decreases in mortgage  origination  fees during these years.  Mortgage
origination  fees for 2000  decreased  by $260,000,  or 33.6%,  compared to 1999
while  1999 fees  decreased  by  $263,000,  or 25.3%,  compared  to 1998.  These
decreases reflect the 37% and 26% reduction in mortgages  originated in 2000 and
1999, respectively,  as a result of increased interest rates during the two year
period.  At December 31, 2000,  1999 and 1998,  the prime lending rate was 9.5%,
8.5% and 7.75%, respectively.

     Other  expenses,  which  include a variety of expense  types,  amounted  to
$6,360,000, $5,865,000 and $5,431,000 for 2000, 1999 and 1998. These totals, the
largest component being salaries,  commissions and benefits at approximately 60%
of the total for each year,  are  reflective of the overall  increase in Grand's
operations over the three-year period.

     The  effective  federal  income tax rates were  35.1%,  35.6% and 34.1% for
2000, 1999 and 1998, comparable to the 34% statutory federal income tax rate.

     Financial Condition.  Total assets were $223.9 million at December 31, 2000
compared to $178.7 million at December 31, 1999, an increase of $45.3 million or
25.3%. Asset growth consisted primarily of growth in the loan portfolio as Grand
continues  to attract new loan  customers  despite the strong  competition  from
other local community banks and larger regional banks. Portfolio loans increased
by $31.3 million,  or 21.0%, in 2000 compared to 1999. The majority of this loan
growth came from commercial loans, which increased by $23.4 million,  while real
estate loans  increased by $9.7  million and  consumer  loans  decreased by $1.8
million.  The ratio of portfolio  loans to total deposits  decreased to 93.4% at
December 30, 2000, from 98.3% at December 31, 1999.

     The allowance for loan losses at December 31, 2000 amounted to  $2,353,000,
or 1.30% of total  portfolio  loans,  comparable  to the year-end  1999 ratio of
1.31%.

     Reference is made to Tables 3-6 that follow this  narrative for  additional
information regarding Grand's loan portfolio,  loan mix, nonperforming loans and
activity within the allowance for loan losses.

                                       53

     The  increase  in total  assets was  principally  funded by strong  deposit
growth. Of the $41.5 million,  or 27.3%,  growth in deposits,  $8.8 million came
from non-interest bearing deposits,  $26.5 million from savings and NOW accounts
and  $6.2  million  from  time  deposits.  Beginning  in  November  1998,  Grand
participated  in a rate  posting  service.  This has been a large  source of new
funds for Grand over the past few years.

     Liquidity and Capital Resources.  In basic banking terms, liquidity relates
to the  ability  to  convert  assets  into cash,  to  acquire  deposits  to meet
withdrawal  needs of  depositors or to provide  funds for  borrowers.  In a more
complex business  environment,  it also represents the ability to fund expanding
operations, allow for contingencies and provide for investment opportunities.

     Grand manages its liquidity to meet the cash flow needs of customers,  such
as  borrowing  and  deposit  withdrawals,  while at the same  time  striving  to
maximize  the  yield  on  investments   and  loans.  To  meet  these  cash  flow
requirements and also to be able to expand services in existing  markets,  there
must be sufficient sources of liquid funds and adequate capital.

     The  principal  funding  source  for  asset  growth  and  loan  origination
activities is deposits. Growth in deposits and loans was previously discussed in
this  analysis.  As  stated  previously,  most of the  deposit  growth  has been
deployed into commercial and real estate loans due to the demand  experienced in
these areas.

     Cash and cash  equivalents  amounted to $26.9 million at December 31, 2000,
compared  to $15.2  million at  December  31,  1999.  As  liquidity  levels vary
continuously based on customer activities,  amounts of cash and cash equivalents
can  vary  widely  at any  given  point  in time.  Management  believes  Grand's
liquidity  position  at December  31, 2000 was  adequate to fund loan demand and
meet depositor needs.

     In addition to cash and cash equivalents,  a source of long-term  liquidity
is Grand's  portfolio of marketable  securities  available  for sale.  Liquidity
requirements  have  not  historically   necessitated  the  sale  of  significant
investments  in order to meet liquidity  needs.  Grand has not engaged in active
trading of its  investments  and has no intention of doing so in the foreseeable
future.  At December 31, 2000 and 1999, Grand had $7.4 million and $5.6 million,
respectively, of investment securities classified as available for sale that can
be  utilized  to  meet  various  liquidity  needs  as  they  arise.   Grand  has
historically  utilized  Federal Home Loan Bank  advances as a further  source of
funding,  primarily  for the  origination  of  loans.  Outstanding  advances  at
December  31,  2000 and  1999  amounted  to $10.0  million  and  $10.3  million,
respectively.  As an additional  source of liquidity at December 31, 2000, Grand
had available borrowings of $2.5 million on its $5.0 million line of credit with
another bank. The primary purpose of the line of credit,  however, is to provide
additional  capital  required  to  maintain  Grand  Bank  at or  above  required
regulatory capital levels.

     Capital   provides  a   foundation   for  future   growth  and   expansion.
Shareholders' equity was $14.9 million, or 6.6% of total assets, at December 31,
2000, and $12.7 million, or 7.1% of total assets, at December 31, 1999.

     The adequacy of capital can be evaluated based on guidelines established by
bank  regulatory  agencies.  The current  method of analyzing  capital  adequacy
employs three  principal ratio  measurements:  Tier 1 capital to average assets,
and  two  risk-based  capital  measures.   The  risk-based  capital  ratios  are
calculated using  risk-adjusted  assets based on assigning standard risk weights
to on- and off-balance  sheet items.  The Tier 1 capital to average assets ratio
and Tier 1 risk-based  capital  ratio are based only on Grand's and Grand Bank's
shareholders' equity. The total risk-based capital ratio is based on Grand's and
Grand  Bank's  shareholders'  equity  plus the  allowance  for loan  losses,  as
adjusted  according to  regulatory  requirements,  and other  qualifying  Tier 2
capital (subordinated debentures for Grand Bank).

                                       54

     Grand's  and Grand  Bank's  capital to assets  ratios,  as  compared to the
regulatory minimums for capital adequacy purposes, are as follows:

                                                              December 31, 2000              December 31, 1999
                                                              -----------------              -----------------
                                           Regulatory                      Grand                         Grand
                                            Minimum           Grand        Bank                Grand      Bank
                                                                                           
Total capital (to risk-weighted assets)       8.0%             9.1%        10.4%                9.5%      10.4%
Tier 1 capital (to risk-weighted assets)      4.0%             7.8%         7.8%                8.2%       8.2%
Tier 1 capital (to average assets)            4.0%             6.8%         6.8%                7.3%       7.3%


     At December  31, 2000 and 1999,  Grand Bank met the  definition  of a "well
capitalized" institution set forth by federal regulatory authorities.

     Analysis of Net Interest Income. Interest income is the total amount earned
on funds  invested  in loans,  securities,  federal  funds sold and other  money
market  instruments.  Interest  expense  is  the  amount  of  interest  paid  on
interest-bearing checking accounts, such as NOW accounts, savings, time deposits
and other  borrowings.  The amount of net  interest  income  (or the  difference
between interest income and interest expense) varies from year to year according
to the volume and mix of assets and liabilities and the level of interest rates.
The  tax  equivalent   adjustment  restates  tax-exempt  interest  income  (from
municipal bonds) on a basis as if it were taxable interest income.  Net interest
income is referred to as being on a fully taxable  equivalent  (FTE) basis after
this  adjustment is made.  The net interest  margin is net interest  income (FTE
basis) as a percentage of average earning assets.

     The  single  most  important  factor in  analyzing  the  results of Grand's
operations is net interest income.  Net interest income is influenced by changes
in (i) the volume of earning assets and interest-bearing  liabilities;  (ii) the
mix of earning assets and interest-bearing liabilities;  (iii) the proportion of
earning  assets  that are  funded  by  noninterest-bearing  liabilities  (demand
deposits) and equity capital;  and (iv) market rates of interest.  Some of these
factors are controlled to a certain extent by management's policies and actions.
However,  conditions quite often beyond management's  control have a significant
impact on changes in net interest income, as occurred  throughout 2000, 1999 and
1998. The prime lending rate averaged  9.24%,  7.99% and 8.33% in 2000, 1999 and
1998,  respectively.  Other factors  impacting net interest  income  include the
strength  of credit  demands  by  customers,  increased  competition  from other
financial  institutions,  the growth of deposit  accounts by non-bank  financial
competitors  and the continued  growth in mutual fund  investments.  As shown in
Tables 1 and 2, net interest income, on a FTE basis,  increased by $1,420,000 in
2000 over 1999 to $7,889,000  while 1999 net interest income increased over 1998
by $447,000 to $6,469,000.  Table 1 presents  average daily  balances,  interest
income on a FTE basis and interest expense,  as well as average rates earned and
paid on Grand's assets and liabilities for 2000, 1999 and 1998.

     Grand's  net  interest  spread  was  3.29%  and  3.39%  for 2000 and  1999,
respectively.  While rates increased  during 2000, as indicated  above,  Grand's
average rate on earning  assets grew at a slower rate (76 basis points) than the
average rate on interest-bearing  liabilities (86 basis points). During 1999, as
rates dropped compared to 1998, the interest rate spread decreased to 3.39% from
3.55%.  Due to the mix of asset and liability  types,  and the timing of Grand's
rate changes  relative to changes in the prime rate, the average rate on earning
assets  dropped at a faster rate (31 basis  points) when compared to the average
rate on  interest-bearing  liabilities (15 basis points).  Grand's interest rate
margin  held  constant  during  2000 and 1999 at 4.04% and 4.01%,  respectively,
dropping  from the  4.44%  experienced  during  1998.  Management  believes  the
reduction  in  interest  rate  margin  from the 1998 level is  primarily  due to
increased competition from other local community and regional banks.

                                       55


                                                            TABLE 1

                                 DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY
                                           INTEREST RATES AND INTEREST DIFFERENTIAL
                                                    (dollars in thousands)
                                                                 Years Ended December 31
                           -----------------------------------------------------------------------------------------------------
                                          2000                             1999                               1998
                                        ----------                       ----------                         ----------
                             Average               Average     Average              Average      Average               Average
                             Balance    Interest    Rate       Balance   Interest     Rate       Balance    Interest    Rate
Interest-earning assets:
                                                                                               
 Federal funds sold            $ 10,983     $ 707     6.44%     $  5,158     $ 261      5.06%       $ 7,780     $ 404     5.19%
 Money market fund                2,273       140     6.16%        1,608        80      4.98%         3,107       168     5.41%
 Investment securities:
  Taxable                        13,334       802     6.01%       16,897       975      5.77%        15,516       969     6.25%
  Tax-exempt (1)                  1,675       155     9.23%            -         -         -%             -         -        -%
 Loans (2) (3)                  166,818    15,242     9.14%      137,578    11,553      8.40%       109,354     9,717     8.89%
                           ---------------------------------  -------------------------------- ---------------------------------
  Total interest-earning
    assets                      195,083    17,046     8.74%      161,241    12,869      7.98%       135,757    11,258     8.29%

Noninterest-earning assets:
Cash and due from banks           4,778                            4,756                              4,438
Premises and equipment              642                              815                                813
Other nonearning assets           3,481                            2,593                              1,792
Allowance for loan losses        (2,166)                          (1,781)                            (1,336)
                            ------------                      -----------                      -------------
Total assets                  $ 201,818                        $ 167,624                          $ 141,464
                            ============                      ===========                      =============

Interest-bearing liabilities:
NOW accounts                   $ 78,611     3,820     4.86%     $ 64,164     2,476      3.86%      $ 65,090     2,695     4.14%
Savings                          11,484       569     4.95%        8,382       343      4.09%         3,559       139     3.91%
Time deposits                    65,579     3,986     6.08%       55,535     2,925      5.27%        36,842     2,083     5.65%
FHLB advances payable            10,128       595     5.87%        9,760       552      5.66%         3,901       237     6.08%
Note payable                      2,257       187     8.29%        1,500       104      6.93%         1,134        82     7.23%
                           ---------------------------------  -------------------------------- ---------------------------------
  Total interest-bearing
    liabilities                 168,059     9,157     5.45%      139,341     6,400      4.59%       110,526     5,236     4.74%

Noninterest-bearing liabilities:
Noninterest-bearing demand       17,153                           14,761                             19,319
Other liabilities                 2,086                            1,479                              1,144
Stockholders' Equity             14,520                           12,043                             10,475
                           -------------                      -----------                      -------------
Total liabilities and
   stockholders' equity       $ 201,818                        $ 167,624                          $ 141,464
                           =============                      ===========                      =============

Net interest earnings                      $7,889                           $6,469                             $6,022
                                        ==========                       ==========                         ==========

Interest spread (average yield
       earned minus average  rate paid)               3.29%                             3.39%                             3.55%
                                                  ==========                       ===========                        ==========

Net interest margin (net interest
   income/total earning assets)                       4.04%                             4.01%                             4.44%
                                                  ==========                       ===========                        ==========


(1)  Interest income is adjusted to taxable  equivalents  for tax-exempt  assets
     based on a federal income tax rate of 34% for each year.
(2)  Non-accruing  loans are not  significant  during the 3-year period and, for
     the purposes of the  calculations  above, are included in the average daily
     loan balances.
(3)  Interest includes loan fees.

                                       56


                                                          TABLE 2

                                                   RATE/VOLUME ANALYSIS
                                                  (dollars in thousands)

                                                                 Year Ended December 31,
                                         2000 Compared to 1999                             1999 Compared to 1998
                                          Increase (Decrease)                               Increase (Decrease)
                               -------------------------------------------      --------------------------------------------
                                                Change         Change                             Change         Change
                                   Total        Due To         Due To               Total         Due To         Due To
                                  Change       Volume (3)    Rate (3)              Change       Volume (3)      Rate (3)
                                  ------       ----------    ---------             ------       ----------      --------
Interest income:
                                                                                                  
    Federal funds sold              $   446      $    359        $    87            $   (143)      $   (133)        $  (10)
    Money market fund                    60            38             22                 (88)           (75)           (13)
    Investment securities:
       Taxable                         (173)         (213)            40                   6             83            (77)
       Tax-exempt (1)                   155           155              -                   -              -             -
    Loans (1) (2)                     3,689         2,608          1,081               1,836          2,394           (558)
                               -------------------------------------------      --------------------------------------------

                                      4,177         2,947          1,230               1,611          2,269           (658)
                               -------------------------------------------      --------------------------------------------

 Interest expense:
    NOW accounts                      1,344           625            719                (219)           (38)          (181)
    Savings                             226           144             82                 204            197              7
    Time deposits                     1,061           573            488                 842            993           (151)
    FHLB advances
       payable                           43            21             22                 315            332            (17)
    Note payable                         83            60             23                  22             25             (3)
                               -------------------------------------------      --------------------------------------------

                                      2,757         1,423          1,334               1,164          1,509           (345)
                               -------------------------------------------      --------------------------------------------

 Net interest earnings             $  1,420     $   1,524       $   (104)           $    447       $    760         $ (313)
                               ===========================================      ============================================



(1)  Interest income is adjusted to taxable  equivalents  for tax-exempt  assets
     based on a federal income tax rate of 34% for each year.

(2)  Non-accruing  loans are not  significant  during the 3-year period and, for
     the purposes of the  calculations  above, are included in the average daily
     loan balances.

(3)  Changes in rates and volumes are computed on a  consistent  basis using the
     absolute values of changes in volume compared to the absolute values of the
     changes in rates. Loan fees included in interest income are not material.

Table 2 identifies  the dollar  change in net interest  income  attributable  to
interest  rate  movement   versus  the  change  in  the  volume  of  assets  and
liabilities,  including the change in the mix of Grand's assets and liabilities.
Table 2 shows that Grand's net interest  income  increased by $1,420,000 in 2000
and $447,000 in 1999.  The  majority of the  increase in net interest  income in
2000 is  attributable  to the overall  increase in the volume of earning  assets
being  only  partially  offset by the  increase  in  volume of  interest-bearing
liabilities. The effect of rate increases on earning assets during 2000 was more
than offset by the effect of rate  increases  on  interest-bearing  liabilities.
Compared to 2000, the 1999 increase in net interest earnings due to the increase
in the volume of earning  assets was offset to a larger degree by the effects of
the  increase  in volume of  interest-bearing  liabilities.  The  effect of rate
decreases  during 1999 had a more  significant  impact on earning assets than it
did on interest-bearing liabilities.

                                       57

     Loans.  Tables 3 through 5 provide detailed  information about Grand's loan
portfolio, loan mix and nonperforming loans.

                                                         TABLE 3

                                                      LOAN PORTFOLIO
                                                  (dollars in thousands)

Portfolio loans were as follows:

                                                                                     December 31,
                                           2000            1999           1998           1997            1996
                                           ----            ----           ----           ----            ----
                                                                                          
          Commercial                     $ 111,092        $ 87,695      $ 73,414       $ 58,941          $49,329
          Real estate                       53,588          43,848        33,866         26,185           23,714
          Consumer                          16,170          17,960        16,067          9,434            8,298
                                    ---------------  --------------  ------------  -------------  ---------------

                   Total loans           $ 180,850       $ 149,503     $ 123,347       $ 94,560          $81,341
                                    ===============  ==============  ============  =============  ===============


The following presents the balance of portfolio loans outstanding as of December
31, 2000 by maturities, based on the contractual repayments of principal:

                                           One            Over 1
                                           Year           Through         Over
                                         or Less          5 Years        5 Years        Total
                                         -------          -------        -------        -----
                                                                          
          Commercial                      $ 83,188        $ 26,596       $ 1,308      $ 111,092
          Real estate                       16,043          33,064         4,481         53,588
          Consumer                             953          13,141         2,076         16,170
                                    ---------------  --------------  ------------  -------------

                   Total loans           $ 100,184        $ 72,801       $ 7,865      $ 180,850
                                    ===============  ==============  ============  =============

              Percentage of total           55.40%          40.25%         4.35%        100.00%
                                    ===============  ==============  ============  =============


     Table 3 presents a summary of commercial, real estate mortgage and consumer
loans,  as well as the maturity  distribution  for such loans as of December 31,
2000.  The  percentage  of these  loans  maturing  within  one year was 55.4% at
December 31, 2000.

     Grand's loan portfolio at December 31, 2000 is  diversified  along industry
lines and is concentrated  in the Western  Michigan area.  Commercial  loans are
primarily  secured by business  assets and consumer loans are secured by various
items of personal property. Mortgage loans are secured principally by commercial
and  residential  real estate.  The loan to value ratio does not normally exceed
80%. Grand has no loans to foreign countries or borrowers.

     As of December 31, 2000,  loans and  maturities  over one year consisted of
$42.0  million in fixed rate loans and $38.7  million in variable or  adjustment
rate  loans.  The loan  maturities  noted  above  are  based on the  contractual
provisions  of the  individual  loans.  Grand has no  general  policy  regarding
renewals and borrower requests for such are handled on a case-by-case basis.

                                       58


                                                        TABLE 4

                                            SUMMARY OF NON-PERFORMING LOANS
                                                 (dollars in thousands)

                                                                               December 31,
                                                   2000           1999              1998            1997            1996
                                                   ----           ----              ----            ----            ----
                                                                                                
Nonaccrual loans (1)                              $  20          $ 146              $  -            $  -          $    -
Past due loans 90 days or more                        -              5                 -               -               -
Restructured loans                                    -              -                 -               -               -


(1)  The accrual of interest is discontinued if the  collectibility of principal
     and  interest is  considered  doubtful or whenever  payment of principal or
     interest is 90 days or more past due,  unless the loan is both well secured
     and in the process of collection.  Additional interest that would have been
     earned in 2000 had the loans classified as nonaccrual  remained at original
     terms,  and the actual  interest on loans  classified  as  nonaccrual  been
     included in net income for 2000, are immaterial.

     Provision for Loan Losses. Because some loans may not be repaid in full, an
allowance  for loan losses is recorded.  Increases to the allowance are recorded
by a provision for loan losses  charged to expense.  Estimating  the risk of the
loss and the amount of loss on any loan is necessarily subjective.  Accordingly,
the allowance is maintained  by  management  at a level  considered  adequate to
cover losses that are currently anticipated, as of the balance sheet date, based
on past loss experience, general economic conditions, information about specific
borrower  situations  including their financial  position and collateral values,
and other  factors and  estimates  which are subject to change over time.  While
management  may  periodically  allocate  portions of the  allowance for specific
problem  loan  situations,  the  entire  allowance  is  available  for any  loan
charge-offs that occur. A loan is charged against the allowance by management as
a loss when deemed  uncollectible,  although collection efforts may continue and
future recoveries may occur.



                                       59

                                                        TABLE 5

                                             SUMMARY OF LOAN LOSS EXPERIENCE
                                                  (dollars in thousands)

Loan loss experience is summarized as follows:

                                                                    Year Ended December 31,
                                          2000             1999            1998             1997               1996
                                      --------------   -------------  ---------------  ----------------  ------------------
                                                                                                  
Average loans outstanding                $ 166,818       $ 137,578        $ 109,354          $ 86,354            $ 74,069
                                      ==============   =============  ===============  ================  ==================

Allowance at beginning of year            $  1,955        $  1,648         $  1,109            $  925              $  759
Loan losses:
     Commercial                                102               -                -                60                   -
     Real estate                                 -               -                -                 -                   -
     Consumer                                    3               -                6                 1                   -
                                      --------------   -------------  ---------------  ----------------  ------------------
                                               105               -                6                61                   -

Recoveries:
     Commercial                                 11               1                1                41                  31
     Real estate                                 -               -                -                 -                   -
     Consumer                                    2               2                1                 -                   -
                                      --------------   -------------  ---------------  ----------------  ------------------
                                                13               3                2                41                  31

Net charge-offs (recoveries)                    92              (3)               4                20                 (31)
Provision for loan losses                      490             304              543               204                 135
                                      --------------   -------------  ---------------  ----------------  ------------------
Allowance at end of year                  $  2,353        $  1,955         $  1,648          $  1,109              $  925
                                      ==============   =============  ===============  ================  ==================
Ratio of net charge-offs to
     average loans                           0.06%           0.00%             0.00%             0.02%             (0.04%)
                                      ==============   =============  ===============  ================  ==================
Ratio of allowance for loan
     losses to loans outstanding
     at end of year                           1.30            1.31              1.34              1.17              1.14
                                      ==============   =============  ===============  ================  ==================


     As previously  discussed,  Grand provides,  through a charge to expense, an
amount considered necessary to maintain the allowance for loan losses at a level
considered  adequate to absorb  estimated  losses in the loan  portfolio  at the
balance  sheet date.  By  maintaining a ratio of the allowance to total loans in
the 1.30 range for each year, the provision  resulted  largely from Grand's loan
growth over the three-year period.

                                       60

                                                         TABLE 6

                                       ALLOCATION OF THE ALLOWANCE FOR LOAN LOSS
                                                (dollars in thousands)

     The allowance for loan losses, in management's judgment, would be allocated
as follows to cover potential loan losses.

                         December 31, 2000     December 31, 1999     December 31, 1998     December 31, 1997     December 31, 1996
                         -----------------     -----------------     -----------------     -----------------     -----------------
                          Allow-     % of      Allow-      % of       Allow-     % of       Allow-     % of       Allow-     % of
                         ance For   Loans To   ance For   Loans To   ance For   Loans To   ance For   Loans To   ance For   Loans To
                          Loan       Total      Loan       Total      Loan       Total      Loan        Total     Loan       Total
                         Losses      Loans     Losses      Loans     Losses      Loans     Losses       Loans    Losses      Loans
                          ------   -------     ------   -------     ------     -------     ------    -------     ------    -------
Balance at end of period
applicable to:
                                                                                             
     Commercial           $  904    61.43%     $  946    58.66%     $  711      59.52%     $  485     62.33%     $  336     60.64%
     Real estate           1,298     29.63        662     29.33        532       27.46        429      27.69        416      29.15
     Consumer                107      8.94         40     12.01         42       13.03         38       9.98         35      10.20
                          ------   -------     ------   -------     ------     -------     ------    -------     ------    -------
          Total allocated  2,309   100.00%      1,648   100.00%      1,285     100.00%        952    100.00%        787    100.00%
Unallocated                   44        -         307        -         363          -         157         -         138         -
                          ------   -------     ------   -------     ------     -------     ------    -------     ------    -------
     Allowance at end
       of year           $ 2,353   100.00%    $ 1,955   100.00%    $ 1,648     100.00%    $ 1,109    100.00%     $  925    100.00%
                         =======   =======    =======   =======    =======     =======    =======    =======     ======    =======


     The  allocation  of the  allowance  in  Table 6 is  based  upon  management
estimates and is not intended to imply limitations on the usage of the allowance
or  exactness  of the  specific  amounts.  The entire  allowance is available to
absorb  any  future  losses  without  regard  to the  categories  in  which  the
charged-off loans are classified.  The allowance for loan losses is allocated to
the individual loan categories by a specific  reserve for all classified  loans,
plus a percentage of loans not classified, based on historical losses.

                                       61

                                                          TABLE 7

                                                   INVESTMENT PORTFOLIO
                                                  (dollars in thousands)

     The carrying amount of investment securities were as follows:

                                                               December 31,
                                                 2000             1999             1998
                                                 ----             ----             ----
Debt securities:
                                                                           
U.S. Treasury and other U.S.
  government agency securities                    $  3,027         $ 1,981          $ 3,023
Obligations of states and political
  subdivisions                                       1,936               -                -
Mortgage-backed securities                           8,868           9,251           11,313
                                            ---------------   -------------    -------------
     Total debt securities                          13,831          11,232           14,336
Other - Federal Home Loan Bank stock                   602             602              602
                                            ---------------   -------------    -------------
     Total                                        $ 14,433        $ 11,834         $ 14,938
                                            ===============   =============    =============


     The following  schedule sets forth the schedule of maturities  and weighted
average interest rates of debt securities as of as of December 31, 2000:

                                                   One           After One        After Five
                                                  Year            Through          Through          Over
                                                 or Less          Five Years       Ten Years       Ten Years        Total
                                                 -------        ------------     -----------     -----------        -----
                                                                                                     
U.S. Treasury and other
  U.S. government agency securities (1)          $  2,015          $ 1,012            $   -           $  -          $ 3,027
Obligations of states and political
  subdivisions (1)                                      -                -                -          1,936            1,936
                                            --------------    -------------    -------------   ------------    -------------
                                                 $  2,015          $ 1,012            $   -        $ 1,936            4,963
                                            ==============    =============    =============   ============    =============

Mortgage-backed securities, not due at a
   single maturity date (1)                                                                                           8,868
                                                                                                               -------------
     Total                                                                                                          $13,831
                                                                                                               =============

Weighted average yield (2)                          6.56%            6.25%                -          5.48%
                                            ==============    =============    =============   ============
Full taxable equivalent yield (3)                   6.56%            6.25%                -          8.31%
                                            ==============    =============    =============   ============


     The weighted  average  yields are  calculated  on the basis of the cost and
effective  yields  weighted for the scheduled  maturity of each  security.  Full
taxable  equivalent  yields have been calculated using the statutory tax rate of
34%.

(1)  The aggregate carrying amount of the securities of no single issuer, except
     the U.S. government, exceeds 10% of Grand's shareholders' equity.

(2)  The weighted average yields are calculated on the basis of carrying amount,
     effective interest rates and the scheduled maturities of each issue.

(3)  Yields are  computed  on a taxable  equivalent  basis  using a 34%  federal
     income tax rate.

                                       62

     Table 8 presents the maturity  distribution of time certificates of deposit
of $100,000 or more as of December  31, 2000.  All time  deposits of $100,000 or
more held by Grand are in the form of time certificates of deposit.  At December
31,  2000,  38.4% of these  deposits  mature in less than three months and 88.5%
mature within one year. Time deposits of $100,000 or more increased  slightly in
2000 to $41.3 million  (including  $10.0 million of brokered time deposits),  or
21.3% of total  deposits,  at December 31, 2000,  from $40.0 million  (including
$4.0 million of brokered time deposits), or 26.3% of total deposits, at December
31, 1999. However, as indicated,  the percentage of time deposits of $100,000 or
more to total deposits  decreased during 2000. Grand has and expects to continue
to have more than  sufficient  funds to meet the liquidity  requirements  of its
deposits.

                                     TABLE 8

                 MATURITIES OF TIME DEPOSITS OF $100,000 OR MORE
                             (dollars in thousands)

     The maturity  distribution of time deposits of $100,000 or more at December
31, 2000 is as follows:

                                                               
         Maturing within 3 months                                 $ 15,843
         After 3 but within 6 months                                12,223
         After 6 but within 12 months                                8,493
         After 12 months                                             4,736
                                                            ---------------
         Total                                                    $ 41,295
                                                            ===============


     There were no time  deposits of $100,000 or more issued by foreign  offices
at December 31, 2000.

     Table 1 shows the daily average  amounts of deposits and rates paid on such
deposits for the periods indicated therein.

                                     TABLE 9

                                FINANCIAL RATIOS

                                                                               Year Ended
                                                                              December 31,
                                                                   2000           1999          1998
                                                                   ----           ----          ----
                                                                                        
Return on average total assets                                      1.12 %         1.06 %        1.11 %
Return on average shareholder's equity                             15.50          14.76         14.93
Average shareholder's equity to average total assets                7.19           7.18          7.40
Dividend payout ratio                                              11.99          14.28         14.79



                                       63


                        Grand Bank Financial Corporation
                           Consolidated Balance Sheets
                                   (Unaudited)
--------------------------------------------------------------------------------

                                                                             September 30,           December 31,
                                                                                  2001                   2000
                                                                         ----------------------------------------------
Assets
                                                                                                     
   Cash and due from banks                                                         $  9,775,082            $ 6,417,464
   Federal funds sold                                                                 2,300,000             20,500,000
   Money market fund                                                                  5,000,000                      -
-----------------------------------------------------------------------------------------------------------------------
          Cash and cash equivalents                                                  17,075,082             26,917,464

   Securities available for sale                                                      6,082,640              7,369,176
   Securities held to maturity                                                        5,720,928              6,461,915
   Other securities                                                                     793,900                601,700
-----------------------------------------------------------------------------------------------------------------------
         Total investment securities                                                 12,597,468             14,432,791
-----------------------------------------------------------------------------------------------------------------------

   Loans held for sale                                                                2,590,600                148,000

   Portfolio loans                                                                  217,908,685            180,849,803
   Allowance for loan losses                                                         (2,913,530)            (2,352,971)
-----------------------------------------------------------------------------------------------------------------------
          Net portfolio loans                                                       214,995,155            178,496,832

   Premises and equipment, net                                                          756,757                527,624
   Partnership interest from defaulted loan                                             377,167                377,167
   Accrued interest receivable                                                          886,206                855,744
   Other assets                                                                       2,625,577              2,174,529
-----------------------------------------------------------------------------------------------------------------------
                                                                                  $ 251,904,012          $ 223,930,151
-----------------------------------------------------------------------------------------------------------------------

Liabilities and Shareholders' Equity

Liabilities
   Deposits:
      Noninterest-bearing deposits                                                 $ 21,021,731           $ 24,184,015
      Savings and NOW accounts                                                      103,542,876            102,831,901
      Time deposits                                                                  88,120,384             66,570,816
-----------------------------------------------------------------------------------------------------------------------
   Total deposits                                                                   212,684,991            193,586,732

   FHLB advances payable                                                             15,293,168             10,042,551
   Notes payable                                                                      4,000,000              2,500,000
   Accrued interest payable                                                           1,010,660                723,200
   Other liabilities                                                                  2,345,501              2,212,754
-----------------------------------------------------------------------------------------------------------------------
Total Liabilities                                                                   235,334,320            209,065,237
-----------------------------------------------------------------------------------------------------------------------

Shareholders' Equity
   Common stock, no par value; 250,000 shares
      authorized, 134,959 shares issued and outstanding                               5,772,837              5,772,837
   Retained earnings                                                                 10,739,555              9,071,003
   Accumulated other comprehensive income -
      unrealized gains on securities, net of tax                                         57,300                 21,074
-----------------------------------------------------------------------------------------------------------------------
Total Shareholders' Equity                                                           16,569,692             14,864,914
-----------------------------------------------------------------------------------------------------------------------
                                                                                  $ 251,904,012          $ 223,930,151
-----------------------------------------------------------------------------------------------------------------------


          See accompanying notes to consolidated financial statements.

                                       64


                                         Grand Bank Financial Corporation
                                         Consolidated Statements of Income
                                                    (Unaudited)
---------------------------------------------------------------------------------------------------------------------
                                                        Three months ended,                 Nine months ended,
September 30,                                          2001            2000               2001            2000
----------------------------------------------------------------------------------   --------------------------------

Interest Income
                                                                                             
   Loans, including fees                              $ 3,956,582     $ 4,016,779        $11,823,658     $11,021,205
   Investment securities
                                                          200,704         270,436            614,920         823,652
   Federal funds sold
                                                           97,305          94,611            479,462         471,213
---------------------------------------------------------------------------------------------------------------------

Total interest income                                   4,254,591       4,381,826         12,918,040      12,316,070
---------------------------------------------------------------------------------------------------------------------

Interest Expense
   Deposits                                             1,888,599       2,141,288          6,110,259       5,957,616
   Other                                                  247,148         202,783            655,903         581,037
---------------------------------------------------------------------------------------------------------------------
Total interest expense                                  2,135,747       2,344,071          6,766,162       6,538,653
---------------------------------------------------------------------------------------------------------------------

Net interest income                                     2,118,844       2,037,755          6,151,878       5,777,417

Provision for Loan Losses                                 250,017         164,199            528,409         401,155
---------------------------------------------------------------------------------------------------------------------

Net interest income after provision for
   loan losses                                          1,868,827       1,873,556          5,623,469       5,376,262
---------------------------------------------------------------------------------------------------------------------

Other Income
   Trust fees                                             403,589         404,783          1,164,537       1,154,197
   Service charges                                         76,346          67,014            226,565         187,535
   Mortgage origination fees                              251,661         116,965            786,821         375,847
   Net realized security gain (loss)                            -         (4,238)             34,798         (4,254)
   Other                                                   40,667          28,016            148,011         107,255
---------------------------------------------------------------------------------------------------------------------
Total other income                                        772,263         612,540          2,360,732       1,820,580
---------------------------------------------------------------------------------------------------------------------

Other Expenses
   Salaries, commissions and benefits                   1,051,407         913,975          3,269,685       2,814,503
   Premises and equipment                                 165,873         165,315            495,732         490,430
   Professional fees and outside services                 154,664         171,880            461,197         481,636
   Charitable contributions                               108,579         113,933            320,699         312,942
   Other                                                  183,354         204,335            550,598         595,991
---------------------------------------------------------------------------------------------------------------------
Total other expenses                                    1,663,877       1,569,438          5,097,911       4,695,502
---------------------------------------------------------------------------------------------------------------------

Income before federal income tax expense                  977,213         916,658          2,886,290       2,501,340

Federal Income Taxes                                      330,400         314,300          1,015,300         867,900
---------------------------------------------------------------------------------------------------------------------

Net Income                                             $  646,813      $  602,358        $ 1,870,990     $ 1,633,440
---------------------------------------------------------------------------------------------------------------------

Earnings Per Share
   Basic                                                $    4.79       $    4.46          $   13.86       $   12.33
   Diluted                                                   4.69            4.37              13.57           12.09
---------------------------------------------------------------------------------------------------------------------


          See accompanying notes to consolidated financial statements.

                                       65


                                          Grand Bank Financial Corporation
                                        Consolidated Statements of Cash Flows
                                                    (Unaudited)
---------------------------------------------------------------------------------------------------------------------

Nine months ended September 30,                                                   2001                    2000
---------------------------------------------------------------------------------------------------------------------

Cash Flows from Operating Activities
                                                                                                    
      Net income                                                                   $ 1,870,990            $1,633,440
      Adjustments to reconcile net income to net cash from
          operating activities:
          Depreciation                                                                 191,097               217,557
          Provision for loan losses                                                    528,409               401,155
          Net amortization (accretion) on securities                                   (10,730)              (38,704)
          Net realized security (gains) losses                                         (34,798)                4,254
          Proceeds from sales of mortgage loans                                     63,415,980            27,958,050
          Mortgage loans originated for sale                                       (65,858,580)          (28,233,750)
          Changes in operating assets and liabilities:
             Accrued interest and other assets                                        (500,172)             (414,997)
             Accrued interest and other liabilities                                    420,207               209,618
---------------------------------------------------------------------------------------------------------------------

Net cash from operating activities                                                      22,403             1,736,623
---------------------------------------------------------------------------------------------------------------------

Cash Flows from Investing Activities
      Purchases of securities available for sale                                    (2,108,960)           (6,044,714)
      Proceeds from sales of securities available for sale                           1,424,847             2,958,047
      Proceeds from calls, maturities and paydowns of
         securities available for sale                                               2,039,907             2,211,547
      Purchases of  securities held to maturity                                              -           (1,934,446)
      Proceeds from calls, maturities and paydowns of
         securities held to maturity                                                   772,145             1,056,897
      Purchases of other securities                                                   (192,200)                    -
      Net increase in portfolio loans                                              (37,026,732)          (26,176,989)
      Capital expenditures                                                            (420,230)              (69,222)
---------------------------------------------------------------------------------------------------------------------

Net cash for investing activities                                                  (35,511,223)          (27,998,880)
---------------------------------------------------------------------------------------------------------------------

Cash Flows from Financing Activities
      Net increase in deposits                                                      19,098,259            17,334,644
      Proceeds from FHLB advances                                                   10,500,000             1,300,000
      Repayment of FHLB advances                                                    (5,249,383)           (1,530,768)
      Proceeds from note payable                                                     1,500,000             1,000,000
      Payment of dividends                                                            (202,438)             (202,438)
---------------------------------------------------------------------------------------------------------------------

Net cash from financing activities                                                  25,646,438            17,901,438
---------------------------------------------------------------------------------------------------------------------

Net Change in Cash and Cash Equivalents                                             (9,842,382)           (8,360,819)

Cash and Cash Equivalents, beginning of year                                        26,917,464            15,152,833
---------------------------------------------------------------------------------------------------------------------

Cash and Cash Equivalents, end of year                                            $ 17,075,082            $6,792,014
---------------------------------------------------------------------------------------------------------------------

Cash Paid During the Period
      Interest                                                                     $ 6,478,702            $6,342,126
      Income Taxes                                                                   1,270,608             1,062,000
---------------------------------------------------------------------------------------------------------------------


 See accompanying notes to consolidated financial statements.

                                       66

                        Grand Bank Financial Corporation
                   Notes to Consolidated Financial Statements
                                   (Unaudited)
--------------------------------------------------------------------------------

NOTE 1 - BASIS OF PRESENTATION

In the opinion of the management of Grand Bank Financial Corporation  ("Grand"),
the accompanying  unaudited consolidated financial statements include all normal
recurring  adjustments  considered  necessary  to present  fairly the  financial
position as of September 30, 2001,  and the results of operations  for the three
months and nine months ended September 30, 2001 and 2000, and cash flows for the
nine months ended September 30, 2001 and 2000.

The results of operations  for the nine months ended  September 30, 2001 are not
necessarily indicative of the expected results for all of 2001.

The  consolidated  financial  statements  include the  accounts of Grand and its
wholly-owned subsidiaries,  Grand Bank and Grand Financial Associates,  Inc. (an
inactive  corporation),  and Grand Bank's  wholly-owned  subsidiary,  Grand Bank
Mortgage Company,  after elimination of significant  inter-company  transactions
and accounts.

The  accompanying  consolidated  financial  statements  are condensed and do not
contain all of the  information and footnote  disclosures  required by generally
accepted accounting principles in a complete set of financial statements.

NOTE 2 - ALLOWANCE FOR LOAN LOSSES

Activity in the allowance for loan losses was as follows:


Nine months ended September 30,                                                       2001               2000
---------------------------------------------------------------------------------------------------------------------
                                                                                               
Balance, beginning of period                                                      $  2,352,971       $  1,954,827
Provision charged to operations                                                        528,409            401,155
Loans charged off                                                                            -            (68,065)
Recoveries                                                                              32,150             10,040
---------------------------------------------------------------------------------------------------------------------
Balance, end of period                                                            $  2,913,530       $  2,297,957
---------------------------------------------------------------------------------------------------------------------


NOTE 3 - EARNINGS PER SHARE

A  reconciliation  of the  numerators and  denominators  used in the "basic" and
"diluted" earnings per share (EPS) calculations follows:

                                                                Three months ended,             Nine months ended,
                                                               ----------------------        ------------------------
September 30,                                                    2001        2000               2001         2000
---------------------------------------------------------------------------------------------------------------------
                                                                                             
Numerator - net income for the period                         $ 646,813   $  602,358        $1,870,990   $ 1,663,440
---------------------------------------------------------------------------------------------------------------------
Denominator:
     Weighted average number of shares outstanding
     (denominator for basic earnings per share)                 134,959      134,959            134,959      134,959
     Effect of dilutive stock options                             2,988        2,734              2,924        2,675
---------------------------------------------------------------------------------------------------------------------

Denominator for diluted earnings per share                      137,947      137,693            137,883      137,634
---------------------------------------------------------------------------------------------------------------------

Basic earnings per share                                      $    4.79   $     4.46        $     13.86  $     12.33
---------------------------------------------------------------------------------------------------------------------
Diluted earnings per share                                    $    4.69   $     4.37        $     13.57  $     12.09
---------------------------------------------------------------------------------------------------------------------


                                       67

                        Grand Bank Financial Corporation
                   Notes to Consolidated Financial Statements
                                   (Unaudited)
--------------------------------------------------------------------------------

NOTE 4 - COMPREHENSIVE INCOME

Comprehensive income consists of the following:

                                                                  Three months ended,              Nine months ended,
September 30,                                                      2001         2000               2001         2000
---------------------------------------------------------------------------------------------------------------------
                                                                                             
Net income                                                    $ 646,813   $  602,358        $ 1,870,990  $ 1,663,440
Other comprehensive income, unrealized gains
     on securities, net of tax                                    8,062       42,528             36,226       70,563
---------------------------------------------------------------------------------------------------------------------

Comprehensive income                                          $ 654,875   $  644,886        $ 1,907,216  $ 1,734,003
---------------------------------------------------------------------------------------------------------------------



                                       68

Independent Auditors' Report

Board of Directors and Stockholders
Grand Bank Financial Corporation
Grand Rapids, Michigan

We have  audited  the  accompanying  consolidated  balance  sheets of Grand Bank
Financial Corporation and subsidiaries as of December 31, 2000 and 1999, and the
related consolidated  statements of income,  changes in stockholders' equity and
cash flows for each of the three years in the period  ended  December  31, 2000.
These  consolidated  financial  statements  are the  responsibility  of  Grand's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain reasonable  assurance about whether the consolidated
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  consolidated  financial  statements.  An audit also includes  assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall  consolidated  financial  statement  presentation.  We
believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects, the financial position of Grand Bank Financial
Corporation  and  subsidiaries as of December 31, 2000 and 1999, and the results
of their  operations  and their  cash  flows for each of the years in the period
ended  December 31, 2000, in conformity  with  accounting  principles  generally
accepted in the United States of America.


/s/ BDO Seidman, LLP

Grand Rapids, Michigan
January 17, 2001


                                       69


                        GRAND BANK FINANCIAL CORPORATION
                           CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------------------------------------------

December 31,                                                                       2000                 1999
--------------------------------------------------------------------------------------------------------------------
Assets
                                                                                             
     Cash and due from banks                                                  $   6,417,464        $    7,352,833
     Federal funds sold                                                          20,500,000             6,800,000
     Money market fund                                                                    -             1,000,000
--------------------------------------------------------------------------------------------------------------------

         Cash and cash equivalents                                               26,917,464            15,152,833

     Securities available for sale (Note 2)                                       7,369,176             5,556,759
     Securities held to maturity (estimated market value
         of $6,564,439 and $5,497,960) (Note 2)                                   6,461,915             5,675,342
     Other securities (Note 2)                                                      601,700               601,700
--------------------------------------------------------------------------------------------------------------------

         Total securities                                                        14,432,791            11,833,801

     Loans held for sale                                                            148,000               868,000

     Portfolio loans (Note 3)                                                   180,849,803           149,503,297
     Allowance for loan losses (Note 4)                                          (2,352,971)           (1,954,827)
--------------------------------------------------------------------------------------------------------------------

         Net portfolio loans                                                    178,496,832           147,548,470

     Premises and equipment, net (Note 5)                                           527,624               740,131
     Partnership interest from defaulted loan                                       377,167               377,167
     Accrued interest receivable                                                    855,744               638,654
     Other assets (Note 9)                                                        2,174,529             1,506,257
--------------------------------------------------------------------------------------------------------------------
                                                                              $ 223,930,151        $  178,665,313
--------------------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity

Liabilities
     Noninterest-bearing deposits                                             $  24,184,015        $   15,369,583
     Savings and NOW accounts                                                   102,831,901            76,320,325
     Time deposits (Note 6)                                                      66,570,816            60,376,312
--------------------------------------------------------------------------------------------------------------------

         Total deposits                                                         193,586,732           152,066,220
     FHLB advances payable (Note 7)                                              10,042,551            10,298,014
     Note payable (Note 8)                                                        2,500,000             1,500,000
     Accrued interest payable                                                       723,200               456,816
     Other liabilities (Note 10)                                                  2,212,754             1,617,235
--------------------------------------------------------------------------------------------------------------------
Total Liabilities                                                               209,065,237           165,938,285
--------------------------------------------------------------------------------------------------------------------

Commitments and Contingencies (Notes 5 and 13)

Stockholders' Equity (Note 15)
     Common stock, no par value; 250,000 shares authorized;
         134,959 shares issued and outstanding                                    5,772,837             5,772,837
     Retained earnings                                                            9,071,003             7,089,546
     Accumulated other comprehensive income - unrealized
         gains (losses) on securities, net of tax                                    21,074              (135,355)
--------------------------------------------------------------------------------------------------------------------
Total Stockholders' Equity                                                       14,864,914            12,727,028
--------------------------------------------------------------------------------------------------------------------
                                                                              $ 223,930,151        $  178,665,313
--------------------------------------------------------------------------------------------------------------------

See accompanying notes to consolidated financial statements.

                                       70


                        GRAND BANK FINANCIAL CORPORATION
                        CONSOLIDATED STATEMENTS OF INCOME
--------------------------------------------------------------------------------------------------------------------

Year ended December 31,                                                 2000             1999            1998
--------------------------------------------------------------------------------------------------------------------
Interest Income
                                                                                           
     Loans, including fees                                          $ 15,241,808    $  11,553,070   $   9,717,314
     Investment securities                                             1,044,298        1,055,180       1,136,648
     Federal funds sold                                                  706,685          261,372         403,636
--------------------------------------------------------------------------------------------------------------------

Total interest income                                                 16,992,791       12,869,622      11,257,598
--------------------------------------------------------------------------------------------------------------------

Interest Expense
     Deposits                                                          8,375,004        5,744,188       4,916,946
     Other                                                               781,854          655,543         318,663
--------------------------------------------------------------------------------------------------------------------

Total interest expense                                                 9,156,858        6,399,731       5,235,609
--------------------------------------------------------------------------------------------------------------------

Net interest income                                                    7,835,933        6,469,891       6,021,989

Provision for Loan Losses (Note 4)                                       489,927          303,574         543,155
--------------------------------------------------------------------------------------------------------------------

Net interest income after provision for loan losses                    7,346,006        6,166,317       5,478,834
--------------------------------------------------------------------------------------------------------------------

Other Income
     Trust fees                                                        1,589,133        1,391,980       1,049,425
     Service charges                                                     255,013          192,602         122,350
     Mortgage origination fees                                           514,820          775,060       1,037,821
     Gain on sale of mortgage loans                                            -                -          19,560
     Net realized security gain (loss) (Note 2)                           (4,254)               -           6,034
     Other                                                               127,733           97,264          91,919
--------------------------------------------------------------------------------------------------------------------

Total other income                                                     2,482,445        2,456,906       2,327,109
--------------------------------------------------------------------------------------------------------------------

Other Expenses
     Salaries, commissions and benefits (Note 10)                      3,810,694        3,535,696       3,270,974
     Premises and equipment (Note 5)                                     667,589          704,881         707,492
     Professional fees and outside services                              676,779          556,661         482,672
     Charitable contributions                                            385,431          351,542         307,300
     Other                                                               819,083          715,807         662,318
--------------------------------------------------------------------------------------------------------------------

Total other expenses                                                   6,359,576        5,864,587       5,430,756
--------------------------------------------------------------------------------------------------------------------

Income before federal income taxes                                     3,468,875        2,758,636       2,375,187

Federal Income Taxes (Note 9)                                          1,217,500          982,000         811,000
--------------------------------------------------------------------------------------------------------------------

Net Income                                                          $  2,251,375    $   1,776,636   $   1,564,187
--------------------------------------------------------------------------------------------------------------------

Earnings Per Share (Note 12)
     Basic                                                          $      16.68    $       13.16   $       11.94
     Diluted                                                               16.35            12.95           11.86
--------------------------------------------------------------------------------------------------------------------

See accompanying notes to consolidated financial statements.

                                       71


                        GRAND BANK FINANCIAL CORPORATION
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
---------------------------------------------------------------------------------------------------------
                                                                         Accumulated
                                                                            other
                                              Common         Retained   comprehensive
                                               stock         earnings      income             Total
---------------------------------------------------------------------------------------------------------
                                                                             
Balance, January 1, 1998                     $5,575,837   $   4,233,823     $  (24,598)  $    9,785,062

Comprehensive income:
    Net income                                        -       1,564,187              -        1,564,187
    Other comprehensive income - net
       unrealized gains on securities:
       Net unrealized holding gains arising
          during the period ($13,711, net of
          tax of $4,662)                              -               -          9,049            9,049
       Less: reclassification adjustment
          for net gains included in net
          income ($6,034, net of tax of
          $2,052)                                     -               -         (3,982)          (3,982)
                                                                                           --------------
                                                                                                  5,067
                                                                                           --------------

Total comprehensive income                                                                    1,569,254

Dividends ($1.76 per share)                           -        (231,377)             -         (231,377)

Stock issued upon exercise of stock
    options (Note 11)                           189,600               -              -          189,600
---------------------------------------------------------------------------------------------------------

Balance, December 31, 1998                    5,765,437       5,566,633        (19,531)      11,312,539

Comprehensive income:
    Net income                                        -       1,776,636              -        1,776,636
    Other comprehensive income - net
       unrealized holding losses arising
       during the period ($175,491, net of
       tax of $59,667)                                -               -       (115,824)        (115,824)
                                                                                           --------------
Total comprehensive income                                                                    1,660,812

Dividends ($1.88 per share)                           -        (253,723)             -         (253,723)

Stock issued upon exercise of stock options
    (Note 11)                                     7,400               -              -            7,400
---------------------------------------------------------------------------------------------------------

Balance, December 31, 1999                    5,772,837       7,089,546       (135,355)      12,727,028

Comprehensive income:
    Net income                                        -       2,251,375              -        2,251,375
    Other comprehensive income - net
       unrealized holding gains arising
       during the period ($232,759, net of
       tax of $79,138)                                -               -        153,621          153,621
    Plus reclassification adjustment for
       net losses included in net income
       ($4,254, net of tax of $1,446)                 -               -          2,808            2,808
                                                                                           --------------

Total comprehensive income                                                                    2,407,804

Dividends ($2.00 per share)                           -        (269,918)             -         (269,918)
---------------------------------------------------------------------------------------------------------

Balance, December 31, 2000                   $5,772,837   $   9,071,003     $   21,074   $   14,864,914
---------------------------------------------------------------------------------------------------------

          See accompanying notes to consolidated financial statements.

                                       72


                        GRAND BANK FINANCIAL CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------------------------------------------

Year ended December 31,                                            2000               1999              1998
--------------------------------------------------------------------------------------------------------------------
Cash Flows From Operating Activities
                                                                                         
     Net income                                               $    2,251,375    $     1,776,636   $     1,564,187
     Adjustments to reconcile net income to net cash from
         operating activities:
         Depreciation                                                281,728            328,376           286,206
         Provision for loan losses                                   489,927            303,574           543,155
         Deferred federal income taxes                              (338,000)          (222,000)         (255,500)
         Net amortization (accretion) on securities                  (40,975)           125,099           (81,183)
         Net realized security gain (loss)                             4,254                  -            (6,034)
         Gain on sale of mortgage loans                                    -                  -           (19,560)
         Proceeds from sales of mortgage loans                    38,906,600          1,364,500         1,669,685
         Mortgage loans originated for sale                      (38,186,600)        (2,151,500)         (774,000)
         Loss on disposed assets                                           -              5,983            44,567
         Changes in operating assets and liabilities:
              Accrued interest receivable and other assets          (627,946)          (224,208)          (96,173)
              Accrued interest payable and other                                                          232,563
              liabilities                                            861,903            459,230
--------------------------------------------------------------------------------------------------------------------
Net cash from operating activities                                 3,602,266          1,765,690         3,107,913
--------------------------------------------------------------------------------------------------------------------

Cash Flows From Investing Activities
     Purchases of securities available for sale                   (7,058,933)        (7,128,554)       (5,081,360)
     Proceeds from sales of securities available for sale          2,958,047                  -         2,008,008
     Proceeds from calls, maturities and paydowns of
         securities available for sale                             2,512,913          8,135,806         2,980,179
     Purchases of securities held to maturity                     (1,934,446)                 -                 -
     Proceeds from calls, maturities and paydowns of
         securities held to maturity                               1,197,163          1,796,010         2,482,705
     Net increase in portfolio loans                             (31,438,289)       (26,153,472)      (28,790,260)
     Proceeds from partial redemption of partnership
         interest from defaulted loan                                      -                  -            33,000
     Capital expenditures                                            (69,221)          (177,285)         (611,954)
--------------------------------------------------------------------------------------------------------------------
Net cash for investing activities                                (33,832,766)       (23,527,495)      (26,979,682)
--------------------------------------------------------------------------------------------------------------------

Cash Flows From Financing Activities
     Net increase in deposits                                     41,520,512         27,647,313         6,675,010
     Net increase (decrease) in federal funds purchased                    -         (1,700,000)        1,700,000
     Proceeds from FHLB advances                                           -          2,000,000         7,700,000
     Repayment of FHLB advances                                     (255,463)          (178,178)       (2,064,570)
     Proceeds from note payable                                    1,000,000                  -         1,500,000
     Payment of dividends                                           (269,918)          (253,723)         (231,377)
     Proceeds from issuance of common stock                                -              7,400           189,600
--------------------------------------------------------------------------------------------------------------------
Net cash from financing activities                                41,995,131         27,522,812        15,468,663
--------------------------------------------------------------------------------------------------------------------

Net Change in Cash and Cash Equivalents                           11,764,631          5,761,007        (8,403,106)

Cash and Cash Equivalents, beginning of year                      15,152,833          9,391,826        17,794,932
--------------------------------------------------------------------------------------------------------------------

Cash and Cash Equivalents, end of year                        $   26,917,464    $    15,152,833   $     9,391,826
--------------------------------------------------------------------------------------------------------------------

Cash Paid During the Year
     Interest                                                 $    8,886,482    $     6,237,085   $     5,364,826
     Income taxes                                                  1,472,000          1,140,000         1,047,014
--------------------------------------------------------------------------------------------------------------------

See accompanying notes to consolidated financial statements.

                                       73

                        Grand Bank Financial Corporation
                   Notes To Consolidated Financial Statements
--------------------------------------------------------------------------------


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis  of  Presentation:  The  consolidated  financial  statements  include  the
accounts  of  Grand  Bank  Financial   Corporation   (Grand),  its  wholly-owned
subsidiaries,  Grand  Bank  (Bank)  and Grand  Financial  Associates,  Inc.  (an
inactive  corporation),  and the  Bank's  wholly-owned  subsidiary,  Grand  Bank
Mortgage Company, after elimination of significant intercompany transactions and
accounts.

The  accounting   and  reporting   policies  and  practices  of  Grand  and  its
wholly-owned  subsidiaries conform with generally accepted accounting principles
and prevailing practices within the banking industry.

Nature  of  Operations:  Grand  provides  a broad  range of  banking  and  trust
services.  The Bank operates  predominately  in Western Michigan as a commercial
bank. The Bank's primary services include accepting deposits, making commercial,
mortgage  and  consumer  loans,  engaging in mortgage  banking  activities,  and
providing trust services.

Use of Estimates:  The  preparation of financial  statements in conformity  with
generally accepted  accounting  principles requires management to make estimates
and assumptions based on available information.  These estimates and assumptions
affect the amounts  reported in the  consolidated  financial  statements and the
disclosures provided. Actual results could differ from those estimates.

Cash and Cash  Equivalents:  Cash and cash equivalents  consist of cash on hand,
amounts due from banks, federal funds sold and money market funds.

Investment  Securities:  Securities  are  classified  as "held to maturity"  and
carried  at  amortized  cost when  management  has the  positive  intent and the
ability to hold them to maturity.  Securities classified as "available for sale"
are  reported  at their fair value and the  related  unrealized  gain or loss is
included in accumulated other comprehensive  income, net of tax, until realized.
Such  securities  might be sold prior to  maturity  due to  changes in  interest
rates,  prepayment  risks,  yield,   availability  of  alternative  investments,
liquidity needs or other factors.  Other securities consist of Federal Home Loan
Bank stock.

Premiums and discounts on securities are recognized in interest income using the
level yield method over the period to maturity.  Gains and losses on the sale of
securities  available for sale are determined using the specific  identification
method.

Loans and  Interest  and Fees on  Loans:  Portfolio  loans  are  stated at their
principal  amount  outstanding,  net of  deferred  loan  fees and  costs  and an
allowance for loan losses.  Interest on loans is accrued on the interest  method
and includes the  amortization  of net deferred  fees and costs over the term of
the loan.  The accrual of  interest is  discontinued  if the  collectibility  of
principal or interest is considered doubtful or whenever payment of principal or
interest is 90 days or more past due,  unless the loan is both well  secured and
in the process of collection.  For impaired loans that are on nonaccrual status,
cash payments received are generally applied to reduce the outstanding principal
balance.  However,  all or a portion of a cash payment  received on a nonaccrual
loan may be  recognized  as  interest  income to the extent  allowed by the loan
contract,  assuming  management expects to fully collect the remaining principal
balance of the loan.

Allowance  for Loan  Losses:  Because  some loans may not be repaid in full,  an
allowance  for loan losses is recorded.  Increases to the allowance are recorded
by a provision for loan losses  charged to expense.  Estimating  the risk of the
loss and the amount of loss on any loan is necessarily subjective.  Accordingly,
the allowance is maintained  by  management  at a level  considered  adequate to
cover  losses  that are  currently  anticipated  based on past loss  experience,
general economic  conditions,  information  about specific  borrower  situations
including their financial  position and collateral values, and other factors and
estimates  which  are  subject  to  change  over  time.   While  management  may
periodically  allocate  portions of the  allowance  for  specific  problem  loan
situations,  the entire  allowance is available  for any loan  charge-offs  that
occur.  A loan is charged  against the  allowance by  management  as a loss when
deemed  uncollectible,  although  collection  efforts  may  continue  and future
recoveries may occur.

Loan  impairment  is  reported  when full  payment  under the loan  terms is not
expected. Smaller-balance homogenous loans, including residential first mortgage
loans secured by one-to-four family residences, residential construction loans,

                                       74

                        Grand Bank Financial Corporation
                   Notes To Consolidated Financial Statements
--------------------------------------------------------------------------------


automobile, home equity and second mortgage loans are collectively evaluated for
impairment.   Commercial  loans  and  first  mortgage  loans  secured  by  other
properties are evaluated  individually  for  impairment.  The allowance for loan
losses  related to loans  identified  as  impaired is  principally  based on the
excess of the loan's current  outstanding  principal  balance over the estimated
fair market value of the related  collateral.  For  impaired  loans that are not
collateral dependent, the allowance for loan losses is recorded at the amount by
which the  outstanding  recorded  principal  balance  exceeds the  current  best
estimate  of the  future  cash  flows on the loan,  discontinued  at the  loan's
effective interest rate.

Sale of Mortgage  Loans:  Certain  mortgage loans are originated for sale to the
secondary  market.  All such loans are sold with  servicing  released.  Mortgage
loans held for sale are valued at the lower of cost or market, calculated on the
aggregate loan balance.

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.

Other Real Estate and  Partnership  Interest From  Defaulted  Loans:  Other real
estate consists of properties acquired through loan foreclosure. Both other real
estate and the  partnership  interest  from  defaulted  loans are carried at the
lower of cost or fair value less estimated  costs of disposal.  Any reduction to
cost at the time of acquisition from a related loan is accounted for as a charge
to the allowance for loan losses. Any subsequent reduction in cost or fair value
is charged  to loss on other  real  estate or the  partnership  interest  in the
period incurred,  while improvements made to the asset during the holding period
are capitalized.

Mortgage  Origination  Fees: A fee is received for  originating  loans for other
financial  institutions  and is  recognized  in  income  when the  services  are
performed.

Stock-Based  Compensation:  Expense for employee compensation under stock option
plans is based on Accounting  Principles Board Opinion 25,  Accounting for Stock
Issued to Employees, and related interpretations,  with expense reported only if
options are granted  below market price at grant date.  To date,  none have been
issued below market price.

Advertising  Costs: All advertising  costs,  amounting to $127,710,  $71,825 and
$57,996 in 2000,  1999 and 1998,  respectively,  are  expensed  in the period in
which they are incurred.

Income  Taxes:  Income tax expense is the sum of the current year income tax due
and the change in the  deferred  income tax  assets  and  liabilities.  Deferred
income tax assets and  liabilities  are computed based on temporary  differences
between  the  financial  statement  and tax  bases of  assets  and  liabilities,
computed  using  enacted  rates.  A valuation  allowance  is  established,  when
necessary,  to reduce  deferred  income tax assets to the amount  expected to be
realized.

Fair Values of Financial  Instruments:  Fair values of financial instruments are
estimated using relevant market information and other assumptions, as more fully
disclosed in Note 14. 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.

Earnings Per Share:  Basic  earnings per share is based on the weighted  average
number of shares  of common  stock  outstanding  during  each  period.  Dilutive
earnings per share is based on the weighted average number of shares outstanding
plus the number of additional  common shares that would have been outstanding if
the dilutive shares, under Grand's stock option program, had been issued.

Comprehensive Income: Total comprehensive income is reported in the consolidated
statements  of  changes in  stockholders'  equity  and  includes  net income and
unrealized security holding gains and losses, net of income taxes.

                                       75

                        Grand Bank Financial Corporation
                   Notes To Consolidated Financial Statements
--------------------------------------------------------------------------------


NOTE 2 - INVESTMENT SECURITIES

The amortized cost and estimated  market value of securities  available for sale
are as follows:

                                                                              Gross         Gross       Estimated
                                                            Amortized    unrealized    unrealized          market
December 31, 2000                                                cost         gains        losses           value
--------------------------------------------------------------------------------------------------------------------
                                                                                         
U.S. treasury securities                                 $  3,015,463      $ 11,507        $    -    $  3,026,970
Mortgage-backed securities                                  4,321,783        20,423             -       4,342,206
--------------------------------------------------------------------------------------------------------------------
                                                         $  7,337,246      $ 31,930        $    -    $  7,369,176
--------------------------------------------------------------------------------------------------------------------


                                                                              Gross         Gross       Estimated
                                                            Amortized    unrealized    unrealized          market
December 31, 1999                                                cost         gains        losses           value
--------------------------------------------------------------------------------------------------------------------

U.S. treasury securities                                 $  2,026,634         $   -    $   45,696    $  1,980,938
Mortgage-backed securities                                  3,735,209             -       159,388       3,575,821
--------------------------------------------------------------------------------------------------------------------
                                                         $  5,761,843         $   -    $  205,084    $  5,556,759
--------------------------------------------------------------------------------------------------------------------

The amortized cost and estimated market value of securities held to maturity are
as follows:

 December 31, 2000                                           Amortized        Gross         Gross       Estimated
                                                                         unrealized    unrealized          market
                                                                  cost        gains        losses           value
 -------------------------------------------------------------------------------------------------------------------

 Obligations of states and political subdivisions        $   1,936,492   $  118,622      $      -    $  2,055,114
 Mortgage-backed securities                                  4,525,423            -        16,098       4,509,325
 -------------------------------------------------------------------------------------------------------------------
                                                         $   6,461,915   $  118,622      $ 16,098    $  6,564,439
 -------------------------------------------------------------------------------------------------------------------


Securities  held to  maturity at December  31, 1999 were  comprised  entirely of
mortgage-backed securities. These securities had an amortized cost of $5,675,342
and  an  estimated  market  value  of  $5,497,960  (gross  unrealized  gains  of
$177,382).

Contractual  maturities  of debt  securities  at December 31, 2000 are presented
below.  Expected  maturities  may differ  from  contractual  maturities  because
borrowers may have the right to call or prepay  obligations with or without call
or prepayment penalties.

                                       76

                        Grand Bank Financial Corporation
                   Notes To Consolidated Financial Statements
--------------------------------------------------------------------------------

                                                           Available for Sale                  Held to Maturity

                                                         Amortized        Estimated         Amortized        Estimated
December 31, 2000                                             cost     market value              cost     market value
--------------------------------------------------------------------------------------------------------------------------
                                                                                            
Due within one year                                 $    2,017,010   $    2,015,084   $             -   $            -
Due after one year through five years                      998,453        1,011,886                 -                -
Due after ten years                                              -                -         1,936,492        2,055,114
Mortgage-backed securities                               4,321,783        4,342,206         4,525,423        4,509,325
--------------------------------------------------------------------------------------------------------------------------
                                                    $    7,337,246   $    7,369,176   $     6,461,915   $    6,564,439
--------------------------------------------------------------------------------------------------------------------------


Securities not due at a single maturity date (i.e., mortgage-backed securities),
are shown separately.

Other securities consist of Federal Home Loan Bank stock of $601,700 at December
31, 2000 and 1999.

Proceeds from sales of  securities  available for sale during 2000 and 1998 were
$2,958,047 and $2,008,008, respectively. Gross losses of $4,254 were realized on
these sales in 2000 and gross gains of $6,034 were realized in 1998.  There were
no securities sales during 1999.

Securities  with a book value of $4,672,378  and $3,889,483 at December 31, 2000
and 1999,  respectively,  were  pledged  for  various  purposes  as  required or
permitted by law.

NOTE 3 - PORTFOLIO LOANS

Portfolio loans were as follows:

Year ended December 31,                                                               2000                   1999
--------------------------------------------------------------------------------------------------------------------
                                                                                            
Commercial                                                                  $  111,091,523        $    87,695,500
Real estate                                                                     53,587,984             43,847,768
Consumer                                                                        16,170,296             17,960,029
--------------------------------------------------------------------------------------------------------------------
                                                                            $  180,849,803        $   149,503,297
--------------------------------------------------------------------------------------------------------------------


Related parties include certain principal stockholders,  directors and executive
officers,  and their  related  affiliates.  Loans to such  related  parties were
$4,380,950 and $2,485,764 at December 31, 2000 and 1999, respectively.

NOTE 4 - PROVISION FOR LOAN LOSSES

Activity in the allowance for loan losses was as follows:

December 31,                                                                 2000            1999            1998
--------------------------------------------------------------------------------------------------------------------
                                                                                            
Balance, beginning of year                                           $  1,954,827    $  1,648,201    $  1,108,992
     Provision charged to operations                                      489,927         303,574         543,155
     Loans charged off                                                   (104,618)              -          (6,014)
     Recoveries                                                            12,835           3,052           2,068
--------------------------------------------------------------------------------------------------------------------
Balance, end of year                                                 $  2,352,971    $  1,954,827    $  1,648,201
--------------------------------------------------------------------------------------------------------------------


Impaired loans, as defined by SFAS No. 114, were insignificant  during the years
ended December 31, 2000, 1999 and 1998.

                                       77

                       Grand Bank Financial Corporation
                  Notes To Consolidated Financial Statements
--------------------------------------------------------------------------------


NOTE 5 - PREMISES AND EQUIPMENT

Premises and equipment were as follows:


December 31,                                                                             2000                1999
--------------------------------------------------------------------------------------------------------------------
                                                                                               
Furniture and equipment                                                          $  1,539,471        $  1,524,477
Leasehold improvements                                                                475,569             429,392
--------------------------------------------------------------------------------------------------------------------

                                                                                    2,015,040           1,953,869
Less accumulated depreciation                                                       1,487,416           1,213,738
--------------------------------------------------------------------------------------------------------------------
                                                                                 $    527,624        $    740,131
--------------------------------------------------------------------------------------------------------------------


Grand has entered into three operating  leases for property to be used as a main
office.  Two leases have an initial term of ten years from January 1, 1994, with
two  five-year  renewal  options.  The annual  lease  payments are subject to an
annual  adjustment  equal to 60% of any  increase  in the  consumer  price index
(CPI). Grand has no obligation for any operating  expenses,  taxes or insurance.
The lessor of the building is a corporation owned by a stockholder of Grand. The
third lease commenced  February 1, 1998, with an initial term of five years with
one  five-year  renewal  option.  The payments for this lease are to be adjusted
annually to the CPI in an amount not to exceed 6%. Grand has an  obligation  for
operating  expenses,  taxes and insurance under this lease. On July 1, 2000, the
third lease was amended to include  additional space at the same premise.  Other
than an increased  lease  payment,  the terms of the original lease apply to the
amendment.

The future  minimum rental  commitments  for these  noncancellable  leases as of
December 31, 2000 are as follows:

Year ending December 31,
--------------------------------------------------------------------------------------------------------------------
                                                                                                    
2001                                                                                                   $  259,089
2002                                                                                                      259,089
2003                                                                                                      158,854
--------------------------------------------------------------------------------------------------------------------
                                                                                                       $  677,032
--------------------------------------------------------------------------------------------------------------------


Total lease expense was $271,044  ($149,740 related party),  $243,265  ($147,373
related party) and $239,115  ($145,320  related party) for 2000,  1999 and 1998,
respectively.

NOTE 6 - DEPOSITS

Time deposits issued in  denominations  of $100,000 or more were $41,295,305 and
$39,963,039 at December 31, 2000 and 1999, respectively.

At December 31, 2000, the scheduled maturities of time deposits were as follows:

Year ending December 31,
--------------------------------------------------------------------------------------------------------------------
                                                                                                
2001                                                                                               $   60,930,010
2002                                                                                                    1,523,693
2003                                                                                                    3,989,120
2004                                                                                                       20,949
2005 and thereafter                                                                                       107,044
--------------------------------------------------------------------------------------------------------------------
                                                                                                   $   66,570,816
--------------------------------------------------------------------------------------------------------------------


Related party deposits  totaled  $13,051,393 and $4,195,064 at December 31, 2000
and 1999, respectively.

                                       78

                        Grand Bank Financial Corporation
                   Notes To Consolidated Financial Statements
--------------------------------------------------------------------------------


NOTE 7 - FEDERAL HOME LOAN BANK ADVANCES

Federal Home Loan Bank (FHLB) advances were as follows:

December 31,                                                                             2000                1999
--------------------------------------------------------------------------------------------------------------------
Fixed rate advances:
                                                                                       
     5.24%, due May 2001                                                        $   2,500,000      $    2,500,000
     5.75%, due August 2001                                                           500,000             500,000
     5.39%, due November 2002                                                       2,000,000           2,000,000
     6.95%, due July 2003                                                             629,096             705,811
     5.98%, due February 2008                                                       1,023,992           1,115,176
     5.50%, due October 2008                                                          552,332             577,027
     5.60%, due January 2009                                                          837,131             900,000

Single-maturity adjustable rate advance (reprice quarterly):
     6.79%, due May 2001                                                            2,000,000           2,000,000
--------------------------------------------------------------------------------------------------------------------
                                                                                $  10,042,551      $   10,298,014
--------------------------------------------------------------------------------------------------------------------


At December 31, 2000,  scheduled  principal  reductions on FHLB advances were as
follows:


Year ending December 31,
--------------------------------------------------------------------------------------------------------------------
                                                                                                
2001                                                                                               $    5,275,931
2002                                                                                                    2,298,049
2003                                                                                                      676,936
2004                                                                                                      239,497
2005                                                                                                      257,669
Thereafter                                                                                              1,294,469
--------------------------------------------------------------------------------------------------------------------
                                                                                                   $   10,042,551
--------------------------------------------------------------------------------------------------------------------


The advances are  collateralized  by mortgage loans and certain  securities with
outstanding   balances  not  less  than  145%  of  advances   outstanding,   and
specifically  pledged  securities  with a market value  between 105% and 110% of
advances outstanding.

The advances are subject to a prepayment penalty based on the greater of .25% of
the principal  amount  prepaid or the present value of the lost cash flow to the
FHLB.

NOTE 8 - NOTE PAYABLE

Grand has entered into a revolving  credit  agreement with a bank which provides
for  unsecured  borrowings  of up to  $5,000,000  through  March 31,  2001.  The
outstanding  balance  on March  30,  2001 can,  at  Grand's  option,  be paid or
converted  to a term  loan  payable  in 11  quarterly  installments  (based on a
10-year  payment  amortization)  through  March  31,  2004,  at  which  time the
remaining  balance is due. Interest is based on three different pricing options:
a negotiated  rate, a eurodollar  rate (LIBOR plus a factor) and a floating rate
(greater  of the prime rate or the  federal  funds rate plus .5%. As of December
31, 2000,  available  borrowings  amounted to $2,500,000.  The weighted  average
interest rate on  outstanding  borrowings of $2,500,000  was 8.11%.  Restrictive
covenants  apply to, among other things,  tangible net worth,  return on average
assets,  indebtedness to tangible net worth and the percentage of  nonperforming
loans to average assets.

                                       79

                        Grand Bank Financial Corporation
                   Notes To Consolidated Financial Statements
--------------------------------------------------------------------------------


NOTE 9 - FEDERAL INCOME TAXES

Federal income tax expense consists of:

Year ended December 31,                                                      2000            1999            1998
--------------------------------------------------------------------------------------------------------------------
                                                                                            
Current                                                              $  1,555,500    $  1,204,000    $  1,066,500
Deferred                                                                 (338,000)       (222,000)       (255,500)
--------------------------------------------------------------------------------------------------------------------
                                                                     $  1,217,500    $    982,000    $    811,000
--------------------------------------------------------------------------------------------------------------------


The tax  effects of  temporary  differences  that give rise to the net  deferred
income tax asset, included in other assets, are as follows:


December 31,                                                                               2000              1999
--------------------------------------------------------------------------------------------------------------------
Deferred income tax assets:
                                                                                                 
     Allowance for loan losses                                                     $    701,192        $  522,617
     Deferred compensation                                                              412,680           262,798
     Deferred loan fees                                                                  15,556            13,179
     Securities valuation                                                                     -            69,729
     Other                                                                               16,765            15,364
--------------------------------------------------------------------------------------------------------------------

Total deferred income tax assets                                                      1,146,193           883,687

Deferred income tax liabilities:
      Accumulated depreciation                                                          (12,193)          (17,958)
      Securities valuation                                                              (10,856)                -
--------------------------------------------------------------------------------------------------------------------

Total deferred income tax liabilities                                                   (23,049)          (17,958)
--------------------------------------------------------------------------------------------------------------------
Net Deferred Income Tax Asset                                                      $  1,123,144        $  865,729
--------------------------------------------------------------------------------------------------------------------


Federal income tax expense  differed from expense at statutory  rates  primarily
due to  miscellaneous  nondeductible  expenses  having a tax effect of  $67,300,
$44,000 and $3,400 in 2000, 1999 and 1998, respectively, and tax-exempt interest
income having a tax effect of $29,200 in 2000.

                                       80

                        Grand Bank Financial Corporation
                   Notes To Consolidated Financial Statements
--------------------------------------------------------------------------------


NOTE 10 - EMPLOYEE BENEFIT PLANS

Defined Benefit Plan

Grand has a defined  benefit  pension  plan  covering  substantially  all of its
employees  under  which  Grand will pay the entire  cost of  providing  eligible
employees with a monthly retirement benefit.  Grand's policy is to annually fund
the amount recommended by the plan's actuary.

Financial information regarding the plan is as follows:

Year ended December 31,                                                     2000            1999             1998
--------------------------------------------------------------------------------------------------------------------
                                                                                            
Benefit obligation at year-end                                     $  (1,098,168)  $  (1,081,847)    $   (695,620)
Fair value of plan assets at year-end                                  1,095,509         967,947          786,041
--------------------------------------------------------------------------------------------------------------------

Funded status                                                      $      (2,659)  $    (113,900)    $     90,421
--------------------------------------------------------------------------------------------------------------------

Accrued pension cost recognized in the consolidated
balance sheet                                                      $     (83,955)  $     (74,846)    $    (28,126)
--------------------------------------------------------------------------------------------------------------------

Benefit cost                                                       $     116,321   $     136,711    $      80,826
Employer contributions                                                   107,212          89,991           77,065
Benefits paid                                                              7,745           2,115           12,863
--------------------------------------------------------------------------------------------------------------------

Weighted average actuarial assumptions as of year-end:
     Discount rate                                                          7.5%            7.0%             7.5%
     Expected return on plan assets                                         8.0%            8.0%             8.0%
     Rate of compensation increase                                          4.0%            4.0%             4.0%
--------------------------------------------------------------------------------------------------------------------


Defined Contribution Plan

Grand  also  sponsors  a defined  contribution  401(k)  plan for the  benefit of
substantially  all  employees.  Under the  plan,  employees  may make  voluntary
contributions  based on a  percentage  of their  compensation,  limited  to 15%.
Matching contributions are made in an amount equal to 25% of the first 8% of the
employee's  contributed  compensation.  Matching  contributions totaled $43,160,
$43,703 and $39,533 during 2000, 1999 and 1998, respectively.

Phantom Stock Plan

The purpose of the Grand Bank  Phantom  Stock Plan is to provide  key  employees
with the  opportunity  to  receive  deferred  bonuses  based upon the growth and
success  of the  Bank.  Eligible  participants  are  determined  by the Board of
Directors,  based on the recommendation of the Bank's Human Resources Committee.
Under the plan,  Phantom  Stock  Units may be  awarded to  participants,  at the
discretion of the Board of Directors, as of January 1 of any year. Phantom Stock
Units  do not  grant  participants  any  voting  rights  or  other  rights  as a
stockholder of the Bank or Grand.

Participants are eligible for benefits,  payable in a lump sum amount,  upon the
occurrence  of a  "Distributable  Event." A  Distributable  Event  occurs if the
participant (a) is employed on the third anniversary of the award date, (b) dies
or is disabled  while  employed by the Bank,  (c)  terminates  employment  after
reaching normal or early retirement age under the Bank's defined benefit pension
plan or (d) is employed by the Bank at the time of the sale of Grand.  The value
of the Phantom  Stock  Units is equal to the excess of the fair market  value of
Grand's common stock, as of the most recent valuation  before the  Distributable
Event, over the fair market value of the common stock as of the award date.

                                       81

                        Grand Bank Financial Corporation
                   Notes To Consolidated Financial Statements
--------------------------------------------------------------------------------

There were 5,000 Phantom Stock Units awarded effective January 1, 2000.  Expense
of $150,000  was  recorded  during 2000 based on the increase in the fair market
value of Grand's common stock and the issuance of an additional 2,500 of Phantom
Stock Units.  There were 2,500 Phantom Stock Units awarded  effective January 1,
1999.  Expense of $50,000 was recorded  during 1999 based on the increase in the
fair market value of Grand's  common stock.  No Phantom Stock Units were awarded
in 1998.

NOTE 11 - STOCK OPTION PLAN

Grand's 1997 and 1988 stock option plans grant corporate  officers and other key
employees  options to purchase  shares of common  stock.  The plans  provide for
stock options to be granted at exercise  prices that  approximate the fair value
of the stock at the  respective  dates of grant.  Some options become vested and
may be  exercised  20% per year from the date of grant  and begin to expire  ten
years  subsequent to the date of grant.  Certain  other options are  immediately
exercisable.

A summary of stock option plan activity is as follows:

                                                       2000                    1999                   1998
                                              -----------------------  ---------------------  ----------------------
                                                            Weighted               Weighted              Weighted
                                                             average                average               average
                                                            exercise               exercise              exercise
Year ended December 31,                       Shares           price    Shares        price     Shares      price
--------------------------------------------------------------------------------------------------------------------
                                                                                      
Options outstanding at beginning of year          4,831     $  79.20      3,951   $   61.11      8,759  $   49.77
Granted                                               -            -      1,000      150.00          -          -
Exercised                                             -            -       (100)     (74.00)    (4,740)    (40.00)
Terminated                                            -            -        (20)     (72.00)       (68)    (72.00)
-------------------------------------------------------------------------------------------------------------------

Options outstanding at end of year                4,831     $  79.20      4,831   $   79.20      3,951  $   61.11
-------------------------------------------------------------------------------------------------------------------

Options exercisable at end of year                4,459     $  79.80      4,273   $   80.14      3,190  $   58.52
-------------------------------------------------------------------------------------------------------------------

Options available for grant at end of year       12,069            -     12,069           -     13,049          -
-------------------------------------------------------------------------------------------------------------------

Price per share of options outstanding           $49.50 - $150.00        $49.50 - $150.00       $49.50 - $74.00
--------------------------------------------------------------------------------------------------------------------


Net income and  earnings  per share would not be  materially  different if Grand
accounted for its employee stock options under the fair value method as provided
for under SFAS No. 123, Accounting for Stock-Based Compensation.

                                       82

                        Grand Bank Financial Corporation
                   Notes To Consolidated Financial Statements
--------------------------------------------------------------------------------


NOTE 12 - EARNINGS PER SHARE

The computations of basic and diluted earnings per share were as follows:

Year ended December 31,                                                     2000            1999             1998
--------------------------------------------------------------------------------------------------------------------
                                                                                           
Numerator - net income for the year                                $   2,251,375   $   1,776,636    $   1,564,187
--------------------------------------------------------------------------------------------------------------------

Denominator:
     Weighted average number of shares outstanding
         (denominator for basic earnings per share)                      134,959         134,952          130,970
     Effect of dilutive stock options                                      2,705           2,280              968
--------------------------------------------------------------------------------------------------------------------

Denominator for diluted earnings per share                               137,664         137,232          131,938
--------------------------------------------------------------------------------------------------------------------

Basic earnings per share                                           $       16.68   $       13.16    $       11.94
--------------------------------------------------------------------------------------------------------------------

Diluted earnings per share                                         $       16.35   $       12.95    $       11.86
--------------------------------------------------------------------------------------------------------------------


NOTE 13 - COMMITMENTS AND CONTINGENCIES

Some financial  instruments with  off-balance  sheet risk are used in the normal
course of business to meet the  financing  needs of customers.  These  financial
instruments  consist of  commitments to make loans and fund lines and letters of
credit.  The exposure to credit loss in the event of nonperformance by the other
party to these financial instruments is represented by the contractual amount of
these instruments. The same credit policies are used to make such commitments as
are used for loans.  Collateral (e.g., cash deposits,  securities,  receivables,
inventory, equipment) is obtained based on management's credit assessment of the
customer.

Financial instruments with off-balance sheet risk are as follows:

December 31,                                                                            2000                 1999
--------------------------------------------------------------------------------------------------------------------
                                                                                             
Commitments to make loans                                                     $   14,536,147       $   15,314,100
Unused lines of credit                                                            90,870,699           66,989,767
Standby letters of credit                                                          1,271,752            3,714,060
--------------------------------------------------------------------------------------------------------------------


Since  certain  commitments  to make loans and fund lines and  letters of credit
expire without being used, the amount does not necessarily represent future cash
commitments. Commitment periods are generally for 90 days.

Certain legal actions arise in the ordinary  course of business.  In the opinion
of management,  after consultation of legal counsel, the ultimate disposition of
these  matters  is not  expected  to have a material  adverse  effect on Grand's
consolidated financial condition or results of operations.

                                       83

                        Grand Bank Financial Corporation
                   Notes To Consolidated Financial Statements
--------------------------------------------------------------------------------


NOTE 14 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The  following  methods and  assumptions  were used to  estimate  fair values of
financial  instruments  for which it is practicable to estimate fair value.  The
carrying  amount  is  considered  to  approximate  fair  value for cash and cash
equivalents  and  accrued  interest  receivable  and  payable.  Fair  values for
securities  are based on quoted  market  prices  or dealer  quotes.  If a quoted
market  price is not  available,  fair value is estimated  using  quoted  market
prices for similar instruments.  The fair value of fixed and variable rate loans
and deposits is principally estimated by discounting future cash flows using the
current  rates  at  which  similar   instruments  would  be  made  with  similar
maturities.  The fair value of FHLB  advances and notes payable is determined by
discounting  cash flows using rates  currently  offered for  advances of similar
remaining  maturities.  The fair  values of  commitments  to extend  credit  and
standby letters of credit were immaterial for this presentation.


The estimated fair values of financial instruments were as follows:


                                                         2000                                  1999
                                          -----------------------------------  -------------------------------------
                                            Carrying                    Fair          Carrying               Fair
December 31,                                 value                     value             value              value
--------------------------------------------------------------------------------------------------------------------
Financial assets:
                                                                                      
     Cash and cash equivalents             $    26,917,464   $    26,917,464    $   15,152,833    $    15,152,833
     Securities available for sale               7,369,176         7,369,176         5,556,759          5,556,759
     Securities held to maturity                 6,461,915         6,564,439         5,675,342          5,497,960
     Other securities                              601,700           601,700           601,700            601,700
     Loans held for sale                           148,000           148,000           868,000            868,000
     Portfolio loans, net                      178,496,832       179,310,000       147,548,470        148,700,000
     Accrued interest receivable                   855,744           855,744           638,654            638,654

Financial liabilities:
     Deposits                                  193,586,732       187,292,000       152,066,220        151,982,390
     FHLB advances payable                      10,042,551         9,958,000        10,298,014         10,322,000
     Notes payable                               2,500,000         2,500,000         1,500,000          1,500,000
     Accrued interest payable                      723,200           723,200           456,816            456,816
--------------------------------------------------------------------------------------------------------------------


NOTE 15 - REGULATORY MATTERS

Grand and the Bank  individually  are  subject  to  various  regulatory  capital
requirements  administered  by the  federal  banking  agencies.  Failure to meet
minimum  capital  requirements  can  initiate  certain  mandatory,  and possibly
additional discretionary,  actions by regulators that, if undertaken, could have
a direct material effect on the financial  statements of Grand as a whole. Under
the  capital  adequacy  guidelines  and  the  regulatory  framework  for  prompt
corrective  action,  the Bank must meet specific capital guidelines that involve
quantitative  measures of its assets,  liabilities and certain off-balance sheet
items as calculated under regulatory  accounting  practices.  The Bank's capital
amounts and  classification  are also  subject to  qualitative  judgments by the
regulators about components, risk weightings and other factors.

Quantitative  measures  established  by  regulation to ensure  capital  adequacy
require the Bank to maintain  minimum amounts and ratios (set forth in the table
below) of total and Tier 1 (as  defined  in the  regulations)  to  risk-weighted
assets (as  defined),  and of Tier 1 capital (as defined) to average  assets (as
defined).  Management believes, as of December 31, 2000, that the Bank meets all
capital adequacy requirements to which it is subject.

As of December 31, 2000 and 1999, the most recent notifications from the Federal
Deposit Insurance  Corporation  categorized the Bank as "well capitalized" under
the regulatory framework for prompt corrective action. To be categorized

                                       84

                        Grand Bank Financial Corporation
                   Notes To Consolidated Financial Statements
--------------------------------------------------------------------------------

as well  capitalized,  the Bank must maintain minimum total  risk-based,  Tier 1
risk-based and Tier 1 leverage  ratios as set forth in the table. As of December
31, 2000,  there are no conditions or events since the most recent  notification
that management believes have changed the category under which the Bank would be
classified.

Grand's and Bank's capital amounts and ratios are presented in the tables below.

                                                     Actual          Minimum for capital       To be well capitalized
                                                                      adequacy purposes        under prompt corrective
                                                                                                 action provisions
                                              ---------------------- -----------------------  -------------------------
December 31, 2000                                Amount      Ratio      Amount        Ratio      Amount         Ratio
-----------------------------------------------------------------------------------------------------------------------
Total Capital (to Risk Weighted Assets)
                                                                                              
    Grand Bank Financial Corporation         $  17,196,812     9.1%    $  15,197,012    8.0%   $         N/A      N/A
    Grand Bank                                  19,677,512    10.4%       15,196,739    8.0%      18,995,924    10.0%
---------------------------------------------------------------------------------------------------------------------

Tier 1 Capital (to Risk Weighted Assets)
    Grand Bank Financial Corporation         $  14,843,841     7.8%    $   7,598,506    4.0%   $         N/A      N/A
    Grand Bank                                  14,824,541     7.8%        7,598,370    4.0%      11,397,554     6.0%
---------------------------------------------------------------------------------------------------------------------

Tier 1 Capital (to Average Assets)
    Grand Bank Financial Corporation         $  14,843,841     6.8%    $   8,741,400    4.0%   $         N/A      N/A
    Grand Bank                                  14,824,541     6.8%        8,741,400    4.0%      10,926,750     5.0%
---------------------------------------------------------------------------------------------------------------------


                                                     Actual          Minimum for capital          To be well
                                                                      adequacy purposes       capitalized under
                                                                                              prompt corrective
                                                                                              action provisions
                                              ---------------------  ---------------------  -------------------------

December 31, 1999                                   Amount    Ratio         Amount  Ratio        Amount      Ratio
---------------------------------------------------------------------------------------------------------------------
Total Capital (to Risk Weighted Assets)
                                                                             
    Grand Bank Financial Corporation         $  14,817,210     9.5% $   12,530,510   8.0%   $         N/A      N/A
    Grand Bank                                  16,295,994    10.4%     12,530,238   8.0%      15,662,797    10.0%
---------------------------------------------------------------------------------------------------------------------

Tier 1 Capital (to Risk Weighted Assets)
    Grand Bank Financial Corporation         $  12,862,383     8.2% $    6,265,255   4.0%   $         N/A      N/A
    Grand Bank                                  12,841,167     8.2%      6,265,119   4.0%       9,397,678     6.0%
---------------------------------------------------------------------------------------------------------------------

Tier 1 Capital (to Average Assets)
    Grand Bank Financial Corporation         $  12,862,383     7.3% $    7,070,520   4.0%   $         N/A      N/A
    Grand Bank                                  12,841,167     7.3%      7,070,520   4.0%       8,838,150     5.0%
---------------------------------------------------------------------------------------------------------------------



NOTE 16 - REGULATORY RESTRICTIONS

State  banking laws and  regulations  place  certain  restrictions  on loans and
advances and dividends from the Bank to Grand.  In 2001,  subject to meeting its
minimum  regulatory  capital  requirements as discussed in Note 15, the Bank may
contribute to Grand (in addition to 2001 net income)  approximately  $420,000 in
dividends without approval from regulatory agencies.

                                       85

                        Voting and Management Information

Voting Securities and Principal Shareholders of Grand

     Shareholders of record of Grand common stock as of the close of business on
_____________,  2002,  are entitled to one vote for each share then held.  As of
that date, Grand had 134,959 shares of its common stock outstanding.

Major Shareholders

     The  following  table sets forth  information  for each  person who was the
beneficial owner of more than 5% of Grand's  outstanding  shares of common stock
as of September 30, 2001.

                                                      Amount and Nature of
                                                     Beneficial Ownership of
                                                    Grand Common Stock(1)(2)
                                           -----------------------------------------------
                                              Sole Voting         Shared                                 Macatawa Common
                                                  and            Voting or       Total        Percent      Stock to be
            Name and Address of               Dispositive       Dispositive   Beneficial        of         Received in
             Beneficial Owner                    Power           Power(3)      Ownership       Class        Merger(4)
---------------------------------------------------------------------------------------------------------------------------
                                                                                              
Peter C. Cook                                    11,728              916        12,644         9.37%         222,507
Owen Pyle Jr.                                      -               9,900         9,900         7.34%         174,219
Charles C. and Janet Stoddard                     176             12,900        13,076         9.68%         230,110
Richard L. Trumley, Trustee of the
  Richard L. Trumley Trust, u/a/d 10-21-85         -               6,767         6,767         5.01%         119,084


(1)  The information shown in this table is based upon information  furnished to
     Macatawa by the individuals named in the table.

(2)  The numbers of shares  stated are based on  information  furnished  by each
     person listed and include shares  personally owned of record by that person
     and shares that under applicable regulations are considered to be otherwise
     beneficially owned by that person.  Under these  regulations,  a beneficial
     owner of a  security  includes  any person  who,  directly  or  indirectly,
     through  any  contract,   arrangement,   understanding,   relationship   or
     otherwise,  has or shares voting power or dispositive power with respect to
     the security.  Voting power includes the power to vote or direct the voting
     of the security.  Dispositive power includes the power to dispose or direct
     the disposition of the security. A person is also considered the beneficial
     owner  of a  security  if the  person  has a right  to  acquire  beneficial
     ownership  of the  security  within  60  days.  Shares  held  in  fiduciary
     capacities by Grand are not included unless otherwise indicated.  Grand and
     the  directors  and  officers of Grand and Grand Bank  disclaim  beneficial
     ownership of shares held by Grand or Grand Bank in fiduciary capacities.

(3)  These  numbers  include  shares as to which the  listed  person is  legally
     entitled to share voting or dispositive power by reason of joint ownership,
     trust or other contract or property  right,  and shares held by spouses and
     minor  children over whom the listed person may have influence by reason of
     relationship. Shares held in fiduciary capacities by Grand are not included
     unless otherwise  indicated.  The directors and officers of Grand and Grand
     Bank, by reason of their  positions,  may be in a position to influence the
     voting or disposition of shares held in trust by Grand to some degree,  but
     disclaim beneficial ownership of these shares.

(4)  This column  reflects  the number of shares of Macatawa  common stock to be
     issued to the  specified  person in  exchange  for the  number of shares of
     Grand  common  stock as of  November  20, 2001 held by such person as shown
     above.

(5)  These  numbers  consist  of shares  held in  various  fiduciary  capacities
     through the trust  department  of Grand Bank.  Grand and the  directors and
     officers of Grand and Grand Bank  disclaim  beneficial  ownership  of these
     shares.

(6)  These numbers include shares of restricted Grand common stock and shares of
     Grand  common  stock that may be  acquired  through  the  exercise of stock
     options within 60 days.

                                       86

Directors and Executive Officers

     The following table sets forth certain information concerning the number of
shares of Grand common  stock held as of November  17, 2001,  by each of Grand's
directors,  each of the named  executive  officers of Grand,  and all of Grand's
directors and executive officers as a group.  Information with respect to shares
held in certain Grand benefit plans incorporated in the following table is based
on the most recent  information  available for those plans,  as indicated in the
footnotes to the table.

                                                    Amount and Nature of
                                      Beneficial Ownership of Grand Common Stock(1)(2)

                                                              Shared
          Name of                        Sole Voting        Voting or            Total             Percent        Macatawa Common
      Beneficial Owner                  and Dispositive     Dispositive         Beneficial           of        Stock to be Received
                                             Power            Power(3)          Ownership          Class          in Merger(4)
------------------------------------------------------------------------------------------------------------------------------
                                                                                                        
Henry Bouma                                 4,351               640               4,991            3.70%               87,831
Robert W. DeJonge                              75             1,136               1,211            0.90%               21,311
Brian L. Downs                              2,173                 -               2,173            1.59%               38,240
William H. Fickes                               -             1,078               1,078            0.80%               18,970
Bill Hardiman                                   -                 -                   -            0.00%                    -
J.C. Huizenga                               1,090               720               1,810            1.34%               31,852
Birgit Klohs                                   20                 -                  20            0.01%                  351
Harvey Koning                               1,250                 -               1,250            0.93%               21,997
R. Lawrence Leigh                           1,635             1,125               2,760            2.05%               48,570
Arend Lubbers                                   -               140                 140            0.10%                2,463
Douglas Meijer                              1,500                 -               1,500            1.11%               26,396
Owen Pyle Jr.                                   -             9,900               9,900            7.34%              174,219
Richard Ross                                    -             1,905               1,905            1.41%               33,523
Dana Sommers                                  134             1,134               1,268            0.94%               22,314
Gordon Stauffer                                 -             2,060               2,060            1.53%               36,251
Charles C. Stoddard                           176            12,900              13,076            9.68%              230,110
Gary Vos                                        -             3,664               3,664            2.71%               64,478
Thomas J. Wesholski                         2,000                 -               2,000            1.46%               35,195

------------------------------------------------------------------------------------------------------------------------------
All directors and
executive officers
as a group (18 persons)                    17,348            29,794              47,142           33.85%              894,071
------------------------------------------------------------------------------------------------------------------------------


(1)  The information shown in this table is based upon information  furnished to
     Macatawa by the individuals named in the table.

(2)  The numbers of shares  stated are based on  information  furnished  by each
     person listed and include shares  personally owned of record by that person
     and shares that under applicable regulations are considered to be otherwise
     beneficially owned by that person.  Under these  regulations,  a beneficial
     owner of a  security  includes  any person  who,  directly  or  indirectly,
     through  any  contract,   arrangement,   understanding,   relationship   or
     otherwise,  has or shares voting power or dispositive power with respect to
     the security.  Voting power includes the power to vote or direct the voting
     of the security.  Dispositive power includes the power to dispose or direct
     the disposition of the security. A person is also considered the beneficial
     owner  of a  security  if the  person  has a right  to  acquire  beneficial
     ownership  of the  security  within  60  days.  Shares  held  in  fiduciary
     capacities by Grand are not included unless otherwise indicated.  Grand and
     the directors and officers of Grand and Grand disclaim beneficial ownership
     of shares held by Grand in fiduciary capacities.

(3)  These  numbers  include  shares as to which the  listed  person is  legally
     entitled to share voting or dispositive power by reason of joint ownership,
     trust or other contract or property  right,  and shares held by spouses and
     minor  children over whom the listed person may have influence by reason of
     relationship. Shares held in fiduciary capacities by Grand are not included
     unless otherwise  indicated.  The directors and officers of Grand and Grand
     Bank, by reason of their

                                       87

     positions,  may be in a position to influence the voting or  disposition of
     shares held in trust by Grand Bank to some degree, but disclaim  beneficial
     ownership of these shares.

(4)  This column  reflects  the number of shares of Macatawa  common stock to be
     issued to the  specified  person in  exchange  for the  number of shares of
     Grand  common  stock as of  November  20, 2001 held by such person as shown
     above.

(5)  These  numbers  consist  of shares  held in  various  fiduciary  capacities
     through the trust department of Grand. Grand and the directors and officers
     of Grand and Grand disclaim beneficial ownership of these shares.

(6)  These numbers include shares of restricted Grand common stock and shares of
     Grand  common  stock that may be  acquired  through  the  exercise of stock
     options within 60 days.

Interests of Certain Persons in the Merger

     Certain  members  of  management  and Board of  Directors  of Grand and its
subsidiaries  may be deemed to have interests in the Merger in addition to their
interests as shareholders of Grand  generally.  The Grand Board of Directors was
aware of these interests and considered them, among other matters,  in approving
the Merger Agreement.

Employment and Noncompetition Agreements

     Three of Grand  Bank's  executive  officers,  Messrs.  Downs,  Fickes,  and
Wesholski,  have entered into amended and restated  employment  agreements  with
Grand  Bank,  which  have  been  approved  and  guaranteed  by  Macatawa.  These
agreements  contain  severance  provisions  entitling the  officers,  in certain
circumstances,   to  compensation   and  benefits  upon  their   termination  or
resignation.  They would amend and replace pre-existing employment agreements as
of the Effective Time of the Merger. Under these amended employment  agreements,
if the executive  resigns from Grand Bank other than for a good reason,  he will
receive  severance  payments of monthly salary at a rate which  approximates the
rate  expected to be in effect prior to the  Effective  Time of the Merger,  and
medical  benefits for the shorter of the year  following his  resignation or the
remainder of the two-year  period  following the  Effective  Time of the Merger.
However, these payments and benefits are terminated if he competes with Grand or
Macatawa in Kent or Ottawa  counties.  If any of these  executives is terminated
for cause or resigns for a good reason, he will receive a lump sum payment equal
to an amount  similar to his monthly  salary  multiplied by the number of months
remaining in the two-year period  following the Effective Time of the Merger and
medical benefits for the number of months  remaining in the two-year period.  In
addition, Messrs. Downs, Fickes, and Wesholski will each receive a bonus payment
($50,000  for Messrs.  Downs and Fickes and $70,000  for Mr.  Wesholski),  if he
remains employed by Grand Bank for two years following the Effective Time of the
Merger.

     Mr. DeJonge has a pre-existing  employment agreement with Grand Bank. Under
that agreement, if his employment with Grand Bank is terminated due to change of
control of Grand  Bank,  he will be entitled to  outplacement  services  and two
year's salary, payable monthly, provided he does not solicit Grand customers.

     It is not expected  that Mr.  Stoddard will continue to serve as a director
or  officer of  Macatawa  or Grand  Bank  after the  Merger.  Grand Bank and Mr.
Stoddard have entered into a noncompetition agreement that will become effective
if the Merger takes place. Under this agreement,  Mr. Stoddard will resign as an
employee  and director of Grand and Grand Bank as of the  Effective  Time of the
Merger, and he will receive payments in twenty-four  monthly  installments of an
amount equal to the average of his annual  salaries for 2002, 2001 and 2000 plus
the average of his annual  bonuses for 2001 and 2000 divided by 12. He will also
receive certain medical and similar benefits for up to 24 months. However, these
payments and benefits  will be  terminated if he competes with Grand or Macatawa
in Kent or Ottawa counties.  These payments are similar to amounts he would have
been entitled to under his  pre-existing  employment  agreement with Grand Bank,
which will be superceded by the separation agreement as of the Effective Time of
the Merger.

Macatawa's Board of Directors

     After the Merger is completed, the number of members of Macatawa's Board of
Directors  will be  increased  by one  member.  The new member will be a current
member of Grand's  Board of  Directors  to be  selected  by Grand and subject to
approval  by  Macatawa's  Board of  Directors.  That  director  has not yet been
identified.

Conversion of Stock Options and Phantom Stock

     Grand's  stock  option  plans and phantom  stock plan have been  amended to
include  terms that would  cause the stock  options  and  phantom  stock held by
Grand's  management who participate in these plans to be converted if the Merger
between  Macatawa and Grand is  consummated.  Under Grand's amended stock option
plan and the Merger Agreement,

                                       88

each existing Grand stock option would be converted into an option to purchase a
number of shares of Macatawa common stock equal to the original number of shares
of Grand common stock subject to the option  multiplied  by the Exchange  Ratio.
The option  price for each such option will be adjusted by dividing the original
option price by the Exchange Ratio.

     Certain  previously  awarded but unvested  stock options will vest upon the
completion of the Merger.  The following numbers of stock options would vest for
the following executive  officers:  19 for Mr. DeJonge, 18 for Mr. Downs, 20 for
Mr. Fickes and 44 for Mr. Stoddard.

     Immediately before the Effective Time of the Merger,  Grand's phantom stock
plan will be terminated  and each unit of phantom stock will be converted into a
right to receive in cash the  difference  between the  appraised  value of Grand
common stock on the date of issue of the phantom stock units and the average per
share trading  price of Macatawa  common stock on the five trading days prior to
the  Effective  Time of the Merger  multiplied  by the Exchange  Ratio.  Certain
previously  awarded  but  unvested  phantom  stock  units  will  vest  upon  the
termination  of the phantom stock plan.  The following  numbers of phantom stock
units would vest for the following  executive  officers:  1,344 for Mr. DeJonge,
1,410 for Mr. Downs, 1,461 for Mr. Fickes,  1,695 for Mr. Stoddard and 1,590 for
Mr.  Wesholski.  If the average per share trading price of Macatawa common stock
as computed  under the plan was $_____ (the closing  price on _________________)
the executive  officers would receive cash payments under the phantom stock plan
as follows: Mr. DeJonge $_______;  Mr. Downs $_______;  Mr. Fickes $_______; Mr.
Stoddard $_______ and Mr. Wesholski $_______.

Macatawa Stock

     Directors and executive  officers of Grand collectively were the beneficial
owners of a total of 47,142  shares of  Macatawa  common  stock as of the record
date.

Indemnification; Directors' and Officers' Liability Insurance

     Macatawa  has also  agreed  to honor  the  rights  to  indemnification  and
advancement  of expenses now existing in favor of the  directors and officers of
Grand and its  subsidiaries  under their  articles of  incorporation  or bylaws.
These  provisions are  contractual  rights  enforceable  by Grand  directors and
officers which will remain in effect following the Merger and will continue with
respect to acts or omissions occurring before the Effective Time of the Merger.

     Macatawa has agreed to use all reasonable efforts to cause the officers and
directors of Grand immediately prior to the Merger to be covered for a period of
at least the six years after the Effective  Time of the Merger by the directors'
and officers'  liability  insurance  policy  maintained by Grand with respect to
acts or  omissions  occurring  before the Merger.  Macatawa may  substitute  new
coverage for Grand's current coverage under policies  offering at least the same
coverage  and amounts.  For a  description  of the specific  terms of the Merger
Agreement concerning  indemnification and insurance,  see "The Merger and Merger
Agreement - Insurance and Indemnification" above.

                                       89

                               General Information

Experts

     The consolidated  financial statements of Macatawa at December 31, 2000 and
1999,  and for each of the three years in the period  ended  December  31, 2000,
incorporated  by  reference in this  prospectus  and joint proxy  statement  and
elsewhere in the Registration Statement of which this prospectus and joint proxy
statement  is a part,  have been  audited  by Crowe,  Chizek  and  Company  LLP,
independent  auditors,  as set forth in their  report  and are  incorporated  by
reference in this  document in reliance  upon such report given on the authority
of such firm as experts in accounting and auditing.

     The  consolidated  financial  statements  of Grand at December 31, 2000 and
1999,  and for each of the three years in the period  ended  December  31, 2000,
included in this  prospectus and joint proxy  statement have been audited by BDO
Seidman,  LLP,  independent  auditors,  as set  forth  in their  report  and are
included in this document in reliance upon such report given on the authority of
that firm as experts in accounting and auditing.

Legal Opinions

     Certain legal matters in connection with the proposed Merger will be passed
upon for Macatawa by its general counsel, Varnum,  Riddering,  Schmidt & Howlett
LLP of Grand  Rapids,  Michigan,  and for Grand by its general  counsel,  Warner
Norcross & Judd LLP of Grand Rapids, Michigan.

     As  of  ___________,  2002,  partners  in  and  attorneys  employed  by  or
associated with Varnum,  Riddering,  Schmidt & Howlett LLP and their  associates
were beneficial owners of a total of approximately __________ shares of Macatawa
common stock having an approximate  aggregate  market value of $__________ as of
such date and no shares of Grand common stock.  Shares  reported as beneficially
owned include all shares as to which such persons have direct or indirect,  sole
or shared,  power to direct voting of disposition,  including personal shares as
well as shares held in fiduciary capacities.

Sources of Information

     Macatawa  has  supplied  all  information   contained  or  incorporated  by
reference in this prospectus and joint proxy statement  relating to Macatawa and
Donnelly, Penman, French, Haggarty & Co. Grand has supplied all such information
relating to itself and Austin Associates.

                                       90

                       Where You Can Find More Information

     Macatawa has filed a  registration  statement on Form S-4 to register  with
the Securities and Exchange  Commission the offering of Macatawa common stock to
be issued by Macatawa in the Merger.  This  prospectus and joint proxy statement
is a part of that registration  statement. As allowed by Securities and Exchange
Commission rules, this prospectus and joint proxy statement does not contain all
of the information  contained in the  registration  statement or the exhibits to
the  registration  statement.  This means that this  prospectus  and joint proxy
statement  incorporates  important  business  and  financial  information  about
Macatawa that is not included in or delivered with this document.

     Macatawa is subject to the  informational  requirements  of the  Securities
Exchange Act of 1934, as amended. Accordingly,  Macatawa files annual, quarterly
and current reports, proxy statements, and other information with the Securities
and Exchange Commission. You may read and copy any reports, statements, or other
information  that we file at the  Securities  and Exchange  Commission's  Public
Reference Room at 450 Fifth Street N.W.,  Washington,  D.C. 20549.  You may call
the Securities and Exchange Commission at 1-800-SEC-0330 for further information
on the  operation  of the  Public  Reference  Room.  Macatawa's  Securities  and
Exchange  Commission  filings are also  available to the public from  commercial
document retrieval services and at the web site maintained by the Securities and
Exchange  Commission at  "http://www.sec.gov."  That web site contains  reports,
proxy and information statements, and other information regarding companies that
file electronically with the Securities and Exchange Commission.

     The Securities and Exchange  Commission  allows  Macatawa to incorporate by
reference information into this prospectus and joint proxy statement. This means
that  Macatawa  can  disclose  important  information  by  referring  to another
document  filed  separately  with the Securities  and Exchange  Commission.  The
information  incorporated  by  reference  is  considered  to  be  part  of  this
prospectus and joint proxy statement,  except for any information  superseded by
information in this  prospectus and joint proxy  statement.  This prospectus and
joint proxy  statement  incorporates  by reference the documents set forth below
that Macatawa has previously filed with the Securities and Exchange  Commission.
These documents contain important information about Macatawa and its finances.

Macatawa Commission Filings (File No. 333-45755)             Period
------------------------------------------------             ------
                                                          
Annual Report  on Form 10-K                                  Year ended December 31, 2000
Quarterly Reports on Form 10-Q                               Quarters ended March 31, 2001, June 30, 2001, and
                                                                September 30, 2001
Registration Statement on Form 8-A                           Filed April 30, 1999


     All  documents  subsequently  filed by  Macatawa  with the  Securities  and
Exchange  Commission  pursuant  to  Sections  13(a),  13(c),  14,  and 15 of the
Securities Exchange Act of 1934, as amended, between the date of this prospectus
and joint proxy  statement  and the date of the later of the special  meeting of
shareholders of Macatawa or the special meeting of the shareholders of Grand are
also incorporated by reference into this prospectus and joint proxy statement.

     Documents  incorporated  by reference are available from Macatawa and Grand
without charge to Macatawa  shareholders.  You may obtain documents incorporated
by reference in this  prospectus and joint proxy statement by requesting them in
writing or by telephone from Macatawa at the following addresses:

                Macatawa Bank Corporation
                Attn:    Secretary
                348 South Waverly Road
                Holland, Michigan 49423
                Tel:   (616) 820-1444

To obtain timely delivery of this information,  you must request the information
no later than _____,  2002,  which is five  business days before the date of the
special meeting at which you are requested to vote.

     You  should  rely only on the  information  contained  or  incorporated  by
reference in this prospectus and joint proxy statement to vote on the Merger and
the related  issuance of Macatawa common stock.  Neither  Macatawa nor Grand has
authorized anyone to provide you with information that is different from what is
contained in this prospectus and joint proxy statement.

                                       91

     This prospectus and joint proxy statement is dated as of the date set forth
on the cover page. You should not assume that the information  contained in this
prospectus and joint proxy  statement is accurate as of any date other than that
date, and neither the mailing of this  prospectus  and joint proxy  statement to
you nor the  issuance of Macatawa  common  stock in the Merger  shall create any
implication to the contrary.

                           Forward-Looking Statements

     This prospectus and joint proxy statement and the documents incorporated in
this prospectus and joint proxy statement by reference  contain  forward-looking
statements  that  are  based  on  management's  beliefs,  assumptions,   current
expectations,  estimates, and projections about the financial services industry,
the  economy,   and  about  Macatawa  and  Grand   themselves.   Words  such  as
"anticipates,"  "believes,"  "estimates," "expects," "forecasts," "intends," "is
likely," "plans,"  "projects,"  variations of such words and similar expressions
are intended to identify such forward-looking  statements.  These statements are
not guarantees of future  performance and involve  certain risks,  uncertainties
and  assumptions  that are  difficult to predict with regard to timing,  extent,
likelihood, and degree of occurrence. Therefore, actual results and outcomes may
materially  differ from what may be  expressed,  implied,  or forecasted in such
forward-looking statements.

     Future  factors  that could cause a difference  between an ultimate  actual
outcome and a preceding  forward-looking  statement  include changes in interest
rates and interest rate  relationships;  demand for products and  services;  the
degree of competition by traditional and non-traditional competitors; changes in
banking  regulations;  changes  in tax laws;  changes  in  prices,  levies,  and
assessments;  the impact of technological advances;  governmental and regulatory
policy changes; the outcomes of pending and future litigation and contingencies;
trends in customer behaviors as well as their ability to repay loans; changes in
the national  economy;  and the possibility that expected  efficiencies and cost
savings  from  the  Merger  of  Grand  with   Macatawa  and  other  mergers  and
acquisitions  in which  Macatawa  may be  involved  might not be fully  realized
within the  expected  time frame.  Neither  Macatawa  nor Grand  undertakes  any
obligation to update, amend or clarify forward-looking statements,  whether as a
result of new information, future events, or otherwise.

                                       92

                                   Appendix A

                          Agreement and Plan of Merger











                          AGREEMENT AND PLAN OF MERGER

                                     Between

                        GRAND BANK FINANCIAL CORPORATION

                                       and

                            MACATAWA BANK CORPORATION








                          Dated as of November 20, 2001


                                      A-1

                                TABLE OF CONTENTS

                                                                            Page

ARTICLE  I     THE TRANSACTION.............................................A - 6
         1.1        Approval of Plan of Merger.............................A - 6
         1.2        The Closing............................................A - 6
         1.3        Effective Time of the Merger...........................A - 6
         1.4        Merger of Grand with and into Macatawa.................A - 6
         1.5        Effect of the Merger...................................A - 6
         1.6        Additional Actions.....................................A - 6
         1.7        Surviving Corporation..................................A - 6

ARTICLE  II    MERGER CONSIDERATION; EXCHANGE PROCEDURE....................A - 7
         2.1        Conversion of Outstanding Grand Common Stock...........A - 7
         2.2        Conversion of Grand Stock Options......................A - 7
         2.3        No Fractional Securities...............................A - 7
         2.4        Exchange Procedures....................................A - 8
         2.5        Macatawa Common Stock..................................A - 8
         2.6        Anti-Dilution Adjustments..............................A - 8
         2.7        Grand Common Stock No Longer Outstanding...............A - 9

ARTICLE  III   REPRESENTATIONS AND WARRANTIES OF MACATAWA..................A - 9
         3.1        Authorization, No Conflicts, Etc.......................A - 9
         3.2        Organization and Good Standing........................A - 10
         3.3        Subsidiaries..........................................A - 10
         3.4        Capital Stock.........................................A - 10
         3.5        Registration Statement, Etc...........................A - 10
         3.6        Financial Statements..................................A - 11
         3.7        Absence of Undisclosed Liabilities....................A - 11
         3.8        Absence of Material Adverse Change....................A - 11
         3.9        Absence of Litigation.................................A - 11
         3.10       Conduct of Business...................................A - 11
         3.11       Absence of Defaults Under Contracts...................A - 12
         3.12       Regulatory Filings....................................A - 12
         3.13       Licenses, Permits, Etc................................A - 12
         3.14       Environmental Matters.................................A - 12
         3.15       Allowance for Loan Losses.............................A - 12
         3.16       Agreements With Bank Regulators.......................A - 12
         3.17       True and Complete Information.........................A - 12

ARTICLE  IV    REPRESENTATIONS AND WARRANTIES OF GRAND....................A - 12
         4.1        Authorization, No Conflicts, Etc......................A - 13
         4.2        Organization and Good Standing........................A - 13
         4.3        Subsidiaries..........................................A - 13
         4.4        Capital Stock and Stock Options.......................A - 14
         4.5        Financial Statements..................................A - 14
         4.6        Absence of Undisclosed Liabilities....................A - 15
         4.7        Absence of Material Adverse Change....................A - 15
         4.8        Absence of Litigation.................................A - 15
         4.9        Conduct of Business...................................A - 15
         4.10       Absence of Defaults Under Contracts...................A - 15
         4.11       Regulatory Filings....................................A - 15
         4.12       Registration Statement, Etc...........................A - 16
         4.13       Tax Matters...........................................A - 16

                                      A-2

         4.14       Title to Properties...................................A - 16
         4.15       Condition of Property.................................A - 17
         4.16       Leases................................................A - 17
         4.17       Ownership of Real Property............................A - 17
         4.18       Licenses, Permits, Etc................................A - 17
         4.19       Certain Employment Matters............................A - 17
         4.20       Employee Benefit Plans................................A - 18
         4.21       Environmental Matters.................................A - 19
         4.22       Duties as Fiduciary...................................A - 20
         4.23       Investment Bankers and Brokers........................A - 21
         4.24       Change in Business Relationships......................A - 21
         4.25       Related Persons.......................................A - 21
         4.26       Insurance.............................................A - 21
         4.27       Books and Records.....................................A - 21
         4.28       Loan Guarantees.......................................A - 21
         4.29       Events Since December 31, 2000........................A - 21
         4.30       Allowance for Loan Losses.............................A - 22
         4.31       Agreements With Bank Regulators.......................A - 22
         4.32       True and Complete Information.........................A - 22

ARTICLE  V     CERTAIN COVENANTS..........................................A - 22
         5.1        Disclosure Statement..................................A - 22
         5.2        Changes Affecting Representations.....................A - 22
         5.3        Conduct of Business Pending the Effective Time
                       of the Merger......................................A - 22
         5.4        Accrual of Transaction Expenses.......................A - 24
         5.5        Termination of Phantom Stock Plan.....................A - 24
         5.6        Regular Dividends.....................................A - 24
         5.7        Affiliates............................................A - 25
         5.8        Approval of Plan of Merger by Macatawa Shareholders...A - 25
         5.9        Approval of Plan of Merger by Grand Shareholders......A - 25
         5.10       Competing Proposals...................................A - 26
         5.11       Indemnification.......................................A - 26
         5.12       Insurance.............................................A - 26
         5.13       Name..................................................A - 27
         5.14       Charitable Giving.....................................A - 27

ARTICLE  VI    ADDITIONAL AGREEMENTS......................................A - 27
         6.1        Registration Statement................................A - 27
         6.2        Other Filings.........................................A - 27
         6.3        Press Releases........................................A - 27
         6.4        Miscellaneous Agreements and Consents.................A - 27
         6.5        Grand Financial Information...........................A - 27
         6.6        Investigation.........................................A - 28
         6.7        Environmental Investigation...........................A - 29
         6.8        Employee Benefit Plans................................A - 29

ARTICLE  VII   CONDITIONS PRECEDENT TO MACATAWA'S OBLIGATIONS.............A - 29
         7.1        Renewal of Representations and Warranties, Etc........A - 30
         7.2        Opinion of Legal Counsel..............................A - 30
         7.3        Required Approvals....................................A - 30
         7.4        Order, Decree, Etc....................................A - 30
         7.5        Proceedings...........................................A - 30
         7.6        Tax Matters...........................................A - 30
         7.7        Registration Statement................................A - 31
         7.8        Certificate as to Outstanding Shares..................A - 31

                                      A-3

         7.9        Change of Control Waivers.............................A - 31
         7.10       Employment Agreements.................................A - 31
         7.11       Grand Stock Options...................................A - 31
         7.12       Amendment of Grand Stock Options......................A - 31
         7.13       Fairness Opinion......................................A - 31

ARTICLE  VIII  CONDITIONS PRECEDENT TO GRAND'S OBLIGATIONS................A - 31
         8.1        Renewal of Representations and Warranties, Etc........A - 31
         8.2        Opinions of Legal Counsel.............................A - 32
         8.3        Required Approvals....................................A - 32
         8.4        Order, Decree, Etc....................................A - 32
         8.5        Proceedings...........................................A - 32
         8.6        Tax Matters...........................................A - 32
         8.7        Registration Statement................................A - 32
         8.8        Listing of Shares.....................................A - 32
         8.9        Certificate as to Outstanding Shares..................A - 32
         8.10       Fairness Opinion......................................A - 32

ARTICLE IX     ABANDONMENT OF MERGER......................................A - 33
         9.1        Mutual Abandonment....................................A - 33
         9.2        Upset Date............................................A - 33
         9.3        Macatawa's Rights to Terminate........................A - 33
         9.4        Grand's Rights to Terminate...........................A - 33
         9.5        Effect of Termination.................................A - 33

ARTICLE X      MISCELLANEOUS..............................................A - 34
         10.1       "Material Adverse Effect" Defined.....................A - 34
         10.2       "Knowledge" Defined...................................A - 34
         10.3       Nonsurvival of Representations, Warranties,
                       and Agreements.....................................A - 34
         10.4       Amendment.............................................A - 34
         10.5       Expenses..............................................A - 34
         10.6       Specific Enforcement..................................A - 34
         10.7       Jurisdiction; Jury....................................A - 34
         10.8       Waiver................................................A - 34
         10.9       Notices...............................................A - 35
         10.10      Governing Law.........................................A - 35
         10.11      Entire Agreement......................................A - 35
         10.12      Third Party Beneficiaries.............................A - 35
         10.13      Counterparts..........................................A - 35
         10.14      Further Assurances; Privileges........................A - 35
         10.15      Headings, Etc.........................................A - 36
         10.16      Calculation of Dates and Deadlines....................A - 36
         10.17      Severability..........................................A - 36

                                      A-4

                          AGREEMENT AND PLAN OF MERGER


     This  Agreement  and Plan of Merger  (the "Plan of  Merger")  is made as of
November  20,  2001,  between  GRAND  BANK  FINANCIAL  CORPORATION,  a  Michigan
corporation  ("Grand"),  and MACATAWA BANK CORPORATION,  a Michigan  corporation
("Macatawa").

     Macatawa and Grand (sometimes  individually  referred to as a "Corporation"
or collectively as the "Corporations")  have agreed to merge Grand with and into
Macatawa  in  accordance  with this Plan of Merger  and in  accordance  with the
Business  Corporation  Act of the State of Michigan,  as amended (the  "Michigan
Act"). The transactions contemplated by and described in this Plan of Merger are
referred to as the "Merger."

     Macatawa is a bank  holding  company  registered  as such with the Board of
Governors of the Federal Reserve System (the "Federal  Reserve Board") under the
Bank Holding  Company Act of 1956, as amended (the "Federal Bank Holding Company
Act").  Macatawa has authorized  capital stock consisting of 9,500,000 shares of
common stock, no par value  ("Macatawa  Common  Stock").  Each share of Macatawa
Common Stock is entitled to one vote on all matters  submitted for a vote of the
shareholders. As of the date of this Plan of Merger, there were 5,307,201 shares
of Macatawa Common Stock issued and outstanding.

     Grand is a bank holding company registered as such with the Federal Reserve
Board under the Federal Bank Holding  Company Act. Grand has authorized  capital
stock  consisting of 250,000 shares of common stock, no par value ("Grand Common
Stock"). Each share of Grand Common Stock is entitled to one vote on all matters
submitted for a vote of the shareholders. As of the date of this Plan of Merger,
there were 134,959  shares of Grand Common  Stock  issued and  outstanding,  and
Grand had options  outstanding  to purchase an additional  4,825 shares of Grand
Common  Stock  ("Grand  Stock  Options").  Grand  owns  all  of the  issued  and
outstanding  shares of capital stock of Grand,  a Michigan  banking  corporation
(the "Bank").

     The  boards  of  directors  of Grand and  Macatawa  each  deems the  Merger
advisable  and in the  best  interests  of  their  respective  Corporations  and
shareholders.  Grand  and  Macatawa  have  each  adopted  this Plan of Merger by
resolutions duly adopted by their respective boards of directors.  The boards of
directors  of Grand  and  Macatawa  have  directed  that  this Plan of Merger be
submitted to the respective shareholders of each Corporation for approval.

     In consideration of the promises and the representations,  warranties,  and
covenants contained in this Plan of Merger, the parties agree:

                                      A-5

                                    ARTICLE I
                                 THE TRANSACTION

     Subject to the terms and  conditions of this Plan of Merger,  the Merger of
Grand with and into Macatawa shall be carried out in the following manner:

     1.1 Approval of Plan of Merger.  As soon as practicable  after this Plan of
Merger has been  executed  and  delivered  and the  Registration  Statement  (as
described in Section 3.5.1 (Document)) has become effective,  Grand shall submit
this  Plan of Merger  and  Macatawa  shall  submit  this Plan of Merger  and the
issuance of shares of Macatawa  Common  Stock  pursuant to the Merger,  to their
respective  shareholders for approval at a meeting properly called, noticed, and
held for that purpose.

     1.2 The Closing.  The Merger shall be  consummated  as promptly as possible
after a closing  (the  "Closing").  The Closing  shall be held at the offices of
Varnum, Riddering,  Schmidt & Howlett LLP, Bridgewater Place, 333 Bridge Street,
N.W.,  Grand  Rapids,  Michigan  49504 on such  date and at such  time as may be
mutually agreed by the parties,  or in the absence of such agreement,  on a date
specified by either party upon 5 business days' written notice after the last to
occur of the following events:  (i) the receipt of all consents and approvals of
government  regulatory  authorities as legally required to consummate the Merger
and the  expiration of all  statutory  waiting  periods;  and (ii) the requisite
approval  of this  Plan of  Merger by the  shareholders  of Grand and  Macatawa.
Scheduling or commencing the Closing shall not, however,  constitute a waiver of
the conditions precedent as set forth in this Plan of Merger. Upon completion of
the  Closing,  Grand  and  Macatawa  shall  each  promptly  execute  and file an
appropriate  certificate  of merger in the form and as required by the  Michigan
Act to effect the Merger (the "Certificate of Merger.")

     1.3 Effective  Time of the Merger.  Subject to the terms and  conditions of
this Plan of Merger,  the Merger  shall be  consummated  as promptly as possible
following the Closing by filing the Certificate of Merger in the manner required
by law.  The  "Effective  Time of the  Merger"  shall  be a date  and time to be
specified in the  Certificate of Merger,  which shall be as soon as practicable,
but not later than 3 business days, after the Closing.

     1.4 Merger of Grand with and into Macatawa.  Grand shall be merged with and
into Macatawa (each sometimes  being referred to as a "Constituent  Corporation"
prior to the  Merger)  by the  filing  of the  Certificate  of  Merger  with the
Michigan  Department  of Consumer and Industry  Services,  Bureau of  Commercial
Services Corporations Division as provided by the Michigan Act. At the Effective
Time  of  the  Merger,  the  Constituent  Corporations  shall  become  a  single
corporation, which shall be Macatawa (the "Surviving Corporation").

     1.5 Effect of the Merger.  From and after the Effective Time of the Merger,
the  effect of the  Merger  upon each of the  Constituent  Corporations  and the
Surviving  Corporation shall be as provided in Chapter Seven of the Michigan Act
with respect to the merger of domestic corporations.

     1.6  Additional  Actions.  If, at any time after the Effective  Time of the
Merger, the Surviving  Corporation shall determine that any further  assignments
or assurances or any other acts are necessary or desirable to vest,  perfect, or
confirm, of record or otherwise,  in the Surviving Corporation its right, title,
or interest in, to, or under any of the rights,  properties,  or assets of Grand
acquired or to be acquired by the  Surviving  Corporation  as a result of, or in
connection with, the Merger, or to otherwise carry out the purposes of this Plan
of Merger,  then Grand and its  directors  and officers  shall be deemed to have
granted to the Surviving Corporation an irrevocable power of attorney to execute
and deliver all such proper deeds, assignments,  and assurances in law and to do
all  acts  necessary  or  proper  to  vest,  perfect,  or  confirm  title to and
possession of such rights,  properties,  or assets in the Surviving  Corporation
and to  otherwise  carry  out the  purposes  of this Plan of  Merger.  After the
Effective  Time of the Merger,  the  directors  and  officers  of the  Surviving
Corporation  are fully  authorized in the name of Grand to take any and all such
action as may be contemplated by this Article I (The Transaction).

     1.7 Surviving  Corporation.  As of and immediately after the Effective Time
of the Merger,  the Surviving  Corporation  shall have the following  attributes
until they are subsequently changed in the manner provided by law:

          1.7.1 Name. The name of the Surviving  Corporation  shall be "Macatawa
     Bank Corporation."

          1.7.2 Articles of Incorporation.  The Articles of Incorporation of the
     Surviving Corporation shall be the Articles of Incorporation of Macatawa as
     in effect immediately prior to the Effective Time of the Merger.

          1.7.3  Bylaws.  The Bylaws of the Surviving  Corporation  shall be the
     Bylaws of Macatawa as in effect  immediately prior to the Effective Time of
     the Merger.

                                      A-6

          1.7.4  Directors.  From and after the  Effective  Time of the  Merger,
     until duly changed in compliance  with  applicable  law and the Articles of
     Incorporation of the Surviving  Corporation,  the Board of Directors of the
     Surviving  Corporation  shall  consist of the  persons  who are  serving as
     directors of Macatawa immediately prior to the Effective Time of the Merger
     plus one additional  person who is a member of the Grand Board of Directors
     immediately  prior to the Effective  Time of the Merger and who is selected
     by Grand, with such selection to be subject to the approval by the Board of
     Directors of Macatawa.

          1.7.5 Officers. The officers of the Surviving Corporation shall be the
     persons who were  officers of Macatawa  immediately  prior to the Effective
     Time of the Merger.

                                   ARTICLE II
                    MERGER CONSIDERATION; EXCHANGE PROCEDURE

     2.1 Conversion of Outstanding Grand Common Stock. Subject to the provisions
of this Plan of Merger, each share of Grand Common Stock outstanding immediately
prior to the Effective Time of the Merger shall become and be converted into the
right to receive  that  number of shares of Macatawa  Common  Stock equal to the
Stock Exchange  Ratio (as defined below) (the "Per Share Stock  Consideration"),
provided that no fractional shares of Macatawa Common Stock will be issued. Each
share of Grand Common Stock (i) held by Macatawa or any of its  subsidiaries for
its own account and not in a fiduciary or  representative  capacity for a person
other  than  Macatawa  or any of its  subsidiaries  or (ii)  held by Grand as an
authorized but unissued share,  if any, shall be cancelled and no  consideration
shall be issuable and payable  with  respect to any such share.  For purposes of
this Plan of Merger, the "Stock Exchange Ratio" will be 17.5979.

     2.2  Conversion of Grand Stock  Options.  Subject to the provisions of this
Plan of Merger:

          2.2.1 Definition of Grand Stock Options.  For purposes of this Plan of
     Merger,  "Grand  Stock  Options"  shall  mean all  outstanding  options  to
     purchase  shares of Grand Common  Stock which were granted  pursuant to the
     Grand Bank Financial  Corporation  1988 Stock Option Plan or the Grand Bank
     Financial Corporation Stock Option Plan of 1997.

          2.2.2  Conversion of Outstanding  Grand Stock Options.  Subject to the
     provisions  of this  Plan of  Merger,  each  Grand  Stock  Option  which is
     outstanding  immediately prior to the Effective Time of the Merger shall at
     the Effective  Time of the Merger become and be converted into an option to
     purchase  shares  of  Macatawa  Common  Stock  ("Converted  Macatawa  Stock
     Options") in an amount equal to the product  (rounded to the fourth decimal
     place) of (a) the number of shares of Grand  Common  Stock then  subject to
     the  Grand  Stock  Option,  multiplied  by (b) the  Stock  Exchange  Ratio,
     provided that any fractional shares of Macatawa Common Stock resulting from
     such  multiplication  shall be  rounded to the  nearest  whole  share.  The
     exercise  price per share of  Macatawa  Common  Stock  under the  Converted
     Macatawa Stock Option shall be equal to the then applicable  exercise price
     per share of Grand Common Stock under the Grand Stock Option divided by the
     Stock Exchange Ratio, provided that such exercise price shall be rounded to
     the nearest whole cent.

          2.2.3  Registration  of  Underlying  Shares of Macatawa  Common Stock.
     Macatawa shall take all corporate  action necessary to reserve for issuance
     a sufficient  number of shares of Macatawa  Common Stock for delivery  upon
     the  exercise  of  all  Converted  Macatawa  Stock  Options.   As  soon  as
     practicable  after the Effective Time of the Merger,  Macatawa shall file a
     registration  statement on form S-8 (or any successor or other  appropriate
     form),  with respect to the Macatawa  Common Stock  subject to such options
     and shall use its reasonable best efforts to maintain the  effectiveness of
     such registration  statement or statements (and maintain the current status
     of the prospectus or prospectuses contained therein) for so long as all the
     Converted Macatawa Stock Options remain outstanding.

     2.3 No Fractional  Securities.  Notwithstanding any other provision hereof,
no  fractional  shares of Macatawa  Common  Stock and no  certificates  or scrip
therefor,  or other evidence of ownership thereof, will be issued in the Merger;
instead,  Macatawa  shall pay to each holder of Grand Common Stock (after taking
into account all Old Certificates (as defined in Section 2.4.1 (New Certificates
and  Exchange  Fund)  delivered  by such  holder)  an  amount  in cash  (without
interest)  determined by  multiplying  such  fraction by the Market  Price.  For
purposes of this Plan of Merger,  the "Market Price" shall be the average of the
last-reported  sale price per share of  Macatawa  Common  Stock for the five (5)
consecutive  trading  days  ending  on the  business  day prior to  Closing,  as
reported on The NASDAQ Stock Market.

                                      A-7

     2.4 Exchange Procedures.

          2.4.1 New Certificates and Exchange Fund. At or prior to the Effective
     Time of the Merger, Macatawa shall deliver, or shall cause to be delivered,
     to Registrar  and Transfer  Company or such other bank or trust  company as
     Macatawa  may  designate  (the  "Exchange  Agent"),  for the benefit of the
     holders of certificates  formerly representing shares of Grand Common Stock
     ("Old  Certificates")  for  exchange  in  accordance  with this  Article II
     (Merger Consideration;  Exchange Procedure),  certificates representing the
     shares of Macatawa  Common  Stock  ("New  Certificates")  and an  estimated
     amount of cash (such cash and New Certificates, together with any dividends
     or distributions with respect thereto (without any interest thereon), being
     hereinafter  referred  to as the  "Exchange  Fund"  to be  issued  and paid
     pursuant to this  Article II in exchange  for  outstanding  shares of Grand
     Common Stock.

          2.4.2  Transmittal  Materials.  As promptly as  practicable  after the
     Effective  Time of the Merger,  Macatawa  shall send or cause to be sent to
     each former  holder of record of shares of Grand Common  Stock  immediately
     prior to the Effective Time of the Merger, transmittal materials for use in
     exchanging such holder's Old Certificates for the  consideration  set forth
     in this Article II (Merger  Consideration;  Exchange  Procedure).  Macatawa
     shall cause the New Certificates into which shares of a shareholder's Grand
     Common Stock are converted on the  Effective  Time of the Merger and/or any
     check  in  respect  of any  fractional  share  interests  or  dividends  or
     distributions  which  such  person  shall  be  entitled  to  receive  to be
     delivered  to such  holder  upon  delivery  to the  Exchange  Agent  of Old
     Certificates  representing  such shares of Grand Common Stock (or indemnity
     reasonably  satisfactory to Macatawa and the Exchange Agent, if any of such
     certificates  are  lost,  stolen or  destroyed)  owned by such  holder.  No
     interest  will be paid on any such cash to be paid pursuant to this Article
     II upon such delivery.

          2.4.3  Delivery to Public  Officials.  Notwithstanding  the foregoing,
     neither  the  Exchange  Agent nor any party  hereto  shall be liable to any
     former holder of Grand Common Stock for any amount properly  delivered to a
     public  official  pursuant to  applicable  abandoned  property,  escheat or
     similar laws.

          2.4.4 Dividends and Distributions. No dividends or other distributions
     with respect to Macatawa  Common Stock with a record date  occurring  after
     the  Effective  Time of the  Merger  shall  be paid  to the  holder  of any
     unsurrendered  Old  Certificate  representing  shares of Grand Common Stock
     converted in the Merger into shares of such Macatawa Common Stock until the
     holder thereof shall surrender such Old Certificate in accordance with this
     Article II (Merger Consideration;  Exchange Procedure). After the surrender
     of an Old Certificate in accordance with this Article II, the record holder
     thereof  shall  be  entitled  to  receive  any  such   dividends  or  other
     distributions,  without any interest thereon,  which theretofore had become
     payable with respect to shares of Macatawa Common Stock represented by such
     Old Certificate.

          2.4.5 Unclaimed  Funds.  Any portion of the Exchange Fund that remains
     unclaimed  by the  shareholders  of  Grand  for  twelve  months  after  the
     Effective Time of the Merger shall be paid to Macatawa. Any shareholders of
     Grand who have not  theretofore  complied  with  this  Article  II  (Merger
     Consideration;  Exchange  Procedure) shall thereafter look only to Macatawa
     for payment of the shares of  Macatawa  Common  Stock,  cash in lieu of any
     fractional  shares and unpaid dividends and  distributions on the shares of
     Macatawa Common Stock  deliverable in respect of each share of Grand Common
     Stock such shareholder holds as determined pursuant to this Plan of Merger,
     in each case, without any interest thereon.

          2.4.6 Grand Stock Options. In addition to the foregoing,  Macatawa may
     require any  procedures  reasonably  deemed  necessary  to  effectuate  the
     conversion  of  Grand  Stock  Options  as   contemplated   by  Section  2.2
     (Conversion of Grand Stock Options).

     2.5 Macatawa Common Stock.  Each share of Macatawa Common Stock outstanding
immediately  prior to the  Effective  Time of the Merger  shall  continue  to be
outstanding  without any change.  Each shareholder of Macatawa whose shares were
outstanding  immediately  before the Effective  Time of the Merger will hold the
same number of shares, with identical designations, preferences, limitations and
relative rights, immediately after the Effective Time of the Merger.

     2.6  Anti-Dilution  Adjustments.  This  Plan of  Merger  shall not limit or
restrict in any manner  Macatawa's  right to effect a consolidation or merger of
Macatawa  with or into another  corporation  or to effect a stock  split,  stock
dividend or similar transaction with respect to the outstanding  Macatawa Common
Stock.  In the event that  Macatawa  changes (or  establishes  a record date for
changing) the number of shares of Macatawa  Common Stock issued and  outstanding
prior to the  Effective  Time of the Merger as a result of a stock split,  stock
dividend or similar transaction with respect to the outstanding  Macatawa Common
Stock and the record date therefore  shall be prior to the Effective Time of the
Merger,  the Stock  Exchange  Ratio shall be adjusted by  multiplying it by that
ratio (i) the numerator of which shall be the total number of shares of

                                      A-8

Macatawa  Common  Stock  that are  outstanding  as of the  record  date for such
adjustment plus the additional  number of shares (including the aggregate of all
possible  fractional shares) to be issued in such adjustment computed as of that
record  date;  and (ii) the  denominator  of which shall be the total  number of
shares of  Macatawa  Common  Stock  outstanding  as of the record  date for such
adjustment.   In  the  event  of  a  recapitalization   or  reclassification  of
outstanding  shares of Macatawa  Common  Stock or a  consolidation  or merger of
Macatawa with or into another corporation, other than a merger in which Macatawa
is the surviving  corporation and which does not result in any  reclassification
of Macatawa Common Stock,  holders of Grand Common Stock would receive,  in lieu
of each share of Macatawa Common Stock to be issued in exchange for Grand Common
Stock, the kind and amount of shares of Macatawa stock, other securities, money,
and property receivable upon such reclassification,  consolidation, or merger by
holders of Macatawa Common Stock with respect to shares of Macatawa Common Stock
outstanding immediately prior to such reclassification, consolidation or merger.

     2.7 Grand  Common Stock No Longer  Outstanding.  Each share of Grand Common
Stock outstanding immediately prior to the Effective Time of the Merger shall be
considered  to be no longer  outstanding  and to  represent  solely the right to
receive shares of Macatawa  Common Stock as provided in Section 2.1  (Conversion
of  Outstanding  Grand  Common  Stock),  together  with any other  distributions
payable as provided in Section 2.6 (Anti-Dilution  Adjustments),  but subject to
the payment of cash in lieu of fractional  shares as provided in Section 2.3 (No
Fractional Securities).

                                   ARTICLE III
                   REPRESENTATIONS AND WARRANTIES OF MACATAWA

     Except  as  otherwise  set  forth  in  the  Macatawa  disclosure  statement
("Macatawa  Disclosure  Statement")  previously  delivered  to  Grand,  Macatawa
represents and warrants to Grand that:

     3.1 Authorization, No Conflicts, Etc.

          3.1.1  Authorization  of  Agreement.  The  execution,   delivery,  and
     performance  of this Plan of Merger by Macatawa  have been duly  authorized
     and approved by all necessary  corporate  action,  except that this Plan of
     Merger and the issuance of shares of Macatawa  Common Stock pursuant to the
     Merger, is subject to the approval of Macatawa's  shareholders as described
     in  Section  1.1  (Approval  of  Plan  of  Merger)  and,  except  for  such
     shareholder approval, when executed and delivered, this Plan of Merger will
     be legally binding on and enforceable  against  Macatawa in accordance with
     its terms.

          3.1.2 No Conflict,  Breach, Violation,  Etc. The execution,  delivery,
     and performance of this Plan of Merger by Macatawa, and the consummation of
     the Merger,  do not and will not  violate,  conflict  with,  or result in a
     breach of:

               (a) Articles or Bylaws.  Any provision of Macatawa's  Articles of
          Incorporation or Bylaws; or

               (b) Statutes, Judgments, Etc. Any statute, code, ordinance, rule,
          regulation,  judgment,  order,  writ,  arbitration  award,  decree, or
          injunction  applicable to Macatawa or its  subsidiaries,  assuming the
          timely  receipt of each of the approvals  referred to in Section 3.1.4
          (Required Approvals).

          3.1.3 No Contractual Breach, Default,  Liability,  Etc. The execution,
     delivery,  and  performance  of this Plan of Merger  by  Macatawa,  and the
     consummation of the Merger, do not and will not:

               (a) Agreements,  Etc. Violate,  conflict with, result in a breach
          of, constitute a default under, require any consent, approval, waiver,
          extension,  amendment,  authorization,  notice  or  filing  under,  or
          extinguish  any  material  contract  right of  Macatawa  or any of its
          subsidiaries  under  any  agreement,   mortgage,   lease,  commitment,
          indenture, other instrument, or obligation to which Macatawa or any of
          its  subsidiaries  is a party or by which they are bound or  affected:
          (1) which is material to the business,  income, or financial condition
          of Macatawa on a consolidated basis; or (2) the violation or breach of
          which could prevent Macatawa from consummating the Merger;

               (b) Regulatory Restrictions.  Violate, conflict with, result in a
          breach of, constitute a default under, require any consent,  approval,
          waiver, extension, amendment,  authorization,  notice, or filing under
          any  memorandum  of  understanding  or  similar   regulatory   consent
          agreement to which Macatawa or any of its  subsidiaries  is a party or
          subject, or by which it is bound or affected; or

                                      A-9

                    (c) Tortious Interference.  Subject Grand, its subsidiaries,
               or their  respective  directors  or  officers  to  liability  for
               tortious interference with contractual rights.

          3.1.4 Required Approvals. No notice to, filing with, authorization of,
     exemption  by, or consent or approval  of, any public body or  authority is
     necessary for the  consummation of the Merger by Macatawa other than filing
     the Certificate of Merger in compliance with the provisions of the Michigan
     Act,  compliance with federal and state  securities laws, and the consents,
     authorizations,  approvals,  or exemptions  required under the Federal Bank
     Holding Company Act. As of the date of this Plan of Merger,  Macatawa knows
     of no reason why the regulatory approvals referred to in this Section 3.1.4
     (Required  Approvals)  cannot  be  obtained  or why this  process  could be
     materially impeded.

     3.2  Organization  and Good  Standing.  Macatawa and its  subsidiaries  are
corporations duly organized,  validly  existing,  and in good standing under the
laws of the  State  of  Michigan.  Macatawa  and its  subsidiaries  possess  all
requisite  corporate  power  and  authority  to  own,  operate,  and  lease  its
properties  and  to  carry  on its  business  substantially  as it is now  being
conducted in all  material  respects.  Macatawa is a bank  holding  company duly
registered and in good standing with the Federal Reserve Board under the Federal
Bank Holding Company Act.  Macatawa and its  subsidiaries are not required to be
qualified or admitted to conduct business as a foreign  corporation in any other
state.

     3.3 Subsidiaries. Macatawa owns all of the issued and outstanding shares of
capital  stock of Macatawa  Bank,  which owns all of the issued and  outstanding
shares of capital stock of Macatawa Bank Mortgage Company, in each case free and
clear of all claims, security interests,  pledges, or liens of any kind. Each of
Macatawa's  subsidiaries  has full corporate power and authority to carry on its
business substantially as and where now being conducted.

     3.4 Capital Stock.

          3.4.1  Classes and Shares.  The  authorized  capital stock of Macatawa
     consists of 500,000 shares of preferred stock, no par value,  none of which
     have been issued,  and 9,500,000  shares of common stock,  no par value, of
     which,  as of the date and time of the  execution  of this Plan of  Merger,
     5,307,201 shares were issued and outstanding.

          3.4.2  No  Other  Capital  Stock.  There  is no  security  or class of
     securities  authorized or issued which  represents or is  convertible  into
     capital stock of Macatawa  except as described in this Section 3.4 (Capital
     Stock).  As of the date of the execution of this Plan of Merger,  there are
     no outstanding  subscriptions,  options, warrants, or rights to acquire any
     capital stock of Macatawa, or agreements to which Macatawa is a party or by
     which it is bound to issue  capital  stock,  except  for the stock  options
     disclosed in Macatawa's  Annual Report to  shareholders  for the year ended
     December 31, 2000 (the "Macatawa  Annual Report") and its Quarterly  Report
     on Form 10-Q for the quarter ended September 30, 2001.

          3.4.3 Voting Rights.  Other than the shares of Macatawa's common stock
     described in this Section 3.4 (Capital Stock),  neither Macatawa nor any of
     its subsidiaries have outstanding any security:

               (a) The  holder or holders of which have the right to vote on the
          approval of the Merger or this Plan of Merger; or

               (b) Which  entitles  the  holder or  holders  to  consent  to, or
          withhold consent on, the Merger or this Plan of Merger.

          3.4.4 Macatawa Common Stock. The shares of Macatawa Common Stock to be
     issued in the Merger,  when issued in accordance  with this Plan of Merger,
     will be duly  authorized  and, when issued as  contemplated by this Plan of
     Merger, will be validly issued, fully paid, and nonassessable shares.

     3.5 Registration Statement, Etc.

          3.5.1 Document.  The term "Document," when capitalized in this Plan of
     Merger, shall collectively mean: (i) the registration statement to be filed
     by Macatawa  with the  Securities  and Exchange  Commission  (the "SEC") in
     connection  with the Macatawa  Common Stock to be issued in the Merger (the
     "Registration  Statement");  (ii) the prospectus  and proxy  statement (the
     "Prospectus and Proxy  Statement") to be mailed to the  shareholders of the
     Corporations in connection  with their  respective  shareholders'  meetings
     regarding  this Plan of Merger;  and (iii) any

                                      A-10

     other  documents to be filed with the SEC, the Federal  Reserve Board,  the
     State of Michigan,  or any other  regulatory  agency in connection with the
     transactions contemplated by this Plan of Merger.

          3.5.2 Accurate Information.  None of the information to be supplied by
     Macatawa for inclusion, or included, in any Document will:

               (a) Be false or misleading  with respect to any material fact, or
          omit to state  any  material  fact  necessary  to make the  statements
          therein not misleading (i) at the respective  times such Documents are
          filed;  (ii)  with  respect  to the  Registration  Statement,  when it
          becomes effective;  and (iii) with respect to the Prospectus and Proxy
          Statement, when it is mailed.

               (b) With respect to the Registration Statement and the Prospectus
          and Proxy Statement, as either may be amended or supplemented,  at the
          time of either Corporation's shareholders meeting with respect to this
          Plan of Merger,  be false or  misleading  with respect to any material
          fact,  or omit to state any  material  fact  necessary  to correct any
          statement   in  any  earlier   communication   with   respect  to  the
          solicitation  of  any  proxy  for  either  Corporation's  shareholders
          meeting.

          3.5.3   Compliance  of  Filings.   All  Documents   that  Macatawa  is
     responsible  for filing with any regulatory  agency in connection  with the
     Merger  will  comply  in all  material  respects  with  the  provisions  of
     applicable law.

     3.6 Financial Statements. The consolidated financial statements of Macatawa
and its  subsidiaries  as of and for each of the three years ended  December 31,
2000, 1999 and 1998, as reported on by Macatawa's independent  accountants,  and
the unaudited consolidated financial statements of Macatawa and its subsidiaries
as of and for the quarter ended March 31, 2001, June 30, 2001, and September 30,
2001,   including  all  schedules   and  notes   relating  to  such   statements
(collectively,  "Macatawa's  Financial  Statements"),  fairly  present,  and the
unaudited  consolidated financial statements of Macatawa and its subsidiaries as
of and for each  quarter and year  ending  after the date of this Plan of Merger
until the  Effective  Time of the  Merger,  including  all  schedules  and notes
relating to such statements,  will fairly present,  the financial  condition and
the results of operations,  changes in shareholders'  equity,  and cash flows of
Macatawa as of the respective  dates of and for the periods  referred to in such
financial  statements,  all in accordance with generally  accepted United States
accounting  principles ("GAAP")  consistently  applied,  subject, in the case of
unaudited  interim  financial   statements,   to  normal,   recurring   year-end
adjustments  (the effect of which would not,  individually  or in the aggregate,
have a Material  Adverse Effect on Macatawa) and the absence of notes (that,  if
presented,  would not  differ  materially  from  those  included  in  Macatawa's
Financial Statements).

     3.7  Absence  of  Undisclosed  Liabilities.  Except  as and  to the  extent
reflected or reserved against in the consolidated  balance sheet of Macatawa and
its  subsidiaries  as of September  30,  2001,  and the notes  thereto,  neither
Macatawa nor any subsidiary  had, as of such date,  liabilities or  obligations,
secured or unsecured (whether accrued, absolute, or contingent) which are, or as
to which  there is a  reasonable  probability  that they  could  be,  materially
adverse to the income or financial condition of Macatawa and its subsidiaries on
a consolidated basis.

     3.8 Absence of Material Adverse Change. Since September 30, 2001, there has
been no material adverse change in the business,  income, or financial condition
of  Macatawa  and  its  subsidiaries  on  a  consolidated  basis.  No  facts  or
circumstances  have been discovered from which it reasonably  appears that there
is a  significant  risk and  reasonable  probability  that  there  will  occur a
material  adverse  change in the  business,  income,  or financial  condition of
Macatawa and its subsidiaries on a consolidated basis.

     3.9 Absence of Litigation.  There is no action,  suit,  proceeding,  claim,
arbitration,  or  investigation  pending or threatened by any person,  including
without limitation any governmental or regulatory agency,  against Macatawa, any
of its  subsidiaries,  or the  assets  or  business  of  Macatawa  or any of its
subsidiaries,  any of which  has or may have a  Material  Adverse  Effect on the
business,  income, or financial  condition of Macatawa and its subsidiaries on a
consolidated  basis.  There  is no  factual  basis  known  to  Macatawa  or  its
subsidiaries  which presents a reasonable  potential for any such action,  suit,
proceeding, claim, arbitration, or investigation.

     3.10 Conduct of  Business.  Macatawa and its  subsidiaries  have  conducted
their respective businesses and used their respective  properties  substantially
in  compliance  with all  federal,  state,  and  local  laws,  civil or  common,
ordinances and regulations,  including without limitation applicable federal and
state laws and regulations  concerning  banking,  securities,  truth-in-lending,
truth-in-savings,   mortgage  origination  and  servicing,  usury,  fair  credit
reporting,  consumer protection,  occupational  safety,  civil rights,  employee
protection,  fair employment practices, fair labor standards, and insurance; and
Environmental  Laws (as  defined in  Section  4.21.3(b)  (Environmental  Laws)),
except for  violations  which  would not have a Material  Adverse  Effect on the
business,  income or financial  condition of Macatawa and its  subsidiaries on a
consolidated basis.

                                      A-11

     3.11 Absence of Defaults Under  Contracts.  There is no existing default by
Macatawa or any of its  subsidiaries,  or any other party,  under any  contract,
mortgage,  lease,  indenture or agreement to which  Macatawa or a subsidiary  of
Macatawa  is a party,  or by which any of them is  bound,  which  could  subject
Macatawa  or a  subsidiary  of  Macatawa  to a risk that  would  have a Material
Adverse Effect on Macatawa and its subsidiaries on a consolidated basis.

     3.12 Regulatory Filings. In the last five years:

          3.12.1 Filings.  Macatawa and its subsidiaries  have filed in a timely
     manner all material  filings with  regulatory  bodies for which filings are
     required;

          3.12.2  Complete and  Accurate.  All such  filings,  as amended,  were
     complete  and  accurate  in all  material  respects as of the dates of such
     filings,  and there were no misstatements or omissions therein which, as of
     the making of this  representation  and warranty,  would be material to the
     business,  income, or financial  condition of Macatawa and its subsidiaries
     on a consolidated basis; and

          3.12.3 Compliance with  Regulations.  All such filings complied in all
     material respects with all regulations, forms, and guidelines applicable to
     such filings.

     3.13  Licenses,  Permits,  Etc.  Macatawa  and its  subsidiaries  hold  all
licenses,  certificates,  permits,  franchises,  and rights from all appropriate
federal,  state, and other public authorities necessary for the conduct of their
businesses  as  presently  conducted,  the lack of which  would  have a Material
Adverse Effect on the business,  income, or financial  condition of Macatawa and
its subsidiaries on a consolidated basis.

     3.14 Environmental  Matters. There are no actions,  suits,  investigations,
liabilities,   inquiries  or  other  proceedings,  rules,  orders  or  citations
involving Macatawa or its subsidiaries pending, or to the knowledge of Macatawa,
threatened as a result of any failure of Macatawa or any of its subsidiaries, to
comply  with any  requirement  of  Environmental  Laws (as  defined  in  Section
4.21.3(b)  (Environmental Laws)) that is material to the operations or assets of
Macatawa and its  subsidiaries  on a  consolidated  basis.  To the  knowledge of
Macatawa, there is no factual basis for any of the foregoing.

     3.15 Allowance for Loan Losses.  The allowance for loan losses reflected in
Macatawa's audited  consolidated  financial  statements and Call Reports for the
fiscal year ended December 31, 2000, and for the fiscal quarter ended  September
30, 2001, and the audited  consolidated  financial statements and unaudited Call
Reports for any subsequent  quarter or year,  was or will be (as  applicable) in
the  reasonable  opinion of  management  of  Macatawa  (a)  adequate to meet all
reasonably   anticipated  loan  losses,  net  of  recoveries  related  to  loans
previously  charged  off  as of  those  dates,  and  (b)  consistent  with  GAAP
consistently applied and safe and sound banking practices.

     3.16  Agreements  With  Bank  Regulators.   Neither  Macatawa  nor  any  of
Macatawa's   subsidiaries   is  a  party  to  any  agreement  or  memorandum  of
understanding  with, or a party to any commitment  letter,  board  resolution or
similar  undertaking  to, or is  subject to any order or  directive  by, or is a
recipient  of  any  extraordinary  supervisory  letter  from,  any  governmental
authority  that  restricts  materially  the conduct of its  business,  or in any
manner relates to its capital  adequacy,  its credit or reserve  policies or its
management,  nor has Macatawa been advised by any governmental authority that it
is contemplating issuing or requesting (or is considering the appropriateness of
issuing  or  requesting)  any  such  order,  decree,  agreement,  memorandum  of
understanding,  extraordinary  supervisory letter,  commitment letter or similar
submission.  As of the date of this Plan of Merger,  Macatawa knows of no reason
why the regulatory  approvals referred to in Section 3.1.4 (Required  Approvals)
cannot be obtained or why this process would be materially impeded.

     3.17  True  and  Complete  Information.   No  schedule,   statement,  list,
certificate,  or other  information  furnished or to be furnished by Macatawa in
connection  with  this  Plan  of  Merger,   including  the  Macatawa  Disclosure
Statement,  contains or will contain any untrue statement of a material fact, or
omits or will omit to state a material  fact  necessary  to make the  statements
contained  therein,  in light of the  circumstances  in which they are made, not
misleading.

                                   ARTICLE IV
                     REPRESENTATIONS AND WARRANTIES OF GRAND

     Except as otherwise  set forth in the Grand  disclosure  statement  ("Grand
Disclosure  Statement")  previously delivered to Macatawa,  Grand represents and
warrants to Macatawa that:

                                      A-12

     4.1 Authorization, No Conflicts, Etc.

          4.1.1  Authorization  of  Agreement.  The  execution,   delivery,  and
     performance  of this Plan of Merger by Grand have been duly  authorized and
     approved by all necessary  corporate action except that this Plan of Merger
     is subject to the approval of Grand's  shareholders as described in Section
     1.1 (Approval of Plan of Merger) and, except for such shareholder approval,
     when executed and delivered, this Plan of Merger will be legally binding on
     and enforceable against Grand in accordance with its terms.

          4.1.2 No Conflict,  Breach, Violation,  Etc. The execution,  delivery,
     and  performance of this Plan of Merger by Grand,  and the  consummation of
     the Merger,  do not and will not  violate,  conflict  with,  or result in a
     breach of:

               (a)  Articles or Bylaws.  Any  provision  of Grand's  Articles of
          Incorporation or Bylaws; or

               (b) Statutes, Judgments, Etc. Any statute, code, ordinance, rule,
          regulation,   judgment,   order,  writ,  arbitral  award,  decree,  or
          injunction  applicable  to Grand  or its  subsidiaries,  assuming  the
          timely  receipt of each of the approvals  referred to in Section 4.1.4
          (Required Approvals).

          4.1.3 No Contractual Breach, Default,  Liability,  Etc. The execution,
     delivery,  and  performance  of  this  Plan of  Merger  by  Grand,  and the
     consummation of the Merger, do not and will not:

          (a) Agreements,  Etc.  Violate,  conflict with, result in a breach of,
     constitute  a  default  under,  require  any  consent,   approval,  waiver,
     extension, amendment,  authorization, notice or filing under, or extinguish
     any material  contract right of Grand or any of its subsidiaries  under any
     agreement,  mortgage,  lease, commitment,  indenture,  other instrument, or
     obligation to which Grand or its  subsidiaries  is a party or by which they
     are bound or affected:  (1) which is material to the business,  income,  or
     financial  condition of Grand, the Bank or any other subsidiary of Grand on
     a consolidated basis; or (2) the violation or breach of which could prevent
     Grand from consummating the Merger;

          (b)  Regulatory  Restrictions.  Violate,  conflict  with,  result in a
     breach of,  constitute  a default  under,  require any  consent,  approval,
     waiver, extension,  amendment,  authorization,  notice, or filing under any
     memorandum of  understanding  or similar  regulatory  consent  agreement to
     which  Grand,  the  Bank or any  other  subsidiary  of  Grand is a party or
     subject, or by which it is bound or affected; or

          (c) Tortious Interference. Subject Macatawa or any of its subsidiaries
     or their  respective  directors  or  officers  to  liability  for  tortious
     interference with contractual rights.

          4.1.4 Required Approvals. No notice to, filing with, authorization of,
     exemption  by, or consent or approval  of, any public body or  authority is
     necessary for the consummation of the Merger by Grand other than filing the
     Certificate  of Merger in  compliance  with the  provisions of the Michigan
     Act,  compliance with federal and state  securities laws, and the consents,
     authorizations,  approvals,  or exemptions  required under the Federal Bank
     Holding Company Act. As of the date of this Plan of Merger,  Grand knows of
     no reason why the  regulatory  approvals  referred to in this Section 4.1.4
     (Required  Approvals)  cannot  be  obtained  or why this  process  could be
     materially impeded.

     4.2  Organization  and  Good  Standing.  Grand  and  its  subsidiaries  are
corporations duly organized,  validly  existing,  and in good standing under the
laws of the State of  Michigan.  Grand and its  subsidiaries  each  possess  all
requisite  corporate  power  and  authority  to  own,  operate,  and  lease  its
properties  and  to  carry  on its  business  substantially  as it is now  being
conducted  in all  material  respects.  Grand  is a bank  holding  company  duly
registered and in good standing with the Federal Reserve Board under the Federal
Bank Holding  Company  Act.  Grand and its  subsidiaries  are not required to be
qualified or admitted to conduct business as a foreign  corporation in any other
state.

     4.3 Subsidiaries.

          4.3.1  Ownership  of  Subsidiaries.  Grand  owns all of the issued and
     outstanding  shares  of  capital  stock of the Bank  which  owns all of the
     issued  and  outstanding  shares of  capital  stock of the  Grand  Mortgage
     Company  (the  "Mortgage  Company"),  in each  case  free and  clear of all
     claims,  security interests,  pledges, or liens of any kind. Grand does not
     have  "Control" (as defined in Section  2(a)(2) of the Federal Bank Holding
     Company Act,  using 5 percent rather than 25 percent),  either  directly or
     indirectly,  of any  corporation  engaged in an active trade or business or
     which holds any significant assets other than as stated in this Section 4.3
     (Subsidiaries).

                                      A-13

                  4.3.2 Rights to Capital Stock. There are no outstanding
         subscriptions, options, warrants, rights to acquire, or any other
         similar agreements pertaining to the capital stock of the Bank or the
         Mortgage Company.

               4.3.3 Qualification and Power. The Bank and the Mortgage Company:

                    (a) Foreign Qualification.  Are not, and are not required to
               be,  qualified or admitted to conduct business in any other state
               except where the lack of such  qualification  or admission  would
               not have a Material  Adverse Effect on Grand and its subsidiaries
               on a consolidated basis; and

                    (b) Corporate Power. Have full corporate power and authority
               to carry on their business  substantially  as and where now being
               conducted.

          4.3.4 FDIC;  Insurance  Assessments.  The Bank maintains in full force
     and effect deposit insurance through the Bank Insurance Fund of the Federal
     Deposit Insurance Corporation ("FDIC"). The Bank has fully paid to the FDIC
     as and  when  due all  assessments  with  respect  to its  deposits  as are
     required to maintain such deposit insurance in full force and effect.

          4.3.5  Regulatory Fees and Charges.  The Bank and the Mortgage Company
     have paid as and when due all material fees, charges,  assessments, and the
     like  to  each  and  every   governmental   or  regulatory   agency  having
     jurisdiction as required by law, regulation, or rule.

     4.4 Capital Stock and Stock Options.

          4.4.1  Classes  and  Shares.  The  authorized  capital  stock of Grand
     consists of 250,000 shares of common stock,  no par value,  of which, as of
     the date and time of the execution of this Plan of Merger,  134,959  shares
     were issued and outstanding and each of such outstanding shares are legally
     and validly issued, fully paid and nonassessable.

          4.4.2  No  Other  Capital  Stock.  There  is no  security  or class of
     securities  authorized or issued which  represents or is  convertible  into
     capital  stock of Grand  except as  described  in this Section 4.4 (Capital
     Stock and Stock  Options).  As of the date of the execution of this Plan of
     Merger,  there are no  outstanding  subscriptions,  options,  warrants,  or
     rights to acquire any capital stock of Grand,  or agreements to which Grand
     is a party or by which it is bound to issue capital stock, except for Grand
     Stock Options disclosed pursuant to Section 4.4.4 (Stock Options).

          4.4.3  Voting  Rights.  Other  than the shares of Grand  Common  Stock
     described in this Section 4.4 (Capital  Stock and Stock  Options),  neither
     Grand nor any of its subsidiaries have outstanding any security:

               (a) The  holder or holders of which have the right to vote on the
          approval of the Merger or this Plan of Merger; or

               (b) Which  entitles  the  holder or  holders  to  consent  to, or
          withhold consent on, the Merger or this Plan of Merger.

          4.4.4 Stock Options.  The Grand Disclosure  Statement contains a true,
     accurate  and  complete  list of all stock  option  plans  and  outstanding
     options and other  rights to purchase  shares of Grand  Common Stock or any
     other securities of Grand.  Each such stock option plan was duly authorized
     and  approved  by the Board of  Directors  of Grand and  complies  with the
     provisions of any and all  applicable  laws.  Each grant of an  outstanding
     Grand  Stock  Option  was duly  authorized  and  approved  by the  Board of
     Directors of Grand and was issued in material  compliance with the terms of
     the applicable stock option plan and applicable laws.

     4.5 Financial Statements.

          4.5.1  Financial  Statements.   The  audited  consolidated   financial
     statements  of  Grand  and its  subsidiaries,  as  reported  on by  Grand's
     independent  accountants,  as of and for (i) each of the three  years ended
     December 31, 2000, 1999 and 1998 and (ii) the year ended December 31, 2001,
     if such is prepared and audited prior to the  Effective  Time of the Merger
     (collectively, "Grand's Financial Statements"), including all schedules and
     notes  relating  to such  statements,  do or will  (as  applicable)  fairly
     present, the financial condition and the results of operations,  changes in
     shareholders' equity, and cash flows of Grand as of the respective dates of
     and for  the  periods  referred  to in such

                                      A-14

     financial statements, all in accordance with GAAP consistently applied. The
     unaudited  consolidated  financial statements of Grand and its subsidiaries
     as of and for the  quarters  ended  March  31,  2001,  June 30,  2001,  and
     September 30, 2001,  contained in Grand's  quarterly reports on Form FRY-9C
     filed with the Federal Reserve,  and the unaudited  consolidated  financial
     statements of Grand to be filed on Form FRY-9C prior to the Effective  Time
     of  the  Merger,  including  all  schedules  and  notes  relating  to  such
     statements and included in such reports  (collectively the "FRY-9Cs"),  are
     and will be correct and  complete in all  material  respects.  The FRY-9Cs,
     which have been filed,  were prepared,  and the FRY-9Cs to be filed will be
     prepared,  in conformity with applicable  regulatory  accounting principles
     ("RAP") applied  consistently  throughout the periods  indicated (except as
     otherwise noted in such FRY-9Cs).

          4.5.2 Call Reports. The reports of condition and income of the Bank as
     of and for each of the years ended December 31, 1998, 1999 and 2000, and as
     of and for each of the quarters  ended March 31, 2001,  June 30, 2001,  and
     September 30, 2001,  and the reports of condition and income of the Bank to
     be filed with the FDIC prior to the Effective Time of the Merger, including
     all schedules, and notes relating to such reports (collectively,  the "Call
     Reports"),  are and will be correct and complete in all material  respects.
     The Call  Reports,  which  have been  filed,  were  prepared,  and the Call
     Reports to be filed will be prepared,  in conformity  with  applicable  RAP
     applied consistently  throughout the periods indicated (except as otherwise
     noted in such reports).

     4.6  Absence  of  Undisclosed  Liabilities.  Except  as and  to the  extent
reflected or reserved against in the consolidated balance sheet of Grand and its
subsidiaries as of December 31, 2000, and the notes thereto,  neither Grand, the
Bank nor any other  subsidiary  of Grand had,  as of such date,  liabilities  or
obligations,  secured or unsecured  (whether accrued,  absolute,  or contingent)
which are, or as to which there is a reasonable  probability that they could be,
materially   adverse  to  the  income  or  financial   condition  of  Grand  and
subsidiaries on a consolidated basis.

     4.7 Absence of Material Adverse Change.  Since December 31, 2000, there has
been no material adverse change in the business,  income, or financial condition
of Grand, the Bank and any other subsidiary of Grand on a consolidated basis. No
facts or  circumstances  have been discovered  from which it reasonably  appears
that there is a  significant  risk and  reasonable  probability  that there will
occur a material adverse change in the business,  income, or financial condition
of Grand and its subsidiaries on a consolidated basis.

     4.8 Absence of Litigation.  There is no action,  suit,  proceeding,  claim,
arbitration,  or  investigation  pending or threatened by any person,  including
without limitation any governmental or regulatory  agency,  against Grand or its
subsidiaries,  or the assets or  business of Grand or its  subsidiaries,  any of
which has or may have a Material  Adverse  Effect on the  business,  income,  or
financial condition of Grand and its subsidiaries on a consolidated basis. There
is no  factual  basis  known to  Grand or its  subsidiaries,  which  presents  a
reasonable potential for any such action, suit, proceeding,  claim, arbitration,
or investigation.

     4.9 Conduct of Business.  Grand and its  subsidiaries  have conducted their
respective  businesses and used their  respective  properties  substantially  in
compliance with all federal, state, and local laws, civil or common,  ordinances
and regulations,  including without limitation applicable federal and state laws
and    regulations    concerning    banking,    securities,    truth-in-lending,
truth-in-savings,   mortgage  origination  and  servicing,  usury,  fair  credit
reporting,  consumer protection,  occupational  safety,  civil rights,  employee
protection,  fair employment practices, fair labor standards, and insurance; and
the Environmental Laws (as defined in Section 4.21.3(b)  (Environmental  Laws)),
except for  violations  which  would not have a Material  Adverse  Effect on the
business,  income or  financial  condition  of Grand and its  subsidiaries  on a
consolidated basis.

     4.10 Absence of Defaults Under  Contracts.  There is no existing default by
Grand, the Bank, or any other subsidiary of Grand or any other party,  under any
contract,  mortgage,  lease,  indenture or agreement to which Grand, the Bank or
any  other  subsidiary  of Grand is a party,  or by which  any of them is bound,
which could subject Grand,  the Bank or any other  subsidiary of Grand to a risk
that would have a Material  Adverse  Effect on Grand and its  subsidiaries  on a
consolidated basis.

     4.11 Regulatory Filings. In the last five years:

          4.11.1  Filings.  Grand and its  subsidiaries  have  filed in a timely
     manner all filings with regulatory bodies for which filings are required;

          4.11.2  Complete and  Accurate.  All such  filings,  as amended,  were
     complete  and  accurate  in all  material  respects as of the dates of such
     filings,  and there were no misstatements or omissions therein which, as of
     the making

                                      A-15

     of this  representation  and  warranty,  would be material to the business,
     income,  or  financial  condition  of  Grand  and  its  subsidiaries  on  a
     consolidated basis; and

          4.11.3 Compliance with  Regulations.  All such filings complied in all
     material respects with all regulations, forms, and guidelines applicable to
     such filings.

     4.12 Registration Statement, Etc.

          4.12.1 Accurate Information. None of the information to be supplied by
     Grand for inclusion, or included, in any Document will:

          (a) Be false or misleading  with respect to any material fact, or omit
     to state any material  fact  necessary to make the  statements  therein not
     misleading (i) at the respective times such Documents are filed;  (ii) with
     respect to the Registration Statement, when it becomes effective; and (iii)
     with respect to the Prospectus and Proxy Statement, when it is mailed.

               (b) With respect to the Registration Statement and the Prospectus
          and Proxy Statement, as either may be amended or supplemented,  at the
          time of either Corporation's shareholders meeting with respect to this
          Plan of Merger,  be false or  misleading  with respect to any material
          fact,  or omit to state any  material  fact  necessary  to correct any
          statement   in  any  earlier   communication   with   respect  to  the
          solicitation  of  any  proxy  for  either  Corporation's  shareholders
          meeting.

          4.12.2 Compliance of Filings.  All Documents that Grand is responsible
     for filing with any  regulatory  agency in connection  with the Merger will
     comply in all material respects with the provisions of applicable law.

     4.13 Tax Matters.

          4.13.1 Tax Returns. Grand and its current subsidiaries and any and all
     prior  subsidiaries  of any of them have duly and timely filed all material
     tax returns that they have by law been required to file,  including without
     limitation  those with  respect to income,  withholding,  social  security,
     unemployment, franchise, real property, personal property, intangibles, and
     single  business taxes.  Each such tax return,  report,  and statement,  as
     amended,  is  correct  and  complies  in all  material  respects  with  all
     applicable laws and regulations.

          4.13.2  Tax   Assessments   and  Payments.   All  material  taxes  and
     assessments,  including any penalties,  interest, and deficiencies relating
     to those  taxes and  assessments,  due and  payable by Grand,  its  current
     subsidiaries and any prior subsidiaries (while owned by Grand or any of its
     subsidiaries)  have been paid in full as and when due including  applicable
     extension  periods.  The  provisions  made for  taxes  on the  consolidated
     balance sheet of Grand and its  subsidiaries  as of December 31, 2000,  are
     sufficient for the payment of all federal,  state,  county, and local taxes
     of Grand,  and all of its  subsidiaries  accrued  but unpaid as of the date
     indicated,  whether or not  disputed,  with respect to all periods  through
     December 31, 2000.

          4.13.3 Tax Audits The federal consolidated income tax returns of Grand
     and the Bank and any other prior or current  subsidiary of Grand,  have not
     been audited by the Internal  Revenue  Service  ("IRS")  within the last 10
     years.  There is no tax  audit or legal or  administrative  proceeding  for
     assessment  or  collection  of taxes  pending  or,  to  Grand's  knowledge,
     threatened  with respect to Grand or the Bank or any other prior or current
     subsidiary  of Grand.  No claim for  assessment  or collection of taxes has
     been asserted with respect to Grand, the Bank or any other prior or current
     subsidiary of Grand. No waiver of any  limitations  statute or extension of
     any  assessment or collection  period is in effect with respect to Taxes of
     Grand, the Bank or any other prior or current subsidiary of Grand.

     4.14 Title to Properties. Grand and its subsidiaries have good, sufficient,
and  marketable  title to all of their  properties  and  assets,  whether  real,
personal,  or a  combination  thereof,  reflected  in their books and records as
being owned  (including  those  reflected in the  consolidated  balance sheet of
Grand and its subsidiaries as of December 31, 2000,  except as since disposed of
in  the  ordinary  course  of  business),  free  and  clear  of  all  liens  and
encumbrances, except:

          4.14.1  Reflected on Balance Sheet.  As reflected on the  consolidated
     balance sheet of Grand and its  subsidiaries  as of December 31, 2000,  and
     the notes thereto;

          4.14.2 Normal to Business.  Liens for current taxes not yet delinquent
     and liens or encumbrances which are normal to the business of Grand and its
     subsidiaries  and which  are not  material  in  relation  to the  business,
     income, or financial condition of Grand or its subsidiaries; and

                                      A-16

          4.14.3  Immaterial   Imperfections.   Such   imperfections  of  title,
     easements,  and  encumbrances,  if any, as are not  material in  character,
     amount,  or  extent,  and do not  materially  detract  from the  value,  or
     materially  interfere  with the  present  use,  of the  properties  subject
     thereto or affected  thereby,  or which would not  otherwise be material to
     the business, income, or financial condition of Grand or its subsidiaries.

     4.15  Condition of  Property.  The  nonfinancial  assets owned or leased by
Grand and its subsidiaries  constitute all of the assets held for use or used in
connection  with the business of Grand and its  subsidiaries  and are  generally
adequate to carry on their  respective  businesses as presently  conducted.  All
material  nonfinancial assets and properties that Grand or its subsidiaries own,
lease,  or use are in good operating  condition  (normal wear and tear excepted)
are in a good state of  maintenance  and repair,  are  reasonably  fit for their
intended purposes, are adequately serviced by all utilities reasonably necessary
for  the  effective   operation  of  Grand's  business  and  also  that  of  its
subsidiaries  substantially as presently conducted, and are in the possession of
Grand or its subsidiaries.  None of the real property leased or used by Grand or
its subsidiaries is the subject of any condemnation  action and there is, to the
best of Grand's  knowledge,  no proposal  under  consideration  by any public or
governmental  authority or entity to use any of the real property leased or used
by Grand or its subsidiaries for some other purpose.

     4.16 Leases.  All leases  pursuant to which Grand or its  subsidiaries,  as
lessee,  lease real property  which is material to the business of Grand and its
subsidiaries  or personal  property having an initial value in excess of $25,000
per lease (a "Material Lease") are valid, effective, and enforceable against the
lessor in accordance with their respective  terms.  There is no existing default
under any Material  Lease,  or any event which with notice or lapse of time,  or
both,  would  constitute a default with respect to Grand or its subsidiaries or,
to the best  knowledge  of Grand,  any other  party  which  would be  reasonably
expected to have a Material  Adverse Effect on Grand and its  subsidiaries  on a
consolidated  basis. No Material Lease contains a prohibition against assignment
by Grand or its  subsidiaries,  by operation of law or  otherwise,  or any other
provision  which would preclude Grand or its  subsidiaries  from  possessing and
using the leased  premises  for the same  purposes  and upon the same rental and
other terms upon  consummation of the Merger as are applicable to the possession
and use by Grand or its subsidiaries as of the date of this Plan of Merger.

     4.17 Ownership of Real Property. Neither Grand nor its subsidiaries own any
of the real property used in connection with their business.

     4.18 Licenses,  Permits, Etc. Grand and its subsidiaries hold all licenses,
certificates,  permits,  franchises,  and rights from all  appropriate  federal,
state,  and  other  public  authorities  necessary  for  the  conduct  of  their
businesses  as  presently  conducted,  the lack of which  would  have a Material
Adverse Effect on the business,  income, or financial condition of Grand and its
subsidiaries on a consolidated basis.

     4.19 Certain Employment Matters.

          4.19.1 Employment Policies,  Programs,  and Procedures.  The policies,
     programs  and  practices of Grand and its  subsidiaries  relating to wages,
     hours  of work,  and  other  terms  and  conditions  of  employment  are in
     compliance  in  all  material   respects  with  applicable  laws,   orders,
     regulations and ordinances governing employment and terms and conditions of
     employment.

          4.19.2  Record  of  Payments.  There  is no  existing  or  outstanding
     material  obligation  of  Grand or its  subsidiaries,  whether  arising  by
     operation  of law,  civil or common,  by contract,  or by past custom,  for
     Employment-Related    Payments    (as    defined    in    Section    4.19.3
     (Employment-Related  Payments) to any trust,  fund,  company,  governmental
     agency, present or former director, officer, employee, agent (or his or her
     heirs, survivors,  legatees, or legal representatives),  or person that has
     not  been  duly  recorded  on  the  books  and  records  of  Grand  or  its
     subsidiaries  and paid  when due or duly  accrued  as a  liability,  in the
     ordinary course of business in accordance with GAAP consistently applied.

          4.19.3  Employment-Related  Payments.  For  purposes  of this  Plan of
     Merger,  "Employment-Related  Payments" include any payment to be made with
     respect to any contract for employment, unemployment compensation benefits,
     profit sharing, pension or retirement benefits or social security benefits,
     or for fringe  benefits,  including  vacation or holiday  pay,  bonuses and
     other forms of compensation,  or for medical insurance or medical expenses,
     which are payable to present or former directors,  officers,  employees, or
     agents of Grand or its subsidiaries,  or their respective survivors, heirs,
     legatees, or legal representatives.

                                      A-17

          4.19.4 Employment Claims.  There are no disputes,  claims, or charges,
     pending or to Grand's knowledge threatened, alleging breach by Grand or any
     of its  subsidiaries  of any  express or  implied  employment  contract  or
     commitment, or breach of any applicable law, order, regulation or ordinance
     relating  to  employment  or terms and  conditions  of  employment,  and to
     Grand's  knowledge  there is no factual basis for any valid claim or charge
     with regard to such matters which could have a Material  Adverse  Effect on
     Grand's business, income or financial condition on a consolidated basis.

          4.19.5  Disclosure of Agreements.  Grand and its  subsidiaries are not
     parties to any written or oral, express or implied:

               (a)  Employment  contract  or  agreement,  or  guarantee  of  job
          security, made with or to any past or present employee of Grand or any
          of  its  subsidiaries  which  is  not  terminable  by  Grand  or  such
          subsidiary  of Grand upon 30 days or less  notice  without  penalty or
          obligation;

               (b)  Plan,   contract  or  arrangement   providing  for  bonuses,
          pensions, options, stock purchases, deferred compensation,  retirement
          payments,  retirement  benefits of the type  described in Statement of
          Financial Accounting Standard No. 106, or profit sharing; or

               (c) Plan,  agreement  or  arrangement  with respect to payment of
          medical expenses,  insurance (except insurance continuation limited to
          that required  under  provisions of the  Consolidated  Omnibus  Budget
          Reconciliation  Act),  or other  benefits  for any former  employee of
          Grand or its  subsidiaries  or any spouse,  child,  member of the same
          household, estate, or survivor of any such employee.

     4.20 Employee Benefit Plans.  With respect to any "employee welfare benefit
plan," any "employee  pension benefit plan", or any employee benefit plan within
the  respective  meanings  of  Sections  3(1),  3(2),  and 3(3) of the  Employee
Retirement  Income Security Act of 1974, as amended  ("ERISA") (each referred to
as an "Employee Benefit Plan"), maintained by or for the benefit of Grand or its
subsidiaries  or to which  Grand  or its  subsidiaries  have  made  payments  or
contributions on behalf of its employees:

          4.20.1 ERISA  Compliance.  Grand and its  subsidiaries,  each Employee
     Benefit  Plan,  and  all  trusts  created  thereunder  are  in  substantial
     compliance  with  ERISA  and all  other  applicable  laws  and  regulations
     applicable to such plans and trusts.

          4.20.2 Internal Revenue Code Compliance.  Grand and its  subsidiaries,
     each Employee  Benefit Plan which is intended to be a qualified  plan under
     Section  401(a) of the  Internal  Revenue  Code of 1986,  as  amended  (the
     "Internal  Revenue  Code"),  and  all  trusts  created  thereunder  are  in
     compliance in all material  respects with the applicable  provisions of the
     Internal Revenue Code.

          4.20.3 Prohibited Transactions.  No Employee Benefit Plan and no trust
     created   thereunder  has  been  involved  in  any  nonexempt   "prohibited
     transaction" as defined in Section 4975 of the Internal Revenue Code and in
     Sections 406, 407, and 408 of ERISA.

          4.20.4 Plan Termination. No Employee Benefit Plan which is a qualified
     plan under Section 401(a) of the Internal Revenue Code and no trust created
     thereunder   has  been   terminated,   partially   terminated,   curtailed,
     discontinued,  or merged into  another  plan or trust after June 30,  1974,
     except in compliance  with notice and disclosure to the IRS and the Pension
     Benefit Guaranty Corporation (the "PBGC"), where applicable, as required by
     the Internal Revenue Code and ERISA. With respect to each such termination,
     all termination  procedures have been completed and there are no pending or
     potential  liabilities to PBGC, to the plans, or to participants under such
     terminated plans. Each such termination, partial termination,  curtailment,
     discontinuance,  or consolidation has been accompanied by the issuance of a
     current  favorable  determination  letter by the IRS and, where applicable,
     has been accompanied by plan  termination  proceedings with and through the
     PBGC.

          4.20.5   Multiemployer   Plan.   No   Employee   Benefit   Plan  is  a
     "multiemployer plan" within the meaning of Section 3(37)(A) of ERISA.

          4.20.6  Defined  Benefit Plan.  Except for the Grand Pension Plan (the
     "Grand Pension Plan") no Employee  Benefit Plan in effect as of the date of
     this Plan of Merger is a  "defined  benefit  plan"  within  the  meaning of
     Section 3(35)of ERISA.

                                      A-18

          4.20.7  Reportable  Events.  There has been no  "reportable  event" as
     defined in Section 4043 of ERISA,  after September 1, 1974, with respect to
     any Employee Benefit Plan or any trust created thereunder.

          4.20.8 Payment of Contributions.  Grand and its subsidiaries have made
     when due all  contributions  required  under any Employee  Benefit Plan and
     under applicable laws and regulations.

          4.20.9  Payment of Benefits.  There are no payments  which have become
     due from any Employee Benefit Plan, the trusts created thereunder,  or from
     Grand or its  subsidiaries  with respect to any Employee Benefit Plan, that
     have not been paid through  normal  administrative  procedures  to the plan
     participants  or  beneficiaries  entitled  thereto,  except  for claims for
     benefits for which  administrative  claims  procedures under such plan have
     not been exhausted.

          4.20.10 Accumulated Funding Deficiency. No Employee Benefit Plan which
     is intended to be a qualified  plan under  Section  401(a) of the  Internal
     Revenue Code and no trust created  thereunder has incurred,  after June 30,
     1974, an "accumulated  funding  deficiency" as defined in Section 412(a) of
     the Internal Revenue Code and Section 302 of ERISA (whether or not waived).

          4.20.11  Funding.  Neither  Grand  nor any  subsidiary  of Grand  owes
     premiums to the PBGC that are due but unpaid or has been  determined by the
     PBGC  to  be  liable  for a  funding  deficiency  with  respect  to a  plan
     termination under Title IV of ERISA.

          4.20.12 No Liability. There has been no amendment of the Grand Pension
     Plan or related  trust or other  occurrence  subsequent  to the date of the
     latest  actuarial  valuation that could result in any liability for further
     contributions  or other  payments  with  respect  thereto  (whether  direct
     liability to the plan, the trust, the participants and beneficiaries of the
     Grand Pension Plan, or liability to the PBGC).

          4.20.13  Condition of Plan.  With respect to the Grand  Pension  Plan,
     there has been no amendment of such plan or other occurrence  subsequent to
     the date of the latest actuarial reports prepared with respect to such plan
     that has materially  changed the financial and/or funding  condition of the
     plan.

          4.20.14 Filing of Reports.  Grand and its  subsidiaries  have filed or
     caused to be filed,  and will  continue to file or cause to be filed,  in a
     timely manner,  all filings  pertaining to each Employee  Benefit Plan with
     the IRS, the United States  Department of Labor, and the PBGC as prescribed
     by the Internal  Revenue Code or ERISA, or regulations  issued  thereunder.
     All such  filings,  as amended,  were complete and accurate in all material
     respects as of the dates of such filings,  and there were no  misstatements
     or omissions in any such filing which, as the making of this representation
     and warranty,  would be material to the financial condition,  net income or
     business of Grand and its subsidiaries on a consolidated basis.

     4.21 Environmental Matters.

          4.21.1  Owned or  Operated  Property.  With  respect  to: (i) the real
     estate owned or leased by Grand or its  subsidiaries or used in the conduct
     of  their  businesses;  (ii)  other  real  estate  owned by the Bank or the
     Mortgage  Company (other than real estate held in trust),  (iii) to Grand's
     knowledge,  any real estate held and  administered  in trust by the Bank or
     the  Mortgage  Company;  and (iv) to  Grand's  knowledge,  any real  estate
     formerly  owned or leased by Grand or any subsidiary of Grand (for purposes
     of this  section,  properties  described  in any of (i)  through  (iv)  are
     collectively referred to as "Premises"):

               (a) Construction and Content.  To the knowledge of Grand, none of
          the Premises is constructed  of, or contains as a component  part, any
          material  which  releases  or may  release  any  substance  that  is a
          Hazardous  Substance  (as  defined  in  Section  4.21.3(a)  (Hazardous
          Substances)) in a quantity or concentration  that would give rise to a
          claim of liability under Environmental Laws) or is known to be (either
          by single exposure or by repeated or prolonged  exposure) injurious or
          hazardous to the health of persons occupying the Premises.

               (b) Uses of  Premises.  No part of the  Premises has been used by
          Grand or its subsidiaries for the generation,  manufacture,  handling,
          storage,  disposal,  or management of Hazardous Substances (as defined
          in Section 4.21.3(a) (Hazardous  Substances)),  except for the storage
          of normal  quantities  of office  supplies  and  office  cleaning  and
          maintenance products.

                                      A-19

               (c)  Underground  Storage Tanks.  To the knowledge of Grand,  the
          Premises do not contain,  and have never  contained,  any  underground
          storage tanks. With respect to any underground  storage tank listed in
          the Grand  Disclosure  Statement as an exception to the foregoing,  to
          the knowledge of Grand,  each such underground  storage tank presently
          or  previously  located  on  Premises  is or has  been  maintained  or
          removed,   as   applicable,   in   compliance   with  all   applicable
          Environmental  Laws (as  defined in Section  4.21.3(b)  (Environmental
          Laws)),  and has not been the  source of any  release  of a  Hazardous
          Substance (as defined in Section 4.21.3(a) (Hazardous  Substances)) to
          the environment.

               (d) Absence of  Contamination.  To the  knowledge  of Grand,  the
          Premises do not contain and are not  contaminated by any quantity of a
          Hazardous  Substance  (as  defined  in  Section  4.21.3(a)  (Hazardous
          Substances)) from any source in excess of applicable cleanup criteria.

               (e)  Environmental  Suits and  Proceedings.  There is no  action,
          suit, investigation,  liability, inquiry, or other proceeding, ruling,
          order, notice of potential  liability,  or citation involving Grand or
          its  subsidiaries  pending  or  to  Grand's  knowledge  threatened  or
          previously asserted under, or as a result of any, or alleged,  failure
          to comply with any requirement of, any  Environmental  Law (as defined
          in Section 4.21.3(b) (Environmental Laws)). To the knowledge of Grand,
          there is no factual basis for any of the foregoing.

          4.21.2 Loan  Portfolio.  With respect to any real estate  securing any
     outstanding loan of Grand or its subsidiaries or related security  interest
     and any real estate owned by Grand or its subsidiaries that was acquired in
     full or partial satisfaction of a debt previously contracted:

               (a)  Investigation.  Grand and its subsidiaries  have complied in
          all material  respects with their  policies (as such policies may have
          been in  effect  from  time  to time  and as  disclosed  in the  Grand
          Disclosure  Statement),  and  all  applicable  laws  and  regulations,
          concerning  the  investigation  of each  such  property  to  determine
          whether  or not  there  exists  or is  reasonably  likely to exist any
          Hazardous  Substance  (as  defined  in  Section  4.21.3(a)  (Hazardous
          Substances))  on, in, or under such property at a level giving rise to
          material  liability  of  Grand  and  whether  or  not a  release  of a
          Hazardous Substance has occurred at or from such property.

               (b) No Known Contamination. No such property is known to Grand to
          contain or be contaminated by any quantity of any Hazardous  Substance
          (as  defined in Section  4.21.3(a)  (Hazardous  Substances))  from any
          source at a level giving rise to material liability of Grand.

          4.21.3 Definitions.

               (a)  Hazardous  Substances.  For purposes of this Plan of Merger,
          "Hazardous Substance" has the meaning set forth in Section 9601 of the
          Comprehensive Environmental Response Compensation and Liability Act of
          1980, as amended, 42 U.S.C.A.  ss. 9601 et seq.  ("CERCLA"),  and also
          includes   any   substance   now   regulated  by  or  subject  to  any
          Environmental   Law  (as  defined  below)  and  any  other  pollutant,
          contaminant  or  waste,   including  without  limitation,   petroleum,
          asbestos, radon and polychlorinated biphenyls.

               (b)  Environmental  Laws.  For  purposes  of this Plan of Merger,
          "Environmental  Laws" means all laws  (civil or  common),  ordinances,
          rules, regulations, and orders that: (i) regulate air, water, soil, or
          solid   waste   management,   including   the   generation,   release,
          containment,   storage,   handling,   transportation,   disposal,   or
          management  of  Hazardous  Substances;   (ii)  regulate  or  prescribe
          requirements  for air, water,  or soil quality;  (iii) are intended to
          protect  the  public  health  or the  environment;  or (iv)  establish
          liability  for the  investigation,  removal,  or cleanup of, or damage
          caused by, any Hazardous Substance.

     4.22  Duties as  Fiduciary.  To the  knowledge  of Grand,  the Bank and the
Mortgage  Company have performed all of their duties in any capacity as trustee,
executor, administrator, registrar, guardian, custodian, escrow agent, receiver,
or other fiduciary in a fashion that complies in all material  respects with all
applicable laws, regulations,  orders, agreement, wills, instruments, and common
law standards.  Neither the Bank nor the Mortgage Company has received notice of
any claim, allegation,  or complaint from any person that either the Bank or the
Mortgage  Company  failed to perform  these  fiduciary  duties in a manner  that
complies in all material respects with all applicable laws, regulations, orders,
agreements,  wills,  instruments,  and common law standards,  except for notices
involving  matters that have been  resolved and any cost of such  resolution  is
reflected in Grand's Financial Statements.

                                      A-20

     4.23  Investment  Bankers and  Brokers.  Grand has not employed any broker,
finder,  or  investment  banker in  connection  with the Merger,  except for the
engagement of Austin Associates, LLC ("Austin Associates").  Except with respect
to Austin Associates,  Grand has no express or implied agreement with any person
or company  relative to any  commission  or finder's fee payable with respect to
the Merger.

     4.24 Change in Business  Relationships.  Neither Grand nor its subsidiaries
have notice that any customer,  agent,  representative,  or supplier of Grand or
its  subsidiaries  intends to discontinue,  diminish,  or adversely change their
relationship  with  Grand  or its  subsidiaries  on  account  of the  Merger  or
otherwise,  the  effect  of which  would be a  Material  Adverse  Effect  on the
business of Grand and its  subsidiaries on a consolidated  basis.  Additionally,
neither  Grand nor any of its  subsidiaries  has been  advised as of the date of
this  Plan of  Merger  that  any  executive  officer  of  Grand or of any of its
subsidiaries  intendeds to  terminate  his or her  employment  on account of the
Merger or otherwise.

     4.25 Related Persons.  For purposes of this Plan of Merger, the term "Grand
Related  Person"  shall mean any director or  executive  officer of Grand or any
subsidiary of Grand, their spouses and children,  and any person who is a member
of the same household as such persons,  and any corporation,  limited  liability
company, partnership,  proprietorship,  trust, or other entity of which any such
persons,  alone or together, has Control (as defined in Section 4.3.1 (Ownership
of Subsidiaries)).

          4.25.1  Control of  Material  Assets.  Other  than in a capacity  as a
     shareholder,  director,  or executive  officer of Grand or a subsidiary  of
     Grand,  no Grand  Related  Person owns or controls any  material  assets or
     properties  that are used in the  business  of Grand or any  subsidiary  of
     Grand.

          4.25.2  Contractual  Relationships.  Other than ordinary and customary
     banking,  directorship,  and  employment  relationships,  no Grand  Related
     Person  has  any  material  contractual  relationship  with  Grand  or  any
     subsidiary of Grand.

          4.25.3 Loan Relationships. No Grand Related Person has any outstanding
     loan or loan commitment  from, or on whose behalf an irrevocable  letter of
     credit has been issued, by Grand or any subsidiary of Grand, in a principal
     amount of $175,000 or more.

     4.26  Insurance.  Grand and its  subsidiaries  maintain  in full  force and
effect  insurance  on  their  assets,  properties,   premises,  operations,  and
personnel in such amounts and against such risks and losses as are customary and
adequate for  comparable  entities  engaged in the same  business and  industry.
During the last five years,  no  insurance  company  has  canceled or refused to
renew  a  policy  of  insurance  covering  Grand's  or any of its  subsidiaries'
material assets, properties, premises, operations, or personnel.

     4.27 Books and Records. The minutes contained in corporate minute books and
files of Grand  and its  subsidiaries  properly  and  accurately  record  in all
material respects all actions actually taken by their  shareholders,  directors,
and committees of directors.  The books,  accounts, and records of Grand and its
subsidiaries  reflect only actual  transactions  and have been maintained in all
material  respects  in the usual and regular  manner,  in  accordance  with GAAP
consistently   applied,   and  in  compliance   with  all  applicable  laws  and
regulations.

     4.28 Loan Guarantees.  All guarantees of indebtedness  owed to Grand or any
subsidiary of Grand,  including without  limitation those of the Federal Housing
Administration,  the Small Business Administration,  and other state and federal
agencies, are valid and enforceable, except where a failure to enforce would not
have a Material Adverse Effect on Grand.

     4.29 Events Since December 31, 2000.  Except as contemplated by the Plan of
Merger, neither Grand nor its subsidiaries have, since December 31, 2000:

          4.29.1 Business in Ordinary Course.  Conducted its business other than
     in the  ordinary  course,  or  incurred or become  subject to any  material
     liability or obligation, except liabilities incurred in the ordinary course
     of business,  except for any single liability that does not exceed $25,000,
     or the aggregate of such liabilities that do not exceed $75,000.

          4.29.2 Strikes or Labor Trouble. Experienced or, to the best knowledge
     of Grand,  been  threatened by any strike,  work  stoppage,  organizational
     effort,  or other labor  trouble,  or any other event or  condition  of any
     similar  character  which has been or could  reasonably  be  expected to be
     materially adverse to the business, income, or financial condition of Grand
     or any of its subsidiaries.

                                      A-21

          4.29.3 Mortgage of Assets.  Mortgaged,  pledged, or subjected to lien,
     charge,  or other encumbrance any of its assets, or sold or transferred any
     such  assets,  except in the ordinary  course of business,  except for such
     mortgages,  pledges, liens, charges, and encumbrances for indebtedness that
     does  not  individually  exceed  $25,000,  or do  not  collectively  exceed
     $75,000.

          4.29.4  Contract  Amendment  or  Termination.  Made or  permitted  any
     amendment or  termination  of any contract to which it is a party and which
     is material to the business,  income,  or financial  condition of Grand and
     its subsidiaries.

     4.30 Allowance for Loan Losses.  The allowance for loan losses reflected in
Grand's  audited  consolidated  financial  statements  and Call  Reports for the
fiscal year ended December 31, 2000, and for the fiscal quarter ended  September
30, 2001 (as applicable) and any audited  consolidated  financial statements and
unaudited  Call Reports for any subsequent  year or quarter,  was or will be (as
applicable)  in the  reasonable  opinion of  management of Grand (a) adequate to
meet all reasonably  anticipated loan losses, net of recoveries related to loans
previously  charged off as of those dates,  and (b) consistent  with GAAP or RAP
(as applicable) consistently applied and safe and sound banking practices.

     4.31  Agreements  With Bank  Regulators.  Neither  Grand nor any of Grand's
subsidiaries is a party to any agreement or memorandum of understanding with, or
a party to any commitment letter, board resolution or similar undertaking to, or
is subject to any order or directive by, or is a recipient of any  extraordinary
supervisory  letter from, any governmental  authority that restricts  materially
the conduct of its business,  or in any manner relates to its capital  adequacy,
its credit or reserve policies or its management,  nor has Grand been advised by
any governmental authority that it is contemplating issuing or requesting (or is
considering  the  appropriateness  of issuing  or  requesting)  any such  order,
decree,  agreement,  memorandum  of  understanding,   extraordinary  supervisory
letter,  commitment letter or similar submission. As of the date of this Plan of
Merger,  Grand knows of no reason why the  regulatory  approvals  referred to in
Section 4.1.4 (Required  Approvals) cannot be obtained or why this process would
be materially impeded.

     4.32  True  and  Complete  Information.   No  schedule,   statement,  list,
certificate,  or other  information  furnished  or to be  furnished  by Grand in
connection with this Plan of Merger,  including the Grand Disclosure  Statement,
contains or will contain any untrue  statement of a material  fact,  or omits or
will omit to state a material fact  necessary to make the  statements  contained
therein, in light of the circumstances in which they are made, not misleading.

                                    ARTICLE V
                                CERTAIN COVENANTS

     5.1 Disclosure  Statement.  The Grand Disclosure Statement and the Macatawa
Disclosure Statement (collectively the "Disclosure Statements" or individually a
"Disclosure   Statement")  shall  contain   appropriate   references  and  cross
references with respect to each of the disclosures,  and appropriate identifying
markings  with  respect to each of the  documents,  that  pertain to one or more
sections  or  articles  of this Plan of  Merger.  Grand and  Macatawa  have each
prepared and  delivered a copy of its  Disclosure  Statement to the other party.
Not less than 5 days prior to the Closing, each party shall deliver to the other
an update to its  Disclosure  Statement  describing  any  material  changes  and
containing  any new or amended  documents,  as  specified  below,  which are not
contained in its Disclosure Statement as initially delivered.  Such update shall
not cure any breach of a  representation  or warranty  occurring  on the date of
this Plan of Merger. Each of Grand's and Macatawa's Disclosure Statement and its
respective  update  shall be certified  on its behalf by  appropriate  executive
officers  that such  Disclosure  Statement  contains  no untrue  statement  of a
material  fact, or fails to omit to state a material fact  necessary to make the
statements  contained  therein,  in light of the circumstances in which they are
made, not misleading.

     5.2  Changes  Affecting  Representations.  While  this Plan of Merger is in
effect,  if  either  Macatawa  or Grand  becomes  aware  of any  facts or of the
occurrence of impending occurrence of any event that (a) would cause one or more
of the  representations  and  warranties  it has given in this  Plan of  Merger,
subject to the exceptions  contained in the Macatawa Disclosure Statement or the
Grand Disclosure Statement,  respectively, to become untrue or incomplete in any
material respect;  or (b) would have caused one or more of such  representations
and warranties to be untrue or incomplete in any material respect had such facts
been known or had such event  occurred prior to the date of this Plan of Merger,
then such party shall immediately give detailed written notice of such discovery
or change,  including a detailed  description of the underlying facts or events,
together with all pertinent documents, to the other party.

     5.3 Conduct of Business Pending the Effective Time of the Merger.  From the
date of the  execution  of this Plan of Merger until the  Effective  Time of the
Merger,  Grand agrees that,  except as consented to in writing by Macatawa or as
otherwise  provided in this Plan of Merger,  it shall, and it shall cause all of
its subsidiaries to:

                                      A-22

          5.3.1  Ordinary  Course.  Conduct  their  business  and  manage  their
     property only in the usual, regular, and ordinary course and not otherwise,
     in  substantially  the same manner as prior to the date of the execution of
     this Plan of Merger,  and not make any substantial  change to their methods
     of management or operation in respect of such business or property.

          5.3.2  No  Inconsistent   Actions.  Take  no  action  which  would  be
     inconsistent  with or  contrary  to the  representations,  warranties,  and
     covenants  made by Grand in this Plan of Merger,  and take no action  which
     would cause  Grand's  representations  and  warranties  to become untrue or
     incomplete  except as and to the extent  required  by  applicable  laws and
     regulations or regulatory agencies having jurisdiction.

          5.3.3  Compliance.  Comply  in all  material  respects  with all laws,
     regulations, agreements, court orders, and administrative orders applicable
     to the  conduct  of their  business  unless the  application  of such laws,
     regulations, or orders is being contested in good faith and the other party
     has been notified of such contest.

          5.3.4 No Amendments. Make no change in their Articles of Incorporation
     or their Bylaws, except as effected by this Plan of Merger and the Merger.

          5.3.5 Books and Records.  Maintain their books,  accounts, and records
     in the  usual and  regular  manner,  and in  material  compliance  with all
     applicable laws and accounting standards.

          5.3.6 No Change in  Stock.  Make no change in the  number of shares of
     their  capital  stock issued and  outstanding  other than upon  exercise of
     Grand Stock Options;  grant no warrant,  option, or commitment  relating to
     their  capital  stock;  enter into no agreement  relating to their  capital
     stock; and issue no securities convertible into their capital stock.

          5.3.7  Maintenance.  Use all  reasonable  efforts  to  maintain  their
     property and assets in their present state of repair,  order and condition,
     reasonable wear and tear and damage by fire or other casualty excepted.

          5.3.8 Preservation of Goodwill. Use all reasonable efforts to preserve
     their business organization intact, to keep available the services of their
     present  officers  and  employees,  and to preserve  the  goodwill of their
     customers and others having business relations with it.

          5.3.9 Insurance  Policies.  Use all reasonable efforts to maintain and
     keep in full force and effect insurance coverage, so long as such insurance
     is reasonably available, on their assets, properties, premises, operations,
     and personnel in such amounts, against such risks and losses, and with such
     self-insurance requirements as are presently in force.

          5.3.10  Charge-Offs.  Charge off loans and maintain  their reserve for
     loan  losses,  in each  case in a  manner  in  conformity  with  the  prior
     practices of Grand and its subsidiaries and applicable industry, regulator,
     and accounting standards;  provided, however, that in addition to the prior
     practices of Grand and its subsidiaries, immediately prior to the Effective
     Time of the Merger,  the Bank will charge  against its earnings an addition
     to its loan loss  reserve in an amount  necessary  to bring the Bank's loan
     loss reserve up to a level  comparable  with the loan loss reserve level of
     1.42%  maintained by Macatawa at its subsidiary  bank; and provided further
     that such action by the Bank to increase  its loan loss  reserve to a level
     of at least 1.42%  irrespective  of the Bank's prior  practices,  shall not
     result in any breach of any  representation,  warranty  or covenant in this
     Plan of Merger.

          5.3.11  Policies  and  Procedures.  Make  no  material  change  in any
     policies  and  procedures  applicable  to the  conduct  of their  business,
     including without limitation any loan and underwriting policies,  loan loss
     and charge-off  policies,  investment  policies,  and employment  policies,
     except as and to the extent  required by law or regulatory  agencies having
     jurisdiction.

          5.3.12 New  Directors or Officers.  Except to reelect  persons who are
     then incumbent directors and officers at annual meetings, not:

               (a)  Increase  the number of directors or fill any vacancy on the
          boards of directors; or

               (b) Elect or appoint any person to an  executive  office  without
          first consulting Macatawa.

                                      A-23

          5.3.13 Compensation and Benefits.

               (a) Not  increase,  or agree to  increase,  the  salary  or other
          compensation payable to, or fringe benefits of, or pay or agree to pay
          any bonus to, any director or officer,  or any other class or group of
          employees as a class or group,  except for  increases,  agreements  or
          payments which are reasonable in amount and consistent  with the prior
          year,  annual  salary  increases as described in the Grand  Disclosure
          Statement  and the  payment  of  bonuses  that  have  previously  been
          approved by the Board of  Directors of Grand as described in the Grand
          Disclosure Statement; and

               (b) Not introduce,  change, or agree to introduce or change,  any
          pension,  profit  sharing,  or employee  benefit plan,  fringe benefit
          program, or other plan or program of any kind for the benefit of their
          employees unless required by law or this Plan of Merger,  or necessary
          or advisable, in the opinion of counsel, to maintain any tax qualified
          status, except as provided in Section 6.8 (Employee Benefit Plans).

          5.3.14  New  Employment  Agreements.  Not  enter  into any  employment
     agreement which is not terminable by Grand or its subsidiaries without cost
     or penalty upon notice of 30 days or less,  except any such agreement which
     may be approved by Macatawa in writing.

          5.3.15  Borrowing.  Not borrow money except in the ordinary  course of
     business.

          5.3.16 Mortgaging Assets. Not sell,  mortgage,  pledge,  encumber,  or
     otherwise  dispose of, or agree to sell,  mortgage,  pledge,  encumber,  or
     otherwise  dispose  of,  any of their  property  or  assets,  except in the
     ordinary course of business and except for property or assets, or any group
     of related properties or assets,  that individually has a fair market value
     of less than $25,000,  or that  collectively  have an aggregate fair market
     value of less than $75,000.

          5.3.17  Notice of  Actions.  Notify  the other  party of the threat or
     commencement of any material action, suit, proceeding,  claim, arbitration,
     or  investigation  against or relating to: (i) Grand, the Bank or any other
     subsidiary of Grand;  (ii) Grand's,  the Bank's or any other  subsidiary of
     Grand's  directors,  officers,  or employees in their  capacities  as such;
     (iii)  Grand's,  the  Bank's or any other  subsidiary  of  Grand's  assets,
     liabilities,  businesses, or operations; or (iv) the Merger or this Plan of
     Merger.

          5.3.18 New Service  Arrangements.  Not enter into,  or commit to enter
     into, any agreement for trust, consulting,  professional,  data processing,
     or other services to Grand or its  subsidiaries  which is not terminable by
     Grand or its  subsidiaries  without penalty upon notice of 30 days or less,
     except for renewal of  contracts  for data  processing  and other  services
     reasonably  believed  to be  necessary  for the  conduct of business in the
     ordinary course and contracts under which the aggregate  required  payments
     do not exceed $25,000, in each case only after consultation with Macatawa.

          5.3.19 Capital Improvements.  Not open, enlarge, or materially remodel
     any bank or other facility,  and not lease,  purchase, or otherwise acquire
     any  real  property  for use as a  branch  bank or  office,  or  apply  for
     regulatory  approval of any new branch  bank,  excepting  pursuant to prior
     commitments  made by Grand or its  subsidiaries  that are  disclosed in the
     Grand Disclosure Statement.

     5.4  Accrual of  Transaction  Expenses.  Grand and its  subsidiaries  shall
immediately  prior to the Effective Time of the Merger accrue and charge against
its earnings all transaction  expenses which Grand has incurred or will incur as
a result of the  transactions  contemplated  by this Plan of Merger  (including,
without  limitation,  any  retention or change of control  payments  approved by
Macatawa and its legal,  accounting,  actuarial,  tax services,  and  investment
banker's  fees).  Such  accrual and charge  shall not  constitute  a result in a
breach of any representation, warranty or covenant in this Plan of Merger.

     5.5  Termination of Phantom Stock Plan.  Prior to the Effective Time of the
Merger,  Grand shall terminate the Grand Bank Financial  Phantom Stock Plan (the
"Phantom Plan") and pay out all benefits earned under that plan,  whether or not
then  vested,  according to the terms of that plan.  All expenses  related to or
caused by the  termination  of the  Phantom  Plan,  will be accrued  and charged
against Grand's earnings prior to the Effective Time of the Merger. Such accrual
and  charge  shall not  constitute  a result in a breach of any  representation,
warranty or covenant in this Plan of Merger.

     5.6 Regular Dividends.  Grand shall not declare, set aside, pay or make any
dividend or other  distribution or payment  (whether in cash, stock or property)
with  respect to, or purchase or redeem,  any shares of Grand Common Stock other
than regular  quarterly cash dividends on Grand Common Stock in an amount not to
exceed  $.50  per  share  per  quarter,  in each  case  payable  on the  regular
historical  payment dates and in a manner  consistent with Grand's past dividend
practice.  Macatawa

                                      A-24

and Grand agree that they will  cooperate  to assure  that,  during any calendar
quarter,  there shall not be either a  duplication  or an omission of payment of
dividends to the holders of Grand Common Stock.

     5.7 Affiliates.  The Grand Disclosure Statement and the update to the Grand
Disclosure  Statement shall identify every person who may, to Grand's reasonable
knowledge,  be deemed to be an  "affiliate"  of Grand for  purposes  of Rule 145
under the Securities Act of 1933, as amended (the "Securities Act"). Grand shall
cause its counsel to deliver to each person who is  identified  as an affiliate,
on or prior to the  Effective  Time of the Merger,  advice with  respect to such
person's  obligations  under  the  Securities  Act  and the  regulations  issued
thereunder with respect to disposition of securities of Macatawa. Further, Grand
shall use all  reasonable  efforts to cause each person who is  identified as an
affiliate to deliver to Macatawa on or prior to the Effective Time of the Merger
a written agreement, reasonably satisfactory to Macatawa, that such person shall
not offer to sell or  otherwise  dispose of any shares of Macatawa  Common Stock
beneficially  owned by or  issued  to such  person  pursuant  to the  Merger  in
violation of the Securities Act or the regulations thereunder.

     5.8 Approval of Plan of Merger by Macatawa Shareholders.  Macatawa,  acting
through its Board of Directors,  shall,  in accordance with the Michigan Act and
its Articles of  Incorporation  and Bylaws,  promptly and duly call, give notice
of, convene,  and hold as soon as practicable  following the date upon which the
Registration Statement becomes effective, a shareholders meeting for the purpose
of  adopting  this Plan of Merger and the  issuance  of the  shares of  Macatawa
Common Stock pursuant to the Merger (the "Macatawa  Shareholders'  Meeting"). At
such meeting,  the Board of Directors of Macatawa  shall  unanimously  recommend
that its shareholders  vote for approval of this Plan of Merger and the issuance
of the  shares of  Macatawa  Common  Stock  pursuant  to the  Merger and use all
reasonable  efforts  to  solicit  from its  shareholders  proxies to vote on the
proposal to approve  this Plan of Merger and the  issuance of such shares and to
secure a quorum at such meeting.

     5.9 Approval of Plan of Merger by Grand Shareholders. Grand, acting through
its Board of Directors, or a duly authorized committee shall, in accordance with
the Michigan Act and its Articles of Incorporation and Bylaws, promptly and duly
call,  give notice of,  convene,  and hold as soon as practicable  following the
date upon which the Registration  Statement  becomes  effective,  a shareholders
meeting  for  the   purpose  of  adopting   this  Plan  of  Merger  (the  "Grand
Shareholders' Meeting").

          5.9.1 Board Recommendation. Except while Grand has received in writing
     a Superior  Proposal  (as defined in Section  5.9.4  (Superior  Proposal)),
     which proposal is still pending, at the Grand Shareholders'  Meeting and in
     any  proxy  materials  used in  connection  with  the  Grand  Shareholders'
     Meeting,  the  Board  of  Directors  of  Grand  shall  recommend  that  its
     shareholders vote for approval of this Plan of Merger.

          5.9.2  Solicitation  of  Proxies.  Except  after the  occurrence  of a
     Fiduciary Event and while such event continues:

               (a) Grand shall use all  reasonable  efforts to solicit  from its
          shareholders  proxies to vote on the  proposal to approve this Plan of
          Merger and to secure a quorum at the Grand Shareholders' Meeting.

               (b)  Except  while  Grand has  received  in  writing  a  Superior
          Proposal that is still pending, Grand shall use all reasonable efforts
          to secure the vote of  shareholders  required by the  Michigan Act and
          Grand's Articles of  Incorporation  and Bylaws to approve this Plan of
          Merger.

          5.9.3  Fiduciary  Event. A "Fiduciary  Event" shall have occurred when
     the Board of  Directors  of Grand has (a)  received  in  writing a Superior
     Proposal (as defined in Section  5.9.4  (Superior  Proposal))  that is then
     pending,  (b)  determined  in good faith (having  considered  the advice of
     legal  counsel) that its  fiduciary  duties to Grand's  shareholders  under
     applicable law would require the Board of Directors to so withdraw, modify,
     or change its  recommendation,  and (c)  determined to accept and recommend
     the Superior Proposal to the shareholders of Grand.

          5.9.4 Superior  Proposal.  A "Superior  Proposal"  means any bona fide
     unsolicited   Acquisition  Proposal  (as  defined  in  Section  5.10.1  (No
     Solicitation))  made by a third party on terms that the Board of  Directors
     of Grand  determines in its good faith  judgment,  (having  considered  the
     written  advice  of Austin  Associates  or  another  financial  advisor  of
     recognized   reputation)  to  be  materially   more  favorable  to  Grand's
     shareholders than this Plan of Merger from a financial point of view.

          5.9.5 Notice.  Grand shall notify  Macatawa at least ten business days
     prior to taking any action with respect to such Superior Proposal or taking
     any action with respect to the withdrawal,  modification,  or change of its
     recommendation to its shareholders for adoption of this Plan of Merger.

                                      A-25

         5.10 Competing Proposals. Except as provided below, neither Grand nor
its subsidiaries, nor any of their respective directors, officers, employees,
investment bankers, representatives, or agents, shall take any action
inconsistent with the intent to consummate the Merger upon the terms and
conditions of this Plan of Merger. Without limiting the foregoing:

          5.10.1 No Solicitation. Neither Grand nor its subsidiaries, nor any of
     their respective  directors,  officers,  employees,  attorneys,  investment
     bankers,  representatives,  or agents, shall,  directly or indirectly,  (i)
     invite,  initiate,  solicit,  or encourage an Acquisition  Proposal or (ii)
     participate  in any  discussions or  negotiations  regarding an Acquisition
     Proposal  unless a  Fiduciary  Event has  occurred  and  continues  or such
     discussions or negotiations  are likely to lead to a Superior  Proposal.  A
     proposal,  offer,  or other  expression of interest  concerning  any tender
     offer,  exchange  offer,  merger,  consolidation,  sale of shares,  sale of
     assets,  or assumption of liabilities not in the ordinary course,  or other
     business combination involving Grand or its subsidiaries,  or substantially
     all of their respective  assets or properties,  other than the Merger shall
     be referred to as an "Acquisition Proposal".

          5.10.2  Communication  of Other  Proposals.  Grand shall cause written
     notice to be delivered to Macatawa promptly upon receipt of any Acquisition
     Proposal.  Such notice shall contain the material  terms and  conditions of
     the Acquisition Proposal to which such notice relates.  Within ten business
     days after Grand's  receipt of an  Acquisition  Proposal,  Grand shall give
     notice to  Macatawa  whether or not a  Fiduciary  Event has  occurred  or a
     Superior  Proposal  is  reasonably  likely to result,  and if not,  Grand's
     notice  shall  include  a copy  of  Grand's  unequivocal  rejection  of the
     Acquisition Proposal in the form actually delivered to the person from whom
     the  Acquisition  Proposal was received.  Thereafter,  Grand shall promptly
     notify  Macatawa  of any  material  changes in the terms,  conditions,  and
     status of such Acquisition Proposal.

          5.10.3 Furnishing  Information.  Unless a Fiduciary Event has occurred
     and continues or there is reasonable  likelihood  that a Superior  Proposal
     would  result,  neither  Grand  nor  its  subsidiaries,  nor  any of  their
     respective directors, officers, employees,  attorneys,  investment bankers,
     representatives,   or  agents,  shall  furnish  any  nonpublic  information
     concerning Grand or its subsidiaries to any person who is not affiliated or
     under contract with Grand or Macatawa, except as required by applicable law
     or regulations.  Prior to furnishing such  information to any person who is
     not  affiliated  or under  contract  with Grand or  Macatawa,  Grand  shall
     receive from such person an executed  confidentiality  agreement with terms
     no less  favorable  to Grand than those  contained  in its  confidentiality
     agreement with Macatawa, and Grand shall then provide only such information
     as has been furnished previously to Macatawa.

          5.10.4 Payment after Certain Events.  If, after this Plan of Merger is
     executed,  the Board of  Directors  of Grand or the  shareholders  of Grand
     accept or approve any  Acquisition  Proposal or  Superior  Proposal,  which
     competes or is otherwise inconsistent with the transactions contemplated by
     this Plan of Merger or  terminates  this Plan of Merger due to a  Fiduciary
     Event, then Grand shall promptly pay to Macatawa a fee of $2,000,000.

          5.10.5 Corporate  Liability for Individual's  Breach. For the purposes
     of this Section 5.10 (Competing Proposals), any breach of this Section 5.10
     (Competing  Proposals) or of any subsection hereof by an executive officer,
     director,  attorney or financial advisor of Grand, in his or her individual
     capacity,  shall be deemed to be a breach  by  Grand.  Notwithstanding  the
     above,  no  provision  of this Plan of Merger shall be construed to require
     either  party or their  directors  to take any action  that  would  violate
     applicable law (whether statutory or common law), rule, or regulation.

     5.11   Indemnification.   Macatawa  shall  honor  any  and  all  rights  to
indemnification and advancement of expenses now existing in favor of the present
and former  directors and officers of Grand,  the Bank, or the Mortgage  Company
under their Articles of Incorporation or Bylaws included in the Grand Disclosure
Statement, which shall survive the Merger as enforceable contractual rights, and
shall,  as  contractual  rights,  continue  with  respect  to acts or  omissions
occurring before the Effective Time of the Merger with the same force and effect
as  prior  to  the   Effective   Time  of  the   Merger.   This   Section   5.11
(Indemnification)  is for the benefit of persons who are or have been  directors
or officers of Grand and shall be  enforceable  by and only by such  persons and
their estates and personal representatives.

     5.12  Insurance.  Macatawa  shall use all  reasonable  efforts to cause the
persons  currently  serving or having  served as officers and directors of Grand
immediately prior to the Effective Time of the Merger to be covered for a period
of at least six years from the  Effective  Time of the Merger by the  directors'
and officers'  liability  insurance  policy ("D&O  Policy")  maintained by Grand
(provided  that Macatawa may  substitute  for such Grand D&O Policy a substitute
D&O Policy of at least the same coverage and amounts as Macatawa provides to its
own officers and directors) with respect to acts or omissions occurring prior to
the  Effective  Time of the Merger  that were  committed  by such  officers  and
directors in their  capacity as such. In no event shall  Macatawa be required to
spend,  directly or  indirectly,  more than  $96,000 in the  aggregate to either

                                      A-26

maintain  or provide  insurance  coverage  pursuant  to this Plan of Merger.  If
Macatawa  does not  advise  Grand in  writing  prior to the Grand  Shareholders'
Meeting  that it has procured  such  coverage,  Grand shall be permitted  (after
giving  Macatawa  three business days prior written notice and an additional two
business  day  period to  purchase  such  coverage),  in lieu of  receiving  the
foregoing  insurance  coverage,  to  procure  tail  coverage  for past  acts and
omissions  for a single  premium  amount not in excess of $96,000.  This Section
5.12 (Insurance) is for the benefit of persons who are or have been directors or
officers of Grand and shall be enforceable by and only by such persons and their
estates and personal representatives.

     5.13 Name. After the Effective Time of the Merger,  Macatawa agrees that it
shall  retain and use the "Grand"  name and charter for a period of at least two
(2) years from the Effective  Time of the Merger,  unless the Board of Directors
of the Bank agrees otherwise.

     5.14 Charitable  Giving.  Notwithstanding  Section 5.3 (Conduct of Business
Pending the  Effective  Time of the Merger) Grand and Bank shall be permitted to
make  charitable  contributions,   authorized  by  their  respective  boards  of
directors,  with  respect to  Grand's  2001  fiscal  year (some of which will be
payable in 2002) in an amount equal to 10% of pretax profits for 2001,  provided
such charitable  contributions  are properly  accrued as an expense for the year
ended on or before December 31, 2001.  Macatawa agrees to work with the Board of
Directors of the Bank to develop an  appropriate  community-giving  plan for the
Bank to be implemented after the Effective Time of the Merger.

                                   ARTICLE VI
                              ADDITIONAL AGREEMENTS

     6.1 Registration  Statement.  As soon as is reasonably practical,  Macatawa
agrees  to  prepare  and  file  with  the  SEC  under  the  Securities  Act  the
Registration  Statement and the related  Prospectus and Proxy Statement included
as a part  thereof  covering  the issuance by Macatawa of the shares of Macatawa
Common  Stock  as  contemplated  by this  Plan of  Merger,  together  with  such
amendments  as may  reasonably  be required  for the  Registration  Statement to
become  effective.  Macatawa  agrees to provide  Grand with the  opportunity  to
review and  comment  upon the  Registration  Statement,  each  amendment  to the
Registration  Statement,  and each form of the  Prospectus  and Proxy  Statement
before   filing.   Macatawa   agrees  to  provide   Grand  with  copies  of  all
correspondence  received from the SEC with respect to the Registration Statement
and its amendments and with all responsive  correspondence  to the SEC. Macatawa
agrees to notify Grand of any stop orders or threatened stop orders with respect
to the Registration Statement. Grand agrees to provide all necessary information
pertaining to Grand and its subsidiaries  promptly upon request,  and to use all
reasonable efforts to obtain the cooperation of Grand's independent  accountants
and attorneys, in connection with the preparation of the Registration Statement.

     6.2 Other  Filings.  Macatawa  agrees to  prepare  and file,  as soon as is
reasonably practical, with the Federal Reserve Board, the State of Michigan, and
any other appropriate  regulatory  agencies all documents in connection with the
transactions  contemplated  by this Plan of Merger.  Macatawa  agrees to provide
Grand with the  opportunity  to review and comment  upon such  documents  before
filing, to make such amendment and file such supplements thereto as Macatawa may
reasonably  request,  and to  provide  Grand with  copies of all  correspondence
received from these  agencies and all  responsive  correspondence  sent to these
agencies.

     6.3 Press  Releases.  Grand and Macatawa shall cooperate with each other in
the  development  and  distribution  of  all  news  releases  and  other  public
information  disclosures  with respect to this Plan of Merger,  except as may be
otherwise  required  by law.  Neither  Grand nor  Macatawa  shall issue any news
releases  with  respect  to this Plan of Merger or the Merger  unless  such news
releases  have been mutually  agreed upon by the parties,  except as required by
law.

     6.4  Miscellaneous  Agreements  and  Consents.  Subject  to the  terms  and
conditions  of  this  Plan of  Merger,  each of the  parties  agrees  to use all
reasonable  efforts to take,  or cause to be taken,  all  actions  and to do, or
cause to be done, all things  necessary,  proper,  or advisable under applicable
laws  and  regulations  to  consummate  and  make  effective  the   transactions
contemplated  by this Plan of Merger.  Macatawa  and Grand  will use  reasonable
efforts  to  obtain  consents  of all  third  parties  and  governmental  bodies
necessary or desirable for the consummation of the Merger.

     6.5 Financial  Information.  Subject to Section 6.6 (Investigation),  after
the date of the execution of this Plan of Merger until the Effective Time of the
Merger, each party shall promptly deliver to the other party copies of:

               (a) Each monthly internal financial report (if any) prepared with
          respect to Grand or Macatawa, as applicable, and its subsidiaries on a
          consolidated or unconsolidated basis; and

               (b) Each  financial  report or statement  submitted to regulatory
          authorities  for  Grand  or  Macatawa,   as  applicable,   and/or  any
          subsidiary.

                                      A-27

     6.6 Investigation.

          6.6.1 Access to Information by Macatawa. For the purpose of permitting
     an  examination  of  Grand  by  such  of  Macatawa's  officers,  attorneys,
     accountants,  and representatives for the purposes of Macatawa's evaluation
     of the Merger, Grand shall:

               (a) Permit,  and shall cause the Bank and all other  subsidiaries
          of Grand to permit, full access to their respective properties, books,
          and records at reasonable times;

               (b) Use reasonable efforts to cause its and the Bank's directors,
          officers,  employees,  accountants,  and  attorneys  and  those of all
          subsidiaries  of  Grand  to  cooperate   fully,  for  the  purpose  of
          permitting  a complete  and  detailed  examination  of such matters by
          Macatawa's officers, attorneys, accountants, and representatives;

               (c) Furnish to Macatawa, upon request, any information reasonably
          requested respecting Grand's and any of its subsidiaries'  properties,
          assets, business, and affairs; and

               (d) Permit  representatives of Macatawa to attend meetings of the
          Board of Directors and  committees of the boards of directors of Grand
          and its  subsidiaries;  provided,  however,  that  representatives  of
          Macatawa  will excuse  themselves  during  discussion  of this Plan of
          Merger and the transactions  contemplated hereby and during discussion
          of matters that the Board of Directors of Grand reasonably believes to
          be of competitive significance.

          6.6.2 Access to Information  by Grand.  For the purposes of permitting
     an  examination  of  Macatawa  by  such  of  Grand's  officers,  attorneys,
     accountants,  and representatives for the purposes of Grand's evaluation of
     the Merger,  Macatawa  shall permit  access to such of  Macatawa's  and its
     subsidiaries books and records and at such times as reasonably and mutually
     agreed between the President of each of Macatawa and Grand.

          6.6.3 Consent to Disclose.  Macatawa and Grand each  acknowledge  that
     certain  information  may not be  disclosed  by  Macatawa or Grand or their
     subsidiaries  without the prior written  consent of persons not  affiliated
     with  Macatawa or Grand.  If such  information  is requested by Macatawa or
     Grand,  then the other party shall use, or cause its  subsidiaries  to use,
     reasonable  efforts to obtain such prior  consent and shall not be required
     to disclose such  information  unless and until such prior consent has been
     obtained.

          6.6.4  Confidentiality.  Except as  provided in Section  6.6.6  (Other
     Information),  while  this Plan of  Merger  is in  effect  and at all times
     thereafter, Macatawa and Grand each agree to treat as strictly confidential
     and agree not to divulge to any other person,  natural or corporate  (other
     than employees of, and attorneys,  accountants, and financial advisers for,
     such party who are reasonably  believed to have a need for such information
     in  connection  with  the  Merger),  and not to make any  business  use not
     related to the Merger of, any financial statements,  schedules,  contracts,
     agreements,  instruments,  papers, documents, or other information relating
     to the other party and the other party's  subsidiary(ies) which it may come
     to know as a direct  result of a disclosure by the other party or the other
     party's subsidiary(ies),  or which may come into its possession directly as
     a result of and during the course of such investigation. Macatawa and Grand
     recognize and understand the close  proximity of their  respective  markets
     and  agree  that the fact  that a party to this Plan of Merger is or begins
     doing  business  with a customer of the other party will not be presumed to
     be a breach of the provisions of this Section 6.6.4 (Confidentiality).

          6.6.5  Return  of  Materials.  Upon the  termination  of this  Plan of
     Merger, Macatawa and Grand each agree to promptly return to the other party
     or to destroy all written materials  furnished to it by the other party and
     the other  party's  subsidiary(ies),  and all notes and  summaries  of such
     written materials, in connection with such investigation, including any and
     all  copies  of any of the  foregoing.  Macatawa  and Grand  each  agree to
     preserve  intact all such materials  which are returned to them and to make
     such materials  reasonably  available upon request or subpoena for a period
     of not less than five years from the  termination of this Plan of Merger or
     such longer or shorter period of time as they may mutually agree.

          6.6.6  Other   Information.   The   provisions  of  this  Section  6.6
     (Investigation)  shall not preclude  Macatawa or Grand, or their respective
     subsidiaries,  from using or disclosing  information  which is: (i) readily
     ascertainable  from public  information or trade sources;  (ii) known by it
     before the commencement of discussions  between the parties or subsequently
     developed by it or its subsidiaries  independent of any investigation under
     this Plan of Merger or received

                                      A-28

     from a third party not under any obligation to Grand or Macatawa,  or their
     respective subsidiaries,  to keep such information  confidential;  or (iii)
     reasonably required to be included in any filing or application required by
     any  governmental  or  regulatory  agency,   including  without  limitation
     Macatawa's  application or applications  to the Federal Reserve Board,  and
     Macatawa's or Grand's  annual report and proxy  statement.  Macatawa  shall
     permit  Grand to  review  Macatawa's  application  or  applications  to the
     Federal Reserve Board prior to filing and Grand may reasonably request that
     sensitive or competitive information be separately filed as confidential in
     accordance with instructions, rules, and regulations issued by such agency.

          6.6.7 Insider Trading. Grand and Macatawa shall take responsible steps
     to assure that any person who  receives  nonpublic  information  concerning
     Macatawa or Grand  pursuant to this Plan of Merger will not buy or sell, or
     advise other persons to buy or sell,  Macatawa Common Stock or Grand Common
     Stock until such information is disclosed to the public.

     6.7  Environmental  Investigation.  Macatawa  may,  at its own  option  and
expense,  engage environmental  consultants to conduct a preliminary ("Phase I")
environmental  assessment  of any  parcel of real  estate  owned and used in the
operation of Grand's or its  subsidiaries'  businesses and any other real estate
owned. Grand and its subsidiaries shall provide reasonable assistance, including
site  access,  to such a  consultant  for  purposes  of  conducting  the Phase I
assessments.  The fees and expenses of a consultant  with respect to the Phase I
assessments shall be paid by Macatawa, subject to the provisions of Section 10.5
(Expenses).  If any environmental conditions are found, reasonably suspected, or
would tend to be indicated by the report of the consultant which may be contrary
to the  representations  and warranties set forth in Section 4.21 (Environmental
Matters),  without regard to any  exceptions  that may be contained in the Grand
Disclosure  Statement,  then  Macatawa  shall  obtain from one or more  mutually
acceptable consultants or contractors,  as appropriate,  an estimate of the cost
of any further environmental investigation,  sampling, analysis, remediation, or
other  follow-up  work that may be  necessary  to address  those  conditions  in
accordance with applicable  Environmental Laws. Macatawa shall forward copies of
any such estimates to Grand upon receipt.

          6.7.1 Mutual  Agreement.  Upon receipt of the estimate of the costs of
     all  follow-up   work  to  the  Phase  I  assessments   or  any  subsequent
     investigation  phases that may be  conducted,  the parties shall attempt to
     agree upon a course of action for further  investigation and remediation of
     any environmental  condition suspected,  found to exist, or that would tend
     to be  indicated  by the report of the  consultant.  All work plans for any
     post-Phase I assessment  activities,  or any removal or remediation actions
     that may be  performed,  shall be mutually  satisfactory  to  Macatawa  and
     Grand.  If the work plans or removal or remediation  actions would entail a
     material  cost to  complete,  Macatawa  and Grand shall  discuss a mutually
     acceptable  modification  to this Plan of Merger.  Macatawa and Grand shall
     cooperate in the review, approval, and implementation of all work plans.

          6.7.2  Right to  Abandon.  If the  parties  are unable to agree upon a
     course  of  action  for  further   investigation   and  remediation  of  an
     environmental  condition  or issue  raised by an  environmental  assessment
     and/or a mutually  acceptable  modification to this Plan of Merger, and the
     condition  or  issue  is not  one  for  which  it can  be  determined  to a
     reasonable  degree of certainty that the risk and expense to which Macatawa
     and its  subsidiaries  (after  the  Merger)  would be  subject  as owner or
     operator  of the  property  involved  can be  quantified  and limited to an
     amount  which would not have a Material  Adverse  Effect on the business or
     financial condition of Grand and its subsidiaries on a consolidated basis ,
     then  Macatawa  may abandon this Plan of Merger  pursuant to Section  9.3.3
     (Environmental Risk).

     6.8 Employee Benefit Plans. The Grand Pension Plan will be frozen as of the
Effective  Time of the  Merger,  so that there  shall be no  further  accrual of
benefits under the Grand Pension Plan after such time. Simultaneously with or in
anticipation  of freezing of the Grand Pension Plan,  Grand will amend the Grand
Benefit  Restoration  Plan to provide that the restored  benefit under that plan
includes the portion of any accrued benefit under the Grand Pension Plan that is
not  vested  when  benefit  accruals  are  frozen and does not later vest due to
termination of the Grand Pension Plan.  Macatawa expressly reserves the right to
terminate  the Grand  Pension Plan at any time it so chooses after the Effective
Time of the Merger.  The Grand 401(k) Plan will be merged into or combined  with
the  Macatawa  Bank  401(k)  Plan at such time after the  Effective  Time of the
Merger and in such manner as determined by Macatawa.

                                   ARTICLE VII
                 CONDITIONS PRECEDENT TO MACATAWA'S OBLIGATIONS

     All  obligations  of Macatawa  under this Plan of Merger are subject to the
fulfillment  (or waiver in writing by a duly  authorized  officer of  Macatawa),
prior to or at the Closing, of each of the following conditions:

                                      A-29

     7.1 Renewal of Representations and Warranties, Etc.

          7.1.1  Representations  and Warranties.  Grand's  representations  and
     warranties  shall then be true in all material  respects or, if one or more
     representations  or  warranties  shall  then be untrue or  incomplete,  the
     cumulative  effect  of  all  untrue  or  incomplete   representations   and
     warranties  shall not then be materially  adverse relative to the business,
     income, financial condition or prospects of Grand and its subsidiaries on a
     consolidated basis. For purposes of this Section 7.1.1 (Representations and
     Warranties),  representations and warranties made with respect to specified
     dates or events need only to have been true in all material  respects as of
     such dates or events.  Any  representation or warranty which becomes untrue
     because  of any  change  intended  by this  Plan  of  Merger  shall  not be
     considered to be a breach of this Plan of Merger because of such change.

          7.1.2  Compliance with Agreements.  Grand and its  subsidiaries  shall
     have performed and complied with all agreements,  conditions, and covenants
     required by this Plan of Merger to be performed  or complied  with by Grand
     or its subsidiaries prior to or at the Closing in all material respects.

          7.1.3  Certificates.  Compliance with Sections 7.1.1  (Representations
     and Warranties) and 7.1.2  (Compliance with Agreements)  shall be evidenced
     by one or more  certificates  signed  on  behalf  of Grand  by  appropriate
     officers  of  Grand  and,  with  respect  to  agreements,  conditions,  and
     covenants  pertaining to its subsidiaries,  by appropriate  officers of its
     subsidiaries, dated as of the date of the Closing, certifying the foregoing
     in such detail as Macatawa  may  reasonably  request,  and  describing  any
     exceptions to such compliance in such certificates.

     7.2 Opinion of Legal  Counsel.  Grand shall have  delivered  to Macatawa an
opinion of its counsel  consistent  with Appendix A, dated as of the date of the
Closing and reasonably satisfactory to counsel for Macatawa.

     7.3 Required Approvals. Macatawa shall have received:

          7.3.1 Regulatory. All such approvals,  consents,  authorizations,  and
     licenses  of all  regulatory  and  other  governmental  authorities  having
     jurisdiction  as may be  required  to permit the  performance  by Grand and
     Macatawa of their respective  obligations under this Plan of Merger and the
     consummation of the Merger.

          7.3.2 Shareholder. The requisite approval of the Macatawa shareholders
     of this Plan of Merger and the Merger and evidence reasonably  satisfactory
     to Macatawa of the requisite approval of Grand's  shareholders of this Plan
     of Merger and the Merger.

     7.4 Order,  Decree, Etc. Neither Macatawa nor Grand shall be subject to any
order, decree or injunction of a court or agency of competent jurisdiction which
enjoins or prohibits the consummation of the Merger.

     7.5 Proceedings.  There shall not be any action, suit,  proceeding,  claim,
arbitration,  or investigation  pending or threatened:  (i) against Grand or its
subsidiaries or their  respective  properties or businesses  which may result in
any liability to either of them or its subsidiaries  which could have a Material
Adverse Effect on the financial condition,  net income,  business, or properties
of Grand and its subsidiaries on a consolidated  basis; or (ii) which challenges
the Merger or this Plan of Merger.

     7.6 Tax  Matters.  Macatawa  shall  have  received  an  opinion  of Varnum,
Riddering, Schmidt & Howlett LLP, reasonably satisfactory in form and substance,
substantially to the effect that:

          7.6.1 Reorganization.  The Merger of Grand with and into Macatawa will
     constitute a reorganization  within the meaning of Section  368(a)(1)(A) of
     the Internal  Revenue Code, and Macatawa and Grand will each be a "party to
     a  reorganization"  within the  meaning of Section  368(b) of the  Internal
     Revenue Code.

          7.6.2 Assets' Tax Basis. The basis of the Grand assets in the hands of
     Macatawa  immediately  after  the  Merger  will be the same as the basis of
     those assets in the hands of Grand immediately prior to the Merger.

          7.6.3 No Gain or Loss.  No gain or loss will be recognized to Macatawa
     on the receipt by Macatawa of the assets of Grand in exchange  for Macatawa
     Common Stock and the assumption by Macatawa of the liabilities of Grand.

          7.6.4 Holding Period. The holding period of the assets of Grand in the
     hands of Macatawa  will include the holding  period during which Grand held
     such assets.

                                      A-30

          The tax opinion shall be supported by one or more fact certificates or
     affidavits  in such form and  content  as may be  reasonably  requested  by
     Macatawa's  counsel  from Grand and its  subsidiaries  and Macatawa and its
     subsidiaries.

     7.7  Registration  Statement.  The  Registration  Statement shall have been
declared  effective  by the SEC and shall not be  subject to a stop order or any
threatened stop order.

     7.8 Certificate as to Outstanding Shares.  Macatawa shall have received one
or more  certificates  signed  by the  secretary  of Grand on  behalf  of Grand,
certifying  the total  number of shares of  capital  stock of Grand  issued  and
outstanding  as of the close of business on the day  immediately  preceding  the
Closing, all in such form as Macatawa may reasonably request.

     7.9 Change of Control Waivers. Macatawa shall have received evidence of the
waiver of any material  rights and the waiver of the loss of any material rights
which may be  triggered by the change of control of Grand upon  consummation  of
the Merger under any agreements,  contracts,  mortgages, deeds of trust, leases,
commitments,  indentures, notes, or other instruments, all in form and substance
reasonably satisfactory to Macatawa.

     7.10 Employment Agreements.  The Amended and Restated Employment Agreements
described in the Grand  Disclosure  Statement shall have been executed and shall
not have been terminated, cancelled or amended.

     7.11 Grand Stock Options.  There shall not have been any issuances of Grand
Stock Options since the date of this Plan of Merger.

     7.12 Amendment of Grand Stock  Options.  Grand shall have amended its stock
option  plans or caused the written  amendment of each  outstanding  Grand Stock
Option  grant prior to the Closing if and to the extent  necessary to permit the
conversion of the outstanding Grand Stock Options as contemplated by Section 2.2
(Conversion of Grand Stock Options).

     7.13 Fairness Opinion.  Macatawa shall have received an opinion  reasonably
acceptable to Macatawa,  dated as of the date of this Plan of Merger and renewed
as of a date approximately the date of the Prospectus and Proxy Statement,  that
the terms of the Merger are fair to  Macatawa's  shareholders  from a  financial
standpoint  as of that date and such  opinion  shall not have been  subsequently
withdrawn;  provided,  that Macatawa shall have used all  reasonable  efforts to
obtain such a fairness opinion.

                                  ARTICLE VIII
                   CONDITIONS PRECEDENT TO GRAND'S OBLIGATIONS

     All  obligations  of Grand  under  this Plan of Merger  are  subject to the
fulfillment (or waiver in writing by a duly authorized officer),  prior to or at
the Closing, of each of the following conditions:

     8.1 Renewal of Representations and Warranties, Etc.

          8.1.1 Representations and Warranties.  Macatawa's  representations and
     warranties  shall then be true in all material  respects or, if one or more
     representations  or warranties shall then be untrue,  the cumulative effect
     of all untrue  representations  and warranties shall not then be materially
     adverse  relative  to the  business,  income,  or  financial  condition  of
     Macatawa and its subsidiaries on a consolidated basis. For purposes of this
     Section  8.1.1   (Representations  and  Warranties),   representations  and
     warranties made with respect to specified dates or events need only to have
     been  true  in all  material  respects  as of such  dates  or  events.  Any
     representation  or  warranty  which  becomes  untrue  because of any change
     intended by this Plan of Merger shall not be  considered  to be a breach of
     this Plan of Merger because of such change.

          8.1.2 Compliance with Agreements.  Macatawa and its subsidiaries shall
     have performed and complied with all agreements,  conditions, and covenants
     required  by this  Plan of  Merger  to be  performed  or  complied  with by
     Macatawa  and its  subsidiaries  prior to or at the Closing in all material
     respects.

          8.1.3  Certificates.  Compliance with Sections 8.1.1  (Representations
     and Warranties) and 8.1.2  (Compliance with Agreements)  shall be evidenced
     by one or more certificates signed on behalf of Macatawa by the appropriate
     officers of Macatawa  and,  with  respect to  agreements,  conditions,  and
     covenants  pertaining to its subsidiaries,  by appropriate  officers of its
     subsidiaries, dated as of the date of the Closing, certifying the foregoing
     in such  detail  as  Grand  may  reasonably  request,  and  describing  any
     exceptions to such compliance in such certificates.

                                      A-31

     8.2 Opinions of Legal  Counsel.  Macatawa  shall have delivered to Grand an
opinion of its counsel  consistent  with Appendix B, dated as of the date of the
Closing and reasonably satisfactory to counsel for Grand.

     8.3 Required Approvals. Grand shall have received:

          8.3.1  Regulatory.  Grand and  Macatawa  shall have  received all such
     approvals,  consents,  authorizations,  and licenses of all  regulatory and
     other governmental  authorities  having  jurisdiction as may be required to
     permit the  performance by Grand and Macatawa,  or their  subsidiaries,  of
     their respective obligations under this Plan of Merger and the consummation
     of the Merger.

          8.3.2  Shareholder.  The Grand  shareholders  shall have approved this
     Plan  of  Merger  and  Grand  shall  have  received   evidence   reasonably
     satisfactory   to  Grand  of  the   requisite   approval  of  the  Macatawa
     shareholders of this Plan of Merger and the Merger.

     8.4 Order,  Decree, Etc. Neither Macatawa nor Grand shall be subject to any
order, decree or injunction of a court or agency of competent jurisdiction which
enjoins or prohibits the consummation of the Merger.

     8.5 Proceedings.  There shall not be any action, suit,  proceeding,  claim,
arbitration,  or investigation pending or threatened: (i) against or relating to
either Grand or Macatawa or their  respective  subsidiaries or their  respective
properties or businesses  which may result in any liability to either of them or
its  subsidiaries  which could have a Material  Adverse  Effect on the financial
condition, net income, business, properties,  operations, or prospects of either
of them and its  subsidiaries on a consolidated  basis; or (ii) which challenges
the Merger or this Plan of Merger.

     8.6 Tax  Matters.  Grand  shall  have  received  an  opinion  from  Varnum,
Riddering Schmidt & Howlett LLP, reasonably  satisfactory in form and substance,
substantially to the effect that:

          8.6.1 Reorganization.  The Merger of Grand with and into Macatawa will
     constitute a reorganization  within the meaning of Section  368(a)(1)(A) of
     the Internal  Revenue Code, and Macatawa and Grand will each be a "party to
     a  reorganization"  within the  meaning of Section  368(b) of the  Internal
     Revenue Code.

          8.6.2  No Gain or  Loss.  No gain or loss  will be  recognized  by the
     shareholders  of Grand who  receive  shares  of  Macatawa  Common  Stock in
     exchange  for all of their  shares  of Grand  Common  Stock,  except to the
     extent  of any cash  received  in lieu of a  fractional  share of  Macatawa
     Common Stock.

          8.6.3 Stock Tax Basis.  The basis of the  Macatawa  Common Stock to be
     received by  shareholders  of Grand will, in each instance,  be the same as
     the basis of the  respective  shares of Grand Common Stock  surrendered  in
     exchange therefor.

          8.6.4 Holding Period.  The holding period of the Macatawa Common Stock
     received by  shareholders  of Grand  will,  in each  instance,  include the
     period during which the Grand Common Stock surrendered in exchange therefor
     was held, provided that the Grand Common Stock was, in each instance,  held
     as a  capital  asset  in the  hands  of the  shareholder  of  Grand  at the
     Effective Time of the Merger.

     8.7  Registration  Statement.  The  Registration  Statement shall have been
declared  effective  by the SEC and shall not be  subject to a stop order or any
threatened stop order.

     8.8 Listing of Shares.  The shares of Macatawa  Common  Stock that shall be
issued to the  shareholders of Grand upon  consummation of the Merger shall have
been  authorized for listing on The NASDAQ Stock Market upon official  notice of
issuance.

     8.9 Certificate as to Outstanding Shares.  Grand shall have received one or
more  certificates  signed by  Macatawa's  transfer  agent and the  secretary of
Macatawa on behalf of Macatawa, certifying the total number of shares of capital
stock of Macatawa  issued and outstanding as of the close of business on the day
immediately  preceding  the  Closing,  all in such form as Grand may  reasonably
request.

     8.10 Fairness Opinion.  Grand shall have received an opinion  acceptable to
Grand,  dated as of the date of this Plan of  Merger  and  renewed  as of a date
approximately the date of the Prospectus and Proxy Statement, that the financial
terms of the Merger are fair to Grand's shareholders from a financial standpoint
as of that date and such  opinion  shall not have been  subsequently  withdrawn;
provided,  that Grand  shall have used all  reasonable  efforts to obtain such a
fairness opinion.

                                      A-32

                                   ARTICLE IX
                              ABANDONMENT OF MERGER

     This Plan of Merger may be terminated and the Merger  abandoned at any time
prior to the Effective Time of the Merger (notwithstanding that approval of this
Plan of Merger by the  shareholders  of Grand and Macatawa  may have  previously
been obtained) as follows:

     9.1 Mutual  Abandonment.  By mutual consent of the boards of directors,  or
duly authorized committees thereof, of Macatawa and Grand.

     9.2 Upset Date.  By either  Macatawa or Grand if the Merger  shall not have
been  consummated  on or before June 30, 2002 and such failure to consummate the
Merger is not  caused  by a breach  of this  Plan of  Merger by the  terminating
party.

     9.3 Macatawa's Rights to Terminate.  By Macatawa under any of the following
circumstances:

          9.3.1 Failure to Satisfy Closing Conditions.  If any of the conditions
     specified in Article VII have not been met or waived by  Macatawa,  at such
     time as such condition can no longer be satisfied  notwithstanding  Grand's
     reasonable  efforts  to comply  with  those  covenants  and  satisfy  those
     conditions by Grand in this Plan of Merger.

          9.3.2 Shareholder Approval. This Plan of Merger is not approved by the
     requisite vote of the  shareholders  of Grand or Macatawa at a meeting duly
     called and held for that  purpose at which a quorum is present and voted in
     person or by proxy and such meeting has been finally adjourned.

          9.3.3  Environmental  Risks.  If Macatawa  has given  Grand  notice of
     termination  based on an  unacceptable  Environmental  Risk, as provided in
     Section 6.7.2 (Right to Abandon).

          9.3.4  Occurrence  of a Fiduciary  Event.  At any time after there has
     occurred a Fiduciary Event.

          9.3.5 Material Adverse Event. If there shall have occurred one or more
     events that shall have caused or are reasonably  likely to cause a Material
     Adverse Effect on Grand.

          9.3.6 Community Reinvestment Act Rating. If, prior to the Closing, the
     Bank is examined for  compliance  with the Community  Reinvestment  Act and
     receives  a  rating  lower  than   "Satisfactory"  or,  if  the  report  of
     examination is still pending on the date of the Closing, Macatawa is unable
     to satisfy  itself that the Bank will receive a rating of  Satisfactory  or
     better.

     9.4  Grand's  Rights to  Terminate.  By the Board of  Directors,  or a duly
authorized committee thereof, of Grand under any of the following circumstances:

     9.4.1  Failure  to Satisfy  Closing  Conditions.  If any of the  conditions
specified  in Article  VIII have not been met or waived by Grand at such time as
such condition can no longer be satisfied notwithstanding  Macatawa's reasonable
efforts to comply with those covenants given by Macatawa in this Plan of Merger.

     9.4.2  Shareholder  Approval.  This Plan of Merger is not  approved  by the
requisite vote of the shareholders of Grand or Macatawa at a meeting duly called
and held for that purpose at which a quorum is present and voted in person or by
proxy and such meeting has been finally adjourned.

     9.4.3 Community  Reinvestment Act Rating. If, prior to the Closing,  any of
the  banking  subsidiaries  of  Macatawa is  examined  for  compliance  with the
Community  Reinvestment Act and receives a rating lower than  "Satisfactory" or,
if the report of examination is still pending on the date of the Closing,  Grand
is unable to satisfy  itself  that such bank or banks  will  receive a rating of
Satisfactory or better.

     9.4.4  Material  Adverse  Event.  If there shall have  occurred one or more
events  that  shall  have  caused or are  reasonably  likely to cause a Material
Adverse Effect on Macatawa.

     9.5  Effect of  Termination.  In the event of  termination  of this Plan of
Merger by either Grand or Macatawa as provided in this  Article IV  (Abandonment
of Merger),  this Plan of Merger  shall  forthwith  have no effect,  and none of
Grand,

                                      A-33

Macatawa,  any of their  respective  subsidiaries,  or any of  their  respective
directors,  officers,  or  employees  shall  have any  liability  of any  nature
whatsoever  under this Plan of Merger,  or in connection  with the  transactions
contemplated  by this Plan of Merger,  except that (a) Sections  5.10.4 (Payment
after Certain  Events),  6.6.4  (Confidentiality),  6.6.5 (Return of Materials),
10.3  (Nonsurvival of  Representations,  Warranties,  and Agreements),  and 10.5
(Expenses)  shall  survive  any  termination  of this  Plan of  Merger,  and (b)
notwithstanding  anything  to the  contrary  contained  in this Plan of  Merger,
neither  Grand  nor  Macatawa  shall be  relieved  or  released  from any of its
liabilities  or  damages  arising  out of a knowing or  intentional  breach of a
representation  and warranty or a breach of any other  provision of this Plan of
Merger.

                                    ARTICLE X
                                  MISCELLANEOUS

     Subject to the terms and  conditions  of this Plan of Merger,  Macatawa and
Grand further agree as follows:

     10.1 "Material Adverse Effect" Defined. As used in this Plan of Merger, the
term "Material Adverse Effect" means any change or effect that,  individually or
when taken  together  with all other such changes or effects that have  occurred
prior to the date of  determination  of the  occurrence of the Material  Adverse
Effect,  has had or could have a material  negative  impact on (a) the business,
assets, financial condition, results of operations, or value of Macatawa and its
subsidiaries, taken as a whole, or Grand and its subsidiaries, taken as a whole,
as the case may be; or (b) the ability of Macatawa or Grand, as the case may be,
to  satisfy  the  applicable   closing  conditions  or  consummate  the  Merger.
Notwithstanding  the above, the impact of the following shall not be included in
any determination of a Material Adverse Effect:  (a) changes in GAAP,  generally
applicable to financial  institutions and their holding  companies;  (b) actions
and  omissions  of a party  (or any of its  subsidiaries)  taken  with the prior
written  consent  of  the  other  party;  (c)  changes  in  economic  conditions
(including changes in the level of interest rates) generally affecting financial
institutions;  and (d) fees and expenses  reasonably related to this transaction
(such as any additional insurance coverages, employment and consulting services,
legal,  accounting,  and investment banking fees and expenses, and severance and
retention provisions) incurred or paid without violation of the representations,
warranties or covenants contained in this Plan of Merger.

     10.2  "Knowledge"  Defined.  As used  in this  Plan  of  Merger,  the  term
"knowledge"  means the actual knowledge of any director or officer (as that term
is defined in Rule 16a-1 of the Exchange Act) of Grand or Macatawa,  as the case
may be.

     10.3 Nonsurvival of Representations,  Warranties,  and Agreements.  None of
the  representations,  warranties,  covenants,  and  agreements  in this Plan of
Merger or in any other agreement or instrument  delivered  pursuant to this Plan
of  Merger,   including   any  rights   arising   out  of  any  breach  of  such
representations,  warranties,  covenants,  and  agreements,  shall  survive  the
Effective  Time  of the  Merger,  except  for  those  covenants  and  agreements
contained  herein  that,  by the terms  hereof,  apply or are to be performed in
whole or in part after the Effective Time of the Merger.

     10.4  Amendment.  Subject  to  applicable  law,  this Plan of Merger may be
amended,  modified,  or  supplemented  by,  and only by,  written  agreement  of
Macatawa  and  Grand,   executed  by  the  respective  officers  thereunto  duly
authorized, at any time prior to the Effective Time of the Merger.

     10.5 Expenses.  Except as otherwise provided in this Plan of Merger,  Grand
and Macatawa shall each pay its own expenses incident to preparing for, entering
into, and carrying out this Plan of Merger,  and incident to the consummation of
the Merger.  Each party shall pay the fees and expenses of any investment banker
engaged  by  that  party.  The  costs  of  all  filing  fees  pertaining  to the
Registration  Statement  shall be paid by  Macatawa.  The costs of printing  and
mailing the  Prospectus  and Proxy  Statement to their  respective  shareholders
shall be borne by Macatawa and by Grand respectively.

     10.6 Specific Enforcement. The parties each agree that, consistent with the
terms and conditions of this Plan of Merger, in the event of a breach by a party
to this Plan of Merger,  money damages will be inadequate and not susceptible of
computation  because of the unique nature of Grand,  the  subsidiaries of Grand,
and the Merger.  Therefore, the parties each agree that a federal or state court
of competent jurisdiction shall have authority,  subject to the rules of law and
equity,  to  specifically  enforce  the  provisions  of this  Plan of  Merger by
injunctive  order or such  other  equitable  means as may be  determined  in the
court's discretion.

     10.7  Jurisdiction;  Jury. The parties  acknowledge  that  jurisdiction and
venue  may be  permissible  in more  than one  jurisdiction  or court  district.
Macatawa  and Grand  each  hereby  agree not to assert any  defense of  improper
jurisdiction or venue and each waive their right to a trial by jury.

     10.8 Waiver.  Any of the terms or  conditions of this Plan of Merger may be
waived in writing  at any time by action  taken by the Board of  Directors  of a
party, a duly authorized committee thereof, or a duly authorized officer of such

                                      A-34

party.  The failure of any party at any time or times to require  performance of
any  provision  of this Plan of Merger  shall in no manner  affect such  party's
right at a later time to enforce the same  provision.  No waiver by any party of
any  condition,  or of the  breach of any  term,  covenant,  representation,  or
warranty contained in this Plan of Merger,  whether by conduct or otherwise,  in
any one or more  instances  shall be deemed to be or  construed  as a further or
continuing  waiver of any such condition or breach,  or as a waiver of any other
condition  or of the  breach of any other  term,  covenant,  representation,  or
warranty.

     10.9 Notices.  All notices,  requests,  demands,  and other  communications
under this Plan of Merger  shall be in writing  and shall be deemed to have been
duly given and effective  immediately if delivered or sent and received by a fax
transmission (if receipt by the intended recipient is confirmed by telephone and
if hard copy is delivered by  overnight  delivery  service the next day), a hand
delivery,  or a nationwide  overnight delivery service (all fees prepaid) to the
following addresses:

If to Grand:                           With a copy to:

Grand Bank Financial Corporation       Warner Norcross & Judd LLP
Attention:  Charles C. Stoddard, CEO   Attention:  Gordon R. Lewis
126 Ottawa Avenue, NW, Suite 100       900 Fifth Third Center
P.O. Box 3580                          111 Lyon Street, NW
Grand Rapids, Michigan 49503-2867      Grand Rapids, Michigan 49503-2487
Telephone:  616-235-7000               Telephone:  616-752-2000
Fax:  616-235-2160                     Fax:  616-222-2752

If to Macatawa:                        With a copy to:

Macatawa Bank Corporation              Varnum, Riddering Schmidt & Howlett LLP
Attention: Benj. A. Smith, III,        Attention: Donald L. Johnson
Chairman and CEO                       Bridgewater Place
c/o Smith & Associates                 P.O. Box 352
106 East 8th Street                    333 Bridge Street, NW
Holland, Michigan 49423                Grand Rapids, Michigan 49501-0352
Telephone:  616-396-0199               (49504 for deliveries)
Fax:  616-396-2381                     Telephone:  616-336-6000
                                       Fax:  616-336-7000

     10.10 Governing Law. This Plan of Merger shall be governed,  construed, and
enforced in accordance with the laws of the State of Michigan, without regard to
principles of conflicts of laws.

     10.11 Entire  Agreement.  This Plan of Merger  (including  all exhibits and
ancillary  agreements  described  in this Plan of Merger)  supersedes  all prior
agreements   between  the  parties  with  respect  to  its  subject  matter  and
constitutes (along with the agreements and documents referred to in this Plan of
Merger) a complete and exclusive statement of the terms of the agreement between
the parties with respect to its subject matter;  except for matters set forth in
any  written  instrument  concurrently  or  contemporaneously  executed  by  the
parties. No party may assign any of its rights or obligations under this Plan of
Merger to any other person.

     10.12 Third Party  Beneficiaries.  The terms and conditions of this Plan of
Merger shall inure to the benefit of and be binding upon  Macatawa and Grand and
their  respective  successors.  Except to the extent  provided in Sections  5.11
(Indemnification) and 5.12 (Insurance),  nothing in this Plan of Merger, express
or implied,  is intended to confer upon any person other than Macatawa and Grand
any rights,  remedies,  obligations,  or liabilities  under or by reason of this
Plan of Merger.

     10.13  Counterparts.  This Plan of Merger  may be  executed  in one or more
counterparts, which taken together shall constitute one and the same instrument.
Executed  counterparts of this Plan of Merger shall be deemed to have been fully
delivered and shall become legally binding if and when executed  signature pages
are  received  by  facsimile  transmission  from a  party.  If so  delivered  by
facsimile  transmission,  the parties agree to promptly send original,  manually
executed copies by nationwide overnight delivery service.

     10.14 Further Assurances; Privileges. Macatawa and Grand each shall, at the
request  of the  other,  execute  and  deliver  such  additional  documents  and
instruments and take such other actions as may be reasonably  requested to carry
out the terms and provisions of this Plan of Merger.

                                      A-35

     10.15 Headings, Etc. The article headings and section headings contained in
this Plan of Merger are  inserted for  convenience  only and shall not affect in
any way the meaning or  interpretation  of this Plan of Merger.  With respect to
any term,  references  to the singular  form of the word include its plural form
and references to the plural form of the word include its singular form.

     10.16 Calculation of Dates and Deadlines.  Unless otherwise specified,  any
period of time to be  determined  under  this Plan of Merger  shall be deemed to
commence at 12:01 a.m. on the first full day after the specified  starting date,
event, or occurrence.  Any deadline, due date, expiration date, or period-end to
be calculated  under this Plan of Merger shall be deemed to end at 5 p.m. on the
last day of the  specified  period.  The time of day  shall be  determined  with
reference to the then current local time in Holland, Michigan.

     10.17  Severability.  If any  term,  provision,  covenant,  or  restriction
contained in this Plan of Merger is held by a final and unappealable  order of a
court of competent jurisdiction to be invalid, void, or unenforceable,  then the
remainder of the terms,  provisions,  covenants,  and restrictions  contained in
this Plan of Merger shall  remain in full force and effect,  and shall in no way
be affected,  impaired,  or invalidated unless the effect would be to cause this
Plan of Merger to not achieve its essential purposes.

     The undersigned have duly executed and acknowledged  this Plan of Merger as
of the date first written above.

                          GRAND BANK FINANCIAL CORPORATION


                          By:      /s/ Charles C. Stoddard
                                   Charles C. Stoddard
                                   Its Chairman and CEO


                          MACATAWA BANK CORPORATION


                          By:      /s/ Benj. A. Smith III
                                   Benj. A. Smith III
                                   Its Chairman and CEO





                                      A-36

                                   Appendix B



November 20, 2001


CONFIDENTIAL

Board of Directors
Grand Bank Financial Corporation
126 Ottawa Avenue NW, Ste 100
Grand Rapids, Michigan  49503

Members of the Board:

You have  requested  our opinion as to the fairness,  from a financial  point of
view, to Grand Bank Financial Corporation,  Grand Rapids, Michigan ("Grand") and
its  shareholders,  of the terms of the Agreement and Plan of Merger dated as of
November 20, 2001 (the "Agreement") between Grand and Macatawa Bank Corporation,
Holland,  Michigan ("Macatawa").  The Agreement provides for the Merger of Grand
with and into  Macatawa  (the  "Merger"),  with  Macatawa  being  the  surviving
company.

     The terms of the Agreement provide for a fixed exchange ratio in which each
     common  share of Grand will be  exchanged  for  17.5979  shares of Macatawa
     common stock. Based on Grand's current common shares outstanding,  Macatawa
     will issue  approximately  2,375,000 shares of common stock to Grand common
     stockholders.  The Agreement further provides that stock options previously
     granted by Grand be converted into and become options to purchase  Macatawa
     common stock.

Austin Associates, LLC ("Austin Associates"),  as part of its investment banking
practice,  is customarily  engaged in the valuation of businesses and securities
in  connection  with  mergers  and  acquisitions,  and  valuations  for  estate,
corporate  and other  purposes.  Austin  Associates  acted as Grand's  financial
advisor in connection with, and has participated in negotiations leading to, the
Agreement.  In connection  with rendering our opinion set forth herein,  we have
among other things:

     (i)  Reviewed  the audited  financial  statements  of Grand for each of the
          years ending 1996 through 2000, and the audited  financial  statements
          of Macatawa for each of the years ending 1998-2000;

    (ii)  Reviewed unaudited financial  statements of Grand and Macatawa for the
          quarters ended March 31, 2001, June 30, 2001 and September 30, 2001;

   (iii)  Reviewed certain other internal  information,  primarily  financial in
          nature,  relating to the respective businesses,  earnings,  assets and
          prospects of Grand and Macatawa  provided to us or publicly  available
          for purposes of our analysis;

    (iv)  Participated    in   meetings   and   telephone    conferences    with
          representatives  of  Grand  and  Macatawa   concerning  the  financial
          condition,  business, assets, financial forecasts and prospects of the
          companies,  as well as  other  matters  we  believed  relevant  to our
          inquiry;

     (v)  Compared the results of operations  and  financial  condition of Grand
          with that of certain  companies,  which we deemed to be  relevant  for
          purposes of this opinion;

    (vi)  Reviewed the financial  terms,  to the extent publicly  available,  of
          certain acquisition  transactions,  which we deemed to be relevant for
          purposes of this opinion;

   (vii)  Reviewed the Agreement and certain related documents; and

  (viii)  Performed   such  other   reviews  and  analyses  as  we  have  deemed
          appropriate.

                                      B-1

In our  review  and  analysis,  we relied  upon and  assumed  the  accuracy  and
completeness of the financial and other  information  provided to us or publicly
available,  and  have  not  attempted  to  verify  the  same.  We  have  made no
independent  verification  as to the  status  and  value of Grand or  Macatawa's
assets, and have instead relied upon representations and information  concerning
assets of both  companies in the  aggregate.  In rendering our opinion,  we have
assumed that the transaction will be a tax-free  reorganization with no material
adverse  tax  consequences  to  Grand  or  Macatawa,  or to  Grand  shareholders
receiving  Macatawa  stock.  In  addition,  we have  assumed  in the  course  of
obtaining the  necessary  approvals for the  transaction,  no condition  will be
imposed that will have a material adverse effect on the contemplated benefits of
the transaction to Grand and its shareholders.

This opinion is based on economic and market conditions and other  circumstances
existing on, and information made available as of, the date hereof. This opinion
is limited to the fairness,  from a financial point of view, of the terms of the
Agreement,  and does not address  the  underlying  business  decision by Grand's
Board of Directors to effect the Merger and does not constitute a recommendation
to any Grand shareholder as to how such shareholder  should vote with respect to
the Merger.

Austin  Associates  reserves  the right to review all  disclosures  in the proxy
materials and consent to the  characterization of our fairness opinion.  For our
services  in  rendering  this  opinion,  Grand will pay us a fee, a  significant
portion of which is contingent upon the  consummation  of the Merger.  Grand has
also agreed to indemnify us against certain liabilities.

Based upon our analysis and subject to the  qualifications  described herein, we
believe that as of the date of this letter, the terms of the Agreement are fair,
from a financial point of view, to Grand and its shareholders.

Respectfully,


/s/ Austin Associates, LLC

Austin Associates, LLC

                                      B-2

                                   Appendix C


                           [To be filed by Amendment]






















                                      C-1

                 PART II. INFORMATION NOT REQUIRED IN PROSPECTUS

Item 20.  Indemnification of Directors and Officers.

     Macatawa  Bank  Corporation  ("Macatawa")  is obligated  under its Restated
Articles of Incorporation to indemnify its directors and executive  officers who
serve  or have  served  at the  request  of  Macatawa  as  directors,  officers,
employees,  agents or  fiduciaries  of Macatawa or another  corporation or other
enterprise  to  the  fullest  extent  permitted  under  the  Michigan   Business
Corporation  Act.  Persons who are not  directors or  executive  officers may be
similarly  indemnified  in respect of such services to the extent  authorized by
Macatawa's Board of Directors.

     Sections 561 through 571 of the Michigan  Business  Corporation Act contain
provisions  governing the  indemnification of directors and officers by Michigan
corporations.  That  statute  provides  that a  corporation  has  the  power  to
indemnify a person who was or is a party or is  threatened to be made a party to
a threatened,  pending or completed action,  suit or proceeding,  whether civil,
criminal,  administrative or investigative and whether formal or informal (other
than an action by or in the right of the corporation) by reason of the fact that
he or she is or was a director,  officer,  employee or agent of the corporation,
or is or was serving at the request of the  corporation as a director,  officer,
partner,  trustee, employee or agent of another foreign or domestic corporation,
partnership,  joint venture,  trust or other  enterprise,  whether for profit or
not, against expenses (including attorneys' fees), judgments,  penalties,  fines
and amounts paid in settlement actually and reasonably incurred by him or her in
connection  with the action,  suit or  proceeding,  if the person  acted in good
faith and in a manner he or she  reasonably  believed to be in or not opposed to
the best interests of the corporation or its shareholders, and with respect to a
criminal action or proceeding,  if the person had no reasonable cause to believe
his or  her  conduct  was  unlawful.  The  termination  of an  action,  suit  or
proceeding by judgment,  order, settlement or conviction, or upon a plea of nolo
contendere or its equivalent, does not, of itself, create a presumption that the
person  did not act in good  faith  and in a  manner  that he or she  reasonably
believed to be in or not opposed to the best interests of the corporation or its
shareholders,  and,  with  respect  to a  criminal  action  or  proceeding,  had
reasonable cause to believe that his or her conduct was unlawful.

     Indemnification of expenses (including attorneys' fees) and amounts paid in
settlement is permitted in derivative  actions,  except that  indemnification is
not allowed  for any claim,  issue or matter in which such person has been found
liable  to the  corporation  unless  and  to the  extent  that a  court  decides
indemnification  is proper.  To the extent that any director or officer has been
successful  on the  merits  or  otherwise  in  defense  of an  action,  suit  or
proceeding,  or in defense of a claim,  issue or matter in the  action,  suit or
proceeding,  he or she  shall  be  indemnified  against  actual  and  reasonable
expenses  (including  attorneys' fees) incurred by him or her in connection with
the action,  suit or proceeding,  and any action,  suit or proceeding brought to
enforce the  mandatory  indemnification  provided  under the  Michigan  Business
Corporation  Act.  The  Michigan   Business   Corporation  Act  permits  partial
indemnification  for a portion  of  expenses  (including  reasonable  attorneys'
fees), judgments,  penalties, fines and amounts paid in settlement to the extent
the person is entitled to indemnification for less than the total amount.

     A  determination  that the person to be  indemnified  meets the  applicable
standard of conduct and an  evaluation  of the  reasonableness  of the  expenses
incurred and amounts paid in  settlement  shall be made by a majority  vote of a
quorum of the Board of Directors  who are not parties or  threatened  to be made
parties to the action, suit or proceeding,  by a majority vote of a committee of
not less than two disinterested  directors, by independent legal counsel, by all
"independent  directors"  not parties or  threatened  to be made  parties to the
action, suit or proceeding, or by the shareholders. An authorization for payment
of indemnification  may be made by: (1) the Board of Directors by (a) a majority
vote of two or more  directors  who are not  parties  or  threatened  to be made
parties to the action, suit or proceeding, (b) a majority vote of a committee of
two or more  directors  who are not parties or  threatened to be made parties to
the action, suit or proceeding,  (c) a majority vote of one or more "independent
directors"  who are not parties or  threatened to be made parties to the action,
suit or proceeding,  or (d) if the corporation lacks the appropriate persons for
alternatives  (a)  through  (c),  by a  majority  vote of the  entire  Board  of
Directors; or (2) the shareholders. Under the Michigan Business Corporation Act,
Macatawa may indemnify a director without a determination  that the director has
met the applicable  standard of conduct unless the director received a financial
benefit to which he or she was not entitled, intentionally inflicted harm on the
corporation or its  shareholders,  violated Section 551 of the Michigan Business
Corporation  Act  (which   prohibits   certain   dividends,   distributions   to
shareholders and certain loans to insiders of the corporation), or intentionally
committed a criminal act. A director may file for a court  determination  of the
propriety of indemnification in any of the situations set forth in the preceding
sentence.

     Under the Michigan Business  Corporation Act, Macatawa may pay or reimburse
the reasonable expenses incurred by a director,  officer,  employee or agent who
is a party or threatened to be made a party to an action,  suit or proceeding in
advance of final  disposition  of the  proceeding  if the person  furnishes  the
corporation a written undertaking to repay the

                                    Part II-1

advance if it is ultimately  determined that he or she did not meet the standard
of conduct, which undertaking need not be secured.

     The indemnification provisions of the Michigan Business Corporation Act are
not exclusive of the rights to indemnification under a corporation's articles of
incorporation or bylaws or by agreement.  However,  the total amount of expenses
advanced or indemnified  from all sources  combined may not exceed the amount of
actual expenses incurred by the person seeking indemnification or advancement of
expenses.   The  indemnification   provided  for  under  the  Michigan  Business
Corporation  Act continues as to a person who ceases to be a director,  officer,
employee or agent.

     The  Michigan  Business   Corporation  Act  permits  Macatawa  to  purchase
insurance on behalf of its  directors,  officers,  employees and agents  against
liabilities  arising out of their  positions with Macatawa,  whether or not such
liabilities would be within the above  indemnification  provisions.  Pursuant to
this  authority,  Macatawa  maintains such insurance on behalf of its directors,
officers, employees and agents.





                                   Part II-2

Item 21.  Exhibits and Financial Statement Schedules.

     A. Exhibits.  The following exhibits are filed as part of this Registration
Statement:

Number              Exhibit

2        Agreement  and Plan of Merger dated  November  20,  2001.  Included as
         Appendix A to the prospectus and joint proxy statement.

4.1      Articles of Incorporation of Macatawa Bank  Corporation,  incorporated
         by  reference  to  Exhibit  3.1  to  the  Macatawa  Bank   Corporation
         Registration Statement on Form SB-2 (Registration No. 333-45755).

4.2      Bylaws of Macatawa  Bank  Corporation,  incorporated  by  reference to
         Exhibit 3.2 to the Macatawa Bank Corporation Registration Statement on
         Form SB-2 (Registration No. 333-45755).

5.1      Opinion of Varnum, Riddering, Schmidt & Howlett LLP.

8.1      Opinion of Varnum, Riddering, Schmidt & Howlett LLP as to Tax Matters.*

23.1     Consent  of  Macatawa's  Independent  Accountants,  Crowe,  Chizek and
         Company LLP.

23.2     Consent of  Grand's  Independent  Certified  Public  Accountants,  BDO
         Seidman LLP.

23.3     Consent of Macatawa's Counsel. Included in Exhibit 5.1

23.4     Consent of Grand's Counsel.

23.5     Consent of Grand's Financial Advisor.

23.6     Consent of Macatawa's Financial Advisor. *

24       Powers of Attorney  (included  on the  signature  page on page II-6 of
         this Registration Statement on Form S-4).

99.1     Notice of Special Meeting of Macatawa Shareholders.

99.2     Form of Proxy for Macatawa Bank Corporation.

99.3     Notice of Special Meeting of Grand Shareholders.

99.4     Form of Proxy for Grand Bank Financial Corporation.

*        To be filed by Amendment.

     B. Financial Statements and Schedules.

     All  schedules  for  which  provision  is  made  in  Regulation  S-X of the
Securities and Exchange Commission have been omitted because they either are not
required under the related  instructions  or the required  information  has been
included in the financial statements of Macatawa or notes thereto.

     C. Opinions of Financial Advisor.

     The form of opinion of Austin Associates,  LLC is included as Appendix B to
the  prospectus  and joint proxy  statement.  The opinion of  Donnelly,  Penman,
French,  Haggarty & Co. will be included  as  Appendix C to the  prospectus  and
joint proxy statement upon filing of an Amendment.

                                   Part II-3

Item 22.  Undertakings.

     The undersigned registrant hereby undertakes:

     (1) To file,  during any period in which  offers or sales are being made, a
post-effective amendment to this registration statement:

     (i)  To  include  any  prospectus  required  by  Section  10(a)(3)  of  the
Securities Act of 1933;

     (ii) To reflect in the  prospectus  any facts or events  arising  after the
effective date of the registration  statement (or the most recent post-effective
amendment  thereof)  which,  individually  or  in  the  aggregate,  represent  a
fundamental  change in the information set forth in the registration  statement.
Notwithstanding the foregoing,  any increase or decrease in volume of securities
offered (if the total dollar value of  securities  offered would not exceed that
which  was  registered)  and any  deviation  from the low end or high end of the
estimated  maximum  offering  range may be reflected  in the form of  prospectus
filed with the  Commission  pursuant  to Rule 424(b) if, in the  aggregate,  the
changes in volume and price  represent  no more than a 20 percent  change in the
maximum  aggregate  offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;

     (iii) To  include  any  material  information  with  respect to the plan of
distribution  not  previously  disclosed  in the  registration  statement or any
material change to such information in the registration statement;"

     (2) That, for the purpose of determining any liability under the Securities
Act of 1933,  each  such  post-effective  amendment  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.

     (3) To remove from registration by means of a post-effective  amendment any
of the securities being registered which remain unsold at the termination of the
offering.

     The  undersigned   registrant  hereby  undertakes  that,  for  purposes  of
determining  any liability  under the Securities Act of 1933, each filing of the
registrant's  annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange  Act of 1934 that is  incorporated  by  reference  in the  registration
statement  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.

     The undersigned  registrant hereby undertakes as follows: that prior to any
public  reoffering  of the  securities  registered  hereunder  through  use of a
prospectus  which is a part of this  registration  statement,  by any  person or
party who is deemed to be an underwriter  within the meaning of Rule 145(c), the
issuer  undertakes that such reoffering  prospectus will contain the information
called for by the  applicable  registration  form with respect to reofferings by
persons who may be deemed  underwriters,  in addition to the information  called
for by the other items of the applicable form.

     The undersigned  registrant  undertakes that every prospectus:  (i) that is
filed pursuant to the paragraph immediately preceding,  or (ii) that purports to
meet the  requirements of Section  10(a)(3) of the Securities Act of 1933 and is
used in connection with an offering of securities  subject to Rule 415, shall be
filed as a part of an amendment to the  registration  statement  and will not be
used until such  amendment is effective,  and that,  for purposes of determining
any  liability  under  the  Securities  Act of 1933,  each  such  post-effective
amendment  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.

     Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors,  officers and controlling  persons of the
registrant pursuant to the foregoing  provisions,  or otherwise,  the registrant
has been advised that in the opinion of the Securities  and Exchange  Commission
such  indemnification  is against  public policy as expressed in the 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 registrant 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 registrant 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  Securities  Act of 1933 and will be governed by the
final adjudication of such issue.

                                   Part II-4

     The  undersigned  registrant  hereby  undertakes to respond to requests for
information  that is incorporated  by reference into the prospectus  pursuant to
Item 4, 10(b),  11, or 13 of this form,  within one  business  day of receipt of
such  request,  and to send the  incorporated  documents  by first class mail or
other equally  prompt means.  This includes  information  contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.

     The  undersigned  registrant  hereby  undertakes  to  supply  by means of a
post-effective  amendment  all  information  concerning a  transaction,  and the
company  being  acquired  involved  therein,  that  was not the  subject  of and
included in the registration statement when it became effective.

                                     * * * *




                                   Part II-5

                                   SIGNATURES

     Pursuant to the  requirements of the Securities Act of 1933, the Registrant
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 December 28, 2001.

                                               MACATAWA BANK CORPORATION


                                               By:    /s/ Benjamin A. Smith, III
                                                      Benjamin A. Smith, III
                                                      Chief Executive Officer

     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 a 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                     Title                             Date
       ---------                     -----                             ----
/s/ Benj. A. Smith, III
Benj. A. Smith, III           Principal Executive Officer      December 28, 2001
                              and a Director

/s/ Steven L. Germond
Steven L. Germond             Principal Financial and          December 28, 2001
                              Accounting Officer

/s/ Philip J. Koning
Philip J. Koning              President and a Director         December 28, 2001


/s/ G. Thomas Boylan
G. Thomas Boylan              Director                         December 28, 2001


/s/ Robert E. DenHerder
Robert E. DenHerder           Director                         December 28, 2001


/s/ John F. Koetje
John F. Koetje                Director                         December 28, 2001


                                   Part II-6

                                  EXHIBIT INDEX


Number                               Exhibit

2        Agreement  and Plan of Merger dated  November  20,  2001.  Included as
         Appendix A to the prospectus and joint proxy statement.

4.1      Articles of Incorporation of Macatawa Bank  Corporation,  incorporated
         by  reference  to  Exhibit  3.1  to  the  Macatawa  Bank   Corporation
         Registration Statement on Form SB-2 (Registration No. 333-45755).

4.2      Bylaws of Macatawa  Bank  Corporation,  incorporated  by  reference to
         Exhibit 3.2 to the Macatawa Bank Corporation Registration Statement on
         Form SB-2 (Registration No. 333-45755).

5.1      Opinion of Varnum, Riddering, Schmidt & Howlett LLP.

8.1      Opinion of Varnum, Riddering, Schmidt & Howlett LLP as to Tax Matters.*

23.1     Consent  of  Macatawa's  Independent  Accountants,  Crowe,  Chizek and
         Company LLP.

23.2     Consent of  Grand's  Independent  Certified  Public  Accountants,  BDO
         Seidman, LLP.

23.3     Consent of Macatawa's Counsel. Included in Exhibit 5.1

23.4     Consent of Grand's Counsel.

23.5     Consent of Grand's Financial Advisor.

23.6     Consent of Macatawa's Financial Advisor. *

24       Powers of Attorney  (included  on the  signature  page on page II-6 of
         this Registration Statement on Form S-4).

99.1     Notice of Special Meeting of Macatawa Shareholders.

99.2     Form of Proxy for Macatawa Bank Corporation.

99.3     Notice of Special Meeting of Grand Shareholders.

99.4     Form of Proxy for Grand Bank Financial Corporation.

*        To be filed by Amendment




                                   Part II-7

                                   Exhibit 5.1



                                December 28, 2001


Macatawa Bank Corporation
348 South Waverly Road
Holland, Michigan 49423

         Subject: Registration Statement on Form S-4
                  2,459,905 Shares of Common Stock, No Par Value per Share
Gentlemen:

     We are counsel to Macatawa Bank Corporation ("Macatawa") in connection with
the  registration  under the Securities Act of 1933, as amended (the "Securities
Act"),  of shares of  Macatawa  common  stock,  no par value  ("Common  Stock"),
pursuant to a registration statement on Form S-4 (the "Registration  Statement")
filed with the Securities and Exchange Commission (the "Commission") on or about
December 28, 2001.

     We are familiar with the  proceedings  taken by Macatawa in connection with
the  authorization of up to 2,459,905 shares of Common Stock to be issued to the
shareholders  of  Grand  Bank  Financial  Corporation.  We  have  examined  such
documents,  records, and matters of law as we have deemed necessary for purposes
of this opinion.  In our  examination,  we have assumed the  genuineness  of all
signatures,  the legal capacity of all natural persons,  the authenticity of all
documents submitted to us as originals,  the conformity to original documents of
all  documents  submitted  to us as  certified or  photostatic  copies,  and the
authenticity of the originals of such copies.

     Based upon the foregoing,  we are of the opinion that the Common Stock will
be, when duly  registered  under the  Securities Act and issued and delivered as
described  in the  Registration  Statement,  legally  issued,  fully  paid,  and
nonassessable.

     We consent to the filing of this opinion as an exhibit to the  Registration
Statement and to the references to our firm in the Registration Statement.

     This  opinion is rendered  for the purposes of Item 21 of Form S-4 and Item
601 of Regulation S-K, may be relied upon only by you and the Commission and may
not be used,  quoted,  or referred to or filed for any other purpose without our
prior written permission.

                                Very truly yours,

                    VARNUM, RIDDERING, SCHMIDT & HOWLETT LLP

                  /s/ Varnum, Riddering, Schmidt & Howlett LLP

DLJ/mjb



                                 Exhibit 5.1-1

                                  Exhibit 23.1

                       Consent of Independent Accountants


     We hereby  consent to the  incorporation  by reference in the  Registration
Statement of Macatawa Bank Corporation on Form S-4 and related  Prospectus/Joint
Proxy  Statement  of our report  dated  January 24,  2001,  on the  consolidated
financial  statements of Macatawa Bank Corporation,  as of December 31, 2000 and
1999,  and for each of the three  years in the period  ended  December  31, 2000
appearing in the 2000 Form 10-K of Macatawa Bank Corporation. We also consent to
the use of our name as "Experts" in the Prospectus/Joint Proxy Statement.


                                /s/ Crowe, Chizek and Company LLP
                                Crowe, Chizek and Company LLP


December 26, 2001
Grand Rapids, Michigan




                                 Exhibit 23.1-1

                                  Exhibit 23.2

               CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



     We do hereby consent to the use in this  Registration  Statement (Form S-4)
of Macatawa Bank Corporation and related Prospectus/Joint Proxy Statement of our
report dated January 17, 2001 on the  consolidated  balance sheets of Grand Bank
Financial  Corporation  as of  December  31,  2000  and  1999,  and the  related
consolidated  statements  of income,  changes in  stockholders'  equity and cash
flows  for each of the  three  years in the  period  ended  December  31,  2000,
contained therein.

     We also consent to the  reference to us under the caption  "Experts" in the
Prospectus/Joint Proxy Statement.



/s/ BDO SEIDMAN, LLP

Grand Rapids, Michigan
December 28, 2001




                                 Exhibit 23.2-1

                                  Exhibit 23.5

                        Consent of Austin Associates, LLC


     We  hereby  consent  to the  use of our  opinion  letter  to the  Board  of
Directors  of Grand Bank  Financial  Corporation,  included as Appendix B to the
Proxy  Statement/Prospectus which forms part of the Registration Statement dated
as of the date hereof on Form S-4 relating to the proposed  Merger of Grand Bank
Financial  Corporation  and Macatawa Bank  Corporation  and to the references to
such opinion therein.

     In giving such consent, we do not admit that we come within the category of
persons whose consent is required under Section 7 of the Securities Act 1933, as
amended,  or the rules and regulations of the Securities and Exchange Commission
thereunder,  nor do we hereby admit that we are experts with respect to any part
of such Registration Statement within the meaning of the term experts as used in
the  Securities  Act of 1933, as amended,  or the rules and  regulations  of the
Securities and Exchange Commission thereunder.

Austin Associates, LLC
By:  /s/ Austin Associates, LLC

December 28, 2001
Grand Rapids, Michigan





                                 Exhibit 23.5-1

                                  Exhibit 99.1


                                 [MACATAWA LOGO]

                            MACATAWA BANK CORPORATION
                                348 Waverly Road
                             Holland, Michigan 49423
                            Telephone (616) 820-1444

Dear Shareholder:

     On behalf of Macatawa Bank  Corporation's  Board of Directors,  I cordially
invite you to attend  the  Special  Meeting of  Shareholders  of  Macatawa  Bank
Corporation to be held on:

                        _____________, ____________, 2002
                        ___________ local time
                        ___________________________
                        ___________________________
                        Holland, Michigan  49423

for the following purposes:

1.   The approval and adoption of the Agreement and Plan of Merger,  dated as of
     November  20,  2001,  between  Macatawa  Bank  Corporation  and Grand  Bank
     Financial   Corporation  and  the  issuance  of  shares  of  Macatawa  Bank
     Corporation's  common stock  pursuant to the  Agreement and Plan of Merger,
     pursuant  to which Grand will merge into  Macatawa  and each share of Grand
     common stock will be converted into 17.5979 shares of Macatawa common stock
     (and cash in lieu of fractional shares); and

2.   To transact  such other  business as may  properly  come before the special
     meeting or any adjournment or postponements thereof.

     The terms of the Merger Agreement,  as well as other important  information
relating to Macatawa and Grand,  are  contained in the attached  prospectus  and
joint  proxy  statement.  Please  give this  document  your  careful  attention.
Macatawa's  Board of Directors has approved the Merger Agreement and unanimously
recommends that Macatawa's shareholders vote "FOR" its approval and adoption and
the approval of the  issuance of shares of Macatawa  Bank  Corporation's  common
stock pursuant to the Merger Agreement. Only holders of Macatawa common stock as
of the close of  business  on  _____________,  2002 are  entitled to vote at the
special meeting.

     This notice and the attached  prospectus and joint proxy  statement and the
accompanying  form of proxy are being  mailed on or about  _____________,  2002.
Because of the  significance  of the  issuance of stock and  proposed  Merger to
Macatawa,  your vote at the special  meeting,  either in person or by proxy,  is
especially  important.  Whether or not you plan to attend the  special  meeting,
please  complete,  sign and date the  enclosed  proxy  card and return it in the
enclosed postage-paid envelope. You may revoke your proxy at any time before the
special  meeting,  as more fully explained in the attached  prospectus and joint
proxy statement. Thank you for your prompt attention to this important matter.

By Order of the Board of Directors



Philip J. Koning,
Secretary

Holland, Michigan


                                 Exhibit 99.1-1

                                  Exhibit 99.2


                                 REVOCABLE PROXY

                            MACATAWA BANK CORPORATION
                         Special Meeting of Shareholders

           THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

     The undersigned  hereby appoints Benj. A. Smith,  III and Philip J. Koning,
or either of them, of Macatawa Bank Corporation ("Macatawa"), with full power of
substitution,  to act as attorneys and proxies for the  undersigned  to vote all
shares of common stock of Macatawa that the  undersigned  is entitled to vote at
Macatawa's  Special  Meeting  of  Shareholders  (the  "Meeting"),  to be held on
__________, 2002, at , located at _________________, Holland, Michigan 49423, at
__________ local time, and any and all adjournments and postponements thereof.

     This  proxy may be  revoked  at any time  before it is voted by: (i) filing
with the  Secretary  of Macatawa  at or before the  Meeting a written  notice of
revocation  bearing  a later  date  than  this  proxy;  (ii)  duly  executing  a
subsequent  proxy relating to the same shares and delivering it to the Secretary
of Macatawa at or before the Meeting;  or (iii) attending the Meeting and voting
in  person  (although  attendance  at the  Meeting  will  not  in and of  itself
constitute  revocation  of this  proxy).  If this proxy is  properly  revoked as
described  above,  then  the  power  of such  attorneys  and  proxies  shall  be
considered terminated and of no further force and effect.

     The undersigned  acknowledges receipt from Macatawa, prior to the execution
of this proxy, of Notice of the Special Meeting and a Prospectus and Joint Proxy
Statement.

                  (Continued and to be signed on reverse side)




                                 Exhibit 99.2-1

MACATAWA BANK CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.     (X)

     The approval and adoption of the Agreement and Plan of Merger,  dated as of
     November  20,  2001  (the  "Merger   Agreement"),   between  Macatawa  Bank
     Corporation and Grand Bank Financial Corporation and the issuance of shares
     of Macatawa Bank Corporation common stock pursuant to the Merger Agreement.

              For                     Against                 Abstain
              ( )                       ( )                     ( )

The Board of Directors recommends a vote "FOR" approval of the Merger Agreement.

     THIS PROXY WILL BE VOTED AS DIRECTED,  BUT IF NO DIRECTIONS  ARE SPECIFIED,
     THIS  PROXY WILL BE VOTED FOR  APPROVAL  OF THE  MERGER  AGREEMENT  AND THE
     ISSUANCE  OF SHARES OF  MACATAWA  BANK  CORPORATION  PURSUANT TO THE MERGER
     AGREEMENT.  IF ANY OTHER  BUSINESS IS PRESENTED AT THE MEETING,  THIS PROXY
     WILL BE VOTED  BY THOSE  NAMED  IN THIS  PROXY  IN THEIR  JUDGMENT.  AT THE
     PRESENT  TIME,  THE BOARD OF  DIRECTORS  KNOWS OF NO OTHER  BUSINESS  TO BE
     PRESENTED AT THE MEETING.

                                                Dated: ______________, 2002
                                                Print Name:_____________________
                                                Signature:______________________
                                                Print Name:_____________________
                                                Signature:______________________

                                                Please sign exactly as your name
                                                appears  on   this   card.  When
                                                signing as  attorney,  executor,
                                                administrator,    trustee     or
                                                guardian,  please give your full
                                                title.   If  shares   are   held
                                                jointly,   each   holder  should
                                                sign.

                                                PLEASE  PROMPTLY COMPLETE,  SIGN
                                                AND  MAIL   THIS  PROXY  IN  THE
                                                ENCLOSED  POSTAGE-PAID  ENVELOPE




                                 Exhibit 99.2-2

                                  Exhibit 99.3


                     [GRAND BANK FINANCIAL CORPORATION LOGO]

                        GRAND BANK FINANCIAL CORPORATION
                        126 Ottawa Avenue, N.W., Ste. 100
                        Grand Rapids, Michigan 49503-2867
                            Telephone: (616) 235-7000

Dear Shareholder:

     On  behalf of Grand  Bank  Financial  Corporation's  Board of  Directors we
cordially  invite you to attend a special  meeting of shareholders of Grand Bank
Financial Corporation to be held on:


                            [TIME, DATE, AND LOCATION
                                TO BE COMPLETED]



for the purpose of considering and acting upon approval of an Agreement and Plan
of Merger,  dated as of November 20, 2001, between Macatawa Bank Corporation and
Grand  Bank  Financial  Corporation,  pursuant  to which  Grand  will merge into
Macatawa and each share of Grand  common  stock will be  converted  into 17.5979
shares of Macatawa  common stock (and cash in lieu of  fractional  shares);  and
such other  matters as may  properly  come  before  the  special  meeting or any
adjournments or postponements thereof.

     The terms of the Merger Agreement,  as well as other important  information
relating to Macatawa and Grand,  are  contained in the attached  prospectus  and
joint proxy statement. Please give this document your careful attention. Grand's
Board of Directors has adopted the Merger  Agreement and recommends that Grand's
shareholders  vote "FOR" its approval.  Only holders of Grand common stock as of
the close of business on December  ___, 2001 are entitled to vote at the special
meeting.

     This notice and the attached  prospectus and joint proxy  statement and the
accompanying  form of proxy are being  mailed  on or about  ____________,  2002.
Because of the  significance of the proposed  Merger to Grand,  your vote at the
special meeting, either in person or by proxy, is especially important.  Whether
or not you plan to attend the special meeting,  please  complete,  sign and date
the  enclosed  proxy card and return it  promptly in the  enclosed  postage-paid
envelope. Thank you for your prompt attention to this important matter.

Sincerely,



Charles C. Stoddard                        Thomas J. Wesholski
Chairman of the Board and Chief            President and Chief Operating Officer
Executive Officer

Grand Rapids, Michigan


                                 Exhibit 99.3-1

                                  Exhibit 99.4


                                 REVOCABLE PROXY

                        GRAND BANK FINANCIAL CORPORATION
                         Special Meeting of Shareholders

           THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

     The undersigned  hereby appoints  Charles C. Stoddard,  Thomas J. Wesholski
and Robert W. DeJonge or any of them, with full power of substitution, to act as
attorneys and proxies for the  undersigned to vote all shares of common stock of
Grand Bank Financial  Corporation  ("Grand") that the undersigned is entitled to
vote at Grand's Special Meeting of Shareholders  (the "Meeting"),  to be held on
_______________,    2002,   at    _____________________________,    located   at
_______________________,   at  ______  a.m.,   local  time,   and  any  and  all
adjournments and postponements thereof..

     The undersigned  acknowledges  receipt from Grand prior to the execution of
this proxy,  of Notice of the Special  Meeting and a Prospectus  and Joint Proxy
Statement.


                  (Continued and to be signed on reverse side)




                                 Exhibit 99.4-1

GRAND BANK FINANCIAL CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.     (X)

     Approval of the Agreement and Plan of Merger, dated as of November 20, 2001
     (the "Merger Agreement"),  between Macatawa Bank Corporation and Grand Bank
     Financial Corporation.

                        For             Against               Abstain
                        ( )               ( )                   ( )

The Board of Directors  recommends a vote "FOR"  approval of the  Agreement  and
Plan of Merger.


     This proxy will be voted as directed. If no directions are specified,  this
     proxy  will be voted for  approval  of the Merger  Agreement.  If any other
     business is  presented  at the  meeting,  this proxy will be voted by those
     named in this proxy in their  judgment.  At the present time,  the Board of
     Directors knows of no other business to be presented at the meeting.

                                               Dated: ___________________, 2002
                                               Print Name:______________________
                                               Signature:_______________________
                                               Print Name:______________________
                                               Signature:_______________________

                                               Please sign exactly as your  name
                                               appears  on   this  card.    When
                                               signing  as  attorney,  executor,
                                               administrator,     trustee     or
                                               guardian,  please give  your full
                                               title.    If  shares   are   held
                                               jointly, each holder should sign.

                                                     YOUR VOTE IS IMPORTANT!

                                               PLEASE  PROMPTLY  COMPLETE,  SIGN
                                               AND  MAIL   THIS  PROXY   IN  THE
                                               ENCLOSED POSTAGE-PAID ENVELOPE