SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

________________

FORM 11-K

ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

(Mark One):

[x]     ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. [NO FEE REQUIRED]

For the fiscal year ended December 31, 2007
 

     OR

 

[ ]     TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED].

For the transition period from ______________ to _______________

Commission file number         000-25927         

 

A.     Full title of the plan and the address of the plan, if different from that of the issuer named below:

      Macatawa Bank 401(k) Plan

B.     Name of the issuer of the securities held pursuant to the plan and the address of its principal executive office:

MACATAWA BANK CORPORATION
10753 Macatawa Drive
Holland, Michigan 49424

 

 

 

MACATAWA BANK 401(k) PLAN

TABLE OF CONTENTS

__________________________________________

 

	PAGE
Report of Independent Registered Public Accounting Firm	1
Financial Statements for the Years Ended December 31, 2007 and 2006
Statements of Net Assets Available for Benefits	2
Statements of Changes in Net Assets Available for Benefits	3
Notes to Financial Statements	4-7
Supplementary Information as of December 31, 2007
Form 5500 Schedule H, Line 4i – Schedule of Assets (Held at End of Year)	8

 

Note:    All other schedules required by Section 2520.103-10 of the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 have been omitted because they are not applicable.

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Audit Committee
Macatawa Bank 401(k) Plan
10753 Macatawa Drive
Holland, Michigan 49422

We have audited the accompanying statements of net assets available for benefits of the Macatawa Bank 401(k) Plan (the “Plan”) as of December 31, 2007 and 2006, and the related statements of changes in net assets available for benefits for the years then ended and the December 31, 2007 supplemental schedule of assets (held at year end), as listed in the accompanying table of contents. These financial statements and supplemental schedule are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
 
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for plan benefits of the Macatawa Bank 401(k) Plan as of December 31, 2007 and 2006, and the changes in net assets available for plan benefits for the years then ended in conformity with accounting principles generally accepted in the United States of America.
 
Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The December 31, 2007 supplemental schedule of assets (held at end of year) is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in the audit of the basic 2007 financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic 2007 financial statements taken as a whole.

     /s/Rehmann Robson
     REHMANN ROBSON, P.C.

June 25, 2008

Grand Rapids, Michigan

 

MACATAWA BANK 401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
	December 31
		2007			2006
ASSETS
Investments at fair value
Mutual funds	$	16,757,506		$	14,251,132
Money market fund		342,974			319,416
Macatawa Bank Corporation common stock		929,567			1,302,111
Participant loans		-			535
Total investments at fair value		18,030,047			15,873,194
Receivables
Participant contributions		-			5,480
Accrued dividends		193,557			4,603
Total receivables		193,557			10,083
Cash		242,346			37,283
Total assets		18,465,950			15,920,560
LIABILITIES
Due to broker for securities purchased		233,398			-
Net assets available for benefits	$	18,232,552		$	15,920,560

The accompanying notes are an integral part of these financial statements.

 

MACATAWA BANK
401(k) PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
	Year Ended December 31
		2007			2006
Additions to net assets attributed to
Net investment income
Net (depreciation) appreciation in aggregate fair value      of mutual funds	$	(79,463)		$	847,037
Net depreciation in fair value of Macatawa Bank      Corporation common stock		(780,562)			(114,125)
Dividends and interest		1,555,959			863,868
Total net investment income		695,934			1,596,780
Contributions
Participants'		1,495,236			1,368,335
Employers'		766,817			690,911
Rollovers		347,915			536,656
Total contributions		2,609,968			2,595,902
Total additions		3,305,902			4,192,682
Deductions from net assets attributed to
Benefits paid to participants		993,910			903,902
Net increase		2,311,992			3,288,780
Net assets available for benefits
Beginning of year		15,920,560			12,631,780
End of year	$	18,232,552		$	15,920,560

The accompanying notes are an integral part of these financial statements.

1.    DESCRIPTION OF THE PLAN AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

The following description of the Macatawa Bank 401(k) Plan (the “Plan”) provides only general information. Participants should refer to the Plan agreement, or Summary Plan Description for a more complete description of the Plan's provisions.

Description of the Plan

General

The Plan is a defined contribution plan covering all full-time employees of Macatawa Bank Corporation (“Plan Sponsor” or “Corporation”) who have attained the age of 21 or older. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”).
 

Contributions

Participants may contribute annual compensation, as defined in the Plan, up to the maximum amount allowed by the Internal Revenue Code. Participants who have attained age 50 before the Plan year are eligible to make catch-up contributions. Participants may also contribute amounts representing distributions from other qualified defined benefit or defined contribution plans. In 2007, the plan elected Safe Harbor status. The Plan’s Sponsor contributes a Safe Harbor match in an amount equal to 100% of the first 3% and 50% of the second 3% of base compensation that a participant contributes to the Plan. Participants direct the investment of contributions into various investment options offered by the Plan. The Plan currently offers 23 mutual funds, a money market fund and shares of Macatawa Bank Corporation common stock as investment options for participants. Contributions are subject to certain limitations.

Participant Accounts

Each participant’s account is credited with the participant’s contribution, the Plan Sponsor matching contribution, and an allocation of Plan earnings. Plan earnings are allocated based on the ratio of each participant’s account balance to the total account balance. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.

Vesting

Participants are immediately vested in employee deferral and employer matching contributions, plus actual earnings thereon.
 

Participant Loans

Participant loans, although not permitted by the terms of the current Plan, result from participant rollovers from predecessor employer plans. All plan loans have been repaid as of December 31, 2007.

Payment of Benefits

On termination of service due to death, disability or retirement, a participant may elect to receive a lump-sum amount equal to the value of the participants vested interest in his or her account as defined by the Plan agreement. For termination of service for other reasons, a participant may receive the value of the vested interest in his or her account as a lump-sum distribution.
 

Administrative Expenses

The Plan’s administrative expenses, including salaries, accounting, legal, recordkeeping, and trust services are paid by the Plan Sponsor and qualify as party-in-interest transactions, which are exempt from prohibited transaction rules.
 

Summary of Significant Accounting Policies

Basis of Accounting

The financial statements of the Plan are prepared using the accrual method of accounting.
 

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires the Plan’s Advisory Committee to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates.

Investment Valuation and Income Recognition

Mutual funds and shares of Macatawa Bank Corporation common stock are stated at fair value, based upon quoted market prices. Money market fund investments and participant loans are reported at cost, which approximates fair value.
 
Unrealized appreciation or depreciation in the aggregate fair value of mutual fund investments and shares of Macatawa Bank Corporation common stock represents the net change in the difference between aggregate fair value and the cost of investments, including reinvestment of earnings. The realized gain or loss on sale of investments is the difference between the proceeds received and the average costs of investments sold.
 
Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.
 
Management fees and operating expenses charged to the Plan for investments in mutual funds are deducted from income earned on a daily basis and are not separately reflected. Consequently, management fees and operating expenses are reflected as a reduction of net appreciation or an addition to net depreciation in the aggregate fair value of such investments.
 

Payment of Benefits

Benefits are recorded when paid.

 

2.    INVESTMENTS

Investments representing 5% or more of the Plan’s net assets available for benefits are as follows at December 31:

 

		2007				2006
	Investments at fair value as determined by
	quoted market price
	Mutual Funds
	Dodge and Cox Stock Fund	$	2,619,466			$	2,417,930
	Fidelity Diversified International Fund		2,410,916				1,823,804
	Neuberger Berman Genesis Investor Fund		1,773,521				1,529,522
	Fidelity Spartan U.S. Equity Index Fund		1,456,853				1,521,005
	Columbia Acorn Fund		1,639,985				1,346,459
	Fidelity Dividend Growth Fund		1,341,656				1,336,877
	Vanguard Mid-Cap Index Fund		976,324				-
	Common Stock
	Macatawa Bank Corporation		929,567				1,302,111

3.    RELATED PARTY TRANSACTIONS

Parties-in-interest are defined under Department of Labor (DOL) regulations as any fiduciary of the Plan, any party rendering service to the Plan, the employer, and certain others. Certain Plan investments are held in shares of common stock of the Plan sponsor, or managed by Northern Trust Corporation, a plan custodian, and, therefore, these transactions qualify as party-in-interest. The Plan’s investment in participant loans, the Northern Trust Money Market Fund and Macatawa Bank Corporation common stock as of December 31, 2007 and 2006 represent party-in-interest investment transactions.
 
Macatawa Bank Corporation, through its trust department, serves as trustee, custodian, and record keeper for the Plan. Therefore, all transactions between the Plan and Macatawa Bank constitute party-in-interest transactions. The 108,215 and 61,247 shares of Macatawa Bank Corporation common stock held by the Plan as of December 31, 2007 and 2006 represent approximately 0.63% and 0.38% of the Corporation’s total outstanding shares of common stock, respectively.
 
Cash dividends of $36,662 and $31,996 were paid to the Plan by Macatawa Bank Corporation during 2007 and 2006, respectively, based on shares of common stock held by the Plan on the dates of declaration. This dividend income is included as dividends in the Statements of Changes in Net Assets Available for Benefits. A stock dividend equal to 5% of the outstanding shares of common stock was declared and paid by Macatawa Bank Corporation in 2007 and 2006, respectively. As a result of this stock dividend, Macatawa Bank Corporation issued 3,444 and 2,106 additional shares of Macatawa Bank Corporation common stock to the Plan as of December 31, 2007 and 2006, which were recorded by the Plan at the aggregate fair value of the shares of $51,522 and $68,024, respectively, on the record dates in each year and is included in dividend income.

4.    INCOME TAX STATUS

 

The Corporation’s Board of Directors adopted the Macatawa Bank Prototype 401(k) plan document.  The prototype plan consists of a basic plan document and an adoption agreement, which is used to customize the basic plan document. The prototype plan has received an opinion letter with respect to the overall plan. Macatawa Bank is relying on the opinion letter for the master and prototype plan.  The Plan is required to operate in conformity with the Code to maintain its qualification. Although the adoption agreement of the Plan has been amended, the Plan administrator and the Plan’s legal counsel believe that the Plan is designed and is currently being operated in compliance with applicable requirements of the Internal Revenue Code.

5.    PLAN TERMINATION

 

Although it has not expressed any intent to do so, the Plan Sponsor has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA.

6.    RISKS AND UNCERTAINTIES

 

The Plan provides for investment options in a money market fund, various mutual funds and in shares of Macatawa Bank Corporation common stock. Investment securities are exposed to various risks, such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the Statements of Net Assets Available for Benefits.
 
 
 

* * * * *

 

 

SUPPLEMENTARY INFORMATION

 

 

MACATAWA BANK
401(k) PLAN
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 31, 2007
PLAN # 001 / EIN 38-3378283
		(b) Identity			(c) Description of Investment			(e)
		of Issue, Borrower,			Including Maturity Date, Rate of			Current
(a)		Lessor, or Similar Party			Interest, Collateral, Par or Maturity Value			Value
		Mutual funds
		Dodge and Cox Funds			Dodge and Cox Stock Fund, 18,946 shares			$     2,619,466
		Fidelity Investments			Diversified International Fund, 60,424 shares			2,410,916
		Neuberger Berman			Neuberger Berman Genesis Investor Fund, 51,630 shares			1,773,521
		Columbia			Columbia Acorn Fund, 55,386 shares			1,639,985
		Fidelity Investments			Spartan U.S. Equity Index Fund 28,070 shares			1,456,853
		Fidelity Investments			Dividend Growth Fund, 45,634 shares			1,341,656
		Vanguard			Vanguard Mid-Cap Index Fund, 47,165 shares			976,324
		Federated			Kaufman Fund, 134,334 shares			836,903
		Value Line Mutual Funds			Value Line Income & Growth Fund, 87,440 shares			738,865
		Fidelity Investments			Government Income Fund, 64,931 shares			672,688
		T. Rowe Price International			T. Rowe Price Growth Stock Fund, 15,710 shares			528,826
		American Fund			American Funds AMCAP R5 Fund, 26,047 shares			526,150
		T. Rowe Price International			T. Rowe Price PS Growth Fund, 14,594 shares			356,687
		T. Rowe Price International			T. Rowe Price PS Income Fund, 21,310 shares			334,358
		T. Rowe Price International			T. Rowe Price PS Balanced Fund, 14,402 shares			277,375
		Dodge and Cox Funds			Dodge & Cox Intl Stock Fund, 3,603 shares			165,829
		UMB Scout			UMB Scout International Fund, 981 shares			36,662
		UMB Scout			UMB Scout Small Cap, 2,011 shares			35,472
		T. Rowe Price			T Rowe Price 2030 Retirement, 832 shares			15,848
		Vanguard			Vanguard LT Bond Index, 765 shares			8,909
		T. Rowe Price			T Rowe Price 2040 Retirement, 143 shares			2,753
		T. Rowe Price			T Rowe Price 2020 Retirement, 72 shares			1,281
		Vanguard			Vanguard Fixed Income Sec, 17 shares			179
		Total mutual funds						16,757,506
		Money market fund
*		Northern Trust			Money Market Fund, 342,974 shares			342,974
		Common stock
*		Macatawa Bank  Corporation			Common stock, 108,215 shares			929,567
		Total investments						$     18,030,047
(*) An asterisk in this column identifies a person known to be a party-in-interest.

SIGNATURES

The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees of the Macatawa Bank Corporation 401(k) Plan have caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

 MACATAWA BANK 401(K) PLAN

 

By:                                     

       Thomas DeWitt

Date: June 26, 2008
 
 

 

 

EXHIBIT INDEX

Exhibit No.                    Description
 

23.1

Consent of Independent Registered Public Accounting Firm