Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission file number: 000-25927 MACATAWA BANK CORPORATION (Exact name of registrant as specified in its charter) Indicate by c ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission file number: 000-25927 MACATAWA BANK CORPORATION (Exact name of registrant as specified in its charter) Michigan 38-3391345 (State or other ...

Financial Performance - Net income for the three months ended March 31, 2023, was $12.0 million, a 100% increase from $6.0 million in the same period in 2022[164]. - Net interest income increased to $22.6 million for the three months ended March 31, 2023, compared to $12.7 million in the same period in 2022, reflecting an increase of $10.0 million[167]. - Noninterest income decreased to $4.5 million for the three months ended March 31, 2023, down from $5.0 million in the same period in 2022, primarily due to a $297,000 decrease in net gains on mortgage loans[178][179]. - Noninterest expense increased by $426,000 to $12.2 million for the three months ended March 31, 2023, with salaries and benefits rising by $409,000[180]. - Federal income tax expense was $3.0 million for the three months ended March 31, 2023, compared to $1.4 million for the same period in 2022, with an effective tax rate of 19.86%[182]. Asset and Liability Management - As of March 31, 2023, total assets were $2.64 billion, total loans were $1.22 billion, total deposits were $2.33 billion, and shareholders' equity was $260.6 million[158]. - Total assets decreased by $269.8 million to $2.64 billion at March 31, 2023, primarily due to a decrease in total deposits of $284.2 million[183]. - Cash and cash equivalents decreased to $420.7 million at March 31, 2023, down from $755.2 million at December 31, 2022[184]. - Total deposits decreased by $284.2 million to $2.33 billion at March 31, 2023, compared to $2.62 billion at December 31, 2022[218]. - Uninsured deposits totaled approximately $962.7 million, representing 41% of total deposits, with liquidity sources exceeding uninsured deposit balances by over $300 million[161]. Loan Portfolio - Total loans increased by $43.2 million in the first three months of 2023, with net loan recoveries of $33,000 compared to $227,000 in the same period in 2022[174][175]. - Total loan originations for the first three months of 2023 were $90.628 million, a decrease from $158.523 million in the same period of 2022[192]. - The commercial loan portfolio increased by $37.4 million in Q1 2023, with commercial and industrial loans up by $31.7 million and commercial real estate loans up by $5.7 million[192]. - The consumer residential mortgage loan portfolio comprised 12.2% of total loans at March 31, 2023, an increase from 11.8% at December 31, 2022[196]. - Nonperforming loans decreased from $90,000 at March 31, 2022 to $75,000 at March 31, 2023, indicating improved asset quality[206]. Capital and Equity - Total shareholders' equity increased by $13.5 million to $260.6 million at March 31, 2023, primarily due to net income of $12.0 million[224]. - The total capital to risk-weighted assets ratio was 18.1% at March 31, 2023, exceeding the well-capitalized minimum requirements[226]. - The allowance for credit losses increased to $16.8 million, representing 1.38% of total portfolio loans at March 31, 2023, up from 1.30% at December 31, 2022[204]. Interest Rate and Economic Impact - The Federal Reserve Bank raised the federal funds rate to 5.00% during the three months ended March 31, 2023, impacting net interest income positively[165]. - Under a scenario of interest rates increasing by 200 basis points, the economic value of equity would decrease by 6.13% to $380.3 million, while net interest income would increase by 1.64% to $92.8 million[245]. Deposit Composition and Management - Core deposits, sourced within local markets, represented 100% of total deposits at March 31, 2023, reflecting a $625.5 million increase, or 37%, over pre-pandemic totals[162]. - Deposit balances in excess of the $250,000 FDIC insured limit totaled approximately $962.7 million, or 41% of total deposits, at March 31, 2023[222]. - Noninterest checking account balances decreased by $144.4 million during the first three months of 2023[220]. Risk Management and Liquidity - The Bank has maintained no brokered deposits since December 2011, focusing on reducing reliance on non-core funding sources[229]. - The Bank's liquidity management includes a contingency funding plan to address potential liquidity shortages from rapid loan growth or loss of deposits[228]. - As of March 31, 2023, the Bank has a borrowing capacity of approximately $642.2 million under the Federal Reserve Bank's new Bank Term Funding Program[227].

PART I [Business](index=5&type=section&id=Item%201%3A%20Business) Macatawa Bank Corporation is a bank holding company with $2.91 billion in assets, focusing on commercial and consumer banking in western Michigan Key Financials at Year-End 2022 | Metric | Amount (in billions) | | :--- | :--- | | Total Assets | $2.91 | | Total Loans | $1.18 | | Total Deposits | $2.62 | | Shareholders' Equity | $0.247 | - Net income increased to **$34.7 million** in 2022 from $29.0 million in 2021, and the company paid a quarterly cash dividend of $0.08 per share throughout both years[15](index=15&type=chunk)[16](index=16&type=chunk) - The company is in an **asset-sensitive position**, meaning its net interest income benefits from increases in short-term interest rates, as was the case in 2022[18](index=18&type=chunk) Nonperforming Assets (2020-2022) | (Dollars in thousands) | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Nonperforming loans | $78 | $92 | $533 | | Other real estate owned | $2,343 | $2,343 | $2,537 | | **Total nonperforming assets** | **$2,421** | **$2,435** | **$3,070** | [Products and Services](index=6&type=section&id=Products%20and%20Services) The company provides a range of loan, deposit, securities, and trust services, with a focus on commercial lending Loan Portfolio Composition (December 31) | (Dollars in thousands) | 2022 Amount | 2022 % of Total | 2021 Amount | 2021 % of Total | | :--- | :--- | :--- | :--- | :--- | | Total commercial | $979,319 | 83% | $936,358 | 84% | | Residential mortgage | $139,148 | 12% | $117,800 | 11% | | Consumer | $59,281 | 5% | $54,835 | 5% | | **Total loans** | **$1,177,748** | **100%** | **$1,108,993** | **100%** | Average Deposit Balances and Rates | (Dollars in thousands) | 2022 Avg. Amount | 2022 Avg. Rate | 2021 Avg. Amount | 2021 Avg. Rate | | :--- | :--- | :--- | :--- | :--- | | Noninterest bearing demand | $884,579 | —% | $885,838 | —% | | Interest bearing demand | $704,926 | 0.14% | $681,411 | 0.03% | | Savings and money market | $879,273 | 0.28% | $822,235 | 0.03% | | Time | $88,218 | 0.40% | $101,353 | 0.49% | | **Total deposits** | **$2,556,996** | **0.15%** | **$2,490,837** | **0.04%** | - Trust Department assets under management totaled approximately **$1.007 billion** as of December 31, 2022, split between personal trust services ($537.5 million) and retirement plan services ($469.2 million)[62](index=62&type=chunk)[63](index=63&type=chunk) [Supervision and Regulation](index=12&type=section&id=Supervision%20and%20Regulation) The company and its bank subsidiary are extensively regulated by federal and state authorities and must adhere to Basel III capital requirements - The company is a registered bank holding company regulated by the **Federal Reserve Board** under the BHCA, while Macatawa Bank is a Michigan-chartered bank regulated by the DIFS and the FDIC[73](index=73&type=chunk)[83](index=83&type=chunk) - The company's ability to pay dividends is indirectly limited by restrictions on the Bank, which are governed by Michigan law and federal regulators like the **FDIC**[79](index=79&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk) - The Bank is subject to **Basel III capital requirements**, including a minimum Common Equity Tier 1 (CET1) ratio of 7.0%, and was categorized as "well capitalized" as of December 31, 2022[87](index=87&type=chunk)[90](index=90&type=chunk) [Risk Factors](index=16&type=section&id=Item%201A%3A%20Risk%20Factors) The company faces risks from interest rate changes, local economic conditions, real estate loan concentration, and stock price volatility - Changes in **interest rates** can negatively affect net interest income, the ability to originate loans, and the fair value of financial assets[104](index=104&type=chunk) - The company's concentration in **western Michigan** makes it vulnerable to local economic downturns, which could impact loan repayment, collateral values, and deposit stability[105](index=105&type=chunk) - A substantial portion of the loan portfolio consists of real estate-related loans, with commercial real estate loans representing **45.7%** and residential loans **11.8%** of the total portfolio, posing significant concentration risk[112](index=112&type=chunk) - The company will adopt the **Current Expected Credit Loss (CECL)** accounting standard on January 1, 2023, which could increase the allowance for loan losses and add volatility to earnings[109](index=109&type=chunk) - Risks associated with the company's stock include **price volatility**, limited trading liquidity, and anti-takeover provisions that could discourage potential acquisition proposals[140](index=140&type=chunk)[143](index=143&type=chunk)[146](index=146&type=chunk) [Unresolved Staff Comments](index=27&type=section&id=Item%201B%3A%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - There are **no unresolved staff comments**[150](index=150&type=chunk) [Properties](index=27&type=section&id=Item%202%3A%20Properties) The company owns or leases 29 facilities, including its main office and 26 branches, primarily in western Michigan - The company's administrative offices are located at 10753 Macatawa Drive, Holland, Michigan and it operates a network of owned and leased facilities, including **26 branch offices**[151](index=151&type=chunk)[14](index=14&type=chunk) [Legal Proceedings](index=27&type=section&id=Item%203%3A%20Legal%20Proceedings) The company is not party to any material pending legal proceedings outside of routine litigation - There were **no material pending legal proceedings**, other than routine litigation incidental to the business of banking[152](index=152&type=chunk) [Mine Safety Disclosures](index=27&type=section&id=Item%204%3A%20Mine%20Safety%20Disclosures) This section is not applicable to the company - **Not applicable**[153](index=153&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=28&type=section&id=Item%205%3A%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's stock (MCBC) trades on Nasdaq, with a quarterly dividend of $0.08 per share declared throughout 2022 Quarterly Stock Price and Dividends (2022) | Quarter | High | Low | Dividends Declared | | :--- | :--- | :--- | :--- | | First | $9.56 | $8.76 | $0.08 | | Second | $9.31 | $8.38 | $0.08 | | Third | $10.28 | $8.65 | $0.08 | | Fourth | $11.84 | $9.21 | $0.08 | - The company's stock performance in 2022, with dividends reinvested, resulted in a cumulative total return of **29.35%** since the end of 2017[159](index=159&type=chunk) - In Q4 2022, the company purchased **15,246 shares** at an average price of $11.30 per share related to employee stock compensation plans, with no publicly announced repurchase programs[160](index=160&type=chunk)[162](index=162&type=chunk) [[Reserved]](index=29&type=section&id=Item%206%3A%20%5BReserved%5D) This item is reserved and contains no information [Management's Discussion and Analysis of Results of Operations and Financial Condition](index=30&type=section&id=Item%207%3A%20Management's%20Discussion%20and%20Analysis%20of%20Results%20of%20Operations%20and%20Financial%20Condition) Net income rose to $34.7 million in 2022, driven by higher net interest income from rising rates, while total assets remained stable at $2.91 billion Financial Performance Summary (2021 vs. 2022) | (Dollars in thousands) | 2022 | 2021 | | :--- | :--- | :--- | | Net Interest Income | $70,146 | $56,069 | | Provision for Loan Losses | $(1,125) | $(2,050) | | Total Noninterest Income | $20,019 | $23,695 | | Total Noninterest Expense | $48,226 | $46,090 | | **Net Income** | **$34,731** | **$29,014** | - The increase in net interest income was primarily due to a **54 basis point** increase in the yield on earning assets, driven by the 425 basis point rise in the federal funds rate[172](index=172&type=chunk)[174](index=174&type=chunk) - Noninterest income decreased mainly due to a **$4.0 million drop** in net gains on mortgage loans, as rising interest rates significantly reduced mortgage origination and sale volumes[185](index=185&type=chunk)[186](index=186&type=chunk) - Total assets decreased slightly by $21.8 million to $2.91 billion, as the company deployed **$396.6 million of cash** into loans and securities[199](index=199&type=chunk)[201](index=201&type=chunk)[202](index=202&type=chunk) [Results of Operations](index=31&type=section&id=Results%20of%20Operations) Net income increased 19.7% to $34.7 million in 2022, driven by a 25% rise in net interest income from higher rates Net Interest Income Change Analysis (2022 vs 2021) | (Dollars in thousands) | Increase (Decrease) Due to Volume | Increase (Decrease) Due to Rate | Total Change | | :--- | :--- | :--- | :--- | | Total interest income | $1,172 | $15,100 | $16,272 | | Total interest expense | $(830) | $3,025 | $2,195 | | **Net interest income** | **$2,002** | **$12,075** | **$14,077** | - Net gains on mortgage loans fell from **$4.7 million** in 2021 to **$706,000** in 2022, as mortgage loans originated for sale dropped significantly due to the rising rate environment[185](index=185&type=chunk)[186](index=186&type=chunk)[211](index=211&type=chunk) - Salaries and benefits expense, the largest component of noninterest expense, increased by nearly **$1.0 million** to $26.2 million in 2022[193](index=193&type=chunk) [Financial Condition](index=37&type=section&id=Financial%20Condition) Total assets were stable at $2.91 billion, with a significant shift from cash into higher-yielding securities and loans while maintaining strong asset quality - Total portfolio loans increased by $68.8 million to $1.18 billion; excluding PPP loan forgiveness, underlying loan growth was robust, particularly in the **commercial portfolio which grew by $84.9 million**[204](index=204&type=chunk)[205](index=205&type=chunk) - Nonperforming assets remained stable and low at **$2.4 million**, representing 0.08% of total assets at year-end 2022 and 2021[216](index=216&type=chunk)[220](index=220&type=chunk) - The allowance for loan losses decreased by $604,000 to $15.3 million, with the allowance as a percentage of total loans declining to **1.30% from 1.43%**[224](index=224&type=chunk) - Shareholders' equity decreased by $7.0 million to $247.0 million, as net income was more than offset by dividends and a **$31.3 million negative impact** from unrealized losses on securities[200](index=200&type=chunk)[253](index=253&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=49&type=section&id=Item%207A%3A%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk, and its asset-sensitive position would benefit from a gradual rate increase Interest Rate Sensitivity Analysis (as of Dec 31, 2022) | Interest Rate Scenario | Net Interest Income % Change | Economic Value of Equity % Change | | :--- | :--- | :--- | | Up 200 bps | +3.78% | -2.88% | | Up 100 bps | +1.89% | -1.33% | | Down 100 bps | -2.27% | -0.06% | | Down 200 bps | -6.38% | -5.81% | [Financial Statements and Supplementary Data](index=51&type=section&id=Item%208%3A%20Financial%20Statements%20and%20Supplementary%20Data) This section contains the company's audited consolidated financial statements and the independent auditor's unqualified opinion - The independent auditor, BDO USA, LLP, issued an **unqualified opinion** on the consolidated financial statements, stating they present fairly the financial position and results of operations[282](index=282&type=chunk) - The auditor identified the qualitative environmental factors used in determining the **Allowance for Loan Losses** as a critical audit matter due to the highly subjective judgments involved[287](index=287&type=chunk)[289](index=289&type=chunk) [Notes to Consolidated Financial Statements](index=59&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies, the upcoming adoption of CECL, and provide breakdowns of key financial statement accounts - The company will adopt the **CECL accounting standard** on January 1, 2023, and estimates it will result in an allowance increase of $1.2 million to $2.2 million[362](index=362&type=chunk) - On January 1, 2022, the company transferred U.S. Treasury securities with an amortized cost of **$123.5 million** from 'available for sale' to 'held to maturity'[372](index=372&type=chunk) Regulatory Capital Ratios (Consolidated) | Ratio | Dec 31, 2022 | Dec 31, 2021 | Minimum w/ Buffer | | :--- | :--- | :--- | :--- | | CET1 capital ratio | 16.9% | 17.2% | 7.0% | | Tier 1 capital ratio | 16.9% | 17.2% | 8.5% | | Total capital ratio | 17.9% | 18.3% | 10.5% | | Tier 1 leverage ratio | 9.7% | 8.7% | 4.0% | [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=99&type=section&id=Item%209%3A%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants - **None reported**[469](index=469&type=chunk) [Controls and Procedures](index=99&type=section&id=Item%209A%3A%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls, procedures, and internal control over financial reporting were effective as of year-end 2022 - Management concluded that the company's **disclosure controls and procedures were effective** as of December 31, 2022[470](index=470&type=chunk) - Based on the COSO criteria, management concluded that the company maintained **effective internal control over financial reporting** as of December 31, 2022[474](index=474&type=chunk) [Other Information](index=101&type=section&id=Item%209B%3A%20Other%20Information) There is no other information to report in this section - **None**[484](index=484&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=101&type=section&id=Item%2010%3A%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information is incorporated by reference from the company's 2023 Annual Meeting Proxy Statement [Executive Compensation](index=101&type=section&id=Item%2011%3A%20Executive%20Compensation) Information is incorporated by reference from the company's 2023 Annual Meeting Proxy Statement [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=101&type=section&id=Item%2012%3A%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership is incorporated by reference from the company's Proxy Statement Equity Compensation Plan Information (as of Dec 31, 2022) | Plan Category | Securities to be issued upon exercise | Securities remaining available for future issuance | | :--- | :--- | :--- | | Approved by security holders | 0 | 973,550 | | Not approved by security holders | 0 | 0 | | **Total** | **0** | **973,550** | [Certain Relationships and Related Transactions, and Director Independence](index=101&type=section&id=Item%2013%3A%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information is incorporated by reference from the company's 2023 Annual Meeting Proxy Statement [Principal Accountant Fees and Services](index=101&type=section&id=Item%2014%3A%20Principal%20Accountant%20Fees%20and%20Services) Information is incorporated by reference from the company's 2023 Annual Meeting Proxy Statement PART IV [Exhibits and Financial Statement Schedules](index=102&type=section&id=Item%2015%3A%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the financial statements, schedules, and exhibits filed as part of the Form 10-K report [Form 10-K Summary](index=103&type=section&id=Item%2016%3A%20Form%2010-K%20Summary) No Form 10-K summary is provided - **None**[498](index=498&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission file number: 000-25927 MACATAWA BANK CORPORATION (Exact name of registrant as specified in its charter) Michigan 38-3391345 (State or o ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission file number: 000-25927 MACATAWA BANK CORPORATION (Exact name of registrant as specified in its charter) Michigan 38-3391345 (State or other ...

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission file number: 000-25927 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q MACATAWA BANK CORPORATION (Exact name of registrant as specified in its charter) Michigan 38-3391345 (State or other ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 000-25927 MACATAWA BANK CORPORATION (Exact name of registrant as specified in its charter) Michigan 38-3391345 (State or other jurisdiction of inco ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission file number: 000-25927 MACATAWA BANK CORPORATION (Exact name of registrant as specified in its charter) Michigan 38-3391345 (State or o ...

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 OR For the transition period from _______ to _______ Commission file number: 000-25927 MACATAWA BANK CORPORATION (Exact name of registrant as specified in its charter) Michigan 38-3391345 (State or other ...