Grand River Commerce : 3Q 2022 FINANCIAL STATEMENT

FINANCIAL STATEMENT

Quarter Ending

September 30, 2022

September 30, 2022

To Our Shareholders:

We present for your review the results of operations for Grand River Commerce, Inc. (the "Company") and Grand River Bank (the "Bank") for the nine-month period ended September 30, 2022.

As of September 30, 2022, total assets of the Company stood at $527 million, an increase of $37 million from year-end 2021. Our loan portfolio grew $50 million, an annualized rate of 19.3%, net of the repayment of Paycheck Protection Program ("PPP") loans. This growth was primarily funded by deposits, which increased by $39 million during the period, or 12.2% on an annualized basis.

As evident from our historically-strong asset quality, we rigorously monitor the performance of our loan portfolio. Careful management of our lending relationships assumes even greater significance, given the current condition of the economy. Our portfolio continues to perform exceptionally well, with negligible delinquency and no charge-offs. At quarter-end, we had two relatively small non- performing loan relationships that we believed pose no risk of loss. Subsequent to the close of the quarter, one of those relationships repaid in full.

At quarter-end, our allowance for loan losses stood at 1.27%, compared to 1.29% at year-end. Following industry standards, we calculate our reserve, in part, by analyzing portfolio mix and applying quantitative and qualitative factors, including lagging indicators that represent overall economic conditions and trends in our portfolio.

As will be discussed in the following paragraphs, the Company, as of September 30, posted a net loss of ($467,000), while the Bank reported net income of $77,000. Consolidated performance was impacted by expenses associated with the development of Grand River Mortgage Company, LLC ("GRMC"). It's important to note that, net of the investment in GRMC, the Bank has generated strong year-to-date net income of $2.1 million.

Grand River Bank is known for consistent growth, strong earnings, pristine asset quality and a uniquely-attractive position in the markets we serve. As we've shared in previous communications, our investment in GRMC, a nationwide mortgage lending subsidiary, is intended to create future income diversification, provide additional financial resources to support the continued expansion of our core West Michigan banking franchise, increase the value of the Company for the benefit of our shareholders, and provide the Bank and our team members with even greater opportunities. The decision to proceed with GRMC was made following a year of rigorous evaluation, financial modeling, and thorough stress testing of a variety of environmental conditions, including market contraction and rapidly rising interest rates. The Bank's directors were advised during their evaluation by a group of nationally-known CPA's, compensation consultants, project managers, and attorneys.

GRMC is led by an industry-leading team with deep experience and a track record of success in all market conditions. The operating platform is now largely complete, lenders are being hired and loan production is just beginning. As is the case with virtually all start-ups, GRMC is experiencing losses, as production revenue has not had time to catch up with the initial costs. Fortunately - as planned - the Bank's strong earnings are able to comfortably support the subsidiary until it becomes revenue positive. While we cannot predict with certainty the ultimate trajectory of the overall

economy and we acknowledge that there are factors beyond our control, our expectation - based upon the experience of our board of directors and combined leadership team - is that Grand River Bank will continue to perform well and that GRMC will achieve its anticipated potential. Our most- current forecast anticipates that GRMC will begin to generate meaningful revenue from loan originations during the fourth quarter. We expect to recapture its start-up expense in the first half of next year.

Led by rising interest rates and growth in earning assets, net interest income increased $1.1 million, or 10.7%, on a year-over-year basis. This increase nearly compensated for the $1.4 million year-over-year decrease in PPP-related fee income which, in accordance with accounting standards, is recognized over the life of the loans. From the Bank's perspective, the program worked as intended and, as of September 30, 2022, all PPP loans that we originated have been forgiven. As a result, fees on those loans have all been reflected in interest income.

Non-interest income declined 70% from last year, primarily due to a reduction in the volume of residential mortgage loans sold to secondary market investors and lower aggregate fees realized from those sales. Rising interest rates and other events may further distort local market dynamics, contribute to production limitations over which we have no control and diminish the contribution from our West Michigan mortgage unit in future reporting periods.

Non-interest expense (NIE) increased $3.3 million, or 35%, year-over-year. Approximately $159,000 of the increase resulted from deferred salaries and benefit expenses associated with the second round of PPP lending in 2021. As with PPP-related fee income, origination costs are recognized over the lives of the loans. Funds for PPP expired in 2021 and no additional loans will be made under that program. Net of these PPP-related expenses, the year-over-year NIE increase was 33%, the bulk of which is attributable to startup expenses for GRMC, as referenced earlier in this letter. Net of GRMC related expenses, the NIE increase for the Bank was approximately $415,000, or 4.7%.

Maintaining capital ratios that meet or exceed the regulatory definition of well-capitalized continues to be a priority. As has been the case since its inception, the Bank again met those requirements as of September 30, 2022. The Company also holds reserves that can further support the growth of the Bank and the Company and provide a cushion in the event of unanticipated economic pressure.

Grand River Bank continues to be a West Michigan employer-of-choice and GRMC is quickly earning that distinction among nationwide mortgage companies. Our team members and our board of directors make our Bank a premier financial partner to all those who rely upon us and we're deeply grateful to each of them.

Our financial results are always available via the Investor Relations section of our website, www.grandriverbank.com. We encourage you to use this comprehensive resource to track our

performance and to gain valuable information about your investment in our Company. Thank you for your investment and your continued support.

Sincerely,

Robert P. Bilotti

Chairman, President & CEO

Grand River Commerce, Inc.

1. [e-mail]

Patrick K. Gill	Elizabeth C. Bracken
CEO	President & CFO
Grand River Bank	Grand River Bank
[phone]	[phone]
[e-mail]	[e-mail]

$0.80

$0.40

$0.00

($0.40)

Key ratios

Earnings Per Share			Net Charge-offs
	Thousands	$200
	$150
		$100

$50 $-

Growth

	$600,000
thousands)	$500,000
$400,000
in	$300,000
(Dollars	$200,000
	$100,000
	$-

2013	2014	2015	2016	2017	2018	2019	2020	2021	3Q2022
		Total Assets	Total Loans	Total Deposits