Huron Valley Bancorp : Annual Report

ANNUAL 2023

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CHAIRMAN & PRESIDENT'S LET TER	8	BOARD OF DIRECTORS & ACCOL ADES
CONSOLIDATED BAL ANCE SHEET	9	APPOINTMENTS & PROMOTIONS
CONSOLIDATED STATEMENT	10	FINANCIAL LITER ACY
OF OPER ATIONS	11	TECHNOLOGY & INNOVATIONS
FINANCIAL S	12	COMMUNIT Y INVOLVEMENT

H V S B . C O M

C H A I R M A N & P R E S I D E N T ' S L E T T E R

March 15, 2024

Dear Shareholders, Neighbors and Friends,

We are proud to present the 2023 annual report highlighting a successful year for Huron Valley Bancorp, Inc., and the Bank, recognizing record profits, significant loan growth, and retention of our low-cost deposit base throughout the year. We were well positioned for a rising interest rate environment, and our market expansion helpeddrive lending opportunities, and foster new valued relationships throughout Southeast Michigan. Our loyal customer base and ability to grow in a challenging banking climate confirmed the benefitstatement for astrong community bank in Oakland, Livingston, and Wayne Counties.

The banking industry was challenged with the Federal Reserves' unprecedented 5.25% increase in rates, after being slow to react to runaway inflation - referring to it as transitory. This came on the heels of a zero- interest rate environment in response to the pandemic, and reminiscent of the scenario in 2008 through 2015. Stimulus money, along with the inability to travel and buy goods and services during the pandemic, caused deposits to soar. Many financial institutions invested in longer-term securities with their excess liquidity in this zero-interest rate environment, leading to the failure of three of the nation's largest banks. As a result, the industry was challenged by a liquidity crisis. Fortunately, Huron Valley State Bank leveraged its strong liquidity position, and benefited from rising interest rates. Due to our liquidity and disciplined investment strategy, we had monies to lend to strong borrowers, resulting in a rising net interest margin throughout the year - one of only a small percentage of US banks to benefit from that strategy.

Earnings for 2023 were a record $2,522,000, up 26.93% from 2022, and earnings per share was $2.89, up from $2.29 the previous year. Return on equity (ROE) was 13.07% and return on assets (ROA) was 1.07% for the year. Profitability was driven by a rising net interest margin (NIM) which grew from 3.32% to 3.92% in 2023. A strong NIM, and solid loan growth in a higher yielding environment, resulted in net interest

income of $9,212,000, or an increase of 17.85% over the previous year.

A strong liquidity position allowed the Bank to avoid having to compete aggressively for deposits and provided us the opportunity to fund good loans. While deposits grew only modestly, loans grew 18.7% for 2023, and we adhered to our normal conservative underwriting standards. As with many community banks, our loan portfolio has a heavy reliance on commercial real estate (CRE). Over two-thirds of our CRE loans are owner occupied, with repayment directly from the owner's operating income, and office buildings are less than 2% of our total portfolio.

Our securities portfolio represents less than 12% of our total assets and has an average duration of 2.3 years. The holding company's capital position expanded throughout 2023, growing $2,547,000, and stands at $20,799,000, and theTier 1 leverage ratio at the bank level improved from 8.69% to 10.11%. Net book value per share grew 12.00% and traded at $23.50 per share at year-end.

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C H A I R M A N & P R E S I D E N T ' S L E T T E R c o n t .

In April 2023 we continued our expansion into Western Wayne County with the opening of the Plymouth Loan Production Office. Our lending team is both knowledgeable and well respected in this market and we have added many valued relationships here. Two additional key hires for the lending team were Marie Warner in the Oakland County market and Angela Gammage, Group Manager of the Milford Lending Team. Recognizing that our people are what make the company successful, we celebrated several key promotions as highlighted in the report. Once again, we were awarded as one of theBest and Brightest Company's to Work For, and in the process gained valuable insight into what our employees value about our company.

The foundation of a good community bank is being agood partner in the community. Our employees continue to share their time and talents in numerous community initiatives and activities. You will see their significant involvement highlighted throughout the annual report. The Bank's vital role in our communities is recognized, as we were honored to receive the2023 Business of the Year Award by the Lakes Area Chamber of Commerce.

The Board of Directors continued to provide sound strategic vision to our company, and actively share their knowledge, experience, and network. We are very fortunate to have such a talented and engaged board. In December 2023, the Board approved a $.10 per share dividend, payable February 6, 2024, based on the strong performance of the Bank. Decisions on future dividends will be evaluated annually by the Board, weighing the importance of retaining capital in a growing organization and the preference of our shareholders.

The business model for a community bank is significant, and now more than ever, customers and prospects see the value in personalized service, people driven technology and relationship banking. Thank you for your support of Huron Valley State Bank, and for honoring the good work our organization does by keeping customers and community first.

With kind regards,

Jack J. Shubitowski	Peter D. Scodeller
President & CEO	Chairman of the Board
Huron Valley Bancorp, Inc.	Huron Valley Bancorp, Inc.

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H U R O N VA L L E Y B A N C O R P, I N C . & S U B S I D I A R Y

C O N S O L I DAT E D B A L A N C E S H E E T

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H U R O N VA L L E Y B A N C O R P, I N C . & S U B S I D I A R Y

C O N S O L I DAT E D S TAT E M E N T O F O P E R AT I O N S

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H U R O N VA L L E Y S TAT E B A N K

F I N A N C I A L S

Asset Trends

Total Assets (000's)

$250,000
$200,000
$150,000
$100,000
$50,000
$0
2018	2019	2020	2021	2022	2023

Loan Trends

Total Loans (000's)

$200,000
$180,000
$160,000
$140,000
$120,000
$100,000
$80,000
$60,000
$40,000
$20,000
$0
2018	2019	2020	2021	2022	2023

Deposit Trends

Total Deposits (000's)

$250,000
$200,000
$150,000
$100,000
$50,000
$0
2018	2019	2020	2021	2022	2023

After Tax NetIncome

000's omitted

$3,000
$2,500
$2,000
$1,500
$1,000
$500
$0
2018	2019	2020	2021	2022	2023

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H U R O N VA L L E Y S TAT E B A N K

F I N A N C I A L S

	Return on Common Equity
0.14
0.12
0.1
0.08
0.06
0.04
0.02
0
2018	2019	2020	2021	2022	2023

	After Tax Return on Assets
0.014
0.012
0.01
0.008
0.006
0.004
0.002
0
2018	2019	2020	2021	2022	2023

Capital Ratio

(Tier One Leverage)

0.12
0.1
0.08
0.06
0.04
0.02
0
2018	2019	2020	2021	2022	2023

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H U R O N VA L L E Y B A N C O R P, I N C . &

S U B S I D I A R Y F I N A N C I A L S

		Net Income				Earnings Per Share
3,000,000
2,500,000						$3.00
					$2.80
2,000,000						$2.60
					$2.40
1,500,000						$2.20
						$2.00
1,000,000						$1.80
						$1.60
500,000						$1.40
						$1.20
0						$1.00
2018	2019	2020	2021	2022	2023	2018	2019	2020	2021	2022	2023

	Return on Average Equity
16.00%
14.00%
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
2018	2019	2020	2021	2022	2023

Book Value Per Common Share

$25.00
$20.00
$15.00
$10.00
$5.00
$0.00
2018	2019	2020	2021	2022	2023

Closing Market Price

$25.00
$20.00
$15.00
$10.00
$5.00
$0.00
2018	2019	2020	2021	2022	2023

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B OA R D O F D I R E C T O R S & A C C O L A D E S

Thomas Duke, Blaire Bowman, Peter Scodeller, Lyle Tyler, Jack Shubitowski, Lynn Torosian, Chris Hamill, Matt Murvay, Chris Smith, Todd Sangster, Marc Weinbaum and Joe Salvia

A C C O L A D E S

2023 Business of the Year by the Lakes Area Chamber of Commerce 5 Star Rating from Bauer Financial (Ongoing) "Best Bank" Award by the Milford Times for 8 consecutive years

Huron Valley Chamber of Commerce Rise to the Occasion Award (December 2020)

Jack Shubitowski selected Citizen of the Year by the Huron Valley Chamber of Commerce (January 2017) Metro Detroit's Best and Brightest Companies to Work For®

Michigan Bankers Association's (MBA) Financial Literacy Award (March 2020, 2022 and 2023) People's Choice Award by the Spinal Column for 9 consecutive years

Top 200 Publicly Traded Community Banks and Thrifts (American Banker Magazine 2021-2023)

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