Eastern Michigan Financial : September 30, 2021 Quarterly Financial Statement

L A I C N A N I F E V I AT R PA M O C

T O O U R S H A R E H O L D E R S	30	20
	SEPTEMBER	21

F I N A N C I A L H I G H L I G H T S

T N E M E TAT S

Eastern Michigan Financial Corporation's (EMFC) earnings through the first nine months of 2021 were $3,923,000 or $3.17 per share, versus $3,054,000 or $2.51 per share for the same period last year. Return on Average Equity (ROE) during this time improved to 11.76% versus 10.10% for the first nine months of 2020. Return on Average Assets (ROA) improved to 1.04%, compared to 0.97% for the same period in 2020.

Our Capital to Assets ratio as of September 30, 2021, was 8.84% versus 8.77% at end of third quarter 2020. Book value per share ended the period at $36.74, an improvement of $2.26 over the same period last year. Market value per share was $31.80 as of the last known trade on September 30, 2021.

Total assets were $518,648,000 at quarter's end, compared to $481,542,000 for the first nine months of 2020. Loans decreased by 9.13% for the first nine months of 2021, ending at $202,917,000, primarily due to Small Business Administration (SBA) Paycheck Protection Program (PPP) forgiveness and pay downs. Deposits were $471,125,000 at the end of the third quarter, a $33,525,000 increase over the same period last year. The primary driver of this increase in deposits continues to be consumer and public fund deposits from stimulus checks and other government benefits.

S H A R E H O L D E R D I V I D E N D

The Board of Directors declared a third-quarter dividend of $0.30 per share, a 6.67% increase. Year-to-date, dividends total $0.80 per share.

• Credit quality remains strong as many of our borrowers have emerged from the Covid-19 crisis well-positioned for the future. Given the liquidity in the market, primarily from SBA PPP loans and Economic Injury Disaster Loans (EIDL), we are seeing reduced reliance on lines of credit, which has decreased our outstanding loan amounts. We anticipate that loan demand may improve as the government programs end, but will still be moderate.

While proud of these results, we recognize the clear challenges that lie ahead and are working hard to address them. We respect your investment in Eastern Michigan Financial Corporation and Eastern Michigan Bank and thank you for your continued support.

President and Chief Executive Officer

M A N A G E M E N T C O M M E N T S

EMFC's results for the first three quarters of 2021 remain very strong, despite the challenges created by the current interest rate environment.

• While showing some improvement, the treasury yield curve remains well below historical averages. This impacts loan pricing and the yield we are able to obtain on our investment portfolio. Until such a time as the yield curve returns to at least historical averages, earnings will be affected.
• Strong participation in the SBA PPP program continues to be reflected in our earnings as both fee and interest income. As the fees are either amortized over the life of the loan or until the loan is forgiven, a significant portion of those fees have hit income this year. Our third quarter income statement reflects $1,357,000 in SBA PPP fees for the quarter and $2,754,000 for the year. All SBA PPP loans are anticipated to be fully processed for forgiveness by the end of first quarter 2022 at which time the fee income will be fully earned.

Eastern Michigan Financial Corporation | COMPARATIVEPARI I FINANCIALI LSTATEMENTSTATEMENT

CONSOLIDATED BALANCE SHEETS (unaudited)

ASSETS		2021 September 30, 2020
Cash and due from banks.....................................….	$	108,624	$	85,349
Securities...........................................…..….…………		185,988			85,285
Federal funds sold & other deposits……………………		252			51,805
Loans.................................................…….……………		202,917			239,244
Allowance for loan loss........................…………………		(1,776)			(1,759)
Other assets......................................…..………………		22,643			21,618
TOTAL ASSETS..........................……….......……	$	518,648		$	481,542
LIABILITIES		-145
Deposits	$	138,386	$	114,044
Non-interest bearing.......................................…...…
Interest bearing..............................................….……		332,739			323,556
Total deposits..............................................…..……		471,125			437,600
Other liabilities.................................................……...		1,687			1,732
TOTAL LIABILITIES.....................……….......……	$	472,812		$	439,332
SHAREHOLDERS' EQUITY

30	20
SEPTEMBER	21

STOCK INFORMATION

Transfer Agent and Registrar:

Computershare Shareholder Services P.O. Box 30170

College Station, Texas 77842-3170 800.368.5948

Investor Relations Contact:

Errin M. Levitt, Chief Financial Officer Eastern Michigan Financial Corporation 810.398.5135

Corporate Headquarters:

Eastern Michigan Financial Corporation 65 N. Howard Avenue

Croswell, Michigan 48422-0139 800.397.2504

Stock Listing:

Symbol: EFIN

Over-The-Counter

Bulletin Board

2021 2020

Common stock (issued 1,247,608 shares in 2021
and 1,224,035 shares in 2020)……..………………… $		6,156		$	6,091
Surplus...........................................................……….		2,748					2,472
Retained earnings.............................................…...…		36,333					32,583
Accumulated other comprehensive income (loss)		599					1,064
TOTAL SHAREHOLDERS' EQUITY….......…..…..	$		45,836			$	42,210
TOTAL LIABILITIES &
SHAREHOLDERS' EQUITY………………………… $		518,648		$	481,542
FINANCIAL RATIOS		11.76%					10.10%
Return on Average Equity (annualized)………………
Return on Average Assets (annualized)………………		1.04%					0.97%
Capital to Assets…………………………………………		8.84%					8.77%
Allowance for Loan Loss / Loans………………………		0.88%					0.74%
(Dollars in thousands except per share data)
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
				Nine Months Ended
INTEREST INCOME		2021 September 30, 2020
Interest & fees on loans.....................................…..	$	8,472	$	7,034
Interest on federal funds sold & other deposits……		370				560
Interest on investment securities......................……			1,403				1,557
TOTAL INTEREST INCOME......………..............		10,245				9,151
INTEREST EXPENSE……………………………………			311				362
NET INTEREST INCOME………………………….		9,934				8,789
PROVISION FOR LOAN LOSSES………………………			(70)				183
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES……………….		10,004				8,606
OTHER INCOME…………………………………………..		2,058				1,947
OTHER OPERATING EXPENSES………………………			7,239				6,805
INCOME BEFORE INCOME TAXES....……..…....		4,823				3,748
INCOME TAX EXPENSE………………………………….		900				694
NET INCOME…………………………….............		$	3,923			$	3,054
EARNINGS PER COMMON SHARE	$	3.17	$	2.51

(Dollars in thousands except per share data)

Numberofshares,isssuedandandoutstandingstanding 1,247,608	1,224,035
Number of shareholders of record		287		291
i	r ,	$	0.80	$	0.75
Cash dividends declared, year-to-date
	-of-		36.74		34.48
Book value, end-of-period
Market value, last trade known		31.80		26.50
Market value, last trade known

BOARD OF DIRECTORS

Timothy M. Ward, Chairman	The Board of Directors of
Retired Chief Executive Officer
Eastern Michigan Bank, Croswell	Eastern Michigan Financial
William G. Oldford, Jr., Vice Chairman	Corporation is pleased
to welcome Anthony
President and Chief Executive Officer
Eastern Michigan Bank, Croswell	Roggenbuck and Steven
Bradley D. Apsey, Director	Schweihofer as Directors of
Eastern Michigan Financial
President	Corporation and Eastern
Apsey Funeral Home, Inc., Deckerville	Michigan Bank. Read more
Karen S. Flanagan, Director	about them at emb.bank/
Farmer	about/bank-news
Sandusky
Donna M. Niester, Director
President and Chief Executive Officer
Acheson Ventures, LLC, Port Huron
Kathlene M. Partaka, Director
Retired Executive Vice President, Operations
Eastern Michigan Bank, Croswell
Anthony L. Roggenbuck, Director
President, D&D Farms, Inc., Ruth
Owner Operator, Trucker T's Transport, LLC, Ubly	Anthony L. Roggenbuck
Patricia W. Ryan, Director
Retired Partner
Frohm, Kelley, Butler & Ryan, P.C., Port Huron
Steven J. Schweihofer, Director
Former Chief Financial Officer
Foster Blue Water Oil, Richmond
Michael D. Wendling, Director
Prosecuting Attorney
St. Clair County
John C. Williams, Director	Steven J. Schweihofer
Retired Superintendent
Croswell Electrical and Water Departments, Croswell

CORPORATE OFFICERS

William G. Oldford, Jr., President and Chief Executive Officer

Stacie L. Bales, Senior Vice President, Chief Operating Officer

Chad W. Deaner, Senior Vice President, Chief Lending Officer

Errin M. Levitt, Senior Vice President, Chief Financial Officer

Eastern Michigan Financial Corporation | COMPARATIVEPARI I FINANCIALI LSTATEMENTSTATEMENT