COMMUNITY
LOYALTY
GROWTH
TRUST
AGILITY
RELATIONSHIPS
KNOWLEDGE
STRENGTH
RESPECT
ABILITY
COMMUNICATION
MANAGEMENT
INDEPENDENCE
Customer Focused, Community Based
TROPER LAUNNA
2013
Customer Focused, Community Based
HURON VALLEY STATE BANK
PROXY STATEMENT
ELECTION OF DIRECTORS
The number of directors constituting the Board of Directors is determined from time to time by
the Board of Directors. The Board is currently composed of nine directors. The Bank’s Bylaws provide
for the division of the Board of Directors into three classes. In the future, directors will be elected each
year for three (3) year terms. Since this is the first year of classification, at this year’s meeting Class I
directors will be elected for a term of one (1) year, Class II directors will be elected for a term of two (2)
years and Class III directors will be elected for a term of three (3) years.
The Board currently consists of the following members, each of whom has been nominated for reelection to the class and for the term set forth below.
Director
Class I -
One year terms expiring in 2015:
Jack J. Shubitowski
Christopher B. Smith
Christina R. Hamill
Class II -
Two year terms expiring in 2016:
Marc S. Weinbaum
Lynn M. Torossian
Lyle B. Tyler
Class III-
Three year terms expiring in 2017:
John H. Welker
Mark A. Murvay
Joseph M. Salvia
A plurality of the votes cast at the Annual Meeting is required to elect the nominees as directors
of the Bank. As such, the nine (9) individuals who receive the most number of votes cast by the holders
of the Bank's common stock will be elected as directors.
If any nominee becomes unavailable for election due to circumstances not now known, the
enclosed proxy will be voted for such other person to become a director as the Board selects.
The Board of Directors recommends a vote FOR the election of each of the persons
nominated by the Board.
Dear Shareholders, Friends and Neighbors:
Results for 2013 were very strong as Huron Valley State Bank completed its fourth full year of
profitability. We continued the trend of favorable deposit, loan and asset growth. Loan demand
was particularly robust resulting from a strengthening economy and growing consumer
confidence. It is also a reflection of the positive reputation and network that the Bank and its
employees have developed in the community.
The Bank had pre-tax profits of $797,000 in 2013, representing a 32% increase over the previous
year’s level of $602,000. You will recall that during 2012 the Bank recognized its deferred tax
asset representing the tax benefit of losses incurred in the start-up phase of the Bank. As a result,
our income is now taxable, resulting in after tax income of $526,000. This strong profitability
resulted in earnings per share on an after tax basis of $0.64, return on equity of 5.35%, and return
on assets of 0.62%.
The main driver of our success in 2013 was strong loan growth. Loans grew 25% in 2013,
primarily in the areas of small business lending and commercial real estate. Consumer loans,
including installment and home equity loans, increased as well. In addition to an improving
economy, we benefited from efficiencies and synergy realized by consolidating our lending
functions under one roof in the Loan Center in Downtown Milford, along with some key staff
additions in the lending department. Asset quality remains high as we continue with our
conservative underwriting standards.
Deposits grew an impressive 17% for the year finishing at $81,688,000. The majority of the
growth was in the area of checking accounts and money market accounts. In fact, checking
account balances, which are the lowest cost deposits for the Bank, grew by 43%. Overall, total
assets of the Bank grew to $91,808,000, representing a 16% increase. The Capital position of the
Bank remained sound with tier 1 capital of 11.29%, well above the regulators requirement to be
considered a “well capitalized bank”. Book value per share of common stock ended the year at
$9.17, up $0.58 from 12/31/2012’s $8.59 Liquidity remains more than adequate averaging over
$14,000,000 for the year.
Our favorable trends of profitability, strong balance sheet and asset quality, good capital and
liquidity, has resulted in the Bank maintaining its 5 Star Rating by Bauer Financial Rating
Agency. This is a distinction we are very proud to hold.
Huron Valley State Bank
Balance Sheet
(000s omitted, except per share data)
December 31,
2013
December 31,
2012
Assets
Cash and due from banks
Federal funds sold
$
Total cash and cash equivalents
Investment securities - Available for sale (Note 2)
Other securities (Note 2)
Loans - Net of allowance for loan losses of $907 and $937 as of
December 31, 2013 and 2012, respectively (Note 3)
Premises and equipment (Note 4)
Deferred tax asset (Note 7)
Other assets
$
Total assets
15,298
262
$
14,423
172
15,560
14,595
4,150
103
6,047
103
69,128
2,267
320
275
55,296
2,321
552
363
91,803
$
79,277
26,993
54,566
$
18,893
50,613
Liabilities and Stockholders' Equity
Liabilities
Deposits:
Noninterest-bearing
Interest-bearing
$
Total deposits (Note 5)
Accrued and other liabilities
Total liabilities
Stockholders' Equity
Preferred stock (Note 12)
Common stock - No par value; authorized - 860,000 shares at
December 31, 2013 and 2012; issued and outstanding 820,000 shares at December 31, 2013 and 2012
Additional paid-in capital
Accumulated deficit
Accumulated other comprehensive income
69,506
129
127
81,688
69,633
2,597
2,597
4,042
4,074
(607)
9
4,042
4,074
(1,106)
37
9,644
10,115
Total stockholders' equity
Total liabilities and stockholders' equity
See Notes to Financial Statements.
81,559
2
$
91,803
$
79,277
Huron Valley State Bank
Statement of Income and Comprehensive Income
(000s omitted, except per share data)
Year Ended
December 31, December 31,
2013
2012
Interest Income
Loans - Including fees
Investment securities:
Taxable
Tax-exempt
Other
$
3,302 $
3,055
39
34
29
110
19
25
3,404
3,209
268
350
3,136
2,859
30
130
3,106
2,729
300
28
280
-
328
280
1,382
363
387
506
1,185
369
348
475
2,638
2,377
Income - Before income taxes
796
632
Income Tax Expense (Benefit)
271
(552)
Net Income
525
1,184
26
30
Net Income Available to Common Stockholders
499
1,154
Other Comprehensive Loss - Unrealized loss on securities - Net
of tax
(28)
Total interest income
Interest Expense
Net Interest Income
Provision for Loan Losses (Note 3)
Net Interest Income After Provision for Loan Losses
Noninterest Income
Service fees on loan and deposit amounts
Other
Total noninterest income
Noninterest Expense
Salaries and employee benefits
Occupancy and equipment
Data processing
Other
Total noninterest expense
Dividends to Preferred Stockholders
(10)
Comprehensive Income
$
471
$
1,144
Earnings per Share - Basic and diluted
$
0.61
$
1.41
See Notes to Financial Statements.
3
HURON VALLEY STATE BANK
Asset Trends
Total Assets (000's)
$100,000
$90,000
$80,000
$70,000
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$0
2008
2009
2010
2011
2012
2013
2012
2013
2012
2013
Loan Trends
Total Loans (000's)
$80,000
$70,000
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$0
2008
2009
2010
2011
Deposit Trends
Total Deposits (000's)
$90,000
$80,000
$70,000
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$0
2008
2009
2010
2011
Book Value per Common Share
$9.50
$9.00
$8.50
$8.00
$7.50
$7.00
$6.50
$6.00
$5.50
$5.00
2008
2009
2010
2011
2012
2013
HURON VALLEY STATE BANK
After Tax Net Income
000's omitted
$1,500
$1,000
$500
$0
2008
2009
2010
2011
2012
2013
‐$500
‐$1,000
Pre Tax Return on Assets
1.00%
0.50%
0.00%
‐0.50%
2008
2009
2010
2011
2012
2013
‐1.00%
‐1.50%
‐2.00%
‐2.50%
Return on Common Equity
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
‐5.00%
2008
2009
2010
2011
2012
2013
2012
2013
‐10.00%
‐15.00%
Capital Ratio
(Tier One Leverage)
18.00%
16.00%
14.00%
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
2008
2009
2010
2011
Huron Valley State Bank, Board of Directors
Top row: Christopher Smith, Lyle Tyler, John Welker, Joseph Salvia, Marc Weinbaum.
Bottom row: Lynn Torossian, Jack Shubitowski, Mark Murvay, Christina Hamill
Customer Focused, Community Based
Milford Branch
130 S. Milford Rd.
Milford, MI 48381
248.684.9626
Loan Center
Highland Branch
2920 E. Highland Rd. 522 N. Main St., Ste 100
Milford, MI 48381
Highland, MI 48356
248.387.6080
248.887.9900
www.hvsb.com
Member