SPARTA, Mich., Oct. 24, 2025 /PRNewswire/ -- ChoiceOne Financial Services, Inc. ((", ChoiceOne", , NASDAQ:COFS), the parent company for ChoiceOne Bank, reported financial results for the quarter ended September 30, 2025.
Significant items impacting comparable first nine month period of 2024 and 2025 results include the following:
- On March 1, 2025, ChoiceOne completed the merger (the "Merger") of Fentura Financial, Inc. ("Fentura"), the former parent company of The State Bank, with and into ChoiceOne with ChoiceOne surviving the merger. On March 14, 2025, the consolidation of The State Bank with and into ChoiceOne Bank with ChoiceOne Bank surviving the consolidation was completed.
- The total assets, loans and deposits acquired in the Merger were approximately $1.8 billion, $1.4 billion and $1.4 billion, respectively.
- Merger related expenses, net of taxes, of $13.9 million or $1.02 per diluted share for the nine months ended September 30, 2025. There were no merger expenses in the third quarter of 2025 and management does not anticipate additional material merger expenses.
- Merger related provision for credit losses, net of taxes, of $9.5 million during the first quarter ended March 31, 2025, or $0.69 per diluted share as of September 30, 2025.
Highlights
- ChoiceOne reported net income of $14,681,000 and $14,309,000 for the three and nine months ended September 30, 2025, compared to net income of $7,348,000 and $19,568,000 for the same periods in the prior year, respectively. Net income excluding merger expenses, net of taxes, and merger related provision for credit losses, net of taxes, was $14,681,000 and $37,657,000 for the three and nine months ended September 30, 2025, respectively.
- Diluted earnings per share were $0.97 and $1.05 for the three and nine months ended September 30, 2025, compared to diluted earnings per share of $0.85 and $2.46 in the same periods in the prior year. Diluted earnings per share excluding merger expenses, net of taxes, and merger related provision for credit losses, net of taxes, were $0.97 and $2.76 for the three and nine months ended September 30, 2025.
- In the third quarter of 2025, ChoiceOne's GAAP net interest margin increased to 3.73%, compared to 3.17% in the same period of 2024. GAAP net interest income also saw a substantial increase, reaching $37.6 million compared to $20.2 million in the third quarter of 2024. This growth was primarily due to the additional net interest income attributable to the Merger beginning on March 1, 2025. Interest income due to accretion from purchased loans increased GAAP net interest margin by 36 basis points for the third quarter of 2025.
- Core loans, which exclude held for sale loans and loans to other financial institutions, declined by $10.3 million or 1.4% on an annualized basis during the third quarter of 2025 and grew organically by $65.3 million or 4.5% during the twelve months ended September 30, 2025. Core loans grew by $1.4 billion due to the Merger on March 1, 2025. Loan interest income increased $23.9 million in the third quarter of 2025 compared to the same period in 2024. Interest income for the three months ended September 30, 2025, includes $3.6 million of interest income due to accretion from purchased loans.
- Asset quality continues to remain strong, with annualized net loan charge-offs to average loans of 0.03% and nonperforming loans to total loans (excluding loans held for sale) of 0.69% as of September 30, 2025. Notably, 0.39% of the nonperforming loans to total loans (excluding loans held for sale) is attributed to loans purchased with credit deterioration through the Merger.
"ChoiceOne continues to deliver exceptional results, driven by the strength of our strategic merger with Fentura and a focus on serving our communities," said Kelly Potes, Chief Executive Officer. "We are proud of the momentum we have built and remain committed to creating lasting value for our customers, employees, and shareholders."
ChoiceOne reported net income of $14,681,000 and $14,309,000 for the three and nine months ended September 30, 2025, compared to net income of $7,348,000 and $19,568,000 for the same periods in the prior year, respectively. Net income excluding merger expenses, net of taxes, and merger related provision for credit losses, net of taxes, was $14,681,000 and $37,657,000 for the three and nine months ended September 30, 2025, respectively. Diluted earnings per share was $0.97 and $1.05 for the three and nine months ended September 30, 2025, compared to diluted earnings per share of $0.85 and $2.46 in the same periods in the prior year. Diluted earnings per share excluding merger expenses, net of taxes, and merger related provision for credit losses, net of taxes, were $0.97 and $2.76 for the three and nine months ended September 30, 2025.
As of September 30, 2025, total assets were $4.3 billion, an increase of $1.6 billion compared to September 30, 2024. The growth in total assets is primarily attributed to the Merger. The growth in total assets was offset by a $36.0 million reduction in loans to other financial institutions and a $47.0 million reduction in cash and cash equivalents on September 30, 2025 compared to September 30, 2024. Loans to other financial institutions consist of a warehouse line of credit to a bank used to facilitate mortgage loan originations, with interest rates and balances that fluctuate in line with the national mortgage market. The reduction in cash balances is primarily due to purchases of agency mortgage backed securities during the third quarter of 2025.
Core loans, which exclude held for sale loans and loans to other financial institutions, declined by $10.3 million or 1.4% on an annualized basis during the third quarter of 2025 and grew organically by $65.3 million or 4.5% during the twelve months ended September 30, 2025. Core loans grew by $1.4 billion due to the Merger on March 1, 2025. Loan interest income increased $23.9 million in the third quarter of 2025 compared to the same period in 2024. Interest income for the three months ended September 30, 2025, includes $3.6 million of interest income due to accretion from purchased loans. Of this amount, $1.8 million was calculated using the effective interest rate method of amortization, while the remaining $1.8 million resulted from accretion through unexpected payoffs and paydowns of loans with an associated fair value mark. Estimated interest income due to accretion from purchased loans for the remainder of 2025 and 2026 using the effective interest method of amortization is $2.3 million and $8.2 million, respectively; however, actual results will be dependent on prepayment speeds and other factors. It is estimated that a total of $51.1 million remains to be recognized as interest income due to accretion from purchased loans over the life of the loan portfolio.
Deposits, excluding brokered deposits, increased by $8.0 million as of September 30, 2025, compared to June 30, 2025. During the third quarter of 2025 non-interest bearing deposits declined by $39.9 million while interest bearing demand deposits increased by $73.4 million. The shift from non-interest-bearing to interest-bearing demand deposits was partly due to quarter-end timing and fluctuations in business and municipal activity. The growth in interest-bearing demand deposits was primarily concentrated in non-maturity interest-bearing checking and money market accounts. The average balance of non-interest-bearing deposits rose to $930.3 million in the third quarter of 2025, up from $915.6 million in the second quarter of 2025. Deposits, excluding brokered deposits, increased by $1.3 billion as of September 30, 2025, compared to September 30, 2024 largely as a result of the Merger. ChoiceOne continues to be proactive in managing its liquidity position by using brokered deposits and FHLB advances to ensure ample liquidity. At September 30, 2025, total available borrowing capacity secured by pledged assets was $1.2 billion. ChoiceOne can increase its borrowing capacity by utilizing unsecured federal fund lines and pledging additional assets. Uninsured deposits totaled $1.2 billion or 33.2% of deposits at September 30, 2025.
In the three months ended September 30, 2025, compared to the same period in the prior year, ChoiceOne's cost of deposits to average total deposits increased by 4 basis points, rising from 1.53% to 1.57%, primarily due to higher-cost deposits acquired through the Merger. This increase was partially offset by a decline in CD costs and a reduction in wholesale funding costs. The annualized cost of funds decreased by 10 basis points, from 1.87% to 1.77% in the three months ended September 30, 2025 compared to the same period in the prior year. In the three months ended September 30, 2025, compared to the three months ended June 30, 2025, annualized cost of funds decreased to 1.77% from 1.84%, primarily due to a decrease in higher cost local and brokered CDs. Interest expense on borrowings for the three months ended September 30, 2025, declined by $489,000 compared to the same period in the prior year. As of September 30, 2025, the total balance of borrowed funds from the FHLB was $198.0 million at a weighted average fixed rate of 4.23%, with $158.0 million due within 12 months.
The provision for credit losses on loans was $200,000 in the third quarter of 2025, due to $244,000 in net charge offs, as well as small adjustments to qualitative and quantitative factors. The ratio of the allowance for credit losses to total loans (excluding loans held for sale) was 1.19% on September 30, 2025 compared to 1.19% on June 30, 2025, and 1.07% on December 31, 2024. Asset quality continues to remain strong, with annualized net loan charge-offs to average loans of 0.03% and nonperforming loans to total loans (excluding loans held for sale) of 0.69% as of September 30, 2025. Notably, 0.39% of the nonperforming loans to total loans (excluding loans held for sale) is attributed to loans purchased with credit deterioration through the Merger.
ChoiceOne uses interest rate swaps to manage interest rate exposure to certain fixed rate assets and variable rate liabilities. During the third quarter of 2025, ChoiceOne entered into $30.4 million in amortizing pay fix swaps to hedge interest rate risk on approximately $40.6 million of newly purchased agency mortgage backed securities. The swaps are designed to amortize with the expected cash flow of the bonds and hold a coupon of 3.52% and a contractual term ending in 2040. On September 30, 2025, ChoiceOne held pay-fixed interest rate swaps with a total notional value of $381.3 million, a weighted average coupon of 3.15%, a fair value of $6.8 million and an average remaining contract length of 7.2 years. These derivative instruments are designed to change in value as interest rates rise or fall inverse to the change in unrealized losses on the securities available for sale portfolio due to changes in interest rates. Settlements from swaps amounted to $1.3 million for the third quarter of 2025 compared to $1.3 million for the second quarter of 2025. In addition to the pay-fixed interest rate swaps, ChoiceOne also employs back-to-back swaps on select commercial loans, with the impact reflected in interest income.
As of September 30, 2025, shareholders' equity was $449.6 million, a significant increase from $247.7 million on September 30, 2024. This growth was primarily driven by the Merger, in which ChoiceOne issued 6,070,836 shares of common stock on March 1, 2025, valued at $193.0 million. Additionally, the sale of 1,380,000 shares of common stock at $25.00 per share on July 26, 2024, generated $34.5 million in aggregate gross proceeds (before deducting discounts and estimated offering expenses). ChoiceOne Bank continues to be "well-capitalized," with a total risk-based capital ratio of 12.8% as of September 30, 2025, compared to 13.1% on September 30, 2024, with the decrease primarily due to the impact of the Merger.
Noninterest income increased by $2.3 million and $5.6 million for the three and nine months ended September 30, 2025, compared to the same periods in the prior year. This increase was partly driven by higher interchange income, which rose due to increased volume from the Merger. Trust income also increased as a result of higher estate settlement fees and customers obtained from the Merger. Additionally, ChoiceOne recognized income from two death benefit claims under bank-owned life insurance policies during the second quarter for an additional $299,000.
Noninterest expense increased by $10.8 million and $44.0 million for the three and nine months ended September 30, 2025, compared to the same periods in 2024. The year to date increase was largely due to merger-related expenses of $17.4 million during the nine months ended September 30, 2025, compared to $645,000 in the same period in the prior year. Management does not anticipate additional material merger expenses. The remainder of the increase was primarily due to the addition of Fentura on March 1, 2025. ChoiceOne continues to strive to optimize our cost structure while investing in opportunities that enhance our performance and reinforce the value we bring to customers and shareholders.
"Our strong financial performance this quarter is due to our outstanding employees and customers. With the Merger behind us, our team is focused on serving our clients and growing our core business. I am thankful for our employees for their hard work and our customers who trust us to be their community bank." said Kelly Potes, Chief Executive Officer.
About ChoiceOne
ChoiceOne Financial Services, Inc. is a financial holding company headquartered in Sparta, Michigan, with assets over $4 billion, and the parent corporation of ChoiceOne Bank. Member FDIC. ChoiceOne Bank operates 56 offices in West, Central and Southeast Michigan. ChoiceOne Bank offers insurance and investment products through its subsidiary, ChoiceOne Insurance Agencies, Inc. ChoiceOne Financial Services, Inc. common stock is quoted on the Nasdaq Capital Market under the symbol "COFS." For more information, please visit Investor Relations at ChoiceOne's website choiceone.bank.
Forward-Looking Statements
This press release contains forward-looking statements. Words such as "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "is likely," "plans," "predicts," "projects," "may," "could," "look forward," "continue", "future" and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements reflect current beliefs as to the expected outcomes of future events and are not guarantees of future performance. These statements involve certain risks, uncertainties and assumptions ("risk factors") that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be expressed, implied or forecasted in such forward-looking statements. Furthermore, ChoiceOne does not undertake any obligation to update, amend, or clarify forward-looking statements, whether as a result of new information, future events, or otherwise.
Risk factors include, but are not limited to, the risk factors described in Item 1A in ChoiceOne's Annual Report on Form 10-K for the year ended December 31, 2024 and in any of ChoiceOne's subsequent SEC filings, which are available on the SEC's website, www.sec.gov.
Non-GAAP Financial Measures
In addition to results presented in accordance with GAAP, this press release includes certain non-GAAP financial measures. ChoiceOne believes these non-GAAP financial measures provide additional information that is useful to investors in helping to understand underlying financial performance and condition and trends of ChoiceOne.
Non-GAAP financial measures have inherent limitations. Readers should be aware of these limitations and should be cautious with respect to the use of such measures. To compensate for these limitations, non-GAAP measures are used as comparative tools, together with GAAP measures, to assist in the evaluation of operating performance or financial condition. These measures are also calculated using the appropriate GAAP or regulatory components in their entirety and are computed in a manner intended to facilitate consistent period-to-period comparisons. ChoiceOne's method of calculating these non-GAAP measures may differ from methods used by other companies. These non-GAAP measures should not be considered in isolation or as a substitute for those financial measures prepared in accordance with GAAP or in-effect regulatory requirements.
Where non-GAAP financial measures are used, the most directly comparable GAAP or regulatory financial measure, as well as the reconciliation to the most directly comparable GAAP or regulatory financial measure, can be found in the tables to this press release under the heading non-GAAP reconciliation.
Condensed Balance Sheets | ||||||||||||
(In thousands) | September 30, | June 30, 2025 | September 30, | |||||||||
Cash and cash equivalents | $ | 98,978 | $ | 156,280 | $ | 145,938 | ||||||
Equity securities, at fair value | 9,505 | 9,582 | 7,816 | |||||||||
Securities Held to Maturity | 388,517 | 390,457 | 391,954 | |||||||||
Securities Available for Sale | 544,023 | 479,426 | 497,552 | |||||||||
Federal Home Loan Bank stock | 18,562 | 18,562 | 4,449 | |||||||||
Federal Reserve Bank stock | 12,554 | 12,547 | 5,307 | |||||||||
Loans held for sale | 6,323 | 7,639 | 5,994 | |||||||||
Loans to other financial institutions | 2,483 | 3,033 | 38,492 | |||||||||
Core loans | 2,907,445 | 2,917,759 | 1,465,458 | |||||||||
Total loans held for investment | 2,909,928 | 2,920,792 | 1,503,950 | |||||||||
Allowance for credit losses | (34,754) | (34,798) | (16,490) | |||||||||
Loans, net of allowance for credit losses | 2,875,174 | 2,885,994 | 1,487,460 | |||||||||
Premises and equipment | 46,159 | 45,667 | 27,135 | |||||||||
Cash surrender value of life insurance policies | 74,231 | 73,673 | 45,699 | |||||||||
Goodwill | 126,730 | 126,730 | 59,946 | |||||||||
Intangible assets | 31,694 | 33,421 | 1,250 | |||||||||
Other assets | 64,452 | 70,274 | 45,503 | |||||||||
Total Assets | $ | 4,296,902 | $ | 4,310,252 | $ | 2,726,003 | ||||||
Noninterest-bearing deposits | $ | 903,925 | $ | 943,873 | $ | 521,055 | ||||||
Interest-bearing demand deposits | 1,395,724 | 1,322,336 | 952,013 | |||||||||
Savings deposits | 588,798 | 595,981 | 335,802 | |||||||||
Certificates of deposit | 605,912 | 624,209 | 392,731 | |||||||||
Brokered deposits | 72,672 | 106,225 | 6,627 | |||||||||
Borrowings | 197,752 | 198,428 | 210,000 | |||||||||
Subordinated debentures | 48,368 | 48,277 | 35,691 | |||||||||
Other liabilities | 34,136 | 39,162 | 24,338 | |||||||||
Total Liabilities | 3,847,287 | 3,878,491 | 2,478,257 | |||||||||
Common stock and paid-in capital, no par value; shares authorized: | 398,688 | 398,201 | 206,427 | |||||||||
Retained earnings | 93,124 | 82,647 | 86,765 | |||||||||
Accumulated other comprehensive income (loss), net | (42,197) | (49,087) | (45,446) | |||||||||
Shareholders' Equity | 449,615 | 431,761 | 247,746 | |||||||||
Total Liabilities and Shareholders' Equity | $ | 4,296,902 | $ | 4,310,252 | $ | 2,726,003 | ||||||
Condensed Statements of Operations | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
(Dollars in thousands, except per share data) | September 30, | September 30, | ||||||||||||||
2025 | 2024 | 2025 | 2024 | |||||||||||||
Interest income | ||||||||||||||||
Loans, including fees | $ | 47,123 | $ | 23,252 | $ | 126,297 | $ | 66,009 | ||||||||
Securities: | ||||||||||||||||
Taxable | 5,249 | 5,563 | 15,243 | 16,382 | ||||||||||||
Tax exempt | 1,418 | 1,402 | 4,220 | 4,224 | ||||||||||||
Other | 908 | 1,473 | 2,822 | 3,451 | ||||||||||||
Total interest income | 54,698 | 31,690 | 148,582 | 90,066 | ||||||||||||
Interest expense | ||||||||||||||||
Deposits | 14,287 | 8,362 | 39,843 | 25,464 | ||||||||||||
Advances from Federal Home Loan Bank | 1,926 | 468 | 5,637 | 1,372 | ||||||||||||
Other | 888 | 2,612 | 2,872 | 8,137 | ||||||||||||
Total interest expense | 17,101 | 11,442 | 48,352 | 34,973 | ||||||||||||
Net interest income | 37,597 | 20,248 | 100,230 | 55,093 | ||||||||||||
Provision for credit losses on loans | 200 | 425 | 14,013 | 1,100 | ||||||||||||
Provision for (reversal of) credit losses on unfunded | - | - | - | (675) | ||||||||||||
Net Provision for credit losses expense | 200 | 425 | 14,013 | 425 | ||||||||||||
Net interest income after provision | 37,397 | 19,823 | 86,217 | 54,668 | ||||||||||||
Noninterest income | ||||||||||||||||
Customer service charges | 1,729 | 1,249 | 4,311 | 3,537 | ||||||||||||
Interchange income | 2,133 | 1,524 | 5,725 | 4,303 | ||||||||||||
Insurance and investment commissions | 485 | 184 | 1,320 | 572 | ||||||||||||
Gains on sales of loans | 671 | 631 | 1,470 | 1,610 | ||||||||||||
Net gains (losses) on sales and write downs of other assets | (39) | 191 | (26) | 203 | ||||||||||||
Earnings on life insurance policies | 558 | 315 | 1,791 | 1,115 | ||||||||||||
Trust income | 734 | 232 | 1,836 | 665 | ||||||||||||
Change in market value of equity securities | 458 | 277 | 804 | 241 | ||||||||||||
Other | 415 | 264 | 1,338 | 755 | ||||||||||||
Total noninterest income | 7,144 | 4,867 | 18,569 | 13,001 | ||||||||||||
Noninterest expense | ||||||||||||||||
Salaries and benefits | 14,127 | 8,372 | 38,178 | 24,467 | ||||||||||||
Occupancy and equipment | 2,694 | 1,475 | 6,845 | 4,414 | ||||||||||||
Data processing | 2,499 | 1,598 | 6,937 | 4,406 | ||||||||||||
Communication | 517 | 334 | 1,458 | 976 | ||||||||||||
Professional fees | 834 | 610 | 2,478 | 1,818 | ||||||||||||
Supplies and postage | 267 | 174 | 816 | 520 | ||||||||||||
Advertising and promotional | 207 | 168 | 723 | 517 | ||||||||||||
Intangible amortization | 1,728 | 198 | 4,140 | 604 | ||||||||||||
FDIC insurance | 530 | 390 | 1,535 | 1,155 | ||||||||||||
Merger related expenses | - | 645 | 17,369 | 645 | ||||||||||||
Other | 2,812 | 1,453 | 6,907 | 3,857 | ||||||||||||
Total noninterest expense | 26,215 | 15,417 | 87,386 | 43,379 | ||||||||||||
Income (loss) before income tax | 18,326 | 9,273 | 17,400 | 24,290 | ||||||||||||
Income tax expense (benefit) | 3,645 | 1,925 | 3,091 | 4,722 | ||||||||||||
Net income (loss) | $ | 14,681 | $ | 7,348 | $ | 14,309 | $ | 19,568 | ||||||||
Basic earnings (loss) per share | $ | 0.98 | $ | 0.86 | $ | 1.05 | $ | 2.48 | ||||||||
Diluted earnings (loss) per share | $ | 0.97 | $ | 0.85 | $ | 1.05 | $ | 2.46 | ||||||||
Dividends declared per share | $ | 0.28 | $ | 0.27 | $ | 0.84 | $ | 0.81 | ||||||||
Three Months Ended | Three Months Ended June 30, | Three Months Ended | ||||||||||||||||||||||||||||||||||
(Dollars in thousands) | Average | Average | Average | |||||||||||||||||||||||||||||||||
Balance | Interest | Rate | Balance | Interest | Rate | Balance | Interest | Rate | ||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||||||
Loans (1)(3)(4)(5) | $ | 2,927,878 | $ | 47,142 | 6.39 | % | $ | 2,936,168 | $ | 46,551 | 6.36 | % | $ | 1,460,033 | $ | 23,262 | 6.34 | % | ||||||||||||||||||
Taxable securities (2) | 703,045 | 5,249 | 2.96 | 695,546 | 5,264 | 3.04 | 681,578 | 5,563 | 3.25 | |||||||||||||||||||||||||||
Nontaxable securities (1) | 287,274 | 1,795 | 2.48 | 289,061 | 1,764 | 2.45 | 289,335 | 1,775 | 2.44 | |||||||||||||||||||||||||||
Other | 79,365 | 909 | 4.54 | 63,416 | 735 | 4.65 | 108,019 | 1,473 | 5.43 | |||||||||||||||||||||||||||
Interest-earning assets | 3,997,562 | 55,095 | 5.47 | 3,984,191 | 54,314 | 5.47 | 2,538,965 | 32,073 | 5.03 | |||||||||||||||||||||||||||
Noninterest-earning assets | 310,727 | 314,322 | 146,225 | |||||||||||||||||||||||||||||||||
Total assets | $ | 4,308,289 | $ | 4,298,513 | $ | 2,685,190 | ||||||||||||||||||||||||||||||
Liabilities and Shareholders' | ||||||||||||||||||||||||||||||||||||
Interest-bearing demand | $ | 1,374,827 | $ | 6,392 | 1.84 | % | $ | 1,332,318 | $ | 6,163 | 1.86 | % | $ | 916,459 | $ | 3,111 | 1.35 | % | ||||||||||||||||||
Savings deposits | 591,653 | 1,125 | 0.75 | 595,362 | 1,003 | 0.68 | 329,613 | 728 | 0.88 | |||||||||||||||||||||||||||
Certificates of deposit | 616,686 | 5,777 | 3.72 | 646,247 | 6,353 | 3.94 | 388,183 | 4,296 | 4.40 | |||||||||||||||||||||||||||
Brokered deposit | 91,735 | 993 | 4.30 | 120,720 | 1,321 | 4.39 | 17,227 | 227 | 5.25 | |||||||||||||||||||||||||||
Borrowings | 179,122 | 2,019 | 4.47 | 169,257 | 1,945 | 4.61 | 210,000 | 2,508 | 4.75 | |||||||||||||||||||||||||||
Subordinated debentures | 48,663 | 701 | 5.72 | 48,971 | 689 | 5.65 | 35,658 | 413 | 4.61 | |||||||||||||||||||||||||||
Other | 8,550 | 94 | 4.38 | 11,763 | 129 | 4.39 | 11,756 | 159 | 5.37 | |||||||||||||||||||||||||||
Interest-bearing liabilities | 2,911,236 | 17,101 | 2.33 | 2,924,638 | 17,603 | 2.41 | 1,908,896 | 11,442 | 2.38 | |||||||||||||||||||||||||||
Demand deposits | 930,346 | 915,637 | 519,511 | |||||||||||||||||||||||||||||||||
Other noninterest-bearing | 28,258 | 30,695 | 18,908 | |||||||||||||||||||||||||||||||||
Total liabilities | 3,869,840 | 3,870,970 | 2,447,315 | |||||||||||||||||||||||||||||||||
Shareholders' equity | 438,449 | 427,543 | 237,875 | |||||||||||||||||||||||||||||||||
Total liabilities and | $ | 4,308,289 | $ | 4,298,513 | $ | 2,685,190 | ||||||||||||||||||||||||||||||
Net interest income (tax- | $ | 37,994 | $ | 36,711 | $ | 20,631 | ||||||||||||||||||||||||||||||
Net interest margin (tax- | 3.77 | % | 3.70 | % | 3.23 | % | ||||||||||||||||||||||||||||||
(1) | Adjusted to a fully tax-equivalent basis to facilitate comparison to the taxable interest-earning assets. The adjustment uses an incremental tax rate of 21%. The presentation of these measures on a tax-equivalent basis is not in accordance with GAAP, but is customary in the banking industry. These non-GAAP measures ensure comparability with respect to both taxable and tax-exempt loans and securities. |
(2) | Taxable securities include dividend income from Federal Home Loan Bank and Federal Reserve Bank stock. |
(3) | Loans include both loans to other financial institutions and loans held for sale. |
(4) | Non-accruing loan balances are included in the balances of average loans. Non-accruing loan average balances were $17.0 million, $16.8 million, and $2.2 million in the third quarter of 2025, the second quarter of 2025 and the third quarter of 2024, respectively. |
(5) | Interest on loans included net origination fees and interest income due to accretion from purchased loans. Interest income due to accretion from purchased loans was $3.6 million, $3.5 million and $275,000 in the third quarter of 2025, the second quarter of 2025 and the third quarter of 2024, respectively. |
Income Adjusted for Merger Expenses - Non-GAAP Reconciliation (Unaudited) | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2025 | 2024 | 2025 | 2024 | ||||||||||||||
(In Thousands, Except Per Share Data) | |||||||||||||||||
Net income (loss) | $ | 14,681 | $ | 7,348 | $ | 14,309 | $ | 19,568 | |||||||||
Merger related expenses net of tax | - | 633 | 13,885 | 633 | |||||||||||||
Merger related provision for credit losses, net of tax (1) | - | - | 9,463 | - | |||||||||||||
Adjusted net income | $ | 14,681 | $ | 7,981 | $ | 37,657 | $ | 20,201 | |||||||||
Weighted average number of shares | 15,014,933 | 8,567,548 | 13,579,249 | 7,898,938 | |||||||||||||
Diluted average shares outstanding | 15,061,155 | 8,615,500 | 13,625,787 | 7,944,143 | |||||||||||||
Basic earnings (loss) per share | $ | 0.98 | $ | 0.86 | $ | 1.05 | $ | 2.48 | |||||||||
Diluted earnings (loss) per share | $ | 0.97 | $ | 0.85 | $ | 1.05 | $ | 2.46 | |||||||||
Adjusted basic earnings per share | $ | 0.98 | $ | 0.94 | $ | 2.77 | $ | 2.56 | |||||||||
Adjusted diluted earnings per share | $ | 0.97 | $ | 0.93 | $ | 2.76 | $ | 2.54 | |||||||||
(1) Merger related provision for credit loss represents the calculated credit loss on Non-PCD loans acquired during the Merger on March 1, 2025. |
Other Selected Financial Highlights (Unaudited) | ||||||||||||||||||||
Quarterly | ||||||||||||||||||||
Earnings | 2025 3rd | 2025 2nd | 2025 1st | 2024 4th | 2024 3rd | |||||||||||||||
(in thousands except per share data) | ||||||||||||||||||||
Net interest income | $ | 37,597 | $ | 36,322 | $ | 26,311 | $ | 19,349 | $ | 20,248 | ||||||||||
Net provision expense | 200 | 650 | 13,163 | 200 | 425 | |||||||||||||||
Noninterest income | 7,144 | 6,503 | 4,922 | 4,994 | 4,867 | |||||||||||||||
Noninterest expense | 26,215 | 25,506 | 35,665 | 15,344 | 15,417 | |||||||||||||||
Net income (loss) before federal income tax expense | 18,326 | 16,669 | (17,595) | 8,799 | 9,273 | |||||||||||||||
Income tax expense (benefit) | 3,645 | 3,135 | (3,689) | 1,640 | 1,925 | |||||||||||||||
Net income (loss) | 14,681 | 13,534 | (13,906) | 7,159 | 7,348 | |||||||||||||||
Basic earnings (loss) per share | 0.98 | 0.90 | (1.30) | 0.79 | 0.86 | |||||||||||||||
Diluted earnings (loss) per share | 0.97 | 0.90 | (1.29) | 0.79 | 0.85 | |||||||||||||||
Adjusted basic earnings per share | 0.98 | 0.91 | 0.87 | 0.84 | 0.94 | |||||||||||||||
Adjusted diluted earnings per share | 0.97 | 0.91 | 0.86 | 0.83 | 0.93 | |||||||||||||||
End of period balances | 2025 3rd | 2025 2nd | 2025 1st | 2024 4th | 2024 3rd | |||||||||||||||
(in thousands) | ||||||||||||||||||||
Gross loans | $ | 2,916,251 | $ | 2,928,431 | $ | 2,928,896 | $ | 1,552,928 | $ | 1,509,944 | ||||||||||
Loans held for sale (1) | 6,323 | 7,639 | 3,941 | 7,288 | 5,994 | |||||||||||||||
Loans to other financial institutions (2) | 2,483 | 3,033 | 2,393 | 39,878 | 38,492 | |||||||||||||||
Core loans (gross loans excluding 1 and 2 | 2,907,445 | 2,917,759 | 2,922,562 | 1,505,762 | 1,465,458 | |||||||||||||||
Allowance for credit losses | 34,754 | 34,798 | 34,567 | 16,552 | 16,490 | |||||||||||||||
Securities available for sale | 544,023 | 479,426 | 480,650 | 479,117 | 497,552 | |||||||||||||||
Securities held to maturity | 388,517 | 390,457 | 394,434 | 394,534 | 391,954 | |||||||||||||||
Other interest-earning assets | 79,677 | 110,206 | 110,605 | 86,185 | 116,643 | |||||||||||||||
Total earning assets (before allowance) | 3,928,468 | 3,908,520 | 3,914,585 | 2,512,764 | 2,516,093 | |||||||||||||||
Total assets | 4,296,902 | 4,310,252 | 4,305,391 | 2,723,243 | 2,726,003 | |||||||||||||||
Noninterest-bearing deposits | 903,925 | 943,873 | 912,033 | 524,945 | 521,055 | |||||||||||||||
Interest-bearing demand deposits | 1,395,724 | 1,322,336 | 1,406,660 | 920,167 | 952,013 | |||||||||||||||
Savings deposits | 588,798 | 595,981 | 602,337 | 338,109 | 335,802 | |||||||||||||||
Certificates of deposit | 605,912 | 624,209 | 663,404 | 394,371 | 392,731 | |||||||||||||||
Brokered deposits | 72,672 | 106,225 | 67,295 | 36,511 | 6,627 | |||||||||||||||
Total deposits | 3,567,031 | 3,592,624 | 3,651,729 | 2,214,103 | 2,208,228 | |||||||||||||||
Deposits excluding brokered | 3,494,359 | 3,486,399 | 3,584,434 | 2,177,592 | 2,201,601 | |||||||||||||||
Total subordinated debt | 48,368 | 48,277 | 48,186 | 35,752 | 35,691 | |||||||||||||||
Total borrowed funds | 197,752 | 198,428 | 137,330 | 175,000 | 210,000 | |||||||||||||||
Other interest-bearing liabilities | 7,695 | 8,529 | 13,420 | 24,003 | 4,956 | |||||||||||||||
Total interest-bearing liabilities | 2,916,921 | 2,903,985 | 2,938,632 | 1,923,913 | 1,937,820 | |||||||||||||||
Shareholders' equity | 449,615 | 431,761 | 427,068 | 260,415 | 247,746 | |||||||||||||||
Average Balances | 2025 3rd | 2025 2nd | 2025 1st | 2024 4th | 2024 3rd | |||||||||||||||
(in thousands) | ||||||||||||||||||||
Loans | $ | 2,927,878 | $ | 2,936,168 | $ | 2,019,643 | $ | 1,516,466 | $ | 1,460,033 | ||||||||||
Securities | 990,319 | 984,607 | 978,769 | 965,501 | 970,913 | |||||||||||||||
Other interest-earning assets | 79,365 | 63,416 | 115,091 | 100,864 | 108,019 | |||||||||||||||
Total earning assets (before allowance) | 3,997,562 | 3,984,191 | 3,113,503 | 2,582,831 | 2,538,965 | |||||||||||||||
Total assets | 4,308,289 | 4,298,513 | 3,319,591 | 2,719,530 | 2,685,190 | |||||||||||||||
Noninterest-bearing deposits | 930,346 | 915,637 | 651,424 | 536,653 | 519,511 | |||||||||||||||
Interest-bearing deposits | 2,583,166 | 2,573,927 | 2,030,543 | 1,641,102 | 1,634,255 | |||||||||||||||
Brokered deposits | 91,735 | 120,720 | 45,553 | 19,620 | 17,227 | |||||||||||||||
Total deposits | 3,605,247 | 3,610,284 | 2,727,520 | 2,197,375 | 2,170,993 | |||||||||||||||
Total subordinated debt | 48,663 | 48,971 | 40,182 | 35,719 | 35,658 | |||||||||||||||
Total borrowed funds | 179,122 | 169,257 | 193,961 | 197,828 | 210,000 | |||||||||||||||
Other interest-bearing liabilities | 8,550 | 11,763 | 20,553 | 16,928 | 11,756 | |||||||||||||||
Total interest-bearing liabilities | 2,911,236 | 2,924,638 | 2,330,792 | 1,911,197 | 1,908,896 | |||||||||||||||
Shareholders' equity | 438,449 | 427,543 | 302,537 | 254,737 | 237,875 | |||||||||||||||
Loan Breakout (in thousands) | 2025 3rd | 2025 2nd | 2025 1st | 2024 4th | 2024 3rd | |||||||||||||||
Agricultural | $ | 51,183 | $ | 47,273 | $ | 48,165 | $ | 48,221 | $ | 49,147 | ||||||||||
Commercial and Industrial | 352,876 | 351,367 | 345,138 | 228,256 | 229,232 | |||||||||||||||
Commercial Real Estate | 1,728,774 | 1,743,541 | 1,757,599 | 901,130 | 862,773 | |||||||||||||||
Consumer | 27,328 | 29,741 | 30,932 | 29,412 | 30,693 | |||||||||||||||
Construction Real Estate | 18,440 | 21,508 | 18,067 | 17,042 | 14,555 | |||||||||||||||
Residential Real Estate | 728,844 | 724,329 | 722,661 | 281,701 | 279,058 | |||||||||||||||
Loans to Other Financial Institutions | 2,483 | 3,033 | 2,393 | 39,878 | 38,492 | |||||||||||||||
Gross Loans (excluding held for sale) | $ | 2,909,928 | $ | 2,920,792 | $ | 2,924,955 | $ | 1,545,640 | $ | 1,503,950 | ||||||||||
Allowance for credit losses | 34,754 | 34,798 | 34,567 | 16,552 | 16,490 | |||||||||||||||
Net loans | $ | 2,875,174 | $ | 2,885,994 | $ | 2,890,388 | $ | 1,529,088 | $ | 1,487,460 | ||||||||||
Performance Ratios | 2025 3rd | 2025 2nd | 2025 1st | 2024 4th | 2024 3rd | |||||||||||||||
Annualized return on average assets | 1.36 | % | 1.26 | % | -1.68 | % | 1.05 | % | 1.09 | % | ||||||||||
Annualized return on average equity | 13.39 | % | 12.66 | % | -18.39 | % | 11.24 | % | 12.36 | % | ||||||||||
Annualized return on average tangible common equity | 19.08 | % | 18.26 | % | -27.97 | % | 14.54 | % | 16.29 | % | ||||||||||
Net interest margin (GAAP) | 3.73 | % | 3.66 | % | 3.43 | % | 2.98 | % | 3.17 | % | ||||||||||
Net interest margin (fully tax-equivalent) | 3.77 | % | 3.70 | % | 3.48 | % | 3.04 | % | 3.23 | % | ||||||||||
Efficiency ratio | 54.76 | % | 55.32 | % | 111.01 | % | 61.29 | % | 60.80 | % | ||||||||||
Annualized cost of funds | 1.77 | % | 1.84 | % | 1.86 | % | 1.90 | % | 1.87 | % | ||||||||||
Annualized cost of deposits | 1.57 | % | 1.65 | % | 1.59 | % | 1.58 | % | 1.53 | % | ||||||||||
Cost of interest bearing liabilities | 2.33 | % | 2.41 | % | 2.37 | % | 2.43 | % | 2.38 | % | ||||||||||
Shareholders' equity to total assets | 10.46 | % | 10.02 | % | 9.91 | % | 9.56 | % | 9.09 | % | ||||||||||
Tangible common equity to tangible assets | 7.04 | % | 6.54 | % | 6.40 | % | 7.49 | % | 7.00 | % | ||||||||||
Annualized noninterest expense to average assets | 2.43 | % | 2.37 | % | 4.30 | % | 2.26 | % | 2.30 | % | ||||||||||
Loan to deposit | 81.76 | % | 81.51 | % | 80.21 | % | 70.14 | % | 68.38 | % | ||||||||||
Full-time equivalent employees | 573 | 571 | 605 | 377 | 371 | |||||||||||||||
Capital Ratios ChoiceOne Financial | 2025 3rd | 2025 2nd | 2025 1st | 2024 4th | 2024 3rd | |||||||||||||||
Total capital (to risk weighted assets) | 13.0 | % | 12.4 | % | 12.0 | % | 14.5 | % | 15.0 | % | ||||||||||
Common equity Tier 1 capital (to risk | 10.3 | % | 9.8 | % | 9.4 | % | 12.0 | % | 12.3 | % | ||||||||||
Tier 1 capital (to risk weighted assets) | 10.9 | % | 10.4 | % | 10.0 | % | 12.2 | % | 12.5 | % | ||||||||||
Tier 1 capital (to average assets) | 8.5 | % | 8.2 | % | 10.4 | % | 9.1 | % | 9.0 | % | ||||||||||
Tier 1 capital (to total assets) | 8.2 | % | 7.9 | % | 7.6 | % | 8.9 | % | 8.7 | % | ||||||||||
Commercial Real Estate Loans (non- | 275.2 | % | 288.2 | % | 302.0 | % | 195.6 | % | 193.3 | % | ||||||||||
Capital Ratios ChoiceOne Bank | 2025 3rd | 2025 2nd | 2025 1st | 2024 4th | 2024 3rd | |||||||||||||||
Total capital (to risk weighted assets) | 12.8 | % | 12.4 | % | 11.9 | % | 12.7 | % | 13.1 | % | ||||||||||
Common equity Tier 1 capital (to risk | 11.7 | % | 11.3 | % | 10.9 | % | 12.0 | % | 12.3 | % | ||||||||||
Tier 1 capital (to risk weighted assets) | 11.7 | % | 11.3 | % | 10.9 | % | 12.0 | % | 12.3 | % | ||||||||||
Tier 1 capital (to average assets) | 9.1 | % | 8.9 | % | 11.3 | % | 8.9 | % | 8.9 | % | ||||||||||
Tier 1 capital (to total assets) | 8.8 | % | 8.6 | % | 8.3 | % | 8.7 | % | 8.5 | % | ||||||||||
Commercial Real Estate Loans (non- | 280.0 | % | 290.6 | % | 303.9 | % | 224.9 | % | 222.2 | % | ||||||||||
Asset Quality | 2025 3rd | 2025 2nd | 2025 1st | 2024 4th | 2024 3rd | |||||||||||||||
(in thousands) | ||||||||||||||||||||
Net loan charge-offs (recoveries) | $ | 244 | $ | 418 | $ | 72 | $ | 138 | $ | 87 | ||||||||||
Annualized net loan charge-offs (recoveries) to average | 0.03 | % | 0.06 | % | 0.01 | % | 0.04 | % | 0.02 | % | ||||||||||
Allowance for credit losses | $ | 34,754 | $ | 34,798 | $ | 34,567 | $ | 16,552 | $ | 16,490 | ||||||||||
Unfunded commitment liability | $ | 1,647 | $ | 1,647 | $ | 1,647 | $ | 1,485 | $ | 1,485 | ||||||||||
Allowance to loans (excludes held for sale) | 1.19 | % | 1.19 | % | 1.18 | % | 1.07 | % | 1.10 | % | ||||||||||
Total funds reserved to pay for loans (includes liability for | 1.25 | % | 1.25 | % | 1.24 | % | 1.17 | % | 1.20 | % | ||||||||||
Non-Accruing loans | $ | 17,365 | $ | 16,854 | $ | 16,789 | $ | 3,704 | $ | 2,355 | ||||||||||
Nonperforming loans (includes OREO) | $ | 19,940 | $ | 19,296 | $ | 19,154 | $ | 4,177 | $ | 2,884 | ||||||||||
Nonperforming loans to total loans (excludes held for | 0.69 | % | 0.66 | % | 0.65 | % | 0.27 | % | 0.19 | % | ||||||||||
Non Accrual classified as PCD | $ | 11,393 | 12,017 | 12,891 | - | - | ||||||||||||||
Nonperforming loans to total loans (excludes held for | 0.39 | % | 0.41 | % | 0.44 | % | - | - | ||||||||||||
Nonperforming assets to total assets | 0.46 | % | 0.45 | % | 0.44 | % | 0.15 | % | 0.11 | % | ||||||||||
Other Non-GAAP Reconciliation (Unaudited)
| ||||||||||||||||||||
NON-GAAP Reconciliation | 2025 3rd | 2025 2nd | 2025 1st | 2024 4th | 2024 3rd | |||||||||||||||
Net interest income (tax-equivalent basis) (Non-GAAP) | $ | 37,994 | $ | 36,711 | $ | 26,710 | $ | 19,739 | $ | 20,631 | ||||||||||
Net interest margin (fully tax-equivalent) | 3.77 | % | 3.70 | % | 3.48 | % | 3.04 | % | 3.23 | % | ||||||||||
Reconciliation to Reported Net Interest Income | ||||||||||||||||||||
Net interest income (tax-equivalent basis) (Non-GAAP) | $ | 37,994 | $ | 36,711 | $ | 26,710 | $ | 19,739 | $ | 20,631 | ||||||||||
Adjustment for taxable equivalent interest | (397) | (389) | (399) | (390) | (383) | |||||||||||||||
Net interest income (GAAP) | $ | 37,597 | $ | 36,322 | $ | 26,311 | $ | 19,349 | $ | 20,248 | ||||||||||
Net interest margin (GAAP) | 3.73 | % | 3.66 | % | 3.43 | % | 2.98 | % | 3.17 | % | ||||||||||
(dollars in thousands) | 2025 3rd | 2025 2nd | 2025 1st | 2024 4th | 2024 3rd | |||||||||||||||
Total assets | $ | 4,296,902 | $ | 4,310,252 | $ | 4,305,391 | $ | 2,723,243 | $ | 2,726,003 | ||||||||||
Less: goodwill | 126,730 | 126,730 | 126,730 | 59,946 | 59,946 | |||||||||||||||
Less: core deposit intangible | 31,694 | 33,421 | 35,153 | 1,096 | 1,250 | |||||||||||||||
Tangible assets | $ | 4,138,478 | $ | 4,150,101 | $ | 4,143,508 | $ | 2,662,201 | $ | 2,664,807 | ||||||||||
Total equity | $ | 449,615 | $ | 431,761 | $ | 427,068 | $ | 260,415 | $ | 247,746 | ||||||||||
Less: goodwill | 126,730 | 126,730 | 126,730 | 59,946 | 59,946 | |||||||||||||||
Less: core deposit intangible | 31,694 | 33,421 | 35,154 | 1,096 | 1,250 | |||||||||||||||
Tangible common equity | $ | 291,191 | $ | 271,610 | $ | 265,184 | $ | 199,373 | $ | 186,550 | ||||||||||
Tangible common equity to tangible assets | 7.04 | % | 6.54 | % | 6.40 | % | 7.49 | % | 7.00 | % | ||||||||||
(dollars in thousands) | 2025 3rd | 2025 2nd | 2025 1st | 2024 4th | 2024 3rd | |||||||||||||||
Net income | $ | 14,681 | $ | 13,534 | $ | (13,906) | $ | 7,159 | $ | 7,348 | ||||||||||
Less: intangible amortization (tax affected at 21%) | 1,365 | 1,369 | 537 | 121 | 156 | |||||||||||||||
Adjusted net income | $ | 13,316 | $ | 12,165 | $ | (14,443) | $ | 7,038 | $ | 7,192 | ||||||||||
Average shareholders' equity | $ | 438,449 | $ | 427,543 | $ | 302,537 | $ | 254,737 | $ | 237,875 | ||||||||||
Less: average goodwill | 126,730 | 126,730 | 83,030 | 59,946 | 59,946 | |||||||||||||||
Less: average core deposit intangible | 32,599 | 34,356 | 12,983 | 1,179 | 1,355 | |||||||||||||||
Average tangible common equity | $ | 279,120 | $ | 266,457 | $ | 206,524 | $ | 193,612 | $ | 176,574 | ||||||||||
Return on average tangible common equity | 19.08 | % | 18.26 | % | -27.97 | % | 14.54 | % | 16.29 | % | ||||||||||
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SOURCE ChoiceOne Financial Services, Inc.