SPARTA, Mich., April 24, 2026 /PRNewswire/ -- ChoiceOne Financial Services, Inc. ("ChoiceOne", NASDAQ:COFS), the parent company for ChoiceOne Bank, reported financial results for the quarter ended March 31, 2026.
Highlights
- ChoiceOne reported net income of $13,704,000 for the three months ended March 31, 2026, compared to net income of $13,867,000 and net loss of $13,906,000 for the three months ended December 31, 2025 and March 31, 2025, respectively. 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.
- Diluted earnings per share were $0.91 for the three months ended March 31, 2026, compared to diluted earnings per share of $0.92 and diluted loss per share of $1.29 for the three months ended December 31, 2025 and March 31, 2025, respectively. Diluted earnings per share excluding merger expenses, net of taxes, and merger related provision for credit losses, net of taxes, was $0.86 for the three months ended March 31, 2025.
- Core loans, which exclude held for sale loans and mortgage warehouse advances, declined by $30.9 million or an annualized 4.2% during the first quarter of 2026 and grew by $9.5 million or 0.3% during the twelve months ended March 31, 2026.
- Net Interest Margin increased to 3.63% for the three months ended March 31, 2026 compared to 3.59% for the three months ended December 31, 2025.
- Deposits, excluding brokered deposits grew by $68.9 million or an annualized 7.9% during the first quarter of 2026. This increase is a combination of organic deposit growth and some seasonality in municipal deposits.
- Asset quality continues to remain strong, with annualized net loan charge-offs to average loans of 0.01% for the first quarter of 2026. Nonperforming loans to total loans (excluding loans held for sale) increased to 1.01% as of March 31, 2026 compared to 0.98% as of December 31, 2025. Notably, 0.61% of the nonperforming loans to total loans (excluding loans held for sale) is attributed to certain purchased loans which were identified prior to the Merger as having credit deterioration.
"ChoiceOne delivered solid first-quarter performance, driven by strong net interest income, continued balance-sheet and expense discipline, and stable credit quality. Our loan pipeline looks strong as we continue to grow organically through deep customer relationships and executing on our strategic priorities across Michigan," said Kelly Potes, Chief Executive Officer.
ChoiceOne reported net income of $13,704,000 for the three months ended March 31, 2026, compared to net income of $13,867,000 and net loss of $13,906,000 for the three months ended December 31, 2025 and March 31, 2025, respectively. Net income excluding merger expenses, net of taxes, and merger related provision for credit losses, net of taxes, was $9,310,000 for the three months ended March 31, 2025. Diluted earnings per share were $0.91 for the three months ended March 31, 2026, compared to diluted earnings per share of $0.92 and diluted loss per share of $1.29 for the three months ended December 31, 2025 and March 31, 2025, respectively. Diluted earnings per share excluding merger expenses, net of taxes, and merger related provision for credit losses, net of taxes, was $0.86 for the three months ended March 31, 2025.
As of March 31, 2026, total assets were $4.4 billion, an increase of $89.2 million compared to March 31, 2025. The growth in total assets is primarily attributed to growth in securities and warehouse mortgage advances. This was partially offset by a reduction in the cash balance of $55.2 million during the twelve months ended March 31, 2026. Interest rates and balances on warehouse mortgage advances fluctuate with the national mortgage market and are short term in nature.
Core loans, which exclude held for sale loans and mortgage warehouse advances, declined by $30.9 million or an annualized 4.2% during the first quarter of 2026 and grew by $9.5 million or 0.3% during the twelve months ended March 31, 2026. Loan interest income increased $13.0 million in the first quarter of 2026 compared to the same period in 2025 and decreased $975,000 compared to the fourth quarter of 2025. The decrease from the fourth quarter of 2025 is partially due to a decline in interest income due to accretion from purchased loans during the first quarter of 2026 compared to the fourth quarter of 2025. Interest income for the three months ended March 31, 2026 includes $2.7 million of interest income due to accretion from purchased loans compared to $3.1 million for the three months ended December 31, 2025. Interest income due to accretion from purchased loans increased GAAP net interest margin by 26 and 29 basis points in the first quarter of 2026 and fourth quarter of 2025, respectively. Of the amount recognized in the first quarter of 2026, $2.1 million was calculated using the effective interest rate method of amortization, while the remaining $597,000 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 2026 using the effective interest method of amortization is $5.8 million; however, actual results will be dependent on prepayment speeds and other factors. It is estimated that a total of $50.4 million remains to be recognized as interest income due to accretion from purchased loans over the life of the purchased loans portfolio.
Deposits, excluding brokered deposits, increased by $68.9 million as of March 31, 2026, compared to December 31, 2025. This increase is a combination of organic deposit growth and some seasonality in municipal deposits. Deposits, excluding brokered deposits, declined by $20.4 million as of March 31, 2026, compared to March 31, 2025. This decrease is primarily related to runoff of higher cost municipal CDs acquired in the Merger, partially offset by organic growth in other categories. ChoiceOne continues to be proactive in managing its liquidity position by using brokered deposits and short term FHLB advances to ensure ample liquidity. As of March 31, 2026, the total balance of borrowed funds from the FHLB was $185.0 million at a weighted average rate of 3.81%, with $165.0 million due within 12 months. At March 31, 2026, 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 $1.1 billion or 30.7% of deposits at March 31, 2026.
In the three months ended March 31, 2026, ChoiceOne's annualized cost of deposits to average total deposits declined 3 basis points compared to the three months ended December 31, 2025 and declined 5 basis points compared to the three months ended March 31, 2025. The annualized cost of funds decreased by 13 basis points, from 1.86% to 1.73% in the three months ended March 31, 2026 compared to the same period in the prior year, primarily due to a decrease in higher cost local and brokered CDs. Interest expense on borrowings for the three months ended March 31, 2026 decreased by $9,000 compared to the same period in the prior year, despite a $32.2 million increase in the average balance borrowed, due to a reduction in rates. In the three months ended March 31, 2026, compared to the three months ended December 31, 2025, annualized cost of funds decreased 6 basis points from 1.79% to 1.73% due to the reductions in federal funds rate during the fourth quarter of 2025. With ChoiceOne's already low cost of deposits and market conditions, additional reductions in the federal funds rate may not immediately result in a further reduction in cost of deposits.
There was no provision for credit losses on loans during the first quarter of 2026, due to a decline in loan balances and only $53,000 in net charge offs. The ratio of the allowance for credit losses to total loans (excluding loans held for sale) was 1.19% on March 31, 2026 compared to 1.18% on December 31, 2025. Asset quality continues to remain strong, with annualized net loan charge-offs to average loans of 0.01% for the first quarter of 2026. Nonperforming loans to total loans (excluding loans held for sale) increased to 1.01% as of March 31, 2026 compared to 0.98% as of December 31, 2025. Notably, 0.61% of the nonperforming loans to total loans (excluding loans held for sale) is attributed to certain purchased loans which were identified prior to the Merger as having credit deterioration.
ChoiceOne uses interest rate swaps to manage interest rate exposure to certain fixed rate assets and variable rate liabilities. During the first quarter of 2026, ChoiceOne exited $351.0 million of pay-fixed interest rate swaps with an average coupon of approximately 3.12%. This resulted in a small gain that was applied to the basis of the hedged bonds and a $4.6 million realized gain that will be amortized into interest expense over approximately six years. After evaluating multiple rate scenarios, we determined that our interest rate risk profile and overall balance sheet flexibility are improved without the pay-fixed interest rate swaps, and we believe this action better aligns our interest rate posture with long-term value creation for shareholders. Following this exit, the asset sensitivity of the bank is reduced and balance sheet derivatives are no longer a significant percentage of assets. ChoiceOne has approximately $29.0 million of pay-fixed interest rate swaps with a weighted average coupon of 3.52%. These swaps were entered into in the third quarter of 2025 to hedge interest rate risk on newly purchased agency mortgage backed securities.
At March 31, 2026, shareholders' equity was $470.0 million, an increase from $427.1 million on March 31, 2025. ChoiceOne repurchased 25,116 shares of stock for a net cost of $775,000 in the fourth quarter of 2025 and 50,000 shares of stock for a net cost of $1.4 million during the first quarter of 2026 under our existing share repurchase plan. The repurchase plan has 300,272 shares remaining to purchase as of March 31, 2026. The repurchase reflects our view that our capital position is healthy and the repurchase of shares is in the best interest of our shareholders. ChoiceOne Bank continues to be "well-capitalized," with a total risk-based capital ratio of 12.9% as of March 31, 2026, compared to 11.9% on March 31, 2025.
Noninterest income declined by $282,000 in the three months ended March 31, 2026, compared to the three months ended December 31, 2025. This decline was partly driven by lower interchange income and lower gains on sales of loans, which are both affected by seasonality. Noninterest income also declined in the first quarter of 2026 compared to the fourth quarter of 2025 due to losses on the sales of securities. These declines were offset by an increase from the change in market value of equity securities during the first quarter of 2026 compared to the fourth quarter of 2025. Noninterest income increased by $893,000 in the three months ended March 31, 2026 compared to the three months ended March 31, 2025. This increase was partly driven by higher customer service charges and interchange income, which rose due to increased volume from the Merger. Insurance and investment commissions income also increased as a result of higher estate settlement fees and customers obtained from the Merger. These increases were offset by the aforementioned loss on sales of securities in the first quarter of 2026.
Noninterest expense increased by $427,000 for the three months ended March 31, 2026, compared to the three months ended December 31, 2025. The increase was due to higher FDIC insurance costs, professional fees, and other expenses including Michigan state taxes, offset by lower salaries and benefits costs. Noninterest expense declined by $9.9 million for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. The decline was largely due to merger-related expenses of $17.2 million in the three months ended March 31, 2025, offset by higher salaries and benefits expense, occupancy and equipment expense and intangible amortization expense in the three months ended March 31, 2026, compared to the same period in 2025. ChoiceOne will continue to invest in its talented staff, technology and footprint while prioritizing operational efficiency and disciplined investment. ChoiceOne has secured a location in Troy, MI and expects to open a full service branch and lending office later in 2026. We believe this new office will help us continue our strong growth in an attractive market.
ChoiceOne's first-quarter 2026 tax expense was reduced by $200,000 as a result of purchasing a transferable tax credit that will be applied to 2026 income taxes. Management intends to purchase similar sized transferable tax credits in 2026 to reduce tax expense.
"We ended the first quarter with solid capital and liquidity and an efficient funding mix, keeping us well positioned to support clients and create long-term value," said Kelly Potes, Chief Executive Officer. "As we progress through 2026, we remain focused on disciplined growth, strengthening customer relationships, and executing on opportunities across our markets."
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 54 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", "view" 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, 2025 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) | March 31, | December 31, | March 31, | ||||||||
Cash and cash equivalents | $ | 84,218 | $ | 87,988 | $ | 139,421 | |||||
Equity securities, at fair value | 9,425 | 9,353 | 9,328 | ||||||||
Securities Held to Maturity | 384,339 | 385,193 | 394,434 | ||||||||
Securities Available for Sale | 573,531 | 554,420 | 480,650 | ||||||||
Federal Home Loan Bank stock | 18,562 | 18,562 | 18,562 | ||||||||
Federal Reserve Bank stock | 12,554 | 12,554 | 12,357 | ||||||||
Loans held for sale | 9,976 | 7,185 | 3,941 | ||||||||
Mortgage warehouse advances | 51,187 | 58,987 | 2,393 | ||||||||
Core loans | 2,932,110 | 2,963,047 | 2,922,562 | ||||||||
Total loans held for investment | 2,983,297 | 3,022,034 | 2,924,955 | ||||||||
Allowance for credit losses | (35,496) | (35,550) | (34,567) | ||||||||
Loans, net of allowance for credit losses | 2,947,801 | 2,986,484 | 2,890,388 | ||||||||
Premises and equipment | 48,670 | 48,110 | 44,284 | ||||||||
Cash surrender value of life insurance policies | 86,305 | 74,798 | 73,765 | ||||||||
Goodwill | 129,854 | 129,854 | 126,730 | ||||||||
Intangible assets | 29,464 | 31,149 | 35,153 | ||||||||
Other assets | 59,866 | 64,901 | 76,378 | ||||||||
Total Assets | $ | 4,394,565 | $ | 4,410,551 | $ | 4,305,391 | |||||
Noninterest-bearing deposits | $ | 912,845 | $ | 907,007 | $ | 912,033 | |||||
Interest-bearing demand deposits | 1,428,338 | 1,364,887 | 1,406,660 | ||||||||
Savings deposits | 624,084 | 607,045 | 602,337 | ||||||||
Certificates of deposit | 598,743 | 616,180 | 663,404 | ||||||||
Brokered deposits | 103,381 | 104,906 | 67,295 | ||||||||
Borrowings | 184,819 | 264,788 | 137,330 | ||||||||
Subordinated debentures | 48,552 | 48,460 | 48,186 | ||||||||
Other liabilities | 23,802 | 31,925 | 41,078 | ||||||||
Total Liabilities | 3,924,564 | 3,945,198 | 3,878,323 | ||||||||
Common stock and paid-in capital, no par value; shares authorized: | 397,498 | 398,386 | 398,075 | ||||||||
Retained earnings | 112,008 | 102,641 | 73,316 | ||||||||
Accumulated other comprehensive income (loss), net | (39,505) | (35,674) | (44,323) | ||||||||
Shareholders' Equity | 470,001 | 465,353 | 427,068 | ||||||||
Total Liabilities and Shareholders' Equity | $ | 4,394,565 | $ | 4,410,551 | $ | 4,305,391 | |||||
Condensed Statements of Operations | |||||||||||
Three Months Ended | |||||||||||
(Dollars in thousands, except per share data) | March 31, | December 31, | March 31, | ||||||||
2026 | 2025 | 2025 | |||||||||
Interest income | |||||||||||
Loans, including fees | $ | 45,642 | $ | 46,617 | $ | 32,641 | |||||
Securities: | |||||||||||
Taxable | 5,492 | 5,663 | 4,730 | ||||||||
Tax exempt | 1,451 | 1,402 | 1,409 | ||||||||
Other | 690 | 694 | 1,179 | ||||||||
Total interest income | 53,275 | 54,376 | 39,959 | ||||||||
Interest expense | |||||||||||
Deposits | 13,745 | 14,127 | 10,716 | ||||||||
Advances from Federal Home Loan Bank | 2,182 | 2,564 | 2,052 | ||||||||
Other | 706 | 845 | 880 | ||||||||
Total interest expense | 16,633 | 17,536 | 13,648 | ||||||||
Net interest income | 36,642 | 36,840 | 26,311 | ||||||||
Provision for credit losses on loans | - | 1,100 | 13,163 | ||||||||
Provision for (reversal of) credit losses on unfunded commitments | - | (300) | - | ||||||||
Net Provision for credit losses expense | - | 800 | 13,163 | ||||||||
Net interest income after provision | 36,642 | 36,040 | 13,148 | ||||||||
Noninterest income | |||||||||||
Customer service charges | 1,656 | 1,683 | 1,181 | ||||||||
Interchange income | 1,892 | 2,086 | 1,509 | ||||||||
Insurance and investment commissions | 551 | 592 | 295 | ||||||||
Gains on sales of loans | 408 | 511 | 444 | ||||||||
Net gains (losses) on sales of securities | (203) | - | - | ||||||||
Net gains (losses) on sales and write downs of other assets | 9 | (200) | 10 | ||||||||
Earnings on life insurance policies | 584 | 567 | 389 | ||||||||
Trust income | 692 | 689 | 506 | ||||||||
Change in market value of equity securities | 26 | (197) | 107 | ||||||||
Other | 200 | 366 | 481 | ||||||||
Total noninterest income | 5,815 | 6,097 | 4,922 | ||||||||
Noninterest expense | |||||||||||
Salaries and benefits | 14,062 | 14,559 | 10,320 | ||||||||
Occupancy and equipment | 2,591 | 2,469 | 1,719 | ||||||||
Data processing | 2,290 | 2,374 | 1,999 | ||||||||
Communication | 555 | 576 | 380 | ||||||||
Professional fees | 982 | 784 | 697 | ||||||||
Supplies and postage | 335 | 291 | 244 | ||||||||
Advertising and promotional | 264 | 258 | 256 | ||||||||
Intangible amortization | 1,685 | 1,683 | 680 | ||||||||
FDIC insurance | 570 | 475 | 455 | ||||||||
Merger related expenses | - | - | 17,203 | ||||||||
Other | 2,442 | 1,880 | 1,712 | ||||||||
Total noninterest expense | 25,776 | 25,349 | 35,665 | ||||||||
Income (loss) before income tax | 16,681 | 16,788 | (17,595) | ||||||||
Income tax expense (benefit) | 2,977 | 2,921 | (3,689) | ||||||||
Net income (loss) | $ | 13,704 | $ | 13,867 | $ | (13,906) | |||||
Basic earnings (loss) per share | $ | 0.91 | $ | 0.92 | $ | (1.30) | |||||
Diluted earnings (loss) per share | $ | 0.91 | $ | 0.92 | $ | (1.29) | |||||
Dividends declared per share | $ | 0.29 | $ | 0.29 | $ | 0.28 | |||||
Table 1 - Average Balances and tax-Equivalent Interest Rates (Unaudited) | ||||||||||||||||||||||||||||||||||||
Three Months Ended March 31, | Three Months Ended December 31, | Three Months Ended March 31, | ||||||||||||||||||||||||||||||||||
(Dollars in thousands) | Average | Average | Average | |||||||||||||||||||||||||||||||||
Balance | Interest | Rate | Balance | Interest | Rate | Balance | Interest | Rate | ||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||||||
Loans (1)(3)(4)(5) | $ | 2,979,652 | $ | 45,661 | 6.21 | % | $ | 2,961,133 | $ | 46,635 | 6.25 | % | $ | 2,019,643 | $ | 32,666 | 6.56 | % | ||||||||||||||||||
Taxable securities (2) | 755,718 | 5,492 | 2.95 | 750,256 | 5,663 | 2.99 | 689,891 | 4,730 | 2.78 | |||||||||||||||||||||||||||
Nontaxable securities (1) | 281,295 | 1,837 | 2.65 | 285,782 | 1,776 | 2.47 | 288,878 | 1,783 | 2.50 | |||||||||||||||||||||||||||
Other | 74,803 | 690 | 3.74 | 69,056 | 694 | 3.99 | 115,091 | 1,179 | 4.15 | |||||||||||||||||||||||||||
Interest-earning assets | 4,091,468 | 53,680 | 5.32 | 4,066,227 | 54,768 | 5.34 | 3,113,503 | 40,358 | 5.26 | |||||||||||||||||||||||||||
Noninterest-earning assets | 313,152 | 309,300 | 206,088 | |||||||||||||||||||||||||||||||||
Total assets | $ | 4,404,620 | $ | 4,375,527 | $ | 3,319,591 | ||||||||||||||||||||||||||||||
Liabilities and Shareholders' | ||||||||||||||||||||||||||||||||||||
Interest-bearing demand | $ | 1,404,153 | $ | 6,282 | 1.81 | % | $ | 1,343,600 | $ | 6,352 | 1.88 | % | $ | 1,111,903 | $ | 4,420 | 1.61 | % | ||||||||||||||||||
Savings deposits | 613,837 | 1,379 | 0.91 | 596,010 | 1,252 | 0.83 | 431,192 | 883 | 0.83 | |||||||||||||||||||||||||||
Certificates of deposit | 598,616 | 5,099 | 3.45 | 613,387 | 5,502 | 3.56 | 487,448 | 4,950 | 4.12 | |||||||||||||||||||||||||||
Brokered deposit | 100,175 | 985 | 3.99 | 100,133 | 1,021 | 4.05 | 45,553 | 463 | 4.12 | |||||||||||||||||||||||||||
Borrowings | 226,192 | 2,182 | 3.91 | 255,978 | 2,663 | 4.13 | 193,961 | 2,191 | 4.58 | |||||||||||||||||||||||||||
Subordinated debentures | 48,503 | 661 | 5.53 | 48,411 | 681 | 5.58 | 40,182 | 518 | 5.23 | |||||||||||||||||||||||||||
Other | 4,871 | 45 | 3.75 | 6,311 | 65 | 4.09 | 20,553 | 223 | 4.41 | |||||||||||||||||||||||||||
Interest-bearing liabilities | 2,996,347 | 16,633 | 2.25 | 2,963,830 | 17,536 | 2.35 | 2,330,792 | 13,648 | 2.37 | |||||||||||||||||||||||||||
Demand deposits | 907,453 | 925,414 | 651,424 | |||||||||||||||||||||||||||||||||
Other noninterest-bearing | 30,425 | 26,860 | 34,838 | |||||||||||||||||||||||||||||||||
Total liabilities | 3,934,225 | 3,916,104 | 3,017,054 | |||||||||||||||||||||||||||||||||
Shareholders' equity | 470,395 | 459,423 | 302,537 | |||||||||||||||||||||||||||||||||
Total liabilities and | $ | 4,404,620 | $ | 4,375,527 | $ | 3,319,591 | ||||||||||||||||||||||||||||||
Net interest income (tax- | $ | 37,047 | $ | 37,232 | $ | 26,710 | ||||||||||||||||||||||||||||||
Net interest margin (tax- | 3.67 | % | 3.63 | % | 3.48 | % | ||||||||||||||||||||||||||||||
(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 mortgage warehouse advances and loans held for sale. |
(4) | Non-accruing loan balances are included in the balances of average loans. Non-accruing loan average balances were $27.5 million, $22.2 million, and $10.2 million in the first quarter of 2026, the fourth quarter of 2025 and the first quarter of 2025, 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 $2.7 million, $3.1 million and $2.9 million in the first quarter of 2026, the fourth quarter of 2025 and the first quarter of 2025, respectively. |
Income Adjusted for Merger Expenses - Non-GAAP Reconciliation (Unaudited) | |||||||||||
Three Months Ended | |||||||||||
March 31, | December 31, | March 31, | |||||||||
2026 | 2025 | 2025 | |||||||||
(In Thousands, Except Per Share Data) | |||||||||||
Net income (loss) | $ | 13,704 | $ | 13,867 | $ | (13,906) | |||||
Merger related expenses, net of tax | - | - | 13,753 | ||||||||
Merger related provision for credit losses, net of tax (1) | - | - | 9,463 | ||||||||
Adjusted net income | $ | 13,704 | $ | 13,867 | $ | 9,310 | |||||
Weighted average number of shares | 14,990,017 | 15,015,486 | 10,676,068 | ||||||||
Diluted average shares outstanding | 15,041,910 | 15,065,937 | 10,740,077 | ||||||||
Basic earnings (loss) per share | $ | 0.91 | $ | 0.92 | $ | (1.30) | |||||
Diluted earnings (loss) per share | $ | 0.91 | $ | 0.92 | $ | (1.29) | |||||
Adjusted basic earnings per share | $ | 0.91 | $ | 0.92 | $ | 0.87 | |||||
Adjusted diluted earnings per share | $ | 0.91 | $ | 0.92 | $ | 0.86 | |||||
(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 | 2026 1st | 2025 4th | 2025 3rd | 2025 2nd | 2025 1st | ||||||||||||||
(in thousands except per share data) | |||||||||||||||||||
Net interest income | $ | 36,642 | $ | 36,840 | $ | 37,597 | $ | 36,322 | $ | 26,311 | |||||||||
Net provision expense | - | 800 | 200 | 650 | 13,163 | ||||||||||||||
Noninterest income | 5,815 | 6,097 | 7,144 | 6,503 | 4,922 | ||||||||||||||
Noninterest expense | 25,776 | 25,349 | 26,215 | 25,506 | 35,665 | ||||||||||||||
Net income (loss) before federal income tax expense | 16,681 | 16,788 | 18,326 | 16,669 | (17,595) | ||||||||||||||
Income tax expense (benefit) | 2,977 | 2,921 | 3,645 | 3,135 | (3,689) | ||||||||||||||
Net income (loss) | 13,704 | 13,867 | 14,681 | 13,534 | (13,906) | ||||||||||||||
Basic earnings (loss) per share | 0.91 | 0.92 | 0.98 | 0.90 | (1.30) | ||||||||||||||
Diluted earnings (loss) per share | 0.91 | 0.92 | 0.97 | 0.90 | (1.29) | ||||||||||||||
Adjusted basic earnings per share (non-GAAP) | 0.91 | 0.92 | 0.98 | 0.91 | 0.87 | ||||||||||||||
Adjusted diluted earnings per share (non-GAAP) | 0.91 | 0.92 | 0.97 | 0.91 | 0.86 | ||||||||||||||
End of period balances | 2026 1st | 2025 4th | 2025 3rd | 2025 2nd | 2025 1st | ||||||||||||||
(in thousands) | |||||||||||||||||||
Gross loans | $ | 2,993,273 | $ | 3,029,219 | $ | 2,916,251 | $ | 2,928,431 | $ | 2,928,896 | |||||||||
Loans held for sale (1) | 9,976 | 7,185 | 6,323 | 7,639 | 3,941 | ||||||||||||||
Mortgage warehouse advances (2) | 51,187 | 58,987 | 2,483 | 3,033 | 2,393 | ||||||||||||||
Core loans (gross loans excluding 1 and 2 | 2,932,110 | 2,963,047 | 2,907,445 | 2,917,759 | 2,922,562 | ||||||||||||||
Allowance for credit losses | 35,496 | 35,550 | 34,754 | 34,798 | 34,567 | ||||||||||||||
Securities available for sale | 573,531 | 554,420 | 544,023 | 479,426 | 480,650 | ||||||||||||||
Securities held to maturity | 384,339 | 385,193 | 388,517 | 390,457 | 394,434 | ||||||||||||||
Other interest-earning assets | 76,229 | 74,857 | 79,677 | 110,206 | 110,605 | ||||||||||||||
Total earning assets (before allowance) | 4,027,372 | 4,043,689 | 3,928,468 | 3,908,520 | 3,914,585 | ||||||||||||||
Total assets | 4,394,565 | 4,410,551 | 4,296,902 | 4,310,252 | 4,305,391 | ||||||||||||||
Noninterest-bearing deposits | 912,845 | 907,007 | 903,925 | 943,873 | 912,033 | ||||||||||||||
Interest-bearing demand deposits | 1,428,338 | 1,364,887 | 1,395,724 | 1,322,336 | 1,406,660 | ||||||||||||||
Savings deposits | 624,084 | 607,045 | 588,798 | 595,981 | 602,337 | ||||||||||||||
Certificates of deposit | 598,743 | 616,180 | 605,912 | 624,209 | 663,404 | ||||||||||||||
Brokered deposits | 103,381 | 104,906 | 72,672 | 106,225 | 67,295 | ||||||||||||||
Total deposits | 3,667,391 | 3,600,025 | 3,567,031 | 3,592,624 | 3,651,729 | ||||||||||||||
Deposits excluding brokered | 3,564,010 | 3,495,119 | 3,494,359 | 3,486,399 | 3,584,434 | ||||||||||||||
Total subordinated debt | 48,552 | 48,460 | 48,368 | 48,277 | 48,186 | ||||||||||||||
Total borrowed funds | 184,819 | 264,788 | 197,752 | 198,428 | 137,330 | ||||||||||||||
Other interest-bearing liabilities | 1 | 7,689 | 7,695 | 8,529 | 13,420 | ||||||||||||||
Total interest-bearing liabilities | 2,987,918 | 3,013,955 | 2,916,921 | 2,903,985 | 2,938,632 | ||||||||||||||
Shareholders' equity | 470,001 | 465,353 | 449,615 | 431,761 | 427,068 | ||||||||||||||
Average Balances | 2026 1st | 2025 4th | 2025 3rd | 2025 2nd | 2025 1st | ||||||||||||||
(in thousands) | |||||||||||||||||||
Loans | $ | 2,979,652 | $ | 2,961,133 | $ | 2,927,878 | $ | 2,936,168 | $ | 2,019,643 | |||||||||
Securities | 1,037,013 | 1,036,038 | 990,319 | 984,607 | 978,769 | ||||||||||||||
Other interest-earning assets | 74,803 | 69,056 | 79,365 | 63,416 | 115,091 | ||||||||||||||
Total earning assets (before allowance) | 4,091,468 | 4,066,227 | 3,997,562 | 3,984,191 | 3,113,503 | ||||||||||||||
Total assets | 4,404,620 | 4,375,527 | 4,308,289 | 4,298,513 | 3,319,591 | ||||||||||||||
Noninterest-bearing deposits | 907,453 | 925,414 | 930,346 | 915,637 | 651,424 | ||||||||||||||
Interest-bearing deposits | 2,616,606 | 2,552,997 | 2,583,166 | 2,573,927 | 2,030,543 | ||||||||||||||
Brokered deposits | 100,175 | 100,133 | 91,735 | 120,720 | 45,553 | ||||||||||||||
Total deposits | 3,624,234 | 3,578,544 | 3,605,247 | 3,610,284 | 2,727,520 | ||||||||||||||
Total subordinated debt | 48,503 | 48,411 | 48,663 | 48,971 | 40,182 | ||||||||||||||
Total borrowed funds | 226,192 | 255,978 | 179,122 | 169,257 | 193,961 | ||||||||||||||
Other interest-bearing liabilities | 4,871 | 6,311 | 8,550 | 11,763 | 20,553 | ||||||||||||||
Total interest-bearing liabilities | 2,996,347 | 2,963,830 | 2,911,236 | 2,924,638 | 2,330,792 | ||||||||||||||
Shareholders' equity | 470,395 | 459,423 | 438,449 | 427,543 | 302,537 | ||||||||||||||
Loan Breakout (in thousands) | 2026 1st | 2025 4th | 2025 3rd | 2025 2nd | 2025 1st | ||||||||||||||
Agricultural | $ | 47,840 | $ | 56,218 | $ | 51,183 | $ | 47,273 | $ | 48,165 | |||||||||
Commercial and Industrial | 369,425 | 352,556 | 352,876 | 351,367 | 345,138 | ||||||||||||||
Commercial Real Estate | 1,745,410 | 1,780,396 | 1,728,774 | 1,743,541 | 1,757,599 | ||||||||||||||
Consumer | 23,180 | 26,701 | 27,328 | 29,741 | 30,932 | ||||||||||||||
Construction Real Estate | 20,897 | 19,139 | 18,440 | 21,508 | 18,067 | ||||||||||||||
Residential Real Estate | 725,358 | 728,037 | 728,844 | 724,329 | 722,661 | ||||||||||||||
Mortgage Warehouse Advances | 51,187 | 58,987 | 2,483 | 3,033 | 2,393 | ||||||||||||||
Gross Loans (excluding held for sale) | $ | 2,983,297 | $ | 3,022,034 | $ | 2,909,928 | $ | 2,920,792 | $ | 2,924,955 | |||||||||
Allowance for credit losses | 35,496 | 35,550 | 34,754 | 34,798 | 34,567 | ||||||||||||||
Net loans | $ | 2,947,801 | $ | 2,986,484 | $ | 2,875,174 | $ | 2,885,994 | $ | 2,890,388 | |||||||||
Performance Ratios | 2026 1st | 2025 4th | 2025 3rd | 2025 2nd | 2025 1st | |||||||||||||||
Annualized return on average assets | 1.24 | % | 1.27 | % | 1.36 | % | 1.26 | % | -1.68 | % | ||||||||||
Annualized return on average equity | 11.65 | % | 12.07 | % | 13.39 | % | 12.66 | % | -18.39 | % | ||||||||||
Annualized return on average tangible common equity | 15.95 | % | 16.66 | % | 19.08 | % | 18.26 | % | -27.97 | % | ||||||||||
Net interest margin (GAAP) | 3.63 | % | 3.59 | % | 3.73 | % | 3.66 | % | 3.43 | % | ||||||||||
Net interest margin (fully tax-equivalent) | 3.67 | % | 3.63 | % | 3.77 | % | 3.70 | % | 3.48 | % | ||||||||||
Efficiency ratio | 55.99 | % | 54.12 | % | 54.76 | % | 55.32 | % | 111.01 | % | ||||||||||
Annualized cost of funds | 1.73 | % | 1.79 | % | 1.77 | % | 1.84 | % | 1.86 | % | ||||||||||
Annualized cost of deposits | 1.54 | % | 1.57 | % | 1.57 | % | 1.65 | % | 1.59 | % | ||||||||||
Cost of interest bearing liabilities | 2.25 | % | 2.35 | % | 2.33 | % | 2.41 | % | 2.37 | % | ||||||||||
Shareholders' equity to total assets | 10.70 | % | 10.55 | % | 10.46 | % | 10.02 | % | 9.91 | % | ||||||||||
Tangible common equity to tangible assets | 7.34 | % | 7.16 | % | 7.04 | % | 6.54 | % | 6.40 | % | ||||||||||
Annualized noninterest expense to average assets | 2.34 | % | 2.32 | % | 2.43 | % | 2.37 | % | 4.30 | % | ||||||||||
Loan to deposit | 81.62 | % | 84.14 | % | 81.76 | % | 81.51 | % | 80.21 | % | ||||||||||
Full-time equivalent employees | 561 | 569 | 573 | 571 | 605 | |||||||||||||||
Capital Ratios ChoiceOne Financial | 2026 1st | 2025 4th | 2025 3rd | 2025 2nd | 2025 1st | |||||||||||||||
Total capital (to risk weighted assets) | 13.2 | % | 12.7 | % | 13.0 | % | 12.4 | % | 12.0 | % | ||||||||||
Common equity Tier 1 capital (to risk weighted assets) | 10.6 | % | 10.2 | % | 10.3 | % | 9.8 | % | 9.4 | % | ||||||||||
Tier 1 capital (to risk weighted assets) | 11.1 | % | 10.7 | % | 10.9 | % | 10.4 | % | 10.0 | % | ||||||||||
Tier 1 capital (to average assets) | 8.6 | % | 8.5 | % | 8.5 | % | 8.2 | % | 10.4 | % | ||||||||||
Tier 1 capital (to total assets) | 8.3 | % | 8.1 | % | 8.2 | % | 7.9 | % | 7.6 | % | ||||||||||
Commercial Real Estate Loans (non-owner | 262.9 | % | 279.0 | % | 275.2 | % | 288.2 | % | 302.0 | % | ||||||||||
Capital Ratios ChoiceOne Bank | 2026 1st | 2025 4th | 2025 3rd | 2025 2nd | 2025 1st | |||||||||||||||
Total capital (to risk weighted assets) | 12.9 | % | 12.5 | % | 12.8 | % | 12.4 | % | 11.9 | % | ||||||||||
Common equity Tier 1 capital (to risk weighted assets) | 11.8 | % | 11.4 | % | 11.7 | % | 11.3 | % | 10.9 | % | ||||||||||
Tier 1 capital (to risk weighted assets) | 11.8 | % | 11.4 | % | 11.7 | % | 11.3 | % | 10.9 | % | ||||||||||
Tier 1 capital (to average assets) | 9.2 | % | 9.1 | % | 9.1 | % | 8.9 | % | 11.3 | % | ||||||||||
Tier 1 capital (to total assets) | 8.9 | % | 8.7 | % | 8.8 | % | 8.6 | % | 8.3 | % | ||||||||||
Commercial Real Estate Loans (non-owner | 268.9 | % | 284.4 | % | 280.0 | % | 290.6 | % | 303.9 | % | ||||||||||
Asset Quality | 2026 1st | 2025 4th | 2025 3rd | 2025 2nd | 2025 1st | |||||||||||||||
(in thousands) | ||||||||||||||||||||
Net loan charge-offs (recoveries) | $ | 53 | $ | 305 | $ | 244 | $ | 418 | $ | 72 | ||||||||||
Annualized net loan charge-offs (recoveries) to average | 0.01 | % | 0.04 | % | 0.03 | % | 0.06 | % | 0.01 | % | ||||||||||
Allowance for credit losses | $ | 35,496 | $ | 35,550 | $ | 34,754 | $ | 34,798 | $ | 34,567 | ||||||||||
Unfunded commitment liability | $ | 1,347 | $ | 1,347 | $ | 1,647 | $ | 1,647 | $ | 1,647 | ||||||||||
Allowance to loans (excludes held for sale) | 1.19 | % | 1.18 | % | 1.19 | % | 1.19 | % | 1.18 | % | ||||||||||
Total funds reserved to pay for loans (includes liability for | 1.23 | % | 1.22 | % | 1.25 | % | 1.25 | % | 1.24 | % | ||||||||||
Non-Accruing loans | $ | 27,892 | $ | 27,058 | $ | 17,365 | $ | 16,854 | $ | 16,789 | ||||||||||
Nonperforming loans (includes OREO) | $ | 30,177 | $ | 29,582 | $ | 19,940 | $ | 19,296 | $ | 19,154 | ||||||||||
Nonperforming loans to total loans (excludes held for sale) | 1.01 | % | 0.98 | % | 0.69 | % | 0.66 | % | 0.65 | % | ||||||||||
Non Accrual classified as PCD | $ | 18,210 | $ | 19,007 | $ | 11,393 | $ | 12,017 | $ | 12,891 | ||||||||||
Nonperforming loans to total loans (excludes held for sale) | 0.61 | % | 0.63 | % | 0.39 | % | 0.41 | % | 0.44 | % | ||||||||||
Nonperforming assets to total assets | 0.69 | % | 0.67 | % | 0.46 | % | 0.45 | % | 0.44 | % | ||||||||||
Other Non-GAAP Reconciliation (Unaudited) | ||||||||||||||||||||
NON-GAAP Reconciliation | 2026 1st | 2025 4th | 2025 3rd | 2025 2nd | 2025 1st | |||||||||||||||
Net interest income (tax-equivalent basis) (Non-GAAP) | $ | 37,047 | $ | 37,232 | $ | 37,994 | $ | 36,711 | $ | 26,710 | ||||||||||
Net interest margin (fully tax-equivalent) | 3.67 | % | 3.63 | % | 3.77 | % | 3.70 | % | 3.48 | % | ||||||||||
Reconciliation to Reported Net Interest Income | ||||||||||||||||||||
Net interest income (tax-equivalent basis) (Non-GAAP) | $ | 37,047 | $ | 37,232 | $ | 37,994 | $ | 36,711 | $ | 26,710 | ||||||||||
Adjustment for taxable equivalent interest | (405) | (392) | (397) | (389) | (399) | |||||||||||||||
Net interest income (GAAP) | $ | 36,642 | $ | 36,840 | $ | 37,597 | $ | 36,322 | $ | 26,311 | ||||||||||
Net interest margin (GAAP) | 3.63 | % | 3.59 | % | 3.73 | % | 3.66 | % | 3.43 | % | ||||||||||
(dollars in thousands) | 2026 1st | 2025 4th | 2025 3rd | 2025 2nd | 2025 1st | |||||||||||||||
Total assets | $ | 4,394,565 | $ | 4,410,551 | $ | 4,296,902 | $ | 4,310,252 | $ | 4,305,391 | ||||||||||
Less: goodwill | 129,854 | 129,854 | 126,730 | 126,730 | 126,730 | |||||||||||||||
Less: core deposit intangible | 29,464 | 31,149 | 31,694 | 33,421 | 35,153 | |||||||||||||||
Tangible assets | $ | 4,235,247 | $ | 4,249,548 | $ | 4,138,478 | $ | 4,150,101 | $ | 4,143,508 | ||||||||||
Total equity | $ | 470,001 | $ | 465,353 | $ | 449,615 | $ | 431,761 | $ | 427,068 | ||||||||||
Less: goodwill | 129,854 | 129,854 | 126,730 | 126,730 | 126,730 | |||||||||||||||
Less: core deposit intangible | 29,464 | 31,149 | 31,694 | 33,421 | 35,153 | |||||||||||||||
Tangible common equity | $ | 310,683 | $ | 304,350 | $ | 291,191 | $ | 271,610 | $ | 265,185 | ||||||||||
Tangible common equity to tangible assets | 7.34 | % | 7.16 | % | 7.04 | % | 6.54 | % | 6.40 | % | ||||||||||
(dollars in thousands) | 2026 1st | 2025 4th | 2025 3rd | 2025 2nd | 2025 1st | |||||||||||||||
Net income | $ | 13,704 | $ | 13,867 | $ | 14,681 | $ | 13,534 | $ | (13,906) | ||||||||||
Less: intangible amortization (tax affected at 21%) | 1,331 | 1,330 | 1,365 | 1,369 | 537 | |||||||||||||||
Adjusted net income | $ | 12,373 | $ | 12,537 | $ | 13,316 | $ | 12,165 | $ | (14,443) | ||||||||||
Average shareholders' equity | $ | 470,395 | $ | 459,423 | $ | 438,449 | $ | 427,543 | $ | 302,537 | ||||||||||
Less: average goodwill | 129,854 | 127,308 | 126,730 | 126,730 | 83,030 | |||||||||||||||
Less: average core deposit intangible | 30,319 | 31,092 | 32,599 | 34,356 | 12,983 | |||||||||||||||
Average tangible common equity | $ | 310,222 | $ | 301,023 | $ | 279,120 | $ | 266,457 | $ | 206,524 | ||||||||||
Return on average tangible common equity | 15.95 | % | 16.66 | % | 19.08 | % | 18.26 | % | -27.97 | % | ||||||||||
SOURCE ChoiceOne Financial Services, Inc.
