Choiceone Financial Services Inc 8-K, filed Jul 25, 2024
Choiceone Financial Services Inc (COFS)
About this 8-K
Choiceone Financial Services Inc filed this 8-K on July 25, 2024.
Items reported
- Item 2.02: Financial results
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
(Exact Name of Registrant as
Specified in its Charter)
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Registrant's telephone number, including area code:
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading symbol(s) |
Name of each exchange on which registered |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 |
Results of Operations and Financial Condition. |
On July 25, 2024, ChoiceOne Financial Services, Inc. issued the press release attached as Exhibit 99.1 to this Form 8-K, which is here incorporated by reference. This Report and the Exhibit are furnished to, and not filed with, the Commission.
Item 9.01 |
Financial Statements and Exhibits. |
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(d) |
Exhibits: |
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Press Release dated July 25, 2024. This Exhibit is furnished to, and not filed with, the Commission. |
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Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: |
July 25, 2024 |
CHOICEONE FINANCIAL SERVICES, INC. |
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By: |
/s/ Adom J. Greenland |
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Adom J. Greenland |
EXHIBIT 99.1
News Release
ChoiceOne Reports Second Quarter 2024 Results
Sparta, Michigan – July 25, 2024 – ChoiceOne Financial Services, Inc. ("ChoiceOne", NASDAQ:COFS), the parent company for ChoiceOne Bank, reported financial results for the quarter ended June 30, 2024.
Financial Highlights
“As we navigate through the evolving economic landscape, our bank has achieved consistent growth due to our strong team, technology, and relationships we have with our customers. Our strategic efforts have improved our net interest margin, bolstered by the use of derivative instruments which contribute positive cashflow. These steps have strengthened our financial base, so that ChoiceOne is well positioned to handle the market’s fluctuations in different rate environments,” said Kelly Potes, Chief Executive Officer.
ChoiceOne reported net income of $6,586,000 and $12,220,000 for the three and six months ended June 30, 2024, compared to $5,213,000 and $10,846,000 for the same periods in 2023. Diluted earnings per share were $0.87 and $1.61 in the three and six months ended June 30, 2024, compared to $0.69 and $1.44 per share in the same periods in the prior year. ChoiceOne experienced modest growth in our loan portfolio and a slight reduction in deposit balances. Despite these fluctuations, both net income and net interest margin have increased largely due to the commencement of cash flows from our pay-fixed interest rate swaps.
As of June 30, 2024, total assets were $2.6 billion, an increase of $139.3 million compared to June 30, 2023. The growth is primarily attributed to an increase in core loans of $175.6 million, and an increase in cash of $24.2 million. This growth was offset by a $62.1 million reduction in securities during the same time period. ChoiceOne has actively managed its liquidity to support organic loan growth, strategically shifting from lower-yielding assets to higher-yielding loans. This is reflected in the loan growth observed since June 30, 2023.
Deposits, excluding brokered deposits, decreased $44.4 million or an annualized 8.3% in the second quarter of 2024 and increased $64.5 million or 3.2% during the twelve months since June 30, 2023. The decrease in deposits in the second quarter was largely public funds including schools and townships which historically fluctuate with summer tax bill collection in July. The increase in deposits in the trailing twelve months is a combination of new business and recapture of deposit losses from the prior year. ChoiceOne continues to be
1
proactive in managing its liquidity position by using brokered deposits, the Bank Term Funding Program (“BTFP”), and FHLB advances to ensure ample liquidity. At June 30, 2024, total available borrowing capacity from all sources was $759.5 million. Uninsured deposits totaled $754.4 million or 35.5% of deposits at June 30, 2024.
Increases to short term interest rates have led to higher deposit costs, which rose to an annualized 1.56% in the second quarter of 2024, compared to an annualized 0.98% in the second quarter of 2023. As deposits reprice and customers shift to certificates of deposits and other interest bearing products, this trend is likely to persist. Deposit costs have declined since the first quarter of 2024 due to positive cash flow from pay-fixed interest rate swaps, hedged against deposits, decreasing deposit expenses. ChoiceOne is taking active measures to control these costs and expects to pay lower rates on deposits than the federal funds rate. Interest expense on borrowings for the three and six months ended June 30, 2024 increased $1.1 million and $3.2 million compared to the same period in the prior year, due to increases in borrowing amounts and interest rates. Borrowings include $170 million from the BTFP and $40 million of FHLB borrowings at a weighted average fixed rate of 4.7%, with the earliest maturity in January 2025. Total cost of funds increased to an annualized 1.92% in the second quarter of 2024 compared to an annualized 2.0% in the first quarter of 2024 and an annualized 1.29% in the second quarter of 2023.
The provision for credit losses expense on loans was $272,000 in the second quarter of 2024, due in part to loan growth during the quarter. This was offset by a reversal of the provision for unfunded commitments leading to net provision for credit losses expense for the second quarter 2024 of $0. The ratio of the allowance for credit losses to total loans (excluding loans held for sale) was 1.12% on June 30, 2024 compared to 1.15% on June 30, 2023. Asset quality continues to remain strong, with annualized net loan charge-offs to average loans of 0.04% and nonperforming loans to total loans (excluding loans held for sale) of 0.16% as of June 30, 2024.
ChoiceOne uses interest rate swaps to manage interest rate exposure to certain fixed assets and variable rate liabilities. On June 30, 2024, ChoiceOne had pay-fixed interest rate swaps with a total notional value of $401.0 million, a weighted average coupon of 3.07%, a fair value of $23.6 million and an average remaining contract length of 7 to 8 years. These derivative instruments increase in value as long-term interest rates rise, which offsets the reduction in equity due to unrealized losses on securities available for sale. Included in the total is $200.0 million of forward starting pay-fixed, receive floating interest rate swaps used to hedge interest bearing liabilities. These forward starting swaps pay a fixed coupon of 2.75% while receiving SOFR. Settlements from these swaps amounted to $974,000 for the second quarter of 2024 and were a contributing factor to the increase in net interest margin during the second quarter of 2024. Fully tax equivalent net interest margin excluding the swaps was 28 basis points lower than tax equivalent net interest margin reported for the second quarter of 2024.
Shareholders’ equity totaled $214.5 million as of June 30, 2024, up from $179.2 million as of June 30, 2023. This increase is due to increased retained earnings and an improvement in accumulated other compressive loss (AOCI) of $19.6 million compared to June 30, 2023. The improvement in AOCI, despite the rise in interest rates, is due to both the shortening duration and maturing (paydowns) of the securities portfolio, as well as an increase in unrealized gain of the pay-fixed swap derivatives. ChoiceOne Bank remains “well-capitalized” with a total risk-based capital ratio of 13.2% as of June 30, 2024, compared to 12.7% on June 30, 2023.
Noninterest income increased $598,000 and $978,000 in the three and six months ended June 30, 2024, compared to the same periods in the prior year. The increase was largely due to an increase in customer service charges of $391,000 and $529,000 in the three and six months ended June 30, 2024 compared to the same period in 2023 and changes in the market value of equity securities in the three and six months ended June 30, 2024, compared to the same period in the prior year. In addition, ChoiceOne recognized earnings on a bank owned life insurance death benefit claim in the amount of $196,000 during the first quarter of 2024.
Noninterest expense increased by $705,000 or 5.2% and $394,000 or 1.4% in the three and six months ended June 30, 2024 compared to the same period in 2023. The increase in total noninterest expense was due to an increase in employee health insurance benefits and an increase to FDIC insurance and other costs related to inflationary pressures. This was offset by a decline in occupancy and equipment related to two branch closures during the first quarter of 2024. Management continues to seek out ways to manage costs, but also recognizes the value of investing in innovation and attracting the best talent in our industry to compete effectively in our markets.
“I am very pleased with the results of the second quarter of 2024, showing an improving net interest margin and excellent credit metrics. Our experienced team has positioned ChoiceOne to grow our franchise, improve our technology, and offer a high level of service to customers. We remain committed to our communities, customers, and stakeholders and sincerely appreciate the trust they put in us as their local financial partner.” said Kelly Potes, Chief Executive Officer.
About ChoiceOne
ChoiceOne Financial Services, Inc. is a financial holding company headquartered in Sparta, Michigan and the parent corporation of ChoiceOne Bank, Member FDIC. ChoiceOne Bank operates 35 offices in parts of Kent, Lapeer, Macomb, Muskegon, Newaygo, Ottawa, and St. Clair counties. ChoiceOne Bank offers insurance and investment products through its subsidiary, ChoiceOne Insurance Agencies, Inc. For more information, please visit Investor Relations at ChoiceOne’s website at choiceone.bank.
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Forward-Looking Statements
This release may contain forward-looking statements. Words such as "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "is likely," "plans," "predicts," "projects," "may," "could," "look forward," "continue", "future", "will" 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 undertakes no 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 Financial Services, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2023.
For Further Information:
Adom Greenland
Executive Vice President & CFO
(616) 887 – 2334
IR@ChoiceOne.bank
3
Condensed Balance Sheets
(Unaudited)
(In thousands) |
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June 30, 2024 |
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March 31, 2024 |
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June 30, 2023 |
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Cash and cash equivalents |
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$ |
101,002 |
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$ |
150,129 |
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$ |
76,810 |
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Equity securities, at fair value |
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7,502 |
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7,560 |
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8,299 |
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Securities Held to Maturity |
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392,699 |
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397,981 |
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420,549 |
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Securities Available for Sale |
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491,670 |
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504,636 |
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521,202 |
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Federal Home Loan Bank stock |
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4,449 |
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4,449 |
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8,366 |
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Federal Reserve Bank stock |
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5,066 |
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5,066 |
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5,065 |
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Loans held for sale |
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5,946 |
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6,035 |
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8,924 |
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Loans to other financial institutions |
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36,569 |
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30,032 |
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38,838 |
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Core loans |
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1,400,958 |
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1,388,558 |
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1,225,390 |
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Total loans held for investment |
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1,437,527 |
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1,418,590 |
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1,264,228 |
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Allowance for credit losses |
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(16,152 |
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(16,037 |
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(14,582 |
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Loans, net of allowance for credit losses |
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1,421,375 |
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1,402,553 |
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1,249,646 |
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Premises and equipment |
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27,370 |
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28,268 |
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29,085 |
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Cash surrender value of life insurance policies |
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45,384 |
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45,079 |
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44,510 |
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Goodwill |
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59,946 |
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59,946 |
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59,946 |
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Core deposit intangible |
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1,448 |
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1,651 |
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2,304 |
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Other assets |
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59,210 |
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57,346 |
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49,020 |
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Total Assets |
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$ |
2,623,067 |
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$ |
2,670,699 |
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$ |
2,483,726 |
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Noninterest-bearing deposits |
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$ |
517,137 |
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$ |
502,685 |
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$ |
544,925 |
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Interest-bearing deposits |
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1,582,365 |
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1,641,193 |
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1,490,093 |
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Brokered deposits |
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27,177 |
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41,970 |
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51,370 |
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Borrowings |
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210,000 |
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210,000 |
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160,000 |
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Subordinated debentures |
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35,630 |
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35,568 |
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35,385 |
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Other liabilities |
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36,239 |
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32,527 |
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22,713 |
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Total Liabilities |
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2,408,548 |
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2,463,943 |
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2,304,486 |
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Common stock and paid-in capital, no par value; shares authorized: 15,000,000; shares outstanding: 7,573,618 at June 30, 2024, 7,556,137 at March 31, 2024, and 7,534,658 at June 30, 2023 |
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173,984 |
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173,786 |
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172,880 |
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Retained earnings |
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81,836 |
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77,294 |
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67,281 |
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Accumulated other comprehensive income (loss), net |
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(41,301 |
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(44,324 |
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(60,921 |
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Shareholders' Equity |
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214,519 |
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206,756 |
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179,240 |
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Total Liabilities and Shareholders’ Equity |
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$ |
2,623,067 |
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$ |
2,670,699 |
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$ |
2,483,726 |
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4
Condensed Statements of Income
(Unaudited)
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Three Months Ended |
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Six Months Ended |
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(Dollars in thousands, except per share data) |
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June 30, |
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June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Interest income |
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Loans, including fees |
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$ |
21,971 |
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$ |
15,978 |
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$ |
42,757 |
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$ |
30,851 |
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Securities: |
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Taxable |
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5,471 |
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5,378 |
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10,819 |
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10,291 |
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Tax exempt |
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1,410 |
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1,389 |
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2,822 |
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2,824 |
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Other |
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1,092 |
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571 |
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1,978 |
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|
748 |
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Total interest income |
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29,944 |
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23,316 |
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58,376 |
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44,714 |
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Interest expense |
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Deposits |
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8,325 |
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5,056 |
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17,102 |
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8,332 |
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Advances from Federal Home Loan Bank |
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463 |
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621 |
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904 |
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1,226 |
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Other |
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2,785 |
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1,548 |
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5,525 |
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2,053 |
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Total interest expense |
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11,573 |
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7,225 |
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23,531 |
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11,611 |
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Net interest income |
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18,371 |
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16,091 |
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34,845 |
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33,103 |
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Provision for credit losses on loans |
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272 |
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(415 |
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675 |
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(106 |
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Provision for credit losses on unfunded commitments |
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(272 |
) |
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165 |
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(675 |
) |
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(119 |
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Net Provision for credit losses expense |
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- |
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(250 |
) |
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- |
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(225 |
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Net interest income after provision |
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18,371 |
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16,341 |
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34,845 |
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33,328 |
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Noninterest income |
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Customer service charges |
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2,662 |
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2,271 |
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5,067 |
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4,538 |
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Insurance and investment commissions |
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190 |
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172 |
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|
388 |
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|
368 |
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Gains on sales of loans |
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525 |
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|
540 |
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|
979 |
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|
943 |
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Net gains (losses) on sales of securities |
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- |
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- |
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- |
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- |
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Net gains (losses) on sales and write downs of other assets |
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11 |
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133 |
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12 |
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136 |
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Earnings on life insurance policies |
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305 |
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269 |
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|
800 |
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532 |
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Trust income |
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220 |
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|
196 |
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433 |
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|
380 |
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Change in market value of equity securities |
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(71 |
) |
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(385 |
) |
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(36 |
) |
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(322 |
) |
Other |
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241 |
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|
289 |
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|
491 |
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|
581 |
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Total noninterest income |
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4,083 |
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3,485 |
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8,134 |
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7,156 |
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Noninterest expense |
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Salaries and benefits |
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8,264 |
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|
7,837 |
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|
16,095 |
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|
15,920 |
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Occupancy and equipment |
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|
1,477 |
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|
|
1,507 |
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2,939 |
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|
|
3,150 |
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Data processing |
|
|
1,780 |
|
|
|
1,681 |
|
|
|
3,450 |
|
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|
3,363 |
|
Professional fees |
|
|
593 |
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|
|
619 |
|
|
|
1,208 |
|
|
|
1,240 |
|
Supplies and postage |
|
|
168 |
|
|
|
197 |
|
|
|
346 |
|
|
|
388 |
|
Advertising and promotional |
|
|
199 |
|
|
|
155 |
|
|
|
349 |
|
|
|
304 |
|
Intangible amortization |
|
|
203 |
|
|
|
253 |
|
|
|
406 |
|
|
|
505 |
|
FDIC insurance |
|
|
390 |
|
|
|
220 |
|
|
|
765 |
|
|
|
520 |
|
Other |
|
|
1,204 |
|
|
|
1,104 |
|
|
|
2,404 |
|
|
|
2,178 |
|
Total noninterest expense |
|
|
14,278 |
|
|
|
13,573 |
|
|
|
27,962 |
|
|
|
27,568 |
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Income before income tax |
|
|
8,176 |
|
|
|
6,253 |
|
|
|
15,017 |
|
|
|
12,916 |
|
Income tax expense |
|
|
1,590 |
|
|
|
1,040 |
|
|
|
2,797 |
|
|
|
2,070 |
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|
|
|
|
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|
||||
Net income |
|
$ |
6,586 |
|
|
$ |
5,213 |
|
|
$ |
12,220 |
|
|
$ |
10,846 |
|
|
|
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|
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|
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Basic earnings per share |
|
$ |
0.87 |
|
|
$ |
0.69 |
|
|
$ |
1.62 |
|
|
$ |
1.44 |
|
Diluted earnings per share |
|
$ |
0.87 |
|
|
$ |
0.69 |
|
|
$ |
1.61 |
|
|
$ |
1.44 |
|
Dividends declared per share |
|
$ |
0.27 |
|
|
$ |
0.26 |
|
|
$ |
0.54 |
|
|
$ |
0.52 |
|
5
Other Selected Financial Highlights
(Unaudited)
|
|
Quarterly |
|
|||||||||||||||||
Earnings |
|
2024 2nd |
|
|
2024 1st |
|
|
2023 4th |
|
|
2023 3rd |
|
|
2023 2nd |
|
|||||
(in thousands except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net interest income |
|
$ |
18,371 |
|
|
$ |
16,474 |
|
|
$ |
16,556 |
|
|
$ |
16,226 |
|
|
$ |
16,091 |
|
Net provision expense |
|
|
- |
|
|
|
- |
|
|
|
375 |
|
|
|
- |
|
|
|
(250 |
) |
Noninterest income |
|
|
4,083 |
|
|
|
4,051 |
|
|
|
4,046 |
|
|
|
3,704 |
|
|
|
3,485 |
|
Noninterest expense |
|
|
14,278 |
|
|
|
13,684 |
|
|
|
13,778 |
|
|
|
13,728 |
|
|
|
13,573 |
|
Net income before federal income tax expense |
|
|
8,176 |
|
|
|
6,841 |
|
|
|
6,449 |
|
|
|
6,202 |
|
|
|
6,253 |
|
Income tax expense |
|
|
1,590 |
|
|
|
1,207 |
|
|
|
1,156 |
|
|
|
1,080 |
|
|
|
1,040 |
|
Net income |
|
|
6,586 |
|
|
|
5,634 |
|
|
|
5,293 |
|
|
|
5,122 |
|
|
|
5,213 |
|
Basic earnings per share |
|
|
0.87 |
|
|
|
0.75 |
|
|
|
0.70 |
|
|
|
0.68 |
|
|
|
0.69 |
|
Diluted earnings per share |
|
|
0.87 |
|
|
|
0.74 |
|
|
|
0.70 |
|
|
|
0.68 |
|
|
|
0.69 |
|
End of period balances |
|
2024 2nd |
|
|
2024 1st |
|
|
2023 4th |
|
|
2023 3rd |
|
|
2023 2nd |
|
|||||
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Gross loans |
|
$ |
1,443,473 |
|
|
$ |
1,424,625 |
|
|
$ |
1,415,363 |
|
|
$ |
1,315,022 |
|
|
$ |
1,273,152 |
|
Loans held for sale (1) |
|
|
5,946 |
|
|
|
6,035 |
|
|
|
4,710 |
|
|
|
5,222 |
|
|
|
8,924 |
|
Loans to other financial institutions (2) |
|
|
36,569 |
|
|
|
30,032 |
|
|
|
19,400 |
|
|
|
23,763 |
|
|
|
38,838 |
|
Core loans (gross loans excluding 1 and 2 above) |
|
|
1,400,958 |
|
|
|
1,388,558 |
|
|
|
1,391,253 |
|
|
|
1,286,037 |
|
|
|
1,225,390 |
|
Allowance for credit losses |
|
|
16,152 |
|
|
|
16,037 |
|
|
|
15,685 |
|
|
|
14,872 |
|
|
|
14,582 |
|
Securities available for sale |
|
|
491,670 |
|
|
|
504,636 |
|
|
|
514,598 |
|
|
|
490,804 |
|
|
|
521,202 |
|
Securities held to maturity |
|
|
392,699 |
|
|
|
397,981 |
|
|
|
407,959 |
|
|
|
414,743 |
|
|
|
420,549 |
|
Other interest-earning assets |
|
|
84,484 |
|
|
|
100,175 |
|
|
|
39,411 |
|
|
|
130,178 |
|
|
|
62,762 |
|
Total earning assets (before allowance) |
|
|
2,412,326 |
|
|
|
2,427,417 |
|
|
|
2,377,331 |
|
|
|
2,350,747 |
|
|
|
2,277,665 |
|
Total assets |
|
|
2,623,067 |
|
|
|
2,670,699 |
|
|
|
2,576,706 |
|
|
|
2,574,196 |
|
|
|
2,483,726 |
|
Noninterest-bearing deposits |
|
|
517,137 |
|
|
|
502,685 |
|
|
|
547,625 |
|
|
|
531,962 |
|
|
|
544,925 |
|
Interest-bearing deposits |
|
|
1,582,365 |
|
|
|
1,641,193 |
|
|
|
1,550,985 |
|
|
|
1,551,995 |
|
|
|
1,490,093 |
|
Brokered deposits |
|
|
27,177 |
|
|
|
41,970 |
|
|
|
23,445 |
|
|
|
49,238 |
|
|
|
51,370 |
|
Total deposits |
|
|
2,126,679 |
|
|
|
2,185,848 |
|
|
|
2,122,055 |
|
|
|
2,133,195 |
|
|
|
2,086,388 |
|
Deposits excluding brokered |
|
|
2,099,502 |
|
|
|
2,143,878 |
|
|
|
2,098,610 |
|
|
|
2,083,957 |
|
|
|
2,035,018 |
|
Total subordinated debt |
|
|
35,630 |
|
|
|
35,568 |
|
|
|
35,507 |
|
|
|
35,446 |
|
|
|
35,385 |
|
Total borrowed funds |
|
|
210,000 |
|
|
|
210,000 |
|
|
|
200,000 |
|
|
|
180,000 |
|
|
|
160,000 |
|
Other interest-bearing liabilities |
|
|
22,378 |
|
|
|
21,512 |
|
|
|
8,060 |
|
|
|
32,204 |
|
|
|
11,985 |
|
Total interest-bearing liabilities |
|
|
1,877,550 |
|
|
|
1,950,243 |
|
|
|
1,817,997 |
|
|
|
1,848,883 |
|
|
|
1,748,833 |
|
Shareholders' equity |
|
|
214,519 |
|
|
|
206,756 |
|
|
|
195,634 |
|
|
|
181,161 |
|
|
|
179,240 |
|
Average Balances |
|
2024 2nd |
|
|
2024 1st |
|
|
2023 4th |
|
|
2023 3rd |
|
|
2023 2nd |
|
|||||
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Loans |
|
$ |
1,435,966 |
|
|
$ |
1,412,569 |
|
|
$ |
1,359,643 |
|
|
$ |
1,278,421 |
|
|
$ |
1,218,860 |
|
Securities |
|
|
986,281 |
|
|
|
1,002,140 |
|
|
|
1,019,218 |
|
|
|
1,035,785 |
|
|
|
1,053,191 |
|
Other interest-earning assets |
|
|
80,280 |
|
|
|
64,064 |
|
|
|
92,635 |
|
|
|
128,704 |
|
|
|
41,075 |
|
Total earning assets (before allowance) |
|
|
2,502,527 |
|
|
|
2,478,773 |
|
|
|
2,471,496 |
|
|
|
2,442,910 |
|
|
|
2,313,126 |
|
Total assets |
|
|
2,647,716 |
|
|
|
2,621,009 |
|
|
|
2,589,541 |
|
|
|
2,568,240 |
|
|
|
2,422,567 |
|
Noninterest-bearing deposits |
|
|
516,308 |
|
|
|
506,175 |
|
|
|
546,778 |
|
|
|
540,497 |
|
|
|
534,106 |
|
Interest-bearing deposits |
|
|
1,601,020 |
|
|
|
1,599,509 |
|
|
|
1,565,493 |
|
|
|
1,550,591 |
|
|
|
1,472,990 |
|
Brokered deposits |
|
|
34,218 |
|
|
|
34,708 |
|
|
|
32,541 |
|
|
|
44,868 |
|
|
|
49,679 |
|
Total deposits |
|
|
2,151,546 |
|
|
|
2,140,392 |
|
|
|
2,144,812 |
|
|
|
2,135,956 |
|
|
|
2,056,775 |
|
Total subordinated debt |
|
|
35,596 |
|
|
|
35,535 |
|
|
|
35,474 |
|
|
|
35,413 |
|
|
|
35,352 |
|
Total borrowed funds |
|
|
210,000 |
|
|
|
214,835 |
|
|
|
185,707 |
|
|
|
181,739 |
|
|
|
144,231 |
|
Other interest-bearing liabilities |
|
|
26,426 |
|
|
|
18,399 |
|
|
|
25,729 |
|
|
|
19,180 |
|
|
|
3,763 |
|
Total interest-bearing liabilities |
|
|
1,907,260 |
|
|
|
1,902,986 |
|
|
|
1,844,944 |
|
|
|
1,831,791 |
|
|
|
1,706,015 |
|
Shareholders' equity |
|
|
210,742 |
|
|
|
200,177 |
|
|
|
187,099 |
|
|
|
181,219 |
|
|
|
171,912 |
|
6
Loan Breakout (in thousands) |
|
2024 2nd |
|
|
2024 1st |
|
|
2023 4th |
|
|
2023 3rd |
|
|
2023 2nd |
|
|||||
Agricultural |
|
$ |
45,274 |
|
|
$ |
41,950 |
|
|
$ |
49,210 |
|
|
$ |
43,290 |
|
|
$ |
40,684 |
|
Commercial and Industrial |
|
|
224,031 |
|
|
|
231,222 |
|
|
|
229,915 |
|
|
|
222,357 |
|
|
|
224,191 |
|
Commercial Real Estate |
|
|
804,213 |
|
|
|
794,705 |
|
|
|
786,921 |
|
|
|
709,960 |
|
|
|
657,549 |
|
Consumer |
|
|
32,811 |
|
|
|
34,268 |
|
|
|
36,541 |
|
|
|
37,605 |
|
|
|
38,614 |
|
Construction Real Estate |
|
|
18,751 |
|
|
|
17,890 |
|
|
|
20,936 |
|
|
|
16,477 |
|
|
|
16,734 |
|
Residential Real Estate |
|
|
275,878 |
|
|
|
268,523 |
|
|
|
267,730 |
|
|
|
256,348 |
|
|
|
247,618 |
|
Loans to Other Financial Institutions |
|
|
36,569 |
|
|
|
30,032 |
|
|
|
19,400 |
|
|
|
23,763 |
|
|
|
38,838 |
|
Gross Loans (excluding held for sale) |
|
$ |
1,437,527 |
|
|
$ |
1,418,590 |
|
|
$ |
1,410,653 |
|
|
$ |
1,309,800 |
|
|
$ |
1,264,228 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Allowance for credit losses |
|
|
16,152 |
|
|
|
16,037 |
|
|
|
15,685 |
|
|
|
14,872 |
|
|
|
14,582 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net loans |
|
$ |
1,421,375 |
|
|
$ |
1,402,553 |
|
|
$ |
1,394,968 |
|
|
$ |
1,294,928 |
|
|
$ |
1,249,646 |
|
Performance Ratios |
|
2024 2nd |
|
|
2024 1st |
|
|
2023 4th |
|
|
2023 3rd |
|
|
2023 2nd |
|
|||||
Annualized return on average assets |
|
|
0.99 |
% |
|
|
0.86 |
% |
|
|
0.82 |
% |
|
|
0.80 |
% |
|
|
0.86 |
% |
Annualized return on average equity |
|
|
12.50 |
% |
|
|
11.26 |
% |
|
|
11.32 |
% |
|
|
11.31 |
% |
|
|
12.13 |
% |
Annualized return on average tangible common equity |
|
|
17.22 |
% |
|
|
15.81 |
% |
|
|
16.40 |
% |
|
|
16.55 |
% |
|
|
18.31 |
% |
Net interest margin (GAAP) |
|
|
2.95 |
% |
|
|
2.67 |
% |
|
|
2.66 |
% |
|
|
2.64 |
% |
|
|
2.79 |
% |
Net interest margin (fully tax-equivalent) |
|
|
3.01 |
% |
|
|
2.74 |
% |
|
|
2.72 |
% |
|
|
2.70 |
% |
|
|
2.86 |
% |
Efficiency ratio |
|
|
61.47 |
% |
|
|
64.55 |
% |
|
|
65.31 |
% |
|
|
65.74 |
% |
|
|
65.92 |
% |
Annualized cost of funds |
|
|
1.92 |
% |
|
|
2.00 |
% |
|
|
1.91 |
% |
|
|
1.70 |
% |
|
|
1.29 |
% |
Annualized cost of deposits |
|
|
1.56 |
% |
|
|
1.65 |
% |
|
|
1.57 |
% |
|
|
1.36 |
% |
|
|
0.98 |
% |
Cost of interest bearing liabilities |
|
|
2.44 |
% |
|
|
2.53 |
% |
|
|
2.45 |
% |
|
|
2.18 |
% |
|
|
1.70 |
% |
Shareholders' equity to total assets |
|
|
8.18 |
% |
|
|
7.74 |
% |
|
|
7.59 |
% |
|
|
7.04 |
% |
|
|
7.22 |
% |
Tangible common equity to tangible assets |
|
|
5.98 |
% |
|
|
5.56 |
% |
|
|
5.32 |
% |
|
|
4.74 |
% |
|
|
4.83 |
% |
Annualized noninterest expense to average assets |
|
|
2.16 |
% |
|
|
2.09 |
% |
|
|
2.13 |
% |
|
|
2.14 |
% |
|
|
2.24 |
% |
Loan to deposit |
|
|
67.87 |
% |
|
|
65.17 |
% |
|
|
66.70 |
% |
|
|
61.65 |
% |
|
|
61.02 |
% |
Full-time equivalent employees |
|
|
368 |
|
|
|
367 |
|
|
|
369 |
|
|
|
376 |
|
|
|
380 |
|
Capital Ratios ChoiceOne Financial Services Inc. |
|
2024 2nd |
|
|
2024 1st |
|
|
2023 4th |
|
|
2023 3rd |
|
|
2023 2nd |
|
|||||
Total capital (to risk weighted assets) |
|
|
13.5 |
% |
|
|
13.3 |
% |
|
|
13.0 |
% |
|
|
13.2 |
% |
|
|
13.2 |
% |
Common equity Tier 1 capital (to risk weighted assets) |
|
|
10.7 |
% |
|
|
10.5 |
% |
|
|
10.3 |
% |
|
|
10.4 |
% |
|
|
10.5 |
% |
Tier 1 capital (to risk weighted assets) |
|
|
10.9 |
% |
|
|
10.7 |
% |
|
|
10.5 |
% |
|
|
10.7 |
% |
|
|
10.8 |
% |
Tier 1 capital (to average assets) |
|
|
7.7 |
% |
|
|
7.6 |
% |
|
|
7.5 |
% |
|
|
7.4 |
% |
|
|
7.7 |
% |
Capital Ratios ChoiceOne Bank |
|
2024 2nd |
|
|
2024 1st |
|
|
2023 4th |
|
|
2023 3rd |
|
|
2023 2nd |
|
|||||
Total capital (to risk weighted assets) |
|
|
13.2 |
% |
|
|
12.6 |
% |
|
|
12.4 |
% |
|
|
12.7 |
% |
|
|
12.7 |
% |
Common equity Tier 1 capital (to risk weighted assets) |
|
|
12.5 |
% |
|
|
11.8 |
% |
|
|
11.8 |
% |
|
|
12.0 |
% |
|
|
12.2 |
% |
Tier 1 capital (to risk weighted assets) |
|
|
12.5 |
% |
|
|
11.8 |
% |
|
|
11.8 |
% |
|
|
12.0 |
% |
|
|
12.2 |
% |
Tier 1 capital (to average assets) |
|
|
8.8 |
% |
|
|
8.3 |
% |
|
|
8.4 |
% |
|
|
8.3 |
% |
|
|
8.7 |
% |
7
Asset Quality |
|
2024 2nd |
|
|
2024 1st |
|
|
2023 4th |
|
|
2023 3rd |
|
|
2023 2nd |
|
|||||
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net loan charge-offs (recoveries) |
|
$ |
157 |
|
|
$ |
51 |
|
|
$ |
120 |
|
|
$ |
148 |
|
|
$ |
67 |
|
Annualized net loan charge-offs (recoveries) to average loans |
|
|
0.04 |
% |
|
|
0.01 |
% |
|
|
0.04 |
% |
|
|
0.05 |
% |
|
|
0.02 |
% |
Allowance for credit losses |
|
$ |
16,152 |
|
|
$ |
16,037 |
|
|
$ |
15,685 |
|
|
$ |
14,872 |
|
|
$ |
14,582 |
|
Unfunded commitment liability |
|
$ |
1,485 |
|
|
$ |
1,757 |
|
|
$ |
2,160 |
|
|
$ |
2,718 |
|
|
$ |
3,156 |
|
Allowance to loans (excludes held for sale) |
|
|
1.12 |
% |
|
|
1.13 |
% |
|
|
1.11 |
% |
|
|
1.14 |
% |
|
|
1.15 |
% |
Total funds reserved to pay for loans (includes liability for unfunded commitments and excludes held for sale) |
|
|
1.23 |
% |
|
|
1.25 |
% |
|
|
1.27 |
% |
|
|
1.34 |
% |
|
|
1.40 |
% |
Non-Accruing loans |
|
$ |
2,086 |
|
|
$ |
1,715 |
|
|
$ |
1,723 |
|
|
$ |
1,670 |
|
|
$ |
1,581 |
|
Nonperforming loans (includes OREO) |
|
$ |
2,358 |
|
|
$ |
1,837 |
|
|
$ |
1,845 |
|
|
$ |
1,792 |
|
|
$ |
1,847 |
|
Nonperforming loans to total loans (excludes held for sale) |
|
|
0.16 |
% |
|
|
0.13 |
% |
|
|
0.13 |
% |
|
|
0.14 |
% |
|
|
0.15 |
% |
Nonperforming assets to total assets |
|
|
0.09 |
% |
|
|
0.07 |
% |
|
|
0.07 |
% |
|
|
0.07 |
% |
|
|
0.07 |
% |
NON-GAAP Reconciliation |
|
2024 2nd |
|
|
2024 1st |
|
|
2023 4th |
|
|
2023 3rd |
|
|
2023 2nd |
|
|||||
Net interest income (tax-equivalent basis) (Non-GAAP) |
|
$ |
18,756 |
|
|
$ |
16,871 |
|
|
$ |
16,945 |
|
|
$ |
16,609 |
|
|
$ |
16,468 |
|
Net interest margin (fully tax-equivalent) |
|
|
3.01 |
% |
|
|
2.74 |
% |
|
|
2.72 |
% |
|
|
2.70 |
% |
|
|
2.86 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Reconciliation to Reported Net Interest Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net interest income (tax-equivalent basis) (Non-GAAP) (1) |
|
$ |
18,756 |
|
|
$ |
16,871 |
|
|
$ |
16,945 |
|
|
$ |
16,609 |
|
|
$ |
16,468 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Adjustment for taxable equivalent interest |
|
|
(385 |
) |
|
|
(397 |
) |
|
|
(390 |
) |
|
|
(383 |
) |
|
|
(377 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net interest income (GAAP) |
|
$ |
18,371 |
|
|
$ |
16,474 |
|
|
$ |
16,555 |
|
|
$ |
16,226 |
|
|
$ |
16,091 |
|
Net interest margin (GAAP) |
|
|
2.95 |
% |
|
|
2.67 |
% |
|
|
2.66 |
% |
|
|
2.64 |
% |
|
|
2.79 |
% |
8
|
Three Months Ended June 30, |
|
|
|||||||||||||||||||||
|
2024 |
|
|
2023 |
|
|
||||||||||||||||||
(Dollars in thousands) |
Average |
|
|
|
|
|
|
|
|
Average |
|
|
|
|
|
|
|
|
||||||
|
Balance |
|
|
Interest |
|
|
Rate |
|
|
Balance |
|
|
Interest |
|
|
Rate |
|
|
||||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Loans (1)(3)(4)(5) |
$ |
1,435,966 |
|
|
$ |
21,981 |
|
|
|
6.16 |
|
% |
$ |
1,218,860 |
|
|
$ |
15,986 |
|
|
|
5.26 |
|
% |
Taxable securities (2) |
|
696,023 |
|
|
|
5,471 |
|
|
|
3.16 |
|
|
|
756,239 |
|
|
|
5,378 |
|
|
|
2.85 |
|
|
Nontaxable securities (1) |
|
290,258 |
|
|
|
1,785 |
|
|
|
2.47 |
|
|
|
296,952 |
|
|
|
1,758 |
|
|
|
2.38 |
|
|
Other |
|
80,280 |
|
|
|
1,092 |
|
|
|
5.47 |
|
|
|
41,075 |
|
|
|
571 |
|
|
|
5.57 |
|
|
Interest-earning assets |
|
2,502,527 |
|
|
|
30,329 |
|
|
|
4.87 |
|
|
|
2,313,126 |
|
|
|
23,693 |
|
|
|
4.11 |
|
|
Noninterest-earning assets |
|
145,189 |
|
|
|
|
|
|
|
|
|
109,441 |
|
|
|
|
|
|
|
|
||||
Total assets |
$ |
2,647,716 |
|
|
|
|
|
|
|
|
$ |
2,422,567 |
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Liabilities and Shareholders' Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest-bearing demand deposits |
$ |
876,344 |
|
|
$ |
2,921 |
|
|
|
1.34 |
|
% |
$ |
815,179 |
|
|
$ |
1,905 |
|
|
|
0.94 |
|
% |
Savings deposits |
|
333,056 |
|
|
|
649 |
|
|
|
0.78 |
|
|
|
372,651 |
|
|
|
345 |
|
|
|
0.37 |
|
|
Certificates of deposit |
|
391,620 |
|
|
|
4,331 |
|
|
|
4.45 |
|
|
|
285,160 |
|
|
|
2,225 |
|
|
|
3.13 |
|
|
Brokered deposit |
|
34,218 |
|
|
|
424 |
|
|
|
4.98 |
|
|
|
49,679 |
|
|
|
581 |
|
|
|
4.69 |
|
|
Borrowings |
|
210,000 |
|
|
|
2,480 |
|
|
|
4.75 |
|
|
|
144,231 |
|
|
|
1,717 |
|
|
|
4.78 |
|
|
Subordinated debentures |
|
35,596 |
|
|
|
412 |
|
|
|
4.65 |
|
|
|
35,352 |
|
|
|
407 |
|
|
|
4.62 |
|
|
Other |
|
26,426 |
|
|
|
356 |
|
|
|
5.41 |
|
|
|
3,763 |
|
|
|
45 |
|
|
|
4.81 |
|
|
Interest-bearing liabilities |
|
1,907,260 |
|
|
|
11,573 |
|
|
|
2.44 |
|
|
|
1,706,015 |
|
|
|
7,225 |
|
|
|
1.70 |
|
|
Demand deposits |
|
516,308 |
|
|
|
|
|
|
|
|
|
534,106 |
|
|
|
|
|
|
|
|
||||
Other noninterest-bearing liabilities |
|
13,406 |
|
|
|
|
|
|
|
|
|
10,534 |
|
|
|
|
|
|
|
|
||||
Total liabilities |
|
2,436,974 |
|
|
|
|
|
|
|
|
|
2,250,655 |
|
|
|
|
|
|
|
|
||||
Shareholders' equity |
|
210,742 |
|
|
|
|
|
|
|
|
|
171,912 |
|
|
|
|
|
|
|
|
||||
Total liabilities and shareholders' equity |
$ |
2,647,716 |
|
|
|
|
|
|
|
|
$ |
2,422,567 |
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net interest income (tax-equivalent basis) (Non-GAAP) (1) |
|
|
|
$ |
18,756 |
|
|
|
|
|
|
|
|
$ |
16,468 |
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net interest margin (tax-equivalent basis) (Non-GAAP) (1) |
|
|
|
|
|
|
|
3.01 |
|
% |
|
|
|
|
|
|
|
2.86 |
|
% |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Reconciliation to Reported Net Interest Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net interest income (tax-equivalent basis) (Non-GAAP) (1) |
|
|
|
$ |
18,756 |
|
|
|
|
|
|
|
|
$ |
16,468 |
|
|
|
|
|
||||
Adjustment for taxable equivalent interest |
|
|
|
|
(385 |
) |
|
|
|
|
|
|
|
|
(377 |
) |
|
|
|
|
||||
Net interest income (GAAP) |
|
|
|
$ |
18,371 |
|
|
|
|
|
|
|
|
$ |
16,091 |
|
|
|
|
|
||||
Net interest margin (GAAP) |
|
|
|
|
|
|
|
2.95 |
|
% |
|
|
|
|
|
|
|
2.79 |
|
% |
||||
9