Financial Performance - ChoiceOne reported net income of $14.7 million for the three months ended September 30, 2025, compared to $7.3 million for the same period in the prior year, representing a 100.5% increase [154]. - The annualized return on average assets was 1.36% for the third quarter of 2025, up from 1.09% in the same period in 2024 [163]. - Cash dividends declared in the third quarter of 2025 were $4.2 million or $0.28 per share, compared to $2.4 million or $0.27 per share in the same period in 2024 [164]. - 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 [189]. - Income tax expense was $3.6 million and $3.1 million for the three and nine months ended September 30, 2025, with an effective tax rate of 19.9% and 17.8% respectively [192]. Assets and Liabilities - Total assets increased to $4.3 billion as of September 30, 2025, an increase of $1.6 billion compared to the same date in 2024, primarily due to the merger [157]. - Total liabilities stood at $3,869,800, slightly down from $3,870,900 in the previous quarter, a decrease of 0.03% [170]. - As of September 30, 2025, total assets were $4.3 billion, net loans were $2.9 billion, and total deposits were $3.5 billion [195]. - Total available-for-sale securities increased to $544.0 million from $479.1 million as of December 31, 2024, driven by securities acquired through the Merger [197]. Loans and Deposits - Core loans grew by $1.4 billion due to the merger on March 1, 2025, while organic growth was $65.3 million or 4.5% over the twelve months ended September 30, 2025 [158]. - Deposits, excluding brokered deposits, increased by $1.3 billion as of September 30, 2025, compared to the same date in 2024, largely as a result of the merger [159]. - Average loans increased by $1.5 billion and $1.2 billion for the three and nine months ended September 30, 2025, respectively, driven by organic growth and the impact of the Merger [178]. - Nonperforming loans to total loans (excluding loans held for sale) were 0.69% as of September 30, 2025, with 0.39% attributed to PCD loans acquired through the Merger [188]. Interest Income and Expenses - Interest income for the three months ended September 30, 2025, increased by $23.9 million compared to the same period in 2024 [158]. - Total interest expense increased by $5.7 million and $13.4 million for the three and nine months ended September 30, 2025, respectively, primarily due to a $1.2 billion increase in interest-bearing liabilities from the Merger [180]. - Loan interest income increased by $23.9 million in the third quarter of 2025 compared to the same period in 2024 [205]. Capital and Equity - Shareholders' equity rose to $449.6 million as of September 30, 2025, up from $260.8 million on December 31, 2024, primarily driven by the Merger [214]. - As of September 30, 2025, ChoiceOne Financial Services Inc. reported total capital to risk-weighted assets at $418.645 million, representing a ratio of 13.0%, exceeding the minimum required ratio of 8.0% [216]. - Common equity Tier 1 capital to risk-weighted assets for ChoiceOne Financial Services Inc. was $333.388 million, with a ratio of 10.3%, above the minimum requirement of 4.5% [216]. Cash Flow - Net cash provided by operating activities for the nine months ended September 30, 2025, was $17.8 million, a decrease from $24.6 million in the same period in 2024, primarily due to a $15.1 million decrease in other liabilities [217]. - Net cash provided by investing activities increased to $224.9 million for the nine months ended September 30, 2025, compared to a net cash used of $56.3 million in the same period in 2024, driven by the sale of $78.9 million in securities from the Merger with Fentura [217]. - Net cash used in financing activities was $240.5 million for the nine months ended September 30, 2025, compared to $122.2 million provided in the same period in the prior year, reflecting a decrease in borrowing by $147.2 million [217]. Risk Management - ChoiceOne entered into $30.4 million in amortizing pay fix swaps during the third quarter of 2025 to hedge interest rate risk [161]. - The ratio of the allowance for credit losses to total loans was 1.19% on September 30, 2025, compared to 1.07% on December 31, 2024 [162]. - The provision for credit losses on loans was $200,000 and $14.0 million for the three and nine months ended September 30, 2025, respectively [186]. - Nonperforming assets increased by $15.8 million to $19.9 million at September 30, 2025, largely due to non-accrual loans and OREO acquired in the Merger [187]. Operational Metrics - The cost of deposits to average total deposits increased by 4 basis points to 1.57% for the three months ended September 30, 2025 [160]. - 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 [181]. - The average rate paid on interest-bearing demand deposits and savings deposits increased by 30 basis points and 20 basis points for the three and nine months ended September 30, 2025, respectively [180]. - Noninterest expense increased by $10.8 million and $44.0 million for the three and nine months ended September 30, 2025, largely due to merger-related expenses of $17.4 million [191].

Core Insights - ChoiceOne Financial Services reported strong financial results for the quarter ended September 30, 2025, with net income of $14.68 million, significantly up from $7.35 million in the same period last year, driven by the strategic merger with Fentura Financial [3][7] - The company’s total assets reached $4.3 billion, an increase of $1.6 billion compared to the previous year, primarily due to the merger [4][11] - Diluted earnings per share rose to $0.97 for the third quarter of 2025, compared to $0.85 in the same period last year [3][7] Financial Performance - Net income for the nine months ended September 30, 2025, was $14.31 million, compared to $19.57 million in the prior year [3][7] - Excluding merger-related expenses, net income was $14.68 million for the third quarter and $37.66 million for the nine months [3][7] - The company’s net interest margin increased to 3.73% from 3.17% year-over-year, with net interest income rising to $37.6 million from $20.2 million [7][9] Asset and Loan Growth - Total assets increased to $4.3 billion, with core loans growing by $1.4 billion due to the merger [4][5] - Core loans, excluding held-for-sale loans, declined by $10.3 million or 1.4% on an annualized basis in Q3 2025 but grew organically by $65.3 million or 4.5% year-over-year [5][7] - Loan interest income increased by $23.9 million in Q3 2025 compared to the same period in 2024 [5][7] Deposit Trends - Deposits, excluding brokered deposits, increased by $1.3 billion year-over-year, largely due to the merger [6][8] - Non-interest-bearing deposits decreased by $39.9 million, while interest-bearing demand deposits increased by $73.4 million in Q3 2025 [6][8] - The average balance of non-interest-bearing deposits rose to $930.3 million in Q3 2025, up from $915.6 million in Q2 2025 [6][8] Noninterest Income and Expenses - Noninterest income increased by $2.3 million and $5.6 million for the three and nine months ended September 30, 2025, respectively, driven by higher interchange income and trust income [12][13] - Noninterest expenses rose by $10.8 million and $44.0 million for the three and nine months ended September 30, 2025, primarily due to merger-related expenses [13][14] Capital and Asset Quality - Shareholders' equity increased to $449.6 million from $247.7 million year-over-year, driven by the merger [11][12] - The allowance for credit losses to total loans ratio was 1.19% as of September 30, 2025, indicating strong asset quality [10][11] - Nonperforming loans to total loans stood at 0.69%, with 0.39% attributed to loans purchased with credit deterioration through the merger [10][11]

Financial Performance - ChoiceOne reported net income of $13,534,000 for the three months ended June 30, 2025, compared to $6,586,000 for the same period in the prior year, reflecting a significant increase [160]. - The diluted earnings per share for the three months ended June 30, 2025, was $0.90, compared to $0.87 in the same period in the prior year [161]. - Cash dividends declared in the second quarter of 2025 were $4.2 million or $0.28 per share, compared to $2.0 million or $0.27 per share in the same period in 2024 [169]. - The annualized return on average assets was 1.26% for the second quarter of 2025, up from 0.99% for the same period in 2024 [168]. Asset and Loan Growth - Total assets increased to $4.3 billion as of June 30, 2025, an increase of $1.7 billion compared to June 30, 2024, primarily due to the merger [162]. - Core loans grew organically by $140.1 million or 10.0% during the twelve months ended June 30, 2025, despite a slight decline of $4.8 million in the second quarter [163]. - Average loans for Q2 2025 reached $2,936,168 thousand with an interest income of $46,551 thousand, resulting in an interest rate of 6.36% [172]. - The company's loan portfolio totaled $2.92 billion as of June 30, 2025, a significant increase from $1.55 billion on December 31, 2024, driven by a merger [206][208]. - Average loan balances increased to $2.9 billion in Q2 2025, compared to $1.4 billion in Q2 2024, with core loans growing organically by $140.1 million or 10.0% year-over-year [208]. Interest Income and Expenses - Interest income for the three months ended June 30, 2025, increased by $24.6 million compared to the same period in 2024, driven by higher loan interest income [163]. - Net interest income on a tax-equivalent basis for Q2 2025 was $36,711 thousand, compared to $18,756 thousand in Q2 2024, reflecting a significant increase [172]. - The net interest margin (tax-equivalent basis) improved to 3.70% in Q2 2025 from 3.01% in Q2 2024 [172]. - Total interest expense increased by $7.7 million for the six months ended June 30, 2025, driven by a $1.2 billion increase in interest-bearing liabilities from the Merger [183]. Credit Losses and Nonperforming Loans - The ratio of the allowance for credit losses to total loans was 1.19% on June 30, 2025, compared to 1.07% on December 31, 2024, indicating a slight increase in credit loss provisions [167]. - The provision for credit losses on loans was $13.8 million for the six months ended June 30, 2025, primarily due to the acquisition of $1.3 billion of non-PCD loans in the Merger [189]. - Nonperforming assets increased by $15.1 million to $19.3 million at June 30, 2025, largely due to non-accrual loans and OREO acquired in the Merger [190]. - Non-accruing loan average balances were $16.8 million in Q2 2025, compared to $1.9 million in Q2 2024, indicating a rise in non-performing loans [173]. Merger Impact - ChoiceOne completed a public offering of 1,380,000 shares at $25.00 per share, raising approximately $34.5 million before expenses [157]. - The company recognized a core deposit intangible of $31.0 million related to the merger, amortized over 10 years [214]. - ChoiceOne's total shareholders' equity reached $431.8 million as of June 30, 2025, up from $214.5 million a year earlier, primarily due to the merger [218]. - Total capital to risk-weighted assets ratio was 12.4% as of June 30, 2025, compared to 14.5% on December 31, 2024, reflecting the impact of the merger [220]. Cash Flow and Borrowings - Net cash provided by operating activities decreased to $2.5 million for the six months ended June 30, 2025, down from $31.1 million in the same period in 2024, primarily due to a net loss of $372,000 compared to a net income of $12.2 million in 2024 [221]. - Net cash provided by investing activities increased significantly to $267.0 million for the six months ended June 30, 2025, compared to $4.0 million in the same period in 2024, driven by the sale of $78.9 million of securities from the Merger with Fentura [221]. - Net cash used in financing activities was $210.0 million for the six months ended June 30, 2025, compared to $10.5 million provided in the same period in 2024, reflecting a decrease in borrowing by $146.5 million [221]. - As of June 30, 2025, ChoiceOne had $195.0 million in outstanding borrowings from the FHLB at a weighted average fixed rate of 4.36%, with the earliest maturity in July 2025 [223]. Securities and Investments - The unrealized loss on available-for-sale securities increased by $8.7 million to $69.8 million in the first six months of 2025, primarily due to increased spreads on tax-exempt municipal bonds [200]. - ChoiceOne's held to maturity securities declined to $390.5 million as of June 30, 2025, due to principal repayments, calls, and maturities [201]. - As of June 30, 2025, ChoiceOne reported $116.9 million in gross unrealized losses on investment securities, including $69.9 million in available for sale securities and $46.4 million in held to maturity securities [202]. Risk Management - The company holds interest rate derivatives with a total notional value of $351.0 million to manage interest rate risk [203]. - ChoiceOne's exposure to interest rate risk and liquidity risk is significant, with no foreign exchange risk exposure as all transactions are in U.S. dollars [222]. - Management believes that ChoiceOne's exposure to changes in commodity prices is insignificant, as agricultural loans comprise a relatively small portion of total assets [222]. - Uninsured deposits totaled $1.1 billion or 29.6% of total deposits as of June 30, 2025, compared to 37.6% at December 31, 2024 [213].

[Financial Highlights and Overview](index=1&type=section&id=Financial%20Highlights%20and%20Overview) This section provides an executive summary of ChoiceOne's financial performance, emphasizing the impact of the Fentura merger [Second Quarter 2025 Highlights](index=1&type=section&id=Second%20Quarter%202025%20Highlights) ChoiceOne reported record net income in Q2 2025, significantly impacted by the merger with Fentura Financial, Inc. completed on March 1, 2025 - ChoiceOne completed its merger with Fentura Financial, Inc. on March 1, 2025, acquiring approximately **$1.8 billion in total assets**, **$1.4 billion in loans**, and **$1.4 billion in deposits**[1](index=1&type=chunk)[4](index=4&type=chunk) Q2 & H1 2025 Financial Performance (GAAP) | Metric | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Net Income (Loss)** | $13,534,000 | ($372,000) | $6,586,000 | $12,220,000 | | **Diluted EPS (Loss)** | $0.90 | ($0.03) | $0.87 | $1.61 | Q2 & H1 2025 Financial Performance (Non-GAAP, Adjusted) | Metric | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :--- | :--- | :--- | | **Adjusted Net Income** | $13,666,000 | $22,976,000 | | **Adjusted Diluted EPS** | $0.91 | $1.78 | - The results were significantly impacted by merger-related expenses and provisions. For the six months ended June 30, 2025, merger expenses (net of tax) were **$13.9 million** and the merger-related provision for credit losses (net of tax) was **$9.5 million**[4](index=4&type=chunk) [Financial Condition](index=3&type=section&id=Financial%20Condition) This section analyzes ChoiceOne's balance sheet, loan portfolio, asset quality, deposits, liquidity, and capital position [Balance Sheet Analysis](index=3&type=section&id=Balance%20Sheet%20Analysis) As of June 30, 2025, total assets reached **$4.31 billion**, a substantial increase of **$1.69 billion** from the prior year, primarily due to the Fentura merger Balance Sheet Summary | (In thousands) | June 30, 2025 | June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | **Total Assets** | $4,310,252 | $2,623,067 | +$1,687,185 | | **Total Loans, net** | $2,885,994 | $1,421,375 | +$1,464,619 | | **Total Deposits** | $3,592,624 | $2,126,679 | +$1,465,945 | | **Total Liabilities** | $3,878,491 | $2,408,548 | +$1,469,943 | | **Shareholders' Equity** | $431,761 | $214,519 | +$217,242 | [Loans and Asset Quality](index=3&type=section&id=Loans%20and%20Asset%20Quality) Core loans grew by **$1.4 billion** due to the merger, with asset quality remaining strong, evidenced by low net charge-offs and a manageable nonperforming loan ratio - Core loans (excluding held for sale and loans to other financial institutions) grew by **$1.4 billion** from the merger and **$140.1 million (10.0%)** organically over the twelve months ended June 30, 2025[4](index=4&type=chunk)[7](index=7&type=chunk) Asset Quality Metrics (as of June 30, 2025) | Metric | Value | | :--- | :--- | | Annualized net loan charge-offs to average loans | 0.06% | | Nonperforming loans to total loans (excl. HFS) | 0.66% | | Portion of nonperforming loans from PCD | 0.41% | | Allowance for credit losses to total loans (excl. HFS) | 1.19% | [Deposits and Liquidity](index=3&type=section&id=Deposits%20and%20Liquidity) Deposits (excluding brokered) increased by **$1.4 billion** year-over-year due to the merger, with the bank maintaining a strong liquidity position - Deposits (excluding brokered) declined by **$98.0 million** from March 31, 2025, but increased by **$1.4 billion** from June 30, 2024[8](index=8&type=chunk) - The bank has **$1.2 billion** in available borrowing capacity secured by pledged assets, and uninsured deposits represent **29.6%** of total deposits[8](index=8&type=chunk) [Shareholders' Equity and Capital Ratios](index=5&type=section&id=Shareholders'%20Equity%20and%20Capital%20Ratios) Shareholders' equity more than doubled to **$431.8 million** from June 30, 2024, primarily driven by the issuance of **6.1 million shares** for the merger - Shareholders' equity increased significantly due to the issuance of **6,070,836 shares** for the merger and a prior sale of **1,380,000 shares**[13](index=13&type=chunk) Capital Ratios (ChoiceOne Bank) | Ratio | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Total capital (to risk weighted assets) | 12.4% | 13.2% | | Common equity Tier 1 capital | 11.3% | 12.5% | | Tier 1 capital (to risk weighted assets) | 11.3% | 12.5% | [Results of Operations](index=3&type=section&id=Results%20of%20Operations) This section details ChoiceOne's income statement performance, including net interest income, provisions, and noninterest income and expenses [Net Interest Income and Margin](index=3&type=section&id=Net%20Interest%20Income%20and%20Margin) Net interest income for Q2 2025 nearly doubled to **$36.3 million** from **$18.4 million** in Q2 2024, a direct result of the merger Net Interest Income and Margin Comparison | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Net Interest Income** | $36.3 million | $18.4 million | | **GAAP Net Interest Margin** | 3.66% | 2.95% | - Accretion income from purchased loans added **36 basis points** to the net interest margin in Q2 2025[4](index=4&type=chunk) - The annualized cost of funds to average total deposits decreased to **1.84%** in Q2 2025 from **1.92%** in Q2 2024, as the company paid down borrowings[9](index=9&type=chunk) [Provision for Credit Losses](index=3&type=section&id=Provision%20for%20Credit%20Losses) The provision for credit losses was **$0.65 million** in Q2 2025, primarily due to changes in economic forecasts, with a higher six-month provision due to merger-related non-PCD loans Provision for Credit Losses | Period | Provision Amount | | :--- | :--- | | **Three Months Ended June 30, 2025** | $650,000 | | **Six Months Ended June 30, 2025** | $13,813,000 | - The ratio of the allowance for credit losses to total loans (excluding loans held for sale) was **1.19%** on June 30, 2025, up from **1.07%** on December 31, 2024[10](index=10&type=chunk) [Noninterest Income](index=5&type=section&id=Noninterest%20Income) Noninterest income increased by **$2.4 million** to **$6.5 million** in Q2 2025 compared to the prior-year quarter, driven by card fees, trust income, and death benefit claims Noninterest Income Comparison (Three Months Ended June 30) | (In thousands) | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | **Total Noninterest Income** | $6,503 | $4,083 | +$2,420 | | Credit and debit card fees | $2,083 | $1,516 | +$567 | | Trust income | $596 | $220 | +$376 | [Noninterest Expense](index=5&type=section&id=Noninterest%20Expense) Noninterest expense rose by **$11.2 million** to **$25.5 million** in Q2 2025 compared to Q2 2024, with **$17.4 million** of the six-month increase attributable to one-time merger-related expenses Noninterest Expense Comparison (Three Months Ended June 30) | (In thousands) | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | **Total Noninterest Expense** | $25,506 | $14,278 | +$11,228 | | Merger related expenses | $166 | $0 | +$166 | - For the six months ended June 30, 2025, merger-related expenses totaled **$17.4 million**, accounting for a large portion of the year-over-year increase in noninterest expense[15](index=15&type=chunk) [Financial Tables](index=8&type=section&id=Financial%20Tables) This section provides detailed financial statements and reconciliations, offering a comprehensive view of ChoiceOne's financial position and performance [Condensed Balance Sheets](index=8&type=section&id=Condensed%20Balance%20Sheets) The condensed balance sheet as of June 30, 2025, shows total assets of **$4.31 billion**, total liabilities of **$3.88 billion**, and shareholders' equity of **$431.8 million** Condensed Balance Sheet (in thousands) | Account | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Total Assets | $4,310,252 | $4,305,391 | $2,623,067 | | Total loans held for investment | $2,920,792 | $2,924,955 | $1,437,527 | | Total Liabilities | $3,878,491 | $3,878,323 | $2,408,548 | | Shareholders' Equity | $431,761 | $427,068 | $214,519 | [Condensed Statements of Operations](index=9&type=section&id=Condensed%20Statements%20of%20Operations) For the three months ended June 30, 2025, the company reported net income of **$13.5 million**, or **$0.90** per diluted share, contrasting with a six-month net loss due to merger costs Condensed Statement of Operations (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :--- | :--- | :--- | | Net interest income | $36,322 | $62,633 | | Net Provision for credit losses | $650 | $13,813 | | Total noninterest income | $6,503 | $11,425 | | Total noninterest expense | $25,506 | $61,171 | | Net income (loss) | $13,534 | $(372) | | Diluted earnings (loss) per share | $0.90 | $(0.03) | [Non-GAAP Reconciliation](index=12&type=section&id=Non-GAAP%20Reconciliation) This section provides reconciliations for non-GAAP measures, adjusting for merger-related expenses and provisions to offer a clearer view of core operating performance Reconciliation of Net Income (Loss) to Adjusted Net Income (Non-GAAP) | (In Thousands) | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :--- | :--- | :--- | | Net income (loss) (GAAP) | $13,534 | $(372) | | Merger related expenses net of tax | $132 | $13,885 | | Merger related provision for credit losses, net of tax | $0 | $9,463 | | **Adjusted net income (Non-GAAP)** | **$13,666** | **$22,976** | Reconciliation of Net Interest Margin (Non-GAAP) | Metric | 2025 2nd Qtr. | | :--- | :--- | | Net interest margin (GAAP) | 3.66% | | Net interest margin (tax-equivalent basis) | 3.70% | [Other Selected Financial Highlights](index=14&type=section&id=Other%20Selected%20Financial%20Highlights) This section presents a quarterly breakdown of key performance ratios and balances, highlighting strong Q2 2025 performance despite merger-related impacts in Q1 Quarterly Performance Ratios | Ratio | 2025 2nd Qtr. | 2025 1st Qtr. | 2024 4th Qtr. | | :--- | :--- | :--- | :--- | | Annualized return on average assets | 1.26% | -1.68% | 1.05% | | Net interest margin (GAAP) | 3.66% | 3.43% | 2.98% | | Efficiency ratio | 55.32% | 111.01% | 61.29% | Quarterly Asset Quality | (in thousands) | 2025 2nd Qtr. | 2025 1st Qtr. | 2024 4th Qtr. | | :--- | :--- | :--- | :--- | | Net loan charge-offs | $418 | $72 | $138 | | Nonperforming loans | $19,296 | $19,154 | $4,177 | | Nonperforming loans to total loans | 0.66% | 0.65% | 0.27% |

Core Insights - ChoiceOne Financial Services reported record net income of $13,534,000 for the quarter ended June 30, 2025, compared to $6,586,000 in the same period of the previous year, reflecting the successful execution of its merger with Fentura Financial and The State Bank [3][7] - The company's total assets increased to $4.3 billion, up by $1.7 billion from the previous year, primarily due to the merger [4][11] - The net interest margin rose significantly to 3.66% from 2.95% year-over-year, driven by increased net interest income [7][8] Financial Performance - Net income excluding merger expenses was $13,666,000 for the quarter, and diluted earnings per share were $0.90, compared to $0.87 in the same period last year [3][7] - Total interest income for the quarter was $53,925,000, a substantial increase from $29,944,000 in the prior year [21] - Noninterest income increased by $2.4 million for the quarter, driven by higher credit and debit card fees and trust income [12] Asset and Loan Growth - Total loans held for investment were $2.9 billion, with core loans growing by $1.4 billion due to the merger [4][5] - Core loans grew organically by $140.1 million or 10.0% year-over-year, despite a slight decline of $4.8 million in the second quarter [5][9] - The company reported a reduction in loans to other financial institutions and securities, attributed to a strategic shift towards internally driven originations [4][5] Deposits and Liquidity - Deposits, excluding brokered deposits, increased by $1.4 billion year-over-year, but declined by $98 million from the previous quarter due to seasonal fluctuations [6][11] - As of June 30, 2025, total available borrowing capacity was $1.2 billion, with uninsured deposits totaling $1.1 billion or 29.6% of total deposits [6][11] Merger Impact - The merger added approximately $1.8 billion in total assets, $1.4 billion in loans, and $1.4 billion in deposits [7] - Merger-related expenses for the quarter were approximately $132,000, with management not anticipating material expenses going forward [7][13] - The merger has strengthened the company's market position and enhanced its ability to serve communities [3][14]

Company Overview - ChoiceOne Financial Services, Inc. (COFS) is expected to report a year-over-year decline in earnings, with a projected earnings per share (EPS) of $0.80, reflecting an 8.1% decrease compared to the previous year [3] - The company's revenues are anticipated to reach $41.3 million, which represents an 84% increase from the same quarter last year [3] Earnings Expectations - The consensus EPS estimate has remained unchanged over the last 30 days, indicating that analysts have not significantly altered their outlook for the company [4] - The Most Accurate Estimate for ChoiceOne Financial Services is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -2.50%, suggesting a bearish sentiment among analysts regarding the company's earnings prospects [12] Historical Performance - In the last reported quarter, ChoiceOne Financial Services exceeded the expected EPS of $0.82 by delivering an actual EPS of $0.86, resulting in a surprise of +4.88% [13] - Over the past four quarters, the company has beaten consensus EPS estimates three times [14] Market Sentiment - The current Zacks Rank for ChoiceOne Financial Services is 4, indicating a "Sell" rating, which complicates the prediction of an earnings beat [12] - Despite the potential for an earnings miss, other market factors may influence stock performance, as stocks can still gain despite missing earnings expectations [15][17] Industry Context - In comparison, Synchrony (SYF), a player in the Zacks Financial - Miscellaneous Services industry, is expected to post earnings of $1.72 per share, reflecting an 11% year-over-year increase, with revenues projected at $4.5 billion, up 2.2% from the previous year [19] - Synchrony has an Earnings ESP of +5.16% and a Zacks Rank of 3 (Hold), indicating a higher likelihood of beating the consensus EPS estimate [20]

Core Points - ChoiceOne Financial Services, Inc. announces the retirement of Chairman Jack G. Hendon effective July 5, 2025, in accordance with the company's mandatory retirement policy for directors [1][2] - Hendon has been with the company for 12 years, serving as a director since August 2013 and as Chairman since December 2021, bringing valuable expertise in accounting and finance [2] - Gregory A. McConnell will succeed Hendon as Chairman, and Roxanne M. Page will be appointed as Vice Chairwoman, both effective July 5, 2025 [4] Company Overview - ChoiceOne Financial Services, Inc. is a financial holding company based in Sparta, Michigan, with assets exceeding $4 billion [9] - The company operates 56 offices across West, Central, and Southeast Michigan through its subsidiary, ChoiceOne Bank, which also offers insurance and investment products [9]

Financial Performance - ChoiceOne reported a net loss of $13.9 million for Q1 2025, compared to a net income of $5.6 million in Q1 2024, resulting in a diluted loss per share of $1.29[152] - The annualized return on average assets and average shareholders' equity was (1.68)% and (18.39)%, respectively, for Q1 2025, compared to 0.86% and 11.26% in Q1 2024[160] - Income tax benefit was $3.7 million in the first quarter of 2025, compared to an expense of $1.2 million in the same period of 2024, with an effective tax rate of 21.0%[184] - Net cash used in operating activities was $6.5 million for Q1 2025, a significant decline from $15.3 million net cash provided in Q1 2024, driven by a net loss of $13.9 million[212] Assets and Liabilities - Total assets increased to $4.3 billion as of March 31, 2025, up $1.6 billion from the previous year, primarily due to the merger[154] - Total assets as of March 31, 2025, were $4.3 billion, with net loans of $2.9 billion and total deposits of $3.6 billion[187] - Shareholders' equity increased to $426.9 million as of March 31, 2025, from $206.8 million on March 31, 2024, primarily due to a merger that issued 6,070,836 shares valued at $193.0 million[210] Loans and Deposits - Core loans grew by $40.1 million or 10.6% on an annualized basis in Q1 2025, and by $157.3 million or 11.3% year-over-year[155] - Deposits, excluding brokered deposits, increased by $1.4 billion as of March 31, 2025, driven by the merger and organic growth[156] - The company has total outstanding loans to the automotive sector of $99.3 million, representing 3.4% of gross loans[150] - Average loans increased by $607.1 million in Q1 2025, attributed to both organic growth and the impact of the Merger[170] - Core loans grew by $1.4 billion through acquisition in the first quarter of 2025, with organic growth of $40.1 million or 10.6% on an annualized basis[197] - Uninsured deposits totaled $1.2 billion or 33.9% of total deposits as of March 31, 2025, down from 37.0% at December 31, 2024[206] Interest Income and Expense - Interest income increased by $11.9 million in Q1 2025 compared to Q1 2024, including $2.8 million from purchased loan interest accretion related to the merger[155] - Tax-equivalent net interest income increased by $9.8 million in Q1 2025 compared to Q1 2024, driven by loan growth and higher interest rates[168] - Interest income from loans rose by $11.9 million in Q1 2025, with an average rate increase of 64 basis points compared to Q1 2024[170] - Interest expense increased by $1.7 million in Q1 2025, primarily due to a $321.2 million increase in average balances of interest-bearing demand and savings deposits[172] - The cost of deposits to average total deposits was an annualized 1.59% in Q1 2025, down from 1.65% in Q1 2024[158] Credit Losses and Nonperforming Assets - The provision for credit losses on loans was $13.1 million in Q1 2025, mainly due to $12.0 million related to the acquisition of non-PCD loans in the Merger[177] - Nonperforming assets rose by $15.1 million to $19.3 million at March 31, 2025, largely due to non-accrual loans and OREO acquired in the Merger[178] - The allowance for credit losses (ACL) was 1.18% of total loans at March 31, 2025, up from 1.07% as of December 31, 2024[178] - Net charge-offs for the first three months of 2025 were $72,000, up from $51,000 in the same period of 2024, with annualized net charge-offs as a percentage of average loans remaining at 0.01% for both years[179][180] Noninterest Income and Expense - Noninterest income increased by $871,000 for the three months ended March 31, 2025, driven by higher mortgage servicing rights income and trust income from the Merger[181] - Noninterest expense rose by $22.0 million in the first quarter of 2025, primarily due to $17.2 million in merger-related expenses[183] Capital and Borrowing - Total capital to risk-weighted assets ratio for ChoiceOne Bank was 11.9% as of March 31, 2025, down from 12.6% on March 31, 2024, attributed to the merger impact[211] - ChoiceOne had $130.0 million in outstanding borrowings from the FHLB at a weighted average fixed rate of 4.03% as of March 31, 2025[214] - Total available borrowing capacity from the FHLB and the Federal Reserve Bank was $945.3 million as of March 31, 2025[214] Cash Flow - Net cash provided by investing activities surged to $257.0 million in Q1 2025, compared to $7.6 million net cash used in the same period in 2024, due to the sale of $78.9 million in securities from the merger[212] - Net cash provided by financing activities was $207.8 million for Q1 2025, up from $71.7 million in Q1 2024, with a decrease in borrowing by $207.5 million compared to an increase of $10.0 million in the prior year[212]

Core Insights - ChoiceOne Financial Services, Inc. (COFS) reported quarterly earnings of $0.86 per share, exceeding the Zacks Consensus Estimate of $0.82 per share, and up from $0.74 per share a year ago, representing an earnings surprise of 4.88% [1] - The company posted revenues of $31.23 million for the quarter ended March 2025, which missed the Zacks Consensus Estimate by 5.07%, compared to year-ago revenues of $20.53 million [2] - The stock has underperformed the market, losing about 21% since the beginning of the year, while the S&P 500 declined by 5.5% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.84 on revenues of $41.8 million, and for the current fiscal year, it is $3.48 on revenues of $160.4 million [7] - The estimate revisions trend for ChoiceOne Financial Services is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Financial - Miscellaneous Services industry, to which ChoiceOne belongs, is currently in the top 35% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Performance - ChoiceOne reported a net loss of $13,906,000 for the three months ended March 31, 2025, compared to net income of $5,634,000 for the same period in 2024[6] - Diluted loss in earnings per share was $1.29 for the three months ended March 31, 2025, compared to diluted earnings per share of $0.74 in the same period in the prior year[6] - Adjusted net income, excluding merger-related expenses, was $9,310 thousand for the three months ended March 31, 2025[34] - Net income for the three months ended March 31, 2025, was a loss of $13,906 thousand, compared to a profit of $7,159 thousand in the previous quarter[31] - Basic earnings per share for the three months ended March 31, 2025, was $(1.30), compared to $0.79 in the previous quarter[31] Assets and Liabilities - Total assets, loans, and deposits acquired in the Merger effective March 1, 2025, were approximately $1.8 billion, $1.4 billion, and $1.4 billion, respectively[4] - ChoiceOne Financial Services, Inc. has assets exceeding $4 billion as of March 31, 2025[21] - Total assets increased to $4,305,176 thousand from $2,723,243 thousand year-over-year[29] - Total liabilities increased to $3,017,054 thousand in Q1 2025, up from $2,420,832 thousand in Q1 2024, reflecting a growth of approximately 24.7%[40] Loans and Credit Quality - Core loans grew organically by $40.1 million or 10.6% on an annualized basis during Q1 2025, and by $157.3 million or 11.3% during the twelve months ended March 31, 2025[8] - The provision for credit losses on loans was $13.1 million in Q1 2025, primarily due to $12.0 million of expense for the acquisition of $1.3 billion of non-PCD loans in the Merger[14] - The provision for credit losses on loans was $13,163 thousand for the three months ended March 31, 2025, compared to $200 thousand in the previous quarter[31] - Nonperforming loans to total loans (excluding held for sale) rose to 0.65% in Q1 2025 from 0.27% in Q4 2024, indicating a deterioration in asset quality[39] - The allowance for credit losses increased to $34,567,000 in Q1 2025 from $16,552,000 in Q4 2024, reflecting a more conservative approach to potential loan losses[39] Income and Expenses - GAAP net interest margin rose significantly to 3.43%, up from 2.67% in the same period of 2024, with GAAP net interest income reaching $26.3 million compared to $16.5 million in Q1 2024[4] - Noninterest income increased by $871,000 for the three months ended March 31, 2025, compared to the same period in the prior year, partly due to higher mortgage servicing rights income from the Merger[18] - Noninterest expense increased by $22.0 million for the three months ended March 31, 2025, largely due to merger-related expenses of $17.2 million[19] - Total noninterest expense increased to $35,665 thousand for the three months ended March 31, 2025, from $15,344 thousand in the previous quarter[31] Merger Impact - The merger with Fentura Financial, Inc. and The State Bank significantly expanded ChoiceOne's capabilities and market presence[20] - Deposits, excluding brokered deposits, increased by $1.4 billion as of March 31, 2025, compared to the same period in 2024, driven by the Merger[11] - The company anticipates finding expected synergies in the combined entities post-merger[20] Growth Metrics - Total assets reached $4,305,176,000 in Q1 2025, up from $2,723,243,000 in Q4 2024, marking a growth of 58.1%[37] - Gross loans increased to $2,928,896,000 in Q1 2025, compared to $1,552,928,000 in Q4 2024, a rise of 88.5%[37] - Total deposits rose to $3,651,729,000 in Q1 2025, up from $2,214,103,000 in Q4 2024, an increase of 64.8%[37] - Shareholders' equity improved to $426,853,000 in Q1 2025, compared to $260,415,000 in Q4 2024, reflecting a growth of 63.9%[37] Operational Efficiency - The efficiency ratio worsened to 111.01% in Q1 2025 compared to 61.29% in Q4 2024, suggesting increased operational costs[38] - The annualized return on average assets decreased to -1.68% in Q1 2025 from 1.05% in Q4 2024, reflecting a decline in profitability[38] - The loan to deposit ratio increased to 80.21% in Q1 2025 from 70.14% in Q4 2024, indicating a tighter liquidity position[38] Workforce - Full-time equivalent employees rose to 605 in Q1 2025 from 377 in Q4 2024, reflecting expansion in workforce[38]