ChoiceOne Financial Services(COFS) - 2025 Q1 - Quarterly Results

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]