CHOICEONE FINANCIAL SERVICES INC
For the period ended Mar 31, 2026. Filed May 11, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 11, 2026
COFS$36.69-0.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-10.
0001193125-25-273356
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-11.
0001193125-26-216698
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 102 previous paragraphs and 89 current paragraphs.
48 unchanged; 29 reworded; 12 added; 19 removed; 6 previous and 0 current paragraphs rearranged.
Tables are not compared: 9 previous and 7 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (12)
Current report
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.
Current report
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 the 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.
Current report
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.
Current report
GAAP based net interest income declined $198,000 in the three months ended March 31, 2026 compared to the three months ended December 31, 2025 and increased $10.3 million in the three ended March 31, 2026 compared to the three months ended March 31, 2025. GAAP based net interest margin increased four and 20 basis points in the three months ended March 31 2026, compared to the three months ended December 31, 2025 and March 31, 2025, respectively.
Current report
Total interest expense decreased $903,000 and increased $3.0 million for the three months ended March 31, 2026 compared to the three months ended December 31, 2025 and March 31, 2025, respectively. The decrease from the fourth quarter of 2025 compared to the first quarter of 2026 was driven by a decline in the average balance and rate paid on borrowings and CDs. This increase in the first quarter of 2026 compared to the first quarter of 2025 was driven by a $665.6 million dollar increase in the average balance of interest bearing liabilities from the Merger which occurred on March 1, 2025. This was offset by a decline in the rate paid on CDs and borrowings since the first quarter of 2025.
Current report
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.
Current report
Interest expense on borrowings for the three months ended March 31, 2026 increased by $130,000 compared to the same period in the prior year due to the Merger that took place on March 1, 2025.
Current report
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.
Current report
Income tax expense was $3.0 million in the three months ended March 31, 2026, compared to income tax benefit of $3.7 million for the same period in 2025. The tax benefit for 2025 was generated by the loss in first quarter of 2025 due to expenses related to the Merger. The effective tax rate was 17.8% for the three months ended March 31, 2026. 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.
Current report
On March 31, 2026, total available‑for‑sale securities were $573.5 million, compared to $554.4 million at December 31, 2025. The increase was primarily driven by the purchase of $34.2 million in agency mortgage‑backed securities. These purchases were partially offset by principal repayments, calls, and maturities.
Current report
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.
Current report
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 12.5% as of March 31, 2026, compared to 11.9% on March 31, 2025.
Removed paragraphs (19)
Previous report
As of September 30, 2025, total assets were $4.3 billion, an increase of $1.6 billion compared to September 30, 2024. The growth in total assets is primarily attributed to the Merger. The growth in total assets was offset by a $36.0 million reduction in loans to other financial institutions and a $47.0 million reduction in cash and cash equivalents on September 30, 2025 compared to September 30, 2024. Loans to other financial institutions consist of a warehouse line of credit used to facilitate mortgage loan originations, with interest rates and balances that fluctuate in line with the national mortgage market. The reduction in cash balances is primarily due to purchases of agency mortgage backed securities during the third quarter of 2025. ChoiceOne has actively managed its balance sheet to support organic loan growth with a loan to deposit ratio of 81.8% at September 30, 2025.
Previous report
In the three months ended September 30, 2025, compared to the same period in the prior year, ChoiceOne’s cost of deposits to average total deposits increased by 4 basis points, rising from 1.53% to 1.57%, primarily due to higher-cost deposits acquired through the Merger. This increase was partially offset by a decline in CD costs and a reduction in wholesale funding costs. The annualized cost of funds decreased by 10 basis points, from 1.87% to 1.77% in the three months ended September 30, 2025 compared to the same period in the prior year. In the three months ended September 30, 2025, compared to the three months ended June 30, 2025, annualized cost of funds decreased to 1.77% from 1.84%, primarily due to a decrease in higher cost local and brokered CDs. Interest expense on borrowings for the three months ended September 30, 2025, declined by $489,000 compared to the same period in the prior year. As of September 30, 2025, the total balance of borrowed funds from the FHLB was $198.0 million at a weighted average fixed rate of 4.23%, with $158.0 million due within 12 months.
Previous report
ChoiceOne uses interest rate swaps to manage interest rate exposure to certain fixed rate assets and variable rate liabilities. During the third quarter of 2025, ChoiceOne entered into $30.4 million in amortizing pay fix swaps to hedge interest rate risk on approximately $40.6 million of newly purchased agency mortgage backed securities. The swaps are designed to amortize with the expected cash flow of the bonds and hold a coupon of 3.52% and a contractual term ending in 2040. On September 30, 2025, ChoiceOne held pay-fixed interest rate swaps with a total notional value of $381.3 million, a weighted average coupon of 3.15%, a fair value of $6.8 million and an average remaining contract length of 7.2 years. Settlements from swaps amounted to $1.3 million for the third quarter of 2025 compared to $1.3 million for the second quarter of 2025. In addition to the pay-fixed interest rate swaps, ChoiceOne also employs back-to-back swaps on select commercial loans, with the impact reflected in interest income.
Previous report
Interest on loans included net origination fees and accretion income. Accretion income was $10.0 million and $944,000 in the nine months ended September 30, 2025 and 2024, respectively.
Previous report
Tax-equivalent net interest income (non-GAAP) increased $17.4 million and $45.2 million in the three and nine months ended September 30, 2025, respectively, compared to the same periods in 2024. The primary factor contributing to the increase in interest income was loan growth, both organically and due to the Merger, the impact of interest income due to accretion from purchased loans, and the impact of fixed rate swaps (see note 8). Tax equivalent net interest margin (non-GAAP) increased 54 and 66 basis points in the three and nine months ended September 30, 2025, respectively, compared to the same periods in 2024. GAAP based net interest margin increased 56 and 68 basis points in the three and nine months ended September 30, 2025, respectively, compared to the same periods in 2024.
Previous report
ChoiceOne has experienced loan growth, leading to an increase in interest income from loans of $23.9 million and $60.3 million in the three and nine months ended September 30, 2025, respectively, compared to the same periods in 2024. In the three and nine months ended September 30, 2025, average loans increased by $1.5 billion and $1.2 billion, respectively, driven by both organic growth and the impact of the Merger, compared to the same periods in 2024. In addition, the average rate earned on loans increased 5 and 28 basis points in the three and nine months ended September 30, 2025, respectively, compared to the same periods in 2024. Interest income for the three and nine months ended September 30, 2025 includes $3.6 million and $10.0 million, respectively, of interest income due to accretion from purchased loans.
Previous report
Total interest expense increased $5.7 million and $13.4 million in the three and nine months ended September 30, 2025, respectively, compared to the same periods in the prior year. This increase was driven by a $1.2 billion increase in interest bearing liabilities from the Merger. Interest expense on interest bearing-demand deposits and savings deposits increased $3.7 million and $8.4 million in the three and nine months ended September 30, 2025, respectively. The average rate paid on interest bearing-demand deposits and savings deposits increased by 30 basis points and 20 basis points in the three and nine months ended September 30, 2025, respectively, compared to the same periods in the prior year as higher cost deposits were acquired in the Merger.
Previous report
In the three months ended September 30, 2025, compared to the same period in the prior year, ChoiceOne’s cost of deposits to average total deposits increased by 4 basis points, rising from 1.53% to 1.57%, primarily due to higher-cost deposits acquired through the Merger. This increase was partially offset by a decline in CD costs and a reduction in wholesale funding costs. The annualized cost of funds decreased by 10 basis points, from 1.87% to 1.77% in the three months ended September 30, 2025 compared to the same period in the prior year. In the three months ended September 30, 2025, compared to the three months ended June 30, 2025, annualized cost of funds decreased to 1.77% from 1.84%, primarily due to a decrease in higher cost local and brokered CDs.
Previous report
The average balance of borrowings increased by $9.9 million and declined by $30.9 million in the three and nine months ended September 30, 2025, respectively, compared to the same periods in 2024. In addition, the rate paid on borrowings declined by 28 basis points and 17 basis points in the three and nine months ended September 30, 2025, compared to the same periods in 2024. The decline in balance and rate led to a decline in interest expense of $489,000 and $1.3 million in the three and nine months ended September 30, 2025, respectively, compared to the same periods in 2024.
Previous report
In September 2021, ChoiceOne completed a private placement of $32.5 million in aggregate principal amount of 3.25% fixed-to-floating rate subordinated notes due 2031. In addition, ChoiceOne holds certain subordinated debentures issued in connection with trust preferred securities that were obtained as part of the merger with Community Shores and the Merger with Fentura. The average balance of subordinated debentures increased $10.3 million and the average rate on subordinated debentures increased 86 basis points in the first nine months of 2025, compared to the same period in the prior year due to the additional subordinated debentures obtained in the Merger. The increase led to additional expense of $652,000 for the first nine months of 2025 compared to the same period in prior year.
Previous report
Noninterest expense increased by $10.8 million and $44.0 million for the three and nine months ended September 30, 2025, compared to the same periods in 2024. The year to date increase was largely due to merger-related expenses of $17.4 million during the nine months ended September 30, 2025, compared to $645,000 in the same period in the prior year. Management does not anticipate additional material merger expenses. The remainder of the increase was primarily due to the addition of Fentura on March 1, 2025. ChoiceOne continues to strive to optimize our cost structure while investing in opportunities that enhance our performance and reinforce the value we bring to customers and shareholders.
Previous report
Income tax expense was $3.6 million and $3.1 million in the three and nine months ended September 30, 2025, compared to income tax expense of $1.9 million and $4.7 million for the same periods in 2024. The effective tax rate was 19.9% and 17.8% for the three and nine months ended September 30, 2025, respectively, compared to 20.8% and 19.4% for the same periods in 2024. The effective tax rate in 2025 is lower than compared to 2024 due to a decrease in disallowed interest expense during 2025.
Previous report
In the first quarter of 2025, ChoiceOne acquired $90.7 million in securities as part of the Merger. However, to reduce higher-cost wholesale funding, management opted to sell $78.9 million of those securities. As a result, the net increase in securities from the Merger totaled $11.8 million.
Previous report
On September 30, 2025, total available-for-sale securities amounted to $544.0 million, up from $479.1 million on December 31, 2024. This increase was driven by securities acquired through the Merger and the purchase of $40.6 million of agency mortgage backed securities purchased in conjuncture with $30.4 million in amortizing pay fix swaps. The swaps are designed to amortize with the expected cash flow of the bonds and hold a coupon of 3.52% and a contractual term ending in 2040. Purchases of securities were offset by principal repayments, calls, and maturities. The unrealized loss on securities available for sale was relatively flat compared to December 31, 2024.
Previous report
ChoiceOne utilizes interest rate derivatives as part of its asset liability management strategy to help manage its interest rate risk position. In order to hedge the risk of rising rates and unrealized losses on securities resulting from the rising rates, ChoiceOne currently holds pay fixed, receive variable interest rate swaps with a total notional value of $381.3 million. These derivative instruments change in value as rates rise or fall inverse to the change in unrealized losses of the available for sale portfolio. Refer to Note 8 - Derivatives and Hedging Activities of the consolidated financial statements for more discussion on ChoiceOne’s derivative position.
Previous report
Average loan balances decreased $8.3 million in the third quarter of 2025, compared to the second quarter of 2025. Core loans, which exclude held for sale loans and loans to other financial institutions, declined by $10.3 million or 1.4% on an annualized basis during the third quarter of 2025 and grew organically by $65.3 million or 4.5% during the twelve months ended September 30, 2025. Core loans grew by $1.4 billion due to the Merger on March 1, 2025.
Previous report
In the three months ended September 30, 2025, compared to the same period in the prior year, ChoiceOne’s cost of deposits to average total deposits increased by 4 basis points, rising from 1.53% to 1.57%, primarily due to higher-cost deposits acquired through the Merger. This increase was partially offset by a decline in CD costs and a reduction in wholesale funding costs. The annualized cost of funds decreased by 10 basis points, from 1.87% to 1.77% in the three months ended September 30, 2025 compared to the same period in the prior year. In the three months ended September 30, 2025, compared to the three months ended June 30, 2025, annualized cost of funds decreased to 1.77% from 1.84%, primarily due to a decrease in higher cost local and brokered CDs.
Previous report
Interest expense on borrowings for the three months ended September 30, 2025, declined by $489,000 compared to the same period in the prior year. As of September 30, 2025, the total balance of borrowed funds from the FHLB was $198.0 million at a weighted average fixed rate of 4.23%, with $158.0 million due within 12 months and the earliest maturity in October 2025.
Previous report
As of September 30, 2025, shareholders’ equity was $449.6 million, a significant increase from $260.8 million on December 31, 2024. This growth was primarily driven by the Merger, in which ChoiceOne issued 6,070,836 shares of common stock on March 1, 2025, valued at $193.0 million. ChoiceOne Bank continues to be “well-capitalized,” with a total risk-based capital ratio of 12.8% as of September 30, 2025, compared to 12.7% on December 31, 2024.
Reworded paragraphs (29)
Previous wording
The following discussion is designed to provide a review of the consolidated financial condition and results of operations of ChoiceOne Financial Services, Inc. (“ChoiceOne”) and its wholly-owned subsidiaries. This discussion should be read in conjunction with the interim consolidated financial statements and related notes.
Current wording
The following discussion is designed to provide a review of the consolidated financial condition and results of operations of ChoiceOne Financial Services, Inc. (“ChoiceOne” or the "Company") and its wholly-owned subsidiaries. This discussion should be read in conjunction with the interim consolidated financial statements and related notes.
Previous wording
On March 1, 2025, ChoiceOne completed the merger (the “Merger”) of Fentura Financial, Inc. (“Fentura”), the former parent company of The State Bank, with and into ChoiceOne with ChoiceOne surviving the Merger. On March 14, 2025, ChoiceOne Bank completed the consolidation of The State Bank with and into ChoiceOne Bank with ChoiceOne Bank surviving the consolidation. Following the Merger, ChoiceOne has approximately $4.3 billion in consolidated total assets and 56 offices in Western, Central and Southeastern Michigan.
Current wording
On March 1, 2025, ChoiceOne completed the merger (the “Merger”) of Fentura Financial, Inc. (“Fentura”), the former parent company of The State Bank, with and into ChoiceOne with ChoiceOne surviving the Merger. On March 14, 2025, ChoiceOne Bank completed the consolidation of The State Bank with and into ChoiceOne Bank with ChoiceOne Bank surviving the consolidation.
Previous wording
ChoiceOne reported net income of $14,681,000 and $14,309,000 for the three and nine months ended September 30, 2025, compared to net income of $7,348,000 and $19,568,000 for the same periods in the prior year, respectively. Adjusted net income (non-GAAP) excluding merger expenses, net of taxes, and merger related provision for credit losses, net of taxes, was $14,681,000 and $37,657,000 for the three and nine months ended September 30, 2025, respectively. Diluted earnings per share were $0.97 and $1.05 for the three and nine months ended September 30, 2025, compared to diluted earnings per share of $0.85 and $2.46 in the same periods in the prior year. Adjusted diluted earnings per share (non-GAAP) excluding merger expenses, net of taxes, and merger related provision for credit losses, net of taxes, were $0.97 and $2.76 for the three and nine months ended September 30, 2025, respectively.
Current wording
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.
Previous wording
Core loans, which exclude held for sale loans and loans to other financial institutions, declined by $10.3 million or 1.4% on an annualized basis during the third quarter of 2025 and grew organically by $65.3 million or 4.5% during the twelve months ended September 30, 2025. Core loans grew by $1.4 billion due to the Merger on March 1, 2025. Loan interest income increased $23.9 million in the third quarter of 2025 compared to the same period in 2024. Interest income for the three months ended September 30, 2025 includes $3.6 million of interest income due to accretion from purchased loans. Of this amount, $1.8 million was calculated using the effective interest rate method of amortization, while the remaining $1.8 million resulted from unexpected payoffs and paydowns of loans with an associated fair value mark. Estimated interest income due to accretion from purchased loans for the remainder of 2025 and 2026 using the effective interest method of amortization is $2.3 million and $8.2 million, respectively; however, actual results will be dependent on prepayment speeds and other factors. It is estimated that a total of $54.0 million remains to be recognized as interest income due to accretion from purchased loans over the life of the loan portfolio.
Current wording
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.
Previous wording
Deposits, excluding brokered deposits, increased by $8.0 million as of September 30, 2025, compared to June 30, 2025. During the third quarter of 2025, non-interest bearing deposits declined by $39.9 million while interest-bearing demand deposits increased by $73.4 million. The shift from non-interest-bearing to interest-bearing demand deposits was partly due to quarter-end timing and fluctuations in business and municipal activity. The growth in interest-bearing demand deposits was primarily concentrated in non-maturity interest-bearing checking and money market accounts. The average balance of non-interest-bearing deposits rose to $930.3 million in the third quarter of 2025, up from $915.6 million in the second quarter of 2025. Deposits, excluding brokered deposits, increased by $1.3 billion as of September 30, 2025, compared to September 30, 2024 largely as a result of the Merger. ChoiceOne continues to be proactive in managing its liquidity position by using brokered deposits and FHLB advances to ensure ample liquidity. At September 30, 2025, total available borrowing capacity secured by pledged assets was $1.2 billion. ChoiceOne can increase its borrowing capacity by utilizing unsecured federal fund lines and pledging additional assets. Uninsured deposits totaled $1.2 billion or 33.2% of deposits at September 30, 2025.
Current wording
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.
Previous wording
The ratio of the allowance for credit losses to total loans (excluding loans held for sale) was 1.19% on September 30, 2025 compared to 1.07% on December 31, 2024. Asset quality continues to remain strong, with annualized net loan charge-offs to average loans of 0.03% and nonperforming loans to total loans (excluding loans held for sale) of 0.69% as of September 30, 2025. Notably, 0.39% of the nonperforming loans to total loans (excluding loans held for sale) is attributed to loans purchased with credit deterioration acquired in the Merger.
Current wording
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.
Previous wording
The annualized return on average assets and annualized return on average shareholders’ equity were 1.36% and 13.39%, respectively, for the third quarter of 2025, compared to an annualized 1.09% and an annualized 12.36%, respectively, for the same period in 2024. The annualized return on average assets and annualized return on average shareholders’ equity were 0.48% and 5.00%, respectively, for the first nine months of 2025, compared to 0.98% and 12.00%, respectively, for the same period in 2024.
Current wording
The annualized return on average assets and annualized return on average shareholders’ equity were 1.24% and 11.65%, respectively, for the first quarter of 2026, compared to an annualized loss on average assets and an annualized loss on average shareholders' equity of (1.68)% and (18.39)%, respectively, for the same period in 2025.
Previous wording
Cash dividends of $4.2 million or $0.28 per share were declared in the third quarter of 2025, compared to $2.4 million or $0.27 per share in thethird quarter of 2024. Cash dividends declared in the first nine months of 2025 were $12.6 million or $0.84 per share, compared to $6.5 million or $0.81 per share in the same period during the prior year. The cash dividend payout percentage was 88.0% for the nine months ended September 30, 2025, compared to 33.2% in the same period in the prior year.
Current wording
Cash dividends of $4.3 million or $0.29 per share were declared in the first quarter of 2026, compared to $4.2 million or $0.28 per share in thefirst quarter of 2025. The cash dividend payout percentage was 31.6% for the three months ended March 31, 2026.
Previous wording
Tables 1 and 2 on the following pages provide information regarding interest income and expense for the three and nine months ended September 30, 2025 and 2024. Table 1 documents ChoiceOne’s average balances and interest income and expense, as well as the average rates earned or paid on assets and liabilities. Table 2 documents the effect on interest income and expense of changes in volume (average balance) and interest rates. These tables are referred to in the discussion of interest income, interest expense and net interest income.
Current wording
Tables 1 and 2 on the following pages provide information regarding interest income and expense for the three months ended March 31, 2026 and 2025. Table 1 documents ChoiceOne’s average balances and interest income and expense, as well as the average rates earned or paid on assets and liabilities. Table 2 documents the effect on interest income and expense of changes in volume (average balance) and interest rates. These tables are referred to in the discussion of interest income, interest expense and net interest income.
Previous wording
Non-accruing loan balances are included in the balances of average loans. Non-accruing loan average balances were $17.0 million, $16.8 million, and $2.2 million in the third quarter of 2025, the second quarter of 2025 and the third quarter of 2024, respectively.
Current wording
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.
Previous wording
Interest on loans included net origination fees and interest income due to accretion from purchased loans. Interest income due to accretion from purchased loans was $3.6 million, $3.5 million and $275,000 in the third quarter of 2025, the second quarter of 2025 and the third quarter of 2024, respectively.
Current wording
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.
Previous wording
The following table presents the annualized cost of deposits and the annualized cost of funds for the three and nine months ended September 30, 2025 and 2024.
Current wording
The following table presents the annualized cost of deposits and the annualized cost of funds for the three months ended March 31, 2025, December 31, 2025 and March 31, 2025.
Previous wording
Loan interest income increased $23.9 million in the third quarter of 2025 compared to the same period in 2024. Interest income for the three months ended September 30, 2025 includes $3.6 million of interest income due to accretion from purchased loans. Of this amount, $1.8 million was calculated using the effective interest rate method of amortization, while the remaining $1.8 million resulted from accretion through unexpected payoffs and paydowns of loans with an associated fair value mark. Estimated interest income due to accretion from purchased loans for the remainder of 2025 and 2026 using the effective interest method of amortization is $2.3 million and $8.2 million, respectively; however, actual results will be dependent on prepayment speeds and other factors. It is estimated that a total of $54.0 million remains to be recognized as interest income due to accretion from purchased loans over the life of the loan portfolio.
Current wording
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.
Previous wording
The average balance of total securities increased $19.4 million and decreased $802,000 for the three and nine months ended September 30, 2025, respectively, compared to the same periods in the prior year. The increase during the three months ended September 30, 2025 is due to $40.6 million of newly purchased agency mortgage backed securities. These securities were purchased in congruence to $30.4 million of amortizing pay fix swaps designed to amortize with the expected cash flow of the bonds and hold a coupon of 3.52%. The decrease in securities during the nine months ended September 30, 2025, is due to paydowns and a decline in the fair value of available for sale securities, offset by the purchase of agency mortgage backed securities during the third quarter of 2025. The average rate earned on securities decreased 18 basis points and 15 basis points for the three and nine months ended September 30, 2025, respectively, compared to the same periods in the prior year. Interest income and rate on securities were impacted by a decline in cash settlements from fixed rate interest rate swaps which are hedged against securities.
Current wording
The average balance of total securities increased $975,000 and $58.2 million for the three months ended March 31, 2026 compared to the three months ended December 31, 2025 and March 31, 2025, respectively. The increase during the first quarter of 2026 compared to the first quarter of 2025 is due in part to $40.6 million of newly purchased agency mortgage backed securities. These securities were purchased in congruence to $30.4 million of amortizing pay fix swaps designed to amortize with the expected cash flow of the bonds and hold a coupon of 3.52%. The average rate earned on securities decreased four basis points and increased 17 basis points for the three months ended March 31, 2026 compared to the three months ended December 31, 2025 and March 31, 2025, respectively. Interest income and rate on securities were impacted by a decline in cash settlements from fixed rate interest rate swaps sold between December of 2025 and February of 2026, which were hedged against securities.
Previous wording
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. The provision for credit losses in the first nine months of 2025 was due primarily to $12.0 million of expense in the first quarter for the acquisition of $1.3 billion of loans purchased without credit deterioration in the Merger. Additional expense was recorded to account for organic growth, changes in qualitative factors, and forecast data used in the allowance for credit losses calculation. The allowance for credit losses also increased by $4.9 million in the first quarter of 2025 as the credit mark on loans purchased with credit deterioration (“PCD loans”) migrated into the reserve in accordance with CECL guidelines.
Current wording
The provision for credit losses on loans was $0 for the three months of 2026 compared to $13.2 million in the same period in 2025. The provision for credit losses in the first three months of 2025 was due primarily to $12.0 million of expense in the first quarter for the acquisition of $1.3 billion of loans purchased without credit deterioration in the Merger. Additional expense was recorded to account for organic growth, changes in qualitative factors, and forecast data used in the allowance for credit losses calculation. The allowance for credit losses also increased by $4.9 million in the first quarter of 2025 as the credit mark on loans purchased with credit deterioration (“PCD loans”) migrated into the reserve in accordance with CECL guidelines.
Previous wording
Nonperforming assets, which includes Other Real Estate Owned ("OREO") but excludes performing troubled loan modifications ("TLM"), increased by $15.8 million to $19.9 million at September 30, 2025, compared to the balance on December 31, 2024, largely due to $12.9 million in non-accrual loans and $1.7 million of OREO acquired in the Merger. All non-accrual loans from the Merger are classified as PCD loans. The ACL was 1.19% of total loans, excluding loans held for sale, at September 30, 2025, compared to 1.07% as of December 31, 2024. The liability for expected credit losses on unfunded loans and other commitments was $1.6 million as of September 30, 2025, compared to $1.5 million as of December 31, 2024.
Current wording
Nonperforming assets, which includes Other Real Estate Owned ("OREO") but excludes performing troubled loan modifications ("TLM"), increased by $595,000 to $30.2 million at March 31, 2026, compared to the balance on December 31, 2025. All non-accrual loans from the Merger are classified as PCD loans. The ACL was 1.19% of total loans, excluding loans held for sale, at March 31, 2026, compared to 1.18% as of December 31, 2025. The liability for expected credit losses on unfunded loans and other commitments was $1.3 million for both March 31, 2026 and December 31, 2025.
Previous wording
Charge-offs and recoveries for respective loan categories for the nine months ended September 30, 2025 and 2024 were as follows:
Current wording
Charge-offs and recoveries for respective loan categories for the three months ended March 31, 2026 and 2025 were as follows:
Previous wording
Net charge-offs were $734,000 during the first nine months of 2025, compared to net charge-offs of $295,000 during the same period in 2024. Net charge-offs for checking accounts during the first nine months of 2025 were $206,000 compared to $155,000 for the same period in the prior year. Annualized net loan charge-offs as a percentage of average loans were 0.03% for the first nine months of 2025 compared to 0.02% for the same period in the prior year. Nonperforming loans to total loans (excluding loans held for sale) were 0.69% as of September 30, 2025. Notably, 0.39% of the nonperforming loans to total loans (excluding loans held for sale) is attributed to PCD loans acquired through the Merger which have a corresponding PCD credit reserve.
Current wording
Net charge-offs were $53,000 during the first three months of 2026, compared to net charge-offs of $71,000 during the same period in 2025. Net charge-offs for checking accounts during the first three months of 2026 were $55,000 compared to $51,000 for the same period in the prior year. Annualized net loan charge-offs as a percentage of average loans were 0.01% for both the three months ended March 31, 2026 and the three months ended March 31, 2025. Nonperforming loans to total loans (excluding loans held for sale) were 1.01% as of March 31, 2026. Notably, 0.61% of the nonperforming loans to total loans (excluding loans held for sale) is attributed to PCD loans acquired through the Merger which have a corresponding PCD credit reserve.
Previous wording
Noninterest income increased by $2.3 million and $5.6 million for the three and nine months ended September 30, 2025, compared to the same periods in the prior year. This increase was partly driven by higher service charges and interchange income, which rose due to increased volume from the Merger. Investment commissions and trust income also increased as a result of higher estate settlement fees and customers obtained from the Merger. Additionally, ChoiceOne recognized income from two death benefit claims under bank-owned life insurance policies during the second quarter for an additional $299,000.
Current wording
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 partially offset by the loss on sales of securities in the first quarter of 2026.
Previous wording
At September 30, 2025, ChoiceOne had consolidated total assets of $4.3 billion, net loans of $2.9 billion, total deposits (excluding brokered deposits) of $3.5 billion and total shareholders' equity of $449.6 million.
Current wording
At March 31, 2026, ChoiceOne had consolidated total assets of $4.4 billion, net loans of $2.9 billion, total deposits (excluding brokered deposits) of $3.6 billion and total shareholders' equity of $470.0 million.
Previous wording
Total held to maturity securities on September 30, 2025 were $388.5 million compared to $394.5 million on December 31, 2024. ChoiceOne's held to maturity securities declined during the first nine months of 2025 due to $12.3 million of principal repayments, calls and maturities, which was offset by $4.1 million in securities acquired through the Merger and purchases of securities during the first nine months of 2025.
Current wording
Total held to maturity securities on March 31, 2026 were $384.3 million compared to $385.2 million on December 31, 2025. ChoiceOne's held to maturity securities declined during the first three months of 2026 due to principal repayments, calls and maturities, which was offset by the purchase of securities during the first three months of 2026.
Previous wording
At September 30, 2025, ChoiceOne had $101.6 million in gross unrealized losses on its investment securities, including $60.5 million in unrealized losses on available for sale securities, $40.6 million in unrealized losses on held to maturity securities, and $496,000 in unrealized losses on equity securities. Unrealized losses on corporate and municipal bonds have not been recognized into income because management believes the issuers are of high credit quality, and management does not intend to sell prior to their anticipated recovery, and the decline in fair value is largely due to changes in interest rates and other market conditions. The issuers continue to make timely principal and interest payments on the bonds. The fair value is expected to recover as the bonds approach maturity.
Current wording
At March 31, 2026, ChoiceOne had $95.0 million in gross unrealized losses on its investment securities, including $55.5 million in unrealized losses on available for sale securities, $39.0 million in unrealized losses on held to maturity securities, and $506,000 in unrealized losses on equity securities. Unrealized losses on corporate and municipal bonds have not been recognized into income because management believes the issuers are of high credit quality, and management does not intend to sell the bonds prior to their anticipated recovery, and the decline in fair value is largely due to changes in interest rates and other market conditions. The issuers continue to make timely principal and interest payments on the bonds. The fair value is expected to recover as the bonds approach maturity.
Previous wording
Equity securities included a money market preferred security ("MMP") of $1.0 million and common stock of $8.5 million as of September 30, 2025. As of December 31, 2024, equity securities included a MMP of $1.0 million and common stock of $6.8 million.
Current wording
Equity securities included a money market preferred security of $1.0 million and common stock of $8.4 million as of March 31, 2026. and December 31, 2025.
Previous wording
Loans to other financial institutions decreased by $37.4 million as of September 30, 2025 compared to December 31, 2024. Loans to other financial institutions consist of a warehouse line of credit used to facilitate mortgage loan originations, with interest rates and balances that fluctuate in line with the national mortgage market.
Current wording
Mortgage warehouse advances increased by $7.8 million as of March 31, 2026 compared to December 31, 2025. Loans to other financial institutions consist of a warehouse line of credit used to facilitate mortgage loan originations, with interest rates and balances that fluctuate in line with the national mortgage market.
Previous wording
Goodwill is not amortized but is evaluated annually for impairment and on an interim basis if events or changes in circumstances indicate that goodwill might be impaired. The goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount, and an impairment charge would be recognized for any amount by which the carrying amount exceeds the reporting unit’s fair value. Accounting pronouncements allow a company to first perform a qualitative assessment for goodwill prior to a quantitative assessment (Step 1 assessment). If the results of the qualitative assessment indicate that it is more likely than not that goodwill is impaired, then a quantitative assessment must be performed. If not, there is no further assessment required. The Company acquired Valley Ridge Financial Corp. in 2006, County Bank Corp in 2019, Community Shores in 2020, and Fentura in 2025, which resulted in the recognition of goodwill of $13.7 million, $38.9 million, $7.3 million and $66.6 million, respectively.
Current wording
Goodwill is not amortized but is evaluated annually for impairment and on an interim basis if events or changes in circumstances indicate that goodwill might be impaired. The goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount, and an impairment charge would be recognized for any amount by which the carrying amount exceeds the reporting unit’s fair value. Accounting pronouncements allow a company to first perform a qualitative assessment for goodwill prior to a quantitative assessment (Step 1 assessment). If the results of the qualitative assessment indicate that it is more likely than not that goodwill is impaired, then a quantitative assessment must be performed. If not, there is no further assessment required. The Company acquired Valley Ridge Financial Corp. in 2006, County Bank Corp in 2019, Community Shores in 2020, and Fentura in 2025, which resulted in the recognition of goodwill of $13.7 million, $38.9 million, $7.3 million and $69.9 million, respectively.
Previous wording
Deposits, excluding brokered deposits, increased by $8.0 million as of September 30, 2025, compared to June 30, 2025. During the third quarter of 2025 non-interest bearing deposits declined by $39.9 million while interest bearing demand deposits increased by $73.4 million. The shift from non-interest-bearing to interest-bearing demand deposits was partly due to quarter-end timing and fluctuations in business and municipal activity. The growth in interest-bearing demand deposits was primarily concentrated in non-maturity interest-bearing checking and money market accounts. The average balance of non-interest-bearing deposits rose to $930.3 million in the third quarter of 2025, up from $915.6 million in the second quarter of 2025. Deposits, excluding brokered deposits, increased by $1.3 billion as of September 30, 2025, compared to September 30, 2024 largely as a result of the Merger. ChoiceOne continues to be proactive in managing its liquidity position by using brokered deposits and FHLB advances to ensure ample liquidity. At September 30, 2025, total available borrowing capacity secured by pledged assets was $1.2 billion. ChoiceOne can increase its borrowing capacity by utilizing unsecured federal fund lines and pledging additional assets. Uninsured deposits totaled $1.2 billion or 33.2% of deposits at September 30, 2025.
Current wording
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 FHLB advances to ensure ample liquidity. 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. As of March 31, 2026, the total balance of borrowed funds from the FHLB was $185.0 million with a weighted average fixed rate of 3.81% and $165.0 million due within 12 months.
Previous wording
ChoiceOne recognized a core deposit intangible of $31.0 million related to the Merger. This intangible asset, valued at 2.78% of Fentura's core deposits, is being amortized over a period of 10 years using the sum-of-years-digits method. This approach reflects the anticipated pattern of economic benefits derived from the core deposits. ChoiceOne recognized core deposit intangible expense of $4.1 million for the nine months ended September 30, 2025.
Current wording
ChoiceOne recognized a core deposit intangible of $31.0 million related to the Merger in the first quarter of 2025. This intangible asset, valued at 2.78% of Fentura's core deposits, is being amortized over a period of 10 years using the sum-of-years-digits method. This approach reflects the anticipated pattern of economic benefits derived from the core deposits. ChoiceOne recognized core deposit intangible expense of $1.7 million for the three months ended March 31, 2026.
Previous wording
Net cash provided by operating activities was $17.8 million for the nine months ended September 30, 2025 compared to $24.6 million net cash provided in the same period in 2024. The change was primarily driven by a $15.1 million decrease in other liabilities during the nine months ended September 30, 2025, compared to the same period in 2024, partially offset by a $13.6 million increase in the provision for credit losses over the same timeframe. Net cash provided by investing activities was $224.9 million for the nine months ended September 30, 2025 compared to net cash used in investing activities of $56.3 million in the same period in 2024. The increase is due to the sale of $78.9 million of securities acquired in the Merger with Fentura. ChoiceOne also received $173.1 million of cash from The State Bank as part of the Merger. 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. ChoiceOne decreased borrowing by $147.2 million in the first nine months of 2025 compared to an increase of $10.1 million in the same period during the prior year. ChoiceOne had $79.0 million in deposit decline, net of the increase from the Merger, in the first nine months of 2025 compared to an increase of $86.2 million in the same period in 2024. The deposit decline was primarily due to seasonal municipal fluctuations and some reduction of higher cost deposits acquired from the Merger, offset by an increase in brokered deposits.
Current wording
Net cash used in operating activities was $179,000 for the three months ended March 31, 2026 compared to $9.4 million in the same period in 2025. The year-over-year change was primarily driven by a $13.2 million decrease in the provision for credit losses in the first quarter of 2026 compared to the prior-year period, largely attributable to the impact of Merger-related activity. Net cash provided by investing activities was $14.6 million for the three months ended March 31, 2026 compared to net cash provided by investing activities of $259.9 million in the same period in 2025. The decrease is due to the cash acquired in the Merger and the sale of $78.9 million of securities acquired in the Merger with Fentura in the first quarter of 2025. ChoiceOne also received $173.1 million of cash from The State Bank as part of the Merger. Net cash used in financing activities was $18.2 million for the three months ended March 31, 2026, compared to $207.8 million provided in the same period in the prior year. ChoiceOne decreased borrowing by $80.0 million in the first three months of 2026 compared to a decrease of $207.5 million in the same period during the prior year. ChoiceOne had $61.6 million in deposit increase in the first three months of 2026 compared to an increase of $5.7 million in the same period in 2025. The deposit increase is a combination of organic deposit growth and some seasonality in municipal deposits.
Previous wording
Liquidity risk deals with ChoiceOne's ability to meet its cash flow requirements. These requirements include depositors desiring to withdraw funds and borrowers seeking credit. Longer-term liquidity needs may be met through core deposit growth, maturities of and cash flows from investment securities, normal loan repayments, advances from the FHLB and the Federal Reserve Bank, brokered certificates of deposit, and income retention. ChoiceOne had $198.0 million in outstanding borrowings from the FHLB at a weighted average fixed rate of 4.23%, with the earliest maturity in October 2025 as of September 30, 2025. ChoiceOne had $72.7 million in brokered deposits on September 30, 2025. The acceptance of brokered certificates of deposit is not limited as long as the Bank is categorized as “well capitalized” under regulatory guidelines. At September 30, 2025, total available borrowing capacity from the FHLB and the Federal Reserve Bank was $1.2 billion.
Current wording
Liquidity risk deals with ChoiceOne's ability to meet its cash flow requirements. These requirements include depositors desiring to withdraw funds and borrowers seeking credit. Longer-term liquidity needs may be met through core deposit growth, maturities of and cash flows from investment securities, normal loan repayments, advances from the FHLB and the Federal Reserve Bank, brokered certificates of deposit, and income retention. ChoiceOne had $185.0 million in outstanding borrowings from the FHLB at a weighted average fixed rate of 3.81% with $165.0 million due within 12 months as of March 31, 2026. ChoiceOne had $103.4 million in brokered deposits on March 31, 2026. The acceptance of brokered certificates of deposit is not limited as long as the Bank is categorized as “well capitalized” under regulatory guidelines. At March 31, 2026, total available borrowing capacity from the FHLB and the Federal Reserve Bank was $1.2 billion.
Rearranged previous paragraphs (6)
Previous report — wording carried elsewhere
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.
Previous report — wording carried elsewhere
Taxable securities include dividend income from Federal Home Loan Bank and Federal Reserve Bank stock.
Previous report — wording carried elsewhere
Loans include both loans to other financial institutions and loans held for sale.
Previous report — wording carried elsewhere
Non-accruing loan balances are included in the balances of average loans. Non-accruing loan average balances were $13.7 million and $2.1 million in the nine months ended September 30, 2025 and 2024, respectively.
Previous report — wording carried elsewhere
The volume variance is computed as the change in volume (average balance) multiplied by the previous year’s interest rate. The rate variance is computed as the change in interest rate multiplied by the previous year’s volume (average balance). The change in interest due to both volume and rate has been allocated to the volume and rate changes in proportion to the relationship of the absolute dollar amounts of the change in each.
Previous report — wording carried elsewhere
Interest on nontaxable investment securities and loans has been adjusted to a fully tax-equivalent basis using an incremental tax rate of 21%.