CHOICEONE FINANCIAL SERVICES INC
For the period ended Jun 30, 2026. Filed Aug 10, 2026.
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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.
Jun 30, 2026 · Filed Aug 10, 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 2026-03-31; filed 2026-05-11.
0001193125-26-216698
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-10.
0001193125-26-342347
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 89 previous paragraphs and 95 current paragraphs.
45 unchanged; 31 reworded; 14 added; 12 removed; 1 previous and 5 current paragraphs rearranged.
Tables are not compared: 7 previous and 8 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 (14)
Current report
ChoiceOne reported net income of $12,463,000 and $26,167,000 for the three and six months ended June 30, 2026, respectively, compared to net income of $13,534,000 and a net loss of $372,000 for the three and six months ended June 30, 2025, respectively. Diluted earnings per share were $0.83 and $1.74 for the three and six months ended June 30, 2026, compared to diluted earnings per share of $0.90 and diluted loss per share of $0.03 for the three and six months ended June 30, 2025, respectively. Second quarter results for 2026 included a pre-tax securities loss of approximately $1.9 million, which reduced diluted earnings per share by approximately $0.10, as ChoiceOne repositioned lower-yielding municipal securities to fund loan growth and improve its interest rate profile.
Current report
In the three months ended June 30, 2026, ChoiceOne's annualized cost of deposits to average total deposits increased four basis points to 1.58% from 1.54% for the three months ended March 31, 2026. The annualized cost of funds increased four basis points to 1.77% for the three months ended June 30, 2026, from 1.73% in the prior quarter, primarily driven by higher rates on interest-bearing demand deposits and savings deposits offset by lower rates on certificates of deposit, borrowings, subordinated debentures, and brokered deposits. The average balance of certificates of deposit declined $14.2 million during the second quarter of 2026. Interest expense on borrowings increased $58,000 compared to the first quarter of 2026 as average borrowings increased $5.1 million. ChoiceOne’s deposit costs may have slight upward pressure as new and repriced deposits carry rates above the existing portfolio average.
Current report
Loans include both mortgage warehouse advances and loans held for sale.
Current report
Interest on loans included net origination fees and accretion income. Accretion income was $5.1 million and $6.4 million in the six months ended June 30, 2026 and 2025, respectively.
Current report
Net interest income increased $375,000 to $36.7 million for the three months ended June 30, 2026, compared to $36.3 million for the same period in 2025. For the six months ended June 30, 2026, net interest income increased $10.7 million to $73.3 million compared to $62.6 million for the same period in 2025. The increase during both periods was driven primarily by growth in average earning assets, including loans and securities, and a lower cost funding base. These benefits were partially offset by lower yields on earning assets, principally due to the continuing decline in interest income due to accretion from purchased loans and the repricing of variable-rate loans in a lower interest rate environment.
Current report
Net interest margin was 3.59% for the second quarter of 2026, compared to 3.66% for the second quarter of 2025, while tax-equivalent net interest margin was 3.63% compared to 3.70% in the prior-year quarter. The seven-basis-point decline in both measures was largely attributable to interest income due to accretion from purchased loans, which contributed approximately 24 basis points to the second quarter of 2026 net interest margin, compared to 36 basis points in the second quarter of 2025. Excluding the impact of interest income due to accretion from purchased loans, underlying margin performance remained relatively stable as lower earning asset yields were substantially offset by continued improvement in funding costs.
Current report
For the first six months of 2026, net interest margin increased to 3.61% from 3.56% for the same period in 2025, while tax-equivalent net interest margin increased to 3.65% from 3.60% in the same period in 2025. The improvement was primarily driven by a reduction in funding costs and favorable changes in funding mix, including growth in interest-bearing demand deposits and savings deposits and a reduction in higher-cost certificates of deposit. Average earning assets increased $546.4 million, or 15.4% for the first six months of 2026, compared to the prior-year period, while the annualized cost of deposits declined six basis points to 1.55% and the annualized cost of funds declined ten basis points to 1.73%.
Current report
Average loans increased $62.0 million during the second quarter of 2026 and $508.5 million, during the first six months of 2026 compared to the corresponding periods in 2025. The average yield on loans declined 16 basis points during the second quarter of 2026 and 21 basis points during the first six months of 2026 compared to the corresponding periods in 2025, primarily due to lower interest income due to accretion from purchased loans and the repricing of variable-rate loans in a lower interest rate environment. Interest income due to accretion from purchased loans totaled $2.4 million during the second quarter of 2026, compared to $3.5 million in the prior-year quarter, reducing the benefit to net interest margin to 24 basis points from 36 basis points in the prior-year quarter. As of June 30, 2026, approximately $48.0 million of interest income due to accretion from purchased loans remained to be recognized over the life of the purchased loan portfolio.
Current report
Interest income on securities increased $415,000 and $1.2 million for the three and six months ended June 30, 2026, respectively, compared to the same periods in 2025. The increase was primarily attributable to higher average securities balances, which increased $64.9 million and $61.4 million for the three and six months ended June 30, 2026, respectively. Average securities balances increased as the Company redeployed excess liquidity into agency mortgage-backed securities and other investment securities. The average yield earned on securities decreased approximately 2 basis points to 2.84% for the three months ended June 30, 2026 compared to 2.86% for the same period in 2025. For the six months ended June 30, 2026, the average yield earned on securities increased approximately 7 basis points to 2.83% compared to 2.76% for the same period in 2025. Securities income and yields continued to be impacted by lower cash settlements from interest rate swaps that matured or were terminated during late 2025 and early 2026 and had previously provided additional income on portions of the securities portfolio.
Current report
Deposits and borrowings continued to provide stable funding for balance sheet growth while benefiting from the repricing of liabilities in a lower interest rate environment. Average interest-bearing deposits increased during both the three- and six-month periods ended June 30, 2026, led by growth in interest-bearing demand and savings deposits, while higher-cost certificates of deposit declined as a percentage of total funding. As a result, the annualized cost of deposits decreased to 1.58% for the second quarter of 2026 from 1.65% in the second quarter of 2025 and to 1.55% for the first six months of 2026 from 1.61% in the comparable prior-year period.
Current report
Interest expense on borrowings and subordinated debentures increased $270,000 for the three months ended June 30, 2026 compared to the same period in 2025. Average balance of borrowings and subordinated debentures increased $61.6 million, which was offset by a 72 point basis point decrease in rate for borrowings and an 18 basis point decrease in rate for subordinated debentures. Interest expense on borrowings and subordinated debentures increased $403,000 for the six months ended June 30, 2026 compared to the same period in 2025. Average balance of borrowings and subordinated debentures increased $51.3 million, which was offset by a 70 point basis point decrease in rate for borrowings and an 6 basis point increase in rate for subordinated debentures.
Current report
Noninterest income for the three months ended June 30, 2026 decreased $1.6 million to $4.9 million compared to $6.5 million for the same period in 2025. The decline was primarily driven by a $1.9 million loss on the sale of securities during the second quarter of 2026, compared to no gains or losses on the sale of securities in the prior-year period. In late June 2026, ChoiceOne sold approximately $25 million of municipal securities with a tax-equivalent yield of 2.28% for a pre-tax loss of $1.9 million. The sale of securities was undertaken to provide funding for the purchase of adjustable-rate residential mortgages and improve ChoiceOne’s overall interest rate profile. Partially offsetting this decline were increases in customer service charges and interchange income and insurance and investment commissions. Compared to the first quarter of 2026, noninterest income declined $876,000, primarily due to the increase in net losses on sales of securities. Noninterest income for the six months ended June 30, 2026 decreased $671,000, to $10.8 million compared to $11.4 million for the same period in 2025.
Current report
Noninterest expense for the three months ended June 30, 2026 increased $545,000, or 2.1%, to $26.1 million compared to $25.5 million for the same period in 2025. The increase was primarily attributable to higher salaries and benefits expense, partially offset by lower intangible amortization expense. Compared to the first quarter of 2026, noninterest expense increased $275,000, reflecting higher salaries and benefits expenses and data processing costs, partially offset by lower occupancy and equipment and intangible amortization expenses. Noninterest expense for the six months ended June 30, 2026 decreased $9.3 million, to $51.8 million compared to $61.2 million for the same period in 2025. The decrease was primarily attributable to the absence of $17.4 million of merger-related expenses incurred during the prior-year period. Excluding merger-related expenses, noninterest expense increased due to higher salaries and benefits, occupancy and equipment, data processing, professional fees, and other operating expenses associated with the Company's growth and integration activities. ChoiceOne expects to open a full service branch and lending office in Troy, Michigan later in 2026. ChoiceOne currently serves customers throughout Southeast Michigan and expects the Troy office to further support commercial lending and treasury management growth initiatives.
Current report
In the three months ended June 30, 2026, ChoiceOne's annualized cost of deposits to average total deposits increased four basis points to 1.58% from 1.54% for the three months ended March 31, 2026. The annualized cost of funds increased four basis points to 1.77% for the three months ended June 30, 2026, from 1.73% in the prior quarter, primarily driven by higher rates on interest-bearing demand deposits and savings deposits offset by lower rates on certificates of deposit, borrowings, subordinated debentures, and brokered deposits.
Removed paragraphs (12)
Previous report
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 report
A reconciliation for non-GAAP adjusted net income and adjusted earnings per share to GAAP net income and earnings (loss) per share follows:
Previous report
(1) Merger related provision for credit losses represents the estimated credit loss on loans purchased without credit deterioration in the Merger on March 1, 2025.
Previous 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.
Previous 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.
Previous 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.
Previous report
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 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.
Previous 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.
Previous 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.
Previous report
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 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.
Reworded paragraphs (31)
Previous wording
This discussion and other sections of this quarterly report contain forward-looking statements that are based on management’s beliefs, assumptions, current expectations, estimates and projections about the financial services industry, the economy, and ChoiceOne. Words such as “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “intends,” “is likely,” “plans,” “predicts,” “projects,” “may,” “could,” “look forward,” “continue,” “future,” “will” and variations of such words and similar expressions are intended to identify such forward-looking statements. Management’s determination of the provision and allowance for credit losses, the carrying value of goodwill, loan servicing rights, other real estate owned, and the fair value of investment securities (including whether any impairment on any investment security is temporary or other-than-temporary and the amount of any impairment) and management’s assumptions concerning pension and other post-retirement benefit plans involve judgments that are inherently forward-looking. All of the information concerning interest rate sensitivity is forward-looking. All statements with references to future time periods are forward-looking. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions (“risk factors”) that are difficult to predict with regard to timing, extent, likelihood, and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be expressed, implied or forecasted in such forward-looking statements. Furthermore, ChoiceOne undertakes no obligation to update, amend, or clarify forward-looking statements, whether as a result of new information, future events, or otherwise.
Current wording
This discussion and other sections of this quarterly report contain forward-looking statements that are based on management’s beliefs, assumptions, current expectations, estimates and projections about the financial services industry, the economy, and ChoiceOne. Words such as “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “intends,” “is likely,” “plans,” “predicts,” “projects,” “may,” “could,” “look forward,” “continue,” “future,” “will” and variations of such words and similar expressions are intended to identify such forward-looking statements. Management’s determination of the provision and allowance for credit losses, the carrying value of goodwill, loan servicing rights, other real estate owned, and the fair value of investment securities (including whether any impairment on any investment security is temporary or other-than-temporary and the amount of any impairment) involve judgments that are inherently forward-looking. All statements with references to future time periods are forward-looking. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions (“risk factors”) that are difficult to predict with regard to timing, extent, likelihood, and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be expressed, implied or forecasted in such forward-looking statements. Furthermore, ChoiceOne undertakes no obligation to update, amend, or clarify forward-looking statements, whether as a result of new information, future events, or otherwise.
Previous wording
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 wording
As of June 30, 2026, total assets were $4.5 billion, an increase of $146.6 million compared to June 30, 2025. The growth in total assets is primarily attributed to growth in core loans, securities and warehouse mortgage advances. This growth was partially offset by a reduction in the cash balance of $67.6 million as of June 30, 2026, during the twelve months ended June 30, 2026.
Previous 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.
Current wording
Core loans, which exclude held for sale loans and mortgage warehouse advances, increased by $87.1 million or an annualized 11.9% during the second quarter of 2026 and grew by $101.5 million or 3.5% during the twelve months ended June 30, 2026. Of this growth approximately $40.0 million was due to a purchase of seasoned, high quality adjustable rate mortgages from another community bank made during the second quarter 2026. Loan interest income increased $703,000 in the second quarter of 2026 compared to the first quarter of 2026 and decreased $187,000 compared to the second quarter of 2025. The decrease from the second quarter of 2025 is partially due to a decline in interest income due to accretion from purchased loans during the second quarter of 2026 compared to the second quarter of 2025. Interest income due to accretion from purchased loans was approximately $2.4 million during the second quarter of 2026 compared to $3.5 million for the three months ended June 30, 2025. Interest income due to accretion from purchased loans increased net interest margin by 24 and 36 basis points in the second quarter of 2026 and the second quarter of 2025, respectively. Of the amount recognized in the second quarter of 2026, $2.0 million was calculated using the effective interest rate method of amortization, while the remaining $433,000 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 2026 using the effective interest method of amortization is $3.8 million; however, actual results will be dependent on prepayment speeds and other factors. It is estimated that a total of $48.0 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 $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.
Current wording
Deposits, excluding brokered deposits, decreased by $55.4 million as of June 30, 2026, compared to March 31, 2026. This decline is largely due to seasonality in municipal deposits as municipal operational balances fluctuate with the timing of tax receipts. Municipal deposits decreased by approximately $95.0 million during the second quarter of 2026, which is consistent with historical fluctuations. Deposits, excluding brokered deposits, increased by $22.2 million as of June 30, 2026, compared to June 30, 2025. This increase is primarily organic growth in interest bearing and savings accounts offset by a decline in higher interest certificate of deposit accounts. 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 June 30, 2026, the total balance of borrowed funds from the FHLB was $295.0 million at a weighted average rate of 3.80%, with $275.0 million due within 12 months. At June 30, 2026, total available borrowing capacity secured by pledged assets was $1.1 billion. ChoiceOne can increase its borrowing capacity by utilizing unsecured federal fund lines and pledging additional assets. Uninsured deposits totaled $1.2 billion or 33.1% of deposits at June 30, 2026.
Previous 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.
Current wording
ChoiceOne incurred a $550,000 provision for credit losses on loans during the second quarter of 2026, due to the increase in loan balances and $309,000 in net charge offs. The ratio of the allowance for credit losses to total loans (excluding loans held for sale) was 1.16% on June 30, 2026 compared to 1.19% and 1.18% on March 31, 2026 and December 31, 2025, respectively. Asset quality continues to remain strong, with annualized net loan charge-offs to average loans of 0.04% for the second quarter of 2026. Nonperforming loans to total loans (excluding loans held for sale) increased to 1.07% as of June 30, 2026 compared to 1.01% as of March 31, 2026. Notably, 0.49% of the nonperforming loans to total loans (excluding loans held for sale) is attributed to certain purchased loans which were identified prior to acquisition as having credit deterioration. In addition, 30.6% of the nonperforming loans carry partial government guarantees from the SBA or USDA.
Previous 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.
Current wording
The annualized return on average assets and annualized return on average shareholders’ equity were 1.13% and 10.46%, respectively, for the second quarter of 2026, compared to 1.26% and 12.66%, respectively, for the same period in 2025. The annualized return on average assets and annualized return on average shareholders’ equity were 1.19% and 11.04%, respectively, for the six months ended June 30 2026, compared to annualized loss on average assets and annualized loss on average shareholders’ equity of (0.02)% and (0.21)%, respectively, for the same period in 2025.
Previous 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.
Current wording
Cash dividends of $4.3 million or $0.29 per share were declared in the second quarter of 2026, compared to $4.2 million or $0.28 per share in thesecond quarter of 2025. The cash dividend payout percentage was 34.8% for the second quarter of 2026, compared to 31.1% in the same period in the prior year. Cash dividends declared in the first six months of 2026 were $8.7 million or $0.58 per share, compared to $8.4 million or $0.56 per share in the same period during the prior year. The cash dividend payout percentage was 33.1% for the six months ended June 30, 2026. The Board of Directors’ determination of appropriate cash dividends will be based on, among other things, market conditions and ChoiceOne’s requirements for cash and capital.
Previous 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.
Current wording
Tables 1 and 2 on the following pages provide information regarding interest income and expense for the three and six months ended June 30, 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 $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.
Current wording
Non-accruing loan balances are included in the balances of average loans. Non-accruing loan average balances were $29.4 million, $27.5 million, and $16.8 million in the second quarter of 2026, the first quarter of 2026 and the second 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 $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.
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 $2.4 million, $2.7 million and $3.5 million in the second quarter of 2026, the first quarter of 2026 and the second quarter of 2025, respectively.
Previous 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.
Current wording
The following table presents the annualized cost of deposits and the annualized cost of funds for the three months ended June 30, 2026, March 31, 2026 and June 30, 2025 for the six months ended June 30, 2026 and 2025.
Previous 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.
Current wording
The provision for credit losses on loans was $550,000 for the first six months of 2026 compared to $13.8 million in the same period in 2025. The provision for credit losses in the first six 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.
Previous 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.
Current wording
Nonperforming assets, which includes Other Real Estate Owned ("OREO") but excludes performing troubled loan modifications ("TLM"), increased by $3.2 million during the first six months of 2026 to $32.8 million at June 30, 2026, compared to the balance on December 31, 2025. The ACL was 1.16% of total loans, excluding loans held for sale, at June 30, 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 June 30, 2026 and December 31, 2025.
Previous wording
Charge-offs and recoveries for respective loan categories for the three months ended March 31, 2026 and 2025 were as follows:
Current wording
Charge-offs and recoveries for respective loan categories for the six months ended June 30, 2026 and 2025 were as follows:
Previous 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.
Current wording
Net charge-offs were $362,000 during the first six months of 2026, compared to net charge-offs of $491,000 during the same period in 2025. Net charge-offs for checking accounts during the first six months of 2026 were $161,000 compared to $132,000 for the same period in the prior year. Annualized net loan charge-offs as a percentage of average loans were 0.04% for the second quarter of 2026 compared to 0.06% for the same period in the prior year. Nonperforming loans to total loans (excluding loans held for sale) were 1.07% as of June 30, 2026 compared to 0.66% for the same period last year. Notably, 0.49% 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. In addition, 30.6% of the nonperforming loans at June 30, 2026 carry partial government guarantees from the SBA or USDA.
Previous wording
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 wording
Income tax expense was $2.6 million in the three months ended June 30, 2026 and $5.5 million in the six months ended June 30, 2026, compared to income tax expense of $3.1 million and $554,000 tax benefit for the same periods in 2025. The tax benefit for 2025 was generated by the loss in the first quarter of 2025 due to expenses related to the Merger. The effective tax rate was 17.1% and 17.5% for the three and six months ended June 30, 2026, respectively, compared to 18.8% and 59.8% for the same periods in 2025. ChoiceOne’s second quarter 2026 tax expense was reduced by a $1.9 million loss on sale of securities.
Previous 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.
Current wording
At June 30, 2026, ChoiceOne had consolidated total assets of $4.5 billion, net loans of $3.0 billion, total deposits (excluding brokered deposits) of $3.5 billion and total shareholders' equity of $482.7 million. Asset growth was primarily due to growth in the loan portfolio and increases in the cash surrender value of bank-owned life insurance, partially offset by decreases in investment securities and other assets. The Company’s balance sheet is well-positioned to support continued lending activity, customer deposit relationships, and overall liquidity needs.
Previous wording
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 wording
On June 30, 2026, total available‑for‑sale securities were $555.5 million, compared to $554.4 million at December 31, 2025. The modest increase was primarily driven by the purchase of $45.5 million of securities, $34.2 million of which were agency mortgage-backed securities, partially offset by the sale of $29.5 million of securities and normal portfolio runoff from principal repayments, calls, and maturities.
Previous 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.
Current wording
Total held to maturity securities on June 30, 2026 were $383.3 million compared to $385.2 million on December 31, 2025. ChoiceOne's held to maturity securities declined during the first six months of 2026 due to principal repayments, calls and maturities, which was offset by the purchase of $1.9 million of securities during the first six months of 2026.
Previous 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.
Current wording
At June 30, 2026, ChoiceOne had $87.7 million in gross unrealized losses on its investment securities, including $48.6 million in unrealized losses on available for sale securities, $39.0 million in unrealized losses on held to maturity securities, and $528,000 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
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 wording
Core loans, which exclude held for sale loans and mortgage warehouse advances, increased by $87.1 million or an annualized 11.9% during the second quarter of 2026 and grew by $101.5 million or 3.5% during the twelve months ended June 30, 2026. Of this growth, approximately $40.0 million was due to a purchase of seasoned, high quality adjustable rate mortgages from another community bank made during the second quarter of 2026.
Previous 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.
Current wording
Mortgage warehouse advances decreased by $5.5 million as of June 30, 2026 compared to December 31, 2025. Mortgage warehouse advances 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 $69.9 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 Bank Corporation 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
ChoiceOne conducted an annual assessment of goodwill as of June 30, 2025 and no impairment was identified. No material changes and no triggering events have occurred that indicated impairment.
Current wording
ChoiceOne conducted an annual assessment of goodwill as of June 30, 2026 and no impairment was identified.
Previous 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.
Current wording
Deposits, excluding brokered deposits, decreased by $55.4 million as of June 30, 2026, compared to March 31, 2026. This decline is largely due to seasonality in municipal deposits as municipal operational balances fluctuate with the timing of tax receipts. Municipal deposits decreased by approximately $95.0 million during the second quarter, which is consistent with historical fluctuations. Deposits, excluding brokered deposits, increased by $13.5 million as of June 30, 2026, compared to December 31, 2025. This increase is primarily organic growth in interest bearing and savings accounts offset by a decline in higher interest certificate of deposit accounts. 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 June 30, 2026, the total balance of borrowed funds from the FHLB was $295.0 million at a weighted average rate of 3.80%, with $275.0 million due within 12 months. At June 30, 2026, total available borrowing capacity secured by pledged assets was $1.1 billion. ChoiceOne can increase its borrowing capacity by utilizing unsecured federal fund lines and pledging additional assets.
Previous 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.
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 $1.2 million for the three months ended June 30, 2026 and $2.9 million for the six months ended June 30, 2026.
Previous wording
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. ChoiceOne also holds $15.9 million in subordinated debentures that were obtained in the acquisition of Community Shores and the Merger with Fentura, offset by the merger mark-to-market adjustment.
Current wording
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. ChoiceOne also holds $16.2 million in subordinated debentures that were obtained in the acquisition of Community Shores Bank Corporation and the Merger with Fentura, offset by the merger mark-to-market adjustment.
Previous wording
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.
Current wording
At June 30, 2026, shareholders’ equity was $482.7 million, an increase from $431.8 million on June 30, 2025. ChoiceOne repurchased 35,000 shares of stock for a net cost of $1.1 million in the second quarter of 2026 and 75,116 shares collectively, during the first quarter of 2026 and the fourth quarter of 2025 for a net cost of $2.2 million under our existing share repurchase plan. The repurchase plan has 265,272 shares remaining to purchase as of June 30, 2026. The repurchase of shares reflects our view that our capital position is healthy and the repurchase of shares is in the best interest of our shareholders. ChoiceOne Bank continues to be “well-capitalized,” with a total risk-based capital ratio of 12.9% as of June 30, 2026, compared to 12.4% on June 30, 2025.
Previous wording
Management reviews the capital levels of ChoiceOne and ChoiceOne Bank on a regular basis. The Board of Directors and management believe that the capital levels as of March 31, 2026 are adequate for the foreseeable future. The Board of Directors’ determination of appropriate cash dividends for future periods will be based on, among other things, market conditions and ChoiceOne’s requirements for cash and capital.
Current wording
Management reviews the capital levels of ChoiceOne and ChoiceOne Bank on a regular basis. The Board of Directors and management believe that the capital levels as of June 30, 2026 are adequate for the foreseeable future.
Previous 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.
Current wording
Net cash provided by operating activities was $29.8 million for the six months ended June 30, 2026 compared to $2.5 million in the same period in 2025. The year-over-year change was primarily due to increased earnings and the lack of merger-related costs. Net cash used in investing activities was $50.0 million for the six months ended June 30, 2026 compared to net cash provided by investing activities of $267.0 million in the same period in 2025. The decrease is due to the cash acquired in the Merger, loan growth and the sale of $49.3 million of securities acquired in the Merger with Fentura in the first six months of 2025. ChoiceOne also received $173.1 million of cash from The State Bank as part of the Merger. During the first six months of 2026, net loan originations and payments used $46.0 million of cash, compared to providing $11.6 million of cash during the same period in 2025. Net cash provided by financing activities was $20.9 million for the six months ended June 30, 2026, compared to $210.0 million used in the same period in the prior year. ChoiceOne increased borrowing by $30.0 million in the first six months of 2026 compared to a decrease of $146.5 million in the same period during the prior year. ChoiceOne had a $1.8 million increase in deposits in the first six months of 2026 compared to a decrease of $53.4 million in the same period in 2025. The deposit increase is a combination of organic deposit growth offset by 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 $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.
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 $295.0 million in outstanding borrowings from the FHLB at a weighted average fixed rate of 3.80% with $275.0 million due within 12 months as of June 30, 2026. ChoiceOne had $93.2 million in brokered deposits on June 30, 2026. The acceptance of brokered deposits is not limited as long as the Bank is categorized as “well capitalized” under regulatory guidelines. At June 30, 2026, total available borrowing capacity from the FHLB and the Federal Reserve Bank was $1.1 billion.
Rearranged current paragraphs (5)
Current report — wording carried from 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.
Current report — wording carried from elsewhere
Taxable securities include dividend income from Federal Home Loan Bank and Federal Reserve Bank stock.
Current report — wording carried from elsewhere
Non-accruing loan balances are included in the balances of average loans. Non-accruing loan average balances were $28.6 million and $12.4 million in the six months ended June 30, 2026 and 2025, respectively.
Current report — wording carried from 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.
Current report — wording carried from elsewhere
Interest on nontaxable investment securities and loans has been adjusted to a fully tax-equivalent basis using an incremental tax rate of 21%.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
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.