SPARTA,
Mich., April 24, 2024 /PRNewswire/ -- ChoiceOne
Financial Services, Inc. ("ChoiceOne", NASDAQ:COFS), the parent
company for ChoiceOne Bank, reported financial results for the
quarter ended March 31, 2024.
Financial Highlights
- ChoiceOne reported net income of $5,634,000 for the three months ended
March 31, 2024, compared to
$5,633,000 for the same period in
2023.
- Diluted earnings per share were $0.74 in the three months ended March 31, 2024, compared to $0.75 per share in the same period in the prior
year.
- Starting in May 2024, net
interest income will be aided by forward starting pay-fixed swaps
and the completion of amortization expense related to previously
terminated swaps. The increase to net interest income will be
approximately $732,000 per month
using the March 31, 2024 SOFR rate of
5.34%.
- Average total loan balances increased to $1.41 billion in the first quarter of 2024
compared to $1.36 billion in the
fourth quarter of 2023 and $1.20
billion in the first quarter of 2023. Core loans, which
exclude held for sale loans, loans to other financial institutions,
and Paycheck Protection Program ("PPP") loans, declined by
$2.7 million or an annualized 0.8%
during the first quarter of 2024 and increased by $178.0 million or 14.7% since March 31, 2023.
- Deposits, excluding brokered deposits, increased by
$45.3 million or an annualized 8.6%
in the first quarter of 2024. The increase in deposits in the first
quarter is a combination of new business, recapture of deposit
losses from the prior year, and some seasonality of municipal
balances. Deposits as of March 31,
2024, excluding brokered deposits, increased $75.8 million or 3.7%, compared to deposits,
excluding brokered deposits, as of March 31,
2023.
- Net interest margin (fully tax-equivalent) in the first quarter
of 2024 increased to 2.74%, compared to 2.72% in the fourth quarter
of 2023, and declined from 3.09% in the first quarter of 2023.
Fully tax-equivalent net interest income was $16.9 million in the first quarter of 2024
compared to $17.4 million in the
first quarter of 2023.
- Expenses are well managed, with $13.7
million of noninterest expense in the first quarter of 2024,
a decrease from $13.8 million and
$14.0 million in the fourth quarter
of 2023 and the first quarter of 2023, respectively.
- Asset quality remains strong with only 0.1% of nonperforming
loans to total loans (excluding held for sale) as of March 31, 2024.
"We have been proactive in preparing our bank for the
uncertainties of a shifting economic landscape with our focus on
core deposits and loans, reducing expenses, and managing our
interest rate risk. We believe these measures have
positioned us to be prepared for current market conditions and
interest rate environment. If the trajectory of interest rates is
'higher for longer,' we believe we are prepared. Our strategic
approach is built to ensure that ChoiceOne remains resilient, and
our financial foundation remains strong," said Kelly Potes, Chief Executive Officer.
ChoiceOne reported net income of $5,634,000 for the three months ended
March 31, 2024, compared to
$5,633,000 for the same period in
2023. Diluted earnings per share were $0.74 in the three months ended March 31, 2024, compared to $0.75 per share in the same period in the prior
year. During 2023 and 2024, earnings were negatively affected
by increased deposit costs, and partially offset by organic loan
growth and higher interest income on loans due to higher interest
rates.
As of March 31, 2024, total assets
were $2.7 billion, an increase of
$260.8 million compared to
March 31, 2023. The growth is
primarily attributed to an increase in gross loans, which includes
a $178.0 million increase in core loans, an increase in
cash of $94.9 million, and
a $30.0 million increase in loans to other financial
institutions over the twelve month period ending March 31, 2024. However, this growth was tempered
by a $57.5 million reduction in securities during the
same time period. ChoiceOne has actively managed its liquidity to
support organic loan growth, strategically shifting from
lower-yielding assets to higher-yielding loans. This is reflected
in the loan growth observed since March 31,
2023.
Deposits, excluding brokered deposits, increased by $45.3 million or an annualized 8.6% in the first
quarter of 2024 and $75.8 million or
3.7% compared to March 31,
2023. Deposits grew in the first quarter of 2024 due to new
business, recapture of deposit losses, and some seasonality in
municipal balances. ChoiceOne continues to be proactive in
managing its liquidity position by using brokered deposits, the
Bank Term Funding Program ("BTFP"), and FHLB advances to ensure
ample liquidity. At March 31,
2024, total available borrowing capacity from all sources
was $960.7 million.
Uninsured deposits totaled $792.3
million or 37.0% of deposits at March
31, 2024.
The increase in short term interest rates led to higher deposit
costs, which rose to an annualized 1.65% in the first quarter of
2024, compared to an annualized 1.57% in the previous quarter and
an annualized 0.62% in the first quarter of 2023. As deposits
reprice and customers shift to certificate of deposits and other
interest bearing products; this trend is likely to persist.
ChoiceOne is taking active measures to control these costs and
expects to pay lower rates on deposits than the federal funds
rate. Interest expense on borrowings for the three months
ended March 31, 2024 increased
$1.8 million compared to the same
period in the prior year, due to increases in borrowing amounts and
interest rates. Borrowings include $170 million from the BTFP and $40 million of FHLB borrowings at a weighted
average fixed rate of 4.7%, with the earliest maturity in January
2025. Total cost of funds increased to an annualized 2.0% in
the first quarter of 2024 compared to an annualized 1.91% in the
fourth quarter of 2023 and an annualized 0.79% in the first quarter
of 2023.
The provision for credit losses expense on loans increased by
$403,000 in the first quarter of
2024, due in part to two recently classified collateral dependent
retail and consumer loan relationships. This was offset by a
decline in provision for unfunded commitments leading to net
provision for credit losses expense for the first quarter 2024 of
$0. The ratio of the allowance
for credit losses to total loans (excluding loans held for sale)
was 1.13% on March 31, 2024 compared
to 1.11% on December 31, 2023.
Asset quality continues to remain strong, with annualized net loan
charge-offs to average loans of 0.01% and nonperforming loans to
total loans (excluding loans held for sale) of 0.13% as of
March 31,
2024.
ChoiceOne uses interest rate swaps to manage interest rate
exposure to certain fixed assets and variable rate
liabilities. On March 31, 2024,
ChoiceOne had pay-fixed interest rate swaps with a total notional
value of $401.0 million, a weighted
average coupon of 3.07%, a fair value of $20.2 million and an average remaining contract
length of 7 to 8 years. These derivative instruments increase
in value as long-term interest rates rise, which offsets the
reduction in equity due to unrealized losses on securities
available for sale. Included in the total is $200.0 million of forward starting pay-fixed,
receive floating interest rate swaps used to hedge interest bearing
liabilities. These forward starting swaps will pay a fixed
coupon of 2.75% while receiving SOFR starting in late April
2024. At the SOFR rate on March 31,
2024 of 5.34%, these forward starting swaps would contribute
approximately $432,000 monthly, which
will partially offset interest expense. In addition, in
March 2023, ChoiceOne eliminated all
receive-fix, pay floating swap agreements for a cash payment of
$4.2 million. The loss is being
amortized in interest income with an expense of approximately
$300,000 monthly through April 2024, which was the remaining period of the
agreements. The effect of these two items will increase net
interest income by approximately $732,000 monthly starting in May 2024.
Shareholders' equity totaled $206.8
million as of March 31, 2024,
up from $168.7 million as of
March 31, 2023. This increase
is due to increased retained earnings and an improvement in
accumulated other compressive loss (AOCI) of $23.6 million compared to March 31, 2023. The improvement in AOCI,
despite the rise in interest rates, is due to both the shortening
duration and maturing (paydowns) of the securities portfolio, as
well as an increase in unrealized gain of the pay-fixed swap
derivatives. ChoiceOne Bank remains "well-capitalized" with a
total risk-based capital ratio of 12.6% as of March 31, 2024, compared to 13.0% on March 31, 2023.
Noninterest income increased $380,000 in the three months ended March 31, 2024, compared to the same period in
the prior year. The increase was largely due to earnings on a
bank owned life insurance death benefit claim in the amount of
$196,000 and an increase in customer
service charges of $138,000 in the
first quarter of 2024 compared to the same period in 2023.
These increases were offset by changes in the market value of
equity securities in the three months ended March 31, 2024, compared to the same period in
the prior year.
Noninterest expense declined by $311,000 or 2.2% in the three months ended
March 31, 2024 compared to the same
period in 2023. The decline in total noninterest expense was
due to a decline in employee health insurance benefits as claims to
date have been lower than past years and a decline in occupancy and
equipment related to two branch closures during the
quarter. ChoiceOne anticipates a low impact on customer
retention related to the branch closures and expects to save around
$700,000 annually from this
decision. This was offset by increases to FDIC insurance and
other costs related to inflationary pressures.
Management continues to seek out ways to manage costs, but also
recognizes the value of investing in innovation and attracting the
best talent in our industry to compete effectively in our
markets.
"Amidst the current economic climate, we are looking ahead
with optimism. Our recent deposit growth is a testament to the
trust our customers place in us, and it is a solid foundation for
the future. We remain focused on seizing opportunities and our goal
to be the best bank in Michigan,"
said Kelly Potes, Chief Executive
Officer.
About ChoiceOne
ChoiceOne Financial Services, Inc. is a financial holding
company headquartered in Sparta,
Michigan and the parent corporation of ChoiceOne Bank,
Member FDIC. ChoiceOne Bank operates 35 offices in parts of
Kent, Lapeer, Macomb, Muskegon, Newaygo, Ottawa, and St.
Clair counties. ChoiceOne Bank offers insurance and
investment products through its subsidiary, ChoiceOne Insurance
Agencies, Inc. For more information, please visit Investor
Relations at ChoiceOne's website at choiceone.bank.
Forward-Looking Statements
This release may contain forward-looking statements. Words such
as "anticipates," "believes," "estimates," "expects," "forecasts,"
"intends," "is likely," "plans," "predicts," "projects," "may,"
"could," "look forward," "continue", "future", "will" and
variations of such words and similar expressions are intended to
identify such forward looking statements. These statements reflect
current beliefs as to the expected outcomes of future events and
are not guarantees of future performance. These statements involve
certain risks, uncertainties and assumptions ("risk factors") that
are difficult to predict with regard to timing, extent, likelihood
and degree of occurrence. Therefore, actual results and outcomes
may materially differ from what may be expressed, implied or
forecasted in such forward-looking statements. Furthermore,
ChoiceOne undertakes no obligation to update, amend, or clarify
forward-looking statements, whether as a result of new information,
future events, or otherwise. Risk factors include, but are not
limited to, the risk factors described in Item 1A in ChoiceOne
Financial Services, Inc.'s Annual Report on Form 10-K for the year
ended December 31, 2023.
Condensed Balance
Sheets
(Unaudited)
|
|
(In
thousands)
|
|
March 31,
2024
|
|
|
December 31,
2023
|
|
|
March 31,
2023
|
|
Cash and cash
equivalents
|
|
$
|
150,129
|
|
|
$
|
55,433
|
|
|
$
|
55,189
|
|
Securities Held to
Maturity
|
|
|
397,981
|
|
|
|
407,959
|
|
|
|
422,876
|
|
Securities Available
for Sale
|
|
|
521,711
|
|
|
|
531,617
|
|
|
|
554,306
|
|
Loans held for
sale
|
|
|
6,035
|
|
|
|
4,710
|
|
|
|
3,603
|
|
Loans to other
financial institutions
|
|
|
30,032
|
|
|
|
19,400
|
|
|
|
-
|
|
Core loans
|
|
|
1,388,558
|
|
|
|
1,391,253
|
|
|
|
1,210,583
|
|
Total
Loans
|
|
|
1,418,590
|
|
|
|
1,410,653
|
|
|
|
1,210,583
|
|
Allowance for loan
losses
|
|
|
(16,037)
|
|
|
|
(15,685)
|
|
|
|
(15,065)
|
|
Loans, net of allowance
for loan losses
|
|
|
1,402,553
|
|
|
|
1,394,968
|
|
|
|
1,195,518
|
|
Premises and
equipment
|
|
|
28,268
|
|
|
|
29,750
|
|
|
|
28,633
|
|
Cash surrender value of
life insurance policies
|
|
|
45,079
|
|
|
|
45,074
|
|
|
|
44,241
|
|
Goodwill
|
|
|
59,946
|
|
|
|
59,946
|
|
|
|
59,946
|
|
Core deposit
intangible
|
|
|
1,651
|
|
|
|
1,854
|
|
|
|
2,557
|
|
Other assets
|
|
|
57,346
|
|
|
|
45,395
|
|
|
|
43,017
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
2,670,699
|
|
|
$
|
2,576,706
|
|
|
$
|
2,409,886
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing
deposits
|
|
$
|
502,685
|
|
|
$
|
547,625
|
|
|
$
|
554,699
|
|
Interest-bearing
deposits
|
|
|
1,641,193
|
|
|
|
1,550,985
|
|
|
|
1,513,429
|
|
Brokered
deposits
|
|
|
41,970
|
|
|
|
23,445
|
|
|
|
37,773
|
|
Borrowings
|
|
|
210,000
|
|
|
|
200,000
|
|
|
|
85,000
|
|
Subordinated
debentures
|
|
|
35,568
|
|
|
|
35,507
|
|
|
|
35,323
|
|
Other
liabilities
|
|
|
32,527
|
|
|
|
23,510
|
|
|
|
14,950
|
|
|
|
|
|
|
|
|
|
|
|
Total
Liabilities
|
|
|
2,463,943
|
|
|
|
2,381,072
|
|
|
|
2,241,174
|
|
|
|
|
|
|
|
|
|
|
|
Common stock and
paid-in capital, no par value; shares authorized: 15,000,000;
shares outstanding: 7,556,137 at March 31, 2024, 7,548,217 at
December 31, 2023, and 7,521,749 at March 31, 2023
|
|
|
173,786
|
|
|
|
173,513
|
|
|
|
172,564
|
|
Retained
earnings
|
|
|
77,294
|
|
|
|
73,699
|
|
|
|
64,026
|
|
Accumulated other
comprehensive income (loss), net
|
|
|
(44,324)
|
|
|
|
(51,578)
|
|
|
|
(67,878)
|
|
Shareholders'
Equity
|
|
|
206,756
|
|
|
|
195,634
|
|
|
|
168,712
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and
Shareholders' Equity
|
|
$
|
2,670,699
|
|
|
$
|
2,576,706
|
|
|
$
|
2,409,886
|
|
Condensed Statements
of Income
(Unaudited)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
(Dollars in thousands,
except per share data)
|
|
March 31,
2024
|
|
|
December 31,
2023
|
|
|
March 31,
2023
|
|
Interest
income
|
|
|
|
|
|
|
|
|
|
Loans, including
fees
|
|
$
|
20,786
|
|
|
$
|
19,759
|
|
|
$
|
14,873
|
|
Securities:
|
|
|
|
|
|
|
|
|
|
Taxable
|
|
|
5,348
|
|
|
|
5,532
|
|
|
|
4,913
|
|
Tax exempt
|
|
|
1,412
|
|
|
|
1,385
|
|
|
|
1,435
|
|
Other
|
|
|
886
|
|
|
|
1,286
|
|
|
|
177
|
|
Total interest
income
|
|
|
28,432
|
|
|
|
27,962
|
|
|
|
21,398
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
8,777
|
|
|
|
8,421
|
|
|
|
3,276
|
|
Advances from Federal
Home Loan Bank
|
|
|
441
|
|
|
|
273
|
|
|
|
605
|
|
Other
|
|
|
2,740
|
|
|
|
2,712
|
|
|
|
505
|
|
Total interest
expense
|
|
|
11,958
|
|
|
|
11,406
|
|
|
|
4,386
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
|
|
16,474
|
|
|
|
16,556
|
|
|
|
17,012
|
|
Provision for credit
losses on loans
|
|
|
403
|
|
|
|
933
|
|
|
|
309
|
|
Provision for credit
losses on unfunded commitments
|
|
|
(403)
|
|
|
|
(558)
|
|
|
|
(284)
|
|
Net Provision for
credit losses expense
|
|
|
-
|
|
|
|
375
|
|
|
|
25
|
|
Net interest income
after provision
|
|
|
16,474
|
|
|
|
16,181
|
|
|
|
16,987
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest
income
|
|
|
|
|
|
|
|
|
|
Customer service
charges
|
|
|
2,405
|
|
|
|
2,427
|
|
|
|
2,267
|
|
Insurance and
investment commissions
|
|
|
198
|
|
|
|
157
|
|
|
|
196
|
|
Gains on sales of
loans
|
|
|
454
|
|
|
|
475
|
|
|
|
403
|
|
Net gains (losses) on
sales of securities
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net gains (losses) on
sales and write downs of other assets
|
|
|
1
|
|
|
|
(2)
|
|
|
|
3
|
|
Earnings on life
insurance policies
|
|
|
495
|
|
|
|
286
|
|
|
|
263
|
|
Trust
income
|
|
|
213
|
|
|
|
194
|
|
|
|
184
|
|
Change in market value
of equity securities
|
|
|
35
|
|
|
|
210
|
|
|
|
63
|
|
Other
|
|
|
250
|
|
|
|
299
|
|
|
|
292
|
|
Total noninterest
income
|
|
|
4,051
|
|
|
|
4,046
|
|
|
|
3,671
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest
expense
|
|
|
|
|
|
|
|
|
|
Salaries and
benefits
|
|
|
7,831
|
|
|
|
8,005
|
|
|
|
8,083
|
|
Occupancy and
equipment
|
|
|
1,462
|
|
|
|
1,471
|
|
|
|
1,643
|
|
Data
processing
|
|
|
1,670
|
|
|
|
1,531
|
|
|
|
1,682
|
|
Professional
fees
|
|
|
615
|
|
|
|
523
|
|
|
|
621
|
|
Supplies and
postage
|
|
|
178
|
|
|
|
200
|
|
|
|
191
|
|
Advertising and
promotional
|
|
|
150
|
|
|
|
148
|
|
|
|
149
|
|
Intangible
amortization
|
|
|
203
|
|
|
|
203
|
|
|
|
252
|
|
FDIC
insurance
|
|
|
375
|
|
|
|
394
|
|
|
|
300
|
|
Other
|
|
|
1,200
|
|
|
|
1,303
|
|
|
|
1,074
|
|
Total noninterest
expense
|
|
|
13,684
|
|
|
|
13,778
|
|
|
|
13,995
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
tax
|
|
|
6,841
|
|
|
|
6,449
|
|
|
|
6,663
|
|
Income tax
expense
|
|
|
1,207
|
|
|
|
1,156
|
|
|
|
1,030
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
5,634
|
|
|
$
|
5,293
|
|
|
$
|
5,633
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
|
$
|
0.75
|
|
|
$
|
0.70
|
|
|
$
|
0.75
|
|
Diluted earnings per
share
|
|
$
|
0.74
|
|
|
$
|
0.70
|
|
|
$
|
0.75
|
|
Dividends declared per
share
|
|
$
|
0.27
|
|
|
$
|
0.27
|
|
|
$
|
0.26
|
|
Other Selected
Financial Highlights
(Unaudited)
|
|
|
|
|
|
|
|
Quarterly
|
|
Earnings
|
|
2024 1st
Qtr.
|
|
|
2023 4th
Qtr.
|
|
|
2023 3rd
Qtr.
|
|
|
2023 2nd
Qtr.
|
|
|
2023 1st
Qtr.
|
|
(in thousands except
per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
|
$
|
16,474
|
|
|
$
|
16,556
|
|
|
$
|
16,226
|
|
|
$
|
16,091
|
|
|
$
|
17,012
|
|
Net provision
expense
|
|
|
-
|
|
|
|
375
|
|
|
|
-
|
|
|
|
(250)
|
|
|
|
25
|
|
Noninterest
income
|
|
|
4,051
|
|
|
|
4,046
|
|
|
|
3,704
|
|
|
|
3,485
|
|
|
|
3,671
|
|
Noninterest
expense
|
|
|
13,684
|
|
|
|
13,778
|
|
|
|
13,728
|
|
|
|
13,573
|
|
|
|
13,995
|
|
Net income before
federal income tax expense
|
|
|
6,841
|
|
|
|
6,449
|
|
|
|
6,202
|
|
|
|
6,253
|
|
|
|
6,663
|
|
Income tax
expense
|
|
|
1,207
|
|
|
|
1,156
|
|
|
|
1,080
|
|
|
|
1,040
|
|
|
|
1,030
|
|
Net income
|
|
|
5,634
|
|
|
|
5,293
|
|
|
|
5,122
|
|
|
|
5,213
|
|
|
|
5,633
|
|
Basic earnings per
share
|
|
|
0.75
|
|
|
|
0.70
|
|
|
|
0.68
|
|
|
|
0.69
|
|
|
|
0.75
|
|
Diluted earnings per
share
|
|
|
0.74
|
|
|
|
0.70
|
|
|
|
0.68
|
|
|
|
0.69
|
|
|
|
0.75
|
|
|
End of period
balances
|
|
2024 1st
Qtr.
|
|
|
2023 4th
Qtr.
|
|
|
2023 3rd
Qtr.
|
|
|
2023 2nd
Qtr.
|
|
|
2023 1st
Qtr.
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross loans
|
|
$
|
1,424,625
|
|
|
$
|
1,415,363
|
|
|
$
|
1,315,022
|
|
|
$
|
1,273,152
|
|
|
$
|
1,214,186
|
|
Loans held for sale
(1)
|
|
|
6,035
|
|
|
|
4,710
|
|
|
|
5,222
|
|
|
|
8,924
|
|
|
|
3,603
|
|
Loans to other
financial institutions (2)
|
|
|
30,032
|
|
|
|
19,400
|
|
|
|
23,763
|
|
|
|
38,838
|
|
|
|
-
|
|
Core loans (gross loans
excluding 1 and 2 above)
|
|
|
1,388,558
|
|
|
|
1,391,253
|
|
|
|
1,286,037
|
|
|
|
1,225,390
|
|
|
|
1,210,583
|
|
Allowance for loan
losses
|
|
|
16,037
|
|
|
|
15,685
|
|
|
|
14,872
|
|
|
|
14,582
|
|
|
|
15,065
|
|
Securities available
for sale
|
|
|
521,711
|
|
|
|
531,617
|
|
|
|
507,580
|
|
|
|
542,932
|
|
|
|
554,306
|
|
Securities held to
maturity
|
|
|
397,981
|
|
|
|
407,959
|
|
|
|
414,743
|
|
|
|
420,549
|
|
|
|
422,876
|
|
Other interest-earning
assets
|
|
|
83,100
|
|
|
|
22,392
|
|
|
|
113,402
|
|
|
|
41,032
|
|
|
|
30,999
|
|
Total earning assets
(before allowance)
|
|
|
2,427,417
|
|
|
|
2,377,331
|
|
|
|
2,350,747
|
|
|
|
2,277,665
|
|
|
|
2,222,367
|
|
Total assets
|
|
|
2,670,699
|
|
|
|
2,576,706
|
|
|
|
2,574,196
|
|
|
|
2,483,726
|
|
|
|
2,409,886
|
|
Noninterest-bearing
deposits
|
|
|
502,685
|
|
|
|
547,625
|
|
|
|
531,962
|
|
|
|
544,925
|
|
|
|
554,699
|
|
Interest-bearing
deposits
|
|
|
1,641,193
|
|
|
|
1,550,985
|
|
|
|
1,551,995
|
|
|
|
1,490,093
|
|
|
|
1,513,429
|
|
Brokered
deposits
|
|
|
41,970
|
|
|
|
23,445
|
|
|
|
49,238
|
|
|
|
51,370
|
|
|
|
37,773
|
|
Total
deposits
|
|
|
2,185,848
|
|
|
|
2,122,055
|
|
|
|
2,133,195
|
|
|
|
2,086,388
|
|
|
|
2,105,901
|
|
Deposits excluding
brokered
|
|
|
2,143,878
|
|
|
|
2,098,610
|
|
|
|
2,083,957
|
|
|
|
2,035,018
|
|
|
|
2,068,128
|
|
Total subordinated
debt
|
|
|
35,568
|
|
|
|
35,507
|
|
|
|
35,446
|
|
|
|
35,385
|
|
|
|
35,323
|
|
Total borrowed
funds
|
|
|
210,000
|
|
|
|
200,000
|
|
|
|
180,000
|
|
|
|
160,000
|
|
|
|
85,000
|
|
Other interest-bearing
liabilities
|
|
|
21,512
|
|
|
|
8,060
|
|
|
|
32,204
|
|
|
|
11,985
|
|
|
|
-
|
|
Total interest-bearing
liabilities
|
|
|
1,950,243
|
|
|
|
1,817,997
|
|
|
|
1,848,883
|
|
|
|
1,748,833
|
|
|
|
1,671,525
|
|
Shareholders'
equity
|
|
|
206,756
|
|
|
|
195,634
|
|
|
|
181,161
|
|
|
|
179,240
|
|
|
|
168,712
|
|
|
Average
Balances
|
|
2024 1st
Qtr.
|
|
|
2023 4th
Qtr.
|
|
|
2023 3rd
Qtr.
|
|
|
2023 2nd
Qtr.
|
|
|
2023 1st
Qtr.
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
|
$
|
1,412,569
|
|
|
$
|
1,359,643
|
|
|
$
|
1,278,421
|
|
|
$
|
1,218,860
|
|
|
$
|
1,202,268
|
|
Securities
|
|
|
1,002,140
|
|
|
|
1,019,218
|
|
|
|
1,035,785
|
|
|
|
1,053,191
|
|
|
|
1,059,747
|
|
Other interest-earning
assets
|
|
|
64,064
|
|
|
|
92,635
|
|
|
|
128,704
|
|
|
|
41,075
|
|
|
|
19,452
|
|
Total earning assets
(before allowance)
|
|
|
2,478,773
|
|
|
|
2,471,496
|
|
|
|
2,442,910
|
|
|
|
2,313,126
|
|
|
|
2,281,467
|
|
Total assets
|
|
|
2,621,009
|
|
|
|
2,589,541
|
|
|
|
2,568,240
|
|
|
|
2,422,567
|
|
|
|
2,391,344
|
|
Noninterest-bearing
deposits
|
|
|
506,175
|
|
|
|
546,778
|
|
|
|
540,497
|
|
|
|
534,106
|
|
|
|
566,628
|
|
Interest-bearing
deposits
|
|
|
1,599,509
|
|
|
|
1,565,493
|
|
|
|
1,550,591
|
|
|
|
1,472,990
|
|
|
|
1,530,313
|
|
Brokered
deposits
|
|
|
34,708
|
|
|
|
32,541
|
|
|
|
44,868
|
|
|
|
49,679
|
|
|
|
12,762
|
|
Total
deposits
|
|
|
2,140,392
|
|
|
|
2,144,812
|
|
|
|
2,129,565
|
|
|
|
2,056,775
|
|
|
|
2,109,703
|
|
Total subordinated
debt
|
|
|
35,535
|
|
|
|
35,474
|
|
|
|
35,413
|
|
|
|
35,352
|
|
|
|
35,290
|
|
Total borrowed
funds
|
|
|
214,835
|
|
|
|
185,707
|
|
|
|
181,739
|
|
|
|
144,231
|
|
|
|
63,122
|
|
Other interest-bearing
liabilities
|
|
|
19,699
|
|
|
|
25,729
|
|
|
|
20,480
|
|
|
|
3,763
|
|
|
|
-
|
|
Total interest-bearing
liabilities
|
|
|
1,904,286
|
|
|
|
1,844,944
|
|
|
|
1,833,091
|
|
|
|
1,706,015
|
|
|
|
1,641,487
|
|
Shareholders'
equity
|
|
|
200,177
|
|
|
|
187,099
|
|
|
|
181,219
|
|
|
|
171,912
|
|
|
|
167,952
|
|
|
Loan Breakout
(in thousands)
|
|
2024 1st
Qtr.
|
|
|
2023 4th
Qtr.
|
|
|
2023 3rd
Qtr.
|
|
|
2023 2nd
Qtr.
|
|
|
2023 1st
Qtr.
|
|
Agricultural
|
|
$
|
41,950
|
|
|
$
|
49,211
|
|
|
$
|
43,290
|
|
|
$
|
40,684
|
|
|
$
|
55,995
|
|
Commercial and
Industrial
|
|
|
231,222
|
|
|
|
229,915
|
|
|
|
222,357
|
|
|
|
224,191
|
|
|
|
217,063
|
|
Commercial Real
Estate
|
|
|
794,705
|
|
|
|
786,921
|
|
|
|
709,960
|
|
|
|
657,549
|
|
|
|
648,202
|
|
Consumer
|
|
|
34,268
|
|
|
|
36,540
|
|
|
|
37,605
|
|
|
|
38,614
|
|
|
|
38,891
|
|
Construction Real
Estate
|
|
|
17,890
|
|
|
|
20,936
|
|
|
|
16,477
|
|
|
|
16,734
|
|
|
|
13,939
|
|
Residential Real
Estate
|
|
|
268,523
|
|
|
|
267,730
|
|
|
|
256,348
|
|
|
|
247,618
|
|
|
|
236,493
|
|
Loans to Other
Financial Institutions
|
|
|
30,032
|
|
|
|
19,400
|
|
|
|
23,763
|
|
|
|
38,838
|
|
|
|
-
|
|
Gross Loans (excluding
held for sale)
|
|
$
|
1,418,590
|
|
|
$
|
1,410,653
|
|
|
$
|
1,309,800
|
|
|
$
|
1,264,228
|
|
|
$
|
1,210,583
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for credit
losses
|
|
|
16,037
|
|
|
|
15,685
|
|
|
|
14,872
|
|
|
|
14,582
|
|
|
|
15,065
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loans
|
|
$
|
1,402,553
|
|
|
$
|
1,394,968
|
|
|
$
|
1,294,928
|
|
|
$
|
1,249,646
|
|
|
$
|
1,195,518
|
|
|
Performance
Ratios
|
|
2024 1st
Qtr.
|
|
|
2023 4th
Qtr.
|
|
|
2023 3rd
Qtr.
|
|
|
2023 2nd
Qtr.
|
|
|
2023 1st
Qtr.
|
|
Annualized return on
average assets
|
|
|
0.86
|
%
|
|
|
0.82
|
%
|
|
|
0.80
|
%
|
|
|
0.86
|
%
|
|
|
0.94
|
%
|
Annualized return on
average equity
|
|
|
11.26
|
%
|
|
|
11.32
|
%
|
|
|
11.31
|
%
|
|
|
12.13
|
%
|
|
|
13.42
|
%
|
Annualized return on
average tangible common equity
|
|
|
15.81
|
%
|
|
|
16.40
|
%
|
|
|
16.55
|
%
|
|
|
18.31
|
%
|
|
|
20.64
|
%
|
Net interest margin
(fully tax-equivalent)
|
|
|
2.74
|
%
|
|
|
2.72
|
%
|
|
|
2.70
|
%
|
|
|
2.86
|
%
|
|
|
3.09
|
%
|
Efficiency
ratio
|
|
|
64.55
|
%
|
|
|
65.31
|
%
|
|
|
65.74
|
%
|
|
|
65.92
|
%
|
|
|
65.40
|
%
|
Annualized cost of
funds
|
|
|
2.00
|
%
|
|
|
1.91
|
%
|
|
|
1.70
|
%
|
|
|
1.29
|
%
|
|
|
0.79
|
%
|
Annualized cost of
deposits
|
|
|
1.65
|
%
|
|
|
1.57
|
%
|
|
|
1.36
|
%
|
|
|
0.98
|
%
|
|
|
0.62
|
%
|
Cost of interest
bearing liabilities
|
|
|
2.53
|
%
|
|
|
2.45
|
%
|
|
|
2.18
|
%
|
|
|
1.70
|
%
|
|
|
1.08
|
%
|
Shareholders' equity to
total assets
|
|
|
7.74
|
%
|
|
|
7.59
|
%
|
|
|
7.04
|
%
|
|
|
7.22
|
%
|
|
|
7.00
|
%
|
Tangible common equity
to tangible assets
|
|
|
5.56
|
%
|
|
|
5.32
|
%
|
|
|
4.74
|
%
|
|
|
4.83
|
%
|
|
|
4.52
|
%
|
Annualized noninterest
expense to average assets
|
|
|
2.09
|
%
|
|
|
2.13
|
%
|
|
|
2.14
|
%
|
|
|
2.24
|
%
|
|
|
2.34
|
%
|
Loan to
deposit
|
|
|
65.17
|
%
|
|
|
66.70
|
%
|
|
|
61.65
|
%
|
|
|
61.02
|
%
|
|
|
57.66
|
%
|
Full-time equivalent
employees
|
|
|
367
|
|
|
|
369
|
|
|
|
376
|
|
|
|
380
|
|
|
|
376
|
|
|
Capital Ratios
ChoiceOne Financial Services Inc.
|
|
2024 1st
Qtr.
|
|
|
2023 4th
Qtr.
|
|
|
2023 3rd
Qtr.
|
|
|
2023 2nd
Qtr.
|
|
|
2023 1st
Qtr.
|
|
Total capital (to risk
weighted assets)
|
|
|
13.3
|
%
|
|
|
13.0
|
%
|
|
|
13.2
|
%
|
|
|
13.2
|
%
|
|
|
13.5
|
%
|
Common equity Tier 1
capital (to risk weighted assets)
|
|
|
10.5
|
%
|
|
|
10.3
|
%
|
|
|
10.4
|
%
|
|
|
10.5
|
%
|
|
|
10.7
|
%
|
Tier 1 capital (to risk
weighted assets)
|
|
|
10.7
|
%
|
|
|
10.5
|
%
|
|
|
10.7
|
%
|
|
|
10.8
|
%
|
|
|
11.0
|
%
|
Tier 1 capital (to
average assets)
|
|
|
7.6
|
%
|
|
|
7.5
|
%
|
|
|
7.4
|
%
|
|
|
7.7
|
%
|
|
|
7.7
|
%
|
|
Capital Ratios
ChoiceOne Bank
|
|
2024 1st
Qtr.
|
|
|
2023 4th
Qtr.
|
|
|
2023 3rd
Qtr.
|
|
|
2023 2nd
Qtr.
|
|
|
2023 1st
Qtr.
|
|
Total capital (to risk
weighted assets)
|
|
|
12.6
|
%
|
|
|
12.4
|
%
|
|
|
12.7
|
%
|
|
|
12.7
|
%
|
|
|
13.0
|
%
|
Common equity Tier 1
capital (to risk weighted assets)
|
|
|
11.8
|
%
|
|
|
11.8
|
%
|
|
|
12.0
|
%
|
|
|
12.2
|
%
|
|
|
12.5
|
%
|
Tier 1 capital (to risk
weighted assets)
|
|
|
11.8
|
%
|
|
|
11.8
|
%
|
|
|
12.0
|
%
|
|
|
12.2
|
%
|
|
|
12.5
|
%
|
Tier 1 capital (to
average assets)
|
|
|
8.3
|
%
|
|
|
8.4
|
%
|
|
|
8.3
|
%
|
|
|
8.7
|
%
|
|
|
8.7
|
%
|
|
Asset
Quality
|
|
2024 1st
Qtr.
|
|
|
2023 4th
Qtr.
|
|
|
2023 3rd
Qtr.
|
|
|
2023 2nd
Qtr.
|
|
|
2023 1st
Qtr.
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loan charge-offs
(recoveries)
|
|
$
|
51
|
|
|
$
|
120
|
|
|
$
|
148
|
|
|
$
|
67
|
|
|
$
|
28
|
|
Annualized net loan
charge-offs (recoveries) to average loans
|
|
|
0.01
|
%
|
|
|
0.04
|
%
|
|
|
0.05
|
%
|
|
|
0.02
|
%
|
|
|
0.01
|
%
|
Allowance for loan
losses
|
|
$
|
16,037
|
|
|
$
|
15,685
|
|
|
$
|
14,872
|
|
|
$
|
14,582
|
|
|
$
|
15,065
|
|
Unfunded commitment
liability
|
|
$
|
1,757
|
|
|
$
|
2,160
|
|
|
$
|
2,718
|
|
|
$
|
3,156
|
|
|
$
|
2,991
|
|
Allowance to loans
(excludes held for sale)
|
|
|
1.13
|
%
|
|
|
1.11
|
%
|
|
|
1.14
|
%
|
|
|
1.15
|
%
|
|
|
1.24
|
%
|
Total funds reserved to
pay for loans (includes liability for unfunded commitments and
excludes held for sale)
|
|
|
1.25
|
%
|
|
|
1.27
|
%
|
|
|
1.34
|
%
|
|
|
1.40
|
%
|
|
|
1.49
|
%
|
Non-Accruing
loans
|
|
$
|
1,715
|
|
|
$
|
1,723
|
|
|
$
|
1,670
|
|
|
$
|
1,581
|
|
|
$
|
1,596
|
|
Nonperforming loans
(includes OREO)
|
|
$
|
1,837
|
|
|
$
|
1,845
|
|
|
$
|
1,792
|
|
|
$
|
1,847
|
|
|
$
|
1,726
|
|
Nonperforming loans to
total loans (excludes held for sale)
|
|
|
0.13
|
%
|
|
|
0.13
|
%
|
|
|
0.14
|
%
|
|
|
0.15
|
%
|
|
|
0.14
|
%
|
Nonperforming assets to
total assets
|
|
|
0.07
|
%
|
|
|
0.07
|
%
|
|
|
0.07
|
%
|
|
|
0.07
|
%
|
|
|
0.07
|
%
|
|
Three Months Ended
March 31,
|
|
|
|
2024
|
|
|
2023
|
|
|
(Dollars in
thousands)
|
Average
|
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
|
|
|
Balance
|
|
|
Interest
|
|
|
Rate
|
|
|
Balance
|
|
|
Interest
|
|
|
Rate
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
(1)(3)(4)(5)
|
$
|
1,412,569
|
|
|
$
|
20,807
|
|
|
|
5.92
|
|
%
|
$
|
1,202,268
|
|
|
$
|
14,889
|
|
|
|
5.02
|
|
%
|
Taxable securities
(2)
|
|
710,508
|
|
|
|
5,348
|
|
|
|
3.03
|
|
|
|
761,318
|
|
|
|
4,913
|
|
|
|
2.62
|
|
|
Nontaxable securities
(1)
|
|
291,632
|
|
|
|
1,788
|
|
|
|
2.47
|
|
|
|
298,429
|
|
|
|
1,817
|
|
|
|
2.47
|
|
|
Other
|
|
64,064
|
|
|
|
886
|
|
|
|
5.56
|
|
|
|
19,452
|
|
|
|
177
|
|
|
|
3.68
|
|
|
Interest-earning
assets
|
|
2,478,773
|
|
|
|
28,829
|
|
|
|
4.68
|
|
|
|
2,281,467
|
|
|
|
21,796
|
|
|
|
3.87
|
|
|
Noninterest-earning
assets
|
|
142,236
|
|
|
|
|
|
|
|
|
|
109,877
|
|
|
|
|
|
|
|
|
Total assets
|
$
|
2,621,009
|
|
|
|
|
|
|
|
|
$
|
2,391,344
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
demand deposits
|
$
|
883,372
|
|
|
$
|
3,577
|
|
|
|
1.63
|
|
%
|
$
|
875,435
|
|
|
$
|
1,572
|
|
|
|
0.73
|
|
%
|
Savings
deposits
|
|
338,497
|
|
|
|
641
|
|
|
|
0.76
|
|
|
|
407,022
|
|
|
|
273
|
|
|
|
0.27
|
|
|
Certificates of
deposit
|
|
377,640
|
|
|
|
4,115
|
|
|
|
4.38
|
|
|
|
247,856
|
|
|
|
1,279
|
|
|
|
2.09
|
|
|
Brokered
deposit
|
|
34,708
|
|
|
|
444
|
|
|
|
5.14
|
|
|
|
12,762
|
|
|
|
152
|
|
|
|
4.84
|
|
|
Borrowings
|
|
214,835
|
|
|
|
2,523
|
|
|
|
4.72
|
|
|
|
63,122
|
|
|
|
708
|
|
|
|
4.55
|
|
|
Subordinated
debentures
|
|
35,535
|
|
|
|
412
|
|
|
|
4.67
|
|
|
|
35,290
|
|
|
|
402
|
|
|
|
4.62
|
|
|
Other
|
|
19,699
|
|
|
|
246
|
|
|
|
5.02
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Interest-bearing
liabilities
|
|
1,904,286
|
|
|
|
11,958
|
|
|
|
2.53
|
|
|
|
1,641,487
|
|
|
|
4,386
|
|
|
|
1.08
|
|
|
Demand
deposits
|
|
506,175
|
|
|
|
|
|
|
|
|
|
566,628
|
|
|
|
|
|
|
|
|
Other
noninterest-bearing liabilities
|
|
10,371
|
|
|
|
|
|
|
|
|
|
15,277
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
2,420,832
|
|
|
|
|
|
|
|
|
|
2,223,392
|
|
|
|
|
|
|
|
|
Shareholders'
equity
|
|
200,177
|
|
|
|
|
|
|
|
|
|
167,952
|
|
|
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
$
|
2,621,009
|
|
|
|
|
|
|
|
|
$
|
2,391,344
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
(tax-equivalent basis) (Non-GAAP) (1)
|
|
|
|
$
|
16,871
|
|
|
|
|
|
|
|
|
$
|
17,410
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin
(tax-equivalent basis) (Non-GAAP) (1)
|
|
|
|
|
|
|
|
2.74
|
|
%
|
|
|
|
|
|
|
|
3.09
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation to
Reported Net Interest Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
(tax-equivalent basis) (Non-GAAP) (1)
|
|
|
|
$
|
16,871
|
|
|
|
|
|
|
|
|
$
|
17,410
|
|
|
|
|
|
Adjustment for taxable
equivalent interest
|
|
|
|
|
(397)
|
|
|
|
|
|
|
|
|
|
(398)
|
|
|
|
|
|
Net interest
income (GAAP)
|
|
|
|
$
|
16,474
|
|
|
|
|
|
|
|
|
$
|
17,012
|
|
|
|
|
|
Net interest margin
(GAAP)
|
|
|
|
|
|
|
|
2.67
|
|
%
|
|
|
|
|
|
|
|
3.02
|
|
%
|
|
|
(1)
|
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.
|
(2)
|
Taxable securities
include dividend income from Federal Home Loan Bank and Federal
Reserve Bank stock.
|
(3)
|
Loans include both
loans to other financial institutions and loans held for
sale.
|
(4)
|
Non-accruing loan
balances are included in the balances of average loans.
Non-accruing loan average balances were $1.7 million and $1.4
million in the first quarter of 2024 and 2023,
respectively.
|
(5)
|
Interest on loans
included net origination fees and accretion income. Accretion
income was $390,000 and $471,000 in the first quarter of 2024 and
2023, respectively.
|
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SOURCE ChoiceOne Financial Services, Inc.