ChoiceOne Reports Second Quarter 2025 Results

Rhea-AI Summary

ChoiceOne Financial Services (NASDAQ:COFS) reported strong Q2 2025 financial results following its March 1 merger with Fentura Financial. The company posted Q2 net income of $13.5 million ($0.90 per diluted share), compared to $6.6 million ($0.87 per share) in Q2 2024.

The merger with Fentura added approximately $1.8 billion in assets, including $1.4 billion each in loans and deposits. The company's GAAP net interest margin increased to 3.66% from 2.95% year-over-year, while net interest income rose to $36.3 million from $18.4 million.

Total assets reached $4.3 billion as of June 30, 2025, up $1.7 billion from the previous year. Asset quality remained strong with annualized net loan charge-offs of 0.06% and nonperforming loans ratio of 0.66%. The company maintains a strong capital position with a total risk-based capital ratio of 12.4%.

Positive

• Record Q2 2025 net income of $13.5 million, up 105% from $6.6 million in Q2 2024
• Significant net interest margin expansion to 3.66% from 2.95% year-over-year
• Strong asset quality with low 0.06% annualized net loan charge-offs
• Substantial growth through merger, adding $1.8 billion in total assets
• Organic core loan growth of 10.0% over the twelve months ended June 30, 2025
• Strong liquidity position with $1.2 billion in available borrowing capacity

Negative

• Net loss of $372,000 for the six months ended June 30, 2025
• Core loans declined by $4.8 million in Q2 2025
• Deposits (excluding brokered) decreased by $98.0 million quarter-over-quarter
• High level of uninsured deposits at 29.6% of total deposits
• Decline in total risk-based capital ratio to 12.4% from 13.2% year-over-year

Insights

Financial Analyst

ChoiceOne posts strong Q2 with merger integration driving record profits despite one-time merger costs impacting YTD results.

ChoiceOne Financial Services reported a substantial second quarter performance, with net income reaching $13.5 million ($0.90 per diluted share), more than doubling from $6.6 million in Q2 2024. This impressive growth stems primarily from the completed merger with Fentura Financial on March 1, 2025, which significantly expanded ChoiceOne's asset base to $4.3 billion.

The bank's net interest margin saw remarkable improvement, rising to 3.66% from 2.95% a year earlier, with $3.5 million of accretion income from acquired loans contributing 36 basis points to this expansion. GAAP net interest income nearly doubled to $36.3 million from $18.4 million in Q2 2024.

Despite the strong quarter, year-to-date results show a net loss of $372,000 due to significant merger-related expenses of $13.9 million ($1.08 per share) and a merger-related provision for credit losses of $9.5 million ($0.73 per share). Excluding these one-time costs, adjusted YTD net income would be $23 million with diluted EPS of $1.78.

The bank maintains strong asset quality with annualized net loan charge-offs at just 0.06% and nonperforming loans at 0.66% of total loans. Core loans declined slightly in Q2 but showed 10% organic growth year-over-year, excluding the $1.4 billion in loans acquired through the merger.

Deposits decreased by $98 million since March 31, attributed to seasonal municipal fluctuations and strategic reduction of higher-cost deposits acquired from Fentura. The bank maintains ample liquidity with $1.2 billion in available borrowing capacity.

Management expects no additional material merger expenses and anticipates further cost synergies as integration efforts complete. With the capital position strengthened by both the merger and a $34.5 million stock offering in July 2024, ChoiceOne appears well-positioned to leverage its expanded footprint across Michigan.

SPARTA, Mich., July 25, 2025 /PRNewswire/ -- ChoiceOne Financial Services, Inc. ("ChoiceOne", NASDAQ:COFS), the parent company for ChoiceOne Bank, reported financial results for the quarter ended June 30, 2025.  On March 1, 2025, ChoiceOne completed the merger (the "Merger") of Fentura Financial, Inc. ("Fentura"), the former parent company of The State Bank, with and into ChoiceOne with ChoiceOne surviving the merger.  On March 14, 2025, the consolidation of The State Bank with and into ChoiceOne Bank with ChoiceOne Bank surviving the consolidation was completed. 

Significant items impacting comparable second quarter 2024 and 2025 results include the following:

• The total assets, loans and deposits acquired in the Merger were approximately $1.8 billion, $1.4 billion and $1.4 billion, respectively.   
• Merger related expenses, net of taxes, of approximately $132,000 and $13.9 million ($0.01 and $1.08 per diluted share) for the three and six months ended June 30, 2025, respectively.  Management does not anticipate material merger expenses going forward.
• Merger related provision for credit losses, net of taxes, of $9.5 million during the first quarter ended March 31, 2025, or $0.73 per diluted share as of June 30, 2025.

Highlights

• ChoiceOne reported net income of $13,534,000 and a net loss of $372,000 for the three and six months ended June 30, 2025, compared to net income of $6,586,000 and $12,220,000 for the same periods in the prior year, respectively.  Net income excluding merger expenses, net of taxes, and merger related provision for credit losses, net of taxes was $13,666,000 and $22,976,000 for the three and six months ended June 30, 2025, respectively.
• Diluted earnings per share was $0.90 for the three months ended June 30, 2025 and diluted loss per share was $0.03 per share for the six months ended June 30, 2025, compared to diluted earnings per share of $0.87 and $1.61 in the same periods in the prior year.  Diluted earnings per share excluding merger expenses, net of taxes, and merger related provision for credit losses, net of taxes, were $0.91 and $1.78 for the three and six months ended June 30, 2025.
• In the second quarter of 2025, ChoiceOne's GAAP net interest margin rose significantly to 3.66%, up from 2.95% in the same period of 2024. GAAP net interest income also saw a substantial increase, reaching $36.3 million compared to $18.4 million in the second quarter of 2024. This growth was primarily due to the additional net interest income added through the Merger beginning on March 1, 2025. Accretion income from purchased loans increased GAAP net interest margin by 36 basis points for the second quarter of 2025.  
• Core loans, which exclude held for sale loans and loans to other financial institutions, declined by $4.8 million or less than 1% on an annualized basis during the second quarter of 2025 and grew organically by $140.1 million or 10.0% during the twelve months ended June 30, 2025.  Core loans grew by $1.4 billion due to the Merger on March 1, 2025.  Loan interest income increased $24.6 million in the second quarter of 2025 compared to the same period in 2024.  Interest income for the three months ended June 30, 2025 includes $3.5 million of interest income accretion due to loans purchased.
• Deposits, excluding brokered deposits, declined by $98.0 million as of June 30, 2025, compared to March 31, 2025, primarily due to seasonal municipal fluctuations and some reduction of higher cost deposits acquired from the Merger. 
• Asset quality continues to remain strong, with annualized net loan charge-offs to average loans of 0.06% and nonperforming loans to total loans (excluding loans held for sale) of 0.66% as of June 30, 2025.  Notably, 0.41% of the nonperforming loans to total loans (excluding loans held for sale) is attributed to loans purchased with credit deterioration acquired through the Merger.  

"We are pleased to report another outstanding quarter at ChoiceOne, highlighted by record net income and an expansion in our net interest margin," said Kelly Potes, Chief Executive Officer. "These results reflect the successful execution of our strategic merger with Fentura and The State Bank, which has strengthened our market position and enhanced our ability to serve our communities.  As we move forward, we remain focused on delivering long-term value to our customers, employees, and shareholders."

ChoiceOne reported net income of $13,534,000 and a net loss of $372,000 for the three and six months ended June 30, 2025, compared to net income of $6,586,000 and $12,220,000 for the same periods in the prior year, respectively.  Net income excluding merger expenses, net of taxes, and merger related provision for credit losses, net of taxes was $13,666,000 and $22,976,000 for the three and six months ended June 30, 2025, respectively.  Diluted earnings per share was $0.90 for the three months ended June 30, 2025 and diluted loss per share was $0.03 per share for the six months ended June 30, 2025, compared to diluted earnings per share of $0.87 and $1.61 in the same periods in the prior year.  Diluted earnings per share excluding merger expenses, net of taxes, and merger related provision for credit losses, net of taxes, were $0.91 and $1.78 for the three and six months ended June 30, 2025.

As of June 30, 2025, total assets were $4.3 billion, an increase of $1.7 billion compared to June 30, 2024.  The growth is primarily attributed to the Merger.  This growth was offset by a $33.5 million reduction in loans to other financial institutions and a $14.5 million reduction in securities on June 30, 2025 compared to June 30, 2024.  Loans to other financial institutions consist of a warehouse line of credit used to facilitate mortgage loan originations, with interest rates that fluctuate in line with the national mortgage market. This decline is attributed to ChoiceOne's strategic shift towards a higher percentage of internally driven originations.  The reduction in securities occurred as ChoiceOne chose to restructure much of the acquired securities portfolio purchased in the Merger in order to reduce high cost wholesale funding. 

Core loans, which exclude held for sale loans and loans to other financial institutions, declined by $4.8 million or less than 1% on an annualized basis during the second quarter of 2025 and grew organically by $140.1 million or 10.0% during the twelve months ended June 30, 2025.  Core loans grew by $1.4 billion due to the Merger on March 1, 2025.  Loan interest income increased $24.6 million in the second quarter of 2025 compared to the same period in 2024.  Interest income for the three months ended June 30, 2025 includes $3.5 million of interest income accretion due to loans purchased.  Of this amount, $2.4 million was calculated using the effective interest rate method of amortization, while the remaining $1.1 million resulted from accretion through unexpected payoffs and paydowns of loans with an associated fair value mark.  Estimated accretion income from purchased loans for the remainder of 2025 using the effective interest method of amortization is $4.1 million; however, actual results will be dependent on prepayment speeds and other factors.

Deposits, excluding brokered deposits, declined by $98.0 million as of June 30, 2025,compared to March 31, 2025, primarily due to seasonal municipal fluctuations and some reduction of higher cost deposits acquired from the Merger.  Deposits, excluding brokered deposits, increased by $1.4 billion  as of June 30, 2025, compared to June 30, 2024 as a result of the Merger.  ChoiceOne continues to be proactive in managing its liquidity position by using brokered deposits and FHLB advances to ensure ample liquidity.  At June 30, 2025, total available borrowing capacity secured by pledged assets was $1.2 billion. ChoiceOne can increase its borrowing capacity by utilizing unsecured federal fund lines and pledging additional assets.  Uninsured deposits totaled $1.1 billion or 29.6% of deposits at June 30, 2025.

ChoiceOne's annualized cost of deposits to average total deposits has increased by 9 basis points from June 30, 2024 to June 30, 2025, as higher cost deposits were acquired in the Merger.  The increase was slightly offset by the decline in the cost of CD's during the same time period.  ChoiceOne has been able to mitigate the increase in the annualized cost of deposits to average total deposits by paying down borrowings in order to decrease the cost of funds to average total deposits to an annualized 1.84% in the second quarter of 2025, down from 1.92% in the second quarter of 2024. If rates continue to decline, we anticipate further reductions in deposit costs, although these will be tempered by decreased cash flows from pay-fixed interest rate swaps.  Interest expense on borrowings for the three months ended June 30, 2025, declined by $536,000 compared to the same period in the prior year.  As of June 30, 2025, the total borrowed balance at the FHLB was $195.0 million at a weighted average fixed rate of 4.36%, with $155.0 million due within 12 months.

The provision for credit losses on loans was $650,000 in the second quarter of 2025, due primarily to changes in forecast metrics per the Federal Open Market Committee.  The ratio of the allowance for credit losses to total loans (excluding loans held for sale) was 1.19% on June 30, 2025 compared to 1.07% on December 31, 2024.  Asset quality continues to remain strong, with annualized net loan charge-offs to average loans of 0.06% and nonperforming loans to total loans (excluding loans held for sale) of 0.66% as of June 30, 2025.  Notably, 0.41% of the nonperforming loans to total loans (excluding loans held for sale) is attributed to loans purchased with credit deterioration acquired through the Merger.  

ChoiceOne uses interest rate swaps to manage interest rate exposure to certain fixed rate assets and variable rate liabilities.  On June 30, 2025, ChoiceOne held pay-fixed interest rate swaps with a total notional value of $351.0 million, a weighted average coupon of 3.12%, a fair value of $7.9 million and an average remaining contract length of 6.9 years.  These derivative instruments change in value as rates rise or fall inverse to the change in unrealized losses of the available for sale portfolio due to rates.  Settlements from swaps amounted to $1.3 million for the second quarter of 2025 compared to $1.3 million for the first quarter of 2025.  In addition to the pay-fixed interest rate swaps, ChoiceOne also employs back-to-back swaps on select commercial loans, with the impact reflected in interest income.

As of June 30, 2025, shareholders' equity was $431.8 million, a significant increase from $214.5 million on June 30, 2024. This growth was primarily driven by the Merger, in which ChoiceOne issued 6,070,836 shares of common stock on March 1, 2025, valued at $193.0 million. Additionally, the sale of 1,380,000 shares of common stock at $25.00 per share on July 26, 2024, generated $34.5 million in aggregate gross proceeds (before deducting discounts and estimated offering expenses). However, this was slightly offset by a minor decline in retained earnings.  ChoiceOne Bank continues to be "well-capitalized," with a total risk-based capital ratio of 12.4% as of June 30, 2025, compared to 13.2% on June 30, 2024, primarily due to the impact of the Merger.

Noninterest income increased by $2.4 million and $3.3 million for the three and six months ended June 30, 2025, compared to the same periods in the prior year. This increase was partly driven by higher credit and debit card fees, which rose due to increased volume from the Merger.  Additionally, ChoiceOne recognized income from two death benefit claims during the quarter for an additional $299,000. Trust income also increased as a result of higher estate settlement fees and customers obtained from the Merger.

Noninterest expense increased by $11.2 million and $33.2 million for the three and six months ended June 30, 2025, compared to the same periods in 2024. The year to date increase was largely due to merger-related expenses of $17.4 million during the six months ended June 30, 2025, compared to $0 in the same period in the prior year.  Management does not anticipate material merger expenses going forward.  The remainder of the increase was primarily due to the addition of Fentura on March 1, 2025.  ChoiceOne is committed to managing costs strategically while making prudent investments to sustain our competitive edge and provide exceptional value to our customers, shareholders, and communities. 

"Our strong second quarter results, including record net income and a substantial increase in net interest margin, reflect the early benefits of the Merger. As we complete integration efforts, we believe in our ability to unlock long-term value through operational efficiencies, a broader customer base, and the exceptional talent that has joined our team. We remain committed to delivering outstanding service and sustainable growth for our customers, communities, and shareholders," said Kelly Potes, Chief Executive Officer.

About ChoiceOne

ChoiceOne Financial Services, Inc. is a financial holding company headquartered in Sparta, Michigan, with assets over $4 billion, and the parent corporation of ChoiceOne Bank. Member FDIC. ChoiceOne Bank operates 56 offices in West, Central and Southeast Michigan. ChoiceOne Bank offers insurance and investment products through its subsidiary, ChoiceOne Insurance Agencies, Inc. ChoiceOne Financial Services, Inc. common stock is quoted on the Nasdaq Capital Market under the symbol "COFS." For more information, please visit Investor Relations at ChoiceOne's website choiceone.bank.

Forward-Looking Statements

This news release contains forward-looking statements.  Words such as "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "is likely," "plans," "predicts," "projects," "may," "could," "look forward," "continue", "future" and variations of such words and similar expressions are intended to identify such forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements regarding the outlook and expectations of ChoiceOne with respect to the Merger, including the strategic benefits and financial benefits of the Merger.  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 does not undertake any 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's Annual Report on Form 10-K for the year ended December 31, 2024 and in any of ChoiceOne's subsequent SEC filings, which are available on the SEC's website, www.sec.gov.

Non-GAAP Financial Measures

In addition to results presented in accordance with GAAP, this presentation includes certain non-GAAP financial measures. ChoiceOne believes these non-GAAP financial measures provide additional information that is useful to investors in helping to understand underlying financial performance and condition and trends of ChoiceOne.

Non-GAAP financial measures have inherent limitations. Readers should be aware of these limitations and should be cautious with respect to the use of such measures. To compensate for these limitations, non-GAAP measures are used as comparative tools, together with GAAP measures, to assist in the evaluation of operating performance or financial condition. These measures are also calculated using the appropriate GAAP or regulatory components in their entirety and are computed in a manner intended to facilitate consistent period-to-period comparisons. ChoiceOne's method of calculating these non-GAAP measures may differ from methods used by other companies. These non-GAAP measures should not be considered in isolation or as a substitute for those financial measures prepared in accordance with GAAP or in-effect regulatory requirements.

Where non-GAAP financial measures are used, the most directly comparable GAAP or regulatory financial measure, as well as the reconciliation to the most directly comparable GAAP or regulatory financial measure, can be found in the tables to this news release under the heading non-GAAP reconciliation.

 

Condensed Balance Sheets (Unaudited)
(In thousands)		June 30, 2025				March 31, 2025				June 30, 2024
Cash and cash equivalents		$	156,280			$	139,421			$	101,002
Equity securities, at fair value			9,582				9,328				7,502
Securities Held to Maturity			390,457				394,434				392,699
Securities Available for Sale			479,426				480,650				491,670
Federal Home Loan Bank stock			18,562				18,562				4,449
Federal Reserve Bank stock			12,547				12,357				5,066
Loans held for sale			7,639				3,941				5,946
Loans to other financial institutions			3,033				2,393				36,569
Core loans			2,917,759				2,922,562				1,400,958
Total loans held for investment			2,920,792				2,924,955				1,437,527
Allowance for credit losses			(34,798)				(34,567)				(16,152)
Loans, net of allowance for credit losses			2,885,994				2,890,388				1,421,375
Premises and equipment			45,667				44,284				27,370
Cash surrender value of life insurance policies			73,673				73,765				45,384
Goodwill			126,730				126,730				59,946
Core deposit intangible			33,421				35,153				1,448
Other assets			70,274				76,378				59,210
Total Assets		$	4,310,252			$	4,305,391			$	2,623,067
Noninterest-bearing deposits		$	943,873			$	912,033			$	517,137
Interest-bearing deposits			2,542,526				2,672,401				1,582,365
Brokered deposits			106,225				67,295				27,177
Borrowings			198,428				137,330				210,000
Subordinated debentures			48,277				48,186				35,630
Other liabilities			39,162				41,078				36,239
Total Liabilities			3,878,491				3,878,323				2,408,548
Common stock and paid-in capital, no par value; shares authorized: 30,000,000; shares outstanding: 15,008,864 at June 30, 2025, 14,975,034 at March 31, 2025, and 7,573,618 at June 30, 2024.			398,201				398,075				173,984
Retained earnings			82,647				73,316				81,836
Accumulated other comprehensive income (loss), net			(49,087)				(44,323)				(41,301)
Shareholders' Equity			431,761				427,068				214,519
Total Liabilities and Shareholders' Equity		$	4,310,252			$	4,305,391			$	2,623,067

 

Condensed Statements of Operations (Unaudited)
		Three Months Ended								Six Months Ended
(Dollars in thousands, except per share data)		June 30,								June 30,
		2025				2024				2025				2024
Interest income
Loans, including fees		$	46,533			$	21,971			$	79,174			$	42,757
Securities:
Taxable			5,264				5,471				9,994				10,819
Tax exempt			1,393				1,410				2,802				2,822
Other			735				1,092				1,914				1,978
Total interest income			53,925				29,944				93,884				58,376
Interest expense
Deposits			14,840				8,325				25,556				17,102
Advances from Federal Home Loan Bank			1,659				463				3,711				904
Other			1,104				2,785				1,984				5,525
Total interest expense			17,603				11,573				31,251				23,531
Net interest income			36,322				18,371				62,633				34,845
Provision for credit losses on loans			650				272				13,813				675
Provision for (reversal of) credit losses on unfunded commitments			-				(272)				-				(675)
Net Provision for credit losses expense			650				-				13,813				-
Net interest income after provision			35,672				18,371				48,820				34,845
Noninterest income
Customer service charges			1,401				1,146				2,582				2,289
Credit and debit card fees			2,083				1,516				3,592				2,778
Insurance and investment commissions			540				190				835				388
Gains on sales of loans			355				525				799				979
Net gains (losses) on sales and write downs of other assets			3				11				13				12
Earnings on life insurance policies			844				305				1,233				800
Trust income			596				220				1,102				433
Change in market value of equity securities			239				(71)				346				(36)
Other			442				241				923				491
Total noninterest income			6,503				4,083				11,425				8,134
Noninterest expense
Salaries and benefits			13,731				8,264				24,051				16,095
Occupancy and equipment			2,432				1,477				4,151				2,939
Data processing			2,439				1,468				4,438				2,808
Communication			561				312				941				642
Professional fees			947				593				1,644				1,208
Supplies and postage			305				168				549				346
Advertising and promotional			260				199				516				349
Intangible amortization			1,732				203				2,412				406
FDIC insurance			550				390				1,005				765
Merger related expenses			166				-				17,369				-
Other			2,383				1,204				4,095				2,404
Total noninterest expense			25,506				14,278				61,171				27,962
Income (loss) before income tax			16,669				8,176				(926)				15,017
Income tax expense (benefit)			3,135				1,590				(554)				2,797
Net income (loss)		$	13,534			$	6,586			$	(372)			$	12,220
Basic earnings (loss) per share		$	0.90			$	0.87			$	(0.03)			$	1.62
Diluted earnings (loss) per share		$	0.90			$	0.87			$	(0.03)			$	1.61
Dividends declared per share		$	0.28			$	0.27			$	0.56			$	0.54

 

	Three Months Ended June 30,
	2025												2024
(Dollars in thousands)	Average												Average
	Balance				Interest				Rate				Balance				Interest				Rate
Assets:
Loans (1)(3)(4)(5)	$	2,936,168			$	46,551				6.36		%	$	1,435,966			$	21,981			6.16			%
Taxable securities (2)		695,546				5,264				3.04				696,023				5,471			3.16
Nontaxable securities (1)		289,061				1,764				2.45				290,258				1,785			2.47
Other		63,416				735				4.65				80,280				1,092			5.47
Interest-earning assets		3,984,191				54,314				5.47				2,502,527				30,329			4.87
Noninterest-earning assets		314,322												145,189
Total assets	$	4,298,513											$	2,647,716
Liabilities and Shareholders' Equity:
Interest-bearing demand deposits	$	1,332,318			$	6,163				1.86		%	$	876,344			$	2,921			1.34			%
Savings deposits		595,362				1,003				0.68				333,056			649				0.78
Certificates of deposit		646,247				6,353				3.94				391,620				4,331			4.45
Brokered deposit		120,720				1,321				4.39				34,218			424				4.98
Borrowings		169,257				1,945				4.61				210,000				2,480			4.75
Subordinated debentures		48,971			689					5.65				35,596			412				4.65
Other		11,763			129					4.39				26,426			356				5.41
Interest-bearing liabilities		2,924,638				17,603				2.41				1,907,260				11,573			2.44
Demand deposits		915,637												516,308
Other noninterest-bearing liabilities		30,695												13,406
Total liabilities		3,870,970												2,436,974
Shareholders' equity		427,543												210,742
Total liabilities and shareholders' equity	$	4,298,513											$	2,647,716
Net interest income (tax-equivalent basis) (Non-GAAP) (1)					$	36,711											$	18,756
Net interest margin (tax-equivalent basis) (Non-GAAP) (1)										3.70		%										3.01		%

(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 $16.8 million and $1.9 million in the second quarter of 2025 and 2024, respectively.
(5)	Interest on loans included net origination fees and accretion income.  Accretion income was $3.5 million and $279,000 in the second quarter of 2025 and 2024, respectively.

 

Income Adjusted for Merger Expenses - Non-GAAP Reconciliation (Unaudited)
		Three Months Ended								Six Months Ended								Three months Ended
		June 30,								June 30,								March 31,				December 31,				September 31,
		2025				2024				2025				2024				2025				2024				2024
(In Thousands, Except Per Share Data)
Net income (loss)		$	13,534			$	6,586			$	(372)			$	12,220			$	(13,906)			$	7,159			$	7,348
Merger related expenses net of tax			132				-				13,885				-				13,753				373				633
Merger related provision for credit losses, net of tax (1)			-				-				9,463				-				9,463				-				-
Adjusted net income		$	13,666			$	6,586			$	22,976			$	12,220			$	9,310			$	7,532			$	7,981
Weighted average number of shares			14,999,067				7,569,241				12,849,509				7,560,960				10,676,068				8,963,258				8,567,548
Diluted average shares outstanding			15,035,113				7,604,963				12,888,899				7,598,215				10,740,077				9,024,567				8,615,500
Basic earnings (loss) per share		$	0.90			$	0.87			$	(0.03)			$	1.62			$	(1.30)			$	0.79			$	0.86
Diluted earnings (loss) per share		$	0.90			$	0.87			$	(0.03)			$	1.61			$	(1.29)			$	0.79			$	0.85
Adjusted basic earnings per share		$	0.91			$	0.87			$	1.79			$	1.62			$	0.87			$	0.84			$	0.94
Adjusted diluted earnings per share		$	0.91			$	0.87			$	1.78			$	1.61			$	0.86			$	0.83			$	0.93

(1)	Merger related provision for credit loss represents the calculated credit loss on Non-PCD loans acquired during the Merger on March 1, 2025.

 

NON-GAAP Reconciliation		2025 2nd Qtr.				2025 1st Qtr.				2024 4th Qtr.				2024  3rd Qtr.				2024  2nd Qtr.
Net interest income (tax-equivalent basis) (Non-GAAP)		$	36,711			$	26,710			$	19,739			$	20,631			$	18,756
Net interest margin (fully tax-equivalent)			3.70	%			3.48	%			3.04	%			3.23	%			3.01	%
Reconciliation to Reported Net Interest Income
Net interest income (tax-equivalent basis) (Non-GAAP)		$	36,711			$	26,710			$	19,739			$	20,631			$	18,756
Adjustment for taxable equivalent interest			(389)				(399)				(390)				(383)				(385)
Net interest income  (GAAP)		$	36,322			$	26,311			$	19,349			$	20,248			$	18,371
Net interest margin (GAAP)			3.66	%			3.43	%			2.98	%			3.17	%			2.95	%

 

(dollars in thousands)		2025 2nd Qtr.				2025 1st Qtr.				2024 4th Qtr.				2024  3rd Qtr.				2024  2nd Qtr.
Total assets		$	4,310,252			$	4,305,391			$	2,723,243			$	2,726,003			$	2,623,067
Less: goodwill			126,730				126,730				59,946				59,946				59,946
Less: core deposit intangible			33,421				35,153				1,096				1,250				1,448
Tangible assets		$	4,150,101			$	4,143,508			$	2,662,201			$	2,664,807			$	2,561,673
Total equity		$	431,761			$	427,068			$	260,415			$	247,746			$	214,519
Less: goodwill			126,730				126,730				59,946				59,946				59,946
Less: core deposit intangible			33,421				35,154				1,096				1,250				1,448
Tangible common equity		$	271,610			$	265,184			$	199,373			$	186,550			$	153,125
Tangible common equity to tangible assets			6.54	%			6.40	%			7.49	%			7.00	%			5.98	%

 

(dollars in thousands)		2025 2nd Qtr.				2025 1st Qtr.				2024 4th Qtr.				2024  3rd Qtr.				2024  2nd Qtr.
Net income		$	13,534			$	(13,906)			$	7,159			$	7,348			$	6,586
Less: intangible amortization (tax affected at 21%)			1,369				537				121				156				160
Adjusted net income		$	12,165			$	(14,443)			$	7,038			$	7,192			$	6,426
Average shareholders' equity		$	427,543			$	302,537			$	254,737			$	237,875			$	210,742
Less: average goodwill			126,730				83,030				59,946				59,946				59,946
Less: average core deposit intangible			34,356				12,983				1,179				1,355				1,553
Average tangible common equity		$	266,457			$	206,524			$	193,612			$	176,574			$	149,243
Return on average tangible common equity			18.26	%			-27.97	%			14.54	%			16.29	%			17.22	%

 

Other Selected Financial Highlights (Unaudited)
		Quarterly
Earnings		2025 2nd Qtr.				2025 1st Qtr.				2024 4th Qtr.				2024  3rd Qtr.				2024  2nd Qtr.
(in thousands except per share data)
Net interest income		$	36,322			$	26,311			$	19,349			$	20,248			$	18,371
Net provision expense			650				13,163				200				425				-
Noninterest income			6,503				4,922				4,994				4,867				4,083
Noninterest expense			25,506				35,665				15,344				15,417				14,278
Net income (loss) before federal income tax expense			16,669				(17,595)				8,799				9,273				8,176
Income tax expense (benefit)			3,135				(3,689)				1,640				1,925				1,590
Net income (loss)			13,534				(13,906)				7,159				7,348				6,586
Basic earnings (loss) per share			0.90				(1.30)				0.79				0.86				0.87
Diluted earnings (loss) per share			0.90				(1.29)				0.79				0.85				0.87
Adjusted basic earnings per share			0.91				0.87				0.84				0.94				0.87
Adjusted diluted earnings per share			0.91				0.86				0.83				0.93				0.87

 

End of period balances		2025 2nd Qtr.				2025 1st Qtr.				2024 4th Qtr.				2024  3rd Qtr.				2024  2nd Qtr.
(in thousands)
Gross loans		$	2,928,431			$	2,928,896			$	1,552,928			$	1,509,944			$	1,443,473
Loans held for sale (1)			7,639				3,941				7,288				5,994				5,946
Loans to other financial institutions (2)			3,033				2,393				39,878				38,492				36,569
Core loans (gross loans excluding 1 and 2 above)			2,917,759				2,922,562				1,505,762				1,465,458				1,400,958
Allowance for credit losses			34,798				34,567				16,552				16,490				16,152
Securities available for sale			479,426				480,650				479,117				497,552				491,670
Securities held to maturity			390,457				394,434				394,534				391,954				392,699
Other interest-earning assets			110,206				110,605				86,185				116,643				84,484
Total earning assets (before allowance)			3,908,520				3,914,585				2,512,764				2,516,093				2,412,326
Total assets			4,310,252				4,305,391				2,723,243				2,726,003				2,623,067
Noninterest-bearing deposits			943,873				912,033				524,945				521,055				517,137
Interest-bearing deposits			2,542,526				2,672,401				1,652,647				1,680,546				1,582,365
Brokered deposits			106,225				67,295				36,511				6,627				27,177
Total deposits			3,592,624				3,651,729				2,214,103				2,208,228				2,126,679
Deposits excluding brokered			3,486,399				3,584,434				2,177,592				2,201,601				2,099,502
Total subordinated debt			48,277				48,186				35,752				35,691				35,630
Total borrowed funds			198,428				137,330				175,000				210,000				210,000
Other interest-bearing liabilities			8,529				13,420				24,003				4,956				22,378
Total interest-bearing liabilities			2,903,985				2,938,632				1,923,913				1,937,820				1,877,550
Shareholders' equity			431,761				427,068				260,415				247,746				214,519

 

Average Balances		2025 2nd Qtr.				2025 1st Qtr.				2024 4th Qtr.				2024  3rd Qtr.				2024  2nd Qtr.
(in thousands)
Loans		$	2,936,168			$	2,019,643			$	1,516,466			$	1,460,033			$	1,435,966
Securities			984,607				978,769				965,501				970,913				986,281
Other interest-earning assets			63,416				115,091				100,864				108,019				80,280
Total earning assets (before allowance)			3,984,191				3,113,503				2,582,831				2,538,965				2,502,527
Total assets			4,298,513				3,319,591				2,719,530				2,685,190				2,647,716
Noninterest-bearing deposits			915,637				651,424				536,653				519,511				516,308
Interest-bearing deposits			2,573,927				2,030,543				1,641,102				1,634,255				1,601,020
Brokered deposits			120,720				45,553				19,620				17,227				34,218
Total deposits			3,610,284				2,727,520				2,197,375				2,170,993				2,151,546
Total subordinated debt			48,971				40,182				35,719				35,658				35,596
Total borrowed funds			169,257				193,961				197,828				210,000				210,000
Other interest-bearing liabilities			11,763				20,553				16,928				11,756				26,426
Total interest-bearing liabilities			2,924,638				2,330,792				1,911,197				1,908,896				1,907,260
Shareholders' equity			427,543				302,537				254,737				237,875				210,742

 

Loan Breakout (in thousands)		2025 2nd Qtr.				2025 1st Qtr.				2024 4th Qtr.				2024  3rd Qtr.				2024  2nd Qtr.
Agricultural		$	47,273			$	48,165			$	48,221			$	49,147			$	45,274
Commercial and Industrial			351,367				345,138				228,256				229,232				224,031
Commercial Real Estate			1,743,541				1,757,599				901,130				862,773				804,213
Consumer			29,741				30,932				29,412				30,693				32,811
Construction Real Estate			21,508				18,067				17,042				14,555				18,751
Residential Real Estate			724,329				722,661				281,701				279,058				275,878
Loans to Other Financial Institutions			3,033				2,393				39,878				38,492				36,569
Gross Loans (excluding held for sale)		$	2,920,792			$	2,924,955			$	1,545,640			$	1,503,950			$	1,437,527
Allowance for credit losses			34,798				34,567				16,552				16,490				16,152
Net loans		$	2,885,994			$	2,890,388			$	1,529,088			$	1,487,460			$	1,421,375

 

Performance Ratios		2025 2nd Qtr.				2025 1st Qtr.				2024 4th Qtr.				2024  3rd Qtr.				2024  2nd Qtr.
Annualized return on average assets			1.26	%			-1.68	%			1.05	%			1.09	%			0.99	%
Annualized return on average equity			12.66	%			-18.39	%			11.24	%			12.36	%			12.50	%
Annualized return on average tangible common equity			18.26	%			-27.97	%			14.54	%			16.29	%			17.22	%
Net interest margin (GAAP)			3.66	%			3.43	%			2.98	%			3.17	%			2.95	%
Net interest margin (fully tax-equivalent)			3.70	%			3.48	%			3.04	%			3.23	%			3.01	%
Efficiency ratio			55.32	%			111.01	%			61.29	%			60.80	%			61.47	%
Annualized cost of funds			1.84	%			1.86	%			1.90	%			1.87	%			1.92	%
Annualized cost of deposits			1.65	%			1.59	%			1.58	%			1.53	%			1.56	%
Cost of interest bearing liabilities			2.41	%			2.37	%			2.43	%			2.38	%			2.44	%
Shareholders' equity to total assets			10.02	%			9.91	%			9.56	%			9.09	%			8.18	%
Tangible common equity to tangible assets			6.54	%			6.40	%			7.49	%			7.00	%			5.98	%
Annualized noninterest expense to average assets			2.37	%			4.30	%			2.26	%			2.30	%			2.16	%
Loan to deposit			81.51	%			80.21	%			70.14	%			68.38	%			67.87	%
Full-time equivalent employees			571				605				377				371				368

 

Capital Ratios ChoiceOne Financial Services Inc.		2025 2nd Qtr.				2025 1st Qtr.				2024 4th Qtr.				2024  3rd Qtr.				2024  2nd Qtr.
Total capital (to risk weighted assets)			12.4	%			12.0	%			14.5	%			15.0	%			13.5	%
Common equity Tier 1 capital (to risk weighted assets)			9.8	%			9.4	%			12.0	%			12.3	%			10.7	%
Tier 1 capital (to risk weighted assets)			10.4	%			10.0	%			12.2	%			12.5	%			10.9	%
Tier 1 capital (to average assets)			8.2	%			10.4	%			9.1	%			9.0	%			7.7	%
Tier 1 capital (to total assets)			7.9	%			7.6	%			8.9	%			8.7	%			7.6	%
Commercial Real Estate Loans (non-owner occupied) as a percentage of total capital			288.2	%			302.0	%			195.6	%			193.3	%			205.1	%

 

Capital Ratios ChoiceOne Bank		2025 2nd Qtr.				2025 1st Qtr.				2024 4th Qtr.				2024  3rd Qtr.				2024  2nd Qtr.
Total capital (to risk weighted assets)			12.4	%			11.9	%			12.7	%			13.1	%			13.2	%
Common equity Tier 1 capital (to risk weighted assets)			11.3	%			10.9	%			12.0	%			12.3	%			12.5	%
Tier 1 capital (to risk weighted assets)			11.3	%			10.9	%			12.0	%			12.3	%			12.5	%
Tier 1 capital (to average assets)			8.9	%			11.3	%			8.9	%			8.9	%			8.8	%
Tier 1 capital (to total assets)			8.6	%			8.3	%			8.7	%			8.5	%			8.7	%
Commercial Real Estate Loans (non-owner occupied) as a percentage of total capital			290.6	%			303.9	%			224.9	%			222.2	%			208.9	%

 

Asset Quality		2025 2nd Qtr.				2025 1st Qtr.				2024 4th Qtr.				2024  3rd Qtr.				2024  2nd Qtr.
(in thousands)
Net loan charge-offs (recoveries)		$	418			$	72			$	138			$	87			$	157
Annualized net loan charge-offs (recoveries) to average loans			0.06	%			0.01	%			0.04	%			0.02	%			0.04	%
Allowance for credit losses		$	34,798			$	34,567			$	16,552			$	16,490			$	16,152
Unfunded commitment liability		$	1,647			$	1,647			$	1,485			$	1,485			$	1,485
Allowance to loans (excludes held for sale)			1.19	%			1.18	%			1.07	%			1.10	%			1.12	%
Total funds reserved to pay for loans (includes liability for unfunded commitments and excludes held for sale)			1.25	%			1.24	%			1.17	%			1.20	%			1.23	%
Non-Accruing loans		$	16,854			$	16,789			$	3,704			$	2,355			$	2,086
Nonperforming loans (includes OREO)		$	19,296			$	19,154			$	4,177			$	2,884			$	2,358
Nonperforming loans to total loans (excludes held for sale)			0.66	%			0.65	%			0.27	%			0.19	%			0.16	%
Non Accrual classified as PCD		$	12,017				12,891				-				-				-
Nonperforming loans to total loans (excludes held for sale) attributed to PCD			0.41	%			0.44	%			0.00	%			0.00	%			0.00	%
Nonperforming assets to total assets			0.45	%			0.44	%			0.15	%			0.11	%			0.09	%

 

 

View original content to download multimedia:https://www.prnewswire.com/news-releases/choiceone-reports-second-quarter-2025-results-302513525.html

SOURCE ChoiceOne Financial Services, Inc.

FAQ

What were ChoiceOne's (COFS) Q2 2025 earnings per share?

ChoiceOne reported diluted earnings of $0.90 per share for Q2 2025, compared to $0.87 in Q2 2024. Excluding merger-related expenses, diluted EPS was $0.91.

How much did ChoiceOne's merger with Fentura Financial add in assets?

The merger with Fentura added approximately $1.8 billion in total assets, including $1.4 billion each in loans and deposits.

What is ChoiceOne's (COFS) net interest margin in Q2 2025?

ChoiceOne's GAAP net interest margin was 3.66% in Q2 2025, up from 2.95% in Q2 2024, with 36 basis points contributed by accretion income from purchased loans.

How strong is ChoiceOne's asset quality as of Q2 2025?

Asset quality remains strong with annualized net loan charge-offs of 0.06% and nonperforming loans ratio of 0.66%, of which 0.41% is attributed to loans purchased with credit deterioration from the merger.

What is ChoiceOne's current capital position?

ChoiceOne maintains a 'well-capitalized' position with a total risk-based capital ratio of 12.4% as of June 30, 2025, with shareholders' equity of $431.8 million.