SPARTA, Mich., Jan. 30, 2026 /PRNewswire/ -- ChoiceOne Financial Services, Inc. ((", ChoiceOne", , NASDAQ:COFS), the parent company for ChoiceOne Bank, reported financial results for the quarter ended December 31, 2025.

Significant items impacting comparable periods of 2024 and 2025 results include the following:

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.
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 $13.9 million or $0.99 per diluted share for the year ended December 31, 2025. There were no merger expenses in the fourth quarter of 2025 and management does not anticipate additional material merger expenses.
Merger related provision for credit losses, net of taxes, of $9.5 million during the first quarter ended March 31, 2025, or $0.68 per diluted share for the year ended December 31, 2025.

Highlights

ChoiceOne reported net income of $13,867,000 and $28,176,000 for the three months ended and year ended December 31, 2025, compared to net income of $7,159,000 and $26,727,000 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 $13,867,000 and $51,524,000 for the three months ended and year ended December 31, 2025, respectively.
Diluted earnings per share were $0.92 and $2.01 for the three months ended and year ended December 31, 2025, compared to diluted earnings per share of $0.79 and $3.25 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 $0.92 and $3.68 for the three months ended and year ended December 31, 2025.
Core loans, which exclude held for sale loans and loans to other financial institutions, increased by $55.6 million or 7.6% on an annualized basis during the fourth quarter of 2025 and grew organically by $86.1 million or 5.7% during the twelve months ended December 31, 2025. Core loans also grew by $1.4 billion due to the Merger on March 1, 2025.
Asset quality continues to remain strong, with annualized net loan charge-offs to average loans of 0.04%. Nonperforming loans to total loans (excluding loans held for sale) increased to 0.98% as of December 31, 2025 compared to 0.69% as of September 30, 2025. Notably, 0.63% 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. Importantly, we believe this uptick is not indicative of a broader trend, and current portfolio performance does not suggest emerging weakness in underlying credit quality.

"2025 was a landmark year for ChoiceOne—not only because of the successful merger with Fentura and its subsidiary, The State Bank, but also due to our strong financial performance. These accomplishments are a direct result of the hard work and dedication of our exceptional team, whose efforts truly shined throughout the year" said Kelly Potes, Chief Executive Officer.

ChoiceOne reported net income of $13,867,000 and $28,176,000 for the three months ended and year ended December 31, 2025, compared to net income of $7,159,000 and $26,727,000 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 $13,867,000 and $51,524,000 for the three months ended and year ended December 31, 2025, respectively. Diluted earnings per share were $0.92 and $2.01 for the three months ended and year ended December 31, 2025, compared to diluted earnings per share of $0.79 and $3.25 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 $0.92 and $3.68 for the three months ended and year ended December 31, 2025.

As of December 31, 2025, total assets were $4.4 billion, an increase of $1.7 billion compared to December 31, 2024. The growth in total assets is primarily attributed to the Merger. In addition to growth related to the Merger, ChoiceOne also grew in core loans, securities and loans to other financial institutions, which consist of a warehouse line of credit used to facilitate mortgage loan originations. Interest rates and balances from this warehouse line of credit fluctuate with the national mortgage market and are short term in nature.

Core loans, which exclude held for sale loans and loans to other financial institutions, increased by $55.6 million or 7.6% on an annualized basis during the fourth quarter of 2025 and grew organically by $86.1 million or 5.7% during the twelve months ended December 31, 2025. Core loans also grew by $1.4 billion due to the Merger on March 1, 2025. Loan interest income increased $23.0 million in the fourth quarter of 2025 compared to the same period in 2024 and decreased $506,000 compared to the third quarter of 2025. The decrease from the third quarter is due to rate reductions in PRIME rate loans which are tied to changes in the federal funds rate and a decrease in interest income due to accretion from purchased loans. Interest income for the three months ended December 31, 2025, includes $3.1 million of interest income due to accretion from purchased loans compared to $3.6 million for the three months ended September 30, 2025. Interest income due to accretion from purchased loans increased GAAP net interest margin by 29 and 36 basis points in the fourth and third quarter of 2025, respectively. Of this amount, $2.3 million was calculated using the effective interest rate method of amortization, while the remaining $635,000 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 2026 using the effective interest method of amortization is $8.0 million; however, actual results will be dependent on prepayment speeds and other factors. It is estimated that a total of $53.1 million remains to be recognized as interest income due to accretion from purchased loans over the life of the loan portfolio.

Deposits, excluding brokered deposits, increased by $760,000 as of December 31, 2025, compared to September 30, 2025. Deposits, excluding brokered deposits, increased by $1.3 billion as of December 31, 2025, compared to December 31, 2024 largely as a result of the Merger. 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 December 31, 2025, the total balance of borrowed funds from the FHLB was $265.0 million at a weighted average rate of 3.83%, with $245.0 million due within 12 months. At December 31, 2025, 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 33.2% of deposits at December 31, 2025.

In the three months ended December 31, 2025, ChoiceOne's annualized cost of deposits to average total deposits remained flat compared to the three months ended September 30, 2025 and was down one basis point compared to the three months ended December 31, 2024, despite the higher-cost deposits acquired through the Merger. The annualized cost of funds decreased by 11 basis points, from 1.90% to 1.79% in the three months ended December 31, 2025 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 December 31, 2025, increased by $289,000 compared to the same period in the prior year, due to a $58.2 million increase in the average balance borrowed offset by a reduction in rates. In the three months ended December 31, 2025, compared to the three months ended September 30, 2025, annualized cost of funds increased 2 basis points from 1.77% to 1.79% despite reductions in federal funds rates during the fourth quarter. This is due to the timing of reductions to customer rates later in the fourth quarter, increased competition for deposits, and the reduction of cash flow on pay-fixed swaps tied to interest bearing deposits which offset interest expense. With ChoiceOne's already low cost of deposits and market conditions, further reductions in federal funds rates may not immediately offset with savings on reductions in deposits and short term borrowings.

The provision for credit losses on loans was $1.1 million in the fourth quarter of 2025, due to $112.1 million of loan growth in the portfolio, excluding loans held for sale, and $305,000 in net charge offs. The ratio of the allowance for credit losses to total loans (excluding loans held for sale) was 1.18% on December 31, 2025 compared to 1.19% on September 30, 2025, and 1.07% on December 31, 2024. Asset quality continues to remain strong, with annualized net loan charge-offs to average loans of 0.04%. Nonperforming loans to total loans (excluding loans held for sale) increased to 0.98% as of December 31, 2025 compared to 0.69% as of September 30, 2025. Notably, 0.63% 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. Importantly, we believe this uptick is not indicative of a broader trend, and current portfolio performance does not suggest emerging weakness in underlying credit quality.

ChoiceOne uses interest rate swaps to manage interest rate exposure to certain fixed rate assets and variable rate liabilities. During the third quarter of 2025, ChoiceOne entered into $30.4 million in amortizing pay-fixed interest rate swaps to hedge interest rate risk on approximately $40.6 million of newly purchased agency mortgage backed securities. The interest rate swaps are designed to amortize with the expected cash flow of the bonds and hold a coupon of 3.52% and a contractual term ending in 2040. On December 31, 2025, ChoiceOne held pay-fixed interest rate swaps with a total notional value of $380.4 million, a weighted average coupon of 3.15%, a fair value of $8.4 million and an average remaining contract length of 7.0 years. Settlements from interest rate swaps amounted to $955,000 for the fourth quarter of 2025 compared to $1.3 million for the third 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. In January 2026, ChoiceOne exited $201.0 million of pay‑fixed interest rate swaps with a coupon of 3.4%, realizing a small gain, that will be applied to the basis of the hedged bonds. 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, ChoiceOne has approximately $180 million of pay-fixed interest rate swaps with a weighted average coupon of 2.88%.

As of December 31, 2025, shareholders' equity was $465.4 million, a significant increase from $260.4 million on December 31, 2024. This growth was primarily driven by the Merger, in which ChoiceOne issued 6,070,836 shares of common stock on March 1, 2025, valued at $193.0 million. Additional growth of $2.1 million is the result of improvement to accumulated other comprehensive loss during the year. ChoiceOne also repurchased 25,116 shares of stock for a net cost of $775,000 under our existing share repurchase plan. The repurchase plan has 350,272 shares remaining to purchase as of December 31, 2025. 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 December 31, 2025, compared to 12.7% on December 31, 2024.

Noninterest income increased by $1.1 million and $6.7 million for the three months ended and year ended December 31, 2025, compared to the same periods in the prior year. This increase was partly driven by higher interchange income, which rose due to increased volume from the Merger. Trust income as well as insurance and investment commissions income also increased as a result of higher estate settlement fees and customers obtained from the Merger. These increases were offset by a decline in gains on sales of loans and losses on sales and write downs of other assets. Gains on sales of loans declined as the bank maintained conservative underwriting and chose not to pursue certain loan sale opportunities that did not meet our pricing or credit risk standards. Noninterest income decreased $1.0 million in the fourth quarter of 2025 compared to the third quarter 2025 due primarily to losses on sales of other assets of $161,000 and unrealized losses on market value of equity securities of $655,000.

Noninterest expense increased by $10.0 million and $54.0 million for the three months ended and year ended December 31, 2025, compared to the same periods in 2024. The increase in 2025 was largely due to merger-related expenses of $17.4 million during 2025, compared to $1.0 million in the same period in the prior year. Management does not anticipate additional material merger expenses. The remainder of the increase was primarily due to the addition of Fentura on March 1, 2025. Noninterest expense decreased by $866,000 in the fourth quarter of 2025 compared to the third quarter of 2025 due to decreases in collections and fraud expenses and other operational expenses which were partially offset by an increase in salaries and benefits. 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. In addition, we are experimenting with automation and AI‑driven solutions designed to modernize processes to augment the ability for our existing staff to manage our growth.

ChoiceOne's fourth‑quarter 2025 tax expense was reduced by $340,000 as a result of purchasing a transferable tax credit that will be applied to 2025 income taxes, with allowable carrybacks to prior years. Management is continuing to evaluate additional transferable tax credit opportunities and may pursue further purchases to help offset tax expense in 2026.

"We closed the year with solid capital and liquidity and an efficient funding mix, keeping us well‑positioned to support clients and create long‑term value" said Kelly Potes, Chief Executive Officer. "As we move into 2026, we do so with strong organic growth momentum across our markets and a renewed focus on strengthening our customer relationships. I am grateful to our employees, Board of Directors, and shareholders for their continued support of our vision to be the Best Bank in Michigan"

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 press 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", "view" 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 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 press release 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 press release under the heading non-GAAP reconciliation.

Condensed Balance Sheets (Unaudited)
(In thousands)	December 31, 2025		September 30, 2025		December 31, 2024
Cash and cash equivalents	$	87,988	$	98,978	$	96,751
Equity securities, at fair value		9,353		9,505		7,782
Securities Held to Maturity		385,193		388,517		394,534
Securities Available for Sale		554,420		544,023		479,117
Federal Home Loan Bank stock		18,562		18,562		9,383
Federal Reserve Bank stock		12,554		12,554		5,307
Loans held for sale		7,185		6,323		7,288
Loans to other financial institutions		58,987		2,483		39,878
Core loans		2,963,047		2,907,445		1,505,762
Total loans held for investment		3,022,034		2,909,928		1,545,640
Allowance for credit losses		(35,550)		(34,754)		(16,552)
Loans, net of allowance for credit losses		2,986,484		2,875,174		1,529,088
Premises and equipment		48,110		46,159		27,099
Cash surrender value of life insurance policies		74,798		74,231		44,896
Goodwill		129,854		126,730		59,946
Intangible assets		31,149		31,694		1,096
Other assets		64,901		64,452		60,956

Total Assets	$	4,410,551	$	4,296,902	$	2,723,243

Noninterest-bearing deposits	$	907,007	$	903,925	$	524,945
Interest-bearing demand deposits		1,364,887		1,395,724		920,167
Savings deposits		607,045		588,798		338,109
Certificates of deposit		616,180		605,912		394,371
Brokered deposits		104,906		72,672		36,511
Borrowings		264,788		197,752		175,000
Subordinated debentures		48,460		48,368		35,752
Other liabilities		31,925		34,136		37,973

Total Liabilities		3,945,198		3,847,287		2,462,828

Common stock and paid-in capital, no par value; shares authorized: 30,000,000; shares outstanding: 15,000,939 at December 31, 2025, 15,017,802 at September 30, 2025, and 8,965,483 at December 31, 2024.		398,386		398,688		206,780
Retained earnings		102,641		93,124		91,414
Accumulated other comprehensive income (loss), net		(35,674)		(42,197)		(37,779)
Shareholders' Equity		465,353		449,615		260,415

Total Liabilities and Shareholders' Equity	$	4,410,551	$	4,296,902	$	2,723,243

Condensed Statements of Operations (Unaudited)
	Three Months Ended		Three Months Ended		Three Months Ended		Twelve Months Ended
(Dollars in thousands, except per share data)	December 31,		September 30,		December 31,		December 31,
	2025		2025		2024		2025		2024
Interest income
Loans, including fees	$	46,617	$	47,123	$	23,571	$	172,914	$	89,580
Securities:
Taxable		5,663		5,249		4,846		20,906		21,228
Tax exempt		1,402		1,418		1,390		5,622		5,614
Other		694		908		1,231		3,516		4,682
Total interest income		54,376		54,698		31,038		202,958		121,104

Interest expense
Deposits		14,127		14,287		8,710		53,970		34,174
Advances from Federal Home Loan Bank		2,564		1,926		669		8,201		2,041
Other		845		888		2,310		3,717		10,447
Total interest expense		17,536		17,101		11,689		65,888		46,662

Net interest income		36,840		37,597		19,349		137,070		74,442
Provision for credit losses on loans		1,100		200		200		15,113		1,300
Provision for (reversal of) credit losses on unfunded commitments		(300)		-		-		(300)		(675)
Net Provision for credit losses expense		800		200		200		14,813		625
Net interest income after provision		36,040		37,397		19,149		122,257		73,817

Noninterest income
Customer service charges		1,683		1,729		1,237		5,994		4,774
Interchange income		2,086		2,133		1,494		7,811		5,797
Insurance and investment commissions		592		485		170		1,912		742
Gains on sales of loans		511		671		829		1,981		2,439
Net gains (losses) on sales and write downs of other assets		(200)		(39)		(5)		(226)		198
Earnings on life insurance policies		567		558		819		2,358		1,934
Trust income		689		734		241		2,525		906
Change in market value of equity securities		(197)		458		(46)		607		195
Other		366		415		255		1,704		1,010
Total noninterest income		6,097		7,144		4,994		24,666		17,995

Noninterest expense
Salaries and benefits		14,559		14,127		8,941		52,737		33,408
Occupancy and equipment		2,469		2,694		1,383		9,314		5,797
Data processing		2,374		2,499		1,499		9,311		5,905
Communication		576		517		341		2,034		1,317
Professional fees		784		834		653		3,262		2,471
Supplies and postage		291		267		179		1,107		699
Advertising and promotional		258		207		271		981		788
Intangible amortization		1,683		1,728		153		5,823		757
FDIC insurance		475		530		180		2,010		1,335
Merger related expenses		-		-		394		17,369		1,039
Other		1,880		2,812		1,350		8,787		5,207
Total noninterest expense		25,349		26,215		15,344		112,735		58,723

Income (loss) before income tax		16,788		18,326		8,799		34,188		33,089
Income tax expense (benefit)		2,921		3,645		1,640		6,012		6,362

Net income (loss)	$	13,867	$	14,681	$	7,159	$	28,176	$	26,727

Basic earnings (loss) per share	$	0.92	$	0.98	$	0.79	$	2.02	$	3.27
Diluted earnings (loss) per share	$	0.92	$	0.97	$	0.79	$	2.01	$	3.25
Dividends declared per share	$	0.29	$	0.28	$	0.28	$	1.13	$	1.09

Table 1 - Average Balances and tax-Equivalent Interest Rates (Unaudited)
	Three Months Ended December 31, 2025							Three Months Ended September 30, 2025							Three Months Ended December 31, 2024

(Dollars in thousands)	Average							Average							Average
	Balance		Interest		Rate			Balance		Interest		Rate			Balance		Interest		Rate
Assets:
Loans (1)(3)(4)(5)	$	2,961,133		46,635		6.25	%	$	2,927,878	$	47,142		6.39	%	$	1,516,466	$	23,591		6.19	%
Taxable securities (2)		750,256		5,663		2.99			703,045		5,249		2.96			677,133		4,846		2.85
Nontaxable securities (1)		285,782		1,776		2.47			287,274		1,795		2.48			288,368		1,760		2.43
Other		69,056		694		3.99			79,365		909		4.54			100,864		1,231		4.86
Interest-earning assets		4,066,227		54,768		5.34			3,997,562		55,095		5.47			2,582,831		31,428		4.84
Noninterest-earning assets		309,300							310,727							136,699
Total assets	$	4,375,527						$	4,308,289						$	2,719,530

Liabilities and Shareholders' Equity:
Interest-bearing demand deposits	$	1,343,600	$	6,352		1.88	%	$	1,374,827	$	6,392		1.84	%	$	907,631	$	3,389		1.49	%
Savings deposits		596,010		1,252		0.83			591,653		1,125		0.75			336,107		810		0.96
Certificates of deposit		613,387		5,502		3.56			616,686		5,777		3.72			397,364		4,291		4.30
Brokered deposit		100,133		1,021		4.05			91,735		993		4.30			19,620		220		4.46
Borrowings		255,978		2,663		4.13			179,122		2,019		4.47			197,828		2,374		4.77
Subordinated debentures		48,411	681			5.58			48,663		701		5.72			35,719		405		4.51
Other		6,311	65			4.09			8,550		94		4.38			16,928		200		4.70
Interest-bearing liabilities		2,963,830		17,536		2.35			2,911,236		17,101		2.33			1,911,197		11,689		2.43
Demand deposits		925,414							930,346							536,653
Other noninterest-bearing liabilities		26,860							28,258							16,943
Total liabilities		3,916,104							3,869,840							2,464,793
Shareholders' equity		459,423							438,449							254,737
Total liabilities and shareholders' equity	$	4,375,527						$	4,308,289						$	2,719,530

Net interest income (tax- equivalent basis) (Non-GAAP) (1)			$	37,232						$	37,994						$	19,739

Net interest margin (tax- equivalent basis) (Non-GAAP) (1)						3.63	%						3.77	%						3.04	%


(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 $22.2 million, $17.1 million, and 3.0 million in the fourth quarter of 2025, the third quarter of 2025 and the fourth quarter of 2024, respectively.
(5)	Interest on loans included net origination fees and interest income due to accretion from purchased loans. Interest income due to accretion from purchased loans was $3.1 million, $3.6 million and $276,000 in the fourth quarter of 2025, the third quarter of 2025 and the fourth quarter of 2024, respectively.

Income Adjusted for Merger Expenses - Non-GAAP Reconciliation (Unaudited)
	Three Months Ended		Three Months Ended		Three Months Ended		Twelve Months Ended
	December 31,		September 30,		December 31,		December 31,
	2025		2025		2024		2025		2024
(In Thousands, Except Per Share Data)
Net income (loss)	$	13,867	$	14,681	$	7,159	$	28,176	$	26,727

Merger related expenses net of tax		-		-		373		13,885		1,006
Merger related provision for credit losses, net of tax (1)		-		-		-		9,463		-
Adjusted net income	$	13,867	$	14,681	$	7,532	$	51,524	$	27,733

Weighted average number of shares		15,015,486		15,014,933		8,963,258		13,941,260		8,166,472
Diluted average shares outstanding		15,065,937		15,061,155		9,024,567		13,992,099		8,221,065
Basic earnings (loss) per share	$	0.92	$	0.98	$	0.79	$	2.02	$	3.27
Diluted earnings (loss) per share	$	0.92	$	0.97	$	0.79	$	2.01	$	3.25
Adjusted basic earnings per share	$	0.92	$	0.98	$	0.84	$	3.70	$	3.40
Adjusted diluted earnings per share	$	0.92	$	0.97	$	0.83	$	3.68	$	3.37

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

Other Selected Financial Highlights (Unaudited)
	Quarterly
Earnings	2025 4th Qtr.		2025 3rd Qtr.		2025 2nd Qtr.		2025 1st Qtr.		2024 4th Qtr.
(in thousands except per share data)
Net interest income	$	36,840	$	37,597	$	36,322	$	26,311	$	19,349
Net provision expense		800		200		650		13,163		200
Noninterest income		6,097		7,144		6,503		4,922		4,994
Noninterest expense		25,349		26,215		25,506		35,665		15,344
Net income (loss) before federal income tax expense		16,788		18,326		16,669		(17,595)		8,799
Income tax expense (benefit)		2,921		3,645		3,135		(3,689)		1,640
Net income (loss)		13,867		14,681		13,534		(13,906)		7,159
Basic earnings (loss) per share		0.92		0.98		0.90		(1.30)		0.79
Diluted earnings (loss) per share		0.92		0.97		0.90		(1.29)		0.79
Adjusted basic earnings per share (non-GAAP)		0.92		0.98		0.91		0.87		0.84
Adjusted diluted earnings per share (non-GAAP)		0.92		0.97		0.91		0.86		0.83

End of period balances	2025 4th Qtr.		2025 3rd Qtr.		2025 2nd Qtr.		2025 1st Qtr.		2024 4th Qtr.
(in thousands)
Gross loans	$	3,029,219	$	2,916,251	$	2,928,431	$	2,928,896	$	1,552,928
Loans held for sale (1)		7,185		6,323		7,639		3,941		7,288
Loans to other financial institutions (2)		58,987		2,483		3,033		2,393		39,878
Core loans (gross loans excluding 1 and 2 above)		2,963,047		2,907,445		2,917,759		2,922,562		1,505,762
Allowance for credit losses		35,550		34,754		34,798		34,567		16,552
Securities available for sale		554,420		544,023		479,426		480,650		479,117
Securities held to maturity		385,193		388,517		390,457		394,434		394,534
Other interest-earning assets		74,857		79,677		110,206		110,605		86,185
Total earning assets (before allowance)		4,043,689		3,928,468		3,908,520		3,914,585		2,512,764
Total assets		4,410,551		4,296,902		4,310,252		4,305,391		2,723,243
Noninterest-bearing deposits		907,007		903,925		943,873		912,033		524,945
Interest-bearing demand deposits		1,364,887		1,395,724		1,322,336		1,406,660		920,167
Savings deposits		607,045		588,798		595,981		602,337		338,109
Certificates of deposit		616,180		605,912		624,209		663,404		394,371
Brokered deposits		104,906		72,672		106,225		67,295		36,511
Total deposits		3,600,025		3,567,031		3,592,624		3,651,729		2,214,103
Deposits excluding brokered		3,495,119		3,494,359		3,486,399		3,584,434		2,177,592
Total subordinated debt		48,460		48,368		48,277		48,186		35,752
Total borrowed funds		264,788		197,752		198,428		137,330		175,000
Other interest-bearing liabilities		7,689		7,695		8,529		13,420		24,003
Total interest-bearing liabilities		3,013,955		2,916,921		2,903,985		2,938,632		1,923,913
Shareholders' equity		465,353		449,615		431,761		427,068		260,415

Average Balances	2025 4th Qtr.		2025 3rd Qtr.		2025 2nd Qtr.		2025 1st Qtr.		2024 4th Qtr.
(in thousands)
Loans	$	2,961,133	$	2,927,878	$	2,936,168	$	2,019,643	$	1,516,466
Securities		1,036,038		990,319		984,607		978,769		965,501
Other interest-earning assets		69,056		79,365		63,416		115,091		100,864
Total earning assets (before allowance)		4,066,227		3,997,562		3,984,191		3,113,503		2,582,831
Total assets		4,375,527		4,308,289		4,298,513		3,319,591		2,719,530
Noninterest-bearing deposits		925,414		930,346		915,637		651,424		536,653
Interest-bearing deposits		2,552,997		2,583,166		2,573,927		2,030,543		1,641,102
Brokered deposits		100,133		91,735		120,720		45,553		19,620
Total deposits		3,578,544		3,605,247		3,610,284		2,727,520		2,197,375
Total subordinated debt		48,411		48,663		48,971		40,182		35,719
Total borrowed funds		255,978		179,122		169,257		193,961		197,828
Other interest-bearing liabilities		6,311		8,550		11,763		20,553		16,928
Total interest-bearing liabilities		2,963,830		2,911,236		2,924,638		2,330,792		1,911,197
Shareholders' equity		459,423		438,449		427,543		302,537		254,737

Loan Breakout (in thousands)	2025 4th Qtr.		2025 3rd Qtr.		2025 2nd Qtr.		2025 1st Qtr.		2024 4th Qtr.
Agricultural	$	56,218	$	51,183	$	47,273	$	48,165	$	48,221
Commercial and Industrial		352,556		352,876		351,367		345,138		228,256
Commercial Real Estate		1,780,396		1,728,774		1,743,541		1,757,599		901,130
Consumer		26,701		27,328		29,741		30,932		29,412
Construction Real Estate		19,139		18,440		21,508		18,067		17,042
Residential Real Estate		728,037		728,844		724,329		722,661		281,701
Loans to Other Financial Institutions		58,987		2,483		3,033		2,393		39,878
Gross Loans (excluding held for sale)	$	3,022,034	$	2,909,928	$	2,920,792	$	2,924,955	$	1,545,640

Allowance for credit losses		35,550		34,754		34,798		34,567		16,552

Net loans	$	2,986,484	$	2,875,174	$	2,885,994	$	2,890,388	$	1,529,088

Performance Ratios	2025 4th Qtr.			2025 3rd Qtr.			2025 2nd Qtr.			2025 1st Qtr.			2024 4th Qtr.

Annualized return on average assets		1.27	%		1.36	%		1.26	%		-1.68	%		1.05	%
Annualized return on average equity		12.07	%		13.39	%		12.66	%		-18.39	%		11.24	%
Annualized return on average tangible common equity		16.66	%		19.08	%		18.26	%		-27.97	%		14.54	%
Net interest margin (GAAP)		3.59	%		3.73	%		3.66	%		3.43	%		2.98	%
Net interest margin (fully tax-equivalent)		3.63	%		3.77	%		3.70	%		3.48	%		3.04	%
Efficiency ratio		54.12	%		54.76	%		55.32	%		111.01	%		61.29	%
Annualized cost of funds		1.79	%		1.77	%		1.84	%		1.86	%		1.90	%
Annualized cost of deposits		1.57	%		1.57	%		1.65	%		1.59	%		1.58	%
Cost of interest bearing liabilities		2.35	%		2.33	%		2.41	%		2.37	%		2.43	%
Shareholders' equity to total assets		10.55	%		10.46	%		10.02	%		9.91	%		9.56	%
Tangible common equity to tangible assets		7.16	%		7.04	%		6.54	%		6.40	%		7.49	%
Annualized noninterest expense to average assets		2.32	%		2.43	%		2.37	%		4.30	%		2.26	%
Loan to deposit		84.14	%		81.76	%		81.51	%		80.21	%		70.14	%
Full-time equivalent employees		569			573			571			605			377

Capital Ratios ChoiceOne Financial Services Inc.	2025 4th Qtr.			2025 3rd Qtr.			2025 2nd Qtr.			2025 1st Qtr.			2024 4th Qtr.

Total capital (to risk weighted assets)		12.7	%		13.0	%		12.4	%		12.0	%		14.5	%
Common equity Tier 1 capital (to risk weighted assets)		10.2	%		10.3	%		9.8	%		9.4	%		12.0	%
Tier 1 capital (to risk weighted assets)		10.7	%		10.9	%		10.4	%		10.0	%		12.2	%
Tier 1 capital (to average assets)		8.5	%		8.5	%		8.2	%		10.4	%		9.1	%
Tier 1 capital (to total assets)		8.1	%		8.2	%		7.9	%		7.6	%		8.9	%
Commercial Real Estate Loans (non-owner occupied) as a percentage of total capital		279.0	%		275.2	%		288.2	%		302.0	%		195.6	%

Capital Ratios ChoiceOne Bank	2025 4th Qtr.			2025 3rd Qtr.			2025 2nd Qtr.			2025 1st Qtr.			2024 4th Qtr.

Total capital (to risk weighted assets)		12.5	%		12.8	%		12.4	%		11.9	%		12.7	%
Common equity Tier 1 capital (to risk weighted assets)		11.4	%		11.7	%		11.3	%		10.9	%		12.0	%
Tier 1 capital (to risk weighted assets)		11.4	%		11.7	%		11.3	%		10.9	%		12.0	%
Tier 1 capital (to average assets)		9.1	%		9.1	%		8.9	%		11.3	%		8.9	%
Tier 1 capital (to total assets)		8.7	%		8.8	%		8.6	%		8.3	%		8.7	%
Commercial Real Estate Loans (non-owner occupied) as a percentage of total capital		284.4	%		280.0	%		290.6	%		303.9	%		224.9	%

Asset Quality	2025 4th Qtr.			2025 3rd Qtr.			2025 2nd Qtr.			2025 1st Qtr.			2024 4th Qtr.
(in thousands)
Net loan charge-offs (recoveries)	$	305		$	244		$	418		$	72		$	138
Annualized net loan charge-offs (recoveries) to average loans		0.04	%		0.03	%		0.06	%		0.01	%		0.04	%
Allowance for credit losses	$	35,550		$	34,754		$	34,798		$	34,567		$	16,552
Unfunded commitment liability	$	1,347		$	1,647		$	1,647		$	1,647		$	1,485
Allowance to loans (excludes held for sale)		1.18	%		1.19	%		1.19	%		1.18	%		1.07	%
Total funds reserved to pay for loans (includes liability for unfunded commitments and excludes held for sale)		1.22	%		1.25	%		1.25	%		1.24	%		1.17	%
Non-Accruing loans	$	27,058		$	17,365		$	16,854		$	16,789		$	3,704
Nonperforming loans (includes OREO)	$	29,582		$	19,940		$	19,296		$	19,154		$	4,177
Nonperforming loans to total loans (excludes held for sale)		0.98	%		0.69	%		0.66	%		0.65	%		0.27	%
Non Accrual classified as PCD	$	19,007		$	11,393		$	12,017		$	12,891		$	-
Nonperforming loans to total loans (excludes held for sale) attributed to PCD		0.63	%		0.39	%		0.41	%		0.44	%		-
Nonperforming assets to total assets		0.67	%		0.46	%		0.45	%		0.44	%		0.15	%

Other Non-GAAP Reconciliation (Unaudited)
NON-GAAP Reconciliation	2025 4th Qtr.			2025 3rd Qtr.			2025 2nd Qtr.			2025 1st Qtr.			2024 4th Qtr.
Net interest income (tax-equivalent basis) (Non-GAAP)	$	37,232		$	37,994		$	36,711		$	26,710		$	19,739
Net interest margin (fully tax-equivalent)		3.63	%		3.77	%		3.70	%		3.48	%		3.04	%

Reconciliation to Reported Net Interest Income

Net interest income (tax-equivalent basis) (Non-GAAP)	$	37,232		$	37,994		$	36,711		$	26,710		$	19,739

Adjustment for taxable equivalent interest		(392)			(397)			(389)			(399)			(390)

Net interest income (GAAP)	$	36,840		$	37,597		$	36,322		$	26,311		$	19,349
Net interest margin (GAAP)		3.59	%		3.73	%		3.66	%		3.43	%		2.98	%

(dollars in thousands)	2025 4th Qtr.			2025 3rd Qtr.			2025 2nd Qtr.			2025 1st Qtr.			2024 4th Qtr.
Total assets	$	4,410,551		$	4,296,902		$	4,310,252		$	4,305,391		$	2,723,243
Less: goodwill		129,854			126,730			126,730			126,730			59,946
Less: core deposit intangible		31,149			31,694			33,421			35,153			1,096
Tangible assets	$	4,249,548		$	4,138,478		$	4,150,101		$	4,143,508		$	2,662,201

Total equity	$	465,353		$	449,615		$	431,761		$	427,068		$	260,415
Less: goodwill		129,854			126,730			126,730			126,730			59,946
Less: core deposit intangible		31,149			31,694			33,421			35,153			1,096
Tangible common equity	$	304,350		$	291,191		$	271,610		$	265,185		$	199,373
Tangible common equity to tangible assets		7.16	%		7.04	%		6.54	%		6.40	%		7.49	%

(dollars in thousands)	2025 4th Qtr.			2025 3rd Qtr.			2025 2nd Qtr.			2025 1st Qtr.			2024 4th Qtr.
Net income	$	13,867		$	14,681		$	13,534		$	(13,906)		$	7,159
Less: intangible amortization (tax affected at 21%)		1,330			1,365			1,369			537			121
Adjusted net income	$	12,537		$	13,316		$	12,165		$	(14,443)		$	7,038

Average shareholders' equity	$	459,423		$	438,449		$	427,543		$	302,537		$	254,737
Less: average goodwill		127,308			126,730			126,730			83,030			59,946
Less: average core deposit intangible		31,092			32,599			34,356			12,983			1,179
Average tangible common equity	$	301,023		$	279,120		$	266,457		$	206,524		$	193,612

Return on average tangible common equity		16.66	%		19.08	%		18.26	%		-27.97	%		14.54	%

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SOURCE ChoiceOne Financial Services, Inc.

ChoiceOne Reports Fourth Quarter 2025 Results