SPARTA, Mich., Oct. 24, 2025 /PRNewswire/ -- ChoiceOne Financial Services, Inc. ((", ChoiceOne", , NASDAQ:COFS), the parent company for ChoiceOne Bank, reported financial results for the quarter ended September 30, 2025.

Significant items impacting comparable first nine month period 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 $1.02 per diluted share for the nine months ended September 30, 2025. There were no merger expenses in the third 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 $0.69 per diluted share as of September 30, 2025.

Highlights

ChoiceOne reported net income of $14,681,000 and $14,309,000 for the three and nine months ended September 30, 2025, compared to net income of $7,348,000 and $19,568,000 for the same periods in the prior year, respectively. Net income excluding merger expenses, net of taxes, and merger related provision for credit losses, net of taxes, was $14,681,000 and $37,657,000 for the three and nine months ended September 30, 2025, respectively.
Diluted earnings per share were $0.97 and $1.05 for the three and nine months ended September 30, 2025, compared to diluted earnings per share of $0.85 and $2.46 in the same periods in the prior year. Diluted earnings per share excluding merger expenses, net of taxes, and merger related provision for credit losses, net of taxes, were $0.97 and $2.76 for the three and nine months ended September 30, 2025.
In the third quarter of 2025, ChoiceOne's GAAP net interest margin increased to 3.73%, compared to 3.17% in the same period of 2024. GAAP net interest income also saw a substantial increase, reaching $37.6 million compared to $20.2 million in the third quarter of 2024. This growth was primarily due to the additional net interest income attributable to the Merger beginning on March 1, 2025. Interest income due to accretion from purchased loans increased GAAP net interest margin by 36 basis points for the third quarter of 2025.
Core loans, which exclude held for sale loans and loans to other financial institutions, declined by $10.3 million or 1.4% on an annualized basis during the third quarter of 2025 and grew organically by $65.3 million or 4.5% during the twelve months ended September 30, 2025. Core loans grew by $1.4 billion due to the Merger on March 1, 2025. Loan interest income increased $23.9 million in the third quarter of 2025 compared to the same period in 2024. Interest income for the three months ended September 30, 2025, includes $3.6 million of interest income due to accretion from purchased loans.
Asset quality continues to remain strong, with annualized net loan charge-offs to average loans of 0.03% and nonperforming loans to total loans (excluding loans held for sale) of 0.69% as of September 30, 2025. Notably, 0.39% of the nonperforming loans to total loans (excluding loans held for sale) is attributed to loans purchased with credit deterioration through the Merger.

"ChoiceOne continues to deliver exceptional results, driven by the strength of our strategic merger with Fentura and a focus on serving our communities," said Kelly Potes, Chief Executive Officer. "We are proud of the momentum we have built and remain committed to creating lasting value for our customers, employees, and shareholders."

ChoiceOne reported net income of $14,681,000 and $14,309,000 for the three and nine months ended September 30, 2025, compared to net income of $7,348,000 and $19,568,000 for the same periods in the prior year, respectively. Net income excluding merger expenses, net of taxes, and merger related provision for credit losses, net of taxes, was $14,681,000 and $37,657,000 for the three and nine months ended September 30, 2025, respectively. Diluted earnings per share was $0.97 and $1.05 for the three and nine months ended September 30, 2025, compared to diluted earnings per share of $0.85 and $2.46 in the same periods in the prior year. Diluted earnings per share excluding merger expenses, net of taxes, and merger related provision for credit losses, net of taxes, were $0.97 and $2.76 for the three and nine months ended September 30, 2025.

As of September 30, 2025, total assets were $4.3 billion, an increase of $1.6 billion compared to September 30, 2024. The growth in total assets is primarily attributed to the Merger. The growth in total assets was offset by a $36.0 million reduction in loans to other financial institutions and a $47.0 million reduction in cash and cash equivalents on September 30, 2025 compared to September 30, 2024. Loans to other financial institutions consist of a warehouse line of credit to a bank used to facilitate mortgage loan originations, with interest rates and balances that fluctuate in line with the national mortgage market. The reduction in cash balances is primarily due to purchases of agency mortgage backed securities during the third quarter of 2025.

Core loans, which exclude held for sale loans and loans to other financial institutions, declined by $10.3 million or 1.4% on an annualized basis during the third quarter of 2025 and grew organically by $65.3 million or 4.5% during the twelve months ended September 30, 2025. Core loans grew by $1.4 billion due to the Merger on March 1, 2025. Loan interest income increased $23.9 million in the third quarter of 2025 compared to the same period in 2024. Interest income for the three months ended September 30, 2025, includes $3.6 million of interest income due to accretion from purchased loans. Of this amount, $1.8 million was calculated using the effective interest rate method of amortization, while the remaining $1.8 million resulted from accretion through unexpected payoffs and paydowns of loans with an associated fair value mark. Estimated interest income due to accretion from purchased loans for the remainder of 2025 and 2026 using the effective interest method of amortization is $2.3 million and $8.2 million, respectively; however, actual results will be dependent on prepayment speeds and other factors. It is estimated that a total of $51.1 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 $8.0 million as of September 30, 2025, compared to June 30, 2025. During the third quarter of 2025 non-interest bearing deposits declined by $39.9 million while interest bearing demand deposits increased by $73.4 million. The shift from non-interest-bearing to interest-bearing demand deposits was partly due to quarter-end timing and fluctuations in business and municipal activity. The growth in interest-bearing demand deposits was primarily concentrated in non-maturity interest-bearing checking and money market accounts. The average balance of non-interest-bearing deposits rose to $930.3 million in the third quarter of 2025, up from $915.6 million in the second quarter of 2025. Deposits, excluding brokered deposits, increased by $1.3 billion as of September 30, 2025, compared to September 30, 2024 largely as a result of the Merger. ChoiceOne continues to be proactive in managing its liquidity position by using brokered deposits and FHLB advances to ensure ample liquidity. At September 30, 2025, total available borrowing capacity secured by pledged assets was $1.2 billion. ChoiceOne can increase its borrowing capacity by utilizing unsecured federal fund lines and pledging additional assets. Uninsured deposits totaled $1.2 billion or 33.2% of deposits at September 30, 2025.

In the three months ended September 30, 2025, compared to the same period in the prior year, ChoiceOne's cost of deposits to average total deposits increased by 4 basis points, rising from 1.53% to 1.57%, primarily due to higher-cost deposits acquired through the Merger. This increase was partially offset by a decline in CD costs and a reduction in wholesale funding costs. The annualized cost of funds decreased by 10 basis points, from 1.87% to 1.77% in the three months ended September 30, 2025 compared to the same period in the prior year. In the three months ended September 30, 2025, compared to the three months ended June 30, 2025, annualized cost of funds decreased to 1.77% from 1.84%, primarily due to a decrease in higher cost local and brokered CDs. Interest expense on borrowings for the three months ended September 30, 2025, declined by $489,000 compared to the same period in the prior year. As of September 30, 2025, the total balance of borrowed funds from the FHLB was $198.0 million at a weighted average fixed rate of 4.23%, with $158.0 million due within 12 months.

The provision for credit losses on loans was $200,000 in the third quarter of 2025, due to $244,000 in net charge offs, as well as small adjustments to qualitative and quantitative factors. The ratio of the allowance for credit losses to total loans (excluding loans held for sale) was 1.19% on September 30, 2025 compared to 1.19% on June 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 0.03% and nonperforming loans to total loans (excluding loans held for sale) of 0.69% as of September 30, 2025. Notably, 0.39% of the nonperforming loans to total loans (excluding loans held for sale) is attributed to loans purchased with credit deterioration through the Merger.

ChoiceOne uses interest rate swaps to manage interest rate exposure to certain fixed rate assets and variable rate liabilities. During the third quarter of 2025, ChoiceOne entered into $30.4 million in amortizing pay fix swaps to hedge interest rate risk on approximately $40.6 million of newly purchased agency mortgage backed securities. The swaps are designed to amortize with the expected cash flow of the bonds and hold a coupon of 3.52% and a contractual term ending in 2040. On September 30, 2025, ChoiceOne held pay-fixed interest rate swaps with a total notional value of $381.3 million, a weighted average coupon of 3.15%, a fair value of $6.8 million and an average remaining contract length of 7.2 years. These derivative instruments are designed to change in value as interest rates rise or fall inverse to the change in unrealized losses on the securities available for sale portfolio due to changes in interest rates. Settlements from swaps amounted to $1.3 million for the third quarter of 2025 compared to $1.3 million for the second quarter of 2025. In addition to the pay-fixed interest rate swaps, ChoiceOne also employs back-to-back swaps on select commercial loans, with the impact reflected in interest income.

As of September 30, 2025, shareholders' equity was $449.6 million, a significant increase from $247.7 million on September 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). ChoiceOne Bank continues to be "well-capitalized," with a total risk-based capital ratio of 12.8% as of September 30, 2025, compared to 13.1% on September 30, 2024, with the decrease primarily due to the impact of the Merger.

Noninterest income increased by $2.3 million and $5.6 million for the three and nine months ended September 30, 2025, compared to the same periods in the prior year. This increase was partly driven by higher interchange income, which rose due to increased volume from the Merger. Trust income also increased as a result of higher estate settlement fees and customers obtained from the Merger. Additionally, ChoiceOne recognized income from two death benefit claims under bank-owned life insurance policies during the second quarter for an additional $299,000.

Noninterest expense increased by $10.8 million and $44.0 million for the three and nine months ended September 30, 2025, compared to the same periods in 2024. The year to date increase was largely due to merger-related expenses of $17.4 million during the nine months ended September 30, 2025, compared to $645,000 in the same period in the prior year. Management does not anticipate additional material merger expenses. The remainder of the increase was primarily due to the addition of Fentura on March 1, 2025. ChoiceOne continues to strive to optimize our cost structure while investing in opportunities that enhance our performance and reinforce the value we bring to customers and shareholders.

"Our strong financial performance this quarter is due to our outstanding employees and customers. With the Merger behind us, our team is focused on serving our clients and growing our core business. I am thankful for our employees for their hard work and our customers who trust us to be their community bank." 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 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" 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)	September 30, 2025		June 30, 2025		September 30, 2024
Cash and cash equivalents	$	98,978	$	156,280	$	145,938
Equity securities, at fair value		9,505		9,582		7,816
Securities Held to Maturity		388,517		390,457		391,954
Securities Available for Sale		544,023		479,426		497,552
Federal Home Loan Bank stock		18,562		18,562		4,449
Federal Reserve Bank stock		12,554		12,547		5,307
Loans held for sale		6,323		7,639		5,994
Loans to other financial institutions		2,483		3,033		38,492
Core loans		2,907,445		2,917,759		1,465,458
Total loans held for investment		2,909,928		2,920,792		1,503,950
Allowance for credit losses		(34,754)		(34,798)		(16,490)
Loans, net of allowance for credit losses		2,875,174		2,885,994		1,487,460
Premises and equipment		46,159		45,667		27,135
Cash surrender value of life insurance policies		74,231		73,673		45,699
Goodwill		126,730		126,730		59,946
Intangible assets		31,694		33,421		1,250
Other assets		64,452		70,274		45,503

Total Assets	$	4,296,902	$	4,310,252	$	2,726,003

Noninterest-bearing deposits	$	903,925	$	943,873	$	521,055
Interest-bearing demand deposits		1,395,724		1,322,336		952,013
Savings deposits		588,798		595,981		335,802
Certificates of deposit		605,912		624,209		392,731
Brokered deposits		72,672		106,225		6,627
Borrowings		197,752		198,428		210,000
Subordinated debentures		48,368		48,277		35,691
Other liabilities		34,136		39,162		24,338

Total Liabilities		3,847,287		3,878,491		2,478,257

Common stock and paid-in capital, no par value; shares authorized: 30,000,000; shares outstanding: 15,017,802 at September 30, 2025, 15,008,864 at June 30, 2025, and 8,959,664 at September 30, 2024.		398,688		398,201		206,427
Retained earnings		93,124		82,647		86,765
Accumulated other comprehensive income (loss), net		(42,197)		(49,087)		(45,446)
Shareholders' Equity		449,615		431,761		247,746

Total Liabilities and Shareholders' Equity	$	4,296,902	$	4,310,252	$	2,726,003

Condensed Statements of Operations (Unaudited)

	Three Months Ended				Nine Months Ended
(Dollars in thousands, except per share data)	September 30,				September 30,
	2025		2024		2025		2024
Interest income
Loans, including fees	$	47,123	$	23,252	$	126,297	$	66,009
Securities:
Taxable		5,249		5,563		15,243		16,382
Tax exempt		1,418		1,402		4,220		4,224
Other		908		1,473		2,822		3,451
Total interest income		54,698		31,690		148,582		90,066

Interest expense
Deposits		14,287		8,362		39,843		25,464
Advances from Federal Home Loan Bank		1,926		468		5,637		1,372
Other		888		2,612		2,872		8,137
Total interest expense		17,101		11,442		48,352		34,973

Net interest income		37,597		20,248		100,230		55,093
Provision for credit losses on loans		200		425		14,013		1,100
Provision for (reversal of) credit losses on unfunded commitments		-		-		-		(675)
Net Provision for credit losses expense		200		425		14,013		425
Net interest income after provision		37,397		19,823		86,217		54,668

Noninterest income
Customer service charges		1,729		1,249		4,311		3,537
Interchange income		2,133		1,524		5,725		4,303
Insurance and investment commissions		485		184		1,320		572
Gains on sales of loans		671		631		1,470		1,610
Net gains (losses) on sales and write downs of other assets		(39)		191		(26)		203
Earnings on life insurance policies		558		315		1,791		1,115
Trust income		734		232		1,836		665
Change in market value of equity securities		458		277		804		241
Other		415		264		1,338		755
Total noninterest income		7,144		4,867		18,569		13,001

Noninterest expense
Salaries and benefits		14,127		8,372		38,178		24,467
Occupancy and equipment		2,694		1,475		6,845		4,414
Data processing		2,499		1,598		6,937		4,406
Communication		517		334		1,458		976
Professional fees		834		610		2,478		1,818
Supplies and postage		267		174		816		520
Advertising and promotional		207		168		723		517
Intangible amortization		1,728		198		4,140		604
FDIC insurance		530		390		1,535		1,155
Merger related expenses		-		645		17,369		645
Other		2,812		1,453		6,907		3,857
Total noninterest expense		26,215		15,417		87,386		43,379

Income (loss) before income tax		18,326		9,273		17,400		24,290
Income tax expense (benefit)		3,645		1,925		3,091		4,722

Net income (loss)	$	14,681	$	7,348	$	14,309	$	19,568

Basic earnings (loss) per share	$	0.98	$	0.86	$	1.05	$	2.48
Diluted earnings (loss) per share	$	0.97	$	0.85	$	1.05	$	2.46
Dividends declared per share	$	0.28	$	0.27	$	0.84	$	0.81

	Three Months Ended September 30, 2025							Three Months Ended June 30, 2025							Three Months Ended September 30, 2024

(Dollars in thousands)	Average							Average							Average
	Balance		Interest		Rate			Balance		Interest		Rate			Balance		Interest		Rate
Assets:
Loans (1)(3)(4)(5)	$	2,927,878	$	47,142		6.39	%	$	2,936,168	$	46,551		6.36	%	$	1,460,033	$	23,262		6.34	%
Taxable securities (2)		703,045		5,249		2.96			695,546		5,264		3.04			681,578		5,563		3.25
Nontaxable securities (1)		287,274		1,795		2.48			289,061		1,764		2.45			289,335		1,775		2.44
Other		79,365		909		4.54			63,416		735		4.65			108,019		1,473		5.43
Interest-earning assets		3,997,562		55,095		5.47			3,984,191		54,314		5.47			2,538,965		32,073		5.03
Noninterest-earning assets		310,727							314,322							146,225
Total assets	$	4,308,289						$	4,298,513						$	2,685,190

Liabilities and Shareholders' Equity:
Interest-bearing demand deposits	$	1,374,827	$	6,392		1.84	%	$	1,332,318	$	6,163		1.86	%	$	916,459	$	3,111		1.35	%
Savings deposits		591,653		1,125		0.75			595,362		1,003		0.68			329,613		728		0.88
Certificates of deposit		616,686		5,777		3.72			646,247		6,353		3.94			388,183		4,296		4.40
Brokered deposit		91,735		993		4.30			120,720		1,321		4.39			17,227		227		5.25
Borrowings		179,122		2,019		4.47			169,257		1,945		4.61			210,000		2,508		4.75
Subordinated debentures		48,663	701			5.72			48,971		689		5.65			35,658		413		4.61
Other		8,550	94			4.38			11,763		129		4.39			11,756		159		5.37
Interest-bearing liabilities		2,911,236		17,101		2.33			2,924,638		17,603		2.41			1,908,896		11,442		2.38
Demand deposits		930,346							915,637							519,511
Other noninterest-bearing liabilities		28,258							30,695							18,908
Total liabilities		3,869,840							3,870,970							2,447,315
Shareholders' equity		438,449							427,543							237,875
Total liabilities and shareholders' equity	$	4,308,289						$	4,298,513						$	2,685,190

Net interest income (tax- equivalent basis) (Non-GAAP) (1)			$	37,994						$	36,711						$	20,631

Net interest margin (tax- equivalent basis) (Non-GAAP) (1)						3.77	%						3.70	%						3.23	%


(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 $17.0 million, $16.8 million, and $2.2 million in the third quarter of 2025, the second quarter of 2025 and the third quarter of 2024, respectively.
(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 $3.6 million, $3.5 million and $275,000 in the third quarter of 2025, the second quarter of 2025 and the third quarter of 2024, respectively.

Income Adjusted for Merger Expenses - Non-GAAP Reconciliation (Unaudited)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2025		2024		2025		2024
(In Thousands, Except Per Share Data)
Net income (loss)	$	14,681	$	7,348	$	14,309	$	19,568

Merger related expenses net of tax		-		633		13,885		633
Merger related provision for credit losses, net of tax (1)		-		-		9,463		-
Adjusted net income	$	14,681	$	7,981	$	37,657	$	20,201

Weighted average number of shares		15,014,933		8,567,548		13,579,249		7,898,938
Diluted average shares outstanding		15,061,155		8,615,500		13,625,787		7,944,143
Basic earnings (loss) per share	$	0.98	$	0.86	$	1.05	$	2.48
Diluted earnings (loss) per share	$	0.97	$	0.85	$	1.05	$	2.46
Adjusted basic earnings per share	$	0.98	$	0.94	$	2.77	$	2.56
Adjusted diluted earnings per share	$	0.97	$	0.93	$	2.76	$	2.54

(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 3rd Qtr.		2025 2nd Qtr.		2025 1st Qtr.		2024 4th Qtr.		2024 3rd Qtr.
(in thousands except per share data)
Net interest income	$	37,597	$	36,322	$	26,311	$	19,349	$	20,248
Net provision expense		200		650		13,163		200		425
Noninterest income		7,144		6,503		4,922		4,994		4,867
Noninterest expense		26,215		25,506		35,665		15,344		15,417
Net income (loss) before federal income tax expense		18,326		16,669		(17,595)		8,799		9,273
Income tax expense (benefit)		3,645		3,135		(3,689)		1,640		1,925
Net income (loss)		14,681		13,534		(13,906)		7,159		7,348
Basic earnings (loss) per share		0.98		0.90		(1.30)		0.79		0.86
Diluted earnings (loss) per share		0.97		0.90		(1.29)		0.79		0.85
Adjusted basic earnings per share		0.98		0.91		0.87		0.84		0.94
Adjusted diluted earnings per share		0.97		0.91		0.86		0.83		0.93

End of period balances	2025 3rd Qtr.		2025 2nd Qtr.		2025 1st Qtr.		2024 4th Qtr.		2024 3rd Qtr.
(in thousands)
Gross loans	$	2,916,251	$	2,928,431	$	2,928,896	$	1,552,928	$	1,509,944
Loans held for sale (1)		6,323		7,639		3,941		7,288		5,994
Loans to other financial institutions (2)		2,483		3,033		2,393		39,878		38,492
Core loans (gross loans excluding 1 and 2 above)		2,907,445		2,917,759		2,922,562		1,505,762		1,465,458
Allowance for credit losses		34,754		34,798		34,567		16,552		16,490
Securities available for sale		544,023		479,426		480,650		479,117		497,552
Securities held to maturity		388,517		390,457		394,434		394,534		391,954
Other interest-earning assets		79,677		110,206		110,605		86,185		116,643
Total earning assets (before allowance)		3,928,468		3,908,520		3,914,585		2,512,764		2,516,093
Total assets		4,296,902		4,310,252		4,305,391		2,723,243		2,726,003
Noninterest-bearing deposits		903,925		943,873		912,033		524,945		521,055
Interest-bearing demand deposits		1,395,724		1,322,336		1,406,660		920,167		952,013
Savings deposits		588,798		595,981		602,337		338,109		335,802
Certificates of deposit		605,912		624,209		663,404		394,371		392,731
Brokered deposits		72,672		106,225		67,295		36,511		6,627
Total deposits		3,567,031		3,592,624		3,651,729		2,214,103		2,208,228
Deposits excluding brokered		3,494,359		3,486,399		3,584,434		2,177,592		2,201,601
Total subordinated debt		48,368		48,277		48,186		35,752		35,691
Total borrowed funds		197,752		198,428		137,330		175,000		210,000
Other interest-bearing liabilities		7,695		8,529		13,420		24,003		4,956
Total interest-bearing liabilities		2,916,921		2,903,985		2,938,632		1,923,913		1,937,820
Shareholders' equity		449,615		431,761		427,068		260,415		247,746

Average Balances	2025 3rd Qtr.		2025 2nd Qtr.		2025 1st Qtr.		2024 4th Qtr.		2024 3rd Qtr.
(in thousands)
Loans	$	2,927,878	$	2,936,168	$	2,019,643	$	1,516,466	$	1,460,033
Securities		990,319		984,607		978,769		965,501		970,913
Other interest-earning assets		79,365		63,416		115,091		100,864		108,019
Total earning assets (before allowance)		3,997,562		3,984,191		3,113,503		2,582,831		2,538,965
Total assets		4,308,289		4,298,513		3,319,591		2,719,530		2,685,190
Noninterest-bearing deposits		930,346		915,637		651,424		536,653		519,511
Interest-bearing deposits		2,583,166		2,573,927		2,030,543		1,641,102		1,634,255
Brokered deposits		91,735		120,720		45,553		19,620		17,227
Total deposits		3,605,247		3,610,284		2,727,520		2,197,375		2,170,993
Total subordinated debt		48,663		48,971		40,182		35,719		35,658
Total borrowed funds		179,122		169,257		193,961		197,828		210,000
Other interest-bearing liabilities		8,550		11,763		20,553		16,928		11,756
Total interest-bearing liabilities		2,911,236		2,924,638		2,330,792		1,911,197		1,908,896
Shareholders' equity		438,449		427,543		302,537		254,737		237,875

Loan Breakout (in thousands)	2025 3rd Qtr.		2025 2nd Qtr.		2025 1st Qtr.		2024 4th Qtr.		2024 3rd Qtr.
Agricultural	$	51,183	$	47,273	$	48,165	$	48,221	$	49,147
Commercial and Industrial		352,876		351,367		345,138		228,256		229,232
Commercial Real Estate		1,728,774		1,743,541		1,757,599		901,130		862,773
Consumer		27,328		29,741		30,932		29,412		30,693
Construction Real Estate		18,440		21,508		18,067		17,042		14,555
Residential Real Estate		728,844		724,329		722,661		281,701		279,058
Loans to Other Financial Institutions		2,483		3,033		2,393		39,878		38,492
Gross Loans (excluding held for sale)	$	2,909,928	$	2,920,792	$	2,924,955	$	1,545,640	$	1,503,950

Allowance for credit losses		34,754		34,798		34,567		16,552		16,490

Net loans	$	2,875,174	$	2,885,994	$	2,890,388	$	1,529,088	$	1,487,460

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

Annualized return on average assets		1.36	%		1.26	%		-1.68	%		1.05	%		1.09	%
Annualized return on average equity		13.39	%		12.66	%		-18.39	%		11.24	%		12.36	%
Annualized return on average tangible common equity		19.08	%		18.26	%		-27.97	%		14.54	%		16.29	%
Net interest margin (GAAP)		3.73	%		3.66	%		3.43	%		2.98	%		3.17	%
Net interest margin (fully tax-equivalent)		3.77	%		3.70	%		3.48	%		3.04	%		3.23	%
Efficiency ratio		54.76	%		55.32	%		111.01	%		61.29	%		60.80	%
Annualized cost of funds		1.77	%		1.84	%		1.86	%		1.90	%		1.87	%
Annualized cost of deposits		1.57	%		1.65	%		1.59	%		1.58	%		1.53	%
Cost of interest bearing liabilities		2.33	%		2.41	%		2.37	%		2.43	%		2.38	%
Shareholders' equity to total assets		10.46	%		10.02	%		9.91	%		9.56	%		9.09	%
Tangible common equity to tangible assets		7.04	%		6.54	%		6.40	%		7.49	%		7.00	%
Annualized noninterest expense to average assets		2.43	%		2.37	%		4.30	%		2.26	%		2.30	%
Loan to deposit		81.76	%		81.51	%		80.21	%		70.14	%		68.38	%
Full-time equivalent employees		573			571			605			377			371

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

Total capital (to risk weighted assets)		13.0	%		12.4	%		12.0	%		14.5	%		15.0	%
Common equity Tier 1 capital (to risk weighted assets)		10.3	%		9.8	%		9.4	%		12.0	%		12.3	%
Tier 1 capital (to risk weighted assets)		10.9	%		10.4	%		10.0	%		12.2	%		12.5	%
Tier 1 capital (to average assets)		8.5	%		8.2	%		10.4	%		9.1	%		9.0	%
Tier 1 capital (to total assets)		8.2	%		7.9	%		7.6	%		8.9	%		8.7	%
Commercial Real Estate Loans (non- owner occupied) as a percentage of total capital		275.2	%		288.2	%		302.0	%		195.6	%		193.3	%

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

Total capital (to risk weighted assets)		12.8	%		12.4	%		11.9	%		12.7	%		13.1	%
Common equity Tier 1 capital (to risk weighted assets)		11.7	%		11.3	%		10.9	%		12.0	%		12.3	%
Tier 1 capital (to risk weighted assets)		11.7	%		11.3	%		10.9	%		12.0	%		12.3	%
Tier 1 capital (to average assets)		9.1	%		8.9	%		11.3	%		8.9	%		8.9	%
Tier 1 capital (to total assets)		8.8	%		8.6	%		8.3	%		8.7	%		8.5	%
Commercial Real Estate Loans (non- owner occupied) as a percentage of total capital		280.0	%		290.6	%		303.9	%		224.9	%		222.2	%

Asset Quality	2025 3rd Qtr.			2025 2nd Qtr.			2025 1st Qtr.			2024 4th Qtr.			2024 3rd Qtr.
(in thousands)
Net loan charge-offs (recoveries)	$	244		$	418		$	72		$	138		$	87
Annualized net loan charge-offs (recoveries) to average loans		0.03	%		0.06	%		0.01	%		0.04	%		0.02	%
Allowance for credit losses	$	34,754		$	34,798		$	34,567		$	16,552		$	16,490
Unfunded commitment liability	$	1,647		$	1,647		$	1,647		$	1,485		$	1,485
Allowance to loans (excludes held for sale)		1.19	%		1.19	%		1.18	%		1.07	%		1.10	%
Total funds reserved to pay for loans (includes liability for unfunded commitments and excludes held for sale)		1.25	%		1.25	%		1.24	%		1.17	%		1.20	%
Non-Accruing loans	$	17,365		$	16,854		$	16,789		$	3,704		$	2,355
Nonperforming loans (includes OREO)	$	19,940		$	19,296		$	19,154		$	4,177		$	2,884
Nonperforming loans to total loans (excludes held for sale)		0.69	%		0.66	%		0.65	%		0.27	%		0.19	%
Non Accrual classified as PCD	$	11,393			12,017			12,891			-			-
Nonperforming loans to total loans (excludes held for sale) attributed to PCD		0.39	%		0.41	%		0.44	%		-			-
Nonperforming assets to total assets		0.46	%		0.45	%		0.44	%		0.15	%		0.11	%

Other Non-GAAP Reconciliation (Unaudited)

NON-GAAP Reconciliation	2025 3rd Qtr.			2025 2nd Qtr.			2025 1st Qtr.			2024 4th Qtr.			2024 3rd Qtr.
Net interest income (tax-equivalent basis) (Non-GAAP)	$	37,994		$	36,711		$	26,710		$	19,739		$	20,631
Net interest margin (fully tax-equivalent)		3.77	%		3.70	%		3.48	%		3.04	%		3.23	%

Reconciliation to Reported Net Interest Income

Net interest income (tax-equivalent basis) (Non-GAAP)	$	37,994		$	36,711		$	26,710		$	19,739		$	20,631

Adjustment for taxable equivalent interest		(397)			(389)			(399)			(390)			(383)

Net interest income (GAAP)	$	37,597		$	36,322		$	26,311		$	19,349		$	20,248
Net interest margin (GAAP)		3.73	%		3.66	%		3.43	%		2.98	%		3.17	%

(dollars in thousands)	2025 3rd Qtr.			2025 2nd Qtr.			2025 1st Qtr.			2024 4th Qtr.			2024 3rd Qtr.
Total assets	$	4,296,902		$	4,310,252		$	4,305,391		$	2,723,243		$	2,726,003
Less: goodwill		126,730			126,730			126,730			59,946			59,946
Less: core deposit intangible		31,694			33,421			35,153			1,096			1,250
Tangible assets	$	4,138,478		$	4,150,101		$	4,143,508		$	2,662,201		$	2,664,807

Total equity	$	449,615		$	431,761		$	427,068		$	260,415		$	247,746
Less: goodwill		126,730			126,730			126,730			59,946			59,946
Less: core deposit intangible		31,694			33,421			35,154			1,096			1,250
Tangible common equity	$	291,191		$	271,610		$	265,184		$	199,373		$	186,550
Tangible common equity to tangible assets		7.04	%		6.54	%		6.40	%		7.49	%		7.00	%

(dollars in thousands)	2025 3rd Qtr.			2025 2nd Qtr.			2025 1st Qtr.			2024 4th Qtr.			2024 3rd Qtr.
Net income	$	14,681		$	13,534		$	(13,906)		$	7,159		$	7,348
Less: intangible amortization (tax affected at 21%)		1,365			1,369			537			121			156
Adjusted net income	$	13,316		$	12,165		$	(14,443)		$	7,038		$	7,192

Average shareholders' equity	$	438,449		$	427,543		$	302,537		$	254,737		$	237,875
Less: average goodwill		126,730			126,730			83,030			59,946			59,946
Less: average core deposit intangible		32,599			34,356			12,983			1,179			1,355
Average tangible common equity	$	279,120		$	266,457		$	206,524		$	193,612		$	176,574

Return on average tangible common equity		19.08	%		18.26	%		-27.97	%		14.54	%		16.29	%

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SOURCE ChoiceOne Financial Services, Inc.

ChoiceOne Reports Third Quarter 2025 Results