SPARTA, Mich. – July 25, 2025 – ChoiceOne Financial Services, Inc. (NASDAQ:COFS), the financial institution steering ChoiceOne Bank, has disclosed its financial performance for the quarter concluding on June 30, 2025. This period marks a significant chapter for ChoiceOne, following the completion of its merger with Fentura Financial, Inc., parent company of The State Bank, on March 1, 2025. The merger, with ChoiceOne emerging as the surviving entity, positions the company for amplified growth and market reach.
The integration wave continued with the consolidation of The State Bank into ChoiceOne Bank, finalized on March 14, 2025, establishing ChoiceOne Bank as the leading entity. These strategic moves are poised to unlock operational efficiencies.
Key Takeaways from the Second Quarter:
- The merger brought ChoiceOne approximately $1.8 billion in total assets, $1.4 billion in loans, and $1.4 billion in deposits, respectively, fortifying its financial foundation and expanding its customer base.
- ChoiceOne’s bottom line was affected by merger-related expenses totaling approximately $132,000 and $13.9 million (equivalent to $0.01 and $1.08 per diluted share) for the three and six months ending June 30, 2025, respectively. Executives say the absorption has been completed, and management does not anticipate significant merger expenses moving forward.
- The merger also necessitated a provision for credit losses of $9.5 million during the first quarter ending March 31, 2025, or $0.73 per diluted share as of June 30, 2025.
By the Numbers:
- ChoiceOne reported a net income of $13.53 million for the second quarter, a marked leap compared to $6.59 million during the same period last year. However, digging into the six-month stretch, the company experienced a net loss of $372,000, contrasting with a $12.22 million net income last year. When these figures are adjusted to exclude merger expenses net of taxes and merger-related provision for credit losses, net income stands at $13.67 million and $22.98 million for the three and six months ended June 30, 2025, respectively.
- Diluted earnings per share hit $0.90 for the quarter, but the six-month figure shows a diluted loss per share of $0.03. In comparison, diluted earnings per share were $0.87 and $1.61 for the same periods last year. Again, sidelining merger-related costs and credit loss provisions yields adjusted diluted earnings per share of $0.91 and $1.78 for the three and six months ended June 30, 2025, respectively.
- The importance of margins in the financial services sector, ChoiceOne increased its GAAP net interest margin jumped to 3.66% in the second quarter, a substantial elevation from 2.95% in Q2 2024. GAAP net interest income surged to $36.3 million, compared to $18.4 million the previous year, primarily due to additional net interest income post-merger. Accretion income from acquired loans increased GAAP net interest margin by 36 basis points for the second quarter of 2025.
- Excluding held-for-sale loans and loans to other financial institutions, core loans decreased by $4.8 million, or less than 1% on an annualized basis, while exhibiting organic growth of $140.1 million, or 10.0%, over the twelve months ending June 30, 2025. The merger significantly augmented core loans by $1.4 billion. Loan interest income grew by $24.6 million compared to the same quarter last year, inclusive of $3.5 million in accretion income from purchased loans.
- Seasonal fluctuations and the reduction of higher-cost deposits acquired through the merger led to a deposit decrease of $98.0 million as of June 30, 2025, excluding brokered deposits, relative to March 31, 2025.
- ChoiceOne sustained asset quality, showing annualized net loan charge-offs to average loans at 0.06% and nonperforming loans to total loans (excluding loans held for sale) at 0.66% as of June 30, 2025. Notably, 0.41% of the nonperforming loans attributed to credit deterioration acquired through the Merger.
Kelly Potes, Chief Executive Officer, highlighted the company’s performance stating, “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,”
ChoiceOne’s assets grew to $4.3 billion as of June 30, 2025, an increase of $1.7 billion compared to June 30, 2024, largely driven by the merger. This surge was counterbalanced by a $33.5 million decrease in loans to other FIs and a $14.5 million decrease in securities. The FI loans, used to facilitate mortgage originations, saw a decline due to ChoiceOne emphasizing internal originations. The restructuring of securities purchased in the Merger reduced high-cost wholesale funding.
Available borrowing capacity was $1.2 Bln at June 30, 2025.
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.”
Forward-Looking Statements:
This report includes predictive statements which include terminology such as “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “intends,” “is likely,” “plans,” “predicts,” “projects,” “may,” “could,” “look forward,” “continue”, “future.” Examples include, but are not limited to, expectations of ChoiceOne with respect to the Merger. These statements should be viewed as current beliefs based on expected outcomes. Risk factors include those described in Item 1A in ChoiceOne’s Annual Report on Form 10-K for the year ended December 31, 2024. ChoiceOne does not undertake obligation to update, amend, or clarify forward-looking statements, whether as a result of new information, future events, or otherwise.
Non-GAAP Financial Measures:
This report 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 cautious with respect to the use of such measures. 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.
|
Condensed Balance Sheets |
||||||||||||
|
(In thousands) |
June 30, 2025 |
March 31, 2025 |
June 30, |
|||||||||
|
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 |
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