SPARTA,
Mich., Jan. 24, 2024 /PRNewswire/ -- ChoiceOne
Financial Services, Inc. ("ChoiceOne", NASDAQ:COFS), the parent
company for ChoiceOne Bank, reported financial results for the
quarter ended December 31, 2023.
Financial Highlights
- Founded in 1898, ChoiceOne Bank celebrated its 125th
anniversary serving local Michigan
communities. ChoiceOne celebrated this accomplishment by ringing
the opening bell on the NASDAQ trading floor on October 30th, 2023.
- ChoiceOne reported net income of $5,293,000 and $21,261,000 for the three and twelve months ended
December 31, 2023, compared to
$6,684,000 and $23,640,000 for the same periods in 2022.
- Diluted earnings per share were $0.70 and $2.82 in
the three and twelve months ended December
31, 2023, compared to $0.89
and $3.15 per share in the same
periods in the prior year.
- Core loans, which exclude held for sale loans, loans to other
financial institutions, and Paycheck Protection Program ("PPP")
loans, grew organically by $105.2
million or an annualized 32.7% during the fourth quarter of
2023 and $201.5 million or 16.9%
since December 31, 2022. This
represents the largest core loan growth by dollar amount in a
single quarter in ChoiceOne's 125 years in business (excludes loan
acquisitions due to mergers and PPP loans).
- Deposits, excluding brokered deposits, increased by
$14.7 million or an annualized 2.8%
in the fourth quarter of 2023. The increase in deposits in the
fourth quarter is a combination of new business, recapture of
deposit losses from earlier in the year, and some seasonality of
municipal balances. Deposits as of December
31, 2023, excluding brokered deposits, decreased
$19.4 million or 0.9%, compared to
deposits as of December 31,
2022.
- Fully tax-equivalent net interest income increased to
$16.9 million in the fourth quarter
of 2023 compared to $16.6 million in
the third quarter of 2023. Net interest margin (fully
tax-equivalent) in the fourth quarter was 2.72% an increase from
2.70% in the third quarter of 2023.
- Asset quality remains strong with only 0.1% of nonperforming
loans to total loans (excluding held for sale) as of December 31, 2023.
"This quarter was a momentous occasion for ChoiceOne Bank as we
marked 125 years of empowering our customers and communities. I am
thrilled to share that we achieved the largest core loan growth by
dollar amount in a single quarter in our entire history (excludes
loan acquisitions due to mergers and PPP loans). This is proof of
our entire team's commitment to supporting our local communities. I
am also very pleased with our full year 2023 results which showcase
loan growth in a tough environment. Our results demonstrate the
strong management of both credit and interest rate risk as we
continue to prioritize mitigation of these risks. We appreciate our
customers' trust and loyalty, and we look forward to many more
years of success together," said Kelly
Potes, Chief Executive Officer.
ChoiceOne reported net income of $5,293,000 and $21,261,000 for the three and twelve months ended
December 31, 2023, compared to
$6,684,000 and $23,640,000 for the same periods in 2022.
Diluted earnings per share were $0.70
and $2.82 in the three and twelve
months ended December 31, 2023,
compared to $0.89 and $3.15 per share in the same periods in the prior
year. During 2023, earnings were negatively affected by
increased deposit costs, but this was partially offset by higher
interest income from loans with higher interest rates and organic
loan growth.
As of December 31, 2023, total
assets remained stable compared to September
30, 2023. ChoiceOne used cash balances to fund loans and
reduced the net balance of borrowings and brokered deposits by
$5.8 million in the fourth quarter of
2023. In addition, core loans increased $105.2 million during the fourth quarter of
2023. Total assets increased by $190.8
million in the twelve months ended December 31, 2023. This increase was driven by
core loan growth of $201.5 million or
16.9%, which was partially offset by a decrease in securities of
$33.2 million. ChoiceOne management
increased liquidity to fund organic loan growth and shifted lower
yield assets into higher yield loans, as shown by the loan growth
in the fourth quarter of 2023.
Deposits, excluding brokered deposits, increased by $14.7 million or an annualized 2.8% in the fourth
quarter of 2023 and decreased $19.4
million or 0.9% as of December 31,
2023 compared to December 31,
2022. The decrease in deposits since December 31, 2022 was largely concentrated in the
first quarter of 2023 as a result of a combination of customers
using cash on hand for debt payoffs, seasonal tax and municipal
bond payments, and customers seeking higher rates in money market
securities or other investments. Deposits grew in the third
and fourth quarters of 2023 due to new business, recapture of
deposit losses, and some seasonality in municipal
balances. ChoiceOne continues to be proactive in managing its
liquidity position by using brokered deposits, the Bank Term
Funding Program ("BTFP"), and FHLB advances to ensure ample
liquidity. At December 31,
2023, total available borrowing capacity from all sources
was $933.3 million.
Uninsured deposits total $769.7
million or 36.7% of deposits at December 31, 2023.
The increase in short term interest rates has led to higher
deposit costs, which rose to 1.57% in the last quarter of 2023,
compared to 1.36% in the previous quarter and 0.47% in the fourth
quarter of 2022. As deposits reprice and customers shift to CD and
other interest bearing products, this trend is likely to persist.
ChoiceOne is taking active measures to control these costs and
expects to pay lower rates on deposits than the federal funds
rate. Interest expense on borrowings for the three and twelve
months ended December 31, 2023,
increased $2.2 million and
$7.2 million, respectively, compared
to the same periods in the prior year, due to increases in
borrowing amounts and interest rates. Borrowings include
$170 million from the BTFP and
$30 million of FHLB borrowings at a
weighted average fixed rate of 4.7%. Total cost of funds
increased to 1.91% in the fourth quarter of 2023 compared to 1.70%
in the third quarter of 2023 and 0.59% in the fourth quarter of
2022.
The provision for credit losses expense on loans increased by
$933,000 in the last quarter of 2023,
due to the significant growth of core loans. Core loan growth
was offset by certain payoffs of watch loans, which declined by
$425,000 during the fourth quarter of
2023. Net provision for credit losses expense for the fourth
quarter 2023 was $375,000. The
ratio of the allowance for credit losses to total loans (excluding
loans held for sale) was 1.11% on December
31, 2023 compared to 1.14% on September 30, 2023. Asset quality continues
to remain strong, with annualized net loan charge-offs to average
loans of 0.04% and nonperforming loans to total loans (excluding
loans held for sale) of 0.13% as of December
31, 2023.
ChoiceOne uses interest rate swaps to manage interest rate
exposure to certain fixed assets and variable rate
liabilities. On December 31,
2023, ChoiceOne had pay-fixed interest rate swaps with a
total notional value of $401.0
million, a weighted average coupon of 3.07%, a fair value of
$8.9 million and an average contract
length of 8 to 9 years. These derivative instruments increase
in value as long-term interest rates rise, which offsets the
reduction in equity due to unrealized losses on securities
available for sale. Included in the total is $200.0 million of forward starting pay-fixed,
receive floating interest rate swaps used to hedge interest bearing
liabilities. These forward starting swaps will pay a fixed
coupon of 2.75% while receiving SOFR starting in late April
2024. At the current SOFR rate of 5.38%, these forward
starting swaps would contribute approximately $438,000 monthly starting in May 2024 which will partially offset interest
expense. In addition, in March 2023,
ChoiceOne eliminated all receive-fix, pay floating swap agreements
for a cash payment of $4.2
million. The loss is being amortized in interest
income with an expense of approximately $273,000 monthly through April 2024, which was the remaining period of the
agreements.
Shareholders' equity totaled $195.6
million as of December 31,
2023, up from $168.9 million
as of December 31, 2022. This
increase is due to increased retained earnings and an improvement
in accumulated other compressive loss (AOCI) of $20.2 million compared to December 31, 2022. The improvement in AOCI
despite the rise in interest rates is due to both the shortening
duration and maturing (paydowns) of the securities portfolio, as
well as an offsetting increase in unrealized gain of the pay-fixed
swap derivatives. ChoiceOne Bank remains "well-capitalized"
with a total risk-based capital ratio of 12.4% as of December 31, 2023, compared to 13.0% on
December 31, 2022.
Noninterest income rose by $297,000 and $834,000 in the three and twelve months ended
December 31, 2023, compared to the
same periods in the prior year. The increase was largely due
to gains in our securities portfolio during 2023 compared to losses
in 2022. Gains on sales of loans increased by $255,000 in the fourth quarter of 2023 compared
to the fourth quarter of 2022; however, overall volume remains
somewhat depressed due to a competitive housing market and higher
mortgage rates.
Noninterest expense increased $563,000 or 4.3% and $1.6
million or 3.0% in the three and twelve months ended
December 31, 2023 compared to the
same periods in 2022. The increase in total noninterest
expense was largely related to inflationary pressures on employee
wages and benefits and increases to FDIC insurance partially offset
by lower occupancy and data processing costs. As part of its
ongoing optimization strategy, ChoiceOne intends to consolidate two
of its branches by March 2025.
Customers who currently use these branches will be able to access
nearby ChoiceOne locations that offer the same level of service and
convenience. ChoiceOne anticipates a low impact on customer
retention and expects to save around $700,000 annually from this decision.
Management continues to seek out ways to manage costs, but also
recognizes the value of investing in innovation and attracting the
best talent in our industry to compete effectively in our
markets.
About ChoiceOne
ChoiceOne Financial Services, Inc. is a financial holding
company headquartered in Sparta,
Michigan and the parent corporation of ChoiceOne Bank,
Member FDIC. ChoiceOne Bank operates 37 offices in parts of
Kent, Lapeer, Macomb, Muskegon, Newaygo, Ottawa, and St.
Clair counties. ChoiceOne Bank offers insurance and
investment products through its subsidiary, ChoiceOne Insurance
Agencies, Inc. For more information, please visit Investor
Relations at ChoiceOne's website at choiceone.bank.
Forward-Looking Statements
This release may contain forward-looking statements. Words such
as "anticipates," "believes," "estimates," "expects," "forecasts,"
"intends," "is likely," "plans," "predicts," "projects," "may,"
"could," "look forward," "continue", "future", "will" and
variations of such words and similar expressions are intended to
identify such forward looking statements. These statements reflect
current beliefs as to the expected outcomes of future events and
are not guarantees of future performance. These statements involve
certain risks, uncertainties and assumptions ("risk factors") that
are difficult to predict with regard to timing, extent, likelihood
and degree of occurrence. Therefore, actual results and outcomes
may materially differ from what may be expressed, implied or
forecasted in such forward-looking statements. Furthermore,
ChoiceOne undertakes no obligation to update, amend, or clarify
forward-looking statements, whether as a result of new information,
future events, or otherwise. Risk factors include, but are not
limited to, the risk factors described in Item 1A in ChoiceOne
Financial Services, Inc.'s Annual Report on Form 10-K for the year
ended December 31, 2022.
Condensed Balance
Sheets
(Unaudited)
|
|
(In
thousands)
|
|
December 31,
2023
|
|
|
September 30,
2023
|
|
|
December 31,
2022
|
|
Cash and cash
equivalents
|
|
$
|
55,433
|
|
|
$
|
144,673
|
|
|
$
|
43,943
|
|
Securities Held to
Maturity
|
|
|
407,959
|
|
|
|
414,743
|
|
|
|
425,906
|
|
Securities Available
for Sale
|
|
|
531,617
|
|
|
|
507,580
|
|
|
|
546,896
|
|
Loans held for
sale
|
|
|
4,710
|
|
|
|
5,222
|
|
|
|
4,834
|
|
Loans to other
financial institutions
|
|
|
19,400
|
|
|
|
23,763
|
|
|
|
-
|
|
Loans, net of allowance
for loan losses
|
|
|
1,375,568
|
|
|
|
1,271,165
|
|
|
|
1,182,163
|
|
Premises and
equipment
|
|
|
29,750
|
|
|
|
29,628
|
|
|
|
28,232
|
|
Cash surrender value of
life insurance policies
|
|
|
45,074
|
|
|
|
44,788
|
|
|
|
43,978
|
|
Goodwill
|
|
|
59,946
|
|
|
|
59,946
|
|
|
|
59,946
|
|
Core deposit
intangible
|
|
|
1,854
|
|
|
|
2,057
|
|
|
|
2,809
|
|
Other assets
|
|
|
45,395
|
|
|
|
70,631
|
|
|
|
47,208
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
2,576,706
|
|
|
$
|
2,574,196
|
|
|
$
|
2,385,915
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing
deposits
|
|
$
|
547,625
|
|
|
$
|
531,962
|
|
|
$
|
599,579
|
|
Interest-bearing
deposits
|
|
|
1,550,985
|
|
|
|
1,551,995
|
|
|
|
1,518,424
|
|
Brokered
deposits
|
|
|
23,445
|
|
|
|
49,238
|
|
|
|
-
|
|
Borrowings
|
|
|
200,000
|
|
|
|
180,000
|
|
|
|
50,000
|
|
Subordinated
debentures
|
|
|
35,507
|
|
|
|
35,446
|
|
|
|
35,262
|
|
Other
liabilities
|
|
|
23,510
|
|
|
|
44,394
|
|
|
|
13,776
|
|
|
|
|
|
|
|
|
|
|
|
Total
Liabilities
|
|
|
2,381,072
|
|
|
|
2,393,035
|
|
|
|
2,217,041
|
|
|
|
|
|
|
|
|
|
|
|
Common stock and
paid-in capital, no par value; shares authorized:
15,000,000; shares outstanding: 7,548,217 at December 31, 2023,
7,541,187 at
September 30, 2023, and 7,516,098 at December 31, 2022
|
|
|
173,513
|
|
|
|
173,187
|
|
|
|
172,277
|
|
Retained
earnings
|
|
|
73,699
|
|
|
|
70,444
|
|
|
|
68,394
|
|
Accumulated other
comprehensive income (loss), net
|
|
|
(51,578)
|
|
|
|
(62,470)
|
|
|
|
(71,797)
|
|
Shareholders'
Equity
|
|
|
195,634
|
|
|
|
181,161
|
|
|
|
168,874
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and
Shareholders' Equity
|
|
$
|
2,576,706
|
|
|
$
|
2,574,196
|
|
|
$
|
2,385,915
|
|
Condensed Statements
of Income
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
|
Twelve Months
Ended
|
|
(Dollars in thousands,
except per share data)
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2023
|
|
|
2022
|
|
|
2023
|
|
2022
|
|
Interest
income
|
|
|
|
|
|
|
|
|
|
|
|
Loans, including
fees
|
|
$
|
19,759
|
|
|
$
|
14,391
|
|
|
$
|
68,384
|
|
$
|
52,823
|
|
Securities:
|
|
|
|
|
|
|
|
|
|
|
|
Taxable
|
|
|
5,532
|
|
|
|
4,582
|
|
|
|
21,169
|
|
|
15,583
|
|
Tax exempt
|
|
|
1,385
|
|
|
|
1,485
|
|
|
|
5,629
|
|
|
6,163
|
|
Other
|
|
|
1,286
|
|
|
|
177
|
|
|
|
3,798
|
|
|
491
|
|
Total interest
income
|
|
|
27,962
|
|
|
|
20,635
|
|
|
|
98,980
|
|
|
75,060
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
8,421
|
|
|
|
2,503
|
|
|
|
23,990
|
|
|
5,845
|
|
Advances from Federal
Home Loan Bank
|
|
|
273
|
|
|
|
109
|
|
|
|
1,771
|
|
|
117
|
|
Other
|
|
|
2,712
|
|
|
|
657
|
|
|
|
7,334
|
|
|
1,784
|
|
Total interest
expense
|
|
|
11,406
|
|
|
|
3,269
|
|
|
|
33,095
|
|
|
7,746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
|
|
16,556
|
|
|
|
17,366
|
|
|
|
65,885
|
|
|
67,314
|
|
Provision for credit
losses on loans
|
|
|
933
|
|
|
|
150
|
|
|
|
1,265
|
|
|
250
|
|
Provision for credit
losses on unfunded commitments
|
|
|
(558)
|
|
|
|
-
|
|
|
|
(1,115)
|
|
|
-
|
|
Net Provision for
credit losses expense
|
|
|
375
|
|
|
|
150
|
|
|
|
150
|
|
|
250
|
|
Net interest income
after provision
|
|
|
16,181
|
|
|
|
17,216
|
|
|
|
65,735
|
|
|
67,064
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest
income
|
|
|
|
|
|
|
|
|
|
|
|
Customer service
charges
|
|
|
2,427
|
|
|
|
2,350
|
|
|
|
9,347
|
|
|
9,350
|
|
Insurance and
investment commissions
|
|
|
157
|
|
|
|
183
|
|
|
|
698
|
|
|
779
|
|
Gains on sales of
loans
|
|
|
475
|
|
|
|
220
|
|
|
|
1,954
|
|
|
2,343
|
|
Net gains (losses) on
sales of securities
|
|
|
-
|
|
|
|
(4)
|
|
|
|
(71)
|
|
|
(809)
|
|
Net gains (losses) on
sales and write downs of other assets
|
|
|
(2)
|
|
|
|
(73)
|
|
|
|
147
|
|
|
99
|
|
Earnings on life
insurance policies
|
|
|
286
|
|
|
|
519
|
|
|
|
1,096
|
|
|
1,312
|
|
Trust
income
|
|
|
194
|
|
|
|
206
|
|
|
|
771
|
|
|
734
|
|
Change in market value
of equity securities
|
|
|
210
|
|
|
|
51
|
|
|
|
(246)
|
|
|
(955)
|
|
Other
|
|
|
299
|
|
|
|
297
|
|
|
|
1,210
|
|
|
1,219
|
|
Total noninterest
income
|
|
|
4,046
|
|
|
|
3,749
|
|
|
|
14,906
|
|
|
14,072
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest
expense
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and
benefits
|
|
|
8,005
|
|
|
|
7,580
|
|
|
|
31,963
|
|
|
30,391
|
|
Occupancy and
equipment
|
|
|
1,471
|
|
|
|
1,501
|
|
|
|
6,048
|
|
|
6,189
|
|
Data
processing
|
|
|
1,531
|
|
|
|
1,673
|
|
|
|
6,618
|
|
|
6,729
|
|
Professional
fees
|
|
|
523
|
|
|
|
547
|
|
|
|
2,198
|
|
|
2,175
|
|
Supplies and
postage
|
|
|
200
|
|
|
|
178
|
|
|
|
780
|
|
|
719
|
|
Advertising and
promotional
|
|
|
148
|
|
|
|
286
|
|
|
|
721
|
|
|
764
|
|
Intangible
amortization
|
|
|
203
|
|
|
|
252
|
|
|
|
955
|
|
|
1,153
|
|
FDIC
insurance
|
|
|
394
|
|
|
|
77
|
|
|
|
1,184
|
|
|
722
|
|
Other
|
|
|
1,303
|
|
|
|
1,121
|
|
|
|
4,607
|
|
|
4,636
|
|
Total noninterest
expense
|
|
|
13,778
|
|
|
|
13,215
|
|
|
|
55,074
|
|
|
53,478
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
tax
|
|
|
6,449
|
|
|
|
7,750
|
|
|
|
25,567
|
|
|
27,658
|
|
Income tax
expense
|
|
|
1,156
|
|
|
|
1,066
|
|
|
|
4,306
|
|
|
4,018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
5,293
|
|
|
$
|
6,684
|
|
|
$
|
21,261
|
|
$
|
23,640
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
|
$
|
0.70
|
|
|
$
|
0.89
|
|
|
$
|
2.82
|
|
$
|
3.15
|
|
Diluted earnings per
share
|
|
$
|
0.70
|
|
|
$
|
0.89
|
|
|
$
|
2.82
|
|
$
|
3.15
|
|
Dividends declared per
share
|
|
$
|
0.27
|
|
|
$
|
0.26
|
|
|
$
|
1.05
|
|
$
|
1.01
|
|
Other Selected
Financial Highlights (Unaudited)
|
|
|
|
Quarterly
|
|
Earnings
|
|
2023 4th
Qtr.
|
|
|
2023 3rd
Qtr.
|
|
|
2023 2nd
Qtr.
|
|
|
2023 1st
Qtr.
|
|
|
2022 4th
Qtr.
|
|
(in thousands except
per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
|
$
|
16,556
|
|
|
$
|
16,226
|
|
|
$
|
16,091
|
|
|
$
|
17,012
|
|
|
$
|
17,366
|
|
Net provision
expense
|
|
|
375
|
|
|
|
-
|
|
|
|
(250)
|
|
|
|
25
|
|
|
|
150
|
|
Noninterest
income
|
|
|
4,046
|
|
|
|
3,704
|
|
|
|
3,485
|
|
|
|
3,671
|
|
|
|
3,749
|
|
Noninterest
expense
|
|
|
13,778
|
|
|
|
13,728
|
|
|
|
13,573
|
|
|
|
13,995
|
|
|
|
13,215
|
|
Net income before
federal income tax expense
|
|
|
6,449
|
|
|
|
6,202
|
|
|
|
6,253
|
|
|
|
6,663
|
|
|
|
7,750
|
|
Income tax
expense
|
|
|
1,156
|
|
|
|
1,080
|
|
|
|
1,040
|
|
|
|
1,030
|
|
|
|
1,066
|
|
Net income
|
|
|
5,293
|
|
|
|
5,122
|
|
|
|
5,213
|
|
|
|
5,633
|
|
|
|
6,684
|
|
Basic earnings per
share
|
|
|
0.70
|
|
|
|
0.68
|
|
|
|
0.69
|
|
|
|
0.75
|
|
|
|
0.89
|
|
Diluted earnings per
share
|
|
|
0.70
|
|
|
|
0.68
|
|
|
|
0.69
|
|
|
|
0.75
|
|
|
|
0.89
|
|
End of period
balances
|
|
2023 4th
Qtr.
|
|
|
2023 3rd
Qtr.
|
|
|
2023 2nd
Qtr.
|
|
|
2023 1st
Qtr.
|
|
|
2022 4th
Qtr.
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross loans
|
|
$
|
1,415,363
|
|
|
$
|
1,315,022
|
|
|
$
|
1,273,152
|
|
|
$
|
1,214,186
|
|
|
$
|
1,194,616
|
|
Loans held for sale
(1)
|
|
|
4,710
|
|
|
|
5,222
|
|
|
|
8,924
|
|
|
|
3,603
|
|
|
|
4,834
|
|
Loans to other
financial institutions (2)
|
|
|
19,400
|
|
|
|
23,763
|
|
|
|
38,838
|
|
|
|
-
|
|
|
|
-
|
|
PPP loans
(3)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Core loans (gross loans
excluding 1, 2, and 3 above)
|
|
|
1,391,253
|
|
|
|
1,286,037
|
|
|
|
1,225,390
|
|
|
|
1,210,583
|
|
|
|
1,189,782
|
|
Allowance for loan
losses
|
|
|
15,685
|
|
|
|
14,872
|
|
|
|
14,582
|
|
|
|
15,065
|
|
|
|
7,619
|
|
Securities available
for sale
|
|
|
531,617
|
|
|
|
507,580
|
|
|
|
542,932
|
|
|
|
554,306
|
|
|
|
546,896
|
|
Securities held to
maturity
|
|
|
407,959
|
|
|
|
414,743
|
|
|
|
420,549
|
|
|
|
422,876
|
|
|
|
425,906
|
|
Other interest-earning
assets
|
|
|
22,392
|
|
|
|
113,402
|
|
|
|
41,032
|
|
|
|
30,999
|
|
|
|
15,447
|
|
Total earning assets
(before allowance)
|
|
|
2,377,331
|
|
|
|
2,350,747
|
|
|
|
2,277,665
|
|
|
|
2,222,367
|
|
|
|
2,182,866
|
|
Total assets
|
|
|
2,576,706
|
|
|
|
2,574,196
|
|
|
|
2,483,726
|
|
|
|
2,409,886
|
|
|
|
2,385,915
|
|
Noninterest-bearing
deposits
|
|
|
547,625
|
|
|
|
531,962
|
|
|
|
544,925
|
|
|
|
554,699
|
|
|
|
599,579
|
|
Interest-bearing
deposits
|
|
|
1,550,985
|
|
|
|
1,551,995
|
|
|
|
1,490,093
|
|
|
|
1,513,429
|
|
|
|
1,518,424
|
|
Brokered
deposits
|
|
|
23,445
|
|
|
|
49,238
|
|
|
|
51,370
|
|
|
|
37,773
|
|
|
|
-
|
|
Total
deposits
|
|
|
2,122,055
|
|
|
|
2,133,195
|
|
|
|
2,086,388
|
|
|
|
2,105,901
|
|
|
|
2,118,003
|
|
Deposits excluding
brokered
|
|
|
2,098,610
|
|
|
|
2,083,957
|
|
|
|
2,035,018
|
|
|
|
2,068,128
|
|
|
|
2,118,003
|
|
Total subordinated
debt
|
|
|
35,507
|
|
|
|
35,446
|
|
|
|
35,385
|
|
|
|
35,323
|
|
|
|
35,262
|
|
Total borrowed
funds
|
|
|
200,000
|
|
|
|
180,000
|
|
|
|
160,000
|
|
|
|
85,000
|
|
|
|
50,000
|
|
Other interest-bearing
liabilities
|
|
|
8,060
|
|
|
|
32,204
|
|
|
|
11,985
|
|
|
|
-
|
|
|
|
-
|
|
Total interest-bearing
liabilities
|
|
|
1,817,997
|
|
|
|
1,848,883
|
|
|
|
1,748,833
|
|
|
|
1,671,525
|
|
|
|
1,603,686
|
|
Shareholders'
equity
|
|
|
195,634
|
|
|
|
181,161
|
|
|
|
179,240
|
|
|
|
168,712
|
|
|
|
168,874
|
|
Average
Balances
|
|
2023 4th
Qtr.
|
|
|
2023 3rd
Qtr.
|
|
|
2023 2nd
Qtr.
|
|
|
2023 1st
Qtr.
|
|
|
2022 4th
Qtr.
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
|
$
|
1,359,643
|
|
|
$
|
1,278,421
|
|
|
$
|
1,218,860
|
|
|
$
|
1,202,268
|
|
|
$
|
1,169,605
|
|
Securities
|
|
|
1,019,218
|
|
|
|
1,035,785
|
|
|
|
1,053,191
|
|
|
|
1,059,747
|
|
|
|
1,072,594
|
|
Other interest-earning
assets
|
|
|
92,635
|
|
|
|
128,704
|
|
|
|
41,075
|
|
|
|
19,452
|
|
|
|
14,809
|
|
Total earning assets
(before allowance)
|
|
|
2,471,496
|
|
|
|
2,442,910
|
|
|
|
2,313,126
|
|
|
|
2,281,467
|
|
|
|
2,257,008
|
|
Total assets
|
|
|
2,589,541
|
|
|
|
2,568,240
|
|
|
|
2,422,567
|
|
|
|
2,391,344
|
|
|
|
2,373,851
|
|
Noninterest-bearing
deposits
|
|
|
546,778
|
|
|
|
540,497
|
|
|
|
534,106
|
|
|
|
566,628
|
|
|
|
605,318
|
|
Interest-bearing
deposits
|
|
|
1,565,493
|
|
|
|
1,550,591
|
|
|
|
1,472,990
|
|
|
|
1,530,313
|
|
|
|
1,522,510
|
|
Brokered
deposits
|
|
|
32,541
|
|
|
|
44,868
|
|
|
|
49,679
|
|
|
|
12,762
|
|
|
|
-
|
|
Total
deposits
|
|
|
2,144,812
|
|
|
|
2,129,565
|
|
|
|
2,056,775
|
|
|
|
2,109,703
|
|
|
|
2,127,828
|
|
Total subordinated
debt
|
|
|
35,474
|
|
|
|
35,413
|
|
|
|
35,352
|
|
|
|
35,290
|
|
|
|
35,230
|
|
Total borrowed
funds
|
|
|
185,707
|
|
|
|
181,739
|
|
|
|
144,231
|
|
|
|
63,122
|
|
|
|
36,773
|
|
Other interest-bearing
liabilities
|
|
|
25,729
|
|
|
|
20,480
|
|
|
|
3,763
|
|
|
|
-
|
|
|
|
-
|
|
Total interest-bearing
liabilities
|
|
|
1,844,944
|
|
|
|
1,833,091
|
|
|
|
1,706,015
|
|
|
|
1,641,487
|
|
|
|
1,594,513
|
|
Shareholders'
equity
|
|
|
187,099
|
|
|
|
181,219
|
|
|
|
171,912
|
|
|
|
167,952
|
|
|
|
160,284
|
|
Loan Breakout
(in thousands)
|
|
2023 4th
Qtr.
|
|
|
2023 3rd
Qtr.
|
|
|
2023 2nd
Qtr.
|
|
|
2023 1st
Qtr.
|
|
|
2022 4th
Qtr.
|
|
Agricultural
|
|
$
|
49,211
|
|
|
$
|
43,290
|
|
|
$
|
40,684
|
|
|
$
|
55,995
|
|
|
$
|
64,159
|
|
Commercial and
Industrial
|
|
|
229,915
|
|
|
|
222,357
|
|
|
|
224,191
|
|
|
|
217,063
|
|
|
|
210,210
|
|
Commercial Real
Estate
|
|
|
786,921
|
|
|
|
709,960
|
|
|
|
657,549
|
|
|
|
648,202
|
|
|
|
630,953
|
|
Consumer
|
|
|
36,540
|
|
|
|
37,605
|
|
|
|
38,614
|
|
|
|
38,891
|
|
|
|
39,808
|
|
Construction Real
Estate
|
|
|
20,936
|
|
|
|
16,477
|
|
|
|
16,734
|
|
|
|
13,939
|
|
|
|
14,736
|
|
Residential Real
Estate
|
|
|
267,730
|
|
|
|
256,348
|
|
|
|
247,618
|
|
|
|
236,493
|
|
|
|
229,916
|
|
Loans to Other
Financial Institutions
|
|
|
19,400
|
|
|
|
23,763
|
|
|
|
38,838
|
|
|
|
-
|
|
|
|
-
|
|
Gross Loans (excluding
held for sale)
|
|
$
|
1,410,653
|
|
|
$
|
1,309,800
|
|
|
$
|
1,264,228
|
|
|
$
|
1,210,583
|
|
|
$
|
1,189,782
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for credit
losses
|
|
|
15,685
|
|
|
|
14,872
|
|
|
|
14,582
|
|
|
|
15,065
|
|
|
|
7,619
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loans
|
|
$
|
1,394,968
|
|
|
$
|
1,294,928
|
|
|
$
|
1,249,646
|
|
|
$
|
1,195,518
|
|
|
$
|
1,182,163
|
|
Performance
Ratios
|
|
2023 4th
Qtr.
|
|
|
2023 3rd
Qtr.
|
|
|
2023 2nd
Qtr.
|
|
|
2023 1st
Qtr.
|
|
|
2022 4th
Qtr.
|
|
Annualized return on
average assets
|
|
|
0.82
|
%
|
|
|
0.80
|
%
|
|
|
0.86
|
%
|
|
|
0.94
|
%
|
|
|
1.13
|
%
|
Annualized return on
average equity
|
|
|
11.32
|
%
|
|
|
11.31
|
%
|
|
|
12.13
|
%
|
|
|
13.42
|
%
|
|
|
16.68
|
%
|
Annualized return on
average tangible common equity
|
|
|
16.40
|
%
|
|
|
16.55
|
%
|
|
|
18.31
|
%
|
|
|
20.64
|
%
|
|
|
26.63
|
%
|
Net interest margin
(fully tax-equivalent)
|
|
|
2.72
|
%
|
|
|
2.70
|
%
|
|
|
2.86
|
%
|
|
|
3.09
|
%
|
|
|
3.15
|
%
|
Efficiency
ratio
|
|
|
65.31
|
%
|
|
|
65.74
|
%
|
|
|
65.92
|
%
|
|
|
65.40
|
%
|
|
|
60.15
|
%
|
Annualized cost of
funds
|
|
|
1.91
|
%
|
|
|
1.70
|
%
|
|
|
1.29
|
%
|
|
|
0.79
|
%
|
|
|
0.59
|
%
|
Annualized cost of
deposits
|
|
|
1.57
|
%
|
|
|
1.36
|
%
|
|
|
0.98
|
%
|
|
|
0.62
|
%
|
|
|
0.47
|
%
|
Cost of interest
bearing liabilities
|
|
|
2.45
|
%
|
|
|
2.18
|
%
|
|
|
1.70
|
%
|
|
|
1.08
|
%
|
|
|
0.81
|
%
|
Shareholders' equity to
total assets
|
|
|
7.59
|
%
|
|
|
7.04
|
%
|
|
|
7.22
|
%
|
|
|
7.00
|
%
|
|
|
7.08
|
%
|
Tangible common equity
to tangible assets
|
|
|
5.32
|
%
|
|
|
4.74
|
%
|
|
|
4.83
|
%
|
|
|
4.52
|
%
|
|
|
4.57
|
%
|
Annualized noninterest
expense to average assets
|
|
|
2.13
|
%
|
|
|
2.14
|
%
|
|
|
2.24
|
%
|
|
|
2.34
|
%
|
|
|
2.23
|
%
|
Loan to
deposit
|
|
|
66.70
|
%
|
|
|
61.65
|
%
|
|
|
61.02
|
%
|
|
|
57.66
|
%
|
|
|
56.40
|
%
|
Full-time equivalent
employees
|
|
|
369
|
|
|
|
376
|
|
|
|
380
|
|
|
|
376
|
|
|
|
376
|
|
Capital Ratios
ChoiceOne Financial Services Inc.
|
|
2023 4th
Qtr.
|
|
|
2023 3rd
Qtr.
|
|
|
2023 2nd
Qtr.
|
|
|
2023 1st
Qtr.
|
|
|
2022 4th
Qtr.
|
|
Total capital (to risk
weighted assets)
|
|
|
13.0
|
%
|
|
|
13.2
|
%
|
|
|
13.2
|
%
|
|
|
13.5
|
%
|
|
|
13.8
|
%
|
Common equity Tier 1
capital (to risk weighted assets)
|
|
|
10.3
|
%
|
|
|
10.4
|
%
|
|
|
10.5
|
%
|
|
|
10.7
|
%
|
|
|
11.1
|
%
|
Tier 1 capital (to risk
weighted assets)
|
|
|
10.5
|
%
|
|
|
10.7
|
%
|
|
|
10.8
|
%
|
|
|
11.0
|
%
|
|
|
11.4
|
%
|
Tier 1 capital (to
average assets)
|
|
|
7.5
|
%
|
|
|
7.4
|
%
|
|
|
7.7
|
%
|
|
|
7.7
|
%
|
|
|
7.9
|
%
|
Capital Ratios
ChoiceOne Bank
|
|
2023 4th
Qtr.
|
|
|
2023 3rd
Qtr.
|
|
|
2023 2nd
Qtr.
|
|
|
2023 1st
Qtr.
|
|
|
2022 4th
Qtr.
|
|
Total capital (to risk
weighted assets)
|
|
|
12.4
|
%
|
|
|
12.7
|
%
|
|
|
12.7
|
%
|
|
|
13.0
|
%
|
|
|
13.0
|
%
|
Common equity Tier 1
capital (to risk weighted assets)
|
|
|
11.8
|
%
|
|
|
12.0
|
%
|
|
|
12.2
|
%
|
|
|
12.5
|
%
|
|
|
12.5
|
%
|
Tier 1 capital (to risk
weighted assets)
|
|
|
11.8
|
%
|
|
|
12.0
|
%
|
|
|
12.2
|
%
|
|
|
12.5
|
%
|
|
|
12.5
|
%
|
Tier 1 capital (to
average assets)
|
|
|
8.4
|
%
|
|
|
8.3
|
%
|
|
|
8.7
|
%
|
|
|
8.7
|
%
|
|
|
8.7
|
%
|
Asset
Quality
|
|
2023 4th
Qtr.
|
|
|
2023 3rd
Qtr.
|
|
|
2023 2nd
Qtr.
|
|
|
2023 1st
Qtr.
|
|
|
2022 4th
Qtr.
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loan charge-offs
(recoveries)
|
|
$
|
120
|
|
|
$
|
148
|
|
|
$
|
67
|
|
|
$
|
28
|
|
|
$
|
(12)
|
|
Annualized net loan
charge-offs (recoveries) to average loans
|
|
|
0.04
|
%
|
|
|
0.05
|
%
|
|
|
0.02
|
%
|
|
|
0.01
|
%
|
|
|
0.00
|
%
|
Allowance for loan
losses
|
|
$
|
15,685
|
|
|
$
|
14,872
|
|
|
$
|
14,582
|
|
|
$
|
15,065
|
|
|
$
|
7,619
|
|
Unfunded commitment
liability
|
|
$
|
2,160
|
|
|
$
|
2,718
|
|
|
$
|
3,156
|
|
|
$
|
2,991
|
|
|
$
|
-
|
|
Allowance to loans
(excludes held for sale)
|
|
|
1.11
|
%
|
|
|
1.14
|
%
|
|
|
1.15
|
%
|
|
|
1.24
|
%
|
|
|
0.64
|
%
|
Total funds reserved to
pay for loans (includes liability for unfunded commitments and
excludes held for sale)
|
|
|
1.27
|
%
|
|
|
1.34
|
%
|
|
|
1.40
|
%
|
|
|
1.49
|
%
|
|
|
0.64
|
%
|
Non-Accruing
loans
|
|
$
|
1,723
|
|
|
$
|
1,670
|
|
|
$
|
1,581
|
|
|
$
|
1,596
|
|
|
$
|
1,263
|
|
Nonperforming loans
(includes OREO)
|
|
$
|
1,845
|
|
|
$
|
1,792
|
|
|
$
|
1,847
|
|
|
$
|
1,726
|
|
|
$
|
2,666
|
|
Nonperforming loans to
total loans (excludes held for sale)
|
|
|
0.13
|
%
|
|
|
0.14
|
%
|
|
|
0.15
|
%
|
|
|
0.14
|
%
|
|
|
0.22
|
%
|
Nonperforming assets to
total assets
|
|
|
0.07
|
%
|
|
|
0.07
|
%
|
|
|
0.07
|
%
|
|
|
0.07
|
%
|
|
|
0.11
|
%
|
|
Three Months Ended
December 31,
|
|
|
|
2023
|
|
|
2022
|
|
|
(Dollars in
thousands)
|
Average
|
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
|
|
|
Balance
|
|
|
Interest
|
|
|
Rate
|
|
|
Balance
|
|
|
Interest
|
|
|
Rate
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
(1)(3)(4)(5)(6)
|
$
|
1,359,643
|
|
|
$
|
19,782
|
|
|
|
5.77
|
|
%
|
$
|
1,169,605
|
|
|
$
|
14,407
|
|
|
|
4.89
|
|
%
|
Taxable securities
(2)(6)
|
|
726,335
|
|
|
|
5,532
|
|
|
|
3.02
|
|
|
|
771,878
|
|
|
|
4,582
|
|
|
|
2.36
|
|
|
Nontaxable securities
(1)
|
|
292,883
|
|
|
|
1,753
|
|
|
|
2.37
|
|
|
|
300,716
|
|
|
|
1,880
|
|
|
|
2.48
|
|
|
Other
|
|
92,635
|
|
|
|
1,284
|
|
|
|
5.50
|
|
|
|
14,809
|
|
|
|
177
|
|
|
|
4.73
|
|
|
Interest-earning
assets
|
|
2,471,496
|
|
|
|
28,350
|
|
|
|
4.55
|
|
|
|
2,257,008
|
|
|
|
21,045
|
|
|
|
3.70
|
|
|
Noninterest-earning
assets
|
|
118,045
|
|
|
|
|
|
|
|
|
|
116,843
|
|
|
|
|
|
|
|
|
Total assets
|
$
|
2,589,541
|
|
|
|
|
|
|
|
|
$
|
2,373,851
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
demand deposits
|
$
|
864,689
|
|
|
$
|
3,667
|
|
|
|
1.68
|
|
%
|
$
|
852,886
|
|
|
$
|
1,480
|
|
|
|
0.69
|
|
%
|
Savings
deposits
|
|
343,766
|
|
|
|
530
|
|
|
|
0.61
|
|
|
|
442,861
|
|
|
|
226
|
|
|
|
0.20
|
|
|
Certificates of
deposit
|
|
357,038
|
|
|
|
3,812
|
|
|
|
4.24
|
|
|
|
226,359
|
|
|
|
795
|
|
|
|
1.39
|
|
|
Brokered
deposit
|
|
32,541
|
|
|
|
413
|
|
|
|
5.03
|
|
|
|
404
|
|
|
|
3
|
|
|
|
2.51
|
|
|
Borrowings
|
|
185,707
|
|
|
|
2,221
|
|
|
|
4.75
|
|
|
|
36,773
|
|
|
|
374
|
|
|
|
4.03
|
|
|
Subordinated
debentures
|
|
35,474
|
|
|
|
414
|
|
|
|
4.63
|
|
|
|
35,230
|
|
|
|
391
|
|
|
|
4.41
|
|
|
Other
|
|
25,729
|
|
|
|
349
|
|
|
|
5.38
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Interest-bearing
liabilities
|
|
1,844,944
|
|
|
|
11,405
|
|
|
|
2.45
|
|
|
|
1,594,513
|
|
|
|
3,268
|
|
|
|
0.81
|
|
|
Demand
deposits
|
|
546,778
|
|
|
|
|
|
|
|
|
|
605,318
|
|
|
|
|
|
|
|
|
Other
noninterest-bearing liabilities
|
|
10,720
|
|
|
|
|
|
|
|
|
|
13,736
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
2,402,442
|
|
|
|
|
|
|
|
|
|
2,213,567
|
|
|
|
|
|
|
|
|
Shareholders'
equity
|
|
187,099
|
|
|
|
|
|
|
|
|
|
160,284
|
|
|
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
$
|
2,589,541
|
|
|
|
|
|
|
|
|
$
|
2,373,851
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
(tax-equivalent basis) (Non-GAAP) (1)
|
|
|
|
$
|
16,945
|
|
|
|
|
|
|
|
|
$
|
17,777
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin
(tax-equivalent basis) (Non-GAAP) (1)
|
|
|
|
|
|
|
|
2.72
|
|
%
|
|
|
|
|
|
|
|
3.12
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation to
Reported Net Interest Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
(tax-equivalent basis) (Non-GAAP) (1)
|
|
|
|
$
|
16,945
|
|
|
|
|
|
|
|
|
$
|
17,777
|
|
|
|
|
|
Adjustment for taxable
equivalent interest
|
|
|
|
|
(390)
|
|
|
|
|
|
|
|
|
|
(411)
|
|
|
|
|
|
Net interest
income (GAAP)
|
|
|
|
$
|
16,555
|
|
|
|
|
|
|
|
|
$
|
17,366
|
|
|
|
|
|
Net interest margin
(GAAP)
|
|
|
|
|
|
|
|
2.66
|
|
%
|
|
|
|
|
|
|
|
3.05
|
|
%
|
|
|
(1)
|
Adjusted to a fully
tax-equivalent basis to facilitate comparison to the taxable
interest-earning assets. The adjustment uses an incremental tax
rate of 21%. The presentation of these measures on a
tax-equivalent basis is not in accordance with GAAP, but is
customary in the banking industry. These non-GAAP measures
ensure comparability with respect to both taxable and tax-exempt
loans and securities.
|
(2)
|
Taxable securities
include dividend income from Federal Home Loan Bank and Federal
Reserve Bank stock.
|
(3)
|
Loans include both
loans to other financial institutions and loans held for
sale.
|
(4)
|
Non-accruing loan
balances are included in the balances of average loans.
Non-accruing loan average balances were $1.7 million and $1.2
million in the fourth quarter of 2023 and 2022,
respectively.
|
(5)
|
Interest on loans
included net origination fees and accretion income. Accretion
income was $447,000 and $378,000 in the fourth quarter of 2023 and
2022, respectively.
|
(6)
|
Interest on loans and
securities included derivative income and expense. Derivative
income in securities was $916,000 and derivative expense in
securities was $9,000 in the fourth quarter of 2023 and 2022,
respectively. Derivative expense in loan interest income was
$673,000 and $459,000 in the fourth quarter of 2023 and 2022,
respectively.
|
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SOURCE ChoiceOne Financial Services, Inc.