ChoiceOne Reports Third Quarter 2026 Results

, /PRNewswire/ — ChoiceOne Financial Services, Inc. (“ChoiceOne”, NASDAQ: COFS), the parent company for ChoiceOne Bank, reported financial results for the quarter ended September 30, 2026. 

Highlights

• ChoiceOne reported net income of $14.5 million, or $0.97 per diluted share, for the third quarter of 2026, and net income of $40.7 million, or $2.71 per diluted share, for the first nine months of 2026.
• Core loans increased $33.6 million, or 4.4% annualized, during the third quarter of 2026, and $145.4 million, or 5.0%, during the twelve months ended September 30, 2026, reflecting continued loan production.
• Deposits, excluding brokered deposits, increased $95.7 million or an annualized 10.9% during the third quarter of 2026, and $109.9 million, or 3.1%, during the twelve months ended September 30, 2026.
• GAAP net interest margin expanded 8 basis points from 3.59% in the second quarter of 2026 to 3.67% in the third quarter of 2026, reflecting the benefits of loan growth and steady funding costs.
• Asset quality remained strong, with annualized net charge-offs of 0.08% of average loans for the third quarter of 2026, while nonperforming loans to total loans, excluding loans held for sale, were 1.25% at September 30, 2026. Notably, 0.40% of the nonperforming loans to total loans (excluding loans held for sale) is attributed to certain purchased loans which were identified prior to acquisition as having credit deterioration.

“ChoiceOne delivered strong third quarter results, highlighted by expansion in our net interest margin and growth in net interest income,” said Kelly Potes, Chief Executive Officer. “The improvement reflects the benefits of our disciplined balance sheet management and continued loan growth. We believe we are well positioned to build on this momentum as we move through the remainder of 2026.”

ChoiceOne reported net income of $14.5 million, or $0.97 per diluted share, for the third quarter of 2026, and net income of $40.7 million, or $2.71 per diluted share, for the first nine months of 2026, compared with net income of $14.7 million, or $0.97 per diluted share, for the third quarter of 2025, and net income of $14.3 million, or $1.05 per diluted share, for the first nine months of 2025.  For the nine months ended September 30, 2025, results were impacted by the acquisition of Fentura Financial, Inc., which was completed during the first quarter of 2025.  As of September 30, 2026, total assets were $4.5 billion, an increase of $162.2 million compared to September 30, 2025.  The growth in total assets was primarily attributed to growth in core loans and warehouse mortgage advances.  

Core loans, which exclude held for sale loans and mortgage warehouse advances, increased by $33.6 million or an annualized 4.4% during the third quarter of 2026 and grew by $145.4 million or 5.0% during the twelve months ended September 30, 2026.  Loan interest income increased $1.7 million in the third quarter of 2026 compared to the second quarter of 2026 and $894,000 compared to the third quarter of 2025.  Interest income due to accretion from purchased loans was approximately $2.7 million during the third quarter of 2026 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 25 and 36 basis points in the third quarter of 2026 and the third quarter of 2025, respectively.  Of the amount recognized in the third quarter of 2026, $1.9 million was calculated using the effective interest rate method of amortization, while the remaining $806,000 resulted from 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 2026 and 2027 using the effective interest method of amortization is $1.8 million and $6.0 million, respectively; however, actual results will be dependent on prepayment speeds and other factors.  It is estimated that a total of $45.3 million remains to be recognized as interest income due to accretion from purchased loans over the life of the purchased loans portfolio, with $22.0 million expected to be recognized using the effective interest method over the next five years.

Deposits, excluding brokered deposits, totaled $3.6 billion at September 30, 2026, an increase of $95.7 million from June 30, 2026, and $109.9 million from September 30, 2025.  The growth during the quarter was primarily due to seasonal fluctuations related to municipal deposits and the timing of tax receipts, while growth year over year reflects steady growth in sustainable deposits. The increase from June 30, 2026 was primarily attributable to growth of $100.3 million in interest-bearing demand deposits and $8.6 million in savings deposits, partially offset by a $7.0 million decrease in noninterest-bearing deposits and a $6.2 million decrease in certificates of deposit.  Growth in relationship-based deposits strengthened the balance sheet, improved liquidity, and reduced the Company’s reliance on brokered deposits and other borrowed funds.  Brokered deposits decreased $25.8 million during the third quarter of 2026 to $67.5 million, while borrowed funds decreased $60.0 million to $234.9 million.  At September 30, 2026, 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 $1.3 billion or 35.0% of deposits at September 30, 2026.

For the three months ended September 30, 2026, the annualized cost of deposits decreased four basis points to 1.54% from 1.58% for the second quarter of 2026, while the annualized cost of funds decreased four basis points to 1.73% from 1.77%.  The cost of interest-bearing liabilities also decreased four basis points to 2.28% for the three months ended September 30, 2026 compared to June 30, 2026. These improvements were primarily due to deposit mix, as the average balance of lower cost liquid deposit balances were higher in the third quarter due to seasonality.  Average brokered deposits decreased $68.1 million and average borrowings decreased $11.5 million in the third quarter of 2026 compared to the second quarter of 2026.

ChoiceOne has improved its funding profile through growth in relationship-based deposits in the third quarter of 2026 compared to the third quarter of 2025. During the three months ended September 30, 2026, ChoiceOne’s annualized cost of deposits declined to 1.54% from 1.57%, while annualized cost of funds decreased to 1.73% from 1.77%.  Average brokered deposits declined $24.1 million and average certificates of deposit declined $32.8 million in the three months ended September 30, 2026 compared to the three months ended September 30, 2025, while average interest-bearing demand and savings deposits increased $113.2 million. This favorable deposit mix contributed to lower funding costs and enhanced ChoiceOne’s net interest income performance.

ChoiceOne incurred a $900,000 provision for credit losses on loans during the third quarter of 2026, due to the increase in loan balances and $647,000 in net charge offs.  The ratio of the allowance for credit losses to total loans (excluding loans held for sale) was 1.16% on September 30, 2026 compared to 1.16% and 1.18% on June 30, 2026 and December 31, 2025, respectively.  Asset quality continues to remain strong, with annualized net loan charge-offs to average loans of 0.08% for the third quarter of 2026.  Nonperforming loans to total loans (excluding loans held for sale) increased to 1.25% as of September 30, 2026 compared to 1.07% as of June 30, 2026.  Notably, 0.40% of the nonperforming loans to total loans (excluding loans held for sale) was attributed to certain purchased loans which were identified prior to acquisition as having credit deterioration. Although nonperforming loans increased to $38.6 million at September 30, 2026, the portfolio continues to benefit from meaningful credit protection. Approximately 35.5% of the loans are supported by SBA or USDA guarantees, and approximately 34.3% of nonperforming assets consist of residential real estate loans, where strong collateral values and the Bank’s historical loss experience have limited realized losses.

At September 30, 2026, shareholders’ equity totaled $469.8 million, compared with $482.7 million at June 30, 2026 and $449.6 million at September 30, 2025. The decline in the third quarter of 2026 compared to the second quarter of 2026 was primarily attributable to a $22.3 million decline in accumulated other comprehensive income resulting from the effect of higher long-term interest rates on the fair value of the Company’s available-for-sale securities portfolio, partially offset by third-quarter earnings. During the third quarter of 2026, ChoiceOne repurchased 40,000 shares of its common stock for $1.3 million under its existing share repurchase plan. The repurchase reflects management’s continued confidence in the Company’s capital position and its commitment to enhancing long-term shareholder value. ChoiceOne Bank continues to be “well-capitalized,” with a total risk-based capital ratio of 12.9% as of September 30, 2026, compared to 12.8% on September 30, 2025.

Noninterest income for the three months ended September 30, 2026 was $6.8 million, a decrease of $389,000, from $7.1 million for the third quarter of 2025. The year-over-year decrease was primarily attributable to a $309,000 loss on other assets during the third quarter of 2026 compared to a $39,000 loss in the third quarter of 2025, and an unrealized loss on the market value of equity securities of $156,000 during the third quarter of 2026 compared to a gain of $458,000 in the third quarter of 2025, due to a CRA bond mutual fund whose fair value is impacted by higher long-term interest rates.  These two items decreased 2026 third quarter earnings by approximately $0.03 per fully diluted share. Compared with the second quarter of 2026, noninterest income increased $1.8 million, primarily due to the absence of the $1.9 million loss on the sale of securities recognized in the second quarter of 2026.  For the nine months ended September 30, 2026, noninterest income decreased $1.1 million to $17.5 million compared to the same period in 2025, primarily due to losses on sales of securities and unfavorable changes in the market value of equity securities, partially offset by growth in customer service charges, interchange income, and insurance and investment commissions.

Noninterest expense for the three months ended September 30, 2026 increased $330,000 to $26.5 million, compared to the third quarter of 2025. The increase primarily reflected higher salaries and benefits and data processing expenses, partially offset by lower intangible amortization, occupancy and equipment expense, and lower other operating expenses. Compared with the second quarter of 2026, noninterest expense increased $494,000.  For the nine months ended September 30, 2026, noninterest expense decreased $9.0 million compared to the same period in 2025, primarily due to the absence of $17.4 million of merger-related expenses.  Excluding those merger-related expenses, the year-over-year increase primarily reflected higher salaries and benefits and other operating costs associated with the Company’s expanded operations.

ChoiceOne’s tax expense for the first nine months of 2026 was reduced by $600,000 as a result of purchasing a transferable tax credit that will be applied to 2026 income taxes. Management intends to purchase similar sized transferable tax credits in the remainder of 2026 to reduce tax expense.

“The third quarter demonstrated the earnings power of our franchise,” said Kelly Potes, Chief Executive Officer. “The combination of strong loan production, growth in relationship-based deposits, and continued credit discipline drove improved net interest margin and profitability.  These results reflect the hard work and commitment of our employees, and I want to thank them for continuing to serve our customers and communities at a high level.  With a well-capitalized balance sheet and a strong liquidity position, we believe in our ability to capitalize on growth opportunities and continue generating value for shareholders.”

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 54 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, 2025 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.