ChoiceOne Financial Services, Inc, the holding company of ChoiceOne Bank, announced its financial performance for the quarter ending March 31, 2026.
Key Highlights
ChoiceOne recorded net income of $13.7 million for the first quarter of 2026. This compares with $13.9 million in the prior quarter and a net loss of $13.9 million in the same quarter last year. On March 1, 2025, the company completed its merger with Fentura Financial, Inc., with ChoiceOne continuing as the surviving entity.
Diluted earnings per share (EPS) stood at $0.91 for the quarter, slightly below $0.92 in the previous quarter but significantly improved from a loss per share of $1.29 a year earlier. Excluding merger-related costs and provisions (net of taxes), diluted EPS for the first quarter of 2025 was $0.86.
Core loans—excluding loans held for sale and mortgage warehouse advances—declined by $30.9 million (annualized 4.2%) in Q1 2026 but increased by $9.5 million (0.3%) over the past 12 months.
Net interest margin rose to 3.63% in Q1 2026, up from 3.59% in Q4 2025. Meanwhile, deposits (excluding brokered deposits) grew by $68.9 million (annualized 7.9%) during the quarter, driven by organic growth and seasonal municipal inflows.
Asset quality remained strong. Net loan charge-offs were minimal at 0.01% of average loans (annualized). However, nonperforming loans rose slightly to 1.01% of total loans from 0.98% in the prior quarter, with a notable portion linked to previously identified credit issues in acquired loans.
CEO Kelly Potes highlighted the company’s solid performance, citing strong net interest income, disciplined cost management, and stable credit quality. She also noted a healthy loan pipeline supported by deep customer relationships and strategic execution across Michigan.
Balance Sheet and Lending Activity
As of March 31, 2026, total assets reached $4.4 billion, up $89.2 million year-over-year. Growth was primarily driven by increased securities holdings and mortgage warehouse activity, partially offset by a $55.2 million decline in cash balances.
Loan interest income rose by $13.0 million compared to the same period last year but dipped slightly from the previous quarter. This decline was partly due to reduced accretion income from acquired loans. Accretion contributed $2.7 million in Q1 2026, compared to $3.1 million in Q4 2025. For the remainder of 2026, accretion income is estimated at $5.8 million, though actual results may vary based on loan prepayment activity.
Deposits and Liquidity
Deposits (excluding brokered deposits) increased by $68.9 million during the quarter but declined by $20.4 million compared to a year ago, largely due to the runoff of higher-cost municipal CDs acquired through the merger. Liquidity remains strong, supported by brokered deposits and Federal Home Loan Bank (FHLB) borrowings. As of March 31, 2026, FHLB borrowings totaled $185 million, with significant borrowing capacity still available.
Uninsured deposits totaled $1.1 billion, representing 30.7% of total deposits.
Funding Costs and Credit Quality
The cost of deposits and overall funding declined modestly compared to both the prior quarter and the same period last year, aided by lower rates on certificates of deposit. There was no provision for credit losses in Q1 2026, reflecting stable loan performance and minimal charge-offs.
Interest Rate Risk Management
During the quarter, ChoiceOne exited $351 million in pay-fixed interest rate swaps, realizing a $4.6 million gain to be amortized over six years. This move was aimed at improving balance sheet flexibility and reducing interest rate sensitivity. A smaller portfolio of swaps remains in place to hedge certain securities.
Capital and Shareholder Returns
Shareholders’ equity increased to $470 million from $427.1 million a year earlier. The company repurchased shares in both Q4 2025 and Q1 2026 and still has authorization to repurchase additional shares. ChoiceOne remains well-capitalized, with a total risk-based capital ratio of 12.9%.
Income and Expenses
Noninterest income declined slightly from the previous quarter due to seasonal factors and losses on securities sales but increased year-over-year due to higher service charges and merger-related business growth.
Noninterest expenses rose modestly from the prior quarter due to higher insurance and professional costs but dropped significantly compared to last year due to the absence of large merger-related expenses incurred in 2025.
Outlook
ChoiceOne continues to invest in staff, technology, and expansion, including a new full-service branch in Troy, Michigan, expected to open later in 2026.
The company also reduced its tax expense by $200,000 through the purchase of transferable tax credits and plans to continue this strategy throughout the year.
CEO Kelly Potes emphasized that the company is entering the remainder of 2026 with strong capital, solid liquidity, and a disciplined growth strategy focused on long-term value creation.
Key Highlights
ChoiceOne recorded net income of $13.7 million for the first quarter of 2026. This compares with $13.9 million in the prior quarter and a net loss of $13.9 million in the same quarter last year. On March 1, 2025, the company completed its merger with Fentura Financial, Inc., with ChoiceOne continuing as the surviving entity.
Diluted earnings per share (EPS) stood at $0.91 for the quarter, slightly below $0.92 in the previous quarter but significantly improved from a loss per share of $1.29 a year earlier. Excluding merger-related costs and provisions (net of taxes), diluted EPS for the first quarter of 2025 was $0.86.
Core loans—excluding loans held for sale and mortgage warehouse advances—declined by $30.9 million (annualized 4.2%) in Q1 2026 but increased by $9.5 million (0.3%) over the past 12 months.
Net interest margin rose to 3.63% in Q1 2026, up from 3.59% in Q4 2025. Meanwhile, deposits (excluding brokered deposits) grew by $68.9 million (annualized 7.9%) during the quarter, driven by organic growth and seasonal municipal inflows.
Asset quality remained strong. Net loan charge-offs were minimal at 0.01% of average loans (annualized). However, nonperforming loans rose slightly to 1.01% of total loans from 0.98% in the prior quarter, with a notable portion linked to previously identified credit issues in acquired loans.
CEO Kelly Potes highlighted the company’s solid performance, citing strong net interest income, disciplined cost management, and stable credit quality. She also noted a healthy loan pipeline supported by deep customer relationships and strategic execution across Michigan.
Balance Sheet and Lending Activity
As of March 31, 2026, total assets reached $4.4 billion, up $89.2 million year-over-year. Growth was primarily driven by increased securities holdings and mortgage warehouse activity, partially offset by a $55.2 million decline in cash balances.
Loan interest income rose by $13.0 million compared to the same period last year but dipped slightly from the previous quarter. This decline was partly due to reduced accretion income from acquired loans. Accretion contributed $2.7 million in Q1 2026, compared to $3.1 million in Q4 2025. For the remainder of 2026, accretion income is estimated at $5.8 million, though actual results may vary based on loan prepayment activity.
Deposits and Liquidity
Deposits (excluding brokered deposits) increased by $68.9 million during the quarter but declined by $20.4 million compared to a year ago, largely due to the runoff of higher-cost municipal CDs acquired through the merger. Liquidity remains strong, supported by brokered deposits and Federal Home Loan Bank (FHLB) borrowings. As of March 31, 2026, FHLB borrowings totaled $185 million, with significant borrowing capacity still available.
Uninsured deposits totaled $1.1 billion, representing 30.7% of total deposits.
Funding Costs and Credit Quality
The cost of deposits and overall funding declined modestly compared to both the prior quarter and the same period last year, aided by lower rates on certificates of deposit. There was no provision for credit losses in Q1 2026, reflecting stable loan performance and minimal charge-offs.
Interest Rate Risk Management
During the quarter, ChoiceOne exited $351 million in pay-fixed interest rate swaps, realizing a $4.6 million gain to be amortized over six years. This move was aimed at improving balance sheet flexibility and reducing interest rate sensitivity. A smaller portfolio of swaps remains in place to hedge certain securities.
Capital and Shareholder Returns
Shareholders’ equity increased to $470 million from $427.1 million a year earlier. The company repurchased shares in both Q4 2025 and Q1 2026 and still has authorization to repurchase additional shares. ChoiceOne remains well-capitalized, with a total risk-based capital ratio of 12.9%.
Income and Expenses
Noninterest income declined slightly from the previous quarter due to seasonal factors and losses on securities sales but increased year-over-year due to higher service charges and merger-related business growth.
Noninterest expenses rose modestly from the prior quarter due to higher insurance and professional costs but dropped significantly compared to last year due to the absence of large merger-related expenses incurred in 2025.
Outlook
ChoiceOne continues to invest in staff, technology, and expansion, including a new full-service branch in Troy, Michigan, expected to open later in 2026.
The company also reduced its tax expense by $200,000 through the purchase of transferable tax credits and plans to continue this strategy throughout the year.
CEO Kelly Potes emphasized that the company is entering the remainder of 2026 with strong capital, solid liquidity, and a disciplined growth strategy focused on long-term value creation.