ChoiceOne Financial Services (COFS) Q1 2025 earnings summary

Executive summary

• Completed merger with Fentura Financial, Inc. and The State Bank on March 1, 2025, adding $1.8B in assets, $1.4B in loans, and $1.4B in deposits; consolidated results include Fentura from March 1, 2025.

• Reported net loss of $13.9M for Q1 2025, compared to net income of $5.6M in Q1 2024, primarily due to $13.8M in after-tax merger expenses and $9.5M in after-tax merger-related credit loss provision.

• Adjusted net income (excluding merger expenses and related credit loss provisions) was $9.3M for Q1 2025.

• Diluted loss per share was $1.29; adjusted diluted EPS was $0.86, compared to $0.74 in Q1 2024.

• ChoiceOne is now the third largest publicly traded bank headquartered in Michigan, with 56 offices statewide.

Financial highlights

• Total assets reached $4.3B at March 31, 2025, up $1.6B year-over-year, mainly from the merger.

• Net interest income rose to $26.3M, up $9.8M year-over-year, driven by loan growth and merger accretion.

• Noninterest income increased by $871K, supported by higher mortgage servicing and trust income.

• Noninterest expense rose by $22M, mainly due to $17.2M in merger-related costs.

• Loan interest income increased $11.9M year-over-year, including $2.8M accretion from purchased loans.

Outlook and guidance

• Management anticipates further reductions in deposit costs if rates decline, though offset by lower swap cash flows.

• Estimated accretion from purchased loans for the remainder of 2025 is $7.5M, subject to prepayment speeds.

• Board believes capital levels are adequate for the foreseeable future; dividend policy will consider market and capital needs.

• Management expects to realize synergies from the merger.