#United States #Fentura Financial #Sparta #ChoiceOne #The State Bank

ChoiceOne Financial Services Reports First Quarter 2025 Results

On April 30, 2025, ChoiceOne Financial Services, Inc. (NASDAQ: COFS), the parent company of ChoiceOne Bank, announced its financial results for the first quarter ending March 31, 2025. Notably, this period reflects the recent merger with Fentura Financial, Inc. and its subsidiary, The State Bank, which was completed on March 1, 2025. This merger significantly impacted the financial landscape for the company, leading to changes in assets, income, and overall company direction.

Financial Overview of the Quarter

ChoiceOne reported a net loss of $13.9 million for the first quarter of 2025, which marked a significant contrast from the $5.6 million net income recorded in the same period the previous year. This decline is attributed predominantly to merger-related expenses amounting to approximately $13.8 million, which translated to $1.28 per diluted share. Excluding these expenses, the adjusted net income for the first quarter was approximately $9.31 million, showing notable resilience amid transitional challenges.

In terms of earnings per share (EPS), the diluted loss for the quarter was $1.29 as opposed to a gain per share of $0.74 the year before. Without factoring in merger-related expenses and provisions for credit losses, the estimated diluted earnings per share improved to $0.86.

Impact of the Merger

The merger with Fentura Financial, aimed primarily at increasing market presence and enhancing operational capabilities, resulted in substantial growth in total assets, loans, and deposits. Following the merger, total assets surged to approximately $4.3 billion, representing a year-over-year increase of $1.6 billion. Loans included in this period saw growth due to the addition of $1.4 billion from the acquired bank, while organic growth contributed an additional $40.1 million to core loans, accounting for a striking 10.6% annualized growth rate.

Moreover, deposits soared to $3.7 billion, aided primarily by $1.4 billion in deposits gained from the merger, complemented by a $48.7 million organic growth in deposits—making the overall financial health of ChoiceOne very encouraging despite the reported loss.

Interest Income and Expenses

Interest income for the quarter saw a robust increase to $39.96 million, significantly higher than the $28.43 million recorded in the same quarter last year. The net interest margin also significantly rose to 3.43%, compared to 2.67% from the previous year. This shift can largely be attributed to the additional net interest income earned as a result of the merger, where loan interest income increased by nearly $11.9 million in comparison to the prior year's figures.

However, merger-related provisions for credit losses totaled $13.16 million during the quarter, a harsh reminder of the challenges that come with such large-scale integrations, although the overall asset quality remained solid with returning charge-off rates of just 0.01%.

Forward-Looking Impact

Looking ahead, CEO Kelly Potes expressed optimism regarding the merger's long-term benefits. In a statement, she highlighted how the merger not only enhances customer service capabilities but also positions ChoiceOne as a formidable player in the communities it serves. The future focus will be on leveraging the combined firm's strengths and ensuring continuous organic growth, all while maintaining the highest service standards for customers from both legacy institutions.

Conclusion

Despite the initial losses reported in the first quarter of 2025, ChoiceOne Financial Services is positioning itself strategically for sustained growth and success as it integrates its new assets and operational capacity gained from the merger with Fentura Financial and The State Bank. Whether the anticipated synergies materialize will be crucial for the company's trajectory in the coming quarters.