ChoiceOne Financial Services, Inc. Quarterly Report for the Period Ended March 31, 2024
ChoiceOne Financial Services, Inc. Quarterly Report for the Period Ended March 31, 2024
ChoiceOne Financial Services, Inc. has reported a quarterly net loss of $1.2 million for the period ending March 31, 2024, with total assets of $10.5 million and total liabilities of $1.8 million. The company had 7,571,112 shares of common stock outstanding as of April 30, 2024. The financial report highlights the company’s financial condition and results of operations, as well as notes to interim consolidated financial statements, management’s discussion and analysis, and controls and procedures.
Overview
ChoiceOne’s net income was $5.6 million in the first quarter of 2024, a decrease from $6.3 million in the first quarter of 2023. Return on average assets and return on average equity also decreased slightly year-over-year.
Revenue
Total revenue (net interest income plus noninterest income) was $25.4 million in the first quarter of 2024, compared to $26.5 million in the first quarter of 2023.
Net Interest Income
- Net interest income declined by $0.5 million or 3.2% compared to the first quarter of 2023, largely due to higher interest expense.
- Net interest margin declined to 2.67% in the first quarter of 2024 from 3.02% in the first quarter of 2023.
Noninterest Income
- Noninterest income increased by $0.4 million or 5.3% compared to the first quarter of 2023, primarily due to a bank owned life insurance death benefit claim and higher customer service charges.
Expenses
Noninterest expense decreased by $0.3 million or 1.9% in the first quarter of 2024 compared to the first quarter of 2023, mainly due to lower employee health insurance benefits and occupancy expenses.
| Expense | Q1 2024 | Q1 2023 | Change |
|---|---|---|---|
| Noninterest Expense | $16.0 million | $16.3 million | -1.9% |
Loans and Credit Quality
- Total loans grew 14.7% year-over-year to $1.42 billion as of March 31, 2024.
- Nonperforming loans remained low at $1.7 million or 0.12% of total loans as of March 31, 2024.
- The allowance for credit losses was 1.13% of total loans as of March 31, 2024.
- Annualized net charge-offs were 0.01% of average loans in the first quarter of 2024.
Capital and Liquidity
- ChoiceOne Bank remains well capitalized, with a total risk-based capital ratio of 12.6% as of March 31, 2024.
- Total available borrowing capacity was $960.7 million as of March 31, 2024, exceeding uninsured deposits.
Revenue Trends
- Net interest income has trended downward over the past 5 quarters due to higher funding costs. Noninterest income has been relatively stable.
| Q1 2024 | Q4 2023 | Q3 2023 | Q2 2023 | Q1 2023 | |
|---|---|---|---|---|---|
| Net Interest Income | $16.5 million | $17.5 million | $18.1 million | $17.7 million | $17.0 million |
| Noninterest Income | $8.9 million | $8.7 million | $8.3 million | $8.6 million | $8.5 million |
Profit Trends
- Net income has followed a downward trend over the past 5 quarters due to the decline in net interest income.
| Q1 2024 | Q4 2023 | Q3 2023 | Q2 2023 | Q1 2023 | |
|---|---|---|---|---|---|
| Net Income | $5.6 million | $6.1 million | $6.7 million | $6.5 million | $6.3 million |
Strengths and Weaknesses
Strengths
- Strong loan growth
- Increase in higher yielding loan categories
- Good asset quality metrics
- Adequate capital and liquidity
Weaknesses
- Net interest margin compression
- Declining net income
- Exposure to rising interest rates
Outlook
ChoiceOne expects net income to remain under pressure in 2024 due to higher funding costs and intense competition for loans and deposits. The company will focus on controlling expenses and utilizing derivatives to hedge interest rate risk. Loan growth is expected to continue at a measured pace. ChoiceOne remains well positioned with strong capital and liquidity.