EXHIBIT 99.1
News Release
| Contact: | Tom Lampen, ChoiceOne Bank
(616) 887-2337
tlampen@choiceone.com |
ChoiceOne Financial Reports Second Quarter 2018 Results
Sparta, Mich. – July 25, 2018 – ChoiceOne Financial Services, Inc. (OTC:COFS), the parent company for ChoiceOne Bank, reported net income of $1,833,000 for the second quarter of 2018 compared to $1,635,000 in the same period in 2017. Diluted earnings per share was an adjusted $0.50 in the second quarter of 2018 compared to an adjusted $0.45 per share in the second quarter of the prior year. Diluted earnings per share for the six months ended June 30, 2018 was an adjusted $0.96 compared to an adjusted $0.85 for the six months ended June 30, 2017. Per share amounts have been adjusted for both 5% stock dividends paid on May 31, 2017 and May 31, 2018.
“With net income at a historical high for the first half of 2018, we are extremely pleased with the progress of our community bank,” said Kelly Potes, President and Chief Executive Officer of ChoiceOne Financial Services, Inc. “We expect our plans to open two additional full-service branch offices later this year in high-growth markets, including downtown Grand Rapids, to further add to our growth.”
Total assets remained steady at $630.3 million as of the end of the second quarter of 2018 compared to $630.1 million as of June 30, 2017. Net loans grew $15.9 million from June 30, 2017 to June 30, 2018, which along with higher interest rates on new loans led to total interest income of $6.1 million in the second quarter of 2018, which was $716,000 higher than the same period in 2017. Total deposits grew 1% or $3.6 million from June 30, 2017 to June 30, 2018.
ChoiceOne recorded no provision for loan losses in the second quarter of 2018, which was slightly lower than provision expense of $25,000 in the same period in the prior year. Nonperforming loans declined $590,000 from June 30, 2017 to June 30, 2018 as credit quality continued to remain a focal point for ChoiceOne.
Total noninterest income decreased $220,000 in the second quarter of 2018 compared to the same quarter in the prior year. Insurance and investment commissions were the largest component of the decline as a result of ChoiceOne’s sale of a majority of its investment book of business during the fourth quarter of 2017. Gains on sales of loans were also lower in the first quarter of 2018 than in the same period in the prior year as higher interest rates coupled with a low inventory of homes for sale in ChoiceOne’s market areas have negatively impacted mortgage originations. Partially offsetting these reductions in income were higher customer service charges in the second quarter of 2018 compared to the same period in 2017.
Total noninterest expense increased $332,000 in the second quarter of 2018 compared to the same period in 2017. Much of this growth was caused by higher salaries and benefits expense related to annual wage increases and additional sales and retail staff in preparation for the two new branch locations which will open later in 2018. Other noninterest expenses were also higher in the second quarter and first half of 2018 compared to the same periods in the prior year as a result of growth in loan related costs and other expenses.
ChoiceOne’s income tax expense decreased $236,000 in the second quarter of 2018 compared to the second quarter of 2017, which caused the effective tax rate to decline from 26% to 16%. This reduction in expense was due to the Tax Cut and Jobs Act passed in December of 2017.
“Although we have seen improvements in net income related to the decrease of ChoiceOne’s corporate tax rate, we have also benefited from management’s decision in the prior year to reduce the securities balance and redeploy funds into loan growth,” said Kelly Potes.
About ChoiceOne
ChoiceOne Financial Services, Inc. is a financial holding company headquartered in Sparta, Michigan and the parent corporation of ChoiceOne Bank, Member FDIC. ChoiceOne Bank operates 12 full service offices and one loan production office in parts of Kent, Ottawa, Muskegon, and Newaygo Counties. ChoiceOne Bank offers insurance and investment products through its subsidiary, ChoiceOne Insurance Agencies, Inc. ChoiceOne Financial Services, Inc. common stock is quoted on the OTC under the symbol “COFS.” For more information, please visit Investor Relations at ChoiceOne’s website at www.choiceone.com.
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” and variations of such words and similar expressions are intended to identify such forward-looking statements. Management’s determination of the provision and allowance for loan losses, the carrying value of goodwill and loan servicing rights, and the fair value of investment securities (including whether any impairment on any investment security is temporary or other than temporary and the amount of any impairment) and management’s assumptions concerning pension and other postretirement benefit plans involve judgments that are inherently forward-looking. These statements reflect management’s 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 undertakes no 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 Financial Services, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2017. These and other factors are representative of the risk factors that could cause a difference between an ultimate actual outcome and a preceding forward-looking statement.
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EDITORS NOTE: Media interviews with ChoiceOne Bank executives are available by calling Tom Lampen at (616)887-2337 or tlampen@choiceone.com. Electronic versions of bank official headshots are also available.
Condensed Balance Sheets
(Unaudited)
| (In thousands) | 6/30/2018 | | 3/31/2018 | | 12/31/2017 | | 6/30/2017 |
| Cash and Cash Equivalents | $ | 11,877 | | $ | 13,985 | | $ | 36,837 | | $ | 17,050 |
| Securities | | 168,592 | | | 171,067 | | | 159,158 | | | 184,015 |
| Loans Held For Sale | | 617 | | | 1,240 | | | 1,721 | | | 1,990 |
| Loans to Other Financial Institutions | | 9,006 | | | 5,637 | | | 6,802 | | | 4,162 |
| Loans, Net of Allowance For Loan Losses | | 391,240 | | | 381,731 | | | 394,208 | | | 375,350 |
| Premises and Equipment | | 13,571 | | | 13,348 | | | 12,855 | | | 12,473 |
| Cash Surrender Value of Life Insurance Policies | | 14,706 | | | 14,608 | | | 14,514 | | | 14,315 |
| Goodwill and Other Intangible Assets | | 13,728 | | | 13,728 | | | 13,728 | | | 13,728 |
| Other Assets | | 7,500 | | | 7,398 | | | 6,721 | | | 6,984 |
| | | | | | | | | | | | |
| Total Assets | $ | 630,837 | | $ | 622,742 | | $ | 646,544 | | $ | 630,067 |
| | | | | | | | | | | | |
| Noninterest-bearing Deposits | $ | 147,040 | | $ | 146,912 | | $ | 151,462 | | $ | 133,956 |
| Interest-bearing Deposits | | 380,881 | | | 385,362 | | | 388,391 | | | 390,388 |
| Borrowings | | 24,251 | | | 12,720 | | | 27,416 | | | 26,586 |
| Other Liabilities | | 2,397 | | | 2,134 | | | 2,725 | | | 3,609 |
| | | | | | | | | | | | |
| Total Liabilities | | 554,569 | | | 547,128 | | | 569,994 | | | 554,539 |
| | | | | | | | | | | | |
| Shareholders' Equity | | 76,268 | | | 75,614 | | | 76,550 | | | 75,528 |
| | | | | | | | | | | | |
| Total Liabilities and Shareholders’ Equity | $ | 630,837 | | $ | 622,742 | | $ | 646,544 | | $ | 630,067 |
Condensed Statements of Income
(Unaudited)
| | Three Months Ended | | Six Months Ended |
| (In Thousands, Except Per Share Data) | 6/30/2018 | | 6/30/2017 | | 6/30/2018 | | 6/30/2017 |
| Interest Income | | | | | | | | | | | |
| Loans, including fees | $ | 4,971 | | $ | 4,401 | | $ | 9,624 | | $ | 8,565 |
| Securities and other | | 1,144 | | | 1,024 | | | 2,190 | | | 2,021 |
| Total Interest Income | | 6,115 | | | 5,425 | | | 11,814 | | | 10,586 |
| | | | | | | | | | | | |
| Interest Expense | | | | | | | | | | | |
| Deposits | | 463 | | | 292 | | | 809 | | | 540 |
| Borrowings | | 83 | | | 56 | | | 129 | | | 114 |
| Total Interest Expense | | 546 | | | 348 | | | 938 | | | 654 |
| | | | | | | | | | | | |
| Net Interest Income | | 5,569 | | | 5,077 | | | 10,876 | | | 9,932 |
| Provision for Loan Losses | | - | | | 25 | | | 35 | | | 25 |
| | | | | | | | | | | | |
Net Interest Income After Provision for
Loan Losses | | 5,569 | | | 5,052 | | | 10,841 | | | 9,907 |
| | | | | | | | | | | | |
| Noninterest Income | | | | | | | | | | | |
| Customer service charges | | 1,120 | | | 1,049 | | | 2,175 | | | 2,023 |
| Insurance and investment commissions | | 72 | | | 262 | | | 134 | | | 500 |
| Gains on sales of loans | | 288 | | | 341 | | | 549 | | | 565 |
| Gains on sales of securities | | 16 | | | 60 | | | 25 | | | 126 |
| Earnings on life insurance policies | | 97 | | | 99 | | | 191 | | | 198 |
| Other income | | 129 | | | 131 | | | 296 | | | 262 |
| Total Noninterest Income | | 1,722 | | | 1,942 | | | 3,370 | | | 3,674 |
| | | | | | | | | | | | |
| Noninterest Expense | | | | | | | | | | | |
| Salaries and benefits | | 2,779 | | | 2,591 | | | 5,528 | | | 5,106 |
| Occupancy and equipment | | 664 | | | 689 | | | 1,344 | | | 1,397 |
| Data processing | | 555 | | | 554 | | | 1,089 | | | 1,130 |
| Professional fees | | 310 | | | 262 | | | 527 | | | 491 |
| Other expenses | | 806 | | | 683 | | | 1,590 | | | 1,324 |
| Total Noninterest Expense | | 5,114 | | | 4,779 | | | 10,078 | | | 9,448 |
| | | | | | | | | | | | |
| Income Before Income Tax | | 2,177 | | | 2,215 | | | 4,133 | | | 4,133 |
| Income Tax Expense | | 344 | | | 580 | | | 642 | | | 1,052 |
| | | | | | | | | | | | |
| Net Income | $ | 1,833 | | $ | 1,635 | | $ | 3,491 | | $ | 3,081 |
| | | | | | | | | | | | |
| Basic Earnings Per Share | $ | 0.51 | | $ | 0.45 | | $ | 0.97 | | $ | 0.85 |
| Diluted Earnings Per Share | $ | 0.50 | | $ | 0.45 | | $ | 0.96 | | $ | 0.85 |
