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Regulatory Capital
 12 Months Ended
Dec. 31, 2023
Notes to Financial Statements  
Regulatory Capital Requirements under Banking Regulations [Text Block]

Note 21 – Regulatory Capital

ChoiceOne and the Bank are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and prompt corrective action regulations involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. The prompt corrective action regulations provide five classifications, including well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. Depending upon the capital category to which an institution is assigned, the regulators' corrective powers include: prohibiting the acceptance of brokered deposits; requiring the submission of a capital restoration plan; placing limits on asset growth and restrictions on activities; requiring the institution to issue additional capital stock (including additional voting stock) or be acquired; restricting transactions with affiliates; restricting the interest rate the institution may pay on deposits; ordering a new election of directors of the institution; requiring that senior executive officers or directors be dismissed; prohibiting the institution from accepting deposits from correspondent banks; requiring the institution to divest certain subsidiaries; prohibiting the payment of principal or interest on subordinated debt; and ultimately, appointing a receiver for the institution. At year-end 2023 and 2022, the Bank was categorized as well capitalized under the regulatory framework for prompt corrective action.

Actual capital levels and minimum required levels for ChoiceOne and the Bank were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Minimum Required

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

to be Well

 

 

 

 

 

 

 

 

 

 

 

Minimum Required

 

 

 

Capitalized Under

 

 

 

 

 

 

 

 

 

 

 

for Capital

 

 

 

Prompt Corrective

 

 

(Dollars in thousands)

 

Actual

 

 

 

Adequacy Purposes

 

 

 

Action Regulations

 

 

 

 

Amount

 

 

Ratio

 

 

 

Amount

 

 

Ratio

 

 

 

Amount

 

 

Ratio

 

 

December 31, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ChoiceOne Financial Services Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total capital (to risk weighted assets)

 

$

233,840

 

 

 

13.0

 

%

 

$

144,441

 

 

 

8.0

 

%

 

N/A

 

 

N/A

 

 

Common equity Tier 1 capital (to risk weighted assets)

 

 

185,412

 

 

 

10.3

 

 

 

 

81,248

 

 

 

4.5

 

 

 

N/A

 

 

N/A

 

 

Tier 1 capital (to risk weighted assets)

 

 

189,912

 

 

 

10.5

 

 

 

 

108,331

 

 

 

6.0

 

 

 

N/A

 

 

N/A

 

 

Tier 1 capital (to average assets)

 

 

189,912

 

 

 

7.5

 

 

 

 

101,337

 

 

 

4.0

 

 

 

N/A

 

 

N/A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ChoiceOne Bank

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total capital (to risk weighted assets)

 

$

224,095

 

 

 

12.4

 

%

 

$

144,274

 

 

 

8.0

 

%

 

$

180,342

 

 

 

10.0

 

%

Common equity Tier 1 capital (to risk weighted assets)

 

 

212,283

 

 

 

11.8

 

 

 

 

81,154

 

 

 

4.5

 

 

 

 

117,223

 

 

 

6.5

 

 

Tier 1 capital (to risk weighted assets)

 

 

212,283

 

 

 

11.8

 

 

 

 

108,205

 

 

 

6.0

 

 

 

 

144,274

 

 

 

8.0

 

 

Tier 1 capital (to average assets)

 

 

212,283

 

 

 

8.4

 

 

 

 

101,244

 

 

 

4.0

 

 

 

 

126,555

 

 

 

5.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ChoiceOne Financial Services Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total capital (to risk weighted assets)

 

$

222,006

 

 

 

13.8

 

%

 

$

128,545

 

 

 

8.0

 

%

 

N/A

 

 

N/A

 

 

Common equity Tier 1 capital (to risk weighted assets)

 

 

177,916

 

 

 

11.1

 

 

 

 

72,307

 

 

 

4.5

 

 

 

N/A

 

 

N/A

 

 

Tier 1 capital (to risk weighted assets)

 

 

182,416

 

 

 

11.4

 

 

 

 

96,409

 

 

 

6.0

 

 

 

N/A

 

 

N/A

 

 

Tier 1 capital (to average assets)

 

 

182,416

 

 

 

7.9

 

 

 

 

92,558

 

 

 

4.0

 

 

 

N/A

 

 

N/A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ChoiceOne Bank

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total capital (to risk weighted assets)

 

$

208,696

 

 

 

13.0

 

%

 

$

128,294

 

 

 

8.0

 

%

 

$

160,367

 

 

 

10.0

 

%

Common equity Tier 1 capital (to risk weighted assets)

 

 

201,077

 

 

 

12.5

 

 

 

 

72,165

 

 

 

4.5

 

 

 

 

104,239

 

 

 

6.5

 

 

Tier 1 capital (to risk weighted assets)

 

 

201,077

 

 

 

12.5

 

 

 

 

96,220

 

 

 

6.0

 

 

 

 

128,294

 

 

 

8.0

 

 

Tier 1 capital (to average assets)

 

 

201,077

 

 

 

8.7

 

 

 

 

92,449

 

 

 

4.0

 

 

 

 

115,562

 

 

 

5.0

 

 

 

Banking laws and regulations limit capital distributions by state-chartered banks. Generally, capital distributions are limited to undistributed net income for the current and prior two years. At December 31, 2023, approximately $53.3 million was available for the Bank to pay dividends to ChoiceOne assuming regulatory approval of any amount in excess of the applicable capital conservation buffer. ChoiceOne’s ability to pay dividends to shareholders is dependent on the payment of dividends from the Bank, which is restricted by state law and regulations.