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Fair Value Measurements | 9 Months Ended
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Sep. 30, 2024
Fair Value Disclosures [Abstract] |
Fair Value Measurements | NOTE 6 – FAIR VALUE MEASUREMENTS The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring basis at September 30, 2024 and December 31, 2023, and the valuation techniques used by the Company to determine those fair values. In general, fair values determined by Level 1 inputs use quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Fair values determined by Level 2 inputs use other inputs that are observable, either directly or indirectly. These Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs, including inputs that are available in situations where there is little, if any, market activity for the related asset or liability. In instances where inputs used to measure fair value fall into different levels in the above fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The Company’s assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability. Disclosures concerning assets and liabilities measured at fair value are as follows: Assets and Liabilities Measured at Fair Value on a Recurring Basis
| Quoted Prices |  |  |  |  |  |  |  |  |  |
| In Active |  |  | Significant |  |  |  |  |  |  |
| Markets for |  |  | Other |  |  | Significant |  |  |  |
| Identical |  |  | Observable |  |  | Unobservable |  |  | Balance |
(Dollars in thousands) | Assets |  |  | Inputs |  |  | Inputs |  |  | at Date |
| (Level 1) |  |  | (Level 2) |  |  | (Level 3) |  |  | Indicated |
Equity Securities Held at Fair Value - September 30, 2024 |  |  |  |  |  |  |  |  |  |  |
Equity securities | $ | 4,919 |  |  | $ | - |  |  | $ | 2,897 |  |  | $ | 7,816 |
Investment Securities, Available for Sale - September 30, 2024 |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury notes and bonds | $ | 82,232 |  |  | $ | - |  |  | $ | - |  |  | $ | 82,232 |
State and municipal |  | - |  |  |  | 235,034 |  |  |  | - |  |  |  | 235,034 |
Mortgage-backed |  | - |  |  |  | 170,759 |  |  |  | - |  |  |  | 170,759 |
Corporate |  | - |  |  |  | 213 |  |  |  | - |  |  |  | 213 |
Asset-backed securities |  | - |  |  |  | 9,314 |  |  |  | - |  |  |  | 9,314 |
Total | $ | 82,232 |  |  | $ | 415,320 |  |  | $ | - |  |  | $ | 497,552 |
Derivative Instruments - September 30, 2024 |  |  |  |  |  |  |  |  |  |  |
Interest rate derivative contracts - assets | $ | - |  |  | $ | 6,410 |  |  | $ | - |  |  | $ | 6,410 |
Interest rate derivative contracts - liabilities | $ | - |  |  | $ | 2,004 |  |  | $ | - |  |  | $ | 2,004 |
Loan Swaps - September 30, 2024 |  |  |  |  |  |  |  |  |  |  |
Loan swaps - assets | $ | - |  |  | $ | 1,331 |  |  | $ | - |  |  | $ | 1,331 |
Loan swaps - liabilities | $ | - |  |  | $ | 1,331 |  |  | $ | - |  |  | $ | 1,331 |
Equity Securities Held at Fair Value - December 31, 2023 |  |  |  |  |  |  |  |  |  |  |
Equity securities | $ | 4,749 |  |  | $ | - |  |  | $ | 2,756 |  |  | $ | 7,505 |
Investment Securities, Available for Sale - December 31, 2023 |  |  |  |  |  |  |  |  |  |  |
U. S. Treasury notes and bonds | $ | 80,194 |  |  | $ | - |  |  | $ | - |  |  | $ | 80,194 |
State and municipal |  | - |  |  |  | 234,682 |  |  |  | - |  |  |  | 234,682 |
Mortgage-backed |  | - |  |  |  | 188,501 |  |  |  | - |  |  |  | 188,501 |
Corporate |  | - |  |  |  | 204 |  |  |  | - |  |  |  | 204 |
Asset-backed securities |  | - |  |  |  | 11,017 |  |  |  | - |  |  |  | 11,017 |
Total | $ | 80,194 |  |  | $ | 434,404 |  |  | $ | - |  |  | $ | 514,598 |
Derivative Instruments - December 31, 2023 |  |  |  |  |  |  |  |  |  |  |
Interest rate derivative contracts - assets | $ | - |  |  | $ | 8,880 |  |  | $ | - |  |  | $ | 8,880 |
Interest rate derivative contracts - liabilities | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Securities classified as available for sale are generally reported at fair value utilizing Level 2 inputs. ChoiceOne’s external investment advisor obtained fair value measurements from an independent pricing service that uses matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities' relationship to other benchmark quoted securities (Level 2 inputs). The fair value measurements considered observable data that may include dealer quotes, market spreads, cash flows and the bonds' terms and conditions, among other things. Securities classified in Level 2 included U.S. Government and federal agency securities, state and municipal securities, mortgage-backed securities, corporate bonds, and asset backed securities. The Company classified certain state and municipal securities and corporate bonds, and equity securities as Level 3. Based on the lack of observable market data, estimated fair values were based on the observable data available and reasonable unobservable market data. Changes in Level 3 Assets Measured at Fair Value on a Recurring Basis
| Nine Months Ended |
(Dollars in thousands) | September 30, |
| 2024 |  |  | 2023 |
Equity Securities Held at Fair Value |  |  |  |  |
Balance, January 1 | $ | 2,756 |  |  | $ | 2,542 |
Total realized and unrealized gains included in noninterest income |  | 71 |  |  |  | 67 |
Net purchases, sales, calls, and maturities |  | 70 |  |  |  | 110 |
Net transfers into Level 3 |  | - |  |  |  | - |
Balance, September 30, | $ | 2,897 |  |  | $ | 2,719 |
Amount of total losses for the period included in earning attributable to the change in unrealized gains (losses) relating to assets and liabilities still held at September 30, | $ | 36 |  |  | $ | - |
Of the Level 3 assets that were held by the Company at September 30, 2024, the net unrealized gain as of September 30, 2024 was $283,000, compared to $208,000 as of September 30, 2023. The change in the net unrealized gain or loss is recognized in noninterest income or other comprehensive income in the consolidated balance sheets and income statements. Amounts recognized in noninterest income relate to changes in equity securities. A total of $70,000 and $110,000 of Level 3 securities were purchased during the nine months ended 2024 and 2023, respectively. Both observable and unobservable inputs may be used to determine the fair value of positions classified as Level 3 assets and liabilities. As a result, the unrealized gains and losses for these assets and liabilities presented in the tables above may include changes in fair value that were attributable to both observable and unobservable inputs. The Company also has assets that under certain conditions are subject to measurement at fair value on a non-recurring basis. These assets are not normally measured at fair value, but can be subject to fair value adjustments in certain circumstances, such as impairment. Disclosures concerning assets measured at fair value on a non-recurring basis are as follows: Assets Measured at Fair Value on a Non-recurring Basis
|  |  |  | Quoted Prices |  |  |  |  |  |  |
|  |  |  | In Active |  |  | Significant |  |  |  |
|  |  |  | Markets for |  |  | Other |  |  | Significant |
| Balances at |  |  | Identical |  |  | Observable |  |  | Unobservable |
(Dollars in thousands) | Dates |  |  | Assets |  |  | Inputs |  |  | Inputs |
| Indicated |  |  | (Level 1) |  |  | (Level 2) |  |  | (Level 3) |
Collateral Dependent Loans |  |  |  |  |  |  |  |  |  |  |
September 30, 2024 | $ | 1,155 |  |  | $ | - |  |  | $ | - |  |  | $ | 1,155 |
December 31, 2023 | $ | 387 |  |  | $ | - |  |  | $ | - |  |  | $ | 387 |
Other Real Estate |  |  |  |  |  |  |  |  |  |  |
September 30, 2024 | $ | 529 |  |  | $ | - |  |  | $ | - |  |  | $ | 529 |
December 31, 2023 | $ | 122 |  |  | $ | - |  |  | $ | - |  |  | $ | 122 |
Collateral dependent loans classified as Level 3 are loans for which the repayment is expected to be provided substantially through the sale or operation of the collateral when the borrower is experiencing financial difficulty. The fair value of the collateral should be adjusted for estimated costs to sell if the repayment depends on the sale of the collateral. The net carrying amount of the loan should not exceed the fair value of the collateral (less costs to sell, if applicable).

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/exampleRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 107 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482078/820-10-55-107 Reference 2: http://www.xbrl.org/2003/role/exampleRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 100 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482078/820-10-55-100 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (c)(3) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2E -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2E Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (g) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 940 -SubTopic 820 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147478119/940-820-50-1 + Details
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