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v3.25.1

Securities | 3 Months Ended
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Mar. 31, 2025
Debt Securities, Trading, and Equity Securities, FV-NI, Cost [Abstract] |
Securities | NOTE 2 – SECURITIES On January 1, 2022, ChoiceOne reassessed and transferred, at fair value, $428.4 million of securities classified as available for sale to the held to maturity classification. The net unrealized after-tax loss of $2.7 million as of the transfer date remained in accumulated other comprehensive income to be amortized over the remaining life of the securities, offsetting the related amortization of discount or premium on the transferred securities. No gains or losses were recognized at the time of the transfer. The remaining net unamortized unrealized loss on transferred securities included in accumulated other comprehensive income was $1.9 million after tax as of March 31, 2025. ChoiceOne acquired $90.7 million in securities as part of the Merger; however, management chose to sell $78.9 million to pay down higher cost wholesale funding. The sale of the securities was completed so close to the fair value determination date that no loss was recognized. Consequently, the net increase in securities from the Merger was $11.8 million. The fair value of equity securities and the related gross unrealized gains and (losses) recognized in noninterest income were as follows:
| March 31, 2025 |
|  |  |  | Gross |  |  | Gross |  |  |  |
(Dollars in thousands) | Amortized |  |  | Unrealized |  |  | Unrealized |  |  | Fair |
| Cost |  |  | Gains |  |  | Losses |  |  | Value |
Equity securities | $ | 9,549 |  |  | $ | 375 |  |  | $ | (596 | ) |  | $ | 9,328 |
| December 31, 2024 |
|  |  |  | Gross |  |  | Gross |  |  |  |
(Dollars in thousands) | Amortized |  |  | Unrealized |  |  | Unrealized |  |  | Fair |
| Cost |  |  | Gains |  |  | Losses |  |  | Value |
Equity securities | $ | 8,043 |  |  | $ | 397 |  |  | $ | (658 | ) |  | $ | 7,782 |
The following tables present the amortized cost and fair value of securities available for sale and the gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) and the amortized cost and fair value of securities held to maturity and the related gross unrealized gains and losses:
| March 31, 2025 |
|  |  |  | Gross |  |  | Gross |  |  |  |
(Dollars in thousands) | Amortized |  |  | Unrealized |  |  | Unrealized |  |  | Fair |
Available for Sale: | Cost |  |  | Gains |  |  | Losses |  |  | Value |
U.S. Government and federal agency | $ | 993 |  |  | $ | - |  |  | $ | - |  |  | $ | 993 |
U.S. Treasury notes and bonds |  | 94,451 |  |  |  | 6 |  |  |  | (7,704 | ) |  |  | 86,753 |
State and municipal |  | 263,464 |  |  |  | - |  |  |  | (39,224 | ) |  |  | 224,240 |
Mortgage-backed |  | 177,779 |  |  |  | 63 |  |  |  | (18,502 | ) |  |  | 159,340 |
Corporate |  | 250 |  |  |  | - |  |  |  | (38 | ) |  |  | 212 |
Asset-backed securities |  | 9,267 |  |  |  | - |  |  |  | (155 | ) |  |  | 9,112 |
Total | $ | 546,204 |  |  | $ | 69 |  |  | $ | (65,623 | ) |  | $ | 480,650 |
(Dollars in thousands) |  |  |  |  |  |  |  |  |  |  |
Held to Maturity: |  |  |  |  |  |  |  |  |  |  |
U.S. Government and federal agency | $ | 2,979 |  |  | $ | - |  |  | $ | (224 | ) |  | $ | 2,755 |
State and municipal |  | 199,997 |  |  |  | 4 |  |  |  | (29,025 | ) |  |  | 170,976 |
Mortgage-backed |  | 170,795 |  |  |  | 4 |  |  |  | (19,244 | ) |  |  | 151,555 |
Corporate |  | 20,503 |  |  |  | 26 |  |  |  | (1,750 | ) |  |  | 18,779 |
Asset-backed securities |  | 160 |  |  |  | - |  |  |  | (2 | ) |  |  | 158 |
Total | $ | 394,434 |  |  | $ | 34 |  |  | $ | (50,245 | ) |  | $ | 344,223 |
| December 31, 2024 |
|  |  |  | Gross |  |  | Gross |  |  |  |
(Dollars in thousands) | Amortized |  |  | Unrealized |  |  | Unrealized |  |  | Fair |
Available for Sale: | Cost |  |  | Gains |  |  | Losses |  |  | Value |
U.S. Treasury notes and bonds | $ | 89,875 |  |  | $ | - |  |  | $ | (9,373 | ) |  | $ | 80,502 |
State and municipal |  | 258,815 |  |  |  | - |  |  |  | (30,579 | ) |  |  | 228,236 |
Mortgage-backed |  | 181,863 |  |  |  | 62 |  |  |  | (20,955 | ) |  |  | 160,970 |
Corporate |  | 250 |  |  |  | - |  |  |  | (38 | ) |  |  | 212 |
Asset-backed securities |  | 9,387 |  |  |  | - |  |  |  | (190 | ) |  |  | 9,197 |
Total | $ | 540,190 |  |  | $ | 62 |  |  | $ | (61,135 | ) |  | $ | 479,117 |
(Dollars in thousands) |  |  |  |  |  |  |  |  |  |  |
Held to Maturity: |  |  |  |  |  |  |  |  |  |  |
U.S. Government and federal agency | $ | 2,978 |  |  | $ | - |  |  | $ | (279 | ) |  | $ | 2,699 |
State and municipal |  | 196,510 |  |  |  | 5 |  |  |  | (31,477 | ) |  |  | 165,038 |
Mortgage-backed |  | 174,323 |  |  |  | 7 |  |  |  | (21,963 | ) |  |  | 152,367 |
Corporate |  | 20,495 |  |  |  | 29 |  |  |  | (1,803 | ) |  |  | 18,721 |
Asset-backed securities |  | 228 |  |  |  | - |  |  |  | (5 | ) |  |  | 223 |
Total | $ | 394,534 |  |  | $ | 41 |  |  | $ | (55,527 | ) |  | $ | 339,048 |
Available for sale securities with unrealized losses as of March 31, 2025 and December 31, 2024, aggregated by investment category and length of time the individual securities have been in an unrealized loss position, were as follows:
| March 31, 2025 |
| Less than 12 months |  |  | More than 12 months |  |  | Total |
(Dollars in thousands) | Fair |  |  | Unrealized |  |  | Fair |  |  | Unrealized |  |  | Fair |  |  | Unrealized |
Available for Sale: | Value |  |  | Losses |  |  | Value |  |  | Losses |  |  | Value |  |  | Losses |
U.S. Treasury notes and bonds | $ | - |  |  | $ | - |  |  | $ | 82,054 |  |  | $ | 7,704 |  |  | $ | 82,054 |  |  | $ | 7,704 |
State and municipal |  | 849 |  |  |  | - |  |  |  | 223,246 |  |  |  | 39,224 |  |  |  | 224,095 |  |  |  | 39,224 |
Mortgage-backed |  | 6,694 |  |  |  | 41 |  |  |  | 140,863 |  |  |  | 18,461 |  |  |  | 147,557 |  |  |  | 18,502 |
Corporate |  | - |  |  |  | - |  |  |  | 212 |  |  |  | 38 |  |  |  | 212 |  |  |  | 38 |
Asset-backed securities |  | - |  |  |  | - |  |  |  | 9,112 |  |  |  | 155 |  |  |  | 9,112 |  |  |  | 155 |
Total temporarily impaired | $ | 7,543 |  |  | $ | 41 |  |  | $ | 455,487 |  |  | $ | 65,582 |  |  | $ | 463,030 |  |  | $ | 65,623 |
| December 31, 2024 |
| Less than 12 months |  |  | More than 12 months |  |  | Total |
(Dollars in thousands) | Fair |  |  | Unrealized |  |  | Fair |  |  | Unrealized |  |  | Fair |  |  | Unrealized |
Available for Sale: | Value |  |  | Losses |  |  | Value |  |  | Losses |  |  | Value |  |  | Losses |
U.S. Treasury notes and bonds | $ | - |  |  | $ | - |  |  | $ | 80,502 |  |  | $ | 9,373 |  |  | $ | 80,502 |  |  | $ | 9,373 |
State and municipal |  | - |  |  |  | - |  |  |  | 228,236 |  |  |  | 30,579 |  |  |  | 228,236 |  |  |  | 30,579 |
Mortgage-backed |  | 963 |  |  |  | 1 |  |  |  | 142,170 |  |  |  | 20,954 |  |  |  | 143,133 |  |  |  | 20,955 |
Corporate |  | - |  |  |  | - |  |  |  | 212 |  |  |  | 38 |  |  |  | 212 |  |  |  | 38 |
Asset-backed securities |  | - |  |  |  | - |  |  |  | 9,197 |  |  |  | 190 |  |  |  | 9,197 |  |  |  | 190 |
Total temporarily impaired | $ | 963 |  |  | $ | 1 |  |  | $ | 460,317 |  |  | $ | 61,134 |  |  | $ | 461,280 |  |  | $ | 61,135 |
Held to maturity securities with unrealized losses as of March 31, 2025 and December 31, 2024, aggregated by investment category and length of time the individual securities have been in an unrealized loss position, were as follows:
| March 31, 2025 |
| Less than 12 months |  |  | More than 12 months |  |  | Total |
(Dollars in thousands) | Fair |  |  | Unrealized |  |  | Fair |  |  | Unrealized |  |  | Fair |  |  | Unrealized |
Held to Maturity: | Value |  |  | Losses |  |  | Value |  |  | Losses |  |  | Value |  |  | Losses |
U.S. Government and federal agency | $ | - |  |  | $ | - |  |  | $ | 2,756 |  |  | $ | 224 |  |  | $ | 2,756 |  |  | $ | 224 |
State and municipal |  | 6,100 |  |  |  | 126 |  |  |  | 164,156 |  |  |  | 28,899 |  |  |  | 170,256 |  |  |  | 29,025 |
Mortgage-backed |  | 4,347 |  |  |  | 23 |  |  |  | 140,699 |  |  |  | 19,221 |  |  |  | 145,046 |  |  |  | 19,244 |
Corporate |  | - |  |  |  | - |  |  |  | 16,650 |  |  |  | 1,750 |  |  |  | 16,650 |  |  |  | 1,750 |
Asset-backed securities |  | - |  |  |  | - |  |  |  | 157 |  |  |  | 2 |  |  |  | 157 |  |  |  | 2 |
Total temporarily impaired | $ | 10,447 |  |  | $ | 149 |  |  | $ | 324,418 |  |  | $ | 50,096 |  |  | $ | 334,865 |  |  | $ | 50,245 |
| December 31, 2024 |
| Less than 12 months |  |  | More than 12 months |  |  | Total |
(Dollars in thousands) | Fair |  |  | Unrealized |  |  | Fair |  |  | Unrealized |  |  | Fair |  |  | Unrealized |
Held to Maturity: | Value |  |  | Losses |  |  | Value |  |  | Losses |  |  | Value |  |  | Losses |
U.S. Government and federal agency | $ | - |  |  | $ | - |  |  | $ | 2,699 |  |  | $ | 279 |  |  | $ | 2,699 |  |  | $ | 279 |
State and municipal |  | 5,262 |  |  |  | 630 |  |  |  | 159,558 |  |  |  | 30,847 |  |  |  | 164,820 |  |  |  | 31,477 |
Mortgage-backed |  | 2,350 |  |  |  | 11 |  |  |  | 141,970 |  |  |  | 21,952 |  |  |  | 144,320 |  |  |  | 21,963 |
Corporate |  | - |  |  |  | - |  |  |  | 16,591 |  |  |  | 1,803 |  |  |  | 16,591 |  |  |  | 1,803 |
Asset-backed securities |  | - |  |  |  | - |  |  |  | 223 |  |  |  | 5 |  |  |  | 223 |  |  |  | 5 |
Total temporarily impaired | $ | 7,612 |  |  | $ | 641 |  |  | $ | 321,041 |  |  | $ | 54,886 |  |  | $ | 328,653 |  |  | $ | 55,527 |
ChoiceOne evaluates all securities on a quarterly basis to determine if an ACL and corresponding impairment charge should be recorded. Consideration is given to the extent to which the fair value has been less than cost, the financial condition and near-term prospects of the issuer, and the intent and ability of ChoiceOne to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value of amortized cost basis. ChoiceOne believes that unrealized losses on securities were temporary in nature and were caused primarily by changes in interest rates, increased credit spreads, and reduced market liquidity and were not caused by the credit status of the issuer. No ACL was recorded in the three months ended March 31, 2025 and March 31, 2024 on AFS securities. The majority of unrealized losses at March 31, 2025, are related to U.S. Treasury notes and bonds, state and municipal bonds and mortgage backed securities. The U.S. Treasury notes are guaranteed by the U.S. government and 100% of the notes are rated AA or better. State and municipal bonds are backed by the taxing authority of the bond issuer or the revenues from the bond. On March 31, 2025, 85% of state and municipal bonds held are rated AA or better, 10% are A rated and 5% are not rated. Of the mortgage-backed securities held on March 31, 2025, 43% were issued by US government sponsored entities and agencies, and rated AA, 44% are AAA rated private issue and collateralized mortgage obligation, and 13% are unrated privately issued mortgage-backed securities with structured credit enhancement and collateralized mortgage obligation. Unrealized losses have not been recognized into income because the issuers’ bonds are of high credit quality, and management does not intend to sell prior to their anticipated recovery, and the decline in fair value is largely due to changes in interest rates and other market conditions. The issuers continue to make timely principal and interest payments on the bonds. The fair value is expected to recover as the bonds approach maturity. Presented below is a schedule of maturities of securities as of March 31, 2025. Available for sale securities are reported at fair value and held to maturity securities are reported at amortized cost. Callable securities in the money are presumed called and matured at the callable date.
| Available for Sale Securities maturing within: |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  | Fair Value |
| Less than |  |  | 1 Year - |  |  | 5 Years - |  |  | More than |  |  | at March 31, |
(Dollars in thousands) | 1 Year |  |  | 5 Years |  |  | 10 Years |  |  | 10 Years |  |  | 2025 |
U.S. Government and federal agency | $ | 993 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 993 |
U.S. Treasury notes and bonds | $ | - |  |  | $ | 86,753 |  |  | $ | - |  |  | $ | - |  |  | $ | 86,753 |
State and municipal |  | 2,250 |  |  |  | 13,660 |  |  |  | 33,334 |  |  |  | 174,996 |  |  |  | 224,240 |
Corporate |  | - |  |  |  | - |  |  |  | 212 |  |  |  | - |  |  |  | 212 |
Asset-backed securities |  | - |  |  |  | 6,646 |  |  |  | 2,466 |  |  |  | - |  |  |  | 9,112 |
Total debt securities |  | 3,243 |  |  |  | 107,059 |  |  |  | 36,012 |  |  |  | 174,996 |  |  |  | 321,310 |
Mortgage-backed securities |  | 3,179 |  |  |  | 79,133 |  |  |  | 58,288 |  |  |  | 18,740 |  |  |  | 159,340 |
Total Available for Sale | $ | 6,422 |  |  | $ | 186,192 |  |  | $ | 94,300 |  |  | $ | 193,736 |  |  | $ | 480,650 |
| Held to Maturity Securities maturing within: |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  | Amortized Cost |
| Less than |  |  | 1 Year - |  |  | 5 Years - |  |  | More than |  |  | at March 31, |
(Dollars in thousands) | 1 Year |  |  | 5 Years |  |  | 10 Years |  |  | 10 Years |  |  | 2025 |
U.S. Government and federal agency | $ | - |  |  | $ | 2,979 |  |  | $ | - |  |  | $ | - |  |  | $ | 2,979 |
State and municipal |  | 3,570 |  |  |  | 21,577 |  |  |  | 94,989 |  |  |  | 79,861 |  |  |  | 199,997 |
Corporate |  | - |  |  |  | - |  |  |  | 20,503 |  |  |  | - |  |  |  | 20,503 |
Asset-backed securities |  | 160 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 160 |
Total debt securities |  | 3,730 |  |  |  | 24,556 |  |  |  | 115,492 |  |  |  | 79,861 |  |  |  | 223,639 |
Mortgage-backed securities |  | 5,512 |  |  |  | 85,893 |  |  |  | 79,390 |  |  |  | - |  |  |  | 170,795 |
Total Held to Maturity | $ | 9,242 |  |  | $ | 110,449 |  |  | $ | 194,882 |  |  | $ | 79,861 |  |  | $ | 394,434 |
Following is information regarding unrealized gains and losses on equity securities for the three months ended March 31, 2025 and 2024:
|  | Three Months Ended |  |
|  | March 31, |  |
|  | 2025 |  |  | 2024 |  |  |  |
(Dollars in thousands) |  |  |  |  |  |  |  |  |
Net gains and (losses) recognized during the period |  | $ | 107 |  |  | $ | 35 |  |  |  |
Less: Net gains and (losses) recognized during the period on securities sold |  |  | — |  |  |  | — |  |  |  |
Unrealized gains and (losses) recognized during the reporting period on securities still held at the reporting date |  | $ | 107 |  |  | $ | 35 |  |  |  |

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