Securities

9 Months Ended

Sep. 30, 2025

Debt Securities, Trading, and Equity Securities, FV-NI, Cost [Abstract]

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 $1.8 million after tax as of September 30, 2025.

ChoiceOne acquired $90.7 million in securities as part of the Merger; however, management chose to sell $78.9 million of those securities 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 (losses) recognized in noninterest income were as follows:


	September 30, 2025
			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Equity securities	$	9,352	$	649	$	(496	)	$	9,505


	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 (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:


	September 30, 2025
			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
Available for Sale:	Cost		Gains		Losses			Value
U.S. Treasury notes and bonds	$	94,284	$	25	$	(5,923	)	$	88,386
State and municipal		262,393		-		(38,236	)		224,157
Mortgage-backed		238,535		98		(16,172	)		222,461
Corporate		250		-		(33	)		217
Asset-backed securities		8,936		-		(134	)		8,802
Total	$	604,398	$	123	$	(60,498	)	$	544,023

(Dollars in thousands)
Held to Maturity:
U.S. Government and federal agency	$	2,983	$	-	$	(182	)	$	2,801
State and municipal		197,497		43		(24,081	)		173,459
Mortgage-backed		167,458		14		(14,849	)		152,623
Corporate		20,532		32		(1,497	)		19,067
Asset-backed securities		47		-		-			47
Total	$	388,517	$	89	$	(40,609	)	$	347,997


	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 September 30, 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:


	September 30, 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	$	-	$	-	$	83,597	$	5,923	$	83,597	$	5,923
State and municipal		4,696		520		219,230		37,716		223,926		38,236
Mortgage-backed		67,359		982		134,772		15,190		202,131		16,172
Corporate		-		-		217		33		217		33
Asset-backed securities		-		-		8,802		134		8,802		134
Total temporarily impaired	$	72,055	$	1,502	$	446,618	$	58,996	$	518,673	$	60,498


	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 September 30, 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:


	September 30, 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	$	-	$	-	$	2,801	$	182	$	2,801	$	182
State and municipal		951		21		167,633		24,060		168,584		24,081
Mortgage-backed		4,329		39		140,576		14,810		144,905		14,849
Corporate		1,447		3		15,929		1,494		17,376		1,497
Asset-backed securities		-		-		47		-		47		-
Total temporarily impaired	$	6,727	$	63	$	326,986	$	40,546	$	333,713	$	40,609


	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 and nine months ended September 30, 2025 and September 30, 2024 on AFS securities.

The majority of unrealized losses at September 30, 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 September 30, 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 September 30, 2025, 47% were issued by US government sponsored entities and agencies, and rated AA, 38% are AAA rated private issue and collateralized mortgage obligations, and 15% are unrated privately issued mortgage-backed securities with structured credit enhancement and collateralized mortgage obligations.

Unrealized losses have not been recognized into income because the issuers’ bonds are of high credit quality, and management does not intend to sell the bonds 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 September 30, 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 September 30,
(Dollars in thousands)	1 Year		5 Years		10 Years		10 Years		2025

U.S. Treasury notes and bonds	$	980	$	87,406	$	-	$	-	$	88,386
State and municipal		230		32,024		29,622		162,281		224,157
Corporate		-		-		217		-		217
Asset-backed securities		-		6,406		2,396		-		8,802
Total debt securities		1,210		125,836		32,235		162,281		321,562

Mortgage-backed securities		1,649		124,723		72,250		23,839		222,461
Total Available for Sale	$	2,859	$	250,559	$	104,485	$	186,120	$	544,023


	Held to Maturity Securities maturing within:
									Amortized Cost
	Less than		1 Year -		5 Years -		More than		at September 30,
(Dollars in thousands)	1 Year		5 Years		10 Years		10 Years		2025

U.S. Government and federal agency	$	-	$	2,983	$	-	$	-	$	2,983
State and municipal		2,332		45,985		90,267		58,913		197,497
Corporate		-		-		20,532		-		20,532
Asset-backed securities		47		-		-		-		47
Total debt securities		2,379		48,968		110,799		58,913		221,059

Mortgage-backed securities		3,416		93,193		70,849		-		167,458
Total Held to Maturity	$	5,795	$	142,161	$	181,648	$	58,913	$	388,517

Following is information regarding unrealized gains and losses on equity securities for the three and nine months ended September 30, 2025 and 2024:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2025		2024		2025		2024
(Dollars in thousands)
Net gains (losses) recognized during the period	$	458	$	277	$	804	$	241
Less: Net gains (losses) recognized during the period on securities sold		—		—		—		—

Unrealized gains (losses) recognized during the reporting period on securities still held at the reporting date	$	458	$	277	$	804	$	241