ChoiceOne Financial Services, Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Reported net income of $14.5 million ($0.97 per diluted share) for the third quarter of 2026, compared to $14.7 million ($0.97 per diluted share) in the third quarter of 2025.
• Reported net income of $40.7 million ($2.71 per diluted share) for the first nine months of 2026, compared to $14.3 million ($1.05 per diluted share) for the same period in 2025.
• Net interest income increased to $38.4 million for the quarter, up from $37.6 million in the third quarter of 2025.
• GAAP net interest margin expanded 8 basis points to 3.67% in the third quarter of 2026 from 3.59% in the second quarter of 2026.
• Noninterest income was $6.8 million for the quarter, a decrease of $389,000 compared to the third quarter of 2025, primarily due to losses on other assets and unrealized losses on equity securities.
• Noninterest expense increased $330,000 to $26.5 million in the third quarter of 2026 compared to the same period in 2025, driven by higher salaries, benefits, and data processing expenses.
• Provision for credit losses on loans was $900,000 for the third quarter of 2026, compared to $200,000 in the third quarter of 2025.
• Total assets were $4.5 billion at September 30, 2026, an increase of $162.2 million compared to September 30, 2025.
• Shareholders' equity totaled $469.8 million at September 30, 2026, down from $482.7 million at June 30, 2026, primarily due to a $22.3 million decline in accumulated other comprehensive income.
• Annualized return on average assets was 1.30% for the third quarter of 2026, compared to 1.36% in the third quarter of 2025.
• Annualized return on average equity was 12.14% for the third quarter of 2026.

Guidance and Future Outlook:

• Management stated they are well-positioned to build on momentum through the remainder of 2026.
• Estimated interest income due to accretion from purchased loans for the remainder of 2026 is $1.8 million and $6.0 million for 2027 using the effective interest method.
• Management intends to purchase similar sized transferable tax credits in the remainder of 2026 to reduce tax expense, following a $600,000 reduction in the first nine months.
• Total of $45.3 million remains to be recognized as interest income due to accretion from purchased loans over the life of the portfolio, with $22.0 million expected over the next five years.

Business Segments and Product Lines:

• Core loans increased $33.6 million (4.4% annualized) during the third quarter of 2026 and grew $145.4 million (5.0%) over the twelve months ended September 30, 2026.
• Deposits, excluding brokered deposits, increased $95.7 million (10.9% annualized) during the third quarter of 2026 and $109.9 million (3.1%) over the twelve months ended September 30, 2026.
• Interest-bearing demand deposits grew by $100.3 million in the third quarter, while savings deposits increased by $8.6 million.
• Brokered deposits decreased $25.8 million during the third quarter to $67.5 million.
• Borrowed funds decreased $60.0 million to $234.9 million.
• Loan portfolio breakdown at September 30, 2026: Commercial Real Estate ($1.75 billion), Residential Real Estate ($779.4 million), Commercial and Industrial ($411.6 million), Agricultural ($54.3 million), and Mortgage Warehouse Advances ($42.2 million).
• ChoiceOne Bank operates 54 offices in West, Central, and Southeast Michigan.

Market and Competitive Landscape:

• Growth in relationship-based deposits strengthened the balance sheet and reduced reliance on brokered deposits and other borrowed funds.
• The increase in deposits was primarily due to seasonal fluctuations related to municipal deposits and the timing of tax receipts.
• Uninsured deposits totaled $1.3 billion, representing 35.0% of total deposits at September 30, 2026.
• Total available borrowing capacity secured by pledged assets was $1.2 billion at September 30, 2026.

Risks and Challenges:

• Nonperforming loans to total loans (excluding loans held for sale) increased to 1.25% at September 30, 2026, from 1.07% at June 30, 2026.
• 0.40% of nonperforming loans is attributed to certain purchased loans identified prior to acquisition as having credit deterioration.
• Accumulated other comprehensive income declined due to the effect of higher long-term interest rates on the fair value of the available-for-sale securities portfolio.
• Noninterest income was negatively impacted by a $309,000 loss on other assets and a $156,000 unrealized loss on the market value of equity securities in the third quarter of 2026.
• Actual results for accretion income from purchased loans are dependent on prepayment speeds and other factors.

Management Commentary and Tone:

• Kelly Potes, Chief Executive Officer, stated the third quarter was highlighted by expansion in net interest margin and growth in net interest income.
• Management attributed improvements to disciplined balance sheet management, continued loan growth, and a favorable deposit mix.
• Potes expressed confidence in the company's ability to capitalize on growth opportunities with a well-capitalized balance sheet and strong liquidity position.
• Management highlighted the earnings power of the franchise driven by strong loan production, growth in relationship-based deposits, and continued credit discipline.

Other Key Points:

• ChoiceOne repurchased 40,000 shares of common stock for $1.3 million during the third quarter of 2026 under its existing share repurchase plan.
• ChoiceOne Bank remains "well-capitalized" with a total risk-based capital ratio of 12.9% as of September 30, 2026.
• Approximately 35.5% of loans are supported by SBA or USDA guarantees.
• Approximately 34.3% of nonperforming assets consist of residential real estate loans.
• The 2025 first nine-month results were impacted by the acquisition of Fentura Financial, Inc., completed in the first quarter of 2025.
• Merger-related expenses of $17.4 million were absent in the first nine months of 2026 compared to the same period in 2025.