ChoiceOne Financial Services reported third-quarter 2026 net income of $14.5 million, or 97 cents per diluted share, as loan growth and lower funding costs helped lift its net interest margin. The Michigan-based bank holding company also reported higher core loans and deposits, alongside continued reductions in brokered deposits and borrowings.
Quarterly earnings were nearly unchanged from a year earlier. For the first nine months of 2026, ChoiceOne reported net income of $40.7 million, or $2.71 per diluted share; the company said the year-earlier period was affected by its first-quarter 2025 acquisition of Fentura Financial.
Earnings and lending
- Third-quarter net income was $14.5 million, compared with $14.7 million in the third quarter of 2025. Diluted earnings per share were 97 cents in both periods.
- Net income for the first nine months of 2026 was $40.7 million, or $2.71 per diluted share, compared with $14.3 million, or $1.05 per diluted share, for the first nine months of 2025. The Fentura acquisition, completed in the first quarter of 2025, affects that comparison.
- Core loans—excluding loans held for sale and mortgage warehouse advances—grew $33.6 million in the third quarter, equivalent to a 4.4% annualized rate. They were up $145.4 million, or 5.0%, from a year earlier.
- Total assets were $4.5 billion at September 30, up $162.2 million from a year earlier. ChoiceOne attributed the increase mainly to core loan growth and mortgage warehouse advances.
- Loan interest income rose $1.7 million from the second quarter and $894,000 from the third quarter of 2025.
Margins and purchased-loan income
- The GAAP net interest margin—the spread between interest earned on assets and interest paid on funding—rose to 3.67% in the third quarter from 3.59% in the second quarter, an increase of 8 basis points. ChoiceOne cited loan growth and steady funding costs.
- Purchased-loan accretion contributed about $2.7 million of interest income in the quarter, down from $3.6 million a year earlier. That income lifted the reported net interest margin by 25 basis points in the third quarter of 2026, compared with 36 basis points in the third quarter of 2025.
- Of the third-quarter accretion, $1.9 million came from scheduled effective-interest amortization and $806,000 from unexpected loan payoffs and paydowns tied to fair-value marks.
- ChoiceOne estimates another $1.8 million of accretion from scheduled amortization in the remainder of 2026 and $6.0 million in 2027. It estimates $45.3 million remains to be recognized over the life of the purchased-loan portfolio, including $22.0 million expected over the next five years. Actual amounts will depend on prepayments and other factors.
Deposits, funding and liquidity
- Deposits excluding brokered deposits totaled $3.6 billion at September 30. They increased $95.7 million during the quarter, an annualized 10.9%, and $109.9 million, or 3.1%, from a year earlier.
- The quarterly increase was driven mainly by seasonal municipal deposits and the timing of tax receipts. Year-over-year growth reflected an increase in sustainable deposits, the company said.
- The quarter’s deposit growth included $100.3 million more in interest-bearing demand deposits and $8.6 million more in savings deposits. These gains were partly offset by declines in noninterest-bearing deposits and certificates of deposit.
- Brokered deposits fell $25.8 million during the quarter to $67.5 million, while borrowed funds declined $60.0 million to $234.9 million. Average brokered deposits were also down $24.1 million year over year, and average certificates of deposit were down $32.8 million.
- The annualized cost of deposits decreased to 1.54% from 1.58% in the second quarter. The overall cost of funds fell to 1.73% from 1.77%, and the cost of interest-bearing liabilities declined to 2.28%, also down 4 basis points from the prior quarter. ChoiceOne attributed the lower costs mainly to a more favorable deposit mix and higher average balances in lower-cost liquid deposits.
- Available borrowing capacity secured by pledged assets was $1.2 billion at quarter-end. Uninsured deposits totaled $1.3 billion, or 35.0% of deposits.
Credit quality
- Annualized net charge-offs were 0.08% of average loans in the third quarter.
- Nonperforming loans were 1.25% of total loans, excluding loans held for sale, at September 30. ChoiceOne said 0.40 percentage points of that ratio came from certain purchased loans that had been identified as credit-impaired before acquisition.
What changed
ChoiceOne’s margin improved as loan income increased and funding costs eased. Deposit growth and lower reliance on brokered deposits and borrowings also strengthened its funding mix. However, part of the reported margin still reflects income from acquired loans, including amounts tied to unexpected repayments; the company’s estimates for future accretion depend in part on how quickly those loans are repaid.