10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-K

(X)	Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the fiscal year ended December 31, 2006
(   )	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the transition period from__________________ to __________________

Commission File Number: 000-19202

ChoiceOne Financial Services, Inc.
(Exact Name of Registrant as Specified in its Charter)

Michigan (State or Other Jurisdiction of Incorporation or Organization)	38-2659066 (I.R.S. Employer Identification No.)
109 East Division Street, Sparta, Michigan (Address of Principal Executive Offices)	49345 (Zip Code)

(616) 887-7366
(Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(g) of the Securities Exchange Act of 1934:

Common Stock
(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes           No   X  

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes           No   X  

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes   X     No        

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained in this form, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  (__)

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.

Large accelerated filer             Accelerated filer             Non-accelerated filer    X   

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes         No   X  

As of June 30, 2006, the aggregate market value of common stock held by non-affiliates of the Registrant was $30.3 million. This amount is based on an average bid price of $18.25 per share for the Registrant's stock as of such date.

As of February 28, 2007, the Registrant had 3,241,624 shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Part I, Item 1, and Part II, Items 5 through 9 incorporate by reference portions of the Registrant's Annual Report to Shareholders for the year ended December 31, 2006.

Part III, Items 10 through 14 incorporate by reference portions of the Registrant's Definitive Proxy Statement for the Registrant's Annual Meeting of Shareholders to be held April 26, 2007.

FORWARD-LOOKING STATEMENTS

This report and the documents incorporated into this report contain forward-looking statements that are based on management's beliefs, assumptions, current expectations, estimates and projections about the financial services industry, the economy, and the Registrant itself. Words such as "anticipates," "believes," "expects," "forecasts," "intends," "is likely," "plans," "predicts," "projects," "may," "could," "estimates," variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions ("risk factors") that are difficult to predict with regard to timing, extent, likelihood, and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be expressed, implied or forecasted in such forward-looking statements. Furthermore, the Registrant undertakes no obligation to update, amend, or clarify forward-looking statements, whether as a result of new information, future events, or otherwise.

Risk factors include, but are not limited to, the risk factors disclosed in Item 1A of this report, changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; changes in banking laws and regulations; changes in tax laws; changes in prices, levies, and assessments; the impact of technological advances; governmental and regulatory policy changes; the outcomes of pending and future litigation and contingencies; trends in customer behavior as well as their ability to repay loans; changes in the local and national economies; changes in market conditions; the possibility that anticipated cost savings and revenue enhancements from the merger with Valley Ridge Financial Corp. may not be fully realized at all or within the expected time frames; the level and timing of asset growth; and local and global uncertainties such as acts of terrorism and military actions. These are representative of the risk factors that could cause a difference between an ultimate actual outcome and a preceding forward-looking statement.

PART I

Item 1. Business

General
ChoiceOne Financial Services, Inc. (the "Registrant") is a one-bank holding company registered under the Bank Holding Company Act of 1956, as amended. The Registrant was incorporated on February 24, 1986, as a Michigan corporation. The Registrant was formed to create a bank holding company for the purpose of acquiring all of the capital stock of ChoiceOne Bank (formerly Sparta State Bank), which became a wholly owned subsidiary of the Registrant on April 6, 1987. The Registrant's only subsidiary and significant asset as of December 31, 2006, was ChoiceOne Bank (the "Bank"). Effective January 1, 1996, the Bank acquired all of the outstanding common stock of ChoiceOne Insurance Agencies, Inc. (formerly Bradford Insurance Centre, Ltd.), an independent insurance agency headquartered in Sparta, Michigan (the "Insurance Agency"). Effective January 1, 2002, the Bank formed ChoiceOne Mortgage Company of Michigan (the "Mortgage Company"). The Bank also owns a 25% interest in a non-banking corporation, West Shore Comp uter Services, Inc., a data processing firm located in Scottville, Michigan. Effective November 1, 2006, the Registrant merged with Valley Ridge Financial Corp. ("VRFC"), a single-bank holding company for Valley Ridge Bank ("VRB"). In the merger, the Registrant issued shares of its common stock in exchange for all outstanding shares of VRFC. In December 2006, VRB was consolidated into the Bank.

The Registrant's business is primarily concentrated in a single industry segment - banking. The Bank is a full-service banking institution that offers a variety of deposit, payment, credit and other financial services to all types of customers. These services include time, savings, and demand deposits, safe deposit services, and automated

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transaction machine services. Loans, both commercial and consumer, are extended primarily on a secured basis to corporations, partnerships and individuals. Commercial lending covers such categories as business, industry, agricultural, construction, inventory and real estate. The Bank's consumer loan department makes direct and indirect loans to consumers and purchasers of residential and real property. The Mortgage Company originates and sells a full line of conventional type mortgage loans for 1-4 family and multi-family residential real estate properties. No material part of the business of the Registrant or the Bank is dependent upon a single customer or very few customers, the loss of which would have a materially adverse effect on the Registrant.

The Bank's primary market area lies within portions of Kent, Muskegon, Newaygo and Ottawa counties in Michigan in the communities where the Bank's offices are located. Currently the Bank serves these markets through thirteen full-service offices. The Registrant and the Bank have no foreign assets or income.

The principal source of revenue for the Registrant and the Bank is interest and fees on loans. On a consolidated basis, interest and fees on loans accounted for 73%, 73%, and 71% of total revenues in 2006, 2005, and 2004, respectively. Interest on securities accounted for 12%, 11%, and 11% of total revenues in 2006, 2005, and 2004, respectively.

The Consolidated Financial Statements incorporated by reference in Part II, Item 8, contain information concerning the financial position and results of operations of the Registrant.

Competition
The Bank's competition primarily comes from other financial institutions located within Kent, Newaygo, Ottawa and Muskegon counties in western Michigan. There are a number of larger commercial banks within the Bank's primary market area. The Bank also competes with a large number of other financial institutions, such as savings and loan associations, insurance companies, consumer finance companies, credit unions and commercial finance and leasing companies for deposits, loans and service business. Money market mutual funds, brokerage houses and nonfinancial institutions provide many of the financial services offered by the Bank. Many of these competitors have substantially greater resources than the Bank. The principal methods of competition for financial services are price (the rates of interest charged for loans, the rates of interest paid for deposits and the fees charged for services) and the convenience and quality of services rendered to customers.

Supervision and Regulation
Banks and bank holding companies are extensively regulated. The Registrant is subject to supervision and regulation by the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"). The Registrant's activities are generally limited to owning or controlling banks and engaging in such other activities as the Federal Reserve Board may determine to be closely related to banking. Prior approval of the Federal Reserve Board, and in some cases various other government agencies, is required for the Registrant to acquire control of any additional bank holding companies, banks or other operating subsidiaries.

The Bank is chartered under state law and is subject to regulation by the Michigan Office of Financial and Insurance Services. State banking laws place restrictions on various aspects of banking, including permitted activities, loan interest rates, branching, payment of dividends and capital and surplus requirements. The Bank is a member of the Federal Reserve System and is also subject to regulation by the Federal Reserve Board. The Bank's deposits are insured by the Federal Deposit Insurance Corporation (the "FDIC") to the extent provided by law. The Bank became a member of the Federal Home Loan Bank system in March 1993. This provides certain advantages to the Bank, including favorable borrowing rates for certain funds.

The Registrant is a legal entity separate and distinct from the Bank. There are legal limitations on the extent to which the Bank can lend or otherwise supply funds to the Registrant. In addition, payment of dividends to the Registrant by the Bank is subject to various state and federal regulatory limitations.

Under Federal Reserve Board policy, the Registrant is expected to act as a source of financial strength to the Bank and to commit resources to support it. On March 31, 2006 the FDIC merged the Bank Insurance Fund ("BIF") and Savings Association Insurance Fund ("SAIF") to form the Deposit Insurance Fund ("DIF") in accordance with the

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Federal Deposit Insurance Reform Act of 2005 ("Reform Act"). The FDIC will maintain the insurance reserves of the DIF by assessing depository institutions an insurance premium.

On November 2, 2006, the FDIC adopted final regulations that implemented the Reform Act to create a stronger and more stable insurance system. The final regulations enable the FDIC to tie each depository institution's DIF insurance premiums both to the balance of insured deposits, as well as to the degree of risk the institution poses to the DIF. In addition, the FDIC has new flexibility to manage the DIF's reserve ratio within a range, which in turn will help prevent sharp swings in assessment rates that were possible under the design of the former system. Under the new risk-based assessment system, the FDIC will evaluate each depository institution's risk based on three primary sources of information: supervisory ratings for all insured institutions, financial ratios for most institutions, and long-term debt issuer ratings for large institutions that have them. Neither the Registrant nor the Bank has a long-term debt issuer rating. The ability to differentiate on the basis of risk will improve incentive s for effective risk management and will reduce the extent to which safer banks subsidize riskier ones.

As of November 2, 2006, the FDIC also set the DIF assessment rates that will take effect at the beginning of 2007. The new rates for nearly all depository institutions will vary between five and seven cents for every $100 of deposits. However, as part of the Reform Act, Congress provided credits to institutions that paid high premiums in the past to bolster the FDIC's insurance reserves that will be used to offset a portion of future DIF insurance reserve assessments. As a result, the FDIC has reported that the majority of banks will use assessment credits in 2007 to offset their entire DIF insurance premium for the year.

The Deposit Insurance Funds Act of 1996 authorized the Financing Corporation ("FICO") to impose periodic assessments on all depository institutions. The purpose of these periodic assessments is to spread the cost of the interest payments on the outstanding FICO bonds over a larger number of institutions. Until the change in the law, only SAIF member institutions bore the cost of funding these interest payments.

Banks are subject to a number of federal and state laws and regulations, which have a material impact on their business. These include, among others, minimum capital requirements, state usury laws, state laws relating to fiduciaries, the Truth in Lending Act, the Truth in Savings Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Expedited Funds Availability Act, the Community Reinvestment Act, the Real Estate Settlement Procedures Act, the USA PATRIOT Act, the Bank Secrecy Act, electronic funds transfer laws, redlining laws, predatory lending laws, antitrust laws, environmental laws, money laundering laws and privacy laws. The instruments of monetary policy of authorities, such as the Federal Reserve Board, may influence the growth and distribution of bank loans, investments and deposits, and may also affect interest rates on loans and deposits. These policies may have a significant effect on the operating results of banks.

Bank holding companies may acquire banks and other bank holding companies located in any state in the United States without regard to geographic restrictions or reciprocity requirements imposed by state banking law. Banks may also establish interstate branch networks through acquisitions of and mergers with other banks. The establishment of de novo interstate branches or the acquisition of individual branches of a bank in another state (rather than the acquisition of an out-of-state bank in its entirety) is allowed only if specifically authorized by state law.

Michigan banking laws do not significantly restrict interstate banking. The Michigan Banking Code permits, in appropriate circumstances and with the approval of the Office of Financial and Insurance Services, (1) acquisition of Michigan banks by FDIC-insured banks, savings banks or savings and loan associations located in other states, (2) sale by a Michigan bank of branches to an FDIC-insured bank, savings bank or savings and loan association located in a state in which a Michigan bank could purchase branches of the purchasing entity, (3) consolidation of Michigan banks and FDIC-insured banks, savings banks or savings and loan associations located in other states having laws permitting such consolidation, (4) establishment of branches in Michigan by FDIC-insured banks located in other states, the District of Columbia or U.S. territories or protectorates having laws permitting a Michigan bank to establish a branch in such jurisdiction, and (5) establishment by foreign banks of branches located in Michigan .

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Effects of Compliance With Environmental Regulations
The nature of the business of the Bank is such that it holds title, on a temporary or permanent basis, to a number of parcels of real property. These include properties owned for branch offices and other business purposes as well as properties taken in or in lieu of foreclosure to satisfy loans in default. Under current state and federal laws, present and past owners of real property may be exposed to liability for the cost of clean up of environmental contamination on or originating from those properties, even if they are wholly innocent of the actions that caused the contamination. These liabilities can be material and can exceed the value of the contaminated property. Management is not presently aware of any instances where compliance with these provisions will have a material effect on the capital expenditures, earnings or competitive position of the Registrant or the Bank, or where compliance with these provisions will adversely affect a borrower's ability to comply with the terms of loan contracts.

Employees
As of February 28, 2007, the Bank employed 136 full-time equivalent employees ("FTE's"); the Insurance Agency employed 12 FTE's; and the Mortgage Company employed 9 FTE's. As of February 28, 2007, the Registrant employed five executive officers (who are also employed by the Bank). The Registrant, Bank, Insurance Agency, and Mortgage Company believe their relations with their employees are good.

Statistical Information
Additional statistical information describing the business of the Registrant appears on the following pages and in Management's Discussion and Analysis of Financial Condition and Results of Operations incorporated by reference in Item 7 of this report and in the Consolidated Financial Statements and the notes thereto incorporated by reference in Item 8 of this report.

The following statistical information should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statements and notes thereto incorporated by reference in this report.

Securities Portfolio
The carrying value of securities categorized by type at December 31 was as follows:

(Dollars in thousands)

		2006		2005		2004
U.S. Government and federal agency	$	18,164	$	5,435	$	6,875
State and municipal		35,651		28,003		26,768
Mortgage-backed		19,842		7,811		6,700
Corporate		2,254		2,382		4,031
Equity securities		1,525		581		539
Total	$	77,436	$	44,212	$	44,913

The Registrant did not hold investment securities from any one issuer at December 31, 2006, that were greater than 10% of the Registrant's shareholders' equity, exclusive of U.S. Government and U.S. Government agency securities.

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Presented below is the fair value of securities as of December 31, 2006 and 2005, a schedule of maturities of securities as of December 31, 2006, and the weighted average yields of securities as of December 31, 2006.

(Dollars in thousands)

	Securities maturing within:
		Less than 1 Year		1 Year - 5 Years		5 Years - 10 Years		More than 10 Years		Fair Value at Dec. 31, 2006		Fair Value at Dec. 31, 2005
U.S. Government and
federal agency	$	2,495	$	10,713	$	4,956	$	-	$	18,164	$	5,435
State and municipal		5,205		18,822		10,908		846		35,781		28,003
Mortgage-backed securities		1,600		15,240		2,872		-		19,712		7,811
Corporate		1,681		573		-		-		2,254		2,382
Total debt securities	$	10,981	$	45,348	$	18,736	$	846	$	75,911	$	43,631
Equity securities (1)		-		-		-		-		1,525		581
Total securities	$	10,981	$	45,348	$	18,736	$	846	$	77,436	$	44,212

			Weighted average yields:
U.S. Government and
federal agency	5.10	%	5.32	%	4.90	%	-	%	5.18	%
State and municipal (2)	6.30		6.14		6.08		6.09		6.14
Corporate	5.41		5.27		-		-		5.27
Mortgage-backed securities	6.10		4.50		4.57		-		4.64
Equity securities	-		-		-		-		5.80

______________

(1)	Equity securities are preferred and common stocks with no stated maturity.
(2)	The yield is computed on a fully tax-equivalent basis at an incremental tax rate of 34%.

Loan Portfolio
The Bank's loan portfolio categorized by loan type (excluding loans held for sale) as of December 31 is presented below.

(Dollars in thousands)

		2006		2005		2004		2003		2002
Agricultural	$	18,583	$	10,203	$	8,686	$	8,515	$	8,527
Commercial and industrial		119,249		37,439		32,934		28,313		30,821
Consumer		15,589		11,820		13,250		14,532		18,565
Real estate - commercial		60,936		51,453		47,901		43,197		46,310
Real estate - construction		4,740		7,466		6,661		10,200		7,869
Real estate - residential		112,534		67,187		63,846		58,375		61,755
Total loans, gross	$	331,631	$	185,568	$	173,278	$	163,132	$	173,847

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Maturities and Sensitivities of Loans to Changes in Interest Rates
The following schedule presents the maturities of loans (excluding residential real estate and consumer loans) as of December 31, 2006. All loans over one year in maturity (excluding residential real estate and consumer loans) are also presented classified according to the sensitivity to changes in interest rates as of December 31, 2006.

(Dollars in thousands)

Loan Type		Less than 1 Year		1 Year - 5 Years		More than 5 Years		Total
Agricultural	$	9,009	$	9,211	$	363	$	18,583
Commercial and industrial		57,864		59,060		2,325		119,249
Real estate - commercial		29,543		30,204		1,189		60,936
Real estate - construction		4,740		-		-		4,740
Totals	$	101,156	$	98,475	$	3,877	$	203,508
Loan Sensitivity to Changes in Interest Rates		Less than 1 Year		1 Year - 5 Years		More than 5 Years		Total
Loans with fixed interest rates	$	56,779	$	84,819	$	3,287	$	144,885
Loans with floating or adjustable interest rates		44,377		13,656		590		58,623
Totals	$	101,156	$	98,475	$	3,877	$	203,508

(1) Loan maturities are classified according to the contractual maturity date or the anticipated amortization period, whichever is appropriate. The anticipated amortization period is used in the case of loans where a balloon payment is due before the end of the loan's normal amortization period. At the time the balloon payment is due, the loan can either be rewritten or payment in full can be requested. The decision regarding whether the loan will be rewritten or a payment in full will be requested will be based upon the loan's payment history, the borrower's current financial condition, and other relevant factors.

Risk Elements
The following loans were classified as nonperforming as of December 31:

(Dollars in thousands)

	2006	2005	2004	2003	2002
Loans accounted for on a non-accrual basis	$  6,420	$  934	$  795	$  1,914	$  2,522
Accruing loans which are contractually past due 90      days or more as to principal or interest payments	278	32	11	39	210
Loans defined as "troubled debt restructurings"	24	-	16	47	48
Totals	$  6,722	$  966	$  822	$  2,000	$  2,780

A loan is placed on nonaccrual status at the point in time at which the collectibility of principal or interest is considered doubtful. One relationship totaling $3.6 million is from various commercial real estate loans from a commercial developer in the metropolitan Grand Rapids area.

The table below illustrates interest forgone and interest recorded on nonperforming loans for the years presented.

(Dollars in thousands)

	2006	2005	2004	2003	2002
Interest on non-performing loans which would have      been earned had the loans been in an accrual or      performing status	$  184	$  33	$  32	$  77	$  97
Interest on non-performing loans that was actually      recorded when received	$  47	$  21	$  18	$  54	$  48

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Potential Problem Loans
At December 31, 2006, there were $8.1 million of loans not disclosed above where some concern existed as to the borrowers' abilities to comply with original loan terms. Specific loss allocations totaling $942,000 from the allowance for loan losses had been allocated for all nonperforming and potential problem loans as of December 31, 2006. However, the entire allowance for loan losses is also available for these potential problem loans.

Loan Concentrations
As of December 31, 2006, there was no concentration of loans exceeding 10% of total loans that is not otherwise disclosed as a category of loans in the loan portfolio listing in Note 4 to the Consolidated Financial Statements incorporated by reference in Item 8 of this report.

Other Interest-Bearing Assets
As of December 31, 2006, there were no other interest-bearing assets requiring disclosure.

Summary of Loan Loss Experience
The following schedule presents a summary of activity in the allowance for loan losses for the periods shown and the percentage of net charge-offs during each period to average gross loans outstanding during the period.

(Dollars in thousands)		2006		2005		2004		2003		2002
Balance at January 1	$	1,963	$	1,739	$	1,974	$	2,211	$	2,013
Charge-offs:
Agricultural		-		-		-		17		-
Commercial and industrial		221		72		689		343		360
Consumer		200		162		144		354		762
Real estate - commercial		-		25		66		190		90
Real estate - construction		-		20		-		-		-
Real estate - residential		92		120		41		76		45
Total charge-offs		513		399		940		980		1,257
Recoveries:
Agricultural		-		-		-		-		-
Commercial and industrial		51		47		58		96		9
Consumer		117		81		182		242		170
Real estate - commercial		-		-		-		-		-
Real estate - construction		-		-		-		-		-
Real estate - residential		-		-		-		5		6
Total recoveries		168		128		240		343		185
Net charge-offs		345		271		700		637		1,072
Transfer of allowance from VRFC		1,751
Additions charged to operations (1)		200		495		465		400		1,270
Balance at December 31	$	3,569	$	1,963	$	1,739	$	1,974	$	2,211

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	2006		2005		2004		2003		2002
Ratio of net charge-offs during the period to average loans outstanding during the period	0.15	%	0.15	%	0.41	%	0.39	%	0.62	%

(1) Additions to the allowance for loan losses charged to operations during the periods shown were based on management's judgment after considering factors such as loan loss experience, evaluation of the loan portfolio, and prevailing and anticipated economic conditions. The evaluation of the loan portfolio is based upon various risk factors such as the financial condition of the borrower, the value of collateral and other considerations, which, in the opinion of management, deserve current recognition in estimating loan losses.

The following schedule presents an allocation of the allowance for loan losses to the various loan categories as of the years ended December 31.

(Dollars in thousands)

		2006		2005		2004		2003		2002
Agricultural	$	314	$	202	$	169	$	210	$	220
Commercial and industrial		1,160		1,060		939		850		762
Consumer		289		195		123		325		408
Real estate - commercial		1,029		254		265		215		430
Real estate - construction		12		19		32		33		140
Real estate - residential		575		229		181		240		251
Unallocated		190		4		30		101		-
Total allowance	$	3,569	$	1,963	$	1,739	$	1,974	$	2,211

The total increase of $1.6 million from 2005 to 2006 relates primarily to the allowance for loan losses totaling $1,751,000 acquired from VRFC in November 2006. The majority of the reserve acquired from VRFC was allocated to commercial real estate and residential real estate loans. Management increased the amount of specific losses allocated to nonperforming loans by $477,000 during 2006. Specific loss allocations totaled $942,000 at December 31, 2006 versus $465,000 at December 31, 2005. Specific loss allocations are based upon either a discounted collateral amount or the net present value of future expected cashflows from borrowers.

Management periodically reviews the assumptions, loss ratios and delinquency trends in estimating the appropriate level of its allowance for loan losses and believes the unallocated portion of the total allowance is sufficient at December 31, 2006.

The following schedule presents the stratification of the loan portfolio by category, based on the amount of loans outstanding as a percentage of total loans for the respective years ended December 31.

	2006		2005		2004		2003		2002
Agricultural	6	%	6	%	5	%	5	%	5	%
Commercial and industrial	36		20		19		17		18
Consumer	5		6		7		9		11
Real estate - commercial	18		28		28		27		27
Real estate - construction	1		4		4		6		4
Real estate - residential	34		36		37		36		35
Total	100	%	100	%	100	%	100	%	100	%

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Deposits
The following schedule presents the average deposit balances by category and the average rates paid thereon for the respective years.

(Dollars in thousands)

		2006				2005				2004
Noninterest-bearing demand	$	27,611	-		$	20,095	-		$	17,864	-
Interest-bearing demand		56,617	2.64	%		56,745	2.11	%		53,339	1.53	%
Savings		11,524	0.50	%		9,136	0.50	%		9,575	0.50	%
Certificates of deposit		126,535	4.45	%		87,443	3.25	%		76,059	2.85	%
Total	$	222,287	3.23	%	$	173,419	2.36	%	$	156,837	1.93	%

The following table illustrates the maturities of certificates of deposits issued in denominations of $100,000 or more as of December 31, 2006.

(Dollars in thousands)

Maturing in less than 3 months	$	31,808
Maturing in 3 to 6 months		22,514
Maturing in 6 to 12 months		16,230
Maturing in more than 12 months		17,944
Total	$	88,496

Short-Term Borrowings
Federal funds purchased by the Registrant are unsecured overnight borrowings from correspondent banks. Federal funds purchased are due the next business day. The table below provides additional information regarding these short-term borrowings:

(Dollars in thousands)

		2006			2005			2004
Outstanding balance at December 31	$	460		$	4,399		$	1,281
Average interest rate at December 31		5.37	%		4.41	%		2.47	%
Average balance during the year	$	2,585		$	2,727		$	3,094
Average interest rate during the year		4.84	%		3.44	%		1.56	%
Maximum month end balance during the year	$	9,987		$	4,545		$	6,968

Repurchase agreements are advances by Bank customers that are not covered by federal deposit insurance. These agreements are direct obligations of the Registrant and are secured by securities held in safekeeping at a correspondent bank. The table below provides additional information regarding these short-term borrowings:

(Dollars in thousands)

		2006			2005			2004
Outstanding balance at December 31	$	15,013		$	7,139		$	6,338
Average interest rate at December 31		3.58	%		2.11	%		1.62	%
Average balance during the year	$	6,492		$	6,215		$	5,051
Average interest rate during the year		2.63	%		2.05	%		1.45	%
Maximum month end balance during the year	$	15,013		$	7,139		$	6,767

Advances from the Federal Home Loan Bank ("FHLB") with original repayment terms less than one year are considered short-term borrowings for the Registrant. These advances are secured by residential real estate mortgage loans and U.S. government agency securities. The advances have maturities ranging from 3 months to 11 months from date of issue.

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The table below provides additional information regarding these short-term borrowings:

(Dollars in thousands)

		2006			2005			2004
Outstanding balance at December 31	$	-		$	11,000		$	9,000
Average interest rate at December 31		-	%		4.19	%		1.95	%
Average balance during the year	$	8,833		$	12,542		$	7,500
Average interest rate during the year		5.13	%		3.50	%		1.65	%
Maximum month end balance during the year	$	15,000		$	15,000		$	11,000

There were no other categories of short-term borrowings whose average balance outstanding exceeded 30% of shareholders' equity in 2006, 2005, or 2004.

Return on Equity and Assets
The following schedule presents the Registrant's ratios for the years ended December 31:

	2006		2005		2004
Return on assets (net income divided by average total assets)	0.72	%	0.91	%	0.83	%
Return on equity (net income divided by average equity)	7.63	%	10.15	%	8.93	%
Dividend payout ratio (dividends declared per share divided      by net income per share)	66.91	%	51.02	%	57.44	%
Equity to assets ratio (average equity divided by average total assets)	9.48	%	8.97	%	9.28	%

Item 1A. Risk Factors

The Registrant is subject to many risks and uncertainties. Although the Registrant seeks ways to manage these risks and develop programs to control those that management can, the Registrant cannot predict the future. Actual results may differ materially from management's expectations. Some of these significant risks and uncertainties are discussed below. The risks and uncertainties described below are not the only ones that the Registrant faces. Additional risks and uncertainties of which the Registrant is unaware, or that it currently deems immaterial, also may become important factors that affect the Registrant and its business. If any of these risks were to occur, the Registrant's business, financial condition or results of operations could be materially and adversely affected.

Investments in the Registrant's common stock involve risk.

The market price of the Registrant's common stock may fluctuate significantly in response to a number of factors, including:

• Variations in quarterly or annual operating results

• Changes in interest rates

• New developments in the banking industry

• Regulatory actions

• Volatility of stock market prices and volumes

• Changes in market valuations of similar companies

• New litigation or contingencies or changes in existing litigation or contingencies

• Changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other regulatory agencies

• Rumors or erroneous information

11

Asset quality could be less favorable than expected.

A significant source of risk for the Registrant arises from the possibility that losses will be sustained because borrowers, guarantors and related parties may fail to perform in accordance with the terms of their loan agreements. Most loans originated by the Registrant are secured, but some loans are unsecured depending on the nature of the loan. With respect to secured loans, the collateral securing the repayment of these loans includes a wide variety of real and personal property that may be insufficient to cover the obligations owed under such loans. Collateral values may be adversely affected by changes in prevailing economic, environmental and other conditions, including declines in the value of real estate, changes in interest rates, changes in monetary and fiscal policies of the federal government, terrorist activity, environmental contamination and other external events. In addition, collateral appraisals that are out of date or that do not meet industry recognized standards may create the impres sion that a loan is adequately collateralized when in fact it is not.

General economic conditions in the state of Michigan could be less favorable than expected.

The Registrant is affected by general economic conditions in the United States, although most directly within Michigan. A further economic downturn within Michigan could negatively impact household and corporate incomes. This impact may lead to decreased demand for both loan and deposit products and increase the number of customers who fail to pay interest or principal on their loans.

If the Registrant does not adjust to changes in the financial services industry, its financial performance may suffer.

The Registrant's ability to maintain its financial performance and return on investment to shareholders will depend in part on its ability to maintain and grow its core deposit customer base and expand its financial services to its existing customers. In addition to other banks, competitors include credit unions, securities dealers, brokers, mortgage bankers, investment advisors and finance and insurance companies. The increasingly competitive environment is, in part, a result of changes in the economic environment within the state of Michigan, regulation, changes in technology and product delivery systems and the accelerating pace of consolidation among financial service providers. New competitors may emerge to increase the degree of competition for the Registrant's customers and services. Financial services and products are also constantly changing. The Registrant's financial performance will also depend in part upon customer demand for the Registrant's products and services and the Registrant's ability to develop and offer competitive financial products and services.

Changes in interest rates could reduce the Registrant's income and cash flow.

The Registrant's income and cash flow depends, to a great extent, on the difference between the interest earned on loans and securities, and the interest paid on deposits and other borrowings. Market interest rates are beyond the Registrant's control, and they fluctuate in response to general economic conditions and the policies of various governmental and regulatory agencies including, in particular, the Federal Reserve Board. Changes in monetary policy, including changes in interest rates and interest rate relationships, will influence the origination of loans, the purchase of investments, the generation of deposits and the rate received on loans and securities and paid on deposits and other borrowings.

Additional risks and uncertainties could have a negative effect on financial performance.

Additional factors could have a negative effect on the financial performance of the Registrant and the Registrant's common stock. Some of these factors are financial market conditions, changes in financial accounting and reporting standards, new litigation or changes in existing litigation, regulatory actions and losses.

Item 1B. Unresolved Staff Comments

None.

12

Item 2. Properties

The offices of the Bank, Insurance Agency, and Mortgage Company as of February 28, 2007, were as follows:

Registrant's, Bank's, Insurance Agency's, and Mortgage Company's main office:
     109 East Division, Sparta, Michigan
     Office is owned by the Bank and comprises 24,000 square feet.

Bank's branch office:
     416 West Division, Sparta, Michigan
     Office is leased by the Bank and comprises 3,000 square feet.

Bank's branch office:
     4170 - 17 Mile Road, Cedar Springs, Michigan
     Office is owned by the Bank and comprises 3,000 square feet.

Bank's branch office:
     6795 Courtland Drive, Rockford, Michigan
     Office is owned by the Bank and comprises 2,400 square feet.

Bank's branch office:
     5050 Alpine Avenue NW, Comstock Park, Michigan
     Office is owned by the Bank and comprises 2,400 square feet.

Bank's branch office:
     450 West Muskegon, Kent City, Michigan
     Office is owned by the Bank and comprises 27,300 square feet.

Bank's branch office:
     3069 Slocum Road, Ravenna, Michigan
     Office is owned by the Bank and comprises 4,800 square feet.

Bank's branch office:
     5475 East Apple Avenue, Muskegon, Michigan
     Office is owned by the Bank and comprises 4,800 square feet.

Bank's branch office:
     661 West Randall, Coopersville, Michigan
     Office is owned by the Bank and comprises 4,800 square feet.

Bank's branch office:
     10 West Main Street, Grant, Michigan
     Office is owned by the Bank and comprises 4,800 square feet.

Bank's branch office:
     246 West River Valley Drive, Newaygo, Michigan
     Office is owned by the Bank and comprises 1,800 square feet.

Bank's branch office:
     47 South Charles Street, White Cloud, Michigan
     Office is leased by the Bank and comprises 1,800 square feet.

13

Bank's branch office:
     1423 West Main Street, Fremont, Michigan
     Office is owned by the Bank and comprises 1,600 square feet.

The Registrant operates its business at the main office of the Bank. The Registrant did not own any properties as of February 28, 2007. The Registrant, Insurance Agency, and Mortgage Company believe that their offices are suitable and adequate for their future needs and are in good condition. The Registrant's management believes all offices are adequately covered by property insurance.

Item 3. Legal Proceedings

As of December 31, 2006, there are no significant pending legal proceedings to which the Registrant or the Bank is a party or to which any of their properties are subject, except for legal proceedings arising in the ordinary course of business. In the opinion of management, pending legal proceedings will not have a material effect on the consolidated financial condition of the Registrant.

Item 4. Submission of Matters to a Vote of Security Holders

There were no matters submitted to a vote of security holders during the quarter ended December 31, 2006.

PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

The information under the caption "Stock Information" on pages 1 and 2 of the Registrant's Annual Report to Shareholders for the year ended December 31, 2006, is incorporated herein by reference.

On October 18, 2006, the Registrant issued 1,062 shares of common stock to its directors pursuant to the Directors' Stock Purchase Plan for an aggregate cash price of $19,000. The Registrant relied on the exemption contained in Section 4(6) of the Securities Act of 1933 in connection with this sale.

On November 22, 2006, the Registrant issued 1,002 shares of common stock to its directors pursuant to the Directors' Stock Purchase Plan for an aggregate cash price of $18,000. The Registrant relied on the exemption contained in Section 4(6) of the Securities Act of 1933 in connection with this sale.

ISSUER PURCHASES OF EQUITY SECURITIES

Period	Total Number of Shares Purchased (1)	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
October 1, 2006 to October 31, 2006	-	-	-	38,889
November 1, 2006 to November 30, 2006	4,100	$  18.00	4,100	34,789
December 1, 2006 to December 31, 2006	587	$  18.00	587	34,202
Total	4,687	$  18.00	4,687	34,202

(1)  On July 21, 2004, the Board of Directors authorized the Registrant to repurchase 50,000 shares under a publicly announced repurchase plan. There is no stated expiration date. All shares purchased by the Registrant during the three months ended December 31, 2006 were made as open-market transactions.

14

Item 6. Selected Financial Data

The information under the caption "Selected Financial Data" on page 3 of the Registrant's Annual Report to Shareholders for the year ended December 31, 2006, is incorporated herein by reference.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

The information under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations," including all subheadings, on pages 4 through 13, inclusive, of the Registrant's Annual Report to Shareholders for the year ended December 31, 2006, is incorporated herein by reference.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

The information under the subheading "Liquidity and Interest Rate Risk" under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" on pages 11 through 13, inclusive, of the Registrant's Annual Report to Shareholders for the year ended December 31, 2006, is incorporated herein by reference.

Item 8. Financial Statements and Supplementary Data

The Report of Independent Registered Public Accounting Firm, Consolidated Financial Statements, and Notes to Consolidated Financial Statements on pages 15 through 40, inclusive, of the Registrant's Annual Report to Shareholders for the year ended December 31, 2006, are incorporated herein by reference.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors
of ChoiceOne Financial Services, Inc., Sparta, Michigan

We have audited the accompanying consolidated balance sheets of ChoiceOne Financial Services, Inc. as of December 31, 2005, and the related consolidated statements of income, changes in shareholders' equity and cash flows for each of the two years in the period ended December 31, 2005. These financial statements are the responsibility of the Corporation's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of ChoiceOne Financial Services, Inc. as of December 31, 2005, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2005, in conformity with U.S. generally accepted accounting principles.

Crowe Chizek and Company LLC

Grand Rapids, Michigan
March 7, 2006

15

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

The information under the caption "Change in Independent Registered Public Accounting Firm" on page 14 of the Registrant's Annual Report to Shareholders for the year ended December 31, 2006, is incorporated herein by reference.

Item 9A. Controls and Procedures

An evaluation was performed under the supervision and with the participation of the Registrant's management, including the Chief Executive Officer and principal financial officer, of the effectiveness of the design and operation of the Registrant's disclosure controls and procedures. Based on and as of the time of that evaluation, the Registrant's management, including the Chief Executive Officer and principal financial officer, concluded that the Registrant's disclosure controls and procedures were effective as of the end of the period covered by this report. There was no change in the Registrant's internal control over financial reporting that occurred during the three months ended December 31, 2006 that has materially affected, or that is reasonably likely to materially affect, the Registrant's internal control over financial reporting.

Item 9B. Other Information

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information under the captions "ChoiceOne's Board of Directors and Executive Officers," "Related Matters - Section 16(a) Beneficial Ownership Reporting Compliance" and "Corporate Governance" in the Registrant's Definitive Proxy Statement for the Annual Meeting of Shareholders to be held April 26, 2007, is incorporated herein by reference.

The Registrant has adopted a Code of Ethics for Executive Officers and Senior Financial Officers, which applies to the Chief Executive Officer and the Chief Financial Officer, as well as all other senior financial and accounting officers. The Code of Ethics is posted on the Registrant's website at "www.choiceone.com." The Registrant intends to satisfy the disclosure requirements under Item 5.05 of Form 8-K regarding an amendment to, or a waiver from, a provision of the Code of Ethics by posting such information on its website at "www.choiceone.com."

Item 11. Executive Compensation

The information under the captions "Executive Compensation" and "Personnel and Benefits Committee Report on Executive Compensation" in the Registrant's Definitive Proxy Statement for the Annual Meeting of Shareholders to be held April 26, 2007, is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information under the caption "Ownership of ChoiceOne Common Stock" in the Registrant's Definitive Proxy Statement for the Annual Meeting of Shareholders to be held April 26, 2007, is incorporated herein by reference.

16

The following table presents information regarding the equity compensation plans both approved and not approved by shareholders at December 31, 2006:

	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)	(b)	(c)
Equity compensation plans approved      by security holders	30,414	$  17.27	117,448
Equity compensation plans not      approved by security holders	- -	- -	42,268
Total	30,414	$  17.27	159,716

Equity compensation plans approved by security holders include the Amended and Restated Executive Stock Incentive Plan and the Employee Stock Purchase Plan.

Shareholders at the Registrant's 2002 Annual Meeting approved the Amended and Restated Executive Stock Incentive Plan. Key employees of the Registrant and its subsidiaries, as the Personnel and Benefits Committee of the Board of Directors may select from time to time, are eligible to receive awards under this Plan. Incentive awards may be stock options, stock appreciation rights or stock awards. The Plan provides for a maximum of 106,573 shares of the Registrant's common stock, subject to adjustments for certain changes in the capital structure of the Registrant. New awards for up to 76,161 shares may be made under this Plan.

The number of shares available for issuance under the Plan is equal to the number determined by the following formula: (a) for the initial plan year, 5% of the total number of shares of common stock outstanding at the time the Plan became effective; plus (b) in each subsequent plan year, an additional number of shares of common stock not to exceed 2% of the number of shares of common stock outstanding as reported in the Registrant's Annual Report on Form 10-K for the fiscal year ending immediately before such plan year such that at the beginning of each plan year after the initial plan year there shall be available, in addition to any amount of shares remaining from the 5% authorization for the initial plan year, a minimum number of shares equal to 2% of the number of shares of common stock outstanding; plus (c) there shall be carried forward and available for additional awards certain shares that are either unused, canceled or surrendered in connection with incentive awards.

Shareholders at the 2002 Annual Meeting approved the Employee Stock Purchase Plan. This Plan allows employees to purchase the Registrant's common stock at a 15% discount from the average bid price for the Registrant's common stock. Employees who elect to participate in the plan can purchase shares of the Registrant's common stock on a quarterly basis. The Plan provides for a maximum of 55,125 shares of the Registrant's common stock, subject to adjustments for certain changes in the capital structure of the Registrant. New issuances for up to 41,287 may be made under this Plan.

Equity compensation plans not approved by security holders consist of the Directors' Stock Purchase Plan. The Plan is designed to provide directors of the Registrant the option of receiving their fees in the Registrant's stock. Directors who elect to participate in the Plan may elect to contribute to the Plan twenty-five, fifty, seventy-five or one hundred percent of their board of director fees and one hundred percent of their director committee fees earned as directors of the Registrant. Contributions to the Plan are made by the Registrant on behalf of each electing participant. Plan participants may terminate their participation in the Plan at any time by written notice of withdrawal to the Registrant. Participants will cease to be eligible to participate in the Plan when they cease to serve as directors of the Registrant. Shares are distributed to participants on a quarterly basis. The Plan provides for a maximum of 72,978 shares of the Registrant's common stock, subject to adjustments for certain cha nges in the capital structure of the Registrant. New issuances for up to 42,268 may be made under this Plan.

17

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information under the captions "Related Matters - Certain Relationships and Related Transactions" and "Corporate Governance" in the Registrant's Definitive Proxy Statement for the Annual Meeting of Shareholders to be held April 26, 2007, is incorporated herein by reference.

Item 14. Principal Accountant Fees and Services

The information under the caption "Related Matters - Independent Certified Public Accountants" in the Registrant's Definitive Proxy Statement for the Annual Meeting of Shareholders to be held April 26, 2007, is incorporated herein by reference.

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a)	(1)	Financial Statements. The following financial statements and independent auditors' reports are filed as part of this report:
			Consolidated Balance Sheets at December 31, 2006 and 2005.
			Consolidated Statements of Income for the years ended December 31, 2006, 2005, and 2004.
			Consolidated Statements of Changes in Shareholders' Equity for the years ended December 31, 2006, 2005, and 2004.
			Consolidated Statements of Cash Flows for the years ended December 31, 2006, 2005, and 2004.
			Notes to Consolidated Financial Statements.
			Report of Independent Registered Public Accounting Firm dated March 20, 2007.
			Report of Independent Registered Public Accounting Firm dated March 7, 2006.
		The consolidated financial statements, notes to consolidated financial statements and independent auditors' report dated March 20, 2007 listed above are incorporated by reference in Item 8 of this report from the Registrant's Annual Report to Shareholders for the year ended December 31, 2006.
	(2)	Financial Statement Schedules. None.

(b) Exhibits. The following exhibits are filed as part of this report:

Exhibit	Document
2	Agreement and Plan of Merger between ChoiceOne Financial Services, Inc. and Valley Ridge Financial Corp. Previously filed as Appendix A to the Prospectus and Proxy Statement included in the Registrant's Registration Statement on Form S-4/A filed with the Commission on September 11, 2006. Here incorporated by reference.
3.1	Amended and Restated Articles of Incorporation of the Registrant. Previously filed as an exhibit to the Registrant's Form 10-K Annual Report for the year ended December 31, 2005. Here incorporated by reference.
3.2	Bylaws of the Registrant as currently in effect and any amendments thereto. Previously filed as an exhibit to the Registrant's Form 10-K Annual Report for the year ended December 31, 2003. Here incorporated by reference.

18

4	Advances, Pledge and Security Agreement between ChoiceOne Bank and the Federal Home Loan Bank of Indianapolis. Previously filed as an exhibit to the Registrant's Form 10-K Annual Report for the year ended December 31, 2001. Here incorporated by reference.
10.1	Employment Agreement with James A. Bosserd. (1) Previously filed as an exhibit to the Registrant's Form 8-K Current Report for November 1, 2006. Here incorporated by reference.
10.2	Amended and Restated Executive Stock Incentive Plan. (1) Previously filed as an exhibit to the Registrant's Form 10-K Annual Report for the year ended December 31, 2005. Here incorporated by reference.
10.3	Directors' Stock Purchase Plan. (1) Previously filed as an exhibit to the Registrant's Form 10-K Annual Report for the year ended December 31, 2003. Here incorporated by reference.
10.4	Consulting and Noncompetition Agreement with Richard L. Edgar. (1) Previously filed as an exhibit to the Registrant's Form 8-K Current Report for November 1, 2006. Here incorporated by reference.
10.5	Consulting and Noncompetition Agreement with Robert Karpinski. (1) Previously filed as an exhibit to the Registrant's Form 8-K Current Report for November 1, 2006. Here incorporated by reference.
10.6	Noncompetition Agreement with Ronald Hansen. (1) Previously filed as an exhibit to the Registrant's Form 8-K Current Report for November 1, 2006. Here incorporated by reference.
10.7	Retention Bonus Agreement with Michael McHugh. (1) Previously filed as an exhibit to the Registrant's Form 8-K Current Report for November 1, 2006. Here incorporated by reference.
10.8	Former Valley Ridge Executive Employee Salary Continuation Agreements. (1)
10.9	Former Valley Ridge Directors' Deferred Compensation Plan and Agreement. (1)
13	Annual Report to Shareholders for the year ended December 31, 2006
16	Letter regarding Change in Certifying Accountant. Previously filed as an exhibit to the Registrant's Form 8-K Current Report for November 25, 2005. Here incorporated by reference.
21	Subsidiaries of the Registrant.
23.1	Consent of Independent Registered Public Accounting Firm for fiscal year ended December 31, 2006.
23.2	Consent of Independent Registered Public Accounting Firm for fiscal years ended December 31, 2005 and 2004.
24	Powers of Attorney.
31.1	Certification of Chief Executive Officer.
31.2	Certification of Treasurer.
32	Certification pursuant to 18 U.S.C. § 1350.

___________________________

(1) This agreement is a management contract or compensation plan or arrangement to be filed as an exhibit to this Form 10-K.

Copies of any exhibits will be furnished to shareholders upon written request. Requests should be directed to: Thomas L. Lampen, Treasurer, ChoiceOne Financial Services, Inc., 109 East Division, Sparta, Michigan, 49345.

19

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

ChoiceOne Financial Services, Inc.
By /s/ James A. Bosserd	March 30, 2007
James A. Bosserd President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

/s/ James A. Bosserd	President and Chief Executive Officer and Director (Principal Executive Officer)	March 30, 2007
James A. Bosserd
/s/ Thomas L. Lampen	Treasurer (Principal Financial and Accounting Officer)	March 30, 2007
Thomas L. Lampen
*/s/ Richard L. Edgar	Chairman of the Board and Director	March 30, 2007
Richard L. Edgar
*/s/ Jerome Arends	Director	March 30, 2007
Jerome Arends
*/s/ Frank G. Berris	Director	March 30, 2007
Frank G. Berris
*/s/ K. Timothy Bull	Director	March 30, 2007
K. Timothy Bull
*/s/ William F. Cutler, Jr.	Director	March 30, 2007
William F. Cutler, Jr.
*/s/ Stuart Goodfellow	Director	March 30, 2007
Stuart Goodfellow
*/s/ Gary Gust	Director	March 30, 2007
Gary Gust
*/s/ Robert Humphreys	Director	March 30, 2007
Robert Humphreys
*/s/ Paul L. Johnson	Director	March 30, 2007
Paul L. Johnson
	Director	March __, 2007
Dennis C. Nelson
*/s/ Jon E. Pike	Director	March 30, 2007
Jon E. Pike

20

*/s/ Donald VanSingel	Director	March 30, 2007
Donald VanSingel
*/s/ Andrew W. Zamiara	Director	March 30, 2007
Andrew W. Zamiara

*By	/s/ Thomas L. Lampen
	Attorney-in-Fact

21

EXHIBIT INDEX

Exhibit	Document
2	Agreement and Plan of Merger between ChoiceOne Financial Services, Inc. and Valley Ridge Financial Corp. Previously filed as Appendix A to the Prospectus and Proxy Statement included in the Registrant's Registration Statement on Form S-4/A filed with the Commission on September 11, 2006. Here incorporated by reference.
3.1	Amended and Restated Articles of Incorporation of the Registrant. Previously filed as an exhibit to the Registrant's Form 10-K Annual Report for the year ended December 31, 2005. Here incorporated by reference.
3.2	Bylaws of the Registrant as currently in effect and any amendments thereto. Previously filed as an exhibit to the Registrant's Form 10-K Annual Report for the year ended December 31, 2003. Here incorporated by reference.
4	Advances, Pledge and Security Agreement between ChoiceOne Bank and the Federal Home Loan Bank of Indianapolis. Previously filed as an exhibit to the Registrant's Form 10-K Annual Report for the year ended December 31, 2001. Here incorporated by reference.
10.1	Employment Agreement with James A. Bosserd. (1) Previously filed as an exhibit to the Registrant's Form 8-K Current Report for November 1, 2006. Here incorporated by reference.
10.2	Amended and Restated Executive Stock Incentive Plan. (1) Previously filed as an exhibit to the Registrant's Form 10-K Annual Report for the year ended December 31, 2005. Here incorporated by reference.
10.3	Directors' Stock Purchase Plan. (1) Previously filed as an exhibit to the Registrant's Form 10-K Annual Report for the year ended December 31, 2003. Here incorporated by reference.
10.4	Consulting and Noncompetition Agreement with Richard L. Edgar. (1) Previously filed as an exhibit to the Registrant's Form 8-K Current Report for November 1, 2006. Here incorporated by reference.
10.5	Consulting and Noncompetition Agreement with Robert Karpinski. (1) Previously filed as an exhibit to the Registrant's Form 8-K Current Report for November 1, 2006. Here incorporated by reference.
10.6	Noncompetition Agreement with Ronald Hansen. (1) Previously filed as an exhibit to the Registrant's Form 8-K Current Report for November 1, 2006. Here incorporated by reference.
10.7	Retention Bonus Agreement with Michael McHugh. (1) Previously filed as an exhibit to the Registrant's Form 8-K Current Report for November 1, 2006. Here incorporated by reference.
10.8	Former Valley Ridge Executive Employee Salary Continuation Agreements. (1)
10.9	Former Valley Ridge Directors' Deferred Compensation Plan and Agreement. (1)
13	Annual Report to Shareholders for the year ended December 31, 2006
16	Letter regarding Change in Certifying Accountant. Previously filed as an exhibit to the Registrant's Form 8-K Current Report for November 25, 2005. Here incorporated by reference.
21	Subsidiaries of the Registrant.
23.1	Consent of Independent Registered Public Accounting Firm for fiscal year ended December 31, 2006.
23.2	Consent of Independent Registered Public Accounting Firm for fiscal years ended December 31, 2005 and 2004.
24	Powers of Attorney.
31.1	Certification of Chief Executive Officer.
31.2	Certification of Treasurer.
32	Certification pursuant to 18 U.S.C. § 1350.

___________________________

(1) This agreement is a management contract or compensation plan or arrangement to be filed as an exhibit to this Form 10-K.

EX-10.8

EXHIBIT 10.8

                    The following persons have Executive Employee Salary Continuation Agreements with the Corporation in the form filed herewith with the names or amounts set forth below inserted in the blanks identified by the following column headings.

(i)	(ii)	(iii)
Richard L. Edgar	$39,300	$3,275.00
Michael McHugh	9,100	758.33
Ronald Hansen	21,900	1,825.00
Robert Karpinski	7,875	656.25

EXECUTIVE EMPLOYEE SALARY
CONTINUATION AGREEMENT

for

(i)

TABLE OF CONTENTS

					PAGE
SECTION 1					1
	DEFINITIONS				1
		1.1	Administrative Committee		1
		1.2	Age		1
		1.3	Change in Control		1
		1.4	Crediting Rate		2
		1.5	Disability		3
		1.6	Discharge for Cause		3
		1.7	Early Retirement Date		3
		1.8	Mortality Assumptions		4
		1.9	Normal Retirement Date		4
		1.10	Termination of Employment		4
		1.11	Vesting		4
SECTION 2					4
	ELIGIBILITY				4
SECTION 3					4
	PAYMENT OF BENEFITS				4
		3.1	Benefits Upon Normal Retirement		4
		3.2	Benefits Upon Early Retirement		5
		3.3	Benefits Upon Late Retirement		5
		3.4	Benefits Upon Disability		6
		3.5	Other Terminations of Employment		6
			(a)	Voluntary Termination of Employment Prior to the Early
				Retirement Date or Discharge for Cause at any Time	6
			(b)	Involuntary Termination of Employment Prior to the Early
				Retirement Date Other Than Because of Death, Disability
				or Discharge for Cause	6
			(c)	Termination of Employment At or After A Change in
				Ownership of Control	7
		3.6	Survivorship Benefits		7
			(a)	Prior to Commencement of Normal or Early Retirement
				Benefits	7
			(b)	After Commencement of Benefits	7
		3.7	Recipients of Payments: Designation of Beneficiary		8
		3.8	Acceleration of Benefits		8

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SECTION 4				8
	ADDITIONAL CHANGE IN CONTROL PROVISIONS			8
		4.1	Application of Section	8
		4.2	Limit on Payments	9
		4.3	Determination by Experts	9
		4.4	Participant's Costs of Enforcement	9
SECTION 5				10
	ADMINISTRATION AND INTERPRETATION OF THIS AGREEMENT			10
SECTION 6				10
	CLAIMS PROCEDURE			10
SECTION 7				11
	REVIEW PROCEDURE			11
		7.1		11
		7.2		11
SECTION 8				11
	LIFE INSURANCE AND FUNDING			11
SECTION 9				12
	ASSIGNMENT OF BENEFITS			12
SECTION 10				12
	EMPLOYMENT NOT GUARANTEED BY AGREEMENT			12
SECTION 11				12
	TAXES			12
SECTION 12				13
	AMENDMENT AND TERMINATION			13
SECTION 13				13
	CONSTRUCTION			13
SECTION 14				13
	FORM OF COMMUNICATION			13
SECTION 15				13
	CAPTIONS			13
SECTION 16				14
	SEVERABILITY			14
SECTION 17				14
	BINDING EFFECT			14
BENEFICIARY DESIGNATION				15

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EXECUTIVE EMPLOYEE SALARY CONTINUATION AGREEMENT
FOR

          THIS AGREEMENT is made this ______ day of _____________, 1998, effective January 1, 1997, between Valley Ridge Bank, a Michigan corporation (the "Company") and                    (i)                     (the "Participant").

          WHEREAS, the Participant is an executive employee of the Company and as such has materially contributed to the Company's position, and

          WHEREAS the Company wishes to establish this Agreement for purposes of promoting in the Participant the strongest interest in the successful operation of the Company and increased efficiency in his work and to provide the Participant benefits upon retirement, death, disability or other termination of employment, in consideration of services to be performed after the date of this agreement but prior to his retirement; and

          WHEREAS, the Company also wishes to establish this Agreement to enhance its abilities to attract and retain highly qualified executives and to enable those executives to perform their duties in the best interests of the Company and its shareholders in the event of possible or threatened Change in Control of the Company without undue concern regarding the personal, financial interests of such executives.

          NOW THEREFORE, in consideration of the premises, the parties hereto agree as follows:

SECTION 1
DEFINITIONS

          1.1          Administrative Committee - "Administrative Committee" shall consist of all outside directors of the Bank's Personnel Committee.

          1.2          Age - "Age" shall mean the age of the person as of the date of his last birthday.

          1.3          Change in Control - For purposes of this Agreement, a Change in Control of the Company shall have occurred (i) on the fifth day preceding the scheduled expiration date of a tender offer by, or exchange offer by any corporation, person, other entity or group (other than the Company or any of its wholly owned subsidiaries), to acquire Voting Stock of the Company if (a) after giving

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effect to such offer such corporation, person other entity or group would own twenty-five percent (25%) or more of the Voting Stock of the Company, (b) there shall have been filed documents with the Securities and Exchange Commission ("SEC") in connection therewith (or, if no such filling is required, public evidence that the offer has already commenced), and (c) such corporation, person, other entity or group has secured all required regulatory approvals to own or control twenty-five percent (25%) or more of the Voting Stock of the Company, (ii) if the shareholders of the Company approve a definitive agreement to merge or consolidate the Company with or into another corporation in a transaction in which neither the Company nor any of its wholly owned subsidiaries will be the surviving corporation, or to sell or otherwise dispose of all or substantially all of the Company's assets to any corporation, person, other entity or group (other than the Company or any of its wholly owned subsidia ries), and such definitive agreement is consummated; (iii) if any corporation, person, other entity or group (other than the Company of any of its wholly owned subsidiaries) becomes the Beneficial Owner of stock representing twenty-five percent (25%) or more of the Voting Stock of the Company, or (iv) if during any period of two (2) consecutive years Continuing Directors cease to comprise a majority of the Company's Board of Directors. The term "Continuing Director" means (i) any member of the Board of Directors of the Company who was a member of the Board of Directors of the Company at the beginning of any period of two (2) consecutive years, and (ii) any person who subsequently becomes a member of the Board of Directors of the Company, if (a) such person's nomination for election or election to the Board of Directors of the Company is recommended or approved by resolution of a majority of the Continuing Directors, or (b) such person is included as a nominee in a pro xy statement of the Company distributed when a majority of the Board of Directors of the Company consists of Continuing Directors. For purposes of this Agreement, "Voting Stock" shall mean those shares of the Company entitled to vote generally in the election of directors.

          1.4          Crediting Rate - "Crediting Rate" shall mean an annual rate of interest equal to 7.5%.

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          1.5          Disability - "Disability" shall mean, if the Participant is insured under the company long term disability policy, the definition of total disability contained in the long term disability insurance policy. If the Participant is not insured under such a policy, the board shall, in its complete and sole discretion, determine whether the Participant is disabled for the purposes of this Agreement.

          1.6          Discharge for Cause - The Company may terminate the Participant's employment under this Agreement for "Cause." A termination for Cause is a termination by reason of the Board's good faith determination that the Participant (i) is incompetent or acted dishonestly or engaged in willful misconduct in the performance of his duties, (ii) breached a fiduciary duty to the Company for personal profit to himself, (iii) intentionally failed to perform reasonably assigned duties, (iv) willfully violated any law, rule or regulation (other than traffic violations or similar offenses) or any final cease and desist order, or (v) materially breached this Agreement. No act, or failure to act, on the Participant's part shall be considered "willful" unless he has acted, or failed to act, with an absence of good faith and without a reasonable belief that his action or failure to act was in the best interes t of the Company. Notwithstanding the foregoing, (i) the Participant shall not be deemed to have been terminated for Cause unless there shall have been delivered to the Participant a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the entire membership of the Board at a meeting of the Board called and held for the purpose (after reasonable notice to the Participant and an opportunity for the Participant, together with is counsel, to be heard before the Board), finding that in the good faith opinion of the Board the Participant was guilty of conduct set forth above in the second sentence of this Section and specifying the particulars thereof in detail, and (ii) in no event will the Participant be subject to termination for Cause pursuant to clause (v) above unless the Participant shall have failed to cure, correct or prevent the alleged breach within thirty days after such resolution has been delivered to the Participant.

          1.7          Early Retirement Date - "Early Retirement Date" shall mean the first day of the month following the month in which a Participant reaches age 60.

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          1.8          Mortality Assumptions - "Mortality Assumptions" shall mean the life expectancy of a Participant, determined by applying Commissioners Standard Ordinary Mortality Table 1980CSO.

          1.9          Normal Retirement Date - "Normal Retirement Date" shall mean the first day of the month following the month in which a Participant reaches age 65.

          1.10        Termination of Employment - "Termination of Employment" shall mean the Participant's ceasing to be employed by the Company for any reason whatsoever, voluntary or involuntary, including by reason of death or disability.

          1.11        Vesting - For the purpose of this Agreement, vesting shall accrue to the Participant on a pro rata annual basis commencing January 1, 1997. The Participant shall earn 20 percent vesting for each complete year under the Agreement. Regardless of the number of years completed by the Participant, upon a Change in Control, the Participant shall become 100% vested in all benefits under this Agreement.

SECTION 2
ELIGIBILITY

                    The Participant is eligible for the benefits provided herein in accordance with the terms of this Agreement upon the execution hereof.

                    A Participant shall cease to be a Participant at Termination of Employment. However, the employment of a Participant shall not be deemed to be terminated by reason of an approved leave of absence granted in accordance with uniform rules applied in a non-discriminatory manner.

SECTION 3
PAYMENT OF BENEFITS

          3.1          Benefits Upon Normal Retirement.

                    Upon a Participant's Termination of Employment on or after the Normal Retirement Date, the Company shall pay to the Participant the sum of $      (ii)       per year, payable in monthly installments of $      (iii)       each, commencing on the first day of the month coincident with or next following the date of Termination of Employment and continuing on the first day of each month

- -4-

thereafter for a period of 15 years, but in any event until a minimum of 180 total monthly payments are made to the Participant or the Participant's beneficiary per Section 3.6(b). At the sole discretion of the board of directors, the initial benefit may be increased in subsequent years to offset the effect of inflation.

          3.2          Benefits Upon Early Retirement.

                    Upon a Participant's Termination of Employment on or after reaching the Early Retirement Date but prior to the Normal Retirement Date, the Company shall pay to the Participant, monthly payments equal to the benefit described in Schedule A, attached. Such payments shall commence on the first day of the month coincident with or next following the date of Termination of Employment and shall continue on the first day of each month thereafter for a period of fifteen years, but in any event until a minimum of 180 total monthly payments are made to the Participant or the Participant's Beneficiary per Section 3.6(b).

                    The Participant may elect, on or before the earlier of a) December 31 of the year prior to Termination of Employment; or b) 90 days prior to Termination of Employment, to defer commencement of payment of the retirement benefit to a date not later than the Normal Retirement Date. Such election shall be in writing and submitted to the Company. If a Participant elects to defer payment of the benefit until his Normal Retirement Date, the Company shall pay to the Participant the normal retirement benefit described in Section 3.1 above. If a Participant elects to defer payment of the benefit to a date prior to the Normal Retirement Date, the Company shall pay to the Participant a benefit calculated in accordance with the first sentence of this Section 3.2, but using the date selected by the Participant for the commencement of this benefit as his "Termination of Employment" date instead of his actual termination date.

          3.3          Benefits Upon Late Retirement.

                    Upon a Participant's Termination of Employment after the Normal Retirement Date, the Company shall pay to the Participant the normal retirement benefit described in Section 3.1 above, increased by .05 per year or .00416 for each month that the Participant's Termination of Employment is deferred beyond the Normal Retirement Date, in equal monthly installments commencing on the first day of the month coincident with or next following the date of Termination of Employment and continuing on the first day of each month thereafter for the periods specified in Section 3.1.

- -5-

          3.4          Benefits Upon Disability.

                    Upon a Participant's Termination of Employment prior to the Normal Retirement Date due to Disability, no separate provision is made for a disability benefit under this Agreement. However, any such Participant shall be considered, notwithstanding such Termination of Employment, to continue to be a Participant while disabled and for so long as the disability continues prior to reaching the Early Retirement Date, such Participant's beneficiary shall receive the survivor's benefits described in Section 3.6(a). In the event the Participant lives to the Early Retirement Date, the Participant shall be entitled to receive the early retirement benefit described in Section 3.2.

          3.5          Other Terminations of Employment.

          (a)          Voluntary Termination of Employment Prior to the Early Retirement Date or Discharge for Cause at any Time. Upon a Participant's voluntary Termination of Employment prior to reaching the Early Retirement Date, for reasons other than death or Disability, or upon the Participant's Discharge for Cause at any time, the Company shall pay the vested benefit to the Participant pursuant to Schedule A attached to this Agreement in the form of an Aimmediate Lump Sum Benefit@, and the Participant shall have no further right to receive any additional benefit hereunder.

          (b)          Involuntary Termination of Employment Prior to the Early Retirement Date Other Than Because of Death, Disability or Discharge for Cause. Upon a Participant's involuntary Termination of Employment prior to reaching the Early Retirement Date, for reasons other than death, disability or discharge for cause, the Participant shall become 100% vested and the Company shall pay to the Participant as compensation for services rendered prior to such Termination of Employment the "Immediate Lump Sum Benefit" as defined in Schedule A. For purposes of this subsection 3.5(b), the Participant shall be deemed to have incurred an Involuntary Termination of Employment covered by this subsection if he quits employment as a result of the Company's significantly lessening either his title, duties, responsibilities, compensation or altering his situs of employment, without his consent. His compensation shall be deemed to be significantly lessene d if any cutback is imposed except as a part of an overall cutback applied proportionately to all of the Company's management employees or if the Participant fails to receive periodic increases substantially proportionate to and coincident with the increase granted to management employees.

- -6-

          (c)          Termination of Employment At or After A Change in Ownership of Control. If a Participant incurs an involuntary Termination of Employment prior to reaching the Early Retirement Date, for reasons other than death, disability, or discharge for cause, but on or after the occurrence of a Change in Control, or if in connection with such change in control, the Participant's title, duties, responsibilities, or compensation is significantly lessened or his situs of employment is changed, without his consent, the Company shall immediately pay to the Participant an amount equal to the sum of a) 100% of the Participant's gross annual salary for the twelve-month period prior to Termination, and b) the AImmediate Lump Sum Benefit@ on Schedule A. For purposes hereof, the standards set forth in subparagraph (b) above with respect to what constitutes a significant lessening of compensation shall apply.

          3.6          Survivorship Benefits.

          (a)          Prior to Commencement of Normal or Early Retirement Benefits. If a Participant dies while in the service of the Company or after a Termination of Employment due to Disability and while Disabled or after a Termination of Employment on or after the Early Retirement Date, but prior to commencement of any benefit payments under this Agreement, the Company shall pay to the Participant's beneficiary a survivor's benefit of 180 equal monthly installments of $______ commencing on the first day of the month after the Participant's death and continuing on the first day of each month thereafter until all such payments are completed. In the event a beneficiary dies before receiving all the survivor's benefit payments, the remaining payments shall be paid to the legal representatives of the beneficiary's estate. Payment of the survivor's benefit shall relieve the Company of the obligation to pay any other benefit which the Participant w ould have otherwise received, under the terms of this Agreement.

          (b)          After Commencement of Benefits. If a Participant dies after any benefit payments have commenced, but prior to receiving all of the scheduled minimum number of monthly payments, the company shall pay the remaining monthly payment to the Participant's beneficiary. In the event a beneficiary dies before receiving all of the remaining payments, the remaining payments shall be paid to the legal representatives of the beneficiary's estate.

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          3.7          Recipients of Payments: Designation of Beneficiary.

                    All payments to be made by the Company shall be made to the Participant, if living. In the event of a Participant's death prior to the receipt of all benefit payments, all subsequent payments to be made under this Agreement shall be to the beneficiary or beneficiaries of the Participant. The Participant shall designate a beneficiary by filing a written notice of such designation with the Company in such form as the Company may prescribe. The Participant may revoke or modify said designation at any time by a further written designation. The Participant's beneficiary designation shall be deemed automatically revoked in the event of the death of the beneficiary, or if the beneficiary is the Participant's spouse, in the event of dissolution of marriage. If no designation shall be in effect at the time of any benefits payable under this Agreement shall become due, the beneficiary shall be the spouse of the Participant, or if no spouse i s then living, the legal representatives of the Participant's estate.

          3.8          Acceleration of Benefits.

                    At any time after the Participant or the Participant's beneficiary becomes entitled to a payment of benefits under this Agreement, the Participant, or the Participant's beneficiary, may elect to accelerate the payment of benefits to the payment of a lump-sum payment. Such payment shall equal ninety percent (90%) of the present value of the remaining payments payable assuming a discount rate equal to the Crediting Rate, and in the case of payments that are payable over the life of the Participant or the Participant's beneficiary, assuming the Mortality Assumptions.

SECTION 4
ADDITIONAL CHANGE IN CONTROL PROVISIONS

          4.1          Application of Section.

                    If the Participant receives payments under this Agreement that are contingent upon a Change in Control, as determined under Section 280G of the Internal Revenue Code of 1986 (the "Code") and the regulations thereunder, then the provisions of this Section 4 shall apply.

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          4.2          Limit on Payments.

                    If payments or benefits under this Agreement, after taking into account all other payments or benefits to which the Participant is entitled from the Company, are expected to result in an excise tax on the Participant or the loss of certain tax deductions by the Company by reason of Code Section 280G and 4999, then payments under this Agreement shall be reduced to an amount such that all payments to the Participant from the Company, which are considered contingent upon the Change in Control, shall not exceed 2.99 times the Participant's Base Amount as defined in Code Section 280G.

          4.3          Determination by Experts.

                    If the Participant and the Company shall disagree as to whether a payment under this Agreement could result in the loss of a deduction, the matter shall be resolved by an opinion of [the Company's law firm], or if [Company's law firm] is unable to provide such an opinion, counsel selected by the Company, and agreed to by the Officer. Counsel's opinion need not be unqualified. Counsel's opinion shall be based on determinations of the Base Amount and Excess Parachute Payments, as such terms are defined by Section 280G of the Code or its successor, by [Consulting Firm], or if [Consulting Firm] is unable to make such determinations, a consulting firm chosen by the Company and agreed to by the Officer. The Company shall pay the fees and expenses of such counsel and consulting firm, and shall make available such information as may be reasonably requested by such counsel and consulting firm to prepare the opinion. If the maximum amount pay able to the Officer pursuant to this Section cannot be determined prior to the due date for such payment, the Company shall pay on the due date the minimum amount which it in good faith determines to be payable, and shall pay the remaining amount as soon as practicable after such remaining amount is determined.

          4.4          Participant's Costs of Enforcement.

                    Following a Change in Control, the company shall pay all expenses of the Participant, including but not limited to attorney fees incurred in enforcing payments by the Company pursuant to this Agreement.

- -9-

SECTION 5
ADMINISTRATION AND INTERPRETATION OF THIS AGREEMENT

          The Board of Directors shall appoint an Administrative Committee consisting of three (3) or more persons to administer and interpret this Agreement. Interpretation by the Administrative Committee shall be final and binding upon a Participant. The Administrative Committee may adopt rules and regulations relating to this Agreement as it may deem necessary or advisable for the administration thereof.

SECTION 6
CLAIMS PROCEDURE

          If the Participant or the Participant's beneficiary (hereinafter referred to as a "Claimant") is denied all or a portion of an expected benefit under this Plan for any reason, he or she may file a claim with the Administrative Committee. The Administrative Committee shall notify the Claimant within sixty (60) days of allowance or denial of the claim, unless the Claimant receives written notice from the Administrative Committee prior to the end of the sixty (60) day period stating that special circumstances requires an extension of the time for decision. The notice of the Administrative Committee's decision shall be in writing, sent by mail to Claimant's last known address, and, if a denial of the claim, must contain the following information:

(a)	the specific reasons for the denial;
(b)	specific reference to pertinent provisions of the Plan on which the denial is based; and
(c)	if applicable, a description of any additional information or material necessary to perfect the claim, an explanation of why such information or material is necessary, and an explanation of the claims review procedure.

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SECTION 7
REVIEW PROCEDURE

          7.1          A Claimant is entitled to request a review of any denial of his claim by the Administrative Committee. The request for review must be submitted in writing within a sixty (60) day period, the claim will be deemed to be conclusively denied. The Claimant or his representative shall be entitled to review all pertinent documents, and to submit issues and comments orally and in writing.

          7.2          If the request for review by a Claimant concerns the interpretation and application of the provisions of the Agreement and the Company's obligations, then the review shall be conducted by a separate committee consisting of three persons designated or appointed by the Administrative Committee. The separate committee shall afford the Claimant a hearing and the opportunity to review all pertinent documents and submit issues and comments orally and in writing and shall render a review decision in writing, all within sixty (60) days after receipt of a request for a review, provided that, in special circumstances (such as the necessity of holding a hearing) the committee may extend the time for decision by not more than sixty (60) days upon written notice to the Claimant. The Claimant shall receive written notice of the separate committee's review decision, together with specific reasons for the decision and reference to the perti nent provisions of this Agreement.

SECTION 8
LIFE INSURANCE AND FUNDING

          The Company in its discretion may apply for and procure as owner and for its own benefit, insurance on the life of the Participant, in such amounts and in such forms as the Company may choose. The Participant shall have no interest whatsoever in any such policy or policies, but at the request of the Company he shall submit to medical examinations and supply such information and execute such documents as may be required by the insurance company or companies to whom the Company has applied for insurance.

          The rights of the Participant, or his beneficiary, or estate, to benefits under the Plan shall be solely those of an unsecured creditor of the Company. Any insurance policy or other assets acquired by or held by the Company in connection with the liabilities assumed by it pursuant to the Plan shall

- -11-

not be deemed to be held under any trust for the benefit of the Participant, his beneficiary, or his estate, or to be security for the performance of the obligations of the Company but shall be, in remain, a general, unpledged, and unrestricted asset of the Company.

          If this Agreement is funded through insurance on the life of the Participant, then in the event of such Participant's death during the first two (2) years after the effective date of this Agreement, and if such Participant's death was a result of suicide or if such Participant made any material misstatement or failed to make a material disclosure of information in any documentation which the Participant is requested to complete in connection with this Agreement, then no death benefits under the terms of this Agreement will be payable, unless and to the extent that the Board of Directors of Company, in their absolute discretion, may otherwise determine.

SECTION 9
ASSIGNMENT OF BENEFITS

          Neither the Participant nor any other beneficiary under the Plan shall have any right to assign the right to receive any benefits hereunder, and in the event of any attempted assignment or transfer, the Company shall have no further liability hereunder.

SECTION 10
EMPLOYMENT NOT GUARANTEED BY AGREEMENT

          Neither this Agreement nor any action taken hereunder shall be construed as giving the Participant the right to be retained as an Executive Employee or as an employee of the Company for any period.

SECTION 11
TAXES

          The Company shall deduct from all payments made hereunder all applicable federal or state taxes required by law to be withheld from such payments. In the event that the Company determines that benefits under the Plan are subject to FICA currently, the Company shall withhold the Participant's portion of FICA from such other amounts payable to the Participant as the Company deems appropriate.

- -12-

SECTION 12
AMENDMENT AND TERMINATION

          The Board of Directors may, at any time, amend or terminate this Agreement, provided that the Board may not reduce or modify any benefit in pay status to the Participant or beneficiary hereunder or any benefit that would become payable hereunder if the Participant was involuntarily terminated under Section 3.5(b) hereof on the day prior to such action by the Board, without the prior written consent of the Participant.

SECTION 13
CONSTRUCTION

          This Agreement shall be construed according to the laws of the State of Michigan.

SECTION 14
FORM OF COMMUNICATION

          Any election, application, claim, notice or other communication required or permitted to be made by the Participant to the Company shall be made in writing and in such form as the Company shall prescribe. Such communication shall be effective upon mailing, if sent by first-class mail, postage prepaid, and addressed to the Company's office at 6 Main Street, Kent City, Michigan 49330.

SECTION 15
CAPTIONS

          The captions at the head of a section or a paragraph of this Agreement are designed for convenience of reference only and are not to be resorted to for the purpose of interpreting any provision of this Agreement.

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SECTION 16
SEVERABILITY

          The invalidity of any portion of this Agreement shall not invalidate the remainder thereof, and said remainder shall continue in full force and effect.

SECTION 17
BINDING EFFECT

          This Agreement shall be binding upon and shall inure to the benefit of the Company and the Participant, and each of their successors, heirs, personal representatives and permitted assigns. No sale of substantially all of the Company's assets shall be made without the buyer expressly assuming the obligation of this Agreement. The Company further agrees that it will not be a party to any merger, consolidation or reorganization unless and until its obligations hereunder are expressly assumed by the successor or successors.

          IN WITNESS WHEREOF, this Agreement has been executed by the parties as of the date first set forth above.

By:

Its:

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BENEFICIARY DESIGNATION NOTICE

VALLEY RIDGE BANK

To the Plan Administrator of ______________________ Executive Salary Continuation Agreement:

Pursuant to the Provisions of my Executive Salary Continuation Agreement with ____________ ______________ permitting the designation of a beneficiary or beneficiaries by the participant, I hereby designate the following persons and entities as primary and secondary beneficiaries of any benefit under said Agreement payable by reason of my death.

Primary Beneficiary:
Name	Address	Relationship

Secondary (Contingent) Beneficiary:
Name	Address	Relationship

THE RIGHT TO REVOKE OR CHANGE ANY BENEFICIARY DESIGNATION IS HEREBY RESERVED. ALL PRIOR DESIGNATIONS, IF ANY, OF BENEFICIARIES AND SECONDARY BENEFICIARIES ARE HEREBY REVOKED.

The Plan Administrator shall pay all sums payable under this Agreement by reason of my death to the Primary Beneficiary, if he or she survives me, and if no Primary Beneficiary shall survive me, then to the Secondary Beneficiary, and if no named beneficiary survives me, then the Plan Administrator shall pay all amounts in accordance with the terms of the Executive Salary Continuation Agreement. In the event that a named beneficiary survives me and dies prior to receiving the entire benefit payable under said Agreement, then and in that event, the remaining unpaid benefit, payable according to the terms of the Agreement, shall be payable to the personal representatives of the estate of said deceased beneficiary, who survives me, but die prior to receiving the total benefit.

Date of Designation Signature of Executive

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EX-10.9

EXHIBIT 10.9

VALLEY RIDGE BANK
AMENDED & RESTATED DIRECTOR DEFERRED COMPENSATION PLAN

VALLEY RIDGE BANK
AMENDED & RESTATED
DIRECTOR DEFERRED COMPENSATION PLAN

         THIS AMENDED & RESTATED DIRECTOR DEFERRED COMPENSATION PLAN (the "Plan") is adopted this 28th day of December, 2006, by Valley Ridge Bank, a state-chartered commercial bank located in Kent City, Michigan (the "Corporation") amending and restating the following agreements:

         Deferred Compensation Agreement dated September 1, 1994 between the Corporation and Jerry Arends;

         Deferred Compensation Agreement dated September 1, 1994 between the Corporation and K. Timothy Bull;

         Deferred Compensation Agreement dated September 1, 1994 between the Corporation and Richard Edgar;

         Deferred Compensation Agreement dated September 23, 1996 between the Corporation and Fred Finkbeiner;

         Deferred Compensation Agreement dated September 1, 1994 between the Corporation and Gary Gust;

         Deferred Compensation Agreement dated December 18, 1996 between the Corporation and Ronald Hansen;

         Deferred Compensation Agreement dated September 1, 1994 between the Corporation and Robert Humphreys;

         Deferred Compensation Agreement dated September 23, 1996 between the Corporation and Ben Landheer;

         Deferred Compensation Agreement dated September 1, 1994 between the Corporation and Michael McHugh;

         Deferred Compensation Agreement dated September 23, 1996 between the Corporation and Dennis Nelson;

         Deferred Compensation Agreement dated September 1, 1994 between the Corporation and John Niederer;

1

VALLEY RIDGE BANK
AMENDED & RESTATED DIRECTOR DEFERRED COMPENSATION PLAN

         Deferred Compensation Agreement dated September 1, 1994 between the Corporation and Paul Spoelman;

         Deferred Compensation Agreement dated September 1, 1994 between the Corporation and Donald Swanson; and

         Deferred Compensation Agreement dated September 23, 1996 between the Corporation and Donald Vansingel (collectively, the "Prior Plan").

         The parties intend this Amended and Restated Plan to be a material modification of the Prior Plan such that all amounts earned and vested prior to December 31, 2004 shall be subject to the provisions of Section 409A of the Code and the regulations promulgated thereunder.

         The purpose of this Plan is to provide specified benefits to the Participant who contributes to the continued growth, development and future business success of the Corporation.

Article 1
Definitions

         Whenever used in this Plan, the following words and phrases shall have the meanings specified:

1.1	"Beneficiary" means each designated person, or the estate of a deceased Participant, entitled to benefits, if any, upon the death of the Participant determined pursuant to Article 6.
1.2	"Beneficiary Designation Form" means the form established from time to time by the Plan Administrator that the Participant completes, signs and returns to the Plan Administrator to designate one or more beneficiaries.
1.3	"Board" means the Board of Directors of the Corporation as from time to time constituted.
1.4	"Code" means the Internal Revenue Code of 1986, as amended.
1.5	"Compensation" means the total gross Fees paid by the Corporation to a Participant and shall not include: salary or other forms of employment compensation, compensation payable in forms other than director fees, salary, retainers, expense allowances, contributions by the Corporation to any plan qualified under Section 401 of the Code, and amounts, if any, expended by the Corporation for health, medical, life or other insurance on behalf of the Participant.
1.6	"Crediting Rate" means the ChoiceOne Bank one-year Certificate of Deposit rate as in effect on January 1 of the Plan Year.

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1.7	"Deferral Account" means the Corporation's accounting of the Participant's accumulated Deferrals plus accrued interest.
1.8	"Deferral Election Form" means the form established from time to time by the Plan Administrator that the Participant completes, signs and returns to the Plan Administrator to designate the amount of the Deferrals.
1.9	"Deferrals" means the amount of the Participant's Compensation which the Participant elects to defer according to this Plan.
1.10	"Distribution Election Form" means the form established from time to time by the Plan Administrator that the Participant completes, signs and returns to the Plan Administrator to designate the time and form of distribution.
1.11	"Effective Date" means January 1, 2005.
1.12	"Fees" means the total fees payable to the Participant during a Plan Year.
1.13	"Participation Agreement" means the written agreement signed by the Participant and Corporation once a Participant is selected for participation in the Plan.
1.14	"Plan Administrator" means the plan administrator described in Article 8.
1.15	"Plan Year" means each twelve (12) month period commencing on January 1 and ending on December 31 of each year.
1.16	"Projected Benefit" means the amount that would have accumulated in the Participant's Deferral Account as of February 1, 2007 if it is assumed that the Participant: (1) Continued to defer Fees at the same rate that the Participant had been deferring Fees on the date of the Participant's death until December 31, 2006; and (2) the Deferral Account continued to earn interest at the same rate on the date of the Participant's death.
1.17	"Separation from Service" means the termination of the Participant's service with the Corporation for reasons other than death. Whether a Separation from Service takes place is determined based on the facts and circumstances surrounding the termination of the Participant's service and whether the Corporation and the Participant intended for the Participant to provide significant services for the Corporation following such termination.
1.18	"Specified Employee" means a key employee (as defined in Section 416(i) of the Code without regard to paragraph 5 thereof) of the Corporation if any stock of the Corporation is publicly traded on an established securities market or otherwise.
1.19	"Termination for Cause" means a Separation from Service for:
	(a)	Gross negligence or gross neglect of duties to the Corporation; or

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(b)	Conviction of a felony or of a gross misdemeanor involving moral turpitude in connection with the Participant's service with the Corporation; or
(c)	Fraud, disloyalty, dishonesty or willful violation of any law or significant Corporation policy committed in connection with the Participant's service and resulting in a material adverse effect on the Corporation.

1.20

"Unforeseeable Emergency" means a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant's spouse, or the Participant's dependent (as defined in Section 152(a) of the Code), loss of the Participant's property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.

1.21

"Vesting" the Participant shall be one-hundred percent (100%) vested unless otherwise stated in the Participation Agreement.

Article 2
Deferral Election

2.1	Elections Generally. The Participant may annually file a Deferral Election Form with the Plan Administrator no later than the end of the Plan Year preceding the Plan Year in which services leading to such Fees will be performed.
2.2	Initial Election. After being notified by the Plan Administrator of becoming eligible for participation in the Plan, the Participant may make an initial deferral election under this Plan by delivering to the Plan Administrator a signed Deferral Election Form and Beneficiary Designation Form within thirty (30) days of becoming eligible. The Deferral Election Forms shall set forth the amount of Fees to be deferred. However, if the Participant was eligible to participate in any other account balance plans sponsored by the Corporation (as referenced in Section 409A of the Code or the regulations thereunder) prior to becoming eligible to participate in this Plan, the initial election to defer Fees under this Plan shall not be effective until the Plan Year following the Plan Year in which the Participant became eligible to participate in this Plan.
2.3	Eligibility. A director shall be eligible for the Plan at the beginning of the Plan Year after completing one (1) year of service on the Board. One year of service shall be the one (1) year anniversary after being elected to the Board.

Article 3
Deferral Account

3.1 Establishing and Crediting. The Corporation shall establish a Deferral Account on its books for the Participant and shall credit to the Deferral Account the following amounts:

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(a)	Any vested amount deemed credited to the Participant's account under the Prior Plan;
(b)	Any Deferrals hereunder;
(c)	Interest as follows:
	(i)	On the last day of each month and immediately prior to the distribution of any benefits, but only until commencement of benefit distributions under this Agreement, interest shall be credited on the Deferral Account at an annual rate equal to the Crediting Rate, compounded monthly; and
	(ii)	On the last day of each month during any applicable installment period, interest shall be credited on the unpaid Deferral Account balance at an annual rate equal to the Crediting Rate, compounded monthly. Prior to the commencement of any distributions hereunder, the Board, in its sole discretion, may change the rate used to calculate interest in this Section 3.1(b)(ii).

3.2 Accounting Device Only. The Deferral Account is solely a device for measuring amounts to be paid under this Plan. The Deferral Account is not a trust fund of any kind. The Participant is a general unsecured creditor of the Corporation for the distribution of benefits. The benefits represent the mere Corporation promise to distribute such benefits. The Participant's rights are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by the Participant's creditors.

Article 4
Distributions During Lifetime

4.1	Normal Benefit. Within thirty (30) days following February 1, 2007, the Corporation shall distribute to the Participant the benefit described in this Section 4.1 in lieu of any other benefit under this Article.
	4.1.1	Amount of Benefit. The benefit under this Section 4.1 is the Deferral Account balance on February 1, 2007.
	4.1.2	Distribution of Benefit. The Corporation shall distribute the benefit to the Participant as elected by the Participant on the Distribution Election Form, commencing within thirty (30) days following February 1, 2007. Interest shall be credited in accordance with Section 3.1.

4.2

This section has been deleted.

4.3

Hardship Distribution. If an Unforeseeable Emergency occurs, the Participant may petition the Board to receive a distribution from the Agreement. The Board in its sole discretion may grant such petition. If granted, the Participant shall receive, within sixty (60) days, a distribution from the Agreement (i) only to the extent deemed necessary by the Board to remedy the Unforeseeable Emergency, plus an amount necessary to pay

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	taxes reasonably anticipated as a result of the distribution; and (ii) after taking into account the extent to which such hardship is or may be relieved through reimbursement or compensation by insurance or otherwise or by liquidation of the Participant's assets (to the extent the liquidation would not itself cause severe financial hardship). In any event, the maximum amount which may be paid out pursuant to this Section 4.3 is the Deferral Account balance as of the day that the Participant petitioned the Board to receive a Hardship Distribution under this Section.
4.4	Restriction on Timing of Distribution. Notwithstanding any provision of this Plan to the contrary, if the Participant is considered a Specified Employee at Separation from Service under such procedures as established by the Corporation in accordance with Section 409A of the Code, benefit distributions that are made upon Separation from Service may not commence earlier than six (6) months after the date of such Separation from Service. Therefore, in the event this Section 4.4 is applicable to the Participant, any distribution which would otherwise be paid to the Participant within the first six months following the Separation from Service shall be accumulated and paid to the Participant in a lump sum on the first day of the seventh month following the Separation from Service. All subsequent distributions shall be paid in the manner specified.
4.5	Distributions Upon Income Inclusion Under Section 409A of the Code. Upon the inclusion of any portion of the Deferral Account balance into the Participant's income as a result of the failure of this non-qualified deferred compensation plan to comply with the requirements of Section 409A of the Code, to the extent such tax liability can be covered by the Deferral Account balance, a distribution shall be made as soon as is administratively practicable following the discovery of the plan failure.
4.6	Change in Form or Timing of Distributions. For distribution of benefits under this Article 4, the Participant may elect to delay the timing or change the form of distributions by submitting the appropriate Distribution Election Form(s) to the Plan Administrator, provided however that no such election shall be permitted once distributions have commenced pursuant to this Article 4. Any such elections:
		(a)	may not accelerate the time or schedule of any distribution, except as provided in Section 409A of the Code and the regulations thereunder;
		(b)	must, for benefits distributable under Section 4.1, delay the commencement of distributions for a minimum of five (5) years from the date the first distribution was originally scheduled to be made; and
		(c)	must take effect not less than twelve (12) months after the election is made.

Article 5
Distributions at Death

5.1 Death During Active Service. If the Participant dies while in active service to the Corporation, the Corporation shall distribute to the Beneficiary the benefit described in this Section 5.1. This benefit shall be distributed in lieu of the benefits under Article 4.

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	5.1.1	Amount of Benefit. The benefit under this Section 5.1 shall be the Participant's Projected Benefit.
	5.1.2	Distribution of Benefit. The Corporation shall distribute the benefit to the Beneficiary, as elected by the Participant on the Distribution Election Form commencing within thirty (30) days following receipt by the Corporation of the Participant's death certificate, but not earlier than January 1, 2007. Interest shall be credited in accordance with Section 3.1.
5.2	Death During Distribution of a Benefit. If the Participant dies after any benefit distributions have commenced under this Plan but before receiving all such distributions, the Corporation shall distribute to the Beneficiary the remaining benefits at the same time and in the same amounts that would have been distributed to the Participant had the Participant survived.
5.3	Death After Entitlement to Benefit But Before Benefit Distributions Commence. If the Participant is entitled to benefit distributions under this Plan, but dies prior to the commencement of said benefit distributions, the Corporation shall distribute to the Beneficiary the same benefits that the Participant was entitled to prior to death except that the benefit distributions shall commence within thirty (30) days following receipt by the Corporation of the Participant's death certificate.

Article 6
Beneficiaries

6.1

Beneficiary. The Participant shall have the right, at any time, to designate a Beneficiary to receive any benefits distributable under the Plan to a Beneficiary upon the death of the Participant. The Beneficiary designated under this Plan may be the same as or different from the beneficiary designated under any other plan of the Corporation in which the Participant participates.

6.2

Beneficiary Designation: Change. The Participant shall designate a Beneficiary by completing and signing the Beneficiary Designation Form, and delivering it to the Plan Administrator or its designated agent. The Participant's beneficiary designation shall be deemed automatically revoked if the Beneficiary predeceases the Participant or if the Participant names a spouse as Beneficiary and the marriage is subsequently dissolved. The Participant shall have the right to change a Beneficiary by completing, signing and otherwise complying with the terms of the Beneficiary Designation Form and the Plan Administrator's rules and procedures, as in effect from time to time. Upon the acceptance by the Plan Administrator of a new Beneficiary Designation Form, all Beneficiary designations previously filed shall be cancelled. The Plan Administrator shall be entitled to rely on the last Beneficiary Designation Form filed by the Participant and accepted by the Plan Administrator prior to the Participant's death.

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6.3	Acknowledgment. No designation or change in designation of a Beneficiary shall be effective until received, accepted and acknowledged in writing by the Plan Administrator or its designated agent.
6.4	No Beneficiary Designation. If the Participant dies without a valid Beneficiary designation, or if all designated Beneficiaries predecease the Participant, then the Participant's spouse shall be the designated Beneficiary. If the Participant has no surviving spouse, the benefits shall be paid to the personal representative of the Participant's estate.
6.5	Facility of Distribution. If the Plan Administrator determines in its discretion that a benefit is to be paid to a minor, to a person declared incompetent, or to a person incapable of handling the disposition of that person's property, the Plan Administrator may direct distribution of such benefit to the guardian, legal representative or person having the care or custody of such minor, incompetent person or incapable person. The Plan Administrator may require proof of incompetence, minority or guardianship as it may deem appropriate prior to distribution of the benefit. Any distribution of a benefit shall be a distribution for the account of the Participant and the Beneficiary, as the case may be, and shall be a complete discharge of any liability under the Plan for such distribution amount.

Article 7
General Limitations

7.1	Termination for Cause. Notwithstanding any provision of this Plan to the contrary, the Corporation shall not distribute any benefit under this Plan in excess of the Deferrals (i.e., Deferral Account minus interest credited thereon) if the Participant's service with the Corporation is terminated due to a Termination for Cause.
7.2	Suicide or Misstatement. Notwithstanding any provision of this Plan to the contrary, the Corporation shall not distribute any benefit under this Plan in excess of the Deferrals if the Participant commits suicide within two (2) years after the Effective Date of this Plan, or if an insurance company which issued a life insurance policy covering the Participant and owned by the Corporation denies coverage (i) for material misstatements of fact made by the Participant on an application for such life insurance, or (ii) for any other reason.
7.3	Removal. Notwithstanding any provision of this Plan to the contrary, the Corporation shall not distribute any benefit under this Plan in excess of the Deferrals (i.e., Deferral Account minus interest credited on both) if the Participant is subject to a final removal or prohibition order issued by an appropriate federal banking agency pursuant to Section 8(e) of the Federal Deposit Insurance Act.

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Article 8
Administration of Agreement

8.1	Plan Administrator Duties. This Plan shall be administered by a Plan Administrator which shall consist of the Board, or such committee or person(s) as the Board shall appoint. The Plan Administrator shall administer this Plan according to its express terms and shall also have the discretion and authority to (i) make, amend, interpret and enforce all appropriate rules and regulations for the administration of this Plan and (ii) decide or resolve any and all questions including interpretations of this Plan, as may arise in connection with the Plan to the extent the exercise of such discretion and authority does not conflict with Section 409A of the Code and regulations thereunder.
8.2	Agents. In the administration of this Plan, the Plan Administrator may employ agents and delegate to them such administrative duties as it sees fit, (including acting through a duly appointed representative), and may from time to time consult with counsel who may be counsel to the Corporation.
8.3	Binding Effect of Decisions. The decision or action of the Plan Administrator with respect to any question arising out of or in connection with the administration, interpretation and application of the Plan and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in the Plan.
8.4	Indemnity of Plan Administrator. The Corporation shall indemnify and hold harmless the members of the Plan Administrator against any and all claims, losses, damages, expenses or liabilities arising from any action or failure to act with respect to this Plan, except in the case of willful misconduct by the Plan Administrator or any of its members.
8.5	Corporation Information. To enable the Plan Administrator to perform its functions, the Corporation shall supply full and timely information to the Plan Administrator on all matters relating to the Compensation of its Participants, the date and circumstances of the death or Separation from Service of its Participants, and such other pertinent information as the Plan Administrator may reasonably require.
8.6	Statement of Accounts. The Plan Administrator shall provide to the Participant, within one hundred twenty (120) days after the end of each Plan Year, a statement setting forth the Deferral Account balance.

Article 9
Claims and Review Procedures

9.1 Claims Procedure. The Participant or Beneficiary ("Claimant") who has not received benefits under the Plan that he or she believes should be paid shall make a claim for such benefits as follows:

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9.1.1	Initiation - Written Claim. The Claimant initiates a claim by submitting to the Corporation a written claim for the benefits. If such a claim relates to the contents of a notice received by the Claimant, the claim must be made within sixty (60) days after such notice was received by the Claimant. All other claims must be made within one hundred eighty (180) days of the date on which the event that caused the claim to arise occurred. The claim must state with particularity the determination desired by the Claimant.
9.1.2	Timing of Corporation Response. The Corporation shall respond to such Claimant within ninety (90) days after receiving the claim. If the Corporation determines that special circumstances require additional time for processing the claim, the Corporation can extend the response period by an additional ninety (90) days by notifying the Claimant in writing, prior to the end of the initial ninety (90) day period, that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Corporation expects to render its decision.
9.1.3	Notice of Decision. If the Corporation denies part or all of the claim, the Corporation shall notify the Claimant in writing of such denial. The Corporation shall write the notification in a manner calculated to be understood by the Claimant. The notification shall set forth:
	(a)	The specific reasons for the denial,
	(b)	A reference to the specific provisions of the Plan on which the denial is based,
	(c)	A description of any additional information or material necessary for the Claimant to perfect the claim and an explanation of why it is needed, and
	(d)	An explanation of the Plan's review procedures and the time limits applicable to such procedures.

9.2	Review Procedure. If the Corporation denies part or all of the claim, the Claimant shall have the opportunity for a full and fair review by the Corporation of the denial, as follows:
	9.2.1	Initiation - Written Request. To initiate the review, the Claimant, within sixty (60) days after receiving the Corporation's notice of denial, must file with the Corporation a written request for review.
	9.2.2	Additional Submissions - Information Access. The Claimant shall then have the opportunity to submit written comments, documents, records and other information relating to the claim. The Corporation shall also provide the Claimant, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the Claimant's claim for benefits.

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9.2.3	Considerations on Review. In considering the review, the Corporation shall take into account all materials and information the Claimant submits relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.
9.2.4	Timing of Corporation Response. The Corporation shall respond in writing to such Claimant within sixty (60) days after receiving the request for review. If the Corporation determines that special circumstances require additional time for processing the claim, the Corporation can extend the response period by an additional sixty (60) days by notifying the Claimant in writing, prior to the end of the initial sixty (60) day period, that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Corporation expects to render its decision.
9.2.5	Notice of Decision. The Corporation shall notify the Claimant in writing of its decision on review. The Corporation shall write the notification in a manner calculated to be understood by the Claimant. The notification shall set forth:
	(a)	The specific reasons for the denial,
	(b)	A reference to the specific provisions of the Plan on which the denial is based, and
	(c)	A statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the Claimant's claim for benefits.

Article 10
Amendments and Termination

10.1	Amendments. The Corporation may amend this Agreement unilaterally by written action.
10.2	Plan Termination Generally. The Corporation may unilaterally terminate this Plan at any time. Except as provided in Section 10.3, the termination of this Plan shall not cause a distribution of benefits under this Plan. Rather, upon such termination benefit distributions will be made at the earliest distribution event permitted under Article 4 or Article 5.
10.3	Plan Terminations Under Section 409A. Notwithstanding anything to the contrary in Section 10.2, if the Corporation terminates this Plan in the following circumstances:
	(a)	Within thirty (30) days before, or twelve (12) months after a change in the ownership or effective control of the Corporation, or in the ownership of a substantial portion of the assets of the Corporation as described in Section 409A(2)(A)(v) of the Code, provided that all distributions are made no later than twelve (12) months following such termination of the Plan and further provided that all the Corporation's arrangements which are substantially similar to the Plan are terminated so the Participant and all participants in the similar arrangements

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	are required to receive all amounts of compensation deferred under the terminated arrangements within twelve (12) months of the termination of the arrangements;
(b)	Upon the Corporation's dissolution or with the approval of a Bankruptcy court provided that the amounts deferred under the Plan are included in the Participant's gross income in the latest of (i) the calendar year in which the Plan terminates; (ii) the calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or (iii) the first calendar year in which the distribution is administratively practical; or
(c)	Upon the Corporation's termination of this and all other account balance plans (as referenced in Section 409A of the Code or the regulations thereunder), provided that all distributions are made no earlier than twelve (12) months and no later than twenty-four (24) months following such termination, and the Corporation does not adopt any new account balance plans for a minimum of five (5) years following the date of such termination;
the Corporation may distribute the Deferral Account balance, determined as of the date of the termination of the Plan, to the Participant in a lump sum subject to the above terms.

Article 11
Miscellaneous

11.1	Binding Effect. This Plan shall bind the Participant and the Corporation and their beneficiaries, survivors, executors, administrators and transferees.
11.2	No Guarantee of Service. This Plan is not a contract for service. It does not give the Participant the right to remain as a director of the Corporation, nor does it interfere with the Corporation's right to discharge the Participant. It also does not require the Participant to remain a director nor interfere with the Participant's right to terminate service at any time.
11.3	Non-Transferability. Benefits under this Plan cannot be sold, transferred, assigned, pledged, attached or encumbered in any manner.
11.4	Tax Withholding and Reporting. The Corporation shall withhold any taxes that are required to be withheld, including but not limited to taxes owed under Section 409A of the Code and regulations thereunder, from the benefits provided under this Plan. Participant acknowledges that the Corporation's sole liability regarding taxes is to forward any amounts withheld to the appropriate taxing authority(ies). Further, the Corporation shall satisfy all applicable reporting requirements, including those under Section 409A of the Code and regulations thereunder.
11.5	Applicable Law. The Plan and all rights hereunder shall be governed by the laws of the State of Michigan, except to the extent preempted by the laws of the United States of America.

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11.6	Unfunded Arrangement. The Participant and the Beneficiary are general unsecured creditors of the Corporation for the distribution of benefits under this Plan. The benefits represent the mere promise by the Corporation to distribute such benefits. The rights to benefits are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors. Any insurance on the Participant's life or other informal funding asset is a general asset of the Corporation to which the Participant and the Beneficiary have no preferred or secured claim.
11.7	Reorganization. The Corporation shall not merge or consolidate into or with another Corporation, or reorganize, or sell substantially all of its assets to another Corporation, firm, or person unless such succeeding or continuing Corporation, firm, or person agrees to assume and discharge the obligations of the Corporation under this Plan. Upon the occurrence of such event, the term "Corporation" as used in this Plan shall be deemed to refer to the successor or survivor Corporation.
11.8	Entire Agreement. This Plan constitutes the entire agreement between the Corporation and the Participant as to the subject matter hereof. No rights are granted to the Participant by virtue of this Plan other than those specifically set forth herein.
11.9	Interpretation. Wherever the fulfillment of the intent and purpose of this Plan requires, and the context will permit, the use of the masculine gender includes the feminine and use of the singular includes the plural.
11.10	Alternative Action. In the event it shall become impossible for the Corporation or the Plan Administrator to perform any act required by this Plan, the Corporation or Plan Administrator may in its discretion perform such alternative act as most nearly carries out the intent and purpose of this Plan and is in the best interests of the Corporation, provided that such alternative acts do not violate Section 409A of the Code.
11.11	Headings. Article and section headings are for convenient reference only and shall not control or affect the meaning or construction of any of its provisions.
11.12	Validity. In case any provision of this Plan shall be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Plan shall be construed and enforced as if such illegal and invalid provision has never been inserted herein.
11.13	Notice. Any notice or filing required or permitted to be given to the Plan Administrator under this Plan shall be sufficient if in writing and hand-delivered, or sent by registered or certified mail, to the address below:

Valley Ridge Bank

PO Box 248

Kent City, MI 49330-0248

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	Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark or the receipt for registration or certification. Any notice or filing required or permitted to be given to the Participant under this Plan shall be sufficient if in writing and hand-delivered, or sent by mail, to the last known address of the Participant.
11.14	Compliance with Section 409A. This Plan shall at all times be administered and the provisions of this Plan shall be interpreted consistent with the requirements of Section 409A of the Code and any and all regulations thereunder, including such regulations as may be promulgated after the Effective Date of this Plan.

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VALLEY RIDGE BANK
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          IN WITNESS WHEREOF, the Corporation has signed this Plan as of the   28th   day of    December   , 2006.

Corporation:
VALLEY RIDGE BANK

By:	/s/ Mike McHugh
Title:	Senior VP/EVP

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VALLEY RIDGE BANK
Director Deferred Compensation Plan
ELECTION FORM - Form and Timing of Distributions

ELECTION FORM

Form and Timing of Distributions

Benefit	Distribution of Benefit
	Lump Sum (Initial below)	Equal Monthly Installments for 36 months. (Initial below)	Equal Monthly Installments for 60 months. (Initial below)
§ 4.1 - Normal Benefit
Article 5 - Death Benefit

The Participant understands and agrees that:

1.	No Deferrals may be made after the 2006 Plan Year.
2.	Prior to distribution and during any applicable installment period, interest on the Participant's Deferral Account will be credited for a Plan Year at an annual rate equal to the ChoiceOne Bank 1 year Certificate of Deposit rate as in effect on January 1 of the Plan Year.
3.	This election is made pursuant to the transition rules under Section 409A of the Code that permit a new payment election to be made with respect to both the time and form of payment under the Plan, and that under the transition rules this election:

• applies only to amounts that would not be payable in 2006; and

• may not cause an amount to be paid in 2006 that would not otherwise be payable in 2006.

4. Although some or all of the amounts payable under this Plan may have been grandfathered under Section 409A of the Internal Revenue Code and therefore may not have been subject to Section 409A, the Plan and all amounts payable under the Plan are being treated as not grandfathered. As a result, the Plan and all amounts payable under the Plan are subject to and must comply with Section 409A and its regulations to avoid possible adverse tax consequences to the Participant.

Printed Name:
Signature:
Date:	December ___, 2006

Received by the Plan Administrator this _____ day of December, 2006

By:

Title:

VALLEY RIDGE BANK
AMENDED & RESTATED DIRECTOR DEFERRED COMPENSATION PLAN
BENEFICIARY DESIGNATION FORM

{  }	New Designation
{  }	Change in Designation

I, _________________________, designate the following as Beneficiary under the Agreement:

Primary:
	%
	%
	%
Contingent:
	%
	%
	%

Notes:
	•	Please PRINT CLEARLY or TYPE the names of the beneficiaries.
	•	To name a trust as beneficiary, please provide the name of the trustee(s) and the exact name and date of the trust agreement.
	•	To name your estate as beneficiary, please write "Estate of     [your name]    ".
	•	Be aware that none of the contingent beneficiaries will receive anything unless ALL of the primary beneficiaries predecease you.

I understand that I may change these beneficiary designations by delivering a new written designation to the Plan Administrator, which shall be effective only upon receipt and acknowledgment by the Plan Administrator prior to my death. I further understand that the designations will be automatically revoked if the beneficiary predeceases me, or, if I have named my spouse as beneficiary and our marriage is subsequently dissolved.

Name:
Signature:	Date:

Received by the Plan Administrator this _____ day of ________________, 2____

By:

Title:

Exhibit 10.9

          The following persons have Deferred Compensation Agreements with ChoiceOne Bank in the form filed herewith with the information set forth below inserted in the blanks identified.

Dennis Nelson	(i)	September 23, 1996
	(ii)	The Grant State Bank
	(iii)	7/22/48
	(iv)	April 1985
	(v)	$31,952.00
	(vi)	7.5%
Jerome B. Arends	(i)	September 1, 1994
	(ii)	Kent City State Bank
	(iii)	12/16/44
	(iv)	February 18, 1987
	(v)	$31,083.00
	(vi)	8.0%
Kenneth T. Bull	(i)	September 1, 1994
	(ii)	Kent City State Bank
	(iii)	1/28/48
	(iv)	1st - February 18, 1987; 2nd - April 23, 1993
	(v)	$44,145.00
	(vi)	8.0%
Richard L. Edgar	(i)	September 1, 1994
	(ii)	Kent City State Bank
	(iii)	5/19/44
	(iv)	January 15, 1974
	(v)	$31,083.00
	(vi)	8.0%
Gary D. Gust	(i)	September 1, 1994
	(ii)	Kent City State Bank
	(iii)	11/11/44
	(iv)	April 16, 1991
	(v)	$31,083.00
	(vi)	8.0%
Robert C. Humphreys	(i)	September 1, 1994
	(ii)	Kent City State Bank
	(iii)	6/20/38
	(iv)	February 17, 1988
	(v)	$23,038.00
	(vi)	8.0%

Michael E. McHugh	(i)	September 1, 1994
	(ii)	Kent City State Bank
	(iii)	6/13/49
	(iv)	March 1989
	(v)	$52,207.00
	(vi)	8.0%
Ronald Hansen	(i)	December 18, 1996
	(ii)	The Grant State Bank
	(iii)	1/12/45
	(iv)	June 1982
	(v)	$16,449
	(vi)	7.5%
Donald Vansingel	(i)	September 23, 1996
	(ii)	The Grant State Bank
	(iii)	8/24/43
	(iv)	December 1973
	(v)	$18,100.00
	(vi)	7.5%

EXHIBIT A

DEFERRED COMPENSATION AGREEMENT

                    THIS AGREEMENT, made and entered into on this    (i)    day of             (i)               , by and between                 (ii)                    (the "Corporation") and                                  (the "Participant").

                    WITNESSETH;

                    WHEREAS, the Corporation has adopted the Deferred Compensation Plan for The Grant State Bank (the "Plan"); and

                    WHEREAS, the Participant has been determined to be eligible to participate in the Plan; and

                    WHEREAS, the Plan requires that an agreement be entered into between the Corporation and the Participant setting forth certain terms of the Plan as they apply to the Participant;

                    NOW, THEREFORE, the Corporation and the Participant agree as follows:

                    1.  Participant. The Participant is hereby designated as a participant in the Plan.

                    2.  Incorporation of Plan. The Plan, a copy of which is attached, is hereby incorporated into and made a part of this Agreement as though set forth in full herein. The parties shall be bound by, and have the benefit of, each and every provision of the Plan including but not limited to the non-transferability provisions of paragraph 15 of the Plan. The Participant hereby acknowledges receipt of a copy of the Plan, and that he/she has read the same.

                    3.  Information Regarding the Participant. The Participant was born on         (iii)         , and his/her present status as a director of the Corporation began in          (iv)           .

                    4.  Election to Defer. The Participant will irrevocably elect to defer, by the filing of a Deferral Election Form with the Administrative Committee of the Corporation.

                    5.  Projected Benefit. For purposes of paragraph 9 of the Plan, the amount of the Projected Benefit at the commencement of the Plan with respect to the Participant is         (v)            annually. The Projected Benefit may change based on changes in the interest crediting rate for the Plan pursuant to paragraph 6 and on amounts deferred by the Participant.

                    6.  Deferral Crediting Rate. The initial interest credited on all balances in the participant's deferral account for the first Plan year shall be the rate of         (vi)         %, subject to and in accordance with the terms of the Plan.

                    7.  Certification by Participant. The Participant certifies that his/her decision to defer Compensation is not due to any reliance upon financial or tax advice given by the Corporation, and that the Corporation has not represented or warranted the tax effect of any Compensation deferred pursuant to the Plan. The Participant further certifies that he/she is aware that no ruling or determination has been obtained from the Internal Revenue Service that the Plan will effect the deferral of income for income tax purposes. The Participant further certifies that he/she understands that all Compensation deferred by the undersigned pursuant to the Plan will remain the property of the Corporation until paid out in accordance with the terms of the Plan, and that all such amounts are subject to the claims of the Corporation's creditors.

                    8.  Definitions. All capitalized terms utilized but not defined herein shall be defined as set forth in the Plan.

                    9.  Entire Agreement. This Agreement, together with the Plan, constitutes the entire Agreement between the parties as to the subject matter hereof. No rights are granted to the Participant by virtue of this Agreement other than those specifically set forth herein or in the Plan.

                    10.  Binding Effect. This Agreement shall be binding upon the parties, the successors and assigns of the Corporation, and subject to the limitations of the Plan, the heirs and beneficiaries of the Participant.

                    11.  Governing Law. This Agreement shall be construed and interpreted in accordance with the laws of the State of Michigan and its enforcement is subject to federal laws and regulations applicable to the Corporation or its successors.

                    IN WITNESS WHEREOF, the parties hereto have entered into the Agreement as of the date first above written.

By

Its

Participant

EX-13

EXHIBIT 13

CHOICEONE FINANCIAL SERVICES, INC.

2006

ANNUAL REPORT TO SHAREHOLDERS

CHOICEONE FINANCIAL SERVICES, INC.

2006 Annual Report to Shareholders

Contents
To Our Shareholders	1
About ChoiceOne Financial Services, Inc	1
Stock Information	1
Five Year Cumulative Total Shareholder Return	2
Selected Financial Data	3
Management's Discussion and Analysis of Financial Condition and Results of Operations	4
Change in Independent Registered Public Accounting Firm	14
Report of Independent Registered Public Accounting Firm	15
Consolidated Financial Statements	16
Notes to Consolidated Financial Statements	20
Corporate and Shareholder Information	41
Directors and Officers	42

TO OUR SHAREHOLDERS

This 2006 Annual Report to Shareholders contains our audited financial statements, detailed financial review and all of the information that regulations of the Securities and Exchange Commission (the "SEC") require to be presented in annual reports to shareholders. For legal purposes, this is the ChoiceOne Financial Services, Inc. 2006 Annual Report to Shareholders. Although attached to our proxy statement, this report is not part of our proxy statement, is not considered to be soliciting material and is not considered to be filed with the SEC except to the extent that it is expressly incorporated by reference in a document filed with the SEC. Shareholders who would like to receive even more detailed information than that contained in this 2006 Annual Report to Shareholders are invited to request our Annual Report on Form 10-K.

Our Annual Report on Form 10-K for the year ended December 31, 2006, including the financial statements and financial statement schedules, will be provided to any shareholder, without charge, upon written request to Mr. Thomas Lampen, Treasurer, ChoiceOne Financial Services, Inc., 109 East Division Street, Sparta, Michigan 49345.

ABOUT CHOICEONE FINANCIAL SERVICES, INC.

ChoiceOne Financial Services, Inc. is a single-bank holding company. Its principal banking subsidiary, ChoiceOne Bank (Sparta, Michigan), primarily serves communities in portions of Kent, Muskegon, Newaygo, and Ottawa counties in Michigan where the Bank's offices are located and the areas immediately surrounding those communities. Currently the Bank serves those markets through thirteen full-service offices. ChoiceOne Insurance Agencies, Inc. is a wholly-owned subsidiary of ChoiceOne Bank and sells insurance and investment products. ChoiceOne Mortgage Company of Michigan, a wholly-owned subsidiary of ChoiceOne Bank, was formed on January 1, 2002 and is engaged in mortgage lending.

ChoiceOne's business is primarily concentrated in a single industry segment - banking. ChoiceOne Bank is a full-service banking institution that offers a variety of deposit, payment, credit and other financial services to all types of customers. These services include time, savings, and demand deposits, safe deposit services, and automated transaction machine services. Loans, both commercial and consumer, are extended primarily on a secured basis to corporations, partnerships and individuals. Commercial lending covers such categories as business, industry, agricultural, construction, inventory and real estate. ChoiceOne Bank's consumer loan department and ChoiceOne Mortgage Company of Michigan make direct loans to consumers and purchasers of residential property.

The principal source of revenue for ChoiceOne is interest and fees on loans. On a consolidated basis, interest and fees from loans accounted for 73%, 73%, and 71% of total revenues in 2006, 2005, and 2004, respectively. Interest from securities accounted for 12%, 11%, and 11% of total revenues in 2006, 2005, and 2004, respectively.

STOCK INFORMATION

Several brokers trade ChoiceOne's common shares in the over-the-counter bulletin board market. There is no well-established public trading market for the shares and trading activity is infrequent. ChoiceOne's trading volume and recent share price information can be viewed under the symbol 'COFS.OB' on certain financial websites.

The range of high and low bid prices for shares of common stock for each quarterly period during the past two years is as follows (adjusted for the stock dividend paid in 2005):

	2006		2005
	Low	High	Low	High
First Quarter	$ 17.35	$ 19.15	$ 20.95	$ 21.90
Second Quarter	18.00	19.20	19.00	20.95
Third Quarter	17.80	18.90	19.10	20.50
Fourth Quarter	17.60	18.50	18.50	20.10

The prices listed above are over-the-counter market quotations reported to ChoiceOne by its market makers listed in this annual report. The over-the-counter market quotations reflect inter-dealer prices without retail markup, markdown or commission and may not necessarily represent actual transactions.

As of February 28, 2007, there were 3,241,624 shares of ChoiceOne Financial Services, Inc. common stock issued and outstanding. As of February 28, 2007, there were 876 holders of record of shares of ChoiceOne Financial Services, Inc. common stock.

1

The following table summarizes cash dividends declared per share of common stock during 2006 and 2005:

	2006	2005
First Quarter	$ 0.17	$ 0.16
Second Quarter	0.17	0.17
Third Quarter	0.17	0.17
Fourth Quarter	0.17	0.17
Total	$ 0.68	$ 0.67

ChoiceOne's principal source of funds to pay cash dividends is the earnings and dividends paid by ChoiceOne Bank. ChoiceOne Bank is restricted in its ability to pay cash dividends under current banking regulations. See Note 21 to the consolidated financial statements for a description of these restrictions. Based on information presently available, management expects ChoiceOne to declare and pay regular quarterly cash dividends in 2007.

The graph below compares the total return on an investment in ChoiceOne common stock with the returns on both a broad-based stock market index and an index comprised of bank holding companies. The total return is measured using both stock price appreciation and the effect of continuous reinvestment of dividends.

The Standard & Poor's 500 Stock Index is a broad equity market index published by Standard & Poor's. The KBW 50 Index is a market capitalization weighted bank stock index published by Keefe, Bruyette & Woods, Inc., an investment banking firm that specializes in the banking industry. The KBW 50 Index is composed of 50 money center and regional bank holding companies.

FIVE YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN

The dollar values plotted in the line graph above are as follows:

December 31,	ChoiceOne	KBW 50	S&P 500
2001	$100.0	$100.0	$100.0
2002	110.2	93.0	78.0
2003	137.8	124.6	100.3
2004	190.4	137.1	111.2
2005	172.2	138.7	116.6
2006	168.8	165.6	135.0

2

ChoiceOne Financial Services, Inc.
SELECTED FINANCIAL DATA

(Dollars in thousands)

		2006			2005			2004			2003			2002
For the year
Net interest income	$	8,748		$	8,045		$	7,672		$	7,775		$	8,106
Provision for loan losses		200			495			465			400			1,270
Noninterest income		2,877			2,580			2,570			3,109			3,657
Noninterest expense		8,698			7,184			7,228			7,668			8,187
Income before income taxes		2,727			2,946			2,549			2,816			2,306
Income tax expense		639			780			695			715			663
Net income		2,088			2,166			1,854			2,101			1,643
Cash dividends declared		1,397			1,105			1,065			1,059			1,037
Per share *
Basic and diluted earnings	$	1.09		$	1.31		$	1.13		$	1.29		$	1.01
Cash dividends declared		0.68			0.67			0.65			0.65			0.64
Shareholders' equity (at year end)		15.85			13.16			12.77			12.53			11.89
Average for the year
Securities	$	57,407		$	44,741		$	42,361		$	31,165		$	21,872
Gross loans		205,851			180,100			170,045			165,224			174,135
Deposits		222,287			173,419			156,837			149,941			141,591
Federal Home Loan Bank advances		26,073			32,765			36,652			28,416			36,489
Shareholders' equity		27,349			21,338			20,753			20,045			18,703
Assets		288,407			237,864			223,742			207,656			207,791
At year end
Securities	$	77,436		$	47,211		$	47,858		$	40,921		$	24,111
Gross loans		331,631			185,832			173,559			163,132			175,061
Deposits		366,380			182,112			167,066			146,263			152,779
Federal Home Loan Bank advances		23,908			30,750			34,250			33,750			32,791
Shareholders' equity		51,519			21,717			21,069			20,568			19,359
Assets		466,650			248,110			232,285			215,467			212,324
Selected financial ratios
Return on average assets		0.72	%		0.91	%		0.83	%		1.01	%		0.79	%
Return on average shareholders' equity		7.63			10.15			8.93			10.48			8.78
Cash dividend payout		66.91			51.02			57.44			50.40			63.12
Shareholders' equity to assets (at year end)		11.04			8.75			9.07			9.55			9.12

*  Per share amounts are retroactively adjusted for the effect of stock dividends and stock splits.

In November 2006, ChoiceOne merged with Valley Ridge Financial Corp. Accordingly, two months of combined operations are included in the 2006 results of operations and all assets acquired and liabilities assumed from Valley Ridge Financial Corp. are included in the 2006 year-end balance sheet. See Note 2 to the consolidated financial statements for information concerning the merger.

3

ChoiceOne Financial Services, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion is designed to provide a review of the consolidated financial condition and results of operations of ChoiceOne Financial Services, Inc. ("ChoiceOne" or the "Company"), and its wholly-owned subsidiaries, ChoiceOne Bank (the "Bank"), ChoiceOne Insurance Agencies, Inc. (the "Insurance Agency"), and ChoiceOne Mortgage Company of Michigan (the "Mortgage Company"). This discussion should be read in conjunction with the consolidated financial statements and related footnotes.

FORWARD-LOOKING STATEMENTS

This discussion and other sections of this annual report contain forward-looking statements that are based on management's beliefs, assumptions, current expectations, estimates and projections about the financial services industry, the economy, and ChoiceOne itself. Words such as "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "is likely," "plans," "predicts," "projects," "may," "could," variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions ("risk factors") that are difficult to predict with regard to timing, extent, likelihood, and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be expressed, implied or forecasted in such forward-looking statements. Furthermore, ChoiceOne undertakes no obligation to update, amend, or clarify forward-looking statements, whether as a result of new information, future events, or otherwise.

Risk factors include, but are not limited to, the risk factors discussed in Item 1A of the Company's Annual Report on Form 10-K; changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; changes in banking laws and regulations; changes in tax laws; changes in prices, levies, and assessments; the impact of technological advances; governmental and regulatory policy changes; the outcomes of pending and future litigation and contingencies; trends in customer behavior as well as their ability to repay loans; changes in the local and national economies; changes in market conditions; the possibility that anticipated cost savings and revenue enhancements from the merger with Valley Ridge Financial Corp. may not be fully realized at all or within the expected time frames; the level and timing of asset growth; and various other local and global uncertainties such as acts of terrorism and military actions. Th ese are representative of the risk factors that could cause a difference between an ultimate actual outcome and a preceding forward-looking statement.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The purpose of this section of the annual report is to provide a narrative discussion about the Company's financial condition and results of operations during 2006. Management's discussion and analysis of financial condition and results of operations as well as disclosures found elsewhere in the annual report are based upon the Company's consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses and loan servicing rights. Actual results could differ from those estimates.

Allowance for Loan Losses
The allowance for loan losses is maintained at a level believed adequate by management to absorb probable incurred losses inherent in the consolidated loan portfolio. Management's evaluation of the adequacy of the allowance is an estimate based on reviews of individual loans, assessments of the impact of current and anticipated economic conditions on the portfolio and historical loss experience of seasoned loan portfolios.

Management believes the accounting estimate related to the allowance for loan losses is a "critical accounting estimate" because (1) the estimate is highly susceptible to change from period to period because of assumptions concerning the changes in the types and volumes of the portfolios and anticipated economic conditions and (2) the impact of recognizing an impairment or loan loss could have a material effect on the Company's assets reported on the balance sheet as well as its net income.

Loan Servicing Rights
Loan servicing rights represent the estimated value of servicing loans that are sold with servicing retained by ChoiceOne. Servicing rights are expensed in proportion to, and over the period of, estimated net servicing revenues. Management's accounting treatment of loan servicing rights is estimated based on current prepayment speeds that are typically market driven.

Management believes the accounting estimate related to loan servicing rights is a "critical accounting estimate" because (1) the estimate is highly susceptible to change from period to period because of significant changes within long-term interest rates

4

ChoiceOne Financial Services, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

affecting the prepayment speeds for current loans being serviced and (2) the impact of recognizing an impairment loss could have a material effect on ChoiceOne's net income. Management has obtained a third-party valuation of its loan servicing rights to corroborate its current carrying value at the end of each reporting period.

MERGER WITH VALLEY RIDGE FINANCIAL CORP.

On November 1, 2006, ChoiceOne merged with Valley Ridge Financial Corp. ("VRFC"). At the time of the merger, VRFC was roughly equal in size in terms of assets with ChoiceOne. The 2006 results of operations include two months of combined financial results after the close of the merger and the 2006 year-end balance sheet includes all of the assets acquired and all of the liabilities assumed from VRFC in the merger. Therefore, a comparison of 2006 financial condition and results of operations to 2005 financial condition and results of operations is materially affected as a result of the merger. For more detailed information concerning the merger, see Note 2 to the consolidated financial statements.

RESULTS OF OPERATIONS

Summary

(Dollars in thousands)		Year ended December 31
		2006			2005			2004
Net interest income	$	8,748		$	8,045		$	7,672
Provision for loan losses		(200	)		(495	)		(465	)
Noninterest income		2,877			2,580			2,570
Noninterest expense		(8,698	)		(7,184	)		(7,228	)
Income tax expense		(639	)		(780	)		(695	)
Net income	$	2,088		$	2,166		$	1,854

	2006		2005		2004
Return on average assets	0.72	%	0.91	%	0.83	%
Return on average equity	7.63	%	10.15	%	8.93	%

Net income for 2006 was $2,088,000, which represented a $78,000 or 4% decrease from 2005. The decrease in net income from 2005 was primarily due to increased noninterest expense. Net interest income increased in 2006 compared to 2005 due to the merger with VRFC in November 2006. A lower provision to the allowance for loan losses was possible due to slow loan growth during 2006 and the allowance acquired from VRFC during 2006. Noninterest income was up 12% in 2006 primarily due to two months of deposit fees from customers acquired in November 2006 from VRFC. Noninterest expense in 2006 was up 21% in 2006 as compared to 2005 largely because the merger with VRFC added two months of compensation expense and occupancy costs for the VRFC employees and VRFC offices acquired in November 2006. ChoiceOne also incurred $160,000 of merger-related expenses in the fourth quarter of 2006 that could not be capitalized as part of the merger.

Net income for 2005 was $2,166,000, which represented a $312,000 or 17% increase from 2004. The increase in net income over 2004 was primarily due to increased net interest income. Net interest income increased in 2005 compared to 2004 due to growth in the Bank's earning assets. A slightly higher provision to the allowance for loan losses in 2005 was necessary due to growth during 2005 in the loan portfolio. Noninterest expense was slightly lower in 2005 compared to 2004 largely because of an adjustment in the computation of the Bank's single business tax during 2005.

Dividends
Cash dividends of $1,397,000 or $0.68 per common share were declared in 2006, compared to $1,105,000 or $0.67 in 2005, and $1,065,000 or $0.65 per common share in 2004. Dividends declared rose 26% in 2006 from 2005 due to the 1.6 million shares of common stock issued in November 2006 in connection with the merger with VRFC. The dividend yield on ChoiceOne's common stock was 3.78% in 2006, compared to 3.41% in 2005, and 3.44% in 2004. The cash dividend payout percentage was 67% in 2006, compared to 51% in 2005 and 57% in 2004.

ChoiceOne's Board of Directors declared a 5% stock dividend payable on common stock in April 2005. The dividend was paid in May 2005 and per share data for all periods presented has been adjusted for this stock dividend.

5

ChoiceOne Financial Services, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ChoiceOne's principal source of funds to pay cash dividends is the earnings of the Bank. The availability of these earnings is dependent upon the capital needs, regulatory constraints and other factors involving the Bank. Regulatory constraints include the maintenance of minimum capital ratios and limits based on net income and retained earnings of the Bank for the past three years. ChoiceOne expects to pay quarterly cash dividends in 2007 to shareholders based on the actual earnings of the Bank.

Table 1 - Average Balances and Tax-Equivalent Interest Rates

(Dollars in thousands)

					Year ended December 31
	2006				2005				2004
	Average Balance	Interest	Rate		Average Balance	Interest	Rate		Average Balance	Interest	Rate
Assets
Loans (1) (2)	$ 205,851	$ 14,907	7.24	%	$ 180,100	$ 11,659	6.47	%	$ 170,045	$ 10,190	5.99	%
Taxable securities (3)	36,032	1,598	4.43		26,937	993	3.69		27,600	971	3.52
Tax-exempt securities (1)	21,375	1,327	6.21		17,804	1,038	5.83		14,761	888	6.02
Other	1,752	97	5.54		151	5	3.31		67	1	1.49
Interest-earning assets	265,010	17,929	6.77		224,992	13,695	6.09		212,473	12,050	5.67
Noninterest-earning assets (4)	23,397				12,872				11,269
Total assets	$ 288,407				$ 237,864				$ 223,742
Liabilities and Shareholders' Equity    Interest-bearing
demand deposits	$  56,617	1,492	2.64	%	$  56,745	1,195	2.11	%	$  53,339	814	1.53	%
Savings deposits	11,524	58	0.50		9,136	46	0.50		9,575	48	0.50
Certificates of deposit	126,535	5,637	4.45		87,443	2,841	3.25		76,059	2,169	2.85
Advances from FHLB	26,073	1,182	4.53		32,765	974	2.97		36,652	914	2.49
Other	9,750	328	3.36		8,943	223	2.49		8,145	122	1.50
Interest-bearing liabilities	230,499	8,697	3.77		195,032	5,279	2.71		183,770	4,067	2.21
Demand deposits	27,611				20,095				17,864
Other noninterest-bearing       liabilities	2,948				1,399				1,355
Shareholders' equity	27,349				21,338				20,753
Total liabilities and          shareholders' equity	$ 288,407				$ 237,864				$ 223,742
Net interest income    (tax-equivalent basis) -    interest spread		9,232	3.00	%		8,416	3.38	%		7,983	3.46	%
Tax-equivalent adjustment (1)		(484	)			(371	)			(311	)
Net interest income		$  8,748				$  8,045				$  7,672
Net interest income as a    percentage of earning assets    (tax-equivalent basis)			3.48	%			3.74	%			3.76	%

(1)	Interest on nontaxable securities and loans has been adjusted to a fully tax-equivalent basis to facilitate comparison to the taxable interest-earning assets. The adjustment uses an incremental tax rate of 34% for the years presented.
(2)	Interest on loans included net origination fees charged on loans of approximately $402,000, $401,000, and $309,000 in 2006, 2005, and 2004, respectively.
(3)	Interest on taxable securities includes dividends on Federal Home Loan Bank and Federal Reserve Bank stock.
(4)	Noninterest-earning assets include loans on a nonaccrual status, which averaged approximately $1,844,000, $1,079,000, and $1,687,000 in 2006, 2005, and 2004, respectively.

6

ChoiceOne Financial Services, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Net Interest Income
As shown in Tables 1 and 2, tax-equivalent net interest income increased $816,000 in 2006 compared to the same period in 2005. This is primarily because earning assets have grown $40 million or 18% compared to 2005 largely due to the merger with VRFC. The increase in market interest rates during 2006 has negatively impacted tax-equivalent net interest income. Interest expense increased to a greater extent during 2006 than tax-equivalent interest income due to changes in the mix of deposits outstanding. Interest income includes $60,000 of accretion income for the purchase accounting adjustments on the loans acquired from VRFC in November 2006.

The average balance of loans increased approximately $26 million in 2006 compared to 2005. In addition, rising interest rates on new and existing loans helped interest income on loans to increase $3.2 million for 2006 compared to 2005. The average balance of total securities grew $12.7 million in 2006 and, coupled with higher yields, increased ChoiceOne's interest income $894,000 over 2005. The average balance of other interest-earning assets (primarily federal funds sold) rose $1.6 million in 2006, which increased interest income $92,000 in 2006.

Higher rates paid on interest-bearing demand deposits increased interest expense by $297,000 in 2006. Growth of $39.1 million in the average balance of certificates of deposit, in addition to higher rates paid on these accounts, increased interest expense $2.8 million in 2006 versus 2005. Significant repricing upward on advances obtained from the Federal Home Loan Bank was partially offset by a decline of $6.7 million in the average balance of advances outstanding, thereby causing interest expense to increase $208,000. Higher rates for other interest-bearing liabilities (federal funds purchased and repurchase agreements) coupled with a $0.8 million increase in the average balance outstanding caused interest expense to increase $105,000 in 2006 compared to 2005.

Net interest income spread was 3.00% (shown in Table 1) for 2006, compared to 3.38% in 2005. The average yield received on interest-earning assets in 2006 increased 68 basis points to 6.77% while the average rate paid on interest-bearing liabilities in 2006 climbed 106 basis points to 3.77%.

Table 2 - Changes in Tax-Equivalent Net Interest Income

(Dollars in thousands)

	Year ended December 31
	2006 Over 2005								2005 Over 2004
	Total		Volume			Rate			Total			Volume			Rate
Increase (decrease) in interest income (1)
Loans (2)	$	3,248	$	1,775		$	1,473		$	1,469		$	623		$	846
Taxable securities		605		378			227			22			(24	)		46
Tax-exempt securities (2)		289		218			71			150			178			(28	)
Other		92		87			5			4			2			2
Net change in tax-equivalent income		4,234		2,458			1,776			1,645			779			866
Increase (decrease) in interest expense (1)
Interest-bearing transaction accounts		297		(3	)		300			381			55			326
Savings deposits		12		12			-			(2	)		(2	)		-
Certificates of deposit		2,796		1,528			1,268			672			348			324
Advances from Federal Home Loan Bank		208		(228	)		436			60			(104	)		164
Other		105		22			83			101			13			88
Net change in interest expense		3,418		1,331			2,087			1,212			310			902
Net change in tax-equivalent          net interest income	$	816	$	1,127		$	(311	)	$	433		$	469		$	(36	)

(1)

The volume variance is computed as the change in volume (average balance) multiplied by the previous year's interest rate. The rate variance is computed as the change in interest rate multiplied by the previous year's volume (average balance). The change in interest due to both volume and rate has been allocated to the volume and rate changes in proportion to the relationship of the absolute dollar amounts of the change in each.

(2)

Interest on tax-exempt securities and loans has been adjusted to a fully tax-equivalent basis using an incremental tax rate of 34% for the years presented.

7

ChoiceOne Financial Services, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Tax-equivalent net interest income increased $433,000 in 2005 compared to the same period in 2004. This was primarily because earning assets grew 6% compared to 2004. The increase in interest rates during 2005 had a slightly negative impact on the net change in tax-equivalent net interest income as increased interest expense more than offset the increase in tax-equivalent interest income.

Management anticipates that net interest income in 2007 will depend upon the Bank's ability to grow loans as well as maintain a stable base of core deposits. Deposits may continue to reprice higher if customers continue to shift from low-cost transaction accounts to higher yielding certificates of deposit. Local deposit rates within ChoiceOne's marketplace are also somewhat higher than rates paid on existing certificates of deposit, which may drive up interest expense in 2007. Management believes that the branch offices acquired in the merger with VRFC will aide it in keeping ChoiceOne's cost of funds lower. Brokered certificates of deposit and advances from the Federal Home Loan Bank will continue to be used if core deposit growth is insufficient to fund the growth of earning assets in 2007.

Allowance and Provision For Loan Losses
Information regarding the allowance and provision for loan losses can be found in Table 3 below:

Table 3 - Provision and Allowance For Loan Losses

(Dollars in thousands)

		2006			2005			2004			2003			2002
Provision for loan losses	$	200		$	495		$	465		$	400		$	1,270
Net charge-offs:
Agricultural	$	-		$	-		$	-		$	17		$	-
Commercial and industrial		170			25			631			247			351
Real estate - commercial		-			25			66			190			90
Real estate - construction		-			20			-			-			-
Real estate - residential		92			120			41			51			-
Consumer		83			81			(38	)		132			631
Total	$	345		$	271		$	700		$	637		$	1,072
Allowance for loan losses acquired from VRFC	$	1,751		$	-		$	-		$	-		$	-
Allowance for loan losses at year end	$	3,569		$	1,963		$	1,739		$	1,974		$	2,211
Allowance for loan losses as a percentage of:
Total loans as of year end		1.08	%		1.06	%		1.00	%		1.21	%		1.26	%
Nonaccrual loans, accrual loans past due 90       days or more and troubled debt       restructurings		53	%		203	%		212	%		99	%		80	%
Ratio of net charge-offs to average total loans    outstanding during the year		0.17	%		0.15	%		0.41	%		0.39	%		0.62	%
Loan recoveries as a percentage of prior year's    charge-offs		42	%		14	%		24	%		27	%		14	%

As indicated in Table 3, the provision for loan losses was $295,000 lower in 2006 than in 2005. Management decreased the provision due to slow loan growth during 2006 and the acquisition of the allowance for loan losses from VRFC in November 2006. The merger with VRFC provided $1,751,000 to the allowance for loan losses in the fourth quarter of 2006.

Net charge-offs of total loans increased $74,000 in 2006 compared to 2005. Net charge-offs of commercial and industrial loans increased $145,000 in 2006 versus 2005; however, net charge-offs of residential real estate loans decreased $28,000. The level of net charge-offs of consumer loans was relatively unchanged from 2005. Net charge-offs of commercial and industrial loans in 2006 included two charge-offs for $109,000 from two borrowers. The ratio of net charge-offs as a percentage of average loans rose slightly from 0.15% in 2005 to 0.17% in 2006. The ratio of the allowance for loan losses to nonperforming loans dropped from 203% in 2005 to 53% in 2006 primarily due to $4.7 million of commercial real estate loans and $0.6 million of commercial and industrial loans that were placed into nonaccrual during 2006. The commercial real estate loans placed into nonaccrual includes $3.6 million from one borrower placed into nonaccrual in December 2006. The allowance as a percentage of total loans is slightly hig her (1.08%) at the end

8

ChoiceOne Financial Services, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

of 2006, compared to the end of 2005 (1.06%) primarily due to the allowance acquired from VRFC. At end of 2006, the Bank had $942,000 specifically reserved for problem loans, while only $465,000 was specifically reserved at the end of 2005. Management believes the specific reserves allocated to certain problem loans at the end of 2006 are reasonable based on the circumstances surrounding each particular borrower.

Based on the current state of the economy and a recent review of the loan portfolio, management believes that the allowance for loan losses as of December 31, 2006, is adequate to absorb probable incurred losses. As charge-offs, changes in the level of nonperforming loans, and changes within the composition of the loan portfolio occur, the provision and allowance for loan losses will be reviewed by the Bank's management and adjusted as necessary.

Noninterest Income
Total noninterest income increased $297,000 or 12% in 2006 compared to 2005. Service charges on deposit accounts were up $391,000 primarily due to the merger with VRFC. In addition, insufficient funds fees and debit card fees were up substantially in 2006 compared to 2005. Insurance and investment commissions were lower due to reduced sales of annuities and mutual funds. Gains on the sale of loans were down due to a slightly lower volume of loans originated for sale by the Mortgage Company. Losses on the sale of securities ($168,000) were partially offset by gains on the sale of securities ($102,000) during 2006. In the fourth quarter of 2006, the Bank sold approximately $15 million of low-yielding securities to pay off certain wholesale borrowings. Losses on the sale of other assets include $196,000 of write-downs and realized losses incurred on foreclosed real estate properties. Profit-sharing income received by the Insurance Agency rose $63,000 due to fewer losses at carriers with whom ChoiceOne writes pr operty and casualty business. Earnings on life insurance policies increased $61,000 in 2006 due to ChoiceOne acquiring $5.7 million in policies from its merger with VRFC.

Total noninterest income increased $10,000 or less than 1% in 2005 compared to 2004. Service charges on deposit accounts were up due to higher returned check charges and debit card fee income. Insurance and investment commissions were lower due to reduced annuity sales and lower property and casualty commissions. Gains on the sale of loans were down due to reduced pricing obtained on loans sold to secondary market investors. Gains on the sale of securities were down due to more losses realized in 2005. The Bank swapped some low yielding securities for higher yielding securities.

Management estimates that noninterest income in 2007 will rise due to a full year of operations from customer accounts acquired from the merger with VRFC.

Noninterest Expense
Total noninterest expense increased $1,514,000 or 21% in 2006 compared to 2005. Salaries and benefits were up $787,000 in 2006 due to the merger with VRFC. ChoiceOne added 80 full-time equivalent employees in November 2006, therefore, compensation expense includes two months of payroll cost for former VRFC personnel. Occupancy expense was higher in 2006 due to two months of operations for the nine offices acquired from VRFC in November 2006. One of these offices has since been closed due to its proximity to ChoiceOne's main office. Data processing expense was higher during 2006 due to two months of operations for the nine offices acquired from VRFC in November 2006. Also, an increased volume of deposit accounts and customer electronic activities also drove higher data processing costs as compared to 2005. Intangible amortization includes $69,000 for two months of amortization expense on the core deposit intangible asset recorded in connection with the merger with VRFC. Other noninterest expense includes a $1 57,000 increase from 2005 for state single business taxes. In 2005, the Bank recorded a credit adjustment of $84,000 for overpayments made during 2002, 2003, and 2004. During the fourth quarter of 2006, ChoiceOne also expensed $160,000 in connection with merger-related items that could not be capitalized into goodwill. Certain professional fees, supplies, and severance payments were one-time payments that are not expected to recur in 2007.

Total noninterest expense decreased $44,000 or nearly 1% in 2005 compared to 2004. Salaries and benefits were up slightly in 2005 due to the addition of personnel for the Rockford and Alpine Offices and higher employee bonuses. Occupancy expense was higher in 2005 due to a full year of operations for the Bank's Rockford Office (opened in September 2004). Professional fees were lower in 2005 due to fewer legal fees and reduced services from a third party marketing agency. Data processing expense was higher due to growth in software maintenance, ATM network processing and core bank charges. Other noninterest expense decreased $257,000 in 2005 primarily due to an adjustment in the computation of state single business taxes for 2002, 2003, and 2004 recorded in 2005. The adjustment to the Bank's single business taxes was a non-recurring benefit to other expense. Fewer bad checks charged off in 2005 also helped reduce other noninterest expense for 2005. In 2004, an altered foreign check for $75,000 was written off as uncollectible. The check was disbursed before the Bank was notified it was a fraudulent item.

9

ChoiceOne Financial Services, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management anticipates that noninterest expenses will significantly rise in 2007 due to a full year of operations for the employees and branch offices acquired in the merger with VRFC.

FINANCIAL CONDITION

Securities
The securities available for sale portfolio increased $33 million or 75% from December 31, 2005 to December 31, 2006. A total of $34 million of securities were acquired in the merger with VRFC in November 2006. Of the securities acquired from VRFC, government agency securities totaled $10 million; municipal securities totaled $9 million; and mortgage-backed securities totaled $15 million. ChoiceOne did purchase a mix of government agency, municipal, mortgage-backed, and corporate securities totaling $22 million during 2006 to maintain the earning assets of the Bank. Approximately $4.7 million in various securities were called or matured in 2006. Principal payments for mortgage-backed securities totaling $2.4 million were received during 2006. Various securities totaling approximately $17 million were sold during 2006 for net losses totaling $66,000. Approximately $15 million of securities were sold in the fourth quarter of 2006 as part of a balance sheet restructuring to help net interest margin in future ye ars. The Bank's Investment Committee continues to monitor the portfolio and purchase securities when deemed prudent. Also, certain securities are sold under agreements to repurchase and management plans to continue this practice as a low-cost source of funding.

Loans
The loan portfolio (excluding loans held for sale) increased approximately $146 million or 79% from December 31, 2005 to December 31, 2006. A total of $148 million of loans were acquired in the merger with VRFC in November 2006. Of the loans acquired from VRFC, commercial real estate, commercial industrial, and agricultural loans totaled $93 million; residential real estate loans totaled $49 million; and consumer loans totaled $6 million. Excluding the loans acquired in the merger with VRFC, total loans declined $2 million in primarily residential real estate and consumer loans. In 2006, the Mortgage Company originated approximately $35 million of residential mortgage loans and sold $15 million (43%) to secondary market investors. In 2005, the Mortgage Company originated approximately $34 million of residential mortgage loans and sold $19 million (56%) to secondary market investors.

Management anticipates demand for commercial loans in 2007 will depend upon the stability of the local and state economy. The Bank intends to increase calling efforts with commercial customers in its expanded marketplace; however, higher interest rates may stall demand for consumer and residential real estate loans in 2007.

Information regarding impaired loans can be found in Note 6 to the consolidated financial statements included in this report. In addition to its review of the loan portfolio for impaired loans, management also monitors various nonperforming loans. Nonperforming loans are comprised of (1) loans accounted for on a nonaccrual basis; (2) loans, not included in nonaccrual loans, which are contractually past due 90 days or more as to interest or principal payments; and (3) loans, not included in nonaccrual or past due 90 days or more, which are considered troubled debt restructurings.

The balances of these nonperforming loans as of December 31 were as follows:

(Dollars in thousands)

		2006		2005
Loans accounted for on a nonaccrual basis	$	6,420	$	934
Loans contractually past due 90 days
or more as to principal or interest payments		278		32
Loans considered troubled debt restructurings		24		-
Total	$	6,722	$	966

At December 31, 2006, nonaccrual loans included $5.9 million in commercial industrial and commercial real estate loans, $351,000 in residential real estate loans, and $133,000 in consumer loans. The Bank had $3.6 million in various commercial real estate loans outstanding from one commercial real estate developer. Management believes these loans are well secured and is attempting to liquidate the collateral with minimal loss to ChoiceOne. At December 31, 2005, nonaccrual loans included $677,000 in commercial loans, $206,000 in residential mortgages, and $51,000 in consumer loans. Management also maintains a list of loans that are not classified as nonperforming loans but where some concern exists as to the borrowers' abilities to comply with the original loan terms. These loans totaled $8.1 million as of December 31, 2006, compared to $8.5 million as of December 31, 2005.

Deposits and Other Funding Sources
Total deposits increased $184 million or 101% from December 31, 2005 to December 31, 2006. Approximately $170 million of deposits were acquired in the merger with VRFC in November 2006. Of the deposits acquired from VRFC, checking, savings and

10

ChoiceOne Financial Services, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

money market accounts totaled $85 million, and certificates of deposit totaled $85 million. During 2006, depositors continued to migrate from low-yielding transaction accounts to higher-yielding certificates of deposit. Excluding the new certificates of deposit acquired from VRFC, the Bank's certificates of deposit grew $15.6 million from 2005. Local certificates accounted for 90% of the growth, while brokered certificates accounted for 10% of the growth.

Securities sold under agreements to repurchase increased nearly $8 million during 2006. Federal funds purchased at the end of 2006 declined approximately $4 million from year-end 2005. Advances from the Federal Home Loan Bank ("FHLB") decreased $6.8 million in 2006. The Bank acquired $11.4 million in fixed rate advances in the merger with VRFC. The weighted average rate on these acquired FHLB advances was 5.34%, with a weighted average remaining term slightly more than 3 years. Specific residential real estate loans were pledged as collateral against all outstanding advances at the end of 2006.

In 2007, management plans to focus its marketing efforts on maintaining its current core deposits as well as integrating its thirteen banking offices with a comprehensive marketing plan. If local deposit growth is insufficient to support asset growth during 2007, management believes that FHLB advances and brokered certificates of deposit can address corresponding funding needs.

Shareholders' Equity
Total shareholders' equity increased approximately $30 million or 137% from December 31, 2005 to December 31, 2006. A total of $28.5 million of common stock was issued to VRFC shareholders in November 2006 as part of the merger with VRFC. Other growth in equity resulted primarily from current year's net income, proceeds from the sale of ChoiceOne's stock, and an increase in accumulated other comprehensive income, offset by cash dividends paid, and shares repurchased. ChoiceOne repurchased 4,687 shares of its common stock in 2006 compared to 15,412 shares in 2005. Management anticipates it will continue to repurchase shares of its common stock in 2007 and retire them.

Note 21 to the consolidated financial statements presents regulatory capital information for the Bank at the end of 2006 and 2005. The Bank's capital ratios decreased from December 31, 2005 to December 31, 2006 due to the merger with VRFC, however, management believes it may grow shareholders' equity in 2007 at a faster rate than it will grow total assets, which should increase its capital ratios. The Board of Directors and management do not plan to allow capital to decrease below those levels necessary to be considered "well capitalized" by regulatory guidelines.

Table 4 - Contractual Obligations

The following table discloses information regarding the maturity of ChoiceOne's contractual obligations at December 31, 2006:

(Dollars in thousands)

	Payment Due By Period
Contractual Obligations		Total		Less than 1 year		1-3 Years		3-5 Years		More than 5 Years
Federal funds purchased	$	460	$	460	$	-	$	-	$	-
Repurchase agreements		15,013		15,013		-		-		-
Time deposits		198,676		150,794		38,282		9,530		70
Advances from Federal Home Loan Bank		23,908		9,000		6,000		8,908		-
Operating leases		150		66		46		38		-
Total	$	238,207	$	175,333	$	44,328	$	18,476	$	70

Liquidity and Interest Rate Risk
ChoiceOne's primary market risk exposure occurs in the form of interest rate risk. Liquidity risk also can have an impact but to a lesser extent. ChoiceOne's business is transacted in U.S. dollars with no foreign exchange risk exposure. Agricultural loans comprise a small portion of ChoiceOne's total assets. Management believes that ChoiceOne's exposure to changes in commodity prices is insignificant.

Liquidity risk deals with ChoiceOne's ability to meet its cash flow requirements. These requirements include depositors desiring to withdraw funds and borrowers seeking credit. Relatively short-term liquid funds exist in the form of lines of credit to purchase federal funds at five of the Bank's correspondent banks. As of December 31, 2006, the amount of federal funds available for purchase from the Bank's correspondent banks totaled approximately $42 million. ChoiceOne purchased $460,000 of federal funds at the end of 2006. The Bank also has a line of credit secured by ChoiceOne's commercial loans with the Federal Reserve Bank of Chicago for $65 million, which is designated for nonrecurring short-term liquidity needs. Longer-term liquidity needs may be met through local deposit

11

ChoiceOne Financial Services, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

growth, maturities of securities, normal loan repayments, advances from the Federal Home Loan Bank, brokered time deposits, and income retention. Approximately $8 million of borrowing capacity was available from the Federal Home Loan Bank based on the Mortgage Company's residential mortgage loans pledged as collateral at year-end 2006. The acceptance of brokered time deposits is not limited as long as the Bank's capital to assets ratio is considered to be "well capitalized" under regulatory guidelines.

Interest rate risk is related to liquidity because each is affected by maturing assets and sources of funds. ChoiceOne's Asset/Liability Management Committee (the "ALCO") attempts to stabilize the interest rate spread and avoid possible adverse effects when unusual or rapid changes in interest rates occur. The ALCO uses a simulation model to measure the Bank's interest rate risk. The model incorporates changes in interest rates on rate-sensitive assets and liabilities. The degree of rate sensitivity is affected by prepayment assumptions that exist in the assets and liabilities. One method the ALCO uses of measuring interest rate sensitivity is the ratio of rate-sensitive assets to rate-sensitive liabilities. An asset or liability is considered to be rate-sensitive if it matures or otherwise reprices within a given time frame.

Table 5 documents the maturity or repricing schedule for ChoiceOne's rate-sensitive assets and liabilities for selected time periods.

Table 5 - Maturities and Repricing Schedule

(Dollars in thousands)

		As of December 31, 2006
		0-3 Months			3-12 Months			1-5 Years		Over 5 Years		Total
Assets
Loans held for sale	$	236		$	-		$	-	$	-	$	236
Loans		93,617			52,284			158,267		27,463		331,631
Securities available for sale		2,563			10,181			35,299		29,393		77,436
Federal Home Loan Bank and         Federal Reserve Bank stock		- -			- -			- -		3,981		3,981
Cash surrender value of life insurance policies		-			-			8,070		-		8,070
Rate-sensitive assets		96,416			62,465			201,636		60,837		421,354
Liabilities
Interest-bearing demand deposits		82,039			-			-		-		82,039
Savings deposits		27,680			-			-		-		27,680
Certificates of deposit		60,989			90,274			47,343		70		198,676
Advances from Federal Home Loan Bank		2,250			6,750			10,408		4,500		23,908
Federal funds purchased		460			-			-		-		460
Repurchase agreements		14,713			-			300		-		15,013
Rate-sensitive liabilities		188,131			97,024			58,051		4,570		347,776
Rate-sensitive assets less rate-sensitive liabilities:
Asset (liability) gap for the period	$	(91,715	)	$	(34,559	)	$	143,585	$	56,267	$	73,578
Cumulative asset (liability) gap	$	(91,715	)	$	(126,274	)	$	17,311	$	73,578

Under this method, the ALCO measures interest rate sensitivity by focusing on the one-year repricing gap. ChoiceOne's ratio of rate-sensitive assets to rate-sensitive liabilities that matured or repriced within a one-year time frame was 56% at December 31, 2006, compared to 72% at December 31, 2005. Table 5 above shows the entire balance of interest-bearing demand deposits, savings deposits, and overnight repurchase agreements in the shortest repricing term. Although these three categories have the ability to reprice immediately, management has some control over the actual timing or extent of the changes in interest rates on these deposits. The merger with VRFC in 2006 has made ChoiceOne more liability sensitive at year-end 2006 compared to year-end 2005. The ALCO plans to continue to monitor the ratio of rate-sensitive assets to rate-sensitive liabilities on a quarterly basis in 2007. As interest rates change during 2007, the ALCO will attempt to match its maturing assets with corresponding liabilities t o maximize ChoiceOne's net interest income.

Another method the ALCO uses to monitor its interest rate sensitivity is to subject rate-sensitive assets and liabilities to interest rate shocks. At December 31, 2006, management used a simulation model to subject its assets and liabilities to an immediate 300 basis point increase and an immediate 300 basis point decrease in interest rates. The maturities of loans and mortgage-backed securities were affected by certain prepayment assumptions. Maturities for interest-bearing core deposits were based on an estimate of the period

12

ChoiceOne Financial Services, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

over which they would be outstanding. The maturities of advances from the Federal Home Loan Bank were based on their contractual maturity dates. In the case of variable rate assets and liabilities, repricing dates were used to determine their values. The simulation model measures the effect of immediate interest rate changes on both net interest income and shareholders' equity. ChoiceOne's Interest Rate Risk Policy states that the changes in interest rates cannot cause net interest income to decrease more than 10% if rates are instantaneously shocked 100 basis points upward or downward; 10% if rates are instantaneously shocked 200 basis points upward or downward; and 10% if rates are instantaneously shocked 300 basis points upward or downward. ChoiceOne's Interest Rate Risk Policy states that the changes in interest rates cannot cause the market value of shareholders' equity to decrease more than 10% if rates are instantaneously shocked 100 basis points upward or downward; 20% if rates are instantaneously sh ocked 200 basis points upward or downward; and 30% if rates are instantaneously shocked 300 basis points upward or downward.

Table 6 provides an illustration of hypothetical interest rate changes as of December 31, 2006 and 2005, respectively:

Table 6 - Sensitivity to Changes in Interest Rates

		2006
(Dollars in thousands)		Net Interest Income	Percent Change			Market Value of Equity	Percent Change
Change in Interest Rates
300 basis point rise	$	16,364	+ 5	%	$	58,116	- 15	%
200 basis point rise		16,194	+ 4	%		61,345	- 10	%
100 basis point rise		16,021	+ 2	%		64,784	- 5	%
Base rate scenario		15,842	-	%		68,428	-	%
100 basis point decline		15,762	- 1	%		72,167	+ 5	%
200 basis point decline		15,640	- 1	%		75,938	+ 11	%
300 basis point decline		15,363	- 3	%		79,713	+ 16	%

		2005
(Dollars in thousands)		Net Income	Percent Change			Market Value of Equity	Percent Change
Change in Interest Rates
300 basis point rise	$	2,204	- 5	%	$	31,472	- 9	%
200 basis point rise		2,265	- 3	%		33,039	- 5	%
100 basis point rise		2,311	- 1	%		34,198	- 2	%
Base rate scenario		2,330	-	%		34,770	-	%
100 basis point decline		2,294	- 2	%		34,611	- 1	%
200 basis point decline		2,205	- 5	%		33,841	- 3	%
300 basis point decline		2,038	- 13	%		32,452	- 7	%

As of December 31, 2006, the Bank is within its guidelines for immediate rate shocks up and down for both net interest income and the market value of shareholder's equity. In 2006, the ALCO converted to a different software vendor for conducting its asset/liability modeling. In 2006, the ALCO also decided to examine the impact of rate shocks on net interest income versus net income due to various uncertainties affecting noninterest income and noninterest expense.

As of December 31, 2005, the Bank was within its guidelines for immediate shocks up and down for both net income and the market value of shareholder's equity. Also, during 2005 the ALCO changed certain assumptions within its asset/liability model to more accurately reflect historical trends and actual experience. The effect of these changes combined with management's desire to limit the immediate repricing of its interest-bearing demand and savings deposits illustrates that ChoiceOne's net income and market value of equity may be negatively impacted in both a rising rate and falling rate environment.

The ALCO plans to continue to monitor the effect of changes in interest rates on both net interest income and shareholders' equity and will make changes in the duration of its rate-sensitive assets and rate-sensitive liabilities where necessary.

13

ChoiceOne Financial Services, Inc.
CHANGE IN INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

On November 23, 2005, ChoiceOne engaged Plante & Moran, PLLC ("Plante") as its independent registered public accounting firm, to replace its prior accounting firm, Crowe Chizek and Company LLC ("Crowe"), effective as of the fiscal year beginning January 1, 2006. The change in ChoiceOne's certifying independent registered public accounting firm was based on the results of a competitive bidding process. The engagement of Plante Moran and the dismissal of Crowe was recommended and approved by the Audit Committee of ChoiceOne's Board of Directors.

Crowe's reports on ChoiceOne's financial statements for the fiscal year ended December 31, 2005 did not contain an adverse opinion or disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles. For the fiscal year ended December 31, 2005, there were no "disagreements" (as that term is defined in Item 304(a)(1)(iv) of Regulation S-K issued under the Securities Exchange Act of 1934, as amended, and its related instructions) between ChoiceOne and Crowe on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure which, if not resolved to the satisfaction of Crowe, would have caused Crowe to make reference to the subject matter of the disagreement in connection with its reports. For the fiscal year ended December 31, 2005, there were no "reportable events" (as that term is defined in Item 304(a)(1)(v) of Regulation S-K issued under the Securities Exchange Act of 1934, as amended, and its related instruct ions) between ChoiceOne and Crowe.

During the fiscal year ended December 31, 2005 (prior to engaging Plante Moran), ChoiceOne did not consult with Plante Moran regarding the application of accounting principles to a specific transaction (either completed or proposed), the type of audit opinion that might be rendered on ChoiceOne's financial statements, or any other matter that was the subject of a disagreement or reportable event.

14

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors
of ChoiceOne Financial Services, Inc., Sparta, Michigan

We have audited the accompanying consolidated balance sheet of ChoiceOne Financial Services, Inc. as of December 31, 2006, and the related consolidated statements of income, changes in shareholders' equity and cash flows for the year ended December 31, 2006. These financial statements are the responsibility of the Corporation's management. Our responsibility is to express an opinion on these financial statements based on our audit. The consolidated balance sheet of ChoiceOne Financial Services, Inc. as of December 31, 2005, and the related consolidated statements of income, changes in shareholders' equity and cash flows for the two years ended December 31, 2005, were audited by other auditors whose report, dated March 7, 2006, expressed an unqualified opinion on those statements.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of ChoiceOne Financial Services, Inc. as of December 31, 2006, and the results of its operations and its cash flows for the year ended December 31, 2006, in conformity with U.S. generally accepted accounting principles.

Plante & Moran, PLLC

Grand Rapids, Michigan
March 20, 2007

15

ChoiceOne Financial Services, Inc.
CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

		December 31
		2006			2005
Assets
Cash and due from banks	$	9,936		$	4,990
Securities available for sale		77,436			44,212
Federal Home Loan Bank stock		3,304			2,623
Federal Reserve Bank stock		677			376
Loans held for sale		236			264
Loans		331,631			185,568
Allowance for loan losses		(3,569	)		(1,963	)
Loans, net		328,062			183,605
Premises and equipment, net		11,622			5,596
Other real estate owned, net		1,774			1,255
Loan servicing rights, net		992			445
Cash value of life insurance policies		8,070			2,237
Intangible assets, net		4,182			-
Goodwill		14,280			-
Other assets		6,079			2,507
Total assets	$	466,650		$	248,110
Liabilities
Deposits - noninterest-bearing	$	57,986		$	22,180
Deposits - interest-bearing		308,394			159,932
Total deposits		366,380			182,112
Repurchase agreements		15,013			7,139
Federal funds purchased		460			4,399
Advances from Federal Home Loan Bank		23,908			30,750
Other liabilities		9,370			1,993
Total liabilities		415,131			226,393
Shareholders' Equity
Preferred stock; shares authorized: 100,000; shares outstanding: none		-			-
Common stock and paid-in capital, no par value; shares authorized: 4,000,000;         shares outstanding: 3,250,629 in 2006 and 1,649,940 in 2005		46,253			17,422
Retained earnings		5,285			4,594
Accumulated other comprehensive income (loss), net		(19	)		(299	)
Total shareholders' equity		51,519			21,717
Total liabilities and shareholders' equity	$	466,650		$	248,110

See accompanying notes to consolidated financial statements.

16

ChoiceOne Financial Services, Inc.
CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per share data)

		Years ended December 31
		2006			2005			2004
Interest income
Loans, including fees	$	14,874		$	11,641		$	10,181
Securities
Taxable		1,598			993			971
Tax exempt		876			685			586
Other		97			5			1
Total interest income		17,445			13,324			11,739
Interest expense
Deposits		7,187			4,082			3,031
Advances from Federal Home Loan Bank		1,182			974			914
Federal funds purchased and repurchase agreements		328			223			122
Total interest expense		8,697			5,279			4,067
Net interest income		8,748			8,045			7,672
Provision for loan losses		200			495			465
Net interest income after provision for loan losses		8,548			7,550			7,207
Noninterest income
Customer service charges		1,450			1,059			915
Insurance and investment commissions		831			866			1,002
Gains on sales of loans		234			264			305
Gains (losses) on sales of securities		(66	)		(28	)		38
Gains (losses) on sales of other assets		(160	)		2			(33	)
Profit sharing income		188			125			164
Earnings on life insurance policies		149			88			3
Other income		251			204			176
Total noninterest income		2,877			2,580			2,570
Noninterest expense
Salaries and benefits		4,664			3,877			3,830
Occupancy and equipment		1,301			1,116			1,024
Data processing		712			570			498
Professional fees		433			464			498
Supplies and postage		266			227			225
Advertising and promotional		111			154			120
Intangible asset amortization		77			-			-
Other expense		1,134			776			1,033
Total noninterest expense		8,698			7,184			7,228
Income before income tax		2,727			2,946			2,549
Income tax expense		639			780			695
Net income	$	2,088		$	2,166		$	1,854
Comprehensive income	$	2,368		$	1,755		$	1,450
Basic earnings per common share	$	1.09		$	1.31		$	1.13
Diluted earnings per common share	$	1.09		$	1.31		$	1.13
Dividends declared per common share	$	0.68		$	0.67		$	0.65

See accompanying notes to consolidated financial statements.

17

ChoiceOne Financial Services, Inc.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(Dollars in thousands, except per share data)

	Number of Shares		Common Stock and Paid in Capital		Unallocated Shares held by ESOP		Retained Earnings		Accumulated Other Comprehensive Income (Loss), Net		Total
Balance, January 1, 2004	1,563,415		$  15,815		$   (27	)	$  4,264		$   516		$  20,568
Comprehensive income:
Net income							1,854				1,854
Net change in unrealized gain (loss)									(404	)	(404	)
Total comprehensive income											1,450
Shares issued	13,267		255								255
Shares repurchased	(6,053	)	(118	)							(118	)
Shares committed to be released    under Employee Stock    Ownership Plan			(18	)	18						- -
Change in ESOP repurchase obligation			(26	)							(26	)
Shares issued under stock    option plans	308		5								5
Cash dividends declared ($0.65 per share)							(1,065	)			(1,065	)
Balance, December 31, 2004	1,570,937		$  15,913		$    (9	)	$  5,053		$   112		$  21,069
Comprehensive income:
Net income							2,166				2,166
Net change in unrealized gain (loss)									(411	)	(411	)
Total comprehensive income											1,755
Shares issued	15,976		307								307
Shares repurchased	(15,412	)	(322	)							(322	)
Shares committed to be released    under Employee Stock    Ownership Plan			(9	)	9						- -
Change in ESOP repurchase obligation			17								17
Cash dividends declared ($0.67 per share)							(1,105	)			(1,105	)
Stock dividends declared (5%)	78,439		1,516				(1,520	)			(4	)
Balance, December 31, 2005	1,649,940		$  17,422		$     -		$  4,594		$  (299	)	$  21,717
Comprehensive income:
Net income							2,088				2,088
Net change in unrealized gain (loss)									280		280
Total comprehensive income											2,368
Shares issued	19,894		339								339
Shares issued in merger with Valley Ridge    Financial Corp.	1,585,482		28,538								28,538
Shares repurchased	(4,687	)	(84	)							(84	)
Change in ESOP repurchase obligation			4								4
Effect of stock options granted			24								24
Effect of employee stock purchases			10								10
Cash dividends declared ($0.68 per share)							(1,397	)			(1,397	)
Balance, December 31, 2006	3,250,629		$  46,253		$     -		$  5,285		$   (19	)	$  51,519

See accompanying notes to consolidated financial statements.

18

ChoiceOne Financial Services, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

		Years ended December 31
		2006			2005			2004
Cash flows from operating activities:
Net income	$	2,088		$	2,166		$	1,854
Adjustments to reconcile net income to net cash from operating activities:
Provision for loan losses		200			495			465
Depreciation		587			535			495
Amortization		531			582			631
Compensation expense on stock options and employee purchases		34			-			-
Stock dividends on Federal Home Loan Bank stock		-			(54	)		(113	)
Losses (gains) on sales of securities		66			28			(38	)
Gains on sales of loans		(234	)		(264	)		(305	)
Loans originated for sale		(15,187	)		(18,757	)		(12,580	)
Proceeds from loan sales		15,386			18,929			12,471
Earnings on bank-owned life insurance		(149	)		(88	)		(3	)
Net change in:
Other assets		(1,562	)		319			1,804
Other liabilities		(8,926	)		(59	)		763
Net cash from operating activities		(7,166	)		3,832			5,444
Cash flows from investing activities:
Sales of securities available for sale		16,982			3,748			5,615
Maturities, prepayments and calls of securities available for sale		7,156			5,928			4,369
Purchases of securities available for sale		(22,223	)		(10,004	)		(18,022	)
Loan originations and payments, net		421			(13,249	)		(16,877	)
Proceeds from sale of residential real estate mortgage loans		-			-			5,037
Additions to premises and equipment		(301	)		(1,225	)		(1,481	)
Purchase of bank-owned life insurance		-			(2,000	)		-
Cash received in merger with Valley Ridge Financial Corp		19,995			-			-
Net cash from investing activities		22,030			(16,802	)		(21,359	)
Cash flows from financing activities:
Net change in deposits		14,104			15,046			20,803
Net change in repurchase agreements		(691	)		801			1,033
Net change in federal funds purchased		(3,939	)		3,118			(6,601	)
Proceeds from Federal Home Loan Bank advances		68,000			52,000			27,750
Payments on Federal Home Loan Bank advances		(86,250	)		(55,500	)		(27,250	)
Issuance of common stock		339			307			260
Repurchase of common stock		(84	)		(322	)		(118	)
Cash dividends and fractional shares from stock dividends		(1,397	)		(1,109	)		(1,065	)
Net cash from financing activities		(9,918	)		14,341			14,812
Net change in cash and cash equivalents		4,946			1,371			(1,103	)
Beginning cash and cash equivalents		4,990			3,619			4,722
Ending cash and cash equivalents	$	9,936		$	4,990		$	3,619
Supplemental disclosures:
Cash paid for interest	$	8,342		$	5,082		$	4,018
Cash paid for income taxes		910			570			375
Loans transferred to other real estate owned		1,093			688			967
Loans transferred to loans held for sale		-			-			5,064
Equity securities transferred to other assets		-			-			208

See accompanying notes to consolidated financial statements.

19

ChoiceOne Financial Services, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Summary of Significant Accounting Policies

Principles of Consolidation
The consolidated financial statements include ChoiceOne Financial Services, Inc., its wholly-owned subsidiary, ChoiceOne Bank, and ChoiceOne Bank's wholly-owned subsidiaries, ChoiceOne Mortgage Company of Michigan, and ChoiceOne Insurance Agencies, Inc., (together referred to as "ChoiceOne"). Intercompany transactions and balances have been eliminated in consolidation.

Nature of Operations
ChoiceOne Bank (the "Bank") is a full-service community bank that offers commercial, consumer, and real estate loans as well as traditional demand, savings and time deposits to both commercial and consumer clients in portions of Kent, Muskegon, Newaygo, and Ottawa counties in Michigan. Substantially all loans are secured by specific items of collateral including business assets, consumer assets, and real estate. Commercial loans are expected to be repaid from the cash flows from operations of businesses. Real estate loans are secured by both residential and commercial real estate.

ChoiceOne Mortgage Company of Michigan (the "Mortgage Company") originates and sells a full line of conventional type mortgage loans for 1-4 family and multi-family residential real estate properties. It also originates second mortgages on residential real estate with home equity term loans and lines of credit.

ChoiceOne Insurance Agencies, Inc. (the "Insurance Agency") is a wholly-owned subsidiary of the Bank. The Insurance Agency sells a full line of insurance policies such as life, health, property and casualty for both commercial and consumer clients. The Insurance Agency also offers alternative investment products such as annuities and mutual funds through a registered broker.

Together, the Bank, the Mortgage Company, and the Insurance Agency, account for substantially all of ChoiceOne's assets, revenues and operating income.

Use of Estimates
To prepare financial statements in conformity with accounting principles generally accepted in the United States of America, ChoiceOne's management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided. Actual results may differ from these estimates. Estimates associated with the allowance for loan losses, core deposit intangible asset, loan servicing rights, goodwill, and fair values of certain financial instruments are particularly susceptible to change.

Cash and Cash Equivalents
Cash and cash equivalents are defined to include cash on hand, demand deposits with other banks, and federal funds sold. Cash flows are reported on a net basis for customer loan and deposit transactions, deposits with other financial institutions, and short-term borrowings with terms of 90 days or less.

Securities
Securities are classified as available for sale because they might be sold before maturity. Securities classified as available for sale are carried at fair value, with unrealized holding gains and losses reported separately in other comprehensive income or loss and shareholders' equity, net of tax effect. Restricted investments in Federal Reserve Bank stock and Federal Home Loan Bank stock are carried at cost.

Interest income includes amortization of purchase premium or discount. Premiums and discounts on securities are amortized using the level-yield method without anticipating prepayments. Gains or losses on sales are recorded on the trade date based on the amortized cost of the security sold.

Declines in the fair value of securities below their cost that are other than temporary are reflected as realized losses. In estimating other-than-temporary losses, management considers: the length of time and extent that fair value has been less than cost, the financial condition and near term prospects of the issuer, and ChoiceOne's ability and intent to hold the security for a period sufficient to allow for any anticipated recovery in fair value.

Loans
Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of unearned interest, deferred loan fees and costs, and an allowance for loan losses. Loans held for sale are reported at the lower of cost or market, on an aggregate basis.

20

ChoiceOne Financial Services, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Interest income on loans is reported on the interest method and includes amortization of net deferred loan fees and costs over the estimated loan term. Interest on loans is accrued based upon the principal balance outstanding. The accrual of interest is discontinued at the time at which commercial loans are 90 days past due unless the loan is secured by sufficient collateral and in the process of collection. Interest on consumer or real estate secured loans is discontinued at the time at which the loan is 120 days past due unless the credit is secured by sufficient collateral and in the process of collection. Past due status is based on the contractual terms of the loan. In all cases, loans are placed into nonaccrual status or charged off at an earlier date if collection of principal or interest is considered doubtful. Interest accrued but not received is reversed against interest income when the loans are placed into nonaccrual status. Interest received on such loans is applied to principal until qualify ing for return to accrual. Loans are returned to accrual basis when all the principal and interest amounts contractually due are brought current and future payment is reasonably assured.

Allowance for Loan Losses
The allowance for loan losses is a valuation allowance for probable incurred credit losses. The allowance is increased by the provision for loan losses and decreased by loans charged off less any recoveries of charged off loans. Management estimates the allowance balance required based on past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions, and other factors. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management's judgment, should be charged off. Loan losses are charged against the allowance when management believes the collectibility of a loan balance is not possible.

The allowance consists of general and specific components. The general component covers non-classified loans and is based on historical loss experience adjusted for current factors. The specific component relates to loans that are individually classified as impaired or loans otherwise classified as substandard or doubtful.

A loan is impaired when full payment under the loan terms is not expected. Commercial loans are evaluated for impairment on an individual loan basis. If a loan is considered impaired, a portion of the allowance for loan losses is allocated to the loan so that it is reported, net, at the present value of estimated future cash flows using the loan's existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Large groups of smaller balance homogeneous loans such as consumer and real estate mortgage loans are collectively evaluated for impairment, and accordingly, they are not separately identified for impairment disclosures.

Premises and Equipment
Premises and equipment are stated at cost less accumulated depreciation. Land is carried at cost. Land improvements are depreciated using the straight-line method with useful lives ranging from 7 to 15 years. Building and related components are depreciated using the straight-line method with useful lives ranging from 5 to 39 years. Leasehold improvements are depreciated over the shorter of the estimated life or the lease term. Furniture and equipment are depreciated using the straight-line method with useful lives ranging from 3 to 7 years. Fixed assets are periodically reviewed for impairment when events indicate their carrying amounts may not be recoverable from future undiscounted cash flows. If impaired, the assets are recorded at fair value.

Other Real Estate Owned
Real estate properties acquired in the collection of a loan are initially recorded at fair value at acquisition establishing a new cost basis. Any reduction to fair value from the carrying value of the related loan is accounted for as a loan loss. After acquisition, a valuation allowance reduces the reported amount to the lower of the initial amount or fair value less costs to sell. Expenses to repair or maintain properties are included within other noninterest expenses. Gains and losses upon disposition and changes in the valuation allowance are reported net within other noninterest income.

Loan Servicing Rights
Servicing rights represent the allocated value of servicing rights on loans sold with servicing retained. Servicing rights are expensed in proportion to, and over the period of, estimated net servicing revenues. Impairment is evaluated based on the fair value of the rights, using groupings of the underlying loans as to interest rates and then, secondarily, as to geographic and prepayment characteristics. Fair value is determined using prices for similar assets with similar characteristics when available or based upon discounted cashflows using market-based assumptions. Any impairment of a grouping is reported as a valuation allowance.

Goodwill
Goodwill results from business acquisitions and represents the excess of the purchase price over the fair value of the acquired intangible assets and liabilities and identifiable intangible assets. Goodwill is assessed at least annually for impairment and any such impairment will be recognized in the period identified.

21

ChoiceOne Financial Services, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Loan Commitments and Related Financial Instruments
Financial instruments include off-balance sheet credit instruments, such as commitments to make loans and commercial letters of credit issued to meet financing needs of customers. The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay. Such financial instruments are recorded when they are funded.

Repurchase Agreements
Substantially all repurchase agreement liabilities represent amounts advanced by deposit clients that are not covered by federal deposit insurance and are secured by securities owned by ChoiceOne.

Employee Benefit Plans
ChoiceOne's 401(k) plan allows participants to contribute up to 15% of their compensation. Contributions from ChoiceOne to its 401(k) plan are discretionary. ChoiceOne also allows retired employees to participate in its health insurance plan. Employees who have attained age 55 and completed at least six years of service to ChoiceOne are eligible to participate as a retiree. These postretirement benefits are accrued during the years in which the employee provides service.

Employee Stock Ownership Plan
The cost of shares issued to the Employee Stock Ownership Plan (the "ESOP") but not yet allocated to participants is presented as a reduction of shareholders' equity. Compensation expense is recorded based on the market price of the shares as they are committed to be released for allocation to participant accounts. The difference between the market price and the cost of shares committed to be released is recorded as an adjustment to additional paid-in capital. Dividends on allocated ESOP shares are recorded as a reduction of retained earnings while dividends on unallocated ESOP shares are reflected as a reduction of debt and accrued interest. Upon distribution of shares to a participant, the participant has the right to require the Company to purchase his or her shares at fair value in accordance with the terms and conditions of the ESOP. As such, these shares are not classified in shareholders' equity as permanent equity.

Income Taxes
Income tax expense is the sum of the current year income tax due and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax consequences of temporary differences between the carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized.

Earnings Per Share
Basic earnings per common share ("EPS") is based on weighted-average common shares outstanding. The weighted-average number of shares used in the computation of basic and diluted earnings per common share includes shares allocated to the ESOP. Diluted EPS further assumes issue of any dilutive potential common shares issuable under stock options. Earnings and dividends per share are restated for stock dividends and splits through the issue date of the financial statements.

Comprehensive Income
Comprehensive income consists of net income and other comprehensive income or loss. Other comprehensive income or loss includes the net change in unrealized appreciation (depreciation) on securities available for sale, net of tax, which is also recognized as a separate component of shareholders' equity.

Loss Contingencies
Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe that there are any such matters that may have a material effect on the financial statements.

Cash Restrictions
Cash on hand or on deposit with the Federal Reserve Bank of $1.9 million and $1.1 million was required to meet regulatory reserve and clearing requirements at December 31, 2006 and 2005, respectively. These balances do not earn interest.

Stock Dividends
Dividends issued in stock are reported by transferring the market value of the stock issued from retained earnings to common stock and additional paid-in capital. Fractional shares resulting from stock dividends are paid in cash.

22

ChoiceOne Financial Services, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Stock Based Compensation
ChoiceOne adopted the provisions of Statement of Financial Accounting Standards ("SFAS") 123R as of January 1, 2006. This standard provides for a modified prospective application. Under this method, ChoiceOne began recognizing compensation cost for equity-based compensation for all new or modified grants after the date of adoption. Awards issued prior to 2006 that have not been modified are not affected by SFAS 123R.

Prior to January 1, 2006, ChoiceOne used the intrinsic value method under Accounting Principles Board Opinion ("APB") 25 to account for its stock option plans. No compensation cost was recognized for ChoiceOne's plans during 2005 or 2004 as all stock options granted under those plans had an exercise price equal to the market value of the underlying stock on the date of grant.

The following pro forma information presents net income and earnings per share for the years ended December 31, 2006, 2005 and 2004, respectively, had the fair value method been used to measure compensation cost for stock option plans:

(Dollars in thousands)

		2006			2005			2004
Net income, as reported	$	2,088		$	2,166		$	1,854
Add: Compensation costs included in net income		34			-			-
Less: Compensation costs based on the fair value method for all     outstanding stock options		(34	)		(17	)		(10	)
Pro forma net income	$	2,088		$	2,149		$	1,844
Basic earnings per common share, as reported	$	1.09		$	1.31		$	1.13
Basic earnings per common share, pro forma	$	1.09		$	1.30		$	1.12
Diluted earnings per common share, as reported	$	1.09		$	1.31		$	1.13
Diluted earnings per common share, pro forma	$	1.09		$	1.30		$	1.12

Dividend Restrictions
Banking regulations require the maintenance of certain capital levels and may limit the amount of dividends that may be paid by the Bank to ChoiceOne (see Note 21).

Fair Value of Financial Instruments
Fair values of financial instruments are estimated using relevant market information and other assumptions, which are more fully documented in Note 19 to the consolidated financial statements. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect the estimates.

Operating Segments
While ChoiceOne's management monitors the revenue streams of various products and services for the Bank, Insurance Agency and Mortgage Company, operations and financial performance are evaluated on a company-wide basis. Accordingly, all of the financial service operations are considered by management to be aggregated into one reportable operating segment.

Adoption of New Accounting Standards

Statement of Financial Accounting Standards Number 157, Fair Value Measurements (SFAS 157)
This statement clarifies the definition of fair value, establishes a framework for measuring fair value, and expands the disclosures on fair value measurements. It applies under other accounting pronouncements that require or permit fair value measurements and does not require any new fair value measurements. SFAS 157 is effective for fiscal years beginning after November 15, 2007. ChoiceOne has determined that the impact of adopting SFAS 157 will not have a material impact on its consolidated financial statements.

FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109 (FIN 48)
In July 2006, the Financial Accounting Standards Board ("FASB") issued this interpretation to clarify the accounting for uncertainty in tax positions. FIN 48 requires, among other matters, that ChoiceOne recognize in its financial statements the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. The provisions of FIN 48 are effective as of the beginning of ChoiceOne's 2007 fiscal year, with any cumulative effect of the change in accounting principle recorded as an adjustment to opening retained earnings. ChoiceOne has determined that the impact of adopting FIN 48 will not have a material impact on its consolidated financial statements.

23

ChoiceOne Financial Services, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Statement of Financial Accounting Standards Number 158, Accounting for Defined Benefit Pension and Other Postretirement Plans (SFAS 158)
This statement requires balance sheet recognition of the funded status of a defined benefit plan. It also requires that changes in the funded status be recognized through comprehensive income and expands disclosures. Additionally, SFAS 158 requires employers to measure the funded status of a plan as of the date of its year-end balance sheet. The recognition and disclosures under SFAS 158 are required as of the end of the fiscal year ending after December 15, 2006, while the new measurement date is effective for fiscal years ending after December 15, 2008. ChoiceOne has determined that the impact of adopting SFAS 158 will not have a material impact on its consolidated financial statements.

Reclassifications
Certain amounts presented in prior year consolidated financial statements have been reclassified to conform to the current year's presentation.

24

ChoiceOne Financial Services, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 2 - Merger

On November 1, 2006, ChoiceOne completed a merger with Valley Ridge Financial Corp. ("VRFC"), parent company of Valley Ridge Bank ("VRB"). On December 7, 2006, Valley Ridge Bank was consolidated into ChoiceOne Bank, and Valley Ridge Mortgage Company ("VRMC") was merged into ChoiceOne Mortgage Company of Michigan. The merger was accounted for using the purchase method of accounting, and accordingly, the purchase price was allocated to the assets acquired and the liabilities assumed based upon the estimated fair values as of the date of the merger.

The aggregate purchase price was $28.5 million including merger costs. The purchase price was determined using ChoiceOne's market price of common stock as of November 1, 2006. ChoiceOne issued a total of 1,585,482 shares of its common stock to former shareholders of Valley Ridge Financial Corp.

The following table summarizes the estimated fair values of the consolidated assets acquired and the liabilities assumed at the date of the merger with VRFC:

(Dollars in thousands)		Fair Value
Cash and cash equivalents	$	19,995
Securities		34,446
Federal Reserve Bank and Federal Home Loan Bank stock		1,560
Loans, net		146,171
Premises and equipment		6,312
Cash surrender value of bank-owned life insurance		5,713
Loan servicing rights		635
Core deposit intangible		4,134
Other intangible assets		125
Goodwill		14,280
Other assets		1,463
Total assets acquired	$	234,834
Deposits		170,164
Advances from Federal Home Loan Bank		11,404
Repurchase agreements		8,565
Other liabilities		16,163
Total liabilities assumed	$	206,296
Net assets acquired	$	28,538

The purchase accounting fair value adjustments are being amortized under various methods and over the estimated lives of the corresponding assets and liabilities. Goodwill recorded from the merger amounted to $14.3 million. A core deposit intangible asset of $4.1 million was recorded as part of the deposits assumed and is being amortized on a straight-line method over a period of 10 years. Amortization of the core deposit intangible asset for the year ended December 31, 2006 was $69,000. Accumulated amortization through December 31, 2006 was $69,000. The estimated amortization expense for the next five years ending December 31 is as follows:

(Dollars in thousands)		Core Deposit Intangible		Other Intangible Assets		Total
2007	$	413	$	50	$	463
2008		413		46		459
2009		413		21		434
2010		414		-		414
2011		414		-		414
Thereafter		1,998		-		1,998
Total	$	4,065	$	117	$	4,182

25

ChoiceOne Financial Services, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 2 - Merger (continued)

The following pro forma disclosures, including the effect of purchase accounting adjustments, depict the results of operations as though the merger with VRFC had taken place as of January 1 for each period presented:

(Dollars in thousands, except per share data)

		2006		2005		2004
Net interest income	$	15,833	$	15,952	$	15,018
Noninterest income		5,195		5,265		5,230
Total income	$	21,028	$	21,217	$	20,248
Provision for loan losses		350		615		465
Noninterest expense		15,954		15,244		15,028
Income taxes		1,166		1,333		1,174
Net income	$	3,558	$	4,025	$	3,581
Basic earnings per common share	$	1.02	$	1.24	$	1.11
Diluted earnings per common share	$	1.02	$	1.24	$	1.11

Note 3 - Securities

The fair value of securities available for sale and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) at December 31 were as follows:

		2006
(Dollars in thousands)		Fair Value		Gross Unrealized Gains		Gross Unrealized Losses
U.S. Government and federal agency	$	18,164	$	39	$	(25	)
State and municipal		35,651		153		(166	)
Mortgage-backed		19,842		102		(123	)
Corporate		2,254		1		(13	)
Equity securities		1,525		4		(1	)
Total	$	77,436	$	299	$	(328	)

		2005
(Dollars in thousands)		Fair Value		Gross Unrealized Gains		Gross Unrealized Losses
U.S. Government and federal agency	$	5,435	$	-	$	(100	)
State and municipal		28,003		174		(343	)
Mortgage-backed		7,811		2		(178	)
Corporate		2,382		-		(55	)
Equity securities		581		46		-
Total	$	44,212	$	222	$	(676	)

Information regarding sales of securities available for sale follows:

(Dollars in thousands)

		2006		2005		2004
Proceeds from sales of securities	$	16,982	$	3,748	$	5,615
Gross realized gains		102		9		41
Gross realized losses		168		37		3

26

ChoiceOne Financial Services, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 3 - Securities (continued)

Contractual maturities of securities available for sale at December 31, 2006 were as follows:

(Dollars in thousands)		Fair Value
Due within one year	$	9,381
Due after one year through five years		29,978
Due after five years through ten years		15,864
Due after ten years		846
Total debt securities		56,069
Mortgage-backed securities, not due at a specific date		19,842
Equity securities		1,525
Total	$	77,436

Various securities were pledged as collateral for securities sold under agreements to repurchase and as collateral for advances from the Federal Home Loan Bank. The carrying amount of securities pledged as collateral at December 31 was as follows:

(Dollars in thousands)

		2006		2005
Securities pledged for securities sold under agreements to repurchase	$	15,474	$	7,139
Securities pledged for advances from Federal Home Loan Bank		-		13,246
Total securities pledged as collateral	$	15,474	$	20,385

Securities with unrealized losses at year-end 2006 and 2005, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position, are as follows:

(Dollars in thousands)		2006
		Less than 12 months					More than 12 months					Total
		Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
U.S. Government and federal    agency	$	2,968	$	(1	)	$	1,484	$	(24	)	$	4,452	$	(25	)
State and municipal		11,413		(66	)		7,783		(100	)		19,196		(166	)
Mortgage-backed		2,664		(5	)		4,992		(118	)		7,656		(123	)
Corporate		3,056		(13	)		-		-			3,056		(13	)
Equity		21		(1	)		-		-			21		(1	)
Total temporarily impaired	$	20,122	$	(86	)	$	14,259	$	(242	)	$	34,381	$	(328	)

(Dollars in thousands)		2005
		Less than 12 months					More than 12 months					Total
		Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
U.S. Government and federal    agency	$	510	$	(8	)	$	2,928	$	(92	)	$	3,438	$	(100	)
State and municipal		8,990		(124	)		8,902		(219	)		17,892		(343	)
Mortgage-backed		5,153		(91	)		1,998		(87	)		7,151		(178	)
Corporate		-		-			2,382		(55	)		2,382		(55	)
Total temporarily impaired	$	14,653	$	(223	)	$	16,210	$	(453	)	$	30,863	$	(676	)

ChoiceOne evaluates securities for other-than-temporary impairment at least on a semi-annual basis, and more frequently when economic or market concerns warrant such evaluation. As of December 31, 2006 and 2005, management has determined that no other-than-temporary declines in market value have occurred. Consideration is given to the length of time and 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 issue for a period of time sufficient to allow for any anticipated recovery in fair value.

27

ChoiceOne Financial Services, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 4 - Loans

The Bank's loan portfolio as of December 31 was as follows:

(Dollars in thousands)

		2006			2005
Agricultural	$	18,583		$	10,203
Commercial and industrial		119,249			37,439
Consumer		15,589			11,820
Real estate - commercial		60,936			51,453
Real estate - construction		4,740			7,466
Real estate - residential		112,534			67,187
Loans, gross		331,631			185,568
Allowance for loan losses		(3,569	)		(1,963	)
Loans, net	$	328,062		$	183,605

Note 5 - Mortgage Banking

Activity during the year was as follows:

(Dollars in thousands)

		2006		2005		2004
Loans originated for resale, net of principal payments	$	15,187	$	18,757	$	12,580
Proceeds from loan sales		15,386		18,929		12,471
Net gains on sales of loans held for sale		234		264		305
Loan servicing fees, net of amortization		53		56		49

Loans serviced for others are not reported as assets in the accompanying consolidated balance sheets. The unpaid principal balances of these loans at December 31 were $138.9 million and $68.5 million at December 31, 2006 and 2005, respectively. The Bank maintains custodial escrow balances in connection with these serviced loans; however, such escrows were immaterial at December 31, 2006 and 2005.

Activity for loan servicing rights was as follows:

(Dollars in thousands)

		2006			2005			2004
Balance, beginning of year	$	445		$	472		$	442
Capitalized		63			109			160
Amortization		(151	)		(136	)		(130	)
Acquisition of servicing rights from VRMC		635			-			-
Balance, end of year	$	992		$	445		$	472

The fair value of loan servicing rights was $1,300,000 and $608,000 as of December 31, 2006 and 2005, respectively. Consequently, a valuation allowance was not necessary at year-end 2006 or 2005. The fair value of servicing rights at December 31, 2006 was determined using a discount rate of 9.5% and prepayment speeds ranging from 9% to 30%. The fair value of servicing rights at December 31, 2005 was determined using a discount rate of 9.5% and prepayment speeds ranging from 11% to 30%.

28

ChoiceOne Financial Services, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 6 - Allowance for Loan Losses

Activity in the allowance for loan losses was as follows:

(Dollars in thousands)

		2006			2005			2004
Balance, beginning of year	$	1,963		$	1,739		$	1,974
Provision charged to expense		200			495			465
Recoveries credited to the allowance		168			128			240
Transfer of allowance from VRB and VRMC		1,751			-			-
Loans charged off		(513	)		(399	)		(940	)
Balance, end of year	$	3,569		$	1,963		$	1,739

Information regarding nonperforming loans for the years ended December 31 follows:

(Dollars in thousands)

		2006		2005
Nonaccrual loans	$	6,420	$	934
Loans past due over 90 days still on accrual		278		32
Restructured loans		24		-
Total	$	6,722	$	966

Nonperforming loans includes both smaller balance homogenous loans that are collectively evaluated for impairment and loans individually classified as impaired loans. Information regarding impaired loans as of and for the year ended December 31 follows:

(Dollars in thousands)

		2006		2005		2004
Loans with no allowance allocated at year end	$	5,030	$	306	$	419
Loans with allowance allocated at year end		1,807		1,157		247
Amount of allowance for loan losses allocated at year end		942		465		105
Average balance during the year		2,627		968		1,072
Interest income recognized thereon		151		48		39
Cash-basis interest income recognized		190		60		25

Note 7 - Premises and Equipment

As of December 31, premises and equipment consisted of the following:

(Dollars in thousands)

		2006			2005
Land and land improvements	$	1,788		$	1,672
Leasehold improvements		42			42
Buildings		10,949			5,177
Furniture and equipment		2,863			2,179
Total cost		15,642			9,070
Accumulated depreciation		(4,020	)		(3,474	)
Premises and equipment, net	$	11,622		$	5,596

ChoiceOne acquired premises and equipment with a fair market value totaling $6.3 million from Valley Ridge Financial Corp. in November 2006.

29

ChoiceOne Financial Services, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 7 - Premises and Equipment (continued)

Depreciation expense was $587,000, $535,000, and $495,000 for 2006, 2005 and 2004, respectively. In September 2004, the Bank sold its Sparta Appletree Office in Sparta, Michigan for a gain of $162,000, of which $105,000 was deferred over a three-year term since part of the office was simultaneously leased back from the purchaser. The Bank also opened a new office in Rockford, Michigan in September 2004 and in Comstock Park, Michigan in July 2005. The Bank's lease on the former Alpine Office location in Comstock Park expired in July 2005. ChoiceOne acquired nine branch offices in Kent City, Ravenna, Muskegon, Sparta, Coopersville, Grant, Newaygo, White Cloud, and Fremont, Michigan in November 2006 as part of the merger with Valley Ridge Financial Corp. In January 2007, the Bank announced the closure of its Sparta State Street Office effective February 28, 2007.

The Bank leases certain branch properties and automated-teller machine locations in its normal course of business. Rent expense totaled $49,000, $57,000, and $40,000 for 2006, 2005 and 2004, respectively. Rent commitments under non-cancelable operating leases were as follows, before considering renewal options that generally are present (dollars in thousands):

2007	$	66
2008		23
2009		23
2010		23
2011		15
Total	$	150

Note 8 - Other Real Estate Owned

Other real estate owned represents residential and commercial properties owned and is reported net of a valuation allowance. Activity within other real estate owned was as follows:

(Dollars in thousands)

		2006			2005
Balance, beginning of year	$	1,255		$	981
Transfers from loans		1,093			688
Acquisition of other real estate from VRFC		75			-
Capitalized improvements or purchased assets		15			20
Sales		(509	)		(404	)
Write-downs		(155	)		(30	)
Balance, end of year	$	1,774		$	1,255

The valuation allowance on other real estate owned totaled $223,000 and $84,000 at year-end 2006 and 2005, respectively.

Note 9 - Deposits

Scheduled maturities of certificates of deposit at December 31 were as follows:

(Dollars in thousands)

2007	$	150,794
2008		22,166
2009		16,116
2010		4,398
2011		5,132
2012		70
Total	$	198,676

The Bank had certificates of deposit issued in denominations of $100,000 or greater totaling $88.5 million and $54.5 million at December 31, 2006 and 2005, respectively. The Bank had brokered certificates of deposit totaling $41.1 million at December 31, 2006 compared to $36.5 million at December 31, 2005. As of December 31, 2006, the weighted average interest rate on these brokered certificates of deposit was 4.92% with maturities ranging from January 2007 to June 2010.

30

ChoiceOne Financial Services, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 10 - Repurchase Agreements

Repurchase agreements are advances by customers that are not covered by federal deposit insurance. These agreements are direct obligations of the Bank and are secured by securities held in safekeeping at a correspondent bank. Information regarding repurchase agreements follows:

(Dollars in thousands)

		2006			2005
Outstanding balance at December 31	$	15,013		$	7,139
Average interest rate at December 31		3.58	%		2.11	%
Average balance during the year	$	6,492		$	6,215
Average interest rate during the year		2.63	%		2.05	%
Maximum month end balance during the year	$	15,013		$	7,139

Note 11 - Federal Home Loan Bank Advances

At December 31, advances from the Federal Home Loan Bank were as follows:

(Dollars in thousands)

		2006		2005
Maturities ranging from January 2007 to December 2010, fixed interest rates ranging from 2.48% to 5.95%, with an average rate of 4.68%	$	23,908
Maturities ranging from January 2006 to December 2008, fixed interest rates ranging from 2.15% to 4.90%, with an average rate of 3.37%			$	20,750
Maturity of February 2006, floating interest rate, with an average rate of 4.20%				6,000
Maturities of June 2006, floating interest rates, with an average rate of 4.18%				4,000
Total advances outstanding at year-end	$	23,908	$	30,750

Penalties are charged on fixed rate advances that are paid prior to maturity. No fixed rate advances were paid prior to maturity in 2006, 2005 or 2004. Advances are secured by residential real estate loans and U.S. Government agency securities with a carrying value of approximately $41.1 million and $55.6 million at December 31, 2006 and 2005, respectively. Based on this collateral, the Bank was eligible to borrow an additional $8.0 million at year-end 2006. The scheduled maturities of advances from the Federal Home Loan Bank at December 31, 2006 are as follows (dollars in thousands):

2007	$	9,000
2008		6,000
2009		-
2010		8,908
Total	$	23,908

31

ChoiceOne Financial Services, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 12 - Income Taxes

Information as of December 31 and for the year follows:

(Dollars in thousands)

		2006			2005			2004
Provision for Income Taxes
Current federal income tax expense	$	780		$	783		$	456
Deferred federal income tax expense (benefit)		(141	)		(3	)		239
Income tax expense	$	639		$	780		$	695
Reconciliation of Income Tax Provision to Statutory Rate
Income tax computed at statutory federal rate of 34%	$	927		$	1,002		$	867
Tax exempt interest income		(323	)		(245	)		(203	)
Tax exempt earnings on bank-owned life insurance		(51	)		(30	)		-
Nondeductible interest expense		49			32			17
Other items		37			21			14
Income tax expense	$	639		$	780		$	695
Effective income tax rate		23	%		26	%		27	%

Components of Deferred Tax Assets and Liabilities		2006			2005
Deferred tax assets:
Deferred compensation	$	895		$	-
Allowance for loan losses		888			421
Purchase accounting adjustments from merger with VRFC		515			-
Postretirement benefits obligation		183			80
Write downs on other real estate owned		98			51
Unrealized losses on securities available for sale		10			154
Other		130			54
Total deferred tax assets		2,719			760
Deferred tax liabilities:
Purchase accounting adjustments from merger with VRFC		2,418			-
Depreciation		310			264
Loan servicing rights		213			149
Stock dividends from Federal Home Loan Bank stock		111			88
Investment in West Shore Computer Services		46			46
Prepaid expenses		56			50
Other		29			20
Total deferred tax liabilities		3,183			617
Net deferred tax assets (liabilities)	$	(464	)	$	143

A valuation allowance related to deferred taxes is recognized when it is considered more likely than not that part or all of the deferred tax benefits will not be realized. Management has determined that no such allowance was required at December 31, 2006 and 2005.

32

ChoiceOne Financial Services, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 13 - Related Party Transactions

Loans to executive officers, directors and their affiliates were as follows at December 31:

(Dollars in thousands)

		2006			2005
Balance, beginning of year	$	3,257		$	2,625
New loans		546			992
Repayments		(797	)		(360	)
Effect of changes in related parties		269			-
Balance, end of year	$	3,275		$	3,257

Deposits from executive officers, directors, and their affiliates were $7.5 million and $4.5 million at December 31, 2006 and 2005, respectively.

In 2004, the Bank sold its Sparta Appletree Office to an affiliate of a member of ChoiceOne's Board of Directors. The building and other related fixed assets were sold for a net gain of $162,000. Half of the building is being leased back from the same affiliate of the Board member for a three-year term. An independent appraiser determined the market value of the building at the time of sale.

Note 14 - Employee Benefit Plans

401(k) Plan:
The 401(k) plan allows employee contributions of up to 15% of their compensation. Matching company contributions to the plan are discretionary. Expense of this plan was $94,000, $95,000, and $65,000 in 2006, 2005, and 2004, respectively.

Employee Stock Ownership Plan:
Employees participate in an Employee Stock Ownership Plan (the "ESOP"). ChoiceOne makes discretionary contributions to the ESOP. Shares of ChoiceOne common stock are allocated to participants based on relative compensation earned and compensation expense is recorded when allocated. Dividends on allocated shares increase the participant accounts. Participants become fully vested upon completing six years of qualifying service. Participants receive the shares at the end of employment. A participant may require stock received to be repurchased by ChoiceOne at any time. ChoiceOne did not contribute to the ESOP in 2006; ChoiceOne contributed $12,000 and $23,000 to the ESOP in 2005 and 2004, respectively. No expense was recorded by ChoiceOne in 2006; expense for 2005 and 2004 was $6,000 and $18,000, respectively.

Shares held by the ESOP as of December 31 were as follows:

(Dollars in thousands)

		2006		2005		2004
Shares allocated to participants		5,355		5,355		4,820
Shares unallocated		-		-		535
Total shares of ChoiceOne stock held by ESOP		5,355		5,355		5,355
Fair value of unallocated shares	$	-	$	-	$	12
Fair value of allocated shares, subject to repurchase obligation,    recorded in other liabilities	$	95	$	99	$	106

33

ChoiceOne Financial Services, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 14 - Employee Benefit Plans (continued)

Postretirement Benefits Plan:
ChoiceOne maintains an unfunded postretirement health care plan, which permits employees (and their dependents) the ability to participate upon retirement from ChoiceOne. ChoiceOne does not pay any portion of the premiums charged its retired participants on its health care plan. Information about the postretirement benefits plan follows:

(Dollars in thousands)

		2006			2005
Change in accumulated benefit obligation:
Accumulated benefit obligation, beginning of year	$	173		$	155
Service cost		23			24
Interest cost		10			9
Actuarial gain		(19	)		(11	)
Benefits paid		(4	)		(4	)
Prior service cost incurred from merger with VRFC		220			-
Accumulated benefit obligation, end of year		403			173
Funded status (plan assets less benefit obligation)		(403	)		(173	)
Unrecognized net actuarial gain		(78	)		(62	)
Unrecognized prior service cost		-			-
Accrued benefit cost at December 31	$	(481	)	$	(235	)
Assumptions used to determine net periodic cost and benefit obligations:
Discount rate		5.5	%		5.5	%
Health care cost trend rate assumed for subsequent year		8	%		8	%
Rate that the cost trend rate gradually declines to		6	%		6	%
Year that the rate reaches the rate it is assumed to remain at		2009			2008

The following benefit payments, which reflect future service, are expected in the years indicated below:

(Dollars in thousands)

2007	7
2008	12
2009	15
2010	21
2011	26
2012 through 2016	256

Deferred Compensation Plans:
A deferred director compensation plan covers former directors of Valley Ridge Bank. Under the plan, ChoiceOne pays each former director the amount of director fees deferred plus interest at rates ranging from 3.90% to 5.84% over various periods as elected by each director. The payout periods range from 1 month to 10 years beginning with the individual's termination of service. A liability has been accrued for the obligation under this plan. ChoiceOne incurred deferred compensation plan expense of $11,000 in 2006, which resulted in a deferred compensation liability of $1,996,000 as of December 31, 2006.

A supplemental retirement plan covers four former executive officers of Valley Ridge Bank. Under the plan, ChoiceOne pays these individuals a specific amount of compensation plus interest at 7.50% over a 15-year period commencing upon early retirement age (as defined in the plan) or normal retirement age (as defined in the plan). A liability has been accrued for the obligation under this plan. ChoiceOne incurred deferred compensation plan expense of $11,000 in 2006. A deferred compensation liability for $636,000 was outstanding as of December 31, 2006.

34

ChoiceOne Financial Services, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 15 - Stock Options

Options to buy stock are granted to key employees under an incentive stock option plan to provide them with an additional equity interest in ChoiceOne. The plan provides for the issuance of up to 106,573 options. ChoiceOne recognized compensation expense of $24,000 in connection with stock options that vested for current participants during 2006. The maximum option term is 10 years and options vest over 3 years. At December 31, 2006, there were 76,161 options available for future grants.

A summary of the activity in the plan is as follows:

	2006		2005			2004
	Share	Weighted average exercise price	Shares		Weighted average exercise price	Shares		Weighted average exercise price
Options outstanding, beginning of year	23,714	$16.82	16,259		$14.65	25,713		$12.87
Options granted	6,700	18.85	7,875		21.43	7,140		16.31
Options exercised	-	-	-		-	(323	)	13.79
Options forfeited or expired	-	-	(420	)	18.87	(16,271	)	12.61
Options outstanding, end of year	30,414	$17.27	23,714		$16.82	16,259		$14.65
Options exercisable at December 31	19,877	$16.15	13,424		$15.26	7,548		$14.66

The range of prices for options outstanding and exercisable at the end of 2006 ranged from $13.04 to $21.43 per share. The weighted average remaining contractual life of options outstanding and exercisable at the end of 2006 was approximately 7.3 years. The numbers of options, weighted average exercise prices, and fair value of options granted have been adjusted for all stock dividends and splits. Information pertaining to options outstanding at December 31, 2006 is as follows:

Exercise price of stock options:	Number of options outstanding at year-end	Number of options exercisable at year-end	Average remaining contractual life (in years)
$ 13.04	4,079	4,079	5.14
$ 13.70	5,250	5,250	5.97
$ 16.31	6,720	5,040	7.06
$ 18.85	6,700	1,675	9.05
$ 21.43	7,665	3,833	8.06

The fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation model that uses the weighted average assumptions noted in the following table. ChoiceOne uses historical data to estimate the volatility of the option exercise price and employee terminations within the valuation model. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

		2006			2005			2004
Expected stock price volatility		24.79	%		24.59	%		20.54	%
Dividend yield		3.39	%		3.03	%		4.42	%
Expected option life (in years)		7			7			7
Risk-free interest rate		4.31	%		4.50	%		3.78	%
Fair value of options granted during year	$	4.18		$	5.10		$	2.90

During 2006, 6,453 shares vested at an average exercise price of $16.15. As of December 31, 2006, there was approximately $46,000 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the plan. That cost is expected to be recognized by ChoiceOne through 2009.

35

ChoiceOne Financial Services, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 16 - Earnings Per Share

(Dollars in thousands, except per share)

		2006		2005		2004
Basic
Net income	$	2,088	$	2,166	$	1,854
Weighted average common shares outstanding		1,918,659		1,647,264		1,643,692
Basic earnings per common share	$	1.09	$	1.31	$	1.13

		2006		2005		2004
Diluted
Net income	$	2,088	$	2,166	$	1,854
Weighted average common shares outstanding		1,918,659		1,647,264		1,643,692
Plus: dilutive effect of assumed exercises of stock options		2,986		4,194		3,995
Average shares and dilutive potential common shares		1,921,645		1,651,458		1,647,687
Diluted earnings per common share	$	1.09	$	1.31	$	1.13

Weighted average common shares have been adjusted for the stock dividend in 2005. As of December 31, 2006, there were 14,365 stock options considered to be anti-dilutive to earnings per share and thus have been excluded from the calculation above. As of December 31, 2005, there were 7,875 stock options considered to be anti-dilutive to earnings per share and thus have been excluded from the calculation above. There were no stock options considered to be anti-dilutive to earnings per share as of December 31, 2004.

Note 17 - Other Comprehensive Income (Loss)

Other comprehensive income (loss) components and related taxes follow:

(Dollars in thousands)

		2006			2005			2004
Unrealized holding gains (losses) on available for sale securities	$	358		$	(652	)	$	(574	)
Less: reclassification adjustments for gains (losses) included in net income		(66	)		(28	)		38
Net unrealized gains (losses)		424			(624	)		(612	)
Tax effect		(144	)		213			208
Total other comprehensive income (loss)	$	280		$	(411	)	$	(404	)

36

ChoiceOne Financial Services, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 18 - Condensed Financial Statements of Parent Company

Condensed Balance Sheets

(Dollars in thousands)		December 31
		2006		2005
Assets
Cash	$	310	$	128
Securities available for sale		740		512
Land		116		-
Other assets		118		54
Investment in ChoiceOne Bank		50,330		21,125
Total assets	$	51,614	$	21,819
Liabilities
Mandatory redeemable shares under ESOP, at fair value	$	95	$	99
Other liabilities		-		3
Total liabilities		95		102
Shareholders' equity		51,519		21,717
Total liabilities and shareholders' equity	$	51,614	$	21,819

Condensed Statements of Income

(Dollars in thousands)		Years Ended December 31
		2006			2005		2004
Interest and dividends from ChoiceOne Bank	$	4,395		$	1,160	$	1,599
Interest and dividends from other securities		26			20		9
Total income		4,421			1,180		1,608
Other expenses		124			113		124
Income before income tax and equity in undistributed net
income of subsidiary		4,297			1,067		1,484
Income tax benefit		42			32		32
Income before equity in undistributed net income of subsidiary		4,339			1,099		1,516
Equity in undistributed net income (distributions in excess    of net income) of subsidiary		(2,251	)		1,067		338
Net income	$	2,088		$	2,166	$	1,854

37

ChoiceOne Financial Services, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 18 - Condensed Financial Statements of Parent Company (continued)

Condensed Statements of Cash Flows

(Dollars in thousands)		Years Ended December 31
		2006			2005			2004
Cash flows from operating activities:
Net income	$	2,088		$	2,166		$	1,854
Adjustments to reconcile net income to net cash from operating     activities:
Equity in undistributed net income (distributions in excess         of net income) of subsidiary		2,251			(1,067	)		(338	)
Amortization		(2	)		-			-
Changes in other assets		(27	)		6			21
Changes in other liabilities		(10,090	)		2			3
Net cash from (used in) operating activities		(5,780	)		1,107			1,540
Cash flows from investing activities:
Capital contribution to subsidiary		(3,000	)		-			-
Purchases of securities		(226	)		-			(513	)
Cash acquired from VRFC		10,330			-			-
Net cash from (used in) investing activities		7,104			-			(513	)
Cash flows from financing activities:
Issuance of common stock		339			307			260
Repurchase of common stock		(84	)		(322	)		(118	)
Cash dividends paid		(1,397	)		(1,109	)		(1,065	)
Net cash used in financing activities		(1,142	)		(1,124	)		(923	)
Net change in cash and cash equivalents		182			(17	)		104
Beginning cash and cash equivalents		128			145			41
Ending cash and cash equivalents	$	310		$	128		$	145
Supplemental disclosure of non-cash activities:
Land acquired from VRFC	$	(116	)
Other assets acquired from VRFC		(37	)
Other liabilities assumed from VRFC		10,089
Common stock issued to VRFC shareholders		28,538

38

ChoiceOne Financial Services, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 19 - Financial Instruments

Financial instruments as of December 31 were as follows:

(Dollars in thousands)		2006						2005
		Carrying Amount			Estimated Fair Value			Carrying Amount			Estimated Fair Value
Assets:
Cash and due from banks	$	9,936		$	9,936		$	4,990		$	4,990
Securities available for sale		77,436			77,436			44,212			44,212
Federal Home Loan Bank and Federal Reserve         Bank stock		3,981			3,981			2,999			2,999
Loans held for sale		236			236			264			264
Loans, net		328,062			327,787			183,605			184,872
Liabilities:
Demand, savings and money market deposits		(167,704	)		(167,704	)		(84,189	)		(84,189	)
Time deposits		(198,676	)		(198,696	)		(97,923	)		(97,044	)
Repurchase agreements		(15,013	)		(15,013	)		(7,139	)		(7,139	)
Federal funds purchased		(460	)		(460	)		(4,399	)		(4,399	)
Advances from Federal Home Loan Bank		(23,908	)		(23,957	)		(30,750	)		(30,573	)

The estimated fair values approximate the carrying amounts for all assets and liabilities except those described later in this paragraph. The estimated fair value for securities available for sale is based on quoted market values for the individual securities or for equivalent securities. The estimated fair value for loans is based on the rates charged at December 31 for new loans with similar maturities, applied until the loan is assumed to reprice or be paid. The allowance for loan losses is considered to be a reasonable estimate of discount for credit quality concerns. The estimated fair values for time deposits and FHLB advances are based on the rates paid at December 31 for new deposits or FHLB advances, applied until maturity. The estimated fair values for other financial instruments and off-balance sheet loan commitments are considered nominal.

Note 20 - Off-Balance Sheet Activities

Some financial instruments, such as loan commitments, credit lines, letters of credit, and overdraft protection, are issued to meet customers' financing needs. These are agreements to provide credit or to support the credit of others, as long as conditions established in the contract are met, and usually have expiration dates. Commitments may expire without being used. Off-balance sheet risk to credit loss exists up to the face amount of these instruments, although material losses are not anticipated. The same credit policies are used to make such commitments as are used for loans, including obtaining collateral at exercise of the commitment.

The contractual amount of financial instruments with off-balance sheet risk was as follows at December 31:

(Dollars in thousands)		2006				2005
		Fixed Rate		Variable Rate		Fixed Rate		Variable Rate
Unused lines of credit and letters of credit	$	12,518	$	38,761	$	5,532	$	22,264
Commitments to fund loans (at market rates)		2,833		795		3,417		1,651

Commitments to fund loans are generally made for periods of 180 days or less. The fixed rate loan commitments have interest rates ranging from 6.25% to 8.25% and maturities ranging from 5 years to 30 years.

39

ChoiceOne Financial Services, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 21 - Regulatory Capital

ChoiceOne Bank is subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and prompt corrective action regulations involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. The prompt corrective action regulations provide five classifications, including well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If only adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as are asset growth and expansion, and plans for capital restoration are required. At year-end 2006 and 2005, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the Bank's categories.

Actual capital levels and minimum required levels for ChoiceOne Bank were as follows:

(Dollars in thousands)	Actual				Minimum Required for Capital Adequacy Purposes				Minimum Required to be Well Capitalized Under Prompt Corrective Action Regulations
		Amount	Ratio			Amount	Ratio			Amount	Ratio
December 31, 2006
Total capital (to risk weighted assets)	$	35,463	10.8	%	$	26,339	8.0	%	$	32,924	10.0	%
Tier 1 capital (to risk weighted assets)		31,891	9.7			13,170	4.0			19,754	6.0
Tier 1 capital (to average assets)		31,891	11.0			11,644	4.0			14,555	5.0
December 31, 2005
Total capital (to risk weighted assets)		23,408	12.8			14,671	8.0			18,339	10.0
Tier 1 capital (to risk weighted assets)		21,424	11.7			7,336	4.0			11,004	6.0
Tier 1 capital (to average assets)		21,424	8.8			9,748	4.0			12,184	5.0

Banking regulations limit capital distributions by state-chartered banks. Generally, capital distributions are limited to undistributed net income for the current and prior two years. At December 31, 2006, approximately $2.2 million was available for ChoiceOne Bank to pay dividends to ChoiceOne Financial Services, Inc. ChoiceOne's ability to pay dividends to shareholders is dependent on the Bank, which is restricted by state law and regulations. These regulations pose no practical restrictions to paying dividends at historical levels.

Note 22 - Quarterly Financial Data (Unaudited)

(Dollars in thousands)							Earnings Per Share
		Interest Income		Net Interest Income		Net Income		Basic	Fully Diluted
2006
First Quarter	$	3,658	$	1,982	$	535		$  0.32	$  0.32
Second Quarter		3,744		1,879		545		0.33	0.33
Third Quarter		3,902		1,798		450		0.27	0.27
Fourth Quarter		6,141		3,089		558		0.21	0.21
2005
First Quarter	$	3,085	$	1,978	$	515		$  0.31	$  0.31
Second Quarter		3,258		2,001		546		0.33	0.33
Third Quarter		3,448		2,071		570		0.35	0.35
Fourth Quarter		3,533		1,995		535		0.32	0.32

The total of the quarterly basic and fully diluted earnings per share amounts for 2006 do not agree to the earnings per share amount reported in the income statement due to the issuance of shares to VRFC shareholders on November 1, 2006. Per share amounts have been adjusted for the stock dividend in 2005.

40

ChoiceOne Financial Services, Inc.
CORPORATE AND SHAREHOLDER INFORMATION

Corporate Headquarters
ChoiceOne Financial Services, Inc.
     109 East Division Street
     Sparta, Michigan 49345
     Phone:  (616) 887-7366
     Fax:     (616) 887-7990
     Website: www.choiceone.com


Market Makers in ChoiceOne Financial
Services, Inc. Stock

Royal Securities, Inc.
     Grand Rapids, Michigan
     (616) 459-3317

Stifel Nicolaus & Company, Inc.
     Grand Rapids, Michigan
     (616) 942-1717
     (800) 676-0477


Stock Registrar and Transfer Agent

Registrar and Transfer Company
     10 Commerce Drive
     Cranford, New Jersey 07016
     (800) 368-5948


Annual Shareholder Meeting
The 2007 Annual Shareholder Meeting of
ChoiceOne Financial Services, Inc., will
be held at 11:00 a.m. local time on Thursday,
April 26, 2007, at Moss Ridge Golf Club in
Ravenna, Michigan.

ChoiceOne Bank
Alpine Office
     5050 Alpine Avenue NW
     Comstock Park, Michigan 49321

Cedar Springs Office
     4170 - 17 Mile Road
     Cedar Springs, Michigan 49319

Coopersville Office
     661 West Randall
     Coopersville, Michigan 49404

Egelston Office
     5475 East Apple Avenue
     Muskegon, Michigan 49442

Fremont Office
     1423 West Main Street
     Fremont, Michigan 49412

Grant Office
     10 West Main Street
     Grant, Michigan 49327

Kent City Office
     450 West Muskegon
     Kent City, Michigan 49330

Newaygo Office
     246 West River Drive
     Newaygo, Michigan 49337

Ravenna Office
     3069 Slocum Road
     Ravenna, Michigan 49451

Rockford Office
     6795 Courtland Drive
     Rockford, Michigan 49341

Sparta - Main Office
     109 East Division Street
     Sparta, Michigan 49345

Sparta - Appletree Office
     416 West Division Street
     Sparta, Michigan 49345

White Cloud Office
     47 South Charles Street
     White Cloud, Michigan 49349 ChoiceOne Insurance Agencies, Inc.
Sparta Office
     109 East Division Street
     Sparta, Michigan 49345


ChoiceOne Mortgage Company of
Michigan
Sparta Office
     109 East Division Street
     Sparta, Michigan 49345

Kent City Office
     450 West Muskegon
     Kent City, Michigan 49330

41

ChoiceOne Financial Services, Inc.
DIRECTORS AND OFFICERS

Directors
ChoiceOne Financial Services, Inc.

Jerome B. Arends
   Former President and Chief Executive
   Officer of Ravenna Farm Equipment
   (Agricultural Equipment Supplier)

Frank G. Berris
   President and Chief Executive Officer,
   American Gas & Oil Co., Inc.
   (Distributor of Petroleum Products)

James A. Bosserd
   President and Chief Executive Officer,
   ChoiceOne Financial Services, Inc. and
   ChoiceOne Bank

K. Timothy Bull
   President, Moon Lake Orchards
   (Fruit Producer)

William F. Cutler, Jr.
   Former Vice President, H. H. Cutler Co.
   (Apparel Manufacturer)

Richard L. Edgar
   Former President and Chief Executive
   Officer, Valley Ridge Financial Corp.
   and Valley Ridge Bank

Stuart Goodfellow
   Owner, Goodfellow Vending Services
   (Vending Company) and Goodfellow
   Blueberry Farms

Gary Gust
   President, Gust Construction Company
   (General Contractor)

Robert Humphreys
   Owner, Humphreys Orchards
   (Fruit Producer)

Paul L. Johnson
   President, Falcon Resources, Inc.
   (Automotive and Furniture Design) Directors
ChoiceOne Financial Services, Inc.
(continued)

Dennis C. Nelson, DDS
   General Dentistry

Jon E. Pike
   CPA and Chairman, Beene Garter LLP
   (Certified Public Accountants)

Donald VanSingel
   Consultant, Governmental Consultant
   Services. Former Legislator,
   Michigan House of Representatives

Andrew W. Zamiara, R.Ph.
   Owner, Sparta Village Pharmacy, Inc. Officers
ChoiceOne Financial Services, Inc.

James A. Bosserd
   President and Chief Executive Officer

Louis D. Knooihuizen
   Senior Vice President

Michael E. McHugh
   Senior Vice President

Linda R. Pitsch
   Secretary

Thomas L. Lampen
   Treasurer

42

Officers
ChoiceOne Bank

James A. Bosserd
   President, Chief Executive Officer

Sheila Clark
   Senior Vice President,
     Human Resources

Louis D. Knooihuizen
   Senior Vice President,
     Chief Lending Officer

Michael McHugh
   Senior Vice President, Sales and Marketing

Linda R. Pitsch
   Senior Vice President, Cashier

Lee A. Braford
   Vice President, Commercial Loans

Terry Farr
   Vice President, Commercial Loans

Amy S. Homich
   Vice President, Deposit Sales

John C. Huffman
   Vice President, Commercial Loans

Mary J. Johnson
   Vice President, Risk Management

Thomas L. Lampen, CPA
   Vice President, Chief Financial Officer

Daniel C. Wheat
   Vice President, Audit and Compliance

Linda K. Anderson
   Assistant Vice President,
   Office Manager - Rockford

Sally Anderson
   Credit Analyst

Candace Bouwkamp
   Administrative Services Manager

Erin Burdick
   Office Manager - Sparta Appletree

Lee Decker
   Office Manager - Egelston Officers
ChoiceOne Bank (continued)

Michael F. Feighan, CPA
   Assistant Vice President, Controller

Rita Flintoff
   Office Manager - Newaygo

Gregory Goss
   Office Manager - Grant

Dean A. Hanson
   Assistant Vice President,
     Commercial Loans

Jason J. Herbig
   Assistant Vice President,
     Information Technology

Valerie J. Heyt
   Assistant Vice President , Retail Lending

Lisa Mann
   Assistant Vice President,
     Branch Training

Linda Nichols
   Office Manager - Ravenna

Lori J. O'Brien
   Assistant Vice President,
     Commercial Loans

Peggy O'Dea
   Office Manager - Coopersville

Jason A. Parker
   Assistant Vice President,
   Office Manager - Cedar Springs

Christine Steele
   Office Manager - White Cloud

Paul Tucker
   Assistant Vice President,
     Information Technology

Cynthia J. Watson
   Assistant Vice President, Operations

Wayne Webster
   Assistant Vice President,
     Commercial Loans

Marva Zeldenrust
   Office Manager - Fremont Officers
ChoiceOne Insurance Agencies, Inc.

James A. Bosserd
   President

Kelly J. Potes, CFP
   Senior Vice President

Jeffrey S. Bradford, CIC
   Vice President

Randy Schmidt
   Vice President

Linda R. Pitsch
   Secretary

Thomas L. Lampen, CPA
   Treasurer

Officers
ChoiceOne Mortgage Company of
Michigan

James A. Bosserd
   President

Louis D. Knooihuizen
   Senior Vice President

Jacqueline L. Klahn
   Vice President

Marilyn B. Childress
   Assistant Vice President

Linda R. Pitsch
   Secretary

Thomas L. Lampen, CPA
   Treasurer

43

EX-21

EXHIBIT 21

SUBSIDIARIES OF THE REGISTRANT

The following lists the subsidiaries of the Registrant and the state or jurisdiction of incorporation.

	Name and Address of Subsidiary	Incorporated
1.	ChoiceOne Bank 109 East Division Sparta, Michigan 49345	Michigan
2.	ChoiceOne Insurance Agencies, Inc. (1) 109 East Division Sparta, Michigan 49345	Michigan
3.	ChoiceOne Mortgage Company of Michigan (1) 109 E. Division Sparta, Michigan 49345	Michigan
4.	West Shore Computer Services, Inc. (2) 111 North Main Street Scottville, Michigan 49454	Michigan
5.	Valley Ridge Financial Services, Inc. (1) 450 West Muskegon Kent City, Michigan 49330	Michigan
6.	Valley Ridge Realty, Inc. (1) 450 West Muskegon Kent City, Michigan 49330	Michigan
7.	1423 West Main LLC (1) 450 West Muskegon Kent City, Michigan 49330	Michigan

___________________

(1)	These are wholly-owned subsidiaries of ChoiceOne Bank.
(2)	ChoiceOne Bank owns a 25% interest in West Shore Computer Services, Inc.

EX-23.1

EXHIBIT 23.1

CONSENT OF REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the following Registration Statements of ChoiceOne Financial Services, Inc. on Form S-3 (Registration No. 333-44336); Form S-8 (Registration No. 333-91364); and Form S-8 (Registration No. 333-91366) of our report dated March 20, 2007 on the 2006 consolidated financial statements of ChoiceOne Financial Services, Inc., which report is included as Exhibit 13 in the Annual Report on Form 10-K for the fiscal year ended December 31, 2006 of ChoiceOne Financial Services, Inc.

/s/Plante & Moran PLLC

Grand Rapids, Michigan
March 30, 2007

EX-23.2

EXHIBIT 23.2

CONSENT OF REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the following Registration Statements of ChoiceOne Financial Services, Inc. on Form S-3 (Registration No. 333-44336); Form S-8 (Registration No. 333-91364); and Form S-8 (Registration No. 333-91366) of our report dated March 7, 2006 on the 2005 and 2004 consolidated financial statements of ChoiceOne Financial Services, Inc. included in Item 8 of the Annual Report on Form 10-K for the fiscal year ended December 31, 2006.

/s/ Crowe Chizek and Company LLC

Crowe Chizek and Company LLC

Grand Rapids, Michigan
March 26, 2007

EX-24

EXHIBIT 24

LIMITED POWER OF ATTORNEY

          The undersigned, in his or her capacity as a director or officer, or both, of ChoiceOne Financial Services, Inc., does hereby appoint Richard L. Edgar, James A. Bosserd, Linda R. Pitsch and Thomas Lampen, or any of them, his or her attorneys or attorney, with full power of substitution, to execute in his or her name an Annual Report of ChoiceOne Financial Services, Inc. on Form 10-K for its fiscal year ended December 31, 2006, and any amendments to that report, and to file it with the Securities and Exchange Commission. Each attorney shall have power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act to be done in the premises as fully and to all intents and purposes as the undersigned could do in person, and the undersigned hereby ratifies and approves the acts of such attorneys.

Dated:  February 14, 2007	/s/ William F. Cutler, Jr.
	(signature)
	William F. Cutler, Jr.
	(type or print name)

LIMITED POWER OF ATTORNEY

          The undersigned, in his or her capacity as a director or officer, or both, of ChoiceOne Financial Services, Inc., does hereby appoint Richard L. Edgar, James A. Bosserd, Linda R. Pitsch and Thomas Lampen, or any of them, his or her attorneys or attorney, with full power of substitution, to execute in his or her name an Annual Report of ChoiceOne Financial Services, Inc. on Form 10-K for its fiscal year ended December 31, 2006, and any amendments to that report, and to file it with the Securities and Exchange Commission. Each attorney shall have power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act to be done in the premises as fully and to all intents and purposes as the undersigned could do in person, and the undersigned hereby ratifies and approves the acts of such attorneys.

Dated:  February 14, 2007	/s/ Paul L. Johnson
	(signature)
	Paul L. Johnson
	(type or print name)

LIMITED POWER OF ATTORNEY

          The undersigned, in his or her capacity as a director or officer, or both, of ChoiceOne Financial Services, Inc., does hereby appoint Richard L. Edgar, James A. Bosserd, Linda R. Pitsch and Thomas Lampen, or any of them, his or her attorneys or attorney, with full power of substitution, to execute in his or her name an Annual Report of ChoiceOne Financial Services, Inc. on Form 10-K for its fiscal year ended December 31, 2006, and any amendments to that report, and to file it with the Securities and Exchange Commission. Each attorney shall have power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act to be done in the premises as fully and to all intents and purposes as the undersigned could do in person, and the undersigned hereby ratifies and approves the acts of such attorneys.

Dated:  February 9, 2007	/s/ Gary Gust
	(signature)
	Gary Gust
	(type or print name)

LIMITED POWER OF ATTORNEY

          The undersigned, in his or her capacity as a director or officer, or both, of ChoiceOne Financial Services, Inc., does hereby appoint Richard L. Edgar, James A. Bosserd, Linda R. Pitsch and Thomas Lampen, or any of them, his or her attorneys or attorney, with full power of substitution, to execute in his or her name an Annual Report of ChoiceOne Financial Services, Inc. on Form 10-K for its fiscal year ended December 31, 2006, and any amendments to that report, and to file it with the Securities and Exchange Commission. Each attorney shall have power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act to be done in the premises as fully and to all intents and purposes as the undersigned could do in person, and the undersigned hereby ratifies and approves the acts of such attorneys.

Dated:  February 16, 2007	/s/ Richard L. Edgar
	(signature)
	Richard L. Edgar
	(type or print name)

LIMITED POWER OF ATTORNEY

          The undersigned, in his or her capacity as a director or officer, or both, of ChoiceOne Financial Services, Inc., does hereby appoint Richard L. Edgar, James A. Bosserd, Linda R. Pitsch and Thomas Lampen, or any of them, his or her attorneys or attorney, with full power of substitution, to execute in his or her name an Annual Report of ChoiceOne Financial Services, Inc. on Form 10-K for its fiscal year ended December 31, 2006, and any amendments to that report, and to file it with the Securities and Exchange Commission. Each attorney shall have power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act to be done in the premises as fully and to all intents and purposes as the undersigned could do in person, and the undersigned hereby ratifies and approves the acts of such attorneys.

Dated:  February 13, 2007	/s/ K. Tim Bull
	(signature)
	K. Tim Bull
	(type or print name)

LIMITED POWER OF ATTORNEY

          The undersigned, in his or her capacity as a director or officer, or both, of ChoiceOne Financial Services, Inc., does hereby appoint Richard L. Edgar, James A. Bosserd, Linda R. Pitsch and Thomas Lampen, or any of them, his or her attorneys or attorney, with full power of substitution, to execute in his or her name an Annual Report of ChoiceOne Financial Services, Inc. on Form 10-K for its fiscal year ended December 31, 2006, and any amendments to that report, and to file it with the Securities and Exchange Commission. Each attorney shall have power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act to be done in the premises as fully and to all intents and purposes as the undersigned could do in person, and the undersigned hereby ratifies and approves the acts of such attorneys.

Dated:  February 15, 2007	/s/ Donald VanSingel
	(signature)
	Donald VanSingel
	(type or print name)

LIMITED POWER OF ATTORNEY

          The undersigned, in his or her capacity as a director or officer, or both, of ChoiceOne Financial Services, Inc., does hereby appoint Richard L. Edgar, James A. Bosserd, Linda R. Pitsch and Thomas Lampen, or any of them, his or her attorneys or attorney, with full power of substitution, to execute in his or her name an Annual Report of ChoiceOne Financial Services, Inc. on Form 10-K for its fiscal year ended December 31, 2006, and any amendments to that report, and to file it with the Securities and Exchange Commission. Each attorney shall have power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act to be done in the premises as fully and to all intents and purposes as the undersigned could do in person, and the undersigned hereby ratifies and approves the acts of such attorneys.

Dated:  February 13, 2007	/s/ Robert C. Humphreys
	(signature)
	Robert C. Humphreys
	(type or print name)

LIMITED POWER OF ATTORNEY

          The undersigned, in his or her capacity as a director or officer, or both, of ChoiceOne Financial Services, Inc., does hereby appoint Richard L. Edgar, James A. Bosserd, Linda R. Pitsch and Thomas Lampen, or any of them, his or her attorneys or attorney, with full power of substitution, to execute in his or her name an Annual Report of ChoiceOne Financial Services, Inc. on Form 10-K for its fiscal year ended December 31, 2006, and any amendments to that report, and to file it with the Securities and Exchange Commission. Each attorney shall have power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act to be done in the premises as fully and to all intents and purposes as the undersigned could do in person, and the undersigned hereby ratifies and approves the acts of such attorneys.

Dated:  February 12, 2007	/s/ Jerry Arends
	(signature)
	Jerry Arends
	(type or print name)

LIMITED POWER OF ATTORNEY

          The undersigned, in his or her capacity as a director or officer, or both, of ChoiceOne Financial Services, Inc., does hereby appoint Richard L. Edgar, James A. Bosserd, Linda R. Pitsch and Thomas Lampen, or any of them, his or her attorneys or attorney, with full power of substitution, to execute in his or her name an Annual Report of ChoiceOne Financial Services, Inc. on Form 10-K for its fiscal year ended December 31, 2006, and any amendments to that report, and to file it with the Securities and Exchange Commission. Each attorney shall have power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act to be done in the premises as fully and to all intents and purposes as the undersigned could do in person, and the undersigned hereby ratifies and approves the acts of such attorneys.

Dated:  February 17, 2007	/s/ Andrew Zamiara
	(signature)
	Andrew Zamiara
	(type or print name)

LIMITED POWER OF ATTORNEY

          The undersigned, in his or her capacity as a director or officer, or both, of ChoiceOne Financial Services, Inc., does hereby appoint Richard L. Edgar, James A. Bosserd, Linda R. Pitsch and Thomas Lampen, or any of them, his or her attorneys or attorney, with full power of substitution, to execute in his or her name an Annual Report of ChoiceOne Financial Services, Inc. on Form 10-K for its fiscal year ended December 31, 2006, and any amendments to that report, and to file it with the Securities and Exchange Commission. Each attorney shall have power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act to be done in the premises as fully and to all intents and purposes as the undersigned could do in person, and the undersigned hereby ratifies and approves the acts of such attorneys.

Dated:  February 15, 2007	/s/ Frank G. Berris
	(signature)
	Frank G. Berris
	(type or print name)

LIMITED POWER OF ATTORNEY

          The undersigned, in his or her capacity as a director or officer, or both, of ChoiceOne Financial Services, Inc., does hereby appoint Richard L. Edgar, James A. Bosserd, Linda R. Pitsch and Thomas Lampen, or any of them, his or her attorneys or attorney, with full power of substitution, to execute in his or her name an Annual Report of ChoiceOne Financial Services, Inc. on Form 10-K for its fiscal year ended December 31, 2006, and any amendments to that report, and to file it with the Securities and Exchange Commission. Each attorney shall have power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act to be done in the premises as fully and to all intents and purposes as the undersigned could do in person, and the undersigned hereby ratifies and approves the acts of such attorneys.

Dated:  February 9, 2007	/s/ Jon E. Pike
	(signature)
	Jon E. Pike
	(type or print name)

LIMITED POWER OF ATTORNEY

          The undersigned, in his or her capacity as a director or officer, or both, of ChoiceOne Financial Services, Inc., does hereby appoint Richard L. Edgar, James A. Bosserd, Linda R. Pitsch and Thomas Lampen, or any of them, his or her attorneys or attorney, with full power of substitution, to execute in his or her name an Annual Report of ChoiceOne Financial Services, Inc. on Form 10-K for its fiscal year ended December 31, 2006, and any amendments to that report, and to file it with the Securities and Exchange Commission. Each attorney shall have power and authority to do and perform in the name and on behalf of the undersigned, in any and all capacities, every act to be done in the premises as fully and to all intents and purposes as the undersigned could do in person, and the undersigned hereby ratifies and approves the acts of such attorneys.

Dated:  February 8, 2007	/s/ Stuart Goodfellow
	(signature)
	Stuart Goodfellow
	(type or print name)

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, James A. Bosserd, certify that:

1.	I have reviewed this annual report on Form 10-K for the year ended December 31, 2006 of ChoiceOne Financial Services, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 30, 2007	/s/ James A. Bosserd
	James A. Bosserd President and Chief Executive Officer ChoiceOne Financial Services, Inc.

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Thomas L. Lampen, certify that:

1.	I have reviewed this annual report on Form 10-K for the year ended December 31, 2006 of ChoiceOne Financial Services, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 30, 2007	/s/ Thomas L. Lampen
	Thomas L. Lampen Treasurer ChoiceOne Financial Services, Inc.

EX-32

EXHIBIT 32

CERTIFICATION

Pursuant to 18 U.S.C. § 1350, each of the undersigned hereby certifies in his capacity as an officer of ChoiceOne Financial Services, Inc. (the "Company") that the Annual Report of the Company on Form 10-K for the accounting period ended December 31, 2006 fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the financial condition of the Company at the end of such period and the results of operations of the Company for such period.

Dated: March 30, 2007	/s/ James A. Bosserd
	James A. Bosserd President and Chief Executive Officer

Dated: March 30, 2007	/s/ Thomas L. Lampen
	Thomas L. Lampen Treasurer

A signed original of this written statement required by Section 906 has been provided to ChoiceOne Financial Services, Inc. and will be retained by ChoiceOne Financial Services, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.