10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-K

☒	Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the fiscal year ended December 31, 2023
☐	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(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common stock	COFS	NASDAQ Capital Market

Securities registered pursuant to Section 12(g) of the Act: None.

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

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 ☒

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

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

As of June 30, 2023, the aggregate market value of common stock held by non-affiliates of the Registrant was $159.3 million. This amount is based on an average bid price of $23.00 per share for the Registrant's stock as of such date.

As of February 29, 2024, the Registrant had 7,552,919 shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive Proxy Statement of ChoiceOne Financial Services, Inc. for the Annual Meeting of Shareholders to be held on May 29, 2024, are incorporated by reference into Part III of this Form 10-K.

ChoiceOne Financial Services, Inc.

Form 10-K ANNUAL REPORT

Contents

		Page
PART 1
Item 1:	Business	3
Item 1A:	Risk Factors	10
Item 1B:	Unresolved Staff Comments	16
Item 1C:	Cybersecurity	16
Item 2:	Properties	17
Item 3:	Legal Proceedings	17
Item 4:	Mine Safety Disclosures	17
PART II
Item 5:	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	18
Item 6:	Reserved	18
Item 7:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 7A:	Quantitative and Qualitative Disclosures About Market Risk	37
Item 8:	Financial Statements and Supplementary Data	38
Item 9:	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	83
Item 9A:	Controls and Procedures	83
Item 9B:	Other Information	83
Item 9C:	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	83
PART III
Item 10:	Directors, Executive Officers and Corporate Governance	84
Item 11:	Executive Compensation	84
Item 12:	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	84
Item 13:	Certain Relationships and Related Transactions, and Director Independence	85
Item 14:	Principal Accountant Fees and Services	85
PART IV
Item 15:	Exhibits and Financial Statement Schedules	86
SIGNATURES		88

1

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 ChoiceOne Financial Services, Inc. Words such as “anticipates,” “believes,” “expects,” “forecasts,” “intends,” “is likely,” “plans,” “predicts,” “projects,” “may,” “could,” “estimates,” “look forward,” “continue,” “future,” and variations of such words and similar expressions are intended to identify such forward-looking statements. Management’s determination of the provision and allowance for credit losses, the carrying value of goodwill, loan servicing rights, other real estate owned, and the fair value of investment securities and management’s assumptions concerning pension and other postretirement benefit plans involve judgments that are inherently forward-looking. All of the information concerning interest rate sensitivity is forward-looking. All statements with references to future time periods are forward-looking. 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 Financial Services, Inc. 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. These are representative of the risk factors that could cause a difference between an ultimate actual outcome and a preceding forward-looking statement.

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PART I

Item 1. Business

General

ChoiceOne Financial Services, Inc. (the “Company”) is a financial holding company registered under the Bank Holding Company Act of 1956, as amended (“BHC Act”). The Company was incorporated on February 24, 1986, as a Michigan corporation. The Company was formed to create a bank holding company for the purpose of acquiring all of the capital stock of ChoiceOne Bank, which became a wholly owned subsidiary of the Company on April 6, 1987. Effective November 1, 2006, Valley Ridge Financial Corp., a one-bank holding company for Valley Ridge Bank (“VRB”), merged with and into the Company. In December 2006, VRB was consolidated into ChoiceOne Bank. Effective October 1, 2019, County Bank Corp. ("County"), a one-bank holding company for Lakestone Bank & Trust (“Lakestone”), merged with and into the Company. Lakestone was consolidated into ChoiceOne Bank in May 2020. On July 1, 2020, Community Shores Bank Corporation ("Community Shores"), a one bank holding company for Community Shores Bank, merged with and into the Company. Community Shores Bank was consolidated into ChoiceOne Bank in October 2020. ChoiceOne Bank owns all of the outstanding common stock of ChoiceOne Insurance Agencies, Inc., an independent insurance agency headquartered in Sparta, Michigan (the "Insurance Agency"). On July 18, 2023, the Company organized 109 Technologies, LLC as a wholly owned subsidiary of the Company with the intent of selling a fintech product marketed to other banks and bank holding companies.

The Company's business is primarily concentrated in a single industry segment, banking. ChoiceOne Bank (referred to as 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 transaction machine services. Loans, both commercial and consumer, are extended primarily on a secured basis to commercial enterprises and individuals. Commercial lending covers such categories as business, industry, agricultural, construction, inventory, and real estate. The Bank’s consumer loan departments make direct and indirect loans to consumers and purchasers of residential and real property. In addition, the Bank offers trust and wealth management services. No material part of the business of the Company 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 Company.

The Bank’s primary market areas lie within Kent, Muskegon, Newaygo, and Ottawa counties in western Michigan, and Lapeer, Macomb, and St. Clair counties in southeastern Michigan in the communities where the Bank's respective offices are located. The Bank serves these markets through 31 full-service offices and five loan production offices. The Company and the Bank have no foreign assets or income.

At December 31, 2023, the Company had consolidated total assets of $2.6 billion, net loans of $1.4 billion, total deposits of $2.1 billion and total shareholders' equity of $195.6 million. For the year ended December 31, 2023, the Company recognized consolidated net income of $21.3 million. The principal source of revenue for the Company and the Bank is interest and fees on loans. On a consolidated basis, interest and fees on loans accounted for 60%, 59%, and 58% of total revenues in 2023, 2022, and 2021, respectively. Interest on securities accounted for 24%, 24%, and 19% of total revenues in 2023, 2022, and 2021, respectively. For more information about the Company's financial condition and results of operations, see the consolidated financial statements and related notes included in Item 8 of this report.

Competition

The Bank’s competition primarily comes from other financial institutions located within Kent, Muskegon, Newaygo, and Ottawa counties in western Michigan and Lapeer, Macomb, and St. Clair counties in southeastern Michigan. There are a number of larger commercial banks within the Bank’s primary market areas. 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, internet banks and other financial technology companies, 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 Company is subject to supervision and regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”). The Company'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 Company to

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acquire control of any additional bank holding companies, banks or other operating subsidiaries. Under Federal Reserve Board policy, the Company is expected to act as a source of financial strength to the Bank and to commit resources to support it.

The Bank is chartered under state law and is subject to regulation by the Michigan Department of Insurance and Financial Services (“DIFS”). 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 maximum extent provided by law. The Bank is a member of the Federal Home Loan Bank system, which provides certain advantages to the Bank, including favorable borrowing rates for certain funds.

The Company is a legal entity separate and distinct from the Bank. The Company's primary source of funds available to pay dividends to shareholders is dividends paid to it by the Bank. There are legal limitations on the extent to which the Bank can lend or otherwise supply funds to the Company. In addition, payment of dividends to the Company by the Bank is subject to various state and federal regulatory limitations.

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 issued to recapitalize the Savings Association Insurance Fund (“SAIF”) over a larger number of institutions.

The federal banking agencies have adopted guidelines to promote the safety and soundness of federally-insured depository institutions. These guidelines establish standards for, among other things, internal controls, information systems, internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth, compensation, fees and benefits, asset quality and earnings.

The Company and the Bank are subject to regulatory “risk-based” capital guidelines. Failure to meet these capital guidelines could subject the Company or the Bank to a variety of enforcement remedies, including issuance of a capital directive, the termination of deposit insurance by the FDIC, a prohibition on accepting brokered deposits, and other restrictions on its business. In addition, the Bank would generally not receive regulatory approval of any application that requires the consideration of capital adequacy, such as a branch or merger application, unless it could demonstrate a reasonable plan to meet the capital requirement within a reasonable period of time.

Under Federal Reserve Board policy, the Company is expected to act as a source of financial strength to the Bank and to commit resources to support the Bank. In addition, if DIFS deems the Bank's capital to be impaired, DIFS may require the Bank to restore its capital by a special assessment on the Company as the Bank's sole shareholder. If the Company fails to pay any assessment, the Company’s directors will be required, under Michigan law, to sell the shares of the Bank's stock owned by the Company to the highest bidder at either a public or private auction and use the proceeds of the sale to restore the Bank's capital.

The Federal Deposit Insurance Corporation Improvement Act (“FDICIA”) requires, among other things, federal banking agencies to take “prompt corrective action” in respect of depository institutions that do not meet minimum capital requirements. FDICIA sets forth the following five capital categories: “well-capitalized,” “adequately-capitalized,” “undercapitalized,” “significantly-undercapitalized” and “critically-undercapitalized.” A depository institution's capital category will depend upon how its capital levels compare with various relevant capital measures as established by regulation, which include a common equity Tier I risk-based capital ratio, Tier 1 risk-based and total risk-based capital ratio measures and a leverage capital ratio measure. In addition, a capital conservation buffer is required. Under certain circumstances, the appropriate banking agency may treat a well-capitalized, adequately-capitalized, or undercapitalized institution as if the institution were in the next lower capital category.

Federal banking regulators are required to take specified mandatory supervisory actions and are authorized to take other discretionary actions with respect to institutions in the three undercapitalized categories. The severity of the action depends upon the capital category in which the institution is placed. Subject to a narrow exception, the banking regulator must generally appoint a receiver or conservator for an institution that is critically undercapitalized. An institution in any of the undercapitalized categories is required to submit an acceptable capital restoration plan to its appropriate federal banking agency. An undercapitalized institution is also generally prohibited from paying any dividends, increasing its average total assets, making acquisitions, establishing any branches, accepting or renewing any brokered deposits or engaging in any new line of business, except under an accepted capital restoration plan or with FDIC approval.

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 Housing Act, the Fair Credit Reporting Act, the Expedited Funds Availability Act, the Community Reinvestment Act, the Real Estate Settlement Procedures Act, the Service Members Civil Relief Act, the USA PATRIOT Act, the Bank Secrecy Act, regulations of the Office of Foreign Assets Controls, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, electronic funds transfer laws, redlining laws, predatory lending laws, antitrust laws, environmental laws, money laundering laws and privacy laws. The monetary policy of the Federal Reserve Board may influence the growth and

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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.

In general, the BHC Act limits the business of bank holding companies to banking, managing or controlling banks and other activities that the Federal Reserve Board has determined to be closely related to the business of banking. In addition, bank holding companies that qualify and elect to be financial holding companies may engage in any activities that are financial in nature or complementary to a financial activity and do not pose a substantial risk to the safety and soundness of depository institutions or the financial system without prior approval of the Federal Reserve Board. Activities that are financial in nature include securities underwriting and dealing, insurance underwriting and making merchant banking investments. The Company has elected to be a financial holding company.

In order for the Company to maintain financial holding company status, the Bank must be categorized as "well-capitalized" and "well-managed" under applicable regulatory guidelines. If the Company or the Bank ceases to meet these requirements, the Federal Reserve Board may impose corrective capital and/or managerial requirements and place limitations on the Company’s ability to conduct the broader financial activities permissible for financial holding companies. In addition, if the deficiencies persist, the Federal Reserve Board may require the Company to divest of the Bank. The Bank was categorized as "well-capitalized" and "well-managed" as of December 31, 2023.

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 DIFS, (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.

Banks are subject to the provisions of the Community Reinvestment Act ("CRA"). Under the terms of the CRA, the appropriate federal bank regulatory agency is required, in connection with its examination of a bank, to assess the bank's record in meeting the credit needs of the community served by that bank, including low- and moderate-income neighborhoods, consistent with the safe and sound operation of the institution. Under the CRA, institutions are assigned a rating of "outstanding," "satisfactory," "needs to improve," or "substantial non-compliance." The regulatory agency's assessment of the bank's record is made available to the public. Further, a bank's federal regulatory agency is required to assess the CRA compliance record of any bank that has applied to establish a new branch office that will accept deposits, relocate an office, or merge or consolidate with, or acquire the assets or assume the liabilities of, a federally regulated financial institution. In the case of a bank holding company applying for approval to acquire a bank or another bank holding company, the Federal Reserve Board will assess the CRA compliance record of each subsidiary bank of the applicant bank holding company, and such compliance records may be the basis for denying the application. Upon receiving notice that a subsidiary bank is rated less than "satisfactory," a financial holding company will be prohibited from additional activities that are permitted to be conducted by a financial holding company and from acquiring any company engaged in such activities. The CRA rating of the Bank was "Satisfactory" as of its most recent examination.

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 cleanup 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 Company or the Bank, or where compliance with these provisions will adversely affect a borrower's ability to comply with the terms of loan contracts.

5

Employees

As of February 29, 2024, the Company, on a consolidated basis, employed 389 employees, of which 324 were full-time employees. Our employees are not represented by any collective bargaining group. Management considers its employee relations to be good.

Statistical Information

Additional statistical information describing the business of the Company appears on the following pages and in Management's Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of this report and in the Consolidated Financial Statements and the notes thereto 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 in this report. Average balances used in statistical information are calculated using daily averages, unless otherwise specified.

The Company did not hold investment securities from any one issuer at December 31, 2023, that were greater than 10% of the Company's shareholders' equity, exclusive of U.S. Government and U.S. Government agency securities.

Presented below is the fair value of securities available for sale and amortized cost for held to maturity securities as of December 31, 2023, a schedule of maturities of securities as of December 31, 2023, and the weighted average yields of securities as of December 31, 2023. Callable securities in the money are presumed called and matured at the callable date.

	Available for Sale Securities maturing within:
									Fair Value
	Less than		1 Year -		5 Years -		More than		at December 31,
(Dollars in thousands)	1 Year		5 Years		10 Years		10 Years		2023
U.S. Government and federal agency	$	-	$	-	$	-	$	-	$	-
U.S. Treasury notes and bonds		-		63,692		16,502		-		80,194
State and municipal		250		18,502		139,613		76,317		234,682
Corporate		-		-		204		-		204
Asset-backed securities		-		8,015		3,002		-		11,017
Total debt securities		250		90,209		159,321		76,317		326,097
Mortgage-backed securities		19,941		58,858		91,029		18,673		188,501
Total Available for Sale	$	20,191	$	149,067	$	250,350	$	94,990	$	514,598

	Available for Sale weighted average yields:
	Less than			1 Year -			5 Years -			More than
	1 Year			5 Years			10 Years			10 Years			Total
U.S. Government and federal agency		-	%		-	%		-	%		-	%		-	%
U.S. Treasury notes and bonds		-			1.16			1.16			-			1.16
State and municipal		3.60			2.87			2.46			2.50			2.51
Corporate		-			-			3.75			-			3.75
Asset-backed securities		-			5.95			6.09			-			5.99
Mortgage-backed securities		3.62			3.09			3.36			1.67			3.14

Security yields are shown before the impact of interest rate swaps. ChoiceOne holds pay fixed, receive variable swaps with a notional value of $201.0 million which effect the interest earned on securities. Further details can be found in Note 8 - Derivatives and Hedging Activities.

6

	Held to Maturity Securities maturing within:
									Amortized Cost
	Less than		1 Year -		5 Years -		More than		at December 31,
(Dollars in thousands)	1 Year		5 Years		10 Years		10 Years		2023
U.S. Government and federal agency	$	-	$	2,972	$	-	$	-	$	2,972
U.S. Treasury notes and bonds		-		-		-		-		-
State and municipal		1,039		9,407		104,631		81,021		196,098
Corporate		-		-		20,013		-		20,013
Asset-backed securities		547		-		-		-		547
Total debt securities		1,586		12,379		124,644		81,021		219,630
Mortgage-backed securities		18,815		24,911		144,603		-		188,329
Total Held to Maturity	$	20,401	$	37,290	$	269,247	$	81,021	$	407,959

	Held to Maturity weighted average yields:
	Less than			1 Year -			5 Years -			More than
	1 Year			5 Years			10 Years			10 Years			Total
U.S. Government and federal agency		-	%		1.61	%		-	%		-	%		1.61	%
U.S. Treasury notes and bonds		-			-			-			-			-
State and municipal		1.59			1.93			2.10			2.44			2.23
Corporate		-			-			4.01			-			4.01
Asset-backed securities		1.10			-			-			-			1.10
Mortgage-backed securities		5.89			4.23			2.24			-			2.87

Weighted average yields are calculated based on the fair value of securities available for sale and amortized cost of securities held to maturity which are denoted in the table above. Weighted average yields for tax-exempt securities is computed on a fully tax-equivalent basis at an incremental tax rate of 21% for 2023.

Maturities and Sensitivities of Loans to Changes in Interest Rates

The following schedule presents the maturities of loans as of December 31, 2023. Loans are also classified according to the sensitivity to changes in interest rates as of December 31, 2023.

(Dollars in thousands)	In one year		After one year		After five years		After fifteen
	or less		through five years		through fifteen years		years		Total
Agricultural	$	14,718	$	18,282	$	13,881	$	2,329	$	49,210
Commercial and industrial		83,051		83,154		57,845		5,865		229,915
Commercial real estate		52,171		479,395		247,733		7,622		786,921
Construction real estate		19,272		1,112		-		552		20,936
Consumer		1,354		20,538		12,472		2,177		36,541
Residential real estate		1,997		11,898		111,325		142,510		267,730
Loans to other financial institutions		19,400		-		-		-		19,400
Totals	$	191,963	$	614,379	$	443,256	$	161,055	$	1,410,653

(Dollars in thousands)	Fixed or		Floating or
	predetermined rates		variable rates		Total
Loans maturing after one year:
Agricultural	$	31,506	$	2,986	$	34,492
Commercial and industrial		123,854		23,010		146,864
Commercial real estate		574,872		159,878		734,750
Construction real estate		1,664		-		1,664
Consumer		34,701		486		35,187
Residential real estate		128,867		136,866		265,733
Loans to other financial institutions		-		-		-
Totals	$	895,464	$	323,226	$	1,218,690

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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.

The following table reflects the composition of our allowance for credit losses, non-accrual loans, and nonperforming loans as a percentage of total loans represented by each class of loans as of the dates indicated:

(Dollars in thousands)	Agricultural			Commercial and industrial			Consumer			Commercial real estate			Construction real estate			Residential real estate			Loans to other financial institutions			Totals
Loans
December 31, 2023	$	49,210		$	229,915		$	36,541		$	786,921		$	20,936		$	267,730		$	19,400		$	1,410,653
Allowance for credit losses year ended December 31, 2023	$	94		$	2,216		$	823		$	8,820		$	58		$	3,644		$	30		$	15,685
Allowance as a percentage of loan category		0.19	%		0.96	%		2.25	%		1.12	%		0.28	%		1.36	%		0.15	%		1.11	%
Nonaccrual loans year ended December 31, 2023	$	-		$	1		$	-		$	-		$	-		$	1,722		$	-		$	1,723
Nonaccrual as a percentage of loan category		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.64	%		0.00	%		0.12	%
Allowance as a percentage of nonaccrual loans	NA			NA			NA			NA			NA				211.61	%	NA				910.33	%
Nonperforming loans year ended December 31, 2023	$	-		$	61		$	-		$	-		$	-		$	1,851		$	-		$	1,912
Nonperforming loans as a percentage of loan category		0.00	%		0.03	%		0.00	%		0.00	%		0.00	%		0.69	%		0.00	%		0.14	%
Net deposit charge-offs during the year ended December 31, 2023	$	-		$	-		$	(226	)	$	-		$	-		$	-		$	-		$	(226	)
Net loan charge-offs during the year ended December 31, 2023	$	-		$	(92	)	$	(45	)	$	13		$	-		$	(14	)	$	-		$	(138	)
Net charge-offs during the year ended December 31, 2023	$	-		$	(92	)	$	(271	)	$	13		$	-		$	(14	)	$	-		$	(364	)
Net charge-offs during the year to average loans outstanding		0.00	%		-0.01	%		-0.02	%		0.00	%		0.00	%		0.00	%		0.00	%		-0.03	%

(Dollars in thousands)	Agricultural			Commercial and industrial			Consumer			Commercial real estate			Construction real estate			Residential real estate			Loans to other financial institutions			Totals
Loans
December 31, 2022	$	64,159		$	210,210		$	39,808		$	630,953		$	14,736		$	229,916		$	-		$	1,189,782
Allowance for loan losses year ended December 31, 2022 (1)	$	144		$	1,361		$	310		$	4,822		$	63		$	906		$	-		$	7,619
Allowance as a percentage of loan category		0.22	%		0.65	%		0.78	%		0.76	%		0.43	%		0.39	%		0.00	%		0.64	%
Nonaccrual loans year ended December 31, 2022	$	-		$	-		$	-		$	-		$	-		$	1,263		$	-		$	1,263
Nonaccrual as a percentage of loan category		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.55	%		0.00	%		0.11	%
Allowance as a percentage of nonaccrual loans	NA			NA			NA			NA			NA				71.73	%	NA				603.25	%
Nonperforming loans year ended December 31, 2022	$	3		$	58		$	-		$	131		$	-		$	2,475		$	-		$	2,667
Nonperforming loans as a percentage of loan category		0.00	%		0.03	%		0.00	%		0.02	%		0.00	%		1.08	%		0.00	%		0.22	%
Net deposit charge-offs during the year ended December 31, 2022	$	-		$	-		$	(246	)	$	-		$	-		$	-		$	-		$	(246	)
Net loan charge-offs during the year ended December 31, 2022	$	-		$	(34	)	$	(44	)	$	3		$	-		$	2		$	-		$	(73	)
Net charge-offs during the year ended December 31, 2022	$	-		$	(34	)	$	(290	)	$	3		$	-		$	2		$	-		$	(319	)
Net charge-offs during the year to average loans outstanding		0.00	%		0.00	%		-0.03	%		0.00	%		0.00	%		0.00	%		0.00	%		-0.03	%

(1) - The total allowance for loan losses on December 31, 2022 includes $13,000 of unallocated reserve which was zero at December 31, 2023.

NA – No non-accrual loans in the loan category.

Additions to the allowance for credit losses charged to operations during the periods shown were based on management’s judgment after considering the factors laid out in Note 1 “Allowance for Credit Losses” to the consolidated financial statements. ChoiceOne

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adopted the Financial Accounting Standards Board (the "FASB") Account Standards Update 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, commonly referred to as "CECL" effective January 1, 2023 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures. Results for reporting periods beginning after January 1, 2023 are presented under CECL while prior period amounts are reported in accordance with the incurred loss accounting standard. The transition adjustment of the CECL adoption included an increase in the ACL of $7.2 million. The evaluation of the loan portfolio is based upon various risk factors such as the financial condition of the borrower, the value of collateral, reasonable and supportable forecasts, and other considerations, which, in the opinion of management, deserve current recognition in estimating credit losses.

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

	2023		2022		2021
Agricultural	$	94	$	144	$	448
Commercial and industrial		2,216		1,361		1,454
Real estate - commercial		8,820		4,822		3,705
Real estate - construction		58		63		110
Real estate - residential		3,644		906		628
Consumer		823		310		290
Loans to other financial institutions		30		-		43
Unallocated		-		13		1,010
Total allowance for loan losses	$	15,685	$	7,619	$	7,688

Deposits

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

(Dollars in thousands)
	2023					2022					2021
	Average Balance		Average Rate			Average Balance		Average Rate			Average Balance		Average Rate
Noninterest-bearing demand	$	546,926		-	%	$	582,992		-	%	$	527,876		-	%
Interest-bearing demand and money market deposits		852,927		1.18			902,090		0.39			791,886		0.23
Savings		370,074		0.43			452,542		0.16			398,969		0.14
Certificates of deposit		342,043		3.46			196,166		0.83			186,898		0.51
Total	$	2,111,970		1.11	%	$	2,133,790		0.27	%	$	1,905,629		0.17	%

Amount of time deposits in uninsured accounts (Dollars in thousands)
Maturing in less than 3 months	$	43,227
Maturing in 3 to 6 months		70,248
Maturing in 6 to 12 months		73,553
Maturing in more than 12 months		12,655
Total uninsured time deposits	$	199,683

At December 31, 2023, the aggregate balance of all deposits exceeding the FDIC insured limit of $250,000 for individual and $500,000 for joint accounts totaled $769.7 million, or 36.3% of total deposits, compared to $823.2 million, or 38.9% of total deposits and $889.3 million, or 43.3% of total deposits at December 31, 2022 and 2021, respectively. Certificate of Deposit Account Registry Service ("CDARs") deposits are excluded from the above table as all CDARs deposits are 100% guaranteed.

Core deposits, which we define as insured branch deposits less certificates of deposit, totaled $1.1 billion or 53.2% of total deposits at December 31, 2023.

At December 31, 2023, the Bank had no material foreign deposits.

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Return on Equity and Assets

The following schedule presents certain financial ratios of the Company for the years ended December 31:

	2023			2022			2021
Return on assets (net income divided by average total assets)		0.85	%		1.00	%		1.02	%
Return on equity (net income divided by average equity)		12.00	%		13.25	%		9.79	%
Dividend payout ratio (dividends declared per share divided by net income per share)		37.21	%		32.06	%		32.67	%
Equity to assets ratio (average equity divided by average total assets)		7.11	%		7.52	%		10.44	%

Item 1A. Risk Factors

The Company is subject to many risks and uncertainties. Although the Company seeks ways to manage these risks and develop programs to control risks to the extent that management can control them, the Company 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 Company faces. Additional risks and uncertainties of which the Company is unaware, or that it currently does not consider to be material, also may become important factors that affect the Company and its business. If any of these risks were to occur, the Company’s business, financial condition or results of operations could be materially and adversely affected.

Risks Related to the Company’s Business

Asset quality could be less favorable than expected.

A significant source of risk for the Company 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 Company 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, public health crisis, and other external events.

The Company’s allowance for credit losses may not be adequate to cover actual credit losses.

The risk of nonpayment of loans is inherent in all lending activities and nonpayment of loans may have a material adverse effect on the Company’s earnings and overall financial condition, and the value of its common stock. The Company makes various assumptions and judgments about the collectability of its loan portfolio and provides an allowance for potential losses based on a number of factors. If its assumptions are wrong, the allowance for credit losses may not be sufficient to cover losses, which could have an adverse effect on the Company’s operating results and may cause it to increase the allowance in the future. The actual amount of future provisions for credit losses cannot now be determined and may exceed the amounts of past provisions for credit losses. Federal and state banking regulators, as an integral part of their supervisory function, periodically review the allowance for credit losses. These regulatory agencies may require the Company to increase its provision for credit losses or to recognize further loan charge-offs based upon their judgments, which may be different from the Company’s judgments. Any increase in the allowance for credit losses could have a negative effect on the Company’s regulatory capital ratios, net income, financial condition and results of operations.

The Current Expected Credit Loss ("CECL") accounting standard could add volatility to our allowance for credit losses and may have an adverse effect on our financial condition and results of operations.

Effective January 1, 2023, we adopted CECL. CECL changed the allowance for credit losses methodology from an incurred loss impairment methodology to an expected loss methodology, which is more dependent on future economic forecasts, assumptions and models than the incurred loss accounting standard and could result in increases in, and add volatility to, our allowance for credit losses and future provisions for credit losses. These forecasts, assumptions and models are by their nature uncertain and are based upon management’s reasonable judgment in light of information currently available.

General economic conditions in the state of Michigan could have a material adverse effect on the Company’s results of operations or financial condition.

The Company is affected by general economic conditions in the United States, although most directly within Michigan. An economic downturn within Michigan caused by inflation, recession or a recessionary environment, unemployment, changes in financial or capital

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markets or other factors, 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.

The Company could be adversely affected by the soundness of other financial institutions, including defaults by larger financial institutions.

The Company's ability to engage in routine funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions. Financial services institutions are interrelated as a result of credit, trading, clearing, counterparty or other relationships between financial institutions. The Company has exposure to multiple counterparties, and it routinely executes transactions with counterparties in the financial industry. As a result, defaults by, or even rumors or questions about, one or more financial services institutions, or the financial services industry generally, could lead to market-wide liquidity problems and losses or defaults by the Company or by other institutions. This is sometimes referred to as "systemic risk" and may adversely affect financial intermediaries, such as clearing agencies, clearing houses, banks, securities firms and exchanges, with which the Company interacts on a daily basis, and therefore could adversely affect the Company.

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

The Company’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, internet banks and other financial technology companies, 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 consolidation among financial service providers. New competitors may emerge to increase the degree of competition for the Company’s customers and services. Financial services and products are also constantly changing. The Company’s financial performance will also depend in part upon customer demand for the Company’s products and services and the Company’s ability to develop and offer competitive financial products and services.

We are subject to significant government regulation, and any regulatory changes may adversely affect us.

We are subject to extensive government regulation under both federal and state law. We are subject to regulation by the Federal Reserve, the FDIC and the DIFS, in addition to other regulatory and self-regulatory organizations. Current laws and applicable regulations are subject to change and any new regulatory change could make compliance more expensive, difficult, or otherwise adversely affect our business. Specifically, regulation changes to overdraft fees could adversely affect our business. We cannot predict the ultimate effect of any changes to regulations affecting us, but such changes could have a material adverse effect on our results of operation or financial condition.

Changes in interest rates could reduce the Company’s income and cash flow.

The Company’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 Company’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.

The Company is subject to liquidity risk in its operations, which could adversely affect its ability to fund various obligations.

Liquidity risk is the possibility of being unable to meet obligations as they come due or capitalize on growth opportunities as they arise because of an inability to liquidate assets or obtain adequate funding on a timely basis, at a reasonable cost and within acceptable risk tolerances. Liquidity is required to fund various obligations, including credit obligations to borrowers, loan originations, withdrawals by depositors, repayment of debt, dividends to shareholders, operating expenses and capital expenditures. Liquidity is derived primarily from retail deposit growth and earnings retention, principal and interest payments on loans and investment securities, net cash provided from operations and access to other funding. If the Company is unable to maintain adequate liquidity, then its business, financial condition and results of operations would be negatively affected.

If the Company were required to sell investment securities in an unrealized loss position to meet liquidity needs and realize losses, that could have a material adverse impact on its results of operation and financial condition.

At December 31, 2023, the Company had $128.9 million in unrealized losses on its investment securities, including $69.7 million in unrealized losses on available for sale securities and $59.2 in unrealized losses on held to maturity securities. If the Company were required to sell investment securities in an unrealized loss position to meet liquidity needs and realize losses, that could have a material

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adverse impact on its results of operations and financial condition, including a negative impact on net income and a permanent reduction in equity capital. The issuers continue to make timely principal and interest payments on the bonds. The fair value is expected to recover as the bonds approach maturity.

Evaluation of investment securities for an allowance for credit losses involves subjective determinations and could have a material adverse impact on our results of operations and financial condition.

The fair value evaluation of investment securities is a quantitative and qualitative process, which is subject to risks and uncertainties and is intended to determine whether declines in the fair value of investments require the establishment of an allowance for credit losses. The risks and uncertainties include changes in general economic conditions, the issuer’s financial condition or future recovery prospects and the effects of changes in interest rates or credit spreads. Estimating future cash flows involves incorporating information received from third-party sources and making internal assumptions and judgments regarding the future performance of the underlying collateral and assessing the probability that an adverse change in future cash flows has occurred. The determination of an allowance for credit losses is based upon our periodic evaluation and assessment of known and inherent risks associated with the respective asset class. Such evaluations and assessments are revised as conditions change and new information becomes available. Our management considers a wide range of factors about the security issuer and uses reasonable judgment in evaluating the cause of the decline in the estimated fair value of the security and in assessing the prospects for recovery. Inherent in management’s evaluation of the security are assumptions and estimates about the operations of the issuer and its future earnings potential. Additions to the allowance for credit losses for our investment securities may need to be taken in the future, which could have a material adverse effect on our results of operations and financial condition.

The Company has significant exposure to risks associated with commercial and residential real estate.

A substantial portion of the Company’s loan portfolio consists of commercial and residential real estate-related loans, including real estate development, construction and residential and commercial mortgage loans. As of December 31, 2023, the Company had approximately $807.9 million of commercial and construction real estate loans outstanding, which represented approximately 57.3% of its loan portfolio. As of that same date, the Company had approximately $267.7 million in residential real estate loans outstanding, or approximately 19.0% of its loan portfolio. Consequently, real estate-related credit risks are a significant concern for the Company. The adverse consequences from real estate-related credit risks tend to be cyclical and are often driven by national economic developments that are not controllable or entirely foreseeable by the Company or its borrowers.

Commercial loans may expose the Company to greater financial and credit risk than other loans.

The Company’s commercial and industrial loan portfolio, including commercial mortgages, was approximately $229.9 million at December 31, 2023, comprising approximately 16.3% of its total loan portfolio. Commercial loans generally carry larger loan balances and can involve a greater degree of financial and credit risk than other loans. Any significant failure to pay on time by the Company’s customers would hurt the Company’s earnings. The increased financial and credit risk associated with these types of loans are a result of several factors, including the concentration of principal in a limited number of loans and borrowers, the size of loan balances, the effects of general economic conditions on income-producing properties and the increased difficulty of evaluating and monitoring these types of loans.

Legislative or regulatory changes or actions could adversely impact the Company or the businesses in which it is engaged.

The Company and the Bank are subject to extensive state and federal regulation, supervision and legislation that govern almost all aspects of their operations. Laws and regulations may change from time to time and are primarily intended for the protection of consumers, depositors and the deposit insurance fund, and not to benefit the Company’s shareholders. The impact of any changes to laws and regulations or other actions by regulatory agencies may negatively impact the Company or its ability to increase the value of its business. Regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities, including the imposition of restrictions on the operation of an institution, the classification of assets by the institution and the adequacy of an institution’s allowance for credit losses. Future regulatory changes or accounting pronouncements may increase the Company’s regulatory capital requirements or adversely affect its regulatory capital levels. Additionally, actions by regulatory agencies against the Company or the Bank could require the Company to devote significant time and resources to defending its business and may lead to penalties that materially affect the Company.

The Company relies heavily on its management and other key personnel, and the loss of any of them may adversely affect its operations.

The Company is and will continue to be dependent upon the services of its management team and other key personnel. Losing the services of one or more key members of the Company’s management team could adversely affect its operations.

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The Company’s controls and procedures may fail or be circumvented.

Management regularly reviews and updates the Company’s internal controls, disclosure controls and procedures, and corporate governance policies and procedures. Any system of controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met. If the Company fails to identify and remediate control deficiencies, it is possible that a material misstatement of interim or annual financial statements will not be prevented or detected on a timely basis. In addition, any failure or circumvention of the Company’s other controls and procedures or failure to comply with regulations related to controls and procedures could have a material adverse effect on the Company’s business, results of operations and financial condition.

The Company may be a defendant in a variety of litigation and other actions, which may have a material adverse effect on the Company’s financial condition and results of operations.

The Company and the Bank are regularly involved in a variety of litigation arising out of the normal course of business. The Company’s insurance may not cover all claims that may be asserted against it, and any claims asserted against it, regardless of merit or eventual outcome, may harm its reputation or cause the Company to incur unexpected expenses, which could be material in amount. Should the ultimate expenses, judgments or settlements in any litigation exceed the Company’s insurance coverage, they could have a material adverse effect on the Company’s financial condition and results of operations. In addition, the Company may not be able to obtain appropriate types or levels of insurance in the future, nor may it be able to obtain adequate replacement policies with acceptable terms, if at all.

If the Company cannot raise additional capital when needed, its ability to further expand its operations through organic growth or acquisitions could be materially impaired.

The Company is required by federal and state regulatory authorities to maintain specified levels of capital to support its operations. The Company may need to raise additional capital to support its current level of assets or its growth. The Company’s ability to raise additional capital will depend on conditions in the capital markets at that time, which are outside its control, and on its financial performance. The Company cannot assure that it will be able to raise additional capital in the future on terms acceptable to it or at all. If the Company cannot raise additional capital when needed, its ability to maintain its current level of assets or to expand its operations through organic growth or acquisitions could be materially limited.

Unauthorized disclosure of sensitive or confidential client or customer information, whether through a breach of computer systems or otherwise, could severely harm the Company’s business.

As part of its business, the Company collects, processes and retains sensitive and confidential client and customer information on behalf of itself and other third parties. Despite the security measures the Company has in place for its facilities and systems, and the security measures of its third party service providers, the Company may be vulnerable to security breaches, acts of vandalism, computer viruses, misplaced or lost data, programming and/or human errors or other similar events. Any security breach involving the misappropriation, loss or other unauthorized disclosure of confidential customer information, whether by the Company or by its vendors, could severely damage the Company’s reputation, expose it to the risks of litigation and liability, disrupt the Company’s operations and have a material adverse effect on the Company’s business.

The Company's information systems may experience an interruption or breach in security.

The Company relies heavily on communications and information systems to conduct its business and deliver its products. Any failure, interruption or breach in security of these systems could result in failures or disruptions in the Company’s customer relationship management, general ledger, deposit, loan and other systems. While the Company has policies and procedures designed to prevent or limit the effect of the failure, interruption or security breach of its information systems, there can be no assurance that any such failures, interruptions or security breaches of the Company’s information systems or its customers’ information or computer systems would not damage the Company’s reputation, result in a loss of customer business, subject the Company to additional regulatory scrutiny, or expose the Company to civil litigation and financial liability, any of which could have a material adverse effect on the Company’s financial condition and results of operations.

Cybersecurity incidents could disrupt business operations, result in the loss of critical and confidential information, and adversely impact our reputation and results of operations.

Global cybersecurity threats and incidents can range from uncoordinated individual attempts to gain unauthorized access to information technology (IT) systems to sophisticated and targeted measures known as advanced persistent threats, directed at the Company and/or its third party service providers. Although we employ comprehensive measures to prevent, detect, address and mitigate these threats (including access controls, employee training, data encryption, vulnerability assessments, continuous monitoring of our IT networks and systems and maintenance of backup and protective systems), cybersecurity incidents, depending on their nature and scope, could

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potentially result in the misappropriation, destruction, corruption or unavailability of critical data and confidential or proprietary information (our own or that of third parties) and the disruption of business operations. The potential consequences of a material cybersecurity incident include reputational damage, litigation with third parties and increased cybersecurity protection and remediation costs, which in turn could materially adversely affect our results of operations.

Employee misconduct could adversely impact our reputation and results of operations.

Our reputation is crucial to maintaining and developing relationships with our customers. There is a risk our employees could engage in misconduct that adversely affects our business. For example, if an employee were to engage (or be accused of engaging) in fraudulent, illegal, or suspicious activities, including fraud or theft, we could be subject to regulatory sanctions or penalties, or litigation, and suffer significant harm to our reputation, financial position, and customer relationships as a result. Additionally, our business often requires that we deal with sensitive customer information. If our employees were to improperly use or disclose this information, even inadvertently, we could suffer significant harm to our reputation, financial position and current and future business relationships. We may not be able to deter all employee misconduct, and the precautions we take to detect and prevent this misconduct may not be effective in all circumstances. Misconduct or harassment by our employees (or unsubstantiated allegations of the same), or improper use or disclosure of confidential information by our employees, even inadvertently, could result in a material adverse effect on our business, reputation, or results of operations.

Environmental liability associated with commercial lending could result in losses.

In the course of its business, the Company may acquire, through foreclosure, properties securing loans it has originated or purchased that are in default. Particularly in commercial real estate lending, there is a risk that hazardous substances could be discovered on these properties. In this event, the Company might be required to remove these substances from the affected properties at the Company’s sole cost and expense. The cost of this removal could substantially exceed the value of affected properties. The Company may not have adequate remedies against the prior owner or other responsible parties and could find it difficult or impossible to sell the affected properties. These events could have an adverse effect on the Company’s business, results of operations and financial condition.

The Company depends upon the accuracy and completeness of information about customers.

In deciding whether to extend credit to customers, the Company relies on information provided to it by its customers, including financial statements and other financial information. The Company may also rely on representations of customers as to the accuracy and completeness of that information and on reports of independent auditors on financial statements. The Company’s financial condition and results of operations could be negatively impacted to the extent that the Company extends credit in reliance on financial statements that do not comply with generally accepted accounting principles or that are misleading or other information provided by customers that is false or misleading.

Our reliance on third party vendors could cause operational losses or business interruptions.

We rely on third party service providers for certain components of our business activity. If these third party service providers experience difficulties or terminate their services and we are unable to replace them with other service providers, our operations could be interrupted. Even if we are able to replace them with another service provider, the replacement may be more expensive or offer an inferior service. Any of these outcomes could have a material adverse effect on our business, financial condition or results of operations.

The Company operates in a highly competitive industry and market area.

The Company faces substantial competition in all areas of its operations from a variety of different competitors, many of which are larger and may have more financial resources. Such competitors primarily include national and regional banks within the various markets where the Company operates, as well as internet banks and other financial technology companies. The Company also faces competition from many other types of financial institutions, including savings and loan associations, credit unions, finance companies, brokerage firms, insurance companies and other financial intermediaries. The financial services industry could become even more competitive as a result of legislative, regulatory and technological changes and continued consolidation. Banks, securities firms and insurance companies can merge under the umbrella of a financial holding company, which can offer virtually any type of financial service, including banking, securities underwriting, insurance (both agency and underwriting) and merchant banking. The Company competes with these institutions both in attracting deposits and in making new loans. Technology has lowered barriers to entry into the market and made it possible for non-banks to offer products and services traditionally provided by banks, such as automatic transfer and automatic payment systems. Many of the Company’s competitors have fewer regulatory constraints and may have lower cost structures, such as credit unions that are not subject to federal income tax. Due to their size, many competitors may be able to achieve economies of scale and, as a result, may offer a broader range of products and services as well as better pricing for those products and services than the Company can.

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Severe weather, natural disasters, acts of war or terrorism, a public health crisis, and other external events could significantly impact the Company’s business.

Severe weather, natural disasters, acts of war or terrorism, risks posed by an outbreak of a widespread epidemic or pandemic of disease (or widespread fear thereof) or other public health crisis, and other adverse external events could have a significant impact on the Company’s ability to conduct business. Such events could affect the stability of the Company’s deposit base, impair the ability of borrowers to repay outstanding loans, impair the value of collateral securing loans, cause significant property damage, result in loss of revenue and/or cause the Company to incur additional expenses.

The Company relies on dividends from the Bank for most of its revenue.

The Company is a separate and distinct legal entity from the Bank. It receives substantially all of its revenue from dividends from the Bank. These dividends are the principal source of funds to pay cash dividends on the Company’s common stock. Various federal and/or state laws and regulations limit the amount of dividends that the Bank may pay to the Company. If the Bank is unable to pay dividends to the Company, the Company may not be able to pay cash dividends on its common stock. The earnings of the Bank have been the principal source of funds to pay cash dividends to shareholders. Over the long-term, cash dividends to shareholders are dependent upon earnings, as well as capital requirements, regulatory restraints and other factors affecting the Company and the Bank.

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 Company and the Company’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.

Risks Related to the Company’s Common Stock

Investments in the Company’s common stock involve risk.

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

•Variations in quarterly or annual operating results

•Changes in dividends per share

•Changes in interest rates

•New developments, laws or regulations in the banking industry

•Acquisitions or business combinations involving the Company or its competition

•Regulatory actions, including changes to regulatory capital levels, the components of regulatory capital and how regulatory capital is calculated

•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

•Credit and capital availability

•Issuance of additional shares of common stock or other debt or equity securities of the Company

•Market conditions

•General economic conditions

•Turbulence, uncertainty or a lack of confidence within the banking industry

The Company’s common stock, while publicly traded, has less liquidity than the average liquidity of stocks listed on the Nasdaq Stock Market.

The Company’s common stock is listed for trading on the Nasdaq Capital Market. However, the Company’s common stock has less liquidity than the average liquidity for companies listed in the Nasdaq Stock Market. The public trading market for the Company’s common stock depends on a marketplace of willing buyers and sellers at any given time, which in turn depends on factors outside of the Company’s control, including general economic and market conditions and the decisions of individual investors. The limited market for the Company’s common stock may affect a shareholder’s ability to sell their shares at any given time, and the sale of a large number of shares at one time could temporarily adversely affect the market price of our common stock.

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The Company's common stock is not insured by any government entity.

The Company’s common stock is not insured by the FDIC or any other government entity. Investment in the Company’s common stock is subject to risk and potential loss.

A shareholder’s ownership of common stock may be diluted if the Company issues additional shares of common stock in the future.

The Company’s articles of incorporation authorize the Company’s Board of Directors to issue additional shares of common stock or preferred stock without shareholder approval. To the extent the Company issues additional shares of common stock or preferred stock, or issues options or warrants permitting the holder to purchase or acquire common stock in the future and such warrants or options are exercised, the Company’s shareholders may experience dilution in their ownership of the Company’s common stock. Holders of the Company’s common stock do not have any preemptive or similar rights to purchase a pro rata share of any additional shares offered or issued by the Company.

The value of the Company's common stock may be adversely affected if the Company issues debt and equity securities that are senior to the Company's common stock in liquidation or as to distributions.

The Company may increase its capital by issuing debt or equity securities or by entering into debt or debt-like financing. This may include the issuance of common stock, preferred stock, senior notes, or subordinated notes. Upon any liquidation of the Company, the Company’s lenders and holders of its debt securities would be entitled to distribution of the Company’s available assets before distributions to the holders of the Company’s common stock, and holders of preferred stock may be granted rights to similarly receive a distribution upon liquidation prior to distribution to holders of the Company’s common stock. The Company cannot predict the amount, timing or nature of any future debt financings or stock offerings, and the decision of whether to incur debt or issue securities will depend on market conditions and other factors beyond the Company’s control. Future offerings could dilute a shareholder’s interests in the Company or reduce the per-share value of the Company’s common stock.

The Company's articles of incorporation and bylaws, and certain provisions of Michigan law, contain provisions that could make a takeover effort more difficult.

The Michigan Business Corporation Act, and the Company’s articles of incorporation and bylaws, include provisions intended to protect shareholders and prohibit, discourage, or delay certain types of hostile takeover activities. In addition, federal law requires the Federal Reserve Board’s prior approval for acquisition of “control” of a bank holding company such as the Company, including acquisition of 10% or more of the Company’s outstanding securities by any person not defined as a company under the Bank Holding Company Act of 1956, as amended (the “BHC Act”). These provisions and requirements could discourage potential acquisition proposals, delay or prevent a change in control, diminish the opportunities for a shareholder to participate in tender offers, prevent transactions in which our shareholders might otherwise receive a premium for their shares, or limit the ability for our shareholders to approve transactions that they may believe to be in their best interests.

An entity or group holding a certain percentage of the Company's outstanding securities could become subject to regulation as a "bank holding company" or may be required to obtain prior approval of the Federal Reserve Board.

Any bank holding company or foreign bank with a presence in the United States may be required to obtain approval of the Federal Reserve Board under the BHC Act to acquire or retain 5% or more of the Company’s outstanding securities. Further, if any entity (including a “group” comprised of individual persons) owns or controls the power to vote 25% or more of the Company’s outstanding securities, or 5% or more of the outstanding securities if the entity otherwise exercises a “controlling influence” over the Company, the entity may become subject to regulation as a “bank holding company” under the BHC Act. An entity that is subject to regulation as a bank holding company would be subject to regulatory and statutory obligations and restrictions, and could be required to divest all or a portion of the entity’s investment in the Company’s securities or in other investments that are not permitted for a bank holding company.

Item 1B. Unresolved Staff Comments

None.

Item 1C. Cybersecurity

Our bank faces various cybersecurity threats, including unauthorized access, malware, and phishing attacks. These threats could compromise the security of our information systems and the data we store and process. While we have experienced, and expect to continue to experience, cybersecurity threats, we have not experienced a material cybersecurity incident in the three year period ended December 31, 2023. The potential consequences of a material cybersecurity incident could include reputational damage, litigation with

16

third parties, regulatory criticism or proceedings and increased cybersecurity protection and remediation costs, which in turn could materially adversely affect our results of operations.

We have established an information security third party risk management program to identify and manage these risks. This program includes regular risk assessments, third party risk provider reviews, and implementation of security measures such as encryption and firewalls, and ongoing monitoring of our systems for potential threats. We also engage with industry consultants to assist with our risk assessments.

On a regular basis, the technology steering committee, led by management, receives comprehensive reports summarizing cybersecurity threat monitoring and incident management activities. These reports also include details about remediation efforts to address identified threats and incidents. Additionally, both internal and external assessments of our company’s cybersecurity threat monitoring capabilities are shared with the committee. Meeting minutes from these committee sessions are diligently maintained and provided to the Board of Directors.

The Board of Directors has responsibility for approving and overseeing management’s policies related to information system security and cybersecurity threats and incidents. They also supervise management’s overall approach to securing the company’s information systems. The Board of Directors delegates the oversight of cybersecurity risk management to the Information Technology Committee of the Board.

The Information Technology Committee, in turn, reviews reports on our cybersecurity risk management processes. These reports cover assessments of management’s handling of cybersecurity threats and incident management functions. The committee receives periodic updates from the chief information officer, including information on social engineering risks, the effectiveness of cybersecurity training, and results from vulnerability and penetration assessments conducted both internally and by external parties. Audit reports related to information systems and cybersecurity threat monitoring are also part of this reporting process.

Item 2. Properties

The Company’s headquarters are located at 109 East Division, Sparta, Michigan 49345. The headquarters location is owned by the Company and is not subject to any mortgage.

29 of the Company’s 35 locations are designed for use and operation as a bank, are well maintained, and are suitable for current operations. The remaining six locations are comprised of loan production offices and wealth management. Offices generally range in size from 1,200 to 3,200 square feet, based on the location and number of employees located at the facility. All of our offices are owned by the Bank except for six that are leased under various operating lease agreements. The Company’s management believes all offices are adequately covered by property insurance.

Item 3. Legal Proceedings

As of December 31, 2023, there were no significant pending legal proceedings to which the Company or the Bank is a party or to which any of their properties were 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 adverse effect on the consolidated financial condition of the Company.

Item 4. Mine Safety Disclosures

Not applicable.

17

PART II

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

Stock Information

The Company’s common stock is traded on the NASDAQ Capital Market under the symbol COFS.

As of February 29, 2024, there were approximately 1,122 owners of record and approximately 1,093 beneficial owners of our common stock.

The following table summarizes the quarterly cash dividends declared per share of common stock during 2023 and 2022:

	2023		2022
First Quarter	$	0.26	$	0.25
Second Quarter		0.26		0.25
Third Quarter		0.26		0.25
Fourth Quarter		0.27		0.26
Total	$	1.05	$	1.01

ChoiceOne’s principal source of funds to pay cash dividends is the earnings and dividends paid by the Bank. The Bank is restricted in its ability to pay cash dividends under current banking regulations. See Note 21 – Regulatory Capital 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 2024, although the amount of the quarterly dividends will be dependent on market conditions and ChoiceOne’s requirements for cash and capital, among other things.

Information regarding the Company’s equity compensation plans may be found in Item 12 of this report and is here incorporated by reference.

ISSUER PURCHASES OF EQUITY SECURITIES

ChoiceOne’s common stock repurchase plan announced in April 2021 and amended in 2022, authorizes the repurchase of up to 375,388 shares, representing 5% of the total outstanding shares of common stock as of the date the plan was adopted. No shares were repurchased under this plan in 2023.

					Total Number		Maximum
					of Shares		Number of
	Total				Purchased as		Shares that
	Number		Average		Part of a		May Yet be
	of Shares		Price Paid		Publicly		Purchased
Period	Purchased		per Share		Announced Plan		Under the Plan
October 1 - October 31, 2023
Employee Transactions		—	$	—		—
Repurchase Plan		—	$	—		—		375,388
November 1 - November 30, 2023
Employee Transactions		—	$	—		—
Repurchase Plan		—	$	—		—		375,388
December 1 - December 31, 2023		—
Employee Transactions (1)		6,853	$	31.07		6,853
Repurchase Plan		—	$	—		—		375,388

(1) Shares submitted for the purchase of stock options. Stock options were issued out of the ChoiceOne Financial Services, Inc. Stock Incentive Plan of 2012.

As of December 31, 2023, there were 375,388 shares remaining that may yet be repurchased under the plan. There was no stated expiration date.

Item 6. Reserved

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Item 7. 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. This discussion should be read in conjunction with the consolidated financial statements and related footnotes.

We have omitted discussion of 2022 results where it would be redundant to the discussion previously included in Part II, Item 7 of our 2022 Annual Report on Form 10-K.

Selected Financial Data

(Dollars in thousands, except per share data)
	2023			2022			2021
For the year
Net interest income	$	65,885		$	67,314		$	60,641
Provision for credit losses, net		150			250			416
Noninterest income		14,906			14,072			19,194
Noninterest expense		55,074			53,478			52,921
Income before income taxes		25,567			27,658			26,498
Income tax expense		4,306			4,018			4,456
Net income		21,261			23,640			22,042
Cash dividends declared		7,910			7,578			7,200
Per share
Basic earnings	$	2.82		$	3.15		$	2.87
Diluted earnings		2.82			3.15			2.86
Cash dividends declared		1.05			1.01			0.94
Shareholders' equity (at year end)		25.92			22.47			29.52
Average for the year
Securities	$	1,042,559		$	1,094,559		$	869,788
Gross loans		1,265,261			1,104,030			1,040,430
Deposits		2,111,970			2,133,790			1,905,629
Borrowings		141,507			13,537			5,465
Subordinated debt		35,382			35,211			12,841
Shareholders' equity		177,201			178,415			225,120
Assets		2,493,840			2,373,374			2,156,774
At year end
Securities	$	939,576		$	972,802		$	1,116,265
Gross loans		1,415,363			1,194,616			1,068,831
Deposits		2,122,055			2,118,003			2,052,294
Borrowings		200,000			50,000			50,000
Subordinated debt		35,507			35,262			35,017
Shareholders' equity		195,634			168,874			221,669
Assets		2,576,706			2,385,915			2,366,682
Selected financial ratios
Return on average assets		0.85	%		1.00	%		1.02	%
Return on average shareholders' equity		12.00			13.25			9.79
Cash dividend payout as a percentage of net income		37.21			32.06			32.67
Shareholders' equity to assets (at year end)		7.59			7.08			9.37

19

RESULTS OF OPERATIONS

Summary

ChoiceOne's net income for 2023 was $21.3 million, compared to $23.6 million in 2022. Diluted earnings per share were $2.82 in the twelve months ended December 31, 2023, compared to $3.15 per share in the twelve months ended December 31, 2022.

ChoiceOne's asset mix has shifted from loans held for investment of 56.2% of deposits at December 31, 2022 to 66.5% of deposits at December 31, 2023. Total assets increased by $190.8 million in the twelve months ended December 31, 2023. As a result of the change in asset mix and increase in total assets, interest income increased $23.9 million in the twelve months ended December 31, 2023, compared to the same period in 2022. This increase was driven by core loan growth of $201.5 million or 16.9%, which was partially offset by a decrease in investment securities of $33.2 million. Loans to other financial institutions, consisting of a warehouse line of credit, increased $19.4 million during the full year 2023.

Deposits, excluding brokered deposits, decreased $17.7 million or 0.8% as of December 31, 2023 compared to December 31, 2022. The decrease in deposits since December 31, 2022 was largely concentrated in the first quarter of 2023 as a result of a combination of customers using cash on hand for debt payoffs, seasonal tax and municipal bond payments, and customers seeking higher rates in money market securities or other investments. Deposits grew in the third and fourth quarters of 2023 due to new business, recapture of deposit losses, and some seasonality in municipal balances. ChoiceOne continues to be proactive in managing its liquidity position by using brokered deposits, the Bank Term Funding Program ("BTFP"), and FHLB advances to ensure ample liquidity. At December 31, 2023, total available borrowing capacity from all sources was $933.3 million.

The increase in short term interest rates has led to higher deposit costs, which rose to 1.14% in 2023 compared to 0.27% in 2022 as deposits reprice and customers shift to CD and other interest bearing products. This trend is likely to persist. ChoiceOne is taking active measures to control these costs and expects to continue to pay lower rates on deposits than the federal funds rate. Interest expense on borrowings for the twelve months ended December 31, 2023, increased $7.2 million, compared to the same period in the prior year, due to increases in borrowing amounts and interest rates. Borrowings include $170 million from the BTFP and $30 million of FHLB borrowings at a weighted average fixed rate of 4.7%. Total cost of funds increased to 1.44% in 2023 compared to 0.35% in 2022.

ChoiceOne adopted CECL effective January 1, 2023 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures. Results for reporting periods beginning after January 1, 2023 are presented under CECL while prior period amounts are reported in accordance with the incurred loss accounting standard. The transition adjustment of the CECL adoption included an increase in the ACL of $7.2 million, which included a $5.5 million decrease to the retained earnings account to reflect the cumulative effect of adopting CECL on our Consolidated Balance Sheet, with the $1.5 million tax impact portion being recorded as part of the deferred tax asset in other assets on our Consolidated Balance Sheet. The transition adjustment of the CECL adoption included an additional ACL on unfunded commitments of $3.3 million, which included a $2.6 million decrease to the retained earnings account to reflect the cumulative effect of adopting CECL on our Consolidated Balance Sheet, with the $688,000 tax impact portion being recorded as part of the deferred tax asset in other assets on our Consolidated Balance Sheet.

The provision for credit losses expense on loans was $1.3 million in the full year 2023, due to the significant growth of core loans. Core loan growth was offset by improvements in the Federal Open Market Committee ("FOMC") forecast and certain payoffs of watch loans during the full year 2023. The ratio of the allowance for credit losses to total loans (excluding loans held for sale) was 1.11% on December 31, 2023 compared to 1.24% on January 1, 2023. Asset quality continues to remain strong, with annualized net loan charge-offs to average loans of 0.03% and nonperforming loans to total loans (excluding loans held for sale) of 0.14% as of December 31, 2023.

Purchased loans carry approximately $2.5 million of accretable yield, which will be recognized into income over the remaining life of the loans, approximately two to four years.

20

Noninterest Income

Noninterest income rose by $834,000 in the twelve months ended December 31, 2023, compared to the same period in the prior year. The increase was largely due to reduced losses on the sale of securities and a decline in the change in market value of equity securities. This was partially offset by the decline in gains on sales of loans in 2023 compared to 2022. With the rapid rise in interest rates, mortgage refinancing activity slowed in 2023 and the rate environment for purchased mortgage loans became increasingly competitive. In addition, ChoiceOne recorded a BOLI claim of $274,000 in December of 2022, which was not repeated in 2023.

Noninterest Expense

Noninterest expense increased $1.6 million or 3.0% in the twelve months ended December 31, 2023 compared to the same period in 2022. The increase in total noninterest expense was largely related to inflationary pressures on employee wages and benefits and increases to FDIC insurance, partially offset by lower occupancy and data processing costs. As part of its ongoing optimization strategy, ChoiceOne intends to consolidate two of its branches by March 2024. Customers who currently use these branches will be able to access nearby ChoiceOne locations that offer the same level of service and convenience. ChoiceOne anticipates a low impact on customer retention and expects to save around $700,000 annually from this decision. Management continues to seek out ways to manage costs, but also recognizes the value of investing in innovation and attracting the best talent in our industry to compete effectively in our markets.

Dividends

Cash dividends of $7.9 million or $1.05 per common share were declared in 2023 compared to $7.6 million or $1.01 per common share in 2022. The dividend yield for ChoiceOne’s common stock was 3.58% as of the end of 2023, compared to 3.48% as of the end of 2022. The cash dividend payout as a percentage of net income was 37% as of December 31, 2023, compared to 32% as of December 31, 2022.

Income Taxes

Income tax expense was $288,000 higher in 2023 than in 2022. The effective tax rate was 16.8% for the year ended 2023 compared to 14.5% for the same period in 2022. During 2023, nontaxable municipal interest decreased and disallowed interest expense increased compared to the year ended 2022. For further details, refer to Note 12 - Income Taxes of the Notes to the Consolidated Financial Statements included in Item 8 of this report.

21

Table 1 – Average Balances and Tax-Equivalent Interest Rates

Tables 1 and 2 on the following pages provide information regarding interest income and expense for the years ended December 31, 2023, 2022, and 2021. Table 1 documents ChoiceOne’s average balances and interest income and expense, as well as the average rates earned or paid on assets and liabilities. Table 2 documents the effect on interest income and expense of changes in volume (average balance) and interest rates.

	Year Ended December 31,
	2023								2022								2021
(Dollars in thousands)	Average								Average								Average
	Balance		Interest			Rate			Balance		Interest			Rate			Balance		Interest			Rate
Assets:
Loans (1) (3)(4)(5)(6)	$	1,265,261	$	68,437			5.41	%	$	1,104,030	$	52,861			4.79	%	$	1,040,430	$	48,672			4.62	%
Taxable securities (2)(6)		747,006		21,169			2.83			779,915		15,583			2.00			599,902		10,260			2.13
Nontaxable securities (1)		295,553		7,106			2.40			314,644		7,790			2.48			269,886		7,098			3.02
Other		70,826		3,797			5.36			34,255		491			1.43			68,879		84			0.37
Interest-earning assets		2,378,646		100,509			4.23			2,232,844		76,725			3.44			1,979,097		66,114			3.83
Noninterest-earning assets		115,194								140,530								177,677
Total assets	$	2,493,840							$	2,373,374							$	2,156,774
Liabilities and Shareholders' Equity:
Interest-bearing demand deposits	$	852,927	$	10,028			1.18	%	$	902,090	$	3,514			0.39	%	$	791,886	$	1,797			0.23	%
Savings deposits		370,074		1,609			0.43			452,542		711			0.16			398,969		551			0.14
Certificates of deposit		306,999		10,621			3.46			196,063		1,618			0.83			186,898		957			0.51
Brokered deposit		35,044		1,732			4.94			103		2			2.48			-		-			0.00
Borrowings		141,507		6,818			4.82			13,537		410			3.02			5,465		101			1.86
Subordinated debentures		35,382		1,636			4.62			35,211		1,491			4.23			12,841		571			4.45
Other		12,258		651			5.31			-		-			0.00			-		-			0.00
Interest-bearing liabilities		1,754,191		33,095			1.89			1,599,546		7,746			0.48			1,396,059		3,977			0.28
Demand deposits		546,926								582,992								527,876
Other noninterest-bearing liabilities		15,522								12,421								7,719
Total liabilities		2,316,639								2,194,959								1,931,654
Shareholders' equity		177,201								178,415								225,120
Total liabilities and shareholders' equity	$	2,493,840							$	2,373,374							$	2,156,774
Net interest income (tax-equivalent basis) (Non-GAAP) (1)			$	67,415							$	68,979							$	62,137
Net interest margin (tax-equivalent basis) (Non-GAAP) (1)							2.83	%							3.09	%							3.14	%
Reconciliation to Reported Net Interest Income
Net interest income (tax-equivalent basis) (Non-GAAP) (1)			$	67,415							$	68,979							$	62,137
Adjustment for taxable equivalent interest				(1,530	)							(1,665	)							(1513	)
Net interest income (GAAP)			$	65,885							$	67,314							$	60,624
Net interest margin (GAAP)							2.77	%							3.01	%							3.08	%

(1)Adjusted to a fully tax-equivalent basis to facilitate comparison to the taxable interest-earning assets. The adjustment uses an incremental tax rate of 21%. The presentation of these measures on a tax-equivalent basis is not in accordance with GAAP, but is customary in the banking industry. These non-GAAP measures ensure comparability with respect to both taxable and tax-exempt loans and securities.

(2)Interest on taxable securities includes dividends on Federal Home Loan Bank and Federal Reserve Bank stock.

(3)Loans include both loans to other financial institutions and loans held for sale.

(4)Non-accruing loan and PPP loan balances are included in the balances of average loans. Non-accruing loan average balances were $1.6 million, $1.3 million, and $3.3 million for the year ended 2023, 2022, and 2021, respectively. PPP loan average balances were $0, $8.7 million, $95.9 million for the year ended 2023, 2022, and 2021, respectively.

(5)Interest on loans included net origination fees, accretion income, and PPP fees. Accretion income was $1.7 million, $2.0 million, and $1.1 million for the full year 2023, 2022, and 2021, respectively. PPP fees were approximately $0, $1.2 million, and $5.2 million for the full year 2023, 2022, and 2021, respectively.

(6)Interest income for 2023 was reduced by $2.8 million due to amortization expense related to the March 2023 sale of the pay floating swap derivative.

22

Table 2 – Changes in Tax-Equivalent Net Interest Income

	Year Ended December 31,
(Dollars in thousands)	2023 Over 2022									2022 Over 2021
	Total			Volume			Rate			Total		Volume			Rate
Increase (decrease) in interest income (1)
Loans (2)	$	15,576		$	8,264		$	7,312		$	4,189	$	3,026		$	1,163
Taxable securities		5,586			(682	)		6,268			5,323		3,410			1,913
Nontaxable securities (2)		(684	)		(455	)		(229	)		692		1,126			(434	)
Other		3,306			925			2,381			407		(62	)		469
Net change in interest income	$	23,784		$	8,052		$	15,732		$	10,611	$	7,500		$	3,111
Increase (decrease) in interest expense (1)
Interest-bearing demand deposits	$	6,514		$	(202	)	$	6,716		$	1,717	$	279		$	1,438
Savings deposits		898			(152	)		1,050			159		79			80
Certificates of deposit		9,003			1,364			7,639			664		50			614
Brokered deposit		1,730			1,725			5			-		-			-
Borrowings		6,408			6,029			379			309		217			92
Subordinated debentures		145			7			138			920		948			(28	)
Other		651			651			-			-		-			-
Net change in interest expense	$	25,349		$	9,422		$	15,927		$	3,769	$	1,573		$	2,196
Net change in tax-equivalent net interest income	$	(1,565	)	$	(1,370	)	$	(195	)	$	6,841	$	5,927		$	915

(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 21% for 2023, 2022, and 2021.

Net Interest Income

Tax-equivalent net interest income declined $1.6 million for the full year 2023, compared to the same period in 2022. The Federal Reserve increased the federal funds rate by 5.25% from March 31, 2022 to September 30, 2023 in response to published inflation rates. This increased rates on newly originated loans and rates paid on deposits and led to a net decline in tax equivalent net interest margin of 26 basis points in 2023 compared to 2022. GAAP based net interest margin declined 24 basis points in 2023 compared to 2022.

The following table presents the cost of deposits and the cost of funds for the years ended December 31, 2023, December 31, 2022, and December 31, 2021.

	Year Ended December 31,
	2023			2022			2021
Cost of deposits		1.14	%		0.27	%		0.17	%
Cost of funds		1.44	%		0.35	%		0.21	%

ChoiceOne has experienced substantial core loan growth from December 31, 2022 to December 31, 2023, leading to an increase in interest income from loans of $15.6 million in the twelve months ended December 31, 2023, compared to the same period in the prior year. Average core loans grew $161.2 million for the twelve months ended December 31, 2023, compared to the same period in the prior year. In addition, the average rate earned on loans increased 62 basis points for the twelve months ended December 31, 2023, compared to the same period in the prior year. The increase in interest income from loans and the average rate increase on loans was muted by a decline in PPP fees and an increase in expense related to derivatives in the twelve months ended December 31, 2023, compared to the same period in 2022. PPP fee income in 2023 was $0 compared to $1.2 million in 2022. Interest income on loans for 2023 was reduced by $2.1 million due to amortization expense related to the March 2023 sale of the pay floating swap derivative.

The average balance of total securities decreased $52.0 million in 2023, compared to the same period in 2022. The decrease was due to the paydowns, maturities, and redemptions during 2023. The average rate earned on securities increased 58 basis points for the full year

23

2023, compared to the same period in the prior year. Interest income on securities for 2023 was reduced by $709,000 due to amortization expense related to the March 2023 sale of the pay floating swap derivative.

Interest expense increased $25.3 million for the full year 2023, compared to the same period in the prior year. The average rate paid on interest bearing-demand deposits and savings deposits increased 64 basis points in the twelve months ended December 31, 2023, compared to the same period in the prior year. This was offset by the decline in the average balance of interest bearing-demand deposits and savings deposits, of $131.6 million during 2023. The increase in the average balance of certificates of deposit of $110.9 million during 2023, combined with a 263 basis point increase in the rate paid on certificates of deposits during 2023, compared to the same period in the prior year, led to an increase in interest expense of $9.0 million during 2023.

In order to bolster liquidity, ChoiceOne borrowed $170.0 million from the Bank Term Funding Program ("BTFP") during the second and fourth quarter of 2023 and currently holds $23.4 million in brokered deposits and $30.0 million in FHLB advances on December 31, 2023. The net effect of these additional borrowed funds and brokered deposits was an increase in interest expense of $8.1 million for the year ended December 31, 2023, compared to the same period in 2022.

In September 2021, ChoiceOne completed a private placement of $32.5 million in aggregate principal amount of 3.25% fixed-to-floating rate subordinated notes due 2031. In addition, ChoiceOne holds certain subordinated debentures issued in connection with a trust preferred securities offering that were obtained as part of the merger with Community Shores. The average balance of subordinated debentures was relatively flat in 2023 compared to the same period in the prior year.

Provision and Allowance For Credit Losses

Table 3 – Provision and Allowance For Credit Losses

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(Dollars in thousands)
	2023			2022			2021
Allowance for credit losses at beginning of year	$	7,619		$	7,688		$	7,593
Cumulative effect of change in accounting principle		7,165			-			-
Charge-offs:
Agricultural		-			-			-
Commercial and industrial		158			177			195
Consumer		554			496			370
Real estate - commercial		-			-			111
Real estate - construction		-			-			-
Real estate - residential		27			-			-
Total		739			673			676
Recoveries:
Agricultural		-			-			-
Commercial and industrial		66			143			86
Consumer		283			206			214
Real estate - commercial		13			3			48
Real estate - construction		-			-			-
Real estate - residential		13			2			7
Total		375			354			355
Net charge-offs (recoveries)		364			319			321
Provision for credit losses		1,265			250			416
Allowance for credit losses at end of year	$	15,685		$	7,619		$	7,688
Allowance for credit losses as a percentage of:
Total loans as of year end		1.11	%		0.64	%		0.76	%
Nonaccrual loans, accrual loans past due 90 days or more and troubled debt restructurings		820	%		286	%		139	%
Ratio of net charge-offs during the period to average loans outstanding during the period		0.03	%	0.03		%	0.03		%
Loan recoveries as a percentage of prior year's charge-offs		56	%	52		%	47		%

On January 1, 2023, ChoiceOne adopted ASU 2016-13 CECL which caused an increase in the allowance for credit losses ("ACL") of $7.2 million. The large increase was partially due to the economic environment and the nature of the CECL calculation. Approximately 20% of this increase was related to the migration of purchased loans into the portfolio assessed by the CECL calculation. ChoiceOne also booked a liability for expected credit losses on unfunded loans and other commitments of $3.3 million related to the adoption of CECL. These unfunded loans are open credit lines with current customers and loans approved by ChoiceOne but not funded. The increase in the ACL and the cost of the liability resulted in a decrease in the retained earnings account on our Consolidated Balance Sheet equal to the after-tax impact, with the tax impact portion being recorded in deferred taxes in our Consolidated Balance Sheet in accordance with FASB guidance.

The ACL consists of general and specific components. The general component covers loans collectively evaluated for credit loss and is based on peer historical loss experience adjusted for current and forecasted factors. Management's adjustment for current and forecasted factors is based on trends in delinquencies, trends in charge-offs and recoveries, trends in the volume of loans, changes in underwriting standards, trends in loan review findings, the experience and ability of lending staff, and a reasonable and supportable economic forecast described further below.

The determination of our loss factors is based, in part, upon benchmark peer loss history adjusted for qualitative factors that, in management's judgment, affect the collectability of the portfolio as of the analysis date. ChoiceOne's lookback period of benchmark peer net charge-off history was from January 1, 2004 through December 31, 2019 for this analysis.

Loans individually evaluated for credit losses decreased by $767,000 to $2.1 million during the full year ended December 31, 2023, and the ACL related to these individually evaluated loans decreased by $93,000 during the same period largely due to the balance change and relationships that paid off in full during the fourth quarter of 2023.

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Nonperforming loans, which includes Other Real Estate Owned ("OREO") but excludes performing troubled loan modifications ("TLM") and troubled debt restructuring ("TDR") loans, remained historically low during 2023 and were $1.9 million as of December 31, 2023, compared to $1.3 million as of December 31, 2022. The ACL was 1.11% of total loans, excluding loans held for sale, at December 31, 2023, compared to 1.24% as of January 1, 2023 (the CECL adoption date) and 0.64% at December 31, 2022. The liability for expected credit losses on unfunded loans and other commitments was $2.2 million on December 31, 2023, compared to $3.3 million as of January 1, 2023 (the CECL adoption date).

Net charge-offs were $364,000 during the full year 2023, compared to net charge-offs of $319,000 during the same period in 2022. Net charge-offs for checking accounts during the full year 2023 were $226,000 compared to $246,000 for the same period in the prior year. Net charge-offs as a percentage of average loans were 0.03% during the full year 2023 and 2022.

The provision for credit losses was $1.3 million during the full year 2023, compared to $250,000 in the same period in the prior year. The provision expense was deemed necessary due to the impact of substantial core loan growth partially offset by improvements in the FOMC forecast for unemployment and GDP growth. The FOMC forecast for change in real GDP (2023) improved from 0.5% in December of 2022 to 2.6% in December of 2023 while the unemployment rate forecast (2023) improved from 4.6% in December 2022 to 3.8% in December 2023.

The loan provision expense was offset by the decrease in unfunded commitments provision expense of $1.1 million in the full year 2023 due to changes in mix and expected funding rates during the year. Total unfunded commitments decreased $17.6 million in the full year 2023 compared to January 1, 2023.

Net provision for credit losses was $150,000 for the full year 2023.

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Financial Condition

Summary

Total assets grew $190.8 million in the twelve months ended December 31, 2023. Core loans grew $201.5 million or 16.9% and were offset by a decline in investment securities of $33.2 million. Deposits, excluding brokered deposits, declined by $17.7 million during 2023, while borrowings increased by $150.0 million to fund loan demand and ensure ample liquidity. Deposit costs rose steadily during the year with larger increases coming in the second and third quarters as competition and rate increases amplified.

Securities

The Company’s securities balances as of December 31 were as follows:

(Dollars in thousands)
	2023		2022
Equity securities	$	7,505	$	8,566
Available for Sale Securities at fair value
U.S. Government and federal agency	$	-	$	-
U.S. Treasury notes and bonds		80,194		78,204
State and municipal		234,682		229,938
Mortgage-backed		188,501		208,563
Corporate		204		711
Asset-backed securities		11,017		12,333
Total	$	514,598	$	529,749
Held to Maturity Securities at amortized cost
U.S. Government and federal agency	$	2,972	$	2,966
U.S. Treasury notes and bonds		-		-
State and municipal		196,098		201,890
Mortgage-backed		188,329		200,473
Corporate		20,013		19,603
Asset-backed securities		547		974
Total	$	407,959	$	425,906

Total investment securities declined $34.2 million from December 31, 2022 to December 31, 2023. ChoiceOne purchased $7.1 million of securities in 2023. This was offset by the liquidation of $4.8 million in securities during 2023, resulting in a $71,000 realized loss. Securities totaling $11.5 million were called or matured in 2023. ChoiceOne received principal payments for municipal and mortgage-backed securities totaling $37.4 million during 2023.

At December 31, 2023, the Company had $128.9 million in unrealized losses on its investment securities, including $69.7 million in unrealized losses on available for sale securities and $59.2 million in unrealized losses on held to maturity securities. Unrealized losses on corporate and municipal bonds have not been recognized into income because management believes the issuers are of high credit quality, and management does not intend to sell prior to their anticipated recovery, and the decline in fair value is largely due to changes in interest rates and other market conditions. The issuers continue to make timely principal and interest payments on the bonds. The fair value is expected to recover as the bonds approach maturity.

ChoiceOne utilizes interest rate derivatives as part of its asset liability management strategy to help manage its interest rate risk position. In order to hedge the risk of rising rates and unrealized losses on securities resulting from the rising rates, ChoiceOne currently holds pay fixed, receive variable interest rate swaps with a total notional value of $401.0 million. These derivative instruments increase in value as long-term interest rates rise, which partially offsets the reduction in shareholders' equity due to unrealized losses on securities available for sale. Refer to Note 8 - Derivatives and Hedging Activities of the consolidated financial statements for more discussion on ChoiceOne’s derivative position.

Equity securities included a money market preferred security ("MMP") of $1.0 million and common stock of $6.5 million as of December 31, 2023. As of December 31, 2022, equity securities included a MMP of $1.0 million and common stock of $7.6 million. The decline compared to December 31, 2022 was due to the sale of an equity position during the third quarter.

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Per U.S. generally accepted accounting principles, unrealized gains or losses on securities available for sale are reflected on the balance sheet in accumulated other comprehensive income (loss), while unrealized gains or losses on securities held to maturity are not reflected on the balance sheet in accumulated other comprehensive income (loss).

Loans

The Company’s loan portfolio by call report code was as follows:

		December 31, 2023					December 31, 2022
(Dollars in thousands)	Call Report Codes	Balance		%			Balance		%
Construction & Development Loans	1A2		112,877		8.0	%		55,426		4.7	%
1-4 Family Loans	1A1, 1C1, 1C2A, 1C2B		347,036		24.6	%		287,208		24.1	%
Multifamily Loans	1D		56,563		4.0	%		44,053		3.7	%
Owner Occupied CRE Loans	1E1		281,515		20.0	%		266,652		22.4	%
Non-Owner Occupied CRE Loans	1E2		298,265		21.1	%		220,779		18.6	%
Commercial & Industrial Loans	2A2, 4A		219,849		15.6	%		205,117		17.2	%
Farm & Agriculture Loans	1B, 3		46,515		3.3	%		59,918		5.0	%
Consumer & Other Loans	6B, 6C, 6D, 8, 9b2,10B		48,033		3.4	%		50,629		4.3	%
Total Loans			1,410,653					1,189,782

Core loans, which exclude held for sale loans, and loans to other financial institutions, grew organically by $201.5 million in 2023. We have expanded our commercial lending team and improved our commercial loan process with automation. This has increased our commercial loan pipeline and growth. Our loan portfolio grew in various segments during 2023: non-owner occupied CRE loans ($77.5 million), 1-4 Family loans ($59.8 million), and construction & development loans ($57.5 million). The growth in non-owner occupied CRE loans came from our loan production offices in Holland, MI, Oakland, MI, Wyoming, MI and Macomb, MI, as experienced lenders were hired there in the past 18 months. CRE growth consisted of increases in seasoned hospitality groups, apartment buildings in the Grand Rapids, Michigan market, and professional office space in suburban areas with long-term leases and low loan to value ratios. 1-4 family loans grew as the 5/1 ARM product became popular as a mortgage option and it is less salable into the secondary market than more traditional mortgage options. The growth in construction and development loans included some apartment projects in Grand Rapids, Michigan, a healthy market with a low vacancy rate of 3.1% in 2023, according to Moody's Analytics REIS. These gains were partly offset by declines in farm & agricultural loans ($13.4 million) and consumer loans ($2.6 million) in the year ended December 31, 2023.

Loans to other financial institutions increased $19.4 million from December 31, 2022 to December 31, 2023. Loans to other financial institutions is comprised of a warehouse line of credit to facilitate mortgage loan originations, and interest rates fluctuate with the national mortgage market. This balance is short term in nature with an average life of under 30 days. Management believes the short-term structure and low credit risk of this asset is advantageous in the current rate environment. ChoiceOne had elected to suspend this program in 2022 and restarted the program in June of 2023. Since restarting the program, ChoiceOne has earned an interest rate of approximately 7.9% on loans to other financial institutions.

ChoiceOne recorded accretion income related to acquired loans in the amount of $1.7 million in 2023 and $2.0 million during 2022. Remaining credit and yield mark on acquired loans from the mergers with County Bank Corp. and Community Shores will accrete into income as the acquired loans mature. ChoiceOne estimates that roughly $2.5 million will accrete into income over the next two to four years.

As part of its review of the loan portfolio, management also monitors the various nonperforming loans. Nonperforming loans are comprised of loans accounted for on a nonaccrual basis, loans not included in nonaccrual loans, which are contractually past due 90 days or more as to interest or principal payments, and troubled loan modifications which are accruing and initiated in the past year. It is noted that prior to January 1, 2023, loans classified as troubled debt restructurings that were not performing as of December 31, 2022 are included in the table below.

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

(Dollars in thousands)
	2023		2022
Loans accounted for on a nonaccrual basis	$	1,723	$	1,263
Loans contractually past due 90 days or more as to principal or interest payments		-		-
Loans modified to borrowers experiencing financial difficulty at December 31, 2023 and troubled debt restructurings as of December 31, 2022.		189		1,404
Total	$	1,912	$	2,667

Nonaccrual loans included $1.7 million in residential real estate loans as of December 31, 2023, compared to $1.3 million in residential real estate loans as of December 31, 2022. Loans considered troubled loan modifications which were not on a nonaccrual basis and were not 90 days or more past due as to principal or interest payments consisted of $60,000 in commercial and industrial loans and $129,000 in residential real estate loans at December 31, 2023, compared to troubled debt restructured loans which were not performing were $3,000 in agricultural loans, $58,000 in commercial and industrial loans, $131,000 in commercial real estate loans and $1.2 million in residential real estate loans at December 31, 2022.

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. There were 22 loans totaling $357,000 fitting this description as of December 31, 2023, and 10 loans totaling $180,000 fitting this description as of December 31, 2022.

Deposits and Other Funding Sources

The Company’s deposit balances as of December 31 were as follows:

(Dollars in thousands)
	2023		2022
Noninterest-bearing demand deposits	$	547,625	$	599,579
Interest-bearing demand deposits		599,681		638,641
Money market deposits		247,602		214,026
Savings deposits		336,851		427,583
Local certificates of deposit		366,851		236,431
Brokered certificates of deposit		23,445		1,743
Total deposits	$	2,122,055	$	2,118,003

Deposits, excluding brokered deposits, increased by $14.7 million or an annualized 2.8% in the fourth quarter of 2023 and decreased $17.7 million or 0.8% as of December 31, 2023 compared to December 31, 2022. The decrease in deposits since December 31, 2022 was largely concentrated in the first quarter of 2023 as a result of a combination of customers using cash on hand for debt payoffs, seasonal tax and municipal bond payments, and customers seeking higher rates in money market securities or other investments. Deposits grew in the third and fourth quarters of 2023 due to new business, recapture of deposit losses, and some seasonality in municipal balances. ChoiceOne continues to be proactive in managing its liquidity position by using brokered deposits, the Bank Term Funding Program ("BTFP"), and FHLB advances to ensure ample liquidity.

At December 31, 2023, total available borrowing capacity from all sources was $933.3 million. Total deposits exceeding the FDIC insured limit of $250,000 for individual and $500,000 for joint accounts were $769.7 million or 36.3% of deposits at December 31, 2023, compared to $823.2 million, or 38.9% of total deposits at December 31, 2022. Core deposits, which we define as insured branch deposits less certificates of deposit, totaled $823.2 million or 38.8% of total deposits at December 31, 2023.

The increase in short term interest rates has led to higher deposit costs, which rose to 1.57% in the last quarter of 2023, compared to 1.36% in the previous quarter and 0.47% in the fourth quarter of 2022. Deposit costs were 1.14% for the full year 2023, compared to 0.27% for the full year 2022, as deposits reprice and customers shift to CD and other interest bearing products. This trend is likely to persist. ChoiceOne is taking active measures to control these costs and expects to continue to pay lower rates on deposits than the federal funds rate. Interest expense on borrowings for the twelve months ended December 31, 2023, increased $7.2 million, compared to the same period in the prior year, due to increases in borrowing amounts and interest rates. Borrowings include $170 million from the BTFP and $30 million of FHLB borrowings at a weighted average fixed rate of 4.7% at December 31, 2023. Total cost of funds increased to

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1.91% in the fourth quarter of 2023 compared to 1.70% in the third quarter of 2023 and 0.59% in the fourth quarter of 2022. Total cost of funds was 1.44% for the full year 2023, compared to 0.35% for the full year 2022.

In September 2021, ChoiceOne completed a private placement of $32.5 million in aggregate principal amount of 3.25% fixed-to-floating rate subordinated notes due 2031. ChoiceOne used a portion of net proceeds from the private placement to redeem senior debt, fund common stock repurchases, and support bank-level capital ratios. ChoiceOne also holds $3.2 million in subordinated debentures issued in connection with a $4.5 million trust preferred securities offering, which were obtained in the merger with Community Shores, offset by the mark-to-market adjustment.

Shareholders’ Equity

Shareholders’ equity totaled $195.6 million as of December 31, 2023, up from $168.9 million as of December 31, 2022. This increase is due to retained earnings increasing $5.3 million due to earnings and a reduction in accumulated other compressive loss (AOCI) of $20.2 million. The improvement in AOCI, despite the rise in interest rates, is due to both the shortening duration and maturing (paydowns) of the securities portfolio, as well as an offsetting increase in unrealized gain of the pay-fixed swap derivatives. ChoiceOne Bank remains “well-capitalized” with a total risk-based capital ratio of 12.4% as of December 31, 2023, compared to 13.0% on December 31, 2022.

ChoiceOne uses interest rate swaps to manage interest rate exposure to certain fixed assets and variable rate liabilities. On December 31, 2023, ChoiceOne had pay-fixed interest rate swaps with a total notional value of $401.0 million, a weighted average coupon of 3.07%, a fair value of $8.9 million and an average contract length of 8 to 9 years. These derivative instruments increase in value as long-term interest rates rise, which partially offsets the reduction in equity due to unrealized losses on securities available for sale. Included in the total is $200.0 million of forward starting pay-fixed, receive floating interest rate swaps used to hedge interest bearing liabilities. These forward starting swaps will pay a fixed coupon of 2.75% while receiving SOFR starting in late April 2024. At the current SOFR rate of 5.38%, these forward starting swaps would contribute approximately $438,000 monthly starting in May 2024 which will partially offset interest expense. In addition, in March 2023, ChoiceOne eliminated all receive-fixed, pay floating swap agreements for a cash payment of $4.2 million. The loss is being amortized in interest income with an expense of approximately $273,000 monthly through April 2024, which was the remaining period of the agreements.

On January 1, 2023, ChoiceOne adopted ASU 2016-13 CECL which caused an increase in the ACL of $7.2 million and booked a liability for expected credit losses on unfunded loans and other commitments of $3.3 million. The increase in the ACL and the cost of the liability resulted in a decrease in retained earnings on our consolidated balance sheet equal to the after-tax impact, with the tax impact portion being recorded in deferred taxes in our consolidated balance sheet in accordance with FASB guidance.

Note 21 to the consolidated financial statements presents regulatory capital information for ChoiceOne and the Bank at the end of 2023 and 2022. Management will monitor these capital ratios during 2024 as they relate to asset growth and earnings retention. ChoiceOne’s 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, 2023:

	Payment Due by Period
			Less						More
			than		1 - 3		3 - 5		than
(Dollars in thousands)	Total		1 year		Years		Years		5 Years
Time deposits	$	390,296	$	351,516	$	33,659	$	4,855	$	266
Borrowings		200,000		170,000		30,000		-		-
ChoiceOne Capital Trust (1)		4,500		-		-		-		4,500
ChoiceOne Subordinated Debenture (2)		32,500		-		-		-		32,500
Operating leases		777		314		398		65		-
Other obligations		94		51		20		18		5
Total	$	628,167	$	521,881	$	64,077	$	4,938	$	37,271

(1)Cumulative preferred securities on the balance sheet include $1.1 million of discount due to a mark to market adjustment which is not reflected in the table above.

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(2)ChoiceOne subordinated debenture on the balance sheet includes $385,000 of capitalized issuance cost which is not reflected in the table above.

Liquidity and Interest Rate Risk

Net cash provided by operating activities was $46.5 million in 2023 compared to $45.0 million in 2022. The change was due to lower net proceeds from loan sales and an increase in other assets in 2023 compared to 2022. Net cash used in investing activities was $181.4 million in 2023 compared to $90.5 million in 2022. ChoiceOne had loan originations and payments of $221.2 million in the full year 2023, compared to $130.6 million in the same period in the prior year. Net cash provided by financing activities was $146.4 million in 2023, compared to $57.5 million in 2022. ChoiceOne had net cash from borrowings of $150.0 million in the full year 2023, compared to $0 in the full year 2022.

ChoiceOne's market risk exposure occurs in the form of interest rate risk and liquidity risk. ChoiceOne's business is transacted in U.S. dollars with no foreign exchange risk exposure. Agricultural loans comprise a relatively 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. Longer-term liquidity needs may be met through core deposit growth, maturities of and cash flows from investment securities, normal loan repayments, advances from the FHLB and the Federal Reserve Bank, brokered certificates of deposit, and income retention. ChoiceOne had $170.0 million in outstanding borrowings from the Federal Reserve’s Bank Term Funding Program (BTFP) as of December 31, 2023 and $30.0 million in outstanding borrowings at the FHLB as of December 31, 2023. ChoiceOne elected to restructure the BTFP balance of $170 million in January 2024 in order to take advantage of lower rates and extend the maturity. The acceptance of brokered certificates of deposit is not limited as long as the Bank is categorized as “well capitalized” under regulatory guidelines. At December 31, 2023, total available borrowing capacity from the FHLB and the Federal Reserve Bank was $933.3 million.

ChoiceOne continues to review its liquidity management and has taken steps in an effort to ensure adequacy. These steps include limiting bond purchases in 2023, pledging securities to FHLB and the Federal Reserve Bank in order to increase borrowing capacity and using alternative funding sources such as brokered deposits.

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NON-GAAP FINANCIAL MEASURES

This report contains financial measures that are not defined in U.S. generally accepted accounting principles ("GAAP"). Management believes this non-GAAP financial measure provides additional information that is useful to investors in helping to understand the underlying financial performance of ChoiceOne.

Non-GAAP financial measures have inherent limitations. Readers should be aware of these limitations and should be cautious with respect to the use of such measures. To compensate for these limitations, we use non-GAAP measures as comparative tools, together with GAAP measures, to assist in the evaluation of our operating performance or financial condition. Also, we ensure that these measures are calculated using the appropriate GAAP or regulatory components in their entirety and that they are computed in a manner intended to facilitate consistent period-to-period comparisons. ChoiceOne’s method of calculating these non-GAAP financial measures may differ from methods used by other companies. These non-GAAP financial measures should not be considered in isolation or as a substitute for those financial measures prepared in accordance with GAAP or in-effect regulatory requirements.

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Critical Accounting Policies And Estimates

Management’s discussion and analysis of financial condition and results of operations as well as disclosures found elsewhere in this 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 market value of securities, the amount of the allowance for credit losses, loan servicing rights, carrying value of goodwill, and income taxes. Actual results could differ from those estimates.

Allowance for Credit Losses ("ACL")

In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments. This ASU (as subsequently amended by ASU 2018-19) significantly changed how entities measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard replaced the former “incurred loss” approach with an “expected loss” model. The new model, referred to as the CECL model, applies to financial assets subject to credit losses and measured at amortized cost, and certain off-balance sheet credit exposures. The standard also expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the ACL. In addition, entities need to disclose the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by the year of origination. A reasonable and supportable economic forecast is a key component of the CECL methodology.

ChoiceOne adopted CECL effective January 1, 2023 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures. Results for reporting periods beginning after January 1, 2023 are presented under CECL while prior period amounts continue to be reported in accordance with the incurred loss accounting standards. The transition adjustment of the CECL adoption included an increase in the ACL of $7.2 million, which included a $5.5 million decrease to the retained earnings account to reflect the cumulative effect of adopting CECL on our Consolidated Balance Sheet, with the $1.5 million tax impact portion being recorded as part of the deferred tax asset in other assets on our Consolidated Balance Sheet. The transition adjustment of the CECL adoption included an additional ACL on unfunded commitments of $3.3 million, which included a $2.6 million decrease to the retained earnings account to reflect the cumulative effect of adopting CECL on our Consolidated Balance Sheet, with the $688,000 tax impact portion being recorded as part of the deferred tax asset in other assets on our Consolidated Balance Sheet.

The ACL is a valuation allowance for expected credit losses. The ACL is increased by the provision for credit losses and decreased by loans charged off less any recoveries of charged off loans. As ChoiceOne has had very limited loss experience since 2011, management elected to utilize benchmark peer loss history data to estimate historical loss rates. ChoiceOne identified an appropriate peer group for each loan cohort which shared similar characteristics. Management estimates the ACL required based on the selected peer group loan loss experience, the nature and volume of the loan portfolio, information about specific borrower situations and estimated collateral values, a reasonable and supportable economic forecast, and other factors. Allocations of the ACL may be made for specific loans, but the entire ACL is available for any loan that, in management’s judgment, should be charged off. Loan losses are charged against the ACL when management believes that collection of a loan balance is not possible.

The ACL consists of general and specific components. The general component covers loans collectively evaluated for credit losses and is based on peer historical loss experience adjusted for current and forecasted factors. Management's adjustment for current and forecasted factors is based on trends in delinquencies, trends in charge-offs and recoveries, trends in the volume of loans, changes in underwriting standards, trends in loan review findings, the experience and ability of lending staff, and a reasonable and supportable economic forecast described further below.

The discounted cash flow methodology is utilized for all loan pools. This methodology is supported by our CECL software provider and allows management to automatically calculate contractual life by factoring in all cash flows and adjusting them for behavioral and credit-related aspects.

Reasonable and supportable economic forecasts have to be incorporated in determining expected credit losses. The forecast period represents the time frame from the current period end through the point in time that we can reasonably forecast and support entity and environmental factors that are expected to impact the performance of our loan portfolio. Ideally, the economic forecast period would encompass the contractual terms of all loans; however, the ability to produce a forecast that is considered reasonable and supportable becomes more difficult or may not be possible in later periods. Subsequent to the end of the forecast period, we revert to historical loan data based on an ongoing evaluation of each economic forecast in relation to then current economic conditions as well as any developing loan loss activity and resulting historical data. As of December 31, 2023, we used a one-year reasonable and supportable economic forecast period, with a two year straight-line reversion period.

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We are not required to develop and use our own economic forecast model, and we elected to utilize economic forecasts from third-party providers that analyze and develop forecasts of the economy for the entire United States at least quarterly.

Other inputs to the calculation are also updated or reviewed quarterly. Prepayment speeds are updated on a one quarter lag based on the asset liability model from the previous quarter. This model is performed at the loan level. Curtailment is updated quarterly within the ACL model based on our peer group average. The reversion period is reviewed by management quarterly with consideration of the current economic climate. Prepayment speeds and curtailment were updated during the fourth quarter of 2023; however, the effect was insignificant.

We are also required to consider expected credit losses associated with loan commitments over the contractual period in which we are exposed to credit risk on the underlying commitments unless the obligation is unconditionally cancellable by us. Any allowance for off-balance sheet credit exposures is reported as an other liability on our Consolidated Balance Sheet and is increased or decreased via the provision for credit losses account on our Consolidated Statement of Income. The calculation includes consideration of the likelihood that funding will occur and forecasted credit losses on commitments expected to be funded over their estimated lives. The allowance is calculated using the same aggregate reserve rates calculated for the funded portion of loans at the portfolio level applied to the amount of commitments expected to be funded.

Loans that do not share risk characteristics are evaluated on an individual basis and are excluded from the collective evaluation. ChoiceOne has determined that any loans which have been placed on non-performing status, loans with a risk rating of 6 or higher, and loans past due more than 60 days will be assessed individually for evaluation. Management's judgment will be used to determine if the loan should be migrated back to pool on an individual basis. Individual analysis will establish a specific reserve for loans in scope. Specific reserves on non-performing loans are typically based on management’s best estimate of the fair value of collateral securing these loans, adjusted for selling costs as appropriate or based on the present value of the expected cash flows from that loan.

Allowance for Loan Losses

Prior to the adoption of CECL on January 1, 2023, management calculated the allowance for loan losses for the valuation allowance for probable incurred credit losses. The allowance for loan losses 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 for loan losses balance required based on past loan loss experience, the nature and volume of the loan portfolio, information about specific borrower situations and estimated collateral values, economic conditions, and other factors. Allocations of the allowance for loan losses may be made for specific loans, but the entire allowance for loan losses is available for any loan that, in management’s judgment, should be charged off. Loan losses are charged against the allowance for loan losses when management believes that collection of a loan balance is not possible.

The allowance for loan losses 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. The general component of management's estimate of the allowance for loan losses covers non-impaired loans and is based on historical loss experience adjusted for current factors. Management's adjustment for current factors is based on trends in delinquencies, trends in charge-offs and recoveries, trends in the volume of loans, changes in underwriting standards, trends in loan review findings, experience and ability of lending staff, national and economic trends and conditions, industry conditions, trends in real estate values, and other conditions.

A loan is impaired when full payment under the loan terms is not expected. Troubled debt restructuring of loans is undertaken to improve the likelihood that the loan will be repaid in full under the modified terms in accordance with a reasonable repayment schedule. All modified loans are evaluated to determine whether the loans should be reported as Troubled Debt Restructurings ("TDR"). A loan is a TDR when the Bank, for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower by modifying a loan. To make this determination, the Bank must determine whether (a) the borrower is experiencing financial difficulties and (b) the Bank granted the borrower a concession. This determination requires consideration of all facts and circumstances surrounding the modification. An overall general decline in the economy or some deterioration in a borrower’s financial condition does not automatically mean the borrower is experiencing financial difficulties. Commercial loans are evaluated for impairment on an individual loan basis. If a loan is considered impaired or if a loan has been classified as a TDR, 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 residential real estate mortgage loans are collectively evaluated for impairment and, accordingly, they are not separately identified for impairment disclosures.

Securities

34

Securities Available for Sale – For securities AFS in an unrealized loss position, management determines whether they intend to sell or if it is more likely than not that ChoiceOne will be required to sell the security before recovery of the amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income with an allowance being established under CECL. For securities AFS with unrealized losses not meeting these criteria, management evaluates whether any decline in fair value is due to credit loss factors. In making this assessment, management considers any changes to the rating of the security by rating agencies and adverse conditions specifically related to the issuer of the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of the cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses (“ACL”) is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Changes in the ACL under ASC 326-30 are recorded as provisions for (or reversal of) credit loss expense. Losses are charged against the allowance when the collectability of a debt security AFS is confirmed or when either of the criteria regarding intent or requirement to sell is met. Any impairment that has not been recorded through an ACL is recognized in other comprehensive income, net of income taxes. At December 31, 2023 and at adoption of CECL on January 1, 2023, there was no ACL related to debt securities AFS. Accrued interest receivable on debt securities was excluded from the estimate of credit losses.

Securities Held to Maturity – Since the adoption of CECL, ChoiceOne measures credit losses on HTM securities on a collective basis by major security type with each type sharing similar risk characteristics, and considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. The ACL on securities HTM is a contra asset valuation account that is deducted from the carrying amount of HTM securities to present the net amount expected to be collected. HTM securities are charged off against the ACL when deemed uncollectible. Adjustments to the ACL are reported in ChoiceOne’s Consolidated Statements of Income in the provision for credit losses. Accrued interest receivable on HTM securities is excluded from the estimate of credit losses. With regard to US Treasury securities, these have an explicit government guarantee; therefore, no ACL is recorded for these securities. With regard to obligations of states and political subdivisions and other HTM securities, management considers (1) issuer bond ratings, (2) historical loss rates for given bond ratings, (3) the financial condition of the issuer, and (4) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities. At December 31, 2023, the ACL related to securities HTM is insignificant.

Troubled Loan Modifications

FASB also issued ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. This standard eliminated the previous accounting guidance for troubled debt restructurings and added additional disclosure requirements for gross chargeoffs by year of origination. It also prescribes guidance for reporting modifications of loans to borrowers experiencing financial difficulty.

Loan Servicing Rights

Loan servicing rights represent the estimated value of servicing loans that are sold with servicing retained by ChoiceOne and are initially recorded at estimated fair value. 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 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.

Goodwill

Goodwill is not amortized but is evaluated annually for impairment and on an interim basis if events or changes in circumstances indicate that goodwill might be impaired. The goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount, and an impairment charge would be recognized for any amount by which the carrying amount exceeds the reporting unit’s fair value. Accounting pronouncements allow a company to first perform a qualitative assessment for goodwill prior to a quantitative assessment (Step 1 assessment). If the results of the qualitative assessment indicate that it is more likely than not that goodwill is impaired, then a quantitative assessment must be performed. If not, there is no further assessment required. The Company acquired Valley Ridge Financial Corp. in 2006, County Bank Corp in 2019, and Community Shores in 2020, which resulted in the recognition of goodwill of $13.7 million, $38.9 million and $7.3 million, respectively.

35

During the prior year, ChoiceOne engaged a third party valuation firm to assist in performing a quantitative analysis of goodwill as of November 30, 2022 ("the valuation date"). In deriving the fair value of the reporting unit (the Bank), the third-party firm assessed general economic conditions and outlook; industry and market considerations and outlook; the impact of recent events to financial performance; the market price of ChoiceOne’s common stock and other relevant events. In addition, the valuation relied on financial projections through 2027 and growth rates prepared by management. Based on the valuation prepared, it was determined that ChoiceOne's estimated fair value of the reporting unit at the valuation date was greater than its book value and impairment of goodwill was not required.

Management concurred with the conclusion derived from the quantitative goodwill analysis as of the valuation date and determined that there were no material changes and that no triggering events had occurred that indicated impairment from the valuation date through December 31, 2023, and as a result that it is more likely than not that there was no goodwill impairment as of December 31, 2023.

The below table shows the inputs and assumptions addressed and the weight and nature of the impact to the analysis.

Relevant Events and Circumstances	Inputs and assumptions that most affect fair value	Weight of events and circumstances	Nature of impact (positive / neutral / negative)	Nature of evidence - subjective or objective
Macroeconomic conditions
Interest rate increases	Discount rate	High	Neutral	Subjective
Interest rate increases have driven deposit costs up	Projections - cost	High	Negative	Objective
Tax rates	Projections - cost	Low	Neutral	Objective
Industry conditions
Markets multiples have declined
	Price to TBV	Mod	Negative	Objective
	Price to TBV (AOCI)	Mod	Negative	Objective
	Price to Earnings Multiple	Mod	Negative	Objective
	Core deposit premium	Mod	Positive	Objective
Entity Specific events and circumstances
Growth Rates are higher than anticipated	Projections - Asset growth rate	High	Positive	Objective

Deferred Tax Assets and Liabilities

Income taxes include both a current and deferred portion. Deferred tax assets and liabilities are recorded to account for differences in the timing of the recognition of revenues and expenses for financial reporting and tax purposes. Generally accepted accounting principles require that deferred tax assets be reviewed to determine whether a valuation allowance should be established using a “more likely than not” standard. Based on its review of ChoiceOne’s deferred tax assets as of December 31, 2023, management determined that no valuation allowance was necessary. The valuation of current and deferred income tax assets and liabilities is considered critical, as it requires management to make estimates based on provisions of the enacted tax laws. The assessment of tax assets and liabilities involves the use of estimates, assumptions, interpretations, and judgments concerning certain accounting pronouncements and the federal tax code.

36

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Interest rate risk is related to liquidity because each is affected by maturing assets and sources of funds. ChoiceOne’s Risk Committee attempts to stabilize the interest rate spread and avoid possible adverse effects when unusual or rapid changes in interest rates occur. The Risk Committee 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 Risk Committee 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

	As of December 31, 2023
(Dollars in thousands)	0 - 3			3 - 12			1 - 5			Over
	Months			Months			Years			5 Years		Total
Assets
Equity securities at fair value	$	7,505		$	-		$	-		$	-	$	7,505
Securities available for sale		72,671			16,262			116,948			308,717		514,598
Securities held to maturity		23,863			7,932			28,282			347,882		407,959
Federal Home Loan Bank stock		4,449			-			-			-		4,449
Federal Reserve Bank stock		-			-			-			5,065		5,065
Loans held for sale		4,710			-			-			-		4,710
Loans to other financial institutions		19,400			-			-			-		19,400
Core Loans		311,184			170,790			719,686			189,593		1,391,253
Cash surrender value of life insurance policies		-			-			-			45,074		45,074
Interest rate derivative contracts		716			8,164			-			-		8,880
Rate-sensitive assets	$	444,498		$	203,148		$	864,916		$	896,331	$	2,408,893
Liabilities
Interest-bearing demand deposits	$	599,681		$	-		$	-		$	-	$	599,681
Money market deposits		247,602			-			-			-		247,602
Savings deposits		336,851			-			-			-		336,851
Certificates of deposit		71,688			261,019			33,878			266		366,851
Brokered deposits		12,056			6,754			4,635			-		23,445
Borrowings		-			170,000			30,000			-		200,000
Subordinated debentures		3,392			-			32,115			-		35,507
Interest rate derivative contracts		-			-			-			-		-
Rate-sensitive liabilities	$	1,271,270		$	437,773		$	100,628		$	266	$	1,809,937
Rate-sensitive assets less rate-sensitive liabilities:
Asset (liability) gap for the period	$	(826,772	)	$	(234,625	)	$	764,288		$	896,065	$	598,956
Cumulative asset (liability) gap	$	(826,772	)	$	(1,061,397	)	$	(297,109	)	$	598,956

(1) Interest rate derivative contracts include pay fixed, receive variable swaps with a notional value of $401.0 million. Further details can be found in Note 8 – Derivatives and Hedging Activities.

Under this method, the Risk Committee 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 38% at December 31, 2023, compared to 36% at December 31, 2022. Table 5 above shows the entire balance of interest-bearing demand deposits, savings deposits, and money market deposits in the shortest repricing term. Although these 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 liabilities. The Risk Committee plans to continue to monitor the ratio of rate-sensitive assets to rate-sensitive liabilities on a quarterly basis in 2024. As interest rates change, the Risk Committee will attempt to match its maturing assets with corresponding liabilities to maximize ChoiceOne’s net interest income.

Another method the Risk Committee uses to monitor its interest rate sensitivity is to subject rate-sensitive assets and liabilities to interest rate shocks. At December 31, 2023, management used a simulation model to subject its assets and liabilities up to an immediate 200 basis point increase and decline. 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 over which they would be outstanding. The maturities of advances from the borrowings were based on their contractual maturity dates. In the case of variable rate assets and

37

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.

Table 6 provides an illustration of hypothetical interest rate changes as of December 31, 2023 and 2022:

Table 6 – Sensitivity to Changes in Interest Rates

	2023
	Net					Market
(Dollars in thousands)	Interest		Percent			Value of		Percent
	Income		Change			Equity		Change
Change in Interest Rate
200 basis point rise		67,650		-2	%		480,950		8	%
100 basis point rise		68,430		-1	%		469,920		5	%
Base rate scenario		69,100		-	%		446,210		-	%
100 basis point decline		66,660		-4	%		407,940		-9	%
200 basis point decline		66,120		-4	%		350,800		-21	%

	2022
	Net					Market
(Dollars in thousands)	Interest		Percent			Value of		Percent
	Income		Change			Equity		Change
Change in Interest Rate
200 basis point rise		61,826		-11	%		355,701		15	%
100 basis point rise		66,025		-5	%		338,913		9	%
Base rate scenario		69,734		-	%		309,801		-	%
100 basis point decline		71,788		3	%		260,889		-16	%
200 basis point decline		71,276		2	%		181,078		-42	%

As of December 31, 2023, the Bank was within its guidelines for immediate rate shocks up and down for all net interest income scenarios and for the up rate scenarios for the market value of shareholders’ equity. The Bank’s percent change in the 100 and 200 basis points down scenarios for the market value of shareholders’ equity was higher than the policy guidelines. As of December 31, 2022, the Bank was within its guidelines for immediate rate shocks up and down for all net interest income scenarios and for the up rate scenarios and the down 100 and down 200 basis points scenarios for the market value of shareholders’ equity. The Risk Committee 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.

Item 8. Financial Statements and Supplementary Data

38

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of ChoiceOne Financial Services, Inc.

Opinion on the Financial Statements

We have audited the accompanying balance sheets of ChoiceOne Financial Services, Inc. (the “Company”) as of December 31, 2023 and 2022, the related statements of income, comprehensive income, changes in stockholders' equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes(collectively referred to as the “financial statements”). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

Change in Accounting Principle

As discussed in Note 1 to the financial statements, the Company has changed its method of accounting for credit losses effective January 1, 2023 due to the adoption of Accounting Standards Codification Topic 326: Financial Instruments – Credit Losses (“ASC 326”). The Company adopted the new credit loss standard using the modified retrospective method such that prior period amounts are not adjusted and continue to be reported in accordance with previously applicable generally accepted accounting principles. The subsequent application of Topic 326 is also communicated as a critical audit matter below.

Basis for Opinion

The Company's management is responsible for these financial statements. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Allowance for Credit Losses – Qualitative Adjustment

As described in Notes 1 and 3 to the financial statements, management’s estimate of the allowance for credit losses (ACL) at December 31, 2023, includes a reserve on collectively evaluated loans. The reserve on collectively evaluated loans is based on an historical average loss rates of peer banks, adjusted for current and forecasted factors, applied over the remaining life of loans. Management applies an adjustment for qualitative factors based on internal and external qualitative and credit market risk factors as described in Note 1 and 3 to the financial statements.

Significant judgment was required by management in the selection and measurement of qualitative factor adjustments. Accordingly, performing audit procedures to evaluate the Company’s estimated ACL involved a high degree of auditor judgment and required significant effort, including the involvement of professionals with specialized skill and knowledge.

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How the Critical Audit Matter was Addressed in the Audit

Our audit procedures related to the Company’s estimate of the ACL included, but were not limited to, the following:

•We evaluated the design of management’s controls over the determination of the qualitative factor adjustments.

•We obtained an understanding of management’s process for determining the need for qualitative factor adjustments, identifying appropriate factors, and measuring the direction and magnitude of the adjustment.

•We evaluated management's rationale for determining qualitative adjustments were relevant and warranted for each loan segment and assessed the measurement of qualitative factor adjustments applied by management.

•We assessed qualitative factors and overall reserves on collectively evaluated loans against trends in Company specific loss history.

/s/ Plante & Moran, PLLC

We have served as the Company’s auditor since 2006.

Grand Rapids, Michigan

March 13, 2024

40

ChoiceOne Financial Services, Inc.

Consolidated Balance Sheets

	December 31,
(Dollars in thousands)	2023			2022
Assets
Cash and due from banks	$	55,083		$	43,593
Time deposits in other financial institutions		350			350
Cash and cash equivalents		55,433			43,943
Equity securities, at fair value (Note 2)		7,505			8,566
Securities available for sale, at fair value (Note 2)		514,598			529,749
Securities held to maturity, at amortized cost (Note 2)		407,959			425,906
Federal Home Loan Bank stock		4,449			3,517
Federal Reserve Bank stock		5,065			5,064
Loans held for sale		4,710			4,834
Loans to other financial institutions		19,400			-
Core Loans		1,391,253			1,189,782
Total loans (Note 3)		1,410,653			1,189,782
Allowance for loan losses (Note 3)		(15,685	)		(7,619	)
Loans, net		1,394,968			1,182,163
Premises and equipment, net (Note 5)		29,750			28,232
Other real estate owned, net (Note 7)		122			-
Cash value of life insurance policies		45,074			43,978
Goodwill (Note 6)		59,946			59,946
Core deposit intangible (Note 6)		1,854			2,809
Other assets		45,273			47,208
Total assets	$	2,576,706		$	2,385,915
Liabilities
Deposits – noninterest-bearing (Note 9)	$	547,625		$	599,579
Deposits – interest-bearing (Note 9)		1,550,985			1,516,681
Brokered deposits (Note 9)		23,445			1,743
Total deposits		2,122,055			2,118,003
Borrowings (Note 10)		200,000			50,000
Subordinated debentures (Note 11)		35,507			35,262
Other liabilities (Notes 12)		23,510			13,776
Total liabilities		2,381,072			2,217,041
Shareholders’ Equity
Preferred stock; shares authorized: 100,000; shares outstanding: none		-			-
Common stock and paid-in capital, no par value; shares authorized: 15,000,000; shares outstanding: 7,548,217 at December 31, 2023 and 7,516,098 at December 31, 2022 (Note 16)		173,513			172,277
Retained earnings		73,699			68,394
Accumulated other comprehensive income, net		(51,578	)		(71,797	)
Total shareholders’ equity		195,634			168,874
Total liabilities and shareholders’ equity	$	2,576,706		$	2,385,915

See accompanying notes to consolidated financial statements.

41

ChoiceOne Financial Services, Inc.

Consolidated Statements of Income

	Year Ended
(Dollars in thousands, except per share data)	December 31,
	2023			2022			2021
Interest income
Loans, including fees	$	68,384		$	52,823		$	48,657
Securities:
Taxable		21,169			15,583			10,260
Tax exempt		5,629			6,163			5,617
Other		3,798			491			84
Total interest income		98,980			75,060			64,618
Interest expense
Deposits		23,990			5,845			3,305
Advances from Federal Home Loan Bank		1,771			117			22
Other		7,334			1,784			650
Total interest expense		33,095			7,746			3,977
Net interest income		65,885			67,314			60,641
Provision for (reversal of) credit losses on loans		1,265			250			416
Provision for (reversal of) credit losses on unfunded commitments		(1,115	)		-			-
Net Provision for (reversal of) credit losses expense		150			250			416
Net interest income after provision for credit losses		65,735			67,064			60,225
Noninterest income
Customer service charges		9,347			9,350			8,628
Insurance and investment commissions		698			779			765
Mortgage servicing rights (Note 4)		820			1,007			2,335
Gains on sales of loans (Note 4)		1,134			1,336			4,441
Net (losses) gains on sales of securities (Note 2)		(71	)		(809	)		(40	)
Net (losses) gains on sales and write-downs of other assets (Note 7)		147			99			6
Earnings on life insurance policies		1,096			1,312			809
Trust income		771			734			790
Change in market value of equity securities		(246	)		(955	)		479
Other		1,210			1,219			981
Total noninterest income		14,906			14,072			19,194
Noninterest expense
Salaries and benefits (Note 13 and 14)		31,963			30,391			29,300
Occupancy and equipment (Note 5)		6,048			6,189			6,168
Data processing		6,618			6,729			6,189
Professional fees		2,198			2,175			3,009
Supplies and postage		780			719			614
Advertising and promotional		721			764			848
Intangible amortization (Note 6)		955			1,153			1,307
FDIC insurance		1,184			722			804
Other		4,607			4,636			4,682
Total noninterest expense		55,074			53,478			52,921
Income before income tax		25,567			27,658			26,498
Income tax expense		4,306			4,018			4,456
Net income	$	21,261		$	23,640		$	22,042
Basic earnings per share (Note 16)	$	2.82		$	3.15		$	2.87
Diluted earnings per share (Note 16)	$	2.82		$	3.15		$	2.86
Dividends declared per share	$	1.05		$	1.01		$	0.94

See accompanying notes to consolidated financial statements.

42

ChoiceOne Financial Services, Inc.

Consolidated Statements of Comprehensive Income

	Year Ended
(Dollars in thousands)	December 31,
	2023			2022			2021
Net income	$	21,261		$	23,640		$	22,042
Other comprehensive income:
Change in net unrealized gain (loss) on AFS securities		20,934			(91,923	)		(17,261	)
Income tax benefit (expense)		(4,396	)		19,304			3,625
Less: reclassification adjustment for net (gain) loss included in net income		-			809			39
Income tax benefit (expense)		-			(170	)		(7	)
Less: reclassification adjustment for net (gain) loss for fair value hedge		(1,534	)		1,930			-
Income tax benefit (expense)		322			(405	)		-
Less: net unrealized (gains) losses on securities transferred from AFS to HTM		-			3,404			-
Income tax benefit (expense)		-			(715	)		-
Unrealized gain (loss) on AFS securities, net of tax		15,326			(67,766	)		(13,604	)
Reclassification of unrealized gain (loss) upon transfer of securities from AFS to HTM		-			(3,404	)		-
Income tax benefit (expense)		-			715			-
Amortization of net unrealized (gains) losses on securities transferred from AFS to HTM		333			351			-
Income tax benefit (expense)		(70	)		(74	)		-
Unrealized loss on held to maturity securities, net of tax		263			(2,412	)		-
Change in net unrealized gain (loss) on cash flow hedge		3,024			(558	)		-
Income tax benefit (expense)		(635	)		117			-
Less: reclassification adjustment for net (gain) loss on cash flow hedge		-			771			-
Income tax benefit (expense)		-			(162	)		-
Less: amortization of net unrealized (gains) losses included in net income		2,837			999			-
Income tax benefit (expense)		(596	)		(210	)		-
Unrealized gain (loss) on cash flow hedge instruments, net of tax		4,630			957			-
Other comprehensive income (loss), net of tax		20,219			(69,221	)		(13,604	)
Comprehensive income (loss)	$	41,480		$	(45,581	)	$	8,438

See accompanying notes to consolidated financial statements.

43

ChoiceOne Financial Services, Inc.

Consolidated Statements of Changes in Shareholders’ Equity

										Accumulated
				Common						Other
				Stock and						Comprehensive
	Number of			Paid in			Retained			Income/(Loss),
(Dollars in thousands, except per share data)	Shares			Capital			Earnings			Net			Total
Balance, January 1, 2021		7,796,352		$	178,750		$	37,490		$	11,028		$	227,268
Net income								22,042						22,042
Other comprehensive income (loss)											(13,604	)		(13,604	)
Shares issued		23,301			509									509
Effect of employee stock purchases					25									25
Stock-based compensation expense					415									415
Shares repurchased		(309,274	)		(7,786	)								(7,786	)
Cash dividends declared ($0.94 per share)								(7,200	)					(7,200	)
Balance, December 31, 2021		7,510,379		$	171,913		$	52,332		$	(2,576	)	$	221,669
Net income								23,640						23,640
Other comprehensive income (loss)											(69,221	)		(69,221	)
Shares issued		31,618			461									461
Effect of employee stock purchases					31									31
Stock-based compensation expense		-			554									554
Shares repurchased		(25,899	)		(682	)								(682	)
Cash dividends declared ($1.01 per share)								(7,578	)					(7,578	)
Balance, December 31, 2022		7,516,098		$	172,277		$	68,394		$	(71,797	)	$	168,874
Adoption of ASU 2016-13 (CECL) on January 1, 2023								(8,046	)					(8,046	)
Balance, January 1, 2023		7,516,098		$	172,277		$	60,348		$	(71,797	)	$	160,828
Net income								21,261						21,261
Other comprehensive income (loss)											20,219			20,219
Shares issued		31,472			566									566
Effect of employee stock purchases					41									41
Stock-based compensation expense					629									629
Stock options exercised and issued (1)		647												-
Cash dividends declared ($1.05 per share)								(7,910	)					(7,910	)
Balance, December 31, 2023		7,548,217		$	173,513		$	73,699		$	(51,578	)	$	195,634

(1)The amount shown represents the number of shares issued in cashless transactions where some taxes are netted on a portion of the exercises.

See accompanying notes to consolidated financial statements.

44

ChoiceOne Financial Services, Inc.

Consolidated Statements of Cash Flows

	Year Ended
(Dollars in thousands)	December 31,
	2023			2022			2021
Cash flows from operating activities:
Net income	$	21,261		$	23,640		$	22,042
Adjustments to reconcile net income to net cash from operating activities:
(Reversal of) provision for credit losses		150			250			416
Depreciation		2,477			2,658			2,624
Amortization		9,953			10,684			9,801
Compensation expense on employee and director stock purchases, stock options, and restricted stock units		1,005			958			812
Net (gains) losses on sales of securities		71			809			40
Net change in market value of equity securities		246			955			(479	)
Gains on sales of loans and capitalized servicing rights		(1,954	)		(2,343	)		(6,776	)
Loans originated for sale		(56,085	)		(71,829	)		(197,387	)
Proceeds from loan sales		57,342			77,681			205,398
Earnings on bank-owned life insurance		(1,096	)		(1,038	)		(778	)
Proceeds from BOLI policy		-			690			204
Earnings on death benefit from bank-owned life insurance		-			(274	)		(31	)
(Gains) on sales of other real estate owned		(12	)		(41	)		(19	)
Proceeds from sales of other real estate owned		157			235			611
Deferred federal income tax (expense) benefit		(24	)		(15	)		924
Net change in:
Other assets		5,395			(4,208	)		(5,418	)
Other liabilities		7,596			6,205			5,715
Net cash provided by operating activities		46,482			45,017			37,699
Cash flows from investing activities:
Sales of securities available for sale		-			47,167			29,742
Sales of equity securities		887			-			-
Proceeds from Federal Home Loan Bank stock redemption		3,917			-			-
Maturities, prepayments and calls of securities available for sale		32,289			51,570			54,202
Maturities, prepayments and calls of securities held to maturity		16,572			8,091			-
Purchases of securities available for sale		(1,646	)		(55,053	)		(632,826	)
Purchases of securities held to maturity		(597	)		(7,505	)		-
Purchases of equity securities		-			(1,029	)		(5,117	)
Purchases of Federal Home Loan Bank stock		(4,849	)		-			-
Purchase of bank-owned life insurance policies		-			-			(10,000	)
Loan originations and payments, net		(221,245	)		(130,620	)		45,384
Additions to premises and equipment		(4,234	)		(1,164	)		(2,759	)
Proceeds from (payments for) derivative contracts, net		1,732			(1,953	)		-
Payments for derivative contracts settlements		(4,191	)		-			-
Net cash (used in)/provided by investing activities		(181,365	)		(90,496	)		(521,374	)
Cash flows from financing activities:
Net change in deposits		4,052			65,709			377,716
Proceeds from borrowings		420,000			726,000			87,500
Payments on borrowings		(270,000	)		(726,000	)		(14,326	)
Issuance of common stock		231			172			139
Repurchase of common stock		-			(682	)		(7,786	)
Share based compensation withholding obligation		-			(85	)		-
Cash dividends		(7,910	)		(7,578	)		(7,200	)
Net cash provided by/(used in) financing activities		146,373			57,536			436,043
Net change in cash and cash equivalents		11,490			12,057			(47,632	)
Beginning cash and cash equivalents		43,943			31,887			79,519
Ending cash and cash equivalents	$	55,433		$	43,943		$	31,887
Supplemental disclosures of cash flow information:
Cash paid for interest	$	27,481		$	7,577		$	3,718
Cash paid for income taxes		4,450			1,989			3,251
Loans transferred to other real estate owned		266			-			520

See accompanying notes to consolidated financial statements.

45

Note 1 – Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include ChoiceOne Financial Services, Inc. (“ChoiceOne”), its wholly-owned subsidiaries, ChoiceOne Bank (the “Bank”) and 109 Technologies, LLC, and ChoiceOne Bank’s wholly-owned subsidiary, ChoiceOne Insurance Agencies, Inc. (the “Insurance Agency”). Intercompany transactions and balances have been eliminated in consolidation.

ChoiceOne owns all of the common securities of Community Shores Capital Trust I (the “Capital Trust”). Under U.S. generally accepted accounting principles (“GAAP”), the Capital Trust is not consolidated because it is a variable interest entity and ChoiceOne is not the primary beneficiary.

Nature of Operations

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 within the Bank’s primary market areas in Kent, Muskegon, Newaygo, and Ottawa counties in western Michigan and Lapeer, Macomb, and St. Clair counties in southeastern 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 collateralized by either residential or commercial real estate.

109 Technologies, LLC is a wholly owned subsidiary of ChoiceOne Financial Services Inc. with the intent of selling a fintech product marketed to other banks and bank holding companies.

The Insurance Agency is a wholly-owned subsidiary of the Bank. The Insurance Agency sells insurance policies such as life and health 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 and ChoiceOne’s other direct and indirect subsidiaries 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. These estimates and assumptions are subject to many risks and uncertainties. Actual results may differ from these estimates. Estimates associated with the allowance for credit losses 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 original terms of 90 days or less.

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, remaining purchase accounting adjustments, and an allowance for credit losses. Loans held for sale are reported at the lower of cost or market, on an aggregate basis.

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 loans are 90 days past due unless the loan is secured by sufficient collateral and is in the process of collection. Past due status is based on the contractual terms of the loan. 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 qualifying 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.

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Purchased financial assets without credit deterioration will be recorded at the acquisition date fair value. Additionally, an allowance is recorded with a corresponding charge to credit loss expense in the reporting period in which the acquisition occurs. For assets purchased with credit deterioration, an allowance is recorded with a corresponding increase to the amortized cost basis of the financial asset as of the acquisition date. No financial assets were purchased since the initiation of CECL on January 1, 2023.

Loans to Other Financial Institutions

Loans to other financial institutions are made for the purpose of providing a warehouse line of credit to facilitate funding of residential mortgage loan originations at other financial institutions. The loans are short-term in nature and are designed to provide funding for the time period between the loan origination and its subsequent sale in the secondary market. Loans to other financial institutions earn a share of interest income, determined by the contract, from when the loan is funded to when the loan is sold on the secondary market.

Allowance for Credit Losses (“ACL”)

In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments. This ASU (as subsequently amended by ASU 2018-19) significantly changed how entities measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard replaced the former “incurred loss” approach with an “expected loss” model. The new model, referred to as the CECL model, applies to financial assets subject to credit losses and measured at amortized cost, and certain off-balance sheet credit exposures. The standard also expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the ACL. In addition, entities need to disclose the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by the year of origination. A reasonable and supportable economic forecast is a key component of the CECL methodology.

ChoiceOne adopted CECL effective January 1, 2023 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures. Results for reporting periods beginning after January 1, 2023 are presented under CECL while prior period amounts continue to be reported in accordance with the incurred loss accounting standards. The transition adjustment of the CECL adoption included an increase in the ACL of $7.2 million, which included a $5.5 million decrease to the retained earnings account to reflect the cumulative effect of adopting CECL on our Consolidated Balance Sheet, with the $1.5 million tax impact portion being recorded as part of the deferred tax asset in other assets on our Consolidated Balance Sheet. The transition adjustment of the CECL adoption included an additional ACL on unfunded commitments of $3.3 million, which included a $2.6 million decrease to the retained earnings account to reflect the cumulative effect of adopting CECL on our Consolidated Balance Sheet, with the $688,000 tax impact portion being recorded as part of the deferred tax asset in other assets on our Consolidated Balance Sheet.

The ACL is a valuation allowance for expected credit losses. The ACL is increased by the provision for credit losses and decreased by loans charged off less any recoveries of charged off loans. As ChoiceOne has had very limited loss experience since 2011, management elected to utilize benchmark peer loss history data to estimate historical loss rates. ChoiceOne identified an appropriate peer group for each loan cohort which shared similar characteristics. Management estimates the ACL required based on the selected peer group loan loss experience, the nature and volume of the loan portfolio, information about specific borrower situations and estimated collateral values, a reasonable and supportable economic forecast, and other factors. Allocations of the ACL may be made for specific loans, but the entire ACL is available for any loan that, in management’s judgment, should be charged off. Loan losses are charged against the ACL when management believes that collection of a loan balance is not possible.

The ACL consists of general and specific components. The general component covers loans collectively evaluated for credit losses and is based on peer historical loss experience adjusted for current and forecasted factors. Management’s adjustment for current and forecasted factors is based on trends in delinquencies, trends in charge-offs and recoveries, trends in the volume of loans, changes in underwriting standards, trends in loan review findings, the experience and ability of lending staff, and a reasonable and supportable economic forecast described further below.

The discounted cash flow methodology is utilized for all loan pools. This methodology is supported by our CECL software provider and allows management to automatically calculate contractual life by factoring in all cash flows and adjusting them for behavioral and credit-related aspects.

Reasonable and supportable economic forecasts have to be incorporated in determining expected credit losses. The forecast period represents the time frame from the current period end through the point in time that we can reasonably forecast and support entity and environmental factors that are expected to impact the performance of our loan portfolio. Ideally, the economic forecast period would encompass the contractual terms of all loans; however, the ability to produce a forecast that is considered reasonable and supportable becomes more difficult or may not be possible in later periods. Subsequent to the end of the forecast period, we revert to historical loan data based on an ongoing evaluation of each economic forecast in relation to then current economic conditions as well as any developing

47

loan loss activity and resulting historical data. As of December 31, 2023, we used a one-year reasonable and supportable economic forecast period, with a two year straight-line reversion period.

We are not required to develop and use our own economic forecast model, and we elected to utilize economic forecasts from third-party providers that analyze and develop forecasts of the economy for the entire United States at least quarterly.

Other inputs to the calculation are also updated or reviewed quarterly. Prepayment speeds are updated on a one quarter lag based on the asset liability model from the previous quarter. This model is performed at the loan level. Curtailment is updated quarterly within the ACL model based on our peer group average. The reversion period is reviewed by management quarterly with consideration of the current economic climate. Prepayment speeds and curtailment were updated during the fourth quarter of 2023; however, the effect was insignificant.

We are also required to consider expected credit losses associated with loan commitments over the contractual period in which we are exposed to credit risk on the underlying commitments unless the obligation is unconditionally cancellable by us. Any allowance for off-balance sheet credit exposures is reported as an other liability on our Consolidated Balance Sheet and is increased or decreased via the provision for credit losses account on our Consolidated Statement of Income. The calculation includes consideration of the likelihood that funding will occur and forecasted credit losses on commitments expected to be funded over their estimated lives. The allowance is calculated using the same aggregate reserve rates calculated for the funded portion of loans at the portfolio level applied to the amount of commitments expected to be funded.

Loans that do not share risk characteristics are evaluated on an individual basis and are excluded from the collective evaluation. ChoiceOne has determined that any loans which have been placed on non-performing status, loans with a risk rating of 6 or higher, and loans past due more than 60 days will be assessed individually for evaluation. Management’s judgment will be used to determine if the loan should be migrated back to pool on an individual basis. Individual analysis will establish a specific reserve for loans in scope. Specific reserves on non-performing loans are typically based on management’s best estimate of the fair value of collateral securing these loans, adjusted for selling costs as appropriate or based on the present value of the expected cash flows from that loan.

Allowance for Loan Losses

Prior to the adoption of CECL on January 1, 2023, management calculated the allowance for loan losses for the valuation allowance for probable incurred credit losses. The allowance for loan losses 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 for loan losses balance required based on past loan loss experience, the nature and volume of the loan portfolio, information about specific borrower situations and estimated collateral values, economic conditions, and other factors. Allocations of the allowance for loan losses may be made for specific loans, but the entire allowance for loan losses is available for any loan that, in management’s judgment, should be charged off. Loan losses are charged against the allowance for loan losses when management believes that collection of a loan balance is not possible.

The allowance for loan losses 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. The general component of management's estimate of the allowance for loan losses covers non-impaired loans and is based on historical loss experience adjusted for current factors. Management's adjustment for current factors is based on trends in delinquencies, trends in charge-offs and recoveries, trends in the volume of loans, changes in underwriting standards, trends in loan review findings, experience and ability of lending staff, national and economic trends and conditions, industry conditions, trends in real estate values, and other conditions.

A loan is impaired when full payment under the loan terms is not expected. Troubled debt restructuring of loans is undertaken to improve the likelihood that the loan will be repaid in full under the modified terms in accordance with a reasonable repayment schedule. All modified loans are evaluated to determine whether the loans should be reported as Troubled Debt Restructurings ("TDR"). A loan is a TDR when the Bank, for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower by modifying a loan. To make this determination, the Bank must determine whether (a) the borrower is experiencing financial difficulties and (b) the Bank granted the borrower a concession. This determination requires consideration of all facts and circumstances surrounding the modification. An overall general decline in the economy or some deterioration in a borrower’s financial condition does not automatically mean the borrower is experiencing financial difficulties. Commercial loans are evaluated for impairment on an individual loan basis. If a loan is considered impaired or if a loan has been classified as a TDR, 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 residential real estate mortgage loans are collectively evaluated for impairment and, accordingly, they are not separately identified for impairment disclosures.

Securities

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Debt securities are classified as held to maturity and carried at amortized cost when management has the positive intent and ability to hold them to maturity. ​ Debt securities are classified as available for sale because they might be sold before maturity. Debt securities classified as available for sale are carried at fair value, with unrealized holding gains and losses reported separately in the accumulated other comprehensive income or loss section of shareholders’ equity, net of tax effect. Restricted investments in Federal Reserve Bank stock and Federal Home Loan Bank stock are carried at cost. Equity securities consist of investments in preferred stock and investments in common stock of other financial institutions. Equity securities are reported at their fair value with changes in market value reported through current earnings.

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.

Securities Available for Sale – For securities AFS in an unrealized loss position, management determines whether they intend to sell or if it is more likely than not that ChoiceOne will be required to sell the security before recovery of the amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income with an allowance being established under CECL. For securities AFS with unrealized losses not meeting these criteria, management evaluates whether any decline in fair value is due to credit loss factors. In making this assessment, management considers any changes to the rating of the security by rating agencies and adverse conditions specifically related to the issuer of the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of the cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses (“ACL”) is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Changes in the ACL under ASC 326-30 are recorded as provisions for (or reversal of) credit loss expense. Losses are charged against the allowance when the collectability of a debt security AFS is confirmed or when either of the criteria regarding intent or requirement to sell is met. Any impairment that has not been recorded through an ACL is recognized in other comprehensive income, net of income taxes. At December 31, 2023 and at adoption of CECL on January 1, 2023, there was no ACL related to debt securities AFS. Accrued interest receivable on debt securities was excluded from the estimate of credit losses.

Securities Held to Maturity – Since the adoption of CECL, ChoiceOne measures credit losses on HTM securities on a collective basis by major security type with each type sharing similar risk characteristics, and considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. The ACL on securities HTM is a contra asset valuation account that is deducted from the carrying amount of HTM securities to present the net amount expected to be collected. HTM securities are charged off against the ACL when deemed uncollectible. Adjustments to the ACL are reported in ChoiceOne’s Consolidated Statements of Income in the provision for credit losses. Accrued interest receivable on HTM securities is excluded from the estimate of credit losses. With regard to US Treasury securities, these have an explicit government guarantee; therefore, no ACL is recorded for these securities. With regard to obligations of states and political subdivisions and other HTM securities, management considers (1) issuer bond ratings, (2) historical loss rates for given bond ratings, (3) the financial condition of the issuer, and (4) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities. A discounted cash flow method will be used to determine the reserve required for any credit losses on HTM securities. At December 31, 2023, the ACL related to securities HTM is insignificant.

Troubled Loan Modifications

FASB also issued ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. This standard eliminated the previous accounting guidance for troubled debt restructurings and added additional disclosure requirements for gross chargeoffs by year of origination. It also prescribes guidance for reporting modifications of loans to borrowers experiencing financial difficulty.

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. If impaired, the assets are recorded at fair value.

Other Real Estate Owned

49

Real estate properties acquired in the collection of a loan are initially recorded at the lower of the Bank’s basis in the loans or 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 credit 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 noninterest income.

Bank Owned Life Insurance

Bank owned life insurance policies are stated at the current cash surrender value of the policy, or the policy death proceeds less any obligation to provide a death benefit to an insured’s beneficiaries if that value is less than the cash surrender value. Increases in the asset value are recorded as earnings in other income.

Loan Servicing Rights

Loan servicing rights represent the allocated value of servicing rights on loans sold with servicing retained. Servicing rights are initially recorded at estimated fair value and fair value is determined using prices for similar assets with similar characteristics when available or based upon discounted cash flows using market-based assumptions. 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. Any impairment of a grouping is reported as a valuation allowance.

Goodwill and Intangible Assets

Goodwill results from business acquisitions and represents the excess of the purchase price over the fair value of the acquired tangible assets and liabilities and identifiable intangible assets. Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but tested for impairment at least annually or more frequently if events and circumstances exist that indicate that a goodwill impairment test should be performed.

Core Deposit Intangible

Core deposit intangible represents the value of the acquired customer core deposit bases and is included as an asset on the consolidated balance sheets. The core deposit intangible has an estimated finite life, is amortized on an accelerated basis over a 120 month period and is subject to periodic impairment evaluation.

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.

Employee Benefit Plans

ChoiceOne’s 401(k) plan allows participants to make contributions to their individual accounts under the plan in amounts up to the IRS maximum. Employer matching contributions from ChoiceOne to its 401(k) plan are discretionary.

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. A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company recognizes interest and/or penalties related to income tax matters in income tax expense.

Earnings Per Share

Basic earnings per common share (“EPS”) is based on weighted-average common shares outstanding. Diluted EPS assumes issuance of any dilutive potential common shares issuable under stock options or restricted stock units granted.

Comprehensive Income

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Comprehensive income consists of net income and other comprehensive income or loss. Other comprehensive income or loss includes unrealized gains and losses on securities available for sale and changes in the funded status of derivative instruments, net of tax, which are also recognized as a separate component of shareholders’ equity.

Accumulated other comprehensive income was as follows:

(Dollars in thousands)	As of December 31,
	2023			2022
Unrealized gain (loss) on available-for-sale securities	$	(69,641	)	$	(89,041	)
Unrealized gain (loss) on held to maturity securities		(2,720	)		(3,053	)
Unrealized gain (loss) on derivative instruments		7,072			1,212
Tax effect		13,711			19,085
Accumulated other comprehensive income (loss)	$	(51,578	)	$	(71,797	)

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 as of December 31, 2023.

Cash Restrictions

Cash on hand or on deposit with the Federal Reserve Bank was $0 at both December 31, 2023 and 2022, as the Federal Reserve revoked the reserve requirement.

Leases

Leases are classified as operating or finance leases at the lease commencement date. Lease expense for operating leases and short-term leases is recognized on a straight-line basis over the lease term. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term.

Stock-Based Compensation

Share based restricted stock units are valued at fair value as of the grant date. The Company values share-based stock option awards granted using the Black-Scholes option-pricing model. The Company recognizes compensation expense for its awards on a straight-line basis over the requisite service period for the entire award (straight-line attribution method), ensuring that the amount of compensation cost recognized at any date at least equals the portion of the grant-date fair value of the award that is vested at that time. Compensation costs related to stock options granted are disclosed in Note 15.

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 18 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.

Derivatives

At the inception of a derivative contract, ChoiceOne designates the derivative as one of two types based on our intention and belief as to the likely effectiveness of the hedge. These two types are (1) a hedge of changes in fair value of a recognized asset or liability or of an unrecognized firm commitment (“fair value hedge”), and (2) a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow hedge”). For a fair value hedge, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item, are recognized in current earnings as fair values change. For a cash flow hedge,

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the gain or loss on the derivative is reported in other comprehensive income and is reclassified into earnings in the same period during which the hedged transaction affects the earnings. The changes in fair value of derivatives that do not qualify for hedge accounting are reported in current earnings, as noninterest income.

Net cash settlements on derivatives that qualify for hedge accounting are recorded in interest income or interest expense, based on the item being hedged. Cash flows on hedges are classified in the cash flow statement in the same line item as the cash flows of the item being hedged.

The initial fair value of hedge components excluded from the assessment of effectiveness are recognized in the statement of financial condition under a systematic and rational method over the life of the hedging relationship and are presented in the same income statement line item as the earnings effect of the hedged item. Any difference between the change in the fair value of the hedge components excluded from the assessment of effectiveness and the amounts recognized in earnings are recorded as a component of other comprehensive income.

ChoiceOne discontinues hedge accounting when it determines that the derivative is no longer effective in offsetting changes in fair values or cash flows of the hedged item, the derivative is settled or terminates, a hedged forecasted transaction is no longer probable, a hedged firm commitment is no longer firm, or the treatment of the derivative as a hedge is no longer appropriate or intended. When hedge accounting is discontinued, subsequent changes in fair value of the derivative are recorded as noninterest income. When a fair value hedge is discontinued, the hedged asset or liability is no longer adjusted for changes in fair value and the existing basis adjustment is amortized or accreted over the remaining life of the asset or liability. When a cash flow hedge is discontinued but the hedged cash flows or forecasted transactions are still expected to occur, gains or losses that were accumulated in other comprehensive income are amortized into earnings over the same periods in which the hedged transactions will affect earnings.

ChoiceOne is exposed to losses if a counterparty fails to make its payments under a contract in which the Company is in the net receiving position. ChoiceOne anticipates that the counterparties will be able to fully satisfy their obligation under the agreements. All the contracts to which we are a party have cash flows that settle monthly or semiannually.

Operating Segments

While ChoiceOne’s management monitors the revenue streams of various products and services for the Bank and the Insurance Agency, 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.

Recent Accounting Pronouncements

Investment in Equity Method and Joint Ventures

In March 2023, the FASB issued ASU 2023-02, Investments – Equity Method and Joint Venture (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method. The amendments in this ASU permit reporting entities to account for the tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method. This update will be effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2023. Early adoption is permitted. This change in guidance effective on January 1, 2023, did not have a significant impact on the financial statements.

Improvements to Income Tax Disclosure

ASU 2023-09 enhances transparency by requiring consistent categorization, greater disaggregation, and detailed disclosure related to income taxes paid. These changes aim to help users of financial statements understand factors contributing to differences between effective and statutory tax rates. The disclosure is effective for annual reporting periods beginning after December 15, 2024.

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Note 2 – Securities

On January 1, 2022, ChoiceOne reassessed and transferred, at fair value, $428.4 million of securities classified as available for sale to the held to maturity classification. The net unrealized after-tax loss of $2.7 million as of the transfer date remained in accumulated other comprehensive income to be amortized over the remaining life of the securities, offsetting the related amortization of discount or premium on the transferred securities. No gains or losses were recognized at the time of the transfer. The remaining net unamortized unrealized loss on transferred securities included in accumulated other comprehensive income was $2.1 million after tax as of December 31, 2023.

The fair value of equity securities and the related gross unrealized gains and (losses) recognized in noninterest income at December 31 were as follows:

	December 31, 2023
			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Equity securities	$	7,960	$	212	$	(667	)	$	7,505

	December 31, 2022
			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Equity securities	$	8,982	$	305	$	(721	)	$	8,566

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

	December 31, 2023
			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
Available for Sale:	Cost		Gains		Losses			Value
U.S. Government and federal agency	$	-	$	-	$	-		$	-
U.S. Treasury notes and bonds		90,345		-		(10,151	)		80,194
State and municipal		269,918		-		(35,236	)		234,682
Mortgage-backed		212,392		14		(23,905	)		188,501
Corporate		250		-		(46	)		204
Asset-backed securities		11,334		-		(317	)		11,017
Total	$	584,239	$	14	$	(69,655	)	$	514,598

	December 31, 2022
			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
Available for Sale:	Cost		Gains		Losses			Value
U.S. Government and federal agency	$	-	$	-	$	-		$	-
U.S. Treasury notes and bonds		90,810		-		(12,606	)		78,204
State and municipal		277,489		-		(47,551	)		229,938
Mortgage-backed		236,703		-		(28,140	)		208,563
Corporate		757		-		(46	)		711
Asset-backed securities		13,031		-		(698	)		12,333
Total	$	618,790	$	-	$	(89,041	)	$	529,749

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The amortized cost and fair value of securities held to maturity and the related gross unrealized gains and losses were as follows:

	December 31, 2023
			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
Held to Maturity:	Cost		Gains		Losses			Value
U.S. Government and federal agency	$	2,972	$	-	$	(293	)	$	2,679
State and municipal		196,098		14		(30,220	)		165,892
Mortgage-backed		188,329		-		(25,796	)		162,533
Corporate		20,013		21		(2,864	)		17,170
Asset-backed securities		547		-		(30	)		517
Total	$	407,959	$	35	$	(59,203	)	$	348,791

	December 31, 2022
			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
Held to Maturity:	Cost		Gains		Losses			Value
U.S. Government and federal agency	$	2,966	$	-	$	(421	)	$	2,545
State and municipal		201,890		1		(39,355	)		162,536
Mortgage-backed		200,473		-		(29,868	)		170,605
Corporate		19,603		-		(2,285	)		17,318
Asset-backed securities		974		-		(77	)		897
Total	$	425,906	$	1	$	(72,006	)	$	353,901

Information regarding sales of equity and debt securities available for sale for the year ended December 31 follows:

(Dollars in thousands)
	2023			2022			2021
Proceeds from sales of securities	$	887		$	47,167		$	29,742
Gross realized gains		-			-			-
Gross realized losses		(71	)		(809	)		(40	)

Contractual maturities of securities available for sale at December 31, 2023 were as follows:

(Dollars in thousands)	Amortized		Fair
	Cost		Value
Due within one year	$	250	$	250
Due after one year through five years		99,159		90,209
Due after five years through ten years		177,228		159,321
Due after ten years		95,210		76,317
Total debt securities		371,847		326,097
Mortgage-backed securities		212,392		188,501
Total	$	584,239	$	514,598

Contractual maturities of securities held to maturity at December 31, 2023 were as follows:

(Dollars in thousands)	Amortized		Fair
	Cost		Value
Due within one year	$	1,586	$	1,543
Due after one year through five years		12,379		11,376
Due after five years through ten years		124,644		108,371
Due after ten years		81,021		64,968
Total debt securities		219,630		186,258
Mortgage-backed securities		188,329		162,533
Total	$	407,959	$	348,791

Certain securities were pledged as collateral for participation in a program that provided Community Reinvestment Act credits and for other purposes, as required or permitted by law. ChoiceOne also pledges securities to the FHLB and the FRB. The purpose of this

54

pledging strategy is to enhance the availability of cash and other liquid assets that can be used to meet the operational needs of the organization. This strategy also allows the organization to optimize its asset allocation and diversify its funding sources. The carrying amount of the securities pledged as collateral at December 31 was as follows:

(Dollars in thousands)	2023		2022
Securities pledged to Federal Reserve Bank	$	526,413	$	-
Securities pledged to Federal Home Loan Bank		278,503		-
Securities pledged for Community Reinvestment Act credits		250		250
Total Securities pledged		805,166		250

Securities with unrealized losses at year-end 2023 and 2022, aggregated by investment category and length of time the individual securities have been in an unrealized loss position, were as follows:

	2023
	Less than 12 months				More than 12 months				Total
(Dollars in thousands)	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Available for Sale:	Value		Losses		Value		Losses		Value		Losses
U.S. Government and federal agency	$	-	$	-	$	-	$	-	$	-	$	-
U.S. Treasury notes and bonds		-		-		80,194		10,151		80,194		10,151
State and municipal		557		6		234,125		35,230		234,682		35,236
Mortgage-backed		1,255		23		176,400		23,882		177,655		23,905
Corporate		-		-		204		46		204		46
Asset-backed securities		-		-		11,017		317		11,017		317
Total temporarily impaired	$	1,812	$	29	$	501,940	$	69,626	$	503,752	$	69,655

	2022
	Less than 12 months				More than 12 months				Total
(Dollars in thousands)	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Available for Sale:	Value		Losses		Value		Losses		Value		Losses
U.S. Government and federal agency	$	-	$	-	$	-	$	-	$	-	$	-
U.S. Treasury notes and bonds		-		-		78,204		12,606		78,204		12,606
State and municipal		89,158		12,612		140,390		34,939		229,548		47,551
Mortgage-backed		63,249		3,093		144,318		25,047		207,567		28,140
Corporate		711		46		-		-		711		46
Asset-backed securities		-		-		12,333		698		12,333		698
Total temporarily impaired	$	153,118	$	15,751	$	375,245	$	73,290	$	528,363	$	89,041

	2023
	Less than 12 months				More than 12 months				Total
(Dollars in thousands)	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Held to Maturity:	Value		Losses		Value		Losses		Value		Losses
U.S. Government and federal agency	$	-	$	-	$	2,679	$	293	$	2,679	$	293
State and municipal		23		-		165,526		30,220		165,549		30,220
Mortgage-backed		-		-		162,533		25,796		162,533		25,796
Corporate		-		-		15,509		2,864		15,509		2,864
Asset-backed securities		-		-		517		30		517		30
Total temporarily impaired	$	23	$	-	$	346,764	$	59,203	$	346,787	$	59,203

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	2022
	Less than 12 months				More than 12 months				Total
(Dollars in thousands)	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Held to Maturity:	Value		Losses		Value		Losses		Value		Losses
U.S. Government and federal agency	$	-	$	-	$	2,545	$	421	$	2,545	$	421
State and municipal		13,457		1,899		149,016		37,456		162,473		39,355
Mortgage-backed		25,582		822		145,024		29,046		170,606		29,868
Corporate		5,296		603		10,771		1,682		16,067		2,285
Asset-backed securities		-		-		897		77		897		77
Total temporarily impaired	$	44,335	$	3,324	$	308,253	$	68,682	$	352,588	$	72,006

ChoiceOne evaluates all securities on a quarterly basis to determine if an ACL and corresponding impairment charge should be recorded. Consideration is given to the extent to which the fair value has been less than cost, the financial condition and near-term prospects of the issuer, and the intent and ability of ChoiceOne to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value of amortized cost basis. ChoiceOne believes that unrealized losses on securities were temporary in nature and were caused primarily by changes in interest rates, increased credit spreads, and reduced market liquidity and were not caused by the credit status of the issuer. No ACL was recorded in the year ended December 31, 2023 and no other-than-temporary impairment charges were recorded in the year ended December 31, 2022.

At December 31, 2023 and December 31, 2022, there were 569 and 611 securities with an unrealized loss, respectively. Unrealized losses have not been recognized into income because the issuers’ bonds are of high credit quality, and management does not intend to sell prior to their anticipated recovery, and the decline in fair value is largely due to changes in interest rates and other market conditions. The issuers continue to make timely principal and interest payments on the bonds. The fair value is expected to recover as the bonds approach maturity.

The majority of unrealized losses at December 31, 2023, are related to U.S. Treasury notes and bonds, state and municipal bonds and mortgage backed securities. The U.S. Treasury notes are guaranteed by the U.S. government and 100% of the notes are rated AA or better. State and municipal bonds are backed by the taxing authority of the bond issuer or the revenues from the bond. On December 31, 2023, 86% of state and municipal bonds held are rated AA or better, 11% are A rated and 3% are not rated. Of the mortgage-backed securities held on December 31, 2023, 39% were issued by US government sponsored entities and agencies, and rated AA, 39% are AAA rated private issue and collateralized mortgage obligation, and 22% are unrated privately issued mortgage-backed securities with structured credit enhancement and collateralized mortgage obligation.

Following is information regarding unrealized gains and losses on equity securities for the years ending December 31:

	2023			2022			2021
Net gains and losses recognized during the period	$	(317	)	$	(955	)	$	479
Less: Net gains and losses recognized during the period on securities sold		(71	)		-			-
Unrealized gains and losses recognized during the reporting period on securities still held at the reporting date	$	(246	)	$	(955	)	$	479

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Note 3 – Loans and Allowance for Credit Losses

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

(Dollars in thousands)
	2023			2022
Agricultural	$	49,210		$	64,159
Commercial and industrial		229,915			210,210
Consumer		36,541			39,808
Real estate - commercial		786,921			630,953
Real estate - construction		20,936			14,736
Real estate - residential		267,730			229,916
Loans to other financial institutions		19,400			-
Total Loans	$	1,410,653		$	1,189,782
Allowance for credit losses		(15,685	)		(7,619	)
Loans, net	$	1,394,968		$	1,182,163

The table below details the outstanding balances of the County Bank Corp. acquired portfolio and the acquisition fair value adjustments at acquisition date:

(Dollars in thousands)	Acquired			Acquired			Acquired
	Impaired			Non-impaired			Total
Loans acquired - contractual payments	$	7,729		$	387,394		$	395,123
Nonaccretable difference		(2,928	)		-			(2,928	)
Expected cash flows		4,801			387,394			392,195
Accretable yield		(185	)		(1,894	)		(2,079	)
Carrying balance at acquisition date	$	4,616		$	385,500		$	390,116

The table below presents a roll-forward of the accretable yield on County Bank Corp. acquired loans for the year ended December 31, 2022:

(Dollars in thousands)	Acquired			Acquired			Acquired
	Impaired			Non-impaired			Total
Balance, January 1, 2019	$	-		$	-		$	-
Merger with County Bank Corp. on October 1, 2019		185			1,894			2,079
Accretion October 1, 2019 through December 31, 2019		-			(75	)		(75	)
Balance January 1, 2020		185			1,819			2,004
Accretion January 1, 2020 through December 31, 2020		(50	)		(295	)		(345	)
Balance January 1, 2021		135			1,524			1,659
Accretion January 1, 2021 through December 31, 2021		(247	)		(348	)		(595	)
Transfer from non-accretable to accretable yield		400			-			400
Balance January 1, 2022		288			1,176			1,464
Transfer from non-accretable to accretable yield		2,192			-			2,192
Accretion January 1, 2022 through December 31, 2022		(553	)		(98	)		(651	)
Balance December 31, 2022	$	1,927		$	1,078		$	3,005

The table below details the outstanding balances of the Community Shores Bank Corporation acquired loan portfolio and the acquisition fair value adjustments at acquisition date:

(Dollars in thousands)	Acquired			Acquired			Acquired
	Impaired			Non-impaired			Total
Loans acquired - contractual payments	$	20,491		$	158,495		$	178,986
Nonaccretable difference		(2,719	)		-			(2,719	)
Expected cash flows		17,772			158,495			176,267
Accretable yield		(869	)		(596	)		(1,465	)
Carrying balance at acquisition date	$	16,903		$	157,899		$	174,802

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The table below presents a roll-forward of the accretable yield on Community Shores Bank Corporation acquired loans for the year ended December 31, 2022:

(Dollars in thousands)	Acquired			Acquired			Acquired
	Impaired			Non-impaired			Total
Balance January 1, 2020	$	-		$	-		$	-
Merger with Community Shores Bank Corporation on July 1, 2020		869			596			1,465
Accretion July 1, 2020 through December 31, 2020		(26	)		(141	)		(167	)
Balance, January 1, 2021		843			455			1,298
Accretion January 1, 2021 through December 31, 2021		(321	)		(258	)		(579	)
Balance January 1, 2022		522			197			719
Transfer from non-accretable to accretable yield		1,086			-			1,086
Accretion January 1, 2022 through December 31, 2022		(993	)		(197	)		(1,190	)
Balance December 31, 2022	$	615		$	-		$	615

ChoiceOne manages its credit risk through the use of its loan policy and its loan approval process and by monitoring of loan credit performance. The loan approval process for commercial loans involves individual and group approval authorities. Individual authority levels are based on the experience of the lender. Group authority approval levels can consist of an internal loan committee that includes the Bank’s President or Senior Lender and other loan officers for loans that exceed individual approval levels, or a loan committee of the Board of Directors for larger commercial loans. Most consumer loans are approved by individual loan officers based on standardized underwriting criteria, with larger consumer loans subject to approval by the internal loan committee.

Ongoing credit review of commercial loans is the responsibility of the loan officers. ChoiceOne’s internal credit committee meets at least monthly and reviews loans with payment issues and loans with a risk rating of 6, 7, or 8. Risk ratings of commercial loans are reviewed periodically and adjusted if needed. ChoiceOne’s consumer loan portfolio is primarily monitored on an exception basis. Loans where payments are past due are turned over to the applicable Bank’s collection department, which works with the borrower to bring payments current or take other actions when necessary. In addition to internal reviews of credit performance, ChoiceOne contracts with a third party for independent loan review that monitors the loan approval process and the credit quality of the loan portfolio.

Activity in the allowance for credit losses and balances in the loan portfolio was as follows:

				Commercial														Loans to Other
(Dollars in thousands)				and						Commercial		Construction			Residential			Financial
	Agricultural			Industrial			Consumer			Real Estate		Real Estate			Real Estate			Institutions		Unallocated			Total
Allowance for Credit Losses Year Ended December 31, 2023
Beginning balance	$	144		$	1,361		$	310		$	4,822	$	63		$	906		$	-	$	13		$	7,619
Cumulative effect of change in accounting principle		14			1,587			541			3,006		20			2,010			-		(13	)		7,165
Charge-offs		-			(158	)		(554	)		-		-			(27	)		-		-			(739	)
Recoveries		-			66			283			13		-			13			-		-			375
Provision		(64	)		(640	)		243			979		(25	)		742			30		-			1,265
Ending balance	$	94		$	2,216		$	823		$	8,820	$	58		$	3,644		$	30	$	-		$	15,685
Individually evaluated loan reserves	$	2		$	6		$	-		$	1	$	-		$	51		$	-	$	-		$	60
Collectively evaluated loan reserves	$	92		$	2,210		$	823		$	8,819	$	58		$	3,593		$	30	$	-		$	15,625
Loans
December 31, 2023
Individually evaluated loans	$	54		$	136		$	2		$	29	$	-		$	1,858		$	-				$	2,079
Collectively evaluated loans		49,156			229,779			36,539			786,892		20,936			265,872			19,400					1,408,574
Ending balance	$	49,210		$	229,915		$	36,541		$	786,921	$	20,936		$	267,730		$	19,400				$	1,410,653

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				Commercial													Loans to Other
(Dollars in thousands)				and						Commercial		Construction			Residential		Financial
	Agricultural			Industrial			Consumer			Real Estate		Real Estate			Real Estate		Institutions		Unallocated			Total
Allowance for Loan Losses Year Ended December 31, 2022
Beginning balance	$	448		$	1,454		$	290		$	3,705	$	110		$	671	$	-	$	1,010		$	7,688
Charge-offs		-			(177	)		(496	)		-		-			-		-		-			(673	)
Recoveries		-			143			206			3		-			2		-		-			354
Provision		(304	)		(59	)		310			1,114		(47	)		233		-		(997	)		250
Ending balance	$	144		$	1,361		$	310		$	4,822	$	63		$	906	$	-	$	13		$	7,619
Individually evaluated for impairment	$	2		$	14		$	1		$	5	$	-		$	131	$	-	$	-		$	153
Collectively evaluated for impairment	$	142		$	1,347		$	309		$	4,817	$	63		$	775	$	-	$	13		$	7,466
Loans
December 31, 2022
Individually evaluated for impairment	$	23		$	177		$	7		$	165	$	-		$	2,474	$	-				$	2,846
Collectively evaluated for impairment		64,136			206,074			39,793			622,131		14,736			225,792		-					1,172,662
Acquired with deteriorated credit quality		-			3,959			8			8,657		-			1,650		-					14,274
Ending balance	$	64,159		$	210,210		$	39,808		$	630,953	$	14,736		$	229,916	$	-				$	1,189,782

The process to monitor the credit quality of ChoiceOne’s loan portfolio includes tracking (1) the risk ratings of business loans and (2) delinquent and nonperforming consumer loans. Business loans are risk rated on a scale of 1 to 9. A description of the characteristics of the ratings follows:

Risk Rating 1 through 5 or pass: These loans are considered pass credits. They exhibit acceptable credit risk and demonstrate the ability to repay the loan from normal business operations.

Risk rating 6 or special mention: Loans and other credit extensions bearing this grade are considered to be inadequately protected by the current sound worth and debt service capacity of the borrower or of any pledged collateral. These obligations, even if apparently protected by collateral value, have well-defined weaknesses related to adverse financial, managerial, economic, market, or political conditions that have clearly jeopardized repayment of principal and interest as originally intended. Furthermore, there is the possibility that ChoiceOne Bank will sustain some future loss if such weaknesses are not corrected. Clear loss potential, however, does not have to exist in any individual assets classified as substandard. Loans falling into this category should have clear action plans and timelines with benchmarks to determine which direction the relationship will move.

Risk rating 7 or substandard: Loans and other credit extensions graded “7” have all the weaknesses inherent in those graded “6”, with the added characteristic that the severity of the weaknesses makes collection or liquidation in full highly questionable or improbable based upon currently existing facts, conditions, and values. Loans in this classification should be evaluated for non-accrual status. All nonaccrual commercial and Retail loans must be at a minimum graded a risk code “7”.

Risk rating 8 or doubtful: Loans and other credit extensions bearing this grade have been determined to have the extreme probability of some loss, but because of certain important and reasonably specific factors, the amount of loss cannot be determined. Such pending factors could include merger or liquidation, additional capital injection, refinancing plans, or perfection of liens on additional collateral.

Risk rating 9 or loss: Loans in this classification are considered uncollectible and cannot be justified as a viable asset of ChoiceOne Bank. This classification does not mean the loan has absolutely no recovery value, but that it is neither practical nor desirable to defer writing off this loan even though partial recovery may be obtained in the future.

The following table reflects the amortized cost basis of loans as of December 31, 2023 based on year of origination (dollars in thousands):

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Commercial:	2023		2022		2021		2020		2019		Prior		Term Loans Total		Revolving Loans		Grand Total
Agricultural
Pass	$	5,015	$	4,088	$	3,078	$	1,788	$	7,028	$	18,476	$	39,473	$	9,507	$	48,980
Special mention		-		-		-		-		176		54		230		-		230
Substandard		-		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-		-
Total	$	5,015	$	4,088	$	3,078	$	1,788	$	7,204	$	18,530	$	39,703	$	9,507	$	49,210
Current year-to-date gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Commercial and Industrial
Pass	$	23,600	$	45,489	$	23,462	$	10,502	$	9,214	$	11,882	$	124,149	$	105,559	$	229,708
Special mention		-		-		28		35		73		64		200		3		203
Substandard		-		-		-		-		-		4		4		-		4
Doubtful		-		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-		-
Total	$	23,600	$	45,489	$	23,490	$	10,537	$	9,287	$	11,950	$	124,353	$	105,562	$	229,915
Current year-to-date gross write-offs	$	-	$	55	$	30	$	71	$	-	$	2	$	158	$	-	$	158
Commercial Real Estate
Pass	$	149,181	$	134,289	$	107,033	$	71,754	$	43,846	$	136,361	$	642,464	$	143,120	$	785,584
Special mention		-		-		-		-		-		1,337		1,337		-		1,337
Substandard		-		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-		-
Total	$	149,181	$	134,289	$	107,033	$	71,754	$	43,846	$	137,698	$	643,801	$	143,120	$	786,921
Current year-to-date gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Total Business Loans	$	177,796	$	183,866	$	133,601	$	84,079	$	60,337	$	168,178	$	807,857	$	258,189	$	1,066,046

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Retail:	2023		2022		2021		2020		2019		Prior		Term Loans Total		Revolving Loans		Grand Total
Consumer
Performing	$	9,775	$	13,876	$	6,771	$	2,849	$	1,260	$	1,202	$	35,733	$	808	$	36,541
Nonperforming		-		-		-		-		-		-		-		-		-
Nonaccrual		-		-		-		-		-		-		-		-		-
Total	$	9,775	$	13,876	$	6,771	$	2,849	$	1,260	$	1,202	$	35,733	$	808	$	36,541
Current year-to-date gross write-offs	$	8	$	24	$	11	$	28	$	-	$	1	$	72	$	-	$	72
Construction real estate
Performing	$	2,507	$	2,719	$	552	$	-	$	-	$	-	$	5,778	$	15,158	$	20,936
Nonperforming		-		-		-		-		-		-		-		-		-
Nonaccrual		-		-		-		-		-		-		-		-		-
Total	$	2,507	$	2,719	$	552	$	-	$	-	$	-	$	5,778	$	15,158	$	20,936
Current year-to-date gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Residential real estate
Performing	$	54,231	$	64,768	$	28,301	$	16,391	$	12,556	$	40,270	$	216,517	$	49,491	$	266,008
Nonperforming		-		-		-		-		-		-		-		-		-
Nonaccrual		-		380		826		-		-		486		1,692		30		1,722
Total	$	54,231	$	65,148	$	29,127	$	16,391	$	12,556	$	40,756	$	218,209	$	49,521	$	267,730
Current year-to-date gross write-offs	$	-	$	26	$	-	$	-	$	-	$	1	$	27	$	-	$	27
Loans to Other Financial Institutions
Performing	$	19,400	$	-	$	-	$	-	$	-	$	-	$	19,400	$	-	$	19,400
Nonperforming		-		-		-		-		-		-		-		-		-
Nonaccrual		-		-		-		-		-		-		-		-		-
Total	$	19,400	$	-	$	-	$	-	$	-	$	-	$	19,400	$	-	$	19,400
Current year-to-date gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Total Consumer Loans	$	85,913	$	81,743	$	36,450	$	19,240	$	13,816	$	41,958	$	279,120	$	65,487	$	344,607

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Corporate Credit Exposure - Credit risk profile by credit worthiness category

(Dollars in thousands)	Agricultural		Commercial and Industrial		Commercial Real Estate
	December 31,		December 31,		December 31,
	2022		2022		2022
Pass	$	63,867	$	209,700	$	624,555
Special Mention		289		400		2,048
Substandard		3		110		4,350
Doubtful		-		-		-
Loss		-		-		-
	$	64,159	$	210,210	$	630,953

Consumer Credit Exposure - Credit risk profile based on payment activity

(Dollars in thousands)	Consumer		Construction Real Estate		Residential Real Estate
	December 31,		December 31,		December 31,
	2022		2022		2022
Performing	$	39,808	$	14,736	$	228,653
Nonperforming		-		-		-
Nonaccrual		-		-		1,263
	$	39,808	$	14,736	$	229,916

Included within the loan categories above were loans in the process of foreclosure. As of December 31, 2023 and 2022, loans in the process of foreclosure totaled $846,000 and $1.1 million, respectively.

The following table presents the amortized cost basis as of December 31, 2023 of the loans modified to borrowers experiencing financial difficulty disaggregated by class of financing receivable and type of concession granted during the reporting period.

For the period ended:	December 31, 2023
	Term Extension
			% of Total
			Class of
(Dollars in thousands)	Amortized		Financing
	Cost Basis		Receivable
Commercial and industrial	$	60		0	%
Residential real estate		129		0	%
Total	$	189

The following table presents the financial effect by type of modification made to borrowers experiencing financial difficulty and class of financing receivable.

For the period ended:	December 31, 2023
	Term Extension
Commercial and industrial	Termed out line of credit and termed out draw note.
Residential real estate	Provided with new twelve month payment plan to catch up on past due balance.

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The following table presents the period-end amortized cost basis of financing receivables that had a payment default during the period and were modified in the 12 months before default to borrowers experiencing financial difficulty.

For the period ended:	December 31, 2023
(Dollars in thousands)	Term extension
Commercial and industrial	$	60
Residential real estate		129
Total	$	189

The following table presents the period-end amortized cost basis of loans that have been modified in the past 12 months to borrowers experiencing financial difficulty by payment status and class of financing receivable.

For the period ended:	December 31, 2023
(Dollars in thousands)	Current		30-89 days		Greater than 90 days		Total
Commercial and industrial	$	60	$	-	$	-	$	60
Residential real estate		-		-		129		129
Total	$	60	$	-	$	129	$	189

The following schedule provides information on loans that were considered troubled debt restructurings ("TDRs") that were modified during the years ended December 31, 2022:

	Year Ended December 31, 2022
			Pre-		Post-
			Modification		Modification
			Outstanding		Outstanding
(Dollars in thousands)	Number of		Recorded		Recorded
	Loans		Investment		Investment
Agricultural		-	$	-	$	-
Commercial and Industrial		1		15		15
Commercial Real Estate		-		-		-
Total		1	$	15	$	15

There were no TDRs as of December 31, 2022 where the borrower was past due with respect to principal and interest for 30 days or more during the year ended December 31, 2022.

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Impaired loans by loan category as of December 31 were as follows:

			Unpaid				Average		Interest
(Dollars in thousands)	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized
December 31, 2022
With no related allowance recorded
Agricultural	$	-	$	-	$	-	$	250	$	-
Commercial and industrial		-		-		-		18		-
Consumer		-		-		-		-		-
Construction real estate		-		-		-		-		-
Commercial real estate		-		-		-		19		-
Residential real estate		550		595		-		231		1
Subtotal		550		595		-		518		1
With an allowance recorded
Agricultural		23		27		2		913		2
Commercial and industrial		177		177		14		209		13
Consumer		7		7		1		14		1
Construction real estate		-		-		-		-		-
Commercial real estate		165		165		5		158		13
Residential real estate		1,924		1,954		131		1,897		93
Subtotal		2,296		2,330		153		3,191		122
Total
Agricultural		23		27		2		1,163		2
Commercial and industrial		177		177		14		227		13
Consumer		7		7		1		14		1
Construction real estate		-		-		-		-		-
Commercial real estate		165		165		5		177		13
Residential real estate		2,474		2,549		131		2,128		94
Total	$	2,846	$	2,925	$	153	$	3,709	$	123

An aging analysis of loans by loan category as of December 31 follows:

					Loans
	Loans		Loans		Past Due								Loans
	Past Due		Past Due		Greater								90 Days Past
(Dollars in thousands)	30 to 59		60 to 89		Than 90				Loans Not		Total		Due and
	Days (1)		Days (1)		Days (1)		Total (1)		Past Due		Loans		Accruing
December 31, 2023
Agricultural	$	-	$	-	$	-	$	-	$	49,210	$	49,210	$	-
Commercial and industrial		-		-		1		1		229,914		229,915		-
Consumer		31		2		-		33		36,508		36,541		-
Commercial real estate		173		-		-		173		786,748		786,921		-
Construction real estate		-		-		-		-		20,936		20,936		-
Residential real estate		755		549		870		2,174		265,556		267,730		-
Loans to other financial institutions		-		-		-		-		19,400		19,400		-
	$	959	$	551	$	871	$	2,381	$	1,408,272	$	1,410,653	$	-
December 31, 2022
Agricultural	$	-	$	-	$	-	$	-	$	64,159	$	64,159	$	-
Commercial and industrial		-		171		-		171		210,039		210,210		-
Consumer		39		7		-		46		39,762		39,808		-
Commercial real estate		-		-		-		-		630,953		630,953		-
Construction real estate		-		-		-		-		14,736		14,736		-
Residential real estate		682		-		842		1,524		228,392		229,916		-

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Loans to other financial institutions		-		-		-		-		-		-		-
	$	721	$	178	$	842	$	1,741	$	1,188,041	$	1,189,782	$	-

(1)Includes nonaccrual loans

Nonaccrual loans by loan category as of December 31 as follows:

(Dollars in thousands)
	2023		2022
Commercial and industrial	$	1	$	-
Residential real estate		1,722		1,263
Total nonaccrual loans	$	1,723	$	1,263

(Dollars in thousands)	Nonaccrual loans with no ACL		Total nonaccrual loans		Interest income recognized during the period on nonaccrual loans
Commercial and industrial	$	-	$	1	$	-
Residential real estate		707		1,722		16
Total nonaccrual loans	$	707	$	1,723	$	16

Note 4 – Mortgage Banking

Activity in secondary market loans during the year was as follows:

(Dollars in thousands)
	2023		2022		2021
Loans originated for resale, net of principal payments	$	56,085	$	71,829	$	197,387
Proceeds from loan sales	$	57,342	$	77,681	$	205,398
Net gains on sales of loans held for sale	$	1,954	$	2,343	$	6,776
Loan servicing fees, net of amortization	$	211	$	175	$	(163	)

Net gains on sales of loans held for sale include capitalization of loan servicing rights. Loans serviced for others are not reported as assets in the accompanying consolidated balance sheets. The unpaid principal balances of these loans were $495.7 million and $488.6 million at December 31, 2023 and 2022, respectively. The Bank maintains custodial escrow balances in connection with these serviced loans; however, such escrows were immaterial at December 31, 2023 and 2022.

Activity for loan servicing rights (included in other assets) was as follows:

(Dollars in thousands)
	2023			2022			2021
Balance, beginning of year	$	4,322		$	4,667		$	3,967
Capitalized		820			1,007			1,961
Amortization		(1,308	)		(1,352	)		(1,635	)
Market valuation allowance change		-			-			374
Balance, end of year	$	3,834		$	4,322		$	4,667

The fair value of loan servicing rights was $5.6 million, $5.9 million and $5.5 million as of December 31, 2023, 2022 and 2021, respectively. Valuation allowances of $0 were recorded at December 31, 2023, 2022 and December 31, 2021. The fair value of the Bank’s servicing rights at December 31, 2023 was determined using a discount rate of 9.5%-10.5% and prepayment speeds ranging from 5.7% to 7.5%. The fair value of the Bank’s servicing rights at December 31, 2022 was determined using a discount rate of 8.00% and prepayment speeds ranging from 5.2% to 6.7%. The fair value of the Bank’s servicing rights at December 31, 2021 was determined using a discount rate of 8.00% and prepayment speeds ranging from 5% to 27%.

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Note 5 – Premises and Equipment

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

(Dollars in thousands)
	2023			2022
Land and land improvements	$	8,415		$	8,327
Leasehold improvements		81			81
Buildings		29,635			26,823
Furniture and equipment		12,558			11,208
Total cost		50,689			46,439
Accumulated depreciation		(20,939	)		(18,207	)
Premises and equipment, net	$	29,750		$	28,232

Depreciation expense was $2.5 million, $2.7 million, and $2.6 million in 2023, 2022 and 2021, respectively.

The Bank leases certain branch properties and automated-teller machine locations in its normal course of business. Rent expense totaled $327,000, $211,000, and $153,000 for 2023, 2022 and 2021, respectively. The associated right of use assets are included in the applicable categories of fixed assets in the above table and the net book value of such assets approximates the operating lease liability. Rent commitments under non-cancelable operating leases were as follows, before considering renewal options that generally are present (dollars in thousands):

	2024	$	314
	2025		230
	2026		168
	2027		65
Total undiscounted cash flows			777
Less discount			68
Total operating lease liabilities		$	709

Note 6 - Goodwill and Acquired Intangible Assets

Goodwill

The change in the balance for goodwill was as follows:

(Dollars in thousands)	2023		2022
Balance, beginning of year	$	59,946	$	59,946
Goodwill adjustment from merger with Community Shores Bank Corporation		-		-
Balance, end of year	$	59,946	$	59,946

The Company acquired Valley Ridge Financial Corp. in 2006, County in 2019, and Community Shores in 2020, which resulted in the recognition of goodwill of $13.7 million, $38.9 million and $7.3 million, respectively.

ChoiceOne conducted an annual assessment of goodwill as of June 30, 2023 and no impairment was identified. ChoiceOne used a qualitative assessment to determine goodwill was not impaired.

During the prior year, ChoiceOne engaged a third party valuation firm to assist in performing a quantitative analysis of goodwill as of November 30, 2022 ("the valuation date"). In deriving the fair value of the reporting unit (the Bank), the third-party firm assessed general economic conditions and outlook; industry and market considerations and outlook; the impact of recent events to financial performance; the market price of ChoiceOne’s common stock and other relevant events. In addition, the valuation relied on financial projections through 2027 and growth rates prepared by management. Based on the valuation prepared, it was determined that ChoiceOne's estimated fair value of the reporting unit at the valuation date was greater than its book value and impairment of goodwill was not required.

Management concurred with the conclusion derived from the quantitative goodwill analysis as of the valuation date and determined that there were no material changes and that no triggering events had occurred that indicated impairment from the valuation date through December 31, 2023, and as a result that it is more likely than not that there was no goodwill impairment as of December 31, 2023.

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Acquired Intangible Assets

Information for acquired intangible assets at December 31 is as follows:

	2023				2022
	Gross				Gross
	Carrying		Accumulated		Carrying		Accumulated
(Dollars in thousands)	Amount		Amortization		Amount		Amortization
Core deposit intangible	$	7,120	$	5,266	$	7,120	$	4,311

The core deposit intangible from the County and Community Shores mergers is being amortized on a sum-of-the-years digits basis over ten years and eight years, respectively. Amortization expense was $955,000 in 2023, $1,153,000 in 2022 and $1,307,000 in 2021. The estimated amortization expense for the next five years ending December 31 is as follows (dollars in thousands):

2024	$	757
2025		560
2026		362
2027		164
2028		11
Total	$	1,854

Note 7 – Other Real Estate Owned

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

(Dollars in thousands)	2023			2022			2021
Balance, beginning of year	$	-		$	194		$	266
Transfers from loans		267			-			520
Additions from merger		-			-			-
Proceeds from sales		(157	)		(235	)		(611	)
Write-downs		-			-			-
Gains on sales		12			41			19
Balance, end of year	$	122		$	-		$	194

Included in the balances above were residential real estate mortgage loans of $122,000, $0, and $80,000 as of December 31, 2023, 2022, and 2021, respectively, and $0, $0, and $114,000 of commercial real estate loans as of December 31, 2023, 2022, and 2021, respectively.

Note 8 – Derivatives and Hedging Activities

ChoiceOne is exposed to certain risks relating to its ongoing business operations. ChoiceOne utilizes interest rate derivatives as part of its asset liability management strategy to help manage its interest rate risk position. Derivative instruments represent contracts between parties that result in one party delivering cash to the other party based on a notional amount and an underlying term (such as a rate, security price or price index) as specified in the contract. The amount of cash delivered from one party to the other is determined based on the interaction of the notional amount of the contract with the underlying term. Derivatives are also implicit in certain contracts and commitments.

ChoiceOne recognizes derivative financial instruments in the consolidated financial statements at fair value regardless of the purpose or intent for holding the instrument. ChoiceOne records derivative assets and derivative liabilities on the balance sheet within other assets and other liabilities, respectively. Changes in the fair value of derivative financial instruments are either recognized in income or in shareholders’ equity as a component of accumulated other comprehensive income or loss depending on whether the derivative financial instrument qualifies for hedge accounting and, if so, whether it qualifies as a fair value hedge or cash flow hedge.

Interest rate swaps

ChoiceOne uses interest rate swaps as part of its interest rate risk management strategy to add stability to net interest income and to manage its exposure to interest rate movements. Interest rate swaps designated as hedges involve the receipt of variable-rate amounts from a counterparty in exchange for ChoiceOne making fixed-rate payments or the receipt of fixed-rate amounts from a counterparty in

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exchange for ChoiceOne making variable rate payments, over the life of the agreements without the exchange of the underlying notional amount.

In the second quarter of 2022, ChoiceOne entered into two pay-floating/receive-fixed interest rate swaps (the “Pay Floating Swap Agreements”) for a total notional amount of $200.0 million that were designated as cash flow hedges. These derivatives hedge the variable cash flows of specifically identified available-for-sale securities, cash and loans. The Pay Floating Swap Agreements were determined to be highly effective during the periods presented and therefore no amount of ineffectiveness has been included in net income. The Pay Floating Swap Agreements pay a coupon rate equal to SOFR while receiving a fixed coupon rate of 2.41%. In March 2023, ChoiceOne terminated all Pay Floating Swap Agreements for a cash payment of $4.2 million. The loss will be amortized into interest income over 13 months, which was the remaining period of the swap agreements. The remaining loss to be fully amortized in 2024 was $1.1 million.

In the second quarter of 2022, ChoiceOne entered into one forward starting pay-fixed/receive-floating interest rate swap (the “Pay Fixed Swap Agreement”) for a notional amount of $200.0 million that was designated as a cash flow hedge. This derivative hedges the risk of variability in cash flows attributable to forecasted payments on future deposits or floating rate borrowings indexed to the SOFR Rate. The Pay Fixed Swap Agreement is two years forward starting with an eight-year term set to expire in 2032. The Pay Fixed Swap Agreements will pay a fixed coupon rate of 2.75% while receiving the SOFR Rate.

In the fourth quarter of 2022, ChoiceOne entered into four pay-fixed/receive-floating interest rate swaps for a total notional amount of $201.0 million that were designated as fair value hedges. These derivatives hedge the risk of changes in fair value of certain available for sale securities for changes in the SOFR benchmark interest rate component of the fixed rate bonds. All four of these hedges were effective immediately on December 22, 2022. Of the total notional value, $101.9 million has a ten-year term set to expire in 2032, with the benchmark SOFR interest rate risk component of the fixed rate bonds equal to 3.390%. Of the total notional value, $50.0 million has a nine-year term set to expire in 2031, with the benchmark SOFR interest rate risk component of the fixed rate bonds equal to 3.4015%. The remaining notional value of $49.1 million has a nine-year term set to expire in 2031, with the benchmark SOFR interest rate risk component of the fixed rate bond equal to 3.4030%. ChoiceOne adopted ASC2022-01, as of December 20, 2022, to use the portfolio layer method. The fair value basis adjustment associated with available-for-sale fixed rate bonds initially results in an adjustment to AOCI. For available-for-sale securities subject to fair value hedge accounting, the changes in the fair value of the fixed rate bonds related to the hedged risk (the benchmark interest rate component and the partial term) are then reclassed from AOCI to current earnings offsetting the fair value measurement change of the interest rate swap, which is also recorded in current earnings. Net cash settlements are received/paid semi-annually, with the first starting in March 2023, and will be included in interest income.

Net settlements received on these four pay-fixed/receive-floating swaps were $3.3 million for the year ended December 31, 2023, which were included in interest income.

The table below presents the fair value of derivative financial instruments as well as the classification within the consolidated statements of financial condition:

	December 31, 2023			December 31, 2022
(Dollars in thousands)	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments
Interest rate contracts	Other Assets	$	8,880	Other Assets	$	9,204
Interest rate contracts	Other Liabilities	$	-	Other Liabilities	$	5,823

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The table below presents the effect of fair value and cash flow hedge accounting on the consolidated statements of operations for the periods presented:

	Location and Amount of Gain or (Loss)					Location and Amount of Gain or (Loss)
	Recognized in Income on Fair Value and Cash Flow Hedging Relationships					Recognized in Income on Fair Value and Cash Flow Hedging Relationships
	Year Ended December 31, 2023					Year Ended December 31, 2022
	Interest Income			Interest Expense		Interest Income			Interest Expense
Total amounts of income and expense line items presented in the consolidated statements of income in which the effects of fair value or cash flow hedges are recorded	$	(284	)	$	-	$	(55	)	$	(825	)
Gain or (loss) on fair value hedging relationships:
Interest rate contracts:
Hedged items	$	1,534		$	-	$	(1,930	)	$	-
Derivatives designated as hedging instruments	$	(1,454	)	$	-	$	2,171		$	-
Amount excluded from effectiveness testing recognized in earnings based on amortization approach	$	-		$	-	$	(496	)	$	-
Gain or (loss) on cash flow hedging relationships:
Interest rate contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive income into income	$	(2,837	)	$	-	$	-		$	-
Amount excluded from effectiveness testing recognized in earnings based on amortization approach	$	-		$	-	$	-		$	(503	)

The table below presents the cumulative basis adjustments on hedged items designated as fair value hedges and the related amortized cost of those items as of the periods presented:

			December 31, 2023
			Cumulative amount of Fair
			Value Hedging Adjustment
Line Item in the Statement of			included in the carrying
Financial Position in which the	Amortized cost of the		amount of the Hedged
Hedged Item is included	Hedged Assets/(Liabilities)		Assets/(Liabilities)
Securities available for sale	$	222,933	$	(396	)

Note 9 – Deposits

Deposit balances as of December 31 consisted of the following:

(Dollars in thousands)	2023		2022
Noninterest-bearing demand deposits	$	547,625	$	599,579
Interest-bearing demand deposits		599,681		638,641
Money market deposits		247,602		214,026
Savings deposits		336,851		427,583
Local certificates of deposit		366,851		236,431
Brokered certificates of deposit		23,445		1,743
Total deposits	$	2,122,055	$	2,118,003

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Scheduled maturities of certificates of deposit as of December 31, 2023 were as follows:

(Dollars in thousands)
2024	$	351,516
2025		29,857
2026		3,802
2027		2,275
2028		2,580
Thereafter		266
Total	$	390,296

The Bank had certificates of deposit issued in denominations of $250,000 or greater totaling $199.7 million and $148.9 million at December 31, 2023 and 2022, respectively. The Bank held $23.4 million and $1.7 million in brokered certificates of deposit at December 31, 2023 and 2022, respectively. In addition, the Bank had $36.2 million and $17.3 million of certificates of deposit as of December 31, 2023, and December 31, 2022, respectively, that had been issued through the Certificate of Deposit Account Registry Service (“CDARS”).

Note 10 – Borrowings

Bank Term Funding Program (“BTFP”)

At December 31, loans from the BTFP were as follows:

(Dollars in thousands)	2023		2022
Maturity of May 2024 with fixed interest rate of 4.71%	$	160,000	$	-
Maturity of December 2024 with fixed interest rate of 4.83%		10,000		-
Total advances outstanding at year-end	$	170,000	$	-

Federal Home Loan Bank Advances

At December 31, advances from the FHLB were as follows:

(Dollars in thousands)	2023		2022
Maturity of January 2023 with fixed interest rate of 4.16%	$	-	$	50,000
Maturity of July 2025 with fixed interest rate of 4.88%		20,000		-
Maturity of December 2026 with fixed interest rate of 4.20%		10,000		-
Total advances outstanding at year-end	$	30,000	$	50,000

Advances from the Federal Reserve Bank were secured by securities with a carrying value of approximately $526.4 million and loans with a carrying value of approximately $433.2 million at December 31, 2023. Based on this collateral, the Bank was eligible to borrow an additional $649.0 million at year end 2023.

Advances from the FHLB were secured by residential real estate loans with a carrying value of approximately $191.1 million and securities with a carrying value of approximately $278.5 million at December 31, 2023 and residential real estate loans with a carrying value of approximately $169.7 million at December 31, 2022, respectively. Based on this collateral, the Bank was eligible to borrow an additional $284.3 million at year-end 2023.

In June 2021, ChoiceOne obtained a $20 million line of credit with an annual renewal. The line carries a floating rate of prime rate with a floor of 3.25% and current rate of 8.5% at December 31, 2023. The credit agreement includes certain financial covenants, including minimum capital ratios, asset quality ratios, and the requirements of achieving certain profitability thresholds.

ChoiceOne was in compliance with all covenants as of December 31, 2023. The line of credit balance was $0 at December 31, 2023.

Note 11 – Subordinated Debentures

The Capital Trust sold 4,500 Cumulative Preferred Securities (“trust preferred securities”) at $1,000 per security in a December 2004 offering. The proceeds from the sale of the trust preferred securities were used by the Capital Trust to purchase an equivalent amount of

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subordinated debentures from Community Shores. The trust preferred securities and subordinated debentures carry a floating rate of 2.05% over the 3-month LIBOR and the rate was 7.6% at December 31, 2023 and 5.7% at December 31, 2022. The stated maturity is December 30, 2034. Total trust preferred securities at December 31, 2023 were $3.4 million consisting of $4.5 million in trust preferred securities less $1.1 million in merger fair value adjustments, which is being amortized over the next 10 years. The trust preferred securities are redeemable at par value on any interest payment date and are, in effect, guaranteed by ChoiceOne. Interest on the subordinated debentures is payable quarterly on March 30, June 30, September 30 and December 30. ChoiceOne is not considered the primary beneficiary of the Capital Trust (under the variable interest entity rules), therefore the Capital Trust is not consolidated in the consolidated financial statements, rather the subordinated debentures are shown as a liability, and the interest expense is recorded in the consolidated statement of income.

The terms of the subordinated debentures, the trust preferred securities and the agreements under which they were issued give ChoiceOne the right, from time to time, to defer payment of interest for up to 20 consecutive quarters, unless certain specified events of default have occurred and are continuing. The deferral of interest payments on the subordinated debentures results in the deferral of distributions on the trust preferred securities.

In September 2021, ChoiceOne completed a private placement of $32.5 million in aggregate principal amount of 3.25% fixed-to-floating rate subordinated notes due 2031. The notes will initially bear interest at a fixed interest rate of 3.25% per annum until September 3, 2026, after which time the interest rate will reset quarterly to a floating rate equal to a benchmark rate, which is expected to be the then current three-month term Secured Overnight Financing Rate (“SOFR”) plus 255 basis points until the notes’ maturity on September 3, 2031. The notes are redeemable by ChoiceOne, in whole or in part, on or after September 3, 2026, and at any time upon the occurrence of certain events. The notes have been structured to qualify as Tier 2 capital for ChoiceOne for regulatory capital purposes. ChoiceOne used a portion of net proceeds from the private placement to redeem senior debt, fund common stock repurchases, and support bank-level capital ratios.

Note 12 – Income Taxes

Information as of December 31 and for the year follows:

(Dollars in thousands)
	2023			2022			2021
Provision for Income Taxes
Current federal income tax expense	$	4,330		$	4,033		$	3,532
Deferred federal income tax expense/(benefit)		(24	)		(15	)		924
Income tax expense	$	4,306		$	4,018		$	4,456
Reconciliation of Income Tax Provision to Statutory Rate
Income tax computed at statutory federal rate of 21%	$	5,369		$	5,808		$	5,565
Tax exempt interest income		(1,206	)		(1,323	)		(1,190	)
Tax exempt earnings on bank-owned life insurance		(230	)		(276	)		(170	)
Tax credits		(282	)		(289	)		(284	)
Disallowed interest expense		752			179			74
Other items		(97	)		(81	)		461
Income tax expense	$	4,306		$	4,018		$	4,456
Effective income tax rate		17	%		15	%		17	%

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(Dollars in thousands)
Components of Deferred Tax Assets and Liabilities	2023		2022
Deferred tax assets:
Purchase accounting adjustments from mergers with County and Community Shores	$	529	$	945
Allowance for credit losses		3,294		1,600
Unrealized losses on securities available for sale		15,279		19,745
Net operating loss carryforward		466		505
Unfunded commitment reserve		454		-
Compensation		347		299
Other		761		716
Total deferred tax assets		21,130		23,810
Deferred tax liabilities:
Purchase accounting adjustments from mergers with County and Community Shores		622		844
Loan servicing rights		805		908
Depreciation		534		605
Interest rate derivative contracts		1,568		660
Deferred loan fees and costs, net		75		15
Other		363		404
Total deferred tax liabilities		3,967		3,436
Net deferred tax asset (liability)	$	17,163	$	20,374

As of December 31, 2023, deferred tax assets included federal net operating loss carryforwards of approximately $2.2 million which was acquired through the merger with Community Shores. The loss carryforwards expire at various dates from 2031 to 2035. Deferred tax assets are recognized for net operating losses because the benefit is more likely than not to be realized. Under Code Section 382, ChoiceOne is limited to applying approximately $185,000 of net operating losses per year.

Note 13 – Related Party Transactions

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

(Dollars in thousands)	2023			2022
Balance, beginning of year	$	24,036		$	24,000
New loans		16,881			9,684
Repayments		(10,601	)		(9,259	)
Effect of changes in related parties		-			(389	)
Balance, end of year	$	30,316		$	24,036

Deposits from executive officers, directors and their affiliates were $21.1 million, $30.0 million and $16.8 million at December 31, 2023, 2022 and 2021, respectively.

Note 14 – Employee Benefit Plans

401(k) Plan:

The 401(k) plan allows employees to contribute to their individual accounts under the plan amounts up to the IRS maximum. Matching company contributions to the plan are discretionary. Expense for matching company contributions under the plan was $594,000 and $650,000 in 2023 and 2022, respectively.

Note 15 - Stock Based Compensation

Options to buy stock have been granted to key employees to provide them with additional equity interests in ChoiceOne under the Stock Incentive Plan of 2012, which is expired. Compensation expense in connection with stock options granted was $0 in 2023 and $4,000 in 2022. The Equity Incentive Plan of 2022 was approved by the Company’s shareholders at the Annual Meeting held on May 25, 2022. The Equity Incentive Plan of 2022 provides for the issuance of up to 200,000 shares of common stock. At December 31, 2023, there were 142,755 shares available for future grants.

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A summary of stock options activity during the year ended December 31, 2023 was as follows:

				Weighted		Weighted
				average		average
				exercise		Grant Date
	Shares			price		Fair Value
Options outstanding at January 1, 2023		20,631		$	25.30	$	3.46
Options granted		-			-		-
Options exercised		(7,500	)		27.25		3.64
Options forfeited or expired		-			-		-
Options outstanding, end of year		13,131		$	24.19	$	3.36
Options exercisable at December 31, 2023		13,131		$	24.19	$	3.36

The exercise prices for options outstanding and exercisable at the end of 2023 ranged from $20.86 to $27.25 per share. The weighted average remaining contractual life of options outstanding and exercisable at the end of 2023 was approximately 4.07 years.

The intrinsic value of all outstanding and exercisable stock options was $67,000 and $76,000 respectively, at December 31, 2023 and December 31, 2022. The aggregate intrinsic values of outstanding and exercisable options at December 31, 2023 were calculated based on the closing market price of the Company’s common stock on December 31, 2023 of $29.30 per share less the exercise price.

Information pertaining to options outstanding at December 31, 2023 was 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)
$27.25		4,500		4,500		5.41
$25.65		3,000		3,000		4.48
$20.86		3,306		3,306		3.34
$21.13		2,325		2,325		1.99

The fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation model. ChoiceOne uses historical data to estimate the volatility of the market price of ChoiceOne stock 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. As of December 31, 2023, there was no unrecognized compensation expense related to stock options.

ChoiceOne has granted restricted stock units to a select group of employees under the Stock Incentive Plan of 2012 and the Equity Incentive Plan of 2022. Restricted stock units outstanding as of December 31, 2023 vest on roughly the three year anniversary of the grant date. Certain additional vesting provisions apply. Each restricted stock unit, once vested, is settled by delivery of one share of ChoiceOne common stock. ChoiceOne recognized compensation expense of $548,000 and $503,000, in 2023 and 2022, respectively, in connection with restricted stock units for current participants during these years.

A summary of the activity for restricted stock units outstanding during the year ended December 31, 2023 is presented below:

				Weighted
				Average Grant
				Date Fair Value
Outstanding Stock Awards	Shares			Per Share
Outstanding at January 1, 2023		53,867		$	27.48
Granted		23,679			24.23
Vested		(9,051	)		29.00
Forfeited		(312	)		24.23
Outstanding at December 31, 2023		68,183		$	26.16

At December 31, 2023, there were 68,183 restricted stock units outstanding with an approximate stock value of $2.0 million based on ChoiceOne’s December 31, 2023 stock price of $29.30 per share. At December 31, 2022, there were 53,867 restricted stock units outstanding with an approximate stock value of $1.6 million based on ChoiceOne’s December 31, 2022 stock price of $29.00 per share. The grant date fair value of restricted stock units granted was $574,000 and $755,000 in 2023 and 2022, respectively. The cost

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is expected to be recognized over a weighted average period of 1.43 years. As of December 31, 2023, there was $770,000 of unrecognized compensation cost related to unvested shares granted.

ChoiceOne has granted performance stock units to a select group of employees under the Stock Incentive Plan of 2012 and the Equity Incentive Plan of 2022. Performance stock units outstanding as of December 31, 2023 vest on the three year anniversary of the grant date based on earnings per share growth rate from the date of the grant. Shares can vest at a rate of 125%, 100%, 75%, or 0% based on the growth rate achieved over the three year time frame. Certain additional vesting provisions apply. Each performance stock unit, once vested, is settled by delivery of one share of ChoiceOne common stock. ChoiceOne recognized compensation expense of $81,000 and $47,000 in 2023 and 2022, respectively, in connection with performance stock units for current participants during these years.

A summary of the activity for performance stock units outstanding during the year ended December 31, 2023 is presented below:

			Weighted
			Average Grant
			Date Fair Value
Outstanding Stock Awards	Shares		Per Share
Outstanding at January 1, 2023		6,396	$	26.34
Granted		5,125		24.23
Vested		-		-
Forfeited		-		-
Outstanding at December 31, 2023		11,521	$	25.40

At December 31, 2023, there were 11,521 performance stock units outstanding assuming 100% vesting with an approximate stock value of $338,000 based on ChoiceOne’s December 31, 2023 stock price of $29.30 per share. The grant date fair value of restricted stock units granted was $124,000 and $168,000 in 2023 and 2022, respectively. The cost is expected to be recognized over a weighted average period of 1.8 years. As of December 31, 2023, there was $165,000 of unrecognized compensation cost related to unvested shares granted.

Note 16 - Earnings Per Share

(Dollars in thousands, except share data)
	2023		2022		2021
Basic
Net income	$	21,261	$	23,640	$	22,042
Weighted average common shares outstanding		7,532,998		7,504,173		7,685,459
Basic earnings per common shares	$	2.82	$	3.15	$	2.87
Diluted
Net income	$	21,261	$	23,640	$	22,042
Weighted average common shares outstanding		7,532,998		7,504,173		7,685,459
Plus dilutive stock options and restricted stock units		39,292		23,198		17,255
Weighted average common shares outstanding and potentially dilutive shares		7,572,290		7,527,371		7,702,714
Diluted earnings per common share	$	2.82	$	3.15	$	2.86

Stock options considered anti-dilutive to earnings per share were 4,500, 15,000, and 15,000 as of December 31, 2023, December 31, 2022, and December 31, 2021, respectively. This calculation is based on the average stock price during the year.

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Note 17 – Condensed Financial Statements of Parent Company

Condensed Balance Sheets

(Dollars in thousands)	December 31,
	2023		2022		2021
Assets
Cash	$	12,031	$	8,310	$	17,622
Equity securities at fair value		2,077		3,199		2,555
Other assets		474		586		553
Investment in subsidiaries		216,975		192,540		236,462
Total assets	$	231,557	$	204,635	$	257,192
Liabilities
Subordinated debentures	$	32,115	$	31,971	$	31,827
Trust preferred securities		3,392		3,291		3,190
Other liabilities		416		499		506
Total liabilities		35,923		35,761		35,523
Shareholders' equity		195,634		168,874		221,669
Total liabilities and shareholders’ equity	$	231,557	$	204,635	$	257,192

Condensed Statements of Income

(Dollars in thousands)	Years Ended December 31,
	2023			2022			2021
Interest income
Interest and dividends from ChoiceOne Bank	$	10,813		$	-		$	6,125
Interest and dividends from other securities		32			27			10
Total interest income		10,845			27			6,135
Interest expense
Borrowings		1,635			1,491			645
Net interest income		9,210			(1,464	)		5,490
Noninterest income
Gains (losses) on sales of securities		(71	)		-			-
Change in market value of equity securities		(307	)		(385	)		554
Other		-			2			4
Total noninterest income		(378	)		(383	)		558
Noninterest expense
Professional fees		47			40			15
Other		217			174			203
Total noninterest expense		264			214			218
Income before income tax and equity in undistributed net income of subsidiary		8,568			(2,061	)		5,830
Income tax (expense)/benefit		472			433			64
Income before equity in undistributed net income of subsidiary		9,040			(1,628	)		5,894
Equity in undistributed net income of subsidiary		12,221			25,268			16,148
Net income	$	21,261		$	23,640		$	22,042

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Condensed Statements of Cash Flows

(Dollars in thousands)	Years Ended December 31,
	2023			2022			2021
Cash flows from operating activities:
Net income	$	21,261		$	23,640		$	22,042
Adjustments to reconcile net income to net cash from operating activities:
Equity in undistributed net income of subsidiary		(12,221	)		(25,268	)		(16,148	)
Amortization		245			245			101
Compensation expense on employee and director stock purchases, stock options, and restricted stock units		964			928			787
Net loss on sale of securities		71			-			-
Change in market value of equity securities		307			385			(554	)
Changes in other assets		113			(33	)		(260	)
Changes in other liabilities		(84	)		(7	)		(2,982	)
Net cash from operating activities		10,656			(110	)		2,986
Cash flows from investing activities:
Sales of securities		887			-			-
Purchases of securities		(143	)		(1,029	)		(117	)
Investment in Subsidiary		-			-			(5,000	)
Net cash from investing activities		744			(1,029	)		(5,117	)
Cash flows from financing activities:
Issuance of common stock		231			172			139
Repurchase of common stock		-			(767	)		(7,786	)
Proceeds from borrowings		-			-			36,827
Payments on borrowings		-			-			(14,166	)
Cash dividends paid		(7,910	)		(7,578	)		(7,200	)
Net cash from financing activities		(7,679	)		(8,173	)		7,814
Net change in cash		3,721			(9,312	)		5,683
Beginning cash		8,310			17,622			11,939
Ending cash	$	12,031		$	8,310		$	17,622

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Note 18 – Financial Instruments

Financial instruments as of the dates indicated were as follows:

					Quoted Prices
					In Active		Significant
					Markets for		Other		Significant
					Identical		Observable		Unobservable
(Dollars in thousands)	Carrying		Estimated		Assets		Inputs		Inputs
	Amount		Fair Value		(Level 1)		(Level 2)		(Level 3)
December 31, 2023
Assets
Cash and cash equivalents	$	55,433	$	55,433	$	55,433	$	-	$	-
Equity securities at fair value		7,505		7,505		4,749		-		2,756
Securities available for sale		514,598		514,598		80,194		434,404		-
Securities held to maturity		407,959		348,791		-		335,493		13,298
Federal Home Loan Bank and Federal Reserve Bank stock		9,514		9,514		-		9,514		-
Loans held for sale		4,710		4,851		-		4,851		-
Loans, net		1,394,968		1,362,920		-		-		1,362,920
Accrued interest receivable		10,066		10,066		-		10,066		-
Interest rate lock commitments		64		64		-		64		-
Interest rate derivative contracts		8,880		8,880		-		8,880		-
Liabilities
Noninterest-bearing deposits		547,625		547,625		547,625		-		-
Interest-bearing deposits		1,550,985		1,549,386		-		1,549,386		-
Brokered deposits		23,445		23,435		-		23,435		-
Borrowings		200,000		199,743		-		199,743		-
Subordinated debentures		35,507		31,748		-		31,748		-
Accrued interest payable		6,223		6,223		-		6,223		-
Interest rate derivative contracts		-		-		-		-		-
December 31, 2022
Assets
Cash and cash equivalents	$	43,943	$	43,943	$	43,943	$	-	$	-
Equity securities at fair value		8,566		8,566		6,024		-		2,542
Securities available for sale		529,749		529,749		78,204		451,545		-
Securities held to maturity		425,906		353,901		-		338,583		15,318
Federal Home Loan Bank and Federal Reserve Bank stock		8,581		8,581		-		8,581		-
Loans held for sale		4,834		4,979		-		4,979		-
Loans, net		1,182,163		1,123,198		-		-		1,123,198
Accrued interest receivable		8,949		8,949		-		8,949		-
Interest rate lock commitments		28		28		-		28		-
Interest rate derivative contracts		9,204		9,204		-		9,204		-
Liabilities
Noninterest-bearing deposits		599,579		599,579		599,579		-		-
Interest-bearing deposits		1,518,424		1,514,294		-		1,514,294		-
Borrowings		50,000		50,000		-		50,000		-
Subordinated debentures		35,262		30,304		-		30,304		-
Accrued interest payable		610		610		-		610		-
Interest rate derivative contracts		5,823		5,823		-		5,823		-

The estimated fair values approximate the carrying amounts for all financial instruments except those described later in this paragraph. The methodology for determining the estimated fair value for securities available for sale is described in Note 18. The estimated fair

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value of loans involves discounting forecasted cash flows. The discounting is executed using the Treasury curve, incorporating a spread adjustment to account for factors such as liquidity, marketability, and related risks. The allowance for credit losses is considered to be a reasonable estimate of discount for credit quality concerns. The estimated fair value of loans also included the mark to market adjustments related to the Company’s mergers.

The valuation of liabilities, encompassing deposits, borrowings, and others, is derived by aligning forecasted cash flows with relevant points on the SOFR Swap curve. 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 19 – Fair Value Measurements

The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring basis at December 31, 2023 and December 31, 2022, and the valuation techniques used by the Company to determine those fair values.

In general, fair values determined by Level 1 inputs use quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

Fair values determined by Level 2 inputs use other inputs that are observable, either directly or indirectly. These Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals.

Level 3 inputs are unobservable inputs, including inputs that are available in situations where there is little, if any, market activity for the related asset or liability.

In instances where inputs used to measure fair value fall into different levels in the above fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The Company’s assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability.

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Disclosures concerning assets and liabilities measured at fair value as of December 31, 2023 or December 31, 2022 are as follows:

Assets and Liabilities Measured at Fair Value on a Recurring Basis

	Quoted Prices
	In Active		Significant
	Markets for		Other		Significant
	Identical		Observable		Unobservable
(Dollars in thousands)	Assets		Inputs		Inputs		Balance at
	(Level 1)		(Level 2)		(Level 3)		Date Indicated
Equity Securities Held at Fair Value - December 31, 2023
Equity securities	$	4,749	$	-	$	2,756	$	7,505
Investment Securities, Available for Sale -December 31, 2023
U. S. Government and federal agency	$	-	$	-	$	-	$	-
U. S. Treasury notes and bonds		80,194		-		-		80,194
State and municipal		-		234,682		-		234,682
Mortgage-backed		-		188,501		-		188,501
Corporate		-		204		-		204
Asset-backed Securities		-		11,017		-		11,017
Total	$	80,194	$	434,404	$	-	$	514,598
Derivative Instruments -December 31, 2023
Interest rate derivative contracts - assets	$	-	$	8,880	$	-	$	8,880
Interest rate derivative contracts - liabilities	$	-	$	-	$	-	$	-
Equity Securities Held at Fair Value -December 31, 2022
Equity securities	$	6,024	$	-	$	2,542	$	8,566
Investment Securities, Available for Sale -December 31, 2022
U. S. Government and federal agency	$	-	$	-	$	-	$	-
U. S. Treasury notes and bonds		78,204		-		-		78,204
State and municipal		-		229,938		-		229,938
Mortgage-backed		-		208,563		-		208,563
Corporate		-		711		-		711
Asset-backed Securities		-		12,333		-		12,333
Total	$	78,204	$	451,545	$	-	$	529,749
Derivative Instruments -December 31, 2022
Interest rate derivative contracts - assets	$	-	$	9,204	$	-	$	9,204
Interest rate derivative contracts - liabilities	$	-	$	5,823	$	-	$	5,823

Securities classified as available for sale are generally reported at fair value utilizing Level 2 inputs. ChoiceOne’s external investment advisor obtained fair value measurements from an independent pricing service that uses matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities' relationship to other benchmark quoted securities (Level 2 inputs). The fair value measurements considered observable data that may include dealer quotes, market spreads, cash flows and the bonds' terms and conditions, among other things. Securities classified in Level 2 included U.S. Government and federal agency securities, state and municipal securities, mortgage-backed securities, corporate bonds, and asset backed securities. The Company classified certain state and municipal securities and corporate bonds, and equity securities as Level 3. Based on the lack of observable market data, estimated fair values were based on the observable data available and reasonable unobservable market data.

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Changes in Level 3 Assets Measured at Fair Value on a Recurring Basis

(Dollars in thousands)
	2023		2022
Equity Securities Held at Fair Value
Balance, January 1	$	2,542	$	1,768
Total realized and unrealized gains included in noninterest income		71		161
Net purchases, sales, calls, and maturities		143		613
Balance, December 31	$	2,756	$	2,542
Amount of total losses for the period included in earning attributable to the change in    unrealized gains (losses) relating to assets and liabilities still held at December 31,	$	5	$	9
Investment Securities, Available for Sale
Balance, January 1	$	-	$	21,050
Total realized and unrealized gains included in income		-		-
Total unrealized gains/(losses) included in other comprehensive income		-		-
Net purchases, sales, calls, and maturities		-		-
Net transfers into Level 3		-		-
Transfer to held to maturity		-		(21,050	)
Balance, December 31	$	-	$	-
Amount of total losses for the period included in earning attributable to the change in    unrealized gains (losses) relating to assets and liabilities still held at December 31,	$	-	$	-

Of the Level 3 assets that were held by the Company at December 31, 2023, the net unrealized gain as of December 31, 2023 was $71,000, compared to $161,000 as of December 31, 2022. The change in the net unrealized gain or loss is recognized in noninterest income or other comprehensive income in the consolidated balance sheets and income statements. Amounts recognized in noninterest income relate to changes in equity securities. A total of $143,000 and $613,000 of Level 3 securities were purchased in 2023 and 2022, respectively.

Both observable and unobservable inputs may be used to determine the fair value of positions classified as Level 3 assets and liabilities. As a result, the unrealized gains and losses for these assets and liabilities presented in the tables above may include changes in fair value that were attributable to both observable and unobservable inputs.

The Company also has assets that under certain conditions are subject to measurement at fair value on a non-recurring basis. These assets are not normally measured at fair value, but can be subject to fair value adjustments in certain circumstances, such as impairment. Disclosures concerning assets measured at fair value on a non-recurring basis are as follows:

Assets Measured at Fair Value on a Non-recurring Basis

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			Quoted Prices
			In Active		Significant
			Markets for		Other		Significant
	Balances at		Identical		Observable		Unobservable
(Dollars in thousands)	Dates		Assets		Inputs		Inputs
	Indicated		(Level 1)		(Level 2)		(Level 3)
Collateral Dependent Loans
December 31, 2023	$	387	$	-	$	-	$	387
Impaired Loans
December 31, 2022	$	2,846	$	-	$	-	$	2,846
Other Real Estate
December 31, 2023	$	122	$	-	$	-	$	122
December 31, 2022	$	-	$	-	$	-	$	-

Collateral dependent loans classified as Level 3 are loans for which the repayment is expected to be provided substantially through the sale or operation of the collateral when the borrower is experiencing financial difficulty. The fair value of the collateral should be adjusted for estimated costs to sell if the repayment depends on the sale of the collateral. The net carrying amount of the loan should not exceed the fair value of the collateral (less costs to sell, if applicable). Impaired loans categorized as Level 3 assets consist of non-homogeneous loans classified as non-accrual, TDR, or past due. The Company estimates the fair value of the loans based on the present value of expected future cash flows using management’s best estimate of key assumptions. These assumptions include future payment ability, timing of payment streams, and estimated realizable values of available collateral (typically based on outside appraisals). The changes in fair value consisted of charge-downs of impaired loans that were posted to the allowance for credit losses and write-downs of other real estate owned that were posted to a valuation account. The fair value of other real estate owned was based on appraisals or other reviews of property values, adjusted for estimated costs to sell.

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:

	2023				2022
	Fixed		Variable		Fixed		Variable
(Dollars in thousands)	Rate		Rate		Rate		Rate
Unused lines of credit and letters of credit	$	57,781	$	141,522	$	54,523	$	148,497
Commitments to fund loans (at market rates)		90,178		27,939		35,789		12,565

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 9.50% and maturities ranging from 1 year to 30 years.

Note 21 – Regulatory Capital

ChoiceOne and the Bank are 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. Depending upon the capital category to which an institution is assigned, the regulators' corrective powers include: prohibiting the acceptance of brokered deposits; requiring the submission of a capital restoration plan; placing limits on asset growth and restrictions on activities; requiring the institution to issue additional capital stock (including additional voting stock) or be acquired; restricting transactions with affiliates; restricting the interest rate the institution may pay on deposits; ordering a new election of directors of the institution; requiring that senior executive officers or directors be dismissed; prohibiting the institution from accepting deposits from correspondent banks; requiring the institution to divest certain subsidiaries; prohibiting the payment of principal or interest on subordinated debt; and ultimately, appointing a receiver for the institution. At year-end 2023 and 2022, the Bank was categorized as well capitalized under the regulatory framework for prompt corrective action.

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

											Minimum Required
											to be Well
						Minimum Required					Capitalized Under
						for Capital					Prompt Corrective
(Dollars in thousands)	Actual					Adequacy Purposes					Action Regulations
	Amount		Ratio			Amount		Ratio			Amount		Ratio
December 31, 2023
ChoiceOne Financial Services Inc.
Total capital (to risk weighted assets)	$	233,840		13.0	%	$	144,441		8.0	%	N/A		N/A
Common equity Tier 1 capital (to risk weighted assets)		185,412		10.3			81,248		4.5		N/A		N/A
Tier 1 capital (to risk weighted assets)		189,912		10.5			108,331		6.0		N/A		N/A
Tier 1 capital (to average assets)		189,912		7.5			101,337		4.0		N/A		N/A
ChoiceOne Bank
Total capital (to risk weighted assets)	$	224,095		12.4	%	$	144,274		8.0	%	$	180,342		10.0	%
Common equity Tier 1 capital (to risk weighted assets)		212,283		11.8			81,154		4.5			117,223		6.5
Tier 1 capital (to risk weighted assets)		212,283		11.8			108,205		6.0			144,274		8.0
Tier 1 capital (to average assets)		212,283		8.4			101,244		4.0			126,555		5.0
December 31, 2022
ChoiceOne Financial Services Inc.
Total capital (to risk weighted assets)	$	222,006		13.8	%	$	128,545		8.0	%	N/A		N/A
Common equity Tier 1 capital (to risk weighted assets)		177,916		11.1			72,307		4.5		N/A		N/A
Tier 1 capital (to risk weighted assets)		182,416		11.4			96,409		6.0		N/A		N/A
Tier 1 capital (to average assets)		182,416		7.9			92,558		4.0		N/A		N/A
ChoiceOne Bank
Total capital (to risk weighted assets)	$	208,696		13.0	%	$	128,294		8.0	%	$	160,367		10.0	%
Common equity Tier 1 capital (to risk weighted assets)		201,077		12.5			72,165		4.5			104,239		6.5
Tier 1 capital (to risk weighted assets)		201,077		12.5			96,220		6.0			128,294		8.0
Tier 1 capital (to average assets)		201,077		8.7			92,449		4.0			115,562		5.0

Banking laws and 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, 2023, approximately $53.3 million was available for the Bank to pay dividends to ChoiceOne assuming regulatory approval of any amount in excess of the applicable capital conservation buffer. ChoiceOne’s ability to pay dividends to shareholders is dependent on the payment of dividends from the Bank, which is restricted by state law and regulations.

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

None.

Item 9A. Controls and Procedures

An evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and principal financial officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on and as of the time of that evaluation, the Company’s management, including the Chief Executive Officer and principal financial officer, concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods.

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting that is designed to produce reliable financial statements in conformity with United States generally accepted accounting principles. The system of internal control over financial reporting as it relates to the financial statements is evaluated for effectiveness by management and tested for reliability through a program of internal audits. Actions are taken to correct potential deficiencies as they are identified. Any system of internal control, no matter how well designed, has inherent limitations, including the possibility that a control can be circumvented or overridden and misstatements due to error or fraud may occur and not be detected. Also, because of changes in conditions, internal control effectiveness may vary over time. Accordingly, even an effective system of internal control will provide only reasonable assurance with respect to financial statement preparation.

Management assessed the effectiveness of the Company’s system of internal control over financial reporting as of December 31, 2023, as required by Section 404 of the Sarbanes-Oxley Act of 2002. Management’s assessment is based on the criteria for effective internal control over financial reporting as described in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this assessment, management has concluded that, as of December 31, 2023, its system of internal control over financial reporting was effective and meets the criteria of the “Internal Control – Integrated Framework."

There was no change in the Company’s internal control over financial reporting that occurred during the three months ended December 31, 2023 that has materially affected, or that is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 9B. Other Information

None.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

None.

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PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information under the captions “ChoiceOne's Board of Directors and Executive Officers and “Corporate Governance” in the Company's Definitive Proxy Statement for the Annual Meeting of Shareholders to be held May 29, 2024, is incorporated herein by reference.

The Company 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 Company’s website at “www.choiceone.bank.” The Company 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.bank.”

Item 11. Executive Compensation

The information under the captions “Executive Compensation” in the Company's Definitive Proxy Statement for the Annual Meeting of Shareholders to be held May 29, 2024, 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 Company's Definitive Proxy Statement for the Annual Meeting of Shareholders to be held May 29, 2024, is incorporated herein by reference.

The following table presents information regarding the equity compensation plans both approved and not approved by shareholders at December 31, 2023:

					Number of securities
					remaining available for
	Number of securities to		Weighted-average		future issuance under
	be issued upon exercise		exercise price of		equity compensation plans
	of outstanding options,		outstanding options,		(excluding securities
	warrants and rights		warrants and rights		reflected in column (a))
	(a)		(b)		(c)
Equity compensation plans approved by security holders		81,314	$	3.91		324,481
Equity compensation plans not approved by security holders		—		—		152,967
Total		81,314	$	3.91		477,448

Equity compensation plans approved by security holders include the Stock Incentive Plan of 2012, the Equity Incentive Plan of 2022, and the 2022 Employee Stock Purchase Plan. As of December 31, 2023, 142,755 shares remained available for future issuance under the Equity Incentive Plan of 2022 and 181,726 shares remained available for future issuance under the 2022 Employee Stock Purchase Plan, in each case other than upon the exercise of outstanding stock options. The Stock Incentive Plan of 2012 has expired and no further issuance of shares is permitted under the plan other than upon the exercise or vesting of outstanding awards.

The Directors’ Stock Purchase Plan and the Directors’ Equity Compensation Plan are the only equity compensation plans not approved by security holders. The Directors’ Stock Purchase Plan is designed to provide directors of the Company the option of receiving their fees in the Company’s common 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 Company. Contributions to the plan are made by the Company 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 Company. The Directors’ Equity Compensation Plan provides for the grant and award of stock options, restricted stock, restricted stock units, stock awards, and other stock-based and stock-related awards as part of director compensation. Participants will cease to be eligible to participate in both plans when they cease to serve as directors of the Company. Shares are distributed to participants on a quarterly basis. The Directors' Equity Compensation Plan provides for the issuance of a maximum of 100,000 shares of the Company's common stock thereunder and the Directors' Stock Purchase Plan provides for issuance of a maximum of 100,000 shares thereunder, in each case subject to adjustments for certain changes in the capital structure of the Company. As of December 31, 2023, 79,926 shares remained available for issuance

84

under the Directors' Equity Compensation Plan and 73,041 shares remained available for issuance under the Directors' Stock Purchase Plan.

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

The information under the captions “Related Matters - Transactions with Related Persons” and “Corporate Governance” in the Company's Definitive Proxy Statement for the Annual Meeting of Shareholders to be held May 29, 2024, 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 Company's Definitive Proxy Statement for the Annual Meeting of Shareholders to be held May 29, 2024, is incorporated herein by reference.

Independent Registered Public Accounting Firm:

Name: Plante & Moran, PLLC

Location: Southfield, Michigan

PCAOB ID: 166

85

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, 2023 and 2022.
			Consolidated Statements of Income for the years ended December 31, 2023, 2022, and 2021.
			Consolidated Statement of Comprehensive Income for the years ended December 31, 2023, 2022, and 2021.
			Consolidated Statements of Changes in Shareholders' Equity for the years ended December 31, 2023, 2022, and 2021.
			Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022, and 2021.
			Notes to Consolidated Financial Statements.
			Report of Independent Registered Public Accounting Firm dated March 13, 2024.
	(2)	Financial Statement Schedules. None.

Exhibit	Document
3.1	Restated Articles of Incorporation of ChoiceOne Financial Services, Inc. Previously filed as an exhibit to ChoiceOne’s Form 10-K Annual Report for the year ended December 31, 2022. Here incorporated by reference.
3.2	Bylaws of ChoiceOne Financial Services, Inc., as currently in effect and any amendments thereto. Previously filed as an exhibit to ChoiceOne Financial Services, Inc.'s Form 8-K filed April 21, 2021. Here incorporated by reference.
4.1	Advances, Pledge and Security Agreement between ChoiceOne Bank and the Federal Home Loan Bank of Indianapolis. Previously filed as an exhibit to ChoiceOne Financial Services, Inc.’s Form 10-K Annual Report for the year ended December 31, 2013. Here incorporated by reference.
4.2	Form of 3.25% Fixed-to-Floating Rate Subordinated Note due September 3, 2031. Previously filed as an exhibit to ChoiceOne Financial Services, Inc.'s Form 8-K filed September 7, 2021. Here incorporated by reference.
4.3	Form of 3.25% Fixed-to-Floating Rate Global Subordinated Note due September 3, 2031. Previously filed as an exhibit to ChoiceOne Financial Services, Inc.'s Form 8-K filed September 7, 2021. Here incorporated by reference.
4.4	Description of Rights of Shareholders. Previously filed as an exhibit to ChoiceOne’s Form 10-K Annual Report for the year ended December 31, 2022. Here incorporated by reference.
10.1	Employment Agreement between ChoiceOne Financial Services, Inc. and Kelly J. Potes, dated as of September 30, 2019. (1) Previously filed as an exhibit to ChoiceOne’s Form 8-K filed October 1, 2019. Here incorporated by reference.
10.2	Employment Agreement between ChoiceOne Financial Services, Inc. and Michael J. Burke, Jr., dated as of March 22, 2019. (1) Previously filed as exhibit to ChoiceOne’s Pre-Effective Amendment No. 2 to Form S-4 filed August 5, 2019. Here incorporated by reference.
10.3	Stock Incentive Plan of 2012. (1) Previously filed as Appendix A to ChoiceOne’s definitive proxy statement for ChoiceOne’s 2018 Annual Meeting of Shareholders, filed on April 19, 2018. Here incorporated by reference.
10.4	2022 Employee Stock Purchase Plan. (1) Previously filed as an exhibit to ChoiceOne’s Form S-8 filed May 27, 2022. Here incorporated by reference.
10.5	Equity Incentive Plan of 2022. (1) Previously filed as an exhibit to ChoiceOne’s Form S-8 filed May 27, 2022. Here incorporated by reference.

86

10.6	Directors' Stock Purchase Plan, as amended. (1) Previously filed as an exhibit to ChoiceOne Financial Services, Inc.'s Form 10-K Annual Report for the year ended December 31, 2019. Here incorporated by reference.
10.7	Director Equity Compensation Plan of 2019. (1) Previously filed as an exhibit to ChoiceOne Financial Services, Inc.'s Form 10-K Annual Report for the year ended December 31, 2019. Here incorporated by reference.
10.8	Former Valley Ridge Executive Employee Salary Continuation Agreements, as amended. (1) Previously filed as an exhibit to ChoiceOne Financial Services, Inc.’s Form 10-K Annual Report for the year ended December 31, 2013. Here incorporated by reference.
10.9	Former Valley Ridge Directors’ Deferred Compensation Plan and Agreement. (1) Previously filed as an exhibit to the ChoiceOne Financial Services, Inc.’s Form 10-K Annual Report for the year ended December 31, 2013. Here incorporated by reference.
19	Insider Trading Policy
21	Subsidiaries of ChoiceOne Financial Services, Inc.
23	Consent of Independent Registered Public Accounting Firm.
24	Powers of Attorney.
31.1	Certification of Chief Executive Officer.
31.2	Certification of Chief Financial Officer
32	Certification pursuant to 18 U.S.C. § 1350.
97	Incentive-Based Compensation Recoupment Policy
101.INS	Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

(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: Adom J. Greenland, Secretary, Chief Financial Officer and Treasurer, ChoiceOne Financial Services, Inc., 109 East Division, Sparta, Michigan, 49345.

87

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/ Kelly J. Potes	March 13, 2024
	Kelly J. Potes 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/ Kelly J. Potes	Chief Executive Officer and	March 13, 2024
Kelly J. Potes	Director (Principal Executive Officer)
/s/ Adom J. Greenland	Chief Financial Officer and Treasurer (Principal Financial and	March 13, 2024
Adom J. Greenland	Accounting Officer)
*/s/ Jack G. Hendon	Chairman of the Board and Director	March 13, 2024
Jack G. Hendon
*/s/ Greg L. Armock	Director	March 13, 2024
Greg L. Armock
*/s/ Keith Brophy	Director	March 13, 2024
Keith Brophy
*/s/ Michael J. Burke, Jr.	President and Director	March 13, 2024
Michael J. Burke, Jr.
*/s/ Harold J. Burns	Director	March 13, 2024
Harold J. Burns
*/s/ Eric E. Burrough	Director	March 13, 2024
Eric E. Burrough
*/s/ Curt E. Coulter	Director	March 13, 2024
Curt E. Coulter
*/s/ Bruce John Essex, Jr.	Director	March 13, 2024
Bruce John Essex, Jr.
*/s/ Gregory A. McConnell	Director	March 13, 2024
Gregory A. McConnell
*/s/ Bradley F. McGinnis	Director	March 13, 2024
Bradley F. McGinnis
*/s/ Roxanne M. Page	Director	March 13, 2024
Roxanne M. Page
*/s/ Michelle M. Wendling	Director	March 13, 2024
Michelle M. Wendling
*By /s/ Adom J. Greenland
Attorney-in-Fact

88

EX-19

ChoiceOne Insider Trading Policy

Adoption date: June 24, 2020

Last Revision: February 22, 2024

This Insider Trading Policy describes the standards of ChoiceOne Financial Services, Inc. and its subsidiaries (the "Company") on trading, and causing the trading of, the Company's securities while in possession of material nonpublic information. This Policy is divided into two parts: the first part prohibits trading in certain circumstances and applies to all directors, officers and employees of the Company and their respective immediate family members and the second part imposes special additional trading restrictions and applies to (i) all directors of the Company, (ii) all officers of the Company that are subject to the reporting obligations of Section 16 of the Securities Exchange Act of 1934 and (iii) certain other employees that the Company may designate because of their position, responsibilities or their actual or potential access to material information ((i), (ii) and (iii), collectively, "Covered Persons").

One of the principal purposes of the federal securities laws is to prohibit so-called "insider trading." Simply stated, insider trading occurs when a person uses material nonpublic information obtained through involvement with the Company to make decisions to purchase, sell or otherwise trade the Company's securities or to provide that information to others outside the Company. The prohibitions against insider trading apply to trades, tips and recommendations by virtually any person, including all persons associated with the Company, if the information involved is "material" and "nonpublic." These terms are defined in this Policy under Part I – Definitions.

Any person who has questions regarding this Policy or its application to any proposed trade may obtain additional guidance from the Compliance Officer. Ultimately, however, the responsibility for adhering to this Policy and avoiding unlawful transactions rests with the individual.

RULE OF THUMB: IF IN DOUBT, DO NOT TRADE.

PART I

Applicability

This Policy applies to all trading or other transactions in the Company's securities, including common stock, options, preferred stock, notes, bonds and convertible securities, as well as to derivative securities relating to any of the Company's securities, whether or not issued by the Company.

Compliance Officer

The Company has appointed the Chief Financial Officer as the Compliance Officer for this Policy. The Compliance Officer is responsible for the administration of this Policy. All determinations and interpretations by the Compliance Officer are final and not subject to further review.

General Policy: No Trading or Causing Trading While in Possession of Material NonpublicInformation

No director, officer or employee or any of their immediate family members may purchase or sell, or offer to purchase or sell, any Company security, whether or not issued by the Company, while in possession of material nonpublic information about the Company.

No director, officer or employee or any of their immediate family members who knows of any material nonpublic information about the Company may communicate that information ("tip") to any other person,including family members and friends, or otherwise disclose such information without the Company’s authorization.

Definitions

“Material” – Insider trading restrictions come into play only if the information you possess is "material." Materiality, however,involves a relatively low threshold. Information is generally regarded as "material" if it has market significance, that is, if its public dissemination is likely to affect the market price of securities, or if it otherwise is information that a reasonable investor would want to know before making an investment decision.

Some examples of information reasonably likely to be found material in particular situations are:

•significant changes in the Company's prospects

•significant write-downs in assets or increases in reserves

•developments regarding significant litigation or government agency investigations

•liquidity problems

i

•unusual gains or losses in operations

•major changes in the Company's management or the board of directors

•changes in dividends or the declaration of a stock split

•extraordinary borrowings

•major changes in accounting methods or policies

•award or loss of a significant contractor customer

·cybersecurity risks and incidents, including vulnerabilities and breaches

·proposals, plans or agreements, even if preliminary in nature, involving mergers, acquisitions, divestitures, recapitalizations, strategic alliances, licensing arrangements, or purchases or sales of substantial assets

·a Company restructuring

·significant related-party transactions

·a change in auditors

·offerings of Company securities

If you are unsure whether information is material, you should either consult with the Compliance Officer or assume that the information is material.

“Nonpublic” – Insider trading prohibitions come into play only when you possess information that is material and "nonpublic." The fact that information has been disclosed to a few members of the public does not make it public for insider trading purposes. To be "public," the information must have been disseminated in a manner designed to reach investors generally, and the investors must be given the opportunity to absorb the information. Even after public disclosure of information about the Company,you must wait until after the second trading day after the information was publicly disclosed before you can treat the information as public.

Nonpublic information may include:

•information available to a select group of analysts or brokers or institutional investors

•undisclosed facts that are the subject of rumors, even if the rumors are widely circulated

•information that has been entrusted to the Company on a confidential basis

If you are unsure whether information is nonpublic, you should either consult with the Compliance Officer or assume that the information is nonpublic and treat it as confidential.

Exceptions

The trading restrictions of this Policy do not apply to the following:

•ESPP Purchasing Company stock through the Company's Employee Stock Purchase Plan ("ESPP") or Directors’ Stock Purchase Plan ("DSPP"). However,electing to enroll in the ESPP or DSPP, making any changes in your elections under the ESPP or DSPP and selling any Company stock acquired under the ESPP or DSPP are subject to trading restrictions under this Policy.

•Options. Exercising stock options granted under the Company's stock incentive plans for cash or the delivery of previously owned Company stock. However, the sale of any shares issued on the exercise of Company-granted stock options and any cashless exercise of Company-granted stock options are subject to trading restrictions under this Policy.

Violations

The penalties for violation of insider trading laws are severe. An individual who trades on (or tips) material nonpublic information is subject to U.S. civil penalties of up to three times the profit gained or loss avoided, U.S. criminal penalties of up to $5,000,000, and/or up to 20 years in jail, as well as any penalties, civil or criminal, under the applicable insider trading laws of other jurisdictions.

Individuals who fail to comply with this Policy will be subject to appropriate disciplinary action, including potential ineligibility for participation in any Company equity compensation plan or termination of employment, whether or not the failure to comply is also a violation of law.

Violations of this Policy should be reported immediately to the Compliance Officer.

ii

PART II

Blackout Periods

All Covered Persons are prohibited from trading in the Company's securities during blackout periods as defined below.

•Quarterly Blackout Periods Trading in the Company's securities is prohibited during the period beginning at the close of the market on the 16th day before the end of each fiscal quarter and ending after the second trading day after the date the Company's financial results are publicly disclosed.

•Other Blackout Periods From time to time, other types of material nonpublic information regarding the Company may be pending and not be publicly disclosed. While such material nonpublic information is pending, the Company may impose special blackout periods during which Covered Persons are prohibited from trading in the Company's securities. If the Company imposes a special blackout period, it will notify the Covered Persons affected

•Exception These trading restrictions do not apply to transactions under a pre-existing written plan, contract, instruction, or arrangement that complies with Rule 10b5-1 under the Securities Exchange Act of 1934 which:

ohas been reviewed and pre-approved by the Compliance Officer; and

owas entered into by the Covered Person during an open trading period and while otherwise not in possession of material nonpublic information about the Company (an "Approved 10b5-1 Plan"). An Approved 10b5-1 Plan must include a representation in the plan certifying that at the time of adoption: (i) the individual is not aware of material nonpublic information about the Company or its securities; and (ii) that the plan is being adopted in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b-5. It must also provide that for members of the board of directors and officers of the Company required to make filings under Section 16 of the Exchange Act, trading will not begin until the later of (i) 90 days after the establishment of a plan or (ii) two business days following the disclosure of the Company’s financial results in a Form 10-Q or Form 10-K for the fiscal quarter in which the plan was adopted (but not to exceed 120 days following plan adoption). For persons other than members of the board of directors and officers of the Company required to make filings under Section 16 of the Exchange Act, an Approved 10b5-1 Plan must provide that trading will not begin until 30 days after the establishment of the plan. Modifications to an Approved 10b5-1 Plan may only be made after consultation with the Compliance Officer and during an open trading period, with the same waiting periods set forth above, as applicable, and not more than once during the term of the Approved 10b5-1 Plan.

Pre-clearance of Securities Transactions

Covered Persons must obtain pre-clearance of all transactions in the Company's securities (even during an open trading period) from the Compliance Officer. The Compliance Officer has no obligation to pre-clear a transaction and may determine not to permit a transaction. Pre-clearance, if granted, will generally be valid for four trading days, unless earlier revoked.

Pre-clearance is not required for purchases and sales of securities under an Approved 10b5-1 Plan.

Prohibited Transactions

Covered Persons are prohibited from trading in the Company's equity securities during a blackout period imposed under an "individual account" retirement or pension plan of the Company, during which at least 50% of the plan participants are unable to purchase, sell or otherwise acquire or transfer an interest in equity securities of the Company, due to a temporary suspension of trading by the Company or the plan fiduciary.

Covered Persons are prohibited from engaging in the following transactions in the Company's securities unless advance approval is obtained from a Compliance Officer:

•Short-term trading Covered Persons who purchase Company securities may not sell any Company securities of the same class for at least six months after the purchase. Covered Persons who sell Company securities may not purchase any Company securities of the same class for at least six months after the sale.

•Short sales Covered Persons may not sell the Company's securities short.

•Options trading Covered Persons may not buy or sell puts or calls or other derivative securities on the Company's securities.

•Trading on margin Covered Persons may not hold Company securities in a margin account.

•Hedging Covered Persons may not enter into hedging or monetization transactions or similar arrangements with respect to Company securities.

iii

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

(1) ChoiceOne Insurance Agencies, Inc. is a wholly-owned subsidiary of ChoiceOne Bank.

EX-23

Exhibit 23

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-226848; 333-237205; 333-237206; 333-265271; and 333-265272) of our report dated March 13, 2024 on the financial statements of ChoiceOne Financial Services, Inc. as of December 31, 2023 and 2022, and for each of the years in the three-year period ended December 31, 2023, which is included in this Annual Report on Form 10-K.

/s/Plante & Moran, PLLC

Grand Rapids, Michigan

March 13, 2024

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 Kelly J. Potes, Michael J. Burke Jr., and Adom J. Greenland, 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, 2023, and any amendments to that report, and to file it with 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 herby ratifies and approves the acts of such attorneys.

Dated: January 16, 2024	/s/ Jack G. Hendon
	(signature)
	Jack G. Hendon
	(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 Kelly J. Potes, Michael J. Burke Jr., and Adom J. Greenland, 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, 2023, and any amendments to that report, and to file it with 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 herby ratifies and approves the acts of such attorneys.

Dated: February 22, 2024	/s/ Greg L. Armock
	(signature)
	Greg L. Armock
	(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 Kelly J. Potes, Michael J. Burke Jr., and Adom J. Greenland, 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, 2023, and any amendments to that report, and to file it with 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 herby ratifies and approves the acts of such attorneys.

Dated: February 1, 2024	/s/ Keith Brophy
	(signature)
	Keith Brophy
	(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 Kelly J. Potes, Michael J. Burke Jr., and Adom J. Greenland, 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, 2023, and any amendments to that report, and to file it with 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 herby ratifies and approves the acts of such attorneys.

Dated: January 12, 2024	/s/ Michael J. Burke, Jr.
	(signature)
	Michael J. Burke, 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 Kelly J. Potes, Michael J. Burke Jr., and Adom J. Greenland, 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, 2023, and any amendments to that report, and to file it with 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 herby ratifies and approves the acts of such attorneys.

Dated: January 18, 2024	/s/ Harold J. Burns
	(signature)
	Harold J. Burns
	(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 Kelly J. Potes, Michael J. Burke Jr., and Adom J. Greenland, 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, 2023, and any amendments to that report, and to file it with 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 herby ratifies and approves the acts of such attorneys.

Dated: January 22, 2024	/s/ Eric E. Burrough
	(signature)
	Eric E. Burrough
	(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 Kelly J. Potes, Michael J. Burke Jr., and Adom J. Greenland, 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, 2023, and any amendments to that report, and to file it with 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 herby ratifies and approves the acts of such attorneys.

Dated: February 16, 2024	/s/ Curt E. Coulter
	(signature)
	Curt E. Coulter
	(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 Kelly J. Potes, Michael J. Burke Jr., and Adom J. Greenland, 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, 2023, and any amendments to that report, and to file it with 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 herby ratifies and approves the acts of such attorneys.

Dated: January 23, 2024	/s/ Bruce John Essex, Jr.
	(signature)
	Bruce John Essex, 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 Kelly J. Potes, Michael J. Burke Jr., and Adom J. Greenland, 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, 2023, and any amendments to that report, and to file it with 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 herby ratifies and approves the acts of such attorneys.

Dated: January 8, 2024	/s/ Gregory A. McConnell
	(signature)
	Gregory A. McConnell
	(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 Kelly J. Potes, Michael J. Burke Jr., and Adom J. Greenland, 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, 2023, and any amendments to that report, and to file it with 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 herby ratifies and approves the acts of such attorneys.

Dated: January 31, 2024	/s/ Bradley F McGinnis
	(signature)
	Bradley F McGinnis
	(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 Kelly J. Potes, Michael J. Burke Jr., and Adom J. Greenland, 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, 2023, and any amendments to that report, and to file it with 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 herby ratifies and approves the acts of such attorneys.

Dated: January 24, 2024	/s/ Roxanne M. Page
	(signature)
	Roxanne M. Page
	(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 Kelly J. Potes, Michael J. Burke Jr., and Adom J. Greenland, 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, 2023, and any amendments to that report, and to file it with 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 herby ratifies and approves the acts of such attorneys.

Dated: February 16, 2024	/s/ Michelle M. Wendling
	(signature)
	Michelle M. Wendling
	(type or print name)

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Kelly J. Potes, certify that:

1.I have reviewed this annual report on Form 10-K for the year ended December 31, 2023 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)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

d)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 13, 2024	/s/ Kelly J. Potes
	Kelly J. Potes Chief Executive Officer ChoiceOne Financial Services, Inc.

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Adom J. Greenland, certify that:

1.I have reviewed this annual report on Form 10-K for the year ended December 31, 2023 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)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

d)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 13, 2024	/s/ Adom J. Greenland
	Adom J. Greenland Chief Financial Officer 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, 2023 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 13, 2024	/s/ Kelly J. Potes
	Kelly J. Potes Chief Executive Officer

Dated: March 13, 2024	/s/ Adom J. Greenland
	Adom J. Greenland Chief Financial Officer

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.

EX-97

Incentive-Based Compensation Recoupment Policy

Adoption Date: September 27, 2023

Last Review Date: November 29, 2023

Overview

The Board of Directors (the “Board”) of ChoiceOne Financial Services, Inc. (the “Company”) believes that it is in the best interests of the Company and its shareholders to create and maintain a culture that emphasizes integrity and accountability and that reinforces the Company’s pay-for-performance compensation philosophy. This Incentive-Based Compensation Recoupment Policy (the “Policy”) is adopted to provide for recovery of Erroneously Awarded Incentive-Based Compensation (as defined below) in accordance with Rule 10D-1 of the Securities Exchange Act of 1934 and NASDAQ Listing Rule 5608.

Administration

This Policy shall be administered by the Personnel and Benefits Committee (the “Committee”).

Covered Executive Officers

This Policy applies to all current and former executive officers of the Company, as determined by the Committee pursuant to Rule 10D-1(d) of the Securities Exchange Act of 1934 and NASDAQ Listing Rule 5608(d) (“Covered Executive Officers”).

Recoupment; Accounting Restatement

This Policy will apply to any incentive-based compensation in the event the Company is required to prepare an accounting restatement due to the Company's material noncompliance with any financial reporting requirements under the securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period (the “Recoupment Event”). The date of the Recoupment Event will be the earlier of:

•The date the Company’s Board, a committee of the Board, or the officer or officers of the Company authorized to take such action if board action is not required, concludes, or reasonably should have concluded, that the Company is required to prepare an accounting restatement as described in the paragraph above; or

•The date a court, regulator, or other legally authorized body directs the Company to prepare an accounting restatement as described in the paragraph above.

Covered Incentive-Based Compensation

After a Recoupment Event has occurred, the Committee will review all short-term and long-term incentive-based compensation (whether provided in the form of cash, equity or other property), which was awarded, earned, vested or paid based, in whole or in part, on the Company’s attainment of a financial reporting measure (“incentive-based compensation”). “Covered Incentive-Based Compensation” is all incentive-based compensation received by a person:

•After beginning service as a Covered Executive Officer;

•Who served as a Covered Executive Officer at any time during the performance period for that incentive-based compensation;

•While the Company has a class of securities listed on a national securities exchange or a national securities association; and

•During the three (3) completed fiscal years (including any transition period in accordance with NASDAQ Listing Rule 5608(b)(1)(i)(D)) immediately preceding the Recoupment Event.

i

Determination of Erroneously Awarded Incentive-Based Compensation

Based on such review by the Committee, the Committee shall determine the amount of any Covered Incentive-Based Compensation received that exceeds the amount of Covered Incentive-Based Compensation that otherwise would have been received had it been determined based on the restated amounts, computed without regard to any taxes paid (“Erroneously Awarded Incentive-Based Compensation”).

If the Committee cannot determine the amount of the Erroneously Awarded Incentive-Based Compensation directly from the information in the accounting restatement, then it will make its determination based on a reasonable estimate of the effect of the accounting restatement. The Committee will maintain documentation supporting its determination and provide such documentation to NASDAQ.

Method of Recoupment

The Committee will recover, reasonably promptly, any Erroneously Awarded Incentive-Based Compensation. The Company’s obligation to recover Erroneously Awarded Incentive-Based Compensation is not dependent on if or when the restated financial statements are filed. The Committee will recover Erroneously Awarded Incentive-Based Compensation unless the Committee determines that a recovery would be impracticable under one of the following standards:

•The direct expense paid to a third party to assist in enforcing the Policy would exceed the amount to be recovered. Before concluding that it would be impracticable to recover any amount of Erroneously Awarded Incentive-Based Compensation based on expense of enforcement, the Company must make a reasonable attempt to recover such Erroneously Awarded Incentive-Based Compensation, document such reasonable attempt(s) to recover, and provide that documentation to NASDAQ.

•Recovery would violate home country law where that law was adopted prior to November 28, 2022. Before concluding that it would be impracticable to recover any amount of Erroneously Awarded Incentive-Based Compensation based on violation of home country law, the Company must obtain an opinion of home country counsel, acceptable to NASDAQ, that recovery would result in such a violation, and must provide such opinion to NASDAQ.

•Recovery would likely cause an otherwise tax-qualified retirement plan, under which benefits are broadly available to employees of the registrant, to fail to meet the requirements of 26 U.S.C. 401(a)(13) or 26 U.S.C. 411(a) and regulations thereunder.

The Committee will determine, in its sole discretion, the method for recouping Erroneously Awarded Incentive-Based Compensation which may include, without limitation:

•Requiring reimbursement of cash incentive-based compensation previously paid;

•Seeking recovery of any gain realized on the vesting, exercise, settlement, sale, transfer, or other disposition of any equity-based awards;

•Offsetting the recouped amount from any compensation otherwise owed by the Company to the Covered Executive Officer;

•Cancelling outstanding vested or unvested equity awards; and/or

•Taking any other remedial and recovery action permitted by law, as determined by the Committee.

No Indemnification

The Company is prohibited from indemnifying any Covered Executive Officer against the loss of Erroneously Awarded Incentive-Based Compensation.

ii

Interpretation

It is intended that this Policy be interpreted consistent with the requirements of Rule 10D-1 of the Securities Exchange Act of 1934 and NASDAQ Listing Rule 5608 (“Applicable Requirements”). The Committee is vested with the sole discretion to interpret and construe this Policy and to make all determinations necessary, appropriate, or advisable for its administration. Any determinations made by the Committee shall be final and binding on all affected individuals, including the Covered Executive Officers’ estate and beneficiaries.

Effective Date

This Policy shall be effective as of the date it is adopted by the Board and shall apply to Erroneously Awarded Incentive-Based Compensation that is approved, awarded or granted to Covered Executive Officers on or after that date.

Other Rights and Laws

Any right of recoupment under this Policy is in addition to, and not in lieu of, any other remedies or rights of recoupment that may be available to the Company pursuant to the terms of any similar policy in any employment agreement, equity award agreement, or similar agreement and any other legal remedies available to the Company. Application of the Policy does not preclude the Company from taking any other action to enforce a Covered Executive Officer’s obligations to the Company, including, without limitation, termination of employment or institution of civil or criminal proceedings.

Amendment

The Board may amend this policy from time to time in its discretion and shall amend this Policy as it deems necessary to comply with Applicable Requirements. The Board may terminate this Policy at any time.

iii

XML

Document And Entity Information - USD ($)
$ in Millions

12 Months Ended

Dec. 31, 2023

Feb. 29, 2024

Jun. 30, 2023

Document Information [Line Items]

Entity Central Index Key

0000803164

Entity Registrant Name

ChoiceOne Financial Services, Inc.

Amendment Flag

false

Current Fiscal Year End Date

--12-31

Document Fiscal Period Focus

FY

Document Fiscal Year Focus

2023

Document Type

10-K

Document Annual Report

true

Document Period End Date

Dec. 31, 2023

Document Transition Report

false

Securities Act File Number

000-19202

Entity Incorporation, State or Country Code

MI

Entity Tax Identification Number

38-2659066

Entity Address, Address Line One

109 East Division Street

Entity Address, City or Town

Sparta

Entity Address, State or Province

MI

Entity Address, Postal Zip Code

49345

City Area Code

616

Local Phone Number

887-7366

Title of 12(b) Security

Common stock

Trading Symbol

COFS

Security Exchange Name

NASDAQ

Entity Well-known Seasoned Issuer

No

Entity Voluntary Filers

No

Entity Current Reporting Status

Yes

Entity Interactive Data Current

Yes

Entity Filer Category

Non-accelerated Filer

Entity Emerging Growth Company

false

Entity Small Business

true

ICFR Auditor Attestation Flag

false

Entity Shell Company

false

Entity Public Float

$ 159.3

Entity Common Stock, Shares Outstanding

7,552,919

Document Financial Statement Error Correction [Flag]

false

Auditor Name

Plante & Moran, PLLC

Auditor Location

Southfield, Michigan

Auditor Firm ID

166

Documents Incorporated by Reference

Portions of the definitive Proxy Statement of ChoiceOne Financial Services, Inc. for the Annual Meeting of Shareholders to be held on May 29, 2024, are incorporated by reference into Part III of this Form 10-K.

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Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Assets
Cash and due from banks	$ 55,083	$ 43,593
Time deposits in other financial institutions	350	350
Cash and cash equivalents	55,433	43,943
Equity securities, at fair value (Note 2)	7,505	8,566
Securities available for sale, at fair value (Note 2)	514,598	529,749
Securities held to maturity, at amortized cost (Note 2)	407,959	425,906
Federal Home Loan Bank Stock	4,449	3,517
Federal Reserve Bank Stock	5,065	5,064
Loans held for sale	4,710	4,834
Loans to other financial institutions	19,400	0
Core Loans	1,391,253	1,189,782
Total loans (Note 3)	1,410,653	1,189,782
Allowance for loan losses (Note 3)	(15,685)	(7,619)
Loans, net	1,394,968	1,182,163
Premises and equipment, net (Note 5)	29,750	28,232
Other real estate owned, net (Note 7)	122	0
Cash value of life insurance policies	45,074	43,978
Goodwill (Note 6)	59,946	59,946
Core deposit intangible (Note 6)	1,854	2,809
Other assets	45,273	47,208
Total assets	2,576,706	2,385,915
Liabilities
Deposits - noninterest-bearing (Note 9)	547,625	599,579
Deposits - interest-bearing (Note 9)	1,550,985	1,516,681
Brokered deposits (Note 9)	23,445	1,743
Total deposits	2,122,055	2,118,003
Borrowings (Note 10)	200,000	50,000
Subordinated debentures (Note 11)	35,507	35,262
Other liabilities (Notes 12)	23,510	13,776
Total liabilities	2,381,072	2,217,041
Shareholders' Equity
Preferred stock; shares authorized: 100,000; shares outstanding: none	0	0
Common stock and paid-in capital, no par value; shares authorized: 15,000,000; shares outstanding: 7,548,217 at December 31, 2023 and 7,516,098 at December 31, 2022 (Note 16)	173,513	172,277
Retained earnings	73,699	68,394
Accumulated other comprehensive income, net	(51,578)	(71,797)
Total shareholders’ equity	195,634	168,874
Total liabilities and shareholders’ equity	$ 2,576,706	$ 2,385,915

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Consolidated Balance Sheets (Parentheticals) - $ / shares	Dec. 31, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Preferred stock, authorized (in shares)	100,000	100,000
Preferred stock, outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0	$ 0
Common stock, authorized (in shares)	15,000,000	15,000,000
Common stock, outstanding (in shares)	7,548,217	7,516,098

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Consolidated Statements of Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Interest income
Loans, including fees	$ 68,384	$ 52,823	$ 48,657
Securities:
Taxable	21,169	15,583	10,260
Tax exempt	5,629	6,163	5,617
Other	3,798	491	84
Total interest income	98,980	75,060	64,618
Interest expense
Deposits	23,990	5,845	3,305
Advances from Federal Home Loan Bank	1,771	117	22
Other	7,334	1,784	650
Total interest expense	33,095	7,746	3,977
Net interest income	65,885	67,314	60,641
Provision for (reversal of) credit losses on loans	1,265	250	416
Provision for (reversal of) credit losses on unfunded commitments	(1,115)	0	0
Net Provision for (reversal of) credit losses expense	150	250	416
Net interest income after provision for credit losses	65,735	67,064	60,225
Noninterest income
Customer service charges	9,347	9,350	8,628
Insurance and investment commissions	698	779	765
Mortgage servicing rights (Note 4)	820	1,007	2,335
Gains on sales of loans (Note 4)	1,134	1,336	4,441
Net (losses) gains on sales of securities (Note 2)	(71)	(809)	(40)
Net (losses) gains on sales and write-downs of other assets (Note 7)	147	99	6
Earnings on life insurance policies	1,096	1,312	809
Trust income	771	734	790
Change in market value of equity securities	(246)	(955)	479
Other	1,210	1,219	981
Total noninterest income	14,906	14,072	19,194
Noninterest expense
Salaries and benefits (Note 13 and 14)	31,963	30,391	29,300
Occupancy and equipment (Note 5)	6,048	6,189	6,168
Data processing	6,618	6,729	6,189
Professional fees	2,198	2,175	3,009
Supplies and postage	780	719	614
Advertising and promotional	721	764	848
Intangible amortization (Note 6)	955	1,153	1,307
FDIC insurance	1,184	722	804
Other	4,607	4,636	4,682
Total noninterest expense	55,074	53,478	52,921
Income before income tax	25,567	27,658	26,498
Income tax expense	4,306	4,018	4,456
Net income	$ 21,261	$ 23,640	$ 22,042
Basic earnings per share (Note 16)	$ 2.82	$ 3.15	$ 2.87
Diluted earnings per share (Note 16)	2.82	3.15	2.86
Dividends declared per share	$ 1.05	$ 1.01	$ 0.94

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Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Net income	$ 21,261	$ 23,640	$ 22,042
Other comprehensive income:
Change in net unrealized gain (loss) on AFS securities	20,934	(91,923)	(17,261)
Change in net unrealized gain (loss) on AFS securities, Income tax benefit (expense)	(4,396)	19,304	3,625
Less: reclassification adjustment for net (gain) loss included in net income	0	809	39
Less: reclassification adjustment for net (gain) loss included in net income, Income tax benefit (expense)	0	(170)	(7)
Less: reclassification adjustment for net (gain) loss for fair value hedge	(1,534)	1,930	0
Less: reclassification adjustment for net (gain) loss for fair value hedge, Income tax benefit (expense)	322	(405)	0
Less: net unrealized (gains) losses on securities transferred from AFS to HTM	0	3,404	0
Net unrealized (gains) losses on securities transferred from AFS to HTM, Income tax benefit (expense)	0	(715)	0
Unrealized gain (loss) on AFS securities, net of tax	15,326	(67,766)	(13,604)
Reclassification of unrealized gain (loss) upon transfer of securities from AFS to HTM	0	(3,404)	0
Reclassification of unrealized gain (loss) upon transfer of securities from AFS to HTM, Income tax benefit (expense)	0	715	0
Amortization of net unrealized (gains) losses on securities transferred from AFS to HTM	333	351	0
Amortization of net unrealized (gains) losses on securities transferred from AFS to HTM, Income tax benefit (expense)	(70)	(74)	0
Unrealized loss on held to maturity securities, net of tax	263	(2,412)	0
Change in net unrealized gain (loss) on cash flow hedge	3,024	(558)	0
Change in net unrealized gain (loss) on derivatives, Income tax benefit (expense)	(635)	117	0
Less: reclassification adjustment for net (gain) loss on cash flow hedge	0	771	0
Less: reclassification adjustment for net (gain) loss on cash flow hedge, Income tax benefit (expense)	0	(162)	0
Less: amortization of net unrealized (gains) losses included in net income	2,837	999	0
Less: amortization of net unrealized (gains) losses included in net income, Income tax benefit (expense)	(596)	(210)	0
Unrealized gain (loss) on cash flow hedge instruments, net of tax	4,630	957	0
Other comprehensive income (loss), net of tax	20,219	(69,221)	(13,604)
Comprehensive income (loss)	$ 41,480	$ (45,581)	$ 8,438

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Consolidated Statements of Changes in Shareholders' Equity - USD ($) $ in Thousands	Total	Common Stock and Paid in Capital [Member]		Retained Earnings [Member]	Accumulated Other Comprehensive Income/(Loss), Net [Member]	Cumulative Effect, Period of Adoption, Adjustment [Member]	Cumulative Effect, Period of Adoption, Adjustment [Member] Retained Earnings [Member]	Cumulative Effect, Period of Adoption, Adjusted Balance [Member]	Cumulative Effect, Period of Adoption, Adjusted Balance [Member] Common Stock and Paid in Capital [Member]	Cumulative Effect, Period of Adoption, Adjusted Balance [Member] Retained Earnings [Member]	Cumulative Effect, Period of Adoption, Adjusted Balance [Member] Accumulated Other Comprehensive Income/(Loss), Net [Member]
Balance (in shares) at Dec. 31, 2020		7,796,352
Balance at Dec. 31, 2020	$ 227,268	$ 178,750		$ 37,490	$ 11,028
Net income	22,042			22,042
Other comprehensive income (loss)	(13,604)				(13,604)
Shares issued (in shares)		23,301
Shares issued	509	$ 509
Effect of employee stock purchases	25	25
Stock-based compensation expense	415	$ 415
Shares repurchased (in shares)		(309,274)
Shares repurchased	(7,786)	$ (7,786)
Cash dividends declared	(7,200)			(7,200)
Balance (in shares) at Dec. 31, 2021		7,510,379
Balance at Dec. 31, 2021	$ 221,669	$ 171,913		52,332	(2,576)
Accounting Standards Update [Extensible Enumeration]	Accounting Standards Update 2016-13 [Member]
Net income	$ 23,640			23,640
Other comprehensive income (loss)	(69,221)				(69,221)
Shares issued (in shares)		31,618
Shares issued	461	$ 461
Effect of employee stock purchases	31	31
Stock-based compensation expense	554	$ 554
Shares repurchased (in shares)		(25,899)
Shares repurchased	(682)	$ (682)
Cash dividends declared	$ (7,578)			(7,578)
Balance (in shares) at Dec. 31, 2022	7,516,098	7,516,098							7,516,098
Balance at Dec. 31, 2022	$ 168,874	$ 172,277		68,394	(71,797)	$ (8,046)	$ (8,046)	$ 160,828	$ 172,277	$ 60,348	$ (71,797)
Net income	21,261			21,261
Other comprehensive income (loss)	20,219				20,219
Shares issued (in shares)		31,472
Shares issued	566	$ 566
Effect of employee stock purchases	$ 41	$ 41
Stock options exercised and issued (in shares)	7,500	647	[1]
Stock-based compensation expense	$ 629	$ 629
Cash dividends declared	$ (7,910)			(7,910)
Balance (in shares) at Dec. 31, 2023	7,548,217	7,548,217
Balance at Dec. 31, 2023	$ 195,634	$ 173,513		$ 73,699	$ (51,578)

[1] The amount shown represents the number of shares issued in cashless transactions where some taxes are netted on a portion of the exercises.

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Consolidated Statements of Changes in Shareholders' Equity (Parentheticals) - $ / shares	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Dividends declared, per share (in dollars per share)	$ 1.05	$ 1.01	$ 0.94

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Cash flows from operating activities:
Net income	$ 21,261	$ 23,640	$ 22,042
Adjustments to reconcile net income to net cash from operating activities:
(Reversal of) provision for credit losses	150	250	416
Depreciation	2,477	2,658	2,624
Amortization	9,953	10,684	9,801
Compensation expense on employee and director stock purchases, stock options, and restricted stock units	1,005	958	812
Net (gains) losses on sales of securities	71	809	40
Net change in market value of equity securities	246	955	(479)
Gains on sales of loans and capitalized servicing rights	(1,954)	(2,343)	(6,776)
Loans originated for sale	(56,085)	(71,829)	(197,387)
Proceeds from loan sales	57,342	77,681	205,398
Earnings on bank-owned life insurance	(1,096)	(1,038)	(778)
Proceeds from BOLI policy	0	690	204
Earnings on death benefit from bank-owned life insurance	0	(274)	(31)
(Gains) on sales of other real estate owned	(12)	(41)	(19)
Proceeds from sales of other real estate owned	157	235	611
Deferred federal income tax (expense) benefit	(24)	(15)	924
Net change in:
Other assets	5,395	(4,208)	(5,418)
Other liabilities	7,596	6,205	5,715
Net cash provided by operating activities	46,482	45,017	37,699
Cash flows from investing activities:
Sales of securities available for sale	0	47,167	29,742
Sales of equity securities	887	0	0
Proceeds from Federal Home Loan Bank stock redemption	3,917	0	0
Maturities, prepayments and calls of securities available for sale	32,289	51,570	54,202
Maturities, prepayments and calls of securities held to maturity	16,572	8,091	0
Purchases of securities available for sale	(1,646)	(55,053)	(632,826)
Purchases of securities held to maturity	(597)	(7,505)	0
Purchases of equity securities	0	(1,029)	(5,117)
Purchases of Federal Home Loan Bank stock	(4,849)	0	0
Purchase of bank-owned life insurance policies	0	0	(10,000)
Loan originations and payments, net	(221,245)	(130,620)	45,384
Additions to premises and equipment	(4,234)	(1,164)	(2,759)
Proceeds from (payments for) derivative contracts, net	1,732	(1,953)	0
Payments for derivative contracts settlements	(4,191)	0	0
Net cash (used in)/provided by investing activities	(181,365)	(90,496)	(521,374)
Cash flows from financing activities:
Net change in deposits	4,052	65,709	377,716
Proceeds from borrowings	420,000	726,000	87,500
Payments on borrowings	(270,000)	(726,000)	(14,326)
Issuance of common stock	231	172	139
Repurchase of common stock	0	(682)	(7,786)
Share based compensation withholding obligation	0	(85)	0
Cash dividends	(7,910)	(7,578)	(7,200)
Net cash provided by/(used in) financing activities	146,373	57,536	436,043
Net change in cash and cash equivalents	11,490	12,057	(47,632)
Beginning cash and cash equivalents	43,943	31,887	79,519
Ending cash and cash equivalents	55,433	43,943	31,887
Supplemental disclosures of cash flow information:
Cash paid for interest	27,481	7,577	3,718
Cash paid for income taxes	4,450	1,989	3,251
Loans transferred to other real estate owned	$ 266	$ 0	$ 520

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Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2023

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 1 – Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include ChoiceOne Financial Services, Inc. (“ChoiceOne”), its wholly-owned subsidiaries, ChoiceOne Bank (the “Bank”) and 109 Technologies, LLC, and ChoiceOne Bank’s wholly-owned subsidiary, ChoiceOne Insurance Agencies, Inc. (the “Insurance Agency”). Intercompany transactions and balances have been eliminated in consolidation.

ChoiceOne owns all of the common securities of Community Shores Capital Trust I (the “Capital Trust”). Under U.S. generally accepted accounting principles (“GAAP”), the Capital Trust is not consolidated because it is a variable interest entity and ChoiceOne is not the primary beneficiary.

Nature of Operations

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 within the Bank’s primary market areas in Kent, Muskegon, Newaygo, and Ottawa counties in western Michigan and Lapeer, Macomb, and St. Clair counties in southeastern 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 collateralized by either residential or commercial real estate.

109 Technologies, LLC is a wholly owned subsidiary of ChoiceOne Financial Services Inc. with the intent of selling a fintech product marketed to other banks and bank holding companies.

The Insurance Agency is a wholly-owned subsidiary of the Bank. The Insurance Agency sells insurance policies such as life and health 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 and ChoiceOne’s other direct and indirect subsidiaries 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. These estimates and assumptions are subject to many risks and uncertainties. Actual results may differ from these estimates. Estimates associated with the allowance for credit losses 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 original terms of 90 days or less.

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, remaining purchase accounting adjustments, and an allowance for credit losses. Loans held for sale are reported at the lower of cost or market, on an aggregate basis.

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 loans are 90 days past due unless the loan is secured by sufficient collateral and is in the process of collection. Past due status is based on the contractual terms of the loan. 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 qualifying 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.

Purchased financial assets without credit deterioration will be recorded at the acquisition date fair value. Additionally, an allowance is recorded with a corresponding charge to credit loss expense in the reporting period in which the acquisition occurs. For assets purchased with credit deterioration, an allowance is recorded with a corresponding increase to the amortized cost basis of the financial asset as of the acquisition date. No financial assets were purchased since the initiation of CECL on January 1, 2023.

Loans to Other Financial Institutions

Loans to other financial institutions are made for the purpose of providing a warehouse line of credit to facilitate funding of residential mortgage loan originations at other financial institutions. The loans are short-term in nature and are designed to provide funding for the time period between the loan origination and its subsequent sale in the secondary market. Loans to other financial institutions earn a share of interest income, determined by the contract, from when the loan is funded to when the loan is sold on the secondary market.

Allowance for Credit Losses (“ACL”)

In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments. This ASU (as subsequently amended by ASU 2018-19) significantly changed how entities measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard replaced the former “incurred loss” approach with an “expected loss” model. The new model, referred to as the CECL model, applies to financial assets subject to credit losses and measured at amortized cost, and certain off-balance sheet credit exposures. The standard also expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the ACL. In addition, entities need to disclose the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by the year of origination. A reasonable and supportable economic forecast is a key component of the CECL methodology.

ChoiceOne adopted CECL effective January 1, 2023 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures. Results for reporting periods beginning after January 1, 2023 are presented under CECL while prior period amounts continue to be reported in accordance with the incurred loss accounting standards. The transition adjustment of the CECL adoption included an increase in the ACL of $7.2 million, which included a $5.5 million decrease to the retained earnings account to reflect the cumulative effect of adopting CECL on our Consolidated Balance Sheet, with the $1.5 million tax impact portion being recorded as part of the deferred tax asset in other assets on our Consolidated Balance Sheet. The transition adjustment of the CECL adoption included an additional ACL on unfunded commitments of $3.3 million, which included a $2.6 million decrease to the retained earnings account to reflect the cumulative effect of adopting CECL on our Consolidated Balance Sheet, with the $688,000 tax impact portion being recorded as part of the deferred tax asset in other assets on our Consolidated Balance Sheet.

The ACL is a valuation allowance for expected credit losses. The ACL is increased by the provision for credit losses and decreased by loans charged off less any recoveries of charged off loans. As ChoiceOne has had very limited loss experience since 2011, management elected to utilize benchmark peer loss history data to estimate historical loss rates. ChoiceOne identified an appropriate peer group for each loan cohort which shared similar characteristics. Management estimates the ACL required based on the selected peer group loan loss experience, the nature and volume of the loan portfolio, information about specific borrower situations and estimated collateral values, a reasonable and supportable economic forecast, and other factors. Allocations of the ACL may be made for specific loans, but the entire ACL is available for any loan that, in management’s judgment, should be charged off. Loan losses are charged against the ACL when management believes that collection of a loan balance is not possible.

The ACL consists of general and specific components. The general component covers loans collectively evaluated for credit losses and is based on peer historical loss experience adjusted for current and forecasted factors. Management’s adjustment for current and forecasted factors is based on trends in delinquencies, trends in charge-offs and recoveries, trends in the volume of loans, changes in underwriting standards, trends in loan review findings, the experience and ability of lending staff, and a reasonable and supportable economic forecast described further below.

The discounted cash flow methodology is utilized for all loan pools. This methodology is supported by our CECL software provider and allows management to automatically calculate contractual life by factoring in all cash flows and adjusting them for behavioral and credit-related aspects.

Reasonable and supportable economic forecasts have to be incorporated in determining expected credit losses. The forecast period represents the time frame from the current period end through the point in time that we can reasonably forecast and support entity and environmental factors that are expected to impact the performance of our loan portfolio. Ideally, the economic forecast period would encompass the contractual terms of all loans; however, the ability to produce a forecast that is considered reasonable and supportable becomes more difficult or may not be possible in later periods. Subsequent to the end of the forecast period, we revert to historical loan data based on an ongoing evaluation of each economic forecast in relation to then current economic conditions as well as any developing

loan loss activity and resulting historical data. As of December 31, 2023, we used a one-year reasonable and supportable economic forecast period, with a two year straight-line reversion period.

We are not required to develop and use our own economic forecast model, and we elected to utilize economic forecasts from third-party providers that analyze and develop forecasts of the economy for the entire United States at least quarterly.

Other inputs to the calculation are also updated or reviewed quarterly. Prepayment speeds are updated on a one quarter lag based on the asset liability model from the previous quarter. This model is performed at the loan level. Curtailment is updated quarterly within the ACL model based on our peer group average. The reversion period is reviewed by management quarterly with consideration of the current economic climate. Prepayment speeds and curtailment were updated during the fourth quarter of 2023; however, the effect was insignificant.

We are also required to consider expected credit losses associated with loan commitments over the contractual period in which we are exposed to credit risk on the underlying commitments unless the obligation is unconditionally cancellable by us. Any allowance for off-balance sheet credit exposures is reported as an other liability on our Consolidated Balance Sheet and is increased or decreased via the provision for credit losses account on our Consolidated Statement of Income. The calculation includes consideration of the likelihood that funding will occur and forecasted credit losses on commitments expected to be funded over their estimated lives. The allowance is calculated using the same aggregate reserve rates calculated for the funded portion of loans at the portfolio level applied to the amount of commitments expected to be funded.

Loans that do not share risk characteristics are evaluated on an individual basis and are excluded from the collective evaluation. ChoiceOne has determined that any loans which have been placed on non-performing status, loans with a risk rating of 6 or higher, and loans past due more than 60 days will be assessed individually for evaluation. Management’s judgment will be used to determine if the loan should be migrated back to pool on an individual basis. Individual analysis will establish a specific reserve for loans in scope. Specific reserves on non-performing loans are typically based on management’s best estimate of the fair value of collateral securing these loans, adjusted for selling costs as appropriate or based on the present value of the expected cash flows from that loan.

Allowance for Loan Losses

Prior to the adoption of CECL on January 1, 2023, management calculated the allowance for loan losses for the valuation allowance for probable incurred credit losses. The allowance for loan losses 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 for loan losses balance required based on past loan loss experience, the nature and volume of the loan portfolio, information about specific borrower situations and estimated collateral values, economic conditions, and other factors. Allocations of the allowance for loan losses may be made for specific loans, but the entire allowance for loan losses is available for any loan that, in management’s judgment, should be charged off. Loan losses are charged against the allowance for loan losses when management believes that collection of a loan balance is not possible.

The allowance for loan losses 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. The general component of management's estimate of the allowance for loan losses covers non-impaired loans and is based on historical loss experience adjusted for current factors. Management's adjustment for current factors is based on trends in delinquencies, trends in charge-offs and recoveries, trends in the volume of loans, changes in underwriting standards, trends in loan review findings, experience and ability of lending staff, national and economic trends and conditions, industry conditions, trends in real estate values, and other conditions.

A loan is impaired when full payment under the loan terms is not expected. Troubled debt restructuring of loans is undertaken to improve the likelihood that the loan will be repaid in full under the modified terms in accordance with a reasonable repayment schedule. All modified loans are evaluated to determine whether the loans should be reported as Troubled Debt Restructurings ("TDR"). A loan is a TDR when the Bank, for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower by modifying a loan. To make this determination, the Bank must determine whether (a) the borrower is experiencing financial difficulties and (b) the Bank granted the borrower a concession. This determination requires consideration of all facts and circumstances surrounding the modification. An overall general decline in the economy or some deterioration in a borrower’s financial condition does not automatically mean the borrower is experiencing financial difficulties. Commercial loans are evaluated for impairment on an individual loan basis. If a loan is considered impaired or if a loan has been classified as a TDR, 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 residential real estate mortgage loans are collectively evaluated for impairment and, accordingly, they are not separately identified for impairment disclosures.

Securities

Debt securities are classified as held to maturity and carried at amortized cost when management has the positive intent and ability to hold them to maturity. ​ Debt securities are classified as available for sale because they might be sold before maturity. Debt securities classified as available for sale are carried at fair value, with unrealized holding gains and losses reported separately in the accumulated other comprehensive income or loss section of shareholders’ equity, net of tax effect. Restricted investments in Federal Reserve Bank stock and Federal Home Loan Bank stock are carried at cost. Equity securities consist of investments in preferred stock and investments in common stock of other financial institutions. Equity securities are reported at their fair value with changes in market value reported through current earnings.

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.

Securities Available for Sale – For securities AFS in an unrealized loss position, management determines whether they intend to sell or if it is more likely than not that ChoiceOne will be required to sell the security before recovery of the amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income with an allowance being established under CECL. For securities AFS with unrealized losses not meeting these criteria, management evaluates whether any decline in fair value is due to credit loss factors. In making this assessment, management considers any changes to the rating of the security by rating agencies and adverse conditions specifically related to the issuer of the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of the cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses (“ACL”) is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Changes in the ACL under ASC 326-30 are recorded as provisions for (or reversal of) credit loss expense. Losses are charged against the allowance when the collectability of a debt security AFS is confirmed or when either of the criteria regarding intent or requirement to sell is met. Any impairment that has not been recorded through an ACL is recognized in other comprehensive income, net of income taxes. At December 31, 2023 and at adoption of CECL on January 1, 2023, there was no ACL related to debt securities AFS. Accrued interest receivable on debt securities was excluded from the estimate of credit losses.

Securities Held to Maturity – Since the adoption of CECL, ChoiceOne measures credit losses on HTM securities on a collective basis by major security type with each type sharing similar risk characteristics, and considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. The ACL on securities HTM is a contra asset valuation account that is deducted from the carrying amount of HTM securities to present the net amount expected to be collected. HTM securities are charged off against the ACL when deemed uncollectible. Adjustments to the ACL are reported in ChoiceOne’s Consolidated Statements of Income in the provision for credit losses. Accrued interest receivable on HTM securities is excluded from the estimate of credit losses. With regard to US Treasury securities, these have an explicit government guarantee; therefore, no ACL is recorded for these securities. With regard to obligations of states and political subdivisions and other HTM securities, management considers (1) issuer bond ratings, (2) historical loss rates for given bond ratings, (3) the financial condition of the issuer, and (4) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities. A discounted cash flow method will be used to determine the reserve required for any credit losses on HTM securities. At December 31, 2023, the ACL related to securities HTM is insignificant.

Troubled Loan Modifications

FASB also issued ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. This standard eliminated the previous accounting guidance for troubled debt restructurings and added additional disclosure requirements for gross chargeoffs by year of origination. It also prescribes guidance for reporting modifications of loans to borrowers experiencing financial difficulty.

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. 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 the lower of the Bank’s basis in the loans or 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 credit 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 noninterest income.

Bank Owned Life Insurance

Bank owned life insurance policies are stated at the current cash surrender value of the policy, or the policy death proceeds less any obligation to provide a death benefit to an insured’s beneficiaries if that value is less than the cash surrender value. Increases in the asset value are recorded as earnings in other income.

Loan Servicing Rights

Loan servicing rights represent the allocated value of servicing rights on loans sold with servicing retained. Servicing rights are initially recorded at estimated fair value and fair value is determined using prices for similar assets with similar characteristics when available or based upon discounted cash flows using market-based assumptions. 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. Any impairment of a grouping is reported as a valuation allowance.

Goodwill and Intangible Assets

Goodwill results from business acquisitions and represents the excess of the purchase price over the fair value of the acquired tangible assets and liabilities and identifiable intangible assets. Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but tested for impairment at least annually or more frequently if events and circumstances exist that indicate that a goodwill impairment test should be performed.

Core Deposit Intangible

Core deposit intangible represents the value of the acquired customer core deposit bases and is included as an asset on the consolidated balance sheets. The core deposit intangible has an estimated finite life, is amortized on an accelerated basis over a 120 month period and is subject to periodic impairment evaluation.

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.

Employee Benefit Plans

ChoiceOne’s 401(k) plan allows participants to make contributions to their individual accounts under the plan in amounts up to the IRS maximum. Employer matching contributions from ChoiceOne to its 401(k) plan are discretionary.

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. A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company recognizes interest and/or penalties related to income tax matters in income tax expense.

Earnings Per Share

Basic earnings per common share (“EPS”) is based on weighted-average common shares outstanding. Diluted EPS assumes issuance of any dilutive potential common shares issuable under stock options or restricted stock units granted.

Comprehensive Income

Comprehensive income consists of net income and other comprehensive income or loss. Other comprehensive income or loss includes unrealized gains and losses on securities available for sale and changes in the funded status of derivative instruments, net of tax, which are also recognized as a separate component of shareholders’ equity.

Accumulated other comprehensive income was as follows:

(Dollars in thousands)	As of December 31,
	2023			2022
Unrealized gain (loss) on available-for-sale securities	$	(69,641	)	$	(89,041	)
Unrealized gain (loss) on held to maturity securities		(2,720	)		(3,053	)
Unrealized gain (loss) on derivative instruments		7,072			1,212
Tax effect		13,711			19,085
Accumulated other comprehensive income (loss)	$	(51,578	)	$	(71,797	)

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 as of December 31, 2023.

Cash Restrictions

Cash on hand or on deposit with the Federal Reserve Bank was $0 at both December 31, 2023 and 2022, as the Federal Reserve revoked the reserve requirement.

Leases

Leases are classified as operating or finance leases at the lease commencement date. Lease expense for operating leases and short-term leases is recognized on a straight-line basis over the lease term. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term.

Stock-Based Compensation

Share based restricted stock units are valued at fair value as of the grant date. The Company values share-based stock option awards granted using the Black-Scholes option-pricing model. The Company recognizes compensation expense for its awards on a straight-line basis over the requisite service period for the entire award (straight-line attribution method), ensuring that the amount of compensation cost recognized at any date at least equals the portion of the grant-date fair value of the award that is vested at that time. Compensation costs related to stock options granted are disclosed in Note 15.

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 18 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.

Derivatives

At the inception of a derivative contract, ChoiceOne designates the derivative as one of two types based on our intention and belief as to the likely effectiveness of the hedge. These two types are (1) a hedge of changes in fair value of a recognized asset or liability or of an unrecognized firm commitment (“fair value hedge”), and (2) a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow hedge”). For a fair value hedge, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item, are recognized in current earnings as fair values change. For a cash flow hedge,

the gain or loss on the derivative is reported in other comprehensive income and is reclassified into earnings in the same period during which the hedged transaction affects the earnings. The changes in fair value of derivatives that do not qualify for hedge accounting are reported in current earnings, as noninterest income.

Net cash settlements on derivatives that qualify for hedge accounting are recorded in interest income or interest expense, based on the item being hedged. Cash flows on hedges are classified in the cash flow statement in the same line item as the cash flows of the item being hedged.

The initial fair value of hedge components excluded from the assessment of effectiveness are recognized in the statement of financial condition under a systematic and rational method over the life of the hedging relationship and are presented in the same income statement line item as the earnings effect of the hedged item. Any difference between the change in the fair value of the hedge components excluded from the assessment of effectiveness and the amounts recognized in earnings are recorded as a component of other comprehensive income.

ChoiceOne discontinues hedge accounting when it determines that the derivative is no longer effective in offsetting changes in fair values or cash flows of the hedged item, the derivative is settled or terminates, a hedged forecasted transaction is no longer probable, a hedged firm commitment is no longer firm, or the treatment of the derivative as a hedge is no longer appropriate or intended. When hedge accounting is discontinued, subsequent changes in fair value of the derivative are recorded as noninterest income. When a fair value hedge is discontinued, the hedged asset or liability is no longer adjusted for changes in fair value and the existing basis adjustment is amortized or accreted over the remaining life of the asset or liability. When a cash flow hedge is discontinued but the hedged cash flows or forecasted transactions are still expected to occur, gains or losses that were accumulated in other comprehensive income are amortized into earnings over the same periods in which the hedged transactions will affect earnings.

ChoiceOne is exposed to losses if a counterparty fails to make its payments under a contract in which the Company is in the net receiving position. ChoiceOne anticipates that the counterparties will be able to fully satisfy their obligation under the agreements. All the contracts to which we are a party have cash flows that settle monthly or semiannually.

Operating Segments

While ChoiceOne’s management monitors the revenue streams of various products and services for the Bank and the Insurance Agency, 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.

Recent Accounting Pronouncements

Investment in Equity Method and Joint Ventures

In March 2023, the FASB issued ASU 2023-02, Investments – Equity Method and Joint Venture (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method. The amendments in this ASU permit reporting entities to account for the tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method. This update will be effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2023. Early adoption is permitted. This change in guidance effective on January 1, 2023, did not have a significant impact on the financial statements.

Improvements to Income Tax Disclosure

ASU 2023-09 enhances transparency by requiring consistent categorization, greater disaggregation, and detailed disclosure related to income taxes paid. These changes aim to help users of financial statements understand factors contributing to differences between effective and statutory tax rates. The disclosure is effective for annual reporting periods beginning after December 15, 2024.

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Securities

12 Months Ended

Dec. 31, 2023

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

Securities

Note 2 – Securities

On January 1, 2022, ChoiceOne reassessed and transferred, at fair value, $428.4 million of securities classified as available for sale to the held to maturity classification. The net unrealized after-tax loss of $2.7 million as of the transfer date remained in accumulated other comprehensive income to be amortized over the remaining life of the securities, offsetting the related amortization of discount or premium on the transferred securities. No gains or losses were recognized at the time of the transfer. The remaining net unamortized unrealized loss on transferred securities included in accumulated other comprehensive income was $2.1 million after tax as of December 31, 2023.

The fair value of equity securities and the related gross unrealized gains and (losses) recognized in noninterest income at December 31 were as follows:

	December 31, 2023
			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Equity securities	$	7,960	$	212	$	(667	)	$	7,505

	December 31, 2022
			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Equity securities	$	8,982	$	305	$	(721	)	$	8,566

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

	December 31, 2023
			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
Available for Sale:	Cost		Gains		Losses			Value
U.S. Government and federal agency	$	-	$	-	$	-		$	-
U.S. Treasury notes and bonds		90,345		-		(10,151	)		80,194
State and municipal		269,918		-		(35,236	)		234,682
Mortgage-backed		212,392		14		(23,905	)		188,501
Corporate		250		-		(46	)		204
Asset-backed securities		11,334		-		(317	)		11,017
Total	$	584,239	$	14	$	(69,655	)	$	514,598

	December 31, 2022
			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
Available for Sale:	Cost		Gains		Losses			Value
U.S. Government and federal agency	$	-	$	-	$	-		$	-
U.S. Treasury notes and bonds		90,810		-		(12,606	)		78,204
State and municipal		277,489		-		(47,551	)		229,938
Mortgage-backed		236,703		-		(28,140	)		208,563
Corporate		757		-		(46	)		711
Asset-backed securities		13,031		-		(698	)		12,333
Total	$	618,790	$	-	$	(89,041	)	$	529,749

The amortized cost and fair value of securities held to maturity and the related gross unrealized gains and losses were as follows:

	December 31, 2023
			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
Held to Maturity:	Cost		Gains		Losses			Value
U.S. Government and federal agency	$	2,972	$	-	$	(293	)	$	2,679
State and municipal		196,098		14		(30,220	)		165,892
Mortgage-backed		188,329		-		(25,796	)		162,533
Corporate		20,013		21		(2,864	)		17,170
Asset-backed securities		547		-		(30	)		517
Total	$	407,959	$	35	$	(59,203	)	$	348,791

	December 31, 2022
			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
Held to Maturity:	Cost		Gains		Losses			Value
U.S. Government and federal agency	$	2,966	$	-	$	(421	)	$	2,545
State and municipal		201,890		1		(39,355	)		162,536
Mortgage-backed		200,473		-		(29,868	)		170,605
Corporate		19,603		-		(2,285	)		17,318
Asset-backed securities		974		-		(77	)		897
Total	$	425,906	$	1	$	(72,006	)	$	353,901

Information regarding sales of equity and debt securities available for sale for the year ended December 31 follows:

(Dollars in thousands)
	2023			2022			2021
Proceeds from sales of securities	$	887		$	47,167		$	29,742
Gross realized gains		-			-			-
Gross realized losses		(71	)		(809	)		(40	)

Contractual maturities of securities available for sale at December 31, 2023 were as follows:

(Dollars in thousands)	Amortized		Fair
	Cost		Value
Due within one year	$	250	$	250
Due after one year through five years		99,159		90,209
Due after five years through ten years		177,228		159,321
Due after ten years		95,210		76,317
Total debt securities		371,847		326,097
Mortgage-backed securities		212,392		188,501
Total	$	584,239	$	514,598

Contractual maturities of securities held to maturity at December 31, 2023 were as follows:

(Dollars in thousands)	Amortized		Fair
	Cost		Value
Due within one year	$	1,586	$	1,543
Due after one year through five years		12,379		11,376
Due after five years through ten years		124,644		108,371
Due after ten years		81,021		64,968
Total debt securities		219,630		186,258
Mortgage-backed securities		188,329		162,533
Total	$	407,959	$	348,791

Certain securities were pledged as collateral for participation in a program that provided Community Reinvestment Act credits and for other purposes, as required or permitted by law. ChoiceOne also pledges securities to the FHLB and the FRB. The purpose of this

pledging strategy is to enhance the availability of cash and other liquid assets that can be used to meet the operational needs of the organization. This strategy also allows the organization to optimize its asset allocation and diversify its funding sources. The carrying amount of the securities pledged as collateral at December 31 was as follows:

(Dollars in thousands)	2023		2022
Securities pledged to Federal Reserve Bank	$	526,413	$	-
Securities pledged to Federal Home Loan Bank		278,503		-
Securities pledged for Community Reinvestment Act credits		250		250
Total Securities pledged		805,166		250

Securities with unrealized losses at year-end 2023 and 2022, aggregated by investment category and length of time the individual securities have been in an unrealized loss position, were as follows:

	2023
	Less than 12 months				More than 12 months				Total
(Dollars in thousands)	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Available for Sale:	Value		Losses		Value		Losses		Value		Losses
U.S. Government and federal agency	$	-	$	-	$	-	$	-	$	-	$	-
U.S. Treasury notes and bonds		-		-		80,194		10,151		80,194		10,151
State and municipal		557		6		234,125		35,230		234,682		35,236
Mortgage-backed		1,255		23		176,400		23,882		177,655		23,905
Corporate		-		-		204		46		204		46
Asset-backed securities		-		-		11,017		317		11,017		317
Total temporarily impaired	$	1,812	$	29	$	501,940	$	69,626	$	503,752	$	69,655

	2022
	Less than 12 months				More than 12 months				Total
(Dollars in thousands)	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Available for Sale:	Value		Losses		Value		Losses		Value		Losses
U.S. Government and federal agency	$	-	$	-	$	-	$	-	$	-	$	-
U.S. Treasury notes and bonds		-		-		78,204		12,606		78,204		12,606
State and municipal		89,158		12,612		140,390		34,939		229,548		47,551
Mortgage-backed		63,249		3,093		144,318		25,047		207,567		28,140
Corporate		711		46		-		-		711		46
Asset-backed securities		-		-		12,333		698		12,333		698
Total temporarily impaired	$	153,118	$	15,751	$	375,245	$	73,290	$	528,363	$	89,041

	2023
	Less than 12 months				More than 12 months				Total
(Dollars in thousands)	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Held to Maturity:	Value		Losses		Value		Losses		Value		Losses
U.S. Government and federal agency	$	-	$	-	$	2,679	$	293	$	2,679	$	293
State and municipal		23		-		165,526		30,220		165,549		30,220
Mortgage-backed		-		-		162,533		25,796		162,533		25,796
Corporate		-		-		15,509		2,864		15,509		2,864
Asset-backed securities		-		-		517		30		517		30
Total temporarily impaired	$	23	$	-	$	346,764	$	59,203	$	346,787	$	59,203

	2022
	Less than 12 months				More than 12 months				Total
(Dollars in thousands)	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Held to Maturity:	Value		Losses		Value		Losses		Value		Losses
U.S. Government and federal agency	$	-	$	-	$	2,545	$	421	$	2,545	$	421
State and municipal		13,457		1,899		149,016		37,456		162,473		39,355
Mortgage-backed		25,582		822		145,024		29,046		170,606		29,868
Corporate		5,296		603		10,771		1,682		16,067		2,285
Asset-backed securities		-		-		897		77		897		77
Total temporarily impaired	$	44,335	$	3,324	$	308,253	$	68,682	$	352,588	$	72,006

ChoiceOne evaluates all securities on a quarterly basis to determine if an ACL and corresponding impairment charge should be recorded. Consideration is given to the extent to which the fair value has been less than cost, the financial condition and near-term prospects of the issuer, and the intent and ability of ChoiceOne to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value of amortized cost basis. ChoiceOne believes that unrealized losses on securities were temporary in nature and were caused primarily by changes in interest rates, increased credit spreads, and reduced market liquidity and were not caused by the credit status of the issuer. No ACL was recorded in the year ended December 31, 2023 and no other-than-temporary impairment charges were recorded in the year ended December 31, 2022.

At December 31, 2023 and December 31, 2022, there were 569 and 611 securities with an unrealized loss, respectively. Unrealized losses have not been recognized into income because the issuers’ bonds are of high credit quality, and management does not intend to sell prior to their anticipated recovery, and the decline in fair value is largely due to changes in interest rates and other market conditions. The issuers continue to make timely principal and interest payments on the bonds. The fair value is expected to recover as the bonds approach maturity.

The majority of unrealized losses at December 31, 2023, are related to U.S. Treasury notes and bonds, state and municipal bonds and mortgage backed securities. The U.S. Treasury notes are guaranteed by the U.S. government and 100% of the notes are rated AA or better. State and municipal bonds are backed by the taxing authority of the bond issuer or the revenues from the bond. On December 31, 2023, 86% of state and municipal bonds held are rated AA or better, 11% are A rated and 3% are not rated. Of the mortgage-backed securities held on December 31, 2023, 39% were issued by US government sponsored entities and agencies, and rated AA, 39% are AAA rated private issue and collateralized mortgage obligation, and 22% are unrated privately issued mortgage-backed securities with structured credit enhancement and collateralized mortgage obligation.

Following is information regarding unrealized gains and losses on equity securities for the years ending December 31:

	2023			2022			2021
Net gains and losses recognized during the period	$	(317	)	$	(955	)	$	479
Less: Net gains and losses recognized during the period on securities sold		(71	)		-			-
Unrealized gains and losses recognized during the reporting period on securities still held at the reporting date	$	(246	)	$	(955	)	$	479

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Loans and Allowance for Credit Losses

12 Months Ended

Dec. 31, 2023

Receivables [Abstract]

Loans and Allowance for Credit Losses

Note 3 – Loans and Allowance for Credit Losses

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

(Dollars in thousands)
	2023			2022
Agricultural	$	49,210		$	64,159
Commercial and industrial		229,915			210,210
Consumer		36,541			39,808
Real estate - commercial		786,921			630,953
Real estate - construction		20,936			14,736
Real estate - residential		267,730			229,916
Loans to other financial institutions		19,400			-
Total Loans	$	1,410,653		$	1,189,782
Allowance for credit losses		(15,685	)		(7,619	)
Loans, net	$	1,394,968		$	1,182,163

The table below details the outstanding balances of the County Bank Corp. acquired portfolio and the acquisition fair value adjustments at acquisition date:

(Dollars in thousands)	Acquired			Acquired			Acquired
	Impaired			Non-impaired			Total
Loans acquired - contractual payments	$	7,729		$	387,394		$	395,123
Nonaccretable difference		(2,928	)		-			(2,928	)
Expected cash flows		4,801			387,394			392,195
Accretable yield		(185	)		(1,894	)		(2,079	)
Carrying balance at acquisition date	$	4,616		$	385,500		$	390,116

The table below presents a roll-forward of the accretable yield on County Bank Corp. acquired loans for the year ended December 31, 2022:

(Dollars in thousands)	Acquired			Acquired			Acquired
	Impaired			Non-impaired			Total
Balance, January 1, 2019	$	-		$	-		$	-
Merger with County Bank Corp. on October 1, 2019		185			1,894			2,079
Accretion October 1, 2019 through December 31, 2019		-			(75	)		(75	)
Balance January 1, 2020		185			1,819			2,004
Accretion January 1, 2020 through December 31, 2020		(50	)		(295	)		(345	)
Balance January 1, 2021		135			1,524			1,659
Accretion January 1, 2021 through December 31, 2021		(247	)		(348	)		(595	)
Transfer from non-accretable to accretable yield		400			-			400
Balance January 1, 2022		288			1,176			1,464
Transfer from non-accretable to accretable yield		2,192			-			2,192
Accretion January 1, 2022 through December 31, 2022		(553	)		(98	)		(651	)
Balance December 31, 2022	$	1,927		$	1,078		$	3,005

The table below details the outstanding balances of the Community Shores Bank Corporation acquired loan portfolio and the acquisition fair value adjustments at acquisition date:

(Dollars in thousands)	Acquired			Acquired			Acquired
	Impaired			Non-impaired			Total
Loans acquired - contractual payments	$	20,491		$	158,495		$	178,986
Nonaccretable difference		(2,719	)		-			(2,719	)
Expected cash flows		17,772			158,495			176,267
Accretable yield		(869	)		(596	)		(1,465	)
Carrying balance at acquisition date	$	16,903		$	157,899		$	174,802

The table below presents a roll-forward of the accretable yield on Community Shores Bank Corporation acquired loans for the year ended December 31, 2022:

(Dollars in thousands)	Acquired			Acquired			Acquired
	Impaired			Non-impaired			Total
Balance January 1, 2020	$	-		$	-		$	-
Merger with Community Shores Bank Corporation on July 1, 2020		869			596			1,465
Accretion July 1, 2020 through December 31, 2020		(26	)		(141	)		(167	)
Balance, January 1, 2021		843			455			1,298
Accretion January 1, 2021 through December 31, 2021		(321	)		(258	)		(579	)
Balance January 1, 2022		522			197			719
Transfer from non-accretable to accretable yield		1,086			-			1,086
Accretion January 1, 2022 through December 31, 2022		(993	)		(197	)		(1,190	)
Balance December 31, 2022	$	615		$	-		$	615

ChoiceOne manages its credit risk through the use of its loan policy and its loan approval process and by monitoring of loan credit performance. The loan approval process for commercial loans involves individual and group approval authorities. Individual authority levels are based on the experience of the lender. Group authority approval levels can consist of an internal loan committee that includes the Bank’s President or Senior Lender and other loan officers for loans that exceed individual approval levels, or a loan committee of the Board of Directors for larger commercial loans. Most consumer loans are approved by individual loan officers based on standardized underwriting criteria, with larger consumer loans subject to approval by the internal loan committee.

Ongoing credit review of commercial loans is the responsibility of the loan officers. ChoiceOne’s internal credit committee meets at least monthly and reviews loans with payment issues and loans with a risk rating of 6, 7, or 8. Risk ratings of commercial loans are reviewed periodically and adjusted if needed. ChoiceOne’s consumer loan portfolio is primarily monitored on an exception basis. Loans where payments are past due are turned over to the applicable Bank’s collection department, which works with the borrower to bring payments current or take other actions when necessary. In addition to internal reviews of credit performance, ChoiceOne contracts with a third party for independent loan review that monitors the loan approval process and the credit quality of the loan portfolio.

Activity in the allowance for credit losses and balances in the loan portfolio was as follows:

				Commercial														Loans to Other
(Dollars in thousands)				and						Commercial		Construction			Residential			Financial
	Agricultural			Industrial			Consumer			Real Estate		Real Estate			Real Estate			Institutions		Unallocated			Total
Allowance for Credit Losses Year Ended December 31, 2023
Beginning balance	$	144		$	1,361		$	310		$	4,822	$	63		$	906		$	-	$	13		$	7,619
Cumulative effect of change in accounting principle		14			1,587			541			3,006		20			2,010			-		(13	)		7,165
Charge-offs		-			(158	)		(554	)		-		-			(27	)		-		-			(739	)
Recoveries		-			66			283			13		-			13			-		-			375
Provision		(64	)		(640	)		243			979		(25	)		742			30		-			1,265
Ending balance	$	94		$	2,216		$	823		$	8,820	$	58		$	3,644		$	30	$	-		$	15,685
Individually evaluated loan reserves	$	2		$	6		$	-		$	1	$	-		$	51		$	-	$	-		$	60
Collectively evaluated loan reserves	$	92		$	2,210		$	823		$	8,819	$	58		$	3,593		$	30	$	-		$	15,625
Loans
December 31, 2023
Individually evaluated loans	$	54		$	136		$	2		$	29	$	-		$	1,858		$	-				$	2,079
Collectively evaluated loans		49,156			229,779			36,539			786,892		20,936			265,872			19,400					1,408,574
Ending balance	$	49,210		$	229,915		$	36,541		$	786,921	$	20,936		$	267,730		$	19,400				$	1,410,653

				Commercial													Loans to Other
(Dollars in thousands)				and						Commercial		Construction			Residential		Financial
	Agricultural			Industrial			Consumer			Real Estate		Real Estate			Real Estate		Institutions		Unallocated			Total
Allowance for Loan Losses Year Ended December 31, 2022
Beginning balance	$	448		$	1,454		$	290		$	3,705	$	110		$	671	$	-	$	1,010		$	7,688
Charge-offs		-			(177	)		(496	)		-		-			-		-		-			(673	)
Recoveries		-			143			206			3		-			2		-		-			354
Provision		(304	)		(59	)		310			1,114		(47	)		233		-		(997	)		250
Ending balance	$	144		$	1,361		$	310		$	4,822	$	63		$	906	$	-	$	13		$	7,619
Individually evaluated for impairment	$	2		$	14		$	1		$	5	$	-		$	131	$	-	$	-		$	153
Collectively evaluated for impairment	$	142		$	1,347		$	309		$	4,817	$	63		$	775	$	-	$	13		$	7,466
Loans
December 31, 2022
Individually evaluated for impairment	$	23		$	177		$	7		$	165	$	-		$	2,474	$	-				$	2,846
Collectively evaluated for impairment		64,136			206,074			39,793			622,131		14,736			225,792		-					1,172,662
Acquired with deteriorated credit quality		-			3,959			8			8,657		-			1,650		-					14,274
Ending balance	$	64,159		$	210,210		$	39,808		$	630,953	$	14,736		$	229,916	$	-				$	1,189,782

The process to monitor the credit quality of ChoiceOne’s loan portfolio includes tracking (1) the risk ratings of business loans and (2) delinquent and nonperforming consumer loans. Business loans are risk rated on a scale of 1 to 9. A description of the characteristics of the ratings follows:

Risk Rating 1 through 5 or pass: These loans are considered pass credits. They exhibit acceptable credit risk and demonstrate the ability to repay the loan from normal business operations.

Risk rating 6 or special mention: Loans and other credit extensions bearing this grade are considered to be inadequately protected by the current sound worth and debt service capacity of the borrower or of any pledged collateral. These obligations, even if apparently protected by collateral value, have well-defined weaknesses related to adverse financial, managerial, economic, market, or political conditions that have clearly jeopardized repayment of principal and interest as originally intended. Furthermore, there is the possibility that ChoiceOne Bank will sustain some future loss if such weaknesses are not corrected. Clear loss potential, however, does not have to exist in any individual assets classified as substandard. Loans falling into this category should have clear action plans and timelines with benchmarks to determine which direction the relationship will move.

Risk rating 7 or substandard: Loans and other credit extensions graded “7” have all the weaknesses inherent in those graded “6”, with the added characteristic that the severity of the weaknesses makes collection or liquidation in full highly questionable or improbable based upon currently existing facts, conditions, and values. Loans in this classification should be evaluated for non-accrual status. All nonaccrual commercial and Retail loans must be at a minimum graded a risk code “7”.

Risk rating 8 or doubtful: Loans and other credit extensions bearing this grade have been determined to have the extreme probability of some loss, but because of certain important and reasonably specific factors, the amount of loss cannot be determined. Such pending factors could include merger or liquidation, additional capital injection, refinancing plans, or perfection of liens on additional collateral.

Risk rating 9 or loss: Loans in this classification are considered uncollectible and cannot be justified as a viable asset of ChoiceOne Bank. This classification does not mean the loan has absolutely no recovery value, but that it is neither practical nor desirable to defer writing off this loan even though partial recovery may be obtained in the future.

The following table reflects the amortized cost basis of loans as of December 31, 2023 based on year of origination (dollars in thousands):

Commercial:	2023		2022		2021		2020		2019		Prior		Term Loans Total		Revolving Loans		Grand Total
Agricultural
Pass	$	5,015	$	4,088	$	3,078	$	1,788	$	7,028	$	18,476	$	39,473	$	9,507	$	48,980
Special mention		-		-		-		-		176		54		230		-		230
Substandard		-		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-		-
Total	$	5,015	$	4,088	$	3,078	$	1,788	$	7,204	$	18,530	$	39,703	$	9,507	$	49,210
Current year-to-date gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Commercial and Industrial
Pass	$	23,600	$	45,489	$	23,462	$	10,502	$	9,214	$	11,882	$	124,149	$	105,559	$	229,708
Special mention		-		-		28		35		73		64		200		3		203
Substandard		-		-		-		-		-		4		4		-		4
Doubtful		-		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-		-
Total	$	23,600	$	45,489	$	23,490	$	10,537	$	9,287	$	11,950	$	124,353	$	105,562	$	229,915
Current year-to-date gross write-offs	$	-	$	55	$	30	$	71	$	-	$	2	$	158	$	-	$	158
Commercial Real Estate
Pass	$	149,181	$	134,289	$	107,033	$	71,754	$	43,846	$	136,361	$	642,464	$	143,120	$	785,584
Special mention		-		-		-		-		-		1,337		1,337		-		1,337
Substandard		-		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-		-
Total	$	149,181	$	134,289	$	107,033	$	71,754	$	43,846	$	137,698	$	643,801	$	143,120	$	786,921
Current year-to-date gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Total Business Loans	$	177,796	$	183,866	$	133,601	$	84,079	$	60,337	$	168,178	$	807,857	$	258,189	$	1,066,046

Retail:	2023		2022		2021		2020		2019		Prior		Term Loans Total		Revolving Loans		Grand Total
Consumer
Performing	$	9,775	$	13,876	$	6,771	$	2,849	$	1,260	$	1,202	$	35,733	$	808	$	36,541
Nonperforming		-		-		-		-		-		-		-		-		-
Nonaccrual		-		-		-		-		-		-		-		-		-
Total	$	9,775	$	13,876	$	6,771	$	2,849	$	1,260	$	1,202	$	35,733	$	808	$	36,541
Current year-to-date gross write-offs	$	8	$	24	$	11	$	28	$	-	$	1	$	72	$	-	$	72
Construction real estate
Performing	$	2,507	$	2,719	$	552	$	-	$	-	$	-	$	5,778	$	15,158	$	20,936
Nonperforming		-		-		-		-		-		-		-		-		-
Nonaccrual		-		-		-		-		-		-		-		-		-
Total	$	2,507	$	2,719	$	552	$	-	$	-	$	-	$	5,778	$	15,158	$	20,936
Current year-to-date gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Residential real estate
Performing	$	54,231	$	64,768	$	28,301	$	16,391	$	12,556	$	40,270	$	216,517	$	49,491	$	266,008
Nonperforming		-		-		-		-		-		-		-		-		-
Nonaccrual		-		380		826		-		-		486		1,692		30		1,722
Total	$	54,231	$	65,148	$	29,127	$	16,391	$	12,556	$	40,756	$	218,209	$	49,521	$	267,730
Current year-to-date gross write-offs	$	-	$	26	$	-	$	-	$	-	$	1	$	27	$	-	$	27
Loans to Other Financial Institutions
Performing	$	19,400	$	-	$	-	$	-	$	-	$	-	$	19,400	$	-	$	19,400
Nonperforming		-		-		-		-		-		-		-		-		-
Nonaccrual		-		-		-		-		-		-		-		-		-
Total	$	19,400	$	-	$	-	$	-	$	-	$	-	$	19,400	$	-	$	19,400
Current year-to-date gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Total Consumer Loans	$	85,913	$	81,743	$	36,450	$	19,240	$	13,816	$	41,958	$	279,120	$	65,487	$	344,607

Corporate Credit Exposure - Credit risk profile by credit worthiness category

(Dollars in thousands)	Agricultural		Commercial and Industrial		Commercial Real Estate
	December 31,		December 31,		December 31,
	2022		2022		2022
Pass	$	63,867	$	209,700	$	624,555
Special Mention		289		400		2,048
Substandard		3		110		4,350
Doubtful		-		-		-
Loss		-		-		-
	$	64,159	$	210,210	$	630,953

Consumer Credit Exposure - Credit risk profile based on payment activity

(Dollars in thousands)	Consumer		Construction Real Estate		Residential Real Estate
	December 31,		December 31,		December 31,
	2022		2022		2022
Performing	$	39,808	$	14,736	$	228,653
Nonperforming		-		-		-
Nonaccrual		-		-		1,263
	$	39,808	$	14,736	$	229,916

Included within the loan categories above were loans in the process of foreclosure. As of December 31, 2023 and 2022, loans in the process of foreclosure totaled $846,000 and $1.1 million, respectively.

The following table presents the amortized cost basis as of December 31, 2023 of the loans modified to borrowers experiencing financial difficulty disaggregated by class of financing receivable and type of concession granted during the reporting period.

For the period ended:	December 31, 2023
	Term Extension
			% of Total
			Class of
(Dollars in thousands)	Amortized		Financing
	Cost Basis		Receivable
Commercial and industrial	$	60		0	%
Residential real estate		129		0	%
Total	$	189

The following table presents the financial effect by type of modification made to borrowers experiencing financial difficulty and class of financing receivable.

For the period ended:	December 31, 2023
	Term Extension
Commercial and industrial	Termed out line of credit and termed out draw note.
Residential real estate	Provided with new twelve month payment plan to catch up on past due balance.

The following table presents the period-end amortized cost basis of financing receivables that had a payment default during the period and were modified in the 12 months before default to borrowers experiencing financial difficulty.

For the period ended:	December 31, 2023
(Dollars in thousands)	Term extension
Commercial and industrial	$	60
Residential real estate		129
Total	$	189

The following table presents the period-end amortized cost basis of loans that have been modified in the past 12 months to borrowers experiencing financial difficulty by payment status and class of financing receivable.

For the period ended:	December 31, 2023
(Dollars in thousands)	Current		30-89 days		Greater than 90 days		Total
Commercial and industrial	$	60	$	-	$	-	$	60
Residential real estate		-		-		129		129
Total	$	60	$	-	$	129	$	189

The following schedule provides information on loans that were considered troubled debt restructurings ("TDRs") that were modified during the years ended December 31, 2022:

	Year Ended December 31, 2022
			Pre-		Post-
			Modification		Modification
			Outstanding		Outstanding
(Dollars in thousands)	Number of		Recorded		Recorded
	Loans		Investment		Investment
Agricultural		-	$	-	$	-
Commercial and Industrial		1		15		15
Commercial Real Estate		-		-		-
Total		1	$	15	$	15

There were no TDRs as of December 31, 2022 where the borrower was past due with respect to principal and interest for 30 days or more during the year ended December 31, 2022.

Impaired loans by loan category as of December 31 were as follows:

			Unpaid				Average		Interest
(Dollars in thousands)	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized
December 31, 2022
With no related allowance recorded
Agricultural	$	-	$	-	$	-	$	250	$	-
Commercial and industrial		-		-		-		18		-
Consumer		-		-		-		-		-
Construction real estate		-		-		-		-		-
Commercial real estate		-		-		-		19		-
Residential real estate		550		595		-		231		1
Subtotal		550		595		-		518		1
With an allowance recorded
Agricultural		23		27		2		913		2
Commercial and industrial		177		177		14		209		13
Consumer		7		7		1		14		1
Construction real estate		-		-		-		-		-
Commercial real estate		165		165		5		158		13
Residential real estate		1,924		1,954		131		1,897		93
Subtotal		2,296		2,330		153		3,191		122
Total
Agricultural		23		27		2		1,163		2
Commercial and industrial		177		177		14		227		13
Consumer		7		7		1		14		1
Construction real estate		-		-		-		-		-
Commercial real estate		165		165		5		177		13
Residential real estate		2,474		2,549		131		2,128		94
Total	$	2,846	$	2,925	$	153	$	3,709	$	123

An aging analysis of loans by loan category as of December 31 follows:

					Loans
	Loans		Loans		Past Due								Loans
	Past Due		Past Due		Greater								90 Days Past
(Dollars in thousands)	30 to 59		60 to 89		Than 90				Loans Not		Total		Due and
	Days (1)		Days (1)		Days (1)		Total (1)		Past Due		Loans		Accruing
December 31, 2023
Agricultural	$	-	$	-	$	-	$	-	$	49,210	$	49,210	$	-
Commercial and industrial		-		-		1		1		229,914		229,915		-
Consumer		31		2		-		33		36,508		36,541		-
Commercial real estate		173		-		-		173		786,748		786,921		-
Construction real estate		-		-		-		-		20,936		20,936		-
Residential real estate		755		549		870		2,174		265,556		267,730		-
Loans to other financial institutions		-		-		-		-		19,400		19,400		-
	$	959	$	551	$	871	$	2,381	$	1,408,272	$	1,410,653	$	-
December 31, 2022
Agricultural	$	-	$	-	$	-	$	-	$	64,159	$	64,159	$	-
Commercial and industrial		-		171		-		171		210,039		210,210		-
Consumer		39		7		-		46		39,762		39,808		-
Commercial real estate		-		-		-		-		630,953		630,953		-
Construction real estate		-		-		-		-		14,736		14,736		-
Residential real estate		682		-		842		1,524		228,392		229,916		-

Loans to other financial institutions		-		-		-		-		-		-		-
	$	721	$	178	$	842	$	1,741	$	1,188,041	$	1,189,782	$	-

(1)Includes nonaccrual loans

Nonaccrual loans by loan category as of December 31 as follows:

(Dollars in thousands)
	2023		2022
Commercial and industrial	$	1	$	-
Residential real estate		1,722		1,263
Total nonaccrual loans	$	1,723	$	1,263

(Dollars in thousands)	Nonaccrual loans with no ACL		Total nonaccrual loans		Interest income recognized during the period on nonaccrual loans
Commercial and industrial	$	-	$	1	$	-
Residential real estate		707		1,722		16
Total nonaccrual loans	$	707	$	1,723	$	16

XML

Mortgage Banking

12 Months Ended

Dec. 31, 2023

Mortgage Banking [Abstract]

Mortgage Banking

Note 4 – Mortgage Banking

Activity in secondary market loans during the year was as follows:

(Dollars in thousands)
	2023		2022		2021
Loans originated for resale, net of principal payments	$	56,085	$	71,829	$	197,387
Proceeds from loan sales	$	57,342	$	77,681	$	205,398
Net gains on sales of loans held for sale	$	1,954	$	2,343	$	6,776
Loan servicing fees, net of amortization	$	211	$	175	$	(163	)

Net gains on sales of loans held for sale include capitalization of loan servicing rights. Loans serviced for others are not reported as assets in the accompanying consolidated balance sheets. The unpaid principal balances of these loans were $495.7 million and $488.6 million at December 31, 2023 and 2022, respectively. The Bank maintains custodial escrow balances in connection with these serviced loans; however, such escrows were immaterial at December 31, 2023 and 2022.

Activity for loan servicing rights (included in other assets) was as follows:

(Dollars in thousands)
	2023			2022			2021
Balance, beginning of year	$	4,322		$	4,667		$	3,967
Capitalized		820			1,007			1,961
Amortization		(1,308	)		(1,352	)		(1,635	)
Market valuation allowance change		-			-			374
Balance, end of year	$	3,834		$	4,322		$	4,667

The fair value of loan servicing rights was $5.6 million, $5.9 million and $5.5 million as of December 31, 2023, 2022 and 2021, respectively. Valuation allowances of $0 were recorded at December 31, 2023, 2022 and December 31, 2021. The fair value of the Bank’s servicing rights at December 31, 2023 was determined using a discount rate of 9.5%-10.5% and prepayment speeds ranging from 5.7% to 7.5%. The fair value of the Bank’s servicing rights at December 31, 2022 was determined using a discount rate of 8.00% and prepayment speeds ranging from 5.2% to 6.7%. The fair value of the Bank’s servicing rights at December 31, 2021 was determined using a discount rate of 8.00% and prepayment speeds ranging from 5% to 27%.

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Premises and Equipment

12 Months Ended

Dec. 31, 2023

Property, Plant and Equipment [Abstract]

Premises and Equipment

Note 5 – Premises and Equipment

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

(Dollars in thousands)
	2023			2022
Land and land improvements	$	8,415		$	8,327
Leasehold improvements		81			81
Buildings		29,635			26,823
Furniture and equipment		12,558			11,208
Total cost		50,689			46,439
Accumulated depreciation		(20,939	)		(18,207	)
Premises and equipment, net	$	29,750		$	28,232

Depreciation expense was $2.5 million, $2.7 million, and $2.6 million in 2023, 2022 and 2021, respectively.

The Bank leases certain branch properties and automated-teller machine locations in its normal course of business. Rent expense totaled $327,000, $211,000, and $153,000 for 2023, 2022 and 2021, respectively. The associated right of use assets are included in the applicable categories of fixed assets in the above table and the net book value of such assets approximates the operating lease liability. Rent commitments under non-cancelable operating leases were as follows, before considering renewal options that generally are present (dollars in thousands):

	2024	$	314
	2025		230
	2026		168
	2027		65
Total undiscounted cash flows			777
Less discount			68
Total operating lease liabilities		$	709

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Goodwill and Acquired Intangible Assets

12 Months Ended

Dec. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Acquired Intangible Assets

Note 6 - Goodwill and Acquired Intangible Assets

Goodwill

The change in the balance for goodwill was as follows:

(Dollars in thousands)	2023		2022
Balance, beginning of year	$	59,946	$	59,946
Goodwill adjustment from merger with Community Shores Bank Corporation		-		-
Balance, end of year	$	59,946	$	59,946

The Company acquired Valley Ridge Financial Corp. in 2006, County in 2019, and Community Shores in 2020, which resulted in the recognition of goodwill of $13.7 million, $38.9 million and $7.3 million, respectively.

ChoiceOne conducted an annual assessment of goodwill as of June 30, 2023 and no impairment was identified. ChoiceOne used a qualitative assessment to determine goodwill was not impaired.

During the prior year, ChoiceOne engaged a third party valuation firm to assist in performing a quantitative analysis of goodwill as of November 30, 2022 ("the valuation date"). In deriving the fair value of the reporting unit (the Bank), the third-party firm assessed general economic conditions and outlook; industry and market considerations and outlook; the impact of recent events to financial performance; the market price of ChoiceOne’s common stock and other relevant events. In addition, the valuation relied on financial projections through 2027 and growth rates prepared by management. Based on the valuation prepared, it was determined that ChoiceOne's estimated fair value of the reporting unit at the valuation date was greater than its book value and impairment of goodwill was not required.

Management concurred with the conclusion derived from the quantitative goodwill analysis as of the valuation date and determined that there were no material changes and that no triggering events had occurred that indicated impairment from the valuation date through December 31, 2023, and as a result that it is more likely than not that there was no goodwill impairment as of December 31, 2023.

Acquired Intangible Assets

Information for acquired intangible assets at December 31 is as follows:

	2023				2022
	Gross				Gross
	Carrying		Accumulated		Carrying		Accumulated
(Dollars in thousands)	Amount		Amortization		Amount		Amortization
Core deposit intangible	$	7,120	$	5,266	$	7,120	$	4,311

The core deposit intangible from the County and Community Shores mergers is being amortized on a sum-of-the-years digits basis over ten years and eight years, respectively. Amortization expense was $955,000 in 2023, $1,153,000 in 2022 and $1,307,000 in 2021. The estimated amortization expense for the next five years ending December 31 is as follows (dollars in thousands):

2024	$	757
2025		560
2026		362
2027		164
2028		11
Total	$	1,854

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Other Real Estate Owned

12 Months Ended

Dec. 31, 2023

Other Real Estate Owned [Abstract]

Real Estate Owned [Text Block]

Note 7 – Other Real Estate Owned

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

(Dollars in thousands)	2023			2022			2021
Balance, beginning of year	$	-		$	194		$	266
Transfers from loans		267			-			520
Additions from merger		-			-			-
Proceeds from sales		(157	)		(235	)		(611	)
Write-downs		-			-			-
Gains on sales		12			41			19
Balance, end of year	$	122		$	-		$	194

Included in the balances above were residential real estate mortgage loans of $122,000, $0, and $80,000 as of December 31, 2023, 2022, and 2021, respectively, and $0, $0, and $114,000 of commercial real estate loans as of December 31, 2023, 2022, and 2021, respectively.

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Derivatives and Hedging Activities

12 Months Ended

Dec. 31, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative and Hedging Activities

Note 8 – Derivatives and Hedging Activities

ChoiceOne is exposed to certain risks relating to its ongoing business operations. ChoiceOne utilizes interest rate derivatives as part of its asset liability management strategy to help manage its interest rate risk position. Derivative instruments represent contracts between parties that result in one party delivering cash to the other party based on a notional amount and an underlying term (such as a rate, security price or price index) as specified in the contract. The amount of cash delivered from one party to the other is determined based on the interaction of the notional amount of the contract with the underlying term. Derivatives are also implicit in certain contracts and commitments.

ChoiceOne recognizes derivative financial instruments in the consolidated financial statements at fair value regardless of the purpose or intent for holding the instrument. ChoiceOne records derivative assets and derivative liabilities on the balance sheet within other assets and other liabilities, respectively. Changes in the fair value of derivative financial instruments are either recognized in income or in shareholders’ equity as a component of accumulated other comprehensive income or loss depending on whether the derivative financial instrument qualifies for hedge accounting and, if so, whether it qualifies as a fair value hedge or cash flow hedge.

Interest rate swaps

ChoiceOne uses interest rate swaps as part of its interest rate risk management strategy to add stability to net interest income and to manage its exposure to interest rate movements. Interest rate swaps designated as hedges involve the receipt of variable-rate amounts from a counterparty in exchange for ChoiceOne making fixed-rate payments or the receipt of fixed-rate amounts from a counterparty in

exchange for ChoiceOne making variable rate payments, over the life of the agreements without the exchange of the underlying notional amount.

In the second quarter of 2022, ChoiceOne entered into two pay-floating/receive-fixed interest rate swaps (the “Pay Floating Swap Agreements”) for a total notional amount of $200.0 million that were designated as cash flow hedges. These derivatives hedge the variable cash flows of specifically identified available-for-sale securities, cash and loans. The Pay Floating Swap Agreements were determined to be highly effective during the periods presented and therefore no amount of ineffectiveness has been included in net income. The Pay Floating Swap Agreements pay a coupon rate equal to SOFR while receiving a fixed coupon rate of 2.41%. In March 2023, ChoiceOne terminated all Pay Floating Swap Agreements for a cash payment of $4.2 million. The loss will be amortized into interest income over 13 months, which was the remaining period of the swap agreements. The remaining loss to be fully amortized in 2024 was $1.1 million.

In the second quarter of 2022, ChoiceOne entered into one forward starting pay-fixed/receive-floating interest rate swap (the “Pay Fixed Swap Agreement”) for a notional amount of $200.0 million that was designated as a cash flow hedge. This derivative hedges the risk of variability in cash flows attributable to forecasted payments on future deposits or floating rate borrowings indexed to the SOFR Rate. The Pay Fixed Swap Agreement is two years forward starting with an eight-year term set to expire in 2032. The Pay Fixed Swap Agreements will pay a fixed coupon rate of 2.75% while receiving the SOFR Rate.

In the fourth quarter of 2022, ChoiceOne entered into four pay-fixed/receive-floating interest rate swaps for a total notional amount of $201.0 million that were designated as fair value hedges. These derivatives hedge the risk of changes in fair value of certain available for sale securities for changes in the SOFR benchmark interest rate component of the fixed rate bonds. All four of these hedges were effective immediately on December 22, 2022. Of the total notional value, $101.9 million has a ten-year term set to expire in 2032, with the benchmark SOFR interest rate risk component of the fixed rate bonds equal to 3.390%. Of the total notional value, $50.0 million has a nine-year term set to expire in 2031, with the benchmark SOFR interest rate risk component of the fixed rate bonds equal to 3.4015%. The remaining notional value of $49.1 million has a nine-year term set to expire in 2031, with the benchmark SOFR interest rate risk component of the fixed rate bond equal to 3.4030%. ChoiceOne adopted ASC2022-01, as of December 20, 2022, to use the portfolio layer method. The fair value basis adjustment associated with available-for-sale fixed rate bonds initially results in an adjustment to AOCI. For available-for-sale securities subject to fair value hedge accounting, the changes in the fair value of the fixed rate bonds related to the hedged risk (the benchmark interest rate component and the partial term) are then reclassed from AOCI to current earnings offsetting the fair value measurement change of the interest rate swap, which is also recorded in current earnings. Net cash settlements are received/paid semi-annually, with the first starting in March 2023, and will be included in interest income.

Net settlements received on these four pay-fixed/receive-floating swaps were $3.3 million for the year ended December 31, 2023, which were included in interest income.

The table below presents the fair value of derivative financial instruments as well as the classification within the consolidated statements of financial condition:

	December 31, 2023			December 31, 2022
(Dollars in thousands)	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments
Interest rate contracts	Other Assets	$	8,880	Other Assets	$	9,204
Interest rate contracts	Other Liabilities	$	-	Other Liabilities	$	5,823

The table below presents the effect of fair value and cash flow hedge accounting on the consolidated statements of operations for the periods presented:

	Location and Amount of Gain or (Loss)					Location and Amount of Gain or (Loss)
	Recognized in Income on Fair Value and Cash Flow Hedging Relationships					Recognized in Income on Fair Value and Cash Flow Hedging Relationships
	Year Ended December 31, 2023					Year Ended December 31, 2022
	Interest Income			Interest Expense		Interest Income			Interest Expense
Total amounts of income and expense line items presented in the consolidated statements of income in which the effects of fair value or cash flow hedges are recorded	$	(284	)	$	-	$	(55	)	$	(825	)
Gain or (loss) on fair value hedging relationships:
Interest rate contracts:
Hedged items	$	1,534		$	-	$	(1,930	)	$	-
Derivatives designated as hedging instruments	$	(1,454	)	$	-	$	2,171		$	-
Amount excluded from effectiveness testing recognized in earnings based on amortization approach	$	-		$	-	$	(496	)	$	-
Gain or (loss) on cash flow hedging relationships:
Interest rate contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive income into income	$	(2,837	)	$	-	$	-		$	-
Amount excluded from effectiveness testing recognized in earnings based on amortization approach	$	-		$	-	$	-		$	(503	)

The table below presents the cumulative basis adjustments on hedged items designated as fair value hedges and the related amortized cost of those items as of the periods presented:

			December 31, 2023
			Cumulative amount of Fair
			Value Hedging Adjustment
Line Item in the Statement of			included in the carrying
Financial Position in which the	Amortized cost of the		amount of the Hedged
Hedged Item is included	Hedged Assets/(Liabilities)		Assets/(Liabilities)
Securities available for sale	$	222,933	$	(396	)

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Deposits

12 Months Ended

Dec. 31, 2023

Statistical Disclosure for Banks [Abstract]

Deposits

Note 9 – Deposits

Deposit balances as of December 31 consisted of the following:

(Dollars in thousands)	2023		2022
Noninterest-bearing demand deposits	$	547,625	$	599,579
Interest-bearing demand deposits		599,681		638,641
Money market deposits		247,602		214,026
Savings deposits		336,851		427,583
Local certificates of deposit		366,851		236,431
Brokered certificates of deposit		23,445		1,743
Total deposits	$	2,122,055	$	2,118,003

Scheduled maturities of certificates of deposit as of December 31, 2023 were as follows:

(Dollars in thousands)
2024	$	351,516
2025		29,857
2026		3,802
2027		2,275
2028		2,580
Thereafter		266
Total	$	390,296

The Bank had certificates of deposit issued in denominations of $250,000 or greater totaling $199.7 million and $148.9 million at December 31, 2023 and 2022, respectively. The Bank held $23.4 million and $1.7 million in brokered certificates of deposit at December 31, 2023 and 2022, respectively. In addition, the Bank had $36.2 million and $17.3 million of certificates of deposit as of December 31, 2023, and December 31, 2022, respectively, that had been issued through the Certificate of Deposit Account Registry Service (“CDARS”).

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Borrowings

12 Months Ended

Dec. 31, 2023

Debt Disclosure [Abstract]

Borrowings

Note 10 – Borrowings

Bank Term Funding Program (“BTFP”)

At December 31, loans from the BTFP were as follows:

(Dollars in thousands)	2023		2022
Maturity of May 2024 with fixed interest rate of 4.71%	$	160,000	$	-
Maturity of December 2024 with fixed interest rate of 4.83%		10,000		-
Total advances outstanding at year-end	$	170,000	$	-

Federal Home Loan Bank Advances

At December 31, advances from the FHLB were as follows:

(Dollars in thousands)	2023		2022
Maturity of January 2023 with fixed interest rate of 4.16%	$	-	$	50,000
Maturity of July 2025 with fixed interest rate of 4.88%		20,000		-
Maturity of December 2026 with fixed interest rate of 4.20%		10,000		-
Total advances outstanding at year-end	$	30,000	$	50,000

Advances from the Federal Reserve Bank were secured by securities with a carrying value of approximately $526.4 million and loans with a carrying value of approximately $433.2 million at December 31, 2023. Based on this collateral, the Bank was eligible to borrow an additional $649.0 million at year end 2023.

Advances from the FHLB were secured by residential real estate loans with a carrying value of approximately $191.1 million and securities with a carrying value of approximately $278.5 million at December 31, 2023 and residential real estate loans with a carrying value of approximately $169.7 million at December 31, 2022, respectively. Based on this collateral, the Bank was eligible to borrow an additional $284.3 million at year-end 2023.

In June 2021, ChoiceOne obtained a $20 million line of credit with an annual renewal. The line carries a floating rate of prime rate with a floor of 3.25% and current rate of 8.5% at December 31, 2023. The credit agreement includes certain financial covenants, including minimum capital ratios, asset quality ratios, and the requirements of achieving certain profitability thresholds.

ChoiceOne was in compliance with all covenants as of December 31, 2023. The line of credit balance was $0 at December 31, 2023.

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Subordinated Debentures

12 Months Ended

Dec. 31, 2023

Subordinated Borrowings [Abstract]

Subordinated Debentures

Note 11 – Subordinated Debentures

The Capital Trust sold 4,500 Cumulative Preferred Securities (“trust preferred securities”) at $1,000 per security in a December 2004 offering. The proceeds from the sale of the trust preferred securities were used by the Capital Trust to purchase an equivalent amount of

subordinated debentures from Community Shores. The trust preferred securities and subordinated debentures carry a floating rate of 2.05% over the 3-month LIBOR and the rate was 7.6% at December 31, 2023 and 5.7% at December 31, 2022. The stated maturity is December 30, 2034. Total trust preferred securities at December 31, 2023 were $3.4 million consisting of $4.5 million in trust preferred securities less $1.1 million in merger fair value adjustments, which is being amortized over the next 10 years. The trust preferred securities are redeemable at par value on any interest payment date and are, in effect, guaranteed by ChoiceOne. Interest on the subordinated debentures is payable quarterly on March 30, June 30, September 30 and December 30. ChoiceOne is not considered the primary beneficiary of the Capital Trust (under the variable interest entity rules), therefore the Capital Trust is not consolidated in the consolidated financial statements, rather the subordinated debentures are shown as a liability, and the interest expense is recorded in the consolidated statement of income.

The terms of the subordinated debentures, the trust preferred securities and the agreements under which they were issued give ChoiceOne the right, from time to time, to defer payment of interest for up to 20 consecutive quarters, unless certain specified events of default have occurred and are continuing. The deferral of interest payments on the subordinated debentures results in the deferral of distributions on the trust preferred securities.

In September 2021, ChoiceOne completed a private placement of $32.5 million in aggregate principal amount of 3.25% fixed-to-floating rate subordinated notes due 2031. The notes will initially bear interest at a fixed interest rate of 3.25% per annum until September 3, 2026, after which time the interest rate will reset quarterly to a floating rate equal to a benchmark rate, which is expected to be the then current three-month term Secured Overnight Financing Rate (“SOFR”) plus 255 basis points until the notes’ maturity on September 3, 2031. The notes are redeemable by ChoiceOne, in whole or in part, on or after September 3, 2026, and at any time upon the occurrence of certain events. The notes have been structured to qualify as Tier 2 capital for ChoiceOne for regulatory capital purposes. ChoiceOne used a portion of net proceeds from the private placement to redeem senior debt, fund common stock repurchases, and support bank-level capital ratios.

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Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Note 12 – Income Taxes

Information as of December 31 and for the year follows:

(Dollars in thousands)
	2023			2022			2021
Provision for Income Taxes
Current federal income tax expense	$	4,330		$	4,033		$	3,532
Deferred federal income tax expense/(benefit)		(24	)		(15	)		924
Income tax expense	$	4,306		$	4,018		$	4,456
Reconciliation of Income Tax Provision to Statutory Rate
Income tax computed at statutory federal rate of 21%	$	5,369		$	5,808		$	5,565
Tax exempt interest income		(1,206	)		(1,323	)		(1,190	)
Tax exempt earnings on bank-owned life insurance		(230	)		(276	)		(170	)
Tax credits		(282	)		(289	)		(284	)
Disallowed interest expense		752			179			74
Other items		(97	)		(81	)		461
Income tax expense	$	4,306		$	4,018		$	4,456
Effective income tax rate		17	%		15	%		17	%

(Dollars in thousands)
Components of Deferred Tax Assets and Liabilities	2023		2022
Deferred tax assets:
Purchase accounting adjustments from mergers with County and Community Shores	$	529	$	945
Allowance for credit losses		3,294		1,600
Unrealized losses on securities available for sale		15,279		19,745
Net operating loss carryforward		466		505
Unfunded commitment reserve		454		-
Compensation		347		299
Other		761		716
Total deferred tax assets		21,130		23,810
Deferred tax liabilities:
Purchase accounting adjustments from mergers with County and Community Shores		622		844
Loan servicing rights		805		908
Depreciation		534		605
Interest rate derivative contracts		1,568		660
Deferred loan fees and costs, net		75		15
Other		363		404
Total deferred tax liabilities		3,967		3,436
Net deferred tax asset (liability)	$	17,163	$	20,374

As of December 31, 2023, deferred tax assets included federal net operating loss carryforwards of approximately $2.2 million which was acquired through the merger with Community Shores. The loss carryforwards expire at various dates from 2031 to 2035. Deferred tax assets are recognized for net operating losses because the benefit is more likely than not to be realized. Under Code Section 382, ChoiceOne is limited to applying approximately $185,000 of net operating losses per year.

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Related Party Transactions

12 Months Ended

Dec. 31, 2023

Related Party Transactions [Abstract]

Related Party Transactions

Note 13 – Related Party Transactions

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

(Dollars in thousands)	2023			2022
Balance, beginning of year	$	24,036		$	24,000
New loans		16,881			9,684
Repayments		(10,601	)		(9,259	)
Effect of changes in related parties		-			(389	)
Balance, end of year	$	30,316		$	24,036

Deposits from executive officers, directors and their affiliates were $21.1 million, $30.0 million and $16.8 million at December 31, 2023, 2022 and 2021, respectively.

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Employee Benefit Plans

12 Months Ended

Dec. 31, 2023

Retirement Benefits [Abstract]

Employee Benefit Plans

Note 14 – Employee Benefit Plans

401(k) Plan:

The 401(k) plan allows employees to contribute to their individual accounts under the plan amounts up to the IRS maximum. Matching company contributions to the plan are discretionary. Expense for matching company contributions under the plan was $594,000 and $650,000 in 2023 and 2022, respectively.

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Stock Based Compensation

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

Stock Based Compensation

Note 15 - Stock Based Compensation

Options to buy stock have been granted to key employees to provide them with additional equity interests in ChoiceOne under the Stock Incentive Plan of 2012, which is expired. Compensation expense in connection with stock options granted was $0 in 2023 and $4,000 in 2022. The Equity Incentive Plan of 2022 was approved by the Company’s shareholders at the Annual Meeting held on May 25, 2022. The Equity Incentive Plan of 2022 provides for the issuance of up to 200,000 shares of common stock. At December 31, 2023, there were 142,755 shares available for future grants.

A summary of stock options activity during the year ended December 31, 2023 was as follows:

				Weighted		Weighted
				average		average
				exercise		Grant Date
	Shares			price		Fair Value
Options outstanding at January 1, 2023		20,631		$	25.30	$	3.46
Options granted		-			-		-
Options exercised		(7,500	)		27.25		3.64
Options forfeited or expired		-			-		-
Options outstanding, end of year		13,131		$	24.19	$	3.36
Options exercisable at December 31, 2023		13,131		$	24.19	$	3.36

The exercise prices for options outstanding and exercisable at the end of 2023 ranged from $20.86 to $27.25 per share. The weighted average remaining contractual life of options outstanding and exercisable at the end of 2023 was approximately 4.07 years.

The intrinsic value of all outstanding and exercisable stock options was $67,000 and $76,000 respectively, at December 31, 2023 and December 31, 2022. The aggregate intrinsic values of outstanding and exercisable options at December 31, 2023 were calculated based on the closing market price of the Company’s common stock on December 31, 2023 of $29.30 per share less the exercise price.

Information pertaining to options outstanding at December 31, 2023 was 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)
$27.25		4,500		4,500		5.41
$25.65		3,000		3,000		4.48
$20.86		3,306		3,306		3.34
$21.13		2,325		2,325		1.99

The fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation model. ChoiceOne uses historical data to estimate the volatility of the market price of ChoiceOne stock 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. As of December 31, 2023, there was no unrecognized compensation expense related to stock options.

ChoiceOne has granted restricted stock units to a select group of employees under the Stock Incentive Plan of 2012 and the Equity Incentive Plan of 2022. Restricted stock units outstanding as of December 31, 2023 vest on roughly the three year anniversary of the grant date. Certain additional vesting provisions apply. Each restricted stock unit, once vested, is settled by delivery of one share of ChoiceOne common stock. ChoiceOne recognized compensation expense of $548,000 and $503,000, in 2023 and 2022, respectively, in connection with restricted stock units for current participants during these years.

A summary of the activity for restricted stock units outstanding during the year ended December 31, 2023 is presented below:

				Weighted
				Average Grant
				Date Fair Value
Outstanding Stock Awards	Shares			Per Share
Outstanding at January 1, 2023		53,867		$	27.48
Granted		23,679			24.23
Vested		(9,051	)		29.00
Forfeited		(312	)		24.23
Outstanding at December 31, 2023		68,183		$	26.16

At December 31, 2023, there were 68,183 restricted stock units outstanding with an approximate stock value of $2.0 million based on ChoiceOne’s December 31, 2023 stock price of $29.30 per share. At December 31, 2022, there were 53,867 restricted stock units outstanding with an approximate stock value of $1.6 million based on ChoiceOne’s December 31, 2022 stock price of $29.00 per share. The grant date fair value of restricted stock units granted was $574,000 and $755,000 in 2023 and 2022, respectively. The cost

is expected to be recognized over a weighted average period of 1.43 years. As of December 31, 2023, there was $770,000 of unrecognized compensation cost related to unvested shares granted.

ChoiceOne has granted performance stock units to a select group of employees under the Stock Incentive Plan of 2012 and the Equity Incentive Plan of 2022. Performance stock units outstanding as of December 31, 2023 vest on the three year anniversary of the grant date based on earnings per share growth rate from the date of the grant. Shares can vest at a rate of 125%, 100%, 75%, or 0% based on the growth rate achieved over the three year time frame. Certain additional vesting provisions apply. Each performance stock unit, once vested, is settled by delivery of one share of ChoiceOne common stock. ChoiceOne recognized compensation expense of $81,000 and $47,000 in 2023 and 2022, respectively, in connection with performance stock units for current participants during these years.

A summary of the activity for performance stock units outstanding during the year ended December 31, 2023 is presented below:

			Weighted
			Average Grant
			Date Fair Value
Outstanding Stock Awards	Shares		Per Share
Outstanding at January 1, 2023		6,396	$	26.34
Granted		5,125		24.23
Vested		-		-
Forfeited		-		-
Outstanding at December 31, 2023		11,521	$	25.40

At December 31, 2023, there were 11,521 performance stock units outstanding assuming 100% vesting with an approximate stock value of $338,000 based on ChoiceOne’s December 31, 2023 stock price of $29.30 per share. The grant date fair value of restricted stock units granted was $124,000 and $168,000 in 2023 and 2022, respectively. The cost is expected to be recognized over a weighted average period of 1.8 years. As of December 31, 2023, there was $165,000 of unrecognized compensation cost related to unvested shares granted.

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Earnings Per Share

12 Months Ended

Dec. 31, 2023

Earnings Per Share [Abstract]

Earnings Per Share

Note 16 - Earnings Per Share

(Dollars in thousands, except share data)
	2023		2022		2021
Basic
Net income	$	21,261	$	23,640	$	22,042
Weighted average common shares outstanding		7,532,998		7,504,173		7,685,459
Basic earnings per common shares	$	2.82	$	3.15	$	2.87
Diluted
Net income	$	21,261	$	23,640	$	22,042
Weighted average common shares outstanding		7,532,998		7,504,173		7,685,459
Plus dilutive stock options and restricted stock units		39,292		23,198		17,255
Weighted average common shares outstanding and potentially dilutive shares		7,572,290		7,527,371		7,702,714
Diluted earnings per common share	$	2.82	$	3.15	$	2.86

Stock options considered anti-dilutive to earnings per share were 4,500, 15,000, and 15,000 as of December 31, 2023, December 31, 2022, and December 31, 2021, respectively. This calculation is based on the average stock price during the year.

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Condensed Financial Statements of Parent Company

12 Months Ended

Dec. 31, 2023

Condensed Financial Information Disclosure [Abstract]

Condensed Financial Statements of Parent Company

Note 17 – Condensed Financial Statements of Parent Company

Condensed Balance Sheets

(Dollars in thousands)	December 31,
	2023		2022		2021
Assets
Cash	$	12,031	$	8,310	$	17,622
Equity securities at fair value		2,077		3,199		2,555
Other assets		474		586		553
Investment in subsidiaries		216,975		192,540		236,462
Total assets	$	231,557	$	204,635	$	257,192
Liabilities
Subordinated debentures	$	32,115	$	31,971	$	31,827
Trust preferred securities		3,392		3,291		3,190
Other liabilities		416		499		506
Total liabilities		35,923		35,761		35,523
Shareholders' equity		195,634		168,874		221,669
Total liabilities and shareholders’ equity	$	231,557	$	204,635	$	257,192

Condensed Statements of Income

(Dollars in thousands)	Years Ended December 31,
	2023			2022			2021
Interest income
Interest and dividends from ChoiceOne Bank	$	10,813		$	-		$	6,125
Interest and dividends from other securities		32			27			10
Total interest income		10,845			27			6,135
Interest expense
Borrowings		1,635			1,491			645
Net interest income		9,210			(1,464	)		5,490
Noninterest income
Gains (losses) on sales of securities		(71	)		-			-
Change in market value of equity securities		(307	)		(385	)		554
Other		-			2			4
Total noninterest income		(378	)		(383	)		558
Noninterest expense
Professional fees		47			40			15
Other		217			174			203
Total noninterest expense		264			214			218
Income before income tax and equity in undistributed net income of subsidiary		8,568			(2,061	)		5,830
Income tax (expense)/benefit		472			433			64
Income before equity in undistributed net income of subsidiary		9,040			(1,628	)		5,894
Equity in undistributed net income of subsidiary		12,221			25,268			16,148
Net income	$	21,261		$	23,640		$	22,042

Condensed Statements of Cash Flows

(Dollars in thousands)	Years Ended December 31,
	2023			2022			2021
Cash flows from operating activities:
Net income	$	21,261		$	23,640		$	22,042
Adjustments to reconcile net income to net cash from operating activities:
Equity in undistributed net income of subsidiary		(12,221	)		(25,268	)		(16,148	)
Amortization		245			245			101
Compensation expense on employee and director stock purchases, stock options, and restricted stock units		964			928			787
Net loss on sale of securities		71			-			-
Change in market value of equity securities		307			385			(554	)
Changes in other assets		113			(33	)		(260	)
Changes in other liabilities		(84	)		(7	)		(2,982	)
Net cash from operating activities		10,656			(110	)		2,986
Cash flows from investing activities:
Sales of securities		887			-			-
Purchases of securities		(143	)		(1,029	)		(117	)
Investment in Subsidiary		-			-			(5,000	)
Net cash from investing activities		744			(1,029	)		(5,117	)
Cash flows from financing activities:
Issuance of common stock		231			172			139
Repurchase of common stock		-			(767	)		(7,786	)
Proceeds from borrowings		-			-			36,827
Payments on borrowings		-			-			(14,166	)
Cash dividends paid		(7,910	)		(7,578	)		(7,200	)
Net cash from financing activities		(7,679	)		(8,173	)		7,814
Net change in cash		3,721			(9,312	)		5,683
Beginning cash		8,310			17,622			11,939
Ending cash	$	12,031		$	8,310		$	17,622

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Financial Instruments

12 Months Ended

Dec. 31, 2023

Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]

Financial Instruments

Note 18 – Financial Instruments

Financial instruments as of the dates indicated were as follows:

					Quoted Prices
					In Active		Significant
					Markets for		Other		Significant
					Identical		Observable		Unobservable
(Dollars in thousands)	Carrying		Estimated		Assets		Inputs		Inputs
	Amount		Fair Value		(Level 1)		(Level 2)		(Level 3)
December 31, 2023
Assets
Cash and cash equivalents	$	55,433	$	55,433	$	55,433	$	-	$	-
Equity securities at fair value		7,505		7,505		4,749		-		2,756
Securities available for sale		514,598		514,598		80,194		434,404		-
Securities held to maturity		407,959		348,791		-		335,493		13,298
Federal Home Loan Bank and Federal Reserve Bank stock		9,514		9,514		-		9,514		-
Loans held for sale		4,710		4,851		-		4,851		-
Loans, net		1,394,968		1,362,920		-		-		1,362,920
Accrued interest receivable		10,066		10,066		-		10,066		-
Interest rate lock commitments		64		64		-		64		-
Interest rate derivative contracts		8,880		8,880		-		8,880		-
Liabilities
Noninterest-bearing deposits		547,625		547,625		547,625		-		-
Interest-bearing deposits		1,550,985		1,549,386		-		1,549,386		-
Brokered deposits		23,445		23,435		-		23,435		-
Borrowings		200,000		199,743		-		199,743		-
Subordinated debentures		35,507		31,748		-		31,748		-
Accrued interest payable		6,223		6,223		-		6,223		-
Interest rate derivative contracts		-		-		-		-		-
December 31, 2022
Assets
Cash and cash equivalents	$	43,943	$	43,943	$	43,943	$	-	$	-
Equity securities at fair value		8,566		8,566		6,024		-		2,542
Securities available for sale		529,749		529,749		78,204		451,545		-
Securities held to maturity		425,906		353,901		-		338,583		15,318
Federal Home Loan Bank and Federal Reserve Bank stock		8,581		8,581		-		8,581		-
Loans held for sale		4,834		4,979		-		4,979		-
Loans, net		1,182,163		1,123,198		-		-		1,123,198
Accrued interest receivable		8,949		8,949		-		8,949		-
Interest rate lock commitments		28		28		-		28		-
Interest rate derivative contracts		9,204		9,204		-		9,204		-
Liabilities
Noninterest-bearing deposits		599,579		599,579		599,579		-		-
Interest-bearing deposits		1,518,424		1,514,294		-		1,514,294		-
Borrowings		50,000		50,000		-		50,000		-
Subordinated debentures		35,262		30,304		-		30,304		-
Accrued interest payable		610		610		-		610		-
Interest rate derivative contracts		5,823		5,823		-		5,823		-

The estimated fair values approximate the carrying amounts for all financial instruments except those described later in this paragraph. The methodology for determining the estimated fair value for securities available for sale is described in Note 18. The estimated fair

value of loans involves discounting forecasted cash flows. The discounting is executed using the Treasury curve, incorporating a spread adjustment to account for factors such as liquidity, marketability, and related risks. The allowance for credit losses is considered to be a reasonable estimate of discount for credit quality concerns. The estimated fair value of loans also included the mark to market adjustments related to the Company’s mergers.

The valuation of liabilities, encompassing deposits, borrowings, and others, is derived by aligning forecasted cash flows with relevant points on the SOFR Swap curve. 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.

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Fair Value Measurements

12 Months Ended

Dec. 31, 2023

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 19 – Fair Value Measurements

The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring basis at December 31, 2023 and December 31, 2022, and the valuation techniques used by the Company to determine those fair values.

In general, fair values determined by Level 1 inputs use quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

Fair values determined by Level 2 inputs use other inputs that are observable, either directly or indirectly. These Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals.

Level 3 inputs are unobservable inputs, including inputs that are available in situations where there is little, if any, market activity for the related asset or liability.

In instances where inputs used to measure fair value fall into different levels in the above fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The Company’s assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability.

Disclosures concerning assets and liabilities measured at fair value as of December 31, 2023 or December 31, 2022 are as follows:

Assets and Liabilities Measured at Fair Value on a Recurring Basis

	Quoted Prices
	In Active		Significant
	Markets for		Other		Significant
	Identical		Observable		Unobservable
(Dollars in thousands)	Assets		Inputs		Inputs		Balance at
	(Level 1)		(Level 2)		(Level 3)		Date Indicated
Equity Securities Held at Fair Value - December 31, 2023
Equity securities	$	4,749	$	-	$	2,756	$	7,505
Investment Securities, Available for Sale -December 31, 2023
U. S. Government and federal agency	$	-	$	-	$	-	$	-
U. S. Treasury notes and bonds		80,194		-		-		80,194
State and municipal		-		234,682		-		234,682
Mortgage-backed		-		188,501		-		188,501
Corporate		-		204		-		204
Asset-backed Securities		-		11,017		-		11,017
Total	$	80,194	$	434,404	$	-	$	514,598
Derivative Instruments -December 31, 2023
Interest rate derivative contracts - assets	$	-	$	8,880	$	-	$	8,880
Interest rate derivative contracts - liabilities	$	-	$	-	$	-	$	-
Equity Securities Held at Fair Value -December 31, 2022
Equity securities	$	6,024	$	-	$	2,542	$	8,566
Investment Securities, Available for Sale -December 31, 2022
U. S. Government and federal agency	$	-	$	-	$	-	$	-
U. S. Treasury notes and bonds		78,204		-		-		78,204
State and municipal		-		229,938		-		229,938
Mortgage-backed		-		208,563		-		208,563
Corporate		-		711		-		711
Asset-backed Securities		-		12,333		-		12,333
Total	$	78,204	$	451,545	$	-	$	529,749
Derivative Instruments -December 31, 2022
Interest rate derivative contracts - assets	$	-	$	9,204	$	-	$	9,204
Interest rate derivative contracts - liabilities	$	-	$	5,823	$	-	$	5,823

Securities classified as available for sale are generally reported at fair value utilizing Level 2 inputs. ChoiceOne’s external investment advisor obtained fair value measurements from an independent pricing service that uses matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities' relationship to other benchmark quoted securities (Level 2 inputs). The fair value measurements considered observable data that may include dealer quotes, market spreads, cash flows and the bonds' terms and conditions, among other things. Securities classified in Level 2 included U.S. Government and federal agency securities, state and municipal securities, mortgage-backed securities, corporate bonds, and asset backed securities. The Company classified certain state and municipal securities and corporate bonds, and equity securities as Level 3. Based on the lack of observable market data, estimated fair values were based on the observable data available and reasonable unobservable market data.

Changes in Level 3 Assets Measured at Fair Value on a Recurring Basis

(Dollars in thousands)
	2023		2022
Equity Securities Held at Fair Value
Balance, January 1	$	2,542	$	1,768
Total realized and unrealized gains included in noninterest income		71		161
Net purchases, sales, calls, and maturities		143		613
Balance, December 31	$	2,756	$	2,542
Amount of total losses for the period included in earning attributable to the change in    unrealized gains (losses) relating to assets and liabilities still held at December 31,	$	5	$	9
Investment Securities, Available for Sale
Balance, January 1	$	-	$	21,050
Total realized and unrealized gains included in income		-		-
Total unrealized gains/(losses) included in other comprehensive income		-		-
Net purchases, sales, calls, and maturities		-		-
Net transfers into Level 3		-		-
Transfer to held to maturity		-		(21,050	)
Balance, December 31	$	-	$	-
Amount of total losses for the period included in earning attributable to the change in    unrealized gains (losses) relating to assets and liabilities still held at December 31,	$	-	$	-

Of the Level 3 assets that were held by the Company at December 31, 2023, the net unrealized gain as of December 31, 2023 was $71,000, compared to $161,000 as of December 31, 2022. The change in the net unrealized gain or loss is recognized in noninterest income or other comprehensive income in the consolidated balance sheets and income statements. Amounts recognized in noninterest income relate to changes in equity securities. A total of $143,000 and $613,000 of Level 3 securities were purchased in 2023 and 2022, respectively.

Both observable and unobservable inputs may be used to determine the fair value of positions classified as Level 3 assets and liabilities. As a result, the unrealized gains and losses for these assets and liabilities presented in the tables above may include changes in fair value that were attributable to both observable and unobservable inputs.

The Company also has assets that under certain conditions are subject to measurement at fair value on a non-recurring basis. These assets are not normally measured at fair value, but can be subject to fair value adjustments in certain circumstances, such as impairment. Disclosures concerning assets measured at fair value on a non-recurring basis are as follows:

Assets Measured at Fair Value on a Non-recurring Basis

			Quoted Prices
			In Active		Significant
			Markets for		Other		Significant
	Balances at		Identical		Observable		Unobservable
(Dollars in thousands)	Dates		Assets		Inputs		Inputs
	Indicated		(Level 1)		(Level 2)		(Level 3)
Collateral Dependent Loans
December 31, 2023	$	387	$	-	$	-	$	387
Impaired Loans
December 31, 2022	$	2,846	$	-	$	-	$	2,846
Other Real Estate
December 31, 2023	$	122	$	-	$	-	$	122
December 31, 2022	$	-	$	-	$	-	$	-

Collateral dependent loans classified as Level 3 are loans for which the repayment is expected to be provided substantially through the sale or operation of the collateral when the borrower is experiencing financial difficulty. The fair value of the collateral should be adjusted for estimated costs to sell if the repayment depends on the sale of the collateral. The net carrying amount of the loan should not exceed the fair value of the collateral (less costs to sell, if applicable). Impaired loans categorized as Level 3 assets consist of non-homogeneous loans classified as non-accrual, TDR, or past due. The Company estimates the fair value of the loans based on the present value of expected future cash flows using management’s best estimate of key assumptions. These assumptions include future payment ability, timing of payment streams, and estimated realizable values of available collateral (typically based on outside appraisals). The changes in fair value consisted of charge-downs of impaired loans that were posted to the allowance for credit losses and write-downs of other real estate owned that were posted to a valuation account. The fair value of other real estate owned was based on appraisals or other reviews of property values, adjusted for estimated costs to sell.

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Off-Balance Sheet Activities

12 Months Ended

Dec. 31, 2023

Off-Balance-Sheet, Credit Loss, Liability [Abstract]

Off-Balance Sheet Activities

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:

	2023				2022
	Fixed		Variable		Fixed		Variable
(Dollars in thousands)	Rate		Rate		Rate		Rate
Unused lines of credit and letters of credit	$	57,781	$	141,522	$	54,523	$	148,497
Commitments to fund loans (at market rates)		90,178		27,939		35,789		12,565

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 9.50% and maturities ranging from 1 year to 30 years.

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Regulatory Capital

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Regulatory Capital Requirements under Banking Regulations [Text Block]

Note 21 – Regulatory Capital

ChoiceOne and the Bank are 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. Depending upon the capital category to which an institution is assigned, the regulators' corrective powers include: prohibiting the acceptance of brokered deposits; requiring the submission of a capital restoration plan; placing limits on asset growth and restrictions on activities; requiring the institution to issue additional capital stock (including additional voting stock) or be acquired; restricting transactions with affiliates; restricting the interest rate the institution may pay on deposits; ordering a new election of directors of the institution; requiring that senior executive officers or directors be dismissed; prohibiting the institution from accepting deposits from correspondent banks; requiring the institution to divest certain subsidiaries; prohibiting the payment of principal or interest on subordinated debt; and ultimately, appointing a receiver for the institution. At year-end 2023 and 2022, the Bank was categorized as well capitalized under the regulatory framework for prompt corrective action.

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

											Minimum Required
											to be Well
						Minimum Required					Capitalized Under
						for Capital					Prompt Corrective
(Dollars in thousands)	Actual					Adequacy Purposes					Action Regulations
	Amount		Ratio			Amount		Ratio			Amount		Ratio
December 31, 2023
ChoiceOne Financial Services Inc.
Total capital (to risk weighted assets)	$	233,840		13.0	%	$	144,441		8.0	%	N/A		N/A
Common equity Tier 1 capital (to risk weighted assets)		185,412		10.3			81,248		4.5		N/A		N/A
Tier 1 capital (to risk weighted assets)		189,912		10.5			108,331		6.0		N/A		N/A
Tier 1 capital (to average assets)		189,912		7.5			101,337		4.0		N/A		N/A
ChoiceOne Bank
Total capital (to risk weighted assets)	$	224,095		12.4	%	$	144,274		8.0	%	$	180,342		10.0	%
Common equity Tier 1 capital (to risk weighted assets)		212,283		11.8			81,154		4.5			117,223		6.5
Tier 1 capital (to risk weighted assets)		212,283		11.8			108,205		6.0			144,274		8.0
Tier 1 capital (to average assets)		212,283		8.4			101,244		4.0			126,555		5.0
December 31, 2022
ChoiceOne Financial Services Inc.
Total capital (to risk weighted assets)	$	222,006		13.8	%	$	128,545		8.0	%	N/A		N/A
Common equity Tier 1 capital (to risk weighted assets)		177,916		11.1			72,307		4.5		N/A		N/A
Tier 1 capital (to risk weighted assets)		182,416		11.4			96,409		6.0		N/A		N/A
Tier 1 capital (to average assets)		182,416		7.9			92,558		4.0		N/A		N/A
ChoiceOne Bank
Total capital (to risk weighted assets)	$	208,696		13.0	%	$	128,294		8.0	%	$	160,367		10.0	%
Common equity Tier 1 capital (to risk weighted assets)		201,077		12.5			72,165		4.5			104,239		6.5
Tier 1 capital (to risk weighted assets)		201,077		12.5			96,220		6.0			128,294		8.0
Tier 1 capital (to average assets)		201,077		8.7			92,449		4.0			115,562		5.0

Banking laws and 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, 2023, approximately $53.3 million was available for the Bank to pay dividends to ChoiceOne assuming regulatory approval of any amount in excess of the applicable capital conservation buffer. ChoiceOne’s ability to pay dividends to shareholders is dependent on the payment of dividends from the Bank, which is restricted by state law and regulations.

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2023

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include ChoiceOne Financial Services, Inc. (“ChoiceOne”), its wholly-owned subsidiaries, ChoiceOne Bank (the “Bank”) and 109 Technologies, LLC, and ChoiceOne Bank’s wholly-owned subsidiary, ChoiceOne Insurance Agencies, Inc. (the “Insurance Agency”). Intercompany transactions and balances have been eliminated in consolidation.

ChoiceOne owns all of the common securities of Community Shores Capital Trust I (the “Capital Trust”). Under U.S. generally accepted accounting principles (“GAAP”), the Capital Trust is not consolidated because it is a variable interest entity and ChoiceOne is not the primary beneficiary.

Nature of Operations

Nature of Operations

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 within the Bank’s primary market areas in Kent, Muskegon, Newaygo, and Ottawa counties in western Michigan and Lapeer, Macomb, and St. Clair counties in southeastern 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 collateralized by either residential or commercial real estate.

109 Technologies, LLC is a wholly owned subsidiary of ChoiceOne Financial Services Inc. with the intent of selling a fintech product marketed to other banks and bank holding companies.

The Insurance Agency is a wholly-owned subsidiary of the Bank. The Insurance Agency sells insurance policies such as life and health 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 and ChoiceOne’s other direct and indirect subsidiaries account for substantially all of ChoiceOne’s assets, revenues and operating income.

Use of Estimates

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. These estimates and assumptions are subject to many risks and uncertainties. Actual results may differ from these estimates. Estimates associated with the allowance for credit losses are particularly susceptible to change.

Cash and Cash Equivalents

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 original terms of 90 days or less.

Loans

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, remaining purchase accounting adjustments, and an allowance for credit losses. Loans held for sale are reported at the lower of cost or market, on an aggregate basis.

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 loans are 90 days past due unless the loan is secured by sufficient collateral and is in the process of collection. Past due status is based on the contractual terms of the loan. 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 qualifying 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.

Purchased financial assets without credit deterioration will be recorded at the acquisition date fair value. Additionally, an allowance is recorded with a corresponding charge to credit loss expense in the reporting period in which the acquisition occurs. For assets purchased with credit deterioration, an allowance is recorded with a corresponding increase to the amortized cost basis of the financial asset as of the acquisition date. No financial assets were purchased since the initiation of CECL on January 1, 2023.

Loans to Other Financial Institutions

Loans to Other Financial Institutions

Loans to other financial institutions are made for the purpose of providing a warehouse line of credit to facilitate funding of residential mortgage loan originations at other financial institutions. The loans are short-term in nature and are designed to provide funding for the time period between the loan origination and its subsequent sale in the secondary market. Loans to other financial institutions earn a share of interest income, determined by the contract, from when the loan is funded to when the loan is sold on the secondary market.

Allowance for Credit Losses ("ACL")

Allowance for Credit Losses (“ACL”)

In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments. This ASU (as subsequently amended by ASU 2018-19) significantly changed how entities measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard replaced the former “incurred loss” approach with an “expected loss” model. The new model, referred to as the CECL model, applies to financial assets subject to credit losses and measured at amortized cost, and certain off-balance sheet credit exposures. The standard also expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the ACL. In addition, entities need to disclose the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by the year of origination. A reasonable and supportable economic forecast is a key component of the CECL methodology.

ChoiceOne adopted CECL effective January 1, 2023 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures. Results for reporting periods beginning after January 1, 2023 are presented under CECL while prior period amounts continue to be reported in accordance with the incurred loss accounting standards. The transition adjustment of the CECL adoption included an increase in the ACL of $7.2 million, which included a $5.5 million decrease to the retained earnings account to reflect the cumulative effect of adopting CECL on our Consolidated Balance Sheet, with the $1.5 million tax impact portion being recorded as part of the deferred tax asset in other assets on our Consolidated Balance Sheet. The transition adjustment of the CECL adoption included an additional ACL on unfunded commitments of $3.3 million, which included a $2.6 million decrease to the retained earnings account to reflect the cumulative effect of adopting CECL on our Consolidated Balance Sheet, with the $688,000 tax impact portion being recorded as part of the deferred tax asset in other assets on our Consolidated Balance Sheet.

The ACL is a valuation allowance for expected credit losses. The ACL is increased by the provision for credit losses and decreased by loans charged off less any recoveries of charged off loans. As ChoiceOne has had very limited loss experience since 2011, management elected to utilize benchmark peer loss history data to estimate historical loss rates. ChoiceOne identified an appropriate peer group for each loan cohort which shared similar characteristics. Management estimates the ACL required based on the selected peer group loan loss experience, the nature and volume of the loan portfolio, information about specific borrower situations and estimated collateral values, a reasonable and supportable economic forecast, and other factors. Allocations of the ACL may be made for specific loans, but the entire ACL is available for any loan that, in management’s judgment, should be charged off. Loan losses are charged against the ACL when management believes that collection of a loan balance is not possible.

The ACL consists of general and specific components. The general component covers loans collectively evaluated for credit losses and is based on peer historical loss experience adjusted for current and forecasted factors. Management’s adjustment for current and forecasted factors is based on trends in delinquencies, trends in charge-offs and recoveries, trends in the volume of loans, changes in underwriting standards, trends in loan review findings, the experience and ability of lending staff, and a reasonable and supportable economic forecast described further below.

The discounted cash flow methodology is utilized for all loan pools. This methodology is supported by our CECL software provider and allows management to automatically calculate contractual life by factoring in all cash flows and adjusting them for behavioral and credit-related aspects.

Reasonable and supportable economic forecasts have to be incorporated in determining expected credit losses. The forecast period represents the time frame from the current period end through the point in time that we can reasonably forecast and support entity and environmental factors that are expected to impact the performance of our loan portfolio. Ideally, the economic forecast period would encompass the contractual terms of all loans; however, the ability to produce a forecast that is considered reasonable and supportable becomes more difficult or may not be possible in later periods. Subsequent to the end of the forecast period, we revert to historical loan data based on an ongoing evaluation of each economic forecast in relation to then current economic conditions as well as any developing

loan loss activity and resulting historical data. As of December 31, 2023, we used a one-year reasonable and supportable economic forecast period, with a two year straight-line reversion period.

We are not required to develop and use our own economic forecast model, and we elected to utilize economic forecasts from third-party providers that analyze and develop forecasts of the economy for the entire United States at least quarterly.

Other inputs to the calculation are also updated or reviewed quarterly. Prepayment speeds are updated on a one quarter lag based on the asset liability model from the previous quarter. This model is performed at the loan level. Curtailment is updated quarterly within the ACL model based on our peer group average. The reversion period is reviewed by management quarterly with consideration of the current economic climate. Prepayment speeds and curtailment were updated during the fourth quarter of 2023; however, the effect was insignificant.

We are also required to consider expected credit losses associated with loan commitments over the contractual period in which we are exposed to credit risk on the underlying commitments unless the obligation is unconditionally cancellable by us. Any allowance for off-balance sheet credit exposures is reported as an other liability on our Consolidated Balance Sheet and is increased or decreased via the provision for credit losses account on our Consolidated Statement of Income. The calculation includes consideration of the likelihood that funding will occur and forecasted credit losses on commitments expected to be funded over their estimated lives. The allowance is calculated using the same aggregate reserve rates calculated for the funded portion of loans at the portfolio level applied to the amount of commitments expected to be funded.

Loans that do not share risk characteristics are evaluated on an individual basis and are excluded from the collective evaluation. ChoiceOne has determined that any loans which have been placed on non-performing status, loans with a risk rating of 6 or higher, and loans past due more than 60 days will be assessed individually for evaluation. Management’s judgment will be used to determine if the loan should be migrated back to pool on an individual basis. Individual analysis will establish a specific reserve for loans in scope. Specific reserves on non-performing loans are typically based on management’s best estimate of the fair value of collateral securing these loans, adjusted for selling costs as appropriate or based on the present value of the expected cash flows from that loan.

Allowance for Loan Losses

Allowance for Loan Losses

Prior to the adoption of CECL on January 1, 2023, management calculated the allowance for loan losses for the valuation allowance for probable incurred credit losses. The allowance for loan losses 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 for loan losses balance required based on past loan loss experience, the nature and volume of the loan portfolio, information about specific borrower situations and estimated collateral values, economic conditions, and other factors. Allocations of the allowance for loan losses may be made for specific loans, but the entire allowance for loan losses is available for any loan that, in management’s judgment, should be charged off. Loan losses are charged against the allowance for loan losses when management believes that collection of a loan balance is not possible.

The allowance for loan losses 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. The general component of management's estimate of the allowance for loan losses covers non-impaired loans and is based on historical loss experience adjusted for current factors. Management's adjustment for current factors is based on trends in delinquencies, trends in charge-offs and recoveries, trends in the volume of loans, changes in underwriting standards, trends in loan review findings, experience and ability of lending staff, national and economic trends and conditions, industry conditions, trends in real estate values, and other conditions.

A loan is impaired when full payment under the loan terms is not expected. Troubled debt restructuring of loans is undertaken to improve the likelihood that the loan will be repaid in full under the modified terms in accordance with a reasonable repayment schedule. All modified loans are evaluated to determine whether the loans should be reported as Troubled Debt Restructurings ("TDR"). A loan is a TDR when the Bank, for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower by modifying a loan. To make this determination, the Bank must determine whether (a) the borrower is experiencing financial difficulties and (b) the Bank granted the borrower a concession. This determination requires consideration of all facts and circumstances surrounding the modification. An overall general decline in the economy or some deterioration in a borrower’s financial condition does not automatically mean the borrower is experiencing financial difficulties. Commercial loans are evaluated for impairment on an individual loan basis. If a loan is considered impaired or if a loan has been classified as a TDR, 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 residential real estate mortgage loans are collectively evaluated for impairment and, accordingly, they are not separately identified for impairment disclosures.

Securities

Securities

Debt securities are classified as held to maturity and carried at amortized cost when management has the positive intent and ability to hold them to maturity. ​ Debt securities are classified as available for sale because they might be sold before maturity. Debt securities classified as available for sale are carried at fair value, with unrealized holding gains and losses reported separately in the accumulated other comprehensive income or loss section of shareholders’ equity, net of tax effect. Restricted investments in Federal Reserve Bank stock and Federal Home Loan Bank stock are carried at cost. Equity securities consist of investments in preferred stock and investments in common stock of other financial institutions. Equity securities are reported at their fair value with changes in market value reported through current earnings.

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.

Securities Available for Sale – For securities AFS in an unrealized loss position, management determines whether they intend to sell or if it is more likely than not that ChoiceOne will be required to sell the security before recovery of the amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income with an allowance being established under CECL. For securities AFS with unrealized losses not meeting these criteria, management evaluates whether any decline in fair value is due to credit loss factors. In making this assessment, management considers any changes to the rating of the security by rating agencies and adverse conditions specifically related to the issuer of the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of the cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses (“ACL”) is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Changes in the ACL under ASC 326-30 are recorded as provisions for (or reversal of) credit loss expense. Losses are charged against the allowance when the collectability of a debt security AFS is confirmed or when either of the criteria regarding intent or requirement to sell is met. Any impairment that has not been recorded through an ACL is recognized in other comprehensive income, net of income taxes. At December 31, 2023 and at adoption of CECL on January 1, 2023, there was no ACL related to debt securities AFS. Accrued interest receivable on debt securities was excluded from the estimate of credit losses.

Securities Held to Maturity – Since the adoption of CECL, ChoiceOne measures credit losses on HTM securities on a collective basis by major security type with each type sharing similar risk characteristics, and considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. The ACL on securities HTM is a contra asset valuation account that is deducted from the carrying amount of HTM securities to present the net amount expected to be collected. HTM securities are charged off against the ACL when deemed uncollectible. Adjustments to the ACL are reported in ChoiceOne’s Consolidated Statements of Income in the provision for credit losses. Accrued interest receivable on HTM securities is excluded from the estimate of credit losses. With regard to US Treasury securities, these have an explicit government guarantee; therefore, no ACL is recorded for these securities. With regard to obligations of states and political subdivisions and other HTM securities, management considers (1) issuer bond ratings, (2) historical loss rates for given bond ratings, (3) the financial condition of the issuer, and (4) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities. A discounted cash flow method will be used to determine the reserve required for any credit losses on HTM securities. At December 31, 2023, the ACL related to securities HTM is insignificant.

Troubled Loan Modifications

FASB also issued ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. This standard eliminated the previous accounting guidance for troubled debt restructurings and added additional disclosure requirements for gross chargeoffs by year of origination. It also prescribes guidance for reporting modifications of loans to borrowers experiencing financial difficulty.

Premises and Equipment

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. If impaired, the assets are recorded at fair value.

Other Real Estate Owned

Other Real Estate Owned

Real estate properties acquired in the collection of a loan are initially recorded at the lower of the Bank’s basis in the loans or 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 credit 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 noninterest income.

Bank Owned Life Insurance

Bank Owned Life Insurance

Bank owned life insurance policies are stated at the current cash surrender value of the policy, or the policy death proceeds less any obligation to provide a death benefit to an insured’s beneficiaries if that value is less than the cash surrender value. Increases in the asset value are recorded as earnings in other income.

Loan Servicing Rights

Loan Servicing Rights

Loan servicing rights represent the allocated value of servicing rights on loans sold with servicing retained. Servicing rights are initially recorded at estimated fair value and fair value is determined using prices for similar assets with similar characteristics when available or based upon discounted cash flows using market-based assumptions. 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. Any impairment of a grouping is reported as a valuation allowance.

Goodwill and Intangible Assets

Goodwill and Intangible Assets

Goodwill results from business acquisitions and represents the excess of the purchase price over the fair value of the acquired tangible assets and liabilities and identifiable intangible assets. Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but tested for impairment at least annually or more frequently if events and circumstances exist that indicate that a goodwill impairment test should be performed.

Core Deposit Intangible

Core Deposit Intangible

Core deposit intangible represents the value of the acquired customer core deposit bases and is included as an asset on the consolidated balance sheets. The core deposit intangible has an estimated finite life, is amortized on an accelerated basis over a 120 month period and is subject to periodic impairment evaluation.

Loan Commitments and Related Financial Instruments

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.

Employee Benefit Plans

Employee Benefit Plans

ChoiceOne’s 401(k) plan allows participants to make contributions to their individual accounts under the plan in amounts up to the IRS maximum. Employer matching contributions from ChoiceOne to its 401(k) plan are discretionary.

Income Taxes

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. A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company recognizes interest and/or penalties related to income tax matters in income tax expense.

Earnings Per Share

Earnings Per Share

Basic earnings per common share (“EPS”) is based on weighted-average common shares outstanding. Diluted EPS assumes issuance of any dilutive potential common shares issuable under stock options or restricted stock units granted.

Comprehensive Income

Comprehensive Income

Comprehensive income consists of net income and other comprehensive income or loss. Other comprehensive income or loss includes unrealized gains and losses on securities available for sale and changes in the funded status of derivative instruments, net of tax, which are also recognized as a separate component of shareholders’ equity.

Accumulated other comprehensive income was as follows:

(Dollars in thousands)	As of December 31,
	2023			2022
Unrealized gain (loss) on available-for-sale securities	$	(69,641	)	$	(89,041	)
Unrealized gain (loss) on held to maturity securities		(2,720	)		(3,053	)
Unrealized gain (loss) on derivative instruments		7,072			1,212
Tax effect		13,711			19,085
Accumulated other comprehensive income (loss)	$	(51,578	)	$	(71,797	)

Loss Contingencies

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 as of December 31, 2023.

Cash Restrictions

Cash Restrictions

Cash on hand or on deposit with the Federal Reserve Bank was $0 at both December 31, 2023 and 2022, as the Federal Reserve revoked the reserve requirement.

Leases

Leases

Leases are classified as operating or finance leases at the lease commencement date. Lease expense for operating leases and short-term leases is recognized on a straight-line basis over the lease term. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term.

Stock-Based Compensation

Stock-Based Compensation

Share based restricted stock units are valued at fair value as of the grant date. The Company values share-based stock option awards granted using the Black-Scholes option-pricing model. The Company recognizes compensation expense for its awards on a straight-line basis over the requisite service period for the entire award (straight-line attribution method), ensuring that the amount of compensation cost recognized at any date at least equals the portion of the grant-date fair value of the award that is vested at that time. Compensation costs related to stock options granted are disclosed in Note 15.

Dividend Restrictions

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 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 18 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.

Derivatives

Derivatives

At the inception of a derivative contract, ChoiceOne designates the derivative as one of two types based on our intention and belief as to the likely effectiveness of the hedge. These two types are (1) a hedge of changes in fair value of a recognized asset or liability or of an unrecognized firm commitment (“fair value hedge”), and (2) a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow hedge”). For a fair value hedge, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item, are recognized in current earnings as fair values change. For a cash flow hedge,

the gain or loss on the derivative is reported in other comprehensive income and is reclassified into earnings in the same period during which the hedged transaction affects the earnings. The changes in fair value of derivatives that do not qualify for hedge accounting are reported in current earnings, as noninterest income.

Net cash settlements on derivatives that qualify for hedge accounting are recorded in interest income or interest expense, based on the item being hedged. Cash flows on hedges are classified in the cash flow statement in the same line item as the cash flows of the item being hedged.

The initial fair value of hedge components excluded from the assessment of effectiveness are recognized in the statement of financial condition under a systematic and rational method over the life of the hedging relationship and are presented in the same income statement line item as the earnings effect of the hedged item. Any difference between the change in the fair value of the hedge components excluded from the assessment of effectiveness and the amounts recognized in earnings are recorded as a component of other comprehensive income.

ChoiceOne discontinues hedge accounting when it determines that the derivative is no longer effective in offsetting changes in fair values or cash flows of the hedged item, the derivative is settled or terminates, a hedged forecasted transaction is no longer probable, a hedged firm commitment is no longer firm, or the treatment of the derivative as a hedge is no longer appropriate or intended. When hedge accounting is discontinued, subsequent changes in fair value of the derivative are recorded as noninterest income. When a fair value hedge is discontinued, the hedged asset or liability is no longer adjusted for changes in fair value and the existing basis adjustment is amortized or accreted over the remaining life of the asset or liability. When a cash flow hedge is discontinued but the hedged cash flows or forecasted transactions are still expected to occur, gains or losses that were accumulated in other comprehensive income are amortized into earnings over the same periods in which the hedged transactions will affect earnings.

ChoiceOne is exposed to losses if a counterparty fails to make its payments under a contract in which the Company is in the net receiving position. ChoiceOne anticipates that the counterparties will be able to fully satisfy their obligation under the agreements. All the contracts to which we are a party have cash flows that settle monthly or semiannually.

Operating Segments

Operating Segments

While ChoiceOne’s management monitors the revenue streams of various products and services for the Bank and the Insurance Agency, 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.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Investment in Equity Method and Joint Ventures

In March 2023, the FASB issued ASU 2023-02, Investments – Equity Method and Joint Venture (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method. The amendments in this ASU permit reporting entities to account for the tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method. This update will be effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2023. Early adoption is permitted. This change in guidance effective on January 1, 2023, did not have a significant impact on the financial statements.

Improvements to Income Tax Disclosure

ASU 2023-09 enhances transparency by requiring consistent categorization, greater disaggregation, and detailed disclosure related to income taxes paid. These changes aim to help users of financial statements understand factors contributing to differences between effective and statutory tax rates. The disclosure is effective for annual reporting periods beginning after December 15, 2024.

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2023

Accounting Policies [Abstract]

Accumulated Other Comprehensive Income

Accumulated other comprehensive income was as follows:

(Dollars in thousands)	As of December 31,
	2023			2022
Unrealized gain (loss) on available-for-sale securities	$	(69,641	)	$	(89,041	)
Unrealized gain (loss) on held to maturity securities		(2,720	)		(3,053	)
Unrealized gain (loss) on derivative instruments		7,072			1,212
Tax effect		13,711			19,085
Accumulated other comprehensive income (loss)	$	(51,578	)	$	(71,797	)

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Securities (Tables)

12 Months Ended

Dec. 31, 2023

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

Schedule of Gross Unrealized Gains and (Losses)

The fair value of equity securities and the related gross unrealized gains and (losses) recognized in noninterest income at December 31 were as follows:

	December 31, 2023
			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Equity securities	$	7,960	$	212	$	(667	)	$	7,505

	December 31, 2022
			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Equity securities	$	8,982	$	305	$	(721	)	$	8,566

Schedule of Gross Unrealized Gains and Losses on Investment Securities Available for Sale Recognized in Accumulated Other Comprehensive Income (loss)

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

	December 31, 2023
			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
Available for Sale:	Cost		Gains		Losses			Value
U.S. Government and federal agency	$	-	$	-	$	-		$	-
U.S. Treasury notes and bonds		90,345		-		(10,151	)		80,194
State and municipal		269,918		-		(35,236	)		234,682
Mortgage-backed		212,392		14		(23,905	)		188,501
Corporate		250		-		(46	)		204
Asset-backed securities		11,334		-		(317	)		11,017
Total	$	584,239	$	14	$	(69,655	)	$	514,598

	December 31, 2022
			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
Available for Sale:	Cost		Gains		Losses			Value
U.S. Government and federal agency	$	-	$	-	$	-		$	-
U.S. Treasury notes and bonds		90,810		-		(12,606	)		78,204
State and municipal		277,489		-		(47,551	)		229,938
Mortgage-backed		236,703		-		(28,140	)		208,563
Corporate		757		-		(46	)		711
Asset-backed securities		13,031		-		(698	)		12,333
Total	$	618,790	$	-	$	(89,041	)	$	529,749

Schedule of Gross Unrealized Gains and Losses on Investment Securities Held to Maturity

The amortized cost and fair value of securities held to maturity and the related gross unrealized gains and losses were as follows:

	December 31, 2023
			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
Held to Maturity:	Cost		Gains		Losses			Value
U.S. Government and federal agency	$	2,972	$	-	$	(293	)	$	2,679
State and municipal		196,098		14		(30,220	)		165,892
Mortgage-backed		188,329		-		(25,796	)		162,533
Corporate		20,013		21		(2,864	)		17,170
Asset-backed securities		547		-		(30	)		517
Total	$	407,959	$	35	$	(59,203	)	$	348,791

	December 31, 2022
			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
Held to Maturity:	Cost		Gains		Losses			Value
U.S. Government and federal agency	$	2,966	$	-	$	(421	)	$	2,545
State and municipal		201,890		1		(39,355	)		162,536
Mortgage-backed		200,473		-		(29,868	)		170,605
Corporate		19,603		-		(2,285	)		17,318
Asset-backed securities		974		-		(77	)		897
Total	$	425,906	$	1	$	(72,006	)	$	353,901

Schedule of Realized Gain (Loss)

Information regarding sales of equity and debt securities available for sale for the year ended December 31 follows:

(Dollars in thousands)
	2023			2022			2021
Proceeds from sales of securities	$	887		$	47,167		$	29,742
Gross realized gains		-			-			-
Gross realized losses		(71	)		(809	)		(40	)

Schedule of Investments Classified by Contractual Maturity Date

Contractual maturities of securities available for sale at December 31, 2023 were as follows:

(Dollars in thousands)	Amortized		Fair
	Cost		Value
Due within one year	$	250	$	250
Due after one year through five years		99,159		90,209
Due after five years through ten years		177,228		159,321
Due after ten years		95,210		76,317
Total debt securities		371,847		326,097
Mortgage-backed securities		212,392		188,501
Total	$	584,239	$	514,598

Contractual maturities of securities held to maturity at December 31, 2023 were as follows:

(Dollars in thousands)	Amortized		Fair
	Cost		Value
Due within one year	$	1,586	$	1,543
Due after one year through five years		12,379		11,376
Due after five years through ten years		124,644		108,371
Due after ten years		81,021		64,968
Total debt securities		219,630		186,258
Mortgage-backed securities		188,329		162,533
Total	$	407,959	$	348,791

Schedule of Financial Instruments Owned and Pledged as Collateral

Certain securities were pledged as collateral for participation in a program that provided Community Reinvestment Act credits and for other purposes, as required or permitted by law. ChoiceOne also pledges securities to the FHLB and the FRB. The purpose of this

pledging strategy is to enhance the availability of cash and other liquid assets that can be used to meet the operational needs of the organization. This strategy also allows the organization to optimize its asset allocation and diversify its funding sources. The carrying amount of the securities pledged as collateral at December 31 was as follows:

(Dollars in thousands)	2023		2022
Securities pledged to Federal Reserve Bank	$	526,413	$	-
Securities pledged to Federal Home Loan Bank		278,503		-
Securities pledged for Community Reinvestment Act credits		250		250
Total Securities pledged		805,166		250

Schedule of Available for Sale Securities with Unrealize Losses

Securities with unrealized losses at year-end 2023 and 2022, aggregated by investment category and length of time the individual securities have been in an unrealized loss position, were as follows:

	2023
	Less than 12 months				More than 12 months				Total
(Dollars in thousands)	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Available for Sale:	Value		Losses		Value		Losses		Value		Losses
U.S. Government and federal agency	$	-	$	-	$	-	$	-	$	-	$	-
U.S. Treasury notes and bonds		-		-		80,194		10,151		80,194		10,151
State and municipal		557		6		234,125		35,230		234,682		35,236
Mortgage-backed		1,255		23		176,400		23,882		177,655		23,905
Corporate		-		-		204		46		204		46
Asset-backed securities		-		-		11,017		317		11,017		317
Total temporarily impaired	$	1,812	$	29	$	501,940	$	69,626	$	503,752	$	69,655

	2022
	Less than 12 months				More than 12 months				Total
(Dollars in thousands)	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Available for Sale:	Value		Losses		Value		Losses		Value		Losses
U.S. Government and federal agency	$	-	$	-	$	-	$	-	$	-	$	-
U.S. Treasury notes and bonds		-		-		78,204		12,606		78,204		12,606
State and municipal		89,158		12,612		140,390		34,939		229,548		47,551
Mortgage-backed		63,249		3,093		144,318		25,047		207,567		28,140
Corporate		711		46		-		-		711		46
Asset-backed securities		-		-		12,333		698		12,333		698
Total temporarily impaired	$	153,118	$	15,751	$	375,245	$	73,290	$	528,363	$	89,041

Schedule of Held to Maturity Securities with Unrealize Losses

	2023
	Less than 12 months				More than 12 months				Total
(Dollars in thousands)	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Held to Maturity:	Value		Losses		Value		Losses		Value		Losses
U.S. Government and federal agency	$	-	$	-	$	2,679	$	293	$	2,679	$	293
State and municipal		23		-		165,526		30,220		165,549		30,220
Mortgage-backed		-		-		162,533		25,796		162,533		25,796
Corporate		-		-		15,509		2,864		15,509		2,864
Asset-backed securities		-		-		517		30		517		30
Total temporarily impaired	$	23	$	-	$	346,764	$	59,203	$	346,787	$	59,203

	2022
	Less than 12 months				More than 12 months				Total
(Dollars in thousands)	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Held to Maturity:	Value		Losses		Value		Losses		Value		Losses
U.S. Government and federal agency	$	-	$	-	$	2,545	$	421	$	2,545	$	421
State and municipal		13,457		1,899		149,016		37,456		162,473		39,355
Mortgage-backed		25,582		822		145,024		29,046		170,606		29,868
Corporate		5,296		603		10,771		1,682		16,067		2,285
Asset-backed securities		-		-		897		77		897		77
Total temporarily impaired	$	44,335	$	3,324	$	308,253	$	68,682	$	352,588	$	72,006

Schedule of Unrealized Gains and Losses on Equity Securities

Following is information regarding unrealized gains and losses on equity securities for the years ending December 31:

	2023			2022			2021
Net gains and losses recognized during the period	$	(317	)	$	(955	)	$	479
Less: Net gains and losses recognized during the period on securities sold		(71	)		-			-
Unrealized gains and losses recognized during the reporting period on securities still held at the reporting date	$	(246	)	$	(955	)	$	479

XML

Loans and Allowance for Credit Losses (Tables)

12 Months Ended

Dec. 31, 2023

Receivables [Abstract]

Loans by Type as Percentage of Portfolio

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

(Dollars in thousands)
	2023			2022
Agricultural	$	49,210		$	64,159
Commercial and industrial		229,915			210,210
Consumer		36,541			39,808
Real estate - commercial		786,921			630,953
Real estate - construction		20,936			14,736
Real estate - residential		267,730			229,916
Loans to other financial institutions		19,400			-
Total Loans	$	1,410,653		$	1,189,782
Allowance for credit losses		(15,685	)		(7,619	)
Loans, net	$	1,394,968		$	1,182,163

Acquired Portfolio and The Acquisition Fair Value Adjustments

The table below details the outstanding balances of the County Bank Corp. acquired portfolio and the acquisition fair value adjustments at acquisition date:

(Dollars in thousands)	Acquired			Acquired			Acquired
	Impaired			Non-impaired			Total
Loans acquired - contractual payments	$	7,729		$	387,394		$	395,123
Nonaccretable difference		(2,928	)		-			(2,928	)
Expected cash flows		4,801			387,394			392,195
Accretable yield		(185	)		(1,894	)		(2,079	)
Carrying balance at acquisition date	$	4,616		$	385,500		$	390,116

The table below presents a roll-forward of the accretable yield on County Bank Corp. acquired loans for the year ended December 31, 2022:

(Dollars in thousands)	Acquired			Acquired			Acquired
	Impaired			Non-impaired			Total
Balance, January 1, 2019	$	-		$	-		$	-
Merger with County Bank Corp. on October 1, 2019		185			1,894			2,079
Accretion October 1, 2019 through December 31, 2019		-			(75	)		(75	)
Balance January 1, 2020		185			1,819			2,004
Accretion January 1, 2020 through December 31, 2020		(50	)		(295	)		(345	)
Balance January 1, 2021		135			1,524			1,659
Accretion January 1, 2021 through December 31, 2021		(247	)		(348	)		(595	)
Transfer from non-accretable to accretable yield		400			-			400
Balance January 1, 2022		288			1,176			1,464
Transfer from non-accretable to accretable yield		2,192			-			2,192
Accretion January 1, 2022 through December 31, 2022		(553	)		(98	)		(651	)
Balance December 31, 2022	$	1,927		$	1,078		$	3,005

The table below details the outstanding balances of the Community Shores Bank Corporation acquired loan portfolio and the acquisition fair value adjustments at acquisition date:

(Dollars in thousands)	Acquired			Acquired			Acquired
	Impaired			Non-impaired			Total
Loans acquired - contractual payments	$	20,491		$	158,495		$	178,986
Nonaccretable difference		(2,719	)		-			(2,719	)
Expected cash flows		17,772			158,495			176,267
Accretable yield		(869	)		(596	)		(1,465	)
Carrying balance at acquisition date	$	16,903		$	157,899		$	174,802

The table below presents a roll-forward of the accretable yield on Community Shores Bank Corporation acquired loans for the year ended December 31, 2022:

(Dollars in thousands)	Acquired			Acquired			Acquired
	Impaired			Non-impaired			Total
Balance January 1, 2020	$	-		$	-		$	-
Merger with Community Shores Bank Corporation on July 1, 2020		869			596			1,465
Accretion July 1, 2020 through December 31, 2020		(26	)		(141	)		(167	)
Balance, January 1, 2021		843			455			1,298
Accretion January 1, 2021 through December 31, 2021		(321	)		(258	)		(579	)
Balance January 1, 2022		522			197			719
Transfer from non-accretable to accretable yield		1,086			-			1,086
Accretion January 1, 2022 through December 31, 2022		(993	)		(197	)		(1,190	)
Balance December 31, 2022	$	615		$	-		$	615

Allowance for Credit Losses and Balances in Loan Portfolio

Activity in the allowance for credit losses and balances in the loan portfolio was as follows:

				Commercial														Loans to Other
(Dollars in thousands)				and						Commercial		Construction			Residential			Financial
	Agricultural			Industrial			Consumer			Real Estate		Real Estate			Real Estate			Institutions		Unallocated			Total
Allowance for Credit Losses Year Ended December 31, 2023
Beginning balance	$	144		$	1,361		$	310		$	4,822	$	63		$	906		$	-	$	13		$	7,619
Cumulative effect of change in accounting principle		14			1,587			541			3,006		20			2,010			-		(13	)		7,165
Charge-offs		-			(158	)		(554	)		-		-			(27	)		-		-			(739	)
Recoveries		-			66			283			13		-			13			-		-			375
Provision		(64	)		(640	)		243			979		(25	)		742			30		-			1,265
Ending balance	$	94		$	2,216		$	823		$	8,820	$	58		$	3,644		$	30	$	-		$	15,685
Individually evaluated loan reserves	$	2		$	6		$	-		$	1	$	-		$	51		$	-	$	-		$	60
Collectively evaluated loan reserves	$	92		$	2,210		$	823		$	8,819	$	58		$	3,593		$	30	$	-		$	15,625
Loans
December 31, 2023
Individually evaluated loans	$	54		$	136		$	2		$	29	$	-		$	1,858		$	-				$	2,079
Collectively evaluated loans		49,156			229,779			36,539			786,892		20,936			265,872			19,400					1,408,574
Ending balance	$	49,210		$	229,915		$	36,541		$	786,921	$	20,936		$	267,730		$	19,400				$	1,410,653

				Commercial													Loans to Other
(Dollars in thousands)				and						Commercial		Construction			Residential		Financial
	Agricultural			Industrial			Consumer			Real Estate		Real Estate			Real Estate		Institutions		Unallocated			Total
Allowance for Loan Losses Year Ended December 31, 2022
Beginning balance	$	448		$	1,454		$	290		$	3,705	$	110		$	671	$	-	$	1,010		$	7,688
Charge-offs		-			(177	)		(496	)		-		-			-		-		-			(673	)
Recoveries		-			143			206			3		-			2		-		-			354
Provision		(304	)		(59	)		310			1,114		(47	)		233		-		(997	)		250
Ending balance	$	144		$	1,361		$	310		$	4,822	$	63		$	906	$	-	$	13		$	7,619
Individually evaluated for impairment	$	2		$	14		$	1		$	5	$	-		$	131	$	-	$	-		$	153
Collectively evaluated for impairment	$	142		$	1,347		$	309		$	4,817	$	63		$	775	$	-	$	13		$	7,466
Loans
December 31, 2022
Individually evaluated for impairment	$	23		$	177		$	7		$	165	$	-		$	2,474	$	-				$	2,846
Collectively evaluated for impairment		64,136			206,074			39,793			622,131		14,736			225,792		-					1,172,662
Acquired with deteriorated credit quality		-			3,959			8			8,657		-			1,650		-					14,274
Ending balance	$	64,159		$	210,210		$	39,808		$	630,953	$	14,736		$	229,916	$	-				$	1,189,782

Summary of Amortized Cost Basis of Loans

The following table reflects the amortized cost basis of loans as of December 31, 2023 based on year of origination (dollars in thousands):

Commercial:	2023		2022		2021		2020		2019		Prior		Term Loans Total		Revolving Loans		Grand Total
Agricultural
Pass	$	5,015	$	4,088	$	3,078	$	1,788	$	7,028	$	18,476	$	39,473	$	9,507	$	48,980
Special mention		-		-		-		-		176		54		230		-		230
Substandard		-		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-		-
Total	$	5,015	$	4,088	$	3,078	$	1,788	$	7,204	$	18,530	$	39,703	$	9,507	$	49,210
Current year-to-date gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Commercial and Industrial
Pass	$	23,600	$	45,489	$	23,462	$	10,502	$	9,214	$	11,882	$	124,149	$	105,559	$	229,708
Special mention		-		-		28		35		73		64		200		3		203
Substandard		-		-		-		-		-		4		4		-		4
Doubtful		-		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-		-
Total	$	23,600	$	45,489	$	23,490	$	10,537	$	9,287	$	11,950	$	124,353	$	105,562	$	229,915
Current year-to-date gross write-offs	$	-	$	55	$	30	$	71	$	-	$	2	$	158	$	-	$	158
Commercial Real Estate
Pass	$	149,181	$	134,289	$	107,033	$	71,754	$	43,846	$	136,361	$	642,464	$	143,120	$	785,584
Special mention		-		-		-		-		-		1,337		1,337		-		1,337
Substandard		-		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-		-
Total	$	149,181	$	134,289	$	107,033	$	71,754	$	43,846	$	137,698	$	643,801	$	143,120	$	786,921
Current year-to-date gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Total Business Loans	$	177,796	$	183,866	$	133,601	$	84,079	$	60,337	$	168,178	$	807,857	$	258,189	$	1,066,046

Retail:	2023		2022		2021		2020		2019		Prior		Term Loans Total		Revolving Loans		Grand Total
Consumer
Performing	$	9,775	$	13,876	$	6,771	$	2,849	$	1,260	$	1,202	$	35,733	$	808	$	36,541
Nonperforming		-		-		-		-		-		-		-		-		-
Nonaccrual		-		-		-		-		-		-		-		-		-
Total	$	9,775	$	13,876	$	6,771	$	2,849	$	1,260	$	1,202	$	35,733	$	808	$	36,541
Current year-to-date gross write-offs	$	8	$	24	$	11	$	28	$	-	$	1	$	72	$	-	$	72
Construction real estate
Performing	$	2,507	$	2,719	$	552	$	-	$	-	$	-	$	5,778	$	15,158	$	20,936
Nonperforming		-		-		-		-		-		-		-		-		-
Nonaccrual		-		-		-		-		-		-		-		-		-
Total	$	2,507	$	2,719	$	552	$	-	$	-	$	-	$	5,778	$	15,158	$	20,936
Current year-to-date gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Residential real estate
Performing	$	54,231	$	64,768	$	28,301	$	16,391	$	12,556	$	40,270	$	216,517	$	49,491	$	266,008
Nonperforming		-		-		-		-		-		-		-		-		-
Nonaccrual		-		380		826		-		-		486		1,692		30		1,722
Total	$	54,231	$	65,148	$	29,127	$	16,391	$	12,556	$	40,756	$	218,209	$	49,521	$	267,730
Current year-to-date gross write-offs	$	-	$	26	$	-	$	-	$	-	$	1	$	27	$	-	$	27
Loans to Other Financial Institutions
Performing	$	19,400	$	-	$	-	$	-	$	-	$	-	$	19,400	$	-	$	19,400
Nonperforming		-		-		-		-		-		-		-		-		-
Nonaccrual		-		-		-		-		-		-		-		-		-
Total	$	19,400	$	-	$	-	$	-	$	-	$	-	$	19,400	$	-	$	19,400
Current year-to-date gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Total Consumer Loans	$	85,913	$	81,743	$	36,450	$	19,240	$	13,816	$	41,958	$	279,120	$	65,487	$	344,607

Schedule of Information Regarding Credit Exposure

Corporate Credit Exposure - Credit risk profile by credit worthiness category

(Dollars in thousands)	Agricultural		Commercial and Industrial		Commercial Real Estate
	December 31,		December 31,		December 31,
	2022		2022		2022
Pass	$	63,867	$	209,700	$	624,555
Special Mention		289		400		2,048
Substandard		3		110		4,350
Doubtful		-		-		-
Loss		-		-		-
	$	64,159	$	210,210	$	630,953

Consumer Credit Exposure - Credit risk profile based on payment activity

(Dollars in thousands)	Consumer		Construction Real Estate		Residential Real Estate
	December 31,		December 31,		December 31,
	2022		2022		2022
Performing	$	39,808	$	14,736	$	228,653
Nonperforming		-		-		-
Nonaccrual		-		-		1,263
	$	39,808	$	14,736	$	229,916

Amortized Cost Basis Loans Modified To Borrowers Experiencing On Financing Receivable

The following table presents the amortized cost basis as of December 31, 2023 of the loans modified to borrowers experiencing financial difficulty disaggregated by class of financing receivable and type of concession granted during the reporting period.

For the period ended:	December 31, 2023
	Term Extension
			% of Total
			Class of
(Dollars in thousands)	Amortized		Financing
	Cost Basis		Receivable
Commercial and industrial	$	60		0	%
Residential real estate		129		0	%
Total	$	189

The following table presents the financial effect by type of modification made to borrowers experiencing financial difficulty and class of financing receivable.

For the period ended:	December 31, 2023
	Term Extension
Commercial and industrial	Termed out line of credit and termed out draw note.
Residential real estate	Provided with new twelve month payment plan to catch up on past due balance.

The following table presents the period-end amortized cost basis of financing receivables that had a payment default during the period and were modified in the 12 months before default to borrowers experiencing financial difficulty.

For the period ended:	December 31, 2023
(Dollars in thousands)	Term extension
Commercial and industrial	$	60
Residential real estate		129
Total	$	189

The following table presents the period-end amortized cost basis of loans that have been modified in the past 12 months to borrowers experiencing financial difficulty by payment status and class of financing receivable.

For the period ended:	December 31, 2023
(Dollars in thousands)	Current		30-89 days		Greater than 90 days		Total
Commercial and industrial	$	60	$	-	$	-	$	60
Residential real estate		-		-		129		129
Total	$	60	$	-	$	129	$	189

Summary of Trouble Debt Restructurings (TDRs)

The following schedule provides information on loans that were considered troubled debt restructurings ("TDRs") that were modified during the years ended December 31, 2022:

	Year Ended December 31, 2022
			Pre-		Post-
			Modification		Modification
			Outstanding		Outstanding
(Dollars in thousands)	Number of		Recorded		Recorded
	Loans		Investment		Investment
Agricultural		-	$	-	$	-
Commercial and Industrial		1		15		15
Commercial Real Estate		-		-		-
Total		1	$	15	$	15

Schedule of Loans for Impairment and Interest Recognized on Impaired Loans

Impaired loans by loan category as of December 31 were as follows:

			Unpaid				Average		Interest
(Dollars in thousands)	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized
December 31, 2022
With no related allowance recorded
Agricultural	$	-	$	-	$	-	$	250	$	-
Commercial and industrial		-		-		-		18		-
Consumer		-		-		-		-		-
Construction real estate		-		-		-		-		-
Commercial real estate		-		-		-		19		-
Residential real estate		550		595		-		231		1
Subtotal		550		595		-		518		1
With an allowance recorded
Agricultural		23		27		2		913		2
Commercial and industrial		177		177		14		209		13
Consumer		7		7		1		14		1
Construction real estate		-		-		-		-		-
Commercial real estate		165		165		5		158		13
Residential real estate		1,924		1,954		131		1,897		93
Subtotal		2,296		2,330		153		3,191		122
Total
Agricultural		23		27		2		1,163		2
Commercial and industrial		177		177		14		227		13
Consumer		7		7		1		14		1
Construction real estate		-		-		-		-		-
Commercial real estate		165		165		5		177		13
Residential real estate		2,474		2,549		131		2,128		94
Total	$	2,846	$	2,925	$	153	$	3,709	$	123

Aging Analysis of Loans by Loan Category

An aging analysis of loans by loan category as of December 31 follows:

					Loans
	Loans		Loans		Past Due								Loans
	Past Due		Past Due		Greater								90 Days Past
(Dollars in thousands)	30 to 59		60 to 89		Than 90				Loans Not		Total		Due and
	Days (1)		Days (1)		Days (1)		Total (1)		Past Due		Loans		Accruing
December 31, 2023
Agricultural	$	-	$	-	$	-	$	-	$	49,210	$	49,210	$	-
Commercial and industrial		-		-		1		1		229,914		229,915		-
Consumer		31		2		-		33		36,508		36,541		-
Commercial real estate		173		-		-		173		786,748		786,921		-
Construction real estate		-		-		-		-		20,936		20,936		-
Residential real estate		755		549		870		2,174		265,556		267,730		-
Loans to other financial institutions		-		-		-		-		19,400		19,400		-
	$	959	$	551	$	871	$	2,381	$	1,408,272	$	1,410,653	$	-
December 31, 2022
Agricultural	$	-	$	-	$	-	$	-	$	64,159	$	64,159	$	-
Commercial and industrial		-		171		-		171		210,039		210,210		-
Consumer		39		7		-		46		39,762		39,808		-
Commercial real estate		-		-		-		-		630,953		630,953		-
Construction real estate		-		-		-		-		14,736		14,736		-
Residential real estate		682		-		842		1,524		228,392		229,916		-

Loans to other financial institutions		-		-		-		-		-		-		-
	$	721	$	178	$	842	$	1,741	$	1,188,041	$	1,189,782	$	-

(1)Includes nonaccrual loans

Nonaccrual Loans by Loan Category

Nonaccrual loans by loan category as of December 31 as follows:

(Dollars in thousands)
	2023		2022
Commercial and industrial	$	1	$	-
Residential real estate		1,722		1,263
Total nonaccrual loans	$	1,723	$	1,263

(Dollars in thousands)	Nonaccrual loans with no ACL		Total nonaccrual loans		Interest income recognized during the period on nonaccrual loans
Commercial and industrial	$	-	$	1	$	-
Residential real estate		707		1,722		16
Total nonaccrual loans	$	707	$	1,723	$	16

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Mortgage Banking (Tables)

12 Months Ended

Dec. 31, 2023

Mortgage Banking [Abstract]

Schedule of Activity in Secondary Market Loans

Activity in secondary market loans during the year was as follows:

(Dollars in thousands)
	2023		2022		2021
Loans originated for resale, net of principal payments	$	56,085	$	71,829	$	197,387
Proceeds from loan sales	$	57,342	$	77,681	$	205,398
Net gains on sales of loans held for sale	$	1,954	$	2,343	$	6,776
Loan servicing fees, net of amortization	$	211	$	175	$	(163	)

Schedule of Activity for Loan Servicing Rights

Activity for loan servicing rights (included in other assets) was as follows:

(Dollars in thousands)
	2023			2022			2021
Balance, beginning of year	$	4,322		$	4,667		$	3,967
Capitalized		820			1,007			1,961
Amortization		(1,308	)		(1,352	)		(1,635	)
Market valuation allowance change		-			-			374
Balance, end of year	$	3,834		$	4,322		$	4,667

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Premises and Equipment (Tables)

12 Months Ended

Dec. 31, 2023

Property, Plant and Equipment [Abstract]

Schedule of Premises and Equipment

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

(Dollars in thousands)
	2023			2022
Land and land improvements	$	8,415		$	8,327
Leasehold improvements		81			81
Buildings		29,635			26,823
Furniture and equipment		12,558			11,208
Total cost		50,689			46,439
Accumulated depreciation		(20,939	)		(18,207	)
Premises and equipment, net	$	29,750		$	28,232

Rent Commitments

Rent commitments under non-cancelable operating leases were as follows, before considering renewal options that generally are present (dollars in thousands):

	2024	$	314
	2025		230
	2026		168
	2027		65
Total undiscounted cash flows			777
Less discount			68
Total operating lease liabilities		$	709

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Goodwill and Acquired Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

The change in the balance for goodwill was as follows:

(Dollars in thousands)	2023		2022
Balance, beginning of year	$	59,946	$	59,946
Goodwill adjustment from merger with Community Shores Bank Corporation		-		-
Balance, end of year	$	59,946	$	59,946

Schedule of Acquired Intangible Assets

Information for acquired intangible assets at December 31 is as follows:

	2023				2022
	Gross				Gross
	Carrying		Accumulated		Carrying		Accumulated
(Dollars in thousands)	Amount		Amortization		Amount		Amortization
Core deposit intangible	$	7,120	$	5,266	$	7,120	$	4,311

Schedule of Estimated Amortization Expense

The estimated amortization expense for the next five years ending December 31 is as follows (dollars in thousands):

2024	$	757
2025		560
2026		362
2027		164
2028		11
Total	$	1,854

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Other Real Estate Owned (Tables)

12 Months Ended

Dec. 31, 2023

Other Real Estate Owned [Abstract]

Other Real Estate Owned

(Dollars in thousands)	2023			2022			2021
Balance, beginning of year	$	-		$	194		$	266
Transfers from loans		267			-			520
Additions from merger		-			-			-
Proceeds from sales		(157	)		(235	)		(611	)
Write-downs		-			-			-
Gains on sales		12			41			19
Balance, end of year	$	122		$	-		$	194

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Derivatives and Hedging Activities (Tables)

12 Months Ended

Dec. 31, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivatives Instruments in Balance Sheet Location

The table below presents the fair value of derivative financial instruments as well as the classification within the consolidated statements of financial condition:

	December 31, 2023			December 31, 2022
(Dollars in thousands)	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments
Interest rate contracts	Other Assets	$	8,880	Other Assets	$	9,204
Interest rate contracts	Other Liabilities	$	-	Other Liabilities	$	5,823

Schedule of Cumulative Basis Adjustments on Hedged Items Designated as Fair Value Hedges and Related Amortized Cost

The table below presents the cumulative basis adjustments on hedged items designated as fair value hedges and the related amortized cost of those items as of the periods presented:

			December 31, 2023
			Cumulative amount of Fair
			Value Hedging Adjustment
Line Item in the Statement of			included in the carrying
Financial Position in which the	Amortized cost of the		amount of the Hedged
Hedged Item is included	Hedged Assets/(Liabilities)		Assets/(Liabilities)
Securities available for sale	$	222,933	$	(396	)

Location and Amount of Gain (Loss) in Income on Fair Value and Cash Flow Hedging Relationships

	Location and Amount of Gain or (Loss)					Location and Amount of Gain or (Loss)
	Recognized in Income on Fair Value and Cash Flow Hedging Relationships					Recognized in Income on Fair Value and Cash Flow Hedging Relationships
	Year Ended December 31, 2023					Year Ended December 31, 2022
	Interest Income			Interest Expense		Interest Income			Interest Expense
Total amounts of income and expense line items presented in the consolidated statements of income in which the effects of fair value or cash flow hedges are recorded	$	(284	)	$	-	$	(55	)	$	(825	)
Gain or (loss) on fair value hedging relationships:
Interest rate contracts:
Hedged items	$	1,534		$	-	$	(1,930	)	$	-
Derivatives designated as hedging instruments	$	(1,454	)	$	-	$	2,171		$	-
Amount excluded from effectiveness testing recognized in earnings based on amortization approach	$	-		$	-	$	(496	)	$	-
Gain or (loss) on cash flow hedging relationships:
Interest rate contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive income into income	$	(2,837	)	$	-	$	-		$	-
Amount excluded from effectiveness testing recognized in earnings based on amortization approach	$	-		$	-	$	-		$	(503	)

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Deposits (Tables)

12 Months Ended

Dec. 31, 2023

Statistical Disclosure for Banks [Abstract]

Schedule of Deposit Balances

Deposit balances as of December 31 consisted of the following:

(Dollars in thousands)	2023		2022
Noninterest-bearing demand deposits	$	547,625	$	599,579
Interest-bearing demand deposits		599,681		638,641
Money market deposits		247,602		214,026
Savings deposits		336,851		427,583
Local certificates of deposit		366,851		236,431
Brokered certificates of deposit		23,445		1,743
Total deposits	$	2,122,055	$	2,118,003

Schedule of Maturities of Certificates of Deposit

Scheduled maturities of certificates of deposit as of December 31, 2023 were as follows:

(Dollars in thousands)
2024	$	351,516
2025		29,857
2026		3,802
2027		2,275
2028		2,580
Thereafter		266
Total	$	390,296

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Borrowings (Tables)

12 Months Ended

Dec. 31, 2023

Debt Disclosure [Abstract]

Schedule of Bank Term Funding Program Advances

Bank Term Funding Program (“BTFP”)

At December 31, loans from the BTFP were as follows:

(Dollars in thousands)	2023		2022
Maturity of May 2024 with fixed interest rate of 4.71%	$	160,000	$	-
Maturity of December 2024 with fixed interest rate of 4.83%		10,000		-
Total advances outstanding at year-end	$	170,000	$	-

Schedule of Federal Home Loan Bank Advances

At December 31, advances from the FHLB were as follows:

(Dollars in thousands)	2023		2022
Maturity of January 2023 with fixed interest rate of 4.16%	$	-	$	50,000
Maturity of July 2025 with fixed interest rate of 4.88%		20,000		-
Maturity of December 2026 with fixed interest rate of 4.20%		10,000		-
Total advances outstanding at year-end	$	30,000	$	50,000

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Schedule of Effective Income Tax Rate Reconciliation

(Dollars in thousands)
	2023			2022			2021
Provision for Income Taxes
Current federal income tax expense	$	4,330		$	4,033		$	3,532
Deferred federal income tax expense/(benefit)		(24	)		(15	)		924
Income tax expense	$	4,306		$	4,018		$	4,456
Reconciliation of Income Tax Provision to Statutory Rate
Income tax computed at statutory federal rate of 21%	$	5,369		$	5,808		$	5,565
Tax exempt interest income		(1,206	)		(1,323	)		(1,190	)
Tax exempt earnings on bank-owned life insurance		(230	)		(276	)		(170	)
Tax credits		(282	)		(289	)		(284	)
Disallowed interest expense		752			179			74
Other items		(97	)		(81	)		461
Income tax expense	$	4,306		$	4,018		$	4,456
Effective income tax rate		17	%		15	%		17	%

Schedule of Deferred Tax Assets and Liabilities

(Dollars in thousands)
Components of Deferred Tax Assets and Liabilities	2023		2022
Deferred tax assets:
Purchase accounting adjustments from mergers with County and Community Shores	$	529	$	945
Allowance for credit losses		3,294		1,600
Unrealized losses on securities available for sale		15,279		19,745
Net operating loss carryforward		466		505
Unfunded commitment reserve		454		-
Compensation		347		299
Other		761		716
Total deferred tax assets		21,130		23,810
Deferred tax liabilities:
Purchase accounting adjustments from mergers with County and Community Shores		622		844
Loan servicing rights		805		908
Depreciation		534		605
Interest rate derivative contracts		1,568		660
Deferred loan fees and costs, net		75		15
Other		363		404
Total deferred tax liabilities		3,967		3,436
Net deferred tax asset (liability)	$	17,163	$	20,374

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Related Party Transactions (Tables)

12 Months Ended

Dec. 31, 2023

Related Party Transactions [Abstract]

Schedule of Related Party Transactions

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

(Dollars in thousands)	2023			2022
Balance, beginning of year	$	24,036		$	24,000
New loans		16,881			9,684
Repayments		(10,601	)		(9,259	)
Effect of changes in related parties		-			(389	)
Balance, end of year	$	30,316		$	24,036

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Stock Based Compensation (Tables)

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

Summary of Stock Option Activity

				Weighted		Weighted
				average		average
				exercise		Grant Date
	Shares			price		Fair Value
Options outstanding at January 1, 2023		20,631		$	25.30	$	3.46
Options granted		-			-		-
Options exercised		(7,500	)		27.25		3.64
Options forfeited or expired		-			-		-
Options outstanding, end of year		13,131		$	24.19	$	3.36
Options exercisable at December 31, 2023		13,131		$	24.19	$	3.36

Summary of Stock Options Outstanding By Exercise Price Range

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)
$27.25		4,500		4,500		5.41
$25.65		3,000		3,000		4.48
$20.86		3,306		3,306		3.34
$21.13		2,325		2,325		1.99

Summary of Activity for Stock Units Outstanding

				Weighted
				Average Grant
				Date Fair Value
Outstanding Stock Awards	Shares			Per Share
Outstanding at January 1, 2023		53,867		$	27.48
Granted		23,679			24.23
Vested		(9,051	)		29.00
Forfeited		(312	)		24.23
Outstanding at December 31, 2023		68,183		$	26.16

			Weighted
			Average Grant
			Date Fair Value
Outstanding Stock Awards	Shares		Per Share
Outstanding at January 1, 2023		6,396	$	26.34
Granted		5,125		24.23
Vested		-		-
Forfeited		-		-
Outstanding at December 31, 2023		11,521	$	25.40

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Earnings Per Share (Tables)

12 Months Ended

Dec. 31, 2023

Earnings Per Share [Abstract]

Schedule of Basic Earnings Per Share and Diluted Earnings Per Share

(Dollars in thousands, except share data)
	2023		2022		2021
Basic
Net income	$	21,261	$	23,640	$	22,042
Weighted average common shares outstanding		7,532,998		7,504,173		7,685,459
Basic earnings per common shares	$	2.82	$	3.15	$	2.87
Diluted
Net income	$	21,261	$	23,640	$	22,042
Weighted average common shares outstanding		7,532,998		7,504,173		7,685,459
Plus dilutive stock options and restricted stock units		39,292		23,198		17,255
Weighted average common shares outstanding and potentially dilutive shares		7,572,290		7,527,371		7,702,714
Diluted earnings per common share	$	2.82	$	3.15	$	2.86

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Condensed Financial Statements of Parent Company (Tables)

12 Months Ended

Dec. 31, 2023

Condensed Financial Information Disclosure [Abstract]

Condensed Balance Sheets

Condensed Balance Sheets

(Dollars in thousands)	December 31,
	2023		2022		2021
Assets
Cash	$	12,031	$	8,310	$	17,622
Equity securities at fair value		2,077		3,199		2,555
Other assets		474		586		553
Investment in subsidiaries		216,975		192,540		236,462
Total assets	$	231,557	$	204,635	$	257,192
Liabilities
Subordinated debentures	$	32,115	$	31,971	$	31,827
Trust preferred securities		3,392		3,291		3,190
Other liabilities		416		499		506
Total liabilities		35,923		35,761		35,523
Shareholders' equity		195,634		168,874		221,669
Total liabilities and shareholders’ equity	$	231,557	$	204,635	$	257,192

Condensed Statements of Income

Condensed Statements of Income

(Dollars in thousands)	Years Ended December 31,
	2023			2022			2021
Interest income
Interest and dividends from ChoiceOne Bank	$	10,813		$	-		$	6,125
Interest and dividends from other securities		32			27			10
Total interest income		10,845			27			6,135
Interest expense
Borrowings		1,635			1,491			645
Net interest income		9,210			(1,464	)		5,490
Noninterest income
Gains (losses) on sales of securities		(71	)		-			-
Change in market value of equity securities		(307	)		(385	)		554
Other		-			2			4
Total noninterest income		(378	)		(383	)		558
Noninterest expense
Professional fees		47			40			15
Other		217			174			203
Total noninterest expense		264			214			218
Income before income tax and equity in undistributed net income of subsidiary		8,568			(2,061	)		5,830
Income tax (expense)/benefit		472			433			64
Income before equity in undistributed net income of subsidiary		9,040			(1,628	)		5,894
Equity in undistributed net income of subsidiary		12,221			25,268			16,148
Net income	$	21,261		$	23,640		$	22,042

Condensed Statements of Cash Flows

Condensed Statements of Cash Flows

(Dollars in thousands)	Years Ended December 31,
	2023			2022			2021
Cash flows from operating activities:
Net income	$	21,261		$	23,640		$	22,042
Adjustments to reconcile net income to net cash from operating activities:
Equity in undistributed net income of subsidiary		(12,221	)		(25,268	)		(16,148	)
Amortization		245			245			101
Compensation expense on employee and director stock purchases, stock options, and restricted stock units		964			928			787
Net loss on sale of securities		71			-			-
Change in market value of equity securities		307			385			(554	)
Changes in other assets		113			(33	)		(260	)
Changes in other liabilities		(84	)		(7	)		(2,982	)
Net cash from operating activities		10,656			(110	)		2,986
Cash flows from investing activities:
Sales of securities		887			-			-
Purchases of securities		(143	)		(1,029	)		(117	)
Investment in Subsidiary		-			-			(5,000	)
Net cash from investing activities		744			(1,029	)		(5,117	)
Cash flows from financing activities:
Issuance of common stock		231			172			139
Repurchase of common stock		-			(767	)		(7,786	)
Proceeds from borrowings		-			-			36,827
Payments on borrowings		-			-			(14,166	)
Cash dividends paid		(7,910	)		(7,578	)		(7,200	)
Net cash from financing activities		(7,679	)		(8,173	)		7,814
Net change in cash		3,721			(9,312	)		5,683
Beginning cash		8,310			17,622			11,939
Ending cash	$	12,031		$	8,310		$	17,622

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Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2023

Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]

Summary of Financial Instruments

Financial instruments as of the dates indicated were as follows:

					Quoted Prices
					In Active		Significant
					Markets for		Other		Significant
					Identical		Observable		Unobservable
(Dollars in thousands)	Carrying		Estimated		Assets		Inputs		Inputs
	Amount		Fair Value		(Level 1)		(Level 2)		(Level 3)
December 31, 2023
Assets
Cash and cash equivalents	$	55,433	$	55,433	$	55,433	$	-	$	-
Equity securities at fair value		7,505		7,505		4,749		-		2,756
Securities available for sale		514,598		514,598		80,194		434,404		-
Securities held to maturity		407,959		348,791		-		335,493		13,298
Federal Home Loan Bank and Federal Reserve Bank stock		9,514		9,514		-		9,514		-
Loans held for sale		4,710		4,851		-		4,851		-
Loans, net		1,394,968		1,362,920		-		-		1,362,920
Accrued interest receivable		10,066		10,066		-		10,066		-
Interest rate lock commitments		64		64		-		64		-
Interest rate derivative contracts		8,880		8,880		-		8,880		-
Liabilities
Noninterest-bearing deposits		547,625		547,625		547,625		-		-
Interest-bearing deposits		1,550,985		1,549,386		-		1,549,386		-
Brokered deposits		23,445		23,435		-		23,435		-
Borrowings		200,000		199,743		-		199,743		-
Subordinated debentures		35,507		31,748		-		31,748		-
Accrued interest payable		6,223		6,223		-		6,223		-
Interest rate derivative contracts		-		-		-		-		-
December 31, 2022
Assets
Cash and cash equivalents	$	43,943	$	43,943	$	43,943	$	-	$	-
Equity securities at fair value		8,566		8,566		6,024		-		2,542
Securities available for sale		529,749		529,749		78,204		451,545		-
Securities held to maturity		425,906		353,901		-		338,583		15,318
Federal Home Loan Bank and Federal Reserve Bank stock		8,581		8,581		-		8,581		-
Loans held for sale		4,834		4,979		-		4,979		-
Loans, net		1,182,163		1,123,198		-		-		1,123,198
Accrued interest receivable		8,949		8,949		-		8,949		-
Interest rate lock commitments		28		28		-		28		-
Interest rate derivative contracts		9,204		9,204		-		9,204		-
Liabilities
Noninterest-bearing deposits		599,579		599,579		599,579		-		-
Interest-bearing deposits		1,518,424		1,514,294		-		1,514,294		-
Borrowings		50,000		50,000		-		50,000		-
Subordinated debentures		35,262		30,304		-		30,304		-
Accrued interest payable		610		610		-		610		-
Interest rate derivative contracts		5,823		5,823		-		5,823		-

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Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2023

Fair Value Disclosures [Abstract]

Schedule of Assets and Liabilities Measured at Fair Value

	Quoted Prices
	In Active		Significant
	Markets for		Other		Significant
	Identical		Observable		Unobservable
(Dollars in thousands)	Assets		Inputs		Inputs		Balance at
	(Level 1)		(Level 2)		(Level 3)		Date Indicated
Equity Securities Held at Fair Value - December 31, 2023
Equity securities	$	4,749	$	-	$	2,756	$	7,505
Investment Securities, Available for Sale -December 31, 2023
U. S. Government and federal agency	$	-	$	-	$	-	$	-
U. S. Treasury notes and bonds		80,194		-		-		80,194
State and municipal		-		234,682		-		234,682
Mortgage-backed		-		188,501		-		188,501
Corporate		-		204		-		204
Asset-backed Securities		-		11,017		-		11,017
Total	$	80,194	$	434,404	$	-	$	514,598
Derivative Instruments -December 31, 2023
Interest rate derivative contracts - assets	$	-	$	8,880	$	-	$	8,880
Interest rate derivative contracts - liabilities	$	-	$	-	$	-	$	-
Equity Securities Held at Fair Value -December 31, 2022
Equity securities	$	6,024	$	-	$	2,542	$	8,566
Investment Securities, Available for Sale -December 31, 2022
U. S. Government and federal agency	$	-	$	-	$	-	$	-
U. S. Treasury notes and bonds		78,204		-		-		78,204
State and municipal		-		229,938		-		229,938
Mortgage-backed		-		208,563		-		208,563
Corporate		-		711		-		711
Asset-backed Securities		-		12,333		-		12,333
Total	$	78,204	$	451,545	$	-	$	529,749
Derivative Instruments -December 31, 2022
Interest rate derivative contracts - assets	$	-	$	9,204	$	-	$	9,204
Interest rate derivative contracts - liabilities	$	-	$	5,823	$	-	$	5,823

Schedule of Changes in Level 3 Assets Measured at Fair Value on a Recurring Basis

(Dollars in thousands)
	2023		2022
Equity Securities Held at Fair Value
Balance, January 1	$	2,542	$	1,768
Total realized and unrealized gains included in noninterest income		71		161
Net purchases, sales, calls, and maturities		143		613
Balance, December 31	$	2,756	$	2,542
Amount of total losses for the period included in earning attributable to the change in    unrealized gains (losses) relating to assets and liabilities still held at December 31,	$	5	$	9
Investment Securities, Available for Sale
Balance, January 1	$	-	$	21,050
Total realized and unrealized gains included in income		-		-
Total unrealized gains/(losses) included in other comprehensive income		-		-
Net purchases, sales, calls, and maturities		-		-
Net transfers into Level 3		-		-
Transfer to held to maturity		-		(21,050	)
Balance, December 31	$	-	$	-
Amount of total losses for the period included in earning attributable to the change in    unrealized gains (losses) relating to assets and liabilities still held at December 31,	$	-	$	-

Schedule of Assets Measured at Fair Value on a Non-recurring Basis

			Quoted Prices
			In Active		Significant
			Markets for		Other		Significant
	Balances at		Identical		Observable		Unobservable
(Dollars in thousands)	Dates		Assets		Inputs		Inputs
	Indicated		(Level 1)		(Level 2)		(Level 3)
Collateral Dependent Loans
December 31, 2023	$	387	$	-	$	-	$	387
Impaired Loans
December 31, 2022	$	2,846	$	-	$	-	$	2,846
Other Real Estate
December 31, 2023	$	122	$	-	$	-	$	122
December 31, 2022	$	-	$	-	$	-	$	-

XML

Off-balance Sheet Activities (Tables)

12 Months Ended

Dec. 31, 2023

Off-Balance-Sheet, Credit Loss, Liability [Abstract]

Schedule of Financial Instruments with Off-Balance Sheet Risk

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

	2023				2022
	Fixed		Variable		Fixed		Variable
(Dollars in thousands)	Rate		Rate		Rate		Rate
Unused lines of credit and letters of credit	$	57,781	$	141,522	$	54,523	$	148,497
Commitments to fund loans (at market rates)		90,178		27,939		35,789		12,565

XML

Regulatory Capital (Tables)

12 Months Ended

Dec. 31, 2023

Notes Tables

Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations [Table Text Block]

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

											Minimum Required
											to be Well
						Minimum Required					Capitalized Under
						for Capital					Prompt Corrective
(Dollars in thousands)	Actual					Adequacy Purposes					Action Regulations
	Amount		Ratio			Amount		Ratio			Amount		Ratio
December 31, 2023
ChoiceOne Financial Services Inc.
Total capital (to risk weighted assets)	$	233,840		13.0	%	$	144,441		8.0	%	N/A		N/A
Common equity Tier 1 capital (to risk weighted assets)		185,412		10.3			81,248		4.5		N/A		N/A
Tier 1 capital (to risk weighted assets)		189,912		10.5			108,331		6.0		N/A		N/A
Tier 1 capital (to average assets)		189,912		7.5			101,337		4.0		N/A		N/A
ChoiceOne Bank
Total capital (to risk weighted assets)	$	224,095		12.4	%	$	144,274		8.0	%	$	180,342		10.0	%
Common equity Tier 1 capital (to risk weighted assets)		212,283		11.8			81,154		4.5			117,223		6.5
Tier 1 capital (to risk weighted assets)		212,283		11.8			108,205		6.0			144,274		8.0
Tier 1 capital (to average assets)		212,283		8.4			101,244		4.0			126,555		5.0
December 31, 2022
ChoiceOne Financial Services Inc.
Total capital (to risk weighted assets)	$	222,006		13.8	%	$	128,545		8.0	%	N/A		N/A
Common equity Tier 1 capital (to risk weighted assets)		177,916		11.1			72,307		4.5		N/A		N/A
Tier 1 capital (to risk weighted assets)		182,416		11.4			96,409		6.0		N/A		N/A
Tier 1 capital (to average assets)		182,416		7.9			92,558		4.0		N/A		N/A
ChoiceOne Bank
Total capital (to risk weighted assets)	$	208,696		13.0	%	$	128,294		8.0	%	$	160,367		10.0	%
Common equity Tier 1 capital (to risk weighted assets)		201,077		12.5			72,165		4.5			104,239		6.5
Tier 1 capital (to risk weighted assets)		201,077		12.5			96,220		6.0			128,294		8.0
Tier 1 capital (to average assets)		201,077		8.7			92,449		4.0			115,562		5.0

XML

Summary of Significant Accounting Policies - Additional Information (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2023 USD ($) Segment	Jan. 01, 2023 USD ($)	Dec. 31, 2022 USD ($)
Cash pass-through reserve, federal home loan bank	$ 0		$ 0
Number of reportable segments | Segment	1
Allowance for credit loss	$ 0	$ 7,200
Additional allowance for credit loss on unfunded commitments		3,300
Number of days individually evaluation	60 days
Other Assets [Member]
Allowance for credit loss		1,500
Additional allowance for credit loss on unfunded commitments		688,000
Retained Earnings [Member]
Allowance for credit loss		5,500
Additional allowance for credit loss on unfunded commitments		$ 2,600
Core Deposits [Member]
Acquired finite-lived intangible assets, weighted average useful life (month)	120 months
Minimum [Member] | Land Improvements [Member]
Property, plant and equipment, useful life (year)	7 years
Minimum [Member] | Building [Member]
Property, plant and equipment, useful life (year)	5 years
Minimum [Member] | Furniture and Fixtures [Member]
Property, plant and equipment, useful life (year)	3 years
Maximum [Member] | Land Improvements [Member]
Property, plant and equipment, useful life (year)	15 years
Maximum [Member] | Building [Member]
Property, plant and equipment, useful life (year)	39 years
Maximum [Member] | Furniture and Fixtures [Member]
Property, plant and equipment, useful life (year)	7 years

XML

Summary of Significant Accounting Policies - Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Unrealized gain (loss) on available-for-sale securities	$ (69,641)	$ (89,041)
Unrealized gain (loss) on held to maturity securities	(2,720)	(3,053)
Unrealized gain (loss) on derivative instruments	7,072	1,212
Tax effect	13,711	19,085
Accumulated other comprehensive income (loss)	$ (51,578)	$ (71,797)

XML

Securities - Additional Information (Details)	12 Months Ended
	Dec. 31, 2023 USD ($) Securities	Dec. 31, 2022 USD ($) Securities	Jan. 01, 2023 USD ($)
Debt and Equity Securities, FV-NI [Line Items]
Debt Securities, Held-to-Maturity, Fair Value, Total	$ 348,791,000	$ 353,901,000
Allowance for credit loss	$ 0		$ 7,200,000
Other-than-temporary Impairment Loss, Debt Securities, Available-for-Sale		$ 0
Debt Securities, Available-for-Sale, Unrealized Loss Position, Number of Positions | Securities	569	611
US Treasury Securities [Member] | AA or Better [Member]
Debt and Equity Securities, FV-NI [Line Items]
Debt Securities, Percent	100.00%
US States and Political Subdivisions Debt Securities [Member]
Debt and Equity Securities, FV-NI [Line Items]
Debt Securities, Held-to-Maturity, Fair Value, Total	$ 165,892,000	$ 162,536,000
US States and Political Subdivisions Debt Securities [Member] | A Rated [Member]
Debt and Equity Securities, FV-NI [Line Items]
Debt Securities, Percent	11.00%
US States and Political Subdivisions Debt Securities [Member] | AA or Better [Member]
Debt and Equity Securities, FV-NI [Line Items]
Debt Securities, Percent	86.00%
US States and Political Subdivisions Debt Securities [Member] | Unrated [Member]
Debt and Equity Securities, FV-NI [Line Items]
Debt Securities, Percent	3.00%
Collateralized Mortgage-Backed Securities [Member]
Debt and Equity Securities, FV-NI [Line Items]
Debt Securities, Held-to-Maturity, Fair Value, Total	$ 162,533,000	$ 170,605,000
Collateralized Mortgage-Backed Securities [Member] | A A [Member]
Debt and Equity Securities, FV-NI [Line Items]
Debt Securities, Percent	39.00%
Collateralized Mortgage-Backed Securities [Member] | A A A [Member]
Debt and Equity Securities, FV-NI [Line Items]
Debt Securities, Percent	39.00%
Collateralized Mortgage-Backed Securities [Member] | Unrated [Member]
Debt and Equity Securities, FV-NI [Line Items]
Debt Securities, Percent	22.00%
Reclassified From Available-for-sale Securities [Member]
Debt and Equity Securities, FV-NI [Line Items]
Debt Securities, Held-to-Maturity, Fair Value, Total	$ 428,400,000
OCI, Debt Securities, Available-for-Sale, Transfer to Held-to-Maturity, Adjustment from AOCI for Amortization of Gain (Loss), after Tax	2,700,000
OCI, Debt Securities, Available-for-Sale, Transfer to Held-to-Maturity, Adjustment from AOCI Unamortized, After Tax	$ 2,100,000

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Securities - Fair Value of Equity Securities and Related Gross Unrealized Gains (Losses) Recognized in Interest Income (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Debt Securities, Trading, and Equity Securities, FV-NI, Cost [Abstract]
Amortized Cost	$ 7,960	$ 8,982
Gross Unrealized Gains	212	305
Gross Unrealized Losses	(667)	(721)
Equity securities, at fair value (Note 2)	$ 7,505	$ 8,566

XML

Securities - Fair Value of Debt Security, Available-for-sale (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Debt and Equity Securities, FV-NI [Line Items]
Amortized cost, available for sale	$ 584,239	$ 618,790
Gross unrealized gains, available for sale	14	0
Gross unrealized losses, available for sale	(69,655)	(89,041)
Securities available for sale, at fair value (Note 2)	514,598	529,749
U.S. Government and Federal Agency [Member]
Debt and Equity Securities, FV-NI [Line Items]
Amortized cost, available for sale	0	0
Gross unrealized gains, available for sale	0	0
Gross unrealized losses, available for sale	0	0
Securities available for sale, at fair value (Note 2)	0	0
U.S. Treasury Notes and Bonds [Member]
Debt and Equity Securities, FV-NI [Line Items]
Amortized cost, available for sale	90,345	90,810
Gross unrealized gains, available for sale	0	0
Gross unrealized losses, available for sale	(10,151)	(12,606)
Securities available for sale, at fair value (Note 2)	80,194	78,204
State and Municipal [Member]
Debt and Equity Securities, FV-NI [Line Items]
Amortized cost, available for sale	269,918	277,489
Gross unrealized gains, available for sale	0	0
Gross unrealized losses, available for sale	(35,236)	(47,551)
Securities available for sale, at fair value (Note 2)	234,682	229,938
Mortgage-backed [Member]
Debt and Equity Securities, FV-NI [Line Items]
Amortized cost, available for sale	212,392	236,703
Gross unrealized gains, available for sale	14	0
Gross unrealized losses, available for sale	(23,905)	(28,140)
Securities available for sale, at fair value (Note 2)	188,501	208,563
Corporate [Member]
Debt and Equity Securities, FV-NI [Line Items]
Amortized cost, available for sale	250	757
Gross unrealized gains, available for sale	0	0
Gross unrealized losses, available for sale	(46)	(46)
Securities available for sale, at fair value (Note 2)	204	711
Asset-backed Securities [Member]
Debt and Equity Securities, FV-NI [Line Items]
Amortized cost, available for sale	11,334	13,031
Gross unrealized gains, available for sale	0	0
Gross unrealized losses, available for sale	(317)	(698)
Securities available for sale, at fair value (Note 2)	$ 11,017	$ 12,333

XML

Securities - Fair Value of Debt Security, Held-to-maturity (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Debt and Equity Securities, FV-NI [Line Items]
Amortized cost, held to maturity	$ 407,959	$ 425,906
Gross unrealized gains, held to maturity	35	1
Gross Unrealized Losses, held to maturity	(59,203)	(72,006)
Fair value, held to maturity	348,791	353,901
U.S. Government and Federal Agency [Member]
Debt and Equity Securities, FV-NI [Line Items]
Amortized cost, held to maturity	2,972	2,966
Gross unrealized gains, held to maturity	0	0
Gross Unrealized Losses, held to maturity	(293)	(421)
Fair value, held to maturity	2,679	2,545
State and Municipal [Member]
Debt and Equity Securities, FV-NI [Line Items]
Amortized cost, held to maturity	196,098	201,890
Gross unrealized gains, held to maturity	14	1
Gross Unrealized Losses, held to maturity	(30,220)	(39,355)
Fair value, held to maturity	165,892	162,536
Mortgage-backed [Member]
Debt and Equity Securities, FV-NI [Line Items]
Amortized cost, held to maturity	188,329	200,473
Gross unrealized gains, held to maturity	0	0
Gross Unrealized Losses, held to maturity	(25,796)	(29,868)
Fair value, held to maturity	162,533	170,605
Corporate [Member]
Debt and Equity Securities, FV-NI [Line Items]
Amortized cost, held to maturity	20,013	19,603
Gross unrealized gains, held to maturity	21	0
Gross Unrealized Losses, held to maturity	(2,864)	(2,285)
Fair value, held to maturity	17,170	17,318
Asset-backed Securities [Member]
Debt and Equity Securities, FV-NI [Line Items]
Amortized cost, held to maturity	547	974
Gross unrealized gains, held to maturity	0	0
Gross Unrealized Losses, held to maturity	(30)	(77)
Fair value, held to maturity	$ 517	$ 897

XML

Securities - Sales of Securities (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Debt Securities, Trading, and Equity Securities, FV-NI, Cost [Abstract]
Proceeds from sales of securities	$ 887	$ 47,167	$ 29,742
Gross realized gains	0	0	0
Gross realized losses	$ (71)	$ (809)	$ (40)

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Securities - Contractual Maturities (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Debt and Equity Securities, FV-NI [Line Items]
Due within one year, amortized cost	$ 250
Due within one year, fair value	250
Due after one year through five years, amortized cost	99,159
Due after one year through five years, fair value	90,209
Due after five years through ten years, amortized cost	177,228
Due after five years through ten years, fair value	159,321
Due after ten years, amortized cost	95,210
Due after ten years, fair value	76,317
Total debt securities, amortized cost	371,847
Total debt securities, fair value	326,097
Amortized cost, available for sale	584,239	$ 618,790
Securities available for sale, at fair value (Note 2)	514,598	529,749
Held to maturity, due within one year, amortized cost	1,586
Held to maturity, due within one year, fair value	1,543
Held to maturity, due after one year through five years, amortized cost	12,379
Held to maturity, due after one year through five years, fair value	11,376
Held to maturity, due after five years through ten years, amortized cost	124,644
Held to maturity, due after five years through ten years, fair value	108,371
Held to maturity, due after ten years, amortized cost	81,021
Held to maturity, due after ten years, fair value	64,968
Held to maturity, total, amortized cost	407,959
Held to maturity, total, fair value	348,791
Debt Securities [Member]
Debt and Equity Securities, FV-NI [Line Items]
Held to maturity, total, amortized cost	219,630
Held to maturity, total, fair value	186,258
Collateralized Mortgage-Backed Securities [Member]
Debt and Equity Securities, FV-NI [Line Items]
Mortgage-backed securities, amortized cost	212,392
Mortgage-backed securities, fair value	188,501
Amortized cost, available for sale	212,392	236,703
Securities available for sale, at fair value (Note 2)	188,501	$ 208,563
Held to maturity, total, amortized cost	188,329
Held to maturity, total, fair value	$ 162,533

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Securities - Carrying Amount of Securities Pledged as Collateral (Details) - Asset Pledged as Collateral [Member] - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Debt and Equity Securities, FV-NI [Line Items]
Total Securities pledged	$ 805,166	$ 250
Federal Reserve Bank [Member]
Debt and Equity Securities, FV-NI [Line Items]
Total Securities pledged	526,413	0
Federal Home Loan Bank [Member]
Debt and Equity Securities, FV-NI [Line Items]
Total Securities pledged	278,503
Community Reinvestment Act Credit [Member]
Debt and Equity Securities, FV-NI [Line Items]
Total Securities pledged	$ 250	$ 250

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Securities - Securities with Unrealized Losses Aggregated by Investment Category and Time with Unrealized Loss Position (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Debt and Equity Securities, FV-NI [Line Items]
Less than 12 months, fair value	$ 1,812	$ 153,118
Less than 12 months, unrealized losses	29	15,751
More than 12 months, fair value	501,940	375,245
More than 12 months, unrealized losses	69,626	73,290
Total, fair value	503,752	528,363
Total, unrealized losses	69,655	89,041
U.S. Government and Federal Agency [Member]
Debt and Equity Securities, FV-NI [Line Items]
Less than 12 months, fair value	0	0
Less than 12 months, unrealized losses	0	0
More than 12 months, fair value	0	0
More than 12 months, unrealized losses	0	0
Total, fair value	0	0
Total, unrealized losses	0	0
U.S. Treasury Notes and Bonds [Member]
Debt and Equity Securities, FV-NI [Line Items]
Less than 12 months, fair value	0	0
Less than 12 months, unrealized losses	0	0
More than 12 months, fair value	80,194	78,204
More than 12 months, unrealized losses	10,151	12,606
Total, fair value	80,194	78,204
Total, unrealized losses	10,151	12,606
State and Municipal [Member]
Debt and Equity Securities, FV-NI [Line Items]
Less than 12 months, fair value	557	89,158
Less than 12 months, unrealized losses	6	12,612
More than 12 months, fair value	234,125	140,390
More than 12 months, unrealized losses	35,230	34,939
Total, fair value	234,682	229,548
Total, unrealized losses	35,236	47,551
Mortgage-backed [Member]
Debt and Equity Securities, FV-NI [Line Items]
Less than 12 months, fair value	1,255	63,249
Less than 12 months, unrealized losses	23	3,093
More than 12 months, fair value	176,400	144,318
More than 12 months, unrealized losses	23,882	25,047
Total, fair value	177,655	207,567
Total, unrealized losses	23,905	28,140
Corporate [Member]
Debt and Equity Securities, FV-NI [Line Items]
Less than 12 months, fair value	0	711
Less than 12 months, unrealized losses	0	46
More than 12 months, fair value	204	0
More than 12 months, unrealized losses	46	0
Total, fair value	204	711
Total, unrealized losses	46	46
Asset-backed Securities [Member]
Debt and Equity Securities, FV-NI [Line Items]
Less than 12 months, fair value	0	0
Less than 12 months, unrealized losses	0	0
More than 12 months, fair value	11,017	12,333
More than 12 months, unrealized losses	317	698
Total, fair value	11,017	12,333
Total, unrealized losses	$ 317	$ 698

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Securities - Fair Value of Securities Available for Sale and The Related Unrealized Gains and Losses Recognized in Accumulated Comprehensive Income (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Debt and Equity Securities, FV-NI [Line Items]
Less than 12 months, fair value	$ 23	$ 44,335
Less than 12 months, unrealized losses	0	3,324
Fair value, more than 12 months	346,764	308,253
Unrealized loss, more than 12 months	59,203	68,682
Fair value	346,787	352,588
Unrealized losses	59,203	72,006
U.S. Government and Federal Agency [Member]
Debt and Equity Securities, FV-NI [Line Items]
Less than 12 months, fair value	0	0
Less than 12 months, unrealized losses	0	0
Fair value, more than 12 months	2,679	2,545
Unrealized loss, more than 12 months	293	421
Fair value	2,679	2,545
Unrealized losses	293	421
State and Municipal [Member]
Debt and Equity Securities, FV-NI [Line Items]
Less than 12 months, fair value	23	13,457
Less than 12 months, unrealized losses	0	1,899
Fair value, more than 12 months	165,526	149,016
Unrealized loss, more than 12 months	30,220	37,456
Fair value	165,549	162,473
Unrealized losses	30,220	39,355
Mortgage-backed [Member]
Debt and Equity Securities, FV-NI [Line Items]
Less than 12 months, fair value	0	25,582
Less than 12 months, unrealized losses	0	822
Fair value, more than 12 months	162,533	145,024
Unrealized loss, more than 12 months	25,796	29,046
Fair value	162,533	170,606
Unrealized losses	25,796	29,868
Corporate [Member]
Debt and Equity Securities, FV-NI [Line Items]
Less than 12 months, fair value	0	5,296
Less than 12 months, unrealized losses	0	603
Fair value, more than 12 months	15,509	10,771
Unrealized loss, more than 12 months	2,864	1,682
Fair value	15,509	16,067
Unrealized losses	2,864	2,285
Asset-backed Securities [Member]
Debt and Equity Securities, FV-NI [Line Items]
Less than 12 months, fair value	0	0
Less than 12 months, unrealized losses	0	0
Fair value, more than 12 months	517	897
Unrealized loss, more than 12 months	30	77
Fair value	517	897
Unrealized losses	$ 30	$ 77

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Securities - Unrealized Gains and Losses on Equity Securities (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Debt Securities, Trading, and Equity Securities, FV-NI, Cost [Abstract]
Net gains and losses recognized during the period	$ (317)	$ (955)	$ 479
Less: Net gains and losses recognized during the period on securities sold	(71)	0	0
Unrealized gains and losses recognized during the reporting period on securities still held at the reporting date	$ (246)	$ (955)	$ 479

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Loans and Allowance for Loan Losses - Additional Information (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($) Loan Interest	Dec. 31, 2023 USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Mortgage Loans in Process of Foreclosure, Amount | $	$ 1,100	$ 846,000
Financing Receivable, Modifications, Number of Contracts | Loan	1
Past Due 30 Days or More [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Modifications, Number of Contracts | Interest	0

XML

Loans and Allowance for Credit Losses - Loans by Type as Percentage of Portfolio (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	$ 1,410,653	$ 1,189,782
Allowance for credit losses	(15,685)	(7,619)	$ (7,688)
Loans, net	1,394,968	1,182,163
Agricultural [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	49,210	64,159
Allowance for credit losses	(94)	(144)	(448)
Commercial and Industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	229,915	210,210
Allowance for credit losses	(2,216)	(1,361)	(1,454)
Consumer Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	36,541	39,808
Allowance for credit losses	(823)	(310)	(290)
Commercial Real Estate Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	786,921	630,953
Allowance for credit losses	(8,820)	(4,822)	(3,705)
Construction Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	20,936	14,736
Allowance for credit losses	(58)	(63)	(110)
Residential Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	267,730	229,916
Allowance for credit losses	(3,644)	(906)	(671)
Loans to Other Financial Institutions [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	19,400	0
Allowance for credit losses	$ (30)	$ 0	$ 0

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Loans and Allowance for Credit Losses - Acquired Portfolio and The Acquisition Fair Value Adjustments (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Jan. 01, 2020	Oct. 01, 2019
County Bank Corp ("County") [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans acquired - contractual payments						$ 395,123
Nonaccretable difference						(2,928)
Expected cash flows						392,195
Accretable yield						(2,079)
Carrying balance at acquisition date						390,116
Balance	$ 1,464	$ 1,659	$ 2,004	$ 0
Merger				2,079
Accretion	(651)	(595)	(345)	(75)
Transfer from non-accretable to accretable yield	2,192	400
Balance	3,005	1,464	1,659	2,004
County Bank Corp ("County") [Member] | Acquired Impaired [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans acquired - contractual payments						7,729
Nonaccretable difference						(2,928)
Expected cash flows						4,801
Accretable yield						(185)
Carrying balance at acquisition date						4,616
Balance	288	135	185	0
Merger				185
Accretion	(553)	(247)	(50)	0
Transfer from non-accretable to accretable yield	2,192	400
Balance	1,927	288	135	185
County Bank Corp ("County") [Member] | Acquired Non-Impaired [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans acquired - contractual payments						387,394
Nonaccretable difference						0
Expected cash flows						387,394
Accretable yield						(1,894)
Carrying balance at acquisition date						$ 385,500
Balance	1,176	1,524	1,819	0
Merger				1,894
Accretion	(98)	(348)	(295)	(75)
Transfer from non-accretable to accretable yield	0	0
Balance	1,078	1,176	1,524	1,819
Community Shores Bank Corp ("Community Shores") [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans acquired - contractual payments					$ 178,986
Nonaccretable difference					(2,719)
Expected cash flows					176,267
Accretable yield					(1,465)
Carrying balance at acquisition date					174,802
Balance	719	1,298	0
Merger			1,465
Accretion	(1,190)	(579)	(167)
Transfer from non-accretable to accretable yield	1,086
Balance	615	719	1,298	0
Community Shores Bank Corp ("Community Shores") [Member] | Acquired Impaired [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans acquired - contractual payments					20,491
Nonaccretable difference					(2,719)
Expected cash flows					17,772
Accretable yield					(869)
Carrying balance at acquisition date					16,903
Balance	522	843	0
Merger			869
Accretion	(993)	(321)	(26)
Transfer from non-accretable to accretable yield	1,086
Balance	615	522	843	0
Community Shores Bank Corp ("Community Shores") [Member] | Acquired Non-Impaired [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans acquired - contractual payments					158,495
Nonaccretable difference					0
Expected cash flows					158,495
Accretable yield					(596)
Carrying balance at acquisition date					$ 157,899
Balance	197	455	0
Merger			596
Accretion	(197)	(258)	(141)
Transfer from non-accretable to accretable yield	0
Balance	$ 0	$ 197	$ 455	$ 0

XML

Loans and Allowance for Credit Losses - Allowance for Credit Losses and Balances in Loan Portfolio (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning balance	$ 7,619	$ 7,688
Charge-offs	(739)	(673)
Recoveries	375	354
Provision	1,265	250	$ 416
Ending balance	15,685	7,619	7,688
Individually evaluated loan reserves for impairment	60	153
Collectively evaluated loan reserves for impairment	15,625	7,466
Individually evaluated loans for impairment	2,079	2,846
Collectively evaluated loans for impairment	1,408,574	1,172,662
Acquired with deteriorated credit quality		14,274
Loans	1,410,653	1,189,782
Cumulative Effect of Change in Accounting Principle
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning balance	7,165
Ending balance		7,165
Agricultural [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning balance	144	448
Charge-offs	0	0
Recoveries	0	0
Provision	(64)	(304)
Ending balance	94	144	448
Individually evaluated loan reserves for impairment	2	2
Collectively evaluated loan reserves for impairment	92	142
Individually evaluated loans for impairment	54	23
Collectively evaluated loans for impairment	49,156	64,136
Acquired with deteriorated credit quality		0
Loans	49,210	64,159
Agricultural [Member] | Cumulative Effect of Change in Accounting Principle
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning balance	14
Ending balance		14
Commercial and Industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning balance	1,361	1,454
Charge-offs	(158)	(177)
Recoveries	66	143
Provision	(640)	(59)
Ending balance	2,216	1,361	1,454
Individually evaluated loan reserves for impairment	6	14
Collectively evaluated loan reserves for impairment	2,210	1,347
Individually evaluated loans for impairment	136	177
Collectively evaluated loans for impairment	229,779	206,074
Acquired with deteriorated credit quality		3,959
Loans	229,915	210,210
Commercial and Industrial [Member] | Cumulative Effect of Change in Accounting Principle
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning balance	1,587
Ending balance		1,587
Consumer Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning balance	310	290
Charge-offs	(554)	(496)
Recoveries	283	206
Provision	243	310
Ending balance	823	310	290
Individually evaluated loan reserves for impairment	0	1
Collectively evaluated loan reserves for impairment	823	309
Individually evaluated loans for impairment	2	7
Collectively evaluated loans for impairment	36,539	39,793
Acquired with deteriorated credit quality		8
Loans	36,541	39,808
Consumer Portfolio Segment [Member] | Cumulative Effect of Change in Accounting Principle
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning balance	541
Ending balance		541
Commercial Real Estate Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning balance	4,822	3,705
Charge-offs	0	0
Recoveries	13	3
Provision	979	1,114
Ending balance	8,820	4,822	3,705
Individually evaluated loan reserves for impairment	1	5
Collectively evaluated loan reserves for impairment	8,819	4,817
Individually evaluated loans for impairment	29	165
Collectively evaluated loans for impairment	786,892	622,131
Acquired with deteriorated credit quality		8,657
Loans	786,921	630,953
Commercial Real Estate Portfolio Segment [Member] | Cumulative Effect of Change in Accounting Principle
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning balance	3,006
Ending balance		3,006
Construction Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning balance	63	110
Charge-offs	0	0
Recoveries	0	0
Provision	(25)	(47)
Ending balance	58	63	110
Individually evaluated loan reserves for impairment	0	0
Collectively evaluated loan reserves for impairment	58	63
Individually evaluated loans for impairment	0	0
Collectively evaluated loans for impairment	20,936	14,736
Acquired with deteriorated credit quality		0
Loans	20,936	14,736
Construction Real Estate [Member] | Cumulative Effect of Change in Accounting Principle
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning balance	20
Ending balance		20
Residential Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning balance	906	671
Charge-offs	(27)	0
Recoveries	13	2
Provision	742	(233)
Ending balance	3,644	906	671
Individually evaluated loan reserves for impairment	51	131
Collectively evaluated loan reserves for impairment	3,593	775
Individually evaluated loans for impairment	1,858	2,474
Collectively evaluated loans for impairment	265,872	225,792
Acquired with deteriorated credit quality		1,650
Loans	267,730	229,916
Residential Portfolio Segment [Member] | Cumulative Effect of Change in Accounting Principle
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning balance	2,010
Ending balance		2,010
Loans to Other Financial Institutions [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning balance	0	0
Charge-offs	0	0
Recoveries	0	0
Provision	30	0
Ending balance	30	0	0
Individually evaluated loan reserves for impairment	0	0
Collectively evaluated loan reserves for impairment	30	0
Individually evaluated loans for impairment	0	0
Collectively evaluated loans for impairment	19,400	0
Acquired with deteriorated credit quality		0
Loans	19,400	0
Loans to Other Financial Institutions [Member] | Cumulative Effect of Change in Accounting Principle
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning balance	0
Ending balance		0
Unallocated Financing Receivables [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning balance	13	1,010
Charge-offs	0	0
Recoveries	0	0
Provision	0	(997)
Ending balance	0	13	$ 1,010
Individually evaluated loan reserves for impairment	0	0
Collectively evaluated loan reserves for impairment	0	13
Unallocated Financing Receivables [Member] | Cumulative Effect of Change in Accounting Principle
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning balance	$ (13)
Ending balance		$ (13)

XML

Loans and Allowance for Credit Losses - Schedule of Information Regarding Credit Exposure (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Accounts, Notes, Loans and Financing Receivable [Line Items]
2023	$ 189
Loans	1,410,653	$ 1,189,782
Total nonaccrual loans	1,723	1,263
Consumer Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
2023	85,913
2022	81,743
2021	36,450
2020	19,240
2019	13,816
Prior	41,958
Term Loans Total	279,120
Revolving Loans	65,487
Grand Total	344,607
Business Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
2023	177,796
2022	183,866
2021	133,601
2020	84,079
2019	60,337
Prior	168,178
Term Loans Total	807,857
Revolving Loans	258,189
Grand Total	1,066,046
Agricultural [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
2023	5,015
2022	4,088
2021	3,078
2020	1,788
2019	7,204
Prior	18,530
Term Loans Total	39,703
Revolving Loans	9,507
Grand Total	49,210
Current year-to-date gross write-offs, 2023	0
Current year-to-date gross write-offs, 2022	0
Current year-to-date gross write-offs, 2021	0
Current year-to-date gross write-offs, 2020	0
Current year-to-date gross write-offs, 2019	0
Current year-to-date gross write-offs, Prior	0
Current year-to-date gross write-offs, Term Loans Total	0
Current year-to-date gross write-offs, Revolving Loans	0
Current year-to-date gross write-offs, Grand Total	0
Loans	49,210	64,159
Agricultural [Member] | Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
2023	5,015
2022	4,088
2021	3,078
2020	1,788
2019	7,028
Prior	18,476
Term Loans Total	39,473
Revolving Loans	9,507
Grand Total	48,980
Loans		63,867
Agricultural [Member] | Special Mention [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	176
Prior	54
Term Loans Total	230
Revolving Loans	0
Grand Total	230
Loans		289
Agricultural [Member] | Substandard [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Term Loans Total	0
Revolving Loans	0
Grand Total	0
Loans		3
Agricultural [Member] | Doubtful [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Term Loans Total	0
Revolving Loans	0
Grand Total	0
Loans		0
Agricultural [Member] | Loss [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Term Loans Total	0
Revolving Loans	0
Grand Total	0
Loans		0
Consumer Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
2023	9,775
2022	13,876
2021	6,771
2020	2,849
2019	1,260
Prior	1,202
Term Loans Total	35,733
Revolving Loans	808
Grand Total	36,541
Current year-to-date gross write-offs, 2023	8
Current year-to-date gross write-offs, 2022	24
Current year-to-date gross write-offs, 2021	11
Current year-to-date gross write-offs, 2020	28
Current year-to-date gross write-offs, 2019	0
Current year-to-date gross write-offs, Prior	1
Current year-to-date gross write-offs, Term Loans Total	72
Current year-to-date gross write-offs, Revolving Loans	0
Current year-to-date gross write-offs, Grand Total	72
Loans	36,541	39,808
Total nonaccrual loans		0
Consumer Portfolio Segment [Member] | Performing Financial Instruments
Accounts, Notes, Loans and Financing Receivable [Line Items]
2023	9,775
2022	13,876
2021	6,771
2020	2,849
2019	1,260
Prior	1,202
Term Loans Total	35,733
Revolving Loans	808
Grand Total	36,541
Loans		39,808
Consumer Portfolio Segment [Member] | Nonperforming Financial Instruments
Accounts, Notes, Loans and Financing Receivable [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Term Loans Total	0
Revolving Loans	0
Grand Total	0
Loans		0
Consumer Portfolio Segment [Member] | Nonaccrual Financing Receivable
Accounts, Notes, Loans and Financing Receivable [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Term Loans Total	0
Revolving Loans	0
Grand Total	0
Commercial and Industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
2023	23,600
2022	45,489
2021	23,490
2020	10,537
2019	9,287
Prior	11,950
Term Loans Total	124,353
Revolving Loans	105,562
Grand Total	229,915
Current year-to-date gross write-offs, 2023	0
Current year-to-date gross write-offs, 2022	55
Current year-to-date gross write-offs, 2021	30
Current year-to-date gross write-offs, 2020	71
Current year-to-date gross write-offs, 2019	0
Current year-to-date gross write-offs, Prior	2
Current year-to-date gross write-offs, Term Loans Total	158
Current year-to-date gross write-offs, Revolving Loans	0
Current year-to-date gross write-offs, Grand Total	158
Loans	229,915	210,210
Total nonaccrual loans	1	0
Commercial and Industrial [Member] | Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
2023	23,600
2022	45,489
2021	23,462
2020	10,502
2019	9,214
Prior	11,882
Term Loans Total	124,149
Revolving Loans	105,559
Grand Total	229,708
Loans		209,700
Commercial and Industrial [Member] | Special Mention [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
2023	0
2022	0
2021	28
2020	35
2019	73
Prior	64
Term Loans Total	200
Revolving Loans	3
Grand Total	203
Loans		400
Commercial and Industrial [Member] | Substandard [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	4
Term Loans Total	4
Revolving Loans	0
Grand Total	4
Loans		110
Commercial and Industrial [Member] | Doubtful [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Term Loans Total	0
Revolving Loans	0
Grand Total	0
Loans		0
Commercial and Industrial [Member] | Loss [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Term Loans Total	0
Revolving Loans	0
Grand Total	0
Loans		0
Construction Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
2023	2,507
2022	2,719
2021	552
2020	0
2019	0
Prior	0
Term Loans Total	5,778
Revolving Loans	15,158
Grand Total	20,936
Current year-to-date gross write-offs, 2023	0
Current year-to-date gross write-offs, 2022	0
Current year-to-date gross write-offs, 2021	0
Current year-to-date gross write-offs, 2020	0
Current year-to-date gross write-offs, 2019	0
Current year-to-date gross write-offs, Prior	0
Current year-to-date gross write-offs, Term Loans Total	0
Current year-to-date gross write-offs, Revolving Loans	0
Current year-to-date gross write-offs, Grand Total	0
Loans	20,936	14,736
Total nonaccrual loans		0
Construction Real Estate [Member] | Performing Financial Instruments
Accounts, Notes, Loans and Financing Receivable [Line Items]
2023	2,507
2022	2,719
2021	552
2020	0
2019	0
Prior	0
Term Loans Total	5,778
Revolving Loans	15,158
Grand Total	20,936
Loans		14,736
Construction Real Estate [Member] | Nonperforming Financial Instruments
Accounts, Notes, Loans and Financing Receivable [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Term Loans Total	0
Revolving Loans	0
Grand Total	0
Loans		0
Construction Real Estate [Member] | Nonaccrual Financing Receivable
Accounts, Notes, Loans and Financing Receivable [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Term Loans Total	0
Revolving Loans	0
Grand Total	0
Commercial Real Estate Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
2023	149,181
2022	134,289
2021	107,033
2020	71,754
2019	43,846
Prior	137,698
Term Loans Total	643,801
Revolving Loans	143,120
Grand Total	786,921
Current year-to-date gross write-offs, 2023	0
Current year-to-date gross write-offs, 2022	0
Current year-to-date gross write-offs, 2021	0
Current year-to-date gross write-offs, 2020	0
Current year-to-date gross write-offs, 2019	0
Current year-to-date gross write-offs, Prior	0
Current year-to-date gross write-offs, Term Loans Total	0
Current year-to-date gross write-offs, Revolving Loans	0
Current year-to-date gross write-offs, Grand Total	0
Loans	786,921	630,953
Commercial Real Estate Portfolio Segment [Member] | Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
2023	149,181
2022	134,289
2021	107,033
2020	71,754
2019	43,846
Prior	136,361
Term Loans Total	642,464
Revolving Loans	143,120
Grand Total	785,584
Loans		624,555
Commercial Real Estate Portfolio Segment [Member] | Special Mention [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	1,337
Term Loans Total	1,337
Revolving Loans	0
Grand Total	1,337
Loans		2,048
Commercial Real Estate Portfolio Segment [Member] | Substandard [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Term Loans Total	0
Revolving Loans	0
Grand Total	0
Loans		4,350
Commercial Real Estate Portfolio Segment [Member] | Doubtful [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Term Loans Total	0
Revolving Loans	0
Grand Total	0
Loans		0
Commercial Real Estate Portfolio Segment [Member] | Loss [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Term Loans Total	0
Revolving Loans	0
Grand Total	0
Loans		0
Residential Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
2023	54,231
2022	65,148
2021	29,127
2020	16,391
2019	12,556
Prior	40,756
Term Loans Total	218,209
Revolving Loans	49,521
Grand Total	267,730
Current year-to-date gross write-offs, 2023	0
Current year-to-date gross write-offs, 2022	26
Current year-to-date gross write-offs, 2021	0
Current year-to-date gross write-offs, 2020	0
Current year-to-date gross write-offs, 2019	0
Current year-to-date gross write-offs, Prior	1
Current year-to-date gross write-offs, Term Loans Total	27
Current year-to-date gross write-offs, Revolving Loans	0
Current year-to-date gross write-offs, Grand Total	27
Loans	267,730	229,916
Total nonaccrual loans	1,722	1,263
Residential Portfolio Segment [Member] | Performing Financial Instruments
Accounts, Notes, Loans and Financing Receivable [Line Items]
2023	54,231
2022	64,768
2021	28,301
2020	16,391
2019	12,556
Prior	40,270
Term Loans Total	216,517
Revolving Loans	49,491
Grand Total	266,008
Loans		228,653
Residential Portfolio Segment [Member] | Nonperforming Financial Instruments
Accounts, Notes, Loans and Financing Receivable [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Term Loans Total	0
Revolving Loans	0
Grand Total	0
Loans		0
Residential Portfolio Segment [Member] | Nonaccrual Financing Receivable
Accounts, Notes, Loans and Financing Receivable [Line Items]
2023	0
2022	380
2021	826
2020	0
2019	0
Prior	486
Term Loans Total	1,692
Revolving Loans	30
Grand Total	1,722
Loans to Other Financial Institutions [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
2023	19,400
2022	0
2021	0
2020	0
2019	0
Prior	0
Term Loans Total	19,400
Revolving Loans	0
Grand Total	19,400
Current year-to-date gross write-offs, 2023	0
Current year-to-date gross write-offs, 2022	0
Current year-to-date gross write-offs, 2021	0
Current year-to-date gross write-offs, 2020	0
Current year-to-date gross write-offs, 2019	0
Current year-to-date gross write-offs, Prior	0
Current year-to-date gross write-offs, Term Loans Total	0
Current year-to-date gross write-offs, Revolving Loans	0
Current year-to-date gross write-offs, Grand Total	0
Loans	19,400	$ 0
Loans to Other Financial Institutions [Member] | Performing Financial Instruments
Accounts, Notes, Loans and Financing Receivable [Line Items]
2023	19,400
2022	0
2021	0
2020	0
2019	0
Prior	0
Term Loans Total	19,400
Revolving Loans	0
Grand Total	19,400
Loans to Other Financial Institutions [Member] | Nonperforming Financial Instruments
Accounts, Notes, Loans and Financing Receivable [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Term Loans Total	0
Revolving Loans	0
Grand Total	0
Loans to Other Financial Institutions [Member] | Nonaccrual Financing Receivable
Accounts, Notes, Loans and Financing Receivable [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Term Loans Total	0
Revolving Loans	0
Grand Total	$ 0

XML

Loans and Allowance for Credit Losses - Summary of Amortized Cost Basis Loans Modified To Borrowers Experiencing On Financing Receivable (Details) $ in Thousands	Dec. 31, 2023 USD ($)
Financing Receivable, Troubled Debt Restructuring [Line Items]
Amortized Cost Basis	$ 189
Term Extension	189
Current [Member]
Financing Receivable, Troubled Debt Restructuring [Line Items]
Term Extension	60
30-89 days [Member]
Financing Receivable, Troubled Debt Restructuring [Line Items]
Term Extension	0
Greater than 90 days [Member]
Financing Receivable, Troubled Debt Restructuring [Line Items]
Term Extension	129
Agricultural [Member]
Financing Receivable, Troubled Debt Restructuring [Line Items]
Term Extension	5,015
Commercial and Industrial [Member]
Financing Receivable, Troubled Debt Restructuring [Line Items]
Amortized Cost Basis	$ 60
% of Total Class of Financing Receivable	0.00%
Term Extension	$ 60
Commercial and Industrial [Member] | Troubled Loan Modifications [Member]
Financing Receivable, Troubled Debt Restructuring [Line Items]
Term Extension	60
Commercial and Industrial [Member] | Current [Member]
Financing Receivable, Troubled Debt Restructuring [Line Items]
Term Extension	60
Commercial and Industrial [Member] | 30-89 days [Member]
Financing Receivable, Troubled Debt Restructuring [Line Items]
Term Extension	0
Commercial and Industrial [Member] | Greater than 90 days [Member]
Financing Receivable, Troubled Debt Restructuring [Line Items]
Term Extension	0
Consumer [Member]
Financing Receivable, Troubled Debt Restructuring [Line Items]
Term Extension	9,775
Commercial Real Estate [Member]
Financing Receivable, Troubled Debt Restructuring [Line Items]
Term Extension	149,181
Construction Real Estate [Member]
Financing Receivable, Troubled Debt Restructuring [Line Items]
Term Extension	2,507
Residential Real Estate [Member]
Financing Receivable, Troubled Debt Restructuring [Line Items]
Amortized Cost Basis	$ 129
% of Total Class of Financing Receivable	0.00%
Term Extension	$ 129
Residential Real Estate [Member] | Troubled Loan Modifications [Member]
Financing Receivable, Troubled Debt Restructuring [Line Items]
Term Extension	129
Residential Real Estate [Member] | Current [Member]
Financing Receivable, Troubled Debt Restructuring [Line Items]
Term Extension	0
Residential Real Estate [Member] | 30-89 days [Member]
Financing Receivable, Troubled Debt Restructuring [Line Items]
Term Extension	0
Residential Real Estate [Member] | Greater than 90 days [Member]
Financing Receivable, Troubled Debt Restructuring [Line Items]
Term Extension	129
Commercial And Industrial And Residential Real Estate Portfolio Segment | Troubled Loan Modifications [Member]
Financing Receivable, Troubled Debt Restructuring [Line Items]
Term Extension	$ 189

XML

Loans and Allowance for Credit Losses - Summary of Trouble Debt Restructurings (TDRs) (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($) Loan
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Loans | Loan	1
Pre-Modification Outstanding Recorded Investment	$ 15
Post-Modification Outstanding Recorded Investment	$ 15
Agricultural [Member]
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Loans | Loan	0
Pre-Modification Outstanding Recorded Investment	$ 0
Post-Modification Outstanding Recorded Investment	$ 0
Commercial Real Estate Portfolio Segment [Member]
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Loans | Loan	0
Pre-Modification Outstanding Recorded Investment	$ 0
Post-Modification Outstanding Recorded Investment	$ 0
Commercial and Industrial [Member]
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Loans | Loan	1
Pre-Modification Outstanding Recorded Investment	$ 15
Post-Modification Outstanding Recorded Investment	$ 15

XML

Loans and Allowance for Credit Losses - Schedule of Loans for Impairment and Interest Recognized on Impaired Loans (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment, With no related allowance recorded	$ 550
Unpaid Principal Balance, With no related allowance recorded	595
Average Recorded Investment, With no related allowance recorded	518
Interest Income Recognized, With no related allowance recorded	1
Recorded Investment, With an allowance recorded	2,296
Unpaid Principal Balance, With an allowance recorded	2,330
Average Recorded Investment, With an allowance recorded	3,191
Related Allowance	153
Interest Income Recognized, With an allowance recorded	122
Recorded Investment	2,846
Unpaid Principal Balance	2,925
Average Recorded Investment	3,709
Interest Income Recognized	123
Agricultural [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment, With no related allowance recorded	0
Unpaid Principal Balance, With no related allowance recorded	0
Average Recorded Investment, With no related allowance recorded	250
Interest Income Recognized, With no related allowance recorded	0
Recorded Investment, With an allowance recorded	23
Unpaid Principal Balance, With an allowance recorded	27
Average Recorded Investment, With an allowance recorded	1,163
Related Allowance	2
Interest Income Recognized, With an allowance recorded	2
Recorded Investment	23
Unpaid Principal Balance	27
Average Recorded Investment	913
Interest Income Recognized	2
Commercial and Industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment, With no related allowance recorded	0
Unpaid Principal Balance, With no related allowance recorded	0
Average Recorded Investment, With no related allowance recorded	18
Interest Income Recognized, With no related allowance recorded	0
Recorded Investment, With an allowance recorded	177
Unpaid Principal Balance, With an allowance recorded	177
Average Recorded Investment, With an allowance recorded	227
Related Allowance	14
Interest Income Recognized, With an allowance recorded	13
Recorded Investment	177
Unpaid Principal Balance	177
Average Recorded Investment	209
Interest Income Recognized	13
Consumer Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment, With no related allowance recorded	0
Unpaid Principal Balance, With no related allowance recorded	0
Average Recorded Investment, With no related allowance recorded	0
Interest Income Recognized, With no related allowance recorded	0
Recorded Investment, With an allowance recorded	7
Unpaid Principal Balance, With an allowance recorded	7
Average Recorded Investment, With an allowance recorded	14
Related Allowance	1
Interest Income Recognized, With an allowance recorded	1
Recorded Investment	7
Unpaid Principal Balance	7
Average Recorded Investment	14
Interest Income Recognized	1
Construction Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment, With no related allowance recorded	0
Unpaid Principal Balance, With no related allowance recorded	0
Average Recorded Investment, With no related allowance recorded	0
Interest Income Recognized, With no related allowance recorded	0
Recorded Investment, With an allowance recorded	0
Unpaid Principal Balance, With an allowance recorded	0
Average Recorded Investment, With an allowance recorded	0
Related Allowance	0
Interest Income Recognized, With an allowance recorded	0
Recorded Investment	0
Unpaid Principal Balance	0
Average Recorded Investment	0
Interest Income Recognized	0
Commercial Real Estate Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment, With no related allowance recorded	0
Unpaid Principal Balance, With no related allowance recorded	0
Average Recorded Investment, With no related allowance recorded	19
Interest Income Recognized, With no related allowance recorded	0
Recorded Investment, With an allowance recorded	165
Unpaid Principal Balance, With an allowance recorded	165
Average Recorded Investment, With an allowance recorded	158
Related Allowance	5
Interest Income Recognized, With an allowance recorded	13
Recorded Investment	165
Unpaid Principal Balance	165
Average Recorded Investment	177
Interest Income Recognized	13
Residential Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment, With no related allowance recorded	550
Unpaid Principal Balance, With no related allowance recorded	595
Average Recorded Investment, With no related allowance recorded	231
Interest Income Recognized, With no related allowance recorded	1
Recorded Investment, With an allowance recorded	1,924
Unpaid Principal Balance, With an allowance recorded	1,954
Average Recorded Investment, With an allowance recorded	1,897
Related Allowance	131
Interest Income Recognized, With an allowance recorded	93
Recorded Investment	2,474
Unpaid Principal Balance	2,549
Average Recorded Investment	2,128
Interest Income Recognized	$ 94

XML

Loans and Allowance for Credit Losses - Aging Analysis of Loans by Loan Category (Details) - USD ($) $ in Thousands		Dec. 31, 2023	Dec. 31, 2022
Financing Receivable, Past Due [Line Items]
Loans		$ 1,410,653	$ 1,189,782
Loans, 90 Days Past Due and Accruing		0	0
Agricultural [Member]
Financing Receivable, Past Due [Line Items]
Loans		49,210	64,159
Loans, 90 Days Past Due and Accruing		0	0
Commercial and Industrial [Member]
Financing Receivable, Past Due [Line Items]
Loans		229,915	210,210
Loans, 90 Days Past Due and Accruing		0	0
Consumer Portfolio Segment [Member]
Financing Receivable, Past Due [Line Items]
Loans		36,541	39,808
Loans, 90 Days Past Due and Accruing		0	0
Commercial Real Estate Portfolio Segment [Member]
Financing Receivable, Past Due [Line Items]
Loans		786,921	630,953
Loans, 90 Days Past Due and Accruing		0	0
Construction Real Estate [Member]
Financing Receivable, Past Due [Line Items]
Loans		20,936	14,736
Loans, 90 Days Past Due and Accruing		0	0
Residential Portfolio Segment [Member]
Financing Receivable, Past Due [Line Items]
Loans		267,730	229,916
Loans, 90 Days Past Due and Accruing		0	0
Loans To Other Financial Institutions [Member]
Financing Receivable, Past Due [Line Items]
Loans		19,400	0
Financial Asset, 30 to 59 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loans	[1]	959	721
Financial Asset, 30 to 59 Days Past Due [Member] | Agricultural [Member]
Financing Receivable, Past Due [Line Items]
Loans	[1]	0	0
Financial Asset, 30 to 59 Days Past Due [Member] | Commercial and Industrial [Member]
Financing Receivable, Past Due [Line Items]
Loans	[1]	0	171
Financial Asset, 30 to 59 Days Past Due [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Past Due [Line Items]
Loans	[1]	31	7
Financial Asset, 30 to 59 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member]
Financing Receivable, Past Due [Line Items]
Loans	[1]	173	0
Financial Asset, 30 to 59 Days Past Due [Member] | Construction Real Estate [Member]
Financing Receivable, Past Due [Line Items]
Loans	[1]	0	0
Financial Asset, 30 to 59 Days Past Due [Member] | Residential Portfolio Segment [Member]
Financing Receivable, Past Due [Line Items]
Loans	[1]	755	0
Financial Asset, 60 to 89 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loans	[1]	551	178
Financial Asset, 60 to 89 Days Past Due [Member] | Agricultural [Member]
Financing Receivable, Past Due [Line Items]
Loans	[1]	0	0
Financial Asset, 60 to 89 Days Past Due [Member] | Commercial and Industrial [Member]
Financing Receivable, Past Due [Line Items]
Loans	[1]	0	0
Financial Asset, 60 to 89 Days Past Due [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Past Due [Line Items]
Loans	[1]	2	39
Financial Asset, 60 to 89 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member]
Financing Receivable, Past Due [Line Items]
Loans	[1]	0	0
Financial Asset, 60 to 89 Days Past Due [Member] | Construction Real Estate [Member]
Financing Receivable, Past Due [Line Items]
Loans	[1]	0	0
Financial Asset, 60 to 89 Days Past Due [Member] | Residential Portfolio Segment [Member]
Financing Receivable, Past Due [Line Items]
Loans	[1]	549	682
Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loans	[1]	871	842
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Agricultural [Member]
Financing Receivable, Past Due [Line Items]
Loans	[1]	0	0
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Commercial and Industrial [Member]
Financing Receivable, Past Due [Line Items]
Loans	[1]	1	0
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Past Due [Line Items]
Loans	[1]	0	0
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member]
Financing Receivable, Past Due [Line Items]
Loans	[1]	0	0
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Construction Real Estate [Member]
Financing Receivable, Past Due [Line Items]
Loans	[1]	0	0
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Residential Portfolio Segment [Member]
Financing Receivable, Past Due [Line Items]
Loans	[1]	870	842
Financial Asset, Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loans	[1]	2,381	1,741
Financial Asset, Past Due [Member] | Agricultural [Member]
Financing Receivable, Past Due [Line Items]
Loans	[1]	0	0
Financial Asset, Past Due [Member] | Commercial and Industrial [Member]
Financing Receivable, Past Due [Line Items]
Loans	[1]	1	171
Financial Asset, Past Due [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Past Due [Line Items]
Loans	[1]	33	46
Financial Asset, Past Due [Member] | Commercial Real Estate Portfolio Segment [Member]
Financing Receivable, Past Due [Line Items]
Loans	[1]	173	0
Financial Asset, Past Due [Member] | Construction Real Estate [Member]
Financing Receivable, Past Due [Line Items]
Loans	[1]	0	0
Financial Asset, Past Due [Member] | Residential Portfolio Segment [Member]
Financing Receivable, Past Due [Line Items]
Loans	[1]	2,174	1,524
Financial Asset, Not Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loans		1,408,272	1,188,041
Financial Asset, Not Past Due [Member] | Agricultural [Member]
Financing Receivable, Past Due [Line Items]
Loans		49,210	64,159
Financial Asset, Not Past Due [Member] | Commercial and Industrial [Member]
Financing Receivable, Past Due [Line Items]
Loans		229,914	210,039
Financial Asset, Not Past Due [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Past Due [Line Items]
Loans		36,508	39,762
Financial Asset, Not Past Due [Member] | Commercial Real Estate Portfolio Segment [Member]
Financing Receivable, Past Due [Line Items]
Loans		786,748	630,953
Financial Asset, Not Past Due [Member] | Construction Real Estate [Member]
Financing Receivable, Past Due [Line Items]
Loans		20,936	14,736
Financial Asset, Not Past Due [Member] | Residential Portfolio Segment [Member]
Financing Receivable, Past Due [Line Items]
Loans		265,556	$ 228,392
Financial Asset, Not Past Due [Member] | Loans To Other Financial Institutions [Member]
Financing Receivable, Past Due [Line Items]
Loans		$ 19,400

[1] Includes nonaccrual loans

XML

Loans and Allowance for Credit Losses - Nonaccrual Loans by Loan Category (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Financing Receivable, Nonaccrual [Line Items]
Total nonaccrual loans	$ 1,723	$ 1,263
Nonaccrual loans with no ACL	707
Interest income recognized during the period on nonaccrual loans	16
Commercial and Industrial [Member]
Financing Receivable, Nonaccrual [Line Items]
Total nonaccrual loans	1	0
Nonaccrual loans with no ACL	0
Consumer Portfolio Segment [Member]
Financing Receivable, Nonaccrual [Line Items]
Total nonaccrual loans		0
Construction Real Estate [Member]
Financing Receivable, Nonaccrual [Line Items]
Total nonaccrual loans		0
Residential Portfolio Segment [Member]
Financing Receivable, Nonaccrual [Line Items]
Total nonaccrual loans	1,722	$ 1,263
Nonaccrual loans with no ACL	707
Interest income recognized during the period on nonaccrual loans	$ 16

XML

Mortgage Banking - Schedule of Activity in Secondary Market Loans (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Mortgage Banking [Abstract]
Loans originated for resale, net of principal payments	$ 56,085	$ 71,829	$ 197,387
Proceeds from loan sales	57,342	77,681	205,398
Net gains on sales of loans held for sale	1,954	2,343	6,776
Loan servicing fees, net of amortization	$ 211	$ 175	$ (163)

XML

Mortgage Banking - Additional Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Compliance with Regulatory Capital Requirements for Mortgage Companies [Line Items]
Mortgage Loans Serviced for Others	$ 495,700	$ 488,600
Servicing Asset at Fair Value, Amount, Ending Balance	5,600	5,900	$ 5,500
Valuation Allowance for Impairment of Recognized Servicing Assets, Balance, Ending Balance	$ 0	$ 0	$ 0
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value, Discount Rate		8.00%	8.00%
Minimum [Member]
Compliance with Regulatory Capital Requirements for Mortgage Companies [Line Items]
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value, Discount Rate	9.50%
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value, Prepayment Speed	5.70%	5.20%	5.00%
Maximum [Member]
Compliance with Regulatory Capital Requirements for Mortgage Companies [Line Items]
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value, Discount Rate	10.50%
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value, Prepayment Speed	7.50%	6.70%	27.00%

XML

Mortgage Banking - Schedule of Activity for Loan Servicing Rights (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Mortgage Banking [Abstract]
Balance, beginning of year	$ 4,322	$ 4,667	$ 3,967
Capitalized	820	1,007	1,961
Amortization	(1,308)	(1,352)	(1,635)
Market valuation allowance change	0	0	374
Balance, end of year	$ 3,834	$ 4,322	$ 4,667

XML

Premises and Equipment - Schedule of Premises and Equipment (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Premises and equipment, gross	$ 50,689	$ 46,439
Accumulated depreciation	(20,939)	(18,207)
Premises and equipment, net	29,750	28,232
Land and Land Improvements [Member]
Property, Plant and Equipment [Line Items]
Premises and equipment, gross	8,415	8,327
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Premises and equipment, gross	81	81
Building [Member]
Property, Plant and Equipment [Line Items]
Premises and equipment, gross	29,635	26,823
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Premises and equipment, gross	$ 12,558	$ 11,208

XML

Premises and Equipment - Additional Information (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Property, Plant and Equipment [Abstract]
Depreciation, Total	$ 2,477,000	$ 2,658,000	$ 2,624,000
Operating Lease, Expense	$ 327,000	$ 211,000	$ 153,000

XML

Premises and Equipment - Rent Commitments (Details) $ in Thousands	Dec. 31, 2023 USD ($)
Property, Plant and Equipment [Line Items]
2024	$ 314
2025	230
2026	168
2027	65
Total undiscounted cash flows	777
Less discount	68
Operating Lease, Liability	$ 709
Operating Lease, Liability, Statement of Financial Position [Extensible Enumeration]	Other Liabilities

XML

Goodwill and Acquired Intangible Assets - Additional Information (Details) - USD ($)		12 Months Ended
	Jun. 30, 2023	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2006
Goodwill [Line Items]
Goodwill		$ 59,946,000	$ 59,946,000	$ 59,946,000
Amortization of intangible assets		$ 955,000	1,153,000	1,307,000
Core Deposits [Member]
Goodwill [Line Items]
Acquired finite-lived intangible assets, weighted average useful life (Month)		120 months
Amortization of intangible assets		$ 955,000	$ 1,153,000	$ 1,307,000
Valley Ridge Financial Corp. [Member]
Goodwill [Line Items]
Goodwill							$ 13,700,000
County Bank Corp [Member]
Goodwill [Line Items]
Goodwill						$ 38,900,000
County Bank Corp [Member] | Core Deposits [Member]
Goodwill [Line Items]
Acquired finite-lived intangible assets, weighted average useful life (Month)		10 years
Community Shores Bank Corporation [Member]
Goodwill [Line Items]
Goodwill					$ 7,300,000
Impairment loss	$ 0
Community Shores Bank Corporation [Member] | Core Deposits [Member]
Goodwill [Line Items]
Acquired finite-lived intangible assets, weighted average useful life (Month)		8 years

XML

Goodwill and Acquired Intangible Assets - Schedule of Goodwill (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Goodwill [Line Items]
Balance, beginning of year	$ 59,946	$ 59,946
Balance, end of year	59,946	59,946
Community Shores Bank Corporation [Member]
Goodwill [Line Items]
Goodwill adjustment from merger	$ 0	$ 0

XML

Goodwill and Acquired Intangible Assets - Schedule of Acquired Intangible Assets (Details) - Core Deposits [Member] - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Goodwill [Line Items]
Gross Carrying Amount	$ 7,120	$ 7,120
Accumulated Amortization	$ 5,266	$ 4,311

XML

Goodwill and Acquired Intangible Assets - Schedule of Estimated Amortization Expense (Details) - Core Deposits [Member] $ in Thousands	Dec. 31, 2023 USD ($)
Goodwill [Line Items]
2024	$ 757
2025	560
2026	362
2027	164
2028	11
Total	$ 1,854

XML

Other Real Estate Owned - Activity within Other Real Estate Owned (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Other Real Estate Owned [Abstract]
Balance, beginning of year	$ 0	$ 194	$ 266
Transfers from loans	267	0	520
Additions from merger	0	0	0
Proceeds from sales	(157)	(235)	(611)
Write-downs	0	0	0
Gains on sales	12	41	19
Balance, end of year	$ 122	$ 0	$ 194

XML

Other Real Estate Owned - Additional Information (Details) - USD ($)	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Other Real Estate Owned [Abstract]
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate, Ending Balance	$ 122,000	$ 0	$ 80,000
Commercial Real Estate Loans	$ 0	$ 0	$ 114,000

XML

Derivatives and Hedging Activities - Additional Information (Details) - Designated as Hedging Instrument [Member] $ in Millions	3 Months Ended		12 Months Ended
	Dec. 31, 2022 USD ($) Interest	Jun. 30, 2022 USD ($) Interest	Dec. 31, 2023 USD ($)	Dec. 31, 2022 USD ($) Interest	Mar. 31, 2023 USD ($)
Pay Floating Swap Agreement [Member]
Derivative [Line Items]
Loss on derivative		$ 1.1
Pay Floating Swap Agreement [Member] | Cash Flow Hedging [Member]
Derivative [Line Items]
Derivative, number of instruments held | Interest		2
Derivative, notional amount		$ 200.0
Derivative instrument cash payment					$ 4.2
Derivative, Fixed Coupon Rate		2.41%
Pay Fixed Swap Agreement [Member] | Cash Flow Hedging [Member]
Derivative [Line Items]
Derivative, number of instruments held | Interest		1
Derivative, notional amount	$ 49.1	$ 200.0		$ 49.1
Derivative, Fixed Coupon Rate		2.75%
Derivative, Term of Contract (Year)		8 years		9 years
Derivative Instruments, Net settlements received			$ 3.3
Pay Fixed Swap Agreement [Member] | Cash Flow Hedging [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member]
Derivative [Line Items]
Derivative, Basis Spread on Variable Rate	3.403%			3.403%
Pay Fixed Swap Agreement [Member] | Fair Value Hedging [Member]
Derivative [Line Items]
Derivative, number of instruments held | Interest	4			4
Derivative, notional amount	$ 201.0			$ 201.0
Pay Fixed Swap Agreements Expiring in 2032 [Member] | Fair Value Hedging [Member]
Derivative [Line Items]
Derivative, notional amount	$ 101.9			$ 101.9
Derivative, Term of Contract (Year)	10 years
Pay Fixed Swap Agreements Expiring in 2032 [Member] | Fair Value Hedging [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member]
Derivative [Line Items]
Derivative, Basis Spread on Variable Rate	3.39%			3.39%
The 3.4015 Percent Pay Fixed Swap Agreement [Member] | Fair Value Hedging [Member]
Derivative [Line Items]
Derivative, notional amount	$ 50.0			$ 50.0
Derivative, Term of Contract (Year)	9 years
The 3.4015 Percent Pay Fixed Swap Agreement [Member] | Fair Value Hedging [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member]
Derivative [Line Items]
Derivative, Basis Spread on Variable Rate	3.4015%			3.4015%

XML

Derivatives and Hedging Activities - Schedule of Derivatives Instruments in Balance Sheet Location (Details) - Interest Rate Contract [Member] - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Derivatives, Fair Value [Line Items]
Interest rate contracts	$ 8,880	$ 9,204
Derivative Asset, Statement of Financial Position [Extensible Enumeration]	Other Assets	Other Assets
Interest rate contracts	$ 0	$ 5,823
Derivative Liability, Statement of Financial Position [Extensible Enumeration]	Other Liabilities	Other Liabilities

XML

Derivatives and Hedging Activities - Location and Amount of Gain (Loss) in Income on Fair Value and Cash Flow Hedging Relationships (Details) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Interest Income [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Total amounts of income and expense line items presented in the consolidated statements of income in which the effects of fair value or cash flow hedges are recorded	$ (284)	$ (55)
Derivative, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration]	Interest and Dividend Income, Operating	Interest Expense
Interest Income [Member] | Interest Rate Contract, Hedged Items [Member]
Derivative Instruments, Gain (Loss) [Line Items]
The effects of fair value and cash flow hedging:	$ 1,534	$ (1,930)
Interest Income [Member] | Interest Rate Contract [Member] | Designated as Hedging Instrument [Member]
Derivative Instruments, Gain (Loss) [Line Items]
The effects of fair value and cash flow hedging:	(1,454)	2,171
Interest Income [Member] | Interest Rate Contract [Member] | Designated as Hedging Instrument [Member] | Fair Value Hedging [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount excluded from effectiveness testing recognized in earnings based on amortization approach	0	(496)
Interest Income [Member] | Interest Rate Contract [Member] | Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of gain or (loss) reclassified from accumulated other comprehensive income into income	(2,837)	0
Amount excluded from effectiveness testing recognized in earnings based on amortization approach	0	0
Interest Expense [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Total amounts of income and expense line items presented in the consolidated statements of income in which the effects of fair value or cash flow hedges are recorded	$ 0	$ (825)
Derivative, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration]	Interest Expense	Interest Expense
Interest Expense [Member] | Interest Rate Contract, Hedged Items [Member]
Derivative Instruments, Gain (Loss) [Line Items]
The effects of fair value and cash flow hedging:	$ 0	$ 0
Interest Expense [Member] | Interest Rate Contract [Member] | Designated as Hedging Instrument [Member]
Derivative Instruments, Gain (Loss) [Line Items]
The effects of fair value and cash flow hedging:	0	0
Interest Expense [Member] | Interest Rate Contract [Member] | Designated as Hedging Instrument [Member] | Fair Value Hedging [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount excluded from effectiveness testing recognized in earnings based on amortization approach	0	0
Interest Expense [Member] | Interest Rate Contract [Member] | Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of gain or (loss) reclassified from accumulated other comprehensive income into income	0	0
Amount excluded from effectiveness testing recognized in earnings based on amortization approach	$ 0	$ (503)

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Derivatives and Hedging Activities - Schedule of Cumulative Basis Adjustments on Hedged Items Designated as Fair Value Hedges and Related Amortized Cost (Details) (Details) - Designated as Hedging Instrument [Member] $ in Thousands	Dec. 31, 2023 USD ($)
Interest rate contracts	$ 222,933
Cumulative amount of discontinued cash flow hedge	$ (396)
Derivative Asset, Statement of Financial Position [Extensible Enumeration]	Debt Securities, Available-for-Sale

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Deposits - Additional Information (Details) - USD ($) $ in Millions	Dec. 31, 2023	Dec. 31, 2022
Statistical Disclosure for Banks [Abstract]
Time deposits, $250,000 or more	$ 199.7	$ 148.9
Interest-bearing and noninterest-bearing deposit, brokered	23.4	1.7
Certificates of deposit issued through CDARS	$ 36.2	$ 17.3

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Deposits - Deposit Balances (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Statistical Disclosure for Banks [Abstract]
Noninterest-bearing demand deposit	$ 547,625	$ 599,579
Interest-bearing demand deposits	599,681	638,641
Money market deposits	247,602	214,026
Savings deposits	336,851	427,583
Local certificates of deposit	366,851	236,431
Brokered certificates of deposit	23,445	1,743
Total deposits	$ 2,122,055	$ 2,118,003

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Deposits - Maturities of Certificate of Deposit (Details) $ in Thousands	Dec. 31, 2023 USD ($)
Statistical Disclosure for Banks [Abstract]
2024	$ 351,516
2025	29,857
2026	3,802
2027	2,275
2028	2,580
Thereafter	266
Total	$ 390,296

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Borrowings - Additional Information (Details) - USD ($) $ in Thousands	1 Months Ended	12 Months Ended
	Jun. 30, 2021	Dec. 31, 2023	Dec. 31, 2022
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Federal reserve bank advances, eligible borrowing capacity		$ 649,000
Federal home loan bank, advances, general debt obligations, amount of available, unused funds		284,300
Securities [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Federal reserve bank , general debt obligations, disclosures, collateral pledged		526,400
Federal home loan bank, advances, general debt obligations, disclosures, collateral pledged		278,500
Loans [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Federal reserve bank , general debt obligations, disclosures, collateral pledged		433,200
Line of Credit [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Line of credit facility, maximum borrowing capacity	$ 20,000
Long-term line of credit		$ 0
Line of Credit [Member] | Prime Rate [Member] | Minimum [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Debt instrument, basis spread on variable rate	3.25%	8.50%
Agricultural and Residential Real Estate [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Federal home loan bank, advances, general debt obligations, disclosures, collateral pledged		$ 191,100	$ 169,700

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Borrowings - Schedule of Bank Term Funding Program Advances (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Bank Term Funding Program Maturity Of May 2024 [Member]
Debt Instrument [Line Items]
Total advances outstanding at year-end	$ 160,000	$ 0
Bank Term Funding Program Maturity Of December 2024 [Member]
Debt Instrument [Line Items]
Total advances outstanding at year-end	10,000	0
Bank Term Funding Program Advances [Member]
Debt Instrument [Line Items]
Total advances outstanding at year-end	$ 170,000	$ 0

XML

Borrowings - Schedule of Bank Term Funding Program Advances (Parenthetical) (Details)	Dec. 31, 2023
Bank Term Funding Program Maturity Of May 2024 [Member]
Debt Instrument [Line Items]
Interest rate	4.71%
Bank Term Funding Program Maturity Of December 2024 [Member]
Debt Instrument [Line Items]
Interest rate	4.83%

XML

Borrowings - Schedule of Federal Home Loan Bank Advances (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Federal Home Loan Bank Advances Maturing January 2023 [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Total advances outstanding at year-end	$ 0	$ 50,000
Federal Home Loan Bank Advances Maturing July 2025 [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Total advances outstanding at year-end	20,000	0
Federal Home Loan Bank Advances Maturing December 2026 [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Total advances outstanding at year-end	10,000	0
Federal Home Loan Bank Advances [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Total advances outstanding at year-end	$ 30,000	$ 50,000

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Borrowings - Schedule of Federal Home Loan Bank Advances (Parentheticals) (Details)	Dec. 31, 2023	Dec. 31, 2022
Federal Home Loan Bank Advances Maturing January 2023 [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Interest rate		4.16%
Federal Home Loan Bank Advances Maturing July 2025 Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Interest rate	4.88%
Federal Home Loan Bank Advances Maturing December 2026 Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Interest rate	4.20%

XML

Subordinated Debentures - Additional Information (Details) $ in Thousands	1 Months Ended	12 Months Ended
	Sep. 30, 2021 USD ($)	Dec. 31, 2023 USD ($)	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)	Dec. 31, 2004 Securities
Subordinated Borrowing [Line Items]
Trust preferred securities after merger fair value adjustments		$ 3,400
Trust preferred securities before merger fair value adjustments		$ 4,500
Trust preferred securities fair value adjustment value amortization period		10 years
Merger fair value adjustments		$ 9,953	$ 10,684	$ 9,801
Subordinated Debt [Member]
Subordinated Borrowing [Line Items]
Debt instrument, interest rate, effective percentage		7.60%	5.70%
Subordinated Debt [Member] | Subordinated Notes Due 2031 [Member]
Subordinated Borrowing [Line Items]
Proceeds from issuance of subordinated long-term debt	$ 32,500
Debt instrument, interest rate, stated percentage	3.25%
Subordinated Debt [Member] | London Interbank Offered Rate (LIBOR) [Member]
Subordinated Borrowing [Line Items]
Debt instrument, basis spread on variable rate		2.05%
Subordinated Debt [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member] | Subordinated Notes Due 2031 [Member]
Subordinated Borrowing [Line Items]
Debt instrument, basis spread on variable rate	2.55%
Trust Preferred Securities [Member]
Subordinated Borrowing [Line Items]
Debt securities, available-for-sale, number of positions sold | Securities					4,500
Debt securities, available-for-sale, price per position					1,000
Trust Preferred Securities [Member] | Subordinated Debt [Member]
Subordinated Borrowing [Line Items]
Merger fair value adjustments		$ 1,100

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Income Taxes - Reconciliation of Effective Income Tax Rate (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Income Tax Disclosure [Abstract]
Current federal income tax expense	$ 4,330	$ 4,033	$ 3,532
Deferred federal income tax expense/(benefit)	(24)	(15)	924
Income tax expense	4,306	4,018	4,456
Income tax computed at statutory federal rate of 21%	5,369	5,808	5,565
Tax exempt interest income	(1,206)	(1,323)	(1,190)
Tax exempt earnings on bank-owned life insurance	(230)	(276)	(170)
Tax credits	(282)	(289)	(284)
Disallowed interest expense	752	179	74
Other items	$ (97)	$ (81)	$ 461
Effective income tax rate	17.00%	15.00%	17.00%

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Income Taxes - Reconciliation of Effective Income Tax Rate (Parentheticals) (Details)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Income Tax Disclosure [Abstract]
Income tax statutory federal rate	21.00%	21.00%	21.00%

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Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Deferred tax assets:
Purchase accounting adjustments from mergers with County and Community Shores	$ 529	$ 945
Allowance for credit losses	3,294	1,600
Unrealized losses on securities available for sale	15,279	19,745
Net operating loss carryforward	466	505
Unfunded commitment reserve	454	0
Compensation	347	299
Other	761	716
Total deferred tax assets	21,130	23,810
Deferred tax liabilities:
Purchase accounting adjustments from mergers with County and Community Shores	622	844
Loan servicing rights	805	908
Depreciation	534	605
Interest rate derivative contracts	1,568	660
Deferred loan fees and costs, net	75	15
Other	363	404
Total deferred tax liabilities	3,967	3,436
Net deferred tax asset (liability)	$ 17,163	$ 20,374

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Income Taxes - Additional Information (Details)	12 Months Ended
	Dec. 31, 2023 USD ($)
Earliest Tax Year [Member]
Income Tax Disclosure [Line Items]
Operating loss carryforwards expiration year	2031
Latest Tax Year [Member]
Income Tax Disclosure [Line Items]
Operating loss carryforwards expiration year	2035
Maximum [Member] | Domestic Tax Authority [Member] | Internal Revenue Service (IRS) [Member]
Income Tax Disclosure [Line Items]
Net operating losses	$ 185,000
Community Shores Bank Corporation [Member]
Income Tax Disclosure [Line Items]
Deferred tax assets, federal net operating loss carryforwards	$ 2,200,000

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Related Party Transactions - Loans to Related Parties (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Related Party Transactions [Abstract]
Balance, beginning of year	$ 24,036	$ 24,000
New loans	16,881	9,684
Repayments	(10,601)	(9,259)
Effect of changes in related parties	0	(389)
Balance, end of year	$ 30,316	$ 24,036

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Related Party Transactions - Additional Information (Details) - USD ($) $ in Millions	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Related Party Transactions [Abstract]
Related party deposit liabilities	$ 21.1	$ 30.0	$ 16.8

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Employee Benefit Plans - Additional Information (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
The 401(k) Plan [Member]
Defined Contribution Plan Disclosure [Line Items]
Defined contribution plan, cost	$ 594,000	$ 650,000

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Stock Based Compensation - Additional Information (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Share-based compensation, weighted average exercise price	$ 24.19	$ 25.3
Share-based compensation exercisable, weighted average exercise price	$ 24.19
Share-based compensation, weighted average remaining contractual term	4 years 25 days
Share-based compensation, exercisable, weighted average remaining contractual term	4 years 25 days
Share-based compensation , options outstanding, intrinsic value	$ 67,000	$ 76,000
Share price	$ 29.3
Unrecognized compensation expense related to stock options	$ 0
Minimum [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Share-based compensation, weighted average exercise price	$ 20.86
Share-based compensation exercisable, weighted average exercise price	20.86
Maximum [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Share-based compensation, weighted average exercise price	27.25
Share-based compensation exercisable, weighted average exercise price	$ 27.25
The Stock Incentive Plan Of 2022 [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Share-based compensation shares authorized	200,000
Share-based compensation shares available for grant	142,755
Share-Based Payment Arrangement, Option [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Share based compensation, expense	$ 0	4,000
Restricted Stock Units (RSUs) [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Share based compensation, expense	$ 548,000	$ 503,000
Share price	$ 29.3	$ 29
Share-based compensation award vesting period	3 years
Share-based compensation, equity instruments other than options, nonvested	68,183	53,867
Share-based compensation, equity instruments other than options, aggregate intrinsic value, outstanding	$ 2,000,000	$ 1,600,000
Share-based compensation, equity instruments other than options, grant date fair value	$ 574,000	755,000
Share-based payment nonvested award, cost not yet recognized, period for recognition	1 year 5 months 4 days
Share-based payment, nonvested award, excluding option, cost not yet recognized, amount	$ 770,000
Restricted Stock Units (RSUs) [Member] | Share-Based Payment Arrangement, Tranche One [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Share-based compensation, vesting rights, percentage	125.00%
Restricted Stock Units (RSUs) [Member] | Share-Based Payment Arrangement, Tranche Three [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Share-based compensation, vesting rights, percentage	75.00%
Restricted Stock Units (RSUs) [Member] | Share-Based Payment Arrangement, Tranche Two [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Share-based compensation, vesting rights, percentage	100.00%
Restricted Stock Units (RSUs) [Member] | Share-based Payment Arrangement, Tranche Four [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Share-based compensation, vesting rights, percentage	0.00%
Performance Stock Units [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Share based compensation, expense	$ 81,000	$ 47,000
Share price	$ 29.3
Share-based compensation, equity instruments other than options, nonvested	11,521	6,396
Share-based compensation, equity instruments other than options, aggregate intrinsic value, outstanding	$ 338,000
Share-based compensation, equity instruments other than options, grant date fair value	$ 124,000	$ 168,000
Share-based payment nonvested award, cost not yet recognized, period for recognition	1 year 9 months 18 days
Share-based payment, nonvested award, excluding option, cost not yet recognized, amount	$ 165,000

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Stock Based Compensation - Stock Option Activity (Details)	12 Months Ended
	Dec. 31, 2023 $ / shares shares
Share-Based Payment Arrangement [Abstract]
Options outstanding, beginning of period (in shares) | shares	20,631
Options granted (in shares) | shares	0
Options exercised (in shares) | shares	(7,500)
Options forfeited or expired (in shares) | shares	0
Options outstanding, end of period (in shares) | shares	13,131
Options exercisable (in shares) | shares	13,131
Options outstanding, beginning of period, weighted average exercise price (in dollars per share)	$ 25.3
Options granted, weighted average exercise price (in dollars per share)	0
Options exercised weighted average exercise price (in dollars per share)	27.25
Options forfeited or expired weighted average exercise price (in dollars per share)	0
Options outstanding, end of period, weighted average exercise price (in dollars per share)	24.19
Options exercisable, weighted average exercise price (in dollars per share)	24.19
Options outstanding at January 1, 2022 (in dollars per share)	3.46
Options exercised (in dollars per share)	3.64
Options forfeited or expired (in dollars per share)	0
Options outstanding, end of year (in dollars per share)	3.36
Options exercisable at December 31, 2022 (in dollars per share)	$ 3.36

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Stock Based Compensation - Stock Options Outstanding By Exercise Price Range (Details)	12 Months Ended
	Dec. 31, 2023 $ / shares shares
Exercise Price Range One [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Exercise price of stock options (in dollars per share) | $ / shares	$ 27.25
Number of options outstanding at year-end (in shares)	4,500
Number of options exercisable at year-end (in shares)	4,500
Average remaining contractual life (Year)	5 years 4 months 28 days
Exercise Price Range Two [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Exercise price of stock options (in dollars per share) | $ / shares	$ 25.65
Number of options outstanding at year-end (in shares)	3,000
Number of options exercisable at year-end (in shares)	3,000
Average remaining contractual life (Year)	4 years 5 months 23 days
Exercise Price Range Three [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Exercise price of stock options (in dollars per share) | $ / shares	$ 20.86
Number of options outstanding at year-end (in shares)	3,306
Number of options exercisable at year-end (in shares)	3,306
Average remaining contractual life (Year)	3 years 4 months 2 days
Exercise Price Range Four [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Exercise price of stock options (in dollars per share) | $ / shares	$ 21.13
Number of options outstanding at year-end (in shares)	2,325
Number of options exercisable at year-end (in shares)	2,325
Average remaining contractual life (Year)	1 year 11 months 26 days

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Stock Based Compensation - Summary of Activity for Stock Units Outstanding (Details)	12 Months Ended
	Dec. 31, 2023 $ / shares shares
Performance Stock Units [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Outstanding at January 1, 2022 (in shares) | shares	6,396
Granted (in shares) | shares	5,125
Vested (in shares) | shares	0
Forfeited (in shares) | shares	0
Outstanding, ending balance (in shares) | shares	11,521
Outstanding, weighted average grant date fair value (in dollars per share) | $ / shares	$ 26.34
Granted, weighted average grant date fair value (in dollars per share) | $ / shares	24.23
Vested, weighted average grant date fair value (in dollars per share) | $ / shares	0
Forfeited, weighted average grant date fair value (in dollars per share) | $ / shares	0
Outstanding, ending balance, weighted average grant date fair value (in dollars per share) | $ / shares	$ 25.4
Restricted Stock Units (RSUs) [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Outstanding at January 1, 2022 (in shares) | shares	53,867
Granted (in shares) | shares	23,679
Vested (in shares) | shares	(9,051)
Forfeited (in shares) | shares	(312)
Outstanding, ending balance (in shares) | shares	68,183
Outstanding, weighted average grant date fair value (in dollars per share) | $ / shares	$ 27.48
Granted, weighted average grant date fair value (in dollars per share) | $ / shares	24.23
Vested, weighted average grant date fair value (in dollars per share) | $ / shares	29
Forfeited, weighted average grant date fair value (in dollars per share) | $ / shares	24.23
Outstanding, ending balance, weighted average grant date fair value (in dollars per share) | $ / shares	$ 26.16

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Earnings Per Share - Schedule of Basic Earnings Per Share and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Earnings Per Share [Abstract]
Net income	$ 21,261	$ 23,640	$ 22,042
Weighted average common shares outstanding (in shares)	7,532,998	7,504,173	7,685,459
Basic earnings per common shares	$ 2.82	$ 3.15	$ 2.87
Net income	$ 21,261	$ 23,640	$ 22,042
Weighted average common shares outstanding and potentially dilutive shares (in shares)	7,572,290	7,527,371	7,702,714
Plus dilutive stock options and restricted stock units (in shares)	39,292	23,198	17,255
Diluted earnings per common share	$ 2.82	$ 3.15	$ 2.86

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Earnings Per Share - Additional Information (Details) - shares	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Employee Stock Option [Member]
Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares)	4,500	15,000	15,000

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Condensed Financial Statements of Parent Company - Condensed Balance Sheets (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Assets
Equity securities at fair value	$ 7,505	$ 8,566
Other assets	45,273	47,208
Total assets	2,576,706	2,385,915
Liabilities
Subordinated debentures	35,507	35,262
Other liabilities	23,510	13,776
Total liabilities	2,381,072	2,217,041
Shareholders' equity	195,634	168,874	$ 221,669	$ 227,268
Total liabilities and shareholders’ equity	2,576,706	2,385,915
Parent Company [Member]
Assets
Cash	12,031	8,310	17,622
Equity securities at fair value	2,077	3,199	2,555
Other assets	474	586	553
Investment in subsidiaries	216,975	192,540	236,462
Total assets	231,557	204,635	257,192
Liabilities
Subordinated debentures	32,115	31,971	31,827
Other liabilities	416	499	506
Total liabilities	35,923	35,761	35,523
Shareholders' equity	195,634	168,874	221,669
Total liabilities and shareholders’ equity	231,557	204,635	257,192
Parent Company [Member] | Trust Preferred Securities [Member]
Liabilities
Long-term debt, carrying amount	$ 3,392	$ 3,291	$ 3,190

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Condensed Financial Statements of Parent Company - Condensed Statements of Income (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Interest income
Total interest income	$ 98,980	$ 75,060	$ 64,618
Interest expense
Net interest income	65,885	67,314	60,641
Noninterest income
Gains (losses) on sales of securities	(71)	(809)	(40)
Change in market value of equity securities	(317)	(955)	479
Other	1,210	1,219	981
Total noninterest income	14,906	14,072	19,194
Noninterest expense
Professional fees	2,198	2,175	3,009
Other	4,607	4,636	4,682
Total noninterest expense	55,074	53,478	52,921
Income before income tax	25,567	27,658	26,498
Income tax (expense)/benefit	(4,306)	(4,018)	(4,456)
Net income	21,261	23,640	22,042
Parent Company [Member]
Interest income
Interest and dividends from ChoiceOne Bank	10,813	0	6,125
Interest and dividends from other securities	32	27	10
Total interest income	10,845	27	6,135
Interest expense
Borrowings	1,635	1,491	645
Net interest income	9,210	(1,464)	5,490
Noninterest income
Gains (losses) on sales of securities	(71)	0	0
Change in market value of equity securities	(307)	(385)	554
Other	0	2	4
Total noninterest income	(378)	(383)	558
Noninterest expense
Professional fees	47	40	15
Other	217	174	203
Total noninterest expense	264	214	218
Income before income tax	8,568	(2,061)	5,830
Income tax (expense)/benefit	472	433	64
Income before equity in undistributed net income of subsidiary	9,040	(1,628)	5,894
Equity in undistributed net income of subsidiary	12,221	25,268	16,148
Net income	$ 21,261	$ 23,640	$ 22,042

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Condensed Financial Statements of Parent Company - Condensed Statements of Cash Flows (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Cash flows from operating activities:
Net income	$ 21,261	$ 23,640	$ 22,042
Adjustments to reconcile net income to net cash from operating activities:
Amortization	9,953	10,684	9,801
Compensation expense on employee and director stock purchases, stock options, and restricted stock units	1,005	958	812
Net loss on sale of securities	71	809	40
Net change in market value of equity securities	317	955	(479)
Changes in other assets	5,395	(4,208)	(5,418)
Changes in other liabilities	7,596	6,205	5,715
Net cash provided by operating activities	46,482	45,017	37,699
Cash flows from investing activities:
Sales of securities available for sale	0	47,167	29,742
Purchases of securities	(1,646)	(55,053)	(632,826)
Net cash (used in)/provided by investing activities	(181,365)	(90,496)	(521,374)
Cash flows from financing activities:
Issuance of common stock	231	172	139
Repurchase of common stock	0	682	7,786
Proceeds from borrowings	420,000	726,000	87,500
Payments on borrowings	(270,000)	(726,000)	(14,326)
Cash dividends paid	(7,910)	(7,578)	(7,200)
Net cash provided by/(used in) financing activities	146,373	57,536	436,043
Net change in cash and cash equivalents	11,490	12,057	(47,632)
Beginning cash and cash equivalents	43,943	31,887	79,519
Ending cash and cash equivalents	55,433	43,943	31,887
Parent Company [Member]
Cash flows from operating activities:
Net income	21,261	23,640	22,042
Adjustments to reconcile net income to net cash from operating activities:
Equity in undistributed net income of subsidiary	(12,221)	(25,268)	(16,148)
Amortization	245	245	101
Compensation expense on employee and director stock purchases, stock options, and restricted stock units	964	928	787
Net loss on sale of securities	71	0	0
Net change in market value of equity securities	307	385	(554)
Changes in other assets	113	(33)	(260)
Changes in other liabilities	(84)	(7)	(2,982)
Net cash provided by operating activities	10,656	(110)	2,986
Cash flows from investing activities:
Sales of securities available for sale	887	0	0
Purchases of securities	(143)	(1,029)	(117)
Investment in Subsidiary	0	0	(5,000)
Net cash (used in)/provided by investing activities	744	(1,029)	(5,117)
Cash flows from financing activities:
Issuance of common stock	231	172	139
Repurchase of common stock	0	767	7,786
Proceeds from borrowings	0	0	36,827
Payments on borrowings	0	0	(14,166)
Cash dividends paid	(7,910)	(7,578)	(7,200)
Net cash provided by/(used in) financing activities	(7,679)	(8,173)	7,814
Net change in cash and cash equivalents	3,721	(9,312)	5,683
Beginning cash and cash equivalents	8,310	17,622	11,939
Ending cash and cash equivalents	$ 12,031	$ 8,310	$ 17,622

XML

Financial Instruments - Summary of Financial Instruments (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Equity securities at fair value	$ 7,505	$ 8,566
Securities available for sale	514,598	529,749
Loans to other financial institutions	19,400	0
Mortgage loan servicing rights	5,600	5,900	$ 5,500
Noninterest-bearing deposits	547,625	599,579
Interest-bearing deposits	1,550,985	1,516,681
Reported Value Measurement [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	55,433	43,943
Equity securities at fair value	7,505	8,566
Securities available for sale	514,598	529,749
Securities held to maturity	407,959	425,906
Federal Home Loan Bank and Federal Reserve Bank stock	9,514	8,581
Loans held for sale	4,710	4,834
Loans, net	1,394,968	1,182,163
Accrued interest receivable	10,066	8,949
Interest rate lock commitments	64	28
Interest rate derivative contracts	8,880	9,204
Noninterest-bearing deposits	547,625	599,579
Interest-bearing deposits	1,550,985	1,518,424
Brokered deposits	23,445
Borrowings	200,000	50,000
Subordinated debentures	35,507	35,262
Accrued interest payable	6,223	610
Interest rate derivative contracts	0	5,823
Estimate of Fair Value Measurement [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	55,433	43,943
Equity securities at fair value	7,505	8,566
Securities available for sale	514,598	529,749
Securities held to maturity	348,791	353,901
Federal Home Loan Bank and Federal Reserve Bank stock	9,514	8,581
Loans held for sale	4,851	4,979
Loans, net	1,362,920	1,123,198
Accrued interest receivable	10,066	8,949
Interest rate lock commitments	64	28
Interest rate derivative contracts	8,880	9,204
Noninterest-bearing deposits	547,625	599,579
Interest-bearing deposits	1,549,386	1,514,294
Brokered deposits	23,435
Borrowings	199,743	50,000
Subordinated debentures	31,748	30,304
Accrued interest payable	6,223	610
Interest rate derivative contracts	0	5,823
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	55,433	43,943
Equity securities at fair value	4,749	6,024
Securities available for sale	80,194	78,204
Securities held to maturity	0	0
Federal Home Loan Bank and Federal Reserve Bank stock	0	0
Loans held for sale	0	0
Loans, net	0	0
Accrued interest receivable	0	0
Interest rate lock commitments	0	0
Interest rate derivative contracts	0	0
Noninterest-bearing deposits	547,625	599,579
Interest-bearing deposits	0	0
Brokered deposits	0
Borrowings	0	0
Subordinated debentures	0	0
Accrued interest payable	0	0
Interest rate derivative contracts	0	0
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	0	0
Equity securities at fair value	0	0
Securities available for sale	434,404	451,545
Securities held to maturity	335,493	338,583
Federal Home Loan Bank and Federal Reserve Bank stock	9,514	8,581
Loans held for sale	4,851	4,979
Loans, net	0	0
Accrued interest receivable	10,066	8,949
Interest rate lock commitments	64	28
Interest rate derivative contracts	8,880	9,204
Noninterest-bearing deposits	0	0
Interest-bearing deposits	1,549,386	1,514,294
Brokered deposits	23,435
Borrowings	199,743	50,000
Subordinated debentures	31,748	30,304
Accrued interest payable	6,223	610
Interest rate derivative contracts	0	5,823
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	0	0
Equity securities at fair value	2,756	2,542
Securities available for sale	0	0
Securities held to maturity	13,298	15,318
Federal Home Loan Bank and Federal Reserve Bank stock	0	0
Loans held for sale	0	0
Loans, net	1,362,920	1,123,198
Accrued interest receivable	0	0
Interest rate lock commitments	0	0
Interest rate derivative contracts	0	0
Noninterest-bearing deposits	0	0
Interest-bearing deposits	0	0
Brokered deposits	0
Borrowings	0	0
Subordinated debentures	0	0
Accrued interest payable	$ 0	$ 0

XML

Fair Value Measurements - Schedule of Assets and Liabilities Measured at Fair Value (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities at fair value	$ 7,505	$ 8,566
Securities available for sale	514,598	529,749
Interest Rate Contract [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate contracts	8,880	9,204
Interest rate derivative contracts Liability	0	5,823
US Treasury and Government [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	0	0
US Treasury Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	80,194	78,204
US States and Political Subdivisions Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	234,682	229,938
Collateralized Mortgage-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	188,501	208,563
Corporate Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	204	711
Asset-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	11,017	12,333
Fair Value, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	514,598	529,749
Fair Value, Recurring [Member] | Interest Rate Contract [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate contracts	8,880	9,204
Interest rate derivative contracts Liability	0	5,823
Fair Value, Recurring [Member] | Equity Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities at fair value	7,505	8,566
Fair Value, Recurring [Member] | US Treasury and Government [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	0	0
Fair Value, Recurring [Member] | US Treasury Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	80,194	78,204
Fair Value, Recurring [Member] | US States and Political Subdivisions Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	234,682	229,938
Fair Value, Recurring [Member] | Collateralized Mortgage-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	188,501	208,563
Fair Value, Recurring [Member] | Corporate Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	204	711
Fair Value, Recurring [Member] | Asset-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	11,017	12,333
Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	80,194	78,204
Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member] | Interest Rate Contract [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate contracts	0	0
Interest rate derivative contracts Liability	0	0
Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member] | Equity Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities at fair value	4,749	6,024
Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member] | US Treasury and Government [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	0	0
Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member] | US Treasury Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	80,194	78,204
Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member] | US States and Political Subdivisions Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	0	0
Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member] | Collateralized Mortgage-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	0	0
Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member] | Corporate Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	0	0
Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member] | Asset-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	0	0
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	434,404	451,545
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member] | Interest Rate Contract [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate contracts	8,880	9,204
Interest rate derivative contracts Liability	0	5,823
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member] | Equity Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities at fair value	0	0
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member] | US Treasury and Government [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	0	0
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member] | US Treasury Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	0	0
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member] | US States and Political Subdivisions Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	234,682	229,938
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member] | Collateralized Mortgage-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	188,501	208,563
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member] | Corporate Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	204	711
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member] | Asset-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	11,017	12,333
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	0	0
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | Interest Rate Contract [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate contracts	0	0
Interest rate derivative contracts Liability	0	0
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | Equity Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities at fair value	2,756	2,542
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | US Treasury and Government [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	0	0
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | US Treasury Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	0	0
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | US States and Political Subdivisions Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	0	0
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | Collateralized Mortgage-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	0	0
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | Corporate Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	0	0
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | Asset-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	$ 0	$ 0

XML

Fair Value Measurements - Changes in Level 3 Assets Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Equity Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Balance	$ 2,542	$ 1,768
Total realized and unrealized gains included in noninterest income	71	161
Net purchases, sales, calls, and maturities	143	613
Balance	2,756	2,542
Amount of total losses for the period included in earning attributable to the change in unrealized gains (losses) relating to assets and liabilities still held at December 31,	5	9
Available-for-Sale Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Balance	0	21,050
Total realized and unrealized gains included in noninterest income	0	0
Total unrealized gains/(losses) included in other comprehensive income	0	0
Net purchases, sales, calls, and maturities	0	0
Net transfers into Level 3	0	0
Transfer to held to maturity	0	(21,050)
Balance	0	0
Amount of total losses for the period included in earning attributable to the change in unrealized gains (losses) relating to assets and liabilities still held at December 31,	$ 0	$ 0

XML

Fair Value Measurements - Additional Information (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Net unrealized gain	$ (69,641,000)	$ (89,041,000)
Securities purchased	0	613,000
Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Net unrealized gain	$ 71,000	$ 161,000

XML

Fair Value Measurements - Assets Measured at Fair Value on a Non-recurring Basis (Details) - Fair Value, Nonrecurring [Member] - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral Dependent Loans	$ 387
Impaired Loans		$ 2,846
Other Real Estate	122	0
Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral Dependent Loans	0
Impaired Loans		0
Other Real Estate	0	0
Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral Dependent Loans	0
Impaired Loans		0
Other Real Estate	0	0
Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral Dependent Loans	387
Impaired Loans		2,846
Other Real Estate	$ 122	$ 0

XML

Off-balance Sheet Activities - Additional Information (Details)	12 Months Ended
	Dec. 31, 2023
Minimum [Member]
Off Balance Sheet Credit Loss Liability [Line Items]
Interest Rate Commitments to Extend Credit	6.25%
Term Commitments to Extend Credit (Year)	1 year
Maximum [Member]
Off Balance Sheet Credit Loss Liability [Line Items]
Interest Rate Commitments to Extend Credit	9.50%
Term Commitments to Extend Credit (Year)	30 years

XML

Off-balance Sheet Activities - Schedule of Financial Instruments with Off-Balance Sheet Risk (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Off-Balance-Sheet, Credit Loss, Liability [Abstract]
Unused lines of credit and letters of credit - fixed rate	$ 57,781	$ 54,523
Unused lines of credit and letters of credit - variable rate	141,522	148,497
Loans and Leases Receivable, Commitments, Fixed Rates	90,178	35,789
Loans and Leases Receivable, Commitments, Variable Rates	$ 27,939	$ 12,565

XML

Regulatory Capital - Additional Information (Details) $ in Millions	Dec. 31, 2023 USD ($)
Statutory Accounting Practices, Statutory Amount Available for Dividend Payments without Regulatory Approval	$ 53.3

XML

Regulatory Capital - Regulatory Capital (Details) $ in Thousands	Dec. 31, 2023 USD ($)	Dec. 31, 2022 USD ($)
Parent Company [Member]
Total Capital	$ 233,840	$ 222,006
Total Capital (to risk-weighted assets) ratio	0.13	0.138
Minimum Required for Capital Adequacy Purposes	$ 144,441	$ 128,545
Minimum Required for Capital Adequacy Purposes, Ratio	0.08	0.08
Common equity Tier 1 capital (to risk weighted assets)	$ 185,412	$ 177,916
Common equity Tier 1 capital (to risk weighted assets), Ratio	0.103	0.111
Common equity Tier 1 capital (to risk weighted assets), Minimum Required for Capital Adequacy Purposes	$ 81,248	$ 72,307
Common equity Tier 1 capital (to risk weighted assets), Minimum Required for Capital Adequacy Purposes, Ratio	0.045	0.045
Tier 1 capital (to risk weighted assets)	$ 189,912	$ 182,416
Tier 1 capital (to risk weighted assets), Ratio	0.105	0.114
Tier 1 capital (to risk weighted assets), Minimum Required for Capital Adequacy Purposes	$ 108,331	$ 96,409
Tier 1 capital (to risk weighted assets), Minimum Required for Capital Adequacy Purposes, Ratio	0.06	0.06
Tier 1 capital (to average assets)	$ 189,912	$ 182,416
Tier 1 capital (to average assets), Ratio	0.075	0.079
Tier 1 capital (to average assets), Minimum Required for Capital Adequacy Purposes	$ 101,337	$ 92,558
Tier 1 capital (to average assets), Minimum Required for Capital Adequacy Purposes, Ratio	0.04	0.04
ChoiceOne Bank [Member]
Total Capital	$ 224,095	$ 208,696
Total Capital (to risk-weighted assets) ratio	0.124	0.13
Minimum Required for Capital Adequacy Purposes	$ 144,274	$ 128,294
Minimum Required for Capital Adequacy Purposes, Ratio	0.08	0.08
Common equity Tier 1 capital (to risk weighted assets)	$ 212,283	$ 201,077
Common equity Tier 1 capital (to risk weighted assets), Ratio	0.118	0.125
Common equity Tier 1 capital (to risk weighted assets), Minimum Required for Capital Adequacy Purposes	$ 81,154	$ 72,165
Common equity Tier 1 capital (to risk weighted assets), Minimum Required for Capital Adequacy Purposes, Ratio	0.045	0.045
Tier 1 capital (to risk weighted assets)	$ 212,283	$ 201,077
Tier 1 capital (to risk weighted assets), Ratio	0.118	0.125
Tier 1 capital (to risk weighted assets), Minimum Required for Capital Adequacy Purposes	$ 108,205	$ 96,220
Tier 1 capital (to risk weighted assets), Minimum Required for Capital Adequacy Purposes, Ratio	0.06	0.06
Tier 1 capital (to average assets)	$ 212,283	$ 201,077
Tier 1 capital (to average assets), Ratio	0.084	0.087
Tier 1 capital (to average assets), Minimum Required for Capital Adequacy Purposes	$ 101,244	$ 92,449
Tier 1 capital (to average assets), Minimum Required for Capital Adequacy Purposes, Ratio	0.04	0.04
Total capital (to risk weighted assets), Minimum Required to be Well Capitalized Under Prompt Corrective Action Regulations	$ 180,342	$ 160,367
Total capital (to risk weighted assets), Minimum Required to be Well Capitalized Under Prompt Corrective Action Regulations, Ratio	0.10	0.10
Common equity Tier 1 capital (to risk weighted assets), Minimum Required to be Well Capitalized Under Prompt Corrective Action Regulations	$ 117,223	$ 104,239
Common equity Tier 1 capital (to risk weighted assets), Minimum Required to be Well Capitalized Under Prompt Corrective Action Regulations, Ratio	0.065	0.065
Tier 1 capital (to risk weighted assets), Minimum Required to be Well Capitalized Under Prompt Corrective Action Regulations	$ 144,274	$ 128,294
Tier 1 capital (to risk weighted assets), Minimum Required to be Well Capitalized Under Prompt Corrective Action Regulations, Ratio	0.08	0.08
Tier 1 capital (to average assets), Minimum Required to be Well Capitalized Under Prompt Corrective Action Regulations	$ 126,555	$ 115,562
Tier 1 capital (to average assets), Minimum Required to be Well Capitalized Under Prompt Corrective Action Regulations, Ratio	0.05	0.05