10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

☒	Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the quarterly period ended June 30, 2022
☐	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 Sparta, Michigan (Address of Principal Executive Offices)	49345 (Zip Code)
(616) 887-7366 (Registrant’s Telephone Number, including Area Code)

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 is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐        No ☒

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

As of July 31, 2022, the Registrant had outstanding 7,507,769 shares of common stock.

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements.

ChoiceOne Financial Services, Inc.
CONSOLIDATED BALANCE SHEETS

	June 30,			December 31,
(Dollars in thousands, except per share data)	2022			2021
	(Unaudited)			(Audited)
Assets
Cash and due from banks	$	39,946		$	31,537
Time deposits in other financial institutions		350			350
Cash and cash equivalents		40,296			31,887
Equity securities, at fair value (Note 2)		8,288			8,492
Securities available for sale, at fair value (Note 2)		566,142			1,098,885
Securities held to maturity, at amortized cost (Note 2)		429,675			-
Federal Home Loan Bank stock		3,493			3,824
Federal Reserve Bank stock		5,064			5,064
Loans held for sale		10,628			9,351
Loans to other financial institutions		37,422			42,632
Loans (Note 3)		1,081,389			1,016,848
Allowance for loan losses (Note 3)		(7,416	)		(7,688	)
Loans, net		1,073,973			1,009,160
Premises and equipment, net		29,122			29,880
Other real estate owned, net		-			194
Cash value of life insurance policies		43,774			43,356
Goodwill		59,946			59,946
Core deposit intangible		3,358			3,962
Other assets		49,024			20,049
Total assets	$	2,360,205		$	2,366,682
Liabilities
Deposits – noninterest-bearing	$	578,927		$	560,931
Deposits – interest-bearing		1,559,577			1,491,363
Total deposits		2,138,504			2,052,294
Borrowings		7,000			50,000
Subordinated debentures		35,140			35,017
Other liabilities		13,101			7,702
Total liabilities		2,193,745			2,145,013
Shareholders' Equity
Preferred stock; shares authorized: 100,000; shares outstanding: none		-			-
Common stock and paid-in capital, no par value; shares authorized: 12,000,000; shares outstanding: 7,503,072 at June 30, 2022 and 7,510,379 at December 31, 2021		171,804			171,913
Retained earnings		59,728			52,332
Accumulated other comprehensive loss, net		(65,072	)		(2,576	)
Total shareholders’ equity		166,460			221,669
Total liabilities and shareholders’ equity	$	2,360,205		$	2,366,682

See accompanying notes to interim consolidated financial statements. 

2

ChoiceOne Financial Services, Inc.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

	Three Months Ended						Six Months Ended
(Dollars in thousands, except per share data)	June 30,						June 30,
	2022			2021			2022			2021
Interest income
Loans, including fees	$	12,523		$	11,565		$	24,821		$	24,247
Securities:
Taxable		3,522			2,396			7,029			4,252
Tax exempt		1,559			1,446			3,214			2,543
Other		62			12			76			32
Total interest income		17,666			15,419			35,140			31,074
Interest expense
Deposits		996			839			1,779			1,719
Advances from Federal Home Loan Bank		2			2			3			3
Other		379			70			748			156
Total interest expense		1,377			911			2,530			1,878
Net interest income		16,289			14,508			32,610			29,196
Provision for loan losses		-			166			-			416
Net interest income after provision for loan losses		16,289			14,342			32,610			28,780
Noninterest income
Customer service charges		2,353			2,134			4,542			4,054
Insurance and investment commissions		233			198			438			471
Gains on sales of loans		887			1,771			1,691			3,917
Net gains (losses) on sales of securities		(427	)		2			(427	)		3
Net gains on sales and write downs of other assets		1			(4	)		172			1
Earnings on life insurance policies		254			191			534			377
Trust income		176			253			354			425
Change in market value of equity securities		(327	)		(119	)		(683	)		489
Other		280			306			655			595
Total noninterest income		3,430			4,732			7,276			10,332
Noninterest expense
Salaries and benefits		7,537			6,999			15,143			14,167
Occupancy and equipment		1,518			1,498			3,143			3,053
Data processing		1,578			1,673			3,322			3,102
Professional fees		559			943			1,069			1,672
Supplies and postage		166			124			357			224
Advertising and promotional		147			207			279			352
Intangible amortization		322			352			604			659
FDIC insurance		225			156			450			308
Other		1,105			1,177			2,480			2,120
Total noninterest expense		13,157			13,129			26,847			25,657
Income before income tax		6,562			5,945			13,039			13,455
Income tax expense		947			902			1,896			2,174
Net income	$	5,615		$	5,043		$	11,143		$	11,281
Basic earnings per share (Note 4)	$	0.75		$	0.65		$	1.49		$	1.45
Diluted earnings per share (Note 4)	$	0.75		$	0.65		$	1.49		$	1.45
Dividends declared per share	$	0.25		$	0.22		$	0.50		$	0.44

See accompanying notes to interim consolidated financial statements. 

3

ChoiceOne Financial Services, Inc.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

	Three Months Ended						Six Months Ended
(Dollars in thousands)	June 30,						June 30,
	2022			2021			2022			2021
Net income	$	5,615		$	5,043		$	11,143		$	11,281
Other comprehensive income:
Change in net unrealized gain (loss) on available-for-sale securities		(31,574	)		11,662			(74,512	)		(5,291	)
Income tax benefit (expense)		6,631			(2,449	)		15,648			1,111
Less: reclassification adjustment for net (gain) loss included in net income		427			(1	)		427			(3	)
Income tax benefit (expense)		(90	)		-			(90	)		1
Less: net unrealized (gains) losses on securities transferred from available-for-sale to held-to-maturity		-			-			3,404			-
Income tax benefit (expense)		-			-			(715	)		-
Unrealized gain (loss) on available-for-sale securities, net of tax		(24,606	)		9,212			(55,838	)		(4,182	)
Reclassification of unrealized gain (loss) upon transfer of securities from available-for-sale to held-to-maturity		-			-			(3,404	)		-
Income tax benefit (expense)		-			-			715			-
Less: amortization of net unrealized (gains) losses on securities transferred from available-for-sale to held-to-maturity		74			-			244			-
Income tax benefit (expense)		(16	)		-			(51	)		-
Unrealized loss on held to maturity securities, net of tax		58			-			(2,496	)		-
Change in net unrealized gain (loss) on derivatives		(5,576	)		-			(5,576	)		-
Income tax benefit (expense)		1,171			-			1,171			-
Less: amortization of net unrealized (gains) losses included in net income		307			-			307			-
Income tax benefit (expense)		(64	)		-			(64	)		-
Unrealized gain (loss) on derivative instruments, net of tax		(4,162	)		-			(4,162	)		-
Other comprehensive income (loss), net of tax		(28,710	)		9,212			(62,496	)		(4,182	)
Comprehensive income (loss)	$	(23,095	)	$	14,255		$	(51,353	)	$	7,099

See accompanying notes to interim consolidated financial statements. 

4

ChoiceOne Financial Services, Inc.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)

For the three months ended June 30,

										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, April 1, 2021		7,802,285		$	178,993		$	42,012		$	(2,366	)	$	218,639
Net income								5,043						5,043
Other comprehensive income											9,212			9,212
Shares issued		5,953			106									106
Effect of employee stock purchases		-			9									9
Stock-based compensation expense		-			112									112
Shares repurchased		(115,701	)		(2,897	)								(2,897	)
Cash dividends declared ($0.22 per share)								(1,703	)					(1,703	)
Balance, June 30, 2021		7,692,537		$	176,323		$	45,352		$	6,846		$	228,521
Balance, April 1, 2022		7,489,812		$	171,492		$	55,988		$	(36,362	)	$	191,118
Net income								5,615						5,615
Other comprehensive income (loss)											(28,710	)		(28,710	)
Shares issued		13,260			139									139
Effect of employee stock purchases					6									6
Stock-based compensation expense					167									167
Cash dividends declared ($0.25 per share)								(1,875	)					(1,875	)
Balance, June 30, 2022		7,503,072		$	171,804		$	59,728		$	(65,072	)	$	166,460

5

ChoiceOne Financial Services, Inc.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)

For the six months ended June 30,

										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								11,281						11,281
Other comprehensive loss											(4,182	)		(4,182	)
Shares issued		11,886			281									281
Effect of employee stock purchases		-			13									13
Stock-based compensation expense		-			176									176
Shares repurchased		(115,701	)		(2,897	)								(2,897	)
Cash dividends declared ($0.44 per share)								(3,419	)					(3,419	)
Balance, June 30, 2021		7,692,537		$	176,323		$	45,352		$	6,846		$	228,521
Balance, January 1, 2022		7,510,379		$	171,913		$	52,332		$	(2,576	)	$	221,669
Net income								11,143						11,143
Other comprehensive income (loss)											(62,496	)		(62,496	)
Shares issued		18,592			272									272
Effect of employee stock purchases					13									13
Stock-based compensation expense					288									288
Shares repurchased		(25,899	)		(682	)								(682	)
Cash dividends declared ($0.50 per share)								(3,747	)					(3,747	)
Balance, June 30, 2022		7,503,072		$	171,804		$	59,728		$	(65,072	)	$	166,460

See accompanying notes to interim consolidated financial statements. 

6

ChoiceOne Financial Services, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	Six Months Ended
(Dollars in thousands)	June 30,
	2022			2021
Cash flows from operating activities:
Net income	$	11,143		$	11,281
Adjustments to reconcile net income to net cash from operating activities:
Provision for loan losses		-			416
Depreciation		1,356			1,299
Amortization		5,506			4,336
Compensation expense on employee and director stock purchases, stock options, and restricted stock units		493			404
Net losses (gains) on sales of available for sale securities		427			(3	)
Net change in market value of equity securities		683			(489	)
Gains on sales of loans		(1,691	)		(3,917	)
Loans originated for sale		(53,750	)		(122,993	)
Proceeds from loan sales		53,480			125,714
Earnings on bank-owned life insurance		(534	)		(377	)
Proceeds from BOLI policy		130			-
Earnings on death benefit from bank-owned life insurance		(14	)		-
(Gains)/losses on sales of other real estate owned		(41	)		(4	)
Proceeds from sales of other real estate owned		235			270
Deferred federal income tax (benefit)/expense		169			506
Net change in:
Other assets		(768	)		(992	)
Other liabilities		5,480			1,693
Net cash provided by operating activities		22,304			17,144
Cash flows from investing activities:
Sales of securities available for sale		31,828			-
Maturities, prepayments and calls of securities available for sale		27,404			28,104
Maturities, prepayments and calls of securities held to maturity		3,485			-
Purchases of securities available for sale		(32,676	)		(322,009	)
Purchases of securities held to maturity		(5,748	)		-
Loan originations and payments, net		(59,602	)		100,799
Additions to premises and equipment		(701	)		(1,461	)
Proceeds from (payments for) derivative contracts, net		(16,745	)		-
Net cash provided by (used in) investing activities		(52,755	)		(194,567	)
Cash flows from financing activities:
Net change in deposits		86,210			206,157
Net change in short term borrowings		(43,000	)		(6,685	)
Issuance of common stock		80			66
Repurchase of common stock		(682	)		(2,897	)
Cash dividends		(3,747	)		(3,419	)
Net cash provided by financing activities		38,861			193,222
Net change in cash and cash equivalents		8,409			15,799
Beginning cash and cash equivalents		31,887			79,519
Ending cash and cash equivalents	$	40,296		$	95,318
Supplemental disclosures of cash flow information:
Cash paid for interest	$	2,182		$	1,965
Cash paid for income taxes		-			901
Loans transferred to other real estate owned		-			260

See accompanying notes to interim consolidated financial statements.

7

ChoiceOne Financial Services, Inc.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation 

The consolidated financial statements include ChoiceOne Financial Services, Inc. ("ChoiceOne"), its wholly-owned subsidiary, ChoiceOne Bank, and ChoiceOne Bank’s wholly-owned subsidiary, ChoiceOne Insurance Agencies, Inc. 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.

The accompanying unaudited consolidated financial statements and notes thereto reflect all adjustments ordinary in nature which are, in the opinion of management, necessary for a fair presentation of such financial statements.  Operating results for the six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

The accompanying consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes thereto included in ChoiceOne’s Annual Report on Form 10-K for the year ended December 31, 2021.

Use of Estimates

To prepare financial statements in conformity with GAAP, 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, including changes in interest rates and other general economic, business and political conditions, including the effects of the COVID-19 pandemic, and its potential effects on the economic environment, our customers and our operations, as well as any changes to federal, state and local government laws, regulations and orders in connection with the pandemic. Actual results may differ from these estimates. Estimates associated with the allowance for loan losses are particularly susceptible to change.

Investment Securities

Investment securities for which ChoiceOne has the intent and ability to hold to maturity are classified as held to maturity and are carried at amortized cost.  Investment securities not classified as held to maturity are classified as available for sale and are reported at fair value with unrealized gains and losses, net of income taxes, as a separate component of other comprehensive income. ChoiceOne determines the appropriate classification of investment securities at the time of purchase and reassesses the classification at each reporting date.

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. Loans to other financial institutions are excluded from Note 3. No loans to other financial institutions were impaired, nonaccrual, or past due greater than 30 days as of June 30, 2022.

Credit risk associated with the participating interest is measured as an allowance for loan losses when necessary. Losses are charged off against the allowance when incurred and recoveries of loan charge-offs are recorded when received. At least quarterly, ChoiceOne Bank reviews the portfolios of participating interests for potential losses including any participating interest that is outstanding over 90 days (even if the advance and participating interest is current).

Goodwill

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.

8

 

Stock Transactions

A total of 7,407 shares of common stock were issued to ChoiceOne’s Board of Directors for a cash price of $192,000 under the terms of the Directors’ Stock Purchase Plan in the first half of 2022. A total of 4,257 shares for a cash price of $80,000 were issued under the Employee Stock Purchase Plan in the first six months of 2022.  ChoiceOne repurchased 25,899 shares for $682,000, or a weighted average all-in cost per share of $26.35, during the first quarter of 2022. This was part of the common stock repurchase program announced in April 2021 which authorized repurchases of up to 390,114 shares, representing 5% of the total outstanding shares of common stock as of the date the program was adopted.  No shares were repurchased under this program in the second quarter of 2022. 

Allowance for Loan Losses

The allowance for loan losses is a 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 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-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.  The specific component relates to loans that are individually classified as impaired.

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 ChoiceOne 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, ChoiceOne Bank must determine whether (a) the borrower is experiencing financial difficulties and (b) ChoiceOne 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, at the net 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.

Reclassifications 

Certain amounts presented in prior periods have been reclassified to conform to the current presentation.

Recent Accounting Pronouncements

The Financial Accounting Standards Board (FASB) issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU provides financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date by replacing the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The new guidance attempts to reflect an entity’s current estimate of all expected credit losses and broadens the information that an entity must consider in developing its expected credit loss estimate for assets measured either collectively or individually to include forecasted information, as well as past events and current conditions. There is no specified method for measuring expected credit losses, and an entity may apply methods that reasonably reflect its expectations of the credit loss estimate. Although an entity may still use its current systems and methods for recording the allowance for credit losses, under the new rules, the inputs used to record the allowance for credit losses generally will need to change to appropriately reflect an estimate of all expected credit losses and the use of reasonable and supportable forecasts. Additionally, credit losses on available-for-sale debt securities will have to be presented as an allowance rather than as a write-down. This ASU is effective for fiscal years beginning after December 15, 2022, and for interim periods within those years for companies considered smaller reporting companies with the Securities and Exchange Commission. ChoiceOne was classified as a smaller reporting company as of the measurement date. Management is currently evaluating the impact of this new ASU on its consolidated financial statements which may be significant.  Management has selected representative peer groups for each loan type and determined economic factors which have a strong correlation with our historical loss data. 

9

 

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 $2.5 million after tax as of June 30, 2022.

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

	June 30, 2022
			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Equity securities	$	8,432	$	405	$	(549	)	$	8,288

	December 31, 2021
			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Equity securities	$	7,953	$	665	$	(126	)	$	8,492

The following tables present the amortized cost and fair value of investment securities at the dates indicated and the corresponding amounts of gross unrealized gains and losses, including the corresponding amounts of gross unrealized gains and losses on investment securities available for sale recognized in accumulated other comprehensive income:

	June 30, 2022
			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
Available for Sale:	Cost		Gains		Losses			Value
U.S. Treasury notes and bonds	$	93,040	$	-	$	(9,397	)	$	83,643
State and municipal		300,824		34		(44,197	)		256,661
Mortgage-backed		230,842		5		(19,719	)		211,128
Corporate		1,256		-		(18	)		1,238
Asset-backed securities		14,122		-		(650	)		13,472
Total	$	640,084	$	39	$	(73,981	)	$	566,142
Held to Maturity:
U.S. Government and federal agency	$	2,963	$	-	$	(283	)	$	2,680
State and municipal		203,267		-		(32,638	)		170,629
Mortgage-backed		202,595		-		(23,007	)		179,588
Corporate		19,593		-		(1,013	)		18,580
Asset-backed securities		1,257		-		(67	)		1,190
Total	$	429,675	$	-	$	(57,008	)	$	372,667

	December 31, 2021
			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
Available for Sale:	Cost		Gains		Losses			Value
U.S. Government and federal agency	$	2,001	$	7	$	-		$	2,008
U.S. Treasury notes and bonds		93,267		23		(1,311	)		91,979
State and municipal		528,252		10,704		(4,109	)		534,847
Mortgage-backed		441,383		781		(9,049	)		433,115
Corporate		20,856		19		(233	)		20,642
Asset-backed securities		16,387		-		(93	)		16,294
Total	$	1,102,146	$	11,534	$	(14,795	)	$	1,098,885

ChoiceOne reviews its securities portfolio on a quarterly basis to determine whether unrealized losses are considered to be temporary or other-than-temporary. No other-than-temporary impairment charges were recorded in the three and six months ended June 30, 2022 or in the same periods in2021. ChoiceOne believes that unrealized losses on securities were temporary in nature and were due to changes in interest rates and reduced market liquidity and not as a result of credit quality issues.

10

 

Presented below is a schedule of maturities of securities as of June 30, 2022, and the fair value of securities available for sale and the amortized cost of securities held to maturity as of June 30, 2022.  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 June 30,
(Dollars in thousands)	1 Year		5 Years		10 Years		10 Years		2022
U.S. Treasury notes and bonds	$	2,000	$	-	$	81,643	$	-	$	83,643
State and municipal		16,426		8,873		75,501		155,861		256,661
Corporate		500		505		233		-		1,238
Asset-backed securities		-		9,741		3,731		-		13,472
Total debt securities		18,926		19,119		161,108		155,861		355,014
Mortgage-backed securities		18,793		101,454		90,244		637		211,128
Total Available for Sale	$	37,719	$	120,573	$	251,352	$	156,498	$	566,142

	Held to Maturity Securities maturing within:
									Amortized Cost
	Less than		1 Year -		5 Years -		More than		at June 30,
(Dollars in thousands)	1 Year		5 Years		10 Years		10 Years		2022
U.S. Government and federal agency	$	-	$	-	$	2,963	$	-	$	2,963
State and municipal		2,724		5,112		89,248		106,183		203,267
Corporate		-		250		18,343		1,000		19,593
Asset-backed securities		-		1,257		-		-		1,257
Total debt securities		2,724		6,619		110,554		107,183		227,080
Mortgage-backed securities		6,525		45,672		150,398		-		202,595
Total Held to Maturity	$	9,249	$	52,291	$	260,952	$	107,183	$	429,675

Following is information regarding unrealized gains and losses on equity securities for the three and six months ended June 30, 2022 and 2021:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2022			2021			2022			2021
Net gains and (losses) recognized during the period	$	(327	)	$	(119	)	$	(683	)	$	489
Less: Net gains and (losses) recognized during the period on securities sold		—			—			—			—
Unrealized gains and (losses) recognized during the reporting period on securities still held at the reporting date	$	(327	)	$	(119	)	$	(683	)	$	489

11

 

NOTE 3 – LOANS AND ALLOWANCE FOR LOAN LOSSES

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

				Commercial
(Dollars in thousands)				and						Commercial		Construction			Residential
	Agricultural			Industrial			Consumer			Real Estate		Real Estate			Real Estate		Unallocated			Total
Allowance for Loan Losses Three Months Ended June 30, 2022
Beginning balance	$	387		$	1,752		$	304		$	3,690	$	37		$	589	$	842		$	7,601
Charge-offs		—			(100	)		(144	)		-		—			-		—			(244	)
Recoveries		—			2			55			1		—			1		—			59
Provision		(255	)		(41	)		94			533		8			101		(440	)		-
Ending balance	$	132		$	1,613		$	309		$	4,224	$	45		$	691	$	402		$	7,416
Allowance for Loan Losses Six Months Ended June 30, 2022
Beginning balance	$	448		$	1,454		$	290		$	3,705	$	110		$	671	$	1,010		$	7,688
Charge-offs					(131	)		(255	)		—		—			—		—			(386	)
Recoveries					4			106			2		—			2		—			114
Provision		(316	)		286			168			517		(65	)		18		(608	)		-
Ending balance	$	132		$	1,613		$	309		$	4,224	$	45		$	691	$	402		$	7,416
Individually evaluated for impairment	$	1		$	52		$	1		$	7	$	—		$	154	$	—		$	215
Collectively evaluated for impairment	$	131		$	1,561		$	308		$	4,217	$	45		$	537	$	402		$	7,201
Loans
June 30, 2022
Individually evaluated for impairment	$	320		$	159		$	7		$	149	$	—		$	2,052				$	2,687
Collectively evaluated for impairment		58,743			204,149			38,359			555,787		17,950			188,257					1,063,245
Acquired with deteriorated credit quality		—			4,549			10			9,227		—			1,671					15,457
Ending balance	$	59,063		$	208,857		$	38,376		$	565,163	$	17,950		$	191,980				$	1,081,389

			Commercial
(Dollars in thousands)			and						Commercial			Construction			Residential
	Agricultural		Industrial			Consumer			Real Estate			Real Estate			Real Estate			Unallocated		Total
Allowance for Loan Losses Three Months Ended June 30, 2021
Beginning balance	$	342	$	1,599		$	247		$	4,345		$	74		$	1,024		$	109	$	7,740
Charge-offs		-		(24	)		(76	)		-			-			-			-		(100	)
Recoveries		-		64			35			42			-			3			-		144
Provision		32		(116	)		37			(10	)		-			(167	)		390		166
Ending balance	$	374	$	1,523		$	243		$	4,377		$	74		$	860		$	499	$	7,950
Allowance for Loan Losses Six Months Ended June 30, 2021
Beginning balance	$	257	$	1,327		$	317		$	4,178		$	97		$	1,300		$	117	$	7,593
Charge-offs		—		(98	)		(147	)		(48	)		—			-			—		(293	)
Recoveries		—		73			113			43			—			5			—		234
Provision		117		221			(40	)		204			(23	)		(445	)		382		416
Ending balance	$	374	$	1,523		$	243		$	4,377		$	74		$	860		$	499	$	7,950
Individually evaluated for impairment	$	138	$	20		$	-		$	56		$	—		$	148		$	—	$	362
Collectively evaluated for impairment	$	236	$	1,503		$	243		$	4,321		$	74		$	712		$	499	$	7,588
Loans
June 30, 2021
Individually evaluated for impairment	$	3,167	$	184		$	-		$	1,140		$	—		$	2,333				$	6,824
Collectively evaluated for impairment		43,400		259,034			33,354			461,941			15,440			165,318					978,487
Acquired with deteriorated credit quality		—		5,814			16			10,906			—			2,540					19,276
Ending balance	$	46,567	$	265,032		$	33,370		$	473,987		$	15,440		$	170,191				$	1,004,587

12

 

			Commercial
(Dollars in thousands)			and				Commercial		Construction		Residential
	Agricultural		Industrial		Consumer		Real Estate		Real Estate		Real Estate		Unallocated		Total
Allowance for Loan Losses
December 31, 2021
Individually evaluated for impairment	$	251	$	95	$	2	$	9	$	-	$	146	$	-	$	503
Collectively evaluated for impairment	$	197	$	1,359	$	288	$	3,696	$	110	$	525	$	1,010	$	7,185
Loans
December 31, 2021
Individually evaluated for impairment	$	2,616	$	339	$	14	$	273	$	-	$	2,191			$	5,433
Collectively evaluated for impairment		62,203		197,656		35,148		515,528		19,066		164,647				994,248
Acquired with deteriorated credit quality		-		5,029		12		10,083		-		2,043				17,167
Ending balance	$	64,819	$	203,024	$	35,174	$	525,884	$	19,066	$	168,881			$	1,016,848

The process to monitor the credit quality of ChoiceOne’s loan portfolio includes tracking (1) the risk ratings of business loans, (2) the level of classified business loans, and (3) 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.

13

 

Information regarding ChoiceOne Bank's credit exposure was as follows:

Corporate Credit Exposure - Credit Risk Profile By Creditworthiness Category

(Dollars in thousands)	Agricultural				Commercial and Industrial				Commercial Real Estate
	June 30,		December 31,		June 30,		December 31,		June 30,		December 31,
	2022		2021		2022		2021		2022		2021
Pass	$	58,429	$	61,864	$	206,399	$	201,202	$	559,653	$	519,537
Special Mention		313		339		1,342		300		739		778
Substandard		321		2,616		1,116		1,266		4,771		5,569
Doubtful		-		-		-		256		-		-
	$	59,063	$	64,819	$	208,857	$	203,024	$	565,163	$	525,884

Consumer Credit Exposure - Credit Risk Profile Based On Payment Activity

(Dollars in thousands)	Consumer				Construction Real Estate				Residential Real Estate
	June 30,		December 31,		June 30,		December 31,		June 30,		December 31,
	2022		2021		2022		2021		2022		2021
Performing	$	38,368	$	35,174	$	17,950	$	19,066	$	191,152	$	168,031
Nonperforming		-		-		-		-		-		-
Nonaccrual		8		-		-		-		828		850
	$	38,376	$	35,174	$	17,950	$	19,066	$	191,980	$	168,881

The following table provides information on loans that were considered troubled debt restructurings ("TDRs") that were modified during the three and six months ended June 30, 2022 and June 30, 2021.

	Three Months Ended June 30, 2022						Six Months Ended June 30, 2022
			Pre-		Post-				Pre-		Post-
			Modification		Modification				Modification		Modification
			Outstanding		Outstanding				Outstanding		Outstanding
(Dollars in thousands)	Number of		Recorded		Recorded		Number of		Recorded		Recorded
	Loans		Investment		Investment		Loans		Investment		Investment
Agricultural		-	$	-	$	-		1	$	258	$	258
Commercial and industrial		1		19		19		1		19		19
Total		1	$	19	$	19		2	$	277	$	277

	Three Months Ended June 30, 2021						Six Months Ended June 30, 2021
			Pre-		Post-				Pre-		Post-
			Modification		Modification				Modification		Modification
			Outstanding		Outstanding				Outstanding		Outstanding
(Dollars in thousands)	Number of		Recorded		Recorded		Number of		Recorded		Recorded
	Loans		Investment		Investment		Loans		Investment		Investment
Agricultural		-	$	-	$	-		6	$	2,320	$	2,320
Commercial Real Estate		-		-		-		2		1,210		1,210
Total		-	$	-	$	-		8	$	3,530	$	3,530

There were no TDRs as of June 30, 2022 where the borrower was past due with respect to principal and/or interest for 30 days or more during the three and six months ended June 30, 2022, which loans had been modified and classified as TDRs during the year prior to the default.  The following schedule provides information on TDRs as of June 30, 2021 where the borrower was past due with respect to principal and/or interest for 30 days or more during the three and six months ended June 30, 2021, which loans had been modified and classified as TDRs during the year prior to the default.

	Three Months Ended				Six Months Ended
	June 30, 2021				June 30, 2021
(Dollars in thousands)	Number		Recorded		Number		Recorded
	of Loans		Investment		of Loans		Investment
Commercial and industrial		1	$	52		1	$	52
Commercial Real Estate		1		184		1		184
Total		2	$	236		2	$	236

14

 

Impaired loans by loan category follow:

			Unpaid
(Dollars in thousands)	Recorded		Principal		Related
	Investment		Balance		Allowance
June 30, 2022
With no related allowance recorded
Agricultural	$	314	$	428	$	-
Commercial and industrial		-		-		-
Consumer		-		-		-
Construction real estate		-		-		-
Commercial real estate		-		-		-
Residential real estate		439		469		-
Subtotal		753		897		-
With an allowance recorded
Agricultural		6		7		1
Commercial and industrial		159		190		52
Consumer		7		8		1
Construction real estate		149		149		-
Commercial real estate		-		-		7
Residential real estate		1,613		1,644		154
Subtotal		1,934		1,998		215
Total
Agricultural		320		435		1
Commercial and industrial		159		190		52
Consumer		7		8		1
Construction real estate		149		149		-
Commercial real estate		-		-		7
Residential real estate		2,052		2,113		154
Total	$	2,687	$	2,895	$	215

			Unpaid
(Dollars in thousands)	Recorded		Principal		Related
	Investment		Balance		Allowance
December 31, 2021
With no related allowance recorded
Agricultural	$	314	$	428	$	-
Commercial and industrial		-		-		-
Consumer		-		-		-
Construction real estate		-		-		-
Commercial real estate		94		94		-
Residential real estate		164		172		-
Subtotal		572		694		-
With an allowance recorded
Agricultural		2,302		2,302		251
Commercial and industrial		339		363		95
Consumer		14		15		2
Construction real estate		-		-		-
Commercial real estate		179		179		9
Residential real estate		2,027		2,084		146
Subtotal		4,861		4,943		503
Total
Agricultural		2,616		2,730		251
Commercial and industrial		339		363		95
Consumer		14		15		2
Construction real estate		-		-		-
Commercial real estate		273		273		9
Residential real estate		2,191		2,256		146
Total	$	5,433	$	5,637	$	503

15

 

The following schedule provides information regarding average balances of impaired loans and interest recognized on impaired loans for the three and six months ended June 30, 2022 and June 30, 2021:

	Average		Interest
(Dollars in thousands)	Recorded		Income
	Investment		Recognized
Three Months Ended June 30, 2022
With no related allowance recorded
Agricultural	$	314	$	-
Commercial and industrial		46		-
Consumer		-		-
Construction real estate		-		-
Commercial real estate		-		-
Residential real estate		220		-
Subtotal		580		-
With an allowance recorded
Agricultural		1,117		-
Commercial and industrial		211		1
Consumer		20		-
Construction real estate		-		-
Commercial real estate		153		2
Residential real estate		1,733		12
Subtotal		3,234		15
Total
Agricultural		1,431		-
Commercial and industrial		257		1
Consumer		20		-
Construction real estate		-		-
Commercial real estate		153		2
Residential real estate		1,953		12
Total	$	3,814	$	15

	Average		Interest
(Dollars in thousands)	Recorded		Income
	Investment		Recognized
Three Months Ended June 30, 2021
With no related allowance recorded
Agricultural	$	778	$	24
Commercial and industrial		993		-
Consumer		-		-
Construction real estate		27		-
Commercial real estate		1,749		13
Residential real estate		267		-
Subtotal		3,814		37
With an allowance recorded
Agricultural		1,451		16
Commercial and industrial		165		-
Consumer		3		-
Construction real estate		-		-
Commercial real estate		642		3
Residential real estate		2,280		15
Subtotal		4,541		34
Total
Agricultural		2,229		40
Commercial and industrial		1,158		-
Consumer		3		-
Construction real estate		27		-
Commercial real estate		2,391		16
Residential real estate		2,547		15
Total	$	8,355	$	71

16

 

	Average		Interest
(Dollars in thousands)	Recorded		Income
	Investment		Recognized
Six Months Ended June 30, 2022
With no related allowance recorded
Agricultural	$	314	$	-
Commercial and industrial		31		-
Consumer		-		-
Construction real estate		-		-
Commercial real estate		31		-
Residential real estate		201		-
Subtotal		577		-
With an allowance recorded
Agricultural		1,512		-
Commercial and industrial		254		2
Consumer		18		-
Construction real estate		-		-
Commercial real estate		162		5
Residential real estate		1,831		29
Subtotal		3,777		36
Total
Agricultural		1,826		-
Commercial and industrial		285		2
Consumer		18		-
Construction real estate		-		-
Commercial real estate		193		5
Residential real estate		2,032		29
Total	$	4,354	$	36

	Average		Interest
(Dollars in thousands)	Recorded		Income
	Investment		Recognized
Six Months Ended June 30, 2021
With no related allowance recorded
Agricultural	$	993	$	52
Commercial and industrial		731		-
Consumer		-		-
Construction real estate		-		-
Commercial real estate		1,698		32
Residential real estate		320		-
Subtotal		3,742		84
With an allowance recorded
Agricultural		2,177		35
Commercial and industrial		174		1
Consumer		-		-
Construction real estate		-		-
Commercial real estate		372		6
Residential real estate		2,141		33
Subtotal		4,864		75
Total
Agricultural		3,170		87
Commercial and industrial		905		1
Consumer		-		-
Construction real estate		-		-
Commercial real estate		2,070		38
Residential real estate		2,461		33
Total	$	8,606	$	159

17

 

An aging analysis of loans by loan category 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
June 30, 2022
Agricultural	$	-	$	-	$	-	$	-	$	59,063	$	59,063	$	-
Commercial and industrial		142		-		93		235		208,622		208,857		-
Consumer		-		-		-		-		38,376		38,376		-
Commercial real estate		-		-		-		-		565,163		565,163		-
Construction real estate		-		-		-		-		17,950		17,950		-
Residential real estate		29		197		580		806		191,174		191,980		-
	$	171	$	197	$	673	$	1,041	$	1,080,348	$	1,081,389	$	-
December 31, 2021
Agricultural	$	-	$	-	$	-	$	-	$	64,819	$	64,819	$	-
Commercial and industrial		21		-		88		109		202,915		203,024		-
Consumer		70		15		-		85		35,089		35,174		-
Commercial real estate		422		13		279		714		525,170		525,884		-
Construction real estate		1,149		1,235		-		2,384		16,682		19,066		-
Residential real estate		1,489		306		454		2,249		166,632		168,881		-
	$	3,151	$	1,569	$	821	$	5,541	$	1,011,307	$	1,016,848	$	-

(1) Includes nonaccrual loans.

Nonaccrual loans by loan category follow:

(Dollars in thousands)	June 30,		December 31,
	2022		2021
Agricultural	$	314	$	313
Commercial and industrial		92		285
Consumer		8		-
Commercial real estate		-		279
Residential real estate		828		850
	$	1,242	$	1,727

18

 

The table below details the outstanding balances of the County Bank Corp. acquired loan portfolio and the acquisition fair value adjustments at acquisition date of October 1, 2019 (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 the County Bank Corp. acquired loan portfolio for the years ended December 31, 2019, December 31, 2020, and December 31, 2021 and the six months ended June 30, 2022 (dollars in thousands):

(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		1,150			-			1,150
Accretion January 1, 2022 through June 30, 2022		(222	)		34			(188	)
Balance, June 30, 2022	$	1,216		$	1,210		$	2,426

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 of July 1, 2020 (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 loan portfolio for the years ended December 31, 2020 and  December 31, 2021 and the six months ended June 30, 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		874			-			874
Accretion January 1, 2022 through June 30, 2022		(578	)		(197	)		(775	)
Balance, June 30, 2022	$	818		$	-		$	818

19

 

NOTE 4 – EARNINGS PER SHARE

Earnings per share are based on the weighted average number of shares outstanding during the period. A computation of basic earnings per share and diluted earnings per share follows:

	Three Months Ended				Six Months Ended
(Dollars in thousands, except share data)	June 30,				June 30,
	2022		2021		2022		2021
Basic
Net income	$	5,615	$	5,043	$	11,143	$	11,281
Weighted average common shares outstanding		7,499,497		7,769,485		7,497,492		7,785,098
Basic earnings per common shares	$	0.75	$	0.65	$	1.49	$	1.45
Diluted
Net income	$	5,615	$	5,043	$	11,143	$	11,281
Weighted average common shares outstanding		7,499,497		7,769,485		7,497,492		7,785,098
Plus dilutive stock options and restricted stock units		11,027		9,600		13,766		10,577
Weighted average common shares outstanding and potentially dilutive shares		7,510,524		7,779,085		7,511,258		7,795,675
Diluted earnings per common share	$	0.75	$	0.65	$	1.49	$	1.45

There were 15,000 stock options that were considered anti-dilutive to earnings per share for the three and six months ended June 30, 2022.  There were 15,000 stock options that were considered anti-dilutive to earnings per share for the three months ended June 30, 2021 and 12,000 stock options that were considered anti-dilutive to earnings per share for the six months ended June 30, 2021. There were 6,396 performance awards and 27,592 restricted stock units that were considered anti-dilutive for the three months ended June 30, 2022. There were no performance awards or restricted stock units that were considered anti-dilutive for the six months ended June 30, 2022.  There were 18,985 restricted stock units that were considered anti-dilutive for the three months ended June 30, 2021. There were no restricted stock units that were considered anti-dilutive for the six months ended June 30, 2021.  There were no performance awards issued prior to 2022.

20

 

Note 5 – 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)
June 30, 2022
Assets
Cash and cash equivalents	$	40,296	$	40,296	$	40,296	$	-	$	-
Equity securities at fair value		8,288		8,288		6,462		-		1,826
Securities available for sale		566,142		566,142		-		566,142		-
Securities held to maturity		429,675		372,667		-		357,723		14,944
Federal Home Loan Bank and Federal
Reserve Bank stock		8,557		8,557		-		8,557		-
Loans held for sale		10,628		10,947		-		10,947		-
Loans to other financial institutions		37,422		37,422		-		37,422		-
Loans, net		1,073,973		1,037,946		-		-		1,037,946
Accrued interest receivable		8,239		8,239		-		8,239		-
Interest rate lock commitments		140		140		-		140		-
Mortgage loan servicing rights		4,679		5,932		-		5,932		-
Interest rate derivative contracts		14,209		14,209		-		14,209		-
Liabilities
Noninterest-bearing deposits		578,927		578,927		-		578,927		-
Interest-bearing deposits		1,559,577		1,556,523		-		1,556,523		-
Borrowings		7,000		6,995		-		6,995		-
Subordinated debentures		35,140		30,785		-		30,785		-
Accrued interest payable		418		418		-		418		-
Interest rate derivative contracts		2,393		2,393		-		2,393		-
December 31, 2021
Assets
Cash and cash equivalents	$	31,887	$	31,887	$	31,887	$	-	$	-
Equity securities at fair value		8,492		8,492		6,724		-		1,768
Securities available for sale		1,098,885		1,098,885		-		1,077,835		21,050
Federal Home Loan Bank and Federal
Reserve Bank stock		8,888		8,888		-		8,888		-
Loans held for sale		9,351		9,632		-		9,632		-
Loans to other financial institutions		42,632		42,632		-		42,632		-
Loans, net		1,009,160		999,393		-		-		999,393
Accrued interest receivable		8,211		8,211		-		8,211		-
Interest rate lock commitments		172		172		-		172		-
Mortgage loan servicing rights		4,666		5,522		-		5,522		-
Liabilities
Noninterest-bearing deposits		560,931		560,931		-		560,931		-
Interest-bearing deposits		1,491,363		1,491,135		-		1,491,135		-
Borrowings		50,000		50,000		-		50,000		-
Subordinated debentures		35,017		33,414		-		33,414		-
Accrued interest payable		441		441		-		441		-

21

 

NOTE 6 – FAIR VALUE MEASUREMENTS

The following tables present information about assets and liabilities measured at fair value on a recurring basis and the valuation techniques used 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 ChoiceOne Bank 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. ChoiceOne Bank’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 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		Balance
(Dollars in thousands)	Assets		Inputs		Inputs		at Date
	(Level 1)		(Level 2)		(Level 3)		Indicated
Equity Securities Held at Fair Value - June 30, 2022
Equity securities	$	6,462	$	-	$	1,826	$	8,288
Investment Securities, Available for Sale - June 30, 2022
U. S. Treasury notes and bonds	$	-	$	83,643	$	-	$	83,643
State and municipal		-		256,661		-		256,661
Mortgage-backed		-		211,128		-		211,128
Corporate		-		1,238		-		1,238
Asset-backed securities		-		13,472		-		13,472
Total	$	-	$	566,142	$	-	$	566,142
Derivative Instruments - June 30, 2022
Interest rate derivative contracts - assets	$	-	$	14,209	$	-	$	14,209
Interest rate derivative contracts - liabilities	$	-	$	2,393	$	-	$	2,393
Equity Securities Held at Fair Value - December 31, 2021
Equity securities	$	6,724	$	-	$	1,768	$	8,492
Investment Securities, Available for Sale - December 31, 2021
U. S. Government and federal agency	$	-	$	2,008	$	-	$	2,008
U. S. Treasury notes and bonds		-		91,979		-		91,979
State and municipal		-		514,797		20,050		534,847
Mortgage-backed		-		433,115		-		433,115
Corporate		-		19,642		1,000		20,642
Asset-backed securities		-		16,294		-		16,294
Total	$	-	$	1,077,835	$	21,050	$	1,098,885

22

 

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

	Six Months Ended
(Dollars in thousands)	June 30,
	2022			2021
Equity Securities Held at Fair Value
Balance, January 1	$	1,768		$	1,485
Total realized and unrealized gains included in noninterest income		(5	)		(39	)
Net purchases, sales, calls, and maturities		63			220
Net transfers into Level 3		-			-
Balance, June 30	$	1,826		$	1,666
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 June 30	$	(5	)	$	(39	)
Investment Securities, Available for Sale
Balance, January 1	$	21,050		$	11,423
Total unrealized gains included in other comprehensive income		-			(264	)
Net purchases, sales, calls, and maturities		-			1,966
Net transfers into Level 3		-			-
Transfer to held to maturity		(21,050	)		-
Balance, June 30	$	-		$	13,125
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 June 30	$	-		$	(250	)

Both observable and unobservable inputs may be used to determine the fair value of positions classified as Level 3 investment securities 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.

Securities categorized as Level 3 assets as of June 30, 2022 primarily consist of common and preferred equity securities of community banks. As of December 31, 2021, bonds issued by local municipalities and corporate issuers were classified as available for sale and were included as Level 3 securities.  ChoiceOne estimates the fair value of these bonds and equity securities based on the present value of expected future cash flows using management’s best estimate of key assumptions, including forecasted interest yield and payment rates, credit quality and a discount rate commensurate with the current market and other risks involved.

ChoiceOne 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)
Impaired Loans
June 30, 2022	$	2,687	$	-	$	-	$	2,687
December 31, 2021	$	5,433	$	-	$	-	$	5,433
Other Real Estate
June 30, 2022	$	-	$	-	$	-	$	-
December 31, 2021	$	194	$	-	$	-	$	194
Mortgage Loan Servicing Rights
June 30, 2022	$	4,679	$	-	$	4,679	$	-
December 31, 2021	$	4,666	$	-	$	4,666	$	-

Impaired loans categorized as Level 3 assets consist of non-homogeneous loans that are considered impaired.  ChoiceOne estimates the fair value of the loans based on the present value of expected future cash flows using management’s 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 loan losses and write-downs of other real estate that were posted to a valuation account.

23

 

NOTE 7 – REVENUE FROM CONTRACTS WITH CUSTOMERS

ChoiceOne has a variety of sources of revenue, which include interest and fees from customers as well as revenue from non-customers.  ASC Topic 606, Revenue from Contracts With Customers, covers certain sources of revenue that are classified within noninterest income in the Consolidated Statements of Income.  Sources of revenue that are included in the scope of ASC Topic 606 include service charges and fees on deposit accounts, interchange income, investment asset management income and transaction-based revenue, and other charges and fees for customer services.

Service Charges and Fees on Deposit Accounts

Revenue includes charges and fees to provide account maintenance, overdraft services, wire transfers, funds transfer, and other deposit-related services.  Account maintenance fees such as monthly service charges are recognized over the period of time that the service is provided.  Transaction fees such as wire transfer charges are recognized when the service is provided to the customer.

Interchange Income

Revenue includes debit card interchange and network revenues.  This revenue is earned on debit card transactions that are conducted through payment networks such as MasterCard. The revenue is recorded as services are delivered and is presented net of interchange expenses.

Investment Commission Income

Revenue includes fees from the investment management advisory services and revenue is recognized when services are rendered.  Revenue also includes commissions received from the placement of brokerage transactions for purchase or sale of stocks or other investments. Commission income is recognized when the transaction has been completed.

Trust Fee Income

Revenue includes fees from the management of trust assets and from other related advisory services. Revenue is recognized when services are rendered.

Following is noninterest income separated by revenue within the scope of ASC 606 and revenue within the scope of other GAAP topics:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(Dollars in thousands)	2022		2021		2022		2021
Service charges and fees on deposit accounts	$	1,036	$	822	$	2,067	$	1,608
Interchange income		1,317		1,312		2,475		2,446
Investment commission income		233		198		438		471
Trust fee income		176		253		354		425
Other charges and fees for customer services		125		138		274		304
Noninterest income from contracts with customers within the scope of ASC 606		2,887		2,723		5,608		5,254
Noninterest income within the scope of other GAAP topics		543		2,009		1,668		5,078
Total noninterest income	$	3,430	$	4,732	$	7,276	$	10,332

NOTE 8 – DERIVATIVE 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 currently uses interest rate swaps and interest rate caps to manage its exposure to certain fixed and variable rate assets and variable rate liabilities.

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 first six months 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 will pay a coupon rate equal to SOFR while receiving a fixed coupon rate of 2.41%.

In the first six months 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.

Interest rate caps

ChoiceOne also uses interest rate caps to provide stability to net interest income and to manage its exposure to interest rate movements. Interest rate caps designated as hedges involve the payment of a fixed premium by ChoiceOne who will then receive payment equivalent to the spread between the current rate and the strike rate until the conclusion of the term from the counterparty.

In the first six months of 2022, ChoiceOne entered into four forward starting interest rate cap agreements with a total notional amount of $200.0 million (“SOFR Cap Agreements”). Three of the SOFR Cap Agreements with a total notional amount of $100.0 million are designated as fair value hedges and hedge against changes in the fair value of certain fixed rate tax-exempt municipal bonds. ChoiceOne utilizes the interest rate caps as hedges against adverse changes in interest rates on the designated securities attributable to fluctuations in the SOFR rate above 2.68%, as applicable. An increase in the benchmark interest rate hedged reduces the fair value of these assets. The remaining SOFR Cap Agreement with a notional amount of $100.0 million is designated as a cash flow hedge and hedges against the risk of variability in cash flows attributable to fluctuations in the SOFR rate above 2.68% for forecasted payments on future deposits or borrowings indexed to the SOFR Rate.  All of the SOFR Cap Agreements are two year forward starting with an eight year term set to expire in 2032.

	June 30, 2022			December 31, 2021
(Dollars in thousands)	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments
Interest rate contracts	Other Assets	$	14,209	Other Assets	$	-
Interest rate contracts	Other Liabilities	$	2,393	Other Liabilities	$	-

	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
	Three months ended June 30, 2022						Six months ended June 30, 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	$	422		$	(155	)	$	422		$	(155	)
Gain or (loss) on fair value hedging relationships:
Interest rate contracts:
Hedged items	$	(71	)	$	-		$	-		$	-
Derivatives designated as hedging instruments	$	71		$	-		$	-		$	-
Amount excluded from effectiveness testing recognized in earnings based on amortization approach	$	(153	)	$	-		$	(153	)	$	-
Gain or (loss) on cash flow hedging relationships:
Interest rate contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive income into income	$	-		$	-		$	-		$	-
Amount excluded from effectiveness testing recognized in earnings based on amortization approach	$	-		$	(155	)	$	-		$	(155	)

24

Item 2.  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”), its wholly-owned subsidiary ChoiceOne Bank, and ChoiceOne Bank’s wholly-owned subsidiary, ChoiceOne Insurance Agencies, Inc.  This discussion should be read in conjunction with the interim consolidated financial statements and related notes.

FORWARD-LOOKING STATEMENTS

This discussion and other sections of this quarterly 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.  Words such as “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “intends,” “is likely,” “plans,” “predicts,” “projects,” “may,” “could,” “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 loan losses, the carrying value of goodwill, loan servicing rights, other real estate owned, and the fair value of investment securities (including whether any impairment on any investment security is temporary or other-than-temporary and the amount of any impairment) and management’s assumptions that are inherently forward-looking.  Examples of forward-looking statements also include, but are not limited to, statements related to risks and uncertainties related to, and the impact of, the COVID-19 pandemic on the businesses, financial condition and results of operations of ChoiceOne and its customers and statements regarding the outlook and expectations of ChoiceOne and its customers.  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 undertakes no obligation to update, amend, or clarify forward-looking statements, whether as a result of new information, future events, or otherwise.

Additional risk factors include, but are not limited to, the risk factors discussed in Item 1A of ChoiceOne’s Annual Report on Form 10-K for the year ended December 31, 2021 and in Part II, Item 1A of this Quarterly Report on Form 10-Q.  These are representative of the risk factors that could cause a difference between an ultimate actual outcome and a preceding forward-looking statement.

25

RESULTS OF OPERATIONS

Net income for the second quarter of 2022 was $5,615,000, which represented an increase of $572,000 or 11% compared to the second quarter of 2021.  Basic and diluted earnings per common share were $0.75 for the second quarter of 2022 compared to $0.65 for the second quarter of the prior year.  The increase in the second quarter 2022 is largely related to the increase in interest income due to strong loan growth. Net income for the first half of 2022 was $11,143,000, which represented a decline of $138,000 or 1% compared to the first half of 2021.  Basic and diluted earnings per common share were $1.49 for the first half of 2022 compared to $1.45 for the first half of the prior year.  The decline in net income in the first half of 2022 compared to the same period in the prior year resulted in part from a decline of refinancing activity within ChoiceOne's mortgage portfolio due to a rise in mortgage rates since the first quarter of the prior year.  Net income also declined as noninterest expense increased partially related to salaries and wages of new commercial loan production and wealth management staff.  These factors were largely offset by an increase of $4.1 million in interest income as the balance of both core loans and securities continued to grow.  Core loans (defined as loans excluding loans held for sale, loans to other financial institutions, and Paycheck Protection Program (“PPP”) loans) increased by $60.7 million or 23.8% on an annualized basis in the second quarter of 2022 and $184.9 million or 20.7% since the end of the second quarter in 2021.

The return on average assets and return on average shareholders’ equity were 0.95% and 12.68%, respectively, for the second quarter of 2022, compared to 0.96% and 8.97%, respectively, for the same period in 2021.  The return on average assets and return on average shareholders’ equity were 0.94% and 11.62%, respectively, for the first six months of 2022, compared to 1.10% and 10.01%, respectively, for the same period in 2021.  The increase in the return on average shareholders' equity is related to the decline in equity caused by the increase in unrealized losses on available-for-sale securities during the first six months of 2022.

Paycheck Protection Program

ChoiceOne processed over $126 million in PPP loans in 2020, acquired an additional $37 million in PPP loans in the merger with Community Shores Bank Corporation ("Community Shores"), and originated $89.1 million in PPP loans in 2021.  PPP loans are forgivable, in whole or in part, if the proceeds are used for payroll and other permitted purposes in accordance with the requirements of the PPP. PPP loans carry a fixed rate of 1.00% and a term of two years (loans made before June 5, 2020) or five years (loans made on or after June 5, 2020), if not forgiven in whole or in part.  Payments are deferred until either the date on which the Small Business Administration ("SBA") remits the amount of forgiveness proceeds to the lender or the date that is ten months after the last day of the covered period if the borrower does not apply for forgiveness within that ten-month period.  The loans are 100% guaranteed by the SBA.  The SBA pays the originating bank a processing fee ranging from 1% to 5%, based on the size of the loan. Upon SBA forgiveness, unrecognized fees are recognized into interest income.  In the second quarter and first half of 2022, $6.7 million and $31.4 million of PPP loans were forgiven resulting in $283,000 and $1.2 million of fee income, respectively.  $1.8 million in PPP loans and $68,000 in deferred PPP fee income remains outstanding as of June 30, 2022.  Management expects the remaining PPP loans to be forgiven in the second half of 2022.

Dividends

Cash dividends of $1,875,000 or $0.25 per share were declared in the second quarter of 2022, compared to $1,703,000 or $0.22 per share declared in the second quarter of 2021.  Cash dividends declared in the first six months of 2022 were $3,747,000 or $0.50 per share, compared to $3,419,000 or $0.44 per share in the same period during the prior year.   The cash dividend payout percentage was 33.6% for the first six months of 2022, compared to 30.3% in the same period in the prior year.

Interest Income and Expense

Tables 1 and 2 on the following pages provide information regarding interest income and expense for the three- and six-month periods ended June 30, 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.  These tables are referred to in the discussion of interest income, interest expense and net interest income.

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Table 1 – Average Balances and Tax-Equivalent Interest Rates

	Three Months Ended June 30,
	2022								2021
(Dollars in thousands)	Average								Average
	Balance		Interest			Rate			Balance		Interest			Rate
Assets:
Loans (1)(3)(4)(5)	$	1,076,934	$	12,529			4.65	%	$	1,041,118	$	11,567			4.44	%
Taxable securities (2)		780,689		3,522			1.80			547,388		2,396			1.75
Nontaxable securities (1)		317,730		1,973			2.48			277,365		1,832			2.64
Other		40,728		63			0.61			57,782		12			0.08
Interest-earning assets		2,216,081		18,087			3.26			1,923,653		15,807			3.29
Noninterest-earning assets		145,398								170,684
Total assets	$	2,361,479							$	2,094,337
Liabilities and Shareholders' Equity:
Interest-bearing demand deposits	$	911,936	$	627			0.27	%	$	750,535	$	465			0.25	%
Savings deposits		461,934		157			0.14			391,745		133			0.14
Certificates of deposit		181,851		211			0.47			185,556		241			0.52
Borrowings		5,765		21			1.44			2,758		22			3.13
Subordinated debentures		35,095		361			4.11			3,123		50			6.44
Interest-bearing liabilities		1,596,581		1,377			0.34			1,333,717		911			0.27
Demand deposits		578,943								529,359
Other noninterest-bearing liabilities		8,870								6,268
Total liabilities		2,184,394								1,869,344
Shareholders' equity		177,085								224,993
Total liabilities and shareholders' equity	$	2,361,479							$	2,094,337
Net interest income (tax-equivalent basis) (Non-GAAP) (1)			$	16,711							$	14,896
Net interest margin (tax-equivalent basis) (Non-GAAP) (1)							3.02	%							3.10	%
Reconciliation to Reported Net Interest Income
Net interest income (tax-equivalent basis) (Non-GAAP) (1)			$	16,711							$	14,896
Adjustment for taxable equivalent interest				(422	)							(388	)
Net interest income (GAAP)			$	16,289							$	14,508
Net interest margin (GAAP)							2.94	%							3.02	%

(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)	Taxable securities include dividend income from 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 $1.3 million and $3.2 million in the second quarter of 2022 and 2021, respectively.  PPP loan average balances were $5.1 million and $123.7 million in the second quarter of 2022 and 2021, respectively.
(5)	Interest on loans included net origination fees, accretion income, and PPP fees.  Accretion income was $408,000 and $320,000 in the first quarter of 2022 and 2021, respectively. PPP fees were approximately $283,000 and $756,000 in the second quarter of 2022 and 2021, respectively.

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	Six Months Ended June 30,
	2022								2021
(Dollars in thousands)	Average								Average
	Balance		Interest			Rate			Balance		Interest			Rate
Assets:
Loans (1)(3)	$	1,056,155	$	24,832			4.70	%	$	1,060,543	$	24,254			4.57	%
Taxable securities (2)		786,620		7,029			1.79			492,170		4,252			1.73
Nontaxable securities (1)		326,687		4,068			2.49			239,507		3,221			2.69
Other		38,521		76			0.39			70,188		32			0.09
Interest-earning assets		2,207,983		36,005			3.26			1,862,408		31,759			3.41
Noninterest-earning assets		155,796								179,949
Total assets	$	2,363,779							$	2,042,357
Liabilities and Shareholders' Equity:
Interest-bearing demand deposits	$	920,141	$	1,062			0.23	%	$	733,298	$	894			0.24	%
Savings deposits		451,462		303			0.13			373,671		247			0.13
Certificates of deposit		180,620		413			0.46			190,298		578			0.61
Borrowings		1,872		27			2.85			5,594		57			2.03
Subordinated debentures		36,509		725			3.97			3,111		102			6.58
Interest-bearing liabilities		1,590,604		2,530			0.32			1,305,972		1,878			0.29
Demand deposits		566,177								504,641
Other noninterest-bearing liabilities		15,235								6,265
Total liabilities		2,172,016								1,816,878
Shareholders' equity		191,763								225,479
Total liabilities and shareholders' equity	$	2,363,779							$	2,042,357
Net interest income (tax-equivalent basis) (Non-GAAP) (1)			$	33,476							$	29,881
Net interest margin (tax-equivalent basis) (Non-GAAP) (1)							3.03	%							3.21	%
Reconciliation to Reported Net Interest Income
Net interest income (tax-equivalent basis) (Non-GAAP) (1)			$	33,476							$	29,881
Adjustment for taxable equivalent interest				(866	)							(685	)
Net interest income (GAAP)			$	32,610							$	29,196
Net interest margin (GAAP)							2.95	%							3.12	%

(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)	Taxable securities include dividend income from 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 $1.4 million and $4.4 million in the half quarter of 2022 and 2021, respectively.  PPP loan average balances were $14.5 million and $128.5 million in the first half of 2022 and 2021, respectively.
(5)	Interest on loans included net origination fees, accretion income, and PPP fees.  Accretion income was $1.2 million and $671,000 in the first half of 2022 and 2021, respectively. PPP fees were approximately $1.2 million and $2.4 million in the first half of 2022 and 2021, respectively.

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Table 2 – Changes in Tax-Equivalent Net Interest Income

	Three Months Ended June 30,
(Dollars in thousands)	2022 Over 2021
	Total			Volume			Rate
Increase (decrease) in interest income (1)
Loans (2)	$	962		$	401		$	561
Taxable securities		1,126			1,049			77
Nontaxable securities (2)		141			715			(574	)
Other		51			(24	)		75
Net change in interest income		2,280			2,141			139
Increase (decrease) in interest expense (1)
Interest-bearing demand deposits		162			111			51
Savings deposits		24			46			(22	)
Certificates of deposit		(30	)		(5	)		(25	)
Borrowings		(1	)		62			(63	)
Subordinated debentures		311			441			(130	)
Net change in interest expense		466			655			(189	)
Net change in tax-equivalent net interest income	$	1,814		$	1,486		$	328

	Six Months Ended June 30,
(Dollars in thousands)	2022 Over 2021
	Total			Volume			Rate
Increase (decrease) in interest income (1)
Loans (2)	$	578		$	(279	)	$	857
Taxable securities		2,777			2,632			145
Nontaxable securities (2)		847			1,497			(650	)
Other		44			(45	)		89
Net change in interest income		4,246			3,805			441
Increase (decrease) in interest expense (1)
Interest-bearing demand deposits		168			263			(95	)
Savings deposits		56			49			7
Certificates of deposit		(165	)		(28	)		(137	)
Borrowings		(30	)		(76	)		46
Subordinated debentures		623			757			(134	)
Net change in interest expense		652			965			(313	)
Net change in tax-equivalent net interest income	$	3,594		$	2,840		$	754

(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 nontaxable investment securities and loans has been adjusted to a fully tax-equivalent basis using an incremental tax rate of 21%.

Net Interest Income

Tax-equivalent net interest income increased $1.8 million and $3.6 million in the second quarter and first half of 2022, respectively, compared to the same periods in 2021.  This was largely due to an increase in the average balance of securities of $273.7 million and $381.6 million in the second quarter and first half of 2022, respectively, compared to the same periods in 2021.  Net interest margin on a tax-equivalent basis declined by 8 basis points and 18 basis points in the second quarter and first half of 2022, respectively, compared to the same periods in 2021. The decline was due to lower PPP fees and a higher percentage of securities to total assets. 

The average balance of loans increased $35.8 million in the second quarter of 2022 and declined $4.4 million in the first half of 2022 compared to the same periods in 2021.  The large increase in average loan balance in the second quarter of 2022 compared to the second quarter of 2021 is due to average core loans balance growth of $153.1 million partially offset by a decline in the average PPP loans balance of $118.6 million.   The decline in average loan balance in the first half of 2022 compared to the first half of 2021 is due to average PPP loans balance declining $114.0 million and a small decline in the average balance of loans to other financial institutions during that time, partially offset by the average balance of core loans increasing $119.4 million.  The average balance of total securities increased $273.7 million in the second quarter of 2022 compared to the same period in 2021 offset by a decline in the average rate earned of 5 basis points. The average balance of total securities increased $381.6 million in the first half of 2022 compared to the same period in 2021 offset by a decline in the average rate earned of 5 basis points. The securities portfolio has grown as ChoiceOne has deployed excess deposit dollars into securities with the intent to transition to loans as good credits become available.  The effect of the average balance growth, partially offset by a combined 5 basis point reduction in the average rate earned on securities, caused tax-equivalent securities income to increase $1.3 million in the second quarter of 2022 and $3.6 million in the first half of 2022, respectively, compared to the same period in 2021. 

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Growth of $231.6 million in the average balance of interest-bearing demand deposits and savings deposits and a combined 2 basis point increase in the average rate paid, caused interest expense to be $186,000 higher in the first quarter of 2022 compared to the first quarter of the prior year.  Growth of $264.6 million in the average balance of interest-bearing demand deposits and savings deposits, partially offset by a combined 1 basis point decrease in the average rate paid, caused interest expense to be $224,000 higher in the first half of 2022 compared to the first half of the prior year. The average balance of certificates of deposit decreased $3.7 million and $9.7 million in the second quarter and first half of 2022, respectively, compared to the same periods in 2021. The decreased balances and a reduction of 5 basis points and 15 basis points in the average rate paid on certificates of deposit caused interest expense to decrease $30,000 and $165,000 in the second quarter and first half of 2022, respectively, compared to the same periods in 2021.  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.  These increased the average balance of subordinated debentures by $32.0 million and $33.4 million in the second quarter and first half of 2022, respectively, compared to the same period in the prior year and caused interest expense to increase by $311,000 and $623,000 in the second quarter and first half of 2022, respectively, compared to the same periods in 2021. 

Provision and Allowance for Loan Losses

The provision for loan losses was $0 in the first six months of 2022, compared to $416,000 in the same period in the prior year. No provision in the second quarter of 2022 was deemed prudent based on our assessment of the probable estimated losses inherent in the loan portfolio. Our methodology for measuring the appropriate level of allowance for loan losses and related provision for loan losses involves specific allocations for loans considered impaired, and general allocations for homogeneous loans based on historical loss experience.  

Loans classified as impaired loans declined by $2.7 million during the six months ended June 30, 2022.  The specific allowance for loan losses for impaired loans decreased by $288,000 during the six months ended June 30, 2022 largely due to the decrease in balance of impaired loans compared to December 31, 2021.

The determination of our loss factors is based, in part, upon our actual loss history adjusted for significant qualitative factors that, in management's judgment, affect the collectability of the portfolio as of the analysis date.  ChoiceOne uses a rolling 20 quarter actual net charge-off history as the base for the computation. 

Nonperforming loans were $2.7 million as of June 30, 2022, compared to $5.5 million as of December 31, 2021.  The allowance for loan losses was 0.69% of total loans at June 30, 2022, compared to 0.76% at December 31, 2021.  Loans acquired in the mergers with County Bank Corp. and Community Shores were recorded at fair value and as a result do not have an allowance for loan losses allocated to them unless credit deteriorates subsequent to acquisition.  ChoiceOne has $3.1 million in credit mark remaining on loans acquired in the mergers. 

Charge-offs and recoveries for respective loan categories for the six months ended June 30, 2022 and 2021 were as follows:

(Dollars in thousands)	2022				2021
	Charge-offs		Recoveries		Charge-offs		Recoveries
Agricultural	$	-	$	-	$	-	$	-
Commercial and industrial		131		4		98		73
Consumer		255		106		147		113
Commercial real estate		-		2		48		43
Residential real estate		-		2		-		5
	$	386	$	114	$	293	$	234

Net charge-offs were $272,000 in the first six months of 2022, compared to net charge-offs of $59,000 during the same period in 2021. Checking account charge-off and recovery activity is included in the consumer charge-off activity above.  Net charge-offs for checking accounts for the second quarter and first half of 2022 was $60,000 and $113,000, respectively, compared to $27,000 and $41,000 for the same periods in the prior year.  Net charge-offs on an annualized basis as a percentage of average loans were 0.05% in the first six months of 2022 compared to annualized net charge-offs of 0.01% of average loans in the same period in the prior year. Management is aware that the economic climate in Michigan will continue to affect businesses and individual borrowers.  Management has worked and intends to continue to work with delinquent borrowers in an attempt to lessen the negative impact to ChoiceOne. As charge-offs, changes in the level of nonperforming loans, and changes within the composition of the loan portfolio occur throughout 2022, the provision and allowance for loan losses will be reviewed by ChoiceOne’s management and adjusted as determined to be necessary.

Noninterest Income

Total noninterest income was $3.4 million in the second quarter and $7.3 million in the first half of 2022 compared to $4.7 million and $10.3 million in the same periods in the prior year.  Total noninterest income in the first six months of 2021 was bolstered by heightened levels of refinancing activity within ChoiceOne's mortgage portfolio, with gains on sales of loans $2.2 million larger than in the first six months of 2022.  Customer service charges increased $488,000 in the first half of 2022 compared to the first half of 2021 as prior year service charges were depressed by the effects of the COVID-19 pandemic.  The market value of equity securities declined during the first half of 2022 compared to the first half of 2021 consistent with general market conditions.  Equity securities include local community bank stocks and Community Reinvestment Act bond mutual funds.  During the second quarter of 2022, ChoiceOne liquidated $31.5 million in securities resulting in a $427,000 realized loss, in order to redeploy the funds into higher yielding loans and reduce the risk of extension on certain fixed income securities which include a call option.

Noninterest Expense

Total noninterest expense increased $28,000 and $1.2 million in the second quarter and first half of 2022, respectively, compared to the same periods in 2021.   Salaries and wages increased $538,000 and $976,000 in the second quarter and first half of 2022, respectively, compared to the same periods in 2021.  The increase as compared to the first six months of 2022 is related to an increase in salaries and wages due to new commercial loan production staff and wealth management staff.  This investment in people will increase expenses short term, but is expected to drive long term value to ChoiceOne through the building of new relationships.  Other expenses have also increased in the first half of 2022 compared to the same period in the prior year due to an increase to our FDIC insurance related expenses and other expenses.  ChoiceOne continues to monitor expenses and looks to improve our efficiency through automation and use of digital tools.

Income Tax Expense

Income tax expense was $1.9 million in the first six months of 2022 compared to $2.2 million for the same period in 2021.  The decrease was due to a higher level of income before income tax in 2021. The effective tax rate was 14.5% for the first six months of 2022 compared to 16.2% for the first six months of 2021.  The decline in the effective tax rate resulted from increased interest income from tax-exempt securities in the first half of 2022 compared to 2021.

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FINANCIAL CONDITION

Securities

In the last two years ChoiceOne has grown its securities portfolio substantially.  Total available for sale securities on December 31, 2020, amounted to $577.7 million and grew steadily to an available for sale balance on December 31, 2021, of $1.1 billion.  Many of the securities making up this balance include local municipals and other securities ChoiceOne has no intent to sell prior to maturity.  During the first quarter of 2022, ChoiceOne elected to move $428.4 million of the portfolio into a held to maturity status.  Management believes the $566.1 million in available for sale securities at June 30, 2022 to be sufficient for any future liquidity needs.

$31.8 million of securities were sold in the six months ended June 30, 2022 to be replaced with higher yielding assets. $8.7 million of securities were called or matured during that same period. Principal repayments on securities totaled $22.2 million in the six months ended June 30, 2022.

Loans

Core loans, which exclude PPP loans, held for sale loans, and loans to other financial institutions, grew organically by $184.9 million from June 30, 2021 to June 30, 2022. Additions to our commercial lending staff in 2021 and investments in the automation of our commercial loan process have helped drive our pipeline of commercial loans and corresponding growth.  Loans to other financial institutions increased $37.4 million from June 30, 2021 to June 30, 2022. Loans to other financial institutions is comprised of a warehouse line of credit to facilitate mortgage loan originations and fluctuates with the national mortgage market.  In the second quarter of 2022, $6.7 million of PPP loans were forgiven, resulting in $283,000 of fee income.  $1.8 million in PPP loans and $68,000 in deferred PPP fee income remains outstanding as of June 30, 2022.  During the second quarter and first half of 2022, ChoiceOne recorded accretion income related to acquired loans in the amount of $346,000 and $1.2 million, respectively.  The remaining credit mark on acquired loans from the recent mergers with County Bank Corp. and Community Shores totaled $3.1 million as of June 30, 2022.  

Excluding PPP loans, ChoiceOne saw an increase of $31.4 million of commercial and industrial loans, $37.7 million of commercial real estate loans and $23.3 million of residential real estate during the first six months of 2022.  Excluding PPP loans, ChoiceOne saw declines of $6.0 million in agricultural loans and $1.1 million in construction real estate loans in the first six months of 2022.  The other changes resulted from normal fluctuations in borrower activity.

Asset Quality

Information regarding impaired loans can be found in Note 3 to the consolidated financial statements included in this report.  The total balance of loans classified as impaired was $2.7 million at June 30, 2022, compared to $5.4 million as of December 31, 2021.  The change in the first six months of 2022 was primarily comprised of a decrease of $2.3 million in impaired agricultural loans.

As part of its review of the loan portfolio, management also monitors the various nonperforming loans.  Nonperforming loans are comprised of: (1) loans accounted for on a nonaccrual basis; (2) loans, not included in nonaccrual loans, which are contractually past due 90 days or more as to interest or principal payments; and (3) loans, not included in nonaccrual or loans past due 90 days or more, which are considered troubled debt restructurings ("TDRs").

The balances of these nonperforming loans were as follows:

(Dollars in thousands)	June 30,		December 31,
	2022		2021
Loans accounted for on a nonaccrual basis	$	1,242	$	1,727
Accruing loans which are contractually past due 90 days or more as to principal or interest payments		-		-
Loans defined as "troubled debt restructurings " which are not included above		1,472		3,816
Total	$	2,714	$	5,543

The reduction in the balance of nonaccrual loans in the first six months of 2022 was primarily due to loans that were paid off.  It is also noted that 82% of loans considered TDRs were performing according to their restructured terms as of June 30, 2022.  Management believes the allowance for loan losses allocated to its nonperforming loans is sufficient at June 30, 2022.

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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. ChoiceOne 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.  

ChoiceOne management performs an annual qualitative assessment and periodically performs a quantitative assessment.  Management will perform a quantitative assessment of goodwill during the third quarter of 2022.

Deposits and Borrowings

Total deposits decreased $7.1 million in the second quarter of 2022 and have increased $257.8 million since June 30, 2021.  Deposit remained relatively flat in the second quarter primarily due to the seasonality of ChoiceOne's municipal clients and some modest deposit runoff as ChoiceOne has held deposit rates steady through the rapidly rising rate environment.  Despite the 13.7% growth in deposits since June 30, 2021, ChoiceOne has been able to maintain relatively low deposit costs, with an increase in interest expense of only 3.5% for the first six months of 2022 compared to the first six months of 2021.

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 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 merger mark-to-market adjustment.   ChoiceOne may use Federal Home Loan Bank advances and advances from the Federal Reserve Bank Discount Window to meet short-term funding needs in the remainder of 2022.

Shareholders' Equity

Total shareholders' equity declined $55.2 million in the first six months of 2022.  The Federal Reserve increased the federal funds rate by 2.25% during the first half of 2022 in response to published inflation rates, causing interest rates to increase.  This change in interest rates increased ChoiceOne's unrealized pre-tax loss on the available for sale securities portfolio from $3.3 million at December 31, 2021 to $73.9 million at June 30, 2022.  Additionally, meeting minutes from the Federal Open Market Committee indicated that additional increases in the federal funds rate are expected in order to combat inflation in the coming quarters.  An increase of an additional 75 basis points to the federal funds rate occurred in July 2022. As such, ChoiceOne has elected to utilize interest rate derivatives in order to better manage its interest rate risk position.  On April 21, 2022, ChoiceOne purchased four forward-starting interest rate caps with a total notional amount of $200.0 million and entered into a $200.0 million forward-starting pay-fixed interest rate swap.  These strategies create accounting symmetry between available for sale securities and other comprehensive income (equity), thus protecting tangible capital from further increases in interest rates.  ChoiceOne also entered into two received-fixed interest rate swaps with a total notional amount of $200.0 million, which, in the current environment, offsets the cost of the rising rate protection. These three strategies, in the aggregate, are expected to be neutral to net income in 2022 and better position ChoiceOne Bank should rates continue to rise.  Importantly, the transactions were structured to qualify for hedge accounting, which means that changes in the fair value of the instruments flow through other comprehensive income (equity).  Refer to further details in Note 8 to the consolidated financial statements included in this report. 

A reduction in common stock and paid in capital resulted from ChoiceOne's repurchase of 25,899 shares for $682,000, or a weighted average all-in cost per share of $26.35, during the first quarter of 2022.  No shares of common stock were repurchased during the second quarter of 2022; however, ChoiceOne may strategically repurchase shares of common stock in the future depending on market and other conditions.

32

Regulatory Capital Requirements

Following is information regarding compliance of ChoiceOne and ChoiceOne Bank with regulatory capital requirements:

											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
June 30, 2022
ChoiceOne Financial Services Inc.
Total capital (to risk weighted assets)		212,043		13.8	%		122,636		8.0	%		N/A		N/A
Common equity Tier 1 capital (to risk weighted assets)		168,228		11.0			68,983		4.5			N/A		N/A
Tier 1 capital (to risk weighted assets)		172,728		11.3			91,977		6.0			N/A		N/A
Tier 1 capital (to average assets)		172,728		7.5			92,046		4.0			N/A		N/A
ChoiceOne Bank
Total capital (to risk weighted assets)		194,686		12.7	%		122,439		8.0	%		153,049		10.0	%
Common equity Tier 1 capital (to risk weighted assets)		187,270		12.2			68,872		4.5			99,482		6.5
Tier 1 capital (to risk weighted assets)		187,270		12.2			91,830		6.0			122,439		8.0
Tier 1 capital (to average assets)		187,270		8.1			91,953		4.0			114,941		5.0
December 31, 2021
ChoiceOne Financial Services Inc.
Total capital (to risk weighted assets)	$	204,353		14.4	%	$	113,604		8.0	%		N/A		N/A
Common equity Tier 1 capital (to risk weighted assets)		160,338		11.3			63,902		4.5			N/A		N/A
Tier 1 capital (to risk weighted assets)		164,838		11.6			85,203		6.0			N/A		N/A
Tier 1 capital (to average assets)		164,838		7.4			89,415		4.0			N/A		N/A
ChoiceOne Bank
Total capital (to risk weighted assets)	$	182,275		12.9	%	$	113,444		8.0	%	$	141,806		10.0	%
Common equity Tier 1 capital (to risk weighted assets)		174,587		12.3			63,813		4.5			92,174		6.5
Tier 1 capital (to risk weighted assets)		174,587		12.3			85,083		6.0			113,444		8.0
Tier 1 capital (to average assets)		174,587		7.8			89,289		4.0			111,611		5.0

Management reviews the capital levels of ChoiceOne and ChoiceOne Bank on a regular basis. The Board of Directors and management believe that the capital levels as of June 30, 2022 are adequate for the foreseeable future. The Board of Directors’ determination of appropriate cash dividends for future periods will be based on, among other things, market conditions and ChoiceOne’s requirements for cash and capital.

Liquidity

Net cash provided by operating activities was $22.3 million for the six months ended June 30, 2022 compared to $17.1 million in the same period a year ago.  The change was due to lower net proceeds from loan sales in 2022 compared to 2021, which was offset by the change in other assets and liabilities.  Net cash used in investing activities was $52.8 million for the six months ended June 30, 2022 compared to $194.6 million in the same period in 2021. ChoiceOne had $32.7 million of securities purchases and sold $31.8 million of securities in the first half of 2022 compared to $322.0 million and $0 in the same period in 2021, respectively.  An increase in net loan originations led to cash used in of $59.6 million in the first six months of 2022 compared to cash provided of $100.8 million in the same period during the prior year.  Net cash provided by financing activities was $38.9 million for the first six months ended 2022, compared to $193.2 million in the same period in the prior year. ChoiceOne experienced growth of $86.2 million in deposits in the first six months of 2022 compared to $206.2 million in 2021, with a $36.3 million decrease in borrowings contributing to the change.

ChoiceOne believes that the current level of liquidity is sufficient to meet ChoiceOne Bank's normal operating needs. This belief is based upon the availability of deposits from both the local and national markets, maturities of securities, normal loan repayments, income retention, federal funds purchased from correspondent banks, advances available from the Federal Home Loan Bank, and secured lines of credit available from the Federal Reserve Bank.

33

PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings.

There are no material pending legal proceedings to which ChoiceOne or ChoiceOne Bank is a party or to which any of their properties are subject, except for proceedings that arose in the ordinary course of business. In the belief of management, pending or current legal proceedings should not have a material effect on the consolidated financial condition of ChoiceOne.

Item 1A.  Risk Factors.

Information concerning risk factors is contained in the discussion in Item 1A, “Risk Factors,” in ChoiceOne’s Annual Report on Form 10-K for the year ended December 31, 2021.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.

There were no unregistered sales of equity securities in the second quarter of 2022.

34

ISSUER PURCHASES OF EQUITY SECURITIES

There were no issuer purchases of equity securities during the second quarter of 2022.

Item 5. Other Information

None.

Item 6.  Exhibits

The following exhibits are filed or incorporated by reference as part of this report:

Exhibit Number	Document
3.1	Restated Articles of Incorporation of ChoiceOne Financial Services, Inc. Previously filed as an exhibit to ChoiceOne’s Form 8-A filed February 4, 2020.  Here incorporated by reference.
3.2	Bylaws of ChoiceOne as currently in effect and any amendments thereto. Previously filed as an exhibit to ChoiceOne’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.
10.1	ChoiceOne Financial Services, Inc. Equity Incentive Plan of 2022.  Previously filed as an exhibit to ChoiceOne Financial Services, Inc.’s Registration on Form S-8 filed May 27, 2022.  Here incorporated by reference.
10.2	ChoiceOne Financial Services, Inc. 2022 Employee Stock Purchase Plan.  Previously filed as an exhibit to ChoiceOne Financial Services, Inc.’s Registration Statement on Form S-8 filed May 27, 2022.  Here incorporated by reference.
31.1	Certification of Chief Executive Officer
31.2	Certification of Treasurer
32.1	Certification pursuant to 18 U.S.C. § 1350.
101.INS	Inline XBRL Instance 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)

35

SIGNATURES

Pursuant to the requirements 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.
Date:   August 12, 2022	/s/ Kelly J. Potes
	Kelly J. Potes Chief Executive Officer (Principal Executive Officer)
Date:   August 12, 2022	/s/ Adom J. Greenland
	Adom J. Greenland Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

36

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, Kelly J. Potes, certify that:

1.	I have reviewed this quarterly report on Form 10-Q 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: August 12, 2022

/s/ Kelly J. Potes

Kelly J. Potes
Chief Executive Officer
ChoiceOne Financial Services, Inc. 

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, Adom J. Greenland, certify that:

1.	I have reviewed this quarterly report on Form 10-Q 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: August 12, 2022

/s/ Adom J. Greenland

Adom J. Greenland
Chief Financial Officer and Treasurer
ChoiceOne Financial Services, Inc.

EX-32.1

EXHIBIT 32.1

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 Quarterly Report of the Company on Form 10-Q for the quarter ended June 30, 2022 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.

Date:   August 12, 2022	/s/ Kelly J. Potes
	Kelly J. Potes Chief Executive Officer
Date:   August 12, 2022	/s/ Adom J. Greenland
	Adom J. Greenland Chief Financial Officer and Treasurer

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2022	Jul. 31, 2022
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	Q2
Document Fiscal Year Focus	2022
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2022
Document Transition Report	false
Entity 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
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
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Title of 12(b) Security	Common stock
Trading Symbol	COFS
Security Exchange Name	NASDAQ
Entity Common Stock, Shares Outstanding		7,507,769

XML

Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Assets
Cash and due from banks	$ 39,946	$ 31,537
Time deposits in other financial institutions	350	350
Cash and cash equivalents	40,296	31,887
Equity securities, at fair value (Note 2)	8,288	8,492
Securities available for sale, at fair value (Note 2)	566,142	1,098,885
Securities held to maturity, at amortized cost (Note 2)	429,675	0
Federal Home Loan Bank stock	3,493	3,824
Federal Reserve Bank stock	5,064	5,064
Loans held for sale	10,628	9,351
Loans to other financial institutions	37,422	42,632
Loans (Note 3)	1,081,389	1,016,848
Allowance for loan losses (Note 3)	(7,416)	(7,688)
Loans, net	1,073,973	1,009,160
Premises and equipment, net	29,122	29,880
Other real estate owned, net	0	194
Cash value of life insurance policies	43,774	43,356
Goodwill	59,946	59,946
Core deposit intangible	3,358	3,962
Other assets	49,024	20,049
Total assets	2,360,205	2,366,682
Liabilities
Deposits – noninterest-bearing	578,927	560,931
Deposits – interest-bearing	1,559,577	1,491,363
Total deposits	2,138,504	2,052,294
Borrowings	7,000	50,000
Subordinated debentures	35,140	35,017
Other liabilities	13,101	7,702
Total liabilities	2,193,745	2,145,013
Shareholders' Equity
Preferred stock; shares authorized: 100,000; shares outstanding: none	0	0
Common stock and paid-in capital, no par value; shares authorized: 12,000,000; shares outstanding: 7,503,072 at June 30, 2022 and 7,510,379 at December 31, 2021	171,804	171,913
Retained earnings	59,728	52,332
Accumulated other comprehensive loss, net	(65,072)	(2,576)
Total shareholders’ equity	166,460	221,669
Total liabilities and shareholders’ equity	$ 2,360,205	$ 2,366,682

XML

Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares $ / shares in Thousands	Jun. 30, 2022	Dec. 31, 2021
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)	12,000,000	12,000,000
Common stock, outstanding (in shares)	7,503,072	7,510,379

XML

Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Interest income
Loans, including fees	$ 12,523	$ 11,565	$ 24,821	$ 24,247
Securities:
Taxable	3,522	2,396	7,029	4,252
Tax exempt	1,559	1,446	3,214	2,543
Other	62	12	76	32
Total interest income	17,666	15,419	35,140	31,074
Interest expense
Deposits	996	839	1,779	1,719
Advances from Federal Home Loan Bank	2	2	3	3
Other	379	70	748	156
Total interest expense	1,377	911	2,530	1,878
Net interest income	16,289	14,508	32,610	29,196
Provision for loan losses	0	166	0	416
Net interest income after provision for loan losses	16,289	14,342	32,610	28,780
Noninterest income
Customer service charges	2,353	2,134	4,542	4,054
Insurance and investment commissions	233	198	438	471
Gains on sales of loans	887	1,771	1,691	3,917
Net gains (losses) on sales of securities	(427)	2	(427)	3
Net gains on sales and write downs of other assets	1	(4)	172	1
Earnings on life insurance policies	254	191	534	377
Trust income	176	253	354	425
Change in market value of equity securities	(327)	(119)	(683)	489
Other	280	306	655	595
Total noninterest income	3,430	4,732	7,276	10,332
Noninterest expense
Salaries and benefits	7,537	6,999	15,143	14,167
Occupancy and equipment	1,518	1,498	3,143	3,053
Data processing	1,578	1,673	3,322	3,102
Professional fees	559	943	1,069	1,672
Supplies and postage	166	124	357	224
Advertising and promotional	147	207	279	352
Intangible amortization	322	352	604	659
FDIC insurance	225	156	450	308
Other	1,105	1,177	2,480	2,120
Total noninterest expense	13,157	13,129	26,847	25,657
Income before income tax	6,562	5,945	13,039	13,455
Income tax expense	947	902	1,896	2,174
Net income	$ 5,615	$ 5,043	$ 11,143	$ 11,281
Basic earnings per share (Note 4) (in dollars per share)	$ 0.75	$ 0.65	$ 1.49	$ 1.45
Diluted earnings per share (Note 4) (in dollars per share)	0.75	0.65	1.49	1.45
Dividends declared per share (in dollars per share)	$ 0.25	$ 0.22	$ 0.50	$ 0.44

XML

Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Net income	$ 5,615	$ 5,043	$ 11,143	$ 11,281
Other comprehensive income:
Change in net unrealized gain (loss) on available-for-sale securities	(31,574)	11,662	(74,512)	(5,291)
Change in net unrealized gain (loss) on available-for-sale securities, Income tax benefit (expense)	6,631	(2,449)	15,648	1,111
Less: reclassification adjustment for net (gain) loss included in net income	427	(1)	427	(3)
Less: reclassification adjustment for net (gain) loss included in net income, Income tax benefit (expense)	(90)	0	(90)	1
Less: net unrealized (gains) losses on securities transferred from available-for-sale to held-to-maturity	0	0	3,404	0
Less: net unrealized (gains) losses on securities transferred from available-for-sale to held-to-maturity, Income tax benefit (expense)	0	0	(715)	0
Unrealized gain (loss) on available-for-sale securities, net of tax	(24,606)	9,212	(55,838)	(4,182)
Reclassification of unrealized gain (loss) upon transfer of securities from available-for-sale to held-to-maturity	0	0	(3,404)	0
Reclassification of unrealized gain (loss) upon transfer of securities from available-for-sale to held-to-maturity, Income tax benefit (expense)	0	0	715	0
Less: amortization of net unrealized (gains) losses on securities transferred from available-for-sale to held-to-maturity	74	0	244	0
Less: amortization of net unrealized (gains) losses on securities transferred from available-for-sale to held-to-maturity, Income tax benefit (expense)	(16)	0	(51)	0
Unrealized loss on held to maturity securities, net of tax	58	0	(2,496)	0
Change in net unrealized gain (loss) on derivatives	(5,576)	0	(5,576)	0
Change in net unrealized gain (loss) on derivatives, Income tax benefit (expense)	1,171	0	1,171	0
Less: amortization of net unrealized (gains) losses included in net income	307	0	307	0
Less: amortization of net unrealized (gains) losses included in net income, Income tax benefit (expense)	(64)	0	(64)	0
Unrealized gain (loss) on derivative instruments, net of tax	(4,162)	0	(4,162)	0
Other comprehensive income (loss), net of tax	(28,710)	9,212	(62,496)	(4,182)
Comprehensive income (loss)	$ (23,095)	$ 14,255	$ (51,353)	$ 7,099

XML

Consolidated Statements of Changes in Shareholders' Equity (Unaudited) - USD ($)	Cash Dividend [Member] Common Stock Including Additional Paid in Capital [Member]	Cash Dividend [Member] Retained Earnings [Member]	Cash Dividend [Member] AOCI Attributable to Parent [Member]	Cash Dividend [Member]	Common Stock Including Additional Paid in Capital [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Total
Balance (in shares) at Dec. 31, 2020					7,796,352
Balance at Dec. 31, 2020					$ 178,750,000	$ 37,490,000	$ 11,028,000	$ 227,268,000
Net income						11,281,000		11,281,000
Other comprehensive income (loss)							(4,182,000)	(4,182,000)
Shares issued (in shares)					11,886
Shares issued					$ 281,000			281,000
Effect of employee stock purchases					13,000			13,000
Stock-based compensation expense					$ 176,000			176,000
Shares repurchased (in shares)					(115,701)
Shares repurchased					$ (2,897,000)			(2,897,000)
Cash dividends declared		$ (3,419,000)		$ (3,419,000)
Balance (in shares) at Jun. 30, 2021					7,692,537
Balance at Jun. 30, 2021					$ 176,323,000	45,352,000	6,846,000	228,521,000
Balance (in shares) at Mar. 31, 2021					7,802,285
Balance at Mar. 31, 2021					$ 178,993,000	42,012,000	(2,366,000)	218,639,000
Net income						5,043,000		5,043,000
Other comprehensive income (loss)							9,212,000	9,212,000
Shares issued (in shares)					5,953
Shares issued					$ 106,000			106,000
Effect of employee stock purchases					9,000			9,000
Stock-based compensation expense					$ 112,000			112,000
Shares repurchased (in shares)					(115,701)
Shares repurchased					$ (2,897,000)			(2,897,000)
Cash dividends declared		(1,703,000)		(1,703,000)
Balance (in shares) at Jun. 30, 2021					7,692,537
Balance at Jun. 30, 2021					$ 176,323,000	45,352,000	6,846,000	$ 228,521,000
Balance (in shares) at Dec. 31, 2021					7,510,379			7,510,379
Balance at Dec. 31, 2021					$ 171,913,000	52,332,000	(2,576,000)	$ 221,669,000
Net income						11,143,000		11,143,000
Other comprehensive income (loss)							(62,496,000)	(62,496,000)
Shares issued (in shares)					18,592
Shares issued					$ 272,000			272,000
Effect of employee stock purchases					13,000			13,000
Stock-based compensation expense					$ 288,000			$ 288,000
Shares repurchased (in shares)					(25,899)			(25,899)
Shares repurchased					$ (682,000)			$ (682,000)
Cash dividends declared		(3,747,000)		(3,747,000)
Balance (in shares) at Jun. 30, 2022					7,503,072			7,503,072
Balance at Jun. 30, 2022					$ 171,804,000	59,728,000	(65,072,000)	$ 166,460,000
Balance (in shares) at Mar. 31, 2022					7,489,812
Balance at Mar. 31, 2022					$ 171,492,000	55,988,000	(36,362,000)	191,118,000
Net income						5,615,000		5,615,000
Other comprehensive income (loss)							(28,710,000)	(28,710,000)
Shares issued (in shares)					13,260
Shares issued					$ 139,000			139,000
Effect of employee stock purchases					6,000			6,000
Stock-based compensation expense					$ 167,000			$ 167,000
Cash dividends declared		$ (1,875,000)		$ (1,875,000)
Effect of employee stock purchases (in shares)
Balance (in shares) at Jun. 30, 2022					7,503,072			7,503,072
Balance at Jun. 30, 2022					$ 171,804,000	$ 59,728,000	$ (65,072,000)	$ 166,460,000

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Consolidated Statements of Changes in Shareholders' Equity (Unaudited) (Parentheticals) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Cash Dividend [Member]
Dividends declared, per share (in dollars per share)	$ 0.25	$ 0.22	$ 0.50	$ 0.44
Dividends declared, per share (in dollars per share)	$ 0.25	$ 0.22	$ 0.50	$ 0.44

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Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Cash flows from operating activities:
Net income	$ 11,143	$ 11,281
Adjustments to reconcile net income to net cash from operating activities:
Provision for loan losses	0	416
Depreciation	1,356	1,299
Amortization	5,506	4,336
Compensation expense on employee and director stock purchases, stock options, and restricted stock units	493	404
Net losses (gains) on sales of available for sale securities	427	(3)
Net change in market value of equity securities	683	(489)
Gains on sales of loans	(1,691)	(3,917)
Loans originated for sale	(53,750)	(122,993)
Proceeds from loan sales	53,480	125,714
Earnings on bank-owned life insurance	(534)	(377)
Proceeds from BOLI policy	130	0
Earnings on death benefit from bank-owned life insurance	(14)	0
(Gains)/losses on sales of other real estate owned	(41)	(4)
Proceeds from sales of other real estate owned	235	270
Deferred federal income tax (benefit)/expense	169	506
Net change in:
Other assets	(768)	(992)
Other liabilities	5,480	1,693
Net cash provided by operating activities	22,304	17,144
Cash flows from investing activities:
Sales of securities available for sale	31,828	0
Maturities, prepayments and calls of securities available for sale	27,404	28,104
Maturities, prepayments and calls of securities held to maturity	3,485	0
Purchases of securities available for sale	(32,676)	(322,009)
Purchases of securities held to maturity	(5,748)	0
Loan originations and payments, net	(59,602)	100,799
Additions to premises and equipment	(701)	(1,461)
Proceeds from (payments for) derivative contracts, net	(16,745)	0
Net cash provided by (used in) investing activities	(52,755)	(194,567)
Cash flows from financing activities:
Net change in deposits	86,210	206,157
Net change in short term borrowings	(43,000)	(6,685)
Issuance of common stock	80	66
Repurchase of common stock	(682)	(2,897)
Cash dividends	(3,747)	(3,419)
Net cash provided by financing activities	38,861	193,222
Net change in cash and cash equivalents	8,409	15,799
Beginning cash and cash equivalents	31,887	79,519
Ending cash and cash equivalents	40,296	95,318
Supplemental disclosures of cash flow information:
Cash paid for interest	2,182	1,965
Cash paid for income taxes	0	901
Loans transferred to other real estate owned	$ 0	$ 260

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Note 1 - Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Significant Accounting Policies [Text Block]

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation 

The consolidated financial statements include ChoiceOne Financial Services, Inc. ("ChoiceOne"), its wholly-owned subsidiary, ChoiceOne Bank, and ChoiceOne Bank’s wholly-owned subsidiary, ChoiceOne Insurance Agencies, Inc. 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.

The accompanying unaudited consolidated financial statements and notes thereto reflect all adjustments ordinary in nature which are, in the opinion of management, necessary for a fair presentation of such financial statements.  Operating results for the six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

The accompanying consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes thereto included in ChoiceOne’s Annual Report on Form 10-K for the year ended December 31, 2021.

Use of Estimates

To prepare financial statements in conformity with GAAP, 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, including changes in interest rates and other general economic, business and political conditions, including the effects of the COVID-19 pandemic, and its potential effects on the economic environment, our customers and our operations, as well as any changes to federal, state and local government laws, regulations and orders in connection with the pandemic. Actual results may differ from these estimates. Estimates associated with the allowance for loan losses are particularly susceptible to change.

Investment Securities

Investment securities for which ChoiceOne has the intent and ability to hold to maturity are classified as held to maturity and are carried at amortized cost.  Investment securities not classified as held to maturity are classified as available for sale and are reported at fair value with unrealized gains and losses, net of income taxes, as a separate component of other comprehensive income. ChoiceOne determines the appropriate classification of investment securities at the time of purchase and reassesses the classification at each reporting date.

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. Loans to other financial institutions are excluded from Note 3. No loans to other financial institutions were impaired, nonaccrual, or past due greater than 30 days as of June 30, 2022.

Credit risk associated with the participating interest is measured as an allowance for loan losses when necessary. Losses are charged off against the allowance when incurred and recoveries of loan charge-offs are recorded when received. At least quarterly, ChoiceOne Bank reviews the portfolios of participating interests for potential losses including any participating interest that is outstanding over 90 days (even if the advance and participating interest is current).

Goodwill

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.

Stock Transactions

A total of 7,407 shares of common stock were issued to ChoiceOne’s Board of Directors for a cash price of $192,000 under the terms of the Directors’ Stock Purchase Plan in the first half of 2022. A total of 4,257 shares for a cash price of $80,000 were issued under the Employee Stock Purchase Plan in the first six months of 2022.  ChoiceOne repurchased 25,899 shares for $682,000, or a weighted average all-in cost per share of $26.35, during the first quarter of 2022. This was part of the common stock repurchase program announced in April 2021 which authorized repurchases of up to 390,114 shares, representing 5% of the total outstanding shares of common stock as of the date the program was adopted.  No shares were repurchased under this program in the second quarter of 2022. 

Allowance for Loan Losses

The allowance for loan losses is a 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 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-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.  The specific component relates to loans that are individually classified as impaired.

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 ChoiceOne 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, ChoiceOne Bank must determine whether (a) the borrower is experiencing financial difficulties and (b) ChoiceOne 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, at the net 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.

Reclassifications 

Certain amounts presented in prior periods have been reclassified to conform to the current presentation.

Recent Accounting Pronouncements

The Financial Accounting Standards Board (FASB) issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU provides financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date by replacing the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The new guidance attempts to reflect an entity’s current estimate of all expected credit losses and broadens the information that an entity must consider in developing its expected credit loss estimate for assets measured either collectively or individually to include forecasted information, as well as past events and current conditions. There is no specified method for measuring expected credit losses, and an entity may apply methods that reasonably reflect its expectations of the credit loss estimate. Although an entity may still use its current systems and methods for recording the allowance for credit losses, under the new rules, the inputs used to record the allowance for credit losses generally will need to change to appropriately reflect an estimate of all expected credit losses and the use of reasonable and supportable forecasts. Additionally, credit losses on available-for-sale debt securities will have to be presented as an allowance rather than as a write-down. This ASU is effective for fiscal years beginning after December 15, 2022, and for interim periods within those years for companies considered smaller reporting companies with the Securities and Exchange Commission. ChoiceOne was classified as a smaller reporting company as of the measurement date. Management is currently evaluating the impact of this new ASU on its consolidated financial statements which may be significant.  Management has selected representative peer groups for each loan type and determined economic factors which have a strong correlation with our historical loss data. 

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Note 2 - Securities

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

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 $2.5 million after tax as of June 30, 2022.

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

	June 30, 2022
			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Equity securities	$	8,432	$	405	$	(549	)	$	8,288

	December 31, 2021
			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Equity securities	$	7,953	$	665	$	(126	)	$	8,492

The following tables present the amortized cost and fair value of investment securities at the dates indicated and the corresponding amounts of gross unrealized gains and losses, including the corresponding amounts of gross unrealized gains and losses on investment securities available for sale recognized in accumulated other comprehensive income:

	June 30, 2022
			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
Available for Sale:	Cost		Gains		Losses			Value
U.S. Treasury notes and bonds	$	93,040	$	-	$	(9,397	)	$	83,643
State and municipal		300,824		34		(44,197	)		256,661
Mortgage-backed		230,842		5		(19,719	)		211,128
Corporate		1,256		-		(18	)		1,238
Asset-backed securities		14,122		-		(650	)		13,472
Total	$	640,084	$	39	$	(73,981	)	$	566,142
Held to Maturity:
U.S. Government and federal agency	$	2,963	$	-	$	(283	)	$	2,680
State and municipal		203,267		-		(32,638	)		170,629
Mortgage-backed		202,595		-		(23,007	)		179,588
Corporate		19,593		-		(1,013	)		18,580
Asset-backed securities		1,257		-		(67	)		1,190
Total	$	429,675	$	-	$	(57,008	)	$	372,667

	December 31, 2021
			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
Available for Sale:	Cost		Gains		Losses			Value
U.S. Government and federal agency	$	2,001	$	7	$	-		$	2,008
U.S. Treasury notes and bonds		93,267		23		(1,311	)		91,979
State and municipal		528,252		10,704		(4,109	)		534,847
Mortgage-backed		441,383		781		(9,049	)		433,115
Corporate		20,856		19		(233	)		20,642
Asset-backed securities		16,387		-		(93	)		16,294
Total	$	1,102,146	$	11,534	$	(14,795	)	$	1,098,885

ChoiceOne reviews its securities portfolio on a quarterly basis to determine whether unrealized losses are considered to be temporary or other-than-temporary. No other-than-temporary impairment charges were recorded in the three and six months ended June 30, 2022 or in the same periods in2021. ChoiceOne believes that unrealized losses on securities were temporary in nature and were due to changes in interest rates and reduced market liquidity and not as a result of credit quality issues.

Presented below is a schedule of maturities of securities as of June 30, 2022, and the fair value of securities available for sale and the amortized cost of securities held to maturity as of June 30, 2022.  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 June 30,
(Dollars in thousands)	1 Year		5 Years		10 Years		10 Years		2022
U.S. Treasury notes and bonds	$	2,000	$	-	$	81,643	$	-	$	83,643
State and municipal		16,426		8,873		75,501		155,861		256,661
Corporate		500		505		233		-		1,238
Asset-backed securities		-		9,741		3,731		-		13,472
Total debt securities		18,926		19,119		161,108		155,861		355,014
Mortgage-backed securities		18,793		101,454		90,244		637		211,128
Total Available for Sale	$	37,719	$	120,573	$	251,352	$	156,498	$	566,142

	Held to Maturity Securities maturing within:
									Amortized Cost
	Less than		1 Year -		5 Years -		More than		at June 30,
(Dollars in thousands)	1 Year		5 Years		10 Years		10 Years		2022
U.S. Government and federal agency	$	-	$	-	$	2,963	$	-	$	2,963
State and municipal		2,724		5,112		89,248		106,183		203,267
Corporate		-		250		18,343		1,000		19,593
Asset-backed securities		-		1,257		-		-		1,257
Total debt securities		2,724		6,619		110,554		107,183		227,080
Mortgage-backed securities		6,525		45,672		150,398		-		202,595
Total Held to Maturity	$	9,249	$	52,291	$	260,952	$	107,183	$	429,675

Following is information regarding unrealized gains and losses on equity securities for the three and six months ended June 30, 2022 and 2021:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2022			2021			2022			2021
Net gains and (losses) recognized during the period	$	(327	)	$	(119	)	$	(683	)	$	489
Less: Net gains and (losses) recognized during the period on securities sold		—			—			—			—
Unrealized gains and (losses) recognized during the reporting period on securities still held at the reporting date	$	(327	)	$	(119	)	$	(683	)	$	489

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Note 3 - Loans and Allowance for Loan Losses

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Financing Receivables [Text Block]

NOTE 3 – LOANS AND ALLOWANCE FOR LOAN LOSSES

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

				Commercial
(Dollars in thousands)				and						Commercial		Construction			Residential
	Agricultural			Industrial			Consumer			Real Estate		Real Estate			Real Estate		Unallocated			Total
Allowance for Loan Losses Three Months Ended June 30, 2022
Beginning balance	$	387		$	1,752		$	304		$	3,690	$	37		$	589	$	842		$	7,601
Charge-offs		—			(100	)		(144	)		-		—			-		—			(244	)
Recoveries		—			2			55			1		—			1		—			59
Provision		(255	)		(41	)		94			533		8			101		(440	)		-
Ending balance	$	132		$	1,613		$	309		$	4,224	$	45		$	691	$	402		$	7,416
Allowance for Loan Losses Six Months Ended June 30, 2022
Beginning balance	$	448		$	1,454		$	290		$	3,705	$	110		$	671	$	1,010		$	7,688
Charge-offs					(131	)		(255	)		—		—			—		—			(386	)
Recoveries					4			106			2		—			2		—			114
Provision		(316	)		286			168			517		(65	)		18		(608	)		-
Ending balance	$	132		$	1,613		$	309		$	4,224	$	45		$	691	$	402		$	7,416
Individually evaluated for impairment	$	1		$	52		$	1		$	7	$	—		$	154	$	—		$	215
Collectively evaluated for impairment	$	131		$	1,561		$	308		$	4,217	$	45		$	537	$	402		$	7,201
Loans
June 30, 2022
Individually evaluated for impairment	$	320		$	159		$	7		$	149	$	—		$	2,052				$	2,687
Collectively evaluated for impairment		58,743			204,149			38,359			555,787		17,950			188,257					1,063,245
Acquired with deteriorated credit quality		—			4,549			10			9,227		—			1,671					15,457
Ending balance	$	59,063		$	208,857		$	38,376		$	565,163	$	17,950		$	191,980				$	1,081,389

			Commercial
(Dollars in thousands)			and						Commercial			Construction			Residential
	Agricultural		Industrial			Consumer			Real Estate			Real Estate			Real Estate			Unallocated		Total
Allowance for Loan Losses Three Months Ended June 30, 2021
Beginning balance	$	342	$	1,599		$	247		$	4,345		$	74		$	1,024		$	109	$	7,740
Charge-offs		-		(24	)		(76	)		-			-			-			-		(100	)
Recoveries		-		64			35			42			-			3			-		144
Provision		32		(116	)		37			(10	)		-			(167	)		390		166
Ending balance	$	374	$	1,523		$	243		$	4,377		$	74		$	860		$	499	$	7,950
Allowance for Loan Losses Six Months Ended June 30, 2021
Beginning balance	$	257	$	1,327		$	317		$	4,178		$	97		$	1,300		$	117	$	7,593
Charge-offs		—		(98	)		(147	)		(48	)		—			-			—		(293	)
Recoveries		—		73			113			43			—			5			—		234
Provision		117		221			(40	)		204			(23	)		(445	)		382		416
Ending balance	$	374	$	1,523		$	243		$	4,377		$	74		$	860		$	499	$	7,950
Individually evaluated for impairment	$	138	$	20		$	-		$	56		$	—		$	148		$	—	$	362
Collectively evaluated for impairment	$	236	$	1,503		$	243		$	4,321		$	74		$	712		$	499	$	7,588
Loans
June 30, 2021
Individually evaluated for impairment	$	3,167	$	184		$	-		$	1,140		$	—		$	2,333				$	6,824
Collectively evaluated for impairment		43,400		259,034			33,354			461,941			15,440			165,318					978,487
Acquired with deteriorated credit quality		—		5,814			16			10,906			—			2,540					19,276
Ending balance	$	46,567	$	265,032		$	33,370		$	473,987		$	15,440		$	170,191				$	1,004,587

			Commercial
(Dollars in thousands)			and				Commercial		Construction		Residential
	Agricultural		Industrial		Consumer		Real Estate		Real Estate		Real Estate		Unallocated		Total
Allowance for Loan Losses
December 31, 2021
Individually evaluated for impairment	$	251	$	95	$	2	$	9	$	-	$	146	$	-	$	503
Collectively evaluated for impairment	$	197	$	1,359	$	288	$	3,696	$	110	$	525	$	1,010	$	7,185
Loans
December 31, 2021
Individually evaluated for impairment	$	2,616	$	339	$	14	$	273	$	-	$	2,191			$	5,433
Collectively evaluated for impairment		62,203		197,656		35,148		515,528		19,066		164,647				994,248
Acquired with deteriorated credit quality		-		5,029		12		10,083		-		2,043				17,167
Ending balance	$	64,819	$	203,024	$	35,174	$	525,884	$	19,066	$	168,881			$	1,016,848

The process to monitor the credit quality of ChoiceOne’s loan portfolio includes tracking (1) the risk ratings of business loans, (2) the level of classified business loans, and (3) 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.

Information regarding ChoiceOne Bank's credit exposure was as follows:

Corporate Credit Exposure - Credit Risk Profile By Creditworthiness Category

(Dollars in thousands)	Agricultural				Commercial and Industrial				Commercial Real Estate
	June 30,		December 31,		June 30,		December 31,		June 30,		December 31,
	2022		2021		2022		2021		2022		2021
Pass	$	58,429	$	61,864	$	206,399	$	201,202	$	559,653	$	519,537
Special Mention		313		339		1,342		300		739		778
Substandard		321		2,616		1,116		1,266		4,771		5,569
Doubtful		-		-		-		256		-		-
	$	59,063	$	64,819	$	208,857	$	203,024	$	565,163	$	525,884

Consumer Credit Exposure - Credit Risk Profile Based On Payment Activity

(Dollars in thousands)	Consumer				Construction Real Estate				Residential Real Estate
	June 30,		December 31,		June 30,		December 31,		June 30,		December 31,
	2022		2021		2022		2021		2022		2021
Performing	$	38,368	$	35,174	$	17,950	$	19,066	$	191,152	$	168,031
Nonperforming		-		-		-		-		-		-
Nonaccrual		8		-		-		-		828		850
	$	38,376	$	35,174	$	17,950	$	19,066	$	191,980	$	168,881

The following table provides information on loans that were considered troubled debt restructurings ("TDRs") that were modified during the three and six months ended June 30, 2022 and June 30, 2021.

	Three Months Ended June 30, 2022						Six Months Ended June 30, 2022
			Pre-		Post-				Pre-		Post-
			Modification		Modification				Modification		Modification
			Outstanding		Outstanding				Outstanding		Outstanding
(Dollars in thousands)	Number of		Recorded		Recorded		Number of		Recorded		Recorded
	Loans		Investment		Investment		Loans		Investment		Investment
Agricultural		-	$	-	$	-		1	$	258	$	258
Commercial and industrial		1		19		19		1		19		19
Total		1	$	19	$	19		2	$	277	$	277

	Three Months Ended June 30, 2021						Six Months Ended June 30, 2021
			Pre-		Post-				Pre-		Post-
			Modification		Modification				Modification		Modification
			Outstanding		Outstanding				Outstanding		Outstanding
(Dollars in thousands)	Number of		Recorded		Recorded		Number of		Recorded		Recorded
	Loans		Investment		Investment		Loans		Investment		Investment
Agricultural		-	$	-	$	-		6	$	2,320	$	2,320
Commercial Real Estate		-		-		-		2		1,210		1,210
Total		-	$	-	$	-		8	$	3,530	$	3,530

There were no TDRs as of June 30, 2022 where the borrower was past due with respect to principal and/or interest for 30 days or more during the three and six months ended June 30, 2022, which loans had been modified and classified as TDRs during the year prior to the default.  The following schedule provides information on TDRs as of June 30, 2021 where the borrower was past due with respect to principal and/or interest for 30 days or more during the three and six months ended June 30, 2021, which loans had been modified and classified as TDRs during the year prior to the default.

	Three Months Ended				Six Months Ended
	June 30, 2021				June 30, 2021
(Dollars in thousands)	Number		Recorded		Number		Recorded
	of Loans		Investment		of Loans		Investment
Commercial and industrial		1	$	52		1	$	52
Commercial Real Estate		1		184		1		184
Total		2	$	236		2	$	236

Impaired loans by loan category follow:

			Unpaid
(Dollars in thousands)	Recorded		Principal		Related
	Investment		Balance		Allowance
June 30, 2022
With no related allowance recorded
Agricultural	$	314	$	428	$	-
Commercial and industrial		-		-		-
Consumer		-		-		-
Construction real estate		-		-		-
Commercial real estate		-		-		-
Residential real estate		439		469		-
Subtotal		753		897		-
With an allowance recorded
Agricultural		6		7		1
Commercial and industrial		159		190		52
Consumer		7		8		1
Construction real estate		149		149		-
Commercial real estate		-		-		7
Residential real estate		1,613		1,644		154
Subtotal		1,934		1,998		215
Total
Agricultural		320		435		1
Commercial and industrial		159		190		52
Consumer		7		8		1
Construction real estate		149		149		-
Commercial real estate		-		-		7
Residential real estate		2,052		2,113		154
Total	$	2,687	$	2,895	$	215

			Unpaid
(Dollars in thousands)	Recorded		Principal		Related
	Investment		Balance		Allowance
December 31, 2021
With no related allowance recorded
Agricultural	$	314	$	428	$	-
Commercial and industrial		-		-		-
Consumer		-		-		-
Construction real estate		-		-		-
Commercial real estate		94		94		-
Residential real estate		164		172		-
Subtotal		572		694		-
With an allowance recorded
Agricultural		2,302		2,302		251
Commercial and industrial		339		363		95
Consumer		14		15		2
Construction real estate		-		-		-
Commercial real estate		179		179		9
Residential real estate		2,027		2,084		146
Subtotal		4,861		4,943		503
Total
Agricultural		2,616		2,730		251
Commercial and industrial		339		363		95
Consumer		14		15		2
Construction real estate		-		-		-
Commercial real estate		273		273		9
Residential real estate		2,191		2,256		146
Total	$	5,433	$	5,637	$	503

The following schedule provides information regarding average balances of impaired loans and interest recognized on impaired loans for the three and six months ended June 30, 2022 and June 30, 2021:

	Average		Interest
(Dollars in thousands)	Recorded		Income
	Investment		Recognized
Three Months Ended June 30, 2022
With no related allowance recorded
Agricultural	$	314	$	-
Commercial and industrial		46		-
Consumer		-		-
Construction real estate		-		-
Commercial real estate		-		-
Residential real estate		220		-
Subtotal		580		-
With an allowance recorded
Agricultural		1,117		-
Commercial and industrial		211		1
Consumer		20		-
Construction real estate		-		-
Commercial real estate		153		2
Residential real estate		1,733		12
Subtotal		3,234		15
Total
Agricultural		1,431		-
Commercial and industrial		257		1
Consumer		20		-
Construction real estate		-		-
Commercial real estate		153		2
Residential real estate		1,953		12
Total	$	3,814	$	15

	Average		Interest
(Dollars in thousands)	Recorded		Income
	Investment		Recognized
Three Months Ended June 30, 2021
With no related allowance recorded
Agricultural	$	778	$	24
Commercial and industrial		993		-
Consumer		-		-
Construction real estate		27		-
Commercial real estate		1,749		13
Residential real estate		267		-
Subtotal		3,814		37
With an allowance recorded
Agricultural		1,451		16
Commercial and industrial		165		-
Consumer		3		-
Construction real estate		-		-
Commercial real estate		642		3
Residential real estate		2,280		15
Subtotal		4,541		34
Total
Agricultural		2,229		40
Commercial and industrial		1,158		-
Consumer		3		-
Construction real estate		27		-
Commercial real estate		2,391		16
Residential real estate		2,547		15
Total	$	8,355	$	71

	Average		Interest
(Dollars in thousands)	Recorded		Income
	Investment		Recognized
Six Months Ended June 30, 2022
With no related allowance recorded
Agricultural	$	314	$	-
Commercial and industrial		31		-
Consumer		-		-
Construction real estate		-		-
Commercial real estate		31		-
Residential real estate		201		-
Subtotal		577		-
With an allowance recorded
Agricultural		1,512		-
Commercial and industrial		254		2
Consumer		18		-
Construction real estate		-		-
Commercial real estate		162		5
Residential real estate		1,831		29
Subtotal		3,777		36
Total
Agricultural		1,826		-
Commercial and industrial		285		2
Consumer		18		-
Construction real estate		-		-
Commercial real estate		193		5
Residential real estate		2,032		29
Total	$	4,354	$	36

	Average		Interest
(Dollars in thousands)	Recorded		Income
	Investment		Recognized
Six Months Ended June 30, 2021
With no related allowance recorded
Agricultural	$	993	$	52
Commercial and industrial		731		-
Consumer		-		-
Construction real estate		-		-
Commercial real estate		1,698		32
Residential real estate		320		-
Subtotal		3,742		84
With an allowance recorded
Agricultural		2,177		35
Commercial and industrial		174		1
Consumer		-		-
Construction real estate		-		-
Commercial real estate		372		6
Residential real estate		2,141		33
Subtotal		4,864		75
Total
Agricultural		3,170		87
Commercial and industrial		905		1
Consumer		-		-
Construction real estate		-		-
Commercial real estate		2,070		38
Residential real estate		2,461		33
Total	$	8,606	$	159

An aging analysis of loans by loan category 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
June 30, 2022
Agricultural	$	-	$	-	$	-	$	-	$	59,063	$	59,063	$	-
Commercial and industrial		142		-		93		235		208,622		208,857		-
Consumer		-		-		-		-		38,376		38,376		-
Commercial real estate		-		-		-		-		565,163		565,163		-
Construction real estate		-		-		-		-		17,950		17,950		-
Residential real estate		29		197		580		806		191,174		191,980		-
	$	171	$	197	$	673	$	1,041	$	1,080,348	$	1,081,389	$	-
December 31, 2021
Agricultural	$	-	$	-	$	-	$	-	$	64,819	$	64,819	$	-
Commercial and industrial		21		-		88		109		202,915		203,024		-
Consumer		70		15		-		85		35,089		35,174		-
Commercial real estate		422		13		279		714		525,170		525,884		-
Construction real estate		1,149		1,235		-		2,384		16,682		19,066		-
Residential real estate		1,489		306		454		2,249		166,632		168,881		-
	$	3,151	$	1,569	$	821	$	5,541	$	1,011,307	$	1,016,848	$	-

(1) Includes nonaccrual loans.

Nonaccrual loans by loan category follow:

(Dollars in thousands)	June 30,		December 31,
	2022		2021
Agricultural	$	314	$	313
Commercial and industrial		92		285
Consumer		8		-
Commercial real estate		-		279
Residential real estate		828		850
	$	1,242	$	1,727

The table below details the outstanding balances of the County Bank Corp. acquired loan portfolio and the acquisition fair value adjustments at acquisition date of October 1, 2019 (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 the County Bank Corp. acquired loan portfolio for the years ended December 31, 2019, December 31, 2020, and December 31, 2021 and the six months ended June 30, 2022 (dollars in thousands):

(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		1,150			-			1,150
Accretion January 1, 2022 through June 30, 2022		(222	)		34			(188	)
Balance, June 30, 2022	$	1,216		$	1,210		$	2,426

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 of July 1, 2020 (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 loan portfolio for the years ended December 31, 2020 and  December 31, 2021 and the six months ended June 30, 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		874			-			874
Accretion January 1, 2022 through June 30, 2022		(578	)		(197	)		(775	)
Balance, June 30, 2022	$	818		$	-		$	818

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Note 4 - Earnings Per Share

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Earnings Per Share [Text Block]

NOTE 4 – EARNINGS PER SHARE

Earnings per share are based on the weighted average number of shares outstanding during the period. A computation of basic earnings per share and diluted earnings per share follows:

	Three Months Ended				Six Months Ended
(Dollars in thousands, except share data)	June 30,				June 30,
	2022		2021		2022		2021
Basic
Net income	$	5,615	$	5,043	$	11,143	$	11,281
Weighted average common shares outstanding		7,499,497		7,769,485		7,497,492		7,785,098
Basic earnings per common shares	$	0.75	$	0.65	$	1.49	$	1.45
Diluted
Net income	$	5,615	$	5,043	$	11,143	$	11,281
Weighted average common shares outstanding		7,499,497		7,769,485		7,497,492		7,785,098
Plus dilutive stock options and restricted stock units		11,027		9,600		13,766		10,577
Weighted average common shares outstanding and potentially dilutive shares		7,510,524		7,779,085		7,511,258		7,795,675
Diluted earnings per common share	$	0.75	$	0.65	$	1.49	$	1.45

There were 15,000 stock options that were considered anti-dilutive to earnings per share for the three and six months ended June 30, 2022.  There were 15,000 stock options that were considered anti-dilutive to earnings per share for the three months ended June 30, 2021 and 12,000 stock options that were considered anti-dilutive to earnings per share for the six months ended June 30, 2021. There were 6,396 performance awards and 27,592 restricted stock units that were considered anti-dilutive for the three months ended June 30, 2022. There were no performance awards or restricted stock units that were considered anti-dilutive for the six months ended June 30, 2022.  There were 18,985 restricted stock units that were considered anti-dilutive for the three months ended June 30, 2021. There were no restricted stock units that were considered anti-dilutive for the six months ended June 30, 2021.  There were no performance awards issued prior to 2022.

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Note 5 - Financial Instruments

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Financial Instruments Disclosure [Text Block]

Note 5 – 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)
June 30, 2022
Assets
Cash and cash equivalents	$	40,296	$	40,296	$	40,296	$	-	$	-
Equity securities at fair value		8,288		8,288		6,462		-		1,826
Securities available for sale		566,142		566,142		-		566,142		-
Securities held to maturity		429,675		372,667		-		357,723		14,944
Federal Home Loan Bank and Federal
Reserve Bank stock		8,557		8,557		-		8,557		-
Loans held for sale		10,628		10,947		-		10,947		-
Loans to other financial institutions		37,422		37,422		-		37,422		-
Loans, net		1,073,973		1,037,946		-		-		1,037,946
Accrued interest receivable		8,239		8,239		-		8,239		-
Interest rate lock commitments		140		140		-		140		-
Mortgage loan servicing rights		4,679		5,932		-		5,932		-
Interest rate derivative contracts		14,209		14,209		-		14,209		-
Liabilities
Noninterest-bearing deposits		578,927		578,927		-		578,927		-
Interest-bearing deposits		1,559,577		1,556,523		-		1,556,523		-
Borrowings		7,000		6,995		-		6,995		-
Subordinated debentures		35,140		30,785		-		30,785		-
Accrued interest payable		418		418		-		418		-
Interest rate derivative contracts		2,393		2,393		-		2,393		-
December 31, 2021
Assets
Cash and cash equivalents	$	31,887	$	31,887	$	31,887	$	-	$	-
Equity securities at fair value		8,492		8,492		6,724		-		1,768
Securities available for sale		1,098,885		1,098,885		-		1,077,835		21,050
Federal Home Loan Bank and Federal
Reserve Bank stock		8,888		8,888		-		8,888		-
Loans held for sale		9,351		9,632		-		9,632		-
Loans to other financial institutions		42,632		42,632		-		42,632		-
Loans, net		1,009,160		999,393		-		-		999,393
Accrued interest receivable		8,211		8,211		-		8,211		-
Interest rate lock commitments		172		172		-		172		-
Mortgage loan servicing rights		4,666		5,522		-		5,522		-
Liabilities
Noninterest-bearing deposits		560,931		560,931		-		560,931		-
Interest-bearing deposits		1,491,363		1,491,135		-		1,491,135		-
Borrowings		50,000		50,000		-		50,000		-
Subordinated debentures		35,017		33,414		-		33,414		-
Accrued interest payable		441		441		-		441		-

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Note 6 - Fair Value Measurements

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Fair Value Disclosures [Text Block]

NOTE 6 – FAIR VALUE MEASUREMENTS

The following tables present information about assets and liabilities measured at fair value on a recurring basis and the valuation techniques used 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 ChoiceOne Bank 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. ChoiceOne Bank’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 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		Balance
(Dollars in thousands)	Assets		Inputs		Inputs		at Date
	(Level 1)		(Level 2)		(Level 3)		Indicated
Equity Securities Held at Fair Value - June 30, 2022
Equity securities	$	6,462	$	-	$	1,826	$	8,288
Investment Securities, Available for Sale - June 30, 2022
U. S. Treasury notes and bonds	$	-	$	83,643	$	-	$	83,643
State and municipal		-		256,661		-		256,661
Mortgage-backed		-		211,128		-		211,128
Corporate		-		1,238		-		1,238
Asset-backed securities		-		13,472		-		13,472
Total	$	-	$	566,142	$	-	$	566,142
Derivative Instruments - June 30, 2022
Interest rate derivative contracts - assets	$	-	$	14,209	$	-	$	14,209
Interest rate derivative contracts - liabilities	$	-	$	2,393	$	-	$	2,393
Equity Securities Held at Fair Value - December 31, 2021
Equity securities	$	6,724	$	-	$	1,768	$	8,492
Investment Securities, Available for Sale - December 31, 2021
U. S. Government and federal agency	$	-	$	2,008	$	-	$	2,008
U. S. Treasury notes and bonds		-		91,979		-		91,979
State and municipal		-		514,797		20,050		534,847
Mortgage-backed		-		433,115		-		433,115
Corporate		-		19,642		1,000		20,642
Asset-backed securities		-		16,294		-		16,294
Total	$	-	$	1,077,835	$	21,050	$	1,098,885

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

	Six Months Ended
(Dollars in thousands)	June 30,
	2022			2021
Equity Securities Held at Fair Value
Balance, January 1	$	1,768		$	1,485
Total realized and unrealized gains included in noninterest income		(5	)		(39	)
Net purchases, sales, calls, and maturities		63			220
Net transfers into Level 3		-			-
Balance, June 30	$	1,826		$	1,666
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 June 30	$	(5	)	$	(39	)
Investment Securities, Available for Sale
Balance, January 1	$	21,050		$	11,423
Total unrealized gains included in other comprehensive income		-			(264	)
Net purchases, sales, calls, and maturities		-			1,966
Net transfers into Level 3		-			-
Transfer to held to maturity		(21,050	)		-
Balance, June 30	$	-		$	13,125
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 June 30	$	-		$	(250	)

Both observable and unobservable inputs may be used to determine the fair value of positions classified as Level 3 investment securities 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.

Securities categorized as Level 3 assets as of June 30, 2022 primarily consist of common and preferred equity securities of community banks. As of December 31, 2021, bonds issued by local municipalities and corporate issuers were classified as available for sale and were included as Level 3 securities.  ChoiceOne estimates the fair value of these bonds and equity securities based on the present value of expected future cash flows using management’s best estimate of key assumptions, including forecasted interest yield and payment rates, credit quality and a discount rate commensurate with the current market and other risks involved.

ChoiceOne 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)
Impaired Loans
June 30, 2022	$	2,687	$	-	$	-	$	2,687
December 31, 2021	$	5,433	$	-	$	-	$	5,433
Other Real Estate
June 30, 2022	$	-	$	-	$	-	$	-
December 31, 2021	$	194	$	-	$	-	$	194
Mortgage Loan Servicing Rights
June 30, 2022	$	4,679	$	-	$	4,679	$	-
December 31, 2021	$	4,666	$	-	$	4,666	$	-

Impaired loans categorized as Level 3 assets consist of non-homogeneous loans that are considered impaired.  ChoiceOne estimates the fair value of the loans based on the present value of expected future cash flows using management’s 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 loan losses and write-downs of other real estate that were posted to a valuation account.

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Note 7 - Revenue From Contracts With Customers

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

NOTE 7 – REVENUE FROM CONTRACTS WITH CUSTOMERS

ChoiceOne has a variety of sources of revenue, which include interest and fees from customers as well as revenue from non-customers.  ASC Topic 606, Revenue from Contracts With Customers, covers certain sources of revenue that are classified within noninterest income in the Consolidated Statements of Income.  Sources of revenue that are included in the scope of ASC Topic 606 include service charges and fees on deposit accounts, interchange income, investment asset management income and transaction-based revenue, and other charges and fees for customer services.

Service Charges and Fees on Deposit Accounts

Revenue includes charges and fees to provide account maintenance, overdraft services, wire transfers, funds transfer, and other deposit-related services.  Account maintenance fees such as monthly service charges are recognized over the period of time that the service is provided.  Transaction fees such as wire transfer charges are recognized when the service is provided to the customer.

Interchange Income

Revenue includes debit card interchange and network revenues.  This revenue is earned on debit card transactions that are conducted through payment networks such as MasterCard. The revenue is recorded as services are delivered and is presented net of interchange expenses.

Investment Commission Income

Revenue includes fees from the investment management advisory services and revenue is recognized when services are rendered.  Revenue also includes commissions received from the placement of brokerage transactions for purchase or sale of stocks or other investments. Commission income is recognized when the transaction has been completed.

Trust Fee Income

Revenue includes fees from the management of trust assets and from other related advisory services. Revenue is recognized when services are rendered.

Following is noninterest income separated by revenue within the scope of ASC 606 and revenue within the scope of other GAAP topics:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(Dollars in thousands)	2022		2021		2022		2021
Service charges and fees on deposit accounts	$	1,036	$	822	$	2,067	$	1,608
Interchange income		1,317		1,312		2,475		2,446
Investment commission income		233		198		438		471
Trust fee income		176		253		354		425
Other charges and fees for customer services		125		138		274		304
Noninterest income from contracts with customers within the scope of ASC 606		2,887		2,723		5,608		5,254
Noninterest income within the scope of other GAAP topics		543		2,009		1,668		5,078
Total noninterest income	$	3,430	$	4,732	$	7,276	$	10,332

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Note 8 - Derivative and Hedging Activities

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Derivative Instruments and Hedging Activities Disclosure [Text Block]

NOTE 8 – DERIVATIVE 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 currently uses interest rate swaps and interest rate caps to manage its exposure to certain fixed and variable rate assets and variable rate liabilities.

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 first six months 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 will pay a coupon rate equal to SOFR while receiving a fixed coupon rate of 2.41%.

In the first six months 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.

Interest rate caps

ChoiceOne also uses interest rate caps to provide stability to net interest income and to manage its exposure to interest rate movements. Interest rate caps designated as hedges involve the payment of a fixed premium by ChoiceOne who will then receive payment equivalent to the spread between the current rate and the strike rate until the conclusion of the term from the counterparty.

In the first six months of 2022, ChoiceOne entered into four forward starting interest rate cap agreements with a total notional amount of $200.0 million (“SOFR Cap Agreements”). Three of the SOFR Cap Agreements with a total notional amount of $100.0 million are designated as fair value hedges and hedge against changes in the fair value of certain fixed rate tax-exempt municipal bonds. ChoiceOne utilizes the interest rate caps as hedges against adverse changes in interest rates on the designated securities attributable to fluctuations in the SOFR rate above 2.68%, as applicable. An increase in the benchmark interest rate hedged reduces the fair value of these assets. The remaining SOFR Cap Agreement with a notional amount of $100.0 million is designated as a cash flow hedge and hedges against the risk of variability in cash flows attributable to fluctuations in the SOFR rate above 2.68% for forecasted payments on future deposits or borrowings indexed to the SOFR Rate.  All of the SOFR Cap Agreements are two year forward starting with an eight year term set to expire in 2032.

	June 30, 2022			December 31, 2021
(Dollars in thousands)	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments
Interest rate contracts	Other Assets	$	14,209	Other Assets	$	-
Interest rate contracts	Other Liabilities	$	2,393	Other Liabilities	$	-

	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
	Three months ended June 30, 2022						Six months ended June 30, 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	$	422		$	(155	)	$	422		$	(155	)
Gain or (loss) on fair value hedging relationships:
Interest rate contracts:
Hedged items	$	(71	)	$	-		$	-		$	-
Derivatives designated as hedging instruments	$	71		$	-		$	-		$	-
Amount excluded from effectiveness testing recognized in earnings based on amortization approach	$	(153	)	$	-		$	(153	)	$	-
Gain or (loss) on cash flow hedging relationships:
Interest rate contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive income into income	$	-		$	-		$	-		$	-
Amount excluded from effectiveness testing recognized in earnings based on amortization approach	$	-		$	(155	)	$	-		$	(155	)

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Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

Consolidation, Policy [Policy Text Block]

Principles of Consolidation 

The consolidated financial statements include ChoiceOne Financial Services, Inc. ("ChoiceOne"), its wholly-owned subsidiary, ChoiceOne Bank, and ChoiceOne Bank’s wholly-owned subsidiary, ChoiceOne Insurance Agencies, Inc. 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.

The accompanying unaudited consolidated financial statements and notes thereto reflect all adjustments ordinary in nature which are, in the opinion of management, necessary for a fair presentation of such financial statements.  Operating results for the six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

The accompanying consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes thereto included in ChoiceOne’s Annual Report on Form 10-K for the year ended December 31, 2021.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

To prepare financial statements in conformity with GAAP, 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, including changes in interest rates and other general economic, business and political conditions, including the effects of the COVID-19 pandemic, and its potential effects on the economic environment, our customers and our operations, as well as any changes to federal, state and local government laws, regulations and orders in connection with the pandemic. Actual results may differ from these estimates. Estimates associated with the allowance for loan losses are particularly susceptible to change.

Marketable Securities, Policy [Policy Text Block]

Investment Securities

Investment securities for which ChoiceOne has the intent and ability to hold to maturity are classified as held to maturity and are carried at amortized cost.  Investment securities not classified as held to maturity are classified as available for sale and are reported at fair value with unrealized gains and losses, net of income taxes, as a separate component of other comprehensive income. ChoiceOne determines the appropriate classification of investment securities at the time of purchase and reassesses the classification at each reporting date.

Mortgage Banking Activity [Policy Text Block]

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. Loans to other financial institutions are excluded from Note 3. No loans to other financial institutions were impaired, nonaccrual, or past due greater than 30 days as of June 30, 2022.

Credit risk associated with the participating interest is measured as an allowance for loan losses when necessary. Losses are charged off against the allowance when incurred and recoveries of loan charge-offs are recorded when received. At least quarterly, ChoiceOne Bank reviews the portfolios of participating interests for potential losses including any participating interest that is outstanding over 90 days (even if the advance and participating interest is current).

Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block]

Goodwill

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.

Goodwill and Intangible Assets, Intangible Assets, Policy [Policy Text Block]

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.

Stockholders' Equity, Policy [Policy Text Block]

Stock Transactions

A total of 7,407 shares of common stock were issued to ChoiceOne’s Board of Directors for a cash price of $192,000 under the terms of the Directors’ Stock Purchase Plan in the first half of 2022. A total of 4,257 shares for a cash price of $80,000 were issued under the Employee Stock Purchase Plan in the first six months of 2022.  ChoiceOne repurchased 25,899 shares for $682,000, or a weighted average all-in cost per share of $26.35, during the first quarter of 2022. This was part of the common stock repurchase program announced in April 2021 which authorized repurchases of up to 390,114 shares, representing 5% of the total outstanding shares of common stock as of the date the program was adopted.  No shares were repurchased under this program in the second quarter of 2022. 

Loans and Leases Receivable, Allowance for Loan Losses Policy [Policy Text Block]

Allowance for Loan Losses

The allowance for loan losses is a 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 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-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.  The specific component relates to loans that are individually classified as impaired.

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 ChoiceOne 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, ChoiceOne Bank must determine whether (a) the borrower is experiencing financial difficulties and (b) ChoiceOne 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, at the net 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.

Reclassification, Comparability Adjustment [Policy Text Block]

Reclassifications 

Certain amounts presented in prior periods have been reclassified to conform to the current presentation.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

The Financial Accounting Standards Board (FASB) issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU provides financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date by replacing the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The new guidance attempts to reflect an entity’s current estimate of all expected credit losses and broadens the information that an entity must consider in developing its expected credit loss estimate for assets measured either collectively or individually to include forecasted information, as well as past events and current conditions. There is no specified method for measuring expected credit losses, and an entity may apply methods that reasonably reflect its expectations of the credit loss estimate. Although an entity may still use its current systems and methods for recording the allowance for credit losses, under the new rules, the inputs used to record the allowance for credit losses generally will need to change to appropriately reflect an estimate of all expected credit losses and the use of reasonable and supportable forecasts. Additionally, credit losses on available-for-sale debt securities will have to be presented as an allowance rather than as a write-down. This ASU is effective for fiscal years beginning after December 15, 2022, and for interim periods within those years for companies considered smaller reporting companies with the Securities and Exchange Commission. ChoiceOne was classified as a smaller reporting company as of the measurement date. Management is currently evaluating the impact of this new ASU on its consolidated financial statements which may be significant.  Management has selected representative peer groups for each loan type and determined economic factors which have a strong correlation with our historical loss data. 

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Note 2 - Securities (Tables)

6 Months Ended

Jun. 30, 2022

Notes Tables

Debt Securities, Trading, and Equity Securities, FV-NI [Table Text Block]

	June 30, 2022
			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Equity securities	$	8,432	$	405	$	(549	)	$	8,288

	December 31, 2021
			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Equity securities	$	7,953	$	665	$	(126	)	$	8,492

Debt Securities, Available-for-Sale and Held-to-Maturity [Table Text Block]

	June 30, 2022
			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
Available for Sale:	Cost		Gains		Losses			Value
U.S. Treasury notes and bonds	$	93,040	$	-	$	(9,397	)	$	83,643
State and municipal		300,824		34		(44,197	)		256,661
Mortgage-backed		230,842		5		(19,719	)		211,128
Corporate		1,256		-		(18	)		1,238
Asset-backed securities		14,122		-		(650	)		13,472
Total	$	640,084	$	39	$	(73,981	)	$	566,142
Held to Maturity:
U.S. Government and federal agency	$	2,963	$	-	$	(283	)	$	2,680
State and municipal		203,267		-		(32,638	)		170,629
Mortgage-backed		202,595		-		(23,007	)		179,588
Corporate		19,593		-		(1,013	)		18,580
Asset-backed securities		1,257		-		(67	)		1,190
Total	$	429,675	$	-	$	(57,008	)	$	372,667

Debt Securities, Available-for-Sale [Table Text Block]

	December 31, 2021
			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
Available for Sale:	Cost		Gains		Losses			Value
U.S. Government and federal agency	$	2,001	$	7	$	-		$	2,008
U.S. Treasury notes and bonds		93,267		23		(1,311	)		91,979
State and municipal		528,252		10,704		(4,109	)		534,847
Mortgage-backed		441,383		781		(9,049	)		433,115
Corporate		20,856		19		(233	)		20,642
Asset-backed securities		16,387		-		(93	)		16,294
Total	$	1,102,146	$	11,534	$	(14,795	)	$	1,098,885

Investments Classified by Contractual Maturity Date [Table Text Block]

	Available for Sale Securities maturing within:
									Fair Value
	Less than		1 Year -		5 Years -		More than		at June 30,
(Dollars in thousands)	1 Year		5 Years		10 Years		10 Years		2022
U.S. Treasury notes and bonds	$	2,000	$	-	$	81,643	$	-	$	83,643
State and municipal		16,426		8,873		75,501		155,861		256,661
Corporate		500		505		233		-		1,238
Asset-backed securities		-		9,741		3,731		-		13,472
Total debt securities		18,926		19,119		161,108		155,861		355,014
Mortgage-backed securities		18,793		101,454		90,244		637		211,128
Total Available for Sale	$	37,719	$	120,573	$	251,352	$	156,498	$	566,142

	Held to Maturity Securities maturing within:
									Amortized Cost
	Less than		1 Year -		5 Years -		More than		at June 30,
(Dollars in thousands)	1 Year		5 Years		10 Years		10 Years		2022
U.S. Government and federal agency	$	-	$	-	$	2,963	$	-	$	2,963
State and municipal		2,724		5,112		89,248		106,183		203,267
Corporate		-		250		18,343		1,000		19,593
Asset-backed securities		-		1,257		-		-		1,257
Total debt securities		2,724		6,619		110,554		107,183		227,080
Mortgage-backed securities		6,525		45,672		150,398		-		202,595
Total Held to Maturity	$	9,249	$	52,291	$	260,952	$	107,183	$	429,675

Gain (Loss) on Securities [Table Text Block]

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2022			2021			2022			2021
Net gains and (losses) recognized during the period	$	(327	)	$	(119	)	$	(683	)	$	489
Less: Net gains and (losses) recognized during the period on securities sold		—			—			—			—
Unrealized gains and (losses) recognized during the reporting period on securities still held at the reporting date	$	(327	)	$	(119	)	$	(683	)	$	489

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Note 3 - Loans and Allowance for Loan Losses (Tables)

6 Months Ended

Jun. 30, 2022

Notes Tables

Financing Receivable, Allowance for Credit Loss [Table Text Block]

				Commercial
(Dollars in thousands)				and						Commercial		Construction			Residential
	Agricultural			Industrial			Consumer			Real Estate		Real Estate			Real Estate		Unallocated			Total
Allowance for Loan Losses Three Months Ended June 30, 2022
Beginning balance	$	387		$	1,752		$	304		$	3,690	$	37		$	589	$	842		$	7,601
Charge-offs		—			(100	)		(144	)		-		—			-		—			(244	)
Recoveries		—			2			55			1		—			1		—			59
Provision		(255	)		(41	)		94			533		8			101		(440	)		-
Ending balance	$	132		$	1,613		$	309		$	4,224	$	45		$	691	$	402		$	7,416
Allowance for Loan Losses Six Months Ended June 30, 2022
Beginning balance	$	448		$	1,454		$	290		$	3,705	$	110		$	671	$	1,010		$	7,688
Charge-offs					(131	)		(255	)		—		—			—		—			(386	)
Recoveries					4			106			2		—			2		—			114
Provision		(316	)		286			168			517		(65	)		18		(608	)		-
Ending balance	$	132		$	1,613		$	309		$	4,224	$	45		$	691	$	402		$	7,416
Individually evaluated for impairment	$	1		$	52		$	1		$	7	$	—		$	154	$	—		$	215
Collectively evaluated for impairment	$	131		$	1,561		$	308		$	4,217	$	45		$	537	$	402		$	7,201
Loans
June 30, 2022
Individually evaluated for impairment	$	320		$	159		$	7		$	149	$	—		$	2,052				$	2,687
Collectively evaluated for impairment		58,743			204,149			38,359			555,787		17,950			188,257					1,063,245
Acquired with deteriorated credit quality		—			4,549			10			9,227		—			1,671					15,457
Ending balance	$	59,063		$	208,857		$	38,376		$	565,163	$	17,950		$	191,980				$	1,081,389

			Commercial
(Dollars in thousands)			and						Commercial			Construction			Residential
	Agricultural		Industrial			Consumer			Real Estate			Real Estate			Real Estate			Unallocated		Total
Allowance for Loan Losses Three Months Ended June 30, 2021
Beginning balance	$	342	$	1,599		$	247		$	4,345		$	74		$	1,024		$	109	$	7,740
Charge-offs		-		(24	)		(76	)		-			-			-			-		(100	)
Recoveries		-		64			35			42			-			3			-		144
Provision		32		(116	)		37			(10	)		-			(167	)		390		166
Ending balance	$	374	$	1,523		$	243		$	4,377		$	74		$	860		$	499	$	7,950
Allowance for Loan Losses Six Months Ended June 30, 2021
Beginning balance	$	257	$	1,327		$	317		$	4,178		$	97		$	1,300		$	117	$	7,593
Charge-offs		—		(98	)		(147	)		(48	)		—			-			—		(293	)
Recoveries		—		73			113			43			—			5			—		234
Provision		117		221			(40	)		204			(23	)		(445	)		382		416
Ending balance	$	374	$	1,523		$	243		$	4,377		$	74		$	860		$	499	$	7,950
Individually evaluated for impairment	$	138	$	20		$	-		$	56		$	—		$	148		$	—	$	362
Collectively evaluated for impairment	$	236	$	1,503		$	243		$	4,321		$	74		$	712		$	499	$	7,588
Loans
June 30, 2021
Individually evaluated for impairment	$	3,167	$	184		$	-		$	1,140		$	—		$	2,333				$	6,824
Collectively evaluated for impairment		43,400		259,034			33,354			461,941			15,440			165,318					978,487
Acquired with deteriorated credit quality		—		5,814			16			10,906			—			2,540					19,276
Ending balance	$	46,567	$	265,032		$	33,370		$	473,987		$	15,440		$	170,191				$	1,004,587

			Commercial
(Dollars in thousands)			and				Commercial		Construction		Residential
	Agricultural		Industrial		Consumer		Real Estate		Real Estate		Real Estate		Unallocated		Total
Allowance for Loan Losses
December 31, 2021
Individually evaluated for impairment	$	251	$	95	$	2	$	9	$	-	$	146	$	-	$	503
Collectively evaluated for impairment	$	197	$	1,359	$	288	$	3,696	$	110	$	525	$	1,010	$	7,185
Loans
December 31, 2021
Individually evaluated for impairment	$	2,616	$	339	$	14	$	273	$	-	$	2,191			$	5,433
Collectively evaluated for impairment		62,203		197,656		35,148		515,528		19,066		164,647				994,248
Acquired with deteriorated credit quality		-		5,029		12		10,083		-		2,043				17,167
Ending balance	$	64,819	$	203,024	$	35,174	$	525,884	$	19,066	$	168,881			$	1,016,848

Financing Receivable Credit Quality Indicators [Table Text Block]

(Dollars in thousands)	Agricultural				Commercial and Industrial				Commercial Real Estate
	June 30,		December 31,		June 30,		December 31,		June 30,		December 31,
	2022		2021		2022		2021		2022		2021
Pass	$	58,429	$	61,864	$	206,399	$	201,202	$	559,653	$	519,537
Special Mention		313		339		1,342		300		739		778
Substandard		321		2,616		1,116		1,266		4,771		5,569
Doubtful		-		-		-		256		-		-
	$	59,063	$	64,819	$	208,857	$	203,024	$	565,163	$	525,884

(Dollars in thousands)	Consumer				Construction Real Estate				Residential Real Estate
	June 30,		December 31,		June 30,		December 31,		June 30,		December 31,
	2022		2021		2022		2021		2022		2021
Performing	$	38,368	$	35,174	$	17,950	$	19,066	$	191,152	$	168,031
Nonperforming		-		-		-		-		-		-
Nonaccrual		8		-		-		-		828		850
	$	38,376	$	35,174	$	17,950	$	19,066	$	191,980	$	168,881

Financing Receivable, Troubled Debt Restructuring [Table Text Block]

	Three Months Ended June 30, 2022						Six Months Ended June 30, 2022
			Pre-		Post-				Pre-		Post-
			Modification		Modification				Modification		Modification
			Outstanding		Outstanding				Outstanding		Outstanding
(Dollars in thousands)	Number of		Recorded		Recorded		Number of		Recorded		Recorded
	Loans		Investment		Investment		Loans		Investment		Investment
Agricultural		-	$	-	$	-		1	$	258	$	258
Commercial and industrial		1		19		19		1		19		19
Total		1	$	19	$	19		2	$	277	$	277

	Three Months Ended June 30, 2021						Six Months Ended June 30, 2021
			Pre-		Post-				Pre-		Post-
			Modification		Modification				Modification		Modification
			Outstanding		Outstanding				Outstanding		Outstanding
(Dollars in thousands)	Number of		Recorded		Recorded		Number of		Recorded		Recorded
	Loans		Investment		Investment		Loans		Investment		Investment
Agricultural		-	$	-	$	-		6	$	2,320	$	2,320
Commercial Real Estate		-		-		-		2		1,210		1,210
Total		-	$	-	$	-		8	$	3,530	$	3,530

	Three Months Ended				Six Months Ended
	June 30, 2021				June 30, 2021
(Dollars in thousands)	Number		Recorded		Number		Recorded
	of Loans		Investment		of Loans		Investment
Commercial and industrial		1	$	52		1	$	52
Commercial Real Estate		1		184		1		184
Total		2	$	236		2	$	236

Impaired Financing Receivables [Table Text Block]

			Unpaid
(Dollars in thousands)	Recorded		Principal		Related
	Investment		Balance		Allowance
June 30, 2022
With no related allowance recorded
Agricultural	$	314	$	428	$	-
Commercial and industrial		-		-		-
Consumer		-		-		-
Construction real estate		-		-		-
Commercial real estate		-		-		-
Residential real estate		439		469		-
Subtotal		753		897		-
With an allowance recorded
Agricultural		6		7		1
Commercial and industrial		159		190		52
Consumer		7		8		1
Construction real estate		149		149		-
Commercial real estate		-		-		7
Residential real estate		1,613		1,644		154
Subtotal		1,934		1,998		215
Total
Agricultural		320		435		1
Commercial and industrial		159		190		52
Consumer		7		8		1
Construction real estate		149		149		-
Commercial real estate		-		-		7
Residential real estate		2,052		2,113		154
Total	$	2,687	$	2,895	$	215

			Unpaid
(Dollars in thousands)	Recorded		Principal		Related
	Investment		Balance		Allowance
December 31, 2021
With no related allowance recorded
Agricultural	$	314	$	428	$	-
Commercial and industrial		-		-		-
Consumer		-		-		-
Construction real estate		-		-		-
Commercial real estate		94		94		-
Residential real estate		164		172		-
Subtotal		572		694		-
With an allowance recorded
Agricultural		2,302		2,302		251
Commercial and industrial		339		363		95
Consumer		14		15		2
Construction real estate		-		-		-
Commercial real estate		179		179		9
Residential real estate		2,027		2,084		146
Subtotal		4,861		4,943		503
Total
Agricultural		2,616		2,730		251
Commercial and industrial		339		363		95
Consumer		14		15		2
Construction real estate		-		-		-
Commercial real estate		273		273		9
Residential real estate		2,191		2,256		146
Total	$	5,433	$	5,637	$	503

	Average		Interest
(Dollars in thousands)	Recorded		Income
	Investment		Recognized
Three Months Ended June 30, 2022
With no related allowance recorded
Agricultural	$	314	$	-
Commercial and industrial		46		-
Consumer		-		-
Construction real estate		-		-
Commercial real estate		-		-
Residential real estate		220		-
Subtotal		580		-
With an allowance recorded
Agricultural		1,117		-
Commercial and industrial		211		1
Consumer		20		-
Construction real estate		-		-
Commercial real estate		153		2
Residential real estate		1,733		12
Subtotal		3,234		15
Total
Agricultural		1,431		-
Commercial and industrial		257		1
Consumer		20		-
Construction real estate		-		-
Commercial real estate		153		2
Residential real estate		1,953		12
Total	$	3,814	$	15

	Average		Interest
(Dollars in thousands)	Recorded		Income
	Investment		Recognized
Three Months Ended June 30, 2021
With no related allowance recorded
Agricultural	$	778	$	24
Commercial and industrial		993		-
Consumer		-		-
Construction real estate		27		-
Commercial real estate		1,749		13
Residential real estate		267		-
Subtotal		3,814		37
With an allowance recorded
Agricultural		1,451		16
Commercial and industrial		165		-
Consumer		3		-
Construction real estate		-		-
Commercial real estate		642		3
Residential real estate		2,280		15
Subtotal		4,541		34
Total
Agricultural		2,229		40
Commercial and industrial		1,158		-
Consumer		3		-
Construction real estate		27		-
Commercial real estate		2,391		16
Residential real estate		2,547		15
Total	$	8,355	$	71

	Average		Interest
(Dollars in thousands)	Recorded		Income
	Investment		Recognized
Six Months Ended June 30, 2022
With no related allowance recorded
Agricultural	$	314	$	-
Commercial and industrial		31		-
Consumer		-		-
Construction real estate		-		-
Commercial real estate		31		-
Residential real estate		201		-
Subtotal		577		-
With an allowance recorded
Agricultural		1,512		-
Commercial and industrial		254		2
Consumer		18		-
Construction real estate		-		-
Commercial real estate		162		5
Residential real estate		1,831		29
Subtotal		3,777		36
Total
Agricultural		1,826		-
Commercial and industrial		285		2
Consumer		18		-
Construction real estate		-		-
Commercial real estate		193		5
Residential real estate		2,032		29
Total	$	4,354	$	36

	Average		Interest
(Dollars in thousands)	Recorded		Income
	Investment		Recognized
Six Months Ended June 30, 2021
With no related allowance recorded
Agricultural	$	993	$	52
Commercial and industrial		731		-
Consumer		-		-
Construction real estate		-		-
Commercial real estate		1,698		32
Residential real estate		320		-
Subtotal		3,742		84
With an allowance recorded
Agricultural		2,177		35
Commercial and industrial		174		1
Consumer		-		-
Construction real estate		-		-
Commercial real estate		372		6
Residential real estate		2,141		33
Subtotal		4,864		75
Total
Agricultural		3,170		87
Commercial and industrial		905		1
Consumer		-		-
Construction real estate		-		-
Commercial real estate		2,070		38
Residential real estate		2,461		33
Total	$	8,606	$	159

Financing Receivable, Past Due [Table Text Block]

					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
June 30, 2022
Agricultural	$	-	$	-	$	-	$	-	$	59,063	$	59,063	$	-
Commercial and industrial		142		-		93		235		208,622		208,857		-
Consumer		-		-		-		-		38,376		38,376		-
Commercial real estate		-		-		-		-		565,163		565,163		-
Construction real estate		-		-		-		-		17,950		17,950		-
Residential real estate		29		197		580		806		191,174		191,980		-
	$	171	$	197	$	673	$	1,041	$	1,080,348	$	1,081,389	$	-
December 31, 2021
Agricultural	$	-	$	-	$	-	$	-	$	64,819	$	64,819	$	-
Commercial and industrial		21		-		88		109		202,915		203,024		-
Consumer		70		15		-		85		35,089		35,174		-
Commercial real estate		422		13		279		714		525,170		525,884		-
Construction real estate		1,149		1,235		-		2,384		16,682		19,066		-
Residential real estate		1,489		306		454		2,249		166,632		168,881		-
	$	3,151	$	1,569	$	821	$	5,541	$	1,011,307	$	1,016,848	$	-

Financing Receivable, Nonaccrual [Table Text Block]

(Dollars in thousands)	June 30,		December 31,
	2022		2021
Agricultural	$	314	$	313
Commercial and industrial		92		285
Consumer		8		-
Commercial real estate		-		279
Residential real estate		828		850
	$	1,242	$	1,727

Business Acquisition, Pro Forma Information, Nonrecurring Adjustments [Table Text Block]

	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

(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		1,150			-			1,150
Accretion January 1, 2022 through June 30, 2022		(222	)		34			(188	)
Balance, June 30, 2022	$	1,216		$	1,210		$	2,426

	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

	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		874			-			874
Accretion January 1, 2022 through June 30, 2022		(578	)		(197	)		(775	)
Balance, June 30, 2022	$	818		$	-		$	818

XML

Note 4 - Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2022

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended				Six Months Ended
(Dollars in thousands, except share data)	June 30,				June 30,
	2022		2021		2022		2021
Basic
Net income	$	5,615	$	5,043	$	11,143	$	11,281
Weighted average common shares outstanding		7,499,497		7,769,485		7,497,492		7,785,098
Basic earnings per common shares	$	0.75	$	0.65	$	1.49	$	1.45
Diluted
Net income	$	5,615	$	5,043	$	11,143	$	11,281
Weighted average common shares outstanding		7,499,497		7,769,485		7,497,492		7,785,098
Plus dilutive stock options and restricted stock units		11,027		9,600		13,766		10,577
Weighted average common shares outstanding and potentially dilutive shares		7,510,524		7,779,085		7,511,258		7,795,675
Diluted earnings per common share	$	0.75	$	0.65	$	1.49	$	1.45

XML

Note 5 - Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2022

Notes Tables

Fair Value, by Balance Sheet Grouping [Table Text Block]

					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)
June 30, 2022
Assets
Cash and cash equivalents	$	40,296	$	40,296	$	40,296	$	-	$	-
Equity securities at fair value		8,288		8,288		6,462		-		1,826
Securities available for sale		566,142		566,142		-		566,142		-
Securities held to maturity		429,675		372,667		-		357,723		14,944
Federal Home Loan Bank and Federal
Reserve Bank stock		8,557		8,557		-		8,557		-
Loans held for sale		10,628		10,947		-		10,947		-
Loans to other financial institutions		37,422		37,422		-		37,422		-
Loans, net		1,073,973		1,037,946		-		-		1,037,946
Accrued interest receivable		8,239		8,239		-		8,239		-
Interest rate lock commitments		140		140		-		140		-
Mortgage loan servicing rights		4,679		5,932		-		5,932		-
Interest rate derivative contracts		14,209		14,209		-		14,209		-
Liabilities
Noninterest-bearing deposits		578,927		578,927		-		578,927		-
Interest-bearing deposits		1,559,577		1,556,523		-		1,556,523		-
Borrowings		7,000		6,995		-		6,995		-
Subordinated debentures		35,140		30,785		-		30,785		-
Accrued interest payable		418		418		-		418		-
Interest rate derivative contracts		2,393		2,393		-		2,393		-
December 31, 2021
Assets
Cash and cash equivalents	$	31,887	$	31,887	$	31,887	$	-	$	-
Equity securities at fair value		8,492		8,492		6,724		-		1,768
Securities available for sale		1,098,885		1,098,885		-		1,077,835		21,050
Federal Home Loan Bank and Federal
Reserve Bank stock		8,888		8,888		-		8,888		-
Loans held for sale		9,351		9,632		-		9,632		-
Loans to other financial institutions		42,632		42,632		-		42,632		-
Loans, net		1,009,160		999,393		-		-		999,393
Accrued interest receivable		8,211		8,211		-		8,211		-
Interest rate lock commitments		172		172		-		172		-
Mortgage loan servicing rights		4,666		5,522		-		5,522		-
Liabilities
Noninterest-bearing deposits		560,931		560,931		-		560,931		-
Interest-bearing deposits		1,491,363		1,491,135		-		1,491,135		-
Borrowings		50,000		50,000		-		50,000		-
Subordinated debentures		35,017		33,414		-		33,414		-
Accrued interest payable		441		441		-		441		-

XML

Note 6 - Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2022

Notes Tables

Fair Value, Assets Measured on Recurring Basis [Table Text Block]

	Quoted Prices
	In Active		Significant
	Markets for		Other		Significant
	Identical		Observable		Unobservable		Balance
(Dollars in thousands)	Assets		Inputs		Inputs		at Date
	(Level 1)		(Level 2)		(Level 3)		Indicated
Equity Securities Held at Fair Value - June 30, 2022
Equity securities	$	6,462	$	-	$	1,826	$	8,288
Investment Securities, Available for Sale - June 30, 2022
U. S. Treasury notes and bonds	$	-	$	83,643	$	-	$	83,643
State and municipal		-		256,661		-		256,661
Mortgage-backed		-		211,128		-		211,128
Corporate		-		1,238		-		1,238
Asset-backed securities		-		13,472		-		13,472
Total	$	-	$	566,142	$	-	$	566,142
Derivative Instruments - June 30, 2022
Interest rate derivative contracts - assets	$	-	$	14,209	$	-	$	14,209
Interest rate derivative contracts - liabilities	$	-	$	2,393	$	-	$	2,393
Equity Securities Held at Fair Value - December 31, 2021
Equity securities	$	6,724	$	-	$	1,768	$	8,492
Investment Securities, Available for Sale - December 31, 2021
U. S. Government and federal agency	$	-	$	2,008	$	-	$	2,008
U. S. Treasury notes and bonds		-		91,979		-		91,979
State and municipal		-		514,797		20,050		534,847
Mortgage-backed		-		433,115		-		433,115
Corporate		-		19,642		1,000		20,642
Asset-backed securities		-		16,294		-		16,294
Total	$	-	$	1,077,835	$	21,050	$	1,098,885

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

	Six Months Ended
(Dollars in thousands)	June 30,
	2022			2021
Equity Securities Held at Fair Value
Balance, January 1	$	1,768		$	1,485
Total realized and unrealized gains included in noninterest income		(5	)		(39	)
Net purchases, sales, calls, and maturities		63			220
Net transfers into Level 3		-			-
Balance, June 30	$	1,826		$	1,666
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 June 30	$	(5	)	$	(39	)
Investment Securities, Available for Sale
Balance, January 1	$	21,050		$	11,423
Total unrealized gains included in other comprehensive income		-			(264	)
Net purchases, sales, calls, and maturities		-			1,966
Net transfers into Level 3		-			-
Transfer to held to maturity		(21,050	)		-
Balance, June 30	$	-		$	13,125
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 June 30	$	-		$	(250	)

Fair Value Measurements, Nonrecurring [Table Text Block]

			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)
Impaired Loans
June 30, 2022	$	2,687	$	-	$	-	$	2,687
December 31, 2021	$	5,433	$	-	$	-	$	5,433
Other Real Estate
June 30, 2022	$	-	$	-	$	-	$	-
December 31, 2021	$	194	$	-	$	-	$	194
Mortgage Loan Servicing Rights
June 30, 2022	$	4,679	$	-	$	4,679	$	-
December 31, 2021	$	4,666	$	-	$	4,666	$	-

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Note 7 - Revenue From Contracts With Customers (Tables)

6 Months Ended

Jun. 30, 2022

Notes Tables

Disaggregation of Revenue [Table Text Block]

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(Dollars in thousands)	2022		2021		2022		2021
Service charges and fees on deposit accounts	$	1,036	$	822	$	2,067	$	1,608
Interchange income		1,317		1,312		2,475		2,446
Investment commission income		233		198		438		471
Trust fee income		176		253		354		425
Other charges and fees for customer services		125		138		274		304
Noninterest income from contracts with customers within the scope of ASC 606		2,887		2,723		5,608		5,254
Noninterest income within the scope of other GAAP topics		543		2,009		1,668		5,078
Total noninterest income	$	3,430	$	4,732	$	7,276	$	10,332

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Note 8 - Derivative and Hedging Activities (Tables)

6 Months Ended

Jun. 30, 2022

Notes Tables

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block]

	June 30, 2022			December 31, 2021
(Dollars in thousands)	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments
Interest rate contracts	Other Assets	$	14,209	Other Assets	$	-
Interest rate contracts	Other Liabilities	$	2,393	Other Liabilities	$	-

Schedule of Derivatives Instruments Statements of Financial Performance and Financial Position, Location [Table Text Block]

	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
	Three months ended June 30, 2022						Six months ended June 30, 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	$	422		$	(155	)	$	422		$	(155	)
Gain or (loss) on fair value hedging relationships:
Interest rate contracts:
Hedged items	$	(71	)	$	-		$	-		$	-
Derivatives designated as hedging instruments	$	71		$	-		$	-		$	-
Amount excluded from effectiveness testing recognized in earnings based on amortization approach	$	(153	)	$	-		$	(153	)	$	-
Gain or (loss) on cash flow hedging relationships:
Interest rate contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive income into income	$	-		$	-		$	-		$	-
Amount excluded from effectiveness testing recognized in earnings based on amortization approach	$	-		$	(155	)	$	-		$	(155	)

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Note 1 - Summary of Significant Accounting Policies (Details Textual) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Apr. 30, 2021
Stock Issued During Period, Value, New Issues	$ 139,000	$ 106,000	$ 272,000	$ 281,000
Stock Repurchased During Period, Shares (in shares)			25,899
Stock Repurchased During Period, Value		$ 2,897,000	$ 682,000	$ 2,897,000
Stock Repurchased, Price Per Share (in dollars per share)			$ 26.35
Stock Repurchase Program, Number of Shares Authorized to be Repurchased (in shares)					390,114
Stock Repurchase Program, Percent of Stock Outstanding					5.00%
Directors' Stock Purchase Plan [Member]
Stock Issued During Period, Shares, New Issues (in shares)			7,407
Stock Issued During Period, Value, New Issues			$ 192,000
Employee Stock Purchase Plan [Member]
Stock Issued During Period, Shares, New Issues (in shares)			4,257
Stock Issued During Period, Value, New Issues			$ 80,000

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Note 2 - Securities (Details Textual) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Debt Securities, Held-to-Maturity, Fair Value, Total	$ 372,667		$ 372,667
Other-than-temporary Impairment Loss, Debt Securities, Available-for-Sale	0	$ 0	0	$ 0
Reclassified From Available-for-sale Securities [Member]
Debt Securities, Held-to-Maturity, Fair Value, Total	$ 428,400		428,400
OCI, Debt Securities, Available-for-Sale, Transfer to Held-to-Maturity, Adjustment from AOCI for Amortization of Gain (Loss), after Tax			(2,700)
OCI, Debt Securities, Available-for-Sale, Transfer to Held-to-Maturity, Adjustment from AOCI Unamortized, After Tax			$ 2,500

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Note 2 - Securities - Fair Value of Equity Securities and Related Gross Unrealized Gains (Losses) Recognized in Interest Income (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2022	Dec. 31, 2021
Amortized Cost	$ 8,432	$ 7,953
Gross Unrealized Gains	405	665
Gross Unrealized Losses	(549)	(126)
Equity securities, at fair value (Note 2)	$ 8,288	$ 8,492

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Note 2 - Securities - Fair Value of Debt Security, Available-for-sale and Held-to-maturity (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Amortized Cost, available for sale	$ 640,084	$ 1,102,146
Gross Unrealized Gains, available for sale	39	11,534
Gross Unrealized Losses, available for sale	(73,981)	(14,795)
Fair Value, available for sale	566,142	1,098,885
Amortized Cost, held to maturity	429,675
Gross Unrealized Gains, held to maturity	0
Gross Unrealized Losses, held to maturity	(57,008)
Fair Value, held to maturity	372,667
US Treasury Securities [Member]
Amortized Cost, available for sale	93,040	93,267
Gross Unrealized Gains, available for sale	0	23
Gross Unrealized Losses, available for sale	(9,397)	(1,311)
Fair Value, available for sale	83,643	91,979
US States and Political Subdivisions Debt Securities [Member]
Amortized Cost, available for sale	300,824	528,252
Gross Unrealized Gains, available for sale	34	10,704
Gross Unrealized Losses, available for sale	(44,197)	(4,109)
Fair Value, available for sale	256,661	534,847
Amortized Cost, held to maturity	203,267
Gross Unrealized Gains, held to maturity	0
Gross Unrealized Losses, held to maturity	(32,638)
Fair Value, held to maturity	170,629
Collateralized Mortgage-Backed Securities [Member]
Amortized Cost, available for sale	230,842	441,383
Gross Unrealized Gains, available for sale	5	781
Gross Unrealized Losses, available for sale	(19,719)	(9,049)
Fair Value, available for sale	211,128	433,115
Amortized Cost, held to maturity	202,595
Gross Unrealized Gains, held to maturity	0
Gross Unrealized Losses, held to maturity	(23,007)
Fair Value, held to maturity	179,588
Corporate Debt Securities [Member]
Amortized Cost, available for sale	1,256	20,856
Gross Unrealized Gains, available for sale	0	19
Gross Unrealized Losses, available for sale	(18)	(233)
Fair Value, available for sale	1,238	20,642
Amortized Cost, held to maturity	19,593
Gross Unrealized Gains, held to maturity	0
Gross Unrealized Losses, held to maturity	(1,013)
Fair Value, held to maturity	18,580
Asset-Backed Securities [Member]
Amortized Cost, available for sale	14,122	16,387
Gross Unrealized Gains, available for sale	0	0
Gross Unrealized Losses, available for sale	(650)	(93)
Fair Value, available for sale	13,472	16,294
Amortized Cost, held to maturity	1,257
Gross Unrealized Gains, held to maturity	0
Gross Unrealized Losses, held to maturity	(67)
Fair Value, held to maturity	1,190
US Treasury and Government [Member]
Amortized Cost, available for sale	2,963	2,001
Gross Unrealized Gains, available for sale	0	7
Gross Unrealized Losses, available for sale	(283)	0
Fair Value, available for sale	$ 2,680	$ 2,008

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Note 2 - Securities - Fair Value of Securities Available for Sale and The Related Unrealized Gains and Losses Recognized in Accumulated Comprehensive Income (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Amortized Cost, available for sale	$ 640,084	$ 1,102,146
Gross Unrealized Gains, available for sale	39	11,534
Gross Unrealized Losses, available for sale	(73,981)	(14,795)
Fair Value, available for sale	566,142	1,098,885
US Treasury and Government [Member]
Amortized Cost, available for sale	2,963	2,001
Gross Unrealized Gains, available for sale	0	7
Gross Unrealized Losses, available for sale	(283)	0
Fair Value, available for sale	2,680	2,008
US Treasury Securities [Member]
Amortized Cost, available for sale	93,040	93,267
Gross Unrealized Gains, available for sale	0	23
Gross Unrealized Losses, available for sale	(9,397)	(1,311)
Fair Value, available for sale	83,643	91,979
US States and Political Subdivisions Debt Securities [Member]
Amortized Cost, available for sale	300,824	528,252
Gross Unrealized Gains, available for sale	34	10,704
Gross Unrealized Losses, available for sale	(44,197)	(4,109)
Fair Value, available for sale	256,661	534,847
Collateralized Mortgage-Backed Securities [Member]
Amortized Cost, available for sale	230,842	441,383
Gross Unrealized Gains, available for sale	5	781
Gross Unrealized Losses, available for sale	(19,719)	(9,049)
Fair Value, available for sale	211,128	433,115
Corporate Debt Securities [Member]
Amortized Cost, available for sale	1,256	20,856
Gross Unrealized Gains, available for sale	0	19
Gross Unrealized Losses, available for sale	(18)	(233)
Fair Value, available for sale	1,238	20,642
Asset-Backed Securities [Member]
Amortized Cost, available for sale	14,122	16,387
Gross Unrealized Gains, available for sale	0	0
Gross Unrealized Losses, available for sale	(650)	(93)
Fair Value, available for sale	$ 13,472	$ 16,294

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Note 2 - Securities - Schedule of Maturities of Securities (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Less than 1 Year	$ 37,719
1 Year - 5 Years	120,573
5 Years - 10 Years	251,352
More than 10 Years	156,498
Fair Value, available for sale	566,142	$ 1,098,885
Total Available for Sale	566,142
Investment securities held to maturity, amortized cost, 1 year or less	9,249
Investment securities held to maturity, amortized cost, over 1 to 5 years	52,291
Investment securities held to maturity, amortized cost, over 5 to 10 years	260,952
Investment securities held to maturity, amortized cost, over 10 years	107,183
Investment securities held to maturity, amortized cost, subtotal	429,675
US Treasury Securities [Member]
Less than 1 Year	2,000
1 Year - 5 Years	0
5 Years - 10 Years	81,643
More than 10 Years	0
Fair Value, available for sale	83,643	91,979
US Treasury and Government [Member]
Fair Value, available for sale	2,680	2,008
Investment securities held to maturity, amortized cost, 1 year or less	0
Investment securities held to maturity, amortized cost, over 1 to 5 years	0
Investment securities held to maturity, amortized cost, over 5 to 10 years	2,963
Investment securities held to maturity, amortized cost, over 10 years	0
Investment securities held to maturity, amortized cost, subtotal	2,963
US States and Political Subdivisions Debt Securities [Member]
Less than 1 Year	16,426
1 Year - 5 Years	8,873
5 Years - 10 Years	75,501
More than 10 Years	155,861
Fair Value, available for sale	256,661	534,847
Investment securities held to maturity, amortized cost, 1 year or less	2,724
Investment securities held to maturity, amortized cost, over 1 to 5 years	5,112
Investment securities held to maturity, amortized cost, over 5 to 10 years	89,248
Investment securities held to maturity, amortized cost, over 10 years	106,183
Investment securities held to maturity, amortized cost, subtotal	203,267
Corporate Debt Securities [Member]
Less than 1 Year	500
1 Year - 5 Years	505
5 Years - 10 Years	233
More than 10 Years	0
Fair Value, available for sale	1,238	20,642
Investment securities held to maturity, amortized cost, 1 year or less	0
Investment securities held to maturity, amortized cost, over 1 to 5 years	250
Investment securities held to maturity, amortized cost, over 5 to 10 years	18,343
Investment securities held to maturity, amortized cost, over 10 years	1,000
Investment securities held to maturity, amortized cost, subtotal	19,593
Asset-Backed Securities [Member]
Less than 1 Year	0
1 Year - 5 Years	9,741
5 Years - 10 Years	3,731
More than 10 Years	0
Fair Value, available for sale	13,472	16,294
Investment securities held to maturity, amortized cost, 1 year or less	0
Investment securities held to maturity, amortized cost, over 1 to 5 years	1,257
Investment securities held to maturity, amortized cost, over 5 to 10 years	0
Investment securities held to maturity, amortized cost, over 10 years	0
Investment securities held to maturity, amortized cost, subtotal	1,257
Debt Securities [Member]
Less than 1 Year	18,926
1 Year - 5 Years	19,119
5 Years - 10 Years	161,108
More than 10 Years	155,861
Fair Value, available for sale	355,014
Investment securities held to maturity, amortized cost, 1 year or less	2,724
Investment securities held to maturity, amortized cost, over 1 to 5 years	6,619
Investment securities held to maturity, amortized cost, over 5 to 10 years	110,554
Investment securities held to maturity, amortized cost, over 10 years	107,183
Investment securities held to maturity, amortized cost, subtotal	227,080
Collateralized Mortgage-Backed Securities [Member]
Less than 1 Year	18,793
1 Year - 5 Years	101,454
5 Years - 10 Years	90,244
More than 10 Years	637
Fair Value, available for sale	211,128	$ 433,115
Investment securities held to maturity, amortized cost, 1 year or less	6,525
Investment securities held to maturity, amortized cost, over 1 to 5 years	45,672
Investment securities held to maturity, amortized cost, over 5 to 10 years	150,398
Investment securities held to maturity, amortized cost, over 10 years	0
Investment securities held to maturity, amortized cost, subtotal	$ 202,595

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Note 2 - Securities - Unrealized Gains and Losses on Equity Securities (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Change in market value of equity securities	$ (327)	$ (119)	$ (683)	$ 489
Less: Net gains and (losses) recognized during the period on securities sold	0	0	0	0
Unrealized gains and (losses) recognized during the reporting period on securities still held at the reporting date	$ (327)	$ (119)	$ (683)	$ 489

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Note 3 - Loans and Allowance for Loan Losses (Details Textual)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Financing Receivable, Modifications, Number of Contracts	1	0	2	8
Past Due 30 Days or More [Member]
Financing Receivable, Modifications, Number of Contracts	0		0

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Note 3 - Loans and Allowance for Loan Losses - Allowance for Loan Losses and Balance in the Loan Portfolio (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Beginning balance	$ 7,601	$ 7,740	$ 7,688	$ 7,593
Charge-offs	(244)	(100)	(386)	(293)
Recoveries	59	144	114	234
Provision	0	166	0	416
Ending balance	7,416	7,950	7,416	7,950
Individually evaluated for impairment	215	362	215	362	$ 503
Collectively evaluated for impairment	7,201	7,588	7,201	7,588	7,185
Individually evaluated for impairment	2,687	6,824	2,687	6,824	5,433
Collectively evaluated for impairment	1,063,245	978,487	1,063,245	978,487	994,248
Acquired with deteriorated credit quality	15,457	19,276	15,457	19,276	17,167
Loans	1,081,389	1,004,587	1,081,389	1,004,587	1,016,848
Agricultural [Member]
Beginning balance	387	342	448	257
Charge-offs	0	0		0
Recoveries	0	0		0
Provision	(255)	32	(316)	117
Ending balance	132	374	132	374
Individually evaluated for impairment	1	138	1	138	251
Collectively evaluated for impairment	131	236	131	236	197
Individually evaluated for impairment	320	3,167	320	3,167	2,616
Collectively evaluated for impairment	58,743	43,400	58,743	43,400	62,203
Acquired with deteriorated credit quality	0	0	0	0	0
Loans	59,063	46,567	59,063	46,567	64,819
Commercial and Industrial [Member]
Beginning balance	1,752	1,599	1,454	1,327
Charge-offs	(100)	(24)	(131)	(98)
Recoveries	2	64	4	73
Provision	(41)	(116)	286	221
Ending balance	1,613	1,523	1,613	1,523
Individually evaluated for impairment	52	20	52	20	95
Collectively evaluated for impairment	1,561	1,503	1,561	1,503	1,359
Individually evaluated for impairment	159	184	159	184	339
Collectively evaluated for impairment	204,149	259,034	204,149	259,034	197,656
Acquired with deteriorated credit quality	4,549	5,814	4,549	5,814	5,029
Loans	208,857	265,032	208,857	265,032	203,024
Consumer Portfolio Segment [Member]
Beginning balance	304	247	290	317
Charge-offs	(144)	(76)	(255)	(147)
Recoveries	55	35	106	113
Provision	94	37	168	(40)
Ending balance	309	243	309	243
Individually evaluated for impairment	1	0	1	0	2
Collectively evaluated for impairment	308	243	308	243	288
Individually evaluated for impairment	7	0	7	0	14
Collectively evaluated for impairment	38,359	33,354	38,359	33,354	35,148
Acquired with deteriorated credit quality	10	16	10	16	12
Loans	38,376	33,370	38,376	33,370	35,174
Commercial Real Estate Portfolio Segment [Member]
Beginning balance	3,690	4,345	3,705	4,178
Charge-offs	0	0	0	(48)
Recoveries	1	42	2	43
Provision	533	(10)	517	204
Ending balance	4,224	4,377	4,224	4,377
Individually evaluated for impairment	7	56	7	56	9
Collectively evaluated for impairment	4,217	4,321	4,217	4,321	3,696
Individually evaluated for impairment	149	1,140	149	1,140	273
Collectively evaluated for impairment	555,787	461,941	555,787	461,941	515,528
Acquired with deteriorated credit quality	9,227	10,906	9,227	10,906	10,083
Loans	565,163	473,987	565,163	473,987	525,884
Construction Real Estate [Member]
Beginning balance	37	74	110	97
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provision	8	0	(65)	(23)
Ending balance	45	74	45	74
Individually evaluated for impairment	0	0	0	0	0
Collectively evaluated for impairment	45	74	45	74	110
Individually evaluated for impairment	0	0	0	0	0
Collectively evaluated for impairment	17,950	15,440	17,950	15,440	19,066
Acquired with deteriorated credit quality	0	0	0	0	0
Loans	17,950	15,440	17,950	15,440	19,066
Residential Portfolio Segment [Member]
Beginning balance	589	1,024	671	1,300
Charge-offs	0	0	0	0
Recoveries	1	3	2	5
Provision	101	(167)	18	(445)
Ending balance	691	860	691	860
Individually evaluated for impairment	154	148	154	148	146
Collectively evaluated for impairment	537	712	537	712	525
Individually evaluated for impairment	2,052	2,333	2,052	2,333	2,191
Collectively evaluated for impairment	188,257	165,318	188,257	165,318	164,647
Acquired with deteriorated credit quality	1,671	2,540	1,671	2,540	2,043
Loans	191,980	170,191	191,980	170,191	168,881
Unallocated Financing Receivables [Member]
Beginning balance	842	109	1,010	117
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provision	(440)	390	(608)	382
Ending balance	402	499	402	499
Individually evaluated for impairment	0	0	0	0	0
Collectively evaluated for impairment	402	499	402	499	1,010
Individually evaluated for impairment
Collectively evaluated for impairment
Acquired with deteriorated credit quality
Loans

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Note 3 - Loans and Allowance for Loan Losses - Credit Risk Profile (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021	Jun. 30, 2021
Loans	$ 1,081,389	$ 1,016,848	$ 1,004,587
Nonaccrual	1,242	1,727
Agricultural [Member]
Loans	59,063	64,819	46,567
Nonaccrual	314	313
Agricultural [Member] | Pass [Member]
Loans	58,429	61,864
Agricultural [Member] | Special Mention [Member]
Loans	313	339
Agricultural [Member] | Substandard [Member]
Loans	321	2,616
Agricultural [Member] | Doubtful [Member]
Loans	0	0
Consumer Portfolio Segment [Member]
Loans	38,376	35,174	33,370
Nonaccrual	8	0
Consumer Portfolio Segment [Member] | Performing Financial Instruments [Member]
Loans	38,368	35,174
Consumer Portfolio Segment [Member] | Nonperforming Financial Instruments [Member]
Loans	0	0
Commercial and Industrial [Member]
Loans	208,857	203,024	265,032
Nonaccrual	92	285
Commercial and Industrial [Member] | Pass [Member]
Loans	206,399	201,202
Commercial and Industrial [Member] | Special Mention [Member]
Loans	1,342	300
Commercial and Industrial [Member] | Substandard [Member]
Loans	1,116	1,266
Commercial and Industrial [Member] | Doubtful [Member]
Loans	0	256
Construction Real Estate [Member]
Loans	17,950	19,066	15,440
Nonaccrual	0	0
Construction Real Estate [Member] | Performing Financial Instruments [Member]
Loans	17,950	19,066
Construction Real Estate [Member] | Nonperforming Financial Instruments [Member]
Loans	0	0
Commercial Real Estate Portfolio Segment [Member]
Loans	565,163	525,884	473,987
Nonaccrual	0	279
Commercial Real Estate Portfolio Segment [Member] | Pass [Member]
Loans	559,653	519,537
Commercial Real Estate Portfolio Segment [Member] | Special Mention [Member]
Loans	739	778
Commercial Real Estate Portfolio Segment [Member] | Substandard [Member]
Loans	4,771	5,569
Commercial Real Estate Portfolio Segment [Member] | Doubtful [Member]
Loans	0	0
Residential Portfolio Segment [Member]
Loans	191,980	168,881	$ 170,191
Nonaccrual	828	850
Residential Portfolio Segment [Member] | Performing Financial Instruments [Member]
Loans	191,152	168,031
Residential Portfolio Segment [Member] | Nonperforming Financial Instruments [Member]
Loans	$ 0	$ 0

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Note 3 - Loans and Allowance for Loan Losses - Troubled Debt Restructurings (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022 USD ($)	Jun. 30, 2021 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2021 USD ($)
Number of loans	1	0	2	8
Pre- Modification Outstanding	$ 19	$ 0	$ 277	$ 3,530
Post- Modification Outstanding	$ 19	$ 0	$ 277	$ 3,530
Financial Asset, 30 Days Past Due or More [Member]
Number of loans		2		2
Recorded investment		$ 236		$ 236
Commercial and Industrial [Member] | Financial Asset, 30 Days Past Due or More [Member]
Number of loans		1		1
Recorded investment		$ 52		$ 52
Commercial Real Estate Portfolio Segment [Member]
Number of loans	1	0	1	2
Pre- Modification Outstanding	$ 19	$ 0	$ 19	$ 1,210
Post- Modification Outstanding	$ 19	$ 0	$ 19	$ 1,210
Commercial Real Estate Portfolio Segment [Member] | Financial Asset, 30 Days Past Due or More [Member]
Number of loans		1		1
Recorded investment		$ 184		$ 184
Agricultural [Member]
Number of loans	0	0	1	6
Pre- Modification Outstanding	$ 0	$ 0	$ 258	$ 2,320
Post- Modification Outstanding	$ 0	$ 0	$ 258	$ 2,320

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Note 3 - Loans and Allowance for Loan Losses - Impaired Loans by Loan Category (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Recorded Investment with no related allowance recorded	$ 753		$ 753		$ 572
Unpaid Principal Balance with no related allowance recorded	897		897		694
Recorded Investment with an allowance recorded	1,934		1,934		4,861
Unpaid Principal Balance with an allowance recorded	1,998		1,998		4,943
Related Allowance	215		215		503
Recorded Investment	2,687		2,687		5,433
Unpaid Principal Balance	2,895		2,895		5,637
Average Recorded Investment with no related allowance recorded	580	$ 3,814	577	$ 3,742
Interest Income Recognized with no related allowance recorded	0	37	0	84
Average Recorded Investment with an allowance recorded	3,234	4,541	3,777	4,864
Interest Income Recognized with an allowance recorded	15	34	36	75
Average Recorded Investment	3,814	8,355	4,354	8,606
Interest Income Recognized	15	71	36	159
Agricultural [Member]
Recorded Investment with no related allowance recorded	314		314		314
Unpaid Principal Balance with no related allowance recorded	428		428		428
Recorded Investment with an allowance recorded	6		6		2,302
Unpaid Principal Balance with an allowance recorded	7		7		2,302
Related Allowance	1		1		251
Recorded Investment	320		320		2,616
Unpaid Principal Balance	435		435		2,730
Average Recorded Investment with no related allowance recorded	314	778	314	993
Interest Income Recognized with no related allowance recorded	0	24	0	52
Average Recorded Investment with an allowance recorded	1,117	1,451	1,512	2,177
Interest Income Recognized with an allowance recorded	0	16	0	35
Average Recorded Investment	1,431	2,229	1,826	3,170
Interest Income Recognized	0	40	0	87
Commercial and Industrial [Member]
Recorded Investment with no related allowance recorded	0		0		0
Unpaid Principal Balance with no related allowance recorded	0		0		0
Recorded Investment with an allowance recorded	159		159		339
Unpaid Principal Balance with an allowance recorded	190		190		363
Related Allowance	52		52		95
Recorded Investment	159		159		339
Unpaid Principal Balance	190		190		363
Average Recorded Investment with no related allowance recorded	46	993	31	731
Interest Income Recognized with no related allowance recorded	0	0	0	0
Average Recorded Investment with an allowance recorded	211	165	254	174
Interest Income Recognized with an allowance recorded	1	0	2	1
Average Recorded Investment	257	1,158	285	905
Interest Income Recognized	1	0	2	1
Consumer Portfolio Segment [Member]
Recorded Investment with no related allowance recorded	0		0		0
Unpaid Principal Balance with no related allowance recorded	0		0		0
Recorded Investment with an allowance recorded	7		7		14
Unpaid Principal Balance with an allowance recorded	8		8		15
Related Allowance	1		1		2
Recorded Investment	7		7		14
Unpaid Principal Balance	8		8		15
Average Recorded Investment with no related allowance recorded	0	0	18	0
Interest Income Recognized with no related allowance recorded	0	0	0	0
Average Recorded Investment with an allowance recorded	20	3	18	0
Interest Income Recognized with an allowance recorded	0	0	0	0
Average Recorded Investment	20	3		0
Interest Income Recognized	0	0
Commercial Real Estate Portfolio Segment [Member]
Recorded Investment with no related allowance recorded	0		0		94
Unpaid Principal Balance with no related allowance recorded	0		0		94
Recorded Investment with an allowance recorded	0		0		179
Unpaid Principal Balance with an allowance recorded	0		0		179
Related Allowance	7		7		9
Recorded Investment	0		0		273
Unpaid Principal Balance	0		0		273
Average Recorded Investment with no related allowance recorded	0	1,749	31	1,698
Interest Income Recognized with no related allowance recorded	0	13	0	32
Average Recorded Investment with an allowance recorded	153	642	162	372
Interest Income Recognized with an allowance recorded	2	3	5	6
Average Recorded Investment	153	2,391	193	2,070
Interest Income Recognized	2	16	5	38
Construction Real Estate [Member]
Recorded Investment with no related allowance recorded	0		0		0
Unpaid Principal Balance with no related allowance recorded	0		0		0
Recorded Investment with an allowance recorded	149		149		0
Unpaid Principal Balance with an allowance recorded	149		149		0
Related Allowance	0		0		0
Recorded Investment	149		149		0
Unpaid Principal Balance	149		149		0
Average Recorded Investment with no related allowance recorded	0	27	0	0
Interest Income Recognized with no related allowance recorded	0	0	0	0
Average Recorded Investment with an allowance recorded	0	0	0	0
Interest Income Recognized with an allowance recorded	0	0	0	0
Average Recorded Investment	0	27		0
Interest Income Recognized	0	0
Residential Portfolio Segment [Member]
Recorded Investment with no related allowance recorded	439		439		164
Unpaid Principal Balance with no related allowance recorded	469		469		172
Recorded Investment with an allowance recorded	1,613		1,613		2,027
Unpaid Principal Balance with an allowance recorded	1,644		1,644		2,084
Related Allowance	154		154		146
Recorded Investment	2,052		2,052		2,191
Unpaid Principal Balance	2,113		2,113		$ 2,256
Average Recorded Investment with no related allowance recorded	220	267	201	320
Interest Income Recognized with no related allowance recorded	0	0	0	0
Average Recorded Investment with an allowance recorded	1,733	2,280	1,831	2,141
Interest Income Recognized with an allowance recorded	12	15	29	33
Average Recorded Investment	1,953	2,547	2,032	2,461
Interest Income Recognized	$ 12	$ 15	$ 29	$ 33

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Note 3 - Loans and Allowance for Loan Losses - Aging Analysis of Loans by Loan Category (Details) - USD ($) $ in Thousands		Jun. 30, 2022		Dec. 31, 2021	Jun. 30, 2021
Loans		$ 1,081,389		$ 1,016,848	$ 1,004,587
Loan 90 days and accruing		0		0
Agricultural [Member]
Loans		59,063		64,819	46,567
Loan 90 days and accruing		0		0
Commercial and Industrial [Member]
Loans		208,857		203,024	265,032
Loan 90 days and accruing		0		0
Consumer Portfolio Segment [Member]
Loans		38,376		35,174	33,370
Loan 90 days and accruing		0		0
Commercial Real Estate Portfolio Segment [Member]
Loans		565,163		525,884	473,987
Loan 90 days and accruing		0		0
Construction Real Estate [Member]
Loans		17,950		19,066	15,440
Loan 90 days and accruing		0		0
Residential Portfolio Segment [Member]
Loans		191,980		168,881	$ 170,191
Loan 90 days and accruing		0		0
Financial Asset, 30 to 59 Days Past Due [Member]
Loans		171	[1]	3,151
Financial Asset, 30 to 59 Days Past Due [Member] | Agricultural [Member]
Loans	[1]	0		0
Financial Asset, 30 to 59 Days Past Due [Member] | Commercial and Industrial [Member]
Loans	[1]	142		21
Financial Asset, 30 to 59 Days Past Due [Member] | Consumer Portfolio Segment [Member]
Loans	[1]	0		70
Financial Asset, 30 to 59 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member]
Loans	[1]	0		422
Financial Asset, 30 to 59 Days Past Due [Member] | Construction Real Estate [Member]
Loans	[1]	0		1,149
Financial Asset, 30 to 59 Days Past Due [Member] | Residential Portfolio Segment [Member]
Loans	[1]	29		1,489
Financial Asset, 60 to 89 Days Past Due [Member]
Loans		197	[1]	1,569
Financial Asset, 60 to 89 Days Past Due [Member] | Agricultural [Member]
Loans	[1]	0		0
Financial Asset, 60 to 89 Days Past Due [Member] | Commercial and Industrial [Member]
Loans	[1]	0		0
Financial Asset, 60 to 89 Days Past Due [Member] | Consumer Portfolio Segment [Member]
Loans	[1]	0		15
Financial Asset, 60 to 89 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member]
Loans	[1]	0		13
Financial Asset, 60 to 89 Days Past Due [Member] | Construction Real Estate [Member]
Loans	[1]	0		1,235
Financial Asset, 60 to 89 Days Past Due [Member] | Residential Portfolio Segment [Member]
Loans	[1]	197		306
Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Loans		673	[1]	821
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Agricultural [Member]
Loans	[1]	0		0
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Commercial and Industrial [Member]
Loans	[1]	93		88
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Consumer Portfolio Segment [Member]
Loans	[1]	0		0
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Commercial Real Estate Portfolio Segment [Member]
Loans	[1]	0		279
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Construction Real Estate [Member]
Loans	[1]	0		0
Financial Asset, Equal to or Greater than 90 Days Past Due [Member] | Residential Portfolio Segment [Member]
Loans	[1]	580		454
Financial Asset, Past Due [Member]
Loans		1,041	[1]	5,541
Financial Asset, Past Due [Member] | Agricultural [Member]
Loans	[1]	0		0
Financial Asset, Past Due [Member] | Commercial and Industrial [Member]
Loans	[1]	235		109
Financial Asset, Past Due [Member] | Consumer Portfolio Segment [Member]
Loans	[1]	0		85
Financial Asset, Past Due [Member] | Commercial Real Estate Portfolio Segment [Member]
Loans	[1]	0		714
Financial Asset, Past Due [Member] | Construction Real Estate [Member]
Loans	[1]	0		2,384
Financial Asset, Past Due [Member] | Residential Portfolio Segment [Member]
Loans	[1]	806		2,249
Financial Asset, Not Past Due [Member]
Loans		1,080,348		1,011,307
Financial Asset, Not Past Due [Member] | Agricultural [Member]
Loans		59,063		64,819
Financial Asset, Not Past Due [Member] | Commercial and Industrial [Member]
Loans		208,622		202,915
Financial Asset, Not Past Due [Member] | Consumer Portfolio Segment [Member]
Loans		38,376		35,089
Financial Asset, Not Past Due [Member] | Commercial Real Estate Portfolio Segment [Member]
Loans		565,163		525,170
Financial Asset, Not Past Due [Member] | Construction Real Estate [Member]
Loans		17,950		16,682
Financial Asset, Not Past Due [Member] | Residential Portfolio Segment [Member]
Loans		$ 191,174		$ 166,632

[1] Includes nonaccrual loans.

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Note 3 - Loans and Allowance for Loan Losses - Nonaccrual Loan by Loan Category (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Nonaccrual loans	$ 1,242	$ 1,727
Agricultural [Member]
Nonaccrual loans	314	313
Commercial and Industrial [Member]
Nonaccrual loans	92	285
Consumer Portfolio Segment [Member]
Nonaccrual loans	8	0
Commercial Real Estate Portfolio Segment [Member]
Nonaccrual loans	0	279
Residential Portfolio Segment [Member]
Nonaccrual loans	$ 828	$ 850

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Note 3 - Loans and Allowance for Loan Losses - Acquired Portfolio and the Acquisition Fair Value Adjustments (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2022	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Jul. 01, 2020	Oct. 01, 2019
County Bank Corp ("County") [Member]
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 with County Bank Corp. on October 1, 2019				2,079
Accretion	(188)	(595)	(345)	(75)
Transfer from non-accretable to accretable yield	1,150	400
Balance	2,426	1,464	1,659	2,004
County Bank Corp ("County") [Member] | Acquired Impaired [Member]
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 with County Bank Corp. on October 1, 2019				185
Accretion	(222)	(247)	(50)	0
Transfer from non-accretable to accretable yield	1,150	400
Balance	1,216	288	135	185
County Bank Corp ("County") [Member] | Acquired Non-Impaired [Member]
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 with County Bank Corp. on October 1, 2019				1,894
Accretion	(34)	(348)	(295)	(75)
Transfer from non-accretable to accretable yield	0	0
Balance	1,210	1,176	1,524	1,819
Community Shores Bank Corp ("Community Shores") [Member]
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 with County Bank Corp. on October 1, 2019			1,465
Accretion	(775)	(579)	(167)
Transfer from non-accretable to accretable yield	874
Balance	818	719	1,298	0
Community Shores Bank Corp ("Community Shores") [Member] | Acquired Impaired [Member]
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 with County Bank Corp. on October 1, 2019			869
Accretion	(578)	(321)	(26)
Transfer from non-accretable to accretable yield	874
Balance	818	522	843	0
Community Shores Bank Corp ("Community Shores") [Member] | Acquired Non-Impaired [Member]
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 with County Bank Corp. on October 1, 2019			596
Accretion	(197)	(258)	(141)
Transfer from non-accretable to accretable yield	0
Balance	$ 0	$ 197	$ 455	$ 0

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Note 4 - Earnings Per Share (Details Textual) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Share-Based Payment Arrangement, Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares)	15,000	15,000	15,000	12,000
Performance Shares [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares)	6,396		0
Restricted Stock Units (RSUs) [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares)	27,592	18,985	0	0

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Note 4 - Earnings Per Share - Computation of Basic Earnings Per Share and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Net income	$ 5,615	$ 5,043	$ 11,143	$ 11,281
Weighted average common shares outstanding (in shares)	7,499,497	7,769,485	7,497,492	7,785,098
Basic earnings per share (Note 4) (in dollars per share)	$ 0.75	$ 0.65	$ 1.49	$ 1.45
Net income	$ 5,615	$ 5,043	$ 11,143	$ 11,281
Plus dilutive stock options and restricted stock units (in shares)	11,027	9,600	13,766	10,577
Weighted average common shares outstanding and potentially dilutive shares (in shares)	7,510,524	7,779,085	7,511,258	7,795,675
Diluted earnings per share (Note 4) (in dollars per share)	$ 0.75	$ 0.65	$ 1.49	$ 1.45

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Note 5 - Financial Instruments - Financial Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Equity securities, at fair value (Note 2)	$ 8,288	$ 8,492
Securities available for sale, at fair value (Note 2)	566,142	1,098,885
Loans to other financial institutions	37,422	42,632
Deposits – noninterest-bearing	578,927	560,931
Deposits – interest-bearing	1,559,577	1,491,363
Reported Value Measurement [Member]
Cash and cash equivalents	40,296	31,887
Equity securities, at fair value (Note 2)	8,288	8,492
Securities available for sale, at fair value (Note 2)	566,142	1,098,885
Securities held to maturity	429,675
Reserve Bank stock	8,557	8,888
Loans held for sale	10,628	9,351
Loans to other financial institutions	37,422	42,632
Loans, net	1,073,973	1,009,160
Accrued interest receivable	8,239	8,211
Interest rate lock commitments	140	172
Mortgage Loan Servicing Rights	4,679	4,666
Interest rate contracts	14,209
Deposits – noninterest-bearing	578,927	560,931
Deposits – interest-bearing	1,559,577	1,491,363
Borrowings	7,000
Subordinated debentures	35,140	35,017
Accrued interest payable	418	441
Interest rate contracts	2,393
Borrowings		50,000
Estimate of Fair Value Measurement [Member]
Cash and cash equivalents	40,296	31,887
Equity securities, at fair value (Note 2)	8,288	8,492
Securities available for sale, at fair value (Note 2)	566,142	1,098,885
Securities held to maturity	372,667
Reserve Bank stock	8,557	8,888
Loans held for sale	10,947	9,632
Loans to other financial institutions	37,422	42,632
Loans, net	1,037,946	999,393
Accrued interest receivable	8,239	8,211
Interest rate lock commitments	140	172
Mortgage Loan Servicing Rights	5,932	5,522
Interest rate contracts	14,209
Deposits – noninterest-bearing	578,927	560,931
Deposits – interest-bearing	1,556,523	1,491,135
Borrowings	6,995
Subordinated debentures	30,785	33,414
Accrued interest payable	418	441
Interest rate contracts	2,393
Borrowings		50,000
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 1 [Member]
Cash and cash equivalents	40,296	31,887
Equity securities, at fair value (Note 2)	6,462	6,724
Securities available for sale, at fair value (Note 2)	0	0
Securities held to maturity	0
Reserve Bank stock	0	0
Loans held for sale	0	0
Loans to other financial institutions	0	0
Loans, net	0	0
Accrued interest receivable	0	0
Interest rate lock commitments	0	0
Mortgage Loan Servicing Rights	0	0
Interest rate contracts	0
Deposits – noninterest-bearing	0	0
Deposits – interest-bearing	0	0
Borrowings	0
Subordinated debentures	0	0
Accrued interest payable	0	0
Interest rate contracts	0
Borrowings		0
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 2 [Member]
Cash and cash equivalents	0	0
Equity securities, at fair value (Note 2)	0	0
Securities available for sale, at fair value (Note 2)	566,142	1,077,835
Securities held to maturity	357,723
Reserve Bank stock	8,557	8,888
Loans held for sale	10,947	9,632
Loans to other financial institutions	37,422	42,632
Loans, net	0	0
Accrued interest receivable	8,239	8,211
Interest rate lock commitments	140	172
Mortgage Loan Servicing Rights	5,932	5,522
Interest rate contracts	14,209
Deposits – noninterest-bearing	578,927	560,931
Deposits – interest-bearing	1,556,523	1,491,135
Borrowings	6,995
Subordinated debentures	30,785	33,414
Accrued interest payable	418	441
Interest rate contracts	2,393
Borrowings		50,000
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 3 [Member]
Cash and cash equivalents	0	0
Equity securities, at fair value (Note 2)	1,826	1,768
Securities available for sale, at fair value (Note 2)	0	21,050
Securities held to maturity	14,944
Reserve Bank stock	0	0
Loans held for sale	0	0
Loans to other financial institutions	0	0
Loans, net	1,037,946	999,393
Accrued interest receivable	0	0
Interest rate lock commitments	0	0
Mortgage Loan Servicing Rights	0	0
Interest rate contracts	0
Deposits – noninterest-bearing	0	0
Deposits – interest-bearing	0	0
Borrowings	0
Subordinated debentures	0	0
Accrued interest payable	0	0
Interest rate contracts	$ 0
Borrowings		$ 0

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Note 6 - Fair Value Measurements - Assets Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Equity securities, at fair value (Note 2)	$ 8,288	$ 8,492
Securities available for sale, at fair value (Note 2)	566,142	1,098,885
US Treasury Securities [Member]
Securities available for sale, at fair value (Note 2)	83,643	91,979
US States and Political Subdivisions Debt Securities [Member]
Securities available for sale, at fair value (Note 2)	256,661	534,847
Collateralized Mortgage-Backed Securities [Member]
Securities available for sale, at fair value (Note 2)	211,128	433,115
Corporate Debt Securities [Member]
Securities available for sale, at fair value (Note 2)	1,238	20,642
Asset-Backed Securities [Member]
Securities available for sale, at fair value (Note 2)	13,472	16,294
US Treasury and Government [Member]
Securities available for sale, at fair value (Note 2)	2,680	2,008
Fair Value, Recurring [Member]
Securities available for sale, at fair value (Note 2)	566,142	1,098,885
Fair Value, Recurring [Member] | Interest Rate Contract [Member]
Interest rate contracts	14,209
Interest rate derivative contracts - liabilities	2,393
Fair Value, Recurring [Member] | Equity Securities [Member]
Equity securities, at fair value (Note 2)	8,288	8,492
Fair Value, Recurring [Member] | US Treasury Securities [Member]
Securities available for sale, at fair value (Note 2)	83,643	91,979
Fair Value, Recurring [Member] | US States and Political Subdivisions Debt Securities [Member]
Securities available for sale, at fair value (Note 2)	256,661	534,847
Fair Value, Recurring [Member] | Collateralized Mortgage-Backed Securities [Member]
Securities available for sale, at fair value (Note 2)	211,128	433,115
Fair Value, Recurring [Member] | Corporate Debt Securities [Member]
Securities available for sale, at fair value (Note 2)	1,238	20,642
Fair Value, Recurring [Member] | Asset-Backed Securities [Member]
Securities available for sale, at fair value (Note 2)	13,472	16,294
Fair Value, Recurring [Member] | US Treasury and Government [Member]
Securities available for sale, at fair value (Note 2)	2,008
Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member]
Securities available for sale, at fair value (Note 2)	0	0
Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member] | Interest Rate Contract [Member]
Interest rate contracts	0
Interest rate derivative contracts - liabilities	0
Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member] | Equity Securities [Member]
Equity securities, at fair value (Note 2)	6,462	6,724
Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member] | US Treasury Securities [Member]
Securities available for sale, at fair value (Note 2)	0	0
Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member] | US States and Political Subdivisions Debt Securities [Member]
Securities available for sale, at fair value (Note 2)	0	0
Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member] | Collateralized Mortgage-Backed Securities [Member]
Securities available for sale, at fair value (Note 2)	0	0
Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member] | Corporate Debt Securities [Member]
Securities available for sale, at fair value (Note 2)	0	0
Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member] | Asset-Backed Securities [Member]
Securities available for sale, at fair value (Note 2)	0	0
Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member] | US Treasury and Government [Member]
Securities available for sale, at fair value (Note 2)	0
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member]
Securities available for sale, at fair value (Note 2)	566,142	1,077,835
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member] | Interest Rate Contract [Member]
Interest rate contracts	14,209
Interest rate derivative contracts - liabilities	2,393
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member] | Equity Securities [Member]
Equity securities, at fair value (Note 2)	0	0
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member] | US Treasury Securities [Member]
Securities available for sale, at fair value (Note 2)	83,643	91,979
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member] | US States and Political Subdivisions Debt Securities [Member]
Securities available for sale, at fair value (Note 2)	256,661	514,797
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member] | Collateralized Mortgage-Backed Securities [Member]
Securities available for sale, at fair value (Note 2)	211,128	433,115
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member] | Corporate Debt Securities [Member]
Securities available for sale, at fair value (Note 2)	1,238	19,642
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member] | Asset-Backed Securities [Member]
Securities available for sale, at fair value (Note 2)	13,472	16,294
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member] | US Treasury and Government [Member]
Securities available for sale, at fair value (Note 2)	2,008
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member]
Securities available for sale, at fair value (Note 2)	0	21,050
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | Interest Rate Contract [Member]
Interest rate contracts	0
Interest rate derivative contracts - liabilities	0
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | Equity Securities [Member]
Equity securities, at fair value (Note 2)	1,826	1,768
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | US Treasury Securities [Member]
Securities available for sale, at fair value (Note 2)	0	0
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | US States and Political Subdivisions Debt Securities [Member]
Securities available for sale, at fair value (Note 2)	0	20,050
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | Collateralized Mortgage-Backed Securities [Member]
Securities available for sale, at fair value (Note 2)	0	0
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | Corporate Debt Securities [Member]
Securities available for sale, at fair value (Note 2)	0	1,000
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | Asset-Backed Securities [Member]
Securities available for sale, at fair value (Note 2)	0	$ 0
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | US Treasury and Government [Member]
Securities available for sale, at fair value (Note 2)	$ 0

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Note 6 - Fair Value Measurements - Changes in Level 3 Assets Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Equity Securities [Member]
Balance	$ 1,768	$ 1,485
Total realized and unrealized gains included in income	(5)	(39)
Net purchases, sales, calls, and maturities	63	220
Net transfers into Level 3	0	0
Balance	1,826	1,666
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 June 30	(5)	(39)
Net transfers into Level 3	(0)	(0)
Available-for-Sale Securities [Member]
Balance	21,050	11,423
Net purchases, sales, calls, and maturities	0	1,966
Net transfers into Level 3	0	0
Balance	0	13,125
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 June 30	0	(250)
Total unrealized gains included in other comprehensive income	0	(264)
Net transfers into Level 3	0	0
Transfer to held to maturity	$ (21,050)	$ 0

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Note 6 - Fair Value Measurements - Assets Measured at Fair Value on a Non-recurring Basis (Details) - Fair Value, Nonrecurring [Member] - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Impaired Loans	$ 2,687	$ 5,433
Other Real Estate	0	194
Mortgage Loan Servicing Rights	4,679	4,666
Fair Value, Inputs, Level 1 [Member]
Impaired Loans	0	0
Other Real Estate	0	0
Mortgage Loan Servicing Rights	0	0
Fair Value, Inputs, Level 2 [Member]
Impaired Loans	0	0
Other Real Estate	0	0
Mortgage Loan Servicing Rights	4,679	4,666
Fair Value, Inputs, Level 3 [Member]
Impaired Loans	2,687	5,433
Other Real Estate	0	194
Mortgage Loan Servicing Rights	$ 0	$ 0

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Note 7 - Revenue from Contracts with Customers - Revenue from Contracts with Customers (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Noninterest income from contracts with customers within the scope of ASC 606	$ 2,887	$ 2,723	$ 5,608	$ 5,254
Noninterest income within the scope of other GAAP topics	543	2,009	1,668	5,078
Total noninterest income	3,430	4,732	7,276	10,332
Service Charges and Fees on Deposit Accounts [Member]
Noninterest income from contracts with customers within the scope of ASC 606	1,036	822	2,067	1,608
Interchange Income [Member]
Noninterest income from contracts with customers within the scope of ASC 606	1,317	1,312	2,475	2,446
Investment Commission Income [Member]
Noninterest income from contracts with customers within the scope of ASC 606	233	198	438	471
Trust Fee Income [Member]
Noninterest income from contracts with customers within the scope of ASC 606	176	253	354	425
Other Charges and Fees for Customer Services [Member]
Noninterest income from contracts with customers within the scope of ASC 606	$ 125	$ 138	$ 274	$ 304

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Note 8 - Derivative and Hedging Activities (Details Textual) $ in Billions	6 Months Ended
	Jun. 30, 2022 USD ($)
Pay Floating Swap Agreement [Member] | Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member]
Derivative, Number of Instruments Held, Total	2
Derivative, Notional Amount	$ 0.2
Derivative, Fixed Coupon Rate	2.41%
Pay Fixed Swap Agreement [Member] | Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member]
Derivative, Number of Instruments Held, Total	1
Derivative, Notional Amount	$ 0.2
Derivative, Fixed Coupon Rate	2.75%
Derivative, Term of Contract (Year)	8 years
Four SOFR Cap Agreements [Member]
Derivative, Number of Instruments Held, Total	4
Derivative, Notional Amount	$ 0.2
Derivative, Term of Contract (Year)	8 years
Three SOFR Cap Agreement [Member] | Designated as Hedging Instrument [Member] | Fair Value Hedging [Member]
Derivative, Notional Amount	$ 0.1
Derivative, Floor Interest Rate	2.68%
One SOFR Cap Agreement [Member] | Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member]
Derivative, Notional Amount	$ 0.1
Derivative, Floor Interest Rate	2.68%

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Note 8 - Derivative and Hedging Activities - Schedule of Derivatives Instruments in Balance Sheet Location (Details) - Interest Rate Contract [Member] - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Other Assets [Member]
Interest rate contracts	$ 14,209	$ 0
Other Liabilities [Member]
Interest rate contracts	$ 2,393	$ 0

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Note 8 - Derivative and Hedging Activities - Location and Amount of Gain (Loss) in Income on Fair Value Hedging Relationships (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Interest Income [Member]
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	$ 422		$ 422
Interest Income [Member] | Interest Rate Contract, Hedged Items [Member]
The effects of fair value and cash flow hedging:	(71)		0
Interest Income [Member] | Interest Rate Contract [Member] | Designated as Hedging Instrument [Member]
The effects of fair value and cash flow hedging:	71		0
Interest Income [Member] | Interest Rate Contract [Member] | Designated as Hedging Instrument [Member] | Fair Value Hedging [Member]
Amount excluded from effectiveness testing recognized in earnings based on amortization approach	(153)		(153)
Interest Income [Member] | Interest Rate Contract [Member] | Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member]
Amount excluded from effectiveness testing recognized in earnings based on amortization approach	0		0
Amount of gain or (loss) reclassified from accumulated other comprehensive income into income	$ 0		$ 0
Interest Expense [Member]
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		$ (155)		$ (155)
Interest Expense [Member] | Interest Rate Contract, Hedged Items [Member]
The effects of fair value and cash flow hedging:		0		0
Interest Expense [Member] | Interest Rate Contract [Member] | Designated as Hedging Instrument [Member]
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]
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]
Amount excluded from effectiveness testing recognized in earnings based on amortization approach		(155)		(155)
Amount of gain or (loss) reclassified from accumulated other comprehensive income into income		$ 0		$ 0