ChoiceOne Financial Services Reports $13.9 Million Net Loss Following Fentura Merger

ChoiceOne Financial Services, Inc. reported a significant financial transformation in its latest 10-Q filing for the first quarter of 2025, primarily driven by its recent merger with Fentura Financial, Inc. The company recorded a net loss of $13.9 million for the three months ended March 31, 2025, compared to a net income of $5.6 million during the same period in 2024. This shift is attributed to merger-related expenses totaling $17.2 million and a provision for credit losses of $12 million related to the acquisition of $1.3 billion in non-purchased credit deteriorated (non-PCD) loans. The diluted loss per share was $1.29, a stark contrast to earnings of $0.74 per share in the prior year.

Total assets surged to $4.3 billion as of March 31, 2025, marking an increase of $1.6 billion from the previous year, largely due to the merger. Core loans, which exclude loans held for sale, grew by $1.4 billion through acquisition and $40.1 million organically, reflecting a 10.6% annualized growth rate. Interest income from loans increased by $11.9 million, bolstered by the merger's impact and higher interest rates. However, the company also experienced a decline in securities, with a $28.5 million reduction compared to the previous year, as it restructured its portfolio to reduce high-cost wholesale funding.

In terms of operational metrics, ChoiceOne's total deposits reached $3.6 billion, an increase of $1.4 billion year-over-year, primarily driven by the merger. The company reported a loan-to-deposit ratio of 80.21% as of March 31, 2025. The number of shares outstanding rose significantly to 14.98 million following the issuance of 6.07 million shares as part of the merger consideration. The company also declared cash dividends of $0.28 per share, up from $0.27 in the previous year.

Looking ahead, ChoiceOne's management remains optimistic about the integration of Fentura and the potential for future growth. The company plans to leverage its expanded market presence and customer base to enhance profitability. However, it will continue to monitor its exposure to the automotive sector, which represents 3.4% of its gross loans, amid ongoing economic uncertainties. The management's focus will be on maintaining strong asset quality and managing liquidity effectively, with total available borrowing capacity reported at $945.3 million as of March 31, 2025.