Choiceone Financial Services, Inc. · NASDAQ:COFS
Choiceone Financial Services — Shareholder Meeting (May 2023)
23 slides from Choiceone Financial Services's shareholder meeting presentation, May 24, 2023
Slide 1: 2023 Annual Meeting
SERVICE • INNOVATION • RESPECT 2023 annual meeting
Slide 2: Agenda: 36th Annual Shareholder Meeting
2 2 2 AGENDA 36th Annual Shareholder Meeting INTRODUCTIONS • Jack Hendon, Chairman of the Board CALL TO ORDER & PRESENTATION OF PROPOSALS IN PROXY STATEMENT • Election of Directors • Advisory approval of ChoiceOne’s Executive Compensation • Ratification of the selection of Plante & Moran, PLLC as in
Slide 3: Forward-Looking Statements
3 3 3 FORWARD-LOOKING STATEMENTS • This presentation contains 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,” “e
Slide 4: Company Profile
4 4 4 COMPANY PROFILE ChoiceOne Financial Services, Inc . (“COFS”) was incorporated in 1986 as a Michigan corporation . ChoiceOne Bank was founded in 1898 (then called Sparta State Bank) in Sparta, MI at the corner of Division and Union Street . Over its more than 120 - year history, COFS has grown
Slide 5: M&A History and Transaction Overview
5 5 5 $671 $1,386 $1,781 $2,334 $2,386 2018 2019 2020 (1) 2021 (1) 2022 Transaction Overview Deal Profile (Announcement) Target Operating Metrics (Quarter Before Announcement) Target Target City, State Announcement Date Deal Value ($M) Consideration Total Assets Gross Loans LTM ROAA Muskegon, MI 1/6
Slide 6: Vision and Mission
6 6 6 Our vision is to be the best bank in Michigan. Our mission is to provide superior service, quality advice, and show utmost respect to everyone we meet.
Slide 7: Awards & Accomplishments
7 7 7 Five Star Bank ( Bauer Financial – 2020 ) Award Nominee ( West MI Hispanic Chamber of Commerce – 2018 ) AWARDS & ACCOMPLISHMENTS With an abundance of accolades & awards, ChoiceOne Bank has been recognized as a top - tier community bank in Michigan and in the banking industry. Named Best Small
Slide 8: 2022 Board of Directors of ChoiceOne Bank and ChoiceOne Financial Services
8 8 8 2022 BOARD OF DIRECTORS OF CHOICEONE BANK AND CHOICEONE FINANCIA L SERVICES, INC. BACK ROW (L - R) ROXANNE M. PAGE HAROLD J. BURNS MICHAEL J. BURKE, JR. KELLY J. POTES BRADLEY F. MCGINNIS GREGORY A. MCCONNELL ERIC E. BURROUGH MICHELLE M. WENDLING FRONT ROW (L - R) NELS W. NYBLAD KEITH D. BROPH
Slide 9: Senior Management
9 9 9 SENIOR MANAGEMENT BACK ROW (L - R) MICHAEL J. BURKE, JR. PRESIDENT KELLY J. POTES CEO ADOM J. GREENLAND EVP, CHIEF FINANCIAL OFFICER BRADLEY A. HENION EVP, CHIEF LENDING OFFICER FRONT ROW (L - R) SHELLY M. CHILDERS SVP, CHIEF INFORMATION OFFICER LEE A. BRAFORD SVP, CHIEF CREDIT OFFICER ROBERT
Slide 10: 2022 Donations and Volunteer Hours
choice® 2022 DONATIONS 2022 VOLUNTEER HOURS
Slide 11: Financial Summary
FINANCIAL SUMMARY
Slide 12: Adjusted Net Income
12 12 12 5 YEARS ADJUSTED NET INCOME *Tax-effected merger expenses refers to expenses related to the merger with County Bank Corp. effective on October 1, 2019, and the acquisition of Community Shores Bank Corporation effective on July 1, 2020. Adjusted amounts are not GAAP. Refer to Non-GAAP Reconc
Slide 13: Historic Balance Sheet Growth
13 13 13 $577,015 $1,154,602 $1,674,578 $2,052,294 $2,118,003 $ - $500,000 $1,000,000 $1,500,000 $2,000,000 2018 2019 2020 2021 2022 $430,548 $856,191 $1,117,798 $1,068,831 $1,194,616 $ - $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 2018 2019 2020 2021 2022 $670,544 $1,386,128 $1,919,34
Slide 14: Financial Performance Trends
14 14 14 70.08% 70.63% 62.99% 63.85% 61.92% 55.00% 57.00% 59.00% 61.00% 63.00% 65.00% 67.00% 69.00% 71.00% 73.00% 2018 2019 2020 2021 2022 FINANCIAL PERFORMANCE TRENDS – COFS Profitability metrics have improved following the integration of M&A deals in 2019 and 2020; the efficiency ratio was 61.92%
Slide 15: Loan and Deposit Commentary
15 15 15 Loan Commentary : ▪ History of successful small business and agriculture lending ▪ Strong commercial and industrial portfolio - 55% of CRE loans are owner occupied ▪ Ample on balance sheet liquidity to fund future loan growth, including $178.7 million of cash flow from securities over the n
Slide 16: Loan Loss Reserve and Credit Mark Build
16 16 16 LOAN LOSS RESERVE AND CREDIT MARK BUILD – COFS On December 31, 2022, COFS had an ALLL balance of $7.6 million and a $1.6 million accounting credit mark (1) against loans acquired from its two most recent M&A deals. COFS has $9.2 million to cover future loan losses, or 0.78% of gross loans (
Slide 17: Asset Quality
17 17 17 ASSET QUALITY Historically strong credit metrics Numbers based on ChoiceOne data as of 12/31/2022 except where specifically identified. Net Charge - Offs / Average Loans NPLs/ Loans Texas Ratio NPAs/ Total Assets 0.58% 0.53% 0.44% 0.24% 0.11% 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% 0.70%
Slide 18: Capital Levels
18 18 18 CAPITAL LEVELS In September 2021, ChoiceOne completed a private placement of $32.5 million in aggregate principal amount of 3.25% fixed - to - floating rate subordinated notes due 2031. ChoiceOne used a portion of the net proceeds from the private placement to redeem senior debt, fund commo
Slide 19: Cash Dividends Per Share
19 19 19 CASH DIVIDENDS PER SHARE *Amounts have been adjusted for a 5% Stock Dividend on May 31, 2018. Ordinary dividends Special dividend paid in connection with the merger with County Bank Corp. $0.25 $0.35 $0.45 $0.55 $0.65 $0.75 $0.85 $0.95 $1.05 2018* 2019 2020 2021 2022 3.48% dividend yield as
Slide 20: COFS Trades on the NASDAQ
C OF S T R ADES ON TH E NAS D A Q ® Since February of 2020, ChoiceOne trades on the NASDAQ Stock Exchange under its symbol, “COFS.”
Slide 21: Thank You
SERVICE • INNOVATION • RESPECT thank you
Slide 22: Appendix: Non-GAAP Reconciliation
22 22 22 APPENDIX NON - GAAP RECONCILIATION Year Ended December 31, (In Thousands, Except Per Share Data) 2020 2019 Income before income tax $ 18,885 $ 8,465 Adjustment for pre - tax merger expenses 3,219 2,001 Adjusted income before income tax 22,104 10,466 Income tax expense 3,272 1,294 Tax impact
Slide 23: Appendix: Non-GAAP Reconciliation
23 23 23 APPENDIX NON - GAAP RECONCILIATION (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 GAA
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