Choiceone Financial Services, Inc. · NASDAQ:COFS
Choiceone Financial Services — Investor Presentation (September 2023)
23 slides from Choiceone Financial Services's investor presentation, Sep 6, 2023
Slide 1: ChoiceOne Financial Services, Inc.
Slide 2: Forward-Looking Statements
2 2 2 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,
Slide 3: Company Highlights
3 COMPANY HIGHLIGHTS Numbers based on ChoiceOne internal data as of 6/30/2023 except where specifically identified. • As of June 30, 2023, COFS regulatory capital ratios: Leverage (7.7%), Tier 1 Risk - Based (10.8%) and Total Risk Based (13.2%) • Use of interest rate derivatives and other instrument
Slide 4: Our vision is to be the best bank in Michigan
4 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 5: Company Profile
5 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 125 - year history, COFS has grown signifi
Slide 6: Awards & Accomplishments
6 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 Bank by Newsweek 3 Years in a row. 2021 – 2022
Slide 7: Executive Leadership
7 Mr. Michael J. Burke Jr. has served as President at ChoiceOne Bank since May 2020. Previously, he served as President, CEO, COO and Director at Lakestone Bank & Trust. Mr. Burke is also involved with the Lapeer Development Corporation, McLaren Lapeer Region Board of Trustees, Capac DDA, Lapeer His
Slide 8: Executive Leadership (continued)
8 Ms. Shelly M. Childers has served as Senior Vice President and Chief Information Officer at ChoiceOne Bank since 2019. Prior to that Ms. Childers was the Senior Vice President and Chief Information Officer at Lakestone Bank and Trust. Ms. Childers has over 25 years of experience leading both the o
Slide 9: Geographic Footprint
9 GRAND RAPIDS - KENTWOOD, MI Locations 10 Deposits $771,446 Market Share 2.46% Market Rank 10 SOUTHEASTERN MI (DETROIT MSA) Locations 13 Deposits $825,585 Market Share 0.41% Market Rank 13 MUSKEGON, MI Locations 5 Deposits $377,822 Market Share 17.15% Market Rank 3 Other, MI (1) Locations 3 Deposit
Slide 10: M&A History
10 Transaction Overview Deal Profile (Announcement) Target Operating Metrics (Quarter Before Announcement) Target Target City, State Announcement Date Deal Value ($M) Consideration Total Assets Gross Loans LTM ROAA Muskegon, MI 1/6/2020 $21.9 76.5% Stock / 23.5% Cash $185.1 $147.2 0.49% Lapeer, MI 3
Slide 11: Financial Summary
FINANCIAL SUMMARY
Slide 12: Historic Balance Sheet Growth
12 $856,191 $1,117,798 $1,068,831 $1,194,616 $1,273,152 $ - $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 2019 2020 2021 2022 Q2 2023 Note: All dollars in thousands (1) Includes $138.0 million, $33.1 million and $0 million in PPP loans in 2020, 2021 and 2022, respectively. All
Slide 13: Attractive Funding Base: Deposit Mix
13 Business - Transactional 29% Business - Savings 9% Retail - Transactional 24% Retail - Savings 23% Public Funds - Transactional 12% Public Funds - Savings 3% Deposit Commentary : ▪ Diverse local deposit franchise of retail, business, and municipal accounts ▪ Launched new treasury management platf
Slide 14: Deposit Trends and Cost of Deposits
14 0.27% 0.91% 0.25% 2.50% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% Q3 2015 Q2 2019 Last Cycle Q3 2015 - Q2 2019 Cost of IB Deposits Fed Funds $0 $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 Q4 2022 Q1 2023 Q2 2023 NIB Deposits IB Deposits Deposit Commentary : ▪ Deposits, excluding brokered
Slide 15: Loan Portfolio
15 All other loan types 61% Office CRE 2% Non - office CRE 37% Loan Commentary : ▪ Strong commercial real estate portfolio - 52% of CRE loans are owner occupied ▪ YTD Yield on loans of 5.1% ▪ $334 million of variable loans or 27% of portfolio with a total of 47% of portfolio repricing within the nex
Slide 16: Investment Portfolio
16 Commercial Mortgage Backed 28% Mortgage - Backed 14% Asset - Backed Securities 1% Corporate 2% State and MUNI - Tax Exempt 28% State and MUNI - Taxable 18% US Treasury Bonds and Agency 9% Numbers based on ChoiceOne internal data as of 6/30/2023 except where specifically identified. (1) See 6/30/2
Slide 17: Financial Performance Trends
17 70.63% 62.99% 63.85% 61.92% 65.66% 55.00% 57.00% 59.00% 61.00% 63.00% 65.00% 67.00% 69.00% 71.00% 73.00% 2019 2020 2021 2022 Q2 2023 FINANCIAL PERFORMANCE TRENDS – COFS Profitability metrics improved following the integration of M&A deals in 2019 and 2020. Efficiency Ratio NIM (1) ROAE ROAA Numbe
Slide 18: Noninterest Income
18 Gain on Sale of Loans Service Charges Wealth BOLI Revenue Other Fees 10% Gain on Sale of Loans Service Charges BOLI Revenue Wealth Other Fees Gain on Sale of Loans Service Charges Wealth BOLI Revenue Other Fees 36% 8% 9% 5% 46% of equ ity sec uriti es NONINTEREST INCOME – COFS Diversified sources
Slide 19: Asset Quality
19 ASSET QUALITY Historically strong credit metrics Net Charge - Offs / Average Loans NPLs/ Loans Texas Ratio NPAs/ Total Assets Numbers based on ChoiceOne internal data as of 06/30/2023 except where specifically identified. 0.53% 0.44% 0.24% 0.11% 0.07% 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% 201
Slide 20: Allowance for Credit Losses and Unfunded Commitments Reserve
20 $14,800 $15,065 $14,582 $3,275 $2,991 $3,156 $ - $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000 $20,000 Jan 1 2023 CECL Q1 2023 Q2 2023 Note: All dollars in Graph are in thousands (1) Remaining yield Mark related to the mark against loans acquired in the County Bank Corp. and
Slide 21: Strong Risk Management
21 STRONG RISK MANAGEMENT Interest Rate Risk Management • ChoiceOne uses interest rate swaps as part of our interest rate risk management strategy. ChoiceOne has pay - fixed interest rate swaps with a total notional value of $401.0 million, a fair value of $11.2 million and a weighted average coupon
Slide 22: COFS Trades on the NASDAQ
C OF S T R ADES ON TH E NAS D A Q ® Market Makers in ChoiceOne Stock D. A. Davidson & Co. Nick Bi cking 800.394.9230 Raymond James & Associates Anthony LanFranca 312.655.2961 Stifel, Nicolaus & Company, Inc. Paul Drueke 616.224.1553 Stock Registrar & Transfer Agent Continental Stock Transfer & Trust
Slide 23: Appendix: Non-GAAP Reconciliation
23 (1) Adjusted to a fully tax - equivalent basis to facilitate comparison to the taxable interest - earning assets. The adjustment use s 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 indu
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