ChoiceOne Financial Reports First Quarter 2021 Results
ChoiceOne Financial Services (NASDAQ: COFS) reported a net income of $6.2 million for Q1 2021, up from $3.3 million in Q1 2020. Diluted earnings per share increased to $0.80 from $0.45. The bank benefitted from the forgiveness of $56.4 million in Paycheck Protection Program (PPP) loans, generating $1.4 million in fee income. Total deposits rose by $165.4 million in Q1 2021, contributing to a total increase of $666.6 million year-over-year. Despite a $250,000 provision for loan losses, the bank's performance was bolstered by significant organic growth and fee income from PPP loans.
- Net income increased to $6.2 million in Q1 2021 from $3.3 million in Q1 2020.
- Diluted earnings per share rose to $0.80 from $0.45 year-over-year.
- Total deposits grew by $165.4 million in Q1 2021, and by $666.6 million year-over-year.
- $1.4 million of fee income generated from the forgiveness of $56.4 million in PPP loans.
- Organic deposit growth supported by funds from the Coronavirus Aid, Relief, and Economic Security Act.
- Provision for loan losses expense of $250,000 due to COVID-19 impacts and portfolio risk changes.
- Total noninterest expenses increased by $2.1 million compared to Q1 2020.
SPARTA, Mich., April 21, 2021 /PRNewswire/ -- ChoiceOne Financial Services, Inc. ("ChoiceOne", NASDAQ: COFS), the parent company for ChoiceOne Bank, reported financial results for the quarter ended March 31, 2021.
Significant items impacting comparable first quarter 2021 and 2020 results include the following:
- On July 1, 2020, ChoiceOne completed the merger of Community Shores Bank Corporation, the former parent company of Community Shores Bank, with and into ChoiceOne with ChoiceOne surviving the merger. Community Shores Bank was consolidated with and into ChoiceOne Bank effective October 16, 2020. The total assets, loans and deposits acquired in the merger with Community Shores were approximately
$244.0 million ,$173.9 million and$227.8 million , respectively. - There were no merger-related expenses in the first quarter of 2021. ChoiceOne incurred tax-effected merger-related expenses of approximately
$547,000 and$282,000 , respectively ($0.07 per diluted share and$0.04 per diluted share, respectively), for the quarters ended December 31, 2020 and March 31, 2020.
Financial Highlights
- Net income of
$6,238,000 for the first quarter of 2021 compared to$3,254,000 in the same period in 2020. - Diluted earnings per share of
$0.80 in the first quarter of 2021 compared to$0.45 per share in the first quarter of the prior year. - In the first quarter of 2021,
$56.4 million of Paycheck Protection Program (PPP) loans were forgiven resulting in$1.4 million of fee income. In addition, ChoiceOne added 718 PPP loans to its portfolio in the first quarter of 2021 with a balance of$76.7 million . Fee income related to new PPP loans amounted to$3.7 million , of which$208,000 was recognized in the first quarter of 2021. - Total deposits grew
$165.4 million in the first quarter of 2021 and$666.6 million since the first quarter of 2020.$227.8 million of the year over year growth was related to the merger with Community Shores which closed on July 1, 2020. - In an effort to deploy deposit growth ChoiceOne grew its securities portfolio
$148.7 million in the first quarter of 2021 and$363.6 million in the twelve months ended March 31, 2021. We believe our portfolio will provide a natural hedge for floating rate loans and investments are sufficiently short-term to allow us to grow loans organically as good credits become available.
ChoiceOne reported net income of
Total assets grew
Total noninterest income was
Total noninterest expense increased
"I am pleased to report strong net income for the first quarter of 2021," said Chief Executive Officer of ChoiceOne Kelly Potes. "I am particularly pleased with the organic deposit growth, and our PPP loans processed. As a community bank, our scale and agility has allowed us to efficiently process PPP loans for our small businesses helping them to maintain thousands of jobs in Michigan."
About ChoiceOne
ChoiceOne Financial Services, Inc. is a financial holding company headquartered in Sparta, Michigan and the parent corporation of ChoiceOne Bank. Member FDIC. ChoiceOne Bank operates 34 offices in parts of Kent, Lapeer, Macomb, Muskegon, Newaygo, Ottawa, and St. Clair counties. ChoiceOne Bank offers insurance and investment products through its subsidiary, ChoiceOne Insurance Agencies, Inc. For more information, please visit Investor Relations at ChoiceOne's website at choiceone.com.
Non-GAAP Financial Measures
This press release contains references to certain financial measures that are not defined in U.S. generally accepted accounting principles ("GAAP"). Management believes these non-GAAP financial measures provide additional information that is useful to investors in helping to understand the underlying financial performance of ChoiceOne.
Non-GAAP financial measures have inherent limitations. Readers should be aware of these limitations and should be cautious with respect to the use of such measures. To compensate for these limitations, we use non-GAAP measures as comparative tools, together with GAAP measures, to assist in the evaluation of our operating performance or financial condition. Also, we ensure that these measures are calculated using the appropriate GAAP or regulatory components in their entirety and that they are computed in a manner intended to facilitate consistent period-to-period comparisons. ChoiceOne's method of calculating these non-GAAP financial measures may differ from methods used by other companies. These non-GAAP financial measures should not be considered in isolation or as a substitute for those financial measures prepared in accordance with GAAP or in-effect regulatory requirements.
Where non-GAAP financial measures are used, the most directly comparable GAAP or regulatory financial measure, as well as the reconciliation to the most directly comparable GAAP or regulatory financial measure, can be found in this news release. See Non-GAAP Reconciliation.
Forward-Looking Statements
This release may contain forward-looking statements. 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. These statements reflect current beliefs as to the expected outcomes of future events and are not guarantees of future performance. These statements involve certain risks, uncertainties and assumptions ("risk factors") that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence, including without limitation the impact of the global coronavirus outbreak (COVID-19). 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.
The COVID-19 pandemic is adversely affecting us and our customers, counterparties, employees, and third-party service providers. The ultimate extent of the impacts on our business, financial position, results of operations, liquidity, and prospects is uncertain. Additional risk factors include, but are not limited to, the risk factors described in Item 1A in ChoiceOne Financial Services, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2020.
Condensed Balance Sheets | ||||||||||||
(In thousands) | 3/31/2021 | 12/31/2020 | 3/31/2020 | |||||||||
Cash and Cash Equivalents | $ | 135,328 | $ | 79,519 | $ | 45,471 | ||||||
Securities | 734,435 | 585,687 | 370,836 | |||||||||
Loans Held For Sale | 18,736 | 12,921 | 7,385 | |||||||||
Loans to Other Financial Institutions | 7,312 | 35,209 | 39,421 | |||||||||
Loans, Net of Allowance For Loan Losses | 1,027,343 | 1,062,075 | 806,787 | |||||||||
Premises and Equipment | 30,262 | 29,489 | 24,087 | |||||||||
Cash Surrender Value of Life Insurance Policies | 32,938 | 32,751 | 32,171 | |||||||||
Goodwill | 59,946 | 60,506 | 52,593 | |||||||||
Core Deposit Intangible | 4,961 | 5,269 | 5,653 | |||||||||
Other Assets | 18,869 | 15,916 | 14,086 | |||||||||
Total Assets | $ | 2,070,130 | $ | 1,919,342 | $ | 1,398,490 | ||||||
Noninterest-bearing Deposits | $ | 515,552 | $ | 477,654 | $ | 283,434 | ||||||
Interest-bearing Deposits | 1,324,412 | 1,196,924 | 889,965 | |||||||||
Borrowings | 6,599 | 9,327 | 23,188 | |||||||||
Other Liabilities | 4,902 | 8,169 | 6,101 | |||||||||
Total Liabilities | 1,851,465 | 1,692,074 | 1,202,688 | |||||||||
Shareholders' Equity | 218,665 | 227,268 | 195,802 | |||||||||
Total Liabilities and Shareholders' Equity | $ | 2,070,130 | $ | 1,919,342 | $ | 1,398,490 | ||||||
Condensed Statements of Income | ||||||||||||
Three Months Ended | ||||||||||||
(In Thousands, Except Per Share Data) | 3/31/2021 | 12/31/2020 | 3/31/2020 | |||||||||
Interest Income | ||||||||||||
Loans, including fees | $ | 12,683 | $ | 12,764 | $ | 10,075 | ||||||
Securities and other | 2,973 | 2,276 | 2,419 | |||||||||
Total Interest Income | 15,656 | 15,040 | 12,494 | |||||||||
Interest Expense | ||||||||||||
Deposits | 880 | 949 | 1,385 | |||||||||
Borrowings | 88 | 99 | 138 | |||||||||
Total Interest Expense | 968 | 1,048 | 1,523 | |||||||||
Net Interest Income | 14,688 | 13,992 | 10,971 | |||||||||
Provision for Loan Losses | 250 | 1,000 | 775 | |||||||||
Net Interest Income After Provision for Loan Losses | 14,438 | 12,992 | 10,196 | |||||||||
Noninterest Income | ||||||||||||
Customer service charges | 1,920 | 1,946 | 1,845 | |||||||||
Insurance and investment commissions | 273 | 125 | 126 | |||||||||
Gains on sales of loans | 2,146 | 2,958 | 1,743 | |||||||||
Gains on sales of securities | 1 | - | 2 | |||||||||
Trust income | 173 | 169 | 170 | |||||||||
Earnings on life insurance policies | 186 | 195 | 192 | |||||||||
Change in market value of equity securities | 608 | 29 | (389) | |||||||||
Other income | 293 | 266 | 410 | |||||||||
Total Noninterest Income | 5,600 | 5,688 | 4,099 | |||||||||
Noninterest Expense | ||||||||||||
Salaries and benefits | 7,168 | 6,994 | 5,128 | |||||||||
Occupancy and equipment | 1,554 | 1,598 | 1,270 | |||||||||
Data processing | 1,429 | 2,128 | 1,484 | |||||||||
Professional fees | 729 | 819 | 762 | |||||||||
Core deposit intangible amortization | 307 | 396 | 353 | |||||||||
Other expenses | 1,341 | 1,833 | 1,419 | |||||||||
Total Noninterest Expense | 12,528 | 13,768 | 10,416 | |||||||||
Income Before Income Tax | 7,510 | 4,912 | 3,879 | |||||||||
Income Tax Expense | 1,272 | 812 | 625 | |||||||||
Net Income | $ | 6,238 | $ | 4,100 | $ | 3,254 | ||||||
Basic Earnings Per Share | $ | 0.80 | $ | 0.53 | $ | 0.45 | ||||||
Diluted Earnings Per Share | $ | 0.80 | $ | 0.52 | $ | 0.45 | ||||||
Non-GAAP Reconciliation
(Unaudited)
In addition to analyzing the Company's results on a reported basis, management reviews the Company's results and the results on an adjusted basis. The non-GAAP measures presented in the table below reflect the adjustments of the reported U.S. GAAP results for significant items that management does not believe are reflective of the Company's current and ongoing operations.
Three Months Ended | ||||||||||||
(In Thousands, Except Per Share Data) | 3/31/2021 | 12/31/2020 | 3/31/2020 | |||||||||
Income before income tax | $ | 7,510 | $ | 4,912 | $ | 3,879 | ||||||
Adjustment for merger-related expenses | - | 692 | 302 | |||||||||
Adjusted income before income tax | $ | 7,510 | $ | 5,604 | $ | 4,181 | ||||||
Income tax expense | $ | 1,272 | $ | 812 | $ | 625 | ||||||
Tax impact on adjustment for merger-related expenses | - | 145 | 20 | |||||||||
Adjusted income tax expense | $ | 1,272 | $ | 957 | $ | 645 | ||||||
Net income | $ | 6,238 | $ | 4,100 | $ | 3,254 | ||||||
Adjusted net income | $ | 6,238 | $ | 4,647 | $ | 3,536 | ||||||
Basic earnings per share | $ | 0.80 | $ | 0.53 | $ | 0.45 | ||||||
Diluted earnings per share | $ | 0.80 | $ | 0.52 | $ | 0.45 | ||||||
Adjusted basic earnings per share | $ | 0.80 | $ | 0.60 | $ | 0.49 | ||||||
Adjusted diluted earnings per share | $ | 0.80 | $ | 0.59 | $ | 0.49 | ||||||
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SOURCE ChoiceOne Financial Services, Inc.
FAQ
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