ChoiceOne Financial's Q2 profit falls on securities loss

Overview

• US community bank's Q2 net income and EPS declined yr/yr, impacted by securities loss

• Core loans rose 11.9% annualized, supported by purchase of $40 mln in mortgages

• Company repurchased 35,000 shares for $1.1 mln in Q2 under existing buyback plan

Outlook

• ChoiceOne expects to open a new branch in Troy, MI later in 2026

• Company intends to purchase additional transferable tax credits in 2026 to reduce tax expense

• Company sees slight upward pressure on deposit costs as new and repriced deposits carry higher rates

Result Drivers

• SECURITIES LOSS - Q2 results included a $1.9 mln pre-tax loss from selling municipal securities to fund loan growth and improve interest rate profile

• LOAN GROWTH - Core loans increased 11.9% annualized in Q2, reflecting organic production and the purchase of $40 mln in adjustable-rate mortgages

• NET INTEREST MARGIN PRESSURE - Net interest margin declined as higher asset yields were offset by increased funding costs and lower accretion income from purchased loans

Company press release: ID:nPn96N4dQa

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 2 "strong buy" or "buy", 1 "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the banks peer group is "hold."

• Wall Street's median 12-month price target for ChoiceOne Financial Services Inc is $34.00, about 1% above its July 23 closing price of $33.67

• The stock recently traded at 9 times the next 12-month earnings vs. a P/E of 8 three months ago

Reuters Recommended Reads

• July 23 - Independent Bank Michigan's Q2 profit rises on higher interest income

• July 22 - United Bancshares Q2 net income drops on one-time securities loss

• July 21 - Capital One second-quarter profit rises on higher interest income

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(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)