On January 1, 2022, ChoiceOne reassessed and transferred, at fair value, $428.4 million of securities classified as available for sale to the held to maturity classification. The net unrealized after-tax loss of $2.7 million as of the transfer date remained in accumulated other comprehensive income to be amortized over the remaining life of the securities, offsetting the related amortization of discount or premium on the transferred securities. No gains or losses were recognized at the time of the transfer. The remaining net unamortized unrealized loss on transferred securities included in accumulated other comprehensive income was $1.7 million after tax as of March 31, 2026.

On March 1, 2025, ChoiceOne acquired $90.7 million in securities as part of the Merger; however, management chose to sell $78.9 million of those securities to pay down higher cost wholesale funding. The sale of the securities was completed so close to the fair value determination date that no loss was recognized. Consequently, the net increase in securities from the Merger was $11.8 million.

The fair value of equity securities and the related gross unrealized gains (losses) recognized in noninterest income were as follows:


	March 31, 2026
			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Equity securities	$	9,119	$	812	$	(506	)	$	9,425


	December 31, 2025
			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Equity securities	$	9,073	$	751	$	(471	)	$	9,353

The following tables present the amortized cost and fair value of securities available for sale and the gross unrealized gains (losses) recognized in accumulated other comprehensive income (loss) and the amortized cost and fair value of securities held to maturity and the related gross unrealized gains and losses:


	March 31, 2026
			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
Available for Sale:	Cost		Gains		Losses			Value
U.S. Treasury notes and bonds	$	94,117	$	9	$	(5,313	)	$	88,813
State and municipal		254,490		-		(34,216	)		220,274
Mortgage-backed		268,774		135		(15,843	)		253,066
Corporate		250		-		(29	)		221
Asset-backed securities		11,294		-		(137	)		11,157
Total	$	628,925	$	144	$	(55,538	)	$	573,531

(Dollars in thousands)
Held to Maturity:
U.S. Government and federal agency	$	2,986	$	-	$	(150	)	$	2,836
State and municipal		196,105		19		(23,337	)		172,787
Mortgage-backed		164,049		6		(14,388	)		149,667
Corporate		21,199		56		(1,105	)		20,150
Total	$	384,339	$	81	$	(38,980	)	$	345,440


	December 31, 2025
			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
Available for Sale:	Cost		Gains		Losses			Value
U.S. Treasury notes and bonds	$	94,200	$	30	$	(5,195	)	$	89,035
State and municipal		260,228		-		(32,654	)		227,574
Mortgage-backed		241,643		178		(14,767	)		227,054
Corporate		250		-		(28	)		222
Asset-backed securities		10,670		-		(135	)		10,535
Total	$	606,991	$	208	$	(52,779	)	$	554,420

(Dollars in thousands)
Held to Maturity:
U.S. Government and federal agency	$	2,984	$	-	$	(152	)	$	2,832
State and municipal		196,448		63		(22,116	)		174,395
Mortgage-backed		164,820		14		(13,729	)		151,105
Corporate		20,941		38		(1,189	)		19,790
Total	$	385,193	$	115	$	(37,186	)	$	348,122

Available for sale securities with unrealized losses as of March 31, 2026 and December 31, 2025, aggregated by investment category and length of time the individual securities have been in an unrealized loss position, were as follows:


	March 31, 2026
	Less than 12 months				More than 12 months				Total
(Dollars in thousands)	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Available for Sale:	Value		Losses		Value		Losses		Value		Losses
U.S. Treasury notes and bonds	$	-	$	-	$	83,968	$	5,313	$	83,968	$	5,313
State and municipal		5,254		396		215,020		33,820		220,274		34,216
Mortgage-backed		93,676		1,569		122,078		14,274		215,754		15,843
Corporate		-		-		221		29		221		29
Asset-backed securities		2,798		22		8,359		115		11,157		137
Total temporarily impaired	$	101,728	$	1,987	$	429,646	$	53,551	$	531,374	$	55,538


	December 31, 2025
	Less than 12 months				More than 12 months				Total
(Dollars in thousands)	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Available for Sale:	Value		Losses		Value		Losses		Value		Losses
U.S. Treasury notes and bonds	$	-	$	-	$	84,204	$	5,195	$	84,204	$	5,195
State and municipal		4,716		467		222,858		32,187		227,574		32,654
Mortgage-backed		66,709		644		128,063		14,123		194,772		14,767
Corporate		-		-		222		28		222		28
Asset-backed securities		1,910		10		8,625		125		10,535		135
Total temporarily impaired	$	73,335	$	1,121	$	443,972	$	51,658	$	517,307	$	52,779

Held to maturity securities with unrealized losses as of March 31, 2026 and December 31, 2025, aggregated by investment category and length of time the individual securities have been in an unrealized loss position, were as follows:


	March 31, 2026
	Less than 12 months				More than 12 months				Total
(Dollars in thousands)	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Held to Maturity:	Value		Losses		Value		Losses		Value		Losses
U.S. Government and federal agency	$	-	$	-	$	2,836	$	150	$	2,836	$	150
State and municipal		1,660		16		167,518		23,321		169,178		23,337
Mortgage-backed		4,493		1		143,492		14,387		147,985		14,388
Corporate		1,140		10		16,338		1,095		17,478		1,105
Total temporarily impaired	$	7,293	$	27	$	330,184	$	38,953	$	337,477	$	38,980


	December 31, 2025
	Less than 12 months				More than 12 months				Total
(Dollars in thousands)	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Held to Maturity:	Value		Losses		Value		Losses		Value		Losses
U.S. Government and federal agency	$	-	$	-	$	2,832	$	152	$	2,832	$	152
State and municipal		45		-		169,139		22,116		169,184		22,116
Mortgage-backed		-		-		144,910		13,729		144,910		13,729
Corporate		2,043		57		16,296		1,132		18,339		1,189
Total temporarily impaired	$	2,088	$	57	$	333,177	$	37,129	$	335,265	$	37,186

ChoiceOne evaluates all securities on a quarterly basis to determine if an ACL and corresponding impairment charge should be recorded. Consideration is given to the extent to which the fair value has been less than cost, the financial condition and near-term prospects of the issuer, and the intent and ability of ChoiceOne to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value of amortized cost basis. ChoiceOne believes that unrealized losses on securities were temporary in nature and were caused primarily by changes in interest rates, increased credit spreads, and reduced market liquidity and were not caused by the credit status of the issuer. No ACL was recorded in the three months ended March 31, 2026 and March 31, 2025 on AFS securities.

The majority of unrealized losses at March 31, 2026, are related to U.S. Treasury notes and bonds, state and municipal bonds and mortgage backed securities. The U.S. Treasury notes are guaranteed by the U.S. government and 100% of the notes are rated AA or better. State and municipal bonds are backed by the taxing authority of the bond issuer or the revenues from the bond. On March 31, 2026, 85% of state and municipal bonds held are rated AA or better, 10% are A rated and 5% are not rated. Of the mortgage-backed securities held on March 31, 2026, 48% were issued by US government sponsored entities and agencies, and rated AA, 39% are AAA rated private issue and collateralized mortgage obligations, and 13% are unrated privately issued mortgage-backed securities with structured credit enhancement and collateralized mortgage obligations.

Unrealized losses have not been recognized into income because the issuers’ bonds are of high credit quality, and management does not intend to sell the bonds prior to their anticipated recovery, and the decline in fair value is largely due to changes in interest rates and other market conditions. The issuers continue to make timely principal and interest payments on the bonds. The fair value is expected to recover as the bonds approach maturity.

Presented below is a schedule of maturities of securities as of March 31, 2026. Available for sale securities are reported at fair value and held to maturity securities are reported at amortized cost. Callable securities in the money are presumed called and matured at the callable date.


	Available for Sale Securities maturing within:
									Fair Value
	Less than		1 Year -		5 Years -		More than		at March 31,
(Dollars in thousands)	1 Year		5 Years		10 Years		10 Years		2026

U.S. Treasury notes and bonds	$	2,941	$	85,872	$	-	$	-	$	88,813
State and municipal		-		34,108		20,317		165,849		220,274
Corporate		-		-		221		-		221
Asset-backed securities		-		7,976		3,181		-		11,157
Total debt securities		2,941		127,956		23,719		165,849		320,465

Mortgage-backed securities		4,892		133,475		84,705		29,994		253,066
Total Available for Sale	$	7,833	$	261,431	$	108,424	$	195,843	$	573,531


	Held to Maturity Securities maturing within:
									Amortized Cost
	Less than		1 Year -		5 Years -		More than		at March 31,
(Dollars in thousands)	1 Year		5 Years		10 Years		10 Years		2026

U.S. Government and federal agency	$	-	$	2,986	$	-	$	-	$	2,986
State and municipal		2,169		53,586		87,631		52,719		196,105
Corporate		-		548		20,651		-		21,199
Total debt securities		2,169		57,120		108,282		52,719		220,290

Mortgage-backed securities		1,761		117,081		45,207		-		164,049
Total Held to Maturity	$	3,930	$	174,201	$	153,489	$	52,719	$	384,339

Following is information regarding sales of securities available for sale for the three months ended March 31, 2026 and 2025. The cost of securities sold is determined using the specific identification method.


	Three Months Ended
(Dollars in thousands)	March 31,
	2026			2025
Proceeds from sales of securities	$	4,235		$	78,856
Gross realized gains		-			-
Gross realized losses		(203	)		-