Loans and Allowance for Credit Losses

3 Months Ended

Mar. 31, 2026

NOTE 3 – LOANS AND ALLOWANCE FOR CREDIT LOSSES

Loans by type as a percentage of the portfolio were as follows:


	March 31, 2026					December 31, 2025
(Dollars in thousands)	Balance		%			Balance		%			Percent Increase (Decrease)
Agricultural	$	47,840		1.6	%	$	56,218		1.9	%		(14.9	)	%
Commercial and Industrial		369,425		12.4	%		352,556		11.7	%		4.8		%
Commercial Real Estate		1,745,410		58.5	%		1,780,396		58.9	%		(2.0	)	%
Consumer		23,180		0.8	%		26,701		0.9	%		(13.2	)	%
Construction Real Estate		20,897		0.7	%		19,139		0.6	%		9.2		%
Residential Real Estate		725,358		24.3	%		728,037		24.1	%		(0.4	)	%
Mortgage Warehouse Advances		51,187		1.7	%		58,987		2.0	%		(13.2	)	%
Gross Loans	$	2,983,297				$	3,022,034

Allowance for credit losses		35,496		1.19	%		35,550		1.18	%

Net loans	$	2,947,801				$	2,986,484

Activity in the allowance for credit losses and balances in the loan portfolio were as follows:


				Commercial														Mortgage
(Dollars in thousands)				And					Commercial			Construction			Residential			Warehouse
	Agricultural			Industrial		Consumer			Real Estate			Real Estate			Real Estate			Advances			Total
Allowance for Credit Losses Three Months Ended March 31, 2026
Beginning balance	$	219		$	6,797	$	693		$	18,416		$	80		$	9,257		$	88		$	35,550
Charge-offs		-			-		(204	)		-			-			(26	)		-			(230	)
Recoveries		-			20		147			-			-			9			-			176
Provision		(48	)		2,108		(73	)		(2,665	)		(33	)		722			(11	)		-
Ending balance	$	171		$	8,925	$	563		$	15,751		$	47		$	9,962		$	77		$	35,496
Loans
March 31, 2026
Ending loan balance	$	47,840		$	369,425	$	23,180		$	1,745,410		$	20,897		$	725,358		$	51,187		$	2,983,297

The outstanding balance and related ACL on PCD loans as of March 1, 2025 (the acquisition date) and March 31, 2026 is as follows (in thousands):


	As of March 31, 2026				As of March 1, 2025
	Loan Balance		ACL Balance		Loan Balance		ACL Balance
(dollars in thousands)
Agricultural	$	441	$	8	$	611	$	2
Commercial and Industrial		11,734		2,939		13,572		2,960
Commercial Real Estate		56,418		2,606		79,444		1,791
Consumer		6		-		32		0
Residential Real Estate		17,127		243		19,252		171
Total	$	85,726	$	5,796	$	112,911	$	4,924


			Commercial														Mortgage
(Dollars in thousands)			and						Commercial			Construction		Residential			Warehouse
	Agricultural		Industrial			Consumer			Real Estate			Real Estate		Real Estate			Advances		Total
Allowance for Credit Losses
December 31, 2025
Beginning Balance	$	90	$	2,260		$	733		$	9,460		$	59	$	3,890		$	60	$	16,552
Acquisition related allowance for credit loss (PCD)		2		2,963						1,791					168					4,924
Charge-offs				(245	)		(720	)		(416	)				(76	)				(1,457	)
Recoveries				9			380								29					418
Provision		127		1,810			300			7,581			21		5,246			28		15,113
Ending balance	$	219	$	6,797		$	693		$	18,416		$	80	$	9,257		$	88	$	35,550
Loans
December 31, 2025
Ending loan balance	$	56,218	$	352,556		$	26,701		$	1,780,396		$	19,139	$	728,037		$	58,987	$	3,022,034


			Commercial
(Dollars in thousands)			and					Commercial		Construction		Residential			Mortgage
	Agricultural		Industrial		Consumer			Real Estate		Real Estate		Real Estate			Warehouse Advances			Total
Allowance for Credit Losses Three Months Ended March 31, 2025
Beginning balance	$	90	$	2,260	$	733		$	9,460	$	59	$	3,890		$	60		$	16,552
Acquisition related allowance for credit loss (PCD)		2		2,963					1,791				168						4,924
Charge-offs		-		-		(133	)		-		-		(22	)		-			(155	)
Recoveries		-		2		60			-		-		21			-			83
Provision		128		278		43			9,476		31		3,263			(56	)		13,163
Ending balance	$	220	$	5,503	$	703		$	20,727	$	90	$	7,320		$	4		$	34,567
Loans
March 31, 2025
Ending loan balance	$	48,165	$	345,138	$	30,932		$	1,757,598	$	18,067	$	722,662		$	2,393		$	2,924,955

The process to monitor the credit quality of ChoiceOne’s loan portfolio includes tracking (1) the risk ratings of business loans and (2) delinquent and nonperforming consumer loans. Business loans are risk rated on a scale of 1 to 9. A description of the characteristics of the ratings follows:

Risk Rating 1 through 5 or pass: These loans are considered pass credits. They exhibit acceptable credit risk and demonstrate the ability to repay the loan from normal business operations.

Risk rating 6 or special mention: Loans and other credit extensions bearing this grade are considered to be inadequately protected by the current sound worth and debt service capacity of the borrower or of any pledged collateral. These obligations, even if apparently protected by collateral value, have well-defined weaknesses related to adverse financial, managerial, economic, market, or political conditions that have clearly jeopardized repayment of principal and interest as originally intended. Furthermore, there is the possibility that ChoiceOne Bank will sustain some future loss if such weaknesses are not corrected. Clear loss potential, however, does not have to exist in any individual assets classified as special mention. Loans falling into this category should have clear action plans and timelines with benchmarks to determine which direction the relationship will move.

Risk rating 7 or substandard: Loans and other credit extensions graded “7” have all the weaknesses inherent in those graded “6”, with the added characteristic that the severity of the weaknesses makes collection or liquidation in full highly questionable or improbable based upon currently existing facts, conditions, and values. Loans in this classification should be evaluated for non-accrual status. All nonaccrual commercial and Retail loans must be at a minimum graded a risk code “7”.

Risk rating 8 or doubtful: Loans and other credit extensions bearing this grade have been determined to have the extreme probability of some loss, but because of certain important and reasonably specific factors, the amount of loss cannot be determined. Such pending factors could include merger or liquidation, additional capital injection, refinancing plans, or perfection of liens on additional collateral.

Risk rating 9 or loss: Loans in this classification are considered uncollectible and cannot be justified as a viable asset of ChoiceOne Bank. This classification does not mean the loan has absolutely no recovery value, but that it is neither practical nor desirable to defer writing off this loan even though partial recovery may be obtained in the future.

The following tables reflect the amortized cost basis of loans as of March 31, 2026 based on year of origination (dollars in thousands). The current year-to-date gross write offs reflect three months ended March 31, 2026 gross write offs:


Commercial:	2026		2025		2024		2023		2022		Prior		Term Loans Total		Revolving Loans		Grand Total
Agricultural
Pass	$	1,505	$	4,383	$	3,941	$	1,456	$	3,527	$	20,878	$	35,690	$	11,417	$	47,107
Special mention		-		-		-		-		-		148		148		-		148
Substandard		-		-		-		266		-		220		486		99		585
Doubtful		-		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-		-
Total	$	1,505	$	4,383	$	3,941	$	1,722	$	3,527	$	21,246	$	36,324	$	11,516	$	47,840
Current year-to-date gross write-offs (1)	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Commercial and Industrial
Pass	$	9,578	$	53,196	$	35,566	$	15,418	$	31,067	$	28,103	$	172,928	$	182,396	$	355,324
Special mention		-		-		-		-		39		237		276		188		464
Substandard		-		-		186		7,982		254		3,020		11,442		2,195		13,637
Doubtful		-		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-		-
Total	$	9,578	$	53,196	$	35,752	$	23,400	$	31,360	$	31,360	$	184,646	$	184,779	$	369,425
Current year-to-date gross write-offs (1)	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Commercial Real Estate
Pass	$	31,944	$	232,949	$	180,979	$	125,006	$	319,508	$	595,452	$	1,485,838	$	231,785	$	1,717,623
Special mention		-		-		-		-		13,368		1,573		14,941		-		14,941
Substandard		-		-		109		1,599		7,864		3,149		12,721		125		12,846
Doubtful		-		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-		-
Total	$	31,944	$	232,949	$	181,088	$	126,605	$	340,740	$	600,174	$	1,513,500	$	231,910	$	1,745,410
Current year-to-date gross write-offs (1)	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Total Commercial Loans	$	43,027	$	290,528	$	220,781	$	151,727	$	375,627	$	652,780	$	1,734,470	$	428,205	$	2,162,675


Retail:	2026		2025		2024		2023		2022		Prior		Term Loans Total		Revolving Loans		Grand Total
Consumer
Performing	$	1,690	$	5,455	$	3,276	$	4,071	$	3,773	$	4,301	$	22,566	$	525	$	23,091
Nonperforming		-		-		-		-		-		-		-		-		-
Nonaccrual		-		1		1		15		-		43		60		29		89
Total	$	1,690	$	5,456	$	3,277	$	4,086	$	3,773	$	4,344	$	22,626	$	554	$	23,180
Current year-to-date gross write-offs (1)	$	-	$	-	$	-	$	-	$	2	$	1	$	3	$	-	$	3

Construction real estate
Performing	$	280	$	592	$	-	$	-	$	-	$	485	$	1,357	$	19,540	$	20,897
Nonperforming		-		-		-		-		-		-		-		-		-
Nonaccrual		-		-		-		-		-		-		-		-		-
Total	$	280	$	592	$	-	$	-	$	-	$	485	$	1,357	$	19,540	$	20,897
Current year-to-date gross write-offs (1)	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Residential real estate
Performing	$	17,227	$	70,081	$	49,155	$	53,079	$	155,712	$	257,603	$	602,857	$	112,385	$	715,242
Nonperforming		-		-		-		-		-		-		-		-		-
Nonaccrual		-		92		1,364		1,256		3,042		3,923		9,677		439		10,116
Total	$	17,227	$	70,173	$	50,519	$	54,335	$	158,754	$	261,526	$	612,534	$	112,824	$	725,358
Current year-to-date gross write-offs (1)	$	-	$	-	$	-	$	26	$	-	$	-	$	26	$	-	$	26

Mortgage warehouse advances
Performing	$	51,187	$	-	$	-	$	-	$	-	$	-	$	51,187	$	-	$	51,187
Nonperforming		-		-		-		-		-		-		-		-		-
Nonaccrual		-		-		-		-		-		-		-		-		-
Total	$	51,187	$	-	$	-	$	-	$	-	$	-	$	51,187	$	-	$	51,187
Current year-to-date gross write-offs (1)	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Total Retail Loans	$	70,384	$	76,221	$	53,796	$	58,421	$	162,527	$	266,355	$	687,704	$	132,918	$	820,622

(1) It is noted that write-offs in the tables above do not include checking account write-offs. Checking account write-offs during the first three months of 2026 were $200,000 or an annualized $800,000 compared to $561,000 during the full year 2025.

The following tables reflect the amortized cost basis of loans as of December 31, 2025 based on year of origination (dollars in thousands). The current year-to-date gross write offs reflect three months ended March 31, 2025 gross write offs:


Commercial:	2025		2024		2023		2022		2021		Prior		Term Loans Total		Revolving Loans		Grand Total
Agricultural
Pass	$	7,046	$	4,057	$	1,903	$	3,832	$	4,875	$	19,748	$	41,461	$	14,428	$	55,889
Special mention		-		-		-		-		-		153		153		-		153
Substandard		-		-		176		-		-		-		176		-		176
Doubtful		-		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-		-
Total	$	7,046	$	4,057	$	2,079	$	3,832	$	4,875	$	19,901	$	41,790	$	14,428	$	56,218
Current year-to-date gross write-offs (1)	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Commercial and Industrial
Pass	$	52,768	$	42,364	$	17,453	$	34,720	$	11,549	$	19,185	$	178,039	$	162,004	$	340,043
Special mention		-				-		127		154		99		380		-		380
Substandard		-		186		5,514		45		1,415		1,697		8,857		3,276		12,133
Doubtful		-		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-		-
Total	$	52,768	$	42,550	$	22,967	$	34,892	$	13,118	$	20,981	$	187,276	$	165,280	$	352,556
Current year-to-date gross write-offs (1)	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Commercial Real Estate
Pass	$	237,396	$	179,922	$	130,368	$	333,082	$	231,358	$	400,392	$	1,512,518	$	239,552	$	1,752,070
Special mention		-		-		-		13,977		1,549		42		15,568		-		15,568
Substandard		-		109		1,624		7,865		-		3,160		12,758		-		12,758
Doubtful		-		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-		-
Total	$	237,396	$	180,031	$	131,992	$	354,924	$	232,907	$	403,594	$	1,540,844	$	239,552	$	1,780,396
Current year-to-date gross write-offs (1)	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Total Commercial Loans	$	297,210	$	226,638	$	157,038	$	393,648	$	250,900	$	444,476	$	1,769,910	$	419,260	$	2,189,170


Retail:	2025		2024		2023		2022		2021		Prior		Term Loans Total		Revolving Loans		Grand Total
Consumer
Performing	$	6,352	$	3,959	$	4,874	$	5,520	$	3,079	$	2,057	$	25,841	$	759	$	26,600
Nonperforming		-		-		-		-		-		-		-		-		-
Nonaccrual		-		1		17		6		42		6		72		29		101
Total	$	6,352	$	3,960	$	4,891	$	5,526	$	3,121	$	2,063	$	25,913	$	788	$	26,701
Current year-to-date gross write-offs (1)	$	-	$	-	$	27	$	-	$	-	$	-	$	27	$	-	$	27

Construction real estate
Performing	$	1,419	$	998	$	-	$	-	$	493	$	-	$	2,910	$	16,229	$	19,139
Nonperforming		-		-		-		-		-		-		-		-		-
Nonaccrual		-		-		-		-		-		-		-		-		-
Total	$	1,419	$	998	$	-	$	-	$	493	$	-	$	2,910	$	16,229	$	19,139
Current year-to-date gross write-offs (1)	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Residential real estate
Performing	$	69,917	$	53,631	$	59,933	$	157,022	$	107,022	$	156,130	$	603,655	$	113,448	$	717,103
Nonperforming		-		-		-		-		-		-		-		-		-
Nonaccrual		96		701		1,156		3,165		2,677		2,600		10,395		539		10,934
Total	$	70,013	$	54,332	$	61,089	$	160,187	$	109,699	$	158,730	$	614,050	$	113,987	$	728,037
Current year-to-date gross write-offs (1)	$	-	$	-	$	-	$	4	$	18	$	-	$	22	$	-	$	22

Mortgage warehouse advances
Performing	$	58,987	$	-	$	-	$	-	$	-	$	-	$	58,987	$	-	$	58,987
Nonperforming		-		-		-		-		-		-		-		-		-
Nonaccrual		-		-		-		-		-		-		-		-		-
Total	$	58,987	$	-	$	-	$	-	$	-	$	-	$	58,987	$	-	$	58,987
Current year-to-date gross write-offs (1)	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Total Retail Loans	$	136,771	$	59,290	$	65,980	$	165,713	$	113,313	$	160,793	$	701,860	$	131,004	$	832,864

(1) It is noted that write-offs in the tables above do not include checking account write-offs. Checking account write-offs were $106,000 for the first three months of 2025 and $561,000 during the full year 2025.

The following table presents the amortized cost basis of the loans modified to borrowers experiencing financial difficulty disaggregated by class of financing receivable and type of concession granted during the full year 2025. There were no loans modified to borrowers experiencing financial difficulty during the first three months of 2026.


For the period ended:	December 31, 2025

	Term Extension
			% of Total
			Class of
(Dollars in thousands)	Amortized		Financing
	Cost Basis		Receivable
Residential real estate	$	128		0	%
Total	$	128

The following table presents the financial effect by type of modification made to borrowers experiencing financial difficulty and class of financing receivable during the full year 2025. There were no loans modified to borrowers experiencing financial difficulty during the first three months of 2026.


For the period ended:	December 31, 2025
	Term Extension
Residential real estate	Provided with new five year payment plan based on bankruptcy

The following table presents the period-end amortized cost basis of financing receivables that had a payment default during the period and were modified in the 12 months before default to borrowers experiencing financial difficulty.


For the period ended:	March 31, 2026
(Dollars in thousands)	Term extension

Residential real estate	$	127
Total	$	127


For the period ended:	December 31, 2025
(Dollars in thousands)	Term extension

Residential real estate	$	128
Total	$	128

The following table presents the period-end amortized cost basis of loans that have been modified in the past 12 months to borrowers experiencing financial difficulty by payment status and class of financing receivable.


For the period ended:	March 31, 2026
(Dollars in thousands)	Current		30-89 days		Greater than 90 days		Total

Residential real estate	$	-	$	127	$	-	$	127
Total	$	-	$	127	$	-	$	127


For the period ended:	December 31, 2025
(Dollars in thousands)	Current		30-89 days		Greater than 90 days		Total

Residential real estate	$	-	$	128	$	-	$	128
Total	$	-	$	128	$	-	$	128

Nonaccrual loans by loan category were as follows and the interest income recognized during the period on those nonaccrual loans:


As of March 31, 2026
(Dollars in thousands)	Nonaccrual loans with no ACL		Nonaccrual loans with ACL		Interest income recognized year to date on nonaccrual loans
Agricultural	$	266	$	144	$	7
Commercial and industrial		-		9,274		-
Consumer		-		89		-
Commercial real estate		-		8,003		-
Residential real estate		2,616		7,500		4
Total nonaccrual loans	$	2,882	$	25,010	$	11


As of December 31, 2025
(Dollars in thousands)	Nonaccrual loans with no ACL		Nonaccrual loans with ACL		Interest income recognized year to date on nonaccrual loans
Commercial and industrial	$	966	$	7,037	$	2
Consumer		-		101		6
Commercial real estate		-		8,020		-
Residential real estate		2,267		8,667		125
Total nonaccrual loans	$	3,233	$	23,825	$	133

An aging analysis of loans by loan category follows:


					Loans								Loans
	Loans		Loans		Past Due								90 Days
	Past Due		Past Due		Greater								Past
(Dollars in thousands)	30 to 59		60 to 89		Than 90				Loans Not		Total		Due and
	Days (1)		Days (1)		Days (1)		Total (1)		Past Due		Loans		Accruing
March 31, 2026
Agricultural	$	-	$	365	$	45	$	410	$	47,430	$	47,840	$	-
Commercial and industrial		157		1,910		6,211		8,278		361,147		369,425		-
Consumer		394		50		38		482		22,698		23,180		-
Commercial real estate		7,665		353		8,003		16,021		1,729,389		1,745,410		-
Construction real estate		2,249		-		-		2,249		18,648		20,897		-
Residential real estate		19,930		2,694		2,929		25,553		699,805		725,358		-
Mortgage warehouse advances		-		-		-		-		51,187		51,187		-
	$	30,395	$	5,372	$	17,226	$	52,993	$	2,930,304	$	2,983,297	$	-

(1) Includes nonaccrual loans.

Management evaluated loans past due 30 to 59 days as of March 31, 2026, and observed that a significant portion of these loans were exactly 30 days past due at the end of the first quarter of 2026. Subsequent to March 31, 2026, $12.2 million of these loans remitted payments and returned to current status by April 20, 2026.


					Loans								Loans
	Loans		Loans		Past Due								90 Days
	Past Due		Past Due		Greater								Past
(Dollars in thousands)	30 to 59		60 to 89		Than 90				Loans Not		Total		Due and
	Days (1)		Days (1)		Days (1)		Total (1)		Past Due		Loans		Accruing
December 31, 2025
Agricultural	$	-	$	-	$	-	$	-	$	56,218	$	56,218	$	-
Commercial and industrial		187		-		6,249		6,436		346,120		352,556		-
Consumer		102		38		62		202		26,499		26,701		-
Commercial real estate		547		211		8,020		8,778		1,771,618		1,780,396		-
Construction real estate		685		495		-		1,180		17,959		19,139		-
Residential real estate		10,844		4,671		4,952		20,467		707,570		728,037		-
Mortgage warehouse advances		-		-		-		-		58,987		58,987		-
	$	12,365	$	5,415	$	19,283	$	37,063	$	2,984,971	$	3,022,034	$	-

(1) Includes nonaccrual loans.

The following tables present the collateral dependent loans and the related ACL allocated by segment of loans. All collateral dependent loans were secured by real estate, with the exception of those classified as commercial and industrial and consumer, which were secured by accounts receivable, inventory, vehicles or equipment.


	March 31, 2026				December 31, 2025
(Dollars in thousands)	Loan Balance		ACL Allocation		Loan Balance		ACL Allocation
Agricultural	$	733	$	19	$	3	$	-
Commercial and Industrial		3,779		1,349		1,500		8
Commercial Real Estate		9,081		1,752		7,715		1,714
Consumer		146		6		115		5
Residential Real Estate		14,674		487		11,195		361
Total	$	28,413	$	3,613	$	20,528	$	2,088