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 $1.6 million after tax as of June 30, 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:


	June 30, 2026
			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Equity securities	$	9,132	$	893	$	(528	)	$	9,497


	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:


	June 30, 2026
			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
Available for Sale:	Cost		Gains		Losses			Value
U.S. Treasury notes and bonds	$	94,033	$	-	$	(5,332	)	$	88,701
State and municipal		226,435		-		(27,204	)		199,231
Mortgage-backed		272,452		167		(15,896	)		256,723
Corporate		250		-		(26	)		224
Asset-backed securities		10,788		1		(97	)		10,692
Total	$	603,958	$	168	$	(48,555	)	$	555,571

(Dollars in thousands)
Held to Maturity:
U.S. Government and federal agency	$	2,987	$	-	$	(164	)	$	2,823
State and municipal		195,676		65		(23,035	)		172,706
Mortgage-backed		162,937		2		(14,581	)		148,358
Corporate		21,745		66		(872	)		20,939
Total	$	383,345	$	133	$	(38,652	)	$	344,826


	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 June 30, 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:


	June 30, 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	$	3,875	$	4	$	83,832	$	5,328	$	87,707	$	5,332
State and municipal		555		2		198,676		27,202		199,231		27,204
Mortgage-backed		104,549		2,042		111,925		13,854		216,474		15,896
Corporate		-		-		224		26		224		26
Asset-backed securities		1,594		14		8,167		83		9,761		97
Total temporarily impaired	$	110,573	$	2,062	$	402,824	$	46,493	$	513,397	$	48,555


	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 June 30, 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:


	June 30, 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	$	-	$	-	$	2,823	$	164	$	2,823	$	164
State and municipal		1,368		7		167,029		23,028		168,397		23,035
Mortgage-backed		4,958		5		142,194		14,576		147,152		14,581
Corporate		1,380		20		15,656		852		17,036		872
Total temporarily impaired	$	7,706	$	32	$	327,702	$	38,620	$	335,408	$	38,652


	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 and six months ended June 30, 2026 and June 30, 2025 on AFS securities.

The majority of unrealized losses at June 30, 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 June 30, 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 June 30, 2026, 47% were issued by US government sponsored entities and agencies, and rated AA, 38% are AAA rated private issue and collateralized mortgage obligations, and 15% 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 June 30, 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 June 30,
(Dollars in thousands)	1 Year		5 Years		10 Years		10 Years		2026

U.S. Treasury notes and bonds	$	2,956	$	85,745	$	-	$	-	$	88,701
State and municipal		555		41,027		15,974		141,675		199,231
Corporate		-		-		224		-		224
Asset-backed securities		797		6,766		3,129		-		10,692
Total debt securities		4,308		133,538		19,327		141,675		298,848

Mortgage-backed securities		10,285		138,159		81,116		27,163		256,723
Total Available for Sale	$	14,593	$	271,697	$	100,443	$	168,838	$	555,571


	Held to Maturity Securities maturing within:
									Amortized Cost
	Less than		1 Year -		5 Years -		More than		at June 30,
(Dollars in thousands)	1 Year		5 Years		10 Years		10 Years		2026

U.S. Government and federal agency	$	-	$	2,987	$	-	$	-	$	2,987
State and municipal		3,259		68,607		80,485		43,325		195,676
Corporate		-		7,257		14,488		-		21,745
Total debt securities		3,259		78,851		94,973		43,325		220,408

Mortgage-backed securities		1,500		133,828		27,609		-		162,937
Total Held to Maturity	$	4,759	$	212,679	$	122,582	$	43,325	$	383,345

Following is information regarding sales of securities available for sale for the three and six months ended June 30, 2026 and 2025. The cost of securities sold is determined using the specific identification method.


	Three Months Ended					Six Months Ended
(Dollars in thousands)	June 30,					June 30,
	2026			2025		2026			2025
Proceeds from sales of securities	$	25,298		$	-	$	29,533		$	78,856
Gross realized gains		-			-		-			-
Gross realized losses		(1,933	)		-		(2,136	)		-

Following is information regarding unrealized gains and losses on equity securities for the three and six months ended June 30, 2026 and 2025:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2026		2025		2026		2025
(Dollars in thousands)
Net gains and (losses) recognized during the period	$	59	$	239	$	85	$	346
Less: Net gains and (losses) recognized during the period on securities sold		-		-		—		—

Unrealized gains and (losses) recognized during the reporting period on securities still held at the reporting date	$	59	$	239	$	85	$	346