Focus and Banking & Finance

Record earnings in Q2 for ChoiceOne Bank

Commercial loan growth is $2.8 million

August 9, 2013
| By Pete Daly |
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ChoiceOne Financial Services (OTCBB: COFS) in Sparta, parent company of ChoiceOne Bank, reported net income of $1,312,000 for the second quarter, compared to $1,021,000 in the same period in 2012. Earnings per share were 40 cents, compared to 31 cents in the second quarter of 2012.

Net income for the first six months of 2013 was $2,547,000 or 77 cents per share, compared to $2,036,000 or 62 cents per share in the first half of 2012.

“I am very pleased to report our earnings for this quarter,” said James Bosserd, president and CEO of ChoiceOne Financial Services Inc. “ChoiceOne experienced record earnings for both the second quarter and first six months of 2013. Our loan portfolio experienced continued growth during the quarter along with our residential mortgage loan activity, which continued to reflect the impact of low rates and the reported housing recovery. Our total assets declined during the quarter due to a reduction in our total deposits. As a local community bank, we continued to help local borrowers refinance their mortgages to reduce their monthly payment or purchase a new home. Our local deposits help to fund loan growth and investments in our communities.”

The increases in net income in both the second quarter and first six months of 2013 were due to higher net interest income and a lower provision for loan losses, which was partially offset by higher noninterest expense.

Net interest income increased $158,000 in the second quarter of 2013 and $166,000 in the first six months of 2013 compared to the same periods in 2012. Average earning assets increased $4.9 million in the first half of 2013 compared to the same period in 2012. The average balance of loans increased $1.7 million as average residential mortgage loans were $2 million higher in the first half of 2013 than in the same period in 2012.

The average balance of securities was $8.9 million higher as securities were purchased during 2012 to provide growth in earning assets. ChoiceOne’s net interest spread increased 10 basis points in the first six months of 2013 compared to the same period in 2012. The interest spread increase was caused by reductions in rates paid on funding sources that were greater than reductions in rates earned on loans and investment securities.

Total assets decreased $10.6 million in the second quarter of 2013 but have grown $3.2 million in the 12 months ended June 30, 2013. Cash and cash equivalents decreased $7.4 million in the second quarter of 2013 and $9.7 million in the last 12 months due to the timing of loan and deposit growth. Securities declined $2.5 million in the second quarter of 2013 but grew $1.6 million in the last 12 months as loan growth used available funds from securities maturities and deposit growth. Net loans grew $2.7 million in the second quarter of 2013 and $10.8 million in the 12 months ended June 30. The increase in net loans in the second quarter of 2013 resulted from commercial loan growth of $2.8 million. Total deposits declined $21.2 million in the second quarter of 2013 and have increased $1.7 million in the last 12 months. The decrease in total deposits in the second quarter of 2013 is consistent with seasonal decreases that have occurred in the same quarter in prior years. Noninterest-bearing demand deposits increased $1.5 million in the second quarter of 2013 while interest-bearing deposits experienced a decrease of $22.7 million.

ChoiceOne Bank operates 12 full-service offices in parts of Kent, Ottawa, Muskegon, and Newaygo counties, plus it also offers insurance and investment products through its subsidiary, ChoiceOne Insurance Agencies Inc.

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