Updated 3/6/25
ChoiceOne Financial Services, Inc. (NASDAQ: COFS) is a community bank that primarily serves Michigan. It’s not a massive national player, but rather a regional institution focused on personal banking, small businesses, and building long-term customer relationships. Unlike the big banks, ChoiceOne operates in a space where stability and consistency often matter more than aggressive expansion.
For dividend investors, regional banks like ChoiceOne offer a unique blend of income potential and solid financials. While the banking sector as a whole faces challenges tied to interest rate shifts and economic uncertainty, this stock has managed to maintain a steady dividend history. Let’s take a closer look at what makes this an interesting choice for dividend-focused portfolios.
Key Dividend Metrics
🟢 Dividend Yield: 3.66% (Forward)
🟢 Annual Dividend: $1.12 per share
🟢 Payout Ratio: 33.54% (Sustainable)
🟢 5-Year Average Dividend Yield: 3.72%
🟢 Dividend Growth: Slow but steady over time
🟢 Ex-Dividend Date: March 14, 2025
🟢 Next Payout Date: March 31, 2025
Dividend Overview
For those seeking a reliable income stream, ChoiceOne offers a dividend yield of 3.66%, which is right in the sweet spot—high enough to be attractive but not so high that it raises concerns about sustainability. The payout ratio of 33.54% shows that the company is paying a reasonable portion of its earnings to shareholders while keeping enough on hand for future growth and stability.
This is a company that doesn’t chase flashy, aggressive growth but instead focuses on maintaining a healthy financial position and rewarding long-term investors. The fact that the five-year average yield sits at 3.72% reinforces that this stock has been consistently rewarding shareholders rather than delivering unpredictable payouts.
Dividend Growth and Safety
Consistency is key when looking for dividend-paying stocks, and ChoiceOne has done well in this regard. The company has managed to steadily increase dividends over time, although the growth has been more measured compared to some of the larger financial institutions.
The low payout ratio suggests there is room for future dividend increases, which is always a positive sign. While some banks get overly aggressive with their payouts—only to cut them when times get tough—ChoiceOne seems to be taking a conservative approach. This adds a layer of safety for investors who rely on dividends for steady income.
Chart Analysis
Price Trend and Moving Averages
Looking at the chart, COFS has been in a downward trend over the past few months after reaching a peak in late 2024. The 50-day moving average (orange line) is sloping downward, which suggests that the stock has been losing momentum in the short term. Meanwhile, the 200-day moving average (blue line) is still rising, but the gap between the two is narrowing.
This kind of setup often indicates a shift in sentiment. If the price drops below the 200-day moving average and stays there, it could signal a more prolonged correction or even a trend reversal. On the other hand, if the stock finds support at this level, it might stabilize and attempt to recover.
Volume and Market Participation
The volume bars show spikes at certain points, particularly in early October, where there was a major increase in trading activity. This suggests that a large number of shares changed hands during that time, possibly due to earnings announcements or significant news.
More recently, volume has been relatively stable, but not particularly high. A low-volume decline like this often indicates that selling pressure is not overly aggressive, but there’s also not much enthusiasm from buyers stepping in to support the price yet. If volume picks up while the stock is near a key support level, it could provide clues about where the stock might head next.
Relative Strength Index (RSI) and Momentum
The RSI (Relative Strength Index) has been declining and is now sitting near the lower end of the range. This suggests that the stock is nearing oversold territory, meaning it could be due for a bounce. However, just because a stock is oversold doesn’t mean it will automatically recover—momentum still needs to shift in favor of buyers.
If the RSI starts turning up from these levels, it could be an early sign of stabilization. If it stays low or keeps dropping, it might indicate that selling pressure isn’t done yet.
Support and Resistance Levels
Right now, the stock is hovering around a key support level near the 200-day moving average. If it holds above this line, it could serve as a strong base for a potential rebound. If it breaks below, the next major support would likely be in the mid-$20s, where the stock previously consolidated before making its last major move higher.
On the upside, resistance is likely to be found around $33 to $34, where the 50-day moving average currently sits. The stock would need to reclaim this level before signaling any real strength in the short term.
Analyst Ratings
📈 Upgrades:
🟢 On March 3, 2025, Janney Montgomery Scott upgraded COFS from Neutral to Buy, assigning a fair value estimate of $38 per share. The firm pointed to the acquisition of Fentura Financial as a key factor in the upgrade. This deal is expected to significantly expand ChoiceOne’s asset base beyond $4.4 billion while strengthening its presence in eastern Michigan. Analysts see this as a move that enhances the bank’s market share and could position it as a future acquisition target. The increased scale and operational efficiency gained through the acquisition played a major role in the firm’s more optimistic outlook.
📉 Downgrades:
🔴 On January 27, 2025, DA Davidson lowered its price target from $41 to $39, though it maintained a Buy rating. While analysts remain positive on the stock’s long-term potential, they adjusted their expectations based on shifting market conditions and a more conservative outlook for earnings growth. This revision suggests that while COFS remains a strong regional player, external economic factors or integration risks from its recent acquisition could impact near-term performance.
🎯 Consensus Price Target:
The 12-month consensus price target for COFS currently stands at $39 per share, reflecting an expected upside from current levels. Analysts remain optimistic about the company’s growth trajectory, but the mixed ratings indicate that while expansion efforts are promising, execution risks and broader market conditions remain key factors to watch.
Earnings Report Summary
ChoiceOne Financial Services wrapped up 2024 on a strong note, delivering solid financial results that show steady growth across the board. The bank continued to expand its loan portfolio, improved its net income, and maintained strong asset quality, setting itself up for what could be another promising year ahead.
Stronger Earnings and Profit Growth
In the final quarter of 2024, ChoiceOne reported $7.16 million in net income, up quite a bit from the $5.29 million it made in the same quarter the year before. That’s about a 35 percent increase year over year, which is a big jump for a regional bank like this. Over the entire year, net income came in at $26.73 million, up from $21.26 million in 2023—a solid improvement. On a per-share basis, earnings landed at $0.79 for the quarter, and for the full year, $3.25 per share compared to $2.82 the year before.
Lending Business Keeps Growing
ChoiceOne’s loan portfolio continued to grow, which helped drive higher earnings. The bank added $40.3 million in new loans during the fourth quarter, an annualized growth rate of 11 percent. Over the full year, loans expanded by $114.5 million, or about 8.2 percent. The interest the bank earned on loans also increased, adding $3.8 million in the fourth quarter alone and $21.2 million over the full year.
On the deposit side, things were a little mixed. Deposits actually fell by $24 million in the fourth quarter, but that was largely due to seasonal factors, with public funds and tax-related money flowing out. Looking at the bigger picture, deposits still managed to grow by $79 million over the year, which is a good sign that the bank is maintaining a solid customer base.
Balance Sheet and Asset Quality Stay Strong
One of the things investors tend to watch closely with banks is asset quality, and ChoiceOne’s numbers still look solid. As of the end of the year, only 0.27 percent of total loans were classified as nonperforming, which is a very manageable level. The bank’s total assets also grew to $2.7 billion, up $146.5 million from the previous year, largely thanks to its growing loan portfolio.
Looking Ahead
CEO Kelly Potes highlighted the company’s focus on smart balance sheet management, which has helped improve profitability and set the stage for continued growth. There’s also a big move coming up—the planned merger with Fentura Financial and The State Bank, which is expected to close in early 2025. If all goes as planned, this could help ChoiceOne expand its reach and become even more competitive in the Michigan banking market.
All in all, it was a strong year for ChoiceOne, and the company’s steady loan growth, strong earnings, and careful financial management should keep it well-positioned heading into 2025.
Financial Health and Stability
A dividend is only as strong as the company paying it, and by most measures, ChoiceOne is in a solid financial position. Here are some key figures that highlight its strength:
✅ Profit Margin: 29.11% – A strong indicator of profitability
✅ Operating Margin: 38.17% – Shows efficiency in operations
✅ Return on Assets (ROA): 1.01% – Decent performance for a regional bank
✅ Return on Equity (ROE): 11.72% – Reflects strong shareholder returns
The bank has a cash position of $96.75 million, which provides a buffer against potential economic downturns. However, it does carry $210.75 million in debt. While that may seem high, it’s fairly typical for a bank, as their business model relies on lending out more than they hold in deposits.
One interesting number to watch is the book value per share, which stands at $29.05. This means the stock is trading only slightly above its intrinsic value, suggesting it isn’t significantly overvalued at current levels.
Valuation and Stock Performance
ChoiceOne is trading at a reasonable valuation compared to the broader banking sector.
✔️ Trailing P/E Ratio: 9.41 – Below the industry average, indicating value
✔️ Forward P/E Ratio: 7.79 – Suggests potential upside in earnings growth
✔️ Price-to-Book (P/B) Ratio: 1.77 – A fair valuation for a stable bank
✔️ Price-to-Sales (P/S) Ratio: 2.72 – Reasonable for its revenue base
The stock has been fairly stable, though it recently dipped to $30.68. It remains well above its 52-week low of $21.52 and has been relatively resilient compared to some of the volatility seen in the broader market.
With a 50-day moving average of $33.53, the stock has pulled back a bit, which could present an opportunity for investors looking for an entry point.
Risks and Considerations
No investment is without risk, and there are a few things to keep in mind when evaluating ChoiceOne.
⚠️ Interest Rate Sensitivity – Like all banks, its profitability is tied to interest rates. If rates drop, it could compress margins.
⚠️ Regional Exposure – Being a smaller, Michigan-focused bank means its success is tied to local economic conditions.
⚠️ Liquidity – Trading volume is relatively low, so large purchases or sales may be harder to execute quickly.
⚠️ Short Interest – A short ratio of 18.51 is worth noting, as it suggests some bearish sentiment on the stock.
Final Thoughts
For dividend investors, ChoiceOne Financial Services offers a steady and reliable income stream without excessive risk. The combination of a 3.66% yield, a low payout ratio, and a history of stable payments makes it an appealing option for those looking to generate income from their portfolio.
The bank’s solid financial foundation and reasonable valuation provide confidence that the dividend can be maintained and potentially increased over time. While there are risks tied to interest rates and regional exposure, the company’s conservative management style and steady financials help offset some of those concerns.
For income-focused investors looking for a regional banking stock with a history of steady dividends, this is one to watch.
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