Press Room
CHOICEONE FINANCIAL ANNOUNCES SECOND QUARTER EARNINGS FOR 2006
09/01/2006 ChoiceOne Financial Services, Inc. reports second quarter net income of $545,000, a decrease of $1,000 or less than 1% from the second quarter of 2005. Earnings per share for the second quarter of 2006 were $0.33, which was equal to the same period in 2005. Net income for the first six months of 2006 was $1,080,000 or $0.65 per share, compared to $1,061,000 or $0.64 per share in the first half of 2005. Total assets as of June 30, 2006 were $250.5 million, which represented growth of $12.4 million from a year earlier. Loans have grown 2% in the last twelve months, while deposits have increased 11% since June 30, 2005.
Net income was relatively unchanged in the second quarter of 2006 compared to the same period in 2005 and up slightly in the first six months of 2006 compared to the first half of 2005 due to a reduced provision for loan losses and higher noninterest income, offset by lower net interest income and higher noninterest expenses.
The provision for loan losses decreased $125,000 in the second quarter and $215,000 in the first half of 2006 compared to the same periods in 2005. The reduction was due to a decline in total loans in 2006 compared to growth in 2005 and lower net charge-offs in the first six months of 2006 than in the same period in 2005. Noninterest income grew $111,000 in the second quarter and $146,000 in the first six months of 2006 compared to the same periods in the prior year. Noninterest income growth was caused by higher customer service charges, gains on sales of securities, and higher profit-sharing income at the Bank’s insurance agency.
ChoiceOne’s net interest income declined $122,000 in the second quarter of 2006 compared to the same period in 2005, after increasing $4,000 in the first quarter of 2006. Net interest income for the first six months of 2006 was down $118,000 from the prior year. Although average earning assets grew 5% in the second quarter of 2006 and 5% in the first half of 2006 compared to the same periods in 2005, ChoiceOne’s interest rate spread was down 54 basis points in the second quarter and 41 basis points in the first six months of 2006 compared to the comparable periods in the prior year. The shrinkage in the interest rate spread resulted from deposits and borrowings repricing upward to a greater extent than loans and securities. Also, migration from lower cost deposits such as checking and savings accounts to higher cost deposits such as certificates of deposit contributed to a reduced interest margin for the second quarter and year-to-date periods. Noninterest expense increased $120,000 in the second quarter and $230,000 in the first six months of 2006 compared to the prior year. State single business tax expense was $109,000 higher in the first half of 2006 than in 2005 as a result of a tax adjustment recorded in the second quarter of 2005. Directors’ fees and expenses associated with foreclosed assets, employee training, and employee recruiting increased other expenses for the first half of 2006 compared to the first half of 2005.
James Bosserd, President and Chief Executive Officer, commented, “In this tough interest rate environment, we were happy to maintain earnings while building for the future. We believe our added insurance producers and investments in our data processing systems for check 21 and remote item capture processing will be good for our future.”
