ChoiceOne Financial Services : Reports Fourth Quarter 2018 Results

EXHIBIT 99.1

News Release

CONTACT:

TOM LAMPEN, CHOICEONE BANK

[phone]

[e-mail]

CHOICEONE FINANCIAL REPORTS FOURTH QUARTER 2018 RESULTS

Sparta, Mich. - January 23, 2019 - ChoiceOne Financial Services, Inc. (OTC:COFS), the parent company for ChoiceOne Bank, reported net income of $1,828,000 for the fourth quarter of 2018 compared to $1,367,000 in the same period in 2017. Diluted earnings per share was $0.50 in the fourth quarter of 2018 compared to an adjusted $0.38 per share in the fourth quarter of the prior year. Net income for the year of 2018 was $7,333,000, compared to $6,168,000 in 2017. Diluted earnings per share for the twelve months ended December 31, 2018 was $2.02 compared to an adjusted $1.70 per share for the twelve months ended December 31, 2017. Per share amounts have been adjusted for the 5% stock dividends paid on May 31, 2017 and May 31, 2018.

"We are pleased to report that 2018 was another record year of earnings for ChoiceOne," said Kelly Potes, President and Chief Executive Officer of ChoiceOne Financial Services, Inc. "During the fourth quarter, we expanded our community bank franchise into West Michigan by opening two full-service branch offices in high-growth, high-traffic areas - one new location in downtown Grand Rapids and a second location in Rockford. We also experienced positive deposit and loan growth during the fourth quarter."

Total assets have grown to $670.2 million as of the end of the fourth quarter of 2018 compared to $650.4 million as of September 30, 2018. Net loans grew $7.1 million from September 30, 2018 to December 31, 2018. This loan growth coupled with higher interest rates earned on both the loan and securities portfolios has helped total interest income for the twelve months ended December 31, 2018 to grow $2.5 million or 11.3% compared to the twelve months ended December 31, 2017. ChoiceOne also saw deposit growth during the fourth quarter 2018 of $32.7 million which helped to fund loan growth and decreased borrowings by $15.6 million.

ChoiceOne recorded no provision for loan losses in the fourth quarter of 2018 and nonperforming loans have declined $464,000 year to date 2018, as credit quality continues to remain a focal point for ChoiceOne.

Total noninterest income decreased $455,000 in the fourth quarter of 2018 and $891,000 in the twelve months ended December 31, 2018 compared to the same periods in the prior year. Insurance and investment commissions were the largest component of the decline because of ChoiceOne's sale of a majority of its investment book of business during the fourth quarter of 2017. Gains on sales of loans have also declined as higher interest rates coupled with a low inventory of homes for sale in ChoiceOne's market areas have negatively impacted the level of mortgage originations. Partially offsetting these reductions in income were higher customer service charges, gains on sales of securities in 2018 in contrast to losses sustained in 2017, and income from changes in the market value of equity securities in the twelve months ended December 31, 2018 compared to the same period in 2017. The implementation of Accounting Standard 2016-01 effective January 1, 2018 caused changes in the market value of equity securities to be recorded in noninterest income in 2018, in contrast with the treatment in prior years where changes were included in other comprehensive income.

1

Total noninterest expense increased $229,000 in the fourth quarter of 2018 and $1.1 million in the twelve months ended December 31, 2018 compared to the same periods in 2017. Much of this increase was caused by higher salaries and benefits expense related to annual wage increases and additional sales and retail staff in preparation for the two new branch locations in 2018. Other noninterest expenses were also higher in the fourth quarter and twelve months ended December 31, 2018 compared to the same periods in the prior year due to growth in loan related costs, advertising and promotional expenses, and other expenses.

ChoiceOne's income tax expense decreased $556,000 in the fourth quarter of 2018 and $1.2 million for the twelve months ended 2018 compared to the same periods in 2017, which caused the effective tax rate to decline from 28% in 2017 to 14% in 2018. This reduction in expense was due to the Tax Cut and Jobs Act passed in December of 2017.

"Increasing our locations in West Michigan to 14 full-service offices from 12 full-service offices allows us to reach more families and businesses in our broadened footprint," said Potes. "In addition, we were able to hire more mortgage lenders, commercial loan officers and branch staff to serve our growing customer base. We believe it's a win-win for ChoiceOne and our communities as we look to further growth."

About ChoiceOne

ChoiceOne Financial Services, Inc. is a financial holding company headquartered in Sparta, Michigan and the parent corporation of ChoiceOne Bank, Member FDIC. ChoiceOne Bank operates 14 full-service offices in parts of Kent, Ottawa, Muskegon, and Newaygo Counties. ChoiceOne Bank offers insurance and investment products through its subsidiary, ChoiceOne Insurance Agencies, Inc. ChoiceOne Financial Services, Inc. common stock is quoted on the OTC under the symbol "COFS." For more information, please visit Investor Relations at ChoiceOne's website atwww.choiceone.com.

Forward-Looking Statements

This press release contains forward-looking statements. Words such as "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "is likely," "plans," "predicts," "projects," "may," "could," "look forward," "continue", "future" and variations of such words and similar expressions are intended to identify such forward-looking statements. Management's determination of the provision and allowance for loan losses, the carrying value of goodwill and loan servicing rights, and the fair value of investment securities (including whether any impairment on any investment security is temporary or other than temporary and the amount of any impairment) and management's assumptions concerning pension and other postretirement benefit plans involve judgments that are inherently forward-looking. These statements reflect management's current beliefs as to the expected outcomes of future events and are not guarantees of future performance. These statements involve certain risks, uncertainties and assumptions ("risk factors") that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be expressed, implied or forecasted in such forward-looking statements. Furthermore, ChoiceOne undertakes no obligation to update, amend, or clarify forward-looking statements, whether as a result of new information, future events, or otherwise.

Risk factors include, but are not limited to, the risk factors described in Item 1A in ChoiceOne Financial Services, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2017. These and other factors are representative of the risk factors that could cause a difference between an ultimate actual outcome and a preceding forward-looking statement.

# # #

EDITORS NOTE: Media interviews with ChoiceOne Bank executives are available by calling Tom Lampen at [phone] [e-mail]. Electronic versions of bank official headshots are also available.

Condensed Balance Sheets

(In thousands)

Cash and Cash Equivalents Securities

Loans Held For Sale

Loans to Other Financial Institutions Loans, Net of Allowance For Loan Losses Premises and Equipment

Cash Surrender Value of Life Insurance Policies Goodwill

Other Assets

Total AssetsNoninterest-bearing Deposits Interest-bearing Deposits Borrowings

Other Liabilities

12/31/2018

$

19,690

173,016

831

20,644

404,401

16,010

14,899

13,728

$ $

6,954 670,173 153,542 423,473 10,034 2,647

9/30/2018

12/31/2017

$

14,427 $ 36,837

169,361 159,158

672 1,721

16,238 6,802

397,293 394,208

14,947 12,855

14,803 14,514

13,728 13,728

8,894 6,721

$ $

650,363 145,025

$ 646,544 $ 151,462

399,322 388,391 25,642 27,416 3,209 2,725

Shareholders' Equity

Total Liabilities

Total Liabilities and Shareholders' Equity

$

589,696 80,477 670,173

573,198 569,994 77,165 76,550 $ 650,363 $ 646,544

3

Condensed Statements of Income

(In Thousands, Except Per Share Data) Interest Income

Loans, including fees

Securities and other

Total Interest Income

Interest Expense

Deposits

Borrowings

Total Interest Expense

Net Interest Income Provision for Loan Losses

Three Months Ended Twelve Months Ended 12/31/2018 12/31/2017 12/31/2018 12/31/2017

$

5,298 1,152 6,450

$

4,807 1,024 5,831

$

20,033

• $ 17,964

  4,492 4,077 24,525 22,041

  5,616 -747 87 834

  5,392 365

  328 111 439

  2,175 1,189 286 289 2,461 1,478 22,064 20,563 35 485

  Net Interest Income After Provision for Loan LossesNoninterest Income

  Customer service charges

  Insurance and investment commissions Gains on sales of loans

  Gains on sales of securities Earnings on life insurance policies

  Gain on sale of investment book of business Change in market value of equity securities Other income

  Total Noninterest Income

  Noninterest Expense

  Salaries and benefits Occupancy and equipment Data processing Professional fees Other expenses

  Total Noninterest Expense

  5,616

  5,027

  22,029 20,078

  1,186

  1,054

  4,526 4,135

  104

  66

  335 826

  231

  345

  1,003 1,265

  9

  (457)

  34 (280)

  96 -

  99

  385 398

  908 - 908

  (90)

  -

  71

  -

  163

  139 566 559

  1,699

  2,154

  • 6,920 7,811

    2,689

    2,523

  • 10,997 10,248

    717

    560

    797

  • 2,722 2,896

    598

  • 2,204 2,279

    511

    388

  • 1,349 1,166

    847

    789

  • 3,189 2,745

    5,324

    5,095

  • 20,461 19,334

    Income Before Income Tax Income Tax Expense

    1,991 163

    2,086 719

  • 8,488 8,555

  • 1,155 2,387

  Net IncomeBasic Earnings Per Share Diluted Earnings Per Share

  $ $ $

  1,828 0.51 0.50

  $ $ $

  1,367 0.38 0.38

  $ $ $

  7,333 2.03 2.02

• $ 6,168

• $ 1.70

• $ 1.70