ChoiceOne Financial surges 3.7% on Q4 earnings beat, dividend hike
Michigan community bank posts 93% profit growth as merger integration completes ahead of schedule
ChoiceOne Financial Services shares rallied 3.7% on Friday after the Michigan-based community bank reported fourth-quarter earnings that handily exceeded analyst expectations, bolstered by a completed merger integration and robust loan growth.
The company reported earnings per share of 92 cents for the fourth quarter of 2025, beating Wall Street estimates by 6 cents, according to earnings data released before market open. Net income surged 93% year-over-year to $13.9 million, driven by a combination of organic growth and the successful integration of Fentura Financial, a $1.4 billion acquisition completed in March 2025.
Perhaps most notably for income-focused investors, ChoiceOne increased its quarterly dividend to 29 cents per share, up from 28 cents in the prior quarter—a 3.6% raise that marks the bank's consistent upward trajectory in shareholder returns. The dividend is payable to shareholders of record as of December 15, 2025.
The bank's core loan portfolio grew organically by $55.6 million during the quarter, representing an annualized increase of 7.6%, according to the company's earnings materials. For the full year 2025, organic core loan growth totaled $86.1 million, or 5.7%, excluding held-for-sale loans and loans to other financial institutions. Core loans now comprise the majority of ChoiceOne's lending book following the Fentura merger.
ChoiceOne also repurchased 25,000 shares during the fourth quarter, returning additional capital to shareholders amid what management described as an efficient capital allocation strategy.
The Fentura Financial merger, which closed in March 2025, has been fully integrated with no additional expenses anticipated going forward. The acquisition expanded ChoiceOne's footprint to 56 offices across West, Central, and Southeast Michigan and pushed total assets beyond $4 billion. Management emphasized during pre-market commentary that integration costs have now ceased, positioning the bank for cleaner earnings comparisons in 2026.
ChoiceOne's strong operational performance comes as regional banks continue navigating a challenging interest rate environment. The company's forward price-to-earnings ratio of 7.79 times suggests investors are pricing in modest growth expectations despite the quarterly beat. At current levels, the stock trades at 0.96 times book value, suggesting some room for multiple expansion if execution continues.
Analysts remain broadly positive on the shares, with three firms rating the stock a buy and a consensus target price of $34.67—roughly 17% above Friday's trading level. The bank's 3.79% dividend yield provides additional income appeal in a rate-sensitive sector.
ChoiceOne's performance highlights the resilience of well-capitalized community banks that have successfully executed consolidation strategies in the post-2023 regional banking turmoil period. The company's emphasis on relationship banking in its Michigan markets has allowed it to maintain stable deposit funding while growing its commercial loan book through local economic development initiatives.
With merger integration now complete and core loan growth accelerating, investors will focus on whether ChoiceOne can sustain its current profitability trajectory into 2026 and whether management might pursue further shareholder-friendly actions, including potential additional dividend increases or share repurchases.