Company: COFS
Filing Date: 2025-03-11
Form Type: 10-K
Source: 0000950170-25-036839
Chunk: 102

Company: CHOICEONE FINANCIAL SERVICES INC
Filing Date: 2025-03-11
Form: 10-K
Item: Item 8
Chunk 102
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2, with the benchmark SOFR interest rate risk component of the fixed rate bonds equal to 3.390%. Of the total notional value, $50.0 million has a nine-year term set to expire in 2031, with the benchmark SOFR interest rate risk component of the fixed rate bonds equal to 3.4015%. The remaining notional value of $49.1 million has a nine-year term set to expire in 2031, with the benchmark SOFR interest rate risk component of the fixed rate bond equal to 3.4030%. ChoiceOne adopted ASC2022-01, as of December 20, 2022, to use the portfolio layer method. The fair value basis adjustment associated with available-for-sale fixed rate bonds initially results in an adjustment to AOCI.  For available-for-sale securities subject to fair value hedge accounting, the changes in the fair value of the fixed rate bonds related to the hedged risk (the benchmark interest rate component and the partial term) are then reclassified from AOCI to current earnings offsetting the fair value measurement change of the interest rate swap, which is also recorded in current earnings. Net cash settlements are received/paid semi-annually, with the first starting in March 2023, and are included in interest income.Net settlements received on these four pay-fixed/receive-floating swaps were $3.7 million and $3.3 million for the years ended December 31, 2024 and December 31, 2023, respectively, which increased interest income.The table below presents the fair value of derivative financial instruments as well as the classification within the consolidated statements of financial condition: 

        December 31, 2024

        December 31, 2023

        (Dollars in thousands)
         
        Balance SheetLocation
         
        Fair Value

        Balance SheetLocation
         
        Fair Value

        Derivatives designated as hedging instruments

        Interest rate contracts
         
        Other Assets
         
        $
        23,649

        Other Assets
         
        $
        8,880

        Interest rate contracts
         
        Other Liabilities
         
        $
        -

        Other Liabilities
         
        $
        -

 72

The table below presents the effect of fair value and cash flow hedge accounting on the consolidated statements of operations for the periods presented: 

        Location and Amount of Gain or (Loss)

        Location and Amount of Gain or (