Company: COFS
Filing Date: 2025-03-11
Form Type: 10-K
Source: 0000950170-25-036839
Chunk: 73

Company: CHOICEONE FINANCIAL SERVICES INC
Filing Date: 2025-03-11
Form: 10-K
Item: Item 8
Chunk 73
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 and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Allowance for Credit Losses - Qualitative Adjustment

As described in Notes 1 and 3 to the consolidated financial statements, management’s estimate of the allowance for credit losses (ACL) at December 31, 2024, includes a reserve on collectively evaluated loans. The reserve on collectively evaluated loans is based on an historical average loss rates of peer banks, adjusted for current and forecasted factors, applied over the remaining life of loans. Management applies an adjustment for qualitative factors based on internal and external qualitative and credit market risk factors, as described in Notes 1 and 3 to the financial statements.  

Significant judgment was required by management in the selection and measurement of qualitative factor adjustments. Accordingly, performing audit procedures to evaluate the Company’s estimated ACL involved a high degree of auditor judgment and required significant effort, including the involvement of professionals with specialized skill and knowledge.

How the Critical Audit Matter was Addressed in the Audit

Our audit procedures related to the Company’s estimate of the ACL included, but were not limited to, the following:

•We evaluated the design of management’s controls over the determination of the qualitative factor adjustments.

•We obtained an understanding of management’s process for determining the need for qualitative factor adjustments, identifying appropriate factors, and measuring the direction and magnitude of the adjustment.

•We evaluated management's rationale for determining qualitative adjustments were relevant and warranted for each loan segment and assessed the measurement of qualitative factor adjustments applied by management.

•We assessed qualitative factors and overall reserves on collectively evaluated loans against trends in Company specific loss history.

/s/ Plante & Moran, PLLC

We have served as the Company’s auditor since 2006.

Grand Rapids, Michigan  

March 11, 2025

 39

ChoiceOne Financial Services, Inc.

Consolidated Balance Sheets

    December 31,

    (Dollars in thousands)
     
    2024

    2023

    Assets

    Cash and due from banks
     
    $
    96,401

    $
    55,083

    Time deposits in other financial institutions

    350

    350

    Cash and cash equivalents

    96,751

    55,433

    Equity securities, at fair value (Note 2)

    7,782

    7,505

    Securities available for sale,