ChoiceOne Financial Services, Inc. (COFS): Analyse de Pestle [Jan-2025 MISE À JOUR]

Dans le paysage dynamique de la banque communautaire, ChoiceOne Financial Services, Inc. (COFS) navigue dans un réseau complexe de facteurs externes qui façonnent sa trajectoire stratégique. De l'environnement réglementaire nuancé du Michigan aux attentes technologiques en évolution des clients bancaires modernes, cette analyse de pilon dévoile les défis et les opportunités multiformes qui définissent l'écosystème opérationnel de la COFS. Plongez dans une exploration globale des forces politiques, économiques, sociologiques, technologiques, juridiques et environnementales stimulant l'approche innovante de cette institution financière régionale dans les services bancaires dans l'ouest du Michigan.

ChoiceOne Financial Services, Inc. (COFS) - Analyse du pilon: facteurs politiques

Impact des réglementations bancaires du Michigan State Banking Impact

Les réglementations bancaires de l'État du Michigan créent des exigences de conformité spécifiques pour les opérations de COFS. En 2024, le Michigan Department of Insurance and Financial Services (DIFS) mandater:

Aspect réglementaire	Exigences spécifiques
Adéquation du capital	Ratio de capital minimum de niveau 1 de 8%
Gestion des liquidités	Maintenir le rapport de couverture de liquidité de 100%
Protection des consommateurs	Exigences de divulgation strictes pour les produits bancaires

Influences de la politique du gouvernement local

Les politiques gouvernementales locales de l'ouest du Michigan affectent directement les stratégies bancaires communautaires de la COF:

• Incitations au développement économique du comté de Kent pour les institutions financières locales
• Support municipal de Grand Rapids pour les programmes de prêts aux petites entreprises
• Exigences de réinvestissement communautaire pour les fournisseurs de services financiers locaux

Exigences de conformité des banques fédérales

Les cadres réglementaires fédéraux clés impactant les COF comprennent:

Règlement fédéral	Exigence de conformité	Impact financier potentiel
Acte Dodd-Frank	Protocoles de gestion des risques améliorés	Coût de conformité estimé: 750 000 $ par an
Acte de secret bancaire	Rapports anti-blanchiment	Dépenses de surveillance de la conformité: 350 000 $ par an
Règlements de la FDIC	Assurance des dépôts et protection des consommateurs	Coûts de déclaration réglementaire annuels: 250 000 $

Défis de planification stratégique

Les changements potentiels dans les cadres réglementaires des services financiers créent des défis de planification stratégique importants pour les COF:

• Changements réglementaires prévus dans la surveillance des banques numériques
• Modifications potentielles aux normes de prêt de banque communautaire
• Exigences de conformité en cybersécurité émergente

Les coûts d'adaptation réglementaire pour les COF sont estimés à environ 1,35 million de dollars par an pour maintenir une conformité complète et une flexibilité stratégique.

ChoiceOne Financial Services, Inc. (COFS) - Analyse du pilon: facteurs économiques

Conditions économiques régionales au Michigan

Le PIB du Michigan en 2023 était de 552,3 milliards de dollars. Le comté d'Oakland, où le COFS opère, avait un revenu médian de 93 751 $ en 2022. Le taux de chômage du comté de Kent était de 3,2% en décembre 2023.

Indicateur économique	Valeur (2023-2024)	Impact sur la COF
PIB du Michigan	552,3 milliards de dollars	Influence du portefeuille de prêt direct
Revenu médian des ménages (comté d'Oakland)	$93,751	Capacité de prêt à la consommation
Taux de chômage (comté de Kent)	3.2%	Évaluation des risques bancaires

Fluctuations des taux d'intérêt

Le taux des fonds fédéraux de la Réserve fédérale était de 5,33% en janvier 2024. La marge nette des intérêts du COFS était de 3,42% au T4 2023.

Métrique des taux d'intérêt	Pourcentage
Taux de fonds fédéraux	5.33%
Marge d'intérêt net du COFS	3.42%

Performance du secteur local

Le secteur manufacturier du Michigan a contribué 57,4 milliards de dollars au PIB de l'État en 2023. Le secteur agricole a généré 6,2 milliards de dollars de revenus.

Secteur	Contribution économique (2023)
Fabrication	57,4 milliards de dollars
Agriculture	6,2 milliards de dollars

Tendances économiques des petites entreprises

West Michigan comptait 102 345 petites entreprises en 2023. Les origines des prêts aux petites entreprises dans la région ont totalisé 1,24 milliard de dollars.

Métrique de petite entreprise	Valeur (2023)
Total des petites entreprises	102,345
Originations de prêts aux petites entreprises	1,24 milliard de dollars

ChoiceOne Financial Services, Inc. (COFS) - Analyse du pilon: facteurs sociaux

La population vieillissante du Michigan crée des besoins uniques de services bancaires et d'adaptation des produits

La démographie de la population du Michigan en 2022:

Groupe d'âge	Pourcentage	Population totale
65 ans et plus	17.3%	1,734,840
55 à 64 ans	13.9%	1,394,216

Augmentation des préférences bancaires numériques parmi les segments démographiques plus jeunes

Taux d'adoption des banques numériques dans le Michigan:

Groupe d'âge	Utilisation des services bancaires numériques
18-34 ans	89.6%
35 à 54 ans	76.3%

Attentes bancaires de la communauté rurale et suburbaine

Préférences du service bancaire rural et suburbain du Michigan:

• Banque des relations personnelles: 62%
• Accessibilité des succursales locales: 73%
• Services axés sur la communauté: 58%

Demande croissante de services financiers personnalisés et intégrés à la technologie

Préférences d'intégration technologique:

Service technologique	Taux d'adoption des clients
Banque mobile	74.2%
Gestion de compte en ligne	81.5%
Plates-formes de paiement numérique	67.9%

ChoiceOne Financial Services, Inc. (COFS) - Analyse du pilon: facteurs technologiques

Investissements de plate-forme bancaire numérique

ChoiceOne Financial Services a alloué 1,2 million de dollars en mises à niveau de la plate-forme bancaire numérique pour l'exercice 2024. Le volume des transactions bancaires en ligne a augmenté de 37,4% par rapport à l'année précédente.

Catégorie d'investissement technologique	2024 Attribution du budget	ROI attendu
Plate-forme bancaire numérique	$1,200,000	8.5%
Infrastructure de cybersécurité	$750,000	6.2%
Application bancaire mobile	$450,000	9.3%

Mises à niveau des infrastructures de cybersécurité

Investissement en cybersécurité: 750 000 $ en 2024. Taux de prévention annuelle moyenne des violations annuelles: 99,7%. Implémenté les protocoles de chiffrement 128 bits sur toutes les plateformes numériques.

Développement d'applications bancaires mobiles

Téléchargements d'applications bancaires mobiles: 42 500 en 2023. Les mesures d'engagement des utilisateurs affichent 65,3% des utilisateurs actifs mensuels. Évaluation des performances de l'application: 4.6 / 5 sur les plates-formes iOS et Android.

Métriques d'application mobile	Performance de 2023	2024 Croissance projetée
Téléchargements totaux	42,500	57,000
Utilisateurs actifs mensuels	65.3%	72.6%
Évaluation de satisfaction des utilisateurs	4.6/5	4.7/5

Intelligence artificielle et intégration d'apprentissage automatique

Modèles d'évaluation des risques alimentés par l'IA déployés sur les processus d'origine du prêt. Précision de l'algorithme d'apprentissage automatique: 94,2% dans la prédiction du risque de crédit. Investissement total de la technologie de l'IA: 350 000 $ en 2024.

• Précision d'évaluation des risques d'IA: 94,2%
• Couverture du modèle d'apprentissage automatique: 87% des processus d'évaluation des prêts
• Efficacité de l'analyse prédictive: réduction du temps de traitement des prêts de 42%

ChoiceOne Financial Services, Inc. (COFS) - Analyse du pilon: facteurs juridiques

Conformité stricte aux réglementations bancaires et aux exigences de déclaration

ChoiceOn Financial Services, Inc. maintient la conformité à plusieurs cadres réglementaires fédéraux:

Corps réglementaire	Exigence de conformité	Fréquence de rapports annuelle
Réserve fédérale	Soumissions de rapport d'appel	Trimestriel
FDIC	Reportage de la situation financière	4 fois par an
SECONDE	Déposages 10-K et 10-Q	Annuellement et trimestriel

Lois sur la protection des consommateurs régissant les interactions des services financiers

Règlements sur la protection des consommateurs clés appliqués:

• Truth in Lending Act (Tila)
• Loi sur l'égalité des chances de crédit (ECOA)
• Loi sur les rapports de crédit équitable (FCRA)

Législation de confidentialité et de sécurité des données

Législation	Mesures de conformité	Plage de pénalité
Gramm-Leach-Bliley	Protection de l'information client	100 000 $ - 1 000 000 $ par violation
CCPA	Protocoles de confidentialité des données	Jusqu'à 7 500 $ par violation intentionnelle

Risques potentiels en matière de litige

Catégories de risques de litige:

• Distigues contractuelles: règlement moyen 250 000 $
• Violation de la conformité réglementaire: amendes potentielles jusqu'à 500 000 $
• Résolution des plaintes des consommateurs: règlement médian 75 000 $

ChoiceOne Financial Services, Inc. (COFS) - Analyse du pilon: facteurs environnementaux

Pratiques bancaires durables

ChoiceOne Financial Services a déclaré 23,4 millions de dollars en produits d'investissement durable au quatrième trimestre 2023. Le portefeuille de financement vert de la banque a augmenté de 14,2% par rapport à l'année précédente.

Catégorie d'investissement durable	Valeur totale 2023	Croissance d'une année à l'autre
Obligations vertes	8,7 millions de dollars	12.3%
Prêts aux énergies renouvelables	6,5 millions de dollars	16.8%
Investissements à impact environnemental	8,2 millions de dollars	15.6%

Options de financement vert

Les options d'investissement environnemental représentaient 7,6% du portefeuille total de prêts de la banque en 2023, en mettant l'accent sur:

• Financement du projet d'énergie solaire
• Prêts d'infrastructure de parc éolien
• Mises à niveau des propriétés commerciales économes en énergie

Considérations d'efficacité énergétique

ChoiceOne Financial Services a réduit la consommation d'énergie des succursales de 22,5% grâce à des mises à niveau stratégiques des installations. Les économies totales de coûts énergétiques ont atteint 412 000 $ en 2023.

Mesure de l'efficacité énergétique	Coût d'investissement	Économies annuelles
Remplacement de l'éclairage LED	$87,500	$156,000
Optimisation du système HVAC	$145,000	$198,000
Installation du panneau solaire	$265,000	$58,000

Évaluation des risques du changement climatique

Portefeuille de prêts agricoles Exposition au risque climatique: 18,3% du total des prêts régionaux classés comme à haut risque pour les perturbations liées au climat. Impact financier potentiel estimé: 42,6 millions de dollars en valeur de prêt potentielle à risque.

Catégorie de risque	Valeur du portefeuille de prêts	Cote de vulnérabilité climatique
Prêts de production agricole	23,7 millions de dollars	Risque élevé
Financement de l'équipement agricole	12,4 millions de dollars	Risque modéré
Prêts d'infrastructure rurale	6,5 millions de dollars	Risque

ChoiceOne Financial Services, Inc. (COFS) - PESTLE Analysis: Social factors

Operates a large physical footprint of 56 offices across West, Central, and Southeast Michigan, emphasizing local relationships.

ChoiceOne Financial Services, Inc. (COFS) maintains a deeply embedded, high-touch strategy, which is a key social factor differentiating it from larger national banks. The company operates a network of 56 offices across its West, Central, and Southeast Michigan footprint, a significant physical presence for a bank with approximately $4.3 billion in total assets as of late 2025. This extensive branch network is not just a cost center; it's a strategic asset that builds social capital, especially in smaller, relationship-driven communities.

This local density allows for stronger personal connections with small business owners and individual clients. Honestly, in community banking, your branch manager is often a more trusted figure than a national call center. This focus helps ChoiceOne attract stable deposits and maintain lending relationships that might be overlooked by institutions relying solely on digital channels. The physical presence acts as a barrier to entry for pure-play digital competitors, still, the cost of maintaining 56 locations must be continually justified by the value of those relationships.

Focus on community engagement through scholarships and local support, which builds social capital and customer loyalty in its regional markets.

The bank's commitment to community engagement is a core part of its social license to operate, translating directly into customer loyalty and brand equity. ChoiceOne uses targeted programs to invest in its communities, generating goodwill that is difficult for non-local competitors to replicate. For the 2025 college year, the Annual ChoiceOne Scholarship Program awarded 13 scholarships of $1,000 each to local high school seniors.

Beyond scholarships, the bank's broader social investment is substantial. In 2024, ChoiceOne employees volunteered over 6,000 hours, and the bank donated approximately $420,000 to community organizations. This funding is strategic, with more than half of the donations attributed to financial literacy programs, directly addressing a critical social need. Plus, the bank acts as a community anchor, as seen in October 2025 when it collected and matched voluntary donations up to $25,000 to support victims of a local tragedy in Grand Blanc.

• Volunteered: Over 6,000 hours (2024).
• Scholarships: 13 recipients of $1,000 each (2025).
• Down Payment Assistance: Nearly $1 million provided.

Must manage the shift in customer behavior, balancing the demand for digital convenience with the expectation of personal, in-branch service.

The biggest social challenge is navigating the digital transformation without alienating the core customer base that values in-person service. You have a customer who wants the speed of a fintech but still expects to talk to a loan officer they know. ChoiceOne has made defintely progress here, winning the Web Marketing Association's 2025 Outstanding Bank Website WebAward, which validates its digital platform's usability and professional feel.

The bank's strategy is to use its digital platforms for high-speed convenience while maintaining its full-service branch network to connect and create long-term personal relationships. This dual approach is essential because while digital adoption is rising, the 'flight to quality' during periods of economic uncertainty often drives customers back to trusted, local institutions where they can meet face-to-face. The risk is in over-investing in one channel at the expense of the other, diluting the bank's core community advantage.

Solid personal income growth in Michigan, forecast to outpace inflation, supports consumer spending and deposit stability.

The underlying economic health of ChoiceOne's operating territory is a critical social factor, directly affecting deposit levels and loan demand. The forecast for Michigan's personal income growth in 2025 is a clear positive signal. Nominal personal income growth is projected at a solid 3.9 percent for the year.

Crucially, this growth is expected to outpace local inflation. The Detroit Consumer Price Index (CPI) is forecast to moderate significantly to 2.0 percent in 2025, its slowest pace since 2020. Here's the quick math: this combination boosts real disposable income per capita growth to an estimated 1.6 percent in 2025, well above the long-term average. This means consumers have more actual purchasing power, supporting higher consumer spending and deposit stability for ChoiceOne Financial Services, Inc.

Michigan Economic Indicator (2025 Forecast)	Projected Value	Impact on COFS Social Environment
Nominal Personal Income Growth	3.9 percent	Increases household wealth, supporting deposit growth and loan repayment capacity.
Detroit CPI (Local Inflation)	2.0 percent	Lower inflation preserves consumer purchasing power, boosting real disposable income.
Real Disposable Income per Capita Growth	1.6 percent	Solid growth supports consumer spending, increasing demand for mortgages and consumer loans.

ChoiceOne Financial Services, Inc. (COFS) - PESTLE Analysis: Technological factors

Received the Web Marketing Association's 2025 Outstanding Bank Website WebAward, validating its digital customer experience.

You need to know where ChoiceOne Financial Services, Inc. (COFS) stands in the digital race, and honestly, they've earned their stripes. The company's focus on a seamless digital experience was validated by receiving the Web Marketing Association (WMA) 2025 Outstanding Website WebAward in the banking category. This isn't just a trophy; it confirms that their website is functional, secure, and user-friendly, which is critical when competing with national banks and nimble financial technology (fintech) startups.

The judges specifically praised the site's design, solid navigation, and excellent use of technology to enhance usability, noting its professional feel that builds customer confidence in the online experience. This recognition is a clear indicator that their investment in the user interface (UI) and user experience (UX) is paying off in the near term, reducing friction for customers and likely lowering the cost-to-serve for routine transactions.

Utilizes advanced digital platforms, including Zelle (person-to-person payments) and a new commercial lending platform, Metriciti.

The firm has made a strategic move from simply using technology to creating it, which is a massive shift for a community bank. Their digital platform strategy is two-pronged: adopting best-in-class consumer tools and building proprietary business solutions.

• Consumer Payments: Like most forward-thinking banks, ChoiceOne Bank offers Zelle for person-to-person (P2P) payments, a necessary feature for retaining the younger demographic. The Zelle network itself processed nearly $600 billion in payments in the first half of 2025, showing the sheer volume of transactions ChoiceOne Bank is positioned to capture.
• Commercial Lending: The real differentiator is Metriciti, a commercial lending platform developed in-house and now licensed to other community banks via a partnership with DPT Solutions. This platform is a significant competitive asset, having already processed over $3 billion in commercial loans since its 2019 launch. Metriciti streamlines the entire lending process, from lead generation to portfolio management, using advanced data analytics to drive efficiency and loan growth.

Offers sophisticated Treasury Management solutions for businesses, including same-day Automated Clearing House (ACH) payments.

For business customers, ChoiceOne Bank's Treasury Management solutions are keeping pace with larger regional players. They've enhanced their platform to offer sophisticated cash management tools, which is defintely a requirement for attracting and retaining mid-sized commercial clients.

A key feature is the inclusion of same-day Automated Clearing House (ACH) payments. This capability allows businesses to manage payroll and vendor payments with greater speed and precision, a vital service in today's rapid business environment. This focus on advanced business services, combined with the Metriciti platform, positions the company as a credible technology partner for Michigan businesses.

Cybersecurity risk is a constant, requiring continuous investment to protect digital banking platforms and customer data.

The flip side of all this digital innovation is the constant, escalating threat of cyber risk. It's a non-negotiable cost of doing business, and ChoiceOne Financial Services, Inc. is taking concrete steps to mitigate it. In January 2025, the company transitioned its website domain to '.bank' from '.com.' This move is a strategic security investment because the '.bank' domain is only available to verified financial institutions, adding an extra layer of authentication that hackers cannot easily replicate for phishing or spoofing.

While a specific line-item for security spend is rarely public, we can see the scale of their operation and the capacity for investment. As of September 30, 2025, the company reported total assets of $4.3 billion. Furthermore, the year-to-date increase in noninterest expense for the nine months ended September 30, 2025, was $44.0 million, a significant portion of which goes toward maintaining and securing their expanded digital infrastructure, especially following the March 2025 merger. This investment is continuous, and the stakes are high: a major breach could quickly erode the customer trust they've worked hard to build.

Technological Factor	2025 Key Data / Metric	Strategic Implication
Outstanding Bank Website WebAward	Received 2025 WMA Outstanding Website WebAward.	Validates successful investment in digital customer experience (CX); reduces customer friction and supports digital adoption.
Metriciti Commercial Lending Platform	Processed over $3 billion in commercial loans since 2019.	Proprietary technology drives efficiency and loan growth; creates a new potential revenue stream by licensing the platform to other banks.
Digital Security Enhancement	Transitioned to the '.bank' domain in January 2025.	Proactive defense against phishing and spoofing; provides an extra layer of visual authentication and security for customers.
Total Assets (Capacity for Investment)	$4.3 billion as of September 30, 2025.	Confirms the scale of the operation and the financial capacity to fund ongoing, material technology and security upgrades.

ChoiceOne Financial Services, Inc. (COFS) - PESTLE Analysis: Legal factors

You're operating in a regulatory environment that is moving faster than ever, and for a regional bank like ChoiceOne Financial Services, Inc. (COFS), this means the cost of simply staying compliant is a major strategic factor. We aren't talking about abstract rules; we're talking about real dollars spent on technology, staffing, and legal counsel. The good news is that COFS successfully navigated a massive legal undertaking in early 2025, but that success now raises the compliance stakes for the combined entity.

Facing increasing regulatory scrutiny on cybersecurity and consumer data privacy standards in the digital banking space

The digital banking space is a minefield of new legal risks, and the scrutiny on COFS is only intensifying post-merger. The regulators-the Federal Financial Institutions Examination Council (FFIEC), the Office of the Comptroller of the Currency (OCC), and others-are demanding more than just basic firewalls; they want proactive, risk-based programs. Honestly, the biggest cost driver here is technology and data processing.

Here's the quick math: For regional and superregional banks, median data processing expenses-which include the heavy lift of cybersecurity and digital platform compliance-continue to rise faster than other noninterest costs. We're seeing five-year compound annual growth rates in the double digits for some institutions in this category. That's a huge drag on operating leverage.

Plus, the penalties for a data breach are getting steeper. While COFS is headquartered in Michigan, any business that processes the personal information of 100,000 or more California residents or households must comply with the California Consumer Privacy Act (CCPA). This is a real risk, as administrative fines for an intentional violation increased in 2025 to up to $7,988 per violation. You defintely need to treat consumer data privacy as a non-negotiable legal and financial risk.

Must comply with new anti-money laundering (AML) and Bank Secrecy Act (BSA) requirements, which increase compliance costs for regional banks

AML and BSA compliance is no longer just a back-office function; it's a major cost center that is growing. The regulatory focus in 2025 is on beneficial ownership reporting under the Corporate Transparency Act and enhanced due diligence for high-risk accounts. These new rules demand significant investment in RegTech (regulatory technology) solutions to automate transaction monitoring and reduce false positives.

For a bank of COFS's new size-approximately $4.3 billion in assets-we can map the general industry cost. Banks in the $1 billion to $10 billion asset range typically allocate around 2.9% of their non-interest expenses to compliance duties. This percentage is significant because smaller institutions often bear a disproportionately high compliance burden compared to the largest banks.

Here is how compliance costs break down for community banks in 2025, which shows exactly where the BSA/AML spending is concentrated:

Compliance Area	Share of Total Compliance Expenses (2025)
Safety and Soundness Practices	27%
Money Laundering (AML/BSA)	25%
Consumer Protection Standards	23%
Other Regulatory Compliance	25%

Money laundering compliance accounts for a quarter of the total compliance budget, and that figure is only rising as 99% of US and Canadian financial institutions reported an increase in financial crime compliance costs in 2023.

The company successfully navigated the complex legal and regulatory requirements for its major merger and consolidation in early 2025

To be fair, the biggest legal hurdle of 2025 is now behind COFS. The merger with Fentura Financial, Inc. was a massive undertaking that required navigating approvals from the Board of Governors of the Federal Reserve System and other regulatory bodies. The transaction was completed on March 1, 2025, with the consolidation of ChoiceOne Bank and The State Bank becoming effective on March 14, 2025.

This successful navigation had a clear, quantifiable cost. The merger-related expenses, which cover the legal, advisory, and integration costs of this complex regulatory process, totaled $17.4 million for the nine months ended September 30, 2025. Net of taxes, this amounted to $13.9 million, or $1.02 per diluted share. That's a big number, but it's the price of successfully scaling up, and management does not anticipate additional material merger expenses going forward.

The key takeaway is that the legal and compliance teams proved they can execute on a large, complex transaction, setting the stage for the combined entity to manage its new, higher regulatory profile.

• Complete merger on March 1, 2025.
• Total merger-related expenses of $17.4 million (YTD Q3 2025).
• New combined asset size is approximately $4.3 billion.

Next step: The Compliance team needs to finalize the integration of the two banks' BSA/AML monitoring systems by year-end to ensure the combined entity meets the 25% compliance cost allocation efficiency.

ChoiceOne Financial Services, Inc. (COFS) - PESTLE Analysis: Environmental factors

US banking regulators are increasing focus on Environmental, Social, and Governance (ESG) compliance and climate-related financial risk disclosures in 2025.

The regulatory landscape for climate risk is currently in flux, which creates uncertainty for all financial institutions, even for a community bank like ChoiceOne Financial Services, Inc. While the Federal Reserve, FDIC, and OCC formally withdrew the Interagency Principles for Climate-Related Financial Risk Management for large banks (those over $100 billion in assets) in October 2025, the underlying regulatory expectation has not disappeared.

ChoiceOne Financial Services, Inc., with total assets of $4.3 billion as of September 30, 2025, is not directly subject to the withdrawn guidance. However, the core principle remains: all institutions must manage material risks, and climate change is an emerging material risk. This means ChoiceOne Financial Services, Inc. must still integrate physical and transition risk analysis into its existing risk framework, or risk being caught flat-footed by future, potentially more stringent, state or federal mandates.

Indirectly lowers its carbon footprint by promoting digital services, like eStatements, which reduces paper use and branch traffic.

ChoiceOne Financial Services, Inc.'s ongoing investment in technology-driven platforms and digital services is a key, low-cost environmental strategy. By shifting customer interactions online, the company naturally reduces its operational carbon footprint from paper, printing, and branch energy consumption.

For context, the industry saw a major digital shift in 2025: 77% of consumer banking interactions now happen via digital channels, with only 8% still occurring at a physical branch. This trend is a tailwind for ChoiceOne Financial Services, Inc.'s environmental efforts, even without a formal net-zero commitment.

The challenge is converting digital users to paperless services like eStatements. While roughly 70% of active digital banking users nationwide have eStatements, only about 54% actually opt out of receiving paper statements, which shows a significant gap between enrollment and true paper reduction. ChoiceOne Financial Services, Inc. needs to close that 16% gap to maximize the environmental and cost benefits of its digital push.

• Convert the 16% eStatement gap to actual paperless adoption.
• Digital channels are now preferred by 77% of consumers.
• Fewer branch visits means lower utility costs.

Must start integrating climate-related risks-like lending exposure to weather-sensitive Michigan industries-into its risk management framework.

The most tangible environmental risk for ChoiceOne Financial Services, Inc. is the physical risk tied to its concentrated loan portfolio in Michigan. The state's key industries are inherently sensitive to extreme weather events, which are increasing in frequency and severity. This risk is particularly acute in the bank's Commercial Real Estate (CRE) and agricultural lending segments.

The bank's exposure to non-owner occupied Commercial Real Estate (CRE) loans is high, measured at 302.0% of total capital as of September 30, 2025. This concentration means that a severe, localized flooding event or a major storm could simultaneously damage a significant portion of its collateral base, leading to higher credit losses and impacting the allowance for credit losses, which stood at 1.19% of total loans on September 30, 2025.

The agricultural sector is also a core part of their business, and it faces significant transition risk (e.g., new state-level ESG mandates) and physical risk (e.g., unpredictable growing seasons, drought, or excessive rain). Michigan is actively pushing a clean energy transition, with a goal of 100% carbon neutrality by 2050, creating opportunities for green lending but also regulatory pressure on high-emitting clients.

Here's the quick math on the largest area of exposure:

Risk Category	Metric (as of Q3 2025)	Value	Implication
Physical Risk Concentration	Commercial Real Estate (Non-Owner Occupied) to Total Capital Ratio	302.0%	High exposure to physical damage from severe weather events.
Credit Risk Buffer	Allowance for Credit Losses to Total Loans	1.19%	The reserve is the first line of defense against climate-driven defaults.
State Transition Goal	Michigan Carbon Neutrality Target	100% by 2050	Creates a long-term transition risk for high-carbon clients like certain manufacturers or farms.

What this estimate hides is the potential for catastrophic loss correlation: a single weather event could trigger defaults across multiple loan types-CRE, residential, and agricultural-in the same geographic area, stressing the bank's capital beyond normal expectations.