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Previous: MERCHANTS GROUP INC, DEF 14A, 2000-03-30 |
Next: CHOICEONE FINANCIAL SERVICES INC, 10KSB, 2000-03-30 |
FORM 10-KSB
| (X) | Annual Report under Section 13 or 15(d) of the Securities Exchange Act of 1934 |
| For the fiscal year ended December 31, 1999 | |
| ( ) | Transition Report under Section 13 or 15(d) of the Securities Exchange Act of 1934 |
| For the transition period from__________________ to __________________ |
Commission File Number: 1-9202
ChoiceOne Financial Services, Inc.
(Name of Small Business Issuer in its Charter)
|
(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
|
(Address of Principal Executive Offices) |
(Zip Code) |
(616) 887-7366
(Issuer's Telephone Number, Including Area Code)
Securities Registered under Section 12(g) of the Exchange Act:
Common Stock
(Title of Class)
Check whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No _____
Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. ( )
The issuer's revenues for the year ended December 31, 1999 were $16,677,000.
As of February 29, 2000, the aggregate market value of the Common Stock held by non-affiliates of the issuer was approximately $27,660,000. This amount is based on the average of the bid and asked price of $25.00 per share for the registrant's stock as of such date.
As of February 29, 2000, the issuer had outstanding 1,106,391
shares of Common Stock.
Part III, Items 9, 10, 11 and 12, incorporate by reference portions of the Registrant's Definitive Proxy Statement for the Registrant's Annual Meeting of Shareholders to be held April 27, 2000.
Transitional Small Business Disclosure Format (check one)
Yes ___ No X
FORWARD-LOOKING STATEMENTS
This report and the documents incorporated into this report contain forward-looking statements that are based on management's beliefs, assumptions, current expectations, estimates and projections about the financial services industry, the economy, and about the Registrant itself. Words such as "anticipates," "believes," "expects," "forecasts," "intends," "is likely," "plans," "predicts," "projects," variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions 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, the Registrant undertakes no obligations to update, amend or clarify forward-looking statements, whether as a result of new information, future events or otherwise.
Future factors include, but are not limited to, changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; changes in banking regulations; changes in tax laws; changes in prices, levies and assessments; the impact of technological advances; governmental and regulatory policy changes; the outcomes of pending and future litigation and contingencies; trends in customer behavior as well as their ability to repay loans; and changes in the national economy. These are representative of the future factors that could cause a difference between an ultimate actual outcome and a preceding forward-looking statement.
General
ChoiceOne Financial Services, Inc. (the "Registrant") is a one-bank holding company registered under the Bank Holding Company Act of 1956, as amended. The Registrant was incorporated on February 24, 1986. The Registrant was formed to create a bank holding company for the purpose of acquiring all of the capital stock of ChoiceOne Bank (formerly Sparta State Bank), which became a wholly owned subsidiary of the Registrant on April 6, 1987. The Registrant's only subsidiary and significant asset as of December 31, 1999, was ChoiceOne Bank (the "Bank"). Effective January 1, 1996, the Bank acquired all of the outstanding common stock of ChoiceOne Insurance Agencies, Inc. (formerly Bradford Insurance Centre, Ltd.), an independent insurance agency headquartered in Sparta, Michigan (the "Insurance Agency"). Effective August 1, 1997, the Bank acquired all of the outstanding common stock of ChoiceOne Travel, Inc. (formerly Alpine Travel, Inc.), a travel agency with one location in Walker, Michigan (the "Travel Agency").
The Registrant's business is primarily concentrated in a single industry
segment - commercial banking. The Bank is a full-service banking institution
that offers a variety of deposit, payment, credit and other financial services
to all types of customers. These services include time, savings, and demand
deposits, safe deposit services, and automated transaction machine services.
Loans, both commercial and consumer, are extended primarily on a secured
basis to corporations, partnerships and individuals. Commercial lending
covers such categories as business, industry, agricultural, construction,
inventory and real estate. The Bank's consumer loan and residential mortgage
loan departments make direct loans to consumers and purchasers of residential
property. No material part of the business of the Registrant or the Bank
is
The Bank's primary market area consists of portions of Kent, Muskegon, Newaygo and Ottawa counties in Michigan in the communities where the Bank's offices are located and the areas immediately surrounding these communities. Currently the Bank serves these markets through five full-service offices and one office with drive-up facilities only. The Registrant and the Bank have no foreign assets or income.
The principal source of revenue for the Registrant and the Bank is interest
and fees on loans. On a consolidated basis, interest and fees on loans
accounted for 82% of total revenues in 1999, 80% in 1998 and 78% in 1997.
Interest on investment securities accounted for 6% of total revenues in
1999, 7% in 1998 and 9% in 1997.
Competition
The business of banking is highly competitive. The Bank's competition primarily comes from other financial institutions located within Sparta, Michigan, and the Kent County, Michigan area. There are a number of larger commercial banks in the Bank's primary market area.
The Bank also competes with a large number of other financial institutions,
such as savings and loan associations, insurance companies, consumer finance
companies, credit unions and commercial finance and leasing companies for
deposits, loans and service business. Money market mutual funds, brokerage
houses and nonfinancial institutions provide many of the financial services
offered by the Bank. Many of these competitors have substantially greater
resources than the Bank. The principal methods of competition for financial
services are price (the rates of interest charged for loans, the rates
of interest paid for deposits and the fees charged for services) and the
convenience and quality of services rendered to customers.
Supervision and Regulation
Banks and bank holding companies are extensively regulated. The Registrant is subject to supervision and regulation by the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"). The Registrant's activities are generally limited to owning or controlling banks and engaging in such other activities as the Federal Reserve Board may determine to be closely related to banking. Prior approval of the Federal Reserve Board, and in some cases various other government agencies, is required for the Registrant to acquire control of any additional banks or other operating subsidiaries.
The Bank is chartered under state law and is subject to regulation by the Financial Institutions Bureau of the Michigan Department of Consumer and Industry Services. State banking laws place restrictions on various aspects of banking, including permitted activities, loan interest rates, branching, payment of dividends and capital and surplus requirements. The Bank is a member of the Federal Reserve System and is also subject to regulation by the Federal Reserve Board. The Bank's deposits are insured by the Federal Deposit Insurance Corporation (the "FDIC") to the extent provided by law. The Bank became a member of the Federal Home Loan Bank system in March 1993. This provides certain advantages to the Bank, including favorable borrowing rates for certain funds.
The Registrant is a legal entity separate and distinct from the Bank.
There are legal limitations on the extent to which the Bank can lend or
otherwise supply funds to the Registrant. In
Under Federal Reserve Board policy, the Registrant is expected to act as a source of financial strength to the Bank and to commit resources to support it. Under federal law, the FDIC also has authority to impose special assessments on insured depository institutions to repay FDIC borrowings from the United States Treasury or other sources and to establish semiannual assessment rates on Bank Insurance Fund ("BIF") member banks to maintain the BIF at the designated reserve ratio required by law.
Banks are subject to a number of federal and state laws and regulations which have a material impact on their business. These include, among others, state usury laws, state laws relating to fiduciaries, the Truth in Lending Act, the Truth in Savings Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Expedited Funds Availability Act, the Community Reinvestment Act, electronic funds transfer laws, redlining laws, antitrust laws, environmental laws and privacy laws. The instruments of monetary policy of authorities such as the Federal Reserve Board may influence the growth and distribution of bank loans, investments and deposits, and may also affect interest rates on loans and deposits. These policies may have a significant effect on the operating results of banks.
The Gramm-Leach-Bliley Act of 1999 (the "GLB Act") represents sweeping
reform of federal regulation of financial services. The GLB Act largely
removes the restrictions that previously prevented affiliations among banks,
securities firms, and insurance companies and provides for a system of
functional regulation of the financial services industry. Among other provisions,
the GLB Act:
| • | Repeals the restrictions on banks affiliating with securities firms contained in the depression-era Glass-Steagall Act. | |
| • | Creates a new "financial holding company." A financial holding company may engage in a statutory list of financial activities, including insurance underwriting and agency activities, securities underwriting and brokerage activities, merchant banking, and insurance company portfolio investment activities. Other activities that are "complimentary" to financial activities, a category to be defined by regulation, are also authorized for financial holding companies. | |
| • | Provides a system of functional regulation under which, with certain exceptions, activities of banks and bank affiliates as securities brokers and investment advisors are subject to regulation and supervision by the Securities and Exchange Commission, eliminating an exemption banks previously enjoyed. | |
| • | Reaffirms the traditional authority of states to regulate insurance companies and insurance agencies, but prohibits discrimination against bank affiliates that conduct those activities. | |
| • | Requires financial institutions to disclose their privacy policy to consumers and provides protections to consumers against the transfer and use of nonpublic personal information by financial institutions. | |
| • | Requires that agreements between banks and non-governmental entities in connection with the Community Reinvestment Act be disclosed to the public, and that community groups that receive funds from banks in excess of defined thresholds disclose how those funds are used. |
Although the GLB Act repeals certain pre-existing statutory barriers
to cross-industry affiliations and provides a structural framework for
achieving the GLB Act's purposes, many details of
The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the "Riegle-Neal Act") substantially changed the geographic constraints applicable to the banking industry. The Riegle-Neal Act allows bank holding companies to acquire banks located in any state in the United States without regard to geographic restrictions or reciprocity requirements imposed by state law. The Riegle-Neal Act also allows banks to establish interstate branch networks through acquisitions of other banks. The establishment of de novo interstate branches or the acquisition of individual branches of a bank in another state (rather than the acquisition of an out-of-state bank in its entirety) is allowed by the Riegle-Neal Act only if specifically authorized by state law. The legislation allowed individual states to "opt-out" of certain provisions of the Riegle-Neal Act by enacting appropriate legislation prior to June 1, 1997.
Michigan permits both U.S. and non-U.S. banks to establish branch offices
in Michigan. The Michigan Banking Code permits, in appropriate circumstances
and with the approval of the Commissioner of the Financial Institutions
Bureau, (1) acquisition of Michigan banks by FDIC-insured banks, savings
banks or savings and loan associations located in other states, (2) sale
by a Michigan bank of branches to an FDIC-insured bank, savings bank or
savings and loan association located in a state in which a Michigan bank
could purchase branches of the purchasing entity, (3) consolidation of
Michigan banks and FDIC-insured banks, savings banks or savings and loan
associations located in other states having laws permitting such consolidation,
(4) establishment of branches in Michigan by FDIC-insured banks located
in other states, the District of Columbia or U.S. territories or protectorates
having laws permitting a Michigan bank to establish a branch in such jurisdiction,
and (5) establishment by foreign banks of branches located in Michigan.
Effects of Compliance With Environmental Regulations
The nature of the business of the Bank is such that it holds title,
on a temporary or permanent basis, to a number of parcels of real property.
These include properties owned for branch offices and other business purposes
as well as properties taken in or in lieu of foreclosure to satisfy loans
in default. Under current state and federal laws, present and past owners
of real property may be exposed to liability for the cost of clean up of
environmental contamination on or originating from those properties, even
if they are wholly innocent of the actions that caused the contamination.
These liabilities can be material and can exceed the value of the contaminated
property. Management is not presently aware of any instances where compliance
with these provisions will have a material effect on the capital expenditures,
earnings or competitive position of the Registrant or the Bank, or where
compliance with these provisions will adversely affect a borrower's ability
to comply with the terms of loan contracts.
Employees
As of February 29, 2000, the Bank employed fifty-five persons on a full-time
basis and twenty-four persons on a part-time basis. The Insurance Agency
employed sixteen persons on a full-time basis and two persons on a part-time
basis. The Travel Agency employed one person on a full-time basis and five
persons on a part-time basis. The Registrant's only employees as of the
same date were its four executive officers (who are also employed by the
Bank). The Registrant, Bank, Insurance Agency, and Travel Agency believe
their relations with their employees are good.
Additional statistical information describing the business of the Registrant appears on the following pages and in Management's Discussion and Analysis or Plan of Operation incorporated by reference in Item 6 of this report and in the Consolidated Financial Statements and the notes thereto incorporated by reference in Item 7 of this report.
The following statistical information should be read in conjunction
with Management's Discussion and Analysis or Plan of Operation and the
Consolidated Financial Statements and notes thereto incorporated by reference
in this report.
Investment Portfolio
Presented below is the fair value of investment securities as of December
31, 1999 and 1998, a schedule of maturities of investment securities as
of December 31, 1999, and the weighted average yield of investment securities
as of December 31, 1999.
|
or Less |
5 Years |
10 Years |
10 Years |
(1) |
Value at Dec. 31, |
|||||||
|
|
1998 |
|||||||||||
|
|
||||||||||||
| Securities Available for Sale | ||||||||||||
| U.S. Treasuries and U.S. | ||||||||||||
| Government agencies (2) |
$1,647
|
$3,157
|
$ --
|
$ --
|
$ 4,804
|
$ 8,646
|
||||||
| Obligations of states and | ||||||||||||
| political subdivisions |
763
|
1,943
|
2,444
|
2,567
|
7,717
|
8,665
|
||||||
| Other securities (3) |
-- |
-- |
-- |
-- |
2,722 |
2,971 |
||||||
| Totals |
$2,410 |
$5,100 |
$2,444 |
$2,567 |
$15,243 |
$20,282 |
||||||
|
Weighted average interest rates as of December
31, 1999 |
||||||||||||
| Securities Available for Sale | ||||||||||||
| U.S. Treasuries and U.S. | ||||||||||||
| Government agencies (2) |
4.75
|
%
|
7.26
|
%
|
--
|
%
|
--
|
%
|
6.40
|
%
|
||
| Obligations of states and | ||||||||||||
| political subdivisions (4) |
8.23
|
7.57
|
7.15
|
7.67
|
7.54
|
|||||||
| Other securities |
--
|
--
|
--
|
--
|
7.48
|
|||||||
| (1) | This column represents the total of the maturity distribution and the fair value at December 31, 1999. |
| (2) | Maturities of mortgage-backed securities are classified according to their estimated average maturity. Approximately 78% of mortgage backed securities were classified in the 1 year to 5 years category. |
| (3) | The total column includes securities which have no stated maturity. |
| (4) | The interest rate is computed on a fully tax-equivalent basis at an incremental tax rate of 34%. |
The Bank had no holdings of investment securities from any one issuer
at December 31, 1999, which were greater than 10% of the Registrant's shareholders'
equity, exclusive of U.S. Government agency securities.
Loan Portfolio
Maturities and Sensitivities of Loans to Changes in Interest Rates
The following schedule presents the maturities of loans (excluding real
estate mortgage loans and installment loans). Also presented are loans
over one year in maturity, classified according to the sensitivity to changes
in interest rates.
|
or less |
5 Years |
5 Years |
|
||||||
|
|
|||||||||
|
|
|||||||||
| Commercial |
$ 17,745
|
$ 35,679
|
$ 6,402
|
$ 59,826
|
|||||
| Agricultural |
4,790
|
2,632
|
1,355
|
8,777
|
|||||
| Real estate - construction |
4,399 |
-- |
-- |
4,399 |
|||||
| Totals |
$ 26,934 |
$ 38,311 |
$ 7,757 |
$ 73,002 |
|||||
|
Loan Sensitivity to Changes in Interest
Rates as of December 31, 1999
|
|||||||||
| Loans which have predetermined interest rates |
$ 30,602
|
$ 7,210
|
$ 37,812
|
||||||
| Loans which have floating or adjustable interest rates |
7,708 |
547 |
8,255 |
||||||
| Totals |
$ 38,311 |
$ 7,757 |
$ 46,068 |
||||||
| (1) | Loan maturities are classified according to the contractual maturity date or the anticipated amortization period, whichever is appropriate. The anticipated amortization period is used in the case of loans where a balloon payment is due before the end of the loan's normal amortization period. At the time the balloon payment is due, the loan can either be rewritten or payment in full can be requested. The decision as to whether the loan will be rewritten or a payment in full will be requested will be based upon the loan's payment history, the borrower's current financial condition, and other relevant factors. |
The following loans were classified as nonperforming as of December
31:
|
|
|
||||
| Loans accounted for on a non-accrual basis |
$ 1,322,000
|
$ 489,000
|
|||
| Accruing loans which are contractually past due 90 | |||||
| days or more as to principal or interest payments |
667,000
|
419,000
|
|||
| Loans not included above which are "troubled debt | |||||
| restructurings" |
60,000 |
62,000 |
|||
| Totals |
$ 2,049,000 |
$ 970,000 |
|||
A loan is placed on nonaccrual status at the point in time at which
the collectibility of principal or interest is considered doubtful.
Potential Problem Loans
At December 31, 1999, there were $3,702,000 of loans not disclosed above
where some concern existed as to the borrowers' ability to comply with
original loan terms. No portion of the allowance for loan losses had been
specifically allocated to these loans at December 31, 1999. However, the
allowance for loan losses that has not been specifically allocated to individual
loans is available for these potential problem loans.
Loan Concentrations
As of December 31, 1999, there was no concentration of loans exceeding
10% of total loans that are not otherwise disclosed as a category of loans
in the loan portfolio listing in Note 4 to the Consolidated Financial Statements
incorporated by reference in Item 7 of this report.
Other Interest-Bearing Assets
As of December 31, 1999, there were no other interest-bearing assets
that would be required to be disclosed if such assets were loans.
Summary of Loan Loss Experience
The following schedule presents a summary of activity in the allowance
for loan losses for the periods shown and the percentage of net charge-offs
during each period to average gross loans outstanding during the period.
|
December 31, |
|||||
|
|
|
||||
|
|
|||||
| Analysis of the Allowance for Loan Losses | |||||
| Balance at beginning of period |
$ 1,851 |
$ 1,567 |
|||
| Charge-offs: | |||||
| Commercial |
272
|
204
|
|||
| Agricultural |
3
|
--
|
|||
| Real estate - construction |
--
|
--
|
|||
| Real estate - mortgage |
--
|
--
|
|||
| Consumer |
371 |
321 |
|||
|
646 |
525 |
||||
| Recoveries: | |||||
| Commercial |
14
|
3
|
|||
| Agricultural |
1
|
--
|
|||
| Real estate - construction |
--
|
--
|
|||
| Real estate - mortgage |
--
|
--
|
|||
| Consumer |
62 |
76 |
|||
|
77 |
79 |
||||
| Net charge-offs |
569 |
446 |
|||
| Additions charged to operations(1) |
625 |
730 |
|||
| Balance at end of period |
$ 1,907 |
$ 1,851 |
|||
| Ratio of net charge-offs during the period to average | |||||
| loans outstanding during the period |
.38 |
% |
.33 |
% | |
| (1) | The amount of additions to the allowance for loan losses charged to operations during the periods shown was based on management's judgment after considering factors such as loan loss experience, evaluation of the loan portfolio, and prevailing and anticipated economic conditions. The evaluation of the loan portfolio is based upon various risk factors such as the financial condition of the borrower, the value of collateral and other considerations which, in the opinion of management, deserve current recognition in estimating possible loan losses. |
The following schedule presents an allocation of the allowance for loan losses to the various loan categories as of the dates indicated.
|
Allowance for Loan Losses As of December 31, |
||||||||
|
|
|
|||||||
|
ance Amount |
of Loans in Each Category to Total Loans |
ance Amount |
of Loans in Each Category to Total Loans |
|||||
|
|
||||||||
| Commercial |
$ 511
|
35.62
|
% |
$ 475
|
36.98
|
% | ||
| Agricultural |
62
|
5.22
|
97
|
6.56
|
||||
| Real estate - construction |
95
|
2.62
|
8
|
2.22
|
||||
| Real estate - mortgage |
155
|
35.77
|
131
|
32.40
|
||||
| Consumer |
873
|
20.77
|
834
|
21.84
|
||||
| Unallocated |
211 |
N/A |
306 |
N/A |
||||
| Totals |
$ 1,907 |
100.00 |
% |
$ 1,851 |
100.00 |
% | ||
Charge-offs in commercial and consumer loans increased in 1999, in contrast to 1998 when charge-offs were approximately the same as the prior year. A small number of loans comprised the commercial loan charge-offs in 1999 and in 1998. Approximately 75% of the consumer loan charge-offs were related to indirect automobile loans in both 1999 and 1998. The increased dollars of loan charge-offs in 1999 were affected both by loan growth and a higher ratio of net charge-offs to loans.
The changes from 1998 to 1999 in the allowance for loan losses allocated to commercial
and agricultural loans was believed reasonable based on management's review
of the respective loan portfolios. The increase in the allocation to construction
real estate loans was due to one loan of concern at December 31, 1999.
The increase in the allocation to consumer and real estate mortgage loans
was primarily due to loan growth. The allocation of the allowance to commercial
and consumer loans increased from the end of 1997 to the end of 1998. This
change was based on the higher level of charge-offs experienced in these
two loan categories in 1998 than in the prior year.
Deposits
The following schedule presents daily average balances and the average interest rate paid by deposit category for 1999 and 1998. It also presents the maturities of time certificates of deposit issued in denominations of $100,000 or more as of December 31, 1999.
|
Average Balances |
Rate Paid |
||||||||
|
|
|
|
|
||||||
|
|
|||||||||
| Demand deposits |
$ 15,294
|
$ 13,675
|
--
|
% |
--
|
% | |||
| Interest-bearing | |||||||||
| transaction accounts |
25,755
|
24,255
|
3.02
|
3.34
|
|||||
| Savings deposits |
8,422
|
8,316
|
1.18
|
1.65
|
|||||
| Time deposits |
73,535 |
67,724 |
5.41
|
5.80
|
|||||
| Total deposits |
$ 123,006 |
$ 113,970 |
|||||||
| Maturities of time certificates of | |
| deposit issued in denominations | |
| of $100,000 or more at December 31, 1999 |
|
| Maturities of 3 months or less |
$ 3,327
|
||
| Maturities over 3 months | |||
| through 6 months | 6,039 | ||
| Maturities over 6 months | |||
| through 12 months | 2,919 | ||
| Maturities over 12 months |
9,055 |
||
| Total |
$ 21,340 |
||
The following schedule presents the ratios indicated for 1999, 1998 and 1997.
|
|
|||||||
|
|
|
|
|||||
| Return on assets (net income divided by average | |||||||
| total assets) |
1.10
|
% |
1.18
|
% |
1.17
|
% | |
| Return on equity (net income divided by average | |||||||
| equity) |
11.78
|
12.01
|
11.58
|
||||
| Dividend payout ratio (dividends declared per | |||||||
| share divided by net income per share) |
46.57
|
44.02
|
45.08
|
||||
| Equity to assets ratio (average equity divided | |||||||
| by average total assets) |
9.34
|
9.81
|
10.09
|
||||
There were no categories of short-term borrowings whose average balance
outstanding exceeded 30% of shareholders' equity in 1999 or 1998.
Item 2. Description of Property
The offices of the Bank, Insurance Agency, and Travel Agency as of February 29, 2000, were as follows:
Registrant's, Bank's and Insurance Agency's main office
109 East Division, Sparta,
Michigan
Office is owned by the Bank
and comprises 24,000 square feet.
Bank's branch office
416 and 440 West Division,
Sparta, Michigan
Office is owned by the Bank.
Office comprises 7,000 square feet, all of which is occupied by
the Bank.
Bank's branch office and Insurance Agency's branch office
4170 Seventeen Mile Road,
Cedar Springs, Michigan
Office is owned by the Bank.
Office comprises 3,000 square feet, of which 2,000 feet are
occupied by the Bank and
1,000 feet are occupied by the Insurance Agency.
Bank's branch office and Insurance Agency's branch office
4949 Plainfield Avenue NE,
Grand Rapids, Michigan
Office is leased by the
Bank and the Insurance Agency. Approximately 3,000 square feet are
occupied by the Bank and
3,000 feet are occupied by the Insurance Agency.
Bank's branch office
565 South State Street,
Sparta, Michigan
Office is leased by the
Bank and comprises approximately 300 square feet.
Bank's branch office and Travel Agency's main office
3527 Alpine Avenue NW, Grand
Rapids, Michigan
Office is leased by the
Travel Agency. Approximately 800 square feet are occupied by the
Bank and 1,200 feet are
occupied by the Travel Agency.
The Registrant operates its business at the main office of the Bank. No properties were owned by the Registrant as of February 29, 2000. The Registrant, Bank, Insurance Agency, and Travel Agency believe that their offices are suitable and adequate for their future needs and are in good condition and repair. The Registrant's management believes the offices are adequately covered by insurance.
As part of its business, the Bank generates all types of mortgages.
The Bank began to purchase mortgages to a limited extent in the second
half of 1999. Some of the mortgages were placed in the Bank's loan portfolio
and some were designated for sale into the secondary market. The mortgages
purchased were first mortgages on single family dwellings. The Bank intends
to continue in 2000 to purchase the same type of mortgage for its portfolio
and for sale into the secondary market.
There are no material pending legal proceedings to which the Registrant
or the Bank is a party or to which any of their property is subject, except
for proceedings which arose in the ordinary course of business. In the
opinion of management, pending legal proceedings will not have a material
effect on the consolidated financial condition of the Registrant.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders during
the quarter ended December 31, 1999.
| Item 5. | Market for Common Equity and Related Stockholder Matters |
The information under the caption "Common Stock Information" on page S-1 of the Registrant's Annual Report to Shareholders for the year ended December 31, 1999, is incorporated herein by reference.
The Registrant issued common stock to its directors in the fourth quarter
of 1999 pursuant to the ChoiceOne Financial Services, Inc. Directors' Stock
Purchase Plan. The number of shares issued were 415 shares on October 8,
1999, for an aggregate cash price of $11,000; 92 shares on November 19,
1999, for an aggregate cash price of $2,000; and 92 shares on December
3, 1999, for an aggregate cash price of $3,000. The Registrant relied on
the exemption contained in Section 4(6) of the Securities Act of 1933 in
connection with these sales.
| Item 6. | Management's Discussion and Analysis or Plan of Operation |
The information under the caption "Management's Discussion and Analysis
of Financial Condition and Results of Operations," including all subheadings,
on pages S-24 through S-33, inclusive, of the Registrant's Annual Report
to Shareholders for the year ended December 31, 1999, is incorporated herein
by reference.
| Item 7. | Financial Statements |
The Consolidated Financial Statements, Notes to Consolidated Financial
Statements, and Independent Auditors' Report on pages S-3 through S-23,
inclusive, of the Registrant's Annual Report to Shareholders for the year
ended December 31, 1999, are incorporated herein by reference.
| Item 8. | Changes in and Disagreements with Accountants on Accounting and |
| Financial Disclosure |
Not applicable.
| Item 9. | Directors, Executive Officers, Promoters and Control Persons; |
| Compliance With Section 16(a) of the Exchange Act |
The information under the captions "Directors and Executive Officers"
and "Section 16(a) Beneficial Ownership Reporting Compliance" in the Registrant's
Definitive Proxy Statement for the Annual Meeting of Shareholders to be
held April 27, 2000, is incorporated herein by reference.
| Item 10. | Executive Compensation |
The information under the caption "Compensation of Executive Officers
and Directors" in the Registrant's Definitive Proxy Statement for the Annual
Meeting of Shareholders to be held April 27, 2000, is incorporated herein
by reference.
| Item 11. | Security Ownership of Certain Beneficial Owners and Management |
The information under the caption "Voting Securities" in the Registrant's
Definitive Proxy Statement for the Annual Meeting of Shareholders to be
held April 27, 2000, is incorporated herein by reference.
| Item 12. | Certain Relationships and Related Transactions |
The information under the caption "Certain Relationships and Related
Transactions" in the Registrant's Definitive Proxy Statement for the Annual
Meeting of Shareholders to be held April 27, 2000, is incorporated herein
by reference.
| Item 13. | Exhibits and Reports on Form 8-K |
| (a) | Exhibits |
The following exhibits are filed as part of this report:
| Exhibit | Document |
| 3.1 | Amended and Restated Articles of Incorporation of the Registrant. Previously filed as an exhibit to the Registrant's Form 10-QSB Quarterly Report for the quarter ended June 30, 1998. Here incorporated by reference. |
| 3.2 | Bylaws of the Registrant as currently in effect and any amendments thereto. Previously filed as an exhibit to the Registrant's Form 10-QSB Quarterly Report for the quarter ended September 30, 1998. Here incorporated by reference. |
| 4. | Advances, Pledge and Security Agreement between ChoiceOne Bank and the Federal Home Loan Bank of Indianapolis. Previously filed as an exhibit to the Registrant's Form 10-KSB Annual Report for its fiscal year ended December 31, 1997. Here incorporated by reference. |
| 10.1 | Employment Agreement With Jae M. Maxfield.(1) Previously filed as an exhibit to the Registrant's Form 10-KSB Annual Report for its fiscal year ended December 31, 1995. Here incorporated by reference. |
| 10.2 | Employment Agreement With Lawrence D. Bradford.(1) Previously filed as an exhibit to the Registrant's Form 10-KSB Annual Report for its fiscal year ended December 31, 1995. Here incorporated by reference. |
| 10.3 | Executive Stock Incentive Plan of 1997.(1) Previously filed as Appendix B to the Registrant's Definitive Proxy Statement with respect to its Annual Meeting of Shareholders held on April 29, 1997. Here incorporated by reference. |
| 13 | Annual Report to Shareholders for the year ended December 31, 1999. |
| 21 | Subsidiaries of the Small Business Issuer. |
| 24 | Power of Attorney |
| 27 | Financial Data Schedule for Year Ended December 31, 1999. |
| (1) | These agreements are management contracts or compensation plans or arrangements required to be filed as exhibits to this Form 10-KSB. |
Copies of any exhibits will be furnished to shareholders upon written
request. Requests should be directed to Tom Lampen, Treasurer, ChoiceOne
Financial Services, Inc., 109 East Division, Sparta, Michigan 49345.
| (b) | Reports on Form 8-K |
| No report on Form 8-K was filed during the fourth quarter of the period covered by this report. |
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ChoiceOne Financial Services, Inc.
| By /s/ Jae M. Maxfield | March 29, 2000 | |
| Jae M. Maxfield | ||
| President and Chief Executive Officer |
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the Registrant and in the capacities
and on the dates indicated.
| /s/ Jae M. Maxfield Jae M. Maxfield |
President and Chief Executive
Officer and Director (Principal Executive Officer) |
March 29, 2000 | |
| /s/ Frank G. Berris Frank G. Berris |
Director | March 15, 2000 | |
| /s/ Lawrence D. Bradford Lawrence D. Bradford |
Director | March 20, 2000 | |
| /s/ William F. Cutler, Jr. William F. Cutler, Jr. |
Director | March 22, 2000 | |
| /s/ Lewis G. Emmons* Lewis G. Emmons |
Director | March 29, 2000 | |
| /s/ Stuart Goodfellow Stuart Goodfellow |
Director | March 23, 2000 | |
| /s/ Paul Johnson Paul Johnson |
Director | March 27, 2000 | |
| /s/ Jon E. Pike Jon E. Pike |
Chairman of the Board
and Director |
March 22, 2000 | |
| /s/ Linda R. Pitsch Linda R. Pitsch |
Secretary and Director | March 15, 2000 | |
| /s/ Andrew W. Zamiara Andrew W. Zamiara |
Director | March 27, 2000 | |
| /s/ Thomas L. Lampen Thomas L. Lampen |
Treasurer (Principal Financial
and Accounting Officer) |
March 15, 2000 | |
| *By /s/ Jae M. Maxfield Jae M. Maxfield Attorney-in-Fact |
March 29, 2000 |
| Exhibit | Document |
| 3.1 | Amended and Restated Articles of Incorporation of the Registrant. Previously filed as an exhibit to the Registrant's Form 10-QSB Quarterly Report for the quarter ended June 30, 1998. Here incorporated by reference. |
| 3.2 | Bylaws of the Registrant as currently in effect and any amendments thereto. Previously filed as an exhibit to the Registrant's Form 10-QSB Quarterly Report for the quarter ended September 30, 1998. Here incorporated by reference. |
| 4. | Advances, Pledge and Security Agreement between ChoiceOne Bank and the Federal Home Loan Bank of Indianapolis. Previously filed as an exhibit to the Registrant's Form 10-KSB Annual Report for its fiscal year ended December 31, 1997. Here incorporated by reference. |
| 10.1 | Employment Agreement With Jae M. Maxfield.(1) Previously filed as an exhibit to the Registrant's Form 10-KSB Annual Report for its fiscal year ended December 31, 1995. Here incorporated by reference. |
| 10.2 | Employment Agreement With Lawrence D. Bradford.(1) Previously filed as an exhibit to the Registrant's Form 10-KSB Annual Report for its fiscal year ended December 31, 1995. Here incorporated by reference. |
| 10.3 | Executive Stock Incentive Plan of 1997.(1) Previously filed as Appendix B to the Registrant's Definitive Proxy Statement with respect to its Annual Meeting of Shareholders held on April 29, 1997. Here incorporated by reference. |
| 13 | Annual Report to Shareholders for the year ended December 31, 1999. |
| 21 | Subsidiaries of the Small Business Issuer. |
| 24 | Power of Attorney |
| 27 | Financial Data Schedule for Year Ended December 31, 1999. |
| (1) | These agreements are management contracts or compensation plans or arrangements required to be filed as exhibits to this Form 10-KSB. |
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