Choiceone Financial Services (COFS) risk factors, FY2025 10-K

Risks Related to the Company ’ s Business

1. 01Asset quality could be less favorable than expected
2. 02The Company’s allowance for credit losses may not be adequate to cover actual credit losses
3. 03General economic conditions in the state of Michigan could have a material adverse effect on the Company ’ s results of operations or financial condition
4. 04We may be adversely affected by risks associated with future mergers and acquisitions, including execution risk, which could disrupt our business and dilute shareholder value
5. 05The Company could be adversely affected by the soundness of other financial institutions, including defaults by larger financial institutions
6. 06If the Company does not adjust to changes in the financial services industry, its financial performance may suffer
7. 07We are subject to significant government regulation, and any regulatory changes may adversely affect us
8. 08Changes in interest rates could reduce the Company’s income and cash flow
9. 09The Company is subject to liquidity risk in its operations, which could adversely affect its ability to fund various obligations
10. 10If the Company were required to sell investment securities in an unrealized loss position to meet liquidity needs and realize losses, that could have a material adverse impact on its results of operation and financial condition58% rewritten
11. 11Evaluation of investment securities for an allowance for credit losses involves subjective determinations and could have a material adverse impact on our results of operations and financial condition
12. 12The Company has significant exposure to risks associated with commercial and residential real estate48% rewritten
13. 13Commercial loans may expose the Company to greater financial and credit risk than other loans22% rewritten
14. 14Legislative or regulatory changes or actions could adversely impact the Company or the businesses in which it is engaged
15. 15The Company relies heavily on its management and other key personnel, and the loss of any of them may adversely affect its operations
16. 16The Company ’ s controls and procedures may fail or be circumvented
17. 17The Company may be a defendant in a variety of litigation and other actions, which may have a material adverse effect on the Company’s financial condition and results of operations
18. 18If the Company cannot raise additional capital when needed, its ability to further expand its operations through organic growth or acquisitions could be materially impaired
19. 19Unauthorized disclosure of sensitive or confidential client or customer information, whether through a breach of computer systems or otherwise, could severely harm the Company’s business
20. 20The Company's information systems may experience an interruption or breach in security
21. 21Cybersecurity incidents could disrupt business operations, result in the loss of critical and confidential information, and adversely impact our reputation and results of operations
22. 22Employee misconduct could adversely impact our reputation and results of operations
23. 23Environmental liability associated with commercial lending could result in losses
24. 24The Company depends upon the accuracy and completeness of information about customers
25. 25Our reliance on third party vendors could cause operational losses or business interruptions
26. 26Severe weather, natural disasters, acts of war or terrorism, a public health crisis, and other external events could significantly impact the Company’s business
27. 27The Company relies on dividends from the Bank for most of its revenue
28. 28Additional risks and uncertainties could have a negative effect on financial performance

Risks Related to the Company ’ s Common Stock

1. 29Investments in the Company ’ s common stock involve risk
2. 30The Company’s common stock, while publicly traded, has less liquidity than the average liquidity of stocks listed on the Nasdaq Stock Market
3. 31A shareholder’s ownership of common stock may be diluted if the Company issues additional shares of common stock in the future
4. 32The value of the Company's common stock may be adversely affected if the Company issues debt and equity securities that are senior to the Company's common stock in liquidation or as to distributions
5. 33The Company's articles of incorporation and bylaws, and certain provisions of Michigan law, contain provisions that could make a takeover effort more difficult
6. 34An entity or group holding a certain percentage of the Company's outstanding securities could become subject to regulation as a "bank holding company" or may be required to obtain prior approval of the Federal Reserve Board