Highlights Include:
  • Net income of $937,000 and net income available to common shareholders of $525,000 in the second quarter of 2010, compared to $62,000 net income and a negative earnings available to common of $351,000 for these measures in the second quarter of 2009
  • Earnings per share equaled $0.07 for the second quarter of 2010, up from $0.03 per share in the first quarter of 2010 and a loss of $0.04 in the second quarter of 2009
  • Provision expense of $3.1 million and net charge-offs of $2.6 million in the second quarter of 2010 decreased from $5.3 million of provision expense and $2.7 million of net charge-offs in the second quarter of 2009
  • Ratio of the allowance for loan losses to loans strengthened to 1.90% at June 30, 2010, compared to 1.70% at December 31, 2009, and 1.48% at June 30, 2009
  • Loan portfolio continues to shrink due to economic conditions and lack of demand
  • Equity ratios remain strong and all affiliate banks continue to exceed all regulatory well-capitalized requirements

ALMA, Mich., July 27, 2010 (GLOBE NEWSWIRE) -- Thomas R. Sullivan, President and Chief Executive Officer of Firstbank Corporation (Nasdaq:FBMI), announced net income of $937,000 for the second quarter of 2010, compared to $62,000 for the second quarter of 2009, with net income available to common shareholders of $525,000 in the second quarter of 2010 compared to negative $351,000 in the second quarter of 2009. Earnings per share were $0.07 in the second quarter of 2010 compared to a loss of $0.04 in the second quarter of 2009. Returns on average assets and average equity for the second quarter of 2010 were 0.26% and 2.7%, respectively, compared to 0.03% and 0.3% respectively in the second quarter of 2009.

Earnings comparisons to the year-ago quarterly period were impacted by a one-time FDIC insurance assessment expense in the second quarter of 2009. Ongoing FDIC insurance expense, provision expense, and other credit and collection expense continue at elevated levels. Provision expense in the second quarter of 2010 was $3,066,000, up 23.1% from the first quarter of 2010 but 41.9% lower than in the second quarter of 2009. The provision expense of $3,066,000 in the second quarter of 2010 exceeded net charge-offs in the quarter of $2,599,000 as management continued to build the level of reserves for loan losses.

For the first half of 2010, net income of $1,596,000 was 1.3% higher than in the first half of 2009, although net income available to common declined to $771,000 in the first six months of 2010 versus $887,000 for the same period in 2009. Earnings per share were $0.10 in the first half of 2010 compared to $0.12 in the year-ago first half. Provision expense of $5,557,000 in the first half of 2010 exceeded net charge-offs of $4,083,000, and the provision expense was 19% lower than in the first half of 2009.

Expense control efforts continued. Comparing the second quarter of 2010 with the second quarter of 2009, salaries and employee benefits expense decreased 5.4% and occupancy and equipment expense declined 10.5%. The sale of 1 st Armored in the first quarter of 2010, while having little impact on net income, also helped to reduce expenses.

Firstbank's net interest margin was 3.82% in the second quarter of 2010 compared to 3.77% in both the first quarter of 2010 and the second quarter of 2009. Some of Firstbank's affiliate banks have begun to pay off higher rate Federal Home Loan Bank advances upon their maturities, helping to reduce funding costs. Core deposits have increased, providing a lower cost source of funding. Also, strategies employed during 2009 aimed at incorporating floors on variable rate loans and re-pricing deposits upon renewal at currently competitive rates, have resulted in the improvement in margin. The improvement in margin helped net interest income in the second quarter of 2010 increase 2.8% compared to the first quarter of 2010 and increase 6.8% from the second quarter of 2009.

Mortgage gains, particularly from refinances, were strong in 2009, but both refinance and purchase money mortgage business were very slow in the first quarter of 2010. However, the second quarter of 2010 saw some improvement. Gain on sale of mortgage loans increased to $726,000 in the second quarter of 2010, 96.2% above the level in the first quarter of 2010. In spite of this improvement in the quarter, for the first half of 2010, mortgage gains were 80% lower than in the first half of 2009.

The category of other non-interest income in the second quarter of 2010 showed decreases from both the first quarter of 2010 and from the second quarter of 2009. These decreases are more than explained by the absence of 1 st Armored and 1 st Title in the consolidated results.

Total assets of Firstbank Corporation at June 30, 2010, were $1.477 billion, an increase of 3.5% over the year-ago period. Total portfolio loans of $1.083 billion were 4.2% below the year-ago level. Commercial and commercial real estate loans decreased 2.5% over this twelve month period, and real estate construction loans decreased 11.2%. Residential mortgage and consumer loans also decreased. The strong mortgage refinance activity in 2009 resulted in loans being financed in the secondary market rather than on the balance sheet of the company. While Firstbank has ample capital and funding resources to increase loans on its balance sheet, demand for funds for new ventures by quality borrowers remains weak due to uncertainty about the economy. Total deposits as of June 30, 2010, were $1.162 billion, compared to $1.056 billion at June 30, 2009, an increase of 10.0%. Core deposits increased $107 million or 10.7% over the year-ago level.

Mr. Sullivan stated, "We continue to focus attention on managing credits and making adjustments in the operations of our company while we wait hopefully for improvement in economic activity. As many businesses and homeowners remain under economic stress, we saw an uptick in net charge-offs in the most recent quarter, although not to an amount above the year-ago level. There continues to be a lack of demand in our markets from borrowers with good credit credentials who are optimistically planning to invest in new projects that have good financial prospects. We continue to have abundant capacity and willingness to make good loans. However, the shrinkage of the loan portfolio results in increased holdings of cash and short term securities with very low investment yields.

"Our efforts to streamline our company by moving out of non-core activities, like title insurance and armored car services, are favorably impacting our expense levels and enabling management to focus on more significant issues. We are also capitalizing on opportunities, related to changes in our business volumes and technology, to reduce personnel and other operating expenses. While recognizing these opportunities, we also are mindful of the importance of our highly capable and motivated staff serving our customers, and our Compensation Committee continues to monitor and adjust compensation programs in accordance with its Compensation Philosophy.

"We continue to have success with our retail strategies and branch network, positioning ourselves well both currently and for the future. Core deposits continue to grow, increasing 0.5% in the second quarter and 10.7% over the past year. Construction is nearly complete on our new branch facility in DeWitt and we are beginning construction on a replacement facility for one of our high volume locations in Mt. Pleasant."

At June 30, 2010, the ratio of the allowance for loan losses to loans increased to 1.90%, compared to 1.70% at December 31, 2009, and 1.48% at June 30, 2009. The ratio of allowance for loan loss to non-performing loans stood at 55% on June 30, 2010, compared to 47% at December 31, 2009, and 63% at June 30, 2009.

Net charge-offs were $2,599,000 in the second quarter of 2010, higher than the $1,484,000 in the first quarter of 2010, but reduced from the $2,736,000 amount in the second quarter of 2009. In the second quarter of 2010, net charge-offs annualized represented 0.95% of average loans. For the first half of 2010, net charge-offs annualized represented 0.74% of average loans, compared to 0.84% in the first half of 2009. The ratio of non-performing loans (including loans past due over 90 days) to loans stood at 3.43% on June 30, 2010, compared to 3.23% on March 31, 2010 and 3.66% as of December 31, 2009.

Total equity was slightly higher at June 30, 2010, compared to both the levels at December 31, 2009, and June 30, 2009. The ratio of average equity to average assets was 9.8% in both the first and second quarters of 2010, compared to 10.5% in the second quarter of 2009. All of Firstbank Corporation's affiliate banks continue to meet regulatory well-capitalized requirements.

Firstbank Corporation, headquartered in Alma, Michigan, is a bank holding company using a multi-bank-charter format with assets of $1.5 billion and 51 banking offices serving Michigan's Lower Peninsula. Bank subsidiaries include: Firstbank - Alma; Firstbank (Mt. Pleasant); Firstbank - West Branch; Firstbank - St. Johns; Keystone Community Bank; and Firstbank - West Michigan.

This press release contains certain forward-looking statements that involve risks and uncertainties. When used in this press release the words "anticipate," "believe," "expect," "hopeful," "potential," "should," and similar expressions identify forward-looking statements. Forward-looking statements include, but are not limited to, statements concerning future business growth, changes in interest rates, loan charge-off rates, demand for new loans, the performance of restructured loans, and the resolution of problem loans. Such statements are subject to certain risks and uncertainties which could cause actual results to differ materially from those expressed or implied by such forward-looking statements, including, but not limited to, economic, competitive, governmental and technological factors affecting the Company's operations, markets, products, services, interest rates and fees for services. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release.
FIRSTBANK CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands except per share data)
UNAUDITED
             
    Three Months Ended: Six Months Ended:
    Jun 30 Mar 31 Jun 30 Jun 30 Jun 30
    2010 2010 2009 2010 2009
Interest income:            
 Interest and fees on loans   $16,993 $17,021 $17,504 $34,014 $35,128
 Investment securities            
 Taxable   910 716 648 1,626 1,394
 Exempt from federal income tax   272 309 321 581 653
 Short term investments   50 53 23 103 53
Total interest income   18,225 18,099 18,496 36,324 37,228
             
Interest expense:            
 Deposits   4,198 4,278 4,819 8,476 9,987
 Notes payable and other borrowing   1,359 1,497 1,821 2,856 3,784
Total interest expense   5,557 5,775 6,640 11,332 13,771
             
Net interest income   12,668 12,324 11,856 24,992 23,457
Provision for loan losses   3,066 2,491 5,276 5,557 6,864
Net interest income after provision for loan losses   9,602 9,833 6,580 19,435 16,593
             
Noninterest income:            
 Gain on sale of mortgage loans   726 370 3,109 1,096 5,482
 Service charges on deposit accounts   1,180 1,097 1,122 2,277 2,205
 Gain (loss) on trading account securities   0 23 16 23 (113)
 Gain (loss) on sale of AFS securities   (46) 55 357 9 300
 Mortgage servicing   63 126 (191) 189 (543)
 Other   442 593 715 1,035 994
Total noninterest income   2,365 2,264 5,128 4,629 8,325
             
Noninterest expense:            
 Salaries and employee benefits   5,249 5,460 5,551 10,709 11,181
 Occupancy and equipment   1,369 1,490 1,529 2,859 3,256
 Amortization of intangibles   210 210 245 420 490
 FDIC insurance premium   485 545 1,155 1,030 1,526
 Other   3,406 3,722 3,460 7,128 6,714
Total noninterest expense   10,719 11,427 11,940 22,146 23,167
             
Income before federal income taxes   1,248 670 (232) 1,918 1,751
Federal income taxes   311 11 (294) 322 176
Net Income    937 659 62 1,596 1,575
Preferred Stock Dividends   412 413 413 825 688
Net Income available to Common Shareholders   $525 $246 ($351) $771 $887
             
Fully Tax Equivalent Net Interest Income   $12,860 $12,543 $12,071 $25,403 $23,900
             
Per Share Data:            
 Basic Earnings   $0.07 $0.03 ($0.04) $0.10 $0.12
 Diluted Earnings   $0.07 $0.03 ($0.04) $0.10 $0.12
 Dividends Paid   $0.01 $0.05 $0.10 $0.06 $0.20
             
Performance Ratios:            
 Return on Average Assets (a)   0.26% 0.21% 0.03% 0.24% 0.24%
 Return on Average Equity (a)   2.7% 2.2% 0.3% 2.4% 2.5%
 Net Interest Margin (FTE) (a)   3.82% 3.77% 3.77% 3.80% 3.72%
 Book Value Per Share (b)   $14.86 $14.73 $15.02 $14.86 $15.02
 Average Equity/Average Assets   9.8% 9.8% 10.5% 9.8% 9.9%
 Net Charge-offs   $2,599 $1,484 $2,736 $4,083 $4,790
 Net Charge-offs as a % of Average Loans (c)(a)   0.95% 0.54% 0.96% 0.74% 0.84%
             
(a) Annualized             
(b) Period End         `  
(c) Total loans less loans held for sale            
 
FIRSTBANK CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
UNAUDITED
           
    Jun 30 Mar 31 Dec 31 Jun 30
    2010 2010 2009 2009
ASSETS          
           
Cash and cash equivalents:          
 Cash and due from banks   $25,752 $22,906 $27,254 $39,653
 Short term investments   49,154 86,069 80,111 52,497
Total cash and cash equivalents   74,906 108,975 107,365 92,150
           
Securities available for sale   231,204 187,374 159,758 108,091
Federal Home Loan Bank stock   9,084 9,084 9,084 9,084
Loans:          
 Loans held for sale   108 1,098 578 2,676
 Portfolio loans:          
 Commercial    182,773 188,983 192,096 183,287
 Commercial real estate    381,216 388,324 397,862 395,227
 Residential mortgage   374,901 375,000 376,683 390,318
 Real estate construction   78,694 80,018 85,229 88,668
 Consumer   65,127 66,318 69,736 72,482
Total portfolio loans   1,082,711 1,098,643 1,121,607 1,129,982
 Less allowance for loan losses   (20,588) (20,121) (19,114) (16,668)
Net portfolio loans   1,062,123 1,078,522 1,102,493 1,113,314
           
Premises and equipment, net   24,662 24,475 25,437 25,616
Goodwill   35,513 35,513 35,513 35,513
Other intangibles   2,520 2,730 2,940 3,384
Other assets   36,491 39,581 39,187 36,302
TOTAL ASSETS   $1,476,611 $1,487,352 $1,482,356 $1,426,130
           
LIABILITIES AND SHAREHOLDERS' EQUITY          
           
LIABILITIES          
           
Deposits:          
 Noninterest bearing accounts   $164,475 $155,896 $164,333 $165,574
 Interest bearing accounts:          
 Demand   261,888 262,778 255,414 226,078
 Savings   197,208 190,214 174,114 162,879
 Time   522,205 531,667 532,370 480,954
 Wholesale CD's   16,452 15,848 22,832 20,700
Total deposits   1,162,228 1,156,403 1,149,063 1,056,185
           
Securities sold under agreements to          
 repurchase and overnight borrowings   36,601 43,750 39,409 44,163
FHLB Advances and notes payable   85,110 94,246 100,263 127,814
Subordinated Debt    36,084 36,084 36,084 36,084
Accrued interest and other liabilities   8,382 10,002 10,657 13,953
Total liabilities   1,328,405 1,340,485 1,335,476 1,278,199
           
SHAREHOLDERS' EQUITY          
Preferred stock; no par value, 300,000          
 shares authorized, 33,000 outstanding   32,748 32,741 32,734 32,707
Common stock; 20,000,000 shares authorized   115,034 114,907 114,773 114,253
Retained earnings   (891) (1,338) (1,225) 50
Accumulated other comprehensive income/(loss)   1,315 557 598 921
Total shareholders' equity   148,206 146,867 146,880 147,931
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $1,476,611 $1,487,352 $1,482,356 $1,426,130
           
Common stock shares issued and outstanding    7,771,105 7,750,159 7,730,241 7,669,227
Principal Balance of Loans Serviced for Others ($mil)   $599.0 $597.8 $602.1 $575.1
           
Asset Quality Ratios:          
 Non-Performing Loans / Loans (a)   3.43% 3.23% 3.66% 2.34%
 Non-Perf. Loans + OREO / Loans (a) + OREO   4.30% 3.99% 4.29% 3.14%
 Non-Performing Assets / Total Assets   3.18% 2.97% 3.27% 2.51%
 Allowance for Loan Loss as a % of Loans (a)    1.90% 1.83% 1.70% 1.48%
 Allowance / Non-Performing Loans   55% 57% 47% 63%
           
Quarterly Average Balances:          
 Total Portfolio Loans (a)   $1,090,129 $1,108,023 $1,124,361 $1,137,106
 Total Earning Assets    1,349,637  1,343,224  1,318,027  1,283,676
 Total Shareholders' Equity    146,396  146,037  147,730  148,247
 Total Assets   1,487,312 1,484,094 1,455,351 1,417,842
 Diluted Shares Outstanding    7,757,387 7,736,621 7,712,814 7,643,929
           
(a) Total Loans less loans held for sale          
CONTACT:  Firstbank Corporation          Samuel G. Stone, Executive Vice President and            Chief Financial Officer          (989) 466-7325