8-K 1 first8k_071504.htm Firstbank Corporation Form 8-K

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report: July 15, 2004

FIRSTBANK CORPORATION
(Exact name of registrant as
specified in its charter)

Michigan
(State or other
jurisdiction of
incorporation)


311 Woodworth Avenue
Alma, Michigan
(Address of principal executive office) 		000-14209
(Commission
File Number) 		38-2633910
(IRS Employer
Identification no.)




48801
(Zip Code)

Registrant’s telephone number,
including area code: (989) 463-3131

Item 7.     Financial Statements and Exhibits.

             Exhibit

             99.1 Press release dated July 15, 2004.

Item 12.   Results of Operations and Financial Condition.

             On July 15, 2004, Firstbank Corporation issued a press release announcing results for its second quarter of 2004. A copy of the press release is attached as Exhibit 99.1.

             The information in this Form 8-K and the attached Exhibit shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

SIGNATURE

        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: July 15, 2004 FIRSTBANK CORPORATION
(Registrant)


By: /s/ Thomas R. Sullivan
      ——————————————
      Thomas R. Sullivan
      President and CEO

EXHIBIT INDEX

99.1       Press Release Dated July 15, 2004.

Exhibit 99.1

FOR IMMEDIATE RELEASE

Date Submitted: July 15, 2004
NASDAQ Symbol: FBMI		 NEWS RELEASE

Contact:Samuel G. Stone
Executive Vice President and
Chief Financial Officer
(989) 466-7325

FIRSTBANK CORPORATION ANNOUNCES
SECOND QUARTER AND YEAR-TO-DATE 2004 RESULTS

Highlights Include:
  •   Earnings per share (diluted) of $0.45 for the second quarter of 2004 and
      $0.92 for the first half of 2004
  •   Share repurchase activity suspended due to pending 500,000 share self-tender offer
  •   Annualized loan growth of 7.7% for the quarter and 9.3% versus year-ago
  •   Continuing strong asset quality and capital ratios

Alma, Michigan (FBMI) — Thomas R. Sullivan, President and Chief Executive Officer of Firstbank Corporation announced net income of $2,565,000 for the quarter ended June 30, 2004, compared to $2,681,000 for the quarter ended March 31, 2004, a decrease of 4.3%. Earnings per share were $0.45, down 4.3% from $0.47 for the first quarter of 2004. Returns on average assets and average equity for the second quarter of 2004 were 1.33% and 12.2%, respectively, compared with 1.39% and 12.7% respectively in the first quarter of 2004. Earnings in the first quarter of 2004 included a $179,000 benefit, net of taxes, from the reversal of allowance for loan losses relating to a partial payoff of a large loan which had associated specific reserves. When this benefit is excluded from net income in the first quarter of 2004, net income in the second quarter of 2004 increased 2.5% and earnings per share increased 2.3% from $0.44 to $0.45. All per share amounts are fully diluted amounts and have been adjusted to reflect the 5% stock dividend paid in December 2003.

Gain on sale of mortgages increased 8.0% in the second quarter of 2004 compared to the first quarter of 2004. However, mortgage activity nationwide and in Firstbank’s market areas was significantly lower than year-ago levels, affecting comparisons with the year-ago period. Net income and earnings per share for the quarter ended June 30, 2004, decreased 24.0% and 22.4% respectively compared to the quarter ended June 30, 2003. Notwithstanding the slowdown in mortgage banking activity from last year, Firstbank’s mortgage servicing portfolio was basically unchanged from the first quarter with the principal balance of loans serviced for others decreasing to $471.1 million as of June 30, 2004, from $471.4 million at March 31, 2004, but increasing 9.2% from $431.5 million at June 30, 2003.

For the first half of 2004, net income of $5,246,000 compared to $6,668,000 for the year-to-date period ended June 30, 2003, a decrease of 21.3%. Earnings per share were $0.92, down 20.0% from $1.15 for the first half of 2003. Returns on average assets and average equity for the first half of 2004 were 1.35% and 12.3%, respectively, compared with 1.77% and 16.5% respectively in the first half of 2003.

Growth in Firstbank’s loan portfolio continued. Total portfolio loans grew 1.9%, or 7.7% annualized, in the second quarter of 2004 and were 9.3% above the level at June 30, 2003. Strength in loan portfolio growth was balanced between commercial and commercial real estate loans, which together increased 6.2% above the year-ago level, and residential mortgage loans, which increased 15.5%.

Total deposits as of June 30, 2004, increased 2.2% from March 31, 2004, and were 2.7% above the year-ago level. Non-interest bearing deposits increased 15.4% from March 31, 2004, and were 8.7% over the level at June 30, 2003.

Firstbank’s net interest margin, at 4.41% in the second quarter of 2004, declined 0.10% from the 4.51% level achieved in the first quarter of 2004 and in the year-ago second quarter of 2003. Upward movement in certain interest rates affecting funding costs occurred prior to the recent increase in the prime rate, causing narrowing of the net interest margin during the quarter.

Mr. Sullivan stated, “We continue to be pleased with the progress of our company and the performance of our bankers. Faced with the industry-wide slowdown in mortgage business compared to last year, we have been able to shift emphasis to the more traditional mainstays of community banking – loan and deposit services to commercial and consumer customers. Our lenders continue to manage asset quality well, and our earnings, before reversal of allowance, increased from the first quarter to the second quarter of 2004. We continue to believe that we have our banks’ balance sheets positioned to benefit both net interest margin and earnings from increasing interest rates, and the recent increase in the prime rate should contribute positively to our earnings.”

With continued focus on cost control, Firstbank reduced salaries and employee benefits expense by 2.6% in the second quarter of 2004 compared to the first quarter of 2004. Total non-interest expense for the second quarter of 2004 was 8.4% below the level in the second quarter of 2003. Non-interest expense in the second quarter of 2004 includes approximately $66,000 associated with Firstbank’s self-tender offer.

Firstbank repurchased 11,300 shares of its common stock in the second quarter of 2004, prior to suspending activity due to the currently pending self-tender offer for up to 500,000 shares. Shareholders’ equity increased 1.7% in the second quarter of 2004 as the impact of share repurchases did not fully offset increases from retained earnings and share issuance related primarily to dividend reinvestment and stock option exercises. The ratio of average equity to average assets stood at 10.9% in the second quarter of 2004, the same level as in the second quarter of 2003.

Firstbank’s asset quality measures remained strong. The ratio of non-performing loans to loans was 0.37% as of June 30, 2004, compared to 0.17% at March 31, 2004, and 0.33% at June 30, 2003. Net charge-offs in the second quarter of 2004 were $119,000, or 0.07% annualized as a percentage of average loans, compared to $144,000, or 0.09% annualized as a percentage of average loans in the first quarter of 2004, and compared to $99,000, or 0.07% annualized in the second quarter of 2003. These measures of asset quality remain at low levels and continue to be at levels considered in the industry to be favorable. Subsequent to June 30, 2004, one of Firstbank Corporation’s banks received substantially full pay-off of a $557,000 loan that was classified as non-performing due to delinquency.

Firstbank Corporation, headquartered in Alma, Michigan is currently a five bank financial services company with assets of $786 million and 35 banking offices located in central and northeast Michigan. Bank subsidiaries include: Firstbank — Alma; Firstbank (Mt. Pleasant); Firstbank — West Branch; Firstbank - Lakeview; and Firstbank — St. Johns. Other corporate affiliates include 1st Armored, Inc.; 1st Title; Gladwin Land Company, Inc.; and C. A. Hanes Realty, Inc. Investment services are available through affiliations with CB Wealth Management N.A., MML Investors Services, Inc., and Raymond James Financial Services Inc.

This press release contains certain forward-looking statements that involve risks and uncertainties. When used in this press release the words “anticipate,” “believe,” “expect,” “potential,” “should,” and similar expressions identify forward-looking statements. Forward-looking statements include, but are not limited to, statements concerning future business growth, increases in interest rates and positioning of balance sheets to benefit net interest margins and earnings. 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 BALANCE SHEETS
(Dollars in thousands)
UNAUDITED

Jun 30
2004 		Mar 31
2004 		Dec 31
2003 		Jun 30
2003
ASSETS                    
   
Cash and cash equivalents:  
  Cash and due from banks   $ 24,070   $ 21,579   $ 27,442   $ 24,816  
  Short term investments    10,807    11,858    5,703    33,999  
Total cash and cash equivalents    34,877    33,437    33,145    58,815  
   
Securities available for sale    66,256    64,122    70,731    72,136  
Federal Home Loan Bank stock    5,241    5,184    4,929    4,809  
Loans:  
  Loans held for sale    1,400    2,672    4,160    7,890  
  Portfolio loans:  
    Commercial    101,393    112,851    112,263    100,796  
    Commercial real estate    216,689    202,828    203,080    198,706  
    Residential mortgage    221,766    212,159    204,806    192,051  
    Real estate construction    51,442    52,746    55,160    43,436  
    Consumer    57,944    56,156    57,557    58,364  
    Credit card    1,828    1,961    2,587    2,444  
Total portfolio loans    651,062    638,701    635,453    595,797  
  Less allowance for loan losses    (11,232 )  (11,292 )  (11,627 )  (11,712 )
Net portfolio loans    639,830    627,409    623,826    584,085  
   
Premises and equipment, net    17,923    17,931    18,103    17,222  
Goodwill    4,880    4,880    4,880    4,880  
Other intangibles    2,538    2,622    2,698    2,848  
Other assets    13,111    13,770    14,028    13,858  
TOTAL ASSETS   $ 786,056   $ 772,027   $ 776,500   $ 766,543  
   
LIABILITIES AND SHAREHOLDERS' EQUITY  
    
LIABILITIES  
   
Deposits:  
  Noninterest bearing accounts    105,104    91,110    102,296    96,723  
  Interest bearing accounts:  
  Demand    181,272    189,767    181,642    182,249  
  Savings    98,651    99,877    95,395    90,938  
  Time    204,341    195,850    188,221    204,236  
Total deposits    589,368    576,604    567,554    574,146  
   
Securities sold under agreements to  
  repurchase and overnight borrowings    28,883    27,386    47,069    28,069  
FHLB Advances and notes payable    72,475    72,727    67,255    69,298  
Accrued interest and other liabilities    8,641    10,072    8,878    10,525  
Total liabilities    699,367    686,789    690,756    682,038  
   
SHAREHOLDERS' EQUITY  
Preferred stock; no par value, 300,000  
  shares authorized, none issued  
Common stock; 10,000,000 shares authorized *    74,115    73,535    75,591    68,538  
Retained earnings    12,139    10,749    9,187    14,321  
Accumulated other comprehensive income    435    954    966    1,646  
Total shareholders' equity    86,689    85,238    85,744    84,505  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 786,056   $ 772,027   $ 776,500   $ 766,543  
   
* Common stock shares issued and outstanding    5,615,224    5,589,389    5,642,304    5,657,632  
   
Asset Quality Ratios:  
  Non-Performing Loans / Loans^    0.37 %  0.17 %  0.22 %  0.33 %
  Non-Perf. Loans + OREO / Loans^ + OREO    0.39 %  0.21 %  0.26 %  0.45 %
  Non-Performing Assets / Total Assets    0.33 %  0.18 %  0.21 %  0.35 %
  Allowance for Loan Loss as a % of Loans^    1.73 %  1.77 %  1.83 %  1.97 %
  Allowance / Non-Performing Loans    464 %  1015 %  822 %  608 %
   
Quarterly Average Balances:  
  Total Portfolio Loans^   $ 644,714   $ 642,911   $ 615,474   $ 591,952  
  Total Earning Assets   $ 729,187   $ 724,939   $ 714,907   $ 714,344  
  Total Shareholders' Equity   $ 84,977   $ 85,167   $ 85,028   $ 83,038  
   
  Total Assets    779,826    776,694    763,503    762,072  
  Diluted Shares Outstanding    5,707,903    5,751,389    5,814,986    5,860,149  
   
^ Total Loans less loans held for sale  

FIRSTBANK CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands except per share data)
UNAUDITED

Three months Ended: Six months Ended:
Jun 30
2004		 Mar 31
2004		 Jun 30
2003		 Jun 30
2004		 Jun 30
2003
Interest income:                        
  Interest and fees on loans   $ 10,058   $ 10,180   $ 10,309   $ 20,238   $ 20,871  
  Investment securities  
    Taxable    380    383    483   $ 763   $ 980  
    Exempt from federal income tax    228    242    262    470    526  
    Short term investments    32    24    108    56    230  
Total interest income    10,698    10,829    11,162    21,527    22,607  
   
Interest expense:  
  Deposits    1,815    1,786    2,252    3,601    4,721  
  Notes payable and other    995    1,030    1,025    2,025    2,045  
Total interest expense    2,810    2,816    3,277    5,626    6,766  
   
Net interest income    7,888    8,013    7,885    15,901    15,841  
Provision for loan losses    60    (191 )  120    (131 )  330  
Net interest income after provision for loan losses    7,828    8,204    7,765    16,032    15,511  
   
Noninterest income:  
  Gain on sale of mortgage loans    847    784    3,114    1,631    5,484  
  Service charges on deposit accounts    703    649    646    1,352    1,251  
  Gain on sale of securities    11    0    2    11    9  
  Mortgage servicing    (56 )  (20 )  (429 )  (76 )  (694 )
  Other    1,316    952    1,464    2,268    2,836  
Total noninterest income    2,821    2,365    4,797    5,186    8,886  
   
Noninterest expense:  
  Salaries and employee benefits    3,838    3,941    4,080    7,779    7,842  
  Occupancy and equipment    923    969    914    1,892    1,863  
  Amortization of intangibles    77    76    73    153    185  
  FDIC insurance premium    21    22    23    43    46  
  Michigan single business tax    24    21    74    45    135  
  Other    1,988    1,574    2,334    3,562    4,307  
Total noninterest expense    6,871    6,603    7,498    13,474    14,378  
   
Income before federal income taxes    3,778    3,966    5,064    7,744    10,019  
Federal income taxes    1,213    1,285    1,691    2,498    3,351  
Net Income   $ 2,565   $ 2,681   $ 3,373   $ 5,246   $ 6,668  
   
Fully Tax Equivalent Interest Income   $ 8,015   $ 8,127   $ 8,048   $ 13,474   $ 14,378  
   
Per Share Data:  
  Basic Earnings   $ 0.46   $ 0.48   $ 0.59   $ 0.94   $ 1.17  
  Diluted Earnings   $ 0.45   $ 0.47   $ 0.58   $ 0.92   $ 1.15  
  Dividends Paid   $ 0.21   $ 0.20   $ 0.19   $ 0.41   $ 0.37  
   
Performance Ratios:  
  Return on Average Assets*    1.33 %  1.39 %  1.78 %  1.35 %  1.77 %
  Return on Average Equity*    12.2 %  12.7 %  16.3 %  12.3 %  16.5 %
  Net Interest Margin (FTE) *    4.41 %  4.51 %  4.51 %  4.46 %  4.54 %
  Book Value Per Share+   $ 15.44   $ 15.22   $ 14.93   $ 15.44   $ 14.93  
  Average Equity/Average Assets    10.9 %  11.0 %  10.9 %  10.9 %  10.7 %
   
  Net Charge-offs    119    144    99    263    258  
  Net Charge-offs as a % of Average Loans^*    0.07 %  0.09 %  0.07 %  0.08 %  0.05 %
   
* Annualized  
+ Period End  
^ Total loans less loans held for sale