8-K 1 first8k_101904.htm Firstbank Corporation Form 8-K

UNITED STATES
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: October 19, 2004

FIRSTBANK CORPORATION
(Exact Name of Registrant as Specified in 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

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Section Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12).
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240-14d-2(b)).
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)).

Section 2.02 Results of Operations and Financial Conditions

On October 19, 2004, Firstbank Corporation issued a press release announcing results for the 2004 third quarter and year-to-date. A copy of the press release is attached as Exhibit 99.1 to this Form 8-K.

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.

Section 9.01 Financial Statements and Exhibits

      (c)     Exhibit

               Press Release Dated October 19, 2004.

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: October 19, 2004 FIRSTBANK CORPORATION
(Registrant)


By: /s/ Samuel G. Stone
      ——————————————
      Samuel G. Stone
      Executive Vice President and CFO


EXHIBIT INDEX

99.1     Press Release Dated October 19, 2004





EXHIBIT 99.1



FOR IMMEDIATE RELEASE
 		 NEWS RELEASE
 
Date Submitted:
NASDAQ Symbol: 		October 19, 2004
FBMI		 Contact: Samuel G. Stone
Executive Vice President and
Chief Financial Officer
(989) 466-7325

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

Highlights Include:
•   Earnings per share (diluted) of $0.49 for the third quarter of 2004 and $1.41 for the first nine months of 2004  
•  Completion of 600,000 share self tender offer for common stock during the third quarter, followed by issuance of $10 million trust preferred securities shortly after quarter-end 
•  Annualized loan growth of 10.0% for the quarter and 10.9% 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 $2,656,000 for the quarter ended September 30, 2004, compared to $2,565,000 for the quarter ended June 30, 2004, an increase of 3.5%. Earnings per share were $0.49, up 8.9% from $0.45 for the second quarter of 2004. Returns on average assets and average equity for the third quarter of 2004 were 1.33% and 13.8%, respectively, compared with 1.33% and 12.2% respectively in the second quarter of 2004. Earnings in the third quarter of 2004 included benefit from a negative provision for loan losses of $374,000 as explained further below. All per share amounts are fully diluted amounts and have been adjusted to reflect the 5% stock dividend paid in December 2003.

The third quarter 2004 earnings per share of $0.49 were even with the third quarter of 2003, although net income was 7.6% lower. Earnings per share benefited from Firstbank’s 600,000 share common stock self tender offer which was completed in August of 2004. The lower level of net income in 2004 was primarily attributable to continuing volatility in the mortgage banking business and reduced levels of mortgage re-financings. Gain on sale of mortgages decreased 45% in the third quarter of 2004 compared to the second quarter of 2004 and was 82% lower than the year-ago level. Notwithstanding the slowdown in mortgage banking activity, Firstbank’s mortgage servicing portfolio was basically unchanged from the second quarter with the principal balance of loans serviced for others increasing to $472.5 million as of September 30, 2004, from $471.1 million at June 30, 2004, and increasing 2.0% from $463.1 million at September 30, 2003.

For the nine months of 2004, net income of $7,902,000 compared to $9,543,000 for the year-to-date period ended September 30, 2003, a decrease of 17.2%. Earnings per share were $1.41, down 14.0% from $1.64 for the nine months of 2003. Returns on average assets and average equity for the nine months of 2004 were 1.35% and 12.9%, respectively, compared with 1.67% and 15.4% respectively in the first nine months of 2003.

Growth in Firstbank’s balance sheet continued. Total portfolio loans grew 2.5%, or 10.0% annualized, in the third quarter of 2004 and were 10.9% above the level at September 30, 2003. Strength in loan portfolio growth was balanced between commercial and commercial real estate loans, which together increased 11.4% above the year-ago level, and residential mortgage loans, which increased 16.4%. Total deposits as of September 30, 2004, increased 2.1% from June 30, 2004, and were 4.9% above the year-ago level. Non-interest bearing deposits increased 5.8% from June 30, 2004, and were 8.7% over the level at September 30, 2003.

Firstbank’s net interest margin, at 4.44% in the third quarter of 2004, increased 0.03% from the 4.41% level achieved in the second quarter of 2004 and compared to 4.42% in the third quarter of 2003. Benefit from increases in the prime rate was partially offset by the interest cost of funds used to repurchase shares in the self tender offer and by increases in rates on other funding sources.

Mr. Sullivan stated, “Our lenders continue to manage asset quality well, and we continue to believe that we have our banks’ balance sheets positioned to benefit both net interest margin and earnings from increasing interest rates. During the third quarter and in the first weeks of October we made significant progress on our capital management strategies with the successful completion of our self tender offer and the issuance of trust preferred securities. We believe that these capital management strategies will enhance our ability to grow earnings per share in the future.”

Firstbank’s salaries and employee benefits expense increased by 1.3% in the third quarter of 2004 compared to the second quarter of 2004, as seasonal needs were met. Total non-interest expense for the third quarter of 2004 was 9.8% below the level in the third quarter of 2003. Non-interest expense in the third quarter of 2004 includes approximately $101,000 associated with Firstbank’s self tender offer.

In the third quarter of 2004, as previously announced, Firstbank completed the repurchase of 600,000 shares of its common stock through its self tender offer. No other shares were repurchased during the quarter. Primarily as a result of the self tender offer, shareholders’ equity decreased 18.0% in the third quarter of 2004. The ratio of average equity to average assets stood at 9.6% in the third quarter of 2004, compared to 10.9% in the second quarter of 2004 and 11.0% in the third quarter of 2003.

Firstbank’s asset quality measures remained strong. The ratio of non-performing loans to loans was 0.37% as of September 30, 2004, compared to 0.37% at June 30, 2004, and 0.16% at September 30, 2003. Net charge-offs in the third quarter of 2004 were $64,000, or 0.04% annualized as a percentage of average loans, compared to $119,000, or 0.07% annualized as a percentage of average loans in the second quarter of 2004, and compared to $193,000, or 0.13% annualized in the third 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. During the third quarter of 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, as reported at the time of the release of second quarter earnings. Specific reserve related to this loan was reversed in the third quarter. Two additional credits having specific reserves experienced partial pay downs and transactions involving collateral that resulted in release of additional specific reserve. As a result, on a consolidated basis Firstbank had negative provision for loan losses related to these loans of $480,000 and a total provision for loan losses for the quarter of negative $374,000.

Firstbank Corporation, headquartered in Alma, Michigan is currently a five bank financial services company with assets of $799 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 Citizens Bank 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

Sep 30
2004 		Jun 30
2004 		Dec 31
2003 		Sep 30
2003
ASSETS                    
   
Cash and cash equivalents:  
   Cash and due from banks   $ 31,087   $ 24,070   $ 27,442   $ 24,325  
   Short term investments    4,136    10,807    5,703    34,954  
Total cash and cash equivalents    35,223    34,877    33,145    59,279  
   
Securities available for sale    63,327    66,256    70,731    69,889  
Federal Home Loan Bank stock    5,303    5,241    4,929    4,857  
Loans:  
   Loans held for sale    434    1,400    4,160    3,296  
   Portfolio loans:  
     Commercial    110,726    101,393    112,263    98,458  
     Commercial real estate    223,307    216,689    203,080    201,436  
     Residential mortgage    223,808    221,766    204,806    192,348  
     Real estate construction    50,682    51,442    55,160    49,346  
     Consumer    56,871    57,944    57,557    57,459  
     Credit card    1,832    1,828    2,587    2,583  
Total portfolio loans    667,226    651,062    635,453    601,630  
   Less allowance for loan losses    (10,795 )  (11,232 )  (11,627 )  (11,634 )
Net portfolio loans    656,431    639,830    623,826    589,996  
   
Premises and equipment, net    17,860    17,923    18,103    17,470  
Goodwill    4,880    4,880    4,880    4,880  
Other intangibles    2,289    2,538    2,698    2,773  
Other assets    13,055    13,111    14,028    12,198  
TOTAL ASSETS   $ 798,802   $ 786,056   $ 776,500   $ 764,638  
   
LIABILITIES AND SHAREHOLDERS' EQUITY  
   
LIABILITIES  
   
Deposits:  
   Noninterest bearing accounts    111,165    105,104    102,296    102,272  
   Interest bearing accounts:  
   Demand    182,221    181,272    181,642    181,532  
   Savings    101,048    98,651    95,395    96,732  
   Time    207,514    204,341    188,221    193,269  
Total deposits    601,948    589,368    567,554    573,805  
   
Securities sold under agreements to  
   repurchase and overnight borrowings    36,021    28,883    47,069    29,357  
FHLB Advances and notes payable    81,462    72,475    67,255    66,286  
Accrued interest and other liabilities    8,305    8,641    8,878    8,936  
Total liabilities    727,736    699,367    690,756    678,384  
   
SHAREHOLDERS' EQUITY  
Preferred stock; no par value, 300,000  
   shares authorized, none issued  
Common stock; 10,000,000 shares authorized *    56,662    74,115    75,591    68,704  
Retained earnings    13,740    12,139    9,187    16,118  
Accumulated other comprehensive income    664    435    966    1,432  
Total shareholders' equity    71,066    86,689    85,744    86,254  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 798,802   $ 786,056   $ 776,500   $ 764,638  
   
* Common stock shares issued and outstanding    5,037,995    5,615,224    5,642,304    5,672,596  
   
Asset Quality Ratios:  
   Non-Performing Loans / Loans^    0.37%    0.37%    0.22%    0.16%  
Non-Perf. Loans + OREO / Loans^ + OREO    0.43%    0.39%    0.26%    0.25%  
   Non-Performing Assets / Total Assets    0.36%    0.33%    0.21%    0.20%  
   Allowance for Loan Loss as a % of Loans^    1.62%    1.73%    1.83%    1.93%  
   Allowance / Non-Performing Loans    438%    464%    822%    1204%  
   
Quarterly Average Balances:  
   Total Portfolio Loans^   $ 661,813   $ 644,714   $ 615,474   $ 594,667  
   Total Earning Assets   $ 741,979   $ 729,187   $ 714,907   $ 721,778  
   Total Shareholders' Equity   $ 76,450   $ 84,977   $ 85,028   $ 84,774  
   Total Assets    93,781    779,826    763,503    770,108  
   Diluted Shares Outstanding    5,395,935    5,707,903    5,814,986    5,856,802  
   
^ Total Loans less loans held for sale  

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

Three months Ended: Nine Months Ended:
Sep 30
2004 		Jun 30
2004 		Sep 30
2003 		Sep 30
2004 		Sep 30
2003
Interest income:                        
   Interest and fees on loans   $ 10,378   $ 10,058   $ 10,071   $ 30,616   $ 30,942  
     Investment securities  
     Taxable    449    380    439   $ 1,212   $ 1,419  
     Exempt from federal income tax    234    228    255   $ 704    781  
     Short term investments    30    32    113    86    343  
Total interest income    11,091    10,698    10,878    32,618    33,485  
   
Interest expense:  
   Deposits    1,878    1,815    2,000   $ 5,479    6,721  
   Notes payable and other    1,097    995    1,020    3,122    3,065  
Total interest expense    2,975    2,810    3,020    8,601    9,786  
   
Net interest income    8,116    7,888    7,858    24,017    23,699  
Provision for loan losses    (374 )  60    115    (505 )  445  
Net interest income after provision for loan losses    8,490    7,828    7,743    24,522    23,254  
   
Noninterest income:  
   Gain on sale of mortgage loans    467    847    2,561    2,098    8,045  
   Service charges on deposit accounts    730    703    653    2,082    1,904  
   Gain on sale of securities    10    11    0    21    9  
   Mortgage servicing    34    (56 )  (470 )  (42 )  (1,164 )
   Other    1,197    1,316    1,575    3,465    4,411  
Total noninterest income    2,438    2,821    4,319    7,624    13,205  
   
Noninterest expense:  
   Salaries and employee benefits    3,888    3,838    4,344    11,667    12,186  
   Occupancy and equipment    986    923    950    2,878    2,813  
   Amortization of intangibles    76    76    75    228    260  
   FDIC insurance premium    21    21    23    64    69  
   Michigan single business tax    28    24    57    73    192  
   Other    1,996    1,989    2,307    5,559    6,614  
Total noninterest expense    6,995    6,871    7,756    20,469    22,134  
   
Income before federal income taxes    3,933    3,778    4,306    11,677    14,325  
Federal income taxes    1,277    1,213    1,431    3,775    4,782  
Net Income   $ 2,656   $ 2,565   $ 2,875   $ 7,902   $ 9,543  
   
Fully Tax Equivalent Interest Income   $ 8,258   $ 8,015   $ 8,005   $ 24,400   $ 24,173  
   
Per Share Data:  
   Basic Earnings   $ 0.50   $ 0.46   $ 0.51   $ 1.44   $ 1.68  
   Diluted Earnings   $ 0.49   $ 0.45   $ 0.49   $ 1.41   $ 1.64  
   Dividends Paid   $ 0.21   $ 0.21   $ 0.19   $ 0.62   $ 0.56  
   
Performance Ratios:  
   Return on Average Assets*    1.33%    1.33%    1.47%    1.35%    1.67%  
   Return on Average Equity*    13.8%    12.2%    13.4%    12.9%    15.4%  
   Net Interest Margin (FTE) *    4.44%    4.41%    4.42%    4.45%    4.50%  
  Book Value Per Share+   $ 14.11   $ 15.44   $ 15.20   $ 14.11   $ 15.20  
  Average Equity/Average Assets    9.6%    10.9%    11.0%    10.5%    10.8%  
   Net Charge-offs    64    119    193    327    347  
   Net Charge-offs as a % of Average Loans^*    0.04%    0.07%    0.13%    0.07%  0.08%
   
* Annualized  
+ Period End  
^ Total loans less loans held for sale