EX-99 2 first8k_072710ex99.htm first8k_072710ex99.htm - Generated by SEC Publisher for SEC Filing

 

Exhibit 99.1

 

 

 

FOR IMMEDIATE RELEASE

 

 

NEWS RELEASE

 

 

 

 

Date Submitted:

NASDAQ Symbol:

July 27, 2010

FBMI

 

Contact:

Samuel G. Stone

Executive Vice President and

Chief Financial Officer

(989) 466-7325

 

 

FIRSTBANK CORPORATION ANNOUNCES

SECOND QUARTER 2010 RESULTS

 

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, Michigan (FBMI) ---- Thomas R. Sullivan, President and Chief Executive Officer of Firstbank Corporation, 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 1st 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 1st Armored and 1st 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