10-Q

 U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the quarterly period ended September30, 2013

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from               to                    .

Commission file number: 000-14209

FIRSTBANK CORPORATION

(Exact name of registrant as specified in its charter)

Michigan (State of Incorporation)	38-2633910 (I.R.S. Employer Identification No.)
311 Woodworth Avenue Alma, Michigan (Address of principal executive offices)	48801 (Zip Code)

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

Indicate by check mark whether the registrant (1) has filed all reports to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes  X    No___

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  X    No___

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ___  Accelerated filer   X   Non-accelerated filer ___ Smaller reporting company ___

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes___  No  X  

Common stock outstanding at October 31, 2013: 8,076,622 shares.

INDEX

PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (UNAUDITED)	Page 3
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	Page 24
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	Page 29
Item 4.	Controls and Procedures	Page 30
PART II.	OTHER INFORMATION
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	Page 30
Item 5.	Other Information	Page 30
Item 6.	Exhibits	Page 30
SIGNATURES		Page 33

2

FIRSTBANK CORPORATION

CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2013 AND DECEMBER 31, 2012

(Dollars in thousands except share data)

UNAUDITED 

	September 30, 2013			December 31, 2012
Assets:
Cash and due from banks	$	28,944		$	38,544
Short term investments		31,019			61,057
Total cash and cash equivalents		59,963			99,601
FDIC insured bank time certificates of deposit		1,440			2,927
Trading account securities		8			6
Securities available for sale		357,421			353,678
Federal Home Loan Bank stock		7,266			7,266
Loans held for sale		732			2,921
Loans		982,286			963,762
Allowance for loan losses		(19,608	)		(21,340	)
Premises and equipment, net		23,893			24,356
Goodwill		35,513			35,513
Core deposit and other intangibles		675			965
Other real estate owned		2,161			2,925
Accrued interest receivable and other assets		25,201			26,182
Total Assets	$	1,476,951		$	1,498,762
Liabilities and Shareholders’ Equity:
Liabilities:
Deposits:
Non-interest bearing accounts	$	259,946		$	251,109
Interest bearing accounts:
Demand		359,926			348,598
Savings		276,783			265,323
Time		333,461			376,371
Total Deposits		1,230,116			1,241,401
Securities sold under agreements to repurchase and overnight borrowings		47,333			42,785
Federal Home Loan Bank advances and other borrowing		19,861			22,493
Subordinated debentures		36,084			36,084
Accrued interest and other liabilities		8,242			8,941
Total Liabilities		1,341,636			1,351,704
Shareholders’ Equity:
Preferred stock; no par value, 300,000 shares authorized, 0 issued and outstanding (17,000 at December 31, 2012)		0			16,908
Common stock; 20,000,000 shares authorized, 8,076,621 shares issued and outstanding (8,001,903 at December 31, 2012)		116,466			115,621
Retained earnings		18,064			10,921
Accumulated other comprehensive income		785			3,608
Total Shareholders’ Equity		135,315			147,058
Total Liabilities and Shareholders’ Equity	$	1,476,951		$	1,498,762

See notes to consolidated financial statements.

3

FIRSTBANK CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

SEPTEMBER 30, 2013 AND 2012

(Dollars in thousands except per share data)

UNAUDITED

	Three Months Ended September 30,
	2013			2012
Interest income:
Interest and fees on loans	$	13,012		$	14,145
Securities:
Taxable		894			1,104
Exempt from federal income tax		441			272
Short term investments		36			53
Total interest income		14,383			15,574
Interest expense:
Deposits		1,190			1,588
FHLB advances and other borrowing		173			170
Subordinated Debt		165			274
Total Interest Expense		1,528			2,032
Net Interest Income		12,855			13,542
Provision for loan losses		0			1,364
Net interest income after provision for loan losses		12,855			12,178
Non-interest income:
Service charges on deposit accounts		1,043			1,048
Gain on sale of mortgage loans		894			1,661
Mortgage servicing, net of amortization		109			(95	)
Loss on trading account securities		(4	)		(5	)
Gain on sale of available for sale securities		0			2
Other		444			405
Total non-interest income		2,486			3,016
Non-interest expense:
Salaries and employee benefits		5,805			5,865
Occupancy and equipment		1,335			1,267
FDIC insurance premium		233			265
Amortization of intangibles		86			109
Outside professional services		324			293
Advertising and promotions		347			400
Other real estate owned costs		143			513
Other		2,236			2,717
Merger related expenses		738			0
Total non-interest expense		11,247			11,429
Income before federal income taxes		4,094			3,765
Federal income taxes		1,225			1,050
Net Income	$	2,869		$	2,715
Preferred stock dividends and accretion of discount on preferred stock		0			220
Net income available to common shareholders	$	2,869		$	2,495
Basic earnings per share	$	0.36		$	0.31
Diluted earnings per share	$	0.35		$	0.31
Dividends per share	$	0.06		$	0.01

See notes to consolidated financial statements.

4

FIRSTBANK CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

SEPTMBER 30, 2013 AND 2012

(Dollars in thousands except per share data)

UNAUDITED

	Nine Months Ended September 30,
	2013			2012
Interest income:
Interest and fees on loans	$	39,695		$	43,206
Securities:
Taxable		2,721			3,508
Exempt from federal income tax		1,244			845
Short term investments		146			161
Total interest income		43,806			47,720
Interest expense:
Deposits		3,777			5,198
FHLB advances and other borrowing		475			552
Subordinated Debt		496			822
Total Interest Expense		4,748			6,572
Net Interest Income		39,058			41,148
Provision for loan losses		1,830			6,352
Net interest income after provision for loan losses		37,228			34,796
Non-interest income:
Service charges on deposit accounts		3,107			3,166
Gain on sale of mortgage loans		3,922			4,816
Mortgage servicing, net of amortization		(54	)		(174	)
Gain on trading account securities		2			1
Gain on sale of available for sale securities		52			42
Other		1,325			1,408
Total non-interest income		8,354			9,259
Non-interest expense:
Salaries and employee benefits		17,428			17,003
Occupancy and equipment		4,021			3,912
FDIC insurance premium		768			964
Amortization of intangibles		291			380
Outside professional services		964			895
Advertising and promotions		1,048			1,120
Other real estate owned costs		495			1,309
Other		7,002			7,925
Merger related expenses		738			0
Total non-interest expense		32,755			33,508
Income before federal income taxes		12,827			10,547
Federal income taxes		3,752			3,011
Net Income	$	9,075		$	7,536
Preferred stock dividends and accretion of discount on preferred stock		481			1,060
Net income available to common shareholders	$	8,594		$	6,476
Basic earnings per share	$	1.07		$	0.82
Diluted earnings per share	$	1.06		$	0.82
Dividends per share	$	0.18		$	0.08

See notes to consolidated financial statements.

5

FIRSTBANK CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

SEPTEMBER 30, 2013 AND 2012

(Dollars in thousands)

UNAUDITED

	Three Months Ended September 30,
	2013			2012
Net income	$	2,869		$	2,715
Other comprehensive income/(loss):
Unrealized holding gains arising during the period		590			588
Less: reclassification adjustment for gains included in net income		0			(2	)
Other comprehensive income before taxes		590			586
Income tax expense related to items in other comprehensive income		(201	)		(199	)
Other comprehensive income net of income tax effect from reclassification of $0 and $1 in 2013 and 2012, respectively		389			387
Comprehensive income	$	3,258		$	3,102

	Nine Months Ended September 30,
	2013			2012
Net income	$	9,075		$	7,536
Other comprehensive income/(loss):
Unrealized holding gains/(losses) arising during the period		(4,218	)		1,934
Less: reclassification adjustment for gains included in net income		(52	)		(42	)
Other comprehensive income/(loss) before taxes		(4,270	)		1,892
Income tax benefit/(expense) related to items in other comprehensive income		1,447			(643	)
Other comprehensive income/(loss) net of income tax effect from reclassification of $27 and $22 in 2013 and 2012, respectively		(2,823	)		1,249
Comprehensive income	$	6,252		$	8,785

See notes to consolidated financial statements.

6

FIRSTBANK CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR PERIODS ENDED SEPTEMBER 30, 2013 AND DECEMBER 31, 2012

(Dollars in thousands except share data)

	Common Stock			Preferred Stock			Retained Earnings			Accumulated Other Comprehensive Income			Total
Balances at January 1, 2012	$	115,734		$	32,792		$	3,955		$	2,896		$	155,377
Net income for 2012								10,534						10,534
Cash dividends on common stock - $0.29 per share								(2,314	)					(2,314	)
Accrued dividends on preferred stock and accretion of discount on preferred stock					22			(1,269	)					(1,247	)
Redemption of 16,000 shares of preferred stock		850			(15,906	)								(15,056	)
Amortization of stock warrants		(15	)					15						0
Repurchase of stock warrants		(1,947	)											(1,947	)
Issuance of 46,512 shares of common stock through the dividend reinvestment plan		440												440
Issuance of 21,925 shares of common stock from supplemental shareholder investments		201												201
Issuance of 40,980 shares of common stock		262												262
Stock option and restricted stock expense		96												96
Net change in unrealized gain/(loss) on securities available for sale, net of tax of $366											712			712
Balances at December 31, 2012		115,621			16,908			10,921			3,608			147,058
Year to date net income September 30, 2013								9,075						9,075
Cash dividends on common stock - $0.18 per share								(1,451	)					(1,451	)
Accrued dividends on preferred stock and accretion of discount on preferred stock					92			(481	)					(389	)
Redemption of 17,000 shares of preferred stock					(17,000	)								(17,000	)
Issuance of 13,543 shares of common stock through the dividend reinvestment plan		176												176
Issuance of 8,385 shares of common stock from supplemental shareholder investments		111												111
Issuance of 52,790 shares of common stock		489												489
Stock option and restricted stock expense		69												69
Net change in unrealized gain/(loss) on securities available for sale, net of tax of $(1,454)											(2,823	)		(2,823	)
Balances at September 30, 2013	$	116,466		$	0		$	18,064		$	785		$	135,315

See notes to consolidated financial statements.

7

FIRSTBANK CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOW

FOR THE NINE MONTHS ENDED

SEPTEMBER 30, 2013 AND 2012

(In thousands of dollars)

UNAUDITED

	Nine months ended September 30,
	2013			2012
Operating Activities:
Net income	$	9,075		$	7,536
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		1,830			6,352
Depreciation of premises and equipment		1,394			1,446
Net amortization of security premiums/discounts		3,287			2,895
Gain on trading account securities		(2	)		(1	)
Gain on available for sale securities transactions		(52	)		(42	)
Amortization of intangibles		291			380
Stock option and restricted stock expense		69			67
Gain on sale of mortgage loans		(3,922	)		(4,816	)
Proceeds from sales of mortgage loans		123,480			148,517
Loans originated for sale		(117,369	)		(147,165	)
Deferred federal income tax benefit		(558	)		(793	)
Decrease in accrued interest receivable and other assets		2,937			568
Increase/(decrease) in accrued interest payable and other liabilities		(699	)		2,536
Net cash provided from operating activities		19,761			17,480
Investing Activities:
Proceeds from sale of securities available for sale		6,332			2,705
Proceeds from maturities of CD’s		1,487			1,505
Proceeds from maturities and calls of securities available for sale		71,091			103,772
Purchases of securities available for sale		(88,678	)		(115,482	)
Proceeds from sale of premises and equipment		146			5
Net increase in portfolio loans		(26,170	)		(2,155	)
Proceeds from sale of other real estate owned		4,903			4,196
Net purchases of premises and equipment		(1,077	)		(1,290	)
Net cash used in investing activities		(31,966	)		(6,744	)
Financing Activities:
Net (decrease)/increase in deposits		(11,285	)		4,319
Net increase/(decrease) in securities sold under agreements to repurchase and overnight borrowings		4,548			(857	)
Repayment of Federal Home Loan Bank advances		(2,632	)		(7,899	)
Repurchase of preferred stock		(17,000	)		(15,056	)
Repurchase of stock warrants		0			(1,947	)
Proceeds from Federal Home Loan Bank advances		0			8,000
Cash proceeds from issuance of common stock, net		776			539
Cash dividends on preferred stock		(389	)		(1,040	)
Cash dividends on common stock		(1,451	)		(636	)
Net cash used by financing activities		(27,433	)		(14,577	)
Decrease in cash and cash equivalents		(39,638	)		(3,841	)
Cash and cash equivalents at beginning of period		99,601			75,816
Cash and cash equivalents at end of period	$	59,963		$	71,975
Supplemental Disclosure:
Interest Paid	$	4,669		$	6,658
Income Taxes Paid	$	3,925		$	3,400
Non cash transfers of loans to Other Real Estate Owned	$	4,084		$	6,615

See notes to consolidated financial statements.

8

FIRSTBANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013

UNAUDITED

NOTE 1- FINANCIAL STATEMENTS

The accompanying unaudited financial information presented is for Firstbank Corporation (“Corporation”) and its wholly owned subsidiaries: Firstbank and its 46% ownership in 1^st Investors Title, LLC, Keystone Community Bank, collectively the “Banks”, FBMI Risk Management Services, Inc., a company that provides insurance coverage to only affiliates of Firstbank Corporation, and Austin Mortgage Company, a company that holds certain performing and non-performing residential mortgage loans originated prior to the acquisition of ICNB Financial Corporation, and beginning in the second quarter of 2009 certain non-performing loans transferred from affiliate banks. All of the subsidiaries listed above are fully owned except 1^st Investors Title, LLC, in which we have a 44% minority interest. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended September 30, 2013, are not necessarily indicative of the results that may be expected for the year ending December 31, 2013. The balance sheet at December 31, 2012, has been derived from the audited financial statements at that date. For further information, refer to the consolidated financial statements and footnotes thereto included in the Corporation’s annual report on Form 10-K for the year ended December 31, 2012.

NOTE 2 - SECURITIES

The following table presents information about our investment portfolio, showing the gross unrealized gains and losses within each segment of the portfolio. Unrealized gains and losses are included in other comprehensive income. Unrealized losses have been analyzed and determined to be temporary in nature. The unrealized losses are related to changes in the interest rate environment compared with rates at the time the securities were purchased.

(In thousands of dollars)	Amortized Cost		Unrealized Gains		Unrealized Losses			Carrying Value
September 30, 2013
Securities available for sale
U.S. governmental agency	$	107,919	$	641	$	(224	)	$	108,336
States and political subdivisions		147,202		811		(1,656	)		146,357
Mortgage backed securities		62,127		1,149		(173	)		63,103
Collateralized mortgage obligations		37,344		499		(58	)		37,785
Equity and other securities		1,611		229		0			1,840
Total securities available for sale	$	356,203	$	3,329	$	(2,111	)	$	357,421
December 31, 2012
Securities available for sale
U.S. governmental agency	$	105,629	$	1,271	$	(15	)	$	106,885
States and political subdivisions		116,123		1,786		(95	)		117,814
Mortgage backed securities		64,550		1,729		(2	)		66,277
Collateralized mortgage obligations		60,278		810		(58	)		61,030
Equity and other securities		1,610		62		0			1,672
Total securities available for sale	$	348,190	$	5,658	$	(170	)	$	353,678

9

Securities with unrealized losses at September 30, 2013 and December 31, 2012 not recognized in income are as follows:

(In thousands of dollars)	Less than 12 Months					12 Months or More					Total
Description of Securities	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
September 30, 2013
U.S. governmental agency	$	27,403	$	(224	)	$	0	$	0		$	27,403	$	(224	)
States and political subdivisions		68,508		(1,603	)		4,414		(53	)		72,922		(1,656	)
Mortgage backed securities		15,096		(173	)		0		0			15,096		(173	)
Collateralized mortgage obligations		2,483		(13	)		6,930		(45	)		9,413		(58	)
Total temporarily impaired	$	113,490	$	(2,013	)	$	11,344	$	(98	)	$	124,834	$	(2,111	)
December 31, 2012
U.S. governmental agencies	$	10,135	$	(15	)	$	0	$	0		$	10,135	$	(15	)
States and political subdivisions		17,141		(93	)		582		(2	)		17,723		(95	)
Mortgage backed securities		0		0			513		(2	)		513		(2	)
Collateralized mortgage obligations		19,995		(55	)		721		(3	)		20,716		(58	)
Total temporarily impaired	$	47,271	$	(163	)	$	1,816	$	(7	)	$	49,087	$	(170	)

Unrealized losses on securities shown in the previous tables have not been recognized into income because management has the intent and ability to hold these securities for the foreseeable future. The decline in market value reflected above was due to changes in longer term interest rates for debt securities, following comments made by the chairman of the federal reserve. The value of a security moves inversely to interest rates, so as rates rose, the unrealized gain or loss in the portfolio was negatively affected. Changes in rates are typical and do not impact earnings of the company so long as investments are held to their maturity. Where unrealized losses exist, management has reviewed the issuers’ bond ratings, noting they remain of high credit quality. As of September 30, 2013 there were 242 securities with negative market positions in the portfolio compared with 74 securities with negative market positions at December 31, 2012.

Trading account securities are marked to market with the change in value reported on the income statement. Gains and losses on available for sale securities are recognized if the security is either deemed to be other than temporarily impaired, or the security is sold. The following table shows gross gains and losses on investment securities for the nine months ended September 30, 2013 and 2012.

	As of September 30,
(In thousands of dollars)	2013		2012
Trading Account Securities Gains/Losses	$	2	$	1
Available for Sale Securities
Gross realized gains		79		42
Gross realized losses		27		0
Net realized gains	$	52	$	42

The carrying value of securities at September 30, 2013, by stated maturity, is shown below. Actual maturities may differ from stated maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

(In thousands of dollars)	Carrying Value
Due in one year or less	$	50,587
Due after one year through five years		149,361
Due after five years through ten years		104,967
Due after ten years		50,666
Total debt securities		355,581
Equity securities		1,840
Total securities	$	357,421

At September 30, 2013 and December 31, 2012, securities with carrying values approximating $47,333,000 and $45,645,000, respectively, were pledged to secure public trust deposits, securities sold under agreements to repurchase, and for such other purposes as required or permitted by law.

Federal Home Loan Bank stock is carried at cost, which approximates fair value.

10

NOTE 3 - LOANS

The following information provides a description of how loan grades are determined for our Commercial and Industrial and Commercial Real Estate segments. In general, for Commercial and Industrial and Commercial Real Estate segments, the probability of loss increases with each rate change from the Grade 1 Excellent down through the Grade 9 Doubtful Nonaccrual classes. For Consumer and Residential Mortgage segments, the probability of loss increases as loans move down from current to greater than 60 days past due, nonaccrual.

Grade 1 Excellent – Characteristics of loans in this category include: the loan is generally secured by cash or readily marketable securities; the borrower provides annual audited financials with interim financials reviewed quarterly; the loan has no delinquencies over ten days in the past year; the company’s management is considered to have a high degree of integrity; management of the company has over 15 years of experience; lines of credit have not and are not expected to be utilized; financial statements demonstrate consistently strong profits; and the company has little competition and excellent growth prospects.

Grade 2 Quality – Characteristics of loans in this category include: high net worth borrowers with excellent cash flow and a high degree of liquidity; the borrower generally has annual audited financial statements; there has been one or fewer delinquencies over ten days in the past year; the company’s management is considered to have a high degree of integrity; the company’s management has over ten years of experience; lines of credit have had nominal use over the preceding 12 months; financial statements demonstrate consistent profitability; and the company is in an excellent competitive position.

Grade 3 Good – Loans in this category are very strong, but may lack some of the net worth and/or cash flow characteristics of the previous rating. Characteristics of loans in this category include: annual reviewed financial statements and compiled quarterly financial statements; there has only been one or fewer delinquencies over 15 days in the past year; the company’s management has solid integrity; the company’s management is capable and has over five years of experience; lines of credit have regular usage with no balance in the last 60 days; financial statements demonstrate consistent but nominal profits; and the company has good a solid market share.

Grade 4 Acceptable – Characteristics of loans in this category include: annual compiled financial statements with quarterly information available or CPA prepared tax returns; there are only two or fewer delinquencies over 15 days of which only one is over 30 days in the past year; the company’s management has average business experience of over three years; lines of credit have regular use but have no current balance or a significant reduction in balance in the last 30 days; the company has been profitable in two of the preceding three years; and the company is competitive in its market and is maintaining its market share.

Loans graded as one through four are considered as Pass loans and are shown as one class of loans in our credit quality table.

Grade 5 Watch – This rating is used for loans which have shown some sign of weakness, but have not degraded to the point of requiring an impairment review. Characteristics of loans in this rating include: annual management prepared financial statements; delinquencies not exceeding three times over 30 days or one time over 60 days in the past year; weakening financial statements but profitable in two of the last three years; and a declining market share in a competitive market. These loans merit monitoring by management to assure that if circumstances deteriorate further actions are taken to protect the bank’s position.

Grade 6 Special Mention – This rating is used for loans which are included on a watch list and have degraded to a point where additional supervision is required; however, the bank remains confident in the full collection of all principal and interest. These loans are reviewed for impairment on a quarterly basis. Characteristics of loans in this rating may include: repeat delinquency; longer term negative trends in financial results; continuing deterioration of cash flows; concerns regarding the liquidity of guarantors; and other negative business trends.

Grade 7 Substandard – This rating is for loans for which a lender is actively working with the borrower to resolve issues and the full repayment of the loan is questionable. The loan is inadequately protected by current sound worth of the borrower, paying capacity of the guarantor, or pledged collateral. Loans in this grade have well defined weaknesses that jeopardize the full collectability of the loan and a distinct possibility of loss exists. These loans are reviewed for potential impairment on a quarterly basis. Characteristics of loans in this rating may include: persistent delinquency; poor financial results of the business; negative cash flow; and the ability of guarantor(s) to provide support for the loan is questionable.

11

Grade 8 Impaired Nonaccrual – This rating is for loans which are considered impaired and classified as nonaccrual. Loans in this grade have all the weaknesses of those classified as substandard grade 7 above, with the added characteristic that, based upon currently known facts, the weaknesses make collection of all principal and interest due according to contractual terms unlikely. These loans are reviewed for impairment on a quarterly basis. Loans in this grade may be assigned an allocated reserve in the loan loss allowance analysis if a determination is made that the future cash flows or the value of the collateral do not support the current carrying value of the loan.

Grade 9 Doubtful Nonaccrual – This rating is for loans which are considered impaired and are classified as nonaccrual. Loans in this grade have all the weaknesses of those classified as impaired nonaccrual grade 8 above, with the added characteristic that the weaknesses make full collection through payment or liquidation of the collateral, based on currently known facts, highly questionable or improbable. These loans are reviewed for impairment on a quarterly basis. Loans in this grade may be assigned an allocated reserve in the loan loss allowance analysis if a determination is made that the future cash flows or the value of the collateral do not support the current carrying value of the loan.

Restructured Loans

Impaired Restructured and Accruing – Loans where the borrower is experiencing financial difficulty and the bank has granted a concession to the borrower. A concession may be: a reduction in the contractual interest rate below current market rates for loans of similar quality, a lengthening of the accrual time frame beyond normal market terms, a forgiveness of a portion of the outstanding principal, or acceptance of collateral in lieu of payment for a portion of the loan balance. If the loan is in accrual status at the time of the restructuring, the borrower has the ability to make the payments under the restructured terms, and the restructuring does not forgive principal, the loan remains on an accrual status under the new terms. However, if there is a forgiveness of debt or partial charge off, the loan will generally be graded as impaired nonaccrual (Grade 8) with any accrued interest reversed against interest income. If a loan is in nonaccrual status at the time of a restructuring, it will remain in nonaccrual status (Grade 8) at the time of restructuring. All non-accruing restructured loans remain in nonaccrual status until the borrower has demonstrated the ability to make the payments under the restructured terms by making a minimum of six months of payments. If the borrower makes the six months of payments without becoming past due 30 days or more, the loan may be returned to accrual status. The determination of the need for an allowance for loan loss adjustment is based on a factor relating to historical losses multiplied by the balance of the loan for residential mortgages, or a collateral impairment review for commercial loans, and a net present value adjustment relating to a change in interest rate and other terms, if applicable.

Impaired Restructured and Accruing loans are graded seven or better based on the above definitions. If a restructured loan is graded as eight or nine, it is reported as Impaired Nonaccrual or Doubtful Nonaccrual, respectively.

For commercial loans graded eight and nine and consumer and residential mortgage loans reported in nonaccrual, interest income is generally not recognized until the loan improves and is returned to accrual status. In some cases, if the loan is well secured and the borrower’s ability to support the loan payments has improved, such as in the case of a restructured nonaccrual loan, interest income may be recognized on a cash basis while the loan is in nonaccrual status.

For consumer and residential mortgage loan segments, loans are classified by risk based on current delinquency and nonaccrual status. These segments of loans will contain a separate class for restructured loans, if they exist.

The following credit quality indicators provide a system for distribution of our loan portfolio in a manner consistent with the previously described loan grading system and for use in the determination of our loan loss allowance. This presentation differs somewhat by loan category from classification of loans presented elsewhere in our regulatory reports and within this report. These variations primarily relate to how real estate loans are analyzed internally to determine the adequacy of the loan loss allowance, versus how we are required to report real estate loans for regulatory purposes.

12

Credit Quality Indicators:

Loans at period end were as follows:

(In thousands of dollars)	September 30, 2013		December 31, 2012
Commercial and Industrial
Pass loans	$	142,668	$	133,678
Watch loans		6,629		5,367
Special mention loans		5,957		5,436
Substandard loans		2,178		1,881
Impaired restructured and accruing loans		1,548		3,234
Impaired nonaccrual loans		111		448
Doubtful nonaccrual loans		0		0
Total Commercial and Industrial		159,091		150,044
Commercial Real Estate
Pass loans	$	388,944	$	373,577
Watch loans		48,542		50,790
Special mention loans		16,747		18,117
Substandard loans		5,879		9,655
Impaired restructured and accruing loans		13,634		12,106
Impaired nonaccrual loans		5,914		8,427
Doubtful nonaccrual loans		0		25
Total Commercial Real Estate		479,660		472,697
First lien residential mortgage loans
Performing loans	$	206,987	$	202,357
Loans > 60 days past due		1,052		1,046
Impaired restructured and accruing loans		4,637		4,953
Nonaccrual loans		4,868		6,040
Total First lien residential mortgage loans		217,544		214,396
Junior lien residential mortgage loans
Performing loans	$	54,309	$	58,089
Loans > 60 days past due		19		96
Impaired restructured and accruing loans		248		235
Nonaccrual loans		275		327
Total Junior lien residential mortgage loans		54,851		58,747
Consumer Loans
Performing loans	$	70,738	$	67,042
Loans > 60 days past due		58		39
Impaired restructured and accruing loans		105		191
Nonaccrual loans		36		401
Total Consumer Loans		70,937		67,673
Deferred Fees and Costs		203		205
Total Loans	$	982,286	$	963,762

Allowance for Loan Losses

The allowance for loan losses is determined based on management’s estimate of probable losses incurred within the loan portfolio as of the balance sheet date. We determine the amount of the allowance for loan losses based on periodic evaluation of the loan portfolios and other relevant factors. This evaluation is inherently subjective and requires material estimates, which are subject to change. Factors that are considered in the evaluation of individual, and pools of loans, include: historical loss experience; likelihood of default; liquidation value of a loan’s underlying collateral; timing and amounts of expected future cash flows; and our exposure to loss in the event of default. We further estimate the impact of qualitative factors that may cause future losses to differ from historical experience. Such factors include: changes in credit quality, macro economic impacts on our customers, and changes in underwriting standards.

Our historical loss experience is determined based on actual losses incurred over the previous twelve quarters. We utilize a method of averaging these losses whereby we place a heavier emphasis on more recent experience. Our model provides a 50% weighting on the most recent four quarters, 30% weighting on the middle four quarters, and 20% weighting on the oldest four quarters.

13

The loan portfolio is segmented into five loan types: commercial and industrial loans; commercial real estate loans; consumer loans; residential mortgages – first liens; and residential mortgage – junior liens. These segments are further grouped by credit quality classifications.

The segments comprising commercial and industrial loans and commercial real estate loans are classified based on the loan grading system described above. We group loans rated as one through four together into one class of pass loans. Commercial and industrial and commercial real estate loans graded as pass and watch are assigned a unique pooled loss rate based on historical losses incurred over the prior three years as described above. We adjust the calculated historical loss rate up or down based on current developments, that in management’s judgment are not reflected in the historical losses of the company. The current outstanding balance for each of these classes of loans is then multiplied by the adjusted historical loss rate to determine the amount of allowance for loan losses to reserve on that pool of loans.

Loans graded special mention use a shorter 12 month loss history to determine the loss rate. Losses over the preceding 12 month period are divided by the average balance outstanding of substandard and impaired loans to determine a historical loss rate. That calculated historical loss rate is multiplied by a probability factor to determine a loss rate to be applied to this class of loans. The probability factor is determined from an analysis of the migration of special mention loans to more severe risk classes over the preceding 12 month period.

Loans graded as substandard use the shorter 12 month loss history to determine the loss rate. Losses over the preceding 12 month period are divided by the average balance outstanding of substandard and impaired loans to determine a historical loss rate. The calculated historical loss rate, without adjustment for migration, is then multiplied times the outstanding balance of substandard loans to determine the amount of allowance for loan losses to provide for this class of loans.

Loans graded as impaired nonaccrual, doubtful nonaccrual, and impaired restructured and accruing are individually analyzed for loan losses. An allocated reserve is established within the allowance for loan losses for the difference between the carrying value of the loan and its determined collectable value. To determine the collectable value of the loan, the present value of expected cash flows, the collateral value, or some combination of the two is used. The allocated reserve is established as the difference between the carrying value of the loan and the collectable value.

For consumer and residential mortgage loan segments, loans that are current, or less than 60 days past due are assigned a unique historical loss rate as described above for commercial pass and watch loans. For loans that are more than 60 days past due including nonaccrual loans, a loss rate is determined based on charge offs within the last 12 months, divided by the sum of the average balance of loans 60 days or more past due and nonaccrual loans. These loss rates are multiplied by the outstanding balances in each unique loan segment at the end of the reporting period to determine the amount of allowance for loan loss.

For restructured loans where the bank has granted a rate concession, an additional amount is added to the loan loss reserve that represents the difference in the present value of the cash flows between the original terms and the new terms of the modified loan, using the original interest rate of the loan as a discount rate. Any change in the present value of the loan due to passage of time is reflected as an adjustment to provision for loan loss expense.

After each of the steps outlined above is completed, the results are aggregated and compared with the existing balance of the allowance for loan losses. If the aggregation is greater than the balance, the allowance for loan losses is increased through a charge to earnings on the provision for loan losses line. If the resulting aggregation is below the current balance of the allowance for loan losses, management will determine, based upon the number, potential impact, and uncertainty of the estimates contained within the process whether the unallocated reserve is excessive. If in management’s judgment the unallocated reserve exceeds a level deemed prudent given the inherent uncertainty of these issues, a reversal of the provision for loan losses may be recorded.

14

Allowance for credit losses for the three months ended September 30 were:

(In thousands of dollars)
Three months ending September 30, 2013	Commercial and Industrial			Commercial Real Estate			First Lien Residential Mortgages			Junior Lien Residential Mortgages			Consumer Loans			Unallocated			Total
Allowance for Credit Losses:
Beginning balance	$	1,821		$	10,237		$	6,287		$	569		$	579		$	746		$	20,239
Provision for loan losses		14			36			71			10			87			(218	)		0
Loans charged off		(68	)		(107	)		(587	)		(41	)		(79	)		0			(882	)
Recoveries		106			109			10			0			26			0			251
Ending balance	$	1,873		$	10,275		$	5,781		$	538		$	613		$	528		$	19,608
Three months ending September 30, 2012
Allowance for Credit Losses:
Beginning balance	$	2,404		$	11,215		$	5,643		$	523		$	851		$	886		$	21,522
Provision for loan losses		(238	)		817			845			229			94			(383	)		1,364
Loans charged off		(110	)		(956	)		(571	)		(174	)		(163	)		0			(1,974	)
Recoveries		34			277			35			0			74			0			420
Ending balance	$	2,090		$	11,353		$	5,952		$	578		$	856		$	503		$	21,332

Allowance for credit losses for the nine months ended September 30 were:

Nine months ending September 30, 2013	Commercial and Industrial			Commercial Real Estate			First Lien Residential Mortgages			Junior Lien Residential Mortgages			Consumer Loans			Unallocated			Total
Allowance for Credit Losses:
Beginning balance	$	1,896		$	11,565		$	5,656		$	555		$	805		$	863		$	21,340
Provision for loan losses		92			283			1,626			207			(43	)		(335	)		1,830
Loans charged off		(274	)		(1,770	)		(1,570	)		(224	)		(367	)		0			(4,205	)
Recoveries		159			197			69			0			218			0			643
Ending balance	$	1,873		$	10,275		$	5,781		$	538		$	613		$	528		$	19,608
Nine months ending September 30, 2012
Allowance for Credit Losses:
Beginning balance	$	2,485		$	11,534		$	5,393		$	505		$	931		$	171		$	21,019
Provision for loan losses		81			3,059			2,138			533			209			332			6,352
Loans charged off		(535	)		(3,605	)		(1,744	)		(460	)		(547	)		0			(6,891	)
Recoveries		59			365			165			0			263			0			852
Ending balance	$	2,090		$	11,353		$	5,952		$	578		$	856		$	503		$	21,332

15

Unpaid principal balance in financing receivables at period end were:

(In thousands of dollars)					First Lien		Junior Lien
September 30, 2013	Commercial and Industrial		Commercial Real Estate		Residential Mortgages		Residential Mortgages		Consumer Loans		Unallocated		Total
Allowance for Credit Losses:
Ending balance: individually evaluated for impairment	$	524	$	4,137	$	2,493	$	137	$	27	$	0	$	7,318
Ending balance: collectively evaluated for impairment	$	1,349	$	6,138	$	3,288	$	401	$	586	$	528	$	12,290
Financing Receivables:
Ending balance	$	159,091	$	479,660	$	217,544	$	54,851	$	70,937	$	0	$	982,083
Ending balance: individually evaluated for impairment	$	1,659	$	19,548	$	9,505	$	523	$	141	$	0	$	31,376
Ending balance: collectively evaluated for impairment	$	157,432	$	460,112	$	208,039	$	54,328	$	70,796	$	0	$	950,707
September 30, 2012
Allowance for Credit Losses:
Ending balance: individually evaluated for impairment	$	321	$	3,479	$	0	$	0	$	0	$	0	$	3,800
Ending balance: collectively evaluated for impairment	$	1,769	$	7,874	$	5,952	$	578	$	856	$	503	$	17,532
Financing Receivables:
Ending balance	$	152,259	$	479,577	$	215,893	$	60,661	$	69,020	$	0	$	977,410
Ending balance: individually evaluated for impairment	$	2,675	$	22,625	$	0	$	0	$	0	$	0	$	25,300
Ending balance: collectively evaluated for impairment	$	149,584	$	456,952	$	215,893	$	60,661	$	69,020	$	0	$	952,110

Age Analysis of Past Due Loans:

(In thousands of dollars)															Recorded
At September 30, 2013	30-59 Days Past Due		60-89 Days Past Due		90 Day s or More Past Due		Total Past Due		Nonaccrual loans		Current		Total Financing Receivables		Investment > 90 days and accruing
Commercial and Industrial	$	685	$	46	$	0	$	731	$	111	$	158,249	$	159,091	$	0
Commercial Real Estate		625		324		14		963		5,914		472,783		479,660		14
Residential Mortgages First Liens		789		1,039		12		1,840		4,868		210,836		217,544		12
Residential Mortgages Junior Liens		379		19		0		398		275		54,178		54,851		0
Consumer		305		58		0		363		36		70,538		70,937		0
Deferred Fees and Costs		0		0		0		0		0		203		203		0
Total	$	2,783	$	1,486	$	26	$	4,295	$	11,204	$	966,787	$	982,286	$	26
At December 31, 2012
Commercial and Industrial	$	206	$	140	$	0	$	346	$	448	$	149,250	$	150,044	$	0
Commercial Real Estate		604		1,881		0		2,485		8,452		461,760		472,697		0
Residential Mortgages First Liens		772		969		37		1,778		6,040		206,578		214,396		37
Residential Mortgages Junior Liens		473		96		0		569		327		57,851		58,747		0
Consumer		435		39		0		474		401		66,798		67,673		0
Deferred Fees and Costs		0		0		0		0		0		205		205		0
Total	$	2,490	$	3,125	$	37	$	5,652	$	15,668	$	942,442	$	963,762	$	37

16

Impaired loans were as follows:

(In thousands of dollars)			Unpaid
September 30, 2013	Recorded Investment		Principal Balance		Related Allowance
Period end loans with no allocated allowance for loan losses
Commercial and Industrial	$	341	$	337		0
Commercial Real Estate		6,692		6,676		0
Residential Mortgages First Liens		0		0		0
Residential Mortgages Junior Liens		0		0		0
Consumer		0		0		0
Total	$	7,033	$	7,013	$	0
Period end loans with allocated allowance for loan losses
Commercial and Industrial	$	805	$	1,322	$	524
Commercial Real Estate		8,767		12,871		4,137
Residential Mortgages First Liens		7,058		9,504		2,493
Residential Mortgages Junior Liens		386		523		137
Consumer		115		141		27
Total	$	17,131	$	24,361	$	7,318
Total
Commercial and Industrial	$	1,146	$	1,659	$	524
Commercial Real Estate		15,459		19,545		4,137
Residential Mortgages First Liens		7,058		9,505		2,493
Residential Mortgages Junior Liens		386		523		137
Consumer		115		141		27
Total	$	24,164	$	31,376	$	7,318
December 31, 2012
Period end loans with no allocated allowance for loan losses
Commercial and Industrial	$	891	$	891		0
Commercial Real Estate		9,215		9,212		0
Residential Mortgages First Liens		0		0		0
Residential Mortgages Junior Liens		0		0		0
Consumer		0		0		0
Total	$	10,106	$	10,103	$	0
Period end loans with allocated allowance for loan losses
Commercial and Industrial	$	2,273	$	2,792	$	515
Commercial Real Estate		8,377		11,346		2,971
Residential Mortgages First Liens		8,695		10,993		2,298
Residential Mortgages Junior Liens		472		562		90
Consumer		366		592		226
Total	$	20,183	$	26,285	$	6,100
Total
Commercial and Industrial	$	3,164	$	3,683	$	515
Commercial Real Estate		17,592		20,558		2,971
Residential Mortgages First Liens		8,695		10,993		2,298
Residential Mortgages Junior Liens		472		562		90
Consumer		366		592		226
Total	$	30,289	$	36,388	$	6,100

Note: Recorded investment includes principal outstanding plus deferred fee and accrued interest, net of related allowance for loan losses.

17

Average recorded investment and income recognized on impaired loans were as follows:

	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
(In thousands of dollars)	Three months ended September 30, 2013				Three months ended September 30, 2012
Period end loans with no allocated allowance for loan losses
Commercial and Industrial	$	984	$	1	$	2,779	$	18
Commercial Real Estate		7,387		40		9,260		113
Residential Mortgages First Liens		0		0		9,451		56
Residential Mortgages Junior Liens		0		0		530		2
Consumer		0		0		481		2
Total	$	8,371	$	41	$	22,501	$	191
Period end loans with allocated allowance for loan losses
Commercial and Industrial	$	730	$	22	$	449	$	1
Commercial Real Estate		8,694		163		10,097		9
Residential Mortgages First Liens		7,420		68		0		0
Residential Mortgages Junior Liens		388		3		0		0
Consumer		117		1		0		0
Total	$	17,349	$	257	$	10,546	$	10
Total
Commercial and Industrial	$	1,714	$	23	$	3,228	$	19
Commercial Real Estate		16,081		203		19,357		122
Residential Mortgages First Liens		7,420		68		9,451		56
Residential Mortgages Junior Liens		388		3		530		2
Consumer		117		1		481		2
Total	$	25,720	$	298	$	33,047	$	201

	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
(In thousands of dollars)	Nine months ended September 30, 2013				Nine months ended September 30, 2012
Period end loans with no allocated allowance for loan losses
Commercial and Industrial	$	1,050	$	134	$	3,355	$	164
Commercial Real Estate		8,163		557		10,463		648
Residential Mortgages First Liens		0		0		9,749		295
Residential Mortgages Junior Liens		0		0		487		9
Consumer		0		0		414		15
Total	$	9,213	$	691	$	24,468	$	1,131
Period end loans with allocated allowance for loan losses
Commercial and Industrial	$	1,125	$	59	$	532	$	2
Commercial Real Estate		8,517		429		11,107		100
Residential Mortgages First Liens		8,977		318		0		0
Residential Mortgages Junior Liens		497		14		0		0
Consumer		268		13		0		0
Total	$	19,384	$	833	$	11,639	$	102
Total
Commercial and Industrial	$	2,175	$	193	$	3,887	$	166
Commercial Real Estate		16,680		986		21,570		748
Residential Mortgages First Liens		8,977		318		9,749		295
Residential Mortgages Junior Liens		497		14		487		9
Consumer		268		13		414		15
Total	$	28,597	$	1,524	$	36,107	$	1,233

18

Loan modifications as of the period ending:

(In thousands of dollars)	Troubled Debt Restructurings						Troubled Debt Restructurings that Subsequently Defaulted
	Number of  contracts		Pre-modification outstanding recorded investment		Post-modification outstanding recorded investment		Number of contracts		Recorded investment
Quarter to date:
September 30, 2013
Commercial and industrial		2	$	219	$	217		0	$	0
Commercial real estate		0		0		0		0		0
Residential First Liens		1		203		134		2		172
Residential junior liens		0		0		0		0		0
Consumer		0		0		0		0		0
Total		3	$	422	$	351		2	$	172
September 30, 2012
Commercial and industrial		3	$	190	$	187		0	$	0
Commercial real estate		4		1,613		1,590		0		0
Residential First Liens		6		871		870		1		64
Residential junior liens		1		15		15		1		9
Consumer		0		0		0		0		0
Total		14	$	2,689	$	2,662		2	$	73
Year to date:
September 30, 2013
Commercial and industrial		5	$	308	$	305		2	$	100
Commercial real estate		5		1,661		1,671		0		0
Residential First Liens		6		1,040		970		5		568
Residential junior liens		1		19		19		0		0
Consumer		0		0		0		0		0
Total		17	$	3,028	$	2,965		7	$	668
September 30, 2012
Commercial and industrial		9	$	998	$	988		5	$	1,143
Commercial real estate		12		3,598		3,573		4		401
Residential First Liens		16		1,673		1,669		1		64
Residential junior liens		3		118		118		1		9
Consumer		2		107		107		0		0
Total		42	$	6,494	$	6,455		11	$	1,617

NOTE 4 – BORROWINGS

On May 17, 2013 we instituted a two year $10 million revolving line of credit agreement at a variable rate of prime rate plus 0.125% on the outstanding balance of the line. We borrowed $8 million on the line in June to facilitate the redemption of our preferred stock. At September 30, the line of credit had $0 outstanding. The line of credit is subject to standard industry covenants and required pledging of the stock in our two banking affiliates as collateral for the loan and requires quarterly interest payments. The line of credit will expire on May 17, 2015.

NOTE 5 – SHAREHOLDERS’ EQUITY

We are subject to various regulatory policies and requirements relating to the payment of dividends, including requirements to maintain adequate capital above regulatory minimums. At September 30, 2013 and year end 2012 we exceeded all requirements to be classified as well as capitalized.

On January 30, 2009 we issued 33,000 shares of Series A, no par value $1,000 liquidation preference, fixed rate cumulative perpetual preferred stock (Preferred Stock) and warrants to purchase 578,947 shares of our common stock at an exercise price of $8.55 per share (Warrants), to the U.S. Department of Treasury in return for $33 million under the Capital Purchase Program (CPP). Of the proceeds, $32.7 million was allocated to the Preferred Stock and $0.3 million was allocated to the Warrants based on the relative fair value of each. The discount on the Preferred Stock was being accreted using an effective yield method over ten years. The Preferred Stock and Warrants qualified as Tier 1 capital.

19

The Preferred Stock required quarterly cash dividends at a rate of 5% per year on the $1,000 liquidation preference while they were outstanding. Holders of shares of the Preferred Stock had no right to exchange or convert such shares into any other security of Firstbank Corporation and had no right to require the redemption or repurchase of the Preferred Stock. The Preferred Stock did not have a sinking fund. The Preferred Stock was non-voting, other than class voting rights on certain matters that could adversely affect the Preferred Stock.

On June 28, 2012 the U.S. Department of Treasury sold all of the shares of our Preferred Stock in a modified Dutch auction process. During the auction, we successfully bid on and retired 16,000 of the 33,000 outstanding shares of our Preferred Stock at a price of $941.01 per share, or $15.1 million aggregate price. As a result of the retirement of these shares, 17,000 shares remained outstanding and carried the same terms under which they were originally issued.

On June 14, 2013 we called the remaining 17,000 shares of our Preferred Stock at their liquidation preference value of $1,000 per outstanding share plus accrued dividends. As a result of the redemption, we no longer have any outstanding Preferred Stock.

The Warrants were immediately exercisable for 578,947 shares of our common stock at an exercise price of $8.55 per common share. The Warrants were transferrable and could be exercised at any time on or before January 30, 2019. We negotiated a repurchase of all of the outstanding warrants with the U.S. Treasury at a price of $1,946,670. The repurchase of these warrants occurred in July 2012 and reduced equity by the amount of the purchase price.

NOTE 6 - FAIR VALUE

Carrying amount and estimated fair values of financial instruments were as follows:

September 30, 2013 (In thousands of dollars)	Carrying Amount			Estimated Fair Value			Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Financial Assets:
Cash and cash equivalents	$	59,963		$	59,963		$	59,963	$	0		$	0
FDIC insured bank certificates of deposit		1,440			1,440			1,440		0			0
Trading account securities		8			8			8		0			0
Securities available for sale		357,421			357,421			263		337,258			19,900
Federal Home Loan Bank stock		7,266			7,266			0		0			7,266
Loans held for sale		732			732			0		732			0
Loans, net		962,678			969,656			0		0			969,656
Financial Liabilities:
Deposits		(1,230,116	)		(1,209,657	)		0		0			(1,209,657	)
Securities sold under agreements to repurchase and overnight borrowings		(47,333	)		(47,333	)		0		(47,333	)		0
Federal Home Loan Bank advances and other borrowing		(19,861	)		(20,868	)		0		0			(20,868	)
Subordinated debentures		(36,084	)		(21,084	)		0		0			(21,084	)

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December 31, 2012 (In thousands of dollars)	Carrying Amount			Estimated Fair Value			Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Financial Assets:
Cash and cash equivalents	$	99,601		$	99,601		$	99,601	$	0		$	0
FDIC insured bank certificates of deposit		2,927			2,927			2,927		0			0
Trading account securities		6			6			6		0			0
Securities available for sale		353,678			353,678			91		331,717			21,870
Federal Home Loan Bank stock		7,266			7,266			0		0			7,266
Loans held for sale		2,921			2,921			0		2,921			0
Loans, net		942,422			930,354			0		0			930,354
Financial Liabilities:
Deposits		(1,241,401	)		(1,243,712	)		0		0			(1,243,712	)
Securities sold under agreements to repurchase and overnight borrowings		(42,785	)		(42,785	)		0		(42,785	)		0
Federal Home Loan Bank advances and other borrowing		(22,493	)		(24,122	)		0		0			(24,122	)
Subordinated debentures		(36,084	)		(36,093	)		0		0			(36,093	)

The methods and assumptions used to estimate fair value are described as follows: The carrying amount is the estimated fair value for cash and cash equivalents, short term borrowings, Federal Home Loan Bank stock, demand deposits, and variable rate loans or deposits that re-price frequently and fully. Security fair values are based on market prices or dealer quotes, and if no such information is available, on the rate and term of the security and information about the issuer. For fixed rate loans and variable rate loans, fair value is based on discounted cash flows using current market rates applied to the estimated life and credit risk based on historical losses on similar loan pools. For deposits with infrequent re-pricing or re-pricing limits, fair value is based on discounted cash flows using current market rates applied to the estimated life of the product. During the second quarter of 2013 we updated rate assumptions relating to commercial fixed rate loans, deposits, and subordinated debentures to reflect changes in the market place and thereby the fair value of these instruments.

Fair values for impaired loans are estimated using discounted cash flow analysis or underlying collateral values for the specific loans in the portfolio and assumes the bank will resolve them through orderly liquidation. Fair value of loans held for sale is based on market quotes. Fair value of debt is based on current rates for similar financing. The fair value of off-balance sheet items is based on the current fees or cost that would be charged to enter into or terminate such arrangements. The fair value of off-balance sheet items was not material to the consolidated financial statements at September 30, 2013 and December 31, 2012.

The following tables present information about our assets measured at fair value on a recurring basis at September 30, 2013 and December 31, 2012, and valuation techniques used by us to determine those fair values.

Level 1 assets are assets which are actively traded on an open market and pricing is publicly available.

Fair values determined by Level 2 inputs use other inputs that are observable, either directly or indirectly. These Level 2 inputs include quoted prices for similar assets in active markets, and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals.

Level 3 inputs are unobservable inputs, including inputs that are available in situations where there is little, if any, market activity for the related asset or liability. Level 3 Securities include local Municipal Securities where market pricing is not available, trust preferred securities issued by banks, and other miscellaneous investments.

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Assets Measured at Fair Value on a Recurring Basis

(In thousands of dollars)	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
September 30, 2013
Securities available for sale
U.S. governmental agency	$	0	$	107,686	$	650	$	108,336
States and political subdivisions		0		128,684		17,673		146,357
Mortgage backed securities		0		63,103		0		63,103
Collateralized mortgage obligations		0		37,785		0		37,785
Equity and other securities		263		0		1,577		1,840
Total securities available for sale	$	263	$	337,258	$	19,900	$	357,421
Trading equity securities	$	8	$	0	$	0	$	8
December 31, 2012
Securities available for sale
U.S. governmental agency	$	0	$	106,885	$	0	$	106,885
States and political subdivisions		0		97,525		20,289		117,814
Mortgage backed securities		0		66,277		0		66,277
Collateralized mortgage obligations		0		61,030		0		61,030
Equity and other securities		91		0		1,581		1,672
Total securities available for sale	$	91	$	331,717	$	21,870	$	353,678
Trading equity securities	$	6	$	0	$	0	$	6

Changes in Level 3 Assets Measured at Fair Value on a Recurring Basis

(In thousands of dollars)	2013			2012
Balance at beginning of year	$	21,870		$	16,914
Total realized and unrealized gains/(losses) included in income		0			0
Total unrealized gains/(losses) included in other comprehensive income		0			0
Purchases of securities		5,885			11,682
Sales of securities		0			0
Calls and maturities		(7,925	)		(12,255	)
Net transfers into Level 3		70			360
Balance at September 30 of each year	$	19,900		$	16,701

Both observable and unobservable inputs may be used to determine the fair value of positions classified as Level 3 assets. As a result, the unrealized gains and losses for these assets presented in the tables above may include changes in fair value that were attributable to both observable and unobservable inputs.

Available for sale investments securities categorized as Level 3 assets primarily consist of bonds issued by local municipalities and other like assets. We carry local municipal securities at historical cost, which approximates fair value, unless economic conditions for the municipality changes to a degree requiring a valuation adjustment. We also have assets that under certain conditions are subject to measurement at fair value on a non-recurring basis. These assets consist of impaired loans, other real estate owned and other repossessed assets. We have estimated the fair value of impaired loans using Level 3 inputs, specifically valuation of loans based on either a discounted cash flow projection, or a discount to the appraised value of the collateral underlying the loan. We use discounted appraised values or broker’s price opinions to determine the fair value of other real estate owned.

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Assets Measured at Fair Value on a Nonrecurring Basis

(In thousands of dollars)	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable  Inputs (Level 3)
September 30, 2013
Impaired loans	$	31,374	$	0	$	0	$	31,374
Other real estate owned	$	2,161	$	0	$	0	$	2,161
Other repossessed assets	$	50	$	0	$	0	$	50
December 31, 2012
Impaired loans	$	36,388	$	0	$	0	$	36,388
Other real estate owned	$	2,925	$	0	$	0	$	2,925
Other repossessed assets	$	250	$	0	$	0	$	250

Impaired loans categorized as Level 3 assets consist of non-homogeneous loans that are considered impaired. We estimate the fair value of the loans based on the present value of expected future cash flows using management’s best estimate of key assumptions. These assumptions include future payment ability, timing of payment streams, and estimated realizable values of available collateral (typically based on outside appraisals). Other real estate owned is valued based on either a recent appraisal for the property or a brokers' price opinion of the value of the property, which are discounted for expected costs to dispose of the property.

NOTE 7 – BASIC AND DILUTED EARNINGS PER SHARE

(In thousands of dollars except per share data)	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Earnings per share
Net income	$	2,869	$	2,715	$	9,075	$	7,536
Preferred stock dividends and accretion of discount		0		220		481		1,060
Income available to common shareholders	$	2,869	$	2,495	$	8,594	$	6,476
Weighted average common shares outstanding (000)		8,073		7,948		8,047		7,924
Basic Earnings per Share	$	0.36	$	0.31	$	1.07	$	0.82
Earnings per share assuming dilution
Net income	$	2,869	$	2,715	$	9,075	$	7,536
Preferred stock dividends and accretion of discount		0		220		481		1,060
Income available to common shareholders	$	2,869	$	2,495	$	8,594	$	6,476
Weighted average common shares outstanding (000)		8,073		7,948		8,047		7,924
Add dilutive effect of assumed exercises of options		62		40		55		20
Weighted average common and dilutive potential common shares outstanding (000)		8,135		7,988		8,102		7,944
Diluted Earnings per Share	$	0.35	$	0.31	$	1.06	$	0.82

Stock options for 216,814 shares for the three and nine months of 2013, were not considered in computing diluted earnings per share because they were anti-dilutive. Stock options and warrants for 254,497 shares for the three months and 292,447 for the nine months of 2012, were not considered in computing diluted earnings per share because they were anti-dilutive.

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Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The consolidated financial information presented is for Firstbank Corporation (“Corporation”) and its wholly owned subsidiaries; Firstbank (including its 46% holdings in 1^ST Investors Title, LLC), Keystone Community Bank, FBMI Risk Management Services, Inc., and Austin Mortgage Company.

Highlights

On August 14, 2013, we signed an Agreement and Plan of Merger to merge with and into Mercantile Bank Corporation in Grand Rapids Michigan. We plan to complete the merger on January 1, 2014, subject to receiving certain shareholder and regulatory approvals. The plan of merger calls for a 1:1 exchange ratio for common stock. Upon completion of the merger Firstbank shareholders will receive one share of Mercantile common stock for each share of Firstbank common stock that they own. Mercantile expects to declare a special cash dividend of $2.00 per share prior to the completion of the transaction.

Through the first nine months of the year, earnings were $9.1 million, or $1.06 per diluted share, compared with $7.5 million, or $0.82 in the first nine months of 2012. The earnings improvement was achieved through lower credit costs as the provision for loan losses was $4.5 million lower in 2013.

Financial Condition

Total assets at September 30, 2013 were down $22 million from year end 2012 at $1.477 billion. Cash and cash equivalents decreased $40 million from year end and securities available for sale increased $4 million. Loans increased $19 million before the allowance for loan losses. The increase in loans was driven by a pickup in commercial lending during the second and third quarters and a decrease in nonaccrual loans of $4.5 million.

The allowance for loan losses decreased by $1.7 million in the first nine months of the year to $19.6 million. The allowance to ending loans ratio was 2.00%, compared with 2.21% at year end 2012 and 2.18% at September 30, 2012. Our problem assets categories continued to show improvement during the quarter as nonaccrual loans have now declined $4.5 million from year end and $4.9 million from September 30 a year ago. Restructured loans which are in conformance with their new terms were $550,000 lower compared with year end, and increased $551,000 from September 30, 2012. Loans 90 days or more past due and still accruing interest decreased $11,000 from year end, and were $629,000 below year ago levels. Other Real Estate Owned decreased $764,000 from the end of the year to $2.2 million, and was down $840,000 from last year’s third quarter. We are pleased with the progress we have made in the problem loan area over the past two years and expect that we will need to remain vigilant as we work through the remaining problem loans in these categories. We continue to be diligent in review of our loan portfolios for problem loans and believe that early detection of troubled credits is critical to our ability to minimize or avoid losses. We maintain the allowance for loan losses at a level considered adequate to cover losses within the loan portfolio. The allowance balance is established after considering past loan loss experience, current economic conditions, composition of the loan portfolio, delinquencies, and other relevant factors.

Following is a comparison of loan balances for the quarter and prior year end.

(In thousands of dollars)	September 30, 2013			December 31, 2012			Change
Commercial and industrial	$	159,091		$	150,044		$	9,047
Commercial real estate		479,660			472,697			6,963
First lien residential mortgages		217,544			214,396			3,148
Junior lien residential mortgages		54,851			58,747			(3,896	)
Consumer		70,937			67,673			3,264
Subtotal		982,083			963,557			18,526
Add: Deferred fees (net of deferred costs)		203			205			(2	)
Less: Allowance for loan losses		(19,608	)		(21,340	)		1,732
Loans, net	$	962,678		$	942,422		$	20,256

First lien residential mortgages increased $3.1 million, or 1.47%, from year end 2012 as new loan production more than offset pay downs of loans and refinanced loans sold in the secondary market. Junior lien residential mortgage loans however declined by $3.9 million, or 6.63% as new equity lines failed to replace those that paid off. Commercial and industrial and commercial real estate loans showed a nice increase, increasing $16.0 million, or 2.57% as new loans from qualified borrowers were able to outpace principal pay downs. Consumer loans increased $3.3 million, or 4.82% from year end. These numbers show some improvement over recent quarters, but it is yet to be determined whether new loan demand is sustainable for the remainder of the year.

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Net charge-offs of loans were $0.6 million in the third quarter of 2013, compared with $1.2 million in the second quarter of the year and $1.6 million in the third quarter of 2012. The ratio of net charge-offs of loans (annualized) to average loans was 0.26% in the third quarter of 2013 compared to 0.48% in the second quarter of 2013 and 0.63% in the third quarter of 2012.

Total deposits decreased $11 million, or 0.9% when compared with year end 2012 balances. In this low interest rate environment, our customers have been willing to trade a small step up in yield for liquidity, resulting in a decline in time balances even as other deposit categories continue to grow. Within the deposit base, interest bearing demand account balances increased $11 million, or 3.2%, savings balances increased $11 million, or 4.3%, and time balances decreased $43 million, or 11.4%. Within time balances, wholesale CDs were $1.6 million lower than year end, while core market CDs were down $41.4 million. Given our current low levels of loan demand, time deposits are being allowed to mature without replacement, or being renewed at lower rates. Non-interest bearing demand account balances were $8.8 million, or 3.5% higher than year end.

For the nine month period ended September 30, 2013, Federal Home Loan Bank advances were down $2.6 million, or 11.7% from year end. During the second quarter of 2013 we borrowed $8 million on a new line of credit for the purpose of redeeming our outstanding preferred stock. That line of credit was fully repaid during the third quarter. Securities sold under agreements to repurchase and overnight borrowings were $4.5 million, or 10.6% higher due to normal fluctuations in customer cash flows. Accrued interest and other liabilities decreased $699,000 compared with year end.

Total shareholders’ equity decreased $11.7 million from the previous year end primarily due to the $16.9 million reduction in preferred stock redeemed in June. Net income exceeded dividends to shareholder by $7.1 million. Net income of $9.1 million and common stock issuances of $776,000 increased shareholders’ equity, while common and preferred stock dividends of $1.9 million reduced shareholder’s equity. Accumulated other comprehensive income decreased $2.8 million from year end as increasing interest rates at the end of the quarter caused a reduction in the fair value of our investment portfolio. Common stock issuance was primarily related to shares issued through supplemental investment plans and dividend reinvestment. Book value per share of shareholders’ common equity was $16.75 at September 30, 2013, increasing from $16.26 at December 31, 2012. Tangible shareholders common equity per share (total common equity less goodwill and other intangible assets) was $12.27 at the end of the third quarter of 2013, increasing from $11.71 at year end 2012. Shareholders’ common equity per share calculations exclude preferred stock of $16.9 million at December 31, 2012.

The following table discloses compliance with current regulatory capital requirements on a consolidated basis:

(In thousands of dollars)	Leverage			Tier 1 Capital			Total Risk- Based Capital
Capital Balances at September 30, 2013	$	134,427		$	134,427		$	146,601
Required Regulatory Capital	$	57,568		$	38,824		$	77,648
Capital in Excess of Regulatory Minimums	$	76,859		$	95,603		$	68,953
Capital Ratios at September 30, 2013		9.34	%		13.85	%		15.10	%
Regulatory Capital Ratios – Minimum Requirement		4.00	%		4.00	%		8.00	%

Our capital remains above regulatory guidelines for the third quarter of 2013. At the end of the third quarter our total risk based capital ratio was 15.10% compared with 15.99% at year end 2012. Tier 1 capital and tier 1 leverage ratios were 13.85% and 9.34% compared with 14.73% and 9.71% at year end 2012. The decrease in all of the capital ratios compared with year end was a result of the redemption of our preferred stock, which qualified as Tier I capital, net of capital retention and limited asset growth. As of September 30, 2013, both of our affiliate banks continue to exceed the regulatory “Well Capitalized” definition.

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Results of Operations

Three Months Ended September 30, 2013

For the third quarter of 2013, net income was $2,869,000, and basic earnings per share was $0.36 and diluted earnings per share was $0.35, compared with net income of $2,715,000, and $0.31 basic and diluted earnings per share for the third quarter of 2012, and compared with net income of $3,343,000, and $0.38 basic and diluted earnings per share, for the second quarter of 2013. Net income available to common shareholders was $2,869,000 in the current quarter compared with $2,495,000 in the third quarter of 2012 and $3,077,000 in the second quarter of 2013. Unfavorably affecting the current quarter was $738,000 of expenses recorded in connection with the merger with Mercantile.

Average earning assets decreased $6 million, when the third quarter of 2013 is compared to the same quarter a year ago. Average net loan balances declined $5 million, while average overnight investments decreased $24 million, and average available for sale securities increased $19 million. The tradeoff of balances from the loan portfolio to securities, as well as a lower overall level of earning assets negatively affected the net interest margin. Compared with the previous quarter, average earning assets decreased $19 million, or 1.4%.

The yield on earning assets decreased 31 basis points, to 4.26%, for the quarter ended September 30, 2013, compared to 4.57% for the same quarter a year ago, and was eight basis points lower when compared with the second quarter of 2013. The cost of funding related liabilities also decreased, falling 15 basis points when comparing this year’s third quarter to the same period a year ago, from 0.59% in 2012, to 0.44% in 2013. Compared with the prior quarter, the cost of funding related liabilities fell by one basis points. The net interest margin decreased 17 basis points from last year’s third quarter of 3.99% to 3.82% in the current quarter. The net interest margin also decreased seven basis points when compared to the previous quarter. Net interest income decreased $687,000 to $12.9 million in the third quarter of 2013 compared with the same period of 2012, due to the unfavorable shift of earning assets from loans to the investment portfolio, and the continued low interest rate environment. The current rate environment is resulting in loan refinancing at rates lower than the previous rate on a loan while our ability to reduce funding costs is limited. This combination has resulted in a lower net interest margin.

Improving metrics in our problem asset categories coupled with a lower level of charge offs in the quarter allowed us to reduce the current quarter provision expense to $0. Provision for loan losses was $552,000 in the second quarter of 2013, and $1.4 million in the third quarter of 2012. After a detailed review of the loan portfolio, it was determined that some loans should be moved to nonaccrual status, while others should be charged off. Following that review, our analysis showed that we did not need to provide for future losses at the current level of charge offs to cover losses inherent in the portfolio. We perform quantitative and qualitative analysis of factors which impact the allowance for loan losses consistently across both of our banking subsidiaries. The process applies risk factors for historical charge-offs and delinquency experience, portfolio segment growth rates, and industry and regional factors and trends as they affect the banks’ portfolios. The consideration of exposures to industries most affected by current risks in the economic and political environment and the review of risks in certain credits that are not considered part of the non-performing loan category contributed to the establishment of the allowance levels at each bank.

Total non-interest income was $2.5 million in the third quarter of 2013, compared with $3.0 million in the both the second quarter of 2013 and the third quarter of 2012. Compared with 2012’s third quarter, gains on sale of mortgages were $767,000 lower, as the current levels of mortgage refinancing have begun to wane as interest rates have begun to increase in in the residential mortgage market. Gain on sale of mortgage loans decreased by $573,000, or 39% when the third quarter of 2013 is compared to the second quarter of the year. Lower refinance rates and less restrictive loan to value ratio criteria from Government Sponsored Entities in the secondary market continuing to provide incentives to borrowers to refinance their loans at lower rates, however, the level of current rates has reduced the number of borrowers that would benefit from refinancing. Service charges on deposit accounts were basically unchanged at $1.0 million from both last year’s third quarter and this year’s second quarter. Mortgage servicing income increased $204,000 compared with last year’s third quarter and also increased $136,000 from this year’s second quarter. Changes in this area are primarily related to a reduction in accelerated write off of mortgage servicing assets in the period due to fewer customers re-financing their loans. Other income increased $39,000 from last year’s third quarter but was $37,000 lower than the second quarter of 2013. This category of earnings includes gains and losses on the sale of other real estate. Other real estate sales occur when the bank has foreclosed on property and subsequently sells the property. The net gain on sale of other real estate was $38,000 higher in this year’s third quarter than a year ago, and $39,000 lower than the second quarter 2013.

Total non-interest expense decreased $182,000, or 1.6%, when comparing the three month periods ended September 30, 2013 and 2012 despite recording of $738,000 of expense related to the pending merger with Mercantile in this year’s third quarter. The reduced expense in this area was primarily a result of lower costs associated with problem loans and other real estate owned. These two categories contributed a $456,000 reduction to expenses. Also continuing to the favorable comparison was salary and benefits expense, which was $60,000 lower, advertising and promotions expense, which was $53,000 lower, and reserves for secondary market repurchase losses which was $250,000 lower. FDIC premiums were $32,000 lower than last year as we now are fully realizing the benefit of the new premium methodology implemented by the FDIC mid-year 2012.

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Compared with the second quarter 2013, non-interest expense was $340,000 higher. Adjusted for the $738,000 in merger related expense, non-interest expense would have decreased $398,000. Salary and benefits costs were $100,000 higher, due to a $70,000 increase in salaries and $30,000 increase in payroll tax expense, group health premiums, and 401k match expense. Advertising and promotions costs decreased $44,000 from the second quarter due to seasonal declines in marketing activities. FDIC premiums decreased $43,000, other real estate owned expense decreased $45,000, and other expense decreased $334,000 mainly due to a $270,000 charge in the second quarter to write down an asset acquired from a failed loan. Increasing other expense for the quarter was a $250,000 charge to increase our reserve for possible repurchase losses on loans sold into the secondary market in prior years.

Federal Income tax expense was $1.2 million in the third quarter of 2013, compared with $1.1 million in last year’s third quarter and $1.4 million in the second quarter of 2013. The change in taxes compared with each of these quarters was primarily driven by changes in pre-tax earnings.

Nine Months Ended September 30, 2013

For the first nine months of 2013, net income was $9,075,000, basic earnings per share was $1.07 and diluted earnings per share was $1.06, compared with net income of $7,536,000, and $0.82 basic and diluted per share for the first nine months of 2012. Net income available to common shareholders was $8,594,000 in the current year compared with $6,476,000 in the first three quarters of 2012. A primary driver of the improved earnings in 2013 was lower provision for loan losses, and lower costs associated with other real estate owned. Unfavorably affecting the current year was $738,000 of expenses recorded in connection with the merger with Mercantile.

A primary driver of the improved earnings in 2013 was lower provision for loan losses, and lower costs associated with other real estate owned.

Year-to-date average earning assets decreased $12 million, when the first nine months of 2013 is compared to the same period a year ago. Average portfolio loan balances declined $15 million, while average overnight investments decreased $4 million, and average available for sale securities increased $13 million. The tradeoff of balances from the loan portfolio to securities, negatively affected the net interest margin.

The yield on earning assets decreased 36 basis points, to 4.30%, for the nine months ended September 30, 2013, compared to 4.66% for the same nine month period a year ago. The cost of funding related liabilities also decreased, falling 18 basis points when comparing this year’s first three quarters to the same period a year ago, from 0.64% in 2012, to 0.46% in 2013. The net interest margin decreased 17 basis points from last year’s first nine months of 4.02% to 3.85% in the current year. Net interest income decreased $2.1 million to $39.1 million in 2013 when compared with the same period of 2012, due to the unfavorable shift of earning assets from loans to the investment portfolio, and the continued low interest rate environment. The current rate environment is resulting in loan refinancing at rates lower than the previous rate on the loan while our ability to reduce funding costs is limited. This combination has resulted in a lower net interest margin.

The provision for loan losses decreased $4.5 million when the first nine months of 2013 is compared to the same period of 2012. Continued improvement in our problem loan areas and lower levels of charged off loans have allowed us to reduce the amount that we reserve for future losses. After a detailed review of the loan portfolio, it was determined that some loans should be moved to nonaccrual status, while others should be charged off. Following that review, our analysis showed that we did not need to provide for future losses at the current level of charge offs to cover losses inherent in the portfolio. We perform quantitative and qualitative analysis of factors which impact the allowance for loan losses consistently across both of our banking subsidiaries. The process applies risk factors for historical charge-offs and delinquency experience, portfolio segment growth rates, and industry and regional factors and trends as they affect the banks’ portfolios. The consideration of exposures to industries most affected by current risks in the economic and political environment and the review of risks in certain credits that are not considered part of the non-performing loan category contributed to the establishment of the allowance levels at each bank.

Total non-interest income was $8.4 million in the first nine months of 2013, compared with $9.3 million in the first nine months of 2012. Compared with 2012, gains on sale of mortgages were $894,000 lower, as the amount of mortgage refinancing, resulting from the low interest rate environment decreased substantially in the third quarter. Lower refinance rates and less restrictive loan to value ratio criteria from Government Sponsored Entities in the secondary market continue to provide incentives to borrowers to refinance their loans at lower rates, however, as interest rates have risen a reduced number of borrowers would benefit from refinancing. Service charges on deposit accounts were $59,000 lower than the year ago first nine months. Mortgage servicing income increased $120,000 compared with last year’s first three quarters from a negative $174,000 in 2012 to a negative $54,000 in 2013. Changes in this area are caused by accelerated write off of mortgage servicing assets in the period due to customers re-financing their loans. Other income decreased $83,000 from last year’s first nine months.

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Total non-interest expense decreased $753,000, or 2.2%, when comparing the nine month periods ended September 30, 2013 and 2012 despite recording $738,000 in expense related to the pending merger with Mercantile. A primary reason for the improvement is lower other real estate costs, which declined $814,000 from the year ago period. Also contributing to the improvement was FDIC premiums, which were $196,000 lower than last year as we are now realizing the benefit of the new premium methodology implemented by the FDIC mid-year 2012, lower amortization of intangibles cost, which was down $89,000, and other expense, which decreased $923,000 from a year ago. This category of expense includes many miscellaneous items, and benefited from lower losses in our captive insurance entity by $271,000 when comparing the two years, and lower reserves for secondary market repurchase losses which decreased $500,000 from the prior year. Salary and benefits expense was $425,000 higher when compared with the first nine months of last year due primarily to higher variable compensation expense, which increased by $156,000 as the company’s performance this year has improved compared with last year, and the impact of annual merit increases.

Federal Income tax expense was $3.8 million in the first three quarters of 2013, compared with $3.0 million in last year’s first nine months. The change in taxes compared with each of these quarters was primarily driven by changes in pre-tax earnings.

 Liquidity

At September 30, 2013, we have adequate sources of liquidity to meet our needs. Cash and cash equivalent balances were $60 million, a decrease of $40 million compared with year end 2012. This decrease was primarily the result of a decrease in deposits of $11 million and an increase in portfolio loans of $19 million. Our securities available for sale portfolio now stands at $357 million, providing a source of liquidity should it become necessary.

Our banks maintain access to immediately available funds through federal funds lines at three correspondent banks, the Federal Home Loan Bank of Indianapolis, and the Federal Reserve’s discount window with aggregate available limits of $54 million, $102 million, and $41 million, respectively. Our banks also have access to funds through brokered CD markets for additional funding if needed. In addition, in the second quarter of 2013, we established a $10 million line of credit for the corporation. The line had $10 million of availability at the end of the quarter.

Contractual Obligations, Commitments, Contingent Liabilities, and Off-Balance Sheet Arrangements

The Corporation has various financial obligations, including contractual obligations and commitments that may require future cash payments. Management believes that there have been no material changes in the Corporation’s overall level of these financial obligations since December 31, 2012 and that any changes in the Corporation’s obligations which have occurred are routine for the industry. Further discussion of the nature of each type of obligation is included in Management’s Discussion and Analysis on page 14 and 15 of the Corporation’s Form 10K Annual Report dated December 31, 2012, and is incorporated herein by reference.

Critical Accounting Policies

Certain of the Corporation’s accounting policies are important to the portrayal of the Corporation’s financial condition and results of operations, since they require management to make difficult, complex or subjective judgments, some of which may relate to matters that are inherently uncertain. Estimates associated with these policies are susceptible to material changes as a result of changes in facts and circumstances. Facts and circumstances which could affect these judgments include, without limitation, changes in interest rates, in local and national economic conditions, or the financial condition of borrowers. We believe that our critical accounting policies include determining the allowance for loan losses, determining the fair value of securities and other financial instruments, including possible impairment of goodwill and other assets, the valuation of mortgage servicing rights, determination of purchase accounting adjustments, determination of the fair value of other real estate owned, and estimating state and federal tax liabilities. The Corporation’s significant accounting policies are discussed in detail in Management’s Discussion and Analysis on pages 15 and 16 in the Corporation’s Form 10K Annual Report to shareholders for the year ended December 31, 2012.

28

FORWARD LOOKING STATEMENTS

This report contains forward-looking statements that are based on management’s beliefs, assumptions, current expectations, estimates and projections about the financial services industry, the economy, and about the Corporation itself. Words such as “anticipate,” “believe,” “determine,” “estimate,” “expect,” “forecast,” “intend,” “is likely,” “plan,” “project,” “opinion,” variations of such terms, and similar expressions are intended to identify such forward-looking statements. The presentations and discussions of the provision and allowance for loan losses, and determinations as to the need for other allowances presented in this report are inherently forward-looking statements in that they involve judgments and statements of belief as to the outcome of future events. These statements are not guarantees of future performance and involve certain risks, uncertainties, and assumptions that are difficult to predict with regard to timing, extent, likelihood, and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be expressed or forecasted in such forward-looking statements. Internal and external factors that may cause such a difference include: whether shareholders and regulators approve the merger with Mercantile Bank Corporation; changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; changes in banking regulations; changes in tax laws; changes in prices, levies, and assessments; the impact of technological advances; governmental and regulatory policy changes; the outcomes of pending and future litigation and contingencies; trends in customer behavior and customer ability to repay loans; software failure, errors or miscalculations; and the vicissitudes of the national economy. The Corporation undertakes no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events, or otherwise.

Item 3.   Quantitative and Qualitative Disclosures about Market Risk

Information under the headings, “Liquidity and Interest Rate Sensitivity” on pages 12 through 14 and “Quantitative and Qualitative Disclosure About Market Risk” on page 17 in the registrant’s annual report to shareholders for the year ended December 31, 2012, is here incorporated by reference. Firstbank’ s annual report is filed as Exhibit 13 to its Form 10-K annual report for its fiscal year ended December 31, 2012. Also referenced here is information under the heading “Item 1A. Risk Factors” on pages 15 through 18 in the registrant’s Form 10-K annual report for its fiscal year ended December 31, 2012.

We face market risk to the extent that both earnings and the fair values of our financial instruments are affected by changes in volatility, market perceptions of credit risk and interest rates. We manage this risk with static GAP analysis and simulation modeling. We do not believe that there has been a material change in the nature of our primary market risk exposures, including the categories of market risk to which we are exposed and the particular markets that present the primary risk of loss to the Corporation. As of the date of this Form 10-Q quarterly report, we do not know of nor expect there to be any material change in the general nature of our primary market risk exposure in the near term.

The methods by which we manage our primary market risk exposures, as described in the sections of our Form 10-K Annual Report incorporated by reference in response to this item, have not changed materially during the current year. As of the date of this Form 10-Q quarterly report, we do not expect to change those methods in the near term. However, we may change those methods in the future to adapt to changes in circumstances or to implement new techniques.

Our market risk exposure is mainly comprised of our vulnerability to interest rate risk. Prevailing interest rates and interest rate relationships in the future will be primarily determined by market, economic, and geopolitical factors which are outside of our control. All information provided in response to this item consists of forward looking statements. Reference is made to the section captioned “Forward Looking Statements” of this Form 10-Q quarterly report for a discussion of the limitations on our responsibility for such statements.

29

Item 4.   Controls and Procedures

a)

Evaluation of Disclosure Controls and Procedures

On November 5, 2013, the Corporation’s Chief Executive Officer and Chief Financial Officer reported on the Corporation’s disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)) to the Audit Committee. The portion of that report which constitutes their conclusions about the effectiveness of the disclosure controls and procedures based on their evaluation as of September 30, 2013 is as follows: “Based on our knowledge and the most recent evaluation, we believe the disclosure controls and procedures to be reasonably effective and commercially practical in providing information for management of the Corporation and for fair reporting to the investing public.”

b)	Changes in Internal Controls
	During the period covered by this report, there have been no changes in the Corporation’s internal control over financial reporting that have materially affected or are reasonably likely to materially affect the Corporation’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 5.   Other Information

The audit committee of the Board of Directors approved the categories of all non-audit services performed by the registrant’s independent accountants during the period covered by this report.

Item 6.   Exhibits

Exhibit	Description
2.1	Agreement and Plan of Merger dated August 14, 2013, by and between the Company and Mercantile Bank Corporation. (Incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K dated August 14, 2013.)
10.1	Voting Agreement dated August 14, 2013. (Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated August 14, 2013.)
10.2	Agreement dated August 14, 2013, by and between Firstbank Corporation and Thomas Sullivan amending that certain Agreement between Firstbank Corporation and Executive dated December 31, 1998. (Incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K dated August 14, 2013.)
10.3	Agreement dated August 14, 2013, by and between Firstbank Corporation and Samuel Stone amending that certain Agreement between Firstbank Corporation and Executive dated November 27, 2000. (Incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K dated August 14, 2013.)
10.4	Agreement dated August 14, 2013, by and between Firstbank Corporation and William Benear amending that certain Agreement between Firstbank Corporation and Executive dated December 17, 1998. (Incorporated by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K dated August 14, 2013.)
10.5	Agreement dated August 14, 2013, by and between Firstbank Corporation and Thomas O. Schlueter amending that certain Agreement between Firstbank Corporation and Executive dated May 11, 2005. (Incorporated by reference to Exhibit 10.5 to the Company's Current Report on Form 8-K dated August 14, 2013.)

30

10.6	Agreement dated August 14, 2013, by and between Firstbank Corporation and David Miller amending that certain Agreement between Firstbank Corporation and Executive dated December 7, 2000. (Incorporated by reference to Exhibit 10.6 to the Company's Current Report on Form 8-K dated August 14, 2013.)
10.7	Agreement dated August 14, 2013, by and between Firstbank Corporation and Richard Rice amending that certain Agreement between Firstbank Corporation and Executive dated April 28, 2005. (Incorporated by reference to Exhibit 10.7 to the Company's Current Report on Form 8-K dated August 14, 2013.)
10.8	Agreement dated August 14, 2013, by and between Firstbank Corporation and James Wheeler II amending that certain Agreement between Firstbank Corporation and Executive dated December 30, 1999. (Incorporated by reference to Exhibit 10.8 to the Company's Current Report on Form 8-K dated August 14, 2013.)
10.9	Agreement dated August 14, 2013, by and between Firstbank Corporation and Douglas Ouellette amending that certain Agreement between Firstbank Corporation and Executive dated February 22, 2005. (Incorporated by reference to Exhibit 10.9 to the Company's Current Report on Form 8-K dated August 14, 2013.)
10.10	Agreement dated August 14, 2013, by and between Firstbank Corporation and Daniel Grenier amending that certain Agreement between Firstbank Corporation and Executive dated December 31, 1998, the form of which was previously filed as exhibit 10 to Firstbank Corporation's Quarterly Report on Form 10-Q for the quarter ended September 30, 2000. (Incorporated by reference to Exhibit 10.10 to the Company's Current Report on Form 8-K dated August 14, 2013.)
10.11	Employment Agreement by and among Thomas Sullivan, Mercantile Bank Corporation, Mercantile Bank of Michigan and Firstbank, dated August 14, 2013. (Incorporated by reference to Exhibit 10.11 to the Company's Current Report on Form 8-K dated August 14, 2013.)
10.12	Employment Agreement by and among Samuel Stone, Mercantile Bank Corporation, Mercantile Bank of Michigan and Firstbank, dated August 14, 2013. (Incorporated by reference to Exhibit 10.12 to the Company's Current Report on Form 8-K dated August 14, 2013.)
10.13	Employment Separation Agreement by and among Mercantile Bank Corporation, Mercantile Bank of Michigan, Firstbank Corporation and William Benear, dated August 14, 2013. (Incorporated by reference to Exhibit 10.13 to the Company's Current Report on Form 8-K dated August 14, 2013.)
10.14	Employment Agreement by and among James E. Wheeler II, Mercantile Bank Corporation, Mercantile Bank of Michigan and Firstbank, dated August 14, 2013. (Incorporated by reference to Exhibit 10.14 to the Company's Current Report on Form 8-K dated August 14, 2013.)
10.15	Employment Agreement by and among Douglas J. Ouellette, Mercantile Bank Corporation, Mercantile Bank of Michigan and Firstbank, dated August 14, 2013. (Incorporated by reference to Exhibit 10.15 to the Company's Current Report on Form 8-K dated August 14, 2013.)
10.16	Employment Agreement by and among Thomas O. Schlueter, Mercantile Bank Corporation, Mercantile Bank of Michigan and Firstbank, dated August 14, 2013. (Incorporated by reference to Exhibit 10.16 to the Company's Current Report on Form 8-K dated August 14, 2013.)

31

10.17	Employment Agreement by and among Richard D. Rice, Mercantile Bank Corporation, Mercantile Bank of Michigan and Firstbank, dated August 14, 2013. (Incorporated by reference to Exhibit 10.17 to the Company's Current Report on Form 8-K dated August 14, 2013.)
10.18	Employment Agreement by and among Daniel M. Grenier, Mercantile Bank Corporation, Mercantile Bank of Michigan and Firstbank, dated August 14, 2013. (Incorporated by reference to Exhibit 10.18 to the Company's Current Report on Form 8-K dated August 14, 2013.)
10.29	Employment Agreement by and among David L. Miller, Mercantile Bank Corporation, Mercantile Bank of Michigan and Firstbank, dated August 14, 2013. (Incorporated by reference to Exhibit 10.19 to the Company's Current Report on Form 8-K dated August 14, 2013.)
31.1	Certificate of the President and Chief Executive Officer of Firstbank Corporation pursuant to 18 U.S.C. Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certificate of the Executive Vice President and Chief Financial Officer of Firstbank Corporation pursuant to 18 U.S.C. Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certificate of the Chief Executive Officer and the Chief Financial Officer of Firstbank Corporation pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	Interactive Data File

32

SIGNATURES

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.

	FIRSTBANK CORPORATION (Registrant)
Date: November 5, 2013	/s/ Thomas R. Sullivan
	Thomas R. Sullivan President, Chief Executive Officer (Principal Executive Officer)
Date: November 5, 2013	/s/ Samuel G. Stone
	Samuel G. Stone Executive Vice President, Chief Financial Officer (Principal Accounting Officer)

33 

EXHIBIT INDEX

Exhibit	Description
2.1	Agreement and Plan of Merger dated August 14, 2013, by and between the Company and Mercantile Bank Corporation. (Incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K dated August 14, 2013.)
10.1	Voting Agreement dated August 14, 2013. (Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated August 14, 2013.)
10.2	Agreement dated August 14, 2013, by and between Firstbank Corporation and Thomas Sullivan amending that certain Agreement between Firstbank Corporation and Executive dated December 31, 1998. (Incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K dated August 14, 2013.)
10.3	Agreement dated August 14, 2013, by and between Firstbank Corporation and Samuel Stone amending that certain Agreement between Firstbank Corporation and Executive dated November 27, 2000. (Incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K dated August 14, 2013.)
10.4	Agreement dated August 14, 2013, by and between Firstbank Corporation and William Benear amending that certain Agreement between Firstbank Corporation and Executive dated December 17, 1998. (Incorporated by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K dated August 14, 2013.)
10.5	Agreement dated August 14, 2013, by and between Firstbank Corporation and Thomas O. Schlueter amending that certain Agreement between Firstbank Corporation and Executive dated May 11, 2005. (Incorporated by reference to Exhibit 10.5 to the Company's Current Report on Form 8-K dated August 14, 2013.)
10.6	Agreement dated August 14, 2013, by and between Firstbank Corporation and David Miller amending that certain Agreement between Firstbank Corporation and Executive dated December 7, 2000. (Incorporated by reference to Exhibit 10.6 to the Company's Current Report on Form 8-K dated August 14, 2013.)
10.7	Agreement dated August 14, 2013, by and between Firstbank Corporation and Richard Rice amending that certain Agreement between Firstbank Corporation and Executive dated April 28, 2005. (Incorporated by reference to Exhibit 10.7 to the Company's Current Report on Form 8-K dated August 14, 2013.)
10.8	Agreement dated August 14, 2013, by and between Firstbank Corporation and James Wheeler II amending that certain Agreement between Firstbank Corporation and Executive dated December 30, 1999. (Incorporated by reference to Exhibit 10.8 to the Company's Current Report on Form 8-K dated August 14, 2013.)
10.9	Agreement dated August 14, 2013, by and between Firstbank Corporation and Douglas Ouellette amending that certain Agreement between Firstbank Corporation and Executive dated February 22, 2005. (Incorporated by reference to Exhibit 10.9 to the Company's Current Report on Form 8-K dated August 14, 2013.)
10.10	Agreement dated August 14, 2013, by and between Firstbank Corporation and Daniel Grenier amending that certain Agreement between Firstbank Corporation and Executive dated December 31, 1998, the form of which was previously filed as exhibit 10 to Firstbank Corporation's Quarterly Report on Form 10-Q for the quarter ended September 30, 2000. (Incorporated by reference to Exhibit 10.10 to the Company's Current Report on Form 8-K dated August 14, 2013.)

34 

10.11	Employment Agreement by and among Thomas Sullivan, Mercantile Bank Corporation, Mercantile Bank of Michigan and Firstbank, dated August 14, 2013. (Incorporated by reference to Exhibit 10.11 to the Company's Current Report on Form 8-K dated August 14, 2013.)
10.12	Employment Agreement by and among Samuel Stone, Mercantile Bank Corporation, Mercantile Bank of Michigan and Firstbank, dated August 14, 2013. (Incorporated by reference to Exhibit 10.12 to the Company's Current Report on Form 8-K dated August 14, 2013.)
10.13	Employment Separation Agreement by and among Mercantile Bank Corporation, Mercantile Bank of Michigan, Firstbank Corporation and William Benear, dated August 14, 2013. (Incorporated by reference to Exhibit 10.13 to the Company's Current Report on Form 8-K dated August 14, 2013.)
10.14	Employment Agreement by and among James E. Wheeler II, Mercantile Bank Corporation, Mercantile Bank of Michigan and Firstbank, dated August 14, 2013. (Incorporated by reference to Exhibit 10.14 to the Company's Current Report on Form 8-K dated August 14, 2013.)
10.15	Employment Agreement by and among Douglas J. Ouellette, Mercantile Bank Corporation, Mercantile Bank of Michigan and Firstbank, dated August 14, 2013. (Incorporated by reference to Exhibit 10.15 to the Company's Current Report on Form 8-K dated August 14, 2013.)
10.16	Employment Agreement by and among Thomas O. Schlueter, Mercantile Bank Corporation, Mercantile Bank of Michigan and Firstbank, dated August 14, 2013. (Incorporated by reference to Exhibit 10.16 to the Company's Current Report on Form 8-K dated August 14, 2013.)
10.17	Employment Agreement by and among Richard D. Rice, Mercantile Bank Corporation, Mercantile Bank of Michigan and Firstbank, dated August 14, 2013. (Incorporated by reference to Exhibit 10.17 to the Company's Current Report on Form 8-K dated August 14, 2013.)
10.18	Employment Agreement by and among Daniel M. Grenier, Mercantile Bank Corporation, Mercantile Bank of Michigan and Firstbank, dated August 14, 2013. (Incorporated by reference to Exhibit 10.18 to the Company's Current Report on Form 8-K dated August 14, 2013.)
10.19	Employment Agreement by and among David L. Miller, Mercantile Bank Corporation, Mercantile Bank of Michigan and Firstbank, dated August 14, 2013. (Incorporated by reference to Exhibit 10.19 to the Company's Current Report on Form 8-K dated August 14, 2013.)
31.1	Certificate of the Chief Executive Officer of Firstbank Corporation pursuant to 18 U.S.C. Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certificate of the Chief Financial Officer of Firstbank Corporation pursuant to 18 U.S.C. Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certificate of the Chief Executive Officer and the Chief Financial Officer of Firstbank Corporation pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	Interactive Data File

EX-31

EXHIBIT 31.1

I, Thomas R. Sullivan, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Firstbank Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 5, 2013
	/s/ Thomas R. Sullivan
	Thomas R. Sullivan President and Chief Executive Officer

EX-31

EXHIBIT 31.2

I, Samuel G. Stone, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Firstbank Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 5, 2013
	/s/ Samuel G. Stone
	Samuel G. Stone Executive Vice President and Chief Financial Officer

EX-32

EXHIBIT 32.1

Thomas R. Sullivan, President and Chief Executive Officer of Firstbank Corporation, and Samuel G. Stone, Executive Vice President and Chief Financial Officer of Firstbank Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) the Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2013 which this statement accompanies fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

(2) the information contained in the Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2013 fairly presents, in all material respects, the financial condition and results of operations of Firstbank Corporation.

Date: November 5, 2013
	/s/ Thomas R. Sullivan
	Thomas R. Sullivan President and Chief Executive Officer

/s/ Samuel G. Stone

Samuel G. Stone

Executive Vice President and Chief Financial Officer

XML

Note 2 - Securities (Tables)

9 Months Ended

Sep. 30, 2013

Investment Holdings [Abstract]

Investment [Table Text Block]

(In thousands of dollars)	Amortized Cost		Unrealized Gains		Unrealized Losses			Carrying Value
September 30, 2013
Securities available for sale
U.S. governmental agency	$	107,919	$	641	$	(224	)	$	108,336
States and political subdivisions		147,202		811		(1,656	)		146,357
Mortgage backed securities		62,127		1,149		(173	)		63,103
Collateralized mortgage obligations		37,344		499		(58	)		37,785
Equity and other securities		1,611		229		0			1,840
Total securities available for sale	$	356,203	$	3,329	$	(2,111	)	$	357,421
December 31, 2012
Securities available for sale
U.S. governmental agency	$	105,629	$	1,271	$	(15	)	$	106,885
States and political subdivisions		116,123		1,786		(95	)		117,814
Mortgage backed securities		64,550		1,729		(2	)		66,277
Collateralized mortgage obligations		60,278		810		(58	)		61,030
Equity and other securities		1,610		62		0			1,672
Total securities available for sale	$	348,190	$	5,658	$	(170	)	$	353,678

Schedule of Unrealized Loss on Investments [Table Text Block]

(In thousands of dollars)	Less than 12 Months					12 Months or More					Total
Description of Securities	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
September 30, 2013
U.S. governmental agency	$	27,403	$	(224	)	$	0	$	0		$	27,403	$	(224	)
States and political subdivisions		68,508		(1,603	)		4,414		(53	)		72,922		(1,656	)
Mortgage backed securities		15,096		(173	)		0		0			15,096		(173	)
Collateralized mortgage obligations		2,483		(13	)		6,930		(45	)		9,413		(58	)
Total temporarily impaired	$	113,490	$	(2,013	)	$	11,344	$	(98	)	$	124,834	$	(2,111	)
December 31, 2012
U.S. governmental agencies	$	10,135	$	(15	)	$	0	$	0		$	10,135	$	(15	)
States and political subdivisions		17,141		(93	)		582		(2	)		17,723		(95	)
Mortgage backed securities		0		0			513		(2	)		513		(2	)
Collateralized mortgage obligations		19,995		(55	)		721		(3	)		20,716		(58	)
Total temporarily impaired	$	47,271	$	(163	)	$	1,816	$	(7	)	$	49,087	$	(170	)

Realized Gain (Loss) on Investments [Table Text Block]

	As of September 30,
(In thousands of dollars)	2013		2012
Trading Account Securities Gains/Losses	$	2	$	1
Available for Sale Securities
Gross realized gains		79		42
Gross realized losses		27		0
Net realized gains	$	52	$	42

Investments Classified by Contractual Maturity Date [Table Text Block]

(In thousands of dollars)	Carrying Value
Due in one year or less	$	50,587
Due after one year through five years		149,361
Due after five years through ten years		104,967
Due after ten years		50,666
Total debt securities		355,581
Equity securities		1,840
Total securities	$	357,421

XML

Consolidated Statements of Income Unaudited (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Interest income:
Interest and fees on loans	$ 13,012	$ 14,145	$ 39,695	$ 43,206
Securities:
Taxable	894	1,104	2,721	3,508
Exempt from federal income tax	441	272	1,244	845
Short term investments	36	53	146	161
Total interest income	14,383	15,574	43,806	47,720
Interest expense:
Deposits	1,190	1,588	3,777	5,198
FHLB advances and other borrowing	173	170	475	552
Subordinated Debt	165	274	496	822
Total Interest Expense	1,528	2,032	4,748	6,572
Net Interest Income	12,855	13,542	39,058	41,148
Provision for loan losses	0	1,364	1,830	6,352
Net interest income after provision for loan losses	12,855	12,178	37,228	34,796
Non-interest income:
Service charges on deposit accounts	1,043	1,048	3,107	3,166
Gain on sale of mortgage loans	894	1,661	3,922	4,816
Mortgage servicing, net of amortization	109	(95)	(54)	(174)
Loss on trading account securities	(4)	(5)	2	1
Gain on sale of available for sale securities	0	2	52	42
Other	444	405	1,325	1,408
Total non-interest income	2,486	3,016	8,354	9,259
Non-interest expense:
Salaries and employee benefits	5,805	5,865	17,428	17,003
Occupancy and equipment	1,335	1,267	4,021	3,912
FDIC insurance premium	233	265	768	964
Amortization of intangibles	86	109	291	380
Outside professional services	324	293	964	895
Advertising and promotions	347	400	1,048	1,120
Other real estate owned costs	143	513	495	1,309
Other	2,236	2,717	7,002	7,925
Merger related expenses	738	0	738	0
Total non-interest expense	11,247	11,429	32,755	33,508
Income before federal income taxes	4,094	3,765	12,827	10,547
Federal income taxes	1,225	1,050	3,752	3,011
Net Income	2,869	2,715	9,075	7,536
Preferred stock dividends and accretion of discount on preferred stock	0	220	481	1,060
Net income available to common shareholders	$ 2,869	$ 2,495	$ 8,594	$ 6,476
Basic earnings per share (in Dollars per share)	$ 0.36	$ 0.31	$ 1.07	$ 0.82
Diluted earnings per share (in Dollars per share)	$ 0.35	$ 0.31	$ 1.06	$ 0.82
Dividends per share (in Dollars per share)	$ 0.06	$ 0.01	$ 0.18	$ 0.08

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Note 1 - Financial Statements

9 Months Ended

Sep. 30, 2013

Disclosure Text Block [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

NOTE 1- FINANCIAL STATEMENTS

The accompanying unaudited financial information presented is for Firstbank Corporation (“Corporation”) and its wholly owned subsidiaries: Firstbank and its 46% ownership in 1^st Investors Title, LLC, Keystone Community Bank, collectively the “Banks”, FBMI Risk Management Services, Inc., a company that provides insurance coverage to only affiliates of Firstbank Corporation, and Austin Mortgage Company, a company that holds certain performing and non-performing residential mortgage loans originated prior to the acquisition of ICNB Financial Corporation, and beginning in the second quarter of 2009 certain non-performing loans transferred from affiliate banks. All of the subsidiaries listed above are fully owned except 1^st Investors Title, LLC, in which we have a 44% minority interest. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended September 30, 2013, are not necessarily indicative of the results that may be expected for the year ending December 31, 2013. The balance sheet at December 31, 2012, has been derived from the audited financial statements at that date. For further information, refer to the consolidated financial statements and footnotes thereto included in the Corporation’s annual report on Form 10-K for the year ended December 31, 2012.

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Note 2 - Securities (Details) - Securities with Unrealized Losses not Recognized in Income (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
Note 2 - Securities (Details) - Securities with Unrealized Losses not Recognized in Income [Line Items]
Less than 12 Months, Fair Value	$ 113,490	$ 47,271
Less than 12 Months, Unrealized Losses	(2,013)	(163)
12 Months or More, Fair Value	11,344	1,816
12 Months or More, Unrealized Losses	(98)	(7)
Fair Value	124,834	49,087
Unrealized Losses	(2,111)	(170)
US Government Agencies Debt Securities [Member]
Note 2 - Securities (Details) - Securities with Unrealized Losses not Recognized in Income [Line Items]
Less than 12 Months, Fair Value	27,403	10,135
Less than 12 Months, Unrealized Losses	(224)	(15)
12 Months or More, Fair Value	0	0
12 Months or More, Unrealized Losses	0	0
Fair Value	27,403	10,135
Unrealized Losses	(224)	(15)
US States and Political Subdivisions Debt Securities [Member]
Note 2 - Securities (Details) - Securities with Unrealized Losses not Recognized in Income [Line Items]
Less than 12 Months, Fair Value	68,508	17,141
Less than 12 Months, Unrealized Losses	(1,603)	(93)
12 Months or More, Fair Value	4,414	582
12 Months or More, Unrealized Losses	(53)	(2)
Fair Value	72,922	17,723
Unrealized Losses	(1,656)	(95)
Mortgage-backed Securities, Issued by Private Enterprises [Member]
Note 2 - Securities (Details) - Securities with Unrealized Losses not Recognized in Income [Line Items]
Less than 12 Months, Fair Value	15,096	0
Less than 12 Months, Unrealized Losses	(173)	0
12 Months or More, Fair Value	0	513
12 Months or More, Unrealized Losses	0	(2)
Fair Value	15,096	513
Unrealized Losses	(173)	(2)
Collateralized Mortgage Obligations [Member]
Note 2 - Securities (Details) - Securities with Unrealized Losses not Recognized in Income [Line Items]
Less than 12 Months, Fair Value	2,483	19,995
Less than 12 Months, Unrealized Losses	(13)	(55)
12 Months or More, Fair Value	6,930	721
12 Months or More, Unrealized Losses	(45)	(3)
Fair Value	9,413	20,716
Unrealized Losses	$ (58)	$ (58)

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Note 3 - Loans (Tables)

9 Months Ended

Sep. 30, 2013

Note 3 - Loans (Tables) [Line Items]

Financing Receivable Credit Quality Indicators [Table Text Block]

(In thousands of dollars)	September 30, 2013		December 31, 2012
Commercial and Industrial
Pass loans	$	142,668	$	133,678
Watch loans		6,629		5,367
Special mention loans		5,957		5,436
Substandard loans		2,178		1,881
Impaired restructured and accruing loans		1,548		3,234
Impaired nonaccrual loans		111		448
Doubtful nonaccrual loans		0		0
Total Commercial and Industrial		159,091		150,044
Commercial Real Estate
Pass loans	$	388,944	$	373,577
Watch loans		48,542		50,790
Special mention loans		16,747		18,117
Substandard loans		5,879		9,655
Impaired restructured and accruing loans		13,634		12,106
Impaired nonaccrual loans		5,914		8,427
Doubtful nonaccrual loans		0		25
Total Commercial Real Estate		479,660		472,697
First lien residential mortgage loans
Performing loans	$	206,987	$	202,357
Loans > 60 days past due		1,052		1,046
Impaired restructured and accruing loans		4,637		4,953
Nonaccrual loans		4,868		6,040
Total First lien residential mortgage loans		217,544		214,396
Junior lien residential mortgage loans
Performing loans	$	54,309	$	58,089
Loans > 60 days past due		19		96
Impaired restructured and accruing loans		248		235
Nonaccrual loans		275		327
Total Junior lien residential mortgage loans		54,851		58,747
Consumer Loans
Performing loans	$	70,738	$	67,042
Loans > 60 days past due		58		39
Impaired restructured and accruing loans		105		191
Nonaccrual loans		36		401
Total Consumer Loans		70,937		67,673
Deferred Fees and Costs		203		205
Total Loans	$	982,286	$	963,762

Schedule of Credit Losses Related to Financing Receivables, Current and Noncurrent [Table Text Block]

(In thousands of dollars)
Three months ending September 30, 2013	Commercial and Industrial			Commercial Real Estate			First Lien Residential Mortgages			Junior Lien Residential Mortgages			Consumer Loans			Unallocated			Total
Allowance for Credit Losses:
Beginning balance	$	1,821		$	10,237		$	6,287		$	569		$	579		$	746		$	20,239
Provision for loan losses		14			36			71			10			87			(218	)		0
Loans charged off		(68	)		(107	)		(587	)		(41	)		(79	)		0			(882	)
Recoveries		106			109			10			0			26			0			251
Ending balance	$	1,873		$	10,275		$	5,781		$	538		$	613		$	528		$	19,608
Three months ending September 30, 2012
Allowance for Credit Losses:
Beginning balance	$	2,404		$	11,215		$	5,643		$	523		$	851		$	886		$	21,522
Provision for loan losses		(238	)		817			845			229			94			(383	)		1,364
Loans charged off		(110	)		(956	)		(571	)		(174	)		(163	)		0			(1,974	)
Recoveries		34			277			35			0			74			0			420
Ending balance	$	2,090		$	11,353		$	5,952		$	578		$	856		$	503		$	21,332

Nine months ending September 30, 2013	Commercial and Industrial			Commercial Real Estate			First Lien Residential Mortgages			Junior Lien Residential Mortgages			Consumer Loans			Unallocated			Total
Allowance for Credit Losses:
Beginning balance	$	1,896		$	11,565		$	5,656		$	555		$	805		$	863		$	21,340
Provision for loan losses		92			283			1,626			207			(43	)		(335	)		1,830
Loans charged off		(274	)		(1,770	)		(1,570	)		(224	)		(367	)		0			(4,205	)
Recoveries		159			197			69			0			218			0			643
Ending balance	$	1,873		$	10,275		$	5,781		$	538		$	613		$	528		$	19,608
Nine months ending September 30, 2012
Allowance for Credit Losses:
Beginning balance	$	2,485		$	11,534		$	5,393		$	505		$	931		$	171		$	21,019
Provision for loan losses		81			3,059			2,138			533			209			332			6,352
Loans charged off		(535	)		(3,605	)		(1,744	)		(460	)		(547	)		0			(6,891	)
Recoveries		59			365			165			0			263			0			852
Ending balance	$	2,090		$	11,353		$	5,952		$	578		$	856		$	503		$	21,332

Allowance for Credit Losses on Financing Receivables [Table Text Block]

(In thousands of dollars)					First Lien		Junior Lien
September 30, 2013	Commercial and Industrial		Commercial Real Estate		Residential Mortgages		Residential Mortgages		Consumer Loans		Unallocated		Total
Allowance for Credit Losses:
Ending balance: individually evaluated for impairment	$	524	$	4,137	$	2,493	$	137	$	27	$	0	$	7,318
Ending balance: collectively evaluated for impairment	$	1,349	$	6,138	$	3,288	$	401	$	586	$	528	$	12,290
Financing Receivables:
Ending balance	$	159,091	$	479,660	$	217,544	$	54,851	$	70,937	$	0	$	982,083
Ending balance: individually evaluated for impairment	$	1,659	$	19,548	$	9,505	$	523	$	141	$	0	$	31,376
Ending balance: collectively evaluated for impairment	$	157,432	$	460,112	$	208,039	$	54,328	$	70,796	$	0	$	950,707
September 30, 2012
Allowance for Credit Losses:
Ending balance: individually evaluated for impairment	$	321	$	3,479	$	0	$	0	$	0	$	0	$	3,800
Ending balance: collectively evaluated for impairment	$	1,769	$	7,874	$	5,952	$	578	$	856	$	503	$	17,532
Financing Receivables:
Ending balance	$	152,259	$	479,577	$	215,893	$	60,661	$	69,020	$	0	$	977,410
Ending balance: individually evaluated for impairment	$	2,675	$	22,625	$	0	$	0	$	0	$	0	$	25,300
Ending balance: collectively evaluated for impairment	$	149,584	$	456,952	$	215,893	$	60,661	$	69,020	$	0	$	952,110

Past Due Financing Receivables [Table Text Block]

(In thousands of dollars)															Recorded
At September 30, 2013	30-59 Days Past Due		60-89 Days Past Due		90 Day s or More Past Due		Total Past Due		Nonaccrual loans		Current		Total Financing Receivables		Investment > 90 days and accruing
Commercial and Industrial	$	685	$	46	$	0	$	731	$	111	$	158,249	$	159,091	$	0
Commercial Real Estate		625		324		14		963		5,914		472,783		479,660		14
Residential Mortgages First Liens		789		1,039		12		1,840		4,868		210,836		217,544		12
Residential Mortgages Junior Liens		379		19		0		398		275		54,178		54,851		0
Consumer		305		58		0		363		36		70,538		70,937		0
Deferred Fees and Costs		0		0		0		0		0		203		203		0
Total	$	2,783	$	1,486	$	26	$	4,295	$	11,204	$	966,787	$	982,286	$	26
At December 31, 2012
Commercial and Industrial	$	206	$	140	$	0	$	346	$	448	$	149,250	$	150,044	$	0
Commercial Real Estate		604		1,881		0		2,485		8,452		461,760		472,697		0
Residential Mortgages First Liens		772		969		37		1,778		6,040		206,578		214,396		37
Residential Mortgages Junior Liens		473		96		0		569		327		57,851		58,747		0
Consumer		435		39		0		474		401		66,798		67,673		0
Deferred Fees and Costs		0		0		0		0		0		205		205		0
Total	$	2,490	$	3,125	$	37	$	5,652	$	15,668	$	942,442	$	963,762	$	37

Impaired Financing Receivables [Table Text Block]

(In thousands of dollars)			Unpaid
September 30, 2013	Recorded Investment		Principal Balance		Related Allowance
Period end loans with no allocated allowance for loan losses
Commercial and Industrial	$	341	$	337		0
Commercial Real Estate		6,692		6,676		0
Residential Mortgages First Liens		0		0		0
Residential Mortgages Junior Liens		0		0		0
Consumer		0		0		0
Total	$	7,033	$	7,013	$	0
Period end loans with allocated allowance for loan losses
Commercial and Industrial	$	805	$	1,322	$	524
Commercial Real Estate		8,767		12,871		4,137
Residential Mortgages First Liens		7,058		9,504		2,493
Residential Mortgages Junior Liens		386		523		137
Consumer		115		141		27
Total	$	17,131	$	24,361	$	7,318
Total
Commercial and Industrial	$	1,146	$	1,659	$	524
Commercial Real Estate		15,459		19,545		4,137
Residential Mortgages First Liens		7,058		9,505		2,493
Residential Mortgages Junior Liens		386		523		137
Consumer		115		141		27
Total	$	24,164	$	31,376	$	7,318
December 31, 2012
Period end loans with no allocated allowance for loan losses
Commercial and Industrial	$	891	$	891		0
Commercial Real Estate		9,215		9,212		0
Residential Mortgages First Liens		0		0		0
Residential Mortgages Junior Liens		0		0		0
Consumer		0		0		0
Total	$	10,106	$	10,103	$	0
Period end loans with allocated allowance for loan losses
Commercial and Industrial	$	2,273	$	2,792	$	515
Commercial Real Estate		8,377		11,346		2,971
Residential Mortgages First Liens		8,695		10,993		2,298
Residential Mortgages Junior Liens		472		562		90
Consumer		366		592		226
Total	$	20,183	$	26,285	$	6,100
Total
Commercial and Industrial	$	3,164	$	3,683	$	515
Commercial Real Estate		17,592		20,558		2,971
Residential Mortgages First Liens		8,695		10,993		2,298
Residential Mortgages Junior Liens		472		562		90
Consumer		366		592		226
Total	$	30,289	$	36,388	$	6,100

Troubled Debt Restructurings on Financing Receivables [Table Text Block]

(In thousands of dollars)	Troubled Debt Restructurings						Troubled Debt Restructurings that Subsequently Defaulted
	Number of  contracts		Pre-modification outstanding recorded investment		Post-modification outstanding recorded investment		Number of contracts		Recorded investment
Quarter to date:
September 30, 2013
Commercial and industrial		2	$	219	$	217		0	$	0
Commercial real estate		0		0		0		0		0
Residential First Liens		1		203		134		2		172
Residential junior liens		0		0		0		0		0
Consumer		0		0		0		0		0
Total		3	$	422	$	351		2	$	172
September 30, 2012
Commercial and industrial		3	$	190	$	187		0	$	0
Commercial real estate		4		1,613		1,590		0		0
Residential First Liens		6		871		870		1		64
Residential junior liens		1		15		15		1		9
Consumer		0		0		0		0		0
Total		14	$	2,689	$	2,662		2	$	73
Year to date:
September 30, 2013
Commercial and industrial		5	$	308	$	305		2	$	100
Commercial real estate		5		1,661		1,671		0		0
Residential First Liens		6		1,040		970		5		568
Residential junior liens		1		19		19		0		0
Consumer		0		0		0		0		0
Total		17	$	3,028	$	2,965		7	$	668
September 30, 2012
Commercial and industrial		9	$	998	$	988		5	$	1,143
Commercial real estate		12		3,598		3,573		4		401
Residential First Liens		16		1,673		1,669		1		64
Residential junior liens		3		118		118		1		9
Consumer		2		107		107		0		0
Total		42	$	6,494	$	6,455		11	$	1,617

Impaired Loans [Member]

Note 3 - Loans (Tables) [Line Items]

Impaired Financing Receivables [Table Text Block]

	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
(In thousands of dollars)	Three months ended September 30, 2013				Three months ended September 30, 2012
Period end loans with no allocated allowance for loan losses
Commercial and Industrial	$	984	$	1	$	2,779	$	18
Commercial Real Estate		7,387		40		9,260		113
Residential Mortgages First Liens		0		0		9,451		56
Residential Mortgages Junior Liens		0		0		530		2
Consumer		0		0		481		2
Total	$	8,371	$	41	$	22,501	$	191
Period end loans with allocated allowance for loan losses
Commercial and Industrial	$	730	$	22	$	449	$	1
Commercial Real Estate		8,694		163		10,097		9
Residential Mortgages First Liens		7,420		68		0		0
Residential Mortgages Junior Liens		388		3		0		0
Consumer		117		1		0		0
Total	$	17,349	$	257	$	10,546	$	10
Total
Commercial and Industrial	$	1,714	$	23	$	3,228	$	19
Commercial Real Estate		16,081		203		19,357		122
Residential Mortgages First Liens		7,420		68		9,451		56
Residential Mortgages Junior Liens		388		3		530		2
Consumer		117		1		481		2
Total	$	25,720	$	298	$	33,047	$	201

	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
(In thousands of dollars)	Nine months ended September 30, 2013				Nine months ended September 30, 2012
Period end loans with no allocated allowance for loan losses
Commercial and Industrial	$	1,050	$	134	$	3,355	$	164
Commercial Real Estate		8,163		557		10,463		648
Residential Mortgages First Liens		0		0		9,749		295
Residential Mortgages Junior Liens		0		0		487		9
Consumer		0		0		414		15
Total	$	9,213	$	691	$	24,468	$	1,131
Period end loans with allocated allowance for loan losses
Commercial and Industrial	$	1,125	$	59	$	532	$	2
Commercial Real Estate		8,517		429		11,107		100
Residential Mortgages First Liens		8,977		318		0		0
Residential Mortgages Junior Liens		497		14		0		0
Consumer		268		13		0		0
Total	$	19,384	$	833	$	11,639	$	102
Total
Commercial and Industrial	$	2,175	$	193	$	3,887	$	166
Commercial Real Estate		16,680		986		21,570		748
Residential Mortgages First Liens		8,977		318		9,749		295
Residential Mortgages Junior Liens		497		14		487		9
Consumer		268		13		414		15
Total	$	28,597	$	1,524	$	36,107	$	1,233

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Note 6 - Fair Value (Details) - Changes in Level 3 Assets Measured at Fair Value on a Recurring Basis (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total unrealized gains/(losses) included in other comprehensive income	$ 590	$ 588	$ (4,218)	$ 1,934
Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance at beginning of year			21,870	16,914
Balance at September 30 of each year	19,900	16,701	19,900	16,701
Total realized and unrealized gains/(losses) included in income			0	0
Total unrealized gains/(losses) included in other comprehensive income			0	0
Purchases of securities			5,885	11,682
Sales of securities			0	0
Calls and maturities			(7,925)	(12,255)
Net transfers into Level 3			$ 70	$ 360

XML

Note 3 - Loans (Details) - Credit Quality Indicators (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Commercial and Industrial
Financing Receivable	$ 982,286	$ 963,762
Commercial Real Estate Portfolio Segment [Member] | Doubtful [Member]
Commercial and Industrial
Financing Receivable	0	25
Commercial and Industrial [Member] | Pass [Member]
Commercial and Industrial
Financing Receivable	142,668	133,678
Commercial and Industrial [Member] | Watch Loan [Member]
Commercial and Industrial
Financing Receivable	6,629	5,367
Commercial and Industrial [Member] | Special Mention [Member]
Commercial and Industrial
Financing Receivable	5,957	5,436
Commercial and Industrial [Member] | Substandard [Member]
Commercial and Industrial
Financing Receivable	2,178	1,881
Commercial and Industrial [Member] | Impaired Restructured and Accruing Loans [Member]
Commercial and Industrial
Financing Receivable	1,548	3,234
Commercial and Industrial [Member] | Impaired Nonaccrual Loans [Member]
Commercial and Industrial
Financing Receivable	111	448
Commercial and Industrial [Member] | Doubtful [Member]
Commercial and Industrial
Financing Receivable	0	0
Commercial and Industrial [Member]
Commercial and Industrial
Financing Receivable	159,091	150,044
Commercial Real Estate Loans [Member] | Pass [Member]
Commercial and Industrial
Financing Receivable	388,944	373,577
Commercial Real Estate Loans [Member] | Watch Loan [Member]
Commercial and Industrial
Financing Receivable	48,542	50,790
Commercial Real Estate Loans [Member] | Special Mention [Member]
Commercial and Industrial
Financing Receivable	16,747	18,117
Commercial Real Estate Loans [Member] | Substandard [Member]
Commercial and Industrial
Financing Receivable	5,879	9,655
Commercial Real Estate Loans [Member] | Impaired Restructured and Accruing Loans [Member]
Commercial and Industrial
Financing Receivable	13,634	12,106
Commercial Real Estate Loans [Member] | Impaired Nonaccrual Loans [Member]
Commercial and Industrial
Financing Receivable	5,914	8,427
Commercial Real Estate Loans [Member]
Commercial and Industrial
Financing Receivable	479,660	472,697
First Lien Residential Mortgage Loans [Member] | Impaired Restructured and Accruing Loans [Member]
Commercial and Industrial
Financing Receivable	4,637	4,953
First Lien Residential Mortgage Loans [Member] | Performing Financing Receivable [Member]
Commercial and Industrial
Financing Receivable	206,987	202,357
First Lien Residential Mortgage Loans [Member] | Loans more than 60 days past due [Member]
Commercial and Industrial
Financing Receivable	1,052	1,046
First Lien Residential Mortgage Loans [Member] | Nonaccrual loans [Member]
Commercial and Industrial
Financing Receivable	4,868	6,040
First Lien Residential Mortgage Loans [Member]
Commercial and Industrial
Financing Receivable	217,544	214,396
Junior Lein Residential Mortgage Loans [Member] | Impaired Restructured and Accruing Loans [Member]
Commercial and Industrial
Financing Receivable	248	235
Junior Lein Residential Mortgage Loans [Member] | Performing Financing Receivable [Member]
Commercial and Industrial
Financing Receivable	54,309	58,089
Junior Lein Residential Mortgage Loans [Member] | Loans more than 60 days past due [Member]
Commercial and Industrial
Financing Receivable	19	96
Junior Lein Residential Mortgage Loans [Member] | Nonaccrual loans [Member]
Commercial and Industrial
Financing Receivable	275	327
Junior Lein Residential Mortgage Loans [Member]
Commercial and Industrial
Financing Receivable	54,851	58,747
Consumer Loans [Member] | Impaired Restructured and Accruing Loans [Member]
Commercial and Industrial
Financing Receivable	105	191
Consumer Loans [Member] | Performing Financing Receivable [Member]
Commercial and Industrial
Financing Receivable	70,738	67,042
Consumer Loans [Member] | Loans more than 60 days past due [Member]
Commercial and Industrial
Financing Receivable	58	39
Consumer Loans [Member] | Nonaccrual loans [Member]
Commercial and Industrial
Financing Receivable	36	401
Consumer Loans [Member]
Commercial and Industrial
Financing Receivable	70,937	67,673
Deferred Fees and Costs [Member]
Commercial and Industrial
Financing Receivable	$ 203	$ 205

XML

Note 2 - Securities (Details) - Carrying Value of Securities at Maturity (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Carrying Value of Securities at Maturity [Abstract]
Due in one year or less	$ 50,587
Due after one year through five years	149,361
Due after five years through ten years	104,967
Due after ten years	50,666
Total debt securities	355,581
Equity securities	1,840
Total securities	$ 357,421	$ 353,678

XML

Note 4 - Borrowings (Details) (Revolving Credit Facility [Member], USD $) In Millions, unless otherwise specified	1 Months Ended
	May 17, 2013 Prime Rate [Member]	Sep. 30, 2013	Jun. 30, 2013	May 17, 2013
Note 4 - Borrowings (Details) [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity				$ 10
Debt Instrument, Basis Spread on Variable Rate	0.125%
Long-term Line of Credit			8
Line of Credit Facility, Amount Outstanding		$ 0

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Note 7 - Basic And Diluted Earnings Per Share (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Earnings Per Share [Abstract]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	216,814	254,497	216,814	292,447

XML

Note 3 - Loans (Details) - Impaired Loans (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Financing Receivable, Impaired [Line Items]
Loans with No Allocated Allowance for loan Losses, Related Allowance	$ 7,318	$ 6,100
Loans with Allocated Allowance for loan Losses, Related Allowance	7,318	6,100
Total
Impaired loans - recorded investment	24,164	30,289
Impaired loans - unpaid principal balance	31,376	36,388
Impaired loans - related allowance	7,318	6,100
Commercial and Industrial [Member] | Period End Loans No Allocated Allowance For Loan Losses [Member]
Financing Receivable, Impaired [Line Items]
Loans with No Allocated Allowance for loan Losses, Recorded Investment	341	891
Loans with No Allocated Allowance for loan Losses, Unpaid Principal Balance	337	891
Loans with No Allocated Allowance for loan Losses, Related Allowance	0	0
Loans with Allocated Allowance for loan Losses, Related Allowance	0	0
Total
Impaired loans - related allowance	0	0
Commercial and Industrial [Member] | Period End Loans Allocated Allowance Loan Losses [Member]
Financing Receivable, Impaired [Line Items]
Loans with No Allocated Allowance for loan Losses, Related Allowance	524	515
Loans with Allocated Allowance for loan Losses, Recorded Investment	805	2,273
Loans with Allocated Allowance for loan Losses, Unpaid Principal Balance	1,322	2,792
Loans with Allocated Allowance for loan Losses, Related Allowance	524	515
Total
Impaired loans - related allowance	524	515
Commercial and Industrial [Member]
Financing Receivable, Impaired [Line Items]
Loans with No Allocated Allowance for loan Losses, Related Allowance	524	515
Loans with Allocated Allowance for loan Losses, Related Allowance	524	515
Total
Impaired loans - recorded investment	1,146	3,164
Impaired loans - unpaid principal balance	1,659	3,683
Impaired loans - related allowance	524	515
Commercial Real Estate Other Receivable [Member] | Period End Loans No Allocated Allowance For Loan Losses [Member]
Financing Receivable, Impaired [Line Items]
Loans with No Allocated Allowance for loan Losses, Recorded Investment	6,692	9,215
Loans with No Allocated Allowance for loan Losses, Unpaid Principal Balance	6,676	9,212
Loans with No Allocated Allowance for loan Losses, Related Allowance	0	0
Loans with Allocated Allowance for loan Losses, Related Allowance	0	0
Total
Impaired loans - related allowance	0	0
Commercial Real Estate Other Receivable [Member] | Period End Loans Allocated Allowance Loan Losses [Member]
Financing Receivable, Impaired [Line Items]
Loans with No Allocated Allowance for loan Losses, Related Allowance	4,137	2,971
Loans with Allocated Allowance for loan Losses, Recorded Investment	8,767	8,377
Loans with Allocated Allowance for loan Losses, Unpaid Principal Balance	12,871	11,346
Loans with Allocated Allowance for loan Losses, Related Allowance	4,137	2,971
Total
Impaired loans - related allowance	4,137	2,971
Commercial Real Estate Other Receivable [Member]
Financing Receivable, Impaired [Line Items]
Loans with No Allocated Allowance for loan Losses, Related Allowance	4,137	2,971
Loans with Allocated Allowance for loan Losses, Related Allowance	4,137	2,971
Total
Impaired loans - recorded investment	15,459	17,592
Impaired loans - unpaid principal balance	19,545	20,558
Impaired loans - related allowance	4,137	2,971
First Lien Residential Mortgage Loans [Member] | Period End Loans No Allocated Allowance For Loan Losses [Member]
Financing Receivable, Impaired [Line Items]
Loans with No Allocated Allowance for loan Losses, Recorded Investment	0	0
Loans with No Allocated Allowance for loan Losses, Unpaid Principal Balance	0	0
Loans with No Allocated Allowance for loan Losses, Related Allowance	0	0
Loans with Allocated Allowance for loan Losses, Related Allowance	0	0
Total
Impaired loans - related allowance	0	0
First Lien Residential Mortgage Loans [Member] | Period End Loans Allocated Allowance Loan Losses [Member]
Financing Receivable, Impaired [Line Items]
Loans with No Allocated Allowance for loan Losses, Related Allowance	2,493	2,298
Loans with Allocated Allowance for loan Losses, Recorded Investment	7,058	8,695
Loans with Allocated Allowance for loan Losses, Unpaid Principal Balance	9,504	10,993
Loans with Allocated Allowance for loan Losses, Related Allowance	2,493	2,298
Total
Impaired loans - related allowance	2,493	2,298
First Lien Residential Mortgage Loans [Member]
Financing Receivable, Impaired [Line Items]
Loans with No Allocated Allowance for loan Losses, Related Allowance	2,493	2,298
Loans with Allocated Allowance for loan Losses, Related Allowance	2,493	2,298
Total
Impaired loans - recorded investment	7,058	8,695
Impaired loans - unpaid principal balance	9,505	10,993
Impaired loans - related allowance	2,493	2,298
Junior Lein Residential Mortgage Loans [Member] | Period End Loans No Allocated Allowance For Loan Losses [Member]
Financing Receivable, Impaired [Line Items]
Loans with No Allocated Allowance for loan Losses, Recorded Investment	0	0
Loans with No Allocated Allowance for loan Losses, Unpaid Principal Balance	0	0
Loans with No Allocated Allowance for loan Losses, Related Allowance	0	0
Loans with Allocated Allowance for loan Losses, Related Allowance	0	0
Total
Impaired loans - related allowance	0	0
Junior Lein Residential Mortgage Loans [Member] | Period End Loans Allocated Allowance Loan Losses [Member]
Financing Receivable, Impaired [Line Items]
Loans with No Allocated Allowance for loan Losses, Related Allowance	137	90
Loans with Allocated Allowance for loan Losses, Recorded Investment	386	472
Loans with Allocated Allowance for loan Losses, Unpaid Principal Balance	523	562
Loans with Allocated Allowance for loan Losses, Related Allowance	137	90
Total
Impaired loans - related allowance	137	90
Junior Lein Residential Mortgage Loans [Member]
Financing Receivable, Impaired [Line Items]
Loans with No Allocated Allowance for loan Losses, Related Allowance	137	90
Loans with Allocated Allowance for loan Losses, Related Allowance	137	90
Total
Impaired loans - recorded investment	386	472
Impaired loans - unpaid principal balance	523	562
Impaired loans - related allowance	137	90
Consumer Loans [Member] | Period End Loans No Allocated Allowance For Loan Losses [Member]
Financing Receivable, Impaired [Line Items]
Loans with No Allocated Allowance for loan Losses, Recorded Investment	0	0
Loans with No Allocated Allowance for loan Losses, Unpaid Principal Balance	0	0
Loans with No Allocated Allowance for loan Losses, Related Allowance	0	0
Loans with Allocated Allowance for loan Losses, Related Allowance	0	0
Total
Impaired loans - related allowance	0	0
Consumer Loans [Member] | Period End Loans Allocated Allowance Loan Losses [Member]
Financing Receivable, Impaired [Line Items]
Loans with No Allocated Allowance for loan Losses, Related Allowance	27	226
Loans with Allocated Allowance for loan Losses, Recorded Investment	115	366
Loans with Allocated Allowance for loan Losses, Unpaid Principal Balance	141	592
Loans with Allocated Allowance for loan Losses, Related Allowance	27	226
Total
Impaired loans - related allowance	27	226
Consumer Loans [Member]
Financing Receivable, Impaired [Line Items]
Loans with No Allocated Allowance for loan Losses, Related Allowance	27	226
Loans with Allocated Allowance for loan Losses, Related Allowance	27	226
Total
Impaired loans - recorded investment	115	366
Impaired loans - unpaid principal balance	141	592
Impaired loans - related allowance	27	226
No Allocated Allowance [Member] | Period End Loans No Allocated Allowance For Loan Losses [Member]
Financing Receivable, Impaired [Line Items]
Loans with No Allocated Allowance for loan Losses, Recorded Investment	7,033	10,106
Loans with No Allocated Allowance for loan Losses, Unpaid Principal Balance	7,013	10,103
Loans with No Allocated Allowance for loan Losses, Related Allowance	0	0
Loans with Allocated Allowance for loan Losses, Related Allowance	0	0
Total
Impaired loans - related allowance	0	0
Allocated Allowance [Member] | Period End Loans Allocated Allowance Loan Losses [Member]
Financing Receivable, Impaired [Line Items]
Loans with No Allocated Allowance for loan Losses, Related Allowance	7,318	6,100
Loans with Allocated Allowance for loan Losses, Recorded Investment	17,131	20,183
Loans with Allocated Allowance for loan Losses, Unpaid Principal Balance	24,361	26,285
Loans with Allocated Allowance for loan Losses, Related Allowance	7,318	6,100
Total
Impaired loans - related allowance	$ 7,318	$ 6,100

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Note 2 - Securities (Details) - Gross Gains and Losses on Investment Securities (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Note 2 - Securities (Details) - Gross Gains and Losses on Investment Securities [Line Items]
Trading Account Securities Gains/Losses	$ (4)	$ (5)	$ 2	$ 1
Available for Sale Securities
Gross realized gains			79	42
Gross realized losses			27	0
Net realized gains	0	2	52	42
Gains/Losses [Member]
Note 2 - Securities (Details) - Gross Gains and Losses on Investment Securities [Line Items]
Trading Account Securities Gains/Losses			$ 2	$ 1

XML

Consolidated Statements of Comprehensive Income Unaudited (Parentheticals) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Other comprehensive income/(loss), tax effect from reclassification (in Dollars)	$ 0	$ 1	$ 27	$ 22

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Consolidated Statements of Changes in Shareholders’ Equity (Parentheticals) (USD $) In Thousands, except Share data, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
Cash dividends on common stock per share (in Dollars per share)	$ 0.18	$ 0.29
Shares of preferred stock redeemed (in Shares)	17,000	16,000
Shares of common stock issued through the dividend reinvestment plan (in Shares)	13,543	46,512
Shares of common stock issued from supplemental shareholder investments (in Shares)	8,385	21,925
Shares of common stock issued (in Shares)	52,790	40,980
Tax on net change in unrealized gain/(loss) on securities available for sale (in Dollars)	$ (1,454)	$ 366
Common Stock [Member]
Cash dividends on common stock per share (in Dollars per share)	$ 0.18	$ 0.29
Shares of common stock issued through the dividend reinvestment plan (in Shares)	13,543	46,512
Shares of common stock issued from supplemental shareholder investments (in Shares)	8,385	21,925
Shares of common stock issued (in Shares)	52,790	40,980
Preferred Stock [Member]
Shares of preferred stock redeemed (in Shares)	17,000	16,000
Accumulated Other Comprehensive Income (Loss) [Member]
Tax on net change in unrealized gain/(loss) on securities available for sale (in Dollars)	$ (1,454)	$ 366

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Note 2 - Securities

9 Months Ended

Sep. 30, 2013

Investment Holdings [Abstract]

Investment Holdings [Text Block]

NOTE 2 - SECURITIES

The following table presents information about our investment portfolio, showing the gross unrealized gains and losses within each segment of the portfolio. Unrealized gains and losses are included in other comprehensive income. Unrealized losses have been analyzed and determined to be temporary in nature. The unrealized losses are related to changes in the interest rate environment compared with rates at the time the securities were purchased.

(In thousands of dollars)	Amortized Cost		Unrealized Gains		Unrealized Losses			Carrying Value
September 30, 2013
Securities available for sale
U.S. governmental agency	$	107,919	$	641	$	(224	)	$	108,336
States and political subdivisions		147,202		811		(1,656	)		146,357
Mortgage backed securities		62,127		1,149		(173	)		63,103
Collateralized mortgage obligations		37,344		499		(58	)		37,785
Equity and other securities		1,611		229		0			1,840
Total securities available for sale	$	356,203	$	3,329	$	(2,111	)	$	357,421
December 31, 2012
Securities available for sale
U.S. governmental agency	$	105,629	$	1,271	$	(15	)	$	106,885
States and political subdivisions		116,123		1,786		(95	)		117,814
Mortgage backed securities		64,550		1,729		(2	)		66,277
Collateralized mortgage obligations		60,278		810		(58	)		61,030
Equity and other securities		1,610		62		0			1,672
Total securities available for sale	$	348,190	$	5,658	$	(170	)	$	353,678

Securities with unrealized losses at September 30, 2013 and December 31, 2012 not recognized in income are as follows:

(In thousands of dollars)	Less than 12 Months					12 Months or More					Total
Description of Securities	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
September 30, 2013
U.S. governmental agency	$	27,403	$	(224	)	$	0	$	0		$	27,403	$	(224	)
States and political subdivisions		68,508		(1,603	)		4,414		(53	)		72,922		(1,656	)
Mortgage backed securities		15,096		(173	)		0		0			15,096		(173	)
Collateralized mortgage obligations		2,483		(13	)		6,930		(45	)		9,413		(58	)
Total temporarily impaired	$	113,490	$	(2,013	)	$	11,344	$	(98	)	$	124,834	$	(2,111	)
December 31, 2012
U.S. governmental agencies	$	10,135	$	(15	)	$	0	$	0		$	10,135	$	(15	)
States and political subdivisions		17,141		(93	)		582		(2	)		17,723		(95	)
Mortgage backed securities		0		0			513		(2	)		513		(2	)
Collateralized mortgage obligations		19,995		(55	)		721		(3	)		20,716		(58	)
Total temporarily impaired	$	47,271	$	(163	)	$	1,816	$	(7	)	$	49,087	$	(170	)

Unrealized losses on securities shown in the previous tables have not been recognized into income because management has the intent and ability to hold these securities for the foreseeable future. The decline in market value reflected above was due to changes in longer term interest rates for debt securities, following comments made by the chairman of the federal reserve. The value of a security moves inversely to interest rates, so as rates rose, the unrealized gain or loss in the portfolio was negatively affected. Changes in rates are typical and do not impact earnings of the company so long as investments are held to their maturity. Where unrealized losses exist, management has reviewed the issuers’ bond ratings, noting they remain of high credit quality. As of September 30, 2013 there were 242 securities with negative market positions in the portfolio compared with 74 securities with negative market positions at December 31, 2012.

Trading account securities are marked to market with the change in value reported on the income statement. Gains and losses on available for sale securities are recognized if the security is either deemed to be other than temporarily impaired, or the security is sold. The following table shows gross gains and losses on investment securities for the nine months ended September 30, 2013 and 2012.

	As of September 30,
(In thousands of dollars)	2013		2012
Trading Account Securities Gains/Losses	$	2	$	1
Available for Sale Securities
Gross realized gains		79		42
Gross realized losses		27		0
Net realized gains	$	52	$	42

The carrying value of securities at September 30, 2013, by stated maturity, is shown below. Actual maturities may differ from stated maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

(In thousands of dollars)	Carrying Value
Due in one year or less	$	50,587
Due after one year through five years		149,361
Due after five years through ten years		104,967
Due after ten years		50,666
Total debt securities		355,581
Equity securities		1,840
Total securities	$	357,421

At September 30, 2013 and December 31, 2012, securities with carrying values approximating $47,333,000 and $45,645,000, respectively, were pledged to secure public trust deposits, securities sold under agreements to repurchase, and for such other purposes as required or permitted by law.

Federal Home Loan Bank stock is carried at cost, which approximates fair value.

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Consolidated Statements of Cash Flow Unaudited (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Operating Activities:
Net income	$ 9,075	$ 7,536
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	1,830	6,352
Depreciation of premises and equipment	1,394	1,446
Net amortization of security premiums/discounts	3,287	2,895
Gain on trading account securities	(2)	(1)
Gain on available for sale securities transactions	(52)	(42)
Amortization of intangibles	291	380
Stock option and restricted stock expense	69	67
Gain on sale of mortgage loans	(3,922)	(4,816)
Proceeds from sales of mortgage loans	123,480	148,517
Loans originated for sale	(117,369)	(147,165)
Deferred federal income tax benefit	(558)	(793)
Decrease in accrued interest receivable and other assets	2,937	568
Increase/(decrease) in accrued interest payable and other liabilities	(699)	2,536
Net cash provided from operating activities	19,761	17,480
Investing Activities:
Proceeds from sale of securities available for sale	6,332	2,705
Proceeds from maturities of CD’s	1,487	1,505
Proceeds from maturities and calls of securities available for sale	71,091	103,772
Purchases of securities available for sale	(88,678)	(115,482)
Proceeds from sale of premises and equipment	146	5
Net increase in portfolio loans	(26,170)	(2,155)
Proceeds from sale of other real estate owned	4,903	4,196
Net purchases of premises and equipment	(1,077)	(1,290)
Net cash used in investing activities	(31,966)	(6,744)
Financing Activities:
Net (decrease)/increase in deposits	(11,285)	4,319
Net increase/(decrease) in securities sold under agreements to repurchase and overnight borrowings	4,548	(857)
Repayment of Federal Home Loan Bank advances	(2,632)	(7,899)
Repurchase of preferred stock	(17,000)	(15,056)
Repurchase of stock warrants	0	(1,947)
Proceeds from Federal Home Loan Bank advances	0	8,000
Cash proceeds from issuance of common stock, net	776	539
Cash dividends on preferred stock	(389)	(1,040)
Cash dividends on common stock	(1,451)	(636)
Net cash used by financing activities	(27,433)	(14,577)
Decrease in cash and cash equivalents	(39,638)	(3,841)
Cash and cash equivalents at beginning of period	99,601	75,816
Cash and cash equivalents at end of period	59,963	71,975
Supplemental Disclosure:
Interest Paid	4,669	6,658
Income Taxes Paid	3,925	3,400
Non cash transfers of loans to Other Real Estate Owned	$ 4,084	$ 6,615

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Note 7 - Basic And Diluted Earnings Per Share (Details) - Basic And Diluted Earnings Per Share (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Earnings per share
Net income	$ 2,869	$ 2,715	$ 9,075	$ 7,536
Preferred dividends and accretion of discount	0	220	481	1,060
Income available to common shareholders	2,869	2,495	8,594	6,476
Weighted average common shares outstanding (in Shares)	8,073	7,948	8,047	7,924
Add dilutive effect of assumed exercises of options	$ 62	$ 40	$ 55	$ 20
Weighted average common and dilutive potential common shares outstanding (000) (in Shares)	8,135	7,988	8,102	7,944
Diluted Earnings per Share (in Dollars per share)	$ 0.35	$ 0.31	$ 1.06	$ 0.82
Basic Earnings per Share (in Dollars per share)	$ 0.36	$ 0.31	$ 1.07	$ 0.82

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Note 3 - Loans (Details) - Allowance for Credit Losses and Recorded Investment in Financing Receivables (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Note 3 - Loans (Details) - Allowance for Credit Losses and Recorded Investment in Financing Receivables [Line Items]
Provision for loan losses	$ 0	$ 1,364	$ 1,830	$ 6,352
Commercial and Industrial [Member]
Note 3 - Loans (Details) - Allowance for Credit Losses and Recorded Investment in Financing Receivables [Line Items]
Beginning Balance	1,821	2,404	1,896	2,485
Provision for loan losses	14	(238)	92	81
Loans charged off	(68)	(110)	(274)	(535)
Recoveries	106	34	159	59
Ending Balance	1,873	2,090	1,873	2,090
Commercial Real Estate Loans [Member]
Note 3 - Loans (Details) - Allowance for Credit Losses and Recorded Investment in Financing Receivables [Line Items]
Beginning Balance	10,237	11,215	11,565	11,534
Provision for loan losses	36	817	283	3,059
Loans charged off	(107)	(956)	(1,770)	(3,605)
Recoveries	109	277	197	365
Ending Balance	10,275	11,353	10,275	11,353
First Lien Residential Mortgage Loans [Member]
Note 3 - Loans (Details) - Allowance for Credit Losses and Recorded Investment in Financing Receivables [Line Items]
Beginning Balance	6,287	5,643	5,656	5,393
Provision for loan losses	71	845	1,626	2,138
Loans charged off	(587)	(571)	(1,570)	(1,744)
Recoveries	10	35	69	165
Ending Balance	5,781	5,952	5,781	5,952
Junior Lein Residential Mortgage Loans [Member]
Note 3 - Loans (Details) - Allowance for Credit Losses and Recorded Investment in Financing Receivables [Line Items]
Beginning Balance	569	523	555	505
Provision for loan losses	10	229	207	533
Loans charged off	(41)	(174)	(224)	(460)
Recoveries	0	0	0	0
Ending Balance	538	578	538	578
Consumer Loans [Member]
Note 3 - Loans (Details) - Allowance for Credit Losses and Recorded Investment in Financing Receivables [Line Items]
Beginning Balance	579	851	805	931
Provision for loan losses	87	94	(43)	209
Loans charged off	(79)	(163)	(367)	(547)
Recoveries	26	74	218	263
Ending Balance	613	856	613	856
Unallocated Financing Receivables [Member]
Note 3 - Loans (Details) - Allowance for Credit Losses and Recorded Investment in Financing Receivables [Line Items]
Beginning Balance	746	886	863	171
Provision for loan losses	(218)	(383)	(335)	332
Loans charged off	0	0	0	0
Recoveries	0	0	0	0
Ending Balance	528	503	528	503
Total [Member]
Note 3 - Loans (Details) - Allowance for Credit Losses and Recorded Investment in Financing Receivables [Line Items]
Beginning Balance	20,239	21,522	21,340	21,019
Provision for loan losses	0	1,364	1,830	6,352
Loans charged off	(882)	(1,974)	(4,205)	(6,891)
Recoveries	251	420	643	852
Ending Balance	$ 19,608	$ 21,332	$ 19,608	$ 21,332

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Note 3 - Loans (Details) - Average Recorded Investment and Income Recognized on Impaired Loans (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Commercial and Industrial [Member] | Period End Loans No Allocated Allowance For Loan Losses [Member]
Financing Receivable, Impaired [Line Items]
Average recorded investment	$ 984	$ 2,779	$ 1,050	$ 3,355
Interest income recognized	1	18	134	164
Commercial and Industrial [Member] | Allocated Allowance [Member]
Financing Receivable, Impaired [Line Items]
Average recorded investment	730	449	1,125	532
Interest income recognized	22	1	59	2
Commercial and Industrial [Member] | Average Recorded Investment and Income Recognized [Member]
Financing Receivable, Impaired [Line Items]
Average recorded investment	1,714	3,228	2,175	3,887
Interest income recognized	23	19	193	166
Commercial Real Estate Loans [Member] | Period End Loans No Allocated Allowance For Loan Losses [Member]
Financing Receivable, Impaired [Line Items]
Average recorded investment	7,387	9,260	8,163	10,463
Interest income recognized	40	113	557	648
Commercial Real Estate Loans [Member] | Allocated Allowance [Member]
Financing Receivable, Impaired [Line Items]
Average recorded investment	8,694	10,097	8,517	11,107
Interest income recognized	163	9	429	100
Commercial Real Estate Loans [Member] | Average Recorded Investment and Income Recognized [Member]
Financing Receivable, Impaired [Line Items]
Average recorded investment	16,081	19,357	16,680	21,570
Interest income recognized	203	122	986	748
First Lien Residential Mortgage Loans [Member] | Period End Loans No Allocated Allowance For Loan Losses [Member]
Financing Receivable, Impaired [Line Items]
Average recorded investment	0	9,451	0	9,749
Interest income recognized	0	56	0	295
First Lien Residential Mortgage Loans [Member] | Allocated Allowance [Member]
Financing Receivable, Impaired [Line Items]
Average recorded investment	7,420	0	8,977	0
Interest income recognized	68	0	318	0
First Lien Residential Mortgage Loans [Member] | Average Recorded Investment and Income Recognized [Member]
Financing Receivable, Impaired [Line Items]
Average recorded investment	7,420	9,451	8,977	9,749
Interest income recognized	68	56	318	295
Junior Lein Residential Mortgage Loans [Member] | Period End Loans No Allocated Allowance For Loan Losses [Member]
Financing Receivable, Impaired [Line Items]
Average recorded investment	0	530	0	487
Interest income recognized	0	2	0	9
Junior Lein Residential Mortgage Loans [Member] | Allocated Allowance [Member]
Financing Receivable, Impaired [Line Items]
Average recorded investment	388	0	497	0
Interest income recognized	3	0	14	0
Junior Lein Residential Mortgage Loans [Member] | Average Recorded Investment and Income Recognized [Member]
Financing Receivable, Impaired [Line Items]
Average recorded investment	388	530	497	487
Interest income recognized	3	2	14	9
Consumer Loans [Member] | Period End Loans No Allocated Allowance For Loan Losses [Member]
Financing Receivable, Impaired [Line Items]
Average recorded investment	0	481	0	414
Interest income recognized	0	2	0	15
Consumer Loans [Member] | Allocated Allowance [Member]
Financing Receivable, Impaired [Line Items]
Average recorded investment	117	0	268	0
Interest income recognized	1	0	13	0
Consumer Loans [Member] | Average Recorded Investment and Income Recognized [Member]
Financing Receivable, Impaired [Line Items]
Average recorded investment	117	481	268	414
Interest income recognized	1	2	13	15
Period End Loans No Allocated Allowance For Loan Losses [Member]
Financing Receivable, Impaired [Line Items]
Average recorded investment	8,371	22,501	9,213	24,468
Interest income recognized	41	191	691	1,131
Allocated Allowance [Member]
Financing Receivable, Impaired [Line Items]
Average recorded investment	17,349	10,546	19,384	11,639
Interest income recognized	257	10	833	102
Average Recorded Investment and Income Recognized [Member]
Financing Receivable, Impaired [Line Items]
Average recorded investment	25,720	33,047	28,597	36,107
Interest income recognized	$ 298	$ 201	$ 1,524	$ 1,233

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Note 6 - Fair Value (Details) - Assets Measured at Fair Value on a Recurring Basis (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Note 6 - Fair Value (Details) - Assets Measured at Fair Value on a Recurring Basis [Line Items]
Securities Available For Sale	$ 357,421	$ 353,678
Trading equity securities	8	6
US Government Agencies Debt Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Note 6 - Fair Value (Details) - Assets Measured at Fair Value on a Recurring Basis [Line Items]
Securities Available For Sale	0	0
US Government Agencies Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Note 6 - Fair Value (Details) - Assets Measured at Fair Value on a Recurring Basis [Line Items]
Securities Available For Sale	107,686	106,885
US Government Agencies Debt Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Note 6 - Fair Value (Details) - Assets Measured at Fair Value on a Recurring Basis [Line Items]
Securities Available For Sale	650	0
US Government Agencies Debt Securities [Member]
Note 6 - Fair Value (Details) - Assets Measured at Fair Value on a Recurring Basis [Line Items]
Securities Available For Sale	108,336	106,885
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Note 6 - Fair Value (Details) - Assets Measured at Fair Value on a Recurring Basis [Line Items]
Securities Available For Sale	0	0
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Note 6 - Fair Value (Details) - Assets Measured at Fair Value on a Recurring Basis [Line Items]
Securities Available For Sale	128,684	97,525
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Note 6 - Fair Value (Details) - Assets Measured at Fair Value on a Recurring Basis [Line Items]
Securities Available For Sale	17,673	20,289
US States and Political Subdivisions Debt Securities [Member]
Note 6 - Fair Value (Details) - Assets Measured at Fair Value on a Recurring Basis [Line Items]
Securities Available For Sale	146,357	117,814
Mortgage-backed Securities, Issued by Private Enterprises [Member] | Fair Value, Inputs, Level 1 [Member]
Note 6 - Fair Value (Details) - Assets Measured at Fair Value on a Recurring Basis [Line Items]
Securities Available For Sale	0	0
Mortgage-backed Securities, Issued by Private Enterprises [Member] | Fair Value, Inputs, Level 2 [Member]
Note 6 - Fair Value (Details) - Assets Measured at Fair Value on a Recurring Basis [Line Items]
Securities Available For Sale	63,103	66,277
Mortgage-backed Securities, Issued by Private Enterprises [Member] | Fair Value, Inputs, Level 3 [Member]
Note 6 - Fair Value (Details) - Assets Measured at Fair Value on a Recurring Basis [Line Items]
Securities Available For Sale	0	0
Mortgage-backed Securities, Issued by Private Enterprises [Member]
Note 6 - Fair Value (Details) - Assets Measured at Fair Value on a Recurring Basis [Line Items]
Securities Available For Sale	63,103	66,277
Collateralized Mortgage Obligations [Member] | Fair Value, Inputs, Level 1 [Member]
Note 6 - Fair Value (Details) - Assets Measured at Fair Value on a Recurring Basis [Line Items]
Securities Available For Sale	0	0
Collateralized Mortgage Obligations [Member] | Fair Value, Inputs, Level 2 [Member]
Note 6 - Fair Value (Details) - Assets Measured at Fair Value on a Recurring Basis [Line Items]
Securities Available For Sale	37,785	61,030
Collateralized Mortgage Obligations [Member] | Fair Value, Inputs, Level 3 [Member]
Note 6 - Fair Value (Details) - Assets Measured at Fair Value on a Recurring Basis [Line Items]
Securities Available For Sale	0	0
Collateralized Mortgage Obligations [Member]
Note 6 - Fair Value (Details) - Assets Measured at Fair Value on a Recurring Basis [Line Items]
Securities Available For Sale	37,785	61,030
Equity Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Note 6 - Fair Value (Details) - Assets Measured at Fair Value on a Recurring Basis [Line Items]
Securities Available For Sale	263	91
Equity Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Note 6 - Fair Value (Details) - Assets Measured at Fair Value on a Recurring Basis [Line Items]
Securities Available For Sale	0	0
Equity Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Note 6 - Fair Value (Details) - Assets Measured at Fair Value on a Recurring Basis [Line Items]
Securities Available For Sale	1,577	1,581
Equity Securities [Member]
Note 6 - Fair Value (Details) - Assets Measured at Fair Value on a Recurring Basis [Line Items]
Securities Available For Sale	1,840	1,672
Fair Value, Inputs, Level 1 [Member]
Note 6 - Fair Value (Details) - Assets Measured at Fair Value on a Recurring Basis [Line Items]
Securities Available For Sale	263	91
Trading equity securities	8	6
Fair Value, Inputs, Level 2 [Member]
Note 6 - Fair Value (Details) - Assets Measured at Fair Value on a Recurring Basis [Line Items]
Securities Available For Sale	337,258	331,717
Trading equity securities	0	0
Fair Value, Inputs, Level 3 [Member]
Note 6 - Fair Value (Details) - Assets Measured at Fair Value on a Recurring Basis [Line Items]
Securities Available For Sale	19,900	21,870
Trading equity securities	$ 0	$ 0

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Consolidated Balance Sheets Unaudited (Parentheticals) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Preferred stock, shares authorized (in Shares)	300,000	300,000
Preferred stock; shares issued (in Shares)	0	17,000
Preferred stock; shares outstanding (in Shares)	0	17,000
Preferred stock; par value (in Dollars per share)	$ 0	$ 0
Common stock; shares authorized (in Shares)	20,000,000	20,000,000
Common stock; shares issued (in Shares)	8,076,621	8,001,903
Common stock; shares outstanding (in Shares)	8,076,621	8,001,903

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Note 5 - Shareholders' Equity

9 Months Ended

Sep. 30, 2013

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

NOTE 5 – SHAREHOLDERS’ EQUITY

We are subject to various regulatory policies and requirements relating to the payment of dividends, including requirements to maintain adequate capital above regulatory minimums. At September 30, 2013 and year end 2012 we exceeded all requirements to be classified as well as capitalized.

On January 30, 2009 we issued 33,000 shares of Series A, no par value $1,000 liquidation preference, fixed rate cumulative perpetual preferred stock (Preferred Stock) and warrants to purchase 578,947 shares of our common stock at an exercise price of $8.55 per share (Warrants), to the U.S. Department of Treasury in return for $33 million under the Capital Purchase Program (CPP). Of the proceeds, $32.7 million was allocated to the Preferred Stock and $0.3 million was allocated to the Warrants based on the relative fair value of each. The discount on the Preferred Stock was being accreted using an effective yield method over ten years. The Preferred Stock and Warrants qualified as Tier 1 capital.

The Preferred Stock required quarterly cash dividends at a rate of 5% per year on the $1,000 liquidation preference while they were outstanding. Holders of shares of the Preferred Stock had no right to exchange or convert such shares into any other security of Firstbank Corporation and had no right to require the redemption or repurchase of the Preferred Stock. The Preferred Stock did not have a sinking fund. The Preferred Stock was non-voting, other than class voting rights on certain matters that could adversely affect the Preferred Stock.

On June 28, 2012 the U.S. Department of Treasury sold all of the shares of our Preferred Stock in a modified Dutch auction process. During the auction, we successfully bid on and retired 16,000 of the 33,000 outstanding shares of our Preferred Stock at a price of $941.01 per share, or $15.1 million aggregate price. As a result of the retirement of these shares, 17,000 shares remained outstanding and carried the same terms under which they were originally issued.

On June 14, 2013 we called the remaining 17,000 shares of our Preferred Stock at their liquidation preference value of $1,000 per outstanding share plus accrued dividends. As a result of the redemption, we no longer have any outstanding Preferred Stock.

The Warrants were immediately exercisable for 578,947 shares of our common stock at an exercise price of $8.55 per common share. The Warrants were transferrable and could be exercised at any time on or before January 30, 2019. We negotiated a repurchase of all of the outstanding warrants with the U.S. Treasury at a price of $1,946,670. The repurchase of these warrants occurred in July 2012 and reduced equity by the amount of the purchase price.

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Consolidated Statements of Comprehensive Income Unaudited (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Net income	$ 2,869	$ 2,715	$ 9,075	$ 7,536
Other comprehensive income/(loss):
Unrealized holding gains arising during the period	590	588	(4,218)	1,934
Less: reclassification adjustment for gains included in net income	0	(2)	(52)	(42)
Other comprehensive income before taxes	590	586	(4,270)	1,892
Income tax expense related to items in other comprehensive income	(201)	(199)	1,447	(643)
Other comprehensive income net of income tax effect from reclassification of $0 and $1 in 2013 and 2012, respectively	389	387	(2,823)	1,249
Comprehensive income	$ 3,258	$ 3,102	$ 6,252	$ 8,785

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Consolidated Balance Sheets Unaudited (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Assets:
Cash and due from banks	$ 28,944	$ 38,544
Short term investments	31,019	61,057
Total cash and cash equivalents	59,963	99,601
FDIC insured bank time certificates of deposit	1,440	2,927
Trading account securities	8	6
Securities available for sale	357,421	353,678
Federal Home Loan Bank stock	7,266	7,266
Loans held for sale	732	2,921
Loans	982,286	963,762
Allowance for loan losses	(19,608)	(21,340)
Premises and equipment, net	23,893	24,356
Goodwill	35,513	35,513
Core deposit and other intangibles	675	965
Other real estate owned	2,161	2,925
Accrued interest receivable and other assets	25,201	26,182
Total Assets	1,476,951	1,498,762
Deposits:
Non-interest bearing accounts	259,946	251,109
Interest bearing accounts:
Demand	359,926	348,598
Savings	276,783	265,323
Time	333,461	376,371
Total Deposits	1,230,116	1,241,401
Securities sold under agreements to repurchase and overnight borrowings	47,333	42,785
Federal Home Loan Bank advances and other borrowing	19,861	22,493
Subordinated debentures	36,084	36,084
Accrued interest and other liabilities	8,242	8,941
Total Liabilities	1,341,636	1,351,704
Shareholders’ Equity:
Preferred stock; no par value, 300,000 shares authorized, 0 issued and outstanding (17,000 at December 31, 2012)	0	16,908
Common stock; 20,000,000 shares authorized, 8,076,621 shares issued and outstanding (8,001,903 at December 31, 2012)	116,466	115,621
Retained earnings	18,064	10,921
Accumulated other comprehensive income	785	3,608
Total Shareholders’ Equity	135,315	147,058
Total Liabilities and Shareholders’ Equity	$ 1,476,951	$ 1,498,762

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Note 3 - Loans (Details) - Unpaid Principal Balance in Financing Receivables (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012	Sep. 30, 2013 Commercial and Industrial [Member]	Sep. 30, 2012 Commercial and Industrial [Member]	Sep. 30, 2013 Commercial Real Estate Loans [Member]	Sep. 30, 2012 Commercial Real Estate Loans [Member]	Sep. 30, 2013 First Lien Residential Mortgage Loans [Member]	Sep. 30, 2012 First Lien Residential Mortgage Loans [Member]	Sep. 30, 2013 Junior Lein Residential Mortgage Loans [Member]	Sep. 30, 2012 Junior Lein Residential Mortgage Loans [Member]	Sep. 30, 2013 Consumer Loans [Member]	Sep. 30, 2012 Consumer Loans [Member]	Sep. 30, 2013 Unallocated Financing Receivables [Member]	Sep. 30, 2012 Unallocated Financing Receivables [Member]	Sep. 30, 2013 Unpaid Principle Balance [Member]	Sep. 30, 2012 Unpaid Principle Balance [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance Ending balance: individually evaluated for impairment			$ 524	$ 321	$ 4,137	$ 3,479	$ 2,493	$ 0	$ 137	$ 0	$ 27	$ 0	$ 0	$ 0	$ 7,318	$ 3,800
Allowance Ending balance: collectively evaluated for impairment			1,349	1,769	6,138	7,874	3,288	5,952	401	578	586	856	528	503	12,290	17,532
Financing Receivable Ending balance	982,286	963,762	159,091	152,259	479,660	479,577	217,544	215,893	54,851	60,661	70,937	69,020	0	0	982,083	977,410
Financing Receivable Ending balance: individually evaluated for impairment			1,659	2,675	19,548	22,625	9,505	0	523	0	141	0	0	0	31,376	25,300
Financing Receivable Ending balance: collectively evaluated for impairment			$ 157,432	$ 149,584	$ 460,112	$ 456,952	$ 208,039	$ 215,893	$ 54,328	$ 60,661	$ 70,796	$ 69,020	$ 0	$ 0	$ 950,707	$ 952,110

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Note 2 - Securities (Details) - Unrealized Gains and Losses in Investments (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
Note 2 - Securities (Details) - Unrealized Gains and Losses in Investments [Line Items]
Amortized Cost	$ 356,203	$ 348,190
Unrealized Gains	3,329	5,658
Unrealized Losses	(2,111)	(170)
Carrying Value	357,421	353,678
US Government Agencies Debt Securities [Member]
Note 2 - Securities (Details) - Unrealized Gains and Losses in Investments [Line Items]
Amortized Cost	107,919	105,629
Unrealized Gains	641	1,271
Unrealized Losses	(224)	(15)
Carrying Value	108,336	106,885
US States and Political Subdivisions Debt Securities [Member]
Note 2 - Securities (Details) - Unrealized Gains and Losses in Investments [Line Items]
Amortized Cost	147,202	116,123
Unrealized Gains	811	1,786
Unrealized Losses	(1,656)	(95)
Carrying Value	146,357	117,814
Mortgage-backed Securities, Issued by Private Enterprises [Member]
Note 2 - Securities (Details) - Unrealized Gains and Losses in Investments [Line Items]
Amortized Cost	62,127	64,550
Unrealized Gains	1,149	1,729
Unrealized Losses	(173)	(2)
Carrying Value	63,103	66,277
Collateralized Mortgage Obligations [Member]
Note 2 - Securities (Details) - Unrealized Gains and Losses in Investments [Line Items]
Amortized Cost	37,344	60,278
Unrealized Gains	499	810
Unrealized Losses	(58)	(58)
Carrying Value	37,785	61,030
Equity Securities [Member]
Note 2 - Securities (Details) - Unrealized Gains and Losses in Investments [Line Items]
Amortized Cost	1,611	1,610
Unrealized Gains	229	62
Unrealized Losses	0	0
Carrying Value	$ 1,840	$ 1,672

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Note 6 - Fair Value (Details) - Assets Measured at Fair Value on a Nonrecurring Basis (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Note 6 - Fair Value (Details) - Assets Measured at Fair Value on a Nonrecurring Basis [Line Items]
Impaired loans	$ 24,164	$ 30,289
Other Real Estate Owned	2,161	2,925
Fair Value, Measurements, Nonrecurring [Member] | Estimate of Fair Value Measurement [Member]
Note 6 - Fair Value (Details) - Assets Measured at Fair Value on a Nonrecurring Basis [Line Items]
Impaired loans	31,374	36,388
Other Real Estate Owned	2,161	2,925
Other repossessed assets	50	250
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 1 [Member]
Note 6 - Fair Value (Details) - Assets Measured at Fair Value on a Nonrecurring Basis [Line Items]
Impaired loans	0	0
Other Real Estate Owned	0	0
Other repossessed assets	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 2 [Member]
Note 6 - Fair Value (Details) - Assets Measured at Fair Value on a Nonrecurring Basis [Line Items]
Impaired loans	0	0
Other Real Estate Owned	0	0
Other repossessed assets	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member]
Note 6 - Fair Value (Details) - Assets Measured at Fair Value on a Nonrecurring Basis [Line Items]
Impaired loans	31,374	36,388
Other Real Estate Owned	2,161	2,925
Other repossessed assets	$ 50	$ 250

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Note 5 - Shareholders' Equity (Details) (USD $)	1 Months Ended		9 Months Ended	12 Months Ended		0 Months Ended	1 Months Ended
	Jul. 31, 2012	Jan. 30, 2009	Sep. 30, 2013	Dec. 31, 2012	Jun. 14, 2013	Jun. 14, 2013 Series A Preferred Stock [Member]	Jun. 28, 2012 Series A Preferred Stock [Member]	Jan. 30, 2009 Series A Preferred Stock [Member]
Note 5 - Shareholders' Equity (Details) [Line Items]
Preferred Stock, Shares Issued			0	17,000				33,000
Preferred Stock, Liquidation Preference, Value (in Dollars)								$ 1,000
Class of Warrant or Right, Number of Securities Called by Warrants or Rights		578,947			578,947
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per Item)		8.55			8.55
Proceeds from Issuance or Sale of Equity (in Dollars)		33,000,000
Proceeds from Issuance of Convertible Preferred Stock (in Dollars)								32,700,000
Proceeds from Issuance of Warrants (in Dollars)		300,000
Fair Value Assumptions, Expected Term								10 years
Preferred Stock, Dividend Rate, Percentage								5.00%
Stock Repurchased and Retired During Period, Shares			17,000	16,000		17,000	16,000
Preferred Stock, Redemption Price Per Share (in Dollars per share)							$ 941.01
Payments for Repurchase of Convertible Preferred Stock (in Dollars)	$ 1,946,670						$ 15,100,000
Preferred Stock, Shares Outstanding			0	17,000			17,000

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Note 6 - Fair Value (Details) - Financial Instruments (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Financial Assets:
Carrying Amount	$ 1,476,951	$ 1,498,762
Financial Liabilities:
Carrying Amount	1,341,636	1,351,704
Interest Bearing Deposit Liabilities [Member] | Fair Value, Inputs, Level 1 [Member]
Financial Liabilities:
Estimated Fair Value	0	0
Interest Bearing Deposit Liabilities [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Liabilities:
Estimated Fair Value	0	0
Interest Bearing Deposit Liabilities [Member] | Fair Value, Inputs, Level 3 [Member]
Financial Liabilities:
Estimated Fair Value	(1,209,657)	(1,243,712)
Interest Bearing Deposit Liabilities [Member]
Financial Liabilities:
Carrying Amount	(1,230,116)	(1,241,401)
Estimated Fair Value	(1,209,657)	(1,243,712)
Securities Loaned or Sold under Agreements to Repurchase [Member] | Fair Value, Inputs, Level 1 [Member]
Financial Liabilities:
Estimated Fair Value	0	0
Securities Loaned or Sold under Agreements to Repurchase [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Liabilities:
Estimated Fair Value	(47,333)	(42,785)
Securities Loaned or Sold under Agreements to Repurchase [Member] | Fair Value, Inputs, Level 3 [Member]
Financial Liabilities:
Estimated Fair Value	0	0
Securities Loaned or Sold under Agreements to Repurchase [Member]
Financial Liabilities:
Carrying Amount	(47,333)	(42,785)
Estimated Fair Value	(47,333)	(42,785)
Federal Home Loan Bank Advance [Member] | Fair Value, Inputs, Level 1 [Member]
Financial Liabilities:
Estimated Fair Value	0	0
Federal Home Loan Bank Advance [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Liabilities:
Estimated Fair Value	0	0
Federal Home Loan Bank Advance [Member] | Fair Value, Inputs, Level 3 [Member]
Financial Liabilities:
Estimated Fair Value	(20,868)	(24,122)
Federal Home Loan Bank Advance [Member]
Financial Liabilities:
Carrying Amount	(19,861)	(22,493)
Estimated Fair Value	(20,868)	(24,122)
Subordinated Debt Obligations [Member] | Fair Value, Inputs, Level 1 [Member]
Financial Liabilities:
Estimated Fair Value	0	0
Subordinated Debt Obligations [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Liabilities:
Estimated Fair Value	0	0
Subordinated Debt Obligations [Member] | Fair Value, Inputs, Level 3 [Member]
Financial Liabilities:
Estimated Fair Value	(21,084)	(36,093)
Subordinated Debt Obligations [Member]
Financial Liabilities:
Carrying Amount	(36,084)	(36,084)
Estimated Fair Value	(21,084)	(36,093)
Cash and Cash Equivalents [Member] | Fair Value, Inputs, Level 1 [Member]
Financial Assets:
Estimated Fair Value	59,963	99,601
Cash and Cash Equivalents [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Assets:
Estimated Fair Value	0	0
Cash and Cash Equivalents [Member] | Fair Value, Inputs, Level 3 [Member]
Financial Assets:
Estimated Fair Value	0	0
Cash and Cash Equivalents [Member]
Financial Assets:
Carrying Amount	59,963	99,601
Estimated Fair Value	59,963	99,601
Certificates of Deposit [Member] | Fair Value, Inputs, Level 1 [Member]
Financial Assets:
Estimated Fair Value	1,440	2,927
Certificates of Deposit [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Assets:
Estimated Fair Value	0	0
Certificates of Deposit [Member] | Fair Value, Inputs, Level 3 [Member]
Financial Assets:
Estimated Fair Value	0	0
Certificates of Deposit [Member]
Financial Assets:
Carrying Amount	1,440	2,927
Estimated Fair Value	1,440	2,927
Trading Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Financial Assets:
Estimated Fair Value	8	6
Trading Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Assets:
Estimated Fair Value	0	0
Trading Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Financial Assets:
Estimated Fair Value	0	0
Trading Securities [Member]
Financial Assets:
Carrying Amount	8	6
Estimated Fair Value	8	6
Securities Available For Sale [Member] | Fair Value, Inputs, Level 1 [Member]
Financial Assets:
Estimated Fair Value	263	91
Securities Available For Sale [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Assets:
Estimated Fair Value	337,258	331,717
Securities Available For Sale [Member] | Fair Value, Inputs, Level 3 [Member]
Financial Assets:
Estimated Fair Value	19,900	21,870
Securities Available For Sale [Member]
Financial Assets:
Carrying Amount	357,421	353,678
Estimated Fair Value	357,421	353,678
Federal Home Loan Bank Stock [Member] | Fair Value, Inputs, Level 1 [Member]
Financial Assets:
Estimated Fair Value	0	0
Federal Home Loan Bank Stock [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Assets:
Estimated Fair Value	0	0
Federal Home Loan Bank Stock [Member] | Fair Value, Inputs, Level 3 [Member]
Financial Assets:
Estimated Fair Value	7,266	7,266
Federal Home Loan Bank Stock [Member]
Financial Assets:
Carrying Amount	7,266	7,266
Estimated Fair Value	7,266	7,266
Loans Held For Sale [Member] | Fair Value, Inputs, Level 1 [Member]
Financial Assets:
Estimated Fair Value	0	0
Loans Held For Sale [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Assets:
Estimated Fair Value	732	2,921
Loans Held For Sale [Member] | Fair Value, Inputs, Level 3 [Member]
Financial Assets:
Estimated Fair Value	0	0
Loans Held For Sale [Member]
Financial Assets:
Carrying Amount	732	2,921
Estimated Fair Value	732	2,921
Loans Receivable [Member] | Fair Value, Inputs, Level 1 [Member]
Financial Assets:
Estimated Fair Value	0	0
Loans Receivable [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Assets:
Estimated Fair Value	0	0
Loans Receivable [Member] | Fair Value, Inputs, Level 3 [Member]
Financial Assets:
Estimated Fair Value	969,656	930,354
Loans Receivable [Member]
Financial Assets:
Carrying Amount	962,678	942,422
Estimated Fair Value	$ 969,656	$ 930,354

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Note 4 - Borrowings

9 Months Ended

Sep. 30, 2013

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

NOTE 4 – BORROWINGS

On May 17, 2013 we instituted a two year $10 million revolving line of credit agreement at a variable rate of prime rate plus 0.125% on the outstanding balance of the line. We borrowed $8 million on the line in June to facilitate the redemption of our preferred stock. At September 30, the line of credit had $0 outstanding. The line of credit is subject to standard industry covenants and required pledging of the stock in our two banking affiliates as collateral for the loan and requires quarterly interest payments. The line of credit will expire on May 17, 2015.

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Note 3 - Loans (Details) - Age Analysis of Past Due Loans Excluding Nonaccrual Loans (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	$ 2,783	$ 2,490
60-89 Days Past Due	1,486	3,125
90 Days or More Past Due	26	37
Total Past Due	4,295	5,652
Nonaccrual loans	11,204	15,668
Current	966,787	942,442
Total Financing Receivables	982,286	963,762
Recorded Investment > 90 days and accruing	26	37
Commercial and Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	685	206
60-89 Days Past Due	46	140
90 Days or More Past Due	0	0
Total Past Due	731	346
Nonaccrual loans	111	448
Current	158,249	149,250
Total Financing Receivables	159,091	150,044
Recorded Investment > 90 days and accruing	0	0
Commercial Real Estate Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	625	604
60-89 Days Past Due	324	1,881
90 Days or More Past Due	14	0
Total Past Due	963	2,485
Nonaccrual loans	5,914	8,452
Current	472,783	461,760
Total Financing Receivables	479,660	472,697
Recorded Investment > 90 days and accruing	14	0
First Lien Residential Mortgage Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	789	772
60-89 Days Past Due	1,039	969
90 Days or More Past Due	12	37
Total Past Due	1,840	1,778
Nonaccrual loans	4,868	6,040
Current	210,836	206,578
Total Financing Receivables	217,544	214,396
Recorded Investment > 90 days and accruing	12	37
Junior Lein Residential Mortgage Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	379	473
60-89 Days Past Due	19	96
90 Days or More Past Due	0	0
Total Past Due	398	569
Nonaccrual loans	275	327
Current	54,178	57,851
Total Financing Receivables	54,851	58,747
Recorded Investment > 90 days and accruing	0	0
Consumer Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	305	435
60-89 Days Past Due	58	39
90 Days or More Past Due	0	0
Total Past Due	363	474
Nonaccrual loans	36	401
Current	70,538	66,798
Total Financing Receivables	70,937	67,673
Recorded Investment > 90 days and accruing	0	0
Deferred Fees and Costs [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	0	0
60-89 Days Past Due	0	0
90 Days or More Past Due	0	0
Total Past Due	0	0
Nonaccrual loans	0	0
Current	203	205
Total Financing Receivables	203	205
Recorded Investment > 90 days and accruing	$ 0	$ 0

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Note 7 - Basic And Diluted Earnings Per Share

9 Months Ended

Sep. 30, 2013

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

NOTE 7 – BASIC AND DILUTED EARNINGS PER SHARE

(In thousands of dollars except per share data)	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Earnings per share
Net income	$	2,869	$	2,715	$	9,075	$	7,536
Preferred stock dividends and accretion of discount		0		220		481		1,060
Income available to common shareholders	$	2,869	$	2,495	$	8,594	$	6,476
Weighted average common shares outstanding (000)		8,073		7,948		8,047		7,924
Basic Earnings per Share	$	0.36	$	0.31	$	1.07	$	0.82
Earnings per share assuming dilution
Net income	$	2,869	$	2,715	$	9,075	$	7,536
Preferred stock dividends and accretion of discount		0		220		481		1,060
Income available to common shareholders	$	2,869	$	2,495	$	8,594	$	6,476
Weighted average common shares outstanding (000)		8,073		7,948		8,047		7,924
Add dilutive effect of assumed exercises of options		62		40		55		20
Weighted average common and dilutive potential common shares outstanding (000)		8,135		7,988		8,102		7,944
Diluted Earnings per Share	$	0.35	$	0.31	$	1.06	$	0.82

Stock options for 216,814 shares for the three and nine months of 2013, were not considered in computing diluted earnings per share because they were anti-dilutive. Stock options and warrants for 254,497 shares for the three months and 292,447 for the nine months of 2012, were not considered in computing diluted earnings per share because they were anti-dilutive.

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Note 3 - Loans

9 Months Ended

Sep. 30, 2013

Receivables [Abstract]

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

NOTE 3 - LOANS

The following information provides a description of how loan grades are determined for our Commercial and Industrial and Commercial Real Estate segments. In general, for Commercial and Industrial and Commercial Real Estate segments, the probability of loss increases with each rate change from the Grade 1 Excellent down through the Grade 9 Doubtful Nonaccrual classes. For Consumer and Residential Mortgage segments, the probability of loss increases as loans move down from current to greater than 60 days past due, nonaccrual.

Grade 1 Excellent – Characteristics of loans in this category include: the loan is generally secured by cash or readily marketable securities; the borrower provides annual audited financials with interim financials reviewed quarterly; the loan has no delinquencies over ten days in the past year; the company’s management is considered to have a high degree of integrity; management of the company has over 15 years of experience; lines of credit have not and are not expected to be utilized; financial statements demonstrate consistently strong profits; and the company has little competition and excellent growth prospects.

Grade 2 Quality – Characteristics of loans in this category include: high net worth borrowers with excellent cash flow and a high degree of liquidity; the borrower generally has annual audited financial statements; there has been one or fewer delinquencies over ten days in the past year; the company’s management is considered to have a high degree of integrity; the company’s management has over ten years of experience; lines of credit have had nominal use over the preceding 12 months; financial statements demonstrate consistent profitability; and the company is in an excellent competitive position.

Grade 3 Good – Loans in this category are very strong, but may lack some of the net worth and/or cash flow characteristics of the previous rating. Characteristics of loans in this category include: annual reviewed financial statements and compiled quarterly financial statements; there has only been one or fewer delinquencies over 15 days in the past year; the company’s management has solid integrity; the company’s management is capable and has over five years of experience; lines of credit have regular usage with no balance in the last 60 days; financial statements demonstrate consistent but nominal profits; and the company has good a solid market share.

Grade 4 Acceptable – Characteristics of loans in this category include: annual compiled financial statements with quarterly information available or CPA prepared tax returns; there are only two or fewer delinquencies over 15 days of which only one is over 30 days in the past year; the company’s management has average business experience of over three years; lines of credit have regular use but have no current balance or a significant reduction in balance in the last 30 days; the company has been profitable in two of the preceding three years; and the company is competitive in its market and is maintaining its market share.

Loans graded as one through four are considered as Pass loans and are shown as one class of loans in our credit quality table.

Grade 5 Watch – This rating is used for loans which have shown some sign of weakness, but have not degraded to the point of requiring an impairment review. Characteristics of loans in this rating include: annual management prepared financial statements; delinquencies not exceeding three times over 30 days or one time over 60 days in the past year; weakening financial statements but profitable in two of the last three years; and a declining market share in a competitive market. These loans merit monitoring by management to assure that if circumstances deteriorate further actions are taken to protect the bank’s position.

Grade 6 Special Mention – This rating is used for loans which are included on a watch list and have degraded to a point where additional supervision is required; however, the bank remains confident in the full collection of all principal and interest. These loans are reviewed for impairment on a quarterly basis. Characteristics of loans in this rating may include: repeat delinquency; longer term negative trends in financial results; continuing deterioration of cash flows; concerns regarding the liquidity of guarantors; and other negative business trends.

Grade 7 Substandard – This rating is for loans for which a lender is actively working with the borrower to resolve issues and the full repayment of the loan is questionable. The loan is inadequately protected by current sound worth of the borrower, paying capacity of the guarantor, or pledged collateral. Loans in this grade have well defined weaknesses that jeopardize the full collectability of the loan and a distinct possibility of loss exists. These loans are reviewed for potential impairment on a quarterly basis. Characteristics of loans in this rating may include: persistent delinquency; poor financial results of the business; negative cash flow; and the ability of guarantor(s) to provide support for the loan is questionable.

Grade 8 Impaired Nonaccrual – This rating is for loans which are considered impaired and classified as nonaccrual. Loans in this grade have all the weaknesses of those classified as substandard grade 7 above, with the added characteristic that, based upon currently known facts, the weaknesses make collection of all principal and interest due according to contractual terms unlikely. These loans are reviewed for impairment on a quarterly basis. Loans in this grade may be assigned an allocated reserve in the loan loss allowance analysis if a determination is made that the future cash flows or the value of the collateral do not support the current carrying value of the loan.

Grade 9 Doubtful Nonaccrual – This rating is for loans which are considered impaired and are classified as nonaccrual. Loans in this grade have all the weaknesses of those classified as impaired nonaccrual grade 8 above, with the added characteristic that the weaknesses make full collection through payment or liquidation of the collateral, based on currently known facts, highly questionable or improbable. These loans are reviewed for impairment on a quarterly basis. Loans in this grade may be assigned an allocated reserve in the loan loss allowance analysis if a determination is made that the future cash flows or the value of the collateral do not support the current carrying value of the loan.

Restructured Loans

Impaired Restructured and Accruing – Loans where the borrower is experiencing financial difficulty and the bank has granted a concession to the borrower. A concession may be: a reduction in the contractual interest rate below current market rates for loans of similar quality, a lengthening of the accrual time frame beyond normal market terms, a forgiveness of a portion of the outstanding principal, or acceptance of collateral in lieu of payment for a portion of the loan balance. If the loan is in accrual status at the time of the restructuring, the borrower has the ability to make the payments under the restructured terms, and the restructuring does not forgive principal, the loan remains on an accrual status under the new terms. However, if there is a forgiveness of debt or partial charge off, the loan will generally be graded as impaired nonaccrual (Grade 8) with any accrued interest reversed against interest income. If a loan is in nonaccrual status at the time of a restructuring, it will remain in nonaccrual status (Grade 8) at the time of restructuring. All non-accruing restructured loans remain in nonaccrual status until the borrower has demonstrated the ability to make the payments under the restructured terms by making a minimum of six months of payments. If the borrower makes the six months of payments without becoming past due 30 days or more, the loan may be returned to accrual status. The determination of the need for an allowance for loan loss adjustment is based on a factor relating to historical losses multiplied by the balance of the loan for residential mortgages, or a collateral impairment review for commercial loans, and a net present value adjustment relating to a change in interest rate and other terms, if applicable.

Impaired Restructured and Accruing loans are graded seven or better based on the above definitions. If a restructured loan is graded as eight or nine, it is reported as Impaired Nonaccrual or Doubtful Nonaccrual, respectively.

For commercial loans graded eight and nine and consumer and residential mortgage loans reported in nonaccrual, interest income is generally not recognized until the loan improves and is returned to accrual status. In some cases, if the loan is well secured and the borrower’s ability to support the loan payments has improved, such as in the case of a restructured nonaccrual loan, interest income may be recognized on a cash basis while the loan is in nonaccrual status.

For consumer and residential mortgage loan segments, loans are classified by risk based on current delinquency and nonaccrual status. These segments of loans will contain a separate class for restructured loans, if they exist.

The following credit quality indicators provide a system for distribution of our loan portfolio in a manner consistent with the previously described loan grading system and for use in the determination of our loan loss allowance. This presentation differs somewhat by loan category from classification of loans presented elsewhere in our regulatory reports and within this report. These variations primarily relate to how real estate loans are analyzed internally to determine the adequacy of the loan loss allowance, versus how we are required to report real estate loans for regulatory purposes.

Credit Quality Indicators:

Loans at period end were as follows:

(In thousands of dollars)	September 30, 2013		December 31, 2012
Commercial and Industrial
Pass loans	$	142,668	$	133,678
Watch loans		6,629		5,367
Special mention loans		5,957		5,436
Substandard loans		2,178		1,881
Impaired restructured and accruing loans		1,548		3,234
Impaired nonaccrual loans		111		448
Doubtful nonaccrual loans		0		0
Total Commercial and Industrial		159,091		150,044
Commercial Real Estate
Pass loans	$	388,944	$	373,577
Watch loans		48,542		50,790
Special mention loans		16,747		18,117
Substandard loans		5,879		9,655
Impaired restructured and accruing loans		13,634		12,106
Impaired nonaccrual loans		5,914		8,427
Doubtful nonaccrual loans		0		25
Total Commercial Real Estate		479,660		472,697
First lien residential mortgage loans
Performing loans	$	206,987	$	202,357
Loans > 60 days past due		1,052		1,046
Impaired restructured and accruing loans		4,637		4,953
Nonaccrual loans		4,868		6,040
Total First lien residential mortgage loans		217,544		214,396
Junior lien residential mortgage loans
Performing loans	$	54,309	$	58,089
Loans > 60 days past due		19		96
Impaired restructured and accruing loans		248		235
Nonaccrual loans		275		327
Total Junior lien residential mortgage loans		54,851		58,747
Consumer Loans
Performing loans	$	70,738	$	67,042
Loans > 60 days past due		58		39
Impaired restructured and accruing loans		105		191
Nonaccrual loans		36		401
Total Consumer Loans		70,937		67,673
Deferred Fees and Costs		203		205
Total Loans	$	982,286	$	963,762

Allowance for Loan Losses

The allowance for loan losses is determined based on management’s estimate of probable losses incurred within the loan portfolio as of the balance sheet date. We determine the amount of the allowance for loan losses based on periodic evaluation of the loan portfolios and other relevant factors. This evaluation is inherently subjective and requires material estimates, which are subject to change. Factors that are considered in the evaluation of individual, and pools of loans, include: historical loss experience; likelihood of default; liquidation value of a loan’s underlying collateral; timing and amounts of expected future cash flows; and our exposure to loss in the event of default. We further estimate the impact of qualitative factors that may cause future losses to differ from historical experience. Such factors include: changes in credit quality, macro economic impacts on our customers, and changes in underwriting standards.

Our historical loss experience is determined based on actual losses incurred over the previous twelve quarters. We utilize a method of averaging these losses whereby we place a heavier emphasis on more recent experience. Our model provides a 50% weighting on the most recent four quarters, 30% weighting on the middle four quarters, and 20% weighting on the oldest four quarters.

The loan portfolio is segmented into five loan types: commercial and industrial loans; commercial real estate loans; consumer loans; residential mortgages – first liens; and residential mortgage – junior liens. These segments are further grouped by credit quality classifications.

The segments comprising commercial and industrial loans and commercial real estate loans are classified based on the loan grading system described above. We group loans rated as one through four together into one class of pass loans. Commercial and industrial and commercial real estate loans graded as pass and watch are assigned a unique pooled loss rate based on historical losses incurred over the prior three years as described above. We adjust the calculated historical loss rate up or down based on current developments, that in management’s judgment are not reflected in the historical losses of the company. The current outstanding balance for each of these classes of loans is then multiplied by the adjusted historical loss rate to determine the amount of allowance for loan losses to reserve on that pool of loans.

Loans graded special mention use a shorter 12 month loss history to determine the loss rate. Losses over the preceding 12 month period are divided by the average balance outstanding of substandard and impaired loans to determine a historical loss rate. That calculated historical loss rate is multiplied by a probability factor to determine a loss rate to be applied to this class of loans. The probability factor is determined from an analysis of the migration of special mention loans to more severe risk classes over the preceding 12 month period.

Loans graded as substandard use the shorter 12 month loss history to determine the loss rate. Losses over the preceding 12 month period are divided by the average balance outstanding of substandard and impaired loans to determine a historical loss rate. The calculated historical loss rate, without adjustment for migration, is then multiplied times the outstanding balance of substandard loans to determine the amount of allowance for loan losses to provide for this class of loans.

Loans graded as impaired nonaccrual, doubtful nonaccrual, and impaired restructured and accruing are individually analyzed for loan losses. An allocated reserve is established within the allowance for loan losses for the difference between the carrying value of the loan and its determined collectable value. To determine the collectable value of the loan, the present value of expected cash flows, the collateral value, or some combination of the two is used. The allocated reserve is established as the difference between the carrying value of the loan and the collectable value.

For consumer and residential mortgage loan segments, loans that are current, or less than 60 days past due are assigned a unique historical loss rate as described above for commercial pass and watch loans. For loans that are more than 60 days past due including nonaccrual loans, a loss rate is determined based on charge offs within the last 12 months, divided by the sum of the average balance of loans 60 days or more past due and nonaccrual loans. These loss rates are multiplied by the outstanding balances in each unique loan segment at the end of the reporting period to determine the amount of allowance for loan loss.

For restructured loans where the bank has granted a rate concession, an additional amount is added to the loan loss reserve that represents the difference in the present value of the cash flows between the original terms and the new terms of the modified loan, using the original interest rate of the loan as a discount rate. Any change in the present value of the loan due to passage of time is reflected as an adjustment to provision for loan loss expense.

After each of the steps outlined above is completed, the results are aggregated and compared with the existing balance of the allowance for loan losses. If the aggregation is greater than the balance, the allowance for loan losses is increased through a charge to earnings on the provision for loan losses line. If the resulting aggregation is below the current balance of the allowance for loan losses, management will determine, based upon the number, potential impact, and uncertainty of the estimates contained within the process whether the unallocated reserve is excessive. If in management’s judgment the unallocated reserve exceeds a level deemed prudent given the inherent uncertainty of these issues, a reversal of the provision for loan losses may be recorded.

Allowance for credit losses for the three months ended September 30 were:

(In thousands of dollars)
Three months ending September 30, 2013	Commercial and Industrial			Commercial Real Estate			First Lien Residential Mortgages			Junior Lien Residential Mortgages			Consumer Loans			Unallocated			Total
Allowance for Credit Losses:
Beginning balance	$	1,821		$	10,237		$	6,287		$	569		$	579		$	746		$	20,239
Provision for loan losses		14			36			71			10			87			(218	)		0
Loans charged off		(68	)		(107	)		(587	)		(41	)		(79	)		0			(882	)
Recoveries		106			109			10			0			26			0			251
Ending balance	$	1,873		$	10,275		$	5,781		$	538		$	613		$	528		$	19,608
Three months ending September 30, 2012
Allowance for Credit Losses:
Beginning balance	$	2,404		$	11,215		$	5,643		$	523		$	851		$	886		$	21,522
Provision for loan losses		(238	)		817			845			229			94			(383	)		1,364
Loans charged off		(110	)		(956	)		(571	)		(174	)		(163	)		0			(1,974	)
Recoveries		34			277			35			0			74			0			420
Ending balance	$	2,090		$	11,353		$	5,952		$	578		$	856		$	503		$	21,332

Allowance for credit losses for the nine months ended September 30 were:

Nine months ending September 30, 2013	Commercial and Industrial			Commercial Real Estate			First Lien Residential Mortgages			Junior Lien Residential Mortgages			Consumer Loans			Unallocated			Total
Allowance for Credit Losses:
Beginning balance	$	1,896		$	11,565		$	5,656		$	555		$	805		$	863		$	21,340
Provision for loan losses		92			283			1,626			207			(43	)		(335	)		1,830
Loans charged off		(274	)		(1,770	)		(1,570	)		(224	)		(367	)		0			(4,205	)
Recoveries		159			197			69			0			218			0			643
Ending balance	$	1,873		$	10,275		$	5,781		$	538		$	613		$	528		$	19,608
Nine months ending September 30, 2012
Allowance for Credit Losses:
Beginning balance	$	2,485		$	11,534		$	5,393		$	505		$	931		$	171		$	21,019
Provision for loan losses		81			3,059			2,138			533			209			332			6,352
Loans charged off		(535	)		(3,605	)		(1,744	)		(460	)		(547	)		0			(6,891	)
Recoveries		59			365			165			0			263			0			852
Ending balance	$	2,090		$	11,353		$	5,952		$	578		$	856		$	503		$	21,332

Unpaid principal balance in financing receivables at period end were:

(In thousands of dollars)					First Lien		Junior Lien
September 30, 2013	Commercial and Industrial		Commercial Real Estate		Residential Mortgages		Residential Mortgages		Consumer Loans		Unallocated		Total
Allowance for Credit Losses:
Ending balance: individually evaluated for impairment	$	524	$	4,137	$	2,493	$	137	$	27	$	0	$	7,318
Ending balance: collectively evaluated for impairment	$	1,349	$	6,138	$	3,288	$	401	$	586	$	528	$	12,290
Financing Receivables:
Ending balance	$	159,091	$	479,660	$	217,544	$	54,851	$	70,937	$	0	$	982,083
Ending balance: individually evaluated for impairment	$	1,659	$	19,548	$	9,505	$	523	$	141	$	0	$	31,376
Ending balance: collectively evaluated for impairment	$	157,432	$	460,112	$	208,039	$	54,328	$	70,796	$	0	$	950,707
September 30, 2012
Allowance for Credit Losses:
Ending balance: individually evaluated for impairment	$	321	$	3,479	$	0	$	0	$	0	$	0	$	3,800
Ending balance: collectively evaluated for impairment	$	1,769	$	7,874	$	5,952	$	578	$	856	$	503	$	17,532
Financing Receivables:
Ending balance	$	152,259	$	479,577	$	215,893	$	60,661	$	69,020	$	0	$	977,410
Ending balance: individually evaluated for impairment	$	2,675	$	22,625	$	0	$	0	$	0	$	0	$	25,300
Ending balance: collectively evaluated for impairment	$	149,584	$	456,952	$	215,893	$	60,661	$	69,020	$	0	$	952,110

Age Analysis of Past Due Loans:

(In thousands of dollars)															Recorded
At September 30, 2013	30-59 Days Past Due		60-89 Days Past Due		90 Day s or More Past Due		Total Past Due		Nonaccrual loans		Current		Total Financing Receivables		Investment > 90 days and accruing
Commercial and Industrial	$	685	$	46	$	0	$	731	$	111	$	158,249	$	159,091	$	0
Commercial Real Estate		625		324		14		963		5,914		472,783		479,660		14
Residential Mortgages First Liens		789		1,039		12		1,840		4,868		210,836		217,544		12
Residential Mortgages Junior Liens		379		19		0		398		275		54,178		54,851		0
Consumer		305		58		0		363		36		70,538		70,937		0
Deferred Fees and Costs		0		0		0		0		0		203		203		0
Total	$	2,783	$	1,486	$	26	$	4,295	$	11,204	$	966,787	$	982,286	$	26
At December 31, 2012
Commercial and Industrial	$	206	$	140	$	0	$	346	$	448	$	149,250	$	150,044	$	0
Commercial Real Estate		604		1,881		0		2,485		8,452		461,760		472,697		0
Residential Mortgages First Liens		772		969		37		1,778		6,040		206,578		214,396		37
Residential Mortgages Junior Liens		473		96		0		569		327		57,851		58,747		0
Consumer		435		39		0		474		401		66,798		67,673		0
Deferred Fees and Costs		0		0		0		0		0		205		205		0
Total	$	2,490	$	3,125	$	37	$	5,652	$	15,668	$	942,442	$	963,762	$	37

Impaired loans were as follows:

(In thousands of dollars)			Unpaid
September 30, 2013	Recorded Investment		Principal Balance		Related Allowance
Period end loans with no allocated allowance for loan losses
Commercial and Industrial	$	341	$	337		0
Commercial Real Estate		6,692		6,676		0
Residential Mortgages First Liens		0		0		0
Residential Mortgages Junior Liens		0		0		0
Consumer		0		0		0
Total	$	7,033	$	7,013	$	0
Period end loans with allocated allowance for loan losses
Commercial and Industrial	$	805	$	1,322	$	524
Commercial Real Estate		8,767		12,871		4,137
Residential Mortgages First Liens		7,058		9,504		2,493
Residential Mortgages Junior Liens		386		523		137
Consumer		115		141		27
Total	$	17,131	$	24,361	$	7,318
Total
Commercial and Industrial	$	1,146	$	1,659	$	524
Commercial Real Estate		15,459		19,545		4,137
Residential Mortgages First Liens		7,058		9,505		2,493
Residential Mortgages Junior Liens		386		523		137
Consumer		115		141		27
Total	$	24,164	$	31,376	$	7,318
December 31, 2012
Period end loans with no allocated allowance for loan losses
Commercial and Industrial	$	891	$	891		0
Commercial Real Estate		9,215		9,212		0
Residential Mortgages First Liens		0		0		0
Residential Mortgages Junior Liens		0		0		0
Consumer		0		0		0
Total	$	10,106	$	10,103	$	0
Period end loans with allocated allowance for loan losses
Commercial and Industrial	$	2,273	$	2,792	$	515
Commercial Real Estate		8,377		11,346		2,971
Residential Mortgages First Liens		8,695		10,993		2,298
Residential Mortgages Junior Liens		472		562		90
Consumer		366		592		226
Total	$	20,183	$	26,285	$	6,100
Total
Commercial and Industrial	$	3,164	$	3,683	$	515
Commercial Real Estate		17,592		20,558		2,971
Residential Mortgages First Liens		8,695		10,993		2,298
Residential Mortgages Junior Liens		472		562		90
Consumer		366		592		226
Total	$	30,289	$	36,388	$	6,100

Note: Recorded investment includes principal outstanding plus deferred fee and accrued interest, net of related allowance for loan losses.

Average recorded investment and income recognized on impaired loans were as follows:

	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
(In thousands of dollars)	Three months ended September 30, 2013				Three months ended September 30, 2012
Period end loans with no allocated allowance for loan losses
Commercial and Industrial	$	984	$	1	$	2,779	$	18
Commercial Real Estate		7,387		40		9,260		113
Residential Mortgages First Liens		0		0		9,451		56
Residential Mortgages Junior Liens		0		0		530		2
Consumer		0		0		481		2
Total	$	8,371	$	41	$	22,501	$	191
Period end loans with allocated allowance for loan losses
Commercial and Industrial	$	730	$	22	$	449	$	1
Commercial Real Estate		8,694		163		10,097		9
Residential Mortgages First Liens		7,420		68		0		0
Residential Mortgages Junior Liens		388		3		0		0
Consumer		117		1		0		0
Total	$	17,349	$	257	$	10,546	$	10
Total
Commercial and Industrial	$	1,714	$	23	$	3,228	$	19
Commercial Real Estate		16,081		203		19,357		122
Residential Mortgages First Liens		7,420		68		9,451		56
Residential Mortgages Junior Liens		388		3		530		2
Consumer		117		1		481		2
Total	$	25,720	$	298	$	33,047	$	201

	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
(In thousands of dollars)	Nine months ended September 30, 2013				Nine months ended September 30, 2012
Period end loans with no allocated allowance for loan losses
Commercial and Industrial	$	1,050	$	134	$	3,355	$	164
Commercial Real Estate		8,163		557		10,463		648
Residential Mortgages First Liens		0		0		9,749		295
Residential Mortgages Junior Liens		0		0		487		9
Consumer		0		0		414		15
Total	$	9,213	$	691	$	24,468	$	1,131
Period end loans with allocated allowance for loan losses
Commercial and Industrial	$	1,125	$	59	$	532	$	2
Commercial Real Estate		8,517		429		11,107		100
Residential Mortgages First Liens		8,977		318		0		0
Residential Mortgages Junior Liens		497		14		0		0
Consumer		268		13		0		0
Total	$	19,384	$	833	$	11,639	$	102
Total
Commercial and Industrial	$	2,175	$	193	$	3,887	$	166
Commercial Real Estate		16,680		986		21,570		748
Residential Mortgages First Liens		8,977		318		9,749		295
Residential Mortgages Junior Liens		497		14		487		9
Consumer		268		13		414		15
Total	$	28,597	$	1,524	$	36,107	$	1,233

Loan modifications as of the period ending:

(In thousands of dollars)	Troubled Debt Restructurings						Troubled Debt Restructurings that Subsequently Defaulted
	Number of  contracts		Pre-modification outstanding recorded investment		Post-modification outstanding recorded investment		Number of contracts		Recorded investment
Quarter to date:
September 30, 2013
Commercial and industrial		2	$	219	$	217		0	$	0
Commercial real estate		0		0		0		0		0
Residential First Liens		1		203		134		2		172
Residential junior liens		0		0		0		0		0
Consumer		0		0		0		0		0
Total		3	$	422	$	351		2	$	172
September 30, 2012
Commercial and industrial		3	$	190	$	187		0	$	0
Commercial real estate		4		1,613		1,590		0		0
Residential First Liens		6		871		870		1		64
Residential junior liens		1		15		15		1		9
Consumer		0		0		0		0		0
Total		14	$	2,689	$	2,662		2	$	73
Year to date:
September 30, 2013
Commercial and industrial		5	$	308	$	305		2	$	100
Commercial real estate		5		1,661		1,671		0		0
Residential First Liens		6		1,040		970		5		568
Residential junior liens		1		19		19		0		0
Consumer		0		0		0		0		0
Total		17	$	3,028	$	2,965		7	$	668
September 30, 2012
Commercial and industrial		9	$	998	$	988		5	$	1,143
Commercial real estate		12		3,598		3,573		4		401
Residential First Liens		16		1,673		1,669		1		64
Residential junior liens		3		118		118		1		9
Consumer		2		107		107		0		0
Total		42	$	6,494	$	6,455		11	$	1,617

XML

Consolidated Statements of Changes in Shareholders’ Equity (USD $) In Thousands	Common Stock [Member]	Preferred Stock [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Total
Balances at Dec. 31, 2011	$ 115,734	$ 32,792	$ 3,955	$ 2,896	$ 155,377
Net income			10,534		10,534
Cash dividends on common stock			(2,314)		(2,314)
Accrued dividends on preferred stock and accretion of discount on preferred stock		22	(1,269)		(1,247)
Redemption of preferred stock	850	(15,906)			(15,056)
Amortization of stock warrants	(15)		15		0
Repurchase of stock warrants	(1,947)				(1,947)
Issuance of shares of common stock through the dividend reinvestment plan	440				440
Issuance of shares of common stock from supplemental shareholder investments	201				201
Issuance of shares of common stock	262				262
Stock option and restricted stock expense	96				96
Net change in unrealized gain/(loss) on securities available for sale, net of tax				712	712
Balances at Dec. 31, 2012	115,621	16,908	10,921	3,608	147,058
Net income			9,075		9,075
Cash dividends on common stock			(1,451)		(1,451)
Accrued dividends on preferred stock and accretion of discount on preferred stock		92	(481)		(389)
Redemption of preferred stock		(17,000)			(17,000)
Repurchase of stock warrants					0
Issuance of shares of common stock through the dividend reinvestment plan	176				176
Issuance of shares of common stock from supplemental shareholder investments	111				111
Issuance of shares of common stock	489				489
Stock option and restricted stock expense	69				69
Net change in unrealized gain/(loss) on securities available for sale, net of tax				(2,823)	(2,823)
Balances at Sep. 30, 2013	$ 116,466	$ 0	$ 18,064	$ 785	$ 135,315

XML

Note 3 - Loans (Details) - Loan Modifications (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended
	Sep. 30, 2013 Commercial and Industrial [Member] Quarter to Date [Member]	Sep. 30, 2012 Commercial and Industrial [Member] Quarter to Date [Member]	Sep. 30, 2013 Commercial and Industrial [Member] Year to Date [Member]	Sep. 30, 2012 Commercial and Industrial [Member] Year to Date [Member]	Sep. 30, 2013 Commercial Real Estate Loans [Member] Quarter to Date [Member]	Sep. 30, 2012 Commercial Real Estate Loans [Member] Quarter to Date [Member]	Sep. 30, 2013 Commercial Real Estate Loans [Member] Year to Date [Member]	Sep. 30, 2012 Commercial Real Estate Loans [Member] Year to Date [Member]	Sep. 30, 2013 First Lien Residential Mortgage Loans [Member] Quarter to Date [Member]	Sep. 30, 2012 First Lien Residential Mortgage Loans [Member] Quarter to Date [Member]	Sep. 30, 2013 First Lien Residential Mortgage Loans [Member] Year to Date [Member]	Sep. 30, 2012 First Lien Residential Mortgage Loans [Member] Year to Date [Member]	Sep. 30, 2013 Junior Lein Residential Mortgage Loans [Member] Quarter to Date [Member]	Sep. 30, 2012 Junior Lein Residential Mortgage Loans [Member] Quarter to Date [Member]	Sep. 30, 2013 Junior Lein Residential Mortgage Loans [Member] Year to Date [Member]	Sep. 30, 2012 Junior Lein Residential Mortgage Loans [Member] Year to Date [Member]	Sep. 30, 2013 Consumer Loans [Member] Quarter to Date [Member]	Sep. 30, 2012 Consumer Loans [Member] Quarter to Date [Member]	Sep. 30, 2013 Consumer Loans [Member] Year to Date [Member]	Sep. 30, 2012 Consumer Loans [Member] Year to Date [Member]	Sep. 30, 2013 Quarter to Date [Member]	Sep. 30, 2012 Quarter to Date [Member]	Sep. 30, 2013 Year to Date [Member]	Sep. 30, 2012 Year to Date [Member]
Financing Receivable, Modifications [Line Items]
Troubled Debt Restructurings Number of contracts	2	3	5	9	0	4	5	12	1	6	6	16	0	1	1	3	0	0	0	2	3	14	17	42
Troubled Debt Restructurings Pre-modification outstanding recorded investment	$ 219	$ 190	$ 308	$ 998	$ 0	$ 1,613	$ 1,661	$ 3,598	$ 203	$ 871	$ 1,040	$ 1,673	$ 0	$ 15	$ 19	$ 118	$ 0	$ 0	$ 0	$ 107	$ 422	$ 2,689	$ 3,028	$ 6,494
Troubled Debt Restructurings Post-modification outstanding recorded investment	217	187	305	988	0	1,590	1,671	3,573	134	870	970	1,669	0	15	19	118	0	0	0	107	351	2,662	2,965	6,455
Troubled Debt Restructurings that Subsequently Defaulted Number of contracts	0	0	2	5	0	0	0	4	2	1	5	1	0	1	0	1	0	0	0	0	2	2	7	11
Troubled Debt Restructurings that Subsequently Defaulted Recorded investment	$ 0	$ 0	$ 100	$ 1,143	$ 0	$ 0	$ 0	$ 401	$ 172	$ 64	$ 568	$ 64	$ 0	$ 9	$ 0	$ 9	$ 0	$ 0	$ 0	$ 0	$ 172	$ 73	$ 668	$ 1,617

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Note 6 - Fair Value (Tables)

9 Months Ended

Sep. 30, 2013

Note 6 - Fair Value (Tables) [Line Items]

Fair Value, Assets Measured on Recurring Basis [Table Text Block]

(In thousands of dollars)	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
September 30, 2013
Securities available for sale
U.S. governmental agency	$	0	$	107,686	$	650	$	108,336
States and political subdivisions		0		128,684		17,673		146,357
Mortgage backed securities		0		63,103		0		63,103
Collateralized mortgage obligations		0		37,785		0		37,785
Equity and other securities		263		0		1,577		1,840
Total securities available for sale	$	263	$	337,258	$	19,900	$	357,421
Trading equity securities	$	8	$	0	$	0	$	8
December 31, 2012
Securities available for sale
U.S. governmental agency	$	0	$	106,885	$	0	$	106,885
States and political subdivisions		0		97,525		20,289		117,814
Mortgage backed securities		0		66,277		0		66,277
Collateralized mortgage obligations		0		61,030		0		61,030
Equity and other securities		91		0		1,581		1,672
Total securities available for sale	$	91	$	331,717	$	21,870	$	353,678
Trading equity securities	$	6	$	0	$	0	$	6

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

(In thousands of dollars)	2013			2012
Balance at beginning of year	$	21,870		$	16,914
Total realized and unrealized gains/(losses) included in income		0			0
Total unrealized gains/(losses) included in other comprehensive income		0			0
Purchases of securities		5,885			11,682
Sales of securities		0			0
Calls and maturities		(7,925	)		(12,255	)
Net transfers into Level 3		70			360
Balance at September 30 of each year	$	19,900		$	16,701

Fair Value Measurements, Nonrecurring [Table Text Block]

(In thousands of dollars)	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable  Inputs (Level 3)
September 30, 2013
Impaired loans	$	31,374	$	0	$	0	$	31,374
Other real estate owned	$	2,161	$	0	$	0	$	2,161
Other repossessed assets	$	50	$	0	$	0	$	50
December 31, 2012
Impaired loans	$	36,388	$	0	$	0	$	36,388
Other real estate owned	$	2,925	$	0	$	0	$	2,925
Other repossessed assets	$	250	$	0	$	0	$	250

Estimate of Fair Value Measurement [Member]

Note 6 - Fair Value (Tables) [Line Items]

Fair Value, by Balance Sheet Grouping [Table Text Block]

September 30, 2013 (In thousands of dollars)	Carrying Amount			Estimated Fair Value			Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Financial Assets:
Cash and cash equivalents	$	59,963		$	59,963		$	59,963	$	0		$	0
FDIC insured bank certificates of deposit		1,440			1,440			1,440		0			0
Trading account securities		8			8			8		0			0
Securities available for sale		357,421			357,421			263		337,258			19,900
Federal Home Loan Bank stock		7,266			7,266			0		0			7,266
Loans held for sale		732			732			0		732			0
Loans, net		962,678			969,656			0		0			969,656
Financial Liabilities:
Deposits		(1,230,116	)		(1,209,657	)		0		0			(1,209,657	)
Securities sold under agreements to repurchase and overnight borrowings		(47,333	)		(47,333	)		0		(47,333	)		0
Federal Home Loan Bank advances and other borrowing		(19,861	)		(20,868	)		0		0			(20,868	)
Subordinated debentures		(36,084	)		(21,084	)		0		0			(21,084	)

December 31, 2012 (In thousands of dollars)	Carrying Amount			Estimated Fair Value			Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Financial Assets:
Cash and cash equivalents	$	99,601		$	99,601		$	99,601	$	0		$	0
FDIC insured bank certificates of deposit		2,927			2,927			2,927		0			0
Trading account securities		6			6			6		0			0
Securities available for sale		353,678			353,678			91		331,717			21,870
Federal Home Loan Bank stock		7,266			7,266			0		0			7,266
Loans held for sale		2,921			2,921			0		2,921			0
Loans, net		942,422			930,354			0		0			930,354
Financial Liabilities:
Deposits		(1,241,401	)		(1,243,712	)		0		0			(1,243,712	)
Securities sold under agreements to repurchase and overnight borrowings		(42,785	)		(42,785	)		0		(42,785	)		0
Federal Home Loan Bank advances and other borrowing		(22,493	)		(24,122	)		0		0			(24,122	)
Subordinated debentures		(36,084	)		(36,093	)		0		0			(36,093	)

XML

Note 6 - Fair Value

9 Months Ended

Sep. 30, 2013

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

NOTE 6 - FAIR VALUE

Carrying amount and estimated fair values of financial instruments were as follows:

September 30, 2013 (In thousands of dollars)	Carrying Amount			Estimated Fair Value			Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Financial Assets:
Cash and cash equivalents	$	59,963		$	59,963		$	59,963	$	0		$	0
FDIC insured bank certificates of deposit		1,440			1,440			1,440		0			0
Trading account securities		8			8			8		0			0
Securities available for sale		357,421			357,421			263		337,258			19,900
Federal Home Loan Bank stock		7,266			7,266			0		0			7,266
Loans held for sale		732			732			0		732			0
Loans, net		962,678			969,656			0		0			969,656
Financial Liabilities:
Deposits		(1,230,116	)		(1,209,657	)		0		0			(1,209,657	)
Securities sold under agreements to repurchase and overnight borrowings		(47,333	)		(47,333	)		0		(47,333	)		0
Federal Home Loan Bank advances and other borrowing		(19,861	)		(20,868	)		0		0			(20,868	)
Subordinated debentures		(36,084	)		(21,084	)		0		0			(21,084	)

December 31, 2012 (In thousands of dollars)	Carrying Amount			Estimated Fair Value			Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Financial Assets:
Cash and cash equivalents	$	99,601		$	99,601		$	99,601	$	0		$	0
FDIC insured bank certificates of deposit		2,927			2,927			2,927		0			0
Trading account securities		6			6			6		0			0
Securities available for sale		353,678			353,678			91		331,717			21,870
Federal Home Loan Bank stock		7,266			7,266			0		0			7,266
Loans held for sale		2,921			2,921			0		2,921			0
Loans, net		942,422			930,354			0		0			930,354
Financial Liabilities:
Deposits		(1,241,401	)		(1,243,712	)		0		0			(1,243,712	)
Securities sold under agreements to repurchase and overnight borrowings		(42,785	)		(42,785	)		0		(42,785	)		0
Federal Home Loan Bank advances and other borrowing		(22,493	)		(24,122	)		0		0			(24,122	)
Subordinated debentures		(36,084	)		(36,093	)		0		0			(36,093	)

The methods and assumptions used to estimate fair value are described as follows: The carrying amount is the estimated fair value for cash and cash equivalents, short term borrowings, Federal Home Loan Bank stock, demand deposits, and variable rate loans or deposits that re-price frequently and fully. Security fair values are based on market prices or dealer quotes, and if no such information is available, on the rate and term of the security and information about the issuer. For fixed rate loans and variable rate loans, fair value is based on discounted cash flows using current market rates applied to the estimated life and credit risk based on historical losses on similar loan pools. For deposits with infrequent re-pricing or re-pricing limits, fair value is based on discounted cash flows using current market rates applied to the estimated life of the product. During the second quarter of 2013 we updated rate assumptions relating to commercial fixed rate loans, deposits, and subordinated debentures to reflect changes in the market place and thereby the fair value of these instruments.

Fair values for impaired loans are estimated using discounted cash flow analysis or underlying collateral values for the specific loans in the portfolio and assumes the bank will resolve them through orderly liquidation. Fair value of loans held for sale is based on market quotes. Fair value of debt is based on current rates for similar financing. The fair value of off-balance sheet items is based on the current fees or cost that would be charged to enter into or terminate such arrangements. The fair value of off-balance sheet items was not material to the consolidated financial statements at September 30, 2013 and December 31, 2012.

The following tables present information about our assets measured at fair value on a recurring basis at September 30, 2013 and December 31, 2012, and valuation techniques used by us to determine those fair values.

Level 1 assets are assets which are actively traded on an open market and pricing is publicly available.

Fair values determined by Level 2 inputs use other inputs that are observable, either directly or indirectly. These Level 2 inputs include quoted prices for similar assets in active markets, and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals.

Level 3 inputs are unobservable inputs, including inputs that are available in situations where there is little, if any, market activity for the related asset or liability. Level 3 Securities include local Municipal Securities where market pricing is not available, trust preferred securities issued by banks, and other miscellaneous investments.

Assets Measured at Fair Value on a Recurring Basis

(In thousands of dollars)	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
September 30, 2013
Securities available for sale
U.S. governmental agency	$	0	$	107,686	$	650	$	108,336
States and political subdivisions		0		128,684		17,673		146,357
Mortgage backed securities		0		63,103		0		63,103
Collateralized mortgage obligations		0		37,785		0		37,785
Equity and other securities		263		0		1,577		1,840
Total securities available for sale	$	263	$	337,258	$	19,900	$	357,421
Trading equity securities	$	8	$	0	$	0	$	8
December 31, 2012
Securities available for sale
U.S. governmental agency	$	0	$	106,885	$	0	$	106,885
States and political subdivisions		0		97,525		20,289		117,814
Mortgage backed securities		0		66,277		0		66,277
Collateralized mortgage obligations		0		61,030		0		61,030
Equity and other securities		91		0		1,581		1,672
Total securities available for sale	$	91	$	331,717	$	21,870	$	353,678
Trading equity securities	$	6	$	0	$	0	$	6

Changes in Level 3 Assets Measured at Fair Value on a Recurring Basis

(In thousands of dollars)	2013			2012
Balance at beginning of year	$	21,870		$	16,914
Total realized and unrealized gains/(losses) included in income		0			0
Total unrealized gains/(losses) included in other comprehensive income		0			0
Purchases of securities		5,885			11,682
Sales of securities		0			0
Calls and maturities		(7,925	)		(12,255	)
Net transfers into Level 3		70			360
Balance at September 30 of each year	$	19,900		$	16,701

Both observable and unobservable inputs may be used to determine the fair value of positions classified as Level 3 assets. As a result, the unrealized gains and losses for these assets presented in the tables above may include changes in fair value that were attributable to both observable and unobservable inputs.

Available for sale investments securities categorized as Level 3 assets primarily consist of bonds issued by local municipalities and other like assets. We carry local municipal securities at historical cost, which approximates fair value, unless economic conditions for the municipality changes to a degree requiring a valuation adjustment. We also have assets that under certain conditions are subject to measurement at fair value on a non-recurring basis. These assets consist of impaired loans, other real estate owned and other repossessed assets. We have estimated the fair value of impaired loans using Level 3 inputs, specifically valuation of loans based on either a discounted cash flow projection, or a discount to the appraised value of the collateral underlying the loan. We use discounted appraised values or broker’s price opinions to determine the fair value of other real estate owned.

Assets Measured at Fair Value on a Nonrecurring Basis

(In thousands of dollars)	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable  Inputs (Level 3)
September 30, 2013
Impaired loans	$	31,374	$	0	$	0	$	31,374
Other real estate owned	$	2,161	$	0	$	0	$	2,161
Other repossessed assets	$	50	$	0	$	0	$	50
December 31, 2012
Impaired loans	$	36,388	$	0	$	0	$	36,388
Other real estate owned	$	2,925	$	0	$	0	$	2,925
Other repossessed assets	$	250	$	0	$	0	$	250

Impaired loans categorized as Level 3 assets consist of non-homogeneous loans that are considered impaired. We estimate the fair value of the loans based on the present value of expected future cash flows using management’s best estimate of key assumptions. These assumptions include future payment ability, timing of payment streams, and estimated realizable values of available collateral (typically based on outside appraisals). Other real estate owned is valued based on either a recent appraisal for the property or a brokers' price opinion of the value of the property, which are discounted for expected costs to dispose of the property.

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Note 2 - Securities (Details) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Investment Holdings [Abstract]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	242	74
Held-to-maturity Securities Pledged as Collateral (in Dollars)	$ 47,333,000	$ 45,645,000

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Note 7 - Basic And Diluted Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2013

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

(In thousands of dollars except per share data)	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Earnings per share
Net income	$	2,869	$	2,715	$	9,075	$	7,536
Preferred stock dividends and accretion of discount		0		220		481		1,060
Income available to common shareholders	$	2,869	$	2,495	$	8,594	$	6,476
Weighted average common shares outstanding (000)		8,073		7,948		8,047		7,924
Basic Earnings per Share	$	0.36	$	0.31	$	1.07	$	0.82
Earnings per share assuming dilution
Net income	$	2,869	$	2,715	$	9,075	$	7,536
Preferred stock dividends and accretion of discount		0		220		481		1,060
Income available to common shareholders	$	2,869	$	2,495	$	8,594	$	6,476
Weighted average common shares outstanding (000)		8,073		7,948		8,047		7,924
Add dilutive effect of assumed exercises of options		62		40		55		20
Weighted average common and dilutive potential common shares outstanding (000)		8,135		7,988		8,102		7,944
Diluted Earnings per Share	$	0.35	$	0.31	$	1.06	$	0.82

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Document And Entity Information	9 Months Ended
	Sep. 30, 2013	Oct. 31, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	FIRSTBANK CORP
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		8,076,622
Amendment Flag	false
Entity Central Index Key	0000778972
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Accelerated Filer
Entity Well-known Seasoned Issuer	No
Document Period End Date	Sep. 30, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q3

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Note 1 - Financial Statements (Details)	Sep. 30, 2013
Disclosure Text Block [Abstract]
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners	44.00%