Firstbank Corporation Announces Fourth Quarter and Full Year 2012 Results

Firstbank Corporation Announces Fourth Quarter and Full Year 2012 Results

                             Highlights Include:

  *For 2012, diluted earnings per share of $1.16 were 132% over the $0.50 for
    2011, as earnings per share of $0.35 in the fourth quarter of 2012
    exceeded the $0.22 of the fourth quarter of 2011 and were the highest
    level since 2007
  *Increases in book value per share, tangible book value per share, and
    dividends
  *Provision expense of $1.3 million in the fourth quarter of 2012 decreased
    by $1.3 million from year ago fourth quarter
  *Fourth quarter 2012 net charge-offs declined to $1.3 million compared to
    $3.0 million in fourth quarter 2011
  *Ratio of allowance for loan losses to loans increased to 2.21% at December
    31, 2012, compared to 2.14% a year ago, as provision exceeded net
    charge-offs in 2012
  *Other real estate owned declined to $2.9 million at December 31, 2012,
    compared to $5.3 million at December 31, 2011
  *Implementing plans to streamline the legal structure of the company
  *Equity ratios remained strong with all affiliate banks continuing to
    exceed regulatory well-capitalized requirements

ALMA, Mich., Jan. 29, 2013 (GLOBE NEWSWIRE) -- Thomas R. Sullivan, President
and Chief Executive Officer of Firstbank Corporation (Nasdaq:FBMI), announced
net income of $2,998,000 for the fourth quarter of 2012, increasing 39% from
$2,150,000 for the fourth quarter of 2011, with net income available to common
shareholders of $2,783,000 in the fourth quarter of 2012 increasing 61% from
$1,731,000 in the fourth quarter of 2011. Earnings per share were $0.35 in the
fourth quarter of 2012 compared to $0.22 in the fourth quarter of 2011.
Returns on average assets and average equity for the fourth quarter of 2012
were 0.79% and 8.1%, respectively, compared to 0.55% and 5.5% respectively in
the fourth quarter of 2011.

For the twelve months of 2012, net income of $10,534,000 increased 87% over
the $5,623,000 earned in 2011. Net income available to common shareholders of
$9,259,000 increased 135%, and diluted earnings per share of $1.16 increased
132% over the $0.50 per share earned in 2011.

Firstbank plans to effect the consolidation of its four Firstbank charters
into one bank charter on February 1, 2013, with Keystone Community Bank
continuing as a separate charter. All regulatory approvals have been received.

Fourth quarter 2012 results included one-time non-recurring expenses of
$600,000 related to closing five branches of the Firstbank banks, certain
supplies inventory adjustments, and other consolidation costs. For the full
year, 2012 results also included, as previously disclosed, one-time
non-recurring expenses of $170,000 (non-tax-deductible) related to the auction
and repurchase of preferred shares, $154,000 related to another branch
closing, and $750,000 to establish a reserve for mortgage put-backs. Some of
this expense was partially offset by a one-time non-recurring income item of
$178,000 (non-taxable) related to a director benefit plan of an affiliate
bank.

Book value per share and tangible book value per share increased in the fourth
quarter of 2012 as earnings exceeded dividends, including the special dividend
of $0.20 per share paid to common shareholders on December 31^st. In the first
quarter of 2012 a dividend of $0.06 was paid of which $0.05 was identified as
relating to 2011. Ignoring the $0.05 attributed to 2011, the special dividend
in the fourth quarter of 2012 would bring total dividends per share paid in
2012 to $0.24, equal to 21% of earnings per share for the year. Book value per
share increased to $16.37 at December 31, 2012, from $16.24 at September 30,
2012, and $15.53 at December 31, 2011. Tangible book value per share increased
to $11.78 at December 31, 2012, from $11.64 at September 30, 2012, and $10.85
at December 31, 2011.

The provision for loan losses, at $1,338,000 in the fourth quarter of 2012,
was 1.9% less than the amount required in the third quarter of 2012 and was
49% less than the amount in the year-ago fourth quarter. The provision expense
of $1,338,000 exceeded fourth quarter net charge-offs of $1,331,000, and the
total provision in 2012 of $7,690,000 exceeded net charge-offs of $7,370,000.
The level of provision expense and other expenses related to management and
collection of the loan portfolio continue to be the major impediments to
higher levels of profitability.

Net interest income, at $13,344,000 in the fourth quarter of 2012 decreased
3.7% compared to the fourth quarter of 2011. Net interest income decreased as
a result of a 16 basis point decline in net interest margin compared to the
year-ago fourth quarter.

Firstbank's net interest margin was 3.91% in the fourth quarter of 2012,
decreasing from 3.99% in the third quarter of 2012 and 4.07% in the fourth
quarter of 2011. Loan demand remains weak, resulting in the allocation of more
earning assets to the investment portfolio versus the higher-yielding loan
portfolio. Also, competitive pricing pressure is forcing yields lower on some
loan renewals. The cost of funds to average earning assets declined by 7 basis
points, to 0.52% in the fourth quarter of 2012 from 0.59% in the third quarter
of 2012, while the yield on average earning assets declined by a greater 15
basis points, to 4.42% in the fourth quarter of 2012 from 4.57% in the third
quarter of 2012.

Total non-interest income, at $3,411,000 in the fourth quarter of 2012, was
12.7% higher than in the fourth quarter of 2011. Mortgage refinance activity
remains at a very strong level. Gain on sale of mortgages, at $1,707,000 in
the fourth quarter of 2012, increased 2.8% compared to the third quarter of
2012 and was 2.7% above the year-ago level. The category of "other"
non-interest income, at $703,000 in the fourth quarter of 2012, was 74%
greater than the amount in the third quarter of 2012 and 109% more than in the
fourth quarter of 2011. Included in this category of income was a $214,000 net
gain on sale of other real estate owned in the fourth quarter of 2012,
compared to a net gain of $64,000 in the third quarter of 2012 and a net gain
of $18,000 in the fourth quarter of 2011. Adjustments to the fair value of
loan rate and sale commitments contributed $104,000 to this category of income
in the fourth quarter of 2012.

Total non-interest expense, at $11,174,000 in the fourth quarter of 2012, was
2.2% lower than the level in the third quarter of 2012 and was 0.5% lower than
the level in the fourth quarter of 2011. Salaries and employee benefits were
3.2% lower than in the third quarter of 2012 and increased 6.3% compared to
the year-ago quarter. For the fourth quarter of 2012 compared to the prior
quarter, the salary and wage component decreased 0.6%, and benefits decreased
13.5%, with the decline in benefits expense mostly due to the ability to
reduce expense accruals in the self-insured medical plan. Occupancy and
equipment costs were 1.4% less than the amount in last year's fourth quarter.
FDIC insurance premium expense, at $256,000 in the fourth quarter of 2012, was
28% less than the level in the fourth quarter of 2011 due to the timing of
expense recognition in 2011 related to the FDIC's change in methodology for
assessing premiums based on assets rather than deposits. In 2012 FDIC
insurance premium expense was down 22% from year ago due to that change in the
FDIC's method of calculation. The category of "other" non-interest expense,
totaling $3,899,000 in the fourth quarter of 2012, decreased 0.6% compared to
the third quarter of 2012 and decreased 5.4% compared to the fourth quarter of
2011, due to several factors. There was no additional amount expensed to add
to the reserve for potential losses on mortgage put-backs, compared to
$500,000 that was expensed in the third quarter of 2012. Offsetting this
beneficial comparison was a $600,000 one-time charge to cover the costs of
closing five branches as previously announced, certain adjustments to supplies
inventory, and other consolidation related expenses. Write-downs of valuations
of other real estate owned (OREO) and expenses related to OREO also vary
quarter to quarter and impact the other expense category. Write-downs of
valuations of other real estate owned were $193,000 in the fourth quarter of
2012, decreased significantly from $341,000 in the third quarter of 2012 and
$759,000 in the fourth quarter of 2011.

Mr. Sullivan stated, "The fourth quarter was a good capstone to a year of
significant accomplishments for our company. We significantly improved our
credit quality metrics, significantly reduced net charge-offs of loans and
provision expense, significantly reduced our other real estate owned, and
completely exited the TARP/CPP program with private investors having the
confidence in our company to purchase $17 million of our preferred stock. We
also significantly increased earnings and earnings per share, restored our
dividend on common stock to an annual rate of $0.24 per share – a level which
gives our stock a 2.2% dividend yield based on recent market prices,
positioned the company for the future by acting to reduce regulatory burden
through consolidation of bank charters, and saw our stock price increase 108%
on the year.

"We are enthusiastic about the opportunities for 2013 and the potential to see
further improvement in credit metrics, allowing reduced provision and other
costs related to managing problem loans. We are very pleased with the planning
for the bank charter consolidations and confident that we have designed a
structure for operating the company that will preserve our community bank
nature, our way of serving our customers' needs, and the input and guidance of
directors in our local markets. The whole industry and indeed the nation face
economic challenges, but we feel very well positioned to succeed in the
environment that lies ahead and to continue improvements in profitability.

"All of our dedicated employees and directors deserve much credit for their
hard work and service to our customers and shareholders, and we thank them for
their efforts and success."

Total assets of Firstbank Corporation at December 31, 2012, were $1.499
billion, an increase of 0.9% from year-ago. Evidencing the weak loan demand in
our markets, total portfolio loans of $964 million decreased 1.4% from
September 30, 2012, and decreased 2.0% from December 31, 2011. Commercial and
commercial real estate loans decreased 2.8% from year ago, including a 1.8%
decrease in the fourth quarter of 2012, and real estate construction loans
decreased 2.9% from year ago, including a 4.8% increase in the fourth quarter
of 2012. Residential mortgage loans decreased 2.4% from year ago, including a
1.7% decrease in the fourth quarter of 2012. Consumer loans increased 6.9%
from year ago, including a 1.6% decrease in the fourth quarter of 2012. While
Firstbank has ample capital and funding resources to increase loans on its
balance sheet, demand for funds for new ventures by quality borrowers remains
weak. Also, the strong mortgage refinance activity has resulted in many
mortgage loans being financed in the secondary market rather than on the
balance sheet of the company. Total deposits as of December 31, 2012, were
$1.241 billion, compared to $1.221 billion at December 31, 2011, an increase
of 1.7%. Core deposits at December 31, 2012, were 1.7% above the year-ago
level, and they increased $17.6 million in the fourth quarter of 2012, mostly
in non-interest bearing deposits.

Net charge-offs were $1,331,000 in the fourth quarter of 2012, reduced from
$1,554,000 in the third quarter of 2012 and $2,975,000 in the fourth quarter
of 2011. In the fourth quarter of 2012, net charge-offs annualized represented
0.55% of average loans, reduced from 0.63% in the third quarter of 2012 and
1.21% in the fourth quarter of 2011. For all of 2012, net charge-offs
represented 0.75% of average loans, down from 1.37% in 2011.

At the end of the fourth quarter of 2012 the ratio of the allowance for loan
losses to loans was 2.21%, up from 2.18% at September 30, 2012, and increased
from 2.14% at December 31, 2011. Performing adjusted loans (troubled debt
restructurings, or TDRs) were $20,722,000 at December 31, 2012, compared to
$19,619,000 at September 30, 2012, and $18,929,000 at December 31, 2011. Loans
past due over 90 days were $37,000 at December 31, 2012, down from $655,000 at
September 30, 2012, and the $419,000 amount at December 31, 2011. Non-accrual
loans were $15,668,000 at December 31, 2012, a decrease of 2.8% from the level
at September 30, 2012, and a significant decrease of 31% from the $22,707,000
amount at December 31, 2011.

Other real estate owned was reduced to $2,925,000 at December 31, 2012, down
2.5% from the $3,001,000 level at September 30, 2012, and down 44% from the
$5,251,000 level at December 31, 2011.

The ratio of average equity to average assets was a strong 9.7% in the third
and fourth quarters of 2012. The decline in this ratio from 10.1% in the
fourth quarter of 2011 reflects the repurchase earlier in the year of $16
million of the original $33 million outstanding of preferred stock and the
repurchase and retirement of all outstanding warrants. All of Firstbank
Corporation's affiliate banks continue to meet regulatory well-capitalized
requirements.

Firstbank Corporation, headquartered in Alma, Michigan, is a bank holding
company using a community bank local decision-making format with assets of
$1.5 billion and 51 banking offices serving Michigan's Lower Peninsula.

This press release contains certain forward-looking statements that involve
risks and uncertainties. When used in this press release the words
"anticipate," "believe," "expect," "hopeful," "potential," "should," and
similar expressions identify forward-looking statements. Forward-looking
statements include, but are not limited to, statements concerning the
consolidation of existing banks and branches, future business growth, changes
in interest rates, loan charge-off rates, demand for new loans, future
profitability, and the resolution of problem loans. Such statements are
subject to certain risks and uncertainties which could cause actual results to
differ materially from those expressed or implied by such forward-looking
statements, including, but not limited to, economic, competitive,
governmental, regulatory and technological factors affecting the Company's
operations, markets, products, services, interest rates and fees for services.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this press release.


FIRSTBANK CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands except per share data)
UNAUDITED
                                                                
                                 Three Months Ended:     Twelve Months Ended:
                                 Dec 31  Sep 30  Dec 31  Dec 31     Dec 31
                                 2012    2012    2011    2012       2011
Interest income:                                                 
Interest and fees on loans        $13,769 $14,145 $14,958 $56,975    $61,465
Investment securities                                            
Taxable                           1,004   1,104   1,249   4,512      4,888
Exempt from federal income tax    324     272     274     1,169      1,118
Short term investments            49      53      35      210        173
Total interest income             15,146  15,574  16,516  62,866     67,644
                                                                
Interest expense:                                                
Deposits                          1,428   1,588   2,206   6,626      10,891
Notes payable and other borrowing 374     444     452     1,748      2,081
Total interest expense            1,802   2,032   2,658   8,374      12,972
                                                                
Net interest income               13,344  13,542  13,858  54,492     54,672
Provision for loan losses         1,338   1,364   2,611   7,690      13,337
Net interest income after         12,006  12,178  11,247  46,802     41,335
provision for loan losses
                                                                
Noninterest income:                                              
Gain on sale of mortgage loans    1,707   1,661   1,662   6,523      3,683
Service charges on deposit        1,053   1,048   1,095   4,219      4,492
accounts
Gain (loss) on trading account    3       (5)     (18)    4          (10)
securities
Gain (loss) on sale of AFS        2       2       (37)    44         (38)
securities
Mortgage servicing                (57)    (95)    (13)    (231)      108
Other                             703     405     337     2,111      1,440
Total noninterest income          3,411   3,016   3,026   12,670     9,675
                                                                
Noninterest expense:                                             
Salaries and employee benefits    5,677   5,865   5,343   22,680     21,263
Occupancy and equipment           1,240   1,267   1,257   5,152      5,311
Amortization of intangibles       102     109     160     482        698
FDIC insurance premium            256     265     356     1,220      1,560
Other                             3,899   3,923   4,120   15,148     14,721
Total noninterest expense         11,174  11,429  11,236  44,682     43,553
                                                                
Income before federal income      4,243   3,765   3,037   14,790     7,457
taxes
Federal income taxes              1,245   1,050   887     4,256      1,834
Net Income                       2,998   2,715   2,150   10,534     5,623
Preferred Stock Dividends         215     220     419     1,275      1,679
Net Income available to Common    $2,783  $2,495  $1,731  $9,259     $3,944
Shareholders
                                                                
Fully Tax Equivalent Net Interest $13,538 $13,719 $14,019 $55,176    $55,347
Income
                                                                
Per Share Data:                                                  
Basic Earnings                    $0.35   $0.31   $0.22   $1.17      $0.50
Diluted Earnings                  $0.35   $0.31   $0.22   $1.16      $0.50
Dividends Paid                    $0.21   $0.01   $0.01   $0.29      $0.04
                                                                
Performance Ratios:                                              
Return on Average Assets (a)      0.79%   0.72%   0.55%   0.70%      0.38%
Return on Average Equity (a)      8.1%    7.4%    5.5%    7.0%       3.8%
Net Interest Margin (FTE) (a)     3.91%   3.99%   4.07%   3.99%      4.06%
Book Value Per Share (b)          $16.26  $16.24  $15.53  $16.26     $15.53
Tangible Book Value per Share (b) $11.71  $11.64  $10.85  $11.71     $10.85
Average Equity/Average Assets     9.7%    9.7%    10.1%   10.0%      10.1%
Net Charge-offs                   $1,331  $1,554  $2,975  $7,370     $13,749
Net Charge-offs as a % of Average 0.55%   0.63%   1.21%   0.75%      1.37%
Loans (c)(a)
                                                                
(a)Annualized                                                  
(b)Period End                                         `          
(c)Total loans less loans held                                  
for sale



FIRSTBANK CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
UNAUDITED
                                                                 
                                             Dec 31     Sep 30     Dec 31
                                             2012       2012       2011
ASSETS                                                            
                                                                 
Cash and cash equivalents:                                        
Cash and due from banks                       $38,544    $29,710    $40,151
Short term investments                        63,984     45,192     35,665
Total cash and cash equivalents               102,528    74,902     75,816
                                                                 
Securities available for sale                 353,684    350,231    346,618
Federal Home Loan Bank stock                  7,266      7,266      7,266
Loans:                                                            
Loans held for sale                           2,921      3,813      349
Portfolio loans:                                                  
Commercial                                   149,265    151,252    156,551
Commercial real estate                       357,831    365,402    365,029
Residential mortgage                          331,896    337,587    340,060
Real estate construction                      58,530     55,855     60,280
Consumer                                      66,240     67,314     61,989
Total portfolio loans                         963,762    977,410    983,909
Less allowance for loan losses                (21,340)   (21,332)   (21,019)
Net portfolio loans                           942,422    956,078    962,890
                                                                 
Premises and equipment, net                   24,356     24,926     25,087
Goodwill                                      35,513     35,513     35,513
Other intangibles                             965        1,068      1,448
Other assets                                  29,107     28,313     30,312
TOTAL ASSETS                                  $1,498,762 $1,482,110 $1,485,299
                                                                 
LIABILITIES AND SHAREHOLDERS' EQUITY                              
                                                                 
LIABILITIES                                                       
                                                                 
Deposits:                                                         
Noninterest bearing accounts                  $251,109   $229,437   $214,904
Interest bearing accounts:                                        
Demand                                        348,598    348,712    340,942
Savings                                       265,323    262,314    241,603
Time                                          358,791    365,745    405,385
Wholesale CD's                                17,580     18,653     17,708
Total deposits                                1,241,401  1,224,861  1,220,542
                                                                 
Securities sold under agreements              42,785     45,927     46,784
torepurchase and overnight borrowings
FHLB Advances and notes payable               22,493     19,558     19,457
Subordinated Debt                            36,084     36,084     36,084
Accrued interest and other liabilities        8,941      9,591      7,055
Total liabilities                             1,351,704  1,336,021  1,329,922
                                                                 
SHAREHOLDERS' EQUITY                                              
Preferred stock; no par value, 300,000shares 16,908     16,904     32,792
authorized, 33,000 outstanding
Common stock; 20,000,000 shares authorized    115,621    115,228    115,734
Retained earnings                             10,921     9,812      3,955
Accumulated other comprehensive income/(loss) 3,608      4,145      2,896
Total shareholders' equity                    147,058    146,089    155,377
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY    $1,498,762 $1,482,110 $1,485,299
                                                                 
Common stock shares issued and outstanding   8,001,903  7,952,502  7,892,486
Principal Balance of Loans Serviced for       $608.2     $594.8     $599.3
Others ($mil)
                                                                 
Asset Quality Information:                                        
Performing Adjusted Loans (TDRs) (b)          20,722    19,619    18,929
Loans Past Due over 90 Days                   37        655       419
Non-Accrual Loans                             15,668    16,112    22,707
Other Real Estate Owned                       2,925      3,001      5,251
Allowance for Loan Loss as a % of Loans (a)  2.21%      2.18%      2.14%
                                                                 
Quarterly Average Balances:                                       
Total Portfolio Loans (a)                     $968,509   $982,144   $983,875
Total Earning Assets                          1,381,004  1,371,768 1,369,931
Total Shareholders' Equity                    145,186    143,805   151,442
Total Assets                                  1,496,135  1,483,546  1,492,870
Diluted Shares Outstanding                   7,994,996  7,987,968  7,875,613
                                                                 
(a) Total Loans less loans held for sale
(b) Troubled Debt Restructurings in Call Reports

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