Firstbank Corporation Announces First Quarter 2013 Results

Firstbank Corporation Announces First Quarter 2013 Results

                             Highlights Include:

  *For the first quarter of 2013, diluted earnings per share of $0.33 were
    32% over the $0.25 for the first quarter of 2012
  *Increases in book value per share and tangible book value per share
  *Planned consolidation of Firstbank charters completed on schedule with
    little or no disruption of customer service
  *Provision expense down 4.5% from the fourth quarter of 2012 and down 49%
    from the year-ago first quarter
  *Non-accrual loans down 18% in the quarter and down 41% from year-ago with
    performing adjusted loans (TDRs) flat with prior quarter; other real
    estate owned 12% less than year-ago
  *Ratio of allowance for loan losses to loans at 2.17%, compared to 2.16% a
    year ago
  *Equity ratios remained strong with all affiliate banks continuing to
    exceed regulatory well-capitalized requirements

ALMA, Mich., April 22, 2013 (GLOBE NEWSWIRE) -- Thomas R. Sullivan, President
and Chief Executive Officer of Firstbank Corporation (Nasdaq:FBMI), announced
net income of $2,863,000 for the first quarter of 2013, increasing 18.5% from
$2,417,000 for the first quarter of 2012, with net income available to common
shareholders of $2,648,000 in the first quarter of 2013 increasing 32.6% from
$1,997,000 in the first quarter of 2012. Earnings per share were $0.33 in the
first quarter of 2013 compared to $0.25 in the first quarter of 2012. Returns
on average assets and average equity for the first quarter of 2013 were 0.77%
and 7.9%, respectively, compared to 0.66% and 6.3% respectively in the first
quarter of 2012.

Firstbank effected the consolidation of its four Firstbank charters into one
bank charter on February 1, 2013, in accordance with previously announced
plans, with Keystone Community Bank continuing as a separate charter.

Book value per share and tangible book value per share increased in the first
quarter of 2013 as earnings exceeded dividends. Book value per share increased
to $16.49 at March 31, 2013, from $16.26 at December 31, 2012, and $15.76 at
March 31, 2012. Tangible book value per share increased to $11.96 at March 31,
2013, from $11.71 at December 31, 2012, and $11.10 at March 31, 2012.

Mr. Sullivan stated, "This quarter was important for our company, and our
staff has performed admirably. The consolidation of our four Firstbank
charters into one, with Keystone Community Bank remaining a separate charter,
became effective as of February 1^st, and the transition was very smooth. Our
people in each local market continue with their same responsibilities and are
taking care of customer needs with the same tradition of community banking
that has always been and continues to be a hallmark of our company. Our
customers hardly notice a change. We already are seeing the benefit of
regulatory efficiencies, which frees up more time for our people to work with
customers and prospects. Some back room changes have already been accomplished
and more are on schedule, and our goal is to gain operating efficiencies
without customer disruption.

"Strong mortgage refinance business and a very hard working mortgage staff
have continued to provide a boost to earnings while loan demand in the
Michigan economy continues to lag. We are ready, willing, and able to increase
lending when quality demand materializes.

"As has become more common in the industry, we had a quarter in which our
provision expense was less than our net charge-offs. This condition is created
when reserves were provided in the past for loans that were previously
identified as problems, and the loans then reach the point of charge-off. In
the largest case of this nature for us in the first quarter, we successfully
auctioned a troubled loan and received a price which did result in a
charge-off; however the charge-off amount was over $600,000 less than the
specific reserve that we previously had set aside.

"As we look to the future, our capital ratios continue to be strong and are
building even further, and we are accumulating cash with the intention of
redeeming all of the $17 million preferred series "A" stock that remains
outstanding. The dividend rate on this preferred stock continues at a
cost-effective 5%. Subject to regulatory approval we expect to accomplish the
redemption well before the dividend steps up to 9% in February of 2014. As the
timing becomes clearer, we anticipate announcing further details in the
future.

"I sense a lot of enthusiasm among our staff for the outlook for our company,
our state, and our communities. They are dedicated servants of our
shareholders and customers, and we owe them much thanks for the progress of
our earnings and stock price."

Provision for Loan Losses. The provision for loan losses, at $1,278,000 in the
first quarter of 2013, was 4.5% less than the amount required in the fourth
quarter of 2012 and was 49% less than the amount in the year-ago first
quarter. Net charge-offs of $1,770,000 in the first quarter included $599,000
that had been specifically reserved in periods prior to the beginning of 2013,
making it unnecessary to provide the full amount of net charge-offs in the
quarter. The provision expense of $1,278,000 in the first quarter of 2013 did
exceed the amount of net charge-offs that had not been previously reserved,
which amounted to $1,171,000. The level of provision expense and other
expenses related to management and collection of the loan portfolio, while
coming down, continue to be the major impediments to higher levels of
profitability.

Net Interest Income. Net interest income, at $13,012,000 in the first quarter
of 2013 decreased 5.5%, compared to the first quarter of 2012, as a result of
a 20 basis point decline in net interest margin. Firstbank's net interest
margin was 3.83% in the first quarter of 2013, decreasing from 3.91% in the
fourth quarter of 2012 and 4.03% in the first quarter of 2012. 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 4 basis points, to
0.48% in the first quarter of 2013 from 0.52% in the fourth quarter of 2012,
while the yield on average earning assets declined by a greater 11 basis
points, to 4.31% in the first quarter of 2013 from 4.42% in the fourth quarter
of 2012.

Non-interest Income. Total non-interest income, at $2,895,000 in the first
quarter of 2013, was 9.9% lower than in the first quarter of 2012. Although
mortgage refinance activity remains at a strong level, gain on sale of
mortgages, at $1,561,000 in the first quarter of 2013, decreased 8.6% compared
to the fourth quarter of 2012 and was 7.9% below the year-ago level. The
category of "other" non-interest income, at $400,000 in the first quarter of
2013, was 43% less than the amount in the fourth quarter of 2012 and 26% less
than in the first quarter of 2012. Included in this category of income was a
$54,000 net gain on sale of other real estate owned in the first quarter of
2013, compared to a net gain of $214,000 in the fourth quarter of 2012 and a
net gain of $219,000 in the first quarter of 2012. Adjustments to the fair
value of loan rate and sale commitments contributed a positive $104,000 to
this category of income in the fourth quarter of 2012, but a negative $19,000
in the first quarter of 2013.

Non-interest Expense. Total non-interest expense, at $10,601,000 in the first
quarter of 2013, was 5.1% lower than the level in the fourth quarter of 2012
and was 4.0% lower than the level in the first quarter of 2012. Salaries and
employee benefits were 4.2% higher than in the fourth quarter of 2012 and
increased 4.4% compared to the year-ago first quarter. For the first quarter
of 2013 compared to the prior quarter, the salary and wage component decreased
2.4%, and benefits increased 34.1% due to higher medical plan costs and taxes
that are seasonally higher earlier in each year. Occupancy and equipment costs
were 0.1% less than the amount in last year's first quarter. FDIC insurance
premium expense, at $259,000 in the first quarter of 2013, was 31% less than
the level in the first quarter of 2012 due to the timing of expense
recognition related to the FDIC's change in methodology for assessing premiums
based on assets rather than deposits. The category of "other" non-interest
expense, totaling $2,963,000 in the first quarter of 2013, decreased 24.0%
compared to the fourth quarter of 2012 and decreased 15.3% compared to the
first quarter of 2012, due to several factors. Contributing to this beneficial
comparison was a $600,000 one-time charge to cover the costs of closing five
branches, certain adjustments to supplies inventory, and other consolidation
related expenses incurred in the fourth quarter of 2012 that did not recur in
the first quarter of 2013. 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 $61,000 in the first quarter of 2013, decreased from
$193,000 in the fourth quarter of 2012 and $326,000 in the first quarter of
2012.

Total Assets. Total assets of Firstbank Corporation at March 31, 2013, were
$1.515 billion, a decrease of 1.2% from year-ago. Evidencing the weak loan
demand in our markets, total portfolio loans of $961 million were down 0.3%
from the level at December 31, 2012, and decreased 2.1% from March 31, 2012.
Commercial and commercial real estate loans decreased 2.8% from year ago, but
increased 0.5% in the first quarter of 2013, and real estate construction
loans decreased 1.9% from year ago, including a 2.7% decrease in the first
quarter of 2013. Residential mortgage loans decreased 2.1% from year ago,
including a 0.7% decrease in the first quarter of 2013. Consumer loans were
2.9% above year ago, even though decreasing 1.6% in the first quarter of 2013.
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 March 31, 2013, were $1.257
billion, compared to $1.253 billion at March 31, 2012, an increase of 0.3%.
Core deposits at March 31, 2013, were 0.3% above the year-ago level, and they
increased $15.8 million in the first quarter of 2013, mostly in interest
bearing demand and savings deposits.

Net Charge-offs. Net charge-offs were $1,770,000 in the first quarter of 2013,
increasing from $1,331,000 in the fourth quarter of 2012 but decreased from
$2,293,000 in the first quarter of 2012. In the first quarter of 2013, net
charge-offs annualized represented 0.73% of average loans, compared to 0.55%
in the fourth quarter of 2012 and 0.94% in the first quarter of 2012.

Allowance and Asset Quality. At the end of the first quarter of 2013 the ratio
of the allowance for loan losses to loans was 2.17%, compared to 2.21% at
December 31, 2012, and nearly the same as the 2.16% at March 31, 2012.
Performing adjusted loans (troubled debt restructurings, or TDRs) were
$20,898,000 at March 31, 2013, compared to $20,720,000 at December 31, 2012,
and $18,115,000 at March 31, 2012. Loans past due over 90 days and accruing
interest were $64,000 at March 31, 2013, compared to $37,000 at December 31,
2012, and reduced from the $1,185,000 amount at March 31, 2012. Non-accrual
loans were $12,872,000 at March 31, 2013, a decrease of 17.8% from the level
at December 31, 2012, and a decrease of 40.9% from the $21,782,000 amount at
March 31, 2012.

Other real estate owned increased to $3,541,000 at March 31, 2013, compared to
the $2,925,000 level at December 31, 2012, but was down 12% from the
$4,022,000 level at March 31, 2012.

Equity to Assets Ratio. The ratio of average equity to average assets was a
strong 9.8% in the first quarter of 2013, increasing 10 basis points from the
prior quarter. The decline in this ratio from 10.3% in the first quarter of
2012 reflects the repurchase in 2012 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 46 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 redemption
of preferred stock, 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:
                                                   Mar 31  Dec 31  Mar 31
                                                   2013    2012    2012
Interest income:                                                  
Interest and fees on loans                          $13,284 $13,769 $14,568
Investment securities                                             
Taxable                                             962     1,004   1,221
Exempt from federal income tax                      371     324     283
Short term investments                              55      49      54
Total interest income                               14,672  15,146  16,126
                                                                 
Interest expense:                                                 
Deposits                                            1,350   1,428   1,892
Notes payable and other borrowing                   310     374     467
Total interest expense                              1,660   1,802   2,359
                                                                 
Net interest income                                 13,012  13,344  13,767
Provision for loan losses                           1,278   1,338   2,494
Net interest income after provision for loan losses 11,734  12,006  11,273
                                                                 
Noninterest income:                                               
Gain on sale of mortgage loans                      1,561   1,707   1,695
Service charges on deposit accounts                 1,020   1,053   1,058
Gain on trading account securities                  0       3       1
Gain on sale of AFS securities                      50      2       13
Mortgage servicing                                  (136)   (57)    (94)
Other                                               400     703     541
Total noninterest income                            2,895   3,411   3,214
                                                                 
Noninterest expense:                                              
Salaries and employee benefits                      5,918   5,677   5,670
Occupancy and equipment                             1,359   1,240   1,361
Amortization of intangibles                         102     102     145
FDIC insurance premium                              259     256     374
Other                                               2,963   3,899   3,497
Total noninterest expense                           10,601  11,174  11,047
                                                                 
Income before federal income taxes                  4,028   4,243   3,440
Federal income taxes                                1,165   1,245   1,023
Net Income                                         2,863   2,998   2,417
Preferred Stock Dividends                           215     215     420
Net Income available to Common Shareholders         $2,648  $2,783  $1,997
                                                                 
Fully Tax Equivalent Net Interest Income            $13,232 $13,538 $13,896
                                                                 
Per Share Data:                                                   
Basic Earnings                                      $0.33   $0.35   $0.25
Diluted Earnings                                    $0.33   $0.35   $0.25
Dividends Paid                                      $0.06   $0.21   $0.06
                                                                 
Performance Ratios:                                               
Return on Average Assets (a)                        0.77%   0.79%   0.66%
Return on Average Equity (a)                        7.9%    8.1%    6.3%
Net Interest Margin (FTE) (a)                       3.83%   3.91%   4.03%
Book Value Per Share (b)                            $16.49  $16.26  $15.76
Tangible Book Value per Share (b)                   $11.96  $11.71  $11.10
Average Equity/Average Assets                       9.8%    9.7%    10.3%
Net Charge-offs                                     $1,770  $1,331  $2,293
Net Charge-offs as a % of Average Loans (c)(a)      0.73%   0.55%   0.94%
                                                                 
(a)Annualized                                                   
(b)Period End                                                    
(c)Total loans less loans held for sale                          



FIRSTBANK CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
UNAUDITED
                                                                 
                                             Mar 31     Dec 31     Mar 31
                                             2013       2012       2012
ASSETS                                                            
                                                                 
Cash and cash equivalents:                                        
Cash and due from banks                       $23,275    $38,544    $26,452
Short term investments                        90,419     63,984     85,863
Total cash and cash equivalents               113,694    102,528    112,315
                                                                 
Securities available for sale                 360,942    353,684    357,970
Federal Home Loan Bank stock                  7,266      7,266      7,266
Loans:                                                            
Loans held for sale                           3,022      2,921      5,417
Portfolio loans:                                                  
Commercial                                   150,845    149,265    156,294
Commercial real estate                       358,957    357,831    367,972
Residential mortgage                          329,428    331,896    336,658
Real estate construction                      56,940     58,530     58,062
Consumer                                      65,148     66,240     63,326
Total portfolio loans                         961,318    963,762    982,312
Less allowance for loan losses                (20,848)   (21,340)   (21,220)
Net portfolio loans                           940,470    942,422    961,092
                                                                 
Premises and equipment, net                   24,499     24,356     24,845
Goodwill                                      35,513     35,513     35,513
Other intangibles                             863        965        1,302
Other assets                                  29,234     29,107     27,831
TOTAL ASSETS                                  $1,515,503 $1,498,762 $1,533,551
                                                                 
LIABILITIES AND SHAREHOLDERS' EQUITY                              
                                                                 
LIABILITIES                                                       
                                                                 
Deposits:                                                         
Noninterest bearing accounts                  $243,126   $251,109   $220,653
Interest bearing accounts:                                        
Demand                                        371,929    348,598    354,889
Savings                                       281,043    265,323    262,734
Time                                          343,495    358,791    397,463
Wholesale CD's                                17,285     17,580     17,563
Total deposits                                1,256,878  1,241,401  1,253,302
                                                                 
Securities sold under agreements to           43,065     42,785     55,047
repurchase and overnight borrowings
FHLB Advances and notes payable               19,959     22,493     24,426
Subordinated Debt                            36,084     36,084     36,084
Accrued interest and other liabilities        10,150     8,941      7,236
Total liabilities                             1,366,136  1,351,704  1,376,095
                                                                 
SHAREHOLDERS' EQUITY                                              
Preferred stock; no par value, 300,000shares 16,912     16,908     32,800
authorized, 33,000 outstanding
Common stock; 20,000,000 shares authorized    115,861    115,621    115,888
Retained earnings                             13,085     10,921     5,485
Accumulated other comprehensive income        3,509      3,608      3,283
Total shareholders' equity                    149,367    147,058    157,456
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY    $1,515,503 $1,498,762 $1,533,551
                                                                 
Common stock shares issued and outstanding   8,032,661  8,001,903  7,911,209
Principal Balance of Loans Serviced for       $606.7     $608.2     $593.2
Others ($mil)
                                                                 
Asset Quality Information:                                        
Performing Adjusted Loans (TDRs) (b)          20,898    20,720    18,115
Loans Past Due over 90 Days                   64        37        1,185
Non-Accrual Loans                             12,872    15,668    21,782
Other Real Estate Owned                       3,541      2,925      4,022
Allowance for Loan Loss as a % of Loans (a)  2.17%      2.21%      2.16%
                                                                 
Quarterly Average Balances:                                       
Total Portfolio Loans (a)                     $963,994   $968,509   $980,115
Total Earning Assets                          1,396,999  1,381,004 1,384,056
Total Shareholders' Equity                    147,386    145,186   156,218
Total Assets                                  1,508,084  1,496,135  1,509,777
Diluted Shares Outstanding                   8,063,604  7,994,996  7,902,624
                                                                 
(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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