Firstbank Corporation Announces Second Quarter and Year-to-Date 2013 Results

Firstbank Corporation Announces Second Quarter and Year-to-Date 2013 Results

                             Highlights Include:

  *For the second quarter of 2013, earnings per share of $0.38 were 52% over
    the $0.25 for the second quarter of 2012
  *Provision expense down 57% from the first quarter of 2013 and down 78%
    from the year-ago second quarter
  *Non-accrual loans down 8% in the quarter and down 34% from year-ago; other
    real estate owned down 29% from the prior quarter and 33% less than
    year-ago
  *Redemption of all preferred stock completed
  *Back room conversions related to the consolidation of Firstbank charters
    completed on schedule with little or no disruption of customer service
  *Equity ratios remained strong with affiliate banks continuing to exceed
    regulatory well-capitalized requirements

ALMA, Mich., July 22, 2013 (GLOBE NEWSWIRE) -- Thomas R. Sullivan, President
and Chief Executive Officer of Firstbank Corporation (Nasdaq:FBMI), announced
net income of $3,343,000 for the second quarter of 2013, increasing 39.1% from
$2,404,000 for the second quarter of 2012, with net income available to common
shareholders of $3,077,000 in the second quarter of 2013 increasing 55.1% from
$1,984,000 in the second quarter of 2012. Earnings per share were $0.38 in the
second quarter of 2013 compared to $0.25 in the second quarter of 2012.
Returns on average assets and average equity for the second quarter of 2013
were 0.90% and 9.1%, respectively, compared to 0.65% and 6.3% respectively in
the second quarter of 2012.

For the first half of 2013, net income of $6,206,000 increased 28.7% from
$4,821,000 for the first half of 2012, with net income available to common
shareholders of $5,725,000 in the first half of 2013 increasing 43.8% from
$3,981,000 in the first half of 2012. Earnings per share were $0.71 in the
first half of 2013 compared to $0.50 in the first half of 2012. Returns on
average assets and average equity for the first half of 2013 were 0.83% and
8.5%, respectively, compared to 0.65% and 6.3% respectively in the first half
of 2012.

Mr. Sullivan stated, "The second quarter of 2013 saw significant progress for
our company. With the redemption and retirement of $17 million of our Series A
Preferred Stock, we completed the redemption of all of the preferred shares
and warrants issued in 2009 as part of the U.S. Treasury's TARP Capital
Purchase Program. This redemption marked a key milestone in our company's
successful navigation of the 'great recession.'

"We saw growth in portfolio loans, which helps our earning asset mix and
hopefully is a sign of an improving economic environment. With the growth in
loans, we saw the first quarterly increase in our yield on earning assets
since the third quarter of 2007.

"We continued to make progress on reducing non-accrual loans and other real
estate owned. Getting these non-performing assets off our balance sheet allows
our lending staff to focus more on developing new relationships and serving
existing good customers.

"The back room conversions related to the integration of our bank charters was
completed and the whole charter consolidation project has gone well and
without disruption. We continue to serve our customers with the same high
quality, timely, personal, professional, community bank service.

"Improvement in our earnings and asset quality metrics are the result of all
of this progress, and we thank our wonderful staff for their hard work and
dedication to our customers and company."

Provision for Loan Losses. The provision for loan losses, at $552,000 in the
second quarter of 2013, was 57% less than the amount required in the first
quarter of 2013 and was 78% less than the amount in the year-ago second
quarter. Net charge-offs of $1,161,000 in the second quarter included $798,000
that had been specifically reserved in periods prior to the beginning of the
quarter, making it unnecessary to provide the full amount of net charge-offs
in the quarter. The provision expense of $552,000 in the second quarter of
2013 did exceed the amount of net charge-offs that had not been previously
reserved. 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 $13,191,000 in the second quarter
of 2013 was 4.7%, lower than in the second quarter of 2012, as a result of a
16 basis point lower net interest margin compared to the year-ago quarter.
More importantly, Firstbank's net interest margin in the second quarter of
2013 improved to 3.89% from 3.83% in the first quarter of 2013. Although
competitive pricing pressure continued to force yields lower on some loan
renewals, portfolio loans grew in the second quarter of 2013. With the
improvement in earning asset mix in the quarter, the yield on average earning
assets increased by 3 basis points, to 4.34% in the second quarter of 2013
from 4.31% in the first quarter of 2013. The cost of funds to average earning
assets declined by 3 basis points, to 0.45% in the second quarter of 2013 from
0.48% in the first quarter of 2013.

Non-interest Income. Total non-interest income, at $2,973,000 in the second
quarter of 2013, was 1.8% lower than in the second quarter of 2012. Although
mortgage refinance activity remained at a historically strong level, gain on
sale of mortgages, at $1,467,000 in the second quarter of 2013, decreased 6.0%
compared to the first quarter of 2013 but was 0.5% above the year-ago level.
The category of "other" non-interest income, at $481,000 in the second quarter
of 2013, was 20% more than the amount in the first quarter of 2013 and 4.1%
more than in the second quarter of 2012. Included in this category of income
was a $103,000 net gain on sale of other real estate owned in the second
quarter of 2013, compared to a net gain of $54,000 in the first quarter of
2012 and a net loss of $13,000 in the second quarter of 2012. In the year-ago
second quarter a non-taxable income item of $178,000, related to a director
benefit plan of an affiliate bank, affected this category and did not recur in
2013.

Non-interest Expense. Total non-interest expense, at $10,907,000 in the second
quarter of 2013, was 1.1% lower than the level in the second quarter of 2012.
Salaries and employee benefits were 4.3% higher than in the second quarter of
2012. The salary and wage component increased 6.0%, mostly due to the
reinstatement of normal incentive plans which were in suspension during the
year-ago second quarter. Benefits costs decreased 1.9%. Occupancy and
equipment costs were 3.3% more than the amount in last year's second quarter
mostly due to upgrades of computer equipment and routine building maintenance.
FDIC insurance premium expense, at $276,000 in the second quarter of 2013, was
15% less than the level in the second 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 $3,496,000 in the second quarter of 2013,
decreased 8.7% compared to the second quarter of 2012. Write-downs of
valuations of other real estate owned (OREO) were $96,000 in the second
quarter of 2013, well below the $257,000 amount in the second quarter of 2012.
Also affecting this category in the second quarter of 2013 was a $270,000
write-down of a municipal note that had previously been taken as collateral on
a loan that had been charged-off in prior periods.

Total Assets. Total assets of Firstbank Corporation at June 30, 2013, were
$1.457 billion, a decrease of 1.9% from year-ago. Total portfolio loans of
$975 million increased 1.4% from the level at March 31, 2013, although
reaching a level still 1.3% less than year-ago. Commercial and commercial real
estate loans increased 0.4% in the second quarter of 2013, but were 2.7% less
than year ago, and real estate construction loans decreased 2.6% from year
ago, including a 3.2% decrease in the second quarter of 2013. Residential
mortgage loans increased 2.9% in the second quarter of 2013, but were 0.2%
less than year ago. Consumer loans increased 5.4% in the second quarter of
2013 and were 4.3% above year ago. Firstbank continues to have ample capital
and funding resources to increase loans on its balance sheet, although demand
for funds for new ventures by quality borrowers remains weak. 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 June 30, 2013, were $1.208 billion, compared to $1.212 billion
at June 30, 2012, a decrease of 0.3%. Core deposits at June 30, 2013, were
0.2% below the year-ago level, and they decreased $48.2 million in the second
quarter of 2013, mostly in interest bearing demand and time deposits. Until
more loan demand materializes and excess liquidity is deployed into loans,
deposit growth can receive less emphasis.

Net Charge-offs. Net charge-offs were $1,161,000 in the second quarter of
2013, decreasing from $1,770,000 in the first quarter of 2013 and decreasing
from $2,192,000 in the second quarter of 2012. In the second quarter of 2013,
net charge-offs annualized represented 0.48% of average loans, down
significantly from 0.73% in the first quarter of 2013 and 0.89% in the second
quarter of 2012.

Allowance and Asset Quality. At the end of the second quarter of 2013 the
ratio of the allowance for loan losses to loans was 2.08%, compared to 2.17%
at March 31, 2013, and 2.18% at June 30, 2012. Performing adjusted loans
(troubled debt restructurings, or TDRs) were $21,815,000 at June 30, 2013,
compared to $20,898,000 at March 31, 2013, and $19,274,000 at June 30, 2012.
Loans past due over 90 days and accruing interest were $18,000 at June 30,
2013, compared to $64,000 at March 31, 2013, and reduced from the $558,000
amount at June 30, 2012. Non-accrual loans were $11,849,000 at June 30, 2013,
a decrease of 7.9% from the level at March 31, 2013, and a decrease of 33.7%
from the $17,875,000 amount at June 30, 2012.

Other real estate owned decreased to $2,504,000 at June 30, 2013, compared to
the $3,541,000 level at March 31, 2013, and was down 33% from the $3,741,000
level at June 30, 2012.

Equity to Assets Ratio. The ratio of average equity to average assets remained
a strong 9.8% in the second quarter of 2013, the same as in the prior quarter.
The decline in this ratio from 10.4% in the second 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. On June 14, 2013, Firstbank redeemed all of the remaining $17
million outstanding preferred stock, and at June 30, 2013, after this
redemption of preferred stock, the ratio of equity to assets was 9.1%, still
quite strong. 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, 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:     Six Months Ended:
                                    Jun 30  Mar 31  Jun 30  Jun 30   Jun 30
                                    2013    2013    2012    2013     2012
Interest income:                                                  
Interest and fees on loans           $13,399 $13,284 $14,493 $26,683  $29,061
Investment securities                                             
Taxable                              865     962     1,183   1,827    2,404
Exempt from federal income tax       432     371     290     803      573
Short term investments               55      55      54      110      108
Total interest income                14,751  14,672  16,020  29,423   32,146
                                                                 
Interest expense:                                                 
Deposits                             1,237   1,350   1,718   2,587    3,610
Notes payable and other borrowing    323     310     463     633      930
Total interest expense               1,560   1,660   2,181   3,220    4,540
                                                                 
Net interest income                  13,191  13,012  13,839  26,203   27,606
Provision for loan losses            552     1,278   2,494   1,830    4,988
Net interest income after provision  12,639  11,734  11,345  24,373   22,618
for loan losses
                                                                 
Noninterest income:                                               
Gain on sale of mortgage loans       1,467   1,561   1,460   3,028    3,155
Service charges on deposit accounts  1,044   1,020   1,060   2,064    2,118
Gain on trading account securities   6       0       5       6        6
Gain on sale of AFS securities       2       50      27      52       40
Mortgage servicing                   (27)    (136)   15      (163)    (79)
Other                                481     400     462     881      1,003
Total noninterest income             2,973   2,895   3,029   5,868    6,243
                                                                 
Noninterest expense:                                              
Salaries and employee benefits       5,705   5,918   5,468   11,623   11,138
Occupancy and equipment              1,327   1,359   1,284   2,686    2,645
Amortization of intangibles          103     102     126     205      271
FDIC insurance premium               276     259     325     535      699
Other                                3,496   2,963   3,829   6,459    7,326
Total noninterest expense            10,907  10,601  11,032  21,508   22,079
                                                                 
Income before federal income taxes   4,705   4,028   3,342   8,733    6,782
Federal income taxes                 1,362   1,165   938     2,527    1,961
Net Income                          3,343   2,863   2,404   6,206    4,821
Preferred Stock Dividends            266     215     420     481      840
Net Income available to Common       $3,077  $2,648  $1,984  $5,725   $3,981
Shareholders
                                                                 
Fully Tax Equivalent Net Interest    $13,438 $13,232 $14,023 $26,670  $27,919
Income
                                                                 
Per Share Data:                                                   
Basic Earnings                       $0.38   $0.33   $0.25   $0.71    $0.50
Diluted Earnings                     $0.38   $0.33   $0.25   $0.71    $0.50
Dividends Paid                       $0.06   $0.06   $0.01   $0.12    $0.07
                                                                 
Performance Ratios:                                               
Return on Average Assets (a)         0.90%   0.77%   0.65%   0.83%    0.65%
Return on Average Equity (a)         9.1%    7.9%    6.3%    8.5%     6.3%
Net Interest Margin (FTE) (a)        3.89%   3.83%   4.05%   3.86%    4.04%
Book Value Per Share (b)             $16.41  $16.49  $16.14  $16.41   $16.14
Tangible Book Value per Share (b)    $11.92  $11.96  $11.52  $11.92   $11.52
Average Equity/Average Assets        9.8%    9.8%    10.4%   9.8%     10.4%
Net Charge-offs                      $1,161  $1,770  $2,192  $2,931   $4,485
Net Charge-offs as a % of Average    0.48%   0.73%   0.89%   0.61%    0.91%
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
                                                                
                                  Jun 30     Mar 31     Dec 31     Jun 30
                                  2013       2013       2012       2012
ASSETS                                                           
                                                                
Cash and cash equivalents:                                       
Cash and due from banks            $14,132    $23,275    $38,544    $29,340
Short term investments             40,298     90,419     63,984     64,759
Total cash and cash equivalents    54,430     113,694    102,528    94,099
                                                                
Securities available for sale      351,022    360,942    353,684    326,680
Federal Home Loan Bank stock       7,266      7,266      7,266      7,266
Loans:                                                           
Loans held for sale                992        3,022      2,921      3,857
Portfolio loans:                                                 
Commercial                        155,787    150,845    149,265    160,106
Commercial real estate            356,137    358,957    357,831    365,801
Residential mortgage               339,054    329,428    331,896    339,663
Real estate construction           55,138     56,940     58,530     56,599
Consumer                           68,688     65,148     66,240     65,861
Total portfolio loans              974,804    961,318    963,762    988,030
Less allowance for loan losses     (20,239)   (20,848)   (21,340)   (21,522)
Net portfolio loans                954,565    940,470    942,422    966,508
                                                                
Premises and equipment, net        24,322     24,499     24,356     24,978
Goodwill                           35,513     35,513     35,513     35,513
Other intangibles                  761        863        965        1,177
Other assets                       28,175     29,234     29,107     25,660
TOTAL ASSETS                       $1,457,046 $1,515,503 $1,498,762 $1,485,738
                                                                
LIABILITIES AND SHAREHOLDERS'                                    
EQUITY
                                                                
LIABILITIES                                                      
                                                                
Deposits:                                                        
Noninterest bearing accounts       $251,742   $243,126   $251,109   $217,824
Interest bearing accounts:                                       
Demand                             338,168    371,929    348,598    330,582
Savings                            273,921    281,043    265,323    258,607
Time                               327,596    343,495    358,791    386,762
Wholesale CD's                     16,875     17,285     17,580     18,071
Total deposits                     1,208,302  1,256,878  1,241,401  1,211,846
                                                                
Securities sold under agreements
torepurchase and overnight        43,661     43,065     42,785     45,746
borrowings
FHLB Advances and notes payable    27,862     19,959     22,493     24,334
Subordinated Debt                 36,084     36,084     36,084     36,084
Accrued interest and other         8,693      10,150     8,941      22,585
liabilities
Total liabilities                  1,324,602  1,366,136  1,351,704  1,340,595
                                                                
SHAREHOLDERS' EQUITY                                             
Preferred stock; no par value,
300,000shares authorized, 33,000  0          16,912     16,908     16,901
outstanding
Common stock; 20,000,000 shares    116,369    115,861    115,621    117,087
authorized
Retained earnings                  15,679     13,085     10,921     7,397
Accumulated other comprehensive    396        3,509      3,608      3,758
income
Total shareholders' equity         132,444    149,367    147,058    145,143
TOTAL LIABILITIES AND              $1,457,046 $1,515,503 $1,498,762 $1,485,738
SHAREHOLDERS' EQUITY
                                                                
Common stock shares issued and     8,070,268  8,032,661  8,001,903  7,945,647
outstanding
Principal Balance of Loans         $609.9     $606.7     $608.2     $595.3
Serviced for Others ($mil)
                                                                
Asset Quality Information:                                       
Performing Adjusted Loans (TDRs)   21,815    20,898    20,720    19,274
(b)
Loans Past Due over 90 Days        18        64        37        558
Non-Accrual Loans                  11,849    12,872    15,668    17,875
Other Real Estate Owned            2,504      3,541      2,925      3,741
Allowance for Loan Loss as a % of  2.08%      2.17%      2.21%      2.18%
Loans (a)
                                                                
Quarterly Average Balances:                                      
Total Portfolio Loans (a)          $965,722   $963,994   $968,509   $984,898
Total Earning Assets               1,384,833  1,396,999 1,381,004 1,392,597
Total Shareholders' Equity         146,755    147,384   145,186   157,080
Total Assets                       1,489,905  1,508,084  1,496,135  1,508,406
Diluted Shares Outstanding        8,118,717  8,063,604  7,994,996  7,995,343
                                                                
(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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