Firstbank Corporation Announces Fourth Quarter and Full Year 2013 Results

Firstbank Corporation Announces Fourth Quarter and Full Year 2013 Results

                             Highlights Include:

  *For the full year 2013, diluted earnings per share were $1.45, increasing
    25% from $1.16 in 2012
  *For the fourth quarter of 2013, diluted earnings per share were $0.39,
    increasing from $0.35 for the fourth quarter of 2012
  *Merger related expenses reduced full year 2013 eps by $0.08 per share
  *Provision expense in fourth quarter of 2013 continued at zero due to
    continued improvement in asset quality metrics and strong level of
    reserves
  *Non-accrual loans reduced 10% in the quarter and 36% less than year-ago;
    other real estate owned reduced 15% from the prior quarter and 37% less
    than year-ago
  *Merger with Mercantile Bank Corporation approved by shareholders of both
    companies and awaiting regulatory approval
  *Equity ratios remained strong with affiliate banks continuing to exceed
    regulatory well-capitalized requirements

ALMA, Mich., Jan. 28, 2014 (GLOBE NEWSWIRE) -- Thomas R. Sullivan, President
and Chief Executive Officer of Firstbank Corporation (Nasdaq:FBMI), announced
net income of $3,159,000 for the fourth quarter of 2013, increasing 5.4% from
$2,998,000 for the fourth quarter of 2012, with net income available to common
shareholders of $3,159,000 in the fourth quarter of 2013 increasing 13.5% from
$2,783,000 in the fourth quarter of 2012. Diluted earnings per share were
$0.39 in the fourth quarter of 2013 compared to $0.35 in the fourth quarter of
2012. Returns on average assets and average equity for the fourth quarter of
2013 were 0.85% and 9.2%, respectively, compared to 0.79% and 8.1%
respectively in the fourth quarter of 2012.

For full year 2013, net income of $12,234,000 increased 16.1% from $10,534,000
for 2012, with net income available to common shareholders of $11,753,000 in
2013 increasing 26.9% from $9,259,000 in 2012. Diluted earnings per share were
$1.45 in 2013 compared to $1.16 in 2012. Returns on average assets and average
equity for full year 2013 were 0.82% and 8.7%, respectively, compared to 0.70%
and 7.0% respectively in 2012.

Expenses related to the pending merger with Mercantile Bank Corporation in the
amount of $133,000 in the fourth quarter of 2013 and $738,000 in the third
quarter of 2013 were recorded. These expenses reduced after tax earnings and
net income available to common shareholders by $117,000 in the fourth quarter,
$569,000 in the third quarter, and $686,000 for the full year.
Correspondingly, they reduced diluted earnings per share by $0.01 in the
fourth quarter, $0.07 in the third quarter, and $0.08 for the full year.

Mr. Sullivan stated, "Two factors stand out as important in our fourth quarter
results. First, we continued to make great progress on reducing non-accrual
loans and other real estate owned. Resolving these situations and getting
these non-performing assets removed from our balance sheet allow our lending
staff to focus more on developing new relationships and serving existing good
customers. Second, we have achieved growth in portfolio loans now for three
consecutive quarters, which helps our earning asset mix and is a sign of an
improving economic environment. The improving asset mix helps to combat more
competitive pricing pressure on new and renewed loans and will eventually be
the key to maintaining and improving net interest margin.

"We were gratified with the robust approval by the shareholders of both
companies, at the special shareholder meetings held during the fourth quarter,
of the previously announced merger with Mercantile Bank Corporation. We are
now awaiting the completion of the regulatory approval process. Our merger and
integration teams, comprised of key members of management from both companies,
have completed most of the tasks needed for a merger consummation.

"Strong improvement in our earnings and asset quality metrics, and our
exciting plans for the future are the result of much hard work and dedication
to our customers and company by our wonderful staff, and we thank them for
their efforts."

Provision for Loan Losses. The provision for loan losses was zero in the
fourth quarter of 2013 (and third quarter of 2013), compared to the $1,338,000
amount required in the fourth quarter of 2012. Net charge-offs of $1,609,000
in the fourth quarter of 2013 represented loans that had been provided for
previously, and the improving risk measures and strong level of allowance for
loan losses made it unnecessary to provide additional amounts to the allowance
in the quarter.

Net Interest Income. Net interest income, at $13,042,000 in the fourth quarter
of 2013 was 2.3%, lower than in the fourth quarter of 2012, as a result of a 7
basis point lower net interest margin compared to the year-ago quarter. Net
interest margin in the fourth quarter of 2013 increased to 3.84% from 3.82% in
the third quarter of 2013. Average portfolio loans grew in the fourth quarter
of 2013, helping to improve earning asset mix. The yield on average earning
assets decreased by only 1 basis point, to 4.25% in the fourth quarter of 2013
from 4.26% in the third quarter of 2013. The cost of funds to average earning
assets declined by 3 basis point, to 0.41% in the fourth quarter of 2013 from
0.44% in the third quarter of 2013.

Non-interest Income. Total non-interest income, at $2,434,000 in the fourth
quarter of 2013, was 28.6% lower than in the fourth quarter of 2012, as
mortgage refinance volume continued at much lower levels than year-ago. Gain
on sale of mortgages, at $514,000 in the fourth quarter of 2013, decreased
42.5% compared to the third quarter of 2013 and was 69.9% less than the
year-ago level. The category of "other" non-interest income, at $482,000 in
the fourth quarter of 2013, was 8.6% more than the amount in the third quarter
of 2013, primarily due to greater gains on sale of other real estate
properties and valuation adjustments on mortgage commitments partially offset
by lesser miscellaneous income on commercial loans. This category of "other"
non-interest income was 31.4% less than in the fourth quarter of 2012,
primarily due to lower gain on sale of other real estate and lesser valuation
adjustments on mortgage commitments when compared to that quarter. Net gain on
sale of other real estate in the fourth quarter of 2013 was $173,000, and net
gains have been recorded in all four quarters of 2013.

Non-interest Expense. Total non-interest expense, at $10,935,000 in the fourth
quarter of 2013, was 2.1% lower than the level in the fourth quarter of 2012,
even with the above mentioned merger related expenses included, and salaries
and employee benefits increasing 3.1% over the level in the fourth quarter of
2012. Occupancy and equipment costs were 3.6% more than the amount in last
year's fourth quarter mostly due to upgrades of computer equipment. FDIC
insurance premium expense, at $221,000 in the fourth quarter of 2013, was
13.7% less than the level in the fourth 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 $3,365,000 in the fourth quarter of 2013
included a $450,000 expense for adding to the reserve for potential put-back
claims related to mortgages previously sold in the secondary market. During
the fourth quarter of 2013, $644,000 was paid to the Federal Home Loan
Mortgage Company (FHLMC) and charged against the reserve in settlement of
claims stemming from loans originated prior to January 1 of 2009. At December
31, 2013, this reserve stands at $806,000. In spite of these additional
expenses, the category of "other" non-interest expense decreased 13.7%
compared to the fourth quarter of 2012, as various other miscellaneous
expenses declined and as write-downs of valuations of other real estate owned
(OREO) included in the category were only $4,000 in the fourth quarter of
2013, well below the $193,000 amount in the fourth quarter of 2012, and
expenses related to the maintenance of OREO properties declined to $60,000
compared to $177,000.

Total Assets. Total assets of Firstbank Corporation at December 31, 2013, were
$1.480 billion, a decrease of 1.3% from year-ago. Total portfolio loans of
$987 million increased 0.5% from the level at September 30, 2013, and reached
a level 2.4% above year-ago. Total portfolio loans have grown for three
consecutive quarters. Commercial and commercial real estate loans increased
0.9% in the fourth quarter of 2013, and were 3.9% more than year ago, and real
estate construction loans decreased 10.9% from year ago, in spite of a 6.0%
increase in the fourth quarter of 2013. Residential mortgage loans decreased
0.4% in the fourth quarter of 2013, but were 2.3% more than year ago. Consumer
loans decreased 2.2% in the fourth quarter of 2013 but were 3.3% above year
ago. Firstbank continues to have ample capital and funding resources to
increase loans on its balance sheet. Total deposits as of December 31, 2013,
were $1.233 billion, compared to $1.241 billion at December 31, 2012, a
decrease of 0.7%. Core deposits at December 31, 2013, were 0.8% below the
year-ago level, and they were flat in the fourth quarter of 2013.

Net Charge-offs. Net charge-offs were $1,609,000 in the fourth quarter of
2013, increasing from $633,000 in the third quarter of 2013 and increasing
from $1,331,000 in the fourth quarter of 2012. In the fourth quarter of 2013,
net charge-offs annualized represented 0.65% of average loans, compared to
0.26% in the third quarter of 2013 and 0.55% in the fourth quarter of 2012.
For full year 2013, net charge-offs declined 30% to $5,173,000 from $7,370,000
in 2012, representing 0.53% of average loans in 2013, improved from 0.75% of
loans in 2012.

Allowance and Asset Quality. Asset quality metrics continued to improve in the
fourth quarter of 2013, indicating a lesser need for reserves. At the end of
the fourth quarter of 2013 the ratio of the allowance for loan losses to loans
was 1.82%, compared to 2.00% at September 30, 2013, and 2.21% at December 31,
2012. Performing adjusted loans (troubled debt restructurings, or TDRs)
remained at a stable level and were $20,697,000 at December 31, 2013, compared
to $20,170,000 at September 30, 2013, and $20,720,000 at December 31, 2012.
Loans past due over 90 days and accruing interest were zero at December 31,
2013, compared to $26,000 at September 30, 2013, and reduced from the $37,000
amount at December 31, 2012. Non-accrual loans were $10,077,000 at December
31, 2013, a decrease of 10.1% from the level at September 30, 2013, and a
decrease of 35.7% from the $15,668,000 amount at December 31, 2012.

Other real estate owned decreased to $1,838,000 at December 31, 2013, compared
to the $2,161,000 level at September 30, 2013, and was down 37.2% from the
$2,925,000 level at December 31, 2012.

Equity to Assets Ratio. The ratio of average equity to average assets remained
a strong 9.3% in the fourth quarter of 2013, increasing from 9.1% in the third
quarter of 2013 and in line with the 9.5% of the year-ago fourth quarter.
Firstbank Corporation's affiliate banks continue to meet or exceed 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.
Firstbank Corporation has a pending merger with the similarly sized Mercantile
Bank Corporation.

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, timing of regulatory approvals and
the completion of the merger, 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
                        2013    2013    2012    2013       2012
Interest income:                                       
Interest and fees on    $12,909 $13,012 $13,769 $52,604    $56,975
loans
Investment securities                                  
Taxable                 1,078   894     1,004   3,799      4,512
Exempt from federal     449     441     324     1,693      1,169
income tax
Short term investments  32      36      49      178        210
Total interest income   14,468  14,383  15,146  58,274     62,866
                                                      
Interest expense:                                      
Deposits                1,114   1,190   1,428   4,891      6,626
Notes payable and other 312     338     374     1,283      1,748
borrowing
Total interest expense  1,426   1,528   1,802   6,174      8,374
                                                      
Net interest income     13,042  12,855  13,344  52,100     54,492
Provision for loan      0       0       1,338   1,830      7,690
losses
Net interest income
after provision for     13,042  12,855  12,006  50,270     46,802
loan losses
                                                      
Noninterest income:                                    
Gain on sale of         514     894     1,707   4,436      6,523
mortgage loans
Service charges on      1,029   1,043   1,053   4,136      4,219
deposit accounts
Gain on trading account 10      (4)     3       12         4
securities
Gain on sale of AFS     282     0       2       334        44
securities
Mortgage servicing      117     109     (57)    63         (231)
Other                   482     444     703     1,807      2,111
Total noninterest       2,434   2,486   3,411   10,788     12,670
income
                                                      
Noninterest expense:                                   
Salaries and employee   5,853   5,805   5,677   23,281     22,680
benefits
Occupancy and equipment 1,285   1,335   1,240   5,306      5,152
Amortization of         78      86      102     369        482
intangibles
FDIC insurance premium  221     233     256     989        1,220
Other                   3,365   3,050   3,899   12,874     15,148
Merger related expense  133     738            871        
Total noninterest       10,935  11,247  11,174  43,690     44,682
expense
                                                      
Income before federal   4,541   4,094   4,243   17,368     14,790
income taxes
Federal income taxes    1,382   1,225   1,245   5,134      4,256
Net Income             3,159   2,869   2,998   12,234     10,534
Preferred Stock         0       0       215     481        1,275
Dividends
Net Income available to $3,159  $2,869  $2,783  $11,753    $9,259
Common Shareholders
                                                      
Fully Tax Equivalent    $13,307 $13,122 $13,538           
Net Interest Income
                                                      
Per Share Data:                                        
Basic Earnings          $0.39   $0.36   $0.35   $1.46      $1.17
Diluted Earnings        $0.39   $0.35   $0.35   $1.45      $1.16
Dividends Paid          $0.06   $0.06   $0.21   $0.24      $0.29
                                                      
Performance Ratios:                                    
Return on Average       0.85%   0.78%   0.79%   0.82%      0.70%
Assets (a)
Return on Average       9.2%    8.6%    8.1%    8.7%       7.0%
Equity (a)
Net Interest Margin     3.84%   3.82%   3.91%   3.84%      3.99%
(FTE) (a)
Book Value Per Share    $17.04  $16.75  $16.26  $17.04     $16.26
(b)
Tangible Book Value per $12.57  $12.27  $11.71  $12.57     $11.71
Share (b)
Average Equity/Average  9.3%    9.1%    9.7%    9.5%       10.0%
Assets
Net Charge-offs         $1,609  $633    $1,331  $5,173     $7,370
Net Charge-offs as a %  0.65%   0.26%   0.55%   0.53%      0.75%
of Average 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     Mar 31     Dec 31
                           2013       2013       2013       2012
ASSETS                                                   
                                                        
Cash and cash equivalents:                               
Cash and due from banks    $28,874    $30,384    $23,275    $38,544
Short term investments     46,724     31,019     90,419     63,984
Total cash and cash        75,598     61,403     113,694    102,528
equivalents
                                                        
Securities available for   343,620    357,429    360,942    353,684
sale
Federal Home Loan Bank     7,266      7,266      7,266      7,266
stock
Loans:                                                   
Loans held for sale        401        732        3,022      2,921
Portfolio loans:                                         
Commercial                167,047    159,199    150,845    149,265
Commercial real estate    359,920    363,059    358,957    357,831
Residential mortgage       339,608    340,877    329,428    331,896
Real estate construction   52,155     49,215     56,940     58,530
Consumer                   68,416     69,936     65,148     66,240
Total portfolio loans      987,146    982,286    961,318    963,762
Less allowance for loan    (17,997)   (19,608)   (20,848)   (21,340)
losses
Net portfolio loans        969,149    962,678    940,470    942,422
                                                        
Premises and equipment,    24,169     23,893     24,499     24,356
net
Goodwill                   35,513     35,513     35,513     35,513
Other intangibles          596        675        863        965
Other assets               23,413     27,362     29,234     29,107
TOTAL ASSETS               $1,479,725 $1,476,951 $1,515,503 $1,498,762
                                                        
LIABILITIES AND                                          
SHAREHOLDERS' EQUITY
                                                        
LIABILITIES                                              
                                                        
Deposits:                                                
Noninterest bearing        $267,405   $259,946   $243,126   $251,109
accounts
Interest bearing accounts:                               
Demand                     360,834    359,926    371,929    348,598
Savings                    282,341    276,783    281,043    265,323
Time                       302,998    317,440    343,495    358,791
Wholesale CD's             19,214     16,021     17,285     17,580
Total deposits             1,232,792  1,230,116  1,256,878  1,241,401
                                                        
Securities sold under
agreements to repurchase   47,635     47,333     43,065     42,785
and overnight borrowings
FHLB Advances and notes    19,790     19,861     19,959     22,493
payable
Subordinated Debt         36,084     36,084     36,084     36,084
Accrued interest and other 5,798      8,242      10,150     8,941
liabilities
Total liabilities          1,342,099  1,341,636  1,366,136  1,351,704
                                                        
SHAREHOLDERS' EQUITY                                     
Preferred stock; no par
value, 300,000shares      0          0          16,912     16,908
authorized, 33,000
outstanding
Common stock; 20,000,000   116,640    116,466    115,861    115,621
shares authorized
Retained earnings          20,739     18,064     13,085     10,921
Accumulated other          247        785        3,509      3,608
comprehensive income
Total shareholders' equity 137,626    135,315    149,367    147,058
TOTAL LIABILITIES AND      $1,479,725 $1,476,951 $1,515,503 $1,498,762
SHAREHOLDERS' EQUITY
                                                        
Common stock shares issued 8,077,022  8,076,621  8,032,661  8,001,903
and outstanding
Principal Balance of Loans $604.9     $609.1     $606.7     $608.2
Serviced for Others ($mil)
                                                        
Asset Quality Information:                               
Performing Adjusted Loans  20,697    20,170    20,898    20,720
(TDRs) (b)
Loans Past Due over 90     --        26        64        37
Days
Non-Accrual Loans          10,077    11,204    12,872    15,668
Other Real Estate Owned    1,838      2,161      3,541      2,925
Allowance for Loan Loss as 1.82%      2.00%      2.17%      2.21%
a % of Loans (a)
                                                        
Quarterly Average                                        
Balances:
Total Portfolio Loans (a)  $982,686   $977,069   $963,994   $968,509
Total Earning Assets       1,377,067  1,366,068 1,396,999 1,381,004
Total Shareholders' Equity 137,317    133,557   147,384   145,186
Total Assets               1,479,776  1,471,510  1,508,084  1,496,135
Diluted Shares             8,157,854  8,134,948  8,063,604  7,994,996
Outstanding
                                                        
(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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