Highlights Include:
- Net income of $1,843,000 in the first half of 2011
increased $247,000 compared to $1,596,000 in the first half of
2010, and net income available to common shareholders increased to
$1,003,000 from $756,000
- Earnings per share equaled $0.13 for the first half of
2011, up from $0.10 per share in the first half of
2010
- For the second quarter of 2011, earnings per share were
$0.03, down from $0.07 in the second quarter of 2010 as net income
and net income available to common shareholders also declined from
the year-ago second quarter.
- Provision expense of $4.3 million in the second quarter
of 2011 increased $1.2 million from the first quarter of 2011 and
also was $1.2 million higher than a year ago
- Ratio of the allowance for loan losses to loans
strengthened to 2.12% at June 30, 2011, compared to 1.90% a year
ago
- Gain on sale of mortgages slowed, declining 27% from
the first quarter of 2011 and was 43% below the year-ago second
quarter level
- Loan portfolio continued to shrink due to economic
conditions and lack of demand
- Equity ratios remained strong and all affiliate banks
continue to exceed all regulatory well-capitalized
requirements
Thomas R. Sullivan, President and Chief Executive Officer of
Firstbank Corporation (Nasdaq:FBMI), announced net income of
$628,000 for the second quarter of 2011, compared to $937,000 for
the second quarter of 2010, with net income available to common
shareholders of $208,000 in the second quarter of 2011 compared to
$517,000 in the second quarter of 2010. Earnings per share were
$0.03 in the second quarter of 2011 compared to $0.07 in the second
quarter of 2010. Returns on average assets and average equity for
the second quarter of 2011 were 0.18% and 1.8%, respectively,
compared to 0.26% and 2.7% respectively in the second quarter of
2010.
For the first half of 2011, net income of $1,843,000 increased
15.5% from the $1,596,000 earned in the first half of 2010. Net
income available to common shareholders of $1,003,000 in the first
half of 2011 increased 32.7% compared to the $756,000 in the first
half of 2010. Earnings per share were $0.13 in the first half of
2011 compared to $0.10 in the first half of 2010. Returns on
average assets and average equity for the first half of 2011 were
0.27% and 2.7%, respectively, compared to 0.24% and 2.4%
respectively in the first half of 2010.
The provision for loan losses, at $4,256,000 in the second
quarter of 2011, was 41% more than the amount required in the first
quarter of 2011, and was 39% more than the amount in the year-ago
second quarter. The level of provision expense, and other expenses
related to management and collection of the loan portfolio,
continues to be the major restraint to higher levels of
profitability. The provision expense of $4,256,000 in the second
quarter of 2011 approximately matched net charge-offs in the
quarter of $4,277,000. Although the dollar level of reserves for
loan losses shows a slight decline, the allowance as a percentage
of loans increased due to the continued shrinkage of the loan
portfolio.
Net interest income, at $13,741,000 in the second quarter of
2011, increased 3.4% compared to the first quarter of 2011 and
increased 8.5% over the second quarter of 2010. Reduced funding
costs, offset to some degree by shrinkage in the loan portfolio
caused by lagging loan demand, improved the net interest
margin.
Firstbank's net interest margin was 4.08% in the second quarter
of 2011 compared to 4.05% in the first quarter of 2011 and 3.82% in
the second quarter of 2010. FHLB advances and notes payable
declined by $4.1 million in the second quarter of 2011 and were $64
million lower than the year-ago balance. Core deposits were nearly
flat (decreasing 0.2%) in the second quarter of 2011 and were 4.9%
above the year-ago level, providing a lower cost source of funding.
Also, strategies employed during 2010 and throughout 2011 aimed at
incorporating floors on variable rate loans and re-pricing deposits
upon renewal at currently competitive rates, have resulted in
improvement in net interest margin.
Total non-interest income, at $2,011,000 in the second quarter
of 2011, was 15% lower than in the second quarter of 2010. Gain on
sale of mortgages, at $413,000 in the second quarter of 2011,
declined 27% compared to the first quarter of 2011 and was 43%
below the year-ago level, reflecting the rapidly declining volumes
of mortgage refinance activity driven by changes in mortgage
interest rates and more stringent and costly secondary market
requirements. The category of "other" non-interest income, at
$340,000 in the second quarter of 2011, was within $19,000 of the
amount in the first quarter of 2011 but $102,000 lower than in the
second quarter of 2010. The comparison to the year-ago second
quarter was mostly due to a $45,000 lower gain on sale of other
real estate, smaller miscellaneous loan fees, and the elimination
of a small investment brokerage business that was marginally
unprofitable.
Total non-interest expense, at $10,810,000 in the second quarter
of 2011, was 0.4% higher than the level in the first quarter of
2011 and was 0.8% higher than the level in the second quarter of
2010, as expense control efforts continued. Salaries and employee
benefits and occupancy and equipment costs declined by 1.5% and
6.2%, respectively, in comparison to the year-ago period. The
category of "other" non-interest expense, totaling $3,672,000 in
the second quarter of 2011, increased 9.9% compared to the first
quarter of 2011 and 7.8% compared to the second quarter of 2010.
Both comparisons resulted mostly from increased write-downs of
valuations of other real estate owned. These write-downs were
$642,000 in the second quarter of 2011 compared to $359,000 in the
first quarter of 2011 and $345,000 in the second quarter of 2010.
The comparison of the second quarter of 2011 with the first quarter
of 2011 was also affected by certain higher marketing expenses in
the second quarter of 2011.
Mr. Sullivan stated, "We experienced yet another quarter, in the
second quarter of 2011, where loan charge-offs and charge-downs and
the corresponding need for provision expense continue well above
historical norms. These and other expenses related to managing the
loan portfolio offset positive developments within our earnings
profile. Our net interest margin is improving and our operating
costs are continuing to be managed tightly. Higher than normal
costs of managing credits and other real estate owned will stay
with us for some time, but eventually should reduce.
"As we have stated previously, our capital, funding, and human
resources are ample to support increased lending, although our loan
portfolios continue to shrink. We maintain good relationships and
communications with customers who will eventually want to expand
their businesses and activities and provide an increased demand for
loans. We have oriented our marketing messages to communicate that
we have money to lend and are willing to do so. We believe our
banks are well positioned to participate in and help support a
better Michigan economy as one of the major community banking
organizations in the state.
"We continually evaluate our unique structure of maintaining
separately chartered community banks within our holding company.
The holding company structure brings many operating cost
efficiencies to the back-room support functions for all of the
banks while the separate bank charters with separate legal boards
of directors give us an advantage in terms of customer service and
community support. There is some added cost of maintaining this
structure, and we must always consider the cost versus the benefit.
In the last two or three years, the burden of the regulatory
process has increased throughout the industry as regulatory
agencies are responding to the financial crises and major Wall
Street bankruptcies of 2008 and 2009. It has become more difficult
to profitably manage our smallest bank, Firstbank – St. Johns, in
this environment, and we can identify geographic, market, balance
sheet, and growth synergies between Firstbank – St. Johns and
Firstbank - Alma. Therefore, the boards of these two banks and the
board of our holding company recently have determined to combine
these two banks, subject to regulatory approval. We believe we have
gained experience and success in markets like Cadillac, Clare, and
Lakeview, which are all served by our Mt. Pleasant bank, and which
will provide a model for successful operation and growth of the
Alma bank while also serving and growing the St. Johns market.
"Another recent development in the second quarter of 2011 is the
opening of our second office in the Cadillac market. The Cadillac
market, while not a huge metropolitan area in any sense, is showing
growth in employment and has some important manufacturers
experiencing upturns in business. Cadillac is also a vibrant
tourism area with two very nice lakes and close access to skiing
and snow mobile trails for winter recreation. Our decision to open
this second office reflects our belief in Cadillac's future
economic prosperity."
Total assets of Firstbank Corporation at June 30, 2011, were
$1.481 billion, an increase of 0.3% from the year-ago period. Total
portfolio loans of $1.006 billion were 7.1% below the year-ago
level. Commercial and commercial real estate loans decreased 6.3%
over this twelve month period, and real estate construction loans
decreased 7.2%. Residential mortgage loans decreased 8.0% and
consumer loans decreased 8.5%. The strong mortgage refinance
activity in 2010 resulted in mortgage loans being financed in the
secondary market rather than on the balance sheet of the company.
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 due to uncertainty regarding the
economy. Total deposits as of June 30, 2011, were $1.218 billion,
compared to $1.162 billion at June 30, 2010, an increase of 4.8%.
Core deposits increased $56 million or 4.9% over the year-ago
level.
At June 30, 2011, provision expense was increased so that the
ratio of the allowance for loan losses to loans increased to 2.12%,
compared to 2.10% at March 31, 2011, and 1.90% at June 30, 2010.
More stringent definitional requirements are being applied by
regulators in determining what loans are to be reported on call
reports as "troubled debt restructurings" (TDRs). These loans
result from mutual efforts between the bank and the borrower to
adjust cash flow requirements and other terms of loans to reflect
new economic reality and to protect the financial interest of the
bank at the same time as allowing the customer to continue to meet
financial obligations while dealing with the protracted slow
economy and particularly weak real estate sales. Loans in this
category continue to perform according to the agreed upon terms,
for if they do not continue to perform, they are moved to either
the past-due-more- than-90-days category or to the non-accrual
category as circumstances indicate. Mostly as a result of the more
stringent definitional requirements, our performing adjusted loans
(TDRs) increased to $17,989,000 at June 30, 2011, compared to
$11,813,000 at March 31, 2011, and compared to $2,056,000 at June
30, 2010. Loans past due over 90 days were $1,787,000 at June 30,
2011, increased from the $544,000 at March 31, 2011, but $538,000,
or 23%, lower than the $2,326,000 at June 30, 2010. Non-accrual
loans were $20,205,000 at June 30, 2011, a decrease of 17.8% from
the level at March 31, 2011, and a decrease of 38.4% from the level
at June 30, 2010.
Net charge-offs were $4,277,000 in the second quarter of 2011,
compared to $3,095,000 in the first quarter of 2011 and $2,599,000
in the second quarter of 2010. In the second quarter of 2011, net
charge-offs annualized represented 1.69% of average loans, compared
to 1.21% in the first quarter of 2011 and 0.95% in the second
quarter of 2010.
Total shareholders' equity was 2.3% higher at June 30, 2011,
compared to the level at June 30, 2010. The ratio of average equity
to average assets was 10.0% in the second quarter of 2011, compared
to 9.8% in the second quarter of 2010. 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 multi-bank-charter format with assets
of $1.5 billion and 52 banking offices serving Michigan's Lower
Peninsula. Bank subsidiaries include: Firstbank – Alma; Firstbank
(Mt. Pleasant); Firstbank – West Branch; Firstbank – St. Johns;
Keystone Community Bank; and Firstbank – West Michigan.
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 future business growth,
changes in interest rates, loan charge-off rates, demand for new
loans, the performance of loans with provisions, 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
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 2011 |
Mar 31 2011 |
Jun 30 2010 |
Jun 30 2011 |
Jun 30 2010 |
Interest income: |
|
|
|
|
|
Interest and fees on loans |
$15,571 |
$15,646 |
$16,993 |
$31,217 |
$34,014 |
Investment securities |
|
|
|
|
|
Taxable |
1,319 |
1,011 |
910 |
2,330 |
1,626 |
Exempt from federal income tax |
280 |
293 |
272 |
573 |
581 |
Short term investments |
45 |
39 |
50 |
84 |
103 |
Total interest income |
17,215 |
16,989 |
18,225 |
34,204 |
36,324 |
|
|
|
|
|
|
Interest expense: |
|
|
|
|
|
Deposits |
2,945 |
3,049 |
4,198 |
5,994 |
8,476 |
Notes payable and other
borrowing |
529 |
648 |
1,359 |
1,177 |
2,856 |
Total interest expense |
3,474 |
3,697 |
5,557 |
7,171 |
11,332 |
|
|
|
|
|
|
Net interest income |
13,741 |
13,292 |
12,668 |
27,033 |
24,992 |
Provision for loan losses |
4,256 |
3,011 |
3,066 |
7,267 |
5,557 |
Net interest income after provision for loan
losses |
9,485 |
10,281 |
9,602 |
19,766 |
19,435 |
|
|
|
|
|
|
Noninterest income: |
|
|
|
|
|
Gain on sale of mortgage loans |
413 |
568 |
726 |
981 |
1,096 |
Service charges on deposit
accounts |
1,182 |
1,092 |
1,180 |
2,274 |
2,277 |
Gain (loss) on trading account
securities |
2 |
6 |
0 |
8 |
23 |
Gain (loss) on sale of AFS
securities |
(2) |
(8) |
(46) |
(10) |
9 |
Mortgage servicing |
76 |
28 |
63 |
104 |
189 |
Other |
340 |
359 |
442 |
699 |
1,035 |
Total noninterest income |
2,011 |
2,045 |
2,365 |
4,056 |
4,629 |
|
|
|
|
|
|
Noninterest expense: |
|
|
|
|
|
Salaries and employee benefits |
5,170 |
5,270 |
5,249 |
10,440 |
10,709 |
Occupancy and equipment |
1,284 |
1,424 |
1,369 |
2,708 |
2,859 |
Amortization of intangibles |
185 |
185 |
210 |
370 |
420 |
FDIC insurance premium |
499 |
543 |
485 |
1,042 |
1,030 |
Other |
3,672 |
3,340 |
3,406 |
7,012 |
7,128 |
Total noninterest expense |
10,810 |
10,762 |
10,719 |
21,572 |
22,146 |
|
|
|
|
|
|
Income before federal income taxes |
686 |
1,564 |
1,248 |
2,250 |
1,918 |
Federal income taxes |
58 |
349 |
311 |
407 |
322 |
Net Income |
628 |
1,215 |
937 |
1,843 |
1,596 |
Preferred Stock Dividends |
420 |
420 |
420 |
840 |
840 |
Net Income available to Common
Shareholders |
$208 |
$795 |
$517 |
$1,003 |
$756 |
|
|
|
|
|
|
Fully Tax Equivalent Net Interest Income |
$13,915 |
$13,464 |
$12,860 |
$27,379 |
$25,403 |
|
|
|
|
|
|
Per Share Data: |
|
|
|
|
|
Basic Earnings |
$0.03 |
$0.10 |
$0.07 |
$0.13 |
$0.10 |
Diluted Earnings |
$0.03 |
$0.10 |
$0.07 |
$0.13 |
$0.10 |
Dividends Paid |
$0.01 |
$0.01 |
$0.01 |
$0.02 |
$0.06 |
|
|
|
|
|
|
Performance Ratios: |
|
|
|
|
|
Return on Average Assets (a) |
0.18% |
0.37% |
0.26% |
0.27% |
0.24% |
Return on Average Equity (a) |
1.8% |
3.7% |
2.7% |
2.7% |
2.4% |
Net Interest Margin (FTE) (a) |
4.08% |
4.05% |
3.82% |
4.07% |
3.80% |
Book Value Per Share (b) |
$15.14 |
$14.95 |
$14.86 |
$15.14 |
$14.86 |
Average Equity/Average Assets |
10.0% |
10.1% |
9.8% |
10.1% |
9.8% |
Net Charge-offs |
$4,277 |
$3,095 |
$2,599 |
$7,372 |
$4,083 |
Net Charge-offs as a % of Average
Loans (c)(a) |
1.69% |
1.21% |
0.95% |
1.45% |
0.74% |
|
|
|
|
|
|
(a) Annualized |
|
|
|
|
|
(b) Period End |
|
|
|
` |
|
(c) Total loans less loans held for
sale |
|
|
|
|
|
|
FIRSTBANK CORPORATION |
CONSOLIDATED BALANCE
SHEETS |
(Dollars in thousands) |
UNAUDITED |
|
|
|
|
|
|
Jun 30 2011 |
Mar 31 2011 |
Dec 31 2010 |
Jun 30 2010 |
ASSETS |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents: |
|
|
|
|
Cash and due from banks |
$28,124 |
$23,707 |
$25,322 |
$25,752 |
Short term investments |
68,594 |
74,074 |
48,216 |
49,154 |
Total cash and cash equivalents |
96,718 |
97,781 |
73,538 |
74,906 |
|
|
|
|
|
Securities available for sale |
296,003 |
281,714 |
266,121 |
231,204 |
Federal Home Loan Bank stock |
7,266 |
8,203 |
8,203 |
9,084 |
Loans: |
|
|
|
|
Loans held for sale |
434 |
27 |
1,355 |
108 |
Portfolio loans: |
|
|
|
|
Commercial |
162,685 |
162,088 |
164,413 |
182,773 |
Commercial real estate |
365,803 |
373,376 |
373,996 |
381,216 |
Residential mortgage |
344,853 |
346,521 |
352,652 |
374,901 |
Real estate construction |
73,019 |
75,399 |
81,016 |
78,694 |
Consumer |
59,601 |
58,156 |
59,543 |
65,127 |
Total portfolio loans |
1,005,961 |
1,015,540 |
1,031,620 |
1,082,711 |
Less allowance for loan losses |
(21,327) |
(21,347) |
(21,431) |
(20,588) |
Net portfolio loans |
984,634 |
994,193 |
1,010,189 |
1,062,123 |
|
|
|
|
|
Premises and equipment, net |
25,557 |
25,461 |
25,431 |
24,662 |
Goodwill |
35,513 |
35,513 |
35,513 |
35,513 |
Other intangibles |
1,775 |
1,960 |
2,145 |
2,520 |
Other assets |
33,493 |
34,647 |
35,848 |
36,491 |
TOTAL ASSETS |
$1,481,393 |
$1,479,499 |
$1,458,343 |
$1,476,611 |
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
Noninterest bearing accounts |
$194,795 |
$187,349 |
$185,191 |
$164,475 |
Interest bearing accounts: |
|
|
|
|
Demand |
310,250 |
308,236 |
293,900 |
261,888 |
Savings |
237,008 |
236,137 |
210,239 |
197,208 |
Time |
459,489 |
471,700 |
486,506 |
522,205 |
Wholesale CD's |
16,778 |
14,297 |
7,947 |
16,452 |
Total deposits |
1,218,320 |
1,217,719 |
1,183,783 |
1,162,228 |
|
|
|
|
|
Securities sold under agreements to
repurchase and overnight borrowings |
46,304 |
42,623 |
41,328 |
36,601 |
FHLB Advances and notes payable |
21,543 |
25,628 |
40,658 |
85,110 |
Subordinated Debt |
36,084 |
36,084 |
36,084 |
36,084 |
Accrued interest and other liabilities |
7,480 |
7,879 |
8,062 |
8,382 |
Total liabilities |
1,329,731 |
1,329,933 |
1,309,915 |
1,328,405 |
|
|
|
|
|
SHAREHOLDERS' EQUITY |
|
|
|
|
Preferred stock; no par value, 300,000 shares
authorized, 33,000 outstanding |
32,778 |
32,770 |
32,763 |
32,748 |
Common stock; 20,000,000 shares
authorized |
115,571 |
115,320 |
115,224 |
115,034 |
Retained earnings |
1,157 |
1,020 |
295 |
(891) |
Accumulated other comprehensive
income/(loss) |
2,156 |
456 |
146 |
1,315 |
Total shareholders' equity |
151,662 |
149,566 |
148,428 |
148,206 |
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY |
$1,481,393 |
$1,479,499 |
$1,458,343 |
$1,476,611 |
|
|
|
|
|
Common stock shares issued and
outstanding |
7,853,295 |
7,814,097 |
7,803,816 |
7,771,105 |
Principal Balance of Loans Serviced for
Others ($mil) |
$604.4 |
$612.0 |
$616.9 |
$599.0 |
|
|
|
|
|
Asset Quality Information: |
|
|
|
|
Performing Adjusted Loans (TDRs)
(b) |
17,989 |
11,813 |
10,056 |
2,056 |
Loans Past Due over 90 Days |
1,787 |
544 |
606 |
2,326 |
Non-Accrual Loans |
20,205 |
24,581 |
26,362 |
32,793 |
Other Real Estate Owned |
8,469 |
7,922 |
8,315 |
9,780 |
Allowance for Loan Loss as a % of
Loans (a) |
2.12% |
2.10% |
2.08% |
1.90% |
|
|
|
|
|
Quarterly Average Balances: |
|
|
|
|
Total Portfolio Loans (a) |
$1,009,646 |
$1,024,733 |
$1,041,986 |
$1,090,129 |
Total Earning Assets |
1,367,013 |
1,342,877 |
1,355,226 |
1,349,637 |
Total Shareholders' Equity |
149,599 |
148,149 |
148,043 |
146,437 |
Total Assets |
1,490,020 |
1,473,199 |
1,484,854 |
1,487,801 |
Diluted Shares
Outstanding |
7,835,123 |
7,809,838 |
7,796,168 |
7,757,387 |
|
|
|
|
|
(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
Firstbank Corp. (MM) (NASDAQ:FBMI)
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