Highlights
Include:
- For the fourth quarter of 2011, earnings per share were
$0.22, up from $0.15 in the third quarter of 2011 and up from $0.05
in the fourth quarter of 2010, as net income and net income
available to common shareholders also increased
- Earnings per share equaled $0.50 for full year 2011, up
from $0.27 per share in 2010
- Net income of $5,623,000 in 2011 increased $1,860,000
compared to $3,763,000 in 2010, and net income available to common
shareholders increased to $3,944,000 from $2,084,000
- Dividend payable March 15, 2012, will include extra
amount related to 2011 results
- Provision expense of $2.6 million in the fourth quarter
of 2011 decreased $848,000 from the third quarter of 2011 and
decreased $2.1 million from year ago fourth quarter
- Ratio of the allowance for loan losses to loans held at
2.14% at December 31, 2011, compared to 2.08% a
year ago
- Gain on sale of mortgages contributed to strong
results
- Equity ratios remained strong continuing to
build toward partial redemption of preferred shares, 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
$2,150,000 for the fourth quarter of 2011, compared to $843,000 for
the fourth quarter of 2010, with net income available to common
shareholders of $1,731,000 in the fourth quarter of 2011 compared
to $424,000 in the fourth quarter of 2010. Earnings per share were
$0.22 in the fourth quarter of 2011 compared to $0.05 in the fourth
quarter of 2010. Returns on average assets and average equity for
the fourth quarter of 2011 were 0.55% and 5.5%, respectively,
compared to 0.21% and 2.1% respectively in the fourth quarter of
2010.
For full year 2011, net income of $5,623,000 increased 49% from
the $3,763,000 earned in 2010. Net income available to common
shareholders of $3,944,000 in 2011 increased 89% compared to the
$2,084,000 in 2010. Earnings per share were $0.50 in 2011 compared
to $0.27 in 2010. Returns on average assets and average equity for
2011 were 0.38% and 3.8%, respectively, compared to 0.25% and 2.6%
respectively in 2010.
The provision for loan losses, at $2,611,000 in the fourth
quarter of 2011, was 25% less than the amount required in the third
quarter of 2011, and was 45% less than the amount in the year-ago
fourth quarter. 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. The
provision expense of $2,611,000 in the fourth quarter of 2011 was
less than net charge-offs in the quarter of $2,975,000, because
charge-offs included balances that had been specifically reserved
in previous quarters.
Net interest income, at $13,858,000 in the fourth quarter of
2011, increased 0.6% compared to the third quarter of 2011 and
increased 3.4% over the fourth quarter of 2010. Net interest income
grew slightly despite a small decline in average earning assets, as
continued reduction in funding costs more than offset the reduction
in asset yields related to shrinkage in the loan portfolio,
resulting in an increased net interest margin.
Firstbank's net interest margin was 4.07% in the fourth quarter
of 2011 compared to 4.03% in the third quarter of 2011 and 3.99% in
the fourth quarter of 2010. The improvement primarily was driven by
the factors explained above. Although FHLB (Federal Home Loan Bank)
advances and notes payable increased by $3 million in the fourth
quarter of 2011, they were $21 million lower than the year-ago
balance. While core deposits decreased 1.6% in the fourth quarter
of 2011, they were 2.3% above the year-ago level, providing a lower
cost source of funding. Additionally, strategies employed during
2010 and 2011 aimed at incorporating floors on variable rate loans
and re-pricing deposits upon renewal at currently competitive
rates, have contributed to improvement in the net interest
margin.
Total non-interest income, at $3,026,000 in the fourth quarter
of 2011, increased 17% from the third quarter of 2011, but was 23%
lower than in the fourth quarter of 2010. Gain on sale of
mortgages, at $1,662,000 in the fourth quarter of 2011, increased
60% compared to the third quarter of 2011 but was 40% below the
year-ago level. Mortgage refinance activity surged in the third and
fourth quarters of 2011, but not to the extremely high levels of
year-ago. Volume compared to year-ago is tempered by more stringent
and costly secondary market requirements. The category of "other"
non-interest income, at $337,000 in the fourth quarter of 2011, was
17% less than the amount in the third quarter of 2011 and 62% more
than in the fourth quarter of 2010. The major factors contributing
to these changes were swings in the amount of gain recognized on
the sale of other real estate owned. In the fourth quarter of 2011,
net gain on sale of properties was $18,000. In the third quarter of
2011, the net gain was $98,000, and in the fourth quarter of 2010 a
net loss of $169,000 was realized.
Total non-interest expense, at $11,236,000 in the fourth quarter
of 2011, was 4.6% higher than the level in the third quarter of
2011 and was 3.3% lower than the level in the fourth quarter of
2010, as expense control efforts continued. Salaries and employee
benefits increased 7.0% compared to the year-ago quarter. The
salary and wage component increased 2.6%, and benefits increased
31% primarily due to lower health care related claims experience in
2010 that resulted in an accrual adjustment in the self-funded plan
in the fourth quarter of 2010. Occupancy and equipment costs
declined 5.8%. FDIC insurance premium expense, at $356,000 in the
fourth quarter of 2011, was 34% below the level in the fourth
quarter of 2010. Firstbank Corporation's FDIC expense in the third
quarter of 2011 was reduced by an adjustment for a $167,000
overstatement of expense in the second quarter of 2011. The amount
expensed in the fourth quarter of 2011 represents a normalized
level of quarterly expense based on the new methodology for
assessing premiums, as the FDIC now assess premiums based on total
assets rather than total deposits. The FDIC made this change to
better align premiums with risk to the insurance fund. The category
of "other" non-interest expense, totaling $4,120,000 in the fourth
quarter of 2011, increased 14.8% compared to the third quarter of
2011 and decreased 9.6% compared to the fourth quarter of 2010. The
most significant factors in both comparisons were variations in
write-downs of valuations of other real estate owned and expenses
related to mortgage volume. Write-downs of valuations of other real
estate owned were $759,000 in the fourth quarter of 2011 compared
to $499,000 in the third quarter of 2011 and $1,062,000 in the
fourth quarter of 2010. In addition to the expense of write-downs,
other expenses associated with carrying other real estate owned,
primarily taxes and insurance, tend to run in the range of $250,000
to $300,000 per quarter.
Mr. Sullivan stated, "We made significant earnings progress in
2011, with net income available to common shareholders and earnings
per share increasing more than 85% from 2010. Our mortgage business
contributed significantly to this progress. Loan charge-offs and
corresponding provision expense, write-down of valuation of other
real estate owned due to real estate market conditions, taxes and
other expenses associated with carrying real estate properties that
have not sold, and other expenses associated with managing credits,
continued to impede further earnings progress. Eventually these
credit related costs should reduce.
"Our capital, funding, and human resources remain 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.
"As we are announcing in more detail in a separate news release
issued in conjunction with this earnings news release, our
management and board of directors have acted to distribute a
reasonable portion of the improved earnings to shareholders in the
form of an increased dividend payable on March 15, 2012. This
dividend will include a $0.01 per share quarterly amount as in
previous quarters plus an additional $0.05 per share related to the
results achieved in 2011, for a total of $0.06 per share. We know
that our shareholders have been impacted by the turmoil in the
financial markets and economy, and we are determined to bring them
the benefits of improvement as quickly as possible.
"Our capital ratios continue to build as earnings improve. Our
aim is to build capital to the point that by the time the dividend
on our preferred stock increases from 5% to 9%, which will occur in
early 2014, we will have been able to redeem approximately half of
the outstanding preferred shares. Doing so will negate any drag on
net income available to common shareholders that otherwise would
have resulted from an increased preferred dividend."
Total assets of Firstbank Corporation at December 31, 2011, were
$1.485 billion, an increase of 1.8% from the year-ago period. Total
portfolio loans of $984 million were 4.6% below the year-ago level.
Commercial and commercial real estate loans decreased 3.1% over
this twelve month period, and real estate construction loans
decreased 25.6%. Residential mortgage loans decreased 3.6%.
Consumer loans increased 4.1%. 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 in 2010 and 2011
resulted in mortgage loans being financed in the secondary market
rather than on the balance sheet of the company. Total deposits as
of December 31, 2011, were $1.221 billion, compared to $1.184
billion at December 31, 2010, an increase of 3.1%. Core deposits
increased $27 million or 2.3% over the year-ago level.
Net charge-offs were $2,975,000 in the fourth quarter of 2011,
reduced from $3,402,000 in the third quarter of 2011 and $4,016,000
in the fourth quarter of 2010. In the fourth quarter of 2011, net
charge-offs annualized represented 1.21% of average loans, reduced
from 1.37% in the third quarter of 2011 and 1.54% in the fourth
quarter of 2010.
At the end of the fourth quarter of 2011 the ratio of the
allowance for loan losses to loans was 2.14%, compared to 2.16% at
September 30, 2011, and 2.08% at December 30, 2010. Mostly as a
result of more stringent definitional requirements, performing
adjusted loans (troubled debt restructurings, or TDRs) increased to
$18,929,000 at December 31, 2011, compared to $18,260,000 at
September 30, 2011, and compared to $10,056,000 at December 31,
2010. Conversely, loans past due over 90 days and non-accrual loans
declined from the year-ago level. Loans past due over 90 days were
$419,000 at December 31, 2011, decreasing from $1,455,000 at
September 30, 2011, and $606,000 at December 31, 2010. Non-accrual
loans were $22,707,000 at December 31, 2011, an increase of 8.8%
from the level at September 30, 2011, but a decrease of 13.9% from
the level at December 31, 2010.
Total shareholders' equity at December 31, 2011, was 4.7% higher
than at December 31, 2010. The ratio of average equity to average
assets was 10.1% in the fourth quarter of 2011, compared to 10.0%
in the fourth 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; 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, the resolution of
problem loans, and the timing and amount of any redemption of
preferred stock. 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 2011 |
Sep 30 2011 |
Dec 31 2010 |
Dec 31 2011 |
Dec 31 2010 |
Interest income: |
|
|
|
|
|
Interest and fees on loans |
$14,958 |
$15,290 |
$16,507 |
$61,465 |
$67,390 |
Investment securities |
|
|
|
|
|
Taxable |
1,249 |
1,309 |
991 |
4,888 |
3,649 |
Exempt from federal income tax |
274 |
271 |
289 |
1,118 |
1,138 |
Short term investments |
35 |
54 |
50 |
173 |
205 |
Total interest income |
16,516 |
16,924 |
17,837 |
67,644 |
72,382 |
|
|
|
|
|
|
Interest expense: |
|
|
|
|
|
Deposits |
2,206 |
2,691 |
3,386 |
10,891 |
15,733 |
Notes payable and other borrowing |
452 |
452 |
1,047 |
2,081 |
5,157 |
Total interest expense |
2,658 |
3,143 |
4,433 |
12,972 |
20,890 |
|
|
|
|
|
|
Net interest income |
13,858 |
13,781 |
13,404 |
54,672 |
51,492 |
Provision for loan losses |
2,611 |
3,459 |
4,721 |
13,337 |
13,344 |
Net interest income after provision for loan
losses |
11,247 |
10,322 |
8,683 |
41,335 |
38,148 |
|
|
|
|
|
|
Noninterest income: |
|
|
|
|
|
Gain on sale of mortgage loans |
1,662 |
1,040 |
2,757 |
3,683 |
5,907 |
Service charges on deposit accounts |
1,095 |
1,123 |
1,155 |
4,492 |
4,576 |
Gain (loss) on trading account
securities |
(18) |
0 |
(10) |
(10) |
3 |
Gain (loss) on sale of AFS
securities |
(37) |
9 |
(6) |
(38) |
4 |
Mortgage servicing |
(13) |
17 |
(187) |
108 |
(96) |
Other |
337 |
404 |
208 |
1,440 |
1,435 |
Total noninterest income |
3,026 |
2,593 |
3,917 |
9,675 |
11,829 |
|
|
|
|
|
|
Noninterest expense: |
|
|
|
|
|
Salaries and employee benefits |
5,343 |
5,480 |
4,994 |
21,263 |
20,889 |
Occupancy and equipment |
1,257 |
1,346 |
1,335 |
5,311 |
5,555 |
Amortization of intangibles |
160 |
168 |
185 |
698 |
796 |
FDIC insurance premium |
356 |
162 |
543 |
1,560 |
2,098 |
Other |
4,120 |
3,589 |
4,558 |
14,721 |
15,364 |
Total noninterest expense |
11,236 |
10,745 |
11,615 |
43,553 |
44,702 |
|
|
|
|
|
|
Income before federal income taxes |
3,037 |
2,170 |
985 |
7,457 |
5,275 |
Federal income taxes |
887 |
540 |
142 |
1,834 |
1,512 |
Net Income |
2,150 |
1,630 |
843 |
5,623 |
3,763 |
Preferred Stock Dividends |
419 |
420 |
419 |
1,679 |
1,679 |
Net Income available to Common
Shareholders |
$1,731 |
$1,210 |
$424 |
$3,944 |
$2,084 |
|
|
|
|
|
|
Fully Tax Equivalent Net Interest Income |
$14,019 |
$13,949 |
$13,582 |
$55,347 |
$52,259 |
|
|
|
|
|
|
Per Share Data: |
|
|
|
|
|
Basic Earnings |
$0.22 |
$0.15 |
$0.05 |
$0.50 |
$0.27 |
Diluted Earnings |
$0.22 |
$0.15 |
$0.05 |
$0.50 |
$0.27 |
Dividends Paid |
$0.01 |
$0.01 |
$0.01 |
$0.04 |
$0.08 |
|
|
|
|
|
|
Performance Ratios: |
|
|
|
|
|
Return on Average Assets (a) |
0.55% |
0.41% |
0.21% |
0.38% |
0.25% |
Return on Average Equity (a) |
5.5% |
4.1% |
2.1% |
3.8% |
2.6% |
Net Interest Margin (FTE) (a) |
4.07% |
4.03% |
3.99% |
4.06% |
3.87% |
Book Value Per Share (b) |
$15.53 |
$15.36 |
$14.82 |
$15.53 |
$14.82 |
Average Equity/Average Assets |
10.1% |
10.0% |
10.0% |
10.1% |
9.9% |
Net Charge-offs |
$2,975 |
$3,402 |
$4,016 |
$13,749 |
$11,027 |
Net Charge-offs as a % of Average Loans
(c)(a) |
1.21% |
1.37% |
1.54% |
1.37% |
1.02% |
|
|
|
|
|
|
(a) Annualized |
|
|
|
|
|
(b) Period End |
|
|
|
` |
|
(c) Total loans less loans held for
sale |
|
|
|
|
|
|
|
|
FIRSTBANK CORPORATION |
CONSOLIDATED BALANCE
SHEETS |
(Dollars in thousands) |
UNAUDITED |
|
|
|
|
|
Dec 31 2011 |
Sep 30 2011 |
Dec 31 2010 |
ASSETS |
|
|
|
|
|
|
|
Cash and cash equivalents: |
|
|
|
Cash and due from banks |
$40,151 |
$24,086 |
$25,322 |
Short term investments |
35,665 |
77,477 |
48,216 |
Total cash and cash equivalents |
75,816 |
101,563 |
73,538 |
|
|
|
|
Securities available for sale |
346,618 |
323,245 |
266,121 |
Federal Home Loan Bank stock |
7,266 |
7,266 |
8,203 |
Loans: |
|
|
|
Loans held for sale |
349 |
2,207 |
1,355 |
Portfolio loans: |
|
|
|
Commercial |
156,551 |
157,155 |
164,413 |
Commercial real estate |
365,029 |
352,156 |
373,996 |
Residential mortgage |
340,060 |
344,700 |
352,652 |
Real estate construction |
60,280 |
74,561 |
81,016 |
Consumer |
61,989 |
60,481 |
59,543 |
Total portfolio loans |
983,909 |
989,053 |
1,031,620 |
Less allowance for loan losses |
(21,019) |
(21,383) |
(21,431) |
Net portfolio loans |
962,890 |
967,670 |
1,010,189 |
|
|
|
|
Premises and equipment, net |
25,087 |
25,454 |
25,431 |
Goodwill |
35,513 |
35,513 |
35,513 |
Other intangibles |
1,448 |
1,607 |
2,145 |
Other assets |
30,312 |
32,421 |
35,848 |
TOTAL ASSETS |
$1,485,299 |
$1,496,946 |
$1,458,343 |
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
Deposits: |
|
|
|
Noninterest bearing accounts |
$214,904 |
$204,604 |
$185,191 |
Interest bearing accounts: |
|
|
|
Demand |
340,942 |
331,007 |
293,900 |
Savings |
241,603 |
243,724 |
210,239 |
Time |
405,385 |
443,417 |
486,506 |
Wholesale CD's |
17,708 |
17,417 |
7,947 |
Total deposits |
1,220,542 |
1,240,169 |
1,183,783 |
|
|
|
|
Securities sold under agreements to
repurchase and overnight borrowings |
46,784 |
42,839 |
41,328 |
FHLB Advances and notes payable |
19,457 |
16,517 |
40,658 |
Subordinated Debt |
36,084 |
36,084 |
36,084 |
Accrued interest and other liabilities |
7,055 |
7,754 |
8,062 |
Total liabilities |
1,329,922 |
1,343,363 |
1,309,915 |
|
|
|
|
SHAREHOLDERS' EQUITY |
|
|
|
Preferred stock; no par value, 300,000 shares
authorized, 33,000 outstanding |
32,792 |
32,785 |
32,763 |
Common stock; 20,000,000 shares
authorized |
115,734 |
115,663 |
115,224 |
Retained earnings |
3,955 |
2,296 |
295 |
Accumulated other comprehensive
income/(loss) |
2,896 |
2,839 |
146 |
Total shareholders' equity |
155,377 |
153,583 |
148,428 |
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY |
$1,485,299 |
$1,496,946 |
$1,458,343 |
|
|
|
|
Common stock shares issued and
outstanding |
7,892,486 |
7,865,166 |
7,803,816 |
Principal Balance of Loans Serviced for
Others ($mil) |
$599.3 |
$601.6 |
$616.9 |
|
|
|
|
Asset Quality Information: |
|
|
|
Performing Adjusted Loans (TDRs) (b) |
18,929 |
18,260 |
10,056 |
Loans Past Due over 90 Days |
419 |
1,455 |
606 |
Non-Accrual Loans |
22,707 |
20,873 |
26,362 |
Other Real Estate Owned |
5,251 |
7,367 |
8,315 |
Allowance for Loan Loss as a % of Loans
(a) |
2.14% |
2.16% |
2.08% |
|
|
|
|
Quarterly Average Balances: |
|
|
|
Total Portfolio Loans (a) |
$983,875 |
$996,234 |
$1,041,986 |
Total Earning Assets |
1,369,931 |
1,376,072 |
1,355,226 |
Total Shareholders' Equity |
151,442 |
150,092 |
148,043 |
Total Assets |
1,492,870 |
1,501,534 |
1,484,854 |
Diluted Shares Outstanding |
7,875,613 |
7,859,159 |
7,796,168 |
|
|
|
|
(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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