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
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 2013 |
Sep 30 2013 |
Dec 31 2012 |
Dec 31 2013 |
Dec 31 2012 |
| Interest income: |
|
|
|
|
|
| Interest and fees on loans |
$12,909 |
$13,012 |
$13,769 |
$52,604 |
$56,975 |
| Investment securities |
|
|
|
|
|
| Taxable |
1,078 |
894 |
1,004 |
3,799 |
4,512 |
| Exempt from federal income
tax |
449 |
441 |
324 |
1,693 |
1,169 |
| 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
borrowing |
312 |
338 |
374 |
1,283 |
1,748 |
| 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 losses |
0 |
0 |
1,338 |
1,830 |
7,690 |
| Net interest income after provision for loan
losses |
13,042 |
12,855 |
12,006 |
50,270 |
46,802 |
| |
|
|
|
|
|
| Noninterest income: |
|
|
|
|
|
| Gain on sale of mortgage
loans |
514 |
894 |
1,707 |
4,436 |
6,523 |
| Service charges on deposit
accounts |
1,029 |
1,043 |
1,053 |
4,136 |
4,219 |
| Gain on trading account
securities |
10 |
(4) |
3 |
12 |
4 |
| Gain on sale of AFS
securities |
282 |
0 |
2 |
334 |
44 |
| Mortgage servicing |
117 |
109 |
(57) |
63 |
(231) |
| Other |
482 |
444 |
703 |
1,807 |
2,111 |
| Total noninterest income |
2,434 |
2,486 |
3,411 |
10,788 |
12,670 |
| |
|
|
|
|
|
| Noninterest expense: |
|
|
|
|
|
| Salaries and employee
benefits |
5,853 |
5,805 |
5,677 |
23,281 |
22,680 |
| Occupancy and equipment |
1,285 |
1,335 |
1,240 |
5,306 |
5,152 |
| Amortization of
intangibles |
78 |
86 |
102 |
369 |
482 |
| 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 expense |
10,935 |
11,247 |
11,174 |
43,690 |
44,682 |
| |
|
|
|
|
|
| Income before federal income taxes |
4,541 |
4,094 |
4,243 |
17,368 |
14,790 |
| 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 Dividends |
0 |
0 |
215 |
481 |
1,275 |
| Net Income available to Common
Shareholders |
$3,159 |
$2,869 |
$2,783 |
$11,753 |
$9,259 |
| |
|
|
|
|
|
| Fully Tax Equivalent Net Interest Income |
$13,307 |
$13,122 |
$13,538 |
|
|
| |
|
|
|
|
|
| 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 Assets
(a) |
0.85% |
0.78% |
0.79% |
0.82% |
0.70% |
| Return on Average Equity
(a) |
9.2% |
8.6% |
8.1% |
8.7% |
7.0% |
| Net Interest Margin (FTE)
(a) |
3.84% |
3.82% |
3.91% |
3.84% |
3.99% |
| Book Value Per Share (b) |
$17.04 |
$16.75 |
$16.26 |
$17.04 |
$16.26 |
| Tangible Book Value per Share
(b) |
$12.57 |
$12.27 |
$11.71 |
$12.57 |
$11.71 |
| Average Equity/Average
Assets |
9.3% |
9.1% |
9.7% |
9.5% |
10.0% |
| Net Charge-offs |
$1,609 |
$633 |
$1,331 |
$5,173 |
$7,370 |
| Net Charge-offs as a % of
Average Loans (c)(a) |
0.65% |
0.26% |
0.55% |
0.53% |
0.75% |
| |
|
|
|
|
|
| (a) Annualized |
|
|
|
|
|
| (b) Period End |
|
|
|
` |
|
| (c) Total loans less loans
held for sale |
|
|
|
|
|
| |
| FIRSTBANK CORPORATION |
| CONSOLIDATED BALANCE
SHEETS |
| (Dollars in thousands) |
| UNAUDITED |
| |
|
|
|
|
| |
Dec 31 2013 |
Sep 30 2013 |
Mar 31 2013 |
Dec 31 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 equivalents |
75,598 |
61,403 |
113,694 |
102,528 |
| |
|
|
|
|
| Securities available for sale |
343,620 |
357,429 |
360,942 |
353,684 |
| Federal Home Loan Bank stock |
7,266 |
7,266 |
7,266 |
7,266 |
| 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
losses |
(17,997) |
(19,608) |
(20,848) |
(21,340) |
| Net portfolio loans |
969,149 |
962,678 |
940,470 |
942,422 |
| |
|
|
|
|
| Premises and equipment, net |
24,169 |
23,893 |
24,499 |
24,356 |
| 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
accounts |
$267,405 |
$259,946 |
$243,126 |
$251,109 |
| 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 and overnight borrowings |
47,635 |
47,333 |
43,065 |
42,785 |
| FHLB Advances and notes payable |
19,790 |
19,861 |
19,959 |
22,493 |
| Subordinated Debt |
36,084 |
36,084 |
36,084 |
36,084 |
| Accrued interest and other liabilities |
5,798 |
8,242 |
10,150 |
8,941 |
| Total liabilities |
1,342,099 |
1,341,636 |
1,366,136 |
1,351,704 |
| |
|
|
|
|
| SHAREHOLDERS' EQUITY |
|
|
|
|
| Preferred stock; no par value,
300,000 shares authorized, 33,000 outstanding |
0 |
0 |
16,912 |
16,908 |
| Common stock; 20,000,000 shares
authorized |
116,640 |
116,466 |
115,861 |
115,621 |
| Retained earnings |
20,739 |
18,064 |
13,085 |
10,921 |
| Accumulated other comprehensive income |
247 |
785 |
3,509 |
3,608 |
| Total shareholders' equity |
137,626 |
135,315 |
149,367 |
147,058 |
| TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY |
$1,479,725 |
$1,476,951 |
$1,515,503 |
$1,498,762 |
| |
|
|
|
|
| Common stock shares issued and
outstanding |
8,077,022 |
8,076,621 |
8,032,661 |
8,001,903 |
| Principal Balance of Loans Serviced for
Others ($mil) |
$604.9 |
$609.1 |
$606.7 |
$608.2 |
| |
|
|
|
|
| Asset Quality Information: |
|
|
|
|
| Performing Adjusted Loans
(TDRs) (b) |
20,697 |
20,170 |
20,898 |
20,720 |
| Loans Past Due over 90
Days |
-- |
26 |
64 |
37 |
| 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 a %
of Loans (a) |
1.82% |
2.00% |
2.17% |
2.21% |
| |
|
|
|
|
| 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
Outstanding |
8,157,854 |
8,134,948 |
8,063,604 |
7,994,996 |
| |
|
|
|
|
| (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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