Highlights Include:
* Net income of $1,217,000, and net income available to common
shareholders of $804,000, in third quarter 2009 compared to
$737,000 for both measures in third quarter 2008
* Earnings per share equaled $0.10 for the third quarter of 2009,
the same as $0.10 in the third quarter of 2008
* Year to date net income of $2,792,000, and 2009 YTD net income
available to common shareholders of $1,691,000, compared to
$3,179,000 in 2008 for both measures
* Net interest margin improved to 3.95% in the third quarter of
2009, up from 3.77% in the second quarter of 2009, and 3.82% in
third quarter 2008
* Ratio of the allowance for loan losses to loans increased to
1.49% at September 30, 2009, compared to 1.26% at December 31,
2008, and 1.11% at September 30, 2008
* Balance sheet and loan growth remain muted by economic conditions
and loan sales into the secondary market
* Equity ratio remains strong and all affiliate banks continue to
meet regulatory well-capitalized requirements
ALMA, Mich., Oct. 27, 2009 (GLOBE NEWSWIRE) -- Thomas R. Sullivan, President and Chief Executive Officer of Firstbank Corporation (Nasdaq:FBMI), announced earnings per share of $0.10 for the third quarter of 2009, the same as the $0.10 earned in the third quarter of 2008. Net income available to common shareholders was $804,000 compared to $737,000 in the year-ago third quarter, and net income increased to $1,217,000 compared to $737,000. Net income was $2,792,000 for the first nine months of 2009, compared to $3,179,000 for the first nine months of 2008. Returns on average assets and average equity for the third quarter of 2009 were 0.33% and 3.2%, respectively, increasing from 0.21% and 2.5% respectively in the year-ago third quarter. All per share amounts are fully diluted.
Earnings continued to be impacted by elevated provisions for loan loss, and expense for FDIC insurance, greatly exceeding year-ago levels. The provision expense in the third quarter of 2009 was $2,821,000, down from the $5,276,000 expensed in the second quarter of 2009, but more than double the $1,082,000 expensed in the third quarter of 2008. For the first nine months of 2009, provision expense was $9,685,000, up from the $5,309,000 provided in the first nine months of 2008, exceeding net charge-offs of $7,486,000. Firstbank's experience with loan charge-offs continues to be favorable compared to results in Michigan and other areas of the country.
Expense for FDIC deposit insurance was $448,000 in the third quarter of 2009, 170% over the $166,000 amount in the third quarter of 2008. Year-to-date in 2009, FDIC deposit insurance expense was $1,974,000, over five times the year-ago level of $382,000. The FDIC assessed a special charge in the second quarter to all banks to help with the costs of resolving bank failures across the country. The total amount of the special assessment to Firstbank was $642,000. There is currently a proposal for the FDIC to require all banks to pre-pay three years of FDIC premiums on December 31, 2009. For Firstbank, this prepayment amount would be nearly $7 million and would be expensed over the next three years.
Firstbank improved its net interest margin to 3.95% in the third quarter of 2009, from 3.77% in the second quarter of 2009, and the 3.82% in the third quarter of 2008. Strategies aimed at incorporating floors on variable rate loans and re-pricing deposits upon renewal at currently competitive rates resulted in the improvement in margin. Firstbank's banks have also been able to reduce their reliance on Federal Home Loan Bank advances and brokered deposits as core deposits have increased. This improvement in margin helped net interest income in the first nine months of 2009 increase 3.4% compared to the first nine months of 2008.
Gain on sale of mortgage loans was $1,104,000 in the third quarter of 2009, declining 65% from the $3,109,000 in the second quarter of 2009 but representing an increase of nearly 250% over the level in the third quarter of 2008.
Promotional costs associated with mortgage production tailed off in the third quarter consistent with the decline in volume. Year over year, promotional costs related to mortgage production are up $377,000. Notwithstanding the increased expense, the higher level of mortgage production has been beneficial to earnings as the gain on sale of mortgages has increased over $4.5 million year to date. Other non-interest expenses continue to be impacted by the difficult credit cycle. Costs related to the maintenance and disposal of other real estate owned amounted to over $1,264,000 during the first nine months of 2009, an increase of $770,000 from the first nine months of 2008. Legal fees largely resulting from increased collection efforts and management of troubled credit situations were $553,000 in the first nine months of 2009, an increase of over $270,000 from the first nine months of 2008.
Expense control efforts in the more manageable categories were successful. Comparing the first nine months of 2009 with the first nine months of 2008, salaries and employee benefits expense increased only 0.7% and occupancy and equipment expense declined 8.7%. The category of other noninterest expense showed an increase from $8,508,000 in the first nine months of 2008 to $10,117,000 in the first nine months of 2009, but over 88% of the increase was related to legal and other costs of managing problem loans and costs associated with the very profitable surge in the mortgage business, leaving the remaining costs in the category of other noninterest expense to increase 2.5%.
Total assets of Firstbank Corporation at September 30, 2009, were $1.430 billion, an increase of 1.6% over the year-ago period. Total portfolio loans of $1.125 billion were 2.6% below the year-ago level. Commercial and commercial real estate loans increased 6.2% over this twelve month period, but residential mortgage, real estate construction, and consumer loans decreased. Although mortgage refinance activity has been very strong in Firstbank's markets, this type of lending activity results in 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 funding new ventures by quality borrowers remains weak due to uncertainty about the economy. Total deposits as of September 30, 2009, were $1.073 billion, compared to $1.028 billion at September 30, 2008, an increase of 4.4%.
Mr. Sullivan stated, "Our lenders continue to do an excellent job of working with borrowers who are financially stressed by the current economic conditions, to both protect the interests of the bank and our shareholders as well as structure credits in the best possible way to accommodate expected cash flows. While we have very little exposure to auto manufacturers and suppliers directly, we know that their problems will ripple through the economy. Considering all of the credit-related costs, we were pleased to make a positive net income in the quarter amounting to a return on assets of 0.33%.
"Due to the low level of stock prices for the industry and the implications for the valuation of the assets of financial companies, and according to accounting guidance, we commissioned a third-party-expert valuation of goodwill on our balance sheet during the third quarter, to test for impairment. We were pleased to find that the proper application of accounting rules and principles indicates that the amount of goodwill on our books is not considered impaired and requires no charge to earnings. As a result, we continue to show a book value per share ($15.11 at September 30, 2009) which is substantially above tangible book value per share ($10.09).
"We are very disappointed in the low level of stock prices in the industry -- substantially below book values -- as are all of our shareholders; however, with the good people employed by our company doing the right things for both our customers and our shareholders and the continuing strong financial condition of our company and our banks, we believe we are well-positioned to emerge from the recession in a strong competitive position and with excellent opportunity for earnings growth when the time arrives."
At September 30, 2009, the ratio of the allowance for loan losses to loans increased to 1.49%, compared to 1.48% at June 30, 2009, 1.26% at December 31, 2008, and 1.11% at September 30, 2008. The ratio of allowance for loan loss to non-performing loans stood at 56% on September 30, 2009, compared to 59% at December 31, 2008.
Net charge-offs were $2,696,000 in the third quarter of 2009 after having risen to $2,736,000 in the second quarter and $2,054,000 in the first quarter. For the nine months of 2009, net charge-offs were $7,486,000, representing 0.88% of average loans on an annualized basis. This level of charge-offs continues to compare favorably in the industry. The ratio of non-performing loans (including loans past due over 90 days) to loans was 2.69% at September 30, 2009, compared to 2.14% as of December 31, 2008, and 1.81% at September 30, 2008.
Total equity increased 0.8% during the third quarter of 2009 and was 29.7% above the level at December 31, 2008, reflecting the improvement obtained by the issuance of $33 million preferred stock at the end of January. The ratio of average equity to average assets was 10.3% in the third quarter of 2009, approximately two full percentage points over the year-ago level. All of Firstbank Corporation's affiliate banks met the regulatory well-capitalized requirements prior to the issuance of preferred stock in January and continue to meet these requirements.
Firstbank Corporation, headquartered in Alma, Michigan, is a financial services company using a multi-bank-charter format with assets of $1.4 billion and 51 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, 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: Nine Months Ended:
------------------------- ----------------
Sep 30 Jun 30 Sep 30 Sep 30 Sep 30
2009 2009 2008 2009 2008
------------------------- ----------------
Interest income:
Interest and fees on
loans $17,748 $17,504 $19,136 $52,876 $57,922
Investment securities
Taxable 651 648 918 $ 2,045 2,902
Exempt from federal
income tax 320 321 357 $ 973 1,059
Short term investments 44 23 91 97 268
------------------------- ----------------
Total interest income 18,763 18,496 20,502 55,991 62,151
Interest expense:
Deposits 4,454 4,819 6,164 14,441 19,684
Notes payable and other
borrowing 1,713 1,821 2,443 5,497 7,591
------------------------- ----------------
Total interest expense 6,167 6,640 8,607 19,938 27,275
Net interest income 12,596 11,856 11,895 36,053 34,876
Provision for loan
losses 2,821 5,276 1,028 9,685 5,309
------------------------- ----------------
Net interest income
after provision for
loan losses 9,775 6,580 10,867 26,368 29,567
Noninterest income:
Gain on sale of
mortgage loans 1,104 3,109 317 6,586 2,024
Service charges on
deposit accounts 1,140 1,122 1,218 3,345 3,642
Gain (loss) on trading
account securities (57) 16 (200) (170) (373)
Gain (loss) on sale of
AFS securities (2) 357 (1,674) 298 (1,612)
Mortgage servicing 25 (191) 180 (518) 188
Other 765 715 690 1,759 1,942
------------------------- ----------------
Total noninterest income 2,975 5,128 531 11,300 5,811
Noninterest expense:
Salaries and employee
benefits 5,641 5,551 5,342 16,822 16,712
Occupancy and equipment 1,510 1,529 1,728 4,766 5,217
Amortization of
intangibles 228 245 264 718 826
FDIC insurance premium 448 1,155 166 1,974 382
Other 3,403 3,460 3,116 10,117 8,508
------------------------- ----------------
Total noninterest
expense 11,230 11,940 10,616 34,397 31,645
Income before federal
income taxes 1,520 (232) 782 3,271 3,733
Federal income taxes 303 (294) 45 479 554
------------------------- ----------------
Net Income 1,217 62 737 2,792 3,179
Preferred Stock
Dividends 413 413 0 1,101 0
------------------------- ----------------
Net Income available to
Common Shareholders $ 804 ($351) $ 737 $ 1,691 $ 3,179
========================= ================
Fully Tax Equivalent Net
Interest Income $12,814 $12,071 $12,160 $36,714 $35,702
Per Share Data:
Basic Earnings $ 0.10 ($0.04) $ 0.10 $ 0.22 $ 0.43
Diluted Earnings $ 0.10 ($0.04) $ 0.10 $ 0.22 $ 0.43
Dividends Paid $ 0.100 $ 0.100 $ 0.225 $ 0.30 $ 0.675
Performance Ratios:
Return on Average
Assets(a) 0.33% 0.03% 0.21% 0.27% 0.32%
Return on Average
Equity(a) 3.2% 0.3% 2.5% 2.7% 3.7%
Net Interest Margin
(FTE)(a) 3.95% 3.77% 3.82% 3.79% 3.79%
Book Value Per
Share(b) $ 15.11 $ 15.02 $ 15.61 $ 15.11 $ 15.61
Average Equity/Average
Assets 10.3% 10.5% 8.4% 10.1% 8.5%
Net Charge-offs $ 2,696 $ 2,736 $ 590 $ 7,486 $ 4,020
Net Charge-offs as a
% of Average
Loans(c)(a) 0.96% 0.96% 0.20% 0.88% 0.47%
(a) Annualized
(b) Period End
(c) Total loans less loans held for sale
FIRSTBANK CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
UNAUDITED
Sep 30 Jun 30 Dec 31 Sep 30
2009 2009 2008 2008
----------------------------------------------
ASSETS
Cash and cash
equivalents:
Cash and due from
banks $ 25,077 $ 39,653 $ 33,050 $ 35,589
Short term
investments 34,747 52,497 30,662 3,873
----------------------------------------------
Total cash and cash
equivalents 59,824 92,150 63,712 39,462
Securities available
for sale 148,628 108,091 113,095 119,756
Federal Home Loan
Bank stock 9,084 9,084 9,084 8,760
Loans:
Loans held for sale 2,627 2,676 1,408 757
Portfolio loans:
Commercial 188,306 183,287 184,455 206,274
Commercial real
estate 393,555 395,227 391,572 341,550
Residential mortgage 385,530 390,318 403,695 398,963
Real estate
construction 85,383 88,668 103,206 130,405
Consumer 71,943 72,482 75,296 77,018
----------------------------------------------
Total portfolio loans 1,124,717 1,129,982 1,158,224 1,154,210
Less allowance for
loan losses (16,793) (16,668) (14,594) (12,767)
----------------------------------------------
Net portfolio loans 1,107,924 1,113,314 1,143,630 1,141,443
Premises and
equipment, net 25,704 25,616 26,941 27,565
Goodwill 35,513 35,513 35,603 35,603
Other intangibles 3,157 3,384 3,881 4,126
Other assets 37,349 36,302 27,986 29,581
----------------------------------------------
TOTAL ASSETS $1,429,810 $1,426,130 $1,425,340 $1,407,053
==============================================
LIABILITIES AND
SHAREHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest bearing
accounts $ 150,878 $ 165,574 $ 149,179 $ 148,762
Interest bearing
accounts:
Demand 247,631 226,078 223,526 216,894
Savings 165,784 162,879 154,015 157,681
Time 481,360 480,954 489,081 463,193
Wholesale CDs 28,028 20,700 31,113 41,512
----------------------------------------------
Total deposits 1,073,681 1,056,185 1,046,914 1,028,042
Securities sold under
agreements to
repurchase and
overnight borrowings 44,914 44,163 52,917 55,877
FHLB Advances and
notes payable 112,303 127,814 162,274 153,865
Subordinated Debt 36,084 36,084 36,084 36,084
Accrued interest and
other liabilities 13,672 13,953 12,168 15,669
----------------------------------------------
Total liabilities 1,280,654 1,278,199 1,310,357 1,289,537
SHAREHOLDERS' EQUITY
Preferred stock; no
par value, 300,000
shares authorized,
33,000 outstanding 32,707 32,707 0 0
Common stock;
20,000,000 shares
authorized 114,525 114,253 113,411 112,970
Retained earnings 87 50 686 4,842
Accumulated other
comprehensive income/
(loss) 1,837 921 886 (296)
----------------------------------------------
Total shareholders'
equity 149,156 147,931 114,983 117,516
----------------------------------------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $1,429,810 $1,426,130 $1,425,340 $1,407,053
==============================================
Common stock shares
issued and
outstanding 7,704,796 7,669,227 7,580,620 7,530,235
Principal Balance of
Loans Serviced for
Others ($mil) $ 589.3 $ 575.1 $ 513.1 $ 514.5
Asset Quality Ratios:
Non-Performing Loans/
Loans(a) 2.69% 2.34% 2.14% 1.81%
Non-Perf. Loans +
OREO/Loans(a) +
OREO 3.59% 3.14% 2.60% 2.24%
Non-Performing
Assets/Total Assets 2.85% 2.51% 2.12% 1.84%
Allowance for Loan
Loss as a % of
Loans(a) 1.49% 1.48% 1.26% 1.11%
Allowance/Non-
Performing Loans 56% 63% 59% 61%
Quarterly Average
Balances:
Total Portfolio
Loans(a) $1,123,737 $1,137,106 $1,153,716 $1,156,041
Total Earning Assets 1,294,116 1,283,676 1,278,675 1,273,716
Total Shareholders'
Equity 147,468 148,247 118,064 118,437
Total Assets 1,429,150 1,417,842 1,409,644 1,408,393
Diluted Shares
Outstanding 7,677,619 7,643,929 7,540,644 7,498,223
(a) Total Loans less loans held for sale