U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
(X) Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended June 30, 1997 .
-----------------------------------
( ) Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from _______________ to ________________
Commission file number 0-22435
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FIRSTBANK CORP.
---------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 84-1389562
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
920 Main Street, Lewiston, ID 83501
------------------------------------
Address of Principal Executive Offices
(208) 746-9610
--------------
(Issuer's Telephone Number, Including Area Code)
(Former Name, Former Address and Former Fiscal Year, If Changed Since Last
Report)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
(X) Yes ( ) No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13, or 15 (d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court.
( ) Yes ( ) No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity as of the latest practicable date:
1,983,750 shares outstanding on June 30, 1997
Transitional Small Business Disclosure Format (check one):
( ) Yes (X) No
<PAGE>
<PAGE>
10-QSB
June 30, March 31,
BALANCE SHEET 1997 1997
Assets -------- --------
Cash and cash equivalents
Non-interest bearing deposits 5,488,548 3,883,176
Federal funds sold 114,456 1,419,560
-------- --------
Total cash and cash equivalents 5,603,004 5,302,736
Investment securities
Held-to-maturity 5,199,375 5,199,375
Mortgage-backed securities
Held-to-maturity 2,222,896 2,280,743
Available for sale 4,899,417 2,599,147
Loans receivable, net 125,427,436 113,048,075
Accrued interest receivable 1,461,265 1,013,848
Real estate owned 381,248 234,366
Stock in FHLB, at cost 1,456,975 945,475
Premises and equipment, net 5,123,678 4,928,655
Cash surrender value of life insurance 1,368,601 1,350,964
Morgage servicing assets 257,974 242,462
Other assets 741,591 505,864
----------- -----------
TOTAL ASSETS 154,143,460 137,651,710
=========== ===========
June 30, March 31,
Liabilities and Equity 1997 1997
Liabilities: -------- --------
Bank overdrafts 1,209,713 2,112,629
Deposits 112,177,979 107,595,602
Accrued interest on deposits 21,380 24,267
Advances from borrowers for taxes and
insurance 1,066,089 1,558,438
Income taxes payable 176,306 116,921
Advances from FHLB 27,618,611 13,922,083
Deferred federal and state income taxes 77,979 76,664
Accrued expenses and other liabilitie 518,033 1,233,995
----------- -----------
Total Liabilities 142,866,090 126,640,599
Equity:
Retained earnings, substantially
restricted 11,269,418 11,043,959
Unrealized gain (loss) on securities
available-for-sale, net of tax 7,952 (32,848)
----------- -----------
Total Equity 11,277,370 11,011,111
----------- -----------
TOTAL LIABILITIES AND EQUITY 154,143,460 137,651,710
=========== ===========
<PAGE>
<PAGE>
Three-Months Ended June 30,
INCOME STATEMENT 1997 1996
Interest income: -------- --------
Loans receivable 2,665,741 2,206,191
Mortgage-backed securities 97,154 34,797
Investment securities 71,826 200,586
Other interest earning assets 63,572 104,786
-------- --------
Total interest income 2,898,293 2,546,360
Interest expense:
Deposits 1,170,111 1,313,591
Advances for FHLB 331,530 43,323
-------- --------
Total interest expense 1,501,641 1,356,914
-------- --------
Net interest income 1,396,652 1,189,446
Provision for loan losses 18,000 28,000
Net interest income after provision -------- --------
for loan losses 1,378,652 1,161,446
Non-interest income:
Gain on sale of loans 180,231 367,288
Service fees and charges 257,278 209,310
Commissions and other 26,374 1,200
-------- --------
Total non-interest income 463,883 577,798
Non-interest expense:
Compensation and related benefits 826,256 781,059
Occupancy 178,229 167,474
Other 477,112 421,917
-------- --------
Total non-interest expense 1,481,597 1,370,450
-------- --------
Income before income tax expense 360,938 368,794
Income tax expense 135,479 152,667
-------- --------
NET INCOME 225,459 216,127
======== ========
<PAGE>
<PAGE>
Three months ended June 30,
Statement's of Cash Flows 1997 1996
Cash flows from operating activities: -------- --------
Net income 225,459 216,127
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation 124,127 87,201
Provision for loan losses 18,000 28,080
FHLB stock dividends (21,500) (17,375)
Loss on sale of investment securities
available-for-sale 0 89,789
Other (gains) losses, net 1,133 1,815
Deffered income taxes (25,278) 75,000
Changes in assets and liabilities:
Accured interest receivable and
other assets (697,903) (465,825)
Income taxes payable 59,385 85,483
Accrued expenses and other liabilities (746,697) (267,147)
-------- --------
Net cash used in operating activities (1,063,274) (166,852)
Cash flows from investing activities:
Purchase of mortgage-backed securities
available-for-sale (2,509,870) 0
Proceeds from maturities of mortgage-backed
securities held-to-maturity 304,259 97,552
Decrease in loans receivable from loans sold 9,679,972 16,594,000
Other net change in loans receivable (22,272,082) (24,509,937)
Purchase of FHLB stock (490,000) 0
Purchases of premises and equipment (288,569) (76,505)
Net increase in cash surrender value of life
insurance policies (17,637) (16,418)
Proceeds from real estate owned 49,000 76,163
Purchase of investment securities held-to-
maturity 0 (5,451,825)
Proceeds from sale of investment securities
held-to-maturity 0 1,302,406
Proceeds from maturities of investment
securities held-to-maturity 0 3,600,000
-------- --------
Net cash used in investing activities (15,544,927) (8,384,564)
Cash flows from financing activities:
Net increase (decrease) in deposits 4,582,377 (3,041,862)
Bank overdrafts (902,916) 726,263
Advances from borrowers for taxes
and insurance (492,349) (437,636)
Advances from FHLB 75,709,027 8,336,500
Payments on advances from FHLB (62,012,499) (6,694,834)
-------- --------
Net cash provided by (used in)
financing activities 16,883,640 (1,111,569)
-------- --------
Net increase (decrease) in cash and cash
equivalents 275,439 (9,662,985)
Cash and cash equivalents, beginning of 5,302,736 13,580,865
-------- --------
Cash and cash equivalents, end of period 5,603,004 3,918,552
========= =========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest 1,504,528 1,366,920
Income taxes 101,000 5,000
Noncash investing and financing activities:
Unrealized (gain) loss on securities
available-for-sale, net of tax (67,393) 36,669
Loans receivable charged to the allowance
for loan losses 994 603
Transfer from loans converted to real
estate acquired through foreclosure 194,749 0
<PAGE>
<PAGE>
FIRSTBANK CORP. AND FIRSTBANK NORTHWEST
NOTES TO COMBINED FINANCIAL STATEMENTS (UNAUDITED)
(1) BASIS OF PRESENTATION
The accompanying unaudited combined financial statements have been prepared in
accordance with Generally Accepted Accounting Principles (GAAP) for interim
financial information and with the instructions to Form 10-QSB and Article 10
of Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by GAAP for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring adjustments)
necessary for a fair presentation have been included. The results of operations
and other data for the three-months ended June 30, 1997 are not necessarily
indicative of results that may be expected for the entire fiscal year ending
March 31, 1998.
The unaudited combined financial statements include the accounts of FirstBank
Corp. (the "Company") and FirstBank Northwest (the "Savings Bank") and it's
wholly-owned subsidiary, TriStar Financial Corporation for the three-months
ended June 30, 1997. The combined financial statements for the periods prior to
June 30, 1997 include only the accounts of the Savings Bank and its subsidiary.
All significant intercompany accounts and transactions have been eliminated in
combination.
In June 1996, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 125, "Accounting for Transfer and
Servicing of Financial Assets and Extinguishment of Liabilities," which
supersedes SFAS No. 122 and establishes new standards that focus on control
whereas, after a transfer of financial assets, an entity recognizes the
financial servicing assets it controls and the liabilities it has incurred,
derecognizes financial assets when control has been surrendered, and
derecognizes liabilities when extinguished. This statement applies
prospectively in fiscal years beginning after December 31, 1996.
In December 1996, the FASB issued SFAS No. 127 "Deferral of the Effective Date
of Certain Provisions of FASB Statement No. 125," which defers for one year the
effective date of certain provisions of SFAS 125 that address secured
borrowings, collateral for all transactions and transfers of financial assets
that are part of repurchase agreements, securities lending and similar
transactions. The Company does not expect the adoption of SFAS No. 125 and SFAS
No. 127 to have a material effect on its financial statements.
<PAGE>
<PAGE>
In February 1997, the FASB issued SFAS No. 128, "Earnings per Share," which
establishes standards for computing and presenting earnings per share and
applies to entities with publicly held common stock or potential common stock.
This statement is effective for financial statements ending after December 15,
1997. The Company does not expect adoption to have a material effect on its
financial statements.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income,"
which requires the disclosure of comprehensive income and requires the
presentation of a reconciliation for net income to the change in equity of the
business during the year arising due to transactions from nonowner sources.
This statement is effective for financial statements beginning after December
15, 1997. The Company does not expect adoption to have a material effect on its
financial statements.
(2) CONVERSION TO STOCK OWNERSHIP
On January 8, 1997 the Board of Directors of the Savings Bank unanimously
adopted a Plan of Conversion pursuant to which the Savings Bank converted from
a federally chartered mutual savings bank to a federally chartered stock
savings bank, with the concurrent formation of the Company. The Company, on
July 1, 1997, sold 1,983,750 shares of common stock at $10.00 per share to
depositors, borrowers and employees of the Savings Bank in a subscription
offering.
(3) EARNINGS PER SHARE
No shares were outstanding as of June 30, 1997 and June 30, 1996, therefore
earnings per share have not been presented.
<PAGE>
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
GENERAL
- -------
On July 1, 1997, FirstBank Northwest converted from a mutual to stock form and
became a wholly-owned subsidiary of a newly formed Delaware holding company,
FirstBank Corp. The Company sold 1,983,750 shares of common stock at $10.00 per
share in conjunction with a subscription offering to the Savings Bank's
Employee Stock Ownership Plan (ESOP) and eligible account holders.
The Company's principal business is the business of the Savings Bank.
Therefore, the discussion in the Management's Discussion and Analysis of
Financial Conditions and Results of Operation relates to the Savings Bank and
its operations.
FINANCIAL CONDITION
- -------------------
Assets increased from 137.7 million at March 31, 1997 to 154.1 million at June
30, 1997. Mortgage-backed securities available- for-sale increased from $2.6
million at March 31, 1997 to $4.9 million at June 30, 1997. Loans receivable,
increased from $113.0 million at March 31, 1997 to $125.4 million due at June
30, 1997 as a result of increased commercial and residential real estate
lending. The increase in mortgage-backed securities available-for-sale and
loans receivable were attributable to the anticipated proceeds to be received
from the company's stock offering and were funded primarily through Federal
Home Loan Bank of Seattle (FHLB) advances. Accrued interest receivable
increased because of the larger asset base in securities and loans. Real estate
owned increased due to the repossession of one property. Deposits increased
from $107.6 million at March 31, 1997 to $112.2 million at June 30, 1997. The
increase was primarily due to the receipt of stock subscriptions in connection
with the Company's stock offering which was completed on July 1, 1997. Accrued
expenses and other liabilities decreased from $1,233,000 at March 31, 1997 to
$518,000 at June 30, 1997. The primary reason for the decrease was timing of
investor mortgage loan payoffs. It is the policy of the Savings Bank to cease
accruing interest on loans 90 days or more past due. Nonaccrual loans decreased
from $1,125,000 at March 31, 1997 to $1,065,000 at June 30, 1997.
RESULTS OF OPERATIONS
- ---------------------
Net earnings increased from $216,000 for the three months ended June 30, 1996
to $225,000 for the three months ended June 30, 1997.
<PAGE>
<PAGE>
NET INTEREST INCOME
- -------------------
Net interest income increased from $1,189,000 for the three months ended June
30, 1996 to $1,397,000 for the three months ended June 30, 1997. Total interest
income increased from $2,546,000 for the three months ended June 30, 1996 to
$2,898,000 for three months ended June 30, 1997. The increase in interest
income stemmed from an increase in average earning assets and higher yields on
those assets. The weighted average yield on the loan portfolio was 8.91% as of
June 30, 1997, whereas the weighted yield average at June 30, 1996 was 8.80%.
Interest income from investment securities decreased from $201,000 for the
three months ended June 30, 1996 to $72,000 for the three months ended June 30,
1997. The decrease is primarily due to a decrease in average balances
outstanding. Interest income from mortgage-backed securities increased from
$35,000 for the three months ended June 30, 1996 to $97,000 for the three
months ended June 30, 1997. The increase was due primarily to the purchase of
approximately $5 million in mortgage-backed securities available-for-sale with
higher yields. Interest expense increased from $1,357,000 for the three months
ended June 30, 1996 to $1,502,000 for the same time period in 1997. The
increase in interest expense is due primarily to higher average deposit
balances and an increase in FHLB advances. The weighted average rate on
deposits for the three months ended June 30, 1997 was 4.25%, whereas the
weighted average rate on deposits as of June 30, 1996 was 4.66%.
PROVISION FOR LOAN LOSSES
- -------------------------
Provision for loan losses is based upon management's consideration of economic
conditions which may affect the ability of borrowers to repay the loans.
Management also reviews individual loans for which full collectibility may not
be reasonably assured and considers, among other matters, the risks inherent in
the Savings Bank's portfolio and the estimated fair value of the underlying
collateral. This evaluation is ongoing and results in variations in the Savings
Bank's provision for loan losses. As a result of this evaluation, the Savings
Bank's provision for loan losses decreased from $28,000 for the three months
ended June 30, 1996 to $18,000 for the three months ended June 30, 1997.
NON-INTEREST INCOME
- -------------------
Non-interest income decreased from $578,000 for the three months ended June 30,
1996 to $464,000 for the three months ended June 30, 1997. The primary reason
was due to a decrease in gain or sale of loans as loans sold decreased from
$16.6 million for the three months ended June 30, 1996 to $9.7 million for the
three months ended June 30, 1997.
<PAGE>
<PAGE>
NON-INTEREST EXPENSE
- --------------------
Non-interest expense increased from $1,370,000 for the three months ended June
30, 1996 to $1,482,000 for the three months ended June 30, 1997. The increase
is primarily due to an increase in compensation and related expenses from the
addition of personnel for expanding loan products and one time cost for the
Bank's name change.
INCOME TAXES
- ------------
Income taxes decreased from $153,000 for the three months ended June 30, 1996
to $135,000 for the same time period in 1997. The decrease was primarily due to
a decrease in taxable income.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Savings Bank's principal sources of funds are cash receipts from deposits,
loan repayments by borrowers, sale of loans and net income. The Savings Bank
has an agreement with FHLB to provide cash advances, should the need for
additional funds be required. Advances totaled $27.6 million at June 30, 1997.
In addition, the Company had $4.9 million of securities available for sale at
June 30, 1997. The Savings Bank uses its liquidity resources principally to
fund existing and future loan commitments, to fund maturing certificates of
deposit and deposit withdrawals, to invest in other interest-earning assets, to
maintain liquidity and to meet operating expenses. Management believes that
loan repayments and other sources of funds will be adequate to meet or exceed
the Bank's liquidity needs for the remainder of fiscal 1997.
For regulatory purposes, liquidity is measured as a ratio of cash and certain
investments to withdrawable deposits. The minimum level of liquidity required
by regulation is presently 5%. The Savings Bank's liquidity ratio was
approximately 7.13% at June 30, 1997.
Commitments to originate adjustable-rate mortgage loans at June 30, 1997 were
approximately $2.3. Commitments to originate fixed-rate mortgage loans at June
30, 1997 were approximately $18.8 million. Commitments to fund outstanding
credit lines at June 30, 1997 were approximately $7.3 million.
The Savings Bank is required to meet certain tangible, core and risk-based
capital requirements. The following table presents the Savings Bank's capital
position relative to its regulatory capital requirements at June 30, 1997:
<PAGE>
<PAGE>
Percent of Adjusted
Amount Total Assets
(Unaudited)
(Dollars in Thousands)
------ ------
Tangible capital $11,270 7.31%
Tangible capital requirement $2,313 1.50%
--------------------------
Excess $8,957 5.81%
Core capital $11,270 7.31%
Core capital requirement $4,627 3.00%
--------------------------
Excess $6,643 4.31%
Risk-based capital $12,261 13.39%
Risk-based capital requirement $7,328 8.00%
--------------------------
Excess $4,933 5.39%
<PAGE>
<PAGE>
FIRSTBANK CORP.
PART II - Other Information
Item 1 - Legal Proceeding
There are no material legal proceedings to which the Company or the
Savings Bank is a party or of which any of their property is subject.
From time to time, the Savings Bank is a party to various legal
proceedings incident to its business.
Item 2 - Changes in Securities
None.
Item 3 - Defaults upon Senior Securities
Not applicable.
Item 4 - Submission of Matters to a Vote of Security Holders
None.
Item 5 - Other Information
None.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits: none
(b) Reports on Form 8-K; No reports on Form 8-K have been filed during
the quarter for which this report is filed.
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRSTBANK CORP.
DATED: August 14, 1997 BY:/s/CLYDE E. CONKLIN
---------------- -------------------
Clyde E. Conklin
President and Chief Executive Officer
BY:/s/LARRY K. MOXLEY
------------------
Larry K. Moxley
Secretary and Chief Financial Officer
<PAGE>
<PAGE>
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