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, 1998.
( ) Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from _______________ to ________________
Commission file number 0-22435
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 CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date:
Common Stock 1,983,750 shares outstanding on June 30, 1998
Transitional Small Business Disclosure Format (check one):
( ) Yes (X) No
<PAGE>
FIRSTBANK CORP.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements Page
Consolidated Statements of Financial Condition
As of June 30, 1998 and March 31, 1998 1
Consolidated Statements of Income
For the three months ended June 30, 1998 and June 30, 1997 2
Consolidated Statements of Cash Flows
For the three months ended June 30, 1998 and June 30, 1997 3
Consolidated Statements of Comprehensive Income
For the three months ended June 30, 1998 and June 30, 1997 4
Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6 - 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 2. Changes in Securities 9
Item 3. Defaults Upon Senior Securities 9
Item 4. Submission of Matters to a Vote of Security Holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 9
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
FirstBank Corp. and Subsidiaries
Consolidated Statements of Financial Condition
<TABLE>
<CAPTION>
At June 30, At March 31,
1998 1998
------------- -------------
(Unaudited)
<S> <C> <C>
ASSETS Cash and cash equivalents:
Non-interest bearing deposits $ 5,292,762 $ 5,443,129
Interest bearing deposits 2,280,702 1,139,185
Federal funds sold 1,613,933 1,834,506
------------- -------------
Total cash and cash equivalents 9,187,397 8,416,820
Investment securities:
Held-to-maturity 1,746,136 2,449,375
Available-for-sale 3,181,073 2,654,233
Mortgage-backed securities:
Held-to-maturity 3,318,291 3,420,153
Available-for-sale 7,651,499 7,969,533
Certificates of deposit 991,000 991,000
Loans receivable, net 156,664,988 145,696,660
Accrued interest receivable 1,761,948 1,374,239
Real estate owned 718,579 883,441
Stock in FHLB, at cost 2,166,175 2,110,075
Premises and equipment, net 4,727,091 4,705,829
Income taxes receivable 59,429 468,807
Cash surrender value of life insurance policies 1,529,266 1,400,055
Mortgage servicing assets 551,633 406,666
Other assets 177,285 616,284
------------- -------------
TOTAL ASSETS $ 194,431,790 $ 183,563,170
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $ 119,960,680 $ 114,495,090
Advances from borrowers for taxes and insurance 727,600 1,329,080
Advances from FHLB 42,202,106 35,655,579
Deferred federal and state income taxes 201,497 245,017
Accrued expenses and other liabilities 949,223 1,830,406
------------- -------------
Total Liabilities 164,041,106 153,555,172
------------- -------------
Stockholders' Equity (Note 4):
Preferred stock, $.01 par value, 500,000 shares authorized; 0 shares
issued and outstanding 0 0
Common stock, $.01 par value, 5,000,000 shares authorized; 1,983,750
shares issued and outstanding 19,838 19,838
Additional paid-in-capital 19,039,968 18,989,977
Retained earnings, substantially restricted 12,797,667 12,493,990
Unearned ESOP shares (Note 3): (1,442,860) (1,493,430)
Accumulated comprehensive loss:
Unrealized losses on securities; available-for-sale, net of tax (23,929) (2,377)
------------- -------------
Total Stockholders' Equity 30,390,684 30,007,998
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 194,431,790 $ 183,563,170
============= =============
</TABLE>
See accompanying notes to consolidated financial statements
1
<PAGE>
FirstBank Corp. and Subsidiaries
Consolidated Statements of Income
<TABLE>
<CAPTION>
Three-months ended June 30,
1998 1997
---------- ----------
(Unaudited)
<S> <C> <C>
Interest income:
Loans receivable $3,188,642 $2,665,741
Mortgage-backed securities 168,078 97,154
Investment securities 67,795 71,826
Other interest earning assets 160,808 63,572
---------- ----------
Total interest income 3,585,323 2,898,293
Interest expense:
Deposits 1,219,432 1,170,111
Advances from FHLB 525,412 331,530
---------- ----------
Total interest expense 1,744,844 1,501,641
Net interest income 1,840,479 1,396,652
Provision for loan losses 135,736 18,000
---------- ----------
Net interest income after provision for loan losses 1,704,743 1,378,652
Non-interest income:
Gain on sale of loans 443,954 180,231
Service fees and charges 331,390 257,278
Commissions and other 39,637 26,374
---------- ----------
Total non-interest income 814,981 463,883
Non-interest expense:
Compensation and related benefits 949,885 826,256
Occupancy 215,020 178,229
Other 656,590 477,112
---------- ----------
Total non-interest expense 1,821,495 1,481,597
Income before income tax expense 698,229 360,938
Income tax expense 247,651 135,479
---------- ----------
Net Income $ 450,578 $ 225,459
========== ==========
Earnings per share (Note 2):
Net income per share (basic and diluted) $ 0.25 N/A
Weighted average shares outstanding 1,838,562 N/A
</TABLE>
See accompanying notes to consolidated financial statements
2
<PAGE>
FirstBank Corp. and Subsidiaries,
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Three-months ended June 30,
1998 1997
------------ ------------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 450,578 $ 225,459
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation 162,058 124,127
Provision for loan losses 135,736 18,000
Gain on sale of loans (443,954) (180,231)
FHLB stock dividends (40,700) (21,500)
ESOP compensation expense 100,561 --
Other (gains) losses, net 50,465 (1,133)
Provision for real estate owned 20,410 14,259
Deferred compensation expense 17,731 --
Deferred income taxes (29,579) (25,278)
Changes in assets and liabilities:
Accrued interest receivable and other assets (437,425) (698,656)
Accrued expenses and other liabilities (898,914) (733,108)
Loss on sale of investment securities: available-for-sale -- --
Income taxes receivable (payable) 409,378 59,385
------------ ------------
Net cash used in operating activities (503,655) (1,218,676)
Cash flows from investing activities:
Purchase of mortgage-backed securities; available-for-sale (750,000) (2,509,870)
Proceeds from maturities of mortgage-backed securities; held-to-maturity 100,009 304,259
Proceeds from maturities of mortgage-backed securities; available-for-sale 993,648 --
Decrease in loans receivable from loans sold 20,845,679 9,860,203
Other net change in loans receivable (31,701,556) (22,272,082)
Purchase of FHLB stock (15,400) (490,000)
Purchases of premises and equipment (193,013) (288,569)
Proceeds from sale of fixed assets 336,357 --
Net increase in cash surrender value of life insurance policies (129,211) (17,637)
Proceeds from sale of real estate owned 353,984 49,000
Purchase of investment securities; available for sale (580,000) --
Proceeds from maturities of investment securities; held-to-maturity 750,000 --
------------ ------------
Net cash used in investing activities (9,989,503) (15,364,696)
Cash flows from financing activities:
Cash paid for dividends (146,902) --
Net increase in deposits 5,465,590 4,582,377
Bank overdrafts -- (902,916)
Advances from borrowers for taxes and insurance (601,480) (492,349)
Advances from FHLB 33,600,000 75,709,027
Payments on advances from FHLB (27,053,473) (62,012,499)
------------ ------------
Net cash provided by financing activities 11,263,735 16,883,640
Net increase in cash and cash equivalents 770,577 300,268
Cash and cash equivalents, beginning of period 8,416,820 5,302,736
------------ ------------
Cash and cash equivalents, end of period $ 9,187,397 $ 5,603,004
============ ============
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest 1,748,619 1,504,528
Income taxes 18,934 101,000
Noncash investing and financing activities:
Unrealized (gains) losses on securities; available-for-sale, net of tax 21,552 (67,393)
Loans receivable charged to the allowance for loan losses 20,761 994
Transfer from loans converted to real estate acquired through foreclosure 195,767 194,749
</TABLE>
See accompanying notes to consolidated financial statements
3
<PAGE>
FirstBank Corp. and Subsidiaries
Consolidated Statements of Comprehensive Income
Three Months Ended June 30,
1998 1997
--------- ---------
(Unaudited)
Net Income $ 450,578 $ 225,459
Other comprehensive income (loss), net of tax:
Change in unrealized gains (losses) on securities;
available-for-sale, net of tax (21,552) 40,800
--------- ---------
Net other comprehensive income (loss) (21,552) 40,800
--------- ---------
Comprehensive income $ 429,026 $ 266,259
========= =========
See accompanying notes to consolidated financial statements
4
<PAGE>
FIRSTBANK CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(1) BASIS OF PRESENTATION
The accompanying unaudited consolidated 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. These statements
should be read in conjunction with the consolidated financial statements and
related notes included in the Company's Form 10-KSB for the year ended March 31,
1998. 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, 1998
are not necessarily indicative of results that may be expected for the entire
fiscal year ending March 31, 1999.
In June 1998, the Financial Accounting Standards Board Issued SFAS 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS 133
requires companies to recognize all derivatives contracts as either assets or
liabilities in the balance sheet and to measure them at fair value. If certain
conditions are met, a derivative may be specifically designated as a hedge, the
objective of which is to match the timing of gain or loss recognition on the
hedging derivative with the recognition of (i) the changes in the fair value of
the hedged assets or liability that are attributable to the hedged risk or (ii)
the earnings effect of the hedged forecasted transaction. For a derivative not
designated as a hedging instrument, the gain or loss is recognized in income in
the period of change. SFAS 133 is effective for all fiscal quarters of fiscal
years beginning after June 15, 1999. Historically, the Company has not entered
into derivative contracts either to hedge existing risks or for speculative
purposes. Accordingly, the Company does not expect adoption of the new standard
on April 1, 2000 to affect its financial statements.
The unaudited consolidated financial statements of FirstBank Corp. ("the
Company") include the accounts of its wholly-owned subsidiary, FirstBank
Northwest (the "Savings Bank") and it's wholly-owned subsidiary, TriStar
Financial Corporation for the three-months ended June 30, 1998. The financial
statements for the periods prior to July 1, 1997 include only the accounts of
the Savings Bank and its subsidiary. All significant intercompany accounts and
transactions have been eliminated in consolidation.
(2) EARNINGS PER SHARE
Basic earnings per share is computed by dividing the Company's net income by the
weighted average number of common shares outstanding during the period. Diluted
earnings per share reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock. The company had no dilutive potential common stock at June
30, 1998, and therefore, basic and diluted earnings per share are the same this
period. ESOP shares, which are unallocated and not yet committed to be released,
are excluded from the weighted average shares outstanding calculation. No shares
were outstanding prior to July 1, 1997, therefore earnings per common share for
those periods have not been presented.
(3) EMPLOYEE STOCK OWNERSHIP PLAN ("ESOP")
During 1997 the Company established a tax-qualified internally leveraged ESOP.
The ESOP covers substantially all employees who have attained the age of 21 and
completed one year of service. In connection with the conversion to a stock
company, the ESOP purchased 158,700 shares of the Company's common stock at a
price of $10.00 per share using funds loaned by the Company. All ESOP shares are
held in a suspense account and are allocated among the participants on a pro
rata basis as the loan is repaid. Currently this receivable from the ESOP is
scheduled to be repaid with level principal and interest payments over 25 years
with no penalty for prepayment. Shares released from the suspense account are
allocated among the participants based upon their pro rata annual compensation.
The sale of the shares to the ESOP was recorded by the Company as unearned ESOP
shares, a contra equity account. As ESOP shares are committed to be released to
compensate employees, the contra equity account is reduced and a corresponding
charge to compensation expense equal to the fair market value of the shares
committed to be released is recorded. Upon committing these share to be
released, they become outstanding for purposes of earnings-per-share
computations. Dividends on allocated ESOP shares are recorded as a reduction of
retained earnings; dividends on unallocated ESOP shares are recorded as a
reduction in ESOP debt. Compensation expense related to the ESOP was $100,561
for the three-months ended June 30, 1998. As of June 30, 1998, the Company has
allocated or committed to release to the ESOP 14,414 earned shares and has
144,286 unearned, restricted shares remaining to be release. The market value of
unearned, restricted shares held by the ESOP trust was approximately $3.2
million at June 30, 1998.
(4) DIVIDEND
On April 28, 1998 the Board of Directors declared a cash dividend of $.08 per
common share to shareholders of record as of May 7, 1998. The dividend was paid
on May 21. On July 23, 1998 the Board of Directors declared another cash
dividend of $.08 per common share to shareholders of record as of August 20,
1998. This dividend will be paid on September 3, 1998.
5
<PAGE>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-looking statements, within the meaning of Section 21E of the Securities
and Exchange Act of 1934, are made throughout this Management's Discussion and
Analysis of Financial Condition and Results of Operations. For this purpose, any
statements contained herein that are not statements of historical fact may be
deemed to be forward-looking statements. Without limiting the foregoing, the
words "believes", "anticipates", "plans", "expects", "estimates" and similar
expressions are intended to identify forward-looking statements. There are a
number of important factors that could cause the results of the Company to
differ materially from those indicated herein. These factors include, but are
not limited to, those set forth in Item 7 entitled Management's Discussion and
Analysis of Financial Condition and Results of Operations in the Company's Form
10-KSB for the year ended March 31, 1998.
GENERAL
On July 1, 1997, FirstBank Northwest converted from 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 net proceeds were
approximately $18,921,825. The company used approximately $9,470,000 of the net
proceeds to purchase all the capital stock of the Savings Bank. In addition,
$1,587,000 was loaned to the ESOP for the purchase of 158,700 shares in the
offering.
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. In August 1997, the Bank opened up a retail branch in Clarkston,
Washington. The Bank now has offices in Idaho and Washington. In January 1998
the Bank changed its charter to a Washington state charter.
On January 13th, the Company announced plans to offer state-of-the-art on line
banking services to customers by Fall of 1998. With this system customers can
access their accounts by screen phones, personal computers, touch-tone
telephones and through internet access. The Bank is currently testing the system
through a pilot program.
On July 22nd the shareholders approved the Company's Management Recognition and
Development Plan and 1998 Stock Option Plan. On July 23, 1998 the Board of
Directors awarded shares of restricted stock and stock options pursuant to the
Plans. Based on the price of the Company's common stock on the date of the
grants, the monthly expense before taxes of the restricted stock awards will be
about $27,000 each month for 60 months.
FINANCIAL CONDITION AT JUNE 30, 1998 AND MARCH 31, 1998
Assets increased from $183.6 million at March 31, 1998 to $194.4 million at June
30, 1998. Cash and cash equivalents increased from $8.4 million at March 31,
1998 to $9.2 million at June 30, 1998. Mortgage-backed securities
available-for-sale decreased from $8.0 million at March 31, 1998 to $7.7 million
at June 30, 1998. Loans receivable, increased from $145.7 million at March 31,
1998 to $156.7 million at June 30, 1998 as a result of an increase in new
commercial lending of $5.7 million, construction lending of $2.1 million,
agricultural operating lending of $2.7 million and $1.8 million in residential
real estate lending. Accrued interest receivable increased $1.4 million at March
31, 1998 to $1.8 million at June 30, 1998 due to a higher average asset base in
securities and loans. Deposits increased from $114.5 million at March 31, 1998
to $120.0 million at June 30, 1998. Activity within deposit balances increased
primarily due to the Savings Bank benefiting from funds deposited by the
customers of other local institutions, following larger bank mergers, and from
deposits of new commercial loan customers. Federal Home Loan Bank of Seattle
(FHLB) advances increased from $35.7 million at March 31, 1998 to $42.2 million
at June 30, 1998. The increase in deposits and FHLB borrowing was used to fund
increasing loans receivable. Accrued expenses and other liabilities decreased
from $1.8 million at March 31, 1998 to $0.9 million at June 30, 1998. 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 $454,000 at March 31, 1998 to
$35,000 at June 30, 1998.
RESULTS OF OPERATIONS FOR THREE MONTHS ENDED JUNE 30, 1998 AND 1997
Net income increased from $225,000 for the three months ended June 30, 1997 to
$451,000 for the three months ended June 30, 1998.
Net interest income increased from $1.4 million for the three months ended June
30, 1997 to $1.8 million for the three months ended June 30, 1998. Total
interest income increased from $2.9 million for the three months ended June 30,
1997 to $3.6 million for three months ended June 30, 1998. The increase in
interest income stemmed from an increase in average interest earning assets due
6
<PAGE>
to the receipt of the offering proceeds offset slightly be a decrease in the
weighted average yield on the loan portfolio was 8.9% as of June 30, 1997
compared to the weighted average yield at June 30, 1998 of 8.5%. The average
balance for loans receivable was $120 million in the 1st quarter of 1997
compared to the 1st quarter 1998 average balance of $150 million. Interest
income from investment securities decreased from $72,000 for the three months
ended June 30, 1997 to $68,000 for the three months ended June 30, 1998. The
decrease is primarily due to a decrease in average yield. Interest income from
mortgage-backed securities increased from $97,000 for the three months ended
June 30, 1997 to $168,000 for the three months ended June 30, 1998. The increase
is due primarily to a higher average balance and a slightly higher yield.
Interest expense increased from $1.5 million for the three months ended June 30,
1997 to $1.7 million for the same time period in 1998. The increase in interest
expense is due primarily to higher average deposit balances, an increase in
average FHLB advances and a decrease in weighted average rates. The weighted
average rate on deposits for the three months ended June 30, 1998 was 4.17%,
whereas the weighted average rate on deposits as of June 30, 1997 was 4.25%. The
weighted average rate on FHLB advances for the three months ended June 30, 1998
was 5.70%, whereas the weighted average rate on FHLB advances as of June 30,
1997 was 5.98%.
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 increased from $18,000 for the three months
ended June 30, 1997 to $136,000 for the three months ended June 30, 1998. The
loans receivable portfolio increased about $11 million dollars in the last
quarter, of which approximately $5.7 million was in commercial lending.
Non-interest income increased from $464,000 for the three months ended June 30,
1997 to $815,000 for the three months ended June 30, 1998. The primary reason
for the increase is the gain on sale of loans increased about $275,000 and
service fees and charges increase about $125,000.
Non-interest expense increased from $1.5 million for the three months ended June
30, 1997 to $1.8 million for the three months ended June 30, 1998. The increase
in compensation and other related expenses of $125,000 is because of the branch
in Clarkston and the expanded commercial and agriculture departments. Other
expenses that were up are advertising and data processing.
Income taxes increased from an expense of $135,000 for the three months ended
June 30, 1997 to expense of $248,000 for the same time period in 1998. The
increase was primarily due to an increase in taxable income.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary recurring sources of funds are customer deposits,
proceeds from principal and interest payments on loans, proceeds from sales of
loans, maturing securities and FHLB advances. While maturities and scheduled
amortization of loans are a predictable source of funds, deposit flows and
mortgage prepayments are greatly influenced by general interest rates, economic
conditions and competition.
The Company must maintain an adequate level of liquidity to ensure the
availability of sufficient funds to support loan growth and deposit withdrawals,
to satisfy financial commitments and to take advantage of investment
opportunities. The Company generally maintains sufficient cash and short-term
investments to meet short-term liquidity needs. At June 30, 1998, cash and cash
equivalents totaled $9.2 million, or 4.7% of total assets. In addition, the
Company maintains a credit facility with the FHLB-Seattle, which provides for
immediately available advances. Advances under this credit facility totaled
$42.2 million at June 30, 1998.
The primary investing activity of the Company is the origination of
loans. During the quarters ended June 30, 1997 and 1998, the Company originated
loans in the amounts of $32.5 million and $45.7 million respectively. At June
30, 1998, the Company had loan commitments totaling $25.6 million, undisbursed
lines of credit totaling $8.3 million, and undisbursed loans in process totaling
$11.9 million. The Company anticipates that it will have sufficient funds
available to meet its current loan origination commitments. Certificates of
deposit that are scheduled to mature in less than one year from June 30, 1998
totaled $56.5 million. Historically, the Company has been able to retain a
significant amount of its deposits as they mature. In addition, management of
the Company believes that it can adjust the offering rates of savings
certificates to retain deposits in changing interest rate environments.
The Bank is required to maintain specific amounts of capital pursuant
to the FDIC and the State of Washington requirements. As of June 30, 1998, the
Bank was in compliance with all regulatory capital requirements which were
effective as of such date with Tier 1 Capital to average assets, Tier 1 Capital
to risk-weighted assets and Total capital to risk-weighted assets of 10.9%,
16.1% and 17.1%, respectively.
7
<PAGE>
YEAR 2000 ISSUES
The Year 2000 issue exists because many computer systems and
applications use two-digit date fields to designate a year. As the century date
change occurs, date-sensitive systems may recognize the year 2000 as 1900, or
not at all. This inability to recognize or properly treat the year 2000 may
cause systems to process financial and operational information incorrectly.
All of the material data processing of the Company that could be
affected by this problem is provided by a third party service bureau. The
Company's service bureau informed the Company that it is year 2000 compliant as
of July 1998 and it will make its systems available for testing in the week of
September 28, 1998. The Company has developed a plan and created a committee of
the Board of Directors to analyze how the year 2000 will impact its operations
and to monitor the status of its vendors. The Company will continue to monitor
its status as well as its service providers' status in their efforts to become
year 2000 compliant. The Company does not believe that the costs associated with
its actions and those of its vendors will be material to the Company. The
Company's service bureau will make available certain software that will allow
the Company to test its critical applications. The Company estimates the costs
incurred for the implementation and testing of such software to be $100,000.
Such costs are expected to be incurred during fiscal 1999. The costs for
accomplishing the Company's plans to complete the year 2000 modifications and
testing processes are based on management's best estimates, which were derived
utilizing numerous assumption of future events, including the continued
availability of various resources, third-party modification plans and other
factors. However, there can be no guarantee that these estimates will be
achieved, and actual results could differ from those plans. In the event the
Company's service bureau is unable to fulfill its contractual obligations to the
Company, it could have a significant adverse impact on the financial condition
and results of operations of the Company.
8
<PAGE>
FIRSTBANK CORP. AND SUBSIDIARIES
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 10, 1998 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
9
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains financial information extracted from the consolidated
financial statements of FirstBank Corp. for the first quarter ended March 31,
1998 and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001035513
<NAME> FirstBank Corp.
<MULTIPLIER> 1
<CURRENCY> USD
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 9,187
<INT-BEARING-DEPOSITS> 2,281
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0
0
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</TABLE>
