<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1995.
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transaction period from ______ to _______.
Commission file number: 0-14209
FIRSTBANK CORPORATION
(Exact name of registrant as specified in its charter)
Michigan 38-2633910
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification
Number)
311 Woodworth Avenue, Alma, Michigan 48801
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (517) 463-3131
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
filing requirements for the past 90 days. [X] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common stock . . . 1,469,017 shares outstanding as of June 30, 1995.
(Less 8,563 unallocated ESOP shares).
<PAGE> 2
INDEX
<TABLE>
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated balance sheets (unaudited) . . . . June 30, 1995, and
December 31, 1994. page 3
Consolidated statements of income (unaudited) . . . . three months ended
June 30, 1995, and June 30, 1994. page 4
Consolidated statements of income (unaudited) . . . . six months ended
June 30, 1995, and June 30, 1994. page 5
Consolidated statements of changes in shareholders' equity (unaudited) page 6
Consolidated statements of cash flows (unaudited) . . . six months
ended June 30, 1995, and June 30, 1994. page 7
Notes to consolidated financial statements . . . . June 30, 1995 page 8-11
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations. page 12-14
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K page 15
SIGNATURES
EXHIBITS
Exhibit 27 -- Financial Data Schedule page 17
</TABLE>
Page 2 of 17
<PAGE> 3
FIRSTBANK CORPORATION
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 1995 AND DECEMBER 31, 1994
(UNAUDITED)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
----------- -----------
<S> <C> <C>
ASSETS
Cash and due from banks $ 15,303,135 $ 15,152,634
Short term investments 16,468,602 706,227
----------- -----------
Total cash and cash equivalents 31,771,737 15,858,861
Securities available for sale 21,464,706 25,234,530
Securities held to maturity (fair value $31,051,633 29,269,553 37,998,951
in 1995, $38,221,094 in 1994)
Loans
Loans held for sale 2,547,154 2,992,194
Portfolio loans
Commercial 108,821,720 99,306,532
Real estate mortgage 79,163,158 70,767,698
Consumer 54,784,322 50,324,264
----------- -----------
Total loans 245,316,354 223,390,688
Less allowance for loan losses (4,450,000) (4,100,000)
----------- -----------
Net loans 240,866,354 219,290,688
Premises and equipment, net 5,802,928 4,851,612
Accrued interest receivable 1,773,692 1,697,252
Other assets 6,009,004 4,790,108
----------- -----------
TOTAL ASSETS $336,957,974 $309,722,002
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest bearing accounts $ 39,050,688 $ 36,113,926
Interest bearing accounts:
Demand 60,495,168 60,317,875
Savings 53,292,953 54,368,810
Time 143,600,631 116,092,944
----------- -----------
Total deposits 296,439,440 266,893,555
Securities sold under agreements to
repurchase and overnight borrowings 9,235,984 14,143,470
Accrued interest and other liabilities 3,773,378 3,088,964
----------- -----------
Total liabilities 309,448,802 284,125,989
SHAREHOLDERS' EQUITY
Preferred stock; no par value, 300,000
shares authorized, none issued
Common stock; 2,500,000 shares authorized,
1,469,017 shares issued and outstanding
(1,468,980 in December 1994) 19,541,624 19,540,938
Retained earnings 7,969,214 6,550,164
Unrealized gain (loss) on available for sale securities 77,741 (336,272)
Less 8,563 unallocated ESOP shares
(14,680 in December 1994) (79,407) (158,817)
------------ ------------
Total shareholders' equity 27,509,172 25,596,013
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $336,957,974 $309,722,002
============ ============
</TABLE>
Page 3 of 17
<PAGE> 4
FIRSTBANK CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED JUNE 30, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended
June 30,
1995 1994
---------- ----------
<S> <C> <C>
Interest income:
Interest and fees on loans $5,776,038 $4,112,257
Securities
Available for sale - Taxable 341,429 146,964
Available for sale - Exempt from
federal income tax 22,228 14,716
Held to maturity - Taxable 119,469 159,204
Held to maturity - Exempt from
federal income tax 363,258 379,692
Short term investments 106,067 71,615
---------- ----------
Total interest income 6,728,489 4,884,448
Interest expense:
Deposits 2,755,641 1,695,546
Notes payable and other 137,808 51,482
---------- ----------
Total interest expense 2,893,449 1,747,028
---------- ----------
Net interest income 3,835,040 3,137,420
Provision for loan losses 230,000 298,000
---------- ----------
Net interest income after
provision for loan losses 3,605,040 2,839,420
Noninterest income:
Deposit account fees 235,841 196,840
Gain on sale of mortgage loans 54,055 78,119
Trust fees 53,947 43,918
Gain on sale of securities 15,604 (287)
Other 243,854 268,111
---------- ----------
Total noninterest income 603,301 586,701
Noninterest expense:
Salaries and employee benefits 1,551,360 1,243,671
Occupancy 385,772 356,337
FDIC Insurance premium 141,751 121,791
Michigan Single Business Tax 72,400 62,300
Other 806,133 658,025
---------- ----------
Total noninterest expense 2,957,416 2,442,124
Income before federal income taxes 1,250,925 983,997
Federal income taxes 301,000 180,000
---------- ----------
NET INCOME $ 949,925 $ 803,997
========== ==========
PER SHARE
NET INCOME $0.65 $0.55
========== ==========
DIVIDENDS $0.18 $0.14
========== ==========
</TABLE>
See notes to consolidated financial statements.
Page 4 of 17
<PAGE> 5
FIRSTBANK CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
Six months ended
June 30,
1995 1994
---------- ----------
<S> <C> <C>
Interest income:
Interest and fees on loans $11,091,509 $7,915,852
Securities
Available for sale - Taxable 700,740 326,296
Available for sale - Exempt
from federal income tax 44,417 19,429
Held to maturity - Taxable 272,994 320,020
Held to maturity - Exempt from
federal income tax 733,164 758,566
Short term investments 116,206 98,853
----------- ----------
Total interest income 12,959,030 9,439,016
Interest expense:
Deposits 5,117,875 3,340,434
Notes payable and other 280,890 120,866
----------- ----------
Total interest expense 5,398,765 3,461,300
----------- ----------
Net interest income 7,560,265 5,977,716
Provision for loan losses 570,000 436,000
----------- ----------
Net interest income after
provision for loan losses 6,990,265 5,541,716
Noninterest income:
Deposit account fees 460,312 377,337
Gain of sale of mortgage loans 116,582 312,440
Trust fees 103,631 84,538
Gain on sale of securities 24,082 39,814
Other 473,536 432,116
----------- ----------
Total noninterest income 1,178,143 1,246,245
Noninterest expense:
Salaries and employee benefits 2,914,811 2,405,122
Occupancy 724,073 695,989
FDIC Insurance premium 283,502 243,581
Michigan Single Business Tax 145,400 124,000
Other 1,571,723 1,248,224
----------- ----------
Total noninterest expense 5,639,509 4,716,916
Income before federal income taxes 2,528,899 2,071,045
Federal income taxes 625,000 431,000
----------- ----------
NET INCOME $ 1,903,899 $1,640,045
=========== ==========
PER SHARE
NET INCOME $1.31 $1.13
=========== ==========
DIVIDENDS $0.33 $0.29
=========== ==========
</TABLE>
See notes to consolidated financial statements.
Page 5 of 17
<PAGE> 6
FIRSTBANK CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
Net unrealized
appreciation
(depreciation)
on available Unallocated
Common Retained for sale ESOP
Stock Earnings securities Shares TOTAL
----------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
BALANCES AT DECEMBER 31, 1993 $18,089,191 $5,638,811 $78,194 ($308,817) $23,497,379
Cash Dividends - $.57 per share (840,233) (840,233)
5% stock dividend - 69,624 shares 1,462,104 (1,469,310) (7,206)
Issuance of 28 shares of common stock 518 518
Allocation of 13,864 ESOP shares 150,000 150,000
Forfeiture of restricted stock (10,875) (10,875)
Net change in unrealized appreciation
(depreciation) on available for sale
securities (414,466) (414,466)
Net income for 1994 3,220,896 3,220,896
----------- ---------- --------- ---------- -----------
BALANCES AT DECEMBER 31, 1994 19,540,938 6,550,164 (336,272) (158,817) 25,596,013
Cash dividends - $.33 per share (484,849) (484,849)
Issuance of 33 shares of common stock 686 686
Allocation of 7,340 ESOP shares 79,410 79,410
Net change in unrealized appreciation
(depreciation) on available for sale
securities 414,013 414,013
Net income year to date 1,903,899 1,903,899
----------- ---------- -------- ---------- -----------
BALANCES AT JUNE 30, 1995 $19,541,624 $7,969,214 $77,741 ($79,407) $27,509,172
=========== ========== ======== ========== ===========
</TABLE>
See notes to consolidated financial statements.
Page 6 of 17
<PAGE> 7
FIRSTBANK CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED
JUNE 30, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
Six months ended
June 30,
1995 1994
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 1,903,899 $ 1,640,045
Adjustments to reconcile net income to
net cash provided by operating activities
Provision for loan losses 570,000 436,000
Depreciation of premises and equipment 268,729 301,650
Net amortization of security
premiums/discounts 94,927 415,723
Gain on sale of securities (24,082) (39,814)
Allocation of common stock to ESOP
participants 79,410 75,000
Amortization of goodwill and other
intangibles 123,176 89,402
Gain on sale of mortgage loans (116,582) (312,440)
Proceeds from sales of mortgage loans 11,528,710 28,076,685
Loans originated for sale (10,967,088) (27,764,245)
Increase in accrued interest
receivable and other assets (1,631,690) (706,877)
Increase in accrued interest payable
and other liabilities 684,414 686,849
----------- -----------
NET CASH PROVIDED BY OPERATING
ACTIVITIES 2,513,823 2,897,978
INVESTING ACTIVITIES
Proceeds from sale of securities
available for sale 6,469,323 2,636,938
Proceeds from maturities of securities
available for sale 800,877 4,789,719
Proceeds from maturities of securities
held to maturity 7,546,693 8,759,842
Purchases of securities
available for sale (1,519,766) (3,690,693)
Purchases of securities
held to maturity (241,559) (2,808,201)
Net increase in portfolio loans (22,590,706) (8,613,056)
Net purchases of premises and equipment (1,220,045) (296,467)
----------- -----------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES (10,755,183) 778,082
FINANCING ACTIVITIES
Net increase (decrease) in deposits 29,545,885 6,307,554
Decrease in securities sold under agreements
to repurchase and other short term borrowings (4,907,486) (5,501,782)
Cash dividends (484,849) (420,429)
Proceeds from issuance of common stock 686
----------- -----------
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES 24,154,236 385,343
INCREASE IN CASH AND CASH
EQUIVALENTS 15,912,876 4,061,403
Cash and cash equivalents at beginning of period 15,858,861 11,411,977
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $31,771,737 $15,473,380
=========== ===========
Supplemental Disclosure
Interest Paid $5,199,037 $3,487,740
Income Taxes Paid $685,000 $475,000
</TABLE>
During 1995, the Corporation transferred $125,199 in securities
held to maturity to securities available for sale.
See notes to consolidated financial statements.
Page 7 of 17
<PAGE> 8
FIRSTBANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1995
(UNAUDITED)
NOTE A - FINANCIAL STATEMENTS
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally
accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted
accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the three and six
month periods ended June 30, 1995, are not necessarily indicative
of the results that may be expected for the year ended December
31, 1995. The balance sheet at December 31, 1994, has been
derived from the audited financial statements at that date. For
further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's annual
report on Form 10-K for the year ended December 31, 1994. Net
income per share is based on the weighted average shares
outstanding (which excludes unallocated ESOP shares) for each
period, 1,457,378 in 1995 and 1,444,203 in 1994.
NOTE B - SECURITIES
Individual securities held in the security portfolio are
classified as either securities available for sale or securities
held to maturity. Available for sale securities consist of bonds
and notes not classified as held to maturity. Such securities
might be sold prior to maturity due to changes in interest rates,
prepayment risks, yield, availability of alternate investments,
liquidity needs or other factors. As required by SFAS 115,
securities classified as available for sale are reported at their
fair value and the related unrealized holding gain or loss is
reported, net of related income tax effects, as a separate
component of Shareholders' Equity until realized.
Securities held to maturity are comprised of bonds and notes for
which the Banks have the positive intent and ability to hold
until maturity or payoff. Held to maturity securities are
reported at cost, adjusted for premiums and discounts that are
recognized in interest income using the level yield method over
the period to call or maturity, whichever is earlier.
During the second quarter of 1995, an affiliate bank transferred
a bond with a carrying value of $125,000 from held to maturity to
available for sale. The investment was downgraded to a grade
below that which the institution considers investment quality.
Subsequent to the transfer to the available for sale portfolio,
the security was sold at a gain.
Page 8 of 17
<PAGE> 9
NOTE C - LOAN COMMITMENTS
Loan commitments (including unused lines of credit and letters of
credit) are made to accommodate the financial needs of the Banks'
customers. The commitments have credit risk essentially the same
as that involved in extending loans to customers, and are subject
to the Banks' normal credit policies and collateral requirements.
Loan commitments which are predominately at variable rates, were
approximately $37,414,000 and $39,110,000 at June 30, 1995, and
December 31, 1994, respectively.
NOTE D - NONPERFORMING LOANS AND ALLOWANCE FOR LOAN LOSSES
Nonperforming Loans and Assets
The following table summarizes nonaccrual and past due loans at
the dates indicated:
<TABLE>
<CAPTION>
(Dollars in thousands) 6/30/95 12/31/94
----------------------------------------- ------- --------
<S> <C> <C>
Nonperforming loans:
Nonaccrual loans $ 37 $120
Loans 90 days or more past due 194 264
Renegotiated loans 300 213
----- -----
Total nonperforming loans $531 $597
===== =====
Property from defaulted loans $ 99 $ 86
===== =====
Nonperforming loans as a percent of:
Total loans .22% .27%
===== =====
Allowance for loan losses
11.9% 14.6%
===== =====
</TABLE>
Page 9 of 17
<PAGE> 10
Analysis of the Allowance for Loan Losses
The following table summarizes changes in the allowance for loan
losses arising from loans charged off, recoveries on loans
previously charged off, and additions to the allowance which have
been charged to expense.
<TABLE>
<CAPTION>
Six Six Twelve
months months months
ended ended ended
(Dollars in thousands) 6/30/95 6/30/94 12/31/94
------------------------------------- ------- ------- --------
<S> <C> <C> <C>
Balance at beginning of period $ 4,100 $ 3,254 $ 3,254
Charge-offs 509 235 499
Recoveries 289 165 345
-------- -------- --------
Net charge-offs (recoveries) 220 70 154
Additions to allowance for
loan losses 570 436 1,000
-------- -------- --------
Balance at end of period $ 4,450 $ 3,620 $ 4,100
======== ======== ========
Average loans outstanding
during the period $232,835 $179,807 $191,782
======== ======== ========
Loans outstanding at end of period $245,316 $186,934 $223,391
======== ======== ========
Allowance as a percent of:
Total loans at end of period 1.81% 1.94% 1.84%
======== ======== ========
Nonperforming loans at end of period 838% 1,006% 687%
======== ======== ========
Net charge-offs (recoveries) as a percent of:
Average loans outstanding .09% .04% .08%
======== ======== ========
Average Allowance for loan losses 5.10% 2.05% 3.76%
======== ======== ========
</TABLE>
Page 10 of 17
<PAGE> 11
NOTE E - RECLASSIFICATION
Certain 1994 amounts have been reclassified to conform to the
1995 presentation.
NOTE F - ACCOUNTING STANDARDS
In May, 1993, the Financial Accounting Standards Board issued
Financial Accounting Standards Board Statements 114, Accounting
By Creditors for Impairment of a Loan, (SFAS #114). The
Corporation adopted SFAS #114 as of January 1, 1995, and its
adoption has had no material impact on the company's financial
position or results of operations.
The Financial Accounting Standards Board recently released
Statement of Financial Accounting Standards No. 122 "Accounting
for Mortgage Servicing Rights" (SFAS No. 122). This statement
changes the accounting for mortgage servicing rights retained by
the loan originator. Under this standard, if the originator
sells or securitizes mortgage loans and retains the related
servicing rights, the total cost of the mortgage loan is
allocated between the loan (without the servicing rights) and the
servicing rights, based on their relative fair values. Under
current practice, all such costs were assigned to the loan. The
costs allocated to mortgage servicing rights will be recorded as
a separate asset and be amortized in proportion to, and over the
life of, the net servicing income. The carrying value of the
mortgage servicing rights will be periodically evaluated for
impairment.
The Bank currently retains servicing on almost all loans
originated and sold into the secondary market. Accordingly, this
statement will apply to most loan sales. The impact on the
Company's results of operations and financial position will
depend upon the volume of loans sold with servicing retained, the
cost of loans originated, the relative fair values of loans and
servicing rights at the point of sale, among other factors. In
general, the standard will increase the amount of income
recognized during the servicing period.
This statement is effective for the Company in fiscal 1996,
although early implementation is permitted. The statement
applies to loan sale transactions after implementation;
retroactive application to servicing rights created prior to
adoption of the statement is prohibited.
Page 11 of 17
<PAGE> 12
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations.
The consolidated financial information presented is for Firstbank
Corporation ("Corporation") and its wholly owned subsidiaries,
Bank of Alma, Firstbank, and 1st Bank at June 30, 1995.
Financial Condition
The Corporate assets increased $27 million, or 8.8%, during the
first half of 1995. Cash and cash equivalents increased $15.9
million during this period. The majority of this increase, $11.2
million, was the result of a branch acquisition in mid June. As
of the end of June, most of the proceeds had not been invested in
higher earning assets. Subsequent to June 30, the cash has been
deployed to investment securities and loans.
Securities decreased $12.5 million, or 19.8%, in the six months
since December 31, 1994. Of this decrease, $7.5 million was from
maturities and principal reductions, while $6.2 million was from
sales of available for sale securities (see note B). In December
of 1994, one of the Corporation's affiliates purchased two
branches from an unrelated financial institution. The cash
proceeds from this acquisition were invested in securities with
the intent to sell those securities to fund loan demand. Those
sales transactions account for the majority of the security
sales. During the first six months of 1995, security purchases
of $1.8 million were used primarily to secure an earnings spread
for a large, short-term deposit. At June 30, 1995, the cash
received from the mid June acquisition had not been fully
invested in higher yielding earning assets. By late July, those
funds had been invested in investment securities, primarily
classified as available for sale, so that funding will be
accessible as loan demand requires.
All classes of portfolio loans experienced strong growth during
the first half of 1995. Three new branches were acquired during
the last quarter of 1994, and loan demand in those areas has
contributed to total loan growth. Total loans grew $22 million
or 9.8% during the first half of 1995. The fourth quarter 1994
branch acquisitions have resulted in operations in three new
areas for our affiliates. Loan demand has been strong in those
communities. As interest rates have shown a modest decline,
mortgage activity has begun to increase. We do not expect to see
the strong level of refinancing activity we experienced in 1993
and early 1994. However the rate decline has increased mortgage
activity. Commercial loan activity has been strong in both new
and existing markets. We have been able to finance both new
projects as well as expansions of seasoned customers. The banks
have seen a great deal of interest in consumer loans in their new
locations.
During the first six months of 1995, loans held for sale
decreased $3.0 million or 53.8% from December 31, 1994. No
transfers were made from held for sale to the portfolio loans
during this period. Mortgage demand has remained steady for the
first half of 1995.
The allowance for loan losses increased $350,000, or 8.5%, during
the first six months of 1995. Management continues to maintain
the allowance for loan losses at the level considered appropriate
to absorb losses inherent in the portfolio. The allowance
balance is established after considering past loan loss
experience, current economic conditions, volume, growth and
composition of the loan portfolio, delinquencies, and other
relevant factors.
Page 12 of 17
<PAGE> 13
Premises and equipment have increased $950,000, or 19.6%, since
December 1994. During the first half of 1995, the Corporation's
affiliates have completed the building for one new facility, and
purchased a second building as part of a branch acquisition.
Other assets have increased $1.2 million, or 25.5%, during the
first six months of 1995. Approximately $500,000 of this
increase is due to the intangibles added as a result of a branch
acquisition. An additional $624,000 of the increase is the
result of a new purchase receivable business program that was
initiated in 1995.
Total deposits have increased 11.1%, or $29.5 million, during the
first half of 1995. Of this increase, $11.2 million was the
result of a second quarter branch acquisition. A successful
effort to increase core deposits, and competitive bidding for
municipal funds explains much of the remainder of the increase.
Total shareholders' equity has increased $1.9 million, or 7.5%,
since December 31, 1994. The components of this change are net
income of $1.9 million, dividends of $480,000, stock transactions
of $80,000, and an increase of $400,000 as a change in net
unrealized gain on available for sale securities. The book value
per share was $18.73 at June 30, 1995, compared to $17.60 at
December 31, 1994.
The following table discloses compliance with current regulatory
requirements on a consolidated basis:
<TABLE>
<CAPTION>
Tier 1 Risk-based
(Dollars in thousands) Leverage Capital Capital
----------------------------------- -------- ------- -------
<S> <C> <C> <C>
Capital balances at June 30, 1995 $25,072 $25,072 $28,129
Required Regulatory Capital 15,577 14,590 24,316
Capital in excess of regulatory minimums 9,495 10,482 3,813
Capital ratios at June 30, 1995 8.04% 10.31% 11.57%
Regulatory capital ratios -- "well capitalized"
definition 5.00% 6.00% 10.00%
Regulatory capital ratios -- minimum requirement 4.00% 4.00% 8.00%
</TABLE>
Results of Operations
Net income for the second quarter was $950,000, an 18.2%, or
$146,000, increase from the $804,000 of the second quarter of
1994. For the first six months of 1995, net income was
$1,904,000, compared to $1,640,000 for the same period in 1994,
for a $264,000, or 16.1%, increase.
Net interest margin was 5.41% for the six months and 5.33% for
the three months ending June 30, 1995, compared to 5.30% and
5.50% for the same periods of 1994. While net interest margin is
still strong, the Corporation has seen some erosion in the three
months ending June 30, 1995 from the same period in 1994. The
Corporation computes net interest margin by dividing annualized
net interest income by average earning assets for the period.
For both the three and six month periods ending June 30, 1995
when compared to the same time frames in 1994, the net interest
income has increased. The increase for the three month period
ending June 30, 1995 is $698,000, and for the six
Page 13 of 17
<PAGE> 14
month period ending June 30, 1995 is $1,583,000. Average earning
assets increased $59 million for the three months, and $54
million for the six month periods ending June 30, 1995 when
compared to the same periods in 1994. The Corporation expects
the investment of assets from the increase in deposits created by
the branch acquisition and the promotions to increase core
deposits to have a favorable effect on net interest margin in the
second half of 1995.
The provision for loan losses was $570,000 for the first half of
1995, compared to $436,000 for the corresponding period of 1994.
For the second quarter of 1995, the provision for loan losses was
$230,000, or $68,000 less than the same period of 1994.
Total noninterest income showed a small increase during the
second quarter of 1995 when compared to the second quarter of
1994, but was actually down $68,000 or 5% when the first six
months of 1995 are compared to the same period in 1994. While
deposit fees, trust fees, and other income increased when
compared to the previous year, the gains on sale of mortgage
loans was down $196,000, or 63%, to $117,000 when compared to
$312,000 for the six months ending June 30, 1994. The affiliates
have experienced increased activity in mortgage loans during the
second quarter of 1995 when compared to the first quarter of
1995. The Corporation expects that the mortgage activity in
the second half of 1995 will exceed the first half of 1995, but
not reach 1994 levels.
Total noninterest expense increased $515,000 for the three months
and $923,000 for the six months ending June 30, 1995, when
compared to the same periods in 1994. Salaries and employee
benefits increased $510,000, or 21.2%, during the first half of
1995 when compared to 1994. Other expenses increased $323,000,
or 25.9%, during the same period from $1,248,000 to $1,572,000.
The additional personnel to operate the new facilities along with
the miscellaneous costs of new branch operations explain both of
these increases. The increase in occupancy is minimal,
approximately $28,000, or a 4.0% increase, when comparing the
first half of 1995 to 1994. The Corporation's data processing
equipment was fully depreciated for book purposes by the end of
1994. Therefore, 1995 expenses do not include any depreciation
for the mainframe equipment or software. The Corporation is
operating three more full-service branches in 1995 than were in
service in 1994.
The effective tax rate has increased to 24.1% for the three
months and 24.7% for the six months ending June 30, 1995 when
compared to 18.3% and 20.8% for the corresponding periods of
1994. The primary reason for this increase is the decrease in
income from securities exempt from federal income taxes. For the
three months ended June 30, 1995, interest income from securities
exempt from federal income taxes was 30.8% of before tax net
income when compared to 40.0% for the same period in 1994. For
the six months ending June 30, 1995, interest income from
securities exempt form federal income taxes made up 30.8% of net
income before federal taxes compared to 37.6% for the six months
ending June 30, 1994. The Corporation does not currently plan to
increase its relative holdings in securities exempt from federal
income taxes.
Net income per share increased 18.2% from the second quarter of
1994 to the second quarter of 1995. The change was $.10 per
share, or $.65 for 1995 compared to $.55 for 1994. Year to date
income increased $.17 per share, or 15.3%, reaching $1.31 for the
first six months of 1995 when compared to $1.13 for the same
period in 1994. All 1994 per share data has been restated to
reflect the 1994 5% stock dividend.
Page 14 of 17
<PAGE> 15
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
------- --------------------------------
(a) Exhibits:
Exhibit 27 -- Financial Data Schedule
(b) Reports on Form 8-K
NONE
Page 15 of 17
<PAGE> 16
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 CORPORATION
---------------------
(Registrant)
Date: August 10, 1995 \s\ John A. McCormack
------------------ -----------------
John A. McCormack
President, Chief Executive Officer and
Director (Principal Executive Officer)
Date: August 10, 1995 \s\ Mary D. Deci
------------------ --------------
Mary D. Deci
Vice President and Chief Financial Officer
(Principal Accounting Officer)
Page 16 of 16
<PAGE> 17
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE NO.
----------- ----------- --------
EXHIBIT 27 FINANCIAL DATA SCHEDULE
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
The schedule contains summary financial information extracted from Firstbank
Corporation and is qualified in its entirety by reference to such financial
statements as of June 30, 1995.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> APR-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 15,303
<INT-BEARING-DEPOSITS> 169
<FED-FUNDS-SOLD> 16,300
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 21,437
<INVESTMENTS-CARRYING> 29,298
<INVESTMENTS-MARKET> 31,052
<LOANS> 245,316
<ALLOWANCE> 4,450
<TOTAL-ASSETS> 336,958
<DEPOSITS> 296,439
<SHORT-TERM> 9,236
<LIABILITIES-OTHER> 3,773
<LONG-TERM> 0
<COMMON> 19,542
0
0
<OTHER-SE> 7,968
<TOTAL-LIABILITIES-AND-EQUITY> 336,958
<INTEREST-LOAN> 11,092
<INTEREST-INVEST> 1,751
<INTEREST-OTHER> 116
<INTEREST-TOTAL> 12,959
<INTEREST-DEPOSIT> 5,118
<INTEREST-EXPENSE> 5,399
<INTEREST-INCOME-NET> 7,560
<LOAN-LOSSES> 570
<SECURITIES-GAINS> 24
<EXPENSE-OTHER> 5,640
<INCOME-PRETAX> 2,529
<INCOME-PRE-EXTRAORDINARY> 1,904
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,904
<EPS-PRIMARY> 1.31
<EPS-DILUTED> 1.31
<YIELD-ACTUAL> 5.41
<LOANS-NON> 37
<LOANS-PAST> 194
<LOANS-TROUBLED> 300
<LOANS-PROBLEM> 7,681
<ALLOWANCE-OPEN> 4,100
<CHARGE-OFFS> 509
<RECOVERIES> 289
<ALLOWANCE-CLOSE> 4,450
<ALLOWANCE-DOMESTIC> 3,601
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 849
</TABLE>
