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, 1996
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)
(517) 463-3131
(Registrant's telephone number, including area code)
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 . . . 1,544,074 shares outstanding as of July 31, 1996.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (UNAUDITED)
Consolidated balance sheets . . . . June 30, 1996
and December 31, 1995. page 3
Consolidated statements of income . . . . three
months ended June 30, 1996, and June 30, 1995. page 4
Consolidated statements of income . . . . six
months ended June 30, 1996, and June 30, 1995. page 5
Consolidated statements of changes in shareholders'
equity page 6
Consolidated statements of cash flows . . . . six
months ended June 30, 1996, and June 30, 1995. page 7
Notes to consolidated financial statements . . . .
June 30, 1996. page 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. page 11
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K page 14
SIGNATURES page 15
EXHIBITS
Exhibit 27 -- Financial Data Schedule page 16
Page 2 of 20
<TABLE>
FIRSTBANK CORPORATION
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 1996 AND DECEMBER 1, 1995
(UNAUDITED)
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
<S> <C> <C>
ASSETS
Cash and due from banks $ 14,692,605 $ 15,526,265
Interest bearing deposits with banks 197,316 272,475
Overnight investments 1,400,000 950,000
------------ ------------
Total cash and cash equivalents 16,289,921 16,748,740
Securities available for sale 56,576,580 61,820,558
Loans
Loans held for sale 10,172,098 2,606,213
Portfolio Loans
Commercial 121,485,606 115,779,085
Real estate mortgage, portfolio 97,754,706 88,146,830
Consumer 64,341,107 58,315,109
------------ ------------
Total loans 293,753,517 264,847,237
Less allowance for loan losses (5,468,000) (4,876,000)
------------ ------------
Net loans 288,285,517 259,971,237
Premises and equipment, net 7,014,821 7,006,008
Accrued interest receivable 2,432,510 2,259,443
Other assets 5,391,481 5,136,839
------------ ------------
TOTAL ASSETS $375,990,830 $352,942,825
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest bearing accounts $ 44,148,767 $ 39,030,563
Interest bearing accounts:
Demand 70,073,710 64,288,096
Savings 60,232,972 54,343,238
Time 151,563,529 149,344,719
----------- -----------
Total deposits 326,018,978 307,006,616
Page 3 of 20
Securities sold under agreements to
repurchase and overnight borrowings 14,790,187 11,842,279
Accrued interest and other liabilities 4,277,298 4,241,277
------------ ------------
Total liabilities 345,086,463 323,090,172
SHAREHOLDERS' EQUITY
Preferred stock; no par value, 300,000
shares authorized, none issued
Common stock; 2,500,000 shares authorized,
1,544,074 shares issued and outstanding
(1,542,295 in December 1995) 21,396,369 21,355,293
Retained earnings 9,139,270 7,583,783
Unrealized gain on available for sale securities 368,728 913,577
------------ ------------
Total shareholders' equity 30,904,367 29,852,653
------------ ------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $375,990,830 $352,942,825
============ ============
</TABLE>
See notes to consolidated financial statements
Page 4 of 20
<TABLE>
FIRSTBANK CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
THREE MONTHS
ENDED JUNE 30,
1996 1995
<S> <C> <C>
Interest income
Interest and fees on loans $6,755,605 $5,776,038
Investment securities
Taxable 497,662 467,731
Exempt from Federal Income Tax 360,922 385,486
Interest bearing deposits with banks 4,731 8,210
Overnight investments 22,227 93,105
---------- ----------
Total interest income 7,641,147 6,730,570
Interest expense:
Deposits 3,058,550 2,755,642
Notes payable and other 195,956 137,808
---------- ----------
Total interest expense 3,254,506 2,893,450
Net interest income 4,386,641 3,837,120
Provision for loan losses 535,000 230,000
---------- ----------
Net interest income after provision for
loan losses 3,851,641 3,607,120
Noninterest income:
Gain on sale of mortgage loans 164,373 54,055
Service charges on deposit accounts 261,896 235,841
Trust fees 63,727 53,947
Gain (loss) on sale of securities (756) 15,604
Other 245,952 241,774
---------- ----------
Total noninterest income 735,192 601,221
Noninterest expense:
Salaries and employee benefits 1,667,625 1,551,360
Occupancy 392,561 385,772
FDIC Insurance premium 21,815 141,751
Michigan Single Business Tax 89,500 72,400
Other 875,983 806,133
---------- ----------
Total noninterest expense 3,047,484 2,957,416
Income before federal income taxes 1,539,349 1,250,925
Federal income taxes 420,000 301,000
---------- ----------
NET INCOME $1,119,349 $ 949,925
========== ==========
Page 5 of 20
Per Share:
NET INCOME $ 0.73 $ 0.62
========== ==========
DIVIDENDS $ 0.22 $ 0.17
========== ==========
</TABLE>
See notes to consolidated financial statements
Page 6 of 20
<TABLE>
FIRSTBANK CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
SIX MONTHS
ENDED JUNE 30,
1996 1995
<S> <C> <C>
Interest income:
Interest and fees on loans $13,166,582 $11,091,509
Investment securities
Taxable 1,006,550 983,567
Exempt from Federal Income Tax 746,640 777,581
Interest bearing deposits with banks 9,602 8,849
Overnight investments 69,513 107,357
----------- -----------
Total interest income 14,998,887 12,968,863
Interest expense:
Deposits 6,161,866 5,117,877
Notes payable and other 345,130 280,890
----------- -----------
Total interest expense 6,506,996 5,398,767
Net interest income 8,491,891 7,570,096
Provision for loan losses 832,000 570,000
----------- -----------
Net interest income after provision for loan losses 7,659,891 7,000,096
Noninterest income:
Gain on sale of mortgage loans 318,864 116,582
Service charges on deposit accounts 497,581 460,312
Trust fees 115,856 103,631
Gain on sale of securities 132 24,082
Other 578,288 463,703
----------- -----------
Total noninterest income 1,510,721 1,168,310
Noninterest expense:
Salaries and employee benefits 3,279,472 2,914,811
Occupancy 886,824 724,073
FDIC Insurance premium 43,629 283,502
Michigan Single Business Tax 170,700 145,400
Other 1,820,091 1,571,721
----------- -----------
Total noninterest expense 6,200,716 5,639,507
Income before federal income taxes 2,969,896 2,528,899
Federal income taxes 797,000 625,000
----------- -----------
NET INCOME $ 2,172,896 $ 1,903,899
=========== ===========
Page 7 of 20
Per Share:
NET INCOME $ 1.41 $ 1.25
=========== ===========
DIVIDENDS $ 0.40 $ 0.31
=========== ===========
</TABLE>
See notes to consolidated financial statements
Page 8 of 20
<TABLE>
FIRSTBANK CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
<CAPTION>
NET UNREALIZED
APPRECIATION
(DEPRECIATION)
ON UNALLOCATED
AVAILABLE FOR
(in thousands) COMMON RETAINED SALE ESOP
STOCK EARNINGS SECURITIES SHARES TOTAL
<S> <C> <C> <C> <C> <C>
BALANCES AT DECEMBER 31, 1994 $19,540,938 $ 6,550,164 $ (336,272) $(158,817) $25,596,013
Cash dividends - $.66 per share (1,013,748) (1,013,748)
5% stock dividend - 73,113 shares 1,809,547 (1,818,112) (8,565)
Issuance of 63 shares of common stock
through exercise of stock options 1,289 1,289
Issuance of 145 shares of common stock 3,519 3,519
Allocation of 15,414 ESOP shares 158,817 158,817
Net change in unrealized appreciation
(depreciation) on available for
sale securities 1,249,849 1,249,849
Net income for 1995 3,865,479 3,865,479
----------- ----------- ---------- --------- -----------
BALANCES AT DECEMBER 31, 1995 21,355,293 7,583,783 913,577 0 29,852,653
Cash dividends - $.40 per share (617,409) (617,409)
Issuance of 1779 shares of common stock
through exercise of stock options 41,076 41,076
Net change unrealized appreciation
(depreciation) on available for
sale securities (544,849) (544,849)
Net income year to date 2,172,896 2,172,896
----------- ----------- ---------- --------- -----------
BALANCES AT JUNE 30, 1995 $21,396,369 $ 9,139,270 $ 368,728 $ 0 $30,904,367
=========== =========== ========== ========= ===========
</TABLE>
See notes to consolidated financial statements
Page 9 of 20
<TABLE>
FIRSTBANK CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED
JUNE 30, 1996 AND 1995
(UNAUDITED)
<CAPTION>
SIX MONTHS ENDED JUNE 30,
1996 1995
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 2,172,896 $ 1,903,899
Adjustment to reconcile net income to net cash provided
by operating activities
Provision for loan losses 832,000 570,000
Depreciation of premises and equipment 363,006 268,729
Net amortization of security premiums/discounts 183,450 94,927
Gain on sale of securities (132) (24,082)
Allocation of common stock to ESOP participants 79,410
Amortization of goodwill and other intangibles 134,385 123,176
Gain on sale of mortgage loans (318,864) (116,582)
Proceeds from sales of mortgage loans 17,898,622 11,528,710
Unrealized loss on loans held for sale 164,973
Loans originated for sale (25,145,643) (10,967,088)
Increase in accrued interest receivable and other assets (281,414) (1,631,690)
Increase in accrued interest payable and other liabilities 36,021 684,414
------------ ------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (3,960,700) 2,513,823
INVESTING ACTIVITIES
Proceeds from sale of securities available for sale 2,035,499 6,469,323
Proceeds from maturities of securities available for sale 11,600,296 800,877
Proceeds from maturities of securities held to maturity 7,546,693
Purchases of securities available for sale (9,400,664) (1,519,766)
Purchases of securities held to maturity (241,559)
Net increase in portfolio loans (21,745,368) (22,590,706)
Net purchases of premises and equipment (371,819) (1,220,045)
------------ ------------
NET CASH USED IN INVESTING ACTIVITIES (17,882,056) (10,755,183)
FINANCING ACTIVITIES
Net increase in deposits 19,012,362 29,545,885
Increase (decrease) in securities sold under agreements
to repurchase and other short term borrowings 2,947,908 (4,907,486)
Cash dividends (617,409) (484,849)
Proceeds from issuance of common stock 41,076 686
------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 21,383,937 24,154,236
Page 10 of 20
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (458,819) 15,912,876
Cash and cash equivalents at beginning of period 16,748,740 15,858,861
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 16,289,921 $ 31,771,737
============ ============
Supplemental Disclosure
Interest Paid $ 6,562,780 $ 5,199,037
Income Taxes Paid $ 1,125,000 $ 685,000
</TABLE>
See notes to consolidated financial statements
Page 11 of 20
FIRSTBANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
(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 six month period ended June 30, 1996, are not necessarily
indicative of the results that may be expected for the year ended December
31, 1996. The balance sheet at December 31, 1995, 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 Corporation's annual report on Form 10-K for the year ended
December 31, 1995. Net income per share is based on the weighted average
shares outstanding (which excludes unallocated ESOP shares for 1995) for
each period, 1,543,041 in 1996 and 1,530,247 in 1995.
NOTE B - SECURITIES
Individual securities held in the security portfolio are classified as
securities available for sale. 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.
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 $47,040,549 and
$43,503,341 at June 30, 1996, and December 31, 1995, respectively.
Page 12 of 20
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>
JUNE 30, DECEMBER 31,
(DOLLARS IN THOUSANDS) 1996 1995
<S> <C> <C> <C>
Nonperforming loans:
Nonaccrual loans $ 73 $ 47
Loans 90 days or more past due 402 386
Renegotiated loans 167 182
---- ----
Total nonperforming loans $642 $615
==== ====
Property from defaulted loans $113 $ 0
==== ====
Nonperforming loans as a percent of:
Total loans .22% .23%
==== ====
Allowance for loan losses 11.74% 12.61%
====== ======
</TABLE>
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.
Page 13 of 20
<TABLE>
<CAPTION>
SIX SIX TWELVE
MONTHS MONTHS MONTHS
ENDED ENDED ENDED
JUNE 30, JUNE 30, DECEMBER 31,
(DOLLARS IN THOUSANDS) 1996 1995 1995
<S> <C> <C> <C>
Balance at beginning of period $ 4,876 $ 4,100 $ 4,100
Charge-offs (360) (509) (738)
Recoveries 120 289 429
-------- -------- --------
Net charge-offs (240) (220) (309)
Additions to allowance for
loan losses 832 570 1,085
-------- -------- --------
Balance at end of period $ 5,468 $ 4,450 $ 4,876
======== ======== ========
Average loans outstanding
during the period $277,661 $232,835 $243,962
======== ======== ========
Loans outstanding at end of period $293,754 $245,316 $264,847
======== ======== ========
Allowance as a percent of:
Total loans at end of period 1.86% 1.81% 1.84%
===== ===== =====
Nonperforming loans at end of period 852% 838% 793%
==== ==== ====
Net charge-offs as a percent of:
Average loans outstanding .09% .09% .13%
=== === ===
Average Allowance for loan losses 4.77% 5.10% 6.93%
===== ===== =====
</TABLE>
Page 14 of 20
NOTE E - RECLASSIFICATION
Certain 1995 amounts have been reclassified to conform to the 1996
presentation.
NOTE F - ACCOUNTING STANDARDS
In May 1995, the Financial Accounting Standards Board 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 secures 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 previous practice, all such costs were
assigned to the loan. The costs allocated to mortgage servicing rights are
recorded as a separate asset and are amortized in proportion to, and over
the life of, the net servicing income. The Corporation adopted SFAS #122
as of January 1, 1996, and its adoption has had no material impact on the
company's financial position or results of operations.
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 123, ACCOUNTING FOR STOCK BASED COMPENSATION (SFAS
123). The Statement establishes a fair value based method of accounting
for employee stock options and similar equity instruments, such as
warrants, and encourages all companies to adopt that method of accounting
for all of their employee stock compensation plans. However, the Statement
allows companies to continue measuring compensation cost for such plans
using accounting guidance in place prior to SFAS 123. Companies that elect
to continue with the former method of accounting must make pro-forma
disclosures of net income and earnings per share as if the fair value
method provided for in SFAS 123 had been adopted. Disclosure requirements
are effective for financial statements issued after December 15, 1995.
Companies which elect to continue measuring compensation costs under
current guidance must present pro-forma disclosures for awards granted in
the first fiscal year beginning after December 15, 1994. However that
disclosure need not be made until financial statements for that fiscal year
are presented for comparative purposes with financial statements for a
later fiscal year. Management has concluded that the Company will not
adopt the fair value accounting provisions of SFAS 123 and will continue to
apply its current method of accounting. Accordingly, adoption of the SFAS
123 will have no impact on the Company's consolidated financial position or
results of operations.
Page 15 of 20
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 (Mt. Pleasant), and 1st Bank (West Branch) (collectively,
the "Banks").
FINANCIAL CONDITION
The Corporation's assets have increased $23 million, or 6.5%, during the
first six months of 1996. During the same time period, loans have grown by
$29 million, or 10.9%, when compared to December 31, 1995. All segments of
the loan portfolio have experienced growth during the first half of 1996.
At June 30, 1996, the Corporation's loan to deposit ratio was 86.8%. All
loans classified as loans held for sale are residential mortgage loans.
Loan demand remains strong in all market areas.
The allowance for loan losses has increased $592,000 from December 31,
1995, to June 30, 1996. The provision for loan losses of $832,000
increased the allowance while net chargeoffs decreased the allowance by
$240,000. The allowance is 1.86% of outstanding loans and 852% of
nonperforming at June 30, 1996, as compared to 1.84% of outstanding loans
and 793% of nonperforming loans at December 31, 1995. Management continues
to maintain the allowance for loan losses at a level considered appropriate
to absorb losses 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.
All of the Corporation's securities are classified as available for sale.
During the first half of 1996, securities have declined $5 million or 8.5%.
The proceeds from the net reduction of investment securities have been
deployed to fund loan demand.
Total deposits have increased $19 million, or 6.2%, during the first half
of 1996. All of this growth has been generated from our current market
areas. The Corporation has not acquired brokered deposits or branches in
the first half of 1996 to augment the deposit total. All classes of
deposits have grown over this six month period, with transaction accounts
leading the increases. Securities sold under agreements to repurchase and
overnight borrowings grew 24.9% or nearly $3 million since the end of 1995.
Much of this growth has occurred due to a new cash management product
offered by the Banks. The cash management product was developed as a
defensive strategy to retain commercial customer deposit dollars.
Total shareholders' equity grew by $1,052,000, or 3.5%, during the first
six months of 1996. Net income of $2,173,000 and stock transactions of
$41,000 increased shareholders' equity while dividends of $617,000 and
Page 16 of 20
change in net unrealized gain (loss) on available for sale securities of
$545,000 reduced shareholders' equity. Book value per share was $20.01 at
June 30, 1996, compared to $19.36 per share at December 31, 1995.
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, 1996 $28,657 $28,657 $32,247
Required Regulatory Capital 14,389 11,412 22,824
------- ------- -------
Capital in excess of regulatory minimums $14,268 $17,245 $ 9,423
======= ======= =======
Capital ratios at June 30, 1996 7.97% 10.04% 11.30%
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 of 1996 was $1,119,000 compared to
$950,000 for the same period in 1995. This increase of $169,000 represents
a gain of 17.79%. For the first six months of 1996, net income was
$2,173,000 compared to $1,904,000 for the same period in 1995 representing
a $268,000, or 14.13%, increase.
Net interest margin was 5.21% for the six months and 5.27% for the three
months ending June 30, 1996, compared to 5.41% and 5.33% for the same
periods in 1995. Net interest margin is computed by dividing annualized
net interest income by average earning assets. Net interest income
increased 12.2% during the first half of 1996 when compared to the same
period in 1995. During this same time, average earning assets increased
15.5%. When the percentage growth of average earning assets is greater
than the percentage increase in annualized net interest income, net margin
will decrease. Although net interest margin has narrowed slightly from the
previous year, the net interest margin of both the second quarter and
first half of 1996 remain strong.
The provision for loan losses was $832,000 for the first half and $535,000
for the second quarter of 1996, compared to $570,000 and $230,000 for the
same periods in 1995. The allowance is maintained in a range management
feels appropriate upon analysis of the loan portfolio.
Page 17 of 20
Noninterest income increased $134,000, or 22.3%, for the three months and
$342,000, or 29.3%, for the six months ending June 30, 1996, when compared
to the same periods in 1995. Sales of mortgage loans have increased over
$6 million in the first half and $3 million in the second quarter of 1996
over the same periods in 1995. The large volume of mortgage sales activity
has been followed by an increase in the gain on sale of mortgage loans.
Gain on sale of mortgage loans has increased $110,000 in the second quarter
and $202,000 in the first half of 1996 from the respective periods in 1995.
Total noninterest expense increased $90,000, or 3.0%, for the quarter and
$561,000, or 9.6%, for the first six months of 1996 when compared to the
respective periods of 1995. An affiliate bank operated one additional
branch in 1996 that was not included in the results of 1995 until late in
the second quarter. In the year period from June 30, 1995, to June 30,
1996, full time equivalent employees have increased by 25 from 193 to 218.
Corporate growth has created the need for additional staff which is the
primary reason for the increase in salary expense.
Occupancy expense increased $163,000 through the first half of 1996 from
1995. Ongoing technology upgrades have resulted in increased depreciation
expenses throughout this period.
The affiliate banks have experienced a dramatic reduction in their FDIC
premium charges. For the first six months of 1996, FDIC premium charges
have decreased $240,000, or 85%, from 1995. FDIC premiums are expected to
remain at the minimum statutory rate for the remainder of 1996.
Other noninterest expenses have increased $248,000, or 16%, for the six
months ending June 30, 1996, when compared to the first half of 1995. The
majority of this increase, $165,000 is the result of an unrealized loss on
mortgage loans held for sale. The mortgage loans held for sale portfolio
increased $7.6 million during the first half of 1996. The high volume of
mortgage loans combined with the rapidly changing rate environment has led
to the market value of several mortgage loans declining below the book
value. Management continues to monitor the classification of loans held
for sale loans, and provides for market valuation adjustments when
necessary.
Net income per share increased 17.7% from the second quarter of 1995 to the
second quarter of 1996. The change was $.11 per share, or earnings of $.73
per share for 1996 compared to $.62 per share for 1995. Year to date net
income increased $.16 per share, or 13.0%, reaching $1.41 for the first six
months of 1996 when compared to $1.25 for the same period in 1995. All
1995 per share data has been restated to reflect the 1995 5% stock
dividend.
Page 18 of 20
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 19 of 20
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 9, 1996 \S\ JOHN MCCORMACK
John McCormack
President, Chief Executive Officer and
Director (Principal Executive Officer)
Date: AUGUST 9, 1996 \S\ MARY D. DECI
Mary D. Deci
Vice President and Chief Financial
Officer (Principal Accounting Officer)
Page 20 of 20
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS OF FIRSTBANK
CORPORATION FOR THE PERIOD ENDED JUNE 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
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