<PAGE>
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 MARCH 31, 1998
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 . . . 4,312,631 shares outstanding as of April 30, 1998.
<PAGE>
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (UNAUDITED) page 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations page 10
Item 3. Quantitative and Qualitative Disclosures about
Market Risk page 13
PART II. OTHER INFORMATION
Item 2. Changes in Securities page 14
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
<PAGE>
FIRSTBANK CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
------------ -------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 20,529,614 $ 23,279,923
Short term investments 8,154,366 835,580
-------------- -------------
Total cash and cash equivalents 28,683,980 24,115,503
Securities available for sale 90,856,367 82,577,999
Loans
Loans held for sale 4,597,764 3,916,791
Portfolio loans
Commercial 163,043,935 158,218,889
Real estate mortgage, portfolio 162,526,641 167,930,825
Consumer 73,423,055 74,741,496
-------------- -------------
Total loans 403,591,395 404,808,001
Less allowance for loan losses (8,419,000) (8,114,000)
-------------- -------------
Net loans 395,172,395 396,694,001
Premises and equipment, net 13,393,102 13,417,065
Acquisition intangibles 10,074,817 10,290,640
Accrued interest receivable 3,713,555 3,458,655
Other assets 6,599,689 5,769,444
-------------- -------------
TOTAL ASSETS $ 548,493,905 $ 536,323,307
============== =============
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest bearing accounts $ 63,333,976 $ 57,952,555
Interest bearing accounts:
Demand 113,816,190 110,363,898
Savings 64,755,011 63,853,842
Time 214,500,197 213,495,526
-------------- -------------
Total deposits 456,405,374 445,665,821
Securities sold under agreements to repurchase
and overnight borrowings 18,180,440 21,232,881
Notes payable 9,077,138 7,590,465
Accrued interest and other liabilities 8,781,063 7,301,246
-------------- -------------
Total liabilities 492,444,015 481,790,413
Page 3 of 20
<PAGE>
SHAREHOLDERS' EQUITY
Preferred stock; no par value, 300,000
shares authorized, none issued
Common stock; 10,000,000 shares authorized, 4,311,754 shares
issued and outstanding (4,292,210 in December 1997) 46,719,778 46,223,949
Retained earnings 8,545,516 7,420,886
Unrealized gain (loss) on available for sale securities 784,596 887,059
-------------- -------------
Total shareholders' equity 56,049,890 54,531,894
-------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 548,493,905 $ 536,322,307
============== =============
</TABLE>
See notes to consolidated financial statements.
Page 4 of 20
<PAGE>
FIRSTBANK CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
1998 1997
------------- -----------
<S> <C> <C>
Interest income:
Interest and fees on loans $ 9,491,632 $ 7,274,784
Investment securities
Taxable 809,201 503,211
Exempt from Federal Income Tax 443,866 366,523
Short term investments 119,684 68,774
------------ -----------
Total interest income 10,864,383 8,213,292
Interest expense:
Deposits 4,410,938 3,482,290
Notes payable and other 340,618 140,426
------------ -----------
Total interest expense 4,751,556 3,622,716
Net interest income 6,112,827 4,590,576
Provision for loan losses 370,000 251,000
------------ -----------
Net interest income after provision for loan losses 5,742,827 4,339,576
Noninterest income:
Gain on sale of mortgage loans 561,463 118,239
Service charges on deposit accounts 346,357 254,584
Trust fees 67,627 56,844
Gain on sale of securities 820 0
Other 308,325 318,259
------------ -----------
Total noninterest income 1,284,592 747,926
Noninterest expense:
Salaries and employee benefits 2,361,215 1,742,702
Occupancy 673,591 474,180
Amortization of Intangibles 186,216 244,513
FDIC Insurance premium 18,257 (8,338)
Michigan Single Business Tax 99,500 95,500
Other 1,198,853 836,933
------------ -----------
Total noninterest expense 4,537,632 3,385,490
Income before federal income taxes 2,489,787 1,702,012
Federal income taxes 742,000 475,000
------------ -----------
NET INCOME $ 1,747,787 $ 1,227,012
============ ===========
Page 5 of 20
<PAGE>
Per Share:
BASIC EARNINGS $0.41 $0.36
===== =====
DILUTED EARNINGS $0.39 $0.35
===== =====
DIVIDENDS $0.15 $0.10
===== =====
</TABLE>
See notes to the consolidated financial statements.
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
QUARTERS ENDING MARCH 31,
<TABLE>
<CAPTION>
1998 1997
------------ -----------
<S> <C> <C>
Net Income $ 1,747,787 $ 1,227,012
Change in unrealized gains on securities (102,463) (409,839)
------------ -----------
Comprehensive income $ 1,645,324 $ 817,173
============ ===========
</TABLE>
See notes to the consolidated financial statements.
Page 6 of 20
<PAGE>
FIRSTBANK CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
NET UNREALIZED
APPRECIATION
(DEPRECIATION) ON
(IN THOUSANDS) COMMON RETAINED AVAILABLE FOR SALE
STOCK EARNINGS SECURITIES TOTAL
------------- -------------- ------------------- -----
<S> <C> <C> <C> <C>
BALANCES AT DECEMBER 31, 1996 $ 24,228,132 $ 8,296,590 $ 563,339 $ 33,088,061
Cash dividends - $.48 per share (1,862,378) (1,862,378)
Issuance of 13,756 shares of common stock
through exercise of stock options 163,566 163,566
Issuance of 25,590 shares of common stock
through dividend reinvestment plan 479,436 479,436
Issuance of 20,734 shares of common stock
through supplemental purchase under
dividend reinvestment plan 402,894 402,894
5% stock dividend - 203,834 shares 4,560,786 (4,571,057) (10,271)
Issuance of 815,266 shares of common
stock pursuant to the acquisition 16,389,135 16,389,135
Net change in unrealized appreciation
(depreciation) on available for
sale securities 323,720 323,720
Net income for 1997 5,557,731 5,557,731
------------ -------------- ---------- ------------
BALANCES AT DECEMBER 31, 1997 $ 46,223,949 $ 7,420,886 $ 887,059 $ 54,531,894
Cash dividends - $.15 per share (623,157) (623,157)
Issuance of 4,715 shares of common stock
through exercise of stock options 53,925 53,925
Issuance of 6,764 shares of common stock
through dividend reinvestment plan 176,482 176,482
Issuance of 9,394 shares of common stock
through supplemental purchase under
dividend reinvestment plan 265,422 265,422
Net change in unrealized appreciation
(depreciation) on available for
sale securities (102,463) (102,463)
Net income year to date 1,747,787 1,747,787
------------ -------------- ---------- ------------
BALANCES AT MARCH 31, 1998 $ 46,719,778 $ 8,545,516 $ 784,596 $ 56,049,890
============ ============== ========== ============
</TABLE>
See notes to consolidated financial statements.
Page 7 of 20
<PAGE>
FIRSTBANK CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
1998 1997
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 1,747,787 $ 1,227,012
Adjustments to reconcile net income to net cash provided
by operating activities
Provision for loan losses 370,000 251,000
Depreciation of premises and equipment 320,419 208,473
Net amortization(accretion) of security premiums/discounts (11,500) 51,167
Gain on sale of securities (820)
Amortization of goodwill and other intangibles 186,216 244,513
Gain on sale of mortgage loans (561,463) (118,239)
Proceeds from sales of mortgage loans 37,802,164 8,694,453
Unrealized loss on loans held for sale 118,800
Loans originated for sale (37,921,674) (8,177,680)
Increase in accrued interest receivable
and other assets (1,003,642) (403,870)
Increase in accrued interest payable and other liabilities 1,479,817 901,643
------------- -------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 2,407,304 2,997,272
INVESTING ACTIVITIES
Proceeds from sale of securities available for sale 610,235 47,898
Proceeds from maturities of securities available for sale 7,822,353 5,444,116
Purchases of securities available for sale (16,853,995) (13,480,484)
Net increase (decrease) in portfolio loans 1,832,579 (4,538,691)
Net purchases of premises and equipment (296,456) (96,339)
------------- -------------
NET CASH USED IN INVESTING ACTIVITIES (6,885,284) (12,623,500)
FINANCING ACTIVITIES
Net increase in deposits 10,739,553 5,562,572
Increase (decrease) in securities sold under agreements
to repurchase and other short term borrowings (3,052,441) 4,657,819
Decrease (increase) of note payable 1,486,673 (12,574)
Cash proceeds from issuance of common stock 495,829 175,506
Cash dividends (623,157) (358,374)
------------- -------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 9,046,457 10,024,949
INCREASE IN CASH AND CASH EQUIVALENTS 4,568,477 398,721
Page 8 of 20
<PAGE>
Cash and cash equivalents at beginning of period 24,115,503 21,228,472
------------- -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 28,683,980 $ 21,627,193
============= =============
Supplemental Disclosure
Interest Paid $ 4,609,350 $ 3,466,411
Income Taxes Paid $0 $0
</TABLE>
See notes to consolidated financial statements.
Page 9 of 20
<PAGE>
FIRSTBANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
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 month period ended March 31, 1998, are not
necessarily indicative of the results that may be expected for the year
ended December 31, 1998. The balance sheet at December 31, 1997, 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, 1997.
Under a new accounting standard, comprehensive income is now reported for
all periods. Comprehensive income includes both net income and other
comprehensive income. Other comprehensive income includes the change in
unrealized gains and losses on securities available for sale.
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 $57,211,000 and
$50,596,000 at March 31, 1998, and December 31, 1997, respectively.
Page 10 of 20
<PAGE>
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>
MARCH 31, DECEMBER 31,
(DOLLARS IN THOUSANDS) 1998 1997
------------------------------------------------ ----------- -----------
<S> <C> <C> <C>
Nonperforming loans:
Nonaccrual loans $862 $1,274
Loans 90 days or more past due 439 1,215
Renegotiated loans 109 121
------ ------
Total nonperforming loans $1,410 $2,610
====== ======
Property from defaulted loans $1,065 $ 663
====== ======
Nonperforming loans as a percent of:
Total loans .35% .64%
====== ======
Allowance for loan losses 16.7% 32.2%
====== ======
</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.
<TABLE>
<CAPTION>
THREE TWELVE THREE
MONTHS MONTHS MONTHS
ENDED ENDED ENDED
MARCH 31, DECEMBER 31, MARCH 31,
(DOLLARS IN THOUSANDS) 1998 1997 1997
- --------------------------------------------- --------- ------------ ---------
<S> <C> <C> <C>
Balance at beginning of period $ 8,114 $ 6,247 $ 6,247
Charge-offs (160) (1,270) (174)
Recoveries 95 413 105
------- -------- --------
Page 11 of 20
<PAGE>
Net charge-offs (65) (857) (69)
Additions to allowance for
loan losses 370 2,724 251
------- -------- --------
Balance at end of period $8,419 $ 8,114 $6,429
======= ======== ========
Average loans outstanding
during the period $403,195 $353,061 $315,539
======= ======== ========
Loans outstanding at end of period $403,591 $404,808 $318,573
======= ======== ========
Allowance as a percent of:
Total loans at end of period 2.09% 2.00% 2.02%
======= ======== ========
Nonperforming loans at end of period 597% 311% 1,000%
======= ======== ========
Net charge-offs as a percent of:
Average loans outstanding .02% .24% .02%
======= ======== ========
Average Allowance for loan losses .79% 12.00% 1.06%
======= ======== ========
</TABLE>
Page 12 of 20
<PAGE>
NOTE E - RECLASSIFICATION
Certain 1997 amounts have been reclassified to conform to the 1998
presentation.
Page 13 of 20
<PAGE>
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), 1st Bank (West Branch), and Bank of Lakeview (Lakeview)
(collectively the "Banks").
FINANCIAL CONDITION
During the first quarter of 1998, assets of the Corporation grew $12
million or 2.3%. Investment securities and cash and cash equivalents
account for this net change, supported by growth in deposits and equity.
Cash and cash equivalents increased $4.6 million or 18.9% in the three
month period from December 31, 1997 to March 31, 1998. During the same time
period, investment securities grew $8.3 million or 10.0%. Both of these
increases are the result of strong deposit growth and level loan demand.
Over half of the investment security increase is from short term (less than
120 days) investments. These investment vehicles are used to lock in a
marginally higher rate than overnight investments while still providing
liquidity to meet the expected increase in loan demand. The Banks have also
established an overnight repurchase agreement account with a correspondent
bank, which allows the Banks to earn a slightly higher interest rate on
overnight investments and maintain the same level of liquidity. The
overnight repurchase agreement has increased the short term investments,
and is responsible for the growth in cash and cash equivalents.
While total outstanding loans have varied very little during the first quarter
of 1998, the Banks have experienced some changes in loan categories. Commer-
cial loans have increased as the economy continues to encourage expansion in
the Banks' service areas. The three month increase of $4.8 million represents a
3.1% growth from December 31, 1997. Real estate mortgage loans have decreased
$5.4 million or 3.2% during this same time period. The sustained decrease in
mortgage rates has created heightened activity in the refinancing market. The
majority of real estate mortgage loans have been sold on the secondary market.
The allowance for loan losses increased $300,000 or 3.8% during the three
month period ending March 31, 1998. At March 31, 1998 the allowance as a
percent of outstanding loans was 2.09% compared to 2.00% at December 31, 1997.
The allowance was decreased by net change offs of $65,000 and increased by a
provision of $370,000. 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.
Total deposits have grown $10.7 million or 2.4% during the first 90 days of
1998. The largest increases, $8.8 million, are in noninterest bearing and
interest bearing demand accounts.
Page 14 of 20
<PAGE>
The total of securities sold under agreement to repurchase and overnight
borrowings declined 14.4% or $3.1 million in the first 3 months of 1998.
Securities sold under agreements to repurchase increased $2.4 million
during this time period as overnight borrowing decreased $5.5 million. The
Banks have historically experienced an increase in securities sold under
agreement to repurchase during the first quarter. The increased cash
generated by this growth, in addition to the deposit increase previously
discussed, have reduced the need for short term borrowing.
Net notes payable have increased $1.5 million or 19.6%. The only Bank which
does not participate in secondary market mortgage sales has funded loan
growth through Federal Home Loan Bank borrowings. For the first quarter of
1998, loan draws of $2 million and loan pay downs of $513,000 account for
the activity in notes payable.
Total shareholders' equity increased $1.5 million or 2.8% in the first
quarter of 1998. Net income of $1,748,000 and stock transactions of
$496,000 have increased shareholders' equity, while dividends of $623,000
and net unrealized loss on available for sale securities of $102,000
reduced shareholders' equity. Book value was $12.71 at December 31,1997
compared to $13.00 at March 31,1998.
On April 8, 1998 the Company distributed a 2 for 1 stock split to
shareholders of record on March 27, 1998. All per share amounts have been
restated to reflect the effect of the stock split.
The following table discloses compliance with current regulatory capital
requirements on a consolidated basis:
<TABLE>
<CAPTION>
TOTAL
TIER 1 RISK-BASED
(DOLLARS IN THOUSANDS) LEVERAGE CAPITAL CAPITAL
---------------------------------- -------- ------- ----------
<S> <C> <C> <C>
Capital balances at March 31, 1998 45,337 45,337 50,280
Required Regulatory Capital 21,257 15,679 31,358
Capital in excess of regulatory minimums 24,080 29,658 18,922
Capital ratios at March 31, 1998 8.53% 11.56% 12.82%
Regulatory capital ratios -- "well capitalized" 5.00% 6.00% 10.00%
definition
Regulatory capital ratios -- minimum requirement 4.00% 4.00% 8.00%
</TABLE>
Page 15 of 20
<PAGE>
RESULTS OF OPERATIONS
The Corporation acquired Lakeview Financial Corporation on August 8, 1997.
The acquisition was accounted for as a purchase transaction. Accordingly,
the results of operations are included in the Corporation's results for
periods subsequent to August 8, 1997. Lakeview Financial Corporation was
dissolved and Bank of Lakeview is operated as a wholly owned subsidiary of
the Corporation.
For the first quarter of 1998, net income was $1,748,000, basic earning per
share was $.41, and diluted earnings per share of $.39, compared to
$1,227,000, $.36 and $.35 for the same period in 1997. Average earning
assets increased $115 million or 30.3% from March 31, 1997 to March 31,
1998. The average yield on earning assets increased from 8.9% for the
quarter ended March 1997 to 9.0% for the comparable time period in 1998.
Average costs for rate related liabilities increased 5 basis points from
3.98% at March 31, 1997 to 4.03% at March 31, 1998.
The provision for loan losses was $370,000 during the first 3 months of
1998 compared to $251,000 for the same period in 1997.
Noninterest income increased $537,000 or 71.8% during the first 90 days of
1998 when compared to the first quarter of 1997. Over 82% of this increase,
$443,000, is an increase in the gain on sale of mortgage loans. Mortgage
activity has been strong as mortgage rates remain low. The remaining item
comprising the difference in noninterest income is service charges on
deposit accounts. This line item grew $92,000 from 1997 to 1998. The
majority of this increase, over 92% or $85,000 is the result of the new
affiliate.
Total noninterest expense increased 34.0% or $1,152,000 when comparing the
first quarter of 1998 to the first quarter of 1997. Most of the increase,
72.8% or $838,000, was the result of the affiliate acquisition. Salaries
and benefits increased $619,000 or 35.5% for the quarter ended March
31,1998 when compared the first quarter of 1997. Of this increase,
$358,000 or 57.9%, is the result of adding a new affiliate. The remaining
increase is from yearly increments which were paid in 1998, and additional
positions to support corporate growth.
Other line item increases in noninterest expense are primarily the result
of the additional affiliate bank.
FORWARD LOOKING STATEMENTS
This quarterly report on Form 10-Q including, without limitation,
management's discussion and analysis of financial condition and results of
operations and items which are incorporated in this quarterly report on
Form 10-Q by reference contain forward-looking statements that are based on
management's beliefs, assumptions, current expectations, estimates and
Page 16 of 20
<PAGE>
projections about the financial services industry, the economy, and about
the Corporation itself. Words such as "anticipates," "believes,"
"estimates," "expects," "forecasts," "intends," "is likely," "plans,"
"projects," "opinion," variations of such terms, and similar expressions
are intended to identify such forward-looking statements. These statements
are not guarantees of future performance and involve certain risks,
uncertainties, and assumptions ("Future Factors") that are difficult to
predict with regard to timing, extent, likelihood, and degree of
occurrence. Therefore, actual results and outcomes may materially differ
from what may be expressed or forecasted in such forward-looking
statements. Furthermore, the Corporation undertakes no obligation to
update, amend or clarify forward-looking statements, whether as a result of
new information, future events, or otherwise. Future Factors include
changes in interest rates and interest rate relationships; demand for
products and services; the degree of competition by traditional and
non-traditional competitors; changes in banking regulations; change sin tax
laws; changes in prices, levies, and assessments; the impact of
technological advances; governmental and regulatory policy changes; the
outcomes of pending and future litigation and contingencies; trends in
customer behavior and customer ability to repay loans; and the vicissitudes
of the national economy. These are representative of the Future Factors
that could cause a difference between an ultimate actual outcome and a
preceding forward-looking statement.
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
Information under the headings, "Liquidity and Interest Rate Sensitivity"
on pages 8 and 9 and "Quantitative and Qualitative Disclosure About Market
Risk" on pages 9 through 10 in the registrant's annual report to
shareholders for the year ended December 31, 1997, is here incorporated by
reference. Firstbank's annual report is filed as Exhibit 13 to its Form
10-K annual report for its fiscal year ended December 31, 1997.
Firstbank faces market risk to the extent that both earnings and the fair
values of its financial instruments are affected by changes in interest
rates. The Corporation manages this risk with static GAP analysis and
simulation modeling. Throughout the first quarter of 1998, the results of
these measurement techniques were within the Corporation's policy
guidelines. The Corporation does not believe that there has been a
material change in the nature of the Corporation's primary market risk
exposures, including the categories of market risk to which the Corporation
is exposed and the particular markets that present the primary risk of loss
to the Corporation. As of the date of this Form 10-Q Quarterly Report, the
Corporation does not know of or expect there to be any material change in
the general nature of its primary market risk exposure in the near term.
The methods by which the Corporation manages its primary market risk
exposures, as described in the sections of its Form 10-K Annual Report
Page 17 of 20
<PAGE>
incorporated by reference in response to this item, have not changed
materially during the current year. As of the date of this Form 10-Q
quarterly report, the Corporation does not expect to change those methods
in the near term. However, the Corporation may change those methods in the
future to adapt to changes in circumstances or to implement new techniques.
The Corporation's market risk exposure is mainly comprised of its
vulnerability to interest rate risk. Prevailing interest rates and
interest rate relationships in the future will be primarily determined by
market factors which are outside of Firstbank's control. All information
provided in response to this item consists of forward looking statements.
Reference is made to the section captioned "Forward Looking Statements" at
the beginning of this Form 10-Q quarterly report for a discussion of the
limitations on Firstbank's responsibility for such statements.
Page 18 of 20
<PAGE>
PART II. OTHER INFORMATION
ITEM 2. Changes in Securities
At various times in the first quarter of 1998, the Corporation issued
unregistered shares of its common stock totaling 480 shares to members of
the board of directors of the Corporation and the Corporation's subsidiary
banks. The shares were issued as retainers and/or director fees for the
directors' services on the Boards. The Corporation claims an exemption
from registration for the issuances under Section 4(2) of the Securities
Act of 1933, as amended, which exempts transactions by an issuer not
involving any public offering. The issuance did not involve any general
solicitation.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 27 -- Financial Data Schedule
Page 19 of 20
<PAGE>
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: MAY 13, 1998 \s\ JOHN MCCORMACK
John McCormack
President, Chief Executive Officer and
Director (Principal Executive Officer)
Date: MAY 13, 1998 \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> THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM FIRSTBANK CORPORATION AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS. (DOLLARS IN THOUSANDS)
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
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