Highlights Include:
-- Net income of $1,513,000 or $0.16 per share for the first quarter
of 2009, compares to $2,150,000 or $0.29 per share for the
quarter ended March 31, 2008
-- Gain on sale of mortgage in the first quarter of 2009 increases
100% from the first quarter of 2008
-- Increase in FDIC fees and collection expenses neutralize cost
reduction efforts
-- Balance sheet and loan growth muted by economic conditions and
loan sales into the secondary market
-- Preferred stock issuance increases total equity by 28.7%
-- All affiliate banks continue to meet regulatory well-capitalized
requirements
ALMA, Mich., April 23, 2009 (GLOBE NEWSWIRE) -- Thomas R. Sullivan, President and Chief Executive Officer of Firstbank Corporation (Nasdaq:FBMI), announced earnings per share of $0.16 for the first quarter of 2009 compared to $0.29 in the first quarter of 2008. Net income was $1,513,000 for the quarter ended March 31, 2009, compared to $2,150,000 for the quarter ended March 31, 2008. Returns on average assets and average equity for the first quarter of 2009 were 0.46% and 4.8%, respectively. All per share amounts are fully diluted.
Total assets of Firstbank Corporation at March 31, 2009, were $1.415 billion, an increase of 2.3% over the year-ago period. Total portfolio loans of $1.135 billion were 0.6% above the level at March 31, 2008, but declined from December 31, 2008. Although mortgage refinance activity is very strong in Firstbank's markets, this type of lending activity results in loans being financed in the secondary market rather than on the balance sheet of the company. While Firstbank has ample resources to increase loans on its balance sheet, demand for funding new ventures by quality borrowers remains weak due to uncertainty about the economy. Total deposits as of March 31, 2009, were $1.036 billion, compared to $1.012 billion at March 31, 2008, an increase of 2.4%.
Firstbank's net interest margin, at 3.66% in the first quarter of 2009, decreased from 3.82% in the fourth quarter of 2008, and from 3.79% in the first quarter of 2008. The lower level of net interest margin was primarily a result of the full-quarter impact of the reduction in prime rate from 4.00% to 3.25% on December 16, 2008. Average earning assets increased 2.1% in the first quarter of 2009 compared to the fourth quarter of 2008 and 4.6% compared to the first quarter of 2008. Due to the higher level of earning assets, net interest income in the first quarter of 2009 was 1.2% above the year-ago period. However, the decrease in net interest margin caused net interest income in the first quarter of 2009 to fall 3.0% below the level in the fourth quarter of 2008. During the first quarter of 2009, the margin showed some improvement on a monthly basis as funding costs were reduced.
Earnings in the first quarter of 2009 were also affected by the level of provision for loan loss expense, which was determined by amounts necessary to keep the allowance for loan losses at the appropriate level. Provision expense in the first quarter of 2009 was $1,588,000, a decrease compared to the $2,947,000 of the fourth quarter of 2008, but higher than the $816,000 amount in the first quarter of 2008.
Gain on sale of mortgages continued very strong in the first quarter of 2009, generating nearly five times the revenue generated in the fourth quarter of 2008, and more than twice the revenue compared to a fairly strong first quarter of 2008. Sharp declines in mortgage interest rates in December of 2008 and continuing into the first quarter of 2009 are resulting in very strong mortgage refinance activity. Increased losses on sale of other real estate and reduced valuations in deferred compensation plan assets (which are matched by reduced other expenses) offset some of the revenue benefits from the mortgage business. As a result, total non-interest income was 9% above the year-ago quarter.
Firstbank continues to emphasize cost control during this period of earnings pressure. While the total of salaries and employee benefits increased 2% from the fourth quarter of 2008 to the first quarter of 2009, the increase was entirely a function of the timing of accruals for various employee benefits expenses and variable compensation. The sub-category of salaries and wages only, in the first quarter of 2009, was 3.1% below its level in both the fourth quarter of 2008 and the first quarter of 2008. Non-interest expenses other than salaries and employee benefits increased 15% in the first quarter of 2009 compared to the first quarter of 2008, with the increase driven mainly by factors related to problems in the economy and the financial system. FDIC insurance premiums increased 228% compared to the year-earlier period. Legal fees related to loans, write-downs of the value of other real estate, and expenses related to the management of other real estate also increased. Although non-interest expense other than salaries and employee benefits in the first quarter of 2009 were higher than the year-ago period, they were 2.7% lower than in the fourth quarter of 2008.
Mr. Sullivan stated, "The economic environment continues to be challenging for bank earnings. With interest rates at low levels, net interest margins are thin. Costs of collections and working with borrowers who are having difficulty are abnormally high, and outright loan losses are obviously above normal. In this environment, we have taken steps to ensure that the company remains financially strong. We have resources to expand lending when there is demand for new money by quality borrowers in our markets with good business or investment plans. We also work very hard to refinance existing loans for customers when there is an opportunity to improve their situation. Residential mortgage refinance activity was the strongest area of our business in the first quarter, and we also found opportunities to refinance good commercial projects where the original lenders need to reduce their commitments. We know that we, like all banks, will have to absorb a special assessment by the FDIC that will be expensed in the second or third quarter of this year. In our case, if the special assessment is reduced to the 10 basis point level that is being discussed, the cost will be approximately $1.1 million.
"Most importantly, we know that the core operations of our company are sound, that we have the strength to get through the challenging times, and that earnings will return to more normal levels when the economic ills are behind us. Our people continue to be loyal servants of their customers' needs and are dedicated to the well-being of our company and our communities. Combined with our capital strength, this personnel strength will keep Firstbank Corporation and our affiliate banks positioned well for the future."
At March 31, 2009, the ratio of the allowance for loan losses to loans was 1.24% compared to 1.26% at December 31, 2008, and increased from 1.02% at March 31, 2008. The ratio of allowance for loan loss to non-performing loans stood at 61% on March 31, 2009, compared to 59% at December 31, 2008.
Net charge-offs rose to $2,054,000 in the first quarter of 2009 and were 0.71% of average loans on an annualized basis. The ratio of non-performing loans (including loans past due over 90 days) to loans was 2.04% at March 31, 2009, compared to 2.14% as of December 31, 2008, and 1.27% at March 31, 2008.
Total equity increased 28.7% in the first quarter of 2009, reflecting the improvement obtained by the issuance of $33 million preferred stock at the end of January. The ratio of average equity to average assets rose to 9.4% in the first quarter of 2009 -- about a full percentage point over levels of past years. All of Firstbank Corporation's affiliate banks met the regulatory well-capitalized requirements prior to the issuance of preferred stock in January and continue to meet these requirements.
Firstbank Corporation, headquartered in Alma, Michigan, is a financial services company using a multi-bank-charter format with assets of $1.4 billion and 53 banking offices serving Michigan's Lower Peninsula. Bank subsidiaries include: Firstbank - Alma; Firstbank (Mt. Pleasant); Firstbank - West Branch; Firstbank - St. Johns; Keystone Community Bank; and Firstbank - West Michigan.
This press release contains certain forward-looking statements that involve risks and uncertainties. When used in this press release the words "anticipate," "believe," "expect," "hopeful," "potential," "should," and similar expressions identify forward-looking statements. Forward-looking statements include, but are not limited to, statements concerning future business growth, changes in interest rates, and the resolution of problem loans. Such statements are subject to certain risks and uncertainties which could cause actual results to differ materially from those expressed or implied by such forward-looking statements, including, but not limited to, economic, competitive, governmental and technological factors affecting the Company's operations, markets, products, services, interest rates and fees for services. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release.
FIRSTBANK CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands except per share data)
UNAUDITED
Three Months Ended:
-----------------------------
Mar 31 Dec 31 Mar 31
2009 2008 2008
-----------------------------
Interest income:
Interest and fees on loans $17,624 $18,682 $19,755
Investment securities
Taxable 746 976 1,039
Exempt from federal income
tax 332 349 353
Short term investments 30 33 91
-----------------------------
Total interest income 18,732 20,040 21,238
Interest expense:
Deposits 5,168 5,784 7,089
Notes payable and other
borrowing 1,963 2,294 2,685
-----------------------------
Total interest expense 7,131 8,078 9,774
Net interest income 11,601 11,962 11,464
Provision for loan losses 1,588 2,947 816
-----------------------------
Net interest income after
provision for loan losses 10,013 9,015 10,648
Noninterest income:
Gain on sale of mortgage
loans 2,373 489 1,142
Service charges on deposit
accounts 1,083 1,183 1,168
Gain (loss) on trading
account securities (129) (81) (13)
Gain (loss) on sale of AFS
securities (57) (3,851) 129
Mortgage servicing (352) 70 (123)
Other 279 369 630
-----------------------------
Total noninterest income 3,197 (1,821) 2,933
Noninterest expense:
Salaries and employee
benefits 5,630 5,519 5,847
Occupancy and equipment 1,727 1,714 1,749
Amortization of intangibles 245 245 281
FDIC insurance premium 371 180 113
Other 3,254 3,612 2,720
-----------------------------
Total noninterest expense 11,227 11,270 10,710
Income before federal income
taxes 1,983 (4,076) 2,871
Federal income taxes 470 (1,616) 721
-----------------------------
Net Income 1,513 (2,460) 2,150
Preferred Stock Dividends 275 0 0
-----------------------------
Net Income available to Common
Shareholders $1,238 ($2,460) $2,150
=============================
Fully Tax Equivalent Net
Interest Income $11,829 $12,220 $11,751
Per Share Data:
Basic Earnings $0.16 ($0.33) $0.29
Diluted Earnings $0.16 ($0.33) $0.29
Dividends Paid $0.100 $0.225 $0.225
Performance Ratios:
Return on Average Assets (a) 0.46% -0.70% 0.64%
Return on Average Equity (a) 4.8% -8.4% 7.5%
Net Interest Margin (FTE) (a) 3.66% 3.82% 3.79%
Book Value Per Share (b) $19.39 $15.17 $16.09
Average Equity/Average Assets 9.4% 8.4% 8.6%
Net Charge-offs $2,054 $1,120 $743
Net Charge-offs as a % of
Average Loans (c)(a) 0.71% 0.39% 0.26%
(a) Annualized
(b) Period End
(c) Total loans less loans held for sale
FIRSTBANK CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
UNAUDITED
Mar 31 Dec 31 Mar 31
2009 2008 2008
----------------------------------
ASSETS
Cash and cash equivalents:
Cash and due from banks $24,759 $33,050 $40,057
Short term investments 47,315 30,662 12,553
----------------------------------
Total cash and cash equivalents 72,074 63,712 52,610
Securities available for sale 104,637 113,095 107,866
Federal Home Loan Bank stock 9,084 9,084 8,481
Loans:
Loans held for sale 5,071 1,408 238
Portfolio loans:
Commercial 177,635 184,455 216,458
Commercial real estate 398,648 391,572 312,012
Residential mortgage 395,945 403,695 391,568
Real estate construction 90,665 103,206 130,942
Consumer 72,546 75,296 77,827
----------------------------------
Total portfolio loans 1,135,439 1,158,224 1,128,807
Less allowance for loan
losses (14,128) (14,594) (11,550)
----------------------------------
Net portfolio loans 1,121,311 1,143,630 1,117,257
Premises and equipment, net 26,396 26,941 28,027
Goodwill 35,603 35,603 35,345
Other intangibles 3,636 3,881 4,670
Other assets 37,143 27,986 27,993
----------------------------------
TOTAL ASSETS $1,414,955 $1,425,340 $1,382,487
==================================
LIABILITIES AND SHAREHOLDERS'
EQUITY
LIABILITIES
Deposits:
Noninterest bearing accounts $142,862 $149,179 $143,246
Interest bearing accounts:
Demand 229,827 223,526 224,998
Savings 161,554 154,015 155,628
Time 489,304 489,081 454,797
Wholesale CD's 12,502 31,113 33,018
----------------------------------
Total deposits 1,036,049 1,046,914 1,011,687
Securities sold under
agreements to repurchase and
overnight borrowings 43,671 52,917 49,280
FHLB Advances and notes
payable 133,988 162,274 147,572
Subordinated Debt 36,084 36,084 36,084
Accrued interest and other
liabilities 17,222 12,168 18,097
----------------------------------
Total liabilities 1,267,014 1,310,357 1,262,720
SHAREHOLDERS' EQUITY
Preferred stock; no par
value, 300,000 shares
authorized, 33,000
outstanding 32,707 0 0
Common stock; 20,000,000
shares authorized 113,951 113,411 111,914
Retained earnings 1,164 686 7,174
Accumulated other
comprehensive income/(loss) 119 886 679
----------------------------------
Total shareholders' equity 147,941 114,983 119,767
----------------------------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $1,414,955 $1,425,340 $1,382,487
==================================
Common stock shares issued
and outstanding 7,630,637 7,580,620 7,441,342
Principal Balance of Loans
Serviced for Others ($mil) $534.5 $513.1 $516.8
Asset Quality Ratios:
Non-Performing Loans /
Loans (a) 2.04% 2.14% 1.27%
Non-Perf. Loans + OREO /
Loans (a) + OREO 2.79% 2.60% 1.51%
Non-Performing Assets /
Total Assets 2.26% 2.12% 1.23%
Allowance for Loan Loss as
a % of Loans (a) 1.24% 1.26% 1.02%
Allowance / Non-Performing
Loans 61% 59% 81%
Quarterly Average Balances:
Total Portfolio Loans (a) $1,149,168 $1,153,716 $1,129,710
Total Earning Assets 1,305,113 1,278,675 1,247,604
Total Shareholders' Equity 134,866 118,064 118,609
Total Assets 1,431,011 1,409,644 1,377,329
Diluted Shares Outstanding 7,595,469 7,540,644 7,417,187
(a) Total Loans less loans held for sale