Exhibit 99.1
| FOR IMMEDIATE RELEASE | NEWS RELEASE |
| Date Submitted: July 21, 2005 NASDAQ Symbol: FBMI | Contact: | Samuel G. Stone Executive Vice President and Chief Financial Officer (989) 466-7325 |
FIRSTBANK CORPORATION ANNOUNCES
SECOND QUARTER AND YEAR-TO-DATE 2005 RESULTS
| Highlights Include: | |||
|---|---|---|---|
| • | Earnings per share (diluted) of $0.46 for the second quarter of 2005, compared to $0.39 in the first quarter of 2005 and $0.43 in the second quarter of 2004 | ||
| • | Earnings per share (diluted) of $0.85 in the first half of 2005 compared to $0.87 in the first half on 2004 | ||
| • | Keystone Community Bank acquisition continues on track | ||
| • | Addition to Russell Microcap Index | ||
Alma, Michigan (FBMI) —Thomas R. Sullivan, President and Chief Executive Officer of Firstbank Corporation announced earnings per share of $0.46 for the second quarter of 2005, compared to $0.43 for the second quarter of 2004, an increase of 7.0%. Net income was $2,508,000 for the quarter ended June 30, 2005, compared to $2,565,000 for the quarter ended June 30, 2004. Returns on average assets and average equity for the second quarter of 2005 were 1.23% and 13.6%, respectively, compared with 1.33% and 12.2%, respectively, in the second quarter of 2004. Net income was affected by mortgage activity at a much lower level than year-ago, with gain on sale of mortgages down 49%. The capital management strategies of share repurchase and self tender offer executed primarily in 2004 helped improve earnings per share and return on equity. All per share amounts are fully diluted amounts and have been adjusted to reflect the 5% stock dividend paid in December 2004.
For the first half of 2005, earnings per share of $0.85 compared to $0.87 for the first half of 2004, a decrease of 2.3%. Net income was $4,645,000 for the six months ended June 30, 2005, compared to $5,246,000 for the six months ended June 30, 2004. Returns on average assets and average equity for the first half of 2005 were 1.16% and 12.8%, respectively, compared with 1.35% and 12.3%, respectively, in the first half of 2004. Firstbank’s capital management strategies helped earnings per share and contributed to the increase in return on equity compared to the year-ago period.
Growth in Firstbank’s balance sheet continued as total assets reached $831 million, 5.7% above the year-ago level. Total portfolio loans at the end of the second quarter of 2005 were 5.3% above the level at June 30, 2004. Commercial and commercial real estate loan growth was strong, increasing 9.1% above the year-ago level, and residential mortgage loans increased 9.9%. Total deposits as of June 30, 2005, were 5.9% above the year-ago level, with savings deposits increasing 33.4% as a result of in-market promotions and with non-interest bearing deposits increasing 4.0% over this time period.
Firstbank’s net interest margin, at 4.39% in the second quarter of 2005, was within 0.02% of the 4.41% level achieved in both the first quarter of 2005 and the second quarter of 2004. Rising rates in Firstbank’s variable rate commercial loan portfolio were offset by lower rates achieved on new and renewed fixed rate loans.
Mr. Sullivan stated, “We are pleased to see earnings growth from our core banking business taking the place of the unusually strong earnings that characterized the mortgage boom of the past few years. Our bankers are doing an excellent job of meeting customer needs in our markets and containing costs. At the same time, we are investing in systems and training designed to increase our service to customers and our revenues in the future. We are also very excited about the opportunity to extend our brand of community banking to the Kalamazoo market as Keystone Community Bank joins our company later this year. Keystone is an excellent and well respected community bank in a market that holds significant opportunity for growth.”
Sullivan continued, “We have been informed that our stock will be part of the new Russell Microcap Index. This new index debuted on July 1 and is comprised of the smallest 1,000 securities in the small-cap Russell 2000 Index along with the next smallest 1,000 companies. While we won’t know the impact of increased exposure of our stock through the Microcap Index for some time, we are hopeful that the combination of increased exposure for our stock, good and progressing fundamental financial performance, and the acquisition of good quality growth opportunities will support creation of value for our shareholders.”
Total non-interest expenses in the second quarter of 2005 declined 1.7% from the first quarter of 2005 and were just 3.2% above the level in the second quarter of 2004. Salaries and employee benefits expense declined 1.3% compared to the first quarter of 2005 and declined 0.1% compared to the second quarter of 2004.
Supported by growth in loans and earning assets, net interest income in the second quarter of 2005 increased 4.8% from the level in the second quarter of 2004. The reduction in mortgage activity compared to last year continued to negatively impact earnings comparisons, as gain on sale of mortgage loans showed a 49% decline compared to the second quarter of 2004. Although total non-interest income in the second quarter of 2005 declined 8.5% from the year-ago quarter, it increased 16.6% compared to the first quarter of 2005. Helping to offset the decline in mortgage activity was an 11.2% increase in deposit account fee income for the first half of 2005 compared to the first half of 2004.
Primarily as a result of the self tender offer in 2004, shareholders’ equity decreased 13.0% from June 30, 2004 to June 30, 2005. Since December 31, 2004, shareholder’s equity has increased 3.5%. Firstbank did not repurchase shares in the second quarter of 2005, as capital is being maintained at an appropriate level in consideration of the pending acquisition of Keystone Financial Corporation. The ratio of average equity to average assets stood at 9.0% in the second quarter of 2005, compared to 9.2% in the first quarter of 2005 and 10.9% in the second quarter of 2004.
Firstbank’s mortgage servicing portfolio was $472.8 million as of June 30, 2005, compared to $473.9 million at March 31, 2005, and $471.1 million at June 30, 2004.
Firstbank’s asset quality measures remained strong. Net charge-offs declined, to $106,000 in the second quarter of 2005, or 0.06% annualized as a percentage of average loans, compared to $461,000, or 0.28% annualized as a percentage of average loans in the first quarter of 2005 and compared to $119,000, or 0.07% annualized, in the second quarter of 2004. The ratio of non-performing loans to loans was 0.41% as of June 30, 2005, compared to 0.23% at March 31, 2005, and 0.37% at June 30, 2004. The increase in non-performing loans was primarily related to one loan which has little risk of loss due to a government guarantee. These measures of asset quality continue to be at levels considered in the industry to be favorable.
Firstbank Corporation, headquartered in Alma, Michigan is currently a five bank financial services company with assets of $831 million and 35 banking offices located in central and northeast Michigan. Bank subsidiaries include: Firstbank — Alma; Firstbank (Mt. Pleasant); Firstbank — West Branch; Firstbank - Lakeview; and Firstbank — St. Johns. Firstbank Corporation’s pending acquisition of the $151 million asset Keystone Community Bank in Kalamazoo, Michigan, is expected to close in the fourth quarter of 2005, subject to regulatory and Keystone shareholder approvals. Other corporate affiliates include 1st Armored, Inc.; 1st Title; Gladwin Land Company, Inc.; and C. A. Hanes Realty, Inc. Investment services are available through affiliations with CB Wealth Management N.A., MML Investors Services, Inc., and Raymond James Financial Services Inc.
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, increases in interest rates and positioning of balance sheets to benefit net interest margins and earnings. 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 | Six months Ended: | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Jun 30 2005 | Mar 31 2005 | Jun 30 2004 | Jun 30 2005 | Jun 30 2004 | ||||||||||||||
| Interest income: | ||||||||||||||||||
| Interest and fees on loans | $ | 11,353 | $ | 10,847 | $ | 10,058 | $ | 22,200 | $ | 20,238 | ||||||||
| Investment securities | ||||||||||||||||||
| Taxable | 504 | 458 | 380 | $ | 962 | $ | 763 | |||||||||||
| Exempt from federal income tax | 231 | 248 | 228 | 479 | 470 | |||||||||||||
| Short term investments | 30 | 34 | 32 | 64 | 56 | |||||||||||||
| Total interest income | 12,118 | 11,587 | 10,698 | 23,705 | 21,527 | |||||||||||||
| Interest expense: | ||||||||||||||||||
| Deposits | 2,617 | 2,243 | 1,815 | 4,860 | 3,601 | |||||||||||||
| Notes payable and other borrowing | 1,237 | 1,196 | 995 | 2,433 | 2,025 | |||||||||||||
| Total interest expense | 3,854 | 3,439 | 2,810 | 7,293 | 5,626 | |||||||||||||
| Net interest income | 8,264 | 8,148 | 7,888 | 16,412 | 15,901 | |||||||||||||
| Provision for loan losses | 73 | 8 | 60 | 81 | (131 | ) | ||||||||||||
| Net interest income after provision for loan losses | 8,191 | 8,140 | 7,828 | 16,331 | 16,032 | |||||||||||||
| Noninterest income: | ||||||||||||||||||
| Gain on sale of mortgage loans | 431 | 455 | 847 | 886 | 1,631 | |||||||||||||
| Service charges on deposit accounts | 783 | 720 | 703 | 1,503 | 1,352 | |||||||||||||
| Gain on sale of securities | 17 | 12 | 11 | 29 | 11 | |||||||||||||
| Mortgage servicing | 30 | 48 | (56 | ) | 78 | (76 | ) | |||||||||||
| Other | 1,336 | 978 | 1,316 | 2,314 | 2,268 | |||||||||||||
| Total noninterest income | 2,597 | 2,213 | 2,821 | 4,810 | 5,186 | |||||||||||||
| Noninterest expense: | ||||||||||||||||||
| Salaries and employee benefits | 3,836 | 3,887 | 3,838 | 7,723 | 7,779 | |||||||||||||
| Occupancy and equipment | 969 | 1,016 | 923 | 1,985 | 1,892 | |||||||||||||
| Amortization of intangibles | 75 | 76 | 75 | 151 | 151 | |||||||||||||
| FDIC insurance premium | 21 | 21 | 21 | 42 | 43 | |||||||||||||
| Other | 2,193 | 2,216 | 2,014 | 4,409 | 3,609 | |||||||||||||
| Total noninterest expense | 7,094 | 7,216 | 6,871 | 14,310 | 13,474 | |||||||||||||
| Income before federal income taxes | 3,694 | 3,137 | 3,778 | 6,831 | 7,744 | |||||||||||||
| Federal income taxes | 1,186 | 1,000 | 1,213 | 2,186 | 2,498 | |||||||||||||
| Net Income | $ | 2,508 | $ | 2,137 | $ | 2,565 | $ | 4,645 | $ | 5,246 | ||||||||
| Fully Tax Equivalent Interest Income | $ | 8,398 | $ | 8,292 | $ | 8,014 | $ | 16,767 | $ | 16,225 | ||||||||
| Per Share Data: | ||||||||||||||||||
| Basic Earnings | $ | 0.47 | $ | 0.40 | $ | 0.44 | $ | 0.87 | $ | 0.89 | ||||||||
| Diluted Earnings | $ | 0.46 | $ | 0.39 | $ | 0.43 | $ | 0.85 | $ | 0.87 | ||||||||
| Dividends Paid | $ | 0.22 | $ | 0.21 | $ | 0.20 | $ | 0.43 | $ | 0.39 | ||||||||
| Performance Ratios: | ||||||||||||||||||
| Return on Average Assets* | 1.23 | % | 1.09 | % | 1.33 | % | 1.16 | % | 1.35 | % | ||||||||
| Return on Average Equity* | 13.6 | % | 11.8 | % | 12.2 | % | 12.8 | % | 12.3 | % | ||||||||
| Net Interest Margin (FTE) * | 4.39 | % | 4.41 | % | 4.41 | % | 4.41 | % | 4.46 | % | ||||||||
| Book Value Per Share+ | $ | 14.10 | $ | 13.76 | $ | 14.70 | $ | 14.10 | $ | 14.70 | ||||||||
| Average Equity/Average Assets | 9.0 | % | 9.2 | % | 10.9 | % | 9.1 | % | 10.9 | % | ||||||||
| Net Charge-offs | 106 | 461 | 119 | 567 | 754 | |||||||||||||
| Net Charge-offs as a % of Average Loans^* | 0.06 | % | 0.28 | % | 0.07 | % | 0.17 | % | 0.08 | % | ||||||||
| * Annualized | ||||||||||||||||||
| + Period End | ||||||||||||||||||
| ^ Total loans less loans held for sale | ||||||||||||||||||
FIRSTBANK CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
UNAUDITED
| Jun 30 2005 | Mar 31 2005 | Dec 31 2004 | Jun 30 2004 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ASSETS | ||||||||||||||
| Cash and cash equivalents: | ||||||||||||||
| Cash and due from banks | $ | 26,541 | $ | 21,930 | $ | 23,715 | $ | 24,070 | ||||||
| Short term investments | 4,826 | 1,849 | 2,057 | 10,807 | ||||||||||
| Total cash and cash equivalents | 31,367 | 23,779 | 25,772 | 34,877 | ||||||||||
| Securities available for sale | 77,803 | 77,855 | 72,475 | 66,256 | ||||||||||
| Federal Home Loan Bank stock | 5,563 | 5,412 | 5,355 | 5,241 | ||||||||||
| Loans: | ||||||||||||||
| Loans held for sale | 1,533 | 1,786 | 1,969 | 1,400 | ||||||||||
| Portfolio loans: | ||||||||||||||
| Commercial | 104,761 | 107,211 | 110,261 | 101,393 | ||||||||||
| Commercial real estate | 242,321 | 235,040 | 225,372 | 216,689 | ||||||||||
| Residential mortgage | 243,718 | 240,281 | 231,213 | 221,766 | ||||||||||
| Real estate construction | 37,793 | 37,877 | 47,920 | 51,442 | ||||||||||
| Consumer | 55,166 | 52,708 | 54,491 | 57,944 | ||||||||||
| Credit card | 1,799 | 1,785 | 1,830 | 1,828 | ||||||||||
| Total portfolio loans | 685,558 | 674,902 | 671,087 | 651,062 | ||||||||||
| Less allowance for loan losses | (10,094 | ) | (10,128 | ) | (10,581 | ) | (11,232 | ) | ||||||
| Net portfolio loans | 675,464 | 664,774 | 660,506 | 639,830 | ||||||||||
| Premises and equipment, net | 17,126 | 17,323 | 17,658 | 17,923 | ||||||||||
| Goodwill | 4,465 | 4,465 | 4,465 | 4,880 | ||||||||||
| Other intangibles | 2,245 | 2,296 | 2,395 | 2,538 | ||||||||||
| Other assets | 15,121 | 16,486 | 15,540 | 13,111 | ||||||||||
| TOTAL ASSETS | $ | 830,687 | $ | 814,176 | $ | 806,135 | $ | 786,056 | ||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||
| LIABILITIES | ||||||||||||||
| Deposits: | ||||||||||||||
| Noninterest bearing accounts | 109,269 | 99,424 | 106,208 | 105,104 | ||||||||||
| Interest bearing accounts: | ||||||||||||||
| Demand | 160,576 | 173,542 | 177,067 | 181,272 | ||||||||||
| Savings | 131,589 | 115,234 | 100,277 | 98,651 | ||||||||||
| Time | 222,420 | 230,425 | 219,715 | 204,341 | ||||||||||
| Total deposits | 623,854 | 618,625 | 603,267 | 589,368 | ||||||||||
| Securities sold under agreements to | ||||||||||||||
| repurchase and overnight borrowings | 34,374 | 31,855 | 39,100 | 28,883 | ||||||||||
| FHLB Advances and notes payable | 76,256 | 68,899 | 71,430 | 72,475 | ||||||||||
| Subordinated Debt | 10,310 | 10,310 | 10,310 | 0 | ||||||||||
| Accrued interest and other liabilities | 10,472 | 11,214 | 9,164 | 8,641 | ||||||||||
| Total liabilities | 755,266 | 740,903 | 733,271 | 699,367 | ||||||||||
| SHAREHOLDERS' EQUITY | ||||||||||||||
| Preferred stock; no par value, 300,000 | ||||||||||||||
| shares authorized, none issued | ||||||||||||||
| Common stock; 20,000,000 shares authorized * | 65,155 | 64,533 | 64,713 | 74,115 | ||||||||||
| Retained earnings | 10,166 | 8,835 | 7,816 | 12,139 | ||||||||||
| Accumulated other comprehensive income | 100 | (95 | ) | 335 | 435 | |||||||||
| Total shareholders' equity | 75,421 | 73,273 | 72,864 | 86,689 | ||||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 830,687 | $ | 814,176 | $ | 806,135 | $ | 786,056 | ||||||
| * Common stock shares issued and outstanding | 5,350,816 | 5,326,667 | 5,322,137 | 5,895,985 | ||||||||||
| Asset Quality Ratios: | ||||||||||||||
| Non-Performing Loans / Loans^ | 0.41 | % | 0.23 | % | 0.28 | % | 0.37 | % | ||||||
| Non-Perf. Loans + OREO / Loans^ + OREO | 0.54 | % | 0.36 | % | 0.42 | % | 0.39 | % | ||||||
| Non-Performing Assets / Total Assets | 0.45 | % | 0.30 | % | 0.35 | % | 0.33 | % | ||||||
| Allowance for Loan Loss as a % of Loans^ | 1.47 | % | 1.50 | % | 1.58 | % | 1.73 | % | ||||||
| Allowance / Non-Performing Loans | 356 | % | 645 | % | 568 | % | 464 | % | ||||||
| Quarterly Average Balances: | ||||||||||||||
| Total Portfolio Loans^ | $ | 678,835 | $ | 670,240 | $ | 663,475 | $ | 644,714 | ||||||
| Total Earning Assets | $ | 765,888 | $ | 755,795 | $ | 746,814 | $ | 729,187 | ||||||
| Total Shareholders' Equity | 74,009 | 74,881 | 72,021 | 84,977 | ||||||||||
| Total Assets | 821,362 | 812,067 | 799,688 | 779,826 | ||||||||||
| Diluted Shares Outstanding | 5,425,421 | 5,436,709 | 5,420,497 | 5,993,298 | ||||||||||
| ^ Total loans less loans held for sale | ||||||||||||||