SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 2001
or
[ ] TRANSACTION 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: (989) 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 . . . . 4,830,431 shares outstanding as of July 31, 2001.
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 14
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders page 15
Item 6. Exhibits and Reports on Form 8-K page 15
SIGNATURES page 16
Page 2
Item 1. Financial Statements (UNAUDITED)
FIRSTBANK CORPORATION
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2001 (Unaudited) AND DECEMBER 31, 2000
(Dollars in thousands)
June 30 December 31,
2001 2000
ASSETS
Cash and due from banks $20,687 $25,716
Short term investments 6,149 2,380
------------ ------------
Total cash and cash equivalents 26,836 28,096
Securities available for sale 71,373 76,175
Loans
Loans held for sale 2,511 1,018
Portfolio loans
Commercial 291,717 279,060
Real estate mortgage 229,288 238,899
Consumer 78,760 81,790
------------ ------------
Total loans 602,276 600,767
Less allowance for loan losses (10,164) (9,857)
------------ ------------
Net loans 592,112 590,910
Premises and equipment, net 15,853 15,682
Acquisition intangibles 8,834 8,974
Accrued interest receivable 4,043 4,623
Other assets 9,414 8,807
------------ ------------
TOTAL ASSETS $728,465 $733,267
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest bearing accounts 78,127 80,295
Interest bearing accounts:
Demand 144,660 135,467
Savings 70,953 68,641
Time 253,252 252,821
------------ ------------
Total deposits 546,992 537,224
Securities sold under agreements to repurchase and overnight 25,058 38,307
borrowings
Notes payable 77,254 83,952
Accrued interest and other liabilities 11,223 9,580
------------ ------------
Total liabilities 660,527 669,063
SHAREHOLDERS' EQUITY
Preferred stock; no par value, 300,000 shares authorized, none issued Common
stock; 10,000,000 shares authorized, 4,827,659 shares issued
and outstanding (4,767,877 in December 2000) 57,481 56,550
Retained earnings 9,641 7,286
Accumulated other comprehensive income 816 368
------------ ------------
Total shareholders' equity 67,938 64,204
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $728,465 $733,267
============ ============
Page 3
FIRSTBANK CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
JUNE 30, 2001 AND 2000
(Unaudited)
(Dollars in Thousands)
Three months ended
June 30,
2001 2000
---- ----
Interest income:
Interest and fees on loans $13,230 $11,954
Investment securities
Taxable 675 849
Exempt from Federal Income Tax 325 378
Short term investments 47 51
------------ -----------
Total interest income 14,277 13,232
Interest expense:
Deposits 5,069 4,544
Notes payable and other 1,483 1,556
------------ -----------
Total interest expense 6,552 6,100
------------ -----------
Net interest income 7,725 7,132
Provision for loan losses 228 213
------------ -----------
Net interest income after provision for loan losses 7,497 6,919
Noninterest income:
Gain on sale of mortgage loans 622 78
Service charges on deposit accounts 494 443
Trust fees 83 107
Gain on sale of securities 0 7
Mortgage servicing (39) 69
Other 1,023 628
------------ -----------
Total noninterest income 2,183 1,332
Noninterest expense:
Salaries and employee benefits 3,320 2,651
Occupancy 768 776
Amortization of Intangibles 194 172
FDIC Insurance premium 27 25
Michigan Single Business Tax 124 152
Other 1,708 1,305
------------ -----------
Total noninterest expense 6,141 5,081
------------ -----------
Income before federal income taxes 3,539 3,170
Federal income taxes 1,121 1,030
------------ -----------
NET INCOME $2,418 $2,140
============ ===========
Comprehensive Income $2,438 $2,344
============ ===========
Basic earnings per share $0.50 $0.44
============ ===========
Diluted earnings per share $0.50 $0.44
============ ===========
Dividends per share $0.18 $0.16
============ ===========
Page 4
FIRSTBANK CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
JUNE 30, 2001 AND 2000
(Unaudited)
(Dollars in Thousands)
Six months ended June 30,
2001 2000
------------ ----------
Interest income:
Interest and fees on loans $26,453 $23,151
Investment securities
Taxable 1,387 1,763
Exempt from Federal Income Tax 660 772
Short term investments 143 100
------------ ----------
Total interest income 28,643 25,786
Interest expense:
Deposits 10,389 8,869
Notes payable and other 3,217 2,818
------------ ----------
Total interest expense 13,606 11,687
------------ ----------
Net interest income 15,037 14,099
Provision for loan losses 431 388
------------ ----------
Net interest income after provision for loan losses 14,606 13,711
Noninterest income:
Gain on sale of mortgage loans 957 171
Service charges on deposit accounts 918 830
Trust fees 172 195
Gain on sale of securities 25 4
Mortgage servicing 2 148
Other 1,984 1,310
------------ ----------
Total noninterest income 4,058 2,658
Noninterest expense:
Salaries and employee benefits 6,574 5,386
Occupancy 1,657 1,551
Amortization of Intangibles 394 343
FDIC Insurance premium 52 50
Michigan Single Business Tax 256 315
Other 3,850 2,532
------------ ----------
Total noninterest expense 12,783 10,177
------------ ----------
Income before federal income taxes 5,881 6,192
Federal income taxes 1,851 1,942
------------ ----------
NET INCOME $4,030 $4,250
============ ==========
Comprehensive Income $4,478 $4,221
============ ==========
Basic earnings per share $0.84 $0.87
============ ==========
Diluted earnings per share $0.83 $0.86
============ ==========
Dividends per share $0.35 $0.32
============ ==========
Page 5
FIRSTBANK CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED
JUNE 30, 2001 and 2000
(Unaudited)
(Dollars in Thousands)
Six months ended June 30,
2001 2000
---- ----
OPERATING ACTIVITIES
Net income $4,030 $4,250
Adjustments to reconcile net income to net cash provided by operating activities
Provision for loan losses 431 388
Depreciation of premises and equipment 685 700
Net amortization of security premiums/discounts 84 78
Gain on sale of securities (25) (4)
Amortization of goodwill and other intangibles 394 343
Gain on sale of mortgage loans (957) (171)
Proceeds from sales of mortgage loans 67,882 16,534
Loans originated for sale (68,418) (16,198)
Increase in accrued interest receivable and other assets (510) (1,247)
Increase in accrued interest payable and other liabilities 1,644 70
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 5,240 4,743
INVESTING ACTIVITIES
Proceeds from sale of securities available for sale 2,163 2,345
Proceeds from maturities of securities available for sale 14,715 15,497
Purchases of securities available for sale (11,459) (9,656)
Net increase in portfolio loans (140) (49,286)
Net purchases of premises and equipment (856) (1,395)
----------- -----------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 4,423 (42,495)
FINANCING ACTIVITIES
Net increase in deposits 9,768 10,549
Decrease in securities sold under agreements
to repurchase and other short term borrowings (13,249) (2,021)
Increase (decrease) of note payable (6,698) 32,457
Cash proceeds from issuance of common stock 971 1,052
Purchase of common stock (40) (2,405)
Cash dividends (1,675) (1,583)
----------- -----------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (10,923) 38,049
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,260) 297
Cash and cash equivalents at beginning of period 28,096 25,197
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $26,836 $25,494
=========== ===========
Supplemental Disclosure
Interest Paid $13,014 $11,820
Income Taxes Paid $1,190 $2,600
Non-cash transaction: purchased goodwill $254 $342
See notes to consolidated financial statements.
Page 6
FIRSTBANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2001
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, 2001,
are not necessarily indicative of the results that may be expected for the year
ending December 31, 2001. The balance sheet at December 31, 2000, 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, 2000.
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. 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 $95,456,000 and $88,264,000 at June 30, 2001, and December 31,
2000, respectively.
Page 7
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:
June 30, December 31,
(Dollars in thousands) 2001 2000
-------------------------------------- -------- -------------
Nonperforming loans:
Nonaccrual loans $1,330 $1,715
Loans 90 days or more past due 364 366
Renegotiated loans 53 53
------ ------
Total nonperforming loans $1,747 $2,134
====== ======
Property from defaulted loans $ 884 $ 512
====== ======
Nonperforming loans as a percent of:
Total loans .29% .35%
==== ====
Allowance for loan losses 17.19% 21.65%
====== ======
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.
June 30, December 31
2001 2000
----------- -----------
Loans outstanding at end of period $602,276 $600,767
======== ========
Allowance at end of period $10,164 $9,857
======= ======
Allowance as a percent of:
Total loans at end of period 1.69% 1.64%
===== =====
Nonperforming loans at end of period 582% 462%
==== ====
Six Months Ended
June 30, June 30,
(Dollars in thousands) 2001 2000
--------------------------------------------------------------------------------------------
Balance at beginning of period $ 9,857 $ 9,317
Charge-offs (280) (305)
Recoveries 156 364
--------- --------
Net (charge-offs) recoveries (124) 59
Additions to allowance for
loan losses 431 388
--------- --------
Balance at end of period $ 10,164 $9,764
========= ========
Average loans outstanding
during the period $605,334 $528,964
======== ========
Net charge-offs (recoveries) as a percent of:
Average loans outstanding .02% (.01)%
=== ====
Average Allowance for loan losses 1.24% .62%
==== ===
Page 8
NOTE E - RECLASSIFICATION
Certain 2000 amounts have been reclassified to conform to the 2001 presentation.
NOTE F - BASIC AND DILUTED EARNINGS PER SHARE (All numbers listed in thousands
except for per share data)
Three months ended Six months ended
June 30, June 30, June 30, June 30,
2001 2000 2001 2000
---- ---- ---- ----
Earnings per share
Net Income $2,418 $2,140 $4,030 $4,250
Weighted average
common shares outstanding 4,799 4,888 4,785 4,902
Basic earnings per share $ 0.50 $ 0.44 $ 0.84 $ 0.87
Earnings per share assuming dilution
Net Income $2,418 $2,140 $4,030 $4,250
Weighted average
common shares outstanding 4,799 4,886 4,785 4,902
Add dilutive effect of assumed
exercises of options 66 31 66 42
Weighted average common and
dilutive potential common
shares outstanding 4,865 4,917 4,851 4,944
Diluted earnings per share $ 0.50 $ 0.44 $ 0.83 $ 0.86
Stock options for 254,431 and 66,111 shares of common stock were not considered
in computing diluted earnings per share for the six month periods of 2001 and
2000 because they were antidilutive.
Page 9
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, Firstbank - Alma, Firstbank
(Mt. Pleasant), Firstbank - West Branch (including its majority holding in C.A.
Hanes Realty, Inc.), Firstbank - Lakeview, Firstbank - St. Johns (collectively
the "Banks") and Gladwin Land Company.
Financial Condition
Total assets showed little change, decreasing $5 million, or .65% during the
first six months of 2001. Cash and cash equivalents decreased by $1.3 million,
or 4.5%, during the first six months of 2001. Securities available for sale
declined $5 million, or 6.3%, during the six months ended June 30, 2001. This
decrease was more than matched by decreases in borrowings (see below). Nearly
all of this decrease was accomplished by decisions not to fully replace maturing
securities.
Total loans grew $1.5 million, or .25%, during the first half of 2001. The
commercial portfolio grew $12.7 million and loans held for sale increased $1.5
million, but this growth was partially offset by decreases in both mortgage and
consumer loans of $9.6 million and $3.0 million, respectively. The allowance for
loan losses increased $307,000, or 3.1%, during the first half of 2001. At June
30, 2001, the allowance as a percent of outstanding loans was 1.69% compared to
1.64% at December 31, 2000. The allowance as a percent of nonperforming loans
was 582% at the end of the second quarter of 2001 and 462% at year end 2000.
During the first six months of 2001, the allowance was increased by a provision
of $431,000 and decreased by net charge offs of $124,000. 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 increased $9.8 million, or 1.82%, from December 31, 2000, to June
30, 2001. Reductions in noninterest bearing account balances of $2.1 million
were offset by increases of $9.2 million, or 6.8%, in interest bearing demand
deposits, $2.3 million, or 3.3%, in savings deposits and $0.4 million in time
deposits.
For the six month period ended June 30, 2001, securities sold under agreements
to repurchase and overnight borrowings have decreased by $13.2 million, or
34.6%. A portion of the decrease resulted from the transfer from repurchase
agreements to time deposits noted above. The increase in time deposits was used
to satisfy funding needs rather than borrowings. Notes payable also have
decreased $6.7 million from the end of December 2000, to the end of June, 2001,
as it was not necessary to renew all maturing notes.
Page 10
Total shareholders' equity increased $3.7 million, or 5.8%, during the first
half of 2001. Net income of $4,030,000, stock issuances of $971,000, and net
unrealized appreciation on securities available for sale of $448,000 increased
shareholders' equity, while stock repurchases of $40,000 and dividends of
$1,675,000 decreased shareholders' equity. Book value was $14.07 per share at
June 30, 2001, and $13.47 at December 31, 2000.
The following table discloses compliance with current regulatory capital
requirements on a consolidated basis:
Total
Tier 1 Risk-based
(Dollars in thousands) Leverage Capital Capital
-------------------------------------------------------------------------
Capital balances at June 30, 2001 $58,156 $58,156 $65,239
Required Regulatory Capital $29,177 $22,543 $45,087
Capital in excess of regulatory minimums $28,979 $35,613 $20,152
Capital ratios at June 30, 2001 7.97% 10.32% 11.58%
Regulatory capital ratios -- "well capitalized"
definition 5.00% 6.00% 10.00%
Regulatory capital ratios -- minimum requirement 4.00% 4.00% 8.00%
Results of Operations
For the second quarter of 2001, net income was $2,418,000, basic earnings per
share were $0.50, and diluted earnings per share were also $0.50 compared to
$2,140,000, $0.44, and $0.44 for the second quarter of 2000. Net income for the
first half of 2001 was $4,030,000 with basic earnings per share of $0.84 and
diluted earnings per share of $0.83, compared to $4,250,000, $0.87 and $0.86 for
the first six months of 2000. Net income for the first half of 2001 was reduced
by a $446,000 one-time charge taken in the first quarter and discussed in
previous disclosures, with basic earnings per share and diluted earnings per
share also reduced by $0.10 and $0.09 respectively by the one-time charge.
Average earning assets increased $63 million, or 10.2%, from the first half of
2000 to the first half of 2001. Despite the sharp decline in short term interest
rates in the first quarter of 2001, due to the fact that interest rates were
rising in the first half of 2000, yields and costs of funds were higher in the
first half of 2001 compared to the first half of 2000. The yield on earning
assets increased 9 basis points to 8.58% at June 30, 2001, compared to 8.49% at
June 30, 2000. The cost of funding related liabilities increased 22 basis points
when comparing the six month periods ended June 30 from 3.96% in 2000 to 4.18%
in 2001. Firstbank Corporation's funding mix also became more costly, as a
greater percentage of funding shifted to Federal Home Loan Bank advances and
other borrowings rather than deposits.
Since the increase in yields on earning assets was less than the increase in
cost of funds, the net interest margin declined 14 basis points from 4.70% for
the first half of 2000 to 4.56% for the six months ended June 30, 2001. However,
the net interest margin rebounded in the second quarter of 2001 to 4.66%
compared to 4.45% in the first quarter of 2001. Net interest income increased
$938,000, or 6.7%, in the first half of 2001 compared to the same period in
2000.
Page 11
The provision for loan losses increased $43,000 to $431,000 for the first half
of 2001 compared to the first half of 2000. This increase reflects the
recognition of strong commercial loan growth over the year-ago level as opposed
to concern over loan quality.
Total noninterest income increased $1,400,000, or 52.7%, during the first half
of 2001 when compared to the same period in 2000. Most of the increase in total
noninterest income and in other noninterest income was attributable to
subsidiaries which were not in operation for all or part of the first half of
2000 (1st Title, C.A. Hanes, Gladwin Land, and Firstbank - St. Johns). Excluding
these new subsidiaries from the 2001 and 2000 periods, non-interest income
increased $581,000, or 22.7%. Service charges on deposit accounts increased
$88,000, or 10.6%. Excluding the new subsidiaries, service charges on deposit
accounts increased $64,000, or 7.7%. Gain on sale of mortgage loans increased
$786,000, or 460% due to increased mortgage origination and mortgage re-finance
activity. None of this increase was due to the new subsidiaries. Certain other
categories of non-interest income declined, most notably mortgage servicing
income which declined from $148,000 in the first half of 2000 to $2,000 in the
first half of 2001. The decline was due to the impact of refinances and other
pre-payments. Excluding these impacts, mortgage servicing income grew 12.5% to
$341,000 in the first half of 2001 compared to $303,000 in the first half of
2000. Refinances and other pre-payments also were the primary cause of the
decline in real estate mortgage portfolio loans, as many re-financed loans were
sold in the secondary market.
Noninterest expense increased $2,606,000, or 25.6%, when comparing the six month
period ended June 30, 2001 and 2000. Most of the increase in noninterest expense
and its components was attributable to subsidiaries which were not in operation
for all or part of the first half of 2000, the one-time charges of $676,000
taken in the first quarter of 2001 and discussed in previous disclosures, and
employee benefits expense - primarily costs of providing medical benefits.
Excluding the new subsidiaries, the one-time charges, and employee benefits
expense, non-interest expenses increased $338,000, or 3.7%.
Analysis of the second quarter of 2001 compared to the second quarter of 2000
provides similar observations as comparisons of the half-year periods.
Total noninterest income increased $851,000, or 63.9%, during the second quarter
of 2001 when compared to the same period in 2000. Most of the increase in total
noninterest income and in other noninterest income was attributable to
subsidiaries which were not in operation for all or part of the second quarter
of 2000 (1st Title, C.A. Hanes, Gladwin Land, and Firstbank - St. Johns).
Excluding these new subsidiaries from the 2001 and 2000 periods, non-interest
income increased $366,000, or 29.6%. Service charges on deposit accounts
increased $51,000, or 11.5%. Excluding the new subsidiaries, service charges on
deposit accounts increased $37,000, or 8.4%. Gain on sale of mortgages increased
$544,000, or 697% due to increased mortgage origination and mortgage re-finance
activity. None of this increase was due to the new subsidiaries. Certain other
categories of non-interest income declined, most notably mortgage servicing
income which declined from $69,000 in the second quarter of 2000 to negative
$39,000 in the second quarter of 2001. The decline was due to the impact of
refinances and other pre-payments.
Page 12
Noninterest expense increased $1,060,000, or 20.9%, when comparing the three
month periods ended June 30, 2001 and 2000. Most of the increase in noninterest
expense and its components was attributable to subsidiaries which were not in
operation for all or part of the second quarter of 2000 and employee benefits
expense - primarily costs of providing medical benefits. Excluding the new
subsidiaries and employee benefits expense, non-interest expenses decreased
$56,000, or 1.2%.
FORWARD LOOKING STATEMENTS
This report contains forward-looking statements that are based on management's
beliefs, assumptions, current expectations, estimates and projections about the
financial services industry, the economy, and about the Corporation itself.
Words such as "anticipate," "believe," "determine," "estimate," "expect,"
"forecast," "intend," "is likely," "plan," "project," "opinion," variations of
such terms, and similar expressions are intended to identify such
forward-looking statements. The presentations and discussions of the provision
and allowance for loan losses, and determinations as to the need for other
allowances presented in this report are inherently forward-looking statements in
that they involve judgements and statements of belief as to the outcome of
future events. These statements are not guarantees of future performance and
involve certain risks, uncertainties, and assumptions 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. Internal and
external factors that may cause such a difference 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; changes in 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; software
failure, errors or miscalculations; and the vicissitudes of the national
economy. The Corporation undertakes no obligation to update, amend or clarify
forward-looking statements, whether as a result of new information, future
events, or otherwise.
Page 13
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Information under the headings, "Liquidity and Interest Rate Sensitivity" on
page 8 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, 2000, 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, 2000.
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.
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 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" on page 12 of this Form 10-Q quarterly
report for a discussion of the limitations on Firstbank's responsibility for
such statements.
Page 14
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
The annual meeting of shareholders of Firstbank Corporation was held on April
23, 2001. Shareholders voted on two matters at the meeting: the election of
directors and a proposal to increase shares available for awards under the
Corporation's Stock Option and Restricted Stock Plan of 1997.
Election of Directors. The name of each director elected (along with the
number of votes cast for or authority withheld) at the meeting follows:
Directors Elected Abstentions
to Three Year Terms Authority and Broker
Expiring in 2003 For Withheld Non-Votes
---------------- --- -------- ---------
William E. Goggin 3,768,187 20,545 3,915
Duane A. Carr 3,782,448 6,285 3,915
Jeffrey C. Schubert 3,776,780 11,952 3,915
Directors Elected Abstentions
to a One Year Term Authority and Broker
Expiring in 2002 For Withheld Non-Votes
---------------- --- -------- ---------
Benson S. Munger 3,774,100 9,049 9,498
Increase in Shares Available for Awards under Stock Option and Restricted
Stock Plan. The proposal was approved. The vote was as follows:
Abstentions and
For Against Broker Non-Votes
--- ------- ----------------
3,520,347 170,223 102,077
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
None
(b) Reports on Form 8-K
None
Page 15
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 14, 2001 \s\ Thomas R. Sullivan
Thomas R. Sullivan
President, Chief Executive Officer
(Principal Executive Officer)
Date: August 14, 2001 \s\ Samuel G. Stone
Samuel G. Stone
Vice President, Chief Financial Officer
(Principal Accounting Officer)
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