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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K

Commission File Number: 000-14209

FIRSTBANK CORPORATION
(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: (989) 463-3131

Securities registered pursuant to Section 12(g) of the Exchange Act:

Common Stock
(Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports to be filed by Section 13 or 15(d) of the 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 such filing requirements for the past 90 days. Yes  X  No ____

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ X ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12-b-2). Yes  X  No ___

State the aggregate market value of the voting and nonvoting common equity held by non-affiliates of the registrant computed by reference to the price at which the common equity was sold, or the average bid and asked prices of such common equity, as of the last business day of the registrant’s most recently completed second quarter.

Aggregate Market Value as of March 4, 2005: $146,605,615

Indicate the number of shares outstanding in each of the registrant’s classes of common stock, as of the latest practicable date.

Common stock outstanding at March 4, 2005: 5,331,113 shares.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s annual report to shareholders for the year ended December 31, 2004, are incorporated by reference in Part II.

Portions of the definitive proxy statement for the registrant’s annual shareholders meeting to be held April 25, 2005, are incorporated by reference in Part III.

FORWARD LOOKING STATEMENTS

        This annual report on Form 10-K including, without limitation, management’s discussion and analysis of financial condition and results of operations and other sections of the Corporation’s Annual Report to Shareholders which are incorporated by reference in 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 or incorporated by reference in this report are inherently forward looking statements in that they involve judgments 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 of 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; changes in accounting principles, policies and guidelines; 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.

Copies of the Corporation’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge through the Corporation’s website (www.firstbank-corp.com) as soon as reasonably practicable after the Corporation electronically files the material with, or furnishes it to, the Securities and Exchange Commission. The reference to our website address does not constitute incorporation by reference of the information contained on the website, and the information contained on the website is not part of this document.

PART 1

ITEM 1.      Business.

        Firstbank Corporation (the “Corporation”) is a bank holding company. The Corporation owns all of the outstanding stock of Firstbank – Alma, Firstbank (Mt. Pleasant), Firstbank – West Branch, Firstbank – Lakeview, Firstbank – St. Johns and Gladwin Land Company, Inc. (a real estate appraisal company).

        The Corporation’s business is concentrated in a single industry segment – commercial banking. Each subsidiary bank of the Corporation is a full-service community bank. The subsidiary banks offer all customary banking services, including the acceptance of checking, savings, and time deposits and the making of commercial, mortgage (principally single family), home improvement, automobile, and other consumer loans. Trust services are offered to customers through Citizens Bank Wealth Management in the Firstbank – Alma main office.

        The principal sources of revenues for the Corporation and its subsidiaries are interest and fees on loans and non-interest revenue resulting from banking and non-bank subsidiary activity. On a consolidated basis, interest and fees on loans accounted for approximately 76% of total revenue in 2004, 68% in 2003, and 74% in 2002. Non-interest revenue accounted for approximately 19% of total revenue in 2004, 27% in 2003, and 20% in 2002. Interest on securities accounted for approximately 5% of total revenue in each of 2004, 2003, and 2002. The Corporation has no foreign assets and no income from foreign sources. The business of the subsidiary banks of the Corporation is not seasonal to any material extent. Beginning in 2001, each of the subsidiary banks established mortgage company subsidiaries. Each of the subsidiary banks also offers securities brokerage services at their main offices through arrangements with third party brokerage firms.

        Firstbank – Alma is a Michigan state chartered bank. It and its predecessors have operated continuously in Alma, Michigan since 1880. Its main office and one branch are located in Alma. Firstbank – Alma also has one full service branch located in each of the following communities near Alma: Ashley, Auburn, Ithaca, Merrill, Pine River Township, St. Charles, St. Louis and Vestaburg. Firstbank – Alma Mortgage Company, a subsidiary of the bank, was established in 2001.

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        Firstbank (Mount Pleasant) is a Michigan state chartered bank which was incorporated in 1894. Its main office and one branch are located in Mount Pleasant, Michigan. Firstbank (Mount Pleasant) also has two full service branches in Union Township and one full service branch located in each of the following communities near Mount Pleasant: Clare, Shepherd, Cadillac and Winn. Firstbank (Mount Pleasant) Mortgage Company, a subsidiary of the bank, was established in 2001.

        Firstbank – West Branch is a Michigan state chartered bank which was incorporated in 1980. Its main office and two branches are located in West Branch, Michigan. Firstbank – West Branch also has one full service branch located in each of the following communities near West Branch: Fairview, Hale, Higgins Lake, Rose City, St. Helen and West Branch Township. Firstbank – West Branch owns 1^st Armored, Incorporated (an armored car service provider), 1^st Title, Incorporated (a title insurance company), Firstbank — West Branch Mortgage Company (a subsidiary of the bank, established in 2001) and a 55% interest in C.A. Hanes Realty, Incorporated.

        Firstbank – Lakeview is a Michigan state chartered bank which was established in 1904. Its main office and one branch are located in Lakeview, Michigan. Firstbank – Lakeview also has one full service branch located in each of the following communities; Howard City, Morley, Remus and Canadian Lakes (Morton Township). Firstbank – Lakeview Mortgage Company, a subsidiary of the bank, was established in 2001.

        Firstbank – St. Johns is a Michigan state chartered bank which was established in 2000. Its main office and one branch are located in St. Johns, Michigan. Firstbank – St. Johns Mortgage Company, a subsidiary of the bank, was established in 2001.

        The following table shows comparative information concerning the Corporation’s subsidiary banks at December 31, 2004:

        As of February 28, 2005, the Corporation and its subsidiaries employed 365 persons on a full-time equivalent basis.

        Banking in the Corporation’s market areas and in the State of Michigan is highly competitive. In addition to competition from other commercial banks, banks face significant competition from non-bank financial institutions. Savings and loan associations are able to compete aggressively with commercial banks for deposits and loans. Credit unions and finance companies are also significant factors in the consumer loan market. Insurance companies, investment firms and retailers are significant competitors for investment products. Banks compete for deposits with a broad spectrum of other types of investments such as mutual funds, debt securities of corporations and debt securities of the federal government, state governments and their respective agencies. The principal methods of competition for financial services are price (interest rates paid on deposits, interest rates charged on loans and fees charged for services) and service (the convenience and quality of services rendered to customers).

        The Corporation’s subsidiary banks compete directly with other banks, thrift institutions, credit unions and other non-depository financial institutions in five geographic banking markets where their offices are located. Firstbank – Alma primarily competes in Gratiot, Bay, Montcalm, and Saginaw counties; Firstbank (Mount Pleasant) primarily in Isabella, Clare and Wexford counties; Firstbank – West Branch primarily in Iosco, Oscoda, Ogemaw, and Roscommon counties; Firstbank – Lakeview primarily in Mecosta and Montcalm counties; and Firstbank – St. Johns primarily in Clinton County.

        Banks and bank holding companies are extensively regulated. The Corporation is a bank holding company that is regulated by the Federal Reserve System. Firstbank – Alma, Firstbank (Mount Pleasant), Firstbank – West Branch, Firstbank – Lakeview and Firstbank – St. Johns are chartered under state law and are supervised, examined, and regulated by the Federal Deposit Insurance Corporation and the Division of Financial Institutions of the Michigan Office of Financial and Insurance Services.

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        Laws that govern banks significantly limit their business activities in a number of respects. Prior approval of the Federal Reserve Board, and in some cases various other governing agencies, is required for the Corporation to acquire control of any additional banks or branches. The business activities of the Corporation and its subsidiaries are limited to banking and to other activities which are determined, by the Federal Reserve Board, to be closely related to banking. Transactions among the Corporation and its subsidiary banks are significantly restricted. In addition, bank regulations govern the ability of the subsidiary banks to pay dividends or make other distributions to the Corporation.

        In addition to laws that affect businesses in general, banks are subject to a number of federal and state laws and regulations which have a material impact on their business. These include, among others, state usury laws, state laws relating to the Expedited Funds Availability Act, the Community Reinvestment Act, the Home Mortgage Disclosure Act, the Real Estate Settlement Procedures Act, the Bank Secrecy Act, the Community Development and Regulatory Improvement Act, the Financial Institutions Reform, the Recovery and Enforcement Act, the FDIC Improvement Act of 1991 (the “FDIC Improvement Act”), the U.S.A. Patriot Act, electronic funds transfer laws, redlining laws, antitrust laws, environmental laws and privacy laws.

        The Corporation’s common stock is registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). It is therefore, subject to the information, proxy solicitation, insider trading and other restrictions and requirements of the SEC under the Exchange Act. On July 30, 2002, President Bush signed into law the Sarbanes-Oxley Act of 2002. The Sarbanes-Oxley Act provides for numerous changes to the reporting, accounting, corporate governance and business practices of companies as well as financial and other professionals who have involvement with the U.S. public markets. In 2004 section 404 of the Sarbanes-Oxley Act were implemented, which require the bank and its auditors to report on the Company’s system of internal controls. Extensive testing and monitoring of the Company’s internal control environment were performed by both the Company’s management and its external audit firm.

        The enactment of the Gramm-Leach-Bliley Act of 1999 (the “GLB Act”) represents a pivotal point in the history of the financial services industry. The GLB Act sweeps away large parts of a regulatory framework that had its origins in the Depression Era of the 1930‘s. Effective March 11, 2000, new opportunities became available for banks, other depository institutions, insurance companies and securities firms to enter into combinations that permit a single financial service organization to offer customers a more complete array of financial products and services. The GLB Act provided a new regulatory framework for regulation through the “financial holding company” which will have, as its umbrella regulator, the Federal Reserve Board. Functional regulation of the financial holding company’s separately regulated subsidiaries will be conducted by their primary functional regulator. In order to qualify as a financial holding company a bank holding company must file an election to become a financial holding company and each of its banks must be “well capitalized” and “well managed”. In addition, the GLB Act makes satisfactory or above Community Reinvestment Act compliance, for insured depository institutions and their financial holding companies, necessary in order for them to engage in new financial activities. The GLB Act provides a federal right to privacy of non-public personal information of individual customers. The Corporation and its subsidiary banks are also subject to certain state laws that deal with the use and distribution of non-public personal information.

        The Corporation believes that the GLB Act could significantly increase competition in its business. The Corporation believes that it is qualified to elect financial holding company status but has not yet decided to do so.

        The instruments of government monetary policy, as determined by the Federal Reserve Board, may influence the growth and distribution of bank loans, investments, and deposits and may also affect interest rates on loans and deposits. These policies have a significant effect on the operating results of banks.

        Under applicable laws, regulations and policies, the Corporation is expected to act as a source of financial strength to each subsidiary bank and to commit resources to support each subsidiary bank. Any insured depository institution owned by the Corporation may be assessed for losses incurred by the Federal Deposit Insurance Corporation (the “FDIC”) in connection with assistance provided to, or the failure of, any other insured depository institution owned by the Corporation.

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        The FDIC has the authority to impose special assessments on insured depository institutions to repay FDIC borrowings from the United States Treasury or other sources and to establish periodic assessment rates on Bank Insurance Fund (“BIF”) member banks so as to maintain the BIF at the designated reserve ratio defined in the FDIC Improvement Act. Firstbank – Alma and Firstbank (Mount Pleasant) also hold deposits that are insured by the Savings Association Insurance Fund (“SAIF”) administered by the FDIC. Deposit insurance premiums on those deposits are paid to the SAIF at rates applicable to that fund. The FDIC has implemented a system of risk-based premiums for deposit insurance pursuant to which the premiums paid by a depository institution will be based on the perceived probability that the insurance funds will incur a loss in respect of that institution.

        Federal law allows bank holding companies to acquire banks located in any state in the United States without regard to geographic restrictions or reciprocity requirements imposed by state law and to establish interstate branch networks through acquisitions of other banks. Michigan and federal law permits both U.S. and non U.S. banks to establish branch offices in Michigan. The Michigan Banking Code permits, in appropriated circumstances and with the approval of the Commissioner: (i) acquisition of Michigan banks by FDIC insured banks, savings banks, or savings and loan associations located in other states (ii) sale by a Michigan bank of branches to an FDIC insured bank, savings bank or savings and loan association located in a state in which a Michigan bank could purchase branches of the purchasing entity; (iii) consolidation of Michigan banks and FDIC insured banks, savings banks or savings and loan associations located in other states having laws permitting such consolidation; (iv) establishment of branches in Michigan by FDIC insured banks located in other states, the District of Columbia or U.S. territories or protectorates having laws permitting a Michigan bank to establish a branch in such jurisdiction; and (v) establishment by foreign banks of branches located in Michigan.

        Risk-based capital and leverage standards apply to all banks under federal regulations. The risk-based capital ratio standards establish a systematic analytical framework that is intended to make regulatory capital requirements sensitive to differences in risk profiles among banking organizations, take off-balance sheet liability exposures into explicit account in assessing capital adequacy and minimize disincentives to hold liquid, low risk assets. Risk-based capital ratios are determined by allocating assets and specified off-balance sheet commitments into risk-weighting categories. Higher levels of capital are required for categories perceived as representing greater risk.

        Failure to meet minimum capital ratio standards could subject a bank to a variety of enforcement remedies available to the federal regulatory authorities including restrictions on certain kinds of activities, restrictions on asset growth, limitations on the ability to pay dividends, the issuance of a directive to increase capital and the termination of deposit insurance premiums at the lowest available rate.

        Each of the Corporation’s subsidiary banks, and the Corporation itself on a consolidated basis, maintains capital at levels which exceed both the minimum and well capitalized levels under currently applicable regulatory requirements.

        The following table summarizes compliance with regulatory capital ratios by the Corporation and each of its subsidiary banks at December 31, 2004:

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        The following table shows the amounts by which the Corporation’s capital (on a consolidated basis) exceeds current regulatory requirements on a dollar amount basis:

        The nature of the business of the Corporation’s subsidiaries is such that they hold title, on a temporary or permanent basis, to a number of parcels of real property. These include property owned for branch offices and other business purposes as well as properties taken in, or in lieu of, foreclosures to satisfy loans in default. Under current state and federal laws, present and past owners of real property may be exposed to liability for the cost of remediation of contamination on or originating from such properties, even though they are wholly innocent of the actions which caused the contamination. Such liabilities can be material and can exceed the value of the contaminated property.

Volume/Rate Analysis⁽¹⁾

The table below provides an analysis of the changes in interest income and interest expense due to volume and rate:

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(1)	Changes in volume/rate have been allocated between the volume and rate variances on the basis of the ratio that the volume and rate variances bear to each other.

(2)	Interest is presented on a fully taxable equivalent basis using a federal income tax rate of 35%.

Investment Portfolio

        The carrying values of investment securities as of the date indicated are summarized as follows:

Analysis of Investment Securities Portfolio

        The following table shows, by class of maturities at December 31, 2004, the amounts and weighted average yields of such investment securities ⁽¹⁾:

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Loan Portfolio

        The following table presents the loans outstanding at December 31st for the years ended:

        The following table shows the maturity of commercial and agricultural and real estate construction loans outstanding at December 31, 2004. Also provided are the amounts due after one year, classified according to their sensitivity to changes in interest rates.

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Nonperforming Loans and Assets

        The following table summarizes nonaccrual, troubled debt restructurings and past-due loans at December 31st for the years ended:

        Nonperforming assets are defined as nonaccrual loans, loans 90 days or more past due, property from defaulted loans and renegotiated loans.

        The amount of interest income on the above loans that was included in net income for the period ended December 31, 2004, was $52,535. If the nonaccrual and renegotiated loans had performed in accordance with their original terms and had been outstanding throughout the period, or since origination if held for part of the period, an additional $47,059 in gross interest income would have been recorded.

        Loan performance is reviewed regularly by external loan review specialists, loan officers and senior management. When reasonable doubt exists concerning collectibility of interest or principal, the loan is placed in nonaccrual status. Any interest previously accrued but not collected at that time is reversed and charged against current earnings.

        At December 31, 2004, the Corporation had $47,199,707 in commercial and mortgage loans for which payments are presently current although the borrowers are experiencing financial difficulties. Those loans are subject to special attention and their status is reviewed on a monthly basis.

        At December 31, 2004, there were no concentrations of loans exceeding 10 percent of total loans, which are not otherwise disclosed as a category of loans, in the consolidated balance sheets of the Corporation contained in the Corporation’s Annual Report to shareholders for the year ended December 31, 2004.

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Analysis of the Allowance for Loan Losses

        The following table summarizes changes in the allowance for loan losses arising from loans charged off and recoveries on loans previously charged off by loan category and additions to the allowance which were charged to expense at December 31st for the years ended:

        The allowance for loan losses is based on management’s evaluation of the portfolio, past loan loss experience, current economic conditions, volume, growth, composition of the loan portfolio and other relevant factors. The allowance is increased by provisions for loan losses that have been charged to expense and reduced by net charge-offs.

Allocation of the Allowance for Loan Losses

        The allowance for loan losses was allocated to provide for inherent losses within the following loan categories as of December 31st for the years ended:

*Beginning in 2001 and continuing throughout 2004, management has developed and implemented a more comprehensive quantitative and qualitative methodology for analyzing factors which impact the allowance for loan losses. This methodology is applied more consistently across the five banking subsidiaries and considers exposures to industries potentially most affected by current risks in the economic and political environment and the review of potential risks in certain credits. One result of this methodology has been the reduction in the amount of allowance that is considered unallocated to specific loan categories.

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Average Deposits

        The daily average deposits and rates paid on such deposits for the years ending December 31st are as follows:

        The time remaining until maturity of time certificates of deposit and other time deposits of $100,000 or more at December 31, 2004, was as follows (In Thousands of Dollars):

Return on Equity and Assets

        The following table sets forth certain financial ratios for the years ended:

Short Term Borrowed Funds

        Included in short term borrowed funds are repurchase agreements as described in Note K to the consolidated financial statements in the Corporation’s Annual Report to Shareholders for the year ended December 31, 2004, which consist of the following:

The weighted average interest rates are derived by dividing the interest expense for the period by the daily average balance during the period.

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ITEM 2.      Properties

        The Corporation’s headquarters are located in the main branch office in Alma, Michigan. The subsidiary banks operate 37 branch offices throughout central Michigan, most of which are full service facilities. The subsidiaries operate larger facilities as main offices in Alma, Mt. Pleasant, West Branch, Lakeview, and St. Johns. The remaining branch facilities range in size from 1,200 to 3,200 square feet, based on the location and number of employees located at the facility. All but five of the branch locations are owned by the company, with the remaining facilities rented under various operating lease agreements which have a range of remaining terms and renewal arrangements. In several instances, branch facilities contain more space than is required for current banking operations. This excess space, totaling approximately 17,000 square feet, is leased to unrelated businesses. The Corporation also maintains a separate facility for its central operations unit near the Corporation’s headquarters office in Alma, Michigan.

        Management considers the properties and equipment of the Corporation and its subsidiaries to be well maintained, in good operating condition and capable of accommodating current growth forecasts for their operations.

ITEM 3.      Legal Proceedings.

        The Corporation and its subsidiaries are parties, as plaintiff or as defendant, to routine litigation arising in the normal course of their business. In the opinion of management, the liabilities arising from these proceedings, if any, will not be material to the Corporation’s consolidated financial condition.

ITEM 4.      Submission of Matters to a Vote of Security Holders.

        Not applicable.

Supplemental Item. Executive Officers of the Registrant.

        The following information concerning executive officers of the Corporation has been omitted from the registrant’s proxy statement pursuant to Instruction 3 to Regulation S-K, Item 401(b).

        Officers of the Corporation are appointed annually by the Board of Directors of the Corporation and serve at the pleasure of the Board of Directors. Information concerning the executive officers of the Corporation to the Board of Directors of the Corporation is given below. Except as otherwise indicated, all existing officers have had the same principal employment for over 5 years.

        William L. Benear (age 58) became president & CEO of Firstbank – Lakeview and Vice President of the Corporation in January 2000. Prior to his appointment as Lakeview’s President & CEO, Mr. Benear has served as Executive Vice President of Firstbank – Lakeview since 1994.

        David M. Brown (age 46) became president & CEO of Firstbank – St. Johns and Vice President of the Corporation in January 2005. Prior to his appointment as St. Johns’ President & CEO, Mr. Brown was worked for over 24 years at both regional and community banks. Positions held during his career include Community Bank President, Commercial Loan Regional Manager, Vice President of Commercial Banking and Branch Manager.

        David L. Miller (age 39) was named a Vice President of the Corporation in December 2000. Prior to this appointment Mr. Miller served as Senior Vice President of Firstbank — Lakeview, having been employed there since 1992. Mr. Miller serves in the Human Resources Department for the Corporation and its subsidiaries.

        Dale A. Peters (age 62) has been a Vice President of the Corporation, President, CEO, and a director of Firstbank – West Branch since 1987.

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        Samuel G. Stone (age 59) was appointed Executive Vice President, CFO, Secretary and Treasurer of the Corporation in December 2001. From November 2000 to the December 2001 appointment, Mr. Stone was Vice President, CFO, Secretary and Treasurer of the Corporation. From 1998 until his appointment to Firstbank Corporation, Mr. Stone served as Senior Vice President – Corporate Planning of National City Corporation (successor to First of America). Previous positions Mr. Stone held during his 28-year tenure with First of America included Senior Vice President and Treasurer, Vice President – Director of Corporate Planning and Vice President – Trust Investments.

        Thomas R. Sullivan (age 54) was appointed President & CEO of the Corporation in January 2000. He also serves as President, CEO, and Director of Firstbank (Mt. Pleasant) by appointment in 1991. Mr. Sullivan was Executive Vice President of the Corporation from 1996 to 2000 and served as Vice President of the Corporation from 1991 to 1996.

        James M. Taylor (age 63) was appointed as the President & CEO of Firstbank – St. Johns in March 2000. He was appointed a Vice President of the Corporation in June 2000. Prior to these appointments, Mr. Taylor was Senior Vice President of Firstbank (Mount Pleasant) since 1989. Mr. Taylor retired from his positions with the Corporation and Firstbank – St. Johns effective December 31, 2004.

        James E. Wheeler, II (age 45) was appointed President & CEO of Firstbank – Alma in January 2000. He also serves as a Vice President of the Corporation to which he was appointed in 1989. Mr. Wheeler served as Executive Vice President of Firstbank – Alma from 1999 to 2000 and from 1989 to 1999 as Senior Vice President and Chief Loan Officer of Firstbank – Alma.

PART II

ITEM 5.      Market for Registrant’s Common Equity and Related Stockholder Matters.

        The information under the caption “Common Stock Data” on page 17 in the registrant’s annual report to shareholders for the year ended December 31, 2004, is here incorporated by reference.

ITEM 6.      Selected Financial Data.

        The information under the heading “Financial Highlights” on page 3 in the registrant’s annual report to shareholders for the year ended December 31, 2004, is here incorporated by reference.

ITEM 7.      Management's Discussion and Analysis of Financial Condition and Results of Operations.

        The information under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on pages 4 through 18 in the registrant’s annual report to shareholders for the year ended December 31, 2004, is here incorporated by reference.

ITEM 7A.      Quantitative and Qualitative Disclosures About Market Risk.

        Information under the headings “Liquidity and Interest Rate Sensitivity” on pages 10 and 11 and “Quantitative and Qualitative Disclosure About Market Risk” on pages 14 and 15 in the registrant’s annual report to shareholders for the year ended December 31, 2004, is here incorporated by reference.

ITEM 8.      Financial Statements and Supplementary Data.

        The reports of the independent registered public accounting firm, and the consolidated financial statements on pages 19 through 24, and the quarterly results of operations on page 42 in the registrant’s annual report to shareholders for the year ended December 31, 2004, are here incorporated by reference.

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ITEM 9.      Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

        None.

ITEM 9A. Controls and Procedures

The Corporation's management is responsible for establishing and maintaining effective disclosure controls and procedures as defined in Exchange Act Rules 13a-15(e) and 15(d)-15(e)) as of the end of the period covered by this Form 10-K Annual Report. The Corporation's Chief Executive Officer and the Chief Financial Officer, after evaluating the effectiveness of the Corporation's disclosure controls and procedures, have concluded that the Corporation's disclosure controls and procedures as of December 31, 2004 were adequate and effective to ensure that information required to be disclosed in this Annual Report on Form 10-K was recorded, processed, summarized, and reported on a timely basis. Management's responsibility relates to establishing and maintaining effective disclosure controls over financial reporting that are designed to produce reliable financial statements in accordance with accounting principles generally accepted in the United States.

        As disclosed in the Report on Management's Assessment of Internal Control Over Financial Reporting on page 18 of the registrant's annual report to shareholders for the year ended December 31, 2004 (incorporated herein by reference to Exhibit 13 to this Form 10-K), management assessed the Corporation's system of internal control over financial reporting. Based on this assessment, management believes that, as of December 31, 2004, its system of internal control over financial reporting was effective. Management's assessment of the effectiveness of internal control over financial reporting as of December 31, 2004, has been audited by Crowe Chizek and Company LLC, an independent registered certified public accounting firm, as stated in their report included in Exhibit 13 to this Annual Report on Form 10-K which is incorporated hereby by reference.

        During the quarter ended December 31, 2004, there were no significant changes in the Corporation's internal control over financial reporting that have materially affected or are reasonably likely to materially affect the Corporation's internal control over financial reporting. There were no significant changes in the Corporation's system of internal controls or other factors that could significantly affect internal controls subsequent to December 31, 2004.

ITEM 9B. OTHER INFORMATION

        None.

PART III

ITEM 10.      Directors and Executive Officers of the Registrant.

        The information under the captions “Board of Directors” and “Section 16(a) Beneficial Ownership Reporting Compliance” in the registrant’s definitive proxy statement for its annual meeting of shareholders to be held April 25, 2005, is here incorporated by reference.

        The Board of Directors of the Corporation has determined that Edward J. Grant, a director and member of the Audit Committee, qualifies as an “Audit Committee Financial Expert” as defined in rules adopted by the Securities and Exchange Committee pursuant to the Sarbanes-Oxley Act of 2002.

        The Board of Directors of the Corporation has adopted a Code of Ethics which details principles and responsibilities governing ethical conduct for all Corporation directors and executive officers. The Code of Ethics is filed as an Exhibit to this Report on Form 10-K.

        The Corporation provides stock options to its full time employees that qualify for benefits under the Firstbank Corporation Stock Option Plans of 1993 and 1997, as amended. These plans provide for shares of stock, in either restricted form or under option. Grant of options may be either incentive stock options or nonqualified stock options.

        The Corporation provides an incentive based bonus program as a part of its overall compensation plan. All full time employees are eligible to receive payment under the plan, provided that the Corporations net income for the year is satisfactory. Annual bonuses are paid based on a discretionary evaluation of the performance of the employee and the employee’s individual achievements.

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ITEM 11.      Executive Compensation.

        Information contained under the captions “Compensation of Directors and Executive Officers” and “Compensation Committee Interlocks and Insider Participation” in the registrant’s definitive proxy statement for its annual meeting of shareholders to be held April 25, 2005, is here incorporated by reference.

ITEM 12.      Security Ownership of Certain Beneficial Owners Management.

        The information under the caption “Voting Securities” in the registrant’s definitive proxy statement for its annual meeting of shareholders to be held April 25, 2005, is here incorporated by reference.

        Securities Authorized for Issuance Under Equity Compensation Plans. The Corporation had the following equity compensation plans at December 31, 2004:

EQUITY COMPENSATION PLAN INFORMATION

        These equity compensation plans are more fully described in Note O to the Consolidated Financial Statements.

ITEM 13.      Certain Relationships and Related Transactions.

        The information under the caption “Compensation Committee Interlocks and Insider Participation” in the registrant’s definitive proxy statement for its annual meeting of shareholders to be held April 25, 2005, is hereby incorporated by reference.

ITEM 14.      Controls and Procedures.

        The information set forth under the heading “Relationship with Independent Registered Public Accounting Firm” on page 15 of the Corporation’s definitive proxy statement for its annual meeting of shareholders to be held April 25, 2005, is hereby incorporated by reference.

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ITEM 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

(a)(1)       Financial Statements.

        The following consolidated financial statements of the Corporation and its subsidiaries and report of independent auditors are incorporated by reference from the registrant’s annual report to shareholders for the year ended December 31, 2004, in Item 8:

        The consolidated financial statements, notes to consolidated financial statements and report of independent auditors listed above are incorporated by reference in Item 8 of this report from the corresponding portions of the registrant’s annual report to shareholders for the year ended December 31, 2004.

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SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, dated March 11, 2005.

        Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the date indicated. Each director of the Registrant, whose signature appears below, hereby appoints Thomas R. Sullivan and Samuel G. Stone and each of them severally, as his attorney-in-fact, to sign in his name and on his behalf, as a director of the Registrant, and to file with the Commission any and all Amendments to this Report on Form 10-K.

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Number

Exhibit

3(a)	Articles of Incorporation. Previously filed as an exhibit to registrant’s Form 10-Q for the quarter ended March 31, 1997. Here incorporated by reference.

3(b)	Bylaws. Previously filed as an exhibit to the registrant’s Registration Statement on Form S-2 (Registration No. 33-68432) filed on September 3, 1993. Here incorporated by reference.

10(a)*

Form of Indemnity Agreement with Directors and Officers. Previously filed as an exhibit to the registrant’s Registration Statement on Form S-2 (Registration No. 33-68432) filed on September 3, 1993. Here incorporated by reference.

10(b)*

Deferred Compensation Plan. Previously filed as an exhibit to the registrant's Form 10-K for the year ended December 31, 1995. Here incorporated by reference.

10(c)*

Trust under Deferred Compensation Plan. Previously filed as an exhibit to the registrant's Form 10-K for the year ended December 31, 1995. Here incorporated by reference.

10(d)*

Stock Option and Restricted Stock Plan of 1993. Previously filed as an appendix to the registrant’s definitive proxy statement for its annual meeting of shareholders held April 26, 1993. Here incorporated by reference.

10(e)*

Stock Option and Restricted Stock Plan of 1997. Previously filed as an appendix to the registrant’s definitive proxy statement for its annual meeting of shareholders held April 28, 1997. Here incorporated by reference.

10(f)

Employee Stock Purchase Plan of 1999. Previously filed as an exhibit to the registrant’s Registration Statement on Form S-8 (Registration No. 333-89771) filed on October 27, 1999. Here incorporated by reference.

10(g)*

Form of Change of Control Severance Agreement. Filed as exhibit 10 to registrant’s report on Form 10-Q for the quarter ended September 30, 2000. Here incorporated by reference.

10(h)*

Form of Stock Option Agreement

13

2004 Annual Report to Shareholders. (This report, except for those portions which are expressly incorporated by reference in this filing, is furnished for the information of the Securities and Exchange Commission and is not deemed “filed” as part of this filing). This report was delivered to the registrant’s shareholders as an appendix to the registrant’s proxy statement dated March 11, 2005, relating to the April 25, 2005 Annual Meeting of Shareholders which was delivered to the registrant’s shareholders in compliance with Rule 14(a)-3 under the Securities Exchange Act of 1934.

14.	Code of Ethics.

21	Subsidiaries of Registrant.

23	Consent of Crowe Chizek and Company LLC - Independent Public Accountants.

24	Powers of Attorney. Contained on the signature page of this report.

31.1	Certificate of Chief Executive Officer of Firstbank Corporation pursuant to 15 U.S.C. Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2	Certificate of Chief Financial Officer of Firstbank Corporation pursuant to 15 U.S.C. Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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32.1	Certificate of Chief Executive Officer and Chief Financial Officer of Firstbank Corporation pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

99	Firstbank Corporation 401(k) Plan Performance Table.

*Management contract or compensatory plan.

The registrant will furnish a copy of any exhibit listed above to any shareholder of the registrant without charge upon written request to Samuel G. Stone, Secretary, Firstbank Corporation, 311 Woodworth Avenue, P.O. Box 1029, Alma, Michigan 48801.

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EXHIBIT 10(h)

Grantee: ____________________________________                 Grant Date: _______________________

Vesting Date: ________________________________

Expiration Date: _______________________________

Number of Shares: _____________________________             Option Number: ________________________

Exercise Price Per Share: _________________________

STOCK OPTION AGREEMENT
1997 Plan

        This Stock Option Agreement (“Agreement”) is made as of the Grant Date set forth above between FIRSTBANK CORPORATION, a Michigan corporation (“Firstbank Corporation” or the (“Company”), and the grantee named above (“Grantee”).

        The Firstbank Corporation and Restricted Stock Plan of 1997 (the “Plan”) is administered by a committee designated by the Firstbank Corporation Board of Directors (the “Committee”) . The Committee has determined that Grantee is eligible to participate in the Plan. The Committee has granted stock options to Grantee, subject to terms and conditions contained in this Agreement and in the Plan.

        Grantee acknowledges receipt of a copy of the Plan and accepts this option subject to all terms, conditions, and provisions of this Agreement and the Plan.

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3.

Exercise. Grantee may exercise this option by giving Firstbank Corporation written notice of the exercise of this option. The notice shall set forth the number of shares to be purchased, and shall be effective when received by the corporate Human Resources Department. Once payment has been received, the Company will deliver to Grantee a certificate or certificates for such shares out of previously unissued shares or reacquired shares of its Common Stock, as it may elect; provided, however, that the time of delivery shall be postponed for such period as may be required for Firstbank Corporation with reasonable diligence to comply with any registration requirements under the Securities Act of 1933, the Securities Exchange Act of 1934, and any requirements under any other law, regulation, or agreement applicable to the issuance, listing, or transfer of such shares. If Grantee fails to accept delivery of and pay for all or any part of the number of share specified in the notice upon tender or delivery of shares, Grantee’s right to exercise the option with respect to such undelivered shares shall terminate.

4.

Payment by Grantee. The Exercise Price per Share shall be the amount shown above; subject to adjustment as provided herein and in the Plan. In exercising this stock option, Grantee must pay the Exercise Price to Company in cash. The time and terms of payment may be amended before or after the exercise of the option (a) by the Committee, in its sole discretion, if the terms of such amendment are more favorable to the Grantee, or (b) in all other cases, by the Committee with the consent of the Grantee.

5.

Transferability. Unless the Committee otherwise consents, this option is not transferable by Grantee except by will or according to the laws of descent and distribution. This option is exercisable during Grantee’s lifetime only by Grantee or Grantee’s guardian or legal representative. The Committee may also impose other restrictions on any shares acquired pursuant to this option, including, without limitation, restrictions under applicable federal and state securities laws.

6.

Termination of Employment.

(a)

General. If Grantee ceases to be employed by the Company or one of its subsidiaries for any reason other than the Grantee’s death, Total Disability, Normal Retirement, Early Retirement, voluntary termination, or termination for cause, Grantee may exercise the option for a period of 90 days after Grantee’s termination of employment (as defined in the Plan), but only to the extent the Participant was entitled to exercise the option on the date of termination and would be entitled to exercise the option if employed at the date of exercise, unless the Committee otherwise consents.

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(b)

Death. If Grantee dies either while an employee of the Company or one of its subsidiaries or after the termination of Grantee’s employment other than for cause and other than as a result of a voluntary termination, but during the time when Grantee could have exercised the option granted under this Agreement, the option shall be exercisable by the Grantee’s personal representative or other successor to the interest of Grantee for one year after Grantee’s death, but only to the extent the Participant was entitled to exercise the option on the date of death or termination of employment, whichever first occurred, and would be entitled to exercise the option if employed at the date of exercise, unless the Committee otherwise consents.

(c)

Total Disability. If Grantee ceases to be employed by the Company or one of its subsidiaries due to Grantee’s Total Disability (as defined in the Plan), Grantee may exercise the option for a period of one year from such termination of employment, but only to the extent the Participant was entitled to exercise the option on the date of termination unless the Committee otherwise consents.

(d)

Normal Retirement. If Grantee ceases to be employed by the Company or one of its subsidiaries due to Grantee’s Normal Retirement (as defined in the Plan) after the Grantee has completed 5 years of service with the Company or any of its subsidiaries, Grantee may exercise all options granted under this Agreement notwithstanding the delayed vesting provisions in Paragraph 2, above for a period of three months after Grantee’s termination, provided, however, that the Participant may not elect to exercise the option at any time prior to twelve months from the Grant date.

(e)

Early Retirement. If Grantee ceases to be employed by the Company or one of its subsidiaries due to Grantee’s Early Retirement (as defined in the Plan) Grantee may exercise the option for one year from the date of Early Retirement, but only to the extent the Participant was entitled to exercise the option on the date of termination unless the Committee otherwise consents.

(f)

Voluntary Termination or Termination for Cause. If Grantee voluntarily terminates employment with the Company or one of its subsidiaries or is terminated for cause, Grantee shall have no further right to exercise any options previously granted under this Agreement.

(g)

Suspension of Exercisability. If Grantee receives notice from the Company that Grantee may be terminated for cause, Grantee shall have no right to exercise any options previously granted under this Agreement for a period of sixty days from the receipt of such notice. If Grantee is terminated for cause, within such sixty-day period, Grantee shall have no further right to exercise any option previously granted under this Agreement. If Grantee is not terminated for cause within the sixty-day period, the provisions of this Agreement and the Plan shall continue to apply to the exercisability of Grantee’s options.

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7.

Adjustment for Corporate Changes. In the event of any stock dividend, stock split, recapitalization, merger, consolidation, combination or exchange of shares or any other change in the corporate structure or shares of the Company, the aggregate number and class of shares covered by this option, and the Exercise Price, are subject to adjustment as provided in the Plan. If Firstbank Corporation is acquired by another corporation or is otherwise merged into or consolidated with another corporation, this option shall be immediately exercisable just prior to the effective date of the merger or consolidation, subject to the restrictions imposed by sections 5.5 and 5.6 of the Plan.

8.

Shareholder Rights. Grantee shall have no rights as a shareholder with respect to any shares covered by this option until exercise of the option and payment for such shares.

9.

Employment by Firstbank Corporation. The grant of this option shall not be construed as giving the Grantee the right to be retained in the employ of the Company or any of its subsidiaries. The Company or any subsidiary may, at any time, dismiss the Grantee from employment, free from any liability or claim under the Plan, unless otherwise expressly provided in the Plan or in any written agreement with the Grantee.

10.

Certifications. Grantee hereby represents ands warrants that Grantee is acquiring the option granted under this Agreement for Grantee’s own account and investment and without any intent to resell or distribute the shares upon exercise of the option. Grantee shall not resell or distribute the shares received upon exercise of the option except in compliance with such conditions as Firstbank Corporation may specify to ensure compliance with federal and state securities laws.

11.

Withholding. The Company or a subsidiary shall be entitled to (a) withhold and deduct from future wages of a Grantee, or make other arrangements for the collection of, all amounts deemed necessary to satisfy any and all federal, state, and local withholding and employment-related tax requirements attributable to the option as provided in the Plan or (b) require a Grantee promptly to remit the amount od such withholding to the Company before taking any action with respect to a stock option.

12.

Effective Date. This option shall be effective as of the Grant Date.

13.

Amendment. This option shall not be modified except in writing executed by the parties hereto.

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14.

Plan Controls. The Plan is incorporated in this Agreement by reference. Capitalized terms not defined in this Agreement shall have those meanings provided in the Plan. In the event of any conflict between the terms of this Agreement and the terms of the Plan, the provisions of the Plan shall control.

FIRSTBANK CORPORATION By:       William E Goggin       Chairman

ACKNOWLEDGMENT OF RECEIPT

        I acknowledge receipt of the Stock Option Agreement issued by Firstbank Corporation for the option number indicated above, and agree to the terms and conditions of the Agreement.

        I understand that I must return this Acknowledgement of Receipt form in order to exercise any options granted to me. I am under no obligation to purchase these shares; however, I am accepting the stock options granted at this time.

Please sign and return this page by {date}, to:
Human Resources Department
Firstbank Corporation
P O Box 1029
Alma MI 48801

Please keep the stock option agreement for your records.

EXHIBIT 13
Rule 14a-3
Annual Report

Firstbank Corporation

2004
Annual Report

This 2004 Annual Report contains audited financial statements and a detailed financial review. This is Firstbank Corporation’s 2004 Annual Report to Shareholders. Although attached to our proxy statement, this report is not part of our proxy statement, is not deemed to be soliciting material and is not deemed to be filed with the Securities and Exchange Commission (the “SEC”) except to the extent that it is expressly incorporated by reference in a document filed with the SEC.

The 2004 Report to Shareholders accompanies this proxy statement. That report presents information concerning the business and financial results of Firstbank Corporation in a format and level of detail that we believe shareholders will find useful and informative. Shareholders who would like to receive even more detailed information than that contained in this 2004 Annual Report are invited to request our Annual Report on Form 10-K.

Firstbank Corporation’s Form 10-K Annual Report filed with the Securities and Exchange Commission will be provided to any shareholder, without charge, upon written request. Requests should be addressed to Samuel G. Stone, Chief Financial Officer, Firstbank Corporation, 311 Woodworth Avenue, P.O. Box 1029, Alma, Michigan 48801-6029. Firstbank Corporation’s Form 10-K Annual Report may also be accessed through out website www.firstbankmi.com.

PRESIDENT’S MESSAGE

TO OUR SHAREHOLDERS:

The theme for this year’s Annual Report to Shareholders is Designing a Vibrant Future. We chose that theme because it reflects the steps we are taking to ensure that the shareholders, customers, employees, and communities we serve continue to benefit from their association with Firstbank Corporation.

The year of 2004 was another successful year for our company, even though we posted somewhat lower earnings than the prior year. Our net income of over $10.3 million was the third highest level of earnings ever achieved. In light of the soft economy in our markets, the rising interest rates that brought a halt to the mortgage refinance activity of prior years, and the uncertainties caused by the Iraq war and our national election, we are very pleased with the results. The impact of the rising rates – and the associated decline in residential mortgage volume – is clearly illustrated by the decline in our gains from the sale of mortgage loans from $8.6 million in 2003 to $2.7 million in 2004.

We continued to maintain our long term focus on growth and asset quality during 2004 as well. Our levels of net charge-off of loans, and non-performing assets, have remained low and compare very favorably with our peers. This strong commitment to asset quality does occasionally limit growth opportunities; however, we did post loan growth of 5.6% in a soft economy, and exceeded $800 million in total assets for the first time at year end.

We are also committed to the effective management of our shareholders capital investment in Firstbank. As a result, during 2004 the board of directors authorized the repurchase of shares through a tender offer process at a price of $28.57 (adjusted for the 5% stock dividend in December). This process allowed shareholders to elect whether to maintain their investment in Firstbank or to sell their shares directly back to the company for little or no brokerage cost. The company repurchased 600,000 of the shares tendered, and since that repurchase we have achieved improved valuation for our shares, increased earnings per share, and increased our return on shareholders’ equity. I am also very pleased to report that $100 invested in Firstbank Corporation common stock on December 31, 1999 with all dividends reinvested, was valued at $225 on December 31, 2004, a five year compound annual growth rate of 17.6% per year!

After posting a 9.8% improvement in earnings per share in the fourth quarter of 2004 versus 2003, we look forward to 2005 with enthusiasm and optimism. With the end of the mortgage refinance boom we have refocused our efforts on maintaining and expanding our relationship with existing customers, while also identifying and pursuing new business opportunities throughout our markets. Even though the Michigan economy continues to struggle, we believe that we have growth opportunities available, and are taking aggressive action to upgrade our sales and service capabilities.

As always, the success of Firstbank Corporation rests squarely on the shoulders of our people. We are fortunate to have outstanding individuals serving throughout the company from the front lines to the board rooms. Their dedication, hard work, commitment, and professionalism have positioned Firstbank Corporation as one of the leading community banking organizations in Michigan.

During 2004 we said farewell to two long time members of the Firstbank family. Sadly, Gerald L. Nielsen, who had served as a member of the Firstbank – Lakeview board of directors since 1986, passed away on August 6, 2004. Jerry’s dedication and insight will truly be missed throughout Firstbank and the entire Lakeview community. Jim Taylor, who had most recently served as President of Firstbank – St. Johns, retired in December and we wish him a happy and healthy retirement. Jim joined Firstbank (Mt. Pleasant) in 1988, and in 2000 was named the first Chief Executive Officer of the St. Johns bank. His leadership was instrumental in the success of that affiliate, and has positioned us for future growth. David M. Brown has been selected to succeed Jim as the President and Chief Executive Officer of Firstbank – St. Johns, and we welcome him into the Firstbank family.

Thank you for your investment in Firstbank Corporation. We appreciate the support and encouragement of our shareholders, and always welcome your comments or suggestions.

Respectfully submitted,
/s/ Thomas R. Sullivan
Thomas R. Sullivan
President & Chief Executive Officer

FINANCIAL HIGHLIGHTS
Firstbank Corporation

(In Thousands of Dollars, Except per Share Data)

Firstbank – St. Johns results are included from June 16, 2000, the date of inception.
Gladwin Land Company, Inc. results are included from May 8, 2000, the date of acquisition.

⁽¹⁾     All per share amounts are adjusted for stock dividends.

The Company’s Form 10-K Annual Report filed with the Securities and Exchange Commission will be provided to any shareholder, without charge, upon written request. Requests should be addressed to: Samuel G. Stone, Chief Financial Officer, Firstbank Corporation, 311 Woodworth Avenue, P.O. Box 1029, Alma, Michigan 48801-6029 The Company’s Form 10-K may also be viewed through our web site at www.firstbankmi.com.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The purpose of this section of the annual report is to provide a narrative discussion about Firstbank Corporation’s financial condition and results of operations. Please refer to the consolidated financial statements and the selected financial data presented in this report in addition to the following discussion and analysis.

RESULTS OF OPERATIONS

Highlights

Firstbank Corporation (“the Company”) had net income of $10,358,000 for 2004 compared with $12,056,000 in 2003, a decrease of $1,698,000, or 14.1%. These results reflect continued strength of core banking activities and favorable developments relating to classified loans, but a substantial reduction in mortgage refinances and resulting secondary market sales during the year. The mortgage refinancing levels of 2003 were at record levels with the historically low interest rates and were expected to decline significantly in 2004.

Management believes that standard performance indicators help evaluate performance. Firstbank posted a return on average assets of 1.32%, 1.58%, and 1.58% for 2004, 2003, and 2002, respectively. Total average assets increased $22 million in 2004, $14 million in 2003, and $13 million in 2002. Diluted earnings per share were $1.79, $1.97, and $1.94 for the same time periods. Return on equity was 13.06% in 2004, 14.47% in 2003, and 15.50% in 2002.

In 2000, 2002, and again in 2003, the Board of Directors authorized share repurchase programs that helped maintain capital and return on equity at appropriate levels. In June of 2004, the Board of Directors further authorized a self tender offer to repurchase shares of its common stock, which resulted in 600,000 shares, or 10.7% of the then outstanding shares of stock being repurchased for a total purchase price of $18 million. The company initially borrowed $11.0 million on its line of credit and utilized cash held by the parent company to fund the remaining $7.0 million of the purchase.

In October of 2004, Firstbank Capital Trust I (“the trust”), an unconsolidated special purpose trust of the Company, sold 10,000 variable rate trust preferred securities, at $1,000 per trust preferred security, for a total of $10 million in Trust Preferred Securities. The initial rate on the Trust Preferred Securities was 4.05% and will adjust quarterly to the then current 90 day LIBOR rate plus 1.99%. Firstbank Corporation issued subordinated debt to the trust in exchange for the proceeds of the offering. The debentures represent the sole assets of the trust. The Company used the proceeds of this transaction to provide long term funding for the self tender offer transaction described in the preceding paragraph, and paid off its line of credit borrowing.

Including the self tender shares repurchased discussed in the preceding paragraphs, the Company repurchased 706,700 shares of its common stock in 2004, 176,100 in 2003, and 122,710 shares in 2002.

Net Interest Income

The core business of the Company is earning interest on loans and securities while paying interest on deposits and borrowings. Interest rates in the first half of 2004 remained at historically low levels, and then began to rise in the second half of the year. During the first half of the year, interest spreads between earning assets and the cost of funding those assets compressed, continuing a pattern which began in 2002. As short term rates began to rise in the second half of the year the interest spread began to expand. The combination of higher earning asset balances and the improving interest spread resulted in the Company’s net interest income increasing by $751,000 in 2004, a 2.3% increase when compared to 2003. The net interest margin for the year decreased to 4.47% compared to 4.50% in 2003, and 4.80% in 2002. During 2004, the Company’s average loan to average deposit ratio was 110%, compared to 105% in 2003, and 107% in 2002.

A critical task of management is to price assets and liabilities so that the spread between the interest earned on assets and the interest paid on liabilities is maximized without unacceptable risks. While interest rates on earning assets and interest bearing liabilities are subject to market forces, in general and in the short run, the Company can exert more control over deposit rates than earning asset rates. However, competitive forces and the need to maintain and grow deposits as a funding source place limitations on the degree of control over deposit rates.

4

The following table presents a summary of net interest income for 2004, 2003, and 2002.

Summary of Consolidated Net Interest Income (dollars in thousands)

        Interest on nonaccrual loans is not included.

In 2004, the average rate realized on earning assets was 6.06%, a decrease of 20 basis points from the 2003 results of 6.26%, and a 106 basis point reduction from the 7.12% realized in 2002. During 2002, the prime rate held steady for the first three quarters and then decreased 50 basis points in the fourth quarter. In 2003 the prime rate continued to move lower, remaining unchanged in the first quarter and then decreasing 25 basis points in the second quarter and remaining at that level for the second half of the year. In 2004, the prime rate was unchanged in the first and second quarters, and then moved up in five 25 basis points increments in the third and fourth quarters to its year end level of 5.25%. As of December 31, 2004, slightly over 40% of the loan portfolio was comprised of variable rate instruments. Except for a relatively small portion of these loans that are affected under current interest rate conditions by interest rate floors or ceilings, these loans will re-price monthly or quarterly as rates change. The remaining 60% of the loan portfolio is made up of fixed rate loans that do not re-price until maturity. Of the fixed rate loans approximately $93 million, or nearly 23% of the fixed rate loan portfolio, matures within the next twelve months and are subject to rate adjustments at maturity.

5

As rates declined in 2002 and 2003, maturing securities in the investment portfolio could not be replaced with securities of comparable quality bearing equal or higher yields. Quality standards were maintained and portfolio yields declined. Although short term interest rates moved up in the second half of 2004, longer term rates have remained basically unchanged. As a result, maturing securities continue to run off from the investment portfolio at higher rates than comparable current offerings, reducing the overall investment portfolio yield from 4.45% in 2003 to 4.32% in 2004. In the current rate environment, management expects to be able to replace maturing investments in the portfolio with securities of high quality, and similar yields.

The average rate paid on interest bearing liabilities was 1.97% in 2004, compared to 2.19% in 2003, and 2.83% in 2002. Deposit rates decreased during 2004 as maturing time deposits were re-priced to lower rates and average rates paid on checking and savings deposits were lower in response to the prime rate reductions of 2002 and 2003. The Company began using brokered CDs in the third quarter of 2004 to assist with increased funding needs. The brokered CDs carry an interest rate that is generally higher than the rate offered in its local markets and were issued with original maturities ranging from three to twelve months.

In past years the Company has funded a portion of its loan growth with borrowings from the Federal Home Loan Bank and notes payable. During 2004, the average outstanding balance of FHLB advances and notes payable increased $5.6 million and the year end balance increased $4.2 million when compared to 2003 balances. While FHLB borrowings are an economical method of funding loans when increased core deposits are not available, the cost is typically higher than the Company’s core deposit costs. The average rate of Federal Home Loan Bank advances and notes payable funding decreased 36 basis points in 2004, to 5.24%, when compared to the 2003 rate of 5.60%, because new advances were at lower rates than maturing notes. Borrowings from the Federal Home Loan Bank carry significant prepayment penalties that act as a deterrent to prepayment. In October of 2004, the Company issued $10.3 million in subordinated debentures, at a variable interest rate of LIBOR plus 1.99%. The Company utilizes short term borrowing, made up of Federal Funds Purchased and Repurchase Agreements as a source of liquidity and to balance the daily cash needs of the Company. Average short term borrowed funds increased by $1.7 million when 2004 is compared with 2003.

The 2004 rate spread of 4.09% is two basis points higher than the 2003 result of 4.07%, but 20 basis points lower than the 2002 result of 4.29%. Tax equivalent net interest income increased $654,000 in 2004 as an increase in total average earning assets of $19 million more than offset the narrower net interest margin. The net interest margin of 4.47% for 2004 was three basis points below the 2003 results, and 33 basis points lower than in 2002. An increase in the rate spread was the result of rates on average earning assets decreasing 20 basis points while the average cost of interest bearing liabilities decreased 22 basis points. The three basis point decrease in the net interest margin was a result of a lower percentage of earning assets being funded by non interest bearing liabilities and equity. Average earning assets represented 93% of total average assets in 2004 and 94% in 2003.

Provision for Loan Losses

The provision for loan losses in 2004 was an expense recovery of $425,000 compared with expense of $550,000 in 2003, and $1,170,000 in 2002. In accordance with Statement of Financial Accounting Standard No. 114 Accounting by Creditor for the Impairment of a Loan, the Company sets aside specific reserves for loans that it determines to be impaired by charging its provision for loan losses. Likewise, if a loan for which reserves had been established pays off, or the risk of loss to the Company is otherwise eliminated, the Company is required to reverse those specific reserves. During 2004, favorable events pertaining to a few impaired loans, for which specific loan loss reserves had been established, caused the Company to reverse provision expense. Management believes the events that transpired in 2004 are rare in occurrence and does not anticipate similar events to occur on a regular basis in the future.

6

At December 31, 2004, the allowance for loan losses as a percent of total loans was 1.58% compared to 1.83% and 1.92% at December 31, 2003, and December 31, 2002, respectively. Net charged off loans totaled $621,000 in 2004, compared to $459,000 in 2003, and $672,000 in 2002. During 2004 recoveries of previously charged off loans were $309,000, compared to $319,000 in 2003, and $363,000 in 2002. Net charged off loans as a percent of average loans were 0.09% in 2004, 0.08% in 2003, and 0.11% in 2002. Total nonperforming loans were 0.28% of ending loans at December 31, 2004, compared to 0.22% and 0.63% at the two previous year ends. Management maintains the allowance for loan losses at a level considered appropriate. 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. Management uses a quantitative and qualitative methodology for analyzing factors which impact the allowance for loan losses consistently across its five banking subsidiaries. The process applies risk factors for historical charge-offs and delinquency experience, portfolio segment weightings, and industry and regional factors and trends as they affect the banks’ portfolios. The consideration of exposures to industries most affected by current risks in the economic and political environment and the review of risks in certain credits that either are, or are not, considered part of the non-performing loan category contributed to the establishment of the allowance levels at each bank. Management believes that the analysis described above provides a consistent basis for the current provision level.

Non-interest Income

Non-interest income declined sharply in 2004, primarily from a 69% reduction in gains on the sale of mortgage loans. Overall, non-interest income was down $5.8 million, or 36.7%. Gain on sale of mortgage loans in 2003 and 2002 benefited from forty year lows in mortgage interest rates which fueled mortgage refinance activity. The lower gains in 2004 are reflective of a more typical level of refinance activity and a return to more traditional new loan business.

When a mortgage is refinanced or pre-paid, capitalized mortgage servicing rights relating to that mortgage are written off. During 2002 and 2003, mortgage servicing income was affected by the refinance activity, causing net servicing income (serving income, net of amortization of capitalized serving rights) to swing to a net expense position. In 2004, with reduced levels of refinancing, the net servicing income, while still a negative $55,000 was largely neutral as compared with a negative $1.1 million in 2003 and a negative $709,000 in 2002.

Courier and cash delivery services income increased 45.7% to $1,072,000 in 2004 after having increased 30.5% in 2003. This revenue is from the operations of 1^st Armored Incorporated, which operates an armored car and courier business, and does not include income from servicing Firstbank affiliates. In 2004, 1^st Armored began servicing coin counting machines located in super markets for a single customer, which contributed $229,000 to revenue.

The mortgage refinance boom of 2002 and 2003 also benefited two of the Company’s non banking subsidiaries which provided title insurance and real estate appraisal services to customers. In 2004, as with gains on the sale of mortgage loans, business was down with decreased mortgage refinance activity. Real estate appraisal fees contributed $604,000 in 2004 down from $912,000 in 2003 and $857,000 in 2002. Title insurance sales declined to $618,000 compared with $1,104,000 in 2003 and $726,000 in 2002.

Other non-interest income decreased $465,000, or 25.8%, when the results of 2004 are compared to 2003. The lower level of income was primarily due to higher gains on the sale of other real estate owned and from the sale of certain customer lists associated with the brokerage business in 2003. When comparing 2003 to 2002 results, other non-interest income was $346,000 higher.

Non-interest Expense

Salary and employee benefits expenses decreased $480,000, or 3.0%, when 2004 is compared with 2003. Temporary staffing and overtime associated with originating, processing and managing secondary market sales related to the high volume in the mortgage business in 2003 were scaled back. The reduction in staffing was partially offset by annual salary increments, merit raises and normal staffing requirements related to growth in other business areas. Employee benefit costs increased 10.9% as well, primarily from higher employee group insurance cost which increased 18.6% in 2004. The Company employed 365 full time equivalent employees at the end of 2004, 25 fewer than at the same time in 2003. Salary and benefit expenses were $1,951,000 higher when 2003 is compared with 2002 as the Company expanded its work force to meet the demands of mortgage refinance activity, staffed new branch facilities and paid for annual merit and incentive increases.

7

Expenses of occupancy and equipment increased $141,000, or 3.8%, over the 2003 level primarily from higher depreciation expense on equipment as the Company upgraded its technology and phone systems. Occupancy and equipment expense had increased $53,000, in 2003 over the 2002 level.

Amortization of intangible assets decreased $34,000, or 10.1%, during 2004 as amortization was reduced due to the sale of certain customer lists related to the brokerage business in 2003. Intangible amortization decreased $26,000 in 2003 compared with 2002 also due to the sale of certain customer lists related to the brokerage business. Included in other non interest expense for 2004 was a $415,000 charge relating to impairment of goodwill at the Company’s Gladwin Land Company and CA Hanes, Realty Inc. businesses. In the fourth quarter of 2004, the Corporation determined that goodwill at its Gladwin Land Company and CA Hanes Realty, Inc. subsidiaries was impaired. The Company uses a discounted future cash flow model to evaluate the goodwill of its non banking subsidiaries. Under the provisions of Statement of Financial Accounting Standard No. 142, Goodwill and Other Intangible Assets, the $314,000 of goodwill at Gladwin Land was determined to be fully impaired, and was written off in its entirety. The $376,000 of goodwill at CA Hanes Realty, Inc. was determined to be partially impaired and written down by $101,000 to a remaining value of $275,000.

Michigan single business tax expense increased $297,000 in 2004. During the fourth quarter of 2004 the Company performed a comprehensive review of its tax asset and liability accounts in order to adjust previous estimates of contingent tax liabilities. As a result, the Company increased its single business tax liability and the corresponding expense in the amount of $365,000. Proposed changes to the Michigan Single Business Tax, by the Governor of Michigan, could substantially increase the Company’s expense in years beginning in 2006.

Expenses for outside professional services decreased $397,000 to $1,598,000 in 2004 compared to $1,995,000 in 2003. Title search fees and costs paid to independent contractors in the title, appraisal and real estate sales operations accounted for substantially all of the reduction. These costs were largely driven by the high level of mortgage refinance activity in 2003. Professional service fees increased in 2003 above 2002‘s level by $436,000 with fees associated with mortgage refinancing driving the increase.

Advertising and special promotion expense decreased to $290,000 from $787,000 in 2003 primarily due to promotional expense for mortgage refinances in 2003. Advertising and promotional expense was higher in 2003 than the previous year by $265,000 for promotional expenditures relating to mortgage refinance activity.

Other non-interest expense increased from $5,679,000 in 2003 to $5,908,000 in 2004. Included in 2004 expense is the goodwill impairment charged discussed above and $205,000 relating to the cost of the Company’s implementation of newly enacted procedures on internal controls required by section 404 of the Sarbanes-Oxley Act. Other non-interest expense declined $186,000, or 3.1%. Prior year expenses had decreased from 2002 by $22,000.

Federal Income Tax

The Company’s effective federal income tax rates were 29% for 2004, and 33% for 2003 and 2002. As discussed above, the Company performed a comprehensive review of its tax asset and liability accounts in order to adjust previous estimates of contingent tax liabilities. As a result, the Company reduced its federal tax liability and the corresponding expense in the amount of $529,000. Excluding this adjustment, the Company’s federal income tax rate for 2004 would have been 32%. The Company’s investment in securities and loans which provide income exempt from federal income tax is the principal cause of the difference between the effective tax rates noted above and the statutory tax rate of 35% for all three years.

FINANCIAL CONDITION

Total assets at December 31, 2004 were $806 million, exceeding December 31, 2003 total assets of $777 million by $29 million, or 3.7%. Loans held for sale in the secondary market decreased 52.7% at December 31, 2004, when compared to the balance at December 31, 2003, reflecting the slower mortgage origination business at the end of the year. Total portfolio loans, net of allowance for loan loss, increased 5.9% at December 31, 2004 compared with the balance at the previous year end. Commercial loans decreased $1.9 million, or 1.8%. Residential mortgage and commercial mortgage loans increased $26.5 million, or 12.9%, and $22.3 million, or 11.0% respectively. Construction loans were lower at December 31, 2004, falling $7.2 million, or 13.1%, from the previous year end. Consumer loans were $3.8 million, or 6.3% lower at the current year end.

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		(In Thousands of Dollars)
		2004		2003		Change		% Change
Commercial		$110,508		$112,384		$(1,876	)	(2	)%
Commercial real estate		225,372		203,080		22,292		11	%
Residential real estate		231,341		204,844		26,497		13	%
Construction		47,920		55,160		(7,240	)	(13	)%
Consumer		56,315		60,128		(3,813	)	(6	)%
Total		671,456		635,596		35,860		6	%
Mortgages serviced for others		$472,100		$464,400		$   7,700		2	%

Total securities available for sale increased $1.7 million, or 2.5%, roughly keeping pace with overall asset growth. Securities available for sale were 9.0% of total assets at year end 2004, compared with 9.1% at the end of 2003.

Premises and equipment decreased by $445,000 after recognized depreciation of $1,954,000. The decrease in premise and equipment resulted from current year depreciation expense exceeding capital expenditures.

Total deposits increased at the end of 2004 to $603 million, an increase of 6.3%, compared to $568 million at year end 2003. In the middle of 2004, the Company entered the brokered CD market to expand its available funding sources. At the end of the year, $15.3 million of brokered CDs had been added to the balance sheet. Brokered CDs generally carry a higher interest rate than locally generated CDs of similar duration, but are available in large dollar pools which results in lower operational cost than smaller dollar local deposits. Including the brokered CDs, total time deposits increased $31.5 million, or 16.7% compared with the end of 2003. Non-interest bearing demand deposit balances increased $3.9 million, or 3.8%, while interest bearing demand deposits decreased by $4.6 million, or 2.5% and savings account balances increased $4.9 million, or 5.1%. Securities sold under agreements to repurchase increased by $4.1 million and federal funds purchased decreased $12.0 million.

Federal Home Loan Bank advances and notes payable increased by $4.2 million at December 31, 2004 as compared to December 31, 2003. Note K and Note L of the Notes to Consolidated Financial Statements have additional discussion of borrowings. The Company also issued $10.3 million in subordinated debentures in the fourth quarter of 2004. Note M of the Notes to Consolidated Financial Statements has additional discussion of that issuance.

Asset Quality

Loans are carried at an amount which management believes will be collected. A balance considered not collectible is charged against (reduction of) the allowance for loan losses. In 2004, net charged off loans were $621,000 compared to $459,000 in 2003. Net charged off loans as a percentage of average loans were 0.09% and 0.08% in 2004 and 2003.

Nonperforming loans are defined as nonaccrual loans, loans 90 days past due and any loans where the terms have been renegotiated. Total nonperforming loans were $1.9 million and $1.4 million at December 31, 2004 and 2003, respectively. The average investment in impaired loans was $1.6 million during 2004 compared to $3.5 million during 2003. At year end, impaired loans were $1.4 million compared with $3.4 million at December 31, 2003. The decrease in impaired loans was mainly due to full or partial repayment of several loans that were classified as impaired at the end of the prior year. Please refer to Note F of the Notes to Consolidated Financial Statements for more information on impaired loans. Total nonaccrual loans were $1,456,000 at December 31, 2004, compared to $834,000 at the end of 2003.

The allowance for loan losses was decreased $1,046,000, or 9.0%, during 2004. The allowance for loan losses represents 1.58% of outstanding loans at the end of 2004 as compared to 1.83% at December 31, 2003. As previously discussed under the provision for loan losses heading, favorable events pertaining to a few impaired loans, for which specific loan loss reserves had been established, caused the Company to reverse allowance. Management believes the events that transpired in 2004 are rare in occurrence and does not anticipate similar events to occur on a regular basis in the future. Management maintains the allowance at a level which they believe adequately provides for losses inherent in the loan portfolio. Such losses are estimated by a variety of factors, including specific examination of certain borrowing relationships and consideration of historical losses incurred on certain types of credits. Management focuses on early identification of problem credits through ongoing reviews by management, loan personnel and an outside loan review specialist.

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LIQUIDITY AND INTEREST RATE SENSITIVITY

Asset liability management aids the Company in achieving reasonable and predictable earnings and liquidity while maintaining a balance between interest earning assets and interest bearing liabilities. Liquidity management involves the ability to meet the cash flow requirements of the Company’s customers. These customers may be either borrowers needing to meet their credit requirements or depositors wanting to withdraw funds. Management of interest rate sensitivity attempts to manage the level of varying net interest margins and to achieve consistent net interest income through periods of changing interest rates. The net interest margin was 4.47% in 2004 compared to 4.50% in 2003. Loan yields declined 48 basis points, from 6.81% in 2003, to 6.33% in 2004. Deposit costs decreased 26 basis points from 1.79% in 2003 to 1.53% in 2004. With low yields on loans through most of the year, demand was strong, and average loans outstanding increased by $51 million. Average total earning assets increased a smaller $19 million as loans were funded, in part, by a shift from lower yielding federal funds sold.

Rising interest rates in the second half of the year allowed the Company to increase its year end balance of time deposits by $31.5 million. Also contributing to the increase in time deposits was the addition of $15.3 million of brokered CDs. The Company continued to maintain its short term funding needs through the use of overnight funding, and ended the year with $10.3 million of federal funds purchased. The use of FHLB advances continued to be a significant source of longer term funding, with advances increasing from the prior year end by $4.2 million. The company also added $10.3 million in subordinated debentures during the year to fund its capital management strategy. Early in the fourth quarter, Firstbank Capital Trust I (“the trust”) raised $10.3 million of funding through the issuance of variable interest trust preferred securities. The Company then issued subordinated debentures to the trust in exchange for the proceeds of the offering. The trust is an unconsolidated subsidiary and accordingly this funding is shown on the balance sheet as subordinated debentures. The rate on these securities is adjustable quarterly to the then current LIBOR rate plus 1.99%

A decision to increase deposit rates affects most rates currently paid and, therefore, has an immediate negative impact on net interest margin. With the exception of variable rate loans, an increase in loan rates does not affect the yield until a new loan is made. During the first half of the year, the Company’s net interest margin compressed as pressure to raise rates on deposits came in advance of prime rate increases, which primarily affect loans. In the second half of 2004 the prime rate increased five times in 25 basis points increments, bringing the prime rate to 5.25% at year end. While deposit rates continued to move higher in the second half, the Company was able to increase rates on variable rate loans at a faster pace, causing the net interest margin to expand.

The principal sources of liquidity for the Company are maturing securities, federal funds purchased or sold, loan payments by borrowers, investment securities, loans held for sale, deposit or deposit equivalent growth and Federal Home Loan Bank advances. Securities maturing or re-pricing within one year at December 31, 2004 were $22.9 million, compared to $13.6 million at December 31, 2003. Total investments available for sale increased $1.7 million to $72.5 million.

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The table below shows the interest sensitivity gaps for five different intervals as of December 31, 2004. Deposits that do not have a fixed maturity date are shown as immediately re-pricing according to reporting conventions.