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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549

FORM 10-Q

[X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the quarterly period ended MARCH 31, 2005

or

[    ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to __________________.

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

        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 by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). [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 . . . 5,327,335 shares outstanding as of April 30, 2005.

INDEX

Item 1: Financial Statements (UNAUDITED)

FIRSTBANK CORPORATION
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2005 AND DECEMBER 31, 2004
(Dollars in thousands) UNAUDITED

See notes to consolidated financial statements.

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FIRSTBANK CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
MARCH 31, 2005 AND 2004
(Dollars in thousands except per share data)
UNAUDITED

See notes to consolidated financial statements.

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FIRSTBANK CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE THREE MONTHS ENDED
MARCH 31, 2005 AND 2004
(Dollars in thousands)
UNAUDITED

See notes to consolidated financial statements.

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FIRSTBANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
UNAUDITED

NOTE A — FINANCIAL STATEMENTS

The accompanying unaudited financial information presented is for Firstbank Corporation (“Corporation”) and its wholly owned subsidiaries: Firstbank — Alma, Firstbank (Mt. Pleasant), Firstbank — West Branch (including its wholly owned subsidiaries; 1^st Armored, Inc., 1^st Title, Inc., and its majority holding in C.A. Hanes Realty, Inc.), Firstbank — Lakeview, Firstbank — St. Johns (collectively the “Banks”) and Gladwin Land Company, Inc. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America 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 accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 2005, are not necessarily indicative of the results that may be expected for the year ending December 31, 2005. The balance sheet at December 31, 2004, 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, 2004.

Stock Compensation

Employment compensation expense under stock options is reported using the intrinsic value method. No stock-based compensation cost is reflected in net income as all options granted had an exercise price equal to or greater than the market price of the underlying common stock at date of grant. The following table illustrates the effect on net income and earnings per share if expense was measured using the fair value recognition provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation.

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NOTE D — NONPERFORMING LOANS AND ASSETS

Nonperforming Loans and Assets

The following table summarizes nonaccrual and past due loans at the dates indicated:

Analysis of the Allowance for Loan Losses

*All loan ratios exclude loans held for sale
^Annualized

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NOTE E – BASIC AND DILUTED EARNINGS PER SHARE

Stock options for 59,039 shares for the three month period of 2004, and 56,729 shares for the three month period of 2005, were not considered in computing diluted earnings per share because they were antidilutive.

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 wholly owned subsidiaries; 1^st Armored, Inc., 1^st Title, Inc. and its majority holding in C.A. Hanes Realty, Inc.), Firstbank — Lakeview, Firstbank — St. Johns (collectively the “Banks”) and Gladwin Land Company, Inc.

Financial Condition

Total assets increased $8.0 million, or 1.0%, during the first three months of 2005. Cash and cash equivalents decreased $1,993,000, or 7.7%, and securities available for sale increased $5.4 million, or 7.4%. The net increase in liquid assets resulted primarily as a result of an increase in the liquidity of one of its affiliates.

Total gross loans increased $3.8 million, or 0.6%, during the first quarter of 2005. Average total loans increased 1.0% in the first quarter of 2005 compared with the fourth quarter of 2004. Residential mortgages were $9.1 million, or 3.9% higher, mainly due to new loans which were retained for the loan portfolio because of their specific rate and collateral characteristics. Real estate construction loans decreased $10.0 million, or 21.0%, due to seasonal and economic factors. Consumer and credit card loans to individuals decreased by $1.8 million, or 3.3%. Commercial and commercial real estate loans were higher, increasing $6.6 million, from December 31, 2004, although they were $26.6 million, or 8.4% above the year-ago level.

Net charge-offs of loans were $461,000 in the first quarter of 2005 compared to $144,000 in the first quarter of 2004. The higher level of charge-offs in this year’s first quarter was primarily due to the charge off of a single commercial loan which had been previously identified as a problem loan and had a specific allowance allocation. The ratio of net charge-offs of loans (annualized) to average loans was 0.28% in the first quarter of 2005 compared to 0.09% in the first quarter of 2004. Even with the higher level of charge-offs in the first quarter of 2005, these measures of asset quality continue to be at favorable levels in the industry. During the first quarter of 2005, continuing favorable developments and pay downs relating to a small number of credits allowed the Company to keep its provision expense low, at $8,000 for the quarter. During the first quarter of 2004, the Company had a negative provision for loan losses of $191,000 which had resulted from a partial pay off of a single commercial loan for which a specific allocation of allowance had been established. At March 31, 2005, the allowance as a percentage of outstanding loans was 1.50% compared with 1.58% at year end 2004. 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.

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Total deposits increased $15.4 million or 2.5%, during the quarter. Short term borrowing of federal funds and repurchase agreements decreased $7.2 million, or 18.5%. Increases of $15.0 million, or 14.9%, in savings deposits, and $10.7 million, or 4.9% in time deposits were partially offset by seasonal decreases of $6.8 million, or 6.4%, in non-interest bearing account balances and $3.5 million, or 2.0%, in interest bearing demand deposits. For the three month period ended March 31, 2005, securities sold under agreements to repurchase and overnight borrowings decreased $7.2 million, or 18.5%, due to normal fluctuations in customer cash flows and less reliance on overnight borrowing. FHLB advances and notes payable decreased $2.5 million during the quarter.

Total shareholders’ equity increased $409,000, or 0.6%, during the first three months of 2005. Net income of $2,137,000 and stock issuances of $835,000 increased shareholders’ equity, while stock repurchases of $1,015,000 and dividends of $1,118,000 decreased shareholders’ equity. Stock issuance was primarily related to dividend reinvestment and exercise of stock options. The book value was $13.76 per share at March 31, 2005, up from $13.74 at December 31, 2004.

The following table discloses compliance with current regulatory capital requirements on a consolidated basis:

Results of Operations

For the first quarter of 2005, net income was $2,137,000, basic earnings per share were $0.40, and diluted earnings per share were $0.39, compared to $2,669,000, $0.45, and $0.44 for the first quarter of 2004. The lower earnings level in this year’s first quarter was mainly a result a decrease of $329,000 in mortgage loan sale gains, and higher operating expenses which increased $613,000. Also affecting the comparison to last years first quarter is an increase of $199,000 in loan loss provision, which was a negative expense in 2004 due to a favorable adjustment relating to the pay down of a single commercial loan for which allowance had been allocated.

Average earning assets increased $30.8 million, or 1.2%, from the first quarter of 2004 to the same period of 2005. The yield on earning assets increased 21 basis points, to 6.27%, for the quarter ended March 31, 2005, compared to 6.06% for the quarter ended March 31, 2004. The cost of funding related liabilities also increased, rising 29 basis points when comparing the three month periods ended March 31st, from 1.55% in 2004, to 1.84% in 2005. Since the increase in yield on earning assets was less than the increase in the cost of funds relative to earning assets, the net interest margin declined by 10 basis points, from 4.51% in 2004 to 4.41% in 2005. The net interest margin was also affected by the Company’s capital restructuring efforts in 2004, which benefited earnings per share, but had a negative impact of approximately 0.09% on the net interest margin, as expected. Net interest income increased $135,000 to $8.1 million in the first three months of 2005 compared to the same period in 2004.

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The provision for loan losses increased $199,000, when the first quarter of 2005 is compared to the first quarter of 2004. The provision for loan losses was reduced by $271,000 in the year ago first quarter because of the partial payoff of a large classified loan, discussed previously. Management has developed 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 growth rates, and industry and regional factors and trends as they affect the banks’ portfolios. The consideration of exposures to industries potentially most affected by current risks in the economic and political environment and the review of potential risks in certain credits that are not considered part of the non-performing loan category contributed to the establishment of the allowance levels at each bank. Net charge-offs for the first three months of 2005 increased by $319,000 to $461,000, when compared to $142,000 in the same period of 2004. The increase in this year’s charge-offs was primarily caused by the write off of a single commercial credit which had been previously identified as a problem loan and specific allowance allocated. Management believes that the analysis described above provides a consistent basis for the current provision levels.

Total non-interest income decreased $152,000, or 6.4%, when the first three months of 2005 are compared to the same period in 2004. Mortgage refinance activity that occurred in the first quarter of 2004 resulted in an unsustainably high level of mortgage gains. The first three months of 2005 saw a lower level of re-finance activity, producing mortgage gains of $455,000, a drop of $329,000, or 42.0%, compared with the same period in 2004. Mortgage servicing income increased $68,000 as a result of fewer prepayments on serviced mortgages. Service charges on deposit accounts for the three month period ended March 31, 2005 were $71,000, or 10.9%, higher than the same period of 2004.

Total non-interest expense increased $613,000, or 9.3%, when comparing the three month periods ended March 31, 2005 and 2004. Salaries and employee benefits decreased $54,000, or 1.4%, below the 2004 level. Other miscellaneous non-interest expense increased $583,000, or 37.0%, when the first three months of 2005 are compared to the same period of 2004. An increase of $88,000 in this area resulted from the Company’s non-banking subsidiaries and was more that covered by higher revenues from these operations. Audit costs increased $128,000 from the prior year as the Company completed its required internal control review to comply with the new Sarbanes-Oxley Act requirements. The remaining increase was caused by a variety of items including, conversions related technology expense for improving the Company’s internet banking service, and other technology and marketing related costs.

Federal Income tax expense decreased $285,000, or 22.2%, reflecting reduced taxes as a result of lower earnings and a lower effective tax rate.

Contractual Obligations, Commitments, Contingent Liabilities, and Off-Balance Sheet Arrangements

The Company has various financial obligations, including contractual obligations and commitments that may require future cash payments. Management believes that there have been no material changes in the Corporation’s overall level of these financial obligations since December 31, 2004 and that any changes in the Corporation’s obligations which have occurred are routine for the industry. Further discussion of the nature of each type of obligation is included in Managements Discussion and Analysis on page 12 of the Company’s Form 10K Annual Report, and is incorporated herein by reference.

Critical Accounting Policies

Certain of the Company’s accounting policies are important to the portrayal of the Company’s financial condition, since they require management to make difficult, complex or subjective judgments, some of which may relate to matters that are inherently uncertain. Estimates associated with these policies are susceptible to material changes as a result of changes in facts and circumstances. Facts and circumstances which could affect these judgments include, but without limitation, changes in interest rate, in local and national economic conditions, or the financial condition of borrowers. Management believes that its critical accounting policies include determining the allowance for loan losses, determining the fair value of securities and other financial instruments, the valuation of mortgage servicing rights, and estimating state and federal contingent tax liabilities. The Company’s significant accounting policies are discussed in detail in Managements Discussion and Analysis on pages 12 through 14 in the Company’s annual report to shareholders for the year ended December 31, 2004.

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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 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 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 Company undertakes no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events, or otherwise.

Item 3. 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. Firstbank’s annual report is filed as Exhibit 13 to its Form 10-K annual report for its fiscal year ended December 31, 2004.

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 Company 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 Company’s primary market risk exposures, including the categories of market risk to which the Company is exposed and the particular markets that present the primary risk of loss to the Company. As of the date of this Form 10-Q Quarterly Report, the Corporation does not know of nor 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 Company’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, economic, and geopolitical 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 11 of this Form 10-Q quarterly report for a discussion of the limitations on Firstbank’s responsibility for such statements.

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Item 4. Controls and Procedures

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PART II. OTHER INFORMATION

Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities

On November 25, 2003, the Company announced a repurchase plan that re-established its authorized limit for share repurchases, from that point forward, of up to $10 million of Firstbank Corporation common stock. As of December 31, 2004, the Company had repurchased 114,700 shares of its stock at an average price of $30.11 under the new authorization. There is no specific date for expiration under this authorization.

On June 15, 2004, the Corporation announced a self tender offer to purchase up to 500,000 shares of its common stock, plus up to 2% of outstanding shares, at a price of $30.00 per share ($28.57 per share after adjusting for the December 31, 2004 stock dividend) and suspended activity under its repurchase program. The offer to purchase shares expired on July 30, with the tender offer over subscribed. On August 5, 2004, the Corporation accepted 600,000 shares of those tendered for a total cost of $18.0 million.

During the first three months of 2005, the Company continued to repurchase shares of its common stock under the November 25, 2003 plan. For the three months ended March 31, 2005, the Company repurchased 37,200 shares of its common stock at an average price of $27.27 per share. Additional information on the Company’s repurchase program is available in the table below.

ISSUER PURCHASES OF EQUITY SECURITIES

Item 5. Other Information

The audit committee of the Board of Directors approved the categories of all non-audit services performed by the registrant’s independent accountants during the period covered by this report, except for certain miscellaneous services that meet the de minimus exception under current regulations.

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Item 6. Exhibits and Reports on Form 8-K

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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.

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EXHIBIT INDEX

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EXHIBIT 31.1

I, Thomas R. Sullivan, certify that:

Date: May 5, 2005

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EXHIBIT 31.2

I, Samuel G. Stone, certify that:

Date: May 5, 2005

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EXHIBIT 32.1

        Thomas R. Sullivan, President and Chief Executive Officer of Firstbank Corporation, and Samuel G. Stone, Executive Vice President and Chief Financial Officer of Firstbank Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

Dated: May 5, 2005

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