First Place Financial Corp. Announces Credit, Securities Impairment and Merger Related...

First Place Financial Corp. Announces Credit, Securities Impairment and Merger
Related Charges for the Fiscal 2008 Second Quarter

WARREN, Ohio, Jan. 15 /PRNewswire-FirstCall/ -- First Place Financial
Corp. (Nasdaq: FPFC) announced today that earnings for the second quarter of
fiscal 2008 will include $11.0 million of credit, securities impairment and
merger related pretax charges. These charges will reduce earnings for the
quarter by $7.1 million or $0.44 per share after considering the impact of
income taxes. The $11.0 million is composed of a $3.2 million increase in the
provision for loan losses, a $5.9 million charge for other than temporary
impairment of securities, a $1.1 million provision for loss on the sale of
real estate owned and a $0.8 million charge for merger expenses. Management
anticipates the net loss for the quarter ended December 31, 2007 will be in
the range of $0.19 to $0.20 per share. First Place Financial Corp.'s
subsidiary bank, First Place Bank, will remain well capitalized under
regulatory capital standards at December 31, 2007 after recording these credit
and merger related charges.
Nonperforming loans were $46.3 million at December 31, 2007 up from $36.8
million at September 30, 2007 and up from $34.0 million at June 30, 2007.
This increase was concentrated in residential loans and to a lesser extent in
commercial loans. Management performed a comprehensive review of commercial
loans and recorded $3.9 million of commercial loan charge-offs primarily
related to the residential construction industry. Management also evaluated
the adequacy of the allowance for loan losses to cover losses on residential
loans. As a result of the increases in residential and commercial
nonperforming loans and charge-offs and with the expectation that Midwest
markets will remain economically challenged, a provision for loan losses of
$5.2 million was recorded. That amount represented a $3.2 million increase
over the provision of $2.0 million in the quarter ended September 30, 2007.
Although real estate owned was relatively flat compared with the prior
quarter it has increased over the past six months. It was $9.6 million at
December 31, 2007 compared with $10.0 million at September 30, 2007 and $6.7
million at June 30, 2007. A provision for loss on the sale of real estate
owned of $1.1 million was recorded in the current quarter. This provision was
necessary as the market for residential real estate, particularly foreclosed
properties, has deteriorated in the Midwest markets where First Place
operates.
Steven R. Lewis, President and Chief Executive Officer, commented, "While
we are disappointed to report these credit charges, it is the prudent thing to
do at this time to better reflect current real estate values. Beginning in
2005 we made a number of changes to our underwriting policies to better
control future exposure to a housing market that was beginning to show signs
of weakness. However, there are many aspects of the economy in the Midwest
and nationally that we obviously cannot control. Our best strategy is to be
proactive and aggressively face these challenges. As previously reported, we
have increased our collection and workout staff and are focusing all possible
resources on bringing each problem loan to a timely resolution. A key
component to our approach was to appropriately value the housing stock that is
in the process of liquidation. I am confident that the strength of our loan
staff and the steps we have already taken will enable us to effectively manage
through this real estate credit cycle. We remain well capitalized under
regulatory standards and anticipate a return to profitability during this next
quarter of our fiscal year."
The $5.9 charge for other than temporary impairment of securities is
composed of a $4.3 million charge related to $11.3 million of Fannie Mae and
Freddie Mac preferred stock and a $1.6 million charge related to $33.5 million
in mutual fund securities. Recent capital restructuring at Fannie Mae and
Freddie Mac and developments in the residential mortgage business have
resulted in impairment of these securities. Due to the uncertainty of future
market conditions and how they might impact the financial performance of
Fannie Mae and Freddie Mac, management was unable to determine when or if this
impairment will be reversed. The mutual funds were primarily invested in
agency backed mortgage securities that did not have any significant exposure
to subprime mortgages. Recent changes in the interest rate environment and
the market for mortgage-backed securities has led management to conclude that
these securities are other than temporarily impaired.
On October 31, 2007 First Place completed its acquisition of Hicksville
Building Loan and Savings Bank of Hicksville, Ohio. In connection with that
acquisition $0.8 million of merger costs were recorded in the current quarter.
First Place will announce earnings for the quarter ended December 31, 2007
after the market closes on January 22, 2008 and will hold its regular
quarterly earnings conference call at 10:00 amWednesday January 23, 2008.
About First Place Financial Corp.
First Place Financial Corp. is a $3.2 billion financial services holding
company based in Warren, Ohio. First Place Financial Corp. operates 43 retail
locations, 2 business financial service centers and 18 loan production offices
through the First Place Bank, and Franklin Bank divisions of First Place Bank.
Additional affiliates of First Place Financial Corp. include First Place
Insurance Agency, Ltd.; Coldwell Banker First Place Real Estate, Ltd.;
TitleWorks Agency, LLC and APB Financial Group, Ltd., an employee benefit
consulting firm and specialist in wealth management services for businesses
and consumers. Information about First Place Financial Corp. may be found on
the Company's web site: www.firstplacebank.com.
Forward-Looking Statements
When used in this press release, or future press releases or other public
or shareholder communications, in filings by First Place Financial Corp. (the
Company) with the Securities and Exchange Commission or in oral statements
made with the approval of an authorized executive officer, words or phrases
such as "will likely result," "expect," "will continue," "anticipate,"
"estimate," "project," "believe," "should," "may," "will," "plan," variations
of such terms or similar expressions are intended to identify "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors, which may cause the Company's actual results
to be materially different from those indicated. Such statements are subject
to certain risks and uncertainties including changes in economic conditions in
the market areas the Company conducts business, which could materially impact
credit quality trends, changes in laws, regulations or policies of regulatory
agencies, fluctuations in interest rates, demand for loans in the market areas
the Company conducts business, and competition, that could cause actual
results to differ materially from historical earnings and those presently
anticipated or projected. The Company wishes to caution readers not to place
undue reliance on any such forward-looking statements, which speak only as of
the date made. The Company undertakes no obligation to publicly release the
result of any revisions that may be made to any forward-looking statements to
reflect events or circumstances after the date of such statements or to
reflect the occurrence of anticipated or unanticipated events.
For Further Information:
Steven R. Lewis, President & CEO
David W. Gifford, Interim CFO
(330) 373-1221

SOURCE First Place Financial Corp.

Steven R. Lewis, President & CEO, or David W. Gifford, Interim CFO,
+1-330-373-1221, both of First Place Financial Corp.