First Place Bank to remain a thrift

First Place hasn't found a strategic reason to become a commercial bank.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
WARREN -- First Place Bank uses the word bank in its name, but its top officials don't think it needs to be one.
The institution is doing quite well operating with the charter of a thrift, or savings and loan, said Steve Lewis, president of First Place Financial Corp.
The Warren-based holding company operates First Place Bank and other companies in real estate, insurance and title work. It is the result of a merger of companies that used to be known as First Federal Savings Bank of Youngstown and First Federal Savings and Loan of Warren.
Lewis told industry analysts in a conference call Wednesday that he has looked at converting to a commercial bank charter but doesn't see a good reason to go through the work that would be required.
Thrifts and commercial banks operate under different sets of rules that are overseen by federal agencies.
Thrift charters were created long ago to encourage financial institutions to provide housing loans. Now, however, other lending companies are offering mortgages, and thrifts are increasingly building up their commercial loans.
In fact, Lewis said Wednesday that First Place has crossed a significant threshold -- its commercial loans now amount to more than 1 billion, or 41 percent of its loan portfolio.
Flexibility
Lewis said, however, that the thrift charter allows First Place to be more flexible. For example, as a commercial bank, it would have to sell its Coldwell Banker First Place Real Estate subsidiary, he said.
"I don't want to do that," he said.
Some companies have converted just for perception, so they can call themselves a commercial bank, he said.
Lewis said, however, that the issue will be reviewed again to determine if converting could save the company money.
"Other than that, I can't find a strategic reason to do it," he said.
First Place reported Tuesday that it earned 6.5 million in its third quarter, which ended March 31, compared with 6.3 million in the same quarter last year.
Commercial loans grew by 42 million last quarter.
Lewis said, however, that company officials are concerned with a recent increase in nonperforming loans, which are those that borrowers are not making payments on. He said the company is aggressively pursuing collections and added that this is part of a national and regional trend.
The company had 27.6 million in nonperforming loans March 31, compared with 25.7 million from Dec. 31. The increase was composed of 1.1 million in commercial loans, 400,000 in mortgage and construction loans and 400,000 in consumer loans.
As of March 31, 91 percent of these loans were secured by real estate. First Place said real estate loans are generally well-secured and losses on loan defaults often are only a fraction of the total loan amount.
shilling@vindy.com