First Place Financial restores its profit

By Don Shilling

Bank officials remain concerned about the quality of their loans.

WARREN — First Place Financial Corp. restored its profits in the most recent quarter but still is struggling with loans that aren’t generating payments.

The Warren-based parent of First Place Bank earned $4.8 million in the quarter that ended March 31, compared with a loss of $3.1 million in the previous quarter.

“We are pleased to report a return to profitability this quarter,” said Steven Lewis, company president and chief executive.

Last quarter’s profits, however, were lower than the $6.5 million that First Place earned in the first three months of 2007.

Lewis said the quality of the company’s loans continues to be its biggest challenge.

Nonperforming assets, which include loans that aren’t being paid and real estate the bank has assumed, was valued at $70.7 million on March 31, compared with $40.7 million on June 30. The company’s fiscal year begins June 30.

The value of real estate owned by the bank has doubled to $13.2 million during the first three quarters of the fiscal year, including $9.2 million in single-family residential properties. Lewis said the amount of bank-owed real estate is growing rapidly because of an effort to take deeds on properties rather than seek foreclosures.

First Place recorded charge-offs of $2.2 million last quarter, compared with $1 million in the first three months of 2007. Charge-offs are accounting moves that reflect the loss in value of a loan that won’t be repaid. Charge-offs in the final three months of 2007 amounted to $5.3 million.

Lewis said a weakness in the Midwest economy has hurt people’s abilities to pay their debts.

He said First Place is setting aside more money to cover loan losses, and it has changed its credit and collection procedures. More resources have been devoted to collections and efforts to work out payment plans with borrowers, he said. Also, the bank has limited its loans for new-home construction.

“We remain committed to reducing nonperforming assets in the coming months,” Lewis added.

He was to have a conference call today with industry analysts. The company’s stock fell 63 cents, or 4.9 percent, Tuesday to close at $12.24.

The company’s board declared a dividend of 17 cents a share, payable May 8 to shareholders of record as of April 24. The dividend amount is unchanged from the previous two quarters.

First Place has 43 branches, two business financial centers and 20 loan production offices, primarily in Ohio and Michigan.

shilling@vindy.com