First Place parent posts loss of $3.1M


By Don Shilling | January 23, 2008 at 12:00a.m.

The loss was the result of an accounting charge that First Place is taking.

By DON SHILLING

VINDICATOR BUSINESS EDITOR

WARREN — First Place Financial Corp. is ready to say it even if economists aren’t — the Midwest is in a recession.

The Warren-based parent of First Place Bank made the call Tuesday in explaining why it was posting a quarterly loss of $3.1 million or 20 cents a share.

“Even though it might not meet the definition the economists use, we believe that the markets we operate in within the Midwest are experiencing a recession,” said Steven Lewis, First Place president and chief executive.

Homeowners have been unable to pay back their loans because of job losses or wage cuts, he said. This has resulted in significant increases in mortgage delinquencies, foreclosures and homes being owned by the bank, he said.

First Place warned last week that it was going to post its first quarterly loss since 2000. The loss in the quarter that ended Dec. 31 compared with earnings of $6.5 million in the same quarter of 2006.

The company’s stock closed at $12.51 Jan. 15 when the warning was issued. The stock closed up $1.03 Tuesday to finish at $12.59, although the earnings report came after the markets closed.

The loss last quarter was the result of an $11 million accounting charge that First Place is taking. After considering taxes, the charge reduced earnings by $7.1 million or 44 cents a share.

The $11 million charge included writing down some investments in the secondary mortgage market, extra funds to cover loan losses and a charge to cover the decreased value of homes the company has gained in foreclosures.

First Place said it has responded to its loss by limiting new home construction loans, eliminating its riskiest home loan programs and increasing resources dedicated to collection.

The company’s board of directors declared a dividend of 17 cents a share, payable Feb. 14 to shareholders of record as of Jan. 31. It was the same dividend that was declared in October.

shilling@vindy.com