First Place lists loan trouble causes

By Don Shilling

About 14 percent of First Place Bank’s loans for residential developments aren’t being paid.

WARREN — First Place Financial Corp. said its problem loans are concentrated with builders of residential developments and owners of residential investment properties.

Executives with the Warren-based company gave industry analysts details of its financial condition Wednesday in a conference call.

On Tuesday, the parent company of First Place Bank posted a $6.2 million quarterly loss, which it attributed to bad loans and investment losses.

Officials said the bank has a portfolio of $53.5 million in loans to builders of residential developments. About 14 percent of those loans are considered nonperforming, meaning they haven’t received any payments for 90 days.

In order to sell homes that have been built in these developments, the bank is offering 30-year, fixed-rate loans of 4.99 percent. Albert Blank, president and chief operating officer of First Place Bank, said the bank will incur small losses with the loans, but home sales will benefit the developers and the bank.

The bank has a portfolio of $70 million in loans to owners of investment residential properties. About 11 percent of these loans are nonperforming.

Meanwhile, “standard homeowner loans” have a nonperforming rate of just over 2 percent, and the bank’s commercial loan portfolio has a nonpayment rate of less than 1 percent.

Leading to the quarter’s loss, First Place recorded a $5.4 million accounting charge to cover loan losses and a $9.3 million charge to cover investment losses.

Also, Steven Lewis, First Place chief executive, said the company has hired a consulting company to look at the bank’s staffing and production levels. The goal is to improve the company’s efficiency, he said.

He called the review timely because First Place hopes to complete a merger this quarter with Camco Financial Corp., which is the Cambridge, Ohio-based holding company for Advantage Bank. That bank has 23 offices in Ohio, Kentucky and West Virginia.

Shareholders of both companies are voting next month on the merger. Lewis said he thought the deal would go through despite a recent drop in First Place’s stock price.

Lewis said there is a need for consolidation of operations in the Columbus area, where both First Place and Advantage operate. OC Financial, which First Place recently acquired, also has a branch in that area.

In a down day on Wall Street, First Place stock closed down 5 cents at $6.12. It has traded between $5.71 and $16.91 in the past 52 weeks.

shilling@vindy.com