First Place reduces dividends again
By Don Shilling
Since July, the quarterly dividend has been cut from 17 cents to 1 cent.
WARREN — First Place Financial Corp. cut its quarterly dividend for the second time since July after posting a $2.6 million loss in the fourth quarter.
The board of directors cut the dividend to 1 cent a share. In July, the board reduced the dividend from 17 cents a share to 8.5 cents.
Steven Lewis, president and chief executive of the holding company for First Place Bank, said the board will review dividend payments each quarter.
“We understand the importance of our dividend to our common shareholders, and we did not make this decision lightly,” he said.
Reducing the dividend to 1 cent will allow the company to retain $5 million a year, which will provide “further flexibility for us to take action to resolve issues as they develop,” he said.
In a conference call with analysts Wednesday, another executive said he was baffled about why First Place stock has been trading at such low levels.
“Our stock goes down any time bad news hits one of the top 10 banks,” said David Gifford, chief financial officer.
Most bank stocks suffered large declines Tuesday. First Place’s stock fell 99 cents, or 29 percent, to $2.42. The company issued its earnings report after the market closed.
The stock rebounded somewhat Wednesday. It closed up 43 cents, or 18 percent, at $2.85.
The stock traded as high as $15.91 in early 2008.
The earnings report revealed that First Place has lost money for the second straight quarter. The company lost $6.2 million in the previous quarter, which was the first quarter of its fiscal year.
First Place said the $2.6 million loss in the most recent quarter was the result of setting aside money to cover loan losses and one-time charges not related to operations.
First Place set aside $9.2 million last quarter to cover loans it doesn’t expect to be repaid. This is a $4 million increase over the prior quarter.
“We have continued to experience unemployment and depressed real estate values in the markets where we lend, resulting in an unsatisfactory level of nonperforming loans,” Lewis said.
The bank’s greatest exposure is in loans to builders to develop residential lots and build new homes, he said.
First Place also recorded a $2.5 million accounting charge to cover the loss in value of securities. The loss included investments in the mortgage company Fannie Mae, which were eventually sold last quarter, and in a mutual fund that has mortgage-backed securities.
First Place also recorded a $1.1 million charge to cover expenses for a merger with Camco Financial Corp., which was abandoned last quarter. Camco is based in Cambridge, Ohio, and operates Advantage Bank, which has 22 branches.
First Place has 33 branches and has expanded in recent years throughout Ohio and into Michigan.
Lewis said First Place will not be looking to grow through acquisitions in the current banking environment. He said small deals were possible, but executives for the most part will look to strengthen the company’s banking operations.
shilling@vindy.com