<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________________ to ___________________
Commission File Number 0-25049
FIRST PLACE FINANCIAL CORP.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE Applied For
- --------------------------------------------------------------------------------
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No. )
185 E. MARKET STREET, WARREN, OHIO 44482
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(330) 373-1221
----------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former fiscal years,
if changes since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes No X
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS.
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: No shares were
outstanding as of December 18, 1998.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
First Place Financial Corp. (the "Company") is a recently formed
holding company, formed for the purpose of acquiring all of the common stock of
First Federal Savings and Loan Association of Warren (the "Association")
concurrent with the Association's conversion from mutual to stock form of
organization. At this time and until the conversion is complete, the Company is
a noncapitalized shell corporation with no business activities. The financial
statements of the Company, which are set forth after Item 3 below, reflect such
status. For a further discussion of the Company's formation and intended
operations see "First Place Financial Corp." in the Company's Prospectus (the
"Prospectus") dated November 12, 1998, which is a part of its Registration
Statement under the Securities Act of 1933 on Form S-1, initially filed on
September 9, 1998 and declared effective on November 12, 1998. Such description
of the Company is incorporated herein by reference and attached hereto as
Exhibit 99(a). Additionally, "Summary of Recent Developments" on pages 12
through 15 of the Prospectus is incorporated herein by reference and attached
hereto as Exhibit 99(b). Such Recent Developments presents financial
information regarding the Association at and for the three months ended
September 30, 1998, including a "Management's Discussion and Analysis of Recent
Developments." Upon completion of its conversion, the Association will become
the wholly-owned subsidiary of the Company.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
See Item 1.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
See Item 1.
<PAGE>
FIRST PLACE FINANCIAL CORP.
STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
September 30, June 30,
1998 1998
------------------- -------------------
<S> <C> <C>
Assets............................................ $ -- NA
Liabilities....................................... -- NA
</TABLE>
See accompanying notes to financial statements.
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
For the Three Months For the Three Months
Ended September 30, 1998 Ended September 30, 1997
----------------------------------- -----------------------------------
<S> <C> <C>
Income............................................ $ -- NA
Expenses.......................................... -- NA
Net income................................... -- NA
</TABLE>
See accompanying notes to financial statements.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
For the Three Months Ended September 30, 1998
---------------------------------------------------------------------------------
Additional
Common Stock Paid-In Retained
Capital Earnings Total
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Balance June 30, 1998.................... NA NA NA NA
Balance September 30, 1998............... $ -- $ -- $ -- $ --
</TABLE>
See accompanying notes to financial statements.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Three Months Ended September 30,
------------------------------------------------------
1998 1997
---------------------- ----------------------
<S> <C> <C>
Funds Provided............................................ $ -- NA
Funds Used................................................ -- NA
</TABLE>
See accompanying notes to financial statements.
<PAGE>
FIRST PLACE FINANCIAL CORP.
NOTES TO FINANCIAL STATEMENTS
1. General
First Place Financial Corp. is a recently formed holding company
formed for the purpose of acquiring all of the common stock of First Federal
Savings and Loan Association of Warren concurrent with its conversion from
mutual to stock form of organization. At September 30, 1998, First Place
Financial Corp. was a shell corporation with no business activities and no
assets.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K (Section 249.308 of this Chapter).
Exhibit 27 Financial Data Schedule
Exhibit 99(a) First Place Financial Corp.
Exhibit 99(b) Recent Developments
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST PLACE FINANCIAL CORP.
Date: December 18, 1998 By: /s/ Steven R. Lewis
----------------- -------------------
Steven R. Lewis
President and Chief Executive
Officer
Date: December 18, 1998 By: /s/ Richard K. Smith
----------------- --------------------
Richard K. Smith
Vice President - Treasurer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONSTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FORM
10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE UNAUDITED FINANCIAL
STATEMENTS CONTAINED THEREIN.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 0
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 0
<ALLOWANCE> 0
<TOTAL-ASSETS> 0
<DEPOSITS> 0
<SHORT-TERM> 0
<LIABILITIES-OTHER> 0
<LONG-TERM> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITIES-AND-EQUITY> 0
<INTEREST-LOAN> 0
<INTEREST-INVEST> 0
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 0
<INTEREST-DEPOSIT> 0
<INTEREST-EXPENSE> 0
<INTEREST-INCOME-NET> 0
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 0
<INCOME-PRETAX> 0
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0<F1>
<FN>
<F1>First Place Financial Corp. is a recently formed savings and loan holding
company formed for the purpose of acquiring all of the common stock of First
Federal Savings and Loan Association of Warren concurrent with its conversion
from mutual to stock form of organization. At September 30, 1998, First Place
Financial Corp. was a shell corporation with no business activities and no
assets.
</FN>
</TABLE>
<PAGE>
EXHIBIT 99(A)
FIRST PLACE FINANCIAL CORP.
First Place Financial Corp. is a Delaware corporation recently organized at
the direction of the Board of Directors of the Association for the purpose of
acquiring all of the capital stock of the Association to be issued in the
Conversion. The Company expects to receive approval from the OTS to become a
savings and loan holding company and, upon completion of the Conversion, will be
subject to regulation by the OTS. See "The Conversion-General" and
"Regulation-Holding Company Regulation." Upon consummation of the Conversion,
the Company's assets will primarily include all of the shares of the
Association's capital stock acquired in the Conversion and an amount equal to
50% of the net proceeds of the Conversion, including the loan to the ESOP, and
will have no significant liabilities. The Company intends to use a portion of
the net proceeds it retains to loan to the ESOP funds to enable the ESOP to
purchase up to 8% of the stock issued in connection with the Conversion,
including shares issued to the Foundation. The Company and the Association may,
however, alternatively choose to fund the ESOP through a loan to the ESOP trust
by a third-party financial institution. The management of the Company is set
forth under "Management of the Company." Initially, the Company will neither
own nor lease any property, but will instead use the premises, equipment and
furniture of the Association. At the present time, the Company does not intend
to employ any persons other than certain officers who are currently officers of
the Association but will utilize the support staff of the Association from time
to time. Additional employees will be hired as appropriate to the extent the
Company expands its business in the future.
Management believes that the holding company structure will provide the
Company additional flexibility to diversify its business activities through
existing or newly formed subsidiaries (which subsidiaries could be financial
institutions), or through acquisitions of or mergers with other financial
institutions and financial services related companies. Although there are no
current arrangements, understandings or agreements regarding any such
opportunities, the Company will be in a position after the Conversion, subject
to regulatory limitations and the Company's financial position, to take
advantage of any such acquisition and expansion opportunities that may arise.
The initial activities of the Company are anticipated to be funded by the
proceeds to be retained by the Company, income thereon and through dividends
from the Association.
The Company's executive office is located at the administrative offices of
the Association, 185 East Market Street, Warren, Ohio 44482. Its telephone
number is (330) 373-1221.
<PAGE>
EXHIBIT 99(B)
SUMMARY OF RECENT DEVELOPMENTS
The selected financial and operating data presented below at September 30,
1998 and for the three month periods ended September 30, 1998 and 1997 are
derived from unaudited financial data, but, in the opinion of management reflect
all adjustments (consisting only of normal recurring adjustments) which are
necessary to present fairly the results for such interim periods. The results
of operations for the three months ended September 30, 1998 are not necessarily
indicative of the results of operations that may be expected for the year ended
June 30, 1999.
<TABLE>
<CAPTION>
AT AT
SEPTEMBER 30, 1998 JUNE 30, 1998
------------------ -------------
(IN THOUSANDS)
SELECTED FINANCIAL DATA:
<S> <C> <C>
Total assets.............................................. $628,664 $609,398
Loans receivable, net..................................... 384,856 353,012
Securities available for sale............................. 200,492 211,185
Securities held to maturity............................... 27,039 28,295
Deposits.................................................. 437,382 435,462
Federal Home Loan Bank advances........................... 57,694 44,820
Repurchase agreements..................................... 60,430 60,430
Total retained earnings................................... 61,105 59,357
</TABLE>
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
----------------------------------------
1998 1997
------------------- -------------------
(IN THOUSANDS)
<S> <C> <C>
SELECTED OPERATING DATA:
Total interest income..................................... $11,215 $10,194
Total interest expense.................................... 6,700 6,094
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Net interest income.................................. 4,515 4,100
Provision for loan losses................................. 183 245
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Net interest income after provision
For loan losses................................. 4,332 3,855
Total noninterest income.................................. 458 558
Total noninterest expense................................. 2,900 2,649
------- -------
Income before income tax............................. 1,890 1,764
Provision for income tax.................................. 643 498
------- -------
Net income........................................... $ 1,247 $ 1,266
======= =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
----------------------------------------
1998 1997
------------------- -------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
SELECTED FINANCIAL RATIOS AND OTHER DATA (1):
PERFORMANCE RATIOS:
Return on average assets.................................... 0.81% 0.91%
Return on average retained earnings......................... 8.21 9.14
Average retained earnings to average assets................. 9.86 9.93
Retained earnings to total assets at end of period.......... 9.72 9.74
Net interest rate spread (2)................................ 2.55 2.58
Net interest margin (3)..................................... 3.03 3.04
Average interest-earning assets to
average interest-bearing liabilities................... 110.89 110.45
Total noninterest expense to average assets................. 1.88 1.94
Efficiency ratio (4)........................................ 54.10 53.58
Net interest income to operating expenses................... 155.67 154.76
REGULATORY CAPITAL RATIOS (5):
Tangible capital............................................ 9.43% 9.77%
Core capital................................................ 9.43 9.77
Total risk-based capital.................................... 21.00 23.37
ASSET QUALITY DATA AND RATIOS:
Total nonperforming loans (6)............................... $ 1,289 $ 2,324
Real estate owned, net...................................... - 115
Total nonperforming assets (7).............................. 1,289 2,439
Allowance for loan losses................................... 3,143 1,841
Nonperforming loans as a percent of total loans (6)(8)...... 0.33% 0.66%
Nonperforming assets as a percent of total assets (7)....... 0.21 0.40
Allowance for loan losses as a percent of loans (8)......... 0.81 0.52
Allowance for loan losses as a percent of
Nonperforming loans (6).................................. 243.83 79.22
</TABLE>
__________
(1) Asset Quality Ratios and Regulatory Capital ratios are end of period
ratios. With the exception of end of period ratios, all ratios are based
on average daily balances during the indicated periods and are annualized
where appropriate.
(2) The net interest rate spread represents the difference between the weighted
average yield on average interest-earning assets and the weighted average
cost of average interest-earning liabilities.
(3) The net interest margin represents net interest income as a percent of
average interest-earning assets.
(4) The efficiency ratio represents the ratio of noninterest expense divided by
the sum of net interest income and noninterest income, net of security
gains.
(5) For definitions and further information relating to the Association's
regulatory capital requirements, see "Regulation-Federal Savings
Institution Regulation-Capital Requirements." See "Regulatory Capital
Compliance" for the Association's pro forma capital levels as a result of
the Offerings.
(6) Nonperforming loans consist of all non-accrual loans and all other loans 90
days or more past due. It is the Association's policy to generally cease
accruing interest on all loans 90 days or more past due when, in
management's opinion, the collection of all or a portion of the loan
principal has become doubtful. See "Business of the Association-Delinquent
Loans, Classified Assets and Real Estate Owned."
(7) Nonperforming assets consist of nonperforming loans and REO.
(8) Loans represent loans receivable, net, excluding the allowance for loan
losses.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RECENT DEVELOPMENTS
COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30, 1998 AND JUNE 30, 1998
Total assets at September 30, 1998 were $628.7 million compared to $609.4
million at June 30, 1998, an increase of $19.3 million. The primary factor in
this increase was a $31.9 million increase in loans receivable, net from $353.0
million at June 30, 1998 to $384.9 million at September 30, 1998, due primarily
to expansion into Mahoning County, and was partially offset by a $10.7 million
decrease in securities available for sale from $211.2 million at June 30, 1998
to $200.5 million at September 30, 1998 as a result of funding loan growth with
proceeds from maturing securities and principal repayments.
Total deposits of the Association increased by $1.9 million from $435.5
million at June 30, 1998 to $437.4 million at September 30, 1998 due principally
to an increase in NOW accounts as a result of the expansion into Mahoning
County. Federal Home Loan Bank ("FHLB") advances increased by $12.9 million
from $44.8 million at June 30, 1998 to $57.7 million at September 30, 1998. The
Association used the new advances to fund loan growth during the three months
ended September 30, 1998.
Total retained earnings at September 30, 1998 were $61.1 million compared
to $59.4 million at June 30, 1998, an increase of $1.7 million, or 2.9%, due to
net earnings of $1.2 million for the three months ended September 30, 1998 and a
$500,000 increase in the value of securities available for sale, net of tax.
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998
AND SEPTEMBER 30, 1997
General. Net income for the three months ended September 30, 1998 was
$1.25 million compared to $1.27 million for the three months ended September 30,
1997. Net interest income increased $415,000 or 10.1% for the three months
ended September 30, 1998 compared to the same period in 1997, due to the
increase in the average balance of interest-earning assets and the change in the
composition of assets and liabilities.
Average interest-earning assets for the three months ended September 30,
1998 increased 10.9% to $605.2 million, due primarily to loan growth by
expansion into Mahoning County, and average interest-bearing liabilities
increased 10.4% to $545.7 million compared to the three months ended September
30, 1997 as a result of increased average deposits and borrowings used to fund
the loan growth. The net interest margin decreased only one basis point from
3.04% for the three months ended September 30, 1997 to 3.03% for the three
months ended September 30, 1998. The growth in net interest income during the
three months ended September 30, 1998 compared to the same period in 1997 was
the result of growth in interest-earning assets.
Noninterest income for the three months ended September 30, 1998 decreased
$100,000, due to the sale of debt securities during the same period in 1997.
Noninterest expense increased $251,000 in the three months ended September 30,
1998 from the three months ended September 30, 1997, attributable to the
increase in salaries and wages and other operating expenses.
Interest Income. Interest income for the three months ended September 30,
1998 was $11.2 million compared to $10.2 million for the three months ended
September 30, 1997, an increase of $1.0 million or 10%. The increase in
interest income was primarily the result of growth in average interest-earning
assets from $546.2 million for the three months ended September 30, 1997 to
$605.2 million for the three months ended September 30, 1998. The yield on
interest-earning assets for the three months ended September 30, 1998 decreased
to 7.40% as compared to 7.46% for the same period in 1997, which partially
offset the increase in interest income due to volume.
Interest Expense. Interest expense for the three months ended September
30, 1998 was $6.7 million as compared to $6.1 million for the three months ended
September 30, 1997, an increase of $606,000 or 9.9%. The increase in interest
expense was primarily the result of growth in average interest-bearing
liabilities from $494.5 million for the three months ended September 30, 1997 to
$545.7 million for the three months ended September 30, 1998. The yield on
interest-bearing liabilities for the three months ended September 30, 1998
decreased to 4.86%
<PAGE>
compared to 4.88% for the same period in 1997, which partially offset the
increase in interest expense due to volume.
Provision for Loan Losses. The Association's provision for loan losses for
the three months ended September 30, 1998 was $183,000, compared to $245,000 for
the three months ended September 30, 1997. The amount of the provision for loan
losses is based upon management's periodic analysis of the adequacy of the
allowance for loan losses. The change in the provision for loan losses is due
to a decrease in the level of charge-offs for the three months ended September
30, 1998 compared to the same period in 1997. Charge-offs reduce the amount of
loan loss allowance recorded on the balance sheet and generally necessitate that
the Association set aside additional funds to replace the allowance through the
loan loss provision.
Noninterest Income. Noninterest income for the three months ended
September 30, 1998 was $458,000 compared to $558,000 for the three months ended
September 30, 1997, a decrease of $100,000, or 17.9%. The Association sold debt
securities and recorded a $100,000 gain on sale for the three months ended
September 30, 1997. No securities were sold during the three months ended
September 30, 1998.
Noninterest Expense. Noninterest expense was $2.9 million for the three
months ended September 30, 1998 compared to $2.6 million for the three months
ended September 30, 1997, a $300,000, or 9.5%, increase. Compensation and
benefits expense increased to $1.5 million for the three months ended September
30, 1998 compared to $1.4 million for the three months ended September 30, 1997,
a $100,000, or 7.1% increase. The increase was due to the addition of
approximately twelve full-time equivalent employees over the year, in part to
implement the expansion into Mahoning County. The employees were added to
facilitate the loan production process as evidenced by the 29% increase in loan
volume for the three months ended September 30, 1998 as compared to the three
months ended September 30, 1997. Other operating expenses increased to $608,000
for the three months ended September 30, 1998 compared to $420,000 for the same
period in 1997, an increase of $188,000 or 44.8%. $110,000 of the increase in
other operating expenses is related to an advertising and promotional campaign
targeting customers of competing institutions, as well as stationery and
supplies expenditures. The Association purchases its stationery and other
supplies in bulk in amounts that are expected to last four to six months;
therefore, such expenses are not regularly incurred on a quarterly basis.
Income Taxes. Income taxes for the three months ended September 30, 1998
were $643,000 compared to $498,000 for the three months ended September 30,
1997, an increase of $145,000 or 29.1%.
