<PAGE>
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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: MARCH 31, 1998
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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 0-25956
FIRST PLACE FINANCIAL CORPORATION
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(Exact name of registrant as specified in its charter)
New Mexico 85-0317365
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(State or other jurisdiction of (I.R.S) Employer
incorporation or organization) Identification No.
100 East Broadway
Farmington, New Mexico 87401
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(Address, including ZIP Code, or registrant's executive offices)
(505) 324-9500
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former fiscal year,
if changed 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, and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Outstanding at
Class April 27, 1998
- --------------------------- --------------
Common shares, no par value 2,159,422
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<PAGE>
FIRST PLACE FINANCIAL CORPORATION
FORM 10Q
INDEX
PAGE
PART I. FINANCIAL INFORMATION NUMBER
------
Item 1. Financial Statements:
Consolidated Balance Sheets at March 31, 1998,
December 31, 1997 and March 31, 1997 3
Consolidated Statements of Income for the three months ended
March 31, 1998 and 1997 4
Consolidated Statements of Changes in Stockholders' Equity
for the three months ended March 31, 1998 and 1997 and
year-ended December 31, 1997 5
Consolidated Statements of Cash Flows for the three months ended
March 31, 1998 and 1997 7
Notes to the Consolidated Financial Statements 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11
Item 3. Quantitative and Qualitative Disclosures About Market Risk 16
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 17
SIGNATURES 18
<PAGE>
FIRST PLACE FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(in thousands)
-------------------------------------
March 31, December 31, March 31,
1998 1997 1997
ASSETS (Unaudited) (Unaudited)
----------- ------------ -----------
<S> <C> <C> <C>
Cash and due from banks $122,849 $ 79,579 $ 48,536
Interest-bearing deposits in banks 24,793 17,052 6,973
Federal funds sold 2,090 250 3,076
-------- -------- --------
Total cash and cash equivalents 149,732 96,881 58,585
-------- -------- --------
Investment securities:
Available for sale (at market value) 269,909 279,559 261,231
-------- -------- --------
Loans 478,331 491,961 472,763
Allowance for loan losses (9,169) (8,722) (8,593)
-------- -------- --------
Total net loans 469,162 483,239 464,170
-------- -------- --------
Bank premises and equipment, net 19,106 17,510 16,463
Other real estate owned 1,330 1,119 1,558
Other assets 18,602 19,652 18,671
-------- -------- --------
Total Assets $927,841 $897,960 $820,678
-------- -------- --------
-------- -------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand $144,760 $130,501 $ 95,733
Interest-bearing demand 118,424 110,145 104,575
Savings and money market accounts 110,704 102,707 114,421
Time certificates, $100,000 and over 146,569 153,774 161,349
Other time certificates 107,855 111,619 119,620
-------- -------- --------
Total deposits 628,312 608,746 595,698
Securities sold under agreements to repurchase 70,824 82,507 70,062
Federal funds purchased 56,814 34,845 11,855
Other short-term borrowings --- 500 ---
Federal Home Loan Banks and other notes payable 90,359 88,416 67,556
Other liabilities 8,431 11,115 9,607
-------- -------- --------
Total liabilities 854,740 826,129 754,778
-------- -------- --------
Stockholder's equity:
Common stock, no par value.
Authorized shares - 5,000,000;
issued and outstanding shares - 2,159,422 at 3/31/98;
2,149,497 at 12/31/97; 2,135,172 at 3/31/97 14,519 14,364 13,955
Additional paid-in capital 587 406 124
Net unrealized holding gain on securities
available-for-sale 1,833 1,775 242
Retained earnings 56,162 55,286 51,579
-------- -------- --------
Total stockholders' equity 73,101 71,831 65,900
-------- -------- --------
Total Liabilities and Stockholders' Equity $927,841 $897,960 $820,678
-------- -------- --------
-------- -------- --------
</TABLE>
See notes to consolidated financial statements
3
<PAGE>
FIRST PLACE FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
(in thousands, except per share data)
-------------------------------------
Three Months Ended
March 31,
---------------------------
1998 1997
-------- --------
<S> <C> <C>
Interest income:
Loans, including fees $ 11,623 $ 11,384
Investment securities:
Taxable 3,245 2,852
Tax-exempt 775 761
Interest-bearing deposits 242 77
Federal funds sold 68 49
-------- --------
Total interest income 15,953 15,123
-------- --------
Interest expense:
Time deposits $100,000 and over 2,255 2,379
Other deposits 3,490 3,491
Short-term borrowings 1,457 1,011
Other borrowings 1,301 928
-------- --------
Total interest expense 8,503 7,809
-------- --------
Net interest income 7,450 7,314
Provision for loan losses 565 330
-------- --------
Net interest income after provision
for loan losses 6,885 6,984
-------- --------
Other income:
Service charges on deposit accounts 675 634
Other service charges and fees 340 321
Investment securities gains 3 ---
Other operating income 110 88
-------- --------
Total other income 1,128 1,043
-------- --------
Other expense:
Salaries and employee benefits 3,187 2,673
Occupancy expenses, net 512 547
Other operating expenses 2,105 1,693
-------- --------
Total other expenses 5,804 4,913
-------- --------
Income before income taxes 2,209 3,114
Income taxes 524 816
-------- --------
Net Income $ 1,685 $ 2,298
-------- --------
-------- --------
Earnings per common share:
Basic $ 0.78 $ 1.08
Diluted $ 0.77 $ 1.06
</TABLE>
See notes to consolidated financial statements
4
<PAGE>
FIRST PLACE FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
(in thousands)
--------------------------------------
Three Months Ended
March 31,
--------------------------------------
1998 1997
----------------- -----------------
<S> <C> <C> <C> <C>
Retained earnings:
Balance at beginning of year $55,286 $50,035
Net income 1,685 $1,685 2,298 $2,298
Cash dividends declared (809) (754)
------- -------
Balance at end of period 56,162 51,579
------- -------
Accumulated other comphrensive income:
Balance at beginning of year 1,775 967
Unrealized gains (losses) on securities
net of reclassification adjustment 58 58 (725) (725)
------ ------
Comprehensive income $1,743 $1,573
------ ------
------ ------
------- -------
Balance at end of period 1,833 242
------- -------
Common stock:
Balance at beginning of year 14,364 13,634
Issuance of new common stock 343 321
Retirement of common stock (188) ---
------- -------
Balance at end of period 14,519 13,955
------- -------
Additional paid-in capital:
Balance at beginning of year 406 124
Additions related to sale of common stock 181 ---
------- -------
Balance at end of period 587 124
------- -------
Total stockholders' equity $73,101 $65,900
------- -------
------- -------
Disclosure of reclassification amount:
Unrealized holding gains (losses)
arising during period $ 55 $ (725)
Less: reclassification adjustment for gains
included in net income --- ---
Plus: reclassification adjustment for losses
included in net income 3 ---
------ ------
Net unrealized gains (losses) on securities $ 58 $ (725)
------ ------
------ ------
</TABLE>
5
<PAGE>
FIRST PLACE FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Year Ended December 31, 1997
<TABLE>
<CAPTION>
1997
----------------------
<S> <C> <C>
Retained earnings:
Balance at beginning of year $50,035
Net income 9,094 $9,094
Cash dividends declared (3,843)
-------
Balance at end of period 55,286
-------
Accumulated other comphrensive income:
Balance at beginning of year 967
Unrealized gains on securities
net of reclassification adjustment 808 808
------
Comprehensive income $9,902
------
------
-------
Balance at end of period 1,775
-------
Common stock:
Balance at beginning of year 13,634
Issuance of new common stock 730
Retirement of common stock ---
-------
Balance at end of period 14,364
-------
Additional paid-in capital:
Balance at beginning of year 124
Additions related to sale of common stock 282
-------
Balance at end of period 406
-------
Total stockholders' equity $71,831
-------
-------
Disclosure of reclassification amount:
Unrealized holding gains arising during period $ 748
Less: reclassification adjustment for gains
included in net income ---
Plus: reclassification adjustment for losses
included in net income 60
------
Net unrealized gains on securities $ 808
------
------
</TABLE>
6
<PAGE>
FIRST PLACE FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
(in thousands)
Three Months Ended
March 31
--------------------
1998 1997
-------- --------
<S> <C> <C>
Cash flow from operating activities:
Net income $ 1,685 $ 2,298
Adjustments to reconcile net income
to net cash provided by operations:
Amortization (80) (81)
Depreciation 411 359
Provision for loan losses 565 330
Decrease in other assets 48 349
Decrease in other liabilities (1,748) (966)
Gain on sale of property, plant
and equipment --- (13)
Gain on sale of other real estate (7) (22)
Writedown of other real estate 50 ---
Gain on sale of available-for-sale
securities (3) ---
Provision for deferred income taxes 796 215
-------- --------
Net cash from operating activities 1,717 2,469
-------- --------
Cash flows from investing activities:
Proceeds from sales of available-
for-sale securities 1,000 ---
Proceeds from maturities of available-
for-sale securities 20,725 24,156
Purchases of available-for-sale
securities (11,874) (41,704)
Net change in loans 13,246 (5,308)
Proceeds from the sale of bank premises
and equipment 35 16
Proceeds from sale of other real estate 12 238
Purchase of bank premises and equipment (2,041) (600)
-------- --------
Net cash from investing activities 21,103 (23,202)
-------- --------
Cash flows from financing activities:
Net change in deposit accounts 30,536 10,694
Net change in certificates of deposit (10,969) (2,888)
Net change in securities sold under
agreements to repurchase (11,683) 1,323
Net change in federal funds purchased 21,469 (3,930)
Proceeds from Federal Home Loan Bank
advances 3,037 16,832
Payments on Federal Home Loan Bank
advances (1,984) (1,539)
Net change in other notes payable 890 242
Cash dividends paid (1,601) (1,450)
Proceeds from issuance of common stock 336 321
-------- --------
Net cash from financing activities 30,031 19,605
-------- --------
Net increase (decrease) in cash and cash
equivalents 52,851 (1,128)
Cash and cash equivalents at beginning of
period 96,881 59,713
-------- --------
Cash and cash equivalents at end of period $149,732 $ 58,585
-------- --------
-------- --------
</TABLE>
See notes to consolidated financial statements
7
<PAGE>
FIRST PLACE FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
<TABLE>
<S> <C> <C>
Supplemental Disclosure of Cash Flow Information:
Cash paid during period for:
Interest 8,522 7,687
Taxes --- 726
Non-cash assets acquired through foreclosure 266 17
</TABLE>
8
<PAGE>
FIRST PLACE FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED STATEMENTS
NOTE 1 - PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of First Place
Financial Corporation and its subsidiaries. Significant intercompany
accounts and transactions have been eliminated in consolidation.
The information contained in the financial statements for March 31, 1998
and March 31, 1997, was unaudited. In the opinion of management, all
adjustments necessary for a fair presentation of the results have been
made. Certain prior year amounts are reclassified to conform to current
year classifications.
NOTE 2 - RECONCILIATION OF EARNINGS PER SHARE
The following is the reconciliation of the numerator and denominator of the
basic and diluted earnings per common share computations:
Basic and Diluted EPS
(in thousands, except per share data)
<TABLE>
<CAPTION>
At March 31 1998 1997
------------------------------------ ------------------------------------
Income Shares Per-Share Income Shares Per-Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- --------- ----------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS:
Income available to
common stockholders $1,685 2,156,841 $.78 $2,298 2,130,818 $1.08
----- -----
----- -----
Effect of dilutive
securities-options --- 37,416 --- 42,348
------ --------- ------ ---------
Diluted EPS:
Income available to
common stockholders $1,685 2,194,257 $.77 $2,298 2,173,166 $1.06
------ --------- ---- ------ --------- -----
------ --------- ---- ------ --------- -----
</TABLE>
NOTE 3 - REPORTING COMPREHENSIVE INCOME
In June, 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 130, REPORTING
COMPREHENSIVE INCOME. SFAS No. 130 requires disclosure in the financial
statements of comprehensive income that encompasses earnings and those
items currently required to be reported directly in the equity section of
the balance sheet, such as unrealized gains and losses on available-for-
sale securities. The Consolidated Statements of Changes in Stockholders'
Equity include the disclosure of comprehensive income.
9
<PAGE>
NOTE 4 - DISCLOSURE ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED
INFORMATION
In June, 1997, the FASB issued SFAS No. 131, DISCLOSURE ABOUT SEGMENTS OF
AN ENTERPRISE AND RELATED INFORMATION. SFAS No. 131 requires disclosures
about segments of an enterprise and related information about the different
types of business activities in which an enterprise engages and the
different economic environments in which it operates. The Company operates
in a limited geographic area and reports its business activities on a
consolidated basis. The Consolidated Balance Sheets and Consolidated
Statements of Income are on pages 3 and 4, respectively.
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
This management discussion and analysis of financial condition should be read in
conjunction with the consolidated financial statements and accompanying notes
and Form 10-K for the year-ended December 31, 1997.
Words or phrases when used in this Form 10-Q or other filings with the
Securities and Exchange Commission, such as "does not expect" and "are expected
to", or similar expressions are intended to identify "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995.
Various factors such as, national and regional economic conditions, changes in
market interest rates, credit and other risks of lending and investment
activities, and competitive and regulatory factors, could affect First Place
Financial Corporation and its subsidiaries' financial performance and could
cause actual results for future periods to differ from those anticipated.
OVERVIEW
First Place Financial Corporation ("First Place") and its wholly owned
subsidiaries, First National Bank of Farmington, New Mexico ("FNBF"), Burns
National Bank of Durango, Colorado ("BNBD"), and Western Bank, Gallup, New
Mexico ("WBG") (collectively, the "Subsidiary Banks") combined operations (the
"Company") recorded, for the first three months of 1998, net income of
$1,685,000, compared to net income of $2,298,000 for the first three months of
1997. Basic and diluted earnings per share (EPS) were $.78 and $.77,
respectively for the three months ended March 31, 1998 compared to $1.08 and
$1.06, respectively for the same period a year ago. The net income for the
first three months of 1998 decreased $613,000 from net income reported for the
first three months of 1997 due to the net result of net interest income
increasing $136,000, other income increasing $85,000 and taxes decreasing
$292,000, offset by increases in the provision for loan losses of $235,000 and
other expenses increasing $891,000.
On an annualized basis, the return on average assets for the first three months
of 1998 was .77 percent and the return on average assets for the first three
months of 1997 was 1.16 percent. On an annualized basis, the return on average
equity for the three months of 1998 was 9.38 percent compared to 14.09 percent
for the same period a year ago. For the year ended December 31, 1997, the
return on average assets and the return on average equity were 1.09 percent and
13.32 percent, respectively.
11
<PAGE>
NET INTEREST INCOME
Interest income for the quarter ended March 31, 1998, was $15,953,000, a 5.5
percent increase over the $15,123,000 recorded for the first quarter of 1997.
Total interest earning assets averaged $789,928,000, up $54,055,000 from the
average earning assets of $735,873,000 for the quarter ended March 31, 1997.
This increase was primarily due to the $16,119,000 increase in average loans,
the increase in average interest-bearing deposits in banks of $12,522,000 and
the $24,520,000 increase in average securities. These increases were 3.4
percent, 229.0 percent and 9.7 percent, respectively. The average yield on
earning assets for the first quarter of 1998 was 8.44 percent, compared to 8.43
percent for the like period a year ago.
Interest expense for the quarter ended March 31, 1998, was $8,503,000 an 8.9
percent increase compared to $7,809,000 for the quarter ended March 31, 1997.
Average interest-bearing liabilities were $689,100,000 for the first quarter of
1998, a 7.5 percent increase from the average interest-bearing liabilities of
$641,225,000 for the first quarter of 1997. The average rate paid on these
liabilities for the first quarter of 1998 was 4.99 percent compared to 4.87
percent paid for the same period a year ago.
Net interest income increased $136,000 for the first three months of 1998
compared to the first three months of 1997. Net interest margin, on a fully
tax-equivalent basis, which is net interest income expressed as a percent of
total average earning assets for the first quarter of 1998, was 4.07 percent,
down from 4.18 percent a year ago. Average interest-bearing liabilities were
87.2 percent of average earning assets for the first quarter of 1998, compared
to 87.1 percent for the same period a year ago.
OTHER INCOME
The Company recorded for the first three months of 1998 other income of
$1,128,000, up $85,000 from the $1,043,000 recorded in the first three months of
1997. Correspondent bank service charges increased $50,000 due to increases in
correspondent bank accounts and activity.
OTHER EXPENSES
Other expenses for the three months ended March 31, 1998 were $5,804,000, up
$891,000 from the $4,913,000 recorded for the same period a year ago. This
increase was primarily due to increases in salaries and benefits of $514,000,
data processing expenses of $90,000 and supplies of $100,000. Salaries and
benefits increased primarily due to normal salary increases and a higher level
of full-time equivalent employees added to support asset growth and four staff
members for Capital Bank, a de novo bank to be opened in Albuquerque, New
Mexico. Final approval from the FDIC for Capital Bank is expected at any time.
The increases in data processing expenses and supplies were primarily due to
technical enhancements. The most significant enhancements were digital check
and statement imaging, local and wide-area networks and an improved voice
response system.
12
<PAGE>
INCOME TAXES
The income tax expense for the first three months of 1998 was $524,000, down
$292,000 from $816,000 recorded for the first quarter of 1997. The effective
tax rates for the first quarter of 1998 and 1997 were 24 percent and 26 percent,
respectively
BALANCE SHEET REVIEW
Average total assets were $890,816,000 for the first three months of 1998
compared to $804,068,000 for the first three months of 1997. Period-end assets
were $927,841,000, $897,960,000 and $820,678,000 at March 31, 1998, December 31,
1997, and March 31, 1997, respectively.
Cash and due from banks at March 31, 1998 was $122,849,000 compared to
$48,536,000 reported for the same period a year ago. This increase of
$74,313,000 was primarily due from bank balances which increased $56,513,000
from March 31, 1997 to March 31, 1998. The due from bank balances have
increased due to increased check processing for correspondent banks; however,
these balances were unusually high as of March 31, 1998. The average cash and
due from banks during the first quarter of 1998 was $72,737,000 compared to
$40,908,000 average during the first quarter of 1997 and $49,572,000 average for
the year ended December 31, 1997.
Available-for-sale securities at March 31, 1998 were $269,909,000 an increase of
$8,678,000 from $261,231,000 reported for March 31, 1997. This increase was
primarily in taxable securities.
Interest-bearing deposits in banks, which consist of balances maintained at
Federal Home Loan Banks increased from $6,973,000 at March 31, 1997 to
$24,793,000 at March 31, 1998. The Company deposits excess funds into Federal
Home Loan Banks in lieu of selling the funds in the federal funds market.
Loans increased $5,568,000 to $478,331,000 at March 31, 1998, from $472,763,000
at March 31, 1997. Loans at March 31, 1998, decreased $13,630,000 from December
31, 1997. This decrease was in the commercial and consumer categories and was
offset somewhat by increases in the residential real estate category. The
$13,630,000 decrease was primarily attributed to payoffs of several large loans
due to customers obtaining alternative long-term financing, early payoffs due to
corporate acquisitions and a reduction in indirect consumer loans. Management
is actively working on expanding the Company's customer base which should
provide additional lending opportunities.
Total deposits of $628,312,000 at March 31, 1998, increased $19,566,000 and
$32,614,000 from December 31, 1997 and March 31, 1997, respectively.
Noninterest-bearing deposits of $144,760,000 at March 31, 1998, increased
$49,027,000 from the $95,733,000 reported at March 31, 1997. This increase was
primarily in correspondent bank deposit balances. The correspondent bank
balances increased due to expansion of the Company's check processing business.
13
<PAGE>
Securities sold under agreements to repurchase as of March 31, 1998, were
$70,824,000 compared to $82,507,000 as of December 31, 1997 and $70,062,000 as
of March 31, 1997. Federal funds purchased were $56,814,000 as of March 31,
1998, compared to $34,845,000 as of December 31, 1997, and $11,855,000 as of
March 31, 1997. Federal Home Loan Bank advances and other notes payable were
$90,359,000 as of March 31, 1998, compared to $88,416,000 as of December 31,
1997, and $67,556,000 at March 31, 1997. The $22,803,000 increase from March
31, 1997 compared to March 31, 1998 was used to "match-fund" 15-year fixed rate
residential mortgage loans with long-term fixed rate borrowings; arbitrage
opportunities by investing the funds in taxable securities and for short-term
funding. Advances taken during the first quarter of 1998 in the amount of
$3,000,000 were used to match fund a commercial loan.
ASSET QUALITY
Nonperforming loans and other real estate owned ("OREO") and other foreclosed
assets are presented in the following table:
<TABLE>
<CAPTION>
(in thousands)
March 31, December 31, March 31,
1998 1997 1997
--------- ------------ ---------
<S> <C> <C> <C>
Nonaccrual loans $ 5,492 $5,078 $1,932
Accruing loans past due 90 days or more 2,677 227 280
Restructured loans (in compliance with
modified terms) 3,107 29 ---
OREO and other foreclosed assets 1,570 1,421 1,709
------- ------ ------
Total nonperforming assets $12,846 $6,755 $3,921
------- ------ ------
------- ------ ------
</TABLE>
The $2,450,000 increase from December 31, 1997 to March 31, 1998 in accruing
loans 90 days or more past due was primarily due to one large loan.
Restructured loans increased $3,078,000 from December 31, 1997 to March 31,
1998. This increase was primarily attributed to a specific loan.
14
<PAGE>
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses is presented in the following table:
<TABLE>
<CAPTION>
March 31, December 31, March 31,
1998 1997 1997
--------- ------------ ---------
<S> <C> <C> <C>
Beginning balance $8,722 $ 8,933 $8,933
Provision charged to expense 565 2,245 330
Recoveries on loans previously
charged-off 306 1,086 287
Loans charged-off (424) (3,542) (957)
------ ------- ------
Balance $9,169 $ 8,722 $8,593
------ ------- ------
------ ------- ------
</TABLE>
The Company considered the allowance for loan losses at March 31, 1998, to be
adequate to absorb known risks in the loan portfolio. Year-to-date loan
charge-offs were .09 percent of loans outstanding at March 31, 1998, compared
to .20 percent at March 31, 1997. The $533,000 decrease in gross charge-offs
was primarily in commercial loans.
LIQUIDITY
The Company maintains an adequate liquidity position through stable deposits,
the prudent usage of debt, and from a high quality securities portfolio.
Other sources of liquidity are provided by federal funds purchased, securities
sold under repurchase agreements, borrowings from Federal Home Loan Banks and
access to the Federal Reserve for short term liquidity needs. The Company has
increased its federal funds lines of credit by $25,000,000 from a year ago
bringing the total of such lines to $78,000,000 as of March 31, 1998. The ratio
of loans to deposits, which is a measure of liquidity, was 76.1 percent at
quarter end compared to 80.8 percent and 79.4 percent at December 31, 1997, and
March 31, 1997, respectively.
While the above-mentioned sources of liquidity are expected to continue to
provide significant amounts of funds in the future, their mix, as well as the
possible use of other sources, will depend upon future economic and market
conditions.
ASSET/LIABILITY MANAGEMENT
The Subsidiary Banks' Asset Liability Management Committees ("ALCO") are
responsible for the identification, assessment and management of the liquidity
and interest rate risk of the respective subsidiary banks. The ALCO has focused
on maintaining acceptable liquidity levels and maintaining a position of minimal
interest rate risk exposure with an emphasis on deposit gathering, nondeposit
options and taking advantage of lending opportunities.
15
<PAGE>
STOCKHOLDERS' EQUITY AND CAPITAL ADEQUACY
The subsidiary banks each exceeded regulatory requirements for "well
capitalized" status as of March 31, 1998. The Company's risk-based capital
ratios at March 31, 1998, were:
Tier 1 capital (regulatory minimum = 4.00% or above) was 12.33 percent
compared to 12.00 percent at year end.
Total capital (regulatory minimum = 8.00% or above) was 13.59 percent
compared to 13.25 percent at year end.
Leverage ratio (regulatory minimum = 4.00% or above) was 7.92 percent
compared to 7.92 percent at year end.
Stockholders' equity increased 10.9 percent to $73,101,000 from a year ago and
was up $1,270,000 from year-end 1997. This growth was primarily due to earnings
retention. The ratio of stockholders' equity to total assets was 7.88 percent
at March 31, 1998, down from 8.00 percent and 8.03 percent at December 31, 1997,
and March 31, 1997, respectively.
YEAR 2000 COMPLIANCE PLAN
Many computer applications do not have the capability of recognizing the year
2000 as existing programs and hardware configurations use only two digits to
identify a year in the date field. The Company is seriously committed to
addressing the year 2000 issue and is currently on schedule for assuring Year
2000 compliance for all significant applications. There have been no material
expenditures for Year 2000 compliance.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
There have been no material changes in the Company's interest rate risk position
since December 31, 1997.
16
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 3 (i). Articles of Incorporation of Registrant*
Exhibit 3 (ii). Bylaws of Registrant*
Exhibit 27. Financial Data Schedule
(b) Reports on Form 8-K
(1) Report dated December 22, 1997, announcing that FNBF had
filed an application with the Office of the Comptroller of
the Currency to establish a branch bank in Kirtland, New
Mexico.
(2) Report dated January 26, 1998, regarding the Company's
results for the year ended December 31, 1997, and reporting
the quarterly dividend payable February 1, 1998.
(3) Report dated April 23, 1998 regarding press release
announcing first quarter 1998 earnings and quarterly
dividend and the first quarter 1998 shareholder letter.
- --------------------
*Incorporated by reference from Exhibits to the Registrant's Registration
Statement on Form S-4, dated April 18, 1995, Registration No. 33-91310.
17
<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 CORPORATION
(Registrant)
Date: May 8, 1998 James D. Rose
----------------- -------------------------------------
James D. Rose
President and Chief Operating Officer
18
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<PAGE>
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<S> <C> <C> <C> <C>
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0 0 0 0
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<FN>
<F1>Long-term and other notes payable
<F2>Basic EPS
<F3>Includes 302 due to WBG merger
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0
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<F1>Long-term and other notes payable
<F2>Basic EPS
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<S> <C>
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0
0
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<FN>
<F1>Long-term and other notes payable
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</FN>
</TABLE>
