WARREN, Ohio, Oct. 17 /PRNewswire-FirstCall/ -- First Place Financial
Corp. (Nasdaq: FPFC) reported record net income of $7.0 million for the
quarter ended September 30, 2006, compared with $6.2 million for the quarter
ended September 30, 2005, an increase of 13.5%. The increase was primarily
attributable to earnings from and gains from the sale of assets acquired as
part of the acquisition of The Northern Savings & Loan Company on June 27,
2006. Diluted earnings per share were $0.41 for the current quarter compared
with $0.42 for the same quarter in the prior year, a decrease of $0.01 or
2.4%. First Place issued 2.3 million shares of common stock as a portion of
the purchase price of Northern Savings and currently has 17.5 million shares
outstanding. Return on average equity for the current quarter was 8.78%
compared with 10.23% for the same quarter in the prior year. Return on
average tangible equity for the current quarter was 13.13% compared with
14.46% for the same quarter in the prior year.
Net income for the three months ended September 30, 2006, of $7.0 million
increased $2.5 million or 55.4% compared with $4.5 million for the preceding
quarter ended June 30, 2006. Diluted earnings per share for the current
quarter of $0.41 increased $0.11 from $0.30 for the preceding quarter, an
increase of 36.7%. Return on average assets of 0.90% and return on average
equity of 8.78% for the current quarter also compared favorably with 0.67% and
7.02% for the preceding quarter. The primary reason for the improvements in
the current quarter compared with the preceding quarter was $2.2 million of
merger charges recognized in the quarter ended June 30, 2006, which reduced
after tax net income by $1.4 million. The merger charges reduced diluted
earnings per share by $0.10 during the fourth quarter of fiscal 2006.
Core earnings are a supplementary financial measure computed using methods
other than generally accepted accounting principles (GAAP) that excludes
certain unusual or nonrecurring items of revenue or expense. Core earnings in
the current quarter were equal to GAAP earnings. Core earnings in the
preceding quarter do not include the $1.4 million of after tax charges for
merger costs.
Core earnings for the quarter ended September 30, 2006, were $7.0 million
compared with $5.9 million for the preceding quarter or an increase of 18.3%.
Core diluted earnings per share were $0.41 for the current quarter compared
with $0.40 for the preceding quarter, an increase of 2.5%. Core return on
average assets for the current quarter was 0.90% and core return on average
equity was 8.78% for the current quarter compared with 0.88% and 9.22%,
respectively for the comparable core measures in the preceding quarter. For
additional information on core earnings, see the Explanation of Certain Non-
GAAP Measures on page four of this release and the Reconciliation of Net
Income to Core Earnings on page eight.
Commenting on these results, Steven R. Lewis, President and CEO, stated,
"We are pleased to announce another quarter of record earnings. This was
possible due to the recent acquisition of Northern Savings. As the interest
rate curve has become more inverted over the last three months it has become
more difficult than ever to continue to increase earnings per share. I am
proud to say that we have resisted the temptation to increase earnings by
taking on additional credit risk or interest rate risk or reducing our loan
loss allowances. This conservative path should bode well for the long-term
financial future of First Place."
Revenue
Net interest income for the first quarter of fiscal 2007 was $22.7
million, an increase of 17.0% over the first quarter of fiscal 2006. This
increase was the result of the benefit of a 21.7% increase in average earning
assets from the first quarter of fiscal 2007 compared with the first quarter
of fiscal 2006 partially offset by a decline in the net interest margin to
3.24% from 3.35% over the same periods. The net interest margin for the
current quarter is down .05% from 3.29% from the fourth quarter of fiscal
2006. The increase in the inversion of the yield curve during the current
quarter has put downward pressure on the net interest margin.
Noninterest income for the first quarter of fiscal 2007 was $7.9 million,
an increase of $1.0 million or 14.6% over the same period in the prior year.
While each component of noninterest income shown in the consolidated statement
of income increased over the prior year period, the largest increases were
$0.3 million in other income -- nonbank, $0.2 million in net gains on sale of
loans and $0.2 million in service charges. The growth in nonbank income was
due to growth in commission income in First Place's investment, insurance and
real estate brokerage affiliates.
Net gains on sale of loans were $2.1 million for the quarter ended
September 30, 2006, a $0.2 million or 11.9% increase from a gain of $1.9
million for the quarter ended September 30, 2005. The volume of loans sold in
the current quarter of $320 million was nearly the same as the $321 million of
loans sold in the same quarter in the prior year. The volume of loans sold in
the current quarter was up $112 million or 53.8% from the volume of loans sold
in the preceding quarter. Steve Lewis explained, "Our normal volume of loan
sales was supplemented this quarter by loans that we classified as held for
sale when they were acquired as part of the Northern Savings acquisition.
While those loans would have provided additional current income, they were all
fixed rate loans and holding them would have increased our exposure to
declining net interest income if interest rates remained at current levels or
increased. Therefore, we elected to sell the loans to maintain our interest
rate risk profile near the level it was at prior to the acquisition."
Noninterest Expense
Noninterest expense for the first quarter of fiscal year 2007 was $18.9
million, an increase of $2.9 million or 17.8% compared with the first quarter
of fiscal year 2006. The primary reason for the increase was the addition of
compensation, benefits, intangible amortization and occupancy costs of the new
retail locations in Lorain County, Ohio included in the Northern Savings
acquisition. Noninterest expense as a percent of average assets was 2.42% for
the quarter ended September 30, 2006 down from 2.79% for the preceding quarter
and 2.51% from the same quarter in the prior year. Current quarter core
noninterest expense as a percent of average assets of 2.42% was also down from
2.47% in the preceding quarter and 2.51% in the same quarter in the prior
year. The efficiency ratio for the quarter ended September 30, 2006 was
61.1%, down from 67.3% in the preceding quarter, but up from 60.5% in the
prior year quarter. The core efficiency ratio for the quarter ended September
30, 2006 was 61.1%, up from 59.5% in the preceding quarter and up from 60.5%
in the prior year quarter. Steve Lewis commented, "In order to insure a
smooth transition for Northern Savings customers we have scheduled conversion
of the core processing systems at the Northern offices for the third quarter
of fiscal 2007. While this means we will incur higher costs and slightly
reduced efficiency during the first three quarters of fiscal 2007, it will be
the best solution for our Lorain County customers."
Asset Quality
Nonperforming assets were $26.2 million at September 30, 2006, or 0.87% of
total assets, up $5.5 million from $20.7 million or 0.66% of total assets at
June 30, 2006. The increase in nonperforming assets was due to a similar
increase in nonperforming loans. Nonperforming loans were $22.3 million at
September 30, 2006, up $5.5 million from $16.8 million at June 30, 2006.
Nonperforming mortgage and construction loans increased $4.0 million during
the quarter accounting for the majority of the increase. Mortgage and
construction loans are generally well secured and if these loans do default,
the actual losses are often only a fraction of the total loan amount. Net
charge-offs for the quarter ended September 30, 2006 were $0.9 million
compared with $0.7 million for the quarter ended June 30, 2006. The provision
for loan losses for the current quarter was $1.38 million up from $1.36
million in the same quarter in the prior year. The allowance for loan losses
increased $0.5 million to $22.8 million at September 30, 2006, from $22.3
million at June 30, 2006. The ratio of the allowance for loan losses to total
loans was 0.97% at September 30, 2006, up from 0.95% at June 30, 2006. The
increase in the provision and the allowance over prior periods are consistent
with the increase in nonperforming loans.
Balance Sheet Activity
Assets were $3.012 billion at September 30, 2006, a decrease of $101
million from June 30, 2006. During the current quarter First Place sold $98
million of loans held for sale and $16 million of securities available for
sale that were existing assets of Northern Savings as of the acquisition date.
All of these assets were fixed rate assets and were sold primarily to achieve
management's interest rate risk objectives. Total portfolio loans were $2.360
billion at September 30, 2006, an increase of $9 million from June 30, 2006,
or growth at an annualized rate of 1.6%. Commercial loans increased $31
million during the current quarter, or 14.5% annualized, to $887 million.
Commercial loans now account for 37.6% of the loan portfolio up from 36.4% at
June 30, 2006. Mortgage and construction loans decreased $11 million during
the current quarter, and consumer loans decreased $11 million during the
current quarter.
Deposits totaled $2.077 billion at September 30, 2006, an increase of $16
million since June 30, 2006. This increase was composed of a $36 million
increase in retail deposits and a $20 million decrease in brokered
certificates of deposit. During the current quarter, total deposits grew at
an annual rate of 3.1% while retail deposits grew at an annual rate of 7.3%.
Steve Lewis added, "We are particularly pleased that deposits within the
Northern Savings franchise have grown during this first quarter indicating the
confidence those customers have placed in First Place." Borrowings were $467
million at September 30, 2006, a decline of $137 million from $604 million at
June 30, 2006. Funds from the sale of loans held for sale and securities
available for sale were used to reduce overnight borrowings at the Federal
Home Loan Bank in order to counteract the impact of the current inverted yield
curve.
Shareholders' equity remains strong; it was $319 million at September 30,
2006, up $7 million from June 30, 2006 primarily due to net income during the
quarter. Shareholders equity as a percent of assets was 10.59% at September
30, 2006, up from 10.01% at June 30, 2006. There were no purchases of
treasury stock during the current quarter although board authorization to
repurchase shares is in place through March 2007 should the internal metrics
for the acquisition of treasury shares be met.
Board Actions
At its regular meeting held October 17, 2006, the Board of Directors
declared a per share cash dividend of $0.155 payable on November 9, 2006, to
shareholders of record as of the close of business on October 26, 2006. This
is a 10.7% increase from the quarterly dividend rate of $0.14 that was in
effect throughout fiscal 2006.
About First Place Financial Corp.
First Place Financial Corp., a $3.0 billion financial services holding
company based in Warren, Ohio, is the largest publicly-traded thrift
headquartered in Ohio. First Place Financial Corp. operates 33 retail
locations, 2 business financial service centers and 16 loan production offices
through First Place Bank, and the Northern Savings and Franklin Bank divisions
of First Place Bank. Additional affiliates of First Place Financial Corp.
include First Place Insurance Agency, Ltd.; Coldwell Banker First Place Real
Estate, Ltd.; TitleWorks Agency, LLC and APB Financial Group, Ltd., an
employee benefit consulting firm and specialist in wealth management services
for businesses and consumers. Information about First Place Financial Corp.
may be found on the Company's web site: www.firstplacebank.com.
Explanation of Certain Non-GAAP Measures
This press release contains certain financial information determined by
methods other than in accordance with Generally Accepted Accounting Principles
(GAAP). Specifically, we have provided financial measures that are based on
core earnings rather than net income. Ratios and other financial measures
with the word "core" in their title were computed using core earnings rather
than net income. Core earnings excludes merger, integration and restructuring
expense; extraordinary income or expense; income or expense from discontinued
operations; and income, expense, gains and losses that are not reflective of
ongoing operations or that we do not expect to reoccur. Similarly, core
noninterest expense or core noninterest income exclude the pretax impact of
those same items that impact noninterest income or noninterest expense. We
believe that this information is useful to both investors and to management
and can aid them in understanding the Company's current performance,
performance trends and financial condition. While core earnings can be useful
in evaluating current performance and projecting current trends into the
future, we do not believe that core earnings are a substitute for GAAP net
income. We encourage investors and others to use core earnings as a
supplemental tool for analysis and not as a substitute for GAAP net income.
Our non-GAAP measures may not be comparable to the non-GAAP measures of other
companies. In addition, future results of operations may include nonrecurring
items that would not be included in core earnings. A reconciliation from GAAP
net income to the non-GAAP measure of core earnings is shown in the
consolidated financial highlights on page eight.
Forward-Looking Statements
When used in this press release, or future press releases or other public
or shareholder communications, in filings by First Place Financial Corp. (the
Company) with the Securities and Exchange Commission or in oral statements
made with the approval of an authorized executive officer, the words or
phrases "will likely result," "are expected to," "will continue," "is
anticipated," "estimate," "project" or similar expressions are intended to
identify "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors, which may
cause the Company's actual results to be materially different from those
indicated. Such statements are subject to certain risks and uncertainties
including changes in economic conditions in the market areas the Company
conducts business, which could materially impact credit quality trends,
changes in laws, regulations or policies of regulatory agencies, fluctuations
in interest rates, demand for loans in the market areas the Company conducts
business, and competition, that could cause actual results to differ
materially from historical earnings and those presently anticipated or
projected. The Company wishes to caution readers not to place undue reliance
on any such forward-looking statements, which speak only as of the date made.
The Company undertakes no obligation to publicly release the result of any
revisions that may be made to any forward-looking statements to reflect events
or circumstances after the date of such statements or to reflect the
occurrence of anticipated or unanticipated events.
FIRST PLACE FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three months ended
September 30,
(Dollars in thousands, Percent
except share data) 2006 2005 Change
Interest income $46,754 $34,791 34.4 %
Interest expense 24,022 15,360 56.4
Net interest income 22,732 19,431 17.0
Provision for loan losses 1,380 1,355 1.8
Net interest income after
provision for loan losses 21,352 18,076 18.1
Noninterest income
Service charges 1,547 1,368 13.1
Net gains on sale of securities 82 - N/M
Net gains on sale of loans 2,107 1,883 11.9
Loan servicing income 223 166 34.3
Other income -- bank 1,895 1,769 7.1
Other income -- non-bank 2,054 1,716 19.7
Total noninterest income 7,908 6,902 14.6
Noninterest expense
Salaries and employee benefits 9,749 7,796 25.1
Occupancy and equipment 2,881 2,418 19.1
Professional fees 672 818 (17.8)
Loan expenses 783 655 19.5
Marketing 630 624 1.0
Franchise taxes 160 91 75.8
Amortization of intangible
assets 1,082 944 14.6
Other 2,976 2,720 9.4
Total noninterest expense 18,933 16,066 17.8
Income before income taxes 10,327 8,912 15.9
Provision for income taxes 3,325 2,745 21.1
Net income $7,002 $6,167 13.5 %
SHARE DATA:
Basic earnings per share $0.41 0.43 (4.7 )%
Diluted earnings per share $0.41 0.42 (2.4 )
Cash dividends paid per share $0.14 0.14 -
Average shares outstanding
- basic 16,920,820 14,473,284 16.9
Average shares outstanding
- diluted 17,162,617 14,709,722 16.7
N/M -- Not meaningful
FIRST PLACE FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
Sept 30, June 30, Mar 31, Dec 31, Sept 30,
2006 2006 2006 2005 2005
(Dollars in
thousands) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
ASSETS
Cash and due
from banks $73,736 $72,906 $60,513 $70,153 $64,759
Interest-bearing
deposits in
other banks 79 4,605 4,600 - -
Securities
available for
sale 271,506 302,994 266,170 286,864 294,763
Loans held
for sale 76,541 154,799 59,015 83,754 138,939
Loans
Mortgage and
construction 1,112,827 1,123,911 916,479 884,123 807,745
Commercial 887,183 856,129 789,992 775,782 742,511
Consumer 360,157 370,744 358,004 345,643 330,177
Total loans 2,360,167 2,350,784 2,064,475 2,005,548 1,880,433
Less allowance
for loan losses 22,819 22,319 20,170 19,617 19,194
Loans, net 2,337,348 2,328,465 2,044,305 1,985,931 1,861,239
Federal Home
Loan Bank stock 32,946 32,616 27,518 31,281 30,922
Premises and
equipment, net 37,498 35,485 25,428 24,128 22,354
Goodwill 88,046 88,009 56,207 55,173 55,173
Core deposit
and other
intangibles 16,323 17,405 12,525 13,413 14,337
Other assets 78,209 75,926 90,874 75,834 77,806
Total assets $3,012,232 $3,113,210 $2,647,155 $2,626,531 $2,560,292
LIABILITIES
Deposits
Non-interest
bearing
checking $214,067 $224,738 $223,647 $251,624 $228,642
Interest
bearing
checking 136,063 140,752 117,586 122,219 118,667
Savings 274,547 242,178 205,284 196,754 193,052
Money market 465,898 511,482 442,061 450,746 452,478
Certificates
of deposit 986,350 941,597 759,784 743,738 762,066
Total
deposits 2,076,925 2,060,747 1,748,362 1,765,081 1,754,905
Securities sold
under agreements
to repurchase 51,533 44,013 39,911 39,095 38,377
Borrowings 466,633 603,906 515,016 482,944 430,752
Junior
subordinated
debentures owed
to unconsolidated
subsidiary
trusts 61,857 61,857 61,857 61,857 61,857
Other
liabilities 36,228 31,113 29,992 32,363 32,932
Total
liabilities 2,693,176 2,801,636 2,395,138 2,381,340 2,318,823
SHAREHOLDERS'
EQUITY 319,056 311,574 252,017 245,191 241,469
Total liabilities
and shareholders
equity $3,012,232 $3,113,210 $2,647,155 $2,626,531 $2,560,292
FIRST PLACE FINANCIAL CORP.
CONSOLIDATED FINANCIAL
HIGHLIGHTS As of or for the three months ended
(Unaudited)
9/30/06 6/30/06 3/31/06 12/31/05 9/30/05
1st Qtr 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr
FY 2007 FY 2006 FY 2006 FY 2006 FY 2006
(Dollars in thousands
except per share data)
EARNINGS (GAAP)
Tax equivalent net
interest income $ 23,089 20,565 19,305 19,876 19,650
Net interest income $ 22,732 20,251 19,080 19,652 19,431
Provision for loan
losses $ 1,380 2,317 1,013 1,190 1,355
Noninterest income $ 7,908 7,372 7,904 6,807 6,902
Noninterest expense $ 18,933 18,800 16,749 16,535 16,066
Net income $ 7,002 4,505 6,326 6,046 6,167
Basic earnings
per share $ 0.41 0.31 0.43 0.42 0.43
Diluted earnings per
share $ 0.41 0.30 0.43 0.41 0.42
PERFORMANCE RATIOS
(annualized) (GAAP)
Return on average
assets 0.90 % 0.67 % 0.98 % 0.93 % 0.96 %
Return on average
equity 8.78 % 7.02 % 10.30 % 9.86 % 10.23 %
Return on average
tangible assets 0.93 % 0.69 % 1.00 % 0.95 % 0.99 %
Return on average
tangible equity 13.13 % 9.64 % 14.22 % 13.77 % 14.46 %
Net interest margin,
fully tax equivalent 3.24 % 3.29 % 3.17 % 3.33 % 3.35 %
Efficiency ratio 61.08 % 67.29 % 61.56 % 61.97 % 60.51 %
Noninterest expense as a
percent of average
assets 2.42 % 2.79 % 2.58 % 2.54 % 2.51 %
RECONCILIATION OF NET
INCOME TO CORE EARNINGS
GAAP net income $ 7,002 4,505 6,326 6,046 6,167
Other than temporary
impairment of
securities, net
of tax $ - - - - -
Tax-free proceeds
from executive life
insurance policy $ - - - - -
Merger, integration
and restructuring,
net of tax $ - 1,413 - - -
Core earnings $ 7,002 5,918 6,326 6,046 6,167
CORE EARNINGS
Core earnings $ 7,002 5,918 6,326 6,046 6,167
Basic core earnings
per share $ 0.41 0.40 0.43 0.42 0.43
Core diluted earnings
per share $ 0.41 0.40 0.43 0.41 0.42
CORE PERFORMANCE RATIOS
(annualized)
Core return on average
assets 0.90 % 0.88 % 0.98 % 0.93 % 0.96 %
Core return on average
equity 8.78 % 9.22 % 10.30 % 9.86 % 10.23 %
Core return on average
tangible assets 0.93 % 0.90 % 1.00 % 0.95 % 0.99 %
Core return on average
tangible equity 13.13 % 12.66 % 14.22 % 13.77 % 14.46 %
Core net interest
margin, fully tax
equivalent 3.24 % 3.29 % 3.17 % 3.33 % 3.35 %
Core efficiency ratio 61.08 % 59.52 % 61.56 % 61.97 % 60.51 %
Core noninterest
expense as a percent
of average assets 2.42 % 2.47 % 2.58 % 2.54 % 2.51 %
FIRST PLACE FINANCIAL CORP.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited) As of or for the three months ended
9/30/06 6/30/06 3/31/06 12/31/05 9/30/05
1st Qtr 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr
FY 2007 FY 2006 FY 2006 FY 2006 FY 2006
(Dollars in thousands
except per share data)
CAPITAL
Equity to total
assets at end of
period 10.59 % 10.01 % 9.52 % 9.34 % 9.43 %
Tangible equity to
tangible assets 7.38 % 6.85 % 7.11 % 6.90 % 6.90 %
Book value per share $18.28 17.87 16.65 16.24 16.02
Tangible book value
per share $12.30 11.83 12.11 11.70 11.41
Period-end market
value per share $22.66 23.01 24.80 24.05 22.17
Dividends declared
per common share $0.14 0.14 0.14 0.14 0.14
Common stock dividend
payout ratio 34.15 % 46.67 % 32.56 % 34.15 % 33.33 %
Period-end common
shares outstanding
(000) 17,456 17,433 15,136 15,096 15,077
Average basic shares
outstanding (000) 16,921 14,704 14,565 14,519 14,473
Average diluted shares
outstanding (000) 17,163 14,950 14,841 14,780 14,710
ASSET QUALITY
Net charge-offs
(recoveries) $879 694 460 767 427
Annualized net
charge-offs
(recoveries) to
average loans 0.15 % 0.13 % 0.09 % 0.16 % 0.09 %
Nonperforming loans
(NPLs) $22,284 16,771 16,117 13,419 15,326
NPLs as a percent
of total loans 0.94 % 0.71 % 0.78 % 0.67 % 0.82 %
Nonperforming assets
(NPAs) $26,184 20,695 19,940 16,294 18,443
NPAs as a percent of
total assets 0.87 % 0.66 % 0.75 % 0.62 % 0.72 %
Allowance for
loan losses $22,819 22,319 20,170 19,617 19,194
Allowance for loan
losses as a percent
of loans 0.97 % 0.95 % 0.98 % 0.98 % 1.02 %
Allowance for loan
losses as a percent
of NPLs 102.40 % 133.08 % 125.15 % 146.19 % 125.24 %
MORTGAGE BANKING
Mortgage
originations $296,600 329,600 270,400 339,100 419,900
Net gains on sale
of loans $2,107 1,196 1,391 1,452 1,883
Mortgage servicing
portfolio $1,882,029 1,627,595 1,485,629 2,446,605 2,302,874
Mortgage servicing
rights $18,882 16,167 14,759 24,448 23,250
Mortgage servicing
rights valuation
(loss) recovery $20 (95) 257 107 247
Mortgage servicing
rights / Mortgage
servicing portfolio 1.00 % 0.99 % 0.99 % 1.00 % 1.01 %
END OF PERIOD BALANCES
Assets $3,012,232 3,113,210 2,647,155 2,626,531 2,560,292
Deposits $2,076,925 2,060,747 1,748,362 1,765,081 1,754,905
Shareholders'
equity $319,056 311,574 252,017 245,191 241,469
Tangible
shareholders'
equity $214,687 206,160 183,285 176,605 171,959
AVERAGE BALANCES
Loans $2,370,173 2,115,447 2,036,257 1,952,498 1,850,254
Loans held
for sale $170,416 71,541 84,698 115,185 171,109
Earning assets $2,853,699 2,497,241 2,436,108 2,389,805 2,345,365
Assets $3,097,857 2,703,370 2,630,097 2,582,202 2,536,719
Deposits $2,063,538 1,784,940 1,738,856 1,763,597 1,737,768
Shareholders'
equity $316,455 257,467 249,155 243,175 239,182
Tangible
shareholders'
equity $211,538 187,522 180,362 174,145 169,240
