First Place Financial Corp. has a market cap of $55.2 million; its shares were traded at around $3.25 with and P/S ratio of 0.3. First Place Financial Corp. had an annual average earning growth of 13.2% over the past 10 years.FPFC is in the portfolios of Irving Kahn of Kahn Brothers & Company Inc., Prem Watsa of Fairfax Financial Holdings, Inc..
Highlight of Business Operations:The Company was formed as a thrift holding company as a result of the conversion of First Place Bank (Bank), formerly known as First Federal Savings and Loan Association of Warren, from a federally chartered mutual savings and loan association to a federally chartered stock savings association in December 1998. First Federal Savings and Loan Association of Warren originally opened for business in 1922. At the time of the conversion, the Company had total assets of approximately $610 million. During fiscal year 2000, the Company acquired Ravenna Savings Bank with total assets of $200 million. During fiscal year 2001, the Company completed a merger-of-equals with FFY Financial Corp. with total assets of $680 million. During fiscal year 2004, the Company acquired Franklin Bancorp, Inc. of Southfield, Michigan with total assets of $627 million. During fiscal year 2006, the Company acquired The Northern Savings & Loan Company of Elyria, Ohio with total assets of $360 million. During fiscal year 2007, the Company acquired seven retail banking offices from Republic Bancorp, Inc. and Citizens Banking Corporation in the greater Flint, Michigan area assuming $200 million in deposits. During fiscal year 2008, the Company acquired Hicksville Building, Loan and Savings Bank of Hicksville, Ohio with total assets of $53 million and OC Financial, Inc. of Dublin, Ohio with total assets of $68 million.
General. Assets totaled $3.259 billion at December 31, 2009, a decrease of $145 million or 4.3% from $3.404 billion at June 30, 2009. The majority of this decrease was due to decreases of $95 million in loans held for sale and $48 million in portfolio loans. Total liabilities decreased $141 million to $2.982 billion at December 31, 2009 primarily due to a decrease of $165 million in short-term borrowings, partially offset by an increase of $31 million in deposits. Total equity was $278 million at December 31, 2009, a decrease of $4 million, primarily due to the Company s net loss of $5 million for the six months ended December 31, 2009.
Securities. The Company s securities balance increased $7 million and totaled $284 million at December 31, 2009, compared to $277 million at June 30, 2009. During the first six months of fiscal year 2010, the Company purchased $31 million in securities and received principal paydowns on mortgage-backed securities of $26 million.
Loans held for sale totaled $282 million at December 31, 2009, compared to $377 million at June 30, 2009, a decrease of $95 million or 25.1%. The decrease in loans held for sale was primarily due to a decrease in the volume of mortgage loan originations from $637 million for the quarter ended June 30, 2009 to $512 million for the quarter ended December 31, 2009. The decrease in mortgage loan originations was due to a lower volume of refinanced loans. The Company anticipates that it will continue to sell a majority of the one-to-four family residential loans that it originates.
Loans. The loan portfolio totaled $2.421 billion at December 31, 2009, a decrease of $48 million, or 1.9% from $2.468 billion at June 30, 2009. The decrease in the loan portfolio was due to decreases of $34 million, or 4.0% in mortgage and construction loans and $18 million, or 4.9% in consumer loans, partially offset by an increase of $4 million, or 0.3% in commercial loans. The decrease in mortgage and construction loans and consumer loans was the result of deteriorating economic conditions and the tightening of credit underwriting standards during the first half of fiscal year 2010. During the quarter ended December 31, 2009, the mix of the loan portfolio did not change significantly as commercial loans accounted for 51.6% of the loan portfolio, mortgage and construction loans accounted for 33.8% and consumer loans accounted for 14.6%. The Company anticipates the volume of the loan portfolio to remain level or decrease slightly during the remainder of fiscal year 2010 and the mix of the loan portfolio to remain relatively unchanged from the mix at December 31, 2009.
In the normal course of business, the Company continually works with borrowers in various stages of delinquency. When deemed beneficial for the borrower and the Company, concessions are made through modifications of current loan terms with the intention of maximizing the amounts collected on the loans prospectively. These modified loans are considered troubled debt restructurings under current accounting guidance and are classified as nonperforming loans even if all contractual terms are met. In the current recessionary economy, these restructurings are becoming more prevalent. The Company also works with borrowers to avoid foreclosure if possible. Furthermore, if it becomes inevitable that a borrower will not be able to retain ownership of their property, the Company often seeks a deed in lieu of foreclosure in order to gain control of the property earlier in the recovery process. The strategy of pursuing deeds in lieu of foreclosure more aggressively should result in a reduction in the holding period for nonperforming assets and ultimately reduce economic losses. The increase of $39 million or 37.4% in nonperforming loans during the six months ended December 31, 2009 was composed of $21 million of mortgage and construction loans, $15 million of commercial loans and $3 million of consumer loans. The increase in nonperforming loans was related to a continued decline in the local economies of the Company s market areas, particularly in the housing markets and automotive industry. This is consistent with both Midwest and national trends. Of the total nonperforming loans at December 31, 2009, 89% were secured by real estate. Real estate loans are generally well secured and if these loans do default, the majority of the loan balance, net of any charge-offs, is usually recovered by liquidating the real estate.
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