First Place Financial 10-Q 2007 Q2 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2006

¨ 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	34-1880130
(State or other jurisdiction of incorporation)	(IRS Employer Identification Number)

185 E. Market Street, Warren, OH 44481

(Address of principal executive offices)

(330) 373-1221

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if change 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  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Securities Exchange Act.

Large accelerated filer  ¨     Accelerated filer  x    Non-accelerated filer   ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act).

Yes  ¨    No  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

17,465,585 shares of common stock as of January 31, 2007

TABLE OF CONTENTS

			Page Number
PART I. FINANCIAL INFORMATION
	Item 1.	Financial Statements (Unaudited)
		Condensed Consolidated Statements of Financial Condition as of December 31, 2006 and June 30, 2006	3
		Condensed Consolidated Statements of Income for the Three and Six Months Ended December 31, 2006 and 2005	4
		Condensed Consolidated Statements of Changes in Shareholders’ Equity For the Three and Six Months Ended December 31, 2006 and 2005	5
		Condensed Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2006 and 2005	6
		Notes to Condensed Consolidated Financial Statements	7-13
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13-25
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	25-26
	Item 4.	Controls and Procedures	26
PART II. OTHER INFORMATION
	Item 1.	Legal Proceedings	26
	Item 1A.	Risk Factors	26
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
	Item 3.	Defaults Upon Senior Securities	27
	Item 4.	Submission of Matters to a Vote of Security Holders	27
	Item 5.	Other Information	27
	Item 6.	Exhibits	27
SIGNATURES			28

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

FIRST PLACE FINANCIAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Dollars in thousands, except share data)

	December 31, 2006			June 30, 2006
	(Unaudited)
ASSETS
Cash and due from banks	$	75,946		$	72,906
Interest-bearing deposits in other banks		84			4,605
Securities available for sale		267,613			302,994
Loans held for sale		75,572			154,799
Loans:
Mortgage and construction		1,102,648			1,123,911
Commercial		959,678			856,129
Consumer		361,082			370,744
Total loans		2,423,408			2,350,784
Less allowance for loan losses		23,425			22,319
Loans, net		2,399,983			2,328,465
Federal Home Loan Bank stock		33,209			32,616
Premises and equipment, net		38,690			35,485
Goodwill		88,046			88,009
Core deposit and other intangibles		15,260			17,405
Other assets		79,849			75,926
Total assets	$	3,074,252		$	3,113,210
LIABILITIES
Deposits:
Noninterest-bearing checking	$	234,576		$	224,738
Interest-bearing checking		146,878			140,752
Savings		307,581			242,178
Money market		464,999			511,482
Certificates of deposit		982,050			941,597
Total deposits		2,136,084			2,060,747
Short-term borrowings		209,700			384,187
Long-term debt		370,004			325,589
Other liabilities		34,069			31,113
Total liabilities		2,749,857			2,801,636
SHAREHOLDERS’ EQUITY
Preferred stock, $.01 par value: 3,000,000 shares authorized, no shares issued and outstanding		—			—
Common stock, $.01 par value: 33,000,000 shares authorized, 18, 114, 673 shares issued		181			181
Additional paid-in capital		214,806			214,243
Retained earnings		125,216			116,757
Unearned employee stock ownership plan shares		(4,155	)		(4,452	)
Treasury stock, at cost: 645,088 shares at December 31, 2006 and 681,228 shares at June 30, 2006		(9,573	)		(10,096	)
Accumulated other comprehensive loss, net		(2,080	)		(5,059	)
Total shareholders’ equity		324,395			311,574
Total liabilities and shareholders’ equity	$	3,074,252		$	3,113,210

See accompanying notes to condensed consolidated financial statements.

3

FIRST PLACE FINANCIAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Dollars in thousands, except per share data)

	Three months ended December 31,				Six months ended December 31,
	2006		2005		2006		2005
INTEREST INCOME
Loans, including fees	$	41,689	$	33,048	$	84,512	$	64,498
Securities and interest-bearing deposits
Taxable		3,140		3,087		6,383		6,023
Tax-exempt		736		395		1,424		800
TOTAL INTEREST INCOME		45,565		36,530		92,319		71,321
INTEREST EXPENSE
Deposits		17,553		10,661		33,763		20,479
Short-term borrowings		2,776		2,325		7,264		4,650
Long-term debt		4,334		3,892		7,658		7,109
TOTAL INTEREST EXPENSE		24,663		16,878		48,685		32,238
NET INTEREST INCOME		20,902		19,652		43,634		39,083
Provision for loan losses		1,410		1,190		2,790		2,545
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		19,492		18,462		40,844		36,538
NONINTEREST INCOME
Service charges and fees on deposit accounts		1,469		1,370		3,016		2,738
Net gains on sale of securities		2		—		84		—
Net gains on sale of loans		1,622		1,452		3,729		3,335
Loan servicing income		248		192		471		358
Other income—bank		1,847		1,853		3,742		3,622
Other income—nonbank subsidiaries		2,320		1,940		4,374		3,656
TOTAL NONINTEREST INCOME		7,508		6,807		15,416		13,709
NONINTEREST EXPENSE
Salaries and employee benefits		8,023		8,487		17,772		16,283
Occupancy and equipment		2,861		2,463		5,742		4,881
Professional fees		773		622		1,445		1,440
Loan expenses		554		597		1,337		1,252
Marketing		666		538		1,296		1,162
Franchise taxes		330		237		490		328
Amortization of intangible assets		1,063		925		2,145		1,869
Other		3,155		2,666		6,131		5,386
TOTAL NONINTEREST EXPENSE		17,425		16,535		36,358		32,601
INCOME BEFORE INCOME TAXES		9,575		8,734		19,902		17,646
Provision for income tax		3,045		2,688		6,370		5,433
NET INCOME	$	6,530	$	6,046	$	13,532	$	12,213
Basic earnings per share	$	0.39	$	0.42	$	0.80	$	0.84
Diluted earnings per share	$	0.38	$	0.41	$	0.79	$	0.83

See accompanying notes to condensed consolidated financial statements.

4

FIRST PLACE FINANCIAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

(Dollars in thousands, except per share data)

	Three months ended December 31,						Six months ended December 31,
	2006			2005			2006			2005
Balance at beginning of period	$	319,056		$	241,469		$	311,574		$	236,656
Comprehensive income:
Net income		6,530			6,046			13,532			12,213
Change in unrealized gain (loss) on securities available for sale, net of reclassification and tax effects		633			(1,107	)		2,669			(1,867	)
Loss on termination of interest rate swaps reclassified into income, net of tax		155			158			311			493
Total comprehensive income		7,318			5,097			16,512			10,839
Cash dividends declared and paid		(2,616	)		(2,024	)		(5,073	)		(4,062	)
Commitment to release employee stock ownership plan shares		352			348			696			672
Commitment to release recognition and retention plan shares		15			12			32			24
Stock options exercised		161			217			448			845
Tax benefit related to exercise of stock options		52			46			94			165
Stock option expense		57			26			112			52
Balance at end of period	$	324,395		$	245,191		$	324,395		$	245,191
Cash dividends declared and paid per share	$	0.155		$	0.140		$	0.295		$	0.280

See accompanying notes to condensed consolidated financial statements.

5

FIRST PLACE FINANCIAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)

	Six months ended December 31,
	2006			2005
Cash flows from operating activities:
Net cash from operating activities	$	97,068		$	48,668
Cash flows from investing activities:
Securities available for sale
Proceeds from sales		19,533			—
Proceeds from maturities, calls and principal paydowns		21,586			30,721
Purchases		(4,201	)		(24,142	)
Net change in interest-bearing deposits in other banks		4,521			—
Net change in loans		(74,653	)		(156,215	)
Proceeds from sale of loans		2,263			9,076
Premises and equipment expenditures, net		(4,674	)		(4,279	)
Investment in nonbank affiliates		(37	)		(96	)
Net cash from investing activities		(35,662	)		(144,935	)
Cash flows from financing activities:
Net change in deposits		75,338			55,742
Net change in short-term borrowings		(181,987	)		(21,738	)
Proceeds from long-term debt		75,032			70,000
Repayment of long-term debt		(22,218	)		(18,009	)
Net proceeds from issuance of subordinated debt securities		—			30,928
Cash dividends paid		(5,073	)		(4,062	)
Proceeds from stock options exercised		448			845
Tax benefit from stock options exercised		94			165
Net cash from financing activities		(58,366	)		113,871
Net change in cash and cash equivalents		3,040			17,604
Cash and cash equivalents at beginning of period		72,906			52,549
Cash and cash equivalents at end of period	$	75,946		$	70,153
Supplemental cash flow information:
Cash payments of interest expense	$	47,296		$	31,076
Cash payments of income taxes	$	3,370		$	5,243
Supplemental non-cash disclosures:
Loans securitized	$	13,925		$	69,532
Transfer of loans to other real estate	$	1,933		$	679
Transfer of loans from held-for-sale to portfolio	$	3,729		$	28,839
Transfer from long-term to short-term borrowings	$	7,500		$	8,250

See accompanying notes to condensed consolidated financial statements.

6

FIRST PLACE FINANCIAL CORP. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

1. Significant Accounting Policies

(Dollars in thousands)

Basis of Presentation. The interim unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (US GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X issued by the Securities and Exchange Commission. The financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in First Place Financial Corp.’s Annual Report on Form 10-K for the year ended June 30, 2006. The interim unaudited condensed consolidated financial statements include all adjustments (consisting of only normal recurring items), which, in the opinion of management, are necessary for a fair presentation of the financial position and results of operations for the periods presented. The results of operations for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for a full year.

Principles of Consolidation. The interim unaudited condensed consolidated financial statements include the accounts of First Place Financial Corp. (the Company) and its wholly owned subsidiaries, First Place Bank, The Northern Savings & Loan Company (Northern) and First Place Holdings, Inc. (Holdings). Northern was acquired by the Company on June 27, 2006. Northern and First Place Bank merged into a single federal savings association, effective July 25, 2006, with the resulting institution having the name First Place Bank. Subsidiaries of Holdings include First Place Insurance Agency, Ltd., APB Financial Group, Ltd., American Pension Benefits, Inc., Coldwell Banker First Place Real Estate, Ltd. and its subsidiary, First Place Referral Network, Ltd., and Title Works Agency, LLC, a 75% owned affiliate of First Place Holdings, Inc. The investments of the Company in its wholly owned subsidiaries, First Place Capital Trust, First Place Capital Trust II and First Place Capital Trust III, have been accounted for using the equity method based on their nature as trusts, which are special purpose entities. All significant intercompany balances and transactions have been eliminated in connection with the consolidation.

Use of Estimates. The preparation of the financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Areas involving the use of management’s estimates and assumptions include the allowance for loan losses, fair values of financial instruments, the realization of deferred tax assets, the identification and carrying value of impaired loans, the carrying value and amortization of intangibles, useful life and impairment of premises and equipment, the carrying value of goodwill and the amortization and valuation of mortgage servicing assets. Actual results could differ from those estimates.

Business Segments.While the Company’s chief decision-makers monitor the revenue streams of the various Company products and services, the segments that could be separated from the Company’s primary business of banking are not material. Accordingly, all of the Company’s financial service operations are considered by management to be combined in one reportable operating segment.

Reclassifications. Certain items in the prior year financial statements were reclassified to conform to the current presentation.

2. Recent Accounting Pronouncements

(Dollars in thousands)

In May 2005, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 154, Accounting Changes and Error Corrections. This statement changes the requirements for the accounting for and reporting of a change in accounting principle. It is effective for fiscal years beginning after December 15, 2005 and applies to the Company effective July 1, 2006. The adoption of this pronouncement did not have a material impact on the Company’s consolidated financial statements.

In February, 2006, the FASB issued Statement of Financial Accounting Standards No. 155, Accounting for Certain Hybrid Financial Instruments. This statement clarifies the treatment of derivatives that are freestanding or embedded as part of a beneficial interest in a securitized financial asset. This statement will be effective July 1, 2007. The adoption of this pronouncement is not expected to have a material impact on the Company’s consolidated financial statements.

7

In March, 2006, the FASB issued Statement of Financial Accounting Standards No. 156, Accounting for Servicing of Financial Assets. This statement allows the entity to choose the amortization method or the fair value method to account for each separately recognized servicing asset or liability. This statement will be effective July 1, 2007. If the Company adopts this pronouncement and elects to account for all servicing assets and liabilities according to the amortization method, it would not change the current treatment of accounting for servicing rights and therefore would have no impact on the consolidated financial statements. At the present time, the Company has not determined if it would apply the fair value method of accounting and what impact the fair value method of accounting would have on the Company’s consolidated financial statements.

In June 2006, the FASB issued Interpretation No.48, Accounting for Uncertainty in Income Taxes – an Interpretation of FASB Statement No. 106 (FIN 48), which clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements in accordance with SFAS 109, Accounting for Income Taxes. FIN 48 prescribes a recognition and measurement threshold for a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. FIN 48 will be effective July 1, 2007. Based on its preliminary assessment, management believes the adoption of this pronouncement will not have a material impact on the Company’s consolidated financial statements.

In July 2006, the FASB issued FASB Staff Position (FSP) 13-2, Accounting for a Change or Projected Change in the Timing of Cash Flows Relating to Income Taxes Generated by a Leveraged Lease Transaction. This FSP amends SFAS 13, Accounting for Leases, to require a lessor in a leveraged lease transaction to recalculate the leveraged lease for the effects of a change or projected change in the timing of cash flows relating to income taxes that are generated by the leveraged lease. The guidance in FSP 13-2 is required to be applied to fiscal years beginning after December 15, 2006. This statement will be effective July 1, 2007. The adoption of this FSP is not expected to have a material impact on the Company’s consolidated financial statements.

In September, 2006, the FASB issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements. This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. It is effective for fiscal years beginning after November 15, 2007 and will apply to the Company effective July 1, 2008 unless the Company elects early adoption in which case it would be effective July 1, 2007. At the present time, the Company has not determined if it will elect early adoption, if it would apply the provisions of the statement and what impact it would have on the Company’s consolidated financial statements.

In September, 2006, the FASB issued Statement of Financial Accounting Standards No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans – An Amendment of FASB Statements No. 87, 88, 106, and 123(R). This statement requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan (other than a multi-employer plan) as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income of a business entity or changes in unrestricted net assets of a not-for-profit organization. It is effective as of the end of the fiscal year ending after December 15, 2006 and will apply to the Company effective July 1, 2007. The adoption of this pronouncement will not have a material impact on the Company’s consolidated financial statements.

In September 2006, the Securities and Exchange Commission issued Staff Accounting Bulletin (SAB) No. 108. This SAB expresses the SEC’s views regarding the process of quantifying financial statement misstatements. SAB No. 108 provides guidance on the consideration of the effects of prior year misstatements for the purpose of a materiality assessment. SAB No. 108 is effective for fiscal years ending after November 15, 2006. Since the Company has had no prior year misstatements, the adoption of this pronouncement will not have a material impact on the Company’s consolidated financial statements.

3. Business Combinations

(Dollars in thousands)

On June 27, 2006, the Company completed the acquisition of Northern. On June 28, 2006, Northern converted from an Ohio chartered stock savings association to a federally chartered stock savings association. At the time of the merger, Northern had total assets of approximately $360,000. On July 25, 2006, the Company’s two federally chartered savings association subsidiaries, Northern and First Place Bank merged into a single federal savings association with the name

8

First Place Bank. The banking offices that were part of Northern will continue to operate as the Northern Savings Division of First Place Bank until the third quarter of fiscal year 2007 when it is expected that the data processing systems and signage will be converted to the name First Place Bank.

4. Mortgage Servicing Assets

(Dollars in thousands)

Following is a summary of mortgage servicing assets:

	Three months ended December 31,						Six months ended December 31,
	2006			2005			2006			2005
Servicing rights:
Beginning of period	$	18,882		$	23,250		$	16,167		$	21,013
Additions		1,796			2,654			5,422			6,258
(Increase) decrease in valuation allowance		(55	)		107			(35	)		354
Amortized to expense		(1,127	)		(1,563	)		(2,058	)		(3,177	)
End of period	$	19,496		$	24,448		$	19,496		$	24,448

The fair value of mortgage servicing assets was $21,792 at December 31, 2006 and $19,986 at June 30, 2006. Noninterest-bearing deposits included $21,449 and $16,528 of custodial account deposits related to loans serviced for others as of December 31, 2006 and June 30, 2006, respectively. Loans serviced for others, which are not reported as assets, were $1,972,502 and $1,627,595 at December 31, 2006 and June 30, 2006 respectively.

5. Short-term Borrowings and Long-term Debt

(Dollars in thousands)

	December 31, 2006		June 30, 2006
Short-term borrowings:
Federal Home Loan Bank advances	$	179,375	$	354,674
Securities sold under agreement to repurchase		30,325		29,513
Total	$	209,700	$	384,187
Long-term debt:
Federal Home Loan Bank advances	$	271,147	$	249,232
Securities sold under agreement to repurchase		37,000		14,500
Junior subordinated debentures owed to unconsolidated subsidiary trusts		61,857		61,857
Total	$	370,004	$	325,589

6. Stock Compensation Plans

(Dollars in thousands, except per share data.)

The following is the stock option activity for the periods indicated:

	Total stock options outstanding
	Six months ended December 31, 2006				Six months ended December 31, 2005
	Shares		Weighted Average Exercise Price Per Share		Shares		Weighted Average Exercise Price Per Share
Stock options outstanding, beginning of period	764,084		$	13.47	859,554		$	13.28
Forfeited	(373	)	$	16.74	—			—
Exercised	(36,140	)	$	12.41	(70,135	)	$	12.06
Granted	98,014		$	21.88	2,000		$	20.98
Stock options outstanding, end of period	825,585		$	14.52	791,419		$	13.41
Stock options exercisable, end of period	662,943		$	12.98	700,636		$	12.67

9

The aggregate intrinsic value of all stock options outstanding at December 31, 2006 was $7,407. The aggregate intrinsic value of all stock options that were exercisable at December 31, 2006 was $6,968.

	Total unvested stock options
	Six months ended December 31, 2006				Six months ended December 31, 2005
	Shares		Weighted Average Per Share Value		Shares		Weighted Average Per Share Value
Unvested stock options, beginning of period	84,783		$	4.44	137,163		$	4.04
Vested	(19,782	)	$	2.72	(48,380	)	$	3.27
Granted	98,014		$	5.46	2,000		$	4.51
Unvested stock options, end of period	163,015		$	5.27	90,783		$	4.46

Proceeds, related tax benefits realized from stock options exercised and intrinsic value of stock options exercised were as follows:

	Six months ended December 31,
	2006		2005
Proceeds of stock options exercised	$	448	$	845
Related tax benefit recognized	$	94	$	165
Intrinsic value of stock options exercised	$	410	$	664

Stock options outstanding at December 31, 2006 were as follows:

	Outstanding		Exercisable
	Shares	Weighted Average Remaining Contractual Life	Shares	Weighted Average Exercise Price Per Share
$9.54-$12.00	80,065	3.8	80,065	$	11.06
$12.01-$14.00	500,081	2.5	500,081	$	12.34
$14.01-$20.98	147,425	6.7	82,797	$	18.72
$20.99-$23.72	98,014	9.6	—	$	—
Outstanding at period end	825,585	4.2	662,943	$	12.98

The fair value of stock options granted during the six months ended December 31, 2006 was determined at the date of grant using the Black-Scholes stock option-pricing model and the following range of assumptions:

Expected average risk-free interest rate	4.54% - 4.88%
Expected average life	6.00 years
Expected volatility	24.03% - 24.50%
Expected dividend yield	2.56% - 2.61%

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Recognition and Retention Plan

Activity in issued but unvested common stock grants during the six months ended December 31, 2006 was as follows:

	Shares		Weighted Average Per Share Value
Issued and unvested as of June 30, 2006	1,855		$	19.42
Shares granted during the period	11,232			21.86
Shares vested during the period	(90	)		19.58
Issued and unvested as of December 31, 2006	12,997		$	21.53

The intrinsic value of unvested common stock grants at December 31, 2006 was $305.

Compensation costs for all share-based plans were as follows:

	Six months ended December 31,
	2006				2005
	Stock Options		Stock Grants		Stock Options		Stock Grants
Compensation cost recognized in income	$	110	$	33	$	52	$	24
Related tax benefit recognized	$	—	$	12	$	—	$	8

The compensation cost yet to be recognized for stock-based awards that have been awarded but not vested is as follows:

	Stock Options		Stock Grants		Total Awards
Remainder of 2007	$	110	$	32	$	142
2008		219		65		284
2009		176		65		241
2010		138		62		200
Total	$	643	$	224	$	867
Weighted average life in years						2.1

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7. Commitments, Contingencies and Guarantees

(Dollars in thousands)

The Company regularly enters into transactions that generate off-balance sheet risk. These transactions include commitments to originate loans, commitments to sell loans, loans with future commitments to disburse funds such as construction loans and lines of credit and recourse obligations for loans sold and letters of credit. The Company enters into these transactions to meet customer needs or to facilitate the sale of assets. These transactions are recorded on the books of the Company based on their estimated fair value. The nominal values of these off-balance sheet transactions as of December 31, 2006 are shown below.

	Nominal value		Current asset / (liability) value
GUARANTEE OBLIGATIONS
Loans sold with recourse	$	305,750	$	(196	)
Standby letters of credit		2,361		—
OTHER OBLIGATIONS
Commitments to disburse construction loan funds	$	187,358
Commitments to originate or purchase loans		129,565
Commitments to sell loans		—
Unused lines of credit		243,078
Commercial letters of credit		61,962

The loans sold with recourse were sold to government-sponsored enterprises and others. This recourse is limited and is eliminated when the loans reach certain loan to value ratios. The Company is able to estimate credit losses associated with sold loans where recourse currently exists. Therefore, a liability has been established to recognize those credit losses.

8. Earnings per Share

(Dollars in thousands, except per share data.)

The computation of basic and diluted earnings per share is shown in the following table:

	Three months ended December 31,						Six months ended December 31,
	2006			2005			2006			2005
Basic earnings per share computation:
Net Income	$	6,530		$	6,046		$	13,532		$	12,213
Gross weighted average shares outstanding		17,465,402			15,088,446			17,454,385			15,073,306
Less: Average unearned ESOP shares		(425,222	)		(484,574	)		(432,668	)		(492,020	)
Less: Average unearned RRP shares		(81,517	)		(84,694	)		(81,975	)		(85,055	)
Net weighted average shares outstanding		16,958,663			14,519,178			16,939,742			14,496,231
Basic earnings per share	$	0.39		$	0.42		$	0.80		$	0.84
Diluted earnings per share computation:
Net Income	$	6,530		$	6,046		$	13,532		$	12,213
Weighted average shares outstanding for basic earnings per share		16,958,663			14,519,178			16,939,742			14,496,231
Add: Dilutive effects of assumed exercises of stock options		249,123			260,409			244,451			248,859
Add: Dilutive effects of unearned Recognition and Retention Plan shares		714			501			617			421
Weighted average shares and potentially dilutive shares		17,208,500			14,780,088			17,184,810			14,745,511
Diluted earnings per share	$	0.38		$	0.41		$	0.79		$	0.83

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There were stock options for 1,000 shares that were antidilutive for the three and six month periods ending December 31, 2006. These stock options were not considered in the computation of diluted earnings per share. There were no stock options that were antidilutive for the three and six month periods ending December 31, 2005.

9. Branch Purchase

(Dollars in thousands)

On December 18, 2006 the Company announced that it had signed a definitive agreement with Republic Bank and Citizens Banking Corporation to acquire seven Republic Bank branches in the greater Flint, Michigan area. Based on the information available at that time, the transaction would result in First Place Bank assuming approximately $210,000 in deposits, and receiving $30,000 in fixed assets and consumer loans and $170,000 in cash. The transaction is expected to close during the fourth fiscal quarter of 2007.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following analysis discusses changes in First Place Financial Corp.’s (Company) results of operations and financial condition during the periods included in the Condensed Consolidated Financial Statements, which are part of this filing.

Forward-Looking Statements

When used in this Form 10-Q, or in future filings with the Securities and Exchange Commission, in press releases or other public or shareholder communications, 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, changes in policies by regulatory agencies, fluctuations in interest rates, demand for loans in the market areas the Company conducts business, and competition, which 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.

Business Overview

Background.First Place Financial Corp. is a unitary savings and loan holding company formed as a result of the conversion of First Place 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. In May 2000, the Company acquired Ravenna Savings Bank. In December 2000, the Company completed a merger of equals with FFY Financial Corp. In May 2004, the Company acquired Franklin Bancorp Inc.

On June 27, 2006, the Company acquired The Northern Savings & Loan Company of Elyria, Ohio (Northern). On June 28, 2006, Northern converted from an Ohio chartered stock savings association to a federally chartered stock savings association. At the time of the acquisition, Northern had total assets of $360 million. On July 25, 2006, the Company’s two federally chartered savings association subsidiaries, Northern and First Place Bank merged into a single federal savings association with the name First Place Bank. The banking offices that were part of Northern operate as the Northern Savings Division of First Place Bank which we expect to continue until the first quarter of calendar 2007 when the data processing systems and signage will be converted to the name First Place Bank. Management believes

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that this acquisition will represent a significant step in the Company’s strategic vision to expand the franchise across Ohio. It is a natural progression west from several Cleveland markets where the Company has experienced exceptional historical growth and it fills in some of the areas between the Mahoning Valley in Ohio and its operations in Southern Michigan.

On December 18, 2006 the Company announced that it had signed a definitive agreement with Republic Bank and Citizens Banking Corporation to acquire seven Republic Bank branches in the greater Flint, Michigan area. Based on the information available at that time, the transaction would result in First Place Bank assuming approximately $210,000 in deposits, and receiving $30,000 in fixed assets and consumer loans and $170,000 in cash. The transaction is expected to close during the fourth fiscal quarter of 2007.

The Company is a community oriented financial institution engaged primarily in the gathering of deposits to originate residential, commercial and consumer loans. The Company currently operates in Ohio, Michigan, Indiana and Pennsylvania with a concentration of banking offices in Northeast Ohio and Southeast Michigan. In addition, the Company, through its subsidiaries, owns affiliates that operate in the following industries: real estate brokerage, title insurance, investment brokerage and general insurance. The Company also operates loan production offices in various cities in Ohio, Michigan and Indiana. As of December 31, 2006, the Company had $3.1 billion in assets and was the largest publicly traded thrift institution in Ohio.

Strategic Plan. The Company seeks to grow assets and fees in order to grow net income. Currently, the Company seeks to grow by increasing market share in current markets, expanding into new markets in the Midwest by opening de novo banking offices and new loan production offices as well as through acquisitions of other financial institutions. The Company evaluates acquisition targets based on the economic viability of the markets they are in, the degree to which they can be efficiently integrated into current operations and the degree to which they are accretive to earnings, initially and over time.

The Company provides a return to its shareholders by taking on various levels of credit risk, interest rate risk, liquidity risk and capital risk in order to achieve profits. The Company’s goal of achieving high levels of profitability on a consistent basis is balanced with what management believes are acceptable levels of risk in each area. The Company uses certain financial ratios and other financial measures to monitor profitability and to monitor the levels of risk. Those ratios and financial measures are shown below.

Results of Operations

Comparison of the Three and Six Months Ended December 31, 2006 and 2005

Selected Financial Ratios and Other Financial Measures

(Dollars in thousands, except per share data)

	Three Months Ended December 31,						Increase (Decrease)
	2006			2005			Amount			Percent
Total assets	$	3,074,252		$	2,626,531		$	447,721		17.0	%
Net income	$	6,530		$	6,046		$	484		8.0	%
Diluted earnings per share	$	0.38		$	0.41		$	(0.03	)	(7.3	%)
Return on average equity		8.06	%		9.86	%				(1.80	%)
Return on average assets		0.86	%		0.93	%				(0.07	%)
Net interest margin		3.04	%		3.33	%				(0.29	%)
Efficiency ratio		60.54	%		61.97	%				(1.43	%)
Noninterest expense as a percent of average assets		2.29	%		2.54	%				(0.25	%)
Non-performing assets to total assets		0.96	%		0.62	%				0.34	%
Tangible equity to tangible assets		7.44	%		6.90	%				0.54	%

Summary. Net income of $6.5 million for the quarter ended December 31, 2006 was an increase of $0.5 million or 8.0% from net income of $6.0 million for the quarter ended December 31, 2005. Diluted earnings per share were $0.38

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for the current quarter compared with $0.41 for the prior-year quarter, a decrease of 7.3%. Return on average equity for the current quarter was 8.06% compared with 9.86% for the same quarter in the prior year. Total assets increased $448 million to $3.074 billion at December 31, 2006 from $2.627 billion at December 31, 2005. The increase in total assets was primarily due to the acquisition of Northern. Diluted earnings per share decreased in the current quarter compared to the prior year quarter even though net income increased over the same periods. This was due to an increase in diluted shares outstanding in the current quarter. The Company issued approximately 2.3 million shares of common stock as part of the consideration paid to acquire Northern. The increase in net income was primarily due to increases of $1.3 million in net interest income, $0.2 million in net gain on sale of loans and $0.4 million in other income – non-bank subsidiaries, partially offset by an increase of $0.9 million in noninterest expense. The increase in net interest income was primarily due to an increase in average interest-earning assets, partially offset by a decline in the net interest margin. The growth in other income – nonbank subsidiaries for the current quarter was due to growth in commission income in the Company’s insurance, real estate and brokerage affiliates. The increase in noninterest expense was caused primarily by an increase in occupancy and equipment due to additional costs of the new banking offices in Lorain County acquired in the acquisition of Northern. These costs were offset by a reduction in employee benefit costs of $0.5 million resulting from an initiative to realign certain benefit plans to match our fiscal year. Even though non-interest expense increased, the ratio of noninterest expense to average assets decreased to 2.29% for the current quarter compared with 2.54% for the prior year quarter. Non-performing assets as a percent of total assets increased to 0.96% from 0.62% a year earlier.

Selected Financial Ratios and Other Financial Measures

(Dollars in thousands, except per share data)

	Six Months Ended December 31,						Increase (Decrease)
	2006			2005			Amount			Percent
Total assets	$	3,074,252		$	2,626,531		$	447,721		17.0	%
Net income	$	13,532		$	12,213		$	1,319		10.8	%
Diluted earnings per share	$	0.79		$	0.83		$	(0.04	)	(4.8	%)
Return on average equity		8.42	%		10.05	%				(1.63	%)
Return on average assets		0.88	%		0.95	%				(0.07	%)
Net interest margin		3.14	%		3.34	%				(0.20	%)
Efficiency ratio		60.82	%		61.24	%				(0.42	%)
Noninterest expense as a percent of average assets		2.36	%		2.53	%				(0.17	%)
Non-performing assets to total assets		0.96	%		0.62	%				0.34	%
Tangible equity to tangible assets		7.44	%		6.90	%				0.54	%

Summary. Net income of $13.5 million for the six months ended December 31, 2006 was an increase of $1.3 million or 10.8% from net income of $12.2 million for the six months ended December 31, 2005. Diluted earnings per share were $0.79 for the first six months of fiscal year 2007 compared with $0.83 for the prior-year period, a decrease of 4.8%. Return on average equity for the six months ended December 31, 2006 was 8.42% compared with 10.05% for the same period in the prior year. Total assets increased $447 million to $3.074 billion at December 31, 2006 from $2.627 billion at December 31, 2005. The increases in total assets and net income were primarily due to the acquisition of Northern including the sale of certain assets acquired with Northern. Diluted earnings per share decreased because net income grew more slowly than diluted shares outstanding. The Company issued approximately 2.3 million shares of common stock as part of the consideration paid to acquire Northern. The increase in net income was primarily due to increases of $4.6 million in net interest income, $0.4 million in net gain on sale of loans and $0.7 million in other income – non-bank subsidiaries, partially offset by an increase of $3.8 million in noninterest expense. The increase in net interest income was primarily due to an increase in average interest-earning assets, partially offset by a decline in the net interest margin. The growth in other income – nonbank subsidiaries for the six months ended December 31, 2006 was due to growth in commission income in the Company’s insurance, real estate and brokerage affiliates. The increase in noninterest expense was caused primarily by an increase in salaries, employee benefits and occupancy costs due to the new retail banking offices in Lorain County, Ohio acquired with Northern along with newly opened retail banking offices in Livonia and Shelby, Michigan. These costs were offset by a reduction in employee benefit costs of $0.5 million resulting from an initiative to realign certain benefit plans to match our fiscal year. Even though non-interest expense increased, the ratio of noninterest expense to average assets decreased to 2.36% for the six months ended December 31, 2006 compared with 2.53% for the prior year period. Non-performing assets as a percent of total assets increased to 0.96% from 0.62% a year earlier.

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Net Interest Income.Net interest income for the quarter ended December 31, 2006, totaled $20.9 million, an increase of $1.3 million or 6.4% from $19.7 million for the quarter ended December 31, 2005. The increase in net interest income resulted from an increase of $419.6 million or 17.1% in average interest-earning assets compared to the same quarter a year ago, partially offset by a decline in the net interest margin to 3.04%, down from 3.33% in the prior year quarter. Net interest margin in the current quarter decreased as liability costs grew faster than asset yields. This decrease was due to the inversion of the yield curve from a positive slope in the prior year quarter to a slight negative slope during the current quarter.

The average yield on interest-earning assets was 6.56% for the quarter ended December 31, 2006, an increase of 41 basis points from 6.15% for the same quarter in the prior year. The increase was due to increases in the yields on loans, securities and Federal Home Loan Bank stock. In addition, an increase in the average balance of loans and a decrease in the average balance of securities shifted the mix of interest-earning assets to include a greater percentage of loans, which also contributed to the increase in the overall yield on interest-earning assets. The average rate paid on interest-bearing liabilities was 4.04% for the quarter ended December 31, 2006 compared to 3.25% for the prior year quarter, an increase of 79 basis points. This increase was due to increases in the rates paid on short-term borrowings, certificates of deposit, savings and money market accounts and long-term debt.

Net interest income for the six months ended December 31, 2006, totaled $43.6 million, an increase of $4.5 million or 11.6% from $39.1 million for the six months ended December 31, 2005. The increase in net interest income resulted from an increase of $458.9 million or 19.4% in average interest-earning assets compared to the same period a year ago, partially offset by a decline in the net interest margin to 3.14%, down from 3.34% in the prior year period. Net interest margin in the current six month period benefited from the recognition of $0.9 million which represented the unamortized balance of a purchase accounting premium on a Federal Home Loan Bank advance that was called. In spite of this benefit, net interest margin decreased as liability costs grew faster than asset yields. This decrease was due to the inversion of the yield curve from a positive slope during the first six months of fiscal 2006 to a slight negative slope during the first six months of fiscal 2007.

The average yield on interest-earning assets was 6.58% for the six months ended December 31, 2006, an increase of 52 basis points from 6.06% for the same period in the prior year. The increase was due to increases in the yields on loans, securities and Federal Home Loan Bank stock. In addition, an increase in the average balance of loans and a decrease in the average balance of securities shifted the mix of interest-earning assets to include a greater percentage of loans, which also contributed to the increase in the overall yield on interest-earning assets. The average rate paid on interest-bearing liabilities was 3.92% for the six months ended December 31, 2006 compared to 3.16% for the prior year period, an increase of 76 basis points. This increase was due to increases in the rates paid on short-term borrowings, certificates of deposit, savings and money market accounts and long-term debt. In addition, the mix of deposits changed to include relatively less checking, savings and money market accounts and relatively more certificate of deposit accounts, which contributed to the increase in the rate paid on interest-bearing liabilities.

The following schedule details the various components of net interest income for the quarters indicated. All asset yields are calculated on tax-equivalent basis where applicable. Security yields are based on amortized historic cost.

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Average Balances, Interest Rates and Yields

(Dollars in thousands)

	Three Months Ended December 31, 2006							Three Months Ended December 31, 2005
	Average Balance			Interest		Average Yield/cost		Average Balance			Interest		Average Yield/cost
ASSETS
Interest-earning assets
Loans and loans held for sale	$	2,497,247		$	41,729	6.68	%	$	2,067,683			33,088	6.40	%
Securities and interest-bearing deposits		269,230			3,719	5.53	%		291,192			3,250	4.46	%
Federal Home Loan Bank stock		32,891			492	6.01	%		30,930			416	5.40	%
Total interest-earning assets		2,799,368			45,940	6.56	%		2,389,805			36,754	6.15	%
Noninterest-earning assets
Cash and due from banks		60,187							51,819
Allowance for loan losses		(23,283	)						(19,582	)
Other assets		187,438							160,160
Total assets	$	3,023,710						$	2,582,202
LIABILITIES
Interest-bearing liabilities
Deposits
Checking accounts	$	136,842			171	0.49	%	$	119,563			144	0.48	%
Savings and money market accounts		759,921			5,621	2.93	%		647,832			3,635	2.23	%
Certificates of deposit		987,596			11,761	4.72	%		754,973			6,882	3.62	%
Total deposits		1,884,359			17,553	3.70	%		1,522,368			10,661	2.78	%
Borrowings
Short-term borrowings		211,804			2,776	5.20	%		240,015			2,325	3.84	%
Long-term debt		328,098			4,334	5.24	%		300,081			3,892	5.15	%
Total interest-bearing liabilities		2,424,261			24,663	4.04	%		2,062,464			16,878	3.25	%
Noninterest-bearing liabilities
Noninterest-bearing checking accounts		234,469							241,228
Other liabilities		43,524							35,335
Total liabilities		2,702,254							2,339,027
Shareholders’ equity		321,456							243,175
Total liabilities and shareholders equity	$	3,023,710						$	2,582,202
Fully tax-equivalent net interest income					21,277							19,876
Interest rate spread						2.52	%						2.90	%
Net interest margin						3.04	%						3.33	%
Average interest-earning assets to average interest-bearing liabilities						115.47	%						115.87	%
Tax-equivalent adjustment					375							224
Net interest income				$	20,902						$	19,652

17

Average Balances, Interest Rates and Yields

(Dollars in thousands)

	Six Months Ended December 31, 2006							Six Months Ended December 31, 2005
	Average Balance			Interest		Average Yield/cost		Average Balance			Interest		Average Yield/cost
ASSETS
Interest-earning assets
Loans and loans held for sale	$	2,518,918		$	84,593	6.72	%	$	2,044,523			64,572	6.32	%
Securities and interest-bearing deposits		274,907			7,503	5.46	%		292,285			6,408	4.38	%
Federal Home Loan Bank stock		32,709			955	5.79	%		30,777			784	5.06	%
Total interest-earning assets		2,826,534			93,051	6.58	%		2,367,585			71,764	6.06	%
Noninterest-earning assets
Cash and due from banks		60,620							51,449
Allowance for loan losses		(22,922	)						(19,155	)
Other assets		196,551							159,582
Total assets	$	3,060,783						$	2,559,461
LIABILITIES
Interest-bearing liabilities
Deposits
Checking accounts	$	137,353			337	0.49	%	$	117,817			281	0.48	%
Savings and money market accounts		751,745			10,754	2.84	%		646,979			6,820	2.11	%
Certificates of deposit		970,813			22,672	4.63	%		748,888			13,378	3.58	%
Total deposits		1,859,911			33,763	3.60	%		1,513,684			20,479	2.71	%
Borrowings
Short-term borrowings		281,825			7,264	5.11	%		255,337			4,650	3.65	%
Long-term debt		320,630			7,658	4.74	%		276,103			7,109	5.16	%
Total interest-bearing liabilities		2,462,366			48,685	3.92	%		2,045,124			32,238	3.16	%
Noninterest-bearing liabilities
Noninterest-bearing checking accounts		231,272							236,999
Other liabilities		48,189							36,160
Total liabilities		2,741,827							2,318,283
Shareholders’ equity		318,956							241,178
Total liabilities and shareholders equity	$	3,060,783						$	2,559,461
Fully tax-equivalent net interest income					44,366							39,526
Interest rate spread						2.66	%						2.90	%
Net interest margin						3.14	%						3.34	%
Average interest-earning assets to average interest-bearing liabilities						114.79	%						115.77	%
Tax-equivalent adjustment					732							443
Net interest income				$	43,634						$	39,083

Provision for Loan Losses. The provision for loan losses was $1.4 million for the quarter ended December 31, 2006 and $1.2 million for the quarter ended December 31, 2005. Net charge-offs were $0.8 million for the quarters ended December 31, 2006 and December 31, 2005. Total loans were $2.423 billion at December 31, 2006 compared with $2.006 billion at December 31, 2005. The amount of the provision in the current quarter compared with the prior year quarter is consistent with the increase in total loans and in non-performing loans. Non-performing loans were 1.06% of total loans for the quarter ended December 31, 2006 compared with 0.67% for the prior year quarter. The provision for

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loan losses was $2.8 million for the six months ended December 31, 2006 compared with $2.5 million for the six months ended December 31, 2005. Net charge-offs for the six months ended December 31, 2006 were $1.7 million compared with $1.2 million for the comparable period in the prior year. The amount of the provision in the first half compared with the prior year is consistent with the increase total loans and in non-performing loans. Non-performing loans were $25.7 million at December 31, 2006 compared with $13.4 million at December 31, 2005.

Noninterest Income. Noninterest income totaled $7.5 million for the quarter ended December 31, 2006, an increase of $0.7 million or 10.3% from $6.8 million in the prior year quarter. Noninterest income totaled $15.4 million for the six months ended December 31, 2006, an increase of $1.7 million or 12.5% from $13.7 million in the prior year period. The increases in noninterest income were due to increases in service charges, net gains on sale of loans, other income – nonbank subsidiaries and loan servicing income.

Service charges increased $0.1 million for the quarter ended December 31, 2006, as compared with the prior year quarter. Service charges increased $0.3 million for the six months ended December 31, 2006, as compared with the prior year period. The increases were due to additional deposit accounts from the Northern acquisition.

Net gain on the sale of loans for the three months ended December 31, 2006, was $1.6 million compared with $1.5 million for the three months ended December 31, 2005. The volume of loans sold during the current quarter decreased to $197 million compared with $250 million in the prior year quarter however, higher average profit margins on the sale of loans offset the decline in volume. The higher margins were due in part to the positive impact of activities to hedge the value of loan commitments and loans held for sale.

Net gain on the sale of loans for the six months ended December 31, 2006, was $3.7 million compared with $3.3 million for the six months ended December 31, 2005. The volume of loans sold during the six months ended December 31, 2006 decreased to $517 million compared with $571 million in the prior year period however, higher average profit margins on the sale of loans offset the decline in volume. The Company’s normal volume of loan sales was supplemented during September, 2006 by $98 million of loans that were classified as held for sale when they were acquired as part of the Northern acquisition. While those loans would have provided additional current income, they were all fixed rate loans and holding them would have increased the Company’s exposure to rate risk. Therefore, the Company elected to sell the loans to maintain an interest rate risk profile near the level it stood prior to the Northern acquisition. The Company realized $1.5 million on the sale of the $98 million in loans acquired with Northern and held for sale. The remaining gains on sale of loans from current activity were $2.2 million on sales of $419 million of loans. This represents a significant decline in volume from the same quarter in the prior year. The decline in volume was due to a decline in the market for mortgage loans due to an increase in short-term and long-term interest rates from the prior year quarter.

The growth in other income – nonbank subsidiaries was $0.4 million or 19.6% for the current quarter compared to $0.4 million or 26.4% in the prior year quarter. The growth in other income – nonbank subsidiaries was $0.7 million or 19.7% for the six months ended December 31, 2006 compared to $0.5 million or 14.2% in the prior year period. These increases were due to growth in commission income in the Company’s insurance, real estate and brokerage affiliates. Also contributing to the increases was the February, 2006 acquisition of Insurance Center of Warren by the Company’s wholly owned subsidiary First Place Insurance Agency Ltd.

Loan servicing income is composed of the current fees generated from the servicing of sold loans less the current amortization of loan servicing rights and the adjustment for any change in the allowance for impairment of loan servicing rights, which are valued at the lower of cost or market. Both the amortization and the valuation of loan servicing rights are sensitive to movements in interest rates. Both amortization and impairment valuation allowances tend to increase as rates fall and tend to decrease as rates rise. However, the level of amortization is a function of interest rates over the period while the level of impairment valuation allowances is a function of interest rates at the end of the period. While long-term interest rates have risen significantly over the past three years, there have been both periods of rising rates and periods of falling rates. As a result, increases in impairment and reversals of impairment of loan servicing rights have often been the most significant component of loan servicing income. The table below shows how the change in the impairment of loan servicing rights has affected loan servicing income.

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	Three months ended December 31,					Six months ended December 31,
	2006			2005		2006			2005
	(Dollars in thousands)
Loan servicing income (loss)
Loan servicing revenue, net of amortization	$	303		$	85	$	506		$	4
Change in impairment		(55	)		107		(35	)		354
Total loan servicing income	$	248		$	192	$	471		$	358

The increase in total loan servicing income in the current quarter and the six months ended December 31, 2006 compared with the same periods in the prior year was primarily due to increases in net loan servicing revenue, partially offset by increases in impairment charges.

The process used to arrive at the estimated aggregate fair value of the Company’s loan servicing rights is a material estimate that is particularly susceptible to significant changes in the near term as interest rates and other factors change. The value of the loan servicing rights portfolio is analyzed quarterly by considering critical assumptions for prepayment speeds, the targeted investor yield to a buyer of loan servicing rights, and float on escrows. While the Company obtains an outside independent expert evaluation of loan servicing rights each quarter, in order to make the process as accurate as possible, the process is still driven by assumptions about future market activity. Market interest rates are an external factor that has a material influence on this valuation process because interest rates influence prepayment speeds and targeted investor yield.

Over the past several years, the volume and dollar value of loan servicing rights has been growing more rapidly than total assets on a percentage basis. As a result, the Company’s exposure to volatility in mortgage banking revenue has also increased. In order to reduce exposure to volatility due to rapid payoffs or impairment, the Company sold approximately 43% of its loan servicing rights during March 2006. Management plans to consider additional sales of loan servicing rights in the future depending on size of the servicing asset relative to total assets and based on the current market for the sale of these servicing rights.

Noninterest Expense.Noninterest expense increased $0.9 million or 5.4% to $17.4 million for the three months ended December 31, 2006, compared with the same quarter in the prior year. Annualized noninterest expense as a percent of average assets was 2.29% for the quarter ended December 31, 2006 compared to 2.54% for the prior year quarter. The efficiency ratio for the three months ended December 31, 2006, was 60.5% compared with 62.0% for the same period in the prior year. The increase in noninterest expense was primarily due to an increase in occupancy and equipment, partially offset by a decrease in salaries and employee benefits. Occupancy and equipment increased $0.4 million or 16.2% in the current quarter compared to the same quarter in the prior year. Salaries and employee benefits decreased $0.5 million or 5.5% in the current quarter compared to the same quarter in the prior year. The primary reason for the increase in occupancy and equipment was the additional costs of the new banking offices in Lorain County acquired with Northern. Salaries and employee benefits decreased due to a realignment of certain benefit plans to match our fiscal year.

Noninterest expense increased $3.8 million or 11.5% to $36.4 million for the six months ended December 31, 2006, compared with the same period in the prior year. Annualized noninterest expense as a percent of average assets was 2.36% for the six months ended December 31, 2006 compared to 2.53% for the prior year period. The efficiency ratio for the six months ended December 31, 2006, was 60.8% compared with 61.2% for the same period in the prior year. The increase in noninterest expense was primarily due to increases in salaries and employee benefits and in occupancy and equipment. Salaries and employee benefits increased $1.5 million or 9.1% for the six months ended December 31, 2006 compared to the same period in the prior year. Occupancy and equipment increased $0.9 million or 17.6% for the six months ended December 31, 2006 compared to the same period in the prior year. The primary reason for the increases were the addition of compensation, benefits and occupancy costs of the new retail banking offices in Lorain County, Ohio acquired with Northern. In order to ensure a smooth transition for Northern customers, the Company has scheduled the conversion of the core processing systems at the Northern offices for the third quarter of fiscal 2007. While this will delay some of the cost savings anticipated as part of the acquisition until the fourth quarter of fiscal 2007, the Company believes that the timing of the conversion represents the best solution for delivering high quality service to Lorain County customers.

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Income Taxes. Income tax expense was $3.0 million for the three months ended December 31, 2006, compared with $2.7 million for the prior year quarter. The effective tax rate was 31.8% for the three months ended December 31, 2006 compared with 30.8% for the prior year quarter. Income tax expense was $6.4 million for the six months ended December 31, 2006, compared with $5.4 million for the prior year period. The effective tax rate was 32.0% for the six months ended December 31, 2006 compared with 30.8% for the prior year period.

Financial Condition

General. Assets totaled $3.074 billion at December 31, 2006, a decrease of $39 million or 1.3% from June 30, 2006. This decrease was primarily due to the Company’s sale of $17 million in securities available for sale and $98 million in loans held for sale that were existing assets of Northern as of the acquisition date, partially offset an increase in the loan portfolio of $73 million. Funds from the sales of securities held for sale and loans held for sale were used to reduce overnight borrowings at the Federal Home Loan Bank. All of the Northern assets sold were fixed rate assets and were sold primarily to achieve management’s interest rate risk objectives. Capital ratios increased with the ratio of equity to total assets at December 31, 2006 of 10.55% as compared with 10.01% at June 30, 2006. Tangible equity also increased to $218 million at December 31, 2006 compared with $188 million at June 30, 2006.

Securities. Securities available for sale totaled $268 million at December 31, 2006, compared to $303 million at June 30, 2006, a decrease of $35 million or 11.7%. During the first half of 2007, the Company completed an investment portfolio restructuring program, which resulted in the sale of $17 million of securities that were existing assets of Northern as of the acquisition date.

Loans Held for Sale.Loans held for sale totaled $76 million at December 31, 2006, compared to $155 million at June 30, 2006, a decrease of $79 million or 51.2%. The decrease was due to the Company’s sale of $98 million in loans held for sale that were existing assets of Northern as of the acquisition date.

Loans. The loan portfolio totaled $2.423 billion at December 31, 2006, an increase of $73 million, or 3.1% from June 30, 2006. The increase in the loan portfolio was due to an increase of $104 million, or 24.2% annualized, in commercial loans, offset by decreases of $21 million in mortgage and construction loans and $10 million in consumer loans. At December 31, 2006, commercial loans accounted for 39.6% of the loan portfolio, which is up from 36.4% at June 30, 2006.

	As of December 31, 2006				As of June 30, 2006
	Amount		Percent		Amount		Percent
	(Dollars in thousands)
Mortgage and construction	$	1,102,648	45.5	%	$	1,123,911	47.8	%
Commercial		959,678	39.6	%		856,129	36.4	%
Consumer		361,082	14.9	%		370,744	15.8	%
Total loans	$	2,423,408	100.0	%	$	2,350,784	100.0	%

Non-performing Assets and Allowance for Loan Losses.The following table indicates asset quality data over the past five quarters.

Asset Quality History

(Dollars in thousands)

	12/31/06			9/30/06			6/30/06			3/31/06			12/31/05
Non-performing assets	$	29,439		$	26,184		$	20,695		$	19,940		$	16,294
Non-performing assets as a % of total assets		0.96	%		0.87	%		0.66	%		0.75	%		0.62	%
Non-performing loans	$	25,702		$	22,284		$	16,771		$	16,117		$	13,419
Non-performing loans as a % of total loans		1.06	%		0.94	%		0.71	%		0.78	%		0.67	%
Delinquent loans	$	40,650		$	35,687		$	26,537		$	23,673		$	27,837
Delinquent loans as a % of total loans		1.68	%		1.51	%		1.13	%		1.15	%		1.39	%
Allowance for loan losses	$	23,425		$	22,819		$	22,319		$	20,170		$	19,617
Allowance for loan losses as a % of loans		0.97	%		0.97	%		0.95	%		0.98	%		0.98	%
Allowance for loan losses as a % of non-performing loans		91.14	%		102.40	%		133.08	%		125.15	%		146.19	%

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Management analyzes the adequacy of the allowance for loan losses regularly through reviews of the performance of the loan portfolio considering economic conditions, changes in interest rates and the effect of such changes on real estate values, changes in the composition of the loan portfolio, and trends in past due and non-performing loans. The allowance for loan losses is a significant estimate that is particularly susceptible to changes in the near term and is established through a provision for loan losses based on management’s evaluation of the risk in the Company’s loan portfolio and the general economy. This evaluation, which includes a review of all loans for which full collectibility may not be reasonably assured, considers among other matters, the estimated fair value of the underlying collateral, economic conditions, historical loan loss experience and other factors that warrant recognition in providing for an adequate loan loss allowance. Future additions to the allowance for loan losses will be dependent on these factors. The Company maintains an allowance for loan losses at a level adequate to absorb management’s estimate of probable losses in the loan portfolio.

Non-performing assets at December 31, 2006 were $29.4 million or 0.96% of total assets compared with $26.2 million or 0.87% of total assets at September 30, 2006 and $20.7 million or 0.66% of total assets at June 30, 2006. The change in non-performing assets was primarily related to the increase in non-performing loans. Non-performing loans were $25.7 million at December 31, 2006, $22.3 million at September 30, 2006 and $16.8 million at June 30, 2006. Non-performing mortgage and construction loans increased $4.2 million during the current quarter accounting for the majority of the increase. It is important to note that of the total non-performing loans at December 31, 2006, 68% are secured by residential real estate loans and 21% were home equity loans. As a result, if the borrower ultimately defaults on the loan, the Company is often able to recover a substantial portion of the loan balance through the sale of the related real estate. Delinquent loans were $40.7 million, $35.7 million and $26.5 million at December 31, 2006, September 30, 2006 and June 30, 2006, respectively. The allowance for loan losses increased during the quarter to $23.4 million at December 31, 2006, up $1.1 million from $22.3 million at June 30, 2006. The ratio for the allowance for loan losses as a percent of total loans was 0.97% as of December 31, 2006 and 0.95% as of June 30, 2006. The increase in the provision and the allowance over prior periods are consistent with increases in nonperforming loans considering that the increase in non-performing loans was concentrated in mortgage and construction loans.

Other Assets. Other assets increased $4 million to $80 million at December 31, 2006, compared with $76 million at June 30, 2006. One of the components of other assets is loan servicing rights. Loan servicing rights increased $3.3 million to $19.5 million from $16.2 million as of December 31, 2006 and June 30, 2006, respectively.

Deposits.Deposits increased $75 million, or 3.7% during the first six months of fiscal 2007 and totaled $2.136 billion at December 31, 2006, compared to $2.061 billion at June 30, 2006. This increase was composed of an increase of $105 million in retail deposits, offset by a decrease of $30 million of brokered certificates of deposit. The Company has chosen not to renew brokered deposits due to the success of the branches in raising retail deposits. At December 31, 2006, the Company had $48 million in brokered deposits compared to $78 million at June 30, 2006. The Company considers these brokered deposits to be an element of a diversified funding strategy and an alternative to borrowings. Management regularly compares rates to determine the most economical source of funding. The Company anticipates that they will continue to use brokered funds as a funding alternative in the future, but not as the primary source of funding to support growth.

Borrowings and Debt. During the first six months of fiscal year 2007, long-term debt showed a net increase of $44 million as a result of a net increase of $22 million in long-term borrowings from the Federal Home Loan Bank and a net increase of $30 million in long-term securities sold under agreements to repurchase, partially offset by an $8 million reclassification of borrowings from long-term to short-term. The Company borrowed $45 million in long-term fixed-rate advances from the Federal Home Loan Bank with an original maturities ranging from thirty-six to one hundred twenty months at a rates ranging from 4.07% to 5.25%. The Company also sold $30 million in securities under agreements to repurchase with original maturity dates through December, 2016 at a rates ranging from 4.12% to 4.30%. During the first six months of fiscal year 2007, short-term borrowings showed a net decrease of $174 million consisting of a decrease of $183 million in short-term borrowings, partially offset by an increase of $1 million in short-term securities sold under agreements to repurchase and an $8 million reclassification of borrowings from long-term to short-term. At December 31, 2006, $179 million of the $210 million of short-term borrowings were in the form of overnight borrowings from the Federal Home Loan Bank. The rate on the daily borrowings generally approximates the Federal Funds rate. At the end of December 2006, the rate was approximately 5.25%, up 25 basis points from June 30, 2006, due to a 25 basis point rate increase in the discount rate by the Federal Reserve Board. If the Federal Reserve Board increases the discount rate over the remainder of the fiscal year, overnight borrowing costs would increase immediately. However, the impact on net interest income would be mitigated by increases the Company would anticipate on loans in the portfolio that are indexed to the prime rate.

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Capital Resources. Total shareholders’ equity increased $12.8 million, or 4.1% during the six months ended December 31, 2006, and totaled $324 million. The primary components of the increase in shareholders’ equity were net income of $13.5 million and a $2.7 million increase from the change in unrealized gain on available for sale securities. These increases were offset by dividends declared on the Company’s common stock totaling $5.1 million. During March 2006, the Company’s board of directors authorized the purchase of up to 500,000 shares of issued and outstanding common stock over the following 12 month period. The stock repurchase program is a component of the Company’s strategy to invest or reduce excess capital after consideration of market and economic factors, the effect on shareholder dilution, adequacy of capital and the effect on liquidity. The shares of common stock repurchased will be held as treasury shares and may be used by the Company in its dividend reinvestment plan, its stock option plan, as consideration in an acquisition transaction or for general corporate purposes. There were no repurchases of common stock during the first six months of fiscal year 2007. Tangible equity also increased to $218 million at December 31, 2006 compared with $188 million at June 30, 2006.

Office of Thrift Supervision (OTS) regulations require savings institutions to maintain certain minimum levels of regulatory capital. Additionally, the regulations establish a framework for the classification of savings institutions into five categories: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized. A comparison of First Place Bank’s actual capital ratios to ratios required to be well capitalized under OTS regulations at December 31, 2006 follows:

	Actual ratio at December 31, 2006		Actual ratio at June 30, 2006		Well-capitalized ratio
Total capital to risk-weighted assets	11.65	%	11.16	%	10.00	%
Tier 1 (core) capital to risk-weighted assets	10.63	%	10.18	%	6.00	%
Tier 1 (core) capital to adjusted total assets	8.14	%	7.45	%	5.00	%

Critical Accounting Policies

The Company follows financial accounting and reporting policies that are in accordance with GAAP and conform to general practices within the banking industry. Some of these accounting policies require management to make estimates and judgments about matters that are uncertain. Application of assumptions different from those used by management could have a material impact on the Company’s financial position or results of operations. These policies are considered critical accounting policies. These policies include the policies to determine the adequacy of the allowance for loan losses and the valuation of the mortgage servicing rights. These policies, current assumptions and estimates utilized and the related disclosure of this process are determined by management and reviewed periodically with the audit committee of the board of directors. Management believes that the judgments, estimates and assumptions used in the preparation of the consolidated financial statements are appropriate given the factual circumstances at the time. Details of the policies and the nature of the estimates follow.

Allowance for loan losses. The allowance for loan losses represents management’s estimate of probable incurred credit losses in the portfolio at each balance sheet date. Management analyzes the adequacy of the allowance based on a review of the loans in the portfolio along with an analysis of external factors. Loans are reviewed individually, or in the case of small homogeneous loans, in the aggregate. This review includes historical data, the ability of the borrower to meet the terms of the loan, an evaluation of the collateral securing the loan, various collection strategies and other factors relevant to the loan or loans. External factors considered include economic conditions, current interest rates, trends in the borrower’s industry and the market for various types of collateral. In addition, overall information about the loan portfolio or segments of the portfolio is considered, including industry concentrations, delinquency statistics and workout experience based on factors such as historical loss experience, the nature and volume of the portfolio, loan concentrations, specific problem loans and current economic conditions. As a result, determining the appropriate level for the allowance for loan losses involves not only evaluating the current financial situation of individual borrowers or groups of borrowers but also current predictions about future cash flows that could change before an actual loss is determined. Based on the variables involved and the fact that management must make judgments about outcomes that are uncertain, the determination of the allowance for loan losses is considered to be a critical accounting policy.

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Mortgage Servicing Rights. When the Company sells a mortgage loan and retains the rights to service that loan, the amortized cost of the loan is allocated between the loan sold and the mortgage servicing right retained. The basis assigned to the mortgage servicing right is amortized in proportion to and over the life of the net revenue anticipated to be received from servicing the loan. Mortgage servicing rights are valued at the lower of amortized cost or estimated fair value. Fair value is measured by stratifying the portfolio of loan servicing rights into groups of loans with similar risk characteristics. When the amortized cost of a group of loans exceeds the fair value, an allowance for impairment is recorded to reduce the value of the mortgage servicing rights to fair value. Fair value for each group of loans is determined quarterly by obtaining an appraisal from an independent third party. That appraisal is based on a modeling process in conjunction with information on recent sales of mortgage servicing rights. Some of the assumptions used in the modeling process are prepayment speeds, delinquency rates, servicing costs, periods to hold idle cash, returns currently available on idle cash, and a discount rate, which takes into account the current rate of return anticipated by holders of servicing rights. The process of determining the fair value of servicing rights involves a number of judgments and estimates including the way loans are grouped, the estimation of the various assumptions used by recent buyers and a projection of how those assumptions may change in the future. The most important variable in valuing servicing rights is the level of interest rates. Long-term interest rates are the primary determinant of prepayment speeds while short-term interest rates determine the return available on idle cash. The process of estimating the value of loan servicing rights is further complicated by the fact that short-term and long-term interest rates may change in a similar magnitude and direction or may change independent of each other.

Loan prepayment speeds have varied significantly over the past three years and could continue to vary in the future. In addition, any of the other variables mentioned above could change over time. Therefore, the valuation of mortgage servicing rights is, and is expected to continue to be, a critical accounting policy where the results are based on estimates that are subject to change over time and can have a significant financial impact on the Company.

Liquidity and Cash Flows

Liquidity is a measurement of the Company’s ability to generate adequate cash flows to meet the demands of its customers and provide adequate flexibility for the Company to take advantage of market opportunities. Cash is used to fund loans, purchase investments, fund the maturity of liabilities, and at times to fund deposit outflows and operating activities. The Company’s principal sources of funds are deposits; amortization, prepayments and sales of loans; maturities, sales and principal receipts from securities; borrowings; the issuance of debt or equity securities and operations. Managing liquidity entails balancing the need for cash or the ability to borrow against the objectives of maximizing profitability and minimizing interest rate risk. The most liquid types of assets typically carry the lowest yields.

At December 31, 2006, the Company had $143 million of cash and unpledged securities available to meet cash needs. Unpledged securities can be sold or pledged to secure additional borrowings. In addition, the Company had the ability to borrow an additional $194 million from the Federal Home Loan Bank based on loans currently pledged under blanket pledge agreements and $35 million on unsecured commercial bank lines of credit. This is compared to $167 million of cash and unpledged securities, Federal Home Loan Bank availability of $131 million and $10 million of availability in an unsecured commercial bank line of credit at June 30, 2006. Potential cash available as measured by liquid assets and borrowing capacity has increased $39 million through December 31, 2006 due to the sale of loans and securities acquired as part of the Northern acquisition and sold during the current quarter and due to deposit growth, partially offset by growth in the loan portfolio. Management receives reports on liquidity on a regular basis and considers the level of liquidity in setting both loan and deposit rates. In addition to the sources of funds listed above, the Company has the ability to raise additional funds by increasing deposit rates relative to competition in national markets, or to sell additional loans currently held in the loan portfolio. Management believes that the current and potential resources mentioned are adequate to meet liquidity needs in the foreseeable future.

The Company, as a holding company, has more limited sources of liquidity. In addition to its existing liquid assets, it can raise funds in the securities markets through debt or equity offerings or it can receive dividends from First Place Bank. Cash can be used by the holding company to make acquisitions, pay the quarterly interest payments on its Junior Subordinated Debentures, pay dividends to common shareholders and to fund operating expenses. At December 31, 2006, the holding company had cash and unpledged securities of $31 million available to meet cash needs. Annual debt service on the junior subordinated debentures is approximately $4 million. Banking regulations limit the amount of dividends that can be paid to the holding company without prior approval of the OTS. Generally, First Place Bank may pay dividends without prior approval as long as the dividend is not more than the total of the current calendar year-to-date

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earnings plus any earnings from the previous two years not already paid out in dividends, and as long as First Place Bank would remain well capitalized. At the present time, First Place Bank could pay approximately $24 million of dividends without OTS approval. Future dividend payments by First Place Bank beyond the $24 million currently available would be based upon future earnings or the approval of the OTS.

Off-balance sheet arrangements

See Note 6, Commitments, Contingencies and Guarantees, of the Notes to Condensed Consolidated Financial Statements in Part 1. Item 1 of this Form 10-Q for a discussion of off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The Company, like other financial institutions, is subject to market risk. Market risk is the type of risk that occurs when a company suffers economic loss due to changes in the market value of various types of assets or liabilities. As a financial institution, the Company makes a profit by accepting and managing various risks, with credit risk and interest rate risk being the most significant. Interest rate risk is the Company’s primary market risk. It is the risk that occurs when changes in market interest rates will result in a reduction in net interest income or net interest margin because interest-bearing assets and interest-bearing liabilities mature at different intervals and reprice at different times. Asset/liability management is the measurement and analysis of the Company’s exposure to changes in net interest income due to changes in interest rates. The objective of the Company’s asset/liability management function is to balance the goal of maximizing net interest income with the control of risks in the areas of liquidity, safety, capital adequacy and earnings volatility. In general, the Company’s customers seek loans with long-term fixed rates and deposit products with shorter maturities, which creates a mismatch of asset and liability maturities. The Company’s primary strategy to counteract this mismatch is to sell the majority of long-term fixed-rate loans within 60 days after they are closed. The Company manages this risk and other aspects of interest rate risk on a continuing basis through a number of functions including review of monthly financial results, rate setting, cash forecasting and planning, budgeting and an Asset/Liability Committee.

On a quarterly basis, the Asset/Liability Committee reviews the results of an interest rate risk model that forecasts changes in net interest income and net portfolio value (NPV), based on one or more interest rate scenarios. NPV is the market value of financial assets less the market value of financial liabilities. The model combines detailed information on existing assets and liabilities with an interest rate forecast, loan prepayment speed assumptions and assumptions about how those assets and liabilities will react to changes in interest rates. These assumptions are inherently uncertain, and as a result, the model cannot precisely measure net interest income or precisely predict the impact of fluctuations in interest rates on net interest income. Actual results will differ from simulated results due to timing, magnitude and frequency of interest rate changes as well as differences in how interest rates change at various points along the yield curve.

The change in the NPV ratio is a long-term measure of what might happen to the market value of financial assets and liabilities over time if interest rates changed instantaneously and the Company did not change existing strategies. The actual results could be better or worse based on changes in interest rate risk strategies. The table below indicates a comparison of the projected NPV for various changes in interest rates as of the end of the most recent quarter compared with the end of the previous fiscal year. The projections are based on an instantaneous change in interest rates and the assumption that short-term and long-term interest rates change by the same magnitude and in the same direction.

Basis point change in rates	NPV ratio December 31, 2006		NPV ratio June 30, 2006
Up 200	9.24	%	8.57	%
Up 100	10.38	%	10.09	%
No change	11.30	%	11.24	%
Down 100	12.03	%	12.12	%
Down 200	12.47	%	12.85	%

The NPV projections indicate that the Company has experienced small decreases in its exposure to rising interest rates and in its potential benefit from falling interest rates during the six months ended December 31, 2006. The NPV ratio for no change in rates has increased 6 basis points. This model indicates what would be likely to happen given no change in the shape of the yield curve. The Company also has exposure to changes in the shape of the yield curve.

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In addition to the risk of changes in net interest income, the Company is exposed to interest rate risk related to loans held for sale and loan commitments. This is the risk that occurs when changes in interest rates will reduce gains or result in losses on the sale of residential mortgage loans that the Company has committed to originate but has not yet contracted to sell. The Company hedges this risk by executing commitments to sell loans or mortgage-backed securities based on the volume of committed loans that are likely to close. Additionally, loan servicing rights act as an economic hedge against rising rates, as they become more valuable in a rising rate environment, often offsetting part or all of the decline in the value of loan commitments or loans held for sale in a rising rate environment.

Item 4. Controls and Procedures

As of the end of the period covered by this quarterly report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective to reasonably ensure that the financial and non-financial information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, including this Form 10-Q for the period ended December 31, 2006, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

There were no changes in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. As a result, no corrective actions were taken.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Neither the Company nor any of its affiliates is involved in any pending legal proceedings other than routine legal proceedings occurring in the ordinary course of business, which involve amounts in the aggregate believed by management to be immaterial to the financial condition of the Company.

Item 1A. Risk Factors

There were no material changes from the risk factors as previously disclosed in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended June 30, 2006.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On March 21, 2006, the Company’s board of directors publicly announced that it had approved a new buy-back program authorizing the repurchase of up to 500,000 shares of the Company’s common stock. There were no repurchases of common stock during the six months ended December 31, 2006. There are 500,000 shares remaining that may be repurchased under the March 2006 authorization. The authorization is in force through March 21, 2007.

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Item 3. Defaults Upon Senior Securities – Not applicable.

Item 4. Submission of Matters to a Vote of Security Holders

The Company held its Annual Meeting of Shareholders on October 26, 2006. The voting results on each issue submitted to the shareholders at that meeting are indicated below.

Election of Directors for a three year term:

	For	Percent		Withheld	Percent
Marie Izzo Cartwright	13,615,539	98.3	%	231,724	1.7	%
Robert P. Grace	13,627,346	98.4	%	219,917	1.6	%
Thomas M. Humphries	13,756,496	99.3	%	90,767	0.7	%
Jeffery B. Ohlemacher	13,680,140	98.8	%	167,123	1.2	%

The following Directors terms continued after the Annual Meeting: A. Gary Bitonte, Earl T. Kissel, E. Jeffrey Rossi, William A. Russell, Robert L. Wagmiller, Donald Cagigas, Steven R. Lewis, Samuel A. Roth, and Ronald P. Volpe.

Ratification of the appointment of Crowe Chizek and Company LLC, as independent auditors of the Company for the fiscal year ending June 30, 2007.

For	Against	Abstain
13,744,268	56,914	46,081

Item 5. Other Information – Not applicable.

Item 6. Exhibits

Exhibit 2	Purchase and Assumption Agreement, dated December 17, 2006, by and among Citizens Banking Corporation, Republic Bank and its successors, First Place Bank and First Place Financial Corp. (i)
Exhibit 31.1	CEO certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 31.2	CFO certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 32.1	CEO certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 32.2	CFO certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(i) Filed as an exhibit to the Company’s current report on Form 8-K dated December 21, 2006 and incorporated by reference herein.

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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: February 7, 2007	/s/ Steven R. Lewis	/s/ Paul S. Musgrove
	Steven R. Lewis	Paul S. Musgrove
	President and Chief Executive Officer	Chief Financial Officer

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