<PAGE>

                                     FORM 10-Q

                         SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, D.C.  20549
                                --------------------

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

                For the quarterly period ended:  September 30, 1998
                                                 ------------------

                                         OR

            [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                          SECURITIES EXCHANGE ACT OF 1934
                 For the transition period from _______ to _______


                           Commission file number 0-25956

                         FIRST PLACE FINANCIAL CORPORATION          
               ------------------------------------------------------
               (Exact name of registrant as specified in its charter)

          New Mexico                                 85-0317365   
-------------------------------                   -----------------
(State or other jurisdiction of                   (I.R.S) Employer
incorporation or organization)                    Identification No.

                                 100 East Broadway
                           Farmington, New Mexico  87401
          ----------------------------------------------------------------
          (Address, including ZIP Code, or registrant's executive offices)

                                  (505) 324-9500
                ----------------------------------------------------
                (Registrant's telephone number, including area code)

                                   Not Applicable
                ----------------------------------------------------
                (Former name, former address and former fiscal year,
                           if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
 the preceding 12 months, and (2) has been subject to such filing requirements
                           for the past 90 days.

       YES   X                                                         NO     
           -----                                                          -----

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

<TABLE>
<CAPTION>
                                                 Outstanding at
           Class                               October 28, 1998 
----------------------------                   -----------------
<S>                                            <C>
Common shares, no par value                       2,160,122

</TABLE>

<PAGE>

                         FIRST PLACE FINANCIAL CORPORATION

                                      FORM 10Q

                                       INDEX

<TABLE>
<CAPTION>

                                                                         PAGE
                                                                        NUMBER
                                                                        ------
<S>                                                                     <C>
PART I.   FINANCIAL INFORMATION
Item 1.   Financial Statements:
          Consolidated Balance Sheets at September 30, 1998,
            December 31, 1997 and September 30, 1997                       3

          Consolidated Statements of Income for the three months and
            nine months ended September 30, 1998 and 1997                  4

          Consolidated Statements of Changes in Stockholders' Equity
            for the nine months ended September 30, 1998 and 1997 and 
            year-ended December 31, 1997                                   5

          Consolidated Statements of Cash Flows for the nine months 
            ended September 30, 1998 and 1997                              7

          Notes to the Consolidated Financial Statements                   9

Item 2.   Management's Discussion and Analysis of
            Financial Condition and Results of Operations                 11

Item 3.   Quantitative and Qualitative Disclosures About Market Risk      17

PART II.  OTHER INFORMATION
Item 6.   Exhibits and Reports on Form 8-K                                18

SIGNATURES                                                                19

</TABLE>

<PAGE>

               FIRST PLACE FINANCIAL CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>


                                                                                  (in thousands)
                                                                   ---------------------------------------------
                                                                   September 30,   December 31,    September 30,
                                                                      1998            1997             1997
                                                                    (Unaudited)                     (Unaudited)
                                                                   ------------    ------------    -------------
<S>                                                                <C>             <C>             <C>
                      ASSETS
Cash and due from banks                                             $  76,426       $  79,579       $  57,183
Interest-bearing deposits                                              18,806          17,052          14,528
Federal funds sold                                                     48,505             250           3,680
                                                                    ---------       ---------       ---------
  Total cash and cash equivalents                                     143,737          96,881          75,391
                                                                    ---------       ---------       ---------

Investment securities:
  Available for sale (at market value)                                306,872         279,559         271,279
                                                                    ---------       ---------       ---------

Loans                                                                 430,991         491,961         487,561
Allowance for loan losses                                              (9,928)         (8,722)         (8,189)
                                                                    ---------       ---------       ---------
  Total net loans                                                     421,063         483,239         479,372
                                                                    ---------       ---------       ---------

Bank premises and equipment, net                                       20,056          17,510          17,247
Other real estate owned                                                   702           1,119           1,597
Other assets                                                           17,723          19,652          19,453
                                                                    ---------       ---------       ---------

Total Assets                                                        $ 910,153       $ 897,960       $ 864,339
                                                                    ---------       ---------       ---------
                                                                    ---------       ---------       ---------

        LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits:
  Noninterest-bearing demand                                        $ 137,993       $ 130,501       $ 102,926
  Interest-bearing demand                                             113,971         110,145         107,581
  Savings and money market accounts                                   104,167         102,707         104,805
  Time certificates, $100,000 and over                                151,349         153,774         160,992
  Other time certificates                                             111,157         111,619         113,200
                                                                    ---------       ---------       ---------
      Total deposits                                                  618,637         608,746         589,504

Securities sold under agreements to repurchase                         68,127          82,507          63,616
Federal funds purchased                                                45,488          34,845          46,130
Federal Home Loan Banks and other notes payable                        91,727          88,416          84,460
Other short-term borrowings                                             - - -             500           - - -
Other liabilities                                                       9,315          11,115           9,952
                                                                    ---------       ---------       ---------
  Total liabilities                                                   833,294         826,129         793,662
                                                                    ---------       ---------       ---------

Stockholders' equity:
Common stock, no par value

  Authorized shares - 5,000,000
  Issued shares - 2,160,122 at 9/30/98;
    2,149,497 at 12/31/97; 2,145,622 at 9/30/97                        14,553          14,364          14,248
  Additional paid-in capital                                              591             406             318
  Net unrealized holding gain on securities available for sale          2,634           1,775           1,530
  Retained earnings                                                    59,081          55,286          54,581
                                                                    ---------       ---------       ---------
      Total stockholders' equity                                       76,859          71,831          70,677
                                                                    ---------       ---------       ---------

Total Liabilities and Stockholders' Equity                          $ 910,153       $ 897,960       $ 864,339
                                                                    ---------       ---------       ---------
                                                                    ---------       ---------       ---------

</TABLE>

See notes to consolidated financial statements

                                       3

<PAGE>

                 FIRST PLACE FINANCIAL CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED STATEMENTS OF INCOME
                                     (Unaudited)

<TABLE>
<CAPTION>

                                                                              (in thousands, except per share)
                                                                  ---------------------------------------------------------
                                                                     Three Months Ended                Nine Months Ended
                                                                       September 30,                     September 30,
                                                                  -----------------------           -----------------------
                                                                    1998            1997              1998            1997
                                                                  --------        -------           -------         -------
<S>                                                               <C>             <C>               <C>             <C>
Interest income:
  Loans, including fees                                           $ 10,739        $11,747           $33,985         $34,888
  Investment securities:
    Taxable                                                          3,422          3,113             9,916           8,897
    Tax-exempt                                                         796            775             2,344           2,326
  Interest-bearing deposits                                            822            203             1,795             457
  Federal funds sold                                                   362             93               734             236
                                                                  --------        -------           -------         -------
    Total interest income                                           16,141         15,931            48,774          46,804
                                                                  --------        -------           -------         -------

Interest expense:
  Time deposits $100,000 and over                                    2,173          2,367             6,543           7,106
  Other deposits                                                     3,503          3,593            10,625          10,733
  Short-term borrowings                                              1,627          1,249             4,846           3,383
  Other borrowings                                                   1,441          1,200             4,089           3,176
                                                                  --------        -------           -------         -------
    Total interest expense                                           8,744          8,409            26,103          24,398
                                                                  --------        -------           -------         -------

Net interest income                                                  7,397          7,522            22,671          22,406
Provision for loan losses                                              420            555             1,555           1,290
                                                                  --------        -------           -------         -------
Net interest income after provision for loan losses                  6,977          6,967            21,116          21,116
                                                                  --------        -------           -------         -------

Other income:
  Service charges on deposit accounts                                  712            705             2,075           2,020
  Other service charges and fees                                       442            327             1,132           1,002
  Investment securities gains (losses)                                   4             --                 7            (129)
  Other operating income                                                75            122               299             418
                                                                  --------        -------           -------         -------
    Total other income                                               1,233          1,154             3,513           3,311
                                                                  --------        -------           -------         -------

Other expense:
  Salaries and employee benefits                                     2,951          2,802             8,996           8,187
  Occupancy expenses, net                                              584            551             1,622           1,691
  Other operating expenses                                           1,931          2,011             6,202           5,453
                                                                  --------        -------           -------         -------
    Total other expenses                                             5,466          5,364            16,820          15,331
                                                                  --------        -------           -------         -------

Income before income taxes                                           2,744          2,757             7,809           9,096
Income taxes                                                           488            660             1,608           2,297
                                                                  --------        -------           -------         -------
Net Income                                                        $  2,256        $ 2,097           $ 6,201         $ 6,799
                                                                  --------        -------           -------         -------
                                                                  --------        -------           -------         -------

Earnings per common share:
   Basic                                                          $   1.04        $  0.98           $  2.87         $  3.18
   Diluted                                                        $   1.03        $  0.96           $  2.83         $  3.12

</TABLE>

See notes to consolidated financial statements

                                       4

<PAGE>

                        FIRST PLACE FINANCIAL CORPORATION
            CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY


<TABLE>
<CAPTION>

                                                                          (in thousands)
                                                           ------------------------------------------------
                                                                         Nine Months Ended
                                                                            September 30,
                                                           ------------------------------------------------
                                                                   1998                      1997
                                                           ---------------------     ----------------------
<S>                                                        <C>          <C>          <C>           <C>
Retained earnings:
   Balance at beginning of year                            $ 55,286                  $ 50,035
   Net income                                                 6,201     $ 6,201         6,799      $ 6,799
   Cash dividends declared                                   (2,406)                   (2,253)
                                                           ---------                 ---------
   Balance at end of period                                  59,081                    54,581
                                                           ---------                 ---------
Accumulated other comprehensive income:
   Balance at beginning of year                               1,775                       967
   Unrealized gains on securities
       net of reclassification adjustment                       859         859           563          563
                                                                        ---------                  --------
   Comprehensive income                                                 $ 7,060                    $ 7,362
                                                                        ---------                  --------
                                                                        ---------                  --------

                                                           ---------                 ---------
   Balance at end of period                                   2,634                     1,530
                                                           ---------                 ---------

Common stock:
   Balance at beginning of year                              14,364                    13,634
   Issuance of new common stock                                 377                       614
   Retirement of common stock                                  (188)                       --
                                                           ---------                 ---------
   Balance at end of period                                  14,553                    14,248
                                                           ---------                 ---------

Additional paid-in capital:
   Balance at beginning of year                                 406                       124
   Additions related to sale of common stock                    185                       194
                                                           ---------                 ---------
Balance at end of period                                        591                       318
                                                           ---------                 ---------
Total stockholders' equity                                 $ 76,859                  $ 70,677
                                                           ---------                 ---------
                                                           ---------                 ---------


Disclosure of reclassification amount:
   Unrealized holding gains arising during period                       $   837                    $   492
   Less:  reclassification adjustment for gains
      included in net income                                                 --                         --
   Plus:  reclassification adjustment for losses
      included in net income                                                 22                         71
                                                                        ---------                  --------
   Net unrealized gains on securities                                   $   859                    $   563
                                                                        ---------                  --------
                                                                        ---------                  --------

</TABLE>

                                       5

<PAGE>

                        FIRST PLACE FINANCIAL CORPORATION
            CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                           Year Ended December 31, 1997


<TABLE>
<CAPTION>

                                                                1997
                                                      --------------------------
<S>                                                   <C>            <C>
Retained earnings:
   Balance at beginning of year                       $ 50,035
   Net income                                            9,094       $ 9,094
   Cash dividends declared                              (3,843)
                                                      ---------
   Balance at end of period                             55,286
                                                      ---------

Accumulated other comprehensive income:
   Balance at beginning of year                            967
   Unrealized gains on securities
       net of reclassification adjustment                  808           808
                                                                     -------
   Comprehensive income                                              $ 9,902
                                                                     -------
                                                                     -------
                                                      ---------
   Balance at end of period                              1,775
                                                      ---------

Common stock:
   Balance at beginning of year                         13,634
   Issuance of new common stock                            730
   Retirement of common stock                               --
                                                      ---------
   Balance at end of period                             14,364
                                                      ---------
Additional paid-in capital:
   Balance at beginning of year                            124
   Additions related to sale of common stock               282
                                                      ---------
Balance at end of period                                   406
                                                      ---------
Total stockholders' equity                            $ 71,831
                                                      ---------
                                                      ---------


Disclosure of reclassification amount:
   Unrealized holding gains arising during period                    $   748
   Less:  reclassification adjustment for gains
      included in net income                                              --
   Plus:  reclassification adjustment for losses
      included in net income                                              60
                                                                     -------
   Net unrealized gains on securities                                $   808
                                                                     -------
                                                                     -------

</TABLE>

                                       6

<PAGE>


                           FIRST PLACE FINANCIAL CORPORATION
                         CONSOLIDATED STATEMENTS OF CASH FLOWS
                                    (unaudited)

<TABLE>
<CAPTION>

                                                                                     (in thousands)
                                                                                   Nine Months Ended
                                                                                      September 30
                                                                               --------------------------
                                                                                   1998          1997
                                                                               ----------     -----------
<S>                                                                            <C>            <C>
Cash flow from operating  activities:
  Net income                                                                   $   6,201      $   6,799
  Adjustments to reconcile net income to net cash provided by operations:
    Amortization                                                                    (456)          (374)
    Depreciation                                                                   1,334          1,104
    Provision for loan losses                                                      1,555          1,290
    Decrease (increase) in other assets                                              480           (319)
    Decrease in other liabilities                                                   (863)          (624)
    Gain on sale of bank premises and equipment                                       (4)            (9)
    Gain on sale of other real estate                                                (33)          (274)
    Writedown of other real estate                                                    80             --
    (Gain) loss on sale of available-for-sale securities                             (15)           129
    Provision for deferred income taxes                                              864           (546)
                                                                               ---------      ---------
Net cash from operating activities                                                 9,143          7,176
                                                                               ---------      ---------

Cash flows from investing activities:
  Proceeds from  sales of available-for-sale securities                            7,852         13,039
  Proceeds from maturities of available-for-sale securities                       77,143         71,673
  Purchases of available-for-sale securities                                    (110,538)      (110,209)
  Net change in loans                                                             60,354        (22,448)
  Proceeds from the sale of bank premises and equipment                               40             21
  Proceeds from sale of other real estate                                            638          1,429
  Purchase of property and equipment                                              (3,917)        (2,140)
                                                                               ---------      ---------
Net cash from investing activities                                                31,572        (48,635)
                                                                               ---------      ---------

Cash flows from financing activities:
  Net change in deposit accounts                                                  12,778         11,278
  Net change in certificates of deposit                                           (2,888)        (9,666)
  Net change in securities sold under agreements to repurchase                   (14,380)        (5,123)
  Net change in federal funds purchased                                           10,143         30,345
  Proceeds from Federal Home Loan Bank advances                                    9,037         38,578
  Payments on Federal Home Loan Bank advances                                    (16,763)        (5,587)
  Net change in other notes payable                                               11,038           (550)
  Cash dividends paid                                                             (3,199)        (2,946)
  Proceeds from issuance of common stock                                             375            808
                                                                               ---------      ---------
Net cash from financing activities                                                 6,141         57,137
                                                                               ---------      ---------

Net increase in cash and cash equivalents                                         46,856         15,678
Cash and cash equivalents at beginning of period                                  96,881         59,713
                                                                               ---------      ---------

Cash and cash equivalents at end of period                                     $ 143,737      $  75,391
                                                                               ---------      ---------
                                                                               ---------      ---------

</TABLE>

See notes to consolidated financial statements

                                       7

<PAGE>

                 FIRST PLACE FINANCIAL CORPORATION AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED


<TABLE>
<S>                                                                            <C>            <C>

Supplemental Disclosure of Cash Flow Information:
  Cash paid during period for:
    Interest                                                                      26,539         24,668
    Taxes                                                                          1,212          2,086
  Non-cash assets acquired through foreclosure                                       268            186

</TABLE>

                                       8

<PAGE>

                 FIRST PLACE FINANCIAL CORPORATION AND SUBSIDIARIES
                          NOTES TO CONSOLIDATED STATEMENTS

NOTE 1 - PRINCIPLES OF CONSOLIDATION

     The consolidated financial statements include the accounts of First Place
     Financial Corporation and its subsidiaries.  Significant intercompany
     accounts and transactions have been eliminated in consolidation.

     The information contained in the financial statements for September 30,
     1998 and September 30, 1997, was unaudited.  In the opinion of management,
     all adjustments necessary for a fair presentation of the results have been
     made.  Certain prior year amounts are reclassified to conform to current
     year classifications.

NOTE 2 - RECONCILIATION OF EARNINGS PER SHARE

     The following is the reconciliation of the numerator and denominator of the
     basic and diluted earnings per common share computations:

<TABLE>
<CAPTION>
                                                           Basic and Diluted EPS
                                                    (in thousands, except per share data)

At September 30                           1998                                     1997
                        ---------------------------------------   ---------------------------------------
                          Income         Shares       Per-Share     Income        Shares        Per-Share
                        (Numerator)   (Denominator)     Amount    (Numerator)   (Denominator)     Amount
                        -----------   -------------   ---------   -----------   -------------   ---------
<S>                     <C>           <C>             <C>         <C>           <C>             <C>
Basic EPS:
Income available to
  common stockholders     $ 6,201       2,158,540      $ 2.87       $ 6,799       2,136,486       $ 3.18
                                                       ------                                     ------
                                                       ------                                     ------
Effect of dilutive
  securities-options           --          31,955                        --          42,086
                          -------       ---------                   -------       ---------
Diluted EPS:
Income available to 
  common stockholders     $ 6,201       2,190,495      $ 2.83       $ 6,799       2,178,572      $ 3.12
                          -------       ---------      ------       -------       ---------      ------
                          -------       ---------      ------       -------       ---------      ------

</TABLE>

NOTE 3 - REPORTING COMPREHENSIVE INCOME

     In June, 1997, the  Financial Accounting Standards Board (FASB) issued
     Statement of Financial Accounting Standards (SFAS) No. 130, REPORTING
     COMPREHENSIVE INCOME.  SFAS No. 130 requires disclosure in the financial
     statements of comprehensive income that encompasses earnings and those
     items currently required to be reported directly in the equity section of
     the balance sheet, such as unrealized gains and losses on 
     available-for-sale securities.  The Consolidated Statements of Changes in 
     Stockholders' Equity include the disclosure of comprehensive income.

                                       9

<PAGE>

NOTE 4 - DISCLOSURE ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED 
          INFORMATION

     In June, 1997, the FASB issued SFAS No. 131, DISCLOSURE ABOUT SEGMENTS OF
     AN ENTERPRISE AND RELATED INFORMATION.  SFAS No. 131 requires disclosures
     about segments of an enterprise and related information about the different
     types of business activities in which an enterprise engages and the
     different economic environments in which it operates.  The Company operates
     in a limited geographic area and reports its business activities on a
     consolidated basis.  The Consolidated Balance Sheets and Consolidated
     Statements of Income are on pages 3 and 4, respectively.

NOTE 5 - CAPITALIZATION OF CERTAIN SOFTWARE COSTS

     In March, 1998, the American Institute of Certified Public Accountants
     (AICPA) issued Statement of Position (SOP) 98-1 CAPITALIZATION OF CERTAIN
     SOFTWARE COSTS, which will become effective for financial statements for
     calendar year 1999.  SOP 98-1 requires the capitalization of certain costs
     related to computer software development or obtained for internal use. 
     Management does not anticipate that the adoption of this SOP will be
     material.

NOTE 6 - REPORTING ON THE COSTS OF START-UP ACTIVITIES

     In April, 1998, the AICPA issued SOP 98-5 REPORTING ON THE COSTS OF 
     START-UP ACTIVITIES, which will be effective for financial statements for 
     fiscal years beginning after December 15, 1998. SOP 98-5 requires cost of 
     start-up activities and organization costs to be expensed as incurred. 
     Management does not anticipate that the adoption of this SOP will be
     material.

NOTE 7 - ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING
          ACTIVITIES

     In June, 1998, the FASB issued SFAS No. 133, ACCOUNTING FOR DERIVATIVE
     INSTRUMENTS AND HEDGING ACTIVITIES.  SFAS No. 133 establishes accounting
     and reporting standards for derivative instruments.  This Statement is
     effective for the fiscal year beginning after June 15, 1999.  Management
     does not anticipate that the adoption of this FASB will be material.

                                       10

<PAGE>

                        MANAGEMENT'S DISCUSSION AND ANALYSIS
                  OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                    FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998


This management discussion and analysis of financial condition should be read 
in conjunction with the consolidated financial statements and accompanying 
notes and Form 10-K for the year-ended December 31, 1997.

Words or phrases when used in this Form 10-Q or other filings with the 
Securities and Exchange Commission, such as "does not expect" and "are 
expected to", or similar expressions are intended to identify 
"forward-looking statements" within the meaning of the Private Securities 
Litigation Reform Act of 1995. 

Various factors such as, national and regional economic conditions, changes 
in market interest rates, credit and other risks of lending and investment 
activities, and competitive and regulatory factors, could affect the 
financial performance of First Place Financial Corporation and its 
subsidiaries and could cause actual results for future periods to differ from 
those anticipated.

OVERVIEW

First Place Financial Corporation ("First Place") and its wholly owned 
subsidiaries, First National Bank of Farmington, New Mexico ("FNBF"), Burns 
National Bank of Durango, Colorado ("BNBD"), and Western Bank, Gallup, New 
Mexico ("WBG") (collectively, the "Subsidiary Banks") combined operations 
(the "Company") recorded, for the first nine months of 1998, net income of 
$6,201,000, compared to net income of $6,799,000 for the first nine months of 
1997.  Basic and diluted earnings per share (EPS) were $2.87 and $2.83, 
respectively, for the nine months ended September 30, 1998 compared to $3.18 
and $3.12, respectively, for the same period a year ago.  The net income for 
the first nine months of 1998 decreased $598,000 from net income reported for 
the first nine months of 1997 due to the net result of net interest income 
increasing $265,000, other income increasing $202,000 and taxes decreasing 
$689,000, offset by increases in the provision for loan losses of $265,000 
and in other expenses of $1,489,000.

Net income of $2,256,000 was recorded for the third quarter of 1998, up 
$159,000 from the $2,097,000 recorded for the third quarter of 1997.  Basic 
and diluted EPS were $1.04 and $1.03, respectively, for the three months 
ended September 30, 1998 compared to $.98 and $.96, respectively, for the 
same period a year ago.

On an annualized basis, the return on average assets for the first nine 
months of 1998 was .91 percent and the return on average assets for the first 
nine months of 1997 was 1.11 percent.  On an annualized basis, the return on 
average equity for the nine months of 1998 was 11.25 percent compared to 
13.38 percent for the same period a year ago.  For the year-ended December 31,
1997, the return on average assets and the return on average equity were 
1.09 percent and 13.32 percent, respectively.

                                       11

<PAGE>

NET INTEREST INCOME

Interest income for the nine months ended September 30, 1998, was 
$48,774,000, a 4.2 percent increase over the $46,804,000 recorded for the 
nine months of 1997. Loan interest income and fees decreased $903,000, 
interest income on available-for-sale securities increased $1,037,000, 
interest income on interest-bearing deposits in other banks increased 
$1,338,000 and interest income on federal funds sold increased $498,000.  
Total interest earning assets averaged $810,835,000, up $61,862,000 from 
average earning assets of $748,973,000 recorded for the nine months ended 
September 30, 1997.  This increase was primarily due to the increase of 
$24,555,000 or 9.5 percent in average available-for-sale securities, 
$33,485,000 or 298.1 percent increase in average interest-bearing deposits in 
other banks and average federal funds sold increase of $12,018,000 or 211.2 
percent.  These increases were offset by a decrease of $8,196,000 or 1.7 
percent in average loans.  The average yield on earning assets for the first 
nine months  of 1998 was 8.28 percent, compared to 8.61 percent for the like 
period a year ago. The decrease in the average yield on earning assets was 
primarily due to the change in the composition of average earning assets 
previously discussed.  

Interest income for the quarter ended September 30, 1998 was $16,141,000, a 
1.3 percent increase over the $15,931,000 recorded for the third quarter of 
1997.

Interest expense for the nine months ended September 30, 1998, was 
$26,103,000, a 7.0 percent increase compared to $24,398,000 for the nine 
months ended September 30, 1997.  Average interest-bearing liabilities were 
$700,565,000 for the first nine months of 1998, a 7.4 percent increase from 
average interest-bearing liabilities of $652,105,000 for the first nine 
months of 1997.  This increase was due to the $16,832,000 increase in average 
interest-bearing demand deposits, the $32,145,000 increase in average federal 
funds purchased, the $5,263,000 increase in average securities sold under 
agreements to repurchase and an increase in average Federal Home Loan Bank 
notes and other notes payable of $20,546,000.  These increases were offset 
somewhat by decreases of $5,278,000 in average savings and money market 
accounts and $21,048,000 in average time certificates.  The average rates 
paid on these liabilities for the first nine months of 1998 was 4.98 percent 
compared to 5.00 percent paid for the same period a year ago.

Interest expense for the quarter ended September 30, 1998 was $8,744,000, a 
4.0 percent increase, compared to $8,409,000 for the quarter ended 
September 30, 1997.

Net interest income increased $265,000 for the first nine months of 1998 
compared to the same period a year ago.  Net interest margin, which is net 
interest income expressed as a percent of total average earning assets on a 
fully tax-equivalent basis, for the first nine months of 1998, was 3.98 
percent, down from 4.26 percent a year ago.  The decrease in the net interest 
margin was primarily due to the change in the composition of average earning 
assets. Average loans, which are the highest yielding earning asset, were 
57.5 percent and 63.3 percent of total average earning assets as of 
September 30, 1998 and 1997, respectively.  The impact of this shift was offset 
somewhat by an increase in the ratio of noninterest-bearing deposits to 
average earning assets, which was 15.7 percent and 12.4 percent as of 
September 30, 1998 and 1997, respectively.

                                       12

<PAGE>

Net interest income decreased $125,000, or 1.7 percent, for the third quarter 
of 1998 compared to the same period in 1997.

PROVISION FOR LOAN LOSSES

The 1998 year-to-date provision for loan losses was $1,555,000, an increase 
of $265,000, or 20.5 percent from the year-ago period.  For the third quarter 
of 1998, the provision for loan losses was $420,000, down $135,000 from the 
year-ago quarter.  The provision increase was in response to concerns with 
certain portions of the loan portfolio during the first half of 1998 as 
discussed and reported in "Asset Quality" on page 15.  However, the decrease 
in the provision in the third quarter of 1998 compared to the third quarter 
of 1997 reflects management's commitment to improving loan quality as well as 
the impact of the decrease in outstanding loans.

OTHER INCOME

For the first nine months of 1998, the Company recorded other income of 
$3,513,000, up $202,000 from the $3,311,000 recorded in the first nine months 
of 1997.  Correspondent bank service charges increased $104,000 due to 
increases in correspondent bank accounts and activity; secondary mortgage fee 
income increased $114,000 and ATM and credit card fees increased $100,000. 
Investment security losses of $129,000 were reported for the nine months 
ended September 30, 1997 while $7,000 in gains were reported for the nine 
months ended September 30, 1998.  These gains were offset somewhat by a 
decrease in gains on the sale of other real estate owned (OREO) and other 
related income of $221,000.

Other income for the third quarter of 1998 was $1,233,000, up $79,000 from 
the $1,154,000 reported for the same period a year ago.  This increase was 
primarily due to ATM and credit card fee increases offset somewhat by OREO 
income decreases.

OTHER EXPENSES

Other expenses for the nine months ended September 30, 1998 were $16,820,000, 
up $1,489,000 from the $15,331,000 recorded for the same period a year ago.  
This increase was primarily due to increases in salaries and benefits of 
$809,000, data processing expenses of $353,000 and supplies of $111,000 
offset somewhat by $172,000 decrease in legal expenses.  Salaries and 
benefits increased primarily due to normal salary increases and a higher 
level of full-time equivalent employees added to support expansion, including 
twelve staff members hired for Capital Bank, a de novo bank which is located 
in Albuquerque and is a wholly owned subsidiary of the Company.  Capital Bank 
opened in October, 1998.  The increases in data processing expenses and 
supplies were primarily due to technical enhancements.  The most significant 
enhancements were digital check and statement imaging, local and wide-area 
networks and an improved voice response system.  The decrease in legal 
expenses was due to improved loan quality and recoveries of legal expenses.

                                       13

<PAGE>

Other expenses for the three months ended September 30, 1998 were $5,466,000, 
up $102,000 from the $5,364,000 recorded for the same period a year ago.  
This increase was primarily due to increases in salaries and benefits of 
$149,000 and an increase of $142,000 in data processing expenses offset by a 
$107,000 decrease in legal fees.

INCOME TAXES

Income tax expense for the first nine months of 1998 was $1,608,000, down 
$689,000 from $2,297,000 recorded for the nine months of 1997.  The effective 
tax rates for the nine months of 1998 and 1997 were 21 percent and 25 
percent, respectively.

Income tax expense for the third quarter of 1998 was $488,000, down $172,000 
from $660,000 recorded in the third quarter of 1997.  The effective tax rates 
for the third quarter of 1998 and 1997 were 18 percent and 24 percent, 
respectively.

The decrease in the effective tax rates for third quarter and nine months 
ended September 30, 1998 was primarily the result of the Company's increased 
investment in U.S. government and tax-exempt municipal securities.

BALANCE SHEET REVIEW

Average total assets were $910,624,000 for the first nine months of 1998 
compared to $822,478,000 for the like period of 1997.  Period-end assets were 
$910,153,000, $897,960,000 and $864,339,000 at September 30, 1998, December 
31, 1997, and September 30, 1997, respectively.  

Cash and due from banks at September 30, 1998 were $76,426,000 compared to 
$57,183,000 reported for the same period a year ago.  This increase of 
$19,243,000 consisted primarily of due from bank balances which increased 
$12,640,000 from September 30, 1997 to September 30, 1998.  The due from bank 
balances have increased due to increased check processing for correspondent 
banks.  The average cash and due from banks balances for the first nine 
months of 1998 were $71,141,000 compared to $45,176,000 average during the 
first nine months of 1997 and $49,572,000 average for the year-ended December 
31, 1997.

Interest-bearing deposits in banks, which consist of balances maintained at 
Federal Home Loan Banks, increased from $14,528,000 at September 30, 1997 to 
$18,806,000 at September 30, 1998.  The Company deposits excess funds into 
Federal Home Loan Banks in lieu of selling the funds in the federal funds 
market.  Federal funds sold increased $44,825,000 from September 30, 1997 to 
the September 30, 1998 balance of $48,505,000.

Average available-for-sale securities at September 30, 1998 were $282,438,000 
an increase of $24,557,000 from $257,881,000 reported for September 30, 1997. 
This increase was primarily in taxable securities.  The balance of 
available-for-sale securities at September 30, 1998 was $306,872,000 up 13.1 
percent from a year ago.

                                       14

<PAGE>

Loans decreased $56,570,000 to $430,991,000 at September 30, 1998, from 
$487,561,000 at September 30, 1997.  Loans at September 30, 1998, decreased 
$60,970,000 from December 31, 1997.  This decrease was in both the commercial 
and consumer categories, with the most significant decrease being in the 
commercial and commercial real estate areas.  The $60,970,000 decrease was 
primarily attributable to payoffs of several large loans due to customers 
obtaining alternative long-term financing, early payoffs due to corporate 
acquisitions and a reduction in direct and indirect consumer loans which was 
primarily due to enhanced underwriting standards. Management is actively 
working on expanding the Company's customer base which should provide 
additional lending opportunities.  The October, 1998 opening of Capital Bank 
will give the Company access to the Albuquerque market which has strategic 
significance as the Albuquerque metropolitan area economy is the largest and 
most robust economy in New Mexico.

Total deposits of $618,637,000 at September 30, 1998, increased $9,891,000 
and $29,133,000 from December 31, 1997 and September 30, 1997, respectively. 
Noninterest-bearing deposits of $137,993,000 at September 30, 1998, increased 
$35,067,000 from the $102,926,000 reported at September 30, 1997.  This 
increase was primarily in correspondent bank deposit balances.  The 
correspondent bank balances increased due to expansion of the Company's check 
processing business. Interest-bearing demand of $113,971,000 increased 
$6,390,000 from the $107,581,000 reported at September 30, 1997.  Savings and 
money market accounts were $104,167,000 at September 30, 1998 down slightly 
from the year-ago period. Time certificates decreased $11,686,000 from a year 
ago to $262,506,000.

Securities sold under agreements to repurchase as of September 30, 1998, were 
$68,127,000 compared to $82,507,000 as of December 31, 1997 and $63,616,000 
as of September 30, 1997.  Federal funds purchased were $45,488,000 as of 
September 30, 1998, compared to $34,845,000 as of December 31, 1997, and 
$46,130,000 as of September 30, 1997.  Federal Home Loan Bank (FHLB) advances 
and other notes payable were $91,727,000 as of September 30, 1998, compared 
to $88,416,000 as of December 31, 1997, and $84,460,000 at September 30, 
1997.

ASSET QUALITY

Nonperforming loans, OREO and other foreclosed assets are presented in the 
following table:

<TABLE>
<CAPTION>

                                                           (in thousands)
                                           -----------------------------------------------
                                           September 30,    December 31,     September 30,
                                               1998             1997            1997
                                           -------------    ------------     -------------
<S>                                        <C>              <C>              <C>
Nonaccrual loans                             $4,056           $5,078           $2,448

Accruing loans past due 90 days or more       1,239              227            1,484

Restructured loans (in compliance with
modified terms)                               3,090               29               29

OREO and other foreclosed assets                778            1,421            1,805
                                             ------           ------           ------
Total nonperforming assets                   $9,163           $6,755           $5,766
                                             ------           ------           ------
                                             ------           ------           ------

</TABLE>

                                       15

<PAGE>

Restructured loans increased $3,061,000 from December 31, 1997 to 
September 30, 1998. This increase was primarily attributed to a single loan.

ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses is presented in the following table:

<TABLE>
<CAPTION>

                                           September 30,    December 31,     September 30,
                                               1998             1997            1997
                                           -------------    ------------     -------------
<S>                                        <C>              <C>              <C>
Beginning balance                            $ 8,722          $ 8,933          $ 8,933
  Provision charged to expense                 1,555            2,245            1,290
  Recoveries on loans previously
    charged-off                                  661            1,086              859
  Loans charged-off                           (1,010)          (3,542)          (2,893)
                                             -------          -------          -------
Balance                                      $ 9,928          $ 8,722          $ 8,189
                                             -------          -------          -------
                                             -------          -------          -------

</TABLE>

The Company considered the allowance for loan losses at September 30, 1998, 
to be adequate to absorb known risks in the loan portfolio.  Year-to-date net 
loan charge-offs were .08 percent of loans outstanding at September 30, 1998, 
compared to .42 percent at September 30, 1997.  The $1,883,000 decrease in 
gross charge-offs from the same period a year ago was primarily in commercial 
loans.

Based upon recent experience, management estimates gross charge-offs for 1998 
of $1,700,000 broken down as follows:  commercial $200,000; commercial real 
estate $200,000 and consumer $1,300,000.  Actual results may differ from 
management's estimates.

LIQUIDITY

The Company maintains liquidity through stable deposits, the prudent usage of 
debt, and from a high quality securities portfolio.

Other sources of liquidity are provided by federal funds purchased, 
securities sold under repurchase agreements, borrowings from Federal Home 
Loan Banks and access to the Federal Reserve for short term liquidity needs.  
The Company has federal funds lines of credit of $78,000,000 as of September 
30, 1998.  The ratio of loans to deposits, which is a measure of liquidity, 
was 69.7 percent at September 30, 1998 compared to 80.8 percent and 82.7 
percent at December 31, 1997, and September 30, 1997, respectively.

Management expects that current sources of liquidity will meet funding needs 
although changes in market conditions could affect their mix or could require 
the use of other funding sources.

                                       16

<PAGE>

ASSET/LIABILITY MANAGEMENT

The subsidiary banks' Asset Liability Management Committees ("ALCO") are 
responsible for the identification, assessment and management of the 
liquidity and interest rate risk of the respective subsidiary banks.  The 
ALCO has focused on maintaining acceptable liquidity levels and maintaining a 
position of minimal interest rate risk exposure with an emphasis on deposit 
gathering, nondeposit options such as FHLB borrowings and taking advantage of 
lending opportunities.  

STOCKHOLDERS' EQUITY AND CAPITAL ADEQUACY

The subsidiary banks each exceeded regulatory requirements for "well 
capitalized" status as of September 30, 1998.  The Company's risk-based 
capital ratios at September 30, 1998, were:

     Tier 1 capital (regulatory minimum = 4.00% or above) was 14.05 percent
     compared to 12.00 percent at year end.

     Total capital (regulatory minimum = 8.00% or above) was 15.31 percent
     compared to 13.25 percent at year end.

     Leverage ratio (regulatory minimum = 4.00% or above) was 8.09 percent
     compared to 7.92 percent at year end.

Stockholders' equity increased 8.7 percent to $76,859,000 from a year ago 
and was up $5,028,000 from year-end 1997.  This growth was primarily due to 
earnings retention.  The ratio of stockholders' equity to total assets was 
8.4 percent at September 30, 1998, compared to 8.0 percent and 8.2 percent at 
December 31, 1997, and September 30, 1997, respectively.

YEAR 2000 COMPLIANCE PLAN

Many computer applications do not have the capability of recognizing the year 
2000 as existing programs and hardware configurations typically use only two 
digits to identify a year in the date field.  The Company is actively engaged 
in resolving the issues involved with the Year 2000 challenge.  A team has 
been formed to identify the scope of the project and address the various 
issues.  The Company is currently on schedule with its plan to have all 
mission critical systems upgraded before the year 2000 and the majority of 
the testing will be completed by December 31, 1998.  The Company has assessed 
the Year 2000 compliance status of third party service providers and has also 
assessed the scope of the Year 2000 issue in regard to  major customers and 
has developed contingency plans which address the potential credit and 
liquidity risks involved.

The estimated expense for the Company's Year 2000 project is not expected to 
be material (approximately $200,000 for 1999 and $100,000 for 2000).  The 
completion dates and costs are based on management's current best estimates.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

There have been no material changes in the Company's interest rate risk 
position since December 31, 1997.

                                       17

<PAGE>

PART II.  OTHER INFORMATION

Item 6.   Exhibits and Reports on Form 8-K
     
               (a)  Exhibits:
                    Exhibit 3 (i).  Articles of Incorporation of Registrant*
                    Exhibit 3(ii).  Bylaws of Registrant*
                    Exhibit 27.     Financial Data Schedule

               (b)  Reports on Form 8-K

                    (1)  Report dated August 19, 1998, regarding management
                         promotions.

                    (2)  Report dated October 26, 1998, regarding the press
                         release announcing the results for the third quarter
                         ended September 30, 1998, and reporting the quarterly
                         dividend and the third quarter 1998 shareholder letter.

-------------------
*    Incorporated by reference from Exhibits to the Registrant's Registration
     Statement on Form S-4, dated April 18, 1995, Registration No. 33-91310

                                       18

<PAGE>

                                    SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the 
registrant has duly caused this report to be signed on its behalf by the 
undersigned thereunto duly authorized.


                                       FIRST PLACE FINANCIAL CORPORATION
                                       ---------------------------------
                                                (Registrant)


Date: November 9, 1998                 /s/ James D. Rose
      ----------------                 -------------------------------------
                                       President and Chief Operating Officer

                                       19