##### Table of Contents

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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

For the quarterly period ended March 31, 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



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FIRST PLACE FINANCIAL CORP.

(Exact name of registrant as specified in its charter)



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|                                               |  |                                     
|---------------------------------------------- |  | ------------------------------------
|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)



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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.

15,136,384 shares of common stock as of April 30, 2006



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##### Table of Contents

TABLE OF CONTENTS



|                              |  |          |  |                                                                                                                                  |  |           
|----------------------------- |  | -------- |  | -------------------------------------------------------------------------------------------------------------------------------- |  | ----------
|                              |  |          |  |                                                                                                                                  |  | PageNumber
|PART I. FINANCIAL INFORMATION |  |         
|                              |  |          | 
|                              |  | Item 1.  |  | Financial Statements                                                                                                             |  |           
|                              |  |          | 
|                              |  |          |  | Condensed Consolidated Statements of Financial Condition as of March 31, 2006 and June 30, 2005                                  |  | 3         
|                              |  |          | 
|                              |  |          |  | Condensed Consolidated Statements of Income for the Three and Nine Months Ended March 31, 2006 and 2005                          |  | 4         
|                              |  |          | 
|                              |  |          |  | Condensed Consolidated Statements of Changes in Shareholders Equity For the Three and Nine Months Ended March 31, 2006 and 2005 |  | 5         
|                              |  |          | 
|                              |  |          |  | Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2006 and 2005                                |  | 6         
|                              |  |          | 
|                              |  |          |  | Notes to Condensed Consolidated Financial Statements                                                                             |  | 7-15      
|                              |  |          | 
|                              |  | Item 2.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                            |  | 15-28     
|                              |  |          | 
|                              |  | Item 3.  |  | Quantitative and Qualitative Disclosures about Market Risk                                                                       |  | 28-29     
|                              |  |          | 
|                              |  | Item 4.  |  | Controls and Procedures                                                                                                          |  | 29 - 30   
|                              | 
|PART II. OTHER INFORMATION    |  |         
|                              |  |          | 
|                              |  | Item 1.  |  | Legal Proceedings                                                                                                                |  | 30        
|                              |  |          | 
|                              |  | Item 1a. |  | Risk Factors                                                                                                                     |  | 30        
|                              |  |          | 
|                              |  | Item 2.  |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                      |  | 30        
|                              |  |          | 
|                              |  | Item 3.  |  | Defaults Upon Senior Securities                                                                                                  |  | 30        
|                              |  |          | 
|                              |  | Item 4.  |  | Submission of Matters to a Vote of Security Holders                                                                              |  | 30        
|                              |  |          | 
|                              |  | Item 5.  |  | Other Information                                                                                                                |  | 30        
|                              |  |          | 
|                              |  | Item 6.  |  | Exhibits                                                                                                                         |  | 30        
|                              | 
|SIGNATURES                    |  | 31      



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##### Table of Contents

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)



|                                                                                                  |  |               |           |   |              |   |           |  
|------------------------------------------------------------------------------------------------- |  | ------------- | --------- | - | ------------ | - | --------- | -
|                                                                                                  |  | March 31,2006 |           |   | June 30,2005 |  
|                                                                                                  |  | (Unaudited)   |           |   |              |  
|ASSETS                                                                                            |  |               |           |   |              |   |           |  
|Cash and due from banks                                                                           |  | $             | 60,513    |   |              | $ | 52,549    |  
|Interest-bearing deposits in other banks                                                          |  |               | 4,600     |   |              |   |          |  
|Securities available for sale                                                                     |  |               | 266,170   |   |              |   | 296,314   |  
|Loans held for sale                                                                               |  |               | 59,015    |   |              |   | 145,053   |  
|Loans:                                                                                            |  |               |           |   |              |   |           |  
|Mortgage and construction                                                                         |  |               | 916,479   |   |              |   | 806,294   |  
|Commercial                                                                                        |  |               | 789,992   |   |              |   | 715,903   |  
|Consumer                                                                                          |  |               | 358,004   |   |              |   | 308,924   |  
|                                                                                                  |  |               |           |   |              |   |           |  
|Total loans                                                                                       |  |               | 2,064,475 |   |              |   | 1,831,121 |  
|Less allowance for loan losses                                                                    |  |               | 20,170    |   |              |   | 18,266    |  
|                                                                                                  |  |               |           |   |              |   |           |  
|Loans, net                                                                                        |  |               | 2,044,305 |   |              |   | 1,812,855 |  
|Federal Home Loan Bank stock                                                                      |  |               | 27,518    |   |              |   | 30,621    |  
|Premises and equipment, net                                                                       |  |               | 25,428    |   |              |   | 21,367    |  
|Goodwill                                                                                          |  |               | 56,207    |   |              |   | 55,076    |  
|Core deposit and other intangibles                                                                |  |               | 12,525    |   |              |   | 15,282    |  
|Other assets                                                                                      |  |               | 90,874    |   |              |   | 69,826    |  
|                                                                                                  |  |               |           |   |              |   |           |  
|Total assets                                                                                      |  | $             | 2,647,155 |   |              | $ | 2,498,943 |  
|                                                                                                  |  |               |           |   |              |   |           |  
|LIABILITIES                                                                                       |  |               |           |   |              |   |           |  
|Deposits:                                                                                         |  |               |           |   |              |   |           |  
|Noninterest-bearing checking                                                                      |  | $             | 223,647   |   |              | $ | 235,840   |  
|Interest-bearing checking                                                                         |  |               | 117,586   |   |              |   | 110,774   |  
|Savings                                                                                           |  |               | 205,284   |   |              |   | 195,203   |  
|Money market                                                                                      |  |               | 442,061   |   |              |   | 441,134   |  
|Certificates of deposit                                                                           |  |               | 759,784   |   |              |   | 726,388   |  
|                                                                                                  |  |               |           |   |              |   |           |  
|Total deposits                                                                                    |  |               | 1,748,362 |   |              |   | 1,709,339 |  
|Short-term borrowings                                                                             |  |               | 286,011   |   |              |   | 262,293   |  
|Long-term borrowings                                                                              |  |               | 330,773   |   |              |   | 260,788   |  
|Other liabilities                                                                                 |  |               | 29,992    |   |              |   | 29,867    |  
|                                                                                                  |  |               |           |   |              |   |           |  
|Total liabilities                                                                                 |  |               | 2,395,138 |   |              |   | 2,262,287 |  
|                                                                                                  |  |              
|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                                                                        |  |               | 188,744   |   |              |   | 187,797   |  
|Retained earnings                                                                                 |  |               | 114,307   |   |              |   | 101,878   |  
|Unearned employee stock ownership plan shares                                                     |  |               | (4,600    | ) |              |   | (5,045    | )
|Treasury stock, at cost: 2,978,289 shares at March 31, 2006 and 3,088,854 shares at June 30, 2005 |  |               | (43,040   | ) |              |   | (44,638   | )
|Accumulated other comprehensive loss                                                              |  |               | (3,575    | ) |              |   | (3,517    | )
|                                                                                                  |  |               |           |   |              |   |           |  
|Total shareholders equity                                                                        |  |               | 252,017   |   |              |   | 236,656   |  
|                                                                                                  |  |               |           |   |              |   |           |  
|Total liabilities and shareholders equity                                                        |  | $             | 2,647,155 |   |              | $ | 2,498,943 |  
|                                                                                                  |  |               |           |   |              |   |           |  

See accompanying notes to condensed consolidated financial statements.



3



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##### Table of Contents

FIRST PLACE FINANCIAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

(Dollars in thousands, except per share data)



|                                                    |  |                             |        |   |                            |   |        |      |  |   |         |   |  |   |        |  
|--------------------------------------------------- |  | --------------------------- | ------ | - | -------------------------- | - | ------ | ---- |  | - | ------- | - |  | - | ------ | -
|                                                    |  | Three months endedMarch 31, |        |   | Nine months endedMarch 31, |  
|                                                    |  | 2006                        |        |   | 2005                       |   |        | 2006 |  |   | 2005    |  
|INTEREST INCOME                                     |  |                             |        |   |                            |   |        |      |  |   |         |   |  |   |        |  
|Loans, including fees                               |  | $                           | 34,061 |   |                            | $ | 27,662 |      |  | $ | 98,559  |   |  | $ | 77,418 |  
|Securities and interest-bearing deposits            |  |                             |        |   |                            |   |        |      |  |   |         |   |  |   |        |  
|Taxable                                             |  |                             | 3,080  |   |                            |   | 3,166  |      |  |   | 9,103   |   |  |   | 9,730  |  
|Tax-exempt                                          |  |                             | 406    |   |                            |   | 405    |      |  |   | 1,206   |   |  |   | 1,221  |  
|                                                    |  |                             |        |   |                            |   |        |      |  |   |         |   |  |   |        |  
|TOTAL INTEREST INCOME                               |  |                             | 37,547 |   |                            |   | 31,233 |      |  |   | 108,868 |   |  |   | 88,369 |  
|                                                    |  |                             |        |  
|INTEREST EXPENSE                                    |  |                             |        |   |                            |   |        |      |  |   |         |   |  |   |        |  
|Deposits                                            |  |                             | 11,281 |   |                            |   | 7,542  |      |  |   | 31,760  |   |  |   | 21,279 |  
|Short-term borrowings                               |  |                             | 2,878  |   |                            |   | 1,630  |      |  |   | 7,528   |   |  |   | 3,942  |  
|Long-term borrowings                                |  |                             | 4,308  |   |                            |   | 3,461  |      |  |   | 11,417  |   |  |   | 10,275 |  
|                                                    |  |                             |        |   |                            |   |        |      |  |   |         |   |  |   |        |  
|TOTAL INTEREST EXPENSE                              |  |                             | 18,467 |   |                            |   | 12,633 |      |  |   | 50,705  |   |  |   | 35,496 |  
|                                                    |  |                             |        |   |                            |   |        |      |  |   |         |   |  |   |        |  
|NET INTEREST INCOME                                 |  |                             | 19,080 |   |                            |   | 18,600 |      |  |   | 58,163  |   |  |   | 52,873 |  
|PROVISION FOR LOAN LOSSES                           |  |                             | 1,013  |   |                            |   | 906    |      |  |   | 3,558   |   |  |   | 2,584  |  
|                                                    |  |                             |        |   |                            |   |        |      |  |   |         |   |  |   |        |  
|NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES |  |                             | 18,067 |   |                            |   | 17,694 |      |  |   | 54,605  |   |  |   | 50,289 |  
|                                                    |  |                             |        |  
|NONINTEREST INCOME                                  |  |                             |        |   |                            |   |        |      |  |   |         |   |  |   |        |  
|Service charges and fees on deposit accounts        |  |                             | 1,340  |   |                            |   | 1,220  |      |  |   | 4,078   |   |  |   | 3,945  |  
|Net (losses) gains on sale of securities            |  |                             | (945   | ) |                            |   | (136   | )    |  |   | (945    | ) |  |   | 168    |  
|Impairment of securities                            |  |                             |       |   |                            |   |       |      |  |   |        |   |  |   | (5,246 | )
|Net gains on sale of loans                          |  |                             | 1,391  |   |                            |   | 1,934  |      |  |   | 4,726   |   |  |   | 4,358  |  
|Gain on sale of loan servicing rights               |  |                             | 1,551  |   |                            |   |       |      |  |   | 1,551   |   |  |   |       |  
|Loan servicing income                               |  |                             | 723    |   |                            |   | 107    |      |  |   | 1,081   |   |  |   | 174    |  
|Other income - bank                                 |  |                             | 1,651  |   |                            |   | 2,518  |      |  |   | 5,273   |   |  |   | 5,449  |  
|Other income - non-bank subsidiaries                |  |                             | 2,193  |   |                            |   | 1,757  |      |  |   | 5,849   |   |  |   | 4,959  |  
|                                                    |  |                             |        |   |                            |   |        |      |  |   |         |   |  |   |        |  
|TOTAL NONINTEREST INCOME                            |  |                             | 7,904  |   |                            |   | 7,400  |      |  |   | 21,613  |   |  |   | 13,807 |  
|                                                    |  |                             |        |  
|NONINTEREST EXPENSE                                 |  |                             |        |   |                            |   |        |      |  |   |         |   |  |   |        |  
|Salaries and employee benefits                      |  |                             | 8,282  |   |                            |   | 7,996  |      |  |   | 24,565  |   |  |   | 21,707 |  
|Occupancy and equipment                             |  |                             | 2,465  |   |                            |   | 2,457  |      |  |   | 7,346   |   |  |   | 7,265  |  
|Professional fees                                   |  |                             | 693    |   |                            |   | 723    |      |  |   | 2,133   |   |  |   | 1,929  |  
|Loan expenses                                       |  |                             | 687    |   |                            |   | 559    |      |  |   | 1,939   |   |  |   | 1,596  |  
|Marketing                                           |  |                             | 437    |   |                            |   | 524    |      |  |   | 1,599   |   |  |   | 1,761  |  
|Franchise taxes                                     |  |                             | 598    |   |                            |   | 78     |      |  |   | 926     |   |  |   | 1,107  |  
|Amortization of intangible assets                   |  |                             | 900    |   |                            |   | 972    |      |  |   | 2,769   |   |  |   | 2,916  |  
|Other                                               |  |                             | 2,687  |   |                            |   | 2,440  |      |  |   | 8,073   |   |  |   | 7,230  |  
|                                                    |  |                             |        |   |                            |   |        |      |  |   |         |   |  |   |        |  
|TOTAL NONINTEREST EXPENSE                           |  |                             | 16,749 |   |                            |   | 15,749 |      |  |   | 49,350  |   |  |   | 45,511 |  
|                                                    |  |                             |        |   |                            |   |        |      |  |   |         |   |  |   |        |  
|INCOME BEFORE INCOME TAXES                          |  |                             | 9,222  |   |                            |   | 9,345  |      |  |   | 26,868  |   |  |   | 18,585 |  
|Provision for income tax                            |  |                             | 2,896  |   |                            |   | 2,755  |      |  |   | 8,329   |   |  |   | 5,602  |  
|                                                    |  |                             |        |   |                            |   |        |      |  |   |         |   |  |   |        |  
|NET INCOME                                          |  | $                           | 6,326  |   |                            | $ | 6,590  |      |  | $ | 18,539  |   |  | $ | 12,983 |  
|                                                    |  |                             |        |   |                            |   |        |      |  |   |         |   |  |   |        |  
|Basic earnings per share                            |  | $                           | 0.43   |   |                            | $ | 0.46   |      |  | $ | 1.28    |   |  | $ | 0.90   |  
|                                                    |  |                             |        |   |                            |   |        |      |  |   |         |   |  |   |        |  
|Diluted earnings per share                          |  | $                           | 0.43   |   |                            | $ | 0.45   |      |  | $ | 1.25    |   |  | $ | 0.89   |  
|                                                    |  |                             |        |   |                            |   |        |      |  |   |         |   |  |   |        |  

See accompanying notes to condensed consolidated financial statements.



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##### Table of Contents

FIRST PLACE FINANCIAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS EQUITY

(Unaudited)

(Dollars in thousands, except per share data)



|                                                                                                           |  |                             |         |   |                            |   |         |      |  |   |         |   |  |   |         |  
|---------------------------------------------------------------------------------------------------------- |  | --------------------------- | ------- | - | -------------------------- | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                                                                           |  | Three months endedMarch 31, |         |   | Nine months endedMarch 31, |  
|                                                                                                           |  | 2006                        |         |   | 2005                       |   |         | 2006 |  |   | 2005    |  
|Balance at beginning of period                                                                             |  | $                           | 245,191 |   |                            | $ | 227,835 |      |  | $ | 236,656 |   |  | $ | 223,110 |  
|Comprehensive income:                                                                                      |  |                             |         |   |                            |   |         |      |  |   |         |   |  |   |         |  
|Net income                                                                                                 |  |                             | 6,326   |   |                            |   | 6,590   |      |  |   | 18,539  |   |  |   | 12,983  |  
|Loss on termination of interest rate swaps reclassified into income, net of tax                            |  |                             | 158     |   |                            |   | 353     |      |  |   | 651     |   |  |   | 1,172   |  
|Change in unrealized gain (loss) on securities available for sale, net of reclassification and tax effects |  |                             | 1,158   |   |                            |   | (2,052  | )    |  |   | (709    | ) |  |   | 1,708   |  
|                                                                                                           |  |                             |         |   |                            |   |         |      |  |   |         |   |  |   |         |  
|Total comprehensive income                                                                                 |  |                             | 7,642   |   |                            |   | 4,891   |      |  |   | 18,481  |   |  |   | 15,863  |  
|Cash dividends declared                                                                                    |  |                             | (2,048  | ) |                            |   | (2,026  | )    |  |   | (6,110  | ) |  |   | (6,075  | )
|Commitment to release employee stock ownership plan shares                                                 |  |                             | 359     |   |                            |   | 292     |      |  |   | 1,031   |   |  |   | 891     |  
|Commitment to release recognition and retention plan shares                                                |  |                             | 12      |   |                            |   | 10      |      |  |   | 36      |   |  |   | 90      |  
|Treasury shares acquired                                                                                   |  |                             |        |   |                            |   | (128    | )    |  |   |        |   |  |   | (3,509  | )
|Issuance of 21,358 shares of stock for acquisition                                                         |  |                             | 550     |   |                            |   |        |      |  |   | 550     |   |  |   |        |  
|Stock options exercised and related tax benefit                                                            |  |                             | 285     |   |                            |   | 229     |      |  |   | 1,295   |   |  |   | 733     |  
|Issuance of stock option recognized                                                                        |  |                             | 26      |   |                            |   |        |      |  |   | 78      |   |  |   |        |  
|                                                                                                           |  |                             |         |   |                            |   |         |      |  |   |         |   |  |   |         |  
|Balance at end of period                                                                                   |  | $                           | 252,017 |   |                            | $ | 231,103 |      |  | $ | 252,017 |   |  | $ | 231,103 |  
|                                                                                                           |  |                             |         |   |                            |   |         |      |  |   |         |   |  |   |         |  
|Cash dividends declared per share                                                                          |  | $                           | 0.14    |   |                            | $ | 0.14    |      |  | $ | 0.42    |   |  | $ | 0.42    |  
|                                                                                                           |  |                             |         |   |                            |   |         |      |  |   |         |   |  |   |         |  

See accompanying notes to condensed consolidated financial statements.



5



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##### Table of Contents

FIRST PLACE FINANCIAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)



|                                                                                           |  |                            |          |   |      |   |          |  
|------------------------------------------------------------------------------------------ |  | -------------------------- | -------- | - | ---- | - | -------- | -
|                                                                                           |  | Nine months endedMarch 31, |         
|                                                                                           |  | 2006                       |          |   | 2005 |  
|Cash flows from operating activities:                                                      |  |                            |          |   |      |   |          |  
|Net cash from operating activities                                                         |  | $                          | 63,555   |   |      | $ | (11,016  | )
|                                                                                           |  |                           
|Cash flows from investing activities:                                                      |  |                            |          |   |      |   |          |  
|Securities available for sale                                                              |  |                            |          |   |      |   |          |  
|Proceeds from sales                                                                        |  |                            | 33,452   |   |      |   | 33,564   |  
|Proceeds from maturities, calls and principal paydowns                                     |  |                            | 48,390   |   |      |   | 87,058   |  
|Purchases                                                                                  |  |                            | (49,300  | ) |      |   | (67,418  | )
|Net change in interest-bearing deposits in other banks                                     |  |                            | (4,600   | ) |      |   | 43,901   |  
|Net change in loans                                                                        |  |                            | (213,941 | ) |      |   | (347,906 | )
|Proceeds from sale of loans                                                                |  |                            | 9,076    |   |      |   | 12,946   |  
|Premises and equipment expenditures, net                                                   |  |                            | (6,043   | ) |      |   | (1,776   | )
|Cash paid for acquisition of Insurance Center of Warren Agency, Inc., net of cash received |  |                            | (503     | ) |      |   |         |  
|Investment in non-bank affiliates                                                          |  |                            | (114     | ) |      |   | (517     | )
|                                                                                           |  |                            |          |   |      |   |          |  
|Net cash from investing activities                                                         |  |                            | (183,583 | ) |      |   | (240,148 | )
|                                                                                           |  |                           
|Cash flows from financing activities:                                                      |  |                            |          |   |      |   |          |  
|Net change in deposits                                                                     |  |                            | 39,023   |   |      |   | 109,923  |  
|Net change in short-term borrowings                                                        |  |                            | 15,468   |   |      |   | 106,534  |  
|Repayment of long-term borrowings                                                          |  |                            | (56,763  | ) |      |   | (29,387  | )
|Proceeds from long-term borrowings                                                         |  |                            | 104,375  |   |      |   | 50,000   |  
|Net proceeds from issuance of subordinated debt securities                                 |  |                            | 30,928   |   |      |   |         |  
|Cash dividends paid                                                                        |  |                            | (6,110   | ) |      |   | (6,075   | )
|Proceeds from stock options exercised                                                      |  |                            | 1,071    |   |      |   | 597      |  
|Purchase of treasury stock                                                                 |  |                            |         |   |      |   | (3,509   | )
|                                                                                           |  |                            |          |   |      |   |          |  
|Net cash from financing activities                                                         |  |                            | 127,992  |   |      |   | 228,083  |  
|                                                                                           |  |                            |          |   |      |   |          |  
|Net change in cash and cash equivalents                                                    |  |                            | 7,964    |   |      |   | (23,081  | )
|                                                                                           |  |                           
|Cash and cash equivalents at beginning of period                                           |  |                            | 52,549   |   |      |   | 67,350   |  
|                                                                                           |  |                            |          |   |      |   |          |  
|Cash and cash equivalents at end of period                                                 |  | $                          | 60,513   |   |      | $ | 44,269   |  
|                                                                                           |  |                            |          |   |      |   |          |  
|Supplemental cash flow information:                                                        |  |                            |          |   |      |   |          |  
|Cash payments of interest expense                                                          |  | $                          | 48,909   |   |      | $ | 32,992   |  
|Cash payments of income taxes                                                              |  | $                          | 7,833    |   |      | $ | 3,780    |  
|Supplemental non-cash disclosures:                                                         |  |                            |          |   |      |   |          |  
|Stock portion of acquisition price of Insurance Center of Warren Agency, Inc.              |  | $                          | 550      |   |      | $ |         |  
|Loans securitized                                                                          |  | $                          | 87,930   |   |      | $ | 91,099   |  
|Transfer of loans from portfolio to held-for-sale                                          |  | $                          |         |   |      | $ | 97,486   |  
|Transfer of loans from held-for-sale to portfolio                                          |  | $                          | 30,839   |   |      | $ |         |  
|Transfer of loans to other real estate                                                     |  | $                          | 1,837    |   |      | $ | 3,727    |  
|Reclassification of borrowings from long-term to short-term                                |  | $                          | 8,250    |   |      | $ |         |  

See accompanying notes to condensed consolidated financial statements.



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##### Table of Contents

FIRST PLACE FINANCIAL CORP. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

1. Significant Accounting Policies

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 consolidated financial statements and notes thereto
included in First Place Financial Corp.s 2005 Annual Report to Shareholders included in First Place Financial Corp.s 2005 Annual Report on Form 10-K. 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. (Company) and its wholly owned subsidiaries, First Place Bank (Bank) and First Place Holdings, Inc. The
condensed consolidated financial statements include subsidiaries of First Place Holdings, Inc. - 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 TitleWorks Agency, LLC a 75% owned subsidiary of First Place Holdings, Inc. The investments of the Company in First Place Capital Trust, First Place Capital Trust II and First Place Capital Trust
III have been accounted for under the equity method. This accounting treatment is based on the purpose of First Place Capital Trust, First Place Capital Trust II and First Place Capital Trust III as protecting the interests of the holders of the
securities they have issued. All significant intercompany balances and transactions have been eliminated in consolidation. During the third quarter of fiscal year 2006, First Place Insurance Agency, Ltd. completed the acquisition of Insurance Center
of Warren Agency, Inc., a local general insurance agency. This acquisition was accounted for under the purchase method and results of operations have been included in the Consolidated Financial Statements since the acquisition date.

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. Actual results could differ from those estimates. The allowance for loan losses and the valuation of mortgage servicing
rights are particularly subject to change.

Stock Options. Prior to July 1, 2005, the Company accounted for stock-based compensation expense
using the intrinsic value method as required by Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees and as permitted by Statement of Financial Accounting Standards (SFAS) No. 123,
Accounting for Stock-Based Compensation. No compensation cost for stock options was reflected in net income for fiscal year 2005, as all options granted had an exercise price equal to the market price of the underlying common stock at
date of grant.

On July 1, 2005, the Company adopted SFAS No. 123(R) (revised version of SFAS No. 123) which requires measurement of
compensation cost for all stock-based awards to be based on the grant-date fair value and recognition of compensation cost over the service period of stock-based awards, which is usually the same as the vesting period. The fair value of stock
options is determined using the Black-Scholes valuation model, which is consistent with the Companys valuation methodology previously utilized for options in footnote disclosures required under SFAS No. 123. The fair value of stock grants
will also be determined using the Black-Scholes valuation model. The Company has adopted SFAS No. 123(R) using the modified prospective method, which provides for no retroactive application to prior periods and no cumulative adjustment to
equity accounts. It also provides for expense recognition, for both new and existing stock-based awards, as the required services are rendered. SFAS No. 123(R) also amends SFAS No. 95, Statement of Cash Flows, and requires tax
benefits relating to excess stock-based compensation deductions to be presented in the statement of cash flows as financing cash inflows. In accordance with SFAS No. 123(R), unearned compensation related to the Recognition and Retention Plan
has been reclassified to additional paid-in-capital.

On March 29, 2005, the Securities and Exchange Commission (SEC) published Staff Accounting
Bulletin No. 107 (SAB 107), which expressed the views of the Staff regarding the interaction between SFAS No. 123(R) and certain SEC rules and regulations and provided the Staffs views regarding the valuation of stock-based payment
arrangements for public companies. SAB 107 requires that stock-based compensation be classified in the same expense category as cash compensation. Accordingly, the Company has included stock-based compensation expense in salaries and employee
benefits in the condensed consolidated statements of income.



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##### Table of Contents

The adoption of SFAS No. 123(R) had the following impact on reported amounts compared with amounts that would have
been reported using the intrinsic value method under previous accounting.



|                                              |  |                                   |        |                       |   |       |            |  |   |       
|--------------------------------------------- |  | --------------------------------- | ------ | --------------------- | - | ----- | ---------- |  | - | ------
|                                              |  | Three months ended March 31, 2006
|(Dollars in thousands, except per share data) |  | Using PreviousAccounting          |        | SFAS123(R)Adjustments |   |       | AsReported
|Income before income taxes                    |  | $                                 | 9,248  |                       | $ | (26   | )          |  | $ | 9,222 
|Income taxes                                  |  |                                   | 2,896  |                       |   |      |            |  |   | 2,896 
|                                              |  |                                   |        |                       |   |       |            |  |   |       
|Net income                                    |  | $                                 | 6,352  |                       | $ | (26   | )          |  | $ | 6,326 
|                                              |  |                                   |        |                       |   |       |            |  |   |       
|Basic earnings per share                      |  | $                                 | 0.43   |                       | $ |      |            |  | $ | 0.43  
|Diluted earnings per share                    |  | $                                 | 0.43   |                       | $ |      |            |  | $ | 0.43  
|                                              |  |                                   |       
|Cash flow from operating activities           |  | $                                 | 14,748 |                       | $ | (26   | )          |  | $ | 14,722
|                                              | 
|                                              |  | Nine months ended March 31, 2006 
|(Dollars in thousands, except per share data) |  | UsingPreviousAccounting           |        | SFAS123(R)Adjustments |   |       | AsReported
|Income before income taxes                    |  | $                                 | 26,946 |                       | $ | (78   | )          |  | $ | 26,868
|Income taxes                                  |  |                                   | 8,329  |                       |   |      |            |  |   | 8,329 
|                                              |  |                                   |        |                       |   |       |            |  |   |       
|Net income                                    |  | $                                 | 18,617 |                       | $ | (78   | )          |  | $ | 18,539
|                                              |  |                                   |        |                       |   |       |            |  |   |       
|Basic earnings per share                      |  | $                                 | 1.28   |                       | $ |      |            |  | $ | 1.28  
|Diluted earnings per share                    |  | $                                 | 1.26   |                       | $ | (0.01 | )          |  | $ | 1.25  
|                                              |  |                                   |       
|Cash flow from operating activities           |  | $                                 | 63,633 |                       | $ | (78   | )          |  | $ | 63,555

The following table illustrates the effect on net income and earnings per share if expense had been measured using
the fair value recognition provisions of SFAS No. 123(R).



|                                              |  |                                   |        |   |                      |   |     |                                  |  |   |        |  
|--------------------------------------------- |  | --------------------------------- | ------ | - | -------------------- | - | --- | -------------------------------- |  | - | ------ | -
|                                              |  | Three months ended March 31, 2005 |       
|(Dollars in thousands, except per share data) |  | AsReported                        |        |   | Pro FormaAdjustments |   |     | Pro Forma asIf underSFAS 123 (R) | 
|Income before income taxes                    |  | $                                 | 9,345  |   |                      | $ | (45 | )                                |  | $ | 9,300  |  
|Income taxes                                  |  |                                   | 2,755  |   |                      |   |    |                                  |  |   | 2,755  |  
|                                              |  |                                   |        |   |                      |   |     |                                  |  |   |        |  
|Net income                                    |  | $                                 | 6,590  |   |                      | $ | (45 | )                                |  | $ | 6,545  |  
|                                              |  |                                   |        |   |                      |   |     |                                  |  |   |        |  
|Basic earnings per share                      |  | $                                 | 0.46   |   |                      | $ |    |                                  |  | $ | 0.46   |  
|Diluted earnings per share as reported        |  | $                                 | 0.45   |   |                      | $ |    |                                  |  | $ | 0.45   |  
|                                              |  |                                   |       
|Cash flow from operating activities           |  | $                                 | (7,817 | ) |                      | $ | (45 | )                                |  | $ | (7,862 | )



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##### Table of Contents

|                                              |  |                                  |         |   |                      |   |       |                                  |  |   |         |  
|--------------------------------------------- |  | -------------------------------- | ------- | - | -------------------- | - | ----- | -------------------------------- |  | - | ------- | -
|                                              |  | Nine months ended March 31, 2005 |        
|(Dollars in thousands, except per share data) |  | AsReported                       |         |   | Pro FormaAdjustments |   |       | Pro Forma asIf underSFAS 123 (R) | 
|Income before income taxes                    |  | $                                | 18,585  |   |                      | $ | (135  | )                                |  | $ | 18,450  |  
|Income taxes                                  |  |                                  | 5,602   |   |                      |   |      |                                  |  |   | 5,602   |  
|                                              |  |                                  |         |   |                      |   |       |                                  |  |   |         |  
|Net income                                    |  | $                                | 12,983  |   |                      | $ | (135  | )                                |  | $ | 12,848  |  
|                                              |  |                                  |         |   |                      |   |       |                                  |  |   |         |  
|Basic earnings per share                      |  | $                                | 0.90    |   |                      | $ | (0.01 | )                                |  | $ | 0.89    |  
|Diluted earnings per share as reported        |  | $                                | 0.89    |   |                      | $ | (0.01 | )                                |  | $ | 0.88    |  
|                                              |  |                                  |        
|Cash flow from operating activities           |  | $                                | (11,016 | ) |                      | $ | (135  | )                                |  | $ | (11,151 | )

Segment Information.While the Companys chief decision-makers monitor the revenue streams of the
Companys various products and services, the identifiable segments are not material, and operations are managed and financial performance is evaluated on a Company-wide basis. Accordingly, all of the Companys financial service operations
are considered by management to be aggregated in one reportable operating segment, community banking.

Reclassifications. Certain reclassifications
have been made to prior periods condensed consolidated financial statements and related notes in order to conform to the current period presentation.

2. Stock Compensation Plans

On July 2, 1999, the Companys shareholders approved and the Board of Directors established the 1999
Incentive Plan (1999 Plan). The 1999 Plan provides the Board with the authority to compensate directors, key employees and individuals performing services as consultants or independent contractors with stock awards for their services to the Company.
The awards authorized include incentive stock options, nonqualified stock options and stock grants. The granting of stock awards is also referred to as the Recognition and Retention Plan. The 1999 Plan originally authorized 1,124,125 shares of stock
for options and 449,650 for grants or a total of 1,573,775. Subsequent to the establishment of the plan, 587,500 shares were added to the shares available for stock options due to a merger. Stock options and stock grants reduce the shares available
for grant while unvested awards that are forfeited increase the shares available for grant. During the nine months ended March 31, 2006, the Company issued 2,000 incentive stock options. As of March 31, 2006, there were 2,461 shares
available to be awarded as options and 80,780 shares available to be awarded as stock grants.

On October 28, 2004, the shareholders of the Company
approved the creation of the 2004 Incentive Plan (2004 Plan). It is similar to the 1999 Plan. It also provides for awards to be issued in the form of incentive stock options, nonqualified stock options and stock awards. A total of 1,000,000 shares
may be issued under the 2004 Plan in any combination of the three types of awards. As of March 31, 2006, no awards have been issued under the 2004 Plan.

Stock Options

The Company can issue incentive stock options and nonqualified stock options under the 1999 Plan and the 2004 Plan. Existing
option awards generally become exercisable at the rate of 20% per year on the first five anniversary dates of the grant. However, the vesting schedule is determined at the time of each grant and future grants may have different vesting
schedules. Generally, the option period expires ten years from the date of grant and the exercise price is the market price at the date of grant.



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Following is activity under the plans:



|                                         |  |                                                           |   |  |                              |       |                          |   |     
|---------------------------------------- |  | --------------------------------------------------------- | - |  | ---------------------------- | ----- | ------------------------ | - | ----
|                                         |  | Nine months ended March 31, 2006Total options outstanding
|                                         |  | Shares                                                    |   |  | WeightedAverageExercisePrice |       | WeightedAverageFairValue
|Options outstanding, beginning of period |  | 859,554                                                   |   |  | $                            | 13.28 |                          | $ | 2.82
|Forfeited                                |  |                                                          |   |  |                              |      |                          |   |    
|Exercised                                |  | (89,207                                                   | ) |  | $                            | 12.01 |                          | $ | 2.23
|Granted                                  |  | 2,000                                                     |   |  | $                            | 20.98 |                          | $ | 4.51
|                                         |  |                                                           |   |  |                              |       |                          |   |     
|Options outstanding, end of period       |  | 772,347                                                   |   |  | $                            | 13.45 |                          | $ | 2.72
|                                         |  |                                                           |   |  |                              |       |                          |   |     
|Options exercisable, end of period       |  | 681,564                                                   |   |  | $                            | 12.70 |                          | $ | 2.59

The aggregate intrinsic value of all options outstanding at March 31, 2006 was $8.76 million. The aggregate
intrinsic value of all options that were exercisable at March 31, 2006 was $8.25 million.



|                                      |  |                                                         |   |  |                            |     
|------------------------------------- |  | ------------------------------------------------------- | - |  | -------------------------- | ----
|                                      |  | Nine months ended March 31, 2006 Total unvested options
|                                      |  | Shares                                                  |   |  | WeightedAverage Fair Value
|Unvested options, beginning of period |  | 137,163                                                 |   |  | $                          | 4.04
|Vested                                |  | (48,380                                                 | ) |  | $                          | 3.27
|Granted                               |  | 2,000                                                   |   |  | $                          | 4.51
|                                      |  |                                                         |   |  |                            |     
|Unvested options, end of period       |  | 90,783                                                  |   |  | $                          | 4.46
|                                      |  |                                                         |   |  |                            |     

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



|                                     |  |                             |       |      |   |    
|------------------------------------ |  | --------------------------- | ----- | ---- | - | ---
|                                     |  | Nine months ended March 31,
|                                     |  | 2006                        |       | 2005
|Proceeds of options exercised        |  | $                           | 1,071 |      | $ | 597
|Related tax benefit recognized       |  | $                           | 300   |      | $ | 136
|Intrinsic value of options exercised |  | $                           | 908   |      | $ | 409

Options outstanding at March 31, 2006 were as follows:



|                          |  |             |  |                                         |  |         |  |                              |      
|------------------------- |  | ----------- |  | --------------------------------------- |  | ------- |  | ---------------------------- | -----
|                          |  | Outstanding |  | Exercisable                            
|                          |  | Shares      |  | WeightedAverageRemainingContractualLife |  | Shares  |  | WeightedAverageExercisePrice
|$9.54-$12.00              |  | 98,678      |  | 4.2                                     |  | 98,678  |  | $                            | 11.11
|$12.01-$14.00             |  | 523,381     |  | 3.2                                     |  | 523,381 |  | $                            | 12.33
|$14.01-$20.98             |  | 150,288     |  | 7.4                                     |  | 59,505  |  | $                            | 18.50
|                          |  |             |  |                                         |  |         |  |                              |      
|Outstanding at period end |  | 772,347     |  | 4.1                                     |  | 681,564 |  | $                            | 12.70
|                          |  |             |  |                                         |  |         |  |                              |      



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##### Table of Contents

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



|                                         |  |       |  
|---------------------------------------- |  | ----- | -
|Expected average risk-free interest rate |  | 4.36  | %
|Expected average life (in years)         |  | 5.06  |  
|Expected volatility                      |  | 24.33 | %
|Expected dividend yield                  |  | 2.79  | %

The expected average risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for
periods corresponding with the expected life of the option. The expected average life represents the weighted average period of time that options granted are expected to be outstanding giving consideration to vesting schedules, historical exercise
and forfeiture patterns. Expected volatility is based on historical volatilities of the Companys common stock. The expected dividend yield is based on historical information.

Recognition and Retention Plan

The Company can issue stock grants as a form of compensation to directors and key
employees under the 1999 Plan and the 2004 Plan. Generally, one-fifth of such shares are earned and nonforfeitable on each of the first five anniversaries of the date of the awards. In the event of the death or disability of a participant or a
change in control of the Company, the participants shares will be deemed to be entirely earned and nonforfeitable upon such date. Recipients are entitled to receive dividends on their respective shares but are restricted from selling,
transferring or assigning their shares until full vesting of such shares has occurred.

Compensation expense for grants prior to July 1, 2005, is
based on the market value of the shares, which approximates fair value at the date of grant, and is recognized over the vesting period of the grant. Compensation expense for grants issued after June 30, 2005, is based on the fair value of the
shares at the date of grant. Unearned compensation is reported as a reduction of shareholders equity until earned.

Activity in issued but unvested stock grants during the nine months ended March 31, 2006, was as follows:



|                                         |  |        |   |  |                      |      
|---------------------------------------- |  | ------ | - |  | -------------------- | -----
|                                         |  | Shares |   |  | WeightedAverageValue
|Issued and unvested as of June 30, 2005  |  | 4,875  |   |  | $                    | 18.05
|Shares vested during the period          |  | (2,265 | ) |  | $                    | 17.20
|                                         |  |        |   |  |                      |      
|Issued and unvested as of March 31, 2006 |  | 2,610  |   |  | $                    | 18.78
|                                         |  |        |   |  |                      |      

The intrinsic value of unvested stock grants at March 31, 2006 was $65.

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



|                                       |  |                             |    |             |   |              |  |             |   |  |   |   
|-------------------------------------- |  | --------------------------- | -- | ----------- | - | ------------ |  | ----------- | - |  | - | --
|                                       |  | Nine months ended March 31,
|                                       |  | 2006                        |    | 2005       
|                                       |  | StockOptions                |    | StockGrants |   | StockOptions |  | StockGrants
|Compensation cost recognized in income |  | $                           | 78 |             | $ | 36           |  | $           |  |  | $ | 91
|Related tax benefit recognized         |  |                             |   |             |   | 13           |  |             |  |  |   | 32



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##### Table of Contents

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



|                  |  |              |     |             |   |             |  |   |    
|----------------- |  | ------------ | --- | ----------- | - | ----------- |  | - | ---
|                  |  | StockOptions |     | StockGrants |   | TotalAwards
|Remainder of 2006 |  | $            | 26  |             | $ | 12          |  | $ | 38 
|2007              |  |              | 104 |             |   | 9           |  |   | 113
|2008              |  |              | 103 |             |   | 9           |  |   | 112
|2009              |  |              | 31  |             |   | 9           |  |   | 40 
|2010              |  |              | 28  |             |   | 2           |  |   | 30 
|2011              |  |              | 2   |             |   |            |  |   | 2  
|                  |  |              |     |             |   |             |  |   |    
|Total             |  | $            | 294 |             | $ | 41          |  | $ | 335
|                  |  |              |     |             |   |             |  |   |    

Weighted average life in years 2.0

3. Earnings per Share

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



|                                                                        |  |                              |            |   |                             |   |            |      |  |   |            |   |  |   |            |  
|----------------------------------------------------------------------- |  | ---------------------------- | ---------- | - | --------------------------- | - | ---------- | ---- |  | - | ---------- | - |  | - | ---------- | -
|                                                                        |  | Three months ended March 31, |            |   | Nine months ended March 31, |  
|(Dollars in thousands, except share data)                               |  | 2006                         |            |   | 2005                        |   |            | 2006 |  |   | 2005       |  
|Basic earnings per share computation:                                   |  |                              |            |   |                             |   |            |      |  |   |            |   |  |   |            |  
|Net Income                                                              |  | $                            | 6,326      |   |                             | $ | 6,590      |      |  | $ | 18,539     |   |  | $ | 12,983     |  
|                                                                        |  |                              |            |   |                             |   |            |      |  |   |            |   |  |   |            |  
|Gross weighted average shares outstanding                               |  |                              | 15,118,506 |   |                             |   | 14,998,449 |      |  |   | 15,088,153 |   |  |   | 15,015,280 |  
|Less: Average unearned ESOP shares                                      |  |                              | (469,732   | ) |                             |   | (529,084   | )    |  |   | (484,699   | ) |  |   | (544,050   | )
|Less: Average unearned RRP shares                                       |  |                              | (84,030    | ) |                             |   | (86,915    | )    |  |   | (84,719    | ) |  |   | (88,038    | )
|                                                                        |  |                              |            |   |                             |   |            |      |  |   |            |   |  |   |            |  
|Net weighted average shares outstanding                                 |  |                              | 14,564,744 |   |                             |   | 14,382,450 |      |  |   | 14,518,735 |   |  |   | 14,383,192 |  
|                                                                        |  |                              |            |   |                             |   |            |      |  |   |            |   |  |   |            |  
|Basic earnings per share                                                |  | $                            | 0.43       |   |                             | $ | 0.46       |      |  | $ | 1.28       |   |  | $ | 0.90       |  
|                                                                        |  |                              |            |   |                             |   |            |      |  |   |            |   |  |   |            |  
|Diluted earnings per share computation:                                 |  |                              |            |   |                             |   |            |      |  |   |            |   |  |   |            |  
|Net Income                                                              |  | $                            | 6,326      |   |                             | $ | 6,590      |      |  | $ | 18,539     |   |  | $ | 12,983     |  
|                                                                        |  |                              |            |   |                             |   |            |      |  |   |            |   |  |   |            |  
|Weighted average shares outstanding for basic earnings per share        |  |                              | 14,564,744 |   |                             |   | 14,382,450 |      |  |   | 14,518,735 |   |  |   | 14,383,192 |  
|Add: Dilutive effects of assumed exercises of stock options             |  |                              | 275,986    |   |                             |   | 245,775    |      |  |   | 258,693    |   |  |   | 244,896    |  
|Add: Dilutive effects of unearned Recognition and Retention Plan shares |  |                              | 483        |   |                             |   | 371        |      |  |   | 442        |   |  |   | 389        |  
|                                                                        |  |                              |            |   |                             |   |            |      |  |   |            |   |  |   |            |  
|Weighted average shares and potentially dilutive shares                 |  |                              | 14,841,213 |   |                             |   | 14,628,596 |      |  |   | 14,777,870 |   |  |   | 14,628,477 |  
|                                                                        |  |                              |            |   |                             |   |            |      |  |   |            |   |  |   |            |  
|Diluted earnings per share                                              |  | $                            | 0.43       |   |                             | $ | 0.45       |      |  | $ | 1.25       |   |  | $ | 0.89       |  
|                                                                        |  |                              |            |   |                             |   |            |      |  |   |            |   |  |   |            |  

There were no stock options that were antidilutive for the three and nine-month periods ended March 31, 2006
and for the three and nine-month periods ended March 31, 2005. Therefore, all stock options were considered in computing diluted earnings per share.



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##### Table of Contents

4. Short-term and Long-term Borrowings



|                                                                        |  |               |         |              |   |        
|----------------------------------------------------------------------- |  | ------------- | ------- | ------------ | - | -------
|                                                                        |  | March 31,2006 |         | June 30,2005
|Short-term borrowings:                                                  |  |               |         |              |   |        
|Federal Home Loan Bank advances                                         |  | $             | 260,600 |              | $ | 248,097
|Securities sold under agreement to repurchase                           |  |               | 25,411  |              |   | 14,196 
|                                                                        |  |               |         |              |   |        
|Total                                                                   |  | $             | 286,011 |              | $ | 262,293
|                                                                        |  |               |         |              |   |        
|Long-term borrowings:                                                   |  |               |         |              |   |        
|Federal Home Loan Bank advances                                         |  | $             | 254,416 |              | $ | 207,109
|Securities sold under agreement to repurchase                           |  |               | 14,500  |              |   | 22,750 
|Junior subordinated debentures owed to unconsolidated subsidiary trusts |  |               | 61,857  |              |   | 30,929 
|                                                                        |  |               |         |              |   |        
|Total                                                                   |  | $             | 330,773 |              | $ | 260,788
|                                                                        |  |               |         |              |   |        

5. Junior Subordinated Debentures Owed to Unconsolidated Subsidiary Trusts

In September 2005, the Company formed an affiliated trust, First Place Capital Trust III (the Trust Affiliate) that issued $30,000 of Guaranteed Capital Trust Securities
(Trust Preferred Securities). In connection with this transaction, the Company issued $30,928 of Junior Subordinated Deferrable Interest Debentures (Junior Debentures) to the Trust Affiliate. The Company formed the Trust Affiliate for the purpose of
issuing Trust Preferred Securities to third-party investors and investing the proceeds from the sale of these capital securities solely in Junior Debentures of the Company. The Junior Debentures held by the Trust Affiliate are the sole assets of
that trust. Distributions on the Trust Preferred Securities issued by First Place Capital Trust III are payable quarterly at a fixed rate of 5.69% for five years through September 15, 2010, and a floating rate of interest that resets quarterly
to 1.45% above the 3-month Libor rate for the remaining 25 years. The interest rates on the Junior Debentures are identical to the interest rates on the Trust Preferred Securities.

The Trust Preferred Securities are subject to mandatory redemption, in whole or part, upon repayment of the Junior Debentures. The Company has entered into an agreement that fully and unconditionally guarantees the
Trust Preferred Securities subject to the terms of the guarantee. The issuers may redeem the Trust Preferred Securities and the Junior Debentures for a premium through September 15, 2010 at the greater of (i) 107.5% of the principal amount
of the Junior Debentures or (ii) the sum of the present values of the scheduled payments of principal during the fixed rate period remaining life of the Debentures discounted to the special redemption date on a quarterly basis at the treasury
rate. After September 15, 2010, the issuers may redeem the Trust Preferred Securities and Junior Debentures at par.

A summary of all junior
debentures issued by the Company to affiliates follows. These amounts represent the par value of the obligations owed to these affiliates, including the Companys equity interest in the trusts. Junior subordinated debentures owed to the
following affiliates were as follows:



|                                                                              |  |               |        |              |   |       
|----------------------------------------------------------------------------- |  | ------------- | ------ | ------------ | - | ------
|                                                                              |  | March 31,2006 |        | June 30,2005
|First Place Capital Trust due January 2034                                    |  | $             | 15,465 |              | $ | 15,465
|First Place Capital Trust II due January 2034                                 |  |               | 15,464 |              |   | 15,464
|First Place Capital Trust III due September 2035                              |  |               | 30,928 |              |   |      
|                                                                              |  |               |        |              |   |       
|Total junior subordinated debentures owed to unconsolidated subsidiary trusts |  | $             | 61,857 |              | $ | 30,929
|                                                                              |  |               |        |              |   |       

The Company has used the proceeds of the Junior Debentures issued in September 2005 for general corporate
purposes. Interest on all three issues of trust preferred securities may be deferred for a period of up to five years at the option of the issuer. The trusts are accounted for using the equity method of accounting for investments, and therefore have
not been included in the consolidated financial statements of the Company.



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6. Commitments, Contingencies and Guarantees

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, recourse obligations for loans sold and letters of credit. The Company enters into these transactions to meet customer needs or 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 March 31, 2006 are shown below.



|                                                |  |               |         |                                  |   |      |  
|----------------------------------------------- |  | ------------- | ------- | -------------------------------- | - | ---- | -
|                                                |  | Nominal value |         | Current asset /(liability) value |  
|GUARANTEE OBLIGATIONS                           |  |               |         |                                  |   |      |  
|Loans sold with recourse                        |  | $             | 240,430 |                                  | $ | (869 | )
|Standby letters of credit                       |  |               | 2,756   |                                  |   |     |  
|                                                |  |              
|OTHER OBLIGATIONS                               |  |               |         |                                  |   |      |  
|Commitments to disburse construction loan funds |  | $             | 194,494 |                                  |   |      |  
|Commitments to originate or purchase loans      |  |               | 195,219 |                                  |   |      |  
|Commitments to sell loans                       |  |               | 114,286 |                                  |   |      |  
|Unused lines of credit                          |  |               | 132,881 |                                  |   |      |  
|Commercial letters of credit                    |  |               | 54,923  |                                  |   |      |  

The loans sold with recourse were sold to government-sponsored enterprises and others beginning in 2001. 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.

7. Mortgage Servicing Assets

Following is a summary of mortgage servicing assets:



|                                           |  |                             |         |   |                            |   |        |      |  |   |         |   |  |   |        |  
|------------------------------------------ |  | --------------------------- | ------- | - | -------------------------- | - | ------ | ---- |  | - | ------- | - |  | - | ------ | -
|                                           |  | Three months endedMarch 31, |         |   | Nine months endedMarch 31, |  
|                                           |  | 2006                        |         |   | 2005                       |   |        | 2006 |  |   | 2005    |  
|Servicing rights:                          |  |                             |         |   |                            |   |        |      |  |   |         |   |  |   |        |  
|Beginning of period                        |  | $                           | 24,448  |   |                            | $ | 18,053 |      |  | $ | 21,013  |   |  | $ | 15,343 |  
|Additions                                  |  |                             | 2,370   |   |                            |   | 1,938  |      |  |   | 8,627   |   |  |   | 6,901  |  
|(Increase) decrease in valuation allowance |  |                             | 256     |   |                            |   | (72    | )    |  |   | 611     |   |  |   | (215   | )
|Sale of servicing rights                   |  |                             | (10,987 | ) |                            |   |       |      |  |   | (10,987 | ) |  |   |       |  
|Amortized to expense                       |  |                             | (1,328  | ) |                            |   | (1,122 | )    |  |   | (4,505  | ) |  |   | (3,232 | )
|                                           |  |                             |         |   |                            |   |        |      |  |   |         |   |  |   |        |  
|End of period                              |  | $                           | 14,759  |   |                            | $ | 18,797 |      |  | $ | 14,759  |   |  | $ | 18,797 |  
|                                           |  |                             |         |   |                            |   |        |      |  |   |         |   |  |   |        |  

The fair value of mortgage servicing assets was $17,447 at March 31, 2006 and $23,126 at June 30, 2005.
Noninterest-bearing deposits included $20,252 and $14,668 of custodial account deposits related to loans serviced for others as of March 31, 2006 and June 30, 2005 respectively.

8. Recent Accounting Pronouncements

In May 2005, the Financial
Accounting Standards Board 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 will apply to the Company effective July 1, 2006. The adoption of this pronouncement will not have a material impact on the Companys consolidated financial
statements.



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In February, 2006, the Financial Accounting Standards Board 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 unless the Company elects early adoption in which case it would be effective July 1, 2006. The adoption of this pronouncement is not expected to have a material impact on the consolidated financial statements.

In March, 2006, the Financial Accounting Standards Board 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 unless the
company elects early adoption in which case it would be effective July 1, 2006. 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 will elect early adoption, if it would apply the fair
value method of accounting and what impact the fair value method of accounting would have on the consolidated financial statements.

9. Pending
Acquisition

On January 27, 2006, the Company announced that it had entered into an Agreement and Plan of Merger (Merger Agreement) to acquire The
Northern Savings & Loan Company of Elyria, Ohio (Northern). As of December 31, 2005, Northern had total assets of $341 million, deposits of $265 million and shareholders equity of $43 million. Under the terms of the Merger
Agreement, Northern shareholders will be entitled to receive for each share of Northern common stock either $29.00 in cash or 1.138 shares of the Companys common stock or any combination thereof, subject to the election and allocation
procedures, which are intended to ensure that in the aggregate a minimum of 80% and a maximum of 90% of Northern shares will be exchanged for common stock of the Company and at least 80% of the value of the aggregate merger consideration as of the
closing will consist of Company common stock. The approximate value of this transaction as of the date the Merger Agreement was signed was $71.5 million. The Merger Agreement has been unanimously approved by the Companys Board of Directors and
Northerns Board of Directors. The consummation of the merger is subject to the approval of Northerns shareholders and regulatory authorities and the satisfaction of other customary closing conditions. The acquisition of Northern is
expected to be completed in June of 2006.

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

The following analysis
discusses changes in the Companys 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.



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Business Overview

Background.First Place Financial Corp. (Company) 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. 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 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. The Company also operates loan production offices in various cities in Ohio, Michigan and Indiana. As of March 31, 2006, the Company had $2.6 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 loan production and banking offices and through acquisitions. 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.

On January 27, 2006, the Company announced that it entered into the Merger Agreement that provides for the acquisition of Northern which is located in Elyria, Ohio.
The acquisition remains subject to approval of the Northern shareholders, approval of regulatory authorities and the satisfaction of certain customary closing conditions. The acquisition is expected to be completed in June of 2006. We believe that
this acquisition will represent a significant step in our strategic vision to expand our 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 our operations in Southern Michigan.

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 goal of achieving high levels of profitability on a consistent basis is balanced with 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. The following section contains a summary of the primary financial measures the Company uses.

Results of Operations

Comparison of the Three Months and Nine
Months Ended March 31, 2006 and 2005

Selected Financial Ratios and Other Measures



|                                                   |  |                    |           |   |                     |   |           |        |  |   |         |   |  |      |   
|-------------------------------------------------- |  | ------------------ | --------- | - | ------------------- | - | --------- | ------ |  | - | ------- | - |  | ---- | --
|                                                   |  | Three Months Ended |           |   | Increase (Decrease) |  
|(Dollars in thousands except per share amounts)    |  | 3/31/2006          |           |   | 3/31/2005           |   |           | Amount |  |   | Percent |  
|Total assets                                       |  | $                  | 2,647,155 |   |                     | $ | 2,479,867 |        |  | $ | 167,288 |   |  | 6.7  | % 
|Net income                                         |  | $                  | 6,326     |   |                     | $ | 6,590     |        |  | $ | (264    | ) |  | (4.0 | )%
|Diluted earnings per share                         |  | $                  | 0.43      |   |                     | $ | 0.45      |        |  | $ | (0.02   | ) |  | (4.4 | )%
|Return on average equity                           |  |                    | 10.30     | % |                     |   | 11.64     | %      |  |   |         |   |  | (1.3 | )%
|Return on average assets                           |  |                    | 0.98      | % |                     |   | 1.11      | %      |  |   |         |   |  |     |   
|Net interest margin                                |  |                    | 3.17      | % |                     |   | 3.37      | %      |  |   |         |   |  | (0.2 | )%
|Efficiency ratio                                   |  |                    | 61.56     | % |                     |   | 60.07     | %      |  |   |         |   |  | 1.5  | % 
|Noninterest expense as a percent of average assets |  |                    | 2.58      | % |                     |   | 2.65      | %      |  |   |         |   |  |     |   
|Non-performing assets to total assets              |  |                    | 0.75      | % |                     |   | 0.61      | %      |  |   |         |   |  |     |   
|Tangible equity to tangible assets                 |  |                    | 7.11      | % |                     |   | 6.42      | %      |  |   |         |   |  | 0.7  | % 



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Summary. Net income of $6.3 million for the quarter ended March 31, 2006 was a decrease of $0.3 million or
4.0% from net income of $6.6 million for the quarter ended March 31, 2005. Diluted earnings per share were $0.43 for the quarter compared with $0.45 for the prior-year period, a decrease of 4.4%. Return on average equity for the quarter was
10.30% compared with 11.64% for the same quarter in the prior year. The decrease in net income was primarily due to a credit of $1.0 million in insurance proceeds in the quarter ended March 31, 2005. These proceeds were tax-free and added $0.07
to diluted earnings per share in the prior year. In addition, there were increases of $1.6 million on gain on sale of loan servicing rights, $0.5 million in net interest income and $0.4 million in other income  non-bank subsidiaries, partially
offset by a net loss of $0.9 million on sale of securities and an increase of $1.0 million in noninterest expense. The increase in net interest income was primarily due to an increase in average interest-earning assets. The increase in noninterest
expense was primarily due to an increase in salaries and employee benefits and franchise taxes. The increase in salaries and benefits was due to additional personnel at new and existing locations and the resulting increases in volume-based
commissions, and health insurance costs. The increase in franchise taxes was mainly due to tax strategies undertaken in the prior year with regard to the Franklin Bank merger. As a result, the ratio of noninterest expense to average assets decreased
to 2.58% for the current quarter compared with 2.65% for the prior year quarter. Non-performing assets as a percent of total assets increased to 0.75% from 0.61% a year earlier.

Selected Financial Ratios and Other Measures



|                                                   |  |                   |           |   |                     |   |           |        |  |         |         |  |      |   
|-------------------------------------------------- |  | ----------------- | --------- | - | ------------------- | - | --------- | ------ |  | ------- | ------- |  | ---- | --
|                                                   |  | Nine Months Ended |           |   | Increase (Decrease) |  
|(Dollars in thousands except per share amounts)    |  | 3/31/2006         |           |   | 3/31/2005           |   |           | Amount |  | Percent |        
|Total assets                                       |  | $                 | 2,647,155 |   |                     | $ | 2,479,867 |        |  | $       | 167,288 |  | 6.7  | % 
|Net income                                         |  | $                 | 18,539    |   |                     | $ | 12,983    |        |  | $       | 5,556   |  | 42.8 | % 
|Diluted earnings per share                         |  | $                 | 1.25      |   |                     | $ | 0.89      |        |  | $       | 0.36    |  | 40.4 | % 
|Return on average equity                           |  |                   | 10.13     | % |                     |   | 7.65      | %      |  |         |         |  | 2.5  | % 
|Return on average assets                           |  |                   | 0.96      | % |                     |   | 0.74      | %      |  |         |         |  | 0.2  | % 
|Net interest margin                                |  |                   | 3.37      | % |                     |   | 3.33      | %      |  |         |         |  |     |   
|Efficiency ratio                                   |  |                   | 61.35     | % |                     |   | 67.58     | %      |  |         |         |  | (6.2 | )%
|Noninterest expense as a percent of average assets |  |                   | 2.55      | % |                     |   | 2.58      | %      |  |         |         |  |     |   
|Non-performing assets to total assets              |  |                   | 0.75      | % |                     |   | 0.61      | %      |  |         |         |  |     |   
|Tangible equity to tangible assets                 |  |                   | 7.11      | % |                     |   | 6.42      | %      |  |         |         |  | 0.7  | % 

Summary. Net income of $18.5 million for the nine months ended March 31, 2006 was an increase of $5.6
million or 42.8% over net income of $13.0 million for the nine months ended March 31, 2005. Diluted earnings per share were $1.25 for the first nine months of fiscal year 2006 compared with $0.89 for the same period in the prior year, an
increase of 40.4%. Return on average equity for the nine months ended March 31, 2006 was 10.13% compared with 7.65% for the same period in the prior year. The increase in net income was primarily due to increases of $5.3 million in net interest
income and $7.8 million in noninterest income, partially offset by increases of $3.8 million in noninterest expense, $2.7 million in income taxes and $1.0 million in provision for loan losses. The increase in net interest income was primarily due to
an increase in average interest-earning assets. The increase in noninterest income was primarily due to a prior-year pre-tax charge of $5.2 million to record other-than-temporary impairment on Fannie Mae and Freddie Mac preferred stocks, a $1.6
million gain on sale of loan servicing rights in the third quarter of fiscal 2006 and increases of $1.3 million in mortgage banking and $0.9 million in other income  non-bank subsidiaries. These increases in noninterest income were partially
offset by a difference of $1.1 million between the loss on sale of securities in the current year and the gain on sale of securities in the prior year. The impairment charge had an after-tax effect on net income of $3.4 million, or $0.23 per diluted
share. The increase in noninterest expense was primarily due to an increase in salaries and employee benefits. This increase was due to additional personnel at new and existing locations and the resulting increases in volume-based commissions, and
health insurance costs. Even though average assets increased $232.1 million or 9.9% for the nine months ended March 31, 2006 compared to the same period in the prior year, noninterest expense as a percent of average assets decreased slightly to
2.55% from 2.58% in the prior year.

Explanation of Certain Non-GAAP Measures.This Form 10-Q contains certain financial information determined by
methods other than Generally Accepted Accounting Principles (GAAP). Specifically, the Company has provided financial measures that are based on core earnings rather than net income. Ratios and other financial measures with the word Core in their
title were computed using core earnings rather than net income. Core earnings excludes merger, integration and restructuring expense, extraordinary income or expense, income or expense from discontinued



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operations, and income, expense, gains and losses that are not reflective of ongoing operations or that we do not expect
to reoccur. Management of the Company believes that this information is useful to both investors and to management and can aid them in understanding the Companys current performance, performance trends and financial condition. While core
earnings can be useful in evaluating current performance and projecting current trends into the future, management does not believe that core earnings are a substitute for GAAP net income. We encourage investors and others to use core earnings as a
supplemental tool for analysis and not as a substitute for GAAP net income. The Companys non-GAAP measures may not be comparable to the non-GAAP numbers of other companies. In addition, future results of operations may include nonrecurring
items that would not be included in core earnings. A reconciliation from GAAP net income to the non-GAAP measure of core earnings is shown below.



|                                                          |  |                             |       |      |                            |        |      |  |      |        |  |   |        |  
|--------------------------------------------------------- |  | --------------------------- | ----- | ---- | -------------------------- | ------ | ---- |  | ---- | ------ |  | - | ------ | -
|                                                          |  | Three months endedMarch 31, |       |      | Nine months endedMarch 31, |       
|(Dollars in thousands)                                    |  | 2006                        |       | 2005 |                            |        | 2006 |  | 2005 |       
|Reconciliation from GAAP Net Income to Core Earnings      |  |                             |       |      |                            |        |      |  |      |        |  |   |        |  
|GAAP Net income                                           |  | $                           | 6,326 |      | $                          | 6,590  |      |  | $    | 18,539 |  | $ | 12,983 |  
|Other-than-temporary impairment of securities, net of tax |  |                             |      |      |                            |       |      |  |      |       |  |   | 3,410  |  
|Tax-free proceeds from executive life insurance policy    |  |                             |      |      |                            | (1,005 | )    |  |      |       |  |   | (1,005 | )
|                                                          |  |                             |       |      |                            |        |      |  |      |        |  |   |        |  
|Core earnings                                             |  | $                           | 6,326 |      | $                          | 5,585  |      |  | $    | 18,539 |  | $ | 15,388 |  
|                                                          |  |                             |       |      |                            |        |      |  |      |        |  |   |        |  

Core earnings for the quarter ended March 31, 2006 were $6.3 million, a 13.3% increase over core earnings of
$5.6 million for the same quarter in the prior year. Diluted core earnings per share were $0.43 for the quarter ended March 31, 2006, compared with $0.38 for the prior year quarter. Core earnings for the nine months ended March 31, 2006
were $18.5 million, a 20.5% increase from core earnings of $15.4 million for the same period in the prior year. Diluted core earnings per share were $1.25 for the nine months ended March 31, 2006, compared with $1.05 for the same period in the
prior year. The increase in core earnings during the three and nine-month periods ended March 31, 2006, compared with the same periods in the prior year were primarily due to interest-earning asset growth during the previous twelve months and
gain on sale of loan servicing rights.

Net Interest Income.Net interest income for the quarter ended March 31, 2006, totaled $19.1 million,
an increase of $0.5 million or 2.6% from $18.6 million for the quarter ended March 31, 2005. The increase in net interest income resulted primarily from an increase of $204 million or 9.1% in average interest-earning assets compared to the same
quarter a year ago. The net interest margin for the current quarter was 3.17%, down from 3.37% in the prior year quarter. Net interest margin decreased as liability costs grew faster than asset yields due to a high volume of certificates of deposits
that matured during the quarter and a decrease in the average balance of noninterestbearing deposits. The average yield on interest-earning assets was 6.20% for the quarter ended March 31, 2006, an increase of 56 basis points from 5.64%
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 assets. The average rate paid on interest-bearing liabilities was 3.45% for the quarter
ended March 31, 2006 compared to 2.66% 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
partially offset by decreases in the rates paid on long-term borrowings. In addition, the mix of deposits changed to include less noninterest-bearing checking accounts and more savings, money market and certificate of deposit accounts, which
contributed to the increase in the rate paid on interest-bearing liabilities.

Net interest income for the nine months ended March 31, 2006 totaled
$58.2 million, an increase of $5.3 million or 10.0% from $52.9 million for the nine months ended March 31, 2005. The increase in net interest income resulted from an increase of $245 million or 11.4% in average interest-earning assets compared
to the same period a year ago. The net interest margin for the nine months ended March 31, 2006 was 3.28%, down from 3.33% in the prior year. Net interest margin decreased primarily due to a decline in the average balance of interest-bearing
and noninterest-bearing checking accounts, which are the deposit categories that carry the lowest interest costs. The average yield on interest-earning assets was 6.11% for the nine months ended March 31, 2006, an increase of 58 basis points
from 5.53% 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



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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 assets. The average rate paid on interest-bearing liabilities was 3.26% for the nine months ended March 31, 2006 compared to 2.55% for the prior year, an increase of 71 basis points. This increase was due to
increases in the rates paid on short-term borrowings, certificates of deposit, savings and money market accounts partially offset by decreases in the rates paid on long-term borrowings. In addition, the mix of deposits changed to include less
interest-bearing and noninterest-bearing checking accounts and more savings, money market and certificate of deposit accounts, which also 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.



19



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##### Table of Contents

Average Balances, Interest Rates and Yields

(Dollars in thousands)



|                                                                        |  |                                   |           |   |                                   |   |                   |  |        |                |  |   |           |   |                   |   |        |  |        |  
|----------------------------------------------------------------------- |  | --------------------------------- | --------- | - | --------------------------------- | - | ----------------- |  | ------ | -------------- |  | - | --------- | - | ----------------- | - | ------ |  | ------ | -
|                                                                        |  | Three Months Ended March 31, 2006 |           |   | Three Months Ended March 31, 2005 |  
|                                                                        |  | AverageBalance                    |           |   | Interest                          |   | AverageYield/cost |  |        | AverageBalance |  |   | Interest  |   | AverageYield/cost |  
|ASSETS                                                                  |  |                                   |           |   |                                   |   |                   |  |        |                |  |   |           |   |                   |   |        |  |        |  
|Interest-earning assets                                                 |  |                                   |           |   |                                   |   |                   |  |        |                |  |   |           |   |                   |   |        |  |        |  
|Loans and loans held for sale                                           |  | $                                 | 2,120,956 |   |                                   | $ | 34,101            |  | 6.43   | %              |  | $ | 1,871,310 |   |                   |   | 27,693 |  | 5.92   | %
|Securities and interest-bearing deposits                                |  |                                   | 285,652   |   |                                   |   | 3,259             |  | 4.56   | %              |  |   | 330,585   |   |                   |   | 3,439  |  | 4.16   | %
|Federal Home Loan Bank stock                                            |  |                                   | 29,500    |   |                                   |   | 413               |  | 5.74   | %              |  |   | 30,026    |   |                   |   | 320    |  | 4.37   | %
|                                                                        |  |                                   |           |   |                                   |   |                   |  |        |                |  |   |           |   |                   |   |        |  |        |  
|Total interest-earning assets                                           |  |                                   | 2,436,108 |   |                                   |   | 37,773            |  | 6.20   | %              |  |   | 2,231,921 |   |                   |   | 31,452 |  | 5.64   | %
|Noninterest-earning assets                                              |  |                                   |           |   |                                   |   |                   |  |        |                |  |   |           |   |                   |   |        |  |        |  
|Cash and due from banks                                                 |  |                                   | 51,150    |   |                                   |   |                   |  |        |                |  |   | 46,998    |   |                   |   |        |  |        |  
|Allowance for loan losses                                               |  |                                   | (19,889   | ) |                                   |   |                   |  |        |                |  |   | (17,936   | ) |                   |   |        |  |        |  
|Other assets                                                            |  |                                   | 162,728   |   |                                   |   |                   |  |        |                |  |   | 152,222   |   |                   |   |        |  |        |  
|                                                                        |  |                                   |           |   |                                   |   |                   |  |        |                |  |   |           |   |                   |   |        |  |        |  
|Total assets                                                            |  | $                                 | 2,630,097 |   |                                   |   |                   |  |        |                |  | $ | 2,413,205 |   |                   |   |        |  |        |  
|                                                                        |  |                                   |           |   |                                   |   |                   |  |        |                |  |   |           |   |                   |   |        |  |        |  
|LIABILITIES                                                             |  |                                   |           |   |                                   |   |                   |  |        |                |  |   |           |   |                   |   |        |  |        |  
|Interest-bearing liabilities                                            |  |                                   |           |   |                                   |   |                   |  |        |                |  |   |           |   |                   |   |        |  |        |  
|Deposits                                                                |  |                                   |           |   |                                   |   |                   |  |        |                |  |   |           |   |                   |   |        |  |        |  
|Checking accounts                                                       |  | $                                 | 118,941   |   |                                   |   | 133               |  | 0.44   | %              |  | $ | 113,512   |   |                   |   | 99     |  | 0.35   | %
|Savings and money market accounts                                       |  |                                   | 647,341   |   |                                   |   | 4,007             |  | 2.46   | %              |  |   | 605,899   |   |                   |   | 2,066  |  | 1.38   | %
|Certificates of deposit                                                 |  |                                   | 745,949   |   |                                   |   | 7,141             |  | 3.80   | %              |  |   | 667,206   |   |                   |   | 5,377  |  | 3.27   | %
|                                                                        |  |                                   |           |   |                                   |   |                   |  |        |                |  |   |           |   |                   |   |        |  |        |  
|Total deposits                                                          |  |                                   | 1,512,231 |   |                                   |   | 11,281            |  | 2.96   | %              |  |   | 1,386,617 |   |                   |   | 7,542  |  | 2.21   | %
|Borrowings                                                              |  |                                   |           |   |                                   |   |                   |  |        |                |  |   |           |   |                   |   |        |  |        |  
|Short-term                                                              |  |                                   | 268,250   |   |                                   |   | 2,878             |  | 4.26   | %              |  |   | 274,329   |   |                   |   | 1,630  |  | 2.41   | %
|Long-term                                                               |  |                                   | 340,341   |   |                                   |   | 4,308             |  | 5.02   | %              |  |   | 265,748   |   |                   |   | 3,461  |  | 5.28   | %
|                                                                        |  |                                   |           |   |                                   |   |                   |  |        |                |  |   |           |   |                   |   |        |  |        |  
|Total interest-bearing liabilities                                      |  |                                   | 2,120,822 |   |                                   |   | 18,467            |  | 3.45   | %              |  |   | 1,926,694 |   |                   |   | 12,633 |  | 2.66   | %
|Noninterest-bearing liabilities                                         |  |                                   |           |   |                                   |   |                   |  |        |                |  |   |           |   |                   |   |        |  |        |  
|Noninterest-bearing checking accounts                                   |  |                                   | 226,624   |   |                                   |   |                   |  |        |                |  |   | 232,597   |   |                   |   |        |  |        |  
|Other liabilities                                                       |  |                                   | 33,496    |   |                                   |   |                   |  |        |                |  |   | 24,277    |   |                   |   |        |  |        |  
|                                                                        |  |                                   |           |   |                                   |   |                   |  |        |                |  |   |           |   |                   |   |        |  |        |  
|Total liabilities                                                       |  |                                   | 2,380,942 |   |                                   |   |                   |  |        |                |  |   | 2,183,568 |   |                   |   |        |  |        |  
|Shareholders equity                                                    |  |                                   | 249,155   |   |                                   |   |                   |  |        |                |  |   | 229,637   |   |                   |   |        |  |        |  
|                                                                        |  |                                   |           |   |                                   |   |                   |  |        |                |  |   |           |   |                   |   |        |  |        |  
|Total liabilities and shareholders equity                               |  | $                                 | 2,630,097 |   |                                   |   |                   |  |        |                |  | $ | 2,413,205 |   |                   |   |        |  |        |  
|                                                                        |  |                                   |           |   |                                   |   |                   |  |        |                |  |   |           |   |                   |   |        |  |        |  
|Fully tax-equivalent net interest income                                |  |                                   |           |   |                                   |   | 19,306            |  |        |                |  |   |           |   |                   |   | 18,819 |  |        |  
|Interest rate spread                                                    |  |                                   |           |   |                                   |   |                   |  | 2.75   | %              |  |   |           |   |                   |   |        |  | 2.98   | %
|Net interest margin                                                     |  |                                   |           |   |                                   |   |                   |  | 3.17   | %              |  |   |           |   |                   |   |        |  | 3.37   | %
|Average interest-earning assets to average interest-bearing liabilities |  |                                   |           |   |                                   |   |                   |  | 114.87 | %              |  |   |           |   |                   |   |        |  | 115.84 | %
|Tax-equivalent adjustment                                               |  |                                   |           |   |                                   |   | 226               |  |        |                |  |   |           |   |                   |   | 219    |  |        |  
|                                                                        |  |                                   |           |   |                                   |   |                   |  |        |                |  |   |           |   |                   |   |        |  |        |  
|Net interest income                                                     |  |                                   |           |   |                                   | $ | 19,080            |  |        |                |  |   |           |   |                   | $ | 18,600 |  |        |  
|                                                                        |  |                                   |           |   |                                   |   |                   |  |        |                |  |   |           |   |                   |   |        |  |        |  



20



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Average Balances, Interest Rates and Yields

(Dollars in thousands)



|                                                                        |  |                                  |           |   |                                  |   |                   |  |        |                |  |   |           |   |                   |   |        |  |        |  
|----------------------------------------------------------------------- |  | -------------------------------- | --------- | - | -------------------------------- | - | ----------------- |  | ------ | -------------- |  | - | --------- | - | ----------------- | - | ------ |  | ------ | -
|                                                                        |  | Nine Months Ended March 31, 2006 |           |   | Nine Months Ended March 31, 2005 |  
|                                                                        |  | AverageBalance                   |           |   | Interest                         |   | AverageYield/cost |  |        | AverageBalance |  |   | Interest  |   | AverageYield/cost |  
|ASSETS                                                                  |  |                                  |           |   |                                  |   |                   |  |        |                |  |   |           |   |                   |   |        |  |        |  
|Interest-earning assets                                                 |  |                                  |           |   |                                  |   |                   |  |        |                |  |   |           |   |                   |   |        |  |        |  
|Loans and loans held for sale                                           |  | $                                | 2,069,629 |   |                                  | $ | 98,673            |  | 6.36   | %              |  | $ | 1,764,736 |   |                   | $ | 77,515 |  | 5.86   | %
|Securities and interest-bearing deposits                                |  |                                  | 290,106   |   |                                  |   | 9,666             |  | 4.44   | %              |  |   | 350,888   |   |                   |   | 10,574 |  | 4.02   | %
|Federal Home Loan Bank stock                                            |  |                                  | 30,357    |   |                                  |   | 1,197             |  | 5.25   | %              |  |   | 29,746    |   |                   |   | 942    |  | 4.22   | %
|                                                                        |  |                                  |           |   |                                  |   |                   |  |        |                |  |   |           |   |                   |   |        |  |        |  
|Total interest-earning assets                                           |  |                                  | 2,390,092 |   |                                  |   | 109,536           |  | 6.11   | %              |  |   | 2,145,370 |   |                   |   | 89,031 |  | 5.53   | %
|Noninterest-earning assets                                              |  |                                  |           |   |                                  |   |                   |  |        |                |  |   |           |   |                   |   |        |  |        |  
|Cash and due from banks                                                 |  |                                  | 51,351    |   |                                  |   |                   |  |        |                |  |   | 64,456    |   |                   |   |        |  |        |  
|Allowance for loan losses                                               |  |                                  | (19,396   | ) |                                  |   |                   |  |        |                |  |   | (17,295   | ) |                   |   |        |  |        |  
|Other assets                                                            |  |                                  | 160,615   |   |                                  |   |                   |  |        |                |  |   | 157,984   |   |                   |   |        |  |        |  
|                                                                        |  |                                  |           |   |                                  |   |                   |  |        |                |  |   |           |   |                   |   |        |  |        |  
|Total assets                                                            |  | $                                | 2,582,662 |   |                                  |   |                   |  |        |                |  | $ | 2,350,515 |   |                   |   |        |  |        |  
|                                                                        |  |                                  |           |   |                                  |   |                   |  |        |                |  |   |           |   |                   |   |        |  |        |  
|LIABILITIES                                                             |  |                                  |           |   |                                  |   |                   |  |        |                |  |   |           |   |                   |   |        |  |        |  
|Interest-bearing liabilities                                            |  |                                  |           |   |                                  |   |                   |  |        |                |  |   |           |   |                   |   |        |  |        |  
|Deposits                                                                |  |                                  |           |   |                                  |   |                   |  |        |                |  |   |           |   |                   |   |        |  |        |  
|Checking accounts                                                       |  | $                                | 118,186   |   |                                  |   | 414               |  | 0.47   | %              |  | $ | 136,673   |   |                   |   | 465    |  | 0.45   | %
|Savings and money market accounts                                       |  |                                  | 647,098   |   |                                  |   | 10,827            |  | 2.23   | %              |  |   | 581,000   |   |                   |   | 5,623  |  | 1.29   | %
|Certificates of deposit                                                 |  |                                  | 747,923   |   |                                  |   | 20,519            |  | 3.65   | %              |  |   | 617,704   |   |                   |   | 15,191 |  | 3.28   | %
|                                                                        |  |                                  |           |   |                                  |   |                   |  |        |                |  |   |           |   |                   |   |        |  |        |  
|Total deposits                                                          |  |                                  | 1,513,207 |   |                                  |   | 31,760            |  | 2.80   | %              |  |   | 1,335,377 |   |                   |   | 21,279 |  | 2.12   | %
|Borrowings                                                              |  |                                  |           |   |                                  |   |                   |  |        |                |  |   |           |   |                   |   |        |  |        |  
|Short-term                                                              |  |                                  | 259,578   |   |                                  |   | 7,528             |  | 3.86   | %              |  |   | 267,077   |   |                   |   | 3,942  |  | 1.97   | %
|Long-term                                                               |  |                                  | 297,204   |   |                                  |   | 11,417            |  | 5.12   | %              |  |   | 249,384   |   |                   |   | 10,275 |  | 5.49   | %
|                                                                        |  |                                  |           |   |                                  |   |                   |  |        |                |  |   |           |   |                   |   |        |  |        |  
|Total interest-bearing liabilities                                      |  |                                  | 2,069,989 |   |                                  |   | 50,705            |  | 3.26   | %              |  |   | 1,851,838 |   |                   |   | 35,496 |  | 2.55   | %
|Noninterest-bearing liabilities                                         |  |                                  |           |   |                                  |   |                   |  |        |                |  |   |           |   |                   |   |        |  |        |  
|Noninterest-bearing checking accounts                                   |  |                                  | 233,591   |   |                                  |   |                   |  |        |                |  |   | 241,945   |   |                   |   |        |  |        |  
|Other liabilities                                                       |  |                                  | 35,283    |   |                                  |   |                   |  |        |                |  |   | 30,532    |   |                   |   |        |  |        |  
|                                                                        |  |                                  |           |   |                                  |   |                   |  |        |                |  |   |           |   |                   |   |        |  |        |  
|Total liabilities                                                       |  |                                  | 2,338,863 |   |                                  |   |                   |  |        |                |  |   | 2,124,315 |   |                   |   |        |  |        |  
|Shareholders equity                                                    |  |                                  | 243,799   |   |                                  |   |                   |  |        |                |  |   | 226,200   |   |                   |   |        |  |        |  
|                                                                        |  |                                  |           |   |                                  |   |                   |  |        |                |  |   |           |   |                   |   |        |  |        |  
|Total liabilities and shareholders equity                               |  | $                                | 2,582,662 |   |                                  |   |                   |  |        |                |  | $ | 2,350,515 |   |                   |   |        |  |        |  
|                                                                        |  |                                  |           |   |                                  |   |                   |  |        |                |  |   |           |   |                   |   |        |  |        |  
|Fully tax-equivalent net interest income                                |  |                                  |           |   |                                  |   | 58,831            |  |        |                |  |   |           |   |                   |   | 53,535 |  |        |  
|Interest rate spread                                                    |  |                                  |           |   |                                  |   |                   |  | 2.85   | %              |  |   |           |   |                   |   |        |  | 2.98   | %
|Net interest margin                                                     |  |                                  |           |   |                                  |   |                   |  | 3.28   | %              |  |   |           |   |                   |   |        |  | 3.33   | %
|Average interest-earning assets to average interest-bearing liabilities |  |                                  |           |   |                                  |   |                   |  | 115.46 | %              |  |   |           |   |                   |   |        |  | 115.85 | %
|Tax-equivalent adjustment                                               |  |                                  |           |   |                                  |   | 668               |  |        |                |  |   |           |   |                   |   | 662    |  |        |  
|                                                                        |  |                                  |           |   |                                  |   |                   |  |        |                |  |   |           |   |                   |   |        |  |        |  
|Net interest income                                                     |  |                                  |           |   |                                  | $ | 58,163            |  |        |                |  |   |           |   |                   | $ | 52,873 |  |        |  
|                                                                        |  |                                  |           |   |                                  |   |                   |  |        |                |  |   |           |   |                   |   |        |  |        |  



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Provision for Loan Losses. The provision for loan losses was $1.0 million for the quarter ended March 31,
2006 compared with $0.9 million for the quarter ended March 31, 2005. Non-performing loans were $16.1 million at March 31, 2006 compared with $12.2 million at March 31, 2005. Net charge-offs for the quarter ended March 31, 2006
were $0.5 million compared with $0.6 million for the quarter ended March 31, 2005. Total loans were $2.064 billion at March 31, 2006 compared with $1.737 billion at March 31, 2005. The increase in the provision in the current quarter
compared with the prior year quarter was consistent with the increase total loans and in non-performing loans. The provision for loan losses for the nine months ended March 31, 2006 was $3.6 million compared with $2.6 million for the nine
months ended March 31, 2005. Net charge-offs for the nine months ended March 31, 2006 were $1.7 million compared with $1.2 million for the comparable period in the prior year. The increase in the provision for loan losses for the nine
months ended March 31, 2006, is consistent with the growth of the loan portfolio, and increases in net charge-offs compared to prior year and non-performing loans.

Noninterest Income. Noninterest income totaled $7.9 million for the quarter ended March 31, 2006, an increase of $0.5 million or 6.8% from $7.4 million in the prior year quarter. The quarter ended
March 31, 2005 included a credit of $1.0 million in other income  bank, which was life insurance proceeds. That credit was unusual and is not expected to recur in the foreseeable future. Therefore, it was excluded from the non-GAAP
measure of core earnings. The other components of noninterest income that varied significantly between the current quarter and the prior year quarter included an increase in gain on sale of loan servicing rights, an increase in loan servicing
income, a decrease in the gain on sale of loans and an increase in the loss on the sale of securities.

The Company sold loan servicing rights during the
quarter with a book value of $11.0 million, which represented loans with principal balances totaling $1.1 billion or approximately 43% of the Companys loan servicing rights asset at the time of sale. The purpose of the sale was to reduce the
size of the servicing asset in order to reduce volatility associated with income from loan servicing rights and to take advantage of a favorable market for loan servicing rights. The gain on the sale was $1.6 million, and the Company had not
previously sold loan servicing rights. Management expects to sell servicing rights in the future to continue to limit the volatility of income from loan servicing rights. However, the exact timing of future sales is not known and will be based on
future loan origination volumes and the market for the sale of loan servicing rights. Net gain on the sale of loans for the three months ended March 31, 2006, was $1.4 million compared with $1.9 million for the three months ended March 31,
2005. The decline in the gain was due to more competitive market conditions in the current quarter than in the same quarter in the prior year as the volume of loans sold during the quarter increased to $220 million compared with $205 million in the
prior year. The loss on the sale of securities for the three months ended March 31, 2006, was $0.9 million compared with $0.1 million for the three months ended March 31, 2005. The increased loss was due to a planned restructuring of the
investment portfolio, which included the sale of $42 million of low yielding securities in order to reinvest the proceeds in securities with current yields, which are significantly higher. By March 31, 2006, approximately $25 million of the
proceeds from the sale of securities had been reinvested in securities with yields averaging 230 basis points higher. Management intends to invest the remaining $17 million of proceeds during the fourth quarter of fiscal 2006 and expects to achieve
similar increases in yields..

Noninterest income totaled $21.6 million for the nine months ended March 31, 2006, an increase of $7.8 million or 56.5%
from $13.8 million in the prior year period. The increase was primarily due to the $5.2 million charge for other-than-temporary impairment of Fannie Mae and Freddie Mac preferred stock recorded in the second quarter of fiscal 2005. This was
partially offset by the $1.0 million of insurance proceeds included in other income  bank. Both the $5.2 million charge and the $1.0 million credit were excluded from the non-GAAP measure of core earnings. Gain on the sale of loan servicing
rights was $1.6 million for the nine months ended March 31, 2006, compared to no gain in the prior year. Gain on the sale of loans was $4.7 million for the nine months ended March 31, 2006 compared with $4.4 million for the nine months
ended March 31, 2005 an increase of 8.4%. This increase was due to an increase in the volume of loans sold to $791 million from $659 million or 19.9%, partially offset by a decline in the margin on loans sold. The sale of securities generated a
loss of $0.9 million for the nine months ended March 31, 2006 compared with a gain of $0.2 million for the nine months ended March 31, 2005. The current year loss resulted from the investment portfolio restructuring described above.

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



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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.



|                                            |  |                             |     |      |                            |     |      |  |      |       |  |   |      |  
|------------------------------------------- |  | --------------------------- | --- | ---- | -------------------------- | --- | ---- |  | ---- | ----- |  | - | ---- | -
|                                            |  | Three months endedMarch 31, |     |      | Nine months endedMarch 31, |    
|                                            |  | 2006                        |     | 2005 |                            |     | 2006 |  | 2005 |      
|Loan servicing income (loss)                |  |                             |     |      |                            |     |      |  |      |       |  |   |      |  
|Loan servicing revenue, net of amortization |  | $                           | 467 |      | $                          | 179 |      |  | $    | 470   |  | $ | 389  |  
|Change in impairment                        |  |                             | 256 |      |                            | (72 | )    |  |      | 611   |  |   | (215 | )
|                                            |  |                             |     |      |                            |     |      |  |      |       |  |   |      |  
|Total loan servicing income                 |  | $                           | 723 |      | $                          | 107 |      |  | $    | 1,081 |  | $ | 174  |  
|                                            |  |                             |     |      |                            |     |      |  |      |       |  |   |      |  

The increase in total loan servicing income in the current quarter compared to the prior year quarter was
primarily due to the reduction of impairment charges of $0.3 million in the current year quarter compared with the $0.1 million increase in impairment in the prior year. That improvement was supplemented by an increase in loan servicing revenue due
to a slowdown in loan payoffs and an increase in the size of the servicing portfolio. The increase in total loan servicing income for the nine months ended March 31, 2006, compared with the same period in the prior year was primarily due to the
reduction of impairment charges of $0.6 million in the first nine months of fiscal 2006 compared with an increase in impairment of $0.2 million in the same period in the prior year. That improvement was supplemented by an increase of $0.1 million in
loan servicing revenue primarily due to the growth in the size of the servicing portfolio.

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,
as 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. If other factors such as prepayment speeds continue at current levels management would anticipate a reduction in loan servicing income during the fourth
quarter of fiscal 2006 due to the reduction in the number and dollar volume of loans serviced.

Service charges did not materially change for the quarter
ended March 31, 2006, as compared with the same period in the prior year. Other income  non-bank subsidiaries increased due to year over year increases in revenue in each of the non-bank businesses including insurance commissions, real
estate commissions and brokerage commissions. Other income  bank increased due to increases in revenue from merchant services and ATM activity.

Service charges did not materially change for the nine months ended March 31, 2006, as compared with the same period in the prior year. Other income  non-bank subsidiaries increased due to year over year increases in revenue in
each of the non-bank businesses including insurance commissions, real estate commissions and brokerage commissions. Other income  bank increased due to increases in revenue from letters of credit, merchant services and ATM activity.

Noninterest Expense.Noninterest expense increased $1.0 million or 6.3% to $16.7 million for the three months ended March 31, 2006, compared
with the same quarter in the prior year. Annualized noninterest expense as a percent of average assets was 2.58% for the quarter ended March 31, 2006 compared to 2.65% for the prior year quarter. The efficiency ratio for the three months ended
March 31, 2006, was 61.6% compared with 60.1% for the same period in the prior year. The core efficiency ratio for the quarter ended March 31, 2006, was 61.6%, down from 62.5% for the same period in the prior year. The increase in
noninterest expense was primarily due to an increase of $0.5 million in franchise taxes and an increase of $0.3 million in salaries and employee benefits. Franchise taxes are predominantly levied on a calendar year basis and are expected to continue
at current levels throughout the remainder of calendar 2006. Salaries and employee benefits increased $0.3 million or 3.6% in the current quarter compared with the same quarter in the prior year primarily due to annual merit increases.



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Noninterest expense increased $3.8 million or 8.4% to $49.3 million for the nine months ended March 31, 2006,
compared with the same period in the prior year. Annualized noninterest expense as a percent of average assets was 2.55% for the nine months ended March 31, 2006 compared with 2.58% for the prior year period. The efficiency ratio for the nine
months ended March 31, 2006 was 61.4% compared with 67.6% for the prior year period. The core efficiency ratio for the nine months ended March 31, 2006, was 61.2% compared with 63.6% for the prior year period. The increase in noninterest
expense was primarily due to an increase of $2.9 million in salaries and employee benefits and an increase of $0.8 million in other noninterest expense. The main factor contributing to the growth in personnel costs was additional personnel at new
and existing locations, the resulting increases in volume-based commissions, and increases in health insurance costs. Other noninterest expense was up due to increase in printing and supplies, ATM network costs and due to the net change in the
liability for recourse on loans sold.

Income Taxes. Income tax expense was $2.9 million for the three months ended March 31, 2006, compared
with $2.8 million for the prior year period. The effective tax rate was 31.4% for the three months ended March 31, 2006 compared with 29.5% for the same period in the prior year. The effective rate was lower in the prior year because the $1.0
million of life insurance proceeds were not subject to federal income tax. Income tax expense was $8.3 million for the nine months ended March 31, 2006, compared with $5.6 million for the prior year period. The effective tax rate was 31.0% for
the nine months ended March 31, 2006 compared with 30.1% for the same period in the prior year. The increase in income tax expense for the nine months ended March 31, 2006, compared with the prior year was primarily due to the lower level
of pretax income in the prior year, due to the impairment of Fannie Mae and Freddie Mac preferred stocks in addition to the tax-free life insurance income.

Financial Condition

General. Assets totaled $2.647 billion at March 31, 2006, an increase of $148 million or 5.9% from
June 30, 2005. This increase was primarily due to the Companys success in originating new loans in all categories. Capital ratios remain stable, with the ratio of equity to total assets at March 31, 2006 of 9.52% as compared with
9.47% at June 30, 2005.

Securities. Securities available for sale decreased $29 million or 10.2% during the first nine months of fiscal 2006
and totaled $266 million at March 31, 2006. During March 2006, the Company began an investment portfolio restructuring program, which resulted in the sale of $42 million of low yielding securities and the reinvestment of $25 million into higher
yielding securities. The Company intends to reinvest the remaining $17 million into higher yielding securities during the fourth quarter of fiscal 2006.

Loans Held for Sale.Loans held for sale totaled $59 million at March 31, 2006, compared to $145 million at June 30, 2005, a decrease of $86 million or 59.3%. The decrease was primarily due to a slowdown in mortgage banking
activity during the second and third quarters of fiscal 2006 related to rising long-term interest rates and seasonal slowdown in originations.

Loans. The loan portfolio totaled $2.064 billion at March 31, 2006, an increase of $233 million, or 12.7% from $1.831 billion at June 30, 2005. The increase in the loan portfolio was due to increases of $110 million or
13.7% in mortgage and construction loans, $74 million or 10.3% in commercial loans, and $49 million or 15.9% in consumer loans. Virtually all fixed-rate residential mortgage loans are originated for sale, generating substantial noninterest income
and minimizing interest rate risk. More than 80% of consumer loans are secured by single-family residences. These loans include home equity loans and lines, and second mortgages. A summary of the loan portfolio follows.



|                          |  |                      |           |         |                     |   |        |   |           |  |       |  
|------------------------- |  | -------------------- | --------- | ------- | ------------------- | - | ------ | - | --------- |  | ----- | -
|                          |  | As of March 31, 2006 |           |         | As of June 30, 2005 |  
|                          |  | Amount               |           | Percent |                     |   | Amount |   | Percent   | 
|Mortgage and construction |  | $                    | 916,479   |         | 44.4                | % |        | $ | 806,294   |  | 44.0  | %
|Commercial                |  |                      | 789,992   |         | 38.3                | % |        |   | 715,903   |  | 39.1  | %
|Consumer                  |  |                      | 358,004   |         | 17.3                | % |        |   | 308,924   |  | 16.9  | %
|                          |  |                      |           |         |                     |   |        |   |           |  |       |  
|Total loans               |  | $                    | 2,064,475 |         | 100.0               | % |        | $ | 1,831,121 |  | 100.0 | %
|                          |  |                      |           |         |                     |   |        |   |           |  |       |  



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

Asset Quality History

(Dollars in thousands)



|                                                         |  |         |        |   |          |   |        |         |  |   |         |   |  |         |        |   |  |   |        |  
|-------------------------------------------------------- |  | ------- | ------ | - | -------- | - | ------ | ------- |  | - | ------- | - |  | ------- | ------ | - |  | - | ------ | -
|                                                         |  | 3/31/06 |        |   | 12/31/05 |   |        | 9/30/05 |  |   | 6/30/05 |   |  | 3/31/05 |       
|Non-performing assets                                    |  | $       | 19,940 |   |          | $ | 16,294 |         |  | $ | 18,443  |   |  | $       | 15,611 |   |  | $ | 15,052 |  
|Non-performing assets as a % of total assets             |  |         | 0.75   | % |          |   | 0.62   | %       |  |   | 0.72    | % |  |         | 0.62   | % |  |   | 0.61   | %
|Non-performing loans                                     |  | $       | 16,117 |   |          | $ | 13,419 |         |  | $ | 15,326  |   |  | $       | 12,605 |   |  | $ | 12,186 |  
|Non-performing loans as a % of total loans               |  |         | 0.78   | % |          |   | 0.67   | %       |  |   | 0.82    | % |  |         | 0.69   | % |  |   | 0.70   | %
|Delinquent loans                                         |  | $       | 23,673 |   |          | $ | 27,837 |         |  | $ | 24,795  |   |  | $       | 19,601 |   |  | $ | 20,308 |  
|Delinquent loans as a % of total loans                   |  |         | 1.15   | % |          |   | 1.39   | %       |  |   | 1.32    | % |  |         | 1.07   | % |  |   | 1.17   | %
|Allowance for loan losses                                |  | $       | 20,170 |   |          | $ | 19,617 |         |  | $ | 19,194  |   |  | $       | 18,266 |   |  | $ | 17,888 |  
|Allowance for loan losses as a % of loans                |  |         | 0.98   | % |          |   | 0.98   | %       |  |   | 1.02    | % |  |         | 1.00   | % |  |   | 1.03   | %
|Allowance for loan losses as a % of non-performing loans |  |         | 125.15 | % |          |   | 146.19 | %       |  |   | 125.24  | % |  |         | 144.91 | % |  |   | 146.79 | %

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 March 31, 2006,
were $19.9 million or 0.75% of total assets compared with $16.3 million or 0.62% of total assets at December 31, 2005, and $15.6 million or 0.62% of total assets at June 30, 2005. The changes in non-performing assets were primarily related
to changes in non-performing loans, which were $16.1 million, $13.4 million and $12.6 million at March 31, 2006, December 31, 2005 and June 30, 2005, respectively. Delinquent loans were $23.7 million, $27.8 million and $19.6
million at March 31, 2006, December 31, 2005 and June 30, 2005 respectively. The allowance for loan losses increased during the quarter to $20.2 million at March 31, 2006, from $19.6 million at December 31, 2005.
However, the allowance remained constant as a percent of total loans at 0.98% as of March 31, 2006 and December 31, 2005. This maintenance of the allowance at the same relative size is consistent with the neutral state of asset quality
indicated by the rising level of non-performing loans which is mitigated by the falling level of delinquencies. Also, the allowance for loan losses is 125.15% of non-performing loans. It is important to note that more than 50% of non-performing
loans are secured by 1-4 family residences, and the majority of the remaining loans are secured by commercial real estate. 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.

Other Assets. Other assets increased $21 million to $91 million at March 31,
2006, compared with $70 million at June 30, 2005. One of the components of other assets is loan servicing rights. During the current quarter the Company sold loan servicing rights with a cost basis of approximately $11.0 million, which
represented approximately 43% of the balance of loan servicing rights as of the date of the sale. The cost basis of the servicing rights that remain on the books is $14.8 million and those servicing rights have an average cost basis equal to 0.99%
of the outstanding balances of the



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related loans. Also included in Other Assets at March 31, 2006, are receivables of $23.6 million for loan servicing
rights and securities sold but not settled. The Company has an equity investment in a low-income housing project of $0.7 million that is also included in other assets. That investment was classified as special mention at December 31, 2005 due
to low occupancy, resulting in negative cash flow. At March 31, 2006, the project cash flow remained negative and the asset remains classified as special mention. However, plans are underway to restructure the project. Management believes this
investment is realizable at March 31, 2006. However, if restructuring does not take place and there is further deterioration partial or total impairment could occur.

Deposits.Deposits increased $39 million, or 2.3% during the first nine months of fiscal 2006 and totaled $1.748 billion at March 31, 2006, compared to $1.709 billion at June 30, 2005. This increase
was composed of an $84 million or 5.5% increase in retail deposits, partially offset by a decrease of $18 million of brokered certificates of deposit and a $26 million decrease in public funds deposits. The Company has chosen not to renew brokered
deposits and public funds deposits due to the success of the retail branches in raising deposits and because of the level of competition for public funds and brokered deposits has resulted in higher costs than we are currently paying for retail
deposits. At March 31, 2006, the Company had $77 million in brokered deposits and $60 million in public funds requiring pledges. The Company considers these types of wholesale funds 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. Long-term borrowings increased $70 million during the first nine months of fiscal 2006. That
increase was composed of a $31 million increase in junior subordinated debentures and a $47 million net increase in long-term borrowings, partially offset by an $8 million reclassification of borrowings that are now due in less than one year from
long-term to short-term. The additional $31 million of junior subordinated debentures carry a fixed rate of 5.69% for five years and a rate that floats with three-month LIBOR for the remaining 25 years. During the nine months ended March 31,
2006, the Company borrowed $80 million in long-term fixed-rate FHLB advances with original maturities ranging from twenty-four to forty-two months and rates ranging from 4.82% to 4.96%. Short-term borrowings increased $24 million. That increase was
composed of a net $16 million borrowing and an $8 million increase due to a reclassification of borrowings that are now due in less than one year from long-term to short-term. At March 31, 2006, $261 million of the $286 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 March 2006, the rate was approximately 4.75%, up 150 basis points from
June 30, 2005, due to six 25 basis point rate increases 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. The Company presently has $528 million of loans that are indexed to
the prime rate that re-price at least monthly compared to $261 million of overnight borrowings.

Capital Resources. Total shareholders equity
increased $15.3 million, or 6.5% during the nine months ended March 31, 2006, and totaled $252 million. The primary components of the increase in shareholders equity were net income of $18.5 million, an increase of $1.0 million from the
recognition of ESOP shares awarded and a $1.3 million increase from the exercise of stock options, offset by dividends declared of $6.1 million. There were no purchases of treasury stock during the first nine months of fiscal year 2006. During March
2006, the Board of Directors authorized the purchase of up to 500,000 shares of treasury stock over the following 12 months. The company does not currently plan to make any purchases of treasury stock under the new authorization while the
acquisition of Northern Savings is pending. 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. Shares repurchased by the Company may be used in its dividend reinvestment plan, its stock option plan, as consideration in an acquisition or for general corporate purposes.

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 the Banks
actual capital ratios to ratios required to be well capitalized under OTS regulations at March 31, 2006 follows:



|                                               |  |             |   |  |                       |  
|---------------------------------------------- |  | ----------- | - |  | --------------------- | -
|                                               |  | Actualratio |   |  | Well-capitalizedratio |  
|Total capital to risk-weighted assets          |  | 11.16       | % |  | 10.00                 | %
|Tier 1 (core) capital to risk-weighted assets  |  | 10.13       | % |  | 6.00                  | %
|Tier 1 (core) capital to adjusted total assets |  | 7.71        | % |  | 5.00                  | %



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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.

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.



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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 March 31, 2006, the Company had $173 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 $87 million from the Federal Home Loan Bank
based on loans currently pledged under blanket pledge agreements and $10 million on an unsecured commercial bank line of credit. This is compared to $151 million of cash and unpledged securities and Federal Home Loan Bank availability of $42 million
at June 30, 2005. Potential cash available as measured by liquid assets and borrowing capacity has increased $77 million during fiscal 2006 due to the additional junior subordinated debentures issued during the first quarter of fiscal year
2006, a reduction of securities pledged to secure public funds and a slowdown in mortgage banking activity. 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.

First Place
Financial Corp., 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 the 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 March 31, 2006, the holding company had
cash and unpledged securities of $41 million available to meet cash needs. This amount increased significantly from June 30, 2005 primarily due to the issuance of $31 million of junior subordinated debentures during the first quarter of fiscal
2006. The pending acquisition of Northern Savings by First Place Financial Corp. will require between $7 and $15 million of cash depending on the stock price and upon various elections available to the Northern Savings shareholders. 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, the 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 earnings plus any earnings from the previous two years not already paid out in dividends, and as long as the Bank would remain well capitalized.
At the present time, the Bank could pay approximately $18 million of dividends without OTS approval. Future dividend payments by the Bank beyond the $18 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.



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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 March 31, 2006 |   |  | NPV ratioJune 30, 2005 |  
|Up 200                      |  | 8.85                     | % |  | 9.01                   | %
|Up 100                      |  | 10.04                    | % |  | 10.02                  | %
|No change                   |  | 10.94                    | % |  | 10.76                  | %
|Down 100                    |  | 11.55                    | % |  | 11.10                  | %
|Down 200                    |  | 12.08                    | % |  | 11.49                  | %

The NPV projections indicate that the Company has experienced small increases in its exposure to rising interest
rates and in its potential benefit from falling interest rates during the nine months ended March 31, 2006. The NPV ratio for no change in rates has increased 18 basis points. This was due to the continued increase in short-term interest rates
and flattening of the yield curve. 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.

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



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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 March 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 the Bank 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 and the Bank.

Item 1a. Risk Factors  Not applicable.

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

On January 30, 2006, First Place Insurance
Agency, Ltd., a subsidiary of the Company entered into an Agreement of Purchase and Sale of Stock to acquire the Insurance Center of Warren Agency, Inc. (Insurance Center). Based on the terms of this agreement, on February 3, 2006, the Company
issued 21,358 shares of its common stock valued at approximately $550 to the previous owners of the Insurance Center as part of the purchase consideration for the acquisition of the Insurance Center. This transaction was exempt from the registration
requirements under section 4(2) of the Securities Act of 1933, as amended.

On March 21, 2006, the Company publicly announced that the Board of
Directors had approved a new buy-back program authorizing the purchase of up to 500,000 shares. There were no purchases of treasury stock during the nine months ended March 31, 2006. There are 500,000 shares remaining that may be purchased
under the March 2006 authorization. The authorization is in force through March 12, 2007.

Item 3. Defaults Upon Senior Securities  Not applicable.

Item 4. Submission of Matters to a Vote of Security Holders  Not applicable.

Item 5. Other Information  Not applicable.

Item 6. Exhibits

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



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##### Table of Contents

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: May 9, 2006 |  | /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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