Exhibit 13

LOGO



2004 ANNUAL REPORT

SCALING NEW HEIGHTS

FIRST PLACE FINANCIAL CORP.



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LOGO



2004 ANNUAL REPORT

FIRST PLACE FINANCIAL CORP.

SCALING NEW HEIGHTS

First Place Financial Corp.

185 East Market Street

P.O. Box 551

Warren, OH

44482-0551



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LOGO



Shareholder
Letter

This past year has been an exciting and challenging one for First Place Financial Corp. We have made great strides
over the past twelve months putting in place powerful strategic programs to accelerate the realization of our goal: delivering ongoing superior financial performance for our shareholders. As we move into 2005, we look forward to scaling new heights.

A lot has changed for First Place in the past five years. Once a traditional savings and loan with roots in two Ohio
counties  today we have grown to provide a full range of commercial and household financial services in four Midwestern states.

We have dramatically expanded our business lines and geography to position your company for future performance.

Importantly, we have expanded services and product lines and added experienced high caliber banking industry professionals to our corporation. Mega bank consolidation is continuing, creating unique opportunities for First Place to
enhance its market strength in the Midwest as a leading independent financial services corporation. Expansion into key Ohio markets continues, improving the banks overall mortgage and business lending opportunities.

This past year we added two loan production offices, one in Ohio and one in Indiana. We also acquired two in Michigan and introduced a
wholesale mortgage banking program, which combined, generate a healthy level of mortgage loan volume. This year, we originated over $1.3 billion, an increase of 30% over the previous year, despite the slowdown in the mortgage market nationwide.

Our long term goal is to create a viable and profitable First Place presence in the Midwest by greatly expanding our
mortgage and commercial lending programs into additional cities. We have identified strong growth markets and have positioned ourselves for the possibility of expanding our bank within a bank concept into many of these areas. This year
we transitioned our first loan origination office into a fully-integrated, full-service financial center in Solon, Ohio. This office serves as our prototype as we enter new growth markets for the delivery of financial services and private banking
programs to entrepreneurs, professionals and executives. In the fall of this year, we will be transitioning our North Olmsted office, and by the end of the fiscal year, our office in Columbus, Ohio.

We continue to grow our complementary non-bank affiliates with our recent acquisition of the Weigel, Lackey & Ross Agency, who
specialize in employee benefit programs for individuals and businesses; which include life and health insurance, group dental programs and retirement plans.

Simultaneous to growing our Ohio banking base, we have taken the critical step of expanding our First Place footprint beyond Ohio with the strategic acquisition of Southeast Michigan based Franklin
Bank. As a result of this acquisition, we have gained an abundance of low cost core deposits plus a powerful array of business product offerings. This will go a long way in satisfying the needs of our growing customer base of small and medium size
business customers throughout the First Place Midwest marketing areas.

2004 Financial Performance

This year, our total return to shareholders was a respectable 9.43%. This consisted of an increase of $1.09 in market value and $0.56 in
dividends. 1.10%

1.07%

104%

First Place Financial Corp. reported net income for the fiscal year ended June 30, 2004 of
0.97% $14.2 million compared with $16.7 million reported for the fiscal year ended June 30, 0.86% 2003. Diluted earnings per share were $1.09 compared to $1.29 reported last year. Return on average equity and return on average assets for fiscal 2004
were 7.46% and 0.83% compared with 9.23% and 1.08% for fiscal 2003. Earnings reflect the inclusion of $4.3 million of pre-tax expenses ($2.8 million after-tax) related to the acquisition of Franklin Bancorp Inc., which was completed on May 28, 2004.
These costs were $0.22 per diluted share. Without these costs, net income for the current year would have exceeded the prior year whether measured in total dollars or on a per share basis.

0.40% 0.33% 0.29% 0.23% 0.11%

2000 2001 2002 2003 2004

Our asset quality continues to improve and remains at very acceptable
levels, despite the slow recovery of our Northeast Ohio marketplace. Net charge-offs as a percent of total loans have declined for the third year in a row to 0.23% down 42% from the 2001 level. Also, non-performing assets continue to decline and as
of June 30th represent just .65% of assets, a decline of more than 26% from the previous year. While charge-offs and non-performing assets have declined, the allowance for loan losses has increased to 1.10% of total loans from 1.07% in the prior
year to reflect a shift in the loan portfolio composition, recognizing the substantial increase in commercial loans.

Loan
Loss Reserve Net Charge-Offs



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LOGO



Who is Franklin
Bank?

The new thinking in banking for business.Thats who. Due in part to their powerful marketing program, Franklin
has expanded their deposit base to over 14,000 Southeast Michigan business customers. Now theyll be expanding their product offerings as well  bringing the First Place retail product mix to consumers in affluent Oakland and Wayne
Counties.

As Franklin introduces its new consumer programs they are also introducing new loan production offices with
recent openings in Grand Blanc and Northville, Michigan. These offices are staffed with experienced loan professionals to drive growth in our commercial real estate portfolio.

The Franklin acquisition provides First Place with an outstanding opportunity to grow its overall coverage area and enhance its stream of
low cost deposits while dramatically accelerating the scope of its commercial loan activity. Additionally, the acquisition provides First Place with a successful business model to follow as we launch business financial products throughout the
Midwest.

Importantly, Franklins President, Craig Johnson, has joined the First Place management team. Mr. Johnson
brings twenty plus years in commercial banking to First Place.

Reshaping the Balance Sheet At 6/30/98- Total Assets= $712MM
At 6/30/04- Total Assets= $2,247MM

Other Other

Although at lower yields, we continue 2% 16% to see good growth in our Ohio Investments

40%

markets.With the addition of Franklin Investments Mortgage

Mortgage

17% Loans Loans 36%

Bank, we believe that we are much 46% better positioned for margin stability and improvement if interest rates rise. With the acquisition of Franklin,

Consumer

our balance sheet reflects a major Commercial Loans

Loans 9%

shift in our loan and deposit mix. Consumer Commercial

Loans 1% Loans

Commercial loans now constitute 11% 22% nearly 33% of our loan portfolio,

At 6/30/98- Total Deposits= $435MM At 6/30/04- Total Deposits= $1,548MM

and core deposits exceed 60% of total

MMA Savings

deposits.We look forward to expanding Savings MMA

16% 9% 15% 23%

our customer base in Franklins NOW

13%

growing S o u t h e a s t Michigan CDs

NOW 39%

markets through the introduction 8%

CDs Non-Int. DDA

of our enhanced product lines. 60% 16%

Non-Int. DDA

1%

The
Future

This past year has been the most important in the history of First Place. As we continue to reflect on our past
accomplishments and consider our future opportunities, we wish to

thank Jeff Francis for his enormous contribution to First
Place Financial Corp. Jeff has recently announced his retirement from our board.We thank Jeff for his guidance and vision in helping to grow the First Place idea.

In 2004 weve added important services and products  weve expanded our footprint  and weve made a strategic acquisition as we seek to guarantee our future success. In 2005
we wont forget what has made us one of the nations leading banking companies. Our commitment remains steadfast to our customers as our talented and passionate staff promise to provide personal service thats second to none.

Steven R. Lewis

President and Chief Executive Officer



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LOGO

Managements Discussion and Analysis of Financial Condition and Results of Operations



Selected Financial and Other Data



|                                                              |  |                              |           |      |   |           |  |   |           |   |      |   |           |  |   |          
|------------------------------------------------------------- |  | ---------------------------- | --------- | ---- | - | --------- |  | - | --------- | - | ---- | - | --------- |  | - | ---------
|                                                              |  | At June 30,                 
|                                                              |  | 2004                         |           | 2003 |   | 2002      |  |   | 2001      |   | 2000
|                                                              | 
|                                                              |  | (Dollars in thousands)      
|Selected Financial Condition Data:                            |  |                              |           |      |   |           |  |   |           |   |      |   |           |  |   |          
|                                                              |  |                              |           |      |  
|Total assets                                                  |  | $                            | 2,247,080 |      | $ | 1,558,613 |  | $ | 1,590,935 |   |      | $ | 1,592,787 |  | $ | 1,051,577
|Loans receivable, net                                         |  |                              | 1,483,993 |      |   | 891,842   |  |   | 896,541   |   |      |   | 996,586   |  |   | 705,066  
|Loans held for sale                                           |  |                              | 47,465    |      |   | 65,695    |  |   | 16,471    |   |      |   | 14,259    |  |   | 13,071   
|Allowance for loan losses                                     |  |                              | 16,528    |      |   | 9,603     |  |   | 9,456     |   |      |   | 9,757     |  |   | 6,150    
|Nonperforming assets                                          |  |                              | 14,643    |      |   | 13,774    |  |   | 12,566    |   |      |   | 15,384    |  |   | 7,416    
|Securities available for sale                                 |  |                              | 378,248   |      |   | 346,429   |  |   | 462,927   |   |      |   | 415,270   |  |   | 249,638  
|Deposits                                                      |  |                              | 1,548,011 |      |   | 1,108,450 |  |   | 1,061,393 |   |      |   | 1,018,829 |  |   | 586,748  
|Borrowings                                                    |  |                              | 414,249   |      |   | 235,952   |  |   | 247,546   |   |      |   | 263,528   |  |   | 227,762  
|Repurchase agreements                                         |  |                              | 31,108    |      |   | 9,547     |  |   | 63,705    |   |      |   | 91,064    |  |   | 75,000   
|Total shareholders equity                                    |  |                              | 223,110   |      |   | 182,681   |  |   | 185,275   |   |      |   | 194,036   |  |   | 147,975  
|                                                              | 
|                                                              |  | For the Years Ended June 30,
|                                                              |  | 2004                         |           | 2003 |   | 2002      |  |   | 2001      |   | 2000
|                                                              | 
|                                                              |  | (Dollars in thousands)      
|Summary of Earnings:                                          |  |                              |           |      |   |           |  |   |           |   |      |   |           |  |   |          
|                                                              |  |                              |           |      |  
|Total interest income                                         |  | $                            | 85,773    |      | $ | 87,394    |  | $ | 105,073   |   |      | $ | 98,018    |  | $ | 58,506   
|Total interest expense                                        |  |                              | 37,605    |      |   | 43,296    |  |   | 60,421    |   |      |   | 59,463    |  |   | 32,657   
|                                                              |  |                              |           |      |   |           |  |   |           |   |      |   |           |  |   |          
|Net interest income                                           |  |                              | 48,168    |      |   | 44,098    |  |   | 44,652    |   |      |   | 38,555    |  |   | 25,849   
|                                                              |  |                              |           |      |  
|Provision for loan losses                                     |  |                              | 4,896     |      |   | 2,864     |  |   | 2,990     |   |      |   | 3,125     |  |   | 2,294    
|                                                              |  |                              |           |      |   |           |  |   |           |   |      |   |           |  |   |          
|Net interest income after provision for loan losses           |  |                              | 43,272    |      |   | 41,234    |  |   | 41,662    |   |      |   | 35,430    |  |   | 23,555   
|                                                              |  |                              |           |      |  
|Total noninterest income (1)                                  |  |                              | 22,510    |      |   | 20,207    |  |   | 15,007    |   |      |   | 3,020     |  |   | 2,447    
|                                                              |  |                              |           |      |  
|Total noninterest expense (2) (3)                             |  |                              | 45,333    |      |   | 36,723    |  |   | 32,648    |   |      |   | 30,224    |  |   | 15,890   
|                                                              |  |                              |           |      |   |           |  |   |           |   |      |   |           |  |   |          
|                                                              |  |                              |           |      |  
|Income before income tax and minority interest                |  |                              | 20,449    |      |   | 24,718    |  |   | 24,021    |   |      |   | 8,226     |  |   | 10,112   
|                                                              |  |                              |           |      |  
|Provision for income tax                                      |  |                              | 6,214     |      |   | 7,947     |  |   | 7,812     |   |      |   | 1,912     |  |   | 3,298    
|                                                              |  |                              |           |      |  
|Minority interest in income (loss) of consolidated subsidiary |  |                              | 84        |      |   | 79        |  |   | (21       | ) |      |   | -         |  |   | -        
|                                                              |  |                              |           |      |   |           |  |   |           |   |      |   |           |  |   |          
|                                                              |  |                              |           |      |  
|Net income                                                    |  | $                            | 14,151    |      | $ | 16,692    |  | $ | 16,230    |   |      | $ | 6,314     |  | $ | 6,814    
|                                                              |  |                              |           |      |   |           |  |   |           |   |      |   |           |  |   |          



|(1) | For the year ended June 30, 2001, noninterest income included $4.8 million in restructuring losses associated with the merger with FFY Financial Corp.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | For the year ended June 30, 2001, noninterest expense included merger, integration and restructuring charges of $3.9 million for the merger with FFY Financial Corp.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | For the year ended June 30, 2004, noninterest expense included merger, integration and restructuring expense of $2.2 million for the merger with Franklin Bancorp Inc.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------





1



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Managements Discussion and Analysis of Financial Condition and Results of Operations



|                                                                        |  |                              |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|----------------------------------------------------------------------- |  | ---------------------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | - |  | ---- | ------ | - |  | - | ------ | -
|                                                                        |  | For the Years Ended June 30, |       
|                                                                        |  | 2004                         |        |   | 2003 |   |        | 2002 |  |   | 2001   |   |  | 2000 |       
|Selected Financial Ratios and Other Data:                               |  |                              |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|                                                                        |  |                              |        |   |     
|Performance Ratios (1):                                                 |  |                              |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|Return on average assets                                                |  |                              | 0.83   | % |      |   | 1.08   | %    |  |   | 0.99   | % |  |      | 0.47   | % |  |   | 0.83   | %
|Return on average equity                                                |  |                              | 7.46   |   |      |   | 9.23   |      |  |   | 8.54   |   |  |      | 3.70   |   |  |   | 4.80   |  
|Interest rate spread                                                    |  |                              | 2.99   |   |      |   | 2.98   |      |  |   | 2.61   |   |  |      | 2.54   |   |  |   | 2.39   |  
|Net interest margin, fully taxable equivalent                           |  |                              | 3.20   |   |      |   | 3.21   |      |  |   | 3.01   |   |  |      | 3.16   |   |  |   | 3.25   |  
|Noninterest expense to average assets                                   |  |                              | 2.65   |   |      |   | 2.38   |      |  |   | 1.99   |   |  |      | 2.26   |   |  |   | 1.94   |  
|Efficiency ratio                                                        |  |                              | 63.28  |   |      |   | 56.24  |      |  |   | 54.49  |   |  |      | 67.68  |   |  |   | 56.03  |  
|Average interest-earning assets to average interest-bearing liabilities |  |                              | 108.27 |   |      |   | 108.69 |      |  |   | 110.38 |   |  |      | 113.11 |   |  |   | 121.29 |  
|Dividend payout ratio                                                   |  |                              | 51.38  |   |      |   | 38.76  |      |  |   | 43.10  |   |  |      | 64.81  |   |  |   | 44.00  |  
|                                                                        |  |                              |        |   |     
|Capital Ratios:                                                         |  |                              |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|Equity to total assets at end of period                                 |  |                              | 9.93   |   |      |   | 11.72  |      |  |   | 11.65  |   |  |      | 12.19  |   |  |   | 14.07  |  
|Average equity to average assets                                        |  |                              | 11.09  |   |      |   | 11.74  |      |  |   | 11.61  |   |  |      | 12.79  |   |  |   | 17.34  |  
|Tangible capital to adjusted total assets (2)                           |  |                              | 7.25   |   |      |   | 8.20   |      |  |   | 8.27   |   |  |      | 7.94   |   |  |   | 8.75   |  
|Tier 1 capital to adjusted total assets (2)                             |  |                              | 7.25   |   |      |   | 8.20   |      |  |   | 8.27   |   |  |      | 7.94   |   |  |   | 8.75   |  
|Tier 1 capital to risk weighted assets (2)                              |  |                              | 10.48  |   |      |   | 13.12  |      |  |   | 14.89  |   |  |      | 12.43  |   |  |   | 14.46  |  
|Total capital to risk weighted assets (2)                               |  |                              | 12.07  |   |      |   | 14.03  |      |  |   | 15.97  |   |  |      | 13.05  |   |  |   | 15.27  |  
|                                                                        |  |                              |        |   |     
|Asset Quality Ratios:                                                   |  |                              |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|Nonperforming assets as a percent of total assets                       |  |                              | 0.65   |   |      |   | 0.88   |      |  |   | 0.79   |   |  |      | 0.97   |   |  |   | 0.71   |  
|Allowance for loan losses as a percent of loans                         |  |                              | 1.10   |   |      |   | 1.07   |      |  |   | 1.04   |   |  |      | 0.97   |   |  |   | 0.86   |  
|Net charge-offs to average loans                                        |  |                              | 0.23   |   |      |   | 0.29   |      |  |   | 0.33   |   |  |      | 0.40   |   |  |   | 0.11   |  
|Allowance for loan losses as a percent of nonperforming loans           |  |                              | 142.01 |   |      |   | 75.15  |      |  |   | 81.11  |   |  |      | 67.60  |   |  |   | 93.67  |  
|                                                                        |  |                              |        |   |     
|Per Share Data:                                                         |  |                              |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|Basic earnings per share                                                |  | $                            | 1.11   |   |      | $ | 1.31   |      |  | $ | 1.18   |   |  | $    | 0.54   |   |  | $ | 0.75   |  
|Diluted earnings per share                                              |  |                              | 1.09   |   |      |   | 1.29   |      |  |   | 1.16   |   |  |      | 0.54   |   |  |   | 0.75   |  
|Dividends declared per common share                                     |  |                              | 0.56   |   |      |   | 0.50   |      |  |   | 0.50   |   |  |      | 0.35   |   |  |   | 0.33   |  
|Tangible book value per share at year end                               |  |                              | 9.83   |   |      |   | 11.97  |      |  |   | 11.56  |   |  |      | 11.39  |   |  |   | 13.84  |  



|(1) | For the year ended June 30, 2001, the ratios include $4.8 million in restructuring losses and $3.9 million in merger, integration and restructuring charges associated with the
merger with FFY Financial Corp. For the year ended June 30, 2004 the ratios include $2.2 million in merger, integration and restructuring charges associated with the merger with Franklin Bancorp Inc.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Regulatory capital ratios as of June 30, 2004 are the combined ratios for First Place Bank and Franklin Bank.
|--- | -------------------------------------------------------------------------------------------------------------





2



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LOGO

Managements Discussion and Analysis of Financial Condition and Results of Operations



General



First Place Financial Corp. (Company) was formed as a thrift holding company as a result of the conversion of First Place Bank (Bank), formerly known as First Federal
Savings and Loan Association of Warren, from a federally-chartered mutual savings and loan association to a federally-chartered stock savings association in December of 1998.



On May 12, 2000, the Company acquired The Ravenna Savings Bank (Ravenna) in a tax-free exchange accounted for as a purchase. The Company
reissued treasury stock valued at $23.9 million on the date the transaction was consummated to acquire all of the outstanding shares of Ravenna. At the date of acquisition, Ravenna was merged into the Bank.



On December 22, 2000, the Company completed the merger of equals transaction with FFY
Financial Corp. (FFY). FFY was merged into the Company and FFYs thrift subsidiary FFY Bank, was merged into the Bank. The Company issued 6,873,423 shares of common stock valued at approximately $68.3 million in the transaction with FFY. The
transaction was recorded as a purchase and, accordingly, the operating results of FFY have been included in the Companys consolidated financial statements since the date of acquisition.



The Company changed the name of its thrift subsidiary, First Federal Savings and Loan
Association of Warren, to First Place Bank as part of the merger transaction with FFY.



On May 28, 2004, the Company acquired 100% of the common stock of Franklin Bancorp Inc. (Franklin) and merged Franklin into the Company. The consideration for the stock was approximately 50% cash based on $21.00 per share and 50% common
stock of the Company exchanged at a ratio of 1.137 shares of First Place Financial Corp. for each share of Franklin. The cash consideration was approximately $39.815 million and the stock consideration consisted of approximately 2,156,000 shares
valued at $40.765 million. Concurrent with the merger, Franklins wholly owned subsidiary, Franklin Bank N.A., converted from a national bank to a federally chartered thrift. As of June 30, 2004, both the Bank and Franklin Bank are wholly owned
subsidiaries of the Company. The Bank had total assets of $1.677 billion and Franklin Bank had total assets of $615 million as of June 30, 2004. Effective July 2, 2004, First Place Bank and Franklin Bank were merged and will operate as a single
federally-chartered stock savings association. The surviving corporation will be First Place Bank, although, it will continue to do business in Michigan under the name of Franklin Bank.



The Company is a community-oriented financial institution engaged primarily in gathering deposits to originate 1-4 family residential
mortgage loans, commercial and consumer loans. The Company currently operates 27 retail locations and 16 loan production offices located in Ohio and Michigan.



Managements discussion and analysis represents a review of the Companys consolidated financial condition and results of operations. This review should be
read in conjunction with the consolidated financial statements and footnotes. Dollars in the tables in the following sections are in thousands except per share data.



Forward-Looking Statements



When used in this Annual Report, 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, regulations or policies of regulatory agencies, fluctuations in interest rates, demand for loans in the market areas the Company conducts
business, and competition, that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. The Company wishes to caution readers not to place undue reliance on any such forward-looking
statements, which speak only as of the date made. The Company





3



---

Managements Discussion and Analysis of Financial Condition and Results of Operations



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.



Financial Condition



General.Assets at June 30, 2004 totaled $2.247 billion compared to $1.559 billion at June 30,
2003, an increase of $688 million or 44.2%. The increase was due primarily to the acquisition of Franklin Bancorp Inc. and its subsidiary Franklin Bank as of May 28, 2004. Franklin had assets of $627 million as of May 28, 2004. The following
table indicates what portion of the change in First Places assets, liabilities and equity was due to the Franklin acquisition. Fair value adjustments and purchase accounting entries that have been pushed down to Franklin Bank are included with
the Franklin Acquisition column. Explanations of changes in individual categories follow the table.



Analysis of change in asset and liability categories



|                                                                                                                       |  |                      |           |                                 |   |                  |  |   |                      |   |  |   |          
|---------------------------------------------------------------------------------------------------------------------- |  | -------------------- | --------- | ------------------------------- | - | ---------------- |  | - | -------------------- | - |  | - | ---------
|                                                                                                                       |  | BalanceJune 30, 2003 |           | FranklinAcquisitionMay 28, 2004 |   | AllOtherActivity |  |   | BalanceJune 30, 2004
|ASSETS                                                                                                                 |  |                      |           |                                 |   |                  |  |   |                      |   |  |   |          
|Cash and due from banks                                                                                                |  | $                    | 32,206    |                                 | $ | 48,849           |  | $ | (13,705              | ) |  | $ | 67,350   
|Interest-bearing deposits in other banks                                                                               |  |                      | 1,650     |                                 |   | 76,385           |  |   | (34,134              | ) |  |   | 43,901   
|Securities available for sale                                                                                          |  |                      | 346,429   |                                 |   | 51,870           |  |   | (20,051              | ) |  |   | 378,248  
|Loans held for sale                                                                                                    |  |                      | 65,695    |                                 |   | 13,015           |  |   | (31,245              | ) |  |   | 47,465   
|Loans                                                                                                                  |  |                      | 901,445   |                                 |   | 348,286          |  |   | 250,790              |   |  |   | 1,500,521
|Less, allowance for loan losses                                                                                        |  |                      | 9,603     |                                 |   | 4,506            |  |   | 2,419                |   |  |   | 16,528   
|                                                                                                                       |  |                      |           |                                 |   |                  |  |   |                      |   |  |   |          
|Loans, net                                                                                                             |  |                      | 891,842   |                                 |   | 343,780          |  |   | 248,371              |   |  |   | 1,483,993
|Federal Home Loan Bank stock                                                                                           |  |                      | 22,523    |                                 |   | 5,947            |  |   | 915                  |   |  |   | 29,385   
|Premises and equipment, net                                                                                            |  |                      | 19,766    |                                 |   | 2,586            |  |   | 41                   |   |  |   | 22,393   
|Goodwill                                                                                                               |  |                      | 18,407    |                                 |   | 35,723           |  |   | 1,218                |   |  |   | 55,348   
|Core deposits and other intangibles                                                                                    |  |                      | 4,902     |                                 |   | 15,274           |  |   | (1,263               | ) |  |   | 18,913   
|Other assets                                                                                                           |  |                      | 155,193   |                                 |   | 33,977           |  |   | (89,086              | ) |  |   | 100,084  
|                                                                                                                       |  |                      |           |                                 |   |                  |  |   |                      |   |  |   |          
|Total assets                                                                                                           |  | $                    | 1,558,613 |                                 | $ | 627,406          |  | $ | 61,061               |   |  | $ | 2,247,080
|                                                                                                                       |  |                      |           |                                 |   |                  |  |   |                      |   |  |   |          
|LIABILITIES                                                                                                            |  |                      |           |                                 |   |                  |  |   |                      |   |  |   |          
|Deposits                                                                                                               |  |                      |           |                                 |   |                  |  |   |                      |   |  |   |          
|Non-interest bearing checking                                                                                          |  | $                    | 39,506    |                                 | $ | 229,538          |  | $ | (29,073              | ) |  | $ | 239,971  
|Interest bearing checking                                                                                              |  |                      | 73,125    |                                 |   | 129,529          |  |   | (4,497               | ) |  |   | 198,157  
|Savings                                                                                                                |  |                      | 135,819   |                                 |   | 156              |  |   | 5,269                |   |  |   | 141,244  
|Money market                                                                                                           |  |                      | 298,788   |                                 |   | 54,602           |  |   | 6,125                |   |  |   | 359,515  
|Certificates of deposit                                                                                                |  |                      | 561,212   |                                 |   | 63,247           |  |   | (15,335              | ) |  |   | 609,124  
|                                                                                                                       |  |                      |           |                                 |   |                  |  |   |                      |   |  |   |          
|Total deposits                                                                                                         |  |                      | 1,108,450 |                                 |   | 477,072          |  |   | (37,511              | ) |  |   | 1,548,011
|Securities sold under agreements to repurchase                                                                         |  |                      | 9,547     |                                 |   | -                |  |   | 21,561               |   |  |   | 31,108   
|Borrowings                                                                                                             |  |                      | 235,952   |                                 |   | 57,555           |  |   | 89,813               |   |  |   | 383,320  
|Junior subordinated deferrable interest debentures held by affiliated trusts that issued guaranteed capital
securities |  |                      | -         |                                 |   | -                |  |   | 30,929               |   |  |   | 30,929   
|                                                                                                                       |  |                      |          
|Other liabilities                                                                                                      |  |                      | 21,983    |                                 |   | 10,476           |  |   | (1,857               | ) |  |   | 30,602   
|                                                                                                                       |  |                      |           |                                 |   |                  |  |   |                      |   |  |   |          
|Total liabilities                                                                                                      |  |                      | 1,375,932 |                                 |   | 545,103          |  |   | 102,935              |   |  |   | 2,023,970
|                                                                                                                       |  |                      |           |                                
|SHAREHOLDERS EQUITY                                                                                                   |  |                      | 182,681   |                                 |   | 82,303           |  |   | (41,874              | ) |  |   | 223,110  
|                                                                                                                       |  |                      |           |                                 |   |                  |  |   |                      |   |  |   |          
|Total liabilities and shareholders equity                                                                             |  | $                    | 1,558,613 |                                 | $ | 627,406          |  | $ | 61,061               |   |  | $ | 2,247,080
|                                                                                                                       |  |                      |           |                                 |   |                  |  |   |                      |   |  |   |          





4



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LOGO

Managements Discussion and Analysis of Financial Condition and Results of Operations



Loans.Total loans increased $600 million to $1.501 billion at June 30, 2004 from $901 million at June 30, 2003. The increase included $349 million from the Franklin acquisition and a $251 million net increase attributable to other
activity during the year. The increase by type of loan included increases of $223 million in 1-4 family residential real estate loans, $335 million in commercial loans and $42 million in consumer loans. The Franklin acquisition included $39 million
in 1-4 family residential real estate loans, $289 million in commercial loans and $21 million in consumer loans. The remaining net increases during the year were $184 million in 1-4 family residential real estate loans, $46 million in commercial
loans and $21 million in consumer loans. At June 30, 2003, the loan portfolio was 64% residential real estate loans, 18% commercial loans and 18% consumer loans. The Franklin acquisition significantly increased the percentage of the portfolio
invested in commercial loans. At June 30, 2004, the loan portfolio was 53% residential real estate loans, 33% commercial loans and 14% consumer loans. The Company intends to continue to increase commercial loans relative to residential real estate
loans in order to increase the diversity of the loan portfolio.



The Company
engages in mortgage banking as part of an overall strategy to deliver loan products to customers. As a result, the Company sells most fixed rate residential loans and some adjustable-rate residential loans. During fiscal 2004, the company originated
$1.3 billion in 1-4 family residential loans and sold $0.9 billion compared to originations of $1.0 billion and sales of $0.7 billion in fiscal 2003. This increase was achieved through the addition of a loan production office, the hiring of
additional commissioned loan officers and the addition of a wholesale department that purchases loans from independent originators and brokers.



Nonperforming Assets.Nonperforming assets
consist of loans past due greater than 90 days, nonaccrual loans, restructured loans and repossessed assets. There were no loans at June 30, 2004 or at June 30, 2003 past due greater than 90 days and still accruing interest. Nonperforming assets
totaled $14.6 million at June 30, 2004 compared to $13.8 million at June 30, 2003. At June 30, 2004, nonperforming assets consisted of $11.0 million in nonaccrual loans, $0.6 million in restructured loans and $3.0 million in repossessed assets. At
June 30, 2003, nonperforming assets consisted of $11.6 million in nonaccrual loans, $1.2 million in restructured loans and $1.0 million of repossessed assets. While nonperforming assets increased $0.8 million during fiscal 2004, the ratio of
nonperforming assets to total assets decreased to 0.65% at June 30, 2004, from 0.88% at June 30, 2003.



Allowance for Loan Losses.The allowance for loan losses represents
managements assessment of the estimated probable credit losses in the loan portfolio at each balance sheet date. All lending activity contains associated risks of loan losses. 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 nonperforming loans. The allowance for loan losses is a material estimate that is particularly susceptible to significant changes in the near term and is established through a provision for loan losses based on managements evaluation
of the risk inherent in the Companys loan portfolio and the general economy. Such 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 management believes warrant recognition in providing for an appropriate loan loss allowance. In addition to the analysis and procedures
just described, the Company utilizes an outside party to conduct an independent review of commercial and commercial real estate loans. The Company uses the results of this review to help determine the effectiveness of the existing policies and
procedures, and to provide an independent assessment of the allowance for loan losses allocated to these types of loans.



At June 30, 2004, the allowance for loan losses was $16.5 million compared to $9.6 million as of June 30, 2003. The majority of this increase, $4.5 million of the total
increase of $6.9 million, was due to the allowance acquired in the Franklin acquisition. The ratio of the allowance to gross loans outstanding was 1.10% at June 30, 2004, an increase from 1.07% at June 30, 2003. Net charge-offs for fiscal 2004
totaled $2.5 million compared to $2.7 million for the fiscal year ended June 30, 2003. Loans 30 days or more delinquent totaled $17.7 million as of June 30, 2004 and as of June 30, 2003. Loans 30 or more days delinquent as a percent of net loans
were 1.19% as June 30, 2004 and 1.98% as of June 30, 2003. Management believes that the allowance for loan losses was appropriately stated at June 30, 2004.





5



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Managements Discussion and Analysis of Financial Condition and Results of Operations



Securities.The securities portfolio increased $32 million to $378 million at June 30, 2004, from $346 million at June 30, 2003. This change included $52 million of securities acquired in connection with the Franklin acquisition and a net
decrease of $20 million due to other activity. The other activity included $73 million of purchases, $56 million of amortization and maturities, $29 million of sales and a net decrease of $8 million in market value. The declines in market value were
primarily attributable to rising interest rates during fiscal 2004 and all impairment that occurred was considered to be temporary. Management believes that none of these investments which were impaired met the criteria to be considered other than
temporarily impaired.



Goodwill and Intangible Assets.Goodwill increased $37 million to $55 million at June 30, 2004. The Franklin acquisition accounted for $36 million of the increase.
No impairment of goodwill was recorded during the year. Core deposits and other intangibles increase $14 million to $19 million from $5 million a year earlier. The increase was primarily due to recording $15 million related to the Franklin
acquisition.



Deposits.Total deposits were $1.548 billion at June 30, 2004, an increase of $440 million, compared to $1.108 billion at June 30, 2003. The Franklin acquisition
added $477 million to deposits, and the remaining activity was a net decrease of $37 million. The net growth by deposit category included $201 million in noninterest-bearing checking, $125 million in interest-bearing checking, $61 million in money
market accounts, $48 million in certificates of deposit and $5 million in savings accounts. Franklins deposits were concentrated in noninterest-bearing checking and to a lesser extent interest-bearing checking. The acquisition accounts for all
of the growth in those two categories. As a result, the mix of the Companys deposits has shifted during fiscal 2004 to include a larger percentage of core deposits, particularly checking accounts. This should result in lower deposit costs and
less sensitivity to interest rate fluctuations in fiscal 2005. The Company regularly monitors competition within its market areas and structures deposit rates to remain competitive within the market and to attract and retain customers.



Borrowings.Securities sold under agreements to repurchase increased $21 million to $31 million at June 30, 2004, compared to $10 million at June 30, 2003. The increase was primarily due to $23 million of
long-term repurchase agreements maturing in fiscal 2007, 2008 and 2009, which financed purchases of mortgage-backed securities with similar duration. Short-term Federal Home Loan Bank (FHLB) advances increased $77 million to $196 million at June 30,
2004 compared to $119 million at June 30, 2003. This increase funded a significant portion of the growth in loans during the fiscal year and was not attributable to the Franklin acquisition. Long-term FHLB advances increased $70 million to $187
million at June 30, 2004 compared to $117 million at June 30, 2003. The Franklin acquisition accounted for $58 million of the increase.



In December 2003, the Company issued $31 million of Junior Debentures. These debentures were issued to an unconsolidated affiliate that purchased them with the proceeds
from a $30 million issue of trust preferred securities to an outside party. The proceeds of the Junior Debentures were used to fund a portion of the cash consideration for the Franklin acquisition. For additional information on the Junior Debentures
see discussion of these securities under Off-Balance-Sheet Agreements in the following section. The Company uses borrowings as part of its liquidity management, cash flow, and asset/liability management. Borrowings are an alternative to raising cash
through deposit growth and are used when they offer a favorable alternative to deposits in terms of rate, maturity or volume.



Capital Resources.Total shareholders
equity increased $40 million to $223 million at June 30, 2004, compared to $183 million at June 30, 2003. This increase was primarily composed of increases of $41 million for the issuance of treasury stock to fund the stock portion of the Franklin
acquisition and $14 million in net income along with decreases of $7 million for treasury stock purchases and $7 million for cash dividends. The Companys Board of Directors authorized stock repurchase programs in March 2003 and March 2004 each
for the repurchase of up to 750,000 shares of the Companys common stock over a 12-month period in open market transactions or in privately negotiated transactions in accordance with applicable regulations of the Securities and Exchange
Commission. During fiscal 2004, the Company repurchased 385,900 shares at an average price of $17.66. At June 30, 2004, there were 466,400 shares remaining under the stock buy-back program approved in March 2004. Stock repurchase programs are a
component of the Companys strategy to invest excess capital after consideration of market and economic factors, the effect on shareholder dilution, adequacy of capital, effect on liquidity and an assessment of alternative





6



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LOGO

Managements Discussion and Analysis of Financial Condition and Results of Operations



investment returns. Shares repurchased by the Company may be used to meet the Companys requirements for common shares under its dividend reinvestment
plan, stock option or other stock based plans and for general corporate purposes such as expansion and acquisitions or future capital requirements.



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. Generally, an institution is
considered well-capitalized if it has a core (Tier 1) capital ratio of at least 5.0% (based on adjusted total assets); a core (Tier 1) risk-based capital ratio of at least 6.0%; and a total risk-based capital ratio of at least 10.0%. At June 30,
2004, the Banks capital levels were above the levels required to be well capitalized, and Franklin Banks capital levels were above the levels required to be adequately capitalized. The Bank and Franklin Bank merged effective July 2,
2004. On a combined basis, the capital levels of both banks together were above the levels required to be well capitalized as of June 30, 2004.



Contractual Obligations and Off-Balance-Sheet Arrangements



Contractual Obligations.  The Company uses a variety of funding sources to finance its earning assets and other activities. These contractual obligations
have various terms and maturities that may require the outlay of cash in the future. The following table summarizes those obligations as of June 30, 2004 by type and by payment date. The amounts represent the amounts contractually due and do not
include any interest, premiums, discounts or other similar carrying value adjustments. Additional information on the terms of these obligations can be found in the referenced note to the consolidated financial statements. Dollars are in thousands.



|                                              |  |                                    |  |                  |           |                    |   |                        |  |                 |         |       |   |         |  |   |          
|--------------------------------------------- |  | ---------------------------------- |  | ---------------- | --------- | ------------------ | - | ---------------------- |  | --------------- | ------- | ----- | - | ------- |  | - | ---------
|                                              |  | Financial Statement Note Reference |  | One Year or Less |           | One to Three Years |   | Three to To Five Years |  | Over Five Years |         | Total
|Deposits without a stated maturity            |  |                                    |  | $                | 938,887   |                    | $ | -                      |  | $               | -       |       | $ | -       |  | $ | 938,887  
|Lease obligations                             |  | 7                                  |  |                  | 2,042     |                    |   | 3,479                  |  |                 | 2,262   |       |   | 981     |  |   | 8,764    
|Certificates of deposit                       |  | 9                                  |  |                  | 290,850   |                    |   | 245,078                |  |                 | 71,587  |       |   | 1,609   |  |   | 609,124  
|Securities sold under agreement to repurchase |  | 10                                 |  |                  | 8,358     |                    |   | 8,250                  |  |                 | 14,500  |       |   | -       |  |   | 31,108   
|Borrowings                                    |  | 11                                 |  |                  | 225,630   |                    |   | 41,550                 |  |                 | 32,875  |       |   | 80,567  |  |   | 380,622  
|Junior subordinated debentures                |  | 12                                 |  |                  | -         |                    |   | -                      |  |                 | -       |       |   | 30,929  |  |   | 30,929   
|Purchase obligations                          |  | 17                                 |  |                  | 540       |                    |   | 1,080                  |  |                 | 450     |       |   | -       |  |   | 2,070    
|                                              |  |                                    |  |                  |           |                    |   |                        |  |                 |         |       |   |         |  |   |          
|Total                                         |  |                                    |  | $                | 1,466,307 |                    | $ | 299,437                |  | $               | 121,674 |       | $ | 114,086 |  | $ | 2,001,274
|                                              |  |                                    |  |                  |           |                    |   |                        |  |                 |         |       |   |         |  |   |          



Off-Balance-Sheet
Arrangements.  The Company regularly engages in business practices that give rise to obligations or interests that are not fully included in the statements of financial position. They include commitments to make loans, commitments to
sell loans, guarantees under letters of credit, interests in securities or derivatives used to hedge the value of loans held for sale and the use of wholly-owned unconsolidated special purpose entities which act as trusts to facilitate the sale of
debt securities to the public.



As a lending institution, the Company makes
commitments to lend money before loans are disbursed in order to serve the needs of borrowers. At June 30, 2004, the Company had commitments to make loans totaling $219 million including $116 million in commitments to make new loans and $103 million
in unused lines and letters of credit. These loan commitments are similar in form and terms to loans already recorded on the books and do not present credit risks that are different from the credit risks in the existing loan portfolio. The Company
does have interest rate risk on loan commitments and loans held for sale between the time a rate commitment is made to the borrower and the time the company contracts for the sale of the loan. This risk is minimized by issuing commitments to sell
loans or mortgage-backed securities to offset this interest rate risk. At June 30, 2004, the Company had $63 million in mortgage loan commitments that are in the form of obligations to sell mortgage backed securities of like maturity and coupon to
the loan commitments.





7



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Managements Discussion and Analysis of Financial Condition and Results of Operations



The Company issues standby letters of credit for commercial customers to third parties to guarantee the performance
of customers to those third parties. If the customer fails to perform, the Company performs in its place and treats the funds advanced as an interest-bearing loan. Therefore, these standby letters of credit represent the same risk to the Company as
a loan to that commercial loan customer would. At June 30, 2004, the Company had $2.5 million in standby letters of credit outstanding with an average remaining term of 29 months. While no liability has been recorded for the nominal amount of this
obligation, the fair value of this obligation has been recorded in the form of unearned fees.



In December 2003, the Company formed two affiliated trusts that issued $30.0 million of Guaranteed Capital Trust Securities. These affiliates used the equity capital from the Company and the proceeds of the Guaranteed
Capital Trust Securities to purchase $30.9 million in Junior Subordinated Deferrable Interest Debentures from the Company. The affiliates have no other operations. Based on the structure, nature and purpose of these affiliated trusts, the Company
has accounted for them using the equity method, and therefore they have not been included in the consolidated financial statements. The Company has guaranteed the securities issued by the affiliated trusts; however, this guarantee is recorded as a
liability of the Company in the form of the Junior Subordinated Deferrable Interest Debentures.





8



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LOGO

Managements Discussion and Analysis of Financial Condition and Results of Operations



Comparison of Results of Operations for Years Ended June 30, 2004 and 2003



General.The Company recorded net income for the year ended June 30, 2004 of $14.2 million, a decrease of 15.0% or $2.5 million, from net income of $16.7 million for the year ended June 30, 2003. Diluted earnings
per share for the year ended June 30, 2004 were $1.09, a decrease of 15.5% compared to $1.29 for the year ended June 30, 2003. The decrease in net income and earnings per share was due primarily to increases in non-interest expense and the provision
for loan losses, which were both impacted by merger related expenses. For fiscal 2004, returns on average equity (ROE) and average assets (ROA) were 7.46% and 0.83%, respectively, compared to 9.23% and 1.08% for fiscal 2003.



Net Interest
Income.The table below, in the section titled Average Balances, Interest Rates, and Yields provides important information on factors impacting net interest income and
should be read in conjunction with this discussion of net interest income. Interest income for the year ended June 30, 2004 totaled $85.8 million, a decrease of $1.6 million from $87.4 million for the year ended June 30, 2003. Interest income on
loans totaled $71.9 million for the year ended June 30, 2004 compared to $69.7 million for the year ended June 30, 2003, an increase of $2.2 million. The increase in interest income on loans was primarily due to an increase of $199.6 million in the
average balance of loans partially offset by a reduction in the average yield on loans of 1.05% to 6.16% for fiscal 2004 compared to 7.21% for the prior fiscal year. The increase in average loan balances was primarily due to the addition of
commissioned loan officers, the addition of one new loan production office in fiscal 2004, the addition of three loan production offices in fiscal 2003, which were operating for a full year in fiscal 2004 and to a lesser extent the Franklin
acquisition. Interest rates during fiscal 2004 continued to remain at historically low levels resulting in a high level of refinance activity, which reduced the average yield on loans, compared to fiscal 2003. Interest income on mortgage-backed and
other securities decreased $3.8 million and totaled $13.9 million for the year ended June 30, 2003 compared to $17.7 million for the prior year. The increase in interest income on mortgage-backed and other securities was due to a $58 million
increase in the average balance, partially offset by a 31 basis point decline in average rate.



Interest expense for the year ended June 30, 2004 was $37.6 million, a decrease of $5.7 million from $43.3 million for the prior year ended June 30, 2003. Interest expense on deposits decreased by $5.6 million to
$25.2 million for the year ended June 30, 2004 from $30.8 million for the year ended June 30, 2003. The decrease in interest expense on deposits was primarily due to a decline in the average cost of interest-bearing deposits from 2.91% for the prior
year ended June 30, 2003 to 2.32% for the year ended June 30, 2004, a decline of 59 basis points. Average interest-bearing deposit balances increased $31.8 million to $1,089.0 million for the year ended June 30, 2004 compared to $1,057.2 million for
the year ended June 30, 2003. The increase was due to growth in interest-bearing checking and money market accounts partially offset by a decline in higher-costing time deposits. Interest expense on repurchase agreements declined $0.6 million to
$0.7 million from $1.3 million for the prior year primarily due to a reduction in the average cost of repurchase agreements as higher rate instruments matured and were replaced by lower rate instruments. Interest expense on borrowings was $10.7
million for the year ended June 30, 2004, a decrease of $0.6 million from the prior year. The decrease was the net effect of a 1.79% decrease in the average rate and an $84.7 million decrease in the average balance. Substantially all of the increase
in the average balance occurred in short-term FHLB advances, which substantially lowered the average cost of borrowings. In addition, the average cost of borrowings declined due to a decline in interest rate swap expense of $0.9 million to $2.6
million from $3.5 million in the prior year. The interest rate swaps were redeemed on August 9, 2002 at the fair value of $12.6 million and a loss in other comprehensive income, net of tax, of $8.2 million was recorded that will be amortized to
interest expense over the remaining original terms of the individual interest rate swap contracts. The amount amortized to expense in future periods is expected to be less than what the net interest cost would have been in each period under the
prevailing lower interest rate environment that existed at the time the interest rate swaps were redeemed. Approximately 60% of this expense will be recognized within the first three fiscal years beginning in the year ended June 30, 2003 with the
remainder to be recognized in essentially equal annual increments through fiscal year 2010. Additional information can be found in the notes to the consolidated financial statements.





9



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Managements Discussion and Analysis of Financial Condition and Results of Operations



Net interest income for the year ended June 30, 2004 totaled $48.2 million versus $44.1 million for the year ended
June 30, 2003, an increase of $4.1 million. This increase was primarily due to a $134.6 million increase in interest-earning assets. Both asset yields and liability costs declined during fiscal 2004 as paid off loans and maturing liabilities were
replaced by new instruments at lower interest rates. The Company was able to hold the levels of interest rate spread and net interest margin within one basis point of prior year levels by changing the mix of assets to include relatively more loans
and less securities and by utilizing low cost short-term borrowings to finance growth.





10



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LOGO

Managements Discussion and Analysis of Financial Condition and Results of Operations



Average Balances, Interest Rates and Yields.The following table presents for the periods indicated the total dollar amount of fully taxable equivalent interest income from average interest-earning assets and the resultant yields, as well as
the interest expense on average interest-bearing liabilities, expressed in both dollars and rates.



|                                                                                                           |  |                           |           |   |                      |   |            |  |        |  
|---------------------------------------------------------------------------------------------------------- |  | ------------------------- | --------- | - | -------------------- | - | ---------- |  | ------ | -
|For the Years Ended June 30,                                                                               |  | 2004                      |          
|                                                                                                           |  | AverageOutstandingBalance |           |   | InterestEarned/ Paid |   | Yield/Rate | 
|(Dollars in thousands)                                                                                     |  |                           |           |   |                      |   |            |  |        |  
|                                                                                                           |  |                           |          
|Assets                                                                                                     |  |                           |           |   |                      |   |            |  |        |  
|Interest-earning assets:                                                                                   |  |                           |           |   |                      |   |            |  |        |  
|Loans receivable, net(2)                                                                                   |  | $                         | 1,169,251 |   |                      | $ | 72,031     |  | 6.16   | %
|Mortgage-backed and related securities(1)                                                                  |  |                           | 120,066   |   |                      |   | 5,383      |  | 4.48   |  
|Securities(1) (2)                                                                                          |  |                           | 219,243   |   |                      |   | 8,335      |  | 3.80   |  
|Other earning assets                                                                                       |  |                           | 5,379     |   |                      |   | 50         |  | 0.93   |  
|Federal Home Loan Bank stock                                                                               |  |                           | 23,371    |   |                      |   | 938        |  | 4.01   |  
|                                                                                                           |  |                           |           |   |                      |   |            |  |        |  
|Total interest-earning assets                                                                              |  |                           | 1,537,310 |   |                      |   | 86,737     |  | 5.64   |  
|Cash and cash equivalents                                                                                  |  |                           | 35,741    |   |                      |   |            |  |        |  
|Other assets                                                                                               |  |                           | 149,400   |   |                      |   |            |  |        |  
|Allowance for loan losses                                                                                  |  |                           | (11,163   | ) |                      |   |            |  |        |  
|                                                                                                           |  |                           |           |   |                      |   |            |  |        |  
|Total assets                                                                                               |  | $                         | 1,711,288 |   |                      |   |            |  |        |  
|                                                                                                           |  |                           |           |   |                      |   |            |  |        |  
|                                                                                                           |  |                           |          
|Liabilities and Shareholders Equity                                                                       |  |                           |           |   |                      |   |            |  |        |  
|Interest-bearing liabilities:                                                                              |  |                           |           |   |                      |   |            |  |        |  
|Interest-bearing checking and money market accounts                                                        |  | $                         | 395,790   |   |                      | $ | 4,934      |  | 1.25   | %
|Savings accounts                                                                                           |  |                           | 135,498   |   |                      |   | 788        |  | 0.58   |  
|Time deposits                                                                                              |  |                           | 557,746   |   |                      |   | 19,517     |  | 3.50   |  
|Repurchase agreements                                                                                      |  |                           | 26,087    |   |                      |   | 735        |  | 2.82   |  
|Borrowings                                                                                                 |  |                           | 288,349   |   |                      |   | 10,737     |  | 3.72   |  
|Junior subordinated deferrable interest debentures held bytrusts that issued guaranteed capital securities |  |                           | 16,457    |   |                      |   | 894        |  | 5.43   |  
|                                                                                                           |  |                           |           |   |                      |   |            |  |        |  
|Total interest-bearing liabilities                                                                         |  |                           | 1,419,927 |   |                      |   | 37,605     |  | 2.65   |  
|Noninterest-bearing deposits                                                                               |  |                           | 60,647    |   |                      |   |            |  |        |  
|Other liabilities                                                                                          |  |                           | 41,016    |   |                      |   |            |  |        |  
|                                                                                                           |  |                           |           |   |                      |   |            |  |        |  
|Total liabilities                                                                                          |  |                           | 1,521,590 |   |                      |   |            |  |        |  
|Shareholders equity                                                                                       |  |                           | 189,698   |   |                      |   |            |  |        |  
|                                                                                                           |  |                           |           |   |                      |   |            |  |        |  
|Total liabilities and shareholders equity                                                                 |  | $                         | 1,711,288 |   |                      |   |            |  |        |  
|                                                                                                           |  |                           |           |   |                      |   |            |  |        |  
|Net interest income/interest rate spread                                                                   |  |                           |           |   |                      | $ | 49,132     |  | 2.99   | %
|                                                                                                           |  |                           |           |   |                      |   |            |  |        |  
|                                                                                                           |  |                           |          
|Net interest margin                                                                                        |  |                           |           |   |                      |   |            |  | 3.20   | %
|                                                                                                           |  |                           |           |   |                      |   |            |  |        |  
|                                                                                                           |  |                           |          
|Average interest-earning assets to interest-bearing liabilities                                            |  |                           |           |   |                      |   |            |  | 108.27 | %
|                                                                                                           |  |                           |           |   |                      |   |            |  |        |  



|(1) | Includes unamortized discounts and premiums. Average balance is computed using the carrying value of securities. The average yield has been computed using the historical amortized
cost average balance for available for sale securities.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Average yields are stated on a fully taxable equivalent basis.
|--- | --------------------------------------------------------------





11



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Managements Discussion and Analysis of Financial Condition and Results of Operations



| |  |                           |           |   |                     |   |            |  |        |                           |  |   |                     |   |            |   |         |  |        |  
| |  | ------------------------- | --------- | - | ------------------- | - | ---------- |  | ------ | ------------------------- |  | - | ------------------- | - | ---------- | - | ------- |  | ------ | -
| |  |                           |           |   | 2003                |   |            |  |        |                           |  |   | 2002                |   |            |  
| |  | AverageOutstandingBalance |           |   | InterestEarned/Paid |   | Yield/Rate |  |        | AverageOutstandingBalance |  |   | InterestEarned/Paid |   | Yield/Rate |  
| |  |                           |           |   |                     |   |            |  |        |                           |  |   |                     |   |            |   |         |  |        |  
| |  |                           |           |   |                     |  
| |  |                           |           |   |                     |   |            |  |        |                           |  |   |                     |   |            |   |         |  |        |  
| |  |                           |           |   |                     |   |            |  |        |                           |  |   |                     |   |            |   |         |  |        |  
| |  | $                         | 969,692   |   |                     | $ | 69,871     |  | 7.21   | %                         |  | $ | 1,004,318           |   |            | $ | 79,319  |  | 7.90   | %
| |  |                           | 139,521   |   |                     |   | 7,265      |  | 5.21   |                           |  |   | 229,079             |   |            |   | 13,806  |  | 6.03   |  
| |  |                           | 257,824   |   |                     |   | 10,045     |  | 3.90   |                           |  |   | 205,851             |   |            |   | 10,215  |  | 4.96   |  
| |  |                           | 13,768    |   |                     |   | 255        |  | 1.85   |                           |  |   | 66,341              |   |            |   | 1,722   |  | 2.60   |  
| |  |                           | 21,937    |   |                     |   | 945        |  | 4.31   |                           |  |   | 20,869              |   |            |   | 1,134   |  | 5.43   |  
| |  |                           |           |   |                     |   |            |  |        |                           |  |   |                     |   |            |   |         |  |        |  
| |  |                           | 1,402,742 |   |                     |   | 88,381     |  | 6.33   |                           |  |   | 1,526,458           |   |            |   | 106,196 |  | 6.98   |  
| |  |                           | 35,659    |   |                     |   |            |  |        |                           |  |   | 34,605              |   |            |   |         |  |        |  
| |  |                           | 111,136   |   |                     |   |            |  |        |                           |  |   | 85,643              |   |            |   |         |  |        |  
| |  |                           | (9,502    | ) |                     |   |            |  |        |                           |  |   | (9,677              | ) |            |   |         |  |        |  
| |  |                           |           |   |                     |   |            |  |        |                           |  |   |                     |   |            |   |         |  |        |  
| |  | $                         | 1,540,035 |   |                     |   |            |  |        |                           |  | $ | 1,637,029           |   |            |   |         |  |        |  
| |  |                           |           |   |                     |   |            |  |        |                           |  |   |                     |   |            |   |         |  |        |  
| |  |                           |           |   |                     |  
| |  |                           |           |   |                     |   |            |  |        |                           |  |   |                     |   |            |   |         |  |        |  
| |  |                           |           |   |                     |   |            |  |        |                           |  |   |                     |   |            |   |         |  |        |  
| |  | $                         | 348,348   |   |                     | $ | 5,732      |  | 1.65   | %                         |  | $ | 300,846             |   |            | $ | 7,073   |  | 2.35   | %
| |  |                           | 134,028   |   |                     |   | 1,216      |  | 0.91   |                           |  |   | 135,243             |   |            |   | 2,479   |  | 1.83   |  
| |  |                           | 574,803   |   |                     |   | 23,822     |  | 4.14   |                           |  |   | 599,232             |   |            |   | 30,159  |  | 5.03   |  
| |  |                           | 28,776    |   |                     |   | 1,252      |  | 4.35   |                           |  |   | 90,645              |   |            |   | 4,893   |  | 5.40   |  
| |  |                           | 204,654   |   |                     |   | 11,274     |  | 5.51   |                           |  |   | 256,911             |   |            |   | 15,817  |  | 6.16   |  
| |  |                           |           |   |                     |   |            |  |        |                           |  |   |                     |   |            |   |         |  |        |  
| |  |                           |           |   |                     |   |            |  |        |                           |  |   |                     |   |            |   |         |  |        |  
| |  |                           | 1,290,609 |   |                     |   | 43,296     |  | 3.35   |                           |  |   | 1,382,877           |   |            |   | 60,421  |  | 4.37   |  
| |  |                           | 36,622    |   |                     |   |            |  |        |                           |  |   | 28,133              |   |            |   |         |  |        |  
| |  |                           | 32,027    |   |                     |   |            |  |        |                           |  |   | 35,923              |   |            |   |         |  |        |  
| |  |                           |           |   |                     |   |            |  |        |                           |  |   |                     |   |            |   |         |  |        |  
| |  |                           | 1,359,258 |   |                     |   |            |  |        |                           |  |   | 1,446,933           |   |            |   |         |  |        |  
| |  |                           | 180,777   |   |                     |   |            |  |        |                           |  |   | 190,096             |   |            |   |         |  |        |  
| |  |                           |           |   |                     |   |            |  |        |                           |  |   |                     |   |            |   |         |  |        |  
| |  | $                         | 1,540,035 |   |                     |   |            |  |        |                           |  | $ | 1,637,029           |   |            |   |         |  |        |  
| |  |                           |           |   |                     |   |            |  |        |                           |  |   |                     |   |            |   |         |  |        |  
| |  |                           |           |   |                     | $ | 45,085     |  | 2.98   | %                         |  |   |                     |   |            | $ | 45,775  |  | 2.61   | %
| |  |                           |           |   |                     |   |            |  |        |                           |  |   |                     |   |            |   |         |  |        |  
| |  |                           |           |   |                     |  
| |  |                           |           |   |                     |   |            |  | 3.21   | %                         |  |   |                     |   |            |   |         |  | 3.01   | %
| |  |                           |           |   |                     |   |            |  |        |                           |  |   |                     |   |            |   |         |  |        |  
| |  |                           |           |   |                     |  
| |  |                           |           |   |                     |   |            |  | 108.69 | %                         |  |   |                     |   |            |   |         |  | 110.38 | %
| |  |                           |           |   |                     |   |            |  |        |                           |  |   |                     |   |            |   |         |  |        |  





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Managements Discussion and Analysis of Financial Condition and Results of Operations



Rate/Volume Analysis of Net Interest
Income.The following table presents the dollar amount of changes in fully tax equivalent interest income and interest expense for major components of interest-earning assets and
interest-bearing liabilities. It distinguishes between the increase or decrease related to changes in balances and/or changes in interest rates. For each category of interest-earning assets and interest-bearing liabilities, information is provided
on changes attributable to (i) changes in volume (i.e., changes in volume multiplied by old rate) and (ii) changes in rate (i.e., changes in rate multiplied by old volume). For purposes of this table, changes attributable to both rate and volume,
which cannot be segregated, have been allocated proportionately to the change due to volume and the change due to rate.



|                                                                                                            |  |                                                               |        |   |                                                               |   |         |     |  |   |        |   |  |      |        |   |     |   |         |   |  |   |         |  
|----------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------- | ------ | - | ------------------------------------------------------------- | - | ------- | --- |  | - | ------ | - |  | ---- | ------ | - | --- | - | ------- | - |  | - | ------- | -
|                                                                                                            |  | Year Ended June 30, 2004 Compared to Year Ended June 30, 2003 |        |   | Year Ended June 30, 2003 Compared to Year Ended June 30, 2002 |  
|                                                                                                            |  | Increase (Decrease) Due to                                    |        |   | Increase (Decrease) Due to                                    |  
|                                                                                                            |  | Volume                                                        |        |   | Rate                                                          |   |         | Net |  |   | Volume |   |  | Rate |        |   | Net |  
|                                                                                                            |  | (Dollars in thousands)                                        |       
|Interest-Earning Assets:                                                                                    |  |                                                               |        |   |                                                               |   |         |     |  |   |        |   |  |      |        |   |     |   |         |   |  |   |         |  
|Loans receivable, net                                                                                       |  | $                                                             | 13,190 |   |                                                               | $ | (11,030 | )   |  | $ | 2,160  |   |  | $    | (2,674 | ) |     | $ | (6,774  | ) |  | $ | (9,448  | )
|Mortgage-backed and related securities                                                                      |  |                                                               | (939   | ) |                                                               |   | (943    | )   |  |   | (1,882 | ) |  |      | (4,853 | ) |     |   | (1,688  | ) |  |   | (6,541  | )
|Securities                                                                                                  |  |                                                               | (1,460 | ) |                                                               |   | (250    | )   |  |   | (1,710 | ) |  |      | 2,271  |   |     |   | (2,441  | ) |  |   | (170    | )
|Other earning assets                                                                                        |  |                                                               | (113   | ) |                                                               |   | (92     | )   |  |   | (205   | ) |  |      | (1,075 | ) |     |   | (392    | ) |  |   | (1,467  | )
|Federal Home Loan Bank stock                                                                                |  |                                                               | 60     |   |                                                               |   | (67     | )   |  |   | (7     | ) |  |      | 55     |   |     |   | (244    | ) |  |   | (189    | )
|                                                                                                            |  |                                                               |        |   |                                                               |   |         |     |  |   |        |   |  |      |        |   |     |   |         |   |  |   |         |  
|                                                                                                            |  |                                                               |        |   |                                                               |  
|Total interest-earning assets                                                                               |  |                                                               | 10,738 |   |                                                               |   | (12,382 | )   |  |   | (1,644 | ) |  |      | (6,276 | ) |     |   | (11,539 | ) |  |   | (17,815 | )
|                                                                                                            |  |                                                               |        |   |                                                               |   |         |     |  |   |        |   |  |      |        |   |     |   |         |   |  |   |         |  
|                                                                                                            |  |                                                               |        |   |                                                               |  
|Interest-Bearing Liabilities:                                                                               |  |                                                               |        |   |                                                               |   |         |     |  |   |        |   |  |      |        |   |     |   |         |   |  |   |         |  
|Interest-bearing checking and money market accounts                                                         |  |                                                               | 716    |   |                                                               |   | (1,514  | )   |  |   | (798   | ) |  |      | 994    |   |     |   | (2,335  | ) |  |   | (1,341  | )
|Savings accounts                                                                                            |  |                                                               | 13     |   |                                                               |   | (441    | )   |  |   | (428   | ) |  |      | (22    | ) |     |   | (1,241  | ) |  |   | (1,263  | )
|Time deposits                                                                                               |  |                                                               | (693   | ) |                                                               |   | (3,612  | )   |  |   | (4,305 | ) |  |      | (1,187 | ) |     |   | (5,150  | ) |  |   | (6,337  | )
|Repurchase agreements                                                                                       |  |                                                               | (108   | ) |                                                               |   | (409    | )   |  |   | (517   | ) |  |      | (2,834 | ) |     |   | (807    | ) |  |   | (3,641  | )
|Borrowings                                                                                                  |  |                                                               | 3,784  |   |                                                               |   | (4,321  | )   |  |   | (537   | ) |  |      | (2,991 | ) |     |   | (1,552  | ) |  |   | (4,543  | )
|Junior subordinated deferrable interest debentures held by trusts that issued guaranteed capital securities |  |                                                               | 894    |   |                                                               |   | -       |     |  |   | 894    |   |  |      | -      |   |     |   | -       |   |  |   | -       |  
|                                                                                                            |  |                                                               |        |   |                                                               |   |         |     |  |   |        |   |  |      |        |   |     |   |         |   |  |   |         |  
|                                                                                                            |  |                                                               |        |   |                                                               |  
|Total interest-bearing liabilities                                                                          |  |                                                               | 4,606  |   |                                                               |   | (10,297 | )   |  |   | (5,691 | ) |  |      | (6,040 | ) |     |   | (11,085 | ) |  |   | (17,125 | )
|                                                                                                            |  |                                                               |        |   |                                                               |   |         |     |  |   |        |   |  |      |        |   |     |   |         |   |  |   |         |  
|                                                                                                            |  |                                                               |        |   |                                                               |  
|Net change in net interest income                                                                           |  | $                                                             | 6,132  |   |                                                               | $ | (2,085  | )   |  | $ | 4,047  |   |  | $    | (236   | ) |     | $ | (454    | ) |  | $ | (690    | )
|                                                                                                            |  |                                                               |        |   |                                                               |   |         |     |  |   |        |   |  |      |        |   |     |   |         |   |  |   |         |  



Provision for Loan Losses.The provision for loan losses was $4.9 million for fiscal 2004, which was an increase of $2.0 million from fiscal 2003 expense of $2.9
million. The majority of that increase was due to a $1.5 million provision related to the Franklin Bank loan portfolio. That charge was recorded after the merger took place to reflect a change in the approach to managing credit issues at Franklin
and to conform Franklins practices to those that First Place Bank has used successfully to manage credit risk. The remaining increase of $0.5 million was due to growth in the loan portfolio and a change in the mix of loans to include
relatively more commercial loans in fiscal 2004 compared to fiscal 2003.



Noninterest Income.Noninterest income increased 11% to $22.5 million in the year ended June 30, 2004 from $20.2
million for the prior year ended June 30, 2003. The increase was due primarily to an improvement in income from loan servicing. Loan servicing income is composed of the current fees generated from the servicing of sold loans less the current
amortization of mortgage servicing rights (MSRs) and the adjustment for any change in the allowance for impairment of MSRs, which are valued at the lower of cost or market. The valuation of MSRs is a critical accounting policy and the Company
utilizes the services of an independent firm to determine market value. Both the amortization and the valuation of MSRs are sensitive to movements in





13



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Managements Discussion and Analysis of Financial Condition and Results of Operations



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. Historically low interest rates over the past two years and volatility in
rates recently have resulted in the increased variability of loan servicing income over the past two years. The table below shows how the change in the impairment of MSRs impacts loan servicing income.



|                                           |  |                     |   |  |          |  
|------------------------------------------ |  | ------------------- | - |  | -------- | -
|                                           |  | Year ended June 30, |  
|                                           |  | 2004                |   |  | 2003     |  
|Loan servicing income (loss)               |  |                     |   |  |          |  
|Loan servicing revenue net of amortization |  | $ (2,088            | ) |  | $ (2,594 | )
|Change in impairment of MSRs               |  | 2,099               |   |  | (2,397   | )
|                                           |  |                     |   |  |          |  
|Total loan servicing income (loss)         |  | $       11          |   |  | $ (4,991 | )
|                                           |  |                     |   |  |          |  



The reduction of the loss in loan
servicing revenue net of amortization in the current year compared to the prior year was due to a slowdown in amortization of servicing rights due to loan payoffs. The change in impairment was due to interest rates being significantly higher at June
30, 2004 than they were at June 30, 2003. The effective yield on the ten-year US Treasury note, a primary factor in pricing fixed rate mortgage products, is up more that 100 basis points at June 30, 2004 compared to June 30, 2003. The remaining
allowance for impairment of MSRs at June 30, 2004 was $0.3 million.



Gains
from the sale of loans totaled $8.5 million for the current fiscal year, a decline of $4.9 million from $13.4 million in the prior year. Gains in the current year averaged 94 basis points on $905 million of loan sales compared to gains averaging 197
basis points on $680 million of loan sales in the prior year. Sales margins were higher in fiscal 2003 as interest rates were on a downward trend throughout most of the year. Rates have trended upward through fiscal 2004 resulting in a narrowing of
margins on the gain on sale of loans. Service charges and fees on deposit accounts increased $0.7 million to $5.8 million for fiscal 2004 compared to $5.1 million for the prior year. These fees represent a stable source of income that is expected to
grow as deposit balances grow. Revenues from non-bank businesses increased $1.2 million for fiscal 2004 compared to fiscal 2003. This was primarily due to including a full year of revenue from two affiliates, APB Financial Group, Ltd. and majority
ownership in Title Works, LLC both acquired January 2003.



Noninterest Expense.Noninterest expense for the year ended June 30, 2004 totaled $45.3 million compared to $36.7 million for the year ended June 30, 2003, an increase of $8.6 million or 23%. The Company has undertaken a number of expansion initiatives over the
past two years which have resulted in significant increases in noninterest expense. These initiatives have also resulted in significant increases in residential loan originations and other non-bank income. The initiatives include having a full year
of expenses for TitleWorks, APB, loan production offices in Cincinnati, Toledo and Hudson, Ohio, a financial center in Solon, Ohio and adding a wholesale residential lending department. Each of these initiatives were new in fiscal 2003 and only
included a partial year of revenue and expense. In addition, the current year included one months expense from the Franklin acquisition. These initiatives particularly impacted salaries and benefits and occupancy expenses and to a lesser
extent marketing and other expense. Salaries and benefits expense increased $3.3 million to $21.7 million for the current fiscal year compared to $18.4 million for the prior year. Occupancy expenses were $6.5 million for the year ended June 30,
2004, an increase of $0.7 million over expense of $5.8 million for the prior fiscal year. Merger, integration and restructuring expense related to the Franklin acquisition was $2.2 million in fiscal 2004 compared to no expense in the prior year.
These expenses included personnel, data processing, travel, and consulting expenses for legal, accounting and other services. Other noninterest expenses increased $1.2 million to $7.3 million for the current fiscal year compared to $6.1 million in
the prior year. This increase was primarily due to a $0.8 million charge related to aged outstanding reconciling items in the Banks primary correspondent bank account. It was determined that these reconciling items were not likely to be
recovered due to their age.



Provision for Income Taxes.Income tax for the
current fiscal year was $6.2 million, a decrease of $1.7 million from the prior year expense of $7.9 million. The decline was due to a decline in pretax income and a decline in the effective tax rate to





14



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Managements Discussion and Analysis of Financial Condition and Results of Operations



30.4% for fiscal 2004 from 32.2% for fiscal 2003. The lower effective tax rate was primarily due to permanent tax benefits recognized related to the
Companys employee stock ownership plan.



Comparison of Results of Operations for
Years Ended June 30, 2003 and 2002



General.The Company recorded net income for the year
ended June 30, 2003 of $16.7 million, an increase of 2.8% or $0.5 million, from net income of $16.2 million for the year ended June 30, 2002. Diluted earnings per share for the year ended June 30, 2003 were $1.29, an increase of 11.2% compared to
$1.16 for the year ended June 30, 2002. The increase on a per share basis was due primarily to an increase in non-interest revenues and a reduction in shares outstanding arising from treasury stock purchases. For fiscal 2003, returns on average
equity (ROE) and average assets (ROA) were 9.23% and 1.08%, respectively, compared to 8.54% and 0.99% for fiscal 2002.



Net Interest Income.The table above, in the
section titled Average Balances, Interest Rates, and Yields provides important information on factors impacting net interest income and should be read in conjunction with this discussion of net interest income. Interest income for the
year ended June 30, 2003 totaled $87.4 million, a decrease of $17.7 million from $105.1 million for the year ended June 30, 2002. Interest income on loans totaled $69.7 million for the year ended June 30, 2003 compared to $79.3 million for the year
ended June 30, 2002, a decrease of $9.6 million. The decrease in interest income on loans was primarily due to a reduction in the average yield on loans of 69 basis points to 7.21%. Market interest rates continued at historically low levels
throughout the fiscal year, which created an environment favorable for residential 1-4 family mortgage holders to refinance their existing mortgage or to secure a mortgage on a new residence. The accelerated prepayments of higher yielding mortgages
contributed to the overall decline in the yield on the loan portfolio. Average loan balances, including loans held for sale, decreased $34.6 million to $969.7 million compared to the prior fiscal year. The decrease was primarily due to a reduction
in mortgage loan balances, partially offset by an increase in commercial loan balances. Interest income on securities decreased $6.4 million and totaled $16.5 million for the year ended June 30, 2003 compared to $22.9 million for the prior year. The
decrease in interest income on securities was due to a 116 basis point decline in the average yield on the security portfolio and also due to a $37.6 million decrease in average balances, from $434.9 million for the year ended June 30, 2002 to
$397.3 million for the year ended June 30, 2003. Interest income from other earning assets, primarily federal funds sold, decreased $1.4 million due to a decrease in average balances of $52.5 million to $13.8 million for fiscal 2003 and also due to
a 75 basis point decline in the average yield.



Interest expense for the year
ended June 30, 2003 was $43.3 million, a decrease of $17.1 million from $60.4 million for the prior year ended June 30, 2002. A reduction in average balances of interest-bearing liabilities of $92.3 million and a reduction in the average rate paid
on interest-bearing liabilities of 102 basis points contributed to the decrease. Interest expense on deposits decreased by $8.9 million from $39.7 million for the year ended June 30, 2002 to $30.8 million for the year ended June 30, 2003. The
decrease in interest expense on deposits was primarily due to a decline in the average cost of interest-bearing deposits from 3.83% for the prior year ended June 30, 2002 to 2.91% for the year ended June 30, 2003, a decline of 92 basis points.
Average interest-bearing deposit balances increased $21.9 million to $1,057.2 million for the year ended June 30, 2003 compared to $1,035.3 million for the year ended June 30, 2002. The increase was due to growth in money market accounts partially
offset by a decline in higher-costing time deposits. Interest expense on borrowed funds was $11.3 million for the year ended June 30, 2003, a decrease of $4.5 million from the prior year. The decrease was primarily due to a combination of lower
average balances of FHLB advances and reduced expense from interest rate swaps that were terminated during the year. The expense recorded for the year ended June 30, 2003 attributable to the interest rate swaps was $3.5 million compared to $5.5
million for the year ended June 30, 2002. The interest rate swaps were redeemed on August 9, 2002 at the fair value of $12.6 million, which was recorded as a component of other comprehensive income in shareholders equity, for a loss of $8.2
million net of tax. The loss is amortized to interest expense over the remaining original terms of the individual interest rate swap contracts. The amount amortized to expense in future periods is expected to be less than what the net interest cost
would have been in each period under the prevailing lower interest rate environment that existed at the time the interest rate swaps were redeemed. Approximately 60% of





15



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Managements Discussion and Analysis of Financial Condition and Results of Operations



this expense will be recognized within the first three fiscal years beginning in the year ended June 30, 2003 with the remainder to be recognized in
essentially equal annual increments through fiscal year 2010. Additional information can be found in the notes to the consolidated financial statements and in the Comparison of Results of Operations for Years Ended June 30, 2002 and 2001. Interest
expense on repurchase agreements declined $3.6 million to $1.3 million from $4.9 million for the prior year ended June 30, 2002. The decrease was due to a reduction in average balances caused by the scheduled maturity of the repurchase agreements.



Net interest income for the year ended June 30, 2003 totaled $44.1 million
versus $44.7 million for the year ended June 30, 2002, a slight decrease of $0.6 million or 1.3%. The net interest margin increased 20 basis points from 3.01% for the year ended June 30, 2002 to 3.21% for the year ended June 30, 2003. The
improvement in the net interest margin occurred from a reduction of low-yielding earning assets, a favorable shift in the deposit mix to lower cost deposits and a favorable impact of terminating the interest rate swaps.



Noninterest
Income.Noninterest income increased 35% to $20.2 million in the year ended June 30, 2003 from $15.0 million for the prior year ended June 30, 2002. The increase was due primarily to
gains on the sale of mortgage loans and revenues from non-bank businesses acquired in June, 2002 and January, 2003, as discussed below, offset by a net loss from loan servicing income. Gains from the sale of loans totaled $13.4 million for the
current fiscal year compared to $7.3 million in the prior year. The gains on loan sales were aided by the continuation throughout the year of low mortgage interest rates, which resulted in high levels of residential mortgage origination activity.
For fiscal 2003, mortgage loan sales totaled $680.1 million compared to $464.4 million in the prior year, an increase of $215.7 million. The full-year net loss in loan servicing income was $5.0 million for the year ended June 30, 2003 compared to a
net loss in the prior year of $0.6 million. Included in the current year were $2.4 million of non-cash charges for impairment to the valuation of the mortgage servicing rights, or MSRs. Similar valuation adjustments to mortgage servicing rights for
fiscal 2002 were negligible. Additionally, amortization of the related capitalized servicing asset is charged against servicing income. Amortization was accelerated throughout fiscal 2003 as a result of rapid prepayments of serviced loans, which
contributed to the overall level of losses on loan servicing income. The valuation of MSRs is a critical accounting policy and the Company utilizes the services of two outside firms to support the valuation process. At June 30, 2003, the value of
the MSRs was 0.69% of the loans being serviced.



Acquisitions of non-bank
businesses contributed to an increase in noninterest income during fiscal 2003. They include Coldwell Banker The Brokers Realty Group (June, 2002); the remaining one-third interest in Coldwell Banker First Place Real Estate Ltd. (July 2002); APB
Financial Group, Ltd. (January 2003); and the majority ownership in Title Works, LLC (January 2003). These acquisitions added $3.1 million to other noninterest income for fiscal 2003 compared to the prior year.



Service charge income increased to $5.1 million in the year ended June 30, 2003, an increase
of $0.7 million from $4.4 million for the year ended June 30, 2002. The increase was primarily attributable to revenues generated by transaction accounts. The Company reported net gains on sales of securities for fiscal year 2003 of $1.1 million
compared to net gains of $1.6 million for fiscal year 2002. During the current year, the Company sold certain securities that were anticipated to have very rapid prepayments due to continued low interest rates.



Noninterest
Expense.Noninterest expense for the year ended June 30, 2003 totaled $36.7 million compared to $32.6 million for the year ended June 30, 2002, an increase of $4.1 million. The non-bank
business acquisitions referenced above contributed $2.2 million to the increase in noninterest expense, as described more fully below. Salaries and benefits expense increased $2.1 million to $18.4 million for the current fiscal year compared to
$16.3 million for the prior year. The non-bank business acquisitions contributed $1.1 million to the increase in salaries and benefits expense. The balance of the increase was due to other increases in wages, health benefits and other employee
benefits. Occupancy expenses were $5.8 million for the year ended June 30, 2003, an increase of $0.5 million over the prior fiscal year. Non-bank businesses added $0.4 million to occupancy expense for the year ended June 30, 2003. Loan expenses were
$1.5 million for the year ended June 30, 2003 compared to $0.9 million for the year ended June 30, 2002. The increase was attributable to the higher volumes of mortgage loans originated. Other noninterest





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Managements Discussion and Analysis of Financial Condition and Results of Operations



expenses increased $0.9 million to $7.1 million for the current fiscal year attributable primarily to the non-bank businesses acquired. The efficiency ratio
was 56.2% for the current fiscal year compared to 54.5% for the prior fiscal year.



Asset/Liability Management and Market Risk



The Company, like
other financial institutions, is subject to market risk. Market risk is the type of risk that occurs when a company suffers economic loss due to changes in the market value of various types of assets or liabilities. As a financial institution, the
Company makes a profit by accepting and managing various risks with credit risk and interest rate risk being the most significant. Interest rate risk is the Companys primary market risk. It is the risk that occurs when changes in market
interest rates will result in a reduction in net interest income or net interest margin because interest-bearing assets and interest-bearing liabilities mature at different intervals and reprice at different times. Asset/liability management is the
measurement and analysis of the Companys exposure to changes in net interest income due to changes in interest rates. The objective of the Companys asset/liability management function is to balance the goal of maximizing net interest
income with the control of risks in the areas of liquidity, safety, capital adequacy and earnings volatility. In general, the Companys customers seek loans with long-term fixed rates and deposit products with shorter maturities which creates a
mismatch of asset and liability maturities. The Companys primary strategy to counteract this mismatch is to sell the majority of long-term fixed rate loans within 90 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 results below indicate how NPV would change based on various changes in interest rates. The projections are based on an instantaneous change in interest rates and
assume that short-term and long-term rates change by the same magnitude and in the same direction.



|                          |  |  |  |                          |  
|------------------------- |  |  |  | ------------------------ | -
|Net Portfolio Value       | 
|Basis PointChange inRates |  |  |  | Net PortfolioValue Ratio |  
|+200                      |  |  |  | 9.93                     | %
|+100                      |  |  |  | 10.01                    | %
|Base                      |  |  |  | 9.83                     | %
|-100                      |  |  |  | 9.82                     | %



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 above results indicate minimal exposure to falling rates and a small benefit from rising rates. The results of the projections are within parameters established by the Board of Directors.



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 the 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





17



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Managements Discussion and Analysis of Financial Condition and Results of Operations



that are likely to close. Additionally, MSRs act as a hedge against rising rates, as they becomes more valuable in a rising rate environment, offsetting the
decline in the value of loan commitments or loans held for sale in a rising rate environment.



Liquidity



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 June 30, 2004,
the Company had $267 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 $180 million
from the Federal Home Loan Bank based on loans currently pledged under blanket pledge agreements. This compared to $347 million of cash and unpledged securities and Federal Home Loan Bank availability of $215 million at June 30, 2003. Potential cash
available as measured by liquid assets and borrowing capacity has decreased during fiscal 2004 as the Company has increased its investment in loans. 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 locally or in national markets, or to sell additional loans. 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 June 30, 2004, the holding company had cash and unpledged securities of $10 million available to meet
cash needs. In addition, the holding company had a $20 million line of credit with a commercial bank. There were no funds borrowed on the line of credit as of June 30, 2004. Annual debt service on the Junior Subordinated Debentures is approximately
$1.6 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. First Place Bank paid a dividend of $10 million to the holding
company in June 2004 and would not be able to pay any additional dividend as of June 30, 2004 without the approval of the OTS. Future dividend payments by the Bank will be based upon future earnings or the approval of the OTS.



Impact of Inflation



Consolidated financial data included herein has been prepared in accordance with accounting principles generally accepted in the United
States of America (GAAP). Presently, GAAP requires the Company to measure financial position and operating results primarily in terms of historical dollars. Changes in the relative value of money due to inflation or deflation are generally not
considered.



In managements opinion, changes in interest rates affect
the financial condition of the Company to a far greater degree than changes in the inflation rate. While interest rates are greatly influenced by changes in the inflation rate, they do not move concurrently. Rather, interest rate volatility is based
on changes in the expected rate of inflation, as well as changes in monetary and fiscal policy. A financial institutions ability to be relatively unaffected by changes in interest rates is a good indicator of its





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Managements Discussion and Analysis of Financial Condition and Results of Operations



capability to perform in a volatile economic environment. In an effort to protect itself from the effects of interest rate volatility, the Company reviews
its interest rate risk position frequently, monitoring its exposure and taking necessary steps to minimize any detrimental effects on the Companys profitability.



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 than those used by management could have a material impact on the Companys financial position
or results of operations. These policies are considered to be 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 is 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, the nature of the estimates, and the sensitivity of the estimates
follows.



Allowance for loan losses.  The allowance for loan
losses represents managements estimate of probable 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 are considered including historic loss experience, 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 which could change before the 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 loss is considered to be a critical accounting policy.



One of the tools utilized by management to determine the appropriate level for the allowance for loan losses is the grading of individual loans according to the
severity of the credit issue. An illustration of the sensitivity of this system to changes in conditions or changes in estimates follows. The most serious grading a loan can receive is to be classified as a loss. A loan classified in the loss grade
would be 100% reserved and would be subject to charge-off. The next most serious grade is identified as doubtful. At June 30, 2004, the Company had $4.1 million of loans classified as doubtful. If all of these loans were to deteriorate and become
classified as loss the allowance for loan losses would need to increase by approximately $2.5 million.



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
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





19



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Managements Discussion and Analysis of Financial Condition and Results of Operations



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. The following table indicates how changes in assumptions about the prepayment speeds in the mortgage loan
servicing portfolio would affect the fair value of the portfolio as of the date of the most recent outside quarterly evaluation date, May 31, 2004.



|                                                 |  |   |       
|------------------------------------------------ |  | - | ------
|Fair Value of Mortgage Servicing Rights          |  | $ | 17,200
|Fair Value of Mortgage Servicing Rights assuming |  |   |       
|20% increase in prepayment speeds                |  | $ | 16,400
|40% increase in prepayment speeds                |  | $ | 15,850



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.



Market Prices and Dividends Declared



The common stock of First Place Financial Corp. trades on the Nasdaq Stock Market under the symbol FPFC. The table below shows the quarterly reported high and
low trade prices of the common stock and cash dividends per share declared during the years ended June 30, 2004 and 2003.



|               |  |      |       |     |   |           |  |   |      
|-------------- |  | ---- | ----- | --- | - | --------- |  | - | -----
|June 30, 2004: |  | High |       | Low |   | Dividends
|First quarter  |  | $    | 19.36 |     | $ | 16.51     |  | $ | 0.140
|Second quarter |  |      | 20.00 |     |   | 17.36     |  |   | 0.140
|Third quarter  |  |      | 20.00 |     |   | 17.62     |  |   | 0.140
|Fourth quarter |  |      | 18.67 |     |   | 16.44     |  |   | 0.140
|               |  |      |      
|June 30, 2003: |  |      |       |     |   |          
|First quarter  |  | $    | 19.50 |     | $ | 13.25     |  | $ | 0.125
|Second quarter |  |      | 17.58 |     |   | 13.15     |  |   | 0.125
|Third quarter  |  |      | 17.40 |     |   | 15.20     |  |   | 0.125
|Fourth quarter |  |      | 17.50 |     |   | 15.15     |  |   | 0.125





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Report of Independent Auditors



Board of Directors and Shareholders



First Place Financial Corp.



Warren, Ohio

LOGO



We have audited the accompanying consolidated
statements of financial condition of First Place Financial Corp. as of June 30, 2004 and 2003, and the related consolidated statements of income, changes in shareholders equity and cash flows for each of the three years in the period ended
June 30, 2004. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits.





We conducted
our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.





In our opinion, the consolidated financial statements referred to above present fairly, in
all material respects, the financial position of First Place Financial Corp. as of June 30, 2004 and 2003, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2004, in conformity with United
States generally accepted accounting principles.



LOGO

Crowe Chizek and Company LLC



Columbus, Ohio

August 12, 2004





21



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Consolidated Statements of Financial Condition



|                                                                                                                                                   |  |                                           |           |   |      |   |           |  
|-------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------- | --------- | - | ---- | - | --------- | -
|June 30,                                                                                                                                           |  | 2004                                      |           |   | 2003 |  
|                                                                                                                                                   |  | (Dollars in thousands, except share data) |          
|ASSETS                                                                                                                                             |  |                                           |           |   |      |   |           |  
|Cash and due from banks                                                                                                                            |  | $                                         | 67,350    |   |      | $ | 32,206    |  
|Interest-bearing deposits in other banks                                                                                                           |  |                                           | 43,901    |   |      |   | 1,650     |  
|Securities available for sale                                                                                                                      |  |                                           | 378,248   |   |      |   | 346,429   |  
|Loans held for sale                                                                                                                                |  |                                           | 47,465    |   |      |   | 65,695    |  
|Loans                                                                                                                                              |  |                                           | 1,500,521 |   |      |   | 901,445   |  
|Less, allowance for loan losses                                                                                                                    |  |                                           | 16,528    |   |      |   | 9,603     |  
|                                                                                                                                                   |  |                                           |           |   |      |   |           |  
|Loans, net                                                                                                                                         |  |                                           | 1,483,993 |   |      |   | 891,842   |  
|Federal Home Loan Bank stock                                                                                                                       |  |                                           | 29,385    |   |      |   | 22,523    |  
|Premises and equipment, net                                                                                                                        |  |                                           | 22,393    |   |      |   | 19,766    |  
|Goodwill                                                                                                                                           |  |                                           | 55,348    |   |      |   | 18,407    |  
|Core deposit and other intangibles                                                                                                                 |  |                                           | 18,913    |   |      |   | 4,902     |  
|Other assets                                                                                                                                       |  |                                           | 100,084   |   |      |   | 155,193   |  
|                                                                                                                                                   |  |                                           |           |   |      |   |           |  
|Total assets                                                                                                                                       |  | $                                         | 2,247,080 |   |      | $ | 1,558,613 |  
|                                                                                                                                                   |  |                                           |           |   |      |   |           |  
|                                                                                                                                                   |  |                                          
|LIABILITIES                                                                                                                                        |  |                                           |           |   |      |   |           |  
|Deposits                                                                                                                                           |  |                                           |           |   |      |   |           |  
|Non-interest bearing checking                                                                                                                      |  | $                                         | 239,971   |   |      | $ | 39,506    |  
|Interest bearing checking                                                                                                                          |  |                                           | 198,157   |   |      |   | 73,125    |  
|Savings                                                                                                                                            |  |                                           | 141,244   |   |      |   | 135,819   |  
|Money market                                                                                                                                       |  |                                           | 359,515   |   |      |   | 298,788   |  
|Certificates of deposit                                                                                                                            |  |                                           | 609,124   |   |      |   | 561,212   |  
|                                                                                                                                                   |  |                                           |           |   |      |   |           |  
|Total deposits                                                                                                                                     |  |                                           | 1,548,011 |   |      |   | 1,108,450 |  
|Securities sold under agreements to repurchase                                                                                                     |  |                                           | 31,108    |   |      |   | 9,547     |  
|Borrowings                                                                                                                                         |  |                                           | 383,320   |   |      |   | 235,952   |  
|Junior subordinated deferrable interest debentures held by affiliated trusts that issued guaranteed capital securities                             |  |                                           | 30,929    |   |      |   | -         |  
|Other liabilities                                                                                                                                  |  |                                           | 30,602    |   |      |   | 21,983    |  
|                                                                                                                                                   |  |                                           |           |   |      |   |           |  
|Total liabilities                                                                                                                                  |  |                                           | 2,023,970 |   |      |   | 1,375,932 |  
|                                                                                                                                                   |  |                                          
|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 sharesissued at June 30, 2004 and 18,128,272 shares issued at June
30, 2003 |  |                                           | 181       |   |      |   | 181       |  
|Additional paid-in capital                                                                                                                         |  |                                           | 188,312   |   |      |   | 177,059   |  
|Retained earnings                                                                                                                                  |  |                                           | 91,041    |   |      |   | 83,806    |  
|Unearned employee stock ownership plan shares                                                                                                      |  |                                           | (5,639    | ) |      |   | (6,219    | )
|Unearned recognition and retention plan shares                                                                                                     |  |                                           | (1,205    | ) |      |   | (1,887    | )
|Treasury stock, at cost, 2,973,309 shares at June 30, 2004 and 4,819,567 shares atJune 30, 2003                                                    |  |                                           | (42,083   | ) |      |   | (66,452   | )
|Accumulated other comprehensive loss                                                                                                               |  |                                           | (7,497    | ) |      |   | (3,807    | )
|                                                                                                                                                   |  |                                           |           |   |      |   |           |  
|Total shareholders equity                                                                                                                         |  |                                           | 223,110   |   |      |   | 182,681   |  
|                                                                                                                                                   |  |                                           |           |   |      |   |           |  
|Total liabilities and shareholders equity                                                                                                         |  | $                                         | 2,247,080 |   |      | $ | 1,558,613 |  
|                                                                                                                                                   |  |                                           |           |   |      |   |           |  



See accompanying notes to consolidated financial statements.



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Consolidated Statements of Income



|                                                              |  |                                               |        |      |   |        |      |  |   |         |  
|------------------------------------------------------------- |  | --------------------------------------------- | ------ | ---- | - | ------ | ---- |  | - | ------- | -
|For the years ended June 30,                                  |  | 2004                                          |        | 2003 |   |        | 2002 | 
|                                                              |  | (Dollars in thousands, except per share data) |       
|Interest income                                               |  |                                               |        |      |   |        |      |  |   |         |  
|Loans, including fees                                         |  | $                                             | 71,899 |      | $ | 69,741 |      |  | $ | 79,319  |  
|Securities:                                                   |  |                                               |        |      |   |        |      |  |   |         |  
|Taxable                                                       |  |                                               | 12,050 |      |   | 15,744 |      |  |   | 22,917  |  
|Tax exempt                                                    |  |                                               | 1,824  |      |   | 1,909  |      |  |   | 2,837   |  
|                                                              |  |                                               |        |      |   |        |      |  |   |         |  
|Total interest income                                         |  |                                               | 85,773 |      |   | 87,394 |      |  |   | 105,073 |  
|                                                              |  |                                               |       
|Interest expense                                              |  |                                               |        |      |   |        |      |  |   |         |  
|Deposits                                                      |  |                                               | 25,239 |      |   | 30,770 |      |  |   | 39,711  |  
|Short-term borrowings                                         |  |                                               | 1,880  |      |   | 9,248  |      |  |   | 15,342  |  
|Long-term borrowings                                          |  |                                               | 10,486 |      |   | 3,278  |      |  |   | 5,368   |  
|                                                              |  |                                               |        |      |   |        |      |  |   |         |  
|Total interest expense                                        |  |                                               | 37,605 |      |   | 43,296 |      |  |   | 60,421  |  
|                                                              |  |                                               |        |      |   |        |      |  |   |         |  
|                                                              |  |                                               |       
|Net interest income                                           |  |                                               | 48,168 |      |   | 44,098 |      |  |   | 44,652  |  
|                                                              |  |                                               |       
|Provision for loan losses                                     |  |                                               | 4,896  |      |   | 2,864  |      |  |   | 2,990   |  
|                                                              |  |                                               |        |      |   |        |      |  |   |         |  
|                                                              |  |                                               |       
|Net interest income after provision for loan losses           |  |                                               | 43,272 |      |   | 41,234 |      |  |   | 41,662  |  
|                                                              |  |                                               |       
|Noninterest income                                            |  |                                               |        |      |   |        |      |  |   |         |  
|Service charges and fees on deposit accounts                  |  |                                               | 5,824  |      |   | 5,096  |      |  |   | 4,432   |  
|Net gains on sale of securities                               |  |                                               | 480    |      |   | 1,125  |      |  |   | 1,552   |  
|Net gains on sale of loans                                    |  |                                               | 8,481  |      |   | 13,379 |      |  |   | 7,349   |  
|Loan servicing income (loss)                                  |  |                                               | 11     |      |   | (4,991 | )    |  |   | (646    | )
|Other income  bank                                           |  |                                               | 1,051  |      |   | 158    |      |  |   | 401     |  
|Other income non-bank subsidiaries                            |  |                                               | 6,663  |      |   | 5,440  |      |  |   | 1,919   |  
|                                                              |  |                                               |        |      |   |        |      |  |   |         |  
|Total noninterest income                                      |  |                                               | 22,510 |      |   | 20,207 |      |  |   | 15,007  |  
|                                                              |  |                                               |       
|Noninterest expense                                           |  |                                               |        |      |   |        |      |  |   |         |  
|Salaries and employee benefits                                |  |                                               | 21,704 |      |   | 18,383 |      |  |   | 16,266  |  
|Occupancy and equipment                                       |  |                                               | 6,483  |      |   | 5,758  |      |  |   | 5,327   |  
|Professional fees                                             |  |                                               | 1,695  |      |   | 1,356  |      |  |   | 1,573   |  
|Loan expenses                                                 |  |                                               | 1,629  |      |   | 1,482  |      |  |   | 866     |  
|Marketing                                                     |  |                                               | 1,235  |      |   | 979    |      |  |   | 799     |  
|Merger, integration and restructuring expense                 |  |                                               | 2,175  |      |   | -      |      |  |   | -       |  
|Franchise taxes                                               |  |                                               | 1,766  |      |   | 1,656  |      |  |   | 1,403   |  
|Amortization of intangible assets                             |  |                                               | 1,305  |      |   | 997    |      |  |   | 986     |  
|Other                                                         |  |                                               | 7,341  |      |   | 6,112  |      |  |   | 5,428   |  
|                                                              |  |                                               |        |      |   |        |      |  |   |         |  
|Total noninterest expense                                     |  |                                               | 45,333 |      |   | 36,723 |      |  |   | 32,648  |  
|                                                              |  |                                               |        |      |   |        |      |  |   |         |  
|                                                              |  |                                               |       
|Income before income taxes and minority interest              |  |                                               | 20,449 |      |   | 24,718 |      |  |   | 24,021  |  
|Provision for income taxes                                    |  |                                               | 6,214  |      |   | 7,947  |      |  |   | 7,812   |  
|Minority interest in income (loss) of consolidated subsidiary |  |                                               | 84     |      |   | 79     |      |  |   | (21     | )
|                                                              |  |                                               |        |      |   |        |      |  |   |         |  
|Net income                                                    |  | $                                             | 14,151 |      | $ | 16,692 |      |  | $ | 16,230  |  
|                                                              |  |                                               |        |      |   |        |      |  |   |         |  
|Earnings per share:                                           |  |                                               |        |      |   |        |      |  |   |         |  
|Basic                                                         |  | $                                             | 1.11   |      | $ | 1.31   |      |  | $ | 1.18    |  
|Diluted                                                       |  | $                                             | 1.09   |      | $ | 1.29   |      |  | $ | 1.16    |  



See accompanying notes to consolidated financial statements.



23



---

Consolidated Statements of Changes in Shareholders Equity



Years ended June 30, 2004, 2003 and 2002

(Dollars in thousands, except share data)



|                                                                                                           |  |              |     |                            |   |         |                   |  |   |                      |   |  |                     |         |   |               |   |         |                                              |  |   |          |   |  |   |         |   |  |   |         |  
|---------------------------------------------------------------------------------------------------------- |  | ------------ | --- | -------------------------- | - | ------- | ----------------- |  | - | -------------------- | - |  | ------------------- | ------- | - | ------------- | - | ------- | -------------------------------------------- |  | - | -------- | - |  | - | ------- | - |  | - | ------- | -
|                                                                                                           |  | Common Stock |     | Additional Paid-in Capital |   |         | Retained Earnings |  |   | Unearned ESOP Shares |   |  | Unearned RRP Shares |         |   | TreasuryStock |   |         | AccumulatedOther Comprehensive Income (Loss) |  |   | Total    |  
|Balance at July 1, 2001                                                                                    |  | $            | 181 |                            | $ | 177,396 |                   |  | $ | 64,505               |   |  | $                   | (7,420  | ) |               | $ | (3,429  | )                                            |  | $ | (34,040  | ) |  | $ | (3,157  | ) |  | $ | 194,036 |  
|                                                                                                           |  |              |     |                            |   |         |                   |  |   |                      |   |  |                     |         |   |               |   |         |                                              |  |   |          |   |  |   |         |   |  |   |         |  
|Comprehensive income:                                                                                      |  |              |     |                            |   |         |                   |  |   |                      |   |  |                     |         |   |               |   |         |                                              |  |   |          |   |  |   |         |   |  |   |         |  
|Net income                                                                                                 |  |              |     |                            |   |         |                   |  |   | 16,230               |   |  |                     |         |   |               |   |         |                                              |  |   |          |   |  |   |         |   |  |   | 16,230  |  
|Change in unrealized gain (loss) on securities available for sale, net of reclassification and tax effects |  |              |     |                            |   |         |                   |  |   |                      |   |  |                     |         |   |               |   |         |                                              |  |   |          |   |  |   | 1,650   |   |  |   | 1,650   |  
|Change in unrealized gain (loss) onswaps, net of tax                                                       |  |              |     |                            |   |         |                   |  |   |                      |   |  |                     |         |   |               |   |         |                                              |  |   |          |   |  |   | (1,788  | ) |  |   | (1,788  | )
|                                                                                                           |  |              |     |                            |   |         |                   |  |   |                      |   |  |                     |         |   |               |   |         |                                              |  |   |          |   |  |   |         |   |  |   |         |  
|Total comprehensive income                                                                                 |  |              |     |                            |   |         |                   |  |   |                      |   |  |                     |         |   |               |   |         |                                              |  |   |          |   |  |   |         |   |  |   | 16,092  |  
|Cash dividends declared ($.50 per share)                                                                   |  |              |     |                            |   |         |                   |  |   | (7,009               | ) |  |                     |         |   |               |   |         |                                              |  |   |          |   |  |   |         |   |  |   | (7,009  | )
|Commitment to release employee stock ownership plan shares (59,424 shares)                                 |  |              |     |                            |   | 349     |                   |  |   |                      |   |  |                     | 594     |   |               |   |         |                                              |  |   |          |   |  |   |         |   |  |   | 943     |  
|Commitment to release recognition and retention plan shares (59,770 shares)                                |  |              |     |                            |   |         |                   |  |   |                      |   |  |                     |         |   |               |   | 800     |                                              |  |   |          |   |  |   |         |   |  |   | 800     |  
|Purchase of 1,445,455 shares of common stock                                                               |  |              |     |                            |   |         |                   |  |   |                      |   |  |                     |         |   |               |   |         |                                              |  |   | (22,913  | ) |  |   |         |   |  |   | (22,913 | )
|Stock options exercised (326,011 shares)                                                                   |  |              |     |                            |   | (867    | )                 |  |   |                      |   |  |                     |         |   |               |   |         |                                              |  |   | 3,733    |   |  |   |         |   |  |   | 2,866   |  
|Stock issued as employee compensation (671 shares)                                                         |  |              |     |                            |   | 1       |                   |  |   |                      |   |  |                     |         |   |               |   |         |                                              |  |   | 8        |   |  |   |         |   |  |   | 9       |  
|Tax benefit related to exercise of stock options                                                           |  |              |     |                            |   | 451     |                   |  |   |                      |   |  |                     |         |   |               |   |         |                                              |  |   |          |   |  |   |         |   |  |   | 451     |  
|                                                                                                           |  |              |     |                            |   |         |                   |  |   |                      |   |  |                     |         |   |               |   |         |                                              |  |   |          |   |  |   |         |   |  |   |         |  
|Balance at June 30, 2002                                                                                   |  |              | 181 |                            |   | 177,330 |                   |  |   | 73,726               |   |  |                     | (6,826  | ) |               |   | (2,629  | )                                            |  |   | (53,212  | ) |  |   | (3,295  | ) |  |   | 185,275 |  
|Comprehensive income:                                                                                      |  |              |     |                            |   |         |                   |  |   |                      |   |  |                     |         |   |               |   |         |                                              |  |   |          |   |  |   |         |   |  |   |         |  
|Net income                                                                                                 |  |              |     |                            |   |         |                   |  |   | 16,692               |   |  |                     |         |   |               |   |         |                                              |  |   |          |   |  |   |         |   |  |   | 16,692  |  
|Change in unrealized gain (loss) on securities available for sale, net of reclassification and tax effects |  |              |     |                            |   |         |                   |  |   |                      |   |  |                     |         |   |               |   |         |                                              |  |   |          |   |  |   | (1,080  | ) |  |   | (1,080  | )
|Change in unrealized gain (loss) on swaps, net of tax                                                      |  |              |     |                            |   |         |                   |  |   |                      |   |  |                     |         |   |               |   |         |                                              |  |   |          |   |  |   | 6,984   |   |  |   | 6,984   |  
|Loss on termination of interest rate swaps, net of tax                                                     |  |              |     |                            |   |         |                   |  |   |                      |   |  |                     |         |   |               |   |         |                                              |  |   |          |   |  |   | (8,164  | ) |  |   | (8,164  | )
|Loss on termination of interest rate swaps reclassified into income, net of tax                            |  |              |     |                            |   |         |                   |  |   |                      |   |  |                     |         |   |               |   |         |                                              |  |   |          |   |  |   | 1,748   |   |  |   | 1,748   |  
|                                                                                                           |  |              |     |                            |   |         |                   |  |   |                      |   |  |                     |         |   |               |   |         |                                              |  |   |          |   |  |   |         |   |  |   |         |  
|Total comprehensive income                                                                                 |  |              |     |                            |   |         |                   |  |   |                      |   |  |                     |         |   |               |   |         |                                              |  |   |          |   |  |   |         |   |  |   | 16,180  |  
|Cash dividends declared ($0.50 per share)                                                                  |  |              |     |                            |   |         |                   |  |   | (6,612               | ) |  |                     |         |   |               |   |         |                                              |  |   |          |   |  |   |         |   |  |   | (6,612  | )
|Commitment to release employee stock ownership plan shares (59,354 shares)                                 |  |              |     |                            |   | 396     |                   |  |   |                      |   |  |                     | 607     |   |               |   |         |                                              |  |   |          |   |  |   |         |   |  |   | 1,003   |  
|Commitment to release recognition and retention plan shares (55,294 shares)                                |  |              |     |                            |   |         |                   |  |   |                      |   |  |                     |         |   |               |   | 742     |                                              |  |   |          |   |  |   |         |   |  |   | 742     |  
|Purchase of 887,285 shares of common stock                                                                 |  |              |     |                            |   |         |                   |  |   |                      |   |  |                     |         |   |               |   |         |                                              |  |   | (15,111  | ) |  |   |         |   |  |   | (15,111 | )
|Stock options exercised (148,698 shares)                                                                   |  |              |     |                            |   | (905    | )                 |  |   |                      |   |  |                     |         |   |               |   |         |                                              |  |   | 1,862    |   |  |   |         |   |  |   | 957     |  
|Stock issued as employee compensation (671 shares)                                                         |  |              |     |                            |   | 3       |                   |  |   |                      |   |  |                     |         |   |               |   |         |                                              |  |   | 9        |   |  |   |         |   |  |   | 12      |  
|Tax benefit related to exercise of stock options                                                           |  |              |     |                            |   | 235     |                   |  |   |                      |   |  |                     |         |   |               |   |         |                                              |  |   |          |   |  |   |         |   |  |   | 235     |  
|                                                                                                           |  |              |     |                            |   |         |                   |  |   |                      |   |  |                     |         |   |               |   |         |                                              |  |   |          |   |  |   |         |   |  |   |         |  
|Balance at June 30, 2003                                                                                   |  |              | 181 |                            |   | 177,059 |                   |  |   | 83,806               |   |  |                     | (6,219  | ) |               |   | (1,887  | )                                            |  |   | (66,452  | ) |  |   | (3,807  | ) |  |   | 182,681 |  
|Comprehensive income:                                                                                      |  |              |     |                            |   |         |                   |  |   |                      |   |  |                     |         |   |               |   |         |                                              |  |   |          |   |  |   |         |   |  |   |         |  
|Net income                                                                                                 |  |              |     |                            |   |         |                   |  |   | 14,151               |   |  |                     |         |   |               |   |         |                                              |  |   |          |   |  |   |         |   |  |   | 14,151  |  
|Change in unrealized gain (loss) on securities available for sale, net of reclassification and tax effects |  |              |     |                            |   |         |                   |  |   |                      |   |  |                     |         |   |               |   |         |                                              |  |   |          |   |  |   | (5,365  | ) |  |   | (5,365  | )
|Loss on termination of interest rate swaps reclassified into income, net of tax                            |  |              |     |                            |   |         |                   |  |   |                      |   |  |                     |         |   |               |   |         |                                              |  |   |          |   |  |   | 1,675   |   |  |   | 1,675   |  
|                                                                                                           |  |              |     |                            |   |         |                   |  |   |                      |   |  |                     |         |   |               |   |         |                                              |  |   |          |   |  |   |         |   |  |   |         |  
|Total comprehensive income                                                                                 |  |              |     |                            |   |         |                   |  |   |                      |   |  |                     |         |   |               |   |         |                                              |  |   |          |   |  |   |         |   |  |   | 10,461  |  
|Cash dividends declared ($0.56 per share)                                                                  |  |              |     |                            |   |         |                   |  |   | (6,916               | ) |  |                     |         |   |               |   |         |                                              |  |   |          |   |  |   |         |   |  |   | (6,916  | )
|Commitment to release employee stock ownership plan shares (59,352 shares)                                 |  |              |     |                            |   | 501     |                   |  |   |                      |   |  |                     | 580     |   |               |   |         |                                              |  |   |          |   |  |   |         |   |  |   | 1,081   |  
|Commitment to release recognition and retention plan shares (50,812 shares)                                |  |              |     |                            |   |         |                   |  |   |                      |   |  |                     |         |   |               |   | 682     |                                              |  |   |          |   |  |   |         |   |  |   | 682     |  
|Purchase of 385,900 shares of common stock                                                                 |  |              |     |                            |   |         |                   |  |   |                      |   |  |                     |         |   |               |   |         |                                              |  |   | (6,815   | ) |  |   |         |   |  |   | (6,815  | )
|Stock options exercised (85,861 shares)                                                                    |  |              |     |                            |   | (180    | )                 |  |   |                      |   |  |                     |         |   |               |   |         |                                              |  |   | 1,189    |   |  |   |         |   |  |   | 1,009   |  
|Issuance of 2,155,727 shares of stock for merger                                                           |  |              |     |                            |   | 10,779  |                   |  |   |                      |   |  |                     |         |   |               |   |         |                                              |  |   | 29,986   |   |  |   |         |   |  |   | 40,765  |  
|Stock issued as employee compensation (671 shares)                                                         |  |              |     |                            |   | 2       |                   |  |   |                      |   |  |                     |         |   |               |   |         |                                              |  |   | 9        |   |  |   |         |   |  |   | 11      |  
|Tax benefit related to exercise of stock options                                                           |  |              |     |                            |   | 151     |                   |  |   |                      |   |  |                     |         |   |               |   |         |                                              |  |   |          |   |  |   |         |   |  |   | 151     |  
|                                                                                                           |  |              |     |                            |   |         |                   |  |   |                      |   |  |                     |         |   |               |   |         |                                              |  |   |          |   |  |   |         |   |  |   |         |  
|Balance at June 30, 2004                                                                                   |  | $            | 181 |                            | $ | 188,312 |                   |  | $ | 91,041               |   |  | $                   | (5,639) |   |               | $ | (1,205) |                                              |  | $ | (42,083) |   |  | $ | (7,497) |   |  | $ | 223,110 |  
|                                                                                                           |  |              |     |                            |   |         |                   |  |   |                      |   |  |                     |         |   |               |   |         |                                              |  |   |          |   |  |   |         |   |  |   |         |  



See accompanying notes to consolidated financial statements.



24



---

LOGO

Consolidated Statements of Cash Flows



|                                                                          |  |                        |          |   |      |   |          |      |  |   |          |  
|------------------------------------------------------------------------- |  | ---------------------- | -------- | - | ---- | - | -------- | ---- |  | - | -------- | -
|For the years ended June 30,                                              |  | 2004                   |          |   | 2003 |   |          | 2002 | 
|                                                                          |  | (Dollars in thousands) |         
|Cash flows from operating activities                                      |  |                        |          |   |      |   |          |      |  |   |          |  
|Net income                                                                |  | $                      | 14,151   |   |      | $ | 16,692   |      |  | $ | 16,230   |  
|Adjustments to reconcile net income to net cash from operating activities |  |                        |          |   |      |   |          |      |  |   |          |  
|Depreciation                                                              |  |                        | 2,481    |   |      |   | 2,431    |      |  |   | 2,604    |  
|Provision for loan losses                                                 |  |                        | 4,896    |   |      |   | 2,864    |      |  |   | 2,990    |  
|Provision (recovery) for impaired mortgage servicing rights               |  |                        | (2,098   | ) |      |   | 2,397    |      |  |   | 35       |  
|Amortization, net of accretion                                            |  |                        | 3,716    |   |      |   | 2,850    |      |  |   | (206     | )
|Securities gain                                                           |  |                        | (480     | ) |      |   | (1,125   | )    |  |   | (1,552   | )
|Proceeds from sales of loans and securitized loans held for sale          |  |                        | 932,455  |   |      |   | 595,632  |      |  |   | 424,103  |  
|Originations of loans held for sale                                       |  |                        | (894,242 | ) |      |   | (648,330 | )    |  |   | (418,966 | )
|Gain on sale of loans held for sale                                       |  |                        | (6,968   | ) |      |   | (12,749  | )    |  |   | (6,719   | )
|Gain on sale of other loans                                               |  |                        | (1,513   | ) |      |   | (630     | )    |  |   | (630     | )
|Loss on disposal of fixed assets                                          |  |                        | 29       |   |      |   | 5        |      |  |   | 29       |  
|Federal Home Loan Bank stock dividends                                    |  |                        | (916     | ) |      |   | (946     | )    |  |   | (1,498   | )
|Employee stock ownership plan expense                                     |  |                        | 1,081    |   |      |   | 1,003    |      |  |   | 943      |  
|Recognition and retention plan expense                                    |  |                        | 682      |   |      |   | 742      |      |  |   | 800      |  
|Increase in cash surrender value of bank owned life insurance             |  |                        | (818     | ) |      |   | (203     | )    |  |   | -        |  
|Change in                                                                 |  |                        |          |   |      |   |          |      |  |   |          |  
|Other assets                                                              |  |                        | 91,777   |   |      |   | (76,936  | )    |  |   | (16,849  | )
|Other liabilities                                                         |  |                        | 1,033    |   |      |   | (2,092   | )    |  |   | 5,311    |  
|Deferred loan fees                                                        |  |                        | (2,456   | ) |      |   | (2,046   | )    |  |   | (1,652   | )
|Deferred taxes                                                            |  |                        | 2,390    |   |      |   | 2,205    |      |  |   | 3,828    |  
|                                                                          |  |                        |          |   |      |   |          |      |  |   |          |  
|Net cash from operating activities                                        |  |                        | 145,200  |   |      |   | (118,236 | )    |  |   | (8,801   | )
|                                                                          |  |                        |         
|Cash flows from investing activities                                      |  |                        |          |   |      |   |          |      |  |   |          |  
|Securities available for sale                                             |  |                        |          |   |      |   |          |      |  |   |          |  
|Proceeds from sales                                                       |  |                        | 29,174   |   |      |   | 68,565   |      |  |   | 95,869   |  
|Proceeds from maturities, calls and principal paydowns                    |  |                        | 55,633   |   |      |   | 137,118  |      |  |   | 111,048  |  
|Purchases                                                                 |  |                        | (73,433  | ) |      |   | (90,730  | )    |  |   | (251,086 | )
|Net change in interest-bearing deposits in other banks                    |  |                        | 34,134   |   |      |   | 39,081   |      |  |   | (19,210  | )
|Net change in loans                                                       |  |                        | (306,721 | ) |      |   | 2,226    |      |  |   | 77,505   |  
|Proceeds from sale of payday loans                                        |  |                        | -        |   |      |   | 2,610    |      |  |   | -        |  
|Proceeds from sale of loans                                               |  |                        | 55,594   |   |      |   | 16,853   |      |  |   | 20,010   |  
|Premises and equipment expenditures, net                                  |  |                        | (2,643   | ) |      |   | (1,471   | )    |  |   | (1,423   | )
|Investment in bank owned life insurance                                   |  |                        | -        |   |      |   | (15,000  | )    |  |   | -        |  
|Cash paid for Franklin Bancorp, Inc., net of cash acquired                |  |                        | 7,312    |   |      |   | -        |      |  |   | -        |  
|Investment in nonbank affiliates                                          |  |                        | (1,252   | ) |      |   | (1,634   | )    |  |   | (900     | )
|                                                                          |  |                        |          |   |      |   |          |      |  |   |          |  
|Net cash from investing activities                                        |  |                        | (202,202 | ) |      |   | 157,618  |      |  |   | 31,813   |  



See accompanying notes to consolidated financial statements.



25



---

Consolidated Statements of Cash Flows (Continued)



|                                                             |  |                        |         |   |      |   |         |      |  |   |         |  
|------------------------------------------------------------ |  | ---------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|For the years ended June 30,                                 |  | 2004                   |         |   | 2003 |   |         | 2002 | 
|                                                             |  | (Dollars in thousands) |        
|Cash flows from financing activities                         |  |                        |         |   |      |   |         |      |  |   |         |  
|Net change in deposits                                       |  | $                      | (37,511 | ) |      | $ | 47,728  |      |  | $ | 42,690  |  
|Net change in repurchase agreements                          |  |                        | 21,561  |   |      |   | (54,100 | )    |  |   | (26,889 | )
|Net proceeds from issurance of subordinated debt securities  |  |                        | 30,608  |   |      |   | -       |      |  |   | -       |  
|Cash dividends paid                                          |  |                        | (6,916  | ) |      |   | (6,612  | )    |  |   | (7,009  | )
|Proceeds and tax benefit from stock options exercised        |  |                        | 1,160   |   |      |   | 1,192   |      |  |   | 3,317   |  
|Purchase of treasury stock                                   |  |                        | (6,815  | ) |      |   | (15,111 | )    |  |   | (22,913 | )
|Net change in short-term Federal Home Loan Bank borrowings   |  |                        | 59,940  |   |      |   | (3,686  | )    |  |   | -       |  
|Proceeds from long-term Federal Home Loan Bank borrowings    |  |                        | 36,100  |   |      |   | -       |      |  |   | -       |  
|Repayment of long-term Federal Home Loan Bank borrowings     |  |                        | (5,981  | ) |      |   | (7,656  | )    |  |   | (15,730 | )
|Termination of interest rate swaps                           |  |                        | -       |   |      |   | (12,560 | )    |  |   | -       |  
|                                                             |  |                        |         |   |      |   |         |      |  |   |         |  
|Net cash from financing activities                           |  |                        | 92,146  |   |      |   | (50,805 | )    |  |   | (26,534 | )
|                                                             |  |                        |         |   |      |   |         |      |  |   |         |  
|                                                             |  |                        |        
|Net change in cash and cash equivalents                      |  |                        | 35,144  |   |      |   | (11,423 | )    |  |   | 14,080  |  
|                                                             |  |                        |        
|Cash and cash equivalents at beginning of year               |  |                        | 32,206  |   |      |   | 43,629  |      |  |   | 29,549  |  
|                                                             |  |                        |         |   |      |   |         |      |  |   |         |  
|                                                             |  |                        |        
|Cash and cash equivalents at end of year                     |  | $                      | 67,350  |   |      | $ | 32,206  |      |  | $ | 43,629  |  
|                                                             |  |                        |         |   |      |   |         |      |  |   |         |  
|                                                             |  |                        |        
|Supplemental cash flow information:                          |  |                        |         |   |      |   |         |      |  |   |         |  
|Cash payments of interest expense                            |  | $                      | 34,747  |   |      | $ | 42,302  |      |  | $ | 62,812  |  
|Cash payments of income taxes                                |  |                        | 4,668   |   |      |   | 5,030   |      |  |   | 5,701   |  
|                                                             |  |                        |        
|Supplemental noncash disclosures:                            |  |                        |         |   |      |   |         |      |  |   |         |  
|Stock portion of acquisition price of Franklin Bancorp, Inc. |  |                        | 40,765  |   |      |   | -       |      |  |   | -       |  
|Loans securitized                                            |  |                        | 93,459  |   |      |   | -       |      |  |   | -       |  
|Transfer of loans to other real estate                       |  |                        | 2,788   |   |      |   | 1,048   |      |  |   | 725     |  



See accompanying notes to consolidated financial statements.



26



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LOGO

Notes to Consolidated Financial Statements

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(Dollar amounts in thousands, except per share data.)



Principles of Consolidation:The consolidated financial statements of First Place Financial Corp. (the Company) include the accounts of its
wholly owned subsidiaries, First Place Bank (the Bank), Franklin Bank and First Place Holdings, Inc. Wholly owned subsidiaries of First Place Holdings, Inc. include First Place Insurance Agency, Ltd., Coldwell Banker First Place Real Estate, Ltd.,
APB Financial Group, Ltd., and American Pension Benefits, Inc. Title Works Agency, LLC. is a 75% owned affiliate of First Place Holdings, Inc. The investments of the Company in its wholly owned subsidiaries, First Place Capital Trust and First Place
Capital Trust II, have been accounted for using the equity method based on their nature as trusts which are special purpose entities. See Effect of New Accounting Standards for further discussion of this issue. All significant intercompany balances
and transactions have been eliminated in consolidation. Franklin Bank was merged with First Place Bank effective July 2, 2004.



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



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



Cash Flows:Cash and cash equivalents includes cash
and due from banks. Net cash flows are reported for loans, deposits, interest-bearing deposits in other banks and short term borrowings.



Securities:Securities are classified as held-to-maturity, available-for-sale, or held for
trading on the date of purchase. The Company has no securities held for trading at this time. Securities are classified as held to maturity when the Company has both the ability and the intent to hold them until maturity, and they are carried at
amortized cost. Securities classified as available-for-sale are carried at fair value with unrealized gains and losses, net of tax, reported in other comprehensive income. Federal Home Loan Bank stock is carried at cost, which approximates fair
value. The fair value of a security is based on quoted market prices. If quoted prices are not available, fair value is determined based on quoted prices of similar investments. The cost of securities sold is based on the specific identification
method.



Interest income includes amortization of
premiums or discounts arising at the time of purchase or as the result of a business combination. Gains and losses on sales are based on the amortized cost of the security sold. Available-for-sale and held-to-maturity securities are reviewed
quarterly for impairment in value. If the fair value of a security is less than the amortized cost and the impairment is not considered to be temporary, the security is written down, establishing a reduced cost basis and the related charge is
recorded as a component of net income.



Loans Held for Sale:Loans held for sale consist of residential mortgage loans originated for sale and other loans which have been identified for sale. These loans are carried on the
books at the lower of cost or fair value, determined in the aggregate. Net unrealized losses, if any, are recorded as a valuation allowance and charged to earnings.



Loans:Loans that management has the intent and
ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of deferred loan origination fees and costs and any premiums or discounts arising at the time of purchase or due to a
business combination.





27



---

Notes to Consolidated Financial Statements

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (continued)



Interest income is reported on the accrual method and includes amortization
of premiums, discounts and net deferred loan fees and costs over the loan term using the interest method. Recognition of accrued interest income is discontinued at the time the loan is 90 days delinquent unless the loan is well secured and in
process of collection. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. When a loan is placed on nonaccrual status all accrued and unpaid interest is
charged against interest income. Subsequently, interest received on such loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual status. Loans are returned to accrual status when all the principal and
interest amounts contractually due are brought current and future payments are reasonably assured.



Allowance for Loan Losses:The allowance for loan losses represents
managements estimate of probable losses in the portfolio based on factors such as historical loss experience, the nature and volume of the portfolio, loan concentrations, specific problem loans and current economic conditions. The allowance
for loan losses is a material estimate that is particularly susceptible to significant changes in the near term. A provision for loan losses is charged to operations based on managements periodic evaluation of factors previously mentioned.
Loan charge-offs are deducted from the allowance, and subsequent recoveries are added. Loan losses are charged off against the allowance when management believes that the full collectibility of the loan is unlikely. Allocations of the allowance may
be made for specific loans, but the entire allowance is available for any loan that, in managements judgment, is deemed to be uncollectible.



A loan is impaired when full payment under the terms of the loan is no longer expected. Commercial and commercial real estate loans are individually
evaluated for impairment. If a loan is impaired, a portion of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loans existing rate or at the fair value of collateral if
repayment is expected solely from the collateral. Large groups of smaller balance homogeneous loans, such as consumer and residential real estate loans, are not individually evaluated for impairment. However, they are considered in determining the
appropriate level of the allowance for loan losses.



Foreclosed Assets:Assets acquired through or instead of loan foreclosure are initially recorded at the lower of the loan balance or fair value less estimated selling costs,
establishing a new cost basis. If fair value declines after the asset is acquired, a valuation allowance is recorded through expense. Costs to carry foreclosed assets after acquisition are expensed as incurred.



Premises and
Equipment:Premises and equipment are stated at cost less accumulated depreciation and amortization.
Depreciation is calculated using the straight-line method based on the estimated useful lives of the assets. For tax purposes, depreciation on certain assets is calculated using accelerated methods. The estimated useful lives are based on the asset
type and range from two years to forty years. Premises and equipment and other long-term assets are reviewed for impairment when events indicate their carrying amount may not be recoverable from future undiscounted cash flows. If impaired, the
assets are recorded at fair value.



Securitizations:The Company may, from time to time, securitize loans
in order to gain access to a broader range of buyers of interests in loans. Historically, mortgage loans have been securitized with a third party. The securitization is recorded as a sale when control has been relinquished, with a gain or loss
recorded on the sale. The gain or loss is calculated based on the cash received versus the carrying value of the assets transferred. If some interests, such as servicing assets and cash reserve accounts, are retained, the carrying value of all
assets sold and retained is allocated to each asset based on fair value at sale date. Fair values are based on market quotes or on the present value of future expected cash flows using estimates of credit losses, prepayment rates, interest rates,
and discount rates. Cash flows are estimated using the Public Securities Associations (PSA) standard prepayment model.





28



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Notes to Consolidated Financial Statements

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (continued)



Mortgage Servicing
Assets:Servicing assets represent the allocated value of retained servicing rights on loans sold. Servicing
assets are amortized in proportion to, and over the period of, estimated net servicing revenues. Servicing assets are stated at the lower of cost or fair value which is determined by a grouping of servicing assets by risk factors. Fair value is
determined quarterly by the use of an independent third party appraisal. Any impairment of a grouping is reported as a valuation allowance.



Bank Owned Life Insurance:The Company has purchased life insurance policies on certain key executives. Bank owned life insurance is recorded at its cash surrender value, which
represents the amount that can be realized.



Goodwill and Other Intangible Assets:Goodwill
results from business acquisitions and represents the excess of the purchase price over the fair value of acquired tangible assets and liabilities and identifiable intangible assets. Goodwill is assessed at least annually for impairment and any such
impairment is recognized in the period identified. Identified purchased intangibles, primarily core deposits, are recorded at cost and amortized over their estimated lives of four to ten years.



Employee Stock Ownership
Plan:The cost of shares issued to the Employee Stock Ownership Plan (ESOP), but not yet allocated to
participants, is shown as a reduction of shareholders equity. Compensation expense is based on the market price of shares as they are committed to be released to participant accounts. Dividends on allocated ESOP shares reduce
shareholders equity; dividends on unallocated ESOP shares reduce debt and accrued interest.



Treasury Stock:Management
utilizes stock repurchases as a component of its strategy to invest capital after consideration of market and economic factors, the effect on shareholder dilution, adequacy of capital, effect on liquidity and an assessment of alternative returns.
Shares repurchased by the Company may be used to meet the Companys requirements for common shares under its dividend reinvestment plan, stock option or other stock based plans and for general corporate purposes such as expansion and
acquisitions or future capital requirements. The purchases are made in open market transactions or in privately negotiated transactions in accordance with applicable regulations of the Securities and Exchange Commission and recorded at cost.



Derivative Instruments and Hedging Activities:All derivative instruments are recorded at their fair values. If derivative instruments are designated as hedges of
fair values, both the change in the fair value of the hedge and the hedged item are included in current earnings. Fair value adjustments related to cash flow hedges are recorded in other comprehensive income and reclassified to earnings when the
hedged transaction is reflected in earnings. Ineffective portions of hedges are reflected in income as they occur. If a hedge of fair values is dedesignated, the fair value adjustment of the hedged item is generally accounted for as a yield
adjustment over its remaining life. If a hedge of cash flows is dedesignated, the fair value adjustment in accumulated other comprehensive income, depending upon the dedesignation circumstances, is either included currently in earnings or
reclassified to earnings over the remaining term of the originally designated hedging relationship.



The Company routinely issues commitments to make loans as a part of its residential lending program. These commitments are considered derivatives. The
Company also issues commitments to sell loans to hedge the risk that the market value of residential loans may deteriorate between the time the rate commitment is issued to the customer and the time the company contracts to sell the loan. These
commitments are also derivatives. Both types of derivatives are recorded at fair value. Fair value adjustments related to these commitments are recorded in current period earnings as an adjustment to net gains (losses) on sale of loans.



Stock
Compensation:Employee compensation expense under stock options is reported using the intrinsic value method. No stock-based compensation cost is reflected in net income, as all options
granted had an exercise price





29



---

Notes to Consolidated Financial Statements

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (continued)



equal to or greater than the market price of the underlying common stock at
date of grant. The following table illustrates the effect on net income and earnings per share if expense were measured using the fair value recognition provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation.



|                                                                                 |  |      |        |      |   |        |  |   |       
|-------------------------------------------------------------------------------- |  | ---- | ------ | ---- | - | ------ |  | - | ------
|                                                                                 |  | 2004 |        | 2003 |   | 2002  
|Net income as reported                                                           |  | $    | 14,151 |      | $ | 16,692 |  | $ | 16,230
|Deduct: Stock-based compensation expense determined underfair value based method |  |      | 396    |      |   | 380    |  |   | 325   
|                                                                                 |  |      |        |      |   |        |  |   |       
|Pro forma net income                                                             |  | $    | 13,755 |      | $ | 16,312 |  | $ | 15,905
|                                                                                 |  |      |        |      |   |        |  |   |       
|Basic earnings per share as reported                                             |  | $    | 1.11   |      | $ | 1.31   |  | $ | 1.18  
|Pro forma basic earning per share                                                |  |      | 1.08   |      |   | 1.28   |  |   | 1.16  
|Diluted earnings per share as reported                                           |  |      | 1.09   |      |   | 1.29   |  |   | 1.16  
|Pro forma diluted earnings per share                                             |  |      | 1.06   |      |   | 1.26   |  |   | 1.13  



The pro forma effects
are computed using option pricing models, using the following weighted-average assumptions as of grant date. There were no stock option grants in 2003.



|                                |  |         |   |  |  |  |         |  
|------------------------------- |  | ------- | - |  |  |  | ------- | -
|                                |  | 2004    |   |  |  |  | 2002    |  
|Risk-free interest rate         |  | 4.00    | % |  |  |  | 5.17    | %
|Expected option life            |  | 9 years |   |  |  |  | 9 years |  
|Expected stock price volatility |  | 21.89   | % |  |  |  | 21.50   | %
|Dividend yield                  |  | 2.90    | % |  |  |  | 2.89    | %



Income Taxes:The Company records income tax expense based on the amount of tax due and the change in deferred tax assets and liabilities.
Deferred tax assets and liabilities are the expected future tax consequences of temporary differences between the carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, would
reduce deferred tax assets to the amounts expected to be realized.



Earnings Per Share:Basic earnings per common share is net income divided by the weighted average number of shares
outstanding during the period. ESOP shares are considered outstanding for this calculation unless unearned. Recognition and Retention Plan (RRP) shares are considered outstanding as they become vested. Diluted earnings per share include
the dilutive effect of RRP shares and the additional potential shares issuable under stock options using the treasury stock method.



Off-Balance-Sheet Financial Instruments:Financial instruments include off-balance-sheet credit instruments, such as commitments to make loans and commercial letters of credit, issued to meet customer financing needs. The face amount of these items represents the
exposure to loss, before considering customer collateral or ability to repay. Such financial instruments are recorded in the financial statements when they are funded or the related fees are incurred or received.



Comprehensive
Income:Comprehensive income consists of net income and other comprehensive income. Other comprehensive income includes unrealized gains and losses on securities available for sale and
changes in the fair value of cash flow hedges, which are also recognized as separate components of equity, and realized gains or losses reclassified into income.



Fair Value of Financial Instruments:Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in a separate note. Fair value estimates involve uncertainties and
matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect the
estimates.





30



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Notes to Consolidated Financial Statements

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (continued)



Loss
Contingencies:Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and
an amount or range of loss can be reasonably estimated. Management does not believe there now are such matters that will have a material effect on the financial statements.



Effect of New Accounting Standards:Effective July 1, 2002, Derivatives Implementation Group (DIG) Statement 133 Implementation Issue No. C13 required that non-portfolio mortgage loan commitments with interest rate locks be accounted for as
free-standing derivatives subject to Statement of Financial Accounting Standards (SFAS) No. 133. The change in the value of these commitments is reflected in earnings as a component of current period gain or loss on sale of loans.



On October 1, 2002, the Financial Accounting Standards Board
(FASB) issued SFAS No. 147, Acquisitions of Certain Financial Institutions, effective for certain business combinations initiated after October 1, 2002. This statement addresses the financial accounting and reporting for the
acquisition of all or part of a financial institution, except for a transaction between two or more mutual enterprises. This statement removes acquisitions of financial institutions, other than transactions between two or more mutual enterprises,
from the scope of SFAS No. 72, Accounting for Certain Acquisitions of Banking or Thrift Institutions, and FASB Interpretations No. 9, Applying Accounting Principles Board Opinions No. 16 and 17 When a Savings and Loan Association
or a Similar Institution is Acquired in a Business Combination Accounted for by the Purchase Method. The acquisition of all or part of a financial institution that meets the definition of a business combination shall be accounted for by the
purchase method in accordance with SFAS No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets. This statement also provides guidance on the accounting for the impairment or disposal of
acquired long-term customer-relationship intangible assets (such as depositor-and borrower-relationship intangible assets and credit cardholder intangible assets), including those acquired in transactions between two or more mutual enterprises. The
adoption of this statement did not have a material effect on the Companys financial position or results of operations.



In November 2002, FASB issued Interpretation No. 45, Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others, which requires recognizing the fair value of guarantees made and information about the maximum potential payments that might be required, as well as the collateral or other recourse obtainable. The
liability that must be recognized is specifically related to the obligation to stand ready to perform over the term of the guarantee. Examples of guarantees that are subject to the provisions of this Interpretation are letters of credit, performance
guarantees, and direct or indirect guarantees of the indebtedness of others, but not guarantees of funding. The adoption of this statement did not have a material effect on the Companys financial position or results of operations.



The Company has stock option plans for certain employees that are
accounted for under the intrinsic value method in accordance with Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees and related Interpretations. Because the exercise price at the date of the grant is
equal to the market value of the stock, no compensation expense is recognized. On December 31, 2002, FASB issued SFAS No. 148, Accounting for Stock-Based Compensation, to provide alternative methods of transition for an entity that
changes to the fair value method of accounting for stock-based employee compensation. In addition, SFAS No. 148 amends the disclosure provisions of SFAS No. 123 to require expanded and more prominent disclosure of the effects of an entitys
accounting policy with respect to stock-based employee compensation.



In January 2003, FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities, (FIN 46). In December 2003, FASB issued a revision to FIN 46. This interpretation and the revision clarify the application of





31



---

Notes to Consolidated Financial Statements

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (continued)



Accounting Research Bulletin No. 51, Consolidated Financial
Statement, and address when a variable interest entity (more commonly known as a Special Purpose Entity or SPE) should be consolidated. FIN 46 first applied to the Company and was adopted in December 2003 when First Place Capital Trust and
First Place Capital Trust II, both SPEs, were created to facilitate the issuance of trust preferred securities. The criteria for consolidation include the size of the Companys equity investment in the entity relative to the entity itself, the
right to receive anticipated returns and the obligation to absorb anticipated losses, the ability to control the entity through voting rights or similar interests and the purpose of the entity as serving the interests of its investors or its equity
owners. Based on these criteria, the wholly owned subsidiaries, First Place Capital Trust and First Place Capital Trust II, have not been included in the consolidated financial statements of the Company and are being accounted for using the equity
method.



On March 9, 2004, the Securities and Exchange
Commission issued Staff Accounting Bulletin (SAB) 105, Application of Accounting Principles to Loan Commitments stating that the fair value of loan commitments accounted for as a derivative instrument under SFAS 133 should
not consider expected future cash flows related to servicing of the future loan. SAB 105 was effective for loan commitments accounted for as derivatives entered into after March 31, 2004. The Company adopted the provisions of SAB 105 as of April 1,
2004. The adoption of this standard did not have a material impact on the Companys financial position or results of operations.



Newly Issued But Not Yet Effective Accounting Standards:In March 2004, the Emerging Issues Task Force (EITF) arrived at a Consensus regarding EITF 03-1, The Meaning of Other-Than-Temporary Impairment and its Application to Certain Investments. This Consensus
provides additional guidance and requires additional disclosure for annual reporting periods ending after June 15, 2004 and for other reporting periods beginning after June 15, 2004. The Company currently has investments where the current market
value is less than the amortized cost. As of June 30, 2004, all impairment was considered temporary. Management does not believe that this Consensus will have a significant impact on its accounting for these investments when it becomes effective.



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





32



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Notes to Consolidated Financial Statements

NOTE 2 - ACQUISITION



On May 28, 2004, the Company acquired Franklin Bancorp Inc., (Franklin), a bank holding company headquartered in Southfield, Michigan and its wholly owned subsidiary,
Franklin Bank N.A. Franklin shareholders received $80.580 million for their common stock including $ 39.815 million in cash and 2.156 million shares of the Company stock valued at $40.765 million. In addition, the Agreement and Plan of Merger as
amended provided that holders of options on Franklins common stock would receive $1,741 million. The acquisition was accounted for as a purchase and the results of operations of Franklin have been included in the consolidated financial
statements since the acquisition date. Concurrent with the merger, Franklin Bank N.A. converted to a federally chartered thrift and changed its name to Franklin Bank. The Bank and Franklin Bank were merged into one entity effective July 2, 2004. The
following table presents the preliminary allocation of the acquisition cost of Franklin to the assets and liabilities assumed based on their fair values:



|                                         |  |   |        
|---------------------------------------- |  | - | -------
|Cash and interest-bearing deposits       |  | $ | 125,234
|Securities available for sale            |  |   | 51,870 
|Loans, net                               |  |   | 356,795
|Premises and equipment                   |  |   | 2,586  
|Core deposit and other intangible assets |  |   | 15,274 
|Goodwill                                 |  |   | 35,723 
|Other assets                             |  |   | 39,924 
|                                         |  |   |        
|Total Assets                             |  | $ | 627,406
|                                         |  |   |        
|                                         | 
|Deposits                                 |  | $ | 477,072
|Borrowings                               |  |   | 57,555 
|Other liabilities                        |  |   | 10,476 
|                                         |  |   |        
|Total Liabilities                        |  | $ | 545,103
|                                         |  |   |        
|                                         |  |   |        
|                                         | 
|Net assets acquired                      |  | $ | 82,303 



The Company recorded $2.2 million of
merger, integration and restructuring charges related to the acquisition. Included are compensation and other employee related costs of $965, data processing conversion expense of $518, and professional fees and other conversion costs of $723. Of
those costs, $1.3 million was funded prior to June 30, 2004. The Company anticipates that the remainder will be funded during fiscal 2005.



The following pro forma information was computed as if the acquisition had occurred as of July 1, 2002. This pro forma information includes adjustments due to recognition
of fair value adjustments of Franklins assets and liabilities in the income statement including amortization of premiums and discounts of loans and securities, term deposits and borrowings, amortization of intangibles and depreciation. The
core deposit intangible is being amortized over ten years. This pro forma information is not necessarily indicative of the results of operations as they would have been had the transaction taken place on July 1, 2002.



|                                          |  |                     |        |      |   |       
|----------------------------------------- |  | ------------------- | ------ | ---- | - | ------
|                                          |  | Year ended June 30,
|                                          |  | 2004                |        | 2003
|Net interest income                       |  | $                   | 68,785 |      | $ | 69,653
|Provision for loan losses                 |  |                     | 8,596  |      |   | 8,450 
|Noninterest income                        |  |                     | 27,131 |      |   | 27,353
|Noninterest expense and minority interest |  |                     | 65,894 |      |   | 65,493
|Net income                                |  |                     | 15,055 |      |   | 15,755
|                                          |  |                    
|Basic earnings per share                  |  |                     | 1.02   |      |   | 1.06  
|Diluted earnings per share                |  |                     | 1.01   |      |   | 1.04  





33



---

Notes to Consolidated Financial Statements



NOTE 3 - SECURITIES

The
fair value of available for sale securities and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) at June 30, were as follows:



|                                                                   |  |            |         |                        |   |                         |  |   |        |  
|------------------------------------------------------------------ |  | ---------- | ------- | ---------------------- | - | ----------------------- |  | - | ------ | -
|                                                                   |  | 2004       |        
|                                                                   |  | Fair Value |         | Gross Unrealized Gains |   | Gross Unrealized Losses | 
|Debt securities                                                    |  |            |         |                        |   |                         |  |   |        |  
|U.S. Government agencies                                           |  | $          | 112,230 |                        | $ | 1,075                   |  | $ | (297   | )
|Obligations of states and political subdivisions                   |  |            | 26,789  |                        |   | 949                     |  |   | (161   | )
|Trust preferred securities                                         |  |            | 34,359  |                        |   | 473                     |  |   | (601   | )
|Asset-backed securities                                            |  |            | 2,519   |                        |   | 1                       |  |   | -      |  
|Mortgage-backed securities and collateralized mortgage obligations |  |            | 131,884 |                        |   | 783                     |  |   | (1,924 | )
|                                                                   |  |            |         |                        |   |                         |  |   |        |  
|Total                                                              |  |            | 307,781 |                        |   | 3,281                   |  |   | (2,983 | )
|                                                                   |  |            |         |                        |   |                         |  |   |        |  
|Equity securities                                                  |  |            |         |                        |   |                         |  |   |        |  
|Common stock                                                       |  |            | 2,704   |                        |   | 186                     |  |   | (4     | )
|FannieMae and FreddieMac preferred stock                           |  |            | 19,394  |                        |   | 88                      |  |   | (3,887 | )
|Mutual funds                                                       |  |            | 48,369  |                        |   | -                       |  |   | (920   | )
|                                                                   |  |            |         |                        |   |                         |  |   |        |  
|Total                                                              |  |            | 70,467  |                        |   | 274                     |  |   | (4,811 | )
|                                                                   |  |            |         |                        |   |                         |  |   |        |  
|Total securities                                                   |  | $          | 378,248 |                        | $ | 3,555                   |  | $ | (7,794 | )
|                                                                   |  |            |         |                        |   |                         |  |   |        |  



|                                                                   |  |            |         |                      |   |                       |  |   |        |  
|------------------------------------------------------------------ |  | ---------- | ------- | -------------------- | - | --------------------- |  | - | ------ | -
|                                                                   |  | 2003       |        
|                                                                   |  | Fair Value |         | GrossUnrealizedGains |   | GrossUnrealizedLosses | 
|Debt securities                                                    |  |            |         |                      |   |                       |  |   |        |  
|U.S. Government agencies                                           |  | $          | 94,240  |                      | $ | 3,784                 |  | $ | -      |  
|Obligations of states and political subdivisions                   |  |            | 24,857  |                      |   | 1,862                 |  |   | -      |  
|Trust preferred securities                                         |  |            | 40,625  |                      |   | 374                   |  |   | (1,587 | )
|Mortgage-backed securities and collateralized mortgage obligations |  |            | 116,999 |                      |   | 2,993                 |  |   | (72    | )
|                                                                   |  |            |         |                      |   |                       |  |   |        |  
|Total                                                              |  |            | 276,721 |                      |   | 9,013                 |  |   | (1,659 | )
|                                                                   |  |            |         |                      |   |                       |  |   |        |  
|Equity securities                                                  |  |            |         |                      |   |                       |  |   |        |  
|Common stock                                                       |  |            | 2,380   |                      |   | 121                   |  |   | (1     | )
|FannieMae and FreddieMac preferred stock                           |  |            | 19,983  |                      |   | 254                   |  |   | (3,463 | )
|Mutual funds                                                       |  |            | 47,345  |                      |   | 62                    |  |   | (312   | )
|                                                                   |  |            |         |                      |   |                       |  |   |        |  
|Total                                                              |  |            | 69,708  |                      |   | 437                   |  |   | (3,776 | )
|                                                                   |  |            |         |                      |   |                       |  |   |        |  
|Total securities                                                   |  | $          | 346,429 |                      | $ | 9,450                 |  | $ | (5,435 | )
|                                                                   |  |            |         |                      |   |                       |  |   |        |  
|                                                                   |  |            |        
|Sale of available for sale securities were as follows:             |  |            |         |                      |   |                       |  |   |        |  
|                                                                   |  | 2004       |         | 2003                 |   | 2002                  | 
|Proceeds                                                           |  | $          | 29,174  |                      | $ | 68,565                |  | $ | 95,869 |  
|Gross gains                                                        |  |            | 480     |                      |   | 1,125                 |  |   | 1,615  |  
|Gross losses                                                       |  |            | -       |                      |   | -                     |  |   | 63     |  





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Notes to Consolidated Financial Statements

NOTE 3 - SECURITIES  (continued)



The fair value of debt securities available for sale by contractual maturity at June 30, 2004 are summarized below. Securities not due at a
single maturity date, primarily mortgage-backed securities, are shown separately.



|                                                                 |  |            |        
|---------------------------------------------------------------- |  | ---------- | -------
|                                                                 |  | Fair Value
|Available for sale  Debt securities                             |  |            |        
|Due in one year or less                                          |  | $          | 76,178 
|Due after one year through five years                            |  |            | 61,102 
|Due after five years through ten years                           |  |            | 19,667 
|Due after ten years                                              |  |            | 16,431 
|                                                                 |  |            |        
|                                                                 |  |            | 173,378
|Asset-backed securities                                          |  |            | 2,519  
|Mortgage-backed securities and collaterized mortgage obligations |  |            | 131,884
|                                                                 |  |            |        
|Total debt securities                                            |  | $          | 307,781
|                                                                 |  |            |        



Debt and mortgage-backed securities
with fair values of $153,095 and $116,210 as of June 30, 2004 and 2003 were pledged to secure public deposits, repurchase agreements, borrowings from the Federal Home Loan Bank and for other purposes as required or permitted by law.



At year-end 2004 and 2003 there were no holdings of securities of any one issuer, other than
the U.S. Government and its agencies, in an amount greater than 10% of shareholders equity.



Securities with unrealized losses at June 30, 2004 not recognized in income are as follows:



|                                                                   |  |                     |         |                |                   |        |           |       |                |        |  |           |        |                |  |   |         |  |   |        |  
|------------------------------------------------------------------ |  | ------------------- | ------- | -------------- | ----------------- | ------ | --------- | ----- | -------------- | ------ |  | --------- | ------ | -------------- |  | - | ------- |  | - | ------ | -
|                                                                   |  | Less than 12 Months |         |                | 12 Months or More |        |           | Total |               
|Description of Securities                                          |  | FairValue           |         | UnrealizedLoss |                   |        | FairValue |       | UnrealizedLoss |        |  | FairValue |        | UnrealizedLoss | 
|U.S. Government agencies                                           |  | $                   | 19,653  |                | $                 | (91    | )         |       | $              | 4,794  |  | $         | (206   | )              |  | $ | 24,447  |  | $ | (297   | )
|Obligations of states and political subdivisions                   |  |                     | 6,249   |                |                   | (161   | )         |       |                | -      |  |           | -      |                |  |   | 6,249   |  |   | (161   | )
|Trust preferred securities                                         |  |                     | 15,984  |                |                   | (71    | )         |       |                | 2,288  |  |           | (530   | )              |  |   | 18,272  |  |   | (601   | )
|Mortgage-backed securities and collateralized mortgage obligations |  |                     | 72,945  |                |                   | (1,223 | )         |       |                | 14,446 |  |           | (701   | )              |  |   | 87,391  |  |   | (1,924 | )
|Equity securities                                                  |  |                     | 47      |                |                   | (4     | )         |       |                | -      |  |           | -      |                |  |   | 47      |  |   | (4     | )
|FannieMae and FreddieMac preferred stock                           |  |                     | 1,015   |                |                   | (58    | )         |       |                | 15,921 |  |           | (3,829 | )              |  |   | 16,936  |  |   | (3,887 | )
|Mutual funds                                                       |  |                     | -       |                |                   | -      |           |       |                | 48,369 |  |           | (920   | )              |  |   | 48,369  |  |   | (920   | )
|                                                                   |  |                     |         |                |                   |        |           |       |                |        |  |           |        |                |  |   |         |  |   |        |  
|Total                                                              |  | $                   | 115,893 |                | $                 | (1,608 | )         |       | $              | 85,818 |  | $         | (6,186 | )              |  | $ | 201,711 |  | $ | (7,794 | )
|                                                                   |  |                     |         |                |                   |        |           |       |                |        |  |           |        |                |  |   |         |  |   |        |  



Unrealized losses on debt and equity
securities have not been recognized into income because the issuers securities are of high credit quality (rated AA or higher), management has the intent and ability to hold for the foreseeable future, and the unrealized losses are largely
attributable to changes in market interest rates. The fair value is expected to recover as the securities approach their maturity date and/or as market rates change. The majority of the unrealized losses relate primarily to two FannieMae preferred
stock securities. Because of their structure, the tax-effective yield to an investor in these securities declines more rapidly than the coupon declines during a period of falling interest rates. Management has evaluated these securities and
anticipates that the fair value will approximate the amortized book cost when interest rates increase to the level they were at the time the securities were purchased in 2000. As a result of this analysis, management does not believe the unrealized
loss as of June 30, 2004 represents an other-than-temporary impairment.





35



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Notes to Consolidated Financial Statements



NOTE 4 - LOANS

Loans at
year-end were as follows:



|                                          |  |      |           |      |   |        
|----------------------------------------- |  | ---- | --------- | ---- | - | -------
|                                          |  | 2004 |           | 2003
|1-4 family residential real estate loans: |  |      |           |      |   |        
|Permanent financing                       |  | $    | 698,002   |      | $ | 538,248
|Construction                              |  |      | 104,133   |      |   | 41,004 
|                                          |  |      |           |      |   |        
|Total                                     |  |      | 802,135   |      |   | 579,252
|Commercial loans:                         |  |      |           |      |   |        
|Commercial real estate                    |  |      | 259,681   |      |   | 99,058 
|Multifamily                               |  |      | 89,575    |      |   | 27,213 
|Commercial                                |  |      | 120,743   |      |   | 24,947 
|Construction                              |  |      | 24,526    |      |   | 9,013  
|                                          |  |      |           |      |   |        
|Total                                     |  |      | 494,525   |      |   | 160,231
|Consumer loans                            |  |      | 203,861   |      |   | 161,962
|                                          |  |      |           |      |   |        
|Total loans                               |  | $    | 1,500,521 |      | $ | 901,445
|                                          |  |      |           |      |   |        



Activity in the allowance for loan
losses was as follows:



|                          |  |      |        |   |      |   |        |      |  |   |        |  
|------------------------- |  | ---- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                          |  | 2004 |        |   | 2003 |   |        | 2002 | 
|Beginning balance         |  | $    | 9,603  |   |      | $ | 9,456  |      |  | $ | 9,757  |  
|Provision for loan losses |  |      | 4,896  |   |      |   | 2,864  |      |  |   | 2,990  |  
|Acquisition               |  |      | 4,506  |   |      |   | -      |      |  |   | -      |  
|Loans charged-off         |  |      | (3,073 | ) |      |   | (4,513 | )    |  |   | (3,702 | )
|Recoveries                |  |      | 596    |   |      |   | 1,796  |      |  |   | 411    |  
|                          |  |      |        |   |      |   |        |      |  |   |        |  
|Ending balance            |  | $    | 16,528 |   |      | $ | 9,603  |      |  | $ | 9,456  |  
|                          |  |      |        |   |      |   |        |      |  |   |        |  



|                                                           |  |      |       |      |   |      
|---------------------------------------------------------- |  | ---- | ----- | ---- | - | -----
|Impaired loans were as follows:                            |  |      |       |      |   |      
|                                                           |  | 2004 |       | 2003
|Year-end loans with no allocated allowance for loan losses |  | $    | -     |      | $ | -    
|Year-end loans with allocated allowance for loan losses    |  |      | 1,509 |      |   | 1,944
|                                                           |  |      |       |      |   |      
|Total                                                      |  | $    | 1,509 |      | $ | 1,944
|                                                           |  |      |       |      |   |      
|Amount of the allowance for loan losses allocated          |  | $    | 554   |      | $ | 1,387



|                                             |  |      |       |      |   |       |  |   |      
|-------------------------------------------- |  | ---- | ----- | ---- | - | ----- |  | - | -----
|                                             |  | 2004 |       | 2003 |   | 2002 
|Average of impaired loans during the year    |  | $    | 1,086 |      | $ | 1,695 |  | $ | 2,241
|Interest income recognized during impairment |  |      | 105   |      |   | 361   |  |   | 42   
|Cash-basis interest income recognized        |  |      | 67    |      |   | 376   |  |   | 40   



|                                     |  |      |        |      |   |       
|------------------------------------ |  | ---- | ------ | ---- | - | ------
|Nonperforming loans were as follows: |  |      |        |      |   |       
|                                     |  | 2004 |        | 2003
|Nonaccrual loans                     |  | $    | 11,014 |      | $ | 11,577
|Troubled debt restructuring          |  |      | 625    |      |   | 1,202 
|                                     |  |      |        |      |   |       
|Total nonperforming loans            |  | $    | 11,639 |      | $ | 12,779
|                                     |  |      |        |      |   |       
|                                     |  |      |        |      |   |       



There were no loans past due over 90
days still on accrual as of June 30, 2004 or 2003.





36



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Notes to Consolidated Financial Statements

NOTE 4 - LOANS  (continued)



Nonperforming loans include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually
classified impaired loans. Interest not recognized on nonaccrual loans totaled approximately $509, $630 and $669 for the years then ended June 30, 2004, 2003 and 2002.



NOTE 5 - MORTGAGE SERVICING ASSETS



Following is a summary of mortgage servicing assets at June 30:



|                                           |  |      |        |   |      |   |        |  
|------------------------------------------ |  | ---- | ------ | - | ---- | - | ------ | -
|                                           |  | 2004 |        |   | 2003 |  
|Servicing rights:                          |  |      |        |   |      |   |        |  
|Beginning of year                          |  | $    | 7,051  |   |      | $ | 7,127  |  
|Additions                                  |  |      | 11,277 |   |      |   | 7,113  |  
|(Increase) Decrease in valuation allowance |  |      | 2,098  |   |      |   | (2,397 | )
|Amortized to expense                       |  |      | (5,083 | ) |      |   | (4,792 | )
|                                           |  |      |        |   |      |   |        |  
|End of year                                |  | $    | 15,343 |   |      | $ | 7,051  |  
|                                           |  |      |        |   |      |   |        |  
|                                           |  |     
|Valuation allowance                        |  |      |        |   |      |   |        |  
|Beginning of year                          |  | $    | 2,432  |   |      | $ | 35     |  
|Additions expensed                         |  |      | 604    |   |      |   | 2,397  |  
|Reductions credited to expense             |  |      | (2,702 | ) |      |   | -      |  
|                                           |  |      |        |   |      |   |        |  
|End of year                                |  | $    | 334    |   |      | $ | 2,432  |  
|                                           |  |      |        |   |      |   |        |  



Loans serviced for others, which are
not reported as assets, totaled $1,498,028 and $920,178 at June 30, 2004 and 2003. Noninterest-bearing deposits included $9,270 and $12,872 of custodial account deposits related to loans serviced for others as of June 30, 2004 and 2003.





37



---

Notes to Consolidated Financial Statements

NOTE 6 - SECURITIZATIONS



Periodically, the Company will securitize residential real estate loans in order to gain access to a larger number of buyers than it would normally have for the sale of
whole loans. During 2004 and at times in the past, the Company has securitized loans, sold the securities and retained the right to service those loans. For each securitization the issuer of the security has been an independent third party and all
of the securitizations have been without recourse. Information on those securitizations follows.



Securitization activity during 2004



|                                                                          |  |   |             |  
|------------------------------------------------------------------------- |  | - | ----------- | -
|Principal balance of loans securitized                                    |  | $ | 93,458      |  
|Principal balance of securitized assets sold                              |  | $ | 93,458      |  
|Initial value of loan servicing asset retained                            |  | $ | 910         |  
|Gain on sale of securitized assets                                        |  | $ | 1,693       |  
|Range of assumptions to determine fair value of servicing asset retained: |  |   |             |  
|Discount rate                                                             |  |   | 9.5-10.5    | %
|Prepayment rate                                                           |  |   | 300-675 PSA |  
|Anticipated delinquency                                                   |  |   | 6.5         | %
|Weighted average expected life in months                                  |  |   | 25-105      |  



Securitization information at June 30,
2004



|                                                                 |  |   |             |  
|---------------------------------------------------------------- |  | - | ----------- | -
|Principal balance of loans                                       |  | $ | 137,288     |  
|Balance of securities still owned                                |  | $ | -           |  
|Current value of loan servicing asset retained                   |  | $ | 1,440       |  
|Loans delinquent 30 days or more                                 |  | $ | 850         |  
|Assumptions to determine fair value of servicing asset retained: |  |   |             |  
|Discount rate                                                    |  |   | 9.5-10.0    | %
|Prepayment rate                                                  |  |   | 300-600 PSA |  
|Anticipated delinquency                                          |  |   | 6.5         | %
|Weighted average expected life in months                         |  |   | 25-105      |  
|                                                                 | 
|Securitization information for the year ended June 30, 2004      |  |   |             |  
|Charge-offs, net of recoveries for securitized loans             |  | $ | -           |  
|Servicing revenue from securitized loans                         |  | $ | 335         |  



The fair value of loan servicing
assets retained can change significantly over time as the underlying assumptions used in the valuation change. The following table is a projection of how the fair value of servicing rights would change based on two magnitudes of adverse changes in
each of the key assumptions used in the valuation. These projections are hypothetical and should be used with caution. They project only one change in one variable at a time. Extrapolation of these results beyond the assumptions indicated may not
produce meaningful results. All variables are dynamic, are subject to change at any time, and may interrelate so that movement in one may cause movement in another.



Projected value of loan servicing asset under various adverse alternative assumptions as of June 30, 2004



|                                          |  |   |      
|----------------------------------------- |  | - | -----
|1% added to discount rate                 |  | $ | 1,408
|2% added to discount rate                 |  | $ | 1,379
|10% increase in PSA prepayment speed used |  | $ | 1,385
|20% increase in PSA prepayment speed used |  | $ | 1,336
|10% increase in delinquency rate          |  | $ | 1,445
|20% increase in delinquency rate          |  | $ | 1,451





38



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Notes to Consolidated Financial Statements

NOTE 7 - PREMISES AND EQUIPMENT



Following is a summary of premises and equipment:



|                               |  |      |         |   |      |   |         |  
|------------------------------ |  | ---- | ------- | - | ---- | - | ------- | -
|                               |  | 2004 |         |   | 2003 |  
|Land and improvements          |  | $    | 5,715   |   |      | $ | 5,047   |  
|Buildings and improvements     |  |      | 14,774  |   |      |   | 14,504  |  
|Leasehold improvements         |  |      | 1,989   |   |      |   | 1,578   |  
|Furniture and equipment        |  |      | 12,434  |   |      |   | 9,345   |  
|Construction in process        |  |      | 601     |   |      |   | 175     |  
|                               |  |      |         |   |      |   |         |  
|                               |  |      | 35,513  |   |      |   | 30,649  |  
|Less: Accumulated depreciation |  |      | (13,120 | ) |      |   | (10,883 | )
|                               |  |      |         |   |      |   |         |  
|                               |  | $    | 22,393  |   |      | $ | 19,766  |  
|                               |  |      |         |   |      |   |         |  



Depreciation expense totaled $2,481,
$2,431, and $2,604 for 2004, 2003 and 2002 respectively.



The Companys
subsidiaries have entered into a number of noncancelable lease agreements with respect to premises. Following is a summary of future minimum rental payments under operating leases that have initial or remaining noncancelable terms in excess of one
year as of June 30, 2004:



|           |  |   |      
|---------- |  | - | -----
|2005       |  | $ | 2,043
|2006       |  |   | 1,914
|2007       |  |   | 1,564
|2008       |  |   | 1,144
|2009       |  |   | 1,118
|Thereafter |  |   | 981  
|           |  |   |      
|           |  | $ | 8,764
|           |  |   |      



Rent expense for cancelable and
noncancelable agreements totaled $972, $666 and $504 for 2004, 2003 and 2002, respectively.



NOTE 8 - GOODWILL AND INTANGIBLE ASSETS



See Note 2 for
information regarding the acquisition of Franklin and the effect on goodwill and intangible assets.



GOODWILL



The change in the carrying amount of
goodwill for the year ended June 30, 2004 is as follows:



|                                    |  |   |       
|----------------------------------- |  | - | ------
|Balance as of June 30, 2003         |  | $ | 18,407
|Goodwill acquired during the period |  |   | 36,941
|                                    |  |   |       
|Balance as of June 30, 2004         |  | $ | 55,348
|                                    |  |   |       





39



---

Notes to Consolidated Financial Statements

NOTE 8 - GOODWILL AND INTANGIBLE ASSETS  (continued)



ACQUIRED INTANGIBLE ASSETS



|Acquired | intangible assets were as follows as of year-end:
|-------- | -------------------------------------------------



|                             |  |                      |        |                          |   |      
|---------------------------- |  | -------------------- | ------ | ------------------------ | - | -----
|                             |  | As of June 30, 2004 
|                             |  | Gross CarryingAmount |        | Accumulated Amortization
|Amortized intangible assets: |  |                      |        |                          |   |      
|Core deposit intangibles     |  | $                    | 22,534 |                          | $ | 3,801
|Other intangibles            |  |                      | 244    |                          |   | 64   
|                             |  |                      |        |                          |   |      
|Total                        |  | $                    | 22,778 |                          | $ | 3,865
|                             |  |                      |        |                          |   |      
|                             | 
|                             |  | As of June 30, 2003 
|                             |  | Gross CarryingAmount |        | Accumulated Amortization
|Amortized intangible assets: |  |                      |        |                          |   |      
|Core deposit intangibles     |  | $                    | 7,360  |                          | $ | 2,536
|Other intangibles            |  |                      | 119    |                          |   | 41   
|                             |  |                      |        |                          |   |      
|Total                        |  | $                    | 7,479  |                          | $ | 2,577
|                             |  |                      |        |                          |   |      



Aggregate amortization expense was
$1,305, $997 and $986 for 2004, 2003 and 2002.



Estimated amortization expense
for each of the next five years:



|           |  |   |       
|---------- |  | - | ------
|2005       |  | $ | 3,843 
|2006       |  |   | 3,568 
|2007       |  |   | 3,252 
|2008       |  |   | 2,908 
|2009       |  |   | 1,643 
|Thereafter |  |   | 3,699 
|           |  |   |       
|           |  | $ | 18,913
|           |  |   |       



NOTE 9 - INTEREST BEARING DEPOSITS



At June 30, 2004, scheduled maturities of certificate of deposits are as
follows:



|           |  |   |        
|---------- |  | - | -------
|2005       |  | $ | 290,850
|2006       |  |   | 193,768
|2007       |  |   | 51,310 
|2008       |  |   | 54,297 
|2009       |  |   | 17,290 
|Thereafter |  |   | 1,609  
|           |  |   |        
|           |  | $ | 609,124
|           |  |   |        



At June 30, 2004, scheduled maturities
of certificate of deposits of $100 or more are as follows:



|                               |  |   |        
|------------------------------ |  | - | -------
|Three months or less           |  | $ | 35,281 
|Over three through six months  |  |   | 34,512 
|Over six through twelve months |  |   | 39,792 
|Over twelve months             |  |   | 88,002 
|                               |  |   |        
|Total                          |  | $ | 197,587
|                               |  |   |        





40



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Notes to Consolidated Financial Statements

NOTE 10 - SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE



Securities sold under agreements to repurchase consisted of the following as of June 30:



|                      |  |        |        |                     |      |   |        |   |                       |  |      |  
|--------------------- |  | ------ | ------ | ------------------- | ---- | - | ------ | - | --------------------- |  | ---- | -
|                      |  | 2004   |        |                     | 2003 |  
|                      |  | Amount |        | WeightedAverageRate |      |   | Amount |   | Weighted Average Rate | 
|Short-term            |  | $      | 8,358  |                     | 1.06 | % |        | $ | 9,547                 |  | 1.08 | %
|                      |  |        |        |                    
|Long-term maturing in |  |        |        |                     |      |   |        |   |                       |  |      |  
|September 2006        |  |        | 8,250  |                     | 3.03 | % |        |   | -                     |  | -    |  
|September 2007        |  |        | 7,500  |                     | 3.56 | % |        |   | -                     |  | -    |  
|September 2008        |  |        | 7,000  |                     | 4.01 | % |        |   | -                     |  | -    |  
|                      |  |        |        |                     |      |   |        |   |                       |  |      |  
|Subtotal              |  |        | 22,750 |                     | 3.51 | % |        |   | -                     |  | -    |  
|                      |  |        |        |                     |      |   |        |   |                       |  |      |  
|Total Borrowings      |  | $      | 31,108 |                     | 2.85 | % |        | $ | 9,547                 |  | 1.08 | %
|                      |  |        |        |                     |      |   |        |   |                       |  |      |  



Securities sold under agreements to
repurchase are secured primarily by mortgage-backed securities with a fair value of approximately $37,088 at June 30, 2004 and $10,403 at June 30, 2003. Securities sold under agreements to repurchase are typically held by an independent third party
when they are for retail customers and are delivered to the counterparty when they are wholesale borrowings with brokerage firms. At maturity, the securities underlying the agreements are returned to the Company.



Short-term securities sold under agreements to repurchase are financing arrangements that
typically mature within ninety days. Information concerning short-term securities sold under agreements to repurchase is as follows:



|                                          |  |      |        |   |      |   |        |  
|----------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | -
|                                          |  | 2004 |        |   | 2003 |  
|Average daily balance during the year     |  | $    | 7,894  |   |      | $ | 28,789 |  
|Average interest rate during the year     |  |      | 1.08   | % |      |   | 4.35   | %
|Maximum month-end balance during the year |  | $    | 10,346 |   |      | $ | 61,415 |  



NOTE 11 - BORROWINGS



Following is a summary of borrowings at June 30:



|                               |  |        |         |                     |      |   |        |   |                       |  |      |  
|------------------------------ |  | ------ | ------- | ------------------- | ---- | - | ------ | - | --------------------- |  | ---- | -
|                               |  | 2004   |         |                     | 2003 |  
|                               |  | Amount |         | WeightedAverageRate |      |   | Amount |   | Weighted Average Rate | 
|Short-term borrowings          |  |        |         |                     |      |   |        |   |                       |  |      |  
|Federal Home Loan Bank         |  | $      | 196,255 |                     | 1.50 | % |        | $ | 118,815               |  | 1.51 | %
|Commercial bank line of credit |  |        | -       |                     |      |   |        |   | -                     |  |      |  
|                               |  |        |         |                     |      |   |        |   |                       |  |      |  
|Total                          |  | $      | 196,255 |                     | 1.50 | % |        | $ | 118,815               |  | 1.51 | %
|                               |  |        |         |                    
|Long-term borrowings           |  |        |         |                     |      |   |        |   |                       |  |      |  
|Federal Home Loan Bank         |  |        |         |                     |      |   |        |   |                       |  |      |  
|2004                           |  |        |         |                     |      |   |        |   | 4,369                 |  | 7.06 | %
|2005                           |  |        | 29,550  |                     | 6.46 | % |        |   | 29,849                |  | 6.47 | %
|2006                           |  |        | 20,175  |                     | 5.06 | % |        |   | 20,175                |  | 5.06 | %
|2007                           |  |        | 21,375  |                     | 2.61 | % |        |   | 4,375                 |  | 3.08 | %
|2008                           |  |        | 4,375   |                     | 3.46 | % |        |   | 4,375                 |  | 3.46 | %
|2009                           |  |        | 28,500  |                     | 5.54 | % |        |   | 28,411                |  | 5.54 | %
|Thereafter                     |  |        | 83,090  |                     | 4.82 | % |        |   | 25,583                |  | 6.23 | %
|                               |  |        |         |                     |      |   |        |   |                       |  |      |  
|Total                          |  |        | 187,065 |                     | 5.18 | % |        |   | 117,137               |  | 5.73 | %
|                               |  |        |         |                     |      |   |        |   |                       |  |      |  
|Total borrowings               |  | $      | 383,320 |                     | 3.17 | % |        | $ | 235,952               |  | 3.61 | %
|                               |  |        |         |                     |      |   |        |   |                       |  |      |  





41



---

Notes to Consolidated Financial Statements

NOTE 11 - BORROWINGS  (continued)



Federal Home Loan Bank advances totaling $111,023 and $53,411 at June 30, 2004 and 2003 which are scheduled to mature in 2009 and later
years can be called by the issuer on various dates and under various conditions. Advances are collateralized by the Companys Federal Home Loan Bank stock, blanket pledges of certain 1-4 family residential loans totaling $636,000 and the pledge
of specific securities with a market value of $37,000 as of June 30, 2004. Based on the Companys existing pledges, the dollar amount of additional FHLB advance borrowings available at June 30, 2004 was $179,935. Federal Home Loan Bank advances
generally carry prepayment penalties equal to the present value of the difference in interest between the rate on the loan and the current rate for loans with similar terms and remaining maturities.



The Company has a $20,000 line of credit with a commercial bank. Interest on the line is
charged at the banks prime rate or 1.75% over one, two or three-month LIBOR multiplied by the outstanding balance plus a fee of 0.125% of the unused balance. As a condition of the loan, the Company has agreed to not pledge or sell any of its
100% interest in the Bank and that the Bank will maintain specified capital levels.



Information concerning short-term borrowings during the periods indicated is as follows:



|                                          |  |      |         |   |      |   |         |  
|----------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                          |  | 2004 |         |   | 2003 |  
|Federal Home Loan Bank                    |  |      |         |   |      |   |         |  
|Average daily balance during the year     |  | $    | 167,329 |   |      | $ | 101,767 |  
|Average interest rate during the year     |  |      | 1.06    | % |      |   | 1.51    | %
|Maximum month-end balance during the year |  | $    | 246,590 |   |      | $ | 140,000 |  
|Commercial bank line of credit            |  |      |         |   |      |   |         |  
|Average daily balance during the year     |  | $    | 355     |   |      | $ | -       |  
|Average interest rate during the year     |  |      | 3.96    | % |      |   |         |  
|Maximum month-end balance during the year |  | $    | 5,000   |   |      | $ | -       |  
|                                          |  |      |         |   |      |   |         |  



NOTE 12 -
JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES HELD BY AFFILIATED TRUSTS THAT ISSUED GUARANTEED CAPITAL SECURITIES



In December 2003, the Company formed two affiliated trusts that issued $30,000 of Guaranteed Capital Trust Securities (Trust Preferred Securities). These affiliates,
First Place Capital Trust and First Place Capital Trust II, (collectively the Trust Affiliates) issued Trust Preferred Securities in a private transaction. In connection with this transaction, the Company issued $30,929 of Junior Subordinated
Deferrable Interest Debentures (Junior Debentures) to the Trust Affiliates. The Company has guaranteed payment of principal and interest on the Trust Preferred Securities. The terms of the Trust Preferred Securities issued by the Trust Affiliates
were as follows:



|                                  |  |                           |  |                             
|--------------------------------- |  | ------------------------- |  | ----------------------------
|Issuer                            |  | First Place Capital Trust |  | First Place Capital Trust II
|Principal Amount                  |  | $ 15,000                  |  | $ 15,000                    
|Issue Date                        |  | December 19, 2003         |  | December 19, 2003           
|Maturity Date                     |  | January 23, 2034          |  | January 23, 2034            
|Initial Interest Rate             |  | 3 month LIBOR + 2.85%     |  | 6.45%                       
|Interest Rate after January 2009  |  | 3 month LIBOR + 2.85%     |  | 3 month LIBOR + 2.85%       
|Redeemable by issuer at par after |  | January 23, 2009          |  | January 23, 2009            



The proceeds of these securities were
used to purchase the Junior Debentures issued by the Company. The terms of the Junior Debentures were as follows:



|                                  |  |                             |  |                            
|--------------------------------- |  | --------------------------- |  | ---------------------------
|Issuer                            |  | First Place Financial Corp. |  | First Place Financial Corp.
|Principal Amount                  |  | $ 15,465                    |  | $ 15,464                   
|Issue Date                        |  | December 19, 2003           |  | December 19, 2003          
|Maturity Date                     |  | January 23, 2034            |  | January 23, 2034           
|Initial Interest Rate             |  | 3 month LIBOR + 2.85%       |  | 6.45%                      
|Interest Rate after January 2009  |  | 3 month LIBOR + 2.85%       |  | 3 month LIBOR + 2.85%      
|Redeemable by issuer at par after |  | January 23, 2009            |  | January 23, 2009           





42



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Notes to Consolidated Financial Statements

NOTE 12 - JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES HELD BY AFFILIATED TRUSTS
THAT ISSUED GUARANTEED CAPITAL SECURITIES  (continued)



The
Company used the proceeds of the Junior Debentures to fund a portion of the cash consideration of the purchase price of the common stock of Franklin discussed in Note 2. The Company incurred $300 of debt issuance costs which were classified as
deferred charges and are being amortized over the period from January 2004 to January 2009 when both the Trust Preferred Securities and the Junior Debentures can be called by the issuers at par.



The Trust Preferred Securities and the Junior Debentures may be redeemed by the issuers for
a premium from January 23, 2005 until January 22, 2009 as follows:



|                                    |  |                  |  
|----------------------------------- |  | ---------------- | -
|Period                              |  | Premium over par |  
|January 23, 2005  January 22, 2006 |  | 3.300            | %
|January 23, 2006  January 22, 2007 |  | 2.415            | %
|January 23, 2007  January 22, 2008 |  | 1.650            | %
|January 23, 2008  January 22, 2009 |  | 0.825            | %



Interest on both securities may be
deferred for a period of up to five years at the option of the issuer. As discussed in Note 1, the Trust Affiliates are accounted for using the equity method of accounting for investments and have not been included in the consolidated financial
statements of the Company.



NOTE 13 - INCOME TAXES



The provision for income taxes consisted of the following:



|                             |  |      |       |      |   |       |  |   |      
|---------------------------- |  | ---- | ----- | ---- | - | ----- |  | - | -----
|                             |  | 2004 |       | 2003 |   | 2002 
|Current provision            |  | $    | 4,115 |      | $ | 5,742 |  | $ | 3,984
|Deferred provision (benefit) |  |      | 2,099 |      |   | 2,205 |  |   | 3,828
|                             |  |      |       |      |   |       |  |   |      
|                             |  | $    | 6,214 |      | $ | 7,947 |  | $ | 7,812
|                             |  |      |       |      |   |       |  |   |      



The income tax benefit from the
exercise of non-qualified stock options and disposition of incentive stock option shares was recognized for financial reporting purposes by crediting additional paid-in capital for $151 in 2004, $235 in 2003, and $451 in 2002.



The differences between the financial statement provision and amounts computed by applying
the statutory federal income tax rate to income before taxes were as follows:



|                                                  |  |      |       |   |      |   |       |      |  |   |       |  
|------------------------------------------------- |  | ---- | ----- | - | ---- | - | ----- | ---- |  | - | ----- | -
|                                                  |  | 2004 |       |   | 2003 |   |       | 2002 | 
|Income tax computed at the statutory federal rate |  | $    | 7,128 |   |      | $ | 8,624 |      |  | $ | 8,412 |  
|                                                  |  |      |      
|Add (subtract) tax effect of:                     |  |      |       |   |      |   |       |      |  |   |       |  
|Tax-exempt income                                 |  |      | (350  | ) |      |   | (391  | )    |  |   | (366  | )
|Dividends received deduction                      |  |      | (184  | ) |      |   | (220  | )    |  |   | (395  | )
|Earnings on life insurance contracts              |  |      | (286  | ) |      |   | (71   | )    |  |   | -     |  
|Miscellaneous items                               |  |      | (94   | ) |      |   | 5     |      |  |   | 161   |  
|                                                  |  |      |       |   |      |   |       |      |  |   |       |  
|                                                  |  | $    | 6,214 |   |      | $ | 7,947 |      |  | $ | 7,812 |  
|                                                  |  |      |       |   |      |   |       |      |  |   |       |  



The statutory tax rate was 35% for
2004, 2003 and 2002.





43



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Notes to Consolidated Financial Statements

NOTE 13 - INCOME TAXES  (continued)



The tax effects of principal temporary differences and the resulting deferred tax assets and liabilities that comprise the net deferred tax
balance were as follows at June 30:



|                                                        |  |      |         |   |      |   |         |  
|------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                                        |  | 2004 |         |   | 2003 |  
|Items giving rise to deferred tax assets:               |  |      |         |   |      |   |         |  
|Charitable contribution carryforward                    |  | $    | -       |   |      | $ | 611     |  
|Bad debts                                               |  |      | 5,785   |   |      |   | 3,180   |  
|Nonaccrual loan interest                                |  |      | 494     |   |      |   | 248     |  
|Accrued stock awards                                    |  |      | 259     |   |      |   | 259     |  
|Deferred compensation                                   |  |      | 150     |   |      |   | 127     |  
|Mark-to-market adjustments                              |  |      | 517     |   |      |   | 879     |  
|Unrealized loss on securities available for sale        |  |      | 1,484   |   |      |   | -       |  
|Unrealized loss on hedging transactions                 |  |      | 2,553   |   |      |   | 3,455   |  
|Other valuation allowances                              |  |      | 707     |   |      |   | -       |  
|Other                                                   |  |      | 752     |   |      |   | 560     |  
|                                                        |  |      |         |   |      |   |         |  
|                                                        |  |      | 12,701  |   |      |   | 9,319   |  
|Items giving rise to deferred tax liabilities:          |  |      |         |   |      |   |         |  
|Deferred loan fees and costs                            |  |      | (309    | ) |      |   | (210    | )
|Unrealized gain on securities available for sale        |  |      | -       |   |      |   | (1,405  | )
|FHLB stock dividends                                    |  |      | (4,020  | ) |      |   | (3,700  | )
|Franchise taxes                                         |  |      | (276    | ) |      |   | (283    | )
|Depreciation                                            |  |      | (1,468  | ) |      |   | (1,487  | )
|Purchase accounting adjustments and related intangibles |  |      | (5,119  | ) |      |   | (1,151  | )
|Loan servicing                                          |  |      | (5,370  | ) |      |   | (2,468  | )
|Other                                                   |  |      | (459    | ) |      |   | (88     | )
|                                                        |  |      |         |   |      |   |         |  
|                                                        |  |      | (17,021 | ) |      |   | (10,792 | )
|                                                        |  |      |         |   |      |   |         |  
|Net deferred liability                                  |  | $    | (4,320  | ) |      | $ | (1,473  | )
|                                                        |  |      |         |   |      |   |         |  



The Company has sufficient taxes paid
in prior years and available for recovery and expected future taxable income sufficient to warrant recording the full deferred tax asset without a valuation allowance.



Retained earnings at June 30, 2004, include approximately $30,574 for which no provision for federal income taxes has been made. This amount
represents the tax bad debt reserve at June 30, 1988, which is the end of the Companys base year for purposes of calculating the bad debt deduction for tax purposes. If this portion of retained earnings is used in the future for any purpose
other than to absorb bad debts, the amount used will be added to future taxable income. The unrecorded deferred tax liability on the above amount at June 30, 2004 was approximately $10,701.



Tax expense attributable to securities gains approximated $168, $394, and $543 for 2004,
2003 and 2002.



NOTE 14 - EMPLOYEE BENEFIT PLANS



ESOP PLAN



During 1999, the Company established an Employee Stock Ownership Plan (ESOP) for the benefit of employees 21 and older who have
completed at least one thousand hours of service.



To fund the plan, the ESOP
borrowed $8,993 from the Company for the purpose of purchasing 899,300 shares of stock at $10 per share in the Companys mutual to stock conversion. Principal and interest payments on the loan are due in annual installments which began December
31, 1999 with the final payments of principal and interest being due and payable at maturity on December 31, 2013. Interest is payable during the term of the loan at a fixed rate of 7.75%. The loan is collateralized by the shares of the
Companys common stock purchased with the proceeds. As the Bank periodically makes contributions to the ESOP





44



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Notes to Consolidated Financial Statements

NOTE 14 - EMPLOYEE BENEFIT PLANS  (continued)



to repay the loan, shares are allocated to participants on the basis of the ratio of each years principal and interest payments to the
total of all principal and interest payments. Dividends on allocated shares increase participant accounts. Dividends on unallocated shares are used for debt service. ESOP compensation expense was $1,081, $1,003 and $943 for 2004, 2003 and 2002.



Shares held by the ESOP at June 30 were as follows:



|                                              |  |                          |   |  |                          |   |  |         |   |  |           |   |  |             |   |  |         |  
|--------------------------------------------- |  | ------------------------ | - |  | ------------------------ | - |  | ------- | - |  | --------- | - |  | ----------- | - |  | ------- | -
|                                              |  | Year ended June 30, 2004 |   |  | Year ended June 30, 2003 |  
|                                              |  | Allocated                |   |  | Unallocated              |   |  | Total   |   |  | Allocated |   |  | Unallocated |   |  | Total   |  
|Beginning balance                             |  | 247,971                  |   |  | 623,223                  |   |  | 871,194 |   |  | 189,769   |   |  | 682,577     |   |  | 872,346 |  
|Allocation of shares to participants          |  | 59,352                   |   |  | (59,352                  | ) |  | -       |   |  | 59,354    |   |  | (59,354     | ) |  | -       |  
|Distribution of shares to former participants |  | (4,423                   | ) |  | -                        |   |  | (4,423  | ) |  | (1,152    | ) |  | -           |   |  | (1,152  | )
|                                              |  |                          |   |  |                          |   |  |         |   |  |           |   |  |             |   |  |         |  
|Ending balance                                |  | 302,900                  |   |  | 563,871                  |   |  | 866,771 |   |  | 247,971   |   |  | 623,223     |   |  | 871,194 |  
|                                              |  |                          |   |  |                          |   |  |         |   |  |           |   |  |             |   |  |         |  



The Company also sponsors, as a result
of the acquisition of Franklin, the Franklin Bank Employee Stock Ownership Plan and Trust (Franklin ESOP) that is available to certain eligible employees of its wholly owned subsidiary, Franklin Bank and its subsidiary, Franklin Mortgage
Services, LLC. The plan provides for cash contributions that may be invested in common stock of the Company, purchased in open market transactions. The Company is not committed to predetermined ESOP contributions. It is expected that in January
2005, the Franklin ESOP will be merged into the ESOP.



401(K) PLAN



A 401(k) benefit plan allows employee contributions up to 15% of their compensation, which
are matched equal to 50% of the first 6% of compensation contributed. The Company match is in the form of cash or stock from the ESOP shares that are committed to be released to participants for that year. 401(k) expense was $0, $0, and $53 for
2004, 2003 and 2002.



The Company also sponsors, as a result of the acquisition
of Franklin, a 401(k) benefit plan (Franklin 401(k)) that is available to certain eligible employees of its wholly owned subsidiary, Franklin Bank and its subsidiary, Franklin Mortgage Services, LLC. The Franklin 401(k) allows employee
contributions to be matched by the Company in an amount equal to 25% of the employees gross earnings up to 8% of the employees compensation. It is expected that in January 2005, the Franklin 401(k) will be merged into the 401(k) benefit
plan of the Company.



EMPLOYEE STOCK PURCHASE PLAN



The Company established the First Place Financial Corp. Employee Stock Purchase Plan
(ESPP) effective May 1, 2004. The purpose of the plan is to provide employees of the Company with an opportunity to purchase shares of First Place common stock. Participation in the ESPP is voluntary and employees may elect a payroll
deduction in any whole dollar amount between 1% and 15% of gross wages to purchase First Place common stock. An amount of 150,000 shares of common stock in the aggregate have been approved for the ESPP. The ESPP was made available to employees in
August, 2004.



NOTE 15 - RELATED PARTY TRANSACTIONS



In the ordinary course of business, the Company has granted loans to executive officers,
directors and their related business interests. A summary of related party loan activity is as follows:



|                                     |  |      |       |   |      |   |        |  
|------------------------------------ |  | ---- | ----- | - | ---- | - | ------ | -
|                                     |  | 2004 |       |   | 2003 |  
|Balance at beginning of period       |  | $    | 2,067 |   |      | $ | 1,983  |  
|New loans                            |  |      | 1,055 |   |      |   | 1,262  |  
|Effect of changes in related parties |  |      | (215  | ) |      |   | (91    | )
|Repayments                           |  |      | (659  | ) |      |   | (1,087 | )
|                                     |  |      |       |   |      |   |        |  
|Balance at end of period             |  | $    | 2,248 |   |      | $ | 2,067  |  
|                                     |  |      |       |   |      |   |        |  



Deposits from executive officers,
directors and their related business interests at year-end 2004 and 2003 were $13,633 and $14,620.





45



---

Notes to Consolidated Financial Statements

NOTE 16 - STOCK COMPENSATION PLANS



STOCK OPTIONS



The Company sponsors an incentive and nonqualified stock option plan (Plan) that provides for the granting of stock options to eligible directors and
employees of the Company. There are 1,711,625 shares of common stock authorized under the Plan. Generally, one-fifth of the options awarded become exercisable on each of the first five anniversaries of the date of grant. The option period expires
ten years from the date of grant and the exercise price is the market price at the date of grant.



Following is activity under the Plan during the years ended June 30, 2004 and 2003.



|                                         |  |         |   |      |                              |       |        |           |   |                              |   |        |  |           |                              |  |   |      
|---------------------------------------- |  | ------- | - | ---- | ---------------------------- | ----- | ------ | --------- | - | ---------------------------- | - | ------ |  | --------- | ---------------------------- |  | - | -----
|                                         |  | 2004    |   | 2003 |                              | 2002 
|                                         |  | Shares  |   |      | WeightedAverageExercisePrice |       | Shares |           |   | WeightedAverageExercisePrice |   | Shares |  |           | WeightedAverageExercisePrice
|Options outstanding, beginning of year   |  | 962,870 |   |      | $                            | 12.21 |        | 1,134,008 |   |                              | $ | 11.60  |  | 1,512,003 |                              |  | $ | 11.11
|                                         |  |         |   |      |                              |      
|Forfeited                                |  | (11,272 | ) |      |                              | 12.81 |        | (22,440   | ) |                              |   | 12.31  |  | (68,720   | )                            |  |   | 12.23
|                                         |  |         |   |      |                              |      
|Exercised                                |  | (85,861 | ) |      |                              | 11.74 |        | (148,698  | ) |                              |   | 7.56   |  | (326,011  | )                            |  |   | 9.39 
|                                         |  |         |   |      |                              |      
|Granted                                  |  | 90,000  |   |      |                              | 19.30 |        | -         |   |                              |   | -      |  | 16,736    |                              |  |   | 15.32
|                                         |  |         |   |      |                              |       |        |           |   |                              |   |        |  |           |                              |  |   |      
|Options outstanding, end of year         |  | 955,737 |   |      | $                            | 12.91 |        | 962,870   |   |                              | $ | 12.21  |  | 1,134,008 |                              |  | $ | 11.60
|                                         |  |         |   |      |                              |       |        |           |   |                              |   |        |  |           |                              |  |   |      
|                                         |  |         |   |      |                              |      
|Options exercisable, end of year         |  | 661,478 |   |      |                              |       |        | 586,184   |   |                              |   |        |  | 555,858   |                              |  |   |      
|Options available for grant, end of year |  | 29,221  |   |      |                              |       |        | 107,949   |   |                              |   |        |  | 85,509    |                              |  |   |      

|                                                            |  |       |  |      |   |      |        |  | 
|----------------------------------------------------------- |  | ----- |  | ---- | - | ---- | ------ |  | 
|                                                            |  |       | 
|                                                            |  | 2004  |  | 2003 |   | 2002
|Weighted-average fair value of options granted during year: |  | $4.38 |  | $    | - |      | $ 3.88



Options outstanding at June 30, 2004 were as follows:



|                         |  |         |  |                                            |  |         |  |                                 |         
|------------------------ |  | ------- |  | ------------------------------------------ |  | ------- |  | ------------------------------- | --------
|Outstanding              |  |         |  | Exercisable                                |  |        
|Range of Exercise Prices |  | Number  |  | Weighted AverageRemaining Contractual Life |  | Number  |  | Weighted Average Exercise Price
|$  9.54  $12.00         |  | 175,528 |  | 5.8                                        |  | 113,528 |  |                                 | $  10.80
|$12.01  $14.00          |  | 658,681 |  | 5.0                                        |  | 524,541 |  |                                 | 12.33   
|$14.01  $19.30          |  | 121,528 |  | 8.6                                        |  | 23,409  |  |                                 | 17.29   
|                         |  |         |  |                                            |  |         |  |                                 |         
|Outstanding at year end  |  | 955,737 |  | 5.6                                        |  | 661,478 |  | $                               | 12.25   
|                         |  |         |  |                                            |  |         |  |                                 |         
|                         |  |         |  |                                            |  |         |  |                                 |         



RECOGNITION AND RETENTION PLAN



The Company maintains a recognition and retention plan used to provide
ownership interest in the Company in a manner designed to compensate directors and certain key employees for services. The Company contributed sufficient funds to enable the stock based incentive plan to purchase a number of common shares in the
open market equal to 4% of the common shares sold in connection with the conversion of First Place Bank from a mutual company to a stock based company.





46



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Notes to Consolidated Financial Statements

NOTE 16 - STOCK COMPENSATION PLANS  (continued)



On July 2, 1999, a Committee of the Board of Directors awarded 449,650 shares to certain directors and officers of the Company. No shares
had been previously awarded. 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. During the year ended June 30, 2004, no shares were forfeited and no shares were awarded. At June 30, 2004, 83,380 shares were available
for grant. Compensation expense is based on the cost of the shares, which approximates fair value at the date of grant, and was $682, $742 and $800 for 2004, 2003 and 2002.



NOTE 17 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK



Some financial instruments, such as loan commitments, credit lines, letters of credit and overdraft protection, are issued to meet customer
financing needs. These are agreements to provide credit or to support the credit of others, as long as conditions established in the contract are met, and usually have expiration dates. Commitments may expire without being used. Off-balance-sheet
risk for credit loss exists up to the face amount of these instruments, although material losses are not anticipated. The same credit policies are used to make such commitments as are used for loans, including obtaining collateral at exercise of the
commitment.



The Company began a program in October 2001 to reduce the
interest rate risk associated with the interest rate commitment made to borrowers for mortgage loans that have not yet been closed and potentially made eligible for sale to secondary markets. The Company will, depending on market interest rates and
loan volume, enter into commitments to sell loans or mortgage-backed securities, considered to be derivatives, to limit the exposure to potential movements in market interest rates. This contractual position is monitored daily to maintain coverage
ranging from 40% to 100% of our loan commitments depending on the status of the loan commitments as they progress from application to sale.



The contractual amount of financial instruments with off-balance-sheet risk was as follows at year end.



|                                             |  |           |        |              |   |           |  |              |         |  |   |       
|-------------------------------------------- |  | --------- | ------ | ------------ | - | --------- |  | ------------ | ------- |  | - | ------
|                                             |  | 2004      |        | 2003        
|                                             |  | FixedRate |        | VariableRate |   | FixedRate |  | VariableRate
|Commitments to make loans (at market rates)  |  | $         | 74,718 |              | $ | 41,516    |  | $            | 157,031 |  | $ | 26,986
|Unused lines of credit and letters of credit |  |           | 73,375 |              |   | 29,195    |  |              | -       |  |   | 83,962
|Mortgage loan sales commitment               |  |           | 63,000 |              |   | -         |  |              | 116,000 |  |   | -     



Commitments to make loans are
generally made for periods of 60 days or less. The fixed rate loan commitments have interest rates ranging from 4.50% to 8.75% and maturities ranging from 5 years to 30 years. The commitments to sell loans have been established with mortgage backed
securities of like maturity and coupon to the commitments to make loans and as of June 30, 2004, have a maturity of less than 93 days.



The Company issues standby letters of credit for commercial customers to third parties to guarantee the performance of customers to those third parties. If the customer
fails to perform, the Company performs in its place and treats the funds advanced as an interest-bearing loan. Therefore, these standby letters of credit represent the same risk to the Company as a loan would. At June 30, 2004, the Company had
$2,535 in standby letters of credit outstanding with an average remaining term of 29 months. While no liability has been recorded for the nominal amount of this obligation, the fair value of the obligation has been recorded in the form of unearned
fees.



The Company has a long-term agreement extending through 2008 for the
servicing of automated teller machines. The obligation under this agreement is approximately $2,000 and is being recognized monthly as services are delivered.





47



---

Notes to Consolidated Financial Statements

NOTE 18 - INTEREST RATE SWAPS



On August 9, 2002, the Company redeemed several interest rate swap agreements that had been designated as cash flow hedges of certain FHLB advances. The fair value of
the interest rate swaps at the time of the redemption was a liability of $12,560 and the cash flow hedge relationship was dedesignated. The loss recorded in accumulated other comprehensive income at the time of the dedesignation totaled $8,164 net
of tax, and will be reclassified into interest expense thru fiscal year 2010, the remaining term of the original hedge periods.



The amount of the net loss on the termination of interest rate swaps reclassified into interest expense in 2004 and 2003 was $1,675 and $1,748. The amount of the net loss
expected to be reclassified into interest expense within the next year is $1,516.



NOTE 19 - REGULATORY REQUIREMENTS



CAPITAL



The Bank and Franklin Bank are subject to regulatory capital requirements administered by
federal banking agencies. Capital adequacy guidelines and prompt corrective action regulations involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital
amounts and classifications are also subject to qualitative judgments by regulators about components, risk weightings, and other factors, and the regulators can lower classifications in certain cases. Failure to meet various capital requirements can
initiate regulatory action that could have a direct material effect on the financial statements.



Under Office of Thrift Supervision (OTS) regulations, limitations have been imposed on all capital distributions, including cash dividends. The regulation establishes a three-tiered system of restrictions,
with the greatest flexibility afforded to thrifts which are both well-capitalized and given favorable qualitative examination ratings by the OTS. As a result of dividends paid to the Company during fiscal 2004, First Place Bank would not be able to
pay any additional dividends to the Company as of June 30, 2004 without the prior approval of the OTS. Future dividends payments by First Place Bank would be based on future earnings or the approval of the OTS.



The prompt corrective action regulations provide five classifications, including well
capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is
required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and plans for capital restoration are required.



As described in Note 2  Acquisition, the Company acquired Franklin Bank during the fourth quarter of fiscal 2004 with the intent to
merge Franklin Bank and the Bank during the first quarter of fiscal 2005. This merger was completed on July 2, 2004.



The table below presents the actual capital levels of Franklin Bank as of June 30, 2004 along with the minimum levels established by the regulatory framework for prompt
corrective action to be classified as well capitalized or adequately capitalized. At year end, Franklin Bank is considered to be adequately capitalized.



|                                            |  |        |        |       |                              |   |        |                                                                |        |  |      |        |  |       |        |  |       |  
|------------------------------------------- |  | ------ | ------ | ----- | ---------------------------- | - | ------ | -------------------------------------------------------------- | ------ |  | ---- | ------ |  | ----- | ------ |  | ----- | -
|                                            |  | Actual |        |       | For CapitalAdequacy Purposes |   |        | To Be WellCapitalized UnderPrompt CorrectiveAction Regulations |       
|                                            |  | Amount |        | Ratio |                              |   | Amount |                                                                | Ratio  |  |      | Amount |  | Ratio |       
|2004                                        |  |        |        |       |                              |   |        |                                                                |        |  |      |        |  |       |        |  |       |  
|Total capital (to risk weighted assets)     |  | $      | 34,489 |       | 8.99                         | % |        | $                                                              | 35,140 |  | 8.00 | %      |  | $     | 43,926 |  | 10.00 | %
|Tier 1 capital (to risk weighted assets)    |  | $      | 25,992 |       | 5.92                         | % |        | $                                                              | 17,570 |  | 4.00 | %      |  | $     | 26,355 |  | 6.00  | %
|Tier 1 capital (to adjusted total assets)   |  | $      | 25,992 |       | 4.89                         | % |        | $                                                              | 21,275 |  | 4.00 | %      |  | $     | 26,594 |  | 5.00  | %
|Tangible capital (to adjusted total assets) |  | $      | 25,992 |       | 4.89                         | % |        | $                                                              | 7,978  |  | 1.50 | %      |  |       |        |  |       |  





48



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LOGO

Notes to Consolidated Financial Statements

NOTE 19 - REGULATORY REQUIREMENTS  (continued)



The table below presents the actual capital levels of the Bank as of June 30, 2004 and 2003.



|                                            |  |        |         |       |                             |   |        |                                                                |        |  |      |        |  |       |         |  |       |  
|------------------------------------------- |  | ------ | ------- | ----- | --------------------------- | - | ------ | -------------------------------------------------------------- | ------ |  | ---- | ------ |  | ----- | ------- |  | ----- | -
|                                            |  | Actual |         |       | For CapitalAdequacyPurposes |   |        | To Be WellCapitalized UnderPrompt CorrectiveAction Regulations |       
|                                            |  | Amount |         | Ratio |                             |   | Amount |                                                                | Ratio  |  |      | Amount |  | Ratio |        
|2004                                        |  |        |         |       |                             |   |        |                                                                |        |  |      |        |  |       |         |  |       |  
|Total capital (to risk weighted assets)     |  | $      | 143,315 |       | 13.33                       | % |        | $                                                              | 85,988 |  | 8.00 | %      |  | $     | 107,486 |  | 10.00 | %
|Tier 1 capital (to risk weighted assets)    |  | $      | 132,738 |       | 12.35                       | % |        | $                                                              | 42,994 |  | 4.00 | %      |  | $     | 64,491  |  | 6.00  | %
|Tier 1 capital (to adjusted total assets)   |  | $      | 132,738 |       | 8.01                        | % |        | $                                                              | 66,325 |  | 4.00 | %      |  | $     | 82,906  |  | 5.00  | %
|Tangible capital (to adjusted total assets) |  | $      | 132,738 |       | 8.01                        | % |        | $                                                              | 24,872 |  | 1.50 | %      |  |       |         |  |       |  
|                                            |  |        |         |       |                             |  
|2003                                        |  |        |         |       |                             |   |        |                                                                |        |  |      |        |  |       |         |  |       |  
|Total capital (to risk weighted assets)     |  | $      | 133,016 |       | 14.03                       | % |        | $                                                              | 75,852 |  | 8.00 | %      |  | $     | 85,181  |  | 10.00 | %
|Tier 1 capital (to risk weighted assets)    |  | $      | 124,432 |       | 13.12                       | % |        | $                                                              | 37,926 |  | 4.00 | %      |  | $     | 51,109  |  | 6.00  | %
|Tier 1 capital (to adjusted total assets)   |  | $      | 124,432 |       | 8.20                        | % |        | $                                                              | 60,672 |  | 4.00 | %      |  | $     | 75,840  |  | 5.00  | %
|Tangible capital (to adjusted total assets) |  | $      | 124,432 |       | 8.20                        | % |        | $                                                              | 22,752 |  | 1.50 | %      |  |       |         |  |       |  



The Bank converted from a mutual to a
stock institution in 1998, and a liquidation account was established at $113,063, which was net worth reported in the conversion prospectus. Eligible depositors who have maintained their accounts, less annual reductions to the extent
they have reduced their deposits, would receive a distribution from this account if the Bank liquidated. Dividends may not reduce shareholders equity below the required liquidation account balance.



The table below presents the actual capital levels of the Bank and Franklin Bank on a
combined basis as of June 30, 2004. The Bank and Franklin Bank were merged effective July 2, 2004. As of June 30, 2004, the combined capital level of the Bank and Franklin Bank would be considered to be well capitalized.



|                                            |  |        |         |       |                              |   |        |                                                                |         |  |      |        |  |       |         |  |       |  
|------------------------------------------- |  | ------ | ------- | ----- | ---------------------------- | - | ------ | -------------------------------------------------------------- | ------- |  | ---- | ------ |  | ----- | ------- |  | ----- | -
|                                            |  | Actual |         |       | For CapitalAdequacy Purposes |   |        | To Be WellCapitalized UnderPrompt CorrectiveAction Regulations |        
|                                            |  | Amount |         | Ratio |                              |   | Amount |                                                                | Ratio   |  |      | Amount |  | Ratio |        
|2004                                        |  |        |         |       |                              |   |        |                                                                |         |  |      |        |  |       |         |  |       |  
|Total capital (to risk weighted assets)     |  | $      | 182,802 |       | 12.07                        | % |        | $                                                              | 121,129 |  | 8.00 | %      |  | $     | 151,411 |  | 10.00 | %
|Tier 1 capital (to risk weighted assets)    |  | $      | 158,730 |       | 10.48                        | % |        | $                                                              | 60,564  |  | 4.00 | %      |  | $     | 90,847  |  | 6.00  | %
|Tier 1 capital (to adjusted total assets)   |  | $      | 158,730 |       | 7.25                         | % |        | $                                                              | 87,599  |  | 4.00 | %      |  | $     | 109,499 |  | 5.00  | %
|Tangible capital (to adjusted total assets) |  | $      | 158,730 |       | 7.25                         | % |        | $                                                              | 32,850  |  | 1.50 | %      |  |       |         |  |       |  



CASH



The Bank and Franklin are required to maintain cash on hand or on deposit with the Federal
Reserve Bank to meet reserve requirements under Regulation D of the Federal Reserve System. Cash on hand and in banks includes $25,276 at June 30, 2004, which was required to be on deposit with the Federal Reserve Bank and was not available for
other purposes. This amount does not earn interest.





49



---

Notes to Consolidated Financial Statements

NOTE 20 - FAIR VALUES OF FINANCIAL INSTRUMENTS





The following table shows the estimated fair value and the
related carrying value of the Companys financial instruments at June 30, 2004 and 2003:



|                                                                                    |  |                |           |   |            |   |           |                |  |   |            |   |  |   |          |  
|----------------------------------------------------------------------------------- |  | -------------- | --------- | - | ---------- | - | --------- | -------------- |  | - | ---------- | - |  | - | -------- | -
|                                                                                    |  | 2004           |           |   | 2003       |  
|                                                                                    |  | CarryingAmount |           |   | Fair Value |   |           | CarryingAmount |  |   | Fair Value |  
|Financial Assets:                                                                   |  |                |           |   |            |   |           |                |  |   |            |   |  |   |          |  
|Cash and due from banks                                                             |  | $              | 67,350    |   |            | $ | 67,350    |                |  | $ | 32,206     |   |  | $ | 32,206   |  
|Interest-bearing deposits in other banks                                            |  |                | 43,901    |   |            |   | 43,901    |                |  |   | 1,650      |   |  |   | 1,650    |  
|Securities available for sale                                                       |  |                | 378,248   |   |            |   | 378,248   |                |  |   | 346,429    |   |  |   | 346,429  |  
|Loans held for sale                                                                 |  |                | 47,465    |   |            |   | 47,465    |                |  |   | 65,695     |   |  |   | 66,667   |  
|Loans, net                                                                          |  |                | 1,483,993 |   |            |   | 1,509,449 |                |  |   | 891,842    |   |  |   | 908,964  |  
|Federal Home Loan Bank stock                                                        |  |                | 29,385    |   |            |   | 29,385    |                |  |   | 22,523     |   |  |   | 22,523   |  
|Accrued interest receivable                                                         |  |                | 8,892     |   |            |   | 8,892     |                |  |   | 6,993      |   |  |   | 6,993    |  
|                                                                                    |  |                |           |  
|Financial Liabilities:                                                              |  |                |           |   |            |   |           |                |  |   |            |   |  |   |          |  
|Demand and savings deposits                                                         |  | $              | (938,887  | ) |            | $ | (938,887  | )              |  | $ | (547,238   | ) |  | $ | (547,238 | )
|Time deposits                                                                       |  |                | (609,124  | ) |            |   | (616,763  | )              |  |   | (561,212   | ) |  |   | (570,064 | )
|Repurchase agreements                                                               |  |                | (31,108   | ) |            |   | (31,876   | )              |  |   | (9,547     | ) |  |   | (9,547   | )
|Borrowings                                                                          |  |                | (383,320  | ) |            |   | (399,970  | )              |  |   | (235,952   | ) |  |   | (257,206 | )
|Junior subordinated deferrable interest debentures                                  |  |                | (30,929   | ) |            |   | (31,856   | )              |  |   | -          |   |  |   | -        |  
|Advances by borrowers for taxes and insurance                                       |  |                | (3,507    | ) |            |   | (3,507    | )              |  |   | (4,385     | ) |  |   | (4,385   | )
|Accrued interest payable                                                            |  |                | (1,294    | ) |            |   | (1,294    | )              |  |   | (796       | ) |  |   | (796     | )
|                                                                                    |  |                |           |  
|Forward commitments to purchase/sell/originate loans and mortgage-backed securities |  |                | (79       | ) |            |   | (79       | )              |  |   | (233       | ) |  |   | (233     | )



The methods and assumptions used to
estimate fair value are described as follows.



Carrying amount is the
estimated fair value for cash and due from banks, interest-bearing deposits in other banks, accrued interest receivable and payable, demand deposits, and advances by borrowers for taxes and insurance. Security fair values, including trust preferred
securities, are based on market prices or dealer quotes, and if no such information is available, on the rate and term of the security and information about the issuer. For fixed rate loans or deposits and for variable rate loans or deposits with
infrequent repricing or repricing limits, fair value is based on discounted cash flows using current market rates applied to the estimated life and credit risk. Fair value of loans held for sale and commitments to purchase/sell/originate loans and
mortgage-backed securities is based on market quotes. Fair value of repurchase agreements, borrowings and junior subordinated debentures is based on current rates for similar financing.





50



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LOGO

Notes to Consolidated Financial Statements

NOTE 21 - CONDENSED PARENT COMPANY FINANCIAL INFORMATION





Condensed financial information of First Place Financial
Corp.:



CONDENSED BALANCE SHEETS



|                                                                                                            |  |      |         |      |   |        
|----------------------------------------------------------------------------------------------------------- |  | ---- | ------- | ---- | - | -------
|As of June 30,                                                                                              |  | 2004 |         | 2003
|ASSETS                                                                                                      |  |      |         |      |   |        
|Cash and due from banks                                                                                     |  | $    | 3,608   |      | $ | 18,594 
|Securities available for sale                                                                               |  |      | 6,812   |      |   | 7,557  
|Notes receivable from banking subsidiaries                                                                  |  |      | 15,064  |      |   | 7,511  
|Investment in banking subsidiaries                                                                          |  |      | 221,439 |      |   | 144,022
|Investment in other subsidiaries                                                                            |  |      | 7,896   |      |   | 7,468  
|Other assets                                                                                                |  |      | 3,481   |      |   | 1,375  
|                                                                                                            |  |      |         |      |   |        
|Total assets                                                                                                |  | $    | 258,300 |      | $ | 186,527
|                                                                                                            |  |      |         |      |   |        
|                                                                                                            |  |     
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                        |  |      |         |      |   |        
|Junior subordinated deferrable interest debentures held by trusts that issued guaranteed capital securities |  | $    | 30,929  |      | $ | -      
|Accrued expenses and other liabilities                                                                      |  |      | 4,261   |      |   | 3,846  
|                                                                                                            |  |      |         |      |   |        
|Total liabilities                                                                                           |  | $    | 35,190  |      |   | 3,846  
|Shareholders equity                                                                                        |  |      | 223,110 |      |   | 182,681
|                                                                                                            |  |      |         |      |   |        
|Total liabilities and shareholders equity                                                                  |  | $    | 258,300 |      | $ | 186,527
|                                                                                                            |  |      |         |      |   |        



|                                                                                           |  |      |        |   |      |   |        |      |  |   |       
|------------------------------------------------------------------------------------------ |  | ---- | ------ | - | ---- | - | ------ | ---- |  | - | ------
|CONDENSED STATEMENTS OF INCOME                                                            
|Years ended June 30,                                                                       |  | 2004 |        |   | 2003 |   |        | 2002
|INCOME                                                                                     |  |      |        |   |      |   |        |      |  |   |       
|Interest income                                                                            |  | $    | 995    |   |      | $ | 1,086  |      |  | $ | 2,004 
|Dividend from Bank                                                                         |  |      | 10,000 |   |      |   | 20,000 |      |  |   | 15,000
|Income from unconsolidated affiliates                                                      |  |      | 26     |   |      |   | -      |      |  |   | -     
|Net gains on sale of securities                                                            |  |      | -      |   |      |   | 20     |      |  |   | 249   
|                                                                                           |  |      |        |   |      |   |        |      |  |   |       
|Total income                                                                               |  |      | 11,021 |   |      |   | 21,106 |      |  |   | 17,253
|                                                                                           |  |      |       
|EXPENSES                                                                                   |  |      |        |   |      |   |        |      |  |   |       
|Interest expense                                                                           |  |      | 907    |   |      |   | -      |      |  |   | -     
|Merger related costs                                                                       |  |      | 2,045  |   |      |   | -      |      |  |   | -     
|Other expenses                                                                             |  |      | 479    |   |      |   | 530    |      |  |   | 623   
|                                                                                           |  |      |        |   |      |   |        |      |  |   |       
|Total expense                                                                              |  |      | 3,431  |   |      |   | 530    |      |  |   | 623   
|                                                                                           |  |      |        |   |      |   |        |      |  |   |       
|Income before income taxes                                                                 |  |      | 7,590  |   |      |   | 20,576 |      |  |   | 16,630
|Income tax provision (benefit)                                                             |  |      | (917   | ) |      |   | 161    |      |  |   | 594   
|                                                                                           |  |      |        |   |      |   |        |      |  |   |       
|Income before undistributed net earnings of subsidiaries                                   |  |      | 8,507  |   |      |   | 20,415 |      |  |   | 16,036
|Equity in undistributed net earnings of subsidiaries (distributions in excess of earnings) |  |      | 5,644  |   |      |   | (3,723 | )    |  |   | 194   
|                                                                                           |  |      |        |   |      |   |        |      |  |   |       
|Net income                                                                                 |  | $    | 14,151 |   |      | $ | 16,692 |      |  | $ | 16,230
|                                                                                           |  |      |        |   |      |   |        |      |  |   |       





51



---

Notes to Consolidated Financial Statements

NOTE 21 - CONDENSED PARENT COMPANY FINANCIAL INFORMATION  (continued)



CONDENSED STATEMENTS OF CASH FLOWS



|                                                                                         |  |      |         |   |      |   |         |      |  |   |         |  
|---------------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|Years ended June 30,                                                                     |  | 2004 |         |   | 2003 |   |         | 2002 | 
|Cash flows from operating activities                                                     |  |      |         |   |      |   |         |      |  |   |         |  
|Net income                                                                               |  | $    | 14,151  |   |      | $ | 16,692  |      |  | $ | 16,230  |  
|Adjustments to reconcile net income to net cash provided by operating activities:        |  |      |         |   |      |   |         |      |  |   |         |  
|Distributions in excess of earnings (equity in undistributed earnings from subsidiaries) |  |      | (5,644  | ) |      |   | 3,723   |      |  |   | (194    | )
|Amortization, net of accretion                                                           |  |      | 12      |   |      |   | 17      |      |  |   | (8      | )
|Securities gains                                                                         |  |      | -       |   |      |   | (20     | )    |  |   | (249    | )
|Change in deferred taxes                                                                 |  |      | 679     |   |      |   | -       |      |  |   | 543     |  
|Change in other assets                                                                   |  |      | (2,541  | ) |      |   | (56     | )    |  |   | (318    | )
|Change in other liabilities                                                              |  |      | 458     |   |      |   | 3,438   |      |  |   | 110     |  
|                                                                                         |  |      |         |   |      |   |         |      |  |   |         |  
|Net cash from operating activities                                                       |  |      | 7,115   |   |      |   | 23,794  |      |  |   | 16,114  |  
|                                                                                         |  |      |        
|Cash flows from investing activities                                                     |  |      |         |   |      |   |         |      |  |   |         |  
|Paydowns of mortgage-backed securities                                                   |  |      | -       |   |      |   | -       |      |  |   | 2,140   |  
|Proceeds from sales of mortgage-backed securities                                        |  |      | -       |   |      |   | -       |      |  |   | 6,664   |  
|Proceeds from maturities of securities                                                   |  |      | 870     |   |      |   | 1,090   |      |  |   | 1,195   |  
|Purchases of securities                                                                  |  |      | (51     | ) |      |   | -       |      |  |   | -       |  
|Net decrease in loans receivable                                                         |  |      | 5       |   |      |   | 1,733   |      |  |   | 203     |  
|Cash paid for Franklin Bancorp, Inc. net of cash acquired                                |  |      | (40,918 | ) |      |   | -       |      |  |   | -       |  
|Investment in First Place Holdings, Inc.                                                 |  |      | -       |   |      |   | (4,523  | )    |  |   | (935    | )
|Distribution from Title Works Agency LLC                                                 |  |      | -       |   |      |   | 76      |      |  |   | 111     |  
|Change in loans to Bank                                                                  |  |      | 442     |   |      |   | 409     |      |  |   | 381     |  
|                                                                                         |  |      |         |   |      |   |         |      |  |   |         |  
|Net cash from investing activities                                                       |  |      | (39,652 | ) |      |   | (1,215  | )    |  |   | 9,759   |  
|                                                                                         |  |      |        
|Cash flows from financing activities                                                     |  |      |         |   |      |   |         |      |  |   |         |  
|Purchase of treasury stock                                                               |  |      | (6,815  | ) |      |   | (15,111 | )    |  |   | (22,913 | )
|Cash dividends paid                                                                      |  |      | (6,916  | ) |      |   | (6,612  | )    |  |   | (7,009  | )
|Net proceeds from issuance of subordinated                                               |  |      |         |   |      |   |         |      |  |   |         |  
|debt securities                                                                          |  |      | 30,608  |   |      |   | -       |      |  |   | -       |  
|Proceeds from stock options exercised                                                    |  |      | 1,009   |   |      |   | 957     |      |  |   | 2,866   |  
|Dividends on unearned ESOP shares                                                        |  |      | (335    | ) |      |   | (330    | )    |  |   | (364    | )
|                                                                                         |  |      |         |   |      |   |         |      |  |   |         |  
|Net cash from financing activities                                                       |  |      | 17,551  |   |      |   | (21,096 | )    |  |   | (27,420 | )
|                                                                                         |  |      |        
|Net change in cash and cash equivalents                                                  |  |      | (14,986 | ) |      |   | 1,483   |      |  |   | (1,547  | )
|Cash and cash equivalents at beginning of year                                           |  |      | 18,594  |   |      |   | 17,111  |      |  |   | 18,658  |  
|                                                                                         |  |      |         |   |      |   |         |      |  |   |         |  
|Cash and cash equivalents at end of year                                                 |  | $    | 3,608   |   |      | $ | 18,594  |      |  | $ | 17,111  |  
|                                                                                         |  |      |         |   |      |   |         |      |  |   |         |  
|Supplemental noncash disclosures:                                                        |  |      |         |   |      |   |         |      |  |   |         |  
|Stock portion of acquisition price of Franklin Bancorp, Inc.                             |  | $    | 40,765  |   |      |   | -       |      |  |   | -       |  





52



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LOGO

Notes to Consolidated Financial Statements

NOTE 22 - EARNINGS PER SHARE



The factors used in the earnings per share computation follow.



|                                                               |  |      |            |   |      |   |            |      |  |   |            |  
|-------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ---- |  | - | ---------- | -
|                                                               |  | 2004 |            |   | 2003 |   |            | 2002 | 
|Basic                                                          |  |      |            |   |      |   |            |      |  |   |            |  
|Net income                                                     |  | $    | 14,151     |   |      | $ | 16,692     |      |  | $ | 16,230     |  
|                                                               |  |      |            |   |      |   |            |      |  |   |            |  
|Average shares outstanding                                     |  |      | 13,453,861 |   |      |   | 13,539,941 |      |  |   | 14,669,220 |  
|Average unearned ESOP shares                                   |  |      | (595,952   | ) |      |   | (655,326   | )    |  |   | (714,729   | )
|Average unearned RRP shares                                    |  |      | (120,325   | ) |      |   | (171,445   | )    |  |   | (229,645   | )
|                                                               |  |      |            |   |      |   |            |      |  |   |            |  
|Weighted average common shares outstanding outstanding - basic |  |      | 12,737,584 |   |      |   | 12,713,170 |      |  |   | 13,724,846 |  
|                                                               |  |      |            |   |      |   |            |      |  |   |            |  
|                                                               |  |      |           
|Basic earnings per share                                       |  | $    | 1.11       |   |      | $ | 1.31       |      |  | $ | 1.18       |  
|                                                               |  |      |            |   |      |   |            |      |  |   |            |  
|                                                               |  |      |           
|Diluted                                                        |  |      |            |   |      |   |            |      |  |   |            |  
|Net income                                                     |  | $    | 14,151     |   |      | $ | 16,692     |      |  | $ | 16,230     |  
|                                                               |  |      |            |   |      |   |            |      |  |   |            |  
|Weighted average common shares outstanding - basic             |  |      | 12,737,584 |   |      |   | 12,713,170 |      |  |   | 13,724,846 |  
|Dilutive effects of assumed exercises of stock options         |  |      | 229,793    |   |      |   | 242,889    |      |  |   | 295,294    |  
|Dilutive effects of unearned RRP shares                        |  |      | 5,032      |   |      |   | 11,293     |      |  |   | 14,981     |  
|                                                               |  |      |            |   |      |   |            |      |  |   |            |  
|Weighted average common shares outstanding - diluted           |  |      | 12,972,409 |   |      |   | 12,967,352 |      |  |   | 14,035,121 |  
|                                                               |  |      |            |   |      |   |            |      |  |   |            |  
|                                                               |  |      |           
|Diluted earnings per share                                     |  | $    | 1.09       |   |      | $ | 1.29       |      |  | $ | 1.16       |  
|                                                               |  |      |            |   |      |   |            |      |  |   |            |  



Stock options of 48,689, 33,117 and
33,117 shares of stock were not considered in computing diluted earnings per share for 2004, 2003 and 2002 because they were antidilutive.



NOTE 23  OTHER COMPREHENSIVE INCOME



Other comprehensive income components, net of taxes at June 30 are as follows:



|                                                                                 |  |      |        |   |      |   |        |      |  |   |        |  
|-------------------------------------------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                                                                 |  | 2004 |        |   | 2003 |   |        | 2002 | 
|Net income                                                                       |  | $    | 14,151 |   |      | $ | 16,692 |      |  | $ | 16,230 |  
|Change in unrealized gains (losses) on available for sale securities             |  |      | (7,774 | ) |      |   | (537   | )    |  |   | 4,091  |  
|Change in unrealized gain (losses) on interest rate swaps                        |  |      | -      |   |      |   | (1,815 | )    |  |   | (2,751 | )
|                                                                                 |  |      |       
|Less reclassification adjustments for (gains) losses later recognized in income: |  |      |        |   |      |   |        |      |  |   |        |  
|Realized (gains) on available for sale securities                                |  |      | (480   | ) |      |   | (1,125 | )    |  |   | (1,552 | )
|Realized losses on termination of interest rate swaps                            |  |      | 2,577  |   |      |   | 2,689  |      |  |   | -      |  
|                                                                                 |  |      |        |   |      |   |        |      |  |   |        |  
|                                                                                 |  |      | (5,677 | ) |      |   | (788   | )    |  |   | (212   | )
|Less tax benefit                                                                 |  |      | (1,987 | ) |      |   | (276   | )    |  |   | (74    | )
|                                                                                 |  |      |        |   |      |   |        |      |  |   |        |  
|Other comprehensive income                                                       |  | $    | 10,461 |   |      | $ | 16,180 |      |  | $ | 16,092 |  
|                                                                                 |  |      |        |   |      |   |        |      |  |   |        |  





53



---

Notes to Consolidated Financial Statements

NOTE 24 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)



|                                                       |  |              |        |             |   |          |  |         |        |  |   |        |    
|------------------------------------------------------ |  | ------------ | ------ | ----------- | - | -------- |  | ------- | ------ |  | - | ------ | ---
|                                                       |  | September 30 |        | December 31 |   | March 31 |  | June 30 |       
|2004                                                   |  |              |        |             |   |          |  |         |       
|Total interest income                                  |  | $            | 21,185 |             | $ | 21,226   |  | $       | 20,769 |  | $ | 22,593 |    
|Total interest expense                                 |  |              | 9,185  |             |   | 9,302    |  |         | 9,352  |  |   | 9,766  |    
|                                                       |  |              |        |             |   |          |  |         |        |  |   |        |    
|Net interest income                                    |  |              | 12,000 |             |   | 11,924   |  |         | 11,417 |  |   | 12,827 |    
|Provision for loan losses                              |  |              | 1,486  |             |   | 687      |  |         | 200    |  |   | 2,523  | (1)
|                                                       |  |              |        |             |   |          |  |         |        |  |   |        |    
|Net interest income after provision for loan losses    |  |              | 10,514 |             |   | 11,237   |  |         | 11,217 |  |   | 10,304 |    
|Total noninterest income                               |  |              | 6,422  |             |   | 5,965    |  |         | 4,415  |  |   | 5,708  |    
|Total noninterest expense                              |  |              | 10,211 |             |   | 10,921   |  |         | 10,226 |  |   | 13,975 | (2)
|                                                       |  |              |        |             |   |          |  |         |        |  |   |        |    
|Income before income taxes and minority interest       |  |              | 6,725  |             |   | 6,281    |  |         | 5,406  |  |   | 2,037  |    
|Provision for income taxes                             |  |              | 2,169  |             |   | 1,937    |  |         | 1,609  |  |   | 499    |    
|Minority interest in income of consolidated subsidiary |  |              | 47     |             |   | 12       |  |         | 12     |  |   | 13     |    
|                                                       |  |              |        |             |   |          |  |         |        |  |   |        |    
|                                                       |  |              |        |            
|Net income                                             |  | $            | 4,509  |             | $ | 4,332    |  | $       | 3,785  |  | $ | 1,525  |    
|                                                       |  |              |        |             |   |          |  |         |        |  |   |        |    
|                                                       |  |              |        |            
|Basic earnings per share                               |  | $            | 0.36   |             | $ | 0.34     |  | $       | 0.30   |  | $ | 0.11   |    
|Diluted earnings per share                             |  | $            | 0.35   |             | $ | 0.34     |  | $       | 0.30   |  | $ | 0.11   |    
|                                                       |  |              |        |            
|2003                                                   |  |              |        |             |   |          |  |         |       
|Total interest income                                  |  | $            | 23,181 |             | $ | 22,638   |  | $       | 20,916 |  | $ | 20,659 |    
|Total interest expense                                 |  |              | 12,798 |             |   | 11,167   |  |         | 9,963  |  |   | 9,368  |    
|                                                       |  |              |        |             |   |          |  |         |        |  |   |        |    
|Net interest income                                    |  |              | 10,383 |             |   | 11,471   |  |         | 10,953 |  |   | 11,291 |    
|Provision for loan losses                              |  |              | 511    |             |   | 697      |  |         | 768    |  |   | 888    |    
|                                                       |  |              |        |             |   |          |  |         |        |  |   |        |    
|Net interest income after provision for loan losses    |  |              | 9,872  |             |   | 10,774   |  |         | 10,185 |  |   | 10,403 |    
|Total noninterest income                               |  |              | 2,876  |             |   | 4,786    |  |         | 5,799  |  |   | 6,746  |    
|Total noninterest expense                              |  |              | 8,374  |             |   | 9,160    |  |         | 9,383  |  |   | 9,806  |    
|                                                       |  |              |        |             |   |          |  |         |        |  |   |        |    
|Income before income taxes and minority interest       |  |              | 4,374  |             |   | 6,400    |  |         | 6,601  |  |   | 7,343  |    
|Provision for income taxes                             |  |              | 1,343  |             |   | 2,112    |  |         | 2,151  |  |   | 2,341  |    
|Minority interest in income of consolidated subsidiary |  |              | -      |             |   | -        |  |         | 39     |  |   | 40     |    
|                                                       |  |              |        |             |   |          |  |         |        |  |   |        |    
|                                                       |  |              |        |            
|Net income                                             |  | $            | 3,031  |             | $ | 4,288    |  | $       | 4,411  |  | $ | 4,962  |    
|                                                       |  |              |        |             |   |          |  |         |        |  |   |        |    
|                                                       |  |              |        |            
|Earnings per share:                                    |  |              |        |             |   |          |  |         |        |  |   |        |    
|Basic                                                  |  | $            | 0.23   |             | $ | 0.34     |  | $       | 0.35   |  | $ | 0.40   |    
|Diluted                                                |  | $            | 0.23   |             | $ | 0.33     |  | $       | 0.34   |  | $ | 0.39   |    



|(1) | Provision for loan losses includes $1,500 to reflect a change in the approach to managing credit issues at Franklin Bank after the acquisition and to conform Franklin Banks
practices to those that the Bank uses.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Includes $2,200 of merger expenses related to the Franklin acquisition completed May 28, 2004.
|--- | ----------------------------------------------------------------------------------------------





54



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LOGO

Corporate Data



CORPORATE DATA



A copy of the Annual Report on Form 10-K filed with the Securities and Exchange Commission
will be available September 13, 2004 without charge upon written request to:



First Place Financial Corp.

185 E. Market Street  P.O. Box 551

Warren, OH 44482  Phone: (330) 373-1221 Fax: (330) 393-5578

Email: InvestorRelations@fpfc.net



Annual Meeting



The Annual Meeting of Shareholders of First Place Financial Corp. will be held at 10 a.m. on Thursday, October 28, 2004 at:



Avalon Inn  9519 E. Market St.  Warren, OH 44484



Shareholder Services



The Registrar and Transfer Company serves as transfer agent for First Place Financial Corp. shares. Communications regarding change of
address, transfer of shares or lost certificates should be sent to:



The
Registrar and Transfer Company

10 Commerce Drive

Cranford,
New Jersey 07016

Phone: (800) 368-5948





55



---

Corporate Directory



FIRST PLACE FINANCIAL CORP. OFFICERS



Steven R. Lewis

President and Chief Executive
Officer



J. Craig Carr

General Counsel and Secretary



FIRST PLACE BANK OFFICERS



Steven R. Lewis

President and Chief Executive Officer



Albert P. Blank

Executive Vice President and Chief Operating Officer



Timothy A. Beaumont

Sr. Vice President  Chief Credit Officer



J.
Craig Carr

Sr. Vice President  General Counsel and Secretary



David S. Hinkle

Sr. Vice President  Retail
Banking



Brian E. Hoopes

Sr. Vice President  Chief Information Officer



Craig L. Johnson

Michigan Regional President and

Corporate Director of Commercial Real Estate



Dominique K. Stoeber

Sr. Vice President  Human Resources



Kenton A. Thompson

Regional President and Corporate Director of BFS



R.
Bruce Wenmoth

Sr. Vice President  Retail Lending



Timothy B. Atkinson

Vice President  Loan Production Office, N. Olmsted



Kurt E. Brugler

Vice President  Corporate Lending Services



Robert R. Campolito

Vice President  Chief Technology Officer



Craig A. Cumberworth

Vice President 
Regional Retail Sales



Peggy R. DeBartolo

Controller



Eric C. Diamond

Vice President  Private Client Services



Bruce R. Downie

Vice President  Financial
Reporting and Analysis



David W. Gifford

Vice President  Finance



Joanne Harrold

Vice President  Human Resources



Michael J. Helon

Vice President  Private
Client Services



Kandy L. Hricik

Vice President  Operations and Administration



Sean M. Keane

Vice President  Commercial Real Estate



Robert H. Kempe

Vice President  Business Financial Services



Lora L. Koralewski

Vice President  Loan Production Office, Toledo



Darrin L. Kresevic

Vice President  Loan
Production Office, Solon



Mark S. Makoski

Vice President  Administrative Services



Joseph M. Noss

Vice President  Marketing



Rocco R. Page

Vice President  Loan Production Manager



Thomas
P. Pishotti

Vice President  Consumer Lending



Thomas J. Roberts

Vice President  Appraisal



Joseph R. Sainato

Vice President  Human Resources



Robert C.
Schuping

Vice President  Corporate Deposit Services



Dennis G. Sell

Vice President  Loan Operations



Mary G. Shaffer

Vice President  CRA/Residential Development



Kathy A. Shaw

Vice President  Loan Production Office, Dayton



Alan K. Smith

Vice President  Loan
Production Manager



Paul B. Snyderman

Vice President  Wholesale Lending



James W. Sollars

Vice President  Loan Production Office, Cincinnati



W. Eric Stone

Vice President  Loan Production Office, Columbus



Karen S. Watson

Vice President  Bank Systems





56



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LOGO

Corporate Directory



Deborah J. Brown

Assistant
Vice President  Branch Sales Manager



Jeanette R. Brown

Assistant Vice President  Manager of Deposit Operations



Michael J. Dolgae

Assistant Vice President  Network Ops. & Technology



Barbara P. Earnest

Assistant Vice President  Director of Corporate Training



Roger D. Ferrante

Assistant Vice President  Business Financial Services



Roberta L. Harding

Assistant Vice President
 Branch Sales Manager



Linda S. Hardman

Assistant Vice President  Bank Systems



Jane A. Hutchins

Assistant Vice President  Mortgage Loan Officer



Mary Ann McElfresh

Assistant Vice President  Branch Sales Manager



Stella J. Ryser

Assistant Vice President  Branch Sales Manager



Michael D. Schrock

Assistant Vice President
 Senior Sales Manager



Laurie B. Whited

Assistant Vice President  Loan Operations, Ravenna



Janet Byrne

Administrative Assistant



Christine L. Chasko

Accounting Officer  Analyst



Joseph P. Conroy

Mortgage Loan Officer

Linda R. Cooper

Loan Review Officer



Richard W. Curry

Mortgage Loan Officer



Dominick P. DeNunzio

Underwriter



Barbara D. Essig

Underwriter



Barbara A. Gaffey

Appraisal Officer



Vikki L. Greene

Security Officer



Lynn A. Maizel

Compliance Officer



Jill Mayfield

Recruiting Officer



Jeanne G. Yankle

Consumer Loan Officer  Credit Analyst



FRANKLIN BANK

OFFICERS



Craig L. Johnson

President  Franklin Bank



Craig Criswell

Sr. Vice President  Commercial Loan Officer



Chris Barham

Sr. Vice President  Indianapolis Group Head



Andrew Gavulic

Sr. Vice President  Genessee Group Head



Darlene
Nowak-Baker

Sr. Vice President  Chief Lending Officer



Thomas Barrett

Vice President  Commercial Loan Officer, Northville

Paul Benson

Vice President  Mortgage Loan Officer



Kathleen Calabrese

Vice President  Mortgage Loan Officer



Doug
Dickie

Vice President  Director of Loss Prevention



April Feyh

Vice President  Commercial Loan Officer, Columbus



Mary Furi

Vice President  Branch Manager



Brent Green

Vice President  Mortgage Loan Officer



Wendy Gutowski

Vice President  Alternative Delivery/Deposit Services
Manager



Debbie Holemo

Vice President  Branch Manager



James Houston

Vice President  Manager, Strategic Asset Management



Ehsan Jaghory

Vice President  Loan Workout Officer III



Jennifer Kangas

Vice President  Commercial Loan Officer, Northville



Vernon Lietz

Vice President  Lending
Relationship Manager



Ed Mantel

Vice President  Commercial Loan Officer, Indianapolis



Mark Motz

Vice President  Branch Manager



Jon Mykala

Vice President  Commercial Loan Officer, Northville (Jackson)





57



---

Corporate Directory



Todd Phillpotts

Vice
President  Mortgage Loan Officer



Michael Polcyn

Vice President  Commercial Loan Officer, Business Center



Mary Kate Stewart

Vice President  Regional Human Resource Manager



Gayl Trepanier

Vice President  Sr. Branch Manager



Janice
Underwood

Vice President  Branch Manager



Al Warren

Vice President  Director of Credit Services



Theresa Watson

Vice President  Sr. Mortgage Loan Officer



Timothy Weaver

Vice President  Mortgage Loan Officer



Michael Dixon

Assistant Vice President 
Lending Relationship Manager



Keith Duffie

Assistant Vice President  Recovery Specialist



Kenneth Fisher

Assistant Vice President  Account Executive



David Gebhardt

Assistant Vice President  Consumer Lending



Kathleen Hart

Assistant Vice President  Field Account Executive



Mini James

Assistant Vice President 
Assistant Manager Alternative Delivery



Ken Jennings

Assistant Vice President  Lending Relationship Manager

Jeff Lewsader

Assistant Vice President  Lending Relationship Manager



Jannie Marshall

Assistant Vice President  Manager Item Processing



Matt McDermott

Assistant Vice President  Branch Account Executive



Michael McHalpine

Assistant Vice President  Lending Relationship Manager



Kevin Poirier

Assistant Vice President  Account Executive



David Schwartz

Assistant Vice President  Commercial Loan Officer, Business Center



Piotr Skorupka

Assistant Vice President  International Manager



Scott Sutherland

Assistant Vice President  Commercial Loan Officer, Grand Blanc



Chris Thompson

Assistant Vice President  Treasury Management



Antoinette Waddell

Assistant Vice President  Account Executive



FIRST PLACE AFFILIATES



Albert P. Blank

President, Coldwell Banker First Place Real Estate, Ltd.



Mero Capo, III

President, APB Financial Group, Ltd.



Daniel W.
Landers

President, First Place Insurance Agency, Ltd.

FIRST
PLACE FINANCIAL CORP. FIRST PLACE BANK

BOARD OF DIRECTORS



A. Gary Bitonte, M.D.

Northeastern Ohio and Ohio University Medical Schools
Faculty



Donald Cagigas

President of Youngstown/Mahoning Valley United Way



Marie Izzo Cartwright

Chairman of the Board

of First Place Holdings, Inc. Consultant, Revak & Associates



George J. Gentithes

Consultant, T.F. Industries



Robert P. Grace

Retired Vice President & Chief Financial Officer, Salem Label Co. Retired Partner, Ernst & Young



Thomas M. Humphries

President, Regional Chamber



Earl T. Kissell

Former President & Chief Executive Officer of Ravenna Savings Bank Assistant Professor Economics and Management, Hiram College



Steven R. Lewis

President & Chief Executive
Officer of First Place Financial Corp.

President & Chief Executive Officer of First Place Bank



W. Terry Patrick

Chairman of the Board of First Place Financial Corp. & First Place Bank Partner, Friedman & Rummell Co., L.P.A.



E. Jeffrey Rossi

Principal, E.J. Rossi & Co.



Samuel A. Roth

Consultant to Businesses

Retired President, First Energy Facilities Service Group



William A. Russell

President, Canteen Service of Steel Valley, Inc.



Ronald P. Volpe, Ph.D.

Professor of Finance, Williamson College of Business Administration Youngstown State University



Robert L. Wagmiller

Retired CPA









58



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LOGO



First Place
Financial Corp. is the holding company for First Place Bank, Franklin Bank, First Place Insurance Agency, Coldwell Banker First Place Real Estate, APB Financial Group and TitleWorks Agency.

First Place Bank

One of the largest local financial institutions serving the financial needs of individuals and businesses. In Ohio, we have 22 retail locations throughout Mahoning, Trumbull and Portage counties and 13 lending production offices in
major metropolitan Ohio cities, including: Cleveland, Columbus, Toledo, Cincinnati, Dayton, Warren and Youngstown. Our Business Financial Services division is dedicated to providing a full range of business financial products and services including
deposit, credit and treasury management services.

Franklin Bank

Franklin Bank, a division of First Place Bank, specializes in serving small to medium size businesses and personal banking customers with
five full service branches in Southeast Michigan. In addition, Franklin operates Lending Production Offices in Grand Blanc and Northville, Michigan

Coldwell Banker First Place Real Esta te

Coldwell Banker First Place is one of the largest
full-service real estate companies in our local market, with more than 120 professionals and six convenient offices. We offer competitive residential and commercial real estate services.

First Place Insurance Agency

For business, professional and personal insurance needs, First Place Insurance offers excellent coverage with convenience. We have one-stop shopping for home, auto, life, business as well as employee benefit programs. With access to
more than 20 carriers, we can find the best coverage at great rates.

APB Financial Group

APB specializes in wealth management services for businesses and consumers. Services include: registered investment advisory services,
sale of annuities and mutual funds and planning services that include financial, tax, and estate and supplemental retirement plans.

TitleWorks Agency

TitleWorks provides title guarantees, owners fee policies, mortgage policies and
all services related to the title industry. We also provide escrow services to expedite the closing of sales and loan refinancing.