First Place Files Chapter 11, Agrees to $45M Asset Sale
WARREN, Ohio – First Place Financial Corp., holding company for First Place Bank, today filed Chapter 11 bankruptcy and announced its assets will be sold to Talmar Bancorp Inc. of Troy, Mich. for $45 million. As part of the sale agreement, Talmar “has agreed to recapitalize the bank through the immediate contribution of additional capital, which is not expected to exceed $205 million,” First Place stated in documents filed with the U.S. Securities and Exchange Commission.
“For the avoidance of any doubt,” states the SEC filing, “the company wishes to make clear that the bank has NOT [emphasis in the original] filed for bankruptcy, was not included as part of the bankruptcy filing and continues to operate its business in the normal course. The bankruptcy filing does not and will not impact the operation of the bank or affect its Federal Deposit Insurance Corp. insurance of deposit accounts.”
The asset sale was approved Friday by the board of directors of First Place Financial Corp. It was followed by notification Oct. 24 from the Office of the Comptroller of the Currency that the regulatory agency “would not grant non-objection to the appointment of Louis J. Dunham as CEO of the bank. As a result, Mr. Dunham is no longer employed by the bank.”
"First Place Bank has faced significant issues for a number of years, and today's agreement with Talmer will enable us to meet the capital requirements set out by our regulator in July 2011," said Samuel A. Roth, chairman of First Place Financial Corp., in a prepared statement. "...The issues we faced called for a comprehensive solution and a strategic partner with the resources and commitment to secure our future. That is what we have done today and I am confident that, with Talmer, First Place Bank will now be in a much stronger position to compete and grow."
Talmar Bancorp reports assets of $2.24 billion. At its website, the privately held company describes its operating company, Talmer Bank and Trust, as “one of the best capitalized banking institutions with locations in Michigan, Wisconsin and Illinois." The company operates 45 bank branches.
Said David T. Provost, president and CEO, also in a prepared statement: "We are excited about this potential acquisition given the strategic fit of our two banking organizations. ...If this transaction is approved, we intend to improve First Place Bank's capital position and make necessary investments in its infrastructure to improve its ability to serve its communities."
The purchase agreement contains covenants that First Place and Talmar will “use their commercially reasonable best efforts” to obtain court approval of certain auction and bidding procedures.
Still, the asset sale will be subject to “receipt of a higher and better bid at the auction.” Should Talmar's $45 sale price be beat, First Place would pay the Michigan company a $5 million fee for serving as the stalking-horse bidder.
Talmar has agreed to buy the assets “free and clear of all liens, claims and encumbrances and will assume no liabilities of the company.”
The bankruptcy filing constitutes default of $46.4 million worth of loans and debt securities, according to the SEC filing. In its Chapter 11 petition, First Place reported the book value of its total assets as $175,287,970, and listed total debts at $64,467,398.
Roth emphasized although First Place Bank will be sold through the bankruptcy process, it will "continue to process loan applications, fund commitments and conduct all other banking operations as we do every day. In addition, customers will have full access to their accounts."
The competitive bidding and sale-approval process is expected to take 60 to 90 days, First Place said.
First Place Financial Corp. announced Oct. 1 that it was seeking another extension on filing its financial statements, this time for its annual report for fiscal 2012.
First Place said in that SEC filing, “Its performance in fiscal 2012 “[is] still being finalized as a result of the pending restatement of [its] consolidated financial statements for the quarterly and annual periods within the fiscal years ended June 30, 2010, 2009 and 2008 and completion of the audit for the fiscal year ended June 30, 2011. However, as disclosed in [its] Form 8-K dated Nov. 8, 2011, increases to the loan losses over the periods of restatement will have a material adverse impact on shareholders’ equity, the regulatory capital levels of First Place Bank, and the ability of the bank to achieve the capital levels set forth in [its] cease and desist order dated July 13, 2011.”
BACKGROUND
July 10, 2012: First Place Bank Names New Chief Credit Officer
June 26, 2012: First Place Bank Names Dunham CEO
Feb. 16, 2012: First Place Seeks Another Filing Extension from SEC
Dec. 30, 2011: First Place Financial Corp. Again Delays Restatement of SEC Filings
Nov. 9, 2011: Nasdaq to Delist First Place Financial; Warns Shareholders of $110M Equity Loss
July 14, 2011: First Place Consents to ‘Cease and Desist’ Order
Copyright 2012 The Business Journal, Youngstown, Ohio.