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

Forward-Looking Statements

When used in this Form 10-Q, or in future filings with the Securities and Exchange Commission (SEC), in press releases or other public or shareholder communications, or in oral statements made with the approval of an authorized executive officer, words or phrases "will likely result," "expect," "will continue," "anticipate," "estimate," "project," "believe," "should," "may," "will," "plan," or variations of such terms 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 undertakes no obligation to publicly release the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

Business Overview

Background. The Company is a unitary thrift holding company formed from the conversion of First Place Bank (formerly known as First Federal Savings and Loan Association of Warren) from a federally chartered mutual savings and loan association to a federally chartered stock savings association in December 1998. First Federal Savings and Loan Association of Warren originally opened for business in 1922. In May 2000, the Company acquired Ravenna Savings Bank of Ravenna, Ohio. In December 2000, the Company completed a merger with FFY Financial Corp. of Youngstown, Ohio. In May 2004, the Company acquired Franklin Bancorp, Inc. of

Southfield, Michigan. In June 2006, the Company acquired The Northern Savings & Loan Company of Elyria, Ohio. In April 2007, the Company acquired seven retail banking offices from Republic Bancorp, Inc. and Citizens Banking Corporation in the greater Flint, Michigan area.

On October 31, 2007, the Company completed its acquisition of Hicksville Building, Loan and Savings Bank (HBLS Bank), located in Hicksville, Ohio. As of that date, the Company acquired $53 million in assets, which included $33 million in loans and $15 million in securities and assumed $40 million in deposits and $9 million in long-term debt. On November 26, 2007, the Company's two federally chartered savings association subsidiaries, HBLS Bank and First Place Bank merged into a single federal savings association with the name First Place Bank.

On June 30, 2008, the Company completed its acquisition of OC Financial Inc. (OC Financial), a Dublin, Ohio financial holding company that owned Ohio Central Savings. As of that date, the Company acquired $68 million in assets, which included $42 million in loans and $15 million in securities and assumed $44 million in deposits and $10 million in long-term debt. On July 11, 2008, the Company's two federally chartered savings association subsidiaries, Ohio Central Savings and First Place Bank merged into a single federal savings association with the name First Place Bank.

On May 7, 2008 the Company announced that it has signed a definitive agreement to acquire Camco Financial Corporation (Camco), a Cambridge, Ohio financial holding company that owns Advantage Bank, a federally chartered savings association. Advantage Bank has approximately $1.026 billion in assets and operates 23 full service banking branches in Ohio, Kentucky and West Virginia. The transaction is expected to have little or no impact on regulatory capital and contribute positively to the Company's earnings per share, excluding one-time merger, integration and restructuring costs, in the current fiscal year ending June 30, 2009. The transaction has been approved by the shareholders of both companies and is subject to the approval of regulatory authorities and the satisfaction of other customary closing conditions. The transaction is expected to close during Company's second fiscal quarter ending December 31, 2008.

The Company is a community-oriented financial institution engaged primarily in gathering deposits to originate one-to-four family residential mortgage loans, commercial and consumer loans. The Company currently operates in Ohio, Michigan, Indiana and Pennsylvania with a concentration of banking offices in Northeast Ohio and Southeast Michigan. The Company also operates loan production offices in various cities in Ohio, Michigan and Indiana. In addition, the Company owns non-bank subsidiaries that operate in the following industries: real estate brokerage, title insurance, investment brokerage, wealth management, employee benefits and general insurance. As of September 30, 2008, the Company had $3.316 billion in assets and was the second largest publicly traded thrift institution in Ohio.

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

The Company seeks to provide a return to its shareholders through dividends and appreciation by taking on various levels of credit risk, interest rate risk, liquidity risk and capital risk in order to achieve profits. The goal of achieving high levels of profitability on a consistent basis is balanced with acceptable levels of risk in each area. The Company monitors a number of financial measures to assess profitability and various types of risk. Those measures include but are not limited to return on average assets, return on average equity, diluted earnings per share, efficiency ratio, net interest margin, noninterest expense as a percentage of average assets, net portfolio value, nonperforming assets as a percent of total assets, allowance for loan losses as a percent of total loans, allowance for loan losses as a percent of nonperforming loans and tangible equity to tangible assets.

Results of Operations

Comparison of the Three Months Ended September 30, 2008 and 2007

             Selected Financial Ratios and Other Financial Measures

                 (Dollars in thousands, except per share data)



                                                    As of or for the
                                                   three months ended
                                                      September 30,                Increase (Decrease)
                                                 2008              2007            Amount         Percent
Total assets                                  $ 3,315,953       $ 3,202,595      $   113,358          3.5 %
Net income (loss)                             $    (6,159 )     $     6,254      $   (12,413 )     (198.5 )%
Diluted earnings (loss) per share             $     (0.37 )     $      0.38      $     (0.75 )     (197.4 )%
Return on average equity                            (7.74 )%           7.72 %                      (15.46 )%
Return on average assets                            (0.74 )%           0.78 %                       (1.52 )%
Net interest margin                                  3.07 %            2.94 %                        0.13 %
Efficiency ratio                                    98.16 %           63.97 %                       34.19 %
Noninterest expense as a percent of
average assets                                       2.56 %            2.55 %                        0.01 %
Nonperforming assets to total assets                 2.70 %            1.46 %                        1.24 %
Allowance for loan losses to total loans             1.19 %            1.03 %                        0.16 %
Allowance for loan losses to nonperforming
loans                                               50.00 %           71.04 %                      (21.04 )%
Equity to total assets                               9.38 %           10.08 %                       (0.70 )%
Tangible equity to tangible assets                   6.37 %            6.96 %                       (0.59 )%

Summary. The Company recorded a net loss of $6.2 million for the quarter ended September 30, 2008, compared to net income of $6.3 million for the quarter ended September 30, 2007, a decrease of $12.5 million or 198.5%. Net loss per share was $0.37 for the current quarter compared to earnings per share of $0.38 for the same quarter in the prior year, a decrease of $0.75. Return on average equity for the current quarter was -7.74% compared with 7.72% for the same quarter in the prior year. Return on average tangible equity for the current quarter was -11.71% compared with 11.60% for the same quarter in the prior year. The significant decline in earnings and returns for the current quarter compared to the prior year quarter was primarily attributable to an increase of $5.4 million in the provision for loan losses and a $9.3 million decline in fair value of securities, partially offset by a decrease of $4.1 million in the provision for income taxes. Nonperforming assets as a percent of total assets increased to 2.70% at September 30, 2008 compared with 1.46% a year earlier. Total assets increased $113 million to $3.316 billion at September 30, 2008 from $3.203 billion at September 30, 2007. The increase in total assets was primarily due to the acquisitions of HBLS Bank and OC Financial.

Explanation of Certain Non-GAAP Measures. This Form 10-Q contains certain financial information determined by methods other than Generally Accepted Accounting Principles (GAAP). Specifically, the Company has provided financial measures that are based on core earnings rather than net income. Ratios and other financial measures with the word core in their title were computed using core earnings rather than net income. Core earnings excludes merger, integration and restructuring expense, extraordinary income or expense, income or expense from discontinued operations, and income, expense, gains and losses that are not reflective of ongoing operations or that we do not expect to reoccur. Management of the Company believes that this information is useful to both investors and to management and can aid them in understanding the Company's current performance, performance trends and financial condition. While core earnings can be useful in evaluating current performance and projecting current trends into the future, management does not believe that core earnings are a substitute for GAAP net income. We encourage investors and others to use core earnings as a supplemental tool for analysis and not as a substitute for GAAP net income. The Company's non-GAAP measures may not be comparable to the non-GAAP numbers of other companies. In addition, future results of operations may include nonrecurring items that would not be included in core earnings. Reconciliation from GAAP net income to the non-GAAP measure of core earnings is shown below.

                                                                Three months ended
                                                                   September 30,
  (Dollars in thousands)                                         2008          2007
  Reconciliation of GAAP net income to core earnings
  GAAP net income (loss)                                      $    (6,159 )   $ 6,254
  Merger, integration and restructuring expense, net of tax            29          -

  Core earnings (loss)                                        $    (6,130 )   $ 6,254

Core loss for the quarter ended September 30, 2008 was $6.1 million, a 198.0% decrease over core earnings of $6.3 million for the same quarter in the prior year. Core loss per share was $0.37 for the quarter ended September 30, 2008 compared with core earnings per share of $0.38 for the prior year quarter. The decline in core earnings for the first quarter of fiscal 2009 compared to the prior year quarter was primarily attributable to an increase of $5.4 million in the provision for loan losses and a $9.3 million decline in fair value of securities, partially offset by a decrease of $4.1 million in the provision for income taxes.

Net Interest Income. Net interest income for the quarter ended September 30, 2008, totaled $23.0 million, an increase of $1.6 million or 7.4% from $21.4 million for the quarter ended September 30, 2007. The increase in net interest income resulted from an increase of $69.2 million or 2.3% in average interest-earning assets compared with the same quarter in the prior year and an increase in the net interest margin to 3.07%, up from 2.94% in the prior year quarter. The increase in net interest margin from the same period in the prior year was primarily due to interest rates on interest-bearing liabilities decreasing faster than the interest rates on interest-earning assets. The decrease in interest rates for the current quarter compared to the same quarter in the prior year was a result of the decline in Federal Reserve short-term interest rates since September 2007. Currently, the Company is unable to lower deposit rates due to higher-than-market rates offered by other financial institutions across the Company's market area. As a result, the Company anticipates that the net interest margin will decline in the quarter ending December 31, 2008 in addition to the Federal Reserve's short-term rate reductions that took place in October 2008.

The average yield on interest-earning assets was 5.90% for the quarter ended September 30, 2008, compared with 6.60% in the same quarter in the prior year. The components of the yield on interest-earning assets include the yields on loans, securities, Federal Home Loan Bank stock and interest-earning deposits in other banks. The decrease in rates on interest-earning assets for the current quarter was primarily due to the amount of prime-based loans recorded and the impact of the decline in Federal Reserve short-term interest rates since September 2007. The increase in the average balance of interest-earning assets was primarily due to an increase in commercial loans. The average rate paid on interest-bearing liabilities was 3.12% for the quarter ended September 30, 2008 compared to 4.17% for the prior year quarter, a decrease of 105 basis points. This decrease was due to decreases in the average rates paid on deposits and borrowings. The decrease in the cost of borrowings was primarily due to the impact of the decline in Federal Reserve short-term interest rates since September 2007.

The following schedules detail the various components of net interest income for the three months ended September 30, 2008 and 2007. All asset yields are calculated on tax-equivalent basis where applicable. Security yields are based on amortized historic cost.

                  Average Balances, Interest Rates and Yields

                             (Dollars in thousands)



                                                Three months ended                         Three months ended
                                                September 30, 2008                         September 30, 2007
                                        Average                    Average         Average                    Average
                                        Balance       Interest    Yield/cost       Balance       Interest    Yield/cost
ASSETS
Interest-earning assets
Loans and loans held for sale         $ 2,674,105     $  40,596         6.02 %   $ 2,633,816     $  44,543         6.73 %
Securities and interest-bearing
deposits                                  306,747         3,784         4.94 %       280,439         3,804         5.38 %
Federal Home Loan Bank stock               35,766           483         5.35 %        33,209           534         6.40 %

Total interest-earning assets           3,016,618        44,863         5.90 %     2,947,464        48,881         6.60 %

Noninterest-earning assets
Cash and due from banks                    43,036                                     49,900
Allowance for loan losses                 (31,563 )                                  (26,012 )
Other assets                              280,905                                    214,631

Total assets                          $ 3,308,996                                $ 3,185,983

LIABILITIES
Interest-bearing liabilities
Deposits
Interest-bearing checking accounts    $   160,127           224         0.56 %   $   149,787           185         0.49 %
Savings and money market accounts         780,282         3,905         1.99 %       789,550         6,380         3.21 %
Certificates of deposit                 1,221,452        11,092         3.60 %     1,051,054        12,934         4.90 %

Total deposits                          2,161,861        15,221         2.79 %     1,990,391        19,499         3.90 %
Borrowings
Short-term borrowings                     149,901         1,465         3.88 %       216,352         2,673         4.91 %
Long-term debt                            420,741         4,819         4.54 %       380,164         4,963         5.19 %

Total interest-bearing liabilities      2,732,503        21,505         3.12 %     2,586,907        27,135         4.17 %
Noninterest-bearing liabilities
Noninterest-bearing checking
accounts                                  232,376                                    235,439
Other liabilities                          28,598                                     41,265

Total liabilities                       2,993,477                                  2,863,611
Shareholders' equity                      315,519                                    322,372

Total liabilities and shareholders
equity                                $ 3,308,996                                $ 3,185,983

Fully tax-equivalent net interest
income                                                   23,358                                     21,746
Interest rate spread                                                    2.78 %                                     2.43 %
Net interest margin                                                     3.07 %                                     2.94 %
Average interest-earning assets to
average interest-bearing
liabilities                                                           110.40 %                                   113.94 %
Tax-equivalent adjustment                                   403                                        374

Net interest income                                   $  22,955                                  $  21,372

Provision for Loan Losses. The provision for loan losses represents the charge to income necessary to adjust the allowance for loan losses to an amount that represents management's assessment of the estimated probable incurred credit losses inherent in the loan portfolio. Each quarter management performs a review of estimated probable incurred credit losses in the loan portfolio. For a more detailed discussion of management's review of the allowance for loan losses, see Nonperforming Assets and Allowance for Loan Losses on page 23 of this Form 10-Q. Based on this review, a provision for loan losses of $7.4 million was recorded for the quarter ended September 30, 2008 compared to $4.6 million for the quarter ended June 30, 2008 and $2.0 million for the quarter ended September 30, 2007. Nonperforming loans were $62.9 million, or 2.39% of total loans at September 30, 2008 compared with $50.7 million, or 1.91% at June 30, 2008 and $36.8 million, or 1.45% at September 30, 2007. Net charge-offs were $4.1 million for the quarter ended September 30, 2008 compared with $5.4 million for the quarter ended June 30, 2008 and $1.6 million for the quarter ended September 30, 2007. Total loans were $2.631 billion at September 30, 2008 compared with $2.649 billion at June 30, 2008 and $2.548 billion at September 30, 2007.

Noninterest Income. Noninterest income totaled a loss of $1.6 million for the quarter ended September 30, 2008, a decrease of $11.8 million or 115.7% from $10.2 million in the same quarter in the prior year. The decrease in the current quarter was primarily due to a $9.3 million decline in the fair value of securities and decreases of $1.5 million in the gain on sale of loan servicing rights, $0.4 million in net gains on sale of securities, $0.4 million in other income - nonbank subsidiaries, $0.3 in loan servicing income and $0.1 million in mortgage banking gains, partially offset by an increase of $0.1 million in service charges and fees on deposit accounts.

Effective July 1, 2008, the Company elected to account for Fannie Mae preferred stock and a mutual fund investment at fair value under Statement of Financial Accounting Standard No. 159, "The Fair Value Option for Assets and Financial Liabilities" (SFAS 159). As a result, the current quarter decrease and future increases and decreases in the value of these securities will be recorded in earnings. The Company took this action due to the recent volatility in the financial condition of Fannie Mae and volatility in the securities market in general, the subjective nature of determining other-than-temporary impairment and to more fully reflect both increases and decreases in value through fair value accounting. There was no impact to adopting fair value for these securities as of July 1, 2008 as the Company had previously recorded them at fair value on June 30, 2008 under the other-than-temporary impairment guidelines. The $9.3 million decline in the fair value of securities was due to a decline in the fair value of Fannie Mae preferred stock from $9.3 million at June 30, 2008 to $1.3 million at September 30, 2008 and a decline in the fair value of a mutual fund investment from $15.5 million at June 30, 2008 to $14.2 million at September 30, 2008. Recent government actions placing Fannie Mae under conservatorship and suspending future dividends resulted in a decline in the value of this security. The decline in the value of the mutual fund investment was due to increases in the spreads between the yield of the underlying mortgage-backed securities and treasury yields.

During the prior year quarter ended September 30, 2007, the Company sold loan servicing rights with a book value of $10.5 million, which represented loans with principal balances totaling $1.1 billion or approximately 50% of the Company's existing loan servicing rights portfolio at the time of sale. The purpose of the sale was to reduce the size of the servicing asset in order to reduce volatility associated with income from loan servicing rights, to reduce exposure to impairment losses and to take advantage of a favorable market for loan servicing rights. The gain on the sale was $1.5 million compared with none for the current quarter ended September 30, 2008. Management expects to sell servicing rights in the future to continue to limit the volatility of income from loan servicing rights. However, the exact timing of future sales is not currently known and will be based on future loan origination volumes, the proportion of loans initially sold with servicing rights and the market for the sale of loan servicing rights.

Net gains on the sale of securities decreased $0.4 million to $0.3 million for the quarter ended September 30, 2008 from $0.7 million for the same quarter in the prior year. Securities may be sold to generate changes in liquidity, to impact interest rate risk, to maximize total returns on securities or to minimize losses on securities in anticipation of changes in interest rates. The Company does not anticipate that gains or losses on the sale of securities will be a major component of future net income. However, the purchase and sale of securities do play a significant part in managing the overall liquidity, credit and interest rate risk of the Company.

Other income - nonbank subsidiaries decreased $0.4 million to $0.9 million for the quarter ended September 30, 2008 from $1.3 million for the same quarter in the prior year. The decrease was primarily due to decreases in investment and real estate commissions related to the economic slowdown in the Company's market area.

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 in determining market value. Both the amortization and the valuation of MSRs are sensitive to movements in interest rates. Both amortization and impairment valuation allowances tend to increase as rates fall and tend to decrease as rates rise. However, the level of amortization is a function of interest rates over the period while the level of impairment valuation allowances is a function of interest rates at the end of the period. During the past two years, both short-term and long-term interest rates have varied significantly and have not moved in tandem resulting in significant shifts in the shape and slope of the yield curve. The level and variability in interest rates over that period have resulted in significant variations in loan servicing income, including changes in the level of impairment of MSRs. The table below shows how the change in the impairment of MSRs has affected loan servicing income.

                                                         Three months ended
                                                            September 30,
         (Dollars in thousands)                           2008           2007
         Loan servicing income (loss)
         Loan servicing revenue, net of amortization   $      248       $  290
         Change in impairment                                (292 )         -

         Total loan servicing income (loss)            $      (44 )     $  290

The decrease in total loan servicing income in the current quarter compared with the prior year quarter was due to an increase in impairment charges and a decrease in net loan servicing revenue. The decrease in loan servicing revenue was due to the sale of 50% of the Company's existing loan servicing rights . . .