PREMIER FINANCIAL CORP. 
By
"The year of 2008 was an uphill battle and the hill definitely got steeper
in the fourth quarter," said
Credit Quality
The 2008 fourth quarter results include expense for provision for loan
losses of
Non-performing loans totaled
"The economic challenges of the country and our market area continue to be
reflected in our quarterly results," said Mr. Small. "We recorded a provision
for loan losses of
Mortgage Servicing Impairment Impacts Results
Results for the fourth quarter of 2008 were significantly impacted by a
Margin Improved by 20 Basis Points
"Despite the continued decline in overall market rates our net interest margin was strong at 3.72% for the quarter," said Mr. Small. "This was a 20 basis point improvement over last year's fourth quarter, although a decline of 9 basis points from the third quarter of 2008 level of 3.81%."
Net interest margin improvement was driven by a 134 basis point decline in
interest-bearing liabilities to 2.56% in the 2008 fourth quarter compared to
3.90% for the same period in 2007. That decline more than offset a 103 basis
point drop in yields on interest-earning assets. The
"Despite the improvement over last year's fourth quarter, we are seeing pressure on our net interest margin," noted Mr. Small. "Both our yield on earnings assets and our average loan rates are down 18 basis points from this year's third quarter, while deposit costs are only down 9 basis points. As a result, the overall margin slipped from 3.81% to 3.72% from the third quarter to the fourth quarter. With the historic cut in the Fed Funds rate last month, I think we'll continue to experience downward pressure on our margin going into 2009."
Investment Portfolio
The
First
The fourth quarter results were also impacted by a
Non-Interest Income
Total non interest income declined to
Non-Interest Expenses Year over Year Rise Due to Acquisition
Total non-interest expense increased to
Annual Results
Earnings for 2008 were
Non-interest income for the 12-month period ended
Non-interest expense increased to
Total Assets at
Total assets at
Capital
First
"First
The Series A stock has a liquidation preference of
Impact of Recent Developments
"It would be nice to think all of the challenges we faced in 2008 are behind us as we move into 2009, but we all know there are many challenges ahead," said Mr. Small. "2008 saw the continued decline in the housing market with additional foreclosures, bank failures, and unprecedented government intervention. But, even in this extremely difficult setting, I believe there is great opportunity for community banks like ours. We remain well capitalized with a proven operating strategy and as we move forward we will pursue opportunities to continue to grow even in this economic environment."
Conference Call
First Defiance Financial Corp. will host a conference call at
Internet access to the call is also available (in listen-only mode) at the following Web address: http://www.talkpoint.com/viewer/starthere.asp?Pres=123058 .
The audio replay of the conference call Webcast will be available at
www.fdef.com until
First Defiance Financial Corp.
First Defiance Financial Corp., headquartered in
For more information, visit the company's Web site at www.fdef.com.
Safe Harbor Statement
This news release may contain certain forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21 B of the Securities Act of 1934, as amended, which are intended to
be safe harbors created thereby. Those statements may include, but are not
limited to, all statements regarding intent, beliefs, expectations,
projections, forecasts and plans of First Defiance Financial Corp. and its
management, and specifically include statements regarding: changes in economic
conditions, the nature, extent and timing of governmental actions and reforms,
future movements of interest rates, the production levels of mortgage loan
generation, the ability to continue to grow loans and deposits, the ability to
benefit from a changing interest rate environment, the ability to sustain
credit quality ratios at current or improved levels, the ability to sell OREO
properties, continued strength in the market area for First Federal Bank of
the Midwest, and the ability of the Company to grow in existing and adjacent
markets. These forward-looking statements involve numerous risks and
uncertainties, including those inherent in general and local banking,
insurance and mortgage conditions, competitive factors specific to markets in
which the Company and its subsidiaries operate, future interest rate levels,
legislative and regulatory decisions or capital market conditions and other
risks and uncertainties detailed from time to time in the Company's Securities
and Exchange Commission (SEC) filings, including the Company's Annual Report
on Form 10-K for the year ended
Consolidated Balance Sheets
First Defiance Financial Corp. (Unaudited)
December 31, December 31,
(in thousands) 2008 2007
Assets
Cash and cash equivalents
Cash and amounts due from
depository institutions $40,980 $53,976
Interest-bearing deposits 5,172 11,577
46,152 65,553
Securities
Available-for sale, carried at
fair value 117,575 112,370
Held-to-maturity, carried at
amortized cost 886 1,117
118,461 113,487
Loans 1,617,235 1,289,696
Allowance for loan losses (24,592) (13,890)
Loans, net 1,592,643 1,275,806
Loans held for sale 10,960 5,751
Mortgage servicing rights 6,611 5,973
Accrued interest receivable 7,293 6,755
Federal Home Loan Bank stock 21,376 18,586
Bank Owned Life Insurance 28,747 28,423
Office properties and equipment 47,756 40,545
Real estate and other assets held for
sale 7,000 2,460
Goodwill 56,585 36,820
Core deposit and other intangibles 8,344 3,551
Other assets 5,249 5,694
Total Assets $1,957,177 $1,609,404
Liabilities and Stockholders' Equity
Non-interest-bearing deposits $176,063 $121,563
Interest-bearing deposits 1,293,849 1,096,295
Total deposits 1,469,912 1,217,858
Advances from Federal Home Loan Bank 156,067 139,536
Notes payable and other interest-
bearing liabilities 49,454 30,055
Subordinated debentures 36,083 36,083
Advance payments by borrowers for tax
and insurance 652 762
Deferred taxes 2,811 1,306
Other liabilities 13,039 17,850
Total liabilities 1,728,018 1,443,450
Stockholders' Equity
Preferred stock- including
warrants and amortization of
discount on preferred shares 37,011 -
Common stock, net 127 117
Additional paid-in-capital 140,449 112,651
Stock acquired by ESOP - (202)
Accumulated other comprehensive
loss (1,904) (415)
Retained earnings 126,114 126,630
Treasury stock, at cost (72,638) (72,827)
Total stockholders' equity 229,159 165,954
Total liabilities and
stockholders' equity $1,957,177 $1,609,404
Consolidated Statements of Income (Unaudited)
First Defiance Financial Corp.
Three Months Twelve Months
Ended Ended
December 31, December 31,
(in thousands, except per share
amounts) 2008 2007 2008 2007
Interest Income:
Loans $24,301 $22,984 $96,522 $90,866
Investment securities 1,375 1,447 5,756 5,735
Interest-bearing deposits 4 438 123 924
FHLB stock dividends 265 328 1,062 1,226
Total interest income 25,945 25,197 103,463 98,751
Interest Expense:
Deposits 7,503 10,227 31,354 40,356
FHLB advances and other 1,572 1,636 6,375 6,889
Subordinated debentures 462 596 1,907 2,115
Notes Payable 415 210 1,632 729
Total interest expense 9,952 12,669 41,268 50,089
Net interest income 15,993 12,528 62,195 48,662
Provision for loan losses 3,824 603 12,585 2,306
Net interest income after provision
for loan losses 12,169 11,925 49,610 46,356
Non-interest Income:
Service fees and other charges 3,512 2,790 13,268 10,788
Mortgage banking income (636) 833 2,990 3,612
Gain on sale of non-mortgage
loans 3 22 180 226
Gain/(Loss) on securities (596) - (3,160) 21
Insurance and investment sales
commissions 1,115 1,034 5,496 5,278
Trust income 104 95 448 375
Income from Bank Owned Life
Insurance (428) 446 323 1,375
Other non-interest income (310) 48 (476) 455
Total Non-interest Income 2,764 5,268 19,069 22,130
Non-interest Expense:
Compensation and benefits 6,408 5,897 28,829 25,245
Occupancy 1,922 1,776 7,484 6,100
State franchise tax 411 506 1,951 1,579
Acquisition related charges 85 - 1,117 -
Data processing 1,274 986 4,658 3,824
Amortization of intangibles 424 165 1,459 646
Other non-interest expense 3,047 2,831 12,296 10,719
Total Non-interest Expense 13,571 12,161 57,794 48,113
Income before income taxes 1,362 5,032 10,885 20,373
Income taxes 482 1,474 3,528 6,469
Net Income $880 $3,558 $7,357 $13,904
Dividends Declared on Preferred Shares $(145) $- $(145) $-
Net Income Applicable to Common Shares $735 $3,558 $7,212 $13,904
Earnings per common share:
Basic $0.09 $0.51 $0.91 $1.96
Diluted $0.09 $0.50 $0.91 $1.94
Core operating earnings per common
share*:
Basic $0.10 $0.51 $1.00 $1.96
Diluted $0.10 $0.50 $1.00 $1.94
Average Shares Outstanding:
Basic 8,117 7,037 7,911 7,085
Diluted 8,117 7,108 7,911 7,178
* - See Non-GAAP Disclosure Reconciliations
Financial Summary and Comparison
First Defiance Financial Corp.
(Unaudited)
Three Months Twelve Months
Ended Ended
December 31, December 31,
(dollars in thousands,
except per share data) 2008 2007 % change 2008 2007 % change
Summary of Operations
Tax-equivalent
interest income (1) 26,188 25,383 3.2 104,360 99,477 4.9
Interest expense 9,952 12,669 (21.4) 41,268 50,089 (17.6)
Tax-equivalent net
interest income (1) 16,236 12,714 27.7 63,092 49,388 27.7
Provision for loan
losses 3,824 603 534.2 12,585 2,306 445.8
Tax-equivalent NII
after provision for
loan loss (1) 12,412 12,111 2.5 50,507 47,082 7.3
Securities losses (596) - NM (3,160) 21 NM
Non-interest
income-excluding
securities losses 3,360 5,268 (36.2) 22,229 22,109 0.5
Non-interest expense 13,571 12,161 11.6 57,794 48,113 20.1
Non-interest
expense-excluding
non-core charges 13,486 12,161 10.9 56,677 48,113 17.8
One time acquisition
related charges 85 - NM 1,117 - NM
Income taxes 482 1,474 (67.3) 3,528 6,469 (45.5)
Net Income 880 3,558 (75.3) 7,357 13,904 (47.1)
Core operating
earnings (2) 935 3,558 (73.7) 8,083 13,904 (41.9)
Tax equivalent
adjustment (1) 243 186 30.6 897 726 23.6
At Period End
Assets 1,957,177 1,609,404 21.6
Earning assets 1,773,204 1,439,097 23.2
Loans 1,617,235 1,289,696 25.4
Allowance for loan
losses 24,592 13,890 77.0
Deposits 1,469,912 1,217,858 20.7
Stockholders'
equity 229,159 165,954 38.1
Average Balances
Assets 1,938,461 1,589,264 22.0 1,852,345 1,544,369 19.9
Earning assets 1,730,284 1,432,061 20.8 1,655,725 1,391,140 19.0
Deposits and
interest-bearing
liabilities 1,718,315 1,404,065 22.4 1,638,426 1,361,920 20.3
Loans 1,591,144 1,265,307 25.8 1,511,877 1,241,817 21.7
Deposits 1,466,366 1,212,486 20.9 1,390,815 1,169,160 19.0
Stockholders'
equity 201,499 165,762 21.6 190,872 164,058 16.3
Stockholders'
equity / assets 10.39% 10.43% (0.3) 10.30% 10.62% (3.0)
Per Common Share Data
Net Income
Basic $0.09 $0.51 (82.4) $0.91 $1.96 (53.6)
Diluted 0.09 0.50 (82.0) 0.91 1.94 (53.1)
Core operating
earnings (2)
Basic $0.10 $0.51 (80.8) $1.00 $1.96 (48.9)
Diluted 0.10 0.50 (80.6) 1.00 1.94 (48.2)
Dividends 0.17 0.26 (34.6) 0.95 1.01 (5.9)
Market Value:
High $14.50 $26.93 (46.2) $22.51 $30.25 (25.6)
Low 6.00 20.58 (70.8) 6.00 20.58 (70.8)
Close 7.73 22.02 (64.9) 7.73 22.02 (64.9)
Book Value 28.23 23.51 20.1 28.23 23.51 20.1
Tangible Book
Value 20.23 17.79 13.7 20.23 17.79 13.7
Shares
outstanding,
end of period
(000) 8,117 7,059 15.0 8,117 7,059 15.0
Performance Ratios
(annualized)
Tax-equivalent
net interest
margin (1) 3.72% 3.52% 5.6 3.80% 3.55% 7.2
Return on
average
assets -GAAP 0.18% 0.89% (79.7) 0.40% 0.90% (55.9)
Return on
average
assets -Core
Operating 0.19% 0.89% (78.4) 0.44% 0.90% (51.5)
Return on
average
equity- GAAP 1.74% 8.52% (79.6) 3.85% 8.48% (54.5)
Return on
average
equity- Core
Operating 1.85% 8.52% (78.3) 4.23% 8.48% (50.1)
Efficiency
ratio (3)
-GAAP 69.25% 67.63% 2.4 67.74% 67.29% 0.7
Efficiency
ratio (3)-
Core
Operating 68.82% 67.63% 1.8 66.43% 67.29% (1.3)
Effective tax
rate 35.39% 29.29% 20.8 32.41% 31.75% 2.1
Dividend payout
ratio (basic) 188.89% 50.98% NM 104.40% 51.53% 102.6
(1) Interest income on tax-exempt securities and loans has been adjusted
to a tax-equivalent basis using the statutory federal income tax rate
of 35%
(2) Core operating earnings = Net income plus after tax effect of
acquisition related and other one-time charges. See Non-GAAP
Disclosure Reconciliation.
(3) Efficiency ratio = Non-interest expense divided by sum of
tax-equivalent net interest income plus non-interest income,
excluding securities gains or losses, net and asset sales gains, net.
NM Percentage change not meaningful
Non-GAAP Disclosure Reconciliations
First Defiance Financial Corp.
Management believes that the presentation of the non-GAAP financial
measures in this release assists investors when comparing results period-
to-period in a more meaningful and consistent manner and provides a better
measure of results for First Defiance's ongoing operations.
Core operating earnings are net income adjusted to exclude discontinued
operations, merger, integration and restructuring expenses and the results
of certain significant transactions not representative of ongoing
operations.
Three Months Twelve Months
Ended Ended
Core Operating Earnings December 31, December 31,
(dollars in thousands, except per
share data) 2008 2007 2008 2007
Net Income $880 $3,558 $7,357 $13,904
Acquisition related charges 85 - 1,117 -
Tax effect (30) - (391) -
After-tax non-operating items 55 - 726 -
Core operating earnings $935 $3,558 $8,083 $13,904
Acquisition related charges in 2008 reflect charges associated with the
acquisition of Pavilion Bancorp.
Core operating earnings is used as the numerator to calculate core
operating return on average assets, core operating return on average
equity and core operating earnings per share. Additionally, non-operating
items are deducted from non-interest expense in the numerator and non-
interest income in the denominator of the core operating efficiency ratio
disclosed in the tables. Comparable information on a GAAP basis is also
provided in the tables.
Income from Mortgage Banking
Revenue from sales and servicing of mortgage loans consisted of the
following:
Three Months Twelve Months
Ended Ended
December 31, December 31,
(dollars in thousands) 2008 2007 2008 2007
Gain from sale of mortgage loans $1,587 $598 $4,395 $2,590
Mortgage loan servicing revenue
(expense):
Mortgage loan servicing revenue 698 440 2,537 1,706
Amortization of mortgage servicing
rights (258) (167) (1,266) (648)
Mortgage servicing rights valuation
adjustments (2,663) (38) (2,676) (36)
(2,223) 235 (1,405) 1,022
Total revenue from sale and servicing
of mortgage loans $(636) $833 $2,990 $3,612
Yield Analysis
First Defiance Financial Corp.
Three Months Ended December 31,
2008 2007
Average Interest Yield Average Interest Yield
Balance (1) Rate(2) Balance (1) Rate(2)
Interest
-earning
assets:
Loans
receivable $1,591,144 $24,329 6.08% $1,265,307 $22,997 7.21%
Securities 115,165 1,590 5.20% 112,910 1,620 5.68%
Interest
Bearing
Deposits 2,599 4 0.61% 35,259 438 4.93%
FHLB stock 21,376 265 4.93% 18,585 328 7.00%
Total
interest-
earning
assets 1,730,284 26,188 6.00% 1,432,061 25,383 7.03%
Non-interest-
earning
assets 208,177 157,203
Total assets $1,938,461 $1,589,264
Deposits and
Interest-
bearing
liabilities:
Interest
bearing
deposits $1,293,560 $7,503 2.31% $1,098,408 $10,227 3.69%
FHLB
advances
and other 155,954 1,572 4.01% 128,677 1,636 5.04%
Other
Borrowings 59,760 415 2.76% 26,605 210 3.13%
Subordinated
debentures 36,235 462 5.07% 36,297 596 6.51%
Total
interest-
bearing
liabilities 1,545,509 9,952 2.56% 1,289,987 12,669 3.90%
Non-interest
bearing
deposits 172,806 - - 114,078 - -
Total
including
non-interest-
bearing demand
deposits 1,718,315 9,952 2.30% 1,404,065 12,669 3.58%
Other non-
interest-
bearing
liabilities 18,647 19,437
Total
liabilities 1,736,962 1,423,502
Stockholders'
equity 201,499 165,762
Total
liabilities
and
stockholders'
equity $1,938,461 $1,589,264
Net interest
income;
interest
rate spread $16,236 3.44% $12,714 3.13%
Net interest
margin (3) 3.72% 3.52%
Average
interest-
earning assets
to average
interest
bearing
liabilities 112% 111%
Twelve Months Ended December 31,
2008 2007
Average Interest Yield Average Interest Yield
Balance (1) Rate(2) Balance (1) Rate(2)
Interest-
earning
assets:
Loans
receivable $1,511,877 $96,627 6.39% $1,241,817 $90,913 7.32%
Securities 117,972 6,548 5.43% 112,577 6,414 5.68%
Interest
Bearing
Deposits 5,383 123 2.28% 18,161 924 5.09%
FHLB stock 20,493 1,062 5.18% 18,585 1,226 6.60%
Total interest-
earning
assets 1,655,725 104,360 6.30% 1,391,140 99,477 7.15%
Non-interest-
earning
assets 196,620 153,229
Total assets $1,852,345 $1,544,369
Deposits and
Interest-
bearing
liabilities:
Interest
bearing
deposits $1,231,363 $31,354 2.55% $1,064,960 $40,356 3.79%
FHLB advances
and other 160,407 6,375 3.97% 136,484 6,889 5.05%
Other
Borrowings 50,962 1,632 3.20% 23,841 729 3.06%
Subordinated
debentures 36,242 1,907 5.26% 32,435 2,115 6.52%
Total
interest-
bearing
liabilities 1,478,974 41,268 2.79% 1,257,720 50,089 3.98%
Non-interest
bearing
deposits 159,452 - - 104,200 - -
Total including
non-interest-
bearing demand
deposits 1,638,426 41,268 2.52% 1,361,920 50,089 3.68%
Other non-
interest-
bearing
liabilities 23,047 18,391
Total
liabilities 1,661,473 1,380,311
Stockholders'
equity 190,872 164,058
Total
liabilities and
stockholders'
equity $1,852,345 $1,544,369
Net interest
income;
interest rate
spread $63,092 3.51% $49,388 3.17%
Net interest
margin (3) 3.80% 3.55%
Average
interest-
earning assets
to average
interest
bearing
liabilities 112% 111%
(1) Interest on certain tax exempt loans and securities is not taxable
for Federal income tax purposes. In order to compare the tax-exempt
yields on these assets to taxable yields, the interest earned on
these assets is adjusted to a pre-tax equivalent amount based on the
marginal corporate federal income tax rate of 35%.
(2) Annualized
(3) Net interest margin is net interest income divided by average
interest-earning assets.
Selected Quarterly Information
First Defiance Financial Corp.
(dollars in thousands, except per
share data) 4th Qtr 2008 3rd Qtr 2008 2nd Qtr 2008
Summary of Operations
Tax-equivalent interest income (1) $26,188 $26,876 $26,453
Interest expense 9,952 10,277 9,991
Tax-equivalent net interest income (1) 16,236 16,599 16,462
Provision for loan losses 3,824 4,907 2,797
Tax-equivalent NII after provision for
loan losses (1) 12,412 11,692 13,665
Investment securities gains (losses) (596) (2,051) (432)
Non-interest income (excluding
securities gains/losses) 3,360 6,191 6,582
Non-interest expense 13,571 15,233 15,515
Acquisition and other one-time charges 85 20 262
Income taxes 482 44 1,349
Net income 880 322 2,735
Core operating earnings (2) 935 335 2,905
Tax equivalent adjustment (1) 243 233 216
At Period End
Total assets $1,957,177 $1,922,026 $1,928,925
Earning assets 1,773,204 1,741,438 1,736,238
Loans 1,617,235 1,596,327 1,582,751
Allowance for loan losses 24,592 23,445 20,578
Deposits 1,469,912 1,435,804 1,427,141
Stockholders' equity 229,159 189,676 194,280
Stockholders' equity / assets 11.71% 9.87% 10.07%
Goodwill 56,585 56,830 56,111
Average Balances
Total assets $1,938,461 $1,928,987 $1,898,165
Earning assets 1,730,284 1,727,343 1,689,398
Deposits and interest-bearing
liabilities 1,718,315 1,712,212 1,678,026
Loans 1,591,144 1,585,489 1,544,409
Deposits 1,466,366 1,437,273 1,423,266
Stockholders' equity 201,499 194,452 195,845
Stockholders' equity / assets 10.39% 10.08% 10.32%
Per Common Share Data
Net Income:
Basic $0.09 $0.04 $0.34
Diluted 0.09 0.04 0.34
Core operating earnings (2)
Basic 0.10 0.04 0.36
Diluted 0.10 0.04 0.36
Dividends 0.17 0.26 0.26
Market Value:
High $14.50 $17.66 $20.00
Low 6.00 10.00 15.90
Close 7.73 11.01 16.01
Book Value 28.23 23.37 23.93
Shares outstanding, end of period (in
thousands) 8,117 8,117 8,118
Performance Ratios (annualized)
Tax-equivalent net interest margin (1) 3.72% 3.81% 3.92%
Return on average assets -GAAP 0.18% 0.07% 0.58%
Return on average assets -Core
Operating 0.19% 0.07% 0.62%
Return on average equity - GAAP 1.74% 0.66% 5.62%
Return on average equity - Core
Operating 1.85% 0.69% 5.97%
Efficiency ratio (3) -GAAP 69.25% 66.84% 67.33%
Efficiency ratio (3) -Core Operating 68.82% 66.75% 66.19%
Effective tax rate 35.39% 12.02% 33.03%
Dividend payout ratio (basic) 188.89% 650.00% 76.47%
Selected Quarterly Information
First Defiance Financial Corp.
(dollars in thousands, except per
share data) 1st Qtr 2008 4th Qtr 2007
Summary of Operations
Tax-equivalent interest income (1) $24,843 $25,383
Interest expense 11,048 12,669
Tax-equivalent net interest income (1) 13,795 12,714
Provision for loan losses 1,058 603
Tax-equivalent NII after provision
for loan losses (1) 12,737 12,111
Investment securities gains (losses) (81) -
Non-interest income (excluding
securities gains/losses) 6,096 5,268
Non-interest expense 13,476 12,161
Acquisition and other one-time charges 750 -
Income taxes 1,653 1,474
Net income 3,419 3,558
Core operating earnings (2) 3,906 3,558
Tax equivalent adjustment (1) 204 186
At Period End
Total assets $1,886,047 $1,609,404
Earning assets 1,689,813 1,439,097
Loans 1,535,354 1,289,696
Allowance for loan losses 18,556 13,890
Deposits 1,413,701 1,217,858
Stockholders' equity 194,780 165,954
Stockholders' equity / assets 10.33% 10.31%
Goodwill 57,315 36,820
Average Balances
Total assets $1,645,436 $1,589,264
Earning assets 1,475,882 1,432,061
Deposits and interest-bearing liabilities 1,445,113 1,404,065
Loans 1,326,468 1,265,307
Deposits 1,236,354 1,212,486
Stockholders' equity 171,693 165,762
Stockholders' equity / assets 10.43% 10.43%
Per Common Share Data
Net Income:
Basic $0.48 $0.51
Diluted 0.47 0.50
Core operating earnings (2)
Basic 0.54 0.51
Diluted 0.54 0.50
Dividends 0.26 0.26
Market Value:
High $22.51 $26.93
Low 17.30 20.58
Close 18.35 22.02
Book Value 24.01 23.51
Shares outstanding, end of period (in
thousands) 8,114 7,059
Performance Ratios (annualized)
Tax-equivalent net interest margin (1) 3.76% 3.52%
Return on average assets - GAAP 0.84% 0.89%
Return on average assets - Core
Operating 0.95% 0.89%
Return on average equity - GAAP 8.01% 8.52%
Return on average equity - Core Operating 9.15% 8.52%
Efficiency ratio (3) - GAAP 67.75% 67.63%
Efficiency ratio (3) - Core Operating 63.98% 67.63%
Effective tax rate 32.59% 29.29%
Dividend payout ratio (basic) 54.17% 50.98%
(1) Interest income on tax-exempt securities and loans has been adjusted
to a tax-equivalent basis using the statutory federal income tax rate
of 35%
(2) See Non-GAAP Disclosure Reconciliation
(3) Efficiency ratio = Non-interest expense divided by sum of tax-
equivalent net interest income plus non-interest income, excluding
securities gains, net and asset sales gains, net.
Selected Quarterly Information
First Defiance Financial Corp.
(dollars in thousands, except per
share data) 4th Qtr 2008 3rd Qtr 2008 2nd Qtr 2008
Loan Portfolio Composition
One to four family residential real
estate $251,807 $250,244 $251,887
Construction 72,938 75,822 83,279
Commercial real estate 755,740 746,676 731,472
Commercial 356,574 353,453 351,812
Consumer finance 41,012 41,964 41,251
Home equity and improvement 161,106 158,992 153,715
Total loans 1,639,177 1,627,151 1,613,416
Less:
Loans in process 20,892 29,794 29,585
Deferred loan origination fees 1,050 1,030 1,080
Allowance for loan losses 24,592 23,445 20,578
Net Loans $1,592,643 $1,572,882 $1,562,173
Allowance for loan loss activity
Beginning allowance $23,445 $20,578 $18,556
Provision for loan losses 3,824 4,907 2,797
Reserve from acquisitions - 121 38
Credit loss charge-offs:
One to four family residential
real estate 369 478 281
Commercial real estate 1,480 1,495 319
Commercial 593 220
Consumer finance 224 73 56
Home equity and improvement 57 216 18
Total charge-offs 2,723 2,262 894
Total recoveries 46 101 81
Net charge-offs (recoveries) 2,677 2,161 813
Ending allowance $24,592 $23,445 $20,578
Credit Quality
Non-accrual loans $28,009 $24,630 $17,727
Restructured loans, accruing 6,250 905 -
Total non-performing loans (2) 34,259 25,535 17,727
Real estate owned (REO) 7,000 4,776 3,158
Total non-performing assets (2) $41,259 $30,311 $20,885
Net charge-offs 2,677 2,161 813
Allowance for loan losses / loans 1.52% 1.47% 1.30%
Allowance for loan losses / non-
performing assets 59.60% 77.35% 98.53%
Allowance for loan losses / non-
performing loans 71.78% 91.82% 116.08%
Non-performing assets / loans plus REO 2.54% 1.89% 1.32%
Non-performing assets / total assets 2.11% 1.57% 1.08%
Net charge-offs / average loans
(annualized) 0.67% 0.56% 0.21%
Deposit Balances
Non-interest-bearing demand deposits $176,063 $158,139 $181,034
Interest-bearing demand deposits and
money market 374,488 365,251 401,401
Savings deposits 132,145 145,019 146,697
Retail time deposits less than
$100,000 578,244 557,643 514,209
Retail time deposits greater than
$100,000 170,485 177,848 163,614
National/Brokered time deposits 38,486 31,904 20,186
Total deposits $1,469,911 $1,435,804 $1,427,141
(1) Non-performing loans consist of non-accrual loans that are
contractually past due 90 days or more and loans that are deemed
impaired under the criteria of FASB Statement No. 114. Non-performing
assets are non-performing loans plus real estate and other assets
acquired by foreclosure or deed-in-lieu thereof.
Selected Quarterly Information
First Defiance Financial Corp.
(dollars in thousands, except per
share data) 1st Qtr 2008 4th Qtr 2007
Loan Portfolio Composition
One to four family residential real
estate $262,710 $229,588
Construction 66,283 56,698
Commercial real estate 706,442 580,621
Commercial 332,772 283,072
Consumer finance 41,209 37,743
Home equity and improvement 151,563 128,080
Total loans 1,560,979 1,315,802
Less:
Loans in process 24,581 25,074
Deferred loan origination fees 1,044 1,032
Allowance for loan losses 18,556 13,890
Net Loans $1,516,798 $1,275,806
Allowance for loan loss activity
Beginning allowance $13,890 $13,427
Provision for loan losses 1,058 603
Reserve from acquisitions 4,099 -
Credit loss charge-offs:
One to four family residential
real estate 57 33
Commercial real estate 464 135
Commercial - 7
Consumer finance 27 42
Home equity and improvement 72 30
Total charge-offs 620 247
Total recoveries 129 107
Net charge-offs (recoveries) 491 140
Ending allowance $18,556 $13,890
Credit Quality
Non-accrual loans $13,497 $9,217
Restructured loans, accruing - -
Total non-performing loans (2) 13,497 9,217
Real estate owned (REO) 3,448 2,460
Total non-performing assets (2) $16,945 $11,677
Net charge-offs 491 140
Allowance for loan losses / loans 1.21% 1.08%
Allowance for loan losses / non-
performing assets 109.51% 118.95%
Allowance for loan losses / non-
performing loans 137.48% 150.70%
Non-performing assets / loans plus
REO 1.10% 0.90%
Non-performing assets / total assets 0.90% 0.73%
Net charge-offs / average loans
(annualized) 0.15% 0.04%
Deposit Balances
Non-interest-bearing demand deposits $168,049 $121,563
Interest-bearing demand deposits and
money market 408,979 342,367
Savings deposits 144,184 105,873
Retail time deposits less than
$100,000 529,990 509,720
Retail time deposits greater than
$100,000 162,400 137,927
National/Brokered time deposits 99 408
Total deposits $1,413,701 $1,217,858
(1) Non-performing loans consist of non-accrual loans that are
contractually past due 90 days or more and loans that are deemed impaired
under the criteria of FASB Statement No. 114. Non-performing assets are
non-performing loans plus real estate and other assets acquired by
foreclosure or deed-in-lieu thereof.
Loan Delinquency Information
First Defiance Financial Corp.
Troubled
30 to 89 90+ days Debt
Total days past due Restruc-
(dollars in thousands) Balance Current past due (1) turing
December 31, 2008
One to four family
residential real estate $251,826 $242,566 $4,676 $4,584 $1,101
Construction 72,938 72,814 52 72 -
Commercial real estate 755,740 730,355 5,406 19,979 2,205
Commercial 356,574 352,022 1,671 2,881 2,944
Consumer finance 41,012 40,428 515 69 -
Home equity and
improvement 161,106 155,658 5,024 424 -
Total loans $1,639,196 $1,593,843 $17,344 $28,009 $6,250
September 30, 2008
One to four family
residential real estate $250,244 $240,791 $4,053 $5,400 $902
Construction 75,822 74,232 101 1,489 -
Commercial real estate 746,676 726,013 6,914 13,749 -
Commercial 353,453 348,507 1,371 3,575 3
Consumer finance 41,964 41,341 473 150 -
Home equity and
improvement 158,992 156,645 2,080 267 -
Total loans $1,627,151 $1,587,529 $14,992 $24,630 $905
December 31, 2007
One to four family
residential real estate $229,588 $226,264 $1,751 $1,573 $-
Construction 56,698 56,432 - 266 -
Commercial real estate 580,621 569,814 4,819 5,988 -
Commercial 283,072 281,805 592 675 -
Consumer finance 37,743 37,448 276 19 -
Home equity and
improvement 128,080 125,969 1,415 696 -
Total loans $1,315,802 $1,297,732 $8,853 $9,217 $-
(1) All loans 90+ days past due are non accrual
SOURCE First Defiance Financial Corp.
