PREMIER FINANCIAL CORP. 
By DEFIANCE, Ohio, Jan. 23, 2012 /PRNewswire/ -- First Defiance Financial Corp. (NASDAQ: FDEF) announced today that net income for the fiscal year ended December 31, 2011 totaled $15.5 million, or $1.42 per diluted common share compared to $8.1 million or $.75 per diluted common share for the year ended December 31, 2010. The 2010 twelve month results included $1.3 million of core conversion related charges associated with the successful transition to a new core processing provider. For the fourth quarter ended December 31, 2011, First Defiance earned $4.1 million or $.36 per diluted common share compared to $2.3 million or $0.22 per diluted common share for the fourth quarter of 2010. The fourth quarter of 2010 included $802,000 of core conversion charges.
"I am pleased to report that despite the ongoing challenges presented by the operating environment, First Defiance continued to show improvement in our core operating metrics in the fourth quarter and full year 2011," said William J. Small, Chairman, President, and Chief Executive Officer of First Defiance Financial Corp. "Asset quality stabilized in the last half of the year, but management is committed to showing more improvement in 2012."
Credit Quality
The fourth quarter 2011 results include expense for provision for loan losses of $4.1 million, compared with $5.7 million in the same period in 2010 and $3.1 million in the third quarter of 2011. The allowance for loan loss as a percentage of total loans decreased to 2.24% at December 31, 2011 from 2.61% at September 30, 2011 and 2.70% at December 31, 2010. The decline in the allowance for loan loss as a percentage of total loans is the result of $9.1 million in charge-offs in the fourth quarter of 2011, of which, $8.2 million were partial charge-offs on loans that had previously identified reserves on them.
Non-performing loans totaled $42.7 million at December 31, 2011, down from $47.0 million at December 31, 2010. The December 31, 2011 balance included $39.3 million of loans that were on non-accrual, or 90 days past due, and another $3.4 million of loans considered non-performing because of changes in terms granted to borrowers, although the loans were still accruing interest. In addition, First Defiance had $3.6 million of real estate owned at December 31, 2011 down from $9.6 million at December 31, 2010. For the fourth quarter of 2011, First Defiance recorded net charge-offs of $9.0 million, which represented 2.49% of average loans outstanding (annualized) for the quarter, compared with 1.55% in the third quarter of 2011 and 1.58% in the fourth quarter of 2010.
"Asset quality continued to show improvement this quarter, reflected by a 18% reduction in non-performing assets from the fourth quarter of 2010," Small said. "We had an increase in net charge-offs in the fourth quarter, reflecting an acceleration of charge offs to proactively address certain credits in the commercial real estate portfolio, but we expect marked improvement in subsequent quarters."
Net Interest Margin
Net interest income decreased to $17.5 million in the fourth quarter of 2011 compared to $17.8 million in the 2010 fourth quarter, and was down slightly from the third quarter of 2011, which was $17.6 million. Net interest margin was 3.83% for the 2011 fourth quarter compared to 3.89% in the third quarter of 2011 and 3.89% in the fourth quarter of 2010. Yield on interest earning assets declined by 46 basis points, to 4.63% in the fourth quarter of 2011 from 5.09% in the 2010 fourth quarter, while the cost of interest-bearing liabilities and non-interest-bearing demand deposits decreased by 38 basis points, to 0.84% from 1.22%.
"We are pleased with the stability of our net interest margin for the quarter and throughout this economic cycle," said Small. "We will continue to see pricing pressures and anticipate an extended low rate environment adding more stress on the margin."
Non-Interest Income
Non-interest income for the 2011 fourth quarter increased to $7.9 million from $7.6 million in the fourth quarter of 2010. Gain on investment securities was $169,000 for the fourth quarter of 2011, compared with a loss of $14,000 in the fourth quarter of 2010. Mortgage banking income decreased to $1.9 million in the fourth quarter of 2011, compared with $2.7 million in the same period in 2010. Gains from the sale of mortgage loans decreased in the fourth quarter of 2011 to $1.7 million from $1.8 million in the fourth quarter of 2010. Mortgage loan servicing revenue increased slightly in the fourth quarter 2011 to $874,000 from $856,000 in the fourth quarter of 2010. Income from the sale of insurance and investment products increased to $2.0 million in the fourth quarter of 2011, up from $1.3 million in the same period of 2010. This increase is largely due to the Payak-Dubbs Insurance Agency, Inc. ("PDI") acquisition that was completed on July 1, 2011. The acquisition of PDI contributed $610,000 of income in the fourth quarter of 2011.
First Defiance recorded a positive valuation adjustment of $181,000 on mortgage servicing rights ("MSR") in the fourth quarter of 2011, compared with $1.1 million in the fourth quarter of 2010. The MSR valuation adjustment is a reflection of the increase in the fair value of certain sectors of the Company's portfolio of MSRs.
"Non-interest income increased driven by insurance revenues and solid fee income, which are part of our core operating strategy. The insurance acquisitions in 2010 and 2011 have had an immediate positive impact, and we also saw an increase in wealth management revenue year over year. Gain on sale of mortgage loans was lower this quarter compared to the 2010 fourth quarter," stated Small.
Non-Interest Expenses
Total non-interest expense was $15.6 million for the quarter ended December 31, 2011, a decrease from $16.5 million in the fourth quarter of 2010. The fourth quarter of 2010 included $802,000 of core conversion related charges.
Compensation and benefits increased by $854,000 in the fourth quarter of 2011 compared to the fourth quarter of 2010. The year over year increase in compensation and benefits expense is largely due to the Company freezing pay in 2010 coupled with the acquisition of PDI that added $381,000 in compensation and benefits expense in the fourth quarter of 2011. FDIC insurance expense decreased to $658,000 in the fourth quarter of 2011 from $885,000 in the same period of 2010, due to the changes in the assessment rate calculation per the Dodd-Frank regulations. Other non-interest expense decreased to $3.2 million in the fourth quarter of 2011 from $4.4 million in the fourth quarter of 2010. Other operating expenses decreased $802,000 in the fourth quarter of 2011 as a result of the core conversion related charges expensed in the fourth quarter of 2010. Credit, collection and real estate owned costs were $983,000 in the fourth quarter of 2011, a $49,000 increase over the fourth quarter of 2010.
Annual Results
On an annual basis, earnings for 2011 were $15.5 million compared with $8.1 million in 2010. Net interest income for 2011 totaled $69.9 million, a $282,000 or 0.40% decrease over 2010. Average interest-earning assets increased to $1.848 billion for 2011 compared to $1.836 billion in 2010. Net interest margin for 2011 was 3.88%, compared with 3.89% for 2010.
The provision for loan losses for 2011 was $12.4 million, which was down $10.7 million or 46% from $23.2 million in 2010.
Non-interest income for the twelve month period ended December 31, 2011 was $27.5 million compared to $27.6 million during the same period of 2010. The 2011 results include securities gains of $216,000, of which $218,000 relate to gain on sale of available-for-sale securities slightly offset by $2,000 related to other-than-temporary impairment ("OTTI") charges recognized for impaired investment securities. The 2010 securities losses of $339,000 consisted of $331,000 related to OTTI charges recognized for impaired investment securities and $8,000 related to losses from the sale of available-for-sale securities. Service fees and other charges were $11.4 million for the year compared to $12.7 million during 2010. Mortgage banking income for 2011 was $6.4 million, down from $7.8 million in 2010. Insurance and investment sales revenues increased to $7.1 million in 2011, compared to $5.1 million in 2010, mainly due to the PDI acquisition.
Non-interest expense decreased to $62.8 million for the full year of 2011 from $63.5 million in 2010. The full year 2010 included $1.3 million of core conversion related charges. FDIC insurance expense decreased to $2.9 million from $3.8 million in 2010.
Non-interest expense also includes $3.3 million of credit, collection and real estate owned costs compared with $5.5 million in 2010.
Total Assets at $2.07 Billion
Total assets at December 31, 2011 were $2.07 billion, compared to $2.04 billion at December 31, 2010. Net loans receivable (excluding loans held for sale) were $1.45 billion at December 31, 2011 compared to $1.48 billion at December 31, 2010. Total cash and cash equivalents were $174.9 million at December 31, 2011 compared with $169.2 million at December 31, 2010. Total deposits at December 31, 2011 were $1.60 billion compared to $1.58 billion at December 31, 2010. Non-interest bearing deposits at December 31, 2011 were $245.9 million compared to $216.7 million at December 31, 2010. Total stockholders' equity was $278.1 million at December 31, 2011 compared to $240.3 million at the December 31, 2010. Also at December 31, 2011, goodwill and other intangible assets totaled $67.7 million compared to $63.7 million at December 31, 2010.
Conference Call
First Defiance Financial Corp. will host a conference call at 11:00 a.m. (EST) on Tuesday, January 24, 2012 to discuss the earnings results and business trends. The conference call may be accessed by calling 1-877-317-6789. A live webcast may be accessed at https://services.choruscall.com/links/fdef120124.html.
Audio replay of the Internet Web cast will be available at www.fdef.com until April 30, 2012 at 9:00 a.m.
First Defiance Financial Corp.
First Defiance Financial Corp., headquartered in Defiance, Ohio, is the holding company for First Federal Bank of the Midwest and First Insurance Group. First Federal operates 33 full service branches and 44 ATM locations in northwest Ohio, southeast Michigan and Fort Wayne, Indiana. First Insurance Group is a full service insurance agency with six offices throughout northwest Ohio.
For more information, visit the company's Web site at www.fdef.com.
-Financial Statements and Highlights Follow-
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 real estate owned 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 December 31, 2010. One or more of these factors have affected or could in the future affect the Company's business and financial results in future periods and could cause actual results to differ materially from plans and projections. Therefore, there can be no assurances that the forward-looking statements included in this news release will prove to be accurate. In light of the significant uncertainties in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other persons, that the objectives and plans of the Company will be achieved. All forward-looking statements made in this news release are based on information presently available to the management of the Company. The Company assumes no obligation to update any forward-looking statements.
Consolidated Balance Sheets
First Defiance Financial Corp. (Unaudited)
December December
31, 31,
(in thousands) 2011 2010
-------------- ---- ----
Assets
Cash and cash equivalents
Cash and amounts due from
depository institutions $31,931 $24,977
Interest-bearing deposits 143,000 144,187
------- -------
174,931 169,164
Securities
Available-for sale, carried at
fair value 232,919 165,252
Held-to-maturity, carried at
amortized cost 661 839
--- ---
233,580 166,091
Loans 1,487,076 1,519,503
Allowance for loan losses (33,254) (41,080)
------- -------
Loans, net 1,453,822 1,478,423
Loans held for sale 13,841 18,127
Mortgage servicing rights 8,690 9,477
Accrued interest receivable 6,142 6,374
Federal Home Loan Bank stock 20,655 21,012
Bank Owned Life Insurance 35,908 34,979
Office properties and equipment 40,045 41,743
Real estate and other assets held
for sale 3,628 9,591
Goodwill 61,525 57,556
Core deposit and other intangibles 6,151 6,128
Deferred taxes 629 5,805
Other assets 8,643 11,047
----- ------
Total Assets $2,068,190 $2,035,517
========== ==========
Liabilities and Stockholders'
Equity
Non-interest-bearing deposits $245,927 $216,699
Interest-bearing deposits 1,350,314 1,358,720
--------- ---------
Total deposits 1,596,241 1,575,419
Advances from Federal Home Loan
Bank 81,841 116,885
Notes payable and other interest-
bearing liabilities 60,386 56,247
Subordinated debentures 36,083 36,083
Advance payments by borrowers for
tax and insurance 1,402 937
Other liabilities 14,110 9,615
------ -----
Total liabilities 1,790,063 1,795,186
Stockholders' Equity
Preferred stock, net of discount 36,640 36,463
Common stock, net 127 127
Common stock warrant 878 878
Additional paid-in-capital 135,825 140,845
Accumulated other comprehensive
income (loss) 3,997 (342)
Retained earnings 148,011 134,988
Treasury stock, at cost (47,351) (72,628)
------- -------
Total stockholders' equity 278,127 240,331
Total Liabilities and Stockholders'
Equity $2,068,190 $2,035,517
========== ==========
Consolidated
Statements of Income
(Unaudited)
First Defiance
Financial Corp.
Twelve Months
Three Months Ended Ended
December 31, December 31,
------------ ------------
(in thousands, except
per share amounts) 2011 2010 2011 2010
--------------------- ---- ---- ---- ----
Interest Income:
Loans $19,095 $21,524 $78,648 $88,628
Investment securities 1,855 1,499 7,086 6,055
Interest-bearing
deposits 115 105 466 303
FHLB stock dividends 205 201 867 879
--- --- --- ---
Total interest income 21,270 23,329 87,067 95,865
Interest Expense:
Deposits 2,527 4,030 12,175 19,222
FHLB advances and
other 761 1,086 3,203 4,711
Subordinated
debentures 333 332 1,278 1,314
Notes Payable 133 126 530 455
--- --- --- ---
Total interest expense 3,754 5,574 17,186 25,702
----- ----- ------ ------
Net interest income 17,516 17,755 69,881 70,163
Provision for loan
losses 4,099 5,652 12,434 23,177
----- ----- ------ ------
Net interest income
after provision for
loan losses 13,417 12,103 57,447 46,986
Non-interest Income:
Service fees and other
charges 2,952 2,884 11,387 12,740
Mortgage banking
income 1,888 2,733 6,437 7,847
Gain on sale of non-
mortgage loans 10 419 361 516
Gain on sale of
securities 169 (14) 218 (8)
Impairment on
securities - - (2) (331)
Insurance and
investment sales
commissions 1,963 1,302 7,109 5,140
Trust income 134 135 599 507
Income from Bank Owned
Life Insurance 226 229 929 1,146
Other non-interest
income 534 (134) 478 33
--- ---- --- ---
Total Non-interest
Income 7,876 7,554 27,516 27,590
Non-interest Expense:
Compensation and
benefits 8,096 7,242 31,554 27,403
Occupancy 1,743 1,784 7,166 7,048
FDIC insurance premium 658 885 2,922 3,766
State franchise tax 385 467 2,010 2,088
Data processing 1,140 1,353 4,257 4,909
Amortization of
intangibles 391 356 1,442 1,495
One time acquisition
related charges - 10 234 63
Other non-interest
expense 3,176 4,388 13,179 16,691
----- ----- ------ ------
Total Non-interest
Expense 15,589 16,485 62,764 63,463
------ ------ ------ ------
Income before income
taxes 5,704 3,172 22,199 11,113
Income taxes 1,640 904 6,665 3,005
----- --- ----- -----
Net Income $4,064 $2,268 $15,534 $8,108
====== ====== ======= ======
Dividends Accrued on
Preferred Shares (462) (463) (1,850) (1,850)
Accretion on Preferred
Shares (46) (43) (177) (170)
--- --- ---- ----
Net Income Applicable
to Common Shares $3,556 $1,762 $13,507 $6,088
====== ====== ======= ======
Earnings per common
share:
Basic $0.37 $0.22 $1.44 $0.75
Diluted $0.36 $0.22 $1.42 $0.75
Average Shares
Outstanding:
Basic 9,726 8,118 9,368 8,118
Diluted 9,908 8,178 9,540 8,153
Financial Summary and Comparison
First Defiance Financial Corp. (Unaudited) (Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------ ------------
(dollars in thousands, except %
per share data) 2011 2010 change 2011 2010 % change
----------------------------- ---- ---- ------- ---- ---- --------
Summary of Operations
Tax-equivalent interest
income (1) $21,665 $23,651 (8.4)% $88,546 $97,108 (8.8)%
Interest expense 3,754 5,574 (32.7) 17,186 25,702 (33.1)
Tax-equivalent net interest
income (1) 17,911 18,077 (0.9) 71,360 71,406 (0.1)
Provision for loan losses 4,099 5,652 (27.5) 12,434 23,177 (46.4)
Tax-equivalent NII after
provision for loan loss (1) 13,812 12,425 11.2 58,926 48,229 22.2
Investment Securities gains
(losses) 169 (14) - 218 (8) NM
Impairment losses on
securities - - - (2) (331) (99.4)
Non-interest income
(excluding securities gains/
losses) 7,707 7,568 1.8 27,300 27,929 (2.3)
Non-interest expense 15,589 16,485 (5.4) 62,764 63,463 (1.1)
Income taxes 1,640 904 81.4 6,665 3,005 121.8
Net Income 4,064 2,268 79.2 15,534 8,108 91.6
Dividends Declared on
Preferred Shares (462) (463) (0.2) (1,850) (1,850) -
Accretion on Preferred Shares (46) (43) 7.0 (177) (170) 4.1
Net Income Applicable to
Common Shares 3,556 1,762 101.8 13,507 6,088 121.9
Tax equivalent adjustment (1) 395 322 22.7 1,479 1,243 19.0
----------------------------- --- --- ---- ----- ----- ----
At Period End
Assets 2,068,190 2,035,517 1.6
Earning assets 1,898,152 1,867,733 1.6
Loans 1,487,076 1,519,503 (2.1)
Allowance for loan losses 33,254 41,080 (19.1)
Deposits 1,596,241 1,575,419 1.3
Stockholders' equity 278,127 240,331 15.7
-------------------- ------- ------- ----
Average Balances
Assets 2,067,881 2,063,965 0.2 2,058,370 2,054,808 0.2
Earning assets 1,861,186 1,844,206 0.9 1,848,154 1,836,322 0.6
Deposits and interest-bearing
liabilities 1,772,812 1,805,620 (1.8) 1,545,131 1,800,749 (14.2)
Loans 1,440,839 1,496,374 (3.7) 1,437,588 1,538,388 (6.6)
Deposits 1,594,938 1,601,516 (0.4) 1,590,128 1,590,194 (0.0)
Stockholders' equity 275,848 241,902 14.0 263,913 238,795 10.5
Stockholders' equity / assets 13.34% 11.72% 13.8 12.82% 11.62% 10.3
----------------------------- ----- ----- ---- ----- ----- ----
Per Common Share Data
Net Income
Basic $0.37 $0.22 68.2 $1.44 $0.75 92.0
Diluted 0.36 0.22 63.6 1.42 0.75 89.3
Dividends 0.05 - - 0.05 - -
Market Value:
High $15.39 $12.32 24.9 $15.51 $14.85 4.4
Low 13.00 9.94 30.8 11.89 8.53 39.4
Close 14.59 11.90 22.6 14.59 11.90 22.6
Common Book Value 24.74 25.00 (1.0) 24.74 25.00 (1.0)
Tangible Common Book Value 17.78 17.16 3.6 17.78 17.16 3.6
Shares outstanding, end of
period (000) 9,726 8,118 19.8 9,726 8,118 19.8
-------------------------- ----- ----- ---- ----- ----- ----
Performance Ratios (annualized)
Tax-equivalent net interest
margin (1) 3.83% 3.89% (1.5) 3.88% 3.89% (0.4)
Return on average assets 0.78% 0.44% 77.2 0.75% 0.39% 93.5
Return on average equity 5.85% 3.72% 57.1 5.89% 3.40% 73.1
Efficiency ratio (2) 60.85% 64.28% (5.3) 63.62% 63.89% (0.4)
Effective tax rate 28.75% 28.50% 0.9 30.02% 27.04% 11.0
Dividend payout ratio (basic) 13.51% 0.00% - 3.47% 0.00% -
----------------------------- ----- ---- --- ---- ---- ---
(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) Efficiency ratio = Non-interest expense divided by sum of tax-equivalent
net interest income plus non-interest income, excluding securities gains or
losses, net.
NM Percentage change not meaningful
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) 2011 2010 2011 2010
---------------------- ---- ---- ---- ----
Gain from sale of mortgage loans $1,653 $1,755 $5,607 $7,017
Mortgage loan servicing revenue
(expense):
Mortgage loan servicing revenue 874 856 3,403 3,119
Amortization of mortgage
servicing rights (820) (1,008) (2,169) (2,642)
Mortgage servicing rights
valuation adjustments 181 1,130 (404) 353
--- ----- ----
235 978 830 830
--- --- --- ---
Total revenue from sale and
servicing of mortgage loans $1,888 $2,733 $6,437 $7,847
====== ====== ====== ======
Yield Analysis
First Defiance Financial Corp.
Three Months Ended December 31,
(dollars in thousands)
----------------------
2011 2010
---- ----
Average Yield Average Yield
Balance Interest(1) Rate(2) Balance Interest(1) Rate(2)
Interest-earning assets:
Loans receivable $1,440,839 $19,123 5.27% $1,496,374 $21,559 5.72%
Securities 235,517 2,222 3.85% 161,638 1,786 4.45%
Interest Bearing Deposits 164,175 115 0.28% 164,822 105 0.25%
FHLB stock 20,655 205 3.94% 21,372 201 3.73%
------ --- ------ ---
Total interest-earning
assets 1,861,186 21,665 4.63% 1,844,206 23,651 5.09%
Non-interest-earning
assets 206,695 219,759
Total assets $2,067,881 $2,063,965
========== ==========
Deposits and Interest-bearing
liabilities:
Interest bearing deposits $1,348,424 $2,527 0.74% $1,376,081 $4,030 1.16%
FHLB advances and other 81,845 761 3.69% 116,889 1,086 3.69%
Other Borrowings 59,832 133 0.88% 50,992 126 0.98%
Subordinated debentures 36,197 333 3.65% 36,223 332 3.64%
------ --- ------ ---
Total interest-bearing
liabilities 1,526,298 3,754 0.98% 1,580,185 5,574 1.40%
Non-interest bearing
deposits 246,514 - - 225,435 - -
------- --- ------- ---
Total including non-
interest-bearing demand
deposits 1,772,812 3,754 0.84% 1,805,620 5,574 1.22%
Other non-interest-
bearing liabilities 19,221 16,443
------ ------
Total liabilities 1,792,033 1,822,063
Stockholders' equity 275,848 241,902
Total liabilities and
stockholders' equity $2,067,881 $2,063,965
========== ==========
Net interest income; interest rate
spread $17,911 3.65% $18,077 3.69%
======= ==== ======= ====
Net interest margin (3) 3.83% 3.89%
==== ====
Average interest-earning assets to
average interest bearing
liabilities 122% 117%
=== ===
Twelve Months Ended December 31,
--------------------------------
2011 2010
---- ----
Average Yield Average Yield
Balance Interest(1) Rate Balance Interest(1) Rate
Interest-earning assets:
Loans receivable $1,437,588 $78,773 5.49% $1,538,388 $88,775 5.77%
Securities 205,609 8,440 4.19% 154,648 7,151 4.71%
Interest Bearing Deposits 184,126 466 0.25% 121,911 303 0.25%
FHLB stock 20,831 867 4.17% 21,375 879 4.11%
------ --- ------ ---
Total interest-earning
assets 1,848,154 88,546 4.80% 1,836,322 97,108 5.29%
Non-interest-earning
assets 210,216 218,486
Total assets $2,058,370 $2,054,808
========== ==========
Deposits and Interest-bearing
liabilities:
Interest bearing deposits $1,358,785 $12,175 0.90% $1,389,330 $19,222 1.38%
FHLB advances and other 93,669 3,203 3.43% 127,281 4,711 3.70%
Other Borrowings 56,464 530 0.94% 47,046 455 0.97%
Subordinated debentures 36,213 1,278 3.54% 36,228 1,314 3.63%
------ ----- ------ -----
Total interest-bearing
liabilities 1,545,131 17,186 1.12% 1,599,885 25,702 1.61%
Non-interest bearing
deposits 231,343 - - 200,864 - -
------- --- ------- ---
Total including non-
interest-bearing demand
deposits 1,776,474 17,186 0.97% 1,800,749 25,702 1.43%
Other non-interest-
bearing liabilities 17,983 15,264
------ ------
Total liabilities 1,794,457 1,816,013
Stockholders' equity 263,913 238,795
Total liabilities and
stockholders' equity $2,058,370 $2,054,808
========== ==========
Net interest income; interest rate
spread $71,360 3.69% $71,406 3.68%
======= ==== ======= ====
Net interest margin (3) 3.88% 3.89%
==== ====
Average interest-earning assets to
average interest bearing
liabilities 120% 115%
=== ===
(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 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr
per share data) 2011 2011 2011 2011 2010
----------------------------- -------- -------- -------- -------- --------
Summary of Operations
Tax-equivalent interest
income (1) $21,665 $22,052 $22,337 $22,501 $23,651
Interest expense 3,754 4,019 4,457 4,956 5,574
Tax-equivalent net interest
income (1) 17,911 18,033 17,880 17,545 18,077
Provision for loan losses 4,099 3,097 2,405 2,833 5,652
Tax-equivalent NII after
provision for loan losses
(1) 13,812 14,936 15,475 14,712 12,425
Investment securities gains
(losses), including
impairment 169 - - 47 (14)
Non-interest income
(excluding securities gains/
losses) 7,707 6,857 6,838 5,898 7,568
Non-interest expense 15,589 15,462 15,086 16,626 16,485
Income taxes 1,640 1,884 2,113 1,028 904
Net income 4,064 4,061 4,750 2,660 2,268
Dividends Declared on
Preferred Shares (462) (463) (463) (462) (463)
Accretion on Preferred Shares (46) (45) (44) (43) (43)
Net Income (Loss) Applicable
to Common Shares 3,556 3,553 4,243 2,155 1,762
Tax equivalent adjustment (1) 395 386 364 343 322
----------------------------- --- --- --- --- ---
At Period End
Total assets $2,068,190 $2,058,357 $2,045,690 $2,061,952 $2,035,517
Earning assets 1,898,152 1,887,484 1,879,834 1,892,970 1,867,733
Loans 1,487,076 1,460,514 1,449,010 1,471,209 1,519,503
Allowance for loan losses 33,254 38,110 40,530 40,798 41,080
Deposits 1,596,241 1,589,980 1,573,500 1,592,046 1,575,419
Stockholders' equity 278,127 275,118 269,139 263,145 240,331
Stockholders' equity / assets 13.45% 13.37% 13.16% 12.76% 11.81%
Goodwill 61,525 61,568 57,556 57,556 57,556
-------- ------ ------ ------ ------ ------
Average Balances
Total assets $2,067,881 $2,056,111 $2,065,100 $2,044,387 $2,063,965
Earning assets 1,861,186 1,843,881 1,858,636 1,828,916 1,844,206
Deposits and interest-
bearing liabilities 1,772,812 1,762,663 1,781,746 1,788,677 1,805,620
Loans 1,440,839 1,419,987 1,431,792 1,457,736 1,496,374
Deposits 1,594,938 1,583,173 1,591,786 1,590,617 1,601,516
Stockholders' equity 275,848 271,736 266,544 241,525 241,902
Stockholders' equity / assets 13.34% 13.22% 12.91% 11.81% 11.72%
----------------------------- ----- ----- ----- ----- -----
Per Common Share Data
Net Income:
Basic $0.37 $0.37 $0.44 $0.25 $0.22
Diluted 0.36 0.36 0.43 0.25 0.22
Dividends 0.05 - - - -
Market Value:
High $15.39 $15.51 $15.00 $14.64 $12.32
Low 13.00 12.60 13.22 11.89 9.94
Close 14.59 13.14 14.69 14.34 11.90
Book Value 24.74 24.43 23.83 23.22 25.00
Shares outstanding, end of
period (in thousands) 9,726 9,726 9,724 9,724 8,118
-------------------------- ----- ----- ----- ----- -----
Performance Ratios (annualized)
Tax-equivalent net interest
margin (1) 3.83% 3.89% 3.86% 3.89% 3.89%
Return on average assets 0.78% 0.78% 0.92% 0.53% 0.44%
Return on average equity 5.85% 5.93% 7.15% 4.47% 3.72%
Efficiency ratio (2) 60.85% 62.12% 61.03% 70.92% 64.28%
Effective tax rate 28.75% 31.69% 30.79% 27.87% 28.50%
Common dividend payout ratio
(basic) 13.51% 0.00% 0.00% 0.00% 0.00%
---------------------------- ----- ---- ---- ---- ----
(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) Efficiency ratio = Non-interest expense divided by sum of tax-
equivalent net interest income plus non-interest income, excluding
securities gains, net.
Selected Quarterly Information
First Defiance Financial Corp.
(dollars in thousands, except 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr
per share data) 2011 2011 2011 2011 2010
----------------------------- -------- -------- -------- -------- --------
Loan Portfolio Composition
One to four family
residential real estate $203,401 $189,669 $213,034 $218,599 $205,938
Construction 31,552 35,203 23,893 24,437 30,340
Commercial real estate 775,992 766,459 735,212 746,899 767,012
Commercial 349,053 339,128 336,598 341,614 369,959
Consumer finance 18,887 19,701 20,384 20,862 22,848
Home equity and improvement 122,143 124,956 127,962 128,810 133,593
------- ------- ------- ------- -------
Total loans 1,501,028 1,475,116 1,457,083 1,481,221 1,529,690
Less:
Loans in process 13,243 13,709 7,257 9,160 9,267
Deferred loan origination
fees 709 893 816 852 920
Allowance for loan loss 33,254 38,110 40,530 40,798 41,080
Net Loans $1,453,822 $1,422,404 $1,408,480 $1,430,411 $1,478,423
========== ========== ========== ========== ==========
Allowance for loan loss activity
Beginning allowance 38,110 40,530 40,798 $41,080 $41,343
Provision for loan losses 4,099 3,097 2,405 2,833 5,652
Credit loss charge-offs:
One to four family
residential real estate 666 647 893 547 483
Commercial real estate 6,738 2,622 1,517 2,273 4,806
Commercial 1,423 2,533 107 335 388
Consumer finance 27 36 20 12 55
Home equity and improvement 251 290 310 201 347
--- --- --- --- ---
Total charge-offs 9,105 6,128 2,847 3,368 6,079
Total recoveries 150 611 174 253 164
--- --- --- --- ---
Net charge-offs (recoveries) 8,955 5,517 2,673 3,115 5,915
Ending allowance $33,254 $38,110 $40,530 $40,798 $41,080
======= ======= ======= ======= =======
Credit Quality
Non-accrual loans $39,328 $48,297 $34,528 $40,948 $41,040
Restructured loans, accruing 3,380 2,934 6,242 4,619 6,001
----- ----- ----- ----- -----
Total non-performing loans
(1) 42,708 51,231 40,770 45,567 47,041
Real estate owned (REO) 3,628 5,805 7,388 9,150 9,591
Total non-performing assets
(2) $46,336 $57,036 $48,158 $54,717 $56,632
======= ======= ======= ======= =======
Net charge-offs 8,955 5,517 2,673 3,115 5,915
Allowance for loan losses /
loans 2.24% 2.61% 2.80% 2.77% 2.70%
Allowance for loan losses /
non-performing assets 71.77% 66.82% 84.16% 74.56% 72.54%
Allowance for loan losses /
non-performing loans 77.86% 74.39% 99.41% 89.53% 87.33%
Non-performing assets /
loans plus REO 3.11% 3.89% 3.31% 3.70% 3.70%
Non-performing assets /
total assets 2.24% 2.77% 2.35% 2.65% 2.78%
Net charge-offs /average
loans (annualized) 2.49% 1.55% 0.75% 0.85% 1.58%
Deposit Balances
Non-interest-bearing demand
deposits $245,927 $239,594 $225,869 $219,374 $216,699
Interest-bearing demand
deposits and money market 609,057 607,965 578,867 581,622 555,434
Savings deposits 155,101 155,244 155,021 153,629 144,491
Retail time deposits less
than $100,000 428,222 429,686 444,431 453,997 465,774
Retail time deposits greater
than $100,000 147,298 143,477 146,655 150,859 151,258
National/Brokered time
deposits 10,636 14,014 22,657 32,565 41,763
Total deposits $1,596,241 $1,589,980 $1,573,500 $1,592,046 $1,575,419
========== ========== ========== ========== ==========
(1) Non-performing loans consist of non-accrual loans that are contractually past due
90 days or more and loans that are deemed impaired.
(2) 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.
(dollars in Total 30 to 89 Non Troubled
thousands) Balance Current days Accrual Debt
----------- -------- ------- past due Loans Restructuring
-------- ----- -------------
December 31,
2011
------------
One to four
family
residential
real estate $203,401 $195,752 $2,120 $3,890 $1,639
Construction 31,552 31,552 - - -
Commercial real
estate 775,992 742,868 3,441 28,150 1,533
Commercial 349,053 341,666 334 6,884 169
Consumer
finance 18,887 18,713 164 10 -
Home equity and
improvement 122,143 118,869 2,841 394 39
-------
Total loans $1,501,028 $1,449,420 $8,900 $39,328 $3,380
========== ========== ====== ======= ======
September 30,
2011
-------------
One to four
family
residential
real estate $189,669 $182,182 $2,287 $4,017 $1,183
Construction 35,203 35,143 - 60 -
Commercial real
estate 766,459 727,706 2,229 35,268 1,256
Commercial 339,128 330,117 360 8,478 173
Consumer
finance 19,701 19,511 170 20 -
Home equity and
improvement 124,956 121,965 2,215 454 322
-------
Total loans $1,475,116 $1,416,624 $7,261 $48,297 $2,934
========== ========== ====== ======= ======
December 31,
2010
------------
One to four
family
residential
real estate $205,938 $192,612 $2,911 $7,161 $3,254
Construction 30,340 30,276 - 64 -
Commercial real
estate 767,012 740,230 2,898 21,737 2,147
Commercial 369,959 356,145 1,982 11,547 285
Consumer
finance 22,848 22,551 283 14 -
Home equity and
improvement 133,593 129,720 3,041 517 315
-------
Total loans $1,529,690 $1,471,534 $11,115 $41,040 $6,001
========== ========== ======= ======= ======
SOURCE First Defiance Financial Corp.
