First Defiance Financial Corp. (NASDAQ: FDEF) announced today record net income for the fiscal year ended December 31, 2014 totaling $23.7 million, or $2.38 per diluted common share, compared to $22.2 million or $2.19 per diluted common share for the year ended December 31, 2013. For the fourth quarter 2014, First Defiance earned $5.8 million, or $0.59 per diluted common share compared to $5.1 million; or $0.50 per diluted common share for the fourth quarter of 2013.

“Our strong fourth quarter results capped another year of record earnings for First Defiance,” said Donald P. Hileman, President and CEO of First Defiance Financial Corp. “We were very pleased to see our business expand, profitability improve and shareholder returns grow in 2014 and look forward to building upon this success in 2015.”

Net Interest Income up from fourth quarter 2013

Net interest income of $18.1 million in the fourth quarter of 2014 was up from $17.0 million in the fourth quarter of 2013. The net interest margin increased to 3.76% in the fourth quarter of 2014 compared with 3.61% in the fourth quarter of 2013 and 3.73% in the third quarter of 2014. Yield on interest earning assets increased by 12 basis points, to 4.09% in the fourth quarter of 2014 from 3.97% in the fourth quarter of 2013. The cost of interest-bearing liabilities decreased by 4 basis points in the fourth quarter of 2014 to 0.42% from 0.46% in the fourth quarter of 2013.

“An improved earning asset mix led to continued expansion of our net interest margin this quarter. Strong loan growth over the second half of 2014 has enabled our margin to grow to 3.76% this quarter from 3.61% a year ago,” said Hileman. “Our net interest income increased over $1 million this quarter from the same quarter last year.”

Non-Interest Income up from fourth quarter 2013

First Defiance’s non-interest income for the fourth quarter of 2014 was $7.3 million compared with $6.5 million in the fourth quarter of 2013. The fourth quarter of 2013 included $337,000 of securities losses recognized on CDOs. Mortgage banking income was $1.3 million in the fourth quarter of 2014, even with the fourth quarter of 2013. Gains from the sale of mortgage loans decreased in the fourth quarter of 2014 to $734,000 from $756,000 in the fourth quarter of 2013. Mortgage loan servicing revenue was $900,000 in the fourth quarter of 2014, down slightly from $918,000 in the fourth quarter of 2013. The Company had a positive change in the valuation adjustment in mortgage servicing rights (“MSR”) of $11,000 in the fourth quarter of 2014 compared with a negative adjustment of $4,000 in the fourth quarter of 2013.

Service fees and other charges were $2.8 million in the fourth quarter of 2014, up from $2.5 million in the fourth quarter of 2013 due to the benefits of new fee structures and product redesigns implemented in the third quarter this year.

Income from the sale of insurance and investment products was $2.2 million in the fourth quarter of 2014, up from $2.1 million in the fourth quarter of 2013.

“Our fourth quarter fee income also reflects a significant increase over the prior year with insurance, bank services, and wealth management all posting healthy revenue gains,” stated Hileman. “Growing our fee income businesses remains a strategic emphasis for our company.”

Non-Interest Expenses up from fourth quarter 2013

Total non-interest expense was $17.0 million in the fourth quarter of 2014, an increase from $16.0 million in the fourth quarter of 2013.

Compensation and benefits increased to $9.1 million in the fourth quarter of 2014 compared to $8.3 million in the fourth quarter of 2013. The increase in compensation and benefits is mainly related to higher medical and life insurance costs and merit increases from a year ago. Data processing cost increased to $1.5 million in the fourth quarter of 2014 from $1.3 million in the fourth quarter of 2013. Other non-interest expense was $3.8 million in the fourth quarter of 2014, an increase from $3.5 million in the fourth quarter of 2013.

Credit Quality

Non-performing loans totaled $24.1 million at December 31, 2014, a decrease from $27.8 million at December 31, 2013. In addition, First Defiance had $6.2 million of real estate owned at December 31, 2014 compared to $5.9 million at December 31, 2013. Accruing troubled debt restructured loans were $24.7 million at December 31, 2014 compared with $27.6 million at December 31, 2013. For the fourth quarter of 2014, First Defiance recorded $37,000 of net recoveries versus net charge-offs of $1.5 million in the fourth quarter of 2013. The allowance for loan loss as a percentage of total loans was 1.50% at December 31, 2014 compared with 1.58% at December 31, 2013.

The fourth quarter results include expense for provision for loan losses of $162,000, compared with $475,000 for the same period in 2013.

“Credit quality remains much improved with non-performing assets down 10.1 percent from the prior year,” said Hileman. “Lower provision expense has strengthened our earnings, and our focus on further reductions to non-performing assets will continue in 2015.”

Annual Results

For the full year ended December 31, 2014, net income was $23.7 million, up 6.8% from $22.2 million in 2013. Net interest income for 2014 totaled $69.7 million, compared with $67.6 million for 2013. Average interest-earning assets increased to $1.95 billion for 2014, compared to $1.85 billion in 2013. Net interest margin for 2014 was 3.68%, down 8 basis points from the 3.76% margin for 2013.

The provision for loan losses for 2014 was $1.1 million, compared to $1.8 million in 2013.

Non-interest income for the year 2014 was $31.6 million, compared to $30.8 million in 2013. Service fees and other charges were $10.3 million for 2014, up from $10.0 million in 2013. Mortgage banking income decreased to $5.6 million for 2014, compared with $8.4 million in 2013. Insurance and investment sales revenues increased to $9.9 million for 2014, compared with $9.6 million for 2013. Non-interest income for 2014 included $932,000 of net securities gains compared to $240,000 of net securities losses for 2013. In addition, 2014 included a $903,000 tax-free benefit from a bank-owned life insurance policy and a $498,000 tax-free gain recognized through the company’s deferred compensation plan trust.

Non-interest expense increased to $66.8 million for 2014 from $65.1 million in 2013. Compensation and benefits expense was $35.5 million for 2014 compared with $34.3 million for 2013 primarily due to merit increases and higher medical and life insurance costs offset by lower incentive expenses resulting from management changes. Data processing expense increased to $5.9 million in 2014 from $5.1 million in 2013 mainly due to increased electronic transaction volumes and product delivery enhancements. Other expense was $14.4 million in 2014 up from $13.5 million in 2013 primarily due to the $786,000 cost recorded in the first quarter for terminating a merger agreement.

Total Assets at $2.18 Billion

Total assets at December 31, 2014 were $2.18 billion, compared to $2.14 billion at December 31, 2013. Net loans receivable (excluding loans held for sale) were $1.62 billion at December 31, 2014, compared to $1.56 billion at December 31, 2013. Total cash and cash equivalents were $112.9 million at December 31, 2014 compared with $179.3 million at December 31, 2013. Also, at December 31, 2014, goodwill and other intangible assets totaled $63.9 million compared to $65.0 million at December 31, 2013.

Total deposits at December 31, 2014 were $1.76 billion compared with $1.74 billion at December 31, 2013. Non-interest bearing deposits at December 31, 2014 were $379.6 million compared to $348.9 million at December 31, 2013. Total stockholders’ equity was $279.0 million at December 31, 2014 compared to $272.1 million at December 31, 2013.

Dividend to be paid February 27

The Board of Directors declared a quarterly cash dividend of $0.175 per common share payable February 27, 2015 to shareholders of record at the close of business on February 20, 2015. The dividend represents an annual dividend of 2.10% percent based on the First Defiance common stock closing price on January 16, 2015. First Defiance has approximately 9,209,177 common shares outstanding.

Conference Call

First Defiance Financial Corp. will host a conference call at 11:00 a.m. (ET) on Tuesday, January 20, 2015 to discuss the earnings results and business trends. The conference call may be accessed by calling 1-877-444-1726. In addition, a live webcast may be accessed at http://services.choruscall.com/links/fdef150120.html.

Replay of the Internet Webcast will be available at www.fdef.com until January 20, 2016.

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 43 ATM locations in northwest Ohio, southeast Michigan and northeast Indiana and a loan production office in Columbus, Ohio. First Insurance Group is a full-service insurance agency with five 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, 2013. 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 (Unaudited)    
First Defiance Financial Corp.
 
December 31, December 31,
(in thousands)   2014   2013
 
Assets
Cash and cash equivalents
Cash and amounts due from depository institutions $ 41,936 $ 36,318
Interest-bearing deposits   71,000     143,000  
112,936

 

179,318
Securities

 

Available-for sale, carried at fair value 239,321 198,170
Held-to-maturity, carried at amortized cost   313     387  
239,634 198,557
 
Loans 1,646,786 1,580,448
Allowance for loan losses   (24,766 )   (24,950 )
Loans, net 1,622,020 1,555,498
Loans held for sale 4,535 9,120
Mortgage servicing rights 9,012 9,106
Accrued interest receivable 6,037 5,778
Federal Home Loan Bank stock 13,802 19,350
Bank Owned Life Insurance 47,013 42,715
Office properties and equipment 40,496 38,597
Real estate and other assets held for sale 6,181 5,859
Goodwill 61,525 61,525
Core deposit and other intangibles 2,395 3,497
Deferred taxes - 565
Other assets   13,366     7,663  
Total Assets $ 2,178,952   $ 2,137,148  
 
Liabilities and Stockholders’ Equity
Non-interest-bearing deposits $ 379,552 $ 348,943
Interest-bearing deposits   1,381,261     1,386,849  
Total deposits 1,760,813 1,735,792
Advances from Federal Home Loan Bank 21,544 22,520
Notes payable and other interest-bearing liabilities 54,759 51,919
Subordinated debentures 36,083 36,083
Advance payments by borrowers for tax and insurance 2,309 1,519
Deferred Taxes 1,176 -
Other liabilities   23,314     17,168  
Total Liabilities 1,899,998 1,865,001
Stockholders’ Equity
Preferred stock - -
Common stock, net 127 127
Common stock warrant 878 878
Additional paid-in-capital 136,266 136,403
Accumulated other comprehensive income 4,114 545
Retained earnings 200,049 182,290
Treasury stock, at cost   (62,480 )   (48,096 )
Total stockholders’ equity   278,954     272,147  
Total Liabilities and Stockholders’ Equity $ 2,178,952   $ 2,137,148  
 
                 
Consolidated Statements of Income (Unaudited)        
First Defiance Financial Corp.
Three Months Ended Twelve Months Ended

December 31,

December 31,

(in thousands, except per share amounts)   2014   2013 2014   2013
Interest Income:
Loans $ 17,788 $ 17,037 $ 68,682 $ 68,077
Investment securities 1,719 1,397 6,575 5,596
Interest-bearing deposits 66 108 349 282
FHLB stock dividends   140   195     642   826  
Total interest income 19,713 18,737 76,248 74,781
Interest Expense:

 

Deposits 1,293 1,399 5,283 5,913
FHLB advances and other 131 136 528 434
Subordinated debentures 148 149 587 601
Notes Payable   40   44     161   222  
Total interest expense   1,612   1,728     6,559   7,170  
Net interest income 18,101 17,009 69,689 67,611
Provision for loan losses   162   475     1,117   1,824  
Net interest income after provision for loan losses 17,939 16,534 68,572 65,787
Non-interest Income:
Service fees and other charges 2,766 2,506 10,258 10,045
Mortgage banking income 1,270 1,324 5,602 8,443
Gain on sale of non-mortgage loans 102 49 181 101
Gain on sale of securities 1 - 932 97
Impairment on securities - (337 ) - (337 )
Insurance commissions 2,219 2,089 9,859 9,627
Trust income 345 274 1,240 969
Income from Bank Owned Life Insurance 218 211 1,802 883
Other non-interest income   421   415     1,767   950  
Total Non-interest Income 7,342 6,531 31,641 30,778
Non-interest Expense:
Compensation and benefits 9,075 8,310 35,543 34,301
Occupancy 1,778 1,733 6,683 6,970
FDIC insurance premium 332 359 1,419 1,616
Financial institutions tax 239 486 1,762 2,323
Data processing 1,523 1,313 5,856 5,125
Amortization of intangibles 269 296 1,102 1,241
Other non-interest expense   3,753   3,490     14,393   13,476  
Total Non-interest Expense   16,969   15,987     66,758   65,052  
Income before income taxes 8,312 7,078 33,455 31,513
Income taxes   2,508   1,991     9,714     9,278  
Net Income $ 5,804 $ 5,087   $ 23,741   $ 22,235  
 
 
Earnings per common share:
Basic $ 0.62 $ 0.52 $ 2.50 $ 2.28
Diluted $ 0.59 $ 0.50 $ 2.38 $ 2.19
 
Average Shares Outstanding:
Basic 9,316 9,766 9,511 9,764
Diluted 9,801 10,198 9,975 10,171
 
                         
Financial Summary and Comparison (Unaudited)
First Defiance Financial Corp.
   
Three Months Ended Twelve Months Ended

December 31,

December 31,

(dollars in thousands, except per share data)   2014   2013   % change   2014   2013   % change
Summary of Operations        
 
Tax-equivalent interest income (1) $ 20,174 $ 19,143 5.4 % $ 78,046 $ 76,413 2.1 %
Interest expense 1,612 1,728 (6.7 ) 6,559 7,170 (8.5 )
Tax-equivalent net interest income (1) 18,562 17,415 6.6 71,487 69,243 3.2
Provision for loan losses 162 475 (65.9 ) 1,117 1,824 (38.8 )
Tax-equivalent NII after provision for loan loss (1) 18,400 16,940 8.6 70,370 67,419 4.4
Investment Securities gains 1 - NM 932 97 NM
Non-interest income (excluding securities gains/losses) 7,341 6,810 7.8 30,709 30,810 (0.3 )
Non-interest expense 16,969 15,929 6.5 66,758 64,844 3.0
Income taxes 2,508 1,991 26.0 9,714 9,278 4.7
Net Income 5,804 5,087 14.1 23,741 22,235 6.8
Tax equivalent adjustment (1)     461       406     13.5       1,798       1,632     10.2  
At Period End
Assets 2,178,952 2,137,148 2.0
Earning assets 1,975,757 1,950,475 1.3
Loans 1,646,786 1,580,448 4.2
Allowance for loan losses 24,766 24,950 (0.7 )
Deposits 1,760,813 1,735,792 1.4
Stockholders’ equity     278,954       272,147     2.5              
Average Balances
Assets 2,184,792 2,124,109 2.9 2,162,468 2,052,250 5.4
Earning assets 1,964,074 1,915,508 2.5 1,947,078 1,845,462 5.5
Loans 1,615,657 1,543,057 4.7 1,574,753 1,528,176 3.0
Deposits and interest-bearing liabilities 1,879,918 1,833,291 2.5 1,862,834 1,766,579 5.4
Deposits 1,764,908 1,719,319 2.7 1,750,184 1,661,895 5.3
Stockholders’ equity 278,944 270,856 3.0 276,537 265,065 4.3
Stockholders’ equity / assets     12.77 %     12.75 %   0.1       12.79 %     12.92 %   (1.0 )
Per Common Share Data
Net Income
Basic $ 0.62 $ 0.52 19.2 $ 2.50 $ 2.28 9.6
Diluted 0.59 0.50 18.0 2.38 2.19 8.7
Dividends 0.175 0.10 75.0 0.625 0.40 56.3
Market Value:
High $ 35.70 $ 27.25 31.0 $ 35.70 $ 28.46 25.4
Low 26.95 23.31 15.6 24.24 18.42 31.6
Close 34.06 25.97 31.2 34.06 23.39 45.6
Common Book Value 30.11 27.91 7.9 30.11 27.91 7.9
Tangible Common Book Value 23.19 21.22 9.3 23.19 21.22 9.3
Shares outstanding, end of period (000)     9,235       9,720     (5.0 )     9,235       9,720     (5.0 )
Performance Ratios (annualized)
Tax-equivalent net interest margin (1) 3.76 % 3.61 % 4.2 3.68 % 3.76 % (2.1 )
Return on average assets 1.05 % 0.95 % 10.9 1.10 % 1.08 % 1.3
Return on average equity 8.25 % 7.45 % 10.8 8.59 % 8.39 % 2.3
Efficiency ratio (2) 65.51 % 65.75 % (0.4 ) 65.32 % 64.81 % 0.8
Effective tax rate 30.17 % 28.13 % 7.3 29.04 % 29.44 % (1.4 )
Dividend payout ratio (basic)     28.23 %     19.23 %   46.8       25.00 %     17.54 %   42.5  
 

(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 Ended Twelve Months Ended

December 31,

December 31,

(dollars in thousands)   2014   2013   2014   2013
 
Gain from sale of mortgage loans $ 734 $ 756 $ 3,335 $ 5,716
Mortgage loan servicing revenue (expense):
Mortgage loan servicing revenue 900 918 3,552 3,564
Amortization of mortgage servicing rights (375 ) (346 ) (1,401 ) (2,098 )
Mortgage servicing rights valuation adjustments   11       (4 )   116       1,261  
  536       568     2,267       2,727  
Total revenue from sale and servicing of mortgage loans $ 1,270     $ 1,324   $ 5,602     $ 8,443  
 
                         
Yield Analysis            
First Defiance Financial Corp.
Three Months Ended December 31,
(dollars in thousands)
2014 2013
Average Yield Average Yield
Balance Interest(1) Rate(2) Balance Interest(1) Rate(2)
Interest-earning assets:
Loans receivable $ 1,615,657 $ 17,833 4.38 % $ 1,543,057 $ 17,055 4.39 %
Securities 238,553 2,135 3.65 % 187,230 1,785 3.82 %
Interest Bearing Deposits 96,062 66 0.27 % 165,871 108 0.26 %
FHLB stock   13,802   140 4.02 %   19,350   195 4.00 %
Total interest-earning assets 1,964,074 20,174 4.09 % 1,915,508 19,143 3.97 %
Non-interest-earning assets   220,718   208,601
Total assets $ 2,184,792 $ 2,124,109
Deposits and Interest-bearing liabilities:
Interest bearing deposits $ 1,393,584 $ 1,293 0.37 % $ 1,382,526 $ 1,399 0.40 %
FHLB advances and other 21,628 131 2.40 % 22,604 136 2.39 %
Subordinated debentures 36,128 148 1.63 % 36,129 149 1.64 %
Notes payable   57,254   40 0.28 %   55,239   44 0.32 %
Total interest-bearing liabilities 1,508,594 1,612 0.42 % 1,496,498 1,728 0.46 %
Non-interest bearing deposits   371,324   - -   336,793   - -
Total including non-interest-bearing demand deposits 1,879,918 1,612 0.34 % 1,833,291 1,728 0.37 %
Other non-interest-bearing liabilities   25,930   19,962
Total liabilities 1,905,848 1,853,253
Stockholders' equity   278,944   270,856
Total liabilities and stockholders' equity $ 2,184,792   $ 2,124,109  
Net interest income; interest rate spread $ 18,562 3.67 % $ 17,415 3.51 %
Net interest margin (3) 3.76 % 3.61 %
Average interest-earning assets to average interest bearing liabilities 130 % 128 %
 
Twelve Months Ended December 31,
2014 2013
Average Yield Average Yield
Balance Interest(1) Rate Balance Interest(1) Rate
Interest-earning assets:
Loans receivable $ 1,574,753 $ 68,828 4.37 % $ 1,528,176 $ 68,147 4.46 %
Securities 223,534 8,227 3.79 % 191,039 7,158 3.78 %
Interest Bearing Deposits 134,114 349 0.26 % 106,742 282 0.26 %
FHLB stock   14,677   642 4.37 %   19,505   826 4.23 %
Total interest-earning assets 1,947,078 78,046 4.01 % 1,845,462 76,413 4.14 %
Non-interest-earning assets   215,390   206,788
Total assets $ 2,162,468 $ 2,052,250
Deposits and Interest-bearing liabilities:
Interest bearing deposits $ 1,399,507 $ 5,283 0.38 % $ 1,353,304 $ 5,913 0.44 %
FHLB advances and other 21,995 528 2.40 % 17,709 434 2.45 %
Subordinated debentures 36,131 587 1.62 % 36,133 601 1.66 %
Notes payable   54,524   161 0.30 %   50,842   222 0.44 %
Total interest-bearing liabilities 1,512,157 6,559 0.43 % 1,457,988 7,170 0.49 %
Non-interest bearing deposits   350,677   - -   308,591   - -
Total including non-interest-bearing demand deposits 1,862,834 6,559 0.35 % 1,766,579 7,170 0.41 %
Other non-interest-bearing liabilities   23,097   20,606
Total liabilities 1,885,931 1,787,185
Stockholders' equity   276,537   165,065
Total liabilities and stockholders' equity $ 2,162,468   $ 2,052,250  
Net interest income; interest rate spread $ 71,487 3.57 % $ 69,243 3.65 %
Net interest margin (3) 3.68 % 3.76 %
Average interest-earning assets to average interest bearing liabilities 129 % 127 %
 

(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 2014   3rd Qtr 2014   2nd Qtr 2014   1st Qtr 2014   4th Qtr 2013
Summary of Operations
Tax-equivalent interest income (1) $ 20,174 $ 19,751 $ 19,221 $ 18,900 $ 19,143
Interest expense 1,612 1,623 1,645 1,678 1,728
Tax-equivalent net interest income (1) 18,562 18,128 17,576 17,222 17,415
Provision for loan losses 162 406 446 103 475
Tax-equivalent NII after provision for loan losses (1) 18,400 17,722 17,130 17,119 16,940
Investment securities gains, net of impairment 1 460 471 - (337 )
Non-interest income (excluding securities gains/losses) 7,341 8,896 7,146 7,326 6,869
Non-interest expense 16,969 16,771 16,357 16,661 15,987
Income taxes 2,508 2,773 2,254 2,179 1,991
Net income 5,804 7,069 5,689 5,179 5,087
Tax equivalent adjustment (1)     461       465       447       426       406  
At Period End
Total assets $ 2,178,952 $ 2,151,079 $ 2,151,490 $ 2,163,659 $ 2,137,148
Earning assets 1,975,757 1,954,496 1,949,729 1,965,225 1,950,475
Loans 1,646,786 1,636,266 1,581,984 1,563,953 1,580,448
Allowance for loan losses 24,766 24,567 24,627 24,783 24,950
Deposits 1,760,813 1,730,645 1,741,812 1,760,617 1,735,792
Stockholders’ equity 278,954 278,233 276,449 274,877 272,147
Stockholders’ equity / assets 12.80 % 12.93 % 12.85 % 12.70 % 12.73 %
Goodwill     61,525       61,525       61,525       61,525       61,525  
Average Balances
Total assets $ 2,184,792 $ 2,153,226 $ 2,165,486 $ 2,146,369 $ 2,124,109
Earning assets 1,964,074 1,934,651 1,952,440 1,937,145 1,915,508
Loans 1,615,657 1,586,652 1,551,799 1,544,902 1,543,057
Deposits and interest-bearing liabilities 1,879,918 1,853,271 1,865,824 1,852,322 1,833,291
Deposits 1,764,908 1,738,494 1,756,098 1,741,237 1,719,319
Stockholders’ equity 278,944 276,968 276,490 273,745 270,856
Stockholders’ equity / assets     12.77 %     12.86 %     12.77 %     12.75 %     12.75 %
Per Common Share Data
Net Income:
Basic $ 0.62 $ 0.75 $ 0.59 $ 0.53 $ 0.52
Diluted 0.59 0.71 0.57 0.51 0.50
Dividends 0.18 0.15 0.15 0.15 0.10
Market Value:
High $ 35.70 $ 29.00 $ 29.00 $ 28.23 $ 27.25
Low 26.95 26.99 26.50 24.24 23.31
Close 34.06 27.01 28.70 27.12 25.97
Common Book Value 30.11 29.60 28.96 28.38 27.91
Shares outstanding, end of period (in thousands)     9,235       9,371       9,515       9,653       9,720  
Performance Ratios (annualized)
Tax-equivalent net interest margin (1) 3.76 % 3.73 % 3.62 % 3.61 % 3.61 %
Return on average assets 1.05 % 1.30 % 1.05 % 0.98 % 0.95 %
Return on average equity 8.25 % 10.13 % 8.25 % 7.67 % 7.45 %
Efficiency ratio (2) 65.51 % 62.06 % 66.16 % 67.87 % 65.75 %
Effective tax rate 30.17 % 28.18 % 28.38 % 29.61 % 28.13 %
Common dividend payout ratio (basic)     28.23 %     20.00 %     25.42 %     28.30 %     19.23 %
 

(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 per share data)   4th Qtr 2014   3rd Qtr 2014   2nd Qtr 2014   1st Qtr 2014   4th Qtr 2013
Loan Portfolio Composition
One to four family residential real estate $ 206,437 $ 209,135 $ 199,886 $ 196,940 $ 195,752
Construction 112,385 116,809 108,478 82,049 86,058
Commercial real estate 840,488 834,443 801,923 809,071 819,618
Commercial 399,730 392,465 390,055 380,144 388,236
Consumer finance 15,466 16,616 15,800 16,346 16,902
Home equity and improvement   111,813       111,151       108,460       106,632       106,930  
Total loans 1,686,319 1,680,619 1,624,602 1,591,182 1,613,496
Less:
Loans in process 38,653 43,548 41,874 26,487 32,290
Deferred loan origination fees 880 805 744 742 758
Allowance for loan loss   24,766       24,567       24,627       24,783       24,950  
Net Loans $ 1,622,020     $ 1,611,699     $ 1,557,357     $ 1,539,170     $ 1,555,498  
                     
Allowance for loan loss activity
Beginning allowance $ 24,567 $ 24,627 $ 24,783 $ 24,950 $ 25,964
Provision for loan losses 162 406 446 103 475
Credit loss charge-offs:
One to four family residential real estate 61 95 42 228 175
Commercial real estate 505 246 39 228 1,097
Commercial 212 1,272 973 525 670
Consumer finance 1 16 12 11 7
Home equity and improvement   87       42       80       184       144  
Total charge-offs 866 1,671 1,146 1,176 2,093
Total recoveries   903       1,205       544       906       604  
Net charge-offs (recoveries)   (37 )     466       602       270       1,489  
Ending allowance $ 24,766     $ 24,567     $ 24,627     $ 24,783     $ 24,950  
                     
Credit Quality
Total non-performing loans (1) $ 24,130 $ 22,525 $ 24,863 $ 26,774 $ 27,847
Real estate owned (REO)   6,181       5,326       5,554       6,028       5,859  
Total non-performing assets (2) $ 30,311     $ 27,851     $ 30,417     $ 32,802     $ 33,706  
Net charge-offs (recoveries) (37 ) 466 602 270 1,489
 
Restructured loans, accruing (3) 24,686 26,579 26,975 26,654 27,630
 
Allowance for loan losses / loans 1.50 % 1.50 % 1.56 % 1.58 % 1.58 %
Allowance for loan losses / non-performing assets 81.71 % 88.21 % 80.96 % 75.55 % 74.02 %
Allowance for loan losses / non-performing loans 102.64 % 109.07 % 99.05 % 92.56 % 89.60 %
Non-performing assets / loans plus REO 1.83 % 1.70 % 1.92 % 2.09 % 2.12 %
Non-performing assets / total assets 1.39 % 1.29 % 1.41 % 1.52 % 1.58 %
Net charge-offs / average loans (annualized) -0.01 % 0.12 % 0.16 % 0.07 % 0.39 %
                     
Deposit Balances
Non-interest-bearing demand deposits $ 379,552 $ 340,575 $ 355,268 $ 338,412 $ 348,943
Interest-bearing demand deposits and money market 727,729 739,292 717,506 740,783 715,939
Savings deposits 203,673 197,464 200,626 199,361 185,121
Retail time deposits less than $100,000 286,904 289,326 299,288 309,758 313,335
Retail time deposits greater than $100,000   162,955       163,988       169,124       172,303       172,454  
Total deposits $ 1,760,813     $ 1,730,645     $ 1,741,812     $ 1,760,617     $ 1,735,792  
 

(1)

 

Non-performing loans consist of non-accrual loans.

(2)

Non-performing assets are non-performing loans plus real estate and other assets acquired by foreclosure or deed-in-lieu thereof.

(3)

Accruing restructured loans are loans with known credit problems that are not contractually past due and therefore are not included in non-performing loans.

 
                 
Loan Delinquency Information        
First Defiance Financial Corp.
 
 
(dollars in thousands)   Total Balance   Current  

30 to 89 days
past due

  

Non Accrual
Loans

 
December 31, 2014                
One to four family residential real estate $ 206,437 $ 201,931 $ 1,174 $ 3,332
Construction 112,385 112,385 - -
Commercial real estate 840,488 824,770 544 15,174
Commercial 399,730 394,671 66 4,993
Consumer finance 15,466 15,330 124 12
Home equity and improvement   111,813     109,993     1,201     619
Total loans $ 1,686,319   $ 1,659,080   $ 3,109   $ 24,130
 
September 30, 2014                
One to four family residential real estate $ 209,135 $ 205,428 $ 654 $ 3,053
Construction 116,809 116,809 - -
Commercial real estate 834,443 820,502 68 13,873
Commercial 392,465 386,266 669 5,530
Consumer finance 16,616 16,524 92 -
Home equity and improvement   111,151     109,937     1,145     69
Total loans $ 1,680,619   $ 1,655,466   $ 2,628   $ 22,525
 
December 31, 2013                
One to four family residential real estate $ 195,752 $ 190,854 $ 1,625 $ 3,273
Construction 86,058 86,058 - -
Commercial real estate 819,618 803,218 566 15,834
Commercial 388,236 379,889 20 8,327
Consumer finance 16,902 16,771 131 -
Home equity and improvement   106,930     105,211     1,306     413
Total loans $ 1,613,496   $ 1,582,001   $ 3,648   $ 27,847