- Net Income of $5.1 million for 2013
fourth quarter compared to $5.2 million in the fourth quarter of
2012
- Fourth quarter 2013 includes
$219,000 after tax loss on CDO securities
- Loan growth $19.2 million during the
quarter
- Deposit growth $77.3 million during
the quarter
- Non-Performing loans down 15% from
prior year
- Net Interest Margin of 3.61% , down
from 3.92% for the fourth quarter of 2012
First Defiance Financial Corp. (NASDAQ: FDEF) announced today
record net income for the fiscal year ended December 31, 2013
totaled $22.2 million, or $2.19 per diluted common share, compared
to $18.7 million or $1.81 per diluted common share for the year
ended December 31, 2012. For the fourth quarter 2013, First
Defiance earned $5.1 million, or $0.50 per diluted common share
compared to $5.2 million; or $0.52 per diluted common share for the
fourth quarter of 2012.
“The record earnings achieved in 2013 reflects a very successful
year for First Defiance,” said Donald P. Hileman, President and CEO
of First Defiance Financial Corp. “Despite the challenges of an
often uncertain economy, our financial performance was
strengthened, and our core profitability was enhanced particularly
by improved credit quality.”
The fourth quarter 2013 results were negatively impacted by a
$219,000 after tax loss, or $0.02 per diluted common share, as a
result of $337,000 in other-than-temporary impairment losses
recognized on $1.9 million of collateralized debt obligations
(CDOs). The CDO securities were among those considered disallowed
under the revised final “Volcker Rule” of the Dodd-Frank Act which
requires the Company to liquidate these securities.
In the fourth quarter of 2012, the Company executed a balance
sheet restructuring strategy taking an after tax loss of
approximately $260,000 through selling $60 million in securities
for a gain of $1.6 million and paying off $62 million in FHLB
advances with a prepayment penalty of $2.0 million.
Credit Quality
Non-performing loans totaled $27.8 million at December 31, 2013,
a decrease from $32.6 million at December 31, 2012. In addition,
First Defiance had $5.9 million of real estate owned at December
31, 2013 compared to $3.8 million at December 31, 2012. Accruing
troubled debt restructured loans were $27.6 million at December 31,
2013 compared with $28.2 million at December 31, 2012. For the
fourth quarter of 2013, First Defiance recorded net charge-offs of
$1.5 million, down from $2.2 million in the fourth quarter of 2012
and up from $782,000 in the third quarter of 2013. The allowance
for loan loss as a percentage of total loans was 1.58% at December
31, 2013 compared with 1.75% at December 31, 2012.
The fourth quarter results include expense for provision for
loan losses of $475,000, compared with $2.6 million for the same
period in 2012 and $476,000 in the third quarter of 2013.
“Non-performing assets declined during the quarter and are now
at their lowest levels in over five years,” said Hileman. “Our
improved credit quality resulted in lower provision expense and has
been a key factor in our stronger earnings.”
Net Interest Income
Net interest income of $17.0 million in the fourth quarter of
2013 was down from $17.4 million in the fourth quarter of 2012. The
net interest margin decreased to 3.61% in the fourth quarter of
2013 compared with 3.92% in the fourth quarter of 2012 and 3.84% in
the third quarter of 2013. Yield on interest earning assets
declined by 43 basis points, to 3.97% in the fourth quarter of 2013
from 4.40% in the fourth quarter of 2012. The cost of
interest-bearing liabilities decreased by 14 basis points in the
fourth quarter of 2013 to 0.46% from 0.60% in the fourth quarter of
2012.
“Our net interest income remained solid during the quarter, down
just slightly from the previous quarter,” said Hileman. “Strong
deposit growth during the quarter elevated our liquidity which led
to some tightening in the net interest margin.”
Non-Interest Income
First Defiance’s non-interest income for the fourth quarter of
2013 was $6.5 million compared with $10.2 million in the fourth
quarter of 2012. The fourth quarter of 2013 included $337,000 of
securities losses realized on CDOs, while last year included $1.6
million in gains on the sale of investment securities from an
executed balance sheet restructure strategy. In addition, mortgage
banking income decreased to $1.3 million in the fourth quarter of
2013, down from $2.7 million in the fourth quarter of 2012. Gains
from the sale of mortgage loans decreased in the fourth quarter of
2013 to $756,000 from $2.7 million in the fourth quarter of 2012.
Mortgage loan servicing revenue was $918,000 in the fourth quarter
of 2013, up from $888,000 in the fourth quarter of 2012. The
Company had a negative change in the valuation adjustment in
mortgage servicing assets (“MSR”) of only $4,000 in the fourth
quarter of 2013 compared with a positive adjustment of $96,000 in
the fourth quarter of 2012.
Service fees and other charges were $2.5 million in the fourth
quarter of 2013, down from $2.6 million in the fourth quarter of
2012.
Income from the sale of insurance and investment products was
$2.1 million in the fourth quarter of 2013, up from $2.0 million in
the fourth quarter of 2012.
“Our fee income business units contributed significantly to our
overall profitability this quarter while mortgage banking revenues
remained well below the prior year’s level due to the reduction in
refinance activity” stated Hileman.
Non-Interest Expenses
Total non-interest expense was $15.9 million in the fourth
quarter of 2013, a decrease from $17.5 million in the fourth
quarter of 2012. The fourth quarter last year included $2.0 million
of prepayment fees associated with the repayment of FHLB debt
resulting from the executed balance sheet restructuring
strategy.
Compensation and benefits increased to $8.3 million in the
fourth quarter of 2013 compared to $7.8 million in the fourth
quarter of 2012. The increase in compensation and benefits is
mainly related to higher incentive compensation and merit increases
from a year ago. FDIC insurance costs decreased to $359,000 in the
fourth quarter of 2013 from $660,000 in the fourth quarter of 2012
due to the improvement in the Company’s risk category late in the
first quarter of 2013. Data processing cost increased to $1.3
million in the fourth quarter of 2013 from $1.2 million in the
fourth quarter of 2012. Credit, collection and real estate owned
costs were $835,000 in the fourth quarter of 2013, which included
$452,000 of OREO write downs, compared to $488,000 in the same
period of 2012. Other non-interest expense was $3.5 million in the
fourth quarter of 2013, a decrease of $1.4 million from the fourth
quarter of 2012 primarily due to the 2012 prepayment fee on
repaying FHLB debt. The fourth quarter 2013 included secondary
market buy-back losses of $51,000 compared to a reversal of
$115,000 in accrued losses recorded in the fourth quarter 2012.
Annual Results
For the full year ended December 31, 2013, net income was $22.2
million, up 19% from $18.7 million in 2012. Net interest income for
2013 totaled $67.6 million, compared with $69.0 million for 2012.
Average interest-earning assets decreased slightly to $1.85 billion
in for 2013, compared to $1.86 billion in 2012. Net interest margin
for 2013 was 3.76%, down 5 basis points from the 3.81% margin for
2012.
The provision for loan losses for 2013 was $1.8 million,
compared to $10.9 million in 2012.
Non-interest income for the year 2013 was $30.6 million,
compared to $34.4 million in 2012. Non-interest income for 2013
included $240,000 of net securities losses compared with $2.1
million of net securities gains for 2012. Service fees and other
charges were $10.0 million for 2013, down from $10.8 million in
2012. Mortgage banking income decreased to $8.4 million for 2013,
compared with $9.7 million in 2012. Insurance and investment sales
revenues increased to $9.6 million for 2013, compared with $8.7
million for 2012 mainly due to an increase in contingent
commissions of $436,000 in 2013.
Non-interest expense decreased to $64.8 million for 2013 from
$65.8 million in 2012. Compensation and benefits expense was $34.3
million for 2013 compared with $32.6 million for 2012 primarily due
to merit increases from a year ago, higher incentive expenses and
an increase in medical insurance costs. Credit, collection and real
estate owned costs have increased $391,000 from 2012 and secondary
market buy-back losses have increased $524,000 for 2013 compared to
2012.
Total Assets at $2.14 Billion
Total assets at December 31, 2013 were $2.14 billion, compared
to $2.05 billion at December 31, 2012. Net loans receivable
(excluding loans held for sale) were $1.56 billion at December 31,
2013, compared to $1.49 billion at December 31, 2012. Total cash
and cash equivalents were $179.3 million at December 31, 2013
compared with $136.8 million at December 31, 2012. Also, at
December 31, 2013, goodwill and other intangible assets totaled
$65.0 million compared to $66.3 million at December 31, 2012.
Total deposits at December 31, 2013 were $1.74 billion compared
with $1.67 billion at December 31, 2012. Non-interest bearing
deposits at December 31, 2013 were $348.9 million compared to
$315.1 million at December 31, 2012. Total stockholders’ equity was
$272.1 million at December 31, 2013 compared to $258.1 million at
December 31, 2012.
Dividend to be Paid February 28
The Board of Directors declared a quarterly cash dividend of
$0.15 per common share payable February 28, 2014 to shareholders of
record at the close of business on February 21, 2014. The dividend
represents an annual dividend of 2.37% percent based on the First
Defiance common stock closing price on January 17, 2014. First
Defiance has approximately 9,719,521 common shares outstanding.
Conference Call
First Defiance Financial Corp. will host a conference call at
11:00 a.m. (EST) on Tuesday, January 21, 2014 to discuss the
earnings results and business trends. The conference call may be
accessed by calling 1-888-317-6016. A live webcast may be accessed
at http://services.choruscall.com/links/fdef140121.html.
Audio replay of the Internet Webcast will be available at
www.fdef.com until January 21, 2015 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 32 full service
branches and 42 ATM locations in northwest Ohio, southeast Michigan
and northeast Indiana. 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, 2012. 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)
2013 2012
Assets Cash and cash equivalents Cash and amounts due from
depository institutions
$ 36,318 $ 45,832
Interest-bearing deposits
143,000
91,000
179,318 136,832 Securities Available-for sale,
carried at fair value
198,170 194,101 Held-to-maturity,
carried at amortized cost
387 508
198,557 194,609 Loans
1,580,448
1,525,257 Allowance for loan losses
(24,950 )
(26,711 ) Loans, net
1,555,498 1,498,546 Loans held
for sale
9,120 22,064 Mortgage servicing rights
9,106
7,833 Accrued interest receivable
5,778 5,594 Federal Home
Loan Bank stock
19,350 20,655 Bank Owned Life Insurance
42,715 41,832 Office properties and equipment
38,597
39,663 Real estate and other assets held for sale
5,859
3,805 Goodwill
61,525 61,525 Core deposit and other
intangibles
3,497 4,738 Deferred taxes
565 78 Other
assets
7,663 9,174
Total
Assets $ 2,137,148 $ 2,046,948
Liabilities and Stockholders’ Equity
Non-interest-bearing deposits
$ 348,943 $ 315,132
Interest-bearing deposits
1,386,849
1,352,340 Total deposits
1,735,792 1,667,472 Advances
from Federal Home Loan Bank
22,520 12,796 Notes payable and
other interest-bearing liabilities
51,919 51,702
Subordinated debentures
36,083 36,083 Advance payments by
borrowers for tax and insurance
1,519 1,473 Other
liabilities
17,168 19,294 Total
liabilities
1,865,001 1,788,820 Stockholders’ Equity
Preferred stock
- - Common stock, net
127 127 Common
stock warrant
878 878 Additional paid-in-capital
136,403 136,046 Accumulated other comprehensive income
545 4,274 Retained earnings
182,290 164,103 Treasury
stock, at cost
(48,096 ) (47,300 )
Total stockholders’ equity
272,147
258,128
Total Liabilities and Stockholders’ Equity
$ 2,137,148 $ 2,046,948
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)
2013
2012
2013 2012 Interest Income: Loans
$
17,037 $ 17,774
$ 68,077 $ 72,621 Investment
securities
1,397 1,504
5,596 7,123 Interest-bearing
deposits
108 51
282 300 FHLB stock dividends
195 243
826
899 Total interest income
18,737 19,572
74,781
80,943 Interest Expense: Deposits
1,399 1,775
5,913
8,169 FHLB advances and other
136 164
434 2,424
Subordinated debentures
149 158
601 971 Notes Payable
44 89
222
373 Total interest expense
1,728
2,186
7,170 11,937
Net interest income
17,009 17,386
67,611 69,006
Provision for loan losses
475 2,618
1,824 10,924 Net interest
income after provision for loan losses
16,534 14,768
65,787 58,082 Non-interest Income: Service fees and other
charges
2,506 2,631
10,045 10,779 Mortgage banking
income
1,324 2,741
8,443 9,665 Gain on sale of
non-mortgage loans
49 20
101 70 Gain on sale of
securities
- 1,611
97 2,139 Impairment on securities
(337 ) (5 )
(337 ) (5 ) Insurance and
investment sales commissions
2,089 1,997
9,627 8,676
Trust income
216 146
761 616 Income from Bank Owned
Life Insurance
211 241
883 924 Other non-interest
income
415 798
950
1,510 Total Non-interest Income
6,473
10,180
30,570 34,374 Non-interest Expense: Compensation and
benefits
8,310 7,806
34,301 32,566 Occupancy
1,675 1,860
6,762 7,578 FDIC insurance premium
359 660
1,616 2,691 State franchise tax
486
846
2,323 2,495 Data processing
1,313 1,183
5,125 4,660 Amortization of intangibles
296 344
1,241 1,413 Other non-interest expense
3,490
4,839
13,476
14,377 Total Non-interest Expense
15,929
17,538
64,844
65,780 Income before income taxes
7,078 7,410
31,513 26,676 Income taxes
1,991
2,253
9,278 8,012 Net
Income
$ 5,087 $ 5,157
$
22,235 $ 18,664 Dividends Accrued on
Preferred Shares
- -
- (900 ) Accretion on Preferred
Shares
- -
- (359 ) Redemption of Preferred Shares
- -
-
642 Net Income Applicable to Common Shares
$ 5,087 $ 5,157
$ 22,235
$ 18,047 Earnings per common share: Basic
$ 0.52 $ 0.53
$ 2.28 $ 1.86 Diluted
$ 0.50 $ 0.52
$ 2.19 $ 1.81
Average Shares Outstanding: Basic
9,766 9,729
9,764
9,728 Diluted
10,198 10,012
10,171 9,998
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)
2013
2012 % change
2013 2012 %
change
Summary of Operations
Tax-equivalent interest income (1)
$ 19,143 $
19,993 (4.3 )%
$ 76,413 $ 82,598 (7.5 )% Interest
expense
1,728 2,186 (21.0 )
7,170 11,937 (39.9 )
Tax-equivalent net interest income (1)
17,415 17,807 (2.2 )
69,243 70,661 (2.0 ) Provision for loan losses
475
2,618 (81.9 )
1,824 10,924 (83.3 ) Tax-equivalent NII after
provision for loan loss (1)
16,940 15,189 11.5
67,419
59,737 12.9 Investment Securities gains
- 1,611 (100.0 )
97 2,139 (95.5 ) Impairment losses on securities
(337
) (5 ) NM
(337 ) (5 ) NM Non-interest income
(excluding securities gains/losses)
6,810 8,574 (20.6 )
30,810 32,240 (4.4 ) Non-interest expense
15,929
17,538 (9.2 )
64,844 65,780 (1.4 ) Income taxes
1,991
2,253 (11.6 )
9,278 8,012 15.8 Net Income
5,087 5,157
(1.4 )
22,235 18,664 19.1 Dividends Declared on Preferred
Shares
- - NM
- (900 ) NM Accretion on Preferred
Shares
- - NM
- (359 ) NM Redemption on Preferred
Shares
- - NM
- 642 NM Net Income Applicable to
Common Shares
5,087 5,157 (1.4 )
22,235 18,047 23.2
Tax equivalent adjustment (1)
406
421 (3.6 )
1,632
1,655 (1.4 )
At Period
End Assets
2,137,148 2,046,948 4.4 Earning assets
1,950,475 1,853,585 5.2 Loans
1,580,448 1,525,257 3.6
Allowance for loan losses
24,950 26,711 (6.6 ) Deposits
1,735,792 1,667,472 4.1 Stockholders’ equity
272,147 258,128 5.4
Average
Balances Assets
2,124,109 2,023,890 5.0
2,052,250
2,063,552 (0.5 ) Earning assets
1,915,508 1,815,263 5.5
1,845,462 1,862,340 (0.9 ) Loans
1,543,057 1,509,611
2.2
1,528,176 1,477,681 3.4 Deposits and interest-bearing
liabilities
1,833,291 1,744,274 5.1
1,766,579
1,775,082 (0.5 ) Deposits
1,719,319 1,633,432 5.3
1,661,895 1,619,637 2.6 Stockholders’ equity
270,856
256,304 5.7
265,065 267,194 (0.8 ) Stockholders’ equity /
assets
12.75 % 12.66 %
0.7
12.92 %
12.95 % (0.3 )
Per Common Share Data Net Income Basic
$ 0.52 $ 0.53 (1.9 )
$ 2.28 $ 1.86 22.6
Diluted
0.50 0.52 (3.8 )
2.19 1.81 21.0 Dividends
0.10 0.05 100.0
0.40 0.20 100.0 Market Value: High
$ 27.25 $ 19.38 40.6
$ 28.46 $ 19.38
46.9 Low
23.31 15.75 48.0
18.42 14.41 27.8 Close
25.97 19.19 35.3
23.39 19.19 21.9 Common Book Value
27.91 26.44 5.5
27.91 26.44 5.5 Tangible Common Book
Value
21.22 19.63 8.1
21.22 19.63 8.1 Shares
outstanding, end of period (000)
9,720
9,729 (0.1 )
9,720
9,729 (0.1 ) Performance Ratios
(annualized) Tax-equivalent net interest margin (1)
3.61
% 3.92 % (7.9 )
3.76 % 3.81 % (1.4 ) Return on
average assets
0.95 % 1.01 % (6.3 )
1.08
% 0.90 % 19.8 Return on average equity
7.45 %
8.00 % (6.9 )
8.39 % 6.99 % 20.1 Efficiency ratio (2)
65.75 % 66.48 % (1.1 )
64.81 % 63.93 %
1.4 Effective tax rate
28.13 % 30.40 % (7.5 )
29.44 % 30.03 % (2.0 ) Dividend payout ratio (basic)
19.23 % 9.43 %
103.8
17.54 %
10.75 % 63.2
(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)
2013 2012
2013 2012 Gain from sale of mortgage loans
$ 756 $ 2,709
$ 5,716 $ 10,599 Mortgage
loan servicing revenue (expense): Mortgage loan servicing revenue
918 888
3,564 3,387 Amortization of mortgage
servicing rights
(346 ) (952 )
(2,098 )
(3,562 ) Mortgage servicing rights valuation adjustments
(4 ) 96
1,261
(759 )
568
32
2,727 (934 ) Total
revenue from sale and servicing of mortgage loans
$
1,324 $ 2,741
$ 8,443
$ 9,665
Yield Analysis First
Defiance Financial Corp. Three Months Ended December
31, (dollars in thousands)
2013 2012 Average
Yield Average Yield Balance Interest(1)
Rate(2) Balance Interest(1) Rate(2)
Interest-earning assets:
Loans receivable $ 1,543,057 $ 17,055 4.39% $ 1,509,611 $ 17,799
4.69% Securities 187,230 1,785 3.82% 204,882 1,900 3.86% Interest
Bearing Deposits 165,871 108 0.26% 80,115 51 0.25% FHLB stock
19,350 195 4.00% 20,655 243 4.68% Total interest-earning assets
1,915,508 19,143 3.97% 1,815,263 19,993 4.40% Non-interest-earning
assets 208,601 208,627 Total assets $ 2,124,109 $ 2,023,890
Deposits and Interest-bearing liabilities: Interest bearing
deposits $ 1,382,526 $ 1,399 0.40% $ 1,338,400 $ 1,775 0.53% FHLB
advances and other 22,604 136 2.39% 19,015 164 3.43% Subordinated
debentures 36,129 149 1.64% 55,688 89 0.64% Notes payable 55,239 44
0.32% 36,139 158 1.74% Total interest-bearing liabilities 1,496,498
1,728 0.46% 1,449,242 2,186 0.60% Non-interest bearing deposits
336,793 - - 295,032 - - Total including non-interest-bearing demand
deposits 1,833,291 1,728 0.37% 1,744,274 2,186 0.50% Other
non-interest-bearing liabilities 19,962 23,312 Total liabilities
1,853,253 1,767,586 Stockholders' equity 270,856 256,304 Total
liabilities and stockholders' equity $ 2,124,109 $ 2,023,890
Net interest income; interest rate spread $ 17,415 3.51% $
17,807 3.80% Net interest margin (3) 3.61% 3.92% Average
interest-earning assets to average interest bearing liabilities
128% 125%
Twelve Months Ended December 31,
2013 2012 Average Yield Average Yield Balance Interest(1)
Rate Balance Interest(1) Rate
Interest-earning assets: Loans
receivable $ 1,528,176 $ 68,147 4.46% $ 1,477,681 $ 72,724 4.92%
Securities 191,039 7,158 3.78% 247,442 8,675 3.63% Interest Bearing
Deposits 106,742 282 0.26% 116,562 300 0.26% FHLB stock 19,505 826
4.23% 20,655 899 4.35% Total interest-earning assets 1,845,462
76,413 4.14% 1,862,340 82,598 4.44% Non-interest-earning assets
206,788 201,212 Total assets $ 2,052,250 $ 2,063,552
Deposits
and Interest-bearing liabilities: Interest bearing deposits $
1,353,304 $ 5,913 0.44% $ 1,352,724 $ 8,169 0.60% FHLB advances and
other 17,709 434 2.45% 66,121 2,424 3.67% Subordinated debentures
36,133 601 1.66% 53,155 373 0.70% Notes payable 50,842 222 0.44%
36,169 971 2.68% Total interest-bearing liabilities 1,457,988 7,170
0.49% 1,508,169 11,937 0.79% Non-interest bearing deposits 308,591
- - 266,913 - - Total including non-interest-bearing demand
deposits 1,766,579 7,170 0.41% 1,775,082 11,937 0.67% Other
non-interest-bearing liabilities 20,606 21,276 Total liabilities
1,787,185 1,796,358 Stockholders' equity 265,065 267,194 Total
liabilities and stockholders' equity $ 2,052,250 $ 2,063,552
Net interest income; interest rate spread $ 69,243 3.65% $
70,661 3.64% Net interest margin (3) 3.76% 3.81% Average
interest-earning assets to average interest bearing liabilities
127% 123%
(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 2013 3rd Qtr 2013
2nd Qtr 2013 1st Qtr 2013 4th Qtr 2012
Summary of Operations Tax-equivalent interest income (1)
$ 19,143 $ 19,242 $ 19,143 $ 18,885 $ 19,993 Interest
expense
1,728 1,680 1,814 1,949 2,186 Tax-equivalent net
interest income (1)
17,415 17,562 17,329 16,936 17,807
Provision for loan losses
475 476 448 425 2,618
Tax-equivalent NII after provision for loan losses (1)
16,940 17,086 16,881 16,511 15,189 Investment securities
gains, net of impairment
(337 ) - 44 53 1,606
Non-interest income (excluding securities gains/losses)
6,810 7,289 7,804 8,909 8,574 Non-interest expense
15,929 16,045 15,674 17,199 17,538 Income taxes
1,991
2,445 2,535 2,306 2,253 Net income
5,087 5,479 6,109 5,559
5,157 Dividends Declared on Preferred Shares
- - - - -
Accretion on Preferred Shares
- - - - - Redemption on
Preferred Shares
- - - - - Net Income Applicable to Common
Shares
5,087 5,479 6,109 5,559 5,157 Tax equivalent
adjustment (1)
406 406
411 409
421
At Period End Total assets
$
2,137,148 $ 2,058,430 $ 2,066,216 $ 2,039,411 $ 2,046,948
Earning assets
1,950,475 1,863,546 1,873,351 1,858,747
1,853,585 Loans
1,580,448 1,561,279 1,562,666 1,507,008
1,525,257 Allowance for loan losses
24,950 25,964 26,270
26,459 26,711 Deposits
1,735,792 1,658,492 1,635,708
1,656,348 1,667,472 Stockholders’ equity
272,147 269,359
264,497 262,643 258,128 Stockholders’ equity / assets
12.73
% 13.09 % 12.80 % 12.88 % 12.61 % Goodwill
61,525 61,525
61,525 61,525 61,525
Average Balances Total assets
$
2,124,109 $ 2,026,277 $ 2,030,707 $ 2,027,906 $ 2,023,890
Earning assets
1,915,508 1,816,626 1,825,730 1,823,089
1,815,263 Loans
1,543,057 1,548,718 1,520,708 1,500,222
1,509,611 Deposits and interest-bearing liabilities
1,833,291 1,741,850 1,745,084 1,746,092 1,744,274 Deposits
1,719,319 1,632,712 1,644,777 1,650,772 1,633,432
Stockholders’ equity
270,856 265,488 264,293 259,625 256,304
Stockholders’ equity / assets
12.75 %
13.10 % 13.01 % 12.80 %
12.66 %
Per Common Share Data Net Income:
Basic
$ 0.52 $ 0.56 $ 0.63 $ 0.57 $ 0.53 Diluted
0.50 0.54 0.60 0.55 0.52 Dividends
0.10 0.10 0.10
0.10 0.05 Market Value: High
$ 27.25 $ 28.46 $ 23.75
$ 23.75 $ 19.38 Low
23.31 22.49 20.80 18.42 15.75 Close
25.97 23.39 22.55 23.32 19.19 Common Book Value
27.91
27.44 26.97 26.80 26.44 Shares outstanding, end of period (in
thousands)
9,720 9,785
9,776 9,766
9,729
Performance Ratios (annualized)
Tax-equivalent net interest margin (1)
3.61 % 3.84 %
3.82 % 3.78 % 3.92 % Return on average assets
0.95 %
1.07 % 1.21 % 1.11 % 1.01 % Return on average equity
7.45
% 8.19 % 9.27 % 8.68 % 8.00 % Efficiency ratio (2)
65.75 % 64.56 % 62.36 % 66.55 % 66.48 % Effective tax
rate
28.13 % 30.86 % 29.33 % 29.32 % 30.40 % Common
dividend payout ratio (basic)
19.23 %
17.86 % 15.87 % 17.54 %
9.43 %
(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 2013
3rd Qtr 2013 2nd Qtr 2013 1st Qtr 2013
4th Qtr 2012
Loan Portfolio Composition One to four family
residential real estate
$ 195,752 $ 191,984 $ 196,802
$ 197,675 $ 200,826 Construction
86,058 59,567 41,519 33,398
37,788 Commercial real estate
819,618 821,115 820,412
802,098 797,385 Commercial
388,236 386,160 396,158 365,551
383,817 Consumer finance
16,902 16,659 16,817 15,549 15,936
Home equity and improvement
106,930
105,727 106,570
106,524 108,718 Total loans
1,613,496 1,581,212 1,578,278 1,520,795 1,544,470 Less:
Loans in process
32,290 19,189 14,876 13,084 18,478 Deferred
loan origination fees
758 744 736 703 735 Allowance for loan
loss
24,950 25,964
26,270 26,459
26,711 Net Loans
$ 1,555,498 $
1,535,315 $ 1,536,396 $ 1,480,549
$ 1,498,546
Allowance for loan
loss activity Beginning allowance
$ 25,964 $
26,270 $ 26,459 $ 26,711 $ 26,310 Provision for loan losses
475 476 448 425 2,618 Credit loss charge-offs: One to four
family residential real estate
175 78 184 206 976 Commercial
real estate
1,097 829 283 266 593 Commercial
670 39
316 205 541 Consumer finance
7 33 8 46 59 Home equity and
improvement
144 170
170 272 497
Total charge-offs
2,093 1,149 961 995 2,666 Total
recoveries
604 367
324 318 449
Net charge-offs (recoveries)
1,489
782 637 677
2,217 Ending allowance
$ 24,950
$ 25,964 $ 26,270 $
26,459 $ 26,711
Credit
Quality Total non-performing loans (1)
$ 27,847 $
30,512 $ 28,650 $ 35,283 $ 32,570 Real estate owned (REO)
5,859 5,518 6,546
4,313 3,805 Total
non-performing assets (2)
$ 33,706 $
36,030 $ 35,196 $ 39,596
$ 36,375 Net charge-offs
1,489 782 637 677 2,217
Restructured loans, accruing (3)
27,630 28,010 28,732
27,981 28,203 Allowance for loan losses / loans
1.58
% 1.66 % 1.68 % 1.76 % 1.75 % Allowance for loan losses /
non-performing assets
74.02 % 72.06 % 74.64 % 66.82 %
73.43 % Allowance for loan losses / non-performing loans
89.60 % 85.09 % 91.69 % 74.99 % 82.01 %
Non-performing assets / loans plus REO
2.12 % 2.30 %
2.24 % 2.62 % 2.38 % Non-performing assets / total assets
1.58 % 1.75 % 1.70 % 1.94 % 1.78 % Net charge-offs /
average loans (annualized)
0.39 % 0.20 % 0.17 % 0.18
% 0.59 %
Deposit Balances Non-interest-bearing
demand deposits
$ 348,943 $ 300,891 $ 301,742 $
291,765 $ 315,132 Interest-bearing demand deposits and money market
715,939 681,987 659,249 681,061 664,857 Savings deposits
185,121 182,271 182,784 177,336 166,945 Retail time deposits
less than $100,000
313,335 318,317 321,422 330,870 342,472
Retail time deposits greater than $100,000
172,454 175,026
168,573 173,379 176,029 National/Brokered time deposits
- - 1,938
1,937 2,037 Total
deposits
$ 1,735,792 $ 1,658,492
$ 1,635,708 $ 1,656,348 $
1,667,472
(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 dayspast due
Non AccrualLoans
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
September 30, 2013
One to four family residential real estate $ 191,984 $
188,065 $ 760 $ 3,159 Construction 59,567 59,567 - - Commercial
real estate 821,115 802,115 574 18,426 Commercial 386,160 377,116
295 8,749 Consumer finance 16,659 16,616 43 - Home equity and
improvement 105,727 103,997
1,552 178 Total loans $ 1,581,212 $ 1,547,476
$ 3,224 $ 30,512 December 31, 2012
One to four family
residential real estate $ 200,826 $ 195,188 $ 2,036 $ 3,602
Construction 37,788 37,788 - - Commercial real estate 797,385
773,170 1,125 23,090 Commercial 383,817 376,548 1,608 5,661
Consumer finance 15,936 15,701 235 - Home equity and improvement
108,718 106,002 2,499
217 Total loans $ 1,544,470 $ 1,504,397 $
7,503 $ 32,570
First Defiance Financial Corp.Donald P. Hileman, President and
CEO, 419-782-5104dhileman@first-fed.com
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