Exhibit 99.1
 | NEWS RELEASE |
| | |
| Contact: | Donald P. Hileman |
| | President and CEO |
| | (419) 782-5104 |
| | dhileman@first-fed.com |
For Immediate Release
FIRST DEFIANCE FINANCIAL CORP. REPORTS
RECORD FULL YEAR EARNINGS OF $3.22 PER SHARE FOR 2017
| · | Earnings per diluted share of $0.92 for 2017 fourth quarter, up from $0.81 per share in the fourth quarter of 2016 |
| · | Net income of $9.4 million for 2017 fourth quarter, compared to $7.4 million in the fourth quarter of 2016 |
| · | Net interest margin of 3.88% for the 2017 fourth quarter, compared to 3.76% in the fourth quarter of 2016 |
| · | Loan growth of $72.7 million during the 2017 fourth quarter |
| · | Deposit growth of $77.0 million during the 2017 fourth quarter |
| · | Non-performing loans of $30.7 million for 2017 fourth quarter, compared to $14.3 million for 2016 fourth quarter |
DEFIANCE, OHIO (January 22, 2018)– First Defiance Financial Corp. (NASDAQ: FDEF) announced today that net income for the fiscal year ended December 31, 2017, totaled $32.3 million, or $3.22 per diluted common share, compared to $28.8 million or $3.19 per diluted common share for the year ended December 31, 2016.
For the fourth quarter of 2017, First Defiance earned $9.4 million, or $0.92 per diluted common share compared to $7.4 million or $0.81 per diluted common share for the fourth quarter of 2016. The fourth quarter of 2017 results included an increase of $428,000 pre-tax ($278,000 after-tax), or $0.03 per diluted share from changing trust revenues to accrual basis accounting and securities gains of $160,000 pre-tax ($104,000 after-tax), or $0.01 per diluted share. Also, on December 22, 2017, the Tax Cuts and Jobs Act was enacted that required the Company to revalue its deferred tax assets and deferred tax liabilities as of December 31, 2017, to account for the future impact of the lower corporate tax rate on these deferred amounts. As a result of this revaluation, an increase to tax expense and a reduction to earnings of $154,000, or $0.02 per diluted share, negatively impacted the fourth quarter of 2017. The increase in tax expense reflects the company’s current best estimate, and as information becomes available, the company may update this estimate.
“Our strong fourth quarter performance capped a very successful 2017 for First Defiance and provided substantial momentum as we progress into 2018. With fourth quarter earnings per share up 13.6% over last year, we’re pleased to announce our fifth consecutive year of record earnings performance,” said Donald P. Hileman, President and Chief Executive Officer of First Defiance Financial Corp. “While the new Tax Cuts and Jobs Act had only a minor impact on our fourth quarter earnings, we expect the lower tax rates to benefit future operations with added opportunities for growth, profitability and community investment.”
Net interest income up compared to fourth quarter 2016
Net interest income of $25.4 million in the fourth quarter of 2017 was up from $20.5 million in the fourth quarter of 2016. The increase was mostly attributable to the added operations from the Commercial Savings Bank (“CSB”) merger completed earlier in 2017. Net interest margin was 3.88% for the fourth quarter of 2017, down from 3.91% in the third quarter of 2017, but up from 3.76% in the fourth quarter of 2016. Yield on interest earning assets increased by 19 basis points to 4.35% in the fourth quarter of 2017 up from 4.16% in the fourth quarter of 2016. The cost of interest-bearing liabilities increased by 9 basis points in the fourth quarter of 2017 to 0.62% from 0.53% in the fourth quarter of 2016.
“Our net interest income increase in the fourth quarter was driven by our strong balance sheet growth, while our margin tightened slightly in the quarter,” said Hileman. “Our loans and deposits expanded in the fourth quarter at annualized growth rates of 12.8% and 13.0% respectively, providing solid momentum for the new year.”
Non-interest income up from fourth quarter 2016
First Defiance’s non-interest income for the fourth quarter of 2017 was $9.9 million compared to $8.3 million in the fourth quarter of 2016. The increase in total non-interest income was largely due to the inclusion of operations from the CSB and Corporate One Benefits Agency, Inc. (“Corporate One”) mergers completed in 2017. In addition, the fourth quarter of 2017 included gains of $160,000 from the sale of securities and an increase in trust revenues of $428,000 attributable to a change to accrual basis accounting.
Mortgage banking income decreased to $1.7 million in the fourth quarter of 2017, down from $1.9 million in the fourth quarter of 2016 due to significantly lower refinancing volumes which were slightly offset by higher purchase volumes. Gains from the sale of mortgage loans decreased in the fourth quarter of 2017 to $1.1 million from $1.2 million in the fourth quarter of 2016. Mortgage loan servicing revenue was $945,000 in the fourth quarter of 2017, up slightly from $922,000 in the fourth quarter of 2016. First Defiance had a positive change in the valuation adjustment in mortgage servicing assets of $69,000 in the fourth quarter of 2017 compared to a positive adjustment of $241,000 in the fourth quarter of 2016.
For the fourth quarter of 2017, service fees and other charges were $3.1 million, up $365,000 from $2.7 million in the fourth quarter of 2016; and commissions from the sale of insurance products were $3.0 million, up $704,000 from $2.3 million in the fourth quarter of 2016. Trust income was $932,000 in the fourth quarter of 2017, up from $445,000 in the fourth quarter of 2016 and included $428,000 for the adjustment to accrual basis accounting.
“Total non-interest income in the fourth quarter grew $1.6 million, or 19.3% over the same quarter of last year, despite a decline in our mortgage business,” said Hileman. “We believe this demonstrates both the benefits of our mergers and the diversity of our revenues, as non-interest revenues from all other sources were up versus the prior year.”
Non-interest expenses up from fourth quarter 2016
Total non-interest expense was $21.1 million in the fourth quarter of 2017, up from $18.2 million in the fourth quarter of 2016. The increase in non-interest expenses was mostly due to the additional expenses from the operations of CSB and Corporate One mergers completed in 2017. Compensation and benefits in the fourth quarter of 2017 was $12.3 million, an increase of $2.3 million compared to the fourth quarter of 2016. Occupancy expense was $2.0 million in the fourth quarter 2017, down $26,000 from the fourth quarter 2016. Data processing cost was $1.9 million in the fourth quarter of 2017, up $261,000 from the fourth quarter of 2016. Other non-interest expense was $4.0 million in the fourth quarter of 2017, increasing by $88,000 from the fourth quarter of 2016.
Credit quality
Non-performing loans totaled $30.7 million at December 31, 2017, an increase from $14.3 million at December 31, 2016. In addition, First Defiance had $1.5 million of real estate owned at December 31, 2017, up from $455,000 at December 31, 2016. Accruing troubled debt restructured loans were $13.8 million at December 31, 2017, an increase from $10.5 million at December 31, 2016.
The fourth quarter of 2017 results include net recoveries of $28,000 and a provision for loan losses of $314,000 compared with net recoveries of $110,000 and a credit provision of $149,000 for the same period in 2016.
The allowance for loan loss as a percentage of total loans was 1.14% at December 31, 2017, compared with 1.16% at September 30, 2017, and 1.33% at December 31, 2016. The decrease in the allowance for loan loss as a percentage of total loans versus a year ago was primarily attributable to the CSB acquisition. The CSB loans acquired were recorded at fair value with purchase accounting adjustments discounting the loan balance instead of an allowance for loan losses. For the CSB loans acquired, the discount recorded totaled $3.9 million, or 1.9% of acquired CSB loans at December 31, 2017.
“Our non-performing loans to total assets at year-end remained relatively stable with the prior quarter at 1.08%; and importantly, net recoveries of $28,000 in the fourth quarter continued our favorable net loss experience from the previous quarter,” said Hileman. “Reducing our non-performing loans is a high priority in 2018.”
Annual results
Net income for the full year ended on December 31, 2017, totaled $32.3 million, or $3.22 per diluted common share, compared to $28.8 million or $3.19 per diluted common share for 2016. The year 2017 includes the results from the operations of the CSB acquisition completed on February 24, 2017, and Corporate One acquired on April 1, 2017. In addition, 2017 includes merger and conversion expenses related to the acquisitions of $4.0 million, which had an after tax impact of $2.8 million, or $0.28 per diluted share.
Net interest income for 2017 totaled $96.7 million, compared with $78.9 million for 2016. Average interest-earning assets increased to $2.55 billion for 2017, compared to $2.17 billion in 2016. Net interest margin for 2017 was 3.88%, up 14 basis points from the 3.74% margin for 2016.
The provision for loan losses for 2017 was $2.9 million, compared to $283,000 for 2016.
Non-interest income for the year 2017 was $40.1 million, compared to $34.0 million in 2016. The year 2017 includes the operating results from the CSB and Corporate One mergers completed in 2017, a $1.5 million enhancement value gain related to the purchase of bank owned life insurance in the first quarter of 2017, and the aforementioned increase in trust revenues of $428,000 related to a change to accrual basis accounting.
Service fees and other charges were $12.1 million for 2017, up from $10.9 million in 2016. Mortgage banking income decreased to $7.0 million for 2017, compared to $7.3 million in 2016. Gains on the sale of non-mortgage loans were $217,000 for 2017, compared to $753,000 in 2016. Insurance commissions increased to $12.9 million for 2017, compared to $10.4 million in 2016. Non-interest income for 2017 included $584,000 of net securities gains compared to $509,000 of net securities gains for 2016.
Non-interest expense increased to $85.4 million for 2017 from $71.1 million in 2016. Included in non-interest expense for 2017 were merger and conversion expenses of $4.0 million related to acquisitions. Compensation and benefits expense was $49.8 million for 2017 compared with $40.2 million for 2016. Expenses also included increases in occupancy expense of $289,000, data processing expense of $1.4 million, amortization of intangibles of $754,000 and other expense of $2.1 million.
Total assets at $2.99 billion
Total assets at December 31, 2017, were $2.99 billion compared to $2.48 billion at December 31, 2016. The increase reflected at December 31, 2017, is primarily due to the acquisition of CSB effective February 24, 2017, which added $368.3 million to total assets, net of $12.3 million paid in cash, at consummation.
Net loans receivable (excluding loans held for sale) were $2.32 billion at December 31, 2017, compared to $1.91 billion at December 31, 2016. The acquisition of CSB added $285.4 million to the loan portfolio. At December 31, 2017, excluding the CSB acquired loans; net loans receivable grew $121.9 million, or 6.4% from a year ago.
Also, at December 31, 2017, goodwill and other intangible assets totaled $104.3 million compared to $63.1 million at December 31, 2016. The increase in 2017 was attributable to the acquisitions of CSB and Corporate One which together added $42.4 to goodwill and intangibles.
Total deposits at December 31, 2017, were $2.44 billion compared with $1.98 billion at December 31, 2016. The acquisition of CSB added $308.0 million to total deposits. At December 31, 2017, excluding the CSB acquired deposits; total deposits grew $148.0 million, or 7.5% from a year ago.
Total stockholders’ equity was $373.3 million at December 31, 2017, compared to $293.0 million at December 31, 2016. The acquisition of CSB in 2017 added $56.5 million to total equity.
Dividend to be paid February 23
The Board of Directors declared a quarterly cash dividend of $0.30 per common share payable February 23, 2018, to shareholders of record at the close of business on February 16, 2018. The dividend represents an annual dividend of 2.21 percent based on the First Defiance common stock closing price on January 19, 2018. First Defiance has approximately 10,157,000 common shares outstanding.
Conference call
First Defiance Financial Corp. will host a conference call at 11:00 a.m. ET on Tuesday, January 23, 2018 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 https://services.choruscall.com/links/fdef180123.html.
The replay of the conference call webcast will be available at www.fdef.com until 9:00 a.m. ET on Wednesday, January 23, 2019.
First Defiance Financial Corp.
First Defiance Financial Corp. (NASDAQ:FDEF), headquartered in Defiance, Ohio, is the holding company for First Federal Bank of the Midwest, First Insurance Group and Corporate One Benefits. First Federal Bank operates 43 full-service branches and numerous ATM locations in northwest and central Ohio, southeast Michigan and northeast Indiana and a loan production office in Ann Arbor, Michigan. First Insurance Group, including its division Corporate One Benefits, is a full-service insurance agency with nine offices throughout northwest Ohio.
For more information, visit the company’s website atwww.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 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 First Defiance 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 our Securities and Exchange Commission (SEC) filings, including our Annual Report on Form 10-K for the year ended December 31, 2016. One or more of these factors have affected or could in the future affect First Defiance'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 First Defiance or any other persons, that our objectives and plans will be achieved. All forward-looking statements made in this news release are based on information presently available to the management of First Defiance. We assume no obligation to update any forward-looking statements.
As required by U.S. GAAP, First Defiance will evaluate the impact of subsequent events through the issuance date of its December 31, 2017 consolidated financial statements as part of its Annual Report on Form 10-K to be filed with the SEC. Accordingly, subsequent events could occur that may cause First Defiance to update its critical accounting estimates and to revise its financial information from that which is contained in this news release.
Consolidated Balance Sheets (Unaudited)
First Defiance Financial Corp.
| | | December 31, | | | December 31, | |
| (in thousands) | | 2017 | | | 2016 | |
| | | | | | | |
| Assets | | | | | | | | |
| Cash and cash equivalents | | | | | | | | |
| Cash and amounts due from depository institutions | | $ | 58,693 | | | $ | 53,003 | |
| Interest-bearing deposits | | | 55,000 | | | | 46,000 | |
| | | | 113,693 | | | | 99,003 | |
| Securities | | | | | | | | |
| Available-for sale, carried at fair value | | | 260,650 | | | | 250,992 | |
| Held-to-maturity, carried at amortized cost | | | 648 | | | | 184 | |
| | | | 261,298 | | | | 251,176 | |
| | | | | | | | | |
| Loans | | | 2,348,713 | | | | 1,940,487 | |
| Allowance for loan losses | | | (26,683 | ) | | | (25,884 | ) |
| Loans, net | | | 2,322,030 | | | | 1,914,603 | |
| Loans held for sale | | | 10,435 | | | | 9,607 | |
| Mortgage servicing rights | | | 9,808 | | | | 9,595 | |
| Accrued interest receivable | | | 8,706 | | | | 6,760 | |
| Federal Home Loan Bank stock | | | 15,992 | | | | 13,798 | |
| Bank Owned Life Insurance | | | 66,230 | | | | 52,817 | |
| Office properties and equipment | | | 40,217 | | | | 36,958 | |
| Real estate and other assets held for sale | | | 1,532 | | | | 455 | |
| Goodwill | | | 98,569 | | | | 61,798 | |
| Core deposit and other intangibles | | | 5,703 | | | | 1,336 | |
| Deferred taxes | | | 432 | | | | 2,212 | |
| Other assets | | | 38,959 | | | | 17,479 | |
| Total Assets | | $ | 2,993,604 | | | $ | 2,477,597 | |
| | | | | | | | | |
| Liabilities and Stockholders’ Equity | | | | | | | | |
| Non-interest-bearing deposits | | $ | 571,360 | | | $ | 487,663 | |
| Interest-bearing deposits | | | 1,866,296 | | | | 1,493,965 | |
| Total deposits | | | 2,437,656 | | | | 1,981,628 | |
| Advances from Federal Home Loan Bank | | | 84,279 | | | | 103,943 | |
| Notes payable and other interest-bearing liabilities | | | 26,019 | | | | 31,816 | |
| Subordinated debentures | | | 36,083 | | | | 36,083 | |
| Advance payments by borrowers for tax and insurance | | | 2,925 | | | | 2,650 | |
| Other liabilities | | | 33,356 | | | | 28,459 | |
| Total Liabilities | | | 2,620,318 | | | | 2,184,579 | |
| Stockholders’ Equity | | | | | | | | |
| Preferred stock | | | - | | | | - | |
| Common stock, net | | | 127 | | | | 127 | |
| Additional paid-in-capital | | | 160,940 | | | | 126,390 | |
| Accumulated other comprehensive income | | | 217 | | | | 215 | |
| Retained earnings | | | 262,900 | | | | 240,592 | |
| Treasury stock, at cost | | | (50,898 | ) | | | (74,306 | ) |
| Total stockholders’ equity | | | 373,286 | | | | 293,018 | |
| Total Liabilities and Stockholders’ Equity | | $ | 2,993,604 | | | $ | 2,477,597 | |
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) | | 2017 | | | 2016 | | | 2017 | | | 2016 | |
| Interest Income: | | | | | | | | | | | | | | | | |
| Loans | | $ | 26,277 | | | $ | 20,975 | | | $ | 99,540 | | | $ | 80,217 | |
| Investment securities | | | 1,747 | | | | 1,576 | | | | 6,942 | | | | 6,247 | |
| Interest-bearing deposits | | | 281 | | | | 80 | | | | 836 | | | | 367 | |
| FHLB stock dividends | | | 222 | | | | 139 | | | | 784 | | | | 552 | |
| Total interest income | | | 28,527 | | | | 22,770 | | | | 108,102 | | | | 87,383 | |
| Interest Expense: | | | | | | | | | | | | | | | | |
| Deposits | | | 2,461 | | | | 1,648 | | | | 8,818 | | | | 6,261 | |
| FHLB advances and other | | | 352 | | | | 348 | | | | 1,470 | | | | 1,288 | |
| Subordinated debentures | | | 252 | | | | 205 | | | | 935 | | | | 753 | |
| Notes Payable | | | 75 | | | | 30 | | | | 208 | | | | 138 | |
| Total interest expense | | | 3,140 | | | | 2,231 | | | | 11,431 | | | | 8,440 | |
| Net interest income | | | 25,387 | | | | 20,539 | | | | 96,671 | | | | 78,943 | |
| Provision for loan losses | | | 314 | | | | (149 | ) | | | 2,949 | | | | 283 | |
| Net interest income after provision for loan losses | | | 25,073 | | | | 20,688 | | | | 93,722 | | | | 78,660 | |
| Non-interest Income: | | | | | | | | | | | | | | | | |
| Service fees and other charges | | | 3,066 | | | | 2,701 | | | | 12,139 | | | | 10,909 | |
| Mortgage banking income | | | 1,738 | | | | 1,928 | | | | 7,004 | | | | 7,270 | |
| Gain on sale of non-mortgage loans | | | 45 | | | | 149 | | | | 217 | | | | 753 | |
| Gain on sale of securities | | | 160 | | | | - | | | | 584 | | | | 509 | |
| Insurance commissions | | | 3,032 | | | | 2,328 | | | | 12,866 | | | | 10,441 | |
| Trust income | | | 932 | | | | 445 | | | | 2,332 | | | | 1,701 | |
| Income from Bank Owned Life Insurance | | | 419 | | | | 223 | | | | 3,085 | | | | 909 | |
| Other non-interest income | | | 505 | | | | 519 | | | | 1,854 | | | | 1,538 | |
| Total Non-interest Income | | | 9,897 | | | | 8,293 | | | | 40,081 | | | | 34,030 | |
| Non-interest Expense: | | | | | | | | | | | | | | | | |
| Compensation and benefits | | | 12,259 | | | | 9,937 | | | | 49,847 | | | | 40,187 | |
| Occupancy | | | 1,957 | | | | 1,983 | | | | 7,707 | | | | 7,418 | |
| FDIC insurance premium | | | 277 | | | | 161 | | | | 1,250 | | | | 1,169 | |
| Financial institutions tax | | | 400 | | | | 442 | | | | 1,819 | | | | 1,781 | |
| Data processing | | | 1,905 | | | | 1,644 | | | | 7,737 | | | | 6,367 | |
| Amortization of intangibles | | | 358 | | | | 116 | | | | 1,289 | | | | 535 | |
| Other non-interest expense | | | 3,985 | | | | 3,897 | | | | 15,702 | | | | 13,636 | |
| Total Non-interest Expense | | | 21,141 | | | | 18,180 | | | | 85,351 | | | | 71,093 | |
| Income before income taxes | | | 13,829 | | | | 10,801 | | | | 48,452 | | | | 41,597 | |
| Income taxes | | | 4,430 | | | | 3,436 | | | | 16,184 | | | | 12,754 | |
| Net Income | | $ | 9,399 | | | $ | 7,365 | | | $ | 32,268 | | | $ | 28,843 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Earnings per common share: | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.93 | | | $ | 0.82 | | | $ | 3.23 | | | $ | 3.21 | |
| Diluted | | $ | 0.92 | | | $ | 0.81 | | | $ | 3.22 | | | $ | 3.19 | |
| | | | | | | | | | | | | | | | | |
| Average Shares Outstanding: | | | | | | | | | | | | | | | | |
| Basic | | | 10,155 | | | | 8,982 | | | | 9,975 | | | | 8,980 | |
| Diluted | | | 10,222 | | | | 9,060 | | | | 10,034 | | | | 9,053 | |
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) | | 2017 | | | 2016 | | | % change | | | 2017 | | | 2016 | | | % change | |
| Summary of Operations | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| Tax-equivalent interest income (2) | | $ | 29,009 | | | $ | 23,219 | | | | 24.9 | % | | $ | 110,016 | | | $ | 89,213 | | | | 23.3 | % |
| Interest expense | | | 3,140 | | | | 2,231 | | | | 40.7 | | | | 11,431 | | | | 8,440 | | | | 35.4 | |
| Tax-equivalent net interest income (2) | | | 25,869 | | | | 20,988 | | | | 23.3 | | | | 98,585 | | | | 80,773 | | | | 22.1 | |
| Provision for loan losses | | | 314 | | | | (149 | ) | | | NM | | | | 2,949 | | | | 283 | | | | NM | |
| Tax-equivalent NII after provision for loan loss (2) | | | 25,555 | | | | 21,137 | | | | 20.9 | | | | 95,636 | | | | 80,490 | | | | 18.8 | |
| Investment Securities gains | | | 160 | | | | - | | | | NM | | | | 584 | | | | 509 | | | | 14.7 | |
| Non-interest income (excluding securities gains/losses) | | | 9,737 | | | | 8,293 | | | | 17.4 | | | | 39,497 | | | | 33,521 | | | | 17.8 | |
| Non-interest expense | | | 21,141 | | | | 18,180 | | | | 16.3 | | | | 85,351 | | | | 71,093 | | | | 20.1 | |
| Income taxes | | | 4,430 | | | | 3,436 | | | | 28.9 | | | | 16,184 | | | | 12,754 | | | | 26.9 | |
| Net Income | | | 9,399 | | | | 7,365 | | | | 27.6 | | | | 32,268 | | | | 28,843 | | | | 11.9 | |
| Tax equivalent adjustment (2) | | | 482 | | | | 449 | | | | 7.3 | | | | 1,914 | | | | 1,830 | | | | 4.6 | |
| At Period End | | | | | | | | | | | | | | | | | | | | | | | | |
| Assets | | | 2,993,604 | | | | 2,477,597 | | | | 20.8 | | | | | | | | | | | | | |
| Earning assets | | | 2,691,438 | | | | 2,261,068 | | | | 19.0 | | | | | | | | | | | | | |
| Loans | | | 2,348,713 | | | | 1,940,487 | | | | 21.0 | | | | | | | | | | | | | |
| Allowance for loan losses | | | 26,683 | | | | 25,884 | | | | 3.1 | | | | | | | | | | | | | |
| Deposits | | | 2,437,656 | | | | 1,981,628 | | | | 23.0 | | | | | | | | | | | | | |
| Stockholders’ equity | | | 373,286 | | | | 293,018 | | | | 27.4 | | | | | | | | | | | | | |
| Average Balances | | | | | | | | | | | | | | | | | | | | | | | | |
| Assets | | | 2,968,445 | | | | 2,458,952 | | | | 20.7 | | | | 2,851,531 | | | | 2,397,439 | | | | 18.9 | |
| Earning assets | | | 2,646,643 | | | | 2,226,868 | | | | 18.9 | | | | 2,545,261 | | | | 2,168,046 | | | | 17.4 | |
| Loans | | | 2,279,358 | | | | 1,908,731 | | | | 19.4 | | | | 2,198,639 | | | | 1,853,419 | | | | 18.6 | |
| Deposits and interest-bearing liabilities | | | 2,560,258 | | | | 2,133,868 | | | | 20.0 | | | | 2,464,952 | | | | 2,080,444 | | | | 18.5 | |
| Deposits | | | 2,400,061 | | | | 1,954,631 | | | | 22.8 | | | | 2,298,712 | | | | 1,905,621 | | | | 20.6 | |
| Stockholders’ equity | | | 369,366 | | | | 292,301 | | | | 26.4 | | | | 351,236 | | | | 285,634 | | | | 23.0 | |
| Stockholders’ equity / assets | | | 12.44 | % | | | 11.89 | % | | | 4.7 | | | | 12.32 | % | | | 11.91 | % | | | 3.4 | |
| Per Common Share Data | | | | | | | | | | | | | | | | | | | | | | | | |
| Net Income | | | | | | | | | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.93 | | | $ | 0.82 | | | | 13.4 | | | $ | 3.23 | | | $ | 3.21 | | | | 0.6 | |
| Diluted | | | 0.92 | | | | 0.81 | | | | 13.6 | | | | 3.22 | | | | 3.19 | | | | 0.9 | |
| Dividends | | | 0.25 | | | | 0.22 | | | | 13.6 | | | | 1.00 | | | | 0.88 | | | | 13.6 | |
| Market Value: | | | | | | | | | | | | | | | | | | | | | | | | |
| High | | $ | 56.91 | | | $ | 52.31 | | | | 8.8 | | | $ | 56.91 | | | $ | 52.31 | | | | 8.8 | |
| Low | | | 50.28 | | | | 36.91 | | | | 36.2 | | | | 46.27 | | | | 34.80 | | | | 33.0 | |
| Close | | | 51.97 | | | | 50.74 | | | | 2.4 | | | | 51.97 | | | | 50.74 | | | | 2.4 | |
| Common Book Value | | | 36.76 | | | | 32.62 | | | | 12.7 | | | | 36.76 | | | | 32.62 | | | | 12.7 | |
| Tangible Common Book Value (1) | | | 26.49 | | | | 25.59 | | | | 3.5 | | | | 26.49 | | | | 25.59 | | | | 3.5 | |
| Shares outstanding, end of period (000) | | | 10,156 | | | | 8,983 | | | | 13.1 | | | | 10,156 | | | | 8,983 | | | | 13.1 | |
| Performance Ratios (annualized) | | | | | | | | | | | | | | | | | | | | | | | | |
| Tax-equivalent net interest margin (2) | | | 3.88 | % | | | 3.76 | % | | | 3.3 | | | | 3.88 | % | | | 3.74 | % | | | 3.7 | |
| Return on average assets | | | 1.26 | % | | | 1.19 | % | | | 5.4 | | | | 1.13 | % | | | 1.20 | % | | | (5.9 | ) |
| Return on average equity | | | 10.10 | % | | | 10.02 | % | | | 0.7 | | | | 9.19 | % | | | 10.10 | % | | | (9.0 | ) |
| Efficiency ratio (3) | | | 59.37 | % | | | 62.09 | % | | | (4.4 | ) | | | 61.81 | % | | | 62.20 | % | | | (0.6 | ) |
| Effective tax rate | | | 32.03 | % | | | 31.81 | % | | | 0.7 | | | | 33.40 | % | | | 30.66 | % | | | 8.9 | |
| Dividend payout ratio (basic) | | | 26.88 | % | | | 26.83 | % | | | 0.2 | | | | 30.96 | % | | | 27.41 | % | | | 12.9 | |
| (1) | Tangible common book value = total stockholders' equity less the sum of goodwill, core deposit and other intangibles, and preferred stock divided by shares outstanding at the end of the period. |
| (2) | 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% |
| (3) | Efficiency ratio = Non-interest expense divided by sum of tax-equivalent net interest income plus non-interest income, excluding securities gains or losses, net. |
| 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) | | 2017 | | | 2016 | | | 2017 | | | 2016 | |
| | | | | | | | | | | | | |
| Gain from sale of mortgage loans | | $ | 1,087 | | | $ | 1,208 | | | $ | 4,664 | | | $ | 5,311 | |
| Mortgage loan servicing revenue (expense): | | | | | | | | | | | | | | | | |
| Mortgage loan servicing revenue | | | 945 | | | | 922 | | | | 3,714 | | | | 3,560 | |
| Amortization of mortgage servicing rights | | | (363 | ) | | | (443 | ) | | | (1,464 | ) | | | (1,724 | ) |
| Mortgage servicing rights valuation adjustments | | | 69 | | | | 241 | | | | 90 | | | | 123 | |
| | | | 651 | | | | 720 | | | | 2,340 | | | | 1,959 | |
| Total revenue from sale and servicing of mortgage loans | | $ | 1,738 | | | $ | 1,928 | | | $ | 7,004 | | | $ | 7,270 | |
Yield Analysis
First Defiance Financial Corp.
| | | Three Months Ended December 31, | |
| | | (dollars in thousands) | |
| | | 2017 | | | | 2016 | |
| | | Average | | | | | | Yield | | | | Average | | | | | | Yield | |
| | | Balance | | | Interest(1) | | | Rate(2) | | | | Balance | | | Interest(1) | | | Rate(2) | |
| Interest-earning assets: | | | | | | | | | | | | | | | | | | | | | | | | | |
| Loans receivable | | $ | 2,279,358 | | | $ | 26,327 | | | | 4.58 | % | | | $ | 1,908,731 | | | $ | 21,028 | | | | 4.38 | % |
| Securities | | | 261,328 | | | | 2,179 | | | | 3.35 | % | (3) | | | 243,456 | | | | 1,972 | | | | 3.30 | %(3) |
| Interest Bearing Deposits | | | 89,965 | | | | 281 | | | | 1.24 | % | | | | 60,881 | | | | 80 | | | | 0.52 | % |
| FHLB stock | | | 15,992 | | | | 222 | | | | 5.51 | % | | | | 13,800 | | | | 139 | | | | 4.01 | % |
| Total interest-earning assets | | | 2,646,643 | | | | 29,009 | | | | 4.35 | % | | | | 2,226,868 | | | | 23,219 | | | | 4.16 | % |
| Non-interest-earning assets | | | 321,802 | | | | | | | | | | | | | 232,084 | | | | | | | | | |
| Total assets | | $ | 2,968,445 | | | | | | | | | | | | $ | 2,458,952 | | | | | | | | | |
| Deposits and Interest-bearing liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest bearing deposits | | $ | 1,847,837 | | | $ | 2,461 | | | | 0.53 | % | | | $ | 1,484,531 | | | $ | 1,648 | | | | 0.44 | % |
| FHLB advances and other | | | 94,773 | | | | 352 | | | | 1.47 | % | | | | 95,631 | | | | 348 | | | | 1.45 | % |
| Subordinated debentures | | | 36,161 | | | | 252 | | | | 2.76 | % | | | | 36,146 | | | | 205 | | | | 2.26 | % |
| Notes payable | | | 29,263 | | | | 75 | | | | 1.02 | % | | | | 47,460 | | | | 30 | | | | 0.25 | % |
| Total interest-bearing liabilities | | | 2,008,034 | | | | 3,140 | | | | 0.62 | % | | | | 1,663,768 | | | | 2,231 | | | | 0.53 | % |
| Non-interest bearing deposits | | | 552,224 | | | | - | | | | - | | | | | 470,100 | | | | - | | | | - | |
| Total including non-interest-bearing demand deposits | | | 2,560,258 | | | | 3,140 | | | | 0.49 | % | | | | 2,133,868 | | | | 2,231 | | | | 0.42 | % |
| Other non-interest-bearing liabilities | | | 38,821 | | | | | | | | | | | | | 32,783 | | | | | | | | | |
| Total liabilities | | | 2,599,079 | | | | | | | | | | | | | 2,166,651 | | | | | | | | | |
| Stockholders' equity | | | 369,366 | | | | | | | | | | | | | 292,301 | | | | | | | | | |
| Total liabilities and stockholders' equity | | $ | 2,968,445 | | | | | | | | | | | | $ | 2,458,952 | | | | | | | | | |
| Net interest income; interest rate spread | | | | | | $ | 25,869 | | | | 3.73 | % | | | | | | | $ | 20,988 | | | | 3.63 | % |
| Net interest margin (4) | | | | | | | | | | | 3.88 | % | | | | | | | | | | | | 3.76 | % |
| Average interest-earning assets to average interest bearing liabilities | | | | | | | | | | | 132 | % | | | | | | | | | | | | 134 | % |
| | | Twelve Months Ended December 31, | |
| | | 2017 | | | | 2016 | |
| | | Average | | | | | | Yield | | | | Average | | | | | | Yield | |
| | | Balance | | | Interest(1) | | | Rate | | | | Balance | | | Interest(1) | | | Rate | |
| Interest-earning assets: | | | | | | | | | | | | | | | | | | | | | | | | | |
| Loans receivable | | $ | 2,198,639 | | | $ | 99,742 | | | | 4.54 | % | | | $ | 1,853,419 | | | $ | 80,423 | | | | 4.34 | % |
| Securities | | | 258,775 | | | | 8,654 | | | | 3.39 | % | (3) | | | 233,407 | | | | 7,871 | | | | 3.48 | %(3) |
| Interest Bearing Deposits | | | 72,215 | | | | 836 | | | | 1.16 | % | | | | 67,420 | | | | 367 | | | | 0.54 | % |
| FHLB stock | | | 15,632 | | | | 784 | | | | 5.02 | % | | | | 13,800 | | | | 552 | | | | 4.00 | % |
| Total interest-earning assets | | | 2,545,261 | | | | 110,016 | | | | 4.33 | % | | | | 2,168,046 | | | | 89,213 | | | | 4.13 | % |
| Non-interest-earning assets | | | 306,270 | | | | | | | | | | | | | 229,393 | | | | | | | | | |
| Total assets | | $ | 2,851,531 | | | | | | | | | | | | $ | 2,397,439 | | | | | | | | | |
| Deposits and Interest-bearing liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest bearing deposits | | $ | 1,769,786 | | | $ | 8,818 | | | | 0.50 | % | | | $ | 1,463,890 | | | $ | 6,261 | | | | 0.43 | % |
| FHLB advances and other | | | 102,155 | | | | 1,470 | | | | 1.44 | % | | | | 85,856 | | | | 1,288 | | | | 1.50 | % |
| Subordinated debentures | | | 36,156 | | | | 935 | | | | 2.58 | % | | | | 36,141 | | | | 753 | | | | 2.09 | % |
| Notes payable | | | 27,929 | | | | 208 | | | | 0.74 | % | | | | 52,826 | | | | 138 | | | | 0.26 | % |
| Total interest-bearing liabilities | | | 1,936,026 | | | | 11,431 | | | | 0.59 | % | | | | 1,638,713 | | | | 8,440 | | | | 0.52 | % |
| Non-interest bearing deposits | | | 528,926 | | | | - | | | | - | | | | | 441,731 | | | | - | | | | - | |
| Total including non-interest-bearing demand deposits | | | 2,464,952 | | | | 11,431 | | | | 0.46 | % | | | | 2,080,444 | | | | 8,440 | | | | 0.41 | % |
| Other non-interest-bearing liabilities | | | 35,343 | | | | | | | | | | | | | 31,361 | | | | | | | | | |
| Total liabilities | | | 2,500,295 | | | | | | | | | | | | | 2,111,805 | | | | | | | | | |
| Stockholders' equity | | | 351,236 | | | | | | | | | | | | | 285,634 | | | | | | | | | |
| Total liabilities and stockholders' equity | | $ | 2,851,531 | | | | | | | | | | | | $ | 2,397,439 | | | | | | | | | |
| Net interest income; interest rate spread | | | | | | $ | 98,585 | | | | 3.74 | % | | | | | | | $ | 80,773 | | | | 3.61 | % |
| Net interest margin (4) | | | | | | | | | | | 3.88 | % | | | | | | | | | | | | 3.74 | % |
| Average interest-earning assets to average interest bearing liabilities | | | | | | | | | | | 131 | % | | | | | | | | | | | | 132 | % |
| (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%. |
| (3) | Securities yield = annualized interest income divided by the average balance of securities, excluding average unrealized gains/losses. |
| (4) | Net interest margin is tax equivalent 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 2017 | | | 3rd Qtr 2017 | | | 2nd Qtr 2017 | | | 1st Qtr 2017 | | | 4th Qtr 2016 | |
| Summary of Operations | | | | | | | | | | | | | | | |
| Tax-equivalent interest income (1) | | $ | 29,009 | | | $ | 28,557 | | | $ | 27,944 | | | $ | 24,505 | | | $ | 23,219 | |
| Interest expense | | | 3,140 | | | | 3,074 | | | | 2,826 | | | | 2,391 | | | | 2,231 | |
| Tax-equivalent net interest income (1) | | | 25,869 | | | | 25,483 | | | | 25,118 | | | | 22,114 | | | | 20,988 | |
| Provision for loan losses | | | 314 | | | | 462 | | | | 2,118 | | | | 55 | | | | (149 | ) |
| Tax-equivalent NII after provision for loan losses (1) | | | 25,555 | | | | 25,021 | | | | 23,000 | | | | 22,059 | | | | 21,137 | |
| Investment securities gains, net of impairment | | | 160 | | | | 158 | | | | 267 | | | | - | | | | - | |
| Non-interest income (excluding securities gains/losses) | | | 9,737 | | | | 9,337 | | | | 9,873 | | | | 10,549 | | | | 8,293 | |
| Non-interest expense | | | 21,141 | | | | 20,440 | | | | 20,630 | | | | 23,142 | | | | 18,180 | |
| Income taxes | | | 4,430 | | | | 4,219 | | | | 3,677 | | | | 3,857 | | | | 3,436 | |
| Net income | | | 9,399 | | | | 9,381 | | | | 8,347 | | | | 5,140 | | | | 7,365 | |
| Tax equivalent adjustment (1) | | | 482 | | | | 476 | | | | 486 | | | | 469 | | | | 449 | |
| At Period End | | | | | | | | | | | | | | | | | | | | |
| Total assets | | $ | 2,993,604 | | | $ | 2,935,030 | | | $ | 2,890,507 | | | $ | 2,928,697 | | | $ | 2,477,151 | |
| Earning assets | | | 2,691,438 | | | | 2,633,996 | | | | 2,596,674 | | | | 2,639,325 | | | | 2,261,068 | |
| Loans | | | 2,348,713 | | | | 2,276,042 | | | | 2,254,435 | | | | 2,238,006 | | | | 1,940,487 | |
| Allowance for loan losses | | | 26,683 | | | | 26,341 | | | | 25,915 | | | | 25,749 | | | | 25,884 | |
| Deposits | | | 2,437,656 | | | | 2,360,675 | | | | 2,326,702 | | | | 2,373,789 | | | | 1,981,628 | |
| Stockholders’ equity | | | 373,286 | | | | 367,924 | | | | 361,430 | | | | 354,191 | | | | 293,018 | |
| Stockholders’ equity / assets | | | 12.47 | % | | | 12.54 | % | | | 12.50 | % | | | 12.09 | % | | | 11.83 | % |
| Goodwill | | | 98,569 | | | | 98,370 | | | | 98,318 | | | | 90,768 | | | | 61,798 | |
| Average Balances | | | | | | | | | | | | | | | | | | | | |
| Total assets | | $ | 2,968,445 | | | $ | 2,906,795 | | | $ | 2,908,483 | | | $ | 2,622,402 | | | $ | 2,458,952 | |
| Earning assets | | | 2,646,643 | | | | 2,590,463 | | | | 2,591,397 | | | | 2,355,544 | | | | 2,226,868 | |
| Loans | | | 2,279,358 | | | | 2,251,071 | | | | 2,238,061 | | | | 2,026,067 | | | | 1,908,731 | |
| Deposits and interest-bearing liabilities | | | 2,560,258 | | | | 2,507,805 | | | | 2,516,024 | | | | 2,275,724 | | | | 2,133,868 | |
| Deposits | | | 2,400,061 | | | | 2,338,817 | | | | 2,346,336 | | | | 2,109,637 | | | | 1,954,631 | |
| Stockholders’ equity | | | 369,366 | | | | 363,612 | | | | 357,523 | | | | 314,442 | | | | 292,301 | |
| Stockholders’ equity / assets | | | 12.44 | % | | | 12.51 | % | | | 12.29 | % | | | 11.99 | % | | | 11.89 | % |
| Per Common Share Data | | | | | | | | | | | | | | | | | | | | |
| Net Income: | | | | | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.93 | | | $ | 0.92 | | | $ | 0.82 | | | $ | 0.54 | | | $ | 0.82 | |
| Diluted | | | 0.92 | | | | 0.92 | | | | 0.82 | | | | 0.54 | | | | 0.81 | |
| Dividends | | | 0.25 | | | | 0.25 | | | | 0.25 | | | | 0.25 | | | | 0.22 | |
| Market Value: | | | | | | | | | | | | | | | | | | | | |
| High | | $ | 56.91 | | | $ | 53.99 | | | $ | 56.90 | | | $ | 51.15 | | | $ | 52.31 | |
| Low | | | 50.28 | | | | 47.01 | | | | 48.78 | | | | 46.27 | | | | 36.91 | |
| Close | | | 51.97 | | | | 52.49 | | | | 52.68 | | | | 49.51 | | | | 50.74 | |
| Common Book Value | | | 36.76 | | | | 36.25 | | | | 35.61 | | | | 34.92 | | | | 32.62 | |
| Shares outstanding, end of period (in thousands) | | | 10,156 | | | | 10,149 | | | | 10,147 | | | | 10,143 | | | | 8,983 | |
| Performance Ratios (annualized) | | | | | | | | | | | | | | | | | | | | |
| Tax-equivalent net interest margin (1) | | | 3.88 | % | | | 3.91 | % | | | 3.89 | % | | | 3.81 | % | | | 3.76 | % |
| Return on average assets | | | 1.26 | % | | | 1.28 | % | | | 1.15 | % | | | 0.79 | % | | | 1.19 | % |
| Return on average equity | | | 10.10 | % | | | 10.24 | % | | | 9.36 | % | | | 6.63 | % | | | 10.02 | % |
| Efficiency ratio (2) | | | 59.37 | % | | | 58.70 | % | | | 58.96 | % | | | 70.85 | % | | | 62.09 | % |
| Effective tax rate | | | 32.03 | % | | | 31.02 | % | | | 30.58 | % | | | 42.87 | % | | | 31.81 | % |
| Common dividend payout ratio (basic) | | | 26.88 | % | | | 27.17 | % | | | 30.49 | % | | | 46.30 | % | | | 26.83 | % |
| (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 2017 | | | 3rd Qtr 2017 | | | 2nd Qtr 2017 | | | 1st Qtr 2017 | | | 4th Qtr 2016 | |
| Loan Portfolio Composition | | | | | | | | | | | | | | | |
| One to four family residential real estate | | $ | 274,862 | | | $ | 271,048 | | | $ | 276,578 | | | $ | 276,931 | | | $ | 207,550 | |
| Construction | | | 265,476 | | | | 244,920 | | | | 234,688 | | | | 199,724 | | | | 182,886 | |
| Commercial real estate | | | 1,235,221 | | | | 1,205,695 | | | | 1,182,087 | | | | 1,193,906 | | | | 1,040,562 | |
| Commercial | | | 526,142 | | | | 510,240 | | | | 515,004 | | | | 504,366 | | | | 469,055 | |
| Consumer finance | | | 29,109 | | | | 29,009 | | | | 28,860 | | | | 27,696 | | | | 16,680 | |
| Home equity and improvement | | | 135,457 | | | | 132,220 | | | | 130,429 | | | | 132,965 | | | | 118,429 | |
| Total loans | | | 2,466,267 | | | | 2,393,132 | | | | 2,367,646 | | | | 2,335,588 | | | | 2,035,162 | |
| Less: | | | | | | | | | | | | | | | | | | | | |
| Undisbursed loan funds | | | 115,972 | | | | 115,714 | | | | 112,000 | | | | 95,460 | | | | 93,355 | |
| Deferred loan origination fees | | | 1,582 | | | | 1,379 | | | | 1,211 | | | | 1,264 | | | | 1,320 | |
| Allowance for loan loss | | | 26,683 | | | | 26,341 | | | | 25,915 | | | | 25,749 | | | | 25,884 | |
| Net Loans | | $ | 2,322,030 | | | $ | 2,249,698 | | | $ | 2,228,520 | | | $ | 2,213,115 | | | $ | 1,914,603 | |
| | | | | | | | | | | | | | | | | | | | | |
| Allowance for loan loss activity | | | | | | | | | | | | | | | | | | | | |
| Beginning allowance | | $ | 26,341 | | | $ | 25,915 | | | $ | 25,749 | | | $ | 25,884 | | | $ | 25,923 | |
| Provision for loan losses | | | 314 | | | | 462 | | | | 2,118 | | | | 55 | | | | (149 | ) |
| Credit loss charge-offs: | | | | | | | | | | | | | | | | | | | | |
| One to four family residential real estate | | | 170 | | | | 60 | | | | 0 | | | | 49 | | | | 147 | |
| Commercial real estate | | | 29 | | | | 0 | | | | 110 | | | | 290 | | | | 0 | |
| Commercial | | | 210 | | | | 64 | | | | 2,027 | | | | 0 | | | | 234 | |
| Consumer finance | | | 27 | | | | 20 | | | | 21 | | | | 71 | | | | 53 | |
| Home equity and improvement | | | 55 | | | | 92 | | | | 100 | | | | 54 | | | | 98 | |
| Total charge-offs | | | 491 | | | | 236 | | | | 2,258 | | | | 464 | | | | 532 | |
| Total recoveries | | | 519 | | | | 200 | | | | 306 | | | | 274 | | | | 642 | |
| Net charge-offs (recoveries) | | | (28 | ) | | | 36 | | | | 1,952 | | | | 190 | | | | (110 | ) |
| Ending allowance | | $ | 26,683 | | | $ | 26,341 | | | $ | 25,915 | | | $ | 25,749 | | | $ | 25,884 | |
| | | | | | | | | | | | | | | | | | | | | |
| Credit Quality | | | | | | | | | | | | | | | | | | | | |
| Total non-performing loans (1) | | $ | 30,715 | | | $ | 29,152 | | | $ | 30,359 | | | $ | 15,057 | | | $ | 14,348 | |
| Real estate owned (REO) | | | 1,532 | | | | 532 | | | | 672 | | | | 705 | | | | 455 | |
| Total non-performing assets (2) | | $ | 32,247 | | | $ | 29,684 | | | $ | 31,031 | | | $ | 15,762 | | | $ | 14,803 | |
| Net charge-offs (recoveries) | | | (28 | ) | | | 36 | | | | 1,952 | | | | 190 | | | | (110 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Restructured loans, accruing (3) | | | 13,770 | | | | 13,044 | | | | 10,521 | | | | 9,814 | | | | 10,544 | |
| | | | | | | | | | | | | | | | | | | | | |
| Allowance for loan losses / loans | | | 1.14 | % | | | 1.16 | % | | | 1.15 | % | | | 1.15 | % | | | 1.33 | % |
| Allowance for loan losses / non-performing assets | | | 82.75 | % | | | 88.74 | % | | | 83.51 | % | | | 163.36 | % | | | 174.86 | % |
| Allowance for loan losses / non-performing loans | | | 86.87 | % | | | 90.36 | % | | | 85.36 | % | | | 171.01 | % | | | 180.40 | % |
| Non-performing assets / loans plus REO | | | 1.37 | % | | | 1.30 | % | | | 1.38 | % | | | 0.70 | % | | | 0.76 | % |
| Non-performing assets / total assets | | | 1.08 | % | | | 1.01 | % | | | 1.07 | % | | | 0.54 | % | | | 0.60 | % |
| Net charge-offs / average loans (annualized) | | | 0.00 | % | | | 0.01 | % | | | 0.35 | % | | | 0.04 | % | | | -0.02 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Deposit Balances | | | | | | | | | | | | | | | | | | | | |
| Non-interest-bearing demand deposits | | $ | 571,360 | | | $ | 519,911 | | | $ | 520,778 | | | $ | 579,943 | | | $ | 487,663 | |
| Interest-bearing demand deposits and money market | | | 1,005,519 | | | | 989,514 | | | | 967,834 | | | | 973,459 | | | | 816,665 | |
| Savings deposits | | | 302,022 | | | | 296,230 | | | | 288,643 | | | | 288,498 | | | | 243,369 | |
| Retail time deposits less than $250,000 | | | 504,912 | | | | 504,277 | | | | 499,298 | | | | 490,953 | | | | 400,080 | |
| Retail time deposits greater than $250,000 | | | 53,843 | | | | 50,743 | | | | 50,149 | | | | 40,936 | | | | 33,851 | |
| Total deposits | | $ | 2,437,656 | | | $ | 2,360,675 | | | $ | 2,326,702 | | | $ | 2,373,789 | | | $ | 1,981,628 | |
| (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, 2017 | | | | | | | | | | | | |
| One to four family residential real estate | | $ | 274,862 | | | $ | 269,624 | | | $ | 2,201 | | | $ | 3,037 | |
| Construction | | | 265,476 | | | | 265,476 | | | | - | | | | - | |
| Commercial real estate | | | 1,235,221 | | | | 1,215,980 | | | | 1,022 | | | | 18,219 | |
| Commercial | | | 526,142 | | | | 515,874 | | | | 1,427 | | | | 8,841 | |
| Consumer finance | | | 29,109 | | | | 28,728 | | | | 353 | | | | 28 | |
| Home equity and improvement | | | 135,457 | | | | 131,986 | | | | 2,881 | | | | 590 | |
| Total loans | | $ | 2,466,267 | | | $ | 2,427,668 | | | $ | 7,884 | | | $ | 30,715 | |
| | | | | | | | | | | | | | | | | |
| September 30, 2017 | | | | | | | | | | | | | | | | |
| One to four family residential real estate | | $ | 271,048 | | | $ | 265,873 | | | $ | 1,807 | | | $ | 3,368 | |
| Construction | | | 244,920 | | | | 244,920 | | | | - | | | | - | |
| Commercial real estate | | | 1,205,695 | | | | 1,187,826 | | | | 759 | | | | 17,110 | |
| Commercial | | | 510,240 | | | | 500,755 | | | | 1,415 | | | | 8,070 | |
| Consumer finance | | | 29,009 | | | | 28,741 | | | | 209 | | | | 59 | |
| Home equity and improvement | | | 132,220 | | | | 130,199 | | | | 1,476 | | | | 545 | |
| Total loans | | $ | 2,393,132 | | | $ | 2,358,314 | | | $ | 5,666 | | | $ | 29,152 | |
| | | | | | | | | | | | | | | | | |
| December 31, 2016 | | | | | | | | | | | | | | | | |
| One to four family residential real estate | | $ | 207,550 | | | $ | 203,624 | | | $ | 998 | | | $ | 2,928 | |
| Construction | | | 182,886 | | | | 182,886 | | | | - | | | | - | |
| Commercial real estate | | | 1,040,562 | | | | 1,030,833 | | | | 137 | | | | 9,592 | |
| Commercial | | | 469,055 | | | | 468,038 | | | | 10 | | | | 1,007 | |
| Consumer finance | | | 16,680 | | | | 16,438 | | | | 151 | | | | 91 | |
| Home equity and improvement | | | 118,429 | | | | 116,439 | | | | 1,260 | | | | 730 | |
| Total loans | | $ | 2,035,162 | | | $ | 2,018,258 | | | $ | 2,556 | | | $ | 14,348 | |
