Exhibit 99
| | | | | | |
 | | NEWS RELEASE | | |
| | Contact: | | William J. Small Chairman, President and CEO (419) 782-5015 bsmall@first-fed.com | | |
| | | | | | |
| | | | | | |
For Immediate Release
FIRST DEFIANCE FINANCIAL CORP. ANNOUNCES 2010
FOURTH QUARTER AND FULL YEAR EARNINGS
| | • | | Net Income of $2.3 million for 2010 fourth quarter, up from $555,000 in the fourth quarter of 2009 |
| | • | | Provision for Loan Losses of $5.7 million, down from $8.5 million in the fourth quarter of 2009 |
| | • | | Expenses related to core system conversion of $802,000 in the fourth quarter |
| | • | | Positive valuation adjustment of $1.1 million on Mortgage Servicing Rights |
DEFIANCE, OHIO (January 24, 2011) – First Defiance Financial Corp. (NASDAQ: FDEF) today announced that net income for the fiscal year ended December 31, 2010 totaled $8.1 million, or $.75 per diluted common share compared to $7.2 million or $.63 per diluted common share for the year ended December 31, 2009. The 2010 twelve month results included $1.3 million of core conversion related charges associated with the successful conversion to a new core processing provider. For the fourth quarter ended December 31, 2010, First Defiance earned $2.3 million or $.22 per diluted common share compared to $555,000 or $0.01 per diluted common share for the fourth quarter of 2009. The fourth quarter of 2010 included $802,000 of core conversion charges.
“I am pleased to report that despite the very difficult operating environment in 2010, First Defiance Financial Corp. was once again profitable,” said William J. Small, Chairman, President, and Chief Executive Officer of First Defiance Financial Corp. “Our core operating metrics remained strong throughout the year and asset quality stabilized in the last half of the year. Plus, Net Income is up on both a quarterly and full year basis.”
Credit Quality
The fourth quarter 2010 results include expense for provision for loan losses of $5.7 million, compared with $8.5 million in the same period in 2009 and $5.2 million in the third quarter of 2010. “We have been working to strengthen the reserve for loan loss to adequately cover probable future credit losses in this challenging credit environment,” said Small. “The allowance for loan loss as a percentage of total loans increased slightly to 2.70% at December 31, 2010 from 2.66% at September 30, 2010 and 2.26% at December 31, 2009.”
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Non-performing loans totaled $47.1 million at December 31, 2010, down from $47.9 million at December 31, 2009. The December 31, 2010 balance included $41.0 million of loans that are on non-accrual or 90 days past due and another $6.1 million of loans considered non-performing because of changes in terms granted to borrowers, although the loans are still accruing interest. In addition, First Defiance had $9.6 million of Real Estate Owned at December 31, 2010, down from $13.5 million at December 31, 2009. For the fourth quarter of 2010, First Defiance recorded net charge-offs of $5.9 million, which represented 1.58% of average loans outstanding (annualized) for the quarter, compared with 0.70% in the third quarter of 2010 and 0.79% in the fourth quarter of 2009.
“Asset quality continues to have an impact on earnings in this economy,” Small said. “We are still dealing with uncertainty in the commercial real estate market and stubbornly high unemployment rates in our region. However, we had a slight improvement in the fourth quarter over the third quarter results in the level of non-performing assets. We hope this indicates a positive trend.”
Core System Conversion
The company successfully converted its core systems in the fourth quarter, with no significant service interruptions or client impact. “The core conversion project consumed significant resources, in both capital and staff terms,” said Small. “The reach of this project was pervasive, and it took many months to unfold. I am proud of the conversion team and their efforts, as they consistently placed client needs first and worked to mitigate any negative effects. We can now move on to maximizing the advantages of the new system.”
Net Interest Margin
Net interest income increased to $17.8 million in the fourth quarter of 2010 compared to $17.5 million in the 2009 fourth quarter, and was flat with the third quarter of 2010, which was $17.8 million. Net interest margin was 3.89% for the 2010 fourth quarter compared to 3.94% in the third quarter of 2010 and 3.82% in the fourth quarter of 2009. Yield on interest earning assets declined by 36 basis points, to 5.09% in the fourth quarter of 2010 from 5.45% in the 2009 fourth quarter, while the cost of interest-bearing liabilities and non-interest-bearing demand deposits decreased by 45 basis points, to 1.22% from 1.67%.
“We are pleased with the stability of our net interest margin for the quarter,” said Small. “We will continue to look for pricing and other opportunities to maintain our margin in this extended low rate environment.”
Non-Interest Income
Non-interest income for the 2010 fourth quarter increased to $7.6 million from $5.6 million in the fourth quarter of 2009. Loss on investment securities was $14,000 for the fourth quarter of 2010, compared with a loss of $1.4 million net of a gain of $5,000 in the fourth quarter of 2009. Mortgage banking income increased to $2.7 million in the fourth quarter of 2010, compared with $2.1 million in the same period in 2009. Gains from the sale of mortgage loans increased in the fourth quarter of 2010 to $1.8 million from $1.5 million in the fourth quarter of 2009. Mortgage loan servicing revenue increased slightly to $856,000 in the fourth quarter 2010 over the fourth quarter of 2009.
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First Defiance recorded a positive valuation adjustment of $1.1 million on mortgage servicing rights (MSR) in the fourth quarter of 2010, compared with $397,000 in the fourth quarter of 2009. The MSR valuation adjustment is a reflection of the increase in the fair value of certain sectors of the Company’s portfolio of mortgage servicing rights.
“Mortgage banking income for the quarter was strong, with originations of $154 million,” commented Small. “This was an increase from the third quarter; our production clearly benefited from the low rate environment. However, we did see originations begin to slow in December and as the pipeline works down we anticipate lower production through the first part of 2011.”
Non-Interest Expenses
Total non-interest expense was $16.5 million for the quarter ended December 31, 2010, an increase from the $14.6 million of non-interest expense in the fourth quarter of 2009. The fourth quarter of 2010 included $802,000 of core conversion related charges.
Compensation and benefits increased by $845,000 compared to the 2009 fourth quarter. FDIC insurance expense increased to $885,000 in the fourth quarter of 2010 from $637,000 in the same period of 2009 as a result of the FDIC rate increases and higher insured deposits. Other non-interest expense increased to $4.4 million in the fourth quarter of 2010 from $3.7 million in the fourth quarter of 2009. Credit, collection and OREO-related costs were $934,000 in the quarter, a $283,000 reduction over the fourth quarter of 2009. Deferred compensation expense increased $162,000 from the fourth quarter of 2009. These increases were partially offset by decreases in marketing and miscellaneous other operating expenses.
Annual Results
On an annual basis, earnings for 2010 were $8.1 million compared with $7.2 million in 2009. Net interest income for 2010 totaled $70.2 million, a $2.8 million or 4.2% increase over 2009. Average interest-earning assets increased to $1.836 billion for 2010 compared to $1.822 billion in 2009. Net interest margin for 2010 was 3.89%, compared with 3.76% for 2009.
The provision for loan losses for 2010 was $23.2 million, which was even with the $23.2 million in 2009.
Non-interest income for the twelve month period ended December 31, 2010 was $27.6 million compared to $26.3 million during the same period of 2009. The 2010 results include securities losses of $339,000, of which $331,000 related to OTTI charges recognized for impaired investment securities. The 2009 securities losses of $3.7 million included $3.9 million related to OTTI which was partially offset by securities gains of $284,000. Service fees and other charges were $12.7 million for the year compared to $13.5 million during 2009. Mortgage banking income for 2010 was $7.8 million, down from $9.7 million in 2009. Non-interest expense increased to $63.5 million for the full year of 2010 from $60.5 million in 2009. Excluding the core conversion related charges in 2010 of $1.3 million, non-interest expense increased by 2.7%. FDIC insurance expense increased to $3.8 million from $3.4 million in 2009.
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Non-interest expense also includes $5.5 million of credit, collection and OREO-related costs compared with $3.4 million in 2009. The year over year decrease in expense relating to deferred compensation was $175,000.
Total Assets at $2.04 Billion
Total assets at December 31, 2010 were $2.04 billion, compared to $2.06 billion at December 31, 2009. Net loans receivable (excluding loans held for sale) were $1.48 billion at December 31, 2010 compared to $1.58 billion at December 31, 2009. Total cash and cash equivalents were $169.2 million at December 31, 2010 compared with $121.1 million at December 31, 2009, an increase of $48.1 million. Total deposits at December 31, 2010 were $1.58 billion, unchanged from December 31, 2009. Non-interest bearing deposits at December 31, 2010 were $216.7 million compared to $189.1 million at December 31, 2009. Total stockholders’ equity was $240.3 million at December 31, 2010 compared to $234.1 million at the December 31, 2009. Also at December 31, 2010, goodwill and other intangible assets totaled $63.7 million compared to $63.5 million at December 31, 2009.
Conference Call
First Defiance Financial Corp. will host a conference call at 11:00 a.m. (EST) on Tuesday, January 25, 2011 to discuss the earnings results and business trends. The conference call may be accessed by calling 1-800-860-2442. A live webcast may be accessed at http://www.talkpoint.com/viewer/starthere.asp?Pres=133653.
Audio replay of the Internet Web cast will be available atwww.fdef.com until February 28, 2011 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 & Investments. First Federal operates 33 full service branches and 45 ATM locations in northwest Ohio, southeast Michigan and Fort Wayne, Indiana. First Insurance & Investments specializes in property and casualty and group health and life insurance, with offices in Defiance, Archbold, Bryan and Bowling Green, Ohio.
For more information, visit the company’s Web site 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
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environment, the ability to sustain credit quality ratios at current or improved levels, the ability to sell OREO properties, continued strength in the market area for First Federal Bank of the Midwest, and the ability of the Company to grow in existing and adjacent markets. These forward-looking statements involve numerous risks and uncertainties, including those inherent in general and local banking, insurance and mortgage conditions, competitive factors specific to markets in which the Company and its subsidiaries operate, future interest rate levels, legislative and regulatory decisions or capital market conditions and other risks and uncertainties detailed from time to time in the Company’s Securities and Exchange Commission (SEC) filings, including the Company’s Annual Report on Form 10-K for the year ended December 31, 2009. 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.
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Consolidated Balance Sheets
First Defiance Financial Corp.
| | | | | | | | |
(in thousands) | | (Unaudited)
December 31,
2010 | | | December 31,
2009 | |
Assets | | | | | | | | |
Cash and cash equivalents | | | | | | | | |
Cash and amounts due from depository institutions | | $ | 26,164 | | | $ | 29,613 | |
Interest-bearing deposits | | | 143,000 | | | | 91,503 | |
| | | | | | | | |
| | | 169,164 | | | | 121,116 | |
| | |
Securities | | | | | | | | |
Available-for sale, carried at fair value | | | 165,252 | | | | 137,458 | |
Held-to-maturity, carried at amortized cost | | | 839 | | | | 1,920 | |
| | | | | | | | |
| | | 166,091 | | | | 139,378 | |
| | |
Loans | | | 1,519,503 | | | | 1,617,122 | |
Allowance for loan losses | | | (41,080 | ) | | | (36,547 | ) |
| | | | | | | | |
Loans, net | | | 1,478,423 | | | | 1,580,575 | |
Loans held for sale | | | 18,127 | | | | 10,346 | |
Mortgage servicing rights | | | 9,477 | | | | 8,958 | |
Accrued interest receivable | | | 6,374 | | | | 6,851 | |
Federal Home Loan Bank stock | | | 21,012 | | | | 21,376 | |
Bank Owned Life Insurance | | | 34,979 | | | | 30,804 | |
Office properties and equipment | | | 41,743 | | | | 43,597 | |
Real estate and other assets held for sale | | | 9,591 | | | | 13,527 | |
Goodwill | | | 57,556 | | | | 56,585 | |
Core deposit and other intangibles | | | 6,128 | | | | 6,888 | |
Deferred taxes | | | 6,799 | | | | 3,289 | |
Other assets | | | 11,047 | | | | 14,233 | |
| | | | | | | | |
Total Assets | | $ | 2,036,511 | | | $ | 2,057,523 | |
| | | | | | | | |
| | |
Liabilities and Stockholders’ Equity | | | | | | | | |
Non-interest-bearing deposits | | $ | 216,699 | | | $ | 189,132 | |
Interest-bearing deposits | | | 1,358,720 | | | | 1,391,094 | |
| | | | | | | | |
Total deposits | | | 1,575,419 | | | | 1,580,226 | |
Advances from Federal Home Loan Bank | | | 116,885 | | | | 146,927 | |
Notes payable and other interest-bearing liabilities | | | 56,247 | | | | 48,398 | |
Subordinated debentures | | | 36,083 | | | | 36,083 | |
Advance payments by borrowers for tax and insurance | | | 937 | | | | 665 | |
Other liabilities | | | 10,609 | | | | 11,138 | |
| | | | | | | | |
Total liabilities | | | 1,796,180 | | | | 1,823,437 | |
Stockholders’ Equity | | | | | | | | |
Preferred stock-including warrants and amortization of discount on preferred shares | | | 36,463 | | | | 36,293 | |
Common stock, net | | | 127 | | | | 127 | |
Common stock warrant | | | 878 | | | | 878 | |
Additional paid-in-capital | | | 140,845 | | | | 140,677 | |
Accumulated other comprehensive income (loss) | | | (342 | ) | | | (158 | ) |
Retained earnings | | | 134,988 | | | | 128,900 | |
Treasury stock, at cost | | | (72,628 | ) | | | (72,631 | ) |
| | | | | | | | |
Total stockholders’ equity | | | 240,331 | | | | 234,086 | |
| | | | | | | | |
Total Liabilities and Stockholders’ Equity | | $ | 2,036,511 | | | $ | 2,057,523 | |
| | | | | | | | |
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Consolidated Statements of Income (Unaudited)
First Defiance Financial Corp.
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
December 31, | | | Twelve Months Ended
December 31, | |
(in thousands, except per share amounts) | | 2010 | | | 2009 | | | 2010 | | | 2009 | |
Interest Income: | | | | | | | | | | | | | | | | |
Loans | | $ | 21,524 | | | $ | 23,473 | | | $ | 88,628 | | | $ | 93,702 | |
Investment securities | | | 1,499 | | | | 1,385 | | | | 6,055 | | | | 5,773 | |
Interest-bearing deposits | | | 105 | | | | 60 | | | | 303 | | | | 149 | |
FHLB stock dividends | | | 201 | | | | 229 | | | | 879 | | | | 955 | |
| | | | | | | | | | | | | | | | |
Total interest income | | | 23,329 | | | | 25,147 | | | | 95,865 | | | | 100,579 | |
Interest Expense: | | | | | | | | | | | | | | | | |
Deposits | | | 4,030 | | | | 5,896 | | | | 19,222 | | | | 26,102 | |
FHLB advances and other | | | 1,086 | | | | 1,249 | | | | 4,711 | | | | 5,114 | |
Subordinated debentures | | | 332 | | | | 332 | | | | 1,314 | | | | 1,471 | |
Notes Payable | | | 126 | | | | 137 | | | | 455 | | | | 570 | |
| | | | | | | | | | | | | | | | |
Total interest expense | | | 5,574 | | | | 7,614 | | | | 25,702 | | | | 33,257 | |
| | | | | | | | | | | | | | | | |
Net interest income | | | 17,755 | | | | 17,533 | | | | 70,163 | | | | 67,322 | |
Provision for loan losses | | | 5,652 | | | | 8,470 | | | | 23,177 | | | | 23,232 | |
| | | | | | | | | | | | | | | | |
Net interest income after provision for loan losses | | | 12,103 | | | | 9,063 | | | | 46,986 | | | | 44,090 | |
Non-interest Income: | | | | | | | | | | | | | | | | |
Service fees and other charges | | | 2,884 | | | | 3,514 | | | | 12,740 | | | | 13,503 | |
Mortgage banking income | | | 2,733 | | | | 2,070 | | | | 7,847 | | | | 9,747 | |
Gain on sale of non-mortgage loans | | | 419 | | | | 13 | | | | 516 | | | | 264 | |
Gain/(Loss) on sale of securities | | | (14 | ) | | | 5 | | | | (8 | ) | | | 284 | |
Impairment on securities | | | — | | | | (1,399 | ) | | | (331 | ) | | | (3,940 | ) |
Insurance and investment sales commissions | | | 1,302 | | | | 1,076 | | | | 5,140 | | | | 5,021 | |
Trust income | | | 135 | | | | 109 | | | | 507 | | | | 415 | |
Income from Bank Owned Life Insurance | | | 229 | | | | 219 | | | | 1,146 | | | | 557 | |
Other non-interest income | | | (134 | ) | | | (31 | ) | | | 33 | | | | 444 | |
| | | | | | | | | | | | | | | | |
Total Non-interest Income | | | 7,554 | | | | 5,576 | | | | 27,590 | | | | 26,295 | |
Non-interest Expense: | | | | | | | | | | | | | | | | |
Compensation and benefits | | | 7,242 | | | | 6,397 | | | | 27,403 | | | | 27,898 | |
Occupancy | | | 1,784 | | | | 1,951 | | | | 7,048 | | | | 7,852 | |
FDIC insurance premium | | | 885 | | | | 637 | | | | 3,766 | | | | 3,350 | |
State franchise tax | | | 467 | | | | 326 | | | | 2,088 | | | | 1,994 | |
Data processing | | | 1,353 | | | | 1,211 | | | | 4,909 | | | | 4,541 | |
Amortization of intangibles | | | 356 | | | | 355 | | | | 1,495 | | | | 1,456 | |
One time acquisition related charges | | | 10 | | | | — | | | | 63 | | | | — | |
Other non-interest expense | | | 4,388 | | | | 3,732 | | | | 16,691 | | | | 13,433 | |
| | | | | | | | | | | | | | | | |
Total Non-interest Expense | | | 16,485 | | | | 14,609 | | | | 63,463 | | | | 60,524 | |
| | | | | | | | | | | | | | | | |
Income before income taxes | | | 3,172 | | | | 30 | | | | 11,113 | | | | 9,861 | |
Income taxes | | | 904 | | | | (525 | ) | | | 3,004 | | | | 2,667 | |
| | | | | | | | | | | | | | | | |
Net Income | | $ | 2,268 | | | $ | 555 | | | $ | 8,109 | | | $ | 7,194 | |
| | | | | | | | | | | | | | | | |
| | | | |
Dividends Accrued on Preferred Shares | | | (463 | ) | | | (447 | ) | | | (1,850 | ) | | | (1,850 | ) |
Accretion on Preferred Shares | | | (43 | ) | | | (41 | ) | | | (171 | ) | | | (160 | ) |
| | | | | | | | | | | | | | | | |
| | | | |
Net Income Applicable to Common Shares | | $ | 1,762 | | | $ | 67 | | | $ | 6,088 | | | $ | 5,184 | |
| | | | | | | | | | | | | | | | |
| | | | |
Earnings per common share: | | | | | | | | | | | | | | | | |
Basic | | $ | 0.22 | | | $ | 0.01 | | | $ | 0.75 | | | $ | 0.64 | |
Diluted | | $ | 0.22 | | | $ | 0.01 | | | $ | 0.75 | | | $ | 0.63 | |
| | | | |
Core operating earnings per common share*: | | | | | | | | | | | | | | | | |
Basic | | $ | 0.22 | | | $ | 0.01 | | | $ | 0.75 | | | $ | 0.64 | |
Diluted | | $ | 0.22 | | | $ | 0.01 | | | $ | 0.75 | | | $ | 0.63 | |
| | | | |
Average Shares Outstanding: | | | | | | | | | | | | | | | | |
Basic | | | 8,118 | | | | 8,117 | | | | 8,118 | | | | 8,117 | |
Diluted | | | 8,178 | | | | 8,265 | | | | 8,153 | | | | 8,196 | |
| * | - See Non-GAAP Disclosure Reconciliations |
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Financial Summary and Comparison
First Defiance Financial Corp.
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | (Unaudited) | | | (Unaudited) | |
| | | Three Months Ended | | | Twelve Months Ended | |
| | | December 31, | | | December 31, | |
(dollars in thousands, except per share data) | | 2010 | | | 2009 | | | % change | | | 2010 | | | 2009 | | | % change | |
Summary of Operations | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Tax-equivalent interest income (1) | | $ | 23,651 | | | $ | 25,434 | | | | (7.0 | %) | | $ | 97,108 | | | $ | 101,727 | | | | (4.5 | %) |
Interest expense | | | 5,574 | | | | 7,614 | | | | (26.8 | ) | | | 25,702 | | | | 33,257 | | | | (22.7 | ) |
Tax-equivalent net interest income (1) | | | 18,077 | | | | 17,820 | | | | 1.4 | | | | 71,406 | | | | 68,470 | | | | 4.3 | |
Provision for loan losses | | | 5,652 | | | | 8,470 | | | | (33.3 | ) | | | 23,177 | | | | 23,232 | | | | (0.2 | ) |
Tax-equivalent NII after provision for loan loss (1) | | | 12,425 | | | | 9,350 | | | | 32.9 | | | | 48,229 | | | | 45,238 | | | | 6.6 | |
Investment Securities gains (losses) | | | (14 | ) | | | 5 | | | | (380.0 | ) | | | (8 | ) | | | 284 | | | | (102.8 | ) |
Impairment losses on securities | | | — | | | | (1,399 | ) | | | (100.0 | ) | | | (331 | ) | | | (3,940 | ) | | | (91.6 | ) |
Non-interest income-excluding securities losses | | | 7,568 | | | | 6,970 | | | | 8.6 | | | | 27,929 | | | | 29,951 | | | | (6.8 | ) |
Non-interest expense | | | 16,485 | | | | 14,609 | | | | 12.8 | | | | 63,463 | | | | 60,524 | | | | 4.9 | |
Non-interest expense-excluding non-core charges | | | 16,475 | | | | 14,609 | | | | 12.8 | | | | 63,400 | | | | 60,524 | | | | 4.8 | |
One time acquisition related charges | | | 10 | | | | — | | | | NM | | | | 63 | | | | — | | | | NM | |
Income taxes | | | 904 | | | | (525 | ) | | | (272.2 | ) | | | 3,004 | | | | 2,667 | | | | 12.6 | |
Net Income | | | 2,268 | | | | 555 | | | | 308.6 | | | | 8,109 | | | | 7,194 | | | | 12.7 | |
Dividends Declared on Preferred Shares | | | (463 | ) | | | (447 | ) | | | 3.6 | | | | (1,850 | ) | | | (1,850 | ) | | | — | |
Accretion on Preferred Shares | | | (43 | ) | | | (41 | ) | | | 4.9 | | | | (171 | ) | | | (160 | ) | | | 6.9 | |
Net Income Applicable to Common Shares | | | 1,762 | | | | 67 | | | | 2,529.9 | | | | 6,088 | | | | 5,184 | | | | 17.4 | |
Core operating earnings (2) | | | 2,274 | | | | 555 | | | | 309.7 | | | | 8,150 | | | | 7,194 | | | | 13.3 | |
Tax equivalent adjustment (1) | | | 322 | | | | 287 | | | | 12.2 | | | | 1,243 | | | | 1,148 | | | | 8.3 | |
At Period End | | | | | | | | | | | | | | | | | | | | | | | | |
Assets | | | 2,036,511 | | | | 2,057,523 | | | | (1.0 | ) | | | | | | | | | | | | |
Earning assets | | | 1,867,733 | | | | 1,879,725 | | | | (0.6 | ) | | | | | | | | | | | | |
Loans | | | 1,519,503 | | | | 1,617,122 | | | | (6.0 | ) | | | | | | | | | | | | |
Allowance for loan losses | | | 41,080 | | | | 36,547 | | | | 12.4 | | | | | | | | | | | | | |
Deposits | | | 1,575,419 | | | | 1,580,226 | | | | (0.3 | ) | | | | | | | | | | | | |
Stockholders’ equity | | | 240,331 | | | | 234,086 | | | | 2.7 | | | | | | | | | | | | | |
Average Balances | | | | | | | | | | | | | | | | | | | | | | | | |
Assets | | | 2,063,965 | | | | 2,058,219 | | | | 0.3 | | | | 2,054,808 | | | | 2,025,233 | | | | 1.5 | |
Earning assets | | | 1,844,206 | | | | 1,852,401 | | | | (0.4 | ) | | | 1,836,322 | | | | 1,822,273 | | | | 0.8 | |
Deposits and interest-bearing liabilities | | | 1,805,620 | | | | 1,805,090 | | | | 0.0 | | | | 1,800,749 | | | | 1,774,772 | | | | 1.5 | |
Loans | | | 1,496,374 | | | | 1,600,265 | | | | (6.5 | ) | | | 1,538,388 | | | | 1,600,725 | | | | (3.9 | ) |
Deposits | | | 1,601,516 | | | | 1,572,399 | | | | 1.9 | | | | 1,590,194 | | | | 1,547,339 | | | | 2.8 | |
Stockholders’ equity | | | 241,902 | | | | 235,152 | | | | 2.9 | | | | 238,795 | | | | 232,719 | | | | 2.6 | |
Stockholders’ equity / assets | | | 11.72 | % | | | 11.43 | % | | | 2.6 | | | | 11.62 | % | | | 11.49 | % | | | 1.1 | |
Per Common Share Data | | | | | | | | | | | | | | | | | | | | | | | | |
Net Income | | | | | | | | | | | | | | | | | | | | | | | | |
Basic | | $ | 0.22 | | | $ | 0.01 | | | | 2,100.0 | | | $ | 0.75 | | | $ | 0.64 | | | | 17.2 | |
Diluted | | | 0.22 | | | | 0.01 | | | | 2,100.0 | | | | 0.75 | | | | 0.63 | | | | 19.0 | |
Core operating earnings (2) | | | | | | | | | | | | | | | | | | | | | | | | |
Basic | | $ | 0.22 | | | $ | 0.01 | | | | 2,538.5 | | | $ | 0.75 | | | $ | 0.64 | | | | 18.2 | |
Diluted | | | 0.22 | | | | 0.01 | | | | 2,566.9 | | | | 0.75 | | | | 0.63 | | | | 18.9 | |
Dividends | | | — | | | | — | | | | NM | | | | — | | | | 0.30 | | | | (100.0 | ) |
Market Value: | | | | | | | | | | | | | | | | | | | | | | | | |
High | | $ | 12.32 | | | $ | 18.93 | | | | (34.9 | ) | | $ | 14.85 | | | $ | 18.93 | | | | (21.6 | ) |
Low | | | 9.94 | | | | 10.06 | | | | (1.2 | ) | | | 8.53 | | | | 3.76 | | | | 126.9 | |
Close | | | 11.90 | | | | 11.29 | | | | 5.4 | | | | 11.90 | | | | 11.29 | | | | 5.4 | |
Book Value | | | 25.00 | | | | 24.26 | | | | 3.1 | | | | 25.00 | | | | 24.26 | | | | 3.1 | |
Tangible Book Value | | | 17.16 | | | | 16.44 | | | | 4.4 | | | | 17.16 | | | | 16.44 | | | | 4.4 | |
Shares outstanding, end of period (000) | | | 8,118 | | | | 8,118 | | | | — | | | | 8,118 | | | | 8,118 | | | | — | |
Performance Ratios (annualized) | | | | | | | | | | | | | | | | | | | | | | | | |
Tax-equivalent net interest margin (1) | | | 3.89 | % | | | 3.82 | % | | | 2.0 | | | | 3.89 | % | | | 3.76 | % | | | 3.7 | |
Return on average assets -GAAP | | | 0.44 | % | | | 0.11 | % | | | 307.5 | | | | 0.39 | % | | | 0.36 | % | | | 11.1 | |
Return on average equity- GAAP | | | 3.72 | % | | | 0.94 | % | | | 297.2 | | | | 3.40 | % | | | 3.09 | % | | | 9.9 | |
Efficiency ratio (2) -GAAP | | | 64.28 | % | | | 58.93 | % | | | 9.1 | | | | 63.89 | % | | | 61.50 | % | | | 3.9 | |
Effective tax rate | | | 28.50 | % | | | -1750.00 | % | | | (101.6 | ) | | | 27.03 | % | | | 27.05 | % | | | (0.1 | ) |
Dividend payout ratio (basic) | | | 0.00 | % | | | 0.00 | % | | | NM | | | | 0.00 | % | | | 46.09 | % | | | (100.0 | ) |
| (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 |
8
Non-GAAP Disclosure Reconciliations
First Defiance Financial Corp.
Management believes that the presentation of the non-GAAP financial measures in this release assists investors when comparing results period-to-period in a more meaningful and consistent manner and provides a better measure of results for First Defiance's ongoing operations.
Core operating earnings are net income adjusted to exclude discontinued operations, merger, integration and restructuring expenses and the results of certain significant transactions not representative of ongoing operations.
| | | | | | | | | | | | | | | | |
| | | Three months ended | | | Twelve Months Ended | |
| Core Operating Earnings | | December 31, | | | December 31, | |
(dollars in thousands, except per share data) | | 2010 | | | 2009 | | | 2010 | | | 2009 | |
Net Income | | $ | 2,268 | | | $ | 555 | | | $ | 8,109 | | | $ | 7,194 | |
Acquisition related charges | | | 10 | | | | — | | | | 63 | | | | — | |
Tax effect | | | (4 | ) | | | — | | | | (22 | ) | | | — | |
| | | | | | | | | | | | | | | | |
After-tax non-operating items | | | 6 | | | | — | | | | 41 | | | | — | |
| | | | | | | | | | | | | | | | |
Core operating earnings | | $ | 2,274 | | | $ | 555 | | | $ | 8,150 | | | $ | 7,194 | |
| | | | | | | | | | | | | | | | |
Acquisition related charges in 2010 reflect charges associated with the purchase of the group benefits business from Andres, O'Neil & Lowe.
Core operating earnings is used as the numerator to calculate core operating return on average assets, core operating return on average equity and core operating earnings per share. Additionally, non-operating items are deducted from non-interest expense in the numerator and non-interest income in the denominator of the core operating efficiency ratio disclosed in the tables. Comparable information on a GAAP basis is also provided in the tables.
Income from Mortgage Banking
Revenue from sales and servicing of mortgage loans consisted of the following:
| | | | | | | | | | | | | | | | |
| | | Three months ended | | | Twelve Months Ended | |
| | | December 31, | | | December 31, | |
(dollars in thousands) | | 2010 | | | 2009 | | | 2010 | | | 2009 | |
Gain from sale of mortgage loans | | $ | 1,755 | | | $ | 1,468 | | | $ | 7,017 | | | $ | 8,744 | |
Mortgage loan servicing revenue (expense): | | | | | | | | | | | | | | | | |
Mortgage loan servicing revenue | | | 856 | | | | 751 | | | $ | 3,119 | | | | 2,860 | |
Amortization of mortgage servicing rights | | | (1,008 | ) | | | (546 | ) | | $ | (2,642 | ) | | | (3,171 | ) |
Mortgage servicing rights valuation adjustments | | | 1,130 | | | | 397 | | | $ | 353 | | | | 1,314 | |
| | | | | | | | | | | | | | | | |
| | | 978 | | | | 602 | | | | 830 | | | | 1,003 | |
| | | | | | | | | | | | | | | | |
Total revenue from sale and servicing of mortgage loans | | $ | 2,733 | | | $ | 2,070 | | | $ | 7,847 | | | $ | 9,747 | |
| | | | | | | | | | | | | | | | |
9
Yield Analysis
First Defiance Financial Corp.
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended December 31, | |
| | | (dollars in thousands) | |
| | | 2010 | | | 2009 | |
| | | Average
Balance | | | Interest(1) | | | Yield
Rate(2) | | | Average
Balance | | | Interest(1) | | | Yield
Rate(2) | |
Interest-earning assets: | | | | | | | | | | | | | | | | | | | | | | | | |
Loans receivable | | $ | 1,496,374 | | | $ | 21,559 | | | | 5.72 | % | | $ | 1,600,265 | | | $ | 23,517 | | | | 5.83 | % |
Securities | | | 161,638 | | | | 1,786 | | | | 4.45 | % | | | 134,575 | | | | 1,628 | | | | 4.82 | % |
Interest Bearing Deposits | | | 164,822 | | | | 105 | | | | 0.25 | % | | | 96,185 | | | | 60 | | | | 0.25 | % |
FHLB stock | | | 21,372 | | | | 201 | | | | 3.73 | % | | | 21,376 | | | | 229 | | | | 4.25 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total interest-earning assets | | | 1,844,206 | | | | 23,651 | | | | 5.09 | % | | | 1,852,401 | | | | 25,434 | | | | 5.45 | % |
Non-interest-earning assets | | | 219,759 | | | | | | | | | | | | 205,818 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total assets | | $ | 2,063,965 | | | | | | | | | | | $ | 2,058,219 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Deposits and Interest-bearing liabilities: | | | | | | | | | | | | | | | | | | | | | | | | |
Interest bearing deposits | | $ | 1,376,081 | | | $ | 4,030 | | | | 1.16 | % | | $ | 1,383,370 | | | $ | 5,896 | | | | 1.69 | % |
FHLB advances and other | | | 116,889 | | | | 1,086 | | | | 3.69 | % | | | 146,930 | | | | 1,249 | | | | 3.37 | % |
Other Borrowings | | | 50,992 | | | | 126 | | | | 0.98 | % | | | 49,649 | | | | 137 | | | | 1.09 | % |
Subordinated debentures | | | 36,223 | | | | 332 | | | | 3.64 | % | | | 36,112 | | | | 332 | | | | 3.65 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total interest-bearing liabilities | | | 1,580,185 | | | | 5,574 | | | | 1.40 | % | | | 1,616,061 | | | | 7,614 | | | | 1.87 | % |
Non-interest bearing deposits | | | 225,435 | | | | — | | | | — | | | | 189,029 | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total including non-interest-bearing demand deposits | | | 1,805,620 | | | | 5,574 | | | | 1.22 | % | | | 1,805,090 | | | | 7,614 | | | | 1.67 | % |
Other non-interest-bearing liabilities | | | 16,443 | | | | | | | | | | | | 17,977 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total liabilities | | | 1,822,063 | | | | | | | | | | | | 1,823,067 | | | | | | | | | |
Stockholders’ equity | | | 241,902 | | | | | | | | | | | | 235,152 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total liabilities and stockholders’ equity | | $ | 2,063,965 | | | | | | | | | | | $ | 2,058,219 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net interest income; interest rate spread | | | | | | $ | 18,077 | | | | 3.69 | % | | | | | | $ | 17,820 | | | | 3.58 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net interest margin (3) | | | | | | | | | | | 3.89 | % | | | | | | | | | | | 3.82 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Average interest-earning assets to average interest bearing liabilities | | | | | | | | | | | 117 | % | | | | | | | | | | | 115 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Twelve Months Ended December 31, | |
| | | 2010 | | | 2009 | |
| | | Average
Balance | | | Interest(1) | | | Yield
Rate(2) | | | Average
Balance | | | Interest(1) | | | Yield
Rate(2) | |
Interest-earning assets: | | | | | | | | | | | | | | | | | | | | | | | | |
Loans receivable | | $ | 1,538,388 | | | $ | 88,775 | | | | 5.77 | % | | $ | 1,600,725 | | | $ | 93,850 | | | | 5.86 | % |
Securities | | | 154,648 | | | | 7,151 | | | | 4.71 | % | | | 128,806 | | | | 6,773 | | | | 5.23 | % |
Interest Bearing Deposits | | | 121,911 | | | | 303 | | | | 0.25 | % | | | 71,366 | | | | 149 | | | | 0.21 | % |
FHLB stock | | | 21,375 | | | | 879 | | | | 4.11 | % | | | 21,376 | | | | 955 | | | | 4.47 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total interest-earning assets | | | 1,836,322 | | | | 97,108 | | | | 5.29 | % | | | 1,822,273 | | | | 101,727 | | | | 5.58 | % |
Non-interest-earning assets | | | 218,486 | | | | | | | | | | | | 202,960 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total assets | | $ | 2,054,808 | | | | | | | | | | | $ | 2,025,233 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Deposits and Interest-bearing liabilities: | | | | | | | | | | | | | | | | | | | | | | | | |
Interest bearing deposits | | $ | 1,389,330 | | | $ | 19,222 | | | | 1.38 | % | | $ | 1,370,826 | | | $ | 26,102 | | | | 1.90 | % |
FHLB advances and other | | | 127,281 | | | | 4,711 | | | | 3.70 | % | | | 146,978 | | | | 5,114 | | | | 3.48 | % |
Other Borrowings | | | 47,046 | | | | 455 | | | | 0.97 | % | | | 44,247 | | | | 570 | | | | 1.29 | % |
Subordinated debentures | | | 36,228 | | | | 1,314 | | | | 3.63 | % | | | 36,208 | | | | 1,471 | | | | 4.06 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total interest-bearing liabilities | | | 1,599,885 | | | | 25,702 | | | | 1.61 | % | | | 1,598,259 | | | | 33,257 | | | | 2.08 | % |
Non-interest bearing deposits | | | 200,864 | | | | — | | | | — | | | | 176,513 | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total including non-interest-bearing demand deposits | | | 1,800,749 | | | | 25,702 | | | | 1.43 | % | | | 1,774,772 | | | | 33,257 | | | | 1.87 | % |
Other non-interest-bearing liabilities | | | 15,264 | | | | | | | | | | | | 17,742 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total liabilities | | | 1,816,013 | | | | | | | | | | | | 1,792,514 | | | | | | | | | |
Stockholders’ equity | | | 238,795 | | | | | | | | | | | | 232,719 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total liabilities and stockholders’ equity | | $ | 2,054,808 | | | | | | | | | | | $ | 2,025,233 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net interest income; interest rate spread | | | | | | $ | 71,406 | | | | 3.68 | % | | | | | | $ | 68,470 | | | | 3.50 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net interest margin (3) | | | | | | | | | | | 3.89 | % | | | | | | | | | | | 3.76 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Average interest-earning assets to average interest bearing liabilities | | | | | | | | | | | 115 | % | | | | | | | | | | | 114 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
| (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) | Net interest margin is net interest income divided by average interest-earning assets. |
10
Selected Quarterly Information
First Defiance Financial Corp.
| | | | | | | | | | | | | | | | | | | | |
(dollars in thousands, except per share data) | | 4th Qtr 2010 | | | 3rd Qtr 2010 | | | 2nd Qtr 2010 | | | 1st Qtr 2010 | | | 4th Qtr 2009 | |
Summary of Operations | | | | | | | | | | | | | | | | | | | | |
Tax-equivalent interest income (1) | | $ | 23,651 | | | $ | 24,373 | | | $ | 24,655 | | | $ | 24,427 | | | $ | 25,434 | |
Interest expense | | | 5,574 | | | | 6,295 | | | | 6,788 | | | | 7,044 | | | | 7,614 | |
Tax-equivalent net interest income (1) | | | 18,077 | | | | 18,078 | | | | 17,867 | | | | 17,383 | | | | 17,820 | |
Provision for loan losses | | | 5,652 | | | | 5,196 | | | | 5,440 | | | | 6,889 | | | | 8,470 | |
Tax-equivalent NII after provision for loan losses (1) | | | 12,425 | | | | 12,882 | | | | 12,427 | | | | 10,494 | | | | 9,350 | |
Investment securities gains (losses) | | | (14 | ) | | | (190 | ) | | | (71 | ) | | | (64 | ) | | | (1,394 | ) |
Non-interest income (excluding securities gains/losses) | | | 7,568 | | | | 7,669 | | | | 5,862 | | | | 6,830 | | | | 6,970 | |
Non-interest expense | | | 16,485 | | | | 17,102 | | | | 15,045 | | | | 14,832 | | | | 14,609 | |
Income taxes | | | 904 | | | | 668 | | | | 808 | | | | 624 | | | | (525 | ) |
Net income | | | 2,268 | | | | 2,275 | | | | 2,059 | | | | 1,506 | | | | 555 | |
Dividends Declared on Preferred Shares | | | (463 | ) | | | (463 | ) | | | (462 | ) | | | (463 | ) | | | (447 | ) |
Accretion on Preferred Shares | | | (43 | ) | | | (43 | ) | | | (42 | ) | | | (40 | ) | | | (41 | ) |
Net Income (Loss) Applicable to Common Shares | | | 1,762 | | | | 1,769 | | | | 1,555 | | | | 1,003 | | | | 67 | |
Tax equivalent adjustment (1) | | | 322 | | | | 316 | | | | 306 | | | | 298 | | | | 287 | |
At Period End | | | | | | | | | | | | | | | | | | | | |
Total assets | | $ | 2,036,511 | | | $ | 2,042,239 | | | $ | 2,038,656 | | | $ | 2,058,775 | | | $ | 2,057,523 | |
Earning assets | | | 1,867,733 | | | | 1,866,939 | | | | 1,858,300 | | | | 1,884,650 | | | | 1,879,725 | |
Loans | | | 1,519,503 | | | | 1,549,677 | | | | 1,571,413 | | | | 1,576,602 | | | | 1,617,122 | |
Allowance for loan losses | | | 41,080 | | | | 41,343 | | | | 38,852 | | | | 38,980 | | | | 36,547 | |
Deposits | | | 1,575,419 | | | | 1,590,648 | | | | 1,580,520 | | | | 1,599,584 | | | | 1,580,226 | |
Stockholders’ equity | | | 240,331 | | | | 241,029 | | | | 238,438 | | | | 235,655 | | | | 234,086 | |
Stockholders’ equity / assets | | | 11.80 | % | | | 11.80 | % | | | 11.70 | % | | | 11.45 | % | | | 11.38 | % |
Goodwill | | | 57,556 | | | | 57,556 | | | | 57,556 | | | | 56,585 | | | | 56,585 | |
Average Balances | | | | | | | | | | | | | | | | | | | | |
Total assets | | $ | 2,063,965 | | | $ | 2,045,835 | | | $ | 2,060,925 | | | $ | 2,048,506 | | | $ | 2,058,219 | |
Earning assets | | | 1,844,206 | | | | 1,823,911 | | | | 1,845,306 | | | | 1,831,867 | | | | 1,852,401 | |
Deposits and interest-bearing liabilities | | | 1,805,620 | | | | 1,790,022 | | | | 1,808,944 | | | | 1,798,408 | | | | 1,805,090 | |
Loans | | | 1,496,374 | | | | 1,545,378 | | | | 1,551,396 | | | | 1,560,405 | | | | 1,600,265 | |
Deposits | | | 1,601,516 | | | | 1,585,300 | | | | 1,597,820 | | | | 1,576,140 | | | | 1,572,399 | |
Stockholders’ equity | | | 241,902 | | | | 240,709 | | | | 237,076 | | | | 235,492 | | | | 235,152 | |
Stockholders’ equity / assets | | | 11.72 | % | | | 11.77 | % | | | 11.50 | % | | | 11.50 | % | | | 11.43 | % |
Per Common Share Data | | | | | | | | | | | | | | | | | | | | |
Net Income: | | | | | | | | | | | | | | | | | | | | |
Basic | | $ | 0.22 | | | $ | 0.22 | | | $ | 0.19 | | | $ | 0.12 | | | $ | 0.01 | |
Diluted | | | 0.22 | | | | 0.22 | | | | 0.19 | | | | 0.12 | | | | 0.01 | |
Dividends | | | 0.00 | | | | 0.00 | | | | 0.00 | | | | 0.00 | | | | 0.00 | |
Market Value: | | | | | | | | | | | | | | | | | | | | |
High | | $ | 12.32 | | | $ | 10.63 | | | $ | 14.85 | | | $ | 12.33 | | | $ | 18.93 | |
Low | | | 9.94 | | | | 8.55 | | | | 8.53 | | | | 9.20 | | | | 10.06 | |
Close | | | 11.90 | | | | 10.06 | | | | 8.94 | | | | 10.12 | | | | 11.29 | |
Book Value | | | 25.00 | | | | 25.10 | | | | 24.78 | | | | 24.45 | | | | 24.26 | |
Shares outstanding, end of period (in thousands) | | | 8,118 | | | | 8,118 | | | | 8,118 | | | | 8,117 | | | | 8,118 | |
Performance Ratios (annualized) | | | | | | | | | | | | | | | | | | | | |
Tax-equivalent net interest margin (1) | | | 3.89 | % | | | 3.94 | % | | | 3.89 | % | | | 3.85 | % | | | 3.82 | % |
Return on average assets | | | 0.44 | % | | | 0.44 | % | | | 0.40 | % | | | 0.30 | % | | | 0.11 | % |
Return on average equity | | | 3.72 | % | | | 3.75 | % | | | 3.48 | % | | | 2.59 | % | | | 0.94 | % |
Efficiency ratio (2) | | | 64.28 | % | | | 66.42 | % | | | 63.40 | % | | | 61.26 | % | | | 58.93 | % |
Effective tax rate | | | 28.50 | % | | | 22.70 | % | | | 28.18 | % | | | 29.30 | % | | | -1750.00 | % |
Common dividend payout ratio (basic) | | | 0.00 | % | | | 0.00 | % | | | 0.00 | % | | | 0.00 | % | | | 0.00 | % |
| (1) | Interest income on tax-exempt securities and loans has been adjusted to a tax-equivalent basis using the statutory federal income tax rate of 35% |
| (2) | Efficiency ratio = Non-interest expense divided by sum of tax-equivalent net interest income plus non-interest income, excluding securities gains, net. |
11
Selected Quarterly Information
First Defiance Financial Corp.
| | | | | | | | | | | | | | | | | | | | |
(dollars in thousands, except per share data) | | 4th Qtr 2010 | | | 3rd Qtr 2010 | | | 2nd Qtr 2010 | | | 1st Qtr 2010 | | | 4th Qtr 2009 | |
| | | | | |
Loan Portfolio Composition | | | | | | | | | | | | | | | | | | | | |
One to four family residential real estate | | $ | 209,590 | | | $ | 213,574 | | | $ | 217,603 | | | $ | 222,099 | | | $ | 227,592 | |
Construction | | | 32,497 | | | | 31,722 | | | | 43,333 | | | | 46,369 | | | | 48,626 | |
Commercial real estate | | | 764,447 | | | | 776,972 | | | | 790,521 | | | | 797,449 | | | | 806,889 | |
Commercial | | | 369,530 | | | | 372,583 | | | | 364,281 | | | | 352,923 | | | | 379,408 | |
Consumer finance | | | 23,027 | | | | 27,060 | | | | 28,961 | | | | 31,718 | | | | 34,105 | |
Home equity and improvement | | | 133,412 | | | | 137,747 | | | | 140,969 | | | | 144,826 | | | | 147,977 | |
| | | | | | | | | | | | | | | | | | | | |
Total loans | | | 1,532,503 | | | | 1,559,658 | | | | 1,585,668 | | | | 1,595,384 | | | | 1,644,597 | |
Less: | | | | | | | | | | | | | | | | | | | | |
Loans in process | | | 12,080 | | | | 9,030 | | | | 13,283 | | | | 17,794 | | | | 26,494 | |
Deferred loan origination fees | | | 920 | | | | 951 | | | | 972 | | | | 988 | | | | 981 | |
Allowance for loan loss | | | 41,080 | | | | 41,343 | | | | 38,852 | | | | 38,980 | | | | 36,547 | |
| | | | | | | | | | | | | | | | | | | | |
Net Loans | | $ | 1,478,423 | | | $ | 1,508,334 | | | $ | 1,532,561 | | | $ | 1,537,622 | | | $ | 1,580,575 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Allowance for loan loss activity | | | | | | | | | | | | | | | | | | | | |
Beginning allowance | | | 41,343 | | | | 38,852 | | | | 38,980 | | | | 36,547 | | | | 31,248 | |
Provision for loan losses | | | 5,652 | | | | 5,196 | | | | 5,440 | | | | 6,889 | | | | 8,470 | |
Credit loss charge-offs: | | | | | | | | | | | | | | | | | | | | |
One to four family residential real estate | | | 483 | | | | 1,164 | | | | 1,135 | | | | 326 | | | | 884 | |
Commercial real estate | | | 4,806 | | | | 688 | | | | 1,243 | | | | 3,191 | | | | 1,912 | |
Commercial | | | 388 | | | | 842 | | | | 3,153 | | | | 735 | | | | 354 | |
Consumer finance | | | 55 | | | | 28 | | | | 16 | | | | 25 | | | | 75 | |
Home equity and improvement | | | 347 | | | | 148 | | | | 156 | | | | 399 | | | | 134 | |
| | | | | | | | | | | | | | | | | | | | |
Total charge-offs | | | 6,079 | | | | 2,870 | | | | 5,703 | | | | 4,676 | | | | 3,359 | |
Total recoveries | | | 164 | | | | 165 | | | | 135 | | | | 220 | | | | 188 | |
| | | | | | | | | | | | | | | | | | | | |
Net charge-offs (recoveries) | | | 5,915 | | | | 2,705 | | | | 5,568 | | | | 4,456 | | | | 3,171 | |
| | | | | | | | | | | | | | | | | | | | |
Ending allowance | | $ | 41,080 | | | $ | 41,343 | | | $ | 38,852 | | | $ | 38,980 | | | $ | 36,547 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Credit Quality | | | | | | | | | | | | | | | | | | | | |
Non-accrual loans | | $ | 41,040 | | | $ | 37,377 | | | $ | 31,804 | | | $ | 33,567 | | | $ | 41,191 | |
Restructured loans, accruing | | | 6,062 | | | | 8,784 | | | | 8,918 | | | | 7,023 | | | | 6,715 | |
| | | | | | | | | | | | | | | | | | | | |
Total non-performing loans (1) | | | 47,102 | | | | 46,161 | | | | 40,722 | | | | 40,590 | | | | 47,906 | |
Real estate owned (REO) | | | 9,591 | | | | 11,127 | | | | 12,735 | | | | 12,768 | | | | 13,527 | |
| | | | | | | | | | | | | | | | | | | | |
Total non-performing assets (2) | | $ | 56,693 | | | $ | 57,288 | | | $ | 53,457 | | | $ | 53,358 | | | $ | 61,433 | |
| | | | | | | | | | | | | | | | | | | | |
Net charge-offs | | | 5,915 | | | | 2,705 | | | | 5,568 | | | | 4,456 | | | | 3,171 | |
| | | | | |
Allowance for loan losses / loans | | | 2.70 | % | | | 2.67 | % | | | 2.47 | % | | | 2.47 | % | | | 2.26 | % |
Allowance for loan losses / non-performing assets | | | 72.46 | % | | | 72.17 | % | | | 72.68 | % | | | 73.05 | % | | | 59.49 | % |
Allowance for loan losses / non-performing loans | | | 87.21 | % | | | 89.56 | % | | | 95.41 | % | | | 96.03 | % | | | 76.29 | % |
Non-performing assets / loans plus REO | | | 3.71 | % | | | 3.67 | % | | | 3.37 | % | | | 3.36 | % | | | 3.77 | % |
Non-performing assets / total assets | | | 2.78 | % | | | 2.81 | % | | | 2.62 | % | | | 2.59 | % | | | 2.99 | % |
Net charge-offs / average loans (annualized) | | | 1.58 | % | | | 0.70 | % | | | 1.44 | % | | | 1.14 | % | | | 0.79 | % |
| | | | | |
Deposit Balances | | | | | | | | | | | | | | | | | | | | |
Non-interest-bearing demand deposits | | $ | 216,699 | | | $ | 213,414 | | | $ | 190,140 | | | $ | 187,231 | | | $ | 189,132 | |
Interest-bearing demand deposits and money market | | | 555,434 | | | | 543,539 | | | | 517,170 | | | | 525,311 | | | | 499,575 | |
Savings deposits | | | 144,491 | | | | 141,190 | | | | 140,473 | | | | 138,364 | | | | 130,156 | |
Retail time deposits less than $100,000 | | | 465,774 | | | | 485,777 | | | | 527,421 | | | | 539,313 | | | | 550,172 | |
Retail time deposits greater than $100,000 | | | 151,258 | | | | 161,413 | | | | 158,069 | | | | 161,071 | | | | 163,838 | |
National/Brokered time deposits | | | 41,763 | | | | 45,315 | | | | 47,247 | | | | 48,294 | | | | 47,353 | |
| | | | | | | | | | | | | | | | | | | | |
Total deposits | | $ | 1,575,419 | | | $ | 1,590,648 | | | $ | 1,580,520 | | | $ | 1,599,584 | | | $ | 1,580,226 | |
| | | | | | | | | | | | | | | | | | | | |
| (1) | Non-performing loans consist of non-accrual loans that are contractually past due 90 days or more and loans that are deemed impaired. |
| (2) | Non-performing assets are non-performing loans plus real estate and other assets acquired by foreclosure or deed-in-lieu thereof. |
12
Loan Delinquency Information
First Defiance Financial Corp.
| | | | | | | | | | | | | | | | | | | | |
(dollars in thousands) | | Total Balance | | | Current | | | 30 to 89 days
past due | | | Non Accrual
Loans | | | Troubled Debt
Restructuring | |
| | | | | |
December 31, 2010 | | | | | | | | | | | | | | | | | | | | |
One to four family residential real estate | | $ | 209,590 | | | $ | 195,699 | | | $ | 3,371 | | | $ | 7,232 | | | $ | 3,288 | |
Construction | | | 32,497 | | | | 32,433 | | | | — | | | | 64 | | | | — | |
Commercial real estate | | | 764,447 | | | | 737,621 | | | | 2,942 | | | | 21,737 | | | | 2,147 | |
Commercial | | | 369,530 | | | | 355,654 | | | | 1,983 | | | | 11,547 | | | | 346 | |
Consumer finance | | | 23,027 | | | | 22,714 | | | | 299 | | | | 14 | | | | — | |
Home equity and improvement | | | 133,412 | | | | 130,165 | | | | 2,520 | | | | 446 | | | | 281 | |
| | | | | | | | | | | | | | | | | | | | |
Total loans | | | 1,532,503 | | | $ | 1,474,286 | | | $ | 11,115 | | | $ | 41,040 | | | $ | 6,062 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
September 30, 2010 | | | | | | | | | | | | | | | | | | | | |
One to four family residential real estate | | $ | 213,574 | | | $ | 200,573 | | | $ | 2,483 | | | $ | 6,589 | | | $ | 3,929 | |
Construction | | | 31,722 | | | | 31,553 | | | | — | | | | 169 | | | | — | |
Commercial real estate | | | 776,972 | | | | 745,663 | | | | 3,420 | | | | 23,421 | | | | 4,468 | |
Commercial | | | 372,583 | | | | 364,958 | | | | 318 | | | | 6,955 | | | | 352 | |
Consumer finance | | | 27,060 | | | | 26,842 | | | | 184 | | | | 34 | | | | — | |
Home equity and improvement | | | 137,747 | | | | 135,825 | | | | 1,678 | | | | 209 | | | | 35 | |
| | | | | | | | | | | | | | | | | | | | |
Total loans | | $ | 1,559,658 | | | $ | 1,505,414 | | | $ | 8,083 | | | $ | 37,377 | | | $ | 8,784 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
June 30, 2010 | | | | | | | | | | | | | | | | | | | | |
One to four family residential real estate | | $ | 217,603 | | | $ | 202,472 | | | $ | 4,790 | | | $ | 6,457 | | | $ | 3,884 | |
Construction | | | 43,333 | | | | 43,079 | | | | — | | | | 254 | | | | — | |
Commercial real estate | | | 790,521 | | | | 763,913 | | | | 4,057 | | | | 17,912 | | | | 4,639 | |
Commercial | | | 364,281 | | | | 356,500 | | | | 508 | | | | 6,898 | | | | 375 | |
Consumer finance | | | 28,961 | | | | 28,767 | | | | 177 | | | | 17 | | | | — | |
Home equity and improvement | | | 140,969 | | | | 139,219 | | | | 1,464 | | | | 266 | | | | 20 | |
| | | | | | | | | | | | | | | | | | | | |
Total loans | | $ | 1,585,668 | | | $ | 1,533,950 | | | $ | 10,996 | | | $ | 31,804 | | | $ | 8,918 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
December 31, 2009 | | | | | | | | | | | | | | | | | | | | |
One to four family residential real estate | | $ | 227,592 | | | $ | 215,209 | | | $ | 4,333 | | | $ | 5,349 | | | $ | 2,701 | |
Construction | | | 48,625 | | | | 47,950 | | | | — | | | | 675 | | | | — | |
Commercial real estate | | | 806,890 | | | | 775,604 | | | | 3,280 | | | | 24,042 | | | | 3,964 | |
Commercial | | | 379,408 | | | | 367,592 | | | | 1,151 | | | | 10,615 | | | | 50 | |
Consumer finance | | | 34,105 | | | | 33,669 | | | | 377 | | | | 59 | | | | — | |
Home equity and improvement | | | 147,977 | | | | 145,481 | | | | 2,045 | | | | 451 | | | | — | |
| | | | | | | | | | | | | | | | | | | | |
Total loans | | $ | 1,644,597 | | | $ | 1,585,505 | | | $ | 11,186 | | | $ | 41,191 | | | $ | 6,715 | |
| | | | | | | | | | | | | | | | | | | | |
13
