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. ANNOUNCES

2017 FIRST QUARTER EARNINGS

 

·

Earnings per share of $0.54 for 2017 first quarter, after merger related costs of $0.27 per share

·

Net income of $5.1 million for 2017 first quarter, after merger related costs of $2.5 million after tax

·

Net interest margin of 3.81% for the 2017 first quarter, compared to 3.80% in the first quarter of 2016

·

Loan growth $298.5 million during the 2017 first quarter, including $285.7 million from acquisition

·

Deposit growth $392.2 million during the 2017 first quarter, including $308.0 million from acquisition

·

Non-performing assets to total assets down to 0.54% at 2017 first quarter-end from 0.80% at 2016 first quarter-end

 

DEFIANCE, OHIO (April 17, 2017) – First Defiance Financial Corp. (NASDAQ: FDEF) announced today that earnings for the first quarter of 2017 were $5.1 million, or $0.54 per diluted common share, which included the acquisition and operations of Commercial Bancshares, Inc. and its banking subsidiary, Commercial Savings Bank (collectively “CSB”), at February 24, 2017. These results included merger and conversion expenses related to the acquisition of $3.6 million, which had an after tax impact of $2.5 million, or $0.27 per diluted share.

 

In addition, first quarter 2017 results reflected the impact of the purchase of a bank owned life insurance policy including a tax-free value enhancement gain of $1.5 million and the surrender of a bank owned life insurance policy which added $1.7 million to income tax expense. Together, these transactions reduced net income approximately $0.2 million, or $0.02 per diluted share.

 

For the comparable period last year, net income was $7.2 million, or $0.79 per diluted share.

 

“We are very pleased with our strong operating performance for the first quarter and our successful completion of the merger and integration of CSB late in the quarter,” said Donald P. Hileman, President and Chief Executive Officer of First Defiance Financial Corp. “While the inclusion of CSB’s financials in the current quarter’s results impacts comparison of the quarter’s operating results, we were encouraged by our organic loan and deposit growth and the continued strength of our net interest margin. We look forward to building relationships in our new markets and realizing the benefits from the merger in our future results.”

 

 

Net interest income up compared to first quarter 2016

 

Net interest income of $21.6 million in the first quarter of 2017 was up from $19.2 million in the first quarter of 2016. Net interest income grew $2.5 million over the prior year’s first quarter including approximately $945,000 from the acquisition of CSB completed during the first quarter 2017. Net interest margin was 3.81% for the first quarter of 2017, up from 3.76% in the fourth quarter of 2016, and up from 3.80% in the first quarter of 2016. Yield on interest earning assets were up slightly at 4.22% in the first quarter of 2017 compared to 4.18% in the first quarter of 2016. The cost of interest-bearing liabilities increased by 5 basis points in the first quarter of 2017 to 0.54% from 0.49% in the first quarter of 2016.

 

“The acquisition of CSB, particularly with its profitable earning asset mix and low cost deposit funding, supplemented our balance sheet very nicely as net interest income rose 12.8% over the first quarter last year,” said Hileman. “Our net interest margin showed improvement in the first quarter with the rise in interest rates and remains well positioned for future rate movements.”

 

Non-interest income up from first quarter 2016

 

First Defiance’s non-interest income for the first quarter of 2017 was $10.5 million compared with $8.6 million in the first quarter of 2016. The first quarter 2017 included a $1.5 million enhancement value gain related to the purchase of bank owned life insurance, while the first quarter 2016 included net securities gains of $131,000 and net gains on the sale of OREO of $317,000.

 

Mortgage banking income increased to $1.7 million in the first quarter of 2017, up from $1.5 million in the first quarter of 2016, mostly due to higher mortgage volumes this year compared to a year ago. Gains from the sale of mortgage loans increased in the first quarter of 2017 to $1.1 million from $1.0 million in the first quarter of 2016. Mortgage loan servicing revenue was $934,000 in the first quarter of 2017, up slightly from $877,000 in the first quarter of 2016. First Defiance had a positive change in the valuation adjustment in mortgage servicing assets of $33,000 in the first quarter of 2017 compared with a negative adjustment of $21,000 in the first quarter of 2016.

 

For the first quarter 2017, service fees and other charges were $2.8 million, up from $2.6 million in the first quarter of 2016; and commissions from the sale of insurance products were $3.5 million, up from $3.1 million in the first quarter of 2016. The first quarter typically includes contingent revenues, bonuses paid by insurance carriers when the Company achieves certain loss ratios or growth targets. In the first quarter of 2017, First Defiance’s insurance subsidiary, First Insurance Group, earned $1.2 million of contingent income, compared to $799,000 during the first quarter of 2016. Trust income was $450,000 in the first quarter of 2017, up from $427,000 in the first quarter of 2016.

 

“First quarter total non-interest income was up significantly from a year ago due to growth in all of our key business lines plus an enhancement to our bank-owned life insurance revenues,” said Hileman. “Increases in service fees, mortgage banking, insurance commissions and trust income all contributed to our improvement this quarter.”

 

 

Non-interest expenses up from first quarter 2016

 

Total non-interest expense was $23.1 million in the first quarter of 2017, up $5.8 million from $17.3 million in the first quarter of 2016. The first quarter 2017 included expenses of $3.6 million related to the CSB merger and conversion. The remainder of the increase was mostly due to the operating costs for CSB from February 24 to the end of the quarter. Compensation and benefits increased to $14.3 million in the first quarter of 2017 compared to $10.2 million in the first quarter of 2016. The increase in compensation and benefits from a year ago is mainly due to $2.8 million of merger costs to settle employment and benefit agreements and for personnel expenses related to operating the new CSB locations. Data processing cost was $1.9 million in the first quarter of 2017, up $479,000 from the first quarter of 2016 and included $124,000 of CSB merger and conversion related costs. Other non-interest expense of $4.0 million in the first quarter of 2017 increased $1.1 million from the first quarter of 2016 and included $667,000 of CSB merger and conversion related costs.

 

Credit quality

 

Non-performing loans totaled $15.1 million at March 31, 2017, a decrease from $17.7 million at March 31, 2016. In addition, First Defiance had $705,000 of OREO at March 31, 2017, compared to $1.1 million at March 31, 2016. Accruing troubled debt restructured loans were $9.8 million at March 31, 2017, compared with $11.3 million at March 31, 2016.

 

The allowance for loan loss as a percentage of total loans was 1.15% at March 31, 2017 compared with 1.41% at March 31, 2016. The decrease in the allowance for loan loss as a percentage of total loans was primarily attributable to the CSB acquisition. The CSB loans acquired were recorded at fair value with purchase accounting adjustment discounting the loan balance instead of an allowance for loan losses. Excluding the loans acquired from CSB the allowance for loan loss as a percentage of loans would be 1.32% at March 31, 2017. For the CSB loans acquired the discount recorded totaled $5.1 million, or 1.8% of total CSB loans at acquisition.

 

The first quarter 2017 results include a provision for loan losses of $55,000 compared with $364,000 for the same period in 2016, while net charge-offs totaled $190,000 in the current quarter in comparison to net charge-offs of $78,000 in the first quarter of 2016.

 

“Asset quality remained steady and strong in the first quarter,” said Hileman. “While the accounting rules for the acquisition affect some of our key asset quality measures, the Commercial Savings Bank loan portfolio had many similarities to ours and we are very confident in our credit strength as we pursue our growth strategies going forward.”

 

Total assets at $2.9 billion

 

Total assets at March 31, 2017, were $2.93 billion compared to $2.48 billion at December 31, 2016 and $2.36 billion at March 31, 2016. The increase in the current quarter is primarily due to the acquisition of CSB effective February 24, 2017, which added $369.5 million to total assets, net of $12.3 million paid in cash, at consummation.

 

 

Net loans receivable (excluding loans held for sale) were $2.21 billion at March 31, 2017, compared to $1.91 billion at December 31, 2016, and $1.80 billion at March 31, 2016. In the current quarter, the acquisition of CSB added $285.7 million to the loan portfolio. At March 31, 2017, excluding the CSB acquired loans, net loans receivable grew $128.1 million, or 7.1% from a year ago.

 

Also, at March 31, 2017, goodwill and other intangible assets totaled $97.1 million compared to $63.1 million at December 31, 2016 and $63.5 million at March 31, 2016. The increase in the current quarter was attributable to the acquisition of CSB which added $34.2 million to goodwill and intangibles.

 

Total deposits at March 31, 2017 were $2.37 billion compared with $1.98 billion at December 31, 2016, and $1.87 billion at March 31, 2016. In the current quarter, the acquisition of CSB added $308.0 million to total deposits. At March 31, 2017, excluding the CSB acquired deposits, total deposits grew $194.6 million, or 10.4% from a year ago.

 

Total stockholders’ equity was $354.2 million at March 31, 2017, compared to $293.0 million at December 31, 2016, and $280.4 million at March 31, 2016. The acquisition of CSB during the current quarter added $56.5 million to total equity.

 

Acquisition of Corporate One Benefits Agency, Inc.

 

On April 13, 2017, First Defiance and Corporate One Benefits Agency, Inc. (“Corporate One”) jointly announced the signing of an agreement under which First Defiance acquired the business of Corporate One. Corporate One will be part of First Defiance’s subsidiary insurance agency, First Insurance Group.

 

Corporate One is a full-service employee benefits consulting organization founded in 1996 with offices located in Archbold, Findlay, Fostoria and Tiffin, Ohio. Corporate One consults employers to better manage their employee benefit programs to effectively lead them into the future. The transaction will enhance employee benefit offerings and expand First Insurance Group’s presence into adjacent markets in northwest Ohio.

 

Dividend to be paid May 26

 

The Board of Directors declared a quarterly cash dividend of $0.25 per common share payable May 26, 2017, to shareholders of record at the close of business on May 19, 2017. The dividend represents an annual dividend of 2.00 percent based on the First Defiance common stock closing price on April 14, 2017. First Defiance has approximately 10,145,303 common shares outstanding.

 

 

Conference call

 

First Defiance Financial Corp. will host a conference call at 11:00 a.m. ET on Tuesday, April 18, 2017, to discuss the earnings results and business trends. The conference call may be accessed by calling 1-877-444-1726. In addition, a live webcast may be accessed at http://services.choruscall.com/links/fdef170418.html. 

 

The replay of the conference call Webcast will be available at www.fdef.com until April 18, 2018, at 9:00 a.m. ET.

 

First Defiance Financial Corp.

 

First Defiance Financial Corp., headquartered in Defiance, Ohio, is the holding company for First Federal Bank of the Midwest and First Insurance Group. First Federal Bank operates 43 full-service branches and numerous ATM locations in northwest and central Ohio, southeast Michigan and northeast Indiana. First Insurance Group is a full-service insurance agency with six offices throughout northwest Ohio.

 

For more information, visit the company’s website at www.fdef.com.

 

Financial Statements and Highlights Follow-

 

 

Safe Harbor Statement

This news release may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21 B of the Securities Act of 1934, as amended, which are intended to be safe harbors created thereby. Those statements may include, but are not limited to, all statements regarding intent, beliefs, expectations, projections, forecasts and plans of First Defiance Financial Corp. and its management, and specifically include statements regarding: changes in economic conditions, the nature, extent and timing of governmental actions and reforms, future movements of interest rates, the production levels of mortgage loan generation, the ability to continue to grow loans and deposits, the ability to benefit from a changing interest rate environment, the ability to sustain credit quality ratios at current or improved levels, the ability to sell real estate owned properties, continued strength in the market area for First Federal Bank of the Midwest, and the ability 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 March 31, 2017 consolidated financial statements as part of its Quarterly Report on Form 10-Q 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.

 

		March 31,				December 31,
(in thousands)		2017				2016
Assets
Cash and cash equivalents
Cash and amounts due from depository institutions		$	53,998			$	53,003
Interest-bearing deposits			116,000				46,000
			169,998				99,003
Securities
Available-for sale, carried at fair value			260,601				250,992
Held-to-maturity, carried at amortized cost			771				184
			261,372				251,176
Loans			2,238,864				1,940,487
Allowance for loan losses			(25,749	)			(25,884	)
Loans, net			2,213,115				1,914,603
Loans held for sale			7,955				9,607
Mortgage servicing rights			9,672				9,595
Accrued interest receivable			8,872				6,760
Federal Home Loan Bank stock			15,992				13,798
Bank Owned Life Insurance			64,968				52,817
Office properties and equipment			42,824				36,958
Real estate and other assets held for sale			705				455
Goodwill			88,589				61,798
Core deposit and other intangibles			8,498				1,336
Deferred Taxes			823				2,212
Other assets			36,091				17,479
Total Assets		$	2,929,474			$	2,477,597
Liabilities and Stockholders’ Equity
Non-interest-bearing deposits		$	579,943			$	487,663
Interest-bearing deposits			1,793,846				1,493,965
Total deposits			2,373,789				1,981,628
Advances from Federal Home Loan Bank			105,104				103,943
Notes payable and other interest-bearing liabilities			24,891				31,816
Subordinated debentures			36,083				36,083
Advance payments by borrowers for tax and insurance			1,840				2,650
Deferred taxes			-				-
Other liabilities			33,576				28,459
Total Liabilities			2,575,283				2,184,579
Stockholders’ Equity
Preferred stock			-				-
Common stock, net			127				127
Additional paid-in-capital			160,397				126,390
Accumulated other comprehensive income			1,242				215
Retained earnings			243,446				240,592
Treasury stock, at cost			(51,021	)			(74,306	)
Total stockholders’ equity			354,191				293,018
Total Liabilities and Stockholders’ Equity		$	2,929,474			$	2,477,597

 

 

                         

Consolidated Statements of Income (Unaudited)

First Defiance Financial Corp.

 

		Three Months Ended
		March 31,
(in thousands, except per share amounts)		2017				2016
Interest Income:
Loans		$	21,969			$	19,312
Investment securities			1,756				1,630
Interest-bearing deposits			145				49
FHLB stock dividends			166				139
Total interest income			24,036				21,130
Interest Expense:
Deposits			1,796				1,433
FHLB advances and other			366				297
Subordinated debentures			215				175
Notes Payable			14				37
Total interest expense			2,391				1,942
Net interest income			21,645				19,188
Provision for loan losses			55				364
Net interest income after provision for loan losses			21,590				18,824
Non-interest Income:
Service fees and other charges			2,760				2,644
Mortgage banking income			1,738				1,539
Gain on sale of non-mortgage loans			-				45
Gain on sale of securities			-				131
Insurance commissions			3,457				3,136
Trust income			450				427
Income from Bank Owned Life Insurance			1,823				231
Other non-interest income			321				483
Total Non-interest Income			10,549				8,636
Non-interest Expense:
Compensation and benefits			14,335				10,185
Occupancy			1,837				1,785
FDIC insurance premium			290				327
Financial institutions tax			480				446
Data processing			1,939				1,460
Amortization of intangibles			232				157
Other non-interest expense			4,029				2,914
Total Non-interest Expense			23,142				17,274
Income before income taxes			8,997				10,186
Income taxes			3,857				3,017
Net Income		$	5,140			$	7,169
Earnings per common share:
Basic		$	0.54			$	0.80
Diluted		$	0.54			$	0.79
Average Shares Outstanding:
Basic			9,435				8,994
Diluted			9,490				9,064

 

                          

Financial Summary and Comparison (Unaudited)

First Defiance Financial Corp.

 

		Three Months Ended
		March 31,
(dollars in thousands, except per share data)		2017				2016				% change
Summary of Operations
Tax-equivalent interest income (1)		$	24,505			$	21,605				13.4	%
Interest expense			2,391				1,942				23.1
Tax-equivalent net interest income (1)			22,114				19,663				12.5
Provision for loan losses			55				364				NM
Tax-equivalent NII after provision for loan loss (1)			22,059				19,299				14.3
Investment Securities gains			-				131				NM
Non-interest income (excluding securities gains/losses)			10,549				8,505				24.0
Non-interest expense			23,142				17,274				34.0
Income taxes			3,857				3,017				27.8
Net Income			5,140				7,169				(28.3	)
Tax equivalent adjustment (1)			469				475				(1.3	)
At Period End
Assets			2,929,474				2,358,931				24.2
Earning assets			2,640,183				2,158,177				22.3
Loans			2,238,864				1,824,986				22.7
Allowance for loan losses			25,749				25,668				0.3
Deposits			2,373,789				1,871,157				26.9
Stockholders’ equity			354,191				280,418				26.3
Average Balances
Assets			2,622,402				2,314,203				13.3
Earning assets			2,355,544				2,088,582				12.8
Loans			2,026,067				1,796,200				12.8
Deposits and interest-bearing liabilities			2,275,724				2,005,395				13.5
Deposits			2,109,637				1,835,345				14.9
Stockholders’ equity			314,442				279,051				12.7
Stockholders’ equity / assets			11.99	%			12.06	%			(0.6	)
Per Common Share Data
Net Income
Basic		$	0.54			$	0.80				(32.5	)
Diluted			0.54				0.79				(31.6	)
Dividends			0.25				0.22				13.6
Market Value:
High		$	51.15			$	40.98				24.8
Low			46.27				34.80				33.0
Close			49.51				38.41				28.9
Common Book Value			34.92				31.29				11.6
Tangible Common Book Value (1)			25.35				24.21				4.7
Shares outstanding, end of period (000)			10,143				8,961				13.2
Performance Ratios (annualized)
Tax-equivalent net interest margin (2)			3.81	%			3.80	%			0.3
Return on average assets			0.79	%			1.25	%			(36.2	)
Return on average equity			6.63	%			10.33	%			(35.8	)
Efficiency ratio (3)			70.85	%			61.32	%			15.5
Effective tax rate			42.87	%			29.62	%			44.7
Dividend payout ratio (basic)			46.30	%			27.50	%			68.4

 

(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
		March 31,
(dollars in thousands)		2017				2016
Gain from sale of mortgage loans		$	1,083			$	994
Mortgage loan servicing revenue (expense):
Mortgage loan servicing revenue			934				877
Amortization of mortgage servicing rights			(312	)			(311	)
Mortgage servicing rights valuation adjustments			33				(21	)
			655				545
Total revenue from sale and servicing of mortgage loans		$	1,738			$	1,539

 

                                                                                                 

 

Yield Analysis

First Defiance Financial Corp.

 

 

		Three Months Ended March 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		$	2,026,067			$	22,020				4.41	%		$	1,796,200			$	19,363				4.34	%
Securities			254,842				2,174				3.48	%(3)			233,815				2,054				3.65	%(3)
Interest Bearing Deposits			60,083				145				0.98	%			44,766				49				0.44	%
FHLB stock			14,552				166				4.63	%			13,801				139				4.05	%
Total interest-earning assets			2,355,544				24,505				4.22	%			2,088,582				21,605				4.18	%
Non-interest-earning assets			266,858												225,621
Total assets		$	2,622,402											$	2,314,203
Deposits and Interest-bearing liabilities:
Interest bearing deposits		$	1,626,742			$	1,796				0.45	%		$	1,420,479			$	1,433				0.41	%
FHLB advances and other			104,277				366				1.42	%			78,670				297				1.52	%
Subordinated debentures			36,150				215				2.41	%			36,137				175				1.95	%
Notes payable			25,660				14				0.22	%			55,243				37				0.27	%
Total interest-bearing liabilities			1,792,829				2,391				0.54	%			1,590,529				1,942				0.49	%
Non-interest bearing deposits			482,895				-				-				414,866				-				-
Total including non-interest-bearing demand deposits			2,275,724				2,391				0.43	%			2,005,395				1,942				0.39	%
Other non-interest-bearing liabilities			32,236												29,757
Total liabilities			2,307,960												2,035,152
Stockholders' equity			314,442												279,051
Total liabilities and stockholders' equity		$	2,622,402											$	2,314,203
Net interest income; interest rate spread						$	22,114				3.68	%						$	19,663				3.69	%
Net interest margin (4)											3.81	%											3.80	%
Average interest-earning assets  to average interest bearing liabilities											131	%											131	%

 

 

(1)

Interest on certain tax exempt loans and securities is not taxable for Federal income tax purposes. In order to compare the tax-exempt yields on these assets to taxable yields, the interest earned on these assets is adjusted to a pre-tax equivalent amount based on the marginal corporate federal income tax rate of 35%.

(2)

Annualized

(3)

Securities yield = annualized interest income divided by the average balance of securities, excluding average unrealized gains/losses.

(4)

Net interest margin is net interest income divided by average interest-earning assets.

 

                                          

Selected Quarterly Information

First Defiance Financial Corp.

 

(dollars in thousands, except per share data)		1st Qtr 2017				4th Qtr 2016				3rd Qtr 2016				2nd Qtr 2016				1st Qtr 2016
Summary of Operations
Tax-equivalent interest income (1)		$	24,505			$	23,219			$	22,449			$	21,940			$	21,605
Interest expense			2,391				2,231				2,183				2,084				1,942
Tax-equivalent net interest income (1)			22,114				20,988				20,266				19,856				19,663
Provision for loan losses			55				(149	)			15				53				364
Tax-equivalent NII after provision for loan losses (1)			22,059				21,137				20,251				19,803				19,299
Investment securities gains, net of impairment			-				-				151				227				131
Non-interest income (excluding securities gains/losses)			10,549				8,293				8,375				8,348				8,505
Non-interest expense			23,142				18,180				18,292				17,347				17,274
Income taxes			3,857				3,436				2,994				3,307				3,017
Net income			5,140				7,365				7,045				7,264				7,169
Tax equivalent adjustment (1)			469				449				446				460				475
At Period End
Total assets		$	2,929,474			$	2,477,151			$	2,450,040			$	2,409,599			$	2,358,931
Earning assets			2,640,183				2,261,068				2,240,747				2,200,517				2,158,177
Loans			2,238,864				1,940,487				1,925,694				1,861,403				1,824,986
Allowance for loan losses			25,749				25,884				25,923				25,948				25,668
Deposits			2,373,789				1,981,628				1,927,686				1,920,270				1,871,157
Stockholders’ equity			354,191				293,018				292,138				286,616				280,418
Stockholders’ equity / assets			12.09	%			11.83	%			11.92	%			11.89	%			11.89	%
Goodwill			88,589				61,798				61,798				61,798				61,798
Average Balances
Total assets		$	2,622,402			$	2,458,952			$	2,425,535			$	2,391,064			$	2,314,203
Earning assets			2,355,544				2,226,868				2,194,170				2,162,574				2,088,582
Loans			2,026,067				1,908,731				1,879,760				1,828,984				1,796,200
Deposits and interest-bearing liabilities			2,275,724				2,133,868				2,103,054				2,079,442				2,005,395
Deposits			2,109,637				1,954,631				1,929,368				1,903,139				1,835,345
Stockholders’ equity			314,442				292,301				288,609				282,573				279,051
Stockholders’ equity / assets			11.99	%			11.89	%			11.90	%			11.82	%			12.06	%
Per Common Share Data
Net Income:
Basic		$	0.54			$	0.82			$	0.78			$	0.81			$	0.80
Diluted			0.54				0.81				0.78				0.80				0.79
Dividends			0.25				0.22				0.22				0.22				0.22
Market Value:
High		$	51.15			$	52.31			$	46.83			$	41.21			$	40.98
Low			46.27				36.91				35.90				37.53				34.80
Close			49.51				50.74				44.64				38.85				38.41
Common Book Value			34.92				32.62				32.53				31.95				31.29
Shares outstanding, end of period (in thousands)			10,143				8,983				8,980				8,971				8,961
Performance Ratios (annualized)
Tax-equivalent net interest margin (1)			3.81	%			3.76	%			3.69	%			3.71	%			3.80	%
Return on average assets			0.79	%			1.19	%			1.16	%			1.22	%			1.25	%
Return on average equity			6.63	%			10.02	%			9.71	%			10.34	%			10.33	%
Efficiency ratio (2)			70.85	%			62.09	%			63.87	%			61.51	%			61.32	%
Effective tax rate			42.87	%			31.81	%			29.82	%			31.28	%			29.62	%
Common dividend payout ratio (basic)			46.30	%			26.83	%			28.21	%			27.16	%			27.50	%

 

(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)		1st Qtr 2017				4th Qtr 2016				3rd Qtr 2016				2nd Qtr 2016				1st Qtr 2016
Loan Portfolio Composition
One to four family residential real estate		$	276,931			$	207,550			$	209,097			$	206,861			$	208,818
Construction			199,724				182,886				177,075				161,282				145,635
Commercial real estate			1,193,906				1,040,562				1,043,820				1,001,315				989,468
Commercial			504,366				469,055				456,099				428,599				412,911
Consumer finance			27,696				16,680				17,251				16,690				15,679
Home equity and improvement			132,965				118,429				118,165				116,685				116,856
Total loans			2,335,588				2,035,162				2,021,507				1,931,432				1,889,367
Less:
Undisbursed loan funds			95,460				93,355				94,552				68,850				63,267
Deferred loan origination fees			1,264				1,320				1,261				1,179				1,114
Allowance for loan loss			25,749				25,884				25,923				25,948				25,668
Net Loans		$	2,213,115			$	1,914,603			$	1,899,771			$	1,835,455			$	1,799,318
Allowance for loan loss activity
Beginning allowance		$	25,884			$	25,923			$	25,948			$	25,668			$	25,382
Provision for loan losses			55				(149	)			15				53				364
Credit loss charge-offs:
One to four family residential real estate			49				147				111				37				55
Commercial real estate			290				0				79				0				13
Commercial			-				234				26				18				336
Consumer finance			71				53				24				18				0
Home equity and improvement			54				98				74				66				30
Total charge-offs			464				532				314				139				434
Total recoveries			274				642				274				366				356
Net charge-offs (recoveries)			190				(110	)			40				(227	)			78
Ending allowance		$	25,749			$	25,884			$	25,923			$	25,948			$	25,668
Credit Quality
Total non-performing loans (1)		$	15,074			$	14,348			$	18,198			$	16,423			$	17,707
Real estate owned (REO)			705				455				704				1,079				1,111
Total non-performing assets (2)		$	15,779			$	14,803			$	18,902			$	17,502			$	18,818
Net charge-offs (recoveries)			190				(110	)			40				(227	)			78
Restructured loans, accruing (3)			9,814				10,544				9,113				9,648				11,284
Allowance for loan losses / loans			1.15	%			1.33	%			1.35	%			1.39	%			1.41	%
Allowance for loan losses / non-performing assets			163.19	%			174.86	%			137.14	%			148.26	%			136.40	%
Allowance for loan losses / non-performing loans			170.82	%			180.40	%			142.45	%			158.00	%			144.96	%
Non-performing assets / loans plus REO			0.70	%			0.76	%			0.98	%			0.94	%			1.03	%
Non-performing assets / total assets			0.54	%			0.60	%			0.77	%			0.73	%			0.80	%
Net charge-offs / average loans (annualized)			0.04	%			-0.02	%			0.01	%			-0.05	%			0.02	%
Deposit Balances
Non-interest-bearing demand deposits		$	579,943			$	487,663			$	443,321			$	442,811			$	426,053
Interest-bearing demand deposits and money market			973,459				816,665				810,393				805,550				783,016
Savings deposits			288,498				243,369				241,016				240,316				233,546
Retail time deposits less than $250,000			490,953				400,080				399,749				399,494				401,350
Retail time deposits greater than $250,000			40,936				33,851				33,207				32,099				27,192
Total deposits		$	2,373,789			$	1,981,628			$	1,927,686			$	1,920,270			$	1,871,157

 

(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
March 31, 2017
One to four family residential real estate		$	276,931			$	273,133			$	1,039			$	2,759
Construction			199,724				199,724				-				-
Commercial real estate			1,193,906				1,182,836				1,221				9,849
Commercial			504,366				501,193				1,684				1,489
Consumer finance			27,696				27,360				234				102
Home equity and improvement			132,965				131,873				217				875
Total loans		$	2,335,588			$	2,316,119			$	4,395			$	15,074
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
March 31, 2016
One to four family residential real estate		$	208,818			$	205,334			$	354			$	3,130
Construction			145,635				145,635				-				-
Commercial real estate			989,468				977,895				1,229				10,344
Commercial			412,911				409,232				128				3,551
Consumer finance			15,679				15,623				47				9
Home equity and improvement			116,856				115,324				859				673
Total loans		$	1,889,367			$	1,869,043			$	2,617			$	17,707