Exhibit 99.1

 

 

 

For Immediate Release

 

FIRST DEFIANCE FINANCIAL CORP. ANNOUNCES

2018 FIRST QUARTER EARNINGS

 

·

Earnings per share of $1.15 for the 2018 first quarter, up from $0.54 per share in the first quarter 2017

·

Net income of $11.7 million for the 2018 first quarter, up from $5.1 million in the first quarter 2017

·

Net interest margin of 3.95% for the 2018 first quarter, compared to 3.81% in the first quarter 2017

·

Loan growth $9.6 million during the 2018 first quarter

·

Deposit growth $54.1 million during the 2018 first quarter

·

Non-performing loans of $27.9 million for the 2018 first quarter, compared to $15.1 million for the 2017 first quarter

 

DEFIANCE, OHIO (April 16, 2018) – First Defiance Financial Corp. (NASDAQ: FDEF) announced today that earnings for the first quarter of 2018 were $11.7 million, or $1.15 per diluted common share compared to $5.1 million or $0.54 per diluted common share for the first quarter of 2017. The first quarter 2017 results included approximately one month of operations from Commercial Savings Bank and had no impact from Corporate One Benefits Agency Inc. (“Corporate One”). In comparison, the first quarter 2018 results include a full quarter of operations from both Commercial Savings Bank and Corporate One. The acquisitions of Commercial Bancshares, Inc. and its banking subsidiary Commercial Savings Bank (collectively “CSB”) and Corporate One were completed on February 24, 2017, and April 1, 2017, respectively.

 

The results for the first quarter 2018 also include a credit loan loss provision of $1.1 million, which had an after tax benefit of $865,000, or $0.08 per diluted share, which more than offset expenses for OREO write-downs of $544,000, with an after tax impact of $430,000, or $0.04 per diluted share and non-executive employee bonuses of $300,000, which had an after tax impact of $237,000, or $0.02 per diluted share. The first quarter 2017 results included merger and conversion expenses related to the CSB transaction of $3.6 million, which had an after tax impact of $2.5 million, or $0.27 per diluted share. In addition, the first quarter 2017 results reflected the impact of the purchase of a bank owned life insurance policy which included 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, which together reduced net income approximately $200,000, or $0.02 per diluted share.

 

“We are very pleased to reach the $3.0 billion milestone in total assets at quarter-end,” said Donald P. Hileman, President and Chief Executive Officer of First Defiance Financial Corp. “We have come a long way from a year ago by delivering on our acquisitions, executing our organic growth strategies, and improving our profitability metrics, which were further enhanced by the benefit from tax reform. We remain very positive that we can build upon this progress in 2018 and beyond.”

 

 

Net interest income up compared to first quarter 2017

 

Net interest income of $25.7 million in the first quarter of 2018 was up from $21.6 million in the first quarter of 2017. The increase over the prior year’s first quarter was attributable to a full quarter of added operations from the CSB merger, organic growth and net interest margin expansion. Net interest margin was 3.95% for the first quarter of 2018, up from 3.88% in the fourth quarter of 2017, and up from 3.81% in the first quarter of 2017. Yield on interest earning assets increased to 4.43% in the first quarter of 2018, up 21 basis points from 4.22% in the first quarter of 2017. The cost of interest-bearing liabilities increased 11 basis points in the first quarter of 2018 to 0.65% from 0.54% in the first quarter of 2017.

 

“Our net interest margin improved in the first quarter and continues to perform well in the rising interest rate environment,” said Hileman. “While organic loan and deposit growth was seasonally down from last quarter, success in our growth strategies is evident with our 18.7% increase in net interest income from a year ago. We feel confident that this performance will continue as we are well positioned for future rate movements.”

 

Non-interest income up from first quarter 2017

 

First Defiance’s non-interest income in the first quarter of 2018 was $10.7 million compared with $10.5 million in the first quarter of 2017. The first quarter 2017 included a $1.5 million enhancement value gain related to the purchase of bank owned life insurance. Excluding the 2017 enhancement value gain, non-interest income increased $1.7 million primarily due to the inclusion of operations from the CSB and Corporate One mergers completed in 2017.

 

Mortgage banking income remained flat at $1.7 million in the first quarters of 2018 and 2017. Gains from the sale of mortgage loans also remained consistent at $1.1 million in the first quarters of 2018 and 2017. Mortgage loan servicing revenue was $944,000 in the first quarter of 2018, up slightly from $934,000 in the first quarter of 2017. First Defiance had a positive change in the valuation adjustment in mortgage servicing assets of $37,000 in the first quarter of 2018 compared with a positive adjustment of $33,000 in the first quarter of 2017.

 

For the first quarter 2018, service fees and other charges were $3.1 million, up from $2.8 million in the first quarter of 2017; and commissions from the sale of insurance products were $4.3 million, up from $3.5 million in the first quarter of 2017. 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 2018, First Defiance’s insurance subsidiary, First Insurance Group, earned $1.0 million of contingent income, compared to $1.2 million during the first quarter of 2017. Trust income was $552,000 in the first quarter of 2018, up from $450,000 in the first quarter of 2017.

 

“Non-interest income continues to bolster our overall revenue growth with solid core growth in all of our major business lines with additional contributions from our acquisitions,” said Hileman.

 

 

Non-interest expenses up from first quarter 2017

 

Total non-interest expense was $23.3 million in the first quarter of 2018, up from $23.1 million in the first quarter of 2017. The first quarter 2017 included expenses of $3.6 million related to the CSB merger and conversion. Excluding the 2017 merger and conversion expenses, the increase in non-interest expenses was $3.7 million, mostly due to the additional expenses from the operations of CSB and Corporate One mergers completed in 2017. Compensation and benefits decreased to $13.2 million in the first quarter of 2018, compared to $14.3 million in the first quarter of 2017. The decrease in compensation and benefits from a year ago is mainly due to the prior year period including $2.8 million of merger costs to settle employment and benefit agreements, while the current year period includes a full quarter of personnel expenses for the acquired CSB and Corporate One locations. Data processing cost was $2.1 million in the first quarter of 2018, up from $1.9 million in the first quarter of 2017. Other non-interest expense of $4.6 million in the first quarter of 2018 increased from $4.0 million in the first quarter of 2017. Other expenses in the first quarter 2018 include OREO write-downs of $544,000, while the first quarter 2017 included $667,000 of CSB merger and conversion related costs.

 

Credit quality

 

Non-performing loans totaled $27.9 million at March 31, 2018, a decrease from $30.7 million at December 31, 2017, but an increase from $15.1 million at March 31, 2017. The decrease from the prior quarter-end was due to the payoff of a large relationship previously downgraded in the second quarter of 2017. In addition, First Defiance had $1.4 million of OREO at March 31, 2018, compared to $705,000 at March 31, 2017. Accruing troubled debt restructured loans were $13.7 million at March 31, 2018, compared with $9.8 million at March 31, 2017.

 

The non-performing loan payoff resulted in a principal recovery of $1.7 million. As a result, the first quarter 2018 performance reflected net loan recoveries of $1.7 million and a credit provision for loan losses of $1.1 million compared with net loan charge-offs of $190,000 and a provision for loan loss expense of $55,000 for the same period in 2017.

 

The allowance for loan loss as a percentage of total loans was 1.16% at March 31, 2018, compared with 1.15% at March 31, 2017. In addition, the CSB loans acquired in 2017 were recorded at fair value with purchase accounting adjustment discounting the loan balance instead of an allowance for loan losses. For the CSB loans acquired the discount recorded totaled $3.7 million, or 1.9% of total CSB loans at March 31, 2018.

 

“Overall asset quality metrics improved from last quarter, with all non-performing asset categories declining and all allowance coverage ratios improving,” said Hileman. “Significant recoveries totaling $2.0 million contributed to both higher earnings and strengthened reserves this quarter.”

 

Total assets at $3.02 billion

 

Total assets at March 31, 2018, were $3.02 billion compared to $2.99 billion at December 31, 2017, and $2.93 billion at March 31, 2017.

 

 

Net loans receivable (excluding loans held for sale) were $2.33 billion at March 31, 2018, compared to $2.32 billion at December 31, 2017, and $2.21 billion at March 31, 2017. At March 31, 2018, net loans receivable grew $118.8 million, or 5.4% from a year ago.

 

Also, at March 31, 2018, goodwill and other intangible assets totaled $103.9 million compared to $104.3 million at December 31, 2017, and $97.1 million at March 31, 2017.

 

Total deposits at March 31, 2018, were $2.49 billion compared with $2.44 billion at December 31, 2017, and $2.37 billion at March 31, 2017. At March 31, 2018, total deposits grew $118.0 million, or 5.0% from a year ago.

 

Total stockholders’ equity was $379.2 million at March 31, 2018, compared to $373.3 million at December 31, 2017, and $354.2 million at March 31, 2017.

 

Dividend to be paid May 25

 

The Board of Directors declared a quarterly cash dividend of $0.30 per common share payable May 25, 2018, to shareholders of record at the close of business on May 18, 2018. The dividend represents an annual dividend of 2.09 percent based on the First Defiance common stock closing price on April 13, 2018. First Defiance has approximately 10,182,649 common shares outstanding.

 

Chairman William J. Small Announces Planned Retirement

 

First Defiance Financial Corp. Chairman William J. Small announced that he will be retiring from the Board of Directors effective July 31, 2018.  Mr. Small has served as Chairman since 1999 and served as President and CEO of First Defiance and CEO of First Federal Bank from 1999 through 2013.  John L. Bookmyer will succeed Mr. Small as Chairman.  Mr. Bookmyer has been a member of the First Defiance Board since 2005 and currently serves as the Lead Independent Director.

 

Conference call

 

First Defiance Financial Corp. will host a conference call at 11:00 a.m. ET on Tuesday, April 17, 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/fdef180417.html. 

 

The replay of the conference call Webcast will be available at www.fdef.com until April 17, 2019, at 9:00 a.m. ET.

 

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 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 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 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, 2017. 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, 2018 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)		2018				2017
Assets
Cash and cash equivalents
Cash and amounts due from depository institutions		$	46,566			$	58,693
Interest-bearing deposits			92,000				55,000
			138,566				113,693
Securities
Available-for sale, carried at fair value			270,111				260,650
Held-to-maturity, carried at amortized cost			642				648
			270,753				261,298
Loans			2,358,330				2,348,713
Allowance for loan losses			(27,267	)			(26,683	)
Loans, net			2,331,063				2,322,030
Loans held for sale			11,266				10,435
Mortgage servicing rights			9,850				9,808
Accrued interest receivable			9,359				8,706
Federal Home Loan Bank stock			15,989				15,992
Bank Owned Life Insurance			66,630				66,230
Office properties and equipment			39,826				40,217
Real estate and other assets held for sale			1,440				1,532
Goodwill			98,569				98,569
Core deposit and other intangibles			5,356				5,703
Deferred taxes			978				231
Other assets			23,359				38,959
Total Assets		$	3,023,004			$	2,993,403
Liabilities and Stockholders’ Equity
Non-interest-bearing deposits		$	550,742			$	571,360
Interest-bearing deposits			1,941,059				1,866,296
Total deposits			2,491,801				2,437,656
Advances from Federal Home Loan Bank			71,001				84,279
Notes payable and other interest-bearing liabilities			9,321				26,019
Subordinated debentures			36,083				36,083
Advance payments by borrowers for tax and insurance			2,482				2,925
Other liabilities			33,102				33,155
Total Liabilities			2,643,790				2,620,117
Stockholders’ Equity
Preferred stock			-				-
Common stock, net			127				127
Additional paid-in-capital			160,547				160,940
Accumulated other comprehensive income (loss)			(2,546	)			217
Retained earnings			271,426				262,900
Treasury stock, at cost			(50,340	)			(50,898	)
Total stockholders’ equity			379,214				373,286
Total Liabilities and Stockholders’ Equity		$	3,023,004			$	2,993,403

 

 

Consolidated Statements of Income (Unaudited)

First Defiance Financial Corp.

		Three Months Ended
		March 31,
(in thousands, except per share amounts)		2018				2017
Interest Income:
Loans		$	26,526			$	21,969
Investment securities			1,851				1,756
Interest-bearing deposits			297				145
FHLB stock dividends			231				166
Total interest income			28,905				24,036
Interest Expense:
Deposits			2,611				1,796
FHLB advances and other			319				366
Subordinated debentures			280				215
Notes Payable			8				14
Total interest expense			3,218				2,391
Net interest income			25,687				21,645
Provision for loan losses			(1,095	)			55
Net interest income after provision for loan losses			26,782				21,590
Non-interest Income:
Service fees and other charges			3,131				2,760
Mortgage banking income			1,742				1,738
Gain on sale of non-mortgage loans			224				-
Insurance commissions			4,277				3,457
Trust income			552				450
Income from Bank Owned Life Insurance			400				1,823
Other non-interest income			377				321
Total Non-interest Income			10,703				10,549
Non-interest Expense:
Compensation and benefits			13,249				14,335
Occupancy			2,071				1,837
FDIC insurance premium			360				290
Financial institutions tax			531				480
Data processing			2,105				1,939
Amortization of intangibles			347				232
Other non-interest expense			4,588				4,029
Total Non-interest Expense			23,251				23,142
Income before income taxes			14,234				8,997
Income taxes			2,497				3,857
Net Income		$	11,737			$	5,140
Earnings per common share:
Basic		$	1.15			$	0.54
Diluted		$	1.15			$	0.54
Average Shares Outstanding:
Basic			10,165				9,435
Diluted			10,219				9,490

 

 

Financial Summary and Comparison (Unaudited)

First Defiance Financial Corp.

 

		Three Months Ended
		March 31,
(dollars in thousands, except per share data)		2018				2017				% change
Summary of Operations
Tax-equivalent interest income (2)		$	29,142			$	24,505				18.9	%
Interest expense			3,218				2,391				34.6
Tax-equivalent net interest income (2)			25,924				22,114				17.2
Provision for loan losses			(1,095	)			55				NM
Tax-equivalent NII after provision for loan loss (2)			27,019				22,059				22.5
Investment Securities gains			-				-				-
Non-interest income (excluding securities gains/losses)			10,703				10,549				1.5
Non-interest expense			23,251				23,142				0.5
Income taxes			2,497				3,857				(35.3	)
Net Income			11,737				5,140				128.3
Tax equivalent adjustment (2)			237				469				(49.5	)
At Period End
Assets			3,023,004				2,929,474				3.2
Earning assets			2,748,338				2,640,183				4.1
Loans			2,358,330				2,238,864				5.3
Allowance for loan losses			27,267				25,749				5.9
Deposits			2,491,801				2,373,789				5.0
Stockholders’ equity			379,214				354,191				7.1
Average Balances
Assets			2,977,864				2,622,402				13.6
Earning assets			2,664,114				2,355,544				13.1
Loans			2,316,316				2,026,067				14.3
Deposits and interest-bearing liabilities			2,565,537				2,275,724				12.7
Deposits			2,434,440				2,109,637				15.4
Stockholders’ equity			373,993				314,442				18.9
Stockholders’ equity / assets			12.56	%			11.99	%			4.7
Per Common Share Data
Net Income
Basic		$	1.15			$	0.54				113.0
Diluted			1.15				0.54				113.0
Dividends			0.30				0.25				20.0
Market Value:
High		$	59.85			$	51.15				17.0
Low			51.02				46.27				10.3
Close			57.32				49.51				15.8
Common Book Value			37.24				34.92				6.7
Tangible Common Book Value (1)			27.04				25.35				6.7
Shares outstanding, end of period (000)			10,182				10,143				0.4
Performance Ratios (annualized)
Tax-equivalent net interest margin (2)			3.95	%			3.81	%			3.5
Return on average assets			1.60	%			0.79	%			101.1
Return on average equity			12.73	%			6.63	%			92.0
Efficiency ratio (3)			63.48	%			70.85	%			(10.4	)
Effective tax rate			17.54	%			42.87	%			(59.1	)
Dividend payout ratio (basic)			26.09	%			46.30	%			(43.7	)

 

(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)		2018				2017
Gain from sale of mortgage loans		$	1,080			$	1,083
Mortgage loan servicing revenue (expense):
Mortgage loan servicing revenue			944				934
Amortization of mortgage servicing rights			(319	)			(312	)
Mortgage servicing rights valuation adjustments			37				33
			662				655
Total revenue from sale and servicing of mortgage loans		$	1,742			$	1,738

 

 

Yield Analysis

First Defiance Financial Corp.

 

		Three Months Ended March 31,
		(dollars in thousands)
		2018												2017
		Average								Yield				Average								Yield
		Balance				Interest(1)				Rate(2)				Balance				Interest(1)				Rate(2)
Interest-earning assets:
Loans receivable		$	2,316,316			$	26,550				4.65	%		$	2,026,067			$	22,020				4.41	%
Securities			263,596				2,064				3.16	%(3)			254,842				2,174				3.48	%
Interest Bearing Deposits			68,211				297				1.77	%			60,083				145				0.98	%
FHLB stock			15,991				231				5.86	%			14,552				166				4.63	%
Total interest-earning assets			2,664,114				29,142				4.43	%			2,355,544				24,505				4.22	%
Non-interest-earning assets			313,750												266,858
Total assets		$	2,977,864											$	2,622,402
Deposits and Interest-bearing liabilities:
Interest bearing deposits		$	1,888,990			$	2,611				0.56	%		$	1,626,742			$	1,796				0.45	%
FHLB advances and other			78,923				319				1.64	%			104,277				366				1.42	%
Subordinated debentures			36,192				280				3.14	%			36,150				215				2.41	%
Notes payable			15,982				8				0.20	%			25,660				14				0.22	%
Total interest-bearing liabilities			2,020,087				3,218				0.65	%			1,792,829				2,391				0.54	%
Non-interest bearing deposits			545,450				-				-				482,895				-				-
Total including non-interest-bearing demand deposits			2,565,537				3,218				0.51	%			2,275,724				2,391				0.43	%
Other non-interest-bearing liabilities			38,334												32,236
Total liabilities			2,603,871												2,307,960
Stockholders' equity			373,993												314,442
Total liabilities and stockholders' equity		$	2,977,864											$	2,622,402
Net interest income; interest rate spread						$	25,924				3.78	%						$	22,114				3.68	%
Net interest margin (4)											3.95	%											3.81	%
Average interest-earning assets  to average interest bearing liabilities											132	%											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 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)		1st Qtr 2018				4th Qtr 2017				3rd Qtr 2017				2nd Qtr 2017				1st Qtr 2017
Summary of Operations
Tax-equivalent interest income (1)		$	29,142			$	29,009			$	28,557			$	27,944			$	24,505
Interest expense			3,218				3,140				3,074				2,826				2,391
Tax-equivalent net interest income (1)			25,924				25,869				25,483				25,118				22,114
Provision for loan losses			(1,095	)			314				462				2,118				55
Tax-equivalent NII after provision for loan losses (1)			27,019				25,555				25,021				23,000				22,059
Investment securities gains, net of impairment			-				160				158				267				-
Non-interest income (excluding securities gains/losses)			10,703				9,737				9,337				9,873				10,549
Non-interest expense			23,251				21,141				20,440				20,630				23,142
Income taxes			2,497				4,430				4,219				3,677				3,857
Net income			11,737				9,399				9,381				8,347				5,140
Tax equivalent adjustment (1)			237				482				476				486				469
At Period End
Total assets		$	3,023,004			$	2,993,403			$	2,935,030			$	2,890,507			$	2,928,697
Earning assets			2,748,338				2,691,438				2,633,996				2,596,674				2,639,325
Loans			2,358,330				2,348,713				2,276,042				2,254,435				2,238,006
Allowance for loan losses			27,267				26,683				26,341				25,915				25,749
Deposits			2,491,801				2,437,656				2,360,675				2,326,702				2,373,789
Stockholders’ equity			379,214				373,286				367,924				361,430				354,191
Stockholders’ equity / assets			12.54	%			12.47	%			12.54	%			12.50	%			12.09	%
Goodwill			98,569				98,569				98,370				98,318				90,768
Average Balances
Total assets		$	2,977,864			$	2,968,445			$	2,906,795			$	2,908,483			$	2,622,402
Earning assets			2,664,114				2,646,643				2,590,463				2,591,397				2,355,544
Loans			2,316,316				2,279,358				2,251,071				2,238,061				2,026,067
Deposits and interest-bearing liabilities			2,565,537				2,560,258				2,507,805				2,516,024				2,275,724
Deposits			2,434,440				2,400,061				2,338,817				2,346,336				2,109,637
Stockholders’ equity			373,993				369,366				363,612				357,523				314,442
Stockholders’ equity / assets			12.56	%			12.44	%			12.51	%			12.29	%			11.99	%
Per Common Share Data
Net Income:
Basic		$	1.15			$	0.93			$	0.92			$	0.82			$	0.54
Diluted			1.15				0.92				0.92				0.82				0.54
Dividends			0.30				0.25				0.25				0.25				0.25
Market Value:
High		$	59.85			$	56.91			$	53.99			$	56.90			$	51.15
Low			51.02				50.28				47.01				48.78				46.27
Close			57.32				51.97				52.49				52.68				49.51
Common Book Value			37.24				36.76				36.25				35.61				34.92
Shares outstanding, end of period (in thousands)			10,182				10,156				10,149				10,147				10,143
Performance Ratios (annualized)
Tax-equivalent net interest margin (1)			3.95	%			3.88	%			3.91	%			3.89	%			3.81	%
Return on average assets			1.60	%			1.26	%			1.28	%			1.15	%			0.79	%
Return on average equity			12.73	%			10.10	%			10.24	%			9.36	%			6.63	%
Efficiency ratio (2)			63.48	%			59.37	%			58.70	%			58.96	%			70.85	%
Effective tax rate			17.54	%			32.03	%			31.02	%			30.58	%			42.87	%
Common dividend payout ratio (basic)			26.09	%			26.88	%			27.17	%			30.49	%			46.30	%

 

(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 2018				4th Qtr 2017				3rd Qtr 2017				2nd Qtr 2017				1st Qtr 2017
Loan Portfolio Composition
One to four family residential real estate		$	275,547			$	274,862			$	271,048			$	276,578			$	276,931
Construction			251,944				265,476				244,920				234,688				199,724
Commercial real estate			1,282,027				1,235,221				1,205,695				1,182,087				1,193,906
Commercial			500,496				526,142				510,240				515,004				504,366
Consumer finance			28,035				29,109				29,009				28,860				27,696
Home equity and improvement			133,407				135,457				132,220				130,429				132,965
Total loans			2,471,456				2,466,267				2,393,132				2,367,646				2,335,588
Less:
Undisbursed loan funds			111,450				115,972				115,714				112,000				95,460
Deferred loan origination fees			1,676				1,582				1,379				1,211				1,264
Allowance for loan loss			27,267				26,683				26,341				25,915				25,749
Net Loans		$	2,331,063			$	2,322,030			$	2,249,698			$	2,228,520			$	2,213,115
Allowance for loan loss activity
Beginning allowance		$	26,683			$	26,341			$	25,915			$	25,749			$	25,884
Provision for loan losses			(1,095	)			314				462				2,118				55
Credit loss charge-offs:
One to four family residential real estate			16				170				60				0				49
Commercial real estate			55				29				0				110				290
Commercial			97				210				64				2,027				0
Consumer finance			31				27				20				21				71
Home equity and improvement			117				55				92				100				54
Total charge-offs			316				491				236				2,258				464
Total recoveries			1,995				519				200				306				274
Net charge-offs (recoveries)			(1,679	)			(28	)			36				1,952				190
Ending allowance		$	27,267			$	26,683			$	26,341			$	25,915			$	25,749
Credit Quality
Total non-performing loans (1)		$	27,925			$	30,715			$	29,152			$	30,359			$	15,057
Real estate owned (REO)			1,440				1,532				532				672				705
Total non-performing assets (2)		$	29,365			$	32,247			$	29,684			$	31,031			$	15,762
Net charge-offs (recoveries)			(1,679	)			(28	)			36				1,952				190
Restructured loans, accruing (3)			13,722				13,770				13,044				10,521				9,814
Allowance for loan losses / loans			1.16	%			1.14	%			1.16	%			1.15	%			1.15	%
Allowance for loan losses / non-performing assets			92.86	%			82.75	%			88.74	%			83.51	%			163.36	%
Allowance for loan losses / non-performing loans			97.64	%			86.87	%			90.36	%			85.36	%			171.01	%
Non-performing assets / loans plus REO			1.24	%			1.37	%			1.30	%			1.38	%			0.70	%
Non-performing assets / total assets			0.97	%			1.08	%			1.01	%			1.07	%			0.54	%
Net charge-offs / average loans (annualized)			-0.29	%			0.00	%			0.01	%			0.35	%			0.04	%
Deposit Balances
Non-interest-bearing demand deposits		$	550,742			$	571,360			$	519,911			$	520,778			$	579,943
Interest-bearing demand deposits and money market			1,055,416				1,005,519				989,514				967,834				973,459
Savings deposits			306,510				302,022				296,230				288,643				288,498
Retail time deposits less than $250,000			512,746				504,912				504,277				499,298				490,953
Retail time deposits greater than $250,000			66,387				53,843				50,743				50,149				40,936
Total deposits		$	2,491,801			$	2,437,656			$	2,360,675			$	2,326,702			$	2,373,789

 

(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, 2018
One to four family residential real estate		$	275,547			$	272,323			$	764			$	2,460
Construction			251,944				251,944				-				-
Commercial real estate			1,282,027				1,264,623				53				17,351
Commercial			500,496				493,325				5				7,166
Consumer finance			28,035				27,703				293				39
Home equity and improvement			133,407				132,477				21				909
Total loans		$	2,471,456			$	2,442,395			$	1,136			$	27,925
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
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