- Earnings per share of $0.71 for 2014
third quarter, up from $0.57 per share in 2014 second quarter and
$0.54 per share in the 2013 third quarter
- Net income of $7.1 million for 2014
third quarter, up from $5.7 million in 2014 second quarter and $5.5
million in the 2013 third quarter
- Net interest margin of 3.73%, up
from 3.62% in the linked quarter, down from 3.84% in the 2013 third
quarter
- Loans up 4.8% from third quarter
2013
- Nonperforming loans down 26.2% from
third quarter 2013
First Defiance Financial Corp. (NASDAQ: FDEF) announced today
that net income for the third quarter ended September 30, 2014
totaled $7.1 million, or $0.71 per diluted common share, compared
to $5.5 million or $0.54 per diluted common share for the third
quarter ended September 30, 2013.
“We are very pleased with our strong financial performance in
the third quarter,” said Donald P. Hileman, President, and Chief
Executive Officer of First Defiance Financial Corp. “Loan growth,
revenue growth, profitability, and credit quality each showed
significant improvement from a year ago.”
The third quarter 2014 results were positively impacted by
$299,000 after tax gains on the sale of securities, a $903,000
tax-free benefit from a bank owned life insurance policy and a
$498,000 tax- free gain realized through the company’s deferred
compensation plan trust. Additional net adjustments to income taxes
of $250,000, which included the write-off of a portion of unused
deferred tax assets, negatively impacted third quarter 2014
results.
Net Interest Income up compared to third quarter 2013
Net interest income of $17.7 million in the third quarter of
2014 was up from $17.2 in the third quarter of 2013. Net interest
margin was 3.73% for the third quarter of 2014, up from 3.62% in
the second quarter 2014, but down from 3.84% in the third quarter
of 2013. Yield on interest earning assets declined by 14 basis
points, to 4.06% in the third quarter of 2014 from 4.20% in the
third quarter of 2013. The cost of interest-bearing liabilities
decreased by 3 basis points in the third quarter of 2014 to 0.43%
from 0.46% in the third quarter of 2013.
“Loan demand was particularly robust this quarter with
contributions from each of our market areas including our new loan
production office in Columbus, Ohio,” said Hileman. “Most
significantly, the added loans enabled us to improve our earning
asset mix leading to increased net interest margin and net interest
income.”
Non-Interest Income up from third quarter 2013
First Defiance’s non-interest income for the third quarter of
2014 was $9.4 million compared with $7.3 million in the third
quarter of 2013. The third quarter 2014 included $460,000 of gains
on the sale of securities, a $903,000 tax-free benefit from a
bank-owned life insurance policy and a $498,000 tax-free gain
realized through the company’s deferred compensation plan
trust.
Mortgage banking income decreased to $1.5 million in the third
quarter of 2014, down from $1.8 million in the third quarter of
2013, primarily due to a lower valuation adjustment in mortgage
servicing assets. First Defiance had a positive change in the
valuation adjustment of $68,000 in the third quarter of 2014
compared with a positive adjustment of $480,000 in the third
quarter of 2013. Mortgage loans sold were up 11% from the second
quarter 2014, but down 23% from the third quarter a year ago
primarily due to lower refinance volumes impacted by higher rates.
Gains from the sale of mortgage loans increased in the third
quarter of 2014 to $973,000 from $894,000 in the third quarter of
2013. Mortgage loan servicing revenue was $870,000 in the third
quarter of 2014, slightly down from $901,000 in the third quarter
of 2013.
For the third quarter 2014, income from the sale of insurance
and investment products was $2.4 million and service fees and other
charges were $2.7 million, up 6.3% and 2.1% respectively from the
third quarter of 2013. Trust income was $315,000 in the third
quarter of 2014 up 25.5% from the third quarter of 2013.
“Our non-interest income revenues were very healthy on a core
basis this quarter,” continued Hileman. “We had solid increases in
our insurance and wealth management business divisions, and
mortgage performance remained steady.”
Non-Interest Expenses up from third quarter 2013
Total non-interest expense was $16.8 million in the third
quarter of 2014, an increase from $16.1 million in the third
quarter of 2013.
Compensation and benefits increased to $9.3 million in the third
quarter of 2014 compared to $8.7 in the third quarter of 2013. The
increase was mainly due to merit increases for salaries, higher
health plan costs, increased sales commissions and higher accruals
for bonus payments based on meeting performance targets. Other
non-interest expense increased to $3.2 million in the third quarter
of 2014 from $3.1 million in the third quarter of 2013.
Credit Quality
Non-performing loans totaled $22.5 million at September 30,
2014, a decrease of 26.2% from $30.5 million at September 30, 2013.
In addition, First Defiance had $5.3 million of real estate owned
at September 30, 2014 compared to $5.5 million at September 30,
2013. Accruing troubled debt restructured loans were $26.6 million
at September 30, 2014 compared with $28.0 million at September 30,
2013. For the third quarter of 2014, First Defiance recorded net
charge-offs of $466,000, down from $782,000 in the third quarter of
2013. The allowance for loan loss as a percentage of total loans
was 1.50% at September 30, 2014 compared with 1.66% at September
30, 2013.
The third quarter results include expense for provision for loan
losses of $406,000, compared with $476,000 for the same period in
2013.
“Asset quality improvement continued to progress during the
third quarter with reductions in classified assets, nonperforming
loans and other real estate,” said Hileman. “Our allowance for loan
losses now stands at 109% of our non-accruing loan balances.”
Year-To-Date Results
For the nine month period ended September 30, 2014, net interest
income totaled $51.6 million compared with $50.6 million in the
first nine months of 2013. Average interest-earning assets
increased to $1.941 billion in the first nine months of 2014,
compared to $1.821 billion in the first nine months of 2013. Net
interest margin for the first nine months of 2014 was 3.65%, down
17 basis points from the 3.82% margin reported in the nine month
period ended September 30, 2013.
The provision for loan losses in the first nine months of 2014
was $955,000, compared to $1.3 million recorded during the first
nine months of 2013.
Non-interest income for the first nine months of 2014 was $24.3
million, compared to $24.2 million during the same period of 2013.
Service fees and other charges were $7.5 million for the first nine
months of 2014, basically even with the same period of 2013.
Mortgage banking income decreased to $4.3 million for the first
nine months of 2014, compared with $7.1 million during the same
period of 2013. Insurance and investment sales revenues increased
to $7.6 million for the first nine months of 2014, compared with
$7.5 million in same period of 2013. Non-interest income for the
first nine months of 2014 included $931,000 of gain on the sale of
securities compared with $97,000 during the same period of 2013.
The first nine months of 2014 also included a $903,000 tax-free
benefit from a bank owned life insurance policy and a $498,000
tax-free gain realized through the company’s deferred compensation
plan trust.
Non-interest expense was $49.8 million for the first nine months
of 2014; up slightly from the $49.1 million during the same period
of 2013. Compensation and benefits expense was $26.5 million for
the first nine months of 2014 compared with $26.0 million during
the same period of 2013. Decreases in FDIC insurance premiums of
$169,000, state taxes not based on income of $313,000 and
amortization of intangibles of $113,000 were offset by increases in
data processing of $521,000, primarily due to increased volumes in
electronic banking and expenses to support growth strategies, and
other expenses of $437,000, which included the $786,000 cost
recorded in the first quarter for terminating a merger
agreement.
Total Assets at $2.15 Billion
Total assets at September 30, 2014 were $2.15 billion compared
to $2.14 billion at December 31, 2013 and $2.06 billion at
September 30, 2013. Net loans receivable (excluding loans held for
sale) were $1.61 billion at September 30, 2014 compared to $1.56
billion at December 31, 2013 and $1.54 billion at September 30,
2013. Total cash and cash equivalents were $96.7 million at
September 30, 2014 compared with $179.3 million at December 31,
2013 and $127.6 million at September 30, 2013. Also, at September
30, 2014, goodwill and other intangible assets totaled $64.2
million compared to $65.0 million at December 31, 2013 and $65.3
million at September 30, 2013.
Total deposits at September 30, 2014 were $1.73 billion compared
with $1.74 billion at December 31, 2013, and $1.66 billion at
September 30, 2013. Non-interest bearing deposits at September 30,
2014 were $340.6 million compared to $348.9 million at December 31,
2013 and $300.9 million at September 30, 2013. Total stockholders’
equity was $278.2 million at September 30, 2014 compared to $272.1
million at December 31, 2013 and $269.4 million at September 30,
2013.
Dividend to be Paid November 21
The Board of Directors declared a quarterly cash dividend of
$0.175 per common share payable November 21, 2014 to shareholders
of record at the close of business on November 14, 2014. The
dividend represents an annual dividend of 2.54 percent based on the
First Defiance common stock closing price on October 17, 2014.
First Defiance has approximately 9,354,760 common shares
outstanding.
Share Repurchase Program
In a separate action, the Board of Directors authorized a new
share repurchase program of up to 5%, or approximately 469,000
shares, of the common stock outstanding. Repurchases will be made
periodically depending on market conditions and other factors. The
repurchased shares will be held as treasury stock and will be
available for general corporate purposes, including employee stock
option plans. The exact number of shares to be repurchased by the
company is not guaranteed. Purchases under the First Defiance
Financial Corp. stock repurchase program may be made periodically,
in the open market, through block trades and pursuant to any
trading plan that may be adopted in accordance with Rule 10b5-1 of
the Securities Exchange Commission or otherwise, and also in
privately negotiated transactions. Depending on market conditions
and other factors, these purchases may be commenced or suspended at
any time or periodically without prior notice.
“Earlier this month, we completed the authorization from a year
ago to repurchase our shares,” stated Hileman. “Capital management
is a key strategic focus for our company, and we believe that the
new authorization to repurchase our stock represents an opportunity
to continue offering additional value to our shareholders."
Conference Call
First Defiance Financial Corp. will host a conference call at
11:00 a.m. ET on Tuesday, October 21, 2014 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/fdef141021.html.
Audio replay of the Internet Webcast will be available at
www.fdef.com until November 21, 2014 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 operates 33 full-service
branches and 43 ATM locations in northwest Ohio, southeast Michigan
and northeast Indiana. First Insurance Group is a full-service
insurance agency with five offices throughout northwest Ohio.
For more information, visit the company’s Web site at
www.fdef.com.
-Financial Statements and Highlights
Follow-
Safe Harbor Statement
This news release may contain certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21 B of the Securities Act of 1934, as
amended, which are intended to be safe harbors created thereby.
Those statements may include, but are not limited to, all
statements regarding intent, beliefs, expectations, projections,
forecasts and plans of First Defiance Financial Corp. and its
management, and specifically include statements regarding: changes
in economic conditions, the nature, extent and timing of
governmental actions and reforms, future movements of interest
rates, the production levels of mortgage loan generation, the
ability to continue to grow loans and deposits, the ability to
benefit from a changing interest rate environment, the ability
to sustain credit quality ratios at current or improved levels, the
ability to sell real estate owned properties, continued strength in
the market area for First Federal Bank of the Midwest, and the
ability of the Company to grow in existing and adjacent markets.
These forward-looking statements involve numerous risks and
uncertainties, including those inherent in general and local
banking, insurance and mortgage conditions, competitive factors
specific to markets in which the Company and its subsidiaries
operate, future interest rate levels, legislative and regulatory
decisions or capital market conditions and other risks and
uncertainties detailed from time to time in the Company's
Securities and Exchange Commission (SEC) filings, including the
Company's Annual Report on Form 10-K for the year ended December
31, 2013. One or more of these factors have affected or could in
the future affect the Company's business and financial results in
future periods and could cause actual results to differ materially
from plans and projections. Therefore, there can be no assurances
that the forward-looking statements included in this news release
will prove to be accurate. In light of the significant
uncertainties in the forward-looking statements included herein,
the inclusion of such information should not be regarded as a
representation by the Company or any other persons, that the
objectives and plans of the Company will be achieved. All
forward-looking statements made in this news release are based on
information presently available to the management of the Company.
The Company assumes no obligation to update any forward-looking
statements.
Consolidated Balance Sheets (Unaudited) First
Defiance Financial Corp. September 30, December
31, September 30, (in thousands)
2014 2013
2013
Assets Cash and cash equivalents Cash and
amounts due from depository institutions
$ 36,654 $
36,318 $ 42,629 Interest-bearing deposits
60,000
143,000 85,000
96,654
179,318
127,629 Securities
Available-for sale, carried at fair value
238,367 198,170
184,119 Held-to-maturity, carried at amortized cost
323 387 407
238,690 198,557 184,526 Loans
1,636,266
1,580,448 1,561,279 Allowance for loan losses
(24,567
) (24,950 ) (25,964 ) Loans, net
1,611,699 1,555,498 1,535,315 Loans held for sale
5,738 9,120 13,391 Mortgage servicing rights
9,053
9,106 9,182 Accrued interest receivable
6,903 5,778 6,425
Federal Home Loan Bank stock
13,802 19,350 19,350 Bank Owned
Life Insurance
46,795 42,715 42,504 Office properties and
equipment
39,988 38,597 39,066 Real estate and other assets
held for sale
5,326 5,859 5,518 Goodwill
61,525
61,525 61,525 Core deposit and other intangibles
2,664 3,497
3,793 Deferred taxes
- 565 2,253 Other assets
12,242 7,663 7,953
Total Assets $ 2,151,079 $ 2,137,148
$ 2,058,430
Liabilities and Stockholders’
Equity Non-interest-bearing deposits
$ 340,575 $
348,943 $ 300,891 Interest-bearing deposits
1,390,070
1,386,849 1,357,601 Total
deposits
1,730,645 1,735,792 1,658,492 Advances from Federal
Home Loan Bank
21,790 22,520 22,761 Notes payable and other
interest-bearing liabilities
60,089 51,919 50,822
Subordinated debentures
36,083 36,083 36,083 Advance
payments by borrowers for tax and insurance
1,848 1,519
1,752 Deferred Taxes
876 - - Other liabilities
21,515 17,168 19,161
Total Liabilities
1,872,846 1,865,001 1,789,071
Stockholders’ Equity Preferred stock
- - - Common stock, net
127 127 127 Common stock warrant
878 878 878
Additional paid-in-capital
136,194 136,403 136,257
Accumulated other comprehensive income
3,301 545 282
Retained earnings
195,877 182,290 178,181 Treasury stock, at
cost
(58,144 ) (48,096 ) (46,366
) Total stockholders’ equity
278,233
272,147 269,359
Total Liabilities and
Stockholders’ Equity $ 2,151,079 $
2,137,148 $ 2,058,430
Consolidated
Statements of Income (Unaudited)
First Defiance Financial Corp. Three Months Ended
Nine Months Ended September 30,
September 30, (in thousands, except per share
amounts)
2014 2013
2014 2013
Interest Income: Loans
$ 17,365 $ 17,197
$
50,894 $ 51,040 Investment securities
1,720 1,390
4,855 4,199 Interest-bearing deposits
64 44
283 174 FHLB stock dividends
137 205
502 631 Total interest income
19,286
18,836
56,534 56,044 Interest Expense:
Deposits
1,304 1,356
3,989 4,514 FHLB advances and
other
131 116
397 298 Subordinated debentures
147 150
439 452 Notes Payable
41
58
121 178 Total interest expense
1,623 1,680
4,946 5,442 Net
interest income
17,663 17,156
51,588 50,602 Provision
for loan losses
406 476
955
1,349 Net interest income after provision for loan losses
17,257 16,680
50,633 49,253 Non-interest Income:
Service fees and other charges
2,660 2,605
7,492
7,539 Mortgage banking income
1,545 1,846
4,332 7,119
Gain on sale of non-mortgage loans
40 35
79 52 Gain
on sale of securities
460 -
931 97 Insurance
commissions
2,366 2,225
7,640 7,538 Trust income
315 251
895 695 Income from Bank Owned Life Insurance
1,130 212
1,584 672 Other non-interest income
840 170
1,346 535 Total
Non-interest Income
9,356 7,344
24,299 24,247
Non-interest Expense: Compensation and benefits
9,287 8,718
26,468 25,991 Occupancy
1,613 1,719
4,905
5,022 FDIC insurance premium
350 326
1,088 1,257
Financial institutions tax
515 580
1,524 1,837 Data
processing
1,489 1,318
4,333 3,812 Amortization of
intangibles
269 296
832 945 Other non-interest
expense
3,248 3,143
10,639
10,202 Total Non-interest Expense
16,771
16,100
49,789 49,066 Income before
income taxes
9,842 7,924
25,143 24,434 Income taxes
2,773 2,445
7,206
7,286 Net Income
$ 7,069 $ 5,479
$
17,937 $ 17,148 Earnings per common share:
Basic
$ 0.75 $ 0.56
$ 1.87 $ 1.76
Diluted
$ 0.71 $ 0.54
$ 1.79 $ 1.69
Average Shares Outstanding: Basic
9,445 9,780
9,577 9,763 Diluted
9,903 10,212
10,031 10,160
Financial Summary and
Comparison (Unaudited)
First Defiance Financial Corp. Three Months
Ended Nine Months Ended
September
30,
September
30,
(dollars in thousands, except per share data)
2014
2013 % change
2014 2013
% change
Summary of Operations Tax-equivalent
interest income (1)
$ 19,751 $ 19,242 2.6 %
$
57,871 $ 57,270 1.0 % Interest expense
1,623 1,680
(3.4 )
4,946 5,442 (9.1 ) Tax-equivalent net interest income
(1)
18,128 17,562 3.2
52,925 51,828 2.1 Provision for
loan losses
406 476 (14.7 )
955 1,349 (29.2 )
Tax-equivalent NII after provision for loan loss (1)
17,722
17,086 3.7
51,970 50,479 3.0 Investment Securities gains
460 - NM
931 97 859.8 Non-interest income (excluding
securities gains/losses)
8,896 7,289 22.0
23,368
24,000 (2.6 ) Non-interest expense
16,771 16,045 4.5
49,789 48,916 1.8 Income taxes
2,773 2,445 13.4
7,206 7,286 (1.1 ) Net Income
7,069 5,479 29.0
17,937 17,148 4.6 Tax equivalent adjustment (1)
465 406 14.5
1,337 1,226
9.1
At Period End Assets
2,151,079 2,058,430 4.5 Earning assets
1,954,496
1,863,546 4.9 Loans
1,636,266 1,561,279 4.8 Allowance for
loan losses
24,567 25,964 (5.4 ) Deposits
1,730,645
1,658,492 4.4 Stockholders’ equity
278,233
269,359 3.3
Average Balances Assets
2,153,226 2,026,277 6.3
2,155,027 2,028,297 6.2
Earning assets
1,934,651 1,816,626 6.5
1,941,412
1,820,565 6.6 Loans
1,586,652 1,548,718 2.4
1,561,118
1,523,216 2.5 Deposits and interest-bearing liabilities
1,853,271 1,741,850 6.4
1,857,139 1,744,342 6.5
Deposits
1,738,494 1,632,712 6.5
1,745,276 1,642,754
6.2 Stockholders’ equity
276,968 265,488 4.3
275,734
263,135 4.8 Stockholders’ equity / assets
12.86 % 13.10 % (1.8 )
12.79 % 12.97 %
(1.4 )
Per Common Share Data Net Income Basic
$
0.75 $ 0.56 33.9
$ 1.87 $ 1.76 6.3 Diluted
0.71 0.54 31.5
1.79 1.69 5.9 Dividends
0.15
0.10 50.0
0.45 0.30 50.0 Market Value: High
$
29.00 $ 28.46 1.9
$ 29.00 $ 28.46 1.9 Low
26.99 22.49 20.0
24.24 18.42 31.6 Close
27.01
23.39 15.5
27.01 23.39 15.5 Common Book Value
29.60
27.44 7.9
29.60 27.44 7.9 Tangible Common Book Value
22.75 20.76 9.6
22.75 20.76 9.6 Shares outstanding,
end of period (000)
9,371
9,785 (4.2 )
9,371
9,776 (4.1 ) Performance Ratios
(annualized) Tax-equivalent net interest margin (1)
3.73
% 3.84 % (2.8 )
3.65 % 3.82 % (4.3 ) Return on
average assets
1.30 % 1.07 % 21.4
1.11
% 1.13 % (1.6 ) Return on average equity
10.13
% 8.19 % 23.7
8.70 % 8.71 % (0.2 ) Efficiency
ratio (2)
62.06 % 64.56 % (3.9 )
65.26
% 64.51 % 1.2 Effective tax rate
28.18 % 30.86
% (8.7 )
28.66 % 29.82 % (3.9 ) Dividend payout ratio
(basic)
20.00 % 17.86 %
12.0
24.06 %
17.05 % 41.2 (1) Interest income
on tax-exempt securities and loans has been adjusted to a
tax-equivalent basis using the statutory federal income tax rate of
35% (2) Efficiency ratio = Non-interest expense divided by sum of
tax-equivalent net interest income plus non-interest income,
excluding securities gains or losses, net.
NM Percentage change not meaningful
Income from Mortgage Banking
Revenue from sales and servicing of
mortgage loans consisted of the following:
Three Months
Ended Nine Months Ended September
30, September 30, (dollars in
thousands)
2014 2013
2014 2013 Gain from sale of mortgage loans
$ 973 $ 894
$ 2,601 $ 4,960 Mortgage
loan servicing revenue (expense): Mortgage loan servicing revenue
870 901
2,652 2,646 Amortization of mortgage
servicing rights
(366 ) (429 )
(1,026 )
(1,752 ) Mortgage servicing rights valuation adjustments
68 480
105
1,265
572
952
1,731 2,159
Total revenue from sale and servicing of mortgage loans
$
1,545 $ 1,846
$ 4,332
$ 7,119
Yield
Analysis First Defiance Financial Corp. Three Months
Ended September 30, (dollars in thousands)
2014 2013
Average Yield Average Yield Balance Interest(1) Rate(2) Balance
Interest(1) Rate(2)
Interest-earning assets: Loans
receivable $ 1,586,652 $ 17,406 4.35 % $ 1,548,718 $ 17,214 4.41 %
Securities 235,459 2,144 3.70 % 184,413 1,779 3.83 % Interest
Bearing Deposits 98,738 64 0.26 % 64,142 44 0.27 % FHLB stock
13,802 137 3.94 % 19,353 205 4.20 %
Total interest-earning assets 1,934,651 19,751 4.06 % 1,816,626
19,242 4.20 % Non-interest-earning assets 218,575
209,651 Total assets $ 2,153,226 $ 2,026,277
Deposits and
Interest-bearing liabilities: Interest bearing deposits $
1,396,698 $ 1,304 0.37 % $ 1,330,467 $ 1,356 0.40 % FHLB advances
and other 21,872 131 2.38 % 21,003 116 2.19 % Subordinated
debentures 36,129 147 1.61 % 36,130 150 1.65 % Notes payable
56,776 41 0.29 % 52,005 58 0.44 % Total
interest-bearing liabilities 1,511,475 1,623 0.43 % 1,439,605 1,680
0.46 % Non-interest bearing deposits 341,796 - -
302,245 - - Total including non-interest-bearing
demand deposits 1,853,271 1,623 0.35 % 1,741,850 1,680 0.38 % Other
non-interest-bearing liabilities 22,987 18,939 Total
liabilities 1,876,258 1,760,789 Stockholders' equity 276,968
265,488 Total liabilities and stockholders' equity $
2,153,226 $ 2,026,277 Net interest income; interest
rate spread $ 18,128 3.63 % $ 17,562 3.74 % Net interest margin (3)
3.73 % 3.84 % Average interest-earning assets to average interest
bearing liabilities 128 % 126 %
Nine Months Ended
September 30, 2014 2013 Average Yield Average Yield
Balance Interest(1) Rate Balance Interest(1) Rate
Interest-earning assets: Loans receivable $ 1,561,118 $
50,996 4.37 % $ 1,523,216 $ 51,092 4.48 % Securities 218,527 6,091
3.83 % 192,309 5,373 3.74 % Interest Bearing Deposits 146,798 283
0.26 % 85,483 174 0.27 % FHLB stock 14,969 502 4.48 %
19,557 631 4.31 % Total interest-earning assets
1,941,412 57,872 3.99 % 1,820,565 57,270 4.21 %
Non-interest-earning assets 213,615 207,732 Total
assets $ 2,155,027 $ 2,028,297
Deposits and Interest-bearing
liabilities: Interest bearing deposits $ 1,401,481 $ 3,989 0.38
% $ 1,343,564 $ 4,514 0.45 % FHLB advances and other 22,117 397
2.40 % 16,078 298 2.48 % Subordinated debentures 36,132 439 1.62 %
36,134 452 1.67 % Notes payable 53,614 121 0.30 %
49,376 178 0.48 % Total interest-bearing liabilities
1,513,344 4,946 0.44 % 1,445,152 5,442 0.50 % Non-interest bearing
deposits 343,795 - - 299,190 - - Total
including non-interest-bearing demand deposits 1,857,139 4,946 0.36
% 1,744,342 5,442 0.42 % Other non-interest-bearing liabilities
22,154 20,820 Total liabilities 1,879,293 1,765,162
Stockholders' equity 275,734 263,135 Total
liabilities and stockholders' equity $ 2,155,027 $ 2,028,297
Net interest income; interest rate spread $ 52,926 3.55 % $
51,828 3.70 % Net interest margin (3) 3.65 % 3.82 % Average
interest-earning assets to average interest bearing liabilities 128
% 126 % (1) Interest on certain tax exempt loans and
securities is not taxable for Federal income tax purposes. In order
to compare the tax-exempt yields on these assets to taxable yields,
the interest earned on these assets is adjusted to a pre-tax
equivalent amount based on the marginal corporate federal income
tax rate of 35%. (2) Annualized (3) Net interest margin is net
interest income divided by average interest-earning assets.
Selected Quarterly Information
First Defiance Financial Corp. (dollars
in thousands, except per share data)
3rd Qtr 2014
2nd Qtr 2014 1st Qtr 2014 4th Qtr 2013
3rd Qtr 2013
Summary of Operations Tax-equivalent interest
income (1)
$ 19,751 $ 19,221 $ 18,900 $ 19,143 $
19,242 Interest expense
1,623 1,645 1,678 1,728 1,680
Tax-equivalent net interest income (1)
18,128 17,576 17,222
17,415 17,562 Provision for loan losses
406 446 103 475 476
Tax-equivalent NII after provision for loan losses (1)
17,722 17,130 17,119 16,940 17,086 Investment securities
gains, net of impairment
460 471 - (337 ) - Non-interest
income (excluding securities gains/losses)
8,896 7,146 7,326
6,869 7,344 Non-interest expense
16,771 16,357 16,661 15,987
16,100 Income taxes
2,773 2,254 2,179 1,991 2,445 Net income
7,069 5,689 5,179 5,087 5,479 Tax equivalent adjustment (1)
465 447
426 406 406
At Period End Total assets
$ 2,151,079 $
2,151,490 $ 2,163,659 $ 2,137,148 $ 2,058,430 Earning assets
1,954,496 1,949,729 1,965,225 1,950,475 1,863,546 Loans
1,636,266 1,581,984 1,563,953 1,580,448 1,561,279 Allowance
for loan losses
24,567 24,627 24,783 24,950 25,964 Deposits
1,730,645 1,741,812 1,760,617 1,735,792 1,658,492
Stockholders’ equity
278,233 276,449 274,877 272,147 269,359
Stockholders’ equity / assets
12.93 % 12.85 % 12.70 %
12.73 % 13.09 % Goodwill
61,525
61,525 61,525
61,525 61,525
Average Balances
Total assets
$ 2,153,226 $ 2,165,486 $ 2,146,369 $
2,124,109 $ 2,026,277 Earning assets
1,934,651 1,952,440
1,937,145 1,915,508 1,816,626 Loans
1,586,652 1,551,799
1,544,902 1,543,057 1,548,718 Deposits and interest-bearing
liabilities
1,853,271 1,865,824 1,852,322 1,833,291
1,741,850 Deposits
1,738,494 1,756,098 1,741,237 1,719,319
1,632,712 Stockholders’ equity
276,968 276,490 273,745
270,856 265,488 Stockholders’ equity / assets
12.86 % 12.77 % 12.75 %
12.75 % 13.10 %
Per Common Share
Data Net Income: Basic
$ 0.75 $ 0.59 $ 0.53 $
0.52 $ 0.56 Diluted
0.71 0.57 0.51 0.50 0.54 Dividends
0.15 0.15 0.15 0.10 0.10 Market Value: High
$
29.00 $ 29.00 $ 28.23 $ 27.25 $ 28.46 Low
26.99 26.50
24.24 23.31 22.49 Close
27.01 28.70 27.12 25.97 23.39 Common
Book Value
29.60 28.96 28.38 27.91 27.44 Shares outstanding,
end of period (in thousands)
9,371
9,515 9,653
9,720 9,785
Performance Ratios
(annualized) Tax-equivalent net interest margin (1)
3.73
% 3.62 % 3.61 % 3.61 % 3.84 % Return on average assets
1.30 % 1.05 % 0.98 % 0.95 % 1.07 % Return on average
equity
10.13 % 8.25 % 7.67 % 7.45 % 8.19 % Efficiency
ratio (2)
62.06 % 66.16 % 67.87 % 65.75 % 64.56 %
Effective tax rate
28.18 % 28.38 % 29.61 % 28.13 %
30.86 % Common dividend payout ratio (basic)
20.00 % 25.42 % 28.30 %
19.23 % 17.86 % (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)
3rd Qtr 2014 2nd Qtr 2014
1st Qtr 2014 4th Qtr 2013 3rd Qtr 2013
Loan
Portfolio Composition One to four family residential real
estate
$ 209,135 $ 199,886 $ 196,940 $ 195,752 $
191,984 Construction
116,809 108,478 82,049 86,058 59,567
Commercial real estate
834,443 801,923 809,071 819,618
821,115 Commercial
392,465 390,055 380,144 388,236 386,160
Consumer finance
16,616 15,800 16,346 16,902 16,659 Home
equity and improvement
111,151
108,460 106,632 106,930
105,727 Total loans
1,680,619
1,624,602 1,591,182 1,613,496 1,581,212 Less: Loans in process
43,548 41,874 26,487 32,290 19,189 Deferred loan origination
fees
805 744 742 758 744 Allowance for loan loss
24,567 24,627
24,783 24,950 25,964
Net Loans
$ 1,611,699 $
1,557,357 $ 1,539,170 $ 1,555,498
$ 1,535,315
Allowance for loan
loss activity Beginning allowance
$ 24,627 $
24,783 $ 24,950 $ 25,964 $ 26,270 Provision for loan losses
406 446 103 475 476 Credit loss charge-offs: One to four
family residential real estate
95 42 228 175 78 Commercial
real estate
246 39 228 1,097 829 Commercial
1,272 973
525 670 39 Consumer finance
16 12 11 7 33 Home equity and
improvement
42 80
184 144 170
Total charge-offs
1,671 1,146 1,176 2,093 1,149 Total
recoveries
1,205 544
906 604 367
Net charge-offs (recoveries)
466
602 270 1,489
782 Ending allowance
$
24,567 $ 24,627 $ 24,783
$ 24,950 $ 25,964
Credit
Quality Total non-performing loans (1)
$ 22,525 $
24,863 $ 26,774 $ 27,847 $ 30,512 Real estate owned (REO)
5,326 5,554 6,028
5,859 5,518 Total
non-performing assets (2)
$ 27,851 $
30,417 $ 32,802 $ 33,706
$ 36,030 Net charge-offs
466 602 270 1,489 782
Restructured loans, accruing (3)
26,579 26,975 26,654 27,630
28,010 Allowance for loan losses / loans
1.50
% 1.56 % 1.58 % 1.58 % 1.66 % Allowance for loan losses /
non-performing assets
88.21 % 80.96 % 75.55 % 74.02 %
72.06 % Allowance for loan losses / non-performing loans
109.07 % 99.05 % 92.56 % 89.60 % 85.09 %
Non-performing assets / loans plus REO
1.70 % 1.92 %
2.09 % 2.12 % 2.30 % Non-performing assets / total assets
1.29 % 1.41 % 1.52 % 1.58 % 1.75 % Net charge-offs /
average loans (annualized)
0.12 % 0.16 % 0.07 % 0.39
% 0.20 %
Deposit Balances Non-interest-bearing
demand deposits
$ 340,575 $ 355,268 $ 338,412 $
348,943 $ 300,891 Interest-bearing demand deposits and money market
739,292 717,506 740,783 715,939 681,987 Savings deposits
197,464 200,626 199,361 185,121 182,271 Retail time deposits
less than $100,000
289,326 299,288 309,758 313,335 318,317
Retail time deposits greater than $100,000
163,988 169,124
172,303 172,454 175,026 National/Brokered time deposits
- - -
- - Total deposits
$ 1,730,645 $ 1,741,812 $
1,760,617 $ 1,735,792 $ 1,658,492
(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. 30 to 89 days Non
Accrual (dollars in thousands)
Total Balance
Current past due Loans
September 30, 2014
One to four family residential real estate
$ 209,135 $ 205,428 $ 654
$ 3,053 Construction
116,809 116,809
- - Commercial real estate
834,443
820,502 68 13,873 Commercial
392,465
386,266 669 5,530 Consumer finance
16,616 16,524 92 - Home equity and
improvement
111,151 109,937
1,145 69 Total loans
$ 1,680,619 $ 1,655,466
$ 2,628 $ 22,525 December
31, 2013
One to four family residential real estate $ 195,752 $ 190,854 $
1,625 $ 3,273 Construction 86,058 86,058 - - Commercial real estate
819,618 803,218 566 15,834 Commercial 388,236 379,889 20 8,327
Consumer finance 16,902 16,771 131 - Home equity and improvement
106,930 105,211 1,306
413 Total loans $ 1,613,496 $ 1,582,001 $
3,648 $ 27,847 September 30, 2013
One to four family
residential real estate $ 191,984 $ 188,065 $ 760 $ 3,159
Construction 59,567 59,567 - Commercial real estate 821,115 802,115
574 18,426 Commercial 386,160 377,116 295 8,749 Consumer finance
16,659 16,616 43 Home equity and improvement 105,727
103,997 1,552 178 Total loans $
1,581,212 $ 1,547,476 $ 3,224 $ 30,512
First Defiance Financial Corp.Donald P. Hileman, President and
CEO, 419-782-5104dhileman@first-fed.com
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