- 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
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 % (3) 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.
30 to 89 days Non Accrual
(dollars in thousands)
Total Balance
Current past due 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
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180416006512/en/
First Defiance Financial Corp.Donald P. Hileman,
419-782-5104President and CEOdhileman@first-fed.com
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