- Quarterly dividend increased 29.4% to $0.22 per share, up from
$0.17 per share paid in the 2018 fourth quarter
- Diluted earnings per share of $0.66 for the 2019 third quarter,
up from $0.55 in the 2018 third quarter
- Net income of $13.2 million for the 2019 third quarter, up from
$11.3 million in the 2018 third quarter
- Return on average assets of 1.58% for the 2019 third quarter,
up from 1.47% in the 2018 third quarter
- Loan growth of $41 million during the 2019 third quarter
- Deposit growth of $80 million during the 2019 third
quarter
- Non-performing assets of $14.7 million for the 2019 third
quarter, compared to $22.6 million for 2018 third quarter
- Announces strategic merger with UCFC and a Trust
acquisition
First Defiance Financial Corp.
(NASDAQ: FDEF) announced today its unaudited financial results for
the three- and nine-month periods ended September 30, 2019. Net
income for the third quarter ended September 30, 2019, totaled
$13.2 million, or $0.66 per diluted common share compared to $11.3
million or $0.55 per diluted common share for the quarter ended
September 30, 2018. Net income for the nine months ended September
30, 2019, totaled $36.9 million, or $1.85 per diluted common share
compared to $34.2 million or $1.67 per diluted common share for the
quarter ended September 30, 2018. The year-to-year comparison is
impacted by the current year’s results, including merger-related
costs, which had an after tax cost of $427,000, or $0.02 per
diluted share.
“Our third quarter results reflect our company’s continued high
financial performance,” said Donald P. Hileman, President and Chief
Executive Officer of First Defiance Financial Corp. “With earnings
per share up 20% from the third quarter last year, our shareholders
were delivered excellent results as we grew our balance sheet and
maintained strong profitability.”
Net Interest Income up Compared to Third Quarter 2018
Net interest income of $28.9 million in the third quarter of
2019 was up from $27.5 million in the third quarter of 2018. The
increase was primarily due to the growth in earning assets offset
partly by compression in the net interest margin versus the third
quarter last year. The net interest margin was 3.88% for the third
quarter of 2019, down from 4.03% in the second quarter of 2019 and
4.00% in the third quarter of 2018. Yield on interest earning
assets increased by 15 basis points, to 4.78% in the third quarter
of 2019 from 4.63% in the third quarter of 2018. The cost of
interest-bearing liabilities increased by 35 basis points in the
third quarter of 2019 to 1.20% from 0.85% in the third quarter of
2018.
“Our solid loan and core deposit growth helped generate growth
in net interest income despite margin compression,” said Hileman.
“Year-to-date loan growth was 6.6% annualized while deposit growth
was 7.1%. This growth combined with a net interest margin that
remains healthy for the quarter produced a 5% increase in our net
interest income over the third quarter last year.”
Non-Interest Income up from Third Quarter 2018
First Defiance’s non-interest income for the third quarter of
2019 was $11.8 million compared with $9.9 million in the third
quarter of 2018. The third quarter of 2019 included gains of
$11,000 from the sale of securities compared to gains of $76,000 in
the third quarter of 2018. Results for the third quarter of 2019
included $325,000 of BOLI income death benefit whereas the third
quarter of 2018 included no BOLI income death benefit. Total income
from BOLI was $783,000 in the third quarter of 2019, up from
$399,000 in the third quarter of 2018.
Mortgage banking income was $2.8 million in the third quarter of
2019, up from $1.9 million in the third quarter of 2018. Mortgage
originations totaled $126.9 million in the third quarter of 2019
compared to $74.0 million in the same quarter last year. As a
result of the higher volumes, gains from the sale of mortgage loans
increased in the third quarter of 2019 to $2.6 million from $1.3
million in the third quarter of 2018. Mortgage loan servicing
revenue was $960,000 in the third quarter of 2019, up from $929,000
in the third quarter of 2018, and amortization of mortgage
servicing rights increased to $579,000 from $340,000 in the third
quarter last year. Valuation adjustments in the third quarter of
2019 were a negative $155,000 compared to a positive $8,000 in the
third quarter of 2018.
Service fees and other charges were $4.0 million in the third
quarter of 2019, up from $3.3 million in the third quarter of 2018.
Insurance commissions and trust income for the third quarters 2019
and 2018 were consistent year over year at $3.3 million and $0.5
million, respectively.
“Key business lines drove our 16% growth in non-interest income
over the third quarter last year, excluding BOLI death benefits,”
said Hileman. “This growth was led by a 50% increase in mortgage
banking and a 21% increase in services fees year over year.”
Non-Interest Expenses up from Third Quarter 2018
Total non-interest expense was $23.2 million in the third
quarter of 2019, an increase from $22.3 million in the third
quarter of 2018. Compensation and benefits increased to $14.1
million in the third quarter of 2019, compared to $12.9 million in
the third quarter of 2018. Occupancy expense and data processing
expense were $2.2 million and $1.7 million, respectively, in the
third quarter of 2019, compared to $2.2 million and $2.2 million,
respectively, in the third quarter of 2018. Other non-interest
expense of $4.1 million in the third quarter of 2019 was up from
$4.0 million in the third quarter of 2018. FDIC insurance premiums
were a credit of $255,000 in the third quarter of 2019 compared to
an expense of $255,000 in the third quarter of 2018 due to the
receipt of small bank assessment credits. In addition,
merger-related costs totaled $540,000 in the third quarter of 2019
compared to none in the prior year.
Credit Quality
Non-performing loans totaled $14.7 million at September 30,
2019, a decrease from $20.9 million at September 30, 2018. In
addition, First Defiance had no real estate owned at September 30,
2019, compared to $1.7 million at September 30, 2018. Accruing
troubled debt restructured loans were $10.3 million at September
30, 2019, compared with $12.6 million at September 30, 2018.
The third quarter 2019 results include net charge-offs of
$11,000 and a provision for loan losses of $1.3 million compared
with net charge-offs of $1.1 million and a provision of $1.4
million for the same period in 2018. The allowance for loan loss as
a percentage of total loans was 1.13% at September 30, 2019,
consistent with 1.13% at September 30, 2018.
“We continue to be pleased with the steady improvement in our
non-performing assets,” said Hileman. “Total non-performing assets
including troubled debt restructurings declined 29% from last year,
now representing only 0.74% of assets compared to 1.18% a year
ago.”
Year-To-Date Results
For the nine-month period
ended September 30, 2019, net income totaled $36.9 million, or
$1.85 per diluted common share, compared to $34.2 million, or $1.67
per diluted common share for the nine months ended September 30,
2018. The year-to-year comparison is impacted by the prior year’s
results, including a significant loan recovery and a loan loss
provision expense of $704,000, which had an after-tax cost of
$556,000, or $0.03 per diluted share. The first nine months of 2019
included a provision for loan losses expense of $1,821,000, which
had an after-tax cost of $1,439,000, or $0.07 per diluted
share.
Net interest income was $86.2
million for the first nine months of 2019 compared with $79.8
million in the first nine months of 2018. Average interest-earning
assets increased to $2.92 billion in the first nine months of 2019
compared to $2.71 billion in the first nine months of 2018. Net
interest margin for the first nine months of 2019 was 3.98%, up one
basis point from the 3.97% margin reported in the nine-month period
ended September 30, 2018.
Non-interest income for the
first nine months of 2019 was $33.1 million compared to $30.8
million during the same period of 2018. Results for the first nine
months of 2019 included $418,000 of BOLI income death benefit
compared to $168,000 for the same period in 2018.
Service fees and other charges
were $10.3 million for the first nine months of 2019, up from $9.8
million during the same period of 2018. Mortgage banking income was
$6.8 million for the first nine months of 2019 compared with $5.6
million during the same period of 2018. Insurance commissions were
$11.0 million for the first nine months of 2019 consistent with
$11.0 million for the same period of 2018. Non-interest income for
the first nine months of 2019 included $11,000 of gains from the
sale of securities compared with securities gains of $76,000 during
the same period of 2018.
Non-interest expense was $72.3
million for the first nine months of 2019, up from $68.2 million
for the same period of 2018. Compensation and benefits expense was
$42.5 million for the first nine months of 2019 compared with $39.0
million during the same period of 2018. Expenses also included
increases in occupancy of $500,000, merger-related costs of
$540,000 and other expenses of $217,000. FDIC insurance premiums
were $276,000 for the first nine months of 2019 compared to
$817,000 during the same period of 2018 due to the receipt of small
bank assessment credits in the third quarter of 2019.
Total Assets at $3.35 Billion
Total assets at September 30, 2019, were $3.35 billion compared
to $3.18 billion at December 31, 2018, and $3.10 billion at
September 30, 2018. Net loans receivable (excluding loans held for
sale) were $2.64 billion at September 30, 2019, compared to $2.51
billion at December 31, 2018, and $2.43 billion at September 30,
2018. Also, at September 30, 2019, goodwill and other intangible
assets totaled $104.1 million compared to $103.0 million at
December 31, 2018, and $103.3 million at September 30, 2018. Total
deposits at September 30, 2019, were $2.76 billion compared with
$2.62 billion at December 31, 2018, and $2.52 billion at September
30, 2018.
Total stockholders’ equity was $418.0 million at September 30,
2019, compared to $399.6 million at December 31, 2018, and $393.5
million at September 30, 2018. The change in stockholders’ equity
from year-end 2018 was impacted by the company’s repurchase of
515,000 shares of its common stock for $15.1 million during the
first quarter of 2019. During the quarter ended June 30, 2019, the
company announced a new 500,000 share repurchase plan authorization
with all such shares available for repurchase as of September 30,
2019.
Strategic Mergers and Acquisitions
On September 9, 2019, First Defiance and United Community
Financial Corp. (NASDAQ: UCFC) (“United Community”) announced the
signing of a definitive merger agreement under which United
Community will merge into First Defiance in a stock-for-stock
transaction. Under the terms of the merger agreement, shareholders
of United Community will receive 0.3715 shares of First Defiance
common stock for each share of United Community common stock. The
merger combines two complementary banking platforms, and First
Defiance and United Community consider this partnership an ideal
strategic, financial and operational fit, particularly given their
respective strong and consistent performance over time. The pro
forma combined company will have approximately $6.1 billion in
assets, $5.0 billion in loans and $4.9 billion in deposits,
utilizing financial information as of June 30, 2019. It will
leverage the respective strengths of each institution in commercial
banking, residential lending, retail banking, insurance and wealth
management and better position the combined company to serve the
geographies of Ohio, Michigan, Indiana, Pennsylvania and West
Virginia with increased scale and expanded product offerings. The
transaction is expected to close early in the first quarter of
2020, subject to the approval of shareholders of both First
Defiance and United Community and regulatory approvals, as well as
satisfaction or waiver of other customary closing conditions.
On September 30, 2019, First Defiance, through its wholly owned
subsidiary First Federal Bank of the Midwest (“First Federal
Bank”), completed the acquisition of Strategic Investment Advisors,
LLC (“SIA”), a financial advisory and brokerage firm. Located in
Sylvania, Ohio, with assets under management of approximately $115
million and annual revenues of approximately $0.6 million, SIA will
be added to First Federal Bank’s Trust and Wealth Management
platform.
Dividend to be Paid November 22
The Board of Directors declared a quarterly cash dividend of
$0.22 per common share payable November 22, 2019, to shareholders
of record at the close of business on November 15, 2019. This
represents an increase of 15.8% from the prior quarter and 29.4%
from the prior year. The dividend represents an annual dividend of
3.02 percent based on the First Defiance common stock closing price
on October 18, 2019. First Defiance has approximately 19,728,588
common shares outstanding.
Conference Call
First Defiance Financial Corp. will host a conference call at
11:00 a.m. ET on Tuesday, October 22, 2019, 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/fdef191022.html. The
replay of the conference call webcast will be available at
www.fdef.com until October 21, 2020, 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
44 full-service branches in northwest and central Ohio, southeast
Michigan and northeast Indiana and a loan production office in Ann
Arbor, Michigan. First Insurance Group 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, 2018. 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
September 30, 2019, 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.
September 30,
December 31,
(in thousands)
2019
2018
Assets Cash and cash equivalents
Cash and amounts due from depository institutions
$
56,994
$
55,962
Interest-bearing deposits
55,000
43,000
111,994
98,962
Securities Available-for sale, carried at fair value
290,054
294,076
Held-to-maturity, carried at amortized cost
481
526
290,535
294,602
Loans
2,665,300
2,540,039
Allowance for loan losses
(30,250
)
(28,331
)
Loans, net
2,635,050
2,511,708
Loans held for sale
22,909
6,613
Mortgage servicing rights
9,859
10,119
Accrued interest receivable
11,386
9,641
Federal Home Loan Bank stock
11,915
14,217
Bank Owned Life Insurance
75,088
67,660
Office properties and equipment
39,911
40,670
Real estate and other assets held for sale
-
1,205
Goodwill
100,069
98,569
Core deposit and other intangibles
4,052
4,391
Other assets
37,956
23,365
Total Assets
$
3,350,724
$
3,181,722
Liabilities and Stockholders’ Equity
Non-interest-bearing deposits
$
604,129
$
607,198
Interest-bearing deposits
2,156,486
2,013,684
Total deposits
2,760,615
2,620,882
Advances from Federal Home Loan Bank
85,095
85,189
Notes payable and other interest-bearing liabilities
2,851
5,741
Subordinated debentures
36,083
36,083
Advance payments by borrowers for tax and insurance
5,504
3,652
Deferred taxes
1,871
264
Other liabilities
40,659
30,322
Total Liabilities
2,932,678
2,782,133
Stockholders’ Equity Preferred stock
-
-
Common stock, net
127
127
Additional paid-in-capital
161,577
161,593
Accumulated other comprehensive income (loss)
5,101
(2,148
)
Retained earnings
321,736
295,588
Treasury stock, at cost
(70,495
)
(55,571
)
Total stockholders’ equity
418,046
399,589
Total Liabilities and Stockholders’ Equity
$
3,350,724
$
3,181,722
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)
2019
2018
2019
2018
Interest Income: Loans
$
33,284
$
29,371
$
97,158
$
83,557
Investment securities
1,952
2,077
6,295
5,967
Interest-bearing deposits
312
275
857
945
FHLB stock dividends
135
240
533
698
Total interest income
35,683
31,963
104,843
91,167
Interest Expense: Deposits
6,029
3,753
16,615
9,508
FHLB advances and other
431
342
1,011
943
Subordinated debentures
329
334
1,043
934
Notes Payable
2
5
23
19
Total interest expense
6,791
4,434
18,692
11,404
Net interest income
28,892
27,529
86,151
79,763
Provision for loan losses
1,327
1,376
1,821
704
Net interest income after provision for loan losses
27,565
26,153
84,330
79,059
Non-interest Income: Service fees and other charges
4,027
3,335
10,335
9,762
Mortgage banking income
2,822
1,877
6,800
5,632
Gain on sale of non-mortgage loans
105
33
215
300
Gain on sale of securities
11
76
11
76
Insurance commissions
3,263
3,254
10,994
11,024
Trust income
511
514
1,510
1,588
Income from Bank Owned Life Insurance
783
399
1,702
1,365
Other non-interest income
320
434
1,574
1,092
Total Non-interest Income
11,842
9,922
33,141
30,839
Non-interest Expense: Compensation and benefits
14,061
12,882
42,544
39,016
Occupancy
2,206
2,154
6,751
6,251
FDIC insurance premium
(255
)
255
276
817
Financial institutions tax
555
531
1,667
1,593
Data processing
1,728
2,161
6,292
6,349
One time acquisition related charges
540
-
540
-
Amortization of intangibles
264
319
839
998
Other non-interest expense
4,104
3,984
13,395
13,178
Total Non-interest Expense
23,203
22,286
72,304
68,202
Income before income taxes
16,204
13,789
45,167
41,696
Income taxes
3,033
2,483
8,315
7,544
Net Income
$
13,171
$
11,306
$
36,852
$
34,152
Earnings per common share: Basic
$
0.67
$
0.55
$
1.86
$
1.68
Diluted
$
0.66
$
0.55
$
1.85
$
1.67
Average Shares Outstanding: Basic
19,790
20,400
19,862
20,373
Diluted
19,875
20,467
19,943
20,465
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)
2019
2018
% change
2019
2018
% change
Summary of Operations
Tax-equivalent interest income (2)
$
35,922
$
32,220
11.5
%
$
105,578
$
91,913
14.9
%
Interest expense
6,791
4,434
53.2
18,692
11,404
63.9
Tax-equivalent net interest income (2)
29,131
27,786
4.8
86,886
80,509
7.9
Provision for loan losses
1,327
1,376
(3.6
)
1,821
704
158.7
Tax-equivalent NII after provision for loan loss (2)
27,804
26,410
5.3
85,065
79,805
6.6
Investment securities gains
11
76
-
11
76
-
Non-interest income (excluding securities gains/losses)
11,831
9,846
20.2
33,130
30,763
7.7
Non-interest expense
23,203
22,286
4.1
72,304
68,202
6.0
Income taxes
3,033
2,483
22.2
8,315
7,544
10.2
Net Income
13,171
11,306
16.5
36,852
34,152
7.9
Tax equivalent adjustment (2)
239
257
(7.0
)
735
746
(1.5
)
At Period End
Assets
3,350,724
3,098,093
8.2
Earning assets
3,045,659
2,810,624
8.4
Loans
2,665,300
2,456,357
8.5
Allowance for loan losses
30,250
27,639
9.4
Deposits
2,760,615
2,524,431
9.4
Stockholders’ equity
418,046
393,457
6.2
Average Balances
Assets
3,303,013
3,059,225
8.0
3,236,674
3,018,632
7.2
Earning assets
2,985,498
2,754,561
8.4
2,923,809
2,710,998
7.8
Loans
2,624,314
2,403,932
9.2
2,567,646
2,352,514
9.1
Deposits and interest-bearing liabilities
2,843,079
2,633,054
8.0
2,788,974
2,599,540
7.3
Deposits
2,718,632
2,513,708
8.2
2,679,616
2,478,526
8.1
Stockholders’ equity
411,041
389,361
5.6
401,597
381,506
5.3
Stockholders’ equity / assets
12.44
%
12.73
%
(2.2
)
12.41
%
12.64
%
(1.8
)
Per Common Share Data
Net Income Basic
$
0.67
$
0.55
21.8
$
1.86
$
1.68
10.7
Diluted
0.66
0.55
20.0
1.85
1.67
10.8
Dividends
0.19
0.17
11.8
0.57
0.47
21.3
Market Value: High
$
29.44
$
35.00
(15.9
)
$
31.30
$
35.00
(10.6
)
Low
25.50
29.61
(13.9
)
24.12
25.51
(5.4
)
Close
28.97
30.11
(3.8
)
28.97
30.11
(3.8
)
Common Book Value
21.19
19.29
9.8
21.19
19.29
9.8
Tangible Common Book Value (1)
15.91
14.23
11.8
15.91
14.23
11.8
Shares outstanding, end of period (000)
19,729
20,396
(3.3
)
19,729
20,396
(3.3
)
Performance Ratios (annualized)
Tax-equivalent net interest margin (2)
3.88
%
4.00
%
(2.9
)
3.98
%
3.97
%
0.2
Return on average assets
1.58
%
1.47
%
7.9
1.52
%
1.51
%
0.6
Return on average equity
12.71
%
11.52
%
10.4
12.27
%
11.97
%
2.5
Efficiency ratio (3)
56.65
%
59.22
%
(4.3
)
60.25
%
61.29
%
(1.7
)
Effective tax rate
18.72
%
18.01
%
3.9
18.41
%
18.09
%
1.7
Dividend payout ratio (basic)
28.36
%
30.91
%
(8.3
)
30.65
%
27.98
%
9.5
(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 21%
(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
Nine Months Ended
September 30,
September 30,
(dollars in thousands)
2019
2018
2019
2018
Gain from sale of mortgage loans
$
2,596
$
1,280
$
5,672
$
3,744
Mortgage loan servicing revenue (expense):
Mortgage loan servicing revenue
960
929
2,842
2,806
Amortization of mortgage servicing rights
(579
)
(340
)
(1,256
)
(1,009
)
Mortgage servicing rights valuation adjustments
(155
)
8
(458
)
91
226
597
1,128
1,888
Total revenue from sale and servicing of mortgage loans
$
2,822
$
1,877
$
6,800
$
5,632
Yield Analysis First Defiance Financial Corp.
Three Months Ended September
30,
(dollars in thousands)
2019
2018
Average
Yield
Average
Yield
Balance
Interest(1)
Rate(2)
Balance
Interest(1)
Rate(2)
Interest-earning assets:
Loans receivable
$
2,624,314
$
33,306
5.04
%
$
2,403,932
$
29,397
4.85
%
Securities
293,876
2,169
2.99
%
(3
)
286,507
2,308
3.16
%
(3
)
Interest Bearing Deposits
55,393
312
2.23
%
49,734
275
2.19
%
FHLB stock
11,915
135
4.50
%
14,388
240
6.62
%
Total interest-earning assets
2,985,498
35,922
4.78
%
2,754,561
32,220
4.63
%
Non-interest-earning assets
317,515
304,664
Total assets
$
3,303,013
$
3,059,225
Deposits and Interest-bearing liabilities:
Interest bearing deposits
$
2,129,306
$
6,029
1.12
%
$
1,955,518
$
3,753
0.76
%
FHLB advances and other
85,339
431
2.00
%
77,719
342
1.75
%
Subordinated debentures
36,083
329
3.62
%
36,196
334
3.66
%
Notes payable
3,025
2
0.26
%
5,431
5
0.37
%
Total interest-bearing liabilities
2,253,753
6,791
1.20
%
2,074,864
4,434
0.85
%
Non-interest bearing deposits
589,326
-
-
558,190
-
-
Total including non-interest-bearing demand deposits
2,843,079
6,791
0.95
%
2,633,054
4,434
0.67
%
Other non-interest-bearing liabilities
48,893
36,810
Total liabilities
2,891,972
2,669,864
Stockholders' equity
411,041
389,361
Total liabilities and stockholders' equity
$
3,303,013
$
3,059,225
Net interest income; interest rate spread
$
29,131
3.58
%
$
27,786
3.78
%
Net interest margin (4)
3.88
%
4.00
%
Average interest-earning assets to average interest bearing
liabilities
132
%
133
%
Nine Months Ended September
30,
2019
2018
Average Yield Average Yield
Balance Interest(1) Rate Balance Interest(1)
Rate
Interest-earning assets:
Loans receivable
$
2,567,646
$
97,227
5.06
%
$
2,352,514
$
83,633
4.75
%
Securities
296,312
6,961
3.14
%
(3
)
276,745
6,637
3.21
%
(3
)
Interest Bearing Deposits
47,360
857
2.42
%
66,283
945
1.91
%
FHLB stock
12,491
533
5.71
%
15,456
698
6.04
%
Total interest-earning assets
2,923,809
105,578
4.83
%
2,710,998
91,913
4.53
%
Non-interest-earning assets
312,865
307,634
Total assets
$
3,236,674
$
3,018,632
Deposits and Interest-bearing liabilities:
Interest bearing deposits
$
2,094,693
$
16,615
1.06
%
$
1,925,972
$
9,508
0.66
%
FHLB advances and other
68,920
1,011
1.96
%
74,634
943
1.69
%
Subordinated debentures
36,083
1,043
3.86
%
36,195
934
3.45
%
Notes payable
4,355
23
0.71
%
10,185
19
0.25
%
Total interest-bearing liabilities
2,204,051
18,692
1.13
%
2,046,986
11,404
0.74
%
Non-interest bearing deposits
584,923
-
-
552,554
-
-
Total including non-interest-bearing demand deposits
2,788,974
18,692
0.90
%
2,599,540
11,404
0.59
%
Other non-interest-bearing liabilities
46,103
37,586
Total liabilities
2,835,077
2,637,126
Stockholders' equity
401,597
381,506
Total liabilities and stockholders' equity
$
3,236,674
$
3,018,632
Net interest income; interest rate spread
$
86,886
3.70
%
$
80,509
3.79
%
Net interest margin (4)
3.98
%
3.97
%
Average interest-earning assets to average interest bearing
liabilities
133
%
132
%
(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 21%.
(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)
3rd Qtr 2019
2nd Qtr 2019
1st Qtr 2019
4th Qtr 2018
3rd Qtr 2018
Summary of Operations
Tax-equivalent interest income (1)
$
35,922
$
35,490
$
34,166
$
33,808
$
32,220
Interest expense
6,791
6,252
5,649
5,058
4,434
Tax-equivalent net interest income (1)
29,131
29,238
28,517
28,750
27,786
Provision for loan losses
1,327
282
212
472
1,376
Tax-equivalent NII after provision for loan losses (1)
27,804
28,956
28,305
28,278
26,410
Investment securities gains, net of impairment
11
-
-
97
76
Non-interest income (excluding securities gains/losses)
11,831
10,486
10,813
8,272
9,846
Non-interest expense
23,203
24,235
24,866
21,210
22,286
Income taxes
3,033
2,759
2,523
3,082
2,483
Net income
13,171
12,199
11,482
12,097
11,306
Tax equivalent adjustment (1)
239
249
247
258
257
At Period End Total
assets
$
3,350,724
$
3,277,552
$
3,221,249
$
3,181,722
$
3,098,093
Earning assets
3,045,659
2,980,243
2,934,860
2,898,471
2,810,624
Loans
2,665,300
2,624,219
2,548,968
2,540,039
2,456,357
Allowance for loan losses
30,250
28,934
28,164
28,331
27,639
Deposits
2,760,615
2,680,637
2,685,792
2,620,882
2,524,431
Stockholders’ equity
418,046
407,216
395,789
399,589
393,457
Stockholders’ equity / assets
12.48
%
12.42
%
12.29
%
12.56
%
12.70
%
Goodwill
100,069
98,569
98,569
98,569
98,569
Average Balances Total
assets
$
3,303,013
$
3,223,997
$
3,183,012
$
3,138,202
$
3,059,225
Earning assets
2,985,498
2,914,587
2,871,340
2,831,866
2,754,561
Loans
2,624,314
2,561,341
2,517,283
2,474,221
2,403,932
Deposits and interest-bearing liabilities
2,843,079
2,781,216
2,742,626
2,705,736
2,633,054
Deposits
2,718,632
2,678,060
2,642,158
2,594,635
2,513,708
Stockholders’ equity
411,041
398,612
395,138
392,701
389,361
Stockholders’ equity / assets
12.44
%
12.36
%
12.41
%
12.51
%
12.73
%
Per Common Share Data Net
Income: Basic
$
0.67
$
0.62
$
0.57
$
0.60
$
0.55
Diluted
0.66
0.61
0.57
0.59
0.55
Dividends
0.19
0.19
0.19
0.17
0.17
Market Value: High
$
29.44
$
30.44
$
31.30
$
31.09
$
35.00
Low
25.50
26.59
24.12
22.78
29.61
Close
28.97
28.57
28.74
24.51
30.11
Common Book Value
21.19
20.65
20.08
19.81
19.29
Shares outstanding, end of period (in thousands)
19,729
19,723
19,713
20,171
20,396
Performance Ratios (annualized)
Tax-equivalent net interest margin (1)
3.88
%
4.03
%
4.03
%
4.02
%
4.00
%
Return on average assets
1.58
%
1.52
%
1.46
%
1.53
%
1.47
%
Return on average equity
12.71
%
12.28
%
11.78
%
12.22
%
11.52
%
Efficiency ratio (2)
56.65
%
61.01
%
63.22
%
57.29
%
59.22
%
Effective tax rate
18.72
%
18.44
%
18.01
%
20.30
%
18.01
%
Common dividend payout ratio (basic)
28.36
%
30.65
%
33.33
%
28.33
%
30.91
%
(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 21%.
(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 2019
2nd Qtr 2019
1st Qtr 2019
4th Qtr 2018
3rd Qtr 2018
Loan Portfolio Composition One to four family
residential real estate
$
330,369
$
322,123
$
321,644
$
322,686
$
313,300
Construction
308,061
335,847
304,241
265,772
274,344
Commercial real estate
1,430,919
1,411,463
1,394,500
1,404,810
1,363,087
Commercial
537,806
530,528
509,627
509,577
489,393
Consumer finance
36,644
35,350
34,262
34,405
32,379
Home equity and improvement
123,871
125,860
124,450
128,152
129,295
Total loans
2,767,670
2,761,171
2,688,724
2,665,402
2,601,798
Less: Undisbursed loan funds
100,260
134,794
137,742
123,293
143,286
Deferred loan origination fees
2,110
2,158
2,014
2,070
2,155
Allowance for loan loss
30,250
28,934
28,164
28,331
27,639
Net Loans
$
2,635,050
$
2,595,285
$
2,520,804
$
2,511,708
$
2,428,718
Allowance for loan loss activity
Beginning allowance
$
28,934
$
28,164
$
28,331
$
27,639
$
27,321
Provision for loan losses
1,327
282
212
472
1,376
Credit loss charge-offs: One to four family residential real
estate
74
11
172
31
136
Commercial real estate
-
15
-
30
1,048
Commercial
25
13
187
15
528
Consumer finance
80
33
142
105
25
Home equity and improvement
12
64
33
75
36
Total charge-offs
191
136
534
256
1,773
Total recoveries
180
624
155
476
715
Net charge-offs (recoveries)
11
(488
)
379
(220
)
1,058
Ending allowance
$
30,250
$
28,934
$
28,164
$
28,331
$
27,639
Credit Quality Total non-performing
loans (1)
$
14,677
$
15,334
$
17,645
$
19,016
$
20,929
Real estate owned (REO)
-
-
941
1,205
1,676
Total non-performing assets (2)
$
14,677
$
15,334
$
18,586
$
20,221
$
22,605
Net charge-offs (recoveries)
11
(488
)
379
(220
)
1,058
Restructured loans, accruing (3)
10,334
10,308
11,908
11,573
12,611
Allowance for loan losses / loans
1.13
%
1.10
%
1.10
%
1.12
%
1.13
%
Allowance for loan losses / non-performing assets
206.10
%
188.69
%
151.53
%
140.11
%
122.27
%
Allowance for loan losses / non-performing loans
206.10
%
188.69
%
159.61
%
148.99
%
132.06
%
Non-performing assets / loans plus REO
0.55
%
0.58
%
0.73
%
0.80
%
0.92
%
Non-performing assets / total assets
0.44
%
0.47
%
0.58
%
0.64
%
0.73
%
Net charge-offs / average loans (annualized)
0.00
%
-0.08
%
0.06
%
-0.04
%
0.18
%
Deposit Balances Non-interest-bearing
demand deposits
$
604,129
$
584,735
$
586,033
$
607,198
$
556,316
Interest-bearing demand deposits and money market
1,124,208
1,088,694
1,107,511
1,040,471
1,016,294
Savings deposits
294,594
304,051
300,244
292,829
293,359
Retail time deposits less than $250,000
634,737
610,345
601,012
591,822
564,379
Retail time deposits greater than $250,000
102,947
92,812
90,992
88,562
94,083
Total deposits
$
2,760,615
$
2,680,637
$
2,685,792
$
2,620,882
$
2,524,431
(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
September 30, 2019
One to four family residential real estate
$
330,369
$
325,573
$
1,787
$
3,009
Construction
308,061
308,061
-
-
Commercial real estate
1,430,919
1,414,694
8,012
8,213
Commercial
537,806
534,321
516
2,969
Consumer finance
36,644
36,413
231
-
Home equity and improvement
123,871
122,103
1,282
486
Total loans
$
2,767,670
$
2,741,165
$
11,828
$
14,677
December 31, 2018
One to four family residential real estate
$
322,686
$
317,740
$
1,306
$
3,640
Construction
265,772
265,772
-
-
Commercial real estate
1,404,810
1,394,211
242
10,357
Commercial
509,577
504,884
193
4,500
Consumer finance
34,405
34,079
200
126
Home equity and improvement
128,152
126,188
1,571
393
Total loans
$
2,665,402
$
2,642,874
$
3,512
$
19,016
September 30, 2018
One to four family residential real estate
$
313,300
$
308,108
$
1,680
$
3,512
Construction
274,344
274,344
-
-
Commercial real estate
1,363,087
1,351,257
138
11,692
Commercial
489,393
484,216
48
5,129
Consumer finance
32,379
32,124
221
34
Home equity and improvement
129,295
127,291
1,442
562
Total loans
$
2,601,798
$
2,577,340
$
3,529
$
20,929
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191021005862/en/
Donald P. Hileman President and CEO (419) 782-5104
dhileman@first-fed.com
First Defiance Financial (NASDAQ:FDEF)
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