- Earnings per diluted share of $0.63 for 2019 fourth quarter, up
from $0.59 per share in the 2018 fourth quarter
- Net income of $12.5 million for 2019 fourth quarter, compared
to $12.1 million in the 2018 fourth quarter
- Loan growth of $112 million during the 2019 fourth quarter
- Deposit growth of $110 million during the 2019 fourth
quarter
- Non-performing loans of $13.5 million for 2019 fourth quarter,
compared to $19.0 million for the 2018 fourth quarter
First Defiance Financial Corp.
(NASDAQ: FDEF) announced today that net income for the fiscal year
ended December 31, 2019, totaled $49.4 million, or $2.48 per
diluted common share, compared to $46.2 million, or $2.26 per
diluted common share, for the year ended December 31, 2018. For the
fourth quarter of 2019, First Defiance earned $12.5 million, or
$0.63 per diluted common share, compared to $12.1 million, or
$0.59 per diluted common share for the fourth quarter of 2018. The
fourth quarter of 2018 results included an increase of $806,000
pre-tax ($636,000 after-tax), or $0.03 per diluted share, from an
immaterial accounting correction related to the company’s deferred
compensation plan. The year-over-year comparisons are impacted by
merger-related costs in the current year’s results, which had an
after-tax cost of $1.1 million, or $0.05 per diluted share, for the
full year and $697,000, or $0.03 per diluted share, for the fourth
quarter.
“With fourth quarter earnings
per share up 12% over last year, excluding merger costs, we are
proud to announce record earnings performance for our seventh
consecutive year,” said Donald P. Hileman, President and Chief
Executive Officer of First Defiance. “Our balance sheet and
earnings growth, along with continued asset quality improvement,
allowed us to finish the year strong. We are pleased with our
position as we start 2020 and prepared to close our strategic
merger with United Community Financial Corp.”
Net interest income up compared to fourth quarter
2018
Net interest income of $29.5 million in the fourth quarter of
2019 was up from $28.5 million in the fourth 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 fourth
quarter last year. The net interest margin was 3.80% for the fourth
quarter, down from 3.88% for the third quarter of 2019 and 4.02% in
the fourth quarter of 2018. Yield on interest earning assets
decreased by six basis points, to 4.67% in the fourth quarter of
2019 from 4.73% in the fourth quarter of 2018. The cost of
interest-bearing liabilities increased by 20 basis points in the
fourth quarter of 2019 to 1.15% from 0.95% in the fourth quarter of
2018.
“Our solid loan and core deposit growth helped generate an
increase in net interest income despite margin compression,” said
Hileman. “Annualized growth rates of 17% for loans and 16% for
deposits in the fourth quarter provided the momentum we like to see
as we begin a new year.”
Non-interest income up from fourth quarter 2018
First Defiance’s non-interest income for the fourth quarter of
2019 was $11.8 million compared to $8.4 million in the fourth
quarter of 2018. Results for the fourth quarter of 2019 included a
$324,000 increase in deferred compensation plan assets compared to
a $690,000 decrease for the same period in 2018 due to stock market
performance.
Mortgage banking income was $2.7 million in the fourth quarter
of 2019, up from $1.4 million in the fourth quarter of 2018 due to
higher volumes. Mortgage originations totaled $106.5 million in the
fourth quarter of 2019 compared to $60.9 million in the same
quarter last year. As a result of the higher volumes, gains from
the sale of mortgage loans increased in the fourth quarter of 2019
to $2.0 million from $758,000 in the fourth quarter of 2018.
Mortgage loan servicing revenue was $978,000 in the fourth quarter
of 2019, consistent with $978,000 in the fourth quarter of 2018.
First Defiance had a positive change in the valuation adjustment in
mortgage servicing assets of $223,000 in the fourth quarter of 2019
compared to a positive adjustment of $41,000 in the fourth quarter
of 2018.
For the fourth quarter of 2019, service fees and other charges
were $3.7 million, up from $3.3 million in the fourth quarter of
2018; and commissions from the sale of insurance products were $3.1
million, consistent with $3.1 million in the fourth quarter of
2018. Trust income was $746,000 in the fourth quarter of 2019, up
from $503,000 in the fourth quarter of 2018. The fourth quarter of
2019 included gains of $13,000 from the sale of securities compared
to gains of $97,000 in the fourth quarter of 2018.
Other non-interest income for the fourth quarter of 2019 was a
positive $1.1 million compared to a negative $494,000 for the
fourth quarter of 2018, primarily due to the change in deferred
compensation plan assets described above. Excluding the impact of
this item, other non-interest income for fourth quarter 2019 would
be $767,000 compared to $196,000 in the fourth quarter of 2018.
Non-interest expenses up from fourth quarter 2018
Non-interest expense totaled $24.8 million in the fourth quarter
of 2019 compared to $21.2 million in the fourth quarter of 2018.
The comparison includes a one-time $806,000 reduction in expenses
from the accounting correction to the company’s deferred
compensation plan in the fourth quarter of 2018. Additionally, the
fourth quarter of 2019 included a $321,000 increase in deferred
compensation plan expense compared to a $1.3 million decrease in
the fourth quarter of 2018 due to stock market performance in the
relative periods.
Compensation and benefits in the fourth quarter of 2019 was
$14.6 million, an increase of $1.1 million compared to the fourth
quarter of 2018. Occupancy expense was $2.3 million in the fourth
quarter of 2019, down $113,000 from the fourth quarter of 2018.
Data processing cost was $1.8 million in the fourth quarter of
2019, down $443,000 from the fourth quarter of 2018. In addition,
acquisition-related costs totaled $882,000 in the fourth quarter of
2019 compared to none in the prior year.
Other non-interest expense was $4.2 million in the fourth
quarter of 2019 compared to $2.0 million (or $2.8 million excluding
the benefit from the deferred compensation accounting correction)
in the fourth quarter of 2018. Additionally, results for the fourth
quarter of 2018 included a $1,052,000 decrease in deferred
compensation plan liabilities compared to a $321,000 increase for
the same period in 2019 due to stock market performance. Excluding
the impact of these items, other non-interest expense for fourth
quarter 2019 would be $3.9 million compared to $3.9 million in the
fourth quarter of 2018.
Credit quality
Non-performing loans totaled $13.5 million at December 31, 2019,
a decrease from $19.0 million at December 31, 2018. In addition,
real estate owned totaled $100,000 at December 31, 2019, down from
$1.2 million at December 31, 2018. Accruing troubled debt
restructured loans were $8.4 million at December 31, 2019, a
decrease from $11.6 million at December 31, 2018.
The fourth quarter of 2019 results include net charge-offs of
$91,000 and a provision for loan losses of $1.1 million compared
with net recoveries of $220,000 and a provision of $472,000 for the
same period in 2018. The allowance for loan loss as a percentage of
total loans was 1.12% at December 31, 2019, compared with 1.13% at
September 30, 2019, and 1.12% at December 31, 2018.
“Our non-performing assets to total assets at year-end improved
significantly from the prior year to 0.39%, and net recoveries were
$7,000 in 2019,” said Hileman. “A heightened, strategic focus in
asset quality played a significant role in this achievement. A
continuation of these efforts in 2020 is anticipated to lead to
additional reductions in our non-performing assets.”
Annual results
Net income for the full year
ended on December 31, 2019, totaled $49.4 million, or $2.48 per
diluted common share, compared to $46.2 million, or $2.26 per
diluted common share for 2018. The year 2018 included a benefit of
$806,000 from an accounting correction, which had an after-tax
impact of $636,000 or $0.03 per diluted share. The year 2019
included acquisition-related expenses, which had an after-tax
impact of $1.1 million or $0.05 per diluted share.
Net interest income for 2019
totaled $115.6 million, compared with $108.3 million for 2018.
Average interest-earning assets increased to $2.97 billion for
2019, compared to $2.74 billion in 2018. Net interest margin for
2019 was 3.93%, down five basis points from the 3.98% margin for
2018. The provision for loan losses for 2019 was $2.9 million,
compared to $1.2 million for 2018.
Non-interest income for the
year 2019 was $45.0 million, compared to $39.2 million in 2018.
Service fees and other charges were $14.0 million for 2019, up from
$13.1 million in 2018. Mortgage banking income increased to $9.5
million for 2019 from $7.1 million in 2018. Gains on the sale of
non-mortgage loans were $226,000 for 2019, compared to $317,000 in
2018. Insurance commissions were $14.1 million for 2019, consistent
with $14.1 million in 2018. Non-interest income for 2019 included
$24,000 of net securities gains compared to $173,000 of net
securities gains for 2018.
Non-interest expense increased
to $97.1 million in 2019 from $89.4 million in 2018. Included in
non-interest expense for 2019 were acquisition-related expenses of
$1.4 million. Compensation and benefits expense was $57.2 million
for 2019 compared to $52.6 million for 2018. Expenses also included
decreases in data processing expense of $500,000 and FDIC insurance
premiums of $537,000, partly offset by an increase in occupancy
expense of $386,000. Other non-interest expense was $17.6 million
in 2019 compared to $15.2 million (or $16.0 million excluding the
benefit from the deferred compensation accounting correction) in
2018.
Total assets at $3.47 billion
Total assets at December 31, 2019, were $3.47 billion compared
to $3.18 billion at December 31, 2018. Net loans receivable
(excluding loans held for sale) were $2.75 billion at December 31,
2019, compared to $2.51 billion at December 31, 2018. Also, at
December 31, 2019, goodwill and other intangible assets totaled
$103.8 million compared to $103.0 million at December 31, 2018.
Total deposits at December 31, 2019, were $2.87 billion compared
with $2.62 billion at December 31, 2018. Total stockholders’ equity
was $426.2 million at December 31, 2019, compared to $399.6 million
at December 31, 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 December 31,
2019.
Dividend to be paid February 21
The Board of Directors declared a quarterly cash dividend of
$0.22 per common share payable February 21, 2020, to shareholders
of record at the close of business on February 14, 2020. The
dividend represents an annual dividend of 2.82% based on the First
Defiance common stock closing price on January 17, 2020. First
Defiance has approximately 19,730,000 common shares
outstanding.
Conference call
First Defiance will host a conference call at 11:00 a.m. ET on
Tuesday, January 21, 2020, to discuss the earnings results and
business trends. The conference call may be accessed by calling
1-877-444-1726. A live webcast may also be accessed at
https://services.choruscall.com/links/fdef200121.html.
The replay of the conference call webcast will be available at
www.fdef.com until 9:00 a.m. ET on Wednesday, January 20, 2021.
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 December 31, 2019 consolidated financial
statements as part of its Annual Report on Form 10-K 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.
December 31,
December 31,
(in thousands)
2019
2018
Assets Cash and cash equivalents Cash and amounts due
from depository institutions
$
46,254
$
55,962
Interest-bearing deposits
85,000
43,000
131,254
98,962
Securities Available-for sale, carried at fair value
283,448
294,076
Held-to-maturity, carried at amortized cost
-
526
283,448
294,602
Loans
2,777,564
2,540,039
Allowance for loan losses
(31,243
)
(28,331
)
Loans, net
2,746,321
2,511,708
Loans held for sale
18,008
6,613
Mortgage servicing rights
10,267
10,119
Accrued interest receivable
10,244
9,641
Federal Home Loan Bank stock
11,915
14,217
Bank Owned Life Insurance
75,544
67,660
Office properties and equipment
39,563
40,670
Real estate and other assets held for sale
100
1,205
Goodwill
100,069
98,569
Core deposit and other intangibles
3,772
4,391
Other assets
38,487
23,365
Total Assets
$
3,468,992
$
3,181,722
Liabilities and Stockholders’ Equity
Non-interest-bearing deposits
$
630,359
$
607,198
Interest-bearing deposits
2,239,966
2,013,684
Total deposits
2,870,325
2,620,882
Advances from Federal Home Loan Bank
85,063
85,189
Notes payable and other interest-bearing liabilities
2,999
5,741
Subordinated debentures
36,083
36,083
Advance payments by borrowers for tax and insurance
5,491
3,652
Deferred taxes
1,326
264
Other liabilities
41,538
30,322
Total Liabilities
3,042,825
2,782,133
Stockholders’ Equity Preferred stock
-
-
Common stock, net
127
127
Additional paid-in-capital
161,955
161,593
Accumulated other comprehensive income (loss)
4,595
(2,148
)
Retained earnings
329,934
295,588
Treasury stock, at cost
(70,444
)
(55,571
)
Total stockholders’ equity
426,167
399,589
Total Liabilities and Stockholders’ Equity
$
3,468,992
$
3,181,722
Consolidated Statements of Income (Unaudited) First
Defiance Financial Corp.
Three Months Ended
Twelve Months Ended
December
31,
December
31,
(in thousands, except per share amounts)
2019
2018
2019
2018
Interest Income: Loans
$
33,695
$
30,841
$
130,853
$
114,398
Investment securities
1,889
2,167
8,183
8,134
Interest-bearing deposits
537
325
1,395
1,270
FHLB stock dividends
120
217
653
915
Total interest income
36,241
33,550
141,084
124,717
Interest Expense: Deposits
5,999
4,389
22,613
13,897
FHLB advances and other
431
318
1,443
1,261
Subordinated debentures
311
347
1,354
1,281
Notes Payable
2
4
25
23
Total interest expense
6,743
5,058
25,435
16,462
Net interest income
29,498
28,492
115,649
108,255
Provision for loan losses
1,084
472
2,905
1,176
Net interest income after provision for loan losses
28,414
28,020
112,744
107,079
Non-interest Income: Service fees and other charges
3,693
3,338
14,028
13,100
Mortgage banking income
2,683
1,445
9,483
7,077
Gain on sale of non-mortgage loans
11
17
226
317
Gain on sale of securities
13
97
24
173
Insurance commissions
3,123
3,061
14,118
14,085
Trust income
746
503
2,255
2,091
Income from Bank Owned Life Insurance
456
402
2,158
1,767
Other non-interest income
1,091
(494
)
2,664
598
Total Non-interest Income
11,816
8,369
44,956
39,208
Non-interest Expense: Compensation and benefits
14,631
13,550
57,175
52,566
Occupancy
2,277
2,390
9,027
8,641
FDIC insurance premium
208
204
484
1,021
Financial institutions tax
526
525
2,193
2,118
Data processing
1,763
2,206
8,055
8,555
One time acquisition related charges
882
-
1,422
-
Amortization of intangibles
281
314
1,120
1,312
Other non-interest expense
4,192
2,021
17,587
15,199
Total Non-interest Expense
24,760
21,210
97,063
89,412
Income before income taxes
15,470
15,179
60,637
56,875
Income taxes
2,953
3,082
11,267
10,626
Net Income
$
12,517
$
12,097
$
49,370
$
46,249
Earnings per common share: Basic
$
0.63
$
0.60
$
2.49
$
2.27
Diluted
$
0.63
$
0.59
$
2.48
$
2.26
Average Shares Outstanding: Basic
19,792
20,313
19,844
20,358
Diluted
19,895
20,404
19,931
20,449
Financial Summary and Comparison (Unaudited) First
Defiance Financial Corp.
Three Months Ended
Twelve Months Ended
December
31,
December
31,
(dollars in thousands, except per share data)
2019
2018
% change
2019
2018
% change
Summary of Operations Tax-equivalent interest income
(2)
$
36,473
$
33,808
7.9
%
$
142,051
$
125,721
13.0
%
Interest expense
6,743
5,058
33.3
25,435
16,462
54.5
Tax-equivalent net interest income (2)
29,730
28,750
3.4
116,616
109,259
6.7
Provision for loan losses
1,084
472
129.7
2,905
1,176
147.0
Tax-equivalent NII after provision for loan loss (2)
28,646
28,278
1.3
113,711
108,083
5.2
Investment securities gains
13
97
(86.6
)
24
173
(86.1
)
Non-interest income (excluding securities gains/losses)
11,803
8,272
42.7
44,932
39,035
15.1
Non-interest expense
24,760
21,210
16.7
97,063
89,412
8.6
Income taxes
2,953
3,082
(4.2
)
11,267
10,626
6.0
Net Income
12,517
12,097
3.5
49,370
46,249
6.7
Tax equivalent adjustment (2)
232
258
(10.1
)
967
1,004
(3.7
)
At Period End Assets
3,468,992
3,181,722
9.0
Earning assets
3,175,935
2,898,471
9.6
Loans
2,777,564
2,540,039
9.4
Allowance for loan losses
31,243
28,331
10.3
Deposits
2,870,325
2,620,882
9.5
Stockholders’ equity
426,167
399,589
6.7
Average Balances Assets
3,425,097
3,138,202
9.1
3,283,780
3,048,525
7.7
Earning assets
3,107,224
2,831,866
9.7
2,969,662
2,741,215
8.3
Loans
2,688,519
2,474,221
8.7
2,597,864
2,382,941
9.0
Deposits and interest-bearing liabilities
2,954,049
2,705,736
9.2
2,830,244
2,626,004
7.8
Deposits
2,830,043
2,594,635
9.1
2,717,224
2,507,553
8.4
Stockholders’ equity
420,352
392,701
7.0
406,286
384,305
5.7
Stockholders’ equity / assets
12.27
%
12.51
%
(1.9
)
12.37
%
12.61
%
(1.9
)
Per Common Share Data Net Income Basic
$
0.63
$
0.60
5.0
$
2.49
$
2.27
9.7
Diluted
0.63
0.59
6.8
2.48
2.26
9.7
Dividends
0.22
0.17
29.4
0.79
0.64
23.4
Market Value: High
$
32.39
$
31.09
4.2
$
32.39
$
31.09
4.2
Low
27.77
22.78
21.9
24.12
22.78
5.9
Close
31.32
24.51
27.8
31.32
24.51
27.8
Common Book Value
21.60
19.81
9.0
21.60
19.81
9.0
Tangible Common Book Value (1)
16.34
14.71
11.1
16.34
14.71
11.1
Shares outstanding, end of period (000)
19,730
20,171
(2.2
)
19,730
20,171
(2.2
)
Performance Ratios (annualized) Tax-equivalent net interest margin
(2)
3.80
%
4.02
%
(5.4
)
3.93
%
3.98
%
(1.2
)
Return on average assets
1.45
%
1.53
%
(5.2
)
1.50
%
1.52
%
(0.9
)
Return on average equity
11.81
%
12.22
%
(3.3
)
12.15
%
12.03
%
1.0
Efficiency ratio (3)
59.62
%
57.29
%
4.1
60.08
%
60.29
%
(0.3
)
Effective tax rate
19.09
%
20.30
%
(6.0
)
18.58
%
18.68
%
(0.5
)
Dividend payout ratio (basic)
34.92
%
28.33
%
23.2
31.73
%
28.19
%
12.5
(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
Twelve Months Ended
December
31,
December
31,
(dollars in thousands)
2019
2018
2019
2018
Gain from sale of mortgage loans
$
2,035
$
758
$
7,706
$
4,502
Mortgage loan servicing revenue (expense): Mortgage loan servicing
revenue
978
978
3,820
3,784
Amortization of mortgage servicing rights
(553
)
(332
)
(1,809
)
(1,341
)
Mortgage servicing rights valuation adjustments
223
41
(234
)
132
648
687
1,777
2,575
Total revenue from sale and servicing of mortgage loans
$
2,683
$
1,445
$
9,483
$
7,077
Yield Analysis First Defiance Financial Corp.
Three Months Ended December
31,
(dollars in thousands)
2019
2018
Average
Yield
Average
Yield
Balance
Interest(1)
Rate(2)
Balance
Interest(1)
Rate(2)
Interest-earning assets: Loans receivable
$
2,688,519
$
33,716
4.98
%
$
2,474,221
$
30,867
4.95
%
Securities
287,172
2,100
2.96
%
(3)
289,233
2,399
3.22
%
(3)
Interest Bearing Deposits
119,618
537
1.78
%
54,195
325
2.38
%
FHLB stock
11,915
120
4.00
%
14,217
217
6.06
%
Total interest-earning assets
3,107,224
36,473
4.67
%
2,831,866
33,808
4.73
%
Non-interest-earning assets
317,873
306,336
Total assets
$
3,425,097
$
3,138,202
Deposits and Interest-bearing liabilities: Interest bearing
deposits
$
2,205,673
$
5,999
1.08
%
$
2,002,541
$
4,389
0.87
%
FHLB advances and other
85,291
431
2.00
%
69,782
318
1.81
%
Subordinated debentures
36,083
311
3.42
%
36,083
347
3.82
%
Notes payable
2,632
2
0.30
%
5,236
4
0.30
%
Total interest-bearing liabilities
2,329,679
6,743
1.15
%
2,113,642
5,058
0.95
%
Non-interest bearing deposits
624,370
-
-
592,094
-
-
Total including non-interest-bearing demand deposits
2,954,049
6,743
0.91
%
2,705,736
5,058
0.74
%
Other non-interest-bearing liabilities
50,696
39,765
Total liabilities
3,004,745
2,745,501
Stockholders' equity
420,352
392,701
Total liabilities and stockholders' equity
$
3,425,097
$
3,138,202
Net interest income; interest rate spread
$
29,730
3.52
%
$
28,750
3.78
%
Net interest margin (4)
3.80
%
4.02
%
Average interest-earning assets to average interest bearing
liabilities
133
%
134
%
Twelve Months Ended December
31,
2019
2018
Average
Yield
Average
Yield
Balance
Interest(1)
Rate
Balance
Interest(1)
Rate
Interest-earning assets: Loans receivable
$
2,597,864
$
130,943
5.04
%
$
2,382,941
$
114,500
4.80
%
Securities
294,027
9,060
3.08
%
(3)
279,867
9,036
3.23
%
(3)
Interest Bearing Deposits
65,424
1,395
2.13
%
63,261
1,270
2.01
%
FHLB stock
12,347
653
5.29
%
15,146
915
6.04
%
Total interest-earning assets
2,969,662
142,051
4.78
%
2,741,215
125,721
4.59
%
Non-interest-earning assets
314,118
307,310
Total assets
$
3,283,780
$
3,048,525
Deposits and Interest-bearing liabilities: Interest bearing
deposits
$
2,122,439
$
22,613
1.07
%
$
1,945,114
$
13,897
0.71
%
FHLB advances and other
73,013
1,443
1.98
%
73,421
1,261
1.72
%
Subordinated debentures
36,083
1,354
3.75
%
36,083
1,281
3.55
%
Notes payable
3,924
25
0.64
%
8,947
23
0.26
%
Total interest-bearing liabilities
2,235,459
25,435
1.14
%
2,063,565
16,462
0.80
%
Non-interest bearing deposits
594,785
-
-
562,439
-
-
Total including non-interest-bearing demand deposits
2,830,244
25,435
0.90
%
2,626,004
16,462
0.63
%
Other non-interest-bearing liabilities
47,250
38,216
Total liabilities
2,877,494
2,664,220
Stockholders' equity
406,286
384,305
Total liabilities and stockholders' equity
$
3,283,780
$
3,048,525
Net interest income; interest rate spread
$
116,616
3.64
%
$
109,259
3.79
%
Net interest margin (4)
3.93
%
3.98
%
Average interest-earning assets to average interest bearing
liabilities
133
%
133
%
(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)
4th Qtr 2019
3rd Qtr 2019
2nd Qtr 2019
1st Qtr 2019
4th Qtr 2018
Summary of Operations Tax-equivalent interest income (1)
$
36,473
$
35,922
$
35,490
$
34,166
$
33,808
Interest expense
6,743
6,791
6,252
5,649
5,058
Tax-equivalent net interest income (1)
29,730
29,131
29,238
28,517
28,750
Provision for loan losses
1,084
1,327
282
212
472
Tax-equivalent NII after provision for loan losses (1)
28,646
27,804
28,956
28,305
28,278
Investment securities gains, net of impairment
13
11
-
-
97
Non-interest income (excluding securities gains/losses)
11,803
11,831
10,486
10,813
8,272
Non-interest expense
24,760
23,203
24,235
24,866
21,210
Income taxes
2,953
3,033
2,759
2,523
3,082
Net income
12,517
13,171
12,199
11,482
12,097
Tax equivalent adjustment (1)
232
239
249
247
258
At Period End Total assets
$
3,468,992
$
3,350,724
$
3,277,552
$
3,221,249
$
3,181,722
Earning assets
3,175,935
3,045,659
2,980,243
2,934,860
2,898,471
Loans
2,777,564
2,665,300
2,624,219
2,548,968
2,540,039
Allowance for loan losses
31,243
30,250
28,934
28,164
28,331
Deposits
2,870,325
2,760,615
2,680,637
2,685,792
2,620,882
Stockholders’ equity
426,167
418,046
407,216
395,789
399,589
Stockholders’ equity / assets
12.29
%
12.48
%
12.42
%
12.29
%
12.56
%
Goodwill
100,069
100,069
98,569
98,569
98,569
Average Balances Total assets
$
3,425,097
$
3,303,013
$
3,223,997
$
3,183,012
$
3,138,202
Earning assets
3,107,224
2,985,498
2,914,587
2,871,340
2,831,866
Loans
2,688,519
2,624,314
2,561,341
2,517,283
2,474,221
Deposits and interest-bearing liabilities
2,954,049
2,843,079
2,781,216
2,742,626
2,705,736
Deposits
2,830,043
2,718,632
2,678,060
2,642,158
2,594,635
Stockholders’ equity
420,352
411,041
398,612
395,138
392,701
Stockholders’ equity / assets
12.27
%
12.44
%
12.36
%
12.41
%
12.51
%
Per Common Share Data Net Income: Basic
$
0.63
$
0.67
$
0.62
$
0.57
$
0.60
Diluted
0.63
0.66
0.61
0.57
0.59
Dividends
0.22
0.19
0.19
0.19
0.17
Market Value: High
$
32.39
$
29.44
$
30.44
$
31.30
$
31.09
Low
27.77
25.50
26.59
24.12
22.78
Close
31.32
28.97
28.57
28.74
24.51
Common Book Value
21.60
21.19
20.65
20.08
19.81
Shares outstanding, end of period (in thousands)
19,730
19,729
19,723
19,713
20,171
Performance Ratios (annualized) Tax-equivalent net interest
margin (1)
3.80
%
3.88
%
4.03
%
4.03
%
4.02
%
Return on average assets
1.45
%
1.58
%
1.52
%
1.46
%
1.53
%
Return on average equity
11.81
%
12.71
%
12.28
%
11.78
%
12.22
%
Efficiency ratio (2)
59.62
%
56.65
%
61.01
%
63.22
%
57.29
%
Effective tax rate
19.09
%
18.72
%
18.44
%
18.01
%
20.30
%
Common dividend payout ratio (basic)
34.92
%
28.36
%
30.65
%
33.33
%
28.33
%
(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)
4th Qtr 2019
3rd Qtr 2019
2nd Qtr 2019
1st Qtr 2019
4th Qtr 2018
Loan Portfolio Composition One to four family residential
real estate
$
324,773
$
330,369
$
322,123
$
321,644
$
322,686
Construction
305,305
308,061
335,847
304,241
265,772
Commercial real estate
1,506,026
1,430,919
1,411,463
1,394,500
1,404,810
Commercial
578,071
537,806
530,528
509,627
509,577
Consumer finance
37,649
36,644
35,350
34,262
34,405
Home equity and improvement
122,864
123,871
125,860
124,450
128,152
Total loans
2,874,688
2,767,670
2,761,171
2,688,724
2,665,402
Less: Undisbursed loan funds
94,865
100,260
134,794
137,742
123,293
Deferred loan origination fees
2,259
2,110
2,158
2,014
2,070
Allowance for loan loss
31,243
30,250
28,934
28,164
28,331
Net Loans
$
2,746,321
$
2,635,050
$
2,595,285
$
2,520,804
$
2,511,708
Allowance for loan loss activity Beginning allowance
$
30,250
$
28,934
$
28,164
$
28,331
$
27,639
Provision for loan losses
1,084
1,327
282
212
472
Credit loss charge-offs: One to four family residential real estate
258
74
11
172
31
Commercial real estate
-
-
15
-
30
Commercial
436
25
13
187
15
Consumer finance
34
80
33
142
105
Home equity and improvement
136
12
64
33
75
Total charge-offs
864
191
136
534
256
Total recoveries
773
180
624
155
476
Net charge-offs (recoveries)
91
11
(488
)
379
(220
)
Ending allowance
$
31,243
$
30,250
$
28,934
$
28,164
$
28,331
Credit Quality Total non-performing loans (1)
$
13,459
$
14,677
$
15,334
$
17,645
$
19,016
Real estate owned (REO)
100
-
-
941
1,205
Total non-performing assets (2)
$
13,559
$
14,677
$
15,334
$
18,586
$
20,221
Net charge-offs (recoveries)
91
11
(488
)
379
(220
)
Restructured loans, accruing (3)
8,427
10,334
10,308
11,908
11,573
Allowance for loan losses / loans
1.12
%
1.13
%
1.10
%
1.10
%
1.12
%
Allowance for loan losses / non-performing assets
230.42
%
206.10
%
188.69
%
151.53
%
140.11
%
Allowance for loan losses / non-performing loans
232.13
%
206.10
%
188.69
%
159.61
%
148.99
%
Non-performing assets / loans plus REO
0.49
%
0.55
%
0.58
%
0.73
%
0.80
%
Non-performing assets / total assets
0.39
%
0.44
%
0.47
%
0.58
%
0.64
%
Net charge-offs / average loans (annualized)
0.01
%
0.00
%
-0.08
%
0.06
%
-0.04
%
Deposit Balances Non-interest-bearing demand deposits
$
630,359
$
604,129
$
584,735
$
586,033
$
607,198
Interest-bearing demand deposits and money market
1,198,012
1,124,208
1,088,694
1,107,511
1,040,471
Savings deposits
303,166
294,594
304,051
300,244
292,829
Retail time deposits less than $250,000
631,253
634,737
610,345
601,012
591,822
Retail time deposits greater than $250,000
107,535
102,947
92,812
90,992
88,562
Total deposits
$
2,870,325
$
2,760,615
$
2,680,637
$
2,685,792
$
2,620,882
(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
December 31, 2019 One to four family residential real estate
$
324,773
$
321,058
$
1,298
$
2,417
Construction
305,305
305,305
-
-
Commercial real estate
1,506,026
1,497,845
546
7,635
Commercial
578,071
574,593
519
2,959
Consumer finance
37,649
37,444
205
-
Home equity and improvement
122,864
121,211
1,205
448
Total loans
$
2,874,688
$
2,857,456
$
3,773
$
13,459
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
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200120005529/en/
Donald P. Hileman President and CEO (419) 782-5104
dhileman@first-fed.com
First Defiance Financial (NASDAQ:FDEF)
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