-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CENVnNIjvbw42YhOjZntI5kJioy7wvqfzDqqoEQ07fxx2TQ6lnt67IXWJoVmpA1T BHNxTc7hRVOpljxEkdnL5A== 0000914317-04-002776.txt : 20040720 0000914317-04-002776.hdr.sgml : 20040720 20040720154526 ACCESSION NUMBER: 0000914317-04-002776 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040719 ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20040720 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST DEFIANCE FINANCIAL CORP CENTRAL INDEX KEY: 0000946647 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 341803915 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-26850 FILM NUMBER: 04922108 BUSINESS ADDRESS: STREET 1: 601 CLINTON ST CITY: DEFIANCE STATE: OH ZIP: 43512 BUSINESS PHONE: 4107825015 MAIL ADDRESS: STREET 1: 601 CLINTON ST CITY: DEFIANCE STATE: OH ZIP: 43512 8-K 1 form8k-61314_1stdefiance.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): July 19, 2004 First Defiance Financial Corp. ------------------------------ (Exact name of registrant as specified in its charter) Ohio 0-26850 34-1803915 - -------------------------------------------------------------------------------- (State or other jurisdiction of (Commission (IRS Employer incorporation) File Number) Identification No.) 601 Clinton Street, Defiance, Ohio 43512 ---------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (419) 782-5015 ------------- ------------------------------------------------------------- (Former name or former address, if changed since last report) ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (a) Financial Statements None. The financial information included in this report is not required to be filed as part of this report. (b) Pro Forma Financial Information None. (c) Exhibits Exhibit 99.1 First Defiance Financial Corp. Press Release dated July 19, 2004 titled "First Defiance Announces Second Quarter Earnings" ITEM 9. REGULATION FD DISCLOSURES/RESULTS OF OPERATIONS AND FINANCIAL CONDITION PROVIDED UNDER ITEM 12 PURSUANT TO RELEASE 34-47583 On July 19, 2004, First Defiance Financial Corp. issued a press release announcing its earnings for the three and six-month periods ended June 30, 2004. A copy of this press release and related earnings tables are furnished herein as Exhibit 99.1. This information is being furnished under Item 9 as provided in the Commission's final rule; interim guidance regarding Form 8-K Item 11 and Item 12 filing requirements (Release No. 34-47583). SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized. First Defiance Financial Corp. By: /s/ John C. Wahl ------------------------------------------------ John C. Wahl Executive Vice President/Chief Financial Officer Date: July 20, 2004 EX-99.1 2 exhibit99-1.txt Exhibit 99.1 For Immediate Release Contact: William J. Small Chairman, President and CEO First Defiance Financial Corp. (419) 782-5015 bsmall@first-fed.com -------------------- FIRST DEFIANCE ANNOUNCES SECOND QUARTER EARNINGS HIGHLIGHTS o Net income of $3.1 million or $0.49 per share for 2004 second quarter compared to $2.9 million or $0.46 for the second quarter of 2003. o Net interest income increased to $8.1 million for the 2004 second quarter, an 18.8% increase over prior year second quarter. o Net interest margin improves to 3.56% for the 2004 second quarter period from 3.36% in the 2003 second quarter; down one basis point from 3.57% in the 2004 first quarter. o Asset quality remains good, net charge-offs in quarter just $120,000 or 0.06% of average loans (annualized). Year-to-date charge-offs just $176,000 or 0.05% of average loans (annualized). o Mortgage Servicing Rights Impairment Reserves reduced by $524,000 in 2004 second quarter due to increased long-term interest rates and slower mortgage prepayment speeds. DEFIANCE, OHIO (July 19, 2004) - First Defiance Financial Corp. (NASDAQ: FDEF) today announced net income of $3.1 million or $0.49 per diluted share for the quarter ended June 30, 2004 compared to $2.9 million or $0.46 per diluted share for the quarter ended June 30, 2003. For the six-month period ended June 30, 2004, First Defiance had net income of $5.6 million or $0.88 per diluted share compared to the same period in 2003 where First Defiance earned $5.6 million, or $0.89 per diluted share Increased Net Interest Income Replaces Gains from Mortgage Sales First Defiance's net income increased for the 2004 second quarter over the same period in 2003 despite a $1.7 million decline in gains from mortgage loan sales, which were just $804,000 in the 2004 second quarter period compared with $2.5 million during the three months ended June 30, 2003. The reduction in gains was largely offset by an increase in net interest income, which was $8.1 million in the 2004 second quarter; a $1.3 million or 18.8% increase from the $6.8 million reported for the 2003 second quarter. The increase in net interest income for the 2004 second quarter is the result of First Defiance completing the acquisition of three banking center offices in Findlay, Ottawa and McComb, Ohio, on June 6, 2003. Through that acquisition, the Company acquired $79.1 million in loans and $166.7 million in deposits. First Defiance had the benefit of those balances for just 24 days in the 2003 second quarter. "We continue to have very strong loan growth, particularly in the commercial and commercial real estate categories," said William J. Small, First Defiance Chairman, President and Chief Executive Officer. "Our average loan balances have increased by $36.7 million in the last quarter compared to the 2004 first quarter and by $152.8 million over the 2003 second quarter. While obviously a large part of the increase in average balances was due to the June 2003 banking center acquisition, we also experienced significant organic growth over the last 12 months. Because of this growth, our interest income from loans increased in the second quarter over last year by $1.25 million or 12.5% despite yields on those loans declining by 58 basis points between those same periods. This level of loan growth is consistent with our projections for the year and has been a key in our ability to replace the non-recurring gain on sale income we realized in 2003." "This organic growth is occurring throughout our branch network," continued Mr. Small. "It's most pronounced in the Toledo, Bowling Green and Findlay, Ohio markets, which is to be expected as those are our largest market areas. However we also have been successful in growing our business in our other communities as well. We haven't bought this growth by offering low rates, we've generated it the old fashioned way: by working hard and providing great service. Our customers want to deal with local bankers who they know and trust; they want quick answers and friendly, professional service; and they want fair pricing. With our community banking strategy and customer-first culture, we deliver on all three counts." "We expect that we will continue to experience strong loan growth throughout the rest of 2004," added Mr. Small. "The northwest Ohio economy has strengthened and our lenders are very busy. I am confident that we will meet or exceed our projection of 16% loan growth for the year." While First Defiance's tax equivalent interest income increased by $789,000 from the 2003 second quarter to the 2004 second quarter, interest expense decreased between those same periods by $439,000 despite a $84.2 million increase in the average balance of interest-bearing deposits during the 2004 second quarter compared to the same period in 2003. First Defiance's interest bearing deposits for the 2004 second quarter cost 1.80%, a 47 basis point decline from the 2003 period. Overall the cost of all interest-bearing liabilities was 2.28% during the 2004 second quarter, down 52 basis points from the 2.80% average cost in the 2003 second quarter. Credit Quality Ratios Remain Excellent First Defiance's non-performing assets totaled just $3.1 million at June 30, 2004, a slight increase from the $2.9 million level at December 31, 2003 and the $2.7 million level at March 31, 2004. The ratio of non-performing assets to total assets was just 0.28% at June 30, 2004, the same level as December 31, 2003 and up only slightly from March 2004's 0.26% level. At June 30, 2004 the allowance for loan losses to non-performing assets was 312.1%, an increase from December 31, 2003 when that ratio was 299.90%. "Our credit quality ratios remain among the best of any bank or thrift of the same size and lending profile," commented Mr. Small. "Although total loans have grown almost $115 million in the past 12 months, our non-performing loans over that same 12-month period are actually down slightly. Our continued success in this area is due to adherence to our underwriting guidelines, the diversity of credits in our portfolio, our strategy to lend only in our immediate market area to customers we know, and active involvement by our board and senior management in the credit decision process." Net charge-offs for the second quarter of 2004 totaled $120,000, which is 0.06% of average loans outstanding, annualized for a 12-month period. Year-to-date charge-offs have totaled $176,000, which is just 0.05% of loans outstanding annualized. First Defiance's provision for loan losses for the three months ended June 30, 2004 was $490,000, an increase from $353,000 for the second quarter of 2003. The increase in the provision is a reflection of the significant loan growth that has occurred during the 2004 second quarter period, especially in the commercial and non-residential real estate categories. Non-Interest Income Declines 22.6% Due to Lower Mortgage Gains Non-interest income for the three months ended June 30, 2004 declined to $4.1 million from $5.3 million because of the $1.7 million decrease in gains from the sale of mortgage loans. Income from those gains has dropped to a more traditional level in the wake of increases in long-term interest rates over the past nine months and the resulting decline in mortgage origination volume. First Defiance realized gains of $804,000 during the 2004 second quarter compared to $2.5 million in the second quarter of 2003 at the peak of the refinance wave. Management estimates that such gains will be in the $600,000 to $700,000 range per quarter for the second half of 2004. Excluding mortgage gains, non-interest income increased by $505,000 or 17.9% for the 2004 second quarter compared to the same period in 2003. Those increases were primarily in service fees, which have increased $240,000 or 21.2% in the 2004 second quarter compared to the same period in 2003 and in insurance and investment sales commissions, which increased by $256,000 or 26.5% over the previous year's second quarter. The increase in fees is due both to an increase in accounts resulting from the June 2003 branch acquisition and an increase in rates charged for certain services. The increase in insurance and investment sales commission income is primarily a result of successful efforts in selling investment products through the Company's First Insurance and Investments subsidiary. Non-Interest Expense Up 12.9% Excluding MSR Impairment and Amortization Overall, First Defiance's reported non-interest expense for the three-month period ended June 30, 2004 declined by $567,000 when compared with the 2003 second quarter period. However, the 2004 quarterly amount includes the recovery of $524,000 of previously recorded impairment of mortgage servicing rights (MSRs). That impairment recovery is the result of a 65 basis point increase in the 10-year treasury rate over the last quarter. At June 30, 2004, First Defiance's $443.9 million mortgage servicing portfolio had a recorded value of $4.2 million or 0.95% of the unpaid principal balance of loans serviced, and remaining impairment reserves at that date totaled approximately $319,000. First Defiance recorded impairment reserve expense of $366,000 in the second quarter of 2003. In addition, non-interest expense for the 2004 second quarter included $233,000 in amortization of MSRs, a decrease from $756,000 recognized in the second quarter of 2003. The decline in MSR amortization is a direct result of the lower level of mortgage refinance activity in the 2004 second quarter compared to the prior year. Excluding mortgage servicing impairment and amortization activity, non-interest expenses increased to $7.4 million in the 2004 second quarter from $6.6 million in the 2003 second quarter, an increase of 12.9%. Most of the increase is due to the recognition of a full quarter of expense in 2004 for the branches acquired in June of 2003, compared to just three weeks of such expense in the 2003 second quarter. In addition, de novo branches were opened on the east side of Findlay, Ohio in December 2003 and in the Toledo, Ohio suburb of Maumee in February 2004. Year-to-Date Results First Defiance's results for the six months ended June 30, 2004 reflect an increase in net interest income to $16.1 million from $13.3 million for the same period in 2003. That 21.6% increase is the result of both the increased volume of interest-earning assets, due both to the June 2003 acquisition and the significant organic loan growth over the last 12 months, and improved net interest margin, which was 3.57% for the six-month period, up from 3.37% in the first half of 2003. Provision for loan losses increased in the first half of 2004, to $868,000 from $688,000 in the first half of 2003, as a result of the significant loan growth during the last twelve months. The loan loss reserve at June 30, 2004 was $9.5 million compared to $8.1 million at June 30, 2003 and $8.8 million at December 31, 2003. Non-interest income declined significantly to $7.6 million for the first half of 2004 from $10.1 million for the first half of 2003, a decline of $2.6 million, which relates entirely to the $2.9 million decline in mortgage loan gains in 2004 compared to 2003. Excluding mortgage activity, non-interest income for the first half of 2004 increased to $6.2 million from $5.8 million in the first half of 2003 as service fees increased by 20.0% and insurance and investment commissions increased by 20.8%. Non-interest expense for the six months ended June 30, 2004 were $14.6 million compared to $14.7 million for the same period of 2003. However MSR impairment and amortization activity was a net $119,000 for the first half of 2004 compared to nearly $1.9 million for the first half of 2003. Excluding mortgage activity, non-interest expense increased to $14.5 million in the first six months of 2004 from $12.8 million in the same period of 2003, an increase of 12.9%. That increase is the result of the 2003 branch acquisition as well as the establishment of de novo branches in December 2003 and February 2004. Total Assets at $1.07 Billion First Defiance's total assets totaled $1.07 billion at June 30, 2004, up from $1.04 billion at December 31, 2003. Net loans and total deposits increased to $813.2 million and $753.4 million respectively at June 30, 2004, up from $741.1 million and $729.0 million at December 31, 2003. Shareholders' equity totaled $124.5 million at June 30, 2004, up just slightly from the $124.3 million level at December 31, 2003. Total shareholders' equity balances have not changed despite year-to-date net income of $5.6 million because of the declaration of dividends totaling $2.5 million, the purchase of 122,848 shares of First Defiance stock at a total cost of $3.08 million (average cost of $25.08 per share), and a reduction in accumulated other comprehensive income of $2.2 million relating to the after-tax change in unrealized gains in the available-for-sale investment portfolio. The equity balances also were favorably impacted by the exercise of 112,801 stock options through the first six months, which increased equity by $1.3 million. Guidance Update Management reiterated that guidance provided with the first quarter earnings release which projected earnings per share for 2004 in the $1.80 to $1.90 range remains current. Management estimates that net income per share for the 2004 third quarter will be between $0.45 and $0.49. "Our guidance of $1.80 to $1.90 per share for the year remains accurate," commented Mr. Small. "In the update, we have reduced some of the growth we initially forecast in the core deposit balance accounts by $5 million for the year, which has a slight negative impact on our margin; and we've projected further 0.25% increases in the Fed Funds rate to occur in September and November, which will be generally beneficial for First Defiance. We have not anticipated any further adjustments to reduce or increase MSR impairment reserves but we have included in the forecast $150,000 of securities gains that we've already realized in July. We believe that our margin on a tax-equivalent basis will increase to the 3.60% to 3.65% range in the third quarter and will exceed 3.65% in the fourth quarter." Conference Call First Defiance Financial Corp. will host a conference call at 11:00 a.m. (EDT) on Tuesday, July 20, 2004 to discuss the earnings results and business trends. The conference call may be accessed by calling 888-880-1525. The passcode for the conference call is "First Defiance." The conference identification number for the call is 8506941. Participants should be prepared to provide both the passcode and conference identification number to access the call. Internet access to the call is also available (in listen-only mode) at the following Web address: http://www.firstcallevents.com/service/ajwz407849424gf12.html. The audio replay of the Internet Web cast will be available at www.fdef.com until August 31, 2004. About First Defiance Financial Corp. First Defiance Financial Corp., headquartered in Defiance, Ohio, is the holding company for First Federal Bank of the Midwest and First Insurance and Investments. First Federal operates 19 full service branches and 25 ATM locations in northwest Ohio. First Insurance and Investments is the largest property and casualty insurance agency in the Defiance, Ohio area and it also specializes in life and group health insurance and financial planning. For more information, visit the company's Web site at www.fdef.com . -Financial Statements and Highlights Follow- Safe Harbor Statement Statements contained herein, including management's expectations, and Mr. Small's comments, may not be based on historical facts and are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21B of the Securities Act of 1934, as amended. Actual results could vary materially depending on risks and uncertainties inherent in general and local banking, insurance and mortgage conditions, competitive factors specific to markets in which the Company and its subsidiaries operate, future interest rate levels, legislative and regulatory decisions or capital market conditions. The Company assumes no responsibility to update this information. For more details, please refer to the Company's SEC filings, including its most recent Annual Report on Form 10-K and quarterly reports on Form 10-Q.
- ---------------------------------------------------------------------------------------------------------- Consolidated Balance Sheets First Defiance Financial Corp. June 30, December 31, June 30, (in thousands) 2004 2003 2003 - ---------------------------------------------------------------------------------------------------------- Assets Cash and cash equivalents Cash and amounts due from depository institutions $ 19,414 $ 28,020 $ 26,367 Interest-bearing deposits 1,125 9,763 46,220 ----------- ----------- ----------- 20,539 37,783 72,587 Securities Available-for sale, carried at fair value 150,869 168,259 177,028 Held-to-maturity, carried at amortized costs 2,582 2,776 3,280 ----------- ----------- ----------- 153,451 171,035 180,308 Loans held for sale 3,948 5,872 9,731 Loans 818,769 744,099 698,484 Allowance for loan losses (9,537) (8,844) (8,105) ----------- ----------- ----------- Loans, net 813,180 741,127 700,110 Mortgage servicing rights 3,783 3,431 1,861 Accrued interest receivable 4,725 4,742 4,834 Federal Home Loan Bank stock and other interest-bearing assets 13,095 17,766 17,414 Bank Owned Life Insurance 18,337 17,952 15,549 Office properties and equipment 23,890 23,846 22,670 Real estate and other assets held for sale 206 404 63 Goodwill and other intangibles 19,310 20,544 20,412 Other assets 2,650 1,969 12,806 ----------- ----------- ----------- Total Assets $ 1,073,166 $ 1,040,599 $ 1,040,599 =========== =========== =========== Liabilities and Stockholders' Equity Non-interest-bearing deposits $ 56,659 $ 52,323 $ 51,798 Interest-bearing deposits 696,731 676,673 699,907 ----------- ----------- ----------- Total deposits 753,390 728,996 751,705 Advances from Federal Home Loan Bank 176,623 164,522 154,408 Notes payable and other interest-bearing liabilities 9,360 12,267 8,785 Advance payments by borrowers for tax and insurance 83 231 218 Deferred taxes 950 1,859 1,961 Other liabilities 8,308 8,455 9,952 ----------- ----------- ----------- Total liabilities 948,714 916,330 927,029 Stockholders' Equity Preferred stock -- -- -- Common stock 63 63 63 Additional paid-in-capital 51,760 51,144 50,026 Stock acquired by ESOP (1,585) (1,904) (2,068) Deferred compensation (7) (11) (20) Accumulated other comprehensive income 1,865 4,017 6,695 Retained earnings 72,356 70,960 66,889 ----------- ----------- ----------- Total stockholders' equity 124,452 124,269 121,585 ----------- ----------- ----------- Total liabilities and stockholders' equity $ 1,073,166 $ 1,040,599 $ 1,048,614 =========== =========== ===========
- ----------------------------------------------------------------------------------------------------- Consolidated Statements of Income (Unaudited) First Defiance Financial Corp. Three Months Ended Six Months Ended June 30, June 30, -------- -------- (in thousands, except per share amounts) 2004 2003 2004 2003 - ----------------------------------------------------------------------------------------------------- Interest Income: Loans $ 11,279 $ 9,974 $ 22,207 $ 19,312 Investment securities 1,727 2,108 3,592 4,532 Interest-bearing deposits 4 80 36 109 -------- -------- -------- -------- Total interest income 13,010 12,162 25,835 23,953 Interest Expense: Deposits 3,071 3,412 6,069 6,946 FHLB advances and other 1,790 1,895 3,575 3,709 Notes Payable 20 13 43 22 -------- -------- -------- -------- Total interest expense 4,881 5,320 9,687 10,677 -------- -------- -------- -------- Net interest income 8,129 6,842 16,148 13,276 Provision for loan losses 490 353 868 688 -------- -------- -------- -------- Net interest income after provision for loan losses 7,639 6,489 15,280 12,588 Non-interest Income: Service fees and other charges 1,373 1,133 2,578 2,149 Dividends on stock and other interest income 153 172 330 341 Gain on sale of loans 804 2,515 1,393 4,316 Gain on sale of securities 293 288 392 919 Insurance and investment sales commissions 1,223 967 2,286 1,893 Trust income 50 38 98 70 Income from Bank Owned Life Insurance 192 204 385 405 Other non-interest income 43 20 92 35 -------- -------- -------- -------- Total Non-interest Income 4,131 5,337 7,554 10,128 Non-interest Expense: Compensation and benefits 4,473 3,976 8,788 7,684 Occupancy 842 741 1,682 1,469 SAIF deposit insurance premiums (credit) 28 31 (14) 55 State franchise tax 157 285 312 566 Data processing 579 427 1,122 859 Amortization of mortgage servicing rights 233 756 406 1,279 Impairment (recovery) of mortgage servicing rights (524) 366 (287) 606 Amortization of intangibles 27 8 55 8 Other non-interest expense 1,319 1,111 2,536 2,189 -------- -------- -------- -------- Total Non-interest Expense 7,134 7,701 14,600 14,715 -------- -------- -------- -------- Income before income taxes 4,636 4,125 8,234 8,001 Income taxes 1,492 1,246 2,597 2,403 -------- -------- -------- -------- Net income $ 3,144 $ 2,879 $ 5,637 $ 5,598 ======== ======== ======== ======== Earnings per share: Basic $ 0.51 $ 0.48 $ 0.92 $ 0.93 Diluted $ 0.49 $ 0.46 $ 0.88 $ 0.89 Average Shares Outstanding: Basic 6,125 6,013 6,115 6,044 Diluted 6,385 6,254 6,402 6,293
- ------------------------------------------------------------------------------------------------------------------------------- Financial Summary and Comparison First Defiance Financial Corp. Three months ended Six months ended June 30, June 30, -------- -------- (dollars in thousands, except per share data) 2004 2003 % change 2004 2003 % change - ------------------------------------------------------------------------------------------------------------------------------- Summary of Operations Tax-equivalent interest income (1) 13,202 12,394 6.5 26,213 24,413 7.4 Interest expense 4,881 5,320 (8.3) 9,687 10,677 (9.3) Tax-equivalent net interest income (1) 8,321 7,074 17.6 16,526 13,736 20.3 Provision for loan losses 490 353 38.8 868 688 26.2 Tax-equivalent NII after provision for loan loss (1) 7,831 6,721 16.5 15,658 13,048 20.0 Securities gains (losses) 293 288 1.7 392 919 (57.3) Non-interest income-excluding securities gains (losses) 3,838 5,049 (24.0) 7,162 9,209 (22.2) Non-interest expense 7,134 7,701 (7.4) 14,600 14,715 (0.8) Income taxes 1,492 1,246 19.7 2,597 2,403 8.1 Net Income 3,144 2,879 9.2 5,637 5,598 0.7 Tax equivalent adjustment (1) 192 232 (17.2) 378 460 (17.8) - ------------------------------------------------------------------------------------------------------------------------------- At Period End Assets 1,073,166 939,077 11.9 Earning assets 980,851 865,144 10.6 Loans 822,717 808,433 13.5 Allowance for loan losses 9,537 8,105 17.7 Deposits 753,390 751,705 0.2 Stockholders' equity 124,452 121,585 2.4 Stockholders' equity / assets 11.60% 11.59% 0.1 - ------------------------------------------------------------------------------------------------------------------------------- Average Balances Assets 1,050,462 939,077 11.9 1,043,517 911,807 14.4 Earning assets 957,173 865,144 10.6 949,258 843,226 12.6 Deposits and interest-bearing liabilities 917,422 808,433 13.5 908,853 780,934 16.4 Loans 786,575 633,755 24.1 768,211 611,796 25.6 Deposits 742,088 649,550 14.2 734,195 621,706 18.1 Stockholders' equity 125,909 120,888 4.2 125,890 120,566 4.4 Stockholders' equity / assets 11.99% 12.87% (6.9) 12.06% 13.22% (8.8) - ------------------------------------------------------------------------------------------------------------------------------- Per Common Share Data Net Income Basic $ 0.51 $ 0.48 6.3 $ 0.92 $ 0.93 (1.1) Diluted 0.49 0.46 6.5 0.88 0.89 (1.1) Dividends 0.20 0.15 33.3 0.40 0.30 33.3 Market Value: High $ 28.88 $ 20.55 40.5 $ 29.00 $ 20.55 41.1 Low 22.07 18.56 18.9 22.07 18.43 19.8 Close 22.10 19.84 11.4 22.10 19.84 11.4 Book Value 19.70 19.36 1.8 19.70 19.36 1.8 Tangible Book Value 16.64 16.11 3.3 16.64 16.11 3.3 Shares outstanding, end of period (000) 6,318 6,281 0.6 6,318 6,281 0.6 - ------------------------------------------------------------------------------------------------------------------------------- Performance Ratios (annualized) Tax-equivalent net interest margin (1) 3.56% 3.36% 6.0 3.57% 3.37% 6.1 Return on average assets 1.20% 1.23% (2.4) 1.08% 1.23% (12.0) Return on average equity 9.99% 9.53% 4.8 8.96% 9.29% (3.6) Efficiency ratio (2) 58.67% 63.52% (7.6) 61.63% 64.13% (3.9) Effective tax rate 32.18% 30.20% 6.6 31.54% 30.03% 5.0 Dividend payout ratio (basic) 39.22% 31.25% 25.5 43.48% 32.26% 34.8 - -------------------------------------------------------------------------------------------------------------------------------
(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 and asset sales gains, net. NM Percentage change not meaningful
- ---------------------------------------------------------------------------------------------------------------------------------- Yield Analysis First Defiance Financial Corp. Three Months Ended June 30 --------------------------------------------------------------------------- 2004 2003 ---------------------------------- -------------------------------- Average Yield Average Yield Balance Interest(1) Rate(2) Balance Interest(1) Rate(2) Interest-earning assets: Loans receivable $ 786,575 $ 11,283 5.77% $ 633,755 $ 10,030 6.35% Securities 154,995 1,915 4.97% 189,448 2,284 4.84% Interest Bearing Deposits 347 4 4.64% 24,697 80 1.30% FHLB stock and other 15,256 153 4.03% 17,244 172 4.00% ----------- --------- --------- -------- Total interest-earning assets 957,173 13,355 5.61% 865,144 12,566 5.83% Non-interest-earning assets 93,289 73,933 ----------- --------- Total assets $ 1,050,462 $ 939,077 =========== ========= Deposits and Interest-bearing liabilities: Interest bearing deposits $ 687,293 $ 3,071 1.80% $ 603,045 $ 3,412 2.27% FHLB advances and other 165,668 1,790 4.35% 154,658 1,895 4.91% Other Borrowings 9,666 20 0.83% 4,225 13 1.23% ----------- --------- --------- -------- Total interest-bearing liabilities 862,627 4,881 2.28% 761,928 5,320 2.80% Non-interest bearing deposits 54,795 - - 46,505 - - ----------- --------- --------- ------- Total including non-interest-bearing demand deposits 917,422 4,881 2.14% 808,433 5,320 2.64% Other non-interest-bearing liabilities 7,131 9,756 ----------- --------- Total liabilities 924,553 818,189 Stockholders' equity 125,909 120,888 ----------- --------- Total liabilities and stockholders' equity $ 1,050,462 $ 939,077 =========== --------- ========= -------- Net interest income; interest rate spread $ 8,474 3.33% $ 7,246 3.03% ========= ==== ======== ===== Net interest margin (3) 3.56% 3.36% ==== ===== Average interest-earning assets to average interest 111% 114% bearing liabilities ==== =====
Six Months Ended June 30 --------------------------------------------------------------------------- 2004 2003 ---------------------------------- -------------------------------- Average Yield Average Yield Balance Interest(1) Rate(2) Balance Interest(1) Rate(2) Interest-earning assets: Loans receivable $ 768,211 $ 22,215 5.82% $ 611,796 $ 19,428 6.40% Securities 160,117 3,962 4.98% 198,046 4,875 4.96% Interest Bearing Deposits 4,418 36 1.64% 15,782 109 1.39% FHLB stock and other 16,512 330 4.02% 17,602 341 3.91% ----------- --------- --------- -------- Total interest-earning assets 949,258 26,543 5.62% 843,226 24,753 5.92% Non-interest-earning assets 94,259 68,581 ----------- --------- Total assets $ 1,043,517 $ 911,807 =========== ========= Deposits and Interest-bearing liabilities: Interest bearing deposits $ 680,243 $ 6,069 1.79% $ 579,285 $ 6,946 2.42% FHLB advances and other 164,455 3,575 4.37% 155,610 3,709 4.81% Other Borrowings 10,203 43 0.85% 3,618 22 1.23% ---------- --------- ------- Total interest-bearing liabilities 854,901 9,687 2.28% 738,513 10,677 2.92% Non-interest bearing deposits 53,952 - - 42,421 - - ----------- --------- --------- -------- Total including non-interest-bearing demand deposits 908,853 9,687 2.14% 780,934 10,677 2.76% Other non-interest-bearing liabilities 8,774 10,307 ----------- --------- Total liabilities 917,627 791,241 Stockholders' equity 125,890 120,566 ----------- --------- Total liabilities and stockholders' equity $ 1,043,517 $ 911,807 =========== --------- ========= -------- Net interest income; interest rate spread $ 16,856 3.34% $ 14,076 3.00% ========= ==== ======== ===== Net interest margin (3) 3.57% 3.37% ==== ===== Average interest-earning assets to average interest bearing liabilities 111% 114% ==== =====
- -------------------------------------------------------------------------------- (1) Interest on certain tax exempt loans and securities is not taxable for Federal income tax purposes. In order to compare the tax-exempt yields on these assets to taxable yields, the interest earned on these assets is adjusted to a pre-tax equivalent amount based on the marginal corporate federal income tax rate of 35%. (2) Annualized (3) Net interest margin is net interest income divided by average interest-earning assets.
- --------------------------------------------------------------------------------------------------------------------------- Selected Quarterly Information First Defiance Financial Corp. (dollars in thousands, except per share data) 2nd Qtr 2004 1st Qtr 2004 4th Qtr 2003 3rd Qtr 2003 2nd Qtr 2003 - --------------------------------------------------------------------------------------------------------------------------- Summary of Operations Tax-equivalent interest income (1) $ 13,202 $ 12,988 $ 13,140 $ 13,136 $ 12,394 Interest expense 4,881 4,806 4,980 5,198 5,320 Tax-equivalent net interest income (1) 8,321 8,182 8,160 7,938 7,074 Provision for loan losses 490 379 534 497 353 Tax-equivalent NII after provision for loan losses (1) 7,831 7,803 7,804 7,742 6,721 Investment securities gains 293 98 656 - 288 Non-interest income (excluding securities gains/losses) 3,838 3,324 3,179 4,839 5,049 Non-interest expense 7,134 7,464 6,885 6,776 7,701 Income taxes 1,492 1,105 1,572 1,715 1,246 Net income 3,144 2,493 2,819 3,681 2,880 Tax equivalent adjustment (1) 192 163 185 233 233 - --------------------------------------------------------------------------------------------------------------------------- At Period End Total assets $1,073,166 $1,037,100 $1,040,599 $1,032,942 $1,048,614 Earning assets 980,851 946,949 939,691 925,187 944,052 Loans 822,717 775,301 749,971 730,471 708,215 Allowance for loan losses 9,537 9,167 8,844 8,577 8,105 Deposits 753,390 722,068 728,996 735,407 751,705 Stockholders' equity 124,452 127,230 124,269 123,179 121,585 Stockholders' equity / assets 11.60% 12.27% 11.94% 11.93% 11.59% Goodwill 19,310 19,302 20,544 20,548 20,412 - --------------------------------------------------------------------------------------------------------------------------- Average Balances (2) Total assets $1,050,462 $1,036,571 $1,038,384 $1,038,188 $ 939,077 Earning assets 957,173 941,345 941,839 945,431 865,144 Deposits and interest-bearing liabilities 917,422 900,285 904,468 855,294 808,433 Loans 786,575 749,848 731,665 713,402 633,755 Deposits 742,088 726,302 735,451 743,293 649,550 Stockholders' equity 125,909 125,872 123,266 120,536 120,888 Stockholders' equity / assets 1 1.99% 12.14% 11.87% 11.61% 12.87% - --------------------------------------------------------------------------------------------------------------------------- Per Common Share Data Basic earnings per share $ 0.51 $ 0.41 $ 0.47 $ 0.61 $ 0.48 Diluted earnings per share 0.49 0.39 0.44 0.58 0.46 Dividends 0.20 0.20 0.20 0.15 0.15 - --------------------------------------------------------------------------------------------------------------------------- Market Value: High $ 28.88 $ 29.00 $ 30.65 $ 26.64 $ 20.55 Low 22.07 26.60 24.00 19.46 18.56 Close 22.10 27.23 25.90 23.30 19.84 Book Value 19.70 19.88 19.64 19.56 19.36 Shares outstanding, end of period (in thousands) 6,318 6,401 6,328 6,295 6,281 - --------------------------------------------------------------------------------------------------------------------------- Performance Ratios (annualized) Tax-equivalent net interest margin 3.56% 3.57% 3.51% 3.46% 3.36% Return on average assets (3) 1.20% 0.96% 1.09% 1.41% 1.23% Return on average equity 9.99% 7.92% 9.15% 12.14% 9.53% Efficiency ratio (4) 58.67% 64.87% 60.72% 53.03% 63.52% Effective tax rate 32.18% 30.71% 35.80% 31.78% 30.20% Dividend payout ratio (basic) 39.22% 49.04% 42.55% 24.46% 31.25% - ---------------------------------------------------------------------------------------------------------------------------
(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) Average balances do not reflect borrowings to fund discontinued operations (3) Income from continuing operations divided by assets, excluding assets of discontinued operations (4) Efficiency ratio = Non-interest expense divided by sum of tax-equivalent net interest income plus non-interest income, excluding securities gains, net and asset sales gains, net.
- ----------------------------------------------------------------------------------------------------------------------------- Selected Quarterly Information First Defiance Financial Corp. (dollars in thousands, except per share data) 2nd Qtr 2004 1st Qtr 2004 4th Qtr 2003 3rd Qtr 2003 2nd Qtr 2003 - ----------------------------------------------------------------------------------------------------------------------------- Loan Portfolio Composition One to four family residential real estate $181,685 $173,367 $167,983 $165,914 $167,412 Construction 15,472 15,272 16,830 16,457 15,559 Commercial real estate 371,360 359,070 341,423 321,602 307,871 Commercial 140,178 119,442 120,677 130,001 124,332 Consumer finance 42,741 40,858 40,257 40,532 42,189 Home equity and improvement 80,312 74,800 70,038 63,853 59,450 -------- -------- -------- -------- -------- Total loans 831,748 782,809 757,208 738,359 716,813 Less: Loans in process 7,925 6,406 6,079 6,713 7,431 Deferred loan origination fees 1,106 1,101 1,158 1,175 1,167 Allowance for loan loss 9,537 9,167 8,844 8,577 8,105 -------- -------- -------- -------- -------- Net Loans $813,180 $766,135 $741,127 $721,894 $700,110 ======== ======== ======== ======== ======== - ----------------------------------------------------------------------------------------------------------------------------- Allowance for loan loss activity Beginning allowance $ 9,167 $ 8,844 $ 8,577 $ 8,106 $ 7,924 Provision for loan losses 490 379 534 497 353 Credit loss charge-offs: One to four family residential real estate -- 52 -- -- 18 Commercial real estate 9 -- -- -- 162 Commercial 125 14 260 52 38 Consumer finance 33 38 37 45 38 Home equity and improvement -- -- -- -- -- -------- -------- -------- -------- -------- Total charge-offs 167 104 297 97 256 Total recoveries 47 48 30 71 85 -------- -------- -------- -------- -------- Net charge-offs (recoveries) 120 56 267 26 171 -------- -------- -------- -------- -------- Ending allowance $ 9,537 $ 9,167 $ 8,844 $ 8,577 $ 8,106 ======== ======== ======== ======== ======== - ----------------------------------------------------------------------------------------------------------------------------- Credit Quality Non-accrual loans $ 2,863 $ 2,375 $ 2,545 $ 2,975 $ 3,273 Loans over 90 days past due and still accruing -- -- -- -- -- Total non-performing loans (1) 2,863 2,375 2,545 2,975 3,273 Real estate owned (REO) 193 348 404 324 63 Total non-performing assets (1) $ 3,056 $ 2,723 $ 2,949 $ 3,299 $ 3,336 Net charge-offs 120 56 267 26 171 - ----------------------------------------------------------------------------------------------------------------------------- Allowance for loan losses / loans 1.16% 1.18% 1.18% 1.17% 1.14% Allowance for loan losses / non-performing assets 312.07% 336.65% 299.90% 259.99% 242.96% Allowance for loan losses / non-performing loans 333.11% 385.98% 347.50% 288.30% 247.63% Non-performing assets / loans plus REO 0.37% 0.35% 0.39% 0.45% 0.47% Non-performing assets / total assets 0.28% 0.26% 0.28% 0.32% 0.32% Net charge-offs / average loans ( annualized) 0.06% 0.03% 0.15% 0.01% 0.11% - ----------------------------------------------------------------------------------------------------------------------------- Deposit Balances Non-interest-bearing demand deposits $ 56,659 $ 52,091 $ 52,323 $ 52,190 $ 51,798 Interest-bearing demand deposits and money market 225,842 216,193 216,042 215,641 212,123 Savings deposits 53,965 54,054 51,767 51,532 51,693 Time deposits less than $100,000 303,909 293,424 312,089 324,262 341,880 Time deposits greater than $100,000 113,015 106,306 96,775 91,782 94,211 -------- -------- -------- -------- -------- Total deposits $753,390 $722,068 $728,996 $735,407 $751,705 ======== ======== ======== ======== ======== - -----------------------------------------------------------------------------------------------------------------------------
(1) Non-performing loans consist of non-accrual loans that are contractually past due 90 days or more and loans that are deemed impaired under the criteria of FASB Statement No. 114. Non-performing assets are non-performing loans plus real estate and other assets acquired by foreclosure or deed-in-lieu thereof. -----END PRIVACY-ENHANCED MESSAGE-----