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 2004 FULL YEAR AND FOURTH QUARTER EARNINGS HIGHLIGHTS o Net income of $3.5 million or $0.55 per share for 2004 fourth quarter, an increase of 25.0% on a per share basis from 2003 fourth quarter. o Annual earnings for 2004 totaled $10.8 million or $1.69 per share compared to $12.1 million or $1.91 per share in 2003. The 2004 results include the effect of a $1.9 million one-time charge recorded in the third quarter for the settlement of a contingency related to the 2002 sale of the Leader Mortgage subsidiary ($1.25 million or $0.20 per share after tax). o Net interest income increased by $1.0 million to $9.0 million for the 2004 fourth quarter compared to 2003 period. o Net interest margin improved to 3.67% for the 2004 fourth quarter from 3.51% for the 2003 fourth quarter and from 3.58% for the 2004 third quarter. o Net charge-offs for the 2004 fourth quarter were just .03% of average loans (annualized). For the full year, net charge-offs were just .05% of average loans. DEFIANCE, OHIO (January 17, 2005) - First Defiance Financial Corp. today announced that its earnings for the 2004 fourth quarter ended December 31, 2004 were $3.5 million, or $0.55 per diluted share, an improvement over the 2003 fourth quarter earnings of $2.8 million or $0.44 per diluted share. On a per share basis, the year-over-year increase was 25.0%. For the year ended December 31, 2004, First Defiance earned $10.8 million or $1.69 per diluted share compared to $12.1 million or $1.91 per diluted share for the year ended December 31, 2003. The 2004 results include a $1.9 million pretax charge ($1.25 million or $0.20 per share after tax) that was recorded in the 2004 third quarter to reflect the final settlement of claims related to the Company's 2002 sale of its Leader Mortgage subsidiary. Excluding that one-time expense, First Defiance's earnings for 2004 would have been $12.0 million or $1.89 per diluted share. "We are extremely pleased with the results of the fourth quarter because we achieved these results through the execution of our core community banking strategy," said First Defiance Chairman, President and Chief Executive Officer William J. Small. "The real strength of the results this quarter came from the core operations of First Federal Bank. We are very confident that this kind of result is sustainable in the environment we are operating in today." Margin Improvement Keys Net Income Growth Net interest income for the three months ended December 31, 2004 was $9.0 million, a $1.0 million, or 13.0% increase from the fourth quarter of 2003. On a tax equivalent basis, net interest margin for the 2004 fourth quarter was 3.67%, a 16 basis point improvement from the 3.51% margin that was reported for the fourth quarter of 2003 and a 9 basis point improvement from the 3.58% tax equivalent margin that the Company realized in the 2004 third quarter. The margin improvement resulted from an increase in the prime lending rate driven by Federal Reserve rate hikes, an improved mix in earning assets, an expanded net interest spread and growth in average balances in non-interest bearing deposits. The improved asset mix was the result of continued strong growth in the Company's commercial and non-residential real estate loan portfolios. At December 31, 2004, commercial loans totaled $141.6 million and non-residential real estate loans were $415.2 million. Those balances represent increases of $20.9 million and $73.8 million, respectively, from December 31, 2003 when those balances totaled $120.7 million and $341.4 million. The net interest margin was also positively impacted by continued growth in the Company's non-interest bearing deposit accounts, which had an average balance of $61.4 million for the 2004 fourth quarter compared to $53.2 million in the fourth quarter of 2003. For the 2004 fourth quarter, yields on assets improved to 5.80% from 5.61% in the fourth quarter of 2003 while the cost of interest bearing liabilities only increased by five basis points, to 2.37% from 2.32%. As a result, the net interest spread improved to 3.43% in the 2004 fourth quarter from 3.29% in the same period of 2003. Loan Growth, Asset Quality Remain Strong "Loan growth continues to be the foundation of our success," commented Mr. Small. "Our goal is to be the bank of choice in the markets we serve and I think the strong demand for our loan products is proof that we are achieving that goal. We are experiencing growth throughout our market, both in the Toledo, Bowling Green and Findlay markets where we are still considered the newcomers, as well as in our more established markets of Defiance, Bryan, Napoleon and Wauseon. I am also very gratified to report that we have been able to grow our loan balances without sacrificing credit quality." Non-performing assets totaled just $2.0 million or 0.18% of total assets at December 31, 2004. Net charge-offs for the 2004 fourth quarter were just $60,000 or 0.03% of average loans calculated on an annualized basis. By comparison, net charge-offs totaled $267,000 in the 2003 fourth quarter, which was 0.15% of average loans. For the quarter ended December 31, 2004, First Defiance recorded a provision for loan losses of $304,000, compared with $534,000 recorded in the fourth quarter of 2003. Service Fee Income Increases Non-interest income totaled $4.2 million for the fourth quarter of 2004 compared to $3.8 million for the same period in 2003. The 2004 amount included $732,000 of investment securities gains while the 2003 amount included $656,000 of such gains. Service fee income increased by $148,000 or 11.9% in the 2004 fourth quarter compared to 2003 and gains from mortgage loans increased by $30,000 to $613,000 for the three months ended December 31, 2004 from $583,000 during the same period in 2003. For the 2004 fourth quarter, non-interest expense increased to $7.8 million from $6.9 million in the fourth quarter of 2003. The 2003 balance included $335,000 of mortgage servicing rights (MSR) impairment recovery while the 2004 balance had just $33,000 of MSR impairment recapture. Compensation and benefits, by far the most significant non-interest expense category, increased by $205,000 or 4.9% to $4.4 million for the three month period ended December 31, 2004 compared to $4.2 million for the fourth quarter of 2003. Annual Results On an annual basis, net income for 2004 was $10.8 million or $1.3 million less than the 2003 total of $12.1 million. However, as noted above, the 2004 results included a one-time charge related to the final settlement of a contingent liability from the sale of the Company's former Leader Mortgage subsidiary which was $1.9 million or $1.25 million after tax. Excluding that one-time charge, 2004 earnings would have been just $54,000 less than the 2003 annual earnings. However, the 2003 results included $7.2 million of gains from mortgage loan sales compared with just $2.5 million of such gains in 2004. After tax, the reduction of mortgage banking gains in 2004 compared to 2003 amounted to $3.1 million or $0.48 per share. For the 2004 year, net interest income totaled $33.7 million before loan loss provision, an improvement of $4.7 million or 16.0% over 2003. For 2004, net interest margin, stated on a tax-equivalent basis, improved to 3.60% from 3.42% for the year ended December 31, 2003. During that same period, the provision for loan losses stayed relatively flat, decreasing to $1.5 million overall in 2004 from $1.7 million in 2003. Non-interest income for 2004 totaled $15.3 million compared to $18.8 million for 2003. However the 2004 total includes the $2.5 million of mortgage banking gains and another $1.4 million of gains from the sale of investment securities while the 2003 total included $7.2 million of mortgage banking gains and $1.6 million of securities gains. Other sources of non-interest income excluding mortgage and securities gains, increased by $1.4 million or 14.0% in 2004 when compared to 2003. Non-interest expense totaled $31.9 million for 2004, up from $28.4 million in 2003. Significant fluctuations were in compensation and benefits expense (which increased to $17.4 million for 2004 from $16.1 million for 2003), occupancy expense (which increased to $3.3 million for 2004 from $3.0 million in 2003), and mortgage servicing rights amortization (which decreased to $704,000 for 2004 compared to $2.0 million in 2003). The increase in compensation and benefits and occupancy expense resulted from the mid-year 2003 acquisition of three banking center offices and the opening in December 2003 and February 2004 of de novo banking center offices in Findlay and Maumee, Ohio, respectively. "Our annual results were a mixed bag in 2004," commented Mr. Small. "Year-over-year earnings growth is always an objective and we did not accomplish that in 2004. However, we knew it would be a significant challenge to replace the record levels of mortgage income we experienced in 2003. Last year we were proud of our results but we knew they would be difficult to duplicate. We are also proud of this year's results and we think they are much more sustainable on a going forward basis." Total Assets Grow to $1.13 Billion Total assets at December 31, 2004 totaled $1.13 billion compared to $1.04 billion at December 31, 2003. At December 31, 2004, total loans, total deposits, and total equity were $881.2 million, $797.7 million and $126.9 million compared to $741.1 million, $729.0 million and $124.3 million, respectively, at December 31, 2003. First Defiance Gears For Acquisitions During 2004, First Defiance announced agreements to acquire ComBanc, Inc. and its subsidiary the Commercial Bank ($208 million in assets) as well as The Genoa Savings and Loan Company ($94 million in assets). The ComBanc transaction, which is scheduled to close on January 21, 2005, will add approximately $118 million in loans and $170 million in deposits, while Genoa Savings, which is scheduled to close on April 8, 2005, subject to customary regulatory and shareholder approval, will add approximately $73 million in loans and $88 million in deposits. "As we reported earlier, under conservative assumptions, we expect that the ComBanc acquisition will add between $0.03 and $0.05 per share in 2005 while the Genoa Savings and Loan acquisition will add between $0.01 and $0.03 per share," said Mr. Small. "Neither of those estimates includes any projection for revenue enhancements, which I think could be significant. Also, neither of those estimates includes merger-related costs. We are optimistic about those opportunities. Staffs from all three organizations have been working hard to prepare for a smooth transition of the Commercial Bank and Genoa Savings and Loan customers to First Federal Bank and we anticipate an efficient integration." 2005 Earnings Guidance In preparing its budget for 2005, management has made the following assumptions: o Loans are budgeted to grow by approximately $97 million for the year, excluding the increased balances from the two acquisitions. Most of the growth is expected to occur in the commercial real estate, commercial and home equity categories. o Deposits are budgeted to grow 9% excluding the additional deposits from the two acquisitions. Emphasis will be on growth in core deposit accounts, especially non-interest bearing checking accounts. o Net interest margin is estimated to be in the 3.55% -- 3.65% range for the 2005 first quarter and is projected to increase to approximately 3.70% --3.80% by the 2005 fourth quarter. The budget includes a projected 0.25% rate hike in the Fed Funds rate in each quarter of 2005. First Defiance's net interest income will increase in a rising rate environment, but by less than 2% when compared to a flat rate environment. The sensitivity of net interest income does not take the two acquisitions into account, however. o Management has not budgeted any growth for either of the pending acquisitions as the challenge will be retaining loan balances while adapting to new underwriting standards and retaining deposit balances in competitive rate markets. Management believes there are significant opportunities to grow both loans and deposits but has not forecast any such growth in preparing the 2005 budget. o Gains from the sale of mortgage loans are estimated to be in the range of $450,000 to $800,000 per quarter for 2005. Other non-interest income is projected to increase by 10% over 2004. Management did not budget any securities gains. o Combined compensation and benefits expense is anticipated to increase by approximately 13% in 2005 from 2004 based on anticipated staffing increases, budgeted salary increases in the 3% to 4% range and benefit cost increases of 10%. o Management does not anticipate mortgage prepayment speeds to be materially different from 2004 levels and therefore anticipates that MSR amortization will be incurred at a level consistent with 2004. Management has not budgeted for either additional impairment or impairment recovery, although approximately $600,000 of impairment reserves remain at December 31, 2004. Based on these factors, management estimates that net income per share for 2005 will range from $2.05 to $2.15 per share. Factors such as changes in interest rates, economic conditions or competitive pressures, as well as future management decisions on de novo branching, acquisitions, and a variety of other matters may impact these estimated amounts. Conference Call First Defiance Financial Corp. will host a conference call at 11:00 a.m. (EST) on Tuesday, January 18, 2005 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 3094397. 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 URL: http://phx.corporate-ir.net/playerlink.zhtml?c=90296&s=wm&e=992112. The audio replay of the Internet Webcast will be available at www.fdef.com until February 28, 2005. For those without Internet access, the earnings release will be available by fax or mail on request. To receive a copy, please call FDEF Investor Relations at 419-782-3836. About First Defiance Financial Corp. First Defiance Financial Corp., headquartered in Defiance, OH, is the holding company for First Federal Bank of the Midwest and First Insurance & Investments. First Federal operates 19 full service branches and 25 ATM locations in northwest Ohio. First Insurance & Investments is the largest property and casualty insurance company in the Defiance, OH area, specializing in life and group health insurance, financial planning and investments. For more information, visit the company's Web site at www.fdef.com. 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: the future recapture of mortgage servicing impairment reserves, future movements of interest rates and particularly 10-year Treasury notes, the production levels of mortgage loan generation, the ability to continue to grow loans and deposits, the ability to benefit from a rising interest rate environment, the ability to sustain credit quality ratios at current or improved levels, a secondary market for packaged mortgage loan securities, future repurchases of First Defiance Financial Corp. stock and the positive impact of exercised stock options on shareholders' equity, the ability to gain regulatory, shareholder and other required approvals to close the announced acquisitions, ability to achieve expected earnings, expense reductions and levels of one-time costs including acquisition-related and restructuring charges, ability to successfully integrate the acquired banking offices into the First Federal Bank of the Midwest branch network by the specified times, the level of assets and total loans expected upon completion of the announced acquisitions, continued strength in the market area for First Federal Bank of the Midwest, and the ability of the Company to grow in existing and adjacent markets. These forward-looking statements involve numerous risks and uncertainties, including those inherent in general and local banking, insurance and mortgage conditions, competitive factors specific to markets in which the Company and its subsidiaries operate, future interest rate levels, legislative and regulatory decisions or capital market conditions and other risks and uncertainties detailed from time to time in the Company's Securities and Exchange Commission (SEC) filings, including the Company's Annual Report on Form 10-K for the year ended December 31, 2003. One or more of these factors have affected or could in the future affect the Company's business and financial results in future periods and could cause actual results to differ materially from plans and projections. Therefore, there can be no assurances that the forward-looking statements included in this news release will prove to be accurate. In light of the significant uncertainties in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other persons, that the objectives and plans of the Company will be achieved. All forward-looking statements made in this news release are based on information presently available to the management of the Company. The Company assumes no obligation to update any forward-looking statements.
-------------------------------------------------------------------------------------------------- Consolidated Balance Sheets First Defiance Financial Corp. December 31, December 31, (in thousands) 2004 2003 -------------------------------------------------------------------------------------------------- Assets Cash and cash equivalents Cash and amounts due from depository institutions $ 19,891 $ 28,020 Interest-bearing deposits 630 9,763 ----------- ----------- 20,521 37,783 Securities Available-for sale, carried at fair value 137,003 168,259 Held-to-maturity, carried at amortized costs 2,255 2,776 ----------- ----------- 139,258 171,035 Loans held for sale 6,225 5,872 Loans 884,938 744,099 Allowance for loan losses (9,956) (8,844) ----------- ----------- Loans, net 881,207 741,127 Mortgage servicing rights 3,598 3,431 Accrued interest receivable 4,653 4,742 Federal Home Loan Bank stock and other interest-bearing assets 13,376 17,766 Bank Owned Life Insurance 18,581 17,952 Office properties and equipment 24,248 23,846 Real estate and other assets held for sale 98 404 Goodwill and other intangibles 18,933 20,544 Other assets 2,194 1,969 ----------- ----------- Total Assets $ 1,126,667 $ 1,040,599 =========== =========== Liabilities and Stockholders' Equity Non-interest-bearing deposits $ 62,450 $ 52,323 Interest-bearing deposits 735,251 676,673 ----------- ----------- Total deposits 797,701 728,996 Advances from Federal Home Loan Bank 181,213 164,522 Notes payable and other interest-bearing liabilities 11,804 12,267 Advance payments by borrowers for tax and insurance 278 231 Deferred taxes 934 1,859 Other liabilities 7,882 8,455 ----------- ----------- Total liabilities 999,812 916,330 Stockholders' Equity Preferred stock -- -- Common stock 63 63 Additional paid-in-capital 52,112 51,144 Stock acquired by ESOP (1,479) (1,904) Deferred compensation (4) (11) Accumulated other comprehensive income 2,131 4,017 Retained earnings 74,032 70,960 ----------- ----------- Total stockholders' equity 126,855 124,269 ----------- ----------- Total liabilities and stockholders' equity $ 1,126,667 $ 1,040,599 =========== ===========
------------------------------------------------------------------------------------------------------------------ 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) 2004 2003 2004 2003 ------------------------------------------------------------------------------------------------------------------ Interest Income: Loans $ 12,933 $ 10,918 $ 47,345 $ 41,165 Investment securities 1,505 1,973 6,731 8,491 Interest-bearing deposits 6 64 43 280 -------- -------- -------- -------- Total interest income 14,444 12,955 54,119 49,936 Interest Expense: Deposits 3,497 3,160 12,950 13,435 FHLB advances and other 1,899 1,790 7,317 7,343 Notes Payable 39 30 114 77 -------- -------- -------- -------- Total interest expense 5,435 4,980 20,381 20,855 -------- -------- -------- -------- Net interest income 9,009 7,975 33,738 29,081 Provision for loan losses 304 534 1,548 1,719 -------- -------- -------- -------- Net interest income after provision for loan losses 8,705 7,441 32,190 27,362 Non-interest Income: Service fees and other charges 1,391 1,243 5,341 4,480 Dividends on stock and other interest income 142 178 612 695 Gain on sale of loans 613 583 2,523 7,173 Gain on sale of securities 732 656 1,426 1,575 Insurance and investment sales commissions 860 895 4,052 3,712 Trust income 58 45 225 161 Income from Bank Owned Life Insurance 368 192 947 809 Other non-interest income 46 43 187 183 -------- -------- -------- -------- Total Non-interest Income 4,210 3,835 15,313 18,788 Non-interest Expense: Compensation and benefits 4,360 4,155 17,422 16,120 Occupancy 874 812 3,294 3,040 SAIF deposit insurance premiums 27 98 40 183 State franchise tax 401 280 868 1,118 Data processing 647 484 2,363 1,841 Amortization of mortgage servicing rights 157 143 704 1,969 Impairment (recovery) of mortgage servicing rights (33) (335) 1 (717) Amortization of intangibles 28 31 110 70 Settlement of contingent liability -- -- 1,927 -- Other non-interest expense 1,376 1,217 5,176 4,754 -------- -------- -------- -------- Total Non-interest Expense 7,837 6,885 31,905 28,378 -------- -------- -------- -------- Income before income taxes 5,078 4,391 15,598 17,772 Income taxes 1,599 1,572 4,802 5,690 -------- -------- -------- -------- Net income $ 3,479 $ 2,819 $ 10,796 $ 12,082 ======== ======== ======== ======== Earnings per share: Basic $ 0.57 $ 0.47 $ 1.77 $ 2.00 Diluted $ 0.55 $ 0.44 $ 1.69 $ 1.91 Average Shares Outstanding: Basic 6,063 6,038 6,094 6,036 Diluted 6,341 6,380 6,371 6,319
--------------------------------------------------------------------------------------------------------------------------------- Financial Summary and Comparison First Defiance Financial Corp. Three months ended Twelve Months Ended December 31, December 31, (dollars in thousands, except per share data) 2004 2003 % change 2004 2003 % change --------------------------------------------------------------------------------------------------------------------------------- Summary of Operations Tax-equivalent interest income (1) 14,639 13,140 11.4 54,902 50,699 8.3 Interest expense 5,435 4,980 9.1 20,381 20,855 (2.3) Tax-equivalent net interest income (1) 9,204 8,160 12.8 34,521 29,844 15.7 Provision for loan losses 304 534 (43.1) 1,548 1,719 (9.9) Tax-equivalent NII after provision for loan loss (1) 8,900 7,626 16.7 32,973 28,125 17.2 Securities gains 732 656 11.6 1,426 1,575 (9.5) Non-interest income-excluding securities gains 3,478 3,179 9.4 13,887 17,213 (19.3) Non-interest expense 7,837 6,885 13.8 31,905 28,378 12.4 Income taxes 1,599 1,572 1.7 4,802 5,690 (15.6) Net Income 3,479 2,819 23.4 10,796 12,082 (10.6) Tax equivalent adjustment (1) 195 185 5.4 783 763 2.6 --------------------------------------------------------------------------------------------------------------------------------- At Period End Assets 1,126,667 1,040,599 8.3 Earning assets 1,034,471 939,691 10.1 Loans 891,163 749,971 18.8 Allowance for loan losses 9,956 8,844 12.6 Deposits 797,701 728,996 9.4 Stockholders' equity 126,855 124,269 2.1 Stockholders' equity / assets 11.26% 11.94% (5.7) --------------------------------------------------------------------------------------------------------------------------------- Average Balances Assets 1,108,979 1,038,384 6.8 1,070,803 975,047 9.8 Earning assets 1,014,424 941,839 7.7 976,482 893,430 9.3 Deposits and interest-bearing liabilities 972,498 904,468 7.5 935,399 843,410 10.9 Loans 858,971 731,665 17.4 806,877 667,165 20.9 Deposits 784,466 735,451 6.7 755,328 680,539 11.0 Stockholders' equity 126,101 123,266 2.3 125,920 121,234 3.9 Stockholders' equity / assets 11.37% 11.87% (4.2) 11.76% 12.43% (5.4) --------------------------------------------------------------------------------------------------------------------------------- Per Common Share Data Net Income Basic $ 0.57 $ 0.47 22.1 $ 1.77 $ 2.00 (11.6) Diluted 0.55 0.44 24.5 1.69 1.91 (11.6) Dividends 0.22 0.20 10.0 0.82 0.65 26.2 Market Value: High $ 28.90 $ 30.65 (5.7) $ 29.00 $ 30.65 (5.4) Low 25.20 24.00 5.0 22.01 18.21 20.9 Close 28.85 25.90 11.4 28.85 25.90 11.4 Book Value 20.11 19.64 2.4 20.11 19.64 2.4 Tangible Book Value 17.10 16.39 4.3 17.10 16.39 4.3 Shares outstanding, end of period (000) 6,280 6,328 (0.8) 6,280 6,328 (0.8) --------------------------------------------------------------------------------------------------------------------------------- Performance Ratios (annualized) Tax-equivalent net interest margin (1) 3.67% 3.51% 4.4 3.60% 3.42% 5.3 Return on average assets 1.25% 1.09% 15.6 1.01% 1.24% (18.6) Return on average equity 11.04% 9.15% 20.6 8.57% 9.97% (14.0) Efficiency ratio (2) 61.80% 60.72% 1.8 65.91% 60.31% 9.3 Effective tax rate 31.49% 35.80% (12.0) 30.79% 32.02% (3.8) Dividend payout ratio (basic) 38.60% 42.84% (9.9) 46.33% 32.47% 42.7 ---------------------------------------------------------------------------------------------------------------------------------
(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 December 31, ---------------------------------------------------------------------------- 2004 2003 ---------------------------------- ------------------------------------- Average Yield Average Yield Balance Interest(1) Rate(2) Balance Interest(1) Rate(2) Interest-earning assets: Loans receivable $ 858,971 $ 12,936 5.99% $ 731,665 $ 10,923 5.92% Securities 141,684 1,697 4.76% 172,703 2,153 4.95% Interest Bearing Deposits 533 6 4.48% 19,880 64 1.28% FHLB stock and other 13,236 142 4.27% 17,591 178 4.01% ----------- -------- ----------- -------- Total interest-earning assets 1,014,424 14,781 5.80% 941,839 13,318 5.61% Non-interest-earning assets 94,555 96,545 ----------- ----------- Total assets $ 1,108,979 $ 1,038,384 =========== =========== Deposits and Interest-bearing liabilities: Interest bearing deposits $ 723,047 $ 3,497 1.92% $ 682,287 $ 3,160 1.84% FHLB advances and other 176,324 1,899 4.28% 155,870 1,790 4.56% Other Borrowings 11,708 39 1.33% 13,147 30 0.91% ----------- -------- ----------- -------- Total interest-bearing liabilities 911,079 5,435 2.37% 851,304 4,980 2.32% Non-interest bearing deposits 61,419 - - 53,164 - - ----------- -------- ----------- -------- Total including non-interest-bearing demand deposit 972,498 5,435 2.22% 904,468 4,980 2.18% Other non-interest-bearing liabilities 10,380 10,650 ----------- ----------- Total liabilities 982,878 915,118 Stockholders' equity 126,101 123,266 ----------- ----------- Total liabilities and stockholders' equity $ 1,108,979 $ 1,038,384 =========== -------- =========== -------- Net interest income; interest rate spread $ 9,346 3.43% $ 8,338 3.29% ======== ==== ======== ==== = Net interest margin (3) 3.67% 3.51% ==== ==== Average interest-earning assets to average interest bearing liabilities 111% 111% ==== ===
Tweleve Months Ended December 31, ---------------------------------------------------------------------------- 2004 2003 ---------------------------------- ------------------------------------- Average Yield Average Yield Balance Interest(1) Rate(2) Balance Interest(1) Rate(2) Interest-earning assets: Loans receivable $ 806,877 $ 47,360 5.87% $ 667,165 $ 41,233 6.18% Securities 152,319 7,499 4.92% 186,631 9,186 4.92% Interest Bearing Deposits 2,447 43 1.76% 22,082 280 1.27% FHLB stock and other 14,839 612 4.12% 17,552 695 3.96% ----------- -------- ----------- ---------- Total interest-earning assets 976,482 55,514 5.69% 893,430 51,394 5.75% Non-interest-earning assets 94,321 81,617 ----------- ----------- Total assets $ 1,070,803 $ 975,047 =========== =========== Deposits and Interest-bearing liabilities: Interest bearing deposits $ 699,087 $ 12,950 1.85% $ 633,034 $ 13,435 2.12% FHLB advances and other 169,463 7,317 4.32% 155,301 7,343 4.73% Other Borrowings 10,608 114 1.07% 7,570 77 1.02% ----------- -------- ----------- ---------- Total interest-bearing liabilities 879,158 20,381 2.32% 795,905 20,855 2.62% Non-interest bearing deposits 56,241 - - 47,505 - - ----------- -------- ----------- ---------- Total including non-interest-bearing demand deposit 935,399 20,381 2.18% 843,410 20,855 2.47% Other non-interest-bearing liabilities 9,484 10,403 ----------- ----------- Total liabilities 944,883 853,813 Stockholders' equity 125,920 121,234 ----------- ----------- Total liabilities and stockholders' equity $ 1,070,803 $ 975,047 =========== -------- =========== ---------- Net interest income; interest rate spread $ 35,133 3.37% $ 30,539 3.13% ======== ==== ========== ==== Net interest margin (3) 3.60% 3.42% ==== ==== Average interest-earning assets to average interest bearing liabilities 111% 112% ==== ==== ----------------------------------------------------------------------------------------------------
(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) 4th Qtr 2004 3rd Qtr 2004 2nd Qtr 2004 1st Qtr 2004 4th Qtr 2003 ---------------------------------------------------------------------------------------------------------------------------------- Summary of Operations Tax-equivalent interest income (1) $ 14,639 $ 14,049 $ 13,202 $ 12,988 $ 13,140 Interest expense 5,435 5,258 4,881 4,806 4,980 Tax-equivalent net interest income (1) 9,204 8,791 8,321 8,182 8,160 Provision for loan losses 304 376 490 379 534 Tax-equivalent NII after provision for loan losses (1) 8,900 8,415 7,831 7,803 7,804 Investment securities gains 732 302 293 98 656 Non-interest income (excluding securities gains/losses) 3,478 3,248 3,838 3,324 3,179 Non-interest expense 7,837 9,469 7,134 7,464 6,885 Income taxes 1,599 606 1,492 1,105 1,572 Net income 3,479 1,680 3,144 2,493 2,819 Tax equivalent adjustment (1) 195 210 192 163 185 ---------------------------------------------------------------------------------------------------------------------------------- At Period End Total assets $ 1,126,667 $ 1,102,370 $ 1,073,166 $ 1,037,100 $ 1,040,599 Earning assets 1,034,471 1,009,302 980,851 946,949 939,691 Loans 891,163 861,070 822,717 775,301 749,971 Allowance for loan losses 9,956 9,712 9,537 9,167 8,844 Deposits 797,701 779,256 753,390 722,068 728,996 Stockholders' equity 126,855 125,423 124,452 127,230 124,269 Stockholders' equity / assets 11.26% 11.38% 11.60% 12.27% 11.94% Goodwill 18,933 18,961 19,310 19,302 20,544 ---------------------------------------------------------------------------------------------------------------------------------- Average Balances (2) Total assets $ 1,108,979 $ 1,087,205 $ 1,050,462 $ 1,036,571 $ 1,038,384 Earning assets 1,014,424 993,406 957,173 941,345 941,839 Deposits and interest-bearing liabilities 972,498 951,392 917,422 900,285 904,468 Loans 858,971 832,116 786,575 749,848 731,665 Deposits 784,466 768,455 742,088 726,302 735,451 Stockholders' equity 126,101 125,800 125,909 125,872 123,266 Stockholders' equity / assets 11.37% 11.57% 11.99% 12.14% 11.87% ---------------------------------------------------------------------------------------------------------------------------------- Per Common Share Data Basic earnings per share $ 0.57 $ 0.28 $ 0.51 $ 0.41 $ 0.47 Diluted earnings per share 0.55 0.26 0.49 0.39 0.44 Dividends 0.22 0.20 0.20 0.20 0.20 Market Value: High $ 28.90 $ 26.73 $ 28.88 $ 29.00 $ 30.65 Low 25.20 22.01 22.07 26.60 24.00 Close 28.85 26.01 22.10 27.23 25.90 Book Value 20.11 19.94 19.70 19.88 19.64 Shares outstanding, end of period (in thousands) 6,280 6,286 6,318 6,401 6,328 ---------------------------------------------------------------------------------------------------------------------------------- Performance Ratios (annualized) Tax-equivalent net interest margin 3.67% 3.58% 3.52% 3.57% 3.51% Return on average assets (3) 1.25% 0.62% 1.20% 0.96% 1.09% Return on average equity 11.04% 5.34% 9.99% 7.92% 9.15% Efficiency ratio (4) 61.80% 78.65% 58.67% 64.87% 60.72% Effective tax rate 31.49% 26.51% 32.18% 30.71% 35.80% Dividend payout ratio (basic) 38.60% 71.43% 39.22% 49.04% 42.55% ----------------------------------------------------------------------------------------------------------------------------------
(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) 4th Qtr 2004 3rd Qtr 2004 2nd Qtr 2004 1st Qtr 2004 4th Qtr 2003 ---------------------------------------------------------------------------------------------------------------------------- Loan Portfolio Composition One to four family residential real estate $190,070 $186,688 $181,685 $173,367 $167,983 Construction 15,507 16,816 15,472 15,272 16,830 Commercial real estate 415,164 392,610 371,360 359,070 341,423 Commercial 141,643 141,264 140,178 119,442 120,677 Consumer finance 45,513 45,267 42,741 40,858 40,257 Home equity and improvement 90,839 87,755 80,312 74,800 70,038 -------- -------- -------- -------- -------- Total loans 898,736 870,400 831,748 782,809 757,208 Less: Loans in process 6,340 8,155 7,925 6,406 6,079 Deferred loan origination fees 1,233 1,175 1,106 1,101 1,158 Allowance for loan loss 9,956 9,712 9,537 9,167 8,844 -------- -------- -------- -------- -------- Net Loans $881,207 $851,358 $813,180 $766,135 $741,127 ======== ======== ======== ======== ======== ---------------------------------------------------------------------------------------------------------------------------- Allowance for loan loss activity Beginning allowance $ 9,712 $ 9,537 $ 9,167 $ 8,844 $ 8,577 Provision for loan losses 304 376 490 379 534 Credit loss charge-offs: One to four family residential real estate -- -- -- 52 -- Commercial real estate 24 25 9 -- -- Commercial 107 144 125 14 260 Consumer finance 37 78 33 38 37 Home equity and improvement -- -- -- -- -- -------- -------- -------- -------- -------- Total charge-offs 168 247 167 104 297 Total recoveries 108 46 47 48 30 -------- -------- -------- -------- -------- Net charge-offs (recoveries) 60 201 120 56 267 -------- -------- -------- -------- -------- Ending allowance $ 9,956 $ 9,712 $ 9,537 $ 9,167 $ 8,844 ======== ======== ======== ======== ======== ---------------------------------------------------------------------------------------------------------------------------- Credit Quality Non-accrual loans $ 1,893 $ 1,945 $ 2,863 $ 2,375 $ 2,545 Loans over 90 days past due and still accruing -- -- -- -- -- -------- -------- -------- -------- -------- Total non-performing loans (1) 1,893 1,945 2,863 2,375 2,545 Real estate owned (REO) 98 61 193 348 404 -------- -------- -------- -------- -------- Total non-performing assets (1) $ 1,991 $ 2,006 $ 3,056 $ 2,723 $ 2,949 ======== ======== ======== ======== ======== Net charge-offs 60 201 120 56 267 Allowance for loan losses / loans 1.12% 1.13% 1.16% 1.18% 1.18% Allowance for loan losses / non-performing assets 500.05% 484.15% 312.07% 336.65% 299.90% Allowance for loan losses / non-performing loans 525.94% 499.33% 333.11% 385.98% 347.50% Non-performing assets / loans plus REO 0.22% 0.23% 0.37% 0.35% 0.39% Non-performing assets / total assets 0.18% 0.18% 0.28% 0.26% 0.28% Net charge-offs / average loans ( annualized) 0.03% 0.10% 0.06% 0.03% 0.15% ---------------------------------------------------------------------------------------------------------------------------- Deposit Balances Non-interest-bearing demand deposits $ 62,450 $ 55,321 $ 56,659 $ 52,091 $ 52,323 Interest-bearing demand deposits and money market 258,797 239,524 225,842 216,193 216,042 Savings deposits 52,132 53,143 53,965 54,054 51,767 Time deposits less than $100,000 289,878 285,939 303,909 293,424 312,089 Time deposits greater than $100,000 134,444 145,329 113,015 106,306 96,775 -------- -------- -------- -------- -------- Total deposits $797,701 $779,256 $753,390 $722,068 $728,996 ======== ======== ======== ======== ======== ----------------------------------------------------------------------------------------------------------------------------
(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.