-----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, CyCo1GUu9GyhVMgDZk1Ejgd973pXyHI7KU3/Ub40ZlMH4NHvWnSplPJOPheWVds+ MzgQoLtnW4NJ3iJY4lP5Ag== 0000914317-06-000169.txt : 20060117 0000914317-06-000169.hdr.sgml : 20060116 20060117110912 ACCESSION NUMBER: 0000914317-06-000169 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20060116 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060117 DATE AS OF CHANGE: 20060117 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: 06531848 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-73042_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): January 16, 2006 First Defiance Financial Corp. ------------------------------ (Exact name of registrant as specified in its charter) OHIO 0-26850 34-1803915 - -------------------------------------------------------------------------------- (State or other jurisdiction (Commission File No.) (IRS Employer I.D. No.) of incorporation) 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) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [_] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [_] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [_] Pre-commencement communications pursuant to Rule 13e-4(C) under the Exchange Act (17-CFR 240.13e-4(c)) ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION On January 16, 2006 First Defiance Financial Corp. issued a press release announcing results for the 2005 fourth quarter and year-end results for periods ended December 31, 2005. A copy of the press release is attached hereto as Exhibit 99.1. The information in this Form 8-K and the attached Exhibit shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing. ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements of businesses acquired. Not Applicable (b) Pro forma financial information. Not Applicable (c) Exhibits 99.1 Press Release, dated January 16, 2006 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: January 17, 2006 EX-99.1 2 ex99-1.txt Exhibit 99.1 NEWS RELEASE Contact: William J. Small [LOGO] FIRST DEFIANCE Chairman, President and CEO FINANCIAL CORP. (419) 782-5015 bsmall@first-fed.com - -------------------------------------------------------------------------------- For Immediate Release FIRST DEFIANCE ANNOUNCES 2005 FOURTH QUARTER AND ANNUAL EARNINGS DEFIANCE, OHIO (January 16, 2006) - First Defiance Financial Corp. (NASDAQ: FDEF) today announced that net income for the fiscal year ended December 31, 2005 totaled $12.0 million, or $1.68 per diluted share compared to $10.8 million or $1.69 per diluted share for the year ended December 31, 2004. The per share amount declined despite the increase in net income because of the issuance of 733,755 shares in conjunction with the first quarter 2005 acquisition of ComBanc, Inc. (ComBanc), based in Delphos, Ohio. In addition to the acquisition of ComBanc, First Defiance also acquired The Genoa Savings and Loan Company, Genoa, Ohio (Genoa) in an all-cash transaction completed in the 2005 second quarter. As a result of the two purchases, First Defiance incurred acquisition-related charges totaling $3.5 million ($2.3 million after tax) during 2005. In the 2004 third quarter the Company recognized $1.9 million of expense ($1.3 million after tax) associated with the settlement of contingent liabilities related to the sale of a former subsidiary. If the acquisition- related charges are excluded from the 2005 results and the net cost of the contingency settlement is excluded from 2004, core operating earnings for those years would have been $14.2 million or $2.00 per diluted share for 2005, and $12.0 million or $1.89 per diluted share for 2004. The attached schedules include a reconciliation of GAAP-basis earnings to core operating earnings for both the quarter and full year. For the 2005 fourth quarter ended December 31, 2005, First Defiance earned $3.4 million or $0.48 per diluted share compared to $3.5 million or $0.55 per diluted share for the fourth quarter in 2004. "By most measures, 2005 was a very good year for us," commented William J. Small, Chairman, President and Chief Executive Officer of First Defiance. "We grew total assets from $1.12 billion to $1.46 billion through a combination of acquisitions and organic growth. We successfully integrated two acquisitions in a timely fashion. In the Genoa acquisition, we had very little deposit run-off and in ComBanc's case deposits have actually increased since the closing date. Net interest income increased year-over-year by $13 million or 37.6% and our core operating earnings increased by almost $2.2 million. In addition, our credit quality ratios, which were already good, improved in the fourth quarter." 1 "Although we were disappointed that results for the fourth quarter declined to $0.48 per share from the $0.51 that we reported from core operating earnings in the 2005 third quarter, we believe fourth quarter results were actually better than they might appear," continued Mr. Small. "Three factors contributed to the lower earnings level in the fourth quarter compared with the third quarter: lower gains from the sale of mortgage loans, an increase in other non-interest expenses, and a significant increase in our effective tax rate to reflect changes resulting from the year-end analysis of the tax accounts. The lower mortgage gains is primarily a seasonal issue. The increase in other non-interest espenses includes year-end charitable contributions, a significant increase in bad check losses, an increased postage cost due to some non-routine mailings, and a $65,000 increase in consulting expenses for initiatives related to sales training, employee benefits planning and documentation of internal control procedures which generally will not be recurring on a quarterly basis.The changes related to the year-end analysis of the tax accounts increased tax expense for the fourth by $122,000 compared with the third quarter despite the fact that pretax income was just $61,000 higher between those periods. These items overshadowed continued growth in both margin and in non-mortgage fee income, as well as a reduction in our overall benefits costs." Net Interest Income Increased 38% Net interest income for the 2005 fourth quarter was $12.6 million, a 37.7% increase over the $9.2 million earned in the fourth quarter of 2004. Net interest margin for the 2005 fourth quarter, on a tax-equivalent basis, was 3.92%, a 24 basis point improvement from the fourth quarter of 2004 and a seven basis point improvement from the 2005 third quarter margin, which was 3.85%. The higher margin in 2005 versus 2004 is due to an improved mix between loans and investment securities, an increase in the interest rate spread from 3.45% in the fourth quarter of 2004 to 3.66% in the fourth quarter of 2005, and a significant increase in average non-interest bearing liabilities between the two periods. Average interest-earning assets grew from $1.01 billion in the fourth quarter of 2004 to $1.29 billion in the fourth quarter of 2005, an increase of 27.2%. The average balance of loans outstanding increased from $859.0 million in the 2004 fourth quarter to $1.15 billion in the fourth quarter of 2005, while the average balance of investment securities dropped from $141.7 million to $113.8 million between those same periods. Approximately $117.3 million of the increase in average loan balances related to the ComBanc acquisition, which closed on January 21, 2005, and $66.9 million related to the Genoa acquisition, which closed on April 8, 2005. The remainder of the increase, $106.8 million, is due to year-over-year balance growth. Yields on loans improved to 6.73% for the 2005 fourth quarter from 5.99% in the fourth quarter of 2004 due to recent increases in the prime interest rate. Overall, yields on interest-earning assets improved to 6.55% in the 2005 fourth quarter compared to 5.82% during that same period in 2004. The fourth quarter asset yield was also a 30 basis point improvement over the 6.25% yield realized in the 2005 third quarter. Yields also were favorably impacted in the 2005 fourth quarter by increased amortization of loan-purchase discounts, which contributed an additional $99,000 to interest income for the quarter. Average interest-bearing deposits increased to $965.6 million in the 2005 fourth quarter compared with $723.0 million during the same period of 2004, an increase of $242.6 million or 33.6%. The ComBanc acquisition added $146.0 million in average balances of interest-bearing 2 Exhibit 99.1 deposits while the Genoa acquisition added $71.8 million in average balances. The average interest-bearing deposit balance also reflects a decrease in brokered certificates of deposits (CDs), which averaged $53.5 million in the 2004 fourth quarter compared to $41.5 million in the 2005 period. Excluding the acquisitions and brokered CDs, average interest-earning deposits increased by $36.8 million in the 2005 fourth quarter compared with the fourth quarter of 2004. The cost of interest-bearing deposits increased 64 basis points, to 2.56% for the 2005 fourth quarter from 1.92% for the 2004 fourth quarter and the cost of Federal Home Loan Bank (FHLB) advances increased 29 basis points, to 4.57% in the 2005 fourth quarter from 4.28% in the 2004 fourth quarter. The Company also increased its leverage during the quarter by issuing $20.0 million of subordinated debentures through a related unconsolidated subsidiary trust. Those trust preferred securities carry an interest rate equal to 90-day LIBOR plus 1.38%. Total interest expense on the subordinated debentures totaled $201,000 in the 2005 fourth quarter. Overall, total funding costs for interest-bearing liabilities increased by 52 basis points, to 2.89% in the 2005 fourth quarter from 2.37% in the same period in 2004. Comparing the 2005 fourth quarter to the 2005 third quarter, the cost of interest-bearing liabilities increased by 26 basis points. As a result of the above factors, the interest rate spread improved to 3.67% in the 2005 fourth quarter from 3.45% during the fourth quarter of 2004. The net interest margin also benefited from growth in the average balance of non-interest bearing deposits, which increased to $93.0 million in the 2005 fourth quarter compared with $61.4 million during the 2004 fourth quarter, an increase of 51.5%. Of that $31.6 million increase, $17.7 million was due to the ComBanc acquisition, $5.0 million was due to the Genoa acquisition, and the remaining increase of $8.9 million resulted from other Company initiatives to grow those balances. Credit Quality Continues to be a Strength The provision for loan losses was $378,000 for the fourth quarter of 2005 compared to $304,000 for the fourth quarter of 2004. The 2005 quarterly provision level reflects continued generally favorable experience with the First Defiance loan portfolios, especially those loans that were originated under First Federal Bank's underwriting standards. Total charge-offs for the three months ended December 31, 2005 were $376,000 while recoveries were $47,000 compared with $168,000 of charge-offs and $108,000 in recoveries during the fourth quarter of 2004. Net charge-offs as a percentage of average loans were 0.11% in the 2005 fourth quarter (annualized) compared to 0.03% for the fourth quarter of 2004 (annualized). At December 31, 2005 the percentage of non-performing assets to total loans plus real estate owned was 0.45% compared to 0.22% at December 31, 2004. The reason for the apparent deterioration of some of the credit-quality statistics between the periods being compared relates to the portfolios acquired from ComBanc and Genoa. The increase in the provision for loan losses between the 2004 and 2005 fourth quarters is a function of the higher volume of lending between the two periods. Total non-performing loans increased to $5.0 million at December 31, 2005 from $1.9 million at December 31, 2004 and non-performing assets increased to $5.4 million from $2.0 million. The December 31, 2005 amounts represent significant decreases from September 30, 2005, when non-performing loans were $6.7 million and non-performing assets totaled $6.9 million. Of the $5.0 million in non-performing loans at December 31, 2005, $3.7 million were acquired in the 2005 acquisitions and $1.3 million related to loans originated by First Defiance. 3 Exhibit 99.1 First Defiance's allowance for loan losses as a percentage of non-performing loans declined to 276.1% at December 31, 2005 from 525.9% at December 31, 2004 but that ratio increased from 202.7% at September 30, 2005. The decrease in the coverage ratios since the beginning of 2005 is primarily due to delinquent loans acquired in the acquisitions. However, those ratios also are impacted by the accounting guidance which requires that estimated losses on loans deemed impaired as of the acquisition date be recorded as a purchase discount, which directly reduces the loan balance, as opposed to establishing an allowance for loan losses. As a result of this accounting, net loan balances totaling $1.9 million (after deducting appropriate purchase discounts) at December 31, 2005 are deemed impaired and have no loan loss reserve recorded for them. Approximately $893,000 of these impaired loans are included in the $5.0 million of non-performing loans with no offsetting loan loss reserve. In management's opinion, the allowance for loan losses at December 31, 2005 is sufficient and the provision for loan losses for both the three months and year ended December 31, 2005 are consistent with historical charge-offs and other information available as of that date. "We have dedicated a substantial amount of resources, both internally and externally, to improve the credit quality ratios, which declined as a result of the two acquisitions," said Mr. Small. "We're making progress working through the problem loans we acquired. That is shown in the improvement in both the level of non-performing loans and the asset quality ratios at December 31 compared to September 30. I want to emphasize again that most of these non-performing loans were acquired by way of the two acquisitions. We knew about these situations before we made the acquisitions and we knew it would take both time and money to work out these loans. I am pleased to report that the portfolio that has been originated under our strict underwriting standards, which represents the vast majority of our outstanding loans, continues to perform very well from an asset quality perspective." Service Fees, Mortgage Banking Income, Sales Commissions All Increase Total non-interest income decreased to $3.8 million for the 2005 fourth quarter from $3.9 million for the same period in 2004. However, the 2004 fourth quarter included $732,000 of gains from sale of investment securities and a $182,000 life insurance settlement. Excluding those items, non-interest income increased by $738,000 or 24.4%. Most of that overall increase was in service fees, which increased by $485,000, mortgage banking income, which was $177,000 higher, and insurance and investment sales commissions, which increased by $96,000. Non-interest expense increased by almost $3.0 million or 38.5% in the 2005 fourth quarter compared to the same period in 2004. Significant increases occurred in compensation and benefits, which increased by $1.5 million, occupancy which increased by $353,000, data processing, which increased by $196,000 and amortization of intangibles, which increased by $186,000. All of those increases are primarily the result of the two acquisitions completed in the first half of 2005, or due to the related increase in staffing to support the larger organization. First Defiance also realized a $679,000 increase in other non-interest expense in the 2005 fourth quarter compared with the prior year. The most significant period-to-period increases included in other non-interest expense were in advertising (which increased by $158,000), postage (up $132,000), checking account related charge-offs (up $125,000) and credit and collection expense (up $70,000). Much of the increase in advertising and postage expense related to raising the public's overall awareness of the Company in its new markets. 4 Exhibit 99.1 Annual Results On an annual basis, core operating earnings for 2005 were $14.2 million, an increase of 18.1% or $2.2 million over core operating earnings for 2004. Net interest income for the year in 2005 totaled $47.3 million, an improvement of $12.9 million or 37.6% over 2004. For 2005, net interest margin, stated on a tax equivalent basis, improved to 3.87% from 3.62% for the year ended December 31, 2004. During that period, despite significant growth in the loan portfolio, the provision for loan losses declined to $1.4 million in 2005 from $1.5 million in 2004. Non-interest income increased by $1.9 million or 13.8%, to $15.9 million for the year ended December 31, 2005 from $14.0 million for 2004. Service fees accounted for $1.4 million of the increase while mortgage banking income increased by $574,000 or 20.7% during 2005, to $3.3 million from $2.8 million in 2004. Most of the increase in mortgage banking related to $418,000 of favorable adjustments to the Company's mortgage servicing rights valuation reserves. Non-interest expense totaled $43.9 million for 2005 compared to $31.2 million in 2004. Those expenses include $3.5 million of acquisition-related costs incurred in 2005 and $1.9 million recorded in 2004 related to the settlement of contingencies related to the 2002 sale of a former subsidiary. When those items are excluded, non-interest expense was $40.5 million in 2005 and $29.3 million in 2004, an increase of $11.2 million or 38.2%. Compensation and benefits increased by $6.0 million between 2004 and 2005 while occupancy costs were up by $1.4 million and data processing increased by $884,000. The higher cost levels were primarily the result of the two acquisitions. Assets Increase to $1.46 Billion Total assets at December 31, 2005 totaled $1.46 billion compared with $1.13 billion at December 31, 2004. At December 31, 2005, net loans totaled $1.17 billion, deposits totaled $1.07 billion and stockholders equity was $151.0 million. At December 31, 2004, net loans, deposits and equity were $881.2 million, $797.7 million and $126.9 million, respectively. Goodwill and other intangible assets were $39.3 million at December 31, 2005 compared to $18.9 million at December 31, 2004. Looking Ahead "A year ago at this time, we were preparing for the completion of our two announced acquisitions," said Mr. Small. "Looking back, I think that everyone involved did an outstanding job of making those transitions happen as smoothly as possible. There was very little disruption to our customers and we are extremely pleased with the way we've been able to integrate our new markets." "Successfully integrating the two acquisitions required a lot of our energy in 2005. Our focus for 2006 will be on improving our overall profitability by growing our revenues and controlling our costs," added Mr. Small. "At the same time, I think we've had some growing pains resulting from the acquisitions that we need to address. Some of our internal customer service levels have been impacted as we've added volumes of loans and deposits without adding additional support in the loan servicing, deposit servicing and accounting areas. The level of 5 Exhibit 99.1 service we provide our customers is what sets us apart in some very competitive markets and we must do everything possible to keep those service levels high. We also need to continue to build our brand identity, especially in the markets that we've recently entered. These initiatives are not without a cost and they are reflected in our 2006 budget." In preparing its profit plan for 2006, management made the following assumptions: o Loans are budgeted to grow from $1.17 billion (after allowance) at December 31, 2005 to $1.36 billion at the end of 2006, which represents growth of approximately 16%. While most of the growth is forecasted in commercial and non-residential real estate loans, the Company also expects mortgage loan balances and home equity balances to grow. o Interest-bearing deposits (excluding national CDs) are budgeted to grow from the fourth quarter average of approximately $925 million to approximately $1.02 billion in the 2006 fourth quarter. Also, management is budgeting non-interest-bearing deposits to increase from the $93.0 million average balance in the 2005 fourth quarter to approximately $115 million in the 2006 fourth quarter. Based on projected loan growth, management anticipates it will need to tap alternative funding sources such as FHLB advances or brokered CDs for up to $70 million by the end of 2006. o Net interest margin is expected to be approximately 3.85% in the first quarter, dropping closer to 3.65% by the fourth quarter based on expected increases in funding costs, especially as alternative sources of funding are tapped. That budget includes just one additional increase in the targeted Fed Funds rate. Net interest income is projected to increase in a rising rate environment by less than 2% when compared with a flat rate environment and it is projected to decline by approximately 1.5% in a falling rate environment. o Mortgage gains are projected to range from $750,000 to $820,000 on a quarterly basis. Those gains are based on more aggressive mortgage origination goals in most markets than were in place in 2005. o Other non-interest income (excluding mortgage banking income) is projected to increase by approximately $2 million in 2006 compared to 2005. The majority of the increase is expected in deposit fees, debit card transaction fees and as an increase in income from Bank Owned Life Insurance due to a recent $5 million additional BOLI purchase. It is expected that more of those fee increases will be realized in the second half of the year than the first half. o Non-interest expenses are projected to increase by approximately $5 million in 2006 compared to 2005. Approximately $3 million of that increase will be in compensation and benefits. The increase is attributable to the projected addition of 37 staff over the course of 2006, a full year's compensation for the two companies acquired in 2005, pay increases in the 3.5% to 4% range and benefit 6 Exhibit 99.1 cost increases in the 10% range. Occupancy will increase by approximately 20%. Also the Company is anticipating a $350,000 increase in Ohio franchise tax based on a higher capital level at the beginning of 2006 compared to 2005. o Projected compensation expense also includes $280,000 of expense related to the expensing of stock options under the Financial Accounting Standards Board Statement No. 123R, Share Based Payments. As all unvested outstanding options are Incentive Stock Options, the option expense will not be tax-deductible. Based on these factors, management estimates that net income per share for 2006 will range from $2.08 to $2.16 per share. On a quarterly basis, management expects that the 2006 first quarter will be in the $0.49 to $0.51 range increasing to the $0.55 to $0.57 range by the fourth quarter. Factors such as changes in interest rates, economic conditions or competitive pressures, as well as future management decisions on acquisitions, de novo branching and a variety of other matters may impact these estimates. Further, unexpected credit losses could also negatively impact expected results. "We're comfortable with our estimate in the range of $2.08 to $2.16 per share," said Mr. Small. "Obviously many factors make up those projections but the bottom line for us is we need continued strong loan growth, a significant increase in deposit balances, preferably in our low or no cost accounts, a higher level of mortgage originations from all of our locations, and a persistent focus on providing superior customer service." Conference Call First Defiance Financial Corp. will host a conference call at 11:00 a.m. (EDT) on Tuesday, January 17, 2006 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 3456983. 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://phx.corporate-ir.net/phoenix.zhtml?p=irol- ------------------------------------------------- eventDetails&c=90296&eventID=1179227 (Due to URL length, please copy and - ------------------------------------ paste into browser.) The audio replay of the Internet Web cast will be available at www.fdef.com until February 28, 2006. - ------------ 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 & Investments. First Federal operates 25 full service branches and 31 ATM locations in northwest Ohio. First Insurance & 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. ------------ 7 Exhibit 99.1 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: 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, 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, 2004. 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. 8
Exhibit 99.1 - --------------------------------------------------------------------------------------------- Consolidated Balance Sheets First Defiance Financial Corp. December 31, December 31, (in thousands) 2005 2004 - --------------------------------------------------------------------------------------------- Assets Cash and cash equivalents Cash and amounts due from depository institutions $ 44,075 $ 19,891 Interest-bearing deposits 5,190 630 ----------- ----------- 49,265 20,521 Securities Available-for sale, carried at fair value 113,079 137,003 Held-to-maturity, carried at amortized cost 1,775 2,255 ----------- ----------- 114,854 139,258 Loans held for sale 2,206 2,295 Loans 1,181,049 888,868 Allowance for loan losses (13,673) (9,956) ----------- ----------- Loans, net 1,169,582 881,207 Mortgage servicing rights 5,063 3,598 Accrued interest receivable 6,207 4,653 Federal Home Loan Bank stock and other interest-bearing assets 17,544 13,376 Bank Owned Life Insurance 24,346 18,581 Office properties and equipment 32,689 24,248 Real estate and other assets held for sale 404 98 Goodwill 35,168 18,340 Core deposit and other intangibles 4,116 593 Other assets 1,136 2,194 ----------- ----------- Total Assets $ 1,460,374 $ 1,126,667 =========== =========== Liabilities and Stockholders' Equity Non-interest-bearing deposits $ 103,498 $ 62,450 Interest-bearing deposits 966,003 735,251 ----------- ----------- Total deposits 1,069,501 797,701 Advances from Federal Home Loan Bank 180,960 178,213 Notes payable and other interest-bearing liabilities 25,748 14,804 Subordinated debentures 20,051 -- Advance payments by borrowers for tax and insurance 605 278 Deferred taxes 1,052 934 Other liabilities 11,506 7,863 ----------- ----------- Total liabilities 1,309,423 999,793 Stockholders' Equity Preferred stock -- -- Common stock, net 71 63 Additional paid-in-capital 73,026 52,131 Stock acquired by ESOP (1,053) (1,479) Deferred compensation (2) (4) Accumulated other comprehensive income (22) 2,131 Retained earnings 78,931 74,032 ----------- ----------- Total stockholders' equity 150,951 126,874 ----------- ----------- Total liabilities and stockholders' equity $ 1,460,374 $ 1,126,667 =========== ===========
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Exhibit 99.1 - -------------------------------------------------------------------------------------------- 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) 2005 2004 2005 2004 - -------------------------------------------------------------------------------------------- Interest Income: Loans $19,505 $12,933 $69,708 $47,345 Investment securities 1,294 1,505 5,273 6,731 Interest-bearing deposits 87 6 364 43 FHLB stock dividends 251 142 829 612 ------- ------- ------- ------- Total interest income 21,137 14,586 76,174 54,731 Interest Expense: Deposits 6,220 3,497 20,615 12,950 FHLB advances and other 1,975 1,899 7,625 7,317 Subordinated debentures 201 -- 201 -- Notes Payable 139 39 451 114 ------- ------- ------- ------- Total interest expense 8,535 5,435 28,892 20,381 ------- ------- ------- ------- Net interest income 12,602 9,151 47,282 34,350 Provision for loan losses 378 304 1,442 1,548 ------- ------- ------- ------- Net interest income after provision for loan losses 12,224 8,847 45,840 32,802 Non-interest Income: Service fees and other charges 1,581 1,096 5,603 4,215 Mortgage banking income 875 698 3,345 2,771 Gain on sale of securities -- 732 1,222 1,426 Insurance and investment sales commissions 956 860 4,185 4,052 Trust income 53 58 282 225 Income from Bank Owned Life Insurance 224 368 765 947 Other non-interest income 79 132 523 360 ------- ------- ------- ------- Total Non-interest Income 3,768 3,944 15,925 13,996 Non-interest Expense: Compensation and benefits 5,870 4,360 23,446 17,422 Occupancy 1,227 842 4,651 3,294 SAIF deposit insurance premiums 35 27 136 40 State franchise tax 420 401 1,285 868 Acquisition related charges 20 -- 3,476 -- Data processing 843 647 3,247 2,363 Amortization of intangibles 214 28 755 110 Settlement of contingent liability -- -- -- 1,927 Other non-interest expense 2,055 1,408 6,946 5,176 ------- ------- ------- ------- Total Non-interest Expense 10,684 7,713 43,942 31,200 ------- ------- ------- ------- Income before income taxes 5,308 5,078 17,823 15,598 Income taxes 1,864 1,599 5,853 4,802 ------- ------- ------- ------- Net income $ 3,444 $ 3,479 $11,970 $10,796 ======= ======= ======= ======= Earnings per share: Basic $ 0.49 $ 0.57 $ 1.74 $ 1.77 Diluted $ 0.48 $ 0.55 $ 1.68 $ 1.69 Core operating earnings per share*: Basic $ 0.49 $ 0.57 $ 2.07 $ 1.98 Diluted $ 0.48 $ 0.55 $ 2.00 $ 1.89 Average Shares Outstanding: Basic 6,991 6,063 6,872 6,094 Diluted 7,223 6,341 7,122 6,371 * - See Non-GAAP Disclosure Reconciliations
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Exhibit 99.1 - ------------------------------------------------------------------------------------------------------------------------ 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) 2005 2004 % change 2005 2004 % change - ------------------------------------------------------------------------------------------------------------------------ Summary of Operations Tax-equivalent interest income (1) 21,283 14,781 44.0 76,798 55,514 38.3 Interest expense 8,535 5,435 57.0 28,892 20,381 41.8 Tax-equivalent net interest income (1) 12,748 9,346 36.4 47,906 35,133 36.4 Provision for loan losses 378 304 24.3 1,442 1,548 (6.8) Tax-equivalent NII after provision for loan loss (1) 12,370 9,042 36.8 46,464 33,585 38.3 Securities gains -- 732 (100.0) 1,222 1,426 (14.3) Non-interest income-excluding securities gains 3,768 3,212 17.3 14,703 12,570 17.0 Non-interest expense 10,684 7,713 38.5 43,942 31,200 40.8 Non-interest expense-excluding non-core charges 10,664 7,713 38.3 40,466 29,273 38.2 One time acquisition related charges 20 -- NM 3,476 -- NM Settlement of contingent liability -- -- NM -- 1,927 NM Income taxes 1,864 1,599 16.6 5,853 4,802 21.9 Net Income 3,444 3,479 (1.0) 11,970 10,796 10.9 Core operating earnings (2) 3,457 3,479 (0.6) 14,229 12,049 18.1 Tax equivalent adjustment (1) 146 195 (25.1) 624 783 (20.3) - ------------------------------------------------------------------------------------------------------------------------ At Period End Assets 1,460,374 1,126,667 29.6 Earning assets 1,320,843 1,044,427 26.5 Loans 1,183,255 891,163 32.8 Allowance for loan losses 13,673 9,956 37.3 Deposits 1,069,501 797,701 34.1 Stockholders' equity 150,951 126,874 19.0 - ------------------------------------------------------------------------------------------------------------------------ Average Balances Assets 1,429,953 1,108,979 28.9 1,364,797 1,070,803 27.5 Earning assets 1,290,007 1,014,424 27.2 1,238,214 976,482 26.8 Deposits and interest-bearing liabilities 1,265,623 972,498 30.1 1,209,284 935,399 29.3 Loans 1,149,937 858,971 33.9 1,089,942 806,877 35.1 Deposits 1,058,660 784,466 35.0 1,018,777 755,328 34.9 Stockholders' equity 150,063 126,101 19.0 144,983 125,920 15.1 Stockholders' equity / assets 10.49% 11.37% (7.7) 10.62% 11.76% (9.7) - ------------------------------------------------------------------------------------------------------------------------ Per Common Share Data Net Income Basic $ 0.49 $ 0.57 (14.0) $ 1.74 $ 1.77 (1.7) Diluted 0.48 0.55 (12.7) 1.68 1.69 (0.6) Core operating earnings (2) Basic $ 0.49 $ 0.57 (13.8) $ 2.07 $ 1.98 4.7 Diluted $ 0.48 $ 0.55 (12.8) 2.00 1.89 5.6 Dividends 0.24 0.22 9.1 0.90 0.82 9.8 Market Value: High $ 30.06 $ 28.90 4.0 $ 31.44 $ 29.00 8.4 Low 25.56 25.20 1.4 25.29 22.01 14.9 Close 27.09 28.85 (6.1) 27.09 28.85 (6.1) Book Value 21.31 20.20 5.5 21.31 20.20 5.5 Tangible Book Value 15.76 17.19 (8.3) 15.76 17.19 (8.3) Shares outstanding, end of period (000) 7,085 6,280 12.8 7,085 6,280 12.8 - ------------------------------------------------------------------------------------------------------------------------ Performance Ratios (annualized) Tax-equivalent net interest margin (1) 3.92% 3.68% 6.6 3.87% 3.62% 7.1 Return on average assets --GAAP 0.96% 1.25% (23.2) 0.88% 1.01% (13.0) Return on average assets -- Core Operating 0.97% 1.25% (22.9) 1.04% 1.13% (7.3) Return on average equity -- GAAP 9.18% 11.04% (16.8) 8.26% 8.57% (3.7) Return on average equity -- Core Operating 9.21% 11.04% (16.5) 9.81% 9.57% 2.6 Efficiency ratio (3) -- GAAP 64.69% 61.42% 5.3 70.18% 65.40% 7.3 Efficiency ratio (3) -- Core Operating 64.57% 61.42% 5.1 64.63% 61.37% 5.3 Effective tax rate 35.12% 31.49% 11.5 32.84% 30.79% 6.7 Dividend payout ratio (basic) 48.98% 38.60% 26.9 51.72% 46.33% 11.6 - ------------------------------------------------------------------------------------------------------------------------
(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) Core operating earnings = Net income plus after-tax effect of acquisition related and other one-time charges. See Non-GAAP Disclosure Reconciliation (3) 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 11 Exhibit 99.1 - -------------------------------------------------------------------------------- Non-GAAP Disclosure Reconciliations First Defiance Financial Corp. Core operating earnings are net income adjusted to exclude discontinued operations, merger, integration and restructuring expenses and the results of certain significant transactions not representative of ongoing operations.
Three months ended Twelve months ended December 31, December 31, (dollars in thousands, except per share data) 2005 2004 2005 2004 - ------------------------------------------------------------------------------------------- Core Operating Earnings Net Income $ 3,444 $ 3,479 $ 11,970 $ 10,796 One-time acquisition related charges 20 -- 3,476 -- Settlement of contingent liability -- -- -- 1,927 Tax effect (7) -- (1,217) (674) -------------------- -------------------- After-tax non-operating items 13 -- 2,259 1,253 -------------------- -------------------- Core operating earnings $ 3,457 $ 3,479 $ 14,229 $ 12,049 ==================== ====================
One-time acquisition related charges in 2005 reflect charges associated with the acquisition of ComBanc, Inc. and Genoa Savings and Loan Company. Settlement of contingent liability relates to the Company's 2002 sales of The Leader Mortgage Company subsidiary. Core Operating earnings is used as the numerator to calculate core operating return on average assets, core operating return on average equity and core operating earnings per share. Additionally, non-operating items are deducted from non-interest expense in the numerator and non-interest income in the denominator of the core operating efficiency ratio disclosed in the tables. Comparable information on a GAAP basis is also provided in the tables. - -------------------------------------------------------------------------------- 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) 2005 2004 2005 2004 - ------------------------------------------------------------------------------------------------------ Gain from sale of mortgage loans $ 609 $ 527 $ 2,291 $ 2,350 Mortgage loan servicing revenue (expense): Mortgage loan servicing revenue 385 295 1,421 1,126 Amortization of mortgage servicing rights (171) (157) (784) (704) Mortgage servicing rights valuation adjustments 52 33 417 (1) -------------------- -------------------- 266 171 1,054 421 -------------------- -------------------- Total revenue from sale and servicing of mortgage loans $ 875 $ 698 $ 3,345 $ 2,771 ==================== ====================
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Exhibit 99.1 - ------------------------------------------------------------------------------------------------------------------------------------ Yield Analysis First Defiance Financial Corp. Three Months Ended December 31, ----------------------------------------------------------------------------- 2005 2004 ------------------------------------ ------------------------------------- Average Yield Average Yield Balance Interest(1) Rate(2) Balance Interest(1) Rate(2) Interest-earning assets: Loans receivable $1,149,937 $ 19,511 6.73% $ 858,971 $ 12,936 5.99% Securities 113,766 1,434 5.00% 141,684 1,697 4.90% Interest Bearing Deposits 9,008 87 3.83% 533 6 4.48% FHLB stock 17,296 251 5.76% 13,236 142 4.27% ---------- ---------- ---------- ---------- Total interest-earning assets 1,290,007 21,283 6.55% 1,014,424 14,781 5.82% Non-interest-earning assets 139,946 94,555 ---------- ---------- Total assets $1,429,953 $1,108,979 ========== ========== Deposits and Interest-bearing liabilities: Interest bearing deposits $ 965,629 $ 6,220 2.56% $ 723,047 $ 3,497 1.92% FHLB advances and other 171,645 1,975 4.57% 176,324 1,899 4.28% Other Borrowings 21,555 139 2.56% 11,708 39 1.33% Subordinated debentures 13,763 201 5.79% -- -- 0.00% ---------- ---------- ---------- ---------- Total interest-bearing liabilities 1,172,592 8,535 2.89% 911,079 5,435 2.37% Non-interest bearing deposits 93,031 -- -- 61,419 -- -- ---------- ---------- ---------- ---------- Total including non-interest-bearing demand deposits 1,265,623 8,535 2.68% 972,498 5,435 2.22% Other non-interest-bearing liabilities 14,268 10,380 ---------- ---------- Total liabilities 1,279,891 982,878 Stockholders' equity 150,063 126,101 ---------- ---------- Total liabilities and stockholders' equity $1,429,954 $1,108,979 ========== ---------- ========== ---------- Net interest income; interest rate spread $ 12,748 3.66% $ 9,346 3.45% ========== ========== ========== ========== Net interest margin (3) 3.92% 3.68% ========== ========== Average interest-earning assets to average interest bearing liabilities 110% 111% ========== ========== Twelve Months Ended December 31, ----------------------------------------------------------------------------- 2005 2004 ------------------------------------ ------------------------------------- Average Yield Average Yield Balance Interest(1) Rate(2) Balance Interest(1) Rate(2) Interest-earning assets: Loans receivable $1,089,942 $ 69,732 6.40% $ 806,877 $ 47,360 5.87% Securities 121,510 5,873 4.88% 152,319 7,499 5.08% Interest Bearing Deposits 10,410 364 3.50% 2,447 43 1.76% FHLB stock 16,352 829 5.07% 14,839 612 4.12% ---------- ---------- ---------- ---------- Total interest-earning assets 1,238,214 76,798 6.20% 976,482 55,514 5.71% Non-interest-earning assets 126,583 94,321 ---------- ---------- Total assets $1,364,797 $1,070,803 ========== ========== Deposits and Interest-bearing liabilities: Interest bearing deposits $ 932,036 $ 20,615 2.21% $ 699,087 $ 12,950 1.85% FHLB advances and other 168,330 7,625 4.53% 169,463 7,317 4.32% Other Borrowings 18,736 451 2.41% 10,608 114 1.07% Subordinated debentures 3,441 201 5.84% -- -- 0.00% ---------- ---------- ---------- ---------- Total interest-bearing liabilities 1,122,543 28,892 2.58% 879,158 20,381 2.32% Non-interest bearing deposits 86,741 -- -- 56,241 -- -- ---------- ---------- ---------- ---------- Total including non-interest-bearing demand deposits 1,209,284 28,892 2.39% 935,399 20,381 2.18% Other non-interest-bearing liabilities 10,530 9,484 ---------- ---------- Total liabilities 1,219,814 944,883 Stockholders' equity 144,983 125,920 ---------- ---------- Total liabilities and stockholders' equity $1,364,797 $1,070,803 ========== ---------- ========== ---------- Net interest income; interest rate spread $ 47,906 3.63% $ 35,133 3.39% ========== ========== ========== ========== Net interest margin (3) 3.87% 3.62% ========== ========== Average interest-earning assets to average interest bearing liabilities 110% 111% ========== ==========
- ------------------------------------------------- (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. 13
Exhibit 99.1 - --------------------------------------------------------------------------------------------------------------------- Selected Quarterly Information First Defiance Financial Corp. (dollars in thousands, except per share data) 4th Qtr 2005 3rd Qtr 2005 2nd Qtr 2005 1st Qtr 2005 4th Qtr 2004 - -------------------------------------------------------------------------------------------------------------------- Summary of Operations Tax-equivalent interest income (1) $ 21,283 $ 20,079 $ 18,830 $ 16,607 $ 14,781 Interest expense 8,535 7,715 6,816 5,826 5,435 Tax-equivalent net interest income (1) 12,748 12,364 12,014 10,781 9,346 Provision for loan losses 378 368 349 347 304 Tax-equivalent NII after provision for loan losses (1) 12,370 11,996 11,665 10,434 9,042 Investment securities gains - 86 515 621 732 Non-interest income (excluding securities gains/losses) 3,768 3,930 3,365 3,641 3,212 Non-interest expense 10,684 10,496 12,518 10,246 7,713 Acquisition and other one-time charges 20 97 2,476 884 - Income taxes 1,864 1,742 838 1,409 1,599 Net income 3,444 3,627 2,028 2,871 3,479 Core operating earnings (2) 3,457 3,690 3,553 3,446 3,479 Tax equivalent adjustment (1) 146 147 161 170 195 - -------------------------------------------------------------------------------------------------------------------- At Period End Total assets $1,460,374 $1,417,577 $1,399,626 $1,283,911 $1,126,667 Earning assets 1,307,170 1,276,425 1,264,326 1,163,699 1,034,471 Loans 1,183,255 1,153,566 1,140,885 1,027,418 891,163 Allowance for loan losses 13,673 13,624 13,460 12,749 9,956 Deposits 1,069,501 1,071,057 1,046,481 950,586 797,701 Stockholders' equity 150,951 149,284 147,550 146,136 126,874 Stockholders' equity / assets 10.34% 10.53% 10.54% 11.38% 11.26% Goodwill 35,168 35,345 35,356 29,993 18,340 - -------------------------------------------------------------------------------------------------------------------- Average Balances (3) Total assets $1,429,953 $1,411,434 $1,382,129 $1,235,682 $1,108,979 Earning assets 1,290,007 1,275,117 1,246,479 1,143,549 1,014,424 Deposits and interest-bearing liabilities 1,265,623 1,250,513 1,224,350 1,096,645 972,498 Loans 1,149,937 1,136,526 1,091,178 982,125 858,971 Deposits 1,058,660 1,046,287 1,048,961 921,196 784,466 Stockholders' equity 150,063 149,332 147,200 134,005 126,101 Stockholders' equity / assets 10.49% 10.58% 10.65% 10.84% 11.37% - -------------------------------------------------------------------------------------------------------------------- Per Common Share Data Net Income: Basic $ 0.49 $ 0.52 $ 0.29 $ 0.43 $ 0.57 Diluted 0.48 0.50 0.28 0.41 0.55 Core operating earnings (2) Basic $ 0.49 $ 0.53 $ 0.53 $ 0.52 $ 0.57 Diluted 0.48 0.51 0.51 0.50 0.55 Dividends 0.24 0.22 0.22 0.22 0.22 Market Value: High $ 30.06 $ 31.44 $ 30.46 $ 29.90 $ 28.90 Low 25.56 26.21 25.29 26.00 25.20 Close 27.09 27.43 26.69 26.00 28.85 Book Value 21.31 21.14 20.91 21.11 20.20 Shares outstanding, end of period (in thousands) 7,085 7,060 7,056 7,020 6,280 - -------------------------------------------------------------------------------------------------------------------- Performance Ratios (annualized) Tax-equivalent net interest margin (1) 3.92% 3.85% 3.87% 3.82% 3.67% Return on average assets -- GAAP (4) 0.96% 1.03% 0.59% 0.93% 1.25% Return on average assets -- Core operating 0.97% 1.05% 1.03% 1.12% 1.25% Return on average equity -- GAAP 9.18% 9.72% 5.51% 8.57% 11.04% Return on average equity -- Core operating 9.21% 9.88% 9.65% 10.29% 11.04% Efficiency ratio (5) -- GAAP 64.69% 64.42% 81.78% 70.93% 61.80% Efficiency ratio -- Core operating 64.57% 63.82% 66.02% 64.91% 61.42% Effective tax rate 35.12% 32.45% 29.24% 32.92% 31.49% Dividend payout ratio (basic) 48.98% 42.31% 75.86% 51.00% 38.60% - --------------------------------------------------------------------------------------------------------------------
(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) See Non-GAAP Disclosure Reconciliation (3) Average balances do not reflect borrowings to fund discontinued operations (4) Income from continuing operations divided by assets, excluding assets of discontinued operations (5) 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. 14
Exhibit 99.1 - ------------------------------------------------------------------------------------------------------------------------------------ Selected Quarterly Information First Defiance Financial Corp. (dollars in thousands, except per share data) 4th Qtr 2005 3rd Qtr 2005 2nd Qtr 2005 1st Qtr 2005 4th Qtr 2004 - ------------------------------------------------------------------------------------------------------------------------------------ Loan Portfolio Composition One to four family residential real estate $ 257,847 $ 280,436 $ 291,036 $ 229,887 $ 190,070 Construction 21,173 22,434 24,000 14,861 15,507 Commercial real estate 575,798 524,305 496,599 482,326 415,164 Commercial 170,225 167,990 172,351 160,749 141,643 Consumer finance 55,297 57,018 57,223 51,753 45,513 Home equity and improvement 113,000 111,234 111,291 95,200 90,839 ---------- ---------- ---------- ---------- --------- Total loans 1,193,340 1,163,417 1,152,500 1,034,776 898,736 Less: Loans in process 8,782 8,601 10,372 6,170 6,340 Deferred loan origination fees 1,303 1,250 1,243 1,188 1,233 Allowance for loan loss 13,673 13,624 13,460 12,749 9,956 ---------- ---------- ---------- ---------- --------- Net Loans $1,169,582 $1,139,942 $1,127,425 $1,014,669 $ 881,207 ========== ========== ========== ========== ========= - ------------------------------------------------------------------------------------------------------------------------------------ Allowance for loan loss activity Beginning allowance $ 13,624 $ 13,460 $ 12,749 $ 9,956 $ 9,712 Provision for loan losses 378 368 349 349 304 Reserve from acquisitions -- 865 2,538 -- Reclassification between allowance for loan loss and purchase loan discount on prior quarter acquisition (376) Credit loss charge-offs: One to four family residential real estate 150 32 -- -- -- Commercial real estate 25 134 -- 67 24 Commercial 55 65 104 45 107 Consumer finance 121 74 100 59 37 Home equity and improvement 25 -- -- -- -- ---------- ---------- ---------- ---------- --------- Total charge-offs 376 305 204 171 168 Total recoveries 47 101 77 77 108 ---------- ---------- ---------- ---------- --------- Net charge-offs (recoveries) 329 204 127 94 60 ---------- ---------- ---------- ---------- --------- Ending allowance $ 13,673 $ 13,624 $ 13,460 $ 12,749 $ 9,956 ========== ========== ========== ========== ========= - ------------------------------------------------------------------------------------------------------------------------------------ Credit Quality Non-accrual loans $ 4,952 $ 6,720 $ 4,745 $ 3,142 $ 1,893 Loans over 90 days past due and still accruing -- -- -- -- -- ---------- ---------- ---------- ---------- --------- Total non-performing loans (1) 4,952 6,720 4,745 3,142 1,893 Real estate owned (REO) 404 168 431 488 98 ---------- ---------- ---------- ---------- --------- Total non-performing assets (1) $ 5,356 $ 6,888 $ 5,176 $ 3,630 $ 1,991 ========== ========== ========== ========== ========= Net charge-offs 329 204 127 94 60 Allowance for loan losses / loans 1.16% 1.18% 1.18% 1.24% 1.12% Allowance for loan losses / non-performing assets 255.28% 197.79% 260.05% 351.21% 500.05% Allowance for loan losses / non-performing loans 276.11% 202.74% 283.67% 405.76% 525.94% Non-performing assets / loans plus REO 0.45% 0.60% 0.45% 0.35% 0.22% Non-performing assets / total assets 0.37% 0.49% 0.37% 0.28% 0.18% Net charge-offs / average loans (annualized) 0.11% 0.07% 0.05% 0.04% 0.03% - ------------------------------------------------------------------------------------------------------------------------------------ Deposit Balances Non-interest-bearing demand deposits $ 103,498 $ 92,720 $ 87,172 $ 76,644 $ 62,450 Interest-bearing demand deposits and money market 276,558 262,544 271,118 270,142 258,797 Savings deposits 82,766 88,994 94,391 85,581 52,132 Retail time deposits less than $100,000 408,384 424,607 412,797 356,763 272,098 Retail time deposits greater than $100,000 161,305 139,752 137,558 125,551 102,750 National/Brokered time deposits 36,990 62,440 43,445 35,905 49,474 ---------- ---------- ---------- ---------- --------- Total deposits $1,069,501 $1,071,057 $1,046,481 $ 950,586 $ 797,701 ========== ========== ========== ========== ========= - ------------------------------------------------------------------------------------------------------------------------------------
(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. 15 -----END PRIVACY-ENHANCED MESSAGE-----