10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

For the Quarterly Period Ended March 31, 2015

OR

¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

For the Transition Period from ___________to__________

Commission file number 0-26850

   First Defiance Financial Corp.

(Exact name of registrant as specified in its charter)

Ohio	34-1803915
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification Number)
601 Clinton Street, Defiance, Ohio	43512
(Address of principal executive office)	(Zip Code)

Registrant's telephone number, including area code: (419) 782-5015

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x     No ¨

Indicate by check mark whether the registrant submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x    No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨	Accelerated filer x
Non-accelerated filer ¨	Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date. Common Stock, $.01 Par Value – 9,262,071 shares outstanding at April 30, 2015.

FIRST DEFIANCE FINANCIAL CORP.

INDEX

		Page Number
PART I.-FINANCIAL INFORMATION
Item 1.	Consolidated Condensed Financial Statements (Unaudited):
	Consolidated Condensed Statements of Financial Condition – March 31, 2015 and December 31, 2014	2
	Consolidated Condensed Statements of Income - Three months ended March 31, 2015 and 2014	4
	Consolidated Condensed Statements of Comprehensive Income – Three months ended March 31, 2015 and 2014	5
	Consolidated Condensed Statements of Changes in Stockholders’ Equity – Three months ended March 31, 2015 and 2014	6
	Consolidated Condensed Statements of Cash Flows - Three months ended March 31, 2015 and 2014	7
	Notes to Consolidated Condensed Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	44
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	65
Item 4.	Controls and Procedures	66
PART II-OTHER INFORMATION:
Item 1.	Legal Proceedings	67
Item 1A.	Risk Factors	67
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	67
Item 3.	Defaults upon Senior Securities	67
Item 4.	Mine Safety Disclosures	67
Item 5.	Other Information	67
Item 6.	Exhibits	68
	Signatures	69

1

PART I-FINANCIAL INFORMATION

Item 1. Financial Statements

FIRST DEFIANCE FINANCIAL CORP.

Consolidated Condensed Statements of Financial Condition

(UNAUDITED)

(Amounts in Thousands, except share and per share data)

	March 31, 2015		December 31, 2014
Assets
Cash and cash equivalents:
Cash and amounts due from depository institutions	$	38,472	$	41,936
Federal funds sold		43,000		71,000
		81,472		112,936
Securities:
Available-for-sale, carried at fair value		248,438		239,321
Held-to-maturity, carried at amortized cost (fair value $300 and $308 at March 31, 2015 and December 31, 2014, respectively)		299		313
		248,737		239,634
Loans held for sale		9,544		4,535
Loans receivable, net of allowance of $25,302 at March 31, 2015 and $24,766 at December 31, 2014, respectively		1,659,216		1,622,020
Accrued interest receivable		6,967		6,037
Federal Home Loan Bank stock		13,802		13,802
Bank owned life insurance		47,221		47,013
Premises and equipment		39,952		40,496
Real estate and other assets held for sale		6,392		6,181
Goodwill		61,525		61,525
Core deposit and other intangibles		2,178		2,395
Mortgage servicing rights		8,947		9,012
Other assets		15,368		13,366
Total assets	$	2,201,321	$	2,178,952

(continued)

2

FIRST DEFIANCE FINANCIAL CORP.

Consolidated Condensed Statements of Financial Condition

(UNAUDITED)

(Amounts in Thousands, except share and per share data)

	March 31, 2015			December 31, 2014
Liabilities and stockholders’ equity
Liabilities:
Deposits	$	1,772,693		$	1,760,813
Advances from the Federal Home Loan Bank		31,298			21,544
Subordinated debentures		36,083			36,083
Securities sold under repurchase agreements		60,271			54,759
Advance payments by borrowers		1,199			2,309
Deferred taxes		1,507			1,176
Other liabilities		25,153			22,763
Total liabilities		1,928,204			1,899,447
Stockholders’ equity:
Preferred stock, $.01 par value per share: 37,000 shares authorized; no shares issued		–			–
Preferred stock, $.01 par value per share:
4,963,000 shares authorized; no shares issued		–			–
Common stock, $.01 par value per share:
25,000,000 shares authorized; 12,725,388 and 12,735,313 shares issued and 9,248,040 and 9,234,534 shares outstanding, respectively		127			127
Common stock warrant		-			878
Additional paid-in capital		125,271			136,266
Accumulated other comprehensive income, net of tax of $2,741 and $2,214, respectively		5,089			4,114
Retained earnings		205,300			200,600
Treasury stock, at cost, 3,477,348 and 3,500,779 shares respectively		(62,670	)		(62,480	)
Total stockholders’ equity		273,117			279,505
Total liabilities and stockholders’ equity	$	2,201,321		$	2,178,952

See accompanying notes

3

FIRST DEFIANCE FINANCIAL CORP.

Consolidated Condensed Statements of Income

(UNAUDITED)

(Amounts in Thousands, except share and per share data)

	Three Months Ended
	March 31,
	2015		2014
Interest Income
Loans	$	17,887	$	16,651
Investment securities:
Taxable		913		775
Non-taxable		779		752
Interest-bearing deposits		39		101
FHLB stock dividends		139		195
Total interest income		19,757		18,474
Interest Expense
Deposits		1,272		1,358
FHLB advances and other		110		133
Subordinated debentures		147		146
Securities sold under repurchase agreements		38		41
Total interest expense		1,567		1,678
Net interest income		18,190		16,796
Provision for loan losses		120		103
Net interest income after provision for loan losses		18,070		16,693
Non-interest Income
Service fees and other charges		2,529		2,324
Insurance commission income		3,139		3,030
Mortgage banking income		1,775		1,247
Gain on sale of non-mortgage loans		36		3
Trust income		357		278
Income from Bank Owned Life Insurance		208		219
Other non-interest income		237		225
Total non-interest income		8,281		7,326
Non-interest Expense
Compensation and benefits		8,922		8,472
Occupancy		1,764		1,588
FDIC insurance premium		351		385
Financial institutions tax		481		495
Data processing		1,523		1,365
Amortization of intangibles		217		289
Other non-interest expense		3,639		4,067
Total non-interest expense		16,897		16,661
Income before income taxes		9,454		7,358
Federal income taxes		2,853		2,179
Net Income	$	6,601	$	5,179
Earnings per common share (Note 6)
Basic	$	0.71	$	0.53
Diluted	$	0.69	$	0.51
Dividends declared per share (Note 5)	$	0.175	$	0.15
Average common shares outstanding (Note 6)
Basic		9,234		9,681
Diluted		9,611		10,108

See accompanying notes

4

FIRST DEFIANCE FINANCIAL CORP.

Consolidated Condensed Statements of Comprehensive Income

(UNAUDITED)

(Amounts in Thousands)

	Three Months Ended March 31,
	2015			2014
Net income	$	6,601		$	5,179
Other comprehensive income:
Unrealized gains  on securities available for sale		1,502			1,723
Income tax expense		(527	)		(603	)
Other comprehensive income		975			1,120
Comprehensive income	$	7,576		$	6,299

(1) Amounts are included in gains on sale or call of securities on the Consolidated Condensed Statements of Income. There were no such amounts for the three months ended March 31, 2015 and 2014.

5

FIRST DEFIANCE FINANCIAL CORP.

Consolidated Statement of Changes in Stockholders’ Equity

(UNAUDITED)

(Amounts in Thousands, except share data)

											Accumulated
					Common			Additional			Other								Total
	Preferred		Common		Stock			Paid-In			Comprehensive		Retained			Treasury			Stockholders’
	Stock		Stock		Warrant			Capital			Income		Earnings			Stock			Equity
Balance at January 1, 2015	$	-	$	127	$	878		$	136,266		$	4,114	$	200,600		$	(62,480	)	$	279,505
Net income														6,601						6,601
Other comprehensive income												975								975
Stock option expense									21											21
Warrant repurchase						(878	)		(11,101	)										(11,979	)
38,575 shares issued under stock option plan, with $91 income tax benefit, net of 9,925 repurchased and retired									177					(287	)		833			723
Restricted share activity under stock incentive Plans, including 12,846 shares issued									(100	)							231			131
542 shares issued direct purchases									8								10			18
37,857 shares repurchased																	(1,264	)		(1,264	)
Common stock dividends declared														(1,614	)					(1,614	)
Balance at March 31, 2015	$	-	$	127	$	-		$	125,271		$	5,089	$	205,300		$	(62,670	)	$	273,117
Balance at January 1, 2014	$	-	$	127	$	878		$	136,403		$	545	$	182,290		$	(48,096	)	$	272,147
Net income														5,179						5,179
Other comprehensive income												1,120								1,120
Stock option expense									20											20
7,050 shares issued under stock option plan, with $17 income tax benefit, net of repurchases									(11	)				(19	)		106			76
Restricted share activity under stock incentive Plans, including 5,767 shares issued									(270	)							93			(177	)
78,972 shares repurchased																	(2,039	)		(2,039	)
Common stock dividends declared														(1,449	)					(1,449	)
Balance at March 31, 2014	$	-	$	127	$	878		$	136,142		$	1,665	$	186,001		$	(49,936	)	$	274,877

6

FIRST DEFIANCE FINANCIAL CORP.

Consolidated Condensed Statements of Cash Flows

(UNAUDITED)

(Amounts in Thousands)

	Three Months Ended
	March 31,
	2015			2014
Operating Activities
Net income	$	6,601		$	5,179
Items not requiring (providing) cash
Provision for loan losses		120			103
Depreciation		765			725
Amortization of mortgage servicing rights, net of impairment recoveries		385			299
Amortization of core deposit and other intangible assets		217			289
Net amortization of premiums and discounts on loans and deposits		232			160
Amortization of premiums and discounts on securities		176			93
Change in deferred taxes		(195	)		(129	)
Proceeds from the sale of loans held for sale		42,628			27,698
Originations of loans held for sale		(46,672	)		(28,093	)
Gain from sale of loans		(1,321	)		(644	)
Loss from write-down of property and equipment		426			-
Gain from sale or call of securities		-			-
(Gain) loss on sale / write-down of real estate and other assets held for sale		79			(38	)
Stock option expense		21			20
Restricted stock expense (credit)		131			(177	)
Income from bank owned life insurance		(208	)		(219	)
Changes in:
Accrued interest receivable		(930	)		(344	)
Other assets		(2,002	)		(2,069	)
Other liabilities		2,390			2,489
Net cash provided by operating activities		2,843			5,342
Investing Activities
Proceeds from maturities of held-to-maturity securities		14			8
Proceeds from maturities, calls and pay-downs of available-for-sale securities		6,395			5,496
Proceeds from sale of real estate and other assets held for sale		572			496
Proceeds from the sale of available-for-sale securities		-			1,654
Proceeds from sale of non-mortgage loans		501			8,679
Purchases of available-for-sale securities		(14,187	)		(16,672	)
Purchase of bank owned life insurance		-			(4,000	)
Purchase of portfolio mortgage loans		-			(5,118	)
Proceeds from Federal Home Loan stock redemption		-			5,548
Purchases of premises and equipment, net		(829	)		(507	)
Net (increase)/decrease in loans receivable		(38,693	)		13,058
Net cash provided by  investing activities		(46,227	)		8,642
Financing Activities
Net increase in deposits and advance payments by borrowers		10,770			24,515
Repayment of Federal Home Loan Bank advances		(7,246	)		(242	)
Proceeds from Federal Home Loan Bank advances		17,000			-
Increase (decrease) in securities sold under repurchase agreements		5,512			(2,980	)
Repayment of warrants		(11,979	)		-
Proceeds from exercise of stock options		723			76
Proceeds from treasury stock sales		18			-
Net cash paid for repurchase of common stock		(1,264	)		(2,039	)
Cash dividends paid on common stock		(1,614	)		(1,449	)
Net cash provided by (used in) financing activities		11,920			17,881
Increase in cash and cash equivalents		(31,464	)		31,865
Cash and cash equivalents at beginning of period		112,936			179,318
Cash and cash equivalents at end of period	$	81,472		$	211,183
Supplemental cash flow information:
Interest paid	$	1,577		$	1,662
Income taxes paid	$	-		$	-
Transfers from loans to real estate and other assets held for sale	$	680		$	627

See accompanying notes.

7

FIRST DEFIANCE FINANCIAL CORP.

Notes to Consolidated Condensed Financial Statements (UNAUDITED)

March 31, 2015

1. Basis of Presentation

First Defiance Financial Corp. (“First Defiance” or the “Company”) is a unitary thrift holding company that conducts business through its three wholly owned subsidiaries, First Federal Bank of the Midwest (“First Federal”), First Insurance Group of the Midwest, Inc. (“First Insurance”), and First Defiance Risk Management Inc. (“First Defiance Risk Management”). All significant intercompany transactions and balances are eliminated in consolidation.

First Federal is primarily engaged in attracting deposits from the general public through its offices and using those and other available sources of funds to originate loans primarily in the counties in which its offices are located. First Federal’s traditional banking activities include originating and servicing residential, non-residential real estate, commercial, home improvement and home equity and consumer loans and providing a broad range of depository, trust and wealth management services. First Insurance is an insurance agency that does business in the Defiance, Bryan, Bowling Green, Maumee and Oregon, Ohio areas, offering property and casualty, group health and life insurance products.First Defiance Risk Management is a wholly-owned insurance company subsidiary of the Company to insure the Company and its subsidiaries against certain risks unique to the operations of the Company and for which insurance may not be currently available or economically feasible in today’s insurance marketplace. First Defiance Risk Management pools resources with several other similar insurance company subsidiaries of financial institutions to spread a limited amount of risk among themselves.

The consolidated condensed statement of financial condition at December 31, 2014 has been derived from the audited financial statements at that date, which were included in First Defiance’s Annual Report on Form 10-K.

The accompanying consolidated condensed financial statements as of March 31, 2015 and for the three month periods ended March 31, 2015 and 2014 have been prepared by First Defiance without audit and do not include information or footnotes necessary for the complete presentation of financial condition, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States. These consolidated condensed financial statements should be read in conjunction with the financial statements and notes thereto included in First Defiance's 2014 Annual Report on Form 10-K for the year ended December 31, 2014. However, in the opinion of management, all adjustments, consisting of only normal recurring items, necessary for the fair presentation of the financial statements have been made. The results for the three month period ended March 31, 2015 are not necessarily indicative of the results that may be expected for the entire year.

8

2. Significant Accounting Policies

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Earnings Per Common Share

Basic earnings per common share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. All outstanding unvested share-based payment awards that contain rights to nonforfeitable dividends are considered participating securities for the calculation. Diluted earnings per common share include the dilutive effect of additional potential common shares issuable under stock options, warrants, restricted stock awards and stock grants.

Newly Issued Accounting Standards

In January 2014, the FASB issued ASU 2014-01, "Accounting for Investments in Qualified Affordable Housing Projects." ASU 2014-01 applies to all reporting entities that invest in qualified affordable housing projects through limited liability entities. The pronouncement permits reporting entities to make an accounting policy election to account for these investments using the proportional amortization method if certain conditions exist. The pronouncement also requires disclosure that enables users of its financial statements to understand the nature of these investments. Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance in the income statement as a component of income tax expense (benefit). The pronouncement should be applied retrospectively for all periods presented, effective for annual periods and interim reporting periods within those annual periods, beginning after December 15, 2014. Early adoption is permitted. The Company early adopted ASU 2014-01 in January 2014 and such adoption did not have a material impact on the Company’s Consolidated Financial Statements.

In January 2014, the FASB issued ASU 2014-04, “Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure.” The objective of the amendments in ASU 2014-04 to Topic 310, “Receivables - Troubled Debt Restructurings by Creditors,” is to reduce diversity by clarifying when an in substance repossession or foreclosure occurs, that is, when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan receivable should be derecognized and the real estate property recognized. The amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2014. An entity can elect to adopt the amendments using either a modified retrospective transition method or a prospective transition method. Early adoption is permitted. The Company adopted ASU 2014-04 on January 1, 2015 and such adoption did not have a material impact on the Company’s Consolidated Financial Statements.

9

3. Fair Value

FASB ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability shall not be adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact and (iv) willing to transact.

FASB ASC Topic 820 requires the use of valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert future amounts, such as cash flows or earnings, to a single present amount on a discounted basis. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement cost). Valuation techniques should be consistently applied. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on the best information available. In that regard, FASB ASC Topic 820 established a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

· Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

· Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by a correlation or other means.

· Level 3: Unobservable inputs for determining fair value of assets and liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.

10

Available for sale securities - Securities classified as available for sale are generally reported at fair value utilizing Level 2 inputs where the Company obtains fair value measurements from an independent pricing service that uses matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows and the bonds’ terms and conditions, among other things. Securities in Level 1 include federal agency preferred stock securities and one corporate bond. Securities in Level 2 include U.S. Government agencies, mortgage-backed securities, corporate bonds and municipal securities.

Impaired loans - Fair values for impaired collateral dependent loans are generally based on appraisals obtained from licensed real estate appraisers and in certain circumstances consideration of offers obtained to purchase properties prior to foreclosure.  Appraisals for commercial real estate generally use three methods to derive value: cost, sales or market comparison and income approach.  The cost method bases value on the cost to replace the current property.  Value of market comparison approach evaluates the sales price of similar properties in the same market area.  The income approach considers net operating income generated by the property and an investors required return.  Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available.  Comparable sales adjustments are based on known sales prices of similar type and similar use properties and duration of time that the property has been on the market to sell.  Such adjustments made in the appraisal process are typically significant and result in a Level 3 classification of the inputs for determining fair value.

Real Estate held for sale - Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are then reviewed monthly by members of the asset review committee for valuation changes and are accounted for at lower of cost or fair value less estimated costs to sell. Fair value is commonly based on recent real estate appraisals which may utilize a single valuation approach or a combination of approaches including cost, comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments may be significant and typically result in a Level 3 classification of the inputs for determining fair value.

Appraisals for both collateral-dependent impaired loans and other real estate owned are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company.  Once received, a member of the Company’s asset quality or collections department reviews the assumptions and approaches utilized in the appraisal.  Appraisal values are discounted from 0% to 20% to account for other factors that may impact the value of collateral. In determining the value of impaired collateral dependent loans and other real estate owned, significant unobservable inputs may be used, which include:  physical condition of comparable properties sold, net operating income generated by the property and investor rates of return.

11

Mortgage servicing rights – On a quarterly basis, mortgage servicing rights are evaluated for impairment based upon the fair value of the rights as compared to the carrying amount. If the carrying amount of an individual tranche exceeds fair value, impairment is recorded on that tranche so that the servicing asset is carried at fair value. Fair value is determined at a tranche level based on a model that calculates the present value of estimated future net servicing income. The valuation model utilizes assumptions that market participants would use in estimating future net servicing income and are validated against available market data (Level 2).

Mortgage banking derivative - The fair value of mortgage banking derivatives are evaluated monthly based on derivative valuation models using quoted prices for similar assets adjusted for specific attributes of the commitments and other observable market data at the valuation date (Level 2).

The following table summarizes the financial assets measured at fair value on a recurring basis segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

Assets and Liabilities Measured on a Recurring Basis

March 31, 2015	Level 1 Inputs		Level 2  Inputs		Level 3 Inputs		Total Fair Value
	(In Thousands)
Available for sale securities:
Obligations of U.S. government corporations and agencies	$	-	$	5,001	$	-	$	5,001
Mortgage-backed - residential		-		61,765		-		61,765
REMICs		-		1,830		-		1,830
Collateralized mortgage obligations		-		82,590		-		82,590
Preferred stock		1		-		-		1
Corporate bonds		1,995		4,013		-		6,008
Obligations of state and political subdivisions		-		91,243		-		91,243
Mortgage banking derivative - asset		-		884		-		884
Mortgage banking derivative - liability		-		119		-		119

December 31, 2014	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
	(In Thousands)
Available for sale securities:
Obligations of U.S. Government corporations and agencies	$	-	$	980	$	-	$	980
Mortgage-backed - residential		-		59,856		-		59,856
REMICs		-		1,839		-		1,839
Collateralized mortgage obligations		-		81,121		-		81,121
Preferred stock		1		-		-		1
Corporate bonds		1,989		5,003		-		6,992
Obligations of state and political subdivisions		-		88,532				88,532
Mortgage banking derivative - asset		-		351		-		351
Mortgage banking derivative - liability		-		24		-		24

12

There were no assets measured at fair value on a recurring basis using Level 3 inputs for the three months ended March 31, 2015. The table below presents a reconciliation and income classification of gains and losses for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended March 31, 2014:

Fair Value Measurements Using Significant Unobservable Inputs (Level 3) (In Thousands)
Beginning balance, January 1, 2014	$	582
Total gains or losses (realized/unrealized)
Included in earnings (unrealized)		-
Included in other comprehensive income (presented gross of taxes)		122
Amortization		-
Sales		-
Transfers in and/or out of Level 3		-
Ending balance, March 31, 2014	$	704

The following table summarizes the financial assets measured at fair value on a non-recurring basis segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

Assets and Liabilities Measured on a Non-Recurring Basis

March 31, 2015	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
	(In Thousands)
Impaired loans
1-4 Family Residential Real Estate	$	-	$	-	$	405	$	405
Multi Family Residential		-		-		257		257
Commercial Real Estate		-		-		5,501		5,501
Commercial loans		-		-		141		141
Home Equity and Improvement		-		-		96		96
Total Impaired loans		-		-		6,400		6,400
Mortgage servicing rights		-		935		-		935
Real estate held for sale		-
Residential		-		-		115		115
CRE		-		-		321		321
Total real estate held for sale		-		-		436		436

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December 31, 2014	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
	(In Thousands)
Impaired loans
1-4 Family Residential Real Estate	$	-	$	-	$	419	$	419
Multi Family Residential		-		-		269		269
Commercial Real Estate		-		-		6,665		6,665
Commercial						340		340
Home Equity and Improvement		-		-		98		98
Total impaired loans		-		-		7,791		7,791
Mortgage servicing rights		-		1,034		-		1,034
Real estate held for sale
Residential		-		-		-		-
CRE		-		-		739		739
Total real estate held for sale		-		-		739		739

For Level 3 assets and liabilities measured at fair value on a recurring or nonrecurring basis as of March 31, 2015, the significant unobservable inputs used in the fair value measurements were as follows:

	Fair  Value		Valuation Technique	Unobservable Inputs	Range of Inputs	Weighted Average
				(Dollars in Thousands)
Impaired Loans- Applies to all loan classes	$	6,400	Appraisals which utilize sales comparison, net income and cost approach	Discounts for collection issues and changes in market conditions	10-30%		11%
Real estate held for sale – Applies to all classes	$	436	Appraisals which utilize sales comparison, net income and cost approach	Discounts for changes in market conditions	20-30%		22%

For Level 3 assets and liabilities measured at fair value on a recurring or nonrecurring basis as of December 31, 2014, the significant unobservable inputs used in the fairv alue measurements were as follows:

	Fair  Value		Valuation Technique	Unobservable Inputs	Range of Inputs	Weighted Average
				(Dollars in Thousands)
Impaired Loans- Applies to all loan classes	$	7,791	Appraisals which utilize sales comparison, net income and cost approach	Discounts for collection issues and changes in market conditions	10-30%		11%
Real estate held for sale – Applies to all classes	$	739	Appraisals which utilize sales comparison, net income and cost approach	Discounts for changes in market conditions	20-40%		28%

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Impaired loans, which are measured for impairment using the fair value of the collateral for collateral dependent loans, had a fair value of $6.4 million, with a $14,000 valuation allowance and a fair value of $7.8 million, with a $19,000 valuation allowance at March 31, 2015 and December 31, 2014, respectively. A provision recovery of $621,000 for the three months ended March 31, 2015 and a provision expense of $756,000 for the three months ended March 31, 2014 was included in earnings.

Mortgage servicing rights which are carried at the lower of cost or fair value had a fair value of $935,000 with a valuation allowance of $885,000 and a fair value of $1.0 million with a valuation allowance of $911,000 at March 31, 2015 and December 31, 2014, respectively. A recovery of $26,000 and a charge of $7,000 for the three months ended March 31, 2015 and March 31, 2014, respectively, were included in earnings.

Real estate held for sale is determined using Level 3 inputs which include appraisals and are adjusted for estimated costs to sell. The change in fair value of real estate held for sale and fixed assets transferred to real estate held for sale was $522,000 for the three months ended March 31, 2015, which was recorded directly as an adjustment to current earnings through non-interest expense. No amounts were recorded for the three months ended March 31, 2014.

In accordance with FASB ASC Topic 825, the Fair Value Measurements tables are a comparative condensed consolidated statement of financial condition based on carrying amount and estimated fair values of financial instruments as of March 31, 2015 and December 31, 2014. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of First Defiance.

Much of the information used to arrive at “fair value” is highly subjective and judgmental in nature and therefore the results may not be precise. Subjective factors include, among other things, estimated cash flows, risk characteristics and interest rates, all of which are subject to change. With the exception of investment securities, the Company’s financial instruments are not readily marketable and market prices do not exist. Since negotiated prices for the instruments, which are not readily marketable depend greatly on the motivation of the buyer and seller, the amounts that will actually be realized or paid per settlement or maturity of these instruments could be significantly different.

The carrying amount of cash and cash equivalents, term notes payable and advance payments by borrowers for taxes and insurance, as a result of their short-term nature, is considered to be equal to fair value and are classified as Level 1.

It was not practicable to determine the fair value of Federal Home Loan Bank (“FHLB”) stock due to restrictions placed on its transferability.

The fair value of loans that reprice within 90 days is equal to their carrying amount. For other loans, the estimated fair value is calculated based on discounted cash flow analysis, using interest rates currently being offered for loans with similar terms, resulting in a Level 3 classification. Impaired loans are valued at the lower of cost of fair value as previously described. The allowance for loan losses is considered to be a reasonable adjustment for credit risk. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price. The fair value of loans held for sale is estimated based on binding contracts and quotes from third party investors resulting in a Level 2 classification.

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The fair value of accrued interest receivable is equal to the carrying amounts resulting in a Level 2 or Level 3 classification which is consistent with its underlying value.

The fair value of non-interest bearing deposits are considered equal to the amount payable on demand at the reporting date (i.e. carrying value) and are classified as Level 1. The fair value of savings, NOW and certain money market accounts are equal to their carrying amounts and are a Level 2 classification. Fair values of fixed rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits resulting in a Level 2 classification.

The fair values of securities sold under repurchase agreements are equal to their carrying amounts resulting in a Level 2 classification. The carrying value of subordinated debentures and deposits with fixed maturities is estimated based discounted cash flow analyses based on interest rates currently being offered on instruments with similar characteristics and maturities resulting in a Level 3 classification.

FHLB advances with maturities greater than 90 days are valued based on discounted cash flow analysis, using interest rates currently being quoted for similar characteristics and maturities resulting in a Level 2 classification. The cost or value of any call or put options is based on the estimated cost to settle the option at March 31, 2015.

			Fair Value Measurements at March 31, 2015 (In Thousands)
	Carrying Value		Total		Level 1		Level 2		Level 3
Financial Assets:
Cash and cash equivalents	$	81,472	$	81,472	$	81,472	$	-	$	-
Investment securities		248,737		248,738		1,996		246,742		-
Federal Home Loan Bank Stock		13,802		N/A		N/A		N/A		N/A
Loans, net, including loans held for sale		1,668,760		1,682,215		-		10,151		1,672,064
Accrued interest receivable		6,967		6,967		-		1,375		5,592
Financial Liabilities:
Deposits	$	1,772,693	$	1,775,117	$	370,997	$	1,404,120	$	-
Advances from Federal Home Loan Bank		31,298		31,562		-		31,562		-
Securities sold under repurchase agreements		60,271		60,271		-		60,271		-
Subordinated debentures		36,083		35,788		-		-		35,788

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			Fair Value Measurements at December 31, 2014 (In Thousands)
	Carrying Value		Total		Level 1		Level 2		Level 3
Financial Assets:
Cash and cash equivalents	$	112,936	$	112,936	$	112,936	$	-	$	-
Investment securities		239,634		239,629		1,990		237,639		-
Federal Home Loan Bank Stock		13,802		N/A		N/A		N/A		N/A
Loans, net, including loans held for sale		1,626,555		1,632,507		-		4,741		1,627,766
Accrued interest receivable		6,037		6,037		3		846		5,188
Financial Liabilities:
Deposits	$	1,760,813	$	1,762,733	$	379,552	$	1,383,181	$	-
Advances from Federal Home Loan Bank		21,544		21,772		-		21,772		-
Securities sold under repurchase agreements		54,759		54,759		-		54,759		-
Subordinated debentures		36,083		35,307		-		-		35,307

4. Stock Compensation Plans

First Defiance has established equity based compensation plans for its directors and employees. On March 15, 2010, the Board adopted, and the shareholders approved at the 2010 Annual Shareholders Meeting, the First Defiance Financial Corp. 2010 Equity Incentive Plan (the “2010 Equity Plan”). The 2010 Equity Plan replaces all existing plans. All awards currently outstanding under prior plans will remain in effect in accordance with their respective terms. Any new awards will be made under the 2010 Equity Plan. The 2010 Equity Plan allows for issuance of up to 350,000 common shares through the award of options, stock grants, restricted stock units (“RSU”), stock appreciation rights or other stock-based awards.

As of March 31, 2015, 126,720 options had been granted and remain outstanding at option prices based on the market value of the underlying shares on the date the options were granted. Options granted under all plans vest 20% per year except for the 2009 grant to the Company’s executive officers, which vested 40% in 2011 and then 20% annually. All options expire ten years from the date of grant. Vested options of retirees expire on the earlier of the scheduled expiration date or three months after the retirement date.

In 2014, the Company approved a 2014 STIP and a 2014 LTIP for selected members of management.

Under the 2014 STIP, the participants may earn up to 30% to 45% of their salary for potential payout based on the achievement of certain corporate performance targets during the calendar year. The final amount of benefits under the 2014 STIP were determined as of December 31, 2014 and were paid out in cash in the first quarter of 2015. The participants are required to be employed on the day of payout in order to receive such payment.

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Under the 2014 LTIP, the participants may earn up to 20% to 45% of their salary for potential payout in the form of equity awards based on the achievement of certain corporate performance targets over a three-year period. The Company granted 30,538 RSU’s to the participants in the 2014 LTIP effective January 1, 2014, which represents the maximum target award. The amount of benefit under the 2014 LTIP will be determined individually at the end of the 36 month performance period ending December 31, 2016. The awards will vest 100% of the target award at the end of the performance period ending December 31, 2016. The benefits earned under the 2014 LTIP will be paid out in equity in the first quarter of 2017. The participants are required to be employed on the day of payout in order to receive such payment.

In 2015, the Company approved a 2015 STIP and a 2015 LTIP for selected members of management.

Under the 2015 STIP, the participants may earn up to 30% to 45% of their salary for potential payout based on the achievement of certain corporate performance targets during the calendar year. The final amount of benefits under the 2015 STIP will be determined as of December 31, 2015 and will be paid out in cash in the first quarter of 2016. The participants are required to be employed on the day of payout in order to receive such payment.

Under the 2015 LTIP, the participants may earn up to 20% to 45% of their salary for potential payout in the form of equity awards based on the achievement of certain corporate performance targets over a three-year period. The Company granted 24,757 RSU’s to the participants in the 2015 LTIP effective January 1, 2015, which represents the maximum target award. The amount of benefit under the 2015 LTIP will be determined individually at the end of the 36 month performance period ending December 31, 2017. The awards will vest 100% of the target award at the end of the performance period ending December 31, 2017. The benefits earned under the 2015 LTIP will be paid out in equity in the first quarter of 2018. The participants are required to be employed on the day of payout in order to receive such payment.

The fair value of each option award is estimated on the date of grant using the Black-Scholes model. Expected volatilities are based on historical volatilities of the Company’s common stock. The Company uses historical data to estimate option exercise and post-vesting termination behavior. The expected term of options granted is based on historical data and represents the period of time that options granted are expected to be outstanding, which takes into account that the options are not transferable. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.

The fair value of stock options granted during the three months ended March 31, 2015 was determined at the date of grant using the Black-Scholes stock option-pricing model and the following assumptions:

	Three Months ended
	March 31, 2015	March 31, 2014
Expected average risk-free rate	2.04%	1.64%
Expected average life	10.00 years	7.44 years
Expected volatility	42.00%	44.62%
Expected dividend yield	2.10%	2.17%

The weighted-average fair value of options granted was $13.13 for the three months ended March 31, 2015 and $11.25 for the three months ended March 31, 2014.

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Following is activity under the plans during the three months ended March 31, 2015:

Stock options	Options Outstanding		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value  (in 000’s)
Options outstanding, January 1, 2015		173,720	$	20.80
Forfeited or cancelled		4,750		25.32
Exercised		48,500		21.82
Granted		6,250		32.94
Options outstanding, March 31, 2015		126,720	$	20.84		3.43	$	1,519
Vested or expected to vest at March 31, 2015		126,720	$	20.84		3.43	$	1,519
Exercisable at March 31, 2015		112,070	$	19.70		2.67	$	1,470

As of March 31, 2015, there was $166,000 of total unrecognized compensation costs related to unvested stock options granted under the Company’s equity plans. The cost is expected to be recognized over a weighted-average period of 4.31 years.

At March 31, 2015, 74,545 RSU’s and 5,767 stock grants were outstanding. Compensation expense is recognized over the performance period based on the achievements of targets as established with the plan documents. A total expense of $226,000 was recorded during the three months ended March 31, 2015 compared to a benefit of $45,000 for the same period in 2014. The benefit in the first quarter of 2014 was due to accrual reversals primarily from the 2013 LTIP adjusting for the actual payout in year one as well as adjusting the estimated payouts in year two and three. There was approximately $96,000 included within other liabilities at March 31, 2015 related to the STIP.

	Restricted Stock Units					Stock Grants
				Weighted-Average					Weighted-Average
				Grant Date					Grant Date
Unvested Shares	Shares			Fair Value		Shares			Fair Value
Unvested at January 1, 2015		91,812		$	21.00		5,767		$	25.97
Granted		24,757			32.30		12,845			17.20
Vested		12,846			17.20		(12,846	)		17.20
Forfeited		(29,178	)		19.48		-			-
Unvested at March 31, 2015		74,545		$	25.86		5,767		$	25.97

The maximum amount of compensation expense that may be recorded for the 2015 STIP and the 2013, 2014 and 2015 LTIPs at March 31, 2015 is approximately $3.6 million. However, the estimated expense expected to be recorded as of March 31, 2015 based on the performance measures in the plans, is $1.8 million of which $1.2 million is unrecognized at March 31, 2015 and will be recognized over the remaining performance periods.

5. Dividends on Common Stock

First Defiance declared and paid a $0.175 per common stock dividend in the first quarter of 2015 and declared and paid a $0.15 per common stock dividend in the first quarter of 2014.

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6. Earnings Per Common Share

The following table sets forth the computation of basic and diluted earnings per common share:

	Three months ended March 31,
	2015		2014
	(In Thousands, except per share data)
Numerator for basic and diluted earnings per common share – Net income	$	6,601	$	5,179
Denominator:
Denominator for basic earnings per common share – weighted average common shares		9,234		9,681
Effect of warrants		291		341
Effect of employee stock options		86		86
Denominator for diluted earnings per common share		9,611		10,108
Basic earnings per common share	$	0.71	$	0.53
Diluted earnings per common share	$	0.69	$	0.51

There were 16,750 shares under option granted to employees excluded from the diluted earnings per common share calculation as they were anti-dilutive for the three months ended March 31, 2015. Options to acquire 92,250 shares were excluded from the diluted earnings per common share calculations as they were anti-dilutive for the three months ended March 31, 2014.

7. Investment Securities

The following is a summary of available-for-sale and held-to-maturity securities:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
At March 31, 2015	(In Thousands)
Available-for-Sale Securities:
Obligations of U.S. government corporations and agencies	$	5,000	$	2	$	(1	)	$	5,001
Mortgage-backed securities – residential		60,121		1,644		-			61,765
REMICs		1,776		54		-			1,830
Collateralized mortgage obligations		80,900		1,856		(166	)		82,590
Trust preferred securities and preferred stock		-		1		-			1
Corporate bonds		5,924		89		(5	)		6,008
Obligations of state and political subdivisions		85,991		5,259		(7	)		91,243
Totals	$	239,712	$	8,905	$	(179	)	$	248,438

20

	Amortized  Cost		Gross Unrecognized Gains		Gross Unrecognized Losses			Fair Value
	(In Thousands)
Held-to-Maturity Securities*:
FHLMC certificates	$	18	$	-	$	-		$	18
FNMA certificates		89		2		(2	)		89
GNMA certificates		37		1		-			38
Obligations of state and political subdivisions		155		-		-			155
Totals	$	299	$	3	$	(2	)	$	300

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(In Thousands)
At December 31, 2014
Available-for-sale
Obligations of U.S. government corporations and agencies	$	1,000	$	-	$	(20	)	$	980
Mortgage-backed securities - residential		58,380		1,476		-			59,856
REMICs		1,820		19		-			1,839
Collateralized mortgage obligations		80,252		1,280		(411	)		81,121
Trust preferred stock and preferred stock		-		1		-			1
Corporate bonds		6,913		85		(6	)		6,992
Obligations of state and political subdivisions		83,732		4,827		(27	)		88,532
Total Available-for-Sale	$	232,097	$	7,688	$	(464	)	$	239,321

	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses			Fair Value
	(In Thousands)
Held-to-Maturity*:
FHLMC certificates	$	26	$	-	$	(8	)	$	18
FNMA certificates		93		2		-			95
GNMA certificates		39		1		-			40
Obligations of states and political subdivisions		155		-		-			155
Total Held-to-Maturity	$	313	$	3	$	(8	)	$	308

*      FHLMC, FNMA, and GNMA certificates are residential mortgage-backed securities.

The amortized cost and fair value of the investment securities portfolio at March 31, 2015 are shown below by contractual maturity. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. For purposes of the maturity table, mortgage-backed securities (“MBS”), collateralized mortgage obligations (“CMO”) and REMICs, which are not due at a single maturity date, have not been allocated over the maturity groupings. These securities may mature earlier than their weighted-average contractual maturities because of principal prepayments.

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	Available-for-Sale				Held-to-Maturity
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
	(In Thousands)
Due in one year or less	$	1,008	$	1,016	$	-	$	-
Due after one year through five years		15,250		15,634		155		155
Due after five years through ten years		37,112		39,532		-		-
Due after ten years		43,545		46,071		-		-
MBS/CMO		142,797		146,185		144		145
	$	239,712	$	248,438	$	299	$	300

Investment securities with a carrying amount of $137.9 million at March 31, 2015 were pledged as collateral on public deposits, securities sold under repurchase agreements and Federal Reserve discount window.

As of March 31, 2015, the Company’s investment portfolio consisted of 366 securities, 18 of which were in an unrealized loss position.

The following tables summarize First Defiance’s securities that were in an unrealized loss position at March 31, 2015 and December 31, 2014:

	Duration of Unrealized Loss Position
	Less than 12 Months					12 Months or Longer					Total
			Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Loss			Value		Loss			Value		Loses
	(In Thousands)
At March 31, 2015
Available-for-sale securities:
Obligations of U.S. government corporations and agencies	$	-	$	-		$	999	$	(1	)	$	999	$	(1	)
Collateralized mortgage obligations		1,584		(89	)		9,292		(77	)		10,876		(166	)
Obligations of state and political subdivisions		1,127		(1	)		422		(6	)		1,549		(7	)
Corporate bonds		-		-			994		(5	)		994		(5	)
Held to maturity securities:
FNMA certificates		26		(2	)		1		-			27		(2	)
Total temporarily impaired securities	$	2,737	$	(92	)	$	11,708	$	(89	)	$	14,445	$	(181	)

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	Duration of Unrealized Loss Position
	Less than 12 Months					12 Months or Longer					Total
			Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Loss			Value		Loss			Value		Loses
	(In Thousands)
At December 31, 2014
Available-for-sale securities:
Obligations of U.S. government corporations and agencies	$	-	$	-		$	980	$	(20	)	$	980	$	(20	)
Collateralized mortgage obligations		4,466		(138	)		14,633		(273	)		19,099		(411	)
Corporate bonds		-		-			994		(6	)		994		(6	)
Obligations of state and political subdivisions		1,194		(8	)		1,499		(19	)		2,693		(27	)
Held to maturity securities:
FHLMC certificates		18		(8	)		-		-			18		(8	)
Total temporarily impaired securities	$	5,678	$	(154	)	$	18,106	$	(318	)	$	23,784	$	(472	)

With the exception of corporate bonds, the above securities all have fixed interest rates, and all securities have defined maturities. Their fair value is sensitive to movements in market interest rates. First Defiance has the ability and intent to hold these investments for a time necessary to recover the amortized cost without impacting its liquidity position and it is not more than likely that the Company will be required to sell the investments before anticipated recovery.

There were no realized gains from the sales of investment securities in the first quarter of 2015 or in the first quarter of 2014.

Management evaluates securities for other-than-temporary impairment (“OTTI”) at least quarterly, and more frequently when economic or market conditions warrant such an evaluation. The investment portfolio is evaluated for OTTI by segregating the portfolio into two general segments. Investment securities classified as available-for-sale or held-to-maturity are generally evaluated for OTTI under FASB ASC Topic 320. Certain collateralized debt obligations (“CDOs”) are evaluated for OTTI under FASB ASC Topic 325, Investment – Other.

When OTTI occurs under either model, the amount of the OTTI recognized in earnings depends on whether an entity intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current period credit loss. If an entity intends to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current period credit loss, the OTTI shall be recognized in earnings equal to the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date. If an entity does not intend to sell the security and it is not more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis less any current period loss, the OTTI shall be separated into the amount representing the credit loss and the amount related to all other factors. The amount of OTTI related to the credit loss is determined based on the present value of cash flows expected to be collected compared to the book value of the security and is recognized in earnings. The amount of OTTI related to other factors shall be recognized in other comprehensive income, net of applicable taxes. The previous amortized cost basis less the OTTI recognized in earnings shall become the new amortized cost basis of the investment.

In the first quarter of 2015 and 2014, management determined there was no OTTI.

23

The Company holds three CDOs at March 31, 2015 and December 31, 2014 with a zero value.

The amount of OTTI recognized in accumulated other comprehensive income (“AOCI”) was zero at March 31, 2015 and December 31, 2014.

The proceeds from the sales and calls of securities and the associated gains and losses are listed below:

	Three Months Ended March 31,
	2015		2014
	(In Thousands)
Proceeds	$	-	$	1,654
Gross realized gains		-		-
Gross realized losses		-		-

8. Loans

Loans receivable consist of the following:

	March 31, 2015			December 31, 2014
	(In Thousands)
Real Estate:
Secured by 1-4 family residential	$	203,558		$	206,437
Secured by multi-family residential		159,133			156,530
Secured by commercial real estate		717,343			683,958
Construction		125,144			112,385
		1,205,178			1,159,310
Other Loans:
Commercial		395,378			399,730
Home equity and improvement		110,755			111,813
Consumer Finance		14,967			15,466
		521,100			527,009
Total loans		1,726,278			1,686,319
Deduct:
Undisbursed loan funds		(40,833	)		(38,653	)
Net deferred loan origination fees and costs		(927	)		(880	)
Allowance for loan loss		(25,302	)		(24,766	)
Totals	$	1,659,216		$	1,622,020

Loan segments have been identified by evaluating the portfolio based on collateral and credit risk characteristics.

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The following table discloses allowance for loan loss activity for the quarter ended March 31, 2015 and 2014 by portfolio segment (In Thousands):

Quarter Ended March 31, 2015	1-4 Family Residential Real Estate			Multi- Family Residential Real Estate		Commercial Real Estate			Construction		Commercial			Home Equity and Improvement			Consumer Finance			Total
Beginning Allowance	$	2,494		$	2,453	$	11,268		$	221	$	6,509		$	1,704		$	117		$	24,766
Charge-Offs		(78	)		0		(155	)		0		(2	)		(43	)		(3	)		(281	)
Recoveries		19			0		597			0		40			29			12			697
Provisions		48			101		(26	)		82		219			(270	)		(34	)		120
Ending Allowance	$	2,483		$	2,554	$	11,684		$	303	$	6,766		$	1,420		$	92		$	25,302

Quarter Ended March 31, 2014	1-4 Family Residential Real Estate			Multi- Family Residential Real Estate		Commercial Real Estate			Construction		Commercial			Home Equity and Improvement			Consumer Finance			Total
Beginning Allowance	$	2,847		$	2,508	$	12,000		$	134	$	5,678		$	1,635		$	148		$	24,950
Charge-Offs		(228	)		0		(228	)		0		(525	)		(184	)		(11	)		(1,176	)
Recoveries		56			3		722			0		76			31			18			906
Provisions		(36	)		104		(507	)		4		381			165			(8	)		103
Ending Allowance	$	2,639		$	2,615	$	11,987		$	138	$	5,610		$	1,647		$	147		$	24,783

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The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of March 31, 2015 (In Thousands):

	1-4 Family		Multi Family
	Residential		Residential		Commercial						Home Equity		Consumer
	Real Estate		Real Estate		Real Estate		Construction		Commercial		& Improvement		Finance		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	260	$	4	$	317	$	-	$	30	$	24	$	5	$	640
Collectively evaluated for impairment		2,223		2,550		11,367		303		6,736		1,396		87		24,662
Acquired with deteriorated credit quality		-		-		-		-		-		-		-		-
Total ending allowance balance	$	2,483	$	2,554	$	11,684	$	303	$	6,766	$	1,420	$	92	$	25,302
Loans:
Loans individually evaluated for impairment	$	10,291	$	2,445	$	19,759	$	150	$	5,181	$	2,253	$	39	$	40,118
Loans collectively evaluated for impairment		193,661		156,807		699,773		84,159		391,540		108,968		14,911		1,649,819
Loans acquired with deteriorated credit quality		1		-		163		-		21		-		-		185
Total ending loans balance	$	203,953	$	159,252	$	719,695	$	84,309	$	396,742	$	111,221	$	14,950	$	1,690,122

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The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of December 31, 2014 (In Thousands):

	1-4 Family		Multi Family
	Residential		Residential		Commercial						Home Equity		Consumer
	Real Estate		Real Estate		Real Estate		Construction		Commercial		& Improvement		Finance		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	216	$	-	$	1,003	$	-	$	30	$	24	$	-	$	1,273
Collectively evaluated for impairment		2,278		2,453		10,265		221		6,479		1,680		117		23,493
Acquired with deteriorated credit quality		-		-		-		-		-		-		-		-
Total ending allowance balance	$	2,494	$	2,453	$	11,268	$	221	$	6,509	$	1,704	$	117	$	24,766
Loans:
Loans individually evaluated for impairment	$	10,281	$	2,482	$	28,117	$	150	$	5,739	$	2,242	$	34	$	49,045
Loans collectively evaluated for impairment		196,582		154,178		657,677		73,572		395,270		110,040		15,417		1,602,736
Loans acquired with deteriorated credit quality		1		-		163		-		22		-		-		186
Total ending loans balance	$	206,864	$	156,660	$	685,957	$	73,722	$	401,031	$	112,282	$	15,451	$	1,651,967

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The following table presents the average balance, interest income recognized and cash basis income recognized on impaired loans by class of loans (In Thousands):

	Three Months Ended March 31, 2015
	Average Balance		Interest Income Recognized		Cash Basis Income Recognized
Residential Owner Occupied	$	5,992	$	68	$	68
Residential Non Owner Occupied		4,347		41		40
Total Residential Real Estate		10,339		109		108
Multi-Family		2,463		8		8
CRE Owner Occupied		6,513		37		39
CRE Non Owner Occupied		10,187		133		135
Agriculture Land		760		7		13
Other CRE		2,441		10		9
Total Commercial Real Estate		19,901		187		196
Construction		150		2		2
Commercial Working Capital		1,866		13		13
Commercial Other		3,839		13		18
Total Commercial		5,705		26		31
Home Equity and Home Improvement		2,202		20		20
Consumer		43		-		-
Total Impaired Loans	$	40,803	$	352	$	365

28

The following table presents the average balance, interest income recognized and cash basis income recognized on impaired loans by class of loans (In Thousands):

	Three Months Ended March 31, 2014
	Average Balance		Interest Income Recognized		Cash Basis Income Recognized
Residential Owner Occupied	$	6,329	$	85	$	83
Residential Non Owner Occupied		4,084		38		38
Total Residential Real Estate		10,413		123		121
Multi-Family		388		1		1
CRE Owner Occupied		9,837		36		35
CRE Non Owner Occupied		19,355		204		204
Agriculture Land		687		3		2
Other CRE		1,862		5		5
Total Commercial Real Estate		31,741		248		246
Construction		261		3		5
Commercial Working Capital		2,924		3		3
Commercial Other		4,959		2		2
Total Commercial		7,883		5		5
Home Equity and Home Improvement		2,439		25		25
Consumer		57		1		1
Total Impaired Loans	$	53,182	$	406	$	404

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The following table presents loans individually evaluated for impairment by class of loans (In Thousands):

	March 31, 2015						December 31, 2014
	Unpaid Principal Balance*		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Principal Balance*		Recorded Investment		Allowance for Loan Losses Allocated
With no allowance recorded:
Residential Owner Occupied	$	3,763	$	3,655	$	-	$	3,967	$	3,859	$	-
Residential Non Owner Occupied		3,631		3,624		-		3,763		3,670		-
Total 1-4 Family Residential Real Estate		7,394		7,279		-		7,730		7,529		-
Multi-Family Residential Real Estate		455		307		-		2,627		2,482		-
CRE Owner Occupied		4,197		3,842		-		7,109		6,481		-
CRE Non Owner Occupied		3,226		2,878		-		4,106		3,759		-
Agriculture Land		621		621		-		213		208		-
Other CRE		2,384		2,056		-		2,923		2,378		-
Total Commercial Real Estate		10,428		9,397		-		14,351		12,826		-
Construction		150		150		-		150		150		-
Commercial Working Capital		826		827		-		1,155		1,157		-
Commercial Other		3,544		3,384		-		3,966		3,663		-
Total Commercial		4,370		4,211		-		5,121		4,820		-
Home Equity and Home Improvement		2,205		2,154		-		2,192		2,140		-
Consumer Finance		34		34		-		35		34		-
Total loans with no allowance recorded	$	25,036	$	23,532	$	-	$	32,206	$	29,981	$	-
With an allowance recorded:
Residential Owner Occupied	$	2,305	$	2,306	$	247	$	2,112	$	2,114	$	204
Residential Non Owner Occupied		701		706		13		636		638		12
Total 1-4 Family Residential Real Estate		3,006		3,012		260		2,748		2,752		216
Multi-Family Residential Real Estate		2,141		2,138		4		-		-		-
CRE Owner Occupied		3,025		2,617		152		2,667		2,257		148
CRE Non Owner Occupied		7,324		7,280		152		13,020		12,606		842
Agriculture Land		125		113		3		333		320		10
Other CRE		596		352		10		137		108		3
Total Commercial Real Estate		11,070		10,362		317		16,157		15,291		1,003
Construction		-		-		-		-		-		-
Commercial Working Capital		703		704		22		649		650		21
Commercial Other		263		266		8		264		269		9
Total Commercial		966		970		30		913		919		30
Home Equity and Home Improvement		98		99		24		101		102		24
Consumer Finance		5		5		5		-		-		-
Total loans with an allowance recorded	$	17,286	$	16,586	$	640	$	19,919	$	19,064	$	1,273

* Presented gross of charge offs

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The following table presents the current balance of the aggregate amounts of non-performing assets, comprised of non-performing loans and real estate owned on the dates indicated:

	March 31, 2015		December 31, 2014
	(In Thousands)
Non-accrual loans	$	18,703	$	24,130
Loans over 90 days past due and still accruing		-		-
Total non-performing loans		18,703		24,130
Real estate and other assets held for sale		6,392		6,181
Total non-performing assets	$	25,095	$	30,311
Troubled debt restructuring, still accruing	$	19,616	$	24,686

The following table presents the aging of the recorded investment in past due and non accrual loans as of March 31, 2015 by class of loans (In Thousands):

	Current		30-59 days		60-89 days		90+ days		Total  Past Due		Total Non Accrual
Residential Owner Occupied	$	138,476	$	118	$	242	$	537	$	897	$	1,690
Residential Non Owner Occupied		63,262		378		362		578		1,318		1,548
Total 1-4 Family Residential Real Estate		201,738		496		604		1,115		2,215		3,238
Multi-Family Residential Real Estate		156,869		-		2,138		245		2,383		2,403
CRE Owner Occupied		313,484		1,188		1,513		1,572		4,273		4,377
CRE Non Owner Occupied		262,278		110		-		662		772		1,887
Agriculture Land		98,781		164		-		12		176		462
Other Commercial Real Estate		39,524		-		-		407		407		2,267
Total Commercial Real Estate		714,067		1,462		1,513		2,653		5,628		8,993
Construction		84,309		-		-		-		-		-
Commercial Working Capital		139,101		10		69		340		419		355
Commercial Other		255,899		233		23		1,067		1,323		3,163
Total Commercial		395,000		243		92		1,407		1,742		3,518
Consumer Finance		14,934		16		-		-		16		16
Home Equity/Home Improvement		111,060		75		56		30		161		534
Total Loans	$	1,677,977	$	2,292	$	4,403	$	5,450	$	12,145	$	18,702

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The following table presents the aging of the recorded investment in past due and non accrual loans as of December 31, 2014 by class of loans (In Thousands):

	Current		30-59 days		60-89 days		90+ days		Total  Past Due		Total Non Accrual
Residential Owner Occupied	$	141,597	$	39	$	1,079	$	365	$	1,483	$	1,702
Residential Non Owner Occupied		62,991		110		105		578		793		1,625
Total 1-4 Family Residential Real Estate		204,588		149		1,184		943		2,276		3,327
Multi-Family Residential Real Estate		156,413		247		-		-		247		2,546
CRE Owner Occupied		299,500		163		1,566		1,753		3,482		7,004
CRE Non Owner Occupied		243,341		119		416		1,308		1,843		2,582
Agriculture Land		93,529		-		14		-		14		686
Other Commercial Real Estate		43,835		155		-		258		413		2,359
Total Commercial Real Estate		680,205		437		1,996		3,319		5,752		12,631
Construction		73,722		-		-		-		-		-
Commercial Working Capital		135,009		-		-		951		951		1,103
Commercial Other		262,982		67		10		2,012		2,089		3,897
Total Commercial		397,991		67		10		2,963		3,040		5,000
Consumer Finance		15,326		68		57		-		125		12
Home Equity/Home Improvement		110,940		1,236		-		106		1,342		619
Total Loans	$	1,639,185	$	2,204	$	3,247	$	7,331	$	12,782	$	24,135

Troubled Debt Restructurings

As of March 31, 2015 and December 31, 2014, the Company had a recorded investment in troubled debt restructurings (“TDRs”) of $26.9 million and $33.0 million, respectively. The Company allocated $515,000 and $1.1 million of specific reserves to those loans at March 31, 2015 and December 31, 2014, and has committed to lend additional amounts totaling up to $14,000 and $69,000 at March 31, 2015 and December 31, 2014, respectively.

The Company offers various types of concessions when modifying a loan, however, forgiveness of principal is rarely granted. Each TDR is uniquely designed to meet the specific needs of the borrower. Commercial and industrial loans modified in a TDR often involve temporary interest-only payments, term extensions, and converting revolving credit lines to term loans. Additional collateral or an additional guarantor is often requested when granting a concession. Commercial mortgage loans modified in a TDR often involve temporary interest-only payments, re-amortization of remaining debt in order to lower payments, and sometimes reducing the interest rate lower than the current market rate. Residential mortgage loans modified in a TDR are comprised of loans where monthly payments are lowered, either through interest rate reductions or principal only payments for a period of time, to accommodate the borrowers’ financial needs, interest is capitalized into principal, or the term and amortization are extended. Home equity modifications are made infrequently and usually involve providing an interest rate that is lower than the borrower would be able to obtain due to credit issues. All retail loans where the borrower is in bankruptcy are classified as TDRs regardless of whether or not a concession is made.

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Of the loans modified in a TDR, $7.3 million are on non-accrual status and partial charge-offs have in some cases been taken against the outstanding balance. Loans modified as a TDR may have the financial effect of increasing the allowance associated with the loan. If the loan is determined to be collateral dependent, the estimated fair value of the collateral, less any selling costs is used to determine if there is a need for a specific allowance or charge-off. If the loan is determined to be cash flow dependent, the allowance is measured based on the present value of expected future cash flows discounted at the loan’s pre-modification effective interest rate.

The following table presents loans by class modified as troubled debt restructurings that occurred during the three month period ending March 31, 2015 and March 31, 2014:

	Loans Modified as a TDR for the Three Months Ended March 31, 2015 ($ in thousands)			Loans Modified as a TDR for the Three Months Ended March 31, 2014 ($ in thousands)
Troubled Debt Restructurings	Number of Loans	Recorded Investment (as of period end)		Number of Loans	Recorded Investment (as of period end)
1-4 Family Owner Occupied	3	$	228	9	$	763
1-4 Family Non Owner Occupied	4		68	0		-
CRE Owner Occupied	0		-	0		-
CRE Non Owner Occupied	0		-	1		361
Agriculture Land	0		-	0		-
Other CRE	0		-	0		-
Commercial Working Capital	0		-	2		321
Commercial Other	0		-	0		-
Home Equity and Improvement	3		59	3		60
Consumer Finance	5		10	3		11
Total	15	$	365	18	$	1,516

The loans described above increased the ALLL by $64,000 in the three month period ending March 31, 2015 and decreased the ALLL by $70,000 in the three month period ending March 31, 2014.

Of the 2015 modifications, 6 were made TDRs due to the fact that the borrower has been in bankruptcy, 1 was made TDR due to extending the amortization, 5 were made TDRs due to advancing funds to a substandard credit, and 3 were made to refinance current debt for payment relief.

The following table presents loans by class modified as TDRs for which there was a payment default within twelve months following the modification during the quarters ending March 31, 2015 and March 31, 2014:

33

	Three Months Ended March 31, 2015 ($ in thousands)			Three Months Ended March 31, 2014 ($ in thousands)
Troubled Debt Restructurings That Subsequently Defaulted	Number of Loans	Recorded Investment (as of period end)		Number of Loans	Recorded Investment (as of period end)
1-4 Family Owner Occupied	1	$	126	0	$	-
1-4 Family Non Owner Occupied	1		104	0		-
CRE Owner Occupied	0		-	0		-
CRE Non Owner Occupied	2		387	0		-
Agriculture Land	0		-	0		-
Other CRE	0		-	0		-
Commercial Working Capital or Other	1		120	0		-
Commercial Other	0		-	0		-
Home Equity and Improvement	0		-	0		-
Consumer Finance	0		-	0		-
Total	5	$	737	0	$	-

The TDRs that subsequently defaulted described above had no affect on the allowance for loan losses for the three month periods ending March 31, 2015 or 2014.

The terms of certain other loans were modified during the period ending March 31, 2015 that did not meet the definition of a TDR. The modification of these loans involved a modification of the terms of a loan to borrowers who were not experiencing financial difficulties. A total of 41 loans were modified under this definition during the three month period ended March 31, 2015.

In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed on the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification.

Credit Quality Indicators

Loans are categorized into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. Loans are analyzed individually by classifying the loans as to credit risk. This analysis includes all non-homogeneous loans, such as commercial and commercial real estate loans and certain homogenous mortgage, home equity and consumer loans. This analysis is performed on a quarterly basis. First Defiance uses the following definitions for risk ratings:

Special Mention. Loans classified as special mention have a potential weakness that deserves management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution's credit position at some future date.

Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

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Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Not Graded. Loans classified as not graded are generally smaller balance residential real estate, home equity and consumer installment loans which are originated primarily by using an automated underwriting system. These loans are monitored based on their delinquency status and are evaluated individually only if they are seriously delinquent.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans. As of March 31, 2015, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows (In Thousands):

Class	Pass		Special Mention		Substandard		Doubtful		Not Graded		Total
1-4 Family Owner Occupied	$	3,740	$	128	$	2,745	$	-	$	132,761	$	139,374
1-4 Family Non Owner Occupied		52,352		2,554		4,760		-		4,913		64,579
Total 1-4 Family Real Estate		56,092		2,682		7,505		-		137,674		203,953
Multi-Family Residential Real Estate		155,041		216		3,095		-		900		159,252
CRE Owner Occupied		289,959		18,886		7,862		-		1,050		317,757
CRE Non Owner Occupied		254,234		3,728		5,068		-		20		263,050
Agriculture Land		96,190		1,759		1,008		-		-		98,957
Other CRE		35,867		62		3,455		-		547		39,931
Total Commercial Real Estate		676,250		24,435		17,393		-		1,617		719,695
Construction		72,608		-		150		-		11,551		84,309
Commercial Working Capital		131,327		7,096		1,097		-		-		139,520
Commercial Other		246,539		6,144		4,539		-		-		257,222
Total Commercial		377,866		13,240		5,636		-		-		396,742
Home Equity and Home Improvement		-		-		617		-		110,604		111,221
Consumer Finance		-		-		36		-		14,914		14,950
Total Loans	$	1,337,857	$	40,573	$	34,432	$	-	$	277,260	$	1,690,122

35

As of December 31, 2014, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows (In Thousands):

Class	Pass		Special Mention		Substandard		Doubtful		Not Graded		Total
1-4 Family Owner Occupied	$	4,230	$	131	$	3,048	$	365	$	135,306	$	143,080
1-4 Family Non Owner Occupied		51,327		2,404		4,872		7		5,174		63,784
Total 1-4 Family Real Estate		55,557		2,535		7,920		372		140,480		206,864
Multi-Family Residential Real Estate		152,290		220		3,236		-		914		156,660
CRE Owner Occupied		273,406		18,448		9,953		-		1,175		302,982
CRE Non Owner Occupied		224,073		7,898		13,186		-		27		245,184
Agriculture Land		90,875		1,849		819		-		-		93,543
Other CRE		40,147		63		3,466		-		572		44,248
Total Commercial Real Estate		628,501		28,258		27,424		-		1,774		685,957
Construction		62,355		-		150		-		11,217		73,722
Commercial Working Capital		128,229		6,287		1,444		-		-		135,960
Commercial Other		253,576		6,504		4,991		-		-		265,071
Total Commercial		381,805		12,791		6,435		-		-		401,031
Home Equity and Home Improvement		-		-		1,647		106		110,529		112,282
Consumer Finance		-		-		125		-		15,326		15,451
Total Loans	$	1,280,508	$	43,804	$	46,937	$	478	$	280,240	$	1,651,967

Foreclosure Proceedings

Consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure totaled $28,000 as of March 31, 2015.

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9. Mortgage Banking

Net revenues from the sales and servicing of mortgage loans consisted of the following:

	Three Months Ended  March 31,
	2015			2014
	(In Thousands)
Gain from sale of mortgage loans	$	1,285		$	641
Mortgage loans servicing revenue (expense):
Mortgage loans servicing revenue		875			905
Amortization of mortgage servicing rights		(411	)		(292	)
Mortgage servicing rights valuation adjustments		26			(7	)
		490			606
Net revenue from sale and servicing of mortgage loans	$	1,775		$	1,247

The unpaid principal balance of residential mortgage loans serviced for third parties was $1.34 billion at March 31, 2015 and $1.35 billion at December 31, 2014.

Activity for capitalized mortgage servicing rights and the related valuation allowance follows for the three months ended March 31, 2015 and 2014:

	March 31,  2015			March 31, 2014
	(In Thousands)
Mortgage servicing assets:
Balance at beginning of period	$	9,923		$	10,133
Loans sold, servicing retained		320			207
Amortization		(411	)		(292	)
Carrying value before valuation allowance at end of period		9,832			10,048
Valuation allowance:
Balance at beginning of period		(911	)		(1,027	)
Impairment (expense) recovery		26			(7	)
Balance at end of period		(885	)		(1,034	)
Net carrying value of MSRs at end of period	$	8,947		$	9,014
Fair value of MSRs at end of period	$	9,180		$	9,628

Amortization of mortgage servicing rights is computed based on payments and payoffs of the related mortgage loans serviced. Estimates of future amortization expense are not easily estimable.

The Company established an accrual for secondary market buy-back losses that resulted in a reversal of $58,000 in the first quarter of 2015 mainly due to no actual losses being recorded in the first quarter of 2015. In the first quarter of 2014, the Company accrued $92,000 which was mostly offset by reversing $67,000 of accrued expenses related to the Freddie Mac post-foreclosure review that began in the third quarter of 2013 and was reversed in 2014 with no losses resulting.

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10. Deposits

A summary of deposit balances is as follows (in thousands):

	March 31, 2015		December 31, 2014
	(In Thousands)
Non-interest-bearing checking accounts	$	370,997	$	379,552
Interest-bearing checking and money market accounts		737,533		727,729
Savings deposits		215,590		203,673
Retail certificates of deposit less than $250,000		422,886		422,907
Retail certificates of deposit greater than $250,000		25,687		26,952
	$	1,772,693	$	1,760,813

11. Borrowings

First Defiance’s debt, FHLB advances and junior subordinated debentures owed to unconsolidated subsidiary trusts are comprised of the following:

	March 31, 2015		December 31, 2014
	(In Thousands)
FHLB Advances:
Single maturity fixed rate advances	$	17,000	$	-
Putable advances		5,000		12,000
Amortizable mortgage advances		9,298		9,544
Total	$	31,298	$	21,544
Junior subordinated debentures owed to unconsolidated subsidiary trusts	$	36,083	$	36,083

The putable advance can be put back to the Company at the option of the FHLB on a quarterly basis. A $5.0 million putable advance with a weighted average rate of 2.35% was not yet callable by the FHLB at March 31, 2015. The call date for this advance is June 12, 2015 and the maturity date is March 12, 2018. Putable advances are callable at the option of the FHLB on a quarterly basis.

In March 2007, the Company sponsored an affiliated trust, First Defiance Statutory Trust II (Trust Affiliate II) that issued $15 million of Guaranteed Capital Trust Securities (Trust Preferred Securities). In connection with this transaction, the Company issued $15.5 million of Junior Subordinated Deferrable Interest Debentures (Subordinated Debentures) to Trust Affiliate II. The Company formed Trust Affiliate II for the purpose of issuing Trust Preferred Securities to third-party investors and investing the proceeds from the sale of these capital securities solely in Subordinated Debentures of the Company. The Subordinated Debentures held by Trust Affiliate II are the sole assets of that trust. The Company is not considered the primary beneficiary of this Trust (variable interest entity), therefore the trust is not consolidated in the Company’s financial statements, but rather the subordinated debentures are shown as a liability.Distributions on the Trust Preferred Securities issued by Trust Affiliate II are payable quarterly at a variable rate equal to the three-month LIBOR rate plus 1.5%. The Coupon rate payable on the Trust Preferred Securities issued by Trust Affiliate II was 1.77% as of March 31, 2015 and 1.74% as of December 31, 2014.

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The Trust Preferred Securities issued by Trust Affiliate II are subject to mandatory redemption, in whole or part, upon repayment of the Subordinated Debentures. The Company has entered into an agreement that fully and unconditionally guarantees the Trust Preferred Securities subject to the terms of the guarantee. The Trust Preferred Securities and Subordinated Debentures mature on June 15, 2037, but can be redeemed at the Company’s option at any time now.

The Company also sponsored an affiliated trust, First Defiance Statutory Trust I (Trust Affiliate I), that issued $20 million of Trust Preferred Securities in 2005. In connection with this transaction, the Company issued $20.6 million of Subordinated Debentures to Trust Affiliate I. Trust Affiliate I was formed for the purpose of issuing Trust Preferred Securities to third-party investors and investing the proceeds from the sale of these capital securities solely in Subordinated Debentures of the Company. The Junior Debentures held by Trust Affiliate I are the sole assets of the trust. The Company is not considered the primary beneficiary of this Trust (variable interest entity), therefore the trust is not consolidated in the Company’s financial statements, but rather the subordinated debentures are shown as a liability.Distributions on the Trust Preferred Securities issued by Trust Affiliate I are payable quarterly at a variable rate equal to the three-month LIBOR rate plus 1.38%. The Coupon rate payable on the Trust Preferred Securities issued by Trust Affiliate I was 1.65% and 1.62% on March 31, 2015 and December 31, 2014 respectively.

The Trust Preferred Securities issued by Trust Affiliate I are subject to mandatory redemption, in whole or in part, upon repayment of the Subordinated Debentures. The Company has entered into an agreement that fully and unconditionally guarantees the Trust Preferred Securities subject to the terms of the guarantee. The Trust Preferred Securities and Subordinated Debentures mature on December 15, 2035, but can be redeemed at the Company’s option at any time now.

The subordinated debentures may be included in Tier 1 capital (with certain limitations applicable) under current regulatory guidelines and interpretations.

Interest on both issues of Trust Preferred Securities may be deferred for a period of up to five years at the option of the issuer.

12. Commitments, Guarantees and Contingent Liabilities

Loan commitments are made to accommodate the financial needs of First Federal’s customers; however, there are no long-term, fixed-rate loan commitments that result in market risk. Standby letters of credit commit the Company to make payments on behalf of customers when certain specified future events occur. They primarily are issued to facilitate customers’ trade transactions.

Both arrangements have credit risk, essentially the same as that involved in extending loans to customers, and are subject to the Company’s normal credit policies. Collateral (e.g., securities, receivables, inventory and equipment) is obtained based on Management’s credit assessment of the customer.

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The Company’s maximum obligation to extend credit for loan commitments (unfunded loans and unused lines of credit) and standby letters of credit outstanding as of the periods stated below were as follows (In Thousands):

	March 31, 2015				December 31, 2014
	Fixed Rate		Variable Rate		Fixed Rate		Variable Rate
Commitments to make loans	$	43,984	$	61,046	$	37,546	$	69,232
Unused lines of credit		14,492		308,145		20,385		307,449
Standby letters of credit		-		17,694		-		17,886
Total	$	58,476	$	386,885	$	57,931	$	394,567

Commitments to make loans are generally made for periods of 60 days or less.

In addition to the above commitments, First Defiance had commitments to sell $29.3 million and $11.6 million of loans to Freddie Mac, Fannie Mae, Federal Home Loan Bank of Cincinnati or BB&T Mortgage at March 31, 2015 and December 31, 2014, respectively.

13. Income Taxes

The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax in the state of Indiana. The Company is no longer subject to examination by taxing authorities for years before 2010. The Company currently operates primarily in the states of Ohio and Michigan, which tax financial institutions based on their equity rather than their income.

14. Derivative Financial Instruments

Commitments to fund certain mortgage loans (interest rate locks) to be sold into the secondary market and forward commitments for the future delivery of mortgage loans to third party investors are considered derivatives. It is the Company’s practice to enter into forward commitments for the future delivery of residential mortgage loans when interest rate lock commitments are entered into in order to economically hedge the effect of changes in interest rates resulting from its commitments to fund the loans. These mortgage banking derivatives are not designated in hedge relationships. First Federal had approximately $21.3 million and $7.4 million of interest rate lock commitments at March 31, 2015 and December 31, 2014, respectively. There were $29.3 million and $11.6 million of forward commitments for the future delivery of residential mortgage loans at March 31, 2015 and December 31, 2014, respectively.

The fair value of these mortgage banking derivatives are reflected by a derivative asset. The table below provides data about the carrying values of these derivative instruments:

March 31, 2015

December 31, 2014

Assets

(Liabilities)

Assets

(Liabilities)

Derivative

Derivative

Carrying

Carrying

Net Carrying

Carrying

Carrying

Net Carrying

Value

Value

Value

Value

Value

Value

(In Thousands)

Derivatives not designated as hedging instruments

Mortgage Banking Derivatives

$

884

$

119

$

765

$

351

$

24

$

327

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The table below provides data about the amount of gains and losses recognized in income on derivative instruments not designated as hedging instruments:

	Three Months Ended March 31,
	2015		2014
	(In Thousands)
Derivatives not designated as hedging instruments
Mortgage Banking Derivatives – Gain (Loss)	$	438	$	50

The above amounts are included in mortgage banking income with gain on sale of mortgage loans.

Note 15 - Other Comprehensive Income (Loss)

The before and after tax amounts allocated to each component of other comprehensive income (loss) are presented in the table below. Reclassification adjustments related to securities available for sale are included in gains on sale or call of securities in the accompanying consolidated condensed statements of income.

	Before Tax Amount		Tax Expense (Benefit)		Net of Tax Amount
	(In Thousands)
Three months ended March 31, 2015:
Securities available for sale and transferred securities:
Change in net unrealized gain/loss during the period	$	1,502	$	527	$	975
Reclassification adjustment for net gains included in net income		-		-		-
Total other comprehensive loss	$	1,502	$	527	$	975
Three months ended March 31, 2014:
Securities available for sale and transferred securities:
Change in net unrealized gain/loss during the period	$	1,723	$	603	$	1,120
Reclassification adjustment for net gains included in net income		-		-		-
Total other comprehensive loss	$	1,723	$	603	$	1,120

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Activity in accumulated other comprehensive income (loss), net of tax, was as follows:

						Accumulated
	Securities		Post-			Other
	Available		retirement			Comprehensive
	For Sale		Benefit			Income
	(In Thousands)
Balance January 1, 2015	$	4,697	$	(583	)	$	4,114
Other comprehensive income before reclassifications		975		-			975
Amounts reclassified from accumulated other comprehensive income		-		-			-
Net other comprehensive income during period		975		-			975
Balance March 31, 2015	$	5,672	$	(583	)	$	5,089
Balance January 1, 2014	$	906	$	(361	)	$	545
Other comprehensive income before reclassifications		1,120		-			1,120
Amounts reclassified from accumulated other comprehensive income		-		-			-
Net other comprehensive income during period		1,120		-			1,120
Balance March 31, 2014	$	2,026	$	(361	)	$	1,665

Note 16 – Affordable Housing Projects Tax Credit Partnership

The Company makes certain equity investments in various limited partnerships that sponsor affordable housing projects utilizing the Low Income Housing Tax Credit (“LIHTC”) pursuant to Section 42 of the Internal Revenue Code. The purpose of these investments is to achieve a satisfactory return on capital, to facilitate the sale of affordable housing product offerings, and to assist in achieving goals associated with the Community Reinvestment Act. The primary activities of the limited partnerships include the identification, development, and operation of multi-family housing that is leased to qualifying residential tenants. Generally, these types of investments are funded through a combination of debt and equity.

The Company is a limited partner in each LIHTC Partnership. A separate unrelated third party is the general partner. Each limited partnership is managed by the general partner, who exercises full control over the affairs of the limited partnership. The general partner has all the rights, powers and authority granted or permitted to be granted to a general partner of a limited partnership. Duties entrusted to the general partner of each limited partnership include, but are not limited to: investment in operating companies, company expenditures, investment of excess funds, borrowing funds, employment of agents, disposition of fund property, prepayment and refinancing of liabilities, votes and consents, contract authority, disbursement of funds, accounting methods, tax elections, bank accounts, insurance, litigation, cash reserve, and use of working capital reserve funds. Except for limited rights granted to consent to certain transactions, the limited partner(s) may not participate in the operation, management, or control of the limited partnership’s business, transact any business in the limited partnership’s name or have any power to sign documents for or otherwise bind the limited partnership. In addition, the general partner may only be removed by the limited partner(s) in the event the general partner fails to comply with the terms of the agreement or is negligent in performing its duties.

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The general partner of each limited partnership has both the power to direct the activities which most significantly affect the performance of each partnership and the obligation to absorb losses or the right to receive benefits that could be significant to the entities. Therefore, the Company has determined that it is not the primary beneficiary of any LIHTC partnership. In January of 2014, the FASB issued ASU 2014-01 “Accounting for Investments in Qualified Affordable Housing Projects.” The pronouncement permitted reporting entities to make an accounting policy election to account for these investments using the proportional amortization method if certain conditions exist. Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received, and will recognize the net investment performance in the income statement as a component of income tax expense (benefit). The Company elected to early adopt ASU 2014-01 in January 2014. All of the Company’s investments are accounted for under the proportional amortization method, as there were no investments held prior to January of 2014. As of March 31, 2015 and December 31, 2014 the Company had $4.6 million and $4.6 million in qualified investments recorded in other assets and $3.0 million and $3.0 million in unfunded commitments recorded in other liabilities, respectively.

Unfunded Commitments

As of March 31, 2015, the expected payments for unfunded affordable housing commitments were as follows:

(dollars in thousands)	Amount
2015	$	1,368
2016		612
2017		160
2018		414
2019		93
Thereafter		312
Total Unfunded Commitments	$	2,959

The following table presents tax credits and other tax benefits recognized and amortization expense related to affordable housing for the three months ended March 31, 2015 and 2014.

	Three Months Ended March 31,
(dollars in thousands)	2015		2014
Proportional Amortization Method
Tax credits and other tax benefits recognized	$	118	$	0
Amortization expense in federal income taxes		89		0

There were no impairment losses of LIHTC investments for the three months ended March 31, 2015 and 2014.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Information

Certain statements contained in this quarterly report are not historical facts, including but not limited to statements that can be identified by the use of forward-looking terminology such as “may”, “will”, “expect”, “anticipate”, or “continue” or the negative thereof or other variations thereon or comparable terminology are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21B of the Securities Exchange Act of 1934, as amended. Actual results could differ materially from those indicated in such statements due to risks, uncertainties and changes with respect to a variety of market and other factors. The Company assumes no obligation to update any forward-looking statements.

General

First Defiance is a unitary thrift holding company that conducts business through its wholly owned subsidiaries, First Federal, First Insurance and First Defiance Risk Management. First Federal is a federally chartered stock savings bank that provides financial services to communities through 33 full service banking centers in communities based in northwest Ohio, northeast Indiana, and southeastern Michigan. First Federal operates one loan production office in central Ohio. First Federal provides a broad range of financial services including checking accounts, savings accounts, certificates of deposit, real estate mortgage loans, commercial loans, consumer loans, home equity loans and trust and wealth management services through its extensive branch network. First Insurance sells a variety of property and casualty, group health and life, and individual health and life insurance products. Insurance products are sold through First Insurance’s offices in Defiance, Bryan, Bowling Green, Maumee and Oregon, Ohio areas. First Defiance Risk Management is a wholly-owned insurance company subsidiary of the Company that insures the Company and its subsidiaries against certain risks unique to the operations of the Company and for which insurance may not be currently available or economically feasible in today’s insurance marketplace. First Defiance Risk Management pools resources with several other similar insurance company subsidiaries of financial institutions to spread a limited amount of risk among themselves.

Impact of Legislation - Over the last several years, Congress and the U.S. Department of the Treasury have enacted legislation and taken actions to address the disruptions in the financial system, declines in the housing market, and the overall regulation of financial institutions and the financial system. In this regard, the 2010 Dodd-Frank Act, includes provisions affecting large and small financial institutions alike, including several provisions that profoundly affect the regulation of community banks, thrifts, and bank and thrift holding companies, such as First Defiance. The Dodd-Frank Act relaxed rules regarding interstate branching, allows financial institutions to pay interest on business checking accounts, changed the scope of federal deposit insurance coverage, imposed new capital requirements on bank and thrift holding companies, and imposed limits on debit card interchange fees charged by issuer banks (commonly known as the Durbin Amendment).

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The Dodd-Frank Act also established the CFPB as an independent bureau within the Federal Reserve, which has broad authority to regulate consumer financial products and services and entities offering such products and services, including banks.

The CFPB has indicated that mortgage lending is an area of supervisory focus and that it will concentrate its examination and rulemaking efforts on the variety of mortgage-related topics required under the Dodd-Frank Act, including steering consumers to less-favorable products, discrimination, abusive or unfair lending practices, predatory lending, origination disclosures, minimum mortgage underwriting standards, mortgage loan originator compensation, and servicing practices. The CFPB recently published numerous final regulations impacting the mortgage industry, including rules related to ability-to-pay, mortgage servicing, and mortgage loan originator compensation and more regulations are anticipated. First Defiance cannot predict the content of the final CFPB and other federal agency regulations or the impact they might have on First Defiance’s financial results. The CFPB’s authority over mortgage lending, and its authority to change regulations adopted in the past by other regulators, or to rescind or ignore past regulatory guidance, could increase First Defiance’s compliance costs and litigation exposure.

Volcker Rules - On December 10, 2013, the Board of Governors of the Federal Reserve System, the OCC, the FDIC, the Securities and Exchange Commission, and the Commodity Futures Trading Commission (“Regulators”) adopted the final version of the Volcker Rule (“Final Volcker Rule”). The Final Volcker Rule restricts United States banks from making certain kinds of speculative investments that do not benefit their customers. The Final Volcker Rule’s purpose is to put in place, as mandated under Section 619 of the Dodd-Frank Act, regulations to help avoid the financial crisis that occurred during the recent past. The Final Volcker Rule is intended to effectively reduce risks posed to banking entities by proprietary trading activities and investments in or relationships with covered funds while permitting banking entities to continue to provide client-oriented financial services that are critical to capital generation and liquid markets.

On January 14, 2014, the Regulators issued an interim final rule (“Interim Final Volcker Rule”) regarding the treatment of certain collateralized debt obligations backed by trust preferred securities (“TruPS-backed CDOs”) under the Final Volcker Rule implementing Section 619 of the Dodd-Frank Act. The Interim Final Volcker Rule, which does not technically amend the Final Volcker Rule but will operate as a “companion rule” to the Final Volcker Rule, specifies that the Final Volcker Rule’s covered fund restrictions do not apply to the ownership by a banking entity of an interest in, or sponsorship of, any issuer of TruPS-backed CDOs if certain conditions are met. Contemporaneously with the Regulators release of the Interim Final Volcker Rule, the Regulators issued a non-exclusive list of issuers of TruPS-backed CDOs that meet the requirements of the Interim Final Volcker Rule. The Interim Final Volcker Rule provides that a banking entity “may rely” on this list.

First Defiance’s management team continues to actively monitor the implementation of the Dodd-Frank Act and the regulations promulgated thereunder and assess its probable impact on the business, financial condition, and results of operations of First Defiance. However, the ultimate effect of the Dodd-Frank Act on the financial services industry in general, and First Defiance in particular, continues to be uncertain.

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New Capital Rules - The federal banking regulators have adopted risk-based capital guidelines for financial institutions and their holding companies, designed to absorb losses. The guidelines provide a systematic analytical framework, which makes regulatory capital requirements sensitive to differences in risk profiles among banking organizations, takes off-balance sheet exposures expressly into account in evaluating capital adequacy and minimizes disincentives to holding liquid, low-risk assets. Capital levels as measured by these standards are also used to categorize financial institutions for purposes of certain prompt corrective action regulatory provisions.

Prior to January 1, 2015, the guidelines applicable to First Defiance and First Federal included a minimum for the ratio of total capital to risk-weighted assets of 8%, with at least half of the ratio composed of common shareholders’ equity, minority interests in certain equity accounts of consolidated subsidiaries and a limited amount of qualifying preferred stock and qualified trust preferred securities, less goodwill and certain other intangible assets (known as “Tier 1” risk-based capital). The guidelines also provided for a minimum ratio of Tier 1 capital to average assets, or “leverage ratio,” of 3% for savings and loan holding companies that meet certain criteria, including having the highest regulatory rating, and 4% for all other savings and loan holding companies.

The risk-based capital guidelines adopted by the federal banking agencies are based on the “International Convergence of Capital Measurement and Capital Standard” (Basel I), published by the Basel Committee on Banking Supervision (the “Basel Committee”) in 1988. In 2004, the Basel Committee published a new capital adequacy framework (Basel II) for large, internationally active banking organizations and in December 2010 and January 2011, the Basel Committee issued an update to Basel II (“Basel III”). The Basel Committee frameworks did not become applicable to financial institutions supervised in the United States until adopted into United States law or regulations. Although the United States banking regulators imposed some of the Basel II and Basel III rules on financial institutions with $250 billion or more in assets or $10 billion of on-balance sheet foreign exposure, it was not until July 2013 that the United States banking regulators issued final (or, in the case of the FDIC, interim final) new capital rules applicable to smaller banking organizations which also implement certain of the provisions of the Dodd-Frank Act (the “Basel III Capital Rules”). The new minimum capital requirements became effective on January 1, 2015, whereas a new capital conservation buffer and deductions from common equity capital phase in from January 1, 2016, through January 1, 2019, and most deductions from common equity tier 1 capital will phase in from January 1, 2015, through January 1, 2019.

The new rules include (a) a new common equity tier 1 capital ratio of at least 4.5 percent, (b) a Tier 1 capital ratio of at least 6.0 percent, rather than the former 4.0 percent, (c) a minimum total capital ratio that remains at 8.0 percent, and (d) a minimum leverage ratio of 4 percent.

Common equity for the common equity tier 1 capital ratio includes common stock (plus related surplus) and retained earnings, plus limited amounts of minority interests in the form of common stock, less the majority of certain regulatory deductions.

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Tier 1 capital includes common equity as defined for the common equity tier 1 capital ratio, plus certain non-cumulative preferred stock and related surplus, cumulative preferred stock and related surplus and trust preferred securities that have been grandfathered (but which are not permitted going forward), and limited amounts of minority interests in the form of additional Tier 1 capital instruments, less certain deductions.

Tier 2 capital, which can be included in the total capital ratio, includes certain capital instruments (such as subordinated debt) and limited amounts of the allowance for loan and lease losses, subject to new eligibility criteria, less applicable deductions.

The deductions from common equity tier 1 capital include goodwill and other intangibles, certain deferred tax assets, mortgage-servicing assets above certain levels, gains on sale in connection with a securitization, investments in a banking organization’s own capital instruments and investments in the capital of unconsolidated financial institutions (above certain levels). The deductions phase in from 2015 through 2019.

Under the guidelines, capital is compared to the relative risk related to the balance sheet. To derive the risk included in the balance sheet, one of several risk weights is applied to different balance sheet and off-balance sheet assets, primarily based on the relative credit risk of the counterparty. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Some of the risk weightings have been changed effective January 1, 2015.

The new rules also place restrictions on the payment of capital distributions, including dividends, and certain discretionary bonus payments to executive officers if the company does not hold a capital conservation buffer of greater than 2.5 percent composed of common equity tier 1 capital above its minimum risk-based capital requirements, or if its eligible retained income is negative in that quarter and its capital conservation buffer ratio was less than 2.5 percent at the beginning of the quarter. The capital conservation buffer phases in starting on January 1, 2016, at .625 percent. The implementation of Basel III did not have a material impact on First Defiance’s or First Federal’s capital ratios.

Business Strategy - First Defiance’s primary objective is to be a high performing community banking organization, well regarded in its market areas. First Defiance accomplishes this through emphasis on local decision making and empowering its employees with tools and knowledge to serve its customers’ needs. First Defiance believes in a “Customer First” philosophy that is strengthened by its Trusted Advisor initiative. First Defiance also has a tagline of “Better Together” as an indication of its commitment to local, responsive, personalized service. First Defiance believes this strategy results in greater customer loyalty and profitability through core relationships. First Defiance is focused on diversification of revenue sources and increased market penetration in areas where the growth potential exists for a balance between acquisition and organic growth. The primary elements of First Defiance’s business strategy are commercial banking, consumer banking, including the origination and sale of single family residential loans, enhancement of fee income, wealth management and insurance sales, each united by a strong customer service culture throughout the organization.

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Commercial and Commercial Real Estate Lending - Commercial and commercial real estate lending have been an ongoing focus and a major component of First Federal’s success. First Federal provides primarily commercial real estate and commercial business loans with an emphasis on owner occupied commercial real estate and commercial business lending with a focus on the deposit balances that accompany these relationships. First Federal’s client base tends to be small to middle market customers with annual gross revenues generally between $1 million and $50 million. First Federal’s focus is also on securing multiple guarantors in addition to collateral where possible. These customers require First Federal to have a high degree of knowledge and understanding of their business in order to provide them with solutions to their financial needs. First Federal’s Customer First philosophy and culture complements this need of its clients. First Federal believes this personal service model differentiates First Federal from its competitors, particularly the larger regional institutions. First Federal offers a wide variety of products to support commercial clients including remote deposit capture and other cash management services. First Federal also believes that the small business customer is a strong market for First Federal. First Federal participates in many of the Small Business Administration lending programs and implemented a new program in 2014 targeting the small business customer. Maintaining a diversified portfolio with an emphasis on monitoring industry concentrations and reacting to changes in the credit characteristics of industries is an ongoing focus.

Consumer Banking - First Federal offers customers a full range of deposit and investment products including demand, checking, money market, certificates of deposits, Certificate of Deposit Account Registry Service (“CDARS”) and savings accounts. First Federal offers a full range of investment products through the wealth management department and a wide variety of consumer loan products, including residential mortgage loans, home equity loans, and installment loans. First Federal also offers online banking services, which include mobile banking, online bill pay along with debit cards.

Fee Income Development - Generation of fee income and the diversification of revenue sources are accomplished through the mortgage banking operation, insurance subsidiary and the wealth management department as First Defiance seeks to reduce reliance on retail transaction fee income.

Deposit Growth - First Federal’s focus has been to grow core deposits with an emphasis on total relationship banking with both our retail and commercial customers. First Federal has initiated a pricing strategy that considers the whole relationship of the customer. First Federal will continue to focus on increasing its market share in the communities it serves by providing quality products with extraordinary customer service, business development strategies and branch expansion. First Federal will look to grow its footprint in areas believed to further complement its overall market share and complement its strategy of being a high performing community bank.

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Asset Quality - Maintaining a strong credit culture is of the utmost importance to First Federal. First Federal has maintained a strong credit approval and review process that has allowed the Company to maintain a credit quality standard that balances the return with the risks of industry concentrations and loan types. First Federal is primarily a collateral lender with an emphasis on cash flow performance, while obtaining additional support from personal guarantees and secondary sources of repayment. First Federal has directed its attention on loan types and markets that it knows well and in which it has historically been successful. First Federal strives to have loan relationships that are well diversified in both size and industry, and monitor the overall trends in the portfolio to maintain its industry and loan type concentration targets. First Federal maintains a problem loan remediation process that focuses on detection and resolution. First Federal maintains a strong process of internal control that subjects the loan portfolio to periodic internal reviews as well as independent third party loan review.

Expansion Opportunities - First Defiance believes it is well positioned to take advantage of acquisitions or other business opportunities in its market areas. First Defiance believes it has a track record of successfully accomplishing both acquisitions and de novo branching in its market area. This track record puts the Company in a solid position to enter or expand its business. First Defiance has successfully integrated acquired institutions in the past. First Defiance will continue to be disciplined as well as opportunistic in its approach to future acquisitions and de novo branching with a focus on its primary geographic market area, which it knows well, and has been competing in for a long period of time as well as surrounding market areas.

Investments - First Defiance invests in U.S. Treasury and federal government agency obligations, obligations of municipal and other political subdivisions, mortgage-backed securities which are issued by federal agencies, corporate bonds, and collateralized mortgage obligations ("CMOs") and real estate mortgage investment conduits ("REMICs"). Management determines the appropriate classification of all such securities at the time of purchase in accordance with FASB ASC Topic 320.

Securities are classified as held-to-maturity when First Defiance has the positive intent and ability to hold the security to maturity. Held-to-maturity securities are stated at amortized cost and had a recorded value of $299,000 at March 31, 2015. Securities not classified as held-to-maturity are classified as available-for-sale, which are stated at fair value and had a recorded value of $248.4 million at March 31, 2015. The available-for-sale portfolio consists of obligations of U.S. Government corporations and agencies ($5.0 million), certain municipal obligations ($91.2 million), CMOs/REMICs ($84.4 million), corporate bonds ($6.0 million), mortgage backed securities ($61.8 million).

In accordance with ASC Topic 320, declines in the fair value of held-to-maturity and available-for-sale securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses to the extent the impairment is related to credit losses. The amount of the impairment related to other factors is recognized in other comprehensive income.

Lending - In order to properly assess the collateral dependent loans included in its loan portfolio, the Company has established policies regarding the monitoring of the collateral underlying such loans. The Company requires an appraisal that is less than one year old for all new collateral dependent real estate loans, and all renewed collateral dependent real estate loans where significant new money is extended. The appraisal process is handled by the Credit Department, which selects the appraiser and orders the appraisal. First Defiance’s loan policy prohibits the account officer from talking or communicating with the appraiser to insure that the appraiser is not influenced by the account officer in any way in making their determination of value.

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First Federal generally does not require updated appraisals for performing loans unless significant new money is requested by the borrower.

When a collateral dependent loan is downgraded to classified status, First Federal reviews the most current appraisal on file and if necessary, based on First Federal’s assessment of the appraisal, such as age, market, etc, First Federal will discount this amount to a more appropriate current value based on inputs from lenders and realtors. This amount may then be discounted further by First Federal’s estimation of the carrying and selling costs. In most instances, if the appraisal is more than twelve to fifteen months old, we may require a new appraisal. Finally, First Federal assesses whether there is any collateral short fall, taking into consideration guarantor support and liquidity, and determines if a charge off is necessary.

When a collateral dependent loan moves to non-performing status, First Federal generally gets a new third party appraisal and charges the loan down appropriately based upon the new appraisal and an estimate of costs to liquidate the collateral. All properties that are moved into the Other Real Estate Owned (“OREO”) category are supported by current appraisals, and the OREO is carried at the lower of cost or fair value, which is determined based on appraised value less First Federal’s estimate of the liquidation costs.

First Federal does not adjust any appraisals upward without written documentation of this valuation change from the appraiser. When setting reserves and charge offs on classified loans, appraisal values may be discounted downward based upon First Federal’s experience with liquidating similar properties.

All loans over 90 days past due and/or on non-accrual are classified as non-performing loans. Non-performing status automatically occurs in the month in which the 90 day delinquency occurs.

As stated above, once a collateral dependent loan is identified as non-performing, First Federal generally gets an appraisal.

Appraisals are received within approximately 60 days after they are requested. The First Federal Loan Loss Reserve Committee reviews the amount of each new appraisal and makes any necessary charge off decisions at its meeting prior to the end of each quarter.

Any partially charged-off collateral dependent loans are considered non-performing, and as such, would need to show an extended period of time with satisfactory payment performance as well as cash flow coverage capability supported by current financial statements before First Federal will consider an upgrade to performing status. First Federal may consider moving the loan to accruing status after approximately six months of satisfactory payment performance.

For loans where First Federal determines that an updated appraisal is not necessary, other means are used to verify the value of the real estate, such as recent sales of similar properties on which First Federal had loans as well as calls to appraisers, brokers, realtors and investors. First Federal monitors and tracks its loan to value quarterly to determine accuracy and any necessary charge offs. Based on these results, changes may occur in the processes used.

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Loan modifications constitute a Troubled Debt Restructuring (“TDR”) if First Federal for economic or legal reasons related to the borrower’s financial difficulties grants a concession to the borrower that it would not otherwise consider. For loans that are considered TDRs, First Federal either computes the present value of expected future cash flows discounted at the original loan’s effective interest rate or it may measure impairment based on the fair value of the collateral. For those loans measured for impairment utilizing the present value of future cash flows method, any discount is carried as a reserve in the allowance for loan and lease losses. For those loans measured for impairment utilizing the fair value of the collateral, any shortfall is charged off.

Earnings - The profitability of First Defiance is primarily dependent on its net interest income and non-interest income. Net interest income is the difference between interest income on interest-earning assets, principally loans and securities, and interest expense on interest-bearing deposits, FHLB advances, and other borrowings. The Company’s non-interest income is mainly derived from service fees and other charges, mortgage banking income, and insurance commissions. First Defiance's earnings also depend on the provision for loan losses and non-interest expenses, such as employee compensation and benefits, occupancy and equipment expense, deposit insurance premiums, and miscellaneous other expenses, as well as federal income tax expense.

Changes in Financial Condition

At March 31, 2015, First Defiance's total assets, deposits and stockholders' equity amounted to $2.20 billion, $1.77 billion and $273.1 million, respectively, compared to $2.18 billion, $1.76 billion and $279.5 million, respectively, at December 31, 2014.

Net loans receivable (excluding loans held for sale) increased $37.2 million to $1.66 billion. The variance in loans receivable between March 31, 2015 and December 31, 2014 include increases in commercial real estate loans (up $36.0 million) and construction loans (up $10.6 million). These increases were partially offset by decreases in commercial loans (down $4.3 million), residential real estate loans (down $2.8 million), home equity loans (down $1.1 million) and consumer loans (down $500,000).

The investment securities portfolio increased $9.1 million to $248.7 million at March 31, 2015 from $239.6 million at December 31, 2014. The increase is the result of $14.2 million of securities being purchased during the first three months of 2015, somewhat offset by $1.0 million of securities maturing or being called in the period, principal pay downs of $5.4 million in CMOs and mortgage-backed securities. There was an unrealized gain in the investment portfolio of $8.7 million at March 31, 2015 compared to an unrealized gain of $7.2 million at December 31, 2014.

Deposits increased from $1.76 billion at December 31, 2014 to $1.77 billion as of March 31, 2015. Non-interest bearing demand deposits decreased $8.6 million to $371.0 million and retail time deposits decreased $1.3 million to $448.6 million. These decreases were mostly offset by increases in interest-bearing demand deposits and money market accounts of $9.8 million to $737.5 million and savings accounts of $11.9 million to $215.6 million.

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Stockholders’ equity decreased from $279.5 million at December 31, 2014 to $273.1 million at March 31, 2015. The decrease in stockholders’ equity was the result of the $12.0 million cost of repurchasing the warrant issued to the U.S Treasury under the TARP Capital Purchase Progam, $1.6 million of common stock dividends being paid in the first quarter of 2015 and $1.3 million in repurchased common stock. These were partially offset by recording net income of $6.6 million, an increase in other comprehensive income of $975,000 and a $723,000 increase due to stock option exercises.

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Average Balances, Net Interest Income and Yields Earned and Rates Paid

The following table presents for the periods indicated the total dollar amount of interest from average interest-earning assets and the resultant yields, as well as the interest expense on average interest-bearing liabilities, expressed both in thousands of dollars and rates, and the net interest margin. The table reports interest income from tax-exempt loans and investment on a tax-equivalent basis. All average balances are based upon daily balances (dollars in thousands).

	Three Months Ended March 31,
	2015							2014
	Average				Yield/			Average				Yield/
	Balance		Interest(1)		Rate(2)			Balance		Interest(1)		Rate(2)
Interest-earning assets:
Loans receivable	$	1,647,059	$	17,932		4.42	%	$	1,544,902	$	16,672		4.38	%
Securities		241,023		2,111		3.67			202,275		1,932		3.93
Interest bearing deposits		56,579		39		0.28			172,666		101		0.24
FHLB stock		13,802		139		4.08			17,302		195		4.57
Total interest-earning assets		1,958,463		20,221		4.20			1,937,145		18,900		3.96
Non-interest-earning assets		221,113							209,224
Total assets	$	2,179,576						$	2,146,369
Interest-bearing liabilities:
Deposits	$	1,394,262	$	1,272		0.37	%	$	1,399,951	$	1,358		0.39	%
FHLB advances and other		21,490		110		2.08			22,363		133		2.41
Subordinated debentures		36,129		147		1.65			36,134		146		1.64
Securities sold under repurchase agreements		53,869		38		0.29			52,588		41		0.32
Total interest-bearing liabilities		1,505,750		1,567		0.42			1,511,036		1,678		0.45
Non-interest bearing deposits		366,121		-					341,286		-
Total including non-interest bearing demand deposits		1,871,871		1,567		0.34			1,852,322		1,678		0.37
Other non-interest-bearing liabilities		27,788							20,302
Total liabilities		1,899,659							1,872,624
Stockholders' equity		279,917							273,745
Total liabilities and stock- holders' equity	$	2,179,576						$	2,146,369
Net interest income; interest rate spread			$	18,654		3.78	%			$	17,222		3.51	%
Net interest margin (3)						3.88	%						3.61	%
Average interest-earning assets to average interest-bearing liabilities						130	%						128	%

(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.

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Results of Operations

Three Months Ended March 31, 2015 and 2014

On a consolidated basis, First Defiance’s net income for the quarter ended March 31, 2015 was $6.6 million compared to net income of $5.2 million for the comparable period in 2014. On a per share basis, basic and diluted earnings per common share for the three months ended March 31, 2015 were $0.71 and $0.69, respectively, compared to basic and diluted earnings per common share of $0.53 and $0.51, respectively, for the quarter ended March 31, 2014. The first quarter 2014 results were negatively impacted by $511,000 ($786,000 before tax), or $0.05 per diluted common share, for costs related to the termination of the merger with First Community Bank.

Net Interest Income

First Defiance’s net interest income is determined by its interest rate spread (i.e. the difference between the yields on its interest-earning assets and the rates paid on its interest-bearing liabilities) and the relative amounts of interest-earning assets and interest-bearing liabilities.

Net interest income was $18.2 million for the quarter ended March 31, 2015, up from $16.8 million for the same period in 2014. The tax-equivalent net interest margin was 3.88% for the quarter ended March 31, 2015, an increase from 3.61% for the same period in 2014. The increase in margin between the 2014 and 2015 first quarters was due to an increase in interest-earning asset yields, which increased to 4.20% for the quarter ended March 31, 2015, up 24 basis points from 3.96% for the same period in 2014. The cost of interest-bearing liabilities between the two periods decreased 3 basis points to 0.42% in the first quarter of 2015 from 0.45% in the same period in 2014. Solid loan growth in the first quarter improved the earning asset mix and yield, increasing the net interest margin. Management continues to analyze and look for additional opportunities to maintain its margin, as well as other alternatives to minimize the impact of the sustained low rate environment.

Total interest income increased $1.3 million to $19.8 million for the quarter ended March 31, 2015 from $18.5 million for the quarter ended March 31, 2014. An increase in the loan portfolio yield to 4.42% was partially offset by a decrease in investment interest income caused by a drop in yields, which declined to 3.67% at March 31, 2015. Despite the drop in yields, interest income from investments increased to $1.7 million for the quarter ended March 31, 2015 compared to $1.5 million for the same period in 2014 due to increased volumes. Income from loans increased to $17.9 million for the quarter ended March 31, 2015 compared to $16.7 million for the same period in 2014 due to $37.7 million of loan growth as well as a recovery of approximately $264,000 of non-accrual interest as a result of pay-offs and loans being put back on accrual status.

Interest expense decreased by $111,000 in the first quarter of 2015 compared to the same period in 2014, to $1.6 million from $1.7 million. This decrease was due to a 3 basis point decline in the average cost of interest-bearing liabilities in the first quarter of 2015 from the continued low rate environment resulting in slight decreases in rate on all the interest-bearing liability categories. Interest expense related to interest-bearing deposits was $1.3 million in the first quarter of 2015 compared to $1.4 million for the same period in 2014. Interest expense recognized by the Company related to subordinated debentures was $147,000 in the first quarter of 2015 compared to $146,000 for the same period in 2014. Expenses on FHLB advances and securities sold under repurchase agreements were $110,000 and $38,000 respectively in the first quarter of 2015 compared to $133,000 and $41,000 respectively for the same period in 2014.

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Allowance for Loan Losses

The allowance for loan losses represents management’s assessment of the estimated probable credit losses in the loan portfolio at each balance sheet date. Management analyzes the adequacy of the allowance for loan losses regularly through reviews of the loan portfolio. Consideration is given to economic conditions, changes in interest rates and the effect of such changes on collateral values and borrower’s ability to pay, changes in the composition of the loan portfolio and trends in past due and non-performing loan balances. The allowance for loan losses is a material estimate that is susceptible to significant fluctuation and is established through a provision for loan losses based on management’s evaluation of the inherent risk in the loan portfolio. In addition to extensive in-house loan monitoring procedures, the Company utilizes an outside party to conduct an independent loan review of all commercial loan and commercial real estate loan relationships that exceed $5.0 million of aggregate exposure and all watchlist relationships that exceed $500,000 of aggregate exposure over annually. Management utilizes the results of this outside loan review to assess the effectiveness of its internal loan grading system as well as to assist in the assessment of the overall adequacy of the allowance for loan losses associated with these types of loans.

The provision for loan losses is determined by management as the amount to be added to the allowance for loan losses after net charge-offs have been deducted to bring the allowance to a level which, in management’s best estimate, is necessary to absorb incurred credit losses within the existing loan portfolio in the normal course of business. The allowance for loan loss is made up of two basic components. The first component is the specific allowance in which the Company sets aside reserves based on the analysis of individual credits that are cash flow dependent, yet there is a discount between the present value of the future cash flows and the carrying value. This was $640,000 at March 31, 2015. The second component is the general reserve. The general reserve is used to record loan loss reserves for groups of homogenous loans in which the Company estimates the losses incurred in the portfolios based on quantitative and qualitative factors. Due to the uncertainty of risks in the loan portfolio, the Company’s judgment on the amount of the allowance necessary to absorb loans losses is approximate.

Due to regulatory guidance, the Company no longer carries specific reserves on collateral dependent loans, and instead charges off any shortfall. First Federal analyzes all loans on its classified and special mention lists at least quarterly and makes judgments about the risk of loss based on the cash flow of the borrower, the value of any collateral and the financial strength of any guarantor in determining the amount of impairment of individual loans and the charge off to be taken.

For purposes of the general reserve analysis, the loan portfolio is stratified into nine different loan pools based on loan type and by market area to allocate historic loss experience. The loss experience factor applied to the non-impaired loan portfolio was based upon historical losses of the most recent rolling twelve quarters ending March 31, 2015.

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The stratification of the loan portfolio resulted in a quantitative general allowance of $5.0 million at March 31, 2015 compared to $7.8 million at December 31, 2014. The decrease in the quantitative allowance was due to a decrease in the historical loss factors relating to commercial, commercial real estate, and residential loans.

In addition to the quantitative analysis, a qualitative analysis is performed each quarter to provide additional general reserves on the non-impaired loan portfolio for various factors. The overall qualitative factors are based on nine sub-factors. The nine sub-factors have been aggregated into three qualitative factors: economic, environment and risk.

ECONOMIC

1) Changes in international, national and local economic business conditions and developments, including the condition of various market segments.

2) Changes in the value of underlying collateral for collateral dependent loans.

ENVIRONMENT

3) Changes in the nature and volume in the loan portfolio.

4) The existence and effect of any concentrations of credit and changes in the level of such concentrations.

5) Changes in lending policies and procedures, including underwriting standards and collection, charge-off and recovery practices.

6) Changes in the quality and breadth of the loan review process.

7) Changes in the experience, ability and depth of lending management and staff.

RISK

8) Changes in the trends of the volume and severity of delinquent and classified loans, and changes in the volume of non-accrual loans, trouble debt restructuring, and other loan modifications.

9) Changes in the political and regulatory environment.

The qualitative analysis at March 31, 2015 indicated a general reserve of $19.7 million compared with $15.7 million at December 31, 2014. Management reviewed the overall economic, environmental and risk factors and determined that it was appropriate to increase several of these due in part to the regional economy reflecting overall mixed movements in unemployment rates in the Northwest Ohio and adjoining market counties in Indiana and Michigan. This along with the strong growth achieved in the first quarter amidst highly competitive conditions on pricing and terms, including the continued growth in our new Business Banking initiative, and balances generated from the expansion into the Columbus market through a new loan production office and changes in the commercial lending credit process were also factors considered in the qualitative analysis. The three year rolling average has led to reductions in the quantitative factors that management believes to be outpacing the overall reduction of risk in the loan portfolio. The qualitative risk factors have been increased as management believes more progress is warranted before reducing allowance levels for historical factor reductions.

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First Defiance’s general reserve percentages for main loan segments not otherwise classified ranged from 0.36% for construction loans to 1.71% for commercial loans at March 31, 2015.

As a result of the quantitative and qualitative analyses, along with the change in specific reserves, the Company’s provision for loan losses for the first quarter of 2015 was $120,000, compared to $103,000 for the same period in 2014. The allowance for loan losses was $25.3 million and $24.8 million and represented 1.50% and 1.50% of loans, net of undisbursed loan funds and deferred fees and costs, as of March 31, 2015 and December 31, 2014, respectively. The provision of $120,000 was offset by charge offs of $281,000 and recoveries of $697,000, resulting in an increase to the overall allowance for loan loss of $536,000 for the first quarter of 2015. In management’s opinion, the overall allowance for loan losses of $25.3 million as of March 31, 2015 is adequate.

Management also assesses the value of real estate owned as of the end of each accounting period and recognizes write-downs to the value of that real estate in the income statement if conditions dictate. In the three month period ended March 31, 2015, First Defiance had write-downs that totaled $522,000 for real estate held for sale and fixed assets transferred to real estate held for sale. Management believes that the values recorded at March 31, 2015 for real estate owned and repossessed assets represent the realizable value of such assets.

Total classified loans decreased to $34.3 million at March 31, 2015, compared to $47.3 million at December 31, 2014.

First Defiance’s ratio of allowance for loan losses to non-performing loans was 135.3% at March 31, 2015 compared with 102.6% at December 31, 2014. Management monitors collateral values of all loans included on the watch list that are collateral dependent and believes that allowances for those loans at March 31, 2015 are appropriate. Of the $18.7 million in non-accrual loans at March 31, 2015, $13.3 million or 71.1% are less than 90 days past due.

At March 31, 2015, First Defiance had total non-performing assets of $25.1 million, compared to $30.3 million at December 31, 2014. Non-performing assets include loans that are on non-accrual, real estate owned and other assets held for sale. Non-performing assets at March 31, 2015 and December 31, 2014 by category were as follows:

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Table 1 – Nonperforming Asset

	March 31,			December 31,
	2015			2014
	(In Thousands)
Non-performing loans:
One to four family residential real estate	$	3,241		$	3,332
Non-residential and multi-family residential real estate		11,399			15,174
Commercial		3,513			4,993
Construction		-			-
Home equity and improvement		534			619
Consumer Finance		16			12
Total non-performing loans		18,703			24,130
Real estate owned		6,392			6,181
Other repossessed assets		-			-
Total repossessed assets	$	6,392			6,181
Total Nonperforming assets	$	25,095		$	30,311
Restructured loans, accruing	$	19,616		$	24,686
Total nonperforming assets as a percentage of total assets		1.14	%		1.39	%
Total nonperforming loans as a percentage of total loans*		1.11	%		1.47	%
Total nonperforming assets as a percentage of total loans plus REO*		1.48	%		1.83	%
Allowance for loan losses as a percent of total nonperforming assets		100.82	%		81.71	%

* Total loans are net of undisbursed loan funds and deferred fees and costs.

The decrease in non-performing loans between December 31, 2014 and March 31, 2015 is primarily in commercial and commercial real estate loans. The balance of these types of non-performing loans were $1.5 million and $3.8 million lower, respectively, at March 31, 2015 compared to December 31, 2014.

Non-performing loans in the commercial loan category represented 0.89% of the total loans in those categories at March 31, 2015 compared to 1.25% for the same category at December 31, 2014. Non-performing loans in the commercial real estate loan category represented 1.30% of the total loans in those categories at March 31, 2015 compared to 1.81% for the same category at December 31, 2014. Management believes that the current allowance for loan losses is appropriate and that the provision for loan losses recorded in the first quarter of 2015 is consistent with both charge-off experience and the risk inherent in the overall credits in the portfolio.

First Federal’s Asset Review Committee meets monthly to review the status of work-out strategies for all criticized relationships, which include all non-accrual loans. Based on such factors as anticipated collateral values in liquidation scenarios, cash flow projections, assessment of net worth of guarantors and all other factors which may mitigate risk of loss, the Asset Review Committee makes recommendations regarding proposed charge-offs which are approved by the Senior Loan Committee or the Loan Loss Reserve Committee.

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The following table details net charge-offs and nonaccrual loans by loan type. For the three months ended and as of March 31, 2015, commercial real estate, which represented 50.77% of total loans, accounted for 106.25% of net recoveries and 60.95% of nonaccrual loans, and commercial loans, which represented 22.90% of total loans, accounted for 9.13% of net recoveries and 18.78% of nonaccrual loans. For the three months ended and as of March 31, 2014, commercial real estate, which represented 50.85% of total loans, accounted for (184.08)% of net charge-offs (recovery) and 58.57% of nonaccrual loans, and commercial loans, which represented 23.89% of total loans, accounted for 166.30% of net charge-offs and 28.84% of nonaccrual loans.

Table 2 – Net Charge-offs and Non-accruals by Loan Type

	For the Three Months Ended March 31, 2015						As of March 31, 2015
	Net Charge-			% of Total Net			Nonaccrual		% of Total Non-
	offs(Recovery)			Charge-offs			Loans		Accrual Loans
	(In Thousands)						(In Thousands)
Residential	$	59			(14.18	)%	$	3,241		17.33	%
Construction		-			0.00	%		-		0.00	%
Commercial real estate		(442	)		106.25	%		11,399		60.95	%
Commercial		(38	)		9.13	%		3,513		18.78	%
Consumer		(9	)		1.92	%		16		0.09	%
Home equity and improvement		14			(3.12	)%		534		2.85	%
Total	$	(416	)		100.00	%	$	18,703		100.00	%
	For the Three Months Ended March 31, 2014						As of March 31, 2014
	Net Charge-			% of Total Net			Nonaccrual		% of Total Non-
	offs(Recovery)			Charge-offs			Loans		Accrual Loans
	(In Thousands)						(In Thousands)
Residential	$	172			63.70	%	$	2,974		11.11	%
Construction		-			0.00	%		-		0.00	%
Commercial real estate		(497	)		(184.08	)%		15,682		58.57	%
Commercial		449			166.30	%		7,723		28.84	%
Consumer		(7	)		(2.59	)%		-		0.00	%
Home equity and improvement		153			56.67	%		395		1.48	%
Total	$	270			100.00	%	$	26,774		100.00	%

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Table 3 – Allowance for Loan Loss Activity

	For the Quarter Ended
	1st 2015			4th 2014			3rd 2014		2nd 2014		1st 2014
	(In Thousands)
Allowance at beginning of period	$	24,766		$	24,567		$	24,627	$	24,783	$	24,950
Provision for credit losses		120			162			406		446		103
Charge-offs:
Residential		78			61			95		42		228
Commercial real estate		155			505			246		39		228
Commercial		2			212			1,272		973		525
Consumer finance		3			1			16		12		11
Home equity and improvement		43			87			42		80		184
Total charge-offs		281			866			1,671		1,146		1,176
Recoveries		697			903			1,205		544		906
Net charge-offs		(416	)		(37	)		466		602		270
Ending allowance	$	25,302		$	24,766		$	24,567	$	24,627	$	24,783

The following table sets forth information concerning the allocation of First Federal’s allowance for loan losses by loan categories at the dates indicated.

Table 4 – Allowance for Loan Loss Allocation by Loan Category

	March 31, 2015					December 31, 2014					September 30, 2014					June 30, 2014					March 31, 2014
			Percent of					Percent of					Percent of					Percent of					Percent of
			total loans					total loans					total loans					total loans					total loans
	Amount		by category			Amount		by category			Amount		by category			Amount		by category			Amount		by category
	(Dollars In Thousands)
Residential	$	2,483		11.79	%	$	2,494		12.24	%	$	2,424		12.44	%	$	2,345		12.30	%	$	2,639		12.38	%
Construction		303		7.25	%		221		6.66	%		214		6.95	%		199		6.68	%		138		5.15	%
Commercial real estate		14,238		50.77	%		13,721		49.84	%		13,668		49.65	%		13,956		49.36	%		14,602		50.85	%
Commercial		6,766		22.90	%		6,509		23.70	%		6,420		23.35	%		6,199		24.01	%		5,610		23.89	%
Consumer		92		0.87	%		117		0.92	%		150		0.99	%		148		0.97	%		147		1.03	%
Home equity and improvement		1,420		6.42	%		1,704		6.64	%		1,691		6.62	%		1,780		6.68	%		1,647		6.70	%
	$	25,302		100.00	%	$	24,766		100.00	%	$	24,567		100.00	%	$	24,627		100.00	%	$	24,783		100.00	%

Key Asset Quality Ratio Trends

Table 5 – Key Asset Quality Ratio Trends

	1st Qtr 2015			4th Qtr 2014			3rd Qtr 2014			2nd Qtr2014			1st Qtr 2014
Allowance for loan losses / loans*		1.50	%		1.50	%		1.50	%		1.56	%		1.58	%
Allowance for loan losses to net charge-offs		-6082.21	%		-66935.14	%		5271.89	%		4090.86	%		9178.89	%
Allowance for loan losses / non-performing assets		100.82	%		81.71	%		88.21	%		80.96	%		75.55	%
Allowance for loan losses / non-performing loans		135.28	%		102.64	%		109.07	%		99.05	%		92.56	%
Non-performing assets / loans plus REO*		1.48	%		1.83	%		1.70	%		1.92	%		2.09	%
Non-performing assets / total assets		1.14	%		1.39	%		1.29	%		1.41	%		1.52	%
Net charge-offs / average loans (annualized)		-0.10	%		-0.01	%		0.12	%		0.16	%		0.07	%

* Total loans are net of undisbursed funds and deferred fees and costs.

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Non-Interest Income.

Total non-interest income increased $1.0 million in the first quarter of 2015 to $8.3 million from $7.3 million for the same period in 2014.

Service Fees. Service fees and other charges increased by $205,000 or 8.8% in the first quarter of 2015 compared to the same period in 2014 due to new fee structures and product redesigns implemented late in 2014.

First Federal’s overdraft privilege program generally provides for the automatic payment of modest overdraft limits on all accounts deemed to be in good standing when the account is accessed using paper-based check processing, a teller withdrawal, a point-of-sale terminal, an ACH transaction, an online banking or voice-response transfer, or an ATM. To be in good standing, an account must be brought to a positive balance within a 30-day period and have not excessively used the overdraft privilege program. Overdraft limits are established for all customers without discrimination using a risk assessment approach for each account classification. The approach includes a systematic review and evaluation of the normal deposit flows made to each account classification to establish reasonable and prudent negative balance limits that would be routinely repaid by normal, expected and reoccurring deposits. The risk assessment by portfolio approach assumes a minimal degree of undetermined credit risk associated with unidentified individual accounts that are overdrawn for 30 or more days. Consumer accounts overdrawn for more than 60 days are automatically charged off. Fees are charged as a one-time fee per occurrence, up to five charges per day, and the fee charged for an item that is paid is equal to the fee charged for a non-sufficient fund item that is returned.

Overdrawn balances, net of allowance for losses, are reflected as loans on First Defiance’s balance sheet. The fees charged for this service are established based both on the return of processing costs plus a profit, and on the level of fees charged by competitors in the Company’s market area for similar services. These fees are considered to be compensation for providing a service to the customer and therefore deemed to be noninterest income rather than interest income. Fee income recorded for the quarters ending March 31, 2015 and 2014 related to the overdraft privilege product, net of adjustments to the allowance for uncollectible overdrafts, were $657,000 and $699,000, respectively. Accounts charged off are included in noninterest expense. The allowance for uncollectible overdrafts was $15,000 at March 31, 2015, $16,000 at December 31, 2014 and $8,000 at March 31, 2014.

Mortgage Banking Activity. Total revenue from the sale and servicing of mortgage loans increased $528,000 to $1.8 million for the first quarter of 2015 compared to $1.2 million for the same period of 2014. The decrease in the long term rates contributed to the increase in mortgage banking activity in the first quarter 2015. Gains realized from the sale of mortgage loans increased in the first quarter of 2015 to $1.3 million from $641,000 in the first quarter of 2014. The amortization of mortgage servicing rights expense increased $119,000 to $411,000 in the first quarter of 2015 compared to $292,000 in the same period in 2014. The Company recorded a positive valuation adjustment of $26,000 on mortgage servicing rights in the first quarter of 2015 compared to a negative valuation adjustment of $7,000 in the first quarter of 2014.

61

Insurance and Investment Sales Commissions. Income from the sale of insurance and investment products was $3.1 million in the first quarter of 2015 compared to $3.0 million in the first quarter of 2014. First Defiance’s insurance subsidiary, First Insurance, typically recognizes contingent revenues during the first quarter. These revenues are bonuses paid by insurance carriers when the Company achieves certain loss ratios or growth targets. In the first quarter of 2015, First Insurance earned $967,000 of contingent income compared to $878,000 for the first quarter of 2014.

Non-Interest Expense.

Non-interest expense increased to $16.9 million for the first quarter of 2015 compared to $16.7 million for the same period in 2014.

Compensation and Benefits. Compensation and benefits increased to $8.9 million for the quarter ended March 31, 2015 from $8.5 million for the same period in 2014. The increase is mainly attributable to merit increases and higher incentive compensation accruals partially offset by lower medical insurance costs.

Other Non-Interest Expenses. Other non-interest expenses decreased $428,000 to $3.6 million for the quarter ended March 31, 2015 from $4.1 million for the same period in 2014. The decrease in other non-interest expense is due to a $786,000 cost in the first quarter 2014 for terminating a merger agreement which was partially offset by $522,000 of fixed asset and real estate owned write-downs in the first quarter of 2015.

The efficiency ratio, considering tax equivalent interest income and excluding securities gains and losses, for the first quarter of 2015 was 62.73% compared to 67.87% for the first quarter of 2014.

Income Taxes.

First Defiance computes federal income tax expense in accordance with ASC Topic 740, Subtopic 942, which resulted in an effective tax rate of 30.18% for the quarter ended March 31, 2015 compared to 29.61% for the same period in 2014. The tax rate is lower than the statutory 35% tax rate for the Company mainly because of investments in tax-exempt securities. The earnings on tax-exempt securities are not subject to federal income tax.

Liquidity

As a regulated financial institution, First Federal is required to maintain appropriate levels of "liquid" assets to meet short-term funding requirements.

First Defiance had $2.8 million of cash provided by operating activities during the first three months of 2015. The Company's cash provided by operating activities resulted from the origination of loans held for sale mostly offset by the proceeds on the sale of loans.

At March 31, 2015, First Federal had $105.0 million in outstanding loan commitments and loans in process to be funded generally within the next six months and an additional $340.3 million committed under existing consumer and commercial lines of credit and standby letters of credit. Also at that date, First Federal had commitments to sell $29.3 million of loans held-for-sale. First Defiance believes that it has adequate resources to fund commitments as they arise and that it can adjust the rate on savings certificates to retain deposits in changing interest rate environments. If First Defiance requires funds beyond its internal funding capabilities, advances from the FHLB of Cincinnati and other financial institutions are available.

62

Liquidity risk arises from the possibility that the Company may not be able to meet its financial obligations and operating cash needs or may become overly reliant upon external funding sources. In order to manage this risk, the Company’s Board of Directors has established a Liquidity Policy that identifies primary sources of liquidity, establishes procedures for monitoring and measuring liquidity and quantifies minimum liquidity requirements. This policy designates First Federal’s Asset/Liability Committee (“ALCO”) as the body responsible for meeting these objectives. The ALCO reviews liquidity on a monthly basis and approves significant changes in strategies that affect balance sheet or cash flow positions. Liquidity is centrally managed on a daily basis by the Company’s Chief Financial Officer and Controller.

Capital Resources

Capital is managed at First Federal and on a consolidated basis. Capital levels are maintained based on regulatory capital requirements and the economic capital required to support credit, market, liquidity and operational risks inherent in our business, as well as flexibility needed for future growth and new business opportunities.

Financial institution regulators have established guidelines for minimum capital ratios for banks, thrifts and bank holding companies. The net unrealized gain or loss on available-for-sale securities is generally not included in computing regulatory capital. During the first quarter of 2015, the Company adopted the new Basel III regulatory capital framework as approved by the federal banking agencies. The adoption of this new framework modified the calculation of the various capital ratios, added a new ratio, common equity tier 1, and revised the adequately and well capitalized thresholds. Additionally, under the new rule, in order to avoid limitations on capital distributions, including dividend payments, the Company must hold a capital conservation buffer above the adequately capitalized risk-based capital ratios. The capital conservation buffer is being phased in from 0.0% for 2015 to 2.50% by 2019. The amounts shown below as the adequately capitalized ratio plus capital conservation buffer, includes the fully phased-in 2.50% buffer.

The Company met each of the well capitalized ratio guidelines at March 31, 2015. The following table indicates the capital ratios for First Defiance and First Federal at March 31, 2015 and December 31, 2014. (In Thousands):

63

As of March 31, 2015
	Leverage			Tier 1 Risk- Based			Common Equity Tier 1			Total Risk-Based
First Federal Bank of the Midwest		11.00	%		12.16	%		12.16	%		13.41	%
First Defiance Financial Corp.		11.64	%		12.87	%		12.87	%		14.12	%
Adequately capitalized ratio		4.00	%		6.00	%		4.50	%		8.00	%
Adequately capitalized ratio plus capital conservation buffer (fully phased-in)		4.00	%		8.50	%		7.00	%		10.50	%
Well capitalized ratio (First Federal only)		5.00	%		8.00	%		6.50	%		10.00	%
As of December 31, 2014
	Leverage			Tier 1 Risk- Based			Common Equity Tier 1			Total Risk-Based
First Federal Bank of the Midwest		11.31	%		13.21	%		N/A			14.46	%
First Defiance Financial Corp.		11.89	%		13.89	%		N/A			15.15	%
Adequately capitalized ratio		4.00	%		4.00	%		N/A			8.00	%
Well capitalized ratio (First Federal only)		5.00	%		6.00	%		N/A			10.00	%

Critical Accounting Policies

First Defiance has established various accounting policies which govern the application of accounting principles generally accepted in the United States in the preparation of its financial statements. The significant accounting policies of First Defiance are described in the footnotes to the consolidated financial statements included in the Company’s Annual Report on Form 10-K. Certain accounting policies involve significant judgments and assumptions by management, which have a material impact on the carrying value of certain assets and liabilities; management considers such accounting policies to be critical accounting policies. Those policies which are identified and discussed in detail in the Company’s Annual Report on Form 10-K include the Allowance for Loan Losses, Goodwill, and the Valuation of Mortgage Servicing Rights. There have been no material changes in assumptions or judgments relative to those critical policies during the first three months of 2015.

64

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As discussed in detail in the Annual Report on Form 10-K for the year ended December 31, 2014, First Defiance’s ability to maximize net income is dependent on management’s ability to plan and control net interest income through management of the pricing and mix of assets and liabilities. Because a large portion of assets and liabilities of First Defiance are monetary in nature, changes in interest rates and monetary or fiscal policy affect its financial condition and can have significant impact on the net income of the Company. First Defiance does not use off-balance sheet derivatives to enhance its risk management, nor does it engage in trading activities beyond the sale of mortgage loans.

First Defiance monitors its exposure to interest rate risk on a monthly basis through simulation analysis that measures the impact changes in interest rates can have on net interest income. The simulation technique analyzes the effect of a presumed 100 basis point shift in interest rates (which is consistent with management’s estimate of the range of potential interest rate fluctuations) and takes into account prepayment speeds on amortizing financial instruments, loan and deposit volumes and rates, non-maturity deposit assumptions and capital requirements. The results of the simulation indicate that in an environment where interest rates rise 100 basis points over a 24 month period, using March 31, 2015 amounts as a base case, First Defiance’s net interest income would be impacted by less than the board mandated guidelines of 10%.

In addition to the simulation analysis, First Defiance also uses an economic value of equity (“EVE”) analysis to measure risk in the balance sheet incorporating all cash flows over the estimated remaining life of all balance sheet positions. The EVE analysis generally calculates the net present value of First Federal’s assets and liabilities in rate shock environments that range from -400 basis points to +400 basis points. However, the likelihood of a decrease in rates beyond 100 basis points as of March 31, 2015 was considered to be remote given the current interest rate environment and, therefore, was not included in this analysis. The results of this analysis are reflected in the following tables for the three months ended March 31, 2015 and the year-ended December 31, 2014.

March 31, 2015
Economic Value of Equity
Change in Rates	$ Amount		$ Change			% Change
(Dollars in Thousands)
+400 bp		456,975		40,766			9.79	%
+ 300 bp		450,216		34,007			8.17	%
+ 200 bp		442,063		25,854			6.21	%
+ 100 bp		432,814		16,606			3.99	%
0 bp		416,209		–			–
- 100 bp		391,693		(24,516	)		(5.89	)%

December 31, 2014
Economic Value of Equity
Change in Rates	$ Amount		$ Change			% Change
(Dollars in Thousands)
+400 bp		475,594		47,730			11.16	%
+ 300 bp		467,028		39,164			9.15	%
+ 200 bp		457,038		29,174			6.82	%
+ 100 bp		446,184		18,320			4.28	%
0 bp		427,864		-			-
- 100 bp		403,088		(24,776	)		(5.79	)%

65

Item 4. Controls and Procedures

Disclosure controls are procedures designed to ensure that information required to be disclosed in the Company's reports filed under the Exchange Act, such as this report, is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms. Disclosure controls are also designed to ensure that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives, as ours are designed to do, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

An evaluation was carried out under the supervision and with the participation of the Company's management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of March 31, 2015. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective.

No changes occurred in the Company’s internal controls over financial reporting during the quarter ended March 31, 2015 that materially affected, or are reasonably likely to materially affect, the internal controls over financial reporting.

66

FIRST DEFIANCE FINANCIAL CORP.

PART II-OTHER INFORMATION

Item 1. Legal Proceedings

Neither First Defiance nor any of its subsidiaries is engaged in any legal proceedings of a material nature.

Item 1A. Risk Factors

There are no material changes from the risk factors set forth under Part I, Item 1A. “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information regarding First Defiance’s purchases of its common stock during the three-month period ended March 31, 2015:

Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)		Maximum Number of Shares (or Approximate Dollar Value) that May Yet Be Purchased Under the Plans or Programs (2)
Beginning Balance, December 31, 2013								333,898
January 1 – January 31, 2015		37,857	$	33.38		37,857		296,041
February 1 – February 28, 2015		-		-		-		296,041
March 1 – March 31, 2015		10,523		32.28		-		296,041
Total		48,380	$	33.14		37,857		296,041

(1) The reported shares were repurchased pursuant to First Defiance’s publicly announced stock repurchase program, which became effective October 20, 2014. Up to 469,000 shares were authorized to be purchased under the program. There is no expiration date for the program.

(2) The number of shares shown represents, as of the end of each period, the maximum number of shares of common stock that may yet be purchased under the publicly announced stock repurchase program. The shares may be purchased, from time to time, depending on market conditions.

Item 3. Defaults upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

67

Item 6. Exhibits

Exhibit 3.1	Articles of Incorporation (1)
Exhibit 3.2	Code of Regulations (1)
Exhibit 3.3	Amendment to Articles of Incorporation (2)
Exhibit 31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 101	The following financial information from the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2015 is formatted in eXtensible Business Reporting Language (“XBRL”): (i) Unaudited Consolidated Condensed Balance Sheet at March 31, 2015 and December 31, 2014, (ii) Unaudited Consolidated Condensed Statements of Income for the Three Months ended March 31, 2015 and 2014 (iii) Unaudited Consolidated Condensed Statements of Comprehensive Income for the Three Months ended March 31, 2015 and 2014, (iv) Unaudited Consolidated Condensed Statements of Changes in Stockholder’ Equity for the Three Months ended March 31, 2015 and 2014, (v) Unaudited Consolidated Condensed Statements of Cash Flows for the Three Months ended March 31, 2015 and 2014 and (vi) Notes to Unaudited Consolidated Condensed Financial Statements.

(1) Incorporated herein by reference to the like numbered exhibit in the Registrant’s Form S-1 (File No. 33-93354)

(2) Incorporated herein by reference to exhibit 3 in Form 8-K filed December 8, 2008 (Film No. 081236105)

68

FIRST DEFIANCE FINANCIAL CORP.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	First Defiance Financial Corp.
	(Registrant)
Date:  May 8, 2015	By:	/s/ Donald P. Hileman
		Donald P. Hileman
		President and
		Chief Executive Officer
Date:  May 8, 2015	By:	/s/ Kevin T. Thompson
		Kevin T. Thompson
		Executive Vice President and
		Chief Financial Officer

69

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT

I, Donald P. Hileman, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of First Defiance Financial Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  May 8, 2015	/s/ Donald P. Hileman
	Donald P. Hileman
	President and
	Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT

I, Kevin T. Thompson, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of First Defiance Financial Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  May 8, 2015	/s/ Kevin T. Thompson
	Kevin T. Thompson
	Executive Vice President and
	Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of First Defiance Financial Corp. (the "Company") on Form 10-Q for the period ending March 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Donald P. Hileman, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and in connection with this quarterly report on Form 10-Q that:

1. The Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and

2. The information contained in the Report fairly presents, in all material respects, the Company's financial condition and results of operations.

Date: May 8, 2015	/s/ Donald P. Hileman
	Donald P. Hileman
	Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of First Defiance Financial Corp. (the "Company") on Form 10-Q for the period ending March 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Kevin T. Thompson, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and in connection with this quarterly report on Form 10-Q that:

1. The Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and

2. The information contained in the Report fairly presents, in all material respects, the Company's financial condition and results of operations.

Date: May 8, 2015	/s/ Kevin T. Thompson
	Kevin T. Thompson
	Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Fair Value (Details 1) (Fair Value, Inputs, Level 3 [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014
Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Beginning balance	$ 582
Total gains or losses (realized/unrealized)
Included in earnings (unrealized)	0
Included in other comprehensive income (presented gross of taxes)	122
Amortization	0
Sales	0
Transfers in and/or out of Level 3	0
Ending balance	$ 704

XML

Investment Securities (Details 3) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Proceeds	$ 0	$ 1,654
Gross realized gains	0	0
Gross realized losses	$ 0	$ 0

XML

Dividends on Common Stock (Details Textual) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Common Stock, Dividends, Per Share, Cash Paid	$ 0.175	$ 0.15

XML

Deposits (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Deposits [Line Items]
Non-interest-bearing checking accounts	$ 370,997	$ 379,552
Interest-bearing checking and money market accounts	737,533	727,729
Savings deposits	215,590	203,673
Retail certificates of deposit less than $250,000	422,886	422,907
Retail certificates of deposit greater than $250,000	25,687	26,952
Deposits	$ 1,772,693	$ 1,760,813

XML

Investment Securities (Details Textual) (USD $) In Millions, unless otherwise specified	Mar. 31, 2015
Security Owned and Pledged as Collateral Carrying Value	$ 137.9
Investment Portfolio, Number of Securities	366
Investment Portfolio, Number of Securities, Unrealized Loss	18

XML

Other Comprehensive Income (Loss) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Securities available for sale and transferred securities: Before Tax Amount
Change in net unrealized gain/loss during the period	$ 1,502	$ 1,723
Reclassification adjustment for net gains included in net income	0	0
Total other comprehensive loss	1,502	1,723
Securities available for sale and transferred securities: Tax Expense (Benefit)
Change in net unrealized gain/loss during the period	527	603
Reclassification adjustment for net gains included in net income	0	0
Total other comprehensive loss	527	603
Securities available for sale and transferred securities: Net of Tax Amount
Change in net unrealized gain/loss during the period	975	1,120
Reclassification adjustment for net gains included in net income	0	0
Total other comprehensive loss	$ 975	$ 1,120

XML

Stock Compensation Plans (Details 2) (USD $)	3 Months Ended
	Mar. 31, 2015
Shares, Unvested at March 31, 2015	5,767
Restricted Stock Units (RSUs) [Member]
Shares, Unvested at January 1, 2015	91,812
Shares, Granted	24,757
Shares, Vested	12,846
Shares, Forfeited	(29,178)
Shares, Unvested at March 31, 2015	74,545
Weighted-Average Grant Date Fair Value, Unvested at January 1, 2015	$ 21
Weighted-Average Grant Date Fair Value, Granted	$ 32.3
Weighted-Average Grant Date Fair Value, Vested	$ 17.20
Weighted-Average Grant Date Fair Value, Forfeited	$ 19.48
Weighted-Average Grant Date Fair Value, Unvested at March 31, 2015	$ 25.86
Stock Grants [Member]
Shares, Unvested at January 1, 2015	5,767
Shares, Granted	12,845
Shares, Vested	(12,846)
Shares, Forfeited	0
Shares, Unvested at March 31, 2015	5,767
Weighted-Average Grant Date Fair Value, Unvested at January 1, 2015	$ 25.97
Weighted-Average Grant Date Fair Value, Granted	$ 17.20
Weighted-Average Grant Date Fair Value, Vested	$ 17.20
Weighted-Average Grant Date Fair Value, Forfeited	$ 0
Weighted-Average Grant Date Fair Value, Unvested at March 31, 2015	$ 25.97

XML

Borrowings (Tables)

3 Months Ended

Mar. 31, 2015

Subordinated Borrowings [Abstract]

Federal Home Loan Bank Advances Disclosure [Table Text Block]

First Defiance’s debt, FHLB advances and junior subordinated debentures owed to unconsolidated subsidiary trusts are comprised of the following:

	March 31, 2015		December 31, 2014
	(In Thousands)
FHLB Advances:
Single maturity fixed rate advances	$	17,000	$	-
Putable advances		5,000		12,000
Amortizable mortgage advances		9,298		9,544
Total	$	31,298	$	21,544
Junior subordinated debentures owed to unconsolidated subsidiary trusts	$	36,083	$	36,083

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Other Comprehensive Income (Loss) (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Accumulated Other Comprehensive Income (Loss) [Line Items]
Securities Available For Sale, Beginning balance	$ 4,697	$ 906
Securities Available For Sale, Other comprehensive income before reclassifications	975	1,120
Securities Available For Sale,Amounts reclassified from accumulated other comprehensive income	0	0
Securities Available For Sale, Net other comprehensive income during period	975	1,120
Securities Available For Sale, Ending balance	5,672	2,026
Post-retirement Benefit, Beginning balance	(583)	(361)
Post-retirement Benefit, Other comprehensive income before reclassifications	0	0
Post-retirement Benefit, Amounts reclassified from accumulated other comprehensive income	0	0
Post-retirement Benefit, Net other comprehensive income during period	0	0
Post-retirement Benefit, Ending balance	(583)	(361)
Accumulated Other Comprehensive Income, Beginning balance	4,114	545
Accumulated Other Comprehensive Income, Other comprehensive income before reclassifications	975	1,120
Accumulated Other Comprehensive Income, Amounts reclassified from accumulated other comprehensive income	0	0
Accumulated Other Comprehensive Income, Net other comprehensive income during period	975	1,120
Accumulated Other Comprehensive Income, Ending balance	$ 5,089	$ 1,665

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Commitments, Guarantees and Contingent Liabilities (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Fixed Rate, Commitments to make loans	$ 43,984	$ 37,546
Fixed Rate, Unused lines of credit	14,492	20,385
Fixed Rate, Standby letters of credit	0	0
Fixed Rate, Total	58,476	57,931
Variable Rate, Commitments to make loans	61,046	69,232
Variable Rate, Unused lines of credit	308,145	307,449
Variable Rate, Standby letters of credit	17,694	17,886
Variable Rate, Total	$ 386,885	$ 394,567

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Loans (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning Allowance	$ 24,766	$ 24,950
Charge-Offs	(281)	(1,176)
Recoveries	697	906
Provisions	120	103
Ending Allowance	25,302	24,783
One to Four Family Residential Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning Allowance	2,494	2,847
Charge-Offs	(78)	(228)
Recoveries	19	56
Provisions	48	(36)
Ending Allowance	2,483	2,639
Multi Family Residential Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning Allowance	2,453	2,508
Charge-Offs	0	0
Recoveries	0	3
Provisions	101	104
Ending Allowance	2,554	2,615
Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning Allowance	11,268	12,000
Charge-Offs	(155)	(228)
Recoveries	597	722
Provisions	(26)	(507)
Ending Allowance	11,684	11,987
Construction Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning Allowance	221	134
Charge-Offs	0	0
Recoveries	0	0
Provisions	82	4
Ending Allowance	303	138
Commercial Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning Allowance	6,509	5,678
Charge-Offs	(2)	(525)
Recoveries	40	76
Provisions	219	381
Ending Allowance	6,766	5,610
Home Equity and Home Improvement [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning Allowance	1,704	1,635
Charge-Offs	(43)	(184)
Recoveries	29	31
Provisions	(270)	165
Ending Allowance	1,420	1,647
Consumer Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning Allowance	117	148
Charge-Offs	(3)	(11)
Recoveries	12	18
Provisions	(34)	(8)
Ending Allowance	$ 92	$ 147

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Derivative Financial Instruments (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Derivatives not designated as hedging instruments
Mortgage Banking Derivatives - Gain (Loss)	$ 438	$ 50

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Affordable Housing Projects Tax Credit Partnership (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Tax credits and other tax benefits recognized	$ 118	$ 0
Amortization expense in federal income taxes	$ 89	$ 0

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Derivative Financial Instruments (Details Textual) (USD $) In Millions, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Derivative Instruments, Gain (Loss) [Line Items]
Interest Rate Derivative Instruments Not Designated as Hedging Instruments at Fair Value, Net	$ 21.3	$ 7.4
Notional Amount of Interest Rate Derivative Instruments Not Designated as Hedging Instruments	$ 30.0	$ 11.6

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Borrowings (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
FHLB Advances:
Single maturity fixed rate advances	$ 17,000	$ 0	$ 0
Putable advances	5,000		12,000
Amortizable mortgage advances	9,298		9,544
Total	31,298		21,544
Junior subordinated debentures owed to unconsolidated subsidiary trusts	$ 36,083		$ 36,083

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Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Earnings Per Share, Policy [Policy Text Block]

Earnings Per Common Share

Basic earnings per common share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. All outstanding unvested share-based payment awards that contain rights to nonforfeitable dividends are considered participating securities for the calculation. Diluted earnings per common share include the dilutive effect of additional potential common shares issuable under stock options, warrants, restricted stock awards and stock grants.

New Accounting Pronouncements, Policy [Policy Text Block]

Newly Issued Accounting Standards

In January 2014, the FASB issued ASU 2014-01, "Accounting for Investments in Qualified Affordable Housing Projects." ASU 2014-01 applies to all reporting entities that invest in qualified affordable housing projects through limited liability entities. The pronouncement permits reporting entities to make an accounting policy election to account for these investments using the proportional amortization method if certain conditions exist. The pronouncement also requires disclosure that enables users of its financial statements to understand the nature of these investments. Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance in the income statement as a component of income tax expense (benefit). The pronouncement should be applied retrospectively for all periods presented, effective for annual periods and interim reporting periods within those annual periods, beginning after December 15, 2014. Early adoption is permitted. The Company early adopted ASU 2014-01 in January 2014 and such adoption did not have a material impact on the Company’s Consolidated Financial Statements.

In January 2014, the FASB issued ASU 2014-04, “Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure.” The objective of the amendments in ASU 2014-04 to Topic 310, “Receivables - Troubled Debt Restructurings by Creditors,” is to reduce diversity by clarifying when an in substance repossession or foreclosure occurs, that is, when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan receivable should be derecognized and the real estate property recognized. The amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2014. An entity can elect to adopt the amendments using either a modified retrospective transition method or a prospective transition method. Early adoption is permitted. The Company adopted ASU 2014-04 on January 1, 2015 and such adoption did not have a material impact on the Company’s Consolidated Financial Statements.

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Earnings Per Common Share (Details Textual)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	16,750	92,250

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Fair Value (Details 4) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014	Mar. 31, 2014	Dec. 31, 2013
Financial Assets, Carrying Value:
Cash and cash equivalents, Carrying Value	$ 81,472	$ 112,936	$ 211,183	$ 179,318
Investment securities, Carrying Value	248,737	239,634
Federal Home Loan Bank stock, Carrying Value	13,802	13,802
Loans, net, including loans held for sale, Carrying Value	1,668,760	1,626,555
Accrued interest receivable, Carrying Value	6,967	6,037
Financial Liabilities, Carrying Value:
Deposits, Carrying Value	1,772,693	1,760,813
Advances from Federal Home Loan Bank, Carrying Value	31,298	21,544
Securities sold under repurchase agreements, Carrying Value	60,271	54,759
Subordinated debentures, Carrying Value	36,083	36,083
Financial Assets, Fair Value:
Cash and cash equivalents, Fair Value	81,472	112,936
Investment securities, Fair Value	248,738	239,629
Loans, net, including loans held for sale, Fair Value	1,682,215	1,632,507
Accrued interest receivable, Fair Value	6,967	6,037
Financial Liabilities, Fair Value:
Deposits, Fair Value	1,775,117	1,762,733
Advances from Federal Home Loan Bank, Fair Value	31,562	21,772
Securities sold under repurchase agreements, Fair Value	60,271	54,759
Subordinated debentures, Fair Value	35,788	35,307
Fair Value, Inputs, Level 1 [Member]
Financial Assets, Fair Value:
Cash and cash equivalents, Fair Value	81,472	112,936
Investment securities, Fair Value	1,996	1,990
Loans, net, including loans held for sale, Fair Value	0	0
Accrued interest receivable, Fair Value	0	3
Financial Liabilities, Fair Value:
Deposits, Fair Value	370,997	379,552
Advances from Federal Home Loan Bank, Fair Value	0	0
Securities sold under repurchase agreements, Fair Value	0	0
Subordinated debentures, Fair Value	0	0
Fair Value, Inputs, Level 2 [Member]
Financial Assets, Fair Value:
Cash and cash equivalents, Fair Value	0	0
Investment securities, Fair Value	246,742	237,639
Loans, net, including loans held for sale, Fair Value	10,151	4,741
Accrued interest receivable, Fair Value	1,375	846
Financial Liabilities, Fair Value:
Deposits, Fair Value	1,404,120	1,383,181
Advances from Federal Home Loan Bank, Fair Value	31,562	21,772
Securities sold under repurchase agreements, Fair Value	60,271	54,759
Subordinated debentures, Fair Value	0	0
Fair Value, Inputs, Level 3 [Member]
Financial Assets, Fair Value:
Cash and cash equivalents, Fair Value	0	0
Investment securities, Fair Value	0	0
Loans, net, including loans held for sale, Fair Value	1,672,064	1,627,766
Accrued interest receivable, Fair Value	5,592	5,188
Financial Liabilities, Fair Value:
Deposits, Fair Value	0	0
Advances from Federal Home Loan Bank, Fair Value	0	0
Securities sold under repurchase agreements, Fair Value	0	0
Subordinated debentures, Fair Value	$ 35,788	$ 35,307

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Derivative Financial Instruments (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Derivatives not designated as hedging instruments
Mortgage Banking Derivatives Assets, Carrying Value	$ 884	$ 351
Mortgage Banking Derivatives Liabilities, Carrying Value	119	24
Mortgage Banking Derivatives, Net Carrying Value	$ 765	$ 327

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Affordable Housing Projects Tax Credit Partnership (Tables)

3 Months Ended

Mar. 31, 2015

Affordable Housing Projects Tax Credit Partnership [Abstract]

Other Commitments [Table Text Block]

As of March 31, 2015, the expected payments for unfunded affordable housing commitments were as follows:

(dollars in thousands)	Amount
2015	$	1,368
2016		612
2017		160
2018		414
2019		93
Thereafter		312
Total Unfunded Commitments	$	2,959

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

The following table presents tax credits and other tax benefits recognized and amortization expense related to affordable housing for the three months ended March 31, 2015 and 2014.

	Three Months Ended March 31,
(dollars in thousands)	2015		2014
Proportional Amortization Method
Tax credits and other tax benefits recognized	$	118	$	0
Amortization expense in federal income taxes		89		0

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Investment Securities (Details 1) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015		Dec. 31, 2014
Available-for-sale, Due in one year or less, Amortized Cost	$ 1,008
Available-for-sale, Due after one year through five years, Amortized Cost	15,250
Available-for-sale, Due after five years through ten years, Amortized Cost	37,112
Available-for-sale, Due after ten years, Amortized Cost	43,545
Available-for-sale, MBS/CMO/REMIC, Amortized Cost	142,797
Available-for-sale, Amortized Cost	239,712
Available-for-sale, Due in one year or less, Fair Value	1,016
Available-for-sale, Due after one year through five years, Fair Value	15,634
Available-for-sale, Due after five years through ten years, Fair Value	39,532
Available-for-sale, Due after ten years, Fair Value	46,071
Available-for-sale, MBS/CMO/REMIC, Fair Value	146,185
Available-for-sale, Fair Value	248,438		239,321
Held-to-maturity Securities, Due in one year or less, Amortized Cost	0
Held-to-maturity Securities, Due after one year through five years,Amorized Cost	155
Held-to-maturity,Securities, Due after five years through ten years, Amortized Cost	0
Held-to-maturity Securities, Due after ten years, Amortized Cost	0
Held-to-maturity, MBS/CMO, Amortized Cost	144
Held-to-maturity, Amortized Cost	299	[1]	313	[1]
Held-to-maturity Securities, Due in one year or less, Fair Value	0
Held-to-maturity Securities, Due after one year through five years, Fair Value	155
Held-to-maturity, Securites, Due after five years through ten years, Fair Value	0
Held-to-maturity Securities, Due after ten years, Fair Value	0
Held-to-maturity, MBS/CMO, Fair Value	145
Held-to-maturity, Fair Value	$ 300		$ 308	[1]

[1] FHLMC, FNMA, and GNMA certificates are residential mortgage-backed securities.

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Mortgage Banking (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Compliance with Regulatory Capital Requirements for Mortgage Companies [Line Items]
Gain from sale of mortgage loans	$ 1,285	$ 641
Mortgage loans servicing revenue (expense):
Mortgage loans servicing revenue	875	905
Amortization of mortgage servicing rights	(411)	(292)
Mortgage servicing rights valuation adjustments	26	(7)
Mortgage loans servicing revenue (expense), Total	490	606
Net revenue from sale and servicing of mortgage loans	$ 1,775	$ 1,247

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Loans (Details 5) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Accounts, Notes, Loans and Financing Receivable [Line Items]
Non-accrual loans	$ 18,703	$ 24,130
Loans over 90 days past due and still accruing	0	0
Total non-performing loans	18,703	24,130
Real estate and other assets held for sale	6,392	6,181
Total non-performing assets	25,095	30,311
Troubled debt restructuring, still accruing	$ 19,616	$ 24,686

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Stock Compensation Plans (Details Textual) (USD $)	3 Months Ended		12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	126,720		173,720
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Stock Options	$ 166,000
Employee Service Share Based Compensation Nonvested Awards, Total Compensation Cost Not Yet Recognized, Period For Recognition (in years)	4 years 3 months 22 days
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number	5,767
Allocated Share-based Compensation Expense	226,000		45,000
Compensation Expense, Maximum	3,600,000
Estimated Compensation Expense, Excepted	1,800,000
Unrecognized Compensation Expense	1,200,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value	$ 13.13	$ 11.25
Short-term Equity Incentive Plan 2013 [Member]
Option Subscription, Description	The final amount of benefits under the 2015 STIP will be determined as of December 31, 2015 and will be paid out in cash in the first quarter of 2016
Short-term Equity Incentive Plan 2013 [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Maximum Employee Subscription Rate	45.00%		45.00%
Short-term Equity Incentive Plan 2013 [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Maximum Employee Subscription Rate	30.00%		30.00%
Equity Plan 2010 [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	350,000
Long-term Equity Incentive Plan 2014 [Member]
Option Subscription, Description	The amount of benefit under the 2015 LTIP will be determined individually at the end of the 36 month performance period ending December 31, 2017. The awards will vest 100% of the target award at the end of the performance period ending December 31, 2017. The benefits earned under the 2015 LTIP will be paid out in equity in the first quarter of 2018. The participants are required to be employed on the day of payout in order to receive such payment.
Long-term Equity Incentive Plan 2014 [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Maximum Employee Subscription Rate	45.00%		45.00%
Long-term Equity Incentive Plan 2014 [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Maximum Employee Subscription Rate	20.00%		20.00%
Restricted Stock Units (Rsus) [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number	74,545		91,812
Short-term and Long-term Equity Incentive Plan 2011 [Member]
Allocated Share-based Compensation Expense	$ 96,000
Stock Option Grant, 2009 [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Maximum Vested Percentage, Year	20.00%
Stock Option Grant, 2011 [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Maximum Vested Percentage, Year	40.00%
Stock Option Grant, Annual [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Maximum Vested Percentage, Year	20.00%
Long Term Equity Incentive Plan 2014 [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	24,757		30,538

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Basis of Presentation

3 Months Ended

Mar. 31, 2015

Organization, Consolidation and Presentation Of Financial Statements [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

1. Basis of Presentation

First Defiance Financial Corp. (“First Defiance” or the “Company”) is a unitary thrift holding company that conducts business through its three wholly owned subsidiaries, First Federal Bank of the Midwest (“First Federal”), First Insurance Group of the Midwest, Inc. (“First Insurance”), and First Defiance Risk Management Inc. (“First Defiance Risk Management”). All significant intercompany transactions and balances are eliminated in consolidation.

First Federal is primarily engaged in attracting deposits from the general public through its offices and using those and other available sources of funds to originate loans primarily in the counties in which its offices are located. First Federal’s traditional banking activities include originating and servicing residential, non-residential real estate, commercial, home improvement and home equity and consumer loans and providing a broad range of depository, trust and wealth management services. First Insurance is an insurance agency that does business in the Defiance, Bryan, Bowling Green, Maumee and Oregon, Ohio areas, offering property and casualty, group health and life insurance products. First Defiance Risk Management is a wholly-owned insurance company subsidiary of the Company to insure the Company and its subsidiaries against certain risks unique to the operations of the Company and for which insurance may not be currently available or economically feasible in today’s insurance marketplace. First Defiance Risk Management pools resources with several other similar insurance company subsidiaries of financial institutions to spread a limited amount of risk among themselves.

The consolidated condensed statement of financial condition at December 31, 2014 has been derived from the audited financial statements at that date, which were included in First Defiance’s Annual Report on Form 10-K.

The accompanying consolidated condensed financial statements as of March 31, 2015 and for the three month periods ended March 31, 2015 and 2014 have been prepared by First Defiance without audit and do not include information or footnotes necessary for the complete presentation of financial condition, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States. These consolidated condensed financial statements should be read in conjunction with the financial statements and notes thereto included in First Defiance's 2014 Annual Report on Form 10-K for the year ended December 31, 2014. However, in the opinion of management, all adjustments, consisting of only normal recurring items, necessary for the fair presentation of the financial statements have been made. The results for the three month period ended March 31, 2015 are not necessarily indicative of the results that may be expected for the entire year.

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Loans (Details 6) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current	$ 1,677,977	$ 1,639,185
30-59 days	2,292	2,204
60-89 days	4,403	3,247
90+ days	5,450	7,331
Total Past Due	12,145	12,782
Total Non Accrual	18,702	24,135
Residential Owner Occupied [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current	138,476	141,597
30-59 days	118	39
60-89 days	242	1,079
90+ days	537	365
Total Past Due	897	1,483
Total Non Accrual	1,690	1,702
Residential Non Owner Occupied [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current	63,262	62,991
30-59 days	378	110
60-89 days	362	105
90+ days	578	578
Total Past Due	1,318	793
Total Non Accrual	1,548	1,625
One To Four Family Residential Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current	201,738	204,588
30-59 days	496	149
60-89 days	604	1,184
90+ days	1,115	943
Total Past Due	2,215	2,276
Total Non Accrual	3,238	3,327
Multi Family Residential Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current	156,869	156,413
30-59 days	0	247
60-89 days	2,138	0
90+ days	245	0
Total Past Due	2,383	247
Total Non Accrual	2,403	2,546
Commercial Real Estate Owner Occupied [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current	313,484	299,500
30-59 days	1,188	163
60-89 days	1,513	1,566
90+ days	1,572	1,753
Total Past Due	4,273	3,482
Total Non Accrual	4,377	7,004
Commercial Real Estate Non Owner Occupied [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current	262,278	243,341
30-59 days	110	119
60-89 days	0	416
90+ days	662	1,308
Total Past Due	772	1,843
Total Non Accrual	1,887	2,582
Agriculture Land [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current	98,781	93,529
30-59 days	164	0
60-89 days	0	14
90+ days	12	0
Total Past Due	176	14
Total Non Accrual	462	686
Commercial Real Estate Other Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current	39,524	43,835
30-59 days	0	155
60-89 days	0	0
90+ days	407	258
Total Past Due	407	413
Total Non Accrual	2,267	2,359
Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current	714,067	680,205
30-59 days	1,462	437
60-89 days	1,513	1,996
90+ days	2,653	3,319
Total Past Due	5,628	5,752
Total Non Accrual	8,993	12,631
Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current	84,309	73,722
30-59 days	0	0
60-89 days	0	0
90+ days	0	0
Total Past Due	0	0
Total Non Accrual	0	0
Commercial Working Capital [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current	139,101	135,009
30-59 days	10	0
60-89 days	69	0
90+ days	340	951
Total Past Due	419	951
Total Non Accrual	355	1,103
Commercial Loans Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current	255,899	262,982
30-59 days	233	67
60-89 days	23	10
90+ days	1,067	2,012
Total Past Due	1,323	2,089
Total Non Accrual	3,163	3,897
Commercial Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current	395,000	397,991
30-59 days	243	67
60-89 days	92	10
90+ days	1,407	2,963
Total Past Due	1,742	3,040
Total Non Accrual	3,518	5,000
Home Equity and Home Improvement [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current	111,060	110,940
30-59 days	75	1,236
60-89 days	56	0
90+ days	30	106
Total Past Due	161	1,342
Total Non Accrual	534	619
Consumer Finance [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Current	14,934	15,326
30-59 days	16	68
60-89 days	0	57
90+ days	0	0
Total Past Due	16	125
Total Non Accrual	$ 16	$ 12

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Fair Value (Details Textual) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 01, 2015	Dec. 31, 2014
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items]
Impaired Financing Receivable, Recorded Investment	$ 6,400,000			$ 7,791,000
Impaired Financing Receivables, Provisional Expenses	621,000	756,000
Mortgage Servicing Rights at Fair Value	935,000		935,000	1,034,000
Valuation Allowance of Mortgage Servicing Rights	885,000			911,000
Proceeds from Collection of Loans Receivable	26,000	7,000
Real Estate Held-for-sale, Increase (Decrease) in Fair Value	522,000
Impaired Financing Receivable, Related Allowance	640,000			1,273,000
Minimum [Member]
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items]
Mortgage Servicing Rights at Fair Value				1,000,000
Appraisal Value Discount, Percentage	0.00%
Maximum [Member]
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items]
Appraisal Value Discount, Percentage	20.00%
Collateral dependent loans [Member]
Fair Value, Option, Qualitative Disclosures Related to Election [Line Items]
Impaired Financing Receivable, Recorded Investment	6,400,000			7,800,000
Impaired Financing Receivable, Related Allowance	$ 14,000			$ 19,000

XML

Investment Securities (Tables)

3 Months Ended

Mar. 31, 2015

Marketable Securities [Abstract]

Schedule of Available-for-sale and Held to Maturity Securities [Table Text Block]

The following is a summary of available-for-sale and held-to-maturity securities:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
At March 31, 2015	(In Thousands)
Available-for-Sale Securities:
Obligations of U.S. government corporations and agencies	$	5,000	$	2	$	(1)	$	5,001
Mortgage-backed securities – residential		60,121		1,644		-		61,765
REMICs		1,776		54		-		1,830
Collateralized mortgage obligations		80,900		1,856		(166)		82,590
Trust preferred securities and preferred stock		-		1		-		1
Corporate bonds		5,924		89		(5)		6,008
Obligations of state and political subdivisions		85,991		5,259		(7)		91,243
Totals	$	239,712	$	8,905	$	(179)	$	248,438

	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses		Fair Value
	(In Thousands)
Held-to-Maturity Securities*:
FHLMC certificates	$	18	$	-	$	-	$	18
FNMA certificates		89		2		(2)		89
GNMA certificates		37		1		-		38
Obligations of state and political subdivisions		155		-		-		155
Totals	$	299	$	3	$	(2)	$	300

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
	(In Thousands)
At December 31, 2014
Available-for-sale
Obligations of U.S. government corporations and agencies	$	1,000	$	-	$	(20)	$	980
Mortgage-backed securities - residential		58,380		1,476		-		59,856
REMICs		1,820		19		-		1,839
Collateralized mortgage obligations		80,252		1,280		(411)		81,121
Trust preferred stock and preferred stock		-		1		-		1
Corporate bonds		6,913		85		(6)		6,992
Obligations of state and political subdivisions		83,732		4,827		(27)		88,532
Total Available-for-Sale	$	232,097	$	7,688	$	(464)	$	239,321

	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses		Fair Value
	(In Thousands)
Held-to-Maturity*:
FHLMC certificates	$	26	$	-	$	(8)	$	18
FNMA certificates		93		2		-		95
GNMA certificates		39		1		-		40
Obligations of states and political subdivisions		155		-		-		155
Total Held-to-Maturity	$	313	$	3	$	(8)	$	308

* FHLMC, FNMA, and GNMA certificates are residential mortgage-backed securities.

Investments Classified by Contractual Maturity Date [Table Text Block]

For purposes of the maturity table, mortgage-backed securities (“MBS”), collateralized mortgage obligations (“CMO”) and REMICs, which are not due at a single maturity date, have not been allocated over the maturity groupings. These securities may mature earlier than their weighted-average contractual maturities because of principal prepayments.

	Available-for-Sale				Held-to-Maturity
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
	(In Thousands)
Due in one year or less	$	1,008	$	1,016	$	-	$	-
Due after one year through five years		15,250		15,634		155		155
Due after five years through ten years		37,112		39,532		-		-
Due after ten years		43,545		46,071		-		-
MBS/CMO		142,797		146,185		144		145
	$	239,712	$	248,438	$	299	$	300

Unrealized Gain (Loss) on Investments [Table Text Block]

	Duration of Unrealized Loss Position
	Less than 12 Months				12 Months or Longer				Total
			Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Loss		Value		Loss		Value		Loses
	(In Thousands)
At March 31, 2015
Available-for-sale securities:
Obligations of U.S. government corporations and agencies	$	-	$	-	$	999	$	(1)	$	999	$	(1)
Collateralized mortgage obligations		1,584		(89)		9,292		(77)		10,876		(166)
Obligations of state and political subdivisions		1,127		(1)		422		(6)		1,549		(7)
Corporate bonds		-		-		994		(5)		994		(5)
Held to maturity securities:
FNMA certificates		26		(2)		1		-		27		(2)
Total temporarily impaired securities	$	2,737	$	(92)	$	11,708	$	(89)	$	14,445	$	(181)

	Duration of Unrealized Loss Position
	Less than 12 Months				12 Months or Longer				Total
			Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Loss		Value		Loss		Value		Loses
	(In Thousands)
At December 31, 2014
Available-for-sale securities:
Obligations of U.S. government corporations and agencies	$	-	$	-	$	980	$	(20)	$	980	$	(20)
Collateralized mortgage obligations		4,466		(138)		14,633		(273)		19,099		(411)
Corporate bonds		-		-		994		(6)		994		(6)
Obligations of state and political subdivisions		1,194		(8)		1,499		(19)		2,693		(27)
Held to maturity securities:
FHLMC certificates		18		(8)		-		-		18		(8)
Total temporarily impaired securities	$	5,678	$	(154)	$	18,106	$	(318)	$	23,784	$	(472)

Marketable Securities [Table Text Block]

The proceeds from the sales and calls of securities and the associated gains and losses are listed below:

	Three Months Ended March 31,
	2015		2014
	(In Thousands)
Proceeds	$	-	$	1,654
Gross realized gains		-		-
Gross realized losses		-		-

XML

Earnings Per Common Share (Tables)

3 Months Ended

Mar. 31, 2015

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

The following table sets forth the computation of basic and diluted earnings per common share:

	Three months ended March 31,
	2015		2014
	(In Thousands, except per share data)
Numerator for basic and diluted earnings per common share – Net income	$	6,601	$	5,179
Denominator:
Denominator for basic earnings per common share – weighted average common shares		9,234		9,681
Effect of warrants		291		341
Effect of employee stock options		86		86
Denominator for diluted earnings per common share		9,611		10,108
Basic earnings per common share	$	0.71	$	0.53
Diluted earnings per common share	$	0.69	$	0.51

XML

Loans (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014	Mar. 31, 2014	Dec. 31, 2013
Real Estate:
Real Estate	$ 1,205,178	$ 1,159,310
Other Loans:
Other Loans	521,100	527,009
Total loans	1,726,278	1,686,319
Deduct:
Undisbursed loan funds	(40,833)	(38,653)
Net deferred loan origination fees and costs	(927)	(880)
Allowance for loan loss	(25,302)	(24,766)	(24,783)	(24,950)
Totals	1,659,216	1,622,020
Consolidated [Member]
Real Estate:
Real Estate	203,558
First Federal Bank [Member]
Real Estate:
Real Estate	159,133
One to Four Family Residential Real Estate [Member]
Real Estate:
Real Estate	203,558	206,437
Multi Family Residential [Member]
Real Estate:
Real Estate	159,133	156,530
Commercial Real Estate [Member]
Real Estate:
Real Estate	717,343	683,958
Construction Loans [Member]
Real Estate:
Real Estate	125,144	112,385
Commercial Loan [Member]
Other Loans:
Other Loans	395,378	399,730
Home Equity and Home Improvement [Member]
Other Loans:
Other Loans	110,755	111,813
Consumer Loan [Member]
Other Loans:
Other Loans	$ 14,967	$ 15,466

XML

Stock Compensation Plans (Details)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Expected average risk-free rate	2.04%	1.64%
Expected average life	10 years	7 years 5 months 8 days
Expected volatility	42.00%	44.62%
Expected dividend yield	2.10%	2.17%

XML

Loans (Tables)

3 Months Ended

Mar. 31, 2015

Loans Receivable, Net [Abstract]

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

Loans receivable consist of the following:

	March 31, 2015		December 31, 2014
	(In Thousands)
Real Estate:
Secured by 1-4 family residential	$	203,558	$	206,437
Secured by multi-family residential		159,133		156,530
Secured by commercial real estate		717,343		683,958
Construction		125,144		112,385
		1,205,178		1,159,310
Other Loans:
Commercial		395,378		399,730
Home equity and improvement		110,755		111,813
Consumer Finance		14,967		15,466
		521,100		527,009
Total loans		1,726,278		1,686,319
Deduct:
Undisbursed loan funds		(40,833)		(38,653)
Net deferred loan origination fees and costs		(927)		(880)
Allowance for loan loss		(25,302)		(24,766)
Totals	$	1,659,216	$	1,622,020

Schedule of Valuation Allowance for Impairment of Recognized Servicing Assets [Table Text Block]

The following table discloses allowance for loan loss activity for the quarter ended March 31, 2015 and 2014 by portfolio segment (In Thousands):

Quarter Ended March 31, 2015	1-4 Family Residential Real Estate		Multi- Family Residential Real Estate		Commercial Real Estate		Construction		Commercial		Home Equity and Improvement		Consumer Finance		Total
Beginning Allowance	$	2,494	$	2,453	$	11,268	$	221	$	6,509	$	1,704	$	117	$	24,766
Charge-Offs		(78)		0		(155)		0		(2)		(43)		(3)		(281)
Recoveries		19		0		597		0		40		29		12		697
Provisions		48		101		(26)		82		219		(270)		(34)		120
Ending Allowance	$	2,483	$	2,554	$	11,684	$	303	$	6,766	$	1,420	$	92	$	25,302

Quarter Ended March 31, 2014	1-4 Family Residential Real Estate		Multi- Family Residential Real Estate		Commercial Real Estate		Construction		Commercial		Home Equity and Improvement		Consumer Finance		Total
Beginning Allowance	$	2,847	$	2,508	$	12,000	$	134	$	5,678	$	1,635	$	148	$	24,950
Charge-Offs		(228)		0		(228)		0		(525)		(184)		(11)		(1,176)
Recoveries		56		3		722		0		76		31		18		906
Provisions		(36)		104		(507)		4		381		165		(8)		103
Ending Allowance	$	2,639	$	2,615	$	11,987	$	138	$	5,610	$	1,647	$	147	$	24,783

Schedule of Allowance for Loan Losses and Recorded Investment in Portfolio Segment Based on Impairment [Table Text Block]

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of March 31, 2015 (In Thousands):

	1-4 Family		Multi Family
	Residential		Residential		Commercial						Home Equity		Consumer
	Real Estate		Real Estate		Real Estate		Construction		Commercial		& Improvement		Finance		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	260	$	4	$	317	$	-	$	30	$	24	$	5	$	640
Collectively evaluated for impairment		2,223		2,550		11,367		303		6,736		1,396		87		24,662
Acquired with deteriorated credit quality		-		-		-		-		-		-		-		-
Total ending allowance balance	$	2,483	$	2,554	$	11,684	$	303	$	6,766	$	1,420	$	92	$	25,302
Loans:
Loans individually evaluated for impairment	$	10,291	$	2,445	$	19,759	$	150	$	5,181	$	2,253	$	39	$	40,118
Loans collectively evaluated for impairment		193,661		156,807		699,773		84,159		391,540		108,968		14,911		1,649,819
Loans acquired with deteriorated credit quality		1		-		163		-		21		-		-		185
Total ending loans balance	$	203,953	$	159,252	$	719,695	$	84,309	$	396,742	$	111,221	$	14,950	$	1,690,122

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of December 31, 2014 (In Thousands):

	1-4 Family		Multi Family
	Residential		Residential		Commercial						Home Equity		Consumer
	Real Estate		Real Estate		Real Estate		Construction		Commercial		& Improvement		Finance		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	216	$	-	$	1,003	$	-	$	30	$	24	$	-	$	1,273
Collectively evaluated for impairment		2,278		2,453		10,265		221		6,479		1,680		117		23,493
Acquired with deteriorated credit quality		-		-		-		-		-		-		-		-
Total ending allowance balance	$	2,494	$	2,453	$	11,268	$	221	$	6,509	$	1,704	$	117	$	24,766
Loans:
Loans individually evaluated for impairment	$	10,281	$	2,482	$	28,117	$	150	$	5,739	$	2,242	$	34	$	49,045
Loans collectively evaluated for impairment		196,582		154,178		657,677		73,572		395,270		110,040		15,417		1,602,736
Loans acquired with deteriorated credit quality		1		-		163		-		22		-		-		186
Total ending loans balance	$	206,864	$	156,660	$	685,957	$	73,722	$	401,031	$	112,282	$	15,451	$	1,651,967

Loans Receivable, Impaired, Interest Income, Cash Basis Method [Table Text Block]

The following table presents the average balance, interest income recognized and cash basis income recognized on impaired loans by class of loans (In Thousands):

	Three Months Ended March 31, 2015
	Average Balance		Interest Income Recognized		Cash Basis Income Recognized
Residential Owner Occupied	$	5,992	$	68	$	68
Residential Non Owner Occupied		4,347		41		40
Total Residential Real Estate		10,339		109		108
Multi-Family		2,463		8		8
CRE Owner Occupied		6,513		37		39
CRE Non Owner Occupied		10,187		133		135
Agriculture Land		760		7		13
Other CRE		2,441		10		9
Total Commercial Real Estate		19,901		187		196
Construction		150		2		2
Commercial Working Capital		1,866		13		13
Commercial Other		3,839		13		18
Total Commercial		5,705		26		31
Home Equity and Home Improvement		2,202		20		20
Consumer		43		-		-
Total Impaired Loans	$	40,803	$	352	$	365

The following table presents the average balance, interest income recognized and cash basis income recognized on impaired loans by class of loans (In Thousands):

	Three Months Ended March 31, 2014
	Average Balance		Interest Income Recognized		Cash Basis Income Recognized
Residential Owner Occupied	$	6,329	$	85	$	83
Residential Non Owner Occupied		4,084		38		38
Total Residential Real Estate		10,413		123		121
Multi-Family		388		1		1
CRE Owner Occupied		9,837		36		35
CRE Non Owner Occupied		19,355		204		204
Agriculture Land		687		3		2
Other CRE		1,862		5		5
Total Commercial Real Estate		31,741		248		246
Construction		261		3		5
Commercial Working Capital		2,924		3		3
Commercial Other		4,959		2		2
Total Commercial		7,883		5		5
Home Equity and Home Improvement		2,439		25		25
Consumer		57		1		1
Total Impaired Loans	$	53,182	$	406	$	404

Impaired Financing Receivables [Table Text Block]

The following table presents loans individually evaluated for impairment by class of loans (In Thousands):

	March 31, 2015						December 31, 2014
	Unpaid Principal Balance*		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Principal Balance*		Recorded Investment		Allowance for Loan Losses Allocated
With no allowance recorded:
Residential Owner Occupied	$	3,763	$	3,655	$	-	$	3,967	$	3,859	$	-
Residential Non Owner Occupied		3,631		3,624		-		3,763		3,670		-
Total 1-4 Family Residential Real Estate		7,394		7,279		-		7,730		7,529		-
Multi-Family Residential Real Estate		455		307		-		2,627		2,482		-
CRE Owner Occupied		4,197		3,842		-		7,109		6,481		-
CRE Non Owner Occupied		3,226		2,878		-		4,106		3,759		-
Agriculture Land		621		621		-		213		208		-
Other CRE		2,384		2,056		-		2,923		2,378		-
Total Commercial Real Estate		10,428		9,397		-		14,351		12,826		-
Construction		150		150		-		150		150		-
Commercial Working Capital		826		827		-		1,155		1,157		-
Commercial Other		3,544		3,384		-		3,966		3,663		-
Total Commercial		4,370		4,211		-		5,121		4,820		-
Home Equity and Home Improvement		2,205		2,154		-		2,192		2,140		-
Consumer Finance		34		34		-		35		34		-
Total loans with no allowance recorded	$	25,036	$	23,532	$	-	$	32,206	$	29,981	$	-
With an allowance recorded:
Residential Owner Occupied	$	2,305	$	2,306	$	247	$	2,112	$	2,114	$	204
Residential Non Owner Occupied		701		706		13		636		638		12
Total 1-4 Family Residential Real Estate		3,006		3,012		260		2,748		2,752		216
Multi-Family Residential Real Estate		2,141		2,138		4		-		-		-
CRE Owner Occupied		3,025		2,617		152		2,667		2,257		148
CRE Non Owner Occupied		7,324		7,280		152		13,020		12,606		842
Agriculture Land		125		113		3		333		320		10
Other CRE		596		352		10		137		108		3
Total Commercial Real Estate		11,070		10,362		317		16,157		15,291		1,003
Construction		-		-		-		-		-		-
Commercial Working Capital		703		704		22		649		650		21
Commercial Other		263		266		8		264		269		9
Total Commercial		966		970		30		913		919		30
Home Equity and Home Improvement		98		99		24		101		102		24
Consumer Finance		5		5		5		-		-		-
Total loans with an allowance recorded	$	17,286	$	16,586	$	640	$	19,919	$	19,064	$	1,273

* Presented gross of charge offs

Schedule of Non-Performing Loans and Real Estate Owned [Table Text Block]

The following table presents the current balance of the aggregate amounts of non-performing assets, comprised of non-performing loans and real estate owned on the dates indicated: 

	March 31, 2015		December 31, 2014
	(In Thousands)
Non-accrual loans	$	18,703	$	24,130
Loans over 90 days past due and still accruing		-		-
Total non-performing loans		18,703		24,130
Real estate and other assets held for sale		6,392		6,181
Total non-performing assets	$	25,095	$	30,311
Troubled debt restructuring, still accruing	$	19,616	$	24,686

Schedule of Financing Receivables, Non Accrual Status [Table Text Block]

The following table presents the aging of the recorded investment in past due and non accrual loans as of March 31, 2015 by class of loans (In Thousands):

	Current		30-59 days		60-89 days		90+ days		Total Past Due		Total Non Accrual
Residential Owner Occupied	$	138,476	$	118	$	242	$	537	$	897	$	1,690
Residential Non Owner Occupied		63,262		378		362		578		1,318		1,548
Total 1-4 Family Residential Real Estate		201,738		496		604		1,115		2,215		3,238
Multi-Family Residential Real Estate		156,869		-		2,138		245		2,383		2,403
CRE Owner Occupied		313,484		1,188		1,513		1,572		4,273		4,377
CRE Non Owner Occupied		262,278		110		-		662		772		1,887
Agriculture Land		98,781		164		-		12		176		462
Other Commercial Real Estate		39,524		-		-		407		407		2,267
Total Commercial Real Estate		714,067		1,462		1,513		2,653		5,628		8,993
Construction		84,309		-		-		-		-		-
Commercial Working Capital		139,101		10		69		340		419		355
Commercial Other		255,899		233		23		1,067		1,323		3,163
Total Commercial		395,000		243		92		1,407		1,742		3,518
Consumer Finance		14,934		16		-		-		16		16
Home Equity/Home Improvement		111,060		75		56		30		161		534
Total Loans	$	1,677,977	$	2,292	$	4,403	$	5,450	$	12,145	$	18,702

The following table presents the aging of the recorded investment in past due and non accrual loans as of December 31, 2014 by class of loans (In Thousands):

	Current		30-59 days		60-89 days		90+ days		Total Past Due		Total Non Accrual
Residential Owner Occupied	$	141,597	$	39	$	1,079	$	365	$	1,483	$	1,702
Residential Non Owner Occupied		62,991		110		105		578		793		1,625
Total 1-4 Family Residential Real Estate		204,588		149		1,184		943		2,276		3,327
Multi-Family Residential Real Estate		156,413		247		-		-		247		2,546
CRE Owner Occupied		299,500		163		1,566		1,753		3,482		7,004
CRE Non Owner Occupied		243,341		119		416		1,308		1,843		2,582
Agriculture Land		93,529		-		14		-		14		686
Other Commercial Real Estate		43,835		155		-		258		413		2,359
Total Commercial Real Estate		680,205		437		1,996		3,319		5,752		12,631
Construction		73,722		-		-		-		-		-
Commercial Working Capital		135,009		-		-		951		951		1,103
Commercial Other		262,982		67		10		2,012		2,089		3,897
Total Commercial		397,991		67		10		2,963		3,040		5,000
Consumer Finance		15,326		68		57		-		125		12
Home Equity/Home Improvement		110,940		1,236		-		106		1,342		619
Total Loans	$	1,639,185	$	2,204	$	3,247	$	7,331	$	12,782	$	24,135

Troubled Debt Restructurings on Financing Receivables [Table Text Block]

The following table presents loans by class modified as troubled debt restructurings that occurred during the three month period ending March 31, 2015 and March 31, 2014:

	Loans Modified as a TDR for the Three Months Ended March 31, 2015 ($ in thousands)				Loans Modified as a TDR for the Three Months Ended March 31, 2014 ($ in thousands)
Troubled Debt Restructurings	Number of Loans		Recorded Investment (as of period end)		Number of Loans		Recorded Investment (as of period end)
1-4 Family Owner Occupied		3	$	228		9	$	763
1-4 Family Non Owner Occupied		4		68		0		-
CRE Owner Occupied		0		-		0		-
CRE Non Owner Occupied		0		-		1		361
Agriculture Land		0		-		0		-
Other CRE		0		-		0		-
Commercial Working Capital		0		-		2		321
Commercial Other		0		-		0		-
Home Equity and Improvement		3		59		3		60
Consumer Finance		5		10		3		11
Total		15	$	365		18	$	1,516

Troubled Debt Restructurings on Payments [Table Text Block]

The following table presents loans by class modified as TDRs for which there was a payment default within twelve months following the modification during the quarters ending March 31, 2015 and March 31, 2014:

	Three Months Ended March 31, 2015 ($ in thousands)				Three Months Ended March 31, 2014 ($ in thousands)
Troubled Debt Restructurings That Subsequently Defaulted	Number of Loans		Recorded Investment (as of period end)		Number of Loans		Recorded Investment (as of period end)
1-4 Family Owner Occupied		1	$	126		0	$	-
1-4 Family Non Owner Occupied		1		104		0		-
CRE Owner Occupied		0		-		0		-
CRE Non Owner Occupied		2		387		0		-
Agriculture Land		0		-		0		-
Other CRE		0		-		0		-
Commercial Working Capital or Other		1		120		0		-
Commercial Other		0		-		0		-
Home Equity and Improvement		0		-		0		-
Consumer Finance		0		-		0		-
Total		5	$	737		0	$	-

Financing Receivable Credit Quality Indicators [Table Text Block]

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans. As of March 31, 2015, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows (In Thousands):

Class	Pass		Special Mention		Substandard		Doubtful		Not Graded		Total
1-4 Family Owner Occupied	$	3,740	$	128	$	2,745	$	-	$	132,761	$	139,374
1-4 Family Non Owner Occupied		52,352		2,554		4,760		-		4,913		64,579
Total 1-4 Family Real Estate		56,092		2,682		7,505		-		137,674		203,953
Multi-Family Residential Real Estate		155,041		216		3,095		-		900		159,252
CRE Owner Occupied		289,959		18,886		7,862		-		1,050		317,757
CRE Non Owner Occupied		254,234		3,728		5,068		-		20		263,050
Agriculture Land		96,190		1,759		1,008		-		-		98,957
Other CRE		35,867		62		3,455		-		547		39,931
Total Commercial Real Estate		676,250		24,435		17,393		-		1,617		719,695
Construction		72,608		-		150		-		11,551		84,309
Commercial Working Capital		131,327		7,096		1,097		-		-		139,520
Commercial Other		246,539		6,144		4,539		-		-		257,222
Total Commercial		377,866		13,240		5,636		-		-		396,742
Home Equity and Home Improvement		-		-		617		-		110,604		111,221
Consumer Finance		-		-		36		-		14,914		14,950
Total Loans	$	1,337,857	$	40,573	$	34,432	$	-	$	277,260	$	1,690,122

As of December 31, 2014, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows (In Thousands):

Class	Pass		Special Mention		Substandard		Doubtful		Not Graded		Total
1-4 Family Owner Occupied	$	4,230	$	131	$	3,048	$	365	$	135,306	$	143,080
1-4 Family Non Owner Occupied		51,327		2,404		4,872		7		5,174		63,784
Total 1-4 Family Real Estate		55,557		2,535		7,920		372		140,480		206,864
Multi-Family Residential Real Estate		152,290		220		3,236		-		914		156,660
CRE Owner Occupied		273,406		18,448		9,953		-		1,175		302,982
CRE Non Owner Occupied		224,073		7,898		13,186		-		27		245,184
Agriculture Land		90,875		1,849		819		-		-		93,543
Other CRE		40,147		63		3,466		-		572		44,248
Total Commercial Real Estate		628,501		28,258		27,424		-		1,774		685,957
Construction		62,355		-		150		-		11,217		73,722
Commercial Working Capital		128,229		6,287		1,444		-		-		135,960
Commercial Other		253,576		6,504		4,991		-		-		265,071
Total Commercial		381,805		12,791		6,435		-		-		401,031
Home Equity and Home Improvement		-		-		1,647		106		110,529		112,282
Consumer Finance		-		-		125		-		15,326		15,451
Total Loans	$	1,280,508	$	43,804	$	46,937	$	478	$	280,240	$	1,651,967

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Mortgage Banking (Tables)

3 Months Ended

Mar. 31, 2015

Mortgage Banking [Abstract]

Mortgage Loans [Table Text Block]

Net revenues from the sales and servicing of mortgage loans consisted of the following:

	Three Months Ended March 31,
	2015		2014
	(In Thousands)
Gain from sale of mortgage loans	$	1,285	$	641
Mortgage loans servicing revenue (expense):
Mortgage loans servicing revenue		875		905
Amortization of mortgage servicing rights		(411)		(292)
Mortgage servicing rights valuation adjustments		26		(7)
		490		606
Net revenue from sale and servicing of mortgage loans	$	1,775	$	1,247

Capitalized Mortgage and Valuation Allowance [Table Text Block]

Activity for capitalized mortgage servicing rights and the related valuation allowance follows for the three months ended March 31, 2015 and 2014:

	March 31, 2015		March 31, 2014
	(In Thousands)
Mortgage servicing assets:
Balance at beginning of period	$	9,923	$	10,133
Loans sold, servicing retained		320		207
Amortization		(411)		(292)
Carrying value before valuation allowance at end of period		9,832		10,048
Valuation allowance:
Balance at beginning of period		(911)		(1,027)
Impairment (expense) recovery		26		(7)
Balance at end of period		(885)		(1,034)
Net carrying value of MSRs at end of period	$	8,947	$	9,014
Fair value of MSRs at end of period	$	9,180	$	9,628

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Consolidated Condensed Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Operating Activities
Net income	$ 6,601	$ 5,179
Items not requiring (providing) cash
Provision for loan losses	120	103
Depreciation	765	725
Amortization of mortgage servicing rights, net of impairment recoveries	385	299
Amortization of core deposit and other intangible assets	217	289
Net amortization of premiums and discounts on loans and deposits	232	160
Amortization of premiums and discounts on securities	176	93
Change in deferred taxes	(195)	(129)
Proceeds from sale of loans held for sale	42,628	27,698
Origination of loans held for sale	(46,672)	(28,093)
Gain from sale of loans	(1,321)	(644)
Loss from write-down of property and equipment	426	0
Gain from sale or call of securities	0	0
(Gain) loss on sale / write-down of real estate and other assets held for sale	79	(38)
Stock option expense	21	20
Restricted stock expense (credit)	131	(177)
Income from bank owned life insurance	(208)	(219)
Changes in:
Accrued interest receivable	(930)	(344)
Other assets	(2,002)	(2,069)
Other liabilities	2,390	2,489
Net cash provided by operating activities	2,843	5,342
Investing Activities
Proceeds from maturities of held-to-maturity securities	14	8
Proceeds from maturities, calls and pay-downs of available-for-sale securities	6,395	5,496
Proceeds from sale of real estate and other assets held for sale	572	496
Proceeds from the sale of available-for-sale securities	0	1,654
Proceeds from sale of non-mortgage loans	501	8,679
Purchases of available-for-sale securities	(14,187)	(16,672)
Purchase of bank owned life insurance	0	(4,000)
Purchase of portfolio mortgage loans	0	(5,118)
Proceeds from Federal Home Loan stock redemption	0	5,548
Purchases of premises and equipment, net	(829)	(507)
Net (increase)/decrease in loans receivable	(38,693)	13,058
Net cash provided by investing activities	(46,227)	8,642
Financing Activities
Net increase in deposits and advance payments by borrowers	10,770	24,515
Repayment of Federal Home Loan Bank advances	(7,246)	(242)
Proceeds from Federal Home Loan Bank advances	17,000	0
Increase (decrease) in securities sold under repurchase agreements	5,512	(2,980)
Repayment of warrants	(11,979)	0
Proceeds from exercise of stock options	723	76
Proceeds from treasury stock sales	18	0
Net cash paid for repurchase of common stock	(1,264)	(2,039)
Cash dividends paid on common stock	(1,614)	(1,449)
Net cash provided by (used in) financing activities	11,920	17,881
Increase in cash and cash equivalents	(31,464)	31,865
Cash and cash equivalents at beginning of period	112,936	179,318
Cash and cash equivalents at end of period	81,472	211,183
Supplemental cash flow information:
Interest paid	1,577	1,662
Income taxes paid	0	0
Transfers from loans to other real estate owned and other assets held for sale	$ 680	$ 627

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Deposits (Tables)

3 Months Ended

Mar. 31, 2015

Deposits [Abstract]

Deposits [Table Text Block]

A summary of deposit balances is as follows (in thousands):

	March 31, 2015		December 31, 2014
	(In Thousands)
Non-interest-bearing checking accounts	$	370,997	$	379,552
Interest-bearing checking and money market accounts		737,533		727,729
Savings deposits		215,590		203,673
Retail certificates of deposit less than $250,000		422,886		422,907
Retail certificates of deposit greater than $250,000		25,687		26,952
	$	1,772,693	$	1,760,813

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Fair Value (Details 2) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Mar. 01, 2015	Dec. 31, 2014
Impaired loans
Total impaired loans	$ 6,400		$ 7,791
Mortgage servicing rights	935	935	1,034
Real estate held for sale
Total real estate held for sale	436		739
One To Four Family Residential Real Estate [Member]
Impaired loans
Total impaired loans	405		419
Multi Family Residential Real Estate [Member]
Impaired loans
Total impaired loans	257		269
Commercial Real Estate [Member]
Impaired loans
Total impaired loans	5,501		6,665
Real estate held for sale
Total real estate held for sale	321		739
Home Equity and Improvement [Member]
Impaired loans
Total impaired loans	96		98
Residential Mortgage [Member]
Real estate held for sale
Total real estate held for sale	115		0
Commercial Loan [Member]
Impaired loans
Total impaired loans	141		340
Fair Value, Inputs, Level 1 [Member]
Impaired loans
Total impaired loans	0		0
Mortgage servicing rights	0		0
Real estate held for sale
Total real estate held for sale	0		0
Fair Value, Inputs, Level 1 [Member] | One To Four Family Residential Real Estate [Member]
Impaired loans
Total impaired loans	0		0
Fair Value, Inputs, Level 1 [Member] | Multi Family Residential Real Estate [Member]
Impaired loans
Total impaired loans	0		0
Fair Value, Inputs, Level 1 [Member] | Commercial Real Estate [Member]
Impaired loans
Total impaired loans	0		0
Real estate held for sale
Total real estate held for sale	0		0
Fair Value, Inputs, Level 1 [Member] | Home Equity and Improvement [Member]
Impaired loans
Total impaired loans	0		0
Fair Value, Inputs, Level 1 [Member] | Residential Mortgage [Member]
Real estate held for sale
Total real estate held for sale	0		0
Fair Value, Inputs, Level 1 [Member] | Commercial Loan [Member]
Impaired loans
Total impaired loans	0
Fair Value, Inputs, Level 2 [Member]
Impaired loans
Total impaired loans	0		0
Mortgage servicing rights	935		1,034
Real estate held for sale
Total real estate held for sale	0		0
Fair Value, Inputs, Level 2 [Member] | One To Four Family Residential Real Estate [Member]
Impaired loans
Total impaired loans	0		0
Fair Value, Inputs, Level 2 [Member] | Multi Family Residential Real Estate [Member]
Impaired loans
Total impaired loans	0		0
Fair Value, Inputs, Level 2 [Member] | Commercial Real Estate [Member]
Impaired loans
Total impaired loans	0		0
Real estate held for sale
Total real estate held for sale	0		0
Fair Value, Inputs, Level 2 [Member] | Home Equity and Improvement [Member]
Impaired loans
Total impaired loans	0		0
Fair Value, Inputs, Level 2 [Member] | Residential Mortgage [Member]
Real estate held for sale
Total real estate held for sale	0		0
Fair Value, Inputs, Level 2 [Member] | Commercial Loan [Member]
Impaired loans
Total impaired loans	0
Fair Value, Inputs, Level 3 [Member]
Impaired loans
Total impaired loans	6,400		7,791
Mortgage servicing rights	0		0
Real estate held for sale
Total real estate held for sale	436		739
Fair Value, Inputs, Level 3 [Member] | One To Four Family Residential Real Estate [Member]
Impaired loans
Total impaired loans	405		419
Fair Value, Inputs, Level 3 [Member] | Multi Family Residential Real Estate [Member]
Impaired loans
Total impaired loans	257		269
Fair Value, Inputs, Level 3 [Member] | Commercial Real Estate [Member]
Impaired loans
Total impaired loans	5,501		6,665
Real estate held for sale
Total real estate held for sale	321		739
Fair Value, Inputs, Level 3 [Member] | Home Equity and Improvement [Member]
Impaired loans
Total impaired loans	96		98
Fair Value, Inputs, Level 3 [Member] | Residential Mortgage [Member]
Real estate held for sale
Total real estate held for sale	115		0
Fair Value, Inputs, Level 3 [Member] | Commercial Loan [Member]
Impaired loans
Total impaired loans	$ 141		$ 340

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Investment Securities (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2015	Dec. 31, 2014
Held to maturity securities:
Total temporarily impaired securities, Duration Unrealized Loss Position, Less Than Twelve Months, Fair Value	$ 2,737	$ 5,678
Total temporarily impaired securities, Duration of Unrealized Loss Position, Less Than 12 Months, Gross Unrealized Loss	(92)	(154)
Total temporarily impaired securities, Duration of Unrealized Loss Position, Twelve Months Or Longer, Fair Value	11,708	18,106
Total temporarily impaired securities, Duration of Unrealized Loss Position, Twelve Months or Longer, Gross Unrealized Loss	(89)	(318)
Total temporarily impaired securities, Duration of Unrealized Loss Position, Fair Value	14,445	23,784
Total temporarily impaired securities, Duration of Unrealized Loss Position, Gross Unrealized Loss	(181)	(472)
Federal Home Loan Mortgage Corporation Certificates and Obligations (Fhlmc) [Member]
Held to maturity securities:
Held-to-maturity Securities, Duration of Unrealized Loss Position, Less than Twelve Months, Fair Value		18
Held-to-maturity Securities, Duration of Unrealized Loss Position, Less than 12 Months, Gross Unrealized Loss		(8)
Held-to-maturity Securities, Duration of Unrealized Loss Position, Twelve Months or Longer, Fair Value		0
Held-to-maturity Securities, Duration of Unrealized Loss Position, 12 Months or Longer, Gross Unrealized Loss		0
Held-to-maturity Securities, Duration of Unrealized Loss Position, Fair Value		18
Held-to-maturity Securities, Duration of Unrealized Loss Position, Gross Unrealized Loss		(8)
Federal National Mortgage Association Certificates and Obligations (Fnma) [Member]
Held to maturity securities:
Held-to-maturity Securities, Duration of Unrealized Loss Position, Less than Twelve Months, Fair Value	26
Held-to-maturity Securities, Duration of Unrealized Loss Position, Less than 12 Months, Gross Unrealized Loss	(2)
Held-to-maturity Securities, Duration of Unrealized Loss Position, Twelve Months or Longer, Fair Value	1
Held-to-maturity Securities, Duration of Unrealized Loss Position, 12 Months or Longer, Gross Unrealized Loss	0
Held-to-maturity Securities, Duration of Unrealized Loss Position, Fair Value	27
Held-to-maturity Securities, Duration of Unrealized Loss Position, Gross Unrealized Loss	(2)
Collateralized Mortgage Obligations [Member]
Available-for-sale securities, Duration of Unrealized Loss Position, Less than 12 Month, Fair Value	1,584	4,466
Available-for-sale Securities, Duration of Unrealized Loss Position, Less than 12 Month, Gross Unrealized Loss	(89)	(138)
Available-for-sale securities, Duration of Unrealized Loss Position, 12 Month or Longer, Fair Value	9,292	14,633
Available-for-sale Securities, Duration of Unrealized Loss Position, 12 Month or Longer, Gross Unrealized Loss	(77)	(273)
Available-for-sale securities, Total, Fair Value	10,876	19,099
Available-for-sale securities, Total, Unrealized Loss	(166)	(411)
Corporate Bond Securities [Member]
Available-for-sale securities, Duration of Unrealized Loss Position, Less than 12 Month, Fair Value	0	0
Available-for-sale Securities, Duration of Unrealized Loss Position, Less than 12 Month, Gross Unrealized Loss	0	0
Available-for-sale securities, Duration of Unrealized Loss Position, 12 Month or Longer, Fair Value	994	994
Available-for-sale Securities, Duration of Unrealized Loss Position, 12 Month or Longer, Gross Unrealized Loss	(5)	(6)
Available-for-sale securities, Total, Fair Value	994	994
Available-for-sale securities, Total, Unrealized Loss	(5)	(6)
US States and Political Subdivisions Debt Securities [Member]
Available-for-sale securities, Duration of Unrealized Loss Position, Less than 12 Month, Fair Value	1,127	1,194
Available-for-sale Securities, Duration of Unrealized Loss Position, Less than 12 Month, Gross Unrealized Loss	(1)	(8)
Available-for-sale securities, Duration of Unrealized Loss Position, 12 Month or Longer, Fair Value	422	1,499
Available-for-sale Securities, Duration of Unrealized Loss Position, 12 Month or Longer, Gross Unrealized Loss	(6)	(19)
Available-for-sale securities, Total, Fair Value	1,549	2,693
Available-for-sale securities, Total, Unrealized Loss	(7)	(27)
Us Government Corporations and Agencies Securities [Member]
Available-for-sale securities, Duration of Unrealized Loss Position, Less than 12 Month, Fair Value	0	0
Available-for-sale Securities, Duration of Unrealized Loss Position, Less than 12 Month, Gross Unrealized Loss	0	0
Available-for-sale securities, Duration of Unrealized Loss Position, 12 Month or Longer, Fair Value	999	980
Available-for-sale Securities, Duration of Unrealized Loss Position, 12 Month or Longer, Gross Unrealized Loss	(1)	(20)
Available-for-sale securities, Total, Fair Value	999	980
Available-for-sale securities, Total, Unrealized Loss	$ (1)	$ (20)

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Borrowings (Details Textual) (USD $) In Millions, unless otherwise specified	12 Months Ended	3 Months Ended
	Dec. 31, 2005	Mar. 31, 2007	Mar. 31, 2015	Dec. 31, 2014
Putable Advances [Member]
Federal Home Loan Bank Advances Balance Amount Yet To Be Called Series1			5.0
Federal home Loan Bank Advances Interest Rate On Balance Amount Yet To Be Called Series1			2.35%
Trust Affiliate I [Member]
Issuance Of Trust Preferred Securities	20
Issuance Of Subordinated Debentures	20.6
Coupon Rate On Preferred Securities, Period End			1.65%	1.62%
Preferred Securities Variable Interest Rate	LIBOR rate plus 1.38%
Trust Affiliate II [Member]
Issuance Of Trust Preferred Securities		15
Issuance Of Subordinated Debentures		$ 15.5
Coupon Rate On Preferred Securities, Period End			1.77%	1.74%
Preferred Securities Variable Interest Rate		LIBOR rate plus 1.5%
Trust Affiliate II [Member] | Strike Rate Advances [Member]
Federal Home Loan Bank Advances Branch of Fhlb Bank Last Due Date			March 12, 2018

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Consolidated Condensed Statements of Financial Condition (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Cash and cash equivalents:
Cash and amounts due from depository institutions	$ 38,472	$ 41,936
Federal funds sold	43,000	71,000
Cash and cash equivalents at beginning of year	81,472	112,936
Securities:
Available-for-sale Securities	248,438	239,321
Held-to-maturity, carried at amortized cost (fair value $300 and $308 at March 31, 2015 and December 31, 2014, respectively)	299	313
Marketable Securities, Total	248,737	239,634
Loans held for sale	9,544	4,535
Loans receivable, net of allowance of $25,302 at March 31, 2015 and $24,766 at December 31, 2014, respectively	1,659,216	1,622,020
Accrued interest receivable	6,967	6,037
Federal Home Loan Bank stock	13,802	13,802
Bank owned life insurance	47,221	47,013
Premises and equipment	39,952	40,496
Real estate and other assets held for sale	6,392	6,181
Goodwill	61,525	61,525
Core deposit and other intangibles	2,178	2,395
Mortgage servicing rights	8,947	9,012
Other assets	15,368	13,366
Total assets	2,201,321	2,178,952
Liabilities:
Deposits	1,772,693	1,760,813
Advances from the Federal Home Loan Bank	31,298	21,544
Subordinated debentures	36,083	36,083
Securities sold under repurchase agreements	60,271	54,759
Advance payments by borrowers	1,199	2,309
Deferred taxes	1,507	1,176
Other liabilities	25,153	22,763
Total liabilities	1,928,204	1,899,447
Stockholders' equity:
Preferred stock, $.01 par value per share: 37,000 shares authorized; no shares issued	0	0
Preferred stock, $.01 par value per share: 4,963,000 shares authorized; no shares issued	0	0
Common stock, $.01 par value per share: 25,000,000 shares authorized; 12,725,388 and 12,735,313 shares issued and 9,248,040 and 9,234,534 shares outstanding, respectively	127	127
Common stock warrant	0	878
Additional paid-in capital	125,271	136,266
Accumulated other comprehensive income, net of tax of $2,741 and $2,214, respectively	5,089	4,114
Retained earnings	205,300	200,600
Treasury stock, at cost, 3,477,348 and 3,500,779 shares respectively	(62,670)	(62,480)
Total stockholders’ equity	273,117	279,505
Total liabilities and stockholders’ equity	$ 2,201,321	$ 2,178,952

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Stock Compensation Plans (Details 1) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2015
Options outstanding, January 1, 2015	173,720
Options Outstanding, Forfeited or cancelled	4,750
Options Outstanding, Exercised	48,500
Options Outstanding, Granted	6,250
Options outstanding, March 31, 2015	126,720
Options Outstanding, Vested or expected to vest at March 31, 2015	126,720
Options Outstanding, Exercisable at March 31, 2015	112,070
Weighted Average Exercise Price, Outstanding, January 1, 2015	$ 20.8
Weighted Average Exercise Price, Forfeited or cancelled	$ 25.32
Weighted Average Exercise Price, Exercised	$ 21.82
Weighted Average Exercise Price, Granted	$ 32.94
Weighted Average Exercise Price, Outstanding, March 31, 2015	$ 20.84
Weighted Average Exercise Price, Vested or expected to vest at March 31, 2015	$ 20.84
Weighted Average Exercise Price, Exercisable at March 31, 2015	$ 19.7
Weighted Average Remaining Contractual Term (in years), Outstanding, March 31, 2015	3 years 5 months 5 days
Weighted Average Remaining Contractual Term (in years), Vested or expected to vest at March 31, 2015	3 years 5 months 5 days
Weighted Average Remaining Contractual Term (in years), Exercisable at March 31, 2015	2 years 8 months 1 day
Aggregate Intrinsic Value, Outstanding, March 31, 2015	$ 1,519
Aggregate Intrinsic Value, Vested or expected to vest at March 31, 2015	1,519
Aggregate Intrinsic Value, Exercisable at March 31, 2015	$ 1,470

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Consolidated Statement of Changes in Stockholders' Equity (USD $) In Thousands	Total	Preferred Stock [Member]	Common Stock [Member]	Common Stock Warrant [Member]	Additional Paid-in Capital [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Retained Earnings [Member]	Treasury Stock [Member]
Balance at Dec. 31, 2013	$ 272,147	$ 0	$ 127	$ 878	$ 136,403	$ 545	$ 182,290	$ (48,096)
Net income	5,179						5,179
Other comprehensive income	1,120					1,120
Stock option expense	20				20
Shares issued under stock option plan	76				(11)		(19)	106
Restricted share activity under stock incentive plans	(177)				(270)			93
shares repurchased	(2,039)							(2,039)
Common stock dividends declared	(1,449)						(1,449)
Balance at Mar. 31, 2014	274,877	0	127	878	136,142	1,665	186,001	(49,936)
Balance at Dec. 31, 2014	279,505	0	127	878	136,266	4,114	200,600	(62,480)
Net income	6,601						6,601
Other comprehensive income	975					975
Stock option expense	21				21
Warrant repurchase	(11,979)			(878)	(11,101)
Shares issued under stock option plan	723				177		(287)	833
Restricted share activity under stock incentive plans	131				(100)			231
542 shares issued direct purchases	18				8			10
shares repurchased	(1,264)							(1,264)
Common stock dividends declared	(1,614)						(1,614)
Balance at Mar. 31, 2015	$ 273,117	$ 0	$ 127	$ 0	$ 125,271	$ 5,089	$ 205,300	$ (62,670)

XML

Loans (Details 3) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Balance	$ 40,803	$ 53,182
Interest Income Recognized	352	406
Cash Basis Income Recognized	365	404
Residential Owner Occupied [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Balance	5,992	6,329
Interest Income Recognized	68	85
Cash Basis Income Recognized	68	83
Residential Non Owner Occupied [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Balance	4,347	4,084
Interest Income Recognized	41	38
Cash Basis Income Recognized	40	38
One To Four Family Residential Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Balance	10,339	10,413
Interest Income Recognized	109	123
Cash Basis Income Recognized	108	121
Multi Family Residential Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Balance	2,463	388
Interest Income Recognized	8	1
Cash Basis Income Recognized	8	1
Commercial Real Estate Owner Occupied [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Balance	6,513	9,837
Interest Income Recognized	37	36
Cash Basis Income Recognized	39	35
Commercial Real Estate Non Owner Occupied [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Balance	10,187	19,355
Interest Income Recognized	133	204
Cash Basis Income Recognized	135	204
Agriculture Land [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Balance	760	687
Interest Income Recognized	7	3
Cash Basis Income Recognized	13	2
Commercial Real Estate Other Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Balance	2,441	1,862
Interest Income Recognized	10	5
Cash Basis Income Recognized	9	5
Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Balance	19,901	31,741
Interest Income Recognized	187	248
Cash Basis Income Recognized	196	246
Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Balance	150	261
Interest Income Recognized	2	3
Cash Basis Income Recognized	2	5
Commercial Working Capital [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Balance	1,866	2,924
Interest Income Recognized	13	3
Cash Basis Income Recognized	13	3
Commercial Loans Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Balance	3,839	4,959
Interest Income Recognized	13	2
Cash Basis Income Recognized	18	2
Commercial Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Balance	5,705	7,883
Interest Income Recognized	26	5
Cash Basis Income Recognized	31	5
Home Equity and Home Improvement [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Balance	2,202	2,439
Interest Income Recognized	20	25
Cash Basis Income Recognized	20	25
Consumer Finance [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Balance	43	57
Interest Income Recognized	0	1
Cash Basis Income Recognized	$ 0	$ 1

XML

Derivative Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments in Statement of Financial Position Carrying Value [Table Text Block]

The fair value of these mortgage banking derivatives are reflected by a derivative asset. The table below provides data about the carrying values of these derivative instruments:

March 31, 2015

December 31, 2014

Assets

(Liabilities)

Assets

(Liabilities)

Derivative

Derivative

Carrying

Carrying

Net Carrying

Carrying

Carrying

Net Carrying

Value

Value

Value

Value

Value

Value

(In Thousands)

Derivatives not designated as hedging instruments

Mortgage Banking Derivatives

$

884

$

119

$

765

$

351

$

24

$

327

Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance [Table Text Block]

The table below provides data about the amount of gains and losses recognized in income on derivative instruments not designated as hedging instruments:

	Three Months Ended March 31,
	2015		2014
	(In Thousands)
Derivatives not designated as hedging instruments
Mortgage Banking Derivatives – Gain (Loss)	$	438	$	50

XML

Loans (Details 9) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	$ 1,690,122	$ 1,651,967
Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	1,337,857	1,280,508
Special Mention [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	40,573	43,804
Substandard [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	34,432	46,937
Doubtful [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	0	478
Not Graded [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	277,260	280,240
Residential Owner Occupied [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	139,374	143,080
Residential Owner Occupied [Member] | Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	3,740	4,230
Residential Owner Occupied [Member] | Special Mention [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	128	131
Residential Owner Occupied [Member] | Substandard [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	2,745	3,048
Residential Owner Occupied [Member] | Doubtful [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	0	365
Residential Owner Occupied [Member] | Not Graded [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	132,761	135,306
Residential Non Owner Occupied [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	64,579	63,784
Residential Non Owner Occupied [Member] | Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	52,352	51,327
Residential Non Owner Occupied [Member] | Special Mention [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	2,554	2,404
Residential Non Owner Occupied [Member] | Substandard [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	4,760	4,872
Residential Non Owner Occupied [Member] | Doubtful [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	0	7
Residential Non Owner Occupied [Member] | Not Graded [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	4,913	5,174
One To Four Family Residential Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	203,953	206,864
One To Four Family Residential Real Estate [Member] | Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	56,092	55,557
One To Four Family Residential Real Estate [Member] | Special Mention [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	2,682	2,535
One To Four Family Residential Real Estate [Member] | Substandard [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	7,505	7,920
One To Four Family Residential Real Estate [Member] | Doubtful [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	0	372
One To Four Family Residential Real Estate [Member] | Not Graded [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	137,674	140,480
Multi Family Residential Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	159,252	156,660
Multi Family Residential Real Estate [Member] | Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	155,041	152,290
Multi Family Residential Real Estate [Member] | Special Mention [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	216	220
Multi Family Residential Real Estate [Member] | Substandard [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	3,095	3,236
Multi Family Residential Real Estate [Member] | Doubtful [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	0	0
Multi Family Residential Real Estate [Member] | Not Graded [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	900	914
Commercial Real Estate Owner Occupied [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	317,757	302,982
Commercial Real Estate Owner Occupied [Member] | Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	289,959	273,406
Commercial Real Estate Owner Occupied [Member] | Special Mention [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	18,886	18,448
Commercial Real Estate Owner Occupied [Member] | Substandard [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	7,862	9,953
Commercial Real Estate Owner Occupied [Member] | Doubtful [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	0	0
Commercial Real Estate Owner Occupied [Member] | Not Graded [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	1,050	1,175
Commercial Real Estate Non Owner Occupied [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	263,050	245,184
Commercial Real Estate Non Owner Occupied [Member] | Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	254,234	224,073
Commercial Real Estate Non Owner Occupied [Member] | Special Mention [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	3,728	7,898
Commercial Real Estate Non Owner Occupied [Member] | Substandard [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	5,068	13,186
Commercial Real Estate Non Owner Occupied [Member] | Doubtful [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	0	0
Commercial Real Estate Non Owner Occupied [Member] | Not Graded [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	20	27
Agriculture Land [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	98,957	93,543
Agriculture Land [Member] | Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	96,190	90,875
Agriculture Land [Member] | Special Mention [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	1,759	1,849
Agriculture Land [Member] | Substandard [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	1,008	819
Agriculture Land [Member] | Doubtful [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	0	0
Agriculture Land [Member] | Not Graded [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	0	0
Commercial Real Estate Other Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	39,931	44,248
Commercial Real Estate Other Receivable [Member] | Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	35,867	40,147
Commercial Real Estate Other Receivable [Member] | Special Mention [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	62	63
Commercial Real Estate Other Receivable [Member] | Substandard [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	3,455	3,466
Commercial Real Estate Other Receivable [Member] | Doubtful [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	0	0
Commercial Real Estate Other Receivable [Member] | Not Graded [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	547	572
Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	719,695	685,957
Commercial Real Estate [Member] | Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	676,250	628,501
Commercial Real Estate [Member] | Special Mention [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	24,435	28,258
Commercial Real Estate [Member] | Substandard [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	17,393	27,424
Commercial Real Estate [Member] | Doubtful [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	0	0
Commercial Real Estate [Member] | Not Graded [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	1,617	1,774
Construction Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	84,309	73,722
Construction Loans [Member] | Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	72,608	62,355
Construction Loans [Member] | Special Mention [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	0	0
Construction Loans [Member] | Substandard [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	150	150
Construction Loans [Member] | Doubtful [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	0	0
Construction Loans [Member] | Not Graded [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	11,551	11,217
Commercial Working Capital [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	139,520	135,960
Commercial Working Capital [Member] | Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	131,327	128,229
Commercial Working Capital [Member] | Special Mention [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	7,096	6,287
Commercial Working Capital [Member] | Substandard [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	1,097	1,444
Commercial Working Capital [Member] | Doubtful [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	0	0
Commercial Working Capital [Member] | Not Graded [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	0	0
Commercial Loans Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	257,222	265,071
Commercial Loans Other [Member] | Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	246,539	253,576
Commercial Loans Other [Member] | Special Mention [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	6,144	6,504
Commercial Loans Other [Member] | Substandard [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	4,539	4,991
Commercial Loans Other [Member] | Doubtful [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	0	0
Commercial Loans Other [Member] | Not Graded [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	0	0
Commercial Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	396,742	401,031
Commercial Loan [Member] | Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	377,866	381,805
Commercial Loan [Member] | Special Mention [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	13,240	12,791
Commercial Loan [Member] | Substandard [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	5,636	6,435
Commercial Loan [Member] | Doubtful [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	0	0
Commercial Loan [Member] | Not Graded [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	0	0
Home Equity and Home Improvement [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	111,221	112,282
Home Equity and Home Improvement [Member] | Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	0	0
Home Equity and Home Improvement [Member] | Special Mention [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	0	0
Home Equity and Home Improvement [Member] | Substandard [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	617	1,647
Home Equity and Home Improvement [Member] | Doubtful [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	0	106
Home Equity and Home Improvement [Member] | Not Graded [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	110,604	110,529
Consumer Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	14,950	15,451
Consumer Loan [Member] | Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	0	0
Consumer Loan [Member] | Special Mention [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	0	0
Consumer Loan [Member] | Substandard [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	36	125
Consumer Loan [Member] | Doubtful [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	0	0
Consumer Loan [Member] | Not Graded [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Net	$ 14,914	$ 15,326

XML

Derivative Financial Instruments

3 Months Ended

Mar. 31, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

14. Derivative Financial Instruments

Commitments to fund certain mortgage loans (interest rate locks) to be sold into the secondary market and forward commitments for the future delivery of mortgage loans to third party investors are considered derivatives. It is the Company’s practice to enter into forward commitments for the future delivery of residential mortgage loans when interest rate lock commitments are entered into in order to economically hedge the effect of changes in interest rates resulting from its commitments to fund the loans. These mortgage banking derivatives are not designated in hedge relationships. First Federal had approximately $21.3 million and $7.4 million of interest rate lock commitments at March 31, 2015 and December 31, 2014, respectively. There were $29.3 million and $11.6 million of forward commitments for the future delivery of residential mortgage loans at March 31, 2015 and December 31, 2014, respectively.

The fair value of these mortgage banking derivatives are reflected by a derivative asset. The table below provides data about the carrying values of these derivative instruments:

March 31, 2015

December 31, 2014

Assets

(Liabilities)

Assets

(Liabilities)

Derivative

Derivative

Carrying

Carrying

Net Carrying

Carrying

Carrying

Net Carrying

Value

Value

Value

Value

Value

Value

(In Thousands)

Derivatives not designated as hedging instruments

Mortgage Banking Derivatives

$

884

$

119

$

765

$

351

$

24

$

327

The table below provides data about the amount of gains and losses recognized in income on derivative instruments not designated as hedging instruments:

	Three Months Ended March 31,
	2015		2014
	(In Thousands)
Derivatives not designated as hedging instruments
Mortgage Banking Derivatives – Gain (Loss)	$	438	$	50

The above amounts are included in mortgage banking income with gain on sale of mortgage loans.

XML

Other Comprehensive Income (Loss) (Tables)

3 Months Ended

Mar. 31, 2015

Other Comprehensive Income (Loss), Net Of Tax [Abstract]

Other Comprehensive Income Loss Reclassification Adjustments Related To Securities Available For Sale [Table Text Block]

The before and after tax amounts allocated to each component of other comprehensive income (loss) are presented in the table below. Reclassification adjustments related to securities available for sale are included in gains on sale or call of securities in the accompanying consolidated condensed statements of income.

	Before Tax Amount		Tax Expense (Benefit)		Net of Tax Amount
			(In Thousands)
Three months ended March 31, 2015:
Securities available for sale and transferred securities:
Change in net unrealized gain/loss during the period	$	1,502	$	527	$	975
Reclassification adjustment for net gains included in net income		-		-		-
Total other comprehensive loss	$	1,502	$	527	$	975
Three months ended March 31, 2014:
Securities available for sale and transferred securities:
Change in net unrealized gain/loss during the period	$	1,723	$	603	$	1,120
Reclassification adjustment for net gains included in net income		-		-		-
Total other comprehensive loss	$	1,723	$	603	$	1,120

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

Activity in accumulated other comprehensive income (loss), net of tax, was as follows:

					Accumulated
	Securities		Post-		Other
	Available		retirement		Comprehensive
	For Sale		Benefit		Income
			(In Thousands)
Balance January 1, 2015	$	4,697	$	(583)	$	4,114
Other comprehensive income before reclassifications		975		-		975
Amounts reclassified from accumulated other comprehensive income		-		-		-
Net other comprehensive income during period		975		-		975
Balance March 31, 2015	$	5,672	$	(583)	$	5,089
Balance January 1, 2014	$	906	$	(361)	$	545
Other comprehensive income before reclassifications		1,120		-		1,120
Amounts reclassified from accumulated other comprehensive income		-		-		-
Net other comprehensive income during period		1,120		-		1,120
Balance March 31, 2014	$	2,026	$	(361)	$	1,665

XML

Affordable Housing Projects Tax Credit Partnership

3 Months Ended

Mar. 31, 2015

Affordable Housing Projects Tax Credit Partnership [Abstract]

Affordable Housing Program [Text Block]

Note 16 – Affordable Housing Projects Tax Credit Partnership

The Company makes certain equity investments in various limited partnerships that sponsor affordable housing projects utilizing the Low Income Housing Tax Credit (“LIHTC”) pursuant to Section 42 of the Internal Revenue Code. The purpose of these investments is to achieve a satisfactory return on capital, to facilitate the sale of affordable housing product offerings, and to assist in achieving goals associated with the Community Reinvestment Act. The primary activities of the limited partnerships include the identification, development, and operation of multi-family housing that is leased to qualifying residential tenants. Generally, these types of investments are funded through a combination of debt and equity.

The Company is a limited partner in each LIHTC Partnership. A separate unrelated third party is the general partner. Each limited partnership is managed by the general partner, who exercises full control over the affairs of the limited partnership. The general partner has all the rights, powers and authority granted or permitted to be granted to a general partner of a limited partnership. Duties entrusted to the general partner of each limited partnership include, but are not limited to: investment in operating companies, company expenditures, investment of excess funds, borrowing funds, employment of agents, disposition of fund property, prepayment and refinancing of liabilities, votes and consents, contract authority, disbursement of funds, accounting methods, tax elections, bank accounts, insurance, litigation, cash reserve, and use of working capital reserve funds. Except for limited rights granted to consent to certain transactions, the limited partner(s) may not participate in the operation, management, or control of the limited partnership’s business, transact any business in the limited partnership’s name or have any power to sign documents for or otherwise bind the limited partnership. In addition, the general partner may only be removed by the limited partner(s) in the event the general partner fails to comply with the terms of the agreement or is negligent in performing its duties.

The general partner of each limited partnership has both the power to direct the activities which most significantly affect the performance of each partnership and the obligation to absorb losses or the right to receive benefits that could be significant to the entities. Therefore, the Company has determined that it is not the primary beneficiary of any LIHTC partnership. In January of 2014, the FASB issued ASU 2014-01 “Accounting for Investments in Qualified Affordable Housing Projects.” The pronouncement permitted reporting entities to make an accounting policy election to account for these investments using the proportional amortization method if certain conditions exist. Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received, and will recognize the net investment performance in the income statement as a component of income tax expense (benefit). The Company elected to early adopt ASU 2014-01 in January 2014. All of the Company’s investments are accounted for under the proportional amortization method, as there were no investments held prior to January of 2014. As of March 31, 2015 and December 31, 2014 the Company had $4.6 million and $4.6 million in qualified investments recorded in other assets and $3.0 million and $3.0 million in unfunded commitments recorded in other liabilities, respectively.

Unfunded Commitments

As of March 31, 2015, the expected payments for unfunded affordable housing commitments were as follows:

(dollars in thousands)	Amount
2015	$	1,368
2016		612
2017		160
2018		414
2019		93
Thereafter		312
Total Unfunded Commitments	$	2,959

The following table presents tax credits and other tax benefits recognized and amortization expense related to affordable housing for the three months ended March 31, 2015 and 2014.

	Three Months Ended March 31,
(dollars in thousands)	2015		2014
Proportional Amortization Method
Tax credits and other tax benefits recognized	$	118	$	0
Amortization expense in federal income taxes		89		0

There were no impairment losses of LIHTC investments for the three months ended March 31, 2015 and 2014.

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Mortgage Banking (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Mortgage servicing assets:
Balance at beginning of period	$ 9,923	$ 10,133
Loans sold, servicing retained	320	207
Amortization	(411)	(292)
Carrying value before valuation allowance at end of period	9,832	10,048
Valuation allowance:
Balance at beginning of period	(911)	(1,027)
Impairment (expense) recovery	26	(7)
Balance at end of period	(885)	(1,034)
Net carrying value of MSRs at end of period	8,947	9,014
Fair value of MSRs at end of period	$ 9,180	$ 9,628

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Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Shares issued under stock option plan (in shares)	38,575	7,050
Stock Based Compensation Income Tax Benefit	$ 91	$ 17
Stock Repurchased and Retired (in shares)	9,925
Shares issued direct purchases (in shares)	12,846	5,767
shares repurchased	542
shares repurchased	37,857	78,972

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Consolidated Condensed Statements of Financial Condition (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Held-to-maturity, fair value (in dollars)	$ 300	$ 308	[1]
Loans receivable, allowance (in dollars)	25,302	24,766
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	25,000,000	25,000,000
Common stock, shares issued	12,725,388	12,735,313
Common stock, shares outstanding	9,248,040	9,234,534
Accumulated other comprehensive income, tax effect (in dollars)	$ 2,741	$ 2,214
Treasury stock, shares	3,477,348	3,500,779
Preferred Stock [Member]
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	4,963,000	4,963,000
Preferred stock, shares issued	0	0
Cumulative Preferred Stock [Member]
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	37,000	37,000
Preferred stock, shares issued	0	0

[1] FHLMC, FNMA, and GNMA certificates are residential mortgage-backed securities.

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Mortgage Banking

3 Months Ended

Mar. 31, 2015

Mortgage Banking [Abstract]

Mortgage Banking [Text Block]

9. Mortgage Banking

Net revenues from the sales and servicing of mortgage loans consisted of the following:

	Three Months Ended March 31,
	2015		2014
	(In Thousands)
Gain from sale of mortgage loans	$	1,285	$	641
Mortgage loans servicing revenue (expense):
Mortgage loans servicing revenue		875		905
Amortization of mortgage servicing rights		(411)		(292)
Mortgage servicing rights valuation adjustments		26		(7)
		490		606
Net revenue from sale and servicing of mortgage loans	$	1,775	$	1,247

The unpaid principal balance of residential mortgage loans serviced for third parties was $1.34 billion at March 31, 2015 and $1.35 billion at December 31, 2014.

Activity for capitalized mortgage servicing rights and the related valuation allowance follows for the three months ended March 31, 2015 and 2014:

	March 31, 2015		March 31, 2014
	(In Thousands)
Mortgage servicing assets:
Balance at beginning of period	$	9,923	$	10,133
Loans sold, servicing retained		320		207
Amortization		(411)		(292)
Carrying value before valuation allowance at end of period		9,832		10,048
Valuation allowance:
Balance at beginning of period		(911)		(1,027)
Impairment (expense) recovery		26		(7)
Balance at end of period		(885)		(1,034)
Net carrying value of MSRs at end of period	$	8,947	$	9,014
Fair value of MSRs at end of period	$	9,180	$	9,628

Amortization of mortgage servicing rights is computed based on payments and payoffs of the related mortgage loans serviced. Estimates of future amortization expense are not easily estimable.

The Company established an accrual for secondary market buy-back losses that resulted in a reversal of $58,000 in the first quarter of 2015 mainly due to no actual losses being recorded in the first quarter of 2015. In the first quarter of 2014, the Company accrued $92,000 which was mostly offset by reversing $67,000 of accrued expenses related to the Freddie Mac post-foreclosure review that began in the third quarter of 2013 and was reversed in 2014 with no losses resulting

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Document And Entity Information	3 Months Ended
	Mar. 31, 2015	Apr. 30, 2015
Document Information [Line Items]
Entity Registrant Name	FIRST DEFIANCE FINANCIAL CORP
Entity Central Index Key	0000946647
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Trading Symbol	FDEF
Entity Common Stock, Shares Outstanding		9,262,071
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2015
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2015

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Deposits

3 Months Ended

Mar. 31, 2015

Deposits [Abstract]

Deposit Liabilities Disclosures [Text Block]

10. Deposits

A summary of deposit balances is as follows (in thousands):

	March 31, 2015		December 31, 2014
	(In Thousands)
Non-interest-bearing checking accounts	$	370,997	$	379,552
Interest-bearing checking and money market accounts		737,533		727,729
Savings deposits		215,590		203,673
Retail certificates of deposit less than $250,000		422,886		422,907
Retail certificates of deposit greater than $250,000		25,687		26,952
	$	1,772,693	$	1,760,813

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Affordable Housing Projects Tax Credit Partnership (Details) (Unfunded Commitments [Member], USD $) In Thousands, unless otherwise specified	Mar. 31, 2015
Unfunded Commitments [Member]
2015	$ 1,368
2016	612
2017	160
2018	414
2019	93
Thereafter	312
Total Unfunded Commitments	$ 2,959

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Consolidated Condensed Statements of Income (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Interest Income
Loans	$ 17,887	$ 16,651
Investment securities:
Taxable	913	775
Non-taxable	779	752
Interest-bearing deposits	39	101
FHLB stock dividends	139	195
Total interest income	19,757	18,474
Interest Expense
Deposits	1,272	1,358
FHLB advances and other	110	133
Subordinated debentures	147	146
Securities sold under repurchase agreements	38	41
Total interest expense	1,567	1,678
Net interest income	18,190	16,796
Provision for loan losses	120	103
Net interest income after provision for loan losses	18,070	16,693
Non-interest Income
Service fees and other charges	2,529	2,324
Insurance commission income	3,139	3,030
Mortgage banking income	1,775	1,247
Gain on sale of non-mortgage loans	36	3
Trust income	357	278
Income from Bank Owned Life Insurance	208	219
Other non-interest income	237	225
Total non-interest income	8,281	7,326
Non-interest Expense
Compensation and benefits	8,922	8,472
Occupancy	1,764	1,588
FDIC insurance premium	351	385
Financial institutions tax	481	495
Data processing	1,523	1,365
Amortization of intangibles	217	289
Other non-interest expense	3,639	4,067
Total non-interest expense	16,897	16,661
Income before income taxes	9,454	7,358
Federal income taxes	2,853	2,179
Net Income	$ 6,601	$ 5,179
Earnings per common share (Note 6)
Basic (in dollars per share)	$ 0.71	$ 0.53
Diluted (in dollars per share)	$ 0.69	$ 0.51
Dividends declared per share (Note 5) (in dollars per share)	$ 0.175	$ 0.15
Average common shares outstanding (Note 6)
Basic	9,234	9,681
Diluted	9,611	10,108

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Stock Compensation Plans

3 Months Ended

Mar. 31, 2015

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

4. Stock Compensation Plans

First Defiance has established equity based compensation plans for its directors and employees. On March 15, 2010, the Board adopted, and the shareholders approved at the 2010 Annual Shareholders Meeting, the First Defiance Financial Corp. 2010 Equity Incentive Plan (the “2010 Equity Plan”). The 2010 Equity Plan replaces all existing plans. All awards currently outstanding under prior plans will remain in effect in accordance with their respective terms. Any new awards will be made under the 2010 Equity Plan. The 2010 Equity Plan allows for issuance of up to 350,000 common shares through the award of options, stock grants, restricted stock units (“RSU”), stock appreciation rights or other stock-based awards.

As of March 31, 2015, 126,720 options had been granted and remain outstanding at option prices based on the market value of the underlying shares on the date the options were granted. Options granted under all plans vest 20% per year except for the 2009 grant to the Company’s executive officers, which vested 40% in 2011 and then 20% annually. All options expire ten years from the date of grant. Vested options of retirees expire on the earlier of the scheduled expiration date or three months after the retirement date.

In 2014, the Company approved a 2014 STIP and a 2014 LTIP for selected members of management.

Under the 2014 STIP, the participants may earn up to 30% to 45% of their salary for potential payout based on the achievement of certain corporate performance targets during the calendar year. The final amount of benefits under the 2014 STIP were determined as of December 31, 2014 and were paid out in cash in the first quarter of 2015. The participants are required to be employed on the day of payout in order to receive such payment.

Under the 2014 LTIP, the participants may earn up to 20% to 45% of their salary for potential payout in the form of equity awards based on the achievement of certain corporate performance targets over a three-year period. The Company granted 30,538 RSU’s to the participants in the 2014 LTIP effective January 1, 2014, which represents the maximum target award. The amount of benefit under the 2014 LTIP will be determined individually at the end of the 36 month performance period ending December 31, 2016. The awards will vest 100% of the target award at the end of the performance period ending December 31, 2016. The benefits earned under the 2014 LTIP will be paid out in equity in the first quarter of 2017. The participants are required to be employed on the day of payout in order to receive such payment.

In 2015, the Company approved a 2015 STIP and a 2015 LTIP for selected members of management.

Under the 2015 STIP, the participants may earn up to 30% to 45% of their salary for potential payout based on the achievement of certain corporate performance targets during the calendar year. The final amount of benefits under the 2015 STIP will be determined as of December 31, 2015 and will be paid out in cash in the first quarter of 2016. The participants are required to be employed on the day of payout in order to receive such payment.

Under the 2015 LTIP, the participants may earn up to 20% to 45% of their salary for potential payout in the form of equity awards based on the achievement of certain corporate performance targets over a three-year period. The Company granted 24,757 RSU’s to the participants in the 2015 LTIP effective January 1, 2015, which represents the maximum target award. The amount of benefit under the 2015 LTIP will be determined individually at the end of the 36 month performance period ending December 31, 2017. The awards will vest 100% of the target award at the end of the performance period ending December 31, 2017. The benefits earned under the 2015 LTIP will be paid out in equity in the first quarter of 2018. The participants are required to be employed on the day of payout in order to receive such payment. 

The fair value of each option award is estimated on the date of grant using the Black-Scholes model. Expected volatilities are based on historical volatilities of the Company’s common stock. The Company uses historical data to estimate option exercise and post-vesting termination behavior. The expected term of options granted is based on historical data and represents the period of time that options granted are expected to be outstanding, which takes into account that the options are not transferable. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.

The fair value of stock options granted during the three months ended March 31, 2015 was determined at the date of grant using the Black-Scholes stock option-pricing model and the following assumptions:

	Three Months ended
	March 31, 2015		March 31, 2014
Expected average risk-free rate		2.04%		1.64%
Expected average life		10.00 years		7.44 years
Expected volatility		42.00%		44.62%
Expected dividend yield		2.10%		2.17%

The weighted-average fair value of options granted was $13.13 for the three months ended March 31, 2015 and $11.25 for the three months ended March 31, 2014.

Following is activity under the plans during the three months ended March 31, 2015:

Stock options	Options Outstanding		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in 000’s)
Options outstanding, January 1, 2015		173,720	$	20.80
Forfeited or cancelled		4,750		25.32
Exercised		48,500		21.82
Granted		6,250		32.94
Options outstanding, March 31, 2015		126,720	$	20.84		3.43	$	1,519
Vested or expected to vest at March 31, 2015		126,720	$	20.84		3.43	$	1,519
Exercisable at March 31, 2015		112,070	$	19.70		2.67	$	1,470

As of March 31, 2015, there was $166,000 of total unrecognized compensation costs related to unvested stock options granted under the Company’s equity plans. The cost is expected to be recognized over a weighted-average period of 4.31 years. 

At March 31, 2015, 74,545 RSU’s and 5,767 stock grants were outstanding. Compensation expense is recognized over the performance period based on the achievements of targets as established with the plan documents. A total expense of $226,000 was recorded during the three months ended March 31, 2015 compared to a benefit of $45,000 for the same period in 2014. The benefit in the first quarter of 2014 was due to accrual reversals primarily from the 2013 LTIP adjusting for the actual payout in year one as well as adjusting the estimated payouts in year two and three. There was approximately $96,000 included within other liabilities at March 31, 2015 related to the STIP.

	Restricted Stock Units				Stock Grants
			Weighted-Average				Weighted-Average
			Grant Date				Grant Date
Unvested Shares	Shares		Fair Value		Shares		Fair Value
Unvested at January 1, 2015		91,812	$	21.00		5,767	$	25.97
Granted		24,757		32.30		12,845		17.20
Vested		12,846		17.20		(12,846)		17.20
Forfeited		(29,178)		19.48		-		-
Unvested at March 31, 2015		74,545	$	25.86		5,767	$	25.97

The maximum amount of compensation expense that may be recorded for the 2015 STIP and the 2013, 2014 and 2015 LTIPs at March 31, 2015 is approximately $3.6 million. However, the estimated expense expected to be recorded as of March 31, 2015 based on the performance measures in the plans, is $1.8 million of which $1.2 million is unrecognized at March 31, 2015 and will be recognized over the remaining performance periods.

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Fair Value

3 Months Ended

Mar. 31, 2015

Fair Value Disclosures [Abstract]

Fair Value, Measurement Inputs, Disclosure [Text Block]

3. Fair Value

FASB ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability shall not be adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact and (iv) willing to transact.

FASB ASC Topic 820 requires the use of valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert future amounts, such as cash flows or earnings, to a single present amount on a discounted basis. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement cost). Valuation techniques should be consistently applied. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on the best information available. In that regard, FASB ASC Topic 820 established a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

⋅ Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

⋅ Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by a correlation or other means.

⋅ Level 3: Unobservable inputs for determining fair value of assets and liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.

Available for sale securities - Securities classified as available for sale are generally reported at fair value utilizing Level 2 inputs where the Company obtains fair value measurements from an independent pricing service that uses matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows and the bonds’ terms and conditions, among other things. Securities in Level 1 include federal agency preferred stock securities and one corporate bond. Securities in Level 2 include U.S. Government agencies, mortgage-backed securities, corporate bonds and municipal securities.

Impaired loans - Fair values for impaired collateral dependent loans are generally based on appraisals obtained from licensed real estate appraisers and in certain circumstances consideration of offers obtained to purchase properties prior to foreclosure.  Appraisals for commercial real estate generally use three methods to derive value: cost, sales or market comparison and income approach.  The cost method bases value on the cost to replace the current property.  Value of market comparison approach evaluates the sales price of similar properties in the same market area.  The income approach considers net operating income generated by the property and an investors required return.  Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available.  Comparable sales adjustments are based on known sales prices of similar type and similar use properties and duration of time that the property has been on the market to sell.  Such adjustments made in the appraisal process are typically significant and result in a Level 3 classification of the inputs for determining fair value.

Real Estate held for sale - Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are then reviewed monthly by members of the asset review committee for valuation changes and are accounted for at lower of cost or fair value less estimated costs to sell. Fair value is commonly based on recent real estate appraisals which may utilize a single valuation approach or a combination of approaches including cost, comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments may be significant and typically result in a Level 3 classification of the inputs for determining fair value.

Appraisals for both collateral-dependent impaired loans and other real estate owned are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company.  Once received, a member of the Company’s asset quality or collections department reviews the assumptions and approaches utilized in the appraisal.  Appraisal values are discounted from 0% to 20% to account for other factors that may impact the value of collateral. In determining the value of impaired collateral dependent loans and other real estate owned, significant unobservable inputs may be used, which include:  physical condition of comparable properties sold, net operating income generated by the property and investor rates of return.

Mortgage servicing rights – On a quarterly basis, mortgage servicing rights are evaluated for impairment based upon the fair value of the rights as compared to the carrying amount. If the carrying amount of an individual tranche exceeds fair value, impairment is recorded on that tranche so that the servicing asset is carried at fair value. Fair value is determined at a tranche level based on a model that calculates the present value of estimated future net servicing income. The valuation model utilizes assumptions that market participants would use in estimating future net servicing income and are validated against available market data (Level 2).

Mortgage banking derivative - The fair value of mortgage banking derivatives are evaluated monthly based on derivative valuation models using quoted prices for similar assets adjusted for specific attributes of the commitments and other observable market data at the valuation date (Level 2).

The following table summarizes the financial assets measured at fair value on a recurring basis segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

Assets and Liabilities Measured on a Recurring Basis

March 31, 2015	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
	(In Thousands)
Available for sale securities:
Obligations of U.S. government corporations and agencies	$	-	$	5,001	$	-	$	5,001
Mortgage-backed - residential		-		61,765		-		61,765
REMICs		-		1,830		-		1,830
Collateralized mortgage obligations		-		82,590		-		82,590
Preferred stock		1		-		-		1
Corporate bonds		1,995		4,013		-		6,008
Obligations of state and political subdivisions		-		91,243		-		91,243
Mortgage banking derivative - asset		-		884		-		884
Mortgage banking derivative - liability		-		119		-		119

December 31, 2014	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
	(In Thousands)
Available for sale securities:
Obligations of U.S. Government corporations and agencies	$	-	$	980	$	-	$	980
Mortgage-backed - residential		-		59,856		-		59,856
REMICs		-		1,839		-		1,839
Collateralized mortgage obligations		-		81,121		-		81,121
Preferred stock		1		-		-		1
Corporate bonds		1,989		5,003		-		6,992
Obligations of state and political subdivisions		-		88,532				88,532
Mortgage banking derivative - asset		-		351		-		351
Mortgage banking derivative - liability		-		24		-		24

There were no assets measured at fair value on a recurring basis using Level 3 inputs for the three months ended March 31, 2015. The table below presents a reconciliation and income classification of gains and losses for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended March 31, 2014:

Fair Value Measurements Using Significant Unobservable Inputs (Level 3) (In Thousands)
Beginning balance, January 1, 2014	$	582
Total gains or losses (realized/unrealized)
Included in earnings (unrealized)		-
Included in other comprehensive income (presented gross of taxes)		122
Amortization		-
Sales		-
Transfers in and/or out of Level 3		-
Ending balance, March 31, 2014	$	704

The following table summarizes the financial assets measured at fair value on a non-recurring basis segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

Assets and Liabilities Measured on a Non-Recurring Basis

March 31, 2015	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
	(In Thousands)
Impaired loans
1-4 Family Residential Real Estate	$	-	$	-	$	405	$	405
Multi Family Residential		-		-		257		257
Commercial Real Estate		-		-		5,501		5,501
Commercial loans		-		-		141		141
Home Equity and Improvement		-		-		96		96
Total Impaired loans		-		-		6,400		6,400
Mortgage servicing rights		-		935		-		935
Real estate held for sale		-
Residential		-		-		115		115
CRE		-		-		321		321
Total real estate held for sale		-		-		436		436

December 31, 2014	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
	(In Thousands)
Impaired loans
1-4 Family Residential Real Estate	$	-	$	-	$	419	$	419
Multi Family Residential		-		-		269		269
Commercial Real Estate		-		-		6,665		6,665
Commercial						340		340
Home Equity and Improvement		-		-		98		98
Total impaired loans		-		-		7,791		7,791
Mortgage servicing rights		-		1,034		-		1,034
Real estate held for sale
Residential		-		-		-		-
CRE		-		-		739		739
Total real estate held for sale		-		-		739		739

For Level 3 assets and liabilities measured at fair value on a recurring or nonrecurring basis as of March 31, 2015, the significant unobservable inputs used in the fair value measurements were as follows:

	Fair Value		Valuation Technique	Unobservable Inputs	Range of Inputs		Weighted Average
				(Dollars in Thousands)
Impaired Loans- Applies to all loan classes	$	6,400	Appraisals which utilize sales comparison, net income and cost approach	Discounts for collection issues and changes in market conditions		10-30%		11	%
Real estate held for sale – Applies to all classes	$	436	Appraisals which utilize sales comparison, net income and cost approach	Discounts for changes in market conditions		20-30%		22	%

For Level 3 assets and liabilities measured at fair value on a recurring or nonrecurring basis as of December 31, 2014, the significant unobservable inputs used in the fairv alue measurements were as follows:

	Fair Value		Valuation Technique	Unobservable Inputs	Range of Inputs		Weighted Average
				(Dollars in Thousands)
Impaired Loans- Applies to all loan classes	$	7,791	Appraisals which utilize sales comparison, net income and cost approach	Discounts for collection issues and changes in market conditions		10-30%		11	%
Real estate held for sale – Applies to all classes	$	739	Appraisals which utilize sales comparison, net income and cost approach	Discounts for changes in market conditions		20-40%		28	%

Impaired loans, which are measured for impairment using the fair value of the collateral for collateral dependent loans, had a fair value of $6.4 million, with a $14,000 valuation allowance and a fair value of $7.8 million, with a $19,000 valuation allowance at March 31, 2015 and December 31, 2014, respectively. A provision recovery of $621,000 for the three months ended March 31, 2015 and a provision expense of $756,000 for the three months ended March 31, 2014 was included in earnings.

 

Mortgage servicing rights which are carried at the lower of cost or fair value had a fair value of $935,000 with a valuation allowance of $885,000 and a fair value of $1.0 million with a valuation allowance of $911,000 at March 31, 2015 and December 31, 2014, respectively. A recovery of $26,000 and a charge of $7,000 for the three months ended March 31, 2015 and March 31, 2014, respectively, were included in earnings.

Real estate held for sale is determined using Level 3 inputs which include appraisals and are adjusted for estimated costs to sell. The change in fair value of real estate held for sale and fixed assets transferred to real estate held for sale was $522,000 for the three months ended March 31, 2015, which was recorded directly as an adjustment to current earnings through non-interest expense. No amounts were recorded for the three months ended March 31, 2014.

 

In accordance with FASB ASC Topic 825, the Fair Value Measurements tables are a comparative condensed consolidated statement of financial condition based on carrying amount and estimated fair values of financial instruments as of March 31, 2015 and December 31, 2014. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of First Defiance.

Much of the information used to arrive at “fair value” is highly subjective and judgmental in nature and therefore the results may not be precise. Subjective factors include, among other things, estimated cash flows, risk characteristics and interest rates, all of which are subject to change. With the exception of investment securities, the Company’s financial instruments are not readily marketable and market prices do not exist. Since negotiated prices for the instruments, which are not readily marketable depend greatly on the motivation of the buyer and seller, the amounts that will actually be realized or paid per settlement or maturity of these instruments could be significantly different.

The carrying amount of cash and cash equivalents, term notes payable and advance payments by borrowers for taxes and insurance, as a result of their short-term nature, is considered to be equal to fair value and are classified as Level 1.

It was not practicable to determine the fair value of Federal Home Loan Bank (“FHLB”) stock due to restrictions placed on its transferability.

The fair value of loans that reprice within 90 days is equal to their carrying amount. For other loans, the estimated fair value is calculated based on discounted cash flow analysis, using interest rates currently being offered for loans with similar terms, resulting in a Level 3 classification. Impaired loans are valued at the lower of cost of fair value as previously described. The allowance for loan losses is considered to be a reasonable adjustment for credit risk. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price. The fair value of loans held for sale is estimated based on binding contracts and quotes from third party investors resulting in a Level 2 classification.

The fair value of accrued interest receivable is equal to the carrying amounts resulting in a Level 2 or Level 3 classification which is consistent with its underlying value.

The fair value of non-interest bearing deposits are considered equal to the amount payable on demand at the reporting date (i.e. carrying value) and are classified as Level 1. The fair value of savings, NOW and certain money market accounts are equal to their carrying amounts and are a Level 2 classification. Fair values of fixed rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits resulting in a Level 2 classification.

The fair values of securities sold under repurchase agreements are equal to their carrying amounts resulting in a Level 2 classification. The carrying value of subordinated debentures and deposits with fixed maturities is estimated based discounted cash flow analyses based on interest rates currently being offered on instruments with similar characteristics and maturities resulting in a Level 3 classification.

FHLB advances with maturities greater than 90 days are valued based on discounted cash flow analysis, using interest rates currently being quoted for similar characteristics and maturities resulting in a Level 2 classification. The cost or value of any call or put options is based on the estimated cost to settle the option at March 31, 2015.

			Fair Value Measurements at March 31, 2015 (In Thousands)
	Carrying Value		Total		Level 1		Level 2		Level 3
Financial Assets:
Cash and cash equivalents	$	81,472	$	81,472	$	81,472	$	-	$	-
Investment securities		248,737		248,738		1,996		246,742		-
Federal Home Loan Bank Stock		13,802		N/A		N/A		N/A		N/A
Loans, net, including loans held for sale		1,668,760		1,682,215		-		10,151		1,672,064
Accrued interest receivable		6,967		6,967		-		1,375		5,592
Financial Liabilities:
Deposits	$	1,772,693	$	1,775,117	$	370,997	$	1,404,120	$	-
Advances from Federal Home Loan Bank		31,298		31,562		-		31,562		-
Securities sold under repurchase agreements		60,271		60,271		-		60,271		-
Subordinated debentures		36,083		35,788		-		-		35,788

			Fair Value Measurements at December 31, 2014 (In Thousands)
	Carrying Value		Total		Level 1		Level 2		Level 3
Financial Assets:
Cash and cash equivalents	$	112,936	$	112,936	$	112,936	$	-	$	-
Investment securities		239,634		239,629		1,990		237,639		-
Federal Home Loan Bank Stock		13,802		N/A		N/A		N/A		N/A
Loans, net, including loans held for sale		1,626,555		1,632,507		-		4,741		1,627,766
Accrued interest receivable		6,037		6,037		3		846		5,188
Financial Liabilities:
Deposits	$	1,760,813	$	1,762,733	$	379,552	$	1,383,181	$	-
Advances from Federal Home Loan Bank		21,544		21,772		-		21,772		-
Securities sold under repurchase agreements		54,759		54,759		-		54,759		-
Subordinated debentures		36,083		35,307		-		-		35,307

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Other Comprehensive Income (Loss)

3 Months Ended

Mar. 31, 2015

Other Comprehensive Income (Loss), Net Of Tax [Abstract]

Other Comprehensive Income Loss [Text Block]

Note 15 - Other Comprehensive Income (Loss)

The before and after tax amounts allocated to each component of other comprehensive income (loss) are presented in the table below. Reclassification adjustments related to securities available for sale are included in gains on sale or call of securities in the accompanying consolidated condensed statements of income.

	Before Tax Amount		Tax Expense (Benefit)		Net of Tax Amount
			(In Thousands)
Three months ended March 31, 2015:
Securities available for sale and transferred securities:
Change in net unrealized gain/loss during the period	$	1,502	$	527	$	975
Reclassification adjustment for net gains included in net income		-		-		-
Total other comprehensive loss	$	1,502	$	527	$	975
Three months ended March 31, 2014:
Securities available for sale and transferred securities:
Change in net unrealized gain/loss during the period	$	1,723	$	603	$	1,120
Reclassification adjustment for net gains included in net income		-		-		-
Total other comprehensive loss	$	1,723	$	603	$	1,120

Activity in accumulated other comprehensive income (loss), net of tax, was as follows:

					Accumulated
	Securities		Post-		Other
	Available		retirement		Comprehensive
	For Sale		Benefit		Income
			(In Thousands)
Balance January 1, 2015	$	4,697	$	(583)	$	4,114
Other comprehensive income before reclassifications		975		-		975
Amounts reclassified from accumulated other comprehensive income		-		-		-
Net other comprehensive income during period		975		-		975
Balance March 31, 2015	$	5,672	$	(583)	$	5,089
Balance January 1, 2014	$	906	$	(361)	$	545
Other comprehensive income before reclassifications		1,120		-		1,120
Amounts reclassified from accumulated other comprehensive income		-		-		-
Net other comprehensive income during period		1,120		-		1,120
Balance March 31, 2014	$	2,026	$	(361)	$	1,665

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Borrowings

3 Months Ended

Mar. 31, 2015

Subordinated Borrowings [Abstract]

Subordinated Borrowings Disclosure [Text Block]

11. Borrowings

First Defiance’s debt, FHLB advances and junior subordinated debentures owed to unconsolidated subsidiary trusts are comprised of the following:

	March 31, 2015		December 31, 2014
	(In Thousands)
FHLB Advances:
Single maturity fixed rate advances	$	17,000	$	-
Putable advances		5,000		12,000
Amortizable mortgage advances		9,298		9,544
Total	$	31,298	$	21,544
Junior subordinated debentures owed to unconsolidated subsidiary trusts	$	36,083	$	36,083

The putable advance can be put back to the Company at the option of the FHLB on a quarterly basis. A $5.0 million putable advance with a weighted average rate of 2.35% was not yet callable by the FHLB at March 31, 2015. The call date for this advance is June 12, 2015 and the maturity date is March 12, 2018. Putable advances are callable at the option of the FHLB on a quarterly basis.

In March 2007, the Company sponsored an affiliated trust, First Defiance Statutory Trust II (Trust Affiliate II) that issued $15 million of Guaranteed Capital Trust Securities (Trust Preferred Securities). In connection with this transaction, the Company issued $15.5 million of Junior Subordinated Deferrable Interest Debentures (Subordinated Debentures) to Trust Affiliate II. The Company formed Trust Affiliate II for the purpose of issuing Trust Preferred Securities to third-party investors and investing the proceeds from the sale of these capital securities solely in Subordinated Debentures of the Company. The Subordinated Debentures held by Trust Affiliate II are the sole assets of that trust. The Company is not considered the primary beneficiary of this Trust (variable interest entity), therefore the trust is not consolidated in the Company’s financial statements, but rather the subordinated debentures are shown as a liability. Distributions on the Trust Preferred Securities issued by Trust Affiliate II are payable quarterly at a variable rate equal to the three-month LIBOR rate plus 1.5%. The Coupon rate payable on the Trust Preferred Securities issued by Trust Affiliate II was 1.77% as of March 31, 2015 and 1.74% as of December 31, 2014.

The Trust Preferred Securities issued by Trust Affiliate II are subject to mandatory redemption, in whole or part, upon repayment of the Subordinated Debentures. The Company has entered into an agreement that fully and unconditionally guarantees the Trust Preferred Securities subject to the terms of the guarantee. The Trust Preferred Securities and Subordinated Debentures mature on June 15, 2037, but can be redeemed at the Company’s option at any time now.

The Company also sponsored an affiliated trust, First Defiance Statutory Trust I (Trust Affiliate I), that issued $20 million of Trust Preferred Securities in 2005. In connection with this transaction, the Company issued $20.6 million of Subordinated Debentures to Trust Affiliate I. Trust Affiliate I was formed for the purpose of issuing Trust Preferred Securities to third-party investors and investing the proceeds from the sale of these capital securities solely in Subordinated Debentures of the Company. The Junior Debentures held by Trust Affiliate I are the sole assets of the trust. The Company is not considered the primary beneficiary of this Trust (variable interest entity), therefore the trust is not consolidated in the Company’s financial statements, but rather the subordinated debentures are shown as a liability. Distributions on the Trust Preferred Securities issued by Trust Affiliate I are payable quarterly at a variable rate equal to the three-month LIBOR rate plus 1.38%. The Coupon rate payable on the Trust Preferred Securities issued by Trust Affiliate I was 1.65% and 1.62% on March 31, 2015 and December 31, 2014 respectively.

The Trust Preferred Securities issued by Trust Affiliate I are subject to mandatory redemption, in whole or in part, upon repayment of the Subordinated Debentures. The Company has entered into an agreement that fully and unconditionally guarantees the Trust Preferred Securities subject to the terms of the guarantee. The Trust Preferred Securities and Subordinated Debentures mature on December 15, 2035, but can be redeemed at the Company’s option at any time now.

The subordinated debentures may be included in Tier 1 capital (with certain limitations applicable) under current regulatory guidelines and interpretations.

Interest on both issues of Trust Preferred Securities may be deferred for a period of up to five years at the option of the issuer.

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Investment Securities

3 Months Ended

Mar. 31, 2015

Marketable Securities [Abstract]

Investment [Text Block]

7. Investment Securities

The following is a summary of available-for-sale and held-to-maturity securities:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
At March 31, 2015	(In Thousands)
Available-for-Sale Securities:
Obligations of U.S. government corporations and agencies	$	5,000	$	2	$	(1)	$	5,001
Mortgage-backed securities – residential		60,121		1,644		-		61,765
REMICs		1,776		54		-		1,830
Collateralized mortgage obligations		80,900		1,856		(166)		82,590
Trust preferred securities and preferred stock		-		1		-		1
Corporate bonds		5,924		89		(5)		6,008
Obligations of state and political subdivisions		85,991		5,259		(7)		91,243
Totals	$	239,712	$	8,905	$	(179)	$	248,438

	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses		Fair Value
	(In Thousands)
Held-to-Maturity Securities*:
FHLMC certificates	$	18	$	-	$	-	$	18
FNMA certificates		89		2		(2)		89
GNMA certificates		37		1		-		38
Obligations of state and political subdivisions		155		-		-		155
Totals	$	299	$	3	$	(2)	$	300

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
	(In Thousands)
At December 31, 2014
Available-for-sale
Obligations of U.S. government corporations and agencies	$	1,000	$	-	$	(20)	$	980
Mortgage-backed securities - residential		58,380		1,476		-		59,856
REMICs		1,820		19		-		1,839
Collateralized mortgage obligations		80,252		1,280		(411)		81,121
Trust preferred stock and preferred stock		-		1		-		1
Corporate bonds		6,913		85		(6)		6,992
Obligations of state and political subdivisions		83,732		4,827		(27)		88,532
Total Available-for-Sale	$	232,097	$	7,688	$	(464)	$	239,321

	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses		Fair Value
	(In Thousands)
Held-to-Maturity*:
FHLMC certificates	$	26	$	-	$	(8)	$	18
FNMA certificates		93		2		-		95
GNMA certificates		39		1		-		40
Obligations of states and political subdivisions		155		-		-		155
Total Held-to-Maturity	$	313	$	3	$	(8)	$	308

* FHLMC, FNMA, and GNMA certificates are residential mortgage-backed securities.

The amortized cost and fair value of the investment securities portfolio at March 31, 2015 are shown below by contractual maturity. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. For purposes of the maturity table, mortgage-backed securities (“MBS”), collateralized mortgage obligations (“CMO”) and REMICs, which are not due at a single maturity date, have not been allocated over the maturity groupings. These securities may mature earlier than their weighted-average contractual maturities because of principal prepayments.

	Available-for-Sale				Held-to-Maturity
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
	(In Thousands)
Due in one year or less	$	1,008	$	1,016	$	-	$	-
Due after one year through five years		15,250		15,634		155		155
Due after five years through ten years		37,112		39,532		-		-
Due after ten years		43,545		46,071		-		-
MBS/CMO		142,797		146,185		144		145
	$	239,712	$	248,438	$	299	$	300

Investment securities with a carrying amount of $137.9 million at March 31, 2015 were pledged as collateral on public deposits, securities sold under repurchase agreements and Federal Reserve discount window.

As of March 31, 2015, the Company’s investment portfolio consisted of 366 securities, 18 of which were in an unrealized loss position.

The following tables summarize First Defiance’s securities that were in an unrealized loss position at March 31, 2015 and December 31, 2014:

	Duration of Unrealized Loss Position
	Less than 12 Months				12 Months or Longer				Total
			Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Loss		Value		Loss		Value		Loses
	(In Thousands)
At March 31, 2015
Available-for-sale securities:
Obligations of U.S. government corporations and agencies	$	-	$	-	$	999	$	(1)	$	999	$	(1)
Collateralized mortgage obligations		1,584		(89)		9,292		(77)		10,876		(166)
Obligations of state and political subdivisions		1,127		(1)		422		(6)		1,549		(7)
Corporate bonds		-		-		994		(5)		994		(5)
Held to maturity securities:
FNMA certificates		26		(2)		1		-		27		(2)
Total temporarily impaired securities	$	2,737	$	(92)	$	11,708	$	(89)	$	14,445	$	(181)

	Duration of Unrealized Loss Position
	Less than 12 Months				12 Months or Longer				Total
			Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Loss		Value		Loss		Value		Loses
	(In Thousands)
At December 31, 2014
Available-for-sale securities:
Obligations of U.S. government corporations and agencies	$	-	$	-	$	980	$	(20)	$	980	$	(20)
Collateralized mortgage obligations		4,466		(138)		14,633		(273)		19,099		(411)
Corporate bonds		-		-		994		(6)		994		(6)
Obligations of state and political subdivisions		1,194		(8)		1,499		(19)		2,693		(27)
Held to maturity securities:
FHLMC certificates		18		(8)		-		-		18		(8)
Total temporarily impaired securities	$	5,678	$	(154)	$	18,106	$	(318)	$	23,784	$	(472)

With the exception of corporate bonds, the above securities all have fixed interest rates, and all securities have defined maturities. Their fair value is sensitive to movements in market interest rates. First Defiance has the ability and intent to hold these investments for a time necessary to recover the amortized cost without impacting its liquidity position and it is not more than likely that the Company will be required to sell the investments before anticipated recovery.

There were no realized gains from the sales of investment securities in the first quarter of 2015 or in the first quarter of 2014.

Management evaluates securities for other-than-temporary impairment (“OTTI”) at least quarterly, and more frequently when economic or market conditions warrant such an evaluation. The investment portfolio is evaluated for OTTI by segregating the portfolio into two general segments. Investment securities classified as available-for-sale or held-to-maturity are generally evaluated for OTTI under FASB ASC Topic 320. Certain collateralized debt obligations (“CDOs”) are evaluated for OTTI under FASB ASC Topic 325, Investment – Other.

When OTTI occurs under either model, the amount of the OTTI recognized in earnings depends on whether an entity intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current period credit loss. If an entity intends to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current period credit loss, the OTTI shall be recognized in earnings equal to the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date. If an entity does not intend to sell the security and it is not more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis less any current period loss, the OTTI shall be separated into the amount representing the credit loss and the amount related to all other factors. The amount of OTTI related to the credit loss is determined based on the present value of cash flows expected to be collected compared to the book value of the security and is recognized in earnings. The amount of OTTI related to other factors shall be recognized in other comprehensive income, net of applicable taxes. The previous amortized cost basis less the OTTI recognized in earnings shall become the new amortized cost basis of the investment.

In the first quarter of 2015 and 2014, management determined there was no OTTI.

The Company holds three CDOs at March 31, 2015 and December 31, 2014 with a zero value.

The amount of OTTI recognized in accumulated other comprehensive income (“AOCI”) was zero at March 31, 2015 and December 31, 2014.

The proceeds from the sales and calls of securities and the associated gains and losses are listed below:

	Three Months Ended March 31,
	2015		2014
	(In Thousands)
Proceeds	$	-	$	1,654
Gross realized gains		-		-
Gross realized losses		-		-

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Loans (Details 4) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015		Dec. 31, 2014
Impaired loans
Unpaid Principal Balance, With No Related Allowance	$ 25,036	[1]	$ 32,206	[1]
Recorded Investment, With No Related Allowance	23,532		29,981
Allowance for Loan Losses Allocated, With No Related Allowance	0		0
Unpaid Principal Balance, With Related Allowance	17,286	[1]	19,919	[1]
Recorded Investment, With Related Allowance	16,586		19,064
Allowance for Loan Losses Allocated, With Related Allowance	640		1,273
Residential Owner Occupied [Member]
Impaired loans
Unpaid Principal Balance, With No Related Allowance	3,763	[1]	3,967	[1]
Recorded Investment, With No Related Allowance	3,655		3,859
Allowance for Loan Losses Allocated, With No Related Allowance	0		0
Unpaid Principal Balance, With Related Allowance	2,305	[1]	2,112	[1]
Recorded Investment, With Related Allowance	2,306		2,114
Allowance for Loan Losses Allocated, With Related Allowance	247		204
Residential Non Owner Occupied [Member]
Impaired loans
Unpaid Principal Balance, With No Related Allowance	3,631	[1]	3,763	[1]
Recorded Investment, With No Related Allowance	3,624		3,670
Allowance for Loan Losses Allocated, With No Related Allowance	0		0
Unpaid Principal Balance, With Related Allowance	701	[1]	636	[1]
Recorded Investment, With Related Allowance	706		638
Allowance for Loan Losses Allocated, With Related Allowance	13		12
One To Four Family Residential Real Estate [Member]
Impaired loans
Unpaid Principal Balance, With No Related Allowance	7,394	[1]	7,730	[1]
Recorded Investment, With No Related Allowance	7,279		7,529
Allowance for Loan Losses Allocated, With No Related Allowance	0		0
Unpaid Principal Balance, With Related Allowance	3,006	[1]	2,748	[1]
Recorded Investment, With Related Allowance	3,012		2,752
Allowance for Loan Losses Allocated, With Related Allowance	260		216
Multi Family Residential Real Estate [Member]
Impaired loans
Unpaid Principal Balance, With No Related Allowance	455	[1]	2,627	[1]
Recorded Investment, With No Related Allowance	307		2,482
Allowance for Loan Losses Allocated, With No Related Allowance	0		0
Unpaid Principal Balance, With Related Allowance	2,141	[1]	0	[1]
Recorded Investment, With Related Allowance	2,138		0
Allowance for Loan Losses Allocated, With Related Allowance	4		0
Commercial Real Estate Owner Occupied [Member]
Impaired loans
Unpaid Principal Balance, With No Related Allowance	4,197	[1]	7,109	[1]
Recorded Investment, With No Related Allowance	3,842		6,481
Allowance for Loan Losses Allocated, With No Related Allowance	0		0
Unpaid Principal Balance, With Related Allowance	3,025	[1]	2,667	[1]
Recorded Investment, With Related Allowance	2,617		2,257
Allowance for Loan Losses Allocated, With Related Allowance	152		148
Commercial Real Estate Non Owner Occupied [Member]
Impaired loans
Unpaid Principal Balance, With No Related Allowance	3,226	[1]	4,106	[1]
Recorded Investment, With No Related Allowance	2,878		3,759
Allowance for Loan Losses Allocated, With No Related Allowance	0		0
Unpaid Principal Balance, With Related Allowance	7,324	[1]	13,020	[1]
Recorded Investment, With Related Allowance	7,280		12,606
Allowance for Loan Losses Allocated, With Related Allowance	152		842
Agriculture Land [Member]
Impaired loans
Unpaid Principal Balance, With No Related Allowance	621	[1]	213	[1]
Recorded Investment, With No Related Allowance	621		208
Allowance for Loan Losses Allocated, With No Related Allowance	0		0
Unpaid Principal Balance, With Related Allowance	125	[1]	333	[1]
Recorded Investment, With Related Allowance	113		320
Allowance for Loan Losses Allocated, With Related Allowance	3		10
Commercial Real Estate Other Receivables [Member]
Impaired loans
Unpaid Principal Balance, With No Related Allowance	2,384	[1]	2,923	[1]
Recorded Investment, With No Related Allowance	2,056		2,378
Allowance for Loan Losses Allocated, With No Related Allowance	0		0
Unpaid Principal Balance, With Related Allowance	596	[1]	137	[1]
Recorded Investment, With Related Allowance	352		108
Allowance for Loan Losses Allocated, With Related Allowance	10		3
Commercial Real Estate [Member]
Impaired loans
Unpaid Principal Balance, With No Related Allowance	10,428	[1]	14,351	[1]
Recorded Investment, With No Related Allowance	9,397		12,826
Allowance for Loan Losses Allocated, With No Related Allowance	0		0
Unpaid Principal Balance, With Related Allowance	11,070	[1]	16,157	[1]
Recorded Investment, With Related Allowance	10,362		15,291
Allowance for Loan Losses Allocated, With Related Allowance	317		1,003
Construction [Member]
Impaired loans
Unpaid Principal Balance, With No Related Allowance	150	[1]	150	[1]
Recorded Investment, With No Related Allowance	150		150
Allowance for Loan Losses Allocated, With No Related Allowance	0		0
Unpaid Principal Balance, With Related Allowance	0	[1]	0	[1]
Recorded Investment, With Related Allowance	0		0
Allowance for Loan Losses Allocated, With Related Allowance	0		0
Commercial Working Capital [Member]
Impaired loans
Unpaid Principal Balance, With No Related Allowance	826	[1]	1,155	[1]
Recorded Investment, With No Related Allowance	827		1,157
Allowance for Loan Losses Allocated, With No Related Allowance	0		0
Unpaid Principal Balance, With Related Allowance	703	[1]	649	[1]
Recorded Investment, With Related Allowance	704		650
Allowance for Loan Losses Allocated, With Related Allowance	22		21
Commercial Loans Other [Member]
Impaired loans
Unpaid Principal Balance, With No Related Allowance	3,544	[1]	3,966	[1]
Recorded Investment, With No Related Allowance	3,384		3,663
Allowance for Loan Losses Allocated, With No Related Allowance	0		0
Unpaid Principal Balance, With Related Allowance	263	[1]	264	[1]
Recorded Investment, With Related Allowance	266		269
Allowance for Loan Losses Allocated, With Related Allowance	8		9
Commercial Loan [Member]
Impaired loans
Unpaid Principal Balance, With No Related Allowance	4,370	[1]	5,121	[1]
Recorded Investment, With No Related Allowance	4,211		4,820
Allowance for Loan Losses Allocated, With No Related Allowance	0		0
Unpaid Principal Balance, With Related Allowance	966	[1]	913	[1]
Recorded Investment, With Related Allowance	970		919
Allowance for Loan Losses Allocated, With Related Allowance	30		30
Home Equity and Home Improvement [Member]
Impaired loans
Unpaid Principal Balance, With No Related Allowance	2,205	[1]	2,192	[1]
Recorded Investment, With No Related Allowance	2,154		2,140
Allowance for Loan Losses Allocated, With No Related Allowance	0		0
Unpaid Principal Balance, With Related Allowance	98	[1]	101	[1]
Recorded Investment, With Related Allowance	99		102
Allowance for Loan Losses Allocated, With Related Allowance	24		24
Consumer Finance [Member]
Impaired loans
Unpaid Principal Balance, With No Related Allowance	34	[1]	35	[1]
Recorded Investment, With No Related Allowance	34		34
Allowance for Loan Losses Allocated, With No Related Allowance	0		0
Unpaid Principal Balance, With Related Allowance	5	[1]	0	[1]
Recorded Investment, With Related Allowance	5		0
Allowance for Loan Losses Allocated, With Related Allowance	$ 5		$ 0

[1] Presented gross of charge offs

XML

Dividends on Common Stock

3 Months Ended

Mar. 31, 2015

Dividends, Common Stock [Abstract]

Dividend on Common Stock [Text Block]

5. Dividends on Common Stock

First Defiance declared and paid a $0.175 per common stock dividend in the first quarter of 2015 and declared and paid a $0.15 per common stock dividend in the first quarter of 2014.

XML

Earnings Per Common Share

3 Months Ended

Mar. 31, 2015

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

6. Earnings Per Common Share

The following table sets forth the computation of basic and diluted earnings per common share:

	Three months ended March 31,
	2015		2014
	(In Thousands, except per share data)
Numerator for basic and diluted earnings per common share – Net income	$	6,601	$	5,179
Denominator:
Denominator for basic earnings per common share – weighted average common shares		9,234		9,681
Effect of warrants		291		341
Effect of employee stock options		86		86
Denominator for diluted earnings per common share		9,611		10,108
Basic earnings per common share	$	0.71	$	0.53
Diluted earnings per common share	$	0.69	$	0.51

There were 16,750 shares under option granted to employees excluded from the diluted earnings per common share calculation as they were anti-dilutive for the three months ended March 31, 2015. Options to acquire 92,250 shares were excluded from the diluted earnings per common share calculations as they were anti-dilutive for the three months ended March 31, 2014.

XML

Loans

3 Months Ended

Mar. 31, 2015

Loans Receivable, Net [Abstract]

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

8. Loans

Loans receivable consist of the following:

	March 31, 2015		December 31, 2014
	(In Thousands)
Real Estate:
Secured by 1-4 family residential	$	203,558	$	206,437
Secured by multi-family residential		159,133		156,530
Secured by commercial real estate		717,343		683,958
Construction		125,144		112,385
		1,205,178		1,159,310
Other Loans:
Commercial		395,378		399,730
Home equity and improvement		110,755		111,813
Consumer Finance		14,967		15,466
		521,100		527,009
Total loans		1,726,278		1,686,319
Deduct:
Undisbursed loan funds		(40,833)		(38,653)
Net deferred loan origination fees and costs		(927)		(880)
Allowance for loan loss		(25,302)		(24,766)
Totals	$	1,659,216	$	1,622,020

Loan segments have been identified by evaluating the portfolio based on collateral and credit risk characteristics.

The following table discloses allowance for loan loss activity for the quarter ended March 31, 2015 and 2014 by portfolio segment (In Thousands):

Quarter Ended March 31, 2015	1-4 Family Residential Real Estate		Multi- Family Residential Real Estate		Commercial Real Estate		Construction		Commercial		Home Equity and Improvement		Consumer Finance		Total
Beginning Allowance	$	2,494	$	2,453	$	11,268	$	221	$	6,509	$	1,704	$	117	$	24,766
Charge-Offs		(78)		0		(155)		0		(2)		(43)		(3)		(281)
Recoveries		19		0		597		0		40		29		12		697
Provisions		48		101		(26)		82		219		(270)		(34)		120
Ending Allowance	$	2,483	$	2,554	$	11,684	$	303	$	6,766	$	1,420	$	92	$	25,302

Quarter Ended March 31, 2014	1-4 Family Residential Real Estate		Multi- Family Residential Real Estate		Commercial Real Estate		Construction		Commercial		Home Equity and Improvement		Consumer Finance		Total
Beginning Allowance	$	2,847	$	2,508	$	12,000	$	134	$	5,678	$	1,635	$	148	$	24,950
Charge-Offs		(228)		0		(228)		0		(525)		(184)		(11)		(1,176)
Recoveries		56		3		722		0		76		31		18		906
Provisions		(36)		104		(507)		4		381		165		(8)		103
Ending Allowance	$	2,639	$	2,615	$	11,987	$	138	$	5,610	$	1,647	$	147	$	24,783

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of March 31, 2015 (In Thousands):

	1-4 Family		Multi Family
	Residential		Residential		Commercial						Home Equity		Consumer
	Real Estate		Real Estate		Real Estate		Construction		Commercial		& Improvement		Finance		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	260	$	4	$	317	$	-	$	30	$	24	$	5	$	640
Collectively evaluated for impairment		2,223		2,550		11,367		303		6,736		1,396		87		24,662
Acquired with deteriorated credit quality		-		-		-		-		-		-		-		-
Total ending allowance balance	$	2,483	$	2,554	$	11,684	$	303	$	6,766	$	1,420	$	92	$	25,302
Loans:
Loans individually evaluated for impairment	$	10,291	$	2,445	$	19,759	$	150	$	5,181	$	2,253	$	39	$	40,118
Loans collectively evaluated for impairment		193,661		156,807		699,773		84,159		391,540		108,968		14,911		1,649,819
Loans acquired with deteriorated credit quality		1		-		163		-		21		-		-		185
Total ending loans balance	$	203,953	$	159,252	$	719,695	$	84,309	$	396,742	$	111,221	$	14,950	$	1,690,122

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of December 31, 2014 (In Thousands):

	1-4 Family		Multi Family
	Residential		Residential		Commercial						Home Equity		Consumer
	Real Estate		Real Estate		Real Estate		Construction		Commercial		& Improvement		Finance		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	216	$	-	$	1,003	$	-	$	30	$	24	$	-	$	1,273
Collectively evaluated for impairment		2,278		2,453		10,265		221		6,479		1,680		117		23,493
Acquired with deteriorated credit quality		-		-		-		-		-		-		-		-
Total ending allowance balance	$	2,494	$	2,453	$	11,268	$	221	$	6,509	$	1,704	$	117	$	24,766
Loans:
Loans individually evaluated for impairment	$	10,281	$	2,482	$	28,117	$	150	$	5,739	$	2,242	$	34	$	49,045
Loans collectively evaluated for impairment		196,582		154,178		657,677		73,572		395,270		110,040		15,417		1,602,736
Loans acquired with deteriorated credit quality		1		-		163		-		22		-		-		186
Total ending loans balance	$	206,864	$	156,660	$	685,957	$	73,722	$	401,031	$	112,282	$	15,451	$	1,651,967

The following table presents the average balance, interest income recognized and cash basis income recognized on impaired loans by class of loans (In Thousands):

	Three Months Ended March 31, 2015
	Average Balance		Interest Income Recognized		Cash Basis Income Recognized
Residential Owner Occupied	$	5,992	$	68	$	68
Residential Non Owner Occupied		4,347		41		40
Total Residential Real Estate		10,339		109		108
Multi-Family		2,463		8		8
CRE Owner Occupied		6,513		37		39
CRE Non Owner Occupied		10,187		133		135
Agriculture Land		760		7		13
Other CRE		2,441		10		9
Total Commercial Real Estate		19,901		187		196
Construction		150		2		2
Commercial Working Capital		1,866		13		13
Commercial Other		3,839		13		18
Total Commercial		5,705		26		31
Home Equity and Home Improvement		2,202		20		20
Consumer		43		-		-
Total Impaired Loans	$	40,803	$	352	$	365

The following table presents the average balance, interest income recognized and cash basis income recognized on impaired loans by class of loans (In Thousands):

	Three Months Ended March 31, 2014
	Average Balance		Interest Income Recognized		Cash Basis Income Recognized
Residential Owner Occupied	$	6,329	$	85	$	83
Residential Non Owner Occupied		4,084		38		38
Total Residential Real Estate		10,413		123		121
Multi-Family		388		1		1
CRE Owner Occupied		9,837		36		35
CRE Non Owner Occupied		19,355		204		204
Agriculture Land		687		3		2
Other CRE		1,862		5		5
Total Commercial Real Estate		31,741		248		246
Construction		261		3		5
Commercial Working Capital		2,924		3		3
Commercial Other		4,959		2		2
Total Commercial		7,883		5		5
Home Equity and Home Improvement		2,439		25		25
Consumer		57		1		1
Total Impaired Loans	$	53,182	$	406	$	404

The following table presents loans individually evaluated for impairment by class of loans (In Thousands):

	March 31, 2015						December 31, 2014
	Unpaid Principal Balance*		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Principal Balance*		Recorded Investment		Allowance for Loan Losses Allocated
With no allowance recorded:
Residential Owner Occupied	$	3,763	$	3,655	$	-	$	3,967	$	3,859	$	-
Residential Non Owner Occupied		3,631		3,624		-		3,763		3,670		-
Total 1-4 Family Residential Real Estate		7,394		7,279		-		7,730		7,529		-
Multi-Family Residential Real Estate		455		307		-		2,627		2,482		-
CRE Owner Occupied		4,197		3,842		-		7,109		6,481		-
CRE Non Owner Occupied		3,226		2,878		-		4,106		3,759		-
Agriculture Land		621		621		-		213		208		-
Other CRE		2,384		2,056		-		2,923		2,378		-
Total Commercial Real Estate		10,428		9,397		-		14,351		12,826		-
Construction		150		150		-		150		150		-
Commercial Working Capital		826		827		-		1,155		1,157		-
Commercial Other		3,544		3,384		-		3,966		3,663		-
Total Commercial		4,370		4,211		-		5,121		4,820		-
Home Equity and Home Improvement		2,205		2,154		-		2,192		2,140		-
Consumer Finance		34		34		-		35		34		-
Total loans with no allowance recorded	$	25,036	$	23,532	$	-	$	32,206	$	29,981	$	-
With an allowance recorded:
Residential Owner Occupied	$	2,305	$	2,306	$	247	$	2,112	$	2,114	$	204
Residential Non Owner Occupied		701		706		13		636		638		12
Total 1-4 Family Residential Real Estate		3,006		3,012		260		2,748		2,752		216
Multi-Family Residential Real Estate		2,141		2,138		4		-		-		-
CRE Owner Occupied		3,025		2,617		152		2,667		2,257		148
CRE Non Owner Occupied		7,324		7,280		152		13,020		12,606		842
Agriculture Land		125		113		3		333		320		10
Other CRE		596		352		10		137		108		3
Total Commercial Real Estate		11,070		10,362		317		16,157		15,291		1,003
Construction		-		-		-		-		-		-
Commercial Working Capital		703		704		22		649		650		21
Commercial Other		263		266		8		264		269		9
Total Commercial		966		970		30		913		919		30
Home Equity and Home Improvement		98		99		24		101		102		24
Consumer Finance		5		5		5		-		-		-
Total loans with an allowance recorded	$	17,286	$	16,586	$	640	$	19,919	$	19,064	$	1,273

* Presented gross of charge offs

The following table presents the current balance of the aggregate amounts of non-performing assets, comprised of non-performing loans and real estate owned on the dates indicated: 

	March 31, 2015		December 31, 2014
	(In Thousands)
Non-accrual loans	$	18,703	$	24,130
Loans over 90 days past due and still accruing		-		-
Total non-performing loans		18,703		24,130
Real estate and other assets held for sale		6,392		6,181
Total non-performing assets	$	25,095	$	30,311
Troubled debt restructuring, still accruing	$	19,616	$	24,686

The following table presents the aging of the recorded investment in past due and non accrual loans as of March 31, 2015 by class of loans (In Thousands):

	Current		30-59 days		60-89 days		90+ days		Total Past Due		Total Non Accrual
Residential Owner Occupied	$	138,476	$	118	$	242	$	537	$	897	$	1,690
Residential Non Owner Occupied		63,262		378		362		578		1,318		1,548
Total 1-4 Family Residential Real Estate		201,738		496		604		1,115		2,215		3,238
Multi-Family Residential Real Estate		156,869		-		2,138		245		2,383		2,403
CRE Owner Occupied		313,484		1,188		1,513		1,572		4,273		4,377
CRE Non Owner Occupied		262,278		110		-		662		772		1,887
Agriculture Land		98,781		164		-		12		176		462
Other Commercial Real Estate		39,524		-		-		407		407		2,267
Total Commercial Real Estate		714,067		1,462		1,513		2,653		5,628		8,993
Construction		84,309		-		-		-		-		-
Commercial Working Capital		139,101		10		69		340		419		355
Commercial Other		255,899		233		23		1,067		1,323		3,163
Total Commercial		395,000		243		92		1,407		1,742		3,518
Consumer Finance		14,934		16		-		-		16		16
Home Equity/Home Improvement		111,060		75		56		30		161		534
Total Loans	$	1,677,977	$	2,292	$	4,403	$	5,450	$	12,145	$	18,702

The following table presents the aging of the recorded investment in past due and non accrual loans as of December 31, 2014 by class of loans (In Thousands):

	Current		30-59 days		60-89 days		90+ days		Total Past Due		Total Non Accrual
Residential Owner Occupied	$	141,597	$	39	$	1,079	$	365	$	1,483	$	1,702
Residential Non Owner Occupied		62,991		110		105		578		793		1,625
Total 1-4 Family Residential Real Estate		204,588		149		1,184		943		2,276		3,327
Multi-Family Residential Real Estate		156,413		247		-		-		247		2,546
CRE Owner Occupied		299,500		163		1,566		1,753		3,482		7,004
CRE Non Owner Occupied		243,341		119		416		1,308		1,843		2,582
Agriculture Land		93,529		-		14		-		14		686
Other Commercial Real Estate		43,835		155		-		258		413		2,359
Total Commercial Real Estate		680,205		437		1,996		3,319		5,752		12,631
Construction		73,722		-		-		-		-		-
Commercial Working Capital		135,009		-		-		951		951		1,103
Commercial Other		262,982		67		10		2,012		2,089		3,897
Total Commercial		397,991		67		10		2,963		3,040		5,000
Consumer Finance		15,326		68		57		-		125		12
Home Equity/Home Improvement		110,940		1,236		-		106		1,342		619
Total Loans	$	1,639,185	$	2,204	$	3,247	$	7,331	$	12,782	$	24,135

Troubled Debt Restructurings

As of March 31, 2015 and December 31, 2014, the Company had a recorded investment in troubled debt restructurings (“TDRs”) of $26.9 million and $33.0 million, respectively. The Company allocated $515,000 and $1.1 million of specific reserves to those loans at March 31, 2015 and December 31, 2014, and has committed to lend additional amounts totaling up to $14,000 and $69,000 at March 31, 2015 and December 31, 2014, respectively.

The Company offers various types of concessions when modifying a loan, however, forgiveness of principal is rarely granted. Each TDR is uniquely designed to meet the specific needs of the borrower. Commercial and industrial loans modified in a TDR often involve temporary interest-only payments, term extensions, and converting revolving credit lines to term loans. Additional collateral or an additional guarantor is often requested when granting a concession. Commercial mortgage loans modified in a TDR often involve temporary interest-only payments, re-amortization of remaining debt in order to lower payments, and sometimes reducing the interest rate lower than the current market rate. Residential mortgage loans modified in a TDR are comprised of loans where monthly payments are lowered, either through interest rate reductions or principal only payments for a period of time, to accommodate the borrowers’ financial needs, interest is capitalized into principal, or the term and amortization are extended. Home equity modifications are made infrequently and usually involve providing an interest rate that is lower than the borrower would be able to obtain due to credit issues. All retail loans where the borrower is in bankruptcy are classified as TDRs regardless of whether or not a concession is made.

Of the loans modified in a TDR, $7.3 million are on non-accrual status and partial charge-offs have in some cases been taken against the outstanding balance. Loans modified as a TDR may have the financial effect of increasing the allowance associated with the loan. If the loan is determined to be collateral dependent, the estimated fair value of the collateral, less any selling costs is used to determine if there is a need for a specific allowance or charge-off. If the loan is determined to be cash flow dependent, the allowance is measured based on the present value of expected future cash flows discounted at the loan’s pre-modification effective interest rate.

The following table presents loans by class modified as troubled debt restructurings that occurred during the three month period ending March 31, 2015 and March 31, 2014:

	Loans Modified as a TDR for the Three Months Ended March 31, 2015 ($ in thousands)				Loans Modified as a TDR for the Three Months Ended March 31, 2014 ($ in thousands)
Troubled Debt Restructurings	Number of Loans		Recorded Investment (as of period end)		Number of Loans		Recorded Investment (as of period end)
1-4 Family Owner Occupied		3	$	228		9	$	763
1-4 Family Non Owner Occupied		4		68		0		-
CRE Owner Occupied		0		-		0		-
CRE Non Owner Occupied		0		-		1		361
Agriculture Land		0		-		0		-
Other CRE		0		-		0		-
Commercial Working Capital		0		-		2		321
Commercial Other		0		-		0		-
Home Equity and Improvement		3		59		3		60
Consumer Finance		5		10		3		11
Total		15	$	365		18	$	1,516

The loans described above increased the ALLL by $64,000 in the three month period ending March 31, 2015 and decreased the ALLL by $70,000 in the three month period ending March 31, 2014.

Of the 2015 modifications, 6 were made TDRs due to the fact that the borrower has been in bankruptcy, 1 was made TDR due to extending the amortization, 5 were made TDRs due to advancing funds to a substandard credit, and 3 were made to refinance current debt for payment relief.

The following table presents loans by class modified as TDRs for which there was a payment default within twelve months following the modification during the quarters ending March 31, 2015 and March 31, 2014:

	Three Months Ended March 31, 2015 ($ in thousands)				Three Months Ended March 31, 2014 ($ in thousands)
Troubled Debt Restructurings That Subsequently Defaulted	Number of Loans		Recorded Investment (as of period end)		Number of Loans		Recorded Investment (as of period end)
1-4 Family Owner Occupied		1	$	126		0	$	-
1-4 Family Non Owner Occupied		1		104		0		-
CRE Owner Occupied		0		-		0		-
CRE Non Owner Occupied		2		387		0		-
Agriculture Land		0		-		0		-
Other CRE		0		-		0		-
Commercial Working Capital or Other		1		120		0		-
Commercial Other		0		-		0		-
Home Equity and Improvement		0		-		0		-
Consumer Finance		0		-		0		-
Total		5	$	737		0	$	-

The TDRs that subsequently defaulted described above had no affect on the allowance for loan losses for the three month periods ending March 31, 2015 or 2014.

The terms of certain other loans were modified during the period ending March 31, 2015 that did not meet the definition of a TDR. The modification of these loans involved a modification of the terms of a loan to borrowers who were not experiencing financial difficulties. A total of 41 loans were modified under this definition during the three month period ended March 31, 2015.

In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed on the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification.

Credit Quality Indicators

Loans are categorized into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. Loans are analyzed individually by classifying the loans as to credit risk. This analysis includes all non-homogeneous loans, such as commercial and commercial real estate loans and certain homogenous mortgage, home equity and consumer loans. This analysis is performed on a quarterly basis. First Defiance uses the following definitions for risk ratings:

Special Mention. Loans classified as special mention have a potential weakness that deserves management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution's credit position at some future date.

Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Not Graded. Loans classified as not graded are generally smaller balance residential real estate, home equity and consumer installment loans which are originated primarily by using an automated underwriting system. These loans are monitored based on their delinquency status and are evaluated individually only if they are seriously delinquent.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans. As of March 31, 2015, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows (In Thousands):

Class	Pass		Special Mention		Substandard		Doubtful		Not Graded		Total
1-4 Family Owner Occupied	$	3,740	$	128	$	2,745	$	-	$	132,761	$	139,374
1-4 Family Non Owner Occupied		52,352		2,554		4,760		-		4,913		64,579
Total 1-4 Family Real Estate		56,092		2,682		7,505		-		137,674		203,953
Multi-Family Residential Real Estate		155,041		216		3,095		-		900		159,252
CRE Owner Occupied		289,959		18,886		7,862		-		1,050		317,757
CRE Non Owner Occupied		254,234		3,728		5,068		-		20		263,050
Agriculture Land		96,190		1,759		1,008		-		-		98,957
Other CRE		35,867		62		3,455		-		547		39,931
Total Commercial Real Estate		676,250		24,435		17,393		-		1,617		719,695
Construction		72,608		-		150		-		11,551		84,309
Commercial Working Capital		131,327		7,096		1,097		-		-		139,520
Commercial Other		246,539		6,144		4,539		-		-		257,222
Total Commercial		377,866		13,240		5,636		-		-		396,742
Home Equity and Home Improvement		-		-		617		-		110,604		111,221
Consumer Finance		-		-		36		-		14,914		14,950
Total Loans	$	1,337,857	$	40,573	$	34,432	$	-	$	277,260	$	1,690,122

As of December 31, 2014, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows (In Thousands):

Class	Pass		Special Mention		Substandard		Doubtful		Not Graded		Total
1-4 Family Owner Occupied	$	4,230	$	131	$	3,048	$	365	$	135,306	$	143,080
1-4 Family Non Owner Occupied		51,327		2,404		4,872		7		5,174		63,784
Total 1-4 Family Real Estate		55,557		2,535		7,920		372		140,480		206,864
Multi-Family Residential Real Estate		152,290		220		3,236		-		914		156,660
CRE Owner Occupied		273,406		18,448		9,953		-		1,175		302,982
CRE Non Owner Occupied		224,073		7,898		13,186		-		27		245,184
Agriculture Land		90,875		1,849		819		-		-		93,543
Other CRE		40,147		63		3,466		-		572		44,248
Total Commercial Real Estate		628,501		28,258		27,424		-		1,774		685,957
Construction		62,355		-		150		-		11,217		73,722
Commercial Working Capital		128,229		6,287		1,444		-		-		135,960
Commercial Other		253,576		6,504		4,991		-		-		265,071
Total Commercial		381,805		12,791		6,435		-		-		401,031
Home Equity and Home Improvement		-		-		1,647		106		110,529		112,282
Consumer Finance		-		-		125		-		15,326		15,451
Total Loans	$	1,280,508	$	43,804	$	46,937	$	478	$	280,240	$	1,651,967

Foreclosure Proceedings

Consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure totaled $28,000 as of March 31, 2015.

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Loans (Details 8) (Subsequently Defaulted [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015 Numbers	Mar. 31, 2014 Numbers
Accounts, Notes, Loans and Financing Receivable [Line Items]
Troubled Debt Restructurings That Subsequently Defaulted, Number of Loans	5	0
Troubled Debt Restructurings That Subsequently Defaulted, Recorded Investment	$ 737	$ 0
One To Four Family Residential Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Troubled Debt Restructurings That Subsequently Defaulted, Number of Loans	1	0
Troubled Debt Restructurings That Subsequently Defaulted, Recorded Investment	126	0
One To Four Family Non Residential Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Troubled Debt Restructurings That Subsequently Defaulted, Number of Loans	1	0
Troubled Debt Restructurings That Subsequently Defaulted, Recorded Investment	104	0
Commercial Real Estate Owner Occupied [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Troubled Debt Restructurings That Subsequently Defaulted, Number of Loans	0	0
Troubled Debt Restructurings That Subsequently Defaulted, Recorded Investment	0	0
Commercial Real Estate Non Owner Occupied [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Troubled Debt Restructurings That Subsequently Defaulted, Number of Loans	2	0
Troubled Debt Restructurings That Subsequently Defaulted, Recorded Investment	387	0
Agriculture Land [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Troubled Debt Restructurings That Subsequently Defaulted, Number of Loans	0	0
Troubled Debt Restructurings That Subsequently Defaulted, Recorded Investment	0	0
Commercial Real Estate Other Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Troubled Debt Restructurings That Subsequently Defaulted, Number of Loans	0	0
Troubled Debt Restructurings That Subsequently Defaulted, Recorded Investment	0	0
Commercial Working Capital [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Troubled Debt Restructurings That Subsequently Defaulted, Number of Loans	1	0
Troubled Debt Restructurings That Subsequently Defaulted, Recorded Investment	120	0
Commercial Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Troubled Debt Restructurings That Subsequently Defaulted, Number of Loans	0	0
Troubled Debt Restructurings That Subsequently Defaulted, Recorded Investment	0	0
Home Equity and Home Improvement [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Troubled Debt Restructurings That Subsequently Defaulted, Number of Loans	0	0
Troubled Debt Restructurings That Subsequently Defaulted, Recorded Investment	0	0
Consumer Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Troubled Debt Restructurings That Subsequently Defaulted, Number of Loans	0	0
Troubled Debt Restructurings That Subsequently Defaulted, Recorded Investment	$ 0	$ 0

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Loans (Details Textual) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
Financing Receivable, Allowance for Credit Losses, Period Increase (Increase)	$ 64,000	$ 70,000
Loans and Leases Receivable, Consumer, Loans in Process	28,000
Troubled Debt Restructuring [Member]
Financing Receivable, Modifications, Recorded Investment	26,900,000		33,000,000
Specified Reserves, Provision for Troubled Debt Restructurings	515,000		1,100,000
Loans and Leases Receivable, Impaired, Commitment to Lend	14,000		69,000
Financing Receivables, Impaired, Troubled Debt Restructuring, Write-down	$ 7,300,000

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Loans (Details 7) (TDRs [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015 Numbers	Mar. 31, 2014 Numbers
Accounts, Notes, Loans and Financing Receivable [Line Items]
Troubled Debt Restructurings, Number of Loans	15	18
Troubled Debt Restructurings, Recorded Investment	$ 365	$ 1,516
One To Four Family Residential Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Troubled Debt Restructurings, Number of Loans	3	9
Troubled Debt Restructurings, Recorded Investment	228	763
One To Four Family Non Residential Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Troubled Debt Restructurings, Number of Loans	4	0
Troubled Debt Restructurings, Recorded Investment	68	0
Commercial Real Estate Owner Occupied [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Troubled Debt Restructurings, Number of Loans	0	0
Troubled Debt Restructurings, Recorded Investment	0	0
Commercial Real Estate Non Owner Occupied [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Troubled Debt Restructurings, Number of Loans	0	1
Troubled Debt Restructurings, Recorded Investment	0	361
Agriculture Land [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Troubled Debt Restructurings, Number of Loans	0	0
Troubled Debt Restructurings, Recorded Investment	0	0
Commercial Real Estate Other Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Troubled Debt Restructurings, Number of Loans	0	0
Troubled Debt Restructurings, Recorded Investment	0	0
Commercial Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Troubled Debt Restructurings, Number of Loans	0	0
Troubled Debt Restructurings, Recorded Investment	0	0
Other Commercial Working Capital [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Troubled Debt Restructurings, Number of Loans	0	2
Troubled Debt Restructurings, Recorded Investment	0	321
Home Equity and Home Improvement [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Troubled Debt Restructurings, Number of Loans	3	3
Troubled Debt Restructurings, Recorded Investment	59	60
Consumer Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Troubled Debt Restructurings, Number of Loans	5	3
Troubled Debt Restructurings, Recorded Investment	$ 10	$ 11

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Commitments, Guarantees and Contingent Liabilities (Tables)

3 Months Ended

Mar. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

Schedule of Line of Credit Facilities [Table Text Block]

The Company’s maximum obligation to extend credit for loan commitments (unfunded loans and unused lines of credit) and standby letters of credit outstanding as of the periods stated below were as follows (In Thousands):

	March 31, 2015				December 31, 2014
	Fixed Rate		Variable Rate		Fixed Rate		Variable Rate
Commitments to make loans	$	43,984	$	61,046	$	37,546	$	69,232
Unused lines of credit		14,492		308,145		20,385		307,449
Standby letters of credit		-		17,694		-		17,886
Total	$	58,476	$	386,885	$	57,931	$	394,567

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Investment Securities (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		12 Months Ended
	Mar. 31, 2015		Dec. 31, 2014
Available-for-Sale Securities:
Available-for-Sale Securities, Amortized Cost	$ 239,712		$ 232,097
Available-for-Sale Securities, Gross Unrealized Gains	8,905		7,688
Available-for-Sale Securities, Gross Unrealized Losses	(179)		(464)
Available-for-Sale Securities, Fair Value	248,438		239,321
Held-to-Maturity Securities:
Held-to-Maturity Securities, Amortized Cost	299	[1]	313	[1]
Held-to-Maturity Securities, Gross Unrealized Gains	3	[1]	3	[1]
Held-to-Maturity Securities, Gross Unrealized Losses	(2)	[1]	(8)	[1]
Held-to-Maturity Securities, Fair Value	300		308	[1]
Obligations of U.S. government corporations and agencies
Available-for-Sale Securities:
Available-for-Sale Securities, Amortized Cost	5,000		1,000
Available-for-Sale Securities, Gross Unrealized Gains	2		0
Available-for-Sale Securities, Gross Unrealized Losses	(1)		(20)
Available-for-Sale Securities, Fair Value	5,001		980
Mortgage-backed securities - residential
Available-for-Sale Securities:
Available-for-Sale Securities, Amortized Cost	60,121		58,380
Available-for-Sale Securities, Gross Unrealized Gains	1,644		1,476
Available-for-Sale Securities, Gross Unrealized Losses	0		0
Available-for-Sale Securities, Fair Value	61,765		59,856
REMICs
Available-for-Sale Securities:
Available-for-Sale Securities, Amortized Cost	1,776		1,820
Available-for-Sale Securities, Gross Unrealized Gains	54		19
Available-for-Sale Securities, Gross Unrealized Losses	0		0
Available-for-Sale Securities, Fair Value	1,830		1,839
Collateralized mortgage obligations
Available-for-Sale Securities:
Available-for-Sale Securities, Amortized Cost	80,900		80,252
Available-for-Sale Securities, Gross Unrealized Gains	1,856		1,280
Available-for-Sale Securities, Gross Unrealized Losses	(166)		(411)
Available-for-Sale Securities, Fair Value	82,590		81,121
Trust preferred stock and preferred stock
Available-for-Sale Securities:
Available-for-Sale Securities, Amortized Cost	0		0
Available-for-Sale Securities, Gross Unrealized Gains	1		1
Available-for-Sale Securities, Gross Unrealized Losses	0		0
Available-for-Sale Securities, Fair Value	1		1
Corporate bonds
Available-for-Sale Securities:
Available-for-Sale Securities, Amortized Cost	5,924		6,913
Available-for-Sale Securities, Gross Unrealized Gains	89		85
Available-for-Sale Securities, Gross Unrealized Losses	(5)		(6)
Available-for-Sale Securities, Fair Value	6,008		6,992
Obligations of state and political subdivisions
Available-for-Sale Securities:
Available-for-Sale Securities, Amortized Cost	85,991		83,732
Available-for-Sale Securities, Gross Unrealized Gains	5,259		4,827
Available-for-Sale Securities, Gross Unrealized Losses	(7)		(27)
Available-for-Sale Securities, Fair Value	91,243		88,532
Held-to-Maturity Securities:
Held-to-Maturity Securities, Amortized Cost	155	[1]	155	[1]
Held-to-Maturity Securities, Gross Unrealized Gains	0	[1]	0	[1]
Held-to-Maturity Securities, Gross Unrealized Losses	0	[1]	0	[1]
Held-to-Maturity Securities, Fair Value	155		155	[1]
Federal Home Loan Mortgage Corporation Certificates and Obligations (FHLMC) [Member]
Held-to-Maturity Securities:
Held-to-Maturity Securities, Amortized Cost	18	[1]	26	[1]
Held-to-Maturity Securities, Gross Unrealized Gains	0	[1]	0	[1]
Held-to-Maturity Securities, Gross Unrealized Losses	0	[1]	(8)	[1]
Held-to-Maturity Securities, Fair Value	18		18	[1]
Federal National Mortgage Association Certificates and Obligations (FNMA) [Member]
Held-to-Maturity Securities:
Held-to-Maturity Securities, Amortized Cost	89	[1]	93	[1]
Held-to-Maturity Securities, Gross Unrealized Gains	2	[1]	2	[1]
Held-to-Maturity Securities, Gross Unrealized Losses	(2)	[1]	0	[1]
Held-to-Maturity Securities, Fair Value	89		95	[1]
Government National Mortgage Association Certificates and Obligations (GNMA) [Member]
Held-to-Maturity Securities:
Held-to-Maturity Securities, Amortized Cost	37	[1]	39	[1]
Held-to-Maturity Securities, Gross Unrealized Gains	1	[1]	1	[1]
Held-to-Maturity Securities, Gross Unrealized Losses	0	[1]	0	[1]
Held-to-Maturity Securities, Fair Value	$ 38		$ 40	[1]

[1] FHLMC, FNMA, and GNMA certificates are residential mortgage-backed securities.

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Income Taxes

3 Months Ended

Mar. 31, 2015

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

13. Income Taxes

The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax in the state of Indiana. The Company is no longer subject to examination by taxing authorities for years before 2010. The Company currently operates primarily in the states of Ohio and Michigan, which tax financial institutions based on their equity rather than their income.

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Fair Value (Tables)

3 Months Ended

Mar. 31, 2015

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

Assets and Liabilities Measured on a Recurring Basis

March 31, 2015	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
	(In Thousands)
Available for sale securities:
Obligations of U.S. government corporations and agencies	$	-	$	5,001	$	-	$	5,001
Mortgage-backed - residential		-		61,765		-		61,765
REMICs		-		1,830		-		1,830
Collateralized mortgage obligations		-		82,590		-		82,590
Preferred stock		1		-		-		1
Corporate bonds		1,995		4,013		-		6,008
Obligations of state and political subdivisions		-		91,243		-		91,243
Mortgage banking derivative - asset		-		884		-		884
Mortgage banking derivative - liability		-		119		-		119

December 31, 2014	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
	(In Thousands)
Available for sale securities:
Obligations of U.S. Government corporations and agencies	$	-	$	980	$	-	$	980
Mortgage-backed - residential		-		59,856		-		59,856
REMICs		-		1,839		-		1,839
Collateralized mortgage obligations		-		81,121		-		81,121
Preferred stock		1		-		-		1
Corporate bonds		1,989		5,003		-		6,992
Obligations of state and political subdivisions		-		88,532				88,532
Mortgage banking derivative - asset		-		351		-		351
Mortgage banking derivative - liability		-		24		-		24

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

There were no assets measured at fair value on a recurring basis using Level 3 inputs for the three months ended March 31, 2015. The table below presents a reconciliation and income classification of gains and losses for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended March 31, 2014:

Fair Value Measurements Using Significant Unobservable Inputs (Level 3) (In Thousands)
Beginning balance, January 1, 2014	$	582
Total gains or losses (realized/unrealized)
Included in earnings (unrealized)		-
Included in other comprehensive income (presented gross of taxes)		122
Amortization		-
Sales		-
Transfers in and/or out of Level 3		-
Ending balance, March 31, 2014	$	704

Schedule of Changes in Fair Value of Plan Assets [Table Text Block]

Assets and Liabilities Measured on a Non-Recurring Basis

March 31, 2015	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
	(In Thousands)
Impaired loans
1-4 Family Residential Real Estate	$	-	$	-	$	405	$	405
Multi Family Residential		-		-		257		257
Commercial Real Estate		-		-		5,501		5,501
Commercial loans		-		-		141		141
Home Equity and Improvement		-		-		96		96
Total Impaired loans		-		-		6,400		6,400
Mortgage servicing rights		-		935		-		935
Real estate held for sale		-
Residential		-		-		115		115
CRE		-		-		321		321
Total real estate held for sale		-		-		436		436

December 31, 2014	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
	(In Thousands)
Impaired loans
1-4 Family Residential Real Estate	$	-	$	-	$	419	$	419
Multi Family Residential		-		-		269		269
Commercial Real Estate		-		-		6,665		6,665
Commercial						340		340
Home Equity and Improvement		-		-		98		98
Total impaired loans		-		-		7,791		7,791
Mortgage servicing rights		-		1,034		-		1,034
Real estate held for sale
Residential		-		-		-		-
CRE		-		-		739		739
Total real estate held for sale		-		-		739		739

Fair Value, Assets Measured on Recurring and Nonrecurring Basis [Table Text Block]

For Level 3 assets and liabilities measured at fair value on a recurring or nonrecurring basis as of March 31, 2015, the significant unobservable inputs used in the fair value measurements were as follows:

	Fair Value		Valuation Technique	Unobservable Inputs	Range of Inputs		Weighted Average
				(Dollars in Thousands)
Impaired Loans- Applies to all loan classes	$	6,400	Appraisals which utilize sales comparison, net income and cost approach	Discounts for collection issues and changes in market conditions		10-30%		11	%
Real estate held for sale – Applies to all classes	$	436	Appraisals which utilize sales comparison, net income and cost approach	Discounts for changes in market conditions		20-30%		22	%

For Level 3 assets and liabilities measured at fair value on a recurring or nonrecurring basis as of December 31, 2014, the significant unobservable inputs used in the fairv alue measurements were as follows:

	Fair Value		Valuation Technique	Unobservable Inputs	Range of Inputs		Weighted Average
				(Dollars in Thousands)
Impaired Loans- Applies to all loan classes	$	7,791	Appraisals which utilize sales comparison, net income and cost approach	Discounts for collection issues and changes in market conditions		10-30%		11	%
Real estate held for sale – Applies to all classes	$	739	Appraisals which utilize sales comparison, net income and cost approach	Discounts for changes in market conditions		20-40%		28	%

Fair Value, by Balance Sheet Grouping [Table Text Block]

The cost or value of any call or put options is based on the estimated cost to settle the option at March 31, 2015.

			Fair Value Measurements at March 31, 2015 (In Thousands)
	Carrying Value		Total		Level 1		Level 2		Level 3
Financial Assets:
Cash and cash equivalents	$	81,472	$	81,472	$	81,472	$	-	$	-
Investment securities		248,737		248,738		1,996		246,742		-
Federal Home Loan Bank Stock		13,802		N/A		N/A		N/A		N/A
Loans, net, including loans held for sale		1,668,760		1,682,215		-		10,151		1,672,064
Accrued interest receivable		6,967		6,967		-		1,375		5,592
Financial Liabilities:
Deposits	$	1,772,693	$	1,775,117	$	370,997	$	1,404,120	$	-
Advances from Federal Home Loan Bank		31,298		31,562		-		31,562		-
Securities sold under repurchase agreements		60,271		60,271		-		60,271		-
Subordinated debentures		36,083		35,788		-		-		35,788

			Fair Value Measurements at December 31, 2014 (In Thousands)
	Carrying Value		Total		Level 1		Level 2		Level 3
Financial Assets:
Cash and cash equivalents	$	112,936	$	112,936	$	112,936	$	-	$	-
Investment securities		239,634		239,629		1,990		237,639		-
Federal Home Loan Bank Stock		13,802		N/A		N/A		N/A		N/A
Loans, net, including loans held for sale		1,626,555		1,632,507		-		4,741		1,627,766
Accrued interest receivable		6,037		6,037		3		846		5,188
Financial Liabilities:
Deposits	$	1,760,813	$	1,762,733	$	379,552	$	1,383,181	$	-
Advances from Federal Home Loan Bank		21,544		21,772		-		21,772		-
Securities sold under repurchase agreements		54,759		54,759		-		54,759		-
Subordinated debentures		36,083		35,307		-		-		35,307

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Earnings Per Common Share (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Numerator for basic and diluted earnings per common share - Net income	$ 6,601	$ 5,179
Denominator:
Denominator for basic earnings per common share - weighted average common shares	9,234	9,681
Effect of warrants	291	341
Effect of employee stock options	86	86
Denominator for diluted earnings per common share	9,611	10,108
Basic earnings per common share	$ 0.71	$ 0.53
Diluted earnings per common share	$ 0.69	$ 0.51

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Fair Value (Details 3) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2015	Dec. 31, 2014
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Impaired Loans- Applies to all loan classes, Fair Value	$ 6,400	$ 7,791
Real estate held for sale - Applies to all classes, Fair Value	436	739
Range of Input 10-30% [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Impaired Loans- Applies to all loan classes, Fair Value	6,400	7,791
Valuation Technique, Fair Value	Appraisals which utilize sales comparison, net income and cost approach	Appraisals which utilize sales comparison, net income and cost approach
Unobservable Inputs, Fair Value	Discounts for collection issues and changes in market conditions	Discounts for collection issues and changes in market conditions
Fair Value, Range of Input, Minimum	10.00%	10.00%
Fair Value, Range of Input, Maximum	30.00%	30.00%
Fair Value Measurement Weighted Average Range	11.00%	11.00%
Range of Input 20-40% [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Real estate held for sale - Applies to all classes, Fair Value		739
Valuation Technique, Fair Value		Appraisals which utilize sales comparison, net income and cost approach
Unobservable Inputs, Fair Value		Discounts for changes in market conditions
Fair Value, Range of Input, Minimum	20.00%	20.00%
Fair Value, Range of Input, Maximum	30.00%	40.00%
Fair Value Measurement Weighted Average Range		28.00%
Range of Input 20-30% [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Real estate held for sale - Applies to all classes, Fair Value	$ 436
Valuation Technique, Fair Value	Appraisals which utilize sales comparison, net income and cost approach
Unobservable Inputs, Fair Value	Discounts for changes in market conditions
Fair Value Measurement Weighted Average Range	22.00%

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Consolidated Condensed Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Net income	$ 6,601	$ 5,179
Other comprehensive income:
Unrealized gains on securities available for sale	1,502	1,723
Income tax expense	(527)	(603)
Other comprehensive income	975	1,120
Comprehensive income	$ 7,576	$ 6,299

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Significant Accounting Policies

3 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

2. Significant Accounting Policies

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Earnings Per Common Share

Basic earnings per common share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. All outstanding unvested share-based payment awards that contain rights to nonforfeitable dividends are considered participating securities for the calculation. Diluted earnings per common share include the dilutive effect of additional potential common shares issuable under stock options, warrants, restricted stock awards and stock grants.

Newly Issued Accounting Standards

In January 2014, the FASB issued ASU 2014-01, "Accounting for Investments in Qualified Affordable Housing Projects." ASU 2014-01 applies to all reporting entities that invest in qualified affordable housing projects through limited liability entities. The pronouncement permits reporting entities to make an accounting policy election to account for these investments using the proportional amortization method if certain conditions exist. The pronouncement also requires disclosure that enables users of its financial statements to understand the nature of these investments. Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance in the income statement as a component of income tax expense (benefit). The pronouncement should be applied retrospectively for all periods presented, effective for annual periods and interim reporting periods within those annual periods, beginning after December 15, 2014. Early adoption is permitted. The Company early adopted ASU 2014-01 in January 2014 and such adoption did not have a material impact on the Company’s Consolidated Financial Statements.

In January 2014, the FASB issued ASU 2014-04, “Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure.” The objective of the amendments in ASU 2014-04 to Topic 310, “Receivables - Troubled Debt Restructurings by Creditors,” is to reduce diversity by clarifying when an in substance repossession or foreclosure occurs, that is, when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan receivable should be derecognized and the real estate property recognized. The amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2014. An entity can elect to adopt the amendments using either a modified retrospective transition method or a prospective transition method. Early adoption is permitted. The Company adopted ASU 2014-04 on January 1, 2015 and such adoption did not have a material impact on the Company’s Consolidated Financial Statements.

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Loans (Details 2) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$ 640	$ 1,273
Collectively evaluated for impairment	24,662	23,493
Acquired with deteriorated credit quality	0	0
Total ending allowance balance	25,302	24,766
Loans:
Loans individually evaluated for impairment	40,118	49,045
Loans collectively evaluated for impairment	1,649,819	1,602,736
Loans acquired with deteriorated credit quality	185	186
Total ending loans balance	1,690,122	1,651,967
One to Four Family Residential Real Estate [Member]
Ending allowance balance attributable to loans:
Individually evaluated for impairment	260	216
Collectively evaluated for impairment	2,223	2,278
Acquired with deteriorated credit quality	0	0
Total ending allowance balance	2,483	2,494
Loans:
Loans individually evaluated for impairment	10,291	10,281
Loans collectively evaluated for impairment	193,661	196,582
Loans acquired with deteriorated credit quality	1	1
Total ending loans balance	203,953	206,864
Multi Family Residential Real Estate [Member]
Ending allowance balance attributable to loans:
Individually evaluated for impairment	4	0
Collectively evaluated for impairment	2,550	2,453
Acquired with deteriorated credit quality	0	0
Total ending allowance balance	2,554	2,453
Loans:
Loans individually evaluated for impairment	2,445	2,482
Loans collectively evaluated for impairment	156,807	154,178
Loans acquired with deteriorated credit quality	0	0
Total ending loans balance	159,252	156,660
Commercial Real Estate [Member]
Ending allowance balance attributable to loans:
Individually evaluated for impairment	317	1,003
Collectively evaluated for impairment	11,367	10,265
Acquired with deteriorated credit quality	0	0
Total ending allowance balance	11,684	11,268
Loans:
Loans individually evaluated for impairment	19,759	28,117
Loans collectively evaluated for impairment	699,773	657,677
Loans acquired with deteriorated credit quality	163	163
Total ending loans balance	719,695	685,957
Construction Loans [Member]
Ending allowance balance attributable to loans:
Individually evaluated for impairment	0	0
Collectively evaluated for impairment	303	221
Acquired with deteriorated credit quality	0	0
Total ending allowance balance	303	221
Loans:
Loans individually evaluated for impairment	150	150
Loans collectively evaluated for impairment	84,159	73,572
Loans acquired with deteriorated credit quality	0	0
Total ending loans balance	84,309	73,722
Commercial Loan [Member]
Ending allowance balance attributable to loans:
Individually evaluated for impairment	30	30
Collectively evaluated for impairment	6,736	6,479
Acquired with deteriorated credit quality	0	0
Total ending allowance balance	6,766	6,509
Loans:
Loans individually evaluated for impairment	5,181	5,739
Loans collectively evaluated for impairment	391,540	395,270
Loans acquired with deteriorated credit quality	21	22
Total ending loans balance	396,742	401,031
Home Equity and Home Improvement [Member]
Ending allowance balance attributable to loans:
Individually evaluated for impairment	24	24
Collectively evaluated for impairment	1,396	1,680
Acquired with deteriorated credit quality	0	0
Total ending allowance balance	1,420	1,704
Loans:
Loans individually evaluated for impairment	2,253	2,242
Loans collectively evaluated for impairment	108,968	110,040
Loans acquired with deteriorated credit quality	0	0
Total ending loans balance	111,221	112,282
Consumer Finance [Member]
Ending allowance balance attributable to loans:
Individually evaluated for impairment	5	0
Collectively evaluated for impairment	87	117
Acquired with deteriorated credit quality	0	0
Total ending allowance balance	92	117
Loans:
Loans individually evaluated for impairment	39	34
Loans collectively evaluated for impairment	14,911	15,417
Loans acquired with deteriorated credit quality	0	0
Total ending loans balance	$ 14,950	$ 15,451

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Affordable Housing Projects Tax Credit Partnership (Details Textual) (USD $)	Mar. 31, 2015	Dec. 31, 2014
Other Assets [Member]
Amortization Method Qualified Affordable Housing Project Investments	$ 4,600,000	$ 4,600,000
Unfunded Commitments [Member]
Qualified Affordable Housing Project Investments Commitment	2,959,000
Unfunded Commitments [Member] | Other Liabilities [Member]
Qualified Affordable Housing Project Investments Commitment	$ 3,000,000	$ 3,000,000

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Mortgage Banking (Details Textual) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
Compliance with Regulatory Capital Requirements for Mortgage Companies [Line Items]
Residential Mortgage Loans, Unpaid Balance	$ 1,340,000,000		$ 1,350,000,000
Accrual For Estimated Secondary Market Buy Back Losses	58,000
Accrual Reversal Amount		67,000
Secondary Market Buy Back Expense		$ 92,000

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Stock Compensation Plans (Tables)

3 Months Ended

Mar. 31, 2015

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

The fair value of stock options granted during the three months ended March 31, 2015 was determined at the date of grant using the Black-Scholes stock option-pricing model and the following assumptions:

	Three Months ended
	March 31, 2015		March 31, 2014
Expected average risk-free rate		2.04%		1.64%
Expected average life		10.00 years		7.44 years
Expected volatility		42.00%		44.62%
Expected dividend yield		2.10%		2.17%

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

Following is activity under the plans during the three months ended March 31, 2015:

Stock options	Options Outstanding		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in 000’s)
Options outstanding, January 1, 2015		173,720	$	20.80
Forfeited or cancelled		4,750		25.32
Exercised		48,500		21.82
Granted		6,250		32.94
Options outstanding, March 31, 2015		126,720	$	20.84		3.43	$	1,519
Vested or expected to vest at March 31, 2015		126,720	$	20.84		3.43	$	1,519
Exercisable at March 31, 2015		112,070	$	19.70		2.67	$	1,470

Schedule of Share-based Compensation, Restricted Stock Units Award Activity [Table Text Block]

	Restricted Stock Units				Stock Grants
			Weighted-Average				Weighted-Average
			Grant Date				Grant Date
Unvested Shares	Shares		Fair Value		Shares		Fair Value
Unvested at January 1, 2015		91,812	$	21.00		5,767	$	25.97
Granted		24,757		32.30		12,845		17.20
Vested		12,846		17.20		(12,846)		17.20
Forfeited		(29,178)		19.48		-		-
Unvested at March 31, 2015		74,545	$	25.86		5,767	$	25.97

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Commitments, Guarantees and Contingent Liabilities (Details Textual) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Dec. 31, 2014
Line of Credit Facility, Period	60 days or less
Commitments and Loans, Available to Sell	$ 29.3	$ 11.6

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Fair Value (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Available for sale securities:
Available for sale securities, Total Fair Value	$ 248,438	$ 239,321
Obligations of U.S. Government corporations and agencies [Member]
Available for sale securities:
Available for sale securities, Total Fair Value	5,001	980
Obligations of U.S. Government corporations and agencies [Member] | Fair Value, Inputs, Level 1 [Member]
Available for sale securities:
Available for sale securities, Total Fair Value	0	0
Obligations of U.S. Government corporations and agencies [Member] | Fair Value, Inputs, Level 2 [Member]
Available for sale securities:
Available for sale securities, Total Fair Value	5,001	980
Obligations of U.S. Government corporations and agencies [Member] | Fair Value, Inputs, Level 3 [Member]
Available for sale securities:
Available for sale securities, Total Fair Value	0	0
Mortgage-backed - residential [Member]
Available for sale securities:
Available for sale securities, Total Fair Value	61,765	59,856
Mortgage-backed - residential [Member] | Fair Value, Inputs, Level 1 [Member]
Available for sale securities:
Available for sale securities, Total Fair Value	0	0
Mortgage-backed - residential [Member] | Fair Value, Inputs, Level 2 [Member]
Available for sale securities:
Available for sale securities, Total Fair Value	61,765	59,856
Mortgage-backed - residential [Member] | Fair Value, Inputs, Level 3 [Member]
Available for sale securities:
Available for sale securities, Total Fair Value	0	0
REMIC [Member]
Available for sale securities:
Available for sale securities, Total Fair Value	1,830	1,839
REMIC [Member] | Fair Value, Inputs, Level 1 [Member]
Available for sale securities:
Available for sale securities, Total Fair Value	0	0
REMIC [Member] | Fair Value, Inputs, Level 2 [Member]
Available for sale securities:
Available for sale securities, Total Fair Value	1,830	1,839
REMIC [Member] | Fair Value, Inputs, Level 3 [Member]
Available for sale securities:
Available for sale securities, Total Fair Value	0	0
Collateralized mortgage obligations [Member]
Available for sale securities:
Available for sale securities, Total Fair Value	82,590	81,121
Collateralized mortgage obligations [Member] | Fair Value, Inputs, Level 1 [Member]
Available for sale securities:
Available for sale securities, Total Fair Value	0	0
Collateralized mortgage obligations [Member] | Fair Value, Inputs, Level 2 [Member]
Available for sale securities:
Available for sale securities, Total Fair Value	82,590	81,121
Collateralized mortgage obligations [Member] | Fair Value, Inputs, Level 3 [Member]
Available for sale securities:
Available for sale securities, Total Fair Value	0	0
Preferred Stock [Member]
Available for sale securities:
Available for sale securities, Total Fair Value	1	1
Preferred Stock [Member] | Fair Value, Inputs, Level 1 [Member]
Available for sale securities:
Available for sale securities, Total Fair Value	1	1
Preferred Stock [Member] | Fair Value, Inputs, Level 2 [Member]
Available for sale securities:
Available for sale securities, Total Fair Value	0	0
Preferred Stock [Member] | Fair Value, Inputs, Level 3 [Member]
Available for sale securities:
Available for sale securities, Total Fair Value	0	0
Corporate bonds [Member]
Available for sale securities:
Available for sale securities, Total Fair Value	6,008	6,992
Corporate bonds [Member] | Fair Value, Inputs, Level 1 [Member]
Available for sale securities:
Available for sale securities, Total Fair Value	1,995	1,989
Corporate bonds [Member] | Fair Value, Inputs, Level 2 [Member]
Available for sale securities:
Available for sale securities, Total Fair Value	4,013	5,003
Corporate bonds [Member] | Fair Value, Inputs, Level 3 [Member]
Available for sale securities:
Available for sale securities, Total Fair Value	0	0
Obligations of state and political subdivisions [Member]
Available for sale securities:
Available for sale securities, Total Fair Value	91,243	88,532
Obligations of state and political subdivisions [Member] | Fair Value, Inputs, Level 1 [Member]
Available for sale securities:
Available for sale securities, Total Fair Value	0	0
Obligations of state and political subdivisions [Member] | Fair Value, Inputs, Level 2 [Member]
Available for sale securities:
Available for sale securities, Total Fair Value	91,243	88,532
Obligations of state and political subdivisions [Member] | Fair Value, Inputs, Level 3 [Member]
Available for sale securities:
Available for sale securities, Total Fair Value	0
Mortgage Banking Derivative Asset [Member]
Available for sale securities:
Available for sale securities, Total Fair Value	884	351
Mortgage Banking Derivative Asset [Member] | Fair Value, Inputs, Level 1 [Member]
Available for sale securities:
Available for sale securities, Total Fair Value	0	0
Mortgage Banking Derivative Asset [Member] | Fair Value, Inputs, Level 2 [Member]
Available for sale securities:
Available for sale securities, Total Fair Value	884	351
Mortgage Banking Derivative Asset [Member] | Fair Value, Inputs, Level 3 [Member]
Available for sale securities:
Available for sale securities, Total Fair Value	0	0
Mortgage Banking Derivative Liability [Member]
Available for sale securities:
Available for sale securities, Total Fair Value	119	24
Mortgage Banking Derivative Liability [Member] | Fair Value, Inputs, Level 1 [Member]
Available for sale securities:
Available for sale securities, Total Fair Value	0	0
Mortgage Banking Derivative Liability [Member] | Fair Value, Inputs, Level 2 [Member]
Available for sale securities:
Available for sale securities, Total Fair Value	119	24
Mortgage Banking Derivative Liability [Member] | Fair Value, Inputs, Level 3 [Member]
Available for sale securities:
Available for sale securities, Total Fair Value	$ 0	$ 0

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Commitments, Guarantees and Contingent Liabilities

3 Months Ended

Mar. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

Commitments Contingencies and Guarantees [Text Block]

12. Commitments, Guarantees and Contingent Liabilities

 

Loan commitments are made to accommodate the financial needs of First Federal’s customers; however, there are no long-term, fixed-rate loan commitments that result in market risk. Standby letters of credit commit the Company to make payments on behalf of customers when certain specified future events occur. They primarily are issued to facilitate customers’ trade transactions.

Both arrangements have credit risk, essentially the same as that involved in extending loans to customers, and are subject to the Company’s normal credit policies. Collateral (e.g., securities, receivables, inventory and equipment) is obtained based on Management’s credit assessment of the customer.

The Company’s maximum obligation to extend credit for loan commitments (unfunded loans and unused lines of credit) and standby letters of credit outstanding as of the periods stated below were as follows (In Thousands):

	March 31, 2015				December 31, 2014
	Fixed Rate		Variable Rate		Fixed Rate		Variable Rate
Commitments to make loans	$	43,984	$	61,046	$	37,546	$	69,232
Unused lines of credit		14,492		308,145		20,385		307,449
Standby letters of credit		-		17,694		-		17,886
Total	$	58,476	$	386,885	$	57,931	$	394,567

Commitments to make loans are generally made for periods of 60 days or less.

In addition to the above commitments, First Defiance had commitments to sell $29.3 million and $11.6 million of loans to Freddie Mac, Fannie Mae, Federal Home Loan Bank of Cincinnati or BB&T Mortgage at March 31, 2015 and December 31, 2014, respectively.