Exhibit 99.1

	NEWS RELEASE
	Contact:	William J. Small Chairman, President and CEO (419) 782-5015 bsmall@first-fed.com

For Immediate Release

FIRST DEFIANCE ANNOUNCES 2009

SECOND QUARTER EARNINGS

• Net Income of $2.9 million for 2009 second quarter up from $2.7 million in the second quarter of 2008

• Provision for Loan Losses of $4.0 million reflects challenging credit environment

• Recapture of $1.5 million of previously recorded MSR impairment

• Other-Than-Temporary Impairment of $874,000 recognized on certain investment securities

• FDIC special assessment of $900,000

• Second quarter loan growth of $24.6 million

DEFIANCE, OHIO (July 20, 2009) – First Defiance Financial Corp. (NASDAQ: FDEF) today announced that net income for its second quarter ended June 30, 2009 totaled $2.9 million, or $0.29 per diluted common share, compared to $2.74 million or $0.34 per diluted common share for the quarter ended June 30, 2008. The 2008 results included $262,000 of acquisition-related charges associated with the March 14, 2008 acquisition of Pavilion Bancorp of Adrian, Michigan (Pavilion) and its subsidiary the Bank of Lenawee.

For the six month period ended June 30, 2009, First Defiance earned $6.3 million or $0.65 per diluted common share compared to $6.15 million or $0.80 per diluted common share for the six month period ended June 30, 2008. Excluding the after-tax cost of the $1.0 million acquisition-related charges from the 2008 results, First Defiance earned $6.81 million, or $0.88 per diluted common share for the first half of 2008.

“Given the economic environment, we are pleased with our second quarter results,” said William J. Small, Chairman, President and Chief Executive Officer of First Defiance Financial Corp. “Net income increased compared to last year’s second quarter, and record-breaking mortgage volume boosted non-interest income. Credit quality was once again the major drag on the results for the quarter as many of our borrowers continue to face challenges. The FDIC special assessment, which was assessed on all FDIC insured institutions to rebuild the insurance

1

reserves, and some additional other-than-temporary impairment also negatively impacted earnings. Even in this environment we were able to grow loans and deposits including 10% growth in non-interest bearing demand deposits from the first quarter of 2009.”

Credit Quality

The second quarter 2009 results include expense for provision for loan losses of $4.0 million, compared with $2.8 million in the same period in 2008 and $2.7 million in the first quarter of 2009.

Non-performing loans totaled $41.8 million at June 30, 2009, an increase from $36.7 million at March 31, 2009. The June 30, 2009 balance included $35.5 million of loans that are 90 days past due and another $6.3 million of loans considered non-performing because of changes in terms granted to borrowers although the loans are still accruing interest. In addition, First Defiance had $8.6 million of Real Estate Owned at June 30, 2009. For the second quarter of 2009, First Defiance recorded net charge-offs of $3.8 million, which represented 0.96% of average loans outstanding (annualized) for the quarter.

“First Federal Bank has a long history of excellent asset quality, but in the current economic situation, we, like most other banks, continue to see deterioration in some credits in our portfolio. These charge-offs were not unexpected, and were accounted for in our provision for loan losses in the quarter. Two credit relationships, one a land development credit and the other a manufacturing business, accounted for more than 60% of the charge-off amount this quarter. We continue to monitor the portfolio and the economic environments in our markets closely and react quickly to any identified weaknesses,” Small said.

Investment Portfolio

The Other-Than-Temporary Impairment (OTTI) charge recognized by First Defiance in the second quarter of 2009 totaled $874,000. The OTTI charge for the quarter related to four Trust Preferred Collateralized Debt Obligations (CDOs) with a remaining book value of $2.3 million. First Defiance also has one other CDO investment that had an OTTI charge in the first quarter of 2009, which has a remaining book value of $243,000 and market value of $163,000 at June 30, 2009. The OTTI charge is due to the credit deterioration of the underlying collateral.

First Defiance also has other Trust Preferred CDO investments with a total book value of $3.8 million and market value of $1.4 million at June 30, 2009. The decline in value of those investments is primarily due to the overall lack of liquidity in the CDO market. These investments continue to pay principal and interest payments in accordance with the contractual terms of the securities. Management has not deemed the impairment in value of these CDO investments to be Other-Than-Temporary, and, therefore, has not recognized the reduction in value of those investments in earnings.

Net Interest Margin

Net interest income was basically flat compared to the 2008 second quarter, with a slight decrease to $16.2 million for the second quarter of 2009. Net interest margin was 3.61% for the 2009 second quarter compared to 3.71% in the first quarter of 2009 and 3.91% in the second quarter of 2008. Yield on interest earning assets declined by 79 basis points, to 5.50% from

2

6.29% in the 2008 second quarter while the cost of interest-bearing liabilities and non-interest-bearing demand deposits decreased by 44 basis points, to 1.95% from 2.39%.

“Despite the fact that we are seeing some encouraging signs of economic recovery in our markets, the challenges to net interest margin are far from over,” said Small. “It’s a low rate environment, which requires that we focus on a disciplined pricing strategy to strengthen net interest margin for the remainder of the year.”

Non-Interest Income

Non-interest income for the 2009 second quarter increased to $8.4 million from $6.2 million in the second quarter of 2008. Most of the increase was in mortgage banking income, which increased to $4.0 million in the 2009 second quarter from $1.5 million for the same period in 2008. Gains from the sale of mortgage loans nearly tripled in the second quarter of 2009 to $2.9 million from $1.0 million in the second quarter of 2008. Mortgage loan servicing revenue remained relatively flat for the 2009 second quarter compared to 2008. The increases in gains and servicing revenue were offset by expense increases of $765,000 for the amortization of mortgage servicing rights due to the higher refinance activity during the quarter.

First Defiance recaptured $1.5 million of the mortgage servicing rights (MSR) valuation adjustment in the second quarter of 2009 compared with a recapture of $167,000 in the second quarter of 2008. The MSR valuation adjustment is a reflection of the increase in the fair value of certain sectors of the Company’s portfolio of mortgage servicing rights.

Loss on investment securities for the second quarter of 2009 was $750,000, which included $874,000 of OTTI charges compared with a loss of $432,000 in the second quarter of 2008 related to OTTI charges.

“Mortgage banking activity in the second quarter surpassed all expectations,” commented Small. “We broke records that were in place from the refinancing boom of 2002 through 2004. It’s an accomplishment for a bank our size to generate $198.0 million in loans in a single quarter. We were also able to recapture a sizeable amount of the mortgage servicing impairment that we took in the 2008 fourth quarter to offset the increased amortization of the mortgage servicing rights due to the heavy refinancing during the quarter. We believe that the mortgage production will drop off in the second half of the year as mortgage rates have risen off the early-year lows. However, we are seeing a pick up in mortgages for the purchase of homes in recent months compared to most of the activity earlier in the year being for refinancing of existing mortgages.”

Non-Interest Expenses

Total non-interest expense increased to $16.1 million for the quarter ended June 30, 2009, an increase from the $15.5 million of non-interest expense, which included $262,000 of acquisition related charges, recognized in the 2008 second quarter. FDIC insurance expense increased to $1.5 million in the second quarter of 2009 from $431,000 in the same period of 2008 as a result of the FDIC rate increases, higher insured deposits and a special assessment of $900,000.

3

Compensation and benefits increased by 3.6% compared to 2008, driven largely by increased medical costs. Other non-interest expense decreased to $3.0 million in the second quarter of 2009 from $3.5 million in the second quarter of 2008. The second quarter of 2008 included an expense of $752,000 associated with losses related to a former investment advisor. The period over period expense reduction benefit was offset partially by credit, collection and OREO-related costs, which increased $574,000 over the second quarter of 2008.

Year-To-Date Results

For the six month period ended June 30, 2009, net interest income totaled $32.2 million, compared with $29.8 million in the first six months of 2008. Average interest-earning assets increased to $1.81 billion for the first half of 2009 compared to $1.58 billion for the first half of 2008. Net interest margin for the first six months of 2009 was 3.66%, down 18 basis points from the 3.84% margin reported in the six month period ended June 30, 2008.

The provision for loan losses for the first half of 2009 was $6.7 million, compared to $3.9 million recorded during the first six months of 2008.

Non-interest income for the first half of 2009 was $15.2 million compared to $12.2 million during the same period of 2008. Most of the non-interest income increase was in mortgage banking, which increased 156% to $6.7 million for the first six months of 2009 compared to $2.6 million in the first six months of 2008. In addition, service fees and other charges were $6.4 million for the first half of 2009 compared to $6.0 million during the first half of 2008. The 2009 first half non-interest income was reduced by $1.6 million of OTTI charges recognized for impaired investment securities.

Non-interest expense increased to $31.1 million for the first six months of 2009 from $29.0 million in 2008. Excluding one-time acquisition-related charges of $1.0 million, non-interest expense was $28.0 million for the first six months of 2008. Most of the 2009 increase relates to ongoing costs of operating the eight branches acquired in the Pavilion acquisition for the full period in 2009. In addition, FDIC insurance expense has increased by $1.6 million due to changes in the assessment rates, a 2009 special assessment of $900,000 and full utilization early in the 2008 first quarter of credits issued by the FDIC. Credit, collection and OREO-related costs have increased $1.1 million in the first six months of 2009 over the first six months of 2008. Year to date 2008 non-interest expense included the $752,000 of expense associated with losses related to a former investment advisor.

“These are interesting times in banking,” said Small. “We are proud of our ability to meet the challenges to date, and we are keeping a watchful eye on the federal government initiatives that are coming down the road. Regulation changes, stimulus package ramifications and special assessments by the FDIC will certainly have an impact on our operations in the future.”

Total Assets at $2.02 Billion

Total assets at June 30, 2009 were $2.02 billion, compared to $1.93 billion at June 30, 2008. Net loans receivable (excluding loans held for sale) were $1.58 billion at June 30, 2009 compared to $1.56 billion at June 30, 2008. Total cash and cash equivalents were $88.8 million at June 30, 2009 compared with $44.7 million at June 30, 2008, an increase of $44.1 million.

4

Total deposits at June 30, 2009 were $1.55 billion compared to $1.43 billion at June 30, 2008, an increase of $126 million. Non-interest bearing deposits at June 30, 2009 were $180.0 million compared to $181.0 million at June 30, 2008. Total stockholders’ equity was $231.6 million at June 30, 2009 compared to $193.8 million at June 30, 2008. Also at June 30, 2009, goodwill and other intangible assets totaled $64.2 million compared to $65.3 million at June 30, 2008.

Conference Call

First Defiance Financial Corp. will host a conference call at 11:00 a.m. (EDT) on Tuesday, July 21, 2009 to discuss the earnings results and business trends. The conference call may be accessed by calling 1-800-860-2442. A live webcast may be accessed at http://www.talkpoint.com/viewer/starthere.asp?Pres=126299.

Audio replay of the Internet Web cast will be available at www.fdef.com until Wednesday August 5, 2009 at 9:00 a.m.

First Defiance Financial Corp.

First Defiance Financial Corp., headquartered in Defiance, Ohio, is the holding company for First Federal Bank of the Midwest and First Insurance & Investments. First Federal operates 35 full service branches and 47 ATM locations in northwest Ohio, southeast Michigan and Fort Wayne, Indiana. First Insurance & Investments specializes in property and casualty and group health and life insurance, with offices in Defiance and Bowling Green, Ohio.

For more information, visit the company’s Web site at www.fdef.com.

Financial Statements and Highlights Follow-

Safe Harbor Statement

This news release may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21 B of the Securities Act of 1934, as amended, which are intended to be safe harbors created thereby. Those statements may include, but are not limited to, all statements regarding intent, beliefs, expectations, projections, forecasts and plans of First Defiance Financial Corp. and its management, and specifically include statements regarding: changes in economic conditions, the nature, extent and timing of governmental actions and reforms, future movements of interest rates, the production levels of mortgage loan generation, the ability to continue to grow loans and deposits, the ability to benefit from a changing interest rate environment, the ability to sustain credit quality ratios at current or improved levels, the ability to sell OREO properties, continued strength in the market area for First Federal Bank of the Midwest, and the ability of the Company to grow in existing and adjacent markets. These forward-looking statements involve numerous risks and uncertainties, including those inherent in general and local banking, insurance and mortgage conditions, competitive factors specific to markets in which the Company and its subsidiaries operate, future interest rate levels, legislative and regulatory decisions or capital market conditions and other risks and uncertainties detailed from time to time in the Company’s Securities and Exchange Commission (SEC) filings, including the Company’s Annual Report on Form 10-K for the year ended December 31, 2008. One or more of these factors have affected or could in the future affect the Company’s business and financial results in future periods and could cause actual results to differ materially from plans and projections. Therefore, there can be no assurances that the forward-looking statements included in this news release will prove to be accurate. In light of the significant uncertainties in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other persons, that the objectives and plans of the Company will be achieved. All forward-looking

5

statements made in this news release are based on information presently available to the management of the Company. The Company assumes no obligation to update any forward-looking statements.

6

Consolidated Balance Sheets

First Defiance Financial Corp.

(in thousands)	(Unaudited) June 30, 2009			December 31, 2008			June 30, 2008
Assets
Cash and cash equivalents
Cash and amounts due from depository institutions	$	31,606		$	40,980		$	44,621
Interest-bearing deposits		57,178			5,172			59
		88,784			46,152			44,680
Securities
Available-for sale, carried at fair value		133,009			117,575			118,825
Held-to-maturity, carried at amortized cost		831			886			1,035
		133,840			118,461			119,860
Loans		1,610,460			1,617,235			1,582,751
Allowance for loan losses		(25,840	)		(24,592	)		(20,578	)
Loans, net		1,584,620			1,592,643			1,562,173
Loans held for sale		23,835			10,960			11,711
Mortgage servicing rights		8,919			6,611			9,348
Accrued interest receivable		7,023			7,293			7,650
Federal Home Loan Bank stock		21,376			21,376			21,118
Bank Owned Life Insurance		28,884			28,747			28,950
Office properties and equipment		46,835			47,756			47,999
Real estate and other assets held for sale		8,567			7,000			3,158
Goodwill		56,585			56,585			56,111
Core deposit and other intangibles		7,598			8,344			9,195
Deferred taxes		52			336			—
Other assets		6,645			5,136			6,233
Total Assets	$	2,023,563		$	1,957,400		$	1,928,186
Liabilities and Stockholders’ Equity
Non-interest-bearing deposits	$	180,035		$	176,063		$	181,034
Interest-bearing deposits		1,373,109			1,293,849			1,246,107
Total deposits		1,553,144			1,469,912			1,427,141
Advances from Federal Home Loan Bank		146,947			156,067			191,895
Notes payable and other interest-bearing liabilities		40,284			49,454			59,039
Subordinated debentures		36,083			36,083			36,083
Advance payments by borrowers for tax and insurance		389			652			599
Deferred taxes		—			—			3,623
Other liabilities		14,033			16,073			16,006
Total liabilities		1,790,880			1,728,241			1,734,386
Stockholders’ Equity
Preferred stock- including warrants and amortization of discount on preferred shares		37,000			37,000			—
Preferred stock discount		(789	)		(867	)		—
Common stock, net		127			127			127
Common stock warrant		878			878			—
Additional paid-in-capital		140,567			140,449			140,297
Accumulated other comprehensive loss		(1,813	)		(1,904	)		(2,533	)
Retained earnings		129,344			126,114			128,536
Treasury stock, at cost		(72,631	)		(72,638	)		(72,627	)
Total stockholders’ equity		232,683			229,159			193,800
Total liabilities and stockholders’ equity	$	2,023,563		$	1,957,400		$	1,928,186

7

Consolidated Statements of Income (Unaudited)

First Defiance Financial Corp.

	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands, except per share amounts)	2009			2008			2009			2008
Interest Income:
Loans	$	23,086		$	24,506		$	46,463		$	47,319
Investment securities		1,474			1,462			2,966			2,947
Interest-bearing deposits		33			15			47			113
FHLB stock dividends		229			254			468			497
Total interest income		24,822			26,237			49,944			50,876
Interest Expense:
Deposits		6,859			7,522			14,042			16,193
FHLB advances and other		1,279			1,545			2,598			3,200
Subordinated debentures		369			456			795			984
Notes Payable		136			468			293			662
Total interest expense		8,643			9,991			17,728			21,039
Net interest income		16,179			16,246			32,216			29,837
Provision for loan losses		3,965			2,797			6,711			3,855
Net interest income after provision for loan losses		12,214			13,449			25,505			25,982
Non-interest Income:
Service fees and other charges		3,326			3,417			6,412			6,039
Mortgage banking income		3,983			1,501			6,697			2,616
Gain on sale of non-mortgage loans		45			8			100			43
Loss on securities		(750	)		(432	)		(1,422	)		(513	)
Insurance and investment sales commissions		1,293			1,267			2,816			3,202
Trust income		103			118			205			229
Income from Bank Owned Life Insurance		78			254			137			527
Other non-interest income		281			17			218			22
Total Non-interest Income		8,359			6,150			15,163			12,165
Non-interest Expense:
Compensation and benefits		7,585			7,318			14,950			14,441
Occupancy		1,924			1,944			4,041			3,613
FDIC insurance premium		1,497			431			2,064			465
State franchise tax		596			513			1,097			1,007
Acquisition related charges		—			262			—			1,012
Data processing		1,176			1,134			2,230			2,163
Amortization of intangibles		355			420			746			611
Other non-interest expense		3,000			3,493			6,001			5,679
Total Non-interest Expense		16,133			15,515			31,129			28,991
Income before income taxes		4,440			4,084			9,539			9,156
Income taxes		1,539			1,349			3,230			3,002
Net Income	$	2,901		$	2,735		$	6,309		$	6,154
Dividends Accrued on Preferred Shares		(468	)		—			(930	)		—
Accretion on Preferred Shares		(40	)		—			(78	)		—
Net Income Applicable to Common Shares	$	2,393		$	2,735		$	5,301		$	6,154
Earnings per common share:
Basic	$	0.29		$	0.34		$	0.65		$	0.80
Diluted	$	0.29		$	0.34		$	0.65		$	0.80
Core operating earnings per common share*:
Basic	$	0.29		$	0.36		$	0.65		$	0.89
Diluted	$	0.29		$	0.36		$	0.65		$	0.88
Average Shares Outstanding:
Basic		8,117			8,094			8,117			7,662
Diluted		8,123			8,126			8,117			7,701

* -See Non-GAAP Disclosure Reconciliations

8

Financial Summary and Comparison

First Defiance Financial Corp.

	(Unaudited) Three Months Ended June 30,								(Unaudited) Six Months Ended June 30,
(dollars in thousands, except per share data)	2009			2008			% change		2009			2008			% change
Summary of Operations
Tax-equivalent interest income (1)		25,117			26,453		(5.1	)		50,496			51,296		(1.6	)
Interest expense		8,643			9,991		(13.5	)		17,728			21,039		(15.7	)
Tax-equivalent net interest income (1)		16,474			16,462		0.1			32,768			30,257		8.3
Provision for loan losses		3,965			2,797		41.8			6,711			3,855		74.1
Tax-equivalent NII after provision for loan loss (1)		12,509			13,665		(8.5	)		26,057			26,402		(1.3	)
Securities losses		(750	)		(432	)	73.6			(1,422	)		(513	)	177.2
Non-interest income-excluding securities losses		9,109			6,582		38.4			16,585			12,678		30.8
Non-interest expense		16,133			15,515		4.0			31,129			28,991		7.4
Non-interest expense-excluding non-core charges		16,133			15,253		5.8			31,129			27,979		11.3
One time acquisition related charges		—			262		NM			—			1,012		NM
Income taxes		1,539			1,349		14.1			3,230			3,002		7.6
Net Income		2,901			2,735		6.1			6,309			6,154		2.5
Dividends Declared on Preferred Shares		(468	)		—		NM			(930	)		—		NM
Accretion on Preferred Shares		(40	)		—		NM			(78	)		—		NM
Net Income Applicable to Common Shares		2,393			2,735		(12.5	)		5,301			6,154		(13.9	)
Core operating earnings (2)		2,901			2,905		(0.1	)		6,309			6,812		(7.4	)
Tax equivalent adjustment (1)		295			216		36.6			552			420		31.4
At Period End
Assets		2,023,563			1,928,925		4.9
Earning assets		1,846,689			1,736,238		6.4
Loans		1,610,460			1,582,751		1.8
Allowance for loan losses		25,840			20,578		25.6
Deposits		1,553,144			1,427,141		8.8
Stockholders’ equity		232,683			194,280		19.8
Average Balances
Assets		2,027,760			1,898,165		6.8			2,006,373			1,771,801		13.2
Earning assets		1,828,272			1,689,398		8.2			1,805,144			1,582,640		14.1
Deposits and interest-bearing liabilities		1,778,848			1,678,026		6.0			1,757,890			1,561,570		12.6
Loans		1,592,513			1,544,409		3.1			1,594,553			1,435,438		11.1
Deposits		1,552,533			1,423,266		9.1			1,533,295			1,329,810		15.3
Stockholders’ equity		231,397			195,845		18.2			230,748			183,769		25.6
Stockholders’ equity / assets		11.41	%		10.32	%	10.6			11.50	%		10.37	%	10.9
Per Common Share Data
Net Income
Basic	$	0.29		$	0.34		(14.7	)	$	0.65		$	0.80		(18.8	)
Diluted		0.29			0.34		(14.7	)		0.65			0.80		(18.8	)
Core operating earnings (2)
Basic	$	0.29		$	0.36		(17.9	)	$	0.65		$	0.89		(26.5	)
Diluted		0.29			0.36		(17.6	)		0.65			0.88		(26.2	)
Dividends		0.085			0.26		(67.3	)		0.255			0.52		(51.0	)
Market Value:
High	$	14.25		$	20.00		(28.8	)	$	14.25		$	22.51		(36.7	)
Low		6.10			15.90		(61.6	)		3.76			15.90		(76.4	)
Close		13.00			16.01		(18.8	)		13.00			16.01		(18.8	)
Book Value		24.10			23.93		0.7			24.10			23.93		0.7
Tangible Book Value		16.19			15.89		1.9			16.19			15.89		1.9
Shares outstanding, end of period (000)		8,118			8,118		(0.0	)		8,118			8,118		(0.0	)
Performance Ratios (annualized)
Tax-equivalent net interest margin (1)		3.61	%		3.92	%	(7.9	)		3.66	%		3.85	%	(5.0	)
Return on average assets -GAAP		0.57	%		0.58	%	(1.1	)		0.63	%		0.70	%	(9.4	)
Return on average assets -Core Operating		0.57	%		0.62	%	(7.4	)		0.63	%		0.77	%	(17.6	)
Return on average equity- GAAP		5.03	%		5.62	%	(10.5	)		5.51	%		6.73	%	(18.1	)
Return on average equity- Core Operating		5.03	%		5.97	%	(15.8	)		5.51	%		7.45	%	(26.0	)
Efficiency ratio (3) -GAAP		63.06	%		67.33	%	(6.3	)		63.07	%		67.52	%	(6.6	)
Efficiency ratio (3) -Core Operating		63.06	%		66.19	%	(4.7	)		63.07	%		65.17	%	(3.2	)
Effective tax rate		34.66	%		33.03	%	4.9			33.86	%		32.79	%	3.3
Dividend payout ratio (basic)		29.31	%		76.47	%	(61.7	)		39.23	%		65.00	%	(39.6	)

(1) Interest income on tax-exempt securities and loans has been adjusted to a tax-equivalent basis using the statutory federal income tax rate of 35%

(2) Core operating earnings = Net income plus after tax effect of acquisition related and other one-time charges. See Non-GAAP Disclosure Reconciliation.

(3) Efficiency ratio = Non-interest expense divided by sum of tax-equivalent net interest income plus non-interest income, excluding securities gains or losses, net and asset sales gains, net.

NM Percentage change not meaningful

9

Non-GAAP Disclosure Reconciliations

First Defiance Financial Corp.

Management believes that the presentation of the non-GAAP financial measures in this release assists investors when comparing results period-to-period in a more meaningful and consistent manner and provides a better measure of results for First Defiance’s ongoing operations.

Core operating earnings are net income adjusted to exclude discontinued operations, merger, integration and restructuring expenses and the results of certain significant transactions not representative of ongoing operations.

Core Operating Earnings	Three months ended June 30,					Six Months Ended June 30,
(dollars in thousands, except per share data)	2009		2008			2009		2008
Net Income	$	2,901	$	2,735		$	6,309	$	6,154
Acquisition related charges		—		262			—		1,012
Tax effect		—		(92	)		—		(354	)
After-tax non-operating items		—		170			—		658
Core operating earnings	$	2,901	$	2,905		$	6,309	$	6,812

Acquisition related charges in 2008 reflect charges associated with the acquisition of Pavilion Bancorp.

Core operating earnings is used as the numerator to calculate core operating return on average assets, core operating return on average equity and core operating earnings per share. Additionally, non-operating items are deducted from non-interest expense in the numerator and non-interest income in the denominator of the core operating efficiency ratio disclosed in the tables. Comparable information on a GAAP basis is also provided in the tables.

Income from Mortgage Banking

Revenue from sales and servicing of mortgage loans consisted of the following:

	Three months ended June 30,						Six Months Ended June 30,
(dollars in thousands)	2009			2008			2009			2008
Gain from sale of mortgage loans	$	2,922		$	1,041		$	5,735		$	2,184
Mortgage loan servicing revenue (expense):
Mortgage loan servicing revenue		695			682			1,384			1,148
Amortization of mortgage servicing rights		(1,154	)		(389	)		(2,111	)		(740	)
Mortgage servicing rights valuation adjustments		1,520			167			1,689			24
		1,061			460			962			432
Total revenue from sale and servicing of mortgage loans	$	3,983		$	1,501		$	6,697		$	2,616

10

Yield Analysis

First Defiance Financial Corp.

	Three Months Ended June 30,
	2009						2008
	Average Balance		Interest(1)		Yield Rate(2)		Average Balance		Interest(1)		Yield Rate(2)
Interest-earning assets:
Loans receivable	$	1,592,513	$	23,116	5.82	%	$	1,544,409	$	24,536	6.39	%
Securities		130,663		1,739	5.26	%		121,506		1,648	5.42	%
Interest Bearing Deposits		83,720		33	0.16	%		2,616		15	2.31	%
FHLB stock		21,376		229	4.30	%		20,867		254	4.90	%
Total interest-earning assets		1,828,272		25,117	5.50	%		1,689,398		26,453	6.29	%
Non-interest-earning assets		199,488						208,767
Total assets	$	2,027,760					$	1,898,165
Deposits and Interest-bearing liabilities:
Interest bearing deposits	$	1,377,317	$	6,859	2.00	%	$	1,252,165	$	7,522	2.42	%
FHLB advances and other		146,951		1,279	3.49	%		164,811		1,545	3.77	%
Other Borrowings		43,122		136	1.27	%		53,724		468	3.50	%
Subordinated debentures		36,242		369	4.08	%		36,225		456	5.06	%
Total interest-bearing liabilities		1,603,632		8,643	2.16	%		1,506,925		9,991	2.67	%
Non-interest bearing deposits		175,216		—	—			171,101		—	—
Total including non-interest-bearing demand deposits		1,778,848		8,643	1.95	%		1,678,026		9,991	2.39	%
Other non-interest-bearing liabilities		17,515						24,294
Total liabilities		1,796,363						1,702,320
Stockholders’ equity		231,397						195,845
Total liabilities and stockholders’ equity	$	2,027,760					$	1,898,165
Net interest income; interest rate spread			$	16,474	3.34	%			$	16,462	3.62	%
Net interest margin (3)					3.61	%					3.91	%
Average interest-earning assets to average interest bearing liabilities					114	%					112	%
	Six Months Ended June 30,
	2009						2008
	Average Balance		Interest(1)		Yield Rate(2)		Average Balance		Interest(1)		Yield Rate(2)
Interest-earning assets:
Loans receivable	$	1,594,553	$	46,521	5.88	%	$	1,435,438	$	47,363	6.64	%
Securities		124,988		3,460	5.51	%		119,112		3,323	5.60	%
Interest Bearing Deposits		64,227		47	0.15	%		8,352		113	2.72	%
FHLB stock		21,376		468	4.42	%		19,738		497	5.06	%
Total interest-earning assets		1,805,144		50,496	5.61	%		1,582,640		51,296	6.52	%
Non-interest-earning assets		201,229						189,161
Total assets	$	2,006,373					$	1,771,801
Deposits and Interest-bearing liabilities:
Interest bearing deposits	$	1,362,747	$	14,042	2.08	%	$	1,181,938	$	16,193	2.76	%
FHLB advances and other		147,021		2,598	3.56	%		155,666		3,200	4.13	%
Other Borrowings		41,327		293	1.43	%		39,841		662	3.34	%
Subordinated debentures		36,247		795	4.41	%		36,253		984	5.46	%
Total interest-bearing liabilities		1,587,342		17,728	2.25	%		1,413,698		21,039	2.99	%
Non-interest bearing deposits		170,548		—	—			147,872		—	—
Total including non-interest-bearing demand deposits		1,757,890		17,728	2.03	%		1,561,570		21,039	2.71	%
Other non-interest-bearing liabilities		17,735						26,462
Total liabilities		1,775,625						1,588,032
Stockholders’ equity		230,748						183,769
Total liabilities and stockholders’ equity	$	2,006,373					$	1,771,801
Net interest income; interest rate spread			$	32,768	3.36	%			$	30,257	3.53	%
Net interest margin (3)					3.66	%					3.84	%
Average interest-earning assets to average interest bearing liabilities					114	%					112	%

(1) Interest on certain tax exempt loans and securities is not taxable for Federal income tax purposes. In order to compare the tax-exempt yields on these assets to taxable yields, the interest earned on these assets is adjusted to a pre-tax equivalent amount based on the marginal corporate federal income tax rate of 35%.

(2) Annualized

(3) Net interest margin is net interest income divided by average interest-earning assets.

11

Selected Quarterly Information

First Defiance Financial Corp.

(dollars in thousands, except per share data)	2nd Qtr 2009			1st Qtr 2009			4th Qtr 2008			3rd Qtr 2008			2nd Qtr 2008
Summary of Operations
Tax-equivalent interest income (1)	$	25,117		$	25,379		$	26,188		$	26,876		$	26,453
Interest expense		8,643			9,085			9,952			10,277			9,991
Tax-equivalent net interest income (1)		16,474			16,294			16,236			16,599			16,462
Provision for loan losses		3,965			2,746			3,824			4,907			2,797
Tax-equivalent NII after provision for loan losses (1)		12,509			13,548			12,412			11,692			13,665
Investment securities gains (losses)		(750	)		(672	)		(596	)		(2,051	)		(432	)
Non-interest income (excluding securities gains/losses)		9,109			7,476			3,360			6,191			6,582
Non-interest expense		16,133			14,996			13,571			15,233			15,515
Acquisition and other on-time charges		—			—			85			20			262
Income taxes		1,539			1,691			482			44			1,349
Net income		2,901			3,408			880			322			2,735
Dividends Declared on Preferred Shares		(468	)		(463	)		(134	)		—			—
Accretion on Preferred Shares		(40	)		(38	)		(11	)		—			—
Net Income Applicable to Common Shares		2,393			2,907			735			322			2,735
Core operating earnings (2)		2,901			3,408			935			335			2,905
Tax equivalent adjustment (1)		295			257			243			233			216
At Period End
Total assets	$	2,023,563		$	2,010,662		$	1,957,400		$	1,922,026		$	1,928,925
Earning assets		1,846,689			1,838,397			1,773,204			1,741,438			1,736,238
Loans		1,610,460			1,585,897			1,617,235			1,596,327			1,582,751
Allowance for loan losses		25,840			25,694			24,592			23,445			20,578
Deposits		1,553,144			1,540,235			1,469,912			1,435,804			1,427,141
Stockholders’ equity		232,683			230,608			229,159			189,676			194,280
Stockholders’ equity / assets		11.50	%		11.47	%		11.71	%		9.87	%		10.07	%
Goodwill		56,585			56,585			56,585			56,830			56,111
Average Balances
Total assets	$	2,027,760		$	1,984,985		$	1,938,461		$	1,928,987		$	1,898,165
Earning assets		1,828,272			1,782,019			1,730,284			1,727,343			1,689,398
Deposits and interest-bearing liabilities		1,778,848			1,736,933			1,718,315			1,712,212			1,678,026
Loans		1,592,513			1,596,592			1,591,144			1,585,489			1,544,409
Deposits		1,552,533			1,514,059			1,466,366			1,437,273			1,423,266
Stockholders’ equity		231,397			230,099			201,499			194,452			195,845
Stockholders’ equity / assets		11.41	%		11.59	%		10.39	%		10.08	%		10.32	%
Per Common Share Data
Net Income:
Basic	$	0.29		$	0.36		$	0.09		$	0.04		$	0.34
Diluted		0.29			0.36			0.09			0.04			0.34
Core operating earnings (2)
Basic		0.29			0.36			0.10			0.04			0.36
Diluted		0.29			0.36			0.10			0.04			0.36
Dividends		0.085			0.17			0.17			0.26			0.26
Market Value:
High	$	14.25		$	8.95		$	14.50		$	17.66		$	20.00
Low		6.10			3.76			6.00			10.00			15.90
Close		13.00			6.08			7.73			11.01			16.01
Book Value		24.10			23.85			23.67			23.37			23.93
Shares outstanding, end of period (in thousands)		8,118			8,117			8,117			8,117			8,118
Performance Ratios (annualized)
Tax-equivalent net interest margin (1)		3.61	%		3.71	%		3.72	%		3.81	%		3.91	%
Return on average assets -GAAP		0.57	%		0.70	%		0.18	%		0.07	%		0.58	%
Return on average assets -Core Operating		0.57	%		0.70	%		0.19	%		0.07	%		0.62	%
Return on average equity- GAAP		5.03	%		6.02	%		1.74	%		0.66	%		5.62	%
Return on average equity- Core Operating		5.03	%		6.02	%		1.85	%		0.69	%		5.97	%
Efficiency ratio (3) -GAAP		63.06	%		63.09	%		69.25	%		66.84	%		67.33	%
Efficiency ratio (3) -Core Operating		63.06	%		63.09	%		68.82	%		66.75	%		66.19	%
Effective tax rate		34.66	%		33.16	%		35.39	%		12.02	%		33.03	%
Common dividend payout ratio (basic)		29.31	%		47.22	%		188.89	%		650.00	%		76.47	%

(1) Interest income on tax-exempt securities and loans has been adjusted to a tax-equivalent basis using the statutory federal income tax rate of 35%

(2) See Non-GAAP Disclosure Reconciliation

(3) Efficiency ratio = Non-interest expense divided by sum of tax-equivalent net interest income plus non-interest income, excluding securities gains, net and asset sales gains, net.

12

Selected Quarterly Information

First Defiance Financial Corp.

(dollars in thousands, except per share data)	2nd Qtr 2009			1st Qtr 2009			4th Qtr 2008			3rd Qtr 2008			2nd Qtr 2008
Loan Portfolio Composition
One to four family residential real estate	$	238,000		$	241,119		$	251,807		$	250,244		$	251,887
Construction		44,670			50,534			72,938			75,822			83,279
Commercial real estate		768,636			764,841			755,740			746,676			731,472
Commercial		382,434			350,070			356,574			353,453			351,812
Consumer finance		38,074			38,676			41,012			41,964			41,251
Home equity and improvement		151,213			156,668			161,106			158,992			153,715
Total loans		1,623,027			1,601,908			1,639,177			1,627,151			1,613,416
Less:
Loans in process		11,602			14,954			20,892			29,794			29,585
Deferred loan origination fees		965			1,057			1,050			1,030			1,080
Allowance for loan loss		25,840			25,694			24,592			23,445			20,578
Net Loans	$	1,584,620		$	1,560,203		$	1,592,643		$	1,572,882		$	1,562,173
Allowance for loan loss activity
Beginning allowance		25,694			24,592		$	23,445		$	20,578		$	18,556
Provision for loan losses		3,965			2,746			3,824			4,907			2,797
Reserve from acquisitions		—			—			—			121			38
Credit loss charge-offs:
One to four family residential real estate		505			148			369			478			281
Commercial real estate		2,066			669			1,480			1,495			319
Commercial		950			702			593						220
Consumer finance		83			123			224			73			56
Home equity and improvement		301			130			57			216			18
Total charge-offs		3,905			1,772			2,723			2,262			894
Total recoveries		86			128			46			101			81
Net charge-offs (recoveries)		3,819			1,644			2,677			2,161			813
Ending allowance	$	25,840		$	25,694		$	24,592		$	23,445		$	20,578
Credit Quality
Non-accrual loans	$	35,528		$	29,473		$	28,017		$	24,630		$	17,727
Restructured loans, accruing		4,845			7,199			6,250			905			—
Total non-performing loans (1)		40,373			36,672			34,267			25,535			17,727
Real estate owned (REO)		8,567			7,839			7,000			4,776			3,158
Total non-performing assets (2)	$	48,940		$	44,511		$	41,267		$	30,311		$	20,885
Net charge-offs		3,819			1,644			2,677			2,161			813
Allowance for loan losses / loans		1.60	%		1.62	%		1.52	%		1.47	%		1.30	%
Allowance for loan losses / non-performing assets		52.80	%		57.73	%		59.59	%		77.35	%		98.53	%
Allowance for loan losses / non-performing loans		64.00	%		70.06	%		71.77	%		91.82	%		116.08	%
Non-performing assets / loans plus REO		3.02	%		2.79	%		2.54	%		1.89	%		1.32	%
Non-performing assets / total assets		2.42	%		2.21	%		2.11	%		1.57	%		1.08	%
Net charge-offs / average loans (annualized)		0.96	%		0.41	%		0.67	%		0.56	%		0.21	%
Deposit Balances
Non-interest-bearing demand deposits	$	180,035		$	163,855		$	176,063		$	158,139		$	181,034
Interest-bearing demand deposits and money market		456,177			413,104			374,488			365,251			401,401
Savings deposits		135,821			132,590			132,145			145,019			146,697
Retail time deposits less than $100,000		568,595			608,811			578,245			557,643			514,209
Retail time deposits greater than $100,000		165,401			171,588			170,485			177,848			163,614
National/Brokered time deposits		47,115			50,287			38,486			31,904			20,186
Total deposits	$	1,553,144		$	1,540,235		$	1,469,912		$	1,435,804		$	1,427,141

(1) Non-performing loans consist of non-accrual loans that are contractually past due 90 days or more and loans that are deemed impaired under the criteria of FASB Statement No. 114.

(2) Non-performing assets are non-performing loans plus real estate and other assets acquired by foreclosure or deed-in-lieu thereof.

13

Loan Delinquency Information

First Defiance Financial Corp.

(dollars in thousands)	Total Balance		Current		30 to 89 days past due		Non Accrual Loans		Troubled Debt Restructuring
June 30, 2009
One to four family residential real estate	$	238,000	$	224,165	$	5,594	$	5,541	$	3,019
Construction		44,670		44,416		194		60		—
Commercial real estate		768,636		726,778		13,212		25,672		1,769
Commercial		382,434		374,761		3,781		3,589		57
Consumer finance		38,074		37,595		440		39		—
Home equity and improvement		151,213		147,975		2,611		627		—
Total loans	$	1,623,027	$	1,555,690	$	25,832	$	35,528	$	4,845
March 31, 2009
One to four family residential real estate	$	241,119	$	230,751	$	4,201	$	6,167	$	1,333
Construction		50,534		50,112		297		125		—
Commercial real estate		764,841		733,251		13,140		18,450		4,474
Commercial		350,070		342,951		3,111		4,008		1,369
Consumer finance		38,676		38,318		301		57		—
Home equity and improvement		156,668		153,206		2,796		666		23
Total loans	$	1,601,908	$	1,548,589	$	23,846	$	29,473	$	7,199
December 31, 2008
One to four family residential real estate	$	251,807	$	242,547	$	4,676	$	4,584	$	1,101
Construction		72,938		72,814		52		72		—
Commercial real estate		755,740		730,355		5,406		19,979		2,205
Commercial		356,574		352,022		1,671		2,881		2,944
Consumer finance		41,012		40,428		515		69		—
Home equity and improvement		161,106		155,650		5,024		432		—
Total loans	$	1,639,177	$	1,593,816	$	17,344	$	28,017	$	6,250
June 30, 2008
One to four family residential real estate	$	251,887	$	243,444	$	2,870	$	5,573	$	—
Construction		83,279		80,372		1,766		1,141		—
Commercial real estate		731,472		710,980		11,230		9,262		—
Commercial		351,812		347,020		3,899		893		—
Consumer finance		41,251		40,714		352		185		—
Home equity and improvement		153,715		151,217		1,825		673		—
Total loans	$	1,613,416	$	1,573,747	$	21,942	$	17,727	$	—

14