8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 19, 2010

FIRST DEFIANCE FINANCIAL CORP.

(Exact name of registrant as specified in its charter)

OHIO	0-26850	34-1803915
(State or other jurisdiction of incorporation)	(Commission File No.)	(IRS Employer I.D. No.)

601 Clinton Street, Defiance, Ohio 43512

(Address of principal executive offices) (Zip Code)

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

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 2 – Financial Information.

Item 2.02 Results of Operations and Financial Condition.

On April 19, 2010, First Defiance Financial Corp. (“FDEF”) issued a press release regarding its earnings for the quarter ended March 31, 2010.

Section 9 – Financial Statements and Exhibits.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit Number	Description
99	Press Release dated April 19, 2010

2

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.
By:	/s/ Donald P. Hileman
	Donald P. Hileman
	Chief Financial Officer

Date: April 19, 2010

3

EX-99

Exhibit 99

	NEWS RELEASE
	Contact:	William J. Small Chairman, President and CEO (419) 782-5014 bsmall@first-fed.com

For Immediate Release

FIRST DEFIANCE ANNOUNCES 2010

FIRST QUARTER EARNINGS

• Net Income of $1.5 million or $.12 per common share for 2010 first quarter

• Provision for Loan Losses of $6.9 million reflects improvement over fourth quarter of 2009

• Net Interest Income increased by $1.0 million or 6.5% over 2009 first quarter

• Net Interest Margin of 3.85%, up from 2009 first quarter

• Other-Than-Temporary Impairment of $70,000 recognized on certain investment securities

DEFIANCE, OHIO (April 19, 2010) – First Defiance Financial Corp. (NASDAQ: FDEF) today announced that net income for its first quarter ended March 31, 2010 totaled $1.5 million, or $0.12 per diluted common share, compared to $3.4 million or $0.36 per diluted common share for the quarter ended March 31, 2009.

“Additional provision expense, primarily related to a few larger credits, pulled down our first quarter earnings,” said William J. Small, Chairman, President and Chief Executive Officer of First Defiance Financial Corp. “Our core banking operation continues to perform as expected and we are further encouraged by some national and local economic indicators that are showing signs of stabilization. However, we felt it was prudent to provide the additional reserves based on the information available to us.”

Credit Quality

The first quarter results include expense for provision for loan losses of $6.9 million, compared with $2.7 million for the same period in 2009 and $8.5 million in the fourth quarter of 2009.

Non-performing loans totaled $40.6 million at March 31, 2010, a decrease from $47.9 million at December 31, 2009 and up from $36.7 million at March 31, 2009. The March 31, 2010 balance included $33.6 million of loans that are on non-accrual and another $7.0 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 $12.8 million of Real Estate Owned at March 31, 2010 and $7.8 million at March 31, 2009. For the first quarter of 2010, First Defiance recorded net charge-offs of $4.5 million, which represented 1.14% of average loans outstanding (annualized) for the quarter.

“The economic challenges of the country and our market area are reflected in our quarterly results,” said Mr. Small. “We recorded a provision for loan losses of $6.9 million in the first quarter. However, we did have a decrease in non-performing loans and I believe we are getting closer to seeing a change in the pattern of declining collateral values. We have worked diligently to identify and address stressed and underperforming credits and proactively work to identify all potential problems and mitigate our losses as much as possible.”

Net Interest Margin up from 2009 First Quarter

Net interest income increased to $17.1 million for the first quarter of 2010, a 6.5% increase from the 2009 first quarter. Net interest margin was 3.85% for the 2010 first quarter compared to 3.82% in the fourth quarter of 2009 and 3.71% in the first quarter of 2009. Yield on interest earning assets declined in the 2010 first quarter by 38 basis points, to 5.39% from 5.77%, while the cost of interest-bearing liabilities and non-interest-bearing demand deposits decreased by 53 basis points, to 1.59% from 2.12%.

“We have been able to react to the market environment and stress disciplined pricing,” commented Mr. Small. “However, while the overall margin was even with last quarter, I believe we will encounter ongoing challenges in the current low rate environment.”

Investment Portfolio

The Other-Than-Temporary Impairment (OTTI) charge recognized by First Defiance in the first quarter of 2010 totaled $70,000, compared with $672,000 in the first quarter of 2009. The 2010 OTTI charge related to two Trust Preferred Collateralized Debt Obligations (CDOs) investments with a remaining book value of $1.1 million and a market value of $277,000.

First Defiance has other Trust Preferred CDO investments with a book value of $2.7 million and market values of $1.3 million at March 31, 2010. Two of these investments with a book value of $2.0 million and a market value of $1.0 million 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 two CDO investments to be Other-Than-Temporary and therefore has not recognized the reduction in value of those investments in earnings. The third investment with a book value of $751,000 and a market value of $295,000 has been written down with OTTI charge in prior periods however the first quarter of 2010 analysis did not result in additional OTTI for this investment.

Non-Interest Income

First Defiance’s non-interest income for the 2010 first quarter remained relatively flat at $6.8 million compared with $6.8 million in the first quarter of 2009. Service fees and other

charges were $3.2 million in the first quarter of 2010, compared with $3.1 million in the first quarter of 2009. Mortgage banking declined to $1.8 million in the first quarter of 2010 from $2.7 million in the first quarter of 2009. Gains from the sale of mortgage loans decreased in the first quarter of 2010 to $1.2 million from $2.8 million in the first quarter of 2009. Also, mortgage loan servicing revenue increased to $748,000 in the 2010 first quarter from $689,000 in the first quarter of 2009. The decreases in gains were partially offset by expense decreases of $531,000 for the amortization of mortgage servicing rights.

The company had a positive change in the valuation adjustment in mortgage servicing assets of $321,000 in the first quarter of 2010 compared with $169,000 in the first quarter of 2009. The MSR positive valuation adjustment is a reflection of the increase in the fair value of certain sectors of the Company’s portfolio of mortgage servicing rights for these periods. The interest rate environment that gives rise to increased mortgage origination activity also typically causes increases in MSR amortization and impairment, creating a natural hedge in the mortgage banking line of business.

“We are pleased with the stability of our fee income stream in light of the many competitive and regulatory challenges,” continued Mr. Small. “We did not have the high volume of mortgage refinances in the first quarter of 2010 that we had in 2009, due to the low mortgage interest rate environment at that time. However, we were able to offset most of the reduction in gain on mortgage sale revenue. Our retail network is focused on providing quality customer service and we remain a leading originator of mortgages in our market.”

Income from the sale of insurance products decreased to $1.1 million for the 2010 first quarter, from $1.5 million in the same period of 2009. First Defiance’s insurance subsidiary, First Insurance and Investments, 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 2010, First Insurance earned $91,000 of contingent income, compared to $431,000 recorded during the first quarter of 2009.

Non-Interest Expenses

Total non-interest expense for First Defiance decreased to $14.8 million for the quarter ended March 31, 2010, from the $15.0 million of non-interest expense for the quarter ended March 31, 2009. Compensation and benefits decreased by $908,000 or 12% compared to the 2009 first quarter. FDIC insurance expense increased to $1.0 million in the first quarter of 2010 from $567,000 in the same period of 2009, primarily as a result of the FDIC rate increases and 2009 special assessments. Occupancy expense decreased $289,000 or 14% compared to the 2009 first quarter. Other non-interest expense increased to $3.3 million in the first quarter of 2010 from $3.0 million in the first quarter of 2009, primarily due to increases in credit and collection expenses.

Total Assets at $2.06 Billion

Total assets at March 31, 2010 were $2.06 billion, compared to $2.01 billion at March 31, 2009. Net loans receivable (excluding loans held for sale) were $1.54 billion at March 31, 2010

compared to $1.56 billion at March 31, 2009. Total Cash and Cash equivalents were $154.7 million at March 31, 2010 compared with $111.6 million at March 31, 2009, an increase of $43.1 million. Total deposits at March 31, 2010 were $1.60 billion compared to $1.54 billion at March 31, 2009, an increase of $59.3 million. Non-interest bearing deposits at March 31, 2010 were $187.2 million compared to $163.9 million at March 31, 2009. Total stockholders’ equity was $235.7 million at March 31, 2010 compared to $230.6 million at March 31, 2009. Also at March 31, 2010, goodwill and other intangible assets totaled $63.0 million compared to $64.5 million at March 31, 2009.

Conference Call

First Defiance Financial Corp. will host a conference call at 11:00 a.m. (EDT) on Tuesday, April 20, 2010 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=129947.

The audio replay of the Internet Web cast will be available at www.fdef.com until Wednesday, April 28, 2010 at 9:00 a.m.

Annual Meeting of Shareholders

First Defiance Financial Corp. will host its Annual Meeting of Shareholders at 2:00 p.m. on Tuesday, April 20, 2010 at the First Federal Bank operations center at 25600 Elliott Road in Defiance. Following the meeting, the audio replay, slide presentation and transcript will be available at the Company’s Web site at www.fdef.com.

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 33 full service branches and 45 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, 2009. One or more of these factors have affected or could in the future affect the Company’s business and financial results in future periods and could cause actual results to differ materially from plans and projections. Therefore, there can be no assurances that the forward-looking statements included in this news release will prove to be accurate. In light of the significant uncertainties in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other persons, that the objectives and plans of the Company will be achieved. All forward-looking statements made in this news release are based on information presently available to the management of the Company. The Company assumes no obligation to update any forward-looking statements.

Consolidated Balance Sheets

First Defiance Financial Corp.

(in thousands)	(Unaudited) March 31, 2010			December 31, 2009			March 31, 2009
Assets
Cash and cash equivalents
Cash and amounts due from depository institutions	$	28,678		$	29,613		$	27,523
Interest-bearing deposits		125,980			91,503			84,050
		154,658			121,116			111,573
Securities
Available-for sale, carried at fair value		146,448			137,458			122,633
Held-to-maturity, carried at amortized cost		1,887			1,920			853
		148,335			139,378			123,486
Loans		1,576,602			1,617,122			1,585,897
Allowance for loan losses		(38,980	)		(36,547	)		(25,694	)
Loans, net		1,537,622			1,580,575			1,560,203
Loans held for sale		12,357			10,346			23,588
Mortgage servicing rights		9,283			8,958			6,957
Accrued interest receivable		7,405			6,851			8,004
Federal Home Loan Bank stock		21,376			21,376			21,376
Bank Owned Life Insurance		30,555			30,804			28,806
Office properties and equipment		42,830			43,597			47,360
Real estate and other assets held for sale		12,768			13,527			7,839
Goodwill		56,585			56,585			56,585
Core deposit and other intangibles		6,450			6,888			7,953
Deferred taxes		3,525			3,289			910
Other assets		15,026			14,233			6,022
Total Assets	$	2,058,775		$	2,057,523		$	2,010,662
Liabilities and Stockholders’ Equity
Non-interest-bearing deposits	$	187,231		$	189,132		$	163,855
Interest-bearing deposits		1,412,353			1,391,094			1,376,380
Total deposits		1,599,584			1,580,226			1,540,235
Advances from Federal Home Loan Bank		126,917			146,927			146,957
Notes payable and other interest-bearing liabilities		44,883			48,398			38,884
Subordinated debentures		36,083			36,083			36,083
Advance payments by borrowers for tax and insurance		397			665			474
Other liabilities		15,256			11,138			17,421
Total liabilities		1,823,120			1,823,437			1,780,054
Stockholders’ Equity
Preferred stock, net of discount		36,334			36,293			36,172
Common stock, net		127			127			127
Common stock warrant		878			878			878
Additional paid-in-capital		140,725			140,677			140,510
Accumulated other comprehensive income (loss)		316			(158	)		(2,084	)
Retained earnings		129,906			128,900			127,643
Treasury stock, at cost		(72,631	)		(72,631	)		(72,638	)
Total stockholders’ equity		235,655			234,086			230,608
Total liabilities and stockholders’ equity	$	2,058,775		$	2,057,523		$	2,010,662

Consolidated Statements of Income (Unaudited)

First Defiance Financial Corp.

	Three Months Ended March 31,
(in thousands, except per share amounts)	2010			2009
Interest Income:
Loans	$	22,397		$	23,377
Investment securities		1,452			1,492
Interest-bearing deposits		61			14
FHLB stock dividends		219			239
Total interest income		24,129			25,122
Interest Expense:
Deposits		5,398			7,183
FHLB advances and other		1,218			1,319
Subordinated debentures		323			426
Notes Payable		105			157
Total interest expense		7,044			9,085
Net interest income		17,085			16,037
Provision for loan losses		6,889			2,746
Net interest income after provision for loan losses		10,196			13,291
Non-interest Income:
Service fees and other charges		3,158			3,086
Mortgage banking income		1,807			2,714
Gain on sale of non-mortgage loans		37			55
Gain on securities		6			—
Impairment on securities		(70	)		(672	)
Insurance and investment sales commissions		1,109			1,523
Trust income		122			102
Income from Bank Owned Life Insurance		480			59
Other non-interest income		117			(63	)
Total Non-interest Income		6,766			6,804
Non-interest Expense:
Compensation and benefits		6,457			7,365
Occupancy		1,828			2,117
FDIC insurance premium		1,046			567
State franchise tax		563			501
Data processing		1,196			1,054
Amortization of intangibles		437			391
Other non-interest expense		3,305			3,001
Total Non-interest Expense		14,832			14,996
Income before income taxes		2,130			5,099
Income taxes		624			1,691
Net Income	$	1,506		$	3,408
Dividends Accrued on Preferred Shares		(463	)		(463	)
Accretion on Preferred Shares		(40	)		(38	)
Net Income Applicable to Common Shares	$	1,003		$	2,907
Earnings per common share:
Basic	$	0.12		$	0.36
Diluted	$	0.12		$	0.36
Average Shares Outstanding:
Basic		8,117			8,117
Diluted		8,142			8,117

Financial Summary and Comparison First Defiance Financial Corp.
	(Unaudited)
	Three Months Ended
	March 31,
(dollars in thousands, except per share data)	2010			2009			% change
Summary of Operations
Tax-equivalent interest income (1)		24,427			25,379		(3.8	)
Interest expense		7,044			9,085		(22.5	)
Tax-equivalent net interest income (1)		17,383			16,294		6.7
Provision for loan losses		6,889			2,746		150.9
Tax-equivalent NII after provision for loan loss (1)		10,494			13,548		(22.5	)
Gains on Securities		6			—		NM
Impairment losses on securities		(70	)		(672	)	(89.6	)
Non-interest income-excluding securities gains/losses		6,830			7,476		(8.6	)
Non-interest expense		14,832			14,996		(1.1	)
Income taxes		624			1,691		(63.1	)
Net Income		1,506			3,408		(55.8	)
Dividends Declared on Preferred Shares		(463	)		(463	)	—
Accretion on Preferred Shares		(40	)		(38	)	5.3
Net Income Applicable to Common Shares		1,003			2,907		(65.5	)
Tax equivalent adjustment (1)		298			257		16.0
At Period End
Assets		2,058,775			2,010,662		2.4
Earning assets		1,884,650			1,838,397		2.5
Loans		1,576,602			1,585,897		(0.6	)
Allowance for loan losses		38,980			25,694		51.7
Deposits		1,599,584			1,540,235		3.9
Stockholders’ equity		235,655			230,608		2.2
Average Balances
Assets		2,048,506			1,984,985		3.2
Earning assets		1,831,867			1,782,019		2.8
Deposits and interest-bearing liabilities		1,798,408			1,736,933		3.5
Loans		1,560,405			1,596,592		(2.3	)
Deposits		1,576,140			1,514,059		4.1
Stockholders’ equity		235,492			230,099		2.3
Stockholders’ equity / assets		11.50	%		11.59	%	(0.8	)
Per Common Share Data
Net Income
Basic	$	0.12		$	0.36		(66.7	)
Diluted		0.12			0.36		(66.7	)
Dividends		—			0.17		(100.0	)
Market Value:
High	$	12.33		$	8.95		37.8
Low		9.20			3.76		144.7
Close		10.12			6.08		66.4
Book Value		24.45			23.95		2.1
Tangible Book Value		16.68			15.90		4.9
Shares outstanding, end of period (000)		8,117			8,117		—
Performance Ratios (annualized)
Tax-equivalent net interest margin (1)		3.85	%		3.71	%	4.0
Return on average assets		0.30	%		0.70	%	(57.3	)
Return on average equity		2.59	%		6.02	%	(56.9	)
Efficiency ratio (2)		61.26	%		63.09	%	(2.9	)
Effective tax rate		29.30	%		33.16	%	(11.7	)
Dividend payout ratio (basic)		0.00	%		47.22	%	(100.0	)

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

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

NM Percentage change not meaningful

Income from Mortgage Banking

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

	Three months ended March 31,
(dollars in thousands)	2010			2009
Gain from sale of mortgage loans	$	1,164		$	2,813
Mortgage loan servicing revenue (expense):
Mortgage loan servicing revenue		748			689
Amortization of mortgage servicing rights		(426	)		(957	)
Mortgage servicing rights valuation adjustments		321			169
		643			(99	)
Total revenue from sale and servicing of mortgage loans	$	1,807		$	2,714

Yield Analysis

First Defiance Financial Corp.

	Three Months Ended March 31,
	(dollars in thousands)
	2010						2009
	Average Balance		Interest(1)		Yield Rate(2)		Average Balance		Interest(1)		Yield Rate(2)
Interest-earning assets:
Loans receivable	$	1,560,405	$	22,436	5.83	%	$	1,596,592	$	23,405	5.95	%
Securities		141,646		1,711	4.96	%		119,314		1,721	5.78	%
Interest Bearing Deposits		108,440		61	0.23	%		44,737		14	0.13	%
FHLB stock		21,376		219	4.15	%		21,376		239	4.53	%
Total interest-earning assets		1,831,867		24,427	5.41	%		1,782,019		25,379	5.77	%
Non-interest-earning assets		216,639						202,966
Total assets	$	2,048,506					$	1,984,985
Deposits and Interest-bearing liabilities:
Interest bearing deposits	$	1,391,945	$	5,398	1.57	%	$	1,348,178	$	7,183	2.16	%
FHLB advances and other		141,759		1,218	3.48	%		147,091		1,319	3.64	%
Other Borrowings		44,280		105	0.96	%		39,532		157	1.61	%
Subordinated debentures		36,229		323	3.62	%		36,251		426	4.77	%
Total interest-bearing liabilities		1,614,213		7,044	1.77	%		1,571,052		9,085	2.35	%
Non-interest bearing deposits		184,195		—	—			165,881		—	—
Total including non-interest-bearing demand deposits		1,798,408		7,044	1.59	%		1,736,933		9,085	2.12	%
Other non-interest-bearing liabilities		14,606						17,953
Total liabilities		1,813,014						1,754,886
Stockholders’ equity		235,492						230,099
Total liabilities and stockholders’ equity	$	2,048,506					$	1,984,985
Net interest income; interest rate spread			$	17,383	3.64	%			$	16,294	3.42	%
Net interest margin (3)					3.85	%					3.71	%
Average interest-earning assets to average interest bearing liabilities					113	%					113	%

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

(2) Annualized

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

Selected Quarterly Information

First Defiance Financial Corp.

(dollars in thousands, except per share data)	1st Qtr 2010			4th Qtr 2009			3rd Qtr 2009			2nd Qtr 2009			1st Qtr 2009
Summary of Operations
Tax-equivalent interest income (1)	$	24,427		$	25,434		$	25,796		$	25,117		$	25,379
Interest expense		7,044			7,614			7,914			8,643			9,085
Tax-equivalent net interest income (1)		17,383			17,820			17,882			16,474			16,294
Provision for loan losses		6,889			8,470			8,051			3,965			2,746
Tax-equivalent NII after provision for loan losses (1)		10,494			9,350			9,831			12,509			13,548
Investment securities gains (losses), including impairment		(64	)		(1,394	)		(840	)		(750	)		(672	)
Non-interest income (excluding securities gains/losses)		6,830			6,970			6,396			9,109			7,476
Non-interest expense		14,832			14,609			14,786			16,133			14,996
Income taxes		624			(525	)		(37	)		1,539			1,691
Net income		1,506			555			329			2,901			3,408
Dividends Declared on Preferred Shares		(463	)		(447	)		(473	)		(468	)		(463	)
Accretion on Preferred Shares		(40	)		(41	)		(40	)		(40	)		(38	)
Net Income Applicable to Common Shares		1,003			67			(184	)		2,393			2,907
Tax equivalent adjustment (1)		298			287			309			295			257
At Period End
Total assets	$	2,058,775		$	2,057,523		$	2,018,598		$	2,023,563		$	2,010,662
Earning assets		1,884,650			1,879,725			1,845,134			1,846,689			1,838,397
Loans		1,576,602			1,617,122			1,623,627			1,610,460			1,585,897
Allowance for loan losses		38,980			36,547			31,248			25,840			25,694
Deposits		1,599,584			1,580,226			1,543,085			1,553,144			1,540,235
Stockholders’ equity		235,655			234,086			234,529			232,683			230,608
Stockholders’ equity / assets		11.45	%		11.38	%		11.62	%		11.50	%		11.47	%
Goodwill		56,585			56,585			56,585			56,585			56,585
Average Balances
Total assets	$	2,048,506		$	2,058,219		$	2,029,970		$	2,027,760		$	1,984,985
Earning assets		1,831,867			1,852,401			1,826,400			1,828,272			1,782,019
Deposits and interest-bearing liabilities		1,798,408			1,805,090			1,778,223			1,778,848			1,736,933
Loans		1,560,405			1,600,265			1,613,529			1,592,513			1,596,592
Deposits		1,576,140			1,572,399			1,550,369			1,552,533			1,514,059
Stockholders’ equity		235,492			235,152			234,241			231,397			230,099
Stockholders’ equity / assets		11.50	%		11.43	%		11.54	%		11.41	%		11.59	%
Per Common Share Data
Net Income:
Basic	$	0.12		$	0.01		$	(0.02	)	$	0.29		$	0.36
Diluted		0.12			0.01			(0.02	)		0.29			0.36
Dividends		—			—			0.04			0.09			0.17
Market Value:
High	$	12.33		$	18.93		$	18.33		$	14.25		$	8.95
Low		9.20			10.06			12.00			6.10			3.76
Close		10.12			11.29			14.91			13.00			6.08
Book Value		24.45			24.26			24.32			24.10			23.85
Shares outstanding, end of period (in thousands)		8,117			8,118			8,118			8,118			8,117
Performance Ratios (annualized)
Tax-equivalent net interest margin (1)		3.85	%		3.82	%		3.88	%		3.61	%		3.71	%
Return on average assets		0.30	%		0.11	%		0.06	%		0.57	%		0.70	%
Return on average equity		2.59	%		0.94	%		0.56	%		5.03	%		6.02	%
Efficiency ratio (2)		61.26	%		58.93	%		60.90	%		63.06	%		63.09	%
Effective tax rate		29.30	%		-1750.00	%		-12.67	%		34.66	%		33.16	%
Common dividend payout ratio (basic)		0.00	%		0.00	%		-200.00	%		29.31	%		47.22	%

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

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

Selected Quarterly Information

First Defiance Financial Corp.

(dollars in thousands, except per share data)	1st Qtr 2010			4th Qtr 2009			3rd Qtr 2009			2nd Qtr 2009			1st Qtr 2009
Loan Portfolio Composition
One to four family residential real estate	$	222,099		$	227,592		$	233,958		$	238,000		$	241,119
Construction		46,369			48,626			53,605			44,670			50,534
Commercial real estate		797,448			806,889			802,434			768,636			764,841
Commercial		352,923			379,408			371,881			382,434			350,070
Consumer finance		31,719			34,105			36,416			38,074			38,676
Home equity and improvement		144,826			147,977			150,379			151,213			156,668
Total loans		1,595,384			1,644,597			1,648,673			1,623,027			1,601,908
Less:
Loans in process		17,794			26,494			23,957			11,602			14,954
Deferred loan origination fees		988			981			1,089			965			1,057
Allowance for loan loss		38,980			36,547			31,248			25,840			25,694
Net Loans	$	1,537,622		$	1,580,575		$	1,592,379		$	1,584,620		$	1,560,203
Allowance for loan loss activity
Beginning allowance		36,547		$	31,248		$	25,840		$	25,694		$	24,592
Provision for loan losses		6,889			8,470			8,051			3,965			2,746
Credit loss charge-offs:
One to four family residential real estate		326			884			744			505			148
Commercial real estate		3,191			1,912			1,152			2,066			669
Commercial		735			354			658			950			702
Consumer finance		25			75			39			83			123
Home equity and improvement		399			134			196			301			130
Total charge-offs		4,676			3,359			2,789			3,905			1,772
Total recoveries		220			188			146			86			128
Net charge-offs (recoveries)		4,456			3,171			2,643			3,819			1,644
Ending allowance	$	38,980		$	36,547		$	31,248		$	25,840		$	25,694
Credit Quality
Non-accrual loans	$	33,567		$	41,191		$	35,490		$	35,528		$	29,473
Restructured loans, accruing		7,023			6,715			4,574			4,845			7,199
Total non-performing loans (1)		40,590			47,906			40,064			40,373			36,672
Real estate owned (REO)		12,768			13,527			9,352			8,567			7,839
Total non-performing assets (2)	$	53,358		$	61,433		$	49,416		$	48,940		$	44,511
Net charge-offs		4,456			3,171			2,643			3,819			1,644
Allowance for loan losses / loans		2.47	%		2.26	%		1.92	%		1.60	%		1.62	%
Allowance for loan losses / non-performing assets		73.05	%		59.49	%		63.23	%		52.80	%		57.73	%
Allowance for loan losses / non-performing loans		96.03	%		76.29	%		78.00	%		64.00	%		70.06	%
Non-performing assets / loans plus REO		3.36	%		3.77	%		3.03	%		3.02	%		2.79	%
Non-performing assets / total assets		2.59	%		2.99	%		2.45	%		2.42	%		2.21	%
Net charge-offs / average loans (annualized)		1.14	%		0.79	%		0.66	%		0.96	%		0.41	%
Deposit Balances
Non-interest-bearing demand deposits	$	187,231		$	189,132		$	174,145		$	180,035		$	163,855
Interest-bearing demand deposits and money market		525,311			499,575			477,566			456,177			413,104
Savings deposits		138,364			130,156			132,333			135,821			132,590
Retail time deposits less than $100,000		539,313			550,172			544,957			568,595			608,811
Retail time deposits greater than $100,000		161,071			163,838			166,787			165,401			171,588
National/Brokered time deposits		48,294			47,353			47,297			47,115			50,287
Total deposits	$	1,599,584		$	1,580,226		$	1,543,085		$	1,553,144		$	1,540,235

(1) Non-performing loans consist of non-accrual loans that are contractually past due 90 days or more and loans that are deemed impaired.

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

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
March 31, 2010
One to four family residential real estate	$	222,099	$	207,733	$	4,749	$	6,572	$	3,045
Construction		46,369		46,129		65		175		—
Commercial real estate		797,448		768,334		6,962		18,241		3,911
Commercial		352,923		338,513		6,866		7,498		46
Consumer finance		31,719		31,490		170		59		—
Home equity and improvement		144,826		142,598		1,185		1,022		21
Total loans	$	1,595,384	$	1,534,797	$	19,997	$	33,567	$	7,023
December 31, 2009
One to four family residential real estate	$	227,592	$	215,211	$	4,331	$	5,349	$	2,701
Construction		48,626		47,951		—		675		—
Commercial real estate		806,889		775,603		3,280		24,042		3,964
Commercial		379,408		367,592		1,151		10,615		50
Consumer finance		34,105		33,669		377		59		—
Home equity and improvement		147,977		145,481		2,045		451		—
Total loans	$	1,644,597	$	1,585,507	$	11,184	$	41,191	$	6,715
September 30, 2009
One to four family residential real estate	$	233,958	$	221,077	$	4,637	$	5,839	$	2,405
Construction		53,605		53,340		71		194		—
Commercial real estate		802,434		765,469		11,570		23,279		2,116
Commercial		371,881		363,739		2,525		5,564		53
Consumer finance		36,416		35,913		454		49		—
Home equity and improvement		150,379		147,031		2,783		565		—
Total loans	$	1,648,673	$	1,586,569	$	22,040	$	35,490	$	4,574
March 31, 2009
One to four family residential real estate	$	241,119	$	229,418	$	4,201	$	6,167	$	1,333
Construction		50,534		50,112		297		125		—
Commercial real estate		764,841		728,777		13,140		18,450		4,474
Commercial		350,070		341,582		3,111		4,008		1,369
Consumer finance		38,676		38,318		301		57		—
Home equity and improvement		156,668		153,183		2,796		666		23
Total loans	$	1,601,908	$	1,548,589	$	23,846	$	29,473	$	7,199