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First Defiance Financial Corp. Announces 2019 First Quarter Earnings

DEFIANCE, Ohio--(BUSINESS WIRE)--

  • Earnings per share of $0.57 for the 2019 first quarter, consistent with $0.57 per share in the 2018 first quarter
  • Net interest margin of 4.03% for the 2019 first quarter, compared to 3.95% in the 2018 first quarter
  • Loan growth of $8.9 million during the 2019 first quarter
  • Deposit growth of $64.9 million during the 2019 first quarter
  • Non-performing loans of $17.6 million for the 2019 first quarter, compared to $27.9 million for the 2018 first quarter

First Defiance Financial Corp. (FDEF) announced today that earnings for the first quarter of 2019 were $11.5 million, or $0.57 per diluted common share compared to $11.7 million or $0.57 per diluted common share for the first quarter of 2018. The year-to-year comparison is impacted by the prior year’s results, including a significant loan recovery and a credit loan loss provision of $1.1 million, which had an after tax benefit of $865,000, or $0.04 per diluted share. The first quarter 2019 included a provision for loan losses expense of $212,000, which had an after tax cost of $168,000, or $0.01 per diluted share.

“Strong deposit gathering, net interest margin expansion and improved asset quality metrics highlight the start to 2019,” said Donald P. Hileman, Chief Executive Officer of First Defiance Financial Corp. “These trends continue to support our positive outlook for 2019.”

Net interest income up compared to first quarter 2018

Net interest income of $28.3 million in the first quarter of 2019 was up from $25.7 million in the first quarter of 2018. The increase over the prior year’s first quarter was attributable to organic growth and net interest margin expansion. Net interest margin was 4.03% for the first quarter of 2019, up from 4.02% in the fourth quarter of 2018, and up from 3.95% in the first quarter of 2018. Yield on interest earning assets increased to 4.82% in the first quarter of 2019, up 39 basis points from 4.43% in the first quarter of 2018. The cost of interest-bearing liabilities increased 41 basis points in the first quarter of 2019 to 1.06% from 0.65% in the first quarter of 2018. While the net interest spread declined 2 basis points to 3.76% from 3.78%, the strong mix of non-interest bearing deposits reduced the increase in overall funding costs, which led to year-over-year net interest margin improvement.

“Our net interest margin improved both quarter over quarter and year over year,” said Hileman. “While loan growth was seasonally down compared to last quarter, our growth strategies are succeeding with loans up 8.1% year over year. This growth in combination with margin expansion led to a 10.1% increase in net interest income from the prior year.”

Non-interest income up from first quarter 2018

First Defiance’s non-interest income in the first quarter of 2019 was $10.8 million compared with $10.7 million in the first quarter of 2018. Results for the first quarter included a $559,000 increase in deferred compensation plan assets compared to a $37,000 decrease for the same period in 2018 primarily due to stock market performance. Excluding the deferred compensation plan impact, non-interest income declined $486,000, as improved mortgage banking performance was more than offset by declines in other business lines.

Mortgage banking income increased to $1.8 million in the first quarter of 2019 from $1.7 million in the first quarter of 2018. Gains from the sale of mortgage loans increased to $1.3 million in the first quarter of 2019 from $1.1 million in the first quarter of 2018. Mortgage loan servicing revenue remained flat at $0.9 million in the first quarters of 2019 and 2018. First Defiance had a negative change in the valuation adjustment in mortgage servicing assets of $113,000 in the first quarter of 2019 compared with a positive adjustment of $37,000 in the first quarter of 2018.

For the first quarter 2019, service fees and other charges were $3.0 million, down from $3.1 million in the first quarter of 2018; and commissions from the sale of insurance products were $4.1 million, down from $4.3 million in the first quarter of 2018. The first quarter typically includes contingent revenues, bonuses paid by insurance carriers when the Company achieves certain loss ratios or growth targets. In the first quarter of 2019, First Defiance’s insurance subsidiary, First Insurance Group, earned $0.9 million of contingent income, compared to $1.0 million during the first quarter of 2018. Trust income was $523,000 in the first quarter of 2019, up from $503,000 in the fourth quarter of 2018, but down from $552,000 in the first quarter of 2018. Other non-interest income for the first quarter was $846,000, up from $377,000 in 2018 primarily due to the increase in deferred compensation assets described above.

“We are very pleased with the performance of mortgage banking this quarter,” said Hileman. “Non-interest income remains an important element to our earnings growth goals and we continue to seek ways to improve these revenue streams.”

Non-interest expenses up from first quarter 2018

Total non-interest expense was $24.9 million in the first quarter of 2019, up from $23.3 million in the first quarter of 2018. Compensation and benefits increased to $14.1 million in the first quarter of 2019, compared to $13.2 million in the first quarter of 2018. The increase in compensation and benefits from a year ago is mainly due to additions to staff to support growth strategies, merit increases, and higher medical benefit costs. Data processing cost was $2.3 million in the first quarter of 2019, up from $2.1 million in the first quarter of 2018. Other non-interest expense of $5.1 million in the first quarter of 2019 increased from $4.6 million in the first quarter of 2018. The increase in other non-interest expenses from a year ago is primarily due to a $559,000 increase in deferred compensation liabilities compared to a $130,000 increase for the same period in 2018. Additionally, other non-interest expenses for the first quarter 2019 included OREO write-downs of $264,000 compared to $544,000 for the first quarter of 2018.

Credit quality

Non-performing loans totaled $17.6 million at March 31, 2019, a decrease from $19.0 million at December 31, 2018, and a decrease from $27.9 million at March 31, 2018. In addition, First Defiance had $0.9 million of OREO at March 31, 2019, compared to $1.4 million at March 31, 2018. Accruing troubled debt restructured loans were $11.9 million at March 31, 2019, compared with $13.7 million at March 31, 2018.

The first quarter 2019 results include net charge-offs of $379,000 and a provision expense for loan losses of $212,000 compared with net recoveries of $1.7 million and a credit provision of $1.1 million for the same period in 2018. The allowance for loan loss as a percentage of total loans was 1.10% at March 31, 2019, compared with 1.16% at March 31, 2018.

“Asset quality metrics continued to strengthen this quarter as expected,” said Hileman. “Non-accrual loans declined 7.2% from last quarter and 36.8% from last year while loan delinquencies improved to 0.72% of balances from 1.18% a year ago. We remain focused on further enhancements to asset quality.”

Total assets at $3.22 billion

Total assets at March 31, 2019, were $3.22 billion compared to $3.18 billion at December 31, 2018, and $3.02 billion at March 31, 2018.

Net loans receivable (excluding loans held for sale) were $2.52 billion at March 31, 2019, compared to $2.51 billion at December 31, 2018, and $2.33 billion at March 31, 2018. At March 31, 2019, net loans receivable grew $189.7 million, or 8.1% from a year ago.

Also, at March 31, 2019, goodwill and other intangible assets totaled $102.7 million compared to $103.0 million at December 31, 2018, and $103.9 million at March 31, 2018.

Total deposits at March 31, 2019, were $2.69 billion compared with $2.62 billion at December 31, 2018, and $2.49 billion at March 31, 2018. At March 31, 2019, total deposits grew $194.0 million, or 7.8% from a year ago.

Total stockholders’ equity was $395.8 million at March 31, 2019, compared to $399.6 million at December 31, 2018, and $379.2 million at March 31, 2018. The reduction in stockholders’ equity from year-end 2018 was due to the company’s repurchase of 515,000 shares of its common stock for $15.1 million during the first quarter of 2019. At March 31, 2019, 9,000 shares of common stock remained available for repurchase under its existing authorization.

Dividend to be paid May 24

The Board of Directors declared a quarterly cash dividend of $0.19 per common share payable May 24, 2019, to shareholders of record at the close of business on May 17, 2019. The dividend represents an annual dividend of 2.63 percent based on the First Defiance common stock closing price on April 18, 2019. First Defiance has approximately 19,714,190 common shares outstanding.

CFO succession

Kevin T. Thompson, Executive Vice President and CFO of First Defiance Financial Corp. and First Federal Bank, announced that he will retire from the company effective April 30, 2019. Mr. Thompson has served as CFO since January 2014 and Executive Vice President since August 2013. Paul D. Nungester will succeed Mr. Thompson as CFO. Mr. Nungester has served as Executive Vice President and Director of Finance and Accounting since July 2018.

Conference call

First Defiance Financial Corp. will host a conference call at 11:00 a.m. ET on Tuesday, April 23, 2019, to discuss the earnings results and business trends. The conference call may be accessed by calling 1-877-444-1726. In addition, a live webcast may be accessed at https://services.choruscall.com/links/fdef190423.html. The replay of the conference call will be available at www.fdef.com until April 23, 2020, at 9:00 a.m. ET.

First Defiance Financial Corp.

First Defiance Financial Corp. (FDEF), headquartered in Defiance, Ohio, is the holding company for First Federal Bank of the Midwest and First Insurance Group. First Federal Bank operates 44 full-service branches in northwest and central Ohio, southeast Michigan and northeast Indiana and a loan production office in Ann Arbor, Michigan. First Insurance Group is a full-service insurance agency with nine offices throughout northwest Ohio.

For more information, visit the company’s website 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 real estate owned properties, continued strength in the market area for First Federal Bank of the Midwest, and the ability 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 First Defiance 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 our Securities and Exchange Commission (SEC) filings, including our Annual Report on Form 10-K for the year ended December 31, 2018. One or more of these factors have affected or could in the future affect First Defiance'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 First Defiance or any other persons, that our objectives and plans will be achieved. All forward-looking statements made in this news release are based on information presently available to the management of First Defiance. We assume no obligation to update any forward-looking statements.

As required by U.S. GAAP, First Defiance will evaluate the impact of subsequent events through the issuance date of its March 31, 2019, consolidated financial statements as part of its Quarterly Report on Form 10-Q to be filed with the SEC. Accordingly, subsequent events could occur that may cause First Defiance to update its critical accounting estimates and to revise its financial information from that which is contained in this news release.

         
Consolidated Balance Sheets (Unaudited)
First Defiance Financial Corp.
   
March 31 December 31,
(in thousands)   2019   2018
 
Assets
Cash and cash equivalents
Cash and amounts due from depository institutions $ 45,517 $ 55,962
Interest-bearing deposits   67,000     43,000  
112,517 98,962
Securities
Available-for sale, carried at fair value 299,895 294,076
Held-to-maturity, carried at amortized cost   523     526  
300,418 294,602
 
Loans 2,548,968 2,540,039
Allowance for loan losses   (28,164 )   (28,331 )
Loans, net 2,520,804 2,511,708
Loans held for sale 6,239 6,613
Mortgage servicing rights 9,998 10,119
Accrued interest receivable 11,180 9,641
Federal Home Loan Bank stock 12,235 14,217
Bank Owned Life Insurance 68,052 67,660
Office properties and equipment 40,422 40,670
Real estate and other assets held for sale 941 1,205
Goodwill 98,569 98,569
Core deposit and other intangibles 4,092 4,391
Other assets   35,782     23,365  
Total Assets $ 3,221,249   $ 3,181,722  
 
Liabilities and Stockholders’ Equity
Non-interest-bearing deposits $ 586,033 $ 607,198
Interest-bearing deposits   2,099,759     2,013,684  
Total deposits 2,685,792 2,620,882
Advances from Federal Home Loan Bank 55,158 85,189
Notes payable and other interest-bearing liabilities 3,513 5,741
Subordinated debentures 36,083 36,083
Advance payments by borrowers for tax and insurance 2,943 3,652
Deferred taxes 1,738 264
Other liabilities   40,233     30,322  
Total Liabilities 2,825,460 2,782,133
Stockholders’ Equity
Preferred stock - -
Common stock, net 127 127
Additional paid-in-capital 160,828 161,593
Accumulated other comprehensive income (loss) 1,569 (2,148 )
Retained earnings 303,277 295,588
Treasury stock, at cost   (70,012 )   (55,571 )
Total stockholders’ equity   395,789     399,589  
Total Liabilities and Stockholders’ Equity $ 3,221,249   $ 3,181,722  
 
           
Consolidated Statements of Income (Unaudited)
First Defiance Financial Corp.
  Three Months Ended
March 31,
(in thousands, except per share amounts)   2019     2018
Interest Income:    
Loans $ 31,214 $ 26,526
Investment securities 2,205 1,851
Interest-bearing deposits 285 297
FHLB stock dividends   215   231  
Total interest income 33,919 28,905
Interest Expense:
Deposits 5,005 2,611
FHLB advances and other 276 319
Subordinated debentures 364 280
Notes Payable   4   8  
Total interest expense   5,649   3,218  
Net interest income 28,270 25,687
Provision for loan losses   212   (1,095 )
Net interest income after provision for loan losses 28,058 26,782
Non-interest Income:
Service fees and other charges 3,007 3,131
Mortgage banking income 1,841 1,742
Gain on sale of non-mortgage loans 89 224
Gain on sale of securities - -
Insurance commissions 4,115 4,277
Trust income 523 552
Income from Bank Owned Life Insurance 392 400
Other non-interest income   846   377  
Total Non-interest Income 10,813 10,703
Non-interest Expense:
Compensation and benefits 14,085 13,249
Occupancy 2,241 2,071
FDIC insurance premium 273 360
Financial institutions tax 556 531
Data processing 2,297 2,105
Amortization of intangibles 299 347
Other non-interest expense   5,115   4,588  
Total Non-interest Expense   24,866   23,251  
Income before income taxes 14,005 14,234
Income taxes   2,523   2,497  
Net Income $ 11,482 $ 11,737  
 
 
Earnings per common share:
Basic $ 0.57 $ 0.58
Diluted $ 0.57 $ 0.57
 
Average Shares Outstanding:
Basic 20,014 20,330
Diluted 20,095 20,438
 
             
Financial Summary and Comparison (Unaudited)    
First Defiance Financial Corp.  
Three Months Ended
March 31,
(dollars in thousands, except per share data)   2019   2018   % change
Summary of Operations
 
Tax-equivalent interest income (2) $ 34,166 $ 29,142 17.2 %
Interest expense 5,649 3,218 75.5
Tax-equivalent net interest income (2) 28,517 25,924 10.0
Provision for loan losses 212 (1,095 ) (119.4 )
Tax-equivalent NII after provision for loan loss (2) 28,305 27,019 4.8
Investment securities gains - - -
Non-interest income (excluding securities gains/losses) 10,813 10,703 1.0
Non-interest expense 24,866 23,251 6.9
Income taxes 2,523 2,497 1.0
Net Income 11,482 11,737 (2.2 )
Tax equivalent adjustment (2)     247       237     4.2  
At Period End
Assets 3,221,249 3,023,004 6.6
Earning assets 2,934,860 2,748,338 6.8
Loans 2,548,968 2,358,330 8.1
Allowance for loan losses 28,164 27,267 3.3
Deposits 2,685,792 2,491,801 7.8
Stockholders’ equity     395,789       379,214     4.4  
Average Balances
Assets 3,183,012 2,977,864 6.9
Earning assets 2,871,340 2,664,114 7.8
Loans 2,517,283 2,316,316 8.7
Deposits and interest-bearing liabilities 2,742,626 2,565,537 6.9
Deposits 2,642,158 2,434,440 8.5
Stockholders’ equity 395,138 373,993 5.7
Stockholders’ equity / assets     12.41 %     12.56 %   (1.2 )
Per Common Share Data
Net Income
Basic $ 0.57 $ 0.58 (0.9 )
Diluted 0.57 0.57 -
Dividends 0.19 0.15 26.7
Market Value:
High $ 31.30 $ 29.93 4.6
Low 24.12 25.51 (5.4 )
Close 28.74 28.66 0.3
Common Book Value 20.08 18.62 7.8
Tangible Common Book Value (1) 14.87 13.52 10.0
Shares outstanding, end of period (000)     19,713       20,364     (3.2 )
Performance Ratios (annualized)
Tax-equivalent net interest margin (2) 4.03 % 3.95 % 2.0
Return on average assets 1.46 % 1.60 % (8.5 )
Return on average equity 11.78 % 12.73 % (7.4 )
Efficiency ratio (3) 63.22 % 63.48 % (0.4 )
Effective tax rate 18.01 % 17.54 % 2.7
Dividend payout ratio (basic)     33.33 %     26.09 %   27.8  

(1)

 

Tangible common book value = total stockholders' equity less the sum of goodwill, core deposit and other intangibles, and preferred stock divided by shares outstanding at the end of the period.

(2)

Interest income on tax-exempt securities and loans has been adjusted to a tax-equivalent basis using the statutory federal income tax rate of 21%

(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.

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)     2019       2018
 
Gain from sale of mortgage loans $ 1,301 $ 1,080
Mortgage loan servicing revenue (expense):
Mortgage loan servicing revenue 939 944
Amortization of mortgage servicing rights (286 ) (319 )
Mortgage servicing rights valuation adjustments   (113 )         37  
  540           662  
Total revenue from sale and servicing of mortgage loans $ 1,841         $ 1,742  
 
                           
         
Yield Analysis
First Defiance Financial Corp.
Three Months Ended March 31,
(dollars in thousands)
2019 2018
Average Yield Average Yield
Balance Interest(1) Rate(2) Balance Interest(1) Rate(2)
Interest-earning assets:
Loans receivable $ 2,517,283 $ 31,238 5.03 % $ 2,316,316 $ 26,550 4.65 %
Securities 295,824 2,428 3.31 % (3 ) 263,596 2,064 3.16 % (3 )
Interest Bearing Deposits 44,752 285 2.58 % 68,211 297 1.77 %
FHLB stock   13,481   215 6.47 %   15,991   231 5.86 %
Total interest-earning assets 2,871,340 34,166 4.82 % 2,664,114 29,142 4.43 %
Non-interest-earning assets   311,672   313,750
Total assets $ 3,183,012 $ 2,977,864
Deposits and Interest-bearing liabilities:
Interest bearing deposits $ 2,061,023 $ 5,005 0.98 % $ 1,888,990 $ 2,611 0.56 %
FHLB advances and other 58,954 276 1.90 % 78,923 319 1.64 %
Subordinated debentures 36,083 364 4.09 % 36,192 280 3.14 %
Notes payable   5,431   4 0.30 %   15,982   8 0.20 %
Total interest-bearing liabilities 2,161,491 5,649 1.06 % 2,020,087 3,218 0.65 %
Non-interest bearing deposits   581,135   - -   545,450   - -
Total including non-interest-bearing demand deposits 2,742,626 5,649 0.84 % 2,565,537 3,218 0.51 %
Other non-interest-bearing liabilities   45,248   38,334
Total liabilities 2,787,874 2,603,871
Stockholders' equity   395,138   373,993
Total liabilities and stockholders' equity $ 3,183,012   $ 2,977,864  
Net interest income; interest rate spread $ 28,517 3.76 % $ 25,924 3.78 %
Net interest margin (4) 4.03 % 3.95 %
Average interest-earning assets to average interest bearing liabilities 133 % 132 %

(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 21%.

(2)

Annualized.

(3)

Securities yield = annualized interest income divided by the average balance of securities, excluding average unrealized gains/losses.

(4)

Net interest margin is tax equivalent 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 2019   4th Qtr 2018   3rd Qtr 2018   2nd Qtr 2018   1st Qtr 2018
Summary of Operations
Tax-equivalent interest income (1) $ 34,166 $ 33,808 $ 32,220 $ 30,550 $ 29,142
Interest expense 5,649 5,058 4,434 3,752 3,218
Tax-equivalent net interest income (1) 28,517 28,750 27,786 26,798 25,924
Provision for loan losses 212 472 1,376 423 (1,095 )
Tax-equivalent NII after provision for loan losses (1) 28,305 28,278 26,410 26,375 27,019
Investment securities gains, net of impairment - 97 76 - -
Non-interest income (excluding securities gains/losses) 10,813 8,272 9,846 10,214 10,703
Non-interest expense 24,866 21,210 22,286 22,665 23,251
Income taxes 2,523 3,082 2,483 2,564 2,497
Net income 11,482 12,097 11,306 11,109 11,737
Tax equivalent adjustment (1)     247       258       257       251       237  
At Period End
Total assets $ 3,221,249 $ 3,181,722 $ 3,098,093 $ 3,039,589 $ 3,023,004
Earning assets 2,934,860 2,898,471 2,810,624 2,756,712 2,748,338
Loans 2,548,968 2,540,039 2,456,357 2,385,344 2,358,330
Allowance for loan losses 28,164 28,331 27,639 27,321 27,267
Deposits 2,685,792 2,620,882 2,524,431 2,489,128 2,491,801
Stockholders’ equity 395,789 399,589 393,457 386,920 379,214
Stockholders’ equity / assets 12.29 % 12.56 % 12.70 % 12.73 % 12.54 %
Goodwill     98,569       98,569       98,569       98,569       98,569  
Average Balances
Total assets $ 3,183,012 $ 3,138,202 $ 3,059,225 $ 3,018,808 $ 2,977,864
Earning assets 2,871,340 2,831,866 2,754,561 2,714,328 2,664,114
Loans 2,517,283 2,474,221 2,403,932 2,337,294 2,316,316
Deposits and interest-bearing liabilities 2,742,626 2,705,736 2,633,054 2,600,029 2,565,537
Deposits 2,642,158 2,594,635 2,513,708 2,487,430 2,434,440
Stockholders’ equity 395,138 392,701 389,361 381,165 373,993
Stockholders’ equity / assets     12.41 %     12.51 %     12.73 %     12.63 %     12.56 %
Per Common Share Data
Net Income:
Basic $ 0.57 $ 0.60 $ 0.55 $ 0.54 $ 0.58
Diluted 0.57 0.59 0.55 0.54 0.57
Dividends 0.19 0.17 0.17 0.15 0.15
Market Value:
High $ 31.30 $ 31.09 $ 35.00 $ 33.72 $ 29.93
Low 24.12 22.78 29.61 27.63 25.51
Close 28.74 24.51 30.11 33.53 28.66
Common Book Value 20.08 19.81 19.29 18.97 18.62
Shares outstanding, end of period (in thousands)     19,713       20,171       20,396       20,396       20,364  
Performance Ratios (annualized)
Tax-equivalent net interest margin (1) 4.03 % 4.02 % 4.00 % 3.95 % 3.95 %
Return on average assets 1.46 % 1.53 % 1.47 % 1.48 % 1.60 %
Return on average equity 11.78 % 12.22 % 11.52 % 11.69 % 12.73 %
Efficiency ratio (2) 63.22 % 57.29 % 59.22 % 61.24 % 63.48 %
Effective tax rate 18.01 % 20.30 % 18.01 % 18.75 % 17.54 %
Common dividend payout ratio (basic)     33.33 %     28.33 %     30.91 %     27.78 %     26.09 %

(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 21% in 2018 and 35% in 2017.

(2)

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

 
                     
Selected Quarterly Information          
First Defiance Financial Corp.
 
(dollars in thousands, except per share data)   1st Qtr 2019   4th Qtr 2018   3rd Qtr 2018   2nd Qtr 2018   1st Qtr 2018
Loan Portfolio Composition
One to four family residential real estate $ 321,644 $ 322,686 $ 313,300 $ 307,480 $ 275,547
Construction 304,241 265,772 274,344 283,911 251,944
Commercial real estate 1,394,500 1,404,810 1,363,087 1,283,698 1,282,027
Commercial 509,627 509,577 489,393 489,296 500,496
Consumer finance 34,262 34,405 32,379 29,724 28,035
Home equity and improvement   124,450       128,152       129,295       129,868       133,407  
Total loans 2,688,724 2,665,402 2,601,798 2,523,977 2,471,456
Less:
Undisbursed loan funds 137,742 123,293 143,286 136,563 111,450
Deferred loan origination fees 2,014 2,070 2,155 2,070 1,676
Allowance for loan loss   28,164       28,331       27,639       27,321       27,267  
Net Loans $ 2,520,804     $ 2,511,708     $ 2,428,718     $ 2,358,023     $ 2,331,063  
                     
Allowance for loan loss activity
Beginning allowance $ 28,331 $ 27,639 $ 27,321 $ 27,267 $ 26,683
Provision for loan losses 212 472 1,376 423 (1,095 )
Credit loss charge-offs:
One to four family residential real estate 172 31 136 78 16
Commercial real estate 0 30 1,048 254 55
Commercial 187 15 528 84 97
Consumer finance 142 105 25 72 31
Home equity and improvement   33       75       36       41       117  
Total charge-offs 534 256 1,773 529 316
Total recoveries   155       476       715       160       1,995  
Net charge-offs (recoveries)   379       (220 )     1,058       369       (1,679 )
Ending allowance $ 28,164     $ 28,331     $ 27,639     $ 27,321     $ 27,267  
                     
Credit Quality
Total non-performing loans (1) $ 17,645 $ 19,016 $ 20,929 $ 18,340 $ 27,925
Real estate owned (REO)   941       1,205       1,676       1,795       1,440  
Total non-performing assets (2) $ 18,586     $ 20,221     $ 22,605     $ 20,135     $ 29,365  
Net charge-offs (recoveries) 379 (220 ) 1,058 369 (1,679 )
 
Restructured loans, accruing (3) 11,908 11,573 12,611 15,834 13,722
 
Allowance for loan losses / loans 1.10 % 1.12 % 1.13 % 1.15 % 1.16 %
Allowance for loan losses / non-performing assets 151.53 % 140.11 % 122.27 % 135.69 % 92.86 %
Allowance for loan losses / non-performing loans 159.61 % 148.99 % 132.06 % 148.97 % 97.64 %
Non-performing assets / loans plus REO 0.73 % 0.80 % 0.92 % 0.84 % 1.24 %
Non-performing assets / total assets 0.58 % 0.64 % 0.73 % 0.66 % 0.97 %
Net charge-offs / average loans (annualized) 0.06 % -0.04 % 0.18 % 0.06 % -0.29 %
                     
Deposit Balances
Non-interest-bearing demand deposits $ 586,033 $ 607,198 $ 556,316 $ 548,147 $ 550,742
Interest-bearing demand deposits and money market 1,107,511 1,040,471 1,016,294 1,021,445 1,055,416
Savings deposits 300,244 292,829 293,359 297,870 306,510
Retail time deposits less than $250,000 601,012 591,822 564,379 547,871 512,746
Retail time deposits greater than $250,000   90,992       88,562       94,083       73,795       66,387  
Total deposits $ 2,685,792     $ 2,620,882     $ 2,524,431     $ 2,489,128     $ 2,491,801  

(1)

 

Non-performing loans consist of non-accrual loans.

(2)

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

(3)

Accruing restructured loans are loans with known credit problems that are not contractually past due and therefore are not included in non-performing loans.

 
                 
Loan Delinquency Information        
First Defiance Financial Corp.
 
 
30 to 89 days Non Accrual
(dollars in thousands)   Total Balance   Current   past due   Loans
 
March 31, 2019                
One to four family residential real estate $ 321,644 $ 317,684 $ 776 $ 3,184
Construction 304,241 304,241 - -
Commercial real estate 1,394,500 1,384,815 225 9,460
Commercial 509,627 504,722 547 4,358
Consumer finance 34,262 34,076 148 38
Home equity and improvement   124,450     123,694     151     605
Total loans $ 2,688,724   $ 2,669,232   $ 1,847   $ 17,645
 
December 31, 2018                
One to four family residential real estate $ 322,686 $ 317,740 $ 1,306 $ 3,640
Construction 265,772 265,772 - -
Commercial real estate 1,404,810 1,394,211 242 10,357
Commercial 509,577 504,884 193 4,500
Consumer finance 34,405 34,079 200 126
Home equity and improvement   128,152     126,188     1,571     393
Total loans $ 2,665,402   $ 2,642,874   $ 3,512   $ 19,016
 
March 31, 2018                
One to four family residential real estate $ 275,547 $ 272,323 $ 764 $ 2,460
Construction 251,944 251,944 - -
Commercial real estate 1,282,027 1,264,623 53 17,351
Commercial 500,496 493,325 5 7,166
Consumer finance 28,035 27,703 293 39
Home equity and improvement   133,407     132,477     21     909
Total loans $ 2,471,456   $ 2,442,395   $ 1,136   $ 27,925

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