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First Defiance Financial Corporation CEO Discusses Q4 2012 Results (Transcript)

Even in this operating environment, we made considerable progress throughout the year and sustain this improvement in the fourth quarter. Our fundamental operating metrics remain strong as we stay confident in our core strategies and continue to see improvement in asset quality trends. We saw some of the early impact of new regulations created from the Dodd-Frank Act throughout the year and the pressure just were put on certain revenue sources going forward.

However, proactive changes we made in our operations have allowed us to neutralize most of this earnings pressure and position us for the future. Lower credit related expenses, while still running considerably higher than historic levels were also a significant factor in the stronger earnings performance in 2011. Continuation of these trends along with the ability to grow loan balances will be critical to our success going forward.

The growth in loan balances for the second consecutive quarter was certainly a big positive as we ended the year. As loan demand remained somewhat softer than historic levels, we did see an increase in opportunities and we were able to increase loans by more than $26 million over the previous quarter end.

We have a disciplined pricing strategy that resulted in a relatively stable net interest margin year-over-year. We will continue to focus on managing the margin and adjusting our pricing strategy as changes in the market warrant.

Several other positive events took place throughout the past year. Most notable was the decision to pay a common dividend to our shareholders. At the end of 2009, we suspended common dividends as a means to preserve capital as the recession worsened. The Board continued to assess our dividend policy on a quarterly basis and made the decision to pay a $0.05 per share dividend in the fourth quarter of 2011. We will continue to prudently review our capital position in light of the economic environment as we evaluate future dividend decisions.

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