First Defiance Financial Corp. (NASDAQ: FDEF) announced today record net income for the fiscal year ended December 31, 2012 totaled $18.7 million, or $1.81 per diluted common share compared to $15.5 million or $1.42 per diluted common share for the year ended December 31, 2011. For the fourth quarter ended December 31, 2012, First Defiance earned $5.2 million or $0.52 per diluted common share compared to $4.1 million or $0.36 per diluted common share for the fourth quarter of 2011. The fourth quarter of 2012 included $2.0 million in prepayment fees from the early payment of FHLB advances, offset by $1.6 million of gains on the sale of securities associated with a balance sheet structuring strategy.
“I am pleased with the record net income in the full year of 2012 and overall performance for the fourth quarter as the country continues to rebound from the economic challenges of the last several years,” said William J. Small, Chairman, President, and Chief Executive Officer of First Defiance Financial Corp. “We are pleased with the strong mortgage banking results this quarter and throughout the full year, as well as the steady improvement in credit quality.”
In the fourth quarter of 2012, the Company executed a balance sheet restructuring strategy to enhance the Company’s current and future profitability while increasing its capital ratios and protecting the balance sheet against rising rates. The strategy required taking an after tax loss of approximately $260,000 through selling $60 million in securities for a gain of $1.6 million and paying off $62 million in FHLB advances with a prepayment penalty of $2.0 million. The anticipated positive effects of this strategy include: 1) increases in the net interest margin and net interest income, 2) improvement in all capital ratios, and 3) increases in return on average assets and return on average equity.