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First Defiance Financial Corp. (NASDAQ: FDEF) announced today that net income for the third quarter ended September 30, 2013 totaled $5.5 million, or $0.54 per diluted common share, compared to $5.4 million or $0.54 per diluted common share for the quarter ended September 30, 2012.
“We are very pleased to report another quarter of solid earnings results, especially considering the significant reduction in mortgage banking activity due to higher mortgage rates during the quarter,” said William J. Small, Chairman, President and CEO of First Defiance Financial Corp. “Our core lines of business are performing steadily as we face many challenges within our industry and a tentative economy.”
Non-performing loans totaled $30.5 million at September 30, 2013, a decrease from $37.8 million at September 30, 2012. In addition, First Defiance had $5.5 million of real estate owned at September 30, 2013 compared to $2.8 million at September 30, 2012. Accruing troubled debt restructured loans were $28.0 million at September 30, 2013 compared with $4.3 million at September 30, 2012. For the third quarter of 2013, First Defiance recorded net charge-offs of $782,000, down from $804,000 in the third quarter of 2012 and up slightly from $637,000 in the second quarter of 2013. The allowance for loan loss as a percentage of total loans was 1.66% at September 30, 2013 compared with 1.74% at September 30, 2012.
The third quarter results include expense for provision for loan losses of $476,000, compared with $705,000 for the same period in 2012 and $448,000 in the second quarter of 2013.
“Credit quality remained stable during the quarter, reflecting the progress we achieved a year ago,” said Small. “Our provision expense has benefitted from the sustained improvement.”
Net Interest Income
Net interest income of $17.2 million in the third quarter of 2013 was flat with the third quarter of 2012. The net interest margin increased to 3.84% in the third quarter of 2013 compared with 3.80% in the third quarter of 2012 and 3.82% in the second quarter of 2013. Yield on interest earning assets declined by 24 basis points, to 4.20% in the third quarter of 2013 from 4.44% in the third quarter of 2012. The cost of interest-bearing liabilities decreased by 31 basis points in the third quarter of 2013 to 0.46% from 0.77% in the third quarter of 2012.