First Defiance Financial Corp. (NASDAQ: FDEF) announced today record net income for the fiscal year ended December 31, 2013 totaled $22.2 million, or $2.19 per diluted common share, compared to $18.7 million or $1.81 per diluted common share for the year ended December 31, 2012. For the fourth quarter 2013, First Defiance earned $5.1 million, or $0.50 per diluted common share compared to $5.2 million; or $0.52 per diluted common share for the fourth quarter of 2012.
“The record earnings achieved in 2013 reflects a very successful year for First Defiance,” said Donald P. Hileman, President and CEO of First Defiance Financial Corp. “Despite the challenges of an often uncertain economy, our financial performance was strengthened, and our core profitability was enhanced particularly by improved credit quality.”
The fourth quarter 2013 results were negatively impacted by a $219,000 after tax loss, or $0.02 per diluted common share, as a result of $337,000 in other-than-temporary impairment losses recognized on $1.9 million of collateralized debt obligations (CDOs). The CDO securities were among those considered disallowed under the revised final “Volcker Rule” of the Dodd-Frank Act which requires the Company to liquidate these securities.
In the fourth quarter of 2012, the Company executed a balance sheet restructuring strategy 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.
Non-performing loans totaled $27.8 million at December 31, 2013, a decrease from $32.6 million at December 31, 2012. In addition, First Defiance had $5.9 million of real estate owned at December 31, 2013 compared to $3.8 million at December 31, 2012. Accruing troubled debt restructured loans were $27.6 million at December 31, 2013 compared with $28.2 million at December 31, 2012. For the fourth quarter of 2013, First Defiance recorded net charge-offs of $1.5 million, down from $2.2 million in the fourth quarter of 2012 and up from $782,000 in the third quarter of 2013. The allowance for loan loss as a percentage of total loans was 1.58% at December 31, 2013 compared with 1.75% at December 31, 2012.