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And now I'll turn the call over to Mr. Small for his comments.Bill Small Thank you Mary Beth. Good morning and thank you for joining us for the First Defiance Financial Corp conference call to review the 2010 fourth quarter and year-end results. Last night, we issued our 2010 earnings release and this morning we would like to discuss that release and give you a look forward into 2011. At the conclusion of our presentation, we will answer any questions you might have. Joining me on the call this morning to give more detail on the financial performance for the fourth quarter and the year is CFO; Don Hileman, also with us this morning to answer questions is Jim Rohrs; President and CEO of First Federal Bank. Fourth quarter 2010 net income on a GAAP basis was $2.3 million or $0.22 per diluted common share, compared to $555,000 and $0.01 per diluted common share in the 2009 fourth quarter. For the year-ended December 31, 2010, First Defiance earned $8.1 million or $0.75 per diluted common share, compared to $7.2 million or $0.63 per diluted common share for 2009. As 2010 came to an end we continued to face many challenges in the banking industry. We are still dealing with the historically low, high unemployment levels and a housing sector that is not found its footing. From [ph] economic indicators of pointing to a sustainable recovery, the job role continues to lag and foreclosures on homes remain high. Throughout the year a high provision expense and additional expenses associated with collections and other real estate owned relating to these issues, had a negative impact on earnings. However even in this environment, we have confidence in our core operation and our fundamental operating metrics were again very solid. I am pleased to report that despite the continuing challenges in this operating environment, the company remained profitable for the quarter and the full year 2010.
Beyond our normal business activities during the year, the company successfully converted its core operating systems in the fourth quarter with no significant service interruptions with client impact. The core conversion project consumed significant resources in both capital and staff terms. The reach of this project was extensive, and it took many months to unfold. I am proud of the conversion team and their efforts as they consistently placed client needs first and work to mitigate any negative effects.From an overall performance viewpoint, net income was flat with the linked quarter but was up significantly over fourth quarter of 2009. Full-year results for 2010 were also up over 2009 results. Net interest margin performance throughout the year, increased mortgage production in the second half of 2010 as well as improved performance in both our wealth management and insurance business, all helped to offset the credit related expenses and the costs related to the core conversion. Asset quality performance in the fourth quarter was again considerably weaker than our historic standards. Our provision expense in the fourth quarter 2010 was down significantly from the 2009 fourth quarter, the total provision for 2010 was at the same level as 2009. In light of the continued environment of high unemployment as well as the overall uncertainty of the commercial real estate market, we believe it is prudent to maintain reserves at this level. This decision drove the provision expense throughout the year, bringing our ratio of allowance of loan loss to total loans up to 2.7%. With a sizeable increase in charge-offs during the fourth quarter as we were more aggressive in writing down collateral values and disposing of OREO. We did have a slight improvement in the fourth quarter over the linked quarter in our level of non-performing assets. We continue to devote significant resources to the monitoring and early recognition of any weaknesses in the portfolio, or we are not seeing new specific home [ph] problems to arise in the portfolio. Read the rest of this transcript for free on seekingalpha.com