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Actual results may differ materially from current management forecasts and projections as a result of factors over which the company has no control. Information on these risk factors and additional information on forward-looking statements are included in the news release and in the company’s reports on file with the Securities and Exchange Commission.And now, I’ll turn the call over to Mr. Small for his comments. Bill Small Thank you, Terra. Good morning and thank you for joining us for the First Defiance Financial Corp. Conference Call to review the 2011 fourth quarter and year-end results. Last night, we issued our 2011 earnings release and this morning, we would like to discuss that release and give you a look forward into 2012. 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 2011 net income on a GAAP basis was $4.1 million or $0.36 per diluted common share compared to $2.3 million and $0.22 per diluted common share in the 2010 fourth quarter. For the year ended December 31, 2011, First Defiance earned $15.5 million or $1.42 per diluted common share compared to $8.1 million or $0.75 per diluted common share for 2010. We are pleased with the improved performance in 2011 over last year, even as the operating environment remains shaky. As 2011 came to an end, we continued to see the economy struggle to gain traction. We’re still dealing with the high unemployment levels in the housing sector that has not found its footing. Some economic indicators are pointing toward a sustainable recovery. The job growth continues to lag and foreclosures on homes remain high.
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.
Asset quality performance in the fourth quarter remained stable with a slight increase in the 30 to 89 days past dues, but a significant decrease in non-accrual loans and non-performing assets. Provision expense in the fourth quarter 2011 was down significantly from the 2010 fourth quarter, and year-over-year expenses, provision expense declined almost 50%.Read the rest of this transcript for free on seekingalpha.com