Previous Statements by FDEF
» First Defiance Financial's CEO Discusses Q1 2012 Results - Earnings Call Transcript
» First Defiance Financial's CEO Discusses Q4 2011 Results - Earnings Call Transcript
» First Defiance Financial Corp.'s CEO Discusses Q3 2011 Results - Earnings Call Transcript
» First Defiance Financial CEO Discusses Q2 2011 Results - Earnings Call Transcript
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 2012 second quarter. Last night we issued our earnings release reporting the second quarter and first half 2012 results. And this morning we would like to discuss that release and look forward into the second half of the year. Joining me on the call this morning to give more detail on the financial performance through the second quarter is Executive Vice President and CFO, Don Hileman. Also with us this morning to answer questions is Jim Rohrs, President and CEO of First Federal Bank. We will answer any questions you might have at the conclusion of our presentation. Second quarter 2012 net income on a GAAP basis was $3.9 million or $0.32 per diluted common share. This compares to net income of $4.8 million and $0.43 per diluted common share in the 2011 second quarter. Net income for the first six months of 2012 was $8.1 million or $0.68 per diluted common share versus $7.4 million and $0.70 per diluted common share for the six months ending June 30, 2011 While the earnings performance for the quarter was somewhat disappointing, there were several major strategic objectives that were met representing significant positives for the quarter. The redemption of $36 million of preferred stock related to the US Treasuries Capital Purchase Program being the highlight for the quarter. With the final $1 million of the preferred stock being acquired in July, we are now totally out of our $37 million TARP investment. On the negative side of this quarter, additional credit related expenses and margin compression was the primary drags on the earnings performance. As credit quality issues continue to be dealt with and as we continue to adapt to the interpretation of certain regulations under the guidance of our new regulator, credit related expenses remained at an elevated level.
Charge-offs while down from the last two quarters remained considerably above historic levels. Under current regulatory interpretation, any loan deem collateral dependent must be charged down to current market value regardless of whether the loan is paying current or not. In the past we would establish a specific valuation allowance for these credits as part of the reserve.The increase was not related to any credits, were not previously on our watch-list. Provision expense was also up over both the link quarter and the second quarter 2011 level. Some of the increase in provision however relates to the loan growth this quarter. On the positive side, related to credit, we saw reductions of classified loans restructure debt, non-accrual loans and 30 to 89 day delinquencies compared to the link quarter. We are encouraged by these indicators and remain confident in our credit administration as we continue to face the challenges of the stalled economy. As we continue our diligent focus on loan quality, the strong increase in loan growth in the second quarter was certainly welcomed. The slow loan environment that we’ve all been experiencing over the past several years has made loan growth a challenge. So, this return to growth after the first quarter decline was certainly welcome. The uncertainty amongst many businesses as to the overall economic environment has made many of them cautious regarding new capital investments. Our loan growth this quarter does reflect some increase in new demand. However, much of the growth came from opportunities to bring on new relationships through the diligent effort of our Call Program. We will continue to look for these opportunities while maintaining our strong underwriting practices and pricing discipline. The deposit side of the balance sheet saw some additional growth which came primarily from our non-interest bearing deposits, as interest bearing deposits remain relatively flat. Non-interest deposits were up over 14% compared to the period ending June 30, 2011, and 6% over the link quarter on an average balance basis. The low rate environment has pushed many depositors to park funds in liquid accounts as a way an opportunity for higher returns. Read the rest of this transcript for free on seekingalpha.com