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 First Defiance Financial Corp. Reports Record Full Year Earnings of $2.82 Per Share for 2015, Up 15.6% from Full Year 2014
   Monday, January 18, 2016 6:16:33 PM ET

--Net income of $6.6 million for 2015 fourth quarter compared to $6.4 million in the fourth quarter of 2014

--Net interest margin of 3.77% for the 2015 fourth quarter, up from 3.76% in the fourth quarter of 2014

--Loan growth $68.7 million during the 2015 fourth quarter

--Deposit growth $43.1 million during the 2015 fourth quarter

--Non-performing loans down 32.6% from 2014 year end

First Defiance Financial Corp. (FDEF ) announced today that net income for the fiscal year ended December 31, 2015 totaled $26.4 million, or $2.82 per diluted common share, compared to $24.3 million or $2.44 per diluted common share for the year ended December 31, 2014.



For the fourth quarter 2015, First Defiance earned $6.6 million, or $0.71 per diluted common share compared to $6.4 million; or $0.65 per diluted common share for the fourth quarter of 2014. Last year’s fourth quarter results were positively impacted by a $551,000 adjustment to the provision for income taxes to reflect the utilization of capital loss carryforwards.

"We are extremely pleased with our achievement of record earnings results for 2015 with earnings per diluted share up 15.6 percent over last year," said Donald P. Hileman, President and Chief Executive Officer of First Defiance Financial Corp. "We are particularly encouraged by our fourth quarter performance. Our profitability remained very strong, credit quality improved, and loan and deposit growth were both exceptional, which gives us good momentum and confidence for continued success in 2016."

Net interest income up compared to fourth quarter 2014

Net interest income of $19.0 million in the fourth quarter of 2015 was up from $18.1 million in the fourth quarter of 2014. Net interest margin was 3.77% for the fourth quarter of 2015, down from 3.78% in the third quarter 2015, but up from 3.76% in the fourth quarter of 2014. Yield on interest earning assets increased by 3 basis points, to 4.12% in the fourth quarter of 2015 from 4.09% in the fourth quarter of 2014. The cost of interest-bearing liabilities increased by 4 basis points in the fourth quarter of 2015 to 0.46% from 0.42% in the fourth quarter of 2014.

"Our healthy loan growth in particular has enabled us to maintain a solid earning asset mix, steady net interest margin and growth in net interest income which increased $866,000, or 4.8% over the same quarter last year," said Hileman. "We expect a challenging rate environment in 2016, but we believe we are well positioned to minimize the risks of potential rate changes ahead."

Non-interest income up from fourth quarter 2014

First Defiance’s non-interest income for the fourth quarter of 2015 was $7.7 million compared with $7.3 million in the fourth quarter of 2014. Mortgage banking income increased to $1.5 million in the fourth quarter of 2015, up from $1.3 million in the fourth quarter of 2014 due to higher volumes of both purchase and refinance loans throughout our market area. Gains from the sale of mortgage loans increased in the fourth quarter of 2015 to $836,000 from $734,000 in the fourth quarter of 2014. Mortgage loan servicing revenue was $910,000 in the fourth quarter of 2015, up slightly from $900,000 in the fourth quarter of 2014. First Defiance had a positive change in the valuation adjustment in mortgage servicing assets of $75,000 in the fourth quarter of 2015 compared with a positive adjustment of $11,000 in the fourth quarter of 2014.

For the fourth quarter 2015, service fees and other charges were $2.7 million, down slightly from $2.8 million in the fourth quarter of 2014; and commissions from the sale of insurance products were $2.3 million, up from $2.2 million in the fourth quarter 2014. Trust income was $367,000 in the fourth quarter of 2015, up from $345,000 in the fourth quarter of 2014.

"Our fourth quarter non-interest revenues grew $388,000, up 5.3% over the same period last year," said Hileman. "Continued increases in mortgage banking origination levels, up 17% from a year ago, and growth in both insurance commissions and wealth management revenues contributed to this success."

Non-interest expenses up from fourth quarter 2014

Total non-interest expense was $17.3 million in the fourth quarter of 2015, up from $17.0 million in the fourth quarter of 2014. Compensation and benefits increased to $9.9 million in the fourth quarter of 2015 compared to $9.1 million in the fourth quarter of 2014. The increase in compensation and benefits from a year ago is mainly related to higher incentive compensation, merit increases and staff additions for growth. Occupancy expense was $1.8 million in the fourth quarter 2015, up only $58,000 from the fourth quarter 2014. Data processing cost was $1.4 million in the fourth quarter of 2015, down $92,000 from the fourth quarter of 2014. Other non-interest expense of $3.3 million in the fourth quarter of 2015, decreased from $3.8 million in the fourth quarter of 2014 primarily due to reductions in OREO costs and management consulting.

Credit quality

Non-performing loans totaled $16.3 million at December 31, 2015, a decrease from $24.1 million at December 31, 2014. In addition, First Defiance had $1.3 million of real estate owned at December 31, 2015 compared to $6.2 million at December 31, 2014. Accruing troubled debt restructured loans were $11.2 million at December 31, 2015 compared with $24.7 million at December 31, 2014. For the fourth quarter of 2015, First Defiance recorded net recoveries of $129,000, compared to net recoveries of $37,000 in the fourth quarter of 2014. The allowance for loan loss as a percentage of total loans was 1.41% at December 31, 2015 compared with 1.50% at December 31, 2014.

The fourth quarter results include a provision for loan losses of $43,000 compared with an expense of $162,000 for the same period in 2014.

"Our progress on improving asset quality continued in the fourth quarter, as non-performing assets, including troubled debt restructurings, were reduced $6.6 million during the quarter, a 48% decrease from the prior year," said Hileman. "This improvement, along with net recoveries on loans in the quarter, has enabled us to strengthen our allowance for loan losses coverage of non-performing loans to 156% and significantly contain our provision expense."

Annual results

For the full year ended on December 31, 2015, net income totaled $26.4 million, or $2.82 per diluted common share, compared to $24.3 million or $2.44 per diluted common share for 2014.

Net interest income for 2015 totaled $74.1 million, compared with $69.7 million for 2014. Average interest-earning assets increased to $2.00 billion for 2015, compared to $1.95 billion in 2014. Net interest margin for 2015 was 3.81%, up 13 basis points from the 3.68% margin for 2014.

The provision for loan losses for 2015 was $136,000 compared to $1.1 million in 2014 as a result of the improved credit quality previously mentioned.

Non-interest income for the year 2015 was $31.8 million, compared to $31.6 million in 2014. Service fees and other charges were $10.8 million for 2015, up from $10.3 million in 2014. Mortgage banking income increased to $6.7 million for 2015, compared with $5.6 million in 2014. Gains on the sale of non-mortgage loans were $824,000 for 2015, compared with $181,000 during 2014. Insurance and investment sales revenues increased to $10.1 million for 2015, compared with $9.9 million for 2014. Non-interest income for 2015 included only $22,000 of net securities gains compared to $932,000 of net securities gains for 2014. In addition, 2014 included a $903,000 tax-free benefit from a bank-owned life insurance policy and a $498,000 tax-free gain recognized through the company’s deferred compensation plan trust.

Non-interest expense increased to $67.9 million for 2015 from $66.8 million in 2014. Compensation and benefits expense was $37.8 million for 2015 compared with $35.5 million for 2014. The increase in compensation and benefits over the prior year is mainly related to higher incentive compensation accruals, merit increases and new staff for growth strategies, partially offset by lower medical insurance costs. Increases in occupancy of $514,000, data processing of $227,000 and financial institutions taxes of $21,000 were offset by decreases in FDIC insurance premiums of $95,000, amortization of intangibles of $403,000 and other expenses of $1.4 million, which included a $786,000 cost recorded in the first quarter 2014 for terminating a merger agreement.

Total assets at $2.3 billion

Total assets at December 31, 2015 were $2.30 billion compared to $2.18 billion at December 31, 2014. Net loans receivable (excluding loans held for sale) were $1.78 billion at December 31, 2015 compared to $1.62 billion at December 31, 2014. Total cash and cash equivalents were $79.8 million at December 31, 2015 compared with $112.9 million at December 31, 2014. Also, at December 31, 2015, goodwill and other intangible assets totaled $63.7 million compared to $63.9 million at December 31, 2014.

Total deposits at December 31, 2015 were $1.84 billion compared with $1.76 billion at December 31, 2014. Non-interest bearing deposits at December 31, 2015 were $420.7 million compared to $379.6 million at December 31, 2014. Total stockholders’ equity was $280.2 million at December 31, 2015 compared to $279.5 million at December 31, 2014.

Dividend to be paid February 26

The Board of Directors declared a quarterly cash dividend of $0.22 per common share payable February 26, 2016 to shareholders of record at the close of business on February 19, 2016. The dividend represents an annual dividend of 2.39 percent based on the First Defiance common stock closing price on January 15, 2016. First Defiance has approximately 9,054,000 common shares outstanding.

Conference call

First Defiance Financial Corp. will host a conference call at 11:00 a.m. ET on Tuesday, January 19, 2016 to discuss the earnings results and business trends. The conference call may be accessed by calling 1-877-444-1726. In addition, a live webcast may be accessed at http://services.choruscall.com/links/fdef160119 .

Audio replay of the Internet Webcast will be available at www.fdef.com until February 19, 2016 at 9:00 a.m. ET.

First Defiance Financial Corp.

First Defiance Financial Corp., headquartered in Defiance, Ohio, is the holding company for First Federal Bank of the Midwest and First Insurance Group. First Federal operates 34 full-service branches and 41 ATM locations in northwest Ohio, southeast Michigan and northeast Indiana and a loan production office in Columbus, Ohio. First Insurance Group is a full-service insurance agency with six offices throughout northwest Ohio.

For more information, visit the company’s Web site at www.fdef.com.

Financial Statements and Highlights Follow

Safe Harbor Statement

This news release may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21 B of the Securities Act of 1934, as amended, which are intended to be safe harbors created thereby. Those statements may include, but are not limited to, all statements regarding intent, beliefs, expectations, projections, forecasts and plans of First Defiance Financial Corp. and its management, and specifically include statements regarding: changes in economic conditions, the nature, extent and timing of governmental actions and reforms, future movements of interest rates, the production levels of mortgage loan generation, the ability to continue to grow loans and deposits, the ability to benefit from a changing interest rate environment, the ability to sustain credit quality ratios at current or improved levels, the ability to sell real estate owned properties, continued strength in the market area for First Federal Bank of the Midwest, and the ability to grow in existing and adjacent markets. These forward-looking statements involve numerous risks and uncertainties, including those inherent in general and local banking, insurance and mortgage conditions, competitive factors specific to markets in which First Defiance and its subsidiaries operate, future interest rate levels, legislative and regulatory decisions or capital market conditions and other risks and uncertainties detailed from time to time in our Securities and Exchange Commission (SEC) filings, including our Annual Report on Form 10-K for the year ended December 31, 2014. One or more of these factors have affected or could in the future affect First Defiance’s business and financial results in future periods and could cause actual results to differ materially from plans and projections. Therefore, there can be no assurances that the forward-looking statements included in this news release will prove to be accurate. In light of the significant uncertainties in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by First Defiance or any other persons, that our objectives and plans will be achieved. All forward-looking statements made in this news release are based on information presently available to the management of First Defiance. We assume no obligation to update any forward-looking statements.

As required by U.S. GAAP, First Defiance will evaluate the impact of subsequent events through the issuance date of its December 31, 2015 consolidated financial statements as part of its Annual Report on Form 10-K to be filed with the SEC. Accordingly, subsequent events could occur that may cause First Defiance to update its critical accounting estimates and to revise its financial information from that which is contained in this news release.

                                                                                               
--------------------------------------------------------------------------- -------------------- ------------------------------------------------------------------------ ----------------------------------------------------
Consolidated Balance Sheets (Unaudited)
First Defiance Financial Corp.
                                                                                                                                   
                                                                                                                     December 31,                                                             December 31,
(in thousands)                                                                                        2015                                                  2014
--------------------------------------------------------------------------- -------------------- ------------------------------------------------------------------------ ----------------------------------------------------
                                                                                                                                                                           
Assets
Cash and cash equivalents
     Cash and amounts due from depository institutions                                                              $    38,769                                                              $    41,936
     Interest-bearing deposits                                                                        41,000                             71,000  
                                                                                                 -------------------- --------- --------------------                      -------------------- --------- --------------------
                                                                                                                         79,769                                               112,936
Securities                                                                                                                                            
     Available-for sale, carried at fair value                                                                          236,435                                                                  239,321
     Held-to-maturity, carried at amortized cost                                                         243                                313  
                                                                                                 -------------------- --------- --------------------                      -------------------- --------- --------------------
                                                                                                                        236,678                                                                  239,634
                                                                                                                                                                           
Loans                                                                                                                 1,802,217                                                                1,646,786
Allowance for loan losses                                                                            (25,382 )                                             (24,766 )
                                                                                                 -------------------- --------- --------------------                      -------------------- --------- --------------------
Loans, net                                                                                                            1,776,835                                                                1,622,020
Loans held for sale                                                                                                       5,523                                                                    4,535
Mortgage servicing rights                                                                                                 9,248                                                                    9,012
Accrued interest receivable                                                                                               6,171                                                                    6,037
Federal Home Loan Bank stock                                                                                             13,801                                                                   13,802
Bank Owned Life Insurance                                                                                                51,908                                                                   47,013
Office properties and equipment                                                                                          38,165                                                                   40,496
Real estate and other assets held for sale                                                                                1,321                                                                    6,181
Goodwill                                                                                                                 61,798                                                                   61,525
Core deposit and other intangibles                                                                                        1,871                                                                    2,395
Other assets                                                                                          14,588                             13,366  
                                                                                                 -------------------- --------- --------------------                      -------------------- --------- --------------------
     Total Assets                                                                                                   $ 2,297,676                                           $ 2,178,952  
                                                                                                 ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                                           
Liabilities and Stockholders’ Equity
Non-interest-bearing deposits                                                                                       $   420,691                                                              $   379,552
Interest-bearing deposits                                                                          1,415,446                          1,381,261  
                                                                                                 -------------------- --------- --------------------                      -------------------- --------- --------------------
      Total deposits                                                                                                  1,836,137                                                                1,760,813
Advances from Federal Home Loan Bank                                                                                     59,902                                                                   21,544
Notes payable and other interest-bearing liabilities                                                                     57,188                                                                   54,759
Subordinated debentures                                                                                                  36,083                                                                   36,083
Advance payments by borrowers for tax and insurance                                                                       2,674                                                                    2,309
Deferred Taxes                                                                                                              823                                                                    1,176
Other liabilities                                                                                     24,672                             22,763  
                                                                                                 -------------------- --------- --------------------                      -------------------- --------- --------------------
      Total Liabilities                                                                                               2,017,479                                                                1,899,447
Stockholders’ Equity
      Preferred stock                                                                                                         -                                                                        -
      Common stock, net                                                                                                     127                                                                      127
      Common stock warrant                                                                                                    -                                                                      878
      Additional paid-in-capital                                                                                        125,734                                                                  136,266
      Accumulated other comprehensive income                                                                              3,622                                                                    4,114
      Retained earnings                                                                                                 219,737                                                                  200,600
      Treasury stock, at cost                                                                        (69,023 )                                             (62,480 )
                                                                                                 -------------------- --------- --------------------                      -------------------- --------- --------------------
      Total stockholders’ equity                                          280,197                            279,505  
                                                                                                 -------------------- --------- --------------------                      -------------------- --------- --------------------
      Total Liabilities and Stockholders’ Equity                                         $ 2,297,676                                           $ 2,178,952  
                                                                                                 ==================== ========= ====================                      ==================== ========= ====================
                                                                                                                                                                                                          
                                                                                 
--------------------------------------------------- -------------------- ---------------------------------------------------- ---------------------------------------------------- ---------------------------------------------------- ------------------------------------------
Consolidated Statements of Income (Unaudited)                                                                                                              
First Defiance Financial Corp.
                                                                                                                                                                                    
                                                                                                          Three Months Ended                                                                                             Twelve Months Ended
                                                                                                             December 31,                                                                                                   December 31,
                                                                         --------------------------------------------------------------------------------                          ------------------------------------------------------------------------------------------
(in thousands, except per share amounts)                            2015                              2014                                                 2015                                   2014
--------------------------------------------------- -------------------- ---------------------------------------------------- --------------------------------                     ---------------------------------------------------- ------------------------------------------
Interest Income:
     Loans                                                                                  $     18,901                                         $     17,788                                         $     73,346                                         $               68,682
     Investment securities                                                                         1,680                                                1,719                                                6,769                                                          6,575
     Interest-bearing deposits                                                                        56                                                   66                                                  169                                                            349
     FHLB stock dividends                                                         139                               140                               552                                         642
                                                                         -------------------- ----------                      -------------------- ----------                      -------------------- ----------                      -------------------- --------------------
Total interest income                                                                             20,776                                               19,713                                               80,836                                                         76,248
Interest Expense:                                                                                         
     Deposits                                                                                      1,394                                                1,293                                                5,341                                                          5,283
     FHLB advances and other                                                                         214                                                  131                                                  675                                                            528
     Subordinated debentures                                                                         162                                                  148                                                  613                                                            587
     Notes Payable                                                                 39                                40                               152                                         161
                                                                         -------------------- ----------                      -------------------- ----------                      -------------------- ----------                      -------------------- --------------------
Total interest expense                                                          1,809                             1,612                             6,781                                       6,559
                                                                         -------------------- ----------                      -------------------- ----------                      -------------------- ----------                      -------------------- --------------------
Net interest income                                                                               18,967                                               18,101                                               74,055                                                         69,689
Provision for loan losses                                                          43                               162                               136                                       1,117
                                                                         -------------------- ----------                      -------------------- ----------                      -------------------- ----------                      -------------------- --------------------
Net interest income after provision for loan losses                                               18,924                                               17,939                                               73,919                                                         68,572
Non-interest Income:
     Service fees and other charges                                                                2,734                                                2,766                                               10,752                                                         10,258
     Mortgage banking income                                                                       1,465                                                1,270                                                6,713                                                          5,602
     Gain on sale of non-mortgage loans                                                               48                                                  102                                                  824                                                            181
     Gain on sale of securities                                                                       22                                                    1                                                   22                                                            932
     Insurance commissions                                                                         2,283                                                2,219                                               10,076                                                          9,859
     Trust income                                                                                    367                                                  345                                                1,462                                                          1,240
     Income from Bank Owned Life Insurance                                                           237                                                  218                                                  895                                                          1,802
     Other non-interest income                                                    574                               421                             1,059                                       1,767
                                                                         -------------------- ----------                      -------------------- ----------                      -------------------- ----------                      -------------------- --------------------
Total Non-interest Income                                                                          7,730                                                7,342                                               31,803                                                         31,641
Non-interest Expense:
     Compensation and benefits                                                                     9,873                                                9,075                                               37,769                                                         35,543
     Occupancy                                                                                     1,836                                                1,778                                                7,197                                                          6,683
     FDIC insurance premium                                                                          325                                                  332                                                1,324                                                          1,419
     Financial institutions tax                                                                      443                                                  239                                                1,783                                                          1,762
     Data processing                                                                               1,431                                                1,523                                                6,083                                                          5,856
     Amortization of intangibles                                                                     163                                                  269                                                  699                                                          1,102
     Other non-interest expense                                                 3,276                             3,753                            13,034                                      14,393
                                                                         -------------------- ----------                      -------------------- ----------                      -------------------- ----------                      -------------------- --------------------
Total Non-interest Expense                                                     17,347                            16,969                            67,889                                      66,758
                                                                         -------------------- ----------                      -------------------- ----------                      -------------------- ----------                      -------------------- --------------------
Income before income taxes                                                                         9,307                                                8,312                                               37,833                                                         33,455
Income taxes                                                                    2,744                             1,957                            11,410                                       9,163
                                                                         -------------------- ----------                      -------------------- ----------                      -------------------- ----------                      -------------------- --------------------
Net Income                                                                                  $      6,563                                         $      6,355                                         $     26,423                                         $               24,292
                                                                         ==================== ==========                      ==================== ==========                      ==================== ==========                      ==================== ====================
                                                                                                                                                                                                                                         
                                                                                                                                                                                                                                         
Earnings per common share:
    Basic                                                                                   $       0.72                                         $       0.68                                         $       2.87                                         $                 2.55
    Diluted                                                                                 $       0.71                                         $       0.65                                         $       2.82                                         $                 2.44
                                                                                                                                                                                                                                         
Average Shares Outstanding:
     Basic                                                                                         9,146                                                9,316                                                9,221                                                          9,511
     Diluted                                                                                       9,235                                                9,801                                                9,383                                                          9,975
                                                                                                                                                                                                                                                              
 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Financial Summary and Comparison (Unaudited)
First Defiance Financial Corp.
                                                                                                                                                                                                                                         
                                                                                                                                                           Three Months Ended                                                                                                                                                                                   Twelve Months Ended
                                                                                                                                                              December 31,                                                                                                                                                                                         December 31,
                                                                              -------------------------------------------------------------------------------------------------------------------------------------------------------------------                               ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(dollars in thousands, except per share data)                                      2015                                                  2014                                   % change                                    2015                                                  2014                                      % change
-------------------------------------------------------- -------------------- ------------------------------------------------------------------------ ------------------------------------------------------------------------ ----------------------------------------------- ------------------------------------------------------------------------ ------------------------------------------------------------------------ --------------------------------
Summary of Operations                                                                                                                                                                                                                                                                                                                                
                                                                                                                                                                                                                                                                                                                                                                                                                                   
Tax-equivalent interest income (1)                                                               $    21,256                                                              $    20,174                                             5.4 %                                                            $    82,741                                                              $    78,046                                                  6.0 %
Interest expense                                                                                       1,809                                                                    1,612                                            12.2                                                                    6,781                                                                    6,559                                                  3.4
Tax-equivalent net interest income (1)                                                                19,447                                                                   18,562                                             4.8                                                                   75,960                                                                   71,487                                                  6.3
Provision for loan losses                                                                                 43                                                                      162                                           (73.5 )                                                                    136                                                                    1,117                                                (87.8 )
Tax-equivalent NII after provision for loan loss (1)                                                  19,404                                                                   18,400                                             5.5                                                                   75,824                                                                   70,370                                                  7.8
Investment Securities gains                                                                               22                                                                        1                                              NM                                                                       22                                                                      932                                                (97.6 )
Non-interest income (excluding securities gains/losses)                                                7,708                                                                    7,341                                             5.0                                                                   31,781                                                                   30,709                                                  3.5
Non-interest expense                                                                                  17,347                                                                   16,969                                             2.2                                                                   67,889                                                                   66,758                                                  1.7
Income taxes                                                                                           2,744                                                                    1,957                                            40.2                                                                   11,410                                                                    9,163                                                 24.5
Net Income                                                                                             6,563                                                                    6,355                                             3.3                                                                   26,423                                                                   24,292                                                  8.8
Tax equivalent adjustment (1)                                      480             461       4.1           1,905           1,798            6.0  
-------------------------------------------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- ---------- --------------------
At Period End
Assets                                                                                             2,297,676                                                                2,178,952                                             5.4
Earning assets                                                                                     2,099,219                                                                1,975,757                                             6.2
Loans                                                                                              1,802,217                                                                1,646,786                                             9.4
Allowance for loan losses                                                                             25,382                                                                   24,766                                             2.5
Deposits                                                                                           1,836,137                                                                1,760,813                                             4.3
Stockholders’ equity                280,197         279,505       0.2                                                                            
-------------------------------------------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- ----- -------------------- -------------------- ------------------------------------------------------------------------ ------------------------------------------------------------------------ --------------------------------
Average Balances
Assets                                                                                             2,276,060                                                                2,184,792                                             4.2                                                                2,222,866                                                                2,162,468                                                  2.8
Earning assets                                                                                     2,051,331                                                                1,964,074                                             4.4                                                                2,000,477                                                                1,947,078                                                  2.7
Loans                                                                                              1,732,472                                                                1,615,657                                             7.2                                                                1,687,413                                                                1,574,753                                                  7.2
Deposits and interest-bearing liabilities                                                          1,967,199                                                                1,879,918                                             4.6                                                                1,916,758                                                                1,862,834                                                  2.9
Deposits                                                                                           1,823,396                                                                1,764,908                                             3.3                                                                1,787,876                                                                1,750,184                                                  2.2
Stockholders’ equity                                                      279,192                                                                  278,944                                             0.1                                                                  277,645                                                                  276,537                                                  0.4
Stockholders’ equity / assets         12.27 %                            12.77 %                       (3.9 )                            12.49 %                            12.79 %                            (2.3 )
-------------------------------------------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- ---------- --------------------
Per Common Share Data
Net Income
     Basic                                                                                       $      0.72                                                              $      0.68                                             5.9                                                              $      2.87                                                              $      2.55                                                 12.5
     Diluted                                                                                            0.71                                                                     0.65                                             9.2                                                                     2.82                                                                     2.44                                                 15.6
Dividends                                                                                               0.20                                                                    0.175                                            14.3                                                                    0.775                                                                    0.625                                                 24.0
Market Value:
     High                                                                                        $     42.46                                                              $     35.70                                            18.9                                                              $     42.46                                                              $     35.70                                                 18.9
     Low                                                                                               35.01                                                                    26.95                                            29.9                                                                    29.05                                                                    24.24                                                 19.8
     Close                                                                                             37.78                                                                    34.06                                            10.9                                                                    37.78                                                                    34.06                                                 10.9
Common Book Value                                                                                      30.78                                                                    30.17                                             2.0                                                                    30.78                                                                    30.17                                                  2.0
Tangible Common Book Value                                                                             23.79                                                                    23.25                                             2.3                                                                    23.79                                                                    23.25                                                  2.3
Shares outstanding, end of period (000)                          9,102           9,235      (1.4 )                            9,102           9,235           (1.4 )
-------------------------------------------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- ---------- --------------------
Performance Ratios (annualized)
Tax-equivalent net interest margin (1)                                                                  3.77 %                                                                   3.76 %                                           0.3                                                                     3.81 %                                                                   3.68 %                                                3.5
Return on average assets                                                                                1.14 %                                                                   1.15 %                                          (0.9 )                                                                   1.19 %                                                                   1.12 %                                                5.8
Return on average equity                                                                                9.33 %                                                                   9.04 %                                           3.2                                                                     9.52 %                                                                   8.78 %                                                8.3
Efficiency ratio (2)                                                                                   63.88 %                                                                  65.51 %                                          (2.5 )                                                                  63.01 %                                                                  65.32 %                                               (3.5 )
Effective tax rate                                                                                     29.48 %                                                                  23.54 %                                          25.2                                                                    30.16 %                                                                  27.39 %                                               10.1
Dividend payout ratio (basic)                                    27.78 %                            25.74 %                        7.9           27.00 %                            24.51 %                            10.2  
-------------------------------------------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- ---------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                              
(1)   Interest income on tax-exempt securities and loans has been
                         adjusted to a tax-equivalent basis using the statutory federal
                         income tax rate of 35%
(2)                      Efficiency ratio = Non-interest expense divided by sum of
                         tax-equivalent net interest income plus non-interest income,
                         excluding securities gains or losses, net.
NM                       Percentage change not meaningful
                          
                                                                                                                                        
------------------------------------------------------- -------------------- --------------------------------------------------------------------- --------------------------------------------------------------------- --------------------------------------------------------------------- -------------------------------------------------
Income from Mortgage Banking                                                                                                                                                                                      
                                                                                                                                                                                                                                                                                                
Revenue from sales and servicing of mortgage loans consisted of the
following:
                                                                                                                               Three Months Ended                                                                                                                          Twelve Months Ended
                                                                                                                                  December 31,                                                                                                                                December 31,
                                                                             ----------------------------------------------------------------------------------------------------------------                            ----------------------------------------------------------------------------------------------------------------
(dollars in thousands)                                                          2015                                               2014                                               2015                                               2014
------------------------------------------------------- -------------------- --------------------------------------------------------------------- --------------------------------------------------------------------- --------------------------------------------------------------------- -------------------------------------------------
                                                                                                                                                                                                                                                                                                
Gain from sale of mortgage loans                                                                $    836                                                              $    734                                                              $  4,564                                                              $  3,335
Mortgage loan servicing revenue (expense):
  Mortgage loan servicing revenue                                                                    910                                                                   900                                                                 3,503                                                                 3,552
  Amortization of mortgage servicing rights                                                         (356 )                                                                (375 )                                                              (1,620 )                                                              (1,401 )
  Mortgage servicing rights valuation adjustments                                  75           11                             266          116  
                                                                             -------------------- ------ -------------------- -------------------- -------------------- ------ --------------------                      -------------------- ------ -------------------- -------------------- -------------------- ------ --------------------
                                                                                  629          536                           2,149        2,267  
                                                                             -------------------- ------ -------------------- -------------------- -------------------- ------ --------------------                      -------------------- ------ -------------------- -------------------- -------------------- ------ --------------------
Total revenue from sale and servicing of mortgage loans                                         $  1,465                        $  1,270                                           $  6,713                        $  5,602  
                                                                             ==================== ====== ==================== ==================== ==================== ====== ====================                      ==================== ====== ==================== ==================== ==================== ====== ====================
                                                                                                                                                                                                                                                                                                                            
                                                                                                            
----------------------------------------------------------- -------------------- ---------------------------------------------------- ---------------------------------------------------- ----------------------------------------- ---------------------------------------------------- ---------------------------------------------------- --------------------------------
Yield Analysis                                                                                                                                                                                                              
First Defiance Financial Corp.
                                                                                                                                                                                                                                                                                                                                                
                                                                                                                                                                                                                 Three Months Ended December 31,
                                                                                                                                                                                                                     (dollars in thousands)
                                                                                 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                              2015                                                                                                                                                      2014
                                                                                 -------------------------------------------------------------------------------------------------------------------------------                     ------------------------------------------------------------------------------------------------------------------------------------------
                                                                                              Average                                                                                              Yield                                          Average                                                                                                    Yield
                                                                                              Balance                                            Interest(1)                                      Rate(2)                                         Balance                                            Interest(1)                                            Rate(2)
Interest-earning assets:
   Loans receivable                                                                                 $  1,732,472                                         $     18,954                            4.34 %                                                 $  1,615,657                                         $     17,833                            4.38 %
   Securities                                                                                            236,361                                                2,107                            3.64 %                                                      238,553                                                2,135                            3.65 %
   Interest Bearing Deposits                                                                              68,697                                                   56                            0.32 %                                                       96,062                                                   66                            0.27 %
   FHLB stock                                                                          13,801                               139                            4.00 %                                    13,802                               140                            4.02 %
                                                                                 -------------------- ----------                      -------------------- ----------                                                                -------------------- ----------                      -------------------- ----------
   Total interest-earning assets                                                                       2,051,331                                               21,256                            4.12 %                                                    1,964,074                                               20,174                            4.09 %
   Non-interest-earning assets                                                        224,729                                                                                                                          220,718
                                                                                 -------------------- ----------                                                                                                                     -------------------- ----------
Total assets                                                                                        $  2,276,060                                                                                                                                        $  2,184,792
                                                                                 ==================== ==========                                                                                                                     ==================== ==========
Deposits and Interest-bearing liabilities:
   Interest bearing deposits                                                                        $  1,408,283                                         $      1,394                            0.39 %                                                 $  1,393,584                                         $      1,293                            0.37 %
   FHLB advances and other                                                                                50,419                                                  214                            1.68 %                                                       21,628                                                  131                            2.40 %
   Subordinated debentures                                                                                36,128                                                  162                            1.78 %                                                       36,128                                                  148                            1.63 %
   Notes payable                                                                       57,256                                39                            0.27 %                                    57,254                                40                            0.28 %
                                                                                 -------------------- ----------                      -------------------- ----------                                                                -------------------- ----------                      -------------------- ----------
   Total interest-bearing liabilities                                                                  1,552,086                                                1,809                            0.46 %                                                    1,508,594                                                1,612                            0.42 %
   Non-interest bearing deposits                                                      415,113                                 -                               -                                     371,324                                 -                               -
                                                                                 -------------------- ----------                      -------------------- ----------                                                                -------------------- ----------                      -------------------- ----------
Total including non-interest-bearing demand deposits                                                   1,967,199                                                1,809                            0.36 %                                                    1,879,918                                                1,612                            0.34 %
Other non-interest-bearing liabilities                                                 29,669                                                                                                                           25,930
                                                                                 -------------------- ----------                                                                                                                     -------------------- ----------
Total liabilities                                                                                      1,996,868                                                                                                                                           1,905,848
   Stockholders’ equity                                                               279,192                                                                                                                          278,944
                                                                                 -------------------- ----------                                                                                                                     -------------------- ----------
Total liabilities and stockholders’ equity                                                          $  2,276,060                                                                                                                     $  2,184,792                       
                                                                                 ==================== ==========                      --------------------------------                                                               ==================== ==========                      --------------------------------
Net interest income; interest rate spread                                                                                                                $     19,447                            3.66 %                                                                                                      $     18,562                            3.67 %
                                                                                                                                      ==================== ==========                      ========== =========                                                                           ==================== ==========                      ========== ====================
Net interest margin (3)                                                                                                                                                                          3.77 %                                                                                                                                              3.76 %
                                                                                                                                                                                           ========== =========                                                                                                                                ========== ====================
Average interest-earning assets to average interest bearing                                                                                                                                       132 %                                                                                                                                               130 %
liabilities
                                                                                                                                                                                           ========== =========                                                                                                                                ========== ====================
                                                                                                                                                                                                                                                                                                                                                
                                                                                                                                                                                                                Twelve Months Ended December 31,
                                                                                 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                              2015                                                                                                                                                      2014
                                                                                 -------------------------------------------------------------------------------------------------------------------------------                     ------------------------------------------------------------------------------------------------------------------------------------------
                                                                                              Average                                                                                              Yield                                          Average                                                                                                    Yield
                                                                                              Balance                                            Interest(1)                                       Rate                                           Balance                                            Interest(1)                                             Rate
Interest-earning assets:
   Loans receivable                                                                                 $  1,687,413                                         $     73,544                            4.36 %                                                 $  1,574,753                                         $     68,828                            4.37 %
   Securities                                                                                            239,852                                                8,476                            3.64 %                                                      223,534                                                8,227                            3.79 %
   Interest Bearing Deposits                                                                              59,410                                                  169                            0.28 %                                                      134,114                                                  349                            0.26 %
   FHLB stock                                                                          13,802                               552                            4.00 %                                    14,677                               642                            4.37 %
                                                                                 -------------------- ----------                      -------------------- ----------                                                                -------------------- ----------                      -------------------- ----------
   Total interest-earning assets                                                                       2,000,477                                               82,741                            4.15 %                                                    1,947,078                                               78,046                            4.01 %
   Non-interest-earning assets                                                        222,389                                                                                                                          215,390
                                                                                 -------------------- ----------                                                                                                                     -------------------- ----------
Total assets                                                                                        $  2,222,866                                                                                                                                        $  2,162,468
                                                                                 ==================== ==========                                                                                                                     ==================== ==========
Deposits and Interest-bearing liabilities:
   Interest bearing deposits                                                                        $  1,399,619                                         $      5,341                            0.38 %                                                 $  1,399,507                                         $      5,283                            0.38 %
   FHLB advances and other                                                                                38,134                                                  675                            1.77 %                                                       21,995                                                  528                            2.40 %
   Subordinated debentures                                                                                36,129                                                  613                            1.70 %                                                       36,131                                                  587                            1.62 %
   Notes payable                                                                       54,619                               152                            0.28 %                                    54,524                               161                            0.30 %
                                                                                 -------------------- ----------                      -------------------- ----------                                                                -------------------- ----------                      -------------------- ----------
   Total interest-bearing liabilities                                                                  1,528,501                                                6,781                            0.44 %                                                    1,512,157                                                6,559                            0.43 %
   Non-interest bearing deposits                                                      388,257                                 -                               -                                     350,677                                 -                               -
                                                                                 -------------------- ----------                      -------------------- ----------                                                                -------------------- ----------                      -------------------- ----------
Total including non-interest-bearing demand deposits                                                   1,916,758                                                6,781                            0.35 %                                                    1,862,834                                                6,559                            0.35 %
Other non-interest-bearing liabilities                                                 28,463                                                                                                                           23,097
                                                                                 -------------------- ----------                                                                                                                     -------------------- ----------
Total liabilities                                                                                      1,945,221                                                                                                                                           1,885,931
   Stockholders’ equity                                                               277,645                                                                                                                          276,537
                                                                                 -------------------- ----------                                                                                                                     -------------------- ----------
Total liabilities and stockholders’ equity                                                          $  2,222,866                                                                                                                     $  2,162,468                       
                                                                                 ==================== ==========                      --------------------------------                                                               ==================== ==========                      --------------------------------
Net interest income; interest rate spread                                                                                                                $     75,960                            3.71 %                                                                                                      $     71,487                            3.57 %
                                                                                                                                      ==================== ==========                      ========== =========                                                                           ==================== ==========                      ========== ====================
Net interest margin (3)                                                                                                                                                                          3.81 %                                                                                                                                              3.68 %
                                                                                                                                                                                           ========== =========                                                                                                                                ========== ====================
Average interest-earning assets to average interest bearing                                                                                                                                       131 %                                                                                                                                               129 %
liabilities
                                                                                                                                                                                           ========== =========                                                                                                                                ========== ====================
                                                                                                                                                                                                                                                                                                                                                           
(1)   Interest on certain tax exempt loans and securities is not taxable
                         for Federal income tax purposes. In order to compare the
                         tax-exempt yields on these assets to taxable yields, the interest
                         earned on these assets is adjusted to a pre-tax equivalent amount
                         based on the marginal corporate federal income tax rate of 35%.
(2)                      Annualized
(3)                      Net interest margin is net interest income divided by average
                         interest-earning assets.
                          
                                                                                                                                                                                     
-------------------------------------------------------- -------------------- ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------------------------ ----------------------------------------------------
Selected Quarterly Information
First Defiance Financial Corp.
                                                                                                                                                                                                                                                                                  
(dollars in thousands, except per share data)              4th Qtr 2015                                          3rd Qtr 2015                                          2nd Qtr 2015                                          1st Qtr 2015                                          4th Qtr 2014
-------------------------------------------------------- -------------------- ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------------------------ ----------------------------------------------------
Summary of Operations
Tax-equivalent interest income (1)                                                               $    21,256                                                              $    20,748                                                              $    20,516                                                              $    20,221                                                              $    20,174
Interest expense                                                                                       1,809                                                                    1,733                                                                    1,672                                                                    1,567                                                                    1,612
Tax-equivalent net interest income (1)                                                                19,447                                                                   19,015                                                                   18,844                                                                   18,654                                                                   18,562
Provision for loan losses                                                                                 43                                                                      (27 )                                                                      -                                                                      120                                                                      162
Tax-equivalent NII after provision for loan losses (1)                                                19,404                                                                   19,042                                                                   18,844                                                                   18,534                                                                   18,400
Investment securities gains, net of impairment                                                            22                                                                        -                                                                        -                                                                        -                                                                        1
Non-interest income (excluding securities gains/losses)                                                7,708                                                                    7,982                                                                    7,809                                                                    8,281                                                                    7,341
Non-interest expense                                                                                  17,347                                                                   16,848                                                                   16,796                                                                   16,897                                                                   16,969
Income taxes                                                                                           2,744                                                                    2,998                                                                    2,815                                                                    2,853                                                                    1,957
Net income                                                                                             6,563                                                                    6,696                                                                    6,563                                                                    6,601                                                                    6,355
Tax equivalent adjustment (1)                                      480             482             479             464             461  
-------------------------------------------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- --------------------
At Period End
Total assets                                                                                     $ 2,297,676                                                              $ 2,228,281                                                              $ 2,196,510                                                              $ 2,201,321                                                              $ 2,178,952
Earning assets                                                                                     2,099,219                                                                2,030,218                                                                1,998,580                                                                1,999,601                                                                1,975,757
Loans                                                                                              1,802,217                                                                1,733,538                                                                1,705,716                                                                1,684,518                                                                1,646,786
Allowance for loan losses                                                                             25,382                                                                   25,209                                                                   25,384                                                                   25,302                                                                   24,766
Deposits                                                                                           1,836,137                                                                1,793,053                                                                1,763,390                                                                1,772,693                                                                1,760,813
Stockholders’ equity                                                      280,197                                                                  278,556                                                                  276,028                                                                  273,117                                                                  279,505
Stockholders’ equity / assets                                               12.19 %                                                                  12.50 %                                                                  12.57 %                                                                  12.41 %                                                                  12.83 %
Goodwill                                                        61,798          61,798          61,525          61,525          61,525  
-------------------------------------------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- --------------------
Average Balances
Total assets                                                                                     $ 2,276,060                                                              $ 2,222,843                                                              $ 2,212,603                                                              $ 2,179,576                                                              $ 2,184,792
Earning assets                                                                                     2,051,331                                                                2,000,284                                                                1,991,830                                                                1,958,463                                                                1,964,074
Loans                                                                                              1,732,472                                                                1,696,370                                                                1,673,750                                                                1,647,059                                                                1,615,657
Deposits and interest-bearing liabilities                                                          1,967,199                                                                1,918,587                                                                1,909,372                                                                1,871,871                                                                1,879,918
Deposits                                                                                           1,823,396                                                                1,786,814                                                                1,780,912                                                                1,760,383                                                                1,764,908
Stockholders’ equity                                                      279,192                                                                  277,235                                                                  274,239                                                                  279,917                                                                  278,944
Stockholders’ equity / assets         12.27 %                            12.47 %                            12.39 %                            12.84 %                            12.77 %
-------------------------------------------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- --------------------
Per Common Share Data
Net Income:
 Basic                                                                                           $      0.72                                                              $      0.72                                                              $      0.71                                                              $      0.71                                                              $      0.68
 Diluted                                                                                                0.71                                                                     0.72                                                                     0.70                                                                     0.69                                                                     0.65
Dividends                                                                                               0.20                                                                     0.20                                                                    0.200                                                                    0.175                                                                    0.175
Market Value:
 High                                                                                            $     42.46                                                              $     39.95                                                              $     38.21                                                              $     34.64                                                              $     35.70
 Low                                                                                                   35.01                                                                    35.03                                                                    32.42                                                                    29.05                                                                    26.95
 Close                                                                                                 37.78                                                                    36.56                                                                    37.53                                                                    32.82                                                                    34.06
Common Book Value                                                                                      30.78                                                                    30.37                                                                    29.76                                                                    29.53                                                                    30.17
Shares outstanding, end of period (in thousands)                 9,102           9,172           9,275           9,248           9,235  
-------------------------------------------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- --------------------
Performance Ratios (annualized)
Tax-equivalent net interest margin (1)                                                                  3.77 %                                                                   3.78 %                                                                   3.81 %                                                                   3.88 %                                                                   3.76 %
Return on average assets                                                                                1.14 %                                                                   1.20 %                                                                   1.19 %                                                                   1.23 %                                                                   1.15 %
Return on average equity                                                                                9.33 %                                                                   9.58 %                                                                   9.60 %                                                                   9.56 %                                                                   9.04 %
Efficiency ratio (2)                                                                                   63.88 %                                                                  62.41 %                                                                  63.02 %                                                                  62.73 %                                                                  65.51 %
Effective tax rate                                                                                     29.48 %                                                                  30.93 %                                                                  30.02 %                                                                  30.18 %                                                                  23.54 %
Common dividend payout ratio (basic)                             27.78 %                            27.78 %                            28.17 %                            24.65 %                            25.74 %
-------------------------------------------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                  
(1)   Interest income on tax-exempt securities and loans has been
                         adjusted to a tax-equivalent basis using the statutory federal
                         income tax rate of 35%
(2)                      Efficiency ratio = Non-interest expense divided by sum of
                         tax-equivalent net interest income plus non-interest income,
                         excluding securities gains, net.
                          
                                                                                                                                                                              
------------------------------------------------- -------------------- ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------------------------ ----------------------------------------------------
Selected Quarterly Information
First Defiance Financial Corp.
                                                                                                                                                                                                                                                                           
(dollars in thousands, except per share data)                           4th Qtr 2015                                          3rd Qtr 2015                                          2nd Qtr 2015                                          1st Qtr 2015                                          4th Qtr 2014
------------------------------------------------- -------------------- ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------------------------ ----------------------------------------------------
Loan Portfolio Composition
One to four family residential real estate                                                $   205,330                                                              $   205,370                                                              $   205,044                                                              $   203,558                                                              $   206,437
Construction                                                                                  163,877                                                                  129,230                                                                  140,114                                                                  125,144                                                                  112,385
Commercial real estate                                                                        948,428                                                                  922,207                                                                  885,125                                                                  876,476                                                                  840,488
Commercial                                                                                    419,349                                                                  402,681                                                                  401,247                                                                  395,378                                                                  399,730
Consumer finance                                                                               16,281                                                                   15,774                                                                   14,911                                                                   14,967                                                                   15,466
Home equity and improvement                                                116,962         113,781         109,694         110,755         111,813  
                                                                       -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- --------------------
Total loans                                                                                 1,870,227                                                                1,789,043                                                                1,756,135                                                                1,726,278                                                                1,686,319
Less:
   Loans in process                                                                            66,902                                                                   54,484                                                                   49,477                                                                   40,833                                                                   38,653
   Deferred loan origination fees                                                               1,108                                                                    1,021                                                                      942                                                                      927                                                                      880
  Allowance for loan loss                                                   25,382          25,209          25,384          25,302          24,766  
                                                                       -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- --------------------
Net Loans                                                                                 $ 1,776,835                        $ 1,708,329                        $ 1,680,332                        $ 1,659,216                        $ 1,622,020  
                                                                       ==================== ========= ==================== ==================== ==================== ========= ==================== ==================== ==================== ========= ==================== ==================== ==================== ========= ==================== ==================== ==================== ========= ====================
                                                                                                                                                                              
------------------------------------------------- -------------------- ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------------------------ ----------------------------------------------------
Allowance for loan loss activity
Beginning allowance                                                                       $    25,209                                                              $    25,384                                                              $    25,302                                                              $    24,766                                                              $    24,567
Provision for loan losses                                                                          43                                                                      (27 )                                                                      0                                                                      120                                                                      162
   Credit loss charge-offs:
     One to four family residential real estate                                                     8                                                                      185                                                                       11                                                                       78                                                                       61
     Commercial real estate                                                                       103                                                                       64                                                                      146                                                                      155                                                                      505
     Commercial                                                                                     -                                                                       43                                                                       23                                                                        2                                                                      212
     Consumer finance                                                                              32                                                                        5                                                                       13                                                                        3                                                                        1
     Home equity and improvement                                                10             110             187              43              87  
                                                                       -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- --------------------
Total charge-offs                                                                                 153                                                                      407                                                                      380                                                                      281                                                                      866
Total recoveries                                                               282             259             462             697             903  
                                                                       -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- --------------------
Net charge-offs (recoveries)                                                  (129 )                              148             (82 )                             (416 )                              (37 )
                                                                       -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- --------------------
Ending allowance                                                                          $    25,382                        $    25,209                        $    25,384                        $    25,302                        $    24,766  
                                                                       ==================== ========= ==================== ==================== ==================== ========= ==================== ==================== ==================== ========= ==================== ==================== ==================== ========= ==================== ==================== ==================== ========= ====================
                                                                                                                                                                              
------------------------------------------------- -------------------- ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------------------------ ----------------------------------------------------
Credit Quality
 Total non-performing loans (1)                                                           $    16,261                                                              $    16,612                                                              $    16,737                                                              $    18,703                                                              $    24,130
Real estate owned (REO)                                                      1,321           4,936           5,371           6,392           6,181  
                                                                       -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- --------------------
 Total non-performing assets (2)                                                          $    17,582                        $    21,548                        $    22,108                        $    25,095                        $    30,311  
                                                                       ==================== ========= ==================== ==================== ==================== ========= ==================== ==================== ==================== ========= ==================== ==================== ==================== ========= ==================== ==================== ==================== ========= ====================
Net charge-offs (recoveries)                                                                     (129 )                                                                    148                                                                      (82 )                                                                   (416 )                                                                    (37 )
                                                                                                                                                                                                                                                                                                                                                                            
Restructured loans, accruing (3)                                                               11,178                                                                   13,786                                                                   22,234                                                                   19,616                                                                   24,686
                                                                                                                                                                                                                                                                                                                                                                            
Allowance for loan losses / loans                                                                1.41 %                                                                   1.45 %                                                                   1.49 %                                                                   1.50 %                                                                   1.50 %
Allowance for loan losses / non-performing assets                                              144.36 %                                                                 116.99 %                                                                 114.82 %                                                                 100.82 %                                                                  81.71 %
Allowance for loan losses / non-performing loans                                               156.09 %                                                                 151.75 %                                                                 151.66 %                                                                 135.28 %                                                                 102.64 %
Non-performing assets / loans plus REO                                                           0.97 %                                                                   1.24 %                                                                   1.29 %                                                                   1.48 %                                                                   1.83 %
Non-performing assets / total assets                                                             0.77 %                                                                   0.97 %                                                                   1.01 %                                                                   1.14 %                                                                   1.39 %
Net charge-offs / average loans (annualized)                                                    -0.03 %                                                                   0.03 %                                                                  -0.02 %                                                                  -0.10 %                                                                  -0.01 %
                                                                                                                                                                              
------------------------------------------------- -------------------- ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------------------------ ----------------------------------------------------
Deposit Balances
Non-interest-bearing demand deposits                                                      $   420,691                                                              $   392,103                                                              $   378,970                                                              $   370,997                                                              $   379,552
Interest-bearing demand deposits and money market                                             767,201                                                                  745,233                                                                  722,813                                                                  737,533                                                                  727,729
Savings deposits                                                                              219,655                                                                  216,613                                                                  218,055                                                                  215,590                                                                  203,673
Retail time deposits less than $100,000                                                       278,707                                                                  282,331                                                                  284,471                                                                  286,890                                                                  286,904
Retail time deposits greater than $100,000                                 149,883         156,773         159,081         161,683         162,955  
                                                                       -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- -------------------- -------------------- -------------------- --------- --------------------
Total deposits                                                                            $ 1,836,137                        $ 1,793,053                        $ 1,763,390                        $ 1,772,693                        $ 1,760,813  
                                                                       ==================== ========= ==================== ==================== ==================== ========= ==================== ==================== ==================== ========= ==================== ==================== ==================== ========= ==================== ==================== ==================== ========= ====================
                                                                                                                                                                                                                                                                                                                                                                                                           
(1)   Non-performing loans consist of non-accrual loans.
(2)                      Non-performing assets are non-performing loans plus real estate
                         and other assets acquired by foreclosure or deed-in-lieu thereof.
(3)                      Accruing restructured loans are loans with known credit problems
                         that are not contractually past due and therefore are not included
                         in non-performing loans.
                          
                                                                        
------------------------------------------ -------------------- ---------------------------------------------------- ---------------------------------------------------- ---------------------------------------------------- --------------------------------
Loan Delinquency Information
First Defiance Financial Corp.
                                                                                                                                                  
                                                                                                                                                                                                                                
(dollars in thousands)                                 Total Balance                        Current                        30 to 89 days                      Non Accrual
                                                                                                                                                                                      past due                                               Loans
------------------------------------------ -------------------- ------------------------------  -------------------- ------------------------------  -------------------- ------------------------------  -------------------- ------------------------------
                                                                                                                                                                                                                                
December 31, 2015                                                                          
------------------------------------------ -------------------- ---------------------------------------------------- ---------------------------------------------------- ---------------------------------------------------- --------------------------------
One to four family residential real estate                                         $    205,330                                         $    201,806                                         $        914                                         $      2,610
Construction                                                                            163,877                                              163,877                                                    -                                                    -
Commercial real estate                                                                  948,428                                              937,844                                                  736                                                9,848
Commercial                                                                              419,349                                              416,114                                                  157                                                3,078
Consumer finance                                                                         16,281                                               16,215                                                   30                                                   36
Home equity and improvement                                          116,962        115,465            808            689
                                                                -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ----------
Total loans                                                                        $  1,870,227                      $  1,851,321                      $      2,645                      $     16,261
                                                                ==================== ========== ==================== ==================== ========== ==================== ==================== ========== ==================== ==================== ==========
                                                                                                                                                                                                                                
September 30, 2015                                                                         
------------------------------------------ -------------------- ---------------------------------------------------- ---------------------------------------------------- ---------------------------------------------------- --------------------------------
One to four family residential real estate                                         $    205,370                                         $    201,797                                         $        828                                         $      2,745
Construction                                                                            129,230                                              129,095                                                  135                                                    -
Commercial real estate                                                                  922,207                                              911,878                                                  239                                               10,090
Commercial                                                                              402,681                                              399,547                                                   17                                                3,117
Consumer finance                                                                         15,774                                               15,676                                                   69                                                   29
Home equity and improvement                                          113,781        112,620            530            631
                                                                -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ----------
Total loans                                                                        $  1,789,043                      $  1,770,613                      $      1,818                      $     16,612
                                                                ==================== ========== ==================== ==================== ========== ==================== ==================== ========== ==================== ==================== ==========
                                                                                                                                                                                                                                
December 31, 2014                                                                          
------------------------------------------ -------------------- ---------------------------------------------------- ---------------------------------------------------- ---------------------------------------------------- --------------------------------
One to four family residential real estate                                         $    206,437                                         $    201,931                                         $      1,174                                         $      3,332
Construction                                                                            112,385                                              112,385                                                    -                                                    -
Commercial real estate                                                                  840,488                                              824,770                                                  544                                               15,174
Commercial                                                                              399,730                                              394,671                                                   66                                                4,993
Consumer finance                                                                         15,466                                               15,330                                                  124                                                   12
Home equity and improvement                                          111,813        109,993          1,201            619
                                                                -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ---------- -------------------- -------------------- ----------
Total loans                                                                        $  1,686,319                      $  1,659,080                      $      3,109                      $     24,130
                                                                ==================== ========== ==================== ==================== ========== ==================== ==================== ========== ==================== ==================== ==========

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20160118005777r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20160118005777/en/

SOURCE: First Defiance Financial Corp.

First Defiance Financial Corp. 
Donald P. Hileman, 419-782-5104 
President and CEO 
dhileman@first-fed.com


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