ý
|
Quarterly
Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of
1934 For the Quarterly Period Ended June
30, 2006
|
o
|
Transition
Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of
1934 For the Transition Period from
___________to__________
|
Ohio
|
34-1803915
|
|
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
|
incorporation
or organization)
|
Identification
Number)
|
|
601
Clinton Street, Defiance, Ohio
|
43512
|
|
(Address
or principal executive office)
|
(Zip
Code)
|
|
Large
accelerated filer o
|
Accelerated
filer ý
|
Non-accelerated
filer o
|
Page
Number
|
||
2
|
||
4
|
||
5
|
||
6
|
||
7
|
||
25
|
||
37
|
||
38
|
||
39
|
||
39
|
||
39
|
||
39
|
||
39
|
||
39
|
||
40
|
||
|
41
|
June
30, 2006
|
December
31, 2005
|
||||||
(In
Thousands)
|
|||||||
Assets
|
|||||||
Cash
and cash equivalents:
|
|||||||
Cash
and amounts due from depository institutions
|
$
|
31,381
|
$
|
44,060
|
|||
Interest-bearing
deposits
|
2,741
|
5,190
|
|||||
34,122
|
49,256
|
||||||
Securities:
|
|||||||
Available-for-sale,
carried at fair value
|
117,647
|
113,079
|
|||||
Held-to-maturity,
carried at amortized cost
|
|||||||
(fair
value $1,710 and $1,845 at June 30, 2006
|
|||||||
and
December 31, 2005, respectively)
|
1,661
|
1,775
|
|||||
119,308
|
114,854
|
||||||
Loans
held for sale
|
5,534
|
5,282
|
|||||
Loans
receivable, net
|
1,217,691
|
1,164,481
|
|||||
Accrued
interest receivable
|
6,485
|
6,207
|
|||||
Federal
Home Loan Bank stock
|
18,047
|
17,544
|
|||||
Bank
owned life insurance
|
24,827
|
24,346
|
|||||
Premises
and equipment
|
33,900
|
32,429
|
|||||
Real
estate and other assets held for sale
|
3,434
|
404
|
|||||
Goodwill
|
35,124
|
35,084
|
|||||
Core
deposit and other intangibles
|
3,757
|
4,117
|
|||||
Mortgage
servicing rights
|
5,294
|
5,063
|
|||||
Other
assets
|
7,143
|
2,015
|
|||||
Total
assets
|
$
|
1,514,666
|
$
|
1,461,082
|
June
30, 2006
|
December
31, 2005
|
||||||
(In
Thousands)
|
|||||||
Liabilities
and stockholders’ equity
|
|||||||
Liabilities:
|
|||||||
Deposits
|
$
|
1,110,750
|
$
|
1,069,501
|
|||
Advances
from the Federal Home Loan Bank
|
194,690
|
180,960
|
|||||
Short
term borrowings and other interest-bearing liabilities
|
20,470
|
25,748
|
|||||
Subordinated
debentures
|
20,619
|
20,619
|
|||||
Advance
payments by borrowers
|
372
|
605
|
|||||
Deferred
taxes
|
396
|
795
|
|||||
Other
liabilities
|
13,057
|
11,638
|
|||||
Total
liabilities
|
1,360,354
|
1,309,866
|
|||||
Stockholders’
equity:
|
|||||||
Preferred
stock, no par value per share:
|
|||||||
5,000
shares authorized; no shares issued
|
-
|
-
|
|||||
Common
stock, $.01 par value per share:
|
|||||||
20,000
shares authorized; 11,703 shares issued
|
|||||||
and
7,117 and 7,086 shares outstanding, respectively
|
117
|
117
|
|||||
Additional
paid-in capital
|
109,449
|
108,626
|
|||||
Stock
acquired by ESOP
|
(734
|
)
|
(1,053
|
)
|
|||
Accumulated
other comprehensive loss, net of
|
|||||||
tax
of $(553) and $(13), respectively
|
(1,029
|
)
|
(22
|
)
|
|||
Retained
earnings
|
115,953
|
112,041
|
|||||
Treasury
stock, at cost, 4,586 and 4,617 shares respectively
|
(69,444
|
)
|
(68,493
|
)
|
|||
Total
stockholders’ equity
|
154,312
|
151,216
|
|||||
Total
liabilities and stockholders’ equity
|
$
|
1,514,666
|
$
|
1,461,082
|
Three
Months Ended
|
Six
Months Ended
|
||||||||||||
June
30
|
June
30
|
||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
Interest
Income
|
|||||||||||||
Loans
|
$
|
21,217
|
$
|
17,045
|
$
|
41,264
|
$
|
31,808
|
|||||
Investment
securities:
|
1,414
|
1,286
|
2,757
|
2,724
|
|||||||||
Taxable
|
1,266
|
1,133
|
2,470
|
2,404
|
|||||||||
Non-taxable
|
148
|
153
|
287
|
320
|
|||||||||
Interest-bearing
deposits
|
67
|
134
|
138
|
205
|
|||||||||
FHLB
stock dividends
|
255
|
204
|
504
|
369
|
|||||||||
Total
interest income
|
22,953
|
18,669
|
44,663
|
35,106
|
|||||||||
Interest
Expense
|
|||||||||||||
Deposits
|
7,872
|
4,911
|
14,695
|
8,856
|
|||||||||
FHLB
advances and other
|
2,374
|
1,791
|
4,521
|
3,591
|
|||||||||
Subordinated
debentures
|
321
|
-
|
620
|
-
|
|||||||||
Notes
payable
|
127
|
114
|
259
|
195
|
|||||||||
Total
interest expense
|
10,694
|
6,816
|
20,095
|
12,642
|
|||||||||
Net
interest income
|
12,259
|
11,853
|
24,568
|
22,464
|
|||||||||
Provision
for loan losses
|
683
|
349
|
1,066
|
696
|
|||||||||
Net
interest income after provision for loan losses
|
11,576
|
11,504
|
23,502
|
21,768
|
|||||||||
Non-interest
Income
|
|||||||||||||
Service
fees and other charges
|
2,365
|
1,388
|
4,077
|
2,511
|
|||||||||
Insurance
commission income
|
1,002
|
1,050
|
2,662
|
2,263
|
|||||||||
Mortgage
banking income
|
888
|
522
|
1,622
|
1,385
|
|||||||||
Gain
on sale of non-mortgage loans
|
437
|
107
|
437
|
120
|
|||||||||
Gain
on sale of securities
|
-
|
515
|
-
|
1,136
|
|||||||||
Trust
income
|
78
|
61
|
157
|
139
|
|||||||||
Income
from Bank Owned Life Insurance
|
243
|
180
|
480
|
357
|
|||||||||
Other
non-interest income
|
114
|
57
|
207
|
231
|
|||||||||
Total
non-interest income
|
5,127
|
3,880
|
9,642
|
8,142
|
|||||||||
Non-interest
Expense
|
|||||||||||||
Compensation
and benefits
|
5,934
|
6,006
|
12,040
|
11,518
|
|||||||||
Occupancy
|
1,287
|
1,198
|
2,515
|
2,227
|
|||||||||
Deposit
insurance premiums
|
34
|
37
|
68
|
68
|
|||||||||
State
franchise tax
|
337
|
290
|
664
|
574
|
|||||||||
Acquisition
related charges
|
-
|
2,476
|
-
|
3,360
|
|||||||||
Data
processing
|
943
|
778
|
1,857
|
1,591
|
|||||||||
Amortization
of intangibles
|
180
|
214
|
359
|
328
|
|||||||||
Other
non-interest expense
|
2,080
|
1,519
|
4,034
|
3,098
|
|||||||||
Total
non-interest expense
|
10,795
|
12,518
|
21,537
|
22,764
|
|||||||||
Income
before income taxes
|
5,908
|
2,866
|
11,607
|
7,146
|
|||||||||
Federal
income taxes
|
1,955
|
838
|
3,803
|
2,247
|
|||||||||
Net
Income
|
3,953
|
$
|
2,028
|
7,804
|
$
|
4,899
|
|||||||
Earnings
per share (Note 7)
|
|||||||||||||
Basic
|
$
|
0.56
|
$
|
0.29
|
$
|
1.11
|
$
|
0.72
|
|||||
Diluted
|
$
|
0.55
|
$
|
0.28
|
$
|
1.09
|
$
|
0.70
|
|||||
Dividends
declared per share (Note 6)
|
$
|
0.24
|
$
|
0.22
|
$
|
0.48
|
$
|
0.44
|
|||||
Average
shares outstanding (Note 7)
|
|||||||||||||
Basic
|
7,029
|
6,887
|
7,013
|
6,771
|
|||||||||
Diluted
|
7,162
|
7,134
|
7,168
|
7,031
|
|||||||||
Three
Months Ended
|
Six
Months Ended
|
||||||||||||
June
30,
|
June
30,
|
||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
Balance
at beginning of period
|
$
|
154,045
|
$
|
146,136
|
$
|
151,216
|
$
|
126,874
|
|||||
Comprehensive
income:
|
|||||||||||||
Net
income
|
3,953
|
2,028
|
7,804
|
4,899
|
|||||||||
Other
comprehensive income (loss)
|
(456
|
)
|
324
|
(1,007
|
)
|
(1,121
|
)
|
||||||
Total
comprehensive income
|
3,497
|
2,352
|
6,797
|
3,778
|
|||||||||
ESOP
shares released
|
327
|
328
|
1,002
|
999
|
|||||||||
Stock
option expense
|
74
|
-
|
133
|
-
|
|||||||||
Amortization
of deferred compensation of
|
|||||||||||||
Management
Recognition Plan
|
-
|
-
|
-
|
1
|
|||||||||
Shares
issued under stock option plans
|
495
|
609
|
1,710
|
1,091
|
|||||||||
Treasury
shares repurchased
|
(2,446
|
)
|
(370
|
)
|
(3,172
|
)
|
(952
|
)
|
|||||
Shares
issued to acquire ComBanc, Inc.
|
-
|
-
|
-
|
18,771
|
|||||||||
Common
cash dividends declared (Note 6)
|
(1,680
|
)
|
(1,505
|
)
|
(3,374
|
)
|
(3,012
|
)
|
|||||
Balance
at end of period
|
$
|
154,312
|
$
|
147,550
|
$
|
154,312
|
$
|
147,550
|
Six
Months Ended
|
|||||||
June
30,
|
|||||||
2006
|
2005
|
||||||
Operating
Activities
|
|||||||
Net
cash provided by operating activities
|
$
|
6,557
|
$
|
3,230
|
|||
Investing
Activities
|
|||||||
Proceeds
from maturities of held-to-maturity securities
|
112
|
193
|
|||||
Proceeds
from maturities of available-for-sale securities
|
6,139
|
18,088
|
|||||
Proceeds
from sale of available-for-sale securities
|
-
|
21,561
|
|||||
Proceeds
from sale of real estate and other assets held for sale
|
1,308
|
140
|
|||||
Proceeds
from sale of property, plant and equipment
|
43
|
1,190
|
|||||
Net
cash received for acquisition of ComBanc, Inc.
|
-
|
52,301
|
|||||
Net
cash paid for acquisition of Genoa Savings and Loan
Company
|
-
|
(604
|
)
|
||||
Purchases
of available-for-sale securities
|
(12,328
|
)
|
(13,779
|
)
|
|||
Purchases
of Federal Home Loan Bank Stock
|
-
|
(373
|
)
|
||||
Purchases
of office properties and equipment
|
(2,891
|
)
|
(2,855
|
)
|
|||
Net
increase in loans receivable
|
(58,935
|
)
|
(58,644
|
)
|
|||
Net
cash provided by/used in investing activities
|
(66,552
|
)
|
17,218
|
||||
Financing
Activities
|
|||||||
Net
increase (decrease) in deposits
|
41,206
|
8,314
|
|||||
Repayment
of Federal Home Loan Bank long-term advances
|
(1,750
|
)
|
(1,227
|
)
|
|||
Net
increase (decrease) in Federal Home Loan Bank
|
|||||||
short-term
advances
|
15,500
|
(6,500
|
)
|
||||
Decrease
in securities sold under repurchase agreements
|
(5,278
|
)
|
(539
|
)
|
|||
Purchase
of common stock for treasury
|
(3,172
|
)
|
(952
|
)
|
|||
Cash
dividends paid
|
(3,355
|
)
|
(2,812
|
)
|
|||
Proceeds
from exercise of stock options
|
1,710
|
1,091
|
|||||
Net
cash provided by (used in) financing activities
|
44,861
|
(2,625
|
)
|
||||
(Decrease)
increase in cash and cash equivalents
|
(15,134
|
)
|
17,823
|
||||
Cash
and cash equivalents at beginning of period
|
49,256
|
20,521
|
|||||
Cash
and cash equivalents at end of period
|
$
|
34,122
|
$
|
38,344
|
|||
Supplemental
cash flow information:
|
|||||||
Interest
paid
|
$
|
19,887
|
$
|
12,292
|
|||
Income
taxes paid
|
$
|
2,601
|
$
|
2,158
|
|||
Transfers
from loans and other real estate owned and other
|
|||||||
assets
held for sale
|
$
|
4,338
|
$
|
353
|
ComBanc
|
Genoa
|
Total
|
|||||||||
Fair
value of assets acquired
|
$
|
213,927
|
$
|
88,077
|
$
|
302,004
|
|||||
Purchase
price
|
(38,339
|
)
|
(11,212
|
)
|
(49,551
|
)
|
|||||
Liabilities
assumed
|
$
|
175,588
|
$
|
76,865
|
$
|
252,453
|
Three
months ended June 30, 2006
|
||||||||||
Using
Previous
Accounting
|
SFAS
123(R)
Adjustments
|
As
Reported
|
||||||||
(dollars
in thousands, except per share data)
|
||||||||||
Income
before income taxes
|
$
|
5,984
|
$
|
(76
|
)
|
$
|
5,908
|
|||
Income
taxes
|
1,956
|
(1
|
)
|
1,955
|
||||||
Net
income
|
$
|
4,028
|
(75
|
)
|
$
|
3,953
|
||||
Basic
earnings per share
|
$
|
.57
|
$
|
(.01
|
)
|
$
|
.56
|
|||
Diluted
earnings per share
|
$
|
.56
|
$
|
(.01
|
)
|
$
|
.55
|
|||
Cash
flow from operating activities
|
$
|
1,533
|
$
|
-
|
$
|
1,533
|
Six
months ended June 30, 2006
|
||||||||||
Using
Previous
Accounting
|
SFAS
123(R)
Adjustments
|
As
Reported
|
||||||||
(dollars
in thousands, except per share data)
|
||||||||||
Income
before income taxes
|
$
|
11,742
|
$
|
(135
|
)
|
$
|
11,607
|
|||
Income
taxes
|
3,805
|
(2
|
)
|
3,803
|
||||||
Net
income
|
$
|
7,937
|
(133
|
)
|
$
|
7,804
|
||||
Basic
earnings per share
|
$
|
1.13
|
$
|
(.02
|
)
|
$
|
1.11
|
|||
Diluted
earnings per share
|
$
|
1.11
|
$
|
(.02
|
)
|
$
|
1.09
|
|||
Cash
flow from operating activities
|
$
|
6,536
|
$
|
-
|
$
|
6,536
|
Three
months ended June 30, 2005
|
||||||||||
As
Reported
|
Pro
Forma
Adjustments
|
Pro
Forma as
if
under
SFAS
123(R)
|
||||||||
(dollars
in thousands, except per share data)
|
||||||||||
Income
before income taxes
|
$
|
2,866
|
$
|
(72
|
)
|
$
|
2,794
|
|||
Income
taxes
|
838
|
(1
|
)
|
837
|
||||||
Net
income
|
$
|
2,028
|
(71
|
)
|
$
|
1,957
|
||||
Basic
earnings per share
|
$
|
.29
|
$
|
(.01
|
)
|
$
|
.28
|
|||
Diluted
earnings per share
|
$
|
.28
|
$
|
(.01
|
)
|
$
|
.27
|
|||
Cash
flow from operating activities
|
$
|
387
|
$
|
-
|
$
|
387
|
Six
months ended June 30, 2005
|
||||||||||
As
Reported
|
Pro
Forma
Adjustments
|
Pro
Forma as
if
under
SFAS
123(R)
|
||||||||
(dollars
in thousands, except per share data)
|
||||||||||
Income
before income taxes
|
$
|
7,146
|
$
|
(128
|
)
|
$
|
7,018
|
|||
Income
taxes
|
2,247
|
(1
|
)
|
2,246
|
||||||
Net
income
|
$
|
4,899
|
(127
|
)
|
$
|
4,772
|
||||
Basic
earnings per share
|
$
|
.72
|
$
|
(.02
|
)
|
$
|
.70
|
|||
Diluted
earnings per share
|
$
|
.70
|
$
|
(.02
|
)
|
$
|
.68
|
|||
Cash
flow from operating activities
|
$
|
3,230
|
$
|
-
|
$
|
3,230
|
Six
months ended June, 2006
Total
options outstanding
|
||||||||||
Shares
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Fair
Value
|
||||||||
Options
outstanding, beginning of period
|
569,099
|
$
|
16.00
|
$
|
4.05
|
|||||
Forfeited
or cancelled
|
(9,300
|
)
|
22.51
|
5.12
|
||||||
Exercised
|
(149,222
|
)
|
11.46
|
3.49
|
||||||
Granted
|
47,250
|
26.47
|
5.98
|
|||||||
Options
outstanding, end of period
|
457,827
|
$
|
18.43
|
$
|
4.38
|
|||||
Options
exercisable, end of period
|
283,875
|
$
|
15.39
|
$
|
3.76
|
Six
months ended June 30, 2006 Total unvested options
|
||||||||
Shares
|
Weighted
Average
Fair
Value
|
|||||||
Unvested
options, beginning of period
|
164,853
|
$
|
5.26
|
|||||
Vested
|
(29,951
|
)
|
4.73
|
|||||
Granted
|
47,250
|
5.98
|
||||||
Forfeited
|
(8,200
|
)
|
5.26
|
|||||
Unvested
options, end of period
|
173,952
|
$
|
5.39
|
Six
months ended June 30,
|
||||||||
2006
|
2005
|
|||||||
Proceeds
of options exercised
|
$
|
1,710
|
$
|
1,091
|
||||
Related
tax benefit recognized
|
192
|
164
|
||||||
Intrinsic
value of options exercised
|
2,276
|
1,449
|
Outstanding
|
Exercisable
|
||||||||||||
Range
of Exercise Prices
|
Shares
|
Weighted
Average
Remaining
Contractual
Life
|
Shares
|
Weighted
Average
Exercise
Price
|
|||||||||
$8.25
- $12.99
|
63,323
|
1.3
|
63,323
|
$
|
10.85
|
||||||||
$13.00
- $17.99
|
190,351
|
3.9
|
158,951
|
14.19
|
|||||||||
$18.00
- $22.99
|
49,450
|
6.7
|
29,950
|
19.41
|
|||||||||
$23.00
- $27.99
|
154,703
|
8.8
|
31,651
|
26.44
|
|||||||||
Outstanding
at period end
|
457,827
|
5.5
|
283,875
|
$
|
15.39
|
Six
Months Ended June 30,
|
|||||||
2006
|
2005
|
||||||
Expected
average risk-free interest rate
|
5.18
|
%
|
4.44
|
%
|
|||
Expected
average life (in years)
|
6.50
|
10.00
|
|||||
Expected
volatility
|
22.40
|
%
|
22.30
|
%
|
|||
Expected
dividend yield
|
3.63
|
%
|
3.15
|
%
|
Remainder
of 2006
|
$
|
143
|
||
2007
|
236
|
|||
2008
|
201
|
|||
2009
|
139
|
|||
2010
|
77
|
|||
2011
|
22
|
|||
Total
|
$
|
818
|
Three
months ended
June
30,
|
Six
months ended
June
30,
|
||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
Numerator
for basic and diluted
earnings
per share - Net income
|
$
|
3,953
|
$
|
2,028
|
$
|
7,804
|
$
|
4,899
|
|||||
Denominator:
|
|||||||||||||
Denominator
for basic earnings
per
share - weighted average shares
|
7,029
|
6,887
|
7,013
|
6,771
|
|||||||||
Effect
of dilutive securities:
|
|||||||||||||
Employee
stock options
|
133
|
246
|
155
|
259
|
|||||||||
Unvested
management recognition
plan
stock
|
-
|
1
|
-
|
1
|
|||||||||
Dilutive
potential common shares
|
133
|
247
|
155
|
260
|
|||||||||
Denominator
for diluted earnings per
share
- adjusted weighted average
shares
and assumed conversions
|
7,162
|
7,134
|
7,168
|
7,031
|
|||||||||
Basic
earnings per share from net income
|
$
|
0.56
|
$
|
0.29
|
$
|
1.11
|
$
|
0.72
|
|||||
Diluted
earnings per share from
net
income
|
$
|
0.55
|
$
|
0.28
|
$
|
1.09
|
$
|
0.70
|
June
30, 2006
|
|||||||||||||
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair
Value
|
||||||||||
Available-for-Sale
Securities:
|
|||||||||||||
U.S.
Treasury securities and obligations
of
U.S. Government corporations and
agencies
|
$
|
44,071
|
$
|
27
|
$
|
(502
|
)
|
$
|
43,596
|
||||
Mortgage-backed
securities
|
20,295
|
2
|
(692
|
)
|
19,605
|
||||||||
REMICs
|
465
|
-
|
(2
|
)
|
463
|
||||||||
Collateralized
mortgage obligations
|
21,725
|
8
|
(596
|
)
|
21,137
|
||||||||
Trust
preferred stock
|
8,217
|
66
|
(10
|
)
|
8,273
|
||||||||
Obligations
of state and political
subdivisions
|
24,458
|
213
|
(98
|
)
|
24,573
|
||||||||
Totals
|
$
|
119,231
|
$
|
316
|
$
|
(1,900
|
)
|
$
|
117,647
|
||||
Held-to-Maturity
Securities:
|
|||||||||||||
FHLMC
certificates
|
$
|
299
|
$
|
7
|
$
|
-
|
$
|
306
|
|||||
FNMA
certificates
|
696
|
2
|
(4
|
)
|
694
|
||||||||
GNMA
certificates
|
221
|
-
|
(1
|
)
|
220
|
||||||||
Obligations
of state and political
subdivisions
|
445
|
45
|
-
|
490
|
|||||||||
Totals
|
$
|
1,661
|
$
|
54
|
$
|
(5
|
)
|
$
|
1,710
|
Duration
of Unrealized Loss Position
|
|||||||||||||||||||
Less
than 12 Months
|
12
Month or Longer
|
Total
|
|||||||||||||||||
Gross
|
Gross
|
||||||||||||||||||
Fair
|
Unrealized
|
Fair
|
Unrealized
|
Fair
|
Unrealized
|
||||||||||||||
Value
|
Loss
|
Value
|
Loss
|
Value
|
Loses
|
||||||||||||||
(In
Thousands)
|
|||||||||||||||||||
At
June 30, 2006
|
|||||||||||||||||||
Available-for-sale
securities:
|
|||||||||||||||||||
U.S.
treasury securities and obligations of U.S. government corporations
and
agencies
|
$
|
11,520
|
$
|
(152
|
)
|
$
|
19,005
|
$
|
(350
|
)
|
$
|
30,525
|
$
|
(502
|
)
|
||||
Mortgage-backed
securities
|
10,398
|
(250
|
)
|
9,025
|
(442
|
)
|
19,423
|
(692
|
)
|
||||||||||
Collateralized
mortgage obligations
|
8,978
|
(199
|
)
|
10,658
|
(399
|
)
|
19,636
|
(598
|
)
|
||||||||||
Trust
preferred stock
|
990
|
(10
|
)
|
-
|
-
|
990
|
(10
|
)
|
|||||||||||
Obligations
of state and political subdivisions
|
7,505
|
(97
|
)
|
19
|
(1
|
)
|
7,524
|
(98
|
)
|
||||||||||
|
|||||||||||||||||||
Held
to maturity securities:
|
|||||||||||||||||||
Mortgage-backed
securities
|
260
|
(1
|
)
|
237
|
(4
|
)
|
497
|
(5
|
)
|
||||||||||
Total
temporarily
impaired
securities
|
$
|
39,651
|
$
|
(709
|
)
|
$
|
38,944
|
$
|
(1,196
|
)
|
$
|
78,595
|
$
|
(1,905
|
)
|
December
31, 2005
|
|||||||||||||
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair
Value
|
||||||||||
Available-for-Sale
Securities:
|
|||||||||||||
U.S.
Treasury securities and obligations
of
U.S. Government corporations and
agencies
|
$
|
41,173
|
$
|
217
|
$
|
(325
|
)
|
$
|
41,065
|
||||
Mortgage-backed
securities
|
19,959
|
35
|
(263
|
)
|
19,731
|
||||||||
REMICs
|
998
|
-
|
(7
|
)
|
991
|
||||||||
Collateralized
mortgage obligations
|
20,002
|
1
|
(330
|
)
|
19,673
|
||||||||
Trust
preferred stock
|
7,725
|
76
|
-
|
7,801
|
|||||||||
Obligations
of state and political
subdivisions
|
23,257
|
574
|
(13
|
)
|
23,818
|
||||||||
Totals
|
$
|
113,114
|
$
|
903
|
$
|
(938
|
)
|
$
|
113,079
|
||||
Held-to-Maturity
Securities:
|
|||||||||||||
FHLMC
certificates
|
$
|
333
|
$
|
11
|
$
|
-
|
$
|
344
|
|||||
FNMA
certificates
|
756
|
4
|
(3
|
)
|
757
|
||||||||
GNMA
certificates
|
241
|
-
|
(1
|
)
|
240
|
||||||||
Obligations
of state and political
subdivisions
|
445
|
59
|
-
|
504
|
|||||||||
Totals
|
$
|
1,775
|
$
|
74
|
$
|
(4
|
)
|
$
|
1,845
|
June
30,
2006
|
December
31,
2005
|
||||||
Real
Estate:
|
|||||||
One-to-four
family residential
|
$
|
270,493
|
$
|
275,497
|
|||
Construction
|
19,912
|
21,173
|
|||||
Non-residential
and multi-family
|
549,345
|
551,983
|
|||||
839,750
|
848,653
|
||||||
Other
Loans:
|
|||||||
Commercial
|
236,845
|
171,289
|
|||||
Consumer
finance
|
49,593
|
55,297
|
|||||
Home
equity and improvement
|
116,250
|
113,000
|
|||||
402,688
|
339,586
|
||||||
Total
real estate and other loans
|
1,242,438
|
1,188,239
|
|||||
Deduct:
|
|||||||
Loans
in process
|
9,111
|
8,782
|
|||||
Net
deferred loan origination fees and costs
|
1,397
|
1,303
|
|||||
Allowance
for loan loss
|
14,239
|
13,673
|
|||||
Totals
|
$
|
1,217,691
|
$
|
1,164,481
|
Three
Months ended
June
30,
|
Six
Months ended
June
30,
|
||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
Balance
at beginning of period
|
$
|
13,848
|
$
|
12,749
|
$
|
13,673
|
$
|
9,956
|
|||||
Provision
for loan losses
|
683
|
349
|
1,066
|
696
|
|||||||||
Reserve
from Acquisitions
|
-
|
865
|
-
|
3,403
|
|||||||||
Reclassification
between allowance for
loan
loss and purchase loan discount on
prior
quarter acquisition
|
-
|
(376
|
)
|
-
|
(376
|
)
|
|||||||
Charge-offs:
|
|||||||||||||
One-to-four
family residential real estate
|
23
|
-
|
211
|
-
|
|||||||||
Non-residential
and multi-family real estate
|
173
|
-
|
230
|
67
|
|||||||||
Commercial
|
13
|
104
|
30
|
149
|
|||||||||
Home
equity and improvement
|
21
|
-
|
53
|
-
|
|||||||||
Consumer
finance
|
135
|
100
|
230
|
157
|
|||||||||
Total
charge-offs
|
365
|
204
|
754
|
373
|
|||||||||
Recoveries
|
73
|
77
|
254
|
154
|
|||||||||
Net
charge-offs
|
292
|
127
|
500
|
219
|
|||||||||
Ending
allowance
|
$
|
14,239
|
$
|
13,460
|
$
|
14,239
|
$
|
13,460
|
June
30,
2006
|
December
31,
2005
|
||||||
(in
thousands)
|
|||||||
Non-accrual
loans
|
$
|
5,504
|
$
|
4,952
|
|||
Loans
over 90 days past due and still accruing
|
-
|
-
|
|||||
Total
non-performing loans
|
5,504
|
$
|
4,952
|
||||
Real
estate owned (REO)
|
3,434
|
404
|
|||||
Total
non-performing assets
|
$
|
8,938
|
$
|
5,356
|
June
30,
2006
|
December
31,
2005
|
||||||
Non-interest-bearing
checking accounts
|
$
|
95,468
|
$
|
103,498
|
|||
Interest-bearing
checking accounts
|
98,663
|
102,144
|
|||||
Savings
accounts
|
76,603
|
82,766
|
|||||
Money
market demand accounts
|
208,414
|
174,414
|
|||||
Certificates
of deposit
|
631,602
|
606,679
|
|||||
$
|
1,110,750
|
$
|
1,069,501
|
June
30,
2006
|
December
31,
2005
|
||||||
(in
thousands)
|
|||||||
FHLB
Advance:
|
|||||||
Callable
fixed maturity advances
|
$
|
75,000
|
$
|
111,000
|
|||
Callable
fixed maturity strike rate advances
|
27,000
|
27,000
|
|||||
Other
fixed rate long-term advances
|
13,690
|
14,181
|
|||||
Three
month LIBOR based advances
|
35,000
|
−
|
|||||
Short-term
and overnight advances
|
44,000
|
28,779
|
|||||
Total
|
$
|
194,690
|
$
|
180,960
|
|||
Junior
subordinated debentures owed to unconsolidated
|
|||||||
subsidiary
trust, due October 2035, 6.71% at June
30,
2006 and 5.87% at December 31, 2005 (variable)
|
$
|
20,619
|
$
|
20,619
|
|||
June
30,
2006
|
December
31,
2005
|
||||||
(In
Thousands)
|
|||||||
Loan
commitments
|
$
|
242,932
|
$
|
275,982
|
|||
Standby
Letters of Credit
|
8,227
|
8,785
|
|||||
Total
|
$
|
251,159
|
$
|
284,767
|
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
||||||||||||
2006
|
2005
|
2005
|
2004
|
||||||||||
(In
Thousands)
|
|||||||||||||
Service
cost-benefits attributable
to
service during the period
|
$
|
10
|
$
|
14
|
$
|
20
|
$
|
26
|
|||||
Interest
cost on accumulated
postretirement
benefit
obligation
|
27
|
24
|
54
|
48
|
|||||||||
Net
amortization and deferral
|
8
|
6
|
16
|
12
|
|||||||||
Net
periodic postretirement
benefit
cost
|
$
|
45
|
$
|
44
|
$
|
90
|
$
|
86
|
|
Three
Months Ended June 30,
|
||||||||||||||||||
|
2006
|
2005
|
|||||||||||||||||
Average
|
Yield/
|
Average
|
Yield/
|
||||||||||||||||
|
Balance
|
Interest(1)
|
Rate(2)
|
Balance
|
Interest(1)
|
Rate(2)
|
|||||||||||||
Interest-earning
assets:
|
|||||||||||||||||||
Loans
receivable
|
$
|
1,209,263
|
$
|
21,223
|
7.04
|
%
|
$
|
1,091,178
|
$
|
17,053
|
6.27
|
%
|
|||||||
Securities
|
114,895
|
1,562
|
5.36
|
121,792
|
1,439
|
4.80
|
|||||||||||||
Interest-earning
deposits
|
4,677
|
67
|
5.75
|
17,314
|
134
|
3.10
|
|||||||||||||
FHLB
stock and other
|
17,795
|
255
|
5.75
|
16,195
|
204
|
5.05
|
|||||||||||||
Total
interest-earning assets
|
1,346,630
|
23,107
|
6.87
|
1,246,479
|
18,830
|
6.07
|
|||||||||||||
Non-interest-earning
assets
|
147,905
|
135,650
|
|||||||||||||||||
Total
assets
|
$
|
1,494,535
|
$
|
1,382,129
|
|||||||||||||||
Interest-bearing
liabilities:
|
|||||||||||||||||||
Deposits
|
$
|
995,848
|
$
|
7,872
|
3.17
|
%
|
$
|
957,094
|
$
|
4,911
|
2.06
|
%
|
|||||||
FHLB
advances and other
|
196,280
|
2,374
|
4.85
|
156,528
|
1,791
|
4.59
|
|||||||||||||
Notes
payable
|
18,114
|
127
|
2.81
|
18,861
|
114
|
2.42
|
|||||||||||||
Subordinated
debentures
|
20,619
|
321
|
6.24
|
-
|
-
|
0.00
|
|||||||||||||
Total
interest-bearing liabilities
|
1,230,861
|
10,694
|
3.48
|
1,132,483
|
6,816
|
2.41
|
|||||||||||||
Non-interest
bearing deposits
|
94,483
|
-
|
91,867
|
-
|
|||||||||||||||
Total
including non-interest bearing
|
|||||||||||||||||||
demand
deposits
|
1,325,344
|
10,694
|
3.24
|
1,224,350
|
6,816
|
2.23
|
|||||||||||||
Other
non-interest-bearing liabilities
|
14,931
|
10,579
|
|||||||||||||||||
Total
liabilities
|
1,340,275
|
1,234,929
|
|||||||||||||||||
Stockholders'
equity
|
154,260
|
147,200
|
|||||||||||||||||
Total
liabilities and stock-
|
|||||||||||||||||||
holders'
equity
|
$
|
1,494,535
|
$
|
1,382,129
|
|||||||||||||||
Net
interest income; interest
|
|||||||||||||||||||
rate
spread
|
$
|
12,413
|
3.39
|
%
|
$
|
12,014
|
3.66
|
%
|
|||||||||||
Net
interest margin (3)
|
3.69
|
%
|
3.87
|
%
|
|||||||||||||||
Average
interest-earning assets
|
|||||||||||||||||||
to
average interest-bearing
|
|||||||||||||||||||
liabilities
|
109
|
%
|
110
|
%
|
|
Six
Months Ended June 30,
|
||||||||||||||||||
|
2006
|
2005
|
|||||||||||||||||
|
Average
|
Yield/
|
Average
|
Yield/
|
|||||||||||||||
|
Balance
|
Interest(1)
|
Rate(2)
|
Balance
|
Interest(1)
|
Rate(2)
|
|||||||||||||
Interest-earning
assets:
|
|||||||||||||||||||
Loans
receivable
|
$
|
1,193,485
|
$
|
41,276
|
6.97
|
%
|
$
|
1,036,652
|
$
|
31,819
|
6.19
|
%
|
|||||||
Securities
|
114,509
|
3,044
|
5.33
|
129,221
|
3,044
|
4.83
|
|||||||||||||
Interest-earning
deposits
|
5,699
|
138
|
4.88
|
13,627
|
205
|
3.03
|
|||||||||||||
FHLB
stock and other
|
17,671
|
504
|
5.75
|
15,513
|
369
|
4.80
|
|||||||||||||
Total
interest-earning assets
|
1,331,364
|
44,962
|
6.81
|
1,195,013
|
35,437
|
5.98
|
|||||||||||||
Non-interest-earning
assets
|
145,482
|
113,892
|
|||||||||||||||||
Total
assets
|
$
|
1,476,846
|
$
|
1,308,905
|
|||||||||||||||
Interest-bearing
liabilities:
|
|||||||||||||||||||
Deposits
|
$
|
984,749
|
$
|
14,695
|
3.01
|
%
|
$
|
901,961
|
$
|
8,856
|
1.98
|
%
|
|||||||
FHLB
advances and other
|
191,111
|
4,521
|
4.77
|
158,671
|
3,591
|
4.56
|
|||||||||||||
Notes
payable
|
18,961
|
259
|
2.75
|
16,748
|
195
|
2.35
|
|||||||||||||
Subordinated
debentures
|
20,619
|
620
|
6.06
|
-
|
-
|
0.00
|
|||||||||||||
Total
interest-bearing liabilities
|
1,215,440
|
20,095
|
3.34
|
1,077,380
|
12,642
|
2.37
|
|||||||||||||
Non-interest
bearing deposits
|
93,255
|
-
|
-
|
83,117
|
-
|
-
|
|||||||||||||
Total
including non-interest bearing
|
|||||||||||||||||||
demand
deposits
|
1,308,695
|
20,095
|
3.10
|
1,160,497
|
12,642
|
2.20
|
|||||||||||||
Other
non-interest-bearing liabilities
|
14,720
|
8,139
|
|||||||||||||||||
Total
liabilities
|
1,323,415
|
1,168,636
|
|||||||||||||||||
Stockholders'
equity
|
153,431
|
140,269
|
|||||||||||||||||
Total
liabilities and stock-
|
|||||||||||||||||||
holders'
equity
|
$
|
1,476,846
|
$
|
1,308,905
|
|||||||||||||||
Net
interest income; interest
|
|||||||||||||||||||
rate
spread
|
$
|
24,867
|
3.47
|
%
|
$
|
22,795
|
3.61
|
%
|
|||||||||||
Net
interest margin (3)
|
3.76
|
%
|
3.85
|
%
|
|||||||||||||||
Average
interest-earning assets
|
|||||||||||||||||||
to
average interest-bearing
|
|||||||||||||||||||
liabilities
|
110
|
%
|
111
|
%
|
June
30,
2006
|
December
31,
2005
|
||||||
(in
thousands)
|
|||||||
Non-accrual
loans
|
$
|
5,504
|
$
|
4,952
|
|||
Loans
over 90 days past due and still accruing
|
-
|
-
|
|||||
Total
non-performing loans
|
5,504
|
$
|
4,952
|
||||
Real
estate owned (REO)
|
3,434
|
404
|
|||||
Total
non-performing assets
|
$
|
8,938
|
$
|
5,356
|
|||
Allowance
for loans losses as a percentage of
total loans
|
1.16
|
%
|
1.16
|
%
|
|||
Allowance
for loan losses as a percentage of
non-performing assets
|
159.31
|
%
|
255.28
|
%
|
|||
Allowance
for loan losses as a percentage of
non-performing loans
|
258.70
|
%
|
276.11
|
%
|
|||
Total
non-performing assets as a percentage of
total assets
|
0.59
|
%
|
0.37
|
%
|
|||
Total
non-performing loans as a percentage of
total loans
|
0.45
|
%
|
0.42
|
%
|
Core
Capital
|
Risk-Based
Capital
|
||||||||||||
Adequately
Capitalized
|
Well
Capitalized
|
Adequately
Capitalized
|
Well
Capitalized
|
||||||||||
Regulatory
capital
|
$
|
129,537
|
$
|
129,537
|
$
|
143,308
|
$
|
143,308
|
|||||
Minimum
required regulatory capital
|
58,916
|
73,645
|
95,276
|
119,095
|
|||||||||
Excess
regulatory capital
|
$
|
70,621
|
$
|
55,892
|
$
|
48,032
|
$
|
24,213
|
|||||
Regulatory
capital as a percentage of assets (1)
|
8.8
|
%
|
8.8
|
%
|
12.0
|
%
|
12.0
|
%
|
|||||
Minimum
capital required as a percentage of assets
|
4.0
|
%
|
5.0
|
%
|
8.0
|
%
|
10.0
|
%
|
|||||
Excess
regulatory capital as a percentage of assets
|
4.8
|
%
|
3.8
|
%
|
4.0
|
%
|
2.0
|
%
|
Period
|
Total
Number of
Shares
Purchased
|
Average
Price
Paid
Per
Share
|
Total
Number of
Shares
Purchased
as
Part of
Publicly
Announced
Plans
or
Programs
|
Maximum
Number
of
Shares
that May
Yet
Be Purchased
Under
the Plans
or
Programs (a)
|
April
1, 2006 -
April
30, 2006
|
53,433
|
$26.67
|
39,633
|
360,757
|
May
1, 2006 -
May
31, 2006
|
12,471
|
$28.77
|
12,471
|
348,286
|
June
1, 2006 -
June
30, 2006
|
25,215
|
$26.25
|
25,215
|
323,071
|
Total
for 2006
Second
Quarter
|
91,119
|
$26.84
|
77,319
|
323,071
|
First
Defiance Financial Corp.
|
||
(Registrant)
|
||
Date:
August
9, 2006
|
By:
|
/s/
William J. Small
|
William
J. Small
|
||
Chairman,
President and
|
||
Chief
Executive Officer
|
||
Date:
August
9, 2006
|
By:
|
/s/
John C. Wahl
|
John
C. Wahl
|
||
Executive Vice
President, Chief
|
||
Financial
Officer and
|
||
Treasurer
|