First Defiance Financial Corp. (NASDAQ:FDEF) Q3 2018 Earnings Conference Call Transcript

Oct 16, 2018 • 11:00 am ET

Previous

First Defiance Financial Corp. (NASDAQ:FDEF) Q3 2018 Earnings Conference Call Transcript

Share
Close

Loading Event

Loading Transcript

Presentation
Operator
Operator

Good morning, and welcome to the First Defiance Financial Corp Third Quarter 2018 Earnings Conference Call. All participants will be in listen-only mode.

(Operator Instructions) After today's presentation there will be an opportunity to ask questions. (Operator Instructions) Please note this event is being recorded.

At this time, I would like to turn the conference over to Tera Murphy, VP and Marketing Director. Please go ahead ma'am.

Executive
Tera Murphy

Thank you. Good morning, everyone, and thank you for joining us for today's 2018 third quarter earnings conference call. This call is also being webcast, and the audio replay will be available at the First Defiance website at fdef.com. Providing commentary this morning will be Don Hileman, President and CEO of First Defiance; and Kevin Thompson, EVP and CFO. Following their prepared comments on the company's strategy and performance, they will be available to take your questions.

(Forward-Looking Cautionary Statements)

And now, I'll turn the call over to Mr. Hileman for his comments.

Executive
Don Hileman

Thank you, and good morning, and welcome to the First Defiance Financial Corporation third quarter conference call. At this time, I would like to discuss the third quarter results and give you a look into the remainder of 2018. Joining me on the call this morning to give more detail on the financial performance for the quarter is our CFO, Kevin Thompson. At the conclusion of our remarks, we will be happy to answer any of your questions.

The third quarter results reflect strong operating performance, as we balance growth and profitability. Net income for the third quarter of 2018 on a GAAP basis was $11.3 million, or $0.55 per diluted common share, compared to $9.4 million, or $0.46 per diluted common share in the third quarter of '17, an increase of 20%. We continue the trend of solid core performance with a return on average assets of 1.47%, compared to 1.28% in the third quarter of '17 and 1.48% on a linked quarter basis. We are also pleased that our efficiency ratio declined under 60% this quarter and loan growth picked up in the third quarter to an annualized 12% growth rate. This puts us on pace for year-over-year growth of around 8%, was a consistent with our overall expectations.

We are seeing very competitive rates on some lending deals, despite the upward movement in loan rates throughout our footprint and are quite satisfied with the linked quarter increase in net interest margin. In this lending environment, filled with rate and structure pressures, we know a balanced approach is necessary to grow our loan portfolio and we continue to be focused on market and relationship pricing, which is reflected in the upward trend of loan yields. Overall, we saw an increase in asset yields of 10 basis points on a linked quarter basis and an increase in interest cost of deposits of 9 basis points on a linked quarter basis. Strategically, we still feel confident in our annual goal of upper single-digit loan growth is achievable with the current solid