First Defiance Announces Strong First-Quarter Earnings

HIGHLIGHTS OF THE QUARTER



*Net income up 39%; EPS up 34% over 2000 first quarter

*Continued growth in mortgage banking income and improvement in net interest

margin

*Falling interest rate environment has reduced first-time homebuyer activity

but increased conventional mortgage business

*Average cost of funds dropped 39 basis points from 2000 fourth quarter

*Asset quality remains good



Apr 24, 2001, 01:00 ET from First Defiance Financial Corp.

    DEFIANCE, Ohio, April 24 /PRNewswire Interactive News Release/ --
 First Defiance Financial Corp. (Nasdaq:   FDEF), today announced net income of
 $3.1 million or $.47 per diluted share for its first quarter ended March 31,
 2001. The 2001 quarterly earnings were an increase of $854,000 or 39% from the
 $2.2 million in earnings reported for the first quarter of 2000. On a per
 share basis, the 2001 results were an increase of 34% from the $.35 reported
 for the 2000 first quarter.
     On a cash basis, First Defiance earned $3.3 million or $.50 per share for
 the quarter ended March 31, 2001 compared to $2.4 million or $.38 per share
 for the same period in 2000. Cash earnings factor out the impact of
 amortization of goodwill.
     "We are pleased with the results for the first quarter," noted First
 Defiance's Chairman, President and CEO William J. Small. "Our earnings
 represent a substantial improvement over the 2000 first quarter amounts due to
 continued growth in our mortgage banking income and improvement in our net
 interest margin, both key factors for us to be successful in 2001. We also are
 pleased to report that our asset quality remains very good."
 
     Non-Interest Income Growth Continues
     The improvement in the first quarter of 2001 when compared to 2000 can be
 attributed primarily to continued growth in non-interest income, which
 increased 28.9% to $15.3 million for the 2001 first quarter compared to
 $11.8 million in 2000. Most of the increase was related to mortgage banking
 income which includes mortgage servicing fees and late charges collected from
 the Company's $8.3 billion loan portfolio. Mortgage banking income was
 $11.1 million for the three month period ended March 31, 2001 compared to
 $8.1 million for the same period in 2000, an increase of $3.0 million or
 36.9%. Also gains on sale of mortgage loans increased to $2.2 million for the
 2001 first quarter from $1.9 million in 2000.
     "Our mortgage banking income continues to be a key component of our
 success," noted Mr. Small. "Revenue in that area increased by nearly
 $1 million over the 2000 fourth quarter because the portfolio continues to
 grow. At March 31 we serviced nearly 130,000 loans with balances of
 $8.3 billion compared to 125,000 loans with balances of $8.0 billion just
 three months ago.
     "The decline in market rates since the beginning of the year has resulted
 in a reduction in the level of production in our core first-time homebuyer
 programs," continued Mr. Small. "This coupled with the fact that production in
 the winter and early spring are historically slower periods in our niche has
 resulted in production levels of $464.2 million in the first-time homebuyer
 programs for this quarter, compared to $583.9 million in the 2000 fourth
 quarter and $657.5 million in the 2000 third quarter. A period of declining
 mortgage rates, which we are experiencing in the mortgage industry overall,
 generally has a short-term negative impact on our production levels as
 conventional financing becomes an attractive option for many of the core
 borrowers under the first-time homebuyer programs. However the housing finance
 agencies will generally react to the lower rates by coming out with new more
 attractive programs. For example, the Ohio Housing Financing Agency recently
 released $75 million for first-time homebuyers at a rate of 6.25%. Those funds
 have already been fully allocated to originators and the loans will start to
 be delivered to us in the second quarter.
     "The lower rate environment has resulted in a substantial increase in
 volumes in other areas of our business," continued Mr. Small. "Our mortgage
 production on the retail side of our business has been strong, especially at
 our First Federal Bank subsidiary. The gains we have realized from the sale of
 these loans have helped to offset the reductions in the first-time homebuyer
 programs and the combined gains are not far behind the 2000 fourth quarter
 level. Its another example of how our mortgage banking niche in the first-time
 homebuyer programs and our core banking business complement each other."
 
     Net Interest Margin Up 11 Basis Points from 2000 Fourth Quarter
     Net interest income for the quarter ended March 31, 2001 was $5.3 million
 compared to $6.1 million for the same period in 2000. However, the 2000 first
 quarter results included a one time adjustment of $690,000 for interest on
 certain loans that were more than 90 days delinquent which had been purchased
 out of the servicing portfolio by our Leader Mortgage subsidiary and which had
 FHA insurance or VA guarantees. Net interest margin for the 2001 first quarter
 was 2.71% compared to 3.40% for the same period in 2000 (2.96% if you exclude
 the one time adjustment noted above). The 2.71% margin for the 2001 first
 quarter is an improvement of 11 basis points over the 2.60% margin reported
 for the 2000 fourth quarter.
     "We positioned ourselves to benefit from falling interest rates," noted
 Mr. Small. "Our average cost of funds for the 2001 first quarter was 5.24%, a
 39 basis point reduction from the 2000 fourth quarter. We anticipate that our
 cost of funds will continue to come down further during this year's second
 quarter and that our net interest margin will continue to improve."
     Non-interest expenses increased to $15.1 million for the 2001 first
 quarter from $13.2 million for the same period in 2000. Most of the increase
 was in amortization of mortgage servicing rights, which increased by $916,000
 because of the larger portfolio balance, and an increase in prepayments. The
 lower interest rate environment of the 2001 first quarter was expected to
 increase the level of prepayments in the Company's servicing portfolio.
 However prepayments are still relatively low, averaging only 5.58% for the
 2001 first quarter and only 7.99% during the month of March 2001. The
 prepayment rates are likely to increase if mortgage rates continue to decline
 throughout the year. If this occurs, First Defiance will experience higher
 levels of mortgage servicing rights amortization and potential adjustments to
 recognize impairment in the value of the mortgage servicing rights portfolio.
 Compensation and benefits increased by $374,000 or 6.8% in the first quarter
 of 2001 compared to 2000 due to staffing increases to handle greater volumes
 and the addition of a full service branch in Bowling Green, Ohio in the fourth
 quarter of 2000.
 
     Total Assets Down Slightly, Asset Quality and Future Outlook Remains
      Strong
     Total assets at March 31 were $1.036 billion, a slight reduction from the
 $1.072 billion reported as of December 31, 2000. The reduced total is due to a
 reduction in the available for sale loan portfolio, which fell to
 $172.4 million at March 31, 2001 from $232.3 million at December 31, 2000.
 Other loans receivable, net of allowance for loan losses, were $545.5 million
 compared to $541.2 million at December 31, 2000. Mortgage servicing rights
 were $142.8 million at March 31, 2001 (compared to $134.8 million at
 December 31, 2000). Total deposits, including escrow deposits were
 $688.0 million ($613.9 million at December 31, 2000) while stockholders equity
 was $102.4 million ($99.5 million at December 31, 2000).
     Non-performing assets as a percentage of total assets were .25% at
 March 31, 2001 compared to .16% at December 31, 2000. The allowance for loan
 losses totaled $9.3 million at December 31, 2001, which is 365.4% of non-
 performing assets.
     "Looking ahead to the rest of 2001, there are a number of factors, both
 positive and negative, that will impact net income, most of which are a result
 of the recent interest rate movements," remarked Mr. Small. "We anticipate
 continued margin improvement as we realize the full impact of recent
 reductions in our deposit and borrowing costs. We also expect that production
 in the first-time homebuyer programs will be slower through much of the second
 quarter as the housing finance agencies attempt to react to the lower
 conventional market rates. However the slowdown in this part of our business
 will continue to be offset by increases in conventional mortgage lending, both
 at The Leader and at First Federal Bank. Lower interest rates also will result
 in some moderate impairment adjustments to the servicing portfolio. Finally,
 we anticipate that the servicing portfolio will continue to increase despite
 decreases in production levels and that the related mortgage banking income
 will also continue to increase."
     First Defiance Financial Corp. will host a conference call at 11:00 a.m.
 (EDT) on Tuesday, April  24 to discuss the earnings results and business
 trends. The conference call may be accessed by calling 1-712-257-2860. The
 password for the call is "First Defiance."
     Internet access to the call is also available (in listen-only mode) at the
 following Web address: http://www.videonewswire.com/FIRSTDEFIANCE/042401/ .
     A replay of the call will be available through 12 Noon on May 1 at
 (402) 344-6810. The audio replay of the Internet webcast will be available at
 www.fdef.com until May 31, 2001. For those without Internet access, the first
 quarter earnings release will be available by fax or mail on request. To
 receive a copy, please call FDEF Investor Relations at 614-825-1752.
     First Defiance Financial Corp. is the holding company for First Federal
 Bank of the Midwest and First Insurance and Investments, Defiance OH and The
 Leader Mortgage Company, Cleveland OH. First Federal is a community Savings
 Bank serving the northwestern corner of Ohio, where it currently operates
 13 full service branches. First Insurance and Investments is the largest
 property and casualty insurance agency in the Defiance, Ohio area and it also
 specializes in life and group health insurance. The Leader Mortgage Company is
 a mortgage banking company that services nearly 130,000 loans with balances
 totaling over $8.3 billion. The Leader specializes in servicing loans issued
 under various first-time homebuyer programs sponsored by state, county or
 municipal governmental units. For more information, visit the company's web
 site at www.fdef.com .
 
     - Financial Statements and Highlights Follow-
 
     Statements contained herein, including Mr. Small's comments, may not be
 based on historical facts and are "forward-looking statements" within the
 meaning of Section 27A of the Securities Act of 1933, as amended and Section
 21B of the Securities Act of 1934, as amended. Actual results could vary
 materially depending on risks and uncertainties inherent in general and local
 banking, insurance and mortgage conditions, competitive factors specific to
 markets in which the Company and its subsidiaries operate, future interest
 rate levels, legislative and regulatory decisions or capital market
 conditions. The Company assumes no responsibility to update this information.
 For more details, please refer to the Company's SEC filings, including its
 most recent Annual Report on Form 10-K and quarterly reports on Form 10-Q.
 
     Consolidated Balance Sheets
     First Defiance Financial Corp.
 
                                    March 31,       December 31,   March 31,
     (in thousands)                    2001             2000          2000
 
 
 
     Assets
     Cash and cash equivalents
     Cash and amounts due from
       depository institutions       $10,217          $7,320       $11,231
     Interest-bearing deposits        24,128          13,634             -
       Total                          34,345          20,954        11,231
     Securities
     Available-for sale, carried at
       fair value                     52,529          53,176        53,264
     Trading, carried at fair value-     234           3,931
     Held-to-maturity, carried at
       amortized costs                 7,555           7,697         9,428
       Total                          60,084          61,107        66,623
     Loans held for sale             172,427         232,314       189,362
     Loans                           554,804         550,112       486,123
     Allowance for loan losses        (9,296)         (8,904)       (8,241)
     Loans, net                      717,935         773,522       667,244
     Mortgage servicing rights       142,833         134,760       104,684
     Accrued interest receivable       5,790           5,976         5,180
     Federal Home Loan Bank stock     15,524          15,251        14,428
     Office properties and equipment  21,980          22,203        21,249
     Real estate and other assets
       held for sale                     227             312         2,359
     Goodwill, net                    13,785          13,983        14,515
     Other assets                     23,774          24,126        23,277
       Total Assets               $1,036,277     $ 1,072,194     $ 930,790
 
     Liabilities and Stockholders' Equity
     Noninterest-bearing deposits    $28,110         $33,256       $16,752
     Interest-bearing deposits       554,415         512,643       494,305
       Total deposits                582,525         545,899       511,057
     Advances from Federal Home
       Loan Bank                     206,599         223,258       183,570
     Warehouse and term notes payable 22,997         120,425        60,230
     Advance payments by borrowers
       for tax and insurance         105,489          67,982        68,992
     Deferred taxes                    2,906           2,611         2,114
     Other liabilities                13,328          12,546        13,517
     Total liabilities               933,844         972,721       839,480
     Stockholders' Equity
     Preferred stock                       -               -             -
     Common stock                         69              69            68
     Additional paid-in-capital       53,511          53,512        53,344
     Stock acquired by ESOP           (3,026)         (3,238)       (3,451)
     Deferred compensation              (176)           (204)         (391)
     Accumulated other comprehensive
       income (loss)                     592              47        (1,137)
     Retained earnings                51,463          49,287        42,877
     Total stockholders' equity      102,433          99,473        91,310
     Total liabilities and
       stockholders' equity       $1,036,277      $1,072,194      $930,790
 
 
 
     Consolidated Statements of Income (Unaudited)
     First Defiance Financial Corp.
 
                                                     For the Three Months Ended
                                                               March 31,
     (in thousands, except per share amounts)            2001           2000
 
     Interest Income
       Interest on loans                               $ 15,424       $ 14,309
       Investment securities                                946          1,470
       Interest-bearing deposits                             61             51
     Total interest income                               16,431         15,830
     Interest Expense
       Deposits                                           7,081          5,623
       FHLB advances and other                            3,239          2,887
       Notes Payable and Warehouse Loans                    818          1,132
     Total interest expense                              11,138          9,642
     Net interest income                                  5,293          6,188
     Provision for loan losses                              773          1,408
     Net interest income after provision
       for loan losses                                    4,520          4,780
     Noninterest Income
       Mortgage banking income                           11,095          8,104
       Loan service fees and other charges                  584            428
       Dividends on stock                                   273            247
       Gain on sale of loans                              2,164          1,945
       Gain (loss) on sale of securities                   (45)              -
       Trust income                                          29             17
       Other noninterest income                           1,166          1,102
     Total Noninterest Income                            15,266         11,843
     Noninterest Expense
       Compensation and benefits                          5,889          5,515
       Occupancy                                          1,358          1,208
       SAIF deposit insurance premiums                       30             29
       State franchise tax                                  364            295
       Data Processing                                      342            333
       Amortization of mortgage servicing rights          4,455          3,539
       Amortization of goodwill and other intangibles       435            609
       Other noninterest expense                          2,234          1,721
     Total Noninterest Expense                           15,107         13,249
     Income before income taxes                           4,679          3,374
     Federal income taxes                                 1,624          1,173
     Net income                                          $3,055         $2,201
 
     Earnings per share
       Basic                                              $0.48          $0.35
       Diluted                                            $0.47          $0.35
 
     Average Shares Outstanding
       Basic                                              6,366          6,232
       Diluted                                            6,536          6,376
 
 
 
     Financial Summary and Comparison
     First Defiance Financial Corp.
 
                                               Three months ended
                                                    March 31,
                                       2001            2000        % change
 
     (in thousands, except per share data)
 
     Summary of Operations
     Interest income                 $16,431         $15,830           3.8
     Interest expense                 11,138           9,642          15.5
     Net interest income               5,293           6,188         (14.5)
     Provision for loan losses           773           1,408         (45.1)
     Net interest income after
       provision for loan loss         4,520           6,188         (27.0)
     Securities losses                   (45)              -             -
     Noninterest income-excluding
       securities losses              15,311          11,843          29.3
     Noninterest expense              15,107          13,249          14.0
     Income taxes                      1,624           1,173          38.4
     Net income                        3,055           2,201          38.8
     At Period End
     Assets                       $1,036,277       $ 930,790          11.3
     Earning assets                  793,543         748,295           6.0
     Loans held for sale             172,427         189,362          (8.9)
     Loans                           554,804         486,123          14.0
     Allowance for loan losses         9,296           8,241          12.8
     Deposits                        582,525         511,057          14.0
     Stockholders' equity            102,433          91,310          12.2
     Average Balances
     Assets                      $ 1,048,805        $952,566          10.1
     Earning assets                  823,014         776,735           6.0
     Interest-bearing liabilities    849,583         790,548           7.5
     Loans held for sale             206,797         208,181           0.6
     Loans                           540,435         469,776          15.0
     Deposits                        569,998         505,507          12.8
     Stockholders' equity            100,666          90,051          11.8
     Stockholders' equity / assets      9.60%           9.45%            -
     Per Common Share Data
     Net income:
       Basic                           $0.48           $0.35          37.1
       Diluted                          0.47            0.35          34.3
       Cash diluted                     0.50            0.38          31.6
     Dividends                          0.12            0.11           9.1
     Market value:
       High                           $15.63          $12.50          25.0
       Low                             10.69            8.00          33.6
       Close                           15.00            8.63          73.8
     Book Value                        14.93           13.36          11.8
     Tangible Book Value               12.92           11.23          15.0
     Shares outstanding,
       end of period (000)             6,863           6,838           0.4
 
     Performance Ratios (annualized)
     Net interest margin                2.71%           3.31%            -
     Return on average assets           1.17            0.92             -
     Return on average equity          12.14            9.78             -
     Efficiency ratio                  73.48           73.48             -
     Effective tax rate                34.70           34.76             -
     Dividend payout ratio (basic)     25.00           31.43             -
 
     * Cash diluted EPS excludes the after-tax effect of the amortization of
       goodwill related intangibles in net income.
     * Efficiency ratio = Noninterest expense divided by sum of net interest
       income plus noninterest income, excluding securities gains, net and
       asset sales gains, net.
 
 
     Yield Analysis
     First Defiance Financial Corp.
 
                                       Three Months Ended March 31,
                                     2001                       2000
                        Average               Yield   Average             Yield
                        Balance    Interest  Rate(a) Balance  Interest  Rate(a)
 
     Interest-earning assets:
       Loans receivable $747,232    $15,424   8.26% $677,957   $14,309    8.44%
       Securities         60,528      1,007   6.65    84,594     1,521    7.19
       FHLB stock         15,254        273   7.16    14,184       247    6.97
       Total interest-
         earning assets  823,014     16,704   8.12   776,735    16,077    8.28
     Non-interest-earning
       assets            225,791          -      -   175,831         -       -
       Total assets   $1,048,805          -      -  $952,566         -       -
 
     Interest-bearing liabilities:
       Deposits         $569,998     $7,081   4.97% $505,507    $5,623    4.45%
       FHLB advances
         and other       231,186      3,239   5.60   217,869     2,887    5.30
       Notes payable      48,399        818   6.76    67,172     1,132    6.74
       Total interest-
         bearing
         liabilities     849,583     11,138   5.24   790,548     9,642    4.88
     Non-interest-bearing
       liabilities        98,556          -      -    71,967         -       -
       Total liabilities 948,139          -      -   862,515         -       -
     Stockholders'
       equity            100,666          -      -    90,051         -       -
       Total liabilities
         and stock-
         holders'
         equity       $1,048,805          -      -  $952,566         -       -
     Net interest
       income;
       interest
       rate spread             -     $5,566   2.87%        -    $6,435    3.40%
     Net interest
       margin (b)              -          -   2.71%        -         -    3.31%
     Average interest-
       earning assets
       to average
       interest-bearing
       liabilities             -          -     97%        -         -      98%
 
     (a)  Annualized
     (b)  Net interest margin is net interest income divided by average
          interest-earning assets.
 
 
     Selected Quarterly Information
     First Defiance Financial Corp.
 
                      1st Qtr     4th Qtr      3rd Qtr      2nd Qtr    1st Qtr
                        2001        2000         2000         2000       2000
 
     (in thousands, except per share data)
 
     Summary of Operations
     Interest income  $16,431     $17,085      $16,911      $15,359    $15,830
     Interest expense  11,138      11,948       11,687       10,225      9,642
     Net interest
       income           5,293       5,137        5,224        5,134      6,188
     Provision for
       loan losses        773         619          539          581      1,408
     Net interest income
       after provision
       for loan losses  4,520       4,518        4,685        4,553      4,780
     Investment
       securities
       gains (losses)     (45)        (29)         (29)           -          -
     Noninterest income
       (excluding
       securities
       gains)          15,311      14,283       14,060       13,118     11,843
     Noninterest
       expense         15,107      13,898       13,944       13,814     13,249
     Income taxes       1,624       1,738        1,604        1,399      1,173
     Net income         3,055       3,136        3,168        2,458      2,201
     At Period End
     Assets        $1,036,277  $1,072,194   $1,021,897     $979,792   $930,790
     Earning assets   793,543     849,880      807,066      786,108    748,295
     Loans held
       for sale       172,427     232,314      204,129      197,707    189,362
     Loans            554,804     550,112      535,275      519,814    486,123
     Allowance for
       loan losses      9,296       8,904        8,801        8,430      8,241
     Deposits         582,525     545,899      533,746      562,707    511,057
     Stockholders'
       equity         102,433      99,473       96,632       93,474     91,310
     Stockholders'
       equity / assets   9.88%       9.28%        9.46%        9.54%      9.81%
     Goodwill          13,785      13,983       14,172       14,361     14,515
     Average Balances
     Assets        $1,048,805  $1,047,816  $ 1,040,636     $996,145   $952,566
     Earning assets   823,014     833,467      834,369      806,238    776,735
     Interest-bearing
       liabilities    849,583     848,473      849,289      816,699    790,548
     Loans held for
       sale           206,797     221,591      234,740      213,862    208,181
     Loans            540,435     536,243      523,279      513,383    469,776
     Deposits         569,998     538,664      542,468      530,179    505,507
     Stockholders'
       equity         100,666      97,875       94,701       91,851     90,051
     Stockholders'
       equity / assets   9.60%       9.34%        9.10%        9.22%      9.45%
     Credit Quality
     Nonaccrual loans  $2,317      $1,449       $1,520         $209       $207
     Loans over 90
       days past due
       and still
       accruing             -           -            -            -          -
     Total nonperforming
       loans            2,317       1,449        1,520          209        207
     Real estate
       owned (ORE)        227         312          713        1,132      2,359
     Total
       nonperforming
       assets           2,544       1,761        2,233        1,341      2,566
     Net charge-offs      381         515          169          392        925
     Allowance for loan
       losses / loans    1.68%       1.62%        1.64%        1.62%      1.69%
     Allowance for
       loan losses /
       nonperforming
       assets          365.41      505.62       394.13       628.64     321.16
     Allowance for loan
       losses /
       nonperforming
       loans           401.21      614.49       579.01     4,033.49   3,981.16
       Nonperforming
       assets / loans
       plus ORE          0.46        0.32         0.42         0.26       0.53
     Nonperforming
       assets /
       total assets      0.25        0.16         0.22         0.14       0.28
     Net charge-offs /
       average loans
       (annualized)      0.28        0.38         0.13         0.30       0.76
     Per Common Share Data
     Net income:
       Basic            $0.48       $0.49        $0.50        $0.39      $0.35
       Diluted           0.47        0.49         0.49         0.38       0.35
       Cash Diluted      0.50        0.52         0.52         0.42       0.38
       Dividends         0.12        0.12         0.11         0.11       0.11
 
     Market Value:
       High            $15.63      $11.13        $9.63        $9.38     $12.50
       Low              10.69        8.38         8.00         7.63       8.00
       Close            15.00       10.88         9.00         8.06       8.63
     Book Value         14.93       14.49        14.03        13.56      13.36
     Shares outstanding,
       end of period
       (000)            6,863       6,864        6,890        6,891      6,838
     Performance Ratios
       (annualized)
     Net interest
       margin            2.71%       2.60%        2.64%        2.68%      3.31%
     Return on average
       assets            1.17        1.20         1.22         0.99       0.92
     Return on average
       equity           12.14       12.82        13.38        10.70       9.78
     Efficiency ratio   73.48       71.67        70.81        75.69      73.48
     Effective tax
       rate             34.70       35.67        33.61        36.28      34.76
     Dividend payout
       ratio
       (basic)          25.00       24.49        22.00        28.21      31.43
 
     * Cash diluted EPS excludes the after-tax effect of the amortization of
       goodwill related intangibles in net income.
     * Efficiency ratio = Noninterest expense divided by sum of net interest
       income plus noninterest income, excluding securities gains, net and
       asset sales gains, net.
     * Nonperforming loans and nonperforming assets reported do not include
       $16.2 million, $9.4 million $7.4 million, $7.6 million, and $11.8
       million at March 31, 2001, December 31, 2000, September 30, 2000,
       June 30, 2000, and March 31, 2000, respectively, for mortgage loans 90
       days or more past due which have FHA insurance or VA guarantees.  The
       risk of loss on these loans is generally limited to the administrative
       cost of foreclosure actions, which is provided for in the allowance.
 
 
 
     Selected Quarterly Information
     First Defiance Financial Corp.
 
     (in thousands, except per share
     data)                              1st Qtr 2001 4th Qtr 2000 3rd Qtr 2000
     Loan Portfolio Composition
     One to four family residential real
      estate                                $413,050     $478,221     $447,761
     Construction                              7,507        9,628       10,040
     Commercial real estate                  149,268      132,204      119,899
     Commercial                               81,501       82,851       81,808
     Consumer finance                         47,566       52,142       55,484
     Home equity and improvement              31,928       31,836       29,377
     Total loans                             730,820      786,882      744,369
     Less:
        Loans in process                       2,502        3,415        4,014
        Deferred loan origination fees         1,087        1,041          951
        Allowance for loan loss                9,296        8,904        8,801
     Net Loans                              $717,935     $773,522     $730,603
 
     Allowance for loan loss activity
     Beginning allowance                      $8,904       $8,801       $8,430
     Provision                                   773          619          539
     Charge-offs:
       One to four family
        residential real estate                  398          471          328
       Commercial real estate                      -            -            -
       Commercial                                  -            -            -
       Consumer finance                          149          206           14
       Home equity and improvement                 -            -            -
     Total charge-offs                           547          677          342
     Recoveries
       One to four family residential
         real estate                             116          108          114
       Consumer finance                           50           53           60
     Total recoveries                            166          161          174
     Net charge-offs                             381          516          168
     Ending allowance                         $9,296       $8,904       $8,801
 
     Mortgage Servicing
     Number of loans serviced, excluding
      sub-servicing                          129,033      124,108      117,490
     Unpaid principal balance of loans
      serviced                            $8,340,859   $7,990,820   $7,510,881
     Net book value of mortgage serving
      rights                                $142,833     $134,760     $125,790
     Fair market value of mortgage
      servicing rights                      $170,554     $184,888     $172,783
     Weighted average coupon of loans
      serviced                                  7.03%        7.00%        6.95%
 
     Deposit Balances
     Noninterest-bearing demand deposits     $28,110      $33,256      $26,350
     Interest-bearing demand deposits and
      money market                           124,760      111,606      101,725
     Savings deposits                         37,420       37,551       39,291
     Time deposits less than $100,000        332,234      301,571      311,125
     Time deposits greater than $100,000      60,001       61,915       55,255
     Total deposits                         $582,525     $545,899     $533,746
 
     Regulatory Capital (First Federal Bank
      only)
     Tier I Capital                          $61,826      $62,569      $60,379
     Tier I Capital Ratio                       6.30%        6.10%        6.20%
     Required Tier I Capital Ratio              4.00%        4.00%        4.00%
     Risk Based Assets                      $661,336     $692,621     $653,990
     Risk Based Capital                      $70,102      $71,210      $68,559
     Risk Based Capital Ratio                  10.60%       10.28%       10.48%
     Required Risk Based Capital Ratio          8.00%        8.00%        8.00%
 
     Selected Quarterly Information
     First Defiance Financial Corp.
 
     (in thousands, except per share data)       2nd Qtr 2000      1st Qtr 2000
     Loan Portfolio Composition
     One to four family residential real
      estate                                       $440,659          $432,277
     Construction                                     8,958             8,643
     Commercial real estate                         104,794            93,162
     Commercial                                      83,149            60,241
     Consumer finance                                59,102            62,333
     Home equity and improvement                     26,845            23,638
     Total loans                                    723,507           680,294
     Less:
        Loans in process                              5,110             4,029
        Deferred loan origination fees                  876               780
        Allowance for loan loss                       8,430             8,241
     Net Loans                                     $709,091          $667,244
 
     Allowance for loan
      loss activity
     Beginning allowance                             $8,241            $7,758
     Provision                                          581             1,408
     Charge-offs:
         One to four family residential real estate     466               285
         Commercial real estate                           -               182
         Commercial                                       -               155
         Consumer finance                               118               356
         Home equity and improvement                      -                 -
     Total charge-offs                                  584               978
     Recoveries
         One to four family residential real estate     126                 -
         Consumer finance                                66                53
     Total recoveries                                   192                53
     Net charge-offs                                    392               925
     Ending allowance                                $8,430            $8,241
 
     Mortgage Servicing
     Number of loans serviced,
      excluding sub-servicing                       109,429           101,961
     Unpaid principal balance
      of loans serviced                          $6,949,953        $6,433,870
     Net book value of
      mortgage serving rights                      $114,304          $104,684
     Fair market value of
      mortgage servicing
      rights                                       $153,881          $147,038
     Weighted average coupon
      of loans serviced                                6.89%             6.84%
 
     Deposit Balances
     Noninterest-bearing
      demand deposits                               $22,872           $16,752
     Interest-bearing demand
      deposits and money
      market                                         98,616            79,593
     Savings deposits                                44,512            49,512
     Time deposits less than
      $100,000                                      341,690           305,881
     Time deposits greater
      than $100,000                                  55,017            59,319
     Total deposits                                $562,707          $511,057
 
     Regulatory Capital (First
      Federal Bank only)
     Tier I Capital                                 $62,644           $59,769
     Tier I Capital Ratio                              6.66%             6.67%
     Required Tier I Capital
      Ratio                                            4.00%             4.00%
     Risk Based Assets                             $626,041          $581,586
     Risk Based Capital                             $70,476           $65,656
     Risk Based Capital Ratio                         11.26%            11.29%
     Required Risk Based
      Capital Ratio                                    8.00%             8.00%
 
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SOURCE First Defiance Financial Corp.
    DEFIANCE, Ohio, April 24 /PRNewswire Interactive News Release/ --
 First Defiance Financial Corp. (Nasdaq:   FDEF), today announced net income of
 $3.1 million or $.47 per diluted share for its first quarter ended March 31,
 2001. The 2001 quarterly earnings were an increase of $854,000 or 39% from the
 $2.2 million in earnings reported for the first quarter of 2000. On a per
 share basis, the 2001 results were an increase of 34% from the $.35 reported
 for the 2000 first quarter.
     On a cash basis, First Defiance earned $3.3 million or $.50 per share for
 the quarter ended March 31, 2001 compared to $2.4 million or $.38 per share
 for the same period in 2000. Cash earnings factor out the impact of
 amortization of goodwill.
     "We are pleased with the results for the first quarter," noted First
 Defiance's Chairman, President and CEO William J. Small. "Our earnings
 represent a substantial improvement over the 2000 first quarter amounts due to
 continued growth in our mortgage banking income and improvement in our net
 interest margin, both key factors for us to be successful in 2001. We also are
 pleased to report that our asset quality remains very good."
 
     Non-Interest Income Growth Continues
     The improvement in the first quarter of 2001 when compared to 2000 can be
 attributed primarily to continued growth in non-interest income, which
 increased 28.9% to $15.3 million for the 2001 first quarter compared to
 $11.8 million in 2000. Most of the increase was related to mortgage banking
 income which includes mortgage servicing fees and late charges collected from
 the Company's $8.3 billion loan portfolio. Mortgage banking income was
 $11.1 million for the three month period ended March 31, 2001 compared to
 $8.1 million for the same period in 2000, an increase of $3.0 million or
 36.9%. Also gains on sale of mortgage loans increased to $2.2 million for the
 2001 first quarter from $1.9 million in 2000.
     "Our mortgage banking income continues to be a key component of our
 success," noted Mr. Small. "Revenue in that area increased by nearly
 $1 million over the 2000 fourth quarter because the portfolio continues to
 grow. At March 31 we serviced nearly 130,000 loans with balances of
 $8.3 billion compared to 125,000 loans with balances of $8.0 billion just
 three months ago.
     "The decline in market rates since the beginning of the year has resulted
 in a reduction in the level of production in our core first-time homebuyer
 programs," continued Mr. Small. "This coupled with the fact that production in
 the winter and early spring are historically slower periods in our niche has
 resulted in production levels of $464.2 million in the first-time homebuyer
 programs for this quarter, compared to $583.9 million in the 2000 fourth
 quarter and $657.5 million in the 2000 third quarter. A period of declining
 mortgage rates, which we are experiencing in the mortgage industry overall,
 generally has a short-term negative impact on our production levels as
 conventional financing becomes an attractive option for many of the core
 borrowers under the first-time homebuyer programs. However the housing finance
 agencies will generally react to the lower rates by coming out with new more
 attractive programs. For example, the Ohio Housing Financing Agency recently
 released $75 million for first-time homebuyers at a rate of 6.25%. Those funds
 have already been fully allocated to originators and the loans will start to
 be delivered to us in the second quarter.
     "The lower rate environment has resulted in a substantial increase in
 volumes in other areas of our business," continued Mr. Small. "Our mortgage
 production on the retail side of our business has been strong, especially at
 our First Federal Bank subsidiary. The gains we have realized from the sale of
 these loans have helped to offset the reductions in the first-time homebuyer
 programs and the combined gains are not far behind the 2000 fourth quarter
 level. Its another example of how our mortgage banking niche in the first-time
 homebuyer programs and our core banking business complement each other."
 
     Net Interest Margin Up 11 Basis Points from 2000 Fourth Quarter
     Net interest income for the quarter ended March 31, 2001 was $5.3 million
 compared to $6.1 million for the same period in 2000. However, the 2000 first
 quarter results included a one time adjustment of $690,000 for interest on
 certain loans that were more than 90 days delinquent which had been purchased
 out of the servicing portfolio by our Leader Mortgage subsidiary and which had
 FHA insurance or VA guarantees. Net interest margin for the 2001 first quarter
 was 2.71% compared to 3.40% for the same period in 2000 (2.96% if you exclude
 the one time adjustment noted above). The 2.71% margin for the 2001 first
 quarter is an improvement of 11 basis points over the 2.60% margin reported
 for the 2000 fourth quarter.
     "We positioned ourselves to benefit from falling interest rates," noted
 Mr. Small. "Our average cost of funds for the 2001 first quarter was 5.24%, a
 39 basis point reduction from the 2000 fourth quarter. We anticipate that our
 cost of funds will continue to come down further during this year's second
 quarter and that our net interest margin will continue to improve."
     Non-interest expenses increased to $15.1 million for the 2001 first
 quarter from $13.2 million for the same period in 2000. Most of the increase
 was in amortization of mortgage servicing rights, which increased by $916,000
 because of the larger portfolio balance, and an increase in prepayments. The
 lower interest rate environment of the 2001 first quarter was expected to
 increase the level of prepayments in the Company's servicing portfolio.
 However prepayments are still relatively low, averaging only 5.58% for the
 2001 first quarter and only 7.99% during the month of March 2001. The
 prepayment rates are likely to increase if mortgage rates continue to decline
 throughout the year. If this occurs, First Defiance will experience higher
 levels of mortgage servicing rights amortization and potential adjustments to
 recognize impairment in the value of the mortgage servicing rights portfolio.
 Compensation and benefits increased by $374,000 or 6.8% in the first quarter
 of 2001 compared to 2000 due to staffing increases to handle greater volumes
 and the addition of a full service branch in Bowling Green, Ohio in the fourth
 quarter of 2000.
 
     Total Assets Down Slightly, Asset Quality and Future Outlook Remains
      Strong
     Total assets at March 31 were $1.036 billion, a slight reduction from the
 $1.072 billion reported as of December 31, 2000. The reduced total is due to a
 reduction in the available for sale loan portfolio, which fell to
 $172.4 million at March 31, 2001 from $232.3 million at December 31, 2000.
 Other loans receivable, net of allowance for loan losses, were $545.5 million
 compared to $541.2 million at December 31, 2000. Mortgage servicing rights
 were $142.8 million at March 31, 2001 (compared to $134.8 million at
 December 31, 2000). Total deposits, including escrow deposits were
 $688.0 million ($613.9 million at December 31, 2000) while stockholders equity
 was $102.4 million ($99.5 million at December 31, 2000).
     Non-performing assets as a percentage of total assets were .25% at
 March 31, 2001 compared to .16% at December 31, 2000. The allowance for loan
 losses totaled $9.3 million at December 31, 2001, which is 365.4% of non-
 performing assets.
     "Looking ahead to the rest of 2001, there are a number of factors, both
 positive and negative, that will impact net income, most of which are a result
 of the recent interest rate movements," remarked Mr. Small. "We anticipate
 continued margin improvement as we realize the full impact of recent
 reductions in our deposit and borrowing costs. We also expect that production
 in the first-time homebuyer programs will be slower through much of the second
 quarter as the housing finance agencies attempt to react to the lower
 conventional market rates. However the slowdown in this part of our business
 will continue to be offset by increases in conventional mortgage lending, both
 at The Leader and at First Federal Bank. Lower interest rates also will result
 in some moderate impairment adjustments to the servicing portfolio. Finally,
 we anticipate that the servicing portfolio will continue to increase despite
 decreases in production levels and that the related mortgage banking income
 will also continue to increase."
     First Defiance Financial Corp. will host a conference call at 11:00 a.m.
 (EDT) on Tuesday, April  24 to discuss the earnings results and business
 trends. The conference call may be accessed by calling 1-712-257-2860. The
 password for the call is "First Defiance."
     Internet access to the call is also available (in listen-only mode) at the
 following Web address: http://www.videonewswire.com/FIRSTDEFIANCE/042401/ .
     A replay of the call will be available through 12 Noon on May 1 at
 (402) 344-6810. The audio replay of the Internet webcast will be available at
 www.fdef.com until May 31, 2001. For those without Internet access, the first
 quarter earnings release will be available by fax or mail on request. To
 receive a copy, please call FDEF Investor Relations at 614-825-1752.
     First Defiance Financial Corp. is the holding company for First Federal
 Bank of the Midwest and First Insurance and Investments, Defiance OH and The
 Leader Mortgage Company, Cleveland OH. First Federal is a community Savings
 Bank serving the northwestern corner of Ohio, where it currently operates
 13 full service branches. First Insurance and Investments is the largest
 property and casualty insurance agency in the Defiance, Ohio area and it also
 specializes in life and group health insurance. The Leader Mortgage Company is
 a mortgage banking company that services nearly 130,000 loans with balances
 totaling over $8.3 billion. The Leader specializes in servicing loans issued
 under various first-time homebuyer programs sponsored by state, county or
 municipal governmental units. For more information, visit the company's web
 site at www.fdef.com .
 
     - Financial Statements and Highlights Follow-
 
     Statements contained herein, including Mr. Small's comments, may not be
 based on historical facts and are "forward-looking statements" within the
 meaning of Section 27A of the Securities Act of 1933, as amended and Section
 21B of the Securities Act of 1934, as amended. Actual results could vary
 materially depending on risks and uncertainties inherent in general and local
 banking, insurance and mortgage conditions, competitive factors specific to
 markets in which the Company and its subsidiaries operate, future interest
 rate levels, legislative and regulatory decisions or capital market
 conditions. The Company assumes no responsibility to update this information.
 For more details, please refer to the Company's SEC filings, including its
 most recent Annual Report on Form 10-K and quarterly reports on Form 10-Q.
 
     Consolidated Balance Sheets
     First Defiance Financial Corp.
 
                                    March 31,       December 31,   March 31,
     (in thousands)                    2001             2000          2000
 
 
 
     Assets
     Cash and cash equivalents
     Cash and amounts due from
       depository institutions       $10,217          $7,320       $11,231
     Interest-bearing deposits        24,128          13,634             -
       Total                          34,345          20,954        11,231
     Securities
     Available-for sale, carried at
       fair value                     52,529          53,176        53,264
     Trading, carried at fair value-     234           3,931
     Held-to-maturity, carried at
       amortized costs                 7,555           7,697         9,428
       Total                          60,084          61,107        66,623
     Loans held for sale             172,427         232,314       189,362
     Loans                           554,804         550,112       486,123
     Allowance for loan losses        (9,296)         (8,904)       (8,241)
     Loans, net                      717,935         773,522       667,244
     Mortgage servicing rights       142,833         134,760       104,684
     Accrued interest receivable       5,790           5,976         5,180
     Federal Home Loan Bank stock     15,524          15,251        14,428
     Office properties and equipment  21,980          22,203        21,249
     Real estate and other assets
       held for sale                     227             312         2,359
     Goodwill, net                    13,785          13,983        14,515
     Other assets                     23,774          24,126        23,277
       Total Assets               $1,036,277     $ 1,072,194     $ 930,790
 
     Liabilities and Stockholders' Equity
     Noninterest-bearing deposits    $28,110         $33,256       $16,752
     Interest-bearing deposits       554,415         512,643       494,305
       Total deposits                582,525         545,899       511,057
     Advances from Federal Home
       Loan Bank                     206,599         223,258       183,570
     Warehouse and term notes payable 22,997         120,425        60,230
     Advance payments by borrowers
       for tax and insurance         105,489          67,982        68,992
     Deferred taxes                    2,906           2,611         2,114
     Other liabilities                13,328          12,546        13,517
     Total liabilities               933,844         972,721       839,480
     Stockholders' Equity
     Preferred stock                       -               -             -
     Common stock                         69              69            68
     Additional paid-in-capital       53,511          53,512        53,344
     Stock acquired by ESOP           (3,026)         (3,238)       (3,451)
     Deferred compensation              (176)           (204)         (391)
     Accumulated other comprehensive
       income (loss)                     592              47        (1,137)
     Retained earnings                51,463          49,287        42,877
     Total stockholders' equity      102,433          99,473        91,310
     Total liabilities and
       stockholders' equity       $1,036,277      $1,072,194      $930,790
 
 
 
     Consolidated Statements of Income (Unaudited)
     First Defiance Financial Corp.
 
                                                     For the Three Months Ended
                                                               March 31,
     (in thousands, except per share amounts)            2001           2000
 
     Interest Income
       Interest on loans                               $ 15,424       $ 14,309
       Investment securities                                946          1,470
       Interest-bearing deposits                             61             51
     Total interest income                               16,431         15,830
     Interest Expense
       Deposits                                           7,081          5,623
       FHLB advances and other                            3,239          2,887
       Notes Payable and Warehouse Loans                    818          1,132
     Total interest expense                              11,138          9,642
     Net interest income                                  5,293          6,188
     Provision for loan losses                              773          1,408
     Net interest income after provision
       for loan losses                                    4,520          4,780
     Noninterest Income
       Mortgage banking income                           11,095          8,104
       Loan service fees and other charges                  584            428
       Dividends on stock                                   273            247
       Gain on sale of loans                              2,164          1,945
       Gain (loss) on sale of securities                   (45)              -
       Trust income                                          29             17
       Other noninterest income                           1,166          1,102
     Total Noninterest Income                            15,266         11,843
     Noninterest Expense
       Compensation and benefits                          5,889          5,515
       Occupancy                                          1,358          1,208
       SAIF deposit insurance premiums                       30             29
       State franchise tax                                  364            295
       Data Processing                                      342            333
       Amortization of mortgage servicing rights          4,455          3,539
       Amortization of goodwill and other intangibles       435            609
       Other noninterest expense                          2,234          1,721
     Total Noninterest Expense                           15,107         13,249
     Income before income taxes                           4,679          3,374
     Federal income taxes                                 1,624          1,173
     Net income                                          $3,055         $2,201
 
     Earnings per share
       Basic                                              $0.48          $0.35
       Diluted                                            $0.47          $0.35
 
     Average Shares Outstanding
       Basic                                              6,366          6,232
       Diluted                                            6,536          6,376
 
 
 
     Financial Summary and Comparison
     First Defiance Financial Corp.
 
                                               Three months ended
                                                    March 31,
                                       2001            2000        % change
 
     (in thousands, except per share data)
 
     Summary of Operations
     Interest income                 $16,431         $15,830           3.8
     Interest expense                 11,138           9,642          15.5
     Net interest income               5,293           6,188         (14.5)
     Provision for loan losses           773           1,408         (45.1)
     Net interest income after
       provision for loan loss         4,520           6,188         (27.0)
     Securities losses                   (45)              -             -
     Noninterest income-excluding
       securities losses              15,311          11,843          29.3
     Noninterest expense              15,107          13,249          14.0
     Income taxes                      1,624           1,173          38.4
     Net income                        3,055           2,201          38.8
     At Period End
     Assets                       $1,036,277       $ 930,790          11.3
     Earning assets                  793,543         748,295           6.0
     Loans held for sale             172,427         189,362          (8.9)
     Loans                           554,804         486,123          14.0
     Allowance for loan losses         9,296           8,241          12.8
     Deposits                        582,525         511,057          14.0
     Stockholders' equity            102,433          91,310          12.2
     Average Balances
     Assets                      $ 1,048,805        $952,566          10.1
     Earning assets                  823,014         776,735           6.0
     Interest-bearing liabilities    849,583         790,548           7.5
     Loans held for sale             206,797         208,181           0.6
     Loans                           540,435         469,776          15.0
     Deposits                        569,998         505,507          12.8
     Stockholders' equity            100,666          90,051          11.8
     Stockholders' equity / assets      9.60%           9.45%            -
     Per Common Share Data
     Net income:
       Basic                           $0.48           $0.35          37.1
       Diluted                          0.47            0.35          34.3
       Cash diluted                     0.50            0.38          31.6
     Dividends                          0.12            0.11           9.1
     Market value:
       High                           $15.63          $12.50          25.0
       Low                             10.69            8.00          33.6
       Close                           15.00            8.63          73.8
     Book Value                        14.93           13.36          11.8
     Tangible Book Value               12.92           11.23          15.0
     Shares outstanding,
       end of period (000)             6,863           6,838           0.4
 
     Performance Ratios (annualized)
     Net interest margin                2.71%           3.31%            -
     Return on average assets           1.17            0.92             -
     Return on average equity          12.14            9.78             -
     Efficiency ratio                  73.48           73.48             -
     Effective tax rate                34.70           34.76             -
     Dividend payout ratio (basic)     25.00           31.43             -
 
     * Cash diluted EPS excludes the after-tax effect of the amortization of
       goodwill related intangibles in net income.
     * Efficiency ratio = Noninterest expense divided by sum of net interest
       income plus noninterest income, excluding securities gains, net and
       asset sales gains, net.
 
 
     Yield Analysis
     First Defiance Financial Corp.
 
                                       Three Months Ended March 31,
                                     2001                       2000
                        Average               Yield   Average             Yield
                        Balance    Interest  Rate(a) Balance  Interest  Rate(a)
 
     Interest-earning assets:
       Loans receivable $747,232    $15,424   8.26% $677,957   $14,309    8.44%
       Securities         60,528      1,007   6.65    84,594     1,521    7.19
       FHLB stock         15,254        273   7.16    14,184       247    6.97
       Total interest-
         earning assets  823,014     16,704   8.12   776,735    16,077    8.28
     Non-interest-earning
       assets            225,791          -      -   175,831         -       -
       Total assets   $1,048,805          -      -  $952,566         -       -
 
     Interest-bearing liabilities:
       Deposits         $569,998     $7,081   4.97% $505,507    $5,623    4.45%
       FHLB advances
         and other       231,186      3,239   5.60   217,869     2,887    5.30
       Notes payable      48,399        818   6.76    67,172     1,132    6.74
       Total interest-
         bearing
         liabilities     849,583     11,138   5.24   790,548     9,642    4.88
     Non-interest-bearing
       liabilities        98,556          -      -    71,967         -       -
       Total liabilities 948,139          -      -   862,515         -       -
     Stockholders'
       equity            100,666          -      -    90,051         -       -
       Total liabilities
         and stock-
         holders'
         equity       $1,048,805          -      -  $952,566         -       -
     Net interest
       income;
       interest
       rate spread             -     $5,566   2.87%        -    $6,435    3.40%
     Net interest
       margin (b)              -          -   2.71%        -         -    3.31%
     Average interest-
       earning assets
       to average
       interest-bearing
       liabilities             -          -     97%        -         -      98%
 
     (a)  Annualized
     (b)  Net interest margin is net interest income divided by average
          interest-earning assets.
 
 
     Selected Quarterly Information
     First Defiance Financial Corp.
 
                      1st Qtr     4th Qtr      3rd Qtr      2nd Qtr    1st Qtr
                        2001        2000         2000         2000       2000
 
     (in thousands, except per share data)
 
     Summary of Operations
     Interest income  $16,431     $17,085      $16,911      $15,359    $15,830
     Interest expense  11,138      11,948       11,687       10,225      9,642
     Net interest
       income           5,293       5,137        5,224        5,134      6,188
     Provision for
       loan losses        773         619          539          581      1,408
     Net interest income
       after provision
       for loan losses  4,520       4,518        4,685        4,553      4,780
     Investment
       securities
       gains (losses)     (45)        (29)         (29)           -          -
     Noninterest income
       (excluding
       securities
       gains)          15,311      14,283       14,060       13,118     11,843
     Noninterest
       expense         15,107      13,898       13,944       13,814     13,249
     Income taxes       1,624       1,738        1,604        1,399      1,173
     Net income         3,055       3,136        3,168        2,458      2,201
     At Period End
     Assets        $1,036,277  $1,072,194   $1,021,897     $979,792   $930,790
     Earning assets   793,543     849,880      807,066      786,108    748,295
     Loans held
       for sale       172,427     232,314      204,129      197,707    189,362
     Loans            554,804     550,112      535,275      519,814    486,123
     Allowance for
       loan losses      9,296       8,904        8,801        8,430      8,241
     Deposits         582,525     545,899      533,746      562,707    511,057
     Stockholders'
       equity         102,433      99,473       96,632       93,474     91,310
     Stockholders'
       equity / assets   9.88%       9.28%        9.46%        9.54%      9.81%
     Goodwill          13,785      13,983       14,172       14,361     14,515
     Average Balances
     Assets        $1,048,805  $1,047,816  $ 1,040,636     $996,145   $952,566
     Earning assets   823,014     833,467      834,369      806,238    776,735
     Interest-bearing
       liabilities    849,583     848,473      849,289      816,699    790,548
     Loans held for
       sale           206,797     221,591      234,740      213,862    208,181
     Loans            540,435     536,243      523,279      513,383    469,776
     Deposits         569,998     538,664      542,468      530,179    505,507
     Stockholders'
       equity         100,666      97,875       94,701       91,851     90,051
     Stockholders'
       equity / assets   9.60%       9.34%        9.10%        9.22%      9.45%
     Credit Quality
     Nonaccrual loans  $2,317      $1,449       $1,520         $209       $207
     Loans over 90
       days past due
       and still
       accruing             -           -            -            -          -
     Total nonperforming
       loans            2,317       1,449        1,520          209        207
     Real estate
       owned (ORE)        227         312          713        1,132      2,359
     Total
       nonperforming
       assets           2,544       1,761        2,233        1,341      2,566
     Net charge-offs      381         515          169          392        925
     Allowance for loan
       losses / loans    1.68%       1.62%        1.64%        1.62%      1.69%
     Allowance for
       loan losses /
       nonperforming
       assets          365.41      505.62       394.13       628.64     321.16
     Allowance for loan
       losses /
       nonperforming
       loans           401.21      614.49       579.01     4,033.49   3,981.16
       Nonperforming
       assets / loans
       plus ORE          0.46        0.32         0.42         0.26       0.53
     Nonperforming
       assets /
       total assets      0.25        0.16         0.22         0.14       0.28
     Net charge-offs /
       average loans
       (annualized)      0.28        0.38         0.13         0.30       0.76
     Per Common Share Data
     Net income:
       Basic            $0.48       $0.49        $0.50        $0.39      $0.35
       Diluted           0.47        0.49         0.49         0.38       0.35
       Cash Diluted      0.50        0.52         0.52         0.42       0.38
       Dividends         0.12        0.12         0.11         0.11       0.11
 
     Market Value:
       High            $15.63      $11.13        $9.63        $9.38     $12.50
       Low              10.69        8.38         8.00         7.63       8.00
       Close            15.00       10.88         9.00         8.06       8.63
     Book Value         14.93       14.49        14.03        13.56      13.36
     Shares outstanding,
       end of period
       (000)            6,863       6,864        6,890        6,891      6,838
     Performance Ratios
       (annualized)
     Net interest
       margin            2.71%       2.60%        2.64%        2.68%      3.31%
     Return on average
       assets            1.17        1.20         1.22         0.99       0.92
     Return on average
       equity           12.14       12.82        13.38        10.70       9.78
     Efficiency ratio   73.48       71.67        70.81        75.69      73.48
     Effective tax
       rate             34.70       35.67        33.61        36.28      34.76
     Dividend payout
       ratio
       (basic)          25.00       24.49        22.00        28.21      31.43
 
     * Cash diluted EPS excludes the after-tax effect of the amortization of
       goodwill related intangibles in net income.
     * Efficiency ratio = Noninterest expense divided by sum of net interest
       income plus noninterest income, excluding securities gains, net and
       asset sales gains, net.
     * Nonperforming loans and nonperforming assets reported do not include
       $16.2 million, $9.4 million $7.4 million, $7.6 million, and $11.8
       million at March 31, 2001, December 31, 2000, September 30, 2000,
       June 30, 2000, and March 31, 2000, respectively, for mortgage loans 90
       days or more past due which have FHA insurance or VA guarantees.  The
       risk of loss on these loans is generally limited to the administrative
       cost of foreclosure actions, which is provided for in the allowance.
 
 
 
     Selected Quarterly Information
     First Defiance Financial Corp.
 
     (in thousands, except per share
     data)                              1st Qtr 2001 4th Qtr 2000 3rd Qtr 2000
     Loan Portfolio Composition
     One to four family residential real
      estate                                $413,050     $478,221     $447,761
     Construction                              7,507        9,628       10,040
     Commercial real estate                  149,268      132,204      119,899
     Commercial                               81,501       82,851       81,808
     Consumer finance                         47,566       52,142       55,484
     Home equity and improvement              31,928       31,836       29,377
     Total loans                             730,820      786,882      744,369
     Less:
        Loans in process                       2,502        3,415        4,014
        Deferred loan origination fees         1,087        1,041          951
        Allowance for loan loss                9,296        8,904        8,801
     Net Loans                              $717,935     $773,522     $730,603
 
     Allowance for loan loss activity
     Beginning allowance                      $8,904       $8,801       $8,430
     Provision                                   773          619          539
     Charge-offs:
       One to four family
        residential real estate                  398          471          328
       Commercial real estate                      -            -            -
       Commercial                                  -            -            -
       Consumer finance                          149          206           14
       Home equity and improvement                 -            -            -
     Total charge-offs                           547          677          342
     Recoveries
       One to four family residential
         real estate                             116          108          114
       Consumer finance                           50           53           60
     Total recoveries                            166          161          174
     Net charge-offs                             381          516          168
     Ending allowance                         $9,296       $8,904       $8,801
 
     Mortgage Servicing
     Number of loans serviced, excluding
      sub-servicing                          129,033      124,108      117,490
     Unpaid principal balance of loans
      serviced                            $8,340,859   $7,990,820   $7,510,881
     Net book value of mortgage serving
      rights                                $142,833     $134,760     $125,790
     Fair market value of mortgage
      servicing rights                      $170,554     $184,888     $172,783
     Weighted average coupon of loans
      serviced                                  7.03%        7.00%        6.95%
 
     Deposit Balances
     Noninterest-bearing demand deposits     $28,110      $33,256      $26,350
     Interest-bearing demand deposits and
      money market                           124,760      111,606      101,725
     Savings deposits                         37,420       37,551       39,291
     Time deposits less than $100,000        332,234      301,571      311,125
     Time deposits greater than $100,000      60,001       61,915       55,255
     Total deposits                         $582,525     $545,899     $533,746
 
     Regulatory Capital (First Federal Bank
      only)
     Tier I Capital                          $61,826      $62,569      $60,379
     Tier I Capital Ratio                       6.30%        6.10%        6.20%
     Required Tier I Capital Ratio              4.00%        4.00%        4.00%
     Risk Based Assets                      $661,336     $692,621     $653,990
     Risk Based Capital                      $70,102      $71,210      $68,559
     Risk Based Capital Ratio                  10.60%       10.28%       10.48%
     Required Risk Based Capital Ratio          8.00%        8.00%        8.00%
 
     Selected Quarterly Information
     First Defiance Financial Corp.
 
     (in thousands, except per share data)       2nd Qtr 2000      1st Qtr 2000
     Loan Portfolio Composition
     One to four family residential real
      estate                                       $440,659          $432,277
     Construction                                     8,958             8,643
     Commercial real estate                         104,794            93,162
     Commercial                                      83,149            60,241
     Consumer finance                                59,102            62,333
     Home equity and improvement                     26,845            23,638
     Total loans                                    723,507           680,294
     Less:
        Loans in process                              5,110             4,029
        Deferred loan origination fees                  876               780
        Allowance for loan loss                       8,430             8,241
     Net Loans                                     $709,091          $667,244
 
     Allowance for loan
      loss activity
     Beginning allowance                             $8,241            $7,758
     Provision                                          581             1,408
     Charge-offs:
         One to four family residential real estate     466               285
         Commercial real estate                           -               182
         Commercial                                       -               155
         Consumer finance                               118               356
         Home equity and improvement                      -                 -
     Total charge-offs                                  584               978
     Recoveries
         One to four family residential real estate     126                 -
         Consumer finance                                66                53
     Total recoveries                                   192                53
     Net charge-offs                                    392               925
     Ending allowance                                $8,430            $8,241
 
     Mortgage Servicing
     Number of loans serviced,
      excluding sub-servicing                       109,429           101,961
     Unpaid principal balance
      of loans serviced                          $6,949,953        $6,433,870
     Net book value of
      mortgage serving rights                      $114,304          $104,684
     Fair market value of
      mortgage servicing
      rights                                       $153,881          $147,038
     Weighted average coupon
      of loans serviced                                6.89%             6.84%
 
     Deposit Balances
     Noninterest-bearing
      demand deposits                               $22,872           $16,752
     Interest-bearing demand
      deposits and money
      market                                         98,616            79,593
     Savings deposits                                44,512            49,512
     Time deposits less than
      $100,000                                      341,690           305,881
     Time deposits greater
      than $100,000                                  55,017            59,319
     Total deposits                                $562,707          $511,057
 
     Regulatory Capital (First
      Federal Bank only)
     Tier I Capital                                 $62,644           $59,769
     Tier I Capital Ratio                              6.66%             6.67%
     Required Tier I Capital
      Ratio                                            4.00%             4.00%
     Risk Based Assets                             $626,041          $581,586
     Risk Based Capital                             $70,476           $65,656
     Risk Based Capital Ratio                         11.26%            11.29%
     Required Risk Based
      Capital Ratio                                    8.00%             8.00%
 
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 SOURCE  First Defiance Financial Corp.