Tag - Fdef

The Russell 2000 (NYSE: IWM) and the Dow Jones Industrial Average (INDU) fell for the second day in a row on news of housing and subprime concerns and record oil prices. The small-cap index let go 6.01 points, or 0.72%, to 823.35. The Dow lost 71.86 points, or 0.51%, to 13,912.94.

On a year-to-date basis, the Russell 2000 has increased 4.56%, while the Dow has added 11.53%.

Predictions by high-level U.S. officials that the slump in the housing sector will get worse and slow down economic growth brought out the bears today, as small and large caps ended in the red for the second consecutive day.

After the close on Monday, Fed chairman Ben Bernanke said that the slump in the housing sector is expected to get worse and be a drag on economic growth going into 2008. Treasury Secretary Henry Paulson made similar comments at Georgetown University’s law school today, adding that the federal government should work to avoid foreclosures and prevent property values from falling further.

As if to confirm the downcast predictions, the National Association of Home Builders announced that its monthly home builder confidence index fell more than expected in October to a record low.

Contributing to the negative mood was news of weaker-than-expected third-quarter earnings for Wells Fargo & Company (NYSE: WFC). CEO John Stumpf blamed disruptions in the credit markets.

First Defiance Financial (Nasdaq: FDEF) CFO John Wahl said the reversal of previously recorded interest income on loans, provisions expenses, poor asset quality and flood damage at the financial services provider’s Findlay, Ohio, and Ottawa, Ohio, facilities weighed down third-quarter earnings. Wahl made the comments during a midday conference call.

“Our expectation is that we’ll continue to experience downward pressure on our margin for at least the balance of the year,” Wahl said.

The damage was caused by the worst flooding in a century of Ohio's Blanchard River and was not covered by insurance. The flood incurred an after-tax expense of $0.16 million, or $0.02 per share.

During the third-quarter ended Sept. 30, Wahl said the Defiance, Ohio-based company’s interest income was negatively impacted by an increase in the balance of loans that were delinquent by more than 90 days. The company reversed $0.33 million of interest on delinquent loans, compared to $0.09 million a year earlier, the chief financial officer said.

Net interest was also affected by deposit costs increasing faster than loan yields, he said. During the third quarter, Wahl said the total cost of interest-bearing deposits increased by six basis points, while the yields on earning assets declined by six basis points.

“We’ve attempted to counter that by dropping our money market savings rate,” Wahl said. “Our expectation is that we’ll continue to experience downward pressure on our margin for at least the balance of the year.”

Another factor contributing to lower earnings was provision expense and other asset-quality issues, he said. The company’s provision for loan losses for the 2007 third quarter was $0.67 million, compared to $0.37 million in the third quarter of 2006, he said.

Shares First Defiance Financial Corp. (Nasdaq: FDEF) are falling following news after the close on Tuesday that it will acquire Pavilion Bancorp Inc. and its subsidiary, the Bank of Lenawee, for $55.7 million.

Defiance, Ohio-based First Defiance Financial, which is the holding company for First Federal Bank of the Midwest and First Insurance & Investments, announced that it has entered into a definitive buyout agreement according to which each Pavilion Bancorp shareholder will receive 1.4209 shares of First Defiance common stock and $37.50 in cash.

“This acquisition allows us to expand farther north into the southeastern Michigan market and it adds the type of communities that have been very responsive to our ‘Customer First’ style of banking,” said First Defiance Chairman, President and CEO William Small in a statement.

Pavilion Bancorp is the parent corporation of Adrian, Mich.-based Bank of Lenawee, which has eight branches in the southeastern part of the state and $290 million in assets.

The transaction should be finalized in the first quarter of 2008, after which First Defiance will seek regulatory approval to convert to a bank holding company. Additionally, First Defiance said that the acquisition will be accretive to earnings during the first 12 months. The company estimates annual pre-tax expense reductions of approximately $3.5 million with the majority realized in 2008.

At 1:06 p.m. ET, shares of First Defiance Financial Corp. (FDEF) were down $1.32, or 5%, to $25.45. The 52-week high of $30.70 was reached on Dec. 27, 2006. The 52-week low of $23.99 was touched on Aug. 10, 2006.