First Defiance Financial (FDEF) in Defiance, Ohio, reported third-quarter income of $5.4 million, up 32% from a year earlier, as credit costs dissipated.

The $2.06 billion-asset company’s results, at 54 cents per share, beat analysts’ consensus estimates by 14 cents.

The results included a $705,000 provision for credit costs, down 77% from a year earlier. The provision for the second quarter was $4.1 million.

First Defiance's net chargeoffs for the quarter were $804,000, and its allowance for loan losses fell to 1.74%, down 87 basis points from a year earlier.

Nonperforming assets were $45 million, or 2.19% of total assets, down 21% from a year earlier. The company nearly halved its repossessed assets, including nonperforming assets, to $2.8 million.

"We saw a substantial decline in the level of chargeoffs during the quarter, reaching the lowest levels since before the economic downturn. We have also made continued improvement in our levels of nonperforming assets," William J. Small, the president and chief executive of First Defiance, said in a press release. “We believe we are at a point where declines in property values have materially slowed" and the valuation of its loan portfolio has stabilized.

Mortgage revenues were $2.2 million, up 63% from a year earlier.

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