Summaryof Cash Bonus Plan

The Compensation Committee of the Board of Directors of First Defiance Financial Corp. (“First Defiance”) administers First Defiance’s annual cash bonus plan for officers of First Defiance and its subsidiary, First Federal Bank of the Midwest.  The annual cash bonus paid to officers is based on First Defiance’s annual performance as measured by four key performance measures: earnings per share, growth in revenue, return on average equity and return on average assets.  In determining the amount of cash bonus to be awarded, each of the target measures is assigned a weighting factor: 50% for earnings per share and  20% for revenue growth, 20% for return on average equity and 10% for return on average assets.

           Within each of these four components, there are threshold, target and maximum goals. Performance below the threshold results in no payout for that component.  Performance at the threshold level results in a 50% payout of that component.  Performance at the target level results in a 100% payout of that component.  Performance at or above the maximum goal results in a 150% payout of that component.  Exact payout percentages for payouts within the 50% to 150% range are calculated based on actual results.  The payout percentage achieved for each component is then multiplied by the weighting factor (50%, 20%, or 10%) and those four components are added together to determine the percentage of potential bonus that will be paid.