First Defiance to acquire United Community Financial for £383m

The combination of First Defiance and United Community is expected to have nearly $6.1bn (£4.95bn) in assets, $5bn (£4.05bn) in loans and $4.9bn (£3.97bn) in deposits, based on financial information as of 30 June 2019

First Defiance Financial has agreed to acquire Ohio-based bank holding company United Community Financial in an all-stock deal worth around $473m (£383.56m).

Headquartered in Defiance, First Defiance is the holding company for First Federal Bank of the Midwest. On the other hand, United Community Financial, which is headquartered in Youngstown, is the holding company for Home Savings Bank.

As per the terms of the deal, United Community will merge into First Defiance, while Home Savings Bank will merge into First Federal Bank of the Midwest.

First Defiance had $3.3bn (£2.68bn) in assets, $2.6bn (£ 2.11bn) in loans, $2.7bn (£2.19bn) in deposits and $407.2m (£330.2m) in shareholders’ equity, as of 30 June 2019. Its subsidiary, First Federal Bank, which was established in 1920, has 44 branches across northwest and central Ohio, southeast Michigan and northeast Indiana.

United Community had $2.9bn (£2.35bn) in assets, $2.3bn (£1.87bn) in loans, $2.3bn (£1.87bn) in deposits and $317.6m (£257.54m) in shareholders’ equity, as of 30 June 2019. Its subsidiary, Home Savings Bank, which was established in 1889, provides commercial, wealth management and consumer banking products and services.

Home Savings has 33 retail banking offices, of which 32 are in Ohio, while the remaining one is in Pennsylvania.

The combined bank holding company, post-merger, is expected to use the respective strengths of each institution in commercial banking, residential lending, retail, and wealth management. It is also expected to be better placed to cater to the geographies of Ohio, Michigan, Indiana, Pennsylvania and West Virginia with enhanced scale and expanded product offerings.

First Defiance president and CEO Donald Hileman said: “After a long relationship between the two companies, we are thrilled to bring together these two great Ohio community bank franchises. These organizations are a perfect strategic fit, balancing the strengths of each.

“With enhanced scale, we will have the opportunity to continue to grow and compete more effectively in all the markets we serve for the foreseeable future.”

Terms of the First Defiance, United Community merger

Under the terms of the deal, United Community shareholders will exchange each of their shares with 0.3715 of First Defiance common stock. Post-merger, First Defiance shareholders will own nearly 52.5% stake in the combined company, while United Community shareholders will own about 47.5% stake.

United Community president and CEO Gary Small said: “We are pleased to partner with a company that has a shared community-minded vision, culture and focus on performance.

“I truly believe that this merger is a win-win for all stakeholders: customers, associates, shareholders as well as the communities we serve.”

The deal is likely to be completed early in the first quarter of 2020, which will be based on shareholders’ approvals of the two bank holding companies, regulatory approvals, and also satisfaction or waiver of other customary closing conditions.