First Defiance Merger With United Community on Tap

September 9, 2019 | Community Banking, Insights

Deal Serves Rust Belt Communities

The First Defiance merger terms are now available.

Financial Corp (FDEF)  and United Community Financial (UCFC) are set to merge. The two companies signed an agreement that will see United Community merge into First Defiance in a stock-for-stock transaction.

Under the terms of the merger agreement, shareholders of United Community will receive 0.3715 shares of First Defiance common stock for each share of United Community common stock. Based upon a closing price for First Defiance as of September 6 of $26.32, the transaction’s value sits at $473 million.

First Defiance Merger 

This is a merger of equals (MOE) that will give the combined banks the scale needed to cope with rising regulatory and technology costs and the prospects of lower net interest margin that will stress the bottom line. We are seeing more of these MOE transactions as banks fight to grow in a slow economy.

The combined banks will have total assets of about $6.1 billion. This deal makes the firms much more competitive in the Ohio, Michigan, Indiana, Pennsylvania and West Virginia. Donald P. Hileman, President and Chief Executive Officer of First Defiance will become the CEO of the company. Meanwhile, United Community CEO Gary M. Small will serve as President.

The scale of the new bank will allow them to cut costs dramatically and earnings for the new bank should grow by about 14$ while once the cutting has been done The return on tangible equity will improve to 17% and the return on average assets should be in excess of 1.5%.

The deal is subject to shareholder and regulatory approval and should close in the first quarter of 2020. For more merger news, check out our daily coverage of deals.

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