FIRST
DEFIANCE FINANCIAL CORP. TO ACQUIRE PAVILION
BANCORP,
INC.
·
|
Acquisition
will add $230 million in deposits and $243 million in
loans
|
·
|
First
Defiance expands market area into southeastern
Michigan
|
·
|
Accretive
to earnings in the first full year of
operations
|
·
|
Transaction
is expected to close late in first quarter of
2008
|
Defiance,
Ohio (October 2, 2007)-- First Defiance Financial Corp. (NASDAQ: FDEF) and
Pavilion Bancorp, Inc. (OTCBB:PVLN) today announced the execution of a
definitive agreement for First Defiance to acquire Pavilion Bancorp, Inc.
and
its wholly owned subsidiary, the Bank of Lenawee, which is headquartered
in
Adrian, Michigan. Each Pavilion Bancorp shareholder will receive 1.4209 shares
of First Defiance common stock and $37.50 in cash. Based on the
closing price of First Defiance shares on October 2, 2007, the transaction
is
valued at $55.7 million or $75.54 per share. With $290 million in assets,
The
Bank of Lenawee has eight banking offices in Lenawee and Hillsdale Counties
in
southeastern Michigan: two in Adrian, two in Tecumseh and one
each
in
Hudson, Morenci, Waldron and Hillsdale. Combined, the banking offices had
$230
million in deposits and $243 million in loans as of June 30, 2007. First
Defiance Financial Corp. and Pavilion Bancorp anticipate that the transaction
will be completed late in the first quarter of 2008, pending regulatory
approvals, the approval of shareholders of Pavilion and completion of other
customary closing conditions. Concurrent with the regulatory approval process
for the merger, First Defiance Financial Corp. will apply to the Federal
Reserve
Board for approval to convert to a bank holding company and its subsidiary,
First Federal Bank of the Midwest, will seek approval to convert to a national
bank charter.
First
Defiance Chairman, President and CEO William J. Small said the acquisition
expands First Federal Bank’s presence into adjacent markets and supports its
growth strategy. “We have a strong presence in northwest Ohio; 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,” Small said. “In addition, Bank of Lenawee has a solid
reputation and a base of commercial and retail customers that is similar
to our
existing franchise. We will continue with a local decision-making strategy
that
the market is accustomed to and we look forward to working with the staff,
customers and shareholders for a successful transition.”
“We
believe that First Defiance, with its proven commitment to community banking,
is
an ideal partner for Pavilion Bancorp,” commented Doug Kapnick, Chairman of
Pavilion Bancorp. “We believe this transaction will produce significant benefits
for our shareholders, customers and communities.”
“We
are
pleased with the opportunities this gives us to expand the product offerings
to
our customers, while maintaining the tradition of local decision-making and
superior customer service,” said Richard DeVries, President and CEO of Bank of
Lenawee.
“Our
strength in community banking is based on the long-term relationships we
build
in our markets and we have a proud history of being good corporate citizens,”
added Mr. Small. “We will continue to provide a true community bank choice for
the customers in Adrian and surrounding areas. Plus, a national bank
charter is more consistent with First Federal Bank’s operating strategy as a
full-service community bank.“
First
Defiance expects the merger to be accretive to earnings in the first 12 months
with no repurchase assumptions or revenue synergies assumed. Management
estimates that annual pre-tax expense reductions will be approximately $3.5
million with approximately 75% to be realized in 2008 and the balance
thereafter. The company expects one-time costs, including acquisition-related
and restructuring charges will not exceed $3.8 million on a pre-tax basis
over
the integration period. Upon completion of the acquisition, on a pro
forma basis using June 30, 2007 data, First Defiance Financial Corp. will
have
$1.8 billion in total assets and $1.4 billion in total deposits.
Pavilion
Bancorp was advised by Donnelly, Penman and Partners, and its legal counsel
was
Varnum, Riddering, Schmidt and Howlett, LLP. First Defiance was advised by
Keefe, Bruyette & Woods and its legal counsel was Vorys, Sater, Seymour and
Pease, LLP.
About
First Defiance Financial Corp.
First
Defiance Financial Corp., headquartered in Defiance, OH, is the holding company
for First Federal Bank of the Midwest and First Insurance & Investments.
First Federal operates 27 full service branches in northwest Ohio and Allen
County, Indiana. With offices in Defiance and Bowling Green, Ohio, First
Insurance & Investments is the largest property and casualty insurance
company in the Defiance, OH area and specializes in life and group health
insurance. For more information, visit the company’s Web site at
www.fdef.com.
About
Pavilion Bancorp, Inc.
Pavilion
Bancorp, Inc. is the parent corporation of the Bank of Lenawee, based in
Adrian,
Michigan. Chartered in 1869, the Bank of Lenawee is an independent, community
bank that provides a broad range of financial services through a network
of
eight branch offices and nine ATMs located in Lenawee and Hillsdale counties
in
Michigan. The bank also offers mortgage products provided by Pavilion Mortgage
Company, a subsidiary of the Bank of Lenawee. For
more information, visit the company’s website at
www.pavilionbancorp.com.
This
communication shall not constitute an offer to sell or the solicitation of
and
offer to buy any securities, nor shall there be any sale of securities in
any
jurisdiction in which such offer, solicitation or sale would be unlawful
prior
to registration or qualification of the securities under the securities laws
of
any such jurisdiction. No offering of securities shall be made except
by means of a prospectus meeting the requirements of Section 10 of the
Securities Act of 1933, as amended.
First
Defiance will be filing a Registration Statement on Form S-4 concerning the
Merger with the SEC, which will include the joint prospectus/proxy statement
that will be mailed to Pavilion’s shareholders. WE URGE INVESTORS TO
READ THESE DOCUMENTS BECAUSE THEY CONTAIN IMPORTANT
INFORMATION. Investors will be able to obtain the documents free of
charge, when filed, at the SEC’s website, www.sec.gov. In addition,
documents filed with the SEC by First Defiance will be available free of
charge
from the Secretary of First Defiance at 601 Clinton Street, Defiance, Ohio
43512, telephone (419) 782-5015. INVESTORS SHOULD READ THE PROXY
STATEMENT CAREFULLY BEFORE MAKING A DECISION CONCERNING THE
MERGER. Copies of all recent proxy statements and annual reports of
First Defiance are also available free of charge by contacting First Defiance’s
secretary.
First
Defiance, Pavilion and their respective directors and executive officers
may be
deemed to be participants in the solicitation of proxies to approve the
Merger. Additional information about the directors and executive
officers of First Defiance may
be
obtained through the SEC’s website from the definitive proxy statement filed by
First Defiance with the SEC on March 20, 2007. Additional information
about the directors and executive officers of Pavilion may be obtained through
the SEC’s website from the definitive proxy statement filed by Pavilion with the
SEC on March 20, 2007. Additional information about participants in
the proxy solicitation and their interests in the transaction will be contained
in the joint prospectus/proxy statement to be filed with the SEC.
Safe
Harbor Statement
This
release may contain forward-looking statements about First Defiance Financial
Corp., Pavilion Bancorp, Inc., and/or the combined company within the meaning
of
Sections 27A of the Securities Act of 1933, as amended, and Rule 175 promulgated
thereunder, and 21E of the Securities Exchange Act of 1934, as amended, and
Rule
3b-6 promulgated thereunder, that involve inherent risks and uncertainties.
This
press release may contain certain forward-looking statements with respect
to the
financial condition, results of operations, plans, objectives, future
performance and business of First Defiance Financial Corp., Pavilion Bancorp,
Inc., and/or the combined company including statements preceded by, followed
by
or that include the words or phrases such as "believes," "expects,"
"anticipates," "plans," "trend," "objective," "continue," "remain" or similar
expressions or future or conditional verbs such as "will," "would," "should,"
"could," "might," "can," "may" or similar expressions. There are a number
of
important factors that could cause future results to differ materially from
historical performance and these forward-looking statements. Factors that
might
cause such a difference include, but are not limited to: (1) competitive
pressures among depository institutions increase significantly; (2) changes
in
the interest rate environment reduce interest margins; (3) prepayment speeds,
loan origination and sale volumes, charge-offs and loan loss provisions;
(4)
general economic conditions, either national or in the counties in which
First
Defiance Financial Corp., Pavilion Bancorp, Inc., and/or the combined company
do
business, are less favorable than expected; (5) political developments, wars
or
other hostilities may disrupt or increase volatility in securities markets
or
other economic conditions; (6) changes and trends in the securities markets;
(7)
legislative or regulatory changes or actions, or significant litigation,
adversely affect First Defiance Financial Corp., Pavilion Bancorp, Inc.,
and/or
the combined company or the businesses in which First Defiance Financial
Corp.,
Pavilion Bancorp, Inc., and/or the combined company are engaged; (8)
difficulties in combining the operations of Pavilion Bancorp, Inc., and/or
other
acquired entities and (9) the impact of reputational risk created by the
developments discussed above on such matters as business generation and
retention, funding and liquidity. We undertake no obligation to release
revisions to these forward-looking statements or reflect events or circumstances
after the date of this release. Further information on other factors which
could
affect the financial results of First Defiance Financial Corp. after the
merger
are included in First Defiance Financial Corp. and Pavilion Bancorp, Inc.’s
filings with the Securities and Exchange
Commission. These documents are available free of charge at the Commission's
website at http://www.sec.gov.