First Defiance Financial Corp. (NasdaqGS:FDEF) signed a definitive merger agreement to acquire United Community Financial Corp. (NasdaqGS:UCFC) for approximately $470 million in a merger of equals on September 9, 2019. Under the transaction, United Community will 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. The options of United Community will vest and be converted into comparable options of First Defiance. The restricted stock awards and performance vesting restricted stock awards of United Community will vest and converted to common shares of First Defiance at the exchange ratio. Upon closing, First Defiance shareholders will own approximately 52.5% of the combined company and United Community shareholders will own approximately 47.5%. Home Savings Bank, a wholly owned subsidiary of United Community, will merge into First Federal Bank of the Midwest, a wholly owned subsidiary of First Defiance. United Community Financial Corp. will merge with and into First Defiance Financial Corp., with First Defiance Financial Corp. continuing as the surviving entity. The mutual termination fee is $18.4 million.

Once the merger is complete, Donald P. Hileman will serve as the Chief Executive Officer of the holding company and the bank before transitioning to an Executive Chairman role in early 2021. Gary M. Small will assume the role of President of the holding company and the bank before transitioning to the Chief Executive Officer role when Hileman becomes Executive Chairman. The Board of Directors of the combined company will be comprised of seven members designated by First Defiance and six members designated by United Community. Current directors from United Community that will serve on the Board following the merger include its current Chairman and Richard Schiraldi who will be named Vice Chairman, Gary M. Small, Marty E. Adams, Zahid Afzal, Louis M. Altman and Lee Burdman. Current directors from First Defiance that will serve on the Board following the merger include its current Chairman, John Bookmyer who will serve as Chairman of the Board, Donald P. Hileman, Terri A. Bettinger, Jean A. Hubbard, Charles D. Niehaus, Mark A. Robison and Samuel S. Strausbaugh. As of December 17, 2019, it was announced that Zahid Afzal, Executive Vice President and Chief Operating Officer of United Community, will resign upon closing of the transaction. The combined company will operate under a name to be jointly determined prior to closing and the holding company will be headquartered in Defiance, Ohio with the bank headquartered in Youngstown, Ohio.

The transaction is subject to the approval by shareholders of both First Defiance and United Community, and regulatory approvals from Federal Reserve Board of Governors, the Federal Deposit Insurance Corporation and the Ohio Division of Financial Institutions, effectiveness of the registration statement on Form S-4, approval for listing on the Nasdaq Global Select Market of the newly issued shares as well as satisfaction or waiver of other customary closing conditions and subject to the merger qualifying as reorganization under the tax code Section 368(a). United Community shall have received a written opinion of Wachtell, Lipton, Rosen & Katz, tax counsel to United Community, in form and substance reasonably satisfactory to United Community and First Defiance. First Defiance established a special committee for the transaction. The transaction was unanimously approved by Boards of both, First Defiance and United Community. The special meeting of First Defiance and United Community will be held on December 10, 2019 and the Board of First Defiance and United Community have recommended their respective shareholders to vote in favor of the transaction. As of December 10, 2019, the transaction was approved by the shareholders of First Defiance and United Community. As of January 20, 2020, the transaction received approvals from the Federal Reserve Bank, the Federal Deposit Insurance Corp. and the Ohio Division of Financial Institutions. The transaction is expected to close early first quarter of 2020. As of December 17, 2019, the transaction is expected to close on or about January 31, 2020. First Defiance expects the transaction to deliver run-rate earnings per share accretion of approximately 14%, with cost savings on a fully-phased in basis.

Keefe, Bruyette & Woods served as financial advisor and provided a fairness opinion to First Defiance. Robert M. Fleetwood, Emily N. Henkel, Donald L. Norman, Jr. and Michael J. Towne of Barack Ferrazzano Kirschbaum & Nagelberg LLP served as legal advisor to First Defiance. William Hickey and Joe Regan of Sandler O'Neill and Partners, L.P. acted as financial advisors and provided a fairness opinion to United Community. Edward D. Herlihy, Brandon C. Price, Jeannemarie M. O'Brien, Michael J. Schobel, Richard K. Kim and Joshua M. Holmes of Wachtell, Lipton, Rosen & Katz acted as legal advisors to United Community. Computershare Trust Company, NA acted as transfer agent for both First Defiance and United Community Financial. Kimberly J. Schaefer of Vorys, Sater, Seymour and Pease LLP acted as legal advisor for First Defiance Financial Corp. Sandler O'Neill will receive a fee in an amount equal to 0.75% of the aggregate merger consideration, which fee is contingent upon the closing of the merger. Sandler O'Neill received a $0.4 million fee from United Community upon rendering its opinion. First Defiance has agreed to pay Keefe, Bruyette & Woods a total cash fee equal to 0.75% of the aggregate merger consideration, $0.25 million of which became payable to Keefe, Bruyette & Woods with the rendering of opinion and the balance of which is contingent upon the consummation of the merger. Alliance Advisors, LLC acted as information agent for both First Defiance Financial and United Community Financial and will receive a fee of $7500 from each of the parties.

First Defiance Financial Corp. (NasdaqGS:FDEF) completed the acquisition of United Community Financial Corp. (NasdaqGS:UCFC) in a merger of equals on January 31, 2020. Following the transaction, Home Savings Bank, a wholly owned subsidiary of United Community, merged into First Federal Bank of the Midwest, a wholly owned subsidiary of First Defiance. Prior to the merger, First Federal Bank of the Midwest converted into an Ohio state-chartered bank. HSB Insurance, LLC and United American Financial Services, Inc., wholly owned subsidiaries of United Community, merged into First Insurance Group of the Midwest, Inc.