As
filed with the Securities and Exchange Commission on December
12, 2007January 31,
2008
|
|||||
Registration
No. 333-________148026
|
|||||
SECURITIES
AND EXCHANGE
COMMISSION
|
|||||
Washington,
DC 20549
|
|||||
PRE-EFFECTIVE
AMENDMENT
NO. 1
TO
FORM
S-4
|
|||||
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES ACT OF
1933
|
|||||
FIRST
DEFIANCEFINANCIAL
CORP.
|
|||||
(Exact
name of
registrant as specified in its charter)
|
|||||
OHIO
|
6035
|
34-1803915
|
|||
(State
or other
jurisdiction
of
incorporation or
organization)
|
(Primary
Standard
Industrial
Classification
Code
Number)
|
(I.R.S.
Employer
Identification
No.)
|
|||
601
Clinton
Street
Defiance,
Ohio 43512
(419)
782-5015
|
|||||
(Address,
including ZIP Code, and telephone number, including area code,
of
registrant’s principal executive offices)
|
|||||
William
J.
Small
Chairman,
President and Chief
Executive Officer
First
DefianceFinancial
Corp.
601
Clinton
Street
Defiance,
Ohio 43512
(419)
782-5015
|
|||||
(Address,
including ZIP Code, and telephone number, including area code,
of agent
for service)
|
|||||
Copies
to:
|
|||||
Terri
R. Abare,
Esq.
Vorys,
Sater, Seymourand
Pease LLP
221
E. Fourth
Street
Suite2000,
Atrium Two
Cincinnati,
Ohio 45202
(513)
723-4000
|
Kimberly
A. Baber,
Esq.
Varnum,
Riddering, Schmidt &
Howlett LLP
Bridgewater
Place
333
Bridge Street,
N.W.
Grand
Rapids, Michigan 49501
(616)
336-6000
|
CALCULATION
OF REGISTRATION FEE
|
||||
Title
of each
class
of securities
to
be registered
|
Amount
to be
registered
(1)
|
Proposed
maximum
offering
price
per
unit
|
Proposed
maximum
aggregate
offering
price
(2)
|
Amount
of registration fee
(3)
|
Common
shares, $0.01 par value per
share
|
1,031,3811,100,000shares
|
N/A
|
$21,848,50619,400,852
|
$670.75762.46
|
(1)
|
Based
upon the maximum number of shares of common stock that the Registrant
may
be required to issue in the transaction, calculated as the product
of (i)
725,864751,971
(the aggregate number of shares
of Pavilion Bancorp, Inc. common stock estimated
tothat
may be outstanding
when the transaction is consummated) and (ii) an exchange ratio
of 1.4209
shares of the Registrant’s common stock for each share of Pavilion
Bancorp, Inc. common stock.
|
(2)
|
Estimated
solely for the purpose
of calculating the registration fee required by Section 6(b) of
the
Securities Act of 1933 and computed pursuant to Rule 457(f)(1)
thereunder
on the basis of the market value of Pavilion Bancorp’s common stock to be
exchanged in the transaction, computed, in accordance with Rule
457(f), as
the product of (i) $67.6063.30(the
average of the bid and asked
price on December
5, 2007January 16,
2008, the last sale date prior to filing this amendment) and (ii)
725,864,751,971,the
aggregate number of shares of
Pavilion Bancorp common stock estimated
tothat
maybe outstanding
when the transaction is consummated, less $27,219,900,28,198,912,the
amount of cash estimated to be
paid by the Registrant to shareholders of Pavilion
Bancorp.
|
(3)
|
$670.75
of this fee was previously
paid in connection with the original Form S-4 filing on December
12,
2007.
|
|
1.
|
To
approve the Agreement and Plan
of Merger, dated as of October 2, 2007,2007
and amended as of January 21,
2008, by and between
First Defiance Financial Corp. (“First Defiance”) and Pavilion, which
provides for the merger of Pavilion into First Defiance and the
exchange
of each outstanding share of Pavilion common stock, other than
common stock held in
the Pavilion ESOP and 401(k) Plan, into the
right to receive (a)
1.4209 shares of First Defiance common stock,
and (b) a$37.50
in cashamount
equal to $37.50..
|
|
2.
|
To
transact such other business
that may properly come before the special meeting, including, if
necessary, the adjournment of the special meeting to allow for
additional
solicitation of shareholder votes to obtain the required vote to
approve
the merger agreement.
|
By
Order of the Board of
Directors,
|
|
JanuaryFebruary ___,
2008
|
Eileen
Loveland,
Secretary
|
PROSPECTUS
|
PROXY
STATEMENT
|
|
FIRST
DEFIANCEFINANCIAL
CORP.
|
PAVILION
BANCORP,
INC.
|
|
For
the issuance of up to
1,031,3811,100,000
shares of common stock |
For
the Special Meeting of
Shareholders
|
|
Neither
the Securities and
Exchange Commission nor any state securities commission has approved
or
disapproved of the securities to be issued under this prospectus/proxy
statement or determined if this prospectus/proxy statement is accurate
or
adequate. Any representation to the contrary is a criminal
offense. The securities we are offering through this document
are not savings or deposit accounts or other obligations of any
bank or
non-bank subsidiary of either of our companies, and they are not
insured
by the Federal Deposit Insurance Corporation, the Deposit Insurance
Fund,
or any other governmental agency.
|
Summary
|
S-
1
|
Risk
factors
|
1
|
Forward
looking statements
|
3
|
Market
price and dividend information
|
4
|
Selected
financial information of First Defiance
|
5
|
Selected
financial information of Pavilion
|
7
|
Comparative
per share data
|
8
|
Pro
forma unaudited consolidated financial information
|
10
|
The
special meeting of Pavilion shareholders
|
18
|
Purpose,
time and place
|
18
|
Shares
outstanding and entitled to vote; record date
|
18
|
Votes
required
|
18
|
Voting,
solicitation and revocation of proxies
|
18
|
Dissenters’
rights
|
19
|
Parties
to the merger agreement
|
19
|
Description
of the merger
|
19
|
Background
and reasons for the merger
|
20
|
First
Defiance background and
reasons for the merger
|
20
|
Pavilion
background of the
merger
|
21
|
Pavilion
merger recommendation and
reasons for the merger
|
23
|
Opinion
of Pavilion’s financial advisor
|
23
|
Merger
consideration
|
31
|
Representations
and warranties
|
32
|
Covenants
|
32
|
Conduct
of business pending the merger
|
33
|
Conditions
|
3435
|
Termination
and amendment
|
35
|
Effective
time
|
36
|
Exchange
of Pavilion stock certificates
|
3637
|
Employee
matters
|
37
|
Interests
of directors and officers
|
37
|
Resale
of First Defiance common stock
|
38
|
Material
federal income tax consequences
|
38
|
Accounting
treatment
|
40
|
Regulatory
approval required
|
4041
|
Comparison
of rights of First Defiance shareholders and Pavilion
shareholders
|
41
|
Authorized
stock
|
41
|
Director
nominations
|
41
|
Anti-takeover
provisions
|
41
|
Anti-takeover
statutes
|
43
|
Legal
matters
|
4445
|
Experts
|
45
|
Where
you can find more information
|
45
|
Annex
A
|
Agreement
and Plan of Merger dated
October 2, 2007,2007
and amended as of January 21,
2008, by and between
First Defiance Financial Corp. and Pavilion Bancorp,
Inc.
|
Annex
B
|
Opinion
of Donnelly, Penman &
Partners, dated as of ____________
_February
__,
2008.
|
First
DefianceFinancial
Corp.
601
Clinton
Street
Defiance,
Ohio 43512-3272
Attention: John
C.
Wahl
(419)
782-5015
|
|
·
|
1.4209
shares of First Defiance
common stock; and
|
|
·
|
a
cash amount equal to $37.50.$37.50 in
cash.
|
|
•
|
provisions
in the merger agreement
relating to indemnification of directors and officers and insurance
for
directors and officers of Pavilion for events occurring before
the
merger;
|
|
•
|
the
appointment of up to six
Pavilion directors who do not become employees or directors of
First
Defiance or First Federal to an advisory board of First
Federal.
|
|
·
|
by
the mutual written consent of
First Defiance and Pavilion;
|
|
·
|
by
either First Defiance or
Pavilion if the merger is not completed on or before June 30,
2008;
|
|
·
|
by
either First Defiance or
Pavilion if any event occurs which would prevent the satisfaction
of
certain conditions described in the merger
agreement;
|
|
·
|
by
either First Defiance or
Pavilion if Pavilion executes a definitive agreement with any person
or
entity other than First Defiance providing for the acquisition
of all, or
a material amount, of the assets or shares of Pavilion common stock,
including by merger, consolidation or business
combination;
|
|
·
|
by
Pavilion if First Defiance does
not increase the number of shares of First Defiance common stock
to be
exchanged for the shares of Pavilion common stock if necessary
to preserve
the status of the merger as a tax-free
reorganization;
|
|
·
|
by
Pavilion if the failure to
terminate the merger agreement could be expected to constitute
a breach of
the Pavilion board of directors’ fiduciary duties;
or
|
|
·
|
by
First Defiance if the cost to
perform any environmental remediation activities of
Pavilionon
real properties
owned by
Pavilion, if
required, is expected to exceed $750,000 in the
aggregate.
|
First
Defiance
|
Pavilion
|
Pavilion
equivalent
per
share
price
|
|
October
1,
2007
|
$25.83
|
$47.00
|
$74.20
|
JanuaryFebruary ___,
2008
|
$_____
|
$_____
|
$_____
|
|
Ÿ
|
Pavilion
may elect to
terminate the merger agreement in accordance with Section 8.02(e)
or
8.03(e) of the Agreement;
|
|
Ÿ
|
First
Defiance
may
elect to terminate the merger
agreement in accordance wth Sectio 8.03(e) of the Agreement;
or
|
|
Ÿ
|
|
Ÿ
|
If
neither Pavilion nor First
Defiance elects to terminate the merger agreement, the merger will
proceed
with different tax
consequences..
|
•
|
an
increase in loan
delinquencies;
|
|
•
|
an
increase in problem assets and
foreclosures;
|
|
•
|
a
decrease in demand for our
products and services; and
|
•
|
a
decrease in the value of
collateral for loans, especially real estate, in turn reducing
customers’
borrowing power, and the value of assets associated with problem
loans.
|
|
·
|
expected
cost savings from the
merger may not be fully realized or realized within the expected
time
frame;
|
|
·
|
revenues
following the merger may
be lower than expected or deposit withdrawals, operating costs
or customer
loss and business disruption following the merger may be greater
than
expected;
|
|
·
|
competition
among depository and
other financial services companies may increase
significantly;
|
|
·
|
costs
or difficulties related to
the integration of First Defiance and Pavilion may be greater than
expected;
|
|
·
|
general
economic or business
conditions, such as interest rates, may be less favorable than
expected;
|
|
·
|
adverse
changes may occur in the
securities market; and
|
|
·
|
legislation
or changes in
regulatory requirements may adversely affect the businesses in
which First
Defiance is engaged.
|
First
Defiance
common
stock
|
Pavilion
common
stock
|
|||||||||||||||||||||||
High
|
Low
|
Dividends
|
High
|
Low
|
Dividends
|
|||||||||||||||||||
Quarter
ended:
|
||||||||||||||||||||||||
December
31,
2007
|
$ | 26.93 | $ | 20.58 | $ | 0.26 | $ | 70.30 | $ | 47.00 | $ | 0.26 | ||||||||||||
September
30,
2007
|
$ | 29.64 | $ | 23.99 | 0.25 | $ | 47.00 | $ | 43.15 | $ | 0.26 | |||||||||||||
June
30,
2007
|
30.00 | 26.71 | 0.25 | 48.00 | 45.00 | 0.26 | ||||||||||||||||||
March
31,
2007
|
30.25 | 27.25 | 0.25 | 47.00 | 43.20 | 0.25 | ||||||||||||||||||
December
31,
2006
|
30.70 | 26.87 | 0.25 | 47.00 | 43.25 | 0.35 | ||||||||||||||||||
September
30,
2006
|
28.69 | 25.18 | 0.24 | 48.00 | 45.50 | 0.24 | ||||||||||||||||||
June
30,
2006
|
30.29 | 25.09 | 0.24 | 46.50 | 44.75 | 0.24 | ||||||||||||||||||
March
31,
2006
|
28.88 | 25.39 | 0.24 | 49.00 | 43.50 | 0.24 | ||||||||||||||||||
December
31,
2005
|
30.06 | 25.56 | 0.24 | 50.25 | 46.15 | 0.24 | ||||||||||||||||||
September
30,
2005
|
31.44 | 26.21 | 0.22 | 55.00 | 50.00 | 0.24 | ||||||||||||||||||
June
30,
2005
|
30.46 | 25.29 | 0.22 | 67.00 | 53.00 | 0.24 | ||||||||||||||||||
March
31,
2005
|
29.90 | 26.00 | 0.22 | 59.80 | 54.00 | 0.24 | ||||||||||||||||||
First
Defianceconsolidated
|
||||||||||||||||||||||||||||
statement
of financial
data:
|
At
September
30
|
At
December
31,
|
||||||||||||||||||||||||||
2007
|
2006
|
2006
|
2005
|
2004
|
2003
|
2002
|
||||||||||||||||||||||
(Unaudited)
|
(In
thousands)
|
|||||||||||||||||||||||||||
Total
assets
|
$ | 1,579,946 | $ | 1,524,679 | $ | 1,527,879 | $ | 1,461,082 | $ | 1,126,667 | $ | 1,040,599 | $ | 884,245 | ||||||||||||||
Loans
held-to maturity,
net
|
1,251,445 | 1,222,414 | 1,226,310 | 1,164,481 | 878,912 | 735,255 | 561,041 | |||||||||||||||||||||
Loans
held-for-sale
|
7,426 | 3,669 | 3,426 | 5,282 | 2,295 | 5,872 | 15,336 | |||||||||||||||||||||
Allowance
for loan
losses
|
13,427 | 14,298 | 13,579 | 13,673 | 9,956 | 8,844 | 7,496 | |||||||||||||||||||||
Non-performing
assets
|
11,915 | 10,044 | 9,675 | 5,356 | 1,990 | 2,949 | 2,731 | |||||||||||||||||||||
Securities
available-for-sale
|
111,236 | 118,429 | 110,682 | 113,079 | 137,003 | 168,259 | 209,604 | |||||||||||||||||||||
Securities
held-to
maturity
|
1,236 | 1,588 | 1,441 | 1,775 | 2,255 | 2,776 | 3,921 | |||||||||||||||||||||
Mortgage
servicing
rights
|
5,917 | 5,430 | 5,529 | 5,063 | 3,598 | 3,431 | 2,090 | |||||||||||||||||||||
Deposits
and borrowers’ escrow
balances
|
1,208,594 | 1,130,919 | 1,139,112 | 1,070,106 | 797,979 | 729,227 | 599,889 | |||||||||||||||||||||
FHLB
advances
|
128,461 | 176,442 | 162,228 | 180,960 | 178,213 | 164,522 | 149,096 | |||||||||||||||||||||
Stockholders’
equity
|
164,706 | 158,155 | 159,825 | 151,216 | 126,874 | 124,269 | 120,110 |
First
Defiance
consolidated
operating
results:
|
Nine
months ended
September
30,
|
Year
ended December 31,
|
||||||||||||||||||||||||||
2007
|
2006
|
2006
|
2005
|
2004
|
2003
|
2002
|
||||||||||||||||||||||
(Unaudited)
|
(In
thousands, except per share data)
|
|||||||||||||||||||||||||||
Interest
income from
continuing
operations
|
$ |
73,553
|
$ |
68,755
|
$ |
93,065
|
$ |
76,174
|
$ |
54,731
|
$ |
50,629
|
$ |
46,908
|
||||||||||||||
Interest
expense from
continuing
operations
|
37,420
|
31,978
|
44,043
|
28,892
|
20,381
|
20,855
|
22,044
|
|||||||||||||||||||||
Net
interest income from
continuing
operations
|
36,133
|
36,777
|
49,022
|
47,282
|
34,350
|
29,774
|
24,864
|
|||||||||||||||||||||
Provision
for loan losses
|
1,704
|
1,438
|
1,756
|
1,442
|
1,548
|
1,719
|
1,451
|
|||||||||||||||||||||
Non-interest
income
|
16,862
|
14,702
|
19,624
|
15,925
|
13,996
|
16,843
|
10,401
|
|||||||||||||||||||||
Settlement
of contingent liability
|
-
|
-
|
-
|
-
|
1,927
|
-
|
-
|
|||||||||||||||||||||
Acquisition
related charges
|
-
|
-
|
-
|
3,476
|
-
|
-
|
-
|
|||||||||||||||||||||
Other
non-interest expense
|
35,950
|
32,629
|
43,839
|
40,466
|
29,273
|
27,126
|
24,408
|
|||||||||||||||||||||
Income
before income taxes
|
15,341
|
17,412
|
23,051
|
17,823
|
15,598
|
17,772
|
9,406
|
|||||||||||||||||||||
Income
taxes
|
4,995
|
5,785
|
7,451
|
5,853
|
4,802
|
5,690
|
2,986
|
|||||||||||||||||||||
Income
from continuing
operations
|
10,346
|
11,627
|
15,600
|
11,970
|
10,796
|
12,082
|
6,420
|
|||||||||||||||||||||
Discontinued
operations, net of tax
|
-
|
-
|
-
|
-
|
-
|
-
|
8,853
|
|||||||||||||||||||||
Cumulative
effect of change in
method of accounting for goodwill
|
-
|
-
|
-
|
-
|
-
|
-
|
(194 | ) | ||||||||||||||||||||
Net
income
|
10,346
|
11,627
|
15,600
|
11,970
|
10,796
|
12,082
|
15,079
|
|||||||||||||||||||||
Basic
earnings per share from
continuing
operations
|
1.46
|
1.66
|
2.22
|
1.75
|
1.77
|
2.00
|
1.01
|
|||||||||||||||||||||
Basic
earnings per share
|
1.46
|
1.66
|
2.22
|
1.75
|
1.77
|
2.00
|
2.37
|
|||||||||||||||||||||
Diluted
earnings per share from
continuing
operations
|
1.44
|
1.62
|
2.18
|
1.69
|
1.69
|
1.91
|
0.97
|
|||||||||||||||||||||
Diluted
earnings per share
|
1.44
|
1.62
|
2.18
|
1.69
|
1.69
|
1.91
|
2.28
|
At
or for the nine months
ended
September
30*
|
Year
ended December 31,
|
|||||||||||||||||||||||||||
Other
data:
|
2007
|
2006
|
2006
|
2005
|
2004
|
2003
|
2002
|
|||||||||||||||||||||
Return
on average assets
|
0.90 | % | 1.04 | % | 1.04 | % | 0.88 | % | 1.01 | % | 1.24 | % | 0.77 | % | ||||||||||||||
Return
on average equity
|
8.46 | % | 10.08 | % | 10.03 | % | 8.26 | % | 8.57 | % | 9.97 | % | 5.39 | % | ||||||||||||||
Interest
rate spread
|
3.18 | % | 3.40 | % | 3.37 | % | 3.63 | % | 3.37 | % | 3.13 | % | 2.92 | % | ||||||||||||||
Net
interest margin
|
3.56 | % | 3.71 | % | 3.68 | % | 3.87 | % | 3.60 | % | 3.42 | % | 3.38 | % | ||||||||||||||
Ratio
of operating expense
to
average total assets
|
3.14 | % | 2.93 | % | 2.93 | % | 3.22 | % | 2.98 | % | 2.91 | % | 3.16 | % |
Pavilion
consolidated statement of
financial condition:
|
At
September
30,
|
At
December
31,
|
||||||||||||||||||||||||||
2007
|
2006
|
2006
|
2005
|
2004
|
2003
|
2002
|
||||||||||||||||||||||
(Unaudited)
|
(In
thousands)
|
|||||||||||||||||||||||||||
Total
assets
|
$ | 278,636 | $ | 298,430 | $ | 295,023 | $ | 287,881 | $ | 259,322 | $ | 323,382 | $ | 287,286 | ||||||||||||||
Securities
available for
sale
|
11,818 | 24,005 | 17,828 | 25,407 | 27,886 | 20,436 | 25,216 | |||||||||||||||||||||
Loans
receivable
|
240,667 | 245,269 | 246,129 | 237,598 | 207,159 | 209,467 | 184,837 | |||||||||||||||||||||
Allowance
for loan
losses
|
3,085 | 2,759 | 2,817 | 2,683 | 2,495 | 2,302 | 2,100 | |||||||||||||||||||||
Deposits
|
228,948 | 233,319 | 235,944 | 210,748 | 199,992 | 202,366 | 189,046 | |||||||||||||||||||||
Shareholders’
equity
|
29,364 | 27,835 | 27,936 | 26,384 | 31,857 | 26,524 | 25,069 |
Pavilion
consolidated statement of
operations:
|
At
or for nine months
ended
September
30,
|
Year
Ended December
31,
|
||||||||||||||||||||||||||
2007
|
2006
|
2006
|
2005
|
2004
|
2003
|
2002
|
||||||||||||||||||||||
(Unaudited)
|
(In
thousands, except per share
data)
|
|||||||||||||||||||||||||||
Interest
and dividend
income
|
$ | 14,774 | $ | 14,018 | $ | 18,875 | $ | 16,130 | $ | 14,885 | $ | 15,039 | $ | 16,021 | ||||||||||||||
Interest
expense
|
5,654 | 5,136 | 7,050 | 4,449 | 2,795 | 3,252 | 4,777 | |||||||||||||||||||||
Net
interest
income
|
9,120 | 8,882 | 11,825 | 11,681 | 12,090 | 11,787 | 11,424 | |||||||||||||||||||||
Provision
for loan
losses
|
458 | 225 | 333 | 342 | 693 | 595 | 667 | |||||||||||||||||||||
Net
interest income
after
provision
for
loan losses
|
8,662 | 8,657 | 11,492 | 11,339 | 11,397 | 11,192 | 10,757 | |||||||||||||||||||||
Noninterest
income
|
2,276 | 2,272 | 3,068 | 3,277 | 3,566 | 5,840 | 5,625 | |||||||||||||||||||||
Noninterest
expense
|
8,307 | 8,285 | 11,088 | 12,075 | 11,809 | 12,110 | 11,384 | |||||||||||||||||||||
Income
from continuing
operations
before
income
taxes
|
2,631 | 2,644 | 3,472 | 2,541 | 3,154 | 4,922 | 4,998 | |||||||||||||||||||||
Income
taxes from
continuing
operations
|
875 | 766 | 1,071 | 603 | 1,001 | 1,563 | 1,590 | |||||||||||||||||||||
Income
from
continuing
operations
|
1,756 | 1,878 | 2,401 | 1,938 | 2,153 | 3,359 | 3,408 | |||||||||||||||||||||
Income
from
discontinued
operations,
net
of tax
|
- | - | - | - | 4,979 | (124 | ) | (553 | ) | |||||||||||||||||||
Net
income
|
1,756 | 1,878 | 2,401 | 1,938 | 7,132 | 3,235 | 2,855 | |||||||||||||||||||||
Basic
earnings per share
from
continuing
operations
|
2.42 | 2.55 | 3.27 | 2.47 | 2.54 | 3.92 | 3.85 | |||||||||||||||||||||
Basic
earnings per share
from
discontinued
operations
|
- | - | - | - | 5.88 | (0.14 | ) | (0.63 | ) | |||||||||||||||||||
Basic
earnings per
share
|
2.42 | 2.55 | 3.27 | 2.47 | 8.42 | 3.78 | 3.23 | |||||||||||||||||||||
Diluted
earnings per share
from
continuing
operations
|
2.41 | 2.54 | 3.26 | 2.45 | 2.52 | 3.89 | 3.83 | |||||||||||||||||||||
Diluted
earnings per share
from
discontinued
operations
|
- | - | - | - | 5.82 | (0.14 | ) | (0.62 | ) | |||||||||||||||||||
Diluted
earnings per
share
|
2.41 | 2.54 | 3.26 | 2.45 | 8.34 | 3.75 | 3.21 |
Other
data:
|
At
or for the
nine
months
ended
September
30,*
|
Year
ended December
31,
|
||||||||||||||||||||||||||
2007
|
2006
|
2006
|
2005
|
2004
|
2003
|
2002
|
||||||||||||||||||||||
Return
on average assets
from
continued
operations
|
0.81 | % | 0.86 | % | 0.82 | % | 0.71 | % | 2.45 | % | 1.06 | % | 1.01 | % | ||||||||||||||
Return
on average equity
from
continued
operations
|
8.23 | % | 9.28 | % | 8.84 | % | 6.66 | % | 24.43 | % | 12.54 | % | 11.74 | % | ||||||||||||||
Interest
rate
spread
|
3.84 | % | 3.70 | % | 3.69 | % | 4.06 | % | 4.68 | % | 4.95 | % | 4.81 | % | ||||||||||||||
Net
interest
margin
|
4.60 | % | 4.39 | % | 4.39 | % | 4.59 | % | 5.02 | % | 5.38 | % | 5.44 | % | ||||||||||||||
Ratio
of operating
expense
to
average total
assets
|
3.85 | % | 3.80 | % | 3.81 | % | 4.41 | % | 4.48 | % | 5.18 | % | 4.94 | % |
Other
data:
|
At
or for the nine
months
ended
September
30,*
|
Year
ended December 31,
|
||||||||||||||||||||||||||
2007
|
2006
|
2006
|
2005
|
2004
|
2003
|
2002
|
||||||||||||||||||||||
Return
on average assets from
continued
operations
|
0.81 | % | 0.86 | % | 0.82 | % | 0.71 | % | 2.45 | % | 1.06 | % | 1.01 | % | ||||||||||||||
Return
on average equity from
continued
operations
|
8.23 | % | 9.28 | % | 8.84 | % | 6.66 | % | 24.43 | % | 12.54 | % | 11.74 | % | ||||||||||||||
Interest
rate spread
|
3.84 | % | 3.70 | % | 3.69 | % | 4.06 | % | 4.68 | % | 4.95 | % | 4.81 | % | ||||||||||||||
Net
interest margin
|
4.60 | % | 4.39 | % | 4.39 | % | 4.59 | % | 5.02 | % | 5.38 | % | 5.44 | % | ||||||||||||||
Ratio
of operating expense
to
average total assets
|
3.85 | % | 3.80 | % | 3.81 | % | 4.41 | % | 4.48 | % | 5.18 | % | 4.94 | % |
First
Defiance
historical
|
Pavilion
historical
|
Pro
forma
(1)
(2)
|
Per
equivalent
Pavilion
share
|
|||||||||||||
Book
value per
share:
|
||||||||||||||||
At
September 30,
2007
|
$ | 23.21 | $ | 40.44 | $ | 23.66 | $ | 67.97 | ||||||||
Cash
dividends declared per
share:
|
||||||||||||||||
Nine
months ended September 30,
2007
|
$ | 0.75 | $ | 0.77 | $ | 0.75 | $ | 2.15 | ||||||||
Year
ended December 31,
2006
|
$ | 0.97 | $ | 1.07 | $ | 0.97 | $ | 2.79 | ||||||||
Diluted
net income per
share:
|
||||||||||||||||
Nine
months ended September 30,
2007
|
$ | 1.44 | $ | 2.41 | $ | 1.26 | $ | 3.62 | ||||||||
Year
ended December 31,
2006
|
$ | 2.18 | $ | 3.26 | $ | 1.92 | $ | 5.52 |
(2)
|
The
pro forma book value per share
of First Defiance is based on the pro forma common shareholders’ equity
for First Defiance and Pavilion divided by total pro forma common
shares
of the combined
entities.
|
First
|
Pro
Forma
Adjustments(1)
|
Combined
|
||||||||||||||||||
Defiance
|
Pavilion
|
Debit
|
Credit
|
Pro
Forma
|
||||||||||||||||
(In
thousands, except per share
data)
|
||||||||||||||||||||
Assets:
|
||||||||||||||||||||
Cash
and due from
banks
|
$ | 30,558 | $ | 8,969 | $ | 30,43630,469 | $ | 30,43630,469 | $ | 39,527 | ||||||||||
Interest-earning
deposits with
financial
institutions
|
29,379 | - | - | 10,43610,469 | 18,94318,910 | |||||||||||||||
Total
cash and cash
equivalents
|
59,937 | 8,969 | 30,43630,469 | 40,87240,938 | 58,47058,437 | |||||||||||||||
Securities
|
||||||||||||||||||||
Available-for-sale
|
111,236 | 11,818 | - | - | 123,054 | |||||||||||||||
Held
to
maturity
|
1,236 | - | - | - | 1,236 | |||||||||||||||
Loans
held for
sale
|
7,426 | 939 | - | - | 8,365 | |||||||||||||||
Loans
receivable,
net
|
1,251,445 | 237,582 | 671 | - | 1,489,698 | |||||||||||||||
Mortgage
servicing
rights
|
5,917 | 2,253 | - | - | 8,170 | |||||||||||||||
Accrued
interest
receivable
|
8,102 | 2,488 | - | - | 10,590 | |||||||||||||||
Federal
Home Loan Bank stock
and
Other
interest-earning
assets
|
18,586 | 2,683 | - | - | 21,269 | |||||||||||||||
Bank
Owned Life
Insurance
|
28,315 | - | - | - | 28,315 | |||||||||||||||
Premises
and
equipment
|
38,287 | 10,112 | - | - | 48,399 | |||||||||||||||
Real
estate and other assets held
for sale
|
3,392 | 917 | - | - | 4,309 | |||||||||||||||
Goodwill
|
36,515 | - | 21,01021,197 | 57,52557,712 | ||||||||||||||||
Core
deposit and other
intangibles
|
3,717 | - | 5,870 | - | 9,587 | |||||||||||||||
Other
assets
|
5,835 | 875 | - | - | 6,710 | |||||||||||||||
Total
assets
|
$ | 1,579,946 | $ | 278,636 | $ | 57,98758,207 | $ | 40,87240,938 | $ | 1,875,6971,875,851 | ||||||||||
Liabilities
|
||||||||||||||||||||
Deposits
|
||||||||||||||||||||
Non-interest-bearing
|
$ | 109,128 | $ | 41,783 | $ | - | $ | - | $ | 150,911 | ||||||||||
Interest-bearing
|
1,099,036 | 187,165 | 193 | - | 1,286,008 | |||||||||||||||
Total
deposits
|
1,208,164 | 228,948 | 193 | - | 1,436,919 | |||||||||||||||
Federal
funds
purchased
|
- | 3,069 | - | - | 3,069 | |||||||||||||||
Securities
sold under
repurchase
agreements
|
24,645 | 1,552 | - | - | 26,197 | |||||||||||||||
Federal
Home Loan Bank
advances
|
128,461 | 10,657 | 19 | - | 139,099 | |||||||||||||||
Subordinated
debentures
|
36,083 | - | - | - | 36,083 | |||||||||||||||
Other
debt
|
- | - | - | 20,000 | 20,000 | |||||||||||||||
Accrued
interest payable and
other
liabilities
|
17,887 | 5,046 | 3,283 | 2,364 | 22,014 | |||||||||||||||
Total
liabilities
|
1,415,240 | 249,272 | 3,495 | 22,364 | 1,683,381 | |||||||||||||||
Stockholders’
Equity
|
||||||||||||||||||||
Common
stock and paid in
capital
|
112,704 | 10,668 | 10,668 | 27,61027,764 | 140,314140,468 | |||||||||||||||
Stock
acquired by
ESOP
|
(202 | ) | - | - | - | (202 | ) | |||||||||||||
Retained
earnings
|
124,899 | 18,605 | 18,605 | - | 124,899 | |||||||||||||||
Treasury
stock
|
(71,996 | ) | - | - | - | (71,996 | ) | |||||||||||||
Accumulated
other comprehensive
income
|
(699 | ) | 91 | 91 | - | (699 | ) | |||||||||||||
Total
stockholders’
equity
|
164,706 | 29,364 | 29,364 | 27,59527,764 | 192,316192,470 | |||||||||||||||
Total
liabilities and
stockholders’ equity
|
$ | 1,579,946 | $ | 278,636 | $ | 32,859 | $ | 49,95950,128 | $ | 1,875,6971,875,851 | ||||||||||
Shares
outstanding
|
7,095 | 726 | - | - | - | |||||||||||||||
Retired
shares
|
- | - | 726 | - | - | |||||||||||||||
Newly
issued
shares
|
- | - | - | 1,0311,037 | - | |||||||||||||||
Resulting
shares
outstanding
|
- | - | - | - | 8,1268,132 | |||||||||||||||
Book
value per
share
|
$ | 23.21 | $ | 40.45 | $ | - | $ | - | $ | 23.6623.67 | ||||||||||
Tangible
book value per
share
|
$ | 17.54 | $ | 40.45 | $ | - | $ | - | $ | 15.4115.39 |
First
Defiance
|
Pavilion
|
Pro
Forma
Adjustments(1)
|
Pro
Forma
Combined
|
|||||||||||||
(In
thousands, except per share
data)
|
||||||||||||||||
Interest
Income:
|
||||||||||||||||
Loans
|
$ | 86,213 | $ | 17,711 | $ | (388 | ) | $ | 103,536 | |||||||
Securities
|
5,645 | 796 | (485487 | ) | 5,9565,954 | |||||||||||
Federal
Funds sold and
other
|
165 | 206 | - | 371 | ||||||||||||
FHLB
stock
dividends
|
1,042 | 162 | - | 1,204 | ||||||||||||
Total
interest
income
|
93,065 | 18,875 | (873875 | ) | 111,067111,065 | |||||||||||
Interest
Expense:
|
||||||||||||||||
Deposits
|
33,273 | 5,467 | 132 | 38,872 | ||||||||||||
Advances
and other borrowed
funds
|
9,462 | 1,164 | 1,365 | 11,991 | ||||||||||||
Subordinated
debentures
|
1,308 | 419 | - | 1,727 | ||||||||||||
Total
interest
income
|
44,043 | 7,050 | 1,497 | 52,590 | ||||||||||||
Net
interest
income
|
49,022 | 11,825 | (2,3702,372 | ) | 58,47758,475 | |||||||||||
Provision
for loan
losses
|
1,756 | 333 | - | 2,089 | ||||||||||||
Net
interest income after
provision for loan losses
|
47,266 | 11,492 | (2,3702,372 | ) | 56,38856,386 | |||||||||||
Non-interest
income:
|
||||||||||||||||
Service
fees and other
charges
|
9,303 | 1,354 | - | 10,657 | ||||||||||||
Mortgage
banking
income
|
3,389 | 1,073 | - | 4,462 | ||||||||||||
Insurance
commissions
|
4,531 | - | - | 4,531 | ||||||||||||
Gain
on sale of non-mortgage
loans
|
526 | - | - | 526 | ||||||||||||
Loss
on sale of
securities
|
(2 | ) | - | - | (2 | ) | ||||||||||
Trust
income
|
312 | - | - | 312 | ||||||||||||
Income
from Bank Owned Life
Insurance
|
980 | - | - | 980 | ||||||||||||
Other
non-interest
income
|
585 | 641 | - | 1,226 | ||||||||||||
Total
non-interest
income
|
19,624 | 3,068 | - | 22,692 | ||||||||||||
Non-interest
expense:
|
||||||||||||||||
Compensation
and
benefits
|
24,152 | 6,217 | - | 30,369 | ||||||||||||
Occupancy
|
5,103 | 1,029 | - | 6,132 | ||||||||||||
Data
processing
|
3,689 | 756 | - | 4,445 | ||||||||||||
Other
non-interest
expense
|
10,895 | 3,086 | 1,176 | 15,157 | ||||||||||||
Total
non-interest
expense
|
43,839 | 11,088 | 1,176 | 56,103 | ||||||||||||
Income
before income
taxes
|
23,051 | 3,472 | (3,5463,548 | ) | 22,97722,975 | |||||||||||
Income
tax
expense
|
7,451 | 1,071 | (1,2411,242 | ) | 7,2817,280 | |||||||||||
Net
income
|
$ | 15,600 | $ | 2,401 | $ | (2,3052,306 | ) | $ | 15,69615,695 | |||||||
Earnings
per
share:
|
||||||||||||||||
Basic
|
$ | 2.22 | $ | 3.27 | $ | - | $ | 1.95 | ||||||||
Diluted
|
2.18 | 3.26 | $ | - | 1.921.91 | |||||||||||
Average
shares
outstanding
|
||||||||||||||||
Basic
|
7,028 | 734 | - | - | ||||||||||||
Retired
--
basic
|
- | - | (734 | ) | - | |||||||||||
Newly
issued --
basic
|
- | - | 1,0311,037 | - | ||||||||||||
Resulting
basic
|
- | - | - | 8,0598,065 | ||||||||||||
Diluted
|
7,163 | 736 | - | - | ||||||||||||
Retired
--
diluted
|
- | - | (736 | ) | - | |||||||||||
Newly
issued --
diluted
|
- | - | 1,0311,037 | - | ||||||||||||
Resulting
diluted
|
- | - | - | 8,1948,200 |
First
Defiance
|
Pavilion
|
Pro
Forma
Adjustments(1)
|
Pro
Forma
Combined
|
|||||||||||||
(In
thousands, except per share
data)
|
||||||||||||||||
Interest
Income:
|
||||||||||||||||
Loans
|
$ | 67,882 | $ | 13,941 | $ | (251 | ) | $ | 81,572 | |||||||
Securities
|
4,290 | 526 | - | 4,816 | ||||||||||||
Federal
Funds sold and
other
|
483 | 210 | (364365 | ) | 329328 | |||||||||||
FHLB
stock
dividends
|
898 | 97 | - | 995 | ||||||||||||
Total
interest
income
|
73,553 | 14,774 | (615616 | ) | 87,71287,711 | |||||||||||
Interest
Expense:
|
||||||||||||||||
Deposits
|
30,130 | 5,083 | 106 | 35,319 | ||||||||||||
Advances
and other borrowed
funds
|
5,772 | 571 | 1,028 | 7,371 | ||||||||||||
Subordinated
debentures
|
1,518 | - | - | 1,518 | ||||||||||||
Total
interest
income
|
37,420 | 5,654 | 1,134 | 44,208 | ||||||||||||
Net
interest
income
|
36,133 | 9,120 | (1,7491,750 | ) | 43,50443,503 | |||||||||||
Provision
for loan
losses
|
1,704 | 458 | - | 2,162 | ||||||||||||
Net
interest income after
provision for loan losses
|
34,429 | 8,662 | (1,7491,750 | ) | 41,34241,341 | |||||||||||
Non-interest
income:
|
||||||||||||||||
Service
fees and other
charges
|
7,997 | 1,650 | - | 9,647 | ||||||||||||
Mortgage
banking
income
|
2,780 | 651 | - | 3,431 | ||||||||||||
Insurance
commissions
|
4,244 | - | - | 4,244 | ||||||||||||
Gain
on sale of non-mortgage
loans
|
204 | - | - | 204 | ||||||||||||
Gain
on sale of
securities
|
21 | - | - | 21 | ||||||||||||
Trust
income
|
280 | - | - | 280 | ||||||||||||
Income
from Bank Owned Life
Insurance
|
929 | - | - | 929 | ||||||||||||
Other
non-interest
income
|
407 | (25 | ) | - | 382 | |||||||||||
Total
non-interest
income
|
16,862 | 2,276 | - | 19,138 | ||||||||||||
Non-interest
expense:
|
||||||||||||||||
Compensation
and
benefits
|
19,610 | 4,541 | - | 24,151 | ||||||||||||
Occupancy
|
4,324 | 961 | - | 5,285 | ||||||||||||
Data
processing
|
2,838 | 636 | - | 3,474 | ||||||||||||
Other
non-interest
expense
|
9,178 | 2,169 | 894 | 12,241 | ||||||||||||
Total
non-interest
expense
|
35,950 | 8,307 | 894 | 45,151 | ||||||||||||
Income
before income
taxes
|
15,341 | 2,631 | (2,6432,644 | ) | 15,32915,328 | |||||||||||
Income
tax
expense
|
4,995 | 875 | (925926 | ) | 4,9454,944 | |||||||||||
Net
income
|
$ | 10,346 | $ | 1,756 | $ | (1,718 | ) | 10,384 | ||||||||
Earnings
per
share:
|
||||||||||||||||
Basic
|
$ | 1.46 | $ | 2.42 | $ | - | $ | 1.28 | ||||||||
Diluted
|
$ | 1.44 | $ | 2.412.42 | $ | - | $ | 1.26 | ||||||||
Average
shares
outstanding
|
||||||||||||||||
Basic
|
7,101 | 726 | - | - | ||||||||||||
Retired
--
basic
|
- | - | (726 | ) | - | |||||||||||
Newly
issued --
basic
|
- | - | 1,0311,037 | - | ||||||||||||
Resulting
basic
|
- | - | - | 8,1328,138 | ||||||||||||
Diluted
|
7,201 | 726 | - | - | ||||||||||||
Retired
--
diluted
|
- | - | (726 | ) | - | |||||||||||
Newly
issued --
diluted
|
- | - | 1,0311,037 | - | ||||||||||||
Resulting
diluted
|
- | - | - | 8,2328,238 |
|
1.
|
Cash
in the amount of $37.50 per
share; and
|
|
2.
|
Shares
of First Defiance common
stock based on an exchange ratio of 1.4209 First Defiance shares
for every
one share of Pavilion.
|
(In
thousands)
|
||||
Purchase
Price of
Pavilion:
|
||||
Cash
consideration paid for the
transaction (including stock options)
|
$ | 27,88227,915 | ||
Stock
consideration paid for the
transaction
|
27,61027,764 | |||
Total
consideration
|
55,49255,679 | |||
Capitalized
costs
|
1,982 | |||
Total
cost
|
$ | 57,47457,661 | ||
Net
historical assets of
Pavilion
|
$ | 29,364 | ||
Fair
market value adjustments as
of September 30, 2007
|
||||
ESOP
stock put
obligation
|
2,711 | |||
Loans
|
671 | |||
Goodwill
|
21,01021,197 | |||
Core
deposit
intangible
|
5,000 | |||
Customer
relationship
intangible
|
870 | |||
Deposits
|
193 | |||
Federal
Home Loan Bank
Advances
|
19 | |||
Recognition
of
deferred tax liability on fair market value
adjustments
|
(2,364 | ) | ||
$ | 57,47457,661 |
Employee
severance
costs
|
$ | 1,329 | ||
Investment
banking and other
fees
|
1,225 | |||
Deferred
tax
benefit
|
(572 | ) | ||
Total
estimated costs, net of tax
benefits
|
$ | 1,982 |
For
the Nine
Months Ended September 30, 2007 |
For
the Year
Ended December 31, 2006 |
|||||||
(in
thousands)
|
||||||||
Yield
adjustment on
loans
|
$ | (251 | ) | $ | (388 | ) | ||
Yield
adjustment on
deposits
|
(106 | ) | (132 | ) | ||||
Yield
adjustment on Federal Home
Loan Bank advances
|
(19 | ) | (19 | ) | ||||
Interest
expense on bank
debt
|
(1,009 | ) | (1,346 | ) | ||||
Reduction
of interest income on
securities used for
consideration
|
(364)(365
|
) | (485)(487 | ) | ||||
Amortization
of core deposit
intangible
|
(719 | ) | (946 | ) | ||||
Amortization
of customer
relationship intangible
|
(175 | ) | (230 | ) | ||||
Total
pro forma income
adjustments
|
(2,6432,644 | ) | (3,5463,548 | ) | ||||
Tax
on pro forma
adjustments
|
925926 | 1,2411,242 | ||||||
Total
pro forma income
adjustments, net
|
$ | (1,718 | ) | $ | (2,3052,306 | ) | ||
Weighted
Average
Remaining Term/ Useful
Life/
Duration
|
Method
of
Amortization
or
Accretion
|
|
Loans
|
1.5
years
|
Level
yield
|
Deposits
|
.5
years
|
Level
yield
|
FHLB
Advances
|
.25
years
|
Level
yield
|
Core
deposit
intangibles
|
10
years
|
Accelerated
|
Customer
relationship
intangibles
|
7
years
|
Accelerated
|
|
|
·
|
filing
a written notice of
revocation with the Secretary of Pavilion, at 135 East Maumee Street,
Adrian, Michigan 49221;
|
|
·
|
executing
and returning a
later-dated proxy received by Pavilion prior to a vote being taken
at the
special meeting; or
|
|
·
|
attending
the special meeting and
giving notice of revocation or simply voting in
person.
|
|
·
|
the
financial value of First
Defiance’s proposal and the premium that value represented over the other
offers for the acquisition of Pavilion and over the then-recent
sales of
Pavilion common stock;
|
|
·
|
the
fact that Pavilion
shareholders would benefit from the increased liquidity of the
First
Defiance shares to be
received;
|
|
·
|
the
dividend payout and market
capitalization of First
Defiance;
|
|
·
|
the
social and economic impact of
First Defiance’s proposal on Pavilion and its employees, customers,
suppliers, and the communities in which Pavilion and its subsidiaries
operate; and
|
|
·
|
the
perception of Pavilion’s Board
of Directors of the strategic and synergistic business opportunities
for
the combined First Defiance -- Pavilion organization to grow into
an
organization that provides greater value to its shareholders than
the sum
of the two previously separate corporations.
|
|
·
|
the
fact that the market value of
the consideration to be received by Pavilion’s shareholders in the merger
represented a premium over other offers received and reviewed by
Pavilion’s Board of Directors and over the then-recent sales of Pavilion
common stock;
|
|
·
|
the
fact that Pavilion
shareholders would benefit from the increased liquidity of the
First
Defiance shares to be
received;
|
|
·
|
the
historical performance of
First Defiance and its perceived future
prospects;
|
|
·
|
the
apparent competence,
experience, community banking philosophy, and integrity of First
Defiance’s management; and
|
|
·
|
the
opinion of Donnelly that the
financial terms of the merger are fair to Pavilion shareholders
from a
financial point of view.
|
|
The
Board of Directors of Pavilion
also believes that, by becoming part of a larger organization with
greater
resources, Pavilion will be able to better serve its customers
and
communities and provide a broader array of products and services
that will
be competitive with other financial service providers in southeast
Michigan.
|
|
·
|
the
Agreement and Plan of Merger
dated October 2, 2007;
|
|
·
|
certain
publicly-available
information for Pavilion, including each of the Annual Reports
to
Stockholders and Annual Reports on Form 10-K for the years ended
December
31, 2004, 2005 and 2006 and the quarterly reports on Form 10-Q
for the
quarters ended March 31, 2007 and June 30, 2007 in addition to
Pavilion
management’s unaudited balance sheet and statement of income for the eight
months ended August 31,
2007;
|
|
·
|
certain
information, including
financial forecasts and projections (and the assumptions and bases
therefor which were deemed reasonable by management), relating
to
earnings, assets, liabilities and prospects of Pavilion as a stand
alone
company with the management of Pavilion. Donnelly
confirmed
|
|
with
management that such
forecasts and projections reflected the best currently available
estimates
and judgments of management;
|
|
·
|
certain
publicly-available
information for First Defiance, including each of the Annual Reports
to
Stockholders and Annual Reports on Form 10-K for the years ended
December
31, 2004, 2005 and 2006 and the quarterly reports on Form 10-Q
for the
quarters ended March 31, 2007 and June 30,
2007;
|
|
·
|
certain
information, including
financial forecasts and projections (and the assumptions and bases
therefore which were deemed reasonable by management), relating
to
earnings, assets, liabilities and prospects of First Defiance with
the
management of First Defiance. Donnelly confirmed with management
that such
forecasts and projections reflected the best currently available
estimates
and judgments of management;
|
|
·
|
the
historical stock prices and
trading volumes of Pavilion’s common
stock;
|
|
·
|
the
historical stock prices and
trading volumes of First Defiance’s common
stock;
|
|
·
|
the
terms of acquisitions of
banking organizations which Donnelly deemed generally comparable
to
Pavilion;
|
|
·
|
the
amount and timing of the cost
savings, income from additional growth, and other expenses and
adjustments
expected to result from the merger furnished by senior management
of First
Defiance and deemed reasonable by
them;
|
|
·
|
the
financial condition and
operating results of First Defiance compared to the financial conditions
and operating results of certain other financial institutions that
Donnelly deemed comparable;
and
|
|
·
|
such
other information, financial
studies, analyses and investigations and such other factors that
Donnelly
deemed relevant for the purposes of its
opinion.
|
As
of August 31, 2007 / For the
Twelve Months Ended August 31, 2007 1
|
|||||||
Deal
Price
|
Price
/
Book
|
Price
/
Tangible
Book |
Price
/
LTM
Earnings |
Price
/
Assets
|
Price
/
Deposits
|
Premium
/ Core
Deposits
|
One-Day
Trading Premium 2 |
$55,490
|
186.7%
|
186.7%
|
23.3x
|
19.2%
|
23.1%
|
15.7%
|
51.1%
|
Footnote:
|
|||||||
1
Although the deal price includes
the cost to cash out current Pavilion options, Donnelly Penman
excluded
this amount from the implied transaction multiples as this value
does not
benefit the individual Pavilion shareholders.
|
|||||||
2
One-day trading premium is based
on Pavilion's common stock trading price as of October 2,
2007.
|
Contribution
Analysis
($'s in thousands) |
||||||||||||||||||
First
Defiance
|
Pavilion
|
Percent
Contribution
|
||||||||||||||||
6/30/2007
|
8/31/2007
|
First
Defiance
|
Pavilion
|
|||||||||||||||
Total
Assets
|
$ |
1,540,675
|
$ |
285,913
|
84.3 | % | 15.7 | % | ||||||||||
Total
Loans,
net
|
1,231,610
|
239,139
|
83.7 | % | 16.3 | % | ||||||||||||
Total
Deposits
|
1,167,198
|
237,273
|
83.1 | % | 16.9 | % | ||||||||||||
Core
Deposits
|
1,023,339
|
162,211
|
86.3 | % | 13.7 | % | ||||||||||||
Total
Equity
|
164,657
|
29,369
|
84.9 | % | 15.1 | % | ||||||||||||
2007E
FYE Net
Income
|
16,230
|
2,253
|
87.8 | % | 12.2 | % | ||||||||||||
2008E
FYE Net
Income
|
16,523
|
2,407
|
87.3 | % | 12.7 | % | ||||||||||||
2009E
FYE Net
Income
|
18,945
|
2,651
|
87.7 | % | 12.3 | % | ||||||||||||
Shares
Outstanding (Proforma
Company)
|
7,178,000
|
1,031,349
|
87.4 | % | 12.6 | % | ||||||||||||
Average
|
85.8 | % | 14.2 | % | ||||||||||||||
Footnotes:
|
||||||||||||||||||
1
|
Source: SNL Securities / SEC Filings (June 30, 2007 10-Q) | |||||||||||||||||
2
|
Source: Pavilion unaudited internal financial statements |
National
Bancorp, Inc. / Antioch
Bancshares, Inc.
|
Community
Bancshares, Inc. / Salt
Creek Valley Bancshares, Inc.
|
Southern
Michigan Bancorp, Inc. /
FNB Financial Corporation
|
Standard
Bancshares, Inc. /
Community Bank of Lemont
|
Firstbank
Corporation / ICNB
Financial Corporation
|
Union
County Bancshares, Inc. /
Jonesboro Bancompany, Inc.
|
Old
National Bancorp / St. Joseph
Capital Corporation
|
FBOP
Corporation / United
Financial Holdings, Inc.
|
Park
National Corporation /
Anderson Bank Company
|
Sky
Financial Group, Inc. / Wells
River Bancorp, Inc.
|
First
Banks, Inc. / TEAMCO,
Inc.
|
Castle
Creek Capital III LLC /
BB&T Bancshares Corp.
|
ChoiceOne
Financial Services, Inc.
/ Valley Ridge Financial Corporation
|
Commerce
Bancshares, Inc. / West
Pointe Bancorp, Incorporated
|
Community
Bank Shares of Indiana,
Inc. / Bancshares, Incorporated
|
First
Mid-Illinois Bancshares,
Incorporated / MansfieldBancorp,
Incorporated
|
IBT
Bancorp, Inc. / Farwell State
Savings Bank
|
German
American Bancorp / Stone
City Bancshares, Inc.
|
PSB
Bancorp / Oxford Bank
Corporation
|
Western
Illinois Bancshares Inc. /
Midwest Bank of Western
Illinois
|
Firstbank
Corporation / Keystone
Financial Corporation
|
Horizon
Bancorp / AllianceFinancial
Corporation
|
Princeton
National Bancorp, Inc. /
Somonauk FSB Bancorp, Inc.
|
Sky
Financial Group, Inc. /
BelmontBancorp.
|
Peoples
Community Bancorp, Inc. /
American State Corporation
|
Croghan
Bancshares, Inc. / Custar
State Bank
|
Illinois
National Bancorp, Inc. /
Riverton Community Bank
|
Metropolitan
Bank Group, Inc. /
Allegiance Community Bank
|
Oak
Hill Financial, Inc. / Ripley
National Bank
|
Metropolitan
Bank Group, Inc. /
Citizens Bank Illinois,
NA
|
Camco
Financial Corporation /
LondonFinancial
Corporation
|
LincolnBancorp
/ First Shares Bancorp,
Inc.
|
Harrodsburg
First Financial
Bancorp, Inc. / IndependenceBancorp
|
|
·
|
The
transaction price was 186.7%
of book value and tangible book value, compared with the comparable
transaction group median of
206.0%;
|
|
·
|
The
transaction price to LTM
earnings multiple was 23.3 times, compared with the comparable
transaction
group median of 24.8 times LTM
earnings;
|
|
·
|
The
transaction price was 19.2% of
total assets, compared with the comparable transaction group median
of
18.5%;
|
|
·
|
The
transaction price was 23.1% of
deposits, compared with the comparable transaction group median
of
22.7%;
|
|
·
|
The
transaction price represented
a 15.7% premium to core deposits, compared with the comparable
transaction
group median of 13.5%; and
|
|
·
|
The
transaction price represented
a 51.1% one-day trading premium to Pavilion’s common stock trading price
as of October 2, 2007, compared with the comparable transaction
group
median of 40.9%.
|
|
·
|
dissolve
Pavilion Financial
Services, Inc. and Pavilion Mortgage
Company;
|
|
·
|
terminate
Pavilion’s ESOP and
401(k) planand
repurchase any Pavilion stock owned by the plans;
|
|
·
|
terminate
Pavilion’s defined
benefit (pension) plan;
|
|
·
|
terminate
its policy regarding
employee “banked” paid time off and compensate employees who have
accumulated paid time off to the extent payment is required;
and
|
|
·
|
terminate
the Pavilion Employee
Stock Purchase Plan.
|
|
·
|
assume
all obligations under
existing Pavilion and Bank of Lenawee employment
agreements;
|
|
·
|
if
necessary, file a listing
application with NASDAQ for the First Defiance shares to be issued
in the
merger;
|
|
·
|
obtain
directors’ and officers’
liability insurance coverage for Pavilion and Bank of Lenawee officers
and
directors for five years after the
merger;
|
|
·
|
indemnify
the former directors and
officers of Pavilion and Bank of
Lenawee;
|
|
·
|
select
one former Pavilion
director to serve on the First Defiance
Board;
|
|
·
|
establish
an advisory board of
First Federal of up to six former Pavilion directors;
and
|
|
·
|
pay
a severance payment to each
former Pavilion or Bank of Lenawee employee who is not covered
by a
written employment or severance agreement and is not offered employment
by
First Defiance or First Federal or is terminated without cause
within 30
days after the merger.
|
|
·
|
sell,
transfer, mortgage, pledge,
or subject to any lien or otherwise encumber any material amount
of
assets, except in the ordinary course of
business;
|
|
·
|
make
any capital expenditure that
individually exceeds $10,000 or in the aggregate exceeds
$50,000;
|
|
·
|
enter
into any contract,
commitment or transaction that would reasonably be likely to have
a
material adverse effect on Pavilion on a consolidated basis or
impair or
delay consummation of the transactions contemplated by the merger
agreement;
|
|
·
|
declare
or pay any dividends on
the Pavilion common stock other than quarterly dividends consistent
with
past practice;
|
|
·
|
purchase,
redeem, retire or
otherwise acquire any Pavilion common stock, except for the redemption
of
shares of Pavilion common stock held in the Pavilion ESOP and 401(k)
Plan;
|
|
·
|
issue
any shares of Pavilion
common stock or grant any option or right to acquire any shares
of
Pavilion common stock, except (a) upon the valid exercise of any
outstanding options exercisable for shares of Pavilion common stock,
(b)
pursuant to the Pavilion Employee Stock Purchase Plan, (c) in the
form of
matching contributions made to the Pavilion ESOP and 401(k) Plan
consistent with past practice, or (d) pursuant to the Pavilion
Dividend
Reinvestment and Stock Purchase
Plan;
|
|
·
|
amend
its articles of
incorporation or bylaws or the articles or bylaws of its
subsidiaries;
|
|
·
|
acquire
any stock or other
interest in any other entity, with certain exceptions in the ordinary
course of business;
|
|
·
|
adopt
or amend any employee or
director benefit plan, pension, retirement, stock, profit sharing,
or
bonus plan or take any action to accelerate the vesting of any
benefits,
except as required by law;
|
|
·
|
except
as otherwise provided in
the merger agreement, enter into or amend any employment contract
with any
of their employees or increase the compensation payable to any
employee or
director;
|
|
·
|
except
in the ordinary course of
business consistent with past practice, borrow or agree to borrow
any
funds or directly guarantee or agree to guarantee any obligations
of
others;
|
|
·
|
implement
or adopt any change in
Pavilion’s accounting principles, practices or methods, except as may be
required by GAAP;
|
|
·
|
make
or change any tax election or
tax accounting method, file any amended tax return, settle any
tax claim
or assessment or consent to the extension or waiver of any statute
of
limitations with respect to
taxes;
|
|
·
|
originate
or issue a commitment to
originate any loan or note in an amount of $250,000 or more or
on an
aggregate basis to one borrower of $500,000 or more or modify,
renew or
release any collateral on an existing loan the outstanding balance
of
which is $250,000 or more;
|
|
·
|
establish
any new lending programs
or make any policy changes concerning who may approve
loans;
|
|
·
|
enter
into any securities
transactions or purchase or otherwise acquire any investment security
other than U.S. Government and agency
obligations;
|
|
·
|
increase
or decrease the rate of
interest paid on time deposits or certificates of deposits except
in a
manner consistent with past practices and prevailing rates in Bank
of
Lenawee’s market;
|
|
·
|
foreclose
upon or otherwise take
title or possession of any real property without first obtaining
a Phase I
environmental report that indicates the absence of a recognized
environmental condition; provided, however, that Bank of Lenawee
will not
be required to obtain such a report with respect to single-family,
non-agricultural residential property of one acre or less unless
it has
reason to believe such property may contain pollutants, contaminants
or
other waste materials;
|
|
·
|
purchase
or acquire any interest
in a loan held by a third
party;
|
|
·
|
open
any new branches or loan
production offices or close any branch or loan production office,
except
as may be agreed by First
Defiance;
|
|
·
|
increase
the number of directors
on the board of directors of Pavilion or Bank of
Lenawee;
|
|
·
|
except
as permitted by the merger
agreement, enter into any contract relating to the provision of
advisory
or consulting services to Pavilion or its subsidiaries;
or
|
|
·
|
agree
to take any of the actions
described above.
|
|
·
|
the
merger agreement is approved
by the holders of a majority of the outstanding shares of Pavilion
common
stock;
|
|
·
|
the
parties receive regulatory
approval from the OTS;
|
|
·
|
no
governmental authority
prohibits consummation of the
merger;
|
|
·
|
the
shares of First Defiance
common stock to be issued in the merger have been registered with
the
Securities and Exchange Commission;
and
|
|
·
|
legal
counsel has provided an
opinion with respect to the federal income tax consequences of
the
merger.
|
|
·
|
all
of Pavilion’s representations
and warranties in the merger agreement are true in all material
respects
as of the effective date of the
merger;
|
|
·
|
Pavilion
satisfies, in all
material respects, its obligations in the merger agreement;
and
|
|
·
|
Pavilion
obtains all consents and
approvals required in connection with the transactions contemplated
by the
merger agreement.
|
|
·
|
all
of First Defiance’s
representations and warranties in the merger agreement are true
in all
material respects as of the effective date of the
merger;
|
|
·
|
First
Defiance satisfies, in all
material respects, its obligations in the merger
agreement;
|
|
·
|
First
Defiance obtains all
consents and approvals required in connection with the transactions
contemplated by the merger agreement;
and
|
|
·
|
Thethe
aggregate
value of First Defiance
common stock to be issued in connection with the merger is at least
40% of
the total consideration to be paid to Pavilion
shareholders.
|
|
·
|
by
the mutual written consent of
First Defiance and Pavilion;
|
|
·
|
by
either First Defiance or
Pavilion if the merger is not consummated on or before June 30,
2008;
|
|
·
|
by
either First Defiance or
Pavilion if any event occurs which would preclude satisfaction
of certain
conditions set forth in the merger
agreement;
|
|
·
|
by
either First Defiance or
Pavilion if Pavilion executes a definitive agreement whereby some
person
or entity other than First Defiance will acquire all or a material
amount
of the assets, or any equity securities, of Pavilion, or Pavilion
and such
other person or entity will enter into a merger, consolidation
or business
combination;
|
|
·
|
by
Pavilion if First Defiance does
not increase the stock consideration to be received by Pavilion
shareholders to preserve the tax-free reorganization status of
the
merger;
|
|
·
|
by
Pavilion if the Pavilion board
of directors reasonably determines in good faith, after consultation
with
Pavilion’s financial advisor and the written advice of Pavilion’s legal
counsel, that failing to terminate the merger agreement could be
expected
to constitute a breach of its fiduciary duties to the Pavilion
shareholders;
|
|
·
|
by
First Defiance if the cost to
perform any environmental remediation activities set forth in the
merger
agreement is expected to exceed $750,000 in the aggregate;
or
|
|
·
|
by
Pavilion if (1) the average
closing price of First Defiance common shares for the 20 trading
days
ending 10 calendar days before the closing is less than $22.08,
and (2)
First Defiance common shares underperform an established
index
of 16 peer companies by more
than 17.5% as measured by dividing the weighted average closing
prices of
the peer companies on October 2, 2007 against the weighted average
of the
closing prices for the 20 trading days ending 10 calendar days
before the
closing.
|
|
·
|
in
the event that the value of the
Aggregate Share Consideration (as defined below) would be less
than 40% of
the sum of the value of the Aggregate Cash Consideration (as defined
below) and the value of the Aggregate Share Consideration, then
either (i)
First Defiance will elect to increase the number of shares of First
Defiance common stock to be exchanged for each share of Pavilion
common
stock in the merger,
or (ii) Pavilionsuch
that the value of the Aggregate Share Consideration would be at
least 40%
of the sum of the value of the Aggregate Cash Consideration and
the value
of the Aggregate Share Consideration, or (ii) Pavilion or First
Defiance
will elect
to
terminate the merger agreement and abandon the
merger.
|
|
·
|
tax
consequences to a Pavilion
shareholder who holds shares of Pavilion common stock other than
as a
capital asset for federal income tax purposes;
|
|
·
|
This
description does not address, among other matters, the tax
consequences to a Pavilion shareholder who holds shares of Pavilion
common
stock other than as a capital asset for federal income tax
purposes. The
description also does not address any federal
income tax
consequences that may be relevant to Pavilion shareholders in light
of
their particular tax circumstances, including, without limitation,
shareholders that are: (i) persons who hold shares of Pavilion
common stock as part of a straddle, hedge, conversion or other
risk-reduction transaction; (ii) broker-dealers; (iii) persons
who have a
functional currency other than the U.S. dollar; (iv) tax-exempt
entities;
(v) foreign persons; (vi) insurance companies; (vii) financial
institutions; (viii) persons that acquired shares of Pavilion common
stock
pursuant to the exercise of employee stock options, stock purchase
plans
or otherwise as compensation; (ix) persons who receive shares of
First
Defiance common stock other than in exchange for shares of Pavilion
common
stock; (x) retirement plans, including, without limitation, the
Pavilion
ESOP and 401(k) Plan; or (xi) pass-through entities and investors
in those
entities. In
addition, this description does not address the tax
consequences to the holders of options to acquire shares of Pavilion
common stock. Furthermore,
the discussion does not address any
alternative minimum tax or any foreign, state or local tax consequences
of
the merger. Pavilion
shareholders with special particular tax circumstances or who are
subject
to special tax treatment are strongly urged to consult with their
tax
advisors regarding their individual tax consequences. ;
|
|
·
|
tax
consequences to the holders of
options to acquire shares of Pavilion common stock;
|
|
·
|
any
alternative minimum tax or any
foreign, state or local tax consequences of the merger;
and
|
|
·
|
No
gain or loss will be recognized
by First Defiance or Pavilion as a result of the
merger.
|
|
·
|
The
tax basis of the assets of
Pavilion in the hands of First Defiance will be the same as the
tax basis
of such assets in the hands of Pavilion immediately prior to the
merger.
|
|
·
|
The
holding period of the assets
of Pavilion to be received by First Defiance will include the period
during which such assets were held by
Pavilion.
|
|
Ÿ
|
Pavilion
will be treated as if it
sold all of its assets for their respective fair market values
and then
liquidated and distributed the proceeds to
shareholders. Pavilion will recognize gain or loss on the
deemed sale of assets. If a gain is recognized, Pavilion will
be taxed on the gain, which tax liability will be inherited by
First
Defianceas
a result of the
merger.
|
|
Ÿ
|
The
tax basis of the assets of
Pavilion in the hands of First Defiancewill
be equal to the cost of such
assets.
|
|
Ÿ
|
The
holding period of the assets
of Pavilion to be received by First Defiance will start on the
effective
date of the merger, just as if the assets were purchased on that
date.
|
|
·
|
any
merger or consolidation of
First Defiance with or into any Related
Person;
|
|
·
|
any
sale, lease, exchange,
mortgage, transfer, or other disposition of all or more than 25%
of the
assets of First Defiance or its subsidiaries to any Related
Person;
|
|
·
|
any
merger or consolidation of a
Related Person with First Defiance or its
subsidiaries;
|
|
·
|
any
sale, lease, exchange,
transfer or other disposition of all or more than 25% of the assets
of a
Related Person to First Defiance or its
subsidiaries;
|
|
·
|
the
issuance of any securities of
First Defiance or its subsidiaries to a Related
Person;
|
|
·
|
the
acquisition by First Defiance
or its subsidiaries of any securities of the Related
Person;
|
|
·
|
any
reclassification of the First
Defiance common stock, or any recapitalization involving the common
stock
of First Defiance; and
|
|
·
|
any
agreement, contract or other
arrangement providing for any of the above
transactions.
|
|
·
|
a
majority of the directors not
affiliated with the interested shareholder approves the
transaction;
|
|
·
|
the
transaction is approved by the
Pavilion shareholders as otherwise required by law or Pavilion’s articles
of incorporation; or
|
|
·
|
the
business combination results
in shareholders, other than the interested shareholder, receiving
a fair
price plus interest for their shares of Pavilion common stock,
as
determined in accordance with the
statute.
|
|
·
|
one-fifth
or more, but less than
one-third, of the voting
power;
|
|
·
|
one-third
or more, but less than a
majority, of the voting power;
or
|
|
·
|
a
majority or more of the voting
power.
|
|
·
|
the
board of directors approves
the transaction;
|
|
·
|
the
transaction is approved by the
holders of shares with at least two-thirds of the voting power
of the
corporation (or a different proportion set forth in the articles
of
incorporation), including at least a majority of the outstanding
shares
after excluding shares controlled by the interested shareholder;
or
|
|
·
|
the
business combination results
in shareholders, other than the interested shareholder, receiving
a fair
price plus interest for their shares, as determined in accordance
with the
statute.
|
|
·
|
one-fifth
or more, but less than
one-third, of the voting
power;
|
|
·
|
one-third
or more, but less than a
majority, of the voting power;
or
|
|
·
|
a
majority or more of the voting
power.
|
First
DefianceFilings
(File No.
000-26850)
|
|
Filing
|
Period
of Report or Date Filed
|
Annual
Report on Form
10-K
|
Year
ended December 31,
2006
|
Quarterly
Reports on Form
10-Q
|
Quarters
ended March 31, June 30,
and September 30, 2007
|
Current
Reports on Form
8-K
|
Filed
on January 16, February 21,
April 3, April 17, July 17, October 1, October 4, and
October 16,
20072007,
and January 22,
2008.
|
The
description of First Defiance
common stock set forth in the Registration Statement filed with
the SEC on
Form 8-A on September 25, 1995, including any amendment of report
filed
with the SEC for the purpose of updating this
description.
|
Pavilion
Filings (File No.
000-30521)
|
|
Filings
|
Period
of Report or Date Filed
|
Annual
Report on Form
10-K
|
Year
ended December 31,
2006
|
Quarterly
Report on Form
10-Q
|
Quarters
ended March 31, June 30,
and September 30, 2007
|
Current
Reports on Form
8-K
|
Filed
on February 27, March 2,
March 26, April 25, May 2, July 26, August 15, October 3, October
3,
October 4, November 2, November 14, and
November
27,
and December
21,
2007.
|
The
description of Pavilion’s
common stock set forth in the Registration Statement on Form 10
as filed
with the SEC on May 1, 2000, including any amendment filed with
the SEC
for the purpose of updating this description.
|
First
DefianceFinancial
Corp.
601
Clinton
Street
Defiance,
Ohio 43512-3272
Attention: John
C.
Wahl
(419)
782-5015
|
Pavilion
Bancorp,
Inc.
135
East Maumee
Street
Adrian,
Michigan 49221
Attention: Richard
DeVries
(517)
265-5144
|
Page
|
||
ARTICLE
ONE -- THE MERGER
|
A-1
|
|
1.01.
|
Corporate
Merger
|
A-1
|
1.02.
|
Effective
Time
|
A-1
|
1.03.
|
Governing
Documents of the Surviving Corporation
|
A-1
|
1.04.
|
Bank
Merger
|
A-2
|
1.05.
|
Structure
of Combination
|
A-2
|
ARTICLE
TWO -- CONVERSION OF SHARES; SURRENDER OF CERTIFICATES
|
A-2
|
|
2.01.
|
Conversion
of Pavilion Shares
|
A-2
|
2.02.
|
Exchange
of Pavilion Certificates
|
A-3
|
2.03.
|
Anti-Dilution
Provisions
|
A-4
|
2.04.
|
First
Defiance Shares
|
A-4
|
2.05.
|
Tax
Consequences
|
A-5
|
ARTICLE
THREE -- REPRESENTATIONS AND WARRANTIES OF PAVILION
|
A-5
|
|
3.01.
|
Corporate
Status
|
A-5
|
3.02.
|
Capitalization
of Pavilion
|
A-6
|
3.03.
|
Capitalization
of Subsidiaries
|
A-7
|
3.04.
|
Corporate
Proceedings
|
A-8
|
3.05.
|
Authorization
|
A-8
|
3.06.
|
Financial
Statements of Pavilion
|
A-8
|
3.07.
|
SEC
Filings
|
A-8
|
3.08.
|
Absence
of Undisclosed Liabilities
|
A-9
|
3.09.
|
Absence
of Changes
|
A-9
|
3.10.
|
Loans
|
A-9
|
3.11.
|
Allowance
for Loan Losses
|
A-9
|
3.12.
|
Reports
and Records
|
A-10
|
3.13.
|
Taxes
|
A-10
|
3.14.
|
Property
and Title
|
A-11
|
3.15.
|
Legal
Proceedings
|
A-12
|
3.16.
|
Compliance
with Laws and Regulations
|
A-12
|
3.17.
|
No
Conflict
|
A-13
|
3.18.
|
Brokers,
Finders and Others
|
A-13
|
3.19.
|
Employment
Agreements
|
A-13
|
3.20.
|
Employee
Benefit Plans
|
A-14
|
3.21.
|
Insurance
|
A-16
|
3.22.
|
Governmental
and Third-Party Consents and Proceedings
|
A-16
|
3.23.
|
Contracts
|
A-16
|
3.24.
|
Environmental
Matters
|
A-16
|
3.25.
|
Pavilion
Information
|
A-17
|
3.26.
|
CRA
Compliance
|
A-17
|
3.27.
|
Ownership
of First Defiance Shares
|
A-18
|
3.28.
|
Fairness
Opinion
|
A-18
|
3.29.
|
Real
Property Interest
|
A-18
|
3.30.
|
Internal
Controls
|
A-18
|
3.31.
|
Knowledge
|
A-18
|
ARTICLE
FOUR -- REPRESENTATIONS AND WARRANTIES OF FIRST DEFIANCE
|
A-18
|
|
4.01.
|
Corporate
Status
|
A-19
|
4.02.
|
Corporate
Proceedings
|
A-19
|
4.03.
|
Capitalization
of First Defiance
|
A-20
|
4.04.
|
Capitalization
of First Federal
|
A-20
|
4.05.
|
Authorized
and Effective Agreement
|
A-21
|
4.06.
|
No
Conflict
|
A-21
|
4.07.
|
SEC
Filings
|
A-22
|
4.08.
|
Financial
Statements of First Defiance and First Federal
|
A-22
|
4.09.
|
Brokers,
Finders and Others
|
A-22
|
4.10.
|
Governmental
and Third-Party Proceedings
|
A-23
|
4.11.
|
Absence
of Undisclosed Liabilities
|
A-23
|
4.12.
|
Absence
of Changes
|
A-23
|
4.13.
|
Legal
Proceedings
|
A-23
|
4.14.
|
Regulatory
Matters
|
A-24
|
4.15.
|
Compliance
with Laws and Regulations
|
A-24
|
4.16.
|
CRA
Compliance
|
A-24
|
4.17.
|
Loans
|
A-25
|
4.18.
|
Allowance
for Loan Losses
|
A-25
|
ARTICLE
FIVE -- FURTHER COVENANTS OF PAVILION
|
A-25
|
|
5.01.
|
Operation
of Business
|
A-25
|
5.02.
|
Notification
|
A-28
|
5.03.
|
Acquisition
Transactions
|
A-29
|
5.04.
|
Delivery
of Information
|
A-29
|
5.05.
|
Affiliates
Compliance with the Securities Act
|
A-29
|
5.06.
|
Voting
Agreement
|
A-30
|
5.07.
|
Amendment
of Pavilion Stock Options
|
A-30
|
5.08.
|
Pavilion
Meeting
|
A-30
|
5.09.
|
Tax
Matters
|
A-30
|
5.10.
|
Insurance
Coverage
|
A-31
|
5.11.
|
Supplemental
Assurances
|
A-31
|
5.12.
|
Subsidiaries
|
A-31
|
5.13.
|
Environmental
Inspection of Property
|
A-31
|
5.14.
|
Employee
Benefit Plans
|
A-32
|
ARTICLE
SIX -- FURTHER COVENANTS OF FIRST DEFIANCE
|
A-33
|
|
6.01
|
Employees;
Employee Benefits
|
A-33
|
6.02.
|
Exchange
Listing
|
A-34
|
6.03.
|
Notification
|
A-34
|
6.04.
|
Board
of Directors
|
A-34
|
6.05.
|
Advisory
Board
|
A-34
|
6.06.
|
Indemnification
|
A-35
|
6.07.
|
Delivery
of and Access to Information
|
A-36
|
6.08.
|
Operation
of Business
|
A-37
|
ARTICLE
SEVEN -- FURTHER OBLIGATIONS OF THE PARTIES
|
A-37
|
|
7.01.
|
Cooperative
Action
|
A-37
|
7.02.
|
Press
Releases
|
A-37
|
7.03.
|
Proxy/Prospectus;
Registration Statement
|
A-37
|
7.04.
|
Regulatory
Applications
|
A-39
|
7.05.
|
Confidentiality
|
A-39
|
7.06.
|
Non-Solicitation
|
A-39
|
ARTICLE
EIGHT -- CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE
PARTIES
|
A-40
|
|
8.01.
|
Conditions
to the Obligations of First Defiance
|
A-40
|
8.02.
|
Conditions
to the Obligations of Pavilion
|
A-40
|
8.03.
|
Mutual
Conditions
|
A-41
|
ARTICLE
NINE -- CLOSING
|
A-42
|
|
9.01.
|
Closing
|
A-42
|
9.02.
|
Closing
Deliveries Required of First Defiance
|
A-42
|
9.03.
|
Closing
Deliveries Required of Pavilion
|
A-43
|
ARTICLE
TEN -- TERMINATION
|
A-43
|
|
10.01.
|
Termination
|
A-43
|
10.02.
|
Effect
of Termination
|
A-46
|
10.03.
|
Termination
Fee
|
A-46
|
10.04.
|
Force
Majeure
|
A-46
|
ARTICLE
ELEVEN -- MISCELLANEOUS
|
A-47
|
|
11.01.
|
Notices
|
A-47
|
11.02.
|
Counterparts
|
A-48
|
11.03.
|
Entire
Agreement
|
A-48
|
11.04.
|
Successors
and Assigns
|
A-48
|
11.05.
|
Captions
|
A-48
|
11.06.
|
Governing
Law
|
A-48
|
11.07.
|
Payment
of Fees and Expenses
|
A-48
|
11.08.
|
Amendment
|
A-48
|
11.09.
|
Waiver
|
A-48
|
11.10.
|
No
Third-Party Rights
|
A-49
|
11.11.
|
Severability
|
A-49
|
11.12.
|
Non-Survival
of Representations, Warranties and Covenants
|
A-49
|
11.13.
|
Materiality
|
A-49
|
Exhibit
A:
|
Form
of Voting Agreement
|
Peer
Company
|
Percentage
Weightings
|
Camco
Financial Corporation (CAFI)
|
3.1%
|
CFS
Bancorp, Inc. (CITZ)
|
4.9%
|
Citizens
First Bancorp, Inc. (CTZN)
|
4.7%
|
Dearborn
Bancorp, Inc. (DEAR)
|
3.5%
|
First
Financial Corporation (THFF)
|
13.2%
|
Firstbank
Corporation (FBMI)
|
3.9%
|
German
American Bancorp, Inc. (GABC)
|
4.6%
|
Horizon
Bancorp (HBNC)
|
2.7%
|
Lakeland
Financial Corporation (LKFN)
|
9.3%
|
LNB
Bancorp, Inc. (LNBB)
|
3.4%
|
Macatawa
Bank Corporation (MCBC)
|
7.7%
|
MainSource
Financial Group, Inc. (MSFG)
|
10.8%
|
MBT
Financial Corp. (MBTF)
|
6.2%
|
Mercantile
Bank Corporation (MBWM)
|
5.8%
|
Peoples
Bancorp Inc. (PEBO)
|
9.0%
|
United
Community Financial Corp. (UCFC)
|
7.2%
|
100.0%
|
ATTEST:
|
FIRST
DEFIANCE FINANCIAL CORP.
|
||
/s/
John W. Boesling
|
By:
|
/s/
William J. Small
|
|
John
W. Boesling, Secretary
|
William
J. Small, Chairman of the Board
|
||
ATTEST:
|
PAVILION
BANCORP, INC.
|
||
/s/
Eileen Loveland
|
By:
|
/s/
Richard DeVries
|
|
Eileen
Loveland, Secretary
|
Richard
DeVries, President and CEO
|
SHAREHOLDER
|
FIRST
DEFIANCE
FINANCIAL
|
|||
CORP.
|
||||
By:
|
||||
Name:
|
||||
Print
Name:
|
Title:
|
1.
|
Section 5.14(a) of
the
Agreement shall be amended by replacing it in its entirety with
the
following:
|
ATTEST:
|
FIRST
DEFIANCEFINANCIAL
CORP.
|
||
/s/
Danielle
Norden
|
By:
|
/s/
William J.
Small
|
|
William
J. Small, Chairman
of the
Board
|
|||
ATTEST:
|
PAVILION
BANCORP,
INC.
|
||
/s/
Eileen
Loveland
|
By:
|
/s/
Richard
DeVries
|
|
Richard
DeVries, President and
CEO
|
|||
|
·
|
the
Agreement and Plan of Merger dated October 2,
2007;
|
|
·
|
certain
publicly-available information for Pavilion, including each
of the Annual
Reports to Stockholders and Annual Reports on Form 10-K for
the years
ended December 31, 2004, 2005 and 2006 and the quarterly reports
on
Form 10-Q for the quarters ended March 31, 2007 and June 30, 2007
in
addition to Pavilion management’s unaudited balance sheet and statement of
income for the eight months ended August 31,
2007;
|
|
·
|
certain
information, including financial forecasts and projections
(and the
assumptions and bases therefore which were deemed reasonable
by
management), relating to earnings, assets, liabilities and
prospects of
Pavilion as a stand alone company with the management of Pavilion.
Donnelly confirmed with management that such forecasts and
projections
reflected the best currently available estimates and judgments
of
management;
|
|
·
|
certain
publicly-available information for First Defiance, including
each of the
Annual Reports to Stockholders and Annual Reports on Form 10-K
for the
years ended December 31, 2004, 2005 and 2006 and the quarterly
reports on
Form 10-Q for the quarters ended March 31, 2007 and June 30,
2007;
|
|
·
|
certain
information, including financial forecasts and projections
(and the
assumptions and bases therefore which were deemed reasonable
by
management), relating to earnings, assets, liabilities
and
|
|
prospects
of First Defiance with the management of First Defiance. Donnelly
confirmed with management that such forecasts and projections
reflected
the best currently available estimates and judgments of
management;
|
|
·
|
the
historical stock prices and trading volumes of Pavilion’s common
stock;
|
|
·
|
the
historical stock prices and trading volumes of First Defiance’s common
stock;
|
|
·
|
the
terms of acquisitions of banking organizations which Donnelly
deemed
generally comparable to Pavilion;
|
|
·
|
the
amount and timing of the cost savings, income from additional
growth, and
other expenses and adjustments expected to result from the
Merger
furnished by senior management of First Defiance and deemed
reasonable by
them;
|
|
·
|
the
financial condition and operating results of First Defiance
compared to
the financial conditions and operating results of certain other
financial
institutions that Donnelly deemed comparable;
and
|
|
·
|
such
other information, financial studies, analyses and investigations
and such
other factors that Donnelly deemed relevant for the purposes
of its
opinion.
|
Exhibit
No.
|
Description
|
2
|
Agreement
and Plan of Merger dated
as of October 2, 2007,and amended
as of January 21,
2008,by and
between
First Defiance Financial Corp. and Pavilion Bancorp, Inc. (included
as
Annex A to the Prospectus/Proxy Statement included in this
Registration
Statement)
|
3.1
|
Articles
of Incorporation of First
Defiance Financial Corp. (incorporated by reference to like
numbered
exhibit in the Registrant’s Form S-1, file no.
33-93354)
|
3.2
|
Code
of Regulations of First
Defiance Financial Corp. (incorporated by reference to like
numbered
exhibit in the Registrant’s Form S-1, file no.
33-93354)
|
44.1
|
Articles
of Incorporation and Code
of Regulations, defining the rights of shareholders
|
4.2
|
Agreement
to furnish instruments
and agreements defining rights of holders of long-term debt
(incorporated
by reference to Exhibit 4 in the Registrant’s 2006 Form 10-K, film no.
07696842)
|
5
|
Opinion
of Vorys, Sater, Seymour
and Pease LLP regarding legality of the First Defiance stock
being
registered(filed
herewith)*
|
8
|
Opinion
of Vorys, Sater, Seymour
and Pease LLP as to federal income tax matters(filed
herewith)*
|
10.1
|
1996
Stock Option Plan
(incorporated by reference to like numbered exhibit in Registrant’s 2001
Form 10-K, film no. 02580719)
|
10.2
|
Form
of Incentive Stock Option
Award Agreement (incorporated by reference to like numbered
exhibit in
Registrant’s 2004 Form 10-K, film no. 05685500)
|
10.3
|
Form
of Nonqualified Stock Option
Award Agreement (incorporated by reference to like numbered
exhibit in
Registrant’s 2004 Form 10-K, film no. 05685500)
|
Exhibit
No.
|
Description
|
10.4
|
1996
Management Recognition Plan
and Trust (incorporated by reference to like numbered exhibit
in
Registrant’s 2001 Form 10-K, film no. 02580719)
|
10.5
|
2001
Stock Option and Incentive
Plan (incorporated by reference to Appendix B to the 2001 Proxy
Statement,
film no. 1577137)
|
10.6
|
1993
Stock Incentive Plan
(incorporated by reference to like numbered exhibit in Registrant’s Form
S-1, film no. 33-93354)
|
10.7
|
Employment
Agreement with William
J. Small (incorporated by reference to Exhibit 10.7 in Registrant’s Form
8-K filed on October 1, 2007, film no. 071144951)
|
10.8
|
Employment
Agreement with James L.
Rohrs (incorporated by reference to Exhibit 10.8 in Registrant’s Form 8-K
filed on October 1, 2007, film no. 071144951)
|
10.9
|
Employment
Agreement with John C.
Wahl (incorporated by reference to Exhibit 10.9 in Registrant’s Form 8-K
filed on October 1, 2007, film no. 071144951)
|
10.10
|
Employment
Agreement with Gregory
R. Allen (incorporated by reference to Exhibit 10.10 in Registrant’s Form
8-K filed on October 1, 2007, film no. 071144951)
|
10.11
|
Description
of Annual Bonus
(incorporated by reference to like numbered exhibit in Registrant’s 2005
Form 10-K, film no. 06682169)
|
10.12
|
2005
Stock Option and Incentive
Plan (incorporated by reference to Appendix A to the 2005 Proxy
Statement,
film no. 05692264)
|
21
|
Subsidiaries
of First Defiance
(incorporated by reference to like numbered exhibit in the Registrant’s
2006 Form 10-K, film no. 07696842)
|
23.1
|
Consent
of Crowe Chizek and
Company LLC (filed herewith)
|
23.2
|
Consent
of Ernst & Young LLP
(filed herewith)
|
23.3
|
Consent
of Plante & Moran,
PLLC (filed herewith)
|
23.4
|
Consent
of Vorys, Sater, Seymour
and Pease LLP (included in Exhibits 5 and 8)
|
23.5
|
Consent
of Donnelly, Penman &
Partners (included in Annex B to the Prospectus/Proxy Statement
included
in this Registration Statement)
|
99
|
Form
of Proxy for Pavilion
Bancorp, Inc. (filed herewith)
|
* Previously
filed.
|
(b)
|
Financial
Statement Schedules
|
(c)
|
Report,
Opinion or Appraisal
|
|
(ii)
|
To
reflect in the prospectus any
facts or events arising after the effective date of the registration
statement (or the most recent post-effective amendment thereof)
which,
individually or in the aggregate, represent a fundamental change
in the
information set forth in the registration statement. Notwithstanding
the
foregoing, any increase or decrease in volume of securities offered
(if
the total dollar value of securities offered would not exceed
that which
was registered) and any deviation from the low or high end of
the
estimated maximum offering range may be reflected in the form
of
prospectus filed with the Securities and Exchange Commission
pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate
offering
price set forth in the “Calculation of Registration Fee” table in the
effective registration statement;
and
|
|
(iii)
|
To
include any material
information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change
to such
information in the registration
statement.
|
First
DefianceFinancial
Corp.
|
||
By:
|
/s/
William J.
Small
|
|
William
J.
Small,
|
||
Chairman,
President
and
|
||
Chief
Executive
Officer
|
||
By
|
/s/
John C.
Wahl
|
By
|
/s/
James L. Rohrs
|
|
John
C. Wahl,
Executive
Vice President
and
Chief
Financial
Officer
|
James
L.
Rohrs,
Director,
Executive Vice
President
|
|||
By
|
/s/
Stephen L.
Boomer
|
By
|
||
Stephen
L.
Boomer,
Director,
Vice
Chairman
|
John
L.
Bookmyer,
Director
|
|||
By
|
/s/Dr.Douglas
A.
Burgei
|
By
|
/s/
Peter A. Diehl
|
|
Dr.
Douglas A.
Burgei,
Director
|
Peter
A.
Diehl,
Director
|
|||
By
|
/s/
Dr. John U. Fauster, III By
|
By
|
/s/
Dwain I.
Metzger
|
|
Dr.
John U. Fauster,
III,
Director
|
Dwain I.Metzger,
Director
|
|||
By
|
/s/
Gerald W. Monnin
|
By
|
||
Gerald
W.
Monnin,
Director
|
Samuel
S.
Strausbaugh,
Director
|
|||
By
|
/s/
Thomas A.
Voigt
|
|||
Thomas
A.
Voigt,
Director
|
Exhibit
No.
|
Description
|
2
|
Agreement
and Plan of Merger dated
as of October 2, 2007,and amended
as of January 21,
2008,by and
between
First Defiance Financial Corp. and Pavilion Bancorp, Inc. (included
as
Annex A to the Prospectus/Proxy Statement included in this
Registration
Statement)
|
3.1
|
Articles
of Incorporation of First
Defiance Financial Corp. (incorporated by reference to like
numbered
exhibit in the Registrant’s Form S-1, file no.
33-93354)
|
3.2
|
Code
of Regulations of First
Defiance Financial Corp. (incorporated by reference to like
numbered
exhibit in the Registrant’s Form S-1, file no.
33-93354)
|
44.1
|
Articles
of Incorporation and Code
of Regulations, defining the rights of shareholders
|
4.2
|
Agreement
to furnish instruments
and agreements defining rights of holders of long-term debt
(incorporated
by reference to Exhibit 4 in the Registrant’s 2006 Form 10-K, film no.
07696842)
|
5
|
Opinion
of Vorys, Sater, Seymour
and Pease LLP regarding legality of the First Defiance stock
being
registered(filed
herewith)*
|
8
|
Opinion
of Vorys, Sater, Seymour
and Pease LLP as to federal income tax matters(filed
herewith)*
|
10.1
|
1996
Stock Option Plan
(incorporated by reference to like numbered exhibit in Registrant’s 2001
Form 10-K, film no. 02580719)
|
10.2
|
Form
of Incentive Stock Option
Award Agreement (incorporated by reference to like numbered
exhibit in
Registrant’s 2004 Form 10-K, film no. 05685500)
|
10.3
|
Form
of Nonqualified Stock Option
Award Agreement (incorporated by reference to like numbered
exhibit in
Registrant’s 2004 Form 10-K, film no. 05685500)
|
10.4
|
1996
Management Recognition Plan
and Trust (incorporated by reference to like numbered exhibit
in
Registrant’s 2001 Form 10-K, film no. 02580719)
|
10.5
|
2001
Stock Option and Incentive
Plan (incorporated by reference to Appendix B to the 2001 Proxy
Statement,
film no. 1577137)
|
10.6
|
1993
Stock Incentive Plan
(incorporated by reference to like numbered exhibit in Registrant’s Form
S-1, film no. 33-93354)
|
10.7
|
Employment
Agreement with William
J. Small (incorporated by reference to Exhibit 10.7 in Registrant’s Form
8-K filed on October 1, 2007, film no. 071144951)
|
10.8
|
Employment
Agreement with James L.
Rohrs (incorporated by reference to Exhibit 10.8 in Registrant’s Form 8-K
filed on October 1, 2007, film no. 071144951)
|
10.9
|
Employment
Agreement with John C.
Wahl (incorporated by reference to Exhibit 10.9 in Registrant’s Form 8-K
filed on October 1, 2007, film no. 071144951)
|
10.10
|
Employment
Agreement with Gregory
R. Allen (incorporated by reference to Exhibit 10.10 in Registrant’s Form
8-K filed on October 1, 2007, film no. 071144951)
|
10.11
|
Description
of Annual Bonus
(incorporated by reference to like numbered exhibit in Registrant’s 2005
Form 10-K, film no. 06682169)
|
10.12
|
2005
Stock Option and Incentive
Plan (incorporated by reference to Appendix A to the 2005 Proxy
Statement,
film no. 05692264)
|
21
|
Subsidiaries
of First Defiance
(incorporated by reference to like numbered exhibit in the
Registrant’s
2006 Form 10-K, film no. 07696842)
|
Exhibit
No.
|
Description
|
23.1
|
Consent
of Crowe Chizek and
Company LLC (filed herewith)
|
23.2
|
Consent
of Ernst & Young LLP
(filed herewith)
|
23.3
|
Consent
of Plante & Moran,
PLLC (filed herewith)
|
23.4
|
Consent
of Vorys, Sater, Seymour
and Pease LLP (included in Exhibits 5 and 8)
|
23.5
|
Consent
of Donnelly, Penman &
Partners (included in Annex B to the Prospectus/Proxy Statement
included
in this Registration Statement)
|
99
|
Form
of Proxy for Pavilion
Bancorp, Inc. (filed herewith)
|
* Previously
filed.
|