First Defiance Financial has signed a definitive merger agreement to acquire United Community Financial in an all-stock transaction valued at around $473m.

Under the agreement, United Community’s wholly-owned subsidiary Home Savings Bank will merge into First Federal Bank of the Midwest, a unit of First Defiance.

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The combination of the two Ohio-based banks will create a lender with more than $6bn in assets.

United Community acquisition: Details

Under the agreed terms, United Community shareholders will receive 0.3715 shares of First Defiance common stock for each share held.

Upon closing, First Defiance shareholders will hold a stake of around 52.5% in the combined company. The remaining interest will be with the United Community shareholders.

The board of the combined company will comprise 13 members, seven designated by First Defiance and six by United Community. Both the companies will jointly determine the operating name of the combined firm, before deal completion in the first quarter of next year.

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First Defiance president and CEO Donald Hileman said: “After a long relationship between the two companies, we are thrilled to bring together these two great Ohio community bank franchises.

“These organisations are a perfect strategic fit, balancing the strengths of each. With enhanced scale, we will have the opportunity to continue to grow and compete more effectively in all the markets we serve for the foreseeable future.”

The combined group will offer commercial banking, insurance, wealth management and residential lending services. It is said to have a footprint across Ohio, Michigan, Indiana, Pennsylvania and West Virginia.

The deal is subject to shareholder and regulatory nod.