First Defiance Financial Corp. Announces the Completion of the Acquisition of The
Leader Mortgage Company
First Defiance Financial Corp.
DEFIANCE, Ohio, July 1 - First Defiance Financial Corp. today announced that it has
completed the acquisition of The Leader Mortgage Company (``Leader''), a privately held,
Cleveland, Ohio-based mortgage banking company. Under terms of the agreement, the
aggregate purchase price was $39.6 million in cash. The pricing reflects 310% of Leader's
March 31, 1998 book value (adjusted for certain journal entries to be recorded at closing)
and 8.4 times Leader's pro forma fiscal September 30, 1998 earnings.
Leader will operate as a subsidiary of First Defiance's wholly owned subsidiary, First
Federal Savings and Loan (``First Federal''), Defiance, Ohio. Leader will maintain its
Cleveland headquarters and continue to operate under The Leader Mortgage Company name.
First Defiance does not anticipate any staff or management changes as a result of the
merger.
Leader, founded in 1960 by Chairman Alvin A. Siegal, is a mortgage banking company
specializing in bond programs for first-time homebuyers. As of June 30, 1998, the company
had a total servicing portfolio of approximately 81,000 loans and $4.7 billion. Unaudited
earnings for the six months ended March 31, 1998 were $2.1 million. Loan originations for
the six months ended March 31, 1998 and fiscal year ended September 30, 1997 were $566
million and $1.1 billion, respectively. The equity of Leader at March 31, 1998, adjusted
for certain anticipated closing entries, was $12.8 million. Leader's return on equity for
the six months ended March 31, 1998 (annualized and adjusted for certain closing entries)
and the fiscal year ended September 30, 1997 were 32.5% and 24.1% respectively.
``We are very happy to announce the completion of this transaction and we look forward
to a long and successful relationship,'' commented Don C. Van Brackel, First Defiance's
Chairman and CEO. ``First of all, Leader is an excellent performer which has recently
achieved outstanding financial results. Second, their niche in the first time home-buyer
bond programs has allowed them to grow substantially the last several years. And, most
importantly, all of the key members of management will be staying.''
``We believe that there will be significant cross-selling potential within Leader's
customer base,'' continued Van Brackel. ``We also believe we will have some opportunities
with our funding sources to reduce Leader's overall borrowing costs and we also will have
an opportunity to take advantage of the substantial escrow deposits that Leader maintains.
We also believe the combination of these two institutions will be accretive to First
Defiance's net income and earnings per share immediately upon acquisition. We have been
seeking opportunities to better leverage our capital base since our conversion from mutual
to stock ownership. This transaction will help us to accomplish that objective, and it
should result in an enhanced return on equity for First Defiance in the future.''
Alvin Siegal, Leader's principal shareholder and its Chairman and CEO added that
``Leader is excited about this merger with First Defiance. With an expanded capital base,
Leader will be in a position to increase its activities in the origination and servicing
of residential mortgage loans for first-time homebuyers through the programs in which we
operate. Additionally, we believe that the increased capital will allow Leader to expand
into states where growth had been limited in the past due to Leader's capital
constraints.'' Mr. Siegal continued, ``We are pleased that the operations of Leader will
remain intact. We believe that this combination is beneficial for our shareholders,
customers and employees.''
First Defiance Financial Corp. conducts business primarily through its wholly owned
subsidiary, First Federal Savings and Loan, Defiance, Ohio, which is a federally chartered
savings and loan association. It currently has eleven full service offices located in five
counties in the northwestern corner of Ohio. Total assets at March 31, 1998 were $577
million and stockholders' equity was $102 million. First Defiance was represented in this
transaction by Charles Webb & Company, a division of Keefe, Bruyette & Woods.
Leader was represented by McDonald & Company Securities, Inc.
This press release may contain certain forward-looking statements
regarding the acquisition of Leader, including earnings accretion, which are based on
management's current expectations regarding economic, legislative and regulatory issues.
The factors which may cause future results to vary materially include, but are not limited
to, general economic conditions, changes in interest rates, loan demand, and competition;
changes in accounting principles, policies or guidelines; changes in legislation or
regulation; and, other economic, competitive, regulatory and technological factors
affecting each company's operations, pricing, products and services.
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