DEFIANCE - One of the biggest locally based banking companies in northwest Ohio is buying a Michigan firm for $55.7 million.

First Defiance Financial Corp. said last night it has an agreement purchase Pavilion Bancorp Inc., of Adrian.

First Defiance, which operates First Federal Bank of the Midwest, said it hopes to complete the deal by early next year. Pavilion, which owns Bank of Lenawee, has eight branches total in Adrian, Tecumseh, Hudson, Morenci, Waldron, and Hillsdale.

Doug Kapnick, Pavilion chairman, said in a statement: "We believe this transaction will produce significant benefits for our shareholders, customers, and communities."

William Small, president and chief executive of First Defiance, said in a statement he expects the new Michigan customers to like his firm's "customer first" style of banking.

Under the agreement, each Pavilion shareholder is to receive 1.4209 shares of First Defiance stock, plus $37.50 in cash. That equates to $75.54 a share, the Defiance company said.

The deal is subject to approval by regulators as well as Pavilion shareholders.

Bank of Lenawee has $290 million in assets, $230 million in deposits, and $243 million in loans. First Defiance said that once the acquisition is completed, it will have $1.8 billion in assets and $1.4 billion in deposits.

First Defiance said it will ask for regulatory approval to receive a national bank charter.

First Published October 3, 2007, 9:57 a.m.