As filed with the Securities and Exchange Commission on November 28, 2016

Registration No. 333-214154

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

Amendment No. 2
to
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

 

FIRST DEFIANCE FINANCIAL 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)

 

Donald P. Hileman
President and Chief Executive Officer
First Defiance Financial 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:

Kimberly J. Schaefer, Esq. Vorys, Sater, Seymour and Pease LLP 301 E. Fourth Street Suite 3500 Cincinnati, Ohio 45202 (513) 723-4000		Robert E. Beach President and Chief Executive Officer Commercial Bancshares, Inc. 118 S. Sandusky Avenue Upper Sandusky, Ohio 43351 (414) 294-5781		Thomas C. Blank, Esq. Shumaker, Loop & Kendrick, LLP 1000 Jackson Street Toledo, Ohio 43604 (419) 321-1394

 

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this Registration Statement has become effective and all other conditions to the consummation of the transactions have been satisfied or waived.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. o

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

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

Common shares, $0.01 par value per share

1,187,630 shares

N/A

$

50,603,507.50

$

5,864.95

(3)

The Registrant hereby amends this Registration Statement on such date(s) as may be necessary to delay its effective date until the Registrant files a further amendment specifically stating that this Registration Statement will thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement becomes effective on such date as the Commission, acting pursuant to Section 8(a) of the Securities Act of 1933, may determine.

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Information contained in this proxy statement/prospectus is not complete and may be changed. A registration statement relating to the shares of First Defiance Financial Corp. common stock to be issued in the merger has been filed with the Securities and Exchange Commission. These securities may not be issued prior to the time the registration statement becomes effective. This proxy statement/prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

PRELIMINARY PROXY STATEMENT/PROSPECTUS
DATED NOVEMBER 28, 2016, SUBJECT TO COMPLETION

FIRST DEFIANCE FINANCIAL CORP. PROSPECTUS		COMMERCIAL BANCSHARES, INC. PROXY STATEMENT
For the issuance of up to 1,187,630 shares of First Defiance Financial Corp. common stock		For the special meeting of shareholders to be held on         , 2016 at   :     .m. local time

On August 23, 2016, First Defiance Financial Corp. (“First Defiance”) and Commercial Bancshares, Inc. (“Commercial Bancshares”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) that provides for the merger of Commercial Bancshares with and into First Defiance (the “merger”). Consummation of the merger is subject to certain conditions, including, but not limited to, obtaining the requisite vote of the Commercial Bancshares’ shareholders and the approval of the merger by various regulatory agencies. Commercial Bancshares is sending you this document to ask you to vote on the adoption of the Merger Agreement. This proxy statement/prospectus, dated           , 2016, and the form of proxy are first being mailed to Commercial Bancshares shareholders on or about           , 2016.

If we complete the merger, each Commercial Bancshares shareholder will be entitled to receive in exchange for each Commercial Bancshares share owned (a) 1.1808 shares of First Defiance common stock or (b) $51.00 in cash, unless such shareholder exercises dissenters’ rights in each case, subject to the election and allocation procedures described in the Merger Agreement. See “The Merger — Conversion of Shares; Exchange of Certificates; Elections as to Form of Consideration” below for more information.

We cannot complete the merger unless the holders of at least      shares of Commercial Bancshares common stock, which is a majority of the issued and outstanding shares of Commercial Bancshares common stock on the record date,           , 2016, approve the Merger Agreement. The Commercial Bancshares board of directors has scheduled a special meeting for Commercial Bancshares shareholders to vote on the Merger Agreement, and the transactions contemplated thereby, including the merger. At the special meeting, Commercial Bancshares shareholders will also be asked to approve the adjournment of the special meeting, if necessary, to solicit additional proxies in favor of the Merger Agreement and to approve, on a non-binding advisory basis, the compensation to be paid to Commercial Bancshares’ named executive officers that is based on or otherwise relates to the merger, discussed under the section titled “The Merger — Interests of Commercial Bancshares Directors and Executive Officers in the Merger” beginning on page 47. Whether or not you plan to attend Commercial Bancshares’ special meeting, please take the time to vote by completing and returning the enclosed proxy card or vote using the Internet or telephone, instructions for which are included on the proxy card. The special meeting of Commercial Bancshares shareholders will be held on           , 2016 at  :00  .m. local time at     , Ohio.

Shares of First Defiance common stock are listed on The NASDAQ Global Select Market under the symbol “FDEF.” On August 22, 2016, the trading day immediately preceding the public announcement of the merger, and           , 2016, the last practicable trading date before we printed this proxy statement/prospectus, the closing prices for First Defiance common stock were $44.57 and $     per share, respectively.

This document, including the material incorporated by reference into this document, contains important information about Commercial Bancshares, First Defiance, the merger and the conditions that must be satisfied before the merger can occur. We urge you to review this entire document, including the section titled “Risk Factors” beginning on page 6, carefully. You may also obtain information about First Defiance and Commercial Bancshares from documents that each has filed with the Securities and Exchange Commission.

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WHERE YOU CAN FIND MORE INFORMATION

First Defiance and Commercial Bancshares file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission. These filings are available to the public over the Internet at the Securities and Exchange Commission’s website at www.sec.gov. You may also read and copy any document First Defiance or Commercial Bancshares files with the Securities and Exchange Commission at its public reference room located at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Copies of these documents can also be obtained at prescribed rates by writing to the Public Reference Section of the Securities and Exchange Commission at 100 F Street, N.E., Room 1580, Washington, D.C. 20549 or by calling 1-800-SEC-0330 for additional information on the operation of the public reference facilities.

First Defiance’s reports can also be found on First Defiance’s website at www.fdef.com, and Commercial Bancshares’ reports can also be found on Commercial Bancshares’ website at www.csbanking.com. By making this reference to First Defiance’s and Commercial Bancshares’ websites, First Defiance and Commercial Bancshares do not intend to incorporate into this report any information contained in those websites. The websites should not be considered as part of this document.

First Defiance has filed with the Securities and Exchange Commission a Registration Statement on Form S-4 under the Securities Act for the shares of First Defiance common stock to be issued in the merger. This proxy statement/prospectus is a part of the Registration Statement on Form S-4. The rules and regulations of the Securities and Exchange Commission permit us to omit from this document information, exhibits and undertakings that are contained in the Registration Statement on Form S-4.

This document incorporates important business and financial information about First Defiance from documents that First Defiance has filed with the Securities and Exchange Commission but have not included in or delivered with this document. For further information, see “Incorporation of Certain Documents by Reference” beginning on page 120.

These documents (except for exhibits to the documents, unless the exhibits are specifically incorporated in this document by reference) are available without charge to you upon written or oral request to either First Defiance’s or Commercial Bancshares’ principal executive office, as applicable. The address and telephone number of each principal executive office is listed below:

First Defiance Financial Corp. 601 Clinton Street Defiance, Ohio 43512 Attention: Donald P. Hileman (419) 782-5015		Commercial Bancshares, Inc. 118 S. Sandusky Avenue Upper Sandusky, Ohio 43351 Attention: Robert E. Beach (419) 294-2350

Please request documents before           , 2016 to receive them before the Commercial Bancshares special meeting. You may also obtain copies of the documents from the Securities and Exchange Commission through its website at www.sec.gov.

You should rely only on the information contained or incorporated by reference in this proxy statement/prospectus. We have not authorized anyone to provide you with information that is different. You should assume that the information contained or incorporated by reference in this proxy statement/prospectus is accurate only as of the date of this proxy statement/prospectus or the date of the document incorporated by reference, as applicable. We are not making an offer of these securities in any jurisdiction where the offer is not permitted.

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COMMERCIAL BANCSHARES, INC.
118 South Sandusky Avenue
Upper Sandusky, Ohio 43351
(419) 294-5781
 
Notice of Special Meeting of Shareholders
          , 2016

To Our Shareholders:

Notice is hereby given that a special meeting of shareholders of Commercial Bancshares, Inc., an Ohio corporation (“Commercial Bancshares”), will be held at      on           , 2016 at   :     .m. local time for the purpose of considering and voting upon the following matters:

The Commercial Bancshares board of directors has established           , 2016, as the record date for the special meeting. Only record holders of shares of Commercial Bancshares common stock as of the close of business on that date will be entitled to receive notice of and to vote at the special meeting.

Your attention is directed to the proxy statement/prospectus accompanying this Notice for a more complete description of the matters to be acted upon at the meeting. A proxy card is also enclosed for the special meeting.

Whether or not you expect to attend the special meeting, please vote your shares to assure the presence of a quorum by (1) signing, dating and returning the enclosed proxy card promptly, (2) visit the website shown on your proxy card and voting via the Internet, or (3) voting via the toll-free number on your proxy card. A postage-paid envelope has been enclosed for your convenience. You may revoke your proxy at any time prior to the proxy being voted at the special meeting by delivering a signed revocation to Commercial Bancshares at any time prior to the special meeting, by submitting a later-dated proxy card, or by attending the special meeting and voting in person.

The Commercial Bancshares board of directors recommends that you vote FOR the approval of the Merger Agreement, the Merger-Related Named Executive Officer Compensation Proposal, and the adjournment of the Special Meeting, if necessary.

By Order of the Board of Directors
 

Upper Sandusky, Ohio
        , 2016

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Questions and Answers			iv
Summary			1
Risk Factors			6
Forward-Looking Statements			11
Market Price and Dividend Information			12
Selected Financial Information of First Defiance			13
Selected Financial Information of Commercial Bancshares			14
Unaudited Historical and Pro Forma Per Share Data			15
The Special Meeting of Commercial Bancshares Shareholders			16
Time, Date and Place of Meeting			16
Matters to be Considered			16
Shares Outstanding and Entitled to Vote; Record Date			16
Votes Required			16
Effect of Abstentions and Broker Non-Votes			17
Shares Held by Officers and Directors			17
How to Vote Your Shares; Solicitation of Proxies			17
Commercial Bancshares’ Proposals			19
Merger Proposal			19
Non-Binding Advisory Vote on Merger-Related Named Executive Officer Compensation			19
Adjournment Proposal			19
Commercial Bancshares Annual Meeting Shareholder Proposals			21
Dissenters’ Rights			22
Rights of Dissenting Commercial Bancshares Shareholders			22
Parties to the Merger Agreement			23
First Defiance			23
Commercial Bancshares			23
The Merger			24
Terms of the Merger			24
Conversion of Shares; Exchange of Certificates; Elections as to Form of Consideration			28
Background of the Merger			29
Commercial Bancshares’ Reasons for the Merger; Board Recommendation			32
Opinion of Commercial Bancshares’ Financial Advisor			33
Certain First Defiance Unaudited Prospective Financial Information			45
Certain Commercial Bancshares Unaudited Prospective Financial Information			46
Management and Board of Directors of First Defiance After the Merger			47
Interests of Commercial Bancshares Directors and Executive Officers in the Merger			47
Merger-Related Compensation for Commercial Bancshares’ Named Executive Officers			49
Regulatory Approvals Required for the Merger			50
Accounting Treatment			52

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Public Trading Markets			52
Resale of First Defiance Common Stock			52
The Merger Agreement			53
Explanatory Note Regarding the Merger Agreement			53
Effects of the Merger			53
Effective Time of the Merger			54
Representations and Warranties			54
Covenants and Agreements			55
Conditions to the Merger			61
Termination of the Merger Agreement			62
Effect of Termination			63
Termination Fee			63
Amendments, Extensions and Waivers			64
Fees and Expenses			64
Governing Law; Jurisdiction			64
Material U.S. Federal Income Tax Consequences of the Merger			65
U.S. Tax Consequences to First Defiance and Commercial Bancshares			66
U.S. Federal Income Tax Consequences to U.S. Holders of Commercial Bancshares Common Stock Based Upon Merger Consideration Received			67
Cash in Lieu of Fractional Shares			68
Possible Dividend Treatment			68
Backup Withholding and Reporting Requirements			68
Comparison of Rights of First Defiance Shareholders and Commercial Bancshares Shareholders			69
General			69
Comparison of Shareholders’ Rights			69
Information with Respect to Commercial Bancshares			76
Description of Commercial Bancshares’ Business			76
Properties			78
Legal Proceedings			78
Quantitative and Qualitative Disclosures on Market Risk			78
Changes in or Disagreements with Accountants on Accounting and Financial Disclosure			79
Supplementary Financial Information			79
Market Price for and Dividends on Commercial Bancshares Common Stock and Related Shareholder Matters			80
Market Information; Dividends			80
Security Ownership of Certain Beneficial Owners and Management			80
Commercial Bancshares’ Management’s Discussion and Analysis of Financial Condition and Results of Operations			82
Introduction			82
Overview			82
Critical Accounting Policies			83

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Comparison of Financial Condition at September 30, 2016 and December 31, 2015			85
Comparison of Results of Operations for the Three Months and Nine Months Ended September 30, 2016			92
Comparison of Financial Condition December 31, 2015 and December 31, 2014			99
Comparison of Results of Operations for the Three Years Ended December 31, 2015			113
Legal Matters			120
Experts			120
Incorporation of Certain Documents by Reference			120
Index to Commercial Bancshares Financial Information			121
Annex A Agreement and Plan of Merger dated August 23, 2016, by and between First Defiance Financial Corp. and Commercial Bancshares, Inc., as amended.
Annex B Opinion of Keefe, Bruyette & Woods, Inc.
Annex C Section 1701.85 of the Ohio Revised Code.

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QUESTIONS AND ANSWERS

The following questions and answers summary highlights certain questions that you may have about the merger and the Commercial Bancshares special meeting and provides brief answers to those questions. We urge you to read carefully the remainder of this proxy statement/prospectus, including all financial statements and annexes, because the information in this section does not provide all the information that may be important to you with respect to the merger and the matters to be voted upon at the Commercial Bancshares special meeting. Additional important information is also contained in certain documents that have been incorporated by reference to this proxy statement/prospectus. Please see “Incorporation of Certain Documents by Reference” beginning on page 120.

The merger cannot be completed unless, among other conditions, including regulatory approval, the Commercial Bancshares shareholders approve the proposal to adopt the Merger Agreement.

This document is both a proxy statement of Commercial Bancshares and a prospectus of First Defiance. The Commercial Bancshares board of directors is using this document as a proxy statement to solicit proxies from its shareholders with respect to the special meeting. This document is also being used by First Defiance as a prospectus to offer, in connection with the merger, shares of its common stock in partial exchange for outstanding shares of Commercial Bancshares common stock.

In order to complete the merger, shareholders of Commercial Bancshares must vote to approve the Merger Agreement (which sets forth the terms of the merger). The enclosed proxy card and voting materials allow you to vote your shares without actually attending the special meeting.

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If you own shares of Commercial Bancshares common stock in “street name” through a bank, broker or other nominee and you wish to make an election, you should seek instructions from the bank, broker or other nominee holding your shares concerning how to make an election. If you do not send in the election form with the transmittal materials and your stock certificate(s) or evidence of book-entry shares by the election deadline, you will be treated as though you had not made an election.

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Provided that the merger qualifies as a “reorganization” for United States federal income tax purposes, the specific tax consequences of the merger to a Commercial Bancshares shareholder will depend upon the form of consideration such Commercial Bancshares shareholder receives in the merger. A Commercial Bancshares shareholder who exchanges their common stock solely for First Defiance common stock should not recognize a gain or loss except with respect to cash received in lieu of a fractional First Defiance share. A Commercial Bancshares shareholder who exchanges their common stock solely for cash should recognize a gain or loss on the exchange. A Commercial Bancshares shareholder who exchanges their common stock for a combination of First Defiance common stock and cash may recognize a gain, but not any loss, on the exchange. The actual U.S. federal income tax consequences to Commercial Bancshares shareholders of electing to receive cash, First Defiance common stock or a combination of cash and stock will not be ascertainable at the time Commercial Bancshares shareholders make their election because it will not be known at that time how, or to what extent, the allocation and proration procedures will apply.

For a more detailed discussion of the material U.S. federal income tax consequences of the transaction, see “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 65.

The tax consequences of the merger to any particular shareholder will depend on that shareholder’s particular facts and circumstances. Accordingly, you are urged to consult your tax advisor to determine your tax consequences from the merger.

In addition, First Defiance may terminate the Merger Agreement if Commercial Bancshares’ “total shareholders’ equity,” as defined in the Merger Agreement, is less than $36.2 million on the last day of the month prior to the planned closing of the merger. For this purpose, total shareholders’ equity on the balance sheet of Commercial Bancshares will be reduced by accumulated comprehensive income, and costs and expenses incurred by Commercial Bancshares that are directly related to the merger and paid

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for or accrued prior to the calculation date will be added to the total. On         , 2016, Commercial Bancshares’ total shareholders’ equity calculated in accordance with the Merger Agreement was approximately $         .

See “The Merger Agreement — Termination of the Merger Agreement” for a complete discussion of the circumstances under which a termination may occur.

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The Merger-Related Named Executive Officer Compensation Proposal:

The Adjournment Proposal:

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You may also cast your vote in person by attending the Commercial Bancshares special meeting. However, even if you currently plan to attend the special meeting, we recommend that you vote by proxy before the special meeting so that your vote will be counted if you later decide not to attend. However, if you attend the special meeting and vote your shares by ballot, your vote at the special meeting will revoke any vote you submitted previously by proxy.

If your shares are held in “street name,” through a broker, bank or other nominee, that institution will send you separate instructions describing the procedure for voting your shares. “Street name” shareholders who wish to vote at the meeting will need to obtain a proxy form from their broker, bank or other nominee.

A signed revocation or later-dated proxy received by Commercial Bancshares after the vote will not affect the vote. If you wish to revoke your vote through a signed revocation, such notice must be sent so that notice is received before the vote is taken at the special meeting and should be addressed as follows:

Commercial Bancshares, Inc.
Attention: David J. Browne, Corporate Secretary
118 South Sandusky Avenue
Upper Sandusky, Ohio 43351

If you have instructed a broker or other nominee to vote your shares, you must follow directions received from your broker or other nominee in order to change those instructions.

Commercial Bancshares shareholders who wish to exercise their dissenters’ rights must: (i) either vote against the merger proposal or not return the proxy card, and (ii) deliver written demand for payment prior to the shareholder vote at the Commercial Bancshares special meeting. For additional information regarding dissenters’ rights, see “Dissenters’ Rights” beginning on page 22 and the complete text of the applicable sections of the OGCL attached to this proxy statement/prospectus as Annex C.

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For driving directions to       , the location of the special meeting, please contact Commercial Bancshares at the above number, write to us at 118 South Sandusky Avenue, Upper Sandusky, Ohio 43351, or visit our website at www.csbanking.com and click on “Menu” and then “Investor Relations” to find directions to the special meeting.

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SUMMARY

This summary highlights selected information from this proxy statement/prospectus. It does not contain all of the information that may be important to you. To fully understand the merger, you should read this entire document carefully and the other documents to which we refer.

The parties

First Defiance Financial Corp.
601 Clinton Street
Defiance, Ohio 43512-3272
(419) 782-5015

First Defiance is a unitary thrift holding company that conducts business through its three wholly owned subsidiaries, First Federal, First Insurance Group of the Midwest, Inc., and First Defiance Risk Management Inc. First Defiance had assets of $2.45 billion and shareholders’ equity of $292.1 million at September 30, 2016.

First Federal is a federally chartered savings bank, operating 34 full-service branches and numerous ATM locations in northwest Ohio, southeast Michigan and northeast Indiana and a loan production office in Columbus, Ohio. First Federal’s traditional banking activities include originating and servicing residential, non-residential real estate, commercial, home improvement and home equity and consumer loans and providing a broad range of depository, trust and wealth management services. First Insurance Group is a full-service insurance agency with six offices throughout northwest Ohio, primarily engaged in attracting deposits from the general public through its offices and using those and other available sources of funds to originate loans primarily in the counties in which its offices are located.

Commercial Bancshares, Inc.
118 South Sandusky Avenue
Upper Sandusky, Ohio 43351
(419) 294-5781

Commercial Bancshares is a financial holding company that conducts business through its wholly owned subsidiaries, the Commercial Bank and Commercial Financial and Insurance Agency, LTD (“Commercial Financial”). At September 30, 2016, Commercial Bancshares had assets of $347.0 million and shareholders’ equity of $38.575 million.

The principal business of Commercial Bancshares is to operate the Commercial Bank, which is its principal asset. Commercial Bank functions as an independent community, state-chartered bank. Commercial Bank provides customary retail and commercial banking services to its customers, including acceptance of deposits for demand, savings and time accounts, individual retirement accounts and servicing of such accounts; commercial, consumer and real estate lending, including installment loans, and safe deposit and night depository facilities. Commercial Bank is a nonmember of the Federal Reserve System, is insured by the Federal Deposit Insurance Corporation (“FDIC”) and is regulated by the Ohio Division of the Financial Institutions and the FDIC. Commercial Bank grants residential, installment and commercial loans to customers located primarily in the Ohio counties of Wyandot, Marion and Hancock and the surrounding area.

The merger (page 24)

The Merger Agreement provides for the merger of Commercial Bancshares into First Defiance and the subsequent merger of the Commercial Bank into First Federal. The mergers cannot be completed unless at least      shares of Commercial Bancshares common stock, which is a majority of the issued and outstanding Commercial Bancshares common stock on       , 2016, approve the merger. The Merger Agreement is attached to this document as Annex A and is incorporated in this proxy statement/prospectus by reference. We encourage you to read the Merger Agreement carefully, as it is the legal document that governs the merger.

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What you will receive in the merger (page 24)

If the merger is completed, each Commercial Bancshares shareholder who has not properly exercised dissenters’ rights will receive in exchange for each Commercial Bancshares common share owned as of the effective date of the merger either:

We cannot insure what mix of cash and First Defiance common stock you will receive in the merger. If you receive First Defiance common stock as merger consideration, the implied value of the merger consideration that you will receive for each share of Commercial Bancshares common stock will depend on the price per share of First Defiance common stock at the time you receive the shares of First Defiance common stock. Therefore, if you receive First Defiance common stock as merger consideration, the implied value of the merger consideration may be different than its estimated value based on the current price of First Defiance common stock or the price of First Defiance common stock at the time of the Commercial Bancshares special meeting.

Based on the closing price of First Defiance common stock on the NASDAQ on August 22, 2016, the last trading day before the announcement of the merger, of $44.57, a share of Commercial Bancshares common stock entitled to receive 1.1808 of a share of First Defiance common stock would receive stock consideration valued at approximately $52.63. Based on the closing price of First Defiance common stock on the NASDAQ on       , 2016, the latest practicable date before the printing of this document, a share of Commercial Bancshares entitled to 1.1808 of a share of First Defiance common stock would receive stock consideration valued at approximately $    .

Special meeting of Commercial Bancshares shareholders (page 16)

The  Commercial  Bancshares  special  meeting  of  shareholders  will  take  place  at      on         , 2016 at   :00  .m. If you owned shares of Commercial Bancshares common stock on         , 2016, you are entitled to vote at the special meeting. The holders of at least      shares of Commercial Bancshares common stock, which is a majority of the issued and outstanding Commercial Bancshares common stock as of the record date, must vote to approve the Merger Agreement.

As of the record date, directors and executive officers of Commercial Bancshares and their affiliates collectively owned approximately     % of the outstanding Commercial Bancshares common stock. All of the directors of Commercial Bancshares entered into voting agreements with First Defiance pursuant to which they agreed to vote all of their shares of Commercial Bancshares common stock in favor of the approval of the Merger Agreement.

Commercial Bancshares’ reasons for the merger; board recommendation (page 32)

The Commercial Bancshares board of directors believes that the terms of the Merger Agreement are fair and in the best interests of Commercial Bancshares and its shareholders. In reaching this decision, the board of directors considered several factors. The Commercial Bancshares board unanimously recommends that you vote FOR the approval of the Merger Agreement.

Opinion of Commercial Bancshares’ financial advisor (page 33)

In connection with its evaluation of the merger, the Commercial Bancshares board of directors received the opinion of Commercial Bancshares’ financial advisor, Keefe, Bruyette & Woods, Inc. (“KBW”), dated August 23, 2016, to the effect that, as of the date of the opinion, the merger consideration was fair, from a financial point of view, to the holders of Commercial Bancshares common stock. The full text of the opinion, which describes the procedures followed, assumptions made, matters considered, and qualifications and limitations on the review undertaken by KBW in preparing the opinion, is attached as Annex B to this document. Commercial Bancshares’ shareholders are encouraged to read the opinion carefully and in its entirety. The opinion was for the information of, and was directed to, the Commercial board (in its capacity as such) in connection with its consideration of the financial terms of the merger. The opinion did not address the underlying business decision of Commercial Bancshares to engage in the merger or

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enter into the merger agreement or constitute a recommendation to the Commercial Bancshares board in connection with the merger, and it does not constitute a recommendation to any holder of Commercial Bancshares common stock as to how to vote in connection with the merger or any other matter (including, with respect to holders of Commercial Bancshares common stock, what election any such shareholder should make with respect to the cash consideration, the stock consideration or any combination thereof).

How to cast your vote (page 17)

It is very important that you cast your vote as soon as possible so that your shares of Commercial Bancshares common stock may be represented at the Commercial Bancshares special meeting. There are three ways in which you can cast your vote: complete, sign, date and return the enclosed proxy card in the enclosed postage-paid envelope; visit the website shown on your proxy card to vote via the Internet; or use the toll-free number shown on your proxy card. If you properly sign and return a proxy card but do not include instructions on how to vote your shares, they will be voted FOR approval of the Merger Agreement and FOR the Adjournment Proposal.

If your shares are held by your broker or other nominee in street name, your broker does not have authority to vote your shares unless you provide your broker instructions on how you want to vote. Your broker should send you a form to give instructions on voting or you may request such a form from your broker.

If you do not provide your broker with voting instructions, your shares will not be voted at the special meeting. Failure to vote Commercial Bancshares shares will have the same effect as voting against approval of the Merger Agreement.

Dissenters’ rights (page 22)

If the Merger Agreement is approved by Commercial Bancshares shareholders, those shareholders who do not vote in favor of the merger proposal and who properly demand payment of fair cash value of their shares are entitled to certain dissenters’ rights pursuant to Sections 1701.84(A) and 1701.85 of the Ohio General Corporation Law (“OGCL”). Section 1701.85 generally provides that Commercial Bancshares shareholders will not be entitled to such rights without strict compliance with the procedures set forth in Section 1701.85, and failure to take any one of the required steps may result in the termination or waiver of such rights.

Specifically, any holder of Commercial Bancshares common stock on         , 2016, the record date for the special meeting, whose shares are not voted in favor of the adoption of the merger proposal may be entitled to be paid the “fair cash value” of such shares of common stock after the effective time of the merger. To be entitled to such payment, a shareholder must deliver to Commercial Bancshares a written demand for payment of the fair cash value of the shares held by such shareholder before the vote on the merger proposal is taken, the shareholder must not vote in favor of the merger proposal, and the shareholder must otherwise comply with Section 1701.85 of the OGCL. A shareholder’s failure to vote against the merger proposal will not constitute a waiver of such shareholder’s dissenters’ rights, as long as such shareholder does not vote in favor of the merger proposal. Any written demand must specify the shareholder’s name and address, the number and class of shares held by him, her or it on the record date, and the amount claimed as the “fair cash value” of such shares of common stock.

See the text of Section 1701.85 of the OGCL attached as Annex C to this proxy statement/prospectus for specific information on the procedures to be followed in exercising dissenters’ rights. Commercial Bancshares shareholders who wish to seek appraisal of their shares are encouraged to seek the advice of legal counsel with respect to the exercise of dissenters’ rights, due to the complexity of the appraisal process. For more information, see “Dissenters’ Rights.”

Regulatory approval required (page 50)

The merger is subject to approval by the Federal Reserve Board of Governors (“Federal Reserve”) and the Office of the Comptroller of the Currency (“OCC”). On November 1, 2016, First Defiance submitted a waiver request with the Federal Reserve in accordance with its regulations in lieu of an application. The

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Federal Reserve waiver was granted on November 14, 2016. First Defiance also filed an application to obtain necessary regulatory approval from the OCC. The OCC application remains outstanding as of the date of this proxy statement/prospectus. Although First Defiance is not aware of any reason why the OCC would not grant such an approval, First Defiance and Commercial Bancshares cannot be certain when or if it will be obtained. For more information, see “The Merger — Regulatory Approvals Required for the Merger” beginning on page 50.

Material U.S. federal income tax consequences of the merger (page 65)

First Defiance and Commercial Bancshares intend that the merger will be treated as a reorganization within the meaning of Section 368(a) of the Code, and it is a condition to the obligation of each of First Defiance and Commercial Bancshares to complete the merger that it receives a legal opinion to that effect. If the merger is treated as a reorganization, for U.S. federal income tax purposes (i) no gain or loss will be recognized by First Defiance or Commercial Bancshares as a result of the merger, (ii) Commercial Bancshares shareholders will recognize gain (but not loss) in an amount not to exceed any cash received in exchange for Commercial Bancshares common stock in the merger (other than any cash received in lieu of a fractional First Defiance common share, as discussed below under the section entitled “Material U.S. Federal Income Tax Consequences of the Merger — Cash in Lieu of Fractional Shares” beginning on page 68) and (iii) Commercial Bancshares shareholders who exercise dissenters’ rights and receive solely cash in exchange for First Defiance common stock in the merger will, generally, recognize gain or loss equal to the difference between the amount of cash received and their tax basis in their shares.

All Commercial Bancshares shareholders should read carefully the description under the section captioned “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 65 of this proxy statement/prospectus and should consult their own tax advisors concerning these matters.

All Commercial Bancshares shareholders should consult their tax advisors as to the specific tax consequences of the merger to them, including the applicability and effect of the alternative minimum tax and any state, local, foreign or other tax laws.

Interests of Commercial Bancshares directors and executive officers in the merger (page 47)

Some of Commercial Bancshares directors and officers may have interests in the merger that are different from, or in addition to, the interests of Commercial Bancshares shareholders generally. These include:

Commercial Bancshares board of directors was aware of these interests and took them into account in approving the merger.

Termination and amendment of the Merger Agreement (pages 62 and 64)

First Defiance and Commercial Bancshares may agree to terminate the Merger Agreement and abandon the merger at any time before the effective time of the merger:

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Under certain circumstances, if Commercial Bancshares enters into or closes an acquisition proposal with a company other than First Defiance within 12 months after the Merger Agreement is terminated, Commercial Bancshares must pay First Defiance a termination fee of $2,400,000.

We may amend the Merger Agreement in writing at any time before or after the Commercial Bancshares shareholders approve the Merger Agreement. If the Commercial Bancshares shareholders have already approved the Merger Agreement, however, we will not amend it without shareholder approval if the amendment would have a material adverse effect on the Commercial Bancshares shareholders.

Comparative stock prices (page 15)

The following table sets forth the closing sales prices per share of First Defiance and Commercial Bancshares common stock on the last full trading day prior to the announcement of the merger and on the last practicable trading day prior to printing this proxy statement/prospectus. The table also presents the equivalent price per share of Commercial Bancshares, giving effect to the merger as of such dates.

		First Defiance				Commercial Bancshares				Commercial Bancshares equivalent per share price
August 22, 2016		$	44.57			$	34.50			$	52.63
, 2016		$				$				$

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RISK FACTORS

In deciding how to vote on the Merger Agreement, you should consider carefully all of the information contained in this document, especially the following factors.

Because the Market Price of First Defiance Common Stock Will Fluctuate Before and After the Merger, Commercial Bancshares Shareholders Cannot Be Sure of the Implied Value of the Merger Consideration They Will Receive.

On August 22, 2016, the day before the merger was announced, the closing price of a share of First Defiance common stock was $44.57. On          , 2016, the most recent practicable date before the mailing of this proxy statement/prospectus, the closing price was $    . Based on these closing prices and the 1.1808 exchange ratio, the implied value of the merger consideration consisting of First Defiance common stock was $52.63 on August 22, 2016 and $     on          , 2016. The price of First Defiance common stock may increase or decrease before and after completion of the merger. Upon completion of the merger, each share of Commercial Bancshares common stock will be converted into merger consideration consisting of shares of First Defiance common stock or $51.00 in cash (without interest) pursuant to the terms of the Merger Agreement. If a Commercial Bancshares shareholder receives First Defiance common stock as merger consideration, the implied value of the merger consideration that such shareholder will receive for each share of Commercial Bancshares common stock will depend on the price per share of First Defiance common stock at the time the shares are received. The closing price of First Defiance common stock on the date that the merger is completed may vary from the closing price of First Defiance common stock on the date First Defiance and Commercial Bancshares announced the merger, on the date that this document is being mailed to Commercial Bancshares shareholders, and on the date of the special meeting of Commercial Bancshares shareholders. Any change in the market price of First Defiance common stock prior to completion of the merger will affect the implied value of the merger consideration that Commercial Bancshares shareholders will receive upon completion of the merger. Stock price changes may result from a variety of factors, including general market and economic conditions, changes in First Defiance’s and Commercial Bancshares’ respective businesses, operations and prospects, and regulatory considerations, among other things. Many of these factors are beyond the control of First Defiance and Commercial Bancshares.

The exchange ratio of 1.1808 is fixed and will not be adjusted based on changes in the price of shares of First Defiance common stock or Commercial Bancshares common stock prior to the closing.

Commercial Bancshares Shareholders May Receive a Form of Consideration Different From What They Elect.

Although each Commercial Bancshares shareholder may elect to receive all cash or all First Defiance common stock in the merger, or cash for certain shares of Commercial Bancshares common stock and First Defiance common stock for other shares, 80% of the Commercial Bancshares common stock outstanding at the completion of the merger will be converted into First Defiance common stock, with the remainder converted into cash. Therefore, if Commercial Bancshares shareholders elect more cash or stock than is available under the Merger Agreement, elections for the over-subscribed form of merger consideration may be prorated. As a result, if either the aggregate cash or stock elections exceed the maximum available, and you choose the consideration election that exceeds the maximum available, some or all of your consideration may be in a form that you did not choose.

Commercial Bancshares Shareholders Who Make Elections May Be Unable to Sell Their Shares in the Market Pending the Merger.

Commercial Bancshares shareholders may elect to receive cash, stock or mixed consideration in the merger by completing an election form that will be sent under separate cover and is not being provided with this document. Elections will require that shareholders making the election turn in their Commercial Bancshares stock certificates. This means that during the time between when the election is made and the date the merger is completed, Commercial Bancshares shareholders will be unable to sell their Commercial Bancshares common stock. If the merger is unexpectedly delayed, this period could extend for a significant period of time. Commercial Bancshares shareholders can shorten the period during which they cannot sell

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their shares by delivering their election shortly before the election deadline. However, elections received after the election deadline will not be accepted or honored.

Commercial Bancshares Shareholders Will Have a Reduced Ownership and Voting Interest After the Merger.

Commercial Bancshares shareholders currently have the right to vote in the election of the board of directors of Commercial Bancshares and on other matters affecting Commercial Bancshares. Upon the completion of the merger, each Commercial Bancshares shareholder who receives shares of First Defiance common stock will become a shareholder of First Defiance with a percentage ownership of First Defiance that is smaller than the shareholder’s percentage ownership of Commercial Bancshares. It is currently expected that the former shareholders of Commercial Bancshares as a group will receive shares in the merger constituting approximately     % of the outstanding shares of First Defiance common stock immediately after the merger. Because of this, Commercial Bancshares shareholders will have less influence on the management and policies of First Defiance than they now have on the management and policies of Commercial Bancshares.

The Market Price for First Defiance Common Stock May Be Affected by Factors Different from Those that Historically Have Affected Commercial Bancshares.

Upon completion of the merger, certain holders of Commercial Bancshares common stock will become holders of First Defiance common stock. First Defiance’s businesses differ from those of Commercial Bancshares, and accordingly the results of operations of First Defiance will be affected by some factors that are different from those currently affecting the results of operations of Commercial Bancshares. For a discussion of the businesses of First Defiance and Commercial Bancshares and of some important factors to consider in connection with those businesses, see the documents incorporated by reference in this proxy statement/prospectus and referred to under “Incorporation of Certain Documents by Reference” on page 120 and “Where You Can Find More Information” on page 1.

First Defiance May Fail to Realize the Anticipated Benefits of the Merger.

The success of the merger will depend on, among other things, First Defiance’s ability to combine the businesses of First Defiance and Commercial Bancshares in a manner that permits growth opportunities and cost efficiencies, and does not materially disrupt the existing customer relationships of Commercial Bancshares nor result in decreased revenues due to any loss of customers. If First Defiance is not able to successfully achieve these objectives, the anticipated benefits of the merger may not be realized fully or at all or may take longer to realize than expected.

First Defiance and Commercial Bancshares have operated and, until the completion of the merger, will continue to operate, independently. Certain employees of Commercial Bancshares may not be employed after the merger. In addition, employees of Commercial Bancshares that First Defiance wishes to retain may elect to terminate their employment as a result of the merger, which could delay or disrupt the integration process. It is possible that the integration process could result in the disruption of First Defiance’s or Commercial Bancshares ongoing businesses or cause inconsistencies in standards, controls, procedures and policies that adversely affect the ability of First Defiance or Commercial Bancshares to maintain relationships with customers and employees or to achieve the anticipated benefits of the merger.

Regulatory Approvals May Not Be Received, May Take Longer than Expected or May Impose Conditions that Are Not Presently Anticipated or Cannot Be Met.

Before the transactions contemplated in the Merger Agreement, including the merger and the bank merger, may be completed, various approvals or waivers must be obtained from the bank regulatory and other governmental authorities. These governmental entities may impose conditions on the granting of such approvals. Such conditions or changes and the process of obtaining regulatory approvals could have the effect of delaying completion of the merger or of imposing additional costs or limitations on First Defiance following the merger. The regulatory approvals may not be received at any time, may not be received in a timely fashion, and may contain conditions on the completion of the merger. In addition, First Defiance may elect not to complete the merger if any regulatory entity imposes any conditions, restrictions or requirements

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on First Defiance that its board of directors reasonably determines would have a material adverse effect on First Defiance and its subsidiaries, taken as a whole, giving effect to the merger or if there are any conditions, restrictions or requirements that are not customary and usual for approvals of this type and which the First Defiance board of directors reasonably determines would be unduly burdensome.

The Combined Company Expects to Incur Substantial Expenses Related to the Merger.

The combined company expects to incur substantial expenses in connection with completing the merger and combining the business, operations, networks, systems, technologies, policies and procedures of the two companies. Although First Defiance and Commercial Bancshares have assumed that a certain level of transaction and combination expenses will be incurred, there are a number of factors beyond their control that could affect the total amount or the timing of these expenses. Many of the expenses that will be incurred, by their nature, are difficult to estimate accurately at the present time. Due to these factors, the transaction and combination expenses associated with the merger could, particularly in the near term, exceed the savings that the combined company expects to achieve from the elimination of duplicative expenses and the realization of economies of scale and cost savings related to the combination of the businesses following the completion of the merger. As a result of these expenses, both First Defiance and Commercial Bancshares could take charges against their earnings before and after the completion of the merger. Such charges taken in connection with the merger could be significant, although the aggregate amount and timing of such charges are uncertain at present.

The Merger Agreement May Be Terminated in Accordance with Its Terms and the Merger May Not Be Completed.

The Merger Agreement is subject to a number of conditions that must be fulfilled in order to complete the merger. Those conditions include: approval of the Merger Agreement by Commercial Bancshares shareholders, receipt of requisite regulatory approvals, absence of orders prohibiting completion of the merger, effectiveness of the registration statement of which this document is a part, approval of the shares of First Defiance common stock to be issued to Commercial Bancshares shareholders for listing on the NASDAQ, the continued accuracy of the representations and warranties by both parties and the performance by both parties of their covenants and agreements, and the receipt by both parties of legal opinions from their respective tax counsels. These conditions to the closing of the merger may not be fulfilled and, accordingly, the merger may not be completed. In addition, if the merger is not completed by June 30, 2017, either First Defiance or Commercial Bancshares may choose not to proceed with the merger, and the parties can mutually decide to terminate the Merger Agreement at any time, before or after shareholder approval. In addition, First Defiance may elect to terminate the Merger Agreement in certain other circumstances. Please refer to “The Merger Agreement — Termination of the Merger Agreement; Termination Fee” (page 63) for a description of these circumstances.

Termination of the Merger Agreement Could Negatively Impact Commercial Bancshares.

If the Merger Agreement is terminated and Commercial Bancshares’ board of directors seeks another merger or business combination, Commercial Bancshares shareholders cannot be certain that Commercial Bancshares will be able to find a party willing to offer equivalent or more attractive consideration than the consideration First Defiance has agreed to provide in the merger. If the Merger Agreement is terminated under certain circumstances, Commercial Bancshares may be required to pay a termination fee of $2.4 million to First Defiance. Please refer to “The Merger Agreement — Termination of the Merger Agreement; Termination Fee” (page 63).

Commercial Bancshares Will Be Subject to Business Uncertainties and Contractual Restrictions While the Merger Is Pending.

Uncertainty about the effect of the merger on employees and customers may have an adverse effect on Commercial Bancshares and consequently on First Defiance. These uncertainties may impair Commercial Bancshares’ ability to attract, retain, and motivate key personnel until the merger is completed, and could cause customers and others that deal with Commercial Bancshares to seek to change existing business relationships with Commercial Bancshares. Retention of certain employees may be challenging during the

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pendency of the merger, as certain employees may experience uncertainty about their future roles. If key employees depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with the business, First Defiance’s business following the merger could be negatively impacted. In addition, the Merger Agreement restricts Commercial Bancshares from making certain acquisitions and taking other specified actions until the merger occurs without the consent of First Defiance. These restrictions may prevent Commercial Bancshares from pursuing attractive business opportunities that may arise prior to the completion of the merger. See “The Merger Agreement — Covenants and Agreements” beginning on page 55 for a description of the restrictive covenants applicable to Commercial Bancshares.

Commercial Bancshares Directors and Officers May Have Interests in the Merger Different From the Interests of Commercial Bancshares Shareholders.

When considering the recommendation of Commercial Bancshares’ board of directors, you should be aware that the executive officers and directors of Commercial Bancshares have interests in the acquisition that are somewhat different from your interests. For example, certain executive officers of Commercial Bancshares will receive severance benefits if terminated following a change in control, directors and officers of Commercial Bancshares will be indemnified by First Defiance for certain events occurring before the merger, and unvested stock options will vest upon the closing of the merger. These arrangements may create potential conflicts of interest. These and certain other additional interests of Commercial Bancshares’ directors and executive officers may cause some of these persons to view the proposed transaction differently than you view it, as a shareholder.

These interests are described in more detail in the section of this document entitled “The Merger —  Interests of Commercial Bancshares Directors and Executive Officers in the Merger” beginning on page 47.

Shares of First Defiance Common Stock to Be Received by Commercial Bancshares Shareholders as a Result of the Merger Will Have Rights Different from the Shares of Commercial Bancshares Common Stock.

Upon completion of the merger, the rights of former Commercial Bancshares shareholders who become First Defiance shareholders will be governed by the articles of incorporation and code of regulations of First Defiance. The rights associated with Commercial Bancshares common stock are different from the rights associated with First Defiance common stock. See “Comparison of Rights of First Defiance Shareholders and Commercial Bancshares Shareholders” beginning on page 69 for a discussion of the different rights associated with First Defiance common stock.

The Merger Agreement Contains Provisions that May Discourage Other Companies from Trying to Acquire Commercial Bancshares for Greater Merger Consideration.

The Merger Agreement contains provisions that may discourage a third party from submitting a business combination proposal to Commercial Bancshares that might result in greater value to Commercial Bancshares’ shareholders than the merger. These provisions include a general prohibition on Commercial Bancshares from soliciting, or, subject to certain exceptions, entering into discussions with any third party regarding any acquisition proposal or offers for competing transactions. In addition, Commercial Bancshares may be required to pay First Defiance a termination fee of $2.4 million in certain circumstances involving acquisition proposals for competing transactions. For further information, please see the section entitled “The Merger Agreement —  Termination of the Merger Agreement; Termination Fee” beginning on page 62.

The Opinion of Commercial Bancshares’ Financial Advisor Received by the Commercial Bancshares Board of Directors prior to Execution of the Merger Agreement Will Not Reflect Changes in Circumstances Between the Signing of the Merger Agreement and the Completion of the Merger.

The opinion of Commercial Bancshares’ financial advisor received by Commercial Bancshares’ board of directors was delivered on and dated August 23, 2016. Changes in the operations and prospects of Commercial Bancshares or First Defiance, general market and economic conditions and other factors that may be beyond the control of Commercial Bancshares or First Defiance, may significantly alter the value of Commercial Bancshares or the prices of the shares of First Defiance common stock or Commercial

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Bancshares common stock by the time the merger is completed. The opinion does not speak as of the time the merger will be completed or as of any date other than the date of such opinion. Because Commercial Bancshares does not currently anticipate asking its financial advisor to update its opinion, the opinion will not address the fairness of the merger consideration from a financial point of view at the time the merger is completed. Commercial Bancshares’ board of directors’ recommendation that Commercial Bancshares shareholders vote “FOR” adoption of the Merger Agreement, however, is made as of the date of this document. For a description of the opinion that the Commercial Bancshares board received from Commercial Bancshares’ financial advisor, please refer to “The Merger — Opinion of Commercial Bancshares’ Financial Advisor” beginning on page 33.

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FORWARD-LOOKING STATEMENTS

The Private Securities Litigation Reform Act of 1995 provides a safe harbor from civil litigation for forward-looking statements. Forward-looking statements include the information concerning future results of operations, cost savings and synergies of First Defiance and Commercial Bancshares after the merger and those statements proceeded by, followed by or that otherwise include the terms “should,” “believe,” “expect,” “anticipate,” “intend,” “may,” “will,” “continue,” “estimate” and other expressions that indicate future events and trends. Although First Defiance and Commercial Bancshares believe, in making such statements, that their expectations are based on reasonable assumptions, these statements may be influenced by risks and uncertainties which could cause actual results and trends to be substantially different from historical results or those anticipated, depending on a variety of factors. These risks and uncertainties include, without limitation:

You should understand that these factors, in addition to those discussed elsewhere in this document and in documents that have been incorporated by reference, could affect the future results of First Defiance and Commercial Bancshares, and could cause those results to be substantially different from those expressed in any forward-looking statements. First Defiance and Commercial Bancshares do not undertake any obligation to update any forward-looking statement to reflect events or circumstances arising after the date of this document.

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MARKET PRICE AND DIVIDEND INFORMATION

First Defiance common stock is listed on the NASDAQ Global Select Market under the symbol “FDEF”. Commercial Bancshares common stock is quoted in the inter-dealer quotation or “over-the-counter” market under the symbol “CMOH”. Commercial Bancshares’ stock trades principally on the OTCQX, which is operated by OTC Markets Group, Inc. The following table lists the high and low sales prices per share for First Defiance common stock and the high and low bid prices per share for Commercial Bancshares common stock and the cash dividends declared by each company for the periods indicated.

		First Defiance common stock												Commercial Bancshares common stock
		High				Low				Dividends				High				Low				Dividends
Quarter ended:
September 30, 2016		$	46.83			$	35.90			$	0.22			$	54.73			$	33.34			$	0.25
June 30, 2016			41.21				37.53				0.22				35.00				29.25				0.25
March 31, 2016			40.98				34.80				0.22				30.90				29.15				0.25
December 31, 2015			42.46				35.01				0.20				32.00				28.25				0.25
September 30, 2015			39.95				35.03				0.20				30.00				26.57				0.25
June 30, 2015			38.21				32.42				0.20				27.50				26.26				0.19
March 31, 2015			34.64				29.05				0.175				28.55				27.30				0.19
December 31, 2014			35.70				26.95				0.175				29.00				26.75				0.19
September 30, 2014			29.00				26.99				0.15				29.00				24.25				0.19
June 30, 2014			29.00				26.50				0.15				24.59				23.75				0.165
March 31, 2014			28.23				24.24				0.15				25.38				22.30				0.165

You should obtain current market quotations for shares of First Defiance common stock, as the market price of the First Defiance common stock will fluctuate between the date of this document and the date on which the merger is completed, and thereafter. You can get these quotations from a newspaper, on the Internet, or by calling your broker. The above information regarding bid prices for Commercial Bancshares common stock may not reflect the prices at which the stock would trade in an active market. This information does not reflect retail mark-up, markdown or commissions, and does not necessarily represent actual transactions.

Following the merger, the declaration of dividends will be at the discretion of First Defiance’s board of directors and will be determined after consideration of various factors, including earnings, cash requirements, the financial condition of First Defiance, applicable state law and government regulations and other factors deemed relevant by First Defiance’s board of directors.

On August 22, 2016, the trading day immediately preceding the public announcement of the merger, and on         , 2016, the last practicable trading day before the printing of this document, the closing prices per share of First Defiance common stock as reported on NASDAQ were $44.57 and $    , respectively, and the closing prices per share of Commercial Bancshares common stock as reported on the OTCQX were $34.50 and $     per share, respectively.

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SELECTED FINANCIAL INFORMATION OF FIRST DEFIANCE

The tables below contain information regarding the financial condition and earnings of First Defiance for the five years ended December 31, 2015, and the nine months ended September 30, 2016 and 2015. This information is based on information contained in First Defiance’s quarterly report on Form 10-Q and annual reports on Form 10-K filed with the Securities and Exchange Commission. This information is only a summary. You should read it in conjunction with the historical financial statements (and related notes) contained or incorporated by reference in First Defiance’s annual reports on Form 10-K and quarterly reports on Form 10-Q and other information filed by First Defiance with the Securities and Exchange Commission. See “Incorporation of Certain Documents by Reference” on page 120.

First Defiance consolidated statement of financial condition data:

		At September 30								At December 31,
		2016				2015				2015				2014				2013				2012				2011
		(Unaudited)								(In thousands)
Total assets		$	2,450,040			$	2,228,281			$	2,297,676			$	2,178,952			$	2,137,148			$	2,046,948			$	2,068,190
Loans held-to maturity, net			1,899,771				1,708,329				1,776,835				1,622,020				1,555,498				1,498,546				1,453,822
Loans held-for-sale			9,839				6,701				5,523				4,535				9,120				22,064				13,841
Allowance for loan losses			25,923				25,209				25,382				24,766				24,950				26,711				33,254
Non-performing assets			18,902				21,548				17,582				30,311				33,706				36,375				42,956
Securities available-for-sale			234,223				236,926				236,435				239,321				198,170				194,101				232,919
Securities held-to maturity			191				251				243				313				387				508				661
Mortgage servicing rights			9,308				9,194				9,248				9,012				9,106				7,833				8,690
Deposits and borrowers’ escrow balances			1,929,759				1,794,917				1,838,811				1,763,122				1,737,311				1,668,945				1,597,643
FHLB advances			114,184				40,801				59,902				21,544				22,520				12,796				81,841
Stockholders’ equity			292,138				278,556				280,197				279,505				272,147				258,128				278,127

First Defiance consolidated operating results:

		Nine months ended September 30,								Year ended December 31,
		2016				2015				2015				2014				2013				2012				2011
		(Unaudited)								(In thousands, except per share data)
Interest income		$	64,613			$	60,060			$	80,836			$	76,248			$	74,781			$	80,943			$	87,067
Interest expense			6,209				4,972				6,781				6,559				7,170				11,937				17,186
Net interest income			58,404				55,088				74,055				69,689				67,611				69,006				69,881
Provision for loan losses			432				93				136				1,117				1,824				10,924				12,434
Non-interest income			25,737				24,073				31,803				31,641				30,778				34,374				27,516
Acquisition related charges			252				—				—				—				—				—				—
Other non-interest expense			52,661				50,542				67,889				66,758				65,052				65,780				62,764
Income before income taxes			30,796				28,526				37,833				33,455				31,513				26,676				22,199
Income taxes			9,318				8,666				11,410				9,163				9,278				8,012				6,665
Net income			21,478				19,860				26,423				24,292				22,235				18,664				15,534
Basic earnings per share			2.39				2.15				2.87				2.55				2.28				1.86				1.44
Diluted earnings per share			2.37				2.11				2.82				2.44				2.19				1.81				1.42

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SELECTED FINANCIAL INFORMATION OF COMMERCIAL BANCSHARES

The tables below contain information regarding the financial condition and earnings of Commercial Bancshares for the five years ended December 31, 2015, and the nine months ended September 30, 2016 and 2015. You should read the below selected financial information in conjunction with the historical consolidated financial statements (and related notes) of Commercial Bancshares contained elsewhere in this document. This information is only a summary and is based on information contained in Commercial Bancshares’ quarterly report on Form 10-Q and annual reports on Form 10-K filed with the Securities and Exchange Commission. To review the reports of Commercial Bancshares that have been filed with the Securities and Exchange Commission, see “Where You Can Find More Information” on page 1.

Commercial Bancshares consolidated statement of financial condition data:

		At September 30								At December 31,
		2016				2015				2015				2014				2013				2012				2011
		(Unaudited)								(In thousands)
Total assets		$	347,039			$	331,889			$	341,090			$	336,529			$	317,998			$	301,564			$	287,779
Loans held-to maturity, net			296,380				279,550				293,072				275,025				265,625				243,303				231,094
Loans held-for-sale			—				—				—				—				—				—				—
Allowance for loan losses			3,884				3,935				3,861				4,126				4,343				4,041				3,779
Non-performing assets			608				1,157				914				3,316				3,063				7,297				1,899
Securities available-for-sale			8,280				10,629				8,711				11,027				13,941				14,773				24,852
Securities held-to maturity			666				740				666				—				—				—				—
Mortgage servicing rights			—				—				—				—				—				—				—
Deposits and borrowers’ escrow balances			305,270				292,494				296,626				298,771				281,308				268,439				259,128
FHLB advances			1,483				1,604				6,574				1,692				1,808				1,922				—
Stockholders’ equity			38,575				36,058				36,136				34,226				31,588				29,388				26,999

Commercial Bancshares consolidated operating results:

		Nine months ended September 30,								Year ended December 31,
		2016				2015				2015				2014				2013				2012				2011
		(Unaudited)								(In thousands, except per share data)
Interest income		$	11,239			$	10,889			$	14,556			$	14,481			$	14,045			$	14,252			$	15,041
Interest expense			672				659				874				882				1,176				1,493				2,112
Net interest income			10,567				10,230				13,682				13,599				12,869				12,759				12,929
Provision for loan losses			70				138				188				309				531				798				989
Non-interest income			2,157				1,484				2,029				2,131				2,163				2,297				2,211
Acquisition related charges			—				—				—				—				—				—				—
Other non-interest expense			8,429				7,980				10,646				10,694				10,175				10,143				10,343
Income before income taxes			4,225				3,596				4,877				4,727				4,326				4,115				3,808
Income taxes			1,195				1,058				1,452				1,431				1,271				1,177				1,029
Net income			3,030				2,538				3,425				3,296				3,055				2,938				2,779
Basic earnings per share			2.54				2.12				2.86				2.78				2.60				2.52				2.40
Diluted earnings per share			2.50				2.08				2.80				2.73				2.57				2.49				2.38

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UNAUDITED HISTORICAL AND PRO FORMA PER SHARE DATA

The following table shows First Defiance’s and Commercial Bancshares’ diluted income, dividends and book value per share of common stock, after giving effect to the merger (which we refer to as “pro forma” information). In presenting the comparative pro forma information for the time periods shown, we assumed that the merger has been completed on the dates or at the beginning of the periods indicated.

The information listed as “per equivalent Commercial Bancshares share” was obtained by multiplying the pro forma amounts by the exchange ratio of 1.1808. We present this information to reflect the fact that Commercial Bancshares shareholders will receive shares of First Defiance and cash for each share of Commercial Bancshares common stock exchanged in the merger. First Defiance anticipates that the combined company will derive financial benefits from the merger that include reduced operating expenses and the opportunity to earn more revenue. The pro forma information, while helpful in illustrating the financial characteristics of First Defiance following the merger under one set of assumptions, does not reflect these benefits and, accordingly, does not attempt to predict or suggest future results. The pro forma information also does not necessarily reflect what the historical results of First Defiance would have been had our companies been combined during these periods.

The information in the following table is based on, and should be read together with, the historical financial information that we have presented in or incorporated by reference into this document.

		First Defiance (historical)				Commercial Bancshares (historical)				Pro forma(1)(2)				Per equivalent Commercial Bancshares Share
Book value per share:
At September 30, 2016		$	32.53			$	31.96			$	33.40			$	39.44
Cash dividends declared per share:
Nine months ended September 30, 2016		$	0.66			$	0.75			$	0.66			$	0.78
Year ended December 31, 2015		$	0.775			$	0.88			$	0.775			$	0.92
Diluted net income per share:
Nine months ended September 30, 2016		$	2.37			$	2.50			$	2.37			$	2.80
Year ended December 31, 2015		$	2.82			$	2.80			$	2.79			$	3.30

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THE SPECIAL MEETING OF COMMERCIAL BANCSHARES SHAREHOLDERS

Time, Date and Place of Meeting

This proxy statement/prospectus is being sent to you in connection with the solicitation of proxies by the Commercial Bancshares board of directors for use at the special meeting of shareholders of Commercial Bancshares to be held at   :00  .m., on         , 2016, at         , Ohio.

Matters to be Considered

At the special meeting, shareholders will be asked to consider and vote upon the following proposals:

The Commercial Bancshares board of directors is not aware, at this time, of any additional matters that may be presented for action at the special meeting of shareholders, other than those proposals set forth above. If any other matters are properly brought before the special meeting for consideration, however, shares of Commercial Bancshares common stock represented by properly executed proxies will be voted in the discretion of the persons named in the proxy card in accordance with their best judgment.

Shares Outstanding and Entitled to Vote; Record Date

Only shareholders of record on         , 2016, will be entitled to notice of and to vote at the special meeting of Commercial Bancshares shareholders. At the close of business on the record date,         , 2016, there were      shares of Commercial Bancshares common stock issued and outstanding and entitled to vote. Shares of Commercial Bancshares common stock were held of record by approximately      shareholders. Each share of Commercial Bancshares common stock entitles the holder to one vote on all matters properly presented at the special meeting.

Votes Required

The following votes are required to approve each of the proposals to be considered at the special meeting:

Item		Vote Required
Approval of the Merger Agreement		Approval by a majority of the issued and outstanding shares of Commercial Bancshares common stock
Merger-Related Named Executive Officer Compensation Proposal		Approval by a majority of shares of Commercial Bancshares common stock represented in person or by proxy at the special meeting
Adjournment Proposal		Approval by a majority of shares of Commercial Bancshares common stock represented in person or by proxy at the special meeting

A quorum, consisting of the holders of a majority of the outstanding shares of Commercial Bancshares common stock, must be present in person or by proxy at the special meeting of Commercial Bancshares shareholders before any action can be taken. At any adjourned meeting at which a quorum is present, any business may be transacted that might have been transacted at the meeting as originally called.

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Effect of Abstentions and Broker Non-Votes

Any “broker non-votes” submitted by brokers or nominees in connection with the special meeting will not be counted for purposes of determining the number of votes cast on a proposal but will be treated as present for quorum purposes. “Broker non-votes” are shares held by brokers or nominees as to whom voting instructions have not been received from the beneficial owners or the persons entitled to vote those shares and for which the broker or nominee does not have discretionary voting power under the applicable Nasdaq rules. Under these rules, approval of the Merger Agreement is not an item on which brokerage firms may vote in their discretion on behalf of their clients. Because this proposal is required to be approved by the affirmative vote of the majority of the outstanding shares of Commercial Bancshares common stock, abstentions and “broker non-votes” will have the same effect as a vote against the merger proposal. And for the same reason, the failure of a Commercial Bancshares shareholder to vote by proxy or in person at the special meeting will have the effect of a vote against approval of the Merger Agreement.

With respect to the Merger-Related Named Executive Officer Compensation proposal and the Adjournment Proposal, failure to vote by proxy or in person at the special and “broker non-votes” will not be counted in the voting results and will have no effect on the outcome of those proposals. However, abstentions submitted by a Commercial Bancshares shareholder will have the effect of a vote against approval of the Merger-Related Named Executive Officer Compensation proposal and the Adjournment Proposal.

Shares Held by Officers and Directors

As of         , 2016, the directors and executive officers of Commercial Bancshares and Commercial Bank and the affiliates of such directors and executive officers had sole or shared voting power with respect to      shares of Commercial Bancshares common stock, or approximately     % of the outstanding shares of Commercial Bancshares common stock. The directors of Commercial Bancshares have agreed to vote their shares of Commercial Bancshares common stock for the approval of the Merger Agreement.

How to Vote Your Shares; Solicitation of Proxies

A proxy card for use at the special meeting accompanies each copy of this proxy statement/prospectus mailed to Commercial Bancshares shareholders. This proxy is solicited by the Commercial Bancshares board of directors. Whether or not you plan to attend the special meeting, the Commercial Bancshares board of directors urges you to return the enclosed proxy card or vote via Internet or telephone by following the instructions on your proxy card. If you have executed a proxy, you may revoke it at any time before a vote is taken at the special meeting by:

Your attendance at the special meeting will not, by itself, revoke your proxy.

If you are a Commercial Bancshares shareholder whose shares are not registered in your own name, you will need additional documentation from your record holder in order to vote your shares in person at the special meeting. If you hold your Commercial Bancshares shares through a broker, bank or other nominee (i.e., in “street name”) and you want to vote your shares in person at the meeting, you will have to get a written proxy in your name from the broker, bank or other nominee who holds your shares.

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Commercial Bancshares and First Defiance will each pay half of all expenses incurred in connection with printing and mailing this proxy statement/prospectus, the accompanying proxy and any other related materials. Commercial Bancshares will pay all other costs incurred in connection with the solicitation of proxies on behalf of the Commercial Bancshares board of directors. Proxies will be solicited by mail and may also be solicited, for no additional compensation, by officers, directors or employees of Commercial Bancshares. Commercial Bancshares will also pay the standard charges and expenses of brokerage houses, voting trustees, banks, associations and other custodians, nominees and fiduciaries, who are record holders of shares of Commercial Bancshares common stock not beneficially owned by them, for forwarding the proxy materials to, and obtaining proxies from, the beneficial owners of shares of Commercial Bancshares common stock entitled to vote at the special meeting of Commercial Bancshares shareholders. Commercial Bancshares has also made arrangements with Laurel Hill Advisory Group, LLC to assist it in soliciting proxies and has agreed to pay Laurel Hill approximately $5,500 plus reasonable expenses, not to exceed $3,000, for these services.

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COMMERCIAL BANCSHARES’ PROPOSALS

Merger Proposal

Commercial Bancshares is asking its shareholders to approve the merger proposal, a matter discussed in detail throughout this document. Holders of Commercial Bancshares common stock should read through this document in its entirety, including any exhibits, and carefully consider the Merger Agreement and the merger. For such purpose, your attention is directed to the Merger Agreement, a copy of which is attached to this document as Annex A.

Vote Required and Commercial Bancshares Board Recommendation

Approval of the merger proposal requires the affirmative vote of a majority of the issued and outstanding shares of Commercial Bancshares common stock.

The Commercial Bancshares board of directors recommends a vote “FOR” the merger proposal.

Non-Binding Advisory Vote on Merger-Related Named Executive Officer Compensation

As required by Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and Rule 14a-21(c) of the Securities Exchange Act of 1934, as amended, Commercial Bancshares is seeking non-binding, advisory shareholder approval of the compensation of the named executive officers of Commercial Bancshares that is based upon or otherwise related to the merger as disclosed under the heading “The Merger — Interests of Commercial Bancshares Directors and Executive Officers in the Merger” beginning on page 47. This proposal provides you as a shareholder of Commercial Bancshares the opportunity to express your view on any merger-related compensation of Commercial Bancshares’ named executive officers by approving or not approving adoption of the following resolution:

“RESOLVED, that the compensation that may be paid or become payable to Commercial Bancshares’ named executive officers in connection with the merger and the agreements or understandings pursuant to which such compensation may be paid or become payable, in each case as disclosed pursuant to Item 402(t) of Regulation S-K in ‘The Merger — Interests of Commercial Bancshares Directors and Executive Officers in the Merger,’ are hereby APPROVED.”

Because the merger is not conditioned upon this proposal and your vote is advisory, it will not be binding on Commercial Bancshares or First Defiance. If the parties complete the merger, the merger-related compensation disclosed under “The Merger — Interests of Commercial Bancshares Directors and Executive Officers in the Merger” will be paid to Commercial Bancshares’ named executive officers to the extent payable in accordance with the compensation agreements and other arrangements even if the Commercial Bancshares’ shareholders do not approve the merger-related compensation on an advisory basis.

Vote Required and Commercial Bancshares Board Recommendation

Approval of the Merger-Related Named Executive Officer Compensation Proposal requires the affirmative vote of a majority of shares of Commercial Bancshares common stock represented, either in person or by proxy, at the special meeting.

The Commercial Bancshares board of directors recommends a vote “FOR” the Merger-Related Named Executive Officer Compensation Proposal.

Adjournment Proposal

If, at the special meeting of Commercial Bancshares shareholders, the number of shares of Commercial Bancshares common stock present or represented and voting in favor of the merger is insufficient to approve the merger proposal, Commercial Bancshares intends to ask its shareholders to vote to adjourn the special meeting to another time or place to allow for the solicitation of additional proxies to approve the merger proposal. In this event, Commercial Bancshares will request that the shareholders vote on the Adjournment Proposal and not the merger proposal.

Accordingly, Commercial Bancshares is asking its shareholders to authorize the holder of any proxy solicited by the Commercial Bancshares board of directors to vote in favor of granting discretionary authority to the proxy holders, and each of them individually, to adjourn the Commercial Bancshares special meeting to

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another time and place for the purpose of soliciting additional proxies. If Commercial Bancshares requests a vote on the Adjournment Proposal and the Commercial Bancshares shareholders approve this proposal, Commercial Bancshares could adjourn the special meeting and use this additional time to solicit proxies from its shareholders, including those shareholders who have previously voted.

Vote Required and Commercial Bancshares Board Recommendation

Approval of the Adjournment Proposal requires the affirmative vote of a majority of shares of Commercial Bancshares common stock represented, either in person or by proxy, at the special meeting

The Commercial Bancshares board of directors recommends a vote “FOR” the Adjournment Proposal.

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COMMERCIAL BANCSHARES ANNUAL MEETING SHAREHOLDER PROPOSALS

Commercial Bancshares held its 2016 annual meeting of shareholders on May 19, 2016. If the merger is completed, Commercial Bancshares will be merged into First Defiance and thus will no longer have public shareholders. However, if the merger is not completed or if Commercial Bancshares is required to do so under applicable law, Commercial Bancshares will hold a 2017 annual meeting of shareholders. Any shareholder nominations or proposals appropriate for shareholder action at Commercial Bancshares’ 2017 annual meeting must be submitted to Commercial Bancshares as set forth below.

For proposals to be considered for inclusion in the proxy statement for the 2017 annual meeting, they must be received by Commercial Bancshares no later than December 8, 2016. Such proposals must be directed to Commercial Bancshares, Inc., Attention: David J. Browne, Corporate Secretary, 118 S. Sandusky Avenue, Upper Sandusky, Ohio 43351. Any Commercial Bancshares shareholder who intends to propose any other matter to be acted upon at the 2017 annual meeting must inform Commercial Bancshares no later than February 21, 2017. The proxy cards delivered in connection with the 2017 annual meeting would confer discretionary voting authority, to be exercised in the judgment of the Commercial Bancshares’ board of directors, with respect to any shareholder proposal received after February 21, 2017. Commercial Bancshares also would have authority to discretionarily vote proxies with respect to shareholder proposals received after December 8, 2016 but prior to February 21, 2017, unless the proposing Commercial Bancshares shareholder takes the necessary steps outlined in Rule 14a-4(c)(2) under the Securities Exchange Act of 1934 to ensure the proper delivery of proxy materials related to the proposal.

In order to make a director nomination at the Commercial Bancshares 2017 annual meeting, a Commercial Bancshares shareholder would need to notify Commercial Bancshares no fewer than 45 nor more than 90 days in advance of the meeting. In addition, the notice must meet all other requirements contained in the Commercial Bancshares’ code of regulations, a copy of which is available without charge upon written request directed to Commercial Bancshares, Inc., Attention: David J. Browne, Corporate Secretary, 118 S. Sandusky Avenue, Upper Sandusky, Ohio 43351.

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DISSENTERS’ RIGHTS

Rights of Dissenting Commercial Bancshares Shareholders

Shareholders of Commercial Bancshares are entitled to certain dissenters’ rights pursuant to Sections 1701.84(A) and 1701.85 of the OGCL. Section 1701.85 sets forth certain procedures by which shares must strictly comply to be entitled to such dissenters’ rights. Failure to take any one of the required steps may result in the termination or waiver of such rights. Specifically, any shareholder who is a record holder of shares of Commercial Bancshares common stock on the record date and who does not vote in favor of the merger proposal or whose shares are not otherwise voted in favor of the merger proposal may be entitled to be paid the “fair cash value” of such shares of Commercial Bancshares common stock after the effective time of the merger. To be entitled to such payment, a shareholder (i) must deliver to Commercial Bancshares a written demand for payment of the fair cash value of the shares held by such shareholder before the vote on the merger proposal is taken, (ii) must not vote in favor of the merger proposal, and (iii) must otherwise comply with Section 1701.85. A shareholder’s failure to vote against the merger proposal will not constitute a waiver of such shareholder’s dissenters’ rights. Any written demand must specify the shareholder’s name and address, the number and class of shares held by such shareholder on the Commercial Bancshares record date, and the amount claimed as the “fair cash value” of such shares of Commercial Bancshares common stock. See the text of Section 1701.85 of the OGCL attached as Annex C to this proxy statement/prospectus for specific information on the procedures to be followed in exercising dissenters’ rights.

If Commercial Bancshares so requests, dissenting shareholders must submit their share certificates to Commercial Bancshares within 15 days of such request, for endorsement on such certificates by Commercial Bancshares that a demand for appraisal has been made. Failure to comply with such request will terminate the dissenting shareholders’ rights. Such certificates will be promptly returned to the dissenting shareholders by Commercial Bancshares. If Commercial Bancshares and any dissenting shareholder cannot agree upon the “fair cash value” of Commercial Bancshares’ common shares, either may, within three months after service of demand by the shareholder, file a petition in the Court of Common Pleas of Wyandot County, Ohio, for a determination of the “fair cash value” of such dissenting shareholder’s shares of Commercial Bancshares common stock. The fair cash value of a share of Commercial Bancshares common stock to which a dissenting shareholder is entitled to under Section 1701.85 will be determined as of the day prior to the vote of the Commercial Bancshares shareholders on the merger proposal. If the shares of Commercial Bancshares common stock are listed on a national securities exchange, such as the NASDAQ, immediately before the effective time of the merger, the fair cash value will be the closing sale price of shares of Commercial Bancshares common stock as of the close of trading on the day before the vote of the Commercial Bancshares shareholders. Investment banker opinions to company boards of directors regarding the fairness from a financial point of view of the consideration payable in a transaction such as the merger are not opinions regarding, and do not address, “fair cash value” under Section 1701.85.

If a Commercial Bancshares shareholder exercises such shareholder’s dissenters’ rights under Section 1701.85, all other rights with respect to such shareholder’s shares of Commercial Bancshares common stock will be suspended until Commercial Bancshares purchases the shares, or the right to receive the fair cash value is otherwise terminated. Such rights will be reinstated should the right to receive the fair cash value be terminated other than by the purchase of the shares.

The foregoing description of the procedures to be followed in exercising dissenters’ rights available to holders of shares of Commercial Bancshares common stock pursuant to Section 1701.85 of the OGCL may not be complete and is qualified in its entirety by reference to the full text of Section 1701.85 attached as Annex C to this proxy statement/prospectus.

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PARTIES TO THE MERGER AGREEMENT

First Defiance

First Defiance Financial is a unitary thrift holding company that conducts business through its three wholly owned subsidiaries, First Federal, First Insurance Group of the Midwest, Inc., and First Defiance Risk Management Inc. First Defiance had assets of $2.5 billion and shareholders’ equity of $292.1 million at September 30, 2016.

First Federal is a federally chartered savings bank, operating 34 full-service branches and numerous ATM locations in northwest Ohio, southeast Michigan and northeast Indiana and a loan production office in Columbus, Ohio. First Federal’s traditional banking activities include originating and servicing residential, non-residential real estate, commercial, home improvement and home equity and consumer loans and providing a broad range of depository, trust and wealth management services. First Insurance Group is a full-service insurance agency with six offices throughout northwest Ohio, primarily engaged in attracting deposits from the general public through its offices and using those and other available sources of funds to originate loans primarily in the counties in which its offices are located.

Commercial Bancshares

Commercial Bancshares is a financial holding company that conducts business through its wholly owned subsidiaries, Commercial Bank and Commercial Financial. At September 30, 2016, Commercial Bancshares had assets of $347 million and Shareholders’ equity of $38.575 million.

The principal business of Commercial Bancshares is to operate the Bank, which is a wholly-owned subsidiary, and its principal asset. Commercial Bank functions as an independent community, state-chartered bank. Commercial Bank provides customary retail and commercial banking services to its customers, including acceptance of deposits for demand, savings and time accounts, individual retirement accounts and servicing of such accounts; commercial, consumer and real estate lending, including installment loans, and safe deposit and night depository facilities. Commercial Bank is a nonmember of the Federal Reserve System, is insured by the FDIC and is regulated by the Ohio Division of the Financial Institutions and the FDIC. Commercial Bank grants residential, installment and commercial loans to customers located primarily in the Ohio counties of Wyandot, Marion and Hancock and the surrounding area.

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THE MERGER

Terms of the Merger

Transaction Structure

First Defiance’s and Commercial Bancshares’ boards of directors have unanimously approved the Merger Agreement. The Merger Agreement provides for the acquisition of Commercial Bancshares by First Defiance through the merger of Commercial Bancshares with and into First Defiance, with First Defiance continuing as the surviving corporation. Immediately following the merger, Commercial Bank will merge with and into First Federal with First Federal being the surviving bank.

Merger Consideration

The Merger Agreement provides that Commercial Bancshares shareholders will have the right, with respect to each of their shares of Commercial Bancshares common stock, to elect to receive, without interest, either (i) 1.1808 shares of First Defiance common stock, or (ii) $51.00 in cash subject to the payment of cash instead of fractional shares and subject to certain election and allocation procedures described below, if necessary, to ensure that 20% of the outstanding shares of Commercial Bancshares are exchanged for cash and 80% of the outstanding shares of Commercial Bancshares are exchanged for shares of First Defiance. Commercial Bancshares shareholders who make no election to receive cash or shares of First Defiance common stock in the merger, whose elections are not received by the exchange agent by the election deadline, or whose forms of election are improperly completed and/or are not signed, will be deemed not to have made an election. Commercial Bancshares shareholders who do not make an election may be paid in cash, First Defiance common stock or a mix of cash and First Defiance common stock depending on, and after giving effect to, the proration and adjustment procedures described below, and the number of valid cash elections and stock elections that have been made by other Commercial Bancshares shareholders.

First Defiance will not issue fractional shares to Commercial Bancshares shareholders. Instead, Commercial Bancshares common shareholders will receive for each fractional share an amount in cash (rounded to the nearest cent) determined by multiplying (i) the fraction of a share (after taking into account all shares of Commercial Bancshares common stock held by such shareholder at the effective time of the merger) of First Defiance common stock the Commercial Bancshares shareholder would otherwise have been entitled to receive under the Merger Agreement by (ii) $51.00.

When making an election, Commercial Bancshares shareholders may specify different elections with respect to different shares of Commercial Bancshares common stock held by them (for example, a Commercial Bancshares shareholder with 100 shares of Commercial Bancshares common stock could make a cash election with respect to 50 shares and a stock election with respect to the other 50 shares, subject to the adjustment, election and allocation procedures described below).

As described in more detail below, the allocation procedures in the Merger Agreement are intended to provide for an aggregate 80% stock and 20% cash allocation among all outstanding Commercial Bancshares shares. The allocation of the mix of consideration payable to Commercial Bancshares shareholders in the merger will not be known until First Defiance tallies the results of the cash and stock elections made by Commercial Bancshares shareholders, which will not occur until shortly after the closing of the merger.

No guarantee can be made that Commercial Bancshares shareholders will receive the amounts of cash or stock they elect. As a result of the allocation procedures and other limitations outlined in this proxy statement/prospectus and in the Merger Agreement, Commercial Bancshares shareholders may receive First Defiance common stock or cash in amounts that vary from the amounts they elect to receive.

If you are a Commercial Bancshares shareholder and you receive First Defiance common stock as merger consideration for all or a portion of your shares of Commercial Bancshares common stock, the implied value of the merger consideration that you will receive will depend on the market price of First Defiance common stock when you receive the shares of First Defiance common stock.

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Election Procedures; Surrender of Stock Certificates

A form of election and transmittal materials will be mailed under separate cover to Commercial Bancshares shareholders who hold shares of Commercial Bancshares common stock in registered form. Each form of election will allow the holder to make cash or stock elections or no elections. We refer to the shares with respect to which a valid cash election is made as “cash election shares,” the shares with respect to which a valid stock consideration election is made as “stock election shares,” and the shares with respect to which no election is made as “non-election shares.”

To make an effective election, a Commercial Bancshares shareholder must submit a properly completed form of election and transmittal materials along with stock certificates or evidence of book-entry shares for which an election is made to the exchange agent by the election deadline, which is 5:00 p.m., Eastern Time, on     . An election is properly made only if the exchange agent actually receives a properly completed and signed form of election by the election deadline. A form of election will be deemed to be properly completed only if accompanied by one or more stock certificates (or a customary guarantee of delivery of such certificates) or evidence of book-entry shares representing all shares of Commercial Bancshares common stock covered by such form of election, together with duly executed transmittal materials included with the form of election.

Generally, an election may be revoked or changed, but only by written notice received by the exchange agent prior to the election deadline accompanied by a revised form of election. If an election is revoked and unless a subsequent properly completed form of election is actually received by the exchange agent at or prior to the election deadline, the holder having revoked the election will be deemed to have made no election with respect to his or her shares of Commercial Bancshares common stock, such shares will be treated as non-election shares. If the Merger Agreement is terminated, and any certificates have been transmitted to the exchange agent, the exchange agent will return those certificates to the shareholder who submitted those certificates.

Commercial Bancshares shareholders will not be entitled to revoke or change their elections following the election deadline. As a result, Commercial Bancshares shareholders who have made elections will be unable to revoke their elections or sell their shares of Commercial Bancshares common stock during the interval between the election deadline and the date of completion of the merger.

If you own shares of Commercial Bancshares in “street name” through a broker or other financial institution, you should receive or seek instructions from the institution holding your shares concerning how to make your election. Any instructions must be given to your broker or other financial institution sufficiently in advance of the election deadline for record holders in order to allow your broker or other financial institution to cause the record holder of your shares to make an election as described above.

If a Commercial Bancshares shareholder either (i) does not submit a properly completed form of election on or before the election deadline or (ii) revokes its form of election prior to the election deadline (without later submitting a properly completed form of election prior to the election deadline), the shares of Commercial Bancshares common stock held by such shareholder shall be designated as non-election shares and will be converted into the right to receive the stock consideration or the cash consideration according to the allocation procedures specified in the Merger Agreement and summarized below. In addition, if it is reasonably determined by the exchange agent that any purported cash election or stock election was not properly made, the purported election will be deemed to be of no force or effect and the holder making the purported election will be deemed not to have made an election for these purposes, unless a proper election is subsequently made on a timely basis. Commercial Bancshares shareholders are urged to carefully read and follow the instructions for completion of the form of election and to submit the form along with the stock certificate(s) or evidence of book-entry shares in advance of the election deadline. These instructions and the form of election will be sent to you separately from this proxy statement/prospectus.

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Allocation Procedures

The aggregate amount of cash and First Defiance common stock that will be paid is subject to the allocation procedures described in detail below. Under the allocation procedures, if the number of shares of Commercial Bancshares common stock for which a cash election is made is higher than 20% of the outstanding shares of Commercial Bancshares common stock, a pro rata portion of those shares may be converted into the right to receive First Defiance common stock in order to provide for an aggregate 80% stock and 20% cash allocation among all outstanding Commercial Bancshares shares. If the number of shares of Commercial Bancshares common stock for which a stock election is made is higher than 80% of the outstanding shares of Commercial Bancshares common stock, a pro rata portion of those shares will be converted into the right to receive the cash consideration, in order to provide for an aggregate 80% stock and 20% cash allocation among all outstanding Commercial Bancshares shares. As a result of these allocations procedures, if you elect to receive only cash consideration or only stock consideration, you may receive a mix of cash consideration and stock consideration.

Stock Consideration Allocation.  If the aggregate number of stock election shares, which we refer to as the “stock election number,” exceeds the stock conversion number (as defined below), then all cash election shares and all non-election shares of each holder thereof will be converted into the right to receive the cash consideration, and stock election shares of each holder will be converted into the right to receive the stock consideration but only in an amount equal to that number of stock election shares equal to the product obtained by multiplying (x) the number of stock election shares held by such holder by (y) a fraction, the numerator or which is the stock conversion number and the denominator of which is the stock election number, with the remaining number of such holder’s stock election shares being converted into the right to receive cash consideration.

The “stock conversion number” is equal to the product obtained by multiplying (x) the number of shares of Commercial Bancshares common stock outstanding immediately prior to the effective time of the merger by (y) 0.80.

Cash Consideration Allocation.  If the stock election number is less than the stock conversion number (the amount by which the stock conversion number exceeds the stock election number being referred to in this proxy statement/prospectus as the “shortfall number”), then all stock election shares shall be converted into the right to receive the stock consideration, and the non-election shares and cash election shares will be treated in the following manner:

Illustrative Examples of Allocation Procedures.  For illustrative purposes only, the following examples describe the application of the allocation provisions of the Merger Agreement in the case of an oversubscription of cash election shares and in the case of an oversubscription of stock election shares. Solely for the purposes of these examples, it is assumed that there are 1,200,000 shares of common stock of

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Commercial Bancshares outstanding, and the stock conversion number is 960,000. It is also assumed that there are no shares with respect to which dissenters’ rights have been properly exercised and perfected under Ohio law.

Example 1 (Oversubscription of Stock Election Shares)

Assume that valid stock elections are received with respect to 1,080,000 shares (approximately 90% of the outstanding shares) of Commercial Bancshares common stock; valid cash elections are received with respect to 120,000 shares (approximately 10% of the outstanding shares) of Commercial Bancshares common stock; and no elections are received with respect to 1,000 shares (less than 0.001% of the outstanding shares). The allocation provisions would generally apply as follows:

This can be further illustrated as follows:

Example 2 (Oversubscription of Cash Election Shares)

Assume that valid cash elections are received with respect to 576,000 shares (approximately 48% of the outstanding shares) of Commercial Bancshares common stock; valid stock elections are received with respect to 456,000 shares (approximately 38% of the outstanding shares); and no elections are received with respect to 168,000 shares (approximately 14% of the outstanding shares). This means that the shortfall number is 504,000 (960,000-456,000), and the allocation provisions would generally apply as follows:

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This can be further illustrated as follows:

Conversion of Shares; Exchange of Certificates; Elections as to Form of Consideration

The conversion of Commercial Bancshares common stock into the right to receive the merger consideration will occur automatically at the effective time of the merger. As soon as reasonably practicable on or within not more than five business days after the effective time of the merger, the exchange agent will exchange shares of Commercial Bancshares common stock for merger consideration to be received in the merger pursuant to the terms of the Merger Agreement.

Letters of Transmittal

As soon as reasonably practicable after the completion of the merger, the exchange agent will send a letter of transmittal to only those persons who were Commercial Bancshares shareholders at the effective time of the merger and who have not previously submitted a form of election and properly surrendered shares of Commercial Bancshares common stock to the exchange agent. This mailing will contain instructions on how to surrender shares of Commercial Bancshares common stock (if these shares have not already been surrendered) in exchange for the merger consideration the holder is entitled to receive under the Merger Agreement. If a certificate for Commercial Bancshares common stock has been lost, stolen or destroyed, the exchange agent will issue the consideration properly payable under the Merger Agreement upon receipt of appropriate evidence as to that loss, theft or destruction, appropriate evidence as to the ownership of that certificate by the claimant, and appropriate and customary indemnification.

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Dividends and Distributions

Until Commercial Bancshares common stock certificates are surrendered for exchange, any dividends or other distributions with a record date after the effective time with respect to First Defiance common stock into which shares of Commercial Bancshares common stock may have been converted will accrue but will not be paid. First Defiance will pay to former Commercial Bancshares shareholders any unpaid dividends or other distributions, without interest, only after they have duly surrendered their Commercial Bancshares stock certificates or evidence of book entry shares. After the effective time of the merger, there will be no transfers on the stock transfer books of Commercial Bancshares of any shares of Commercial Bancshares common stock. If certificates representing shares of Commercial Bancshares common stock or book-entry shares are presented for transfer after the completion of the merger, they will be cancelled and exchanged for the merger consideration into which the shares of Commercial Bancshares common stock represented by that certificate or evidence of book entry have been converted.

Dissenting Shares

Shares held by Commercial Bancshares shareholders who have perfected and not lost their dissenters’ rights in accordance with the procedures and requirements of Ohio law will not be converted into the right to receive either the cash consideration or stock consideration, and will instead be entitled only to the rights granted by Ohio law. If any such Commercial Bancshares shareholder withdraws or loses his or her dissenters’ rights under Ohio law at or prior to the effective time of the merger, the shares of Commercial Bancshares common stock held by such shareholder will be converted into the right to receive the stock consideration or cash consideration, or a combination of stock consideration and cash consideration, as determined by First Defiance in its sole discretion. See the section entitled “Dissenters’ Rights.”

Treatment of Commercial Bancshares Stock Options

In accordance with the Merger Agreement, at the effective time of the merger, each option to purchase shares of Commercial Bancshares common stock (each, a “Commercial Bancshares stock option”) outstanding and unexercised immediately prior to the effective time of the merger that is exercisable, or will become exercisable as a result of the merger, will be terminated immediately prior to the effective time of the merger and entitled to receive cash equal to the excess, if any, of $51.00 over the exercise price of such Commercial Bancshares stock option.

Background of the Merger

As part of Commercial Bancshares’ ongoing strategic planning process, the Commercial Bancshares board of directors regularly discussed issues impacting the future success of Commercial Bancshares. Among the issues discussed were the ability of Commercial Bancshares to compete against much larger banking institutions with greater financial resources and legal lending limits, the ability to grow or even maintain the earnings Commercial Bancshares had experienced based upon a strong net interest margin in a low interest rate environment, management succession in all functional areas of Commercial Bancshares, including on the Commercial Bancshares board of directors, and the cost of complying with current and increasing banking and securities regulations. The directors also discussed the general limited liquidity in Commercial Bancshares’ common stock as a company with stock traded over the counter, even though a public reporting company, and the importance of this factor to its aging shareholder base.

Over the last several years, Commercial Bancshares had been approached from time to time by a number of financial institutions that inquired as to Commercial Bancshares’ interest in combining organizations including a general discussion between Robert Beach, Commercial Bancshares CEO, and Donald Hileman, the CEO and President of First Defiance, in November 2015. None of those approaches resulted in specific definitive proposals and Commercial Bancshares continued to operate and grow as an independent bank.

Early in 2016, the board started to revisit the issue of seeking an affiliation with a larger institution. At the Commercial Bancshares board of directors’ meeting on February 11, 2016, Thomas C. Blank, a partner in the law firm of Shumaker, Loop & Kendrick, LLP (“Shumaker”), discussed with the board various factors to consider in connection with a potential transaction and the process for initiating such a transaction, including retaining an investment banking firm.

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On March 15, 2016 representatives from KBW and another investment banking firm met with members of the Commercial Bancshares board of directors so that the board could evaluate their qualifications to be retained as Commercial Bancshares’ financial advisor. At the conclusion of that meeting, the Commercial Bancshares board discussed the qualifications of each investment banking firm, deliberated and decided it preferred to retain KBW as financial advisor to assist Commercial Bancshares in evaluating its strategic options and authorized and directed Mr. Beach to negotiate an acceptable engagement letter to retain KBW. After negotiation of the engagement letter, KBW was subsequently engaged.

At the next regularly scheduled meeting of the Commercial Bancshares board of directors on April 14, 2016, KBW discussed with the board the community banking environment in Ohio, potential transaction partners and preliminary aspects of a potential transaction and outlined how KBW would assist with the process. Also as a part of that meeting, the board of directors authorized the formation of a committee (the “Committee”) consisting of Directors, Kinnett, Dillon, Sisler and Mr. Beach to assist with considering a potential transaction in a convenient and expeditious manner.

For the remainder of the month of April 2016, select members of the management of Commercial Bancshares and KBW worked to prepare a Confidential Information Memorandum (“CIM”) for distribution to interested potential acquirors of Commercial Bancshares. The Committee and KBW worked to identify a list of potential merger partners, nine of which were contacted at the Committee’s direction, including First Defiance. Of the nine such institutions, eight expressed an interest in considering a transaction, including First Defiance, and each of them executed a confidentiality agreement in order to receive the CIM. Commercial Bancshares, with the assistance of KBW, established an electronic data room containing information about Commercial Bancshares for the interested parties to review in regard to making an offer. The CIM contained instructions for submitting an offer for Commercial Bancshares and was distributed to the interested parties on or about May 5, 2016. Initial expressions of interest were required to be submitted by May 25, 2016. By that date, four expressions of interest had been received, each of which contained information on pricing, the form of consideration, timing, and an indication of the proposed structure of a combined organization. First Defiance did not submit an expression of interest by May 25^th.

On May 26, 2016, the Company’s board of directors met to review the four expressions of interest. A representative of KBW reviewed with the board copies of each of the four expressions of interest, as well as information about each of the institutions that expressed interest. Of the four expressions of interest, one (“P1”) offered a significantly higher price than the other three, one was too low relative to the others to be accepted and two were almost identical in value. Subsequent to the board meeting, at the direction of the board, representatives of KBW contacted both of these two companies and asked each of them to submit revised proposals to attempt to differentiate their proposal from the other proposal. While both such parties submitted revised proposals on May 31^st, one of the two parties (“P2”) submitted a revised proposal significantly in excess of the other (“P3”).

At the Company’s invitation, because they had submitted the two highest proposals, P1 and P2 commenced due diligence on Commercial Bancshares using the electronic data room and additional resources. Representatives of both P1 and P2 also had discussions with Mr. Beach and other officers of Commercial Bancshares. On June 13, 2016, P1 made a decision to withdraw from considering a transaction with Commercial Bancshares, noting a difference of opinion in regard to how Commercial Bancshares treated a particular group of loans. P2 expressed a similar viewpoint on June 30^th and withdrew its initial proposal, but discussions continued after that date between the parties and their respective financial advisors about the ability to restructure the potential transaction.

On July 1^st, Mr. Beach contacted the President of P3 to see if P3 still would have an interest in a transaction. P3 expressed an interest in reengaging in consideration of a transaction and commenced due diligence. On July 15, 2016 Mr. Hileman contacted KBW to inquire if Commercial Bancshares was still evaluating bids and suggested that First Defiance may still be interested. In the meantime, P3 submitted a revised bid for Commercial Bancshares on July 22^nd, which offer was lower than the proposal submitted by P3 on May 25^th.

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First Defiance’s board of directors met on July 18^th and authorized management to conduct due diligence on Commercial Bancshares in order to explore interest in submitting an indication of interest. From July 19^th through July 27^th, First Defiance conducted due diligence through the data room. On July 25^th, Mr. Hileman and Mr. Beach met to discuss synergies of a possible merger.

On July 27, 2016, First Defiance’s board met with its management team to review the due diligence results and a proposed indication of interest. The board approved management’s recommendation to submit the indication of interest. On July 28, 2016, First Defiance submitted the indication of interest, offering to acquire Commercial Bancshares for $51.00 per share payable in cash or stock of First Defiance, subject to not more than 20% of the merger consideration being paid in cash. The offer provided for a fixed exchange ratio. P2 did not resubmit an offer.

The Commercial Bancshares board of directors met on July 29^th to review the two proposals that were then outstanding, the one from First Defiance and the one from P3. Representatives of KBW reviewed with the board publicly available information comparing the remaining two institutions and the two proposals. The board evaluated the proposals in consultation with KBW and, after discussion and deliberation, determined that the proposal from First Defiance was clearly superior in regard to pricing, liquidity and other factors. On that date, the board of directors adopted resolutions authorizing and directing Mr. Beach to accept and deliver the indication of interest to First Defiance and to commence negotiation with First Defiance of a definitive agreement consistent with the indication of interest.

First Defiance engaged Raymond James & Associates, Inc. (“Raymond James”) to act as First Defiance’s investment banking advisor in its evaluation of the merger.

After execution of a confidentiality agreement with First Defiance, Mr. Beach, Mr. Blank of Shumaker and William Showalter of Young & Associates, Inc. conducted an onsite due diligence investigation of First Defiance on August 5, 2016. They reviewed a number of documents including, business plans, budgets, minutes of the board of directors and various committees of First Defiance and First Federal, policies, financial projections and additional items. The due diligence review showed no specific areas of concern that called into question the ability of First Defiance to consummate the transaction or the condition of First Defiance generally. During this time, First Defiance continued its due diligence review of Commercial Bancshares through the data room and conversations with Commercial Bancshares’ management.

Vorys, Sater, Seymour and Pease LLP (“Vorys”), as counsel for First Defiance, prepared a draft of the Merger Agreement and delivered it to Shumaker, as counsel to Commercial Bancshares on August 10th. On August 11^th, members of First Defiance’s management team and board met with certain members of Commercial Bancshares’ management team and board to discuss the merger, including opportunities and synergies. Later that day, the board of directors of Commercial Bancshares met, with representatives from Shumaker and KBW in attendance, to review the results of the due diligence investigation of First Defiance, an initial overview of the Commercial Bancshares merger agreement relative to the indication of interest letter and the likely process through signing of the merger agreement, employee meeting and announcement and reporting of the transaction.

The parties continued their negotiation of the Merger Agreement and exchanged drafts of respective disclosure schedules regarding the same on August 19^th.

The board of directors of First Defiance met on the morning of August 23^rd with Mr. Patel and Mr. Paramore of Raymond James and Ms. Schaefer of Vorys to review the Merger Agreement. The board discussed the merger in detail and, then, the board unanimously approved the Merger Agreement.

The board of directors of Commercial Bancshares also met on August 23, 2016 starting at 1:00 PM. All of the members of the board of directors were present with Ms. Grafmiller participating by telephone. Representatives of Shumaker and KBW were also in attendance. At this meeting, KBW reviewed the financial aspects of the proposed transaction and rendered to the Board an opinion to the effect that, as of such date and subject to the procedures followed, assumptions made, matters considered, and qualifications and limitations on the review undertaken by KBW as set forth in its opinion, the merger consideration in the proposed merger was fair, from a financial point of view, to the holders of Commercial Bancshares common stock. (See “The Merger Opinion of Commercial Bancshares’ Financial Advisor” below).

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After the conclusion of KBW’s presentation, the board received the form of the Merger Agreement and, with the assistance of Mr. Blank of Shumaker, reviewed it in significant detail, confirming that the form of the Merger Agreement corresponded to the terms established in the initial indication of interest and that it was typical for transactions of this type. The board reviewed the structure of the transaction, the representations and warranties, restrictions on the operations of Commercial Bancshares and Commercial Bank between signing and closing, conditions to closing and related matters. After the review of the Merger Agreement, the board, with Mr. Blank participating, discussed the transaction, posed questions to counsel and further deliberated. Thereafter, the board received and considered resolutions concerning the transaction. The members of the board unanimously approved the Merger Agreement and transactions set forth therein and authorized Mr. Beach to execute and deliver the Merger Agreement and take the other actions necessary to effect the transaction. The meeting was adjourned at approximately 3:30 PM.

A meeting of the employees of Commercial Bank was held at 5:30 PM on August 23^rd to announce the transaction to them. Mr. Hileman and other members of First Defiance’s management team were present for that meeting.

Commercial Bancshares’ Reasons for the Merger; Board Recommendation

Commercial Bancshares’ board of directors believes that the merger transaction with First Defiance is consistent with Commercial Bancshares’ goal of enhancing shareholder value and providing liquidity for the holders of Commercial Bancshares common stock. In addition, the board of directors believes that the merger with First Defiance addresses the board’s desire that any potential transaction be deemed in the best interest of the customers and employees of Commercial Bank and the communities Commercial Bancshares serves. Commercial Bancshares’ board of directors considered a variety of factors including the following:

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The foregoing discussion of the information and factors considered by the Commercial Bancshares board of directors is not intended to be exhaustive, but includes the material factors they considered in arriving at this determination to approve the Merger Agreement and the transactions it contemplates and recommend that the Commercial Bancshares shareholders vote to approve it. The Commercial Bancshares board did not assign any relative or specific weights to the above factors and individual directors may have given different weights to different factors.

The Commercial Bancshares board recommends that the Commercial Bancshares shareholders vote to adopt and approve the Merger Agreement and the transactions it contemplates, including the merger.

Opinion of Commercial Bancshares’ Financial Advisor

Commercial Bancshares engaged KBW to render financial advisory and investment banking services to Commercial Bancshares, including an opinion to the Commercial Bancshares board of directors as to the fairness, from a financial point of view, to the holders of Commercial Bancshares common stock of the merger consideration to be received by such shareholders in the proposed merger of Commercial Bancshares with and into First Defiance. Commercial Bancshares selected KBW because KBW is a nationally recognized investment banking firm with substantial experience in transactions similar to the merger. As part of its investment banking business, KBW is continually engaged in the valuation of financial services businesses and their securities in connection with mergers and acquisitions.

As part of its engagement, representatives of KBW attended the meeting of the Commercial Bancshares board held on August 23, 2016, at which the Commercial Bancshares board evaluated the proposed merger. At this meeting, KBW reviewed the financial aspects of the proposed merger and rendered to the Commercial Bancshares board an opinion to the effect that, as of such date and subject to the procedures followed, assumptions made, matters considered, and qualifications and limitations on the review undertaken by KBW as set forth in its opinion, the merger consideration in the proposed merger was fair, from a financial point of view, to the holders of Commercial Bancshares common stock. The Commercial Bancshares board approved the Merger Agreement at this meeting.

The description of the opinion set forth herein is qualified in its entirety by reference to the full text of the opinion, which is attached as Annex B to this document and is incorporated herein by reference, and describes the procedures followed, assumptions made, matters considered, and qualifications and limitations on the review undertaken by KBW in preparing the opinion.

KBW’s opinion speaks only as of the date of the opinion. The opinion was for the information of, and was directed to, the Commercial Bancshares board (in its capacity as such) in connection with its consideration of the financial terms of the merger. The opinion addressed only the fairness, from a financial point of view, of the merger consideration in the merger to the holders of Commercial Bancshares common stock. It did not address the underlying business decision of Commercial Bancshares to engage in the merger or enter into the Merger Agreement or constitute a recommendation to the Commercial Bancshares board in connection with the merger, and it does not constitute a recommendation to any holder of Commercial Bancshares common stock or any shareholder of any other entity as to how to vote in connection with the merger or any other matter (including, with respect to holders of Commercial Bancshares common stock, what election any such

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shareholder should make with respect to the cash consideration, the stock consideration or any combination thereof), nor does it constitute a recommendation regarding whether or not any such shareholder should enter into a voting, shareholders’ or affiliates’ agreement with respect to the merger or exercise any dissenters’ or appraisal rights that may be available to such shareholder.

KBW’s opinion was reviewed and approved by KBW’s Fairness Opinion Committee in conformity with its policies and procedures established under the requirements of Rule 5150 of the Financial Industry Regulatory Authority.

In connection with the opinion, KBW reviewed, analyzed and relied upon material bearing upon the financial and operating condition of Commercial Bancshares and First Defiance and bearing upon the merger, including, among other things:

KBW’s consideration of financial information and other factors that it deemed appropriate under the circumstances or relevant to its analyses included, among others, the following:

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KBW also performed such other studies and analyses as it considered appropriate and took into account its assessment of general economic, market and financial conditions and its experience in other transactions, as well as its experience in securities valuation and knowledge of the banking industry generally. KBW also participated in discussions that were held with the respective managements of Commercial Bancshares and First Defiance regarding the past and current business operations, regulatory relations, financial condition and future prospects of their respective companies and such other matters as KBW deemed relevant to its inquiry. In addition, KBW considered the results of the efforts undertaken by or on behalf of Commercial Bancshares, with KBW’s assistance, to solicit indications of interest from third parties regarding a potential transaction with Commercial Bancshares.

In conducting its review and arriving at its opinion, KBW relied upon and assumed the accuracy and completeness of all of the financial and other information that was provided to it or that was publicly available and did not independently verify the accuracy or completeness of any such information or assume any responsibility or liability for such verification, accuracy or completeness. KBW relied upon the management of Commercial Bancshares as to the reasonableness and achievability of the financial and operating forecasts and projections of Commercial Bancshares (and the assumptions and bases therefor) that were prepared by, and provided to KBW and discussed with KBW by, such management and KBW assumed that such forecasts and projections were reasonably prepared on bases reflecting the best currently available estimates and judgments of such management and that such forecasts and projections would be realized in the amounts and in the time periods estimated by such management. KBW further relied, with the consent of Commercial Bancshares, upon First Defiance management as to the reasonableness and achievability of the publicly available consensus “street estimates” of First Defiance (and the assumed First Defiance long term growth rates provided to KBW by such management) referred to above, as well as the estimates regarding certain pro forma financial effects of the merger on First Defiance (and the assumptions and bases therefor, including, without limitation, the cost savings and related expenses expected to result or be derived from the merger) referred to above, and KBW assumed that all such information was reasonably prepared on bases reflecting, or in the case of the First Defiance “street estimates” referred to above that such estimates were consistent with, the best currently available estimates and judgments of First Defiance management and that the forecasts, projections and estimates reflected in such information would be realized in the amounts and in the time periods estimated.

It is understood that the portion of the foregoing financial information of Commercial Bancshares and First Defiance that was provided to KBW was not prepared with the expectation of public disclosure, that all of the foregoing financial information, including the publicly available consensus “street estimates” of First Defiance referred to above that KBW was directed to use, was based on numerous variables and assumptions that are inherently uncertain, including, without limitation, factors related to general economic and competitive conditions and that, accordingly, actual results could vary significantly from those set forth in such information. KBW assumed, based on discussions with the respective managements of Commercial Bancshares and First Defiance and with the consent of the Commercial Bancshares board, that all such information provided a reasonable basis upon which KBW could form its opinion and KBW expressed no view as to any such information or the assumptions or bases therefor. KBW relied on all such information without independent verification or analysis and did not in any respect assume any responsibility or liability for the accuracy or completeness thereof.

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KBW also assumed that there were no material changes in the assets, liabilities, financial condition, results of operations, business or prospects of either Commercial Bancshares or First Defiance since the date of the last financial statements of each such entity that were made available to KBW. KBW is not an expert in the independent verification of the adequacy of allowances for loan and lease losses and KBW assumed, without independent verification and with Commercial Bancshares’ consent, that the aggregate allowances for loan and lease losses for Commercial Bancshares and First Defiance are adequate to cover such losses. In rendering its opinion, KBW did not make or obtain any evaluations or appraisals or physical inspection of the property, assets or liabilities (contingent or otherwise) of Commercial Bancshares or First Defiance, the collateral securing any of such assets or liabilities, or the collectability of any such assets, nor did KBW examine any individual loan or credit files, nor did it evaluate the solvency, financial capability or fair value of Commercial Bancshares or First Defiance under any state or federal laws, including those relating to bankruptcy, insolvency or other matters. Estimates of values of companies and assets do not purport to be appraisals or necessarily reflect the prices at which companies or assets may actually be sold. Because such estimates are inherently subject to uncertainty, KBW assumed no responsibility or liability for their accuracy.

KBW assumed, in all respects material to its analyses:

KBW assumed that the merger would be consummated in a manner that complies with the applicable provisions of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and all other applicable federal and state statutes, rules and regulations. KBW was further advised by representatives of Commercial Bancshares that Commercial Bancshares relied upon advice from its advisors (other than KBW) or other appropriate sources as to all legal, financial reporting, tax, accounting and regulatory matters with respect to Commercial Bancshares, First Defiance, the merger and any related transaction (including the subsidiary bank merger), and the Merger Agreement. KBW did not provide advice with respect to any such matters.

KBW’s opinion addressed only the fairness, from a financial point of view, as of the date of the opinion, to the holders of Commercial Bancshares common stock, of the merger consideration to be received by such holders in the merger. KBW expressed no view or opinion as to any other terms or aspects of the merger or any term or aspect of any related transaction (including the subsidiary bank merger), including without limitation, the form or structure of the merger (including the form of the merger consideration or the allocation thereof between cash and stock) or any related transaction, any consequences of the merger or any related transaction to Commercial Bancshares, its shareholders, creditors or otherwise, or any terms, aspects, merits or implications of any employment, consulting, voting, support, shareholder or other agreements, arrangements or understandings contemplated or entered into in connection with the merger or otherwise.

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KBW’s opinion was necessarily based upon conditions as they existed and could be evaluated on the date of such opinion and the information made available to KBW through such date. Developments subsequent to the date of KBW’s opinion may have affected, and may affect, the conclusion reached in KBW’s opinion and KBW did not and does not have an obligation to update, revise or reaffirm its opinion. KBW’s opinion did not address, and KBW expressed no view or opinion with respect to:

In performing its analyses, KBW made numerous assumptions with respect to industry performance, general business, economic, market and financial conditions and other matters, which are beyond the control of KBW, Commercial Bancshares and First Defiance. Any estimates contained in the analyses performed by KBW are not necessarily indicative of actual values or future results, which may be significantly more or less favorable than suggested by these analyses. Additionally, estimates of the value of businesses or securities do not purport to be appraisals or to reflect the prices at which such businesses or securities might actually be sold. Accordingly, these analyses and estimates are inherently subject to substantial uncertainty. In addition, the KBW opinion was among several factors taken into consideration by the Commercial Bancshares board in making its determination to approve the Merger Agreement and the merger. Consequently, the analyses described below should not be viewed as determinative of the decision of the Commercial Bancshares board with respect to the fairness of the merger consideration. The type and amount of consideration payable in the

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merger were determined through negotiation between Commercial Bancshares and First Defiance and the decision to enter into the Merger Agreement was solely that of the Commercial Bancshares board.

The following is a summary of the material financial analyses presented by KBW to the Commercial Bancshares board in connection with its opinion. The summary is not a complete description of the financial analyses underlying the opinion or the presentation made by KBW to the Commercial Bancshares board, but summarizes the material analyses performed and presented in connection with such opinion. The financial analyses summarized below includes information presented in tabular format. The tables alone do not constitute a complete description of the financial analyses. The preparation of a fairness opinion is a complex analytic process involving various determinations as to appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. Therefore, a fairness opinion is not readily susceptible to partial analysis or summary description. In arriving at its opinion, KBW did not attribute any particular weight to any analysis or factor that it considered, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Accordingly, KBW believes that its analyses and the summary of its analyses must be considered as a whole and that selecting portions of its analyses and factors or focusing on the information presented below in tabular format, without considering all analyses and factors or the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of the process underlying its analyses and opinion.

For purposes of the financial analyses described below, KBW utilized an implied value of the merger consideration of $52.30 per share of Commercial Bancshares common stock, consisting of the sum of (i) the implied value of the stock consideration of 1.1808 shares of First Defiance common stock, based on the closing price of First Defiance common stock on August 22, 2016, multiplied by 80%, and (ii) the cash consideration of $51.00, multiplied by 20%.

Commercial Bancshares Selected Companies Analyses.  Using publicly available information, KBW compared the financial performance, financial condition and market performance of Commercial Bancshares to 21 selected U.S. depositories which were publicly traded and headquartered in the Midwest region (defined as Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota and Wisconsin) and which had total assets between $300 million and $400 million.

The selected companies were as follows:

Baraboo Bancorporation, Inc.		HFB Financial Corporation
Central Federal Corporation		Jacksonville Bancorp, Inc.
Choice Bancorp, Inc.		Madison County Financial, Inc.
Commercial National Financial Corporation		Ohio Legacy Corp
County Bank Corp		Oxford Bank Corporation
Eastern Michigan Financial Corporation		Perpetual Federal Savings Bank
FFW Corporation		Royal Financial, Inc.
First Bancorp of Indiana, Inc.		Sturgis Bancorp, Inc.
First Federal of Northern Michigan Bancorp, Inc.		West Shore Bank Corporation
FNBH Bancorp, Inc.		Wolverine Bancorp, Inc.
HCB Financial Corporation

To perform this analysis, KBW used profitability and other financial information for, as of, or, in the case of latest 12 months (“LTM”) information, through, the most recent completed quarter (“MRQ”) available (which in the case of Commercial Bancshares was the fiscal quarter ended June 30, 2016) and market price information as of August 22, 2016. Where consolidated holding company level financial data for the selected companies was unreported, subsidiary bank level data was utilized to calculate ratios. Certain financial data prepared by KBW, and as referenced in the tables presented below, may not correspond to the data presented in Commercial Bancshares’ historical financial statements as a result of the different periods, assumptions and methods used by KBW to compute the financial data presented.

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KBW’s analysis showed the following concerning the financial performance of Commercial Bancshares and the selected companies:

						Selected Companies
		Commercial Bancshares				25th Percentile				Median				Average				75th Percentile
LTM Core Return on Average Assets(1)			1.12	%(3)			0.66	%			0.84	%			0.84	%			1.02	%
LTM Core Return on Average Equity(1)			10.23	%(3)			6.26	%			6.98	%			7.61	%			10.04	%
LTM Core Return on Avg. Tangible Common Equity(1)			10.23	%(3)			6.39	%			7.72	%			8.17	%			10.81	%
LTM Net Interest Margin			4.40	%			3.08	%			3.35	%			3.41	%			3.69	%
LTM Fee Income/Revenue Ratio(2)			12.7	%			9.7	%			17.1	%			16.6	%			22.0	%
LTM Efficiency Ratio			64.8	%			82.9	%			74.6	%			72.5	%			69.6	%

KBW’s analysis also showed the following concerning the financial condition of Commercial Bancshares and the selected companies:

						Selected Companies
		Commercial Bancshares				25th Percentile				Median				Average				75th Percentile
Tangible Common Equity/Tangible Assets			11.17	%			8.48	%			10.01	%			10.67	%			10.82	%
Total Capital Ratio			13.58	%			14.29	%			16.99	%			16.92	%			18.35	%
Loans/Deposits			99.0	%			74.7	%			83.5	%			86.8	%			109.0	%
Loan Loss Reserve/Gross Loans			1.29	%			0.96	%			1.26	%			1.55	%			1.91	%
Nonperforming Assets/Loans + OREO			1.50	%			2.88	%			2.25	%			2.90	%			1.71	%
LTM Net Charge-Offs/Average Loans			0.14	%			0.12	%			0.02	%			(0.01	)%			(0.07	)%

In addition, KBW’s analysis showed the following concerning the market performance of Commercial Bancshares and the selected companies:

						Selected Companies
		Commercial Bancshares				25th Percentile				Median				Average				75th Percentile
One-Year Stock Price Change			21.0	%			3.2	%			10.9	%			13.6	%			24.8	%
One-Year Total Return			24.5	%			6.3	%			14.4	%			16.0	%			25.3	%
Year-To-Date Stock Price Change			12.7	%			0.9	%			9.1	%			8.8	%			14.1	%
Stock Price/Book Value per Share			108	%			75	%			84	%			87	%			94	%
Stock Price/Tangible Book Value per Share			108	%			79	%			88	%			89	%			97	%
Stock Price/LTM Core EPS(1)			11.2x	(2)			8.6x				11.3x				11.4x				13.7x
Dividend Yield			2.9	%			0.0	%			2.4	%			2.4	%			3.5	%
LTM Dividend Payout			27.4	%			0.0	%			20.3	%			26.7	%			39.4	%

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No company used as a comparison in the above selected companies analysis is identical to Commercial Bancshares. Accordingly, an analysis of these results is not mathematical. Rather, it involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies involved.

First Defiance Selected Companies Analysis.  Using publicly available information, KBW compared the financial performance, financial condition and market performance of First Defiance to 15 selected U.S. depositories which were traded on NASDAQ, the New York Stock Exchange or the New York Stock Exchange Market and headquartered in the Midwest region and which had total assets between $2.0 billion and $3.5 billion.

The selected companies were as follows:

Bank Mutual Corporation		MidWestOne Financial Group, Inc.
First Financial Corporation		Nicolet Bankshares, Inc.
First Mid-Illinois Bancshares, Inc.		Old Second Bancorp, Inc.
German American Bancorp, Inc.		Peoples Bancorp Inc.
Horizon Bancorp		QCR Holdings, Inc.
Independent Bank Corporation		Stock Yards Bancorp, Inc.
Mercantile Bank Corporation		United Community Financial Corp.
Midland States Bancorp, Inc.

To perform this analysis, KBW used profitability and other financial information for, as of, or, in the case of LTM information, through, the fiscal quarter ended June 30, 2016 and market price information as of August 22, 2016. KBW also used 2016 and 2017 EPS estimates taken from consensus “street estimates” for First Defiance and the selected companies. Where consolidated holding company level financial data for the selected companies was unreported, subsidiary bank level data was utilized to calculate ratios. Certain financial data prepared by KBW, and as referenced in the tables presented below, may not correspond to the data presented in First Defiance’s historical financial statements as a result of the different periods, assumptions and methods used by KBW to compute the financial data presented.

KBW’s analysis showed the following concerning the financial performance of First Defiance and the selected companies:

						Selected Companies
		First Defiance				25th Percentile				Median				Average				75th Percentile
LTM Core Return on Average Assets(1)			1.21	%			0.85	%			1.00	%			0.97	%			1.03	%
LTM Core Return on Average Equity(1)			9.96	%			7.74	%			9.34	%			9.37	%			10.80	%
LTM Core Return on Average Tangible Common Equity(1)			12.90	%			8.76	%			11.60	%			11.13	%			13.78	%
LTM Net Interest Margin			3.76	%			3.38	%			3.57	%			3.60	%			3.90	%
LTM Fee Income/Revenue Ratio(2)			30.0	%			24.9	%			27.3	%			26.6	%			30.3	%
LTM Efficiency Ratio			61.7	%			67.2	%			63.4	%			64.8	%			62.1	%

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KBW’s analysis showed the following concerning the financial condition of First Defiance and the selected companies:

						Selected Companies
		First Defiance				25th Percentile				Median				Average				75th Percentile
Tangible Common Equity/Tangible Assets			9.52	%			8.23	%			9.63	%			9.54	%			10.26	%
Total Capital Ratio			13.60	%			13.32	%			14.11	%			14.59	%			15.18	%
Loans/Deposits			96.9	%			79.8	%			88.0	%			87.4	%			95.1	%
Loan Loss Reserve/Gross Loans			1.38	%			0.75	%			0.98	%			1.00	%			1.16	%
Nonperforming Assets/Loans + OREO			1.45	%			1.60	%			1.02	%			1.55	%			0.81	%
LTM Net Charge-Offs/Average Loans			(0.01	)%			0.22	%			0.09	%			0.17	%			0.04	%

In addition, KBW’s analysis showed the following concerning the market performance of First Defiance and the selected companies:

						Selected Companies
		First Defiance				25th Percentile				Median				Average				75th Percentile
One-Year Stock Price Change			16.4	%			11.3	%			16.8	%			17.9	%			25.5	%
One-Year Total Return			18.6	%			11.9	%			19.2	%			20.0	%			28.1	%
Year-To-Date Stock Price Change			18.0	%			(0.8	)%			5.8	%			8.5	%			18.2	%
Stock Price/Book Value per Share			140	%			117	%			121	%			131	%			136	%
Stock Price/Tangible Book Value per Share			179	%			137	%			146	%			152	%			158	%
Stock Price/LTM Core EPS(1)			14.7x				13.2x				14.9x				15.3x				17.2x
Stock Price/2016 Estimated EPS			14.2x				13.4x				14.4x				14.9x				15.8x
Stock Price/2017 Estimated EPS			13.9x				11.9x				13.3x				13.7x				14.5x
Dividend Yield			2.0	%			1.9	%			2.2	%			2.0	%			2.6	%
LTM Dividend Payout			27.8	%			27.3	%			32.4	%			29.1	%			33.7	%

No company used as a comparison in the above selected companies analysis is identical to First Defiance. Accordingly, an analysis of these results is not mathematical. Rather, it involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies involved.

Select Transactions Analysis.  KBW reviewed publicly available information related to 18 selected bank and thrift transactions announced since January 1, 2015 with transaction values were between $25 million and $150 million, acquired companies headquartered in the Midwest region and acquirors traded on NASDAQ, the New York Stock Exchange or the New York Stock Exchange Market. Acquisitions of distressed targets and merger of equals transactions were excluded from the selected transactions.

The selected transactions were as follows:

Acquiror		Acquired Company
Farmers National Banc Corp.		National Bancshares Corporation
Horizon Bancorp		Peoples Bancorp, Inc.
Wintrust Financial Corporation		Community Financial Shares, Inc.
First Capital, Inc.		Peoples Bancorp Inc. of Bullitt County
Bear State Financial, Inc.		Metropolitan National Bank
First Merchants Corporation		Ameriana Bancorp
German American Bancorp, Inc.		River Valley Bancorp
First Midwest Bancorp, Inc.		NI Bancshares Corporation
County Bancorp, Inc.		Fox River Valley Bancorp, Inc.

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Acquiror		Acquired Company
MainSource Financial Group, Inc.		Cheviot Financial Corp.
Great Western Bancorp, Inc.		HF Financial Corp.
BOK Financial Corporation		MBT Bancshares, Inc.
Wintrust Financial Corporation		Generations Bancorp, Inc.
Horizon Bancorp		La Porte Bancorp, Inc.
First Mid-Illinois Bancshares, Inc.		First Clover Leaf Financial Corp.
QCR Holdings, Inc.		Community State Bank
Wintrust Financial Corporation		First Community Financial Corporation
Middlefield Banc Corp.		Liberty Bank, National Association

For each selected transaction, KBW derived the following implied transaction statistics, in each case based on the transaction consideration value paid for the acquired company and using financial data based on the acquired company’s then latest publicly available financial statements:

The above transaction statistics for the selected transactions were compared with the corresponding transaction statistics for the proposed merger based on the implied transaction value for the proposed merger of $52.30 per share of Commercial Bancshares common stock and using historical financial information for Commercial Bancshares as of June 30, 2016 and for the twelve month period ended June 30, 2016.

The results of the analysis are set forth in the following table (excluding the impact of LTM EPS multiples for six selected transactions, where the multiples were considered not to be meaningful because they were greater than 30.0x):

						Selected Transactions
		Commercial Bancshares				25th Percentile				Median				Average				75th Percentile
Transaction Value/Tangible Book Value (%)			164	%			126	%			134	%			146	%			143	%
Transaction Value/LTM Earnings (x)			16.9x	(1)			14.8x				17.2x				16.9x				19.0x
Core Deposit Premium (%)			10.6	%			4.4	%			5.1	%			6.2	%			6.5	%

No company or transaction used as a comparison in the above selected transaction analysis is identical to Commercial Bancshares or the proposed merger. Accordingly, an analysis of these results is not mathematical. Rather, it involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies involved.

Relative Contribution Analysis.  KBW analyzed the relative standalone contribution of First Defiance and Commercial Bancshares to various pro forma balance sheet and income statement items of the combined entity. This analysis did not include purchase accounting adjustments or cost savings. To perform this analysis, KBW used (i) balance sheet and net income data for First Defiance and Commercial Bancshares as of June 30, 2016 or for the twelve month period ended June 30, 2016, (ii) 2016 and 2017 EPS consensus “street estimates” for First Defiance, and (iii) financial forecasts and projections relating to the 2016 and 2017 net income of Commercial Bancshares provided by Commercial Bancshares management. The results of KBW’s analysis are set forth in the following table, which also compares the results of KBW’s analysis with the implied pro forma ownership percentages of First Defiance and Commercial Bancshares shareholders in the

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combined company based on the stock consideration of 1.1808 shares of First Defiance common stock provided for in the Merger Agreement (reflecting an 80% stock/20% cash implied merger consideration mix) and also based on a hypothetical exchange ratio assuming 100% stock consideration in the proposed merger for illustrative purposes:

		First Defiance as a % of Total				Commercial Bancshares as a % of Total
Ownership
80% stock/20% cash(1)			88.7	%			11.3	%
100% stock(1)(2)			86.3	%			13.7	%
Balance Sheet
Total Assets			87.6	%			12.4	%
Gross Loans			86.3	%			13.7	%
Deposits			86.5	%			13.5	%
Tangible Common Equity			85.4	%			14.6	%
Income Statement
LTM Core Net Income(3)			88.1	%			11.9	%
2016 Estimated Net Income			88.9	%			11.1	%
2017 Estimated Net Income			88.5	%			11.5	%

Forecasted Pro Forma Financial Impact Analysis.  KBW performed a pro forma financial impact analysis that combined projected income statement and balance sheet information of First Defiance and Commercial Bancshares. Using the publicly available consensus “street estimates” for both First Defiance’s balance sheet as of December 31, 2016 and First Defiance’s 2017 EPS, which were both discussed with First Defiance management; an assumed long-term earnings growth rate provided by First Defiance management; financial and operating forecasts and projections (including balance estimates as of December 31, 2016) of Commercial Bancshares prepared by Commercial Bancshares management; and pro forma assumptions (including certain purchase accounting adjustments, cost savings and related expenses) provided by First Defiance management, KBW analyzed the potential financial impact of the merger on certain projected financial results of First Defiance. This analysis indicated the merger could be accretive to First Defiance’s estimated 2017 EPS and estimated 2018 EPS and dilutive to First Defiance’s estimated tangible book value per share as of December 31, 2016. Furthermore, the analysis indicated that each of First Defiance’s tangible common equity to tangible assets ratio, leverage ratio, Common Equity Tier 1 Ratio, Tier 1 Risk-Based Capital Ratio and Total Risk Based Capital Ratio as of December 31, 2016 could be lower. For all of the above analysis, the actual results achieved by First Defiance following the merger may vary from the projected results, and the variations may be material.

Discounted Cash Flow Analysis — Commercial Bancshares KBW performed a discounted cash flow analysis of Commercial Bancshares to estimate a range for the implied equity value of Commercial Bancshares. In this analysis, KBW used financial forecasts and projections relating to the net income and assets of Commercial Bancshares prepared by and provided to KBW by Commercial Bancshares management, and assumed discount rates ranging from 14.0% to 17.0%. The ranges of values were derived by adding (i) the present value of the estimated excess cash flows that Commercial Bancshares could generate over the five-year period from 2017 to 2021 as a standalone company, and (ii) the present value of Commercial

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Bancshares’ implied terminal value at the end of such period. KBW assumed that Commercial Bancshares would maintain a tangible common equity to tangible asset ratio of 8.00% and would retain sufficient earnings to maintain that level. In calculating the terminal value of Commercial Bancshares, KBW applied a range of 13.0x to 15.0x estimated 2021 net income. This discounted cash flow analysis resulted in a range of implied values per share of Commercial Bancshares common stock of $40.67 to $48.44.

The discounted cash flow analysis is a widely used valuation methodology, but the results of such methodology are highly dependent on the assumptions that must be made, including asset and earnings growth rates, terminal values, dividend payout rates, and discount rates. The foregoing discounted cash flow analyses did not purport to be indicative of the actual values of Commercial Bancshares.

Discounted Cash Flow Analysis — First Defiance KBW performed a discounted cash flow analysis of First Defiance to estimate a range for the implied equity value of First Defiance. In this analysis, KBW used the publicly available consensus “street estimates” of First Defiance for 2017, as well as assumed long-term growth rates provided by First Defiance management relating to the net income and assets of First Defiance, and assumed discount rates ranging from 8.0% to 12.0%. The ranges of values were derived by adding (i) the present value of the estimated excess cash flows that First Defiance could generate over the five-year period from 2017 to 2021 as a standalone company, and (ii) the present value of First Defiance’s implied terminal value at the end of such period. KBW assumed that First Defiance would maintain a tangible common equity to tangible asset ratio of 8.00% and would retain sufficient earnings to maintain that level. In calculating the terminal value of First Defiance, KBW applied a range of 13.0x to 16.0x estimated 2021 net income. This discounted cash flow analysis resulted in a range of implied values per share of First Defiance common stock of $45.78 to $62.08.

The discounted cash flow analysis is a widely used valuation methodology, but the results of such methodology are highly dependent on the assumptions that must be made, including asset and earnings growth rates, terminal values, dividend payout rates, and discount rates. The foregoing discounted cash flow analyses did not purport to be indicative of the actual values of First Defiance.

Miscellaneous.  KBW acted as financial advisor to Commercial Bancshares and not as an advisor to or agent of any other person. As part of its investment banking business, KBW is continually engaged in the valuation of bank and bank holding company securities in connection with acquisitions, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements and valuations for various other purposes. As specialists in the securities of banking companies, KBW has experience in, and knowledge of, the valuation of banking enterprises. In the ordinary course of their broker-dealer businesses, KBW and its affiliates may from time to time purchase securities from, and sell securities to, Commercial Bancshares and First Defiance and, as market makers in securities, KBW and its affiliates may from time to time have a long or short position in, and buy or sell, debt or equity securities of Commercial Bancshares or First Defiance for its and their own accounts and for the accounts of its and their respective customers and clients. KBW employees may also from time to time maintain individual positions in Commercial Bancshares common stock and First Defiance common stock. As Commercial Bancshares has previously been informed by KBW, such positions included an individual position in shares of First Defiance common stock held by a senior member of the KBW advisory team which provided services to Commercial Bancshares in connection with the proposed merger.

Pursuant to the KBW engagement agreement, Commercial Bancshares agreed to pay KBW a total cash fee equal to 1.20% of the aggregate merger consideration, $150,000 of which became payable to KBW with the rendering of its opinion and execution of the Merger Agreement and the balance of which is contingent upon the closing of the merger. Commercial Bancshares also agreed to reimburse KBW for reasonable out-of-pocket expenses and disbursements incurred in connection with its retention and to indemnify KBW against certain liabilities relating to or arising out of KBW’s engagement or KBW’s role in connection therewith. Other than in connection with this present engagement, during the two years preceding the date of its opinion, KBW has not provided investment banking and financial advisory services to Commercial Bancshares. During the two years preceding the date of its opinion, KBW has not provided investment

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banking and financial advisory services to First Defiance. KBW may in the future provide investment banking and financial advisory services to Commercial Bancshares or First Defiance and receive compensation for such services.

Certain First Defiance Unaudited Prospective Financial Information

First Defiance does not as a matter of course publicly disclose forecasts or internal projections as to future performance, revenues, earnings, financial condition or other results due to, among other reasons, the inherent uncertainty of the underlying assumptions and estimates and the inherent difficulty of accurately predicting financial performance for future periods. In connection with the proposed merger, however, First Defiance provided to KBW, for purposes of performing the financial analyses described above under “The Merger — Opinion of Commercial Bancshares’ Financial Advisor,” certain unaudited prospective financial information with respect to First Defiance on a stand-alone, pre-merger basis (the “projections”).

The projections were not prepared with a view toward public disclosure, and the inclusion of the projections in this proxy statement/prospectus should not be regarded as an indication that First Defiance, KBW or any other recipient of the projections considered, or now considers, them to be necessarily predictive of actual future results, or that it should be construed as financial guidance, and it should not be relied on as such. This information was prepared solely for internal use and is subjective in many respects. While presented with numeric specificity, the unaudited prospective financial information reflects numerous estimates and assumptions made with respect to business, economic, market, competition, regulatory and financial conditions and matters specific to First Defiance’s business, all of which are difficult to predict and many of which are beyond First Defiance’s control.

The projections also reflect assumptions as to certain business decisions that are subject to change. The projections reflect subjective judgment in many respects and thus are susceptible to multiple interpretations and periodic revisions based on actual experience and business developments. As such, the projections constitute forward-looking information and are subject to risks and uncertainties that could cause actual results to differ materially from the results forecasted in such prospective information, including, but not limited to, First Defiance’s business, industry performance, general business and economic conditions, customer requirements, competition, adverse changes in applicable laws, and regulations or rules. For other factors that could cause the actual results to differ, please see the “Risk Factors” section and “Forward-Looking Statements” in this proxy statement/prospectus.

Neither First Defiance nor its affiliates assumes any responsibility for the accuracy, completeness or validity of the projections. The projections were not prepared with a view toward complying with the guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants for preparation or presentation of financial information. Neither First Defiance’s current independent registered public accounting firm nor any other independent accountants, have compiled, examined or performed any procedures with respect to the projections included below, nor expressed any opinion or any other form of assurance on such information or its achievability.

Furthermore, the projections do not take into account any circumstances or events occurring after the date they were prepared, including the transactions contemplated by the Merger Agreement. First Defiance can give no assurance that, had the projections been prepared as of the date of this document, similar estimates and assumptions would be used. Further, the projections do not take into account the effect of any possible failure of the merger to occur. Neither First Defiance nor any of its affiliates intends to, and each of them disclaims any obligation to, update, revise or correct the projections if they are or become inaccurate (even in the short term). The inclusion of the projections herein should not be deemed an admission or representation by First Defiance that they are viewed by First Defiance as material information of First Defiance, particularly in light of the inherent risks and uncertainties associated with such forecasts. The projections included below are not being included to influence your decision whether to vote in favor of the merger proposal or any other proposal to be considered at the special meeting, but is being provided solely because it was made available to KBW in connection with the merger and used by KBW in performing the financial analyses described above under “The Merger — Opinion of Commercial Bancshares’ Financial Advisor.”

In light of the foregoing, and considering that the Commercial Bancshares special meeting will be held several months after the projections were prepared, as well as the uncertainties inherent in any forecasted

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information, shareholders are cautioned not to place unwarranted reliance on such information, and First Defiance urges you to review First Defiance’s financial statements and other information that is incorporated by reference into this proxy statement/prospectus.

First Defiance Projections

KBW used an assumed average annual asset growth rate of 6% per year and an assumed average annual earnings growth rate of 7% per year in 2018 and annually thereafter.

Certain Commercial Bancshares Unaudited Prospective Financial Information

Commercial Bancshares does not as a matter of course publicly disclose forecasts or internal projections as to future performance, revenues, earnings, financial condition or other results due to, among other reasons, the inherent uncertainty of the underlying assumptions and estimates and the inherent difficulty of accurately predicting financial performance for future periods. In connection with the proposed merger, however, Commercial Bancshares provided to KBW, for purposes of performing the financial analyses described above under “The Merger — Opinion of Commercial Bancshares’ Financial Advisor,” certain unaudited prospective financial information with respect to Commercial Bancshares on a stand-alone, pre-merger basis (the “projections”).

The projections were not prepared with a view toward public disclosure, and the inclusion of the projections in this proxy statement/prospectus should not be regarded as an indication that Commercial Bancshares, KBW or any other recipient of the projections considered, or now considers, them to be necessarily predictive of actual future results, or that it should be construed as financial guidance, and it should not be relied on as such. This information was prepared solely for internal use and is subjective in many respects. While presented with numeric specificity, the projections reflect numerous estimates and assumptions made with respect to business, economic, market, competition, regulatory and financial conditions and matters specific to Commercial Bancshares’ business, all of which are difficult to predict and many of which are beyond Commercial Bancshares’ control.

The projections also reflect assumptions as to certain business decisions that are subject to change. The projections reflect subjective judgment in many respects and thus are susceptible to multiple interpretations and periodic revisions based on actual experience and business developments. As such, the projections constitute forward-looking information and are subject to risks and uncertainties that could cause actual results to differ materially from the results forecasted in such prospective information, including, but not limited to, Commercial Bancshares’ business, industry performance, general business and economic conditions, customer requirements, competition, adverse changes in applicable laws, and regulations or rules. For other factors that could cause the actual results to differ, please see the “Risk Factors” section and “Forward-Looking Statements” in this proxy statement/prospectus.

Neither Commercial Bancshares nor its affiliates assumes any responsibility for the accuracy, completeness or validity of the projections. The projections were not prepared with a view toward complying with the guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants for preparation or presentation of financial information. Neither Commercial Bancshares’ current independent registered public accounting firm nor any other independent accountants, have compiled, examined or performed any procedures with respect to the projections included below, nor expressed any opinion or any other form of assurance on such information or its achievability.

Furthermore, the projections do not take into account any circumstances or events occurring after the date they were prepared, including the transactions contemplated by the Merger Agreement. Commercial Bancshares can give no assurance that, had the projections been prepared as of the date of this document, similar estimates and assumptions would be used. Further, the projections do not take into account the effect of any possible failure of the merger to occur. Neither Commercial Bancshares nor any of its affiliates intends to, and each of them disclaims any obligation to, update, revise or correct the projections if they are or become inaccurate (even in the short term). The inclusion of the projections herein should not be deemed an admission or representation by Commercial Bancshares that they are viewed by Commercial Bancshares as material information of Commercial Bancshares, particularly in light of the inherent risks and uncertainties associated with such forecasts. The projections included below are not being included to influence your decision whether to vote in favor of the merger proposal or any other proposal to be considered at the special

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meeting, but are being provided solely because the information was made available to KBW in connection with the merger and used by KBW in performing the financial analyses described above under “The Merger — Opinion of Commercial Bancshares’ Financial Advisor.”

In light of the foregoing, and considering that the Commercial Bancshares special meeting will be held several months after the projections were prepared, as well as the uncertainties inherent in any forecasted information, shareholders are cautioned not to place unwarranted reliance on such information, and Commercial Bancshares urges you to review Commercial Bancshares’s financial statements and other information that is referenced in this proxy statement/prospectus.

Commercial Bancshares Projections

For purposes of performing its financial analyses of Commercial Bancshares on a standalone basis, KBW used the financial and operating forecasts for Commercial Bancshares for the fiscal years 2017 through 2021 set forth in the table below:

(Dollars in millions)		12/31/2017				12/31/2018				12/31/2019				12/31/2020				12/31/2021
Income Statement
Net Income to Common Stock		$	3.7			$	3.9			$	4.0			$	4.2			$	4.5

In addition, KBW used an assumed asset growth rate of 4.0% in 2017 and annually thereafter.

Management and Board of Directors of First Defiance After the Merger

Upon completion of the merger, the directors and executive officers of First Defiance are expected to continue in their current positions, with the exception of the addition of Robert E. Beach, a current director of Commercial Bancshares, who has been chosen by First Defiance in consultation with Commercial Bancshares to be appointed as a director of First Defiance pursuant to the Merger Agreement. Information about the current First Defiance directors and executive officers can be found in First Defiance’s 2015 Annual Report on Form 10-K incorporated by reference under “Incorporation of Certain Documents by Reference” beginning on page 120.

Robert E. Beach, age 64, has served as a director of Commercial Bancshares since 2007. Mr. Beach serves as President and CEO of Commercial Bancshares and Commercial Bank. Prior to joining Commercial Bancshares, he served as Area President of Key Bank in Findlay, Ohio. Mr. Beach has more than 30 years of management experience in the banking industry. His current term as a director of Commercial Bancshares will expire at the 2019 annual meeting of Commercial Bancshares shareholders.

Mr. Beach has been deemed “independent” by the First Defiance board of directors, according to NASDAQ listing standards. Following the merger, Mr. Beach, as a non-employee director of First Defiance, will receive an annual retainer of $29,000 and a fee of $750 for each board meeting attended for either First Defiance or First Federal. Mr. Beach will also be eligible to defer his retainer and/or meeting fees payable to him under the First Defiance Deferred Compensation Plan. For more information regarding the First Defiance Deferred Compensation Plan and the compensation paid to directors of First Defiance, see First Defiance’s 2015 Annual Report on Form 10-K incorporated by reference under “Incorporation of Certain Documents by Reference” beginning on page 120.

Interests of Commercial Bancshares Directors and Executive Officers in the Merger

In considering the recommendation of the board of directors of Commercial Bancshares to vote for the merger proposal, Commercial Bancshares shareholders should be aware that certain of Commercial Bancshares’ directors and executive officers have interests in the merger as individuals that are in addition to, or different from, their interests as shareholders of Commercial Bancshares. The Commercial Bancshares board of directors was aware of these factors and considered them, among other matters, in approving the Merger Agreement and the merger. These interests are described below. For purposes of this disclosure, the merger constitutes a change in control, change of control or term of similar meaning.

Employment Agreements.  Commercial Bancshares has an employment agreement with each of: Steven M. Strine and Susan E. Brown, each agreement dated June 10, 2015; Robert E. Beach and Bruce Beck, each agreement dated June 11, 2015; and Scott A. Oboy, dated June 30, 2015. Mr. Beach’s agreement has a term of

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three years, Messrs. Oboy and Strine’s agreements each have a term of two years and Mr. Beck and Ms. Brown’s agreements each have a term of one year. At the end of the original term, each of the agreements is automatically extended from year to year for additional one year periods, unless either Commercial Bancshares or the officer provides notice of nonrenewal at least 60 days prior to the expiration date of the current term of the agreement, and subject to earlier termination as set forth in the agreement.

Each of the agreements contain a provision that provides for certain payments if any of the following occurs: (i) within one year after a change in control (as defined below), the officer’s employment is terminated without cause; (ii) within one year after a change in control, the officer resigns because he or she has been demoted, had his or her base salary reduced, had his or her principal place of employment transferred away from Wyandot County, Ohio or a contiguous county, or had his or her job title, status or responsibility materially reduced; or (iii) (a) the officer’s employment is terminated by Commercial Bancshares without cause, (b) there is a change in control within one year following the termination, and (c) the officer’s termination of employment was at the request of a third party who has taken steps reasonably calculated to effect a change in control or was otherwise in anticipation of a change in control. In the event of a termination under any of these circumstances, Commercial Bancshares is obligated to pay the officer monthly payments in an amount equal to: for Mr. Beach — 2.99 times the sum of his then current annual base salary divided by 36, with a total of 36 payments; for each of Messrs. Oboy and Strine — 2.0 times his then current base salary divided by 24, with a total of 24 payments; and for each of Mr. Beck and Ms. Brown — 1.5 times the officer’s then current base salary divided by 18, with a total of 18 payments. Such payments commence within 30 days of the date of termination. These payments are reduced by any continuing compensation (as defined below) paid and payable to the officer. In addition, if the officer elects COBRA continuation coverage and pays the applicable premiums, Commercial Bancshares will reimburse the officer for the premiums paid for comparable medical benefits for a period equal to the shorter of: (1) the time that he or she is provided comparable coverage by a subsequent employer or thorough his spouse’s employer or (2) for Messrs. Beach, Oboy and Strine — 24 months, and for Mr. Beck and Ms. Brown — 18 months.

For purposes of the above employment agreements, a “change in control” occurs on the date of a transaction where (i) any person or group in a 12 month period becomes the beneficial owner, directly or indirectly, of securities of Commercial Bancshares representing more than 50% of the combined voting power of Commercial Bancshares’ then outstanding securities; (ii) during any period of 12 consecutive months, a majority of members of the board of directors is replaced by directors whose appointment or election is not endorsed by a majority of the members of the board before the date of the appointment or election; or (iii) a merger, consolidation or reorganization is consummated with any other corporation or entity pursuant to which the shareholders of Commercial Bancshares immediately prior to the merger, consolidation or reorganization do not immediately thereafter directly or indirectly own more than 50% of the combined voting power of the voting securities entitled to vote in the election of directors of the merged, consolidated or reorganized entity; or (iv) the purchase by any individual, entity or group of persons acting as a group not controlled by or affiliated with Commercial Bancshares of assets that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all assets of Commercial Bancshares immediately prior to such acquisition.

For purposes of the above employment agreements, “continuing compensation” means (i) an amount equal to  1/12 of the employee’s annual base salary in effect on the effective date of the notice of termination determined under the then current policies of Commercial Bancshares for executive compensation, plus (ii) one month of the employee’s annual employee benefits, except for reimbursement of certain business expenses.

Under each of the agreements, any payments or benefits payable to the officer will be cut back to the extent that such payments or benefits would result in the imposition of excise taxes under Sections 280G and 4999 of the Code.

Each of the above officers is subject to a 12-month post-termination non-compete and non-solicitation agreement following termination for any reason, except that Mr. Beck and Ms. Brown’s non-compete agreement is only for 9 months.

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For an estimate of the value of the payments and benefits described above that would be payable to each of the named executive officers, Messrs. Beach, Oboy and Strine, under their employment agreements in connection with a qualifying termination following the merger, see “Merger-Related Compensation for Commercial Bancshares’ Named Executive Officers” below.

Split Dollar Life Insurance Agreements.  Commercial Bancshares has entered into split dollar life insurance agreements with certain officers, including Mr. Oboy (the “Split-Dollar Agreement”). Under the terms of the Split Dollar Agreement with Mr. Oboy he has a fully vested interest in certain insurance policies that provide him a right to name beneficiaries to receive a death benefit equal to three times his annual base salary at the time of his death, or in the event of his death following termination of employment, at termination of employment. Commercial Bank, or any successor, is obligated under the terms of the Split Dollar Agreement to pay all premiums due on the respective policies of insurance. First Defiance has agreed in the Merger Agreement, as required by the Split Dollar Agreement, to expressly assume all obligations under the Split Dollar Agreement.

Stock Options.  In accordance with the Merger Agreement, at the effective time of the merger, each Commercial Bancshares stock option outstanding and unexercised immediately prior to the effective time of the merger that is exercisable or will become exercisable as a result of the merger will be terminated immediately prior to the effective time of the merger and entitled to receive cash equal to the excess, if any, of $51.00 over the exercise price of such Commercial Bancshares stock option. As of the date of this proxy statement/prospectus, directors and executive officers of Commercial Bancshares, as a group, hold outstanding options to purchase      shares of Commercial Bancshares common stock with a weighted average exercise price of $     per share. Assuming a closing date of            , 2017, a total of      unvested options held by executive officers of Commercial Bancshares will be accelerated and will vest upon the completion of the merger.

Restricted Stock.  All unvested restricted stock awarded to directors and executive officers of Commercial Bancshares will become vested immediately upon the closing of the merger. As of the date of this proxy statement/prospectus, directors and executive officers of Commercial Bancshares, as a group, hold      shares of unvested restricted stock. A total of approximately      shares will be accelerated and vest upon completion of the merger.

Board of Directors of First Defiance Following the Merger.  Pursuant to the Merger Agreement, First Defiance agreed to take all appropriate action so that, as of the effective time, one current director of Commercial Bancshares, who will be selected by First Defiance in consultation with Commercial Bancshares, will be appointed as a director of First Defiance. First Defiance has selected Mr. Beach to be appointed to the board following the completion of the merger.

Indemnification.  For six years following the effective time of the merger, First Defiance has agreed to indemnify and hold harmless to the fullest extent permitted by applicable law, the Commercial Bancshares’ articles of incorporation and its code of regulations, each present director and officer of Commercial Bancshares and Commercial Bank. First Defiance has also agreed that for a period of six years following the effective time of the merger, it will provide directors’ and officers’ liability insurance that serves to reimburse the present and former officers and directors of Commercial Bancshares or its subsidiaries with respect to claims against such officers and directors arising from facts or events occurring at or before the effective time of the merger, including the transactions contemplated by the Merger Agreement.

Merger-Related Compensation for Commercial Bancshares’ Named Executive Officers

As described in detail above, Commercial Bancshares has entered into an employment contract with each of Messrs. Beach, Oboy and Strine that provides for severance compensation and the reimbursement of certain health insurance costs in the event of their termination of employment in connection with a change in control. Additionally, under the terms of the Commercial Bancshares’ equity plans and award agreements all unvested options and restricted stock awards are immediately vested upon a change in control. Each of Messrs. Beach, Oboy and Strine’s employment agreements contain customary non-competition, non-solicitation and confidentiality covenants.

The table and footnotes below reflect the estimated amount of compensation that each of the named executive officers of Commercial Bancshares is entitled to receive upon a qualifying termination of such

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executive’s employment following a change in control under their employment agreements. In addition, the table presents the value of the acceleration of the vesting of equity awards under the terms of the award agreements and plan documents of Commercial Bancshares as a result of the merger. The amounts shown assume a termination of employment as of the date of this proxy statement/prospectus and assume the merger is consummated. Amounts do not include compensation and benefits available to all of Commercial Bancshares’ general employees on a non-discriminatory basis. The amounts reported below are estimates based on multiple assumptions that may or may not actually occur or be accurate on the relevant date, including assumptions described in this document, and do not reflect certain compensation actions that may occur before the completion of the merger. As a result of the foregoing assumptions, the actual amounts, if any, to be received by a named executive officer may materially differ from the amounts set forth below.

Golden Parachute Compensation

Name and Principal Position (a)		Cash(1) ($)				Equity(2) ($)				Perquisite/ Benefits(3) ($)				Total ($)
Robert E. Beach President and CEO (PEO)			759,266				313,981				32,568				1,105,815
Scott A. Oboy, EVP and Chief Financial Officer (PFO)			336,916				126,363				47,472				510,751
Steven M. Strine, EVP and Senior Lending Officer			281,216				126,363				32,568				440,147

Name		Stock Options ($)				Restricted Stock ($)				Total ($)
Robert E. Beach			110,595				203,386				313,981
Scott A. Oboy			49,128				77,235				126,363
Steven M. Strine			49,128				77,235				126,363

Regulatory Approvals Required for the Merger

Completion of the merger and the bank merger are subject to the receipt of all approvals (and such approvals having remained in full force and effect) required to complete the transactions contemplated by the Merger Agreement from the OCC and, possibly, the Federal Reserve, and the expiration of any statutory waiting periods. First Defiance and Commercial Bancshares have agreed to use their respective commercially

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reasonable efforts to obtain all required regulatory approvals. First Defiance, Commercial Bancshares and/or their respective subsidiaries have filed applications and notices to obtain these regulatory approvals and waivers.

Although we currently believe we should be able to obtain all required regulatory approvals in a timely manner, we cannot be certain when or if we will obtain them or, if obtained, whether they will contain terms, conditions or restrictions not currently contemplated that will be detrimental to First Defiance after the completion of the merger or will contain a burdensome condition.

Federal Reserve Board.  First Defiance is a unitary thrift holding company and its primary regulator is the Federal Reserve. On November 1, 2016, First Defiance requested confirmation from the Federal Reserve that no application is required to the Federal Reserve under Section 3 of the Bank Holding Company Act of 1956, as amended, for the transactions contemplated by the Merger Agreement. The Federal Reserve waiver was granted on November 14, 2016. So, First Defiance does not need to obtain prior approval of the transactions contemplated by the Merger Agreement from the Federal Reserve.

OCC.  The prior approval of the OCC is required under Section 18(c) of the Federal Deposit Insurance Act, which we refer to as the Bank Merger Act, to merge Commercial Bank into First Federal. First Defiance has filed this application with the OCC, but it remains outstanding as of the date of this proxy statement/prospectus. In evaluating an application filed under the Bank Merger Act, the OCC generally considers: (1) the competitive impact of the transaction, (2) financial and managerial resources of the banks parties to the bank merger, (3) the banks’ effectiveness in combating money laundering activities, and (4) the extent to which the bank merger would result in greater or more concentrated risks to the stability of the U.S. banking or financial system. As required by the Community Reinvestment Act (the “CRA”) and in reviewing the convenience and needs of the communities to be served, the Federal Reserve Board and the OCC will consider the records of performance of the relevant insured depository institutions under the CRA. In their most recent respective CRA performance evaluations, both First Federal and Commercial Bank received an overall “satisfactory” regulatory rating.

Public Notice and Comments.  Furthermore, the Bank Merger Act and applicable regulations require published notice of, and the opportunity for public comment on, these applications, and authorize the OCC to hold a public hearing or meeting if the OCC determines that a hearing or meeting would be appropriate. The OCC takes into account the views of third party commenters, particularly on the subject of the merging parties’ CRA performance and record of service to their respective communities, and any hearing, meeting or comments provided by third parties could prolong the period during which the applications are under review by the OCC.

Waiting Periods.  Transactions approved by the OCC generally may not be completed until 30 days after the approval of the OCC is received, during which time the Department of Justice, which we refer to as the DOJ, may challenge the transaction on antitrust grounds. With the approval of the applicable federal agency and the concurrence of the DOJ, the waiting period may be reduced to no less than 15 days. The commencement of an antitrust action would stay the effectiveness of such an approval unless a court specifically ordered otherwise. In reviewing the merger, the DOJ could analyze the merger’s effect on competition differently than the Federal Reserve Board or the OCC, and thus it is possible that the DOJ could reach a different conclusion than the Federal Reserve Board or the OCC regarding the merger’s effects on competition. A determination by the DOJ not to object to the merger may not prevent the filing of antitrust actions by private persons or state attorneys general.

Additional Regulatory Approvals and Notices.  Notifications and/or applications requesting approval may be submitted to various other federal and state regulatory authorities and self-regulatory organizations.

There can be no assurances that the regulatory approval discussed above will be received on a timely basis, or as to the ability of First Defiance and Commercial Bancshares to obtain the approval on satisfactory terms or the absence of litigation challenging such approval. There can likewise be no assurances that U.S. or state regulatory authorities will not attempt to challenge the merger on antitrust grounds or for other reasons, or, if such a challenge is made, as to the result of such challenge.

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Accounting Treatment

The merger will be treated as a purchase for accounting purposes. Accordingly, First Defiance will record the assets and liabilities of Commercial Bancshares on its books at estimated fair value. The excess, if any, of the fair value of the liabilities assumed and consideration paid over the fair value of the assets received will be assigned to specific and unidentified intangible assets. The resulting unidentified intangible asset will not be amortized, but will be tested for impairment as prescribed under ASC Topic 350, “Intangible — Goodwill and Other.”

Public Trading Markets

First Defiance common stock is listed on the NASDAQ Global Select Market under the symbol “FDEF.” Commercial Bancshares common stock trades principally on the OTCQX under the symbol “CMOH.” Upon completion of the merger, Commercial Bancshares common stock will no longer be listed on the OTCQX and thereafter will be deregistered under the Exchange Act. The First Defiance common stock issuable in the merger will be listed on NASDAQ.

Resale of First Defiance Common Stock

All shares of First Defiance common stock received by Commercial Bancshares shareholders in the merger will be freely tradable for purposes of the Securities Act of 1933, as amended, which is referred to as the Securities Act, and the Exchange Act, except for shares of First Defiance common stock received by any Commercial Bancshares shareholder who becomes an “affiliate” of First Defiance after completion of the merger. This document does not cover resales of shares of First Defiance common stock received by any person upon completion of the merger, and no person is authorized to make any use of this document in connection with any resale.

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THE MERGER AGREEMENT

Explanatory Note Regarding the Merger Agreement

The Merger Agreement and this summary of terms are included to provide you with information regarding the terms of the Merger Agreement. Factual disclosures about First Defiance and Commercial Bancshares contained in this proxy statement/prospectus or in the public reports of First Defiance and Commercial Bancshares filed with the SEC may supplement, update or modify the factual disclosures about First Defiance and Commercial Bancshares contained in the Merger Agreement. The Merger Agreement contains representations and warranties by First Defiance, on the one hand, and by Commercial Bancshares, on the other hand. The representations, warranties and covenants made in the Merger Agreement by First Defiance and Commercial Bancshares were qualified and subject to important limitations agreed to by First Defiance and Commercial Bancshares in connection with negotiating the terms of the Merger Agreement. In particular, in your review of the representations and warranties contained in the Merger Agreement and described in this summary, it is important to bear in mind that the representations and warranties were negotiated with the principal purpose of establishing circumstances in which a party to the Merger Agreement may have the right not to consummate the merger if the representations and warranties of the other party prove to be untrue due to a change in circumstance or otherwise, and allocating risk between the parties to the Merger Agreement, rather than establishing matters as facts. The representations and warranties also may be subject to a contractual standard of materiality different from that generally applicable to shareholders and reports and documents filed with the SEC and some were qualified by the matters contained in the confidential disclosure schedules that First Defiance and Commercial Bancshares each delivered in connection with the Merger Agreement and certain documents filed with the SEC. Moreover, information concerning the subject matter of the representations and warranties, which do not purport to be accurate as of the date of this proxy statement/prospectus, may have changed since the date of the Merger Agreement.

For the foregoing reasons, the representations and warranties or any descriptions of those provisions should not be read alone or relied upon as characterizations of the actual state of facts or condition of First Defiance or Commercial Bancshares or any of their respective subsidiaries or affiliates. Instead, such provisions or descriptions should be read only in conjunction with the other information provided elsewhere in this document or incorporated by reference into this proxy statement/prospectus. Please see “Incorporation of Certain Documents by Reference” on page 120. First Defiance and Commercial Bancshares will provide additional disclosures in their public reports to the extent they are aware of the existence of any material facts that are required to be disclosed under federal securities laws and that might otherwise contradict the terms and information contained in the Merger Agreement and will update such disclosure as required by federal securities laws.

Effects of the Merger

As a result of the merger, Commercial Bancshares will merge with and into First Defiance, with First Defiance as the surviving company. The articles of incorporation and the code of regulations of First Defiance as in effect immediately prior to the merger will be the articles of incorporation and the code of regulations of the surviving company.

As a result of the merger, there will no longer be any publicly held shares of Commercial Bancshares common stock. Those Commercial Bancshares shareholders who receive all of the merger consideration in the form of cash will not participate in First Defiance’s future earnings and potential growth as shareholders of First Defiance and will no longer bear the risk of any losses incurred in the operation of the surviving company’s business or of any decreases in the value of that business. Those Commercial Bancshares shareholders receiving shares of First Defiance common stock as merger consideration will only participate in the surviving company’s future earnings and potential growth through their ownership of First Defiance common stock. All of the other incidents of direct stock ownership in Commercial Bancshares, such as the right to vote on certain corporate decisions, to elect directors and to receive dividends and distributions from Commercial Bancshares, will be extinguished upon completion of the merger.

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Effective Time of the Merger

The merger will occur at a mutually agreeable time and place after the satisfaction or waiver of the last closing condition to be satisfied, including the receipt of all regulatory and shareholder approvals and after the expiration of all regulatory waiting periods. The merger will become effective at the time specified in the certificate of merger to be filed with the Ohio Secretary of State. As of the date of this document, the parties expect that the merger will be effective during the first quarter of 2017. However, there can be no assurance as to when or if the merger will occur.

If the merger is not completed by the close of business on June 30, 2017, the Merger Agreement may be terminated by either Commercial Bancshares or First Defiance, unless the failure of the closing to occur by such date is due to the failure of the party seeking to terminate the Merger Agreement to perform or observe the covenants and agreements of such party set forth in the Merger Agreement.

Representations and Warranties

The Merger Agreement contains customary representations and warranties of Commercial Bancshares and First Defiance relating to their respective businesses. The representations and warranties in the Merger Agreement do not survive the effective time of the merger.

Each of Commercial Bancshares and First Defiance made representations and warranties relating to a number of matters, including the following:

First Defiance also represented and warranted to Commercial Bancshares that it has, or will have available to it prior to the closing date, all funds necessary to satisfy its obligations under the Merger Agreement.

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In addition, certain representations and warranties relating to a number of matters were made only by Commercial Bancshares, including:

Certain representations and warranties of Commercial Bancshares and First Defiance are qualified as to knowledge, “materiality” or “material adverse effect.”

For purposes of the Merger Agreement, a “material adverse effect,” when used in reference to Commercial Bancshares, First Defiance, or the surviving company, means a material adverse effect on (i) the business, properties, assets, liabilities, results of operations or financial condition of such party and its subsidiaries taken as a whole (provided, that, with respect to this clause (i), material adverse effect does not include the impact of (A) changes, after the date of the Merger Agreement, in GAAP or applicable regulatory accounting requirements, (B) changes, after the date of the Merger Agreement, in laws, rules, or regulations of general applicability to companies in the industries in which such party and its subsidiaries operate, or interpretations thereof by courts or governmental entities, (C) changes, after the date of the Merger Agreement, in global, national, or regional political conditions (including the outbreak of war or acts of terrorism) or in economic or market (including equity, credit and debt markets, as well as changes in interest rates) conditions affecting the financial services industry generally and not specifically relating to such party or its subsidiaries, (D) failure, in and of itself, to meet earnings projections or internal financial forecasts, but not including the underlying causes thereof, (E) disclosure or consummation of the transactions contemplated by the Merger Agreement (including any effect on a party’s relationships with its customers or employees) or actions expressly required by the Merger Agreement in contemplation of the transactions contemplated by the Merger Agreement, (F) actions or omissions taken pursuant to the written consent of First Defiance, in the case of Commercial Bancshares, or Commercial Bancshares, in the case of First Defiance; except, with respect to subclauses (A), (B), or (C), to the extent that the effects of such change are materially disproportionately adverse to the business, properties, assets, liabilities, results of operations, or financial condition of such party and its subsidiaries, taken as a whole, as compared to other companies in the industry in which such party and its subsidiaries operate) or (ii) the ability of such party to timely consummate the transactions contemplated by the Merger Agreement.

Covenants and Agreements

Conduct of Businesses Prior to the Completion of the Merger.  Commercial Bancshares has agreed that, prior to the effective time of the merger, it will conduct its businesses, and cause its subsidiaries to conduct their respective businesses, in the ordinary course consistent with past practice in all material respects and use reasonable best efforts to maintain and preserve intact its business organization and advantageous business

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relationships. Commercial Bancshares and First Defiance have agreed to (and shall cause each of their respective subsidiaries to) take no action that would reasonably be likely to adversely affect or delay the ability to obtain necessary approvals of any regulatory agency or to perform the covenants and agreements in the Merger Agreement or to complete the merger and other transactions contemplated by the Merger Agreement on a timely basis.

In addition to the general covenants above, Commercial Bancshares has agreed that prior to the effective time of the merger, subject to specified exceptions, it will not, and will not permit its subsidiaries to, without the prior written consent of First Defiance:

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First Defiance has agreed to a more limited set of restrictions on its business prior to the completion of the merger. Specifically, First Defiance has agreed that prior to the effective time of the merger, except as expressly permitted by the Merger Agreement, it will not, without the prior written consent of Commercial Bancshares (which shall not be unreasonably withheld):

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Regulatory Matters.  First Defiance and Commercial Bancshares have agreed to promptly prepare and file with the SEC a registration statement on Form S-4, of which this document is a part. First Defiance and Commercial Bancshares have agreed to use reasonable best efforts to have the Form S-4 declared effective under the Securities Act as promptly as practicable after such filing, and to mail or deliver the proxy statement/prospectus to Commercial Bancshares’ shareholders. First Defiance has also agreed to use its reasonable best efforts to obtain all necessary state securities law or “Blue Sky” permits and approvals required to complete the merger, and Commercial Bancshares has agreed to furnish all information concerning Commercial Bancshares and the holders of Commercial Bancshares common stock as may be reasonably requested in connection with any such action.

First Defiance and Commercial Bancshares have agreed to cooperate with each other and use their respective reasonable best efforts to promptly prepare and file all necessary documentation, to effect all applications, notices, petitions and filings, to obtain as promptly as practicable all permits, consents, approvals and authorizations of all third parties and governmental entities that are necessary or advisable to complete the merger and to comply with the terms and conditions of all such permits, consents, approvals and authorizations.

Additionally, each of First Defiance and Commercial Bancshares have agreed to furnish to the other all information concerning itself, its subsidiaries, directors, officers and shareholders and such other matters as may be reasonably necessary or advisable in connection with this proxy statement/prospectus, the Form S-4 or any other statement, filing, notice or application made by or on behalf of First Defiance, Commercial Bancshares or any of their respective subsidiaries to any governmental entity in connection with the merger.

Shareholder Approval.  Commercial Bancshares’ board of directors has resolved to recommend to the Commercial Bancshares shareholders that they approve the Merger Agreement and the transactions contemplated thereby, except in the case of an adverse recommendation change (as defined below). Commercial Bancshares must engage a proxy solicitor reasonably acceptable to First Defiance to assist in the solicitation of proxies from shareholders relating to such required vote. However, if the Commercial Bancshares board of directors, after receiving the advice of its outside counsel and, with respect to financial matters, its financial advisors, determines in good faith that it would more likely than not result in a violation of its fiduciary duties under applicable law to continue to recommend the Merger Agreement, then it may submit the Merger Agreement to its shareholders without recommendation or may withhold or withdraw or modify in a manner adverse to First Defiance its recommendation to its shareholders (each of the foregoing defined in this proxy statement/prospectus as an “adverse recommendation change”) (although the resolutions approving the Merger Agreement may not be rescinded or amended) and may communicate the basis for its adverse recommendation change to its shareholders in this proxy statement/prospectus or a supplemental amendment thereto, provided that (1) it gives First Defiance at least three business days’ prior written notice of its intention to take such action and a reasonable description of the event or circumstances giving rise to its determination to take such action (including, in the event such action is taken by the Commercial Bancshares board of directors in response to an acquisition proposal, the latest material terms and conditions, and the identity of the third-party making any such acquisition proposal, or any amendment or modification thereof, or describe in reasonable detail such other event or circumstances); and (2) at the end of such notice period, the Commercial Bancshares board of directors takes into account any amendment or modification to the Merger Agreement proposed by First Defiance and after receiving the advice of its outside counsel and, with respect to financial matters, its financial advisors, determines in good faith that it would nevertheless more likely than not result in a violation of its fiduciary duties under applicable law to continue to recommend the Merger Agreement. Any material amendment to any acquisition proposal will require a new notice period.

Except in the case of an adverse recommendation change, Commercial Bancshares must adjourn or postpone its shareholder meeting up to two times if there are insufficient shares of Commercial Bancshares common stock represented (either in person or by proxy) to constitute a quorum necessary to conduct the business of such meeting, or if on the date of such meeting, Commercial Bancshares has not received proxies representing a sufficient number of shares necessary for adoption of the Merger Agreement.

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All of the directors of Commercial Bancshares entered into voting agreements with First Defiance under which they agreed to vote all of their shares of Commercial Bancshares common stock in favor of the approval of the Merger Agreement.

NASDAQ Listing.  First Defiance will cause the shares of First Defiance common stock to be issued in the merger to be authorized for listing on the NASDAQ, subject to official notice of issuance, prior to the effective time of the merger.

Employee Matters.  The Merger Agreement provides that First Defiance will provide the employees of Commercial Bancshares and its subsidiaries who become employees of First Defiance or First Federal at the effective time with benefits that are, in the aggregate, substantially the same as the benefits provided to similarly situated employees of First Defiance. Further, any employee of Commercial Bancshares or Commercial Bank who does not have an employment agreement, change in control agreement or severance agreement, who is not entitled to a severance benefit under another severance plan and who is not offered employment with First Defiance or First Federal with salary and bonus opportunities substantially the same as the those with Commercial Bancshares or Commercial Bank or whose employment is terminated within six months of the effective time will receive a cash payment in an amount equal to two weeks of the employee’s current base salary for each full year of service, with a minimum payment of four weeks and a maximum of 26 weeks of pay.

Indemnification and Directors’ and Officers’ Insurance.  From and after the effective time of the merger, First Defiance will indemnify and hold harmless, to the fullest extent permitted by applicable law, the Commercial Bancshares’ articles of incorporation and code of regulations, each present director and officer of Commercial Bancshares and Commercial Bank for a period of six years following the effective time.

First Defiance has also agreed, that for a period of six years following the effective time of the merger, it will maintain in effect the current policies of directors’ and officers’ liability insurance maintained by Commercial Bancshares or its subsidiaries with a substantially comparable insurer of at least the same coverage and amounts and containing terms and conditions that are no less advantageous to the insured, with respect to claims against present and former officers and directors of Commercial Bancshares and its subsidiaries arising from facts or events that occurred at or prior to the completion of the merger. However, First Defiance is not required to spend annually more than 125% of the current annual premium paid as of the date of the merger agreement by Commercial Bancshares for such insurance (the “premium cap”), and if the premiums for the insurance would at any time exceed that amount, then First Defiance will maintain policies of insurance which, in its good faith determination, provide the maximum coverage available at an annual premium equal to the premium cap. In lieu of the foregoing, Commercial Bancshares, with the consent of First Defiance, may (and, at First Defiance’s request, will use its reasonable best efforts to) obtain at or prior to the effective time of the merger a six-year “tail” policy under Commercial Bancshares’ existing directors’ and officers’ insurance policy and similar policy covering fiduciaries under the Commercial Bancshares benefit plans providing equivalent coverage to that described in the above if such a policy can be obtained for an amount that, in the aggregate, does not exceed the premium cap. If such a “tail policy” is purchased, First Defiance must maintain the policy in full force and effect and not cancel such policy.

Additional Director.  First Defiance has agreed to take all action to appoint one current director of Commercial Bancshares to the First Defiance board at the effective time of the merger.

Agreement Not to Solicit Other Offers.  Under the terms of the Merger Agreement, Commercial Bancshares will not, and will cause its subsidiaries and its and their officers, directors, agents, advisors, and representatives not to, directly or indirectly, (i) initiate, solicit, knowingly encourage, or knowingly facilitate inquiries or proposals with respect to any acquisition proposal, (ii) engage or participate in any negotiations with any person concerning any acquisition proposal, or (iii) provide any confidential or nonpublic information or data to, or have or participate in any discussions with, any person relating to, any acquisition proposal. For purposes of the Merger Agreement, an “acquisition proposal” means, other than the transactions contemplated by the Merger Agreement, any offer or proposal relating to, or any third-party indication of interest in, (i) any acquisition or purchase, direct or indirect, of 25% or more of the consolidated assets of Commercial Bancshares and its subsidiaries, or 25% or more of any class of equity or voting securities of Commercial Bancshares or its subsidiaries whose assets, individually or in the aggregate, constitute more

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than 25% of the consolidated assets of Commercial Bancshares, (ii) any tender offer or exchange offer that, if consummated, would result in such third-party beneficially owning more than 25% of any class of equity or voting securities of Commercial Bancshares or its subsidiaries whose assets, individually or in the aggregate, constitute more than 25% of the consolidated assets of Commercial Bancshares, or (iii) a merger, consolidation, share exchange or other business combination or reorganization involving Commercial Bancshares or its subsidiaries whose assets, individually or in the aggregate, constitute more than 25% of the consolidated assets of Commercial Bancshares, except in each case, for any sale of whole loans and securitizations in the ordinary course of business and any bona fide internal reorganization.

However, in the event that prior to the adoption of the Merger Agreement by Commercial Bancshares’ shareholders, Commercial Bancshares receives an unsolicited bona fide written acquisition proposal, it may, and may permit its subsidiaries and its and their officers, directors, agents, advisors, and representatives to, furnish or cause to be furnished nonpublic information or data and participate in negotiations or discussions to the extent that its board of directors concludes in good faith (after receiving the advice of its outside counsel, and with respect to financial matters, its financial advisor) that failure to take such actions would be more likely than not to result in a violation of its fiduciary duties under applicable law, provided that, prior to providing any such nonpublic information, Commercial Bancshares provides such information to First Defiance and enters into a confidentiality agreement with such third-party on terms no less favorable to it than the confidentiality agreement between First Defiance and Commercial Bancshares, and which confidentiality agreement does not provide such person with any exclusive right to negotiate with Commercial Bancshares.

Commercial Bancshares agreed to, and to cause its and its subsidiaries’ officers, directors, agents, advisors, and representatives to, immediately cease and cause to be terminated any activities, discussions, or negotiations conducted before the date of the Merger Agreement with any person other than First Defiance with respect to any acquisition proposal. Commercial Bancshares will advise First Defiance within one business day following receipt of any acquisition proposal or any inquiry which could reasonably be expected to lead to an acquisition proposal, including the material terms and conditions of and the identity of the person making such acquisition proposal, and will keep First Defiance reasonably informed of any related developments, discussions, and negotiations on a current basis, including any amendments to or revisions of the terms of such inquiry or acquisition proposal. In addition, Commercial Bancshares has agreed to use its reasonable best efforts, subject to applicable law and the fiduciary duties of the Commercial Bancshares board of directors to enforce any existing confidentiality or standstill agreements to which it or any of its subsidiaries is a party. Commercial Bancshares has also agreed that during the term of the Merger Agreement, it will not and will cause its subsidiaries and its and their officers, directors, agents, advisors, and representatives to not enter into any binding acquisition agreement, merger agreement or other definitive transaction agreement (other than a confidentiality agreement permitted pursuant to the previous paragraph) relating to any acquisition proposal.

Certain Additional Covenants.  The Merger Agreement also contains additional covenants, including, among others, covenants relating to coordination with respect to litigation relating to the merger and further actions required to consummate the merger, advice relating to the occurrence of a material change, access to information, exemption from takeover laws, public announcements with respect to the transactions contemplated by the merger agreement, exemption from liability under Section 16(b) of the Exchange Act, and the absence of control over the other party’s business.

Conditions to the Merger

First Defiance’s and Commercial Bancshares’ respective obligations to complete the merger are subject to the satisfaction or waiver of several conditions, including:

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Neither Commercial Bancshares nor First Defiance can provide assurance as to when or if all of the conditions to the merger can or will be satisfied or waived by the appropriate party. As of the date of this proxy statement/prospectus, neither Commercial Bancshares nor First Defiance has reason to believe that any of these conditions will not be satisfied.

Termination of the Merger Agreement

The Merger Agreement can be terminated at any time prior to completion of the merger in the following circumstances:

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Effect of Termination

If the Merger Agreement is validly terminated, it will become void without any liability on the part of any of the parties unless a party knowingly breaches the Merger Agreement. However, the provisions of the Merger Agreement relating to confidentiality obligations of the parties, the termination fee, publicity and certain other technical provisions will continue in effect notwithstanding termination of the Merger Agreement.

Termination Fee

Commercial Bancshares will pay First Defiance a termination fee if the merger agreement is terminated in either of the following circumstances:

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