WARREN — Northwest Bancshares Inc. and Donegal Financial Services Corp. announced Tuesday the signing of a definitive agreement pursuant to which Northwest will acquire DFSC in a cash and stock transaction for total consideration valued at $85 million.

In addition to the $85 million deal consideration, given DFSC’s substantial capital position, DFSC will pay a dividend of approximately $30 million to its two shareholders, Donegal Group Inc. and Donegal Mutual Insurance Company, immediately prior to the closing of the merger. DFSC is based in Marietta, Lancaster County, and is the parent company of Union Community Bank.

As of March 31, DFSC had total assets of $577 million, net loans of $430 million, deposits of $490 million, tangible equity of $79 million, and operates 14 branches in Lancaster County, which is one of Pennsylvania’s fastest-growing counties.

Northwest’s presence in Lancaster County will increase from six to 16 offices, while deposits will increase to $640 million from $150 million, elevating Northwest to the sixth highest market share in the county. It is also expected that this acquisition, combined with Northwest’s anticipated organic growth in 2018, will result in the company crossing the $10 billion asset threshold in 2019. When the transaction is consummated, the combination of the two banking companies will create an institution that provides banking services through 182 branch locations and 297 ATMs in three states.                   

William J. Wagner, chairman and CEO of Northwest, stated, “We welcome the employees and customers of Union Community Bank to the Northwest family, where we believe they will embrace our community bank culture, superior product and service offering, and tradition of exceptional customer service. We are extremely excited to be acquiring a community bank of exceptional quality in one of the more rapidly-growing counties in our geographic footprint. In addition to providing meaningful accretion in earnings per share and return on equity, this merger will provide bottom-line earnings that exceed the loss of transaction income we will incur as mandated by the Dodd-Frank Act when we cross the $10 billion asset threshold. We believe we would have exceeded this asset threshold in 2019 due to normal internal growth.”