Citfed Bancorp officials hope the acquisition of PSB Holdings Corp. will be the key to one of Ohio's great demographic bounties.

In a deal worth about $44.6 million, the Dayton, Ohio, company last week announced a definitive agreement to acquire $178 million-asset PSB, which owns Peoples Savings Bank, Xenia, in neighboring Greene County.

"The thing that's really attractive to us - other than the fact that it's in a contiguous county to our market - is Greene is probably one of the fastest-growing counties in the state," said Jerry L. Kirby, chairman and chief executive officer of $2 billion-asset Citfed.

As the area's expansion has moved east and southeast, Greene County's population and new construction have climbed, he said.

Moreover, its median household income is about 22% higher than the rest of the state, he added.

Citfed's decision to expand its Citizens Federal Bank close to home comes after it sold marginally profitable branches in Cincinnati and Columbus in the early 1990s, according to Wayne R. Bopp, a thrift analyst at Stifel, Nicolaus & Co., St. Louis.

"I really like the contiguous market aspect of it," Mr. Bopp said of the PSB acquisition. "The demographics look very strong."

The thrift company raised growth capital in a 1992 mutual-to-stock conversion. PSB is its first acquisition since then, though Citfed has expanded its mortgage company and purchased other institutions' deposits.

Negotiated for about eight months, the deal is subject to regulatory and shareholder approvals and is expected to close later this year.

Citfed plans to offer PSB customers new products, including trust services and a free checking program that already has netted the thrift almost 35,000 new accounts, Mr. Kirby said.

"That product really changes the profile of a thrift's customer base," he said.

He paints a typical thrift customer as a 55-year-old mainly interested in CD renewal or maturity.

However, Citfed's typical customer is a 36-year-old who also may need products like consumer, installment, and home equity loans, he said.

Mr. Kirby said Citfed will continue to consider expansion in its existing markets and the two contiguous counties it is not in, Miami and Clark.

After PSB is acquired, L.B. Luttrell, president and chief executive officer for 30 years and employee for 48 years, intends to retire.

Citfed estimated that the transaction will be about 3.9% dilutive for its fiscal 1996 earnings and should be accretive thereafter.

In the agreement, Citfed will exchange 0.6734 share of its common stock for each share of PSB's common stock in a tax-free exchange. Stock options will be exchanged for Citfed stock options at the same ratio as the outstanding common stock.

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