First Federal Savings and Loan Association of Lakewood in Ohio has agreed to acquire Belpre Savings Bank in Belbre, Ohio.

The $1.6 billion-asset First Federal, Ohio's largest depositor-owned bank, said in a press release Thursday that its new holding company, First Mutual Holding, would buy the $51 million-asset Belpre Savings Bank. Belpre, a two-branch mutual thrift founded in 1902, is the only bank in Belpre, a town in southeastern Ohio with 6,500 residents.

First Federal, founded in 1935, has 18 branches.

First Federal did not disclose the financial terms of the merger, which is expected to close in the fourth quarter.

Belpre will retain its charter, name and management team, Thomas Fraser, First Mutual's president and chief executive, said in an interview.

"We're firm believers in the importance of independent mutual banks," Fraser said. "When we formed the holding company, our intent was to affiliate with other banks and provide them with new opportunities to better serve their customers while remaining independent."

Belpre lost $288,000 last year and another $9,000 in the first half of this year, according to regulatory filings.

Fraser said the banks should be able to spread the cost of back-office operations such as compliance and information technology over a larger base, helping move Belpre back toward profitability. At the same time, the seller's $38.8 million in low-cost core deposits and $8.1 million in capital will bolster First Mutual's financial ratios.

First Federal earned $6.4 million last year, and $3.8 million in the first half of 2015, according to regulatory filings.

"We think this will enhance the profitability of both companies," Fraser said. "Every organization needs scale to sustain itself."

First Federal Lakewood announced plans earlier this year to form a non-stock mutual holding company; First Mutual began operating earlier this month. Fraser plans to use the holding company structure to make more acquisitions similar to the Belpre deal. He said his vision is to create a network of affiliated mutual banks and push First Mutual's asset size "north of $2 billion" within a few years.

"That's clearly how we see things going forward," Fraser said. "It's critical we provide a structure in which [mutual banks] can thrive and survive in the future."

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