Union Federal leaving Ohio to focus its energy back home again in Indiana.

Union Federal Savings Bank is bidding farewell to Ohio.

The $1.6 billion-asset Indianapolis company said it would sell its four northeast Ohio offices to First Western Bank, Sharon, Pa., and its six southwest Ohio locations to Citizens Federal Bank, Dayton, Ohio, so it can concentrate on its Indiana operations.

R. Trent McWilliams, vice president of business development at Union Federal, declined to disclose the terms of the deals, but said the company expects them to close by the end of the first quarter next year.

The northeast offices have $84 million of deposits and the southwest offices $115 million.

"What Union is doing is smart," said John Reed, president of the Capital Markets Group with David A. Noyes & Co. in Indianapolis, which advised Union Federal on the sales.

"They're a privately held company. They don't need to go through the motions of expansion to satisfy analysts or shareholders," Mr. Reed said.

"They can take more of a Japanese sort of approach, `What makes sense in the long run?'"

Union Federal decided it either must expand its Ohio operations or sell them, Mr. McWilliams said.

Considering Ohio expansion too expensive, the company decided to take advantage of the high premiums and sell its own locations there.

Union Federal, which reported return on assets of 0.72% at June 30 and return on equity of 9.82%, can redeploy the profits in its Indiana market.

The thrift's network of 40 branches is located largely in storefronts and grocery stores in the eight-county area surrounding Indianapolis.

The company also will consider expanding to other parts of Indiana, Mr. McWilliams said.

The sale of the Ohio branches also will eliminate the problems and costs associated with managing and marketing in diverse markets, he said.

"That's been a major problem since we acquired the branches in 1987" as part of Union Federal's growth strategy, Mr. McWilliams said.

In addition to cost and location concerns, Union Federal also found Ohio institutions to be very aggressive in pricing, Mr. McWilliams said.

"It was very difficult to compete against those rates," he said.

The four northeastern Ohio banking offices that Union Federal is selling to First Western are in Painesville, Madison, Mentor, and Conneaut.

The six southwestern Ohio offices to be sold to Citizens Federal include four in Hamilton, one in Middletown, and one in Fairfield.

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