Associated Banc-Corp to acquire State Financial

Northwestern Financial Review, Apr 15-Apr 30, 2005

Associated Banc-Corp. of Green Bay, Wis., announced March 21 that it will acquire State Financial Services Corp. of Milwaukee. The all-stock transaction is valued at $278 million, based on Associated's share price.

The agreement calls for State Financial shareholders to receive 1.20 shares of Associated stock for each share of State Financial stock they hold. Based on Associated's closing price of $31.85 on March 18, the exchange ratio represents a value of $38.22 per share of State Financial, implying a 27 percent premium to the market price. The transaction is expected to be accretive to Associated's GAAP and cash earnings per share in 2006.

The transaction is subject to the approval of State Financial shareholders and regulators. The companies anticipate closing the transaction in the fall.

State Financial Bank is a $1.5 billion financial services company, with 29 branches in southeastern Wisconsin and northeastern Illinois. State Financial Bank provides commercial and retail banking products, mortgage loan originations and investment brokerage activities.

"State Financial and Associated are strong, customer-focused banks. Our combination enhances customer convenience by expanding our branch distribution network," said Paul S.

Beideman, president and CEO of Associated.

"The skills of State Financial's bankers match perfectly with Associated's community-based approach to banking. We look forward to the benefits that will come from putting Associated's expanded products and services in the hands of State Financial's talented people," Beideman said.

"We are very pleased to join forces with Associated," commented Michael J. Falbo, CEO of State Financial. "Associated's customer-focused philosophy and their broad range of services and expertise will bring significant benefits to our customers. Moreover, in selecting a partner to sustain our growth going forward, we were delighted to connect with a Wisconsin organization that shares our commitment to customer service and community involvement."

The integration of the two companies will result in some efficiencies which will affect administrative and support functions. Employees displaced by the consolidation will receive preferential hiring status for open positions elsewhere in the organization, or, where necessary, severance payments and outplacement services, Associated said.

State Financial's board of directors has postponed the 2005 annual meeting of shareholders previously scheduled for April 27, 2005.

Associated Banc-Corp, is a multibank holding company with assets of $21 billion. Following the State Financial acquisition, the company will have grown more than six-fold during the last 10 years. Associated has more than 300 banking offices serving more than 170 communities in Wisconsin, Illinois and Minnesota.