State Financial Services Corporation Announces Agreement To Acquire 80

    Business Editors

    MILWAUKEE--(BUSINESS WIRE)--Jan. 5, 2005--State Financial Services Corporation ("State")(NASDAQ:SFSW), a bank holding company, today announced that it has entered into an Agreement to acquire 80% of m2 Lease Funds LLC ("M2 Lease Funds"). The transaction is structured as a cash purchase and is subject to regulatory approval.
    M2 Lease Funds, headquartered in Madison, Wisconsin, was founded in 1998 by its Chief Executive Officer, John R. Englebrecht. The company provides general equipment lease financing for small and middle market companies located throughout the United States. The company specializes in the leasing of commercial and industrial equipment, including printing equipment; marine-related equipment; telecommunications equipment; high tech and bio-tech equipment; and construction, manufacturing, and food processing equipment. The company currently has approximately $27 million of lease receivables outstanding. After the transaction, John R. Englebrecht will retain an ownership stake in M2 Lease Funds and will continue to serve as the company's Chief Executive Officer.
    Michael J. Falbo, State's Chairman and Chief Executive Officer commented, "We are excited about this transaction, which will bring to our company a well managed business that complements our existing services to commercial customers. The professionalism and expertise of the staff of M2 Lease Funds will serve the customers and shareholders of State very well."
    The transaction is expected to close by January 31, 2005 and is expected to be accretive to State's earnings in the first year.

    State Financial Services Corporation is a $1.5 billion financial services company operating through 29 locations in southeastern Wisconsin and northeastern Illinois. Through its banking network, State provides commercial and retail banking products, mortgage originations, and investment brokerage activities. State's shares are traded on the Nasdaq National Market System under the symbol "SFSW."

    The Company intends that certain matters discussed in this release are "forward-looking statements" intended to qualify for the safe harbor from liability established by the private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified as such because the statements will include "believes," "anticipates," "expects," or "estimates" or words of similar meaning. Similarly, statements that describe future plans, objectives, targets or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated as of the date of this release. Factors that could cause such a variance include, but are not limited to, unexpected issues related to the execution of a definitive agreement and the consummation of the acquisition of M2 Lease Funds, unanticipated issues, costs or delays in connection with the proposed acquisition and unexpected variances in the financial performance of M2 Lease Funds post acquisition. Shareholders, potential investors, and other readers are urged to consider these factors in evaluating the forward-looking statements. The forward-looking statements included in this release are only made as of the date of this release, and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

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CONTACT: State Financial Services Corporation Daniel L Westrope, 414-223-8400 Fax: 414-226-3278

KEYWORD: WISCONSIN INDUSTRY KEYWORD: BANKING MERGERS/ACQ SOURCE: State Financial Services Corporation

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