Associated Banc-Corp to acquire First Federal Capital Corp

Associated Banc-Corp of Green Bay, Wis., is acquiring First Federal Capital Corp. of La Crosse, Wis. The $613 million stock and cash deal was announced April 28th and is expected to be complete this fall, subject to approval by regulators and First Federal shareholders.

First Federal is a $3.7 billion savings and loan association with 91 offices serving more than 40 communities in Wisconsin, northern Illinois and southern Minnesota. First Federal gained entry to the Minneapolis/St. Paul market last fall when it purchased the 86-year old Liberty State Bank.

“First Federal’s community banking values and its strength in attractive markets provide a highly complementary addition to the Associated family. Together, we will build on those values and that strength to grow and serve our customers,” said Paul Beideman, who became president and CEO of the $15.5 billion Associated in April 2003.

First Federal shareholders will receive 0.635 shares of Associated Banc-Corp stock for each share of First Federal stock they hold, an equivalent amount of cash, or a combination thereof. Based on Associated’s closing price of $42.19 on April 27, the exchange ratio represents a price per First Federal share of $26.79, implying a 27 percent premium to the market price.

Associated will allocate 10 percent cash and 90 percent stock. First Federal will merge into Associated, and will receive two seats on Associated’s board of directors.

“We welcome the considerable skills First Federal brings to our organization, and the resources they bring to our customers,” Beideman said. “We will extend First Federal’s 70-year history as a leading consumer banking institution while bringing First Federal customers a much wider range of services and greater convenience. At the same time, Associated customers will enjoy the benefits of being part of a bigger and more geographically diverse bank,” he said.

“We remain steadfastly committed to the community banking model of servicing customer relationships and local decision-making philosophy that have long been a hallmark of Associated’s success,” Beideman said.

“One of the reasons First Federal was so attractive to us was their approach to customer service, which is so similar to Associated’s,” Beideman said.

Jack Rusch, president and CEO of First Federal, said, “We are very excited about the opportunities ahead of us as First Federal and Associated come together. The expanded range of products and services will be obvious to our customers. At the same time, we are pleased to become part of a highly respected Wisconsin company that shares our community banking philosophy and values.”

Beideman and Rusch noted that while the geographic footprints of the two organizations generally overlap, the distribution of Associated and First Federal office locations are complementary, limiting the need for branch closures. Beideman told the La Crosse Tribune that perhaps 10 to 15 offices might be closed.

Over time, certain back office support facilities currently operated by First Federal will become unnecessary, Associated said in a press release. Last November, First Federal announced it planned to double the size of its operations center in La Crosse, increasing employment to 160 people from 80. Those plans now appear in jeopardy.

First Federal announced plans in April 2003 to build a new corporate headquarters in Onalaska, Wis. Those plans also seem likely to be affected.

The companies expect integration planning to begin immediately and the conversion of all deposit and loan accounts to take place within six months of the transaction’s closing.

First Federal serves nearly 250,000 households. Its 91 office locations include 49 supermarket branches.

Associated Banc-Corp has 218 banking offices serving more than 150 communities in Wisconsin, Illinois, and Minnesota.

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