State Financial Services Corp., Hales Corners, Wis., has announced plans to buy Home Bancorp of Elgin, Ill., for $133.7 million in stock.

The $417 million-asset Wisconsin bank holding company agreed Tuesday to exchange 0.778 of a share of its stock for each outstanding Home share, based on State Financial's stock price of $25.07.

Michael J. Falbo, State's president and chief executive officer, said the deal for $369 million-asset Home would strengthen his company's presence in Illinois and complement its recent purchase of Richmond (Ill.) Bank.

Mr. Falbo said State plans to retain Home's thrift charter so it could better adapt to changes from industry consolidation and national legislative reform.

"Adding a thrift charter provides us with a great deal of flexibility," he said.

State plans to take a one-time, $12 million charge to cover merger expenses and to terminate Home's employee stock ownership plan. The Wisconsin company expects the deal to be mildly dilutive to earnings during the first year but accretive thereafter.

Wayne R. Bopp, a bank analyst at Robert W. Baird & Co. in Milwaukee, said the deal includes some hurdles for State.

"Size-wise, this will be a challenge for them," he said. "And the earnings dilution puts kind of a damper on things."

But Home's strength in mortgage lending should help diversify State's product line, which has traditionally focused on commercial lending, Mr. Bopp said.

The sale is expected to close in the fourth quarter.

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