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ST. PAUL BANCORP AND ELM FINANCIAL SERVICES REACH DEFINITIVE MERGER AGREEMENT

 ST. PAUL BANCORP AND ELM FINANCIAL SERVICES REACH
 DEFINITIVE MERGER AGREEMENT
 CHICAGO, Aug. 26 /PRNewswire/ -- St. Paul Bancorp, Inc. (NASDAQ: SPBC) and Elm Financial Services, Inc. (NASDAQ: ELMF) today jointly announced the execution of a definitive agreement for the merger of Elm Financial and St. Paul Bancorp, and the merger of their subsidiaries, Elmhurst Federal Savings Bank and St. Paul Federal Bank For Savings.
 Under the terms of the transaction, which is expected to be completed by early 1993, Elm Financial shareholders will receive $12.35 in cash and $10.10 in St. Paul Bancorp common stock for each Elm Financial common share, for an aggregate purchase price of $49.0 million. The number of St. Paul Bancorp shares to be issued is subject to adjustment for fluctuations in St. Paul Bancorp's stock price, within a range of $14.77 to $24.78 per share, at the time of consummation of the transaction.
 As this is an "in-market" merger, St. Paul Bancorp expects to achieve significant cost savings in the consolidation of Elmhurst's operations. At current stock prices, the transaction is expected to enhance St. Paul Bancorp's earnings per share in the first year following closing of the transaction.
 Commenting on the merger, St. Paul Bancorp Chairman and Chief Executive Officer Joseph C. Scully said, "With this acquisition, St. Paul Bancorp, through its subsidiary St. Paul Federal Bank, will have an even greater opportunity to serve the residents of eastern DuPage County with a strong, thriving community bank. We believe the operating synergies will contribute positively to earnings and establish a greater presence for our franchise in the fastest growing county in Illinois."
 Elm Financial Chairman Charles H. Walsh stated, "This merger will enable our branches to continue to provide superior service and quality products, backed by the broad product lines, resources and commitment of a $3.5 billion, 103-year old Illinois-based institution. We are excited about the opportunity to be part of a strong locally-based thrift that is equally committed to our traditional constituencies. Given the compatibility of our two institutions, this merger represents a compelling strategic fit."
 The merger is subject to approval by regulatory authorities, as well as Elm Financial stockholders, prior to completion. Approval by St. Paul Bancorp, Inc. stockholders is not required.
 In addition to entering into the definitive agreement, Elm Financial Services granted to St. Paul Bancorp an option to purchase 19.9 percent (on a pro forma basis) of the outstanding shares of Elm Financial Services common stock, at a price of $20.74 per share. The option is only exercisable under certain circumstances, primarily involving new third party agreements, proposals or transactions with regard to the acquisition of Elm Financial Services by persons other than St. Paul Bancorp. The option agreement also provides for certain minimum payments to St. Paul under certain circumstances.
 With assets of $3.5 billion and 38 retail banking offices throughout metropolitan Chicago, St. Paul Bancorp, Inc. is the holding company for St. Paul Federal Bank For Savings, the largest independent Illinois- based thrift.
 Elm Financial Services, Inc. has assets of $387 million. Its primary subsidiary, Elmhurst Federal Savings Bank, is based in Elmhurst, Illinois and operates a total of eight branch facilities.
 -0- 8/26/92
 /CONTACT: Robert N. Parke, senior vice president, 312-804-2360 or Susan H. Fisher, vice president, 312-804-2284, both of St. Paul Bancorp, or Charles H. Walsh, chairman of the board, 708-833-3500, or David G. Plummer, president and CEO, 708-833-8000, both of Elm Financial Services/
 (SPBC ELMF) CO: St. Paul Bancorp, Elm Financial Services ST: Illinois IN: FIN SU: TNM


LD-TM -- NY003 -- 3343 08/26/92 09:22 EDT
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Date:Aug 26, 1992
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