Great Financial Bank FSB to acquire Lexington Federal Savings Bank.

LOUISVILLE, Ky.--(BUSINESS WIRE)--Nov. 24, 1995--Great Financial Bank FSB and LFS Bancorp Inc. today announced the execution of a definitive agreement for Great Financial Bank to acquire all the outstanding shares of LFS Bancorp, the holding company for Lexington Federal Savings Bank.

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Under terms of the agreement, Great Financial Bank will pay $19.50 in cash for all outstanding shares of LFS. Including payments for outstanding stock options, the total price will be $75.5 million. LFS had consolidated total capital as of Sept. 30, 1995, of $65.5 million. As a result of its extremely strong capital position, Lexington Federal Savings substantially exceeds all regulatory capital requirements.

Great Financial Bank Chairman and Chief Executive Officer Paul M. Baker said the acquisition of Lexington Federal provides the expanded presence Great Financial has been seeking in the Lexington market. "We believe that all four of Lexington Federal's branches are strong, viable locations that will be great additions to the Great Financial network."

He noted that the merger significantly adds to the company's presence in central Kentucky, a region that has been a key target for the company's growth strategy. With the addition of Lexington Federal, Baker reported that Great Financial's deposit base will climb to nearly $400 million in central Kentucky.

Great Financial currently has branches in Lexington, Danville, Liberty, Springfield and Lebanon; First Federal Savings Bank of Richmond, which Great Financial acquired earlier this year has branches in Richmond, Berea and Irvine. With Great Financial's strong presence in Louisville and western Kentucky markets, Baker said that this acquisition will give Great Financial a truly statewide presence.

Lexington Federal Savings Bank Chairman, President and CEO William L. Woodward said that his organization had been seeking strategic alternatives to maximize value to LFS shareholders, and through this agreement, his organization has accomplished that goal.

"We believe this merger represents an excellent opportunity for our bank's customers and shareholders," said Woodward. "The merger with Great Financial is the culmination of the process initiated by our board of directors to seek the best value for the shareholders of LFS Bancorp. Through our financial advisor, we contacted several financial institution holding companies to solicit their interest in a merger with LFS Bancorp and Lexington Federal. Great Financial's proposal was the best," he stated.

"We have had an excellent, long-term relationship with the management at Great Financial," Woodward continued, "and are excited about the direction they have taken their organization since their conversion. Great Financial's statewide presence and large capital resources will offer a whole host of competitive products and services that will help meet all of our customer's financial needs," he said.

Baker said the Lexington Federal acquisition is consistent with his company's strategy to focus on growth opportunities in its primary market areas of Kentucky and southern Indiana. "With the acquisition of First Federal and Lexington Federal and the opening of our first southern Indiana branch in New Albany in October, we feel we have made significant progress in our goal to grow our retail bank business, improve profitability and thereby increase value to our shareholders.

"We will continue to look for growth opportunities that enhance our presence in existing markets or provide profitable entry into new markets," he concluded.

Lexington Federal Savings Bank, founded in 1924, was a federally chartered savings and loan association and savings bank until it converted to a stock savings bank in March 1994.

Great Financial Bank FSB, is the largest independent bank headquartered in Kentucky with $2.2 billion in assets. It operates a statewide retail franchise through offices located in Louisville, Lexington, Owensboro and surrounding communities. Its capital substantially exceeds all federal regulatory requirements.

CONTACT: Great Financial Bank FSB, Louisville

Robert Freeze, 502/562-6336

or

LFS Bancorp Inc., Lexington

William L. Woodward, 606/278-3461