Orlando, Midwest Banks Join Forces
United Heritage hopes to open more area branches after merger.

By Richard Burnett, Sentinel Staff Writer
December 05, 2006


Wisconsin-based Marshall & Ilsley Corp. agreed Monday to acquire fast-growing United Heritage Bank of Orlando in a stock deal worth almost $220 million, the banks said.

Marshall & Ilsley, a major Midwest player known as M&I Bank, said the deal was sealed after less than two months of talks but culminated a longtime partnership between the two companies. United Heritage's main banking software comes from Metavante Corp., an M&I subsidiary that now owns the former Kirchman Corp. in Altamonte Springs.

M&I officials promised to keep United's management team, community-bank style and rapid growth. The local bank now ranks 14th in size in Central Florida though it is only 5 years old.

"There will be no changes to the leadership team -- that would defeat the whole purpose," said Mark F. Furlong, M&I's president. "They've done very well for years without us, so we believe they'll do even better with us."

The $217 million sale price is 3.1 times United Heritage's book value -- an excellent premium for a community bank. M&I is offering United shareholders the equivalent of $40.25 for each share of common stock. The deal is expected to close sometime next spring, pending regulatory and shareholder approvals.

It would be the first purchase of a Florida bank by Milwaukee-based M&I, the nation's 29th-largest bank, with deposits of $31.5 billion. The publicly held company has a big presence in Arizona, Minnesota and Missouri in addition to Wisconsin, where it is that state's largest bank.

M&I entered Florida this year when it bought Kansas-based Gold Bank, which had branches in the Tampa Bay area, Sarasota and Naples. That deal made M&I the state's 41st-largest bank. With United Heritage, M&I would have $1.5 billion in deposits, making it Florida's 29th-largest bank.

United officials expect the merger with M&I to fuel branch expansion throughout Central Florida while boosting the number of products and services for commercial and retail customers.

Business customers, for example, can look for more sophisticated cash-management services, while retail customers will find new credit- and debit-card products, mortgage options and wealth-management services, said David Powers, United's president.

"This merger will help take us to the next level as a bank," he said. "And we look forward to playing the lead role in the branding of M&I Bank throughout this region."

Powers and former Orlando Magic owner Jimmy Hewitt founded United in 2001 after several entrepreneurial ventures during the previous decade. Early last year, United attracted veteran local banker Randy O. Burden to its board along with an investment group of well-known local bankers and a team of former SouthTrust Bank lenders.

With a muscled-up banking staff and an ambitious branch-expansion plan, United's deposits have almost doubled since mid-2004. It now has 11 offices and had more than $630 million in deposits as of mid-2006, according to the latest available regulatory reports.

"We've opened an average of two branches a year, which is aggressive for a community bank," Powers said. "But we believe this merger will give us a chance to grow even more. It's a fact that we've already been looking at Lake and Volusia counties. Now we just need to come up with a timetable."

United's strong performance in the market fueled M&I's interest, according to Furlong, the M&I president. M&I has made a dozen acquisitions since 1994, half of those in the past five years, but it is very selective when choosing its targets, he said.

"We're not a serial acquirer," Furlong said. "It's all a matter of finding the right partners. And we feel very fortunate to have found a great fit here with United Heritage."

M&I's arrival in Central Florida would provide a formidable new competitor for established players such as SunTrust, Wachovia and Bank of America, said Kenneth H. Thomas, a Miami-based banking consultant, author and publisher of BranchLocation.com.

"They fly below the radar screen of many stock analysts, but M&I has quietly put together a network of financial and nonfinancial holdings that is among the biggest in the country," Thomas said. "They're like the tortoise in the tortoise-and-hare tale. They've grown slowly, but very surely."


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