Harris Bankcorp Inc. and its Canadian parent company, BMO Financial Group, today announced they have signed definitive agreements to acquire Cedarburg-based Ozaukee Bank and New Berlin-based Merchants & Manufacturers Bancorporation.

Combined, the two banks have approximately 40 full-service locations, including more than 20 in the Milwaukee area, and 13 limited service locations, as well as $1.7 billion in deposits and more than  $2 billion in assets.

"Today's announcements will move us further toward our goal of becoming the leading personal and commercial bank in the U.S. Midwest," said Bill Downe, chief executive officer of BMO Financial Group, the parent company of the Bank of Montreal. "These acquisitions will allow us to enhance the experience the customers of these banks already have by adding the full breadth of personal, business and wealth management services that Harris has delivered in the Chicago market for 125 years."

"Milwaukee is an attractive market for Harris for two important reasons. First, its size and proximity to Chicago - less than 100 miles separate the two cities - make it a natural fit for us. Second, Milwaukee is a relatively affluent market with median household income and projected household income growth higher than the national average," said Ellen Costello, chief executive officer of Harris Bankcorp, Inc. "When you add to that the commitment to customer service and community involvement Harris shares with these banks, we believe we have significant potential to grow our market share even further."

Harris and BMO announced a definitive agreement to purchase Ozaukee Bank in a stock transaction valued at $190 million. Under the agreement, Ozaukee Bank shareholders will receive approximately 3 million shares of BMO Financial Group stock.

Ozaukee Bank is a community bank with six full-service and two limited-service locations in the northern part of the greater Milwaukee area. Ozaukee Bank has $694 million in assets and $561 million in deposits.

"Ozaukee Bank is known for the solid, long lasting relationships we have with our customers and communities. An affiliation with Harris will be an optimal match because it, too, is known for the quality of the relationships it builds," said M.D. "Mal" Hepburn, Ozaukee Bank chairman and founder. "We really like Harris' commitment to people, customers, communities and employees."

Additionally, Harris and BMO announced a definitive agreement to purchase Merchants and Manufacturers for $137.2 million in cash, or $37.30 per share of Merchants and Manufacturers common stock.

Merchants and Manufacturers is engaged in the community banking business through their Community BancGroup, which includes their several bank subsidiaries: Lincoln State Bank; Grafton State Bank; Franklin State Bank; Community Bank Financial; Fortress Bank of Westby; The Reedsburg Bank; Wisconsin State Bank; Fortress Bank of Cresco (in Iowa); and Fortress Bank N.A. (in Minnesota).

Merchants and Manufacturer's banks have a combined $1.5 billion in assets and $1.2 billion in deposits, holding more than half of their deposits in the Milwaukee area.

"Two critical issues were important to our board in making this decision. First, provide a premium to our shareholders to the current market price, in turn providing them with liquidity, and second, enhance the competitive position of the banks," said Michael Murry, chairman and chief executive officer, Merchants and Manufacturers. "With Harris, we accomplish both."

The combined transactions represent a price-to-book multiple of 2.2 times book, consistent with purchase multiples in the U.S. Midwest.

Both acquisitions are expected to close later this year, pending approval by U.S. and Canadian regulators, as well as shareholders of the respective companies.

The Wisconsin acquisitions move Harris closer to its goal of 350 to 400 locations across the Midwest. With $42 billion in assets and $29 billion in deposits, Harris is the second-largest bank based on branches in the Chicago market. Additionally, Harris has affiliated wealth management offices in Arizona, California, Florida, Georgia, Virginia and Washington.