Money Weekly for Tuesday, February 5, 2008

Southeastern Wisconsin financial service industry news.

Tuesday, February 5, 2008

Venture capital grew in '07, has promise this year

While Wisconsin attracted a fraction of the $29.4 billion in total U.S. venture capital invested in 2007, the state's share is growing.

Last year, venture capitalists invested $87.6 million in Wisconsin companies, according to a MoneyTree report issued by PriceWaterhouseCoopers and the National Venture Capital Association. In 2006, VCs invested $72 million, the report states.

Potential economic slowdowns have forecasters predicting cloudy skies for many industries. However, early-stage investment might be OK this year, said Joe Kremer, director of the Wisconsin Angel Network, a division of the Wisconsin Technology Council, based in Madison.

"I'm hearing that deals are still happening," Kremer said. "Entrepreneurs are still starting companies. I have not heard any investor saying they're pulling back because of what is happening. It's all about perception. At this point, I'm not hearing (investors say) that the downturn will affect them."

For some sectors that attract high interest from venture capitalists, an economic downturn might not have much affect, Kremer said.

"When you're investing in a startup that's into a new drug discovery, it doesn’t matter what the economy is doing," he said.

The state's VC climate also will be bolstered by Gov. Jim Doyle's recent proposals to expand tax credit to qualified startup businesses and the Wisconsin Angel Network's efforts to bring investors to Wisconsin from large cities in the Midwest, Kremer said.

"The nice thing with the Angel Network is that we're trying to tie in more investors from Chicago and Minneapolis to try to expand the early stage capital that's available," he said. "I think that's starting to play out. Our connection to Chicago is a great solution to connecting investors in the entire IQ corridor. We have new entrepreneurs that are showing up and making pitches. And the investors are starting to get to know each other, and they're starting to share deals."

SBT to present "The Next Stage" M&A Forum

Small Business Times will conduct an M&A Forum, titled "The Next Stage," on March 27, from 7:30 to 11 a.m. at The Pfister Hotel, 424 E. Wisconsin Ave.

Thousands of Wisconsin businesses are owned and managed by baby boomers who will soon be reaching the age of retirement. What then? What will be the "Next Stage" for their business?

The event will examine different exit strategies, including recapitalizations, employee stock ownership programs, management buyouts, sale to private equity firms, mergers with strategic partners and more.

The keynote speaker will be Mark Herndon, president of Dallas-based Parkwood Advisors LLC, a diversified professional services firm focused on M&A, investment banking and private equity investing. Herndon also is the co-author of "The Complete Guide to Mergers and Acquisitions: Process Tools to support M&A Integration at Every Level."

The event will include breakout sessions from 9:15 to 10 a.m. and from 10:15 to 11 a.m., presented by Emory & Co., The PrivateBank and Reinhart Boerner Van Deuren S.C., sponsors of the event.

The cost to attend is $95 per person or $760 for tables of eight and includes breakfast.

For information or to register, call Sarah Wilson at (414) 336-7129 or email Sarah.Wilson@biztimes.com.

Wauwatosa Savings Bank to change name

After more than 85 years in operation, Wauwatosa Savings Bank plans to change its name and is asking its customers to vote on the new name.

"A name change is necessary to better reflect what we are now, and what we plan to be in the future," said Doug Gordon, president and chief executive officer of Wauwatosa Savings.

Two years ago, Wauwatosa Savings was a traditional savings and loan institution, serving primarily as a mortgage lender and CD acquirer.

Within the last two years, the bank has added consumer loan products, expanded its mortgage offerings, entered the realm of business banking and expanded its deposit products with the iMoney Market and suite of checking accounts.

With the changes and additions, Wauwatosa Savings more closely resembles a full-service bank rather than a savings bank, Gordon said.

The bank added three new branches last year.

"As we continue to expand geographically to other communities, 'Wauwatosa' does not clearly define our intentions to be a community bank in all the communities we serve," Gordon said. "With the potential for us to expand further in the state and across state borders, the 'Wauwatosa' name does not define us, nor does it help us gain acceptance in a new community."

Between today and Feb. 29, Wauwatosa Savings invites its customers and communities to visit any of the banks eight locations to complete an opinion ballot for Wauwatosa Savings' new name. Participants also will be eligible for prizes.

The bank is asking its customers to vote on three new name options: Granite Bank, Security First Bank and WaterStone Bank. The bank also is accepting write-in ideas.

Established in 1921, Wauwatosa Savings Bank has offices Wauwatosa, Franklin/Hales Corners, Germantown/Menomonee Falls, Oak Creek, Oconomowoc, Pewaukee, Waukesha and West Allis.

Banking News

Icy real estate investments take chunk out of Bank Mutual
Bank Mutual Corp. reported net earnings of $17.1 million, 31 cents per share, for the full year, which was down from $20.6 million, or 34 cents per share, in 2006.
The Milwaukee-based banking firm attributed its diminished earnings to a decrease in its net interest margin and losses totaling $798,000 on investments in two mutual funds that, invested in mortgage-related securities.
Bank Mutual's earnings for the fourth quarter were $4.1 million, which was down from $4.6 million in the same period a year earlier.
"Fierce competition for shrinking deposits and loan business continued to pressure our net interest margin during most of 2007; however that pressure abated somewhat during the fourth quarter of 2007. Working in our favor were three components of our strategic plan. We boosted fee income. We managed our expenses with extreme discipline. And, our conservative underwriting standards continued to serve us well. We don't engage in what is generally considered 'subprime mortgage lending' and we don't intend to in the future." said Michael Crowley Jr., chairman, president and chief executive officer of the firm.
The company also warned that a recession could have substantial impact on its bottom line, including: loan originations could continue to decrease, along with related interest and fee income; a slowdown in the appreciation of the value of real estate or even a decrease in value may occur; reduced property prices could negatively affect the volume of home sales, which in turn could affect mortgage loan originations and prepayments; a continuation of stabilized or soft real estate values could also affect the value of the collateral securing our mortgage loans; and borrowers' ability to repay their loan obligations could be affected, leading to increased loan losses or provisions.

Marshall & Ilsley to build new south side bank
Milwaukee-based M&I Bank plans to tear down its branch at the southwest corner of National Avenue and Layton Boulevard, on Milwaukee's south side and build a smaller bank with a drive-through window in its place.
The 16,420-square-foot existing building at 2701 W. National Ave. was built in 1950, and has always been used as a bank. M&I has used the building as a branch since 1997.
The new building with have a footprint of 5,975 square feet of space and a total area of 7,357 square feet, including basement mechanical areas.
The current building does not have a drive through teller window. The new building will have a drive through teller window on the south side of the building.
The branch has seven full-time employees and 10 part-time employees.

Two banks pursuing Greenfield locations
Wauwatosa Savings Bank is seeking to build a new 3,500-square-foot bank at 5000 W. Loomis Road. in Greenfield. The bank needs city approval for its zoning request because the bank wants to have a drive through teller window.
If the bank receives approval from Greenfield officials, it plans to break ground late this year or in the spring of 2009.
Bank Mutual is building a new 4,000-square-foot bank at the intersection of South 85th Street and West Forest Home Avenue, also in Greenfield.

M&A Deals of the week

Midwest Air sale finalized
The sale of Midwest Air Group Inc., parent company of Midwest Airlines, to an affiliate of TPG Capital, a Texas-based private equity group, was finalized late last week.
The transaction was valued at about $450 million. Shareholders were paid $17 cash per share under the sale. Midwest's stock closed at $9.08 on Dec. 12, 2007, the last day it traded.

Smith family to divest of A.O. Smith shares
A. O. Smith Corp. has received a proposal from Smith Investment Co., which plans to restructure its holdings in A.O. Smith by transferring the ownership of its controlling shares of the company to its individual shareholders.
The proposed transaction would result in the shareholders of Smith Investment, a Milwaukee-based firm, having direct ownership of the same number and type of A. O. Smith shares currently held by Smith Investment.
The outstanding shares of A. O. Smith not held by Smith Investment would remain outstanding. Smith Investment currently controls more than 50 percent of the voting power of A. O. Smith.
Pursuant to the proposed transaction, Smith Investment, which is owned primarily by members of the Smith family, would be merged with a newly formed subsidiary of A. O. Smith.
Smith is also one of the largest manufacturers of electric motors for residential and commercial applications in North America.

Novum grows through acquisition in Europe
Menomonee Falls-based Novum Structures LLC is expanding its European market share by acquiring CoverTex Management Systems Ltd. and Rig 'n High Ltd., both of the United Kingdom.
The two companies have been purchased and combined to form Novum Structures UK Ltd.
Novum's existing company in Germany, Novum Structures GmbH, also has acquired KFM GmbH, another high quality manufacturer of architectural membrane materials for lightweight structures.
Novum Structures is a specialty contractor for high-technology spatial architectural structures and enclosures, primarily in steel and glass. The addition of a capability to design and fabricate the most advanced membrane cladding systems will expand Novum's product line.

Fiserv division acquired
TVC Capital has acquired Del Mar DataTrace Inc. from Fiserv Inc. Terms of the acquisition were not disclosed. TVC Capital is a private equity firm based in Del Mar, California.

Fi-Med acquires southwest firm
Wauwatosa-based Fi-Med Management Inc. has acquired Mediplete, a growing medical billing firm with offices in Utah and southern California.
The acquisition, completed on Dec. 28, 2007, will bring new and more efficient technologies to Mediplete, and will allow Fi-Med to expand into the southwest, Fi-Med officials said.

Milwaukee engineering firm acquires Florida company
Graef, Anhalt, Schloemer & Associates Inc., a Milwaukee engineering consulting firm, recently acquired BCA Consulting and Design Engineering, Inc. (BCA) in Orlando, Florida. BCA is an engineering firm specializing in mechanical, electrical, and plumbing (MEP) design. The Orlando office will be renamed BCA-GAS.
Its customer base includes government clients, architects, educational institutions, contractors, developers and industry.
This new location is GAS' second Florida operation and will complement an existing office located near Fort Myers. Together, the two offices offer civil, structural, environmental, commissioning and MEP engineering, providing great synergy for the Florida market.

Profile of the week

Name: David A. Massart
Title: President
Company: Next Generation Wealth Management, Inc.
Family: Married for 15 years, wife Patricia; children - Alexandra 15 and John 8
City of Residence: Village of Elm Grove
What's new at your company? "Our business continues to expand at a rapid pace, including - clients, investment managers, and technology."
What are the most interesting issues you work with clients on? "Providing peace of mind to achieve their personal goals and working with their children toward adifferent set of goals."
What is the most difficult or challenging project you've been involved with? "Every day is difficult as a new challenge always comes about."
What was the funniest moment of your career? "Moving to Milwaukee from another state and having my previous employer buy the company I went to work with."

Financial Services Industry People in the news

Bank Mutual is pleased to announce the appointment of Doug Newman as bank office manager at Bank Mutual’s Racine-Douglas Avenue office. Newman holds a B.A. degree from the University of Wisconsin-Parkside and most recently held the position of bank manager at another financial institution. He resides in Racine.

Chris Cumicek earned Cornerstone Business Services Inc.'s 2007 Top Performer Award. Working with sellers and buyers throughout the transaction process, Cumicek successfully marketed and sold a trucking company and a distribution company. He and Bob Stillman of Cornerstone also served as advisors on the purchase of a manufacturing company. Rob Moore was recognized for Outstanding Sales Support, while Dick Rasmussen of the Cornerstone Petroleum Division earned the Rookie of the Year award.

The Milwaukee law firm of Godfrey & Kahn S.C. has appointed five new shareholders. The new shareholders in the firm's Milwaukee office are Todd Cleary and Michael Huitink. The new shareholders in the firm's Madison office are Jeffrey Femrite, Steven Heinzen and Josh Johanningmeier. Founded in 1957, Godfrey & Kahn maintains offices in Milwaukee, Madison, Appleton, Green Bay and Waukesha; Washington, D.C.; and Shanghai, China.

Jannsen & Company S.C. recently hired Kathryn Braun as financial services coordinator in the Jannsen Wealth Management team.

Ritz, Holman, Butala, Fine LLP, a Milwaukee-based accounting firm, has hired Kelly L. Peterson and Wade P. Piazza as interns on the tax team. Peterson and Piazza are students at UW-La Crosse. Peterson is double majoring in accounting and spanish, while Wade is majoring in accounting with a minor in economics.

Waukesha State Bank recently promoted Timothy Fults to officer, manager of Information Systems. In his new role, Fults will manage the bank's information systems department, including the daily operations and staff supervision of the bank's network administration and its computer room. Fults joined Waukesha State Bank in March of 2006, bringing nearly 20 years of experience in network administration and system support. Prior to joining the Bank, Fults worked in a variety of information technology positions, most recently at Community Memorial Hospital in Menomonee Falls, Wis.

Money Odds & Ends

Baird receives manufacturing awards
Baird Investment Banking has been named "Manufacturing Adviser of the Year" by Acquisitions Monthly, a U.K.-based publication of Thomson Financial. The division of R.W. Baird & Co. also won two manufacturing deal awards – “U.S. Middle Market Industrial Deal of the Year” and “U.S. Middle Market Consumer Deal of the Year” – from The M&A Advisor.

Johnson Financial Group named Best Company
Johnson Financial Group, the $5 billion financial services parent company of Johnson Bank and Johnson Insurance, was recently ranked #37 on Fortune's annual "100 Best Companies to Work for" list. The full list appeared in the magazine's Feb. 4 issue.

Thrivent provides financing to build new high school in Hartland
Thrivent Financial for Lutherans will provide $20.5 million in financing to help build a new Lake Country Lutheran High School in Hartland.
The Lutheran High School Association of Greater Milwaukee selected Thrivent to provide the financing needed to build the $30 million project. The school currently rents a former YMCA building in Oconomowoc. Construction has begun on the new high school campus at the intersection of Highways 16 and 83, and is expected to be complete by the spring semester of 2009.

Marquette's College of Engineering to receive another $25 million donation
The family of a Marquette engineering alumnus will donate an additional $25 million to Marquette University's College of Engineering, doubling a previous donation, the Rev. Robert Wild, S.J., university president, recently announced.
The alumnus and his wife, who asked to remain anonymous, announced a legacy gift of $25 million to the Marquette College of Engineering in December 2006. Wild said the couple's family members have now decided to add another $25 million to that gift to challenge other benefactors to assist in the transformation of engineering education underway at Marquette.
In addition to the $50 million from this family, the Marquette College of Engineering has received several other gifts to support Jaskolski's initiatives:
October 2007 - $15 million from Robert Kern, founder of Generac, Inc., and his wife, Patricia, donated toward construction of Marquette's new engineering facility
May 2006 - $5 million from Robert Greenheck, chairman emeritus of the board and co-founder of Greenheck Fan Corporation in Schofield, Wis., donated to endow a faculty chair in engineering design
January 2007 - $5 million from Jim and Kelly McShane of the McShane Companies in Rosemont, Ill., donated to fund a faculty chair in construction engineering and management.

Farmers Insurance to open centers in Brookfield and Madison
Los Angeles-based Farmers Group Inc. announced that it will open two new recruiting and development centers, one in Brookfield and one in Madison. The centers will create more than 1,000 jobs in the state.
The Milwaukee Farmers Insurance Recruiting and Development Center will be located at 300 N. Corporate Dr., Suite 100, in Brookfield. It will focus on recruiting and training 400 new Farmers Insurance agents in the metro Milwaukee area.
The Madison recruiting and development center will open at 2310 Crossroads Drive in Madison.
Combined, the two new Wisconsin centers will create more than 1,000 new jobs statewide and will mean an investment of more than $20 million into the Wisconsin economy, said Scott Stice, senior vice president of field operations for Farmers
Insurance Group.

WellPoint posts robust year
WellPoint Inc., the independent licensee of the Blue Cross and Blue Shield Association, including Blue Cross & Blue Shield of Wisconsin, reported net income of $3.3 billion, or $5.56 per share, for the full year, up from $3.1 billion, or $4.82 per share, for 2006.
The Indianapolis-based company's total revenues in 2007 grew to $61.1 billion from $57.0 billion in the previous year.

Waukesha accounting firm changes name
Stephen C. VanderBloemen, CPA, announced that the name of his Waukesha-based certified public accounting firm has been changed from from VanderBloemen Rodrigues to The VanderBloemen Group, LLC.
Jon Hilgendorf, CPA, and John VanderBloemen, CPA, were admitted as partners/members of the firm and Eric Carlson, CPA, has rejoined the VanderBloemen Group as a senior manager after spending two years at a large regional firm. Carlson previously spent 10 years with VanderBloemen.

Calendar

Venture Finance: Options for New & Growing Business from Bootstrapping to Venture Capital Presentation, Feb. 13, 5:30 p.m., Tommy G. Thompson Youth Center at State Fair Park; this presentation is part of the regularly scheduled Investors and Entrepreneurs Forum of Greater Milwaukee.

Wisconsin Bank Executives Conference, Feb. 11-13, Pfister Hotel, 424 E. Wisconsin Ave., presented by the Wisconsin Banking Association; speakers include Sam Kashan, senior economist with the Federal Reserve Bank of Chicago; Dick Morris, political columnist and author; and Dr. William Kelly, who will discuss methods for achieving parity with credit unions. For more information, visit www.wisbank.com.

Wisconsin companies invited to Midwest Venture Summit
Wisconsin companies hoping to present at the 2008 Midwest Venture Summit in Chicago, held March 17-18, must submit their business plans by Jan. 30 for a chance to join companies that have raised more than $222 million in private equity funding in past years.
Opportunities are available for companies in various stages of growth, from early-stage start-up firms to series A+. The fee for submission is $175
To learn more about the summit and to apply to present, visit www.midwestventuresummit.com.

Financial Executives International Milwaukee Chapter, second Tuesdays, 5:30 p.m., University Club, 924 E. Wells St., Milwaukee; call Mary at 414-226-6975.