NEW YORK ( TheStreet) -- BankUnited ( BKU - Get Report) on Thursday announced a deal to acquire Herald National Bank ( HNB) of New York for roughly $71 million in cash and stock, setting up the Miami Lakes, Fla. lender for a major expansion in the metropolitan area.

Herald National Bank had $501.1 million in total assets as of March 31, operating three offices in Manhattan, Brooklyn and Melville on Long Island, with a focus on serving small and medium-sized businesses. The bank was strongly capitalized at the end of the first quarter, with a Tier 1 leverage ratio of 10.61% and a total risk-based capital ratio of 16.78%.
BankUnited CEO John A. Kanas

The deal was valued at approximately 1.4 times Herald National's stated book value as of March 31 and 1.1 times the bank's notional book value, when adjusting for deferred tax assets. Sandler O'Neill served as advisor to Herald National Bank and said the deal represented a 5.1% premium for Herald's $437 million in total deposits.

Herald National Bank's shareholders have the option of receiving cash or BankUnited stock for their shares. BankUnited expects the transaction to consist of $22.9 million in cash and 1.7 million BankUnited shares.

The deal is subject to approval by regulators and Herald National's shareholders, and is expected to be completed in the fourth quarter. Herald National will initially continue to operate as a separate subsidiary of BankUnited, with CEO Randy Nielsen remaining in his position.

While BankUnited CEO John Kanas told TheStreet earlier this year that his company was focused on expanding in Florida "and contiguous states," no deals in the Southeast have materialized, and while the Herald National transaction is a small one for the strongly-capitalized BankUnited, it gives the company a platform for a large expansion in New York.

Kanas's previous company, North Fork Bancorporation, followed a strategy of rapid expansion in Manhattan and other boroughs of New York City, with a community-based focus on serving business customers, leading into North Fork's sale to Capital One Financial ( COF - Get Report) in December 2006.

The "new" BankUnited was formed by Kanas and an investor group to acquire the failed BankUnited in May 2009. Kanas took BankUnited public in January, with a public offering, selling 29,350,000 million worth of common shares to the public, at a price of $27, to raise $792.5 million. >

BankUnited's shares were up slightly to $28.24 in early trading.

-- Written by Philip van Doorn in Jupiter, Fla.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.