I love to read, it kind of fuels my thinking and gets my imagination going. I really believe that ideas matter, that they do drive our actions. I actually think if you really think deeply about what you hold to be true, and try to order your actions around that, those ideas really matter. Sadly, I think a lot of people go through life without really reflecting on that.
I’ve been in Wisconsin banking, specifically in Northeast Wisconsin dealing with customers here for over 25 years. There’s a way of doing business around here that is very personal, very long-term oriented, a very mutually supportive way of doing things.
I would not have gone through the brain damage of starting a new organization if I didn’t believe there was something fundamentally wrong with the direction of our industry. I think it was a little harder for people to understand that in 2000 when we started the bank than it is today. If you look at the state of the banking industry today, it should be very obvious to every living soul that there are very fundamental problems with what’s been going on in banking, and in particular, with the way that banks have been thinking about what their job is. Our organization didn’t get started because we thought everything was fine. We thought there was a crisis in business, a movement in business toward the depersonalization of commerce.
You’ll hear this expression over and over again, “Don’t take it personal.” You know, lending and borrowing money is an intensely personal activity. As banks, we really need to understand and respect the people we’re dealing with, and think deeply about what it is they are trying to accomplish – can we help them do it – and can we do so profitably. We look at profits as the result of, not the purpose of our activity; it’s the result of our activity when it’s done well, and when it’s the human person that’s at the center of what it is we’re doing.
When I’m explaining our organization to people that aren’t familiar with Green Bay or myself, I tell them we had a kind of a radical insight into what a successful business model could be like in banking, and we took this transformational model and put it into practice.
Our model is we try to gather deposits from people we know and we lend that money out to other people we know, at a somewhat higher rate, and we use the difference to cover our expenses and provide a return to our shareholders. That’s it. When did that become a radical way of doing things? But obviously, it is.
If you’re entering into a business venture, if you can’t explain it in simple terms at a level that a reasonably curious teenager can understand in a few minutes, it might be more complicated than it ought to be.
We are one of the minority of banks that participated in TARP (Nicolet received a $15 million investment from the treasury) because we believed that having extraordinarily strong capital at the good banks was an important component of restoring stability to the industry. It’s costing us about 8 percent after tax equivalent, on a tax equivalent basis. We took it because we believed in its purpose as it was expressed to us, but we also took it because we thought it would enhance our shareholder value.
A lot of that’s changed. There are a number of provisions being implemented with respect to TARP that were not part of the original contract, which we would not have accepted had they been up front when we signed the deal. We are growing the bank, but the truth is we would not have needed the TARP to do that at the level we are.
We are a commercial bank; 75 percent of our business is businesses’ borrowings and deposits. We’re adding new customers but we’re also experiencing this healthy normal shrinkage of our customers’ borrowings during slow times. We’ll see the real financial fruits of our new relationships and the customers we’re adding when the recovery comes.