One voice

Nicolet founders build state’s largest community bank

Posted on Jan 2, 2017 :: Cover Story
Posted by , Insight on Business Staff Writer

One vision. Two local leaders. A singular passion to serve the area they work and live.

There are a lot of numbers — some quite large — that are often bandied about when describing what makes a bank successful. But these single-digit numbers may best explain the success of Green Bay-based Nicolet National Bank.

It was the vision, shared by Bob Atwell and Mike Daniels, about what a bank should be that prompted the industry veterans to risk their careers and walk away from senior positions with the largest bank in Wisconsin to plan a new bank that would foster local prosperity.

And it was the shared passion to make Northeast Wisconsin a better place that put the two men across from each other in a basement in 2000, when they began building Nicolet National Bank.

“The people who live and work here love this place,” says Atwell, who now holds the title of chairman at Nicolet. “The big banks are withdrawing and their focus is elsewhere.

“Our whole lives are invested in this place.”

As they saw the major industry players shifting their gaze to markets elsewhere, Atwell and Daniels stepped in with a decidedly local — and customer-facing — focus.

“Business owners and their employees pursue work and their passion is what creates prosperity for the region,” says Daniels, president and CEO. “We provide the capital to help them achieve that.”   

The results have proved their shared vision a success.

In just 16 years, Nicolet National Bank has sprouted from a homegrown idea to a business bank operating out of small office spaces in Green Bay’s Bellin Building to its status as a full-service bank serving markets in Northeast and Central Wisconsin.

Along the way, its assets have grown from $18 million as a startup to more than $2 billion, and with the announced acquisition of FNB-Fox Valley, it will be the largest community bank in Wisconsin and the second-largest bank headquartered within the state.

All of it was made possible by a shared passion for the place they call home.

“The nice thing about them being based here is they are active in the community, from a time and resources standpoint,” says Scott Bushkie, president of Cornerstone Business Services, Green Bay. “I was just talking with someone about all the different banks and how they’re changing, and with Nicolet, one of the things they said was, ‘They’ve just got good people there. They are knowledgeable but also very personable.’”

It’s less a yin-yang thing and more akin to a covalent bond — for those who remember their high school chemistry — a stable and strong molecular bond based on shared electrons between atoms.

“I would describe them as good community bankers,” says Peter Prickett, president and CEO of FNB-Fox Valley and past chairman of the Wisconsin Bankers Association board of directors.

As the banking industry evolved through the 1990s, Atwell and Daniels found themselves more and more questioning the direction of the major institutions. 

“In our opinion, they lost the focus on Northeast Wisconsin and were more interested in Minneapolis or Chicago,” Atwell says. “The focus was elsewhere.”

They could have stayed on and each continued their career ascent, but they no longer believed in the mission.

Instead, they risked it all, from careers and steady paychecks to longevity and reputation. All they had to do was convince investors of the need and the opportunity for a new bank.

“At this point, all we have is an idea and we don’t have jobs,” Daniels recalls. “But we had 13 years of experience in the market and we had relationship credibility.”

They also had a mission.

The simple version: Matter in the community. Take care of your customers and make a difference in the community. That will generate value.

“Like many bankers around the state, they are very passionate about what they do and helping people and business succeed in local markets,” says Rose Oswald Poels, president and CEO of the Wisconsin Bankers Association.

That mission and their relationship credibility would be critical as they reached out to potential investors who would help build up the necessary capital. As they made those calls and held those meetings, it became clear they had tapped into something missing in the marketplace.

“For the most part, people didn’t ask to see the numbers or projections,” Atwell says. “The questions they really wanted answered was ‘what is the mission?’”    

The initial plans were simple enough — a commercial bank serving the local business community with assets of $15 million and a staff of 20. When Nicolet opened its first offices in Green Bay’s Bellin Building, assets were more than $18 million and there were more than 20 employees — a few of whom are still with the bank today.

The idea of taking a scaled-back or wait-and-see approach never came up for discussion.

“We didn’t go in saying ‘let’s try,’” Atwell says. “We planned for success from the start.”

The business-centric approach proved immediately powerful. While cheap money has been a hallmark of the economy for much of the past decade, Atwell and Daniels will argue it takes more than cheap money to create prosperity. It takes an understanding of the issues small- and medium-sized business owners in the market face on a daily basis.

As owner-managers, the Nicolet leaders have the same experience and expertise to share with customers, to help them work through or anticipate challenges. Plus, they are right here in the same locale, not dependent on decisions being made elsewhere.

“We see the very same things the business owner has to deal with,” Daniels says. “We may not have been a personal bank, but it was very personal to those business owners.”

Dark clouds

Nicolet’s approach tapped into a receptive market, and its first eight years of operations produced overall growth approaching 150 percent by 2007.

But Atwell and Daniels sensed trouble ahead. While they could not have predicted the financial crisis that would spawn the Great Recession, they took measured steps to reduce the bank’s exposure and increase the liquidity of assets.

Like almost all banks, Nicolet took a hit and saw value and revenues essentially flatline from 2008 to 2011. But the moves they made — including utilizing $15 million from the federal Troubled Asset Relief Program (TARP) and $10 million raised privately — kept the bank stable, enabled it to emerge intact and positioned it for a nimble recovery.

“They got after it right away and were having conversations about how to handle it pretty early on,” says Ann Lawson, chief financial officer since 2009. “They anticipated it really well and that afforded the bank the inward time necessary to make the tough decisions.”

Those prudent moves, along with a deep talent pool, allowed the bank to emerge from the financial crisis and into the recovery with a nimbler approach than other players in the market, she says.

That recovery would be defined, in part, by aggressive growth. With the darkest days of the financial crisis behind it, Nicolet put together a plan that included “creating a highly profitable $2 billion-plus asset bank in Wisconsin in three to five years,” according to the bank’s Report to Investors.

Acquisitions would be the key.

A lot of banks were pursuing a similar path as the financial crisis passed, a pursuit that would transform some of the historic players in the Wisconsin market into national players and result in the disappearance of venerable statewide banks such as M&I, which became part of Montreal-based BMO Harris.

In keeping with its commitment to community, Nicolet identified targets complementary to its Northeast Wisconsin footprint.

Initial targets included nearby Baylake Bank, which had tremendous penetration in the Door County market, as well as banks in Wausau and the Fox Valley. The first opportunities would emerge in 2010 when Nicolet expanded with the purchase of four Anchor Bank branches.

That set the table for a series of acquisitions propelling Nicolet toward its goal.

In 2012, Nicolet acquired Mid-Wisconsin Financial Services, expanding its market presence to the central part of the state, and it would also acquire the troubled Bank of Wausau in 2013.

While there was a pause in purchases for the next few years, Nicolet was still active in pursuing M&A deals. It just needed time to find institutions that were willing partners.

“They really spent the time and were thoughtful about how they would grow the bank,” Oswald Poels says. “They have been pretty focused with intent on growing the bank with intent at the right time to take advantage of opportunities.”

Those courtships would culminate in a trifecta of deals in 2015 and 2016, as Nicolet added Navigator Planning Group, Baylake Bank and capped it off with the recently announced acquisition of FNB-Fox Valley.

By this time, Nicolet had grown from its commercial roots into a full-service bank, now offering personal banking and trust services. The Navigator purchase added a national securities and investment brokerage to its offerings.

The Baylake and FNB-Fox Valley acquisitions bring together like-minded community banks in key regional markets. The Baylake deal pushed Nicolet’s assets to $2.3 billion, and FNB’s addition, once approved, will push that total to more than $2.7 billion.

For FNB, which was also looking to grow, the acquisition made sense in terms of customer service and increasing shareholder value, Prickett says. It certainly helped the two organizations shared similar philosophies for success, and that Prickett worked with Atwell and Daniels during the 1990s.

“You can’t grow unless you can acquire customers, and taking care of those customers is where shareholder value is,” says Prickett. “The philosophy and culture are critical, that’s the key to success.”

Not done yet

The back-to-back acquisitions of Baylake and FNB are most likely not the end of Nicolet’s growth-through-acquisition strategy.

Daniels describes the bank’s ongoing position as “deal ready,” and both he and Atwell note there are still some 240 banks in Wisconsin. Many of the smaller banks continue to struggle with low interest rates, increased regulation and the cost of keeping their technology and infrastructure current.

Nicolet has developed a reputation for M&A execution and has positioned itself as a breakout buyer. The ongoing challenge for Atwell, Daniels and team is to make sure acquisitions make sense strategically and don’t interfere with a mission that has driven its success.

That could mean saying no to markets like Madison or Milwaukee.

“We get asked all the time when we are going to Madison or Milwaukee,” Atwell says. “We have to be needed and I’m not sure that’s the case right now.”

There is still plenty to do from the recent mergers when it comes to integrating staff and ensuring the company culture thrives as the bank grows.

The next deal, if there is one, will be based not just on increasing Nicolet’s footprint, but on being able to deliver the same service and value to customers they have achieved in the existing markets, Atwell says.

“The true value for us is understanding what others don’t see.”