Bank plans stock offering
By PAUL GORES

After what is believed to be the strongest launch ever for a start-up bank in Wisconsin, Green Bay's Nicolet National Bank plans to raise $12.5 million in a stock offering to help fund the bank's rapid growth.
Nicolet, which has been the fastest-growing bank in the state since opening in the fall of 2000, has capitalized on the perception - one disputed by larger banks - that the bigger banks get, the less they typically are concerned about serving small- and medium-sized companies.

The assets of Nicolet, which has targeted small and midsize business customers, have soared from about $45 million at the end of 2000 to $182 million in the first quarter of 2002. Its deposits surged in that period from $27 million to about $157 million, giving it a solid bite of market share in Green Bay.

Many community banks that have been in business for decades in Wisconsin have accumulated far less in assets. A bank's assets consist mostly of its loans.

"Just the growth we've seen has confirmed what we thought was there, and that was that small- and middle-market-sized companies, which Green Bay is full of and this area is full of, like the personal touch of a community bank," said Michael E. Daniels, who left Associated Banc-Corp along with Robert B. Atwell to start Nicolet.

"They like knowing who they're doing business with across the desk and knowing where the decisions are made," added Daniels, who is vice president and chief lending officer.

Associated, which held a commanding market-share lead of nearly 32% in Green Bay in the most recent comparison by federal regulators, declined to comment for this story.

Generally, large banks scoff at the notion that they don't offer personal enough service to small- and midsize companies.

Still, some say, that feeling is out there, especially as the banking industry consolidates through mergers.

"I think there's a perception that with large banks, the decisions aren't being made locally. Even when they are, it's not perceived; it's the old thing about perception being reality," said George Reis, president of George V. Reis Investment Group Inc.

In a recent presentation on start-up banks to the Milwaukee Investment Analyst Society, Michael Steppe, partner and chief investment officer of Brookfield Investment Partners, quoted from a 2000 Federal Reserve Bank of Chicago report that stated: "New banks spring up when depositors, small business borrowers and loan officers become disgruntled, displaced or dismissed in the aftermath of a bank merger."

Five years ago, banker Karl J. Ostby started Southport Bank in Kenosha after he had a falling out at Advantage Bank. Ostby, who is Southport's president and chief executive officer, had gauged from his experience that a new bank focused on middle and small businesses would do well.

It has. Southport's assets grew from $24.5 million at the end of 1997 to nearly $181 million by the end of last year.

The new stock offering by Nicolet comes in the wake of the nearly $18.5 million it raised from investors in order to open the bank in November of 2000. That amount of investment capital is thought to be the most ever raised in Wisconsin for a start-up bank, Reis said.

Among the initial investors was Deanna L. Favre, chief executive of the Favre Forward Foundation and wife of Green Bay Packers quarterback Brett Favre. She is on Nicolet's board of directors.

Most of the new stock - 800,000 shares - will be offered at $12.50 per share to the existing shareholders, according to a prospectus submitted for approval by regulators. The other 200,000 shares will be offered to new investors, primarily employees, customers and prospects of Nicolet National.

The stock offering is expected to result in capital to support loan growth, increase product and service offerings and expand the bank's management team, the prospectus says.

The infusion of capital should allow the bank to make bigger loans. Federal law sets lending limits based on a bank's capital-to-asset ratio, but the bank currently has a more conservative internal lending limit of $2.5 million per borrower.

"We haven't set what our internal limit will be, but my guess is it will be right around $4 million," Daniels said.

Daniels, 37, was a senior vice president at Associated before joining with Atwell to start Nicolet. Atwell, 44, had been an executive vice president and senior lending officer at Associated, according to the prospectus.

By PAUL GORES
of the Journal Sentinel staff
Appeared in the Milwaukee Journal Sentinel on June 23, 2002.