Nicolet Bank will acquire Commerce State Bank
No Commerce branches planned to close in deal
GREEN BAY – Nicolet National Bank will acquire Commerce State Bank in an estimated $129.6 million, all-stock deal that will extend the Green Bay-based bank’s reach to Sheboygan, West Bend and the Milwaukee suburbs.
The acquisition follows three prior acquisitions that have made Nicolet one of the 10 largest banks in the state by market share and one of the three largest banks headquartered in Wisconsin.
“This strengthens us down the 41-43 corridor with people that know their communities, know their customers and understand what community banking is,” said Nicolet President and CEO Mike Daniels.
Daniels announced the acquisition to employees Monday morning, as did Commerce State Bank CEO Joe Fazio during an all-staff meeting. The deal, approved over the weekend by both banks’ board of directors, still needs approval from regulators and shareholders. It’s expected to close in the third quarter of 2020.
Terms of the acquisition call for Commerce State Bank shareholders to receive 1.15 shares of Nicolet stock for every share of Commerce stock. Nasdaqlisted Nicolet was priced at $72.32 per share at the close of trading on Friday and stock markets are closed today.
The agreement calls for resetting the exchange ratio if Nicolet stock drops below $62 or rises above $82 per share.
If the sale is approved, Nicolet will have used a series of acquisitions to boost its assets from $1.2 billion in June 2015 to $4.3 billion. It would remain the third-largest bank headquartered in Wisconsin behind Johnson Bank and Associated Bank.
“We’ve always really appreciated and respected what each other have accomplished,” Fazio said. “We’re really impressed with what Nicolet has done as they saw an opportunity and pivoted to acquisitions. They’re the go-to acquirer in the state of Wisconsin.”
Green Bay-based Nicolet bought Door County-based Baylake Bank in 2016, Menasha-based FNB-Fox Valley Bank in 2018 and Oshkosh-based Choice Bank in 2019. The expansion south into an area from Appleton to
Oshkosh brought the bank much closer to Commerce’s core markets.
Commerce State Bank was founded by Fazio, Tom Hopp and Dave Borchardt in 2003. The trio raised $12 million from investors and opened its first branch in West Bend in 2005. Commerce has since added branches in Sheboygan, Cedarburg and Elm Grove.
It is not a publicly traded bank but does have about 380 shareholders.
Fazio said the founders in the early 2010s pitched investors on a seven-year strategy to increase the bank’s assets to $1 billion and become publicly traded. He said Commerce had $707 million in assets as of Jan. 31.
He said the bank could have continued with its original strategy, but leadership felt it made more sense to sell to Nicolet.
Joining Nicolet gives Commerce shareholders more options for holding or selling their investment. The combination also would give Commerce branches access to assets in the billions rather than millions, allowing them to compete for bigger loans and help more local businesses expand, something Fazio said the Commerce team knows firsthand from growing the bank from nothing.
“We worked through all the issues of building a business and that’s why we relate so well. We can talk about (companies’) financial needs, but can also help them work through expansion and purchases and big decisions,” Fazio said. “They get a sigh of relief. You understand. Anyone can give you a loan, but the tough part is sharing what we’ve been through.”
Daniels said both leadership teams had developed a mutual respect for each other as both teams started community-focused banks from scratch in the 2000s. He said it made acquisition conversations easier.
“There’s a level of understanding and ability to communicate with one another that comes naturally. We all started from zero,” Daniels said. “We both founded our banks from nothing and built it into something. We saw needs in our respective markets for community banking done by people who care about their community, their customers and each other.”
After the acquisition, Fazio would join Nicolet’s board of directors while Hopp and Borchardt would join the combined bank’s staff.
As with any consolidation, the two companies have overlapping operations that would lead to some staff reduction.
Unlike Nicolet’s prior acquisitions, though, there is no overlap between the two banks’ branches, meaning all four Commerce locations will remain open, minimizing one part of consolidation.
Fazio also noted Nicolet has 16 available jobs right now.
“There will be opportunities for our people within Nicolet,” Fazio said.