insight on By Mar y B eth Mat zek

banking

Copyright 2009 Insight Publications. Reproduced by permission. For website use only.

Tapping into TARP

Nicolet, First Manitowoc, Associated and M&I banks put federal funds to work

F
inding opportunities when
the going gets tough isn’t
always easy, but Mike
Daniels, president and chief
operating officer for Nicolet
Bankshares Inc., is looking to do just
that. While the financial industry
has taken a beating nationwide and
across the globe, the Green Bay
holding company for Nicolet National
Bank has held its own, but that didn’t
stop it from participating in the U.S.
Treasury’s Capital Purchase Program.
“Out of crisis, we see a real
opportunity,” Daniels says. “The
Treasury didn’t just intend these funds
for banks in crisis, but also for strong
banks like ours that want to continue
to grow.”
Last fall, the U.S. Congress passed
the $700 billion Troubled Asset Relief
Program (TARP) to prevent the
economy and financial system from
sliding even further into the red. The Nicolet National Bank, headquartered in Green Bay, was one of four in Wisconsin to
bulk of TARP funds went to propping receive TARP funds. President and COO Mike Daniels says, “The macro-view of the
up ailing financial institutions economy shows you that this needed to be done to help restore confidence in the
such as Citigroup and AIG, but the financial industry, but then you hear about XYZ Bank getting TARP funds and the
government also allowed regional stockholders lose money, but the executives still get their bonuses. That’s not what
banks looking for more stability to happened here. We see this as an opportunity to grow our business.”
participate. In return for the funds,
banks give the Treasury preferred “In the first 30 days that we received Bank and First Manitowoc Bancorp
stock in the hopes that as the banks the nearly $15 million through TARP, Inc. – also signed up for the program
grow stronger, the government will we made more than $15 million in and exchanged preferred stocks for an
see some funds in return. loans. That shows that we are putting infusion of cash.
In December, Nicolet received the money we received back into First Manitowoc Bancorp – the
$14.96 million in TARP funds and businesses,” Daniels says. parent company of Bank First
raised an additional $9.5 million Nicolet isn’t the only Northeast National – raised $12 million capital
through a private placement stock Wisconsin bank to receive TARP by issuing preferred stock to the
offering. With the infusion of capital, funds. Three others – Green Bay’s Treasury under the TARP program.
Nicolet ramped up its lending. Associated Bank, Milwaukee’s M&I Like Nicolet Bank, First National

30 | Insight • M a r c h 2 0 0 9 w w w. i n s i g h t o n b u s i n e s s . c o m
“We believe this additional capital will assist of December, up from 9.2 percent at
the end of September.
us in funding anticipated loan growth with Associated Bank reported a 79
percent drop in profits during the
quality customer relationships and will support fourth quarter of 2008 due to a $35
continued local economic expansion in the million investment loss and an increase
in the funds allotted for potentially bad
market we serve.” loans. Associated put $65 million into
its reserves during the fourth quarter
– Mi ch ae l B. Mo le p ske, Fi rst M a n i towo c B a n co rp’s C E O
to cover bad loans, compared to $15.5
million put into reserves during the
same period last year. Despite that,
average deposits increased 4.6 percent
saw an opportunity to grow by customers. The funds also allowed during the quarter.
participating in the federal program. M&I to announce in December Nicolet’s Daniels says he
“We were pleased to have been a foreclosure abatement program understands why most people are
approved to participate in the designed to keep families in their confused about TARP and figuring out
Treasury’s program and to have homes, including a 90-day foreclosure how the funds are going to be spent.
been supported by our primary moratorium on all owner-occupied “The macro-view of the economy
federal regulator,” says Michael B. residential loans. shows you that this needed to be
Molepske, First Manitowoc Bancorp’s The influx of cash comes at a time done to help restore confidence in the
chief executive officer. “In 2008, we when M&I lost $403.9 million in the financial industry, but then you hear
generated $58 million in loan growth, fourth quarter of 2008 as loans losses about XYZ Bank getting TARP funds
and our strategic plan forecasts similar mount for the publicly-traded bank. and the stockholders lose money, but
loan growth goals for 2009 and 2010. The bank has announced a cost-cutting the executives still get their bonuses,”
We believe this additional capital plan, including a loss of 830 jobs, to he says. “That’s not what happened
will assist us in funding anticipated help create a healthier bottom line. here. We see this as an opportunity to
loan growth with quality customer As for Associated Bank, it received grow our business.
relationships and will support $525 million in TARP funds in return “A rule of thumb is that $1 in capital
continued local economic expansion in for stock shares. Since the infusion allows you to increase your assets
the market we serve.” of capital, more than $1.5 billion of by $10. That’s what we’re looking to
Participating in TARP is not a sign credit has been given to new and do. We are planning to be offensive
of weakness, says David Diedrich, existing customers. The TARP funds strategically. There is more value out
president of First Manitowoc Bancorp. also increased Associated Bank’s Tier 1 there than at any other time in our
“We already exceed the industry’s capital ratio to 12.22 percent at the end careers,” Daniels says.
‘well-capitalized’ standards and the
Capital Purchase Program investment
will even further strengthen our
balance sheet. The Treasury’s
investment in our company is an
indication of our soundness and the
“In the first 30 days that we
Treasury’s support of our plans going received the nearly $15 million
forward,” he says.
M&I received $1.715 billion through TARP, we made more than
through TARP and since then has
extended an estimated $1.3 billion
$15 million in loans.”
of new credit to new and existing Mike Daniels – M i ke D a ni e l s, p re si d e nt a n d COO, N i co l e t N at i o n a l B ank

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