It’s All About People

 “We often hear that business is mostly about people – It’s all about people.” ~ Bob Atwell

Twenty years ago, Madison Wealth Management and Nicolet National Bank first opened their doors for business. Launching into the bursting of the bubble and weathering the post-9/11 shock, both companies have built strong, sustainable firms by adhering to their core values, building strong teams, and taking a deeply personal, relationship-oriented approach to advising and serving clients.

Today, Midwest-based Nicolet, is a $3.5 billion, publicly traded company. And under the guidance of its two co-founders, Bob Atwell and Mike Daniels (who serves on Madison’s Advisory Board), the bank continues to adjust to changing markets and challenges to make a positive difference in the lives of clients, associates, and community.

Recently, Bob posted a message in response to the Securities and Exchange Commission (SEC) “calling on public companies to communicate how their ‘operations and financial condition may change as all our efforts to fight COVID-19 progress.’” We found Bob’s message to be extraordinarily forthright, insightful, and reflective of so many other quality businesses and nonprofits operating within our communities. We believe you will enjoy reading his message as well. Please find an abridged version below with the full message viewable at:

Message from Bob Atwell, Chairman, President and CEO of Nicolet Bankshares, Inc.

On April 8, the Chairman of the SEC took the extraordinary step of directly calling on public companies to communicate how their “operations and financial condition may change as all our efforts to fight COVID-19 progress.” Taking the SEC’s challenge at face value, we will offer this forthright caveat to anyone who chooses to make use of this communication. There is deep irony in being challenged to communicate about the future when we have never encountered a time of less forward visibility. But, no assumption about the future is still a form of assumption. The windshield view is murky, but we have good visibility into the people and businesses throughout our region. We hope that these reflections can be of use to investors, customers and community members.


As a regular reader of our annual reports can see, we clearly understand our responsibility to keep our institution and our customers as prepared as we reasonably can for both “normal” recessionary periods and systemic shocks such as we are now undergoing. The current leadership launched this bank into the bursting of the bubble and weathered the post-9/11 shock. We did some of our finest work to date in the midst of the 2008-2010 financial crisis. The dramatic increase in our strength, profitability and share price since 2012 is a direct result of the severe test we and our customers underwent. The hallmark of that work was radical sincerity with ourselves and our customers about the decisions that we needed to take in a crisis setting. We have not encountered a pandemic before, but we do understand rapid decision-making with incomplete information. Above all we understand how deeply personal our work is. Anyone who says banking isn’t personal, has never sat with a customer facing a choice between collapsing in financial ruin or summoning the fortitude to stand up again after being knocked down by

events beyond their control. Any banker who thinks this is all just math has never had to decide when to provide new money when there is not much information other than the full faith and credit evident in the eyes and past behavior of our customers. In communicating with our board and shareholders during the crisis years, we did not hide or color our loan losses with euphemisms like “perfect storm” and “uncharted waters”. We approved those loans, and we resolved them. We stayed profitable, stood by nearly all our customers and grew our loan portfolio. We dramatically increased our market share of loans and deposits, while many competitors deliberately contracted. After facing our challenges directly and quickly, we bought other banks and fixed their problems. That is how the bank grew from $700 million in 2012 to $3.6 billion at year-end 2019. We have a vast multitude of customers who have experienced the difference between a bank run by people they can talk to and bankers who are paid to massage ratios and pitch pricing. Much can be extrapolated about Nicolet’s future from understanding where we and our customers have been. Past performance is no guarantee of future outcomes, but it is the most valuable data available in times of great uncertainty. Nicolet now faces these turbulent times with a strong capital base, stable core deposit funding, an outstanding credit quality history, and strong earnings momentum.

Loan Portfolio Profile.

We have been listening to the various perspectives about the economic after-effects of this public health crisis. We read about V, U and canoe-shaped recoveries. The events triggering this 2020 recession are quite different from those causing the financial crisis of 2008-2010, but the scale of the impact appears to be similar or perhaps worse. The events to date have affected different segments of our customer base in different ways.

Paycheck Protection Program (PPP) under the Coronavirus Aid, Relief and Economic Security (CARES) Act.

We have responded aggressively to the Paycheck Protection Program, which was announced by the Small Business Administration (SBA) on April 3 and whose specifics continue to roll out. As of April 16, we processed nearly 1,700 PPP applications totaling $309 million. We are moving aggressively to document and fund these commitments to our customers as early as practical. There are some flaws in the program, and we are doing our best to get the necessary modifications made. While the PPP is an overall positive initiative, it is not really going to address funding necessary to ramp up in the face of what appears to be pretty difficult recessionary conditions.

Potential Loan Losses.

As March was coming to a close, we talked through how to account for the evolving impact of the COVID-19 conditions on loan losses. A little understood aspect of loan loss experience is that losses do not occur independently of how we choose to handle our customer base. Where people exhibit the character and capacity to make tough decisions and go all-in with their resources, we will do our part to ride with and inject additional support to get them back on their feet. In 2008-2010, our customer base responded very well. It was heartwarming to see what people could do when faced with a clear choice. We expect people to do what they can do. We do not expect them to do what they cannot. We also expect to do what we should. We can create higher losses by either passively hoping customer problems are solved or by failing to afford people the time and money necessary to turn around. Successful lending is more a process of constructive engagement than of detached quantitative analysis. We know that the PPP is the easy money. The hard money to advance comes later.Nicolet is constructed to both reflect and elevate the state of business and community life. The scale of challenges within our customer base will, by design, cause our income statement to reflect the distress of the people we serve. They didn’t ask for this virus and neither did we. We will make responsible choices. Our goal is to be a strong, liquid and supportive vessel of belief in our customers and our market. Doing things right is the way to maximize tomorrow’s value, but not necessarily today’s earnings per share.

Community Impact.

This economic shock is not merely a seismic event for businesses. Individuals are learning new ways of communicating, connecting, shopping and learning. Organizations such as hospitals, universities and school districts are now being forced to implement structural changes from which they are highly unlikely to retreat. We are not going back to what was. In our region, hospitals have shut down elective procedures to prepare for a COVID-19 surge. Most of them are burning a lot of cash as they have eliminated their high margin revenue activities and replaced them with empty beds waiting for COVID-19 cases that are characterized by high cost and low margin. Our public university system was already struggling with a sprawling, aging physical infrastructure and declining enrollment. In the space of two weeks, the UW System went from distance learning as an emerging novelty to moving instruction entirely online. Most public and private higher education institutions have seen cash flow flip dramatically negative, and it is far from clear that on-campus enrollment will rise back to pre-COVID-19 levels.


Housing markets have been very strong in our region for the last several years. Our mortgage volume continues at its highest level ever, despite COVID-19, with a high percentage representing refinance applications. The full impact of COVID-19 on new home purchases and construction is yet to be realized. We expect that consumer confidence will take time to come back. People have a renewed appreciation for how quickly paper wealth can vanish and income levels can change. This will dampen consumer spending and soften real estate activity. Cash outlays that were once considered appropriate and necessary will be re-evaluated. Families will think differently about what are “needs” and “wants”. In the near term, our mortgage fee income level is greatly benefiting from low rates and will likely continue through much of the year, even as housing markets soften.

Policy Implications.

The crisis of 2008-2010 brought a breathtaking expansion of federal initiatives. The Fed, Treasury and FDIC did things no one anticipated they could, should or would do. How these decisions were made and implemented is skillfully chronicled in Andrew Ross Sorkin’s book “Too Big to Fail”. If you are still stuck at home, read it and think about those events. The origins of federal support never really retreated from the stimulating posture taken in those years. These actions sort of worked, and have had a lasting impact on perceptions about what the Federal Government can and should do. Now we find ourselves in circumstances where far more is being done. The scale of liquidity being injected now is a multiple of that former period. We understand that, in these circumstances, what can be done must be done. Unfortunately, these two crises reinforce the fundamental illusion that there is no limit to what federal action can accomplish. This calls forth questions that cut to the heart of our future as a nation as well as our future as a community bank.

Whose trillions are these? Where do they come from? How and when are they paid back and by whom? Much as modern monetary theory would have us think these questions to be hopelessly simplistic, they are very relevant. If these trillions really bear no relationship to future tax rates, GDP growth rates, and currency movements, then why do we wait for a crisis to throw trillions around? Can Congress, the President, the Fed and the Treasury really create money without reference to whose past or future work these dollars represent? There is no question that this massive injection of liquidity will stimulate. To what extent will it merely stimulate asset prices to the benefit of those with investment assets? To what extent will this validate the fundamental illusion that money creates work? Capital can facilitate productivity, but it is people who choose to work, and it is their work which is the foundational source of wealth.

Many people are facing very tough decisions. Some of them involve life and death, and some are more economic in nature. The very difficult economic and political decisions are only just beginning. Our people at Nicolet have been a very effective conduit of federal emergency funding, but the PPP dollars and the broader CARES Act dollars are the easy money. Those dollars are being hustled out to give businesses, hospitals, universities and airlines the chance to face up to questions of how and if to restart, where to cut costs, and how to gain efficiency from what we are all learning. There are real opportunities for forward-looking organizations that grasp the need to change. Where will the money come from to help these organizations stand up, gear up and get back to work? We intend to put Nicolet’s capital, skill and funding behind organizations that show the awareness, capacity and fortitude to address their uncertain future. That work must be launched and sustained into the deeply recessionary conditions that will linger into 2021. What remains unclear is the extent to which federal actions will facilitate, complement or compete with the deployment of our resources.

Nicolet is a pure play, community intermediary. All our equity was raised regionally through stock sold directly and through stock acquisitions of other community banks. Our modest institutional ownership primarily consists of passive investment funds that acquired our stock because we have grown into a public company and are now in the Russell 2000 index. The core of our business is using local deposits, backed by local equity to make local loans. We invest in each other for our regional future. There is much in the scale of federal action at this time to suggest that such regional intermediation is unnecessary. This cuts to the heart of our fundamental value proposition. We are an expression of the trust and cooperation our customers, owners and employees commit to each other. Our owners, depositors and borrowers are not electronic abstractions; still less are they a mere means by which to implement economic theories. They have names and nearly all are known personally by more than one of our 600 employees. The coming months will determine whether such local intermediation is merely insufficient to this crisis moment or whether it has been rendered largely unnecessary by forthcoming federal actions.

The Fed has kept interest rates near zero for most of the last twelve years. This is a very unsubtle message that borrowing is more important than saving. The stock market clamors for rate cuts, but the traditional savers who fund our loans don’t rejoice at these actions. Low rates are essentially a tax on traditional savers for the benefit of borrowers. Most of our customers believe that responsible behavior consists of working hard, living modestly and building a safe nest egg. The deliberate suppression of savings rates has crowded these dollars into riskier assets such as the stock market. Do we really want people borrowing more and investing in paper assets, or do we want them working hard and reducing risk? In the weeks since this crisis erupted, it has become easier to see who does the real work essential to community life. We try to approach our work with the humility appropriate to people who see our neighbors make or grow things, drive trucks, put out fires and work in medical centers. In the hierarchy of real work, banks perform a necessary ancillary service. Our engagement doesn’t cause their work; it merely facilitates it. We hope that federal policy makers remember that they too are merely financial intermediaries. What we really need to do is to get people working, taking care of themselves and each other.


Nicolet will continue to grow and prosper in coming years. We don’t like stress, but we respond well to it. These dislocations create long-term opportunity for adaptable organizations capable of clear strategic decision-making. We have written in recent years about succession planning and talent development. It is very gratifying to see our people be creative, energetic and resilient. Our front-line leadership encourages and teaches people to accept responsibility and act with thoughtful urgency. These definitely are times when we can see who has the capacity and the will to invest in the renewed success of our customers and of Nicolet. We often hear that business is mostly about people – It’s all about people. The long winter is ending in the north, but shelter-in-place is prolonging our cabin fever. There is a very palpable drive to get back to work. Things won’t be the same, but the people who keep it together will have learned anew the concrete reality that we need each other, and we are better together. That reality is not merely a general sentiment. This is the whole foundation of Nicolet and of our communities.

Thank You,

Bob Atwell

Important Note: This material is for informational purposes only and is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy or investment product. Madison Wealth Management does not provide tax, legal or accounting advice. © Madison Wealth Management 2020