In one of the region’s biggest news stories of the year, Green Bay, Wisconsin-based Nicolet Bankshares Inc. announced the acquisition of Iowa City-based MidWestOne Financial Group Inc.
The proposed merger will create one of the largest community banks in the Upper Midwest, with more than $15 billion in assets, significant economies of scale and peer-leading profitability metrics. The combined bank will have complementary and contiguous geographic footprints, including lead local market share positions across several communities throughout Wisconsin, Iowa, eastern Minnesota and northern Michigan, according to a news release.
We don’t question the business case for the acquisition. It makes sense geographically, since the banks have no branch overlaps and ostensibly share the same Midwest work ethic and values. It makes sense financially, since the value of MidWestOne’s stock in the deal was $41.37 per share, a premium of about 46% over MidWestOne’s price before the announcement.
Sometimes getting bigger, especially in a highly-regulated industry like banking, benefits shareholders and even its customers.
Mike Daniels, chairman, president and CEO of Nicolet, understands the complexities and emotions of a bank losing its local headquarters. Nicolet has completed nine acquisitions over the past 12 years. He alluded to such in the news release by saying, “We are excited to announce the acquisition of MidWestOne and welcome their employees, customers and shareholders to Nicolet. We view the people at MidWestOne as true kindred spirits in our approach to serving customers, communities and employees. They have been stalwarts of the community for over 90 years, and we intend to be great stewards of that legacy.”
The deal will push Nicolet into Iowa for the first time and immediately rank it in the top five in deposit market share across the state, according to the investor presentation.
The crown jewel for expansion, though, might be Minneapolis, according to an article in Banking Dive. Nicolet counts two offices there. But buying MidWestOne gives the Wisconsin bank more than $1 billion in added deposits from the Twin Cities area, along with 15 additional branches.
Buying MidWestOne also boosts Nicolet’s wealth management footprint, adding $3.4 billion in assets under advisement across new markets, the Wisconsin bank said.
Whenever one of the region’s largest or publicly traded companies is acquired or merged and the headquarters is no longer based in the Corridor region, things change — and usually not for the best. Community involvement, charitable donations and local decision-making are impacted.
This sale is especially troublesome for Iowa City, which will lose the corporate headquarters of its only publicly-traded company and follows the bankruptcy of Mercy Iowa City, the loss of NCS Pearson, the decline of ACT and the relocation of Steindler Orthopedics to North Liberty.
We hope that Nicolet will, in fact, be “a great steward” of MidWestOne’s 90-plus years of commitment to Iowa City and the region.
