The Bank Slate


Nicolet to buy ag lender County Bancorp

Nicolet Bankshares in Green Bay, Wis., has agreed to buy County Bancorp in Manitowoc, Wis.

The $4.5 billion-asset Nicolet said in a press release Tuesday that it will pay $219 million in cash and stock for the $1.5 billion-asset parent of Investors Community Bank. The deal, which is expected to close in the fourth quarter, priced County at 138% of its tangible book value.

Nicolet has been acquisitive lately, agreeing in April to buy Mackinac Financial. “We are excited about the potential of combining Nicolet and Investors to serve our customers and communities,” Mike Daniels, Nicolet’s president and CEO, said in the release.

“Our collective founder-entrepreneurial mindset makes for a distinctive culture that resonates with our employees and customers,” Daniels added. “This partnership is an intentional, strategic move to become the premier agriculture lender throughout Wisconsin.”

Nicolet said it expects the deal to be accretive to its 2022 earnings per share. It should take less than two years for Nicolet to earn back an expected 1.2% dilution to its tangible book value.

Nicolet said that, over time, it will bring a portion of County’s $842 million ag servicing book onto its own balance sheet.

Nicolet plans to cut about a third of County’s annual noninterest expenses. It expects to incur $19 million of merger-related expenses.

Tim Schneider, County’s president, will join Nicolet at a senior vice president and agriculture lending manager. A County director will join Nicolet’s board.

County on Monday disclosed improved credit metrics, reflecting a recovery in the agriculture sector. 

Total nonperforming assets at County fell by $19 million, or 33%, since March 31, to $39 million. Classified assets have declined by 35% since the end of the first quarter.

The deal was “a surprise,” Brendan Nosal, an analyst at Piper Sandler, wrote in a note to clients.

“We did not view County as sellers,” Nosal added. “We viewed the company’s unique business mix [with ag loans making up 60% of the portfolio] as an unusual consideration for a buyer.”

Nosal said there are “ample opportunities” for Nicolet to use its excess liquidity to remix County’s funding and to “keep more of County’s loan production on-sheet over time.”

Keefe, Bruyette & Woods and Bryan Cave Leighton Paisner advised Nicolet. Stephens and Barack Ferrazzano Kirschbaum & Nagelberg advised County.

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