RankingBanking 25 - Flipbook - Page 26
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C&I can also mean greater stability for a bank
since it’s a heavier lift for a customer to move his
or her business to another institution. “With com-
not business. That’s just booking assets to book
assets,” Daniels says.
C&I is often seen as riskier than CRE lending.
mercial and industrial lending, you are establishing
In terms of charge-off rates, CRE loans fare
a real sticky relationship with that particular
better than commercial loans, Pruis says, though
borrower,” says Joel Pruis, a senior director in the
he notes that’s a “myopic view” of these different
commercial and small business segments at the
business models since it doesn’t take into account
consulting firm Cornerstone Advisors. “To
the better yields and other revenue streams that
1.5%,
NICOLET BANKSHARES’
CORE RETURN ON AVERAGE
ASSETS FOR 2024.
switch banks, it is very challenging for
the customer.”
C&I credits garner. “If you’re heavy into C&I, then
the net impact is you get better pricing to compen-
There are also greater oppor-
sate for the higher charge-offs,” he adds. “The net
tunities for fee income revenue
performance is overall better.”
streams. Nicolet earned roughly
Daniels believes that C&I has its own advantag-
$82 million in noninterest in-
es when it comes to risk management. If this type
come in 2024, more than double
of business begins to struggle, the owner has more
the prior year, according to S&P
levers to pull to right the ship, such as cutting
Global Market Intelligence. In con-
costs or increasing prices. “You can do a lot to
trast, CRE loans are largely transac-
fix an operating company,” he adds. In contrast,
tional, meaning the borrowers are simply
“there’s only one way to fix a bad CRE loan, and
looking for the best interest rate they can get.
that’s to write it down and sell it.”
About 22% of Nicolet’s portfolio are CRE loans,
Still, much of this strategy depends on Nicolet
and even in those cases, the bank normally has a
gaining a significant share of a customer’s wallet.
deeper relationship with the borrower, Daniels says.
To achieve this, no one is referred to as lenders,
Daniels’ office is on the third floor of Nicolet’s
and instead employees are considered bankers,
headquarters in downtown Green Bay. It is across
Daniels says. No one sees their job as merely
the Fox River from the Neville Public Museum
originating a loan; their jobs are in relationship
of Brown County, a local nonprofit that has two
development, he adds.
dinosaurs made from recycled metal wearing
Compensation is not based on commission for
party hats outside its doors. “If something hits the
originating loans. Employees are paid first based
street, like this apartment building going up across
on how the company overall performs and then
the street or those apartment buildings there,”
their individual contributions second. That ensures
Daniels says one day in May while gesturing out
monetary incentives align with this philosophy. “If
of his window to construction projects near the
you turn them into portfolio managers, they quit
Neville and its celebratory dinosaurs, “all they’re
producing,” Daniels adds.
looking for is the lowest rate.”
Emphasizing how personal these financial
If a developer does reach out to Nicolet about
decisions can be for customers and borrowers is
a potential loan, they often don’t like the terms,
also part of the bank’s culture. Recognizing and
Daniels says. The bank requires the borrower to
understanding this is essential to developing these
put in significant cash as equity and offers shorter
deeper relationships and convincing customers
terms than other lenders. These conditions are
Nicolet is a partner to them. Daniels notes that
usually unattractive to the developer, and they
during a recent meeting with Nicolet’s mortgage
end up taking their project elsewhere. “That’s
bankers, he told the group that he never wants to
