BYLK Baylake Corp

Filed Pursuant to Rule 424(b)(3)

Registration Number 333-205127

MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT

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PROXY STATEMENT OF NEW BANCSHARES, INC.

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PROSPECTUS OF BAYLAKE CORP.

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MERGER PROPOSAL – YOUR VOTE IS IMPORTANT

DEAR NEW BANCSHARES, INC. SHAREHOLDERS:

You are cordially invited to attend a special meeting of shareholders of NEW Bancshares, Inc., a Wisconsin corporation, or NEWBI, which will be held on November 23, 2015, at 4:15 p.m. Central Time, at Union State bank, 223 Ellis Street, Kewaunee, Wisconsin 54216.

At the meeting, NEWBI shareholders will be asked to consider and vote upon the agreement and plan of merger, which we refer to as the merger agreement, dated as of May 5, 2015, between Baylake Corp., a Wisconsin corporation, or Baylake, that provides for Baylake’s acquisition of NEWBI.  The acquisition will be effected through the merger of NEWBI with and into Baylake.  On October 30, 2015, NEWBI commenced mailing this proxy statement to shareholders.

The aggregate merger consideration paid by Baylake to NEWBI shareholders is expected to be approximately $9,689,472, subject to possible downward adjustment as described below.  Subject to adjustment, as described below, approximately 40% of the aggregate merger consideration will be paid in shares of Baylake common stock, and approximately 60% of the aggregate merger consideration will be paid in cash.  The percentage of the merger consideration that is payable in cash is subject to downward adjustment, with a corresponding increase in the percentage payable in shares of Baylake common stock, to the extent necessary to qualify the transaction as a reorganization under Section 368(a) of the Internal Revenue Code of 1986, as amended.  Baylake and NEWBI currently believe that, in order for the transaction to qualify as a reorganization,  the portion of the merger consideration to be paid in shares of common stock will be slightly greater than 40% with a corresponding decrease in the portion of the merger consideration to be paid in cash.

The exchange ratio used to determine the number of shares of Baylake common stock that you will be entitled to receive for each share of NEWBI common stock, no par value per share, you own will be determined by dividing $38.40 by the average daily high and low sale price per share of Baylake common stock on The NASDAQ Stock Market, LLC, or NASDAQ, for 10 trading days ending on and including the second trading day preceding the closing date of the merger, which we refer to as the average trading price; provided, that if the number of shares so calculated (i) is greater than 3.4595, such number will be reduced to 3.4595, or (ii) is less than 2.8319, such number will be increased to 2.8319.  The aggregate merger consideration may be adjusted downward dollar-for-dollar if the balance sheet delivered to Baylake by NEWBI as of the closing date of the merger reflects that NEWBI shareholders’ equity, as determined pursuant to the merger agreement, is less than $9,461,136 as of the closing date of the merger.  If the balance sheet delivered to Baylake by NEWBI as of the closing date of the merger reflects that NEWBI shareholders’ equity, as determined pursuant to the merger agreement, is more than $9,461,136 as of the closing date of the merger, NEWBI may, immediately prior to closing, pay a special dividend to its shareholders in an amount equal to any such excess.

On September 8, 2015, Baylake announced that it had entered into a definitive agreement to merge with and into Nicolet Bankshares, Inc., a Wisconsin corporation, or Nicolet, as described in more detail in “Nicolet Merger” beginning on page 48.  NEWBI shareholders receiving shares of Baylake common stock in the merger of NEWBI with and into Baylake will be entitled to notice of and to vote at the special meeting of Baylake shareholders called to consider and approve the Nicolet merger.

The merger consideration is subject to downward adjustment as described in this proxy statement/prospectus, and the exchange ratio and relative percentage of the merger consideration that will be paid in cash and Baylake common stock will not be finally determined until after the date of the special meeting.  Therefore, at the time of the special meeting, you will not know the precise value or composition of the merger consideration you may receive on the date the merger is completed.

Assuming no adjustment to the merger consideration, no payment of any special dividend and that the currently outstanding 100,932 shares of NEWBI common stock remain unchanged at the closing, based on an average trading price of $14.12, which is equal to the Average Trading Price if it were calculated as of October 23, 2015, the latest practicable date prior to the date of this proxy statement/prospectus, the merger consideration that a holder of NEWBI common stock would be entitled to receive for each share of NEWBI common stock would be $57.60 in cash and 2.8319 shares of Baylake common stock.  In each case, assuming no adjustment to the merger consideration, no payment of any special dividend and that the currently outstanding average trading price were equal to the minimum of $11.10, each share of NEWBI common stock would be converted into the right to receive $57.60 in cash and 3.4595 shares of Baylake common stock, and if the average trading price were equal to the maximum of $13.56, each share of NEWBI common stock would be converted into the right to receive $57.60 in cash and 2.8319 shares of Baylake common stock.  In any event, Baylake will issue up to a maximum of 349,174 shares of Baylake common stock to NEWBI shareholders as contemplated by the merger agreement.

We expect the merger to be a tax-free transaction for NEWBI shareholders, except as provided in “Material United States Federal Income Tax Consequences of the Merger” beginning on page 50.

Baylake common stock is traded on NASDAQ under the symbol “BYLK.”  The closing price of Baylake common stock on October 23, 2015 was $14.35 per share.

The NEWBI board of directors has unanimously determined that the combination of NEWBI and Baylake is in the best interests of the NEWBI shareholders based upon its analysis, investigation and deliberation, and the NEWBI board of directors unanimously recommends that the NEWBI shareholders vote “FOR” the approval of the merger agreement and the transactions contemplated thereby.

You should read this entire proxy statement/prospectus, including the appendices and the documents incorporated by reference into the document, carefully because it contains important information about the merger agreement and the merger.  In particular, you should read carefully the information under the section entitled “Risk Factors” beginning on page 16.

The shares of Baylake common stock are not savings accounts, deposits or other obligations of any bank or savings association and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.  Stock is subject to investment risks, including loss of value.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved the merger described in this proxy statement/prospectus or the Baylake common stock to be issued in the merger, or passed upon the adequacy or accuracy of this proxy statement/prospectus.  Any representation to the contrary is a criminal offense.

This proxy statement/prospectus is dated October 30, 2015.

REFERENCES TO ADDITIONAL INFORMATION

As permitted by the Securities and Exchange Commission, which we refer to as the SEC, this document incorporates by reference important business and financial information about Baylake that is not included in or delivered with this document.  See “Where You Can Find More Information – Incorporation of Certain Documents By Reference” on page 75 for a list of documents that Baylake has incorporated by reference into this document.  These documents are available to you without charge upon written or oral request made to:

Baylake Corp.
217 North Fourth Avenue
Sturgeon Bay, Wisconsin 54235
Attention:  Corporate Secretary
(920) 743-5551

To obtain timely delivery of these documents, you must request the information no later than November 16, 2015, in order to receive them before the NEWBI special meeting of shareholders.

NEW Bancshares, Inc.
223 Ellis Street
Kewaunee, WI 54216

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 23, 2015

NOTICE IS HEREBY GIVEN that a special meeting of shareholders of NEW Bancshares, Inc., or NEWBI, will be held at Union State Bank, 223 Ellis Street, Kewaunee, Wisconsin 54216, at 4:15 p.m. Central Time, on November 23, 2015 to approve the agreement and plan of merger, which we refer to as the merger agreement, dated as of May 5, 2015, by and between Baylake Corp. and NEWBI, and the transactions contemplated thereby.  This proposal is referred to as the merger proposal.

NEWBI will transact no other business at the special meeting, except for business properly brought before the special meeting or any adjournment or postponement of such meeting.

The merger proposal is described in more detail in the attached proxy statement/prospectus, which you should read carefully in its entirety before you vote.  A copy of the merger agreement is attached as Appendix A to the proxy statement/prospectus.

The NEWBI board of directors has set October 19, 2015, as the record date for the special meeting.  All holders of record of NEWBI common stock at the close of business on the record date will be notified of the special meeting.  Only holders of record of NEWBI common stock at the close of business on October 19, 2015, will be entitled to vote at the special meeting and any adjournments or postponements thereof.  Any shareholder entitled to attend and vote at the special meeting is entitled to appoint a proxy to attend and vote on such shareholder’s behalf.  Such proxy need not be a holder of NEWBI common stock.

Approval of the merger requires the affirmative vote at the special meeting of a majority of the outstanding shares of NEWBI common stock.

Your vote is very important.  To ensure your representation at the special meeting, please vote via Internet or by completing and returning the enclosed proxy card.  Please vote promptly whether or not you expect to attend the special meeting.  Submitting a proxy now will not prevent you from being able to vote in person at the special meeting.

The NEWBI board of directors has unanimously adopted and approved the merger agreement and the transactions contemplated thereby, and recommends that you vote “FOR” approval of the merger proposal.

BY ORDER OF THE BOARD OF DIRECTORS

Jeffrey W. Kleiman

President

C. Jack Novak

Chairman

October 30, 2015

TABLE OF CONTENTS

i

APPENDICES

Appendix A:  Merger Agreement

Appendix B:  Subchapter XIII of the Wisconsin Business Corporation Law

Appendix C:  First Amendment to Merger Agreement

ii

QUESTIONS AND ANSWERS ABOUT THE MERGER AGREEMENT, THE MERGER AND SPECIAL MEETING

The following questions and answers briefly address some commonly asked questions about the merger agreement, the merger and the special meeting.  They may not include all the information that is important to the shareholders of NEWBI.  Each shareholder of NEWBI should read this entire proxy statement/prospectus carefully, including the appendices and other documents referred to in this proxy statement/prospectus.

Q:

Why am I receiving these materials?

A:

NEWBI is sending these materials to its shareholders to help them decide how to vote their shares of NEWBI common stock with respect to the proposed merger described below.

The merger cannot be completed unless NEWBI shareholders approve the merger agreement.  NEWBI is holding a special meeting of shareholders to vote on the merger agreement as described in “Special Meeting of Shareholders.”  Information about the special meeting, the merger agreement and the merger is contained in this proxy statement/prospectus.

This proxy statement/prospectus constitutes a prospectus of Baylake and a proxy statement of NEWBI.  It is a proxy statement because the board of directors of NEWBI is soliciting proxies from shareholders of NEWBI.  It is a prospectus because Baylake will issue shares of its common stock in exchange for shares of NEWBI common stock in the merger.

Q:

What will NEWBI shareholders be entitled to in the merger?

A:

If the merger is completed, the shares of NEWBI common stock that you own immediately before the completion of the merger will be converted into the right to receive cash and shares of Baylake common stock (in each case subject to possible adjustment).  The aggregate merger consideration paid by Baylake to NEWBI shareholders is intended to be approximately $9,689,472, subject to possible downward adjustment in the overall amount of consideration paid as described below.  The parties intend for approximately 40% of the aggregate merger consideration to be paid in shares of Baylake common stock and approximately 60% to be paid in cash.  However, the percentage of merger consideration that is payable in cash is subject to downward adjustment, with a corresponding increase in the percentage payable in shares of Baylake common stock, to the extent necessary to qualify the transaction as a reorganization under Section 368(a) of the Internal Revenue Code of 1986, as amended, which we refer to as the Code.  To enable the parties to receive tax opinions that it is more likely than not that the merger will be treated as a tax-free reorganization, the parties currently believe that the portion of the merger consideration to be paid in shares of Baylake common stock will be slightly greater than 40% with a corresponding decrease in the portion of the merger consideration to be paid in cash.  The adjustment in the merger consideration will be made to provide assurances that NEWBI shareholders will not receive more than 60% of their total consideration in cash in the aggregate between the merger and the proposed merger of Baylake with and into Nicolet described in more detail in “Nicolet Merger” beginning on page 48.

For each of your shares of NEWBI common stock, you will receive the per share merger consideration to be calculated as set forth in the merger agreement.  The exchange ratio used to determine the number of shares of Baylake common stock that you will be entitled to receive for each share of NEWBI common stock you own will be determined based on the average daily high and low sale price per share of Baylake common stock on the NASDAQ Stock Market LLC, which we refer to as NASDAQ, for 10 trading days ending on and including the second trading day preceding the closing date of the merger, which we refer to as the average trading price; provided, that if the number of shares so calculated (i) is greater than 3.4595, such number will be reduced to 3.4595, or (ii) is less than 2.8319, such number will be increased to 2.8319.

In addition, the merger consideration may be adjusted downward if the balance sheet delivered by NEWBI to Baylake as of the closing date of the merger reflects that NEWBI shareholders’ equity, as determined pursuant to the merger agreement, is less than $9,461,136.  If the balance sheet delivered to Baylake by NEWBI as of the closing date of the merger reflects that NEWBI shareholders’ equity, as determined pursuant to the merger agreement, is more than $9,461,136 as of the closing date of the merger, NEWBI may, and we expect it will, immediately prior to the closing, pay a special dividend to its shareholders in an amount equal to the excess.

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Assuming no adjustment to the merger consideration, no payment of any special dividend and that the currently outstanding 100,932 shares of NEWBI common stock remain unchanged at the closing date, based upon an average trading price of $14.12, which is equal to the average trading price if it were calculated as of October 23, 2015, the latest practicable date prior to the date of this proxy statement/prospectus, the merger consideration that a holder of NEWBI common stock would be entitled to receive for each share of NEWBI common stock would be $57.60 in cash and 2.8319 shares of Baylake common stock.  In each case, assuming no adjustment to the merger consideration, no payment of any special dividend and that the currently outstanding 100,932 shares of NEWBI common stock remain unchanged at the closing, and if the average trading price were equal to the minimum $11.10, each share of NEWBI common stock would be converted into the right to receive $57.60 in cash and 3.4595 shares of Baylake common stock, and if the average trading price were equal to the maximum of $13.56, each share of NEWBI common stock would be converted in to the right to receive $57.60 in cash and 2.8319 shares of Baylake common stock.  For a description of how the per share merger consideration will be calculated, see “The Merger – Terms of the Merger – Merger Consideration” beginning on page 25.

Q:

When do Baylake and NEWBI expect to complete the merger?

A:

Baylake and NEWBI expect to complete the merger after all conditions to the merger in the merger agreement are satisfied or waived, including after shareholder approval is received at the special meeting of NEWBI shareholders and all required regulatory approvals are received.  Baylake and NEWBI currently expect to complete the merger in the fourth quarter of 2015.  It is possible, however, that as a result of factors outside of either company’s control, the merger may be completed at a later time, or may not be completed at all.

Q.

What will happen to Union State Bank after the merger?

A.

Union and Baylake Bank have filed applications with the regulatory agencies for approval to merge the two banks into one immediately after the merger of NEWBI and Baylake.  This will only take place, subject to regulatory approval, if the merger of NEWBI and Baylake has been consummated.  No separate NEWBI shareholder approval is required to consummate the bank merger.

Q:

How would the proposed merger of Baylake with and into Nicolet affect me?

A:

On September 8, 2015, Baylake announced that it had entered into a definitive agreement to merge with and into Nicolet, subject to customary closing conditions, including requisite shareholder and regulatory approval.  NEWBI shareholders receiving shares of Baylake common stock in the merger of NEWBI with and into Baylake will be entitled to notice of and to vote at the special meeting of Baylake shareholders called to approve the merger of Baylake with and into Nicolet if and at such time such a meeting is called.  Baylake is entitled, under its agreement with Nicolet, to pay a special dividend to its shareholders (including shareholders of NEWBI receiving shares of Baylake in the merger of NEWBI with and into Baylake) in an amount up to $0.40 per share immediately prior to consummation of the merger of Baylake with and into Nicolet.  Upon consummation of such merger, you will receive shares of Nicolet common stock in exchange for the shares of Baylake common stock you received in the merger of NEWBI with and into Baylake.  For more information about the proposed merger of Baylake with and into Nicolet, see “Nicolet Merger,” beginning on page 48.

Q:

Why do NEWBI and Baylake want to engage in the merger?

A:

NEWBI believes that the merger will achieve the board of directors’ strategic business objectives, including increasing shareholder value, growing the size of the business and enhancing liquidity for NEWBI shareholders, and Baylake believes that the merger will provide an opportunity to expand and complement its existing market presence in Kewaunee and Brown counties and expand into Manitowoc county.  As a larger company, Baylake can provide greater capital and resources and efficiencies from integrating the operations of NEWBI into Baylake’s existing operations and allow Union State Bank, a Wisconsin state chartered federally insured commercial bank owned by NEWBI, or Union, to compete more effectively and to offer a broader array of products and services to better serve its banking customers.  To review the reasons for the merger in more detail, see “The Merger – NEWBI’s Reasons for the Merger and NEWBI’s Board Recommendations” beginning on page 34 and “The Merger – Baylake’s Reasons for the Merger” on page 34.

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Q:

What am I being asked to vote on?

A:

NEWBI shareholders are being asked to vote on approval of the merger agreement and the merger of NEWBI with and into Baylake.  This vote is separate and independent from any vote of Baylake shareholders to approve the merger of Baylake with and into Nicolet, which vote would be taken at a later special meeting of Baylake shareholders called for such purpose.

Q:

How does the board of directors of NEWBI recommend that I vote?

A:

The NEWBI board of directors unanimously recommends that NEWBI shareholders vote “FOR” the proposal described in this proxy statement/prospectus.  The NEWBI board of directors has determined that the merger agreement and the merger are advisable and in the best interests of NEWBI.

For a discussion of interests of the NEWBI directors and executive officers in the merger that may be different from, or in addition to, the interests of NEWBI shareholders generally, see “The Merger—Interests of NEWBI Directors and Executive Officers in the Merger” on page 36.

Q:

What do I need to do now?

A:

After carefully reading and considering the information contained in this proxy statement/prospectus, each NEWBI shareholder should (i) either complete, sign and date the enclosed proxy card and return it in the enclosed envelope as soon as possible so that their shares will be represented at the NEWBI special meeting, or (ii) vote online by following the instructions on each shareholder’s proxy card.

Please follow the instructions set forth on the proxy card or on the voting instruction form provided by the record holder if your shares are held in the name of your broker or other nominee.

Q:

How do I cast my vote?

A:

If you are a shareholder of record of NEWBI as of the record date for the special meeting, you may vote by signing and dating the enclosed proxy card and returning it in the postage-paid envelope provided.  You may also vote online by following the instructions on the enclosed proxy card.  Finally, you may also cast your vote in person at the NEWBI special meeting.

Q:

When and where is the special meeting?

A:

The special meeting of NEWBI shareholders will be held at Union State Bank, 223 Ellis Street, Kewaunee, Wisconsin 54216, at 4:15 p.m. Central Time, on November 23, 2015.  All shareholders of NEWBI as of the record date, or their duly appointed proxies, may attend the special meeting.

Q:

What vote is required to approve the proposal to be considered at the special meeting?

A:

Approval of the merger agreement requires the affirmative vote of a majority of all of the outstanding shares of NEWBI, which we refer to as the requisite vote.  Abstentions are not considered votes cast, but are included in determining whether there is a quorum present.

All of the directors of NEWBI entered into a voting agreement pursuant to which they agreed to vote their NEWBI shares at the special meeting in favor of the merger and any other matter necessary for consummation of the transaction contemplated by the merger agreement.  The shares subject to the voting agreement represent approximately 11.37% of the outstanding shares of NEWBI common stock.  No vote of Baylake’s shareholders is required in connection with the transactions contemplated by the merger agreement.

Q:

What constitutes a quorum for purposes of the special meeting?

A:

NEWBI’s bylaws provide that a majority of the outstanding securities of NEWBI entitled to vote, represented in person or by proxy, shall constitute a quorum.  Abstentions are treated as present at the meeting for purposes of determining whether a quorum is present.  If you hold your shares in “street name” and do not

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provide your broker or other nominee with instructions and your broker or other nominee does not submit a proxy card or otherwise does not vote because the broker or other nominee lacks discretionary authority to vote the shares, your shares will not be counted for purposes of determining a quorum and they will have the same effect as a vote against the proposal to approve the merger agreement and the merger.

Q:

Why is my vote important?

A:

NEWBI shareholders are being asked to approve the merger agreement and the merger.  Shareholder approval of the merger agreement and the merger is a closing condition to the merger.  If the required shareholder approval is not obtained, the merger will not occur.  If you do not submit your proxy, or vote in person at the special meeting, it will be more difficult for NEWBI to obtain the necessary quorum to hold the special meeting.  In addition, your failure to submit your proxy or attend the special meeting, or your decision to abstain from the vote, will have the same effect as a vote against the merger agreement and the merger and make it more difficult to obtain approval of the merger agreement and the merger.

Q:

How will my proxy be voted?

A:

If you complete, sign, date and mail your proxy card, your proxy will be voted in accordance with your instructions.  If you sign, date and send in your proxy card, but you do not indicate how you want to vote, your proxy will be voted “FOR” the proposal to approve the merger agreement and the merger.

Q:

What if I abstain from voting or do not vote?

A:

For the purposes of the special meeting, an abstention, which occurs when a NEWBI shareholder attends the special meeting, either in person or by proxy, but abstains from voting, will have the same effect as a vote against the merger proposal.

Q:

May I change my vote or revoke my proxy after I have delivered my proxy or voting instruction card?

A:

Yes.  You may change your vote at any time before your proxy is voted at the special meeting:

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by sending a notice of revocation to the corporate secretary of NEWBI;

•

by sending a completed proxy card bearing a later date than your original proxy card; or

•

by attending the special meeting and voting in person and requesting to change your vote; however, your attendance alone will not revoke any proxy.

If you choose the first method, you must take the described action no later than the beginning of the special meeting.  If you choose to send a completed proxy card bearing a later date than your original proxy card, the new proxy card must be received before the beginning of the special meeting.  If you have instructed a bank, broker or other nominee to vote your shares of NEWBI common stock, you must follow the directions you receive from your bank, broker or other nominee in order to change or revoke your vote.

Q:

What happens if I sell my shares after the applicable record date but before the applicable special meeting?

A:

The applicable record date for the special meeting is earlier than both the date of such meeting and the date that the merger is expected to be completed.  NEWBI has decided not to close the stock transfer books, which means you can transfer your shares before the date of the special meeting.  If you transfer your NEWBI common stock after the record date but before the date of the special meeting, you will retain your right to vote at the special meeting (provided that such shares remain outstanding on the date of the special meeting), but you will not have the right to receive any merger consideration for the transferred shares.  You will only be entitled to receive the merger consideration for shares that you own at the effective time of the merger.

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Q:

What do I do if I receive more than one proxy statement/prospectus or set of voting instructions?

A:

If you hold shares directly as a record holder and also through a nominee, you may receive more than one proxy statement/prospectus and set of voting instructions relating to the applicable special meeting.  Each of these should be voted or returned separately to ensure that all of your shares are voted.

Q:

What are the federal income tax consequences of the merger?

A:

The merger will more likely than not be treated as a reorganization within the meaning of Section 368(a) of Code for federal income tax purposes.  It is a condition to the closing of the merger that Wipfli LLP, or Wipfli, independent accountant to NEWBI, will have delivered an opinion to NEWBI to the same effect at or prior to the effective time of the merger.

Provided that the merger is treated as a reorganization within the meaning of Section 368(a) of Code, you may recognize gain, but you will not recognize loss, upon the exchange of your shares of NEWBI common stock for shares of Baylake common stock and cash.  Provided that the merger is treated as a reorganization, if the sum of the fair market value of the Baylake common stock and the amount of cash you receive in exchange for your shares of NEWBI common stock exceeds the cost basis of your shares of NEWBI common stock, you will recognize taxable gain equal to the lesser of the amount of such excess or the amount of cash you receive in the exchange.  Generally, any gain recognized upon the exchange will be capital gain, and any such capital gain will be long-term capital gain if you have established a holding period of more than one year for your shares of NEWBI common stock.  Depending on certain facts specific to you, any gain could instead be characterized as dividend income.

If the merger is treated as a taxable event rather than a reorganization, then you will recognize gain or loss equal to the difference between the sum of the fair market value of the Baylake common stock and the total amount of cash you receive in the merger and your adjusted tax basis in the shares of NEWBI common stock surrendered in the merger.  If the merger is a taxable event, your aggregate basis in the shares of Baylake common stock received in the merger will be equal to the fair market value of such shares and the total amount of cash received at the time of the merger, and the holding period for those shares will not include the period during which you held your shares of NEWBI common stock exchanged in the merger.  Furthermore, NEWBI would be treated as having sold its assets in exchange for the merger consideration plus assumed liabilities in a taxable transaction and would owe corporate-level income taxes on the gain realized.  Wipfli estimates that NEWBI would recognize approximately $428,000 of corporate level gain in a taxable transaction, and a successor to NEWBI would be liable for paying approximately $170,000 of corporate income tax.

For a more detailed discussion of the material United States federal income tax consequences of the transaction, see “Material United States Federal Income Tax Consequences of the Merger” beginning on page 50.

Tax matters are very complicated, and the consequences of the merger to any particular shareholder will depend on that shareholder’s particular facts and circumstances.  Accordingly, you are urged to consult your own tax advisor to determine your tax consequences from the merger.

Q:

What if I oppose the merger?  Do I have appraisal or dissenters’ rights?

A:

NEWBI shareholders are entitled to dissenters’ rights under Section 180.1301 et seq. of the Wisconsin Business Corporation Law, which we refer to as the WBCL.  If you wish to assert dissenters’ rights, you must deliver to NEWBI before the vote is taken written notice of your intent to demand payment for your shares if the proposed action is effectuated and you must not vote in favor of the proposed action.  If you assert dissenters’ rights, the “fair value” of the shares may be determined in a court-supervised proceeding and may be greater than, equal to or less than the merger consideration to be paid under the terms of the merger agreement.  The procedure for dissenting is described in more detail in “The Merger – Dissenters’ Rights” beginning on page 27.  A copy of the relevant sections of the WBCL is attached as Appendix B to this proxy statement/prospectus.

Q:

Should I send in my stock certificates now?

A:

No.  Please do not send your stock certificates with your proxy card.  If you are a holder of NEWBI common stock, within three business days after the closing date of the merger, you will receive written instructions

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from Computershare, the exchange agent in connection with the merger, regarding how to exchange your stock certificates for Baylake common stock.

Q.

Will we be electing the directors at this meeting?

A.

You will not be asked to elect directors at this special meeting.

Q:

Whom should I contact if I have any questions about the proxy materials or the special meeting?

A:

If you have any questions about the merger agreement or the merger to be considered at the special meeting, need assistance in submitting your proxy or voting your shares or need additional copies of this proxy statement/prospectus or the enclosed proxy card, you should contact NEWBI.

NEW Bancshares, Inc., Attn:  Corporate Secretary

223 Ellis Street, Kewaunee, WI  54216

Telephone:  (920) 388-3466

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SUMMARY

This summary highlights selected information from this proxy statement/prospectus.  It may not contain all of the information that is important to you.  We urge you to carefully read the entire document and the other documents to which we refer you in order to fully understand the merger agreement and the merger.  See “Where You Can Find More Information” on page 75.  Each item in this summary refers to the page of this proxy statement/prospectus on which that subject is discussed in more detail.

The Companies

Baylake Corp.

Baylake is a Wisconsin corporation organized in 1976 and is registered as a bank holding company under the Bank Holding Company Act of 1956, as amended, which we refer to as the BHCA.  Baylake’s primary activities consist of holding the stock of our wholly-owned subsidiary bank, Baylake Bank, and providing a wide range of banking and related business activities through Baylake Bank our other subsidiaries.  Baylake Bank, or the Bank, is an independent community bank offering a full range of financial services primarily to small businesses and individuals located in Baylake’s market area.  Baylake conducts community banking business through 20 full-service financial centers located throughout Northeast Wisconsin, in Brown, Door, Kewaunee, and Outagamie Counties.  At December 31, 2014, Baylake had total assets of approximately $1.0 billion.

Baylake’s common stock is traded on NASDAQ under the symbol “BYLK.”

Baylake’s principal executive office is located at 217 North Fourth Avenue, Sturgeon Bay, Wisconsin, and its telephone number is (920) 743-5551.  Baylake’s internet address is www.baylake.com.  Information about the current Baylake directors and executive officers can be found in the documents listed under “Where You Can Find More Information - Incorporation of Certain Documents by Reference” in this proxy statement/prospectus. Additional information about Baylake is included under “Information Concerning Baylake” beginning on page 54 and “Where You Can Find More Information” beginning on page 75.

NEW Bancshares, Inc.

NEWBI is a bank holding company headquartered in Kewaunee, Wisconsin.  NEWBI’s principal business activities are conducted through its full-service, wholly-owned bank subsidiary, Union, a Wisconsin state-chartered bank with deposits insured by the FDIC.  NEWBI had approximately $92.1 million in assets, including $48.9 million in loans, as well as $82.1 million in deposits, as of December 31, 2014.

NEWBI’s common stock is not listed on an exchange or quoted on any automated services, and there is no established trading market for shares of NEWBI common stock.

NEWBI’s principal office is located at 223 Ellis Street, Kewaunee, Wisconsin, and its telephone number is (920) 388-3466.  NEWBI’s internet address is www.unionstatebank.org.  Additional information about NEWBI is included under “Information Concerning NEWBI” beginning on page 55.

The Merger

The merger agreement provides that, subject to its terms and conditions and in accordance with Wisconsin law, NEWBI will merge with and into Baylake, with Baylake being the surviving corporation in the merger.  This transaction is referred to in this proxy statement/prospectus as the merger.  Following the merger, Union will be merged with and into Baylake Bank, with Baylake Bank surviving the merger.

Baylake and NEWBI expect the merger contemplated by the merger agreement, taken together, to be a tax-free transaction for NEWBI shareholders except as provided in “Material United States Federal Income Tax Consequences of the Merger” beginning on page 50.

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Merger Consideration

The aggregate merger consideration paid by Baylake to NEWBI shareholders is expected to be approximately $9,689,472, subject to possible downward adjustment as described below.  Subject to adjustment, as described below, approximately 40% of the aggregate merger consideration will be paid in shares of Baylake common stock, $5.00 par value per share, and approximately 60% of the aggregate merger consideration will be paid in cash.  “Par value” for a share refers to the stock value stated in the corporate articles of incorporation, and is not related to Baylake’s market value.  The percentage of the merger consideration that is payable in cash is subject to downward adjustment, with a corresponding increase in the percentage payable in shares of Baylake common stock, to the extent necessary to qualify the transaction as a reorganization under Section 368(a) of the Code.  To enable Baylake and NEWBI to receive tax opinions that it is more likely than not that the merger will be treated as a tax-free reorganization, the parties currently believe that the portion of the merger consideration to be paid in shares of Baylake common stock will be slightly greater than 40% with a corresponding decrease in the portion of the merger consideration to be paid in cash.  The adjustment in the merger consideration will be made to provide assurances that NEWBI shareholders will not receive more than 60% of their total consideration in cash in the aggregate between the merger and the proposed merger of Baylake with and into Nicolet described in more detail in “Nicolet Merger” beginning on page 48.

The exchange ratio used to determine the number of shares of Baylake common stock that you will be entitled to receive for each share of NEWBI common stock, no par value per share, you own will be determined by dividing $38.40 by the average trading price; provided, that if the number of shares so calculated (i) is greater than 3.4595, such number will be reduced to 3.4595, or (ii) is less than 2.8319, such number will be increased to 2.8319.  The aggregate merger consideration may be adjusted downward dollar-for-dollar if the balance sheet delivered to Baylake by NEWBI as of the closing date of the merger reflects that NEWBI shareholders’ equity, as determined pursuant to the merger agreement, is less than $9,461,136 as of the closing date of the merger.  If the balance sheet delivered to Baylake by NEWBI as of the closing date of the merger reflects that NEWBI shareholders’ equity, as determined pursuant to the merger agreement, is more than $9,461,136 as of the closing date of the merger, NEWBI may, immediately prior to closing, pay a special dividend to its shareholders in an amount equal to any such excess.

The merger consideration is subject to downward adjustment as described in this proxy statement/prospectus, and the exchange ratio and relative percentage of the merger consideration that will be paid in cash and shares of Baylake common stock will not be finally determined until after the date of the special meeting.  Therefore, at the time of the special meeting, you will not know the precise value of the merger consideration you may receive on the date the merger is completed.

Assuming no adjustment to the merger consideration and that the currently outstanding 100,932 shares of NEWBI common stock remain unchanged at the closing, based on an average trading price of $14.12, which is equal to the Average Trading Price if it were calculated as of October 23, 2015, the latest practicable date prior to the date of this proxy statement/prospectus, the merger consideration that a holder of NEWBI common stock would be entitled to receive for each share of NEWBI common stock would be $57.60 in cash and 2.8319 shares of Baylake common stock.  In each case, assuming no adjustment to the merger consideration, no payment of any special dividend and that the currently outstanding average trading price were equal to the minimum of $11.10, each share of NEWBI common stock would be converted into the right to receive $57.60 in cash and 3.4595 shares of Baylake common stock, and if the average trading price were equal to the maximum of $13.56, each share of NEWBI common stock would be converted into the right to receive $57.60 in cash and 2.8319 shares of Baylake common stock.  In any event, Baylake will issue up to a maximum of 349,174 shares of Baylake common stock to NEWBI shareholders as contemplated by the merger agreement.

No fractional shares of Baylake common stock will be issued in the merger.  In lieu of a fractional share of Baylake common stock, the holder of any NEWBI common stock who would otherwise be entitled to receive such fractional share shall be entitled to receive one additional whole share of Baylake common stock and the amount of cash the NEWBI shareholder is entitled to receive shall be reduced by an amount determined by multiplying the average trading price by 1 minus the fraction of a share of Baylake common stock to which the holder would otherwise have been entitled to receive.  For further discussion about the merger consideration you will be entitled to receive, see “The Merger – Terms of the Merger – Merger Consideration” beginning on page 25.

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On September 8, 2015, Baylake announced that it had entered into a definitive agreement to merge with and into Nicolet, subject to requisite shareholder and regulatory approval.  NEWBI shareholders receiving shares of Baylake common stock in the merger of NEWBI with and into Baylake will be entitled to notice of and to vote at the special meeting of Baylake shareholders called to approve the merger of Baylake with and into Nicolet.  Baylake is entitled, under its agreement with Nicolet, to pay a special dividend to its shareholders (including shareholders of NEWBI receiving shares of Baylake in the merger of NEWBI with and into Baylake) in an amount up to $0.40 per share immediately prior to consummation of the merger of Baylake with and into Nicolet.  Upon consummation of such merger, shareholders of Baylake, including shareholders of NEWBI receiving shares of Baylake common stock in the merger of NEWBI with and into Baylake, will receive shares of Nicolet common stock in the transaction as described in more detail in the “Nicolet Merger” section of this proxy statement/prospectus beginning on page 48.  As such, you should consider the potential impact of the proposed merger of Baylake with and into Nicolet in determining how to vote on the transaction contemplated by this proxy statement/prospectus.

Recommendation of the NEWBI Board of Directors

The NEWBI board of directors recommends that holders of NEWBI common stock vote “FOR” the merger proposal.  For further discussion of NEWBI’s reasons for the merger and the recommendations of NEWBI’s board of directors, see “The Merger—Background of the Merger” beginning on page 30 and “The Merger—NEWBI’s Reasons for the Merger and NEWBI’s Board Recommendation” beginning on page 34.

Interests of NEWBI Directors and Executive Officers in the Merger

Certain of NEWBI’s directors and executive officers have interests in the merger as individuals in addition to, or different from, their interests as shareholders of NEWBI, including, but not limited to, (i) potential payment under the employment agreement with Jeffrey W. Kleiman and (ii) continuation of employment after the merger.  The NEWBI board of directors was aware of these interests and took them into account in approving the merger.  For example, in connection with the merger, Baylake will assume an employment-related agreement with Jeffrey W. Kleiman, President of NEWBI, by operation of law, pursuant to which he will be employed with Baylake upon the consummation of the merger in a position to be mutually agreed upon by the parties.

Baylake has also agreed to pay for directors’ and officers’ liability insurance covering the directors and officers of NEWBI and Union for a period of six years after the consummation of the merger, subject to limits on availability and cost.  

As of May 5, 2015, NEWBI’s directors and officers owned, in the aggregate 11,475 shares of the NEWBI common stock.  In order to induce Baylake to enter into the merger agreement, the directors of NEWBI who own, in the aggregate, 11.37 percent of the outstanding shares of NEWBI common stock as of the record date, have each agreed that at any meeting of shareholders of NEWBI or in connection with any written consent of the shareholders of NEWBI, such shareholder will vote all shares of NEWBI common stock held of record or beneficially owned by such shareholder (to the extent the shareholder has the right to vote or direct the voting of such shares) in favor of the merger agreement and take certain other actions.  See “NEWBI Special Meeting of Shareholders –Voting Agreement” beginning on page 22.

For further discussion of the interests of the NEWBI directors and executive officers in the merger, see “The Merger—Interests of the NEWBI Directors and Executive Officers in the Merger” on page 36.

Dissenters’ Rights

The NEWBI shareholders are entitled to dissenters’ rights under Section 180.1301 et seq. of the WBCL.  Those rights, if properly exercised, will allow a shareholder who does not wish to accept the consideration provided for by the merger agreement instead to obtain payment of the fair value of the shareholder’s shares of NEWBI common stock.  If you wish to assert dissenters’ rights, you must deliver to NEWBI before the vote is taken written notice of your intent to demand payment for your shares if the proposed action is effectuated and you must not vote in favor of the proposed action.  The procedure for dissenting is described in more detail in “The Merger – Dissenters’ Rights” beginning on page 27.

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Regulatory Matters

Each of Baylake and NEWBI has agreed to use its reasonable best efforts to obtain all regulatory approvals required to complete the merger.  These approvals include approval from the Board of Governors of the Federal Reserve System, which we refer to as the Federal Reserve, and the Wisconsin Department of Financial Institutions, which we refer to as the WDFI.  Baylake has filed all applications and notifications necessary to obtain these regulatory approvals.  There can be no assurance that such approvals will be received on a timely basis or at all, or as to the ability of Baylake and NEWBI to obtain the approvals on satisfactory terms or that there will be no litigation challenging such approvals.  To date, no such litigation is currently pending.  See “Terms of the Merger Agreement – Covenants and Agreements on page 37.

Conditions to Completion of the Merger

Currently, Baylake and NEWBI expect to complete the merger in the fourth quarter of 2015.  As more fully described in this proxy statement/prospectus and in the merger agreement, the completion of the merger depends on a number of conditions being satisfied or, where legally permissible, waived.  We cannot provide assurance as to when or if all of the conditions to the merger can or will be satisfied or waived by the appropriate party.  See “Terms of the Merger Agreement – Conditions to the Merger” beginning on page 44.

Termination of the Merger Agreement

As more fully described in this proxy statement/prospectus and in the merger agreement, the merger agreement can be terminated by either party at any time before completion of the merger under certain circumstances, including, without limitation:

•

by mutual written consent;

•

if the merger has not been consummated by December 31, 2015, unless certain conditions are met; provided, however, that such date shall be extended to January 31, 2016 if the sole impediment to the closing is a delay in any required approval from the appropriate governmental authorities;

•

if a governmental authority has taken action to restrain, enjoin or otherwise prohibit the merger; or

•

if the requisite vote is not obtained, with certain exceptions.

As more fully described in this proxy statement/prospectus and in the merger agreement, the merger agreement can be terminated by NEWBI at any time before completion of the merger under certain circumstances, including, without limitation:

•

upon certain breaches of the merger agreement by Baylake;

•

if any of the closing conditions to the obligations of NEWBI to effect the merger have not been satisfied or waived;

•

if NEWBI opts to enter into a definitive agreement with respect to a superior offer (as defined in the merger agreement), after complying with its obligations related to the non-solicitation of alternative business combination transactions; or

•

if there has been a Baylake material adverse effect.

As more fully described in this proxy statement/prospectus and in the merger agreement, the merger agreement can be terminated by Baylake at any time prior to completion of the merger under certain circumstances, including, without limitation:

•

upon certain breaches of the merger agreement by NEWBI;

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•

if there is a change of recommendation (as defined in the merger agreement) or if NEWBI materially violates or breaches its non-solicitation obligations relating to alternative business combination transactions;

•

if any of the closing conditions to the obligations of Baylake to effect the merger have not been satisfied or waived; or

•

if there has been a NEWBI material adverse effect.

See “Terms of the Merger Agreement – Termination; Termination Fee” beginning on page 46.

Expenses and Termination Fees

The merger agreement provides that, in the event of termination of the merger agreement (i) by Baylake if there is a change of recommendation (as defined in the merger agreement) or if NEWBI shall have materially violated or breached its obligations not to solicit proposals relating to alternative business combination transactions, (ii) by NEWBI in order to enter into a definitive agreement with respect to an unsolicited superior offer (as defined in the merger agreement), or (iii) by either party if the requisite vote of NEWBI’s shareholders is not obtained at the NEWBI shareholders’ meeting and NEWBI’s board of directors has changed its recommendation to its shareholders to approve the merger agreement and the merger, then NEWBI will pay a termination fee of $300,000 to Baylake within two business days after such termination.  In the event of termination of the merger agreement by NEWBI because Baylake fails to  (i) use its best efforts to have the common stock to be issued pursuant to the merger agreement approved for listing on NASDAQ; (ii) use its best efforts to cause the merger to qualify as a reorganization under the Internal Revenue Code of 1986; or (iii) take the necessary action required to obtain regulatory approval of the merger, then Baylake will pay to NEWBI a termination fee in the amount of NEWBI’s documented out-of-pocket expenses incurred in conjunction with the merger agreement within two days after such termination.

Except for the registration fee and other fees paid to the SEC in connection with the merger, which will be paid by Baylake, and any termination fee for which Baylake or NEWBI is responsible under the merger agreement, all fees and expenses incurred in connection with the merger (including the costs and expense of printing and mailing this proxy statement/prospectus) will be paid by the party incurring such fees or expenses.  See “Terms of the Merger Agreement – Termination; Termination Fee” beginning on page 46.

Matters to Be Considered at the Special Meeting

NEWBI shareholders will be asked to approve the merger proposal.  Approval of the merger proposal is required for the completion of the merger.  The NEWBI board of directors recommends that NEWBI shareholders vote “FOR” the proposals described in this proxy statement/prospectus.  For further discussion of the special meeting, see “NEWBI Special Meeting of Shareholders” beginning on page 22.  NEWBI shareholders are not being asked to approve the Nicolet merger at this time.  NEWBI shareholders receiving shares of Baylake common stock in the merger of NEWBI with and into Baylake will be entitled to receive notice of and to vote at a separate special meeting of Baylake shareholders called for the purpose of approving the Nicolet merger subsequent to completion of the transactions that are the subject of this proxy statement/prospectus.

Rights of NEWBI Shareholders Will Change as a Result of the Merger

The rights of NEWBI shareholders are governed by Wisconsin law and NEWBI’s articles of incorporation and bylaws, and the rights of Baylake shareholders are governed by Wisconsin law and Baylake’s articles of incorporation and bylaws.  Upon the completion of the merger, NEWBI shareholders will no longer have any direct interest in NEWBI.  NEWBI shareholders will only participate in the combined company’s future earnings and potential growth through their ownership of Baylake common stock and, in the event that the Nicolet merger is subsequently approved and completed, in the further combined company’s future earnings and potential growth through their ownership of Nicolet common stock.  All of the other incidents of direct stock ownership in NEWBI will be extinguished upon completion of the merger.  Following the merger, the rights of former NEWBI

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shareholders will be governed by Wisconsin law and Baylake’s articles of incorporation and bylaws (or Nicolet’s articles and bylaws in the event the Nicolet merger is subsequently consummated).  Therefore, NEWBI shareholders will have different rights once they become Baylake shareholders and/or Nicolet shareholders.  See “Comparative Rights of Shareholders” beginning on page 59.

Price Range of Common Stock and Dividends

Baylake common stock is listed on NASDAQ under the symbol “BYLK.”  The following table sets forth, for the periods indicated, the high and low reported sale prices per share of Baylake common stock on NASDAQ, and cash dividends declared per share of Baylake common stock.  Baylake’s common stock was valued at $12.18 on May 7, 2015 (the day preceding the announcement of the merger).

Baylake’s ability to pay dividends to its shareholders may be affected by both general corporate law considerations and policies of the Federal Reserve applicable to bank holding companies.  As a Wisconsin corporation, Baylake is subject to the limitations of the WBCL, which prohibit it from paying dividends if such payment would:  (i) render it unable to pay its debts as they become due in the usual course of business, or (ii) result in its assets being less than the sum of its total liabilities plus the amount needed to satisfy the preferential rights upon dissolution of any shareholders with preferential rights superior to those shareholders receiving the dividend.

While NEWBI shareholders are not being asked to consider and vote upon the Nicolet merger at this time, information concerning Nicolet common stock has been included below to assist NEWBI shareholders in evaluating the consideration they are receiving in the merger in the event the Nicolet merger is approved and completed.  Since May 17, 2013, Nicolet common stock has been traded on the OTCBB under the symbol “NCBS.”  The following table sets forth, for the periods indicated, the high and low reported sale prices per share of Nicolet common stock on OTCBB, and cash dividends declared per share of Nicolet common stock.  Nicolet’s common stock was valued at $33.25 on September 7, 2015 (the day preceding the announcement of the merger).

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As a general matter, the Federal Reserve has indicated that the board of directors of a bank holding company should eliminate, defer or significantly reduce dividends to shareholders if:  (i) the bank holding company’s net income available to shareholders for the past four quarters, net of dividends previously paid during that period, is not sufficient to fully fund the dividends; (ii) the prospective rate of earnings retention is inconsistent with the bank holding company’s capital needs and overall current and prospective financial condition; or (iii) such bank holding company will not meet, or is in danger of not meeting, its minimum regulatory capital adequacy ratios.  The Federal Reserve also possesses enforcement powers over bank holding companies and their nonbank subsidiaries to prevent or remedy actions that represent unsafe or unsound practices or violations of applicable statutes and regulations.  Among these powers is the ability to proscribe the payment of dividends by banks and bank holding companies.

NEWBI’s common stock is not listed on an exchange or quoted on any automated services, and there is no established trading market for shares of NEWBI common stock.  As a result, NEWBI does not have sufficient data to estimate a market value of shares of NEWBI common stock.  The holders of shares of NEWBI common stock are entitled to dividends when, as and if declared by the board of directors, subject to the restrictions imposed by law, including the requirements of the Federal Reserve summarized above.  NEWBI’s recent per share cash dividends have been as follows:

Under the merger agreement, NEWBI is prohibited from declaring or paying any dividend on, or making any other distribution in respect of, its outstanding shares of capital stock prior to the effective date of the merger agreement, except as specifically set forth in the merger agreement.

Selected Historical Financial Data of Baylake

The table below presents selected Baylake historical financial data for the five years ended December 31, 2014, which are derived from its previously filed audited consolidated financial statements for those years, and historical financial data for the six months ended June 30, 2015 and June 30, 2014, which are derived from its unaudited consolidated financial statements for those quarters.

You should read the following table together with the historical financial information that Baylake has presented in its prior SEC filings.  Baylake has incorporated this material into this document by reference.  See “Where You Can Find More Information – Incorporation of Certain Documents By Reference” on page 75.

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Selected Historical Financial Data of Nicolet

The table below presents selected Nicolet historical financial data for the five years ended December 31, 2014, which are derived from its previously filed audited consolidated financial statements for those years, and historical financial data for the six months ended June 30, 2015 and June 30, 2014, which are derived from Nicolet’s unaudited consolidated financial statements for those quarters.

You should read the following table together with the historical financial information that Nicolet has presented in its prior SEC filings.  

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RISK FACTORS

In addition to the other information contained in or incorporated by reference into this proxy statement/prospectus, including Baylake’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, and the matters addressed under the caption “Forward-Looking Statements,” NEWBI shareholders should consider the matters described below carefully in determining whether to vote to approve the merger proposal.

Risk Factors Relating to the Merger

Because the market price of Baylake common stock may fluctuate, you cannot be sure of the value of each share of Baylake common stock that you will receive.

Upon completion of the merger, each share of NEWBI common stock (other than shares of NEWBI common stock owned by Baylake or its subsidiaries, shares of NEWBI common stock held in the treasury of NEWBI, or shares of NEWBI common stock held by shareholders that have validly exercised dissenters’ rights under the WBCL with respect to such shares) will be converted into the right to receive merger consideration consisting of shares of Baylake common stock and cash, pursuant to the terms of the merger agreement.  The value of each share of Baylake common stock to be received by NEWBI shareholders will be based on the average trading price of Baylake’s common stock on NASDAQ, ranging between $11.10 per share and $13.56 per share.  The average trading price may vary from the closing price of Baylake common stock on the date we announced the merger, on the date that we announced the Nicolet merger, on the date that this proxy statement/prospectus was mailed to NEWBI shareholders, on the date of the special meeting of the NEWBI shareholders, on the date the merger is completed, and at any time after the merger is completed.  If the average trading price of the Baylake common stock is less than $11.10, the value of the stock portion of the per share merger consideration will be less than $38.40, and if the average trading price exceeds $13.56, the value of the stock portion of the per share merger consideration will be greater than $38.40.  Stock price changes may result from a variety of factors, including general market and economic conditions, changes in the companies’ respective businesses, operations and prospects, and regulatory considerations, among other things.  Many of these factors are beyond the control of Baylake.  NEWBI shareholders should obtain current market quotations for shares of Baylake common stock before voting their shares at the special meeting.

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Because the merger consideration is subject to downward adjustment, the value of the merger consideration you may receive in the merger may be less than you expect.

The merger consideration to be received by NEWBI shareholders at the closing of the merger is subject to downward adjustment by Baylake if the balance sheet delivered to Baylake by NEWBI as of the closing date reflects that NEWBI shareholders’ equity, as determined pursuant to the merger agreement, is less than $9,461,136.  For a description of the possible adjustment of the merger consideration, see “The Merger – Terms of the Merger – Merger Consideration” beginning on page 25.

Because it is a condition to the closing of the merger that the transaction qualifies as a reorganization under the Code, you may receive a greater percentage of the merger consideration in Baylake common stock.

Under the terms of the merger agreement, the percentage of the relative merger consideration that will comprise Baylake common stock and cash is subject to adjustment to the extent necessary for the transaction to qualify as a reorganization under Section 368(a) of the Code, which is a condition to closing of the merger.  Accordingly, you may receive a greater percentage of your merger consideration in shares of Baylake common stock, which would increase your exposure to certain other risks set forth in this “Risk Factors” section.  Baylake and NEWBI currently believe that the portion of the merger consideration to be paid in shares of Baylake common stock will be adjusted upwards with a corresponding decrease in the portion of the merger consideration to be paid in cash.  The adjustment in the merger consideration will be made to provide assurances that NEWBI shareholders will not receive more than 60% of their total consideration in cash in the aggregate between the merger and the proposed merger of Baylake with and into Nicolet described in more detail in “Nicolet Merger” beginning on page 48.

Baylake may fail to realize all of the anticipated benefits of the merger.

The success of the merger will depend, in part, on Baylake’s ability to successfully combine the Baylake and NEWBI organizations.  If Baylake is not able to achieve this objective, the anticipated benefits of the merger may not be realized fully or at all or may take longer than expected to be realized.  The success of the merger may ultimately further depend, in part, on Nicolet’s ability to successfully combine the Nicolet and Baylake organizations, should the Nicolet merger be approved and completed.  If the Nicolet merger is unable to be completed, it may have a material adverse effect on the ongoing operations of Baylake.

Baylake and NEWBI have operated and, until the completion of the merger, will continue to operate, independently.  It is possible that the integration process or other factors, including the announcement of the Nicolet merger, could result in the loss or departure of key employees, the disruption of the ongoing business of NEWBI or inconsistencies in standards, controls, procedures and policies.  It is also possible that clients, customers, depositors and counterparties of NEWBI could choose to discontinue their relationships with the combined company post-merger because they prefer doing business with NEWBI or for any other reason, which would adversely affect the future performance of the combined company.  These transition matters could have an adverse effect on each of Baylake and NEWBI during the pre-merger period and for an undetermined period of time after the completion of the merger.

NEWBI will be subject to business uncertainties while the merger is pending, which could adversely affect its business.

Uncertainty about the effect of the merger, or of the Nicolet merger, on employees and customers may have an adverse effect on NEWBI and, consequently, the combined company.  Although NEWBI intends to take steps to reduce any adverse effects, these uncertainties may impair NEWBI’s ability to attract, retain and motivate key employees until the merger is consummated and for a period of time thereafter, and could cause customers and others that deal with NEWBI to seek to change their existing business relationships with NEWBI.  Employee retention at NEWBI may be particularly challenging during the pendency of the merger as employees may experience uncertainty about their roles with the combined company following the merger and the Nicolet merger.

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The results of operations of Baylake after the merger may be affected by factors different from those currently affecting the independent results of operations of Baylake and NEWBI.

The businesses of Baylake and NEWBI differ in certain respects and, accordingly, the results of operations of the combined company and the market price of the combined company’s common stock may be affected by factors different from those currently affecting the independent results of operations of Baylake and NEWBI.  For a discussion of the business of Baylake and certain factors to be considered in connection with Baylake’s business, see “Information Concerning Baylake” beginning on page 54 and the documents incorporated by reference in this proxy statement/prospectus and referred to under “Where You Can Find More Information” beginning on page 75.  For a discussion of the business of NEWBI and certain factors to be considered in connection with NEWBI’s business, see “Information Concerning NEWBI” on page 56.

The merger agreement limits NEWBI’s ability to pursue an alternative transaction and requires NEWBI to pay a termination fee under certain circumstances relating to alternative acquisition proposals.

The merger agreement prohibits NEWBI from initiating, soliciting or taking any action to facilitate or encourage, directly or indirectly, any inquiries or the making or submission of any proposal or offer with respect to any acquisition transaction, or engaging in any negotiations concerning, an acquisition proposal, subject to exceptions set forth in the merger agreement.  The merger agreement also provides for the payment by NEWBI to Baylake of a termination fee of $300,000 if the merger agreement is terminated as a result of a breach of those provisions.  These provisions may discourage a potential competing acquirer that might have an interest in acquiring NEWBI from considering or proposing such an acquisition.  See “Terms of the Merger Agreement—Termination; Termination Fee” beginning on page 46.

The Nicolet merger limits Baylake’s ability to pursue an alternative transaction and requires Baylake to pay a termination fee under certain circumstances relating to alternative acquisition proposals.

The merger agreement between Baylake and Nicolet prohibits Baylake from initiating, soliciting, encouraging or knowingly facilitating any inquiries or proposals with respect to any acquisition transaction, or engaging in any negotiations or providing any confidential nonpublic information or data to or having any discussions with any person concerning an acquisition proposal, subject to exceptions set forth in the Nicolet merger agreement.  The merger agreement also provides for the payment by Baylake to Nicolet of a termination fee of $7,000,000 if the merger agreement is terminated as a result of a breach of those provisions.

The merger is subject to the receipt of consents and approvals from governmental entities that may impose conditions that could have an adverse effect on the combined company following the merger.

Before the merger may be completed, approvals must be obtained from the Federal Reserve and the WDFI.  These governmental entities may impose conditions on the granting of such approvals and consents.  Although Baylake and NEWBI do not currently expect that any such material conditions or changes would be imposed, there can be no assurance that they will not be, and such conditions or changes could have the effect of delaying completion of the merger or imposing additional costs or limiting the revenues of the combined company following the merger, any of which might have an adverse effect on the combined company following the merger.  In addition, each of Baylake and NEWBI has agreed to take certain actions prior to the closing of the merger.  Such actions may entail costs and may adversely affect Baylake, NEWBI, or the combined company following the merger.

The merger is subject to certain closing conditions that, if not satisfied or waived, will result in the merger not being completed, which could materially and adversely affect the business, financial condition and results of operations of Baylake or NEWBI.

The merger is subject to customary conditions to closing, including the receipt of required regulatory approvals and approval of the NEWBI shareholders.  If any condition to the merger is not satisfied or waived, to the extent permitted by law, the merger will not be completed.  In addition, Baylake and NEWBI may terminate the merger agreement under certain circumstances even if the merger agreement is approved by NEWBI shareholders.  In addition, neither company would realize any of the expected benefits of having completed the merger.  If the merger is not completed and the NEWBI board of directors seeks another merger or business combination, NEWBI shareholders cannot be certain that NEWBI will be able to find a party willing to offer equivalent or more attractive

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consideration than the consideration Baylake has agreed to provide in the merger.  If the merger is not completed, additional risks could materialize, which could materially and adversely affect the business, financial condition and results of operations of Baylake or NEWBI.  For more information on closing conditions to the merger agreement, see “Terms of the Merger Agreement—Conditions to the Merger” beginning on page 44.

Failure to complete the merger could negatively impact the stock price and future business and financial results of NEWBI.

If the merger is not completed for any reason, including as a result of NEWBI shareholders failing to approve the merger agreement and the merger, the ongoing business of NEWBI may be adversely affected and, without realizing any of the benefits of having completed the merger, NEWBI would be subject to a number of possible consequences, including the following:

•

NEWBI may be required, under certain circumstances, to pay a termination fee to Baylake (see “Terms of the Merger Agreement – Terminations; Termination Fees” beginning on page 46);

•

NEWBI is subject to certain restrictions on the conduct of business prior to completing the merger, which may adversely affect its abilities to execute certain of its business strategies;

•

NEWBI may experience negative impacts on its stock price or from customers, regulators and employees;

•

NEWBI has incurred and will continue to incur certain costs and fees associated with the merger; and

•

matters relating to the merger (including integration planning) may require substantial commitments of time and resources by NEWBI management and employees, which would otherwise have been devoted to day-to-day operations and other opportunities that may have been beneficial to NEWBI as an independent company.

Failure to complete the Nicolet merger could negatively impact the stock price and future business and financial results of Baylake.

Failure to complete the Nicolet merger for any reason, including as a result of Baylake shareholders failing to approve the merger, may adversely affect the ongoing business of Baylake and, without realizing any of the benefits of having completed the Nicolet merger, Baylake would be subject to a number of possible consequences, including the following:

•

Baylake may be required, under certain circumstances, to pay a termination fee to Nicolet;

•

Baylake is subject to certain restrictions on the conduct of business prior to completing the merger, which may adversely affect its ability to execute certain of its business strategies;

•

Baylake may experience negative impacts on its stock price or from customers, regulators and employees; and

•

The costs and fees that Baylake has incurred and will continue to incur in connection with the Nicolet merger could negatively impact Baylake without realizing the anticipated benefits of completing the Nicolet merger.

The combined company expects to incur substantial expenses related to the merger.

The combined company expects to incur substantial expenses in connection with completing the merger.  Although Baylake and NEWBI have assumed that a certain level of transaction and combination expenses would be incurred, there are a number of factors beyond their control that could affect the total amount or the timing of their combination expenses.  Many of the expenses that will be incurred, by their nature, are difficult to estimate accurately at the present time.  Due to these factors, the transaction and integration expenses associated with the merger could, particularly in the near term, exceed the savings that the combined company expects to achieve from

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the elimination of duplicative expenses and the realization of economies of scale and cost savings related to the combination of the businesses following the completion of the merger.  In addition, Baylake expects to incur substantial expenses in conjunction with the Nicolet merger, which expenses will impact its current operations.  Both Baylake and NEWBI expect to take charges against their earnings before and after the completion of the merger.  The charges taken in connection with the merger, and in the case of Baylake with respect to the Nicolet merger, are expected to be significant, although the aggregate amount and timing of such charges are uncertain at the present time.

Shares of Baylake common stock to be received by NEWBI shareholders as a result of the merger will have rights different from the shares of NEWBI common stock.

Upon completion of the merger, the rights of former NEWBI shareholders who receive Baylake common stock in the merger and thereby become Baylake shareholders will be governed by the articles of incorporation and bylaws of Baylake.  Furthermore, if the Nicolet merger is completed, the rights of former Baylake shareholders who receive Nicolet common stock in the Nicolet merger (including former NEWBI shareholders) and thereby become Nicolet shareholders will be governed by the articles of incorporation and bylaws of Nicolet.  The rights associated with NEWBI common stock are different from the rights associated with Baylake common stock and the rights associated with Nicolet common stock.  See “Comparative Rights of Shareholders” beginning on page 59 for a discussion of the differences in the rights between the NEWBI common stock and the Baylake common stock.

The value of the merger consideration that Baylake shareholders will receive in connection with the Nicolet merger will fluctuate with changes in the market price of Nicolet common stock.

Upon completion of the Nicolet merger, each share of Baylake common stock outstanding (including shares issued to former NEWBI shareholders in the merger of NEWBI with and into Baylake) will be converted into the right to receive 0.4517 shares of Nicolet common stock.  Because the price per share of Nicolet common stock will fluctuate, the value of the shares of Nicolet common stock that Baylake shareholders will receive in the Nicolet merger may increase or decrease prior to completion of the merger. 

Nicolet has issued subordinated debentures and SBLF Preferred Stock with rights that are senior to those of its common shareholders.

Nicolet has issued trust preferred securities and accompanying junior subordinated debentures.  As of December 31, 2014, Nicolet had outstanding trust preferred securities and associated junior subordinated debentures with an aggregate par principal amount of $16.5 million.  Nicolet has unconditionally guaranteed the payment of principal and interest on its trust preferred securities.  Additionally, the junior debentures issued to the special purpose trusts that relate to those trust preferred securities are senior to Nicolet’s common stock. As a result, Nicolet must make payments on the junior subordinated debentures before it can pay any dividends on its common stock, and in the event of Nicolet’s bankruptcy, dissolution or liquidation, holders of Nicolet’s junior subordinated debentures must be satisfied before any distributions can be made on its common stock.

Nicolet has also issued preferred stock to the U.S. Department of Treasury under the Small Business Lending Fund, the SBLF.  The SBLF Preferred Stock issued to and currently held by the Treasury has dividend rights that are senior to those of Nicolet’s common stock; therefore, Nicolet must pay dividends on the SBLF Preferred Stock before it can pay any dividends to holders of Nicolet common stock.  In the event of Nicolet’s bankruptcy, dissolution or liquidation, the holders of the SBLF Preferred Stock must be satisfied before Nicolet can make any distributions to holders of its common stock.  Nicolet has agreed to use reasonable best efforts to redeem the SBLF Preferred Stock so that there are not more than 12,200 shares outstanding immediately prior to the closing of the Nicolet merger.  After redeeming 12,200 shares of SBLF Preferred Stock effective on September 28, 2015, Nicolet has only 12,200 shares now outstanding.

Nicolet has not historically paid dividends to common shareholders and cannot guarantee that they will pay dividends to such shareholders in the future.

Nicolet’s board of directors has not declared a dividend on the common stock since Nicolet’s inception in 2000 and may not do so in the foreseeable future.  Any future determination relating to dividend policy will be made at the discretion of Nicolet’s board of directors and will depend on a number of factors, including the company’s future

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earnings, capital requirements, financial condition, future prospects, regulatory restrictions and other factors that the board of directors may deem relevant.

Nicolet’s primary business operations are conducted through Nicolet National Bank.  Cash available to pay dividends to Nicolet shareholders is derived primarily, if not entirely, from dividends paid by Nicolet National Bank.  The ability of Nicolet National Bank to pay dividends to Nicolet, and Nicolet’s ability to pay dividends to its shareholders, is subject to and limited by certain legal and regulatory restrictions.

Certain NEWBI directors and officers may have interests in the merger different from the interests of NEWBI shareholders.

In considering the recommendation of the board of directors of NEWBI, shareholders should be aware that certain directors and executive officers of NEWBI have interests in the merger that may differ from, or may be in addition to, the interests of NEWBI shareholders generally.  The board of directors of NEWBI was aware of these interests and considered them, among other matters, when it adopted the merger agreement and in making its recommendations that the NEWBI shareholders approve the merger proposal.  These interests include:

•

In connection with the merger, NEWBI will assign an employment-related agreement with Jeffrey W. Kleiman to Baylake, pursuant to which he will be employed by Baylake following the merger in a position to be mutually agreed upon by the parties.

•

Baylake has agreed to pay for directors’ and officers’ liability and financial institutions bond insurance covering the directors and officers of NEWBI and Union for a period of six years after consummation of the merger, subject to limits on availability and cost.

For a more complete description of the interests of NEWBI directors and executive officers in the merger, see “The Merger—Interests of NEWBI’s Directors and Executive Officers in the Merger” on page 36.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This document, including information incorporated by reference into this document, contains or may contain forward-looking statements about Baylake, NEWBI and the combined company which are within the meaning of the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.  These forward-looking statements include statements with respect to the expected timing, completion and effects of the proposed merger and the financial condition, results of operations, plans, objectives, future performance and business of Baylake, NEWBI and the combined company, including statements preceded by, followed by or that include the words “believes,” “expects,” “anticipates” or similar expressions.  These forward-looking statements involve certain risks and uncertainties.  Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, those risks discussed above.  Further information on other factors which could affect the financial results of Baylake after the merger are included in the SEC filings incorporated by reference into this document.  See “Where You Can Find More Information” on page 75 included elsewhere in this proxy statement/prospectus.

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NEWBI SPECIAL MEETING OF SHAREHOLDERS

General

The NEWBI board of directors is using this proxy statement/prospectus to solicit proxies from the holders of shares of NEWBI common stock for use at the special meeting.

Together with this proxy statement/prospectus, NEWBI is also sending you a notice of the special meeting and a form of proxy that is solicited by the NEWBI board of directors.  The special meeting will be held at Union State Bank, 223 Ellis Street, Kewaunee, Wisconsin 54216, at 4:15 p.m., Central Time.  On October 30, 2015, NEWBI commenced mailing this proxy statement/prospectus and the enclosed form of proxy to its shareholders entitled to vote at the special meeting.

Purpose of Special Meeting

At the special meeting, NEWBI shareholders will be asked to approve the proposed merger of NEWBI with and into Baylake.

Recommendation of the NEWBI Board of Directors

The NEWBI board of directors recommends that you vote “FOR” the proposal described in this proxy statement/prospectus.  See “The Merger— NEWBI’s Reasons for the Merger and NEWBI’s Board Recommendation” beginning on page 34.

Record Date and Quorum

The NEWBI board of directors has fixed the close of business on October 19, 2015 as the record date for determining the holders of NEWBI stock entitled to receive notice of and to vote at the special meeting.

As of the record date for the special meeting, there were 100,932 shares of NEWBI common stock outstanding and entitled to vote at the special meeting held by 549 holders of record.  Each share of NEWBI common stock entitles the holder to one vote at the special meeting on each proposal to be considered at the special meeting.

The representation (in person or by proxy) of holders of at least a majority of the votes entitled to be cast on each of the matters to be voted on at the special meeting constitutes a quorum for action on that matter at the special meeting.  All shares of NEWBI common stock present in person or represented by proxy, including abstentions and broker non-votes, will be treated as present for purposes of determining the presence or absence of a quorum for all matters voted on at the special meeting.  Adjournments of the special meeting may be made for the purpose of, among other things, soliciting additional proxies.  Any adjournment may be made by a majority of the votes cast by the outstanding shares entitled to vote, represented in person or by proxy, at the special meeting.

Voting Agreement

In order to induce Baylake to enter into the merger agreement, each of the directors of NEWBI, who own, in the aggregate 11.37 percent of the outstanding shares of NEWBI common stock as of the record date, have agreed in a voting agreement that at any meeting of the shareholders of NEWBI or in connection with any written consent of the shareholders of NEWBI, each such director will vote all shares of NEWBI common stock held of record or beneficially owned by such director (to the extent the director has the right to vote or direct the voting of such shares):  (a) in favor of adoption of the merger agreement and the merger; (b) in favor of the approval of any proposal to adjourn or postpone the meeting to a later date, if requested by Baylake; (c) against any action, proposal, transaction or agreement that would result in a breach of any term of, or any other obligation of NEWBI under, the merger agreement; (d) against any action or agreement that would impede, interfere with, prevent or attempt to discourage the merger, including, but not limited to, any other extraordinary corporate transaction; (e) against any acquisition proposal (as defined in the merger agreement); and (f) in favor of any other matter necessary for consummation of the merger.

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Each director who is a party to the voting agreement has agreed that except as contemplated by the voting agreement and the merger agreement, such director shall not, directly or indirectly:

•

transfer any shares beneficially owned by such shareholder without the prior written consent of Baylake, subject to certain limited exceptions;

•

enter into any contract or agreement with respect to any transfer of any or all of such shares or any interest therein except as permitted by the voting agreement;

•

grant any proxy, deposit the shares into a voting trust or enter into a voting agreement or arrangement;

•

create or permit to exist any lien on any or all of such shares;

•

subject to the voting agreement, take any other action that would make any representation or warranty of such shareholder contained in the voting agreement untrue or incorrect in any material respect or in any way restrict, limit or interfere in any material respect with the performance of such shareholder’s obligations under the voting agreement or the transactions contemplated thereby or by the merger agreement.

The director shareholders who are a party to the voting agreement have also agreed not to encourage, solicit, initiate or participate in any way in any discussions or negotiations with, or otherwise take any other action to assist or facilitate, any other person or group (other than Baylake or any affiliate or associate of Baylake) concerning any acquisition proposal.

Notwithstanding the foregoing, in response to an unsolicited bona fide written acquisition proposal that did not result from NEWBI’s breach of the merger agreement, each director may take such actions (in such capacities) as are required to fulfill such officer’s or director’s fiduciary duties to NEWBI and its shareholders, subject to the restrictions and conditions in the merger agreement.

The directors who are a party to the voting agreement also made certain representations and warranties to Baylake.  Each director who is a party to the voting agreement has waived any rights to exercise dissenters’ rights.

Each director who is a party to the voting agreement has agreed to take all actions necessary to consummate and make effective the transactions contemplated by the voting agreement and the merger agreement.

The voting agreement will terminate upon the earlier of:

•

the effective time of the merger; or

•

the termination of the merger agreement.

Required Vote; Effects of Abstention or Failure to Vote

The affirmative vote of a majority of the outstanding shares of NEWBI common stock entitled to vote is required to approve the merger proposal.  Therefore, assuming that a quorum is present, your abstention or failure to vote will have the same effect as a vote cast against this proposal.  The directors and executive officers of NEWBI own, in aggregate, 11.37 percent of the outstanding shares of NEWBI common stock as of the record date.

Voting on Proxies; Incomplete Proxies

Giving a proxy means that a NEWBI shareholder authorizes the persons named in the enclosed proxy card to vote its shares at the special meeting in the manner it directs.  A NEWBI shareholder may vote by proxy or in person at the special meeting.  If you hold your shares of the NEWBI common stock in your name as a shareholder of record, to submit a proxy, you, as a NEWBI shareholder, may vote by completing and signing the accompanying proxy and returning it to NEWBI as soon as possible in the enclosed postage-paid envelope.  You may also vote online by following the instructions on each such shareholder’s proxy card.  When the accompanying proxy is

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returned properly executed, the shares of NEWBI stock represented by it will be voted at the special meeting in accordance with the instructions contained on the proxy card.

If any proxy is returned without indication as to how to vote, the shares of NEWBI common stock represented by the proxy will be voted as recommended by the NEWBI board of directors.  The proxy holders may use their discretion to vote on other matters properly before the special meeting.

If your shares are held in a street name, you should follow the instructions you receive from your broker in order to direct your broker how to vote, and you should also follow the instructions of your broker regarding revocation of proxies.

The vote of every NEWBI shareholder is important.  Accordingly, each NEWBI shareholder should sign, date and return the enclosed proxy card, whether or not the NEWBI shareholder plans to attend the special meeting in person.

Revocability of Proxies and Changes to a NEWBI Shareholder’s Vote

A NEWBI shareholder has the power to change his, her or its vote at any time before his, her or its shares of NEWBI common stock are voted at the special meeting by:

•

sending a notice of revocation to the NEWBI corporate secretary at 223 Ellis Street, Kewaunee, Wisconsin 54216 stating that you would like to revoke your proxy;

•

sending a completed proxy card bearing a later date than your original proxy card; or

•

attending the special meeting and voting in person if your shares of NEWBI common stock are registered in your name rather than in the name of a broker, bank or other nominee, and you so request.  Attendance at the special meeting will not by itself revoke a previously granted proxy. You must provide written or oral notice to the presiding officer at the special meeting of your request to vote in person.

If you choose the first method, you must take the described action no later than the beginning of the special meeting.  If you choose to send a completed proxy card bearing a date that is later than the date of your original proxy card, the new proxy card must be received before the beginning of the special meeting.  If you have instructed a bank, broker or other nominee to vote your shares of NEWBI common stock, you must follow the directions you receive from your bank, broker or other nominee in order to change or revoke your vote.

Solicitation of Proxies

The cost of solicitation of proxies will be borne by NEWBI.  NEWBI will reimburse brokerage firms and other custodians, nominees and fiduciaries of reasonable expenses incurred by them in sending proxy materials to the beneficial owners of common stock.  In addition to solicitations by mail, directors, officers and regular employees of NEWBI may solicit proxies personally by telephone without additional compensation.

Attending the Special Meeting

All NEWBI shareholders as of the record date, or their duly appointed proxies, may attend the special meeting.  Registration and seating will begin at 3:45 p.m. Central Time.

If you hold your shares of NEWBI common stock in your name as a shareholder of record and you wish to attend the special meeting, please bring your proxy and valid picture identification to the special meeting.

If your shares of NEWBI common stock are held in “street name” in a stock brokerage account or by a bank or nominee and you wish to attend the special meeting, you need to bring a copy of a bank or brokerage statement to the special meeting reflecting your stock ownership as of the record date, along with a legal proxy, executed in your favor, from the broker, bank or other nominee that is the holder of record of your shares.  You should also bring valid picture identification.

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PROPOSALS

Merger Proposal

As discussed throughout this proxy statement/prospectus, NEWBI is asking its shareholders to approve the merger proposal (which includes approval of the merger of NEWBI with and into Baylake and the related merger agreement).  Holders of NEWBI common stock should carefully read this proxy statement/prospectus in its entirety, including the appendices, for more detailed information concerning the merger agreement and the merger.  In particular, holders of NEWBI common stock are directed to the merger agreement, a copy of which is attached as Appendix A to this proxy statement/prospectus.

The NEWBI board of directors recommends that NEWBI shareholders vote “FOR” the merger proposal.

Other Matters to Come Before the Special Meeting

No other matters are intended to be brought before the special meeting by NEWBI, and NEWBI does not know of any matters to be brought before the special meeting by others.  If, however, any other matters properly come before the special meeting, the persons named in the proxy will vote the shares represented thereby in accordance with their judgment on any such matter.

THE MERGER

The following is a discussion of the merger and the material terms of the merger agreement between Baylake and NEWBI.  You are urged to carefully read the merger agreement in its entirety, a copy of which is attached as Appendix A to this proxy statement/prospectus and incorporated by reference herein.  This summary may not contain all of the information about the merger agreement that is important to you.  Factual information about Baylake and NEWBI can be found elsewhere in this proxy statement/prospectus.  Additional factual information about Baylake can be found in the public filings Baylake makes with the SEC, as described in the section entitled “Where You Can Find More Information” beginning on page 75.

Terms of the Merger

Transaction Structure.  The Baylake and NEWBI boards of directors have each unanimously approved and adopted the merger agreement.  The merger agreement provides for the acquisition of NEWBI by Baylake through the merger of NEWBI with and into Baylake, with Baylake being the surviving corporation.

Merger Consideration.  The aggregate merger consideration paid by Baylake to NEWBI shareholders is expected to be approximately $9,689,472, subject to possible downward adjustment as described below.  Subject to adjustment, as also described below, approximately 40% of the aggregate merger consideration will be paid in shares of Baylake common stock and approximately 60% of the aggregate merger consideration will be paid in cash.  The percentage of the merger consideration that is payable in cash is subject to downward adjustment, with a corresponding increase in the percentage payable in shares of Baylake common stock, to the extent necessary to qualify the transaction as a reorganization under Section 368(a) of the Code.  To enable Baylake and NEWBI to receive tax opinions that it is more likely than not that the merger will be treated as a tax-free reorganization, the parties currently believe that the portion of the merger consideration to be paid in shares of Baylake common stock will be slightly greater than 40% with a corresponding decrease in the portion of the merger consideration to be paid in cash.  The adjustment in the merger consideration will be made to provide assurances that NEWBI shareholders will not receive more than 60% of their total consideration in cash in the aggregate between the merger and the proposed merger of Baylake with and into Nicolet described in more detail in “Nicolet Merger” beginning on page 48.

The exchange ratio used to determine the number of shares of Baylake common stock that you will be entitled to receive for each share of NEWBI common stock, no par value per share, you own will be determined by dividing $38.40 by the average trading price; provided, that if the number of shares so calculated (i) is greater than 3.4595, such number will be reduced to 3.4595, or (ii) is less than 2.8319, such number will be increased to 2.8319.  The aggregate merger consideration may be adjusted downward dollar-for-dollar if the balance sheet delivered to

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Baylake by NEWBI as of the closing date of the merger reflects that NEWBI shareholders’ equity, as determined pursuant to the merger agreement, is less than $9,461,136 as of the closing date of the merger.  If the balance sheet delivered to Baylake by NEWBI as of the closing date of the merger reflects that NEWBI shareholders’ equity, as determined pursuant to the merger agreement, is more than $9,461,136 as of the closing date of the merger, NEWBI may, immediately prior to closing, pay a special dividend to its shareholders in an amount equal to any such excess.  

The merger consideration is subject to downward adjustment as described in this proxy statement/prospectus, and the exchange ratio and relative percentage of the merger consideration that will be paid in cash and shares of Baylake common stock will not be finally determined until after the date of the special meeting.  Therefore, at the time of the special meeting, you will not know the precise value or composition of the merger consideration you may receive on the date the merger is completed.

Assuming no adjustment to the merger consideration, no payment of any special dividend and that the currently outstanding 100,932 shares of NEWBI common stock remain unchanged at the closing, based on an average trading price of $14.12, which is equal to the average trading price if it were calculated as of October 23, 2015, the latest practicable date prior to the date of this proxy statement/prospectus, the merger consideration that a holder of NEWBI common stock would be entitled to receive for each share of NEWBI common stock would be $57.60 in cash and 2.8319 shares of Baylake common stock.  In each case, assuming no adjustment to the merger consideration, no payment of any special dividend and that the currently outstanding average trading price were equal to the minimum of $11.10, each share of NEWBI common stock would be converted into the right to receive $57.60 in cash and 3.4595 shares of Baylake common stock, and if the average trading price were equal to the maximum of $13.56, each share of NEWBI common stock would be converted into the right to receive $57.60 in cash and 2.8319 shares of Baylake common stock.  In any event, Baylake will issue up to a maximum of 349,174 shares of Baylake common stock to NEWBI shareholders as contemplated by the merger agreement.

No fractional shares of Baylake common stock will be issued in the merger.  In lieu of a fractional share of Baylake common stock, the holder of any NEWBI common stock who would otherwise be entitled to receive such fractional share shall be entitled to receive one additional whole share of Baylake common stock and the amount of cash the NEWBI shareholder is entitled to receive shall be reduced by an amount determined by multiplying the average trading price by 1 minus the fraction of a share of Baylake common stock to which the holder would otherwise have been entitled to receive.

As indicated above, the number of shares of Baylake common stock you will be entitled to receive in the merger will vary based on, among other things, the average trading price.  The following table illustrates, for a range of potentially applicable average trading prices, the number of shares of Baylake common stock that would be exchanged for each share of NEWBI common stock assuming that there are no adjustments to the purchase price and no special dividends are paid by NEWBI immediately prior to the closing of the merger.  These numbers are calculated based on the further assumption that 100,932 shares of NEWBI common stock are outstanding at the time of the merger.

⁽¹⁾

Number of shares of Baylake common stock you will receive will be based on the actual average trading price, which will be computed on the second trading day preceding the date the merger closes; the average trading prices shown on this table are for illustration only.  In lieu of a fractional share of common stock, the holder of any share of NEWBI common stock who would otherwise be entitled to receive such fractional share shall be entitled to receive one additional whole share of Baylake common stock and the amount of cash you will be entitled to receive shall be reduced by an amount determined by multiplying the average trading price by 1 minus the fraction of a share of Baylake common stock to which you would otherwise have been entitled to receive.  The above illustration does not reflect the impact of additional shares of Baylake common stock that would be issued in lieu of such fractional shares.

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Based on the assumption that approximately 314,343 shares of Baylake common stock will be issued to NEWBI shareholders (assuming a $12.33 average trading price), NEWBI shareholders would own approximately 3.36% of Baylake’s common stock after the merger is completed, ignoring any shares of Baylake common stock they may already own.

Letters of Transmittal

Within three business days after the closing date, the exchange agent, Computershare, will send a letter of transmittal and instructions for surrendering certificates in exchange for the merger consideration to each holder of record of certificates which, as of the date the exchange agent sends such letter of transmittal and instructions, represented shares of NEWBI common stock, whose shares were converted into the right to receive the merger consideration.

Promptly upon proper surrender by NEWBI shareholders of their certificates representing NEWBI common stock to the exchange agent, along with a properly completed letter of transmittal, then the exchange agent will promptly deliver the merger consideration to such shareholder.

If a certificate for NEWBI common stock has been lost, stolen or destroyed, the exchange agent will issue the consideration properly payable under the merger agreement upon receipt of an affidavit as to that loss, theft or destruction and the posting of a bond in such amount as Baylake may reasonably determine at the expense of the shareholder to indemnify Baylake and the exchange agent against any claim that may be made against it with respect to such certificate.

Additional Share in Lieu of Fractional Shares

No fractional shares of Baylake common stock will be issued upon the surrender of certificates of NEWBI common stock for exchange.  In lieu of a fractional share of Baylake common stock, the holder of any share of NEWBI common stock who would otherwise be entitled to receive such fractional share shall be entitled to receive one additional whole share of Baylake common stock and the cash which such holder is entitled to receive shall be reduced by an amount determined by multiplying the average trading price by 1 minus the fraction of a share of Baylake common stock to which the holder would otherwise have been entitled.

Dividends and Distributions

Until certificates representing shares of NEWBI common stock are surrendered for exchange, any dividends or other distributions with a record date after the effective time of the merger with respect to Baylake common stock into which such shares of NEWBI common stock may have been converted will not be paid.  Following surrender of any such certificates, the record holder thereof will be entitled to receive, without interest, any dividends or other distributions with a record date after the effective time of the merger payable with respect to the whole shares of Baylake common stock represented by such certificates and paid prior to the surrender date, and, at the appropriate payment date, the amount of dividends or other distributions payable with respect to shares of Baylake common stock represented by such certificates with a record date after the effective time of the merger but before the surrender date and with a payment date after the surrender.

After the effective time of the merger, there will be no transfers on the stock transfer books of NEWBI of any shares of NEWBI common stock, other than to settle transfers that occurred prior to the effective time of the merger.  If certificates representing such shares are presented for transfer after the completion of the merger, they will be cancelled and exchanged for the merger consideration into which the shares represented by that certificate have been converted.

Dissenters’ Rights

In connection with the merger, record holders of NEWBI common stock who comply with the requirements of Subchapter XIII of the WBCL, which is summarized below, will be entitled to dissenters’ rights if the merger is completed.  Under Subchapter XIII of the WBCL, a shareholder of a corporation is entitled to dissent from, and obtain payment of the fair value of his or her shares in the event of, the consummation of a merger to which the

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corporation is a party if shareholder approval is required for the merger by Section 180.1103 of the WBCL or, by the articles of incorporation of the corporation.

The following is a brief summary of Subchapter XIII, which sets forth the procedures relating to the exercise of dissenters’ rights.  This summary is not a complete statement of the law pertaining to dissenters’ rights under the WBCL and is qualified in its entirety by reference to Subchapter XIII, the text of which is attached to this proxy statement/prospectus as Appendix B.

Any shareholder who wishes to assert dissenters’ rights must deliver a written notice of his or her intent to exercise such right to NEW Bancshares, Inc., 223 Ellis Street, Kewaunee, Wisconsin 54216 Attention:  Corporate Secretary, before the vote on the merger agreement is taken at the special meeting.  A PROXY OR VOTE AGAINST THE MERGER AGREEMENT WILL NOT, BY ITSELF, BE REGARDED AS A WRITTEN NOTICE OF INTENT TO DEMAND PAYMENT FOR PURPOSES OF ASSERTING DISSENTERS’ RIGHTS.

A record holder of NEWBI common stock may assert dissenters’ rights as to fewer than all shares registered in that shareholder’s name only if the holder dissents with respect to all shares beneficially owned by any one person and notifies NEWBI in writing of the name and address of each person on whose behalf the shareholder asserts such dissenters’ rights.

A beneficial shareholder may assert dissenters’ rights as to shares held on the shareholder’s behalf only if, in addition to meeting the other requirements to dissent, the beneficial shareholder (i) submits to NEWBI the record shareholder’s written consent to the dissent not later than the time the beneficial shareholder asserts dissenters’ rights and (ii) asserts dissenters’ rights with respect to all shares of which the shareholder is the beneficial shareholder or over which the beneficial shareholder has power to direct the vote.

If the merger agreement is approved by the requisite vote of holders of NEWBI common stock, NEWBI is required to send a notice to all dissenting shareholders containing payment demand and stock certificate surrender information within ten days after such approval.  The return date specified by NEWBI for receiving the payment demand from dissenting shareholders may not be less than 30 nor more than 60 days after the date on which the dissenters’ notice was first sent.  Upon receipt of the dissenters’ notice, each dissenting shareholder must return his or her payment demand and certificate no later than the payment demand date as provided in the dissenters’ notice and certify whether he or she acquired beneficial ownership of the shares prior to the first public announcement of the terms of the merger on May 5, 2015.  A payment demand may not be withdrawn without NEWBI’s consent.

Upon effecting the merger, within 60 days after the payment demand date, NEWBI will pay each dissenting shareholder who properly complied with the statutory requirements of Subchapter XIII of the WBCL, the amount that NEWBI estimates to be the fair value of such dissenting shareholder’s shares, plus accrued interest from the effective time; provided that, with respect to shares acquired after the first public announcement of the merger, NEWBI may elect to withhold payment until either such shareholder accepts NEWBI’s offer of fair value or a court determines the fair value of such shares.

If the merger is not effected within 60 days of the payment demand date, NEWBI will return all deposited certificates to dissenting shareholders.  If the merger is thereafter effected, NEWBI will send a new dissenters’ notice within ten days of effecting the merger and repeat the payment demand procedure described above.

If any dissenting shareholder is dissatisfied with NEWBI’s determination of “fair value,” such dissenting shareholder may notify NEWBI in writing of his or her own estimate of the fair value of his or her shares and the amount of interest due.  A dissenting shareholder must assert this right within 30 days after NEWBI makes or offers payment for his or her shares or the right is waived.  NEWBI may either accept such dissenting shareholder’s estimate of fair value or commence a proceeding in the Wisconsin Circuit Court of Kewaunee County to determine the fair value of the shares of all dissenting shareholders whose own estimates of fair value are not accepted by NEWBI.

In the event any holder of shares of NEWBI common stock fails to perfect his or her rights to dissent by failing to comply strictly with the applicable statutory requirements of Subchapter XIII of the WBCL, he or she will be bound by the terms of the merger agreement and will not be entitled to payment for his or her shares under Subchapter XIII of the WBCL.  ANY HOLDER OF SHARES OF NEWBI COMMON STOCK WHO WISHES TO

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OBJECT TO THE TRANSACTION AND DEMAND PAYMENT IN CASH FOR HIS OR HER SHARES SHOULD CONSIDER CONSULTING HIS OR HER OWN LEGAL ADVISOR.

Because an executed proxy relating to NEWBI common stock on which no voting direction is made will be voted at the special meeting in favor of the merger, a dissenting shareholder who wishes to have his or her shares of NEWBI common stock represented by proxy at the special meeting but preserve his or her dissenters’ rights must mark his or her proxy either to vote against the merger or to abstain from voting thereon, in addition to the foregoing requirements.

The foregoing is a brief summary of Subchapter XIII that sets forth the procedures for demanding statutory dissenters’ rights.  This summary is qualified in its entirety by reference to Subchapter XIII, the text of which is attached hereto as Appendix B.  Failure to comply with all the procedures set forth in Subchapter XIII will result in the loss of a shareholder’s statutory dissenters’ rights.  Consequently, if you desire to exercise your dissenters’ rights you are urged to consult a legal advisor before attempting to exercise these rights.

Regulatory Approvals

Each of Baylake and NEWBI has agreed to use its reasonable best efforts to obtain all regulatory approvals required to complete the merger and the other transactions contemplated by the merger agreement.  These approvals include approval from the Federal Reserve and the WDFI.  Baylake has filed all applications and notifications to obtain these regulatory approvals.

There can be no assurance that such approvals will be received on a timely basis or at all, or as to the ability of Baylake and NEWBI to obtain the approvals on satisfactory terms or that there will be no litigation challenging such approvals.  There can be no assurances that U.S. or state regulatory authorities will not attempt to challenge the merger on antitrust grounds or for other reasons, or, if such a challenge is made, as to the result of such challenge.  The parties’ obligations to complete the transactions contemplated by the merger agreement are subject to a number of conditions, including the receipt of all requisite regulatory approvals.

Accounting Treatment

Baylake will account for the merger using the acquisition method of accounting, in accordance with current accounting guidance and United States generally accepted accounting principles, or GAAP.  The result of this is that the recorded assets and liabilities of Baylake will be carried forward at their recorded amounts, the historical operating results will be unchanged for the prior periods being reported on and that the assets and liabilities of NEWBI will be adjusted to fair value at the date of the merger.  In addition, all identified intangibles will be recorded at fair value and included as part of the net assets acquired.  To the extent that the purchase price, consisting of cash plus the number of shares of Baylake common stock to be issued to former NEWBI shareholders at fair value, exceeds the fair value of the net assets including identifiable intangibles of NEWBI at the date of the merger, that amount will be reported as goodwill.  In accordance with current accounting guidance, goodwill will not be amortized but will be evaluated for impairment annually.  Identified intangibles will be amortized over their estimated lives.  Further, the acquisition method of accounting results in the operating results of NEWBI being included in the operating results of Baylake beginning from the date of completion of the merger.

Public Trading Market

Baylake common stock is listed on NASDAQ under the symbol “BYLK.”  The Baylake common stock issuable in the merger will also be listed on NASDAQ.

Resale of Baylake Common Stock

All shares of Baylake common stock received by NEWBI shareholders in the merger will be freely tradable for purposes of the Securities Act of 1933, as amended, or the Securities Act, and Securities Exchange Act of 1934, as amended, or the Exchange Act, except for shares of Baylake common stock received by any such holder who becomes an “affiliate” of Baylake after completion of the merger, as defined in Rule 144 under the Securities Act.  This proxy statement/prospectus does not cover resales of shares of Baylake common stock received by any person

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upon completion of the merger, and no person is authorized to make any use of this proxy statement/prospectus in connection with any resale.

Background of the Merger

NEWBI’s board of directors and senior management regularly review and evaluate NEWBI’s business, strategic direction, performance, prospects and strategic alternatives.  In July 2014, NEWBI’s President and Chief Executive Officer, Jeffrey W. Kleiman, received an unsolicited contact from an agent of Baylake regarding a possible strategic transaction between the two organizations.  In response, the NEWBI board of directors established an ad hoc committee of the board to evaluate the possible strategic transaction.  The ad hoc committee comprised Jeffrey Kleiman, C. Jack Novak (Chairman of the Board) and Dennis Langenberg, a director with accounting experience.  The ad hoc committee had various meetings with representatives of Baylake.  Baylake informed the committee that it is looking to expand its market share by combining its bank subsidiary with Union, which is in the path of Baylake’s targeted market expansion in the Counties of Brown, Kewaunee and Manitowoc, Wisconsin.  On August 26, 2014, NEWBI and Baylake executed a confidentiality agreement.

As part of the analysis of the potential strategic transaction, the committee, the board and senior management also discussed in depth various strategic options generally available to NEWBI, and the pros and cons of each such option.  For example, they considered other banking organizations that may be possible acquirers within Union’s trade areas (one of which had discussed strategic possibilities with NEWBI in the past), but for a variety of reasons determined that these organizations were not appropriate strategic partners at this time.  They also spoke with NEWBI’s and Union’s accountants about certain Michigan banking organizations that could be potential acquirers, but the board and senior management did not believe that acquisition by an out-of-state bank would be in the best interests of Union’s community and customers.  It is important to the NEWBI board and senior management that Baylake is a community bank with a good reputation, and is one that customers and the community recognize.  The committee, board and senior management also considered the pros and cons of remaining an independent organization.  Concerns were raised regarding increasing banking regulations, increasing cost of compliance, loan growth, the continuing low interest rate environment and decreasing interest margins.  As part of this overall discussion, NEWBI’s ad hoc committee, board and senior management also considered the competition in NEWBI’s primary market, anticipated increases in capital requirements and trends in mergers and acquisitions in the financial services sector.

Also as part of its analysis, NEWBI’s board engaged Wipfli, its accounting firm, to conduct a Fair Market Business Valuation of NEWBI as of September 30, 2014.  A summary of Wipfli’s Fair Market Business Valuation can be found in the section entitled “Summary of Fair Market Business Valuation of NEWBI’s Independent Accountant” beginning on page 31.  The valuation determined that the fair market value per share of the common stock of NEWBI on a controlling, marketable basis as of September 30, 2014 was estimated at $101.00 per share.  The Fair Market Business Valuation prepared by Wipfli also provided the board with certain banking industry information and private transaction data regarding other transactions involving financial institutions, and reached the conclusion that the current outlook for NEWBI from an industry perspective remained uncertain, and provided the board with certain private transaction data regarding other transactions involving financial institutions.

On October 28, 2014, Baylake provided NEWBI with a draft non-binding indication of interest.  Baylake negotiated with NEWBI, which sought advice of its counsel and accountants, regarding the terms of the final indication of interest.  During this time, the board had various meetings about the proposed merger and the indication of interest, and between these meetings, various members of the NEWBI board and senior management held numerous discussions with NEWBI legal counsel and accountants.  At the December 4, 2014 meetings of the board of directors of NEWBI and Union, based on the analysis conducted by the ad hoc committee, the NEWBI board and senior management, extensive discussions with legal counsel and accountants, an analysis of the valuation and other information presented by Wipfli, and the reasons discussed in “NEWBI’s Reasons for the Merger and NEWBI’s Board Recommendation” beginning on page 34, both boards unanimously approved the indication of interest dated November 29, 2014.  On January 30, 2015, Baylake presented the NEWBI board with a revised indication of interest, in which the proposed purchase price for NEWBI common stock was adjusted to the $96.00 per share offered in the merger.  The price was adjusted downward primarily because the current market values of the Kewaunee and Two Rivers branch offices of Union were deemed lower than their respective book values.  Also, the net earnings projections for NEWBI for 2015 were reduced based upon due diligence and new assumptions.  At the February 4, 2015 meetings of the board of directors of NEWBI and Union, based on the same analysis described

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above, both boards unanimously approved the indication of interest dated January 30, 2015, and the indication of interest was signed.

After execution of the January 30, 2015 non-binding indication of interest, both parties conducted due diligence on each other.  NEWBI representatives reviewed documents provided by Baylake, and Baylake representatives reviewed documents provided by NEWBI and sent representatives to Union to conduct on-site due diligence.  During this process, the parties began negotiating and drafting the definitive merger agreement.  This process was conducted with the assistance of counsel for both Baylake and NEWBI, and included NEWBI and Union board meetings, some of which were attended by NEWBI and Union legal counsel by telephone conference.

At the May 5, 2015 board meeting, the NEWBI board unanimously approved the merger agreement and resolved to recommend that NEWBI shareholders approve the merger and merger agreement and authorized Mr. Kleiman, as President, to execute the merger agreement on behalf of NEWBI and approve such minor modifications to the merger agreement as he may deem necessary, beneficial, advantageous, proper and efficient.  The board unanimously determined that the merger would be in the best interests of NEWBI, its shareholders and Union’s employees and customers.  On May 6, 2015, the merger agreement, dated effective May 5, 2015, was finalized and executed by NEWBI and Baylake.

NEWBI and Baylake issued a joint press release on May 8, 2015 announcing the execution of the merger agreement.

On August 12, 2015, Baylake informed representatives of NEWBI that it was in discussions with Nicolet regarding a potential merger with and into Nicolet.  Baylake discussed the reasons why it was considering the Nicolet merger, as well as the potential impact such transaction would have on the merger of NEWBI with and into Baylake, both from a timing as well as a financial perspective.

The NEWBI board of directors and management discussed the potential Nicolet merger, and the potential impact of such a merger on NEWBI and its shareholders, and the possibility that the subsequent merger of Baylake into Nicolet could result in the NEWBI merger into Baylake being characterized as a taxable transaction instead of a reorganization under Section 368(a) of the Code.  See “Material United States Federal Income Tax Consequences of the Merger on page 50.”  The NEWBI board and management determined that, given the anticipated benefits of a subsequent merger of Baylake into Nicolet for NEWBI’s shareholders and for Union’s employees and customers, the NEWBI merger into Baylake continues to be in the best interests of NEWBI and its shareholders. NEWBI’s board of directors and its management decided to proceed with the merger notwithstanding the risk that the merger of NEWBI into Baylake could be subsequently characterized (after the Nicolet merger) as a taxable transaction instead of a reorganization. 

Consistent with this decision, NEWBI executed an amendment to the merger agreement dated October 14, 2015 requiring as a condition to the NEWBI merger that NEWBI receive an opinion from Wipfli that that the NEWBI merger will “more likely than not” be treated as a reorganization under Section 368(a), instead of an opinion that it “will” be treated as a reorganization.  The amendment also extends the deadline for completing the NEWBI merger under the merger agreement from October 31, 2015 to December 31, 2015, unless the merger is not consummated by December 31, 2016 solely due to a delay in obtaining any regulatory approval required by the merger agreement, in which case the deadline is extended to January 31, 2016.

Summary of Fair Market Business Valuation of NEWBI’s Independent Accountant

Wipfli, NEWBI’s independent accountant, prepared a Fair Market Business Valuation of NEWBI as of September 30, 2014.  Wipfli, is a multi-disciplinary professional services firm that has provided various services to NEWBI since 1988.  Wipfli received $24,764 and $25,382 in compensation for tax, auditing and consulting services rendered to NEWBI in 2013 and 2014, respectively.  In addition, Wipfli received $8,285 in compensation for preparing the Fair Market Business Valuation.  Wipfli regularly engages in the valuation of businesses in connection with mergers and acquisitions and other corporate transactions.  Wipfli was selected to prepare the Fair Market Business Valuation because of its familiarity with NEWBI and its experience with mergers and acquisitions consulting services.

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In preparing the Fair Market Business Valuation, Wipfli relied upon warranties of NEWBI and its representatives that the information they supplied was complete and accurate to the best of their knowledge and that the financial statement information reflected NEWBI’s results of operations and financial and business condition.  Wipfli accepted the financial statements and other related information provided by NEWBI and its representatives without any verification as fully and correctly representing NEWBI’s business conditions and operating results for the respective periods, except as noted in the Fair Market Business Valuation.  Public information and industry and statistical information used to prepare the Fair Market Business Valuation was obtained from sources Wipfli believes to be reliable but Wipfli makes no representation as to the accuracy or completeness of such information.  The following is a summary of the analysis undertaken by Wipfli in connection with the preparation of its Fair Market Business Valuation, which is qualified in its entirety by reference to the full text of the Fair Market Business Valuation attached as an exhibit to this proxy statement/prospectus.

In preparing the Fair Market Business Valuation, Wipfli used the following sources of information:

•

financial statements of Union filed with the FDIC for the years ended December 31, 2010 through 2013, and the nine months ended September 30, 2014 and 2013;

•

Uniform Bank Performance Reports for the years ended December 31, 2010 through 2013, and the nine months ended September 30, 2014;

•

NEWBI’s financial statements filed with the Federal Reserve System for the years ended December 31, 2010 through 2013;

•

internally prepared financial statements of NEWBI for the nine months ended September 30, 2014 and 2013;

•

shareholders’ list for NEWBI as of September 30, 2014;

•

key personnel list;

•

the website of Union;

•

information on guideline private transaction database prepared by SNL Financial;

•

trade associations and industry sources;

•

information on the U.S., state and local economies gathered from various trade publications, reports and articles, a national forecast as of August 2014 prepared by KeyValueData and the Wisconsin Economic Outlook prepared by the Division of Research and Policy, Wisconsin Department of Revenue and First Research;

•

industry information gathered from the FDIC’s Quarterly Banking Profile as of June 30, 2014;

•

Duff and Phelps 2014 Valuation Yearbook; and

•

various other information.

Wipfli used the income and market approaches to valuation in preparing the Fair Market Business Valuation.  In the income approach, value is dependent on the present worth of future economic benefits to be derived from ownership.  Value indications are developed by discounting expected future net cash flows available for distribution to their present worth at market-based rates of return.  Value estimates are established in a market approach by an analysis of recent sales or offerings of comparable property.  Wipfli valued Union and then added that valuation to the other assets and liabilities of NEWBI.  Wipfli considered eight factors in their analysis:

•

the nature of the business and the history of NEWBI from its inception;

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•

the economic outlook in general and the condition and outlook of the specific industry in particular;

•

the value of the tangible assets as represented on the books of NEWBI and financial condition of NEWBI including past results and current operations;

•

the potential earnings capacity of NEWBI and its ability to pay a fair return on investment;

•

the actual dividends or the ability of NEWBI to pay dividends;

•

the economic benefit of goodwill and other intangible assets in the overall enterprise value;

•

the size of NEWBI and the size of the block of shares being valued and transactions or sales of similar securities; and

•

market data of similar businesses including actual sales and offerings and relevant financial and sale data of securities in publicly traded comparable companies.

Market Approach.  Wipfli reviewed the SNL Financial transaction database to select transactions announced between September 30, 2013 and September 30, 2014 involving targets in the Midwest where complete information on the purchase price was available.  Wipfli then calculated Union’s indicated value using a price to earnings multiple, a price to normalized tangible book value of equity multiple and a price to tangible asset ratio.  Wipfli then averaged the value determined using each method to determine Union’s indicated value under the market approach.

Wipfli selected a price to earnings multiple of 25.0 to apply to Union’s adjusted ongoing earning power of $301,000.  This was higher than the average and median price multiples of comparable transactions because banks, such as Union, with lower return on assets and equity ratios trade at a multiple significantly above the average and median.  Wipfli determined Union’s value without excess capital to be $7,526,000 by multiplying the price to earnings multiple of 25.0 by the adjusted estimated ongoing earning power of $301,000.  Excess capital of $1,633,000 was added to arrive at the estimated fair market value of Union on a controlling basis of $9,160,000 using the price to earnings method.

Wipfli also applied a price to normalized tangible book value of equity multiple to Union’s normalized tangible book value of equity.  Wipfli determined Union’s price to normalized tangible book value of equity multiple to be 1.10.  The multiple was lower than the average and median multiples used in comparable private transactions due to Union’s relatively low return on assets and equity ratios and other factors.  Multiplying Union’s tangible book value of equity of $6,949,000 by 1.10, Wipfli determined the value of Union without excess capital to be $7,644,000.  Adding excess capital of $1,633,000 to that figure resulted in an estimated fair market value of Union to be $9,277,000 using the price to normalized tangible book value of equity method.

Wipfli selected a price to asset ratio of 11.50% to use in applying the price to tangible asset method.  The multiple was lower than the average and median multiples used in comparable private transactions due to Union’s relatively low returns on assets and equity.  Multiplying Union’s total tangible assets of $86,859,000 by 11.50%, Wipfli determined the estimated fair market value of Union to be $9,989,000 using the price to tangible assets method.  Averaging the three methods, Wipfli determined the value of equity of Union on a controlling, marketable basis to be $9,500,000 using the market approach.

Income Approach.  The income approach estimates the value of an asset by considering the income generated by an investment in the asset over time.  Wipfli applied a capitalization rate to Union’s latest 12-month earnings figure and then applied a control premium.  Using this method, Wipfli determined Union’s indicated value to be $7,468,000 without the control premium.  Reviewing 306 transactions involving publicly traded banks that were sold during the past 10 years, Wipfli determined that the median and average control premiums offered for stock purchases were 27% and 33.5%, respectively.  Several factors can influence the premium paid including management, the ability to replace management, restrictions on transfers of shares, a bank’s size, the number of shareholders, concentration of control, size of the block being valued, volatility of assets, and time of termination of an entity.  With respect to Union, Wipfli noted that Union’s management is adequate but due to the small size of Union, the loss of any key people would hurt the bank.  Wipfli also noted that there are no current restrictions on the

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transfer of Union’s stock, that Union had approximately $87 million in total assets and four branches and that the termination date of Union was not in the foreseeable future.  Based on the data, Wipfli determined a control premium of 25% was appropriate.  Adding the control premium of 25%, Wipfli determined the value of Union to be $9,300,000 using the income approach.

Conclusion.  Wipfli applied equal weight to Union’s value under the market approach and the income approach and therefore determined the fair market value of Union’s equity to be $9,400,000 as of September 30, 2014.  To determine NEWBI’s valuation, Wipfli combined its fair market valuation of Union with NEWBI’s other assets and liabilities.  Based on that valuation method, Wipfli determined NEWBI’s fair market value to be $10,227,000.  Based on the 100,864 outstanding shares at September 30, 2014, Wipfli determined the fair market value per share of NEWBI common stock to be $101.

Baylake’s Reasons for the Merger

In reaching its decision to approve the merger agreement and merger, Baylake’s board of directors consulted with management, as well as its legal advisors, and considered a number of factors, including the following:

•

the combination of Baylake’s business with NEWBI will complement and increase its existing market presence in Kewaunee and Brown Counties and will also serve as an opportunity for Baylake to expand into Manitowoc County, which represents a logical geographical expansion from Baylake’s primary markets in Brown, Door and Kewaunee Counties;

•

Baylake’s existing knowledge of NEWBI’s business, operations, financial condition, asset quality, earnings, capital and prospects both as an independent organization and as part of a combined company;

•

the anticipated pro forma impact of the transaction on the combined company, including the expected cost synergies and savings;

•

the anticipated impact of the transaction on NEWBI’s customers and the communities that it serves, including the potential to better service its customers and enhance its competitive position as a community bank due to Baylake’s ability to offer more diverse financial products and services as a larger institution;

•

the complementary nature of the cultures and philosophies of the two companies, which Baylake’s board of directors believes should facilitate the integration and implementation of the transaction;

•

the board of directors’ expectation that Baylake will retain its strong capital position upon completion of the merger; and

•

the merger consideration to be paid to NEWBI shareholders is fair and reasonable.

The foregoing discussion of the information and factors considered by Baylake is not intended to be exhaustive, but includes the material factors considered by Baylake’s board of directors.  In reaching its determination to enter into the merger agreement, Baylake did not assign any relative or specific weights to the foregoing factors.  Baylake’s board of directors considered all these factors as a whole, including discussions with, and questioning of, Baylake’s management and Baylake’s financial and legal advisors, and overall considered the factors to be favorable to, and in support of, its determination.

NEWBI’s Reasons for the Merger and NEWBI’s Board Recommendation

NEWBI’s board of directors has concluded that the merger offers NEWBI’s shareholders an attractive opportunity to achieve the board’s strategic business objectives, including increasing shareholder value, growing the size of the business and enhancing liquidity for NEWBI’s shareholders.  In addition, NEWBI’s board of directors believes that the customers and communities served by Union will benefit from the merger.

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In deciding to approve the merger agreement and the merger, NEWBI’s board of directors consulted with NEWBI’s management, as well as its legal counsel and financial advisor, and considered numerous factors, including the following:

•

information with respect to the businesses, earnings, operations, financial condition, prospects, capital levels and asset quality of NEWBI and Baylake, both individually and as a combined company, as well as information with respect to the business, earnings, operations, financial condition, prospects, capital levels and asset quality of Nicolet, both individually and as a combined company with Baylake/NEWBI;

•

the perceived risks and uncertainties attendant to NEWBI’s operation as an independent banking organization, including the risks and uncertainties related to the continuing low-interest rate environment, competition in NEWBI’s market area, increased regulatory costs, increased marketing costs, increased technology costs, and increased capital requirements, particularly given that the local economy in Union’s trade area has been adversely affected by the loss of a major employer and many jobs;

•

 the aggregate merger consideration was priced at 102% of common book value as of December 31, 2014, which was within the price range determined to be appropriate by the board, taking into account the valuation of the common stock conducted by Wipfli LLP as of September 30, 2014, and was $12 per share higher than the current price at which shares of common stock were trading between third parties in the market;  

•

the value to be received by NEWBI’s shareholders in the merger as compared to shareholder value projected for NEWBI as an independent entity;

•

the market value of Baylake common stock prior to the execution of the merger agreement;

•

Baylake’s strategy to seek profitable future expansion in NEWBI’s trade area, leading to continued growth in overall shareholder value;

•

the fact that Baylake, as well as Nicolet, although publicly traded, maintain community banking philosophies, and are known to individuals and businesses in Union’s trade area;

•

the fact that Baylake and Nicolet are publicly held and the merger would provide access to a public trading market for NEWBI’s shareholders whose investments currently are in a privately held company, as well as enhanced access to capital markets to finance the combined company’s capital requirements;

•

the fact that Baylake, and Nicolet, are able to offer a wider array of retail and commercial products including mobile banking, as well as investment management solutions to Union customers including a trust department, and a larger lending limit to compete for more sizable transactions; and

•

the likelihood that the merger will be approved by the relevant bank regulatory authorities without undue burden and in a timely manner.

The above discussion of the information and factors considered by NEWBI’s board of directors is not intended to be exhaustive, but includes a description of all material factors considered by NEWBI’s board.  In view of the wide variety of factors considered by the NEWBI board of directors in connection with its evaluation of the merger, the NEWBI board did not consider it practical to, nor did it attempt to, quantify, rank or otherwise assign relative weights to the specific factors that it considered.  In considering the factors described above, individual directors may have given differing weights to different factors.  NEWBI’s board of directors collectively made its determination with respect to the merger based on the conclusion reached by its members, based on the factors that each of them considered appropriate, that the merger is in the best interests of NEWBI’s shareholders.

NEWBI’s board of directors believes that the merger is fair to, and in the best interests of, NEWBI and its shareholders.  NEWBI’s board of directors unanimously approved the merger agreement and recommends that shareholders vote “FOR” approval of the merger agreement.

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All of NEWBI’s directors who directly or beneficially own shares of NEWBI common stock have agreed to vote their shares at the special meeting in favor of the merger and any other matter necessary for consummation of the transactions contemplated by the merger agreement.

Management and Board of Directors of Baylake after the Merger

Upon completion of the merger, the board of directors of Baylake will consist of the directors serving on the board of directors of Baylake prior to the effective time of the merger until such time as the Nicolet merger may be completed.  Upon completion of the Nicolet merger, the board of directors of Nicolet will consist of eight directors of the Nicolet board of directors and eight directors of the Baylake board of directors, each as constituted immediately prior to the Nicolet merger and as set forth under “Management and Directors of Nicolet After Nicolet Merger” on page 49.

The current directors and senior officers of Baylake are expected to continue in their current positions until such time as the Nicolet merger may be completed, other than as has been or may be publicly announced by Baylake in the normal course.  Upon completion of the Nicolet merger, Robert Atwell (current Chairman and Chief Executive Officer of Nicolet) and Robert Cera (current President and Chief Executive Officer of Baylake) will be appointed Co-Chairmen and Co-Chief Executive Officers of Nicolet.  Information about the current Baylake directors and executive officers and the current Nicolet directors and executive officers can be found in the documents listed under “Where You Can Find More Information” beginning on page 75.

Interests of NEWBI Directors and Executive Officers in the Merger

In considering the recommendations of the board of directors of NEWBI, NEWBI shareholders should be aware that certain directors and executive officers of NEWBI have interests in the merger that may differ from, or may be in addition to, the interests of NEWBI shareholders.  These interests are described in more detail and quantified below.  The board of directors of NEWBI was aware of these interests and considered them, among other matters, when it adopted the merger agreement and in making its recommendations that the NEWBI shareholders approve the merger proposal.

In connection with the merger, Baylake will assume by operation of law an employment-related agreement with Jeffrey W. Kleiman, President of NEWBI.  Mr. Kleiman will be employed by Baylake in a position to be mutually agreed to by Baylake and Mr. Kleiman prior to closing.

Pursuant to the terms of the merger agreement, Baylake has agreed to provide NEWBI directors and officers liability and financial institutions bond insurance policies against personal liability for actions taken after the effective time as is provided to other directors and officers of Baylake.  In addition, Baylake has agreed to pay for insurance coverage for up to six years following the closing date under a policy of directors’ and officers’ liability and other professional insurance for actions taken on or prior to the effective time of the merger, so long as the premium of such policy does not exceed two hundred percent of the last annual premium paid by NEWBI for its last annual premium.  If a six-year term of insurance coverage is not available within such costs, the term for the insurance will be such other maximum period of coverage that is available at a cost that does not exceed two hundred percent of the last annual premium paid by NEWBI.  

TERMS OF THE MERGER AGREEMENT

Effects of the Merger

As a result of the merger, NEWBI shall be merged with and into Baylake, with Baylake continuing as the surviving corporation of the merger.  The separate corporate existence of NEWBI will cease as of the effective time of the merger.  Immediately prior to consummation of the merger, NEWBI will sell substantially all of the stock of its indirect subsidiary, Novak Agency, Inc., or Novak to the principals of Novak on terms reasonably agreed to by Baylake.

As a result of the merger, there will no longer be any shares of NEWBI common stock.  NEWBI shareholders will receive cash and shares of Baylake common stock as the merger consideration, and will only participate in the

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combined company’s future earnings and potential growth through their ownership of Baylake common stock.  All of the other incidents of direct stock ownership in Baylake, such as the right to vote on certain corporate decisions, to elect directors and to receive dividends and distributions from NEWBI, will be extinguished upon completion of the merger.

Effective Time of the Merger

The closing of the merger will occur at such time, date and location as may be mutually agreed by the parties, or on a date specified by either party upon five business days’ written notice after the last to occur of the following events:  (a) receipt of all consents and approvals of governmental authorities legally required to consummate the merger and the expiration of all statutory waiting periods; and (b) approval of the merger agreement and the merger by the shareholders of NEWBI.  However, scheduling or commencing the closing will not constitute a waiver of the closing conditions in the merger agreement.  The merger will be completed legally at the date and time specified in the articles of merger to be filed by Baylake with the WDFI.  As of the date of this proxy statement/prospectus, the parties expect that the merger will be effective late in the fourth quarter of 2015.  However, there can be no assurance as to when or if the merger will occur.

As described below, if the merger is not completed by December 31, 2015, the merger agreement may be terminated by either Baylake or NEWBI; provided, however, that such date shall automatically extend to January 31, 2016 in the event that the merger has not been consummated by December 31, 2015 solely due to a delay in obtaining any regulatory approval required by the merger agreement.

Covenants and Agreements

Conduct of Business Prior to the Completion of the Merger.  NEWBI has agreed that, prior to the effective time of the merger, it will operate its business only in the usual, regular and ordinary course consistent with past practices.  NEWBI has agreed to use commercially reasonable efforts to preserve intact its business organization and assets, maintain its rights and franchises, retain the services of its officers and key employees and maintain its relationships with customers prior to closing.

In addition to the general covenants above, NEWBI has agreed that prior to the effective time of the merger, subject to specified exceptions, it will, and will require its subsidiaries to:

•

use commercially reasonable efforts to maintain and keep the owned real property and the leased real property in as good repair and condition as of the date of the merger agreement, ordinary wear and tear excepted;

•

use commercially reasonable efforts to keep in full force and effect director and officer liability insurance comparable in amount and scope of coverage to that maintained by it as of the date of the merger agreement;

•

perform in all material respects all obligations required to be performed by it under all material contracts relating to or affecting its assets, properties, and business;

•

comply with and perform in all material respects all obligations and duties imposed upon it by all applicable laws;

•

maintain the “well capitalized” status of Union;

•

if requested in writing by Baylake within 30 days of the date of the merger agreement, deliver written Phase I environmental site assessments for each piece of real property owned by NEWBI or its subsidiaries for use in its banking operations;

•

not take any action or fail to take any action which, individually or in the aggregate, can be expected to have a material adverse effect on NEWBI;

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•

use its reasonable best efforts to deliver all written consents prior to the effective time necessary to properly assign or transfer all material contracts to Baylake; and

Additionally, NEWBI has agreed that prior to the effective time of the merger, subject to specified exceptions, it will not, and will not permit its subsidiaries to, without the prior consent of Baylake:

•

adopt, amend, renew or terminate any employment contract or employment arrangement or any other agreement, arrangement, plan or policy between NEWBI or any of its subsidiaries and one or more of its current or former directors, officers or employees, or increase in any manner the compensation or benefits of any director, officer or employee, except for normal increases for employees in the ordinary course of business consistent with past practices or to maintain qualification pursuant to the Code;

•

declare or pay any dividend on, or make any other distribution in respect of, its outstanding shares of capital stock, except for dividends by a subsidiary of NEWBI to NEWBI;

•

except as contemplated by the merger agreement, merge with or into any other entity, permit any other entity to merge into it or consolidate with any other entity, or effect any reorganization or recapitalization;

•

acquire the assets or any equity interests of any entity or person other than in the ordinary course of business;

•

liquidate, sell, dispose of, encumber, or permit any liens with respect to any assets or acquire any assets, including the extension of any credit, with a value in excess of $50,000 outside of the ordinary course of business (other than the sale of other real estate owned and nonperforming assets in the ordinary course of business and at par value);

•

make, commit to make, renew, extend the maturity of, or alter any of the material terms of a loan or group of loans to a borrower and its affiliates that, individually or collectively, would be in excess of $500,000; provided, however, that Baylake will be deemed to have consented to such transactions unless it objects to the transaction no later than 48 hours after its receipt of all information relating to the making, renewal or alteration of such loan;

•

with respect to NEWBI and Union, borrow money from any entity or person; provided, however, this shall not affect the ability of NEWBI or Union to accept deposits;

•

repurchase, redeem or otherwise acquire, issue, sell or deliver, split, reclassify, combine or otherwise adjust any securities issued by NEWBI or any of its subsidiaries, or grant or issue any options, warrants or other rights for issue thereof;

•

propose or adopt any amendments to the NEWBI articles or bylaws, or any similar organizational documents of any of its subsidiaries;

•

change any of its methods of accounting in effect at December 31, 2014 or change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of the federal income tax returns for the taxable year ending December 31, 2014, except as may be required by GAAP;

•

change any lending, investment, liability management or other material policies concerning the business or operations of NEWBI or any of its subsidiaries, except as required by law or by a governmental authority:

•

take any of the following actions:

°

acquire or sell any contracts for the purchase or sale of financial or other futures or any put or call options, or enter into any hedges or interest rate swaps relating to cash, securities, or any commodities whatsoever or enter into any other derivative transaction;

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°

make any investments other than in investments in the ordinary course of business in U.S. Treasuries or other securities with a credit rating of no less than AAA and with maturities of no greater than two years;

°

incur any material liabilities or material obligations, whether directly or by way of guaranty, including any obligation for borrowed money in excess of an aggregate of $25,000 (for NEWBI and its subsidiaries on a consolidated basis) except in the ordinary course of business consistent with past practice;

°

enter into any contract with respect to any discharge, waiver, satisfaction, release or relinquishment of any material contract rights, liens, debts or claims, not in the ordinary course of business and consistent with past practices (such as the creation of deposit liabilities, purchases of federal funds, advances from the Federal Reserve Bank or Federal Home Loan Bank, and entry into repurchase agreements fully secured by United States government or agency securities, which are in the ordinary course of business and consistent with past practices), or impose, or suffer the imposition of, on any material asset of NEWBI or any of its subsidiaries of any lien or permit any such lien to exist (other than in connection with deposits, repurchase agreements, bankers acceptances, “treasury tax and loan” accounts established in the ordinary course of business, the satisfaction of legal requirements in the exercise of trust powers, and liens in effect as of the date of the merger agreement) and in no event with a value in excess of $25,000 individually;

°

settle any proceeding for any amount in excess of $10,000 or in any manner which would restrict in any material respect the operations or business of NEWBI or any of its subsidiaries;

°

purchase any new financial product or instrument outside of the ordinary course of business which involves entering into a contract under which the aggregate obligations of NEWBI would exceed $10,000 or which would have a term of twelve months or longer;

°

make any capital expenditure, except in the ordinary course and consistent with past practice and in no event in excess of $10,000 individually;

°

take any action or fail to take any action which, individually or in the aggregate, would be reasonably expected to have a material adverse effect on NEWBI;

°

take any action that would adversely affect or delay the ability of NEWBI to perform any of its obligations on a timely basis under the merger agreement or cause any of the conditions set forth in Article VII (Conditions of the Merger) of the merger agreement to not be satisfied;

•

fail to maintain in their present form and with their present coverage all existing policies of insurance with respect to any owned real property and leased real property;

•

fail to comply with any law or order applicable to owned real property and leased real property if such failure would materially adversely affect the condition (physical or otherwise) of such property or NEWBI’s ability to operate its business therefrom; or

•

agree in writing or otherwise to do any of the foregoing.

Baylake has agreed that prior to the effective time of the merger, subject to specified exceptions, it will, and will cause its subsidiaries to:

•

maintain its corporate existence in good standing and maintain all books and records in accordance with accounting principles and practices as used in Baylake’s financial statements applied on a consistent basis;

•

maintain the “well capitalized” status of  Baylake and Baylake Bank;

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•

conduct its business in a manner that does not violate any law, except for possible violations which, individually or in the aggregate, do not have, and would not reasonably be expected to have, a material adverse effect on Baylake;

•

operate its business in the usual, regular and ordinary course consistent with past practices; and

•

not take any action or fail to take any action which, individually or in the aggregate, can be expected to have a material adverse effect on Baylake.

Further, Baylake has agreed that prior to the effective time of the merger, subject to specified exceptions, it will not, and will cause its subsidiaries to not, take any action that would adversely affect or delay the ability of Baylake to perform any of its obligations on a timely basis under the merger agreement or cause any of the conditions set forth in Article VII (Conditions of the Merger) of the merger agreement to not be satisfied, and will not amend its articles of incorporation or bylaws in a manner that would materially and adversely affect the economic benefits of the merger to the holders of NEWBI common stock.

Regulatory Matters.  Baylake and NEWBI have agreed to promptly prepare and file with the SEC a registration statement on Form S-4, of which this proxy statement/prospectus is a part, within forty-five days of the date of the merger agreement or as soon as practicable thereafter.  Baylake and NEWBI have agreed to use all reasonable efforts to have the Form S-4 declared effective under the Securities Act as promptly as practicable after such filing, and to mail or deliver the proxy statement/prospectus to NEWBI shareholders.  Baylake and NEWBI have each agreed to furnish all information concerning itself and its affiliates that is required to be included in this proxy statement/prospectus or, to the extent applicable, the other filings, or that is customarily included in a proxy statement/prospectus or other filings prepared in connection with transactions of the type contemplated by the merger agreement.

Baylake and NEWBI have agreed to use reasonable and diligent efforts to obtain all consents and orders required under law (including, without limitation, all rulings and approvals of governmental authorities) and from parties to material contracts required in connection with the authorization, execution and delivery of the merger agreement and the consummation by them of the merger, and make all necessary filings, and thereafter make any other required submissions, with respect to the merger agreement and the merger required under applicable federal and state securities laws, the BHCA, the Federal Deposit Insurance Act, any state banking laws and any other applicable federal or state banking laws and any other applicable law.  Baylake and NEWBI will cooperate with each other in connection with the making of all such filings, including providing copies of all such documents to the non-filing party and its advisors prior to filing and, if requested, to accept all reasonable additions, deletions or changes suggested in connection therewith.  NEWBI and Baylake will furnish all information required for any application or other filing to be made pursuant to the rules and regulations of any applicable law in connection with the transactions contemplated by the merger agreement.  In case at any time after the effective time any further action is necessary or desirable to carry out the purposes of the merger agreement, the officers and directors of Baylake and NEWBI have agreed to use commercially reasonable efforts to take all such necessary action.

No Solicitation; Board Recommendation.  Before the effective time of the merger agreement, NEWBI has agreed that neither it nor any of its subsidiaries shall, and each shall use its best efforts to cause their respective representatives not to, initiate, solicit or take any action to facilitate or encourage, directly or indirectly, any inquiries or the making or submission of any proposal or offer (including, without limitation, any proposal or offer to its shareholders) with respect to any acquisition transaction, or, except as provided below, engage in any negotiations concerning, or provide any confidential information or data to, or have any discussions with, any entity, person or group relating to an alternative acquisition proposal.  NEWBI has also agreed to immediately cease and cause to be terminated any existing activities, discussions or negotiations with any parties conducted on or prior to the date of the merger agreement with respect to any of the foregoing, and it will inform such parties of its obligations under the merger agreement; and that it will immediately notify Baylake if any such inquiries, proposals or offers are received by, any such information is requested from, or any such negotiations or discussions are sought to be initiated or continued with, it or any of such entities, persons or groups.

The NEWBI board of directors has resolved to recommend that NEWBI’s shareholders vote in favor of and adopt and approve the merger agreement at the NEWBI shareholders’ meeting.  Neither the NEWBI board of

40

directors nor any committee thereof shall withhold, withdraw, amend or modify, or propose or resolve to withhold, withdraw, amend or modify the NEWBI board of directors’ recommendation in a manner adverse to Baylake.

However, prior to the receipt of the requisite shareholder approval at the NEWBI shareholders’ meeting, solely in response to an unsolicited bona fide written acquisition proposal that did not result from the breach of the merger agreement and following delivery to Baylake of notice of such acquisition proposal, NEWBI is permitted to furnish information to the party making the acquisition proposal and/or engage in discussions or negotiations regarding the acquisition proposal, but only if (A) the NEWBI board of directors has reasonably concluded in good faith that the person or group making such acquisition proposal will have adequate sources of financing to consummate such acquisition proposal, (B) prior to furnishing any information to such person, such person shall have entered into a confidentiality agreement with NEWBI (which shall expressly permit NEWBI to disclose the terms of the confidentiality agreement to Baylake) on terms no less favorable to NEWBI than the Confidentiality Agreement between Baylake and NEWBI, (C) the NEWBI board of directors reasonably determines in good faith that the acquisition proposal would reasonably be expected to result in a “superior offer” (a defined below), and (D) the NEWBI board of directors reasonably determines in good faith after consultation with outside counsel that such action is required for the NEWBI board of directors to comply with its fiduciary duties to shareholders imposed by law.

Under the terms of the merger agreement, a superior offer means an unsolicited, bona fide written offer related to a merger, acquisition, sale of substantially all assets or similar transaction on terms that the NEWBI board of directors determines, in its good faith judgment (after receipt and consideration of the written opinion of a financial advisor to the effect that the consideration offered in such offer is superior, from a financial point of view, to the per share consideration to be received in the merger), to be (1) more favorable to the NEWBI shareholders than the terms of the merger, and (2) reasonably likely to be consummated in accordance with its terms, taking into account all financial, regulatory, legal and other aspects of the proposal, including, to the extent debt financing is required, whether such proposal is fully financed by means of an executed customary commitment letter from a reputable person that has agreed to provide or cause to be provided the amounts set forth therein, after taking into account any revisions to the terms of the merger agreement and the merger proposed by Baylake during the notice period set forth in the merger agreement.

NASDAQ Listing.  Baylake will use its reasonable efforts to cause the shares of Baylake common stock to be issued in the merger to be approved for listing on NASDAQ prior to the effective time of the merger.

Update Disclosure.  Until the effective time, NEWBI has agreed to update the information contained in the disclosure schedule to the merger agreement, to reflect any matters which have occurred from and after the date of the merger agreement which, if existing on the date of the merger agreement, would have been required to be described therein.

Notice of Breach.  Each party has agreed to notify the other party in the event it becomes aware of the impending or threatened occurrence of any event or condition which would cause or constitute a material breach of any of its representations or agreements contained or referred to herein, and use its reasonable best efforts to prevent or promptly remedy the same.

Tax Treatment.  Each party has agreed to use its reasonable best efforts to cause the merger to qualify as a reorganization under Section 368(a) of the Internal Revenue Code.  However, there is a possibility that the subsequent merger of Baylake with and into Nicolet could result in the merger of NEWBI with and into Baylake being characterized as a taxable transaction instead of a reorganization under Section 368(a) of the Code See “Material United States Federal Income Tax Consequences of the Merger on page 50.”

Delivery of Shareholder List.  NEWBI has agreed to deliver to Baylake, prior to the effective time, a list of the names and addresses of NEWBI shareholders, their holdings of stock as of the latest practicable date, and such other information as Baylake may reasonably request.

Loan and Investment Policies.  NEWBI has agreed to maintain and to cause NEWBI’s subsidiaries to maintain their existing loan and investment policies and procedures designed to ensure safe and sound banking practices, which shall remain in effect, except as otherwise agreed in writing by Baylake, until the earlier of the effective time or termination of the merger agreement.  To the extent permitted by applicable law, Baylake shall have the right to

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designate at least one observer to attend all meetings of NEWBI’s (i) loan approval committee, or similar committee at any NEWBI subsidiary designated by Baylake, and (ii) investment committee or similar committee at any NEWBI subsidiary designated by Baylake, and NEWBI will ensure that such representatives receive all information given by NEW Bancshares, NEWBI’s subsidiary, or their respective agents to NEWBI’s or the NEWBI subsidiaries’ committee member unless the observers presence at such meeting or providing such information to the observer is objected to by any state or federal bank regulatory agency, is in connection with any lawfully invoked privilege or is in connection with any discussion of the merger agreement.

Access and Information.  Until the earlier of the effective time or the termination of the merger agreement, each party will give the other party and its representatives reasonable access to certain persons and information, including the officers, employees, properties, books and records of such company, as well as other information that is requested in connection with certain permitted activities, including due diligence review, verification of representations and warranties, confirming compliance with the merger agreement and preparing for the consummation of the transactions contemplated by the merger agreement.

Return of Documents.  In the event of termination of the merger agreement, each party has agreed to return to the other party all originals and copies of documents and work papers obtained by such party from the other party, and not to use, disclose or divulge any information so obtained, subject to certain exceptions.

Directors’ and Officers’ Indemnification and Insurance.  Baylake has agreed to succeed to NEWBI’s obligations with respect to indemnification or exculpation existing in favor of the directors, officers, employees and agents of NEWBI and its subsidiaries as provided in NEWBI’s articles and bylaws, indemnification agreements or otherwise in effect as of the date of the merger agreement with respect to matters occurring before the effective time.  NEWBI will not amend or enter into new indemnification arrangements or agreements from and after the date of the merger agreement.

Baylake shall obtain coverage under Baylake’s Directors’ and Officers’ Liability and Financial Institutions Bond insurance policies for the purpose of insuring Jeffrey W. Kleiman after the effective time of the merger.  Baylake shall maintain in effect for a period of six years after the effective time, the current policies of directors’ and officers’ liability insurance maintained by NEWBI or Union immediately prior to the effective time (provided that Baylake may substitute policies of at least the same coverage and amounts and containing terms and conditions that are not less advantageous to the directors and officers of NEWBI and Union as the coverage, amounts, terms and conditions provided by NEWBI or Union to their directors and officers as of the date of the merger agreement, in each case with respect to claims arising out of or relating to events which occurred before or at the effective time; provided, however, that in no event will Baylake be required to expend an annual premium for such coverage in excess of 200% of the last annual premium paid by NEWBI or Union for such insurance prior to the date of the merger agreement.  If such insurance coverage cannot be obtained at an annual premium equal to or less than two hundred percent of the last annual premium paid by NEWBI or Union, Baylake will obtain that amount of directors’ and officers’ insurance, or tail coverage, obtainable for an annual premium equal to the 200% of the last annual premium paid by NEWBI or Union.

Employee Matters.  The merger agreement provides that each employee who continues employment with Baylake or Baylake Bank after the closing of the merger or is subsequently hired by Baylake or Baylake Bank within six months after the closing of the merger will receive credit for their tenure with NEWBI or Union for vesting and eligibility purposes in Baylake benefit plans.  However, nothing in the merger agreement requires Baylake to continue to employ any particular employee with the exception of Jeffrey W. Kleiman.  Notwithstanding the terms set forth in the merger agreement, in the event any employee who continues employment with Baylake after the closing of the merger agreement or is subsequently hired by Baylake or Baylake Bank within six months after the closing of the merger has entered into a written employment agreement or arrangement with Baylake or Baylake Bank, the terms of such written employment agreement or arrangement will govern.

Representations and Warranties

The merger agreement contains representations and warranties made by NEWBI and Baylake relating to a number of matters, including the following:

•

corporate organization and qualification;

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•

subsidiaries;

•

articles of incorporation and bylaws;

•

capitalization;

•

authority to execute the merger agreement and perform its obligations thereunder;

•

no conflict with organizational documents, laws and contracts;

•

required filings and consents;

•

regulatory approvals;

•

compliance with laws and material contracts;

•

securities and banking reports and financial statements;

•

absence of certain changes or events since December 31, 2014;

•

absence of proceedings and orders;

•

information in this registration statement and proxy statement/prospectus;

•

owned property and leased property;

•

tax matters;

•

brokers;

•

absence of a material adverse effect;

NEWBI makes additional representations and warranties to Baylake in the merger agreement relating to a number of matters, including the following:

•

employee benefit plans;

•

environmental matters;

•

absence of agreements restricting the business of NEWBI;

•

taxes;

•

insurance;

•

vote required to approve the merger agreement and the merger;

•

shareholders’ agreement;

•

absence of related party loans;

•

allowance for loan and lease losses;

•

administration of trust accounts;

•

loans and investment securities; and

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•

due inquiry of NEWBI representatives to inform themselves as to the accuracy of certain of the foregoing representations and warranties.

Baylake makes an additional representation and warranty to NEWBI in the merger agreement related to financing of the merger.

Certain of these representations and warranties are qualified as to materiality or material adverse effect.  For purposes of the merger agreement, a material adverse effect means an effect, that, individually or in the aggregate with other effects, (i) is material and adverse to the business, assets, liabilities, results of operations or financial condition of the party and its subsidiaries taken as a whole, or (ii) materially impairs the ability of the party to consummate the transactions contemplated by the merger agreement; provided, however, that the term material adverse effect is not deemed to include the impact of (a) any effect to the extent resulting from the announcement of the merger agreement or the transactions contemplated thereby; (b) any effect resulting from compliance with the covenants, terms and conditions of the merger agreement; (c) any effect to the extent resulting from changes in laws or interpretations thereof generally applicable to the banking industry; (d) any effect to the extent resulting from changes in GAAP which the party is required to adopt; (e) changes attributable to or resulting from changes in general economic conditions affecting the banking industry generally, including, without limitation, changes in interest rates (unless such effect would reasonably be expected to have a materially disproportionate impact on the business, assets, liabilities, results of operations or financial condition of the party relative to other banking industry participants); or (f) actions contemplated and permitted by the merger agreement.

The representations and warranties in the merger agreement do not survive the effective time of the merger and if the merger agreement is validly terminated, there will be no liability under the representations and warranties of the parties, unless a party knowingly breached the merger agreement.

Conditions to the Merger

Conditions to Each Party’s Obligations.  The respective obligations of each of Baylake and NEWBI to complete the merger are subject to the satisfaction of the following conditions:

•

effectiveness of the registration statement on Form S-4;

•

the approval of the merger agreement and the merger by the requisite vote of the shareholders of NEWBI;

•

the receipt of all necessary approvals or exemptions relating to the merger from the appropriate governmental authorities, including the Federal Reserve and the WDFI;

•

the absence of any law or order preventing or prohibiting consummation of the transactions contemplated by the merger agreement or restricting the consummation of the transactions contemplated by the merger agreement in a manner that would have a material adverse effect;

•

the absence of any action taken, or any statute, rule, regulation or order enacted, entered, enforced or deemed applicable to the merger, by any governmental authority which imposes any condition or restriction upon Baylake or NEWBI or their respective subsidiaries, which would materially adversely impact the economic or business benefits of the transactions contemplated by the merger agreement in such a manner as to render inadvisable the consummation of the merger; and

•

the filing of a notification form (and no objection thereto) for the listing of the Baylake common stock to be issued at the effective time on NASDAQ.

Conditions to Obligations of Baylake.  The obligation of Baylake to complete the merger is also subject to the satisfaction, or waiver by Baylake, of the following conditions:

•

the accuracy of the representations and warranties of NEWBI as of the closing date and effective time of the merger, other than, in most cases, those failures to be true and correct that (disregarding any materiality,

44

material adverse effect and similar qualifying terms), individually or in the aggregate, would not reasonably be expected to result in a material adverse effect on NEWBI;

•

the receipt by Baylake of an officer’s certificate regarding the accuracy of the representations and warranties of NEWBI;

•

the performance or compliance by NEWBI in all material respects with all agreements and covenants required by the merger agreement to be performed or complied with by it on or prior to the effective time;

•

the receipt of all approvals, consents and orders required to be obtained under the merger agreement, and the completion of all filings and notifications required to be made by NEWBI for the authorization, execution and delivery of the merger agreement, and the consummation by NEWBI of the transactions contemplated by the merger agreement, except where the failure to obtain any such consents or orders, or make any such filings or notifications, would not have a material adverse effect;

•

the absence of any pending proceeding before any governmental authority or any other person challenging or seeking material damages in connection with the merger, or seeking to restrain, prohibit or limit the exercise of full rights of ownership or operation by Baylake or its subsidiaries of all or any portion of the business or assets of NEWBI, which is reasonably likely to have a material adverse effect;

•

the absence of any material adverse effect with respect to NEWBI and an officer’s certificate to that effect;

•

holders of not more than ten percent of all outstanding shares of NEWBI’s common stock shall have undertaken steps to perfect dissenters’ rights in accordance with Subchapter XIII of the WBCL;

•

five business days prior to the closing date, NEWBI shall have delivered to Baylake a consolidated balance sheet for NEWBI reflecting NEWBI’s good faith estimate of the accounts of NEWBI and its subsidiaries as of the closing date, prepared in conformity with past practices and policies of NEWBI and its subsidiaries, and in accordance with the accounting methodology applied on a basis consistent with the preparation of the NEWBI financial statements; provided, however, that such NEWBI consolidated balance sheet shall not reflect the payment or accrual of NEWBI merger costs, nor any gain on the sale of Novak immediately prior to closing; and (i) if the closing balance sheet reflects that the total shareholders’ equity of NEWBI is less than $9,461,136, the purchase price shall reduced dollar-for-dollar by an amount equal to the difference between the total shareholders’ equity and $9,461,136; and (ii) if the closing balance sheet reflects that the total shareholders’ equity of NEWBI is more than $9,461,136, NEWBI shall be permitted, immediately prior to closing, to pay a special dividend to its shareholders in an amount equal to the excess.

•

the voting agreement shall have been executed by the NEWBI directors as of the date of the merger agreement; and

•

the termination of any referral or other revenue-sharing arrangement between Novak and NEWBI or Union.

Conditions to Obligations of NEWBI.  The obligation of NEWBI to complete the merger is also subject to the satisfaction, or waiver by NEWBI, of the following conditions:

•

the accuracy of the representations and warranties of Baylake as of the closing date of the merger, other than, in most cases, those failures to be true and correct that (disregarding any materiality, material adverse effect and similar qualifying terms), individually or in the aggregate, would not reasonably be expected to result in a material adverse effect on Baylake;

•

the receipt by NEWBI of an officer’s certificate regarding the accuracy of the representations and warranties of Baylake;

•

the performance or compliance by Baylake in all material respects with all agreements and covenants required by the merger agreement to be performed or complied with by it on or prior to the effective time;

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•

the receipt of all approvals, consents and orders required to be obtained under the merger agreement, and the completion of all filings and notifications required to be made by Baylake for the authorization, execution and delivery of the merger agreement, and the consummation by Baylake of the transactions contemplated by the merger agreement, except where the failure to obtain any such consents or orders, or make any such filings or notifications, would not have a material adverse effect;

•

the receipt of an opinion of Wipfli, in form and substance reasonably satisfactory to NEWBI, dated as of the closing date, to the effect that the merger will more likely than not be treated for federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code; and

•

the absence of any material adverse effect with respect to Baylake and receipt of an officer’s certificate to that effect.

Termination; Termination Fee

The merger agreement can be terminated by either party at any time before completion of the merger in the following circumstances:

•

by mutual written consent duly authorized by Baylake’s and NEWBI’s board of directors;

•

by either Baylake or NEWBI if the merger shall not have been consummated by December 31, 2015, unless extended by Baylake’s and NEWBI’s Board of Directors for any reason; provided, however, that such date shall automatically be extended until January 31, 2016, if the sole impediment to closing is a delay in the approval of any required approval from the appropriate governmental authorities;

•

if a governmental authority has issued a non-appealable order or taken any other action having the effect of restraining, enjoining or otherwise prohibiting the merger; or

•

if the requisite vote of the NEWBI shareholders is not obtained at the NEWBI shareholders’ meeting or at any adjournment or postponement thereof; provided, however, that the right to terminate the merger agreement will not be available to NEWBI where the failure to obtain approval by NEWBI shareholders is caused by NEWBI’s action or failure to act, and such action or failure to act is a breach of the merger agreement.

The merger agreement can be terminated by NEWBI at any time before completion of the merger in the following circumstances:

•

upon a breach by Baylake of any covenant or agreement in the merger agreement, or if any representation or warranty of Baylake was untrue when made or shall have become untrue, in either case such that the closing conditions of NEWBI to effect the merger would not be satisfied as of the time of such breach or as of the time such representation or warranty shall have become untrue, provided, that if the inaccuracy or breach was unintentional and is curable by Baylake, then NEWBI may not terminate the merger agreement for ten business days, so long as Baylake continues to exercise commercially reasonable efforts to cure such breach;

•

if any of the closing conditions to the obligations of NEWBI to effect the merger have not been satisfied or waived by NEWBI at closing or NEWBI reasonably determines that the timely satisfaction of any closing condition has become impossible (other than as a result of any failure on the part of NEWBI to comply with or perform any covenant or obligation of NEWBI set forth in the merger agreement);

•

if there has been a material adverse effect with respect to Baylake between the date of the merger agreement and the effective time of the merger agreement; or

•

if NEWBI opts to enter into a definitive agreement with respect to a superior offer, after complying with its obligations related to the non-solicitation of alternative business combination transactions.

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The merger agreement can be terminated by Baylake at any time prior to completion of the merger in the following circumstances:

•

upon a breach by NEWBI of any covenant or agreement in the merger agreement, or if any representation or warranty of NEWBI was untrue when made or shall have become untrue, in either case such that the closing conditions of Baylake to effect the merger would not be satisfied as of the time of such breach or as of the time such representation or warranty shall have become untrue, provided, that if the inaccuracy or breach was unintentional and is curable by NEWBI, then Baylake may not terminate the merger agreement for ten business days so long as NEWBI continues to exercise commercially reasonable efforts to cure such breach;

•

if NEWBI’s board of directors shall have changed its recommendation to NEWBI’s shareholders to approve the merger agreement and the merger, or if NEWBI shall have materially violated or breached its obligations not to solicit proposals relating to alternative business combination transactions;

•

if any of the closing conditions to the obligations of Baylake to effect the merger have not been satisfied or waived by Baylake at closing or Baylake reasonably determines that the timely satisfaction of any closing condition has become impossible (other than as a result of any failure on the part of Baylake to comply with or perform any covenant or obligation of Baylake in the merger agreement); or

•

if there has been a material adverse effect with respect to NEWBI between the date of the merger agreement and the effective time of the merger agreement.

The merger agreement provides that, in the event of termination of the merger agreement (i) by Baylake if NEWBI’s board has changed its recommendation to its shareholders to approve the merger agreement and the merger, or if NEWBI shall have materially violated or breached its obligations not to solicit proposals relating to alternative business combination transactions, (ii) by NEWBI in order to enter into a definitive agreement with respect to an unsolicited superior offer, or (iii) by either party if the requisite vote of NEWBI’s shareholders is not obtained at the NEWBI shareholders’ meeting and NEWBI’s board of directors has changed its recommendation to its shareholders to approve the merger agreement and the merger, then NEWBI will pay a termination fee of $300,000 to Baylake within two business days after such termination.  In the event of termination of the merger agreement by NEWBI because Baylake fails to  (i) use its best efforts to have the common stock to be issued pursuant to the merger agreement approved for listing on NASDAQ; (ii) use its best efforts to cause the merger to qualify as a reorganization under the Code; or (iii) take the necessary action required to obtain regulatory approval of the merger, then Baylake will pay to NEWBI a termination fee in the amount of NEWBI’s documented out-of-pocket expenses incurred in conjunction with the merger agreement within two days after such termination.

Amendments and Waivers

The merger agreement may only be amended by an instrument in writing signed on behalf of each of the parties.  At any time prior to the effective time of the merger, any party may (a) extend the time for the performance of any of the obligations or other acts of the other parties hereto, (b) waive any inaccuracies by the other parties in the representations and warranties contained in the merger agreement or in any document delivered pursuant thereto, and (c) waive compliance by the other parties with any of the merger agreements or conditions contained therein.  Any agreement on the part of a party to any extension or waiver must be in writing signed on behalf of such party.  Any such extension or waiver or failure to insist on strict compliance with an obligation, covenant, agreement or condition will not operate as a waiver of any subsequent or other failure.

Fees and Expenses

Except for any termination fees, as described elsewhere in this proxy statement/prospectus, all fees and expenses incurred in connection with the merger, the merger agreement, and the transactions contemplated by the merger agreement (including costs and expenses of printing and mailing this proxy statement/prospectus) will be paid by the party incurring such fees or expenses, whether or not the merger is completed.

This summary and the copy of the merger agreement attached to this proxy statement/prospectus as Appendix A are included solely to provide investors with information regarding the terms of the merger agreement.  They are not

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intended to provide factual information about the parties or any of their respective subsidiaries or affiliates.  The merger agreement contains representations and warranties by Baylake and NEWBI, which were made only for purposes of that agreement and as of specific dates.  The representations, warranties and covenants in the merger agreement were made solely for the benefit of the parties to the merger agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the merger agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those generally applicable to investors.  In reviewing the representations, warranties and covenants contained in the merger agreement or any descriptions thereof in this summary, it is important to bear in mind that such representations, warranties and covenants or any descriptions thereof were not intended by the parties to the merger agreement to be characterizations of the actual state of facts or condition of Baylake, NEWBI or any of their respective subsidiaries or affiliates.  Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the date of the merger agreement, which subsequent information may or may not be fully reflected in Baylake’s public disclosures.  For the foregoing reasons, the representations, warranties and covenants or any descriptions of those provisions should not be read alone and should instead be read in conjunction with the other information contained in the reports, statements and filings that Baylake publicly files with the SEC.  For more information regarding these documents, see the section entitled “Where You Can Find More Information” beginning on page 75.

NICOLET MERGER

While NEWBI shareholders are not being asked to consider and vote upon the Nicolet merger, information concerning such merger may be material to NEWBI shareholders in deciding whether to vote in favor of the merger of NEWBI with and into Baylake.  Accordingly, the following is a discussion of the material terms of the Nicolet merger.  This summary may not contain all the information about the Nicolet merger that is important to you.  Factual information about Nicolet can be found in the public filings Nicolet makes with the SEC, as described in the section entitled “Where You Can Find More Information” beginning on page 75.

Transaction Structure.

The Nicolet and Baylake boards of directors have each unanimously approved and adopted the Nicolet merger agreement.  The Nicolet merger agreement provides for the merger of Baylake with and into Nicolet, with Nicolet being the surviving corporation.  Following the merger, Baylake Bank will be merged with and into Nicolet National Bank.

Merger Consideration.

At the effective time of the Nicolet merger, each share of Baylake common stock outstanding (including shares issued to former NEWBI shareholders in the merger of NEWBI with and into Baylake) shall be converted into the right to receive 0.4517 shares of Nicolet common stock.

No fractional shares will be issued in the Nicolet merger.  Each holder of Baylake common stock who would otherwise be entitled to receive a fractional share of Nicolet common stock in the transaction would instead be entitled to receive an amount in cash (without interest), rounded to the nearest whole cent, determined by multiplying a volume weighted average closing price of Nicolet common stock over the 20 trading day period ending on the third trading day prior to closing, by the fraction of a share of Nicolet common stock to which such Baylake shareholder would otherwise be entitled.

In addition, to the foregoing, Baylake shall be permitted to pay a special dividend of $0.40 per share to its common shareholders (including former NEWBI shareholders who receive Baylake shares in the merger of NEWBI with and into Baylake) immediately prior to closing of the Nicolet merger.

Regulatory Approvals

Each of Nicolet and Baylake has agreed to use its reasonable best efforts to obtain all regulatory approvals required to complete the Nicolet merger.  There can be no assurance that such approvals will be received on a timely basis or at all, or as to the ability of Nicolet and Baylake to obtain the approvals on satisfactory terms or that there

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will be no litigation challenging such approvals.  There can be no assurances that U.S. or state regulatory authorities will not attempt to challenge the Nicolet merger on antitrust grounds or for other reasons, or, if such a challenge is made, as to the result of such challenge.  The parties’ obligations to complete the Nicolet merger are subject to a number of conditions, including the receipt of all regulatory approvals.

Public Trading Market.

Nicolet shall cause all shares of its common stock to be listed on the NASDAQ Capital Market prior to the record date for its special shareholder meeting called to approve the Nicolet merger.  Nicolet shall further cause all shares of its common stock issuable in the Nicolet merger to be approved for listing on the NASDAQ Capital Market prior to closing of the transaction.

Resale of Nicolet Common Stock.

All shares of Nicolet common stock received by Baylake shareholders in the Nicolet merger will be freely tradable for purposes of the Securities Act and the Exchange Act, except for shares of Nicolet common stock received by such holder who becomes an “affiliate” of Nicolet after completion of the Nicolet merger, as defined in Rule 144 under the Securities Act.

Management and Directors of Nicolet after the Nicolet Merger

The following individuals shall serve as the executive officers and the directors of Nicolet from and after the effective time of the Nicolet merger, to serve until their resignation, removal or until their successors shall have been elected or appointed and qualified:

Directors

Robert B. Atwell

Michael E. Daniels

John Dykema

Chris Ghidorzi

DJ Long

Sue Merkatoris

Randy Rose

Bob Weyers

Robert J. Cera

Bob Agnew

Tom Herlache

Terry Fulwiler

Rick Jeanquart

Elyse Mollner Stackhouse

Bill Murphy

Dean Nolden

Executive Officers

Robert Atwell – Co-Chairman, Co-Chief Executive Officer and Co-President

Robert Cera – Co-Chairman, Co-Chief Executive Officer and Co-President

Michael Daniels – Executive Vice President and Secretary

Interests of Baylake Directors and Executive Officers in the Nicolet Merger

Certain directors and executive officers of Baylake have interests in the Nicolet merger that may differ from, or may be in addition to, the interests of Baylake shareholders.  These interests are described in more detailed and quantified below.  The board of directors of Baylake was aware of these interests and considered them, among other matters, when it adopted the merger agreement by and between Nicolet and Baylake.

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In connection with the Nicolet merger, Nicolet has agreed to enter into an employment agreement with Robert Cera.  Pursuant to the employment agreement, Mr. Cera will be employed as Co-Chief Executive Officer of Nicolet for a term of two years, unless such term is extended by mutual agreement of the parties.  Mr. Cera shall be entitled to a base salary of $360,000, to be reviewed annually by the Nicolet board of directors for potential adjustments based upon its evaluation of Mr. Cera’s performance.  Mr. Cera will also be eligible for:  (i) an annual incentive bonus in accordance with the compensation program established by the Nicolet board of directors; (ii) a signing bonus in the amount of $250,000 payable within 30 days of the effective date of the employment agreement; (iii) a retention bonus in the amount of $250,000 provided that Mr. Cera remains in the continuous employment of Nicolet through the first anniversary of the effective date of the merger, or is terminated without cause or resigns for good reason, each as defined in the employment agreement; and (iv) a severance payment in the amount of $2,000,000 in the event Mr. Cera is terminated without cause or resigns for good reason, each as defined in the employment agreement, prior to the second anniversary of the effective date of the merger.  Mr. Cera will also receive a restricted stock award for a number of shares of Nicolet common stock equal to the result of dividing 1,000,000 by the per share closing price of Nicolet common stock as of the closing date of the merger, which restricted stock will vest in one-fifth annual increments beginning on the first anniversary of the effective date of the merger.  Nicolet will further provide Mr. Cera with life insurance coverage in an amount equal to no less than $500,000.

Nicolet has agreed to pay for insurance coverage for up to six years following the closing date under a policy of directors’ and officers’ liability insurance for actions taken on or prior to the effective time of the Nicolet merger, so long as the premium of such policy does not exceed three hundred percent of the amount of aggregate premiums paid by Baylake for fiscal year 2014 for such purpose.  If a six-year term of insurance coverage is not available within such costs, the term for the insurance will be such other maximum period of coverage that is available at a cost that does not exceed three hundred percent of the amount of aggregate premiums paid by Baylake for fiscal year 2014 for such purpose.

Certain directors of Baylake, namely Robert Cera, Bob Agnew, Tom Herlache, Terry Fulwiler, Rick Jeanquart, Elyse Mollner Stackhouse, Bill Murphy and Dean Nolden, will continue to serve on the Nicolet board of directors upon completion of the Nicolet merger and will be entitled to receive directors fees from Nicolet in accordance with Nicolet’s existing director compensation policy.

MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

The following discussion sets forth the material United States federal income tax consequences of the merger to NEWBI shareholders who are U.S. holders (as defined below) of NEWBI common stock.  This discussion does not address all issues that may be applicable to holders who acquired shares of NEWBI common stock pursuant to the exercise of options or otherwise as compensation.  Furthermore, this discussion does not address any alternative minimum tax or any state, local or foreign tax considerations.  This discussion is based on the Code and the related tax regulations issued by the United States Internal Revenue Service, or Treasury Regulations, administrative interpretations and court decisions in effect as of the date of this proxy statement/prospectus, all of which are subject to change, possibly with retroactive effect.  Any such change could affect the continuing validity of this discussion regarding the United States federal income tax consequences of the merger.  We urge you to consult your own tax advisor as to the specific tax consequences of the merger, including the applicable federal, state, local and foreign tax consequences to you of the merger.

Godfrey & Kahn, S.C., counsel to Baylake, and Wipfli LLP, independent accountants for NEWBI, have given tax opinions that are filed as Exhibits 8.1 and 8.2 to the registration statement of which this proxy statement/prospectus is a part.  This discussion summarizes the tax opinions of Godfrey & Kahn and Wipfli, subject to the qualifications, assumptions, and limitations set forth in those opinions.  The opinions of Godfrey & Kahn and Wipfli are based on the Code and the related tax regulations issued by the United States Internal Revenue Service, or Treasury Regulations, administrative interpretations and court decisions in effect as of the date of this proxy statement/prospectus, all of which are subject to change, possibly with retroactive effect.  Any such change could affect the continuing validity of the opinions of Godfrey & Kahn and Wipfli regarding the United States federal income tax consequences of the merger.  These opinions are not binding on the Internal Revenue Service or the courts.

For purposes of this discussion, a U.S. holder is a beneficial owner of NEWBI common stock who for United States federal income tax purposes is:

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•

a citizen or resident of the United States;

•

a corporation, or an entity treated as a corporation, created or organized in or under the laws of the United States or any state or political subdivision thereof and taxed under Subchapter C of the Internal Revenue Code;

•

a trust that (1) is subject to (A) the primary supervision of a court within the United States and (B) the authority of one or more United States persons to control all substantial decisions of the trust or (2) has a valid election in effect under applicable Treasury Regulations to be treated as a United States person; or

•

an estate that is subject to United States federal income tax on its income regardless of its source.

If a corporation taxed under Subchapter S of the Internal Revenue Code, referred to as an S corporation, or a partnership (including, for this purpose, any entity treated as a partnership for United States federal income tax purposes) holds NEWBI common stock, the tax treatment of a shareholder or partner generally will depend on the status of the shareholder or partner and the activities of the S corporation or partnership.  If you are a shareholder of an S corporation or partner of a partnership holding NEWBI common stock, you should consult your tax advisor.

This discussion assumes that NEWBI shareholders hold their NEWBI common stock as a capital asset within the meaning of Section 1221 of the Internal Revenue Code and does not address all the United States federal income tax consequences that may be relevant to particular NEWBI shareholders in light of their individual circumstances or to NEWBI shareholders that are subject to special rules, such as:

•

financial institutions;

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pass-through entities or investors in pass-through entities;

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insurance companies;

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tax-exempt organizations;

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dealers in securities;

•

traders in securities that elect to use a mark-to-market method of accounting;

•

persons who exercise appraisal rights;

•

persons who hold NEWBI common stock as part of a straddle, hedge, appreciated financial position, synthetic security, constructive sale, conversion transaction or other integrated investment or risk reduction transaction;

•

certain expatriates or persons that have a functional currency other than the U.S. dollar;

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regulated investment companies;

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persons who are not U.S. holders; and

•

shareholders who acquired their shares of NEWBI common stock through the exercise of an employee stock option or otherwise as compensation or through a tax-qualified retirement plan.

In addition, this discussion does not address any alternative minimum tax consequences or any state, local or foreign tax consequences of the merger.

Baylake and NEWBI have structured the merger so that it should qualify as a reorganization within the meaning of Section 368(a) of the Code, although, as set forth below, the timing of the Nicolet merger creates some uncertainty as to whether the merger of NEWBI with and into Baylake will qualify as a reorganization due to the

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absence of explicit legal authority.  The obligation of NEWBI to complete the merger is conditioned upon the receipt of a closing tax opinion from Wipfli LLP, independent accountants for NEWBI, to the effect that the merger should more likely than not qualify as a reorganization within the meaning of Section 368(a) of the Code for federal income tax purposes.  Furthermore, Godfrey & Kahn, S.C., as counsel to Baylake, anticipates rendering a closing tax opinion to the effect that the merger will more likely than not qualify as a reorganization within the meaning of Section 368(a) of the Code for federal income tax purposes.  These opinions will be rendered on the basis of facts, representations, assumptions, and covenants set forth in such opinions that are consistent with the state of facts existing as of the closing date of the merger.  The accuracy of such representations and assumptions, and compliance with such covenants, could affect the conclusions set forth in such opinions.  These opinions are not binding on the Internal Revenue Service or the courts.

If either of the closing tax opinions referred to above cannot be rendered because the counsel or accounting firm charged with providing such opinion reasonably determines that the merger may not satisfy the continuity of interest requirements under applicable federal income tax principles relating to reorganizations under Section 368(a) of the Code (including, but not limited to, any such determination based on the inclusion of the payment of cash for dissenters’ shares or the inclusion of any special or extraordinary dividend as merger consideration), then Baylake will reduce the cash amount and correspondingly increase the stock amount of the merger consideration to the minimum extent necessary to enable the relevant tax opinion to be rendered.

Baylake and NEWBI have not requested and do not intend to request any ruling from the Internal Revenue Service as to the United States federal income tax consequences of the merger.  Accordingly, each NEWBI shareholder should consult its own tax advisor with respect to the particular tax consequences of the merger to such holder.

Tax Consequences of the Merger Generally to U.S. Holders of NEWBI Common Stock.  While Baylake and NEWBI have structured the merger so that it should qualify as a reorganization within the meaning of Section 368(a) of the Code, the timing of the Nicolet merger creates some uncertainty as to whether the merger of NEWBI with and into Baylake will qualify as a reorganization due to the absence of explicit legal authority.  The Nicolet merger could be viewed by the Internal Revenue Service or court as a pre-existing plan or intention by the NEWBI shareholders to dispose of the Baylake common stock received in the merger, and the Internal Revenue Service or a court could question whether the requisite continuity of interest for the merger is present based on whether the continued holding of Nicolet common stock after the Nicolet merger is viewed as a sufficient continuation of the former NEWBI shareholders’ proprietary interest.  Under Section 1.368-1(e) of the Treasury Regulations, continuity of interest requires that, in substance, a substantial part of the value of the proprietary interests in NEWBI be preserved in the merger of NEWBI with and into Baylake.

Wipfli and Godfrey & Kahn, S.C. are not aware of any Internal Revenue Service rulings or published cases that conclude that the continued holding of Nicolet stock by former NEWBI shareholders after the Nicolet merger would be treated as satisfying the continuity of interest requirement with respect to the merger of NEWBI with and into Baylake.  However, while there is no authority directly addressing this point, the policy underlying the continuity of interest requirement should not be violated by the receipt of Nicolet common stock by former NEWBI shareholders upon consummation of the Nicolet merger.  Although Commissioner v. Morris Trust, 367 F.2d 794 (4th Cir. 1966) holds that the continuity of interest requirement for spin-off transactions under Section 355 of the Code is not violated when the distributing corporation is merged into an unrelated acquiring corporation pursuant to a plan existing at the time of the spin-off, there is no guarantee that the Internal Revenue Service or a court would apply the Section 355 continuity of interest requirement to reorganizations such as the merger under Section 368 of the Code.  Section 1.368-1(e)(3) of the Treasury Regulations also suggests that continuity of interest should be satisfied since the former shareholders of NEWBI will continue to indirectly own a proprietary interest in NEWBI operations following the Nicolet merger.

Based solely on the assumptions set forth above, (i) the underlying policy of the continuity of interest requirement, (ii) the assumption that the aggregate value of cash and any other non-stock consideration received by the NEWBI shareholders in the merger of NEWBI with and into Baylake and the Nicolet merger (including special or extraordinary dividends) does not exceed sixty percent (60%) of the total consideration value received by them in the merger of NEWBI with and into Baylake, and (iii) the representations of NEWBI and Baylake management that the merger of NEWBI with and into Baylake and the Nicolet merger have independent significance and that management is not aware of any plan or intention by the NEWBI shareholders to dispose of the Nicolet common

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stock they will receive in the Nicolet merger and any other plan requiring a disposition of their Nicolet stock, it is more likely than not that the continuity of interest requirement will be satisfied with respect to the merger of NEWBI with and into Baylake, and, therefore, it is more likely than not that the merger will qualify as a reorganization within the meaning of Section 368(a) of the Code.  There can be no assurances that the Internal Revenue Service or a court would agree with this conclusion, since, as noted above, it is not based upon published authority.

Provided that the merger qualifies as a reorganization within the meaning of Section 368(a) of the Code, then, subject to the limitations, qualifications and assumptions described herein:

•

gain (but not loss) will be recognized by the U.S. holders in an amount equal to the lesser of (1) the amount by which the sum of the fair market value of the Baylake common stock and cash received by a U.S. holder of NEWBI common stock exceeds such holder’s cost basis in its NEWBI common stock, and (2) the amount of cash received by such holder of NEWBI common stock;

•

the aggregate basis of the Baylake common stock received in the merger will be the same as the aggregate basis of the NEWBI common stock for which it is exchanged, decreased by the amount of cash received in the merger (and increased by the amount of gain recognized on the exchange (regardless of whether such gain is classified as capital gain, or as dividend income, as discussed below); and

•

the holding period of Baylake common stock received in exchange for shares of NEWBI common stock will include the holding period of the NEWBI common stock for which it is exchanged.

If U.S. holders of NEWBI common stock acquired different blocks of NEWBI common stock at different times or at different prices, any gain or loss will be determined separately with respect to each block of NEWBI common stock and such holders’ basis and holding periods in their shares of Baylake common stock may be determined with reference to each block of NEWBI common stock.  Any such holders should consult their tax advisors regarding the manner in which cash and Baylake common stock received in the exchange should be allocated among different blocks of NEWBI common stock and with respect to identifying the bases or holding periods of the particular shares of Baylake common stock received in the merger.

Provided that the merger qualifies as a reorganization within the meaning of Section 368(a) of the Code, then gain that U.S. holders of NEWBI common stock recognize in connection with the merger generally will constitute capital gain and will constitute long-term capital gain if such holders have held (or are treated as having held) their NEWBI common stock for more than one year as of the date of the merger.  Long-term capital gain of non-corporate U.S. holders of NEWBI common stock is generally taxed at preferential rates.  In some cases, if a U.S. holder actually or constructively owns Baylake stock other than Baylake stock received pursuant to the merger, the recognized gain could be treated as having the effect of a distribution of a dividend under the tests set forth in Section 302 of the Code, in which case such gain would be treated as dividend income to the extent of such holder’s ratable share of undistributed earnings and profits.  Because the possibility of dividend treatment depends primarily upon each holder’s particular circumstances, including the application of the constructive ownership rules, holders of NEWBI common stock should consult their tax advisors regarding the application of the foregoing rules to their particular circumstances.

If the merger does not qualify as a reorganization within the meaning of Section 368(a) of the Code, then you will recognize gain or loss equal to the difference between the sum of the fair market value of the Baylake common stock and the total amount of cash you receive in the merger and your adjusted tax basis in the shares of NEWBI common stock surrendered in the merger.  If the merger is a taxable event, your aggregate basis in the shares of Baylake common stock received in the merger will be equal to the fair market value of such shares and the total amount of cash received at the time of the merger, and the holding period for those shares will not include the period during which you held your shares of NEWBI common stock exchanged in the merger.

Furthermore, if the merger does not qualify as a reorganization within the meaning of Section 368(a) of the Code, NEWBI would be treated as having sold its assets in exchange for the merger consideration plus assumed liabilities in a taxable transaction and would owe corporate-level income taxes on the gain realized. Wipfli estimates that NEWBI would recognize approximately $428,000 of corporate level gain in a taxable transaction, resulting in approximately $170,000 of corporate income tax.

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Medicare Tax.  A U.S. holder of NEWBI common stock who is an individual is generally subject to a 3.8% tax on the lesser of: (i) his or her “net investment income,” as defined in Section 1411 of the Code, for the relevant taxable year; or (ii) the excess of his or her modified adjusted gross income for the taxable year over a certain threshold (between $125,000 and $250,000 depending on the individual’s U.S. federal income tax filing status).  A similar regime applies to estates and trusts; however, the threshold is significantly lower.  Net investment income generally includes any gain recognized in connection with the merger (including any gain that is capital gain or that is treated as a dividend).

Backup Withholding and Information Reporting.  Payments of cash to a U.S. holder of NEWBI common stock may, under certain circumstances, be subject to information reporting and backup withholding, unless such holder provides proof of an applicable exemption satisfactory to Baylake and the exchange agent or furnishes its taxpayer identification number, and otherwise complies with all applicable requirements of the backup withholding rules.  Any amounts withheld from payments to a U.S. holder under the backup withholding rules are not additional tax and will be allowed as a refund or credit against the holder’s United States federal income tax liability, provided the required information is furnished to the Internal Revenue Service.

The discussion set forth above does not address all United States federal income tax consequences that may be relevant to U.S. holders of NEWBI common stock and may not be applicable to such holders that are subject to special rules.  It is not a complete analysis or discussion of all potential tax effects that may be important to you.  Thus, you are strongly encouraged to consult your tax advisor as to the specific tax consequences resulting from the merger, including tax return reporting requirements, the applicability and effect of federal, state, local, and other tax laws and the effect of any proposed changes in the tax laws.

INFORMATION CONCERNING BAYLAKE

General

Baylake is a Wisconsin corporation organized in 1976 and is registered as a bank holding company under the BHCA.  Baylake’s primary activities consist of holding the stock of its wholly-owned subsidiary bank, Baylake Bank, and providing a wide range of banking and related business activities through Baylake Bank and Baylake’s other subsidiaries.  At June 30, 2015, Baylake had total assets of approximately $1.0 billion.

Baylake Bank is a Wisconsin state bank originally chartered in 1876.  Baylake Bank is an independent community bank offering a full range of financial services primarily to small businesses and individuals located in its market area.  Baylake Bank conducts a community banking business through 20 full-service financial centers located throughout Northeast Wisconsin, in Brown, Door, Kewaunee, and Outagamie Counties.  Baylake Bank serves a broader range of service, manufacturing and retail job segments in the Brown County market.  The rest of its financial centers are located in smaller cities and smaller communities.  Other principal industries in Baylake Bank’s market area include tourism/recreation, manufacturing, agriculture and food related products.  Services are provided in person at Baylake Bank’s financial centers discussed above or at other locations, as well as through the mail, over the telephone, electronically by using Baylake Bank’s internet banking services, and mobile banking through customer mobile phones.

In addition to its banking operations, Baylake owns one non-bank subsidiary:  Bay Lake Investments, Inc., located in Las Vegas, Nevada, which holds and manages a portion of Baylake Bank’s investment portfolio.  Baylake Bank also owns 99.2% of the outstanding common stock in United Financial Services, Incorporated, or UFS Inc. which in turn, owns 49.8% of the outstanding common stock in UFS, LLC, a data processing services company located in Grafton, Wisconsin.  Collectively, UFS Inc. and UFS, LLC are referred to as United Financial Services, or UFS.  UFS, LLC provides data processing services to other banks.  During 2013, Baylake capitalized a wholly-owned registered investment advisor subsidiary, Admiral Asset Management, LLC, or Admiral, to provide investment advisory services beyond those provided by Baylake Bank to customers.

Business Lines

Lending.  Baylake offers short-term and long-term loans on a secured and unsecured basis for business and personal purposes.  Baylake make real estate, commercial/industrial, agricultural, consumer and municipal loans in accordance with the basic lending policies established by its Board of Directors.  Baylake focuses lending activities

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on individuals and small businesses in its market area.  Baylake’s lending activity has been historically concentrated primarily within the State of Wisconsin.  Baylake does not conduct any substantial business with foreign obligors.  Baylake serves a wide variety of industries including, on a limited basis, a concentration on businesses directly and indirectly related to the tourism/recreation industries.  Loans to customers in the tourism/recreation industry, including restaurants and lodging businesses, totaled approximately $85.8 million at June 30, 2015, or 12.5% of Baylake’s aggregate loans outstanding at that date.  Although competitive and economic pressures exist in this market segment, business remains relatively steady in the markets Baylake serves.  However, any deterioration in the economy of Northeastern Wisconsin (as a result, for example, of a decline in its manufacturing or tourism/recreation industries or otherwise) could have a material adverse effect on Baylake’s business and operations.  In particular, a decline in the Door County tourism business would not only affect Baylake’s customers in the restaurant and lodging business, and therefore loans to such entities as described above, but could also affect loans and other business relationships with persons employed in that industry, as well as real estate values (including collateral values) in the area.  Baylake’s expansion into other market areas has reduced its concentration level in tourism/recreation related businesses, but these types of businesses still remain an important element of the customer base that Baylake serves.

In addition to originating loans, Baylake buys and sells loan participations with other banks located in markets it serves.  These loans are underwritten to the same lending standards as the loans Baylake originates.  Additionally, Baylake purchases syndicated loans in the national market, which represent small portions of large national credits.  These credits are also subject to Baylake’s normal underwriting guidelines and totaled $66.4 million, or 9.7% of total outstanding loans at June 30, 2015.

Baylake’s total outstanding loans as of June 30, 2015 were approximately $686 million, consisting of 45.9% commercial real estate loans, 21.8% residential real estate loans, 21.4% other commercial and industrial loans, 2.0% agricultural-related loans, 4.7% construction and land development real estate loans, 3.4% tax exempt loans and 0.8% consumer loans.

Investments.  Baylake maintains a portfolio of investments, primarily consisting of U.S. government agency securities, U.S. government sponsored agency securities, mortgage-backed securities, obligations of states and their political subdivisions, and private placement and corporate bonds.  Baylake attempts to balance its portfolio to manage interest rate risks, maximize tax advantages, and meet liquidity needs while endeavoring to optimize investment income.

Deposits.  Baylake offers a broad range of depository products, including noninterest-bearing demand deposits, interest-bearing demand deposits, various savings and money market accounts and certificates of deposit (“CDs”).  Deposits are insured by the Deposit Insurance Fund of the Federal Deposit Insurance Corporation (“FDIC”) up to statutory limits.  At June 30, 2015, Baylake’s total deposits were approximately $758.6 million, including interest-bearing deposits of $593.2 million and noninterest bearing deposits of $165.4 million.

Other Services and Products.  Other services and products Baylake offers include safe deposit box services, personal and corporate trust services, brokerage services, treasury management, private banking, financial planning and electronic banking services, including mobile banking, and eBanc, an internet banking product for Baylake’s customers.  Additionally, Baylake offers investment advisory services through Admiral.

Additional Information

Financial and other information relating to Baylake is set forth in its Annual Report on Form 10-K for the year ended December 31, 2014, and its Quarterly Report on Form 10-Q for the quarter ended June 30, 2015.  Information regarding the names, ages, positions, and business backgrounds of the executive officers and directors of Baylake, as well as additional information, including executive compensation, and certain relationships and related person transactions, is set forth in or incorporated by reference in Baylake’s 10-K and in its proxy statement for its 2015 annual meeting of shareholders.  See “Where You Can Find More Information” beginning on page 75.

INFORMATION CONCERNING NEWBI

NEWBI, a Wisconsin corporation, is a bank holding company headquartered in Kewanee, Wisconsin.  NEWBI began operations in 1984 as Bay Lake Bancorp, Inc.  In 2011, it changed its name to NEW Bancshares, Inc.  As of

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June 30, 2015, NEWBI had consolidated total assets of approximately $87 million, deposits of approximately $75 million and shareholders’ equity of approximately $9.6 million.  NEWBI is not a public company and, accordingly, there is no established trading market for its common stock.  As of May 31, 2015, there were approximately 545 holders of NEWBI common stock.  Its primary business is operating its bank subsidiary, Union, a Wisconsin-chartered, non-member commercial bank, with four banking locations in Kewaunee, Green Bay and Two Rivers, Wisconsin, respectively.

Union has been a locally owned community bank with its main office in Kewaunee since 1911.  In 1934, two local banks were merged to form Union.  Union engages in a general community banking business in the Northeastern region of Wisconsin.  Union provides full-service commercial and consumer banking services from each of its four offices.  Union’s principal office is located at 223 Ellis Street, Kewaunee, Wisconsin, in a facility owned by Union.

Union originates loans in its trade area to business owners, which are typically secured by commercial real estate, multifamily residential property, residential real estate and land.  Union also originates residential first and second mortgages (e.g., home equity lines of credit) loans and commercial and industrial business loans.  Union derives its income from interest earned on loans, gains on the sale of loans, interest earned on investments and service charges.  Union’s principal expenses are interest expense on deposits and borrowings and noninterest expenses such as compensation and employee benefits, office occupancy expenses and other miscellaneous expenses.  Funds for these activities are provided principally by deposits and, to a lesser extent, Federal Home Loan Bank advances and other borrowings.

Union has two wholly-owned subsidiaries, Novak, and Kewaunee Investment, Inc.  Novak, a Wisconsin corporation, is an independent insurance agency and real estate agency with offices in Kewaunee and Green Bay, Wisconsin.  Kewaunee Investment, Inc. is a Nevada corporation which holds a majority of Union’s investments.

As of the record date, the directors and officers of NEWBI owned 11.37% of the outstanding common shares of NEWBI.  Except as noted below, each director and officer of NEWBI individually owned less than 1% of the outstanding common shares of NEWBI.  The mailing address of each director and officer listed in the table below is 223 Ellis Street, Kewaunee, WI 54216.

Additionally, the following shareholders are known by NEWBI to own 5% or more of the outstanding shares of NEWBI common stock as of the record date:

INFORMATION CONCERNING NICOLET

Nicolet, a Wisconsin corporation, is a bank holding company headquartered in Green Bay, Wisconsin.  Nicolet was originally incorporated on April 5, 2000 as Green Bay Financial Corporation, a Wisconsin corporation, to serve as the holding company for and the sole shareholder of Nicolet National Bank.  It amended and restated its articles

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of incorporation and changed its name to Nicolet Bankshares, Inc. on March 14, 2002.  It subsequently became the holding company for Nicolet National Bank upon the completion of the bank’s reorganization into a holding company structure on June 6, 2002.  As of June 30, 2015, Nicolet had consolidated total assets of approximately $1.2 billion.

Nicolet conducts its operations through its wholly-owned subsidiary, Nicolet National Bank, a national banking organization organized under the laws of the United States, originally chartered in 2000.  Nicolet also owns an investment advisory firm that principally provides investment strategy and transactional services to select community banks and entered into a joint venture that provides for 50% ownership of the building in which Nicolet is headquartered.  In addition, Nicolet National Bank has a wholly-owned investment subsidiary that is based in Nevada.

Nicolet National Bank is a full-service community bank, offering traditional banking products and services, and wealth management products and services, to businesses and individuals in the markets it serves, delivered through a branch network serving northeast and central Wisconsin communities and Menominee, Michigan, as well as through on-line and mobile banking capabilities.

Since its opening in late 2000, Nicolet has supplemented its organic growth with the December 2003 purchase of a branch and deposits in Menominee, Michigan, the July 2010 purchase of 4 branches and deposits in Brown County, the April 2013 merger transaction with Mid-Wisconsin Financial Services, Inc., and the August 2013 acquisition of selected assets and liabilities of Bank of Wausau through a transaction with the Federal Deposit Insurance Corporation.

Products and Services Overview

Nicolet’s principal business is banking, consisting of lending and deposit gathering, as well as ancillary banking-related products and services, to businesses and individuals in the communities it serves, and the operational support to deliver, fund and manage such banking products and services.  Additionally, Nicolet National Bank offers trust, brokerage and other investment management services for individuals and retirement plan services for business customers.  Nicolet delivers its products and services through 21 branch locations, on-line banking, mobile banking and an interactive website.  Nicolet’s call center also services customers.

Nicolet offers a variety of loans, deposits and related services to business customers (especially small and medium-sized businesses and professional concerns), including but not limited to:  business checking and other business deposit products and cash management services, international banking services, business loans, lines of credit, commercial real estate financing, construction loans, agricultural real estate or production loans, and letters of credit, as well as retirement plan services.  Similarly, Nicolet offers a variety of banking products and services to consumers, including but not limited to:  residential mortgage loans and mortgage refinancing, home equity loans and lines of credit, residential construction loans, personal loans, checking, savings and money market accounts, various certificates of deposit and individual retirement accounts, safe deposit boxes, and personal brokerage, trust and fiduciary services.  Nicolet also provides on-line services including commercial, retail and trust on-line banking, automated bill payment, mobile banking deposits and account access, remote deposit capture, and telephone banking, and other services such as wire transfers, courier services, debit cards, credit cards, pre-paid gift cards, direct deposit, official bank checks and U.S. Savings Bonds.

Lending is critical to Nicolet’s balance sheet and earnings potential.  Nicolet seeks creditworthy borrowers principally within the geographic area of its branch locations.  As a community bank with experienced commercial lenders and residential mortgage lenders, the bank’s primary lending function is to make commercial loans (consisting of commercial, industrial, and business loans and lines of credit, owner-occupied commercial real estate, and agricultural production and real estate loans); residential real estate loans (consisting of residential first lien mortgages, junior lien mortgages, home equity loans and lines of credit, and to a lesser degree residential construction loans); and other loans, mainly consumer in nature.

Additional Information

Financial and other information relating to Nicolet is set forth in its Annual Report on Form 10-K for the year ended December 31, 2014, and its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2015 and

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June 30, 2015.  Information regarding the names, ages, positions and business backgrounds of the current executive officers and directors of Nicolet, as well as additional information, including executive compensation, and certain relationships and related person transactions, is set forth in or incorporated by reference in Nicolet’s 10-K.

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COMPARATIVE RIGHTS OF SHAREHOLDERS

NEWBI is incorporated under the laws of the state of Wisconsin and, accordingly, the rights of NEWBI’s shareholders are currently governed by the WBCL, NEWBI’s articles of incorporation as amended and NEWBI’s bylaws.  Baylake is incorporated under the laws of the state of Wisconsin and, accordingly, the rights of Baylake shareholders are governed by the WBCL, Baylake’s articles of incorporation as amended and Baylake’s bylaws.  Upon completion of the merger, all outstanding shares of NEWBI stock will be converted into the right to receive per share consideration, which will include a combination of cash and Baylake common stock.  Therefore, upon completion of the merger, the rights of the former NEWBI shareholders will be governed by the WBCL, Baylake’s articles of incorporation and Baylake’s bylaws.  The following is a summary of the material differences between the rights of NEWBI common shareholders and the rights of Baylake shareholders.

Authorized Capital Stock

Size of Board of Directors

Cumulative Voting

Cumulative voting entitles each shareholder to cast an aggregate number of votes equal to the number of voting shares held, multiplied by the number of directors to be elected.  Each shareholder may cast all of his or her votes for one nominee or distribute them among two or more nominees.  The candidates, up to the number of directors to be elected, receiving the highest number of votes are elected.

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Class of Directors

Qualifications of Directors

Voting for Directors

Filling Vacancies on the Board

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Removal of Directors

Nomination of Directors for Election

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Anti-Takeover Provisions

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Shareholder Rights Plan

Shareholders’ Meeting

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Shareholder Action Without a Meeting

Submission of Shareholder Proposals

Notice of Shareholder Meetings

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Shareholder Vote Required for Mergers

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Distributions

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Dissenters’ Rights of Appraisal

Shareholder Preemptive Rights

Indemnification

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Limitations on Directors’ Liability

Amendment of Articles of Incorporation

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Amendment of Bylaws

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Shareholder Inspection Rights

SHAREHOLDER PROPOSALS

Pursuant to Securities and Exchange Commission Rule 14a-8, proposals intended for inclusion in the proxy statement for Baylake’s next annual meeting of shareholders must be in writing and must be received by the Secretary of Baylake at 217 North Fourth Avenue, Sturgeon Bay, Wisconsin 54235 not later than December 25, 2015.  To be considered for inclusion in Baylake’s proxy statement and proxy form for an annual meeting, the

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shareholder proposal must be submitted on a timely basis and the proposal and proponent thereof must meet the requirements established by the SEC for shareholder proposals.

In addition, Baylake’s Bylaws provide that a shareholder wishing to nominate a candidate for election to the Board of Directors or to have any other matter considered by the shareholders at the annual meeting must give Baylake written notice of such proposal, together with specified accompanying information, at least 14 days but not more than 70 days prior to the annual meeting in order to be considered at the meeting.  However, such proposals will not be included in Baylake’s 2016 annual meeting proxy statement unless they further comply with the requirements set forth in the paragraph above.  The notice with respect to director nominations must include the name and address, the principal occupation or employment, and number of shares of Baylake common stock owned by each nominee and the class for which nominated.

The 2016 annual meeting is tentatively scheduled for June 6, 2016 and any proposal and related information must be received between March 28, 2016 and May 23, 2016.  The purpose of this provision of the Bylaws is to assure adequate notice of and information regarding any such matter as to which shareholder action may be sought.

LEGAL MATTERS

The validity of the Baylake common stock to be issued in connection with the merger will be passed upon by Godfrey & Kahn, S.C., Milwaukee, Wisconsin.  Godfrey & Kahn, S.C. will also render an opinion to Baylake regarding the material U.S. federal income tax consequences of the merger.  Wipfli LLP, Milwaukee, Wisconsin, will render an opinion to NEWBI regarding the material U.S. federal income tax consequences of the merger.

EXPERTS

The consolidated financial statements of Baylake as of December 31, 2014 and 2013 and the years ended December 31, 2014, 2013 and 2012, and management’s assessment of the effectiveness of internal control over financial reporting as of December 31, 2014 included in the Annual Report on Form 10-K have been incorporated by reference in this prospectus in reliance upon the reports of Baker Tilly Virchow Krause, LLP, independent registered public accounting firm, and upon the authority of said firm as experts in accounting and auditing.

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WHERE YOU CAN FIND MORE
INFORMATION

Baylake files annual, quarterly and special reports, proxy statements and other business and financial information with the SEC.  You may read and copy any materials that Baylake files with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549, at prescribed rates.  Please call the SEC at (800) SEC-0330 ((800) 732-0330) for further information on the public reference room.  In addition, Baylake files reports and other business and financial information with the SEC electronically, and the SEC maintains a website located at www.sec.gov containing this information.  You will also be able to obtain these documents, free of charge, from Baylake by accessing Baylake’s website at http://www.snl.com/IRWebLinkX/corporateprofile.aspx?iid=100909.  Copies can also be obtained, free of charge, by directing a written request to Baylake Corp., Attention:  Corporate Secretary, 217 North Fourth Avenue, Sturgeon Bay, Wisconsin 54235.

Baylake has filed a registration statement on Form S-4 to register with the SEC up to 349,174 shares of Baylake common stock (the number of shares has been calculated based on an average trading price of Baylake common stock of $11.10, which yields the maximum number of shares of Baylake common stock that each share of NEWBI common stock will be converted into the right to receive).  This proxy statement/prospectus is a part of that registration statement.  As permitted by SEC rules, this proxy statement/prospectus does not contain all of the information included in the registration statement or in the exhibits or schedules to the registration statement.  You may read and copy the registration statement, including any amendments, schedules and exhibits at the addresses set forth below.  Statements contained in this proxy statement/prospectus as to the contents of any contract or other documents referred to in this proxy statement/prospectus are not necessarily complete.  In each case, you should refer to the copy of the applicable contract or other document filed as an exhibit to the registration statement.  This proxy statement/prospectus incorporates important business and financial information about Baylake and NEWBI that is not included in or delivered with this proxy statement/prospectus, including incorporating by reference documents that Baylake has previously filed with the SEC.  These documents contain important information about Baylake and its financial condition.  These documents are available without charge to you upon written or oral request to Baylake’s principal executive offices.  The address and telephone number of such principal executive office is listed below:

Baylake Corp.
217 North Fourth Avenue
Sturgeon Bay, Wisconsin 54235
Attention:  Corporate Secretary
(920) 743-5551

Baylake common stock is traded on NASDAQ under the symbol “BYLK.”

Nicolet files annual, quarterly and special reports and other business and financial information with the SEC.  You may read and copy any materials that Nicolet files with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549, at prescribed rates.  Please call the SEC at (800) SEC-0330 ((800) 732-0330) for further information on the public reference room.  In addition, Nicolet files reports and other business and financial information with the SEC electronically, and the SEC maintains a website located at www.sec.gov containing this information.  You will also be able to obtain these documents, free of charge, from Nicolet by accessing Nicolet’s website at http://www.snl.com/IRW/CorporateProfile/4076774.  Copies can also be obtained, free of charge, by directing a written request to Nicolet Bankshares, Inc., Attention:  Corporate Secretary, 111 N. Washington Street, Green Bay, Wisconsin 54301.

Nicolet common stock is traded on the OTCBB under the symbol “NCBS.”

Incorporation of Certain Documents By Reference

The SEC allows Baylake to incorporate certain information into this document by reference to other information that has been filed with the SEC.  The information incorporated by reference is deemed to be part of this document, except for any information that is superseded by information in this document.  The documents that are

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incorporated by reference contain important information about the companies and you should read this document together with any other documents incorporated by reference in this document.

This document incorporates by reference the following documents that have previously been filed with the SEC by Baylake (File No. 001-16339) (excluding any portion of such documents that have been “furnished” but not “filed” for purposes of the Exchange Act):

·

Annual Report on Form 10-K for the year ended December 31, 2014;

·

Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2015 and June 30, 2015;

·

Current Reports on Form 8-K filed on February 6, 2015, February 19, 2015, April 20, 2015, May 8, 2015, June 3, 2015, September 9, 2015, September 11, 2015, September 25, 2015, October 2, 2015, October 16, 2015, October 16, 2015 and October 21, 2015; and

·

The description of Baylake’s common stock contained in Baylake’s registration statement on Form S-3, dated February 10, 1998, and any amendment or report filed for the purpose of updating such description; and

·

Definitive proxy statement filed on April 24, 2015.

In addition, Baylake is incorporating by reference any documents it may file under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this document, provided, however, that Baylake is not incorporating by reference any information “furnished” but not “filed.”

Baylake files annual, quarterly and special reports, proxy statements and other business and financial information with the SEC.  You may obtain the information Baylake has incorporated by reference and any other materials Baylake files with the SEC without charge by following the instructions described above.

Neither NEWBI nor Baylake has authorized anyone to give any information or make any representation about the merger or the respective companies that is different from, or in addition to, that contained in this document or in any of the materials that have been incorporated into this document.  Therefore, if anyone does give you information of this sort, you should not rely on it.  If you are in a jurisdiction where offers to exchange or sell, or solicitations of offers to exchange or purchase, the securities offered by this document or the solicitation of proxies is unlawful, or if you are a person to whom it is unlawful to direct these types of activities, then the offer presented in this document does not extend to you.  The information contained in this document speaks only as of the date of this document unless the information specifically indicates that another date applies.

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