Nicolet Bankshares Inc.

10/15/2024 | Press release | Distributed by Public on 10/15/2024 14:15

Nicolet Bankshares, Inc. Announces Third Quarter 2024 Results

  • Net income $33 million for third quarter 2024, compared to net income of $29 million in prior quarter, and net income of $17 million for third quarter 2023
  • Net income of $90 million or adjusted net income (non-GAAP) of $87 million for the first nine months of 2024, compared to net income of $31 million or adjusted net income (non-GAAP) of $73 million for the first nine months of 2023
  • Tangible common equity to tangible assets increased 64 bps to 9.21% at quarter end due to strong core earnings and a significant reduction in unrealized losses in the securities portfolio from lower expected interest rates
  • Asset quality remains solid, as nonperforming assets declined to 31 bps - the lowest level in more than three years; annualized net charge-offs remain negligible at 2 bps of loans

GREEN BAY, Wis.--(BUSINESS WIRE)-- Nicolet Bankshares, Inc. (NYSE: NIC) ("Nicolet") announced third quarter 2024 net income of $33 million and earnings per diluted common share of $2.10, compared to net income of $29 million and earnings per diluted common share of $1.92 for second quarter 2024, and net income of $17 million and earnings per diluted common share of $1.14 for third quarter 2023. Net income for the nine months ended September 30, 2024 was $90 million and earnings per diluted common share of $5.84, compared to net income of $31 million and earnings per diluted common share of $2.05 for the nine months ended September 30, 2023.

Net income reflected certain non-core items and the related tax effect of each, including the first quarter 2023 balance sheet repositioning and third quarter 2023 change in Wisconsin state tax law (as detailed in the Reconciliation of Non-GAAP Financial Measures table below), as well as gains / (losses) on other assets and investments in all periods. For the nine months ended September 30, 2024, these non-core items positively impacted earnings per diluted common share $0.19, and negatively impacted earnings per diluted common share $2.82 for the nine months ended September 30, 2023.

"The third quarter produced strong results across all revenue lines, and demonstrated what happens when almost 1,000 people show up every day to make a difference," said Mike Daniels, Chairman, President, and CEO of Nicolet. "Financial results were impressive with quarterly return on average assets of 1.50% and return on average tangible common equity of 17.77%. We saw growth in loans and core deposits. Revenue was up across wealth, mortgage, and all other fee income areas. And our net interest margin continued its upward trajectory as we were able to keep deposit and funding costs relatively stable during the quarter."

"Furthermore, our credit quality remains exceptional as nonperforming assets fell to their lowest level in years. This not only speaks to the team's ability to execute within Nicolet's consistent credit culture, but also to the strength and resilience of our commercial customer base across the Upper Midwest. Despite facing higher interest rates, rising input costs due to inflation, and the challenges of finding qualified workers, our customers have shown their ability to adapt in this economy. Nicolet's message of shared success is resonating within our walls and in the communities we serve," Daniels continued.

Balance Sheet Review

At September 30, 2024, period end assets were $8.6 billion, an increase of $80 million (1%) from June 30, 2024, mostly from loan growth and improvements in the fair value of the available for sale securities portfolio. Total loans increased $28 million from June 30, 2024, while the securities portfolio increased $26 million from June 30, 2024, mostly due to the positive fair value movements. Total deposits of $7.3 billion at September 30, 2024, increased $19 million from June 30, 2024, the net of a $75 million increase in noninterest-bearing demand and a $56 million decrease in interest-bearing deposits. Total capital was $1.1 billion at September 30, 2024, an increase of $58 million over June 30, 2024, with solid earnings and improvements in the securities portfolio valuation partly offset by the quarterly common stock dividend.

Asset Quality

Nonperforming assets were $26 million and represented 0.31% of total assets at September 30, 2024, compared to $29 million or 0.34% of total assets at June 30, 2024, and $32 million or 0.37% of total assets at September 30, 2023. The allowance for credit losses-loans was $66 million and represented 1.00% of total loans at September 30, 2024, compared to $65 million (or 1.00% of total loans) at June 30, 2024, and $63 million (or 1.01% of total loans) at September 30, 2023. Asset quality trends remain solid and loan net charge-offs were negligible.

Income Statement Review - Quarter

Net income was $33 million for third quarter 2024, compared to net income of $29 million for second quarter 2024.

Net interest income was $68 million for third quarter 2024, up $3 million from second quarter 2024. Interest income increased $4 million mostly due to the repricing of new and renewed loans in a higher interest rate environment, as well as solid loan growth, while interest expense increased $1 million due to both higher average balances and higher rates. The net interest margin for third quarter 2024 was 3.44%, up 9 bps from 3.35% for second quarter 2024. The yield on interest-earning assets increased 7 bps (to 5.68%) mostly due to higher average rates from the repricing of the loan portfolio, while the cost of funds increased 2 bps (to 3.11%) for third quarter 2024.

Noninterest income of $22 million for third quarter 2024 increased $3 million over second quarter 2024, with increases in most noninterest income categories. Wealth income increased $0.4 million on growth in assets under management (due to both net new accounts and positive fair value changes), while net mortgage income grew $0.2 million mostly from higher gains on sale. Net asset gains and deferred compensation plan asset market valuations during third quarter 2024 were attributable to positive movements in the market.

Noninterest expense of $49 million for third quarter 2024 increased $2 million over second quarter 2024. Personnel expense increased $3 million over second quarter 2024, including higher incentives commensurate with solid earnings, higher salaries, and the offsetting market value change in the deferred compensation plan liabilities. Non-personnel expenses combined decreased $0.4 million from second quarter 2024 on lower marketing (due to timing of marketing campaigns) and lower other noninterest expense (due to the board equity retainer granted in second quarter), partly offset by higher data processing.

About Nicolet Bankshares, Inc.

Nicolet Bankshares, Inc. is the bank holding company of Nicolet National Bank, a growing, full-service, community bank providing services ranging from commercial, agricultural and consumer banking to wealth management and retirement plan services. Founded in Green Bay in 2000, Nicolet National Bank operates branches primarily in Wisconsin, Michigan, and Minnesota. More information can be found at www.nicoletbank.com.

Use of Non-GAAP Financial Measures

This communication contains non-GAAP financial measures, such as non-GAAP adjusted net income, non-GAAP adjusted earnings per diluted common share, tangible book value per common share, return on average tangible common equity, and tangible common equity to tangible assets. Management believes such measures to be helpful to management, investors and others in understanding Nicolet's results of operations and financial position. When non-GAAP financial measures are used, the comparable GAAP financial measures, as well as the reconciliation of the non-GAAP measures to the GAAP financial measures, are provided. See "Reconciliation of Non-GAAP Financial Measures (Unaudited)" below. The non-GAAP net income measure and related reconciliation provide information useful to investors in understanding the operating performance and trends of Nicolet and also aid investors in comparing Nicolet's financial performance to the financial performance of peer banks. Management considers non-GAAP financial ratios to be critical metrics with which to analyze and evaluate financial condition and capital strengths. While non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools and should not be considered in isolation or as a substitute for analyses of results as reported under GAAP.

Nicolet Bankshares, Inc.

Consolidated Balance Sheets (Unaudited)

(In thousands, except share data)

9/30/2024

6/30/2024

3/31/2024

12/31/2023

9/30/2023

Assets

Cash and due from banks

$

124,076

$

109,674

$

81,677

$

129,898

$

109,414

Interest-earning deposits

303,908

298,856

345,747

361,533

436,466

Cash and cash equivalents

427,984

408,530

427,424

491,431

545,880

Certificates of deposit in other banks

3,189

3,924

5,639

6,374

7,598

Securities available for sale, at fair value

825,907

799,937

803,963

802,573

793,826

Other investments

60,443

60,796

60,464

57,560

58,367

Loans held for sale

11,121

9,450

5,022

4,160

6,500

Loans

6,556,840

6,529,134

6,397,617

6,353,942

6,239,257

Allowance for credit losses - loans

(65,785

)

(65,414

)

(64,347

)

(63,610

)

(63,160

)

Loans, net

6,491,055

6,463,720

6,333,270

6,290,332

6,176,097

Premises and equipment, net

123,585

120,988

119,962

118,756

117,744

Bank owned life insurance ("BOLI")

185,011

171,972

170,746

169,392

168,223

Goodwill and other intangibles, net

389,727

391,421

393,183

394,366

396,208

Accrued interest receivable and other assets

119,096

126,279

126,989

133,734

145,719

Total assets

$

8,637,118

$

8,557,017

$

8,446,662

$

8,468,678

$

8,416,162

Liabilities and Stockholders' Equity

Liabilities:

Noninterest-bearing demand deposits

$

1,839,617

$

1,764,806

$

1,665,229

$

1,958,709

$

2,020,074

Interest-bearing deposits

5,420,380

5,476,272

5,500,503

5,239,091

5,162,314

Total deposits

7,259,997

7,241,078

7,165,732

7,197,800

7,182,388

Short-term borrowings

-

-

-

-

-

Long-term borrowings

161,210

162,433

162,257

166,930

197,754

Accrued interest payable and other liabilities

66,584

62,093

55,018

64,941

61,559

Total liabilities

7,487,791

7,465,604

7,383,007

7,429,671

7,441,701

Stockholders' Equity:

Common stock

151

150

149

149

147

Additional paid-in capital

647,934

639,159

636,621

633,770

626,348

Retained earnings

535,638

507,366

482,295

458,261

431,317

Accumulated other comprehensive income (loss)

(34,396

)

(55,262

)

(55,410

)

(53,173

)

(83,351

)

Total stockholders' equity

1,149,327

1,091,413

1,063,655

1,039,007

974,461

Total liabilities and stockholders' equity

$

8,637,118

$

8,557,017

$

8,446,662

$

8,468,678

$

8,416,162

Common shares outstanding

15,104,381

14,945,598

14,930,549

14,894,209

14,757,565

Nicolet Bankshares, Inc.

Consolidated Statements of Income (Unaudited)

For the Three Months Ended

For the Nine Months Ended

(In thousands, except per share data)

9/30/2024

6/30/2024

3/31/2024

12/31/2023

9/30/2023

9/30/2024

9/30/2023

Interest income:

Loans, including loan fees

$

100,824

$

97,975

$

93,648

$

90,265

$

87,657

$

292,447

$

250,890

Taxable investment securities

5,211

5,056

4,557

4,737

4,351

14,824

13,445

Tax-exempt investment securities

1,095

1,152

1,238

1,394

1,424

3,485

4,637

Other interest income

5,492

4,695

4,588

7,149

6,452

14,775

10,345

Total interest income

112,622

108,878

104,031

103,545

99,884

325,531

279,317

Interest expense:

Deposits

42,060

41,386

38,990

36,583

34,964

122,436

89,241

Short-term borrowings

2

-

-

-

474

2

4,794

Long-term borrowings

2,194

2,150

2,234

2,680

2,972

6,578

8,048

Total interest expense

44,256

43,536

41,224

39,263

38,410

129,016

102,083

Net interest income

68,366

65,342

62,807

64,282

61,474

196,515

177,234

Provision for credit losses

750

1,350

750

1,000

450

2,850

3,990

Net interest income after provision for credit losses

67,616

63,992

62,057

63,282

61,024

193,665

173,244

Noninterest income:

Wealth management fee income

7,085

6,674

6,485

6,308

6,057

20,244

17,439

Mortgage income, net

2,853

2,634

1,364

1,856

2,020

6,851

5,308

Service charges on deposit accounts

1,913

1,813

1,581

1,475

1,492

5,307

4,501

Card interchange income

3,564

3,458

3,098

3,306

3,321

10,120

9,685

BOLI income

1,455

1,225

1,347

1,161

1,090

4,027

3,363

Asset gains (losses), net

1,177

616

1,909

5,947

31

3,702

(38,755

)

Deferred compensation plan asset market valuations

1,162

169

59

949

(457

)

1,390

988

LSR income, net

1,090

1,117

1,134

1,027

1,108

3,341

3,398

Other noninterest income

2,079

1,903

2,445

2,405

1,879

6,427

5,611

Total noninterest income

22,378

19,609

19,422

24,434

16,541

61,409

11,538

Noninterest expense:

Personnel expense

28,937

26,285

26,510

26,937

23,944

81,732

72,172

Occupancy, equipment and office

8,826

8,681

8,944

9,567

9,027

26,451

26,655

Business development and marketing

1,823

2,040

2,142

1,854

1,869

6,005

5,936

Data processing

4,535

4,281

4,270

7,043

4,643

13,086

12,849

Intangibles amortization

1,694

1,762

1,833

1,842

1,986

5,289

6,230

FDIC assessments

990

990

1,033

950

1,500

3,013

3,049

Merger-related expense

-

-

-

-

-

-

189

Other noninterest expense

2,343

2,814

2,415

2,103

2,769

7,572

8,490

Total noninterest expense

49,148

46,853

47,147

50,296

45,738

143,148

135,570

Income before income tax expense

40,846

36,748

34,332

37,420

31,827

111,926

49,212

Income tax expense

8,330

7,475

6,542

6,759

14,669

22,347

18,357

Net income

$

32,516

$

29,273

$

27,790

$

30,661

$

17,158

$

89,579

$

30,855

Earnings per common share:

Basic

$

2.16

$

1.96

$

1.86

$

2.07

$

1.16

$

5.99

$

2.10

Diluted

$

2.10

$

1.92

$

1.82

$

2.02

$

1.14

$

5.84

$

2.05

Common shares outstanding:

Basic weighted average

15,052

14,937

14,907

14,823

14,740

14,966

14,716

Diluted weighted average

15,479

15,276

15,249

15,142

15,100

15,330

15,044

Nicolet Bankshares, Inc.

Consolidated Financial Summary (Unaudited)

For the Three Months Ended

For the Nine Months Ended

(In thousands, except share & per share data)

9/30/2024

6/30/2024

3/31/2024

12/31/2023

9/30/2023

9/30/2024

9/30/2023

Selected Average Balances:

Loans

$

6,542,532

$

6,496,732

$

6,398,838

$

6,263,971

$

6,230,336

$

6,479,598

$

6,223,396

Investment securities

873,212

881,190

884,775

897,437

962,607

879,701

1,177,762

Interest-earning assets

7,824,773

7,733,097

7,629,120

7,683,495

7,676,895

7,729,346

7,667,911

Cash and cash equivalents

431,632

374,176

364,375

558,473

513,250

390,213

283,032

Goodwill and other intangibles, net

390,453

392,171

393,961

395,158

397,052

392,189

399,100

Total assets

8,596,812

8,481,186

8,380,595

8,415,169

8,417,456

8,486,602

8,404,999

Deposits

7,247,321

7,183,777

7,112,971

7,189,650

7,156,577

7,181,597

7,052,978

Interest-bearing liabilities

5,653,259

5,658,642

5,509,882

5,358,445

5,385,292

5,607,430

5,329,540

Stockholders' equity (common)

1,118,242

1,070,379

1,048,596

996,745

983,133

1,079,215

973,509

Selected Ratios: (1)

Book value per common share

$

76.09

$

73.03

$

71.24

$

69.76

$

66.03

$

76.09

$

66.03

Tangible book value per common share (2)

$

50.29

$

46.84

$

44.91

$

43.28

$

39.18

$

50.29

$

39.18

Return on average assets

1.50

%

1.39

%

1.33

%

1.45

%

0.81

%

1.41

%

0.49

%

Return on average common equity

11.57

11.00

10.66

12.20

6.92

11.09

4.24

Return on average tangible common equity (2)

17.77

17.36

17.07

20.22

11.62

17.42

7.18

Average equity to average assets

13.01

12.62

12.51

11.84

11.68

12.72

11.58

Stockholders' equity to assets

13.31

12.75

12.59

12.27

11.58

13.31

11.58

Tangible common equity to tangible assets (2)

9.21

8.57

8.33

7.98

7.21

9.21

7.21

Net interest margin

3.44

3.35

3.26

3.30

3.16

3.35

3.07

Efficiency ratio

54.57

55.24

58.34

60.41

58.27

55.98

59.16

Effective tax rate

20.39

20.34

19.06

18.06

46.09

19.97

37.30

Selected Asset Quality Information:

Nonaccrual loans

$

25,565

$

27,838

$

26,677

$

26,625

$

29,507

$

25,565

$

29,507

Other real estate owned

859

1,147

1,245

1,267

2,031

859

2,031

Nonperforming assets

$

26,424

$

28,985

$

27,922

$

27,892

$

31,538

$

26,424

$

31,538

Net loan charge-offs (recoveries)

$

379

$

283

$

13

$

550

$

101

$

675

$

319

Allowance for credit losses-loans to loans

1.00

%

1.00

%

1.01

%

1.00

%

1.01

%

1.00

%

1.01

%

Net charge-offs to average loans (1)

0.02

0.02

0.00

0.03

0.01

0.01

0.01

Nonperforming loans to total loans

0.39

0.43

0.42

0.42

0.47

0.39

0.47

Nonperforming assets to total assets

0.31

0.34

0.33

0.33

0.37

0.31

0.37

Stock Repurchase Information:

Common stock repurchased ($) (3)

$

-

$

-

$

-

$

-

$

-

$

-

$

1,519

Common stock repurchased (shares) (3)

-

-

-

-

-

-

26,853

(1)

Income statement-related ratios for partial-year periods are annualized.

(2)

See Reconciliation of Non-GAAP Financial Measures below for a reconciliation of these financial measures.

(3)

Reflects common stock repurchased under board of director authorizations for the common stock repurchase program.

Nicolet Bankshares, Inc.

Consolidated Loan & Deposit Metrics (Unaudited)

(In thousands)

9/30/2024

6/30/2024

3/31/2024

12/31/2023

9/30/2023

Period End Loan Composition

Commercial & industrial

$

1,351,516

$

1,358,152

$

1,307,490

$

1,284,009

$

1,237,789

Owner-occupied commercial real estate ("CRE")

920,533

941,137

955,786

956,594

971,397

Agricultural

1,261,152

1,224,885

1,190,371

1,161,531

1,108,261

Commercial

3,533,201

3,524,174

3,453,647

3,402,134

3,317,447

CRE investment

1,226,982

1,198,020

1,188,722

1,142,251

1,130,938

Construction & land development

231,694

247,565

241,730

310,110

326,747

Commercial real estate

1,458,676

1,445,585

1,430,452

1,452,361

1,457,685

Commercial-based loans

4,991,877

4,969,759

4,884,099

4,854,495

4,775,132

Residential construction

85,811

90,904

84,370

75,726

76,289

Residential first mortgage

1,194,574

1,190,790

1,167,069

1,167,109

1,136,748

Residential junior mortgage

223,456

218,512

206,434

200,884

195,432

Residential real estate

1,503,841

1,500,206

1,457,873

1,443,719

1,408,469

Retail & other

61,122

59,169

55,645

55,728

55,656

Retail-based loans

1,564,963

1,559,375

1,513,518

1,499,447

1,464,125

Total loans

$

6,556,840

$

6,529,134

$

6,397,617

$

6,353,942

$

6,239,257

Period End Deposit Composition

Noninterest-bearing demand

$

1,839,617

$

1,764,806

$

1,665,229

$

1,958,709

$

2,020,074

Interest-bearing demand

1,035,593

1,093,621

1,121,030

1,055,520

955,746

Money market

1,928,977

1,963,559

2,027,559

1,891,287

1,933,227

Savings

763,024

762,529

765,084

768,401

789,045

Time

1,692,786

1,656,563

1,586,830

1,523,883

1,484,296

Total deposits

$

7,259,997

$

7,241,078

$

7,165,732

$

7,197,800

$

7,182,388

Brokered transaction accounts

$

159,547

$

250,109

$

265,818

$

166,861

$

146,517

Brokered time deposits

549,907

557,657

517,190

448,582

457,433

Total brokered deposits

$

709,454

$

807,766

$

783,008

$

615,443

$

603,950

Customer transaction accounts

$

5,407,664

$

5,334,406

$

5,313,085

$

5,507,056

$

5,551,575

Customer time deposits

1,142,879

1,098,906

1,069,639

1,075,301

1,026,863

Total customer deposits (core)

$

6,550,543

$

6,433,312

$

6,382,724

$

6,582,357

$

6,578,438

Nicolet Bankshares, Inc.

Net Interest Income and Net Interest Margin Analysis (Unaudited)

For the Three Months Ended

September 30, 2024

June 30, 2024

September 30, 2023

Average

Average

Average

Average

Average

Average

(In thousands)

Balance

Interest

Rate

Balance

Interest

Rate

Balance

Interest

Rate

ASSETS

Total loans (1) (2)

$

6,542,532

$

100,962

6.06

%

$

6,496,732

$

98,086

5.99

%

$

6,230,336

$

87,701

5.54

%

Investment securities (2)

873,212

6,666

3.05

%

881,190

6,579

2.99

%

962,607

6,235

2.59

%

Other interest-earning assets

409,029

5,492

5.27

%

355,175

4,695

5.24

%

483,952

6,452

5.23

%

Total interest-earning assets

7,824,773

$

113,120

5.68

%

7,733,097

$

109,360

5.61

%

7,676,895

$

100,388

5.15

%

Other assets, net

772,039

748,089

740,561

Total assets

$

8,596,812

$

8,481,186

$

8,417,456

LIABILITIES AND STOCKHOLDERS' EQUITY

Interest-bearing core deposits

$

4,723,464

$

32,952

2.78

%

$

4,665,195

$

31,713

2.73

%

$

4,491,858

$

27,628

2.44

%

Brokered deposits

768,058

9,108

4.72

%

831,100

9,673

4.68

%

651,745

7,336

4.47

%

Total interest-bearing deposits

5,491,522

42,060

3.05

%

5,496,295

41,386

3.03

%

5,143,603

34,964

2.70

%

Wholesale funding

161,737

2,196

5.31

%

162,347

2,150

5.24

%

241,689

3,446

5.58

%

Total interest-bearing liabilities

5,653,259

$

44,256

3.11

%

5,658,642

$

43,536

3.09

%

5,385,292

$

38,410

2.83

%

Noninterest-bearing demand deposits

1,755,799

1,687,482

2,012,974

Other liabilities

69,512

64,683

36,057

Stockholders' equity

1,118,242

1,070,379

983,133

Total liabilities and stockholders' equity

$

8,596,812

$

8,481,186

$

8,417,456

Net interest income and rate spread

$

68,864

2.57

%

$

65,824

2.52

%

$

61,978

2.32

%

Net interest margin

3.44

%

3.35

%

3.16

%

Loan purchase accounting accretion (3)

$

1,527

0.09

%

$

1,527

0.08

%

$

1,637

0.10

%

Loan nonaccrual interest (4)

$

(48

)

0.00

%

$

329

0.02

%

$

(257

)

(0.02

)%

For the Nine Months Ended

September 30, 2024

September 30, 2023

Average

Average

Average

Average

(In thousands)

Balance

Interest

Rate

Balance

Interest

Rate

ASSETS

Total loans (1) (2)

$

6,479,598

$

292,792

5.95

%

$

6,223,396

$

251,019

5.33

%

Investment securities (2)

879,701

19,442

2.95

%

1,177,762

19,575

2.22

%

Other interest-earning assets

370,047

14,775

5.26

%

266,753

10,345

5.13

%

Total interest-earning assets

7,729,346

$

327,009

5.58

%

7,667,911

$

280,939

4.85

%

Other assets, net

757,256

737,088

Total assets

$

8,486,602

$

8,404,999

LIABILITIES AND STOCKHOLDERS' EQUITY

Interest-bearing core deposits

$

4,684,586

$

95,921

2.74

%

$

4,365,843

$

69,943

2.14

%

Brokered deposits

759,791

26,515

4.66

%

619,870

19,298

4.16

%

Total interest-bearing deposits

5,444,377

122,436

3.00

%

4,985,713

89,241

2.39

%

Wholesale funding

163,053

6,580

5.30

%

343,827

12,842

4.93

%

Total interest-bearing liabilities

5,607,430

$

129,016

3.07

%

5,329,540

$

102,083

2.56

%

Noninterest-bearing demand deposits

1,737,220

2,067,265

Other liabilities

62,737

34,685

Stockholders' equity

1,079,215

973,509

Total liabilities and stockholders' equity

$

8,486,602

$

8,404,999

Net interest income and rate spread

$

197,993

2.51

%

$

178,856

2.29

%

Net interest margin

3.35

%

3.07

%

Loan purchase accounting accretion (3)

$

4,582

0.09

%

$

4,908

0.10

%

(1)

Nonaccrual loans and loans held for sale are included in the daily average loan balances outstanding.

(2)

The yield on tax-exempt loans and tax-exempt investment securities is computed on a tax-equivalent basis using a federal tax rate of 21%, and adjusted for the disallowance of interest expense.

(3)

Loan purchase accounting accretion included in Total loans interest above, and the related impact to net interest margin.

(4)

Loan nonaccrual interest included in Total loans interest above, and the related impact to net interest margin.

Nicolet Bankshares, Inc.

Reconciliation of Non-GAAP Financial Measures (Unaudited)

For the Three Months Ended

For the Nine Months Ended

(In thousands, except per share data)

9/30/2024

6/30/2024

3/31/2024

12/31/2023

9/30/2023

9/30/2024

9/30/2023

Adjusted net income reconciliation: (1)

Net income (GAAP)

$

32,516

$

29,273

$

27,790

$

30,661

$

17,158

$

89,579

$

30,855

Adjustments:

Provision expense (2)

-

-

-

-

-

-

2,340

Assets (gains) losses, net (3)

(1,177

)

(616

)

(1,909

)

(5,947

)

(31

)

(3,702

)

38,755

Merger-related expense

-

-

-

-

-

-

189

Contract termination charge

-

-

-

2,689

-

-

-

Adjustments subtotal

(1,177

)

(616

)

(1,909

)

(3,258

)

(31

)

(3,702

)

41,284

Tax on Adjustments (4)

(230

)

(120

)

(372

)

(635

)

(6

)

(722

)

8,050

Tax - Wisconsin Tax Law Change (4)

-

-

-

-

6,151

-

9,118

Adjusted net income (Non-GAAP)

$

31,569

$

28,777

$

26,253

$

28,038

$

23,284

$

86,599

$

73,207

Diluted earnings per common share:

Diluted earnings per common share (GAAP)

$

2.10

$

1.92

$

1.82

$

2.02

$

1.14

$

5.84

$

2.05

Adjusted Diluted earnings per common share (Non-GAAP)

$

2.04

$

1.88

$

1.72

$

1.85

$

1.54

$

5.65

$

4.87

Tangible assets: (5)

Total assets

$

8,637,118

$

8,557,017

$

8,446,662

$

8,468,678

$

8,416,162

Goodwill and other intangibles, net

389,727

391,421

393,183

394,366

396,208

Tangible assets

$

8,247,391

$

8,165,596

$

8,053,479

$

8,074,312

$

8,019,954

Tangible common equity: (5)

Stockholders' equity (common)

$

1,149,327

$

1,091,413

$

1,063,655

$

1,039,007

$

974,461

Goodwill and other intangibles, net

389,727

391,421

393,183

394,366

396,208

Tangible common equity

$

759,600

$

699,992

$

670,472

$

644,641

$

578,253

Tangible average common equity: (5)

Average stockholders' equity (common)

$

1,118,242

$

1,070,379

$

1,048,596

$

996,745

$

983,133

$

1,079,215

$

973,509

Average goodwill and other intangibles, net

390,453

392,171

393,961

395,158

397,052

392,189

399,100

Average tangible common equity

$

727,789

$

678,208

$

654,635

$

601,587

$

586,081

$

687,026

$

574,409

Note: Numbers may not sum due to rounding.

(1)

The adjusted net income measure and related reconciliation provide information useful to investors in understanding the operating performance and trends of Nicolet and also to aid investors in the comparison of Nicolet's financial performance to the financial performance of peer banks.

(2)

Provision expense for 2023 is attributable to the expected loss on a bank subordinated debt investment.

(3)

Includes the gains / (losses) on other assets and investments, as well as the impact of the March 2023 balance sheet repositioning which included the sale of $500 million (par value) U.S. Treasury held to maturity securities for a pre-tax loss of $38 million or an after-tax loss of $28 million, with the net proceeds used to reduce FHLB borrowings and the remainder held in investable cash.

(4)

In July 2023, a new Wisconsin tax law change was signed which provided financial institutions with an exemption from state taxable income for interest, fees, and penalties earned on specific loans to existing Wisconsin-based business or agriculture purpose loans. The effective tax rate for periods prior to the July 1, 2023, effective date of this tax law change assumed an effective tax rate of 25%, and periods subsequent to the effective date assumed an effective tax rate of 19.5%. The adjusted net income reconciliation for first and second quarter 2023 is as originally reported, and has not been restated to reflect the $3 million excess tax expense of those quarters that was subsequently reversed in third quarter 2023 due to the Wisconsin tax law change. Thus, the adjusted net income reconciliation for the quarters of 2023 will not sum to the full year impact.

(5)

The ratios of tangible book value per common share, return on average tangible common equity, and tangible common equity to tangible assets exclude goodwill and other intangibles, net. These financial ratios have been included as they are considered to be critical metrics with which to analyze and evaluate financial condition and capital strength.

Source: Nicolet Bankshares, Inc.