8-K
NICOLET BANKSHARES INC (NIC)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 18, 2023
NICOLET BANKSHARES, INC.
(Exact name of registrant as specified in its charter)
| Wisconsin | 001-37700 | 47-0871001 |
|---|---|---|
| (State or other jurisdiction<br>of incorporation) | (Commission<br>File Number) | (IRS Employer<br>Identification No.) |
111 North Washington Street
Green Bay, Wisconsin 54301
(Address of principal executive offices)
(920) 430-1400
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | | --- | --- || ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | | --- | --- || ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | | --- | --- || ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | | --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common stock, par value $0.01 per share | NIC | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter.)
Emerging Growth Company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 | Results of Operations and Financial Condition. |
|---|
On July 18, 2023, Nicolet Bankshares, Inc. (“Nicolet”) announced its earnings for the quarter ended June 30, 2023. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Pursuant to General Instruction B.2 of Form 8-K, the information in this Item 2.02 and Exhibit 99.1, is being furnished to the Securities and Exchange Commission and shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that Section. Furthermore, the information in this Item 2.02 and Exhibit 99.1, shall not be deemed to be incorporated by reference into Nicolet’s filings under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
| Item 9.01 | Financial Statements and Exhibits. | | --- | --- || Exhibit No. | Description of Exhibit | | --- | --- | | 99.1 | Press Release, dated July 18, 2023 | | 104 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document |
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: | July 18, 2023 | NICOLET BANKSHARES, INC. | |
|---|---|---|---|
| By: | /s/ H. Phillip Moore, Jr. | ||
| H. Phillip Moore, Jr. | |||
| Chief Financial Officer |
Document
Exhibit 99.1
FOR IMMEDIATE RELEASE
NICOLET BANKSHARES, INC. ANNOUNCES SECOND QUARTER 2023 RESULTS
•Net income of $23 million for second quarter 2023
•Net income of $14 million for first six months of 2023, compared to $48 million for first six months of 2022, significantly impacted by first quarter balance sheet repositioning
•Quarterly net interest margin of 3.14%, an increase of 23 bps over the first quarter
•Improvement in asset quality as nonperforming assets decline to 0.32% of total assets
•First quarterly cash dividend of $0.25 per common share paid during the second quarter
Green Bay, Wisconsin, July 18, 2023 - Nicolet Bankshares, Inc. (NYSE: NIC) (“Nicolet”) announced second quarter 2023 net income of $23 million and earnings per diluted common share of $1.51, compared to a net loss of $9 million and loss per diluted common share of $0.61 for first quarter 2023, and net income of $24 million and earnings per diluted common share of $1.73 for second quarter 2022. Net income for the six months ended June 30, 2023 was $14 million and earnings per diluted common share of $0.91, compared to net income of $48 million and earnings per diluted common share of $3.43 for the first half of 2022.
Results for 2023 were significantly impacted by the March 7 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. The $500 million portfolio yielded approximately 88 bps with scheduled maturities in 2024 and 2025 (or average duration of 2 years). Proceeds from the sale were used to reduce existing FHLB borrowings with the remainder held in investable cash.
Net income reflected certain non-core items and the related tax effect of each, including U.S. Treasury securities sale loss, expected loss (provision expense) on the Signature Bank sub debt investment (acquired in an acquisition), merger-related expenses, Day 2 credit provision expense required under the CECL model, as well as gains / (losses) on other assets and investments. These non-core items negatively impacted earnings per diluted common share $0.02 for second quarter 2023 and $2.06 for first quarter 2023, and positively impacted earnings per diluted common share $0.06 for second quarter 2022. For the six months ended June 30, 2023, these non-core items negatively impacted earnings per diluted common share $2.07, and positively impacted earnings per diluted common share $0.12 for the first half of 2022.
“First things first, I am impressed at how the entire Nicolet team has responded to our decision to reposition our balance sheet in the first quarter. We have been re-energized by the move and the results are showing up in new relationships across our revenue lines,” said Mike Daniels, President and CEO of Nicolet. “I think this shows the value of putting actions behind our words and trusting our team to continue to deliver on Nicolet’s promise - to serve our customers, communities, and each other. Thus far, they have, and I am confident that this will continue. We anticipated a higher net interest margin, which has happened this quarter. This, combined with an already outstanding asset quality profile and a clean balance sheet, continues to put Nicolet in an enviable position despite the ongoing macroeconomic challenges.”
Daniels continued, “It is important to remember that we are a reflection of the communities we serve. Given the appropriate heightened scrutiny around office commercial real estate, I want to re-emphasize our lending strategy is in the markets we serve. That means any office exposure is limited only to our smaller and mid-size markets, with no exposure in major metro areas. I think people tend to group all office CRE into one bucket, but fail to realize the whole “work from home” movement has had a limited effect in our markets. As a result, our credit quality continues to remain strong. Furthermore, I’ll note the office portfolio is very granular, with the average balance in the portfolio less than $886,000, we believe this speaks to the above point on diversification and limits the loss risk to Nicolet should conditions worsen.”
Nicolet’s financial performance and certain balance sheet line items were impacted by the timing and size of Nicolet’s August 2022 acquisition of Charter Bankshares, Inc. (“Charter”). Certain income statement results, average balances, and related ratios for 2022 include contributions from Charter from the acquisition date. At acquisition, Charter added assets of $1.1 billion, loans of $827 million, and deposits of $869 million.
Balance Sheet Review
At June 30, 2023, period end assets were $8.5 billion, an increase of $290 million (4%) from March 31, 2023, mostly higher cash balances, partly offset by maturities and paydowns of investment securities. Total loans were minimally changed from March 31, 2023, as growth in the portfolio was offset by the sale of specific nonaccrual loans (net book value of approximately $13 million) and the payoff of a classified loan relationship ($10 million outstanding). Total deposits of $7.2 billion at June 30, 2023, increased $270 million (4%) from March 31, 2023, with growth in customer and brokered time deposits partly offset by lower transaction account balances. Total capital was $978 million at June 30, 2023, an increase of $16 million since March 31, 2023, on solid earnings, partly offset by payment of the first quarterly cash dividend and unfavorable market valuations on available for sale securities.
Asset Quality
Nonperforming assets were $27 million and represented 0.32% of total assets at June 30, 2023, compared to $41 million or 0.50% at March 31, 2023, and $42 million or 0.56% at June 30, 2022. The reduction in nonperforming assets was due to the nonaccrual loan sale (noted above). The allowance for credit losses-loans was $63 million and represented 1.01% of total loans at June 30, 2023, compared to $62 million (or 1.00% of total loans) at March 31, 2023, and $51 million (or 1.02% of total loans) at June 30, 2022. Asset quality trends remain solid and loan net charge-offs were negligible.
Income Statement Review - Quarter
Net income for second quarter 2023 was $23 million, compared to a net loss of $9 million for first quarter 2023.
Net interest income was $59 million for second quarter 2023, up $2 million from first quarter 2023, the net effect of higher interest income and higher interest expense. The higher interest income was largely attributable to the repricing of new and renewed loans in a rising interest rate environment along with increased investable cash balances, partly offset by lower interest income on investment securities from the balance sheet repositioning late in first quarter 2023. The increase in interest expense was mostly due to higher average rates, reflecting the rising interest rate environment as well as some migration of customer deposits to higher rate deposit products. The net interest margin for second quarter 2023 was 3.14%, up 23 bps from 2.91% for first quarter 2023. The yield on interest-earning assets increased 41 bps (to 4.90%) due to a shift in the mix of average interest-earning assets (from the balance sheet repositioning) as well as the rising interest rate environment, while the cost of funds increased 24 bps (to 2.54%) for second quarter 2023, attributable mainly to the repricing of deposits and funding in the higher interest rate environment.
Noninterest income was $17 million for second quarter 2023, a $39 million favorable change compared to first quarter 2023. Excluding net asset gains (losses), noninterest income for second quarter 2023 was $17 million, a $1 million increase over first quarter 2023. The sequential quarter increase included higher wealth revenue, mortgage income, and card interchange income, partly offset by an unfavorable change in the fair value of nonqualified deferred compensation plan assets.
Noninterest expense of $45 million was minimally changed from first quarter 2023. Personnel expense decreased slightly due to a decrease in the fair value of nonqualified deferred compensation plan liabilities. Non-personnel expenses increased 2% between the sequential quarters including higher data processing (mostly volume-based system processing) and FDIC assessments, partly offset by lower marketing expense.
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 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 or core banking operations, 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 or 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 corporation, 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.
Forward Looking Statements “Safe Harbor” Statement Under the Private Securities Litigation Reform Act of 1995
Certain statements contained in this communication, which are not statements of historical fact, constitute “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act. Forward-looking statements generally can be identified by words or phrases such as, without limitation, “anticipate,” “believe,” “aim,” “can,” “conclude,” “continue,” “could,” “estimate,” “expect,” “foresee,” “goal,” “intend,” “may,” “might,” “outlook,” “possible,” “plan,” “predict,” “project,” “potential,” “seek,” “should,” “target,” “will,” “will likely,” “would,” or the negative of these terms or other comparable terminology, as well as similar expressions, and in this press release include our statements about our expectations of higher net interest margin in the future and our expectations for potential loss exposure within the loan portfolio due to the current macroeconomic challenges.
Forward-looking statements are not historical facts but instead express only management’s beliefs regarding future results or events, many of which, by their nature, are inherently uncertain and outside of management’s control. It is possible that actual results and outcomes may differ, possibly materially, from the anticipated results or outcomes indicated in these forward-looking statements. Risks, uncertainties and other factors that could cause the actual results to differ materially from the statements, including, but not limited to: (i) deterioration in the financial condition of Nicolet’s borrowers, including as a result of the negative impact of inflationary pressures on our customers and their businesses, resulting in significant increases in loan losses and provisions for those losses; (ii) fluctuations or differences in interest rates on loans or deposits from those that Nicolet is modeling or anticipating, including as a result of Nicolet’s inability to better match deposit rates with the changes in the short-term rate environment, or that affect the yield curve; (iii) adverse conditions in the national or local economies including in Nicolet’s operating markets; (iv) the inability of Nicolet, or entities in which it has significant investments, to maintain the long-term historical growth rate of its loan portfolio; (v) the ability to grow and retain low-cost core deposits and retain large, uninsured deposits, including during times when Nicolet is seeking to limit the rates it pays on deposits; (vi) changes in loan underwriting, credit review or loss reserve policies associated with economic conditions, examination conclusions, or regulatory developments; (vii) effectiveness of Nicolet’s asset management activities in improving, resolving or liquidating lower-quality assets; (viii) the impact of competition with other financial institutions, including pricing pressures and the resulting impact on Nicolet’s results, including as a result of the negative impact to net interest margin from rising deposit and other funding costs; (ix) the results of regulatory examinations; (x) Nicolet’s ability to identify potential candidates for, consummate, and achieve synergies from, potential future acquisitions; (xi) difficulties and delays in integrating acquired businesses or fully realizing costs savings and other benefits from acquisitions; (xii) risks of expansion into new geographic or product markets; (xiiii) any matter that would cause Nicolet to conclude that there was impairment of any asset, including goodwill or other intangible assets; (xiv) reduced ability to attract additional financial advisors (or failure of such advisors to cause their clients to switch to Nicolet), to retain financial advisors (including as a result of the competitive environment for associates) or otherwise to attract customers from other financial institutions; (xv) deterioration in the valuation of other real estate owned and increased expenses associated therewith; (xvi) inability to comply with regulatory capital requirements, including those resulting from changes to capital calculation methodologies, required capital maintenance levels or regulatory requests or directives; (xvii) the vulnerability of Nicolet’s network and online banking portals, and the systems of parties with whom Nicolet contracts, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches; (xviii) the possibility of increased compliance and operational costs as a result of increased regulatory oversight, and the
development of additional banking products for Nicolet’s corporate and consumer clients; (xix) changes in state and federal legislation, regulations or policies applicable to banks and other financial service providers; (xx) fluctuations in the valuations of Nicolet’s equity investments and the ultimate success of such investments; (xxi) the availability of and access to capital; (xxii) adverse results (including costs, fines, reputational harm, inability to obtain necessary approvals and/or other negative effects) from current or future litigation, regulatory examinations or other legal and/or regulatory actions, including as a result of Nicolet’s participation in and execution of government programs related to the COVID-19 pandemic; and (xxiii) general competitive, economic, political and market conditions. Additional factors which could affect the forward looking statements can be found in Nicolet’s 2022 Annual Report on Form 10-K, as well subsequent filings with the SEC and are available on the SEC’s website at www.sec.gov.
All forward-looking statements included in this press release are made as of the date hereof and are based on information available to management at that time. Except as required by law, Nicolet disclaims any obligation to update or revise any forward-looking statement contained in this press release to reflect new information or events or circumstances that occur after the date the forward-looking statements were made.
| Nicolet Bankshares, Inc. | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Consolidated Balance Sheets (Unaudited) | |||||||||||||||||||||
| (In thousands, except share data) | 6/30/2023 | 3/31/2023 | 12/31/2022 | 9/30/2022 | 6/30/2022 | ||||||||||||||||
| Assets | |||||||||||||||||||||
| Cash and due from banks | $ | 122,021 | $ | 93,462 | $ | 121,211 | $ | 118,537 | $ | 96,189 | |||||||||||
| Interest-earning deposits | 383,185 | 20,718 | 33,512 | 319,745 | 84,828 | ||||||||||||||||
| Cash and cash equivalents | 505,206 | 114,180 | 154,723 | 438,282 | 181,017 | ||||||||||||||||
| Certificates of deposit in other banks | 9,808 | 11,293 | 12,518 | 13,510 | 15,502 | ||||||||||||||||
| Securities available for sale, at fair value | 921,108 | 1,023,176 | 917,618 | 949,597 | 813,248 | ||||||||||||||||
| Securities held to maturity, at amortized cost | — | — | 679,128 | 686,424 | 695,812 | ||||||||||||||||
| Other investments | 57,578 | 57,482 | 65,286 | 79,279 | 53,269 | ||||||||||||||||
| Loans held for sale | 3,849 | 4,962 | 1,482 | 3,709 | 5,084 | ||||||||||||||||
| Loans | 6,222,776 | 6,223,732 | 6,180,499 | 5,984,437 | 4,978,654 | ||||||||||||||||
| Allowance for credit losses - loans | (62,811) | (62,412) | (61,829) | (60,348) | (50,655) | ||||||||||||||||
| Loans, net | 6,159,965 | 6,161,320 | 6,118,670 | 5,924,089 | 4,927,999 | ||||||||||||||||
| Premises and equipment, net | 117,278 | 112,569 | 108,956 | 106,648 | 96,656 | ||||||||||||||||
| Bank owned life insurance (“BOLI”) | 167,192 | 166,107 | 165,137 | 165,166 | 136,060 | ||||||||||||||||
| Goodwill and other intangibles, net | 398,194 | 400,277 | 402,438 | 407,117 | 336,721 | ||||||||||||||||
| Accrued interest receivable and other assets | 142,450 | 140,988 | 138,013 | 122,095 | 108,884 | ||||||||||||||||
| Total assets | $ | 8,482,628 | $ | 8,192,354 | $ | 8,763,969 | $ | 8,895,916 | $ | 7,370,252 | |||||||||||
| Liabilities and Stockholders' Equity | |||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||
| Noninterest-bearing demand deposits | $ | 2,059,939 | $ | 2,094,623 | $ | 2,361,816 | $ | 2,477,507 | $ | 2,045,732 | |||||||||||
| Interest-bearing deposits | 5,138,665 | 4,833,956 | 4,817,105 | 4,918,395 | 4,240,534 | ||||||||||||||||
| Total deposits | 7,198,604 | 6,928,579 | 7,178,921 | 7,395,902 | 6,286,266 | ||||||||||||||||
| Short-term borrowings | 50,000 | 50,000 | 317,000 | 280,000 | — | ||||||||||||||||
| Long-term borrowings | 197,577 | 197,448 | 225,342 | 225,236 | 196,963 | ||||||||||||||||
| Accrued interest payable and other liabilities | 58,809 | 54,535 | 70,177 | 56,315 | 47,636 | ||||||||||||||||
| Total liabilities | 7,504,990 | 7,230,562 | 7,791,440 | 7,957,453 | 6,530,865 | ||||||||||||||||
| Stockholders' Equity: | |||||||||||||||||||||
| Common stock | 147 | 147 | 147 | 147 | 134 | ||||||||||||||||
| Additional paid-in capital | 624,897 | 623,746 | 621,988 | 620,392 | 520,741 | ||||||||||||||||
| Retained earnings | 417,863 | 398,966 | 407,864 | 380,263 | 361,753 | ||||||||||||||||
| Accumulated other comprehensive income (loss) | (65,269) | (61,067) | (57,470) | (62,339) | (43,241) | ||||||||||||||||
| Total stockholders' equity | 977,638 | 961,792 | 972,529 | 938,463 | 839,387 | ||||||||||||||||
| Total liabilities and stockholders' equity | $ | 8,482,628 | $ | 8,192,354 | $ | 8,763,969 | $ | 8,895,916 | $ | 7,370,252 | |||||||||||
| Common shares outstanding | 14,717,938 | 14,698,265 | 14,690,614 | 14,673,197 | 13,407,375 | ||||||||||||||||
| Nicolet Bankshares, Inc. | |||||||||||||||||||||
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| Consolidated Statements of Income (Loss) (Unaudited) | |||||||||||||||||||||
| For the Three Months Ended | For the Six Months Ended | ||||||||||||||||||||
| (In thousands, except per share data) | 6/30/2023 | 3/31/2023 | 12/31/2022 | 9/30/2022 | 6/30/2022 | 6/30/2023 | 6/30/2022 | ||||||||||||||
| Interest income: | |||||||||||||||||||||
| Loans, including loan fees | $ | 84,091 | $ | 79,142 | $ | 76,367 | $ | 63,060 | $ | 52,954 | $ | 163,233 | $ | 104,253 | |||||||
| Taxable investment securities | 4,133 | 4,961 | 5,771 | 5,350 | 5,135 | 9,094 | 10,262 | ||||||||||||||
| Tax-exempt investment securities | 1,476 | 1,737 | 1,915 | 1,181 | 647 | 3,213 | 1,322 | ||||||||||||||
| Other interest income | 2,357 | 1,536 | 1,703 | 1,127 | 790 | 3,893 | 1,607 | ||||||||||||||
| Total interest income | 92,057 | 87,376 | 85,756 | 70,718 | 59,526 | 179,433 | 117,444 | ||||||||||||||
| Interest expense: | |||||||||||||||||||||
| Deposits | 29,340 | 24,937 | 12,512 | 4,638 | 2,410 | 54,277 | 4,602 | ||||||||||||||
| Short-term borrowings | 1,108 | 3,212 | 2,624 | 594 | 28 | 4,320 | 28 | ||||||||||||||
| Long-term borrowings | 2,570 | 2,506 | 2,528 | 2,496 | 2,004 | 5,076 | 3,935 | ||||||||||||||
| Total interest expense | 33,018 | 30,655 | 17,664 | 7,728 | 4,442 | 63,673 | 8,565 | ||||||||||||||
| Net interest income | 59,039 | 56,721 | 68,092 | 62,990 | 55,084 | 115,760 | 108,879 | ||||||||||||||
| Provision for credit losses | 450 | 3,090 | 1,850 | 8,600 | 750 | 3,540 | 1,050 | ||||||||||||||
| Net interest income after provision for credit losses | 58,589 | 53,631 | 66,242 | 54,390 | 54,334 | 112,220 | 107,829 | ||||||||||||||
| Noninterest income: | |||||||||||||||||||||
| Wealth management fee income | 5,870 | 5,512 | 5,170 | 5,009 | 4,992 | 11,382 | 10,691 | ||||||||||||||
| Mortgage income, net | 1,822 | 1,466 | 1,311 | 1,728 | 2,205 | 3,288 | 5,458 | ||||||||||||||
| Service charges on deposit accounts | 1,529 | 1,480 | 1,502 | 1,589 | 1,536 | 3,009 | 3,013 | ||||||||||||||
| Card interchange income | 3,331 | 3,033 | 3,100 | 3,012 | 2,950 | 6,364 | 5,531 | ||||||||||||||
| BOLI income | 1,073 | 1,200 | 1,151 | 966 | 768 | 2,273 | 1,701 | ||||||||||||||
| Asset gains (losses), net | (318) | (38,468) | 260 | (46) | 1,603 | (38,786) | 2,916 | ||||||||||||||
| Deferred compensation plan asset market valuations | 499 | 946 | 314 | (571) | (1,316) | 1,445 | (1,783) | ||||||||||||||
| LSR income, net | 1,135 | 1,155 | (324) | (517) | (143) | 2,290 | (525) | ||||||||||||||
| Other noninterest income | 1,900 | 1,832 | 2,362 | 1,830 | 1,536 | 3,732 | 3,072 | ||||||||||||||
| Total noninterest income | 16,841 | (21,844) | 14,846 | 13,000 | 14,131 | (5,003) | 30,074 | ||||||||||||||
| Noninterest expense: | |||||||||||||||||||||
| Personnel expense | 23,900 | 24,328 | 23,705 | 24,136 | 19,681 | 48,228 | 40,872 | ||||||||||||||
| Occupancy, equipment and office | 8,845 | 8,783 | 8,246 | 7,641 | 6,891 | 17,628 | 13,835 | ||||||||||||||
| Business development and marketing | 1,946 | 2,121 | 2,303 | 2,281 | 2,057 | 4,067 | 3,888 | ||||||||||||||
| Data processing | 4,218 | 3,988 | 3,871 | 3,664 | 3,596 | 8,206 | 6,983 | ||||||||||||||
| Intangibles amortization | 2,083 | 2,161 | 2,217 | 1,628 | 1,347 | 4,244 | 2,771 | ||||||||||||||
| FDIC assessments | 1,009 | 540 | 480 | 480 | 480 | 1,549 | 960 | ||||||||||||||
| Merger-related expense | 26 | 163 | 492 | 519 | 555 | 189 | 653 | ||||||||||||||
| Other noninterest expense | 2,930 | 2,791 | 2,675 | 2,218 | 1,931 | 5,721 | 4,126 | ||||||||||||||
| Total noninterest expense | 44,957 | 44,875 | 43,989 | 42,567 | 36,538 | 89,832 | 74,088 | ||||||||||||||
| Income (loss) before income tax expense | 30,473 | (13,088) | 37,099 | 24,823 | 31,927 | 17,385 | 63,815 | ||||||||||||||
| Income tax expense (benefit) | 7,878 | (4,190) | 9,498 | 6,313 | 7,942 | 3,688 | 15,666 | ||||||||||||||
| Net income (loss) | $ | 22,595 | $ | (8,898) | $ | 27,601 | $ | 18,510 | $ | 23,985 | $ | 13,697 | $ | 48,149 | |||||||
| Earnings (loss) per common share: | |||||||||||||||||||||
| Basic | $ | 1.54 | $ | (0.61) | $ | 1.88 | $ | 1.33 | $ | 1.79 | $ | 0.93 | $ | 3.56 | |||||||
| Diluted | $ | 1.51 | $ | (0.61) | $ | 1.83 | $ | 1.29 | $ | 1.73 | $ | 0.91 | $ | 3.43 | |||||||
| Common shares outstanding: | |||||||||||||||||||||
| Basic weighted average | 14,711 | 14,694 | 14,685 | 13,890 | 13,402 | 14,703 | 13,525 | ||||||||||||||
| Diluted weighted average | 14,960 | 14,694 | 15,110 | 14,310 | 13,852 | 15,011 | 14,035 | ||||||||||||||
| Nicolet Bankshares, Inc. | |||||||||||||||||||||
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| Consolidated Financial Summary (Unaudited) | |||||||||||||||||||||
| For the Three Months Ended | For the Six Months Ended | ||||||||||||||||||||
| (In thousands, except share & per share data) | 6/30/2023 | 3/31/2023 | 12/31/2022 | 9/30/2022 | 6/30/2022 | 6/30/2023 | 6/30/2022 | ||||||||||||||
| Selected Average Balances: | |||||||||||||||||||||
| Loans | $ | 6,237,757 | $ | 6,201,780 | $ | 6,087,146 | $ | 5,391,258 | $ | 4,838,535 | $ | 6,219,868 | $ | 4,764,073 | |||||||
| Investment securities | 1,068,144 | 1,508,535 | 1,701,531 | 1,625,453 | 1,573,027 | 1,287,123 | 1,574,319 | ||||||||||||||
| Interest-earning assets | 7,497,935 | 7,830,590 | 7,963,485 | 7,161,120 | 6,579,644 | 7,663,344 | 6,645,054 | ||||||||||||||
| Cash and cash equivalents | 203,883 | 127,726 | 179,381 | 167,550 | 217,553 | 166,015 | 392,043 | ||||||||||||||
| Goodwill and other intangibles, net | 399,080 | 401,212 | 403,243 | 363,211 | 337,289 | 400,140 | 337,988 | ||||||||||||||
| Total assets | 8,228,600 | 8,570,623 | 8,688,741 | 7,856,131 | 7,273,219 | 8,398,667 | 7,395,747 | ||||||||||||||
| Deposits | 6,941,037 | 7,060,262 | 7,222,415 | 6,643,247 | 6,188,044 | 7,000,320 | 6,289,729 | ||||||||||||||
| Interest-bearing liabilities | 5,212,285 | 5,391,107 | 5,262,278 | 4,730,209 | 4,425,450 | 5,301,202 | 4,553,968 | ||||||||||||||
| Stockholders’ equity (common) | 967,142 | 970,108 | 954,970 | 890,205 | 837,975 | 968,617 | 849,582 | ||||||||||||||
| Selected Ratios: (1) | |||||||||||||||||||||
| Book value per common share | $ | 66.42 | $ | 65.44 | $ | 66.20 | $ | 63.96 | $ | 62.61 | $ | 66.42 | $ | 62.61 | |||||||
| Tangible book value per common share (2) | $ | 39.37 | $ | 38.20 | $ | 38.81 | $ | 36.21 | $ | 37.49 | $ | 39.37 | $ | 37.49 | |||||||
| Return on average assets | 1.10 | % | (0.42) | % | 1.26 | % | 0.93 | % | 1.32 | % | 0.33 | % | 1.31 | % | |||||||
| Return on average common equity | 9.37 | (3.72) | 11.47 | 8.25 | 11.48 | 2.85 | 11.43 | ||||||||||||||
| Return on average tangible common equity (2) | 15.95 | (6.34) | 19.85 | 13.93 | 19.21 | 4.86 | 18.98 | ||||||||||||||
| Average equity to average assets | 11.75 | 11.32 | 10.99 | 11.33 | 11.52 | 11.53 | 11.49 | ||||||||||||||
| Stockholders’ equity to assets | 11.53 | 11.74 | 11.10 | 10.55 | 11.39 | 11.53 | 11.39 | ||||||||||||||
| Tangible common equity to tangible assets (2) | 7.17 | 7.21 | 6.82 | 6.26 | 7.15 | 7.17 | 7.15 | ||||||||||||||
| Net interest margin | 3.14 | 2.91 | 3.39 | 3.48 | 3.34 | 3.02 | 3.29 | ||||||||||||||
| Efficiency ratio | 58.60 | 60.69 | 52.79 | 55.62 | 53.74 | 59.63 | 54.16 | ||||||||||||||
| Effective tax rate | 25.85 | 32.01 | 25.60 | 25.43 | 24.88 | 21.21 | 24.55 | ||||||||||||||
| Selected Asset Quality Information: | |||||||||||||||||||||
| Nonaccrual loans | $ | 25,278 | $ | 38,895 | $ | 38,080 | $ | 38,326 | $ | 36,580 | $ | 25,278 | $ | 36,580 | |||||||
| Other real estate owned - closed branches | 958 | 1,347 | 1,347 | 1,506 | 4,378 | 958 | 4,378 | ||||||||||||||
| Other real estate owned | 520 | 628 | 628 | 628 | 628 | 520 | 628 | ||||||||||||||
| Nonperforming assets | $ | 26,756 | $ | 40,870 | $ | 40,055 | $ | 40,460 | $ | 41,586 | $ | 26,756 | $ | 41,586 | |||||||
| Net loan charge-offs (recoveries) | $ | 51 | $ | 167 | $ | 597 | $ | 216 | $ | (149) | $ | 218 | $ | (83) | |||||||
| Allowance for credit losses-loans to loans | 1.01 | % | 1.00 | % | 1.00 | % | 1.01 | % | 1.02 | % | 1.01 | % | 1.02 | % | |||||||
| Net loan charge-offs to average loans (1) | 0.01 | 0.01 | 0.04 | 0.02 | (0.01) | 0.01 | 0.00 | ||||||||||||||
| Nonperforming loans to total loans | 0.41 | 0.62 | 0.62 | 0.64 | 0.73 | 0.41 | 0.73 | ||||||||||||||
| Nonperforming assets to total assets | 0.32 | 0.50 | 0.46 | 0.45 | 0.56 | 0.32 | 0.56 | ||||||||||||||
| Stock Repurchase Information: | |||||||||||||||||||||
| Common stock repurchased (dollars) (3) | $ | 1,519 | $ | — | $ | 786 | $ | — | $ | 6,277 | $ | 1,519 | $ | 60,697 | |||||||
| Common stock repurchased (full shares) (3) | 26,853 | — | 10,000 | — | 67,949 | 26,853 | 661,662 |
(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) | 6/30/2023 | 3/31/2023 | 12/31/2022 | 9/30/2022 | 6/30/2022 | |||||||||||||
| Period End Loan Composition | ||||||||||||||||||
| Commercial & industrial | $ | 1,318,567 | $ | 1,330,052 | $ | 1,304,819 | $ | 1,268,252 | $ | 1,118,360 | ||||||||
| Owner-occupied commercial real estate (“CRE”) | 969,202 | 969,064 | 954,599 | 954,933 | 790,680 | |||||||||||||
| Agricultural | 1,068,999 | 1,065,909 | 1,088,607 | 1,017,498 | 967,192 | |||||||||||||
| Commercial | 3,356,768 | 3,365,025 | 3,348,025 | 3,240,683 | 2,876,232 | |||||||||||||
| CRE investment | 1,108,692 | 1,146,388 | 1,149,949 | 1,132,951 | 818,562 | |||||||||||||
| Construction & land development | 337,389 | 333,370 | 318,600 | 306,446 | 228,575 | |||||||||||||
| Commercial real estate | 1,446,081 | 1,479,758 | 1,468,549 | 1,439,397 | 1,047,137 | |||||||||||||
| Commercial-based loans | 4,802,849 | 4,844,783 | 4,816,574 | 4,680,080 | 3,923,369 | |||||||||||||
| Residential construction | 108,095 | 134,782 | 114,392 | 101,286 | 69,423 | |||||||||||||
| Residential first mortgage | 1,072,609 | 1,014,166 | 1,016,935 | 970,384 | 785,591 | |||||||||||||
| Residential junior mortgage | 184,873 | 177,026 | 177,332 | 176,428 | 148,732 | |||||||||||||
| Residential real estate | 1,365,577 | 1,325,974 | 1,308,659 | 1,248,098 | 1,003,746 | |||||||||||||
| Retail & other | 54,350 | 52,975 | 55,266 | 56,259 | 51,539 | |||||||||||||
| Retail-based loans | 1,419,927 | 1,378,949 | 1,363,925 | 1,304,357 | 1,055,285 | |||||||||||||
| Total loans | $ | 6,222,776 | $ | 6,223,732 | $ | 6,180,499 | $ | 5,984,437 | $ | 4,978,654 | ||||||||
| Period End Deposit Composition | ||||||||||||||||||
| Noninterest-bearing demand | $ | 2,059,939 | $ | 2,094,623 | $ | 2,361,816 | $ | 2,477,507 | $ | 2,045,732 | ||||||||
| Interest-bearing demand | 1,030,919 | 1,138,415 | 1,279,850 | 1,242,961 | 1,230,822 | |||||||||||||
| Money market | 1,835,523 | 1,886,879 | 1,707,619 | 1,769,444 | 1,411,688 | |||||||||||||
| Savings | 821,803 | 865,824 | 931,417 | 939,832 | 858,160 | |||||||||||||
| Time | 1,450,420 | 942,838 | 898,219 | 966,158 | 739,864 | |||||||||||||
| Total deposits | $ | 7,198,604 | $ | 6,928,579 | $ | 7,178,921 | $ | 7,395,902 | $ | 6,286,266 | ||||||||
| Brokered transaction accounts | $ | 173,107 | $ | 233,393 | $ | 252,829 | $ | 252,891 | $ | 265,240 | ||||||||
| Brokered time deposits | 566,405 | 289,181 | 339,066 | 386,101 | 218,198 | |||||||||||||
| Total brokered deposits | $ | 739,512 | $ | 522,574 | $ | 591,895 | $ | 638,992 | $ | 483,438 | ||||||||
| Customer transaction accounts | $ | 5,575,077 | $ | 5,752,348 | $ | 6,027,873 | $ | 6,176,853 | $ | 5,281,162 | ||||||||
| Customer time deposits | 884,015 | 653,657 | 559,153 | 580,057 | 521,666 | |||||||||||||
| Total customer deposits (core) | $ | 6,459,092 | $ | 6,406,005 | $ | 6,587,026 | $ | 6,756,910 | $ | 5,802,828 | ||||||||
| Nicolet Bankshares, Inc. | ||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Net Interest Income and Net Interest Margin Analysis (Unaudited) | ||||||||||||||||||
| For the Three Months Ended | ||||||||||||||||||
| June 30, 2023 | March 31, 2023 | June 30, 2022 | ||||||||||||||||
| Average | Average | Average | Average | Average | Average | |||||||||||||
| (In thousands) | Balance | Interest | Rate | Balance | Interest | Rate | Balance | Interest | Rate | |||||||||
| ASSETS | ||||||||||||||||||
| Total loans (1) (2) | $ | 6,237,757 | $ | 84,132 | 5.35 | % | $ | 6,201,780 | $ | 79,186 | 5.11 | % | $ | 4,838,535 | $ | 52,984 | 4.34 | % |
| Investment securities (2) | 1,068,144 | 6,094 | 2.28 | % | 1,508,535 | 7,246 | 1.93 | % | 1,573,027 | 6,126 | 1.56 | % | ||||||
| Other interest-earning assets | 192,034 | 2,357 | 4.87 | % | 120,275 | 1,536 | 5.11 | % | 168,082 | 790 | 1.87 | % | ||||||
| Total interest-earning assets | 7,497,935 | $ | 92,583 | 4.90 | % | 7,830,590 | $ | 87,968 | 4.49 | % | 6,579,644 | $ | 59,900 | 3.61 | % | |||
| Other assets, net | 730,665 | 740,033 | 693,575 | |||||||||||||||
| Total assets | $ | 8,228,600 | $ | 8,570,623 | $ | 7,273,219 | ||||||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||||||
| Interest-bearing core deposits | $ | 4,278,502 | $ | 22,728 | 2.13 | % | $ | 4,325,340 | $ | 19,587 | 1.84 | % | $ | 3,787,103 | $ | 1,857 | 0.20 | % |
| Brokered deposits | 640,643 | 6,612 | 4.14 | % | 566,282 | 5,350 | 3.83 | % | 423,372 | 553 | 0.52 | % | ||||||
| Total interest-bearing deposits | 4,919,145 | 29,340 | 2.39 | % | 4,891,622 | 24,937 | 2.07 | % | 4,210,475 | 2,410 | 0.23 | % | ||||||
| Wholesale funding | 293,140 | 3,678 | 4.96 | % | 499,485 | 5,718 | 4.58 | % | 214,975 | 2,032 | 3.77 | % | ||||||
| Total interest-bearing liabilities | 5,212,285 | $ | 33,018 | 2.54 | % | 5,391,107 | $ | 30,655 | 2.30 | % | 4,425,450 | $ | 4,442 | 0.40 | % | |||
| Noninterest-bearing demand deposits | 2,021,892 | 2,168,640 | 1,977,569 | |||||||||||||||
| Other liabilities | 27,281 | 40,768 | 32,225 | |||||||||||||||
| Stockholders' equity | 967,142 | 970,108 | 837,975 | |||||||||||||||
| Total liabilities and stockholders' equity | $ | 8,228,600 | $ | 8,570,623 | $ | 7,273,219 | ||||||||||||
| Net interest income and rate spread | $ | 59,565 | 2.36 | % | $ | 57,313 | 2.19 | % | $ | 55,458 | 3.21 | % | ||||||
| Net interest margin | 3.14 | % | 2.91 | % | 3.34 | % | ||||||||||||
| Loan purchase accounting accretion (3) | $ | 1,636 | 0.10 | % | $ | 1,636 | 0.11 | % | $ | 987 | 0.08 | % | ||||||
| For the Six Months Ended | ||||||||||||||||||
| June 30, 2023 | June 30, 2022 | |||||||||||||||||
| Average | Average | Average | Average | |||||||||||||||
| (In thousands) | Balance | Interest | Rate | Balance | Interest | Rate | ||||||||||||
| ASSETS | ||||||||||||||||||
| Total loans (1) (2) | $ | 6,219,868 | $ | 163,318 | 5.23 | % | $ | 4,764,073 | $ | 104,318 | 4.36 | % | ||||||
| Investment securities (2) | 1,287,123 | 13,340 | 2.07 | % | 1,574,319 | 12,284 | 1.56 | % | ||||||||||
| Other interest-earning assets | 156,353 | 3,893 | 4.96 | % | 306,662 | 1,607 | 1.05 | % | ||||||||||
| Total interest-earning assets | 7,663,344 | $ | 180,551 | 4.69 | % | 6,645,054 | $ | 118,209 | 3.54 | % | ||||||||
| Other assets, net | 735,323 | 750,693 | ||||||||||||||||
| Total assets | $ | 8,398,667 | $ | 7,395,747 | ||||||||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||||||
| Interest-bearing core deposits | $ | 4,301,792 | $ | 42,315 | 1.98 | % | $ | 3,897,885 | $ | 3,494 | 0.18 | % | ||||||
| Brokered deposits | 603,668 | 11,962 | 4.00 | % | 441,316 | 1,108 | 0.51 | % | ||||||||||
| Total interest-bearing deposits | 4,905,460 | 54,277 | 2.23 | % | 4,339,201 | 4,602 | 0.21 | % | ||||||||||
| Wholesale funding | 395,742 | 9,396 | 4.72 | % | 214,767 | 3,963 | 3.69 | % | ||||||||||
| Total interest-bearing liabilities | 5,301,202 | $ | 63,673 | 2.42 | % | 4,553,968 | $ | 8,565 | 0.38 | % | ||||||||
| Noninterest-bearing demand deposits | 2,094,860 | 1,950,528 | ||||||||||||||||
| Other liabilities | 33,988 | 41,669 | ||||||||||||||||
| Stockholders' equity | 968,617 | 849,582 | ||||||||||||||||
| Total liabilities and stockholders' equity | $ | 8,398,667 | $ | 7,395,747 | ||||||||||||||
| Net interest income and rate spread | $ | 116,878 | 2.27 | % | $ | 109,644 | 3.16 | % | ||||||||||
| Net interest margin | 3.02 | % | 3.29 | % | ||||||||||||||
| Loan purchase accounting accretion (3) | $ | 3,272 | 0.10 | % | $ | 1,561 | 0.07 | % |
(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 above, and the related impact to net interest margin.
| Nicolet Bankshares, Inc. | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Reconciliation of Non-GAAP Financial Measures (Unaudited) | ||||||||||||||
| At or for the Three Months Ended | At or for the Six Months Ended | |||||||||||||
| (In thousands, except per share data) | 6/30/2023 | 3/31/2023 | 12/31/2022 | 9/30/2022 | 6/30/2022 | 6/30/2023 | 6/30/2022 | |||||||
| Adjusted net income (loss) reconciliation: (1) | ||||||||||||||
| Net income (loss) (GAAP) | $ | 22,595 | $ | (8,898) | $ | 27,601 | $ | 18,510 | $ | 23,985 | $ | 13,697 | $ | 48,149 |
| Adjustments: | ||||||||||||||
| Provision expense (2) | — | 2,340 | — | 8,000 | — | 2,340 | — | |||||||
| Assets (gains) losses, net | 318 | 38,468 | (260) | 46 | (1,603) | 38,786 | (2,916) | |||||||
| Merger-related expense | 26 | 163 | 492 | 519 | 555 | 189 | 653 | |||||||
| Adjustments subtotal | 344 | 40,971 | 232 | 8,565 | (1,048) | 41,315 | (2,263) | |||||||
| Tax on Adjustments (25%) | 86 | 10,243 | 58 | 2,141 | (262) | 10,329 | (566) | |||||||
| Adjustments, net of tax | 258 | 30,728 | 174 | 6,424 | (786) | 30,986 | (1,697) | |||||||
| Core banking operations / Adjusted net income (Non-GAAP) | $ | 22,853 | $ | 21,830 | $ | 27,775 | $ | 24,934 | $ | 23,199 | $ | 44,683 | $ | 46,452 |
| Diluted earnings (loss) per common share: | ||||||||||||||
| Diluted earnings (loss) per common share (GAAP) | $ | 1.51 | $ | (0.61) | $ | 1.83 | $ | 1.29 | $ | 1.73 | $ | 0.91 | $ | 3.43 |
| Adjusted Diluted earnings per common share (Non-GAAP) | $ | 1.53 | $ | 1.45 | $ | 1.84 | $ | 1.74 | $ | 1.67 | $ | 2.98 | $ | 3.31 |
| Tangible assets: (3) | ||||||||||||||
| Total assets | $ | 8,482,628 | $ | 8,192,354 | $ | 8,763,969 | $ | 8,895,916 | $ | 7,370,252 | ||||
| Goodwill and other intangibles, net | 398,194 | 400,277 | 402,438 | 407,117 | 336,721 | |||||||||
| Tangible assets | $ | 8,084,434 | $ | 7,792,077 | $ | 8,361,531 | $ | 8,488,799 | $ | 7,033,531 | ||||
| Tangible common equity: (3) | ||||||||||||||
| Stockholders’ equity (common) | $ | 977,638 | $ | 961,792 | $ | 972,529 | $ | 938,463 | $ | 839,387 | ||||
| Goodwill and other intangibles, net | 398,194 | 400,277 | 402,438 | 407,117 | 336,721 | |||||||||
| Tangible common equity | $ | 579,444 | $ | 561,515 | $ | 570,091 | $ | 531,346 | $ | 502,666 | ||||
| Tangible average common equity: (3) | ||||||||||||||
| Average stockholders’ equity (common) | $ | 967,142 | $ | 970,108 | $ | 954,970 | $ | 890,205 | $ | 837,975 | $ | 968,617 | $ | 849,582 |
| Average goodwill and other intangibles, net | 399,080 | 401,212 | 403,243 | 363,211 | 337,289 | 400,140 | 337,988 | |||||||
| Average tangible common equity | $ | 568,062 | $ | 568,896 | $ | 551,727 | $ | 526,994 | $ | 500,686 | $ | 568,477 | $ | 511,594 |
Note: Numbers may not sum due to rounding.
(1)The adjusted net income or core banking operations 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 our investment in Signature Bank sub debt, and the provision expense for 2022 is attributable to the Day 2 allowance from the acquisition of Charter Bankshares, Inc.
(3)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.
10