Conference Transcript - NIC 2025-10-24

Operator

Thank you for standing by. My name is Van, and I will be your conference operator today. At this time, I would like to welcome everyone to Nikolay BankShares, Inc. merger conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like a question during this time, simply press star, followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. I would now like to turn the call over to Mike Daniels, co-founder, chairman, president, and CEO. Just go ahead.

Mike Daniels, CEO

Thank you and good morning to everyone for joining us today to discuss Nicolet Bankshare's acquisition of Midwest One Financial Group. My name is Mike Daniels and I'm co-founder, chairman, president, and CEO of Nicolet. Also joining me on today's call from Nicolet are Phil Moore, our chief financial officer, Brad Hutchins, executive vice president, Chief Credit and Risk Manager. In addition, Chip Reeves, CEO, and Barry Ray, CFO of Midwest One, are on the call with us. After market close yesterday, we issued a joint press release announcing Nicolet's agreement to acquire Midwest One Financial Group. We've also provided an investor presentation that can be accessed either on the investor relations section of our website or as part of our 8K filing on this announcement. I would like to start off by saying how excited I am to announce this partnership with Midwest One. As you know, Midwest One is a strong growing and well-run community bank headquartered in Iowa City, Iowa, with 57 locations throughout Eastern and Central Iowa, the Twin Cities, parts of Wisconsin, and Denver. As of September 30th, 2025, it had $6.2 billion in assets and adds over $3.4 billion in assets under management to the combined franchise. Page 7 of the investor presentation provides an overview of Midwest One and the markets it serves. Before we discuss the details of the transaction, I want to take a step back to where Nicolet was after our last acquisition in mid-2022. We had then completed three acquisitions in 18 months and had doubled the size of our balance sheet. Shortly thereafter, interest rates began to increase sharply and quickly, and within six months, everyone was questioning the viability of community banking following a few high-profile regional bank failures. This period shined a light on unrealized losses in the vast majority of banks' investment portfolio. While this period impacted Nicolet as well, we were one of the very first banks to reposition our balance sheet in the first quarter of 2023. We recognized then that to get back to the business of being who Nicolet truly was, a growing, highly profitable community bank, we needed to act quickly, which we did by selling $500 million of U.S. Treasuries. That action, coupled with paying down higher cost funding, positioned Nicolet in the best way possible. At the time, I said that this move was consistent with Nikolay's long-term thinking mindset and that it should quickly get us back to our position of producing top quartile shareholder profitability metrics. I even spoke to the Wall Street Journal about this. While we did not know this at the time, we ended up being right. The repositioning resulted in 10 straight quarters of improving or holding our net interest margin and 10 quarters producing an ROAA and ROATCE that placed us in the top quartile, if not top decile, of publicly traded community banks. Also during this period, we took a pause from M&A to integrate our past acquisitions and prepare for the next challenge of crossing $10 billion in assets thresholds. Granted, the market helped with that pause as bankers were trying to understand how to deal with unrealized losses, as well as the volatility in the markets. However, knowing our balance sheet was rock solid and we were on an upward trajectory, we were able to integrate these banks into our culture, as well as make a number of investments to prepare us for the next acquisition that would likely bring us over the $10 billion mark. During this period, a number of you would ask us about our M&A strategy, knowing it wasn't a matter of if, but when. We were consistent in our message that we wanted to be very intentional about the next bank we partnered with. We were not looking to acquire to just get bigger, but we wanted to find a bank that also made Nicolet better, while also providing us with the needed scale to offset some of the costs and revenue hurdles that came with passing the $10 billion mark. At the same time, we didn't want to use our currency just because we could, and as many investment bankers reminded us of. Investors have long rewarded Nicolet with a well-earned premium valuation compared to many of our peers. This premium is the result of top quartiles, top decile profitability, consistent asset quality, and a core funded and transparent balance sheet. Our shareholders earned this premium and we were not going to just give it away for the sake of doing the deal. I am pleased to say that our collective patience has paid off and we are thrilled to partner with the team at Midwest One. I got to know Chip Reeve shortly after he became CEO three years ago. We have stayed in contact since then, often seen each other at conferences and events. As many of you know, Midwest One had many of the same challenges that banks around the country had in that they had a robust investment portfolio that had significant unrealized losses, which was dragging on margins, profitability, and ultimately their stock valuation. I applaud Midwest One's board of directors, Chip, Len, and Barry, and the entire Midwest One team for steering the company through this period and making a difficult decision a year ago to raise the necessary equity to then reposition the balance sheet. As you saw over the past several quarters, this action vastly improved Midwest One's profitability, and we believe they are in the upward swing going forward. What you have now are two banks with very complementary and transparent balance sheets that, when combined, will be positioned to be one of the largest and most profitable community banks, headquartered in the Upper Midwest. Page 12 of the investor deck shows our loan and deposit portfolios side by side. You will notice very little difference between the two. What you see combined is a diversified loan portfolio and a core-funded deposit base. The combined loan-to-deposit ratio of 85% allows us to continue to focus on organic growth while we integrate the two banks and cultures. It also positions us well for future M&A going forward. As you can also see from the investor presentation, the deal is financially attractive to both shareholders of Nicolet and Midwest One. From Nicolet's standpoint, the pricing aligns with past acquisitions we have completed. It offers full-year, fully phased-in EPS accretion of approximately 35% to 40%, and is only slightly dilutive to our tangible book value per share, resulting in a negligible earn-back period. Additionally, the pro forma company is expected to produce peer-leading profitability metrics, as you can see on page 10. While there is significant accretion math in those figures, I expect combined core profitability of the company to keep us well within the top quartile of publicly traded banks that we've been accustomed to being part of on a quarterly basis. While our 2026 expectations do not account for the impact of Durbin, which is estimated at roughly $8.5 million, future expectations only assume 25% cost savings, a number that we think is conservative by industry standards. Likewise, we do not model any revenue synergies, yet have identified several, including throughout Wealth, Commercial, and Ag. Midwest One will double our branch footprint and bring us into eastern and central Iowa. The markets of Iowa City, Dubuque, and Muscatine are all markets we have a number one or number two deposit share position, are very similar to our current markets like Green Bay, Eau Claire, Appleton, and Marquette, Michigan. They're all vibrant markets with growth potential, but also markets where we can easily matter and something that is at the foundation of why we exist. Now, some of you may question the position in the Twin Cities, as to date, we have largely avoided larger metropolitan markets. However, we have always stated we wanted to be in markets where we can matter, and that we struggle to enter larger metro markets without a sizable acquisition that would allow us to matter. Well, Midwest One does that in the Twin Cities. With over $1.2 billion in loans and deposits and 15 branches, we have the perfect opportunity to matter in the Twin Cities. Now there is plenty of room for growth in that market and M&A may play a part of that growth. But in the short term, we are excited to introduce the Twin Cities to community banking the Nicolet Way. Denver also presents an opportunity and remains one of the fastest growing markets in our footprint. Mattering in Denver will require additional scale, and it is something we have talked with the Midwest One team about and are excited to evaluate going forward. Let me highlight our diligence process, as page 13 of the investor deck has much more details about that process. As we have been in one-off negotiations with Midwest One for the past couple of months, we have been able to complete a comprehensive and exhaustive due diligence process. Specifically as it relates to our credit diligence, we reviewed in excess of 70 percent of the commercial and ag credits, including over 95 percent of criticized and watched balances. As a reminder, we do all our own credit diligence during this process, and as such, we do tend to be tougher graders on credits we didn't originate. Lastly, I want to touch on our integration plan, as it will deviate from what we have done in past acquisitions. In the past, we closed and converted all systems the same weekend. This allowed us to achieve cost savings much quicker, as well as begin the cultural integration from the start. Given the timing and size of this merger, we expect to follow the script of most other companies. At this point, we are targeting a legal closing in the first half of 2026, followed by a systems conversion during the summer or early fall. As a result, we have only modeled 50% of the cost savings in 2026. In closing, I want to emphasize how excited I am by this partnership. I have gotten to know Chip, Len, and Barry, and several other members of the Midwest One team and board over the past months. From the start, our discussions have been collaborative and transparent, and both sides have kept employees, customers, and shareholders in mind with their actions. There are many cultural similarities between us that allow me to believe Nicolet Bank's shared success model that is built on the mutual benefit of its three core groups, customers, employees, and shareholders will continue going forward. I'd now like to turn it over to Phil Moore, our CFO, to share some thoughts on the deal metrics. Phil?

Phil Moore, CFO

Thank you, Mike. I echo your sentiment and excitement for this merger. Let me highlight a few of the financial metrics of the transaction as well as the forecasted financial results based on current analyst estimates. The transaction structure can be found on page six of the investor presentation. Midwest One shareholders will receive 0.3175 shares of Nicolet for each share of Midwest One in this all-stock transaction. Based on Nikolay's Wednesday's closing price of $130.31, the implied per-share purchase price is $41.37 for the total transaction value of approximately $864 million when you include Midwest One's outstanding shares and restricted stock that will fully vest. The purchase price is approximately 166% of tangible book value and an 11.5 times our Midwest One's consensus estimated earnings per share for 2026. And while the one-day stock premium appears high by comparable standards, I should point out that the pay-to-trade ratio of roughly 0.71 is among the lowest of transactions this size over the past several years and is also consistent with the handful of past transactions reflecting Nicolet's premium valued currency. We believe the pro forma financial metrics are compelling to our existing shareholders. As noted on page 9 of the investor deck, on a pro forma basis for 2026, we are modeling fully phased in EPS accretion of 37%. There is very minimal dilution to our tangible book value and as such, the earn back period is largely negligible. This includes all merger related charges. Clearly, the pro forma earnings include significant accretion from the interest rate marks that will be amortized over the next few years. However, we still anticipate core EPS accretion in the high single digits, which excludes the accretion map. On a pro forma basis as it stands today, Nicolet shareholders will own approximately 70% of the combined company, with Midwest One shareholders owning the remaining 30%. We expect the combined company to have a higher percentage of institutional ownership and believe all shareholders will benefit from greater liquidity and our stock going forward. Let me quickly address some of the significant financial modeling assumptions that you'll find on page 16. We are modeling approximately $38 million of pre-tax cost savings, or roughly 25% of Midwest One's core non-interest expenses, with 50% of that being realized in 2026, given the likely later integration date. We are expecting deal-related costs of approximately $60 million on a pre-tax basis, which include many larger ticket items like change of control contracts, contract cancellation costs, and professional fees. We expect to take a 1.65% all-in credit mark on Midwest One's loan portfolio and exclude the CECL double count that was eliminated by FASB earlier this year. Our other fair value marks include a $125 million interest rate mark to the loan portfolio that we will accrete back into earnings over two and a quarter years, 73 million in unrealized available for sale investment loss portfolio already accounted for in equity to be accreted over three and a half years, and approximately nine million in interest rate marks on funding liabilities amortized over the remaining lives of those instruments. Finally, as Mike mentioned, we estimate an eight and a half million dollar or negative impact to our interchange income going forward beginning in 2027, as a result of crossing the $10 billion threshold. Approximately 80% of additional expenses associated with crossing the 10 billion threshold are already included in our core expense run as we've been preparing for this transition. So we don't believe we have any remaining significant investments to prepare to make that hurdle. Finally, let me address capital. Our pro forma CET1 ratio is forecasted to be 10.5%, with a TCE ratio of 8.4% at closing. Our strong earnings on a standalone and pro forma basis allows Nicolet to grow its capital quickly, so there will not be any need to raise subordinated debt or equity as part of this transaction. However, we are evaluating our options given the excess liquidity the combined company will likely have and may use that to pay down some higher funding costs, thus shrinking the balance sheet and nominally boosting our capital ratios. With that, now let me turn it over to Chip Reeves for some remarks.

Chip Reeves, CEO

Thank you, Phil and Mike. First, I want to thank and express my extreme gratitude to our Midwest One team for their commitment to our customers, to one another, and to getting better these last few years. You transformed our organization for the good while maintaining our award-winning culture. And on behalf of our team, we are extremely excited to be joining Nicolay Bank. As Mike mentioned, we've known one another for three years, and we and our organizations share similar mindsets and values. We both have an extreme focus on team and customer as we create shared success, and we both absolutely abhor mediocrity. It's rare to have two organizations, both in an upward performance trajectory, come together. Well, that's what we have here today, and we cannot wait to help build the combined Nicolet into the best mid-sized bank in the upper Midwest. We look forward to making that a reality for our team, our customers, and the communities that Midwest One has served so well for decades.

Mike Daniels, CEO

Thank you, Jim. As you can tell, we are all thrilled about this combination and what the future holds. We pride ourselves in our long track record of seamless and timely closings and integrations and fully expect the same experience with Midwest One. Our plan is to continue to remain opportunistic yet disciplined when it comes to future M&A. Both legacy Nicolet and Midwest One shareholders can rest assured that we don't take your investment in our company for granted. Our combined board and management team remain committed to keeping Nicolet, who it always has been. A strong, growing community bank that matters to its employees, customers, and shareholders. That concludes our prepared remarks and now we welcome your questions at this time.

Operator

At this time, I would like to remind everyone in order to ask a question, press star then the number one on your telephone keypad.

Brendan Nozel, Analyst — Hovde Group

Your first question comes from the line of brendan nozel from hovde group llc please go ahead hey good morning everybody hope you're doing well good morning um maybe just to start off your mic one for you um i think over the years i've probably lost the account of the number of times you've said the words lead local to me and how nicholas the matter in your communities um you know it sounds like for the twin cities uh there's a definitive commitment there um denver sounds like it's a little bit more up in the air um maybe just unpack your thoughts on Denver a little bit and how you evaluate, you know, the potential investment needed there versus maybe stepping back from that market?

Mike Daniels, CEO

I think it's the second inning of a baseball game. I look forward to looking at it. Don't really have a lot to unpack there yet, but what I can tell you is consistency matters and lead local matters and mattering matters and i look forward to looking at all of that but i i i don't have by any means at this time a set a set direction or expectation other than um what has been the consistent theme as you mentioned to our history okay no that's fair um maybe turning to you know a little more conceptually just the idea of culture um i think this is the the first uh time you've done a deal where you have to hop on a plane to visit the markets that you're acquiring and getting into.

Brendan Nozel, Analyst — Hovde Group

How do you guys go about maintaining your culture, let alone, you know, export it to some extent to places like Iowa City, Des Moines, and the Twin Cities, just given that increased distance?

Mike Daniels, CEO

It's five hours and 15 minutes by car to Iowa City. It's about three and a half hours to Minneapolis, Minneapolis, maybe four by car, but yeah, you can get there via airplane too. I think as in every deal, right? I mean, it's a long way to Sault Ste. Marie, Michigan and Traverse City. There was a big pond in the way when we did that. So it's intentionality and transparency and all we do in our communication, right? And it's at every level of the organization. It's a commitment as to why we show up across the footprint, wherever that footprint is, every day, to matter to customers, matter to community, matter to one another, and create that shared success, which our belief has been, if we do that exceptionally well, we'll produce top quartile, if not top decile, shareholder results and performance. And we've proven that thesis over the years over our history and continue to do it again but it requires intentionality right but more than words it has to be seen in our actions but as with anything we've done that is as big as the systems part um a critical piece of the integration um having people understand uh what that means and living that i think the two cultures align in certain ways but you know and never are two cultures exactly the same um but i think we have a really good start basis to start from and how they approach relationship banking and mattering in the markets in which they operate all right thanks um i'm going to sneak one more in there.

Brendan Nozel, Analyst — Hovde Group

Just back to, Nicolet, your own results for the quarter, which were quite strong. I think margin expansion was a big driver of this quarter's strength. Can you just offer a little color on how you expect your core margin to behave over the next few quarters with coming rate cuts in store before we layer on the impacts of the Midwest one?

Mike Daniels, CEO

Sure. I think when we talked at the end of the second quarter you know my thought was we we uh we expected given our back book repricing and and uh our deposit uh our deposit positioning to uh to continue to go up um i didn't see 14 basis points uh for the quarter but um we had uh we had really nice deposit growth, back-end repricing was solid. That got us there. There's no real additional accretion from anything in there. That's a pretty solid core level. With a couple of rate cuts, and we're hoping to stay flat. We might give a bit or two back here at year end, And then it'd be, you know, shampoo effect, Brandon. I think the typical margin movement we have seen over the last couple years, you know, depending on the deposit outflow in the first quarter and what that looks like year over year. this year it wasn't as bad so uh our margin our our margin uh uh was stronger and held in there but i don't expect i i i definitely don't expect us to give a lot of ground back um you know new asset uh generation remains solid um but um i i definitely think you know a win for us is to try to deliver a fairly flat margin in the fourth quarter fantastic i appreciate you guys taking my questions.

Operator

Our next question comes from the line of Gary McEvoy from Stevens. Please go ahead.

Gary McEvoy, Analyst — Stevens

Hi, good morning. First off, Mike, congrats to you and your team and same to you, Chip. And thanks for addressing the questions on culture. That topic definitely came through your earnings release last night. A couple of questions, maybe the first one on the MOFG side, there's been an upgrade of talent uh within commercial banking private banking and i'm sure others could you just talk about retention of some of those new hires and then midwest has also invested in digital um any of those tech or digital upgrades kind of complement uh nicolay going forward um and then the last one there any lines of business um kind of specialty lending businesses come to mind any of those maybe don't complement nicolay um on a pro forma basis Yeah, you know, I mean, I'll jump on that, and Chip can jump in.

Mike Daniels, CEO

I think, you know, retention of people is key. The lack of overlap definitely helps in that matter. um so i would i would expect us to uh i don't know if you're here and on the revenue side given given the opportunity on on what this this combination provides why you wouldn't want to be a part of it um but we're very focused on that both both on the uh uh nicolay and midwest one side uh talent is the key um that's uh that's the first one the second one i think the um the technology uh you know the improvements they've made are areas that we are we're just looking at so the the ability to look at those and see how those marry up it uh are part of the uh are part of the integration process and plan uh the teams have already started looking at you know i mean there there are more like vendors than unlike vendors uh in in providers in in this deal that uh uh that are being looked at in examined so i i don't think there's a lot of upheaval or disruption there it it it it feels good um what was the fourth one was the third one Terry, business lines? I mean, I think both companies are fairly chocolate and vanilla, right? I mean, we do common things uncommonly well across our footprint. So there's no national, real national line of business that either of us do. We do things that matter in the markets we serve and take advantage of the opportunities in those markets to bring a relationship banking focus so uh uh you know i don't expect any major uh any major changes there i think i i i think the approach to cni lending and relationship banking regardless of the asset class is first and foremost right it's and you've heard me say all of you've heard me say time and time again it's not about the loan it's about the relationship We don't make loans. We invest in relationships, regardless of the asset class or what we do. And I expect that message to carry the day and carry through in the combined company. I don't know, Chip, if you want to jump in and add anything to those.

Gary McEvoy, Analyst — Stevens

I articulated well, Mike. Thanks, Mike. And maybe a quick one for Phil. When I pull up the call reports, I see $25 million of pre-tax interchange revenue over the last year. it and that's at both banks um just so i'm clear that eight and a half million of pre-tax urban impact hey that's both companies and that's the non-credit card interchange revenue part that i'm unable as an outsider to separate that is correct terry and that is the the reason that your number might have thought differently at first but that is correct okay perfect All right.

Phil Moore, CFO

Thanks for taking my question. Get back into the math there.

Gary McEvoy, Analyst — Stevens

I'll do just that. Thanks. Thanks for taking my questions.

Operator

Good to talk to you. Our next question comes from the line of Nathan Reyes from Viper Sandler. Please go ahead.

Nathan Reyes, Analyst — Piper Sandler

Hey, guys. Good morning. Thanks for taking the questions, and congrats on the deal as well. Mike, going back to your comments around the Twin Cities, obviously, Midwest One has invested in some production talent, just given some of the M&A relay disruption within that market recently. You know, curious, you know, to what extent, you know, you can accelerate some opportunities to, you know, gain market share in the Twin Cities by deploying, you know, the model that's obviously been really successful in Green Bay over the last two and a half decades or so at your franchise and just how you see the overall kind of organic growth of the company trending on a combined basis. yeah i think um i look for i i look forward to that and think that's the opportunity right um but as i as i said uh earlier in the context of how we how we do it how we look at the world

Mike Daniels, CEO

relationship relationship based what's the opportunity what's the depth of relationship how can we matter i think that we can and will i think um the the talent that big west one has been able to add you know across its footprint um things that way um so i look i i look forward to that okay i look forward to hearing from them and and and and the teams as they pull it together to say this is what this is what we think we could do and you know as you know the primary and driving focus from a commercial standpoint is always on CNI. If it's CRE, it has to be relationship-based. Transactions don't work. Not a fan of them. We never have been. But where there's a relationship, we want to matter and will. So I think the two align nicely and look forward to um what we can do across the footprint right not not just there uh throughout throughout iowa denver and the minnesota marketplace gotcha as well as continue to do what we do in wisconsin and michigan understood makes sense and then is there any anticipation that some of the cost saves from the integration could be reinvested in some production hires whether it's in you know the twin cities denver and some of the iowa msa's that you'll be adding or do you feel pretty good about some of the uh production capabilities that are coming over from mofg i feel i feel really good where we are right i think i i i think we're positioned well i think we i think that you know i i mean we we didn't want to come in with some big hairy cost save number that made the deal look. We did things in typical Nicolet fashion, as real as they can be transparent, but I feel good about the talent across the footprint and the leadership delivering that talent and have high expectations as I do for, you know, our legacy, our legacy revenue and relationship people.

Nathan Reyes, Analyst — Piper Sandler

Gotcha. And if I could just sneak one last one in, obviously, you know, it's a pretty big integration you're adding you know one of the biggest retail franchises um that you have in your previous deals and you know the nicolay brand probably isn't too well known across iowa um so just curious if there's any changes or differences in kind of your uh integration playbook as you look forward in terms of how to integrate uh mofg and just ensure kind of seamless retention across the deposit franchise in iowa yeah i think you know i think i i as with everything you know i think that's that's people focus that's people delivery right there's there's

Mike Daniels, CEO

not a lot of overlap um but you know the matter to customer matter to community matter to one another and shared success environment nate only works if it's real and it's got to be real on the street so the the introduction and retention about shared success has got to be delivered by the folks in the markets uh you know i know you've heard me say there's not much i can do from green bay wisconsin to make us matter in the footprint if our people don't believe that they matter and that they can't prove that out the relationships and in the communities um i i i think I think it's very solid across you know the Nicolet legacy footprint as well as the MOFG

Damon DeMonte, Analyst — KBW

footprint and I fully expect this challenge to the people I expect them to carry the day on the relationship because that's what matters okay great I appreciate all the color congrats again guys thank you thanks Dave our last question comes from the line of Damon DeMonte from KBW please go ahead hey good morning guys and uh congrats on a very exciting announcement for for both organizations um just wondering mike you know are there any like products or services um either on the nicolay side or the uh the midwest one side where you see opportunity to leverage the expertise from one side or the other to to create greater synergies you know i mean

Mike Daniels, CEO

the revenue enhancement, the largest opportunity might be across the wealth book and across the customer base. We do, as you know, employee benefits are part of our makeup. And across the Midwest One platform, they don't have that offering. We look forward to bringing that to the customer base, the CNI customer base, and enhancing that rollout. That's, you know, million dollars under management i think there's a tremendous amount of of of upside but i think both companies do common things uncommonly well right i mean it's it's relationship banking and relationship focus at its finest how can we matter across a whole wealth of revenue lines to each uh uh each customer and in each community so um you know i don't know that there's any special special sauce other than what both companies do really well and then show up get after it matter in their markets and deliver you know top-notch relationship-based service with the customer always the focus and making the and mattering in the markets and the customers understand that and look at it in the same lens of shared success that you know business is personal It is personal to our customers. We know that, so it's personal to us.

Damon DeMonte, Analyst — KBW

And then could you just go back to your comment from a previous question on the Denver part of the footprint? Were you saying that you're evaluating the strategy there? Like you're going to maybe look to invest more in a way of like de novo or potentially future M&A, or is this an area that you may ultimately decide is not the best fit for the footprint? I didn't quite hear what was said there.

Mike Daniels, CEO

That's exactly what I said. All of those things, right? I mean, what I said maybe in a convoluted way is I don't know, and I look forward to looking at it. I think it's an exciting market, and we just got to look at how it fits in, right? I mean, you know, probably the biggest thing that can't get lost because everyone gets all excited is you know uh first and foremost relative to the customers and communities showing up and getting after it mattering but secondly you know i mean i mean what it means uh to the shareholders we are always going to look at this from the lens of the shareholder right i mean it's i know it's not lost on you damon that we're still a founder driven organization and it's still you know 95 percent of my of my of my family's worth and wealth so everything we do and every way we look at it on both sides is through the lens of the shareholder and what is the best course of action and you know i think some of that's part of the reason we don't let medium slip in our conversations, right? We expect top quartile, top decile, and we expect to deliver that as a result of the reason and why we show up every day and what we do. And, you know, the reason isn't to produce the shareholder results. That's our responsibility. The reasons to matter in the markets, and as a result of the depth of that, we will deliver those top quartiles, if not decile results to the shareholders, because it matters, and we understand that. So, you know, we'll always look at every opportunity in the lens of the three circles. And as you know, we want those circles to have as much overlap as possible, but it's not bigger. Bigger isn't better. Better is better.

Damon DeMonte, Analyst — KBW

And we'll always look at what better means. got it okay and then just lastly just from a modeling standpoint i i believe the slide deck to the illustrative example there was a 331 that that's reasonable for us to assume in our in our our models when we go to layer in the transaction yeah red jacks tell me yes yeah okay got to be right then okay great um that that's all that i had uh thank you very much for oh i mean i i mean we're gonna you know we're kind of vague there but i mean you know us we're gonna i mean we're

Mike Daniels, CEO

gonna do things the nicolet way and try to get this thing to rocking and rolling uh uh to the extent we can and and but we we also understand we're not in control of everything but i mean the goal the goal is that damon is to get is to get it closed on it okay great um okay that's all that I had.

Damon DeMonte, Analyst — KBW

Thanks a lot. Appreciate it.

Mike Daniels, CEO

You got it.

Operator

I will now turn the call back over to Mike for closing remarks.

Mike Daniels, CEO

Thank you. I appreciate everyone who attended the call today and can't tell you how we look forward to bringing these two companies together and the success that I think it provides across our footprint. As I just finished saying, the focus on the three circles of customers, employees, and shareholders in the overlap in the shared success environment. It sounds simple, yet it takes focus and commitment to make happen. And I think our track record speaks well for what we've been able to do. But our expectation at the end of the day is this combined entity will be a top quartile at South South performing company delivering exceptional shareholder returns. Hopefully you've seen it if you've been a Nicolet shareholder over the past 10 quarters as to where we're headed. There is absolutely that expectation that that will happen here again. We don't take the work involved for granted. We don't take the cultural integration or the systems integration for granted. But we will get after it. And we appreciate your investment. We take it seriously. And if there's ever any questions or additional follow-up, please reach out on behalf of Chip and Barry and their entire organization, as well as Nicolay. Thank you for being part of the call and we look forward to talking to you more.

Operator

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.