Nicolet Bankshares, Inc. Announces 2023 Results

• Net income of $31 million or adjusted net income (non-GAAP) of $28 million for fourth quarter 2023, compared to net income of $17 million or adjusted net income (non-GAAP) of $23 million in prior quarter, and net income of $28 million or adjusted net income (non-GAAP) of $28 million for fourth quarter 2022
• Net income of $62 million and adjusted net income (non-GAAP) of $101 million for 2023, compared to $94 million and adjusted net income (non-GAAP) of $99 million for 2022, significantly impacted by first quarter balance sheet repositioning
• Quarterly net interest margin of 3.30%, an increase of 14 bps over third quarter
• Solid quarter-over-quarter loan growth of $115 million (2%)
• Tangible common equity ratio increased to 7.98% at year-end 2023

GREEN BAY, Wis.--(BUSINESS WIRE)--Nicolet Bankshares, Inc. (NYSE: NIC) (“Nicolet”) announced fourth quarter 2023 net income of $31 million and earnings per diluted common share of $2.02, compared to net income of $17 million and earnings per diluted common share of $1.14 for third quarter 2023, and net income of $28 million and earnings per diluted common share of $1.83 for fourth quarter 2022. Net income for the year ended December 31, 2023 was $62 million and earnings per diluted common share of $4.08, compared to net income of $94 million and earnings per diluted common share of $6.56 for the year ended December 31, 2022.

Net income reflected certain non-core items and the related tax effect of each, including the first quarter U.S. Treasury securities sale loss, the change in Wisconsin state tax law that impacted the third quarter, expected loss (provision expense) on a bank subordinated debt investment, a fourth quarter early contract termination charge, 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 positively impacted earnings per diluted common share $0.17 for fourth quarter 2023, compared to a negative impact of $0.40 for third quarter 2023, and $0.01 for fourth quarter 2022. For the year ended December 31, 2023, these non-core items negatively impacted earnings per diluted common share $2.64, and negatively impacted earnings per diluted common share $0.34 for full year 2022.

“I’m pleased to say Nicolet produced the highest quarterly core net income in our 23-year history,” said Mike Daniels, Chairman, President and CEO of Nicolet. “The actions we took this year to position Nicolet for long-term success came to fruition as the year ended. We saw strong loan growth, solid growth in fee income, resilience in our credit quality, and a continued increase in net interest margin.”

Daniels continued, “2023 was not the year we thought it would be, but we certainly made the most of the year it became. Our employees continue to shine during macroeconomic uncertainty, which shows in the fact that we grew organically in all three main revenue areas (commercial, retail, and wealth). Our value proposition and entrepreneurial spirit continue to resonate in the communities we serve. The proactive balance sheet repositioning at the beginning of the year produced the results we thought it would, as we have a clean balance sheet and a rising net interest margin. The results we saw at the end of this year give us confidence that we are well positioned to maintain our momentum into 2024. Lastly, I’d be remiss to not thank my co-founder, Bob Atwell, for his contributions to Nicolet over the past 23 years. While his transition from Chairman is complete, we look forward to his ongoing commitment and energy as a Board member to this organization.”

Nicolet’s 2023 results were impacted by the Wisconsin State Budget signed in July 2023 and retroactive to January 1, 2023, which included language that provides financial institutions with an exemption from state taxable income for interest, fees, and penalties earned on loans to existing Wisconsin-based business or agriculture purpose loans that are $5 million or less in balance on January 1, 2023, and to new loans that meet the criteria. The impact of this tax law change to Nicolet moving forward will be a reduction / elimination of State income taxes being expensed, resulting in an estimated effective tax rate of 19.5% (compared to a 25% effective tax rate previously). However, the elimination of State income tax expense also required a valuation allowance to be established for the State-related deferred tax asset as of the effective date of the legislation, and a one-time $9.1 million charge to state income tax expense was recognized in third quarter to establish this valuation allowance.

Nicolet’s financial performance and certain balance sheet line items also 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 December 31, 2023, period end assets were $8.5 billion, an increase of $53 million (1%) from September 30, 2023, mostly growth in loans, partly offset by lower cash balances. Total loans increased $115 million (2%) from September 30, 2023, with growth in agricultural, commercial and industrial, and residential real estate loans. Total deposits of $7.2 billion at December 31, 2023, increased slightly ($15 million) from September 30, 2023. Total borrowings declined $31 million due to the early redemption of one subordinated note issuance. Total capital was $1.0 billion at December 31, 2023, an increase of $65 million over September 30, 2023, with earnings and favorable market valuations on available for sale securities, partly offset by the quarterly common stock dividend.

Asset Quality

Nonperforming assets were $28 million and represented 0.33% of total assets at December 31, 2023, compared to $32 million or 0.37% at September 30, 2023, and $40 million or 0.46% at December 31, 2022. The allowance for credit losses-loans was $64 million and represented 1.00% of total loans at December 31, 2023, compared to $63 million (or 1.01% of total loans) at September 30, 2023, and $62 million (or 1.00% of total loans) at December 31, 2022. Asset quality trends remain solid and loan net charge-offs were negligible.

Income Statement Review - Year

Net income was $62 million and adjusted net income (non-GAAP) was $101 million for the year ended December 31, 2023, compared to net income of $94 million and adjusted net income (non-GAAP) was $99 million for the year ended December 31, 2022.

Net interest income was $242 million for the year ended December 31, 2023, up $2 million from the year ended December 31, 2022, the net of $109 million higher interest income and $107 million higher interest expense. The higher interest income was largely attributable to the repricing of new and renewed loans in a rising interest rate environment, as well as the reinvestment of security sales and maturities (mostly U.S. Treasury securities) into investable cash balances at higher rates. The increase in interest expense was due to both higher average balances and higher average rates, reflecting the rising interest rate environment as well as a shift to higher rate deposit products. The net interest margin for 2023 was 3.18%, down 22 bps from 3.40% for 2022. The yield on interest-earning assets increased 114 bps (to 5.02%) due to the rising interest rate environment, as well as the sales and maturities of securities reinvested as investable cash, while the cost of funds increased 194 bps (to 2.65%) for 2023, attributable mainly to the repricing of deposits and funding in the higher interest rate environment.

Noninterest income of $36 million for full year 2023 was down $22 million from full year 2022, significantly impacted by the first quarter balance sheet repositioning. Excluding net asset gains (losses), noninterest income for 2023 was $69 million, a $14 million increase over 2022. The year-over-year increase included higher wealth revenue (from growth in accounts and assets under management) and card interchange income, a favorable change in the fair value of nonqualified deferred compensation plan assets, and higher net LSR income, partly offset by lower net mortgage income.

Noninterest expense of $186 million for full year 2023 reflected an increase of $25 million over 2022. Personnel expense increased $10 million due to higher salaries and fringe benefits (mostly health insurance). Non-personnel expenses increased $15 million year-over-year mostly data processing (including a $3 million early contract termination charge and higher volume-based system processing) and office expense.

Income tax expense was $25 million (effective tax rate 28.99%) for the year ended December 31, 2023, compared to $31 million (effective tax rate 25.03%) for the year ended December 31, 2022. The change in income tax expense included a $9.1 million charge to income tax expense to establish a tax valuation allowance for the Wisconsin tax law change noted above.

Income Statement Review - Quarter

Net income was $31 million and adjusted net income (non-GAAP) was $28 million for fourth quarter 2023, compared to net income of $17 million and adjusted net income (non-GAAP) of $23 million for third quarter 2023.

Net interest income was $64 million for fourth quarter 2023, up $3 million from third quarter 2023. Interest income increased $4 million mostly due to the repricing of new and renewed loans in a rising interest rate environment, while interest expense increased $1 million due to both higher average funding balances and higher average rates. The net interest margin for fourth quarter 2023 was 3.30%, up 14 bps from 3.16% for third quarter 2023. The yield on interest-earning assets increased 17 bps (to 5.32%) due to the sale of U.S. Treasury securities reinvested as investable cash, as well as the rising interest rate environment, while the cost of funds increased 7 bps (to 2.90%) for fourth quarter 2023, attributable mainly to the repricing of deposits and funding in the higher interest rate environment.

Noninterest income of $24 million for fourth quarter 2023 increased $8 million over third quarter 2023, mostly due net asset gains of $6 million in fourth quarter 2023, which included a $9 million pre-tax gain on the sale of Nicolet’s member interest in UFS, LLC, partly offset by a $3 million loss on the sale of certain securities. Excluding the net asset gains (losses), noninterest income for fourth quarter 2023 was $18 million, a $2 million increase from third quarter 2023, mostly due to favorable changes in the fair value of nonqualified deferred compensation plan assets.

Noninterest expense of $50 million for fourth quarter 2023, increased $5 million over third quarter 2023. Personnel expense increased $3 million on higher health insurance and an increase in the fair value of nonqualified deferred compensation plan liabilities. Non-personnel expenses increased $2 million (7%) between the sequential quarters, mostly higher data processing (from the early contract termination charged noted above).

Income tax expense was $7 million (effective tax rate 18.06%) for fourth quarter 2023, compared to $15 million (effective tax rate 46.09%) for third quarter 2023. Third quarter 2023 income tax expense included a $9.1 million charge to income tax expense to establish a tax valuation allowance, partly offset by a $3.0 million reduction to income tax expense to reverse amounts recorded in the first half of 2023, both related to the Wisconsin tax law change noted above.

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, 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 expected future effective tax rate.

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, include, but are not limited to future legislative changes to the taxes imposed upon Nicolet, potential expansion into other jurisdictions that impose different or higher taxes and our ability to generate loans that qualify for the Wisconsin tax reduction / elimination. 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.

Any 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)	12/31/2023			9/30/2023			6/30/2023			3/31/2023			12/31/2022
Assets
Cash and due from banks	$	129,898		$	109,414		$	122,021		$	93,462		$	121,211
Interest-earning deposits		361,533			436,466			383,185			20,718			33,512
Cash and cash equivalents		491,431			545,880			505,206			114,180			154,723
Certificates of deposit in other banks		6,374			7,598			9,808			11,293			12,518
Securities available for sale, at fair value		802,573			793,826			921,108			1,023,176			917,618
Securities held to maturity, at amortized cost		—			—			—			—			679,128
Other investments		57,560			58,367			57,578			57,482			65,286
Loans held for sale		4,160			6,500			3,849			4,962			1,482
Loans		6,353,942			6,239,257			6,222,776			6,223,732			6,180,499
Allowance for credit losses - loans		(63,610	)		(63,160	)		(62,811	)		(62,412	)		(61,829	)
Loans, net		6,290,332			6,176,097			6,159,965			6,161,320			6,118,670
Premises and equipment, net		118,756			117,744			117,278			112,569			108,956
Bank owned life insurance (“BOLI”)		169,392			168,223			167,192			166,107			165,137
Goodwill and other intangibles, net		394,366			396,208			398,194			400,277			402,438
Accrued interest receivable and other assets		133,734			145,719			142,450			140,988			138,013
Total assets	$	8,468,678		$	8,416,162		$	8,482,628		$	8,192,354		$	8,763,969
Liabilities and Stockholders' Equity
Liabilities:
Noninterest-bearing demand deposits	$	1,958,709		$	2,020,074		$	2,059,939		$	2,094,623		$	2,361,816
Interest-bearing deposits		5,239,091			5,162,314			5,138,665			4,833,956			4,817,105
Total deposits		7,197,800			7,182,388			7,198,604			6,928,579			7,178,921
Short-term borrowings		—			—			50,000			50,000			317,000
Long-term borrowings		166,930			197,754			197,577			197,448			225,342
Accrued interest payable and other liabilities		64,941			61,559			58,809			54,535			70,177
Total liabilities		7,429,671			7,441,701			7,504,990			7,230,562			7,791,440
Stockholders' Equity:
Common stock		149			147			147			147			147
Additional paid-in capital		633,770			626,348			624,897			623,746			621,988
Retained earnings		458,261			431,317			417,863			398,966			407,864
Accumulated other comprehensive income (loss)		(53,173	)		(83,351	)		(65,269	)		(61,067	)		(57,470	)
Total stockholders' equity		1,039,007			974,461			977,638			961,792			972,529
Total liabilities and stockholders' equity	$	8,468,678		$	8,416,162		$	8,482,628		$	8,192,354		$	8,763,969
Common shares outstanding		14,894,209			14,757,565			14,717,938			14,698,265			14,690,614

Nicolet Bankshares, Inc.
Consolidated Statements of Income (Loss) (Unaudited)
	For the Three Months Ended														For the Years Ended
(In thousands, except per share data)	12/31/2023		9/30/2023			6/30/2023			3/31/2023			12/31/2022			12/31/2023			12/31/2022
Interest income:
Loans, including loan fees	$	90,265	$	87,657		$	84,091		$	79,142		$	76,367		$	341,155		$	243,680
Taxable investment securities		4,737		4,351			4,133			4,961			5,771			18,182			21,383
Tax-exempt investment securities		1,394		1,424			1,476			1,737			1,915			6,031			4,418
Other interest income		7,149		6,452			2,357			1,536			1,703			17,494			4,437
Total interest income		103,545		99,884			92,057			87,376			85,756			382,862			273,918
Interest expense:
Deposits		36,583		34,964			29,340			24,937			12,512			125,824			21,752
Short-term borrowings		—		474			1,108			3,212			2,624			4,794			3,246
Long-term borrowings		2,680		2,972			2,570			2,506			2,528			10,728			8,959
Total interest expense		39,263		38,410			33,018			30,655			17,664			141,346			33,957
Net interest income		64,282		61,474			59,039			56,721			68,092			241,516			239,961
Provision for credit losses		1,000		450			450			3,090			1,850			4,990			11,500
Net interest income after provision for credit losses		63,282		61,024			58,589			53,631			66,242			236,526			228,461
Noninterest income:
Wealth management fee income		6,308		6,057			5,870			5,512			5,170			23,747			20,870
Mortgage income, net		1,856		2,020			1,822			1,466			1,311			7,164			8,497
Service charges on deposit accounts		1,475		1,492			1,529			1,480			1,502			5,976			6,104
Card interchange income		3,306		3,321			3,331			3,033			3,100			12,991			11,643
BOLI income		1,161		1,090			1,073			1,200			1,151			4,524			3,818
Asset gains (losses), net		5,947		31			(318	)		(38,468	)		260			(32,808	)		3,130
Deferred compensation plan asset market valuations		949		(457	)		499			946			314			1,937			(2,040	)
LSR income, net		1,027		1,108			1,135			1,155			(324	)		4,425			(1,366	)
Other noninterest income		2,405		1,879			1,900			1,832			2,362			8,016			7,264
Total noninterest income		24,434		16,541			16,841			(21,844	)		14,846			35,972			57,920
Noninterest expense:
Personnel expense		26,937		23,944			23,900			24,328			23,705			99,109			88,713
Occupancy, equipment and office		9,567		9,027			8,845			8,783			8,246			36,222			29,722
Business development and marketing		1,854		1,869			1,946			2,121			2,303			7,790			8,472
Data processing		7,043		4,643			4,218			3,988			3,871			19,892			14,518
Intangibles amortization		1,842		1,986			2,083			2,161			2,217			8,072			6,616
FDIC assessments		950		1,500			1,009			540			480			3,999			1,920
Merger-related expense		—		—			26			163			492			189			1,664
Other noninterest expense		2,103		2,769			2,930			2,791			2,675			10,593			9,019
Total noninterest expense		50,296		45,738			44,957			44,875			43,989			185,866			160,644
Income (loss) before income tax expense		37,420		31,827			30,473			(13,088	)		37,099			86,632			125,737
Income tax expense (benefit)		6,759		14,669			7,878			(4,190	)		9,498			25,116			31,477
Net income (loss)	$	30,661	$	17,158		$	22,595		$	(8,898	)	$	27,601		$	61,516		$	94,260
Earnings (loss) per common share:
Basic	$	2.07	$	1.16		$	1.54		$	(0.61	)	$	1.88		$	4.17		$	6.78
Diluted	$	2.02	$	1.14		$	1.51		$	(0.61	)	$	1.83		$	4.08		$	6.56
Common shares outstanding:
Basic weighted average		14,823		14,740			14,711			14,694			14,685			14,743			13,909
Diluted weighted average		15,142		15,100			14,960			14,694			15,110			15,071			14,375

Nicolet Bankshares, Inc.
Consolidated Financial Summary (Unaudited)
	For the Three Months Ended															For the Years Ended
(In thousands, except share & per share data)	12/31/2023			9/30/2023			6/30/2023			3/31/2023			12/31/2022			12/31/2023			12/31/2022
Selected Average Balances:
Loans	$	6,263,971		$	6,230,336		$	6,237,757		$	6,201,780		$	6,087,146		$	6,233,623		$	5,255,646
Investment securities		897,437			962,607			1,068,144			1,508,535			1,701,531			1,107,105			1,619,272
Interest-earning assets		7,683,495			7,676,895			7,497,935			7,830,590			7,963,485			7,671,839			7,107,449
Cash and cash equivalents		558,473			513,250			203,883			127,726			179,381			352,458			281,849
Goodwill and other intangibles, net		395,158			397,052			399,080			401,212			403,243			398,106			361,471
Total assets		8,415,169			8,417,456			8,228,600			8,570,623			8,688,741			8,407,562			7,837,695
Deposits		7,189,650			7,156,577			6,941,037			7,060,262			7,222,415			7,087,427			6,613,924
Interest-bearing liabilities		5,358,445			5,385,292			5,212,285			5,391,107			5,262,278			5,336,825			4,776,924
Stockholders’ equity (common)		996,745			983,133			967,142			970,108			954,970			979,366			886,385
Selected Ratios: ^(1)
Book value per common share	$	69.76		$	66.03		$	66.42		$	65.44		$	66.20		$	69.76		$	66.20
Tangible book value per common share^(2)	$	43.28		$	39.18		$	39.37		$	38.20		$	38.81		$	43.28		$	38.81
Return on average assets		1.45	%		0.81	%		1.10	%		(0.42	) %		1.26	%		0.73	%		1.20	%
Return on average common equity		12.20			6.92			9.37			(3.72	)		11.47			6.28			10.63
Return on average tangible common equity ^(2)		20.22			11.62			15.95			(6.34	)		19.85			10.58			17.96
Average equity to average assets		11.84			11.68			11.75			11.32			10.99			11.65			11.31
Stockholders’ equity to assets		12.27			11.58			11.53			11.74			11.10			12.27			11.10
Tangible common equity to tangible assets^(2)		7.98			7.21			7.17			7.21			6.82			7.98			6.82
Net interest margin		3.30			3.16			3.14			2.91			3.39			3.18			3.40
Efficiency ratio		60.41			58.27			58.60			60.69			52.79			59.50			54.15
Effective tax rate		18.06			46.09			25.85			32.01			25.60			28.99			25.03
Selected Asset Quality Information:
Nonaccrual loans	$	26,625		$	29,507		$	25,278		$	38,895		$	38,080		$	26,625		$	38,080
Other real estate owned - closed branches		808			884			958			1,347			1,347			808			1,347
Other real estate owned		459			1,147			520			628			628			459			628
Nonperforming assets	$	27,892		$	31,538		$	26,756		$	40,870		$	40,055		$	27,892		$	40,055
Net loan charge-offs (recoveries)	$	550		$	101		$	51		$	167		$	597		$	869		$	730
Allowance for credit losses-loans to loans		1.00	%		1.01	%		1.01	%		1.00	%		1.00	%		1.00	%		1.00	%
Net loan charge-offs to average loans ^(1)		0.03			0.01			0.01			0.01			0.04			0.01			0.01
Nonperforming loans to total loans		0.42			0.47			0.41			0.62			0.62			0.42			0.62
Nonperforming assets to total assets		0.33			0.37			0.32			0.50			0.46			0.33			0.46
Stock Repurchase Information:
Common stock repurchased (dollars) ^(3)	$	—		$	—		$	1,519		$	—		$	786		$	1,519		$	61,483
Common stock repurchased (full shares) ^(3)		—			—			26,853			—			10,000			26,853			671,662

(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)	12/31/2023		9/30/2023		6/30/2023		3/31/2023		12/31/2022
Period End Loan Composition
Commercial & industrial	$	1,284,009	$	1,237,789	$	1,318,567	$	1,330,052	$	1,304,819
Owner-occupied commercial real estate (“CRE”)		956,594		971,397		969,202		969,064		954,599
Agricultural		1,161,531		1,108,261		1,068,999		1,065,909		1,088,607
Commercial		3,402,134		3,317,447		3,356,768		3,365,025		3,348,025
CRE investment		1,142,251		1,130,938		1,108,692		1,146,388		1,149,949
Construction & land development		310,110		326,747		337,389		333,370		318,600
Commercial real estate		1,452,361		1,457,685		1,446,081		1,479,758		1,468,549
Commercial-based loans		4,854,495		4,775,132		4,802,849		4,844,783		4,816,574
Residential construction		75,726		76,289		108,095		134,782		114,392
Residential first mortgage		1,167,109		1,136,748		1,072,609		1,014,166		1,016,935
Residential junior mortgage		200,884		195,432		184,873		177,026		177,332
Residential real estate		1,443,719		1,408,469		1,365,577		1,325,974		1,308,659
Retail & other		55,728		55,656		54,350		52,975		55,266
Retail-based loans		1,499,447		1,464,125		1,419,927		1,378,949		1,363,925
Total loans	$	6,353,942	$	6,239,257	$	6,222,776	$	6,223,732	$	6,180,499
Period End Deposit Composition
Noninterest-bearing demand	$	1,958,709	$	2,020,074	$	2,059,939	$	2,094,623	$	2,361,816
Interest-bearing demand		1,055,520		955,746		1,030,919		1,138,415		1,279,850
Money market		1,891,287		1,933,227		1,835,523		1,886,879		1,707,619
Savings		768,401		789,045		821,803		865,824		931,417
Time		1,523,883		1,484,296		1,450,420		942,838		898,219
Total deposits	$	7,197,800	$	7,182,388	$	7,198,604	$	6,928,579	$	7,178,921
Brokered transaction accounts	$	166,861	$	146,517	$	173,107	$	233,393	$	252,829
Brokered time deposits		448,582		457,433		566,405		289,181		339,066
Total brokered deposits	$	615,443	$	603,950	$	739,512	$	522,574	$	591,895
Customer transaction accounts	$	5,507,056	$	5,551,575	$	5,575,077	$	5,752,348	$	6,027,873
Customer time deposits		1,075,301		1,026,863		884,015		653,657		559,153
Total customer deposits (core)	$	6,582,357	$	6,578,438	$	6,459,092	$	6,406,005	$	6,587,026

Nicolet Bankshares, Inc.
Net Interest Income and Net Interest Margin Analysis (Unaudited)
	For the Three Months Ended
	December 31, 2023						September 30, 2023						December 31, 2022
	Average				Average		Average				Average		Average				Average
(In thousands)	Balance		Interest		Rate		Balance		Interest		Rate		Balance		Interest		Rate
ASSETS
Total loans ^(1) (2)	$	6,263,971	$	90,313	5.66	%	$	6,230,336	$	87,701	5.54	%	$	6,087,146	$	76,406	4.93	%
Investment securities ^(2)		897,437		6,567	2.93	%		962,607		6,235	2.59	%		1,701,531		8,302	1.95	%
Other interest-earning assets		522,087		7,149	5.37	%		483,952		6,452	5.23	%		174,808		1,703	3.85	%
Total interest-earning assets		7,683,495	$	104,029	5.32	%		7,676,895	$	100,388	5.15	%		7,963,485	$	86,411	4.27	%
Other assets, net		731,674						740,561						725,256
Total assets	$	8,415,169					$	8,417,456					$	8,688,741
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing core deposits	$	4,570,493	$	29,730	2.58	%	$	4,491,858	$	27,628	2.44	%	$	4,175,671	$	8,477	0.81	%
Brokered deposits		601,379		6,853	4.52	%		651,745		7,336	4.47	%		611,226		4,035	2.62	%
Total interest-bearing deposits		5,171,872		36,583	2.81	%		5,143,603		34,964	2.70	%		4,786,897		12,512	1.04	%
Wholesale funding		186,573		2,680	5.62	%		241,689		3,446	5.58	%		475,381		5,152	4.27	%
Total interest-bearing liabilities		5,358,445	$	39,263	2.90	%		5,385,292	$	38,410	2.83	%		5,262,278	$	17,664	1.33	%
Noninterest-bearing demand deposits		2,017,778						2,012,974						2,435,518
Other liabilities		42,201						36,057						35,975
Stockholders' equity		996,745						983,133						954,970
Total liabilities and stockholders' equity	$	8,415,169					$	8,417,456					$	8,688,741
Net interest income and rate spread			$	64,766	2.42	%			$	61,978	2.32	%			$	68,747	2.94	%
Net interest margin					3.30	%					3.16	%					3.39	%
Loan purchase accounting accretion^(3)			$	1,587	0.10	%			$	1,637	0.10	%			$	1,935	0.09	%
	For the Years Ended
	December 31, 2023						December 31, 2022
	Average				Average		Average				Average
(In thousands)	Balance		Interest		Rate		Balance		Interest		Rate
ASSETS
Total loans ^(1) (2)	$	6,233,623	$	341,332	5.48	%	$	5,255,646	$	243,819	4.64	%
Investment securities ^(2)		1,107,105		26,142	2.36	%		1,619,272		27,575	1.70	%
Other interest-earning assets		331,111		17,494	5.28	%		232,531		4,437	1.91	%
Total interest-earning assets		7,671,839	$	384,968	5.02	%		7,107,449	$	275,831	3.88	%
Other assets, net		735,723						730,246
Total assets	$	8,407,562					$	7,837,695
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing core deposits	$	4,417,426	$	99,673	2.26	%	$	3,987,201	$	15,324	0.38	%
Brokered deposits		615,209		26,151	4.25	%		490,871		6,428	1.31	%
Total interest-bearing deposits		5,032,635		125,824	2.50	%		4,478,072		21,752	0.49	%
Wholesale funding		304,190		15,522	5.10	%		298,852		12,205	4.08	%
Total interest-bearing liabilities		5,336,825	$	141,346	2.65	%		4,776,924	$	33,957	0.71	%
Noninterest-bearing demand deposits		2,054,792						2,135,852
Other liabilities		36,579						38,534
Stockholders' equity		979,366						886,385
Total liabilities and stockholders' equity	$	8,407,562					$	7,837,695
Net interest income and rate spread			$	243,622	2.37	%			$	241,874	3.17	%
Net interest margin					3.18	%					3.40	%
Loan purchase accounting accretion^(3)			$	6,496	0.10	%			$	4,572	0.06	%

(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)
	For the Three Months Ended														For the Years Ended
(In thousands, except per share data)	12/31/2023			9/30/2023			6/30/2023		3/31/2023			12/31/2022			12/31/2023		12/31/2022
Adjusted net income (loss) reconciliation: ^(1)
Net income (loss) (GAAP)	$	30,661		$	17,158		$	22,595	$	(8,898	)	$	27,601		$	61,516	$	94,260
Adjustments:
Provision expense ^(2)		—			—			—		2,340			—			2,340		8,000
Assets (gains) losses, net		(5,947	)		(31	)		318		38,468			(260	)		32,808		(3,130	)
Merger-related expense		—			—			26		163			492			189		1,664
Contract termination charge		2,689			—			—		—			—			2,689		—
Adjustments subtotal		(3,258	)		(31	)		344		40,971			232			38,026		6,534
Tax on Adjustments ^(3)		(635	)		(6	)		86		10,243			58			7,415		1,634
Tax - Wisconsin Tax Law Change ^(4)		—			6,151			—		—			—			9,118		—
Adjusted net income (Non-GAAP)	$	28,038		$	23,284		$	22,853	$	21,830		$	27,775		$	101,245	$	99,161
Diluted earnings (loss) per common share:
Diluted earnings (loss) per common share (GAAP)	$	2.02		$	1.14		$	1.51	$	(0.61	)	$	1.83		$	4.08	$	6.56
Adjusted Diluted earnings per common share (Non-GAAP)	$	1.85		$	1.54		$	1.53	$	1.45		$	1.84		$	6.72	$	6.90
Tangible assets: ^(5)
Total assets	$	8,468,678		$	8,416,162		$	8,482,628	$	8,192,354		$	8,763,969
Goodwill and other intangibles, net		394,366			396,208			398,194		400,277			402,438
Tangible assets	$	8,074,312		$	8,019,954		$	8,084,434	$	7,792,077		$	8,361,531
Tangible common equity: ^(5)
Stockholders’ equity (common)	$	1,039,007		$	974,461		$	977,638	$	961,792		$	972,529
Goodwill and other intangibles, net		394,366			396,208			398,194		400,277			402,438
Tangible common equity	$	644,641		$	578,253		$	579,444	$	561,515		$	570,091
Tangible average common equity: ^(5)
Average stockholders’ equity (common)	$	996,745		$	983,133		$	967,142	$	970,108		$	954,970		$	979,366	$	886,385
Average goodwill and other intangibles, net		395,158			397,052			399,080		401,212			403,243			398,106		361,471
Average tangible common equity	$	601,587		$	586,081		$	568,062	$	568,896		$	551,727		$	581,260	$	524,914

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, and the provision expense for 2022 is attributable to the Day 2 allowance from the acquisition of Charter Bankshares, Inc.
(3)	The effective tax rate for periods prior to the July 1, 2023, effective date of the Wisconsin 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%.
(4)	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.