NICOLET BANKSHARES, INC. ANNOUNCES THIRD QUARTER 2023 RESULTS

Rhea-AI Summary

Nicolet Bankshares, Inc. announces Q3 2023 net income of $17 million, a decrease from Q2 2023, impacted by changes in Wisconsin tax law. Wealth assets under management increased by 24% from 2022.

Positive

• Net income of $17 million for Q3 2023
• Adjusted net income of $23 million for Q3 2023
• Net interest margin increased by 2 bps over Q2 2023
• Wealth assets under management increased by 24% from 2022

Negative

• Net income decreased from Q2 2023
• One-time $9.1 million charge to state income tax expense in Q3 2023

• Net income of $17 million or adjusted net income (non-GAAP) of $23 million for third quarter 2023, compared to net income of $23 million in prior quarter, and net income of $19 million or adjusted net income (non-GAAP) of $25 million for third quarter 2022
• Net income of $31 million and adjusted net income (non-GAAP) of $73 million for first nine months of 2023, compared to $67 million and adjusted net income (non-GAAP) of $71 million for first nine months of 2022, significantly impacted by first quarter balance sheet repositioning
• Change in Wisconsin tax law resulted in one-time $9.1 million charge to state income tax expense in current quarter with expected lower effective tax rate in future periods
• Quarterly net interest margin of 3.16%, an increase of 2 bps over second quarter
• Wealth assets under management increased 24% from year-end 2022

GREEN BAY, Wis., Oct. 24, 2023 /PRNewswire/ -- Nicolet Bankshares, Inc. (NYSE: NIC) ("Nicolet") announced third quarter 2023 net income of $17 million and earnings per diluted common share of $1.14, compared to net income of $23 million and earnings per diluted common share of $1.51 for second quarter 2023, and net income of $19 million and earnings per diluted common share of $1.29 for third quarter 2022.  Net income for the nine months ended September 30, 2023 was $31 million and earnings per diluted common share of $2.05, compared to net income of $67 million and earnings per diluted common share of $4.72 for the nine months ended September 30, 2022.

On July 1, 2023, Wisconsin's Governor signed the State Budget, 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 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 will also cause a valuation allowance to be set up for the State-related deferred tax asset as of the effective date of the legislation, requiring a one-time $9.1 million charge to state income tax expense in the third quarter.

Net income reflected certain non-core items and the related tax effect of each, including the first quarter U.S. Treasury securities sale loss, change in Wisconsin tax law, 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 $0.40 for third quarter 2023, $0.02 for second quarter 2023, and $0.45 for third quarter 2022.  For the nine months ended September 30, 2023, these non-core items negatively impacted earnings per diluted common share $2.82, and negatively impacted earnings per diluted common share $0.33 for the comparable nine-month period of 2022.

"Our recent quarterly results continue to show Nicolet's resilience in a challenging operating environment," said Mike Daniels, President and CEO of Nicolet. "We have a saying at Nicolet - 'control what you can control.' This quarter, our core operations, which we can control, are solid and driven by top-line revenue growth, an increase in core deposits, and another positive movement in our net interest margin.  Our customers continue to perform remarkably well despite the macroeconomic headwinds of a tight labor market and higher costs due to inflation.  We are encouraged by the momentum we have heading into the final quarter of the year."

Daniels continued, "The passage of the 2024 Wisconsin State Budget with the state tax exemption for community banks will have a meaningful impact on the earnings for Wisconsin banks this year and going forward.  I want to thank our state lawmakers for recognizing the value and importance of Wisconsin community banks and for putting positive actions behind their words."

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 September 30, 2023, period end assets were $8.4 billion, a decrease of $66 million (1%) from June 30, 2023, mostly maturities and paydowns of investment securities, partly offset by higher cash balances.  Total loans increased slightly ($16 million) from June 30, 2023, with growth in residential real estate and agriculture loans, offset by slowing commercial loan demand.  Total deposits of $7.2 billion at September 30, 2023, decreased $16 million from June 30, 2023, with lower customer transaction account balances and a reduction in noncore deposits, offset by growth in customer time deposits.  Total borrowings declined $50 million due to the maturity of a short-term FHLB advance.  Total capital was $974 million at September 30, 2023, a decrease of $3 million since June 30, 2023, with earnings more than offset by unfavorable market valuations on available for sale securities. 

Asset Quality
Nonperforming assets were $32 million and represented 0.37% of total assets at September 30, 2023, compared to $27 million or 0.32% at June 30, 2023, and $40 million or 0.45% at September 30, 2022.  The allowance for credit losses-loans was $63 million and represented 1.01% of total loans at September 30, 2023, compared to $63 million (or 1.01% of total loans) at June 30, 2023, and $60 million (or 1.01% of total loans) at September 30, 2022.  Asset quality trends remain solid and loan net charge-offs were negligible.

Income Statement Review - Quarter
Net income was $17 million and adjusted net income (non-GAAP) was $23 million for third quarter 2023, compared to net income of $23 million for second quarter 2023.

Net interest income was $61 million for third quarter 2023, up $2 million from second 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 a shift of maturing investments (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 (mostly time deposits). The net interest margin for third quarter 2023 was 3.16%, up 2 bps from 3.14% for second quarter 2023. The yield on interest-earning assets increased 25 bps (to 5.15%) due to the maturity of U.S. Treasury securities reinvested as investable cash, as well as the rising interest rate environment, while the cost of funds increased 29 bps (to 2.83%) for third quarter 2023, attributable mainly to the repricing of deposits and funding in the higher interest rate environment.

Noninterest income of $17 million for third quarter 2023 was minimally changed from second quarter 2023. Excluding net asset gains (losses), noninterest income for third quarter 2023 was $17 million, a $1 million decrease from second quarter 2023. The sequential quarter decrease included an unfavorable change in the fair value of nonqualified deferred compensation plan assets, partly offset by higher wealth revenue (from growth in accounts and assets under management, though tempered by unfavorable market-related changes) and net mortgage income. 

Noninterest expense of $46 million for third quarter 2023, increased $1 million compared to second quarter 2023. Personnel expense was minimally changed with higher salaries, incentives, and health insurance substantially offset by a decrease in the fair value of nonqualified deferred compensation plan liabilities.  Non-personnel expenses increased 4% between the sequential quarters, mostly higher data processing (volume-based system processing) and office expense. 

Income tax expense was $15 million (effective tax rate 46.09%) for third quarter 2023, compared to $8 million (effective tax rate 25.85%) for second quarter 2023.  The change in 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.

Subsequent Event
On October 2, 2023, Nicolet sold its member interest in UFS, LLC for proceeds of $10 million and a pre-tax gain of approximately $9 million.  This gain on sale will be realized during fourth quarter 2023.

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. 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)		9/30/2023		6/30/2023		3/31/2023		12/31/2022		9/30/2022
Assets
Cash and due from banks		$            109,414		$            122,021		$              93,462		$            121,211		$            118,537
Interest-earning deposits		436,466		383,185		20,718		33,512		319,745
Cash and cash equivalents		545,880		505,206		114,180		154,723		438,282
Certificates of deposit in other banks		7,598		9,808		11,293		12,518		13,510
Securities available for sale, at fair value		793,826		921,108		1,023,176		917,618		949,597
Securities held to maturity, at amortized cost		—		—		—		679,128		686,424
Other investments		58,367		57,578		57,482		65,286		79,279
Loans held for sale		6,500		3,849		4,962		1,482		3,709
Loans		6,239,257		6,222,776		6,223,732		6,180,499		5,984,437
Allowance for credit losses - loans		(63,160)		(62,811)		(62,412)		(61,829)		(60,348)
Loans, net		6,176,097		6,159,965		6,161,320		6,118,670		5,924,089
Premises and equipment, net		117,744		117,278		112,569		108,956		106,648
Bank owned life insurance ("BOLI")		168,223		167,192		166,107		165,137		165,166
Goodwill and other intangibles, net		396,208		398,194		400,277		402,438		407,117
Accrued interest receivable and other assets		145,719		142,450		140,988		138,013		122,095
Total assets		$         8,416,162		$         8,482,628		$         8,192,354		$         8,763,969		$         8,895,916
Liabilities and Stockholders' Equity
Liabilities:
Noninterest-bearing demand deposits		$         2,020,074		$         2,059,939		$         2,094,623		$         2,361,816		$         2,477,507
Interest-bearing deposits		5,162,314		5,138,665		4,833,956		4,817,105		4,918,395
Total deposits		7,182,388		7,198,604		6,928,579		7,178,921		7,395,902
Short-term borrowings		—		50,000		50,000		317,000		280,000
Long-term borrowings		197,754		197,577		197,448		225,342		225,236
Accrued interest payable and other liabilities		61,559		58,809		54,535		70,177		56,315
Total liabilities		7,441,701		7,504,990		7,230,562		7,791,440		7,957,453
Stockholders' Equity:
Common stock		147		147		147		147		147
Additional paid-in capital		626,348		624,897		623,746		621,988		620,392
Retained earnings		431,317		417,863		398,966		407,864		380,263
Accumulated other comprehensive income (loss)		(83,351)		(65,269)		(61,067)		(57,470)		(62,339)
Total stockholders' equity		974,461		977,638		961,792		972,529		938,463
Total liabilities and  stockholders' equity		$         8,416,162		$         8,482,628		$         8,192,354		$         8,763,969		$         8,895,916
Common shares outstanding		14,757,565		14,717,938		14,698,265		14,690,614		14,673,197

 

Nicolet Bankshares, Inc.
Consolidated Statements of Income (Loss) (Unaudited)
		For the Three Months Ended										For the Nine Months Ended
(In thousands, except per share data)		9/30/2023		6/30/2023		3/31/2023		12/31/2022		9/30/2022		9/30/2023		9/30/2022
Interest income:
Loans, including loan fees		$          87,657		$          84,091		$          79,142		$          76,367		$          63,060		$         250,890		$         167,313
Taxable investment securities		4,351		4,133		4,961		5,771		5,350		13,445		15,612
Tax-exempt investment securities		1,424		1,476		1,737		1,915		1,181		4,637		2,503
Other interest income		6,452		2,357		1,536		1,703		1,127		10,345		2,734
Total interest income		99,884		92,057		87,376		85,756		70,718		279,317		188,162
Interest expense:
Deposits		34,964		29,340		24,937		12,512		4,638		89,241		9,240
Short-term borrowings		474		1,108		3,212		2,624		594		4,794		622
Long-term borrowings		2,972		2,570		2,506		2,528		2,496		8,048		6,431
Total interest expense		38,410		33,018		30,655		17,664		7,728		102,083		16,293
Net interest income		61,474		59,039		56,721		68,092		62,990		177,234		171,869
Provision for credit losses		450		450		3,090		1,850		8,600		3,990		9,650
Net interest income after provision for credit losses		61,024		58,589		53,631		66,242		54,390		173,244		162,219
Noninterest income:
Wealth management fee income		6,057		5,870		5,512		5,170		5,009		17,439		15,700
Mortgage income, net		2,020		1,822		1,466		1,311		1,728		5,308		7,186
Service charges on deposit accounts		1,492		1,529		1,480		1,502		1,589		4,501		4,602
Card interchange income		3,321		3,331		3,033		3,100		3,012		9,685		8,543
BOLI income		1,090		1,073		1,200		1,151		966		3,363		2,667
Asset gains (losses), net		31		(318)		(38,468)		260		(46)		(38,755)		2,870
Deferred compensation plan asset market valuations		(457)		499		946		314		(571)		988		(2,354)
LSR income, net		1,108		1,135		1,155		(324)		(517)		3,398		(1,042)
Other noninterest income		1,879		1,900		1,832		2,362		1,830		5,611		4,902
Total noninterest income		16,541		16,841		(21,844)		14,846		13,000		11,538		43,074
Noninterest expense:
Personnel expense		23,944		23,900		24,328		23,705		24,136		72,172		65,008
Occupancy, equipment and office		9,027		8,845		8,783		8,246		7,641		26,655		21,476
Business development and marketing		1,869		1,946		2,121		2,303		2,281		5,936		6,169
Data processing		4,643		4,218		3,988		3,871		3,664		12,849		10,647
Intangibles amortization		1,986		2,083		2,161		2,217		1,628		6,230		4,399
FDIC assessments		1,500		1,009		540		480		480		3,049		1,440
Merger-related expense		—		26		163		492		519		189		1,172
Other noninterest expense		2,769		2,930		2,791		2,675		2,218		8,490		6,344
Total noninterest expense		45,738		44,957		44,875		43,989		42,567		135,570		116,655
Income (loss) before income tax expense		31,827		30,473		(13,088)		37,099		24,823		49,212		88,638
Income tax expense (benefit)		14,669		7,878		(4,190)		9,498		6,313		18,357		21,979
Net income (loss)		$          17,158		$          22,595		$          (8,898)		$          27,601		$          18,510		$           30,855		$           66,659
Earnings (loss) per common share:
Basic		$             1.16		$             1.54		$            (0.61)		$             1.88		$             1.33		$               2.10		$               4.88
Diluted		$             1.14		$             1.51		$            (0.61)		$             1.83		$             1.29		$               2.05		$               4.72
Common shares outstanding:
Basic weighted average		14,740		14,711		14,694		14,685		13,890		14,716		13,648
Diluted weighted average		15,100		14,960		14,694		15,110		14,310		15,044		14,127

 

Nicolet Bankshares, Inc.
Consolidated Financial Summary (Unaudited)
		For the Three Months Ended										For the Nine Months Ended
(In thousands, except share & per share data)		9/30/2023		6/30/2023		3/31/2023		12/31/2022		9/30/2022		9/30/2023		9/30/2022
Selected Average Balances:
Loans		$  6,230,336		$  6,237,757		$  6,201,780		$  6,087,146		$  5,391,258		$    6,223,396		$    4,975,432
Investment securities		962,607		1,068,144		1,508,535		1,701,531		1,625,453		1,177,762		1,591,551
Interest-earning assets		7,676,895		7,497,935		7,830,590		7,963,485		7,161,120		7,667,911		6,818,966
Cash and cash equivalents		513,250		203,883		127,726		179,381		167,550		283,032		316,381
Goodwill and other intangibles, net		397,052		399,080		401,212		403,243		363,211		399,100		346,488
Total assets		8,417,456		8,228,600		8,570,623		8,688,741		7,856,131		8,404,999		7,550,894
Deposits		7,156,577		6,941,037		7,060,262		7,222,415		6,643,247		7,052,978		6,408,863
Interest-bearing liabilities		5,385,292		5,212,285		5,391,107		5,262,278		4,730,209		5,329,540		4,613,360
Stockholders' equity (common)		983,133		967,142		970,108		954,970		890,205		973,509		863,272
Selected Ratios: (1)
Book value per common share		$         66.03		$         66.42		$         65.44		$         66.20		$         63.96		$          66.03		$          63.96
Tangible book value per common share (2)		$         39.18		$         39.37		$         38.20		$         38.81		$         36.21		$          39.18		$          36.21
Return on average assets		0.81 %		1.10 %		(0.42) %		1.26 %		0.93 %		0.49 %		1.18 %
Return on average common equity		6.92		9.37		(3.72)		11.47		8.25		4.24		10.32
Return on average tangible common equity (2)		11.62		15.95		(6.34)		19.85		13.93		7.18		17.25
Average equity to average assets		11.68		11.75		11.32		10.99		11.33		11.58		11.43
Stockholders' equity to assets		11.58		11.53		11.74		11.10		10.55		11.58		10.55
Tangible common equity to tangible assets (2)		7.21		7.17		7.21		6.82		6.26		7.21		6.26
Net interest margin		3.16		3.14		2.91		3.39		3.48		3.07		3.36
Efficiency ratio		58.27		58.60		60.69		52.79		55.62		59.16		54.68
Effective tax rate		46.09		25.85		32.01		25.60		25.43		37.30		24.80
Selected Asset Quality Information:
Nonaccrual loans		$       29,507		$       25,278		$       38,895		$       38,080		$       38,326		$        29,507		$        38,326
Other real estate owned - closed branches		884		958		1,347		1,347		1,506		884		1,506
Other real estate owned		1,147		520		628		628		628		1,147		628
Nonperforming assets		$       31,538		$       26,756		$       40,870		$       40,055		$       40,460		$        31,538		$        40,460
Net loan charge-offs (recoveries)		$           101		$             51		$           167		$           597		$           216		$             319		$             133
Allowance for credit losses-loans to loans		1.01 %		1.01 %		1.00 %		1.00 %		1.01 %		1.01 %		1.01 %
Net loan charge-offs to average loans (1)		0.01		0.01		0.01		0.04		0.02		0.01		0.00
Nonperforming loans to total loans		0.47		0.41		0.62		0.62		0.64		0.47		0.64
Nonperforming assets to total assets		0.37		0.32		0.50		0.46		0.45		0.37		0.45
Stock Repurchase Information:
Common stock repurchased (dollars) (3)		$             —		$         1,519		$             —		$           786		$             —		$          1,519		$        60,697
Common stock repurchased (full shares) (3)		—		26,853		—		10,000		—		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)		9/30/2023		6/30/2023		3/31/2023		12/31/2022		9/30/2022
Period End Loan Composition
Commercial & industrial		$         1,237,789		$         1,318,567		$         1,330,052		$         1,304,819		$         1,268,252
Owner-occupied commercial real estate ("CRE")		971,397		969,202		969,064		954,599		954,933
Agricultural		1,108,261		1,068,999		1,065,909		1,088,607		1,017,498
Commercial		3,317,447		3,356,768		3,365,025		3,348,025		3,240,683
CRE investment		1,130,938		1,108,692		1,146,388		1,149,949		1,132,951
Construction & land development		326,747		337,389		333,370		318,600		306,446
Commercial real estate		1,457,685		1,446,081		1,479,758		1,468,549		1,439,397
Commercial-based loans		4,775,132		4,802,849		4,844,783		4,816,574		4,680,080
Residential construction		76,289		108,095		134,782		114,392		101,286
Residential first mortgage		1,136,748		1,072,609		1,014,166		1,016,935		970,384
Residential junior mortgage		195,432		184,873		177,026		177,332		176,428
Residential real estate		1,408,469		1,365,577		1,325,974		1,308,659		1,248,098
Retail & other		55,656		54,350		52,975		55,266		56,259
Retail-based loans		1,464,125		1,419,927		1,378,949		1,363,925		1,304,357
Total loans		$         6,239,257		$         6,222,776		$         6,223,732		$         6,180,499		$         5,984,437
Period End Deposit Composition
Noninterest-bearing demand		$         2,020,074		$         2,059,939		$         2,094,623		$         2,361,816		$         2,477,507
Interest-bearing demand		955,746		1,030,919		1,138,415		1,279,850		1,242,961
Money market		1,933,227		1,835,523		1,886,879		1,707,619		1,769,444
Savings		789,045		821,803		865,824		931,417		939,832
Time		1,484,296		1,450,420		942,838		898,219		966,158
Total deposits		$         7,182,388		$         7,198,604		$         6,928,579		$         7,178,921		$         7,395,902
Brokered transaction accounts		$            146,517		$            173,107		$            233,393		$            252,829		$            252,891
Brokered time deposits		457,433		566,405		289,181		339,066		386,101
Total brokered deposits		$            603,950		$            739,512		$            522,574		$            591,895		$            638,992
Customer transaction accounts		$         5,551,575		$         5,575,077		$         5,752,348		$         6,027,873		$         6,176,853
Customer time deposits		1,026,863		884,015		653,657		559,153		580,057
Total customer deposits (core)		$         6,578,438		$         6,459,092		$         6,406,005		$         6,587,026		$         6,756,910

 

Nicolet Bankshares, Inc.
Net Interest Income and Net Interest Margin Analysis (Unaudited)
		For the Three Months Ended
		September 30, 2023						June 30, 2023						September 30, 2022
		Average				Average		Average				Average		Average				Average
(In thousands)		Balance		Interest		Rate		Balance		Interest		Rate		Balance		Interest		Rate
ASSETS
Total loans (1) (2)		$ 6,230,336		$   87,701		5.54 %		$ 6,237,757		$   84,132		5.35 %		$ 5,391,258		$   63,095		4.60 %
Investment securities (2)		962,607		6,235		2.59 %		1,068,144		6,094		2.28 %		1,625,453		6,989		1.72 %
Other interest-earning assets		483,952		6,452		5.23 %		192,034		2,357		4.87 %		144,409		1,127		3.09 %
Total interest-earning assets		7,676,895		$ 100,388		5.15 %		7,497,935		$   92,583		4.90 %		7,161,120		$   71,211		3.91 %
Other assets, net		740,561						730,665						695,011
Total assets		$ 8,417,456						$ 8,228,600						$ 7,856,131
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing core deposits		$ 4,491,858		$   27,628		2.44 %		$ 4,278,502		$   22,728		2.13 %		$ 3,974,448		$     3,353		0.33 %
Brokered deposits		651,745		7,336		4.47 %		640,643		6,612		4.14 %		468,010		1,285		1.09 %
Total interest-bearing deposits		5,143,603		34,964		2.70 %		4,919,145		29,340		2.39 %		4,442,458		4,638		0.41 %
Wholesale funding		241,689		3,446		5.58 %		293,140		3,678		4.96 %		287,751		3,090		4.25 %
Total interest-bearing liabilities		5,385,292		$   38,410		2.83 %		5,212,285		$   33,018		2.54 %		4,730,209		$     7,728		0.65 %
Noninterest-bearing demand deposits		2,012,974						2,021,892						2,200,789
Other liabilities		36,057						27,281						34,928
Stockholders' equity		983,133						967,142						890,205
Total liabilities and stockholders' equity		$ 8,417,456						$ 8,228,600						$ 7,856,131
Net interest income and rate spread				$   61,978		2.32 %				$   59,565		2.36 %				$   63,483		3.26 %
Net interest margin						3.16 %						3.14 %						3.48 %
Loan purchase accounting accretion (3)				$     1,637		0.10 %				$     1,636		0.10 %				$     1,075		0.05 %
		For the Nine Months Ended
		September 30, 2023						September 30, 2022
		Average				Average		Average				Average
(In thousands)		Balance		Interest		Rate		Balance		Interest		Rate
ASSETS
Total loans (1) (2)		$ 6,223,396		$ 251,019		5.33 %		$ 4,975,432		$ 167,413		4.45 %
Investment securities (2)		1,177,762		19,575		2.22 %		1,591,551		19,273		1.62 %
Other interest-earning assets		266,753		10,345		5.13 %		251,983		2,734		1.44 %
Total interest-earning assets		7,667,911		$ 280,939		4.85 %		6,818,966		$ 189,420		3.67 %
Other assets, net		737,088						731,928
Total assets		$ 8,404,999						$ 7,550,894
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing core deposits		$ 4,365,843		$   69,943		2.14 %		$ 3,923,687		$     6,846		0.23 %
Brokered deposits		619,870		19,298		4.16 %		450,311		2,394		0.71 %
Total interest-bearing deposits		4,985,713		89,241		2.39 %		4,373,998		9,240		0.28 %
Wholesale funding		343,827		12,842		4.93 %		239,362		7,053		3.91 %
Total interest-bearing liabilities		5,329,540		$ 102,083		2.56 %		4,613,360		$   16,293		0.47 %
Noninterest-bearing demand deposits		2,067,265						2,034,865
Other liabilities		34,685						39,397
Stockholders' equity		973,509						863,272
Total liabilities and stockholders' equity		$ 8,404,999						$ 7,550,894
Net interest income and rate spread				$ 178,856		2.29 %				$ 173,127		3.20 %
Net interest margin						3.07 %						3.36 %
Loan purchase accounting accretion (3)				$     4,908		0.10 %				$     2,636		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)
		At or for the Three Months Ended										At or for the Nine Months Ended
(In thousands, except per share data)		9/30/2023		6/30/2023		3/31/2023		12/31/2022		9/30/2022		9/30/2023		9/30/2022
Adjusted net income (loss) reconciliation: (1)
Net income (loss) (GAAP)		$          17,158		$          22,595		$          (8,898)		$          27,601		$          18,510		$           30,855		$           66,659
Adjustments:
Provision expense (2)		—		—		2,340		—		8,000		2,340		8,000
Assets (gains) losses, net		(31)		318		38,468		(260)		46		38,755		(2,870)
Merger-related expense		—		26		163		492		519		189		1,172
Adjustments subtotal		(31)		344		40,971		232		8,565		41,284		6,302
Tax on Adjustments (3)		(6)		86		10,243		58		2,141		8,050		1,576
Tax - Wisconsin Tax  Law Change		6,151		—		—		—		—		9,118		—
Adjusted net income (Non-GAAP)		$          23,284		$          22,853		$          21,830		$          27,775		$          24,934		$           73,207		$           71,386
Diluted earnings (loss) per common share:
Diluted earnings (loss) per common share (GAAP)		$             1.14		$             1.51		$            (0.61)		$             1.83		$             1.29		$               2.05		$               4.72
Adjusted Diluted earnings per common share (Non-GAAP)		$             1.54		$             1.53		$             1.45		$             1.84		$             1.74		$               4.87		$               5.05
Tangible assets: (4)
Total assets		$     8,416,162		$     8,482,628		$     8,192,354		$     8,763,969		$     8,895,916
Goodwill and other intangibles, net		396,208		398,194		400,277		402,438		407,117
Tangible assets		$     8,019,954		$     8,084,434		$     7,792,077		$     8,361,531		$     8,488,799
Tangible common equity: (4)
Stockholders' equity (common)		$        974,461		$        977,638		$        961,792		$        972,529		$        938,463
Goodwill and other intangibles, net		396,208		398,194		400,277		402,438		407,117
Tangible common equity		$        578,253		$        579,444		$        561,515		$        570,091		$        531,346
Tangible average common equity: (4)
Average stockholders' equity (common)		$        983,133		$        967,142		$        970,108		$        954,970		$        890,205		$         973,509		$         863,272
Average goodwill and other intangibles, net		397,052		399,080		401,212		403,243		363,211		399,100		346,488
Average tangible common equity		$        586,081		$        568,062		$        568,896		$        551,727		$        526,994		$         574,409		$         516,784

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 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 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 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.

 

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SOURCE Nicolet Bankshares, Inc.

FAQ

What was Nicolet Bankshares' net income for Q3 2023?

Nicolet Bankshares' net income for Q3 2023 was $17 million.

What was the adjusted net income for Q3 2023?

The adjusted net income for Q3 2023 was $23 million.

How much did the net interest margin increase by over Q2 2023?

The net interest margin increased by 2 bps over Q2 2023.

What was the percentage increase in wealth assets under management from 2022?

Wealth assets under management increased by 24% from 2022.

What caused the decrease in net income from Q2 2023?

The decrease in net income from Q2 2023 was impacted by changes in Wisconsin tax law.

Was there any one-time charge to state income tax expense in Q3 2023?

Yes, there was a one-time $9.1 million charge to state income tax expense in Q3 2023.