Nicolet Bankshares, Inc. Announces Second Quarter 2024 Results

GREEN BAY, Wis.--(BUSINESS WIRE)--Nicolet Bankshares, Inc. (NYSE: NIC) ("Nicolet") announced second quarter 2024 net income of $29 million and earnings per diluted common share of $1.92, compared to net income of $28 million and earnings per diluted common share of $1.82 for first quarter 2024, and net income of $23 million and earnings per diluted common share of $1.51 for second quarter 2023. Net income for the six months ended June 30, 2024 was $57 million and earnings per diluted common share of $3.74, compared to net income of $14 million and earnings per diluted common share of $0.91 for the first half of 2023.

Net income reflected certain non-core items and the related tax effect of each, including the first quarter 2023 balance sheet repositioning and third quarter 2023 change in Wisconsin state tax law (as detailed in the Reconciliation of Non-GAAP Financial Measures table below), as well as gains / (losses) on other assets and investments in all periods. For the six months ended June 30, 2024, these non-core items positively impacted earnings per diluted common share $0.13, and negatively impacted earnings per diluted common share $2.07 for the six months ended June 30, 2023.

"Our strong second quarter results are a continuation and improvement of our first quarter results," said Mike Daniels, Chairman, President, and CEO of Nicolet. "We witnessed growth in our core deposits after experiencing seasonal lows during tax season; loan growth remained strong for our markets; and our core lines of business are each performing well, despite market headwinds."

Daniels continued, "Our margin continues to improve due to our heavy C&I focus and disciplined deposit pricing. We remain vigilant with credit, see few signs of significant stress in our markets, and unrealized losses are much smaller relative to our balance sheet given the shorter duration of our investment portfolio. Many of the fears the market has about banks, including shrinking margins, tepid loan growth, weakening asset quality due to CRE exposure, and stressed capital levels due to unrealized bond losses, are of limited concern for us at the moment. In short, we remain well positioned to keep producing peer-leading financial metrics for the remainder of the year, which will continue to provide us with strategic optionality going forward."

Balance Sheet Review

At June 30, 2024, period end assets were $8.6 billion, an increase of $110 million (1%) from March 31, 2024, mostly from solid loan growth. Total loans increased $132 million (2%) from March 31, 2024, with growth in agricultural, commercial and industrial, and residential real estate loans. Total deposits of $7.2 billion at June 30, 2024, increased $75 million from March 31, 2024, mostly noninterest-bearing demand and time deposits. Total capital was $1.1 billion at June 30, 2024, an increase of $28 million over March 31, 2024, with earnings partly offset by the quarterly common stock dividend.

Asset Quality

Nonperforming assets were $29 million and represented 0.34% of total assets at June 30, 2024, minimally changed from $28 million or 0.33% of total assets at March 31, 2024, and $27 million or 0.32% of total assets at June 30, 2023. The allowance for credit losses-loans was $65 million and represented 1.00% of total loans at June 30, 2024, compared to $64 million (or 1.01% of total loans) at March 31, 2024, and $63 million (or 1.01% of total loans) at June 30, 2023. Asset quality trends remain solid and loan net charge-offs were negligible.

Income Statement Review - Quarter

Net income and adjusted net income (non-GAAP) was $29 million for second quarter 2024, compared to net income of $28 million or adjusted net income (non-GAAP) of $26 million for first quarter 2024.

Net interest income was $65 million for second quarter 2024, up $3 million from first quarter 2024. Interest income increased $5 million mostly due to the repricing of new and renewed loans in a rising interest rate environment, as well as solid loan growth, while interest expense increased $2 million mainly due to higher average balances. The net interest margin for second quarter 2024 was 3.35%, up 9 bps from 3.26% for first quarter 2024. The yield on interest-earning assets increased 17 bps (to 5.61%) mostly due to higher average rates from the repricing of the loan portfolio and interest recovered upon the payoff of a nonaccrual loan, while the cost of funds increased 8 bps (to 3.09%) for second quarter 2024, attributable mainly to higher cost brokered deposits.

Noninterest income of $20 million for second quarter 2024 was minimally changed from first quarter 2024. Excluding the net asset gains (losses), noninterest income for second quarter 2024 was $19 million, a $1 million increase from first quarter 2024, mostly due to higher net mortgage income. Net asset gains (losses) of $0.6 million for second quarter 2024 were mostly due to the gain on sale of an other investment, while first quarter 2024 included net gains of $1.9 million due to a $1 million gain on sale of an investment security and a $1 million gain on the early extinguishment of subordinated debt.

Noninterest expense of $47 million for second quarter 2024 was also minimally changed from first quarter 2024. Within personnel expense, lower salaries and payroll taxes were substantially offset by higher incentives, while in non-personnel expenses lower snowplowing and equipment maintenance was offset by higher legal and professional fees.

About Nicolet Bankshares, Inc.

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

Use of Non-GAAP Financial Measures

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

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 ability to produce peer-leading financial metrics and strategic optionality going forward.

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 general competitive, economic, political, regulatory and market conditions. Additional factors which could affect the forward-looking statements contained in this press release can be found under the headings "Forward-Looking Statements" and "Risk Factors" in Nicolet's 2023 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.

Many of these factors are beyond Nicolet's ability to control or predict. If one or more events related to these or other risks or uncertainties materialize, or if the underlying assumptions prove to be incorrect, actual results may differ materially from the forward-looking statements. Accordingly, shareholders and investors should not place undue reliance on any such forward-looking statements. 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. New risks and uncertainties may emerge from time to time, and it is not possible for Nicolet to predict their occurrence or how they will affect Nicolet.

Nicolet qualifies all forward-looking statements by these cautionary statements.

Nicolet Bankshares, Inc.
Consolidated Balance Sheets (Unaudited)
(In thousands, except share data)		6/30/2024				3/31/2024				12/31/2023				9/30/2023				6/30/2023
Assets
Cash and due from banks		$	109,674			$	81,677			$	129,898			$	109,414			$	122,021
Interest-earning deposits			298,856				345,747				361,533				436,466				383,185
Cash and cash equivalents			408,530				427,424				491,431				545,880				505,206
Certificates of deposit in other banks			3,924				5,639				6,374				7,598				9,808
Securities available for sale, at fair value			799,937				803,963				802,573				793,826				921,108
Other investments			60,796				60,464				57,560				58,367				57,578
Loans held for sale			9,450				5,022				4,160				6,500				3,849
Loans			6,529,134				6,397,617				6,353,942				6,239,257				6,222,776
Allowance for credit losses - loans			(65,414	)			(64,347	)			(63,610	)			(63,160	)			(62,811	)
Loans, net			6,463,720				6,333,270				6,290,332				6,176,097				6,159,965
Premises and equipment, net			120,988				119,962				118,756				117,744				117,278
Bank owned life insurance ("BOLI")			171,972				170,746				169,392				168,223				167,192
Goodwill and other intangibles, net			391,421				393,183				394,366				396,208				398,194
Accrued interest receivable and other assets			126,279				126,989				133,734				145,719				142,450
Total assets		$	8,557,017			$	8,446,662			$	8,468,678			$	8,416,162			$	8,482,628
Liabilities and Stockholders' Equity
Liabilities:
Noninterest-bearing demand deposits		$	1,764,806			$	1,665,229			$	1,958,709			$	2,020,074			$	2,059,939
Interest-bearing deposits			5,476,272				5,500,503				5,239,091				5,162,314				5,138,665
Total deposits			7,241,078				7,165,732				7,197,800				7,182,388				7,198,604
Short-term borrowings			-				-				-				-				50,000
Long-term borrowings			162,433				162,257				166,930				197,754				197,577
Accrued interest payable and other liabilities			62,093				55,018				64,941				61,559				58,809
Total liabilities			7,465,604				7,383,007				7,429,671				7,441,701				7,504,990
Stockholders' Equity:
Common stock			150				149				149				147				147
Additional paid-in capital			639,159				636,621				633,770				626,348				624,897
Retained earnings			507,366				482,295				458,261				431,317				417,863
Accumulated other comprehensive income (loss)			(55,262	)			(55,410	)			(53,173	)			(83,351	)			(65,269	)
Total stockholders' equity			1,091,413				1,063,655				1,039,007				974,461				977,638
Total liabilities and stockholders' equity		$	8,557,017			$	8,446,662			$	8,468,678			$	8,416,162			$	8,482,628
Common shares outstanding			14,945,598				14,930,549				14,894,209				14,757,565				14,717,938

Nicolet Bankshares, Inc.
Consolidated Statements of Income (Unaudited)
		For the Three Months Ended																	For the Six Months Ended
(In thousands, except per share data)		6/30/2024			3/31/2024			12/31/2023			9/30/2023				6/30/2023				6/30/2024			6/30/2023
Interest income:
Loans, including loan fees		$	97,975		$	93,648		$	90,265		$	87,657			$	84,091			$	191,623		$	163,233
Taxable investment securities			5,056			4,557			4,737			4,351				4,133				9,613			9,094
Tax-exempt investment securities			1,152			1,238			1,394			1,424				1,476				2,390			3,213
Other interest income			4,695			4,588			7,149			6,452				2,357				9,283			3,893
Total interest income			108,878			104,031			103,545			99,884				92,057				212,909			179,433
Interest expense:
Deposits			41,386			38,990			36,583			34,964				29,340				80,376			54,277
Short-term borrowings			-			-			-			474				1,108				-			4,320
Long-term borrowings			2,150			2,234			2,680			2,972				2,570				4,384			5,076
Total interest expense			43,536			41,224			39,263			38,410				33,018				84,760			63,673
Net interest income			65,342			62,807			64,282			61,474				59,039				128,149			115,760
Provision for credit losses			1,350			750			1,000			450				450				2,100			3,540
Net interest income after provision for credit losses			63,992			62,057			63,282			61,024				58,589				126,049			112,220
Noninterest income:
Wealth management fee income			6,674			6,485			6,308			6,057				5,870				13,159			11,382
Mortgage income, net			2,634			1,364			1,856			2,020				1,822				3,998			3,288
Service charges on deposit accounts			1,813			1,581			1,475			1,492				1,529				3,394			3,009
Card interchange income			3,458			3,098			3,306			3,321				3,331				6,556			6,364
BOLI income			1,225			1,347			1,161			1,090				1,073				2,572			2,273
Asset gains (losses), net			616			1,909			5,947			31				(318	)			2,525			(38,786	)
Deferred compensation plan asset market valuations			169			59			949			(457	)			499				228			1,445
LSR income, net			1,117			1,134			1,027			1,108				1,135				2,251			2,290
Other noninterest income			1,903			2,445			2,405			1,879				1,900				4,348			3,732
Total noninterest income			19,609			19,422			24,434			16,541				16,841				39,031			(5,003	)
Noninterest expense:
Personnel expense			26,285			26,510			26,937			23,944				23,900				52,795			48,228
Occupancy, equipment and office			8,681			8,944			9,567			9,027				8,845				17,625			17,628
Business development and marketing			2,040			2,142			1,854			1,869				1,946				4,182			4,067
Data processing			4,281			4,270			7,043			4,643				4,218				8,551			8,206
Intangibles amortization			1,762			1,833			1,842			1,986				2,083				3,595			4,244
FDIC assessments			990			1,033			950			1,500				1,009				2,023			1,549
Merger-related expense			-			-			-			-				26				-			189
Other noninterest expense			2,814			2,415			2,103			2,769				2,930				5,229			5,721
Total noninterest expense			46,853			47,147			50,296			45,738				44,957				94,000			89,832
Income before income tax expense			36,748			34,332			37,420			31,827				30,473				71,080			17,385
Income tax expense			7,475			6,542			6,759			14,669				7,878				14,017			3,688
Net income		$	29,273		$	27,790		$	30,661		$	17,158			$	22,595			$	57,063		$	13,697
Earnings per common share:
Basic		$	1.96		$	1.86		$	2.07		$	1.16			$	1.54			$	3.82		$	0.93
Diluted		$	1.92		$	1.82		$	2.02		$	1.14			$	1.51			$	3.74		$	0.91
Common shares outstanding:
Basic weighted average			14,937			14,907			14,823			14,740				14,711				14,922			14,703
Diluted weighted average			15,276			15,249			15,142			15,100				14,960				15,263			15,011

Nicolet Bankshares, Inc.
Consolidated Financial Summary (Unaudited)
		For the Three Months Ended																				For the Six Months Ended
(In thousands, except share & per share data)		6/30/2024				3/31/2024				12/31/2023				9/30/2023				6/30/2023				6/30/2024				6/30/2023
Selected Average Balances:
Loans		$	6,496,732			$	6,398,838			$	6,263,971			$	6,230,336			$	6,237,757			$	6,447,785			$	6,219,868
Investment securities			881,190				884,775				897,437				962,607				1,068,144				882,982				1,287,123
Interest-earning assets			7,733,097				7,629,120				7,683,495				7,676,895				7,497,935				7,681,109				7,663,344
Cash and cash equivalents			374,176				364,375				558,473				513,250				203,883				369,276				166,015
Goodwill and other intangibles, net			392,171				393,961				395,158				397,052				399,080				393,066				400,140
Total assets			8,481,186				8,380,595				8,415,169				8,417,456				8,228,600				8,430,891				8,398,667
Deposits			7,183,777				7,112,971				7,189,650				7,156,577				6,941,037				7,148,373				7,000,320
Interest-bearing liabilities			5,658,642				5,509,882				5,358,445				5,385,292				5,212,285				5,584,262				5,301,202
Stockholders' equity (common)			1,070,379				1,048,596				996,745				983,133				967,142				1,059,487				968,617
Selected Ratios: (1)
Book value per common share		$	73.03			$	71.24			$	69.76			$	66.03			$	66.42			$	73.03			$	66.42
Tangible book value per common share (2)		$	46.84			$	44.91			$	43.28			$	39.18			$	39.37			$	46.84			$	39.37
Return on average assets			1.39	%			1.33	%			1.45	%			0.81	%			1.10	%			1.36	%			0.33	%
Return on average common equity			11.00				10.66				12.20				6.92				9.37				10.83				2.85
Return on average tangible common equity (2)			17.36				17.07				20.22				11.62				15.95				17.22				4.86
Average equity to average assets			12.62				12.51				11.84				11.68				11.75				12.57				11.53
Stockholders' equity to assets			12.75				12.59				12.27				11.58				11.53				12.75				11.53
Tangible common equity to tangible assets (2)			8.57				8.33				7.98				7.21				7.17				8.57				7.17
Net interest margin			3.35				3.26				3.30				3.16				3.14				3.31				3.02
Efficiency ratio			55.24				58.34				60.41				58.27				58.60				56.75				59.63
Effective tax rate			20.34				19.06				18.06				46.09				25.85				19.72				21.21
Selected Asset Quality Information:
Nonaccrual loans		$	27,838			$	26,677			$	26,625			$	29,507			$	25,278			$	27,838			$	25,278
Other real estate owned - closed branches			768				808				808				884				958				768				958
Other real estate owned			379				437				459				1,147				520				379				520
Nonperforming assets		$	28,985			$	27,922			$	27,892			$	31,538			$	26,756			$	28,985			$	26,756
Net loan charge-offs (recoveries)		$	283			$	13			$	550			$	101			$	51			$	296			$	218
Allowance for credit losses-loans to loans			1.00	%			1.01	%			1.00	%			1.01	%			1.01	%			1.00	%			1.01	%
Net charge-offs to average loans (1)			0.02				0.00				0.03				0.01				0.01				0.01				0.01
Nonperforming loans to total loans			0.43				0.42				0.42				0.47				0.41				0.43				0.41
Nonperforming assets to total assets			0.34				0.33				0.33				0.37				0.32				0.34				0.32
Stock Repurchase Information:
Common stock repurchased ($) (3)		$	-			$	-			$	-			$	-			$	1,519			$	-			$	1,519
Common stock repurchased (shares) (3)			-				-				-				-				26,853				-				26,853

(1)		Income statement-related ratios for partial-year periods are annualized.
(2)		See Reconciliation of Non-GAAP Financial Measures below for a reconciliation of these financial measures.
(3)		Reflects common stock repurchased under board of director authorizations for the common stock repurchase program.

Nicolet Bankshares, Inc.
Consolidated Loan & Deposit Metrics (Unaudited)
(In thousands)		6/30/2024			3/31/2024			12/31/2023			9/30/2023			6/30/2023
Period End Loan Composition
Commercial & industrial		$	1,358,152		$	1,307,490		$	1,284,009		$	1,237,789		$	1,318,567
Owner-occupied commercial real estate ("CRE")			941,137			955,786			956,594			971,397			969,202
Agricultural			1,224,885			1,190,371			1,161,531			1,108,261			1,068,999
Commercial			3,524,174			3,453,647			3,402,134			3,317,447			3,356,768
CRE investment			1,198,020			1,188,722			1,142,251			1,130,938			1,108,692
Construction & land development			247,565			241,730			310,110			326,747			337,389
Commercial real estate			1,445,585			1,430,452			1,452,361			1,457,685			1,446,081
Commercial-based loans			4,969,759			4,884,099			4,854,495			4,775,132			4,802,849
Residential construction			90,904			84,370			75,726			76,289			108,095
Residential first mortgage			1,190,790			1,167,069			1,167,109			1,136,748			1,072,609
Residential junior mortgage			218,512			206,434			200,884			195,432			184,873
Residential real estate			1,500,206			1,457,873			1,443,719			1,408,469			1,365,577
Retail & other			59,169			55,645			55,728			55,656			54,350
Retail-based loans			1,559,375			1,513,518			1,499,447			1,464,125			1,419,927
Total loans		$	6,529,134		$	6,397,617		$	6,353,942		$	6,239,257		$	6,222,776
Period End Deposit Composition
Noninterest-bearing demand		$	1,764,806		$	1,665,229		$	1,958,709		$	2,020,074		$	2,059,939
Interest-bearing demand			1,093,621			1,121,030			1,055,520			955,746			1,030,919
Money market			1,963,559			2,027,559			1,891,287			1,933,227			1,835,523
Savings			762,529			765,084			768,401			789,045			821,803
Time			1,656,563			1,586,830			1,523,883			1,484,296			1,450,420
Total deposits		$	7,241,078		$	7,165,732		$	7,197,800		$	7,182,388		$	7,198,604
Brokered transaction accounts		$	250,109		$	265,818		$	166,861		$	146,517		$	173,107
Brokered time deposits			557,657			517,190			448,582			457,433			566,405
Total brokered deposits		$	807,766		$	783,008		$	615,443		$	603,950		$	739,512
Customer transaction accounts		$	5,334,406		$	5,313,085		$	5,507,056		$	5,551,575		$	5,575,077
Customer time deposits			1,098,906			1,069,639			1,075,301			1,026,863			884,015
Total customer deposits (core)		$	6,433,312		$	6,382,724		$	6,582,357		$	6,578,438		$	6,459,092

Nicolet Bankshares, Inc.
Net Interest Income and Net Interest Margin Analysis (Unaudited)
		For the Three Months Ended
		June 30, 2024									March 31, 2024										June 30, 2023
		Average						Average			Average							Average			Average						Average
(In thousands)		Balance			Interest			Rate			Balance			Interest				Rate			Balance			Interest			Rate
ASSETS
Total loans (1) (2)		$	6,496,732		$	98,086		5.99	%		$	6,398,838		$	93,744			5.81	%		$	6,237,757		$	84,132		5.35	%
Investment securities (2)			881,190			6,579		2.99	%			884,775			6,197			2.80	%			1,068,144			6,094		2.28	%
Other interest-earning assets			355,175			4,695		5.24	%			345,507			4,588			5.26	%			192,034			2,357		4.87	%
Total interest-earning assets			7,733,097		$	109,360		5.61	%			7,629,120		$	104,529			5.44	%			7,497,935		$	92,583		4.90	%
Other assets, net			748,089									751,475										730,665
Total assets		$	8,481,186								$	8,380,595									$	8,228,600
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing core deposits		$	4,665,195		$	31,713		2.73	%		$	4,664,670		$	31,256			2.69	%		$	4,278,502		$	22,728		2.13	%
Brokered deposits			831,100			9,673		4.68	%			680,124			7,734			4.57	%			640,643			6,612		4.14	%
Total interest-bearing deposits			5,496,295			41,386		3.03	%			5,344,794			38,990			2.93	%			4,919,145			29,340		2.39	%
Wholesale funding			162,347			2,150		5.24	%			165,088			2,234			5.35	%			293,140			3,678		4.96	%
Total interest-bearing liabilities			5,658,642		$	43,536		3.09	%			5,509,882		$	41,224			3.01	%			5,212,285		$	33,018		2.54	%
Noninterest-bearing demand deposits			1,687,482									1,768,177										2,021,892
Other liabilities			64,683									53,940										27,281
Stockholders' equity			1,070,379									1,048,596										967,142
Total liabilities and stockholders' equity		$	8,481,186								$	8,380,595									$	8,228,600
Net interest income and rate spread					$	65,824		2.52	%					$	63,305			2.43	%					$	59,565		2.36	%
Net interest margin								3.35	%									3.26	%								3.14	%
Loan purchase accounting accretion (3)					$	1,527		0.08	%					$	1,527			0.08	%					$	1,636		0.10	%
Loan nonaccrual interest (4)					$	329		0.02	%					$	(241	)		(0.01	)%					$	341		0.02	%
		For the Six Months Ended
		June 30, 2024									June 30, 2023
		Average						Average			Average							Average
(In thousands)		Balance			Interest			Rate			Balance			Interest				Rate
ASSETS
Total loans (1) (2)		$	6,447,785		$	191,830		5.90	%		$	6,219,868		$	163,318			5.23	%
Investment securities (2)			882,982			12,776		2.89	%			1,287,123			13,340			2.07	%
Other interest-earning assets			350,342			9,283		5.25	%			156,353			3,893			4.96	%
Total interest-earning assets			7,681,109		$	213,889		5.52	%			7,663,344		$	180,551			4.69	%
Other assets, net			749,782									735,323
Total assets		$	8,430,891								$	8,398,667
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing core deposits		$	4,664,932		$	62,969		2.71	%		$	4,301,792		$	42,315			1.98	%
Brokered deposits			755,612			17,407		4.63	%			603,668			11,962			4.00	%
Total interest-bearing deposits			5,420,544			80,376		2.98	%			4,905,460			54,277			2.23	%
Wholesale funding			163,718			4,384		5.30	%			395,742			9,396			4.72	%
Total interest-bearing liabilities			5,584,262		$	84,760		3.05	%			5,301,202		$	63,673			2.42	%
Noninterest-bearing demand deposits			1,727,829									2,094,860
Other liabilities			59,313									33,988
Stockholders' equity			1,059,487									968,617
Total liabilities and stockholders' equity		$	8,430,891								$	8,398,667
Net interest income and rate spread					$	129,129		2.47	%					$	116,878			2.27	%
Net interest margin								3.31	%									3.02	%
Loan purchase accounting accretion (3)					$	3,055		0.08	%					$	3,272			0.10	%

(1)		Nonaccrual loans and loans held for sale are included in the daily average loan balances outstanding.
(2)		The yield on tax-exempt loans and tax-exempt investment securities is computed on a tax-equivalent basis using a federal tax rate of 21%, and adjusted for the disallowance of interest expense.
(3)		Loan purchase accounting accretion included in Total loans interest above, and the related impact to net interest margin.
(4)		Loan nonaccrual interest included in Total loans interest above, and the related impact to net interest margin.

Nicolet Bankshares, Inc.
Reconciliation of Non-GAAP Financial Measures (Unaudited)
		For the Three Months Ended																			For the Six Months Ended
(In thousands, except per share data)		6/30/2024				3/31/2024				12/31/2023				9/30/2023				6/30/2023			6/30/2024				6/30/2023
Adjusted net income reconciliation: (1)
Net income (GAAP)		$	29,273			$	27,790			$	30,661			$	17,158			$	22,595		$	57,063			$	13,697
Adjustments:
Provision expense (2)			-				-				-				-				-			-				2,340
Assets (gains) losses, net (3)			(616	)			(1,909	)			(5,947	)			(31	)			318			(2,525	)			38,786
Merger-related expense			-				-				-				-				26			-				189
Contract termination charge			-				-				2,689				-				-			-				-
Adjustments subtotal			(616	)			(1,909	)			(3,258	)			(31	)			344			(2,525	)			41,315
Tax on Adjustments (4)			(120	)			(372	)			(635	)			(6	)			86			(492	)			10,329
Tax - Wisconsin Tax Law Change (4)			-				-				-				6,151				-			-				-
Adjusted net income (Non-GAAP)		$	28,777			$	26,253			$	28,038			$	23,284			$	22,853		$	55,030			$	44,683
Diluted earnings per common share:
Diluted earnings per common share (GAAP)		$	1.92			$	1.82			$	2.02			$	1.14			$	1.51		$	3.74			$	0.91
Adjusted Diluted earnings per common share (Non-GAAP)		$	1.88			$	1.72			$	1.85			$	1.54			$	1.53		$	3.61			$	2.98
Tangible assets: (5)
Total assets		$	8,557,017			$	8,446,662			$	8,468,678			$	8,416,162			$	8,482,628
Goodwill and other intangibles, net			391,421				393,183				394,366				396,208				398,194
Tangible assets		$	8,165,596			$	8,053,479			$	8,074,312			$	8,019,954			$	8,084,434
Tangible common equity: (5)
Stockholders' equity (common)		$	1,091,413			$	1,063,655			$	1,039,007			$	974,461			$	977,638
Goodwill and other intangibles, net			391,421				393,183				394,366				396,208				398,194
Tangible common equity		$	699,992			$	670,472			$	644,641			$	578,253			$	579,444
Tangible average common equity: (5)
Average stockholders' equity (common)		$	1,070,379			$	1,048,596			$	996,745			$	983,133			$	967,142		$	1,059,487			$	968,617
Average goodwill and other intangibles, net			392,171				393,961				395,158				397,052				399,080			393,066				400,140
Average tangible common equity		$	678,208			$	654,635			$	601,587			$	586,081			$	568,062		$	666,421			$	568,477

Note: Numbers may not sum due to rounding.
(1)		The adjusted net income measure and related reconciliation provide information useful to investors in understanding the operating performance and trends of Nicolet and also to aid investors in the comparison of Nicolet's financial performance to the financial performance of peer banks.
(2)		Provision expense for 2023 is attributable to the expected loss on a bank subordinated debt investment.
(3)		Includes the gains / (losses) on other assets and investments, as well as the impact of the March 2023 balance sheet repositioning which included the sale of $500 million (par value) U.S. Treasury held to maturity securities for a pre-tax loss of $38 million or an after-tax loss of $28 million, with the net proceeds used to reduce FHLB borrowings and the remainder held in investable cash.
(4)		In July 2023, a new Wisconsin tax law change was signed which provided financial institutions with an exemption from state taxable income for interest, fees, and penalties earned on specific loans to existing Wisconsin-based business or agriculture purpose loans. The effective tax rate for periods prior to the July 1, 2023, effective date of this tax law change assumed an effective tax rate of 25%, and periods subsequent to the effective date assumed an effective tax rate of 19.5%. The adjusted net income reconciliation for first and second quarter 2023 is as originally reported, and has not been restated to reflect the $3 million excess tax expense of those quarters that was subsequently reversed in third quarter 2023 due to the Wisconsin tax law change. Thus, the adjusted net income reconciliation for the quarters of 2023 will not sum to the full year impact.
(5)		The ratios of tangible book value per common share, return on average tangible common equity, and tangible common equity to tangible assets exclude goodwill and other intangibles, net. These financial ratios have been included as they are considered to be critical metrics with which to analyze and evaluate financial condition and capital strength.

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