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Bankshares, Inc. Announces Record 2019 Earnings

- Net income of $12.3 million, 13% above fourth quarter 2018

- Net income of $54.6 million for 2019, 33% higher than 2018

- Earnings per diluted common share of $1.18 for fourth quarter and $5.52 for 2019

- Return on average assets of 1.46% for fourth quarter and 1.75% for 2019

- Acquisition of Choice Bancorp, Inc. consummated November 8, 2019

GREEN BAY, Wis., Jan. 21, 2020 /PRNewswire/ -- Nicolet Bankshares, Inc. (NASDAQ: NCBS) ("Nicolet") announced fourth quarter 2019 net income of $12.3 million and earnings per diluted common share of $1.18, compared to $13.5 million and $1.40 for third quarter 2019, and $10.9 million and $1.11 for fourth quarter 2018, respectively.  Annualized quarterly return on average assets was 1.46%, 1.73% and 1.44%, for fourth quarter 2019, third quarter 2019 and fourth quarter 2018, respectively.

Nicolet Bankshares, Inc. Logo (PRNewsFoto/Nicolet Bankshares, Inc.)

Net income for the year ended December 31, 2019 was $54.6 million, 33% higher than $41.0 million for 2018.  Earnings per diluted common share was $5.52, 34% higher than $4.12 for 2018.  Return on average assets was 1.75% for 2019 and 1.38% for 2018.

The acquisition of Choice Bancorp, Inc. ("Choice") was consummated on November 8, 2019, adding $457 million in assets, including $348 million in loans, $289 million in deposits, $2 million of core deposit intangible, and $45 million of goodwill.  Pursuant to the agreed upon terms, the $82 million final purchase price consisted of issuing 1.2 million shares of common stock (given the final stock-for-stock exchange ratio of 0.497) valued at $80 million and $2 million in cash.

During second quarter 2019, net income favorably included $5.4 million (or $0.55 of diluted earnings per share) related to two actions combined, the sale of 80% of Nicolet's equity investment in a data processing entity ($7.4 million after-tax gain) and retirement-related compensation declared to benefit all employees after that sale ($2.0 million after-tax cost), impacting the 2019 year and quarter comparisons.

"2019 was an exceptional year, continuing our trend of strong performance.  The results primarily reflect the maturation of our core strategies. Our profitable acquisition and integration actions have propelled our level of performance into an elite group," said Bob Atwell, Chairman and CEO of Nicolet.  "In addition to acquisitions, we have remained consistently focused on active balance sheet management, loan and deposit pricing, mortgage banking and wealth management revenue growth, and efficiencies."

"The numbers speak for themselves and are the scorecard underlying the efforts of our 600 employees who execute every day," said Mike Daniels, President and CEO of Nicolet National Bank.  "Our people have done an excellent job adding value for customers, especially in mortgage banking, commercial lending and wealth management, where our relationship-based core values are differentiators.  As well, we have worked hard to preserve a strong margin in a challenging rate environment."

"For 2020, our focus will be on driving core earnings growth through our expanded customer base and capitalizing on our investments in technology and infrastructure for additional operating leverage," Atwell said.  "We are well positioned to increase shareholder value through prudent common stock repurchases and by leveraging our strength as a bank consolidator."

Fourth quarter 2019 net interest income increased $1.3 million (4%) over third quarter, benefiting from growth in average interest-earnings assets, mostly from the inclusion of acquired assets during the quarter, and a resilient net interest margin.  Fourth quarter noninterest income grew $1.0 million (8%) over third quarter, predominantly from strong net mortgage income.  Noninterest expense increased $2.5 million (11%) from third quarter.  Personnel costs were up $0.7 million (mainly from timing of deferred compensation and equity awards) and non-personnel costs were up $1.8 million, mostly due to a $0.7 million lease termination charge for the closure of Nicolet's Oshkosh branch in conjunction with the Choice acquisition and a $0.8 million write-off of goodwill given a recent change in strategy.

Net interest income for 2019 increased $9.4 million (9%) over 2018 on disciplined rate management in a lower interest rate environment (as the Federal Reserve cut interest rates 75bps during the second half of 2019) and overcoming lower aggregate discount income (down $0.9 million from 2018).  Noninterest income excluding net asset gains increased $7.1 million (19%) mostly from strong net mortgage income and growth in wealth fees.  Noninterest expense grew $7.0 million (8%) over 2018.  Personnel increased $5.0 million over 2018 from the $2.75 million of retirement-related compensation actions noted above, as well as merit increases between the years and overall higher incentive compensation.  Non-personnel expenses increased $2.0 million, including the previously noted lease termination charge and goodwill write-off, and $0.4 million for accelerated depreciation given branch facility upgrades.  Income tax expense increased $3.0 million over 2018 on higher pre-tax income and salary deduction limitations, partially offset by the favorable tax treatment of the equity investment sale and the tax benefit on stock-based compensation.

Asset quality remained exceptional, with nonperforming assets of only $15 million, representing 0.42% of total assets at December 31, 2019. The allowance for loan losses of $14 million represented 0.54% of total loans at December 31, 2019.  The provision for loan losses was $1.2 million for the year ended December 31, 2019 (covering $0.4 million of net charge-offs), compared to $1.6 million (covering $1.1 million of net charge-offs) for the year ended December 31, 2018.

At December 31, 2019, assets were $3.6 billion (up 16% since December 31, 2018), loans were $2.6 billion (up 19%), and deposits were $3.0 billion (up 13%), largely due to the acquisition of Choice which was 12% of Nicolet's pre-merger size.  Excluding the impact of Choice, loans increased 3% and deposits increased 2% since December 31, 2018.  On average for 2019, loans of $2.3 billion were 6% stronger than 2018 (or up 4% excluding the acquisition), and deposits of $2.6 billion were 4% higher than 2018 (or up 2% excluding the acquisition).

Total capital was $516 million at December 31, 2019, an increase of $130 million since December 31, 2018, mostly due to stock issued in connection with the Choice acquisition and net income, partially offset by stock repurchases.  We continue to be opportunistic with respect to such repurchases.  At December 31, 2019, there remained $21.0 million authorized under the repurchase program, as modified, to be utilized from time-to-time to repurchase shares in the open market, through block transactions or in private transactions.

The adoption of the current expected credit losses ("CECL") model in 2020 is expected to increase the allowance for loan losses by 55-65%.  This estimate considers our recently completed acquisition of Choice, as well as fourth quarter changes in current economic conditions, forecasts, and our existing loan portfolio.

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 and consumer banking to wealth management and retirement plan services.  Founded in Green Bay in 2000, Nicolet National Bank operates branches in Northeast and Central Wisconsin and the upper peninsula of Michigan.  More information can be found at www.nicoletbank.com

Forward-Looking Statements
This news release contains forward-looking statements within the meaning of the federal securities law.  Statements in this release that are not strictly historical are forward-looking and based upon current expectations that may differ materially from actual results.  These forward-looking statements, identified by words such as "will", "expect", "believe", "prospects", or other words of similar meaning, involve risks and uncertainties that could cause actual results to differ materially from those anticipated by the statements made herein.  These risks and uncertainties include, but are not limited to, general economic trends and changes in interest rates, increased competition, regulatory or legislative developments affecting the financial industry generally or Nicolet specifically, the interpretation of tax legislation, changes in consumer demand for financial services, the possibility of unforeseen events affecting the industry generally or Nicolet specifically, the uncertainties associated with newly developed or acquired operations and market disruptions.  Nicolet undertakes no obligation to release revisions to these forward-looking statements publicly to reflect events or circumstances after the date hereof or to reflect the occurrence of unforeseen events, except as required to be reported under the rules and regulations of the Securities and Exchange Commission.

Nicolet Bankshares, Inc.












Consolidated Financial Summary (Unaudited)













At or for the Three Months Ended


At or for the Year Ended

(In thousands, except per share data)


12/31/2019


9/30/2019


6/30/2019


3/31/2019


12/31/2018


12/31/2019


12/31/2018

Results of operations:















Interest income


$

36,192



$

34,667



$

34,570



$

33,159



$

32,327



$

138,588



$

125,537


Interest expense


5,723



5,477



5,626



5,684



5,298



22,510



18,889


Net interest income


30,469



29,190



28,944



27,475



27,029



116,078



106,648


Provision for loan losses


300



400



300



200



240



1,200



1,600


Net interest income after provision for loan losses


30,169



28,790



28,644



27,275



26,789



114,878



105,048


Noninterest income


13,309



12,312



18,560



9,186



9,797



53,367



39,509


Noninterest expense


25,426



22,887



25,727



22,759



21,621



96,799



89,758


Income before income tax expense


18,052



18,215



21,477



13,702



14,965



71,446



54,799


Income tax expense


5,670



4,603



2,833



3,352



4,015



16,458



13,446


Net income


12,382



13,612



18,644



10,350



10,950



54,988



41,353


Net income attributable to noncontrolling interest


87



82



95



83



87



347



317


Net income attributable to Nicolet Bankshares, Inc.


$

12,295



$

13,530



$

18,549



$

10,267



$

10,863



$

54,641



$

41,036


Earnings per common share:















Basic


$

1.22



$

1.45



$

1.98



$

1.09



$

1.14



$

5.71



$

4.26


Diluted


$

1.18



$

1.40



$

1.91



$

1.05



$

1.11



$

5.52



$

4.12


Common Shares:















Basic weighted average


10,061


9,347


9,374


9,461


9,526


9,562


9,640

Diluted weighted average


10,452


9,697


9,692


9,758


9,814


9,900


9,956

Outstanding


10,588


9,363


9,327


9,431


9,495


10,588


9,495

Noninterest Income:















Trust services fee income


$

1,596



$

1,594



$

1,569



$

1,468



$

1,583



$

6,227



$

6,498


Brokerage fee income


2,190



2,113



2,002



1,810



1,968



8,115



7,042


Mortgage income, net


4,916



3,700



2,059



1,203



1,834



11,878



6,344


Service charges on deposit accounts


1,237



1,223



1,194



1,170



1,208



4,824



4,845


Card interchange income


1,683



1,735



1,660



1,420



1,583



6,498



5,665


BOLI income


535



495



880



459



489



2,369



2,418


Other noninterest income


1,285



1,166



1,624



1,484



1,285



5,559



5,528


Noninterest income without net gains


13,442



12,026



10,988



9,014



9,950



45,470



38,340


Asset gains (losses), net


(133)



286



7,572



172



(153)



7,897



1,169


Total noninterest income


$

13,309



$

12,312



$

18,560



$

9,186



$

9,797



$

53,367



$

39,509


Noninterest Expense:















Personnel expense


$

13,628



$

12,914



$

15,358



$

12,537



$

11,327



$

54,437



$

49,476


Occupancy, equipment and office


3,827



3,454



3,757



3,750



3,673



14,788



14,574


Business development and marketing


1,397



1,428



1,579



1,281



1,185



5,685



5,324


Data processing


2,730



2,515



2,350



2,355



2,420



9,950



9,514


Intangibles amortization


936



914



969



1,053



1,053



3,872



4,389


Other noninterest expense


2,908



1,662



1,714



1,783



1,963



8,067



6,481


Total noninterest expense


$

25,426



$

22,887



$

25,727



$

22,759



$

21,621



$

96,799



$

89,758


 

Nicolet Bankshares, Inc.











Consolidated Financial Summary (Unaudited) - Continued













At or for the Three Months Ended


At or for the Year Ended

(In thousands, except per share data)


12/31/2019


9/30/2019


6/30/2019


3/31/2019


12/31/2018


12/31/2019


12/31/2018

Period-End Balances:















Loans


$

2,573,751



$

2,242,931



$

2,203,273



$

2,189,688



$

2,166,181



$

2,573,751



$

2,166,181


Allowance for loan losses


13,972



13,620



13,571



13,370



13,153



13,972



13,153


Securities available for sale, at fair value


449,302



419,300



403,989



407,693



400,144



449,302



400,144


Goodwill and other intangibles, net


165,967



121,371



122,285



123,254



124,307



165,967



124,307


Total assets


3,577,260



3,105,671



3,054,813



3,041,091



3,096,535



3,577,260



3,096,535


Deposits


2,954,453



2,584,447



2,536,639



2,538,486



2,614,138



2,954,453



2,614,138


Stockholders' equity


516,262



428,014



411,415



398,767



386,609



516,262



386,609


Book value per common share


48.76



45.71



44.11



42.28



40.72



48.76



40.72


Tangible book value per common share (1)


33.08



32.75



31.00



29.21



27.62



33.08



27.62


Average Balances:















Loans


$

2,438,908



$

2,218,307



$

2,189,070



$

2,179,420



$

2,142,870



$

2,257,033



$

2,127,470


Securities available for sale, at fair value


424,981



399,090



402,934



409,580



421,693



409,161



411,007


Interest-earning assets


2,974,974



2,763,997



2,702,357



2,734,936



2,693,752



2,794,641



2,671,560


Total assets


3,339,283



3,094,546



3,022,383



3,047,068



2,996,553



3,126,535



2,977,457


Deposits


2,756,295



2,563,821



2,514,226



2,556,927



2,518,378



2,598,271



2,508,952


Interest-bearing liabilities


2,023,448



1,895,754



1,892,775



1,946,210



1,867,327



1,939,639



1,951,846


Goodwill and other intangibles, net


147,636



121,895



122,841



123,892



124,930



129,112



126,284


Stockholders' equity


478,645



420,864



404,345



391,027



379,846



423,952



371,635


Financial Ratios: (2)















Return on average assets


1.46

%


1.73

%


2.46

%


1.37

%


1.44

%


1.75

%


1.38

%

Return on average common equity


10.19



12.75



18.40



10.65



11.35



12.89



11.04


Return on average tangible common equity (1)


14.74



17.95



26.43



15.59



16.91



18.53



16.73


Average equity to average assets


14.33



13.60



13.38



12.83



12.68



13.56



12.48


Stockholders' equity to assets


14.43



13.78



13.47



13.11



12.49



14.43



12.49


Tangible common equity to tangible assets (1)


10.27



10.28



9.86



9.44



8.83



10.27



8.83


Loan yield


5.33



5.56



5.66



5.51



5.38



5.57



5.37


Earning asset yield


4.82



4.97



5.11



4.89



4.76



5.00



4.74


Cost of interest-bearing deposits


0.99



1.00



1.05



1.04



0.98



1.02



0.82


Cost of funds


1.12



1.14



1.19



1.18



1.12



1.16



0.97


Net interest margin


4.06



4.19



4.28



4.05



3.98



4.19



4.04


Net loan charge-offs to average loans


(0.01)



0.06



0.02



(0.00)



0.01



0.02



0.05


Nonperforming loans to total loans


0.55



0.41



0.35



0.40



0.25



0.55



0.25


Nonperforming assets to total assets


0.42



0.34



0.26



0.30



0.19



0.42



0.19


Allowance for loan losses to loans


0.54



0.61



0.62



0.61



0.61



0.54



0.61


Efficiency ratio


57.57



55.19



64.01



61.91



58.03



59.54



61.42


Effective tax rate


31.41



25.27



13.19



24.46



26.83



23.04



24.54


Selected Items:















Interest income resolved PCI loans (rounded)


$

1,400



$

1,800



$

1,300



$

200



$

100



$

4,700



$

2,000


Tax-equivalent adjustment net interest income


257



251



263



272



278



1,043



1,150


Tax benefit on stock-based compensation


(1,275)



(128)



(739)



(144)



(23)



(2,286)



(182)


Common stock repurchased (dollars) (3)


$

3,383



$

576



$

9,142



$

5,600



$

5,233



$

18,701



$

22,177


Common stock repurchased (full shares) (3)


47,728



9,300



151,098



102,655



100,245



310,781



408,071




1

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.

2

Income statement-related ratios for partial-year periods are annualized.

3

Reflects common stock repurchased under board of director authorizations for the common stock repurchase program.

 

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SOURCE Nicolet Bankshares, Inc.