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Nicolet Bankshares, Inc. Announces Third Quarter 2020 Earnings

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- Net income strong at $18.1 million , 34% above both second quarter 2020 and third quarter 2019

- Net income of $42.1 million for first nine months of 2020, compared to $42.3 million for first nine months of 2019

- Earnings per diluted common share of $1.72 and $3.97 for the three and nine months ended September 30

- Return on average assets was 1.55% and 1.35% for the three and nine months ended September 30

- Exceptional secondary mortgage revenue continued in third quarter, again attributable to strong refinance activity

- Merger of Advantage Community Bancshares, Inc. consummated and integrated in August, adding $172 million in assets and four branches in Central Wisconsin and the Wausau area

- Common stock repurchases resumed in third quarter after a second quarter pause

GREEN BAY, Wis. , Oct. 20, 2020 /PRNewswire/ -- Nicolet Bankshares, Inc. (NASDAQ: NCBS) ("Nicolet") announced third quarter 2020 net income of $18.1 million and earnings per diluted common share of $1.72 , compared to $13.5 million and $1.28 for second quarter 2020, and $13.5 million and $1.40 for third quarter 2019, respectively.  Annualized quarterly return on average assets was 1.55%, 1.26% and 1.73%, for third quarter 2020, second quarter 2020 and third quarter 2019, respectively.

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

For the nine months ended September 30, 2020 , net income was $42.1 million , earnings per common share was $3.97 , and annualized return on average assets was 1.35%.  Comparatively, for the first nine months of 2019, net income was $42.3 million , earnings per diluted common share was $4.36 , and annualized return on average assets was 1.85%, as 2019 net income included $5.4 million from two nonrecurring items.  Second quarter 2019 included a $7.4 million after-tax gain on the partial sale of our equity interest in a data processing company, and $2.75 million ( $2.0 million after-tax) in personnel expense for retirement-related compensation declared. Therefore, 2020 year-to-date net income increased $5.2 million or 14% over net income for the nine months ended September 30, 2019 of $37.0 million , excluding the two nonrecurring items. 

"Third quarter earnings were exceptional, led by continued strong secondary mortgage income, steadily rising wealth revenues, and settling expense levels," said Bob Atwell , Chairman and CEO of Nicolet. "During March and April, we acted aggressively to prepare our bank and customers for the substantially negative impact of the COVID crisis.  As we moved through the second and third quarters, we have experienced the inspiring resilience of our core customer base as well as the diligence and heart of our colleagues to engage and support them.  Earnings momentum remains strong, while we have continued to prepare for credit challenges which remain largely unseen.  We maintained the loan loss provision at $3 million for the third quarter."

"Our commercially focused ("C&I") customers as a group have remained profitable and liquid," Atwell said.  "While this is evident in the financial statements they provide us, it is more importantly visible in their reduced line of credit usage and high cash deposits held on our balance sheet," Atwell said.  "The Paycheck Protection Program ("PPP") was a badly needed confidence boost. This along with other proactive operational changes they have made, many customers have further strengthened their balance sheets even while their operations remain profitable."

"One of the most significant leading indicators today of the level of future problems is the performance of our modified loans," Atwell continued.  "Since the pandemic, we modified $462 million of loans, or approximately 18% of loans excluding PPP loans (predominantly commercial loans and to interest-only terms).  As of September 30 , only $60 million , or 2% of September's non-PPP loans, remain on modified terms, and we expect approximately $45 million of those to end their modification periods by November."

"The volume of our PPP loans, the immediate steps we took to provide payment relief, and our second quarter micro-grants to the smallest and hardest hit of our borrowers, are a very tangible expression of the depth of our commitment to the people and the communities we serve," Atwell stated.  "These measures gave our customers the time and resources to respond to the shock of COVID.  We are seeing both the resourcefulness and determination of our customers very clearly in our second and third quarter results.  Much like the prior financial crisis of 2008-2012, the COVID crisis has been an opportunity to show the difference a deeply embedded bank can make."

"The brand loyalty we have earned has also helped us deal with the impact of rapid rate declines throughout 2019 and 2020," said Atwell.  "We have used strong analytics and a relationship-based culture of fair but disciplined pricing to slow core margin erosion."

"Our year-to-date net income is at a record level, despite absorbing the costs of tough decisions," said Mike Daniels , President and CEO of Nicolet National Bank .  "We recorded nearly $4 million of pre-tax expense related to the onset of the pandemic, a terminated acquisition and branch closure decisions (all in the second quarter), and $9 million of loan loss provision against potential future credit losses that we still cannot specifically identify given significant volatility in the environment and uncertainty of the extent of impact on borrowers."

"The contribution from our secondary mortgage business has been stellar, as refinance activity remains significant," Daniels said.  "Our net mortgage income added $9.7 million in third quarter and $22.0 million year-to-date to pretax earnings.  For retail customers purchasing new homes or refinancing, we closed over 1,200 loans this quarter and nearly 3,300 year-to-date. We are very proud of our teamwork and use of automation to process this significant mortgage activity over several months in an efficient manner, while maintaining a quality customer experience."

"Our balance sheet continued to increase, in part from our recent acquisition, but also from rising cash on extraordinary deposit growth as customers remain focused on liquidity and safety," Daniels said. "The dynamics of rising cash in this near-zero rate environment, as well as waning commercial loan demand, other than PPP loans, continue to squeeze the net interest margin.  In addition to prudent pricing actions on deposits and loans, we are taking actions to reduce non-deposit leverage.  Along with brokered deposits maturing without renewal and selected prepayment of FHLB advances, we are in the process of early redemption of our higher-costing fixed rate subordinated notes ( $12 million at 5%) and the full redemption of one of our issuances of junior subordinated debentures ( $6 million at 8%) by year end.  Prepaying this combined debt of $18 million will save us approximately $1.1 million of interest expense annually," Daniels stated. 

The timing of Nicolet's acquisitions, Choice Bancorp, Inc. ("Choice") on November 8, 2019 , at 12% of pre-merger assets, and Advantage Community Bancshares, Inc. ("Advantage") on August 21, 2020 , at 4% of pre-merger assets, impacts financial comparisons.  Certain income statement results, average balances and related ratios for the three and nine-month periods ended September 30, 2020 include full contribution from Choice and a partial period of Advantage in third quarter 2020, while the same periods in 2019 include no contribution from Choice or Advantage. 

Balance Sheet Review

At September 30, 2020, period end assets were $4.7 billion, an increase of $165 million (4%) over June 30, attributable to the acquisition of Advantage. The quarter-over-quarter increase in assets included higher cash and cash equivalents (up $31 million to $854 million ), investment securities (up $25 million to $535 million ), and loans (up $87 million to $2.9 billion at September 30).  Excluding the impact of Advantage at acquisition, period end loans were unchanged from June 30. 

"Loans were growing well organically during 2019 and through March 2020 ," Daniels said.  "However, since then, underlying organic loans have been declining and only recently leveling off, as our borrowing base is choosing to remain cautious with debt levels, use PPP funds, and stay more liquid during the uncertain operating climate."

Total deposits of $3.7 billion at September 30, 2020 , increased $175 million (5%) over June 30, also largely due to the Advantage acquisition.  Since June 30 , transaction accounts combined (i.e. savings, money markets and interest-bearing checking) increased $152 million (9%) to $1.9 billion at September 30 , and noninterest-bearing demand grew $47 million (4%) to $1.1 billion representing 30% of total deposits, while core time deposits declined slightly (down $5 million or 1%) to $373 million and brokered deposits decreased $20 million (6%) to $327 million .  Excluding the impact of Advantage at acquisition, period end deposits increased $34 million (1%) since June 30 .

Total capital was $538 million at September 30, 2020 , an increase of $6 million since June 30, 2020 , mostly due to solid earnings, partly offset by share repurchase activity. Nicolet repurchased 234,914 shares at a total cost of $13.7 million , or an average per share cost of $58.45 during third quarter 2020. On August 18, 2020 , Nicolet's board authorized an increase to the program of $20 million or up to 325,000 shares of common stock. As a result, at September 30, 2020 , there remained $13.4 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. 

Asset Quality

"Expectations about the extent and duration of current credit stress on our customers remain extremely difficult to estimate," said Daniels.  "As a result, this year we have provided $9 million of loan loss provision, which significantly exceeds the $0.9 million of year-to-date net charge-offs. While our traditional asset quality metrics are not showing rising issues, we feel this provides appropriate consideration for potential future credit losses that just cannot be accurately quantified today."

Nonperforming assets decreased to $12 million at September 30 , to represent 0.25% of total assets compared to $13 million or 0.29% at June 30.  Since the prior quarter, the allowance for credit losses-loans increased to $31 million , due to the $3.0 million provision for credit losses recognized, less net charge-offs during the quarter of $0.7 million or 0.10% of average loans, annualized.  On a year-to-date basis, annualized, the loan loss provision represented 0.44% of average loans (or 0.47% excluding PPP loans) compared to net charge-offs at 0.04% of average loans. At September 30, 2020 , the allowance represented 1.08% of total loans, and represented 1.22% of total loans excluding the net carrying value of PPP loans.

During 2020, we originated 2,725 PPP loans totaling $351 million , bearing a 1% contractual rate.   At September 30 , the net carrying value of PPP loans was $335 million , or 12% of total loans, and $9.6 million of the $12.3 million in related gross fees remain unamortized.

"The PPP program has clearly aided many of our business customers," Daniels said.  "As the terms of forgiveness continue to be clarified, nearly all of this is likely to convert to equity for the businesses that remain viable."

Since the pandemic started, approximately 980 loans (88% commercial and 12% retail) were provided payment modifications, consistent with guidelines of the CARES Act, on loans totaling $462 million (65% interest only and 35% full payment deferrals).  As of September 30 , $384 million (83%) had returned to normal payment structures and $19 million (4%) were paid off (of which one was a September charge-off for $0.5 million ). The remaining $60 million (in 66 commercial and 6 retail loans) remained under modification structure, representing only 2% of September loans excluding PPP loans.

Income Statement Review

Net income for third quarter 2020 was $18.1 million , $4.6 million or 34% stronger than second quarter 2020 on positive net interest income, continued strong net mortgage income, and controlled expenses. 

Net interest income of $32.6 million was $1.1 million higher than second quarter 2020, comprised of $0.4 million higher interest income and $0.7 million lower interest expense.  On a linked quarter basis, average interest-earning assets increased $299 million (8%), due to growth in average loans (up $47 million), investments (up $7 million) and other interest-earning assets, which are predominantly cash, (up $245 million, to represent 20% of interest-earning assets for third quarter 2020 versus 15% for second quarter 2020).  The high cash levels are a positive contributor to net interest income at a very low yield, thus pressuring the related margin components.  Average interest bearing liabilities increased $193 million (7%) on a linked quarter basis, comprised of $119 million higher interest-bearing deposits (with core interest-bearing deposits up $126 million , while brokered deposits declined $7 million on average) and $99 million higher average PPPLF funding, partly offset by $25 million lower other interest-bearing liabilities (mostly the early repayment of FHLB advances).  Also adding to the heavy cash position and net free funds was average noninterest-bearing demand deposits, totaling $1.1 billion for third quarter compared to $1.0 billion in second quarter 2020, reflecting the continued cautionary spending and increased liquidity of consumers and businesses.

The net interest margin for third quarter 2020 was 3.06%, down from 3.21% for second quarter 2020, heavily influenced by the changing balance sheet mix to low-earning cash. The yield on earning assets of 3.50% declined 26bps from second quarter 2020, mostly due to the increase in cash that generally earns 10bps since March 2020 , as well as the low rate on the PPP loans.  The yield on loans excluding PPP loans was 4.89%, 7bps lower than second quarter 2020 mostly attributable to the impact of the lower rate environment on variable loans and new loans. The cost of funds of 0.64% declined 15bps during the same period, attributable mainly to the timing of pricing changes implemented on interest-bearing deposits (down 15bps to 0.60%) and a higher proportion of PPPLF funds costing 35bps versus other funding. 

Third quarter noninterest income of $18.7 million increased $1 .2 million (7%) compared to second quarter 2020. Excluding net asset gains, noninterest income grew $0 .3 million or 1% over second quarter 2020.  Net mortgage income remains strong, though down slightly ( $0 .3 million) from the prior quarter, including higher sale gains and capitalized gains combined (up $0.8 million or 8%), more than offset by an unfavorable change in the fair value marks on the mortgage servicing asset and mortgage derivatives combined (down $1.1 million ). Trust services fee income and brokerage fee income combined increased $0.3 million over second quarter 2020, consistent with growth in accounts and assets under management.  Service charges on deposit accounts increased $0 .2 million (28%), and card interchange income increased $0 .2 million (15%) between the sequential quarters, as activity and volumes returned to more normalized levels.  Other noninterest income decreased $0 .3 million from second quarter largely due to market losses since June on the value of nonqualified deferred compensation plan assets. 

Noninterest expense of $23.7 million decreased $4.1 million (15%) from second quarter 2020. Personnel expense decreased $0.4 million largely due to $0.6 million lower salary and overtime expense (reflecting branch closure savings, as well as $0.4 million of on-site bonus pay and $0.2 million of severance costs incurred in second quarter), $0.3 million lower nonqualified deferred compensation expense (related to the plan asset declines noted above), and $0.2 million lower fringe expense, partly offset by $0.7 million higher incentive accruals between the sequential quarters.  All non-personnel expenses combined decreased $3 .7 million from the prior quarter, as second quarter 2020 included expense of $1.5 million related to the branch closures (mostly lease termination charges), $1.25 million for the micro-grant program, $0.2 million pandemic-based testing and protective equipment and $0.5 million to terminate the Commerce Financial Holdings, Inc. merger agreement.

Acquisition and Branches Update

On August 21 , Nicolet consummated its all-cash purchase of Advantage.  Upon consummation, Advantage added $172 million in assets (4% of pre-merger assets), including $88 million in loans, $1 million in core deposit intangible, $12 million in goodwill, and $141 million in deposits.  The system integration was completed and the four branches of Advantage opened as Nicolet National Bank branches on August 24 , expanding our presence in Central Wisconsin and the Wausau area.  The inclusion of Advantage's balance sheet and operational results for roughly one month in the third quarter explains a modest portion of the increases in certain period end balances, average balances and income statement line items.

Nicolet started the year with 39 branches. As of today, Nicolet operates 36 branches, which includes the acquired 4 locations less the 7 branch closures (as announced in the prior quarter).  During fourth quarter, Nicolet plans to close its Rib Mountain location (near Wausau ) and open an additional Appleton location that is currently under construction. 

Nicolet continues to explore potential acquisitions in existing and adjacent markets. "Margin headwinds, credit quality issues and the general trauma of COVID will accelerate the pressure of smaller banks to sell.  Much like the financial crisis 12 years ago, we see a great opportunity for highly accretive consolidation," concluded Atwell.

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 Private Securities Litigation Reform Act of 1995, which Congress passed in an effort to encourage companies to provide information about their anticipated future financial performance. This act protects a company from unwarranted litigation if actual results are different from management expectations. This report reflects the current views and estimates of future economic circumstances, industry conditions, company performance, and financial results of the management of Nicolet. These forward-looking statements are subject to a number of factors and uncertainties which could cause Nicolet's actual results and experience to differ from the anticipated results and expectations expressed in such forward-looking statements, and such differences may be material. Forward-looking statements speak only as of the date they are made and Nicolet does not assume any duty to update forward-looking statements. There are a number of factors that could cause our actual results to differ materially from those projected in such forward-looking statements.

In addition to factors previously disclosed in Nicolet's reports filed with the SEC and those identified elsewhere in this news release, these forward-looking statements include, but are not limited to, statements about (i) Nicolet's expected COVID pandemic response and how its operations and financial condition may change as a result of the COVID pandemic; (ii) the expected impact on the broader economy with regard to the effects of the COVID pandemic and the government's response to the COVID pandemic; and (iii) Nicolet's plans, objectives, expectations and intentions and other statements contained in this report that are not historical facts.  Other statements identified by words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "targets," "projects" or words of similar meaning generally are intended to identify forward-looking statements. These statements are based upon the current beliefs and expectations of Nicolet's management and are inherently subject to significant business, economic and competitive risks and uncertainties, many of which are beyond their control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Actual results may differ from those indicated or implied in the forward-looking statements and such differences may be material.

The COVID pandemic is adversely affecting us, our customers, counterparties, employees, and third-party service providers, and the ultimate extent of the impacts on our business, financial position, results of operations, liquidity, and prospects is uncertain. Continued deterioration in general business and economic conditions or turbulence in domestic financial markets could adversely affect Nicolet's revenues and the values of its assets and liabilities, lead to a tightening of credit, and increase stock price volatility. In addition, the COVID pandemic may result in changes to statutes, regulations, or regulatory policies or practices resulting from could affect Nicolet in substantial and unpredictable ways.

Nicolet Bankshares, Inc.







Consolidated Financial Summary (Unaudited)









At or for the Three Months Ended


At or for the Nine Months Ended

(In thousands, except per share data)


09/30/2020


06/30/2020


03/31/2020


12/31/2019


09/30/2019


9/30/2020


9/30/2019

Results of operations:















Interest income


$

37,270



$

36,892



$

37,003



$

36,192



$

34,667



$

111,165



$

102,396


Interest expense


4,710



5,395



5,740



5,723



5,477



15,845



16,787


Net interest income


32,560



31,497



31,263



30,469



29,190



95,320



85,609


Provision for credit losses


3,000



3,000



3,000



300



400



9,000



900


Net interest income after provision for credit losses


29,560



28,497



28,263



30,169



28,790



86,320



84,709


Noninterest income


18,691



17,471



9,585



13,309



12,312



45,747



40,058


Noninterest expense


23,685



27,813



23,854



25,426



22,887



75,352



71,373


Income before income tax expense


24,566



18,155



13,994



18,052



18,215



56,715



53,394


Income tax expense


6,434



4,576



3,321



5,670



4,603



14,331



10,788


Net income


18,132



13,579



10,673



12,382



13,612



42,384



42,606


Net income attributable to noncontrolling interest


30



101



118



87



82



249



260


Net income attributable to Nicolet Bankshares, Inc.


$

18,102



$

13,478



$

10,555



$

12,295



$

13,530



$

42,135



$

42,346


Earnings per common share:















Basic


$

1.75



$

1.29



$

1.00



$

1.22



$

1.45



$

4.04



$

4.51


Diluted


$

1.72



$

1.28



$

0.98



$

1.18



$

1.40



$

3.97



$

4.36


Common Shares:















Basic weighted average


10,349



10,417



10,516



10,061



9,347



10,426



9,394

Diluted weighted average


10,499



10,520



10,801



10,452



9,697



10,605



9,707

Outstanding


10,196



10,424



10,408



10,588



9,363



10,196



9,363

Noninterest Income:















Trust services fee income


$

1,628



$

1,510



$

1,579



$

1,596



$

1,594



$

4,717



$

4,631


Brokerage fee income


2,489



2,269



2,322



2,190



2,113



7,080



5,925


Mortgage income, net


9,675



9,963



2,327



4,916



3,700



21,965



6,962


Service charges on deposit accounts


1,037



813



1,225



1,237



1,223



3,075



3,587


Card interchange income


1,877



1,637



1,562



1,683



1,735



5,076



4,815


BOLI income


531



540



703



535



495



1,774



1,834


Other noninterest income


1,237



1,487



521



1,285



1,166



3,245



4,274


Noninterest income without net gains


18,474



18,219



10,239



13,442



12,026



46,932



32,028


Asset gains (losses), net


217



(748)



(654)



(133)



286



(1,185)



8,030


Total noninterest income


$

18,691



$

17,471



$

9,585



$

13,309



$

12,312



$

45,747



$

40,058


Noninterest Expense:















Personnel expense


$

14,072



$

14,482



$

13,323



$

13,628



$

12,914



$

41,877



$

40,809


Occupancy, equipment and office


4,051



4,361



4,204



3,827



3,454



12,616



10,961


Business development and marketing


810



2,514



1,359



1,397



1,428



4,683



4,288


Data processing


2,658



2,399



2,563



2,730



2,515



7,620



7,220


Intangibles amortization


834



880



993



936



914



2,707



2,936


Other noninterest expense


1,260



3,177



1,412



2,908



1,662



5,849



5,159


Total noninterest expense


$

23,685



$

27,813



$

23,854



$

25,426



$

22,887



$

75,352



$

71,373


Period-End Balances:















Total loans


$

2,908,793



$

2,821,501



$

2,607,424



$

2,573,751



$

2,242,931



$

2,908,793



$

2,242,931


PPP loans


335,236



329,157









335,236




Total loans, ex. PPP loans


2,573,557



2,492,344









2,573,557




Allowance for credit losses - loans


31,388



29,130



26,202



13,972



13,620



31,388



13,620


Securities available for sale, at fair value


535,351



510,809



511,860



449,302



419,300



535,351



419,300


Cash and cash equivalents


853,564



822,684



241,960



182,059



143,969



853,564



143,969


Goodwill and other intangibles, net


176,213



164,094



164,974



165,967



121,371



176,213



121,371


Total assets


4,706,375



4,541,228



3,732,554



3,577,260



3,105,671



4,706,375



3,105,671


Deposits


3,712,808



3,537,805



3,023,466



2,954,453



2,584,447



3,712,808



2,584,447


Stockholders' equity


538,068



532,033



510,971



516,262



428,014



538,068



428,014


Book value per common share


52.77



51.04



49.09



48.76



45.71



52.77



45.71


Tangible book value per common share (1)


35.49



35.30



33.24



33.08



32.75



35.49



32.75


Nicolet Bankshares, Inc.









Consolidated Financial Summary (Unaudited) - Continued











At or for the Three Months Ended


At or for the Nine Months Ended

(In thousands, except per share data)


09/30/2020


6/30/2020


3/31/2020


12/31/2019


9/30/2019


9/30/2020


9/30/2019

Average Balances:















Loans


$

2,871,256



$

2,823,866



$

2,584,584



$

2,438,908



$

2,218,307



$

2,760,309



$

2,195,742


Investment securities


496,153



489,597



453,820



424,981



399,090



479,916



403,829


Interest-earning assets


4,216,106



3,917,499



3,167,505



2,974,974



2,763,997



3,768,676



2,733,870


Goodwill and other intangibles, net


169,353



164,564



165,532



147,636



121,895



166,493



122,869


Total assets


4,633,359



4,310,088



3,555,144



3,339,283



3,094,546



4,167,902



3,054,840


Deposits


3,636,260



3,403,188



2,920,071



2,756,295



2,563,821



3,320,994



2,545,017


Interest-bearing liabilities


2,933,737



2,741,199



2,218,592



2,023,448



1,895,754



2,632,280



1,911,395


Stockholders' equity


537,826



520,177



513,558



478,645



420,864



523,904



405,521


Selected Financial Ratios: (2)















Return on average assets


1.55

%


1.26

%


1.19

%


1.46

%


1.73

%


1.35

%


1.85

%

Return on average common equity


13.39



10.42



8.27



10.19



12.75



10.74



13.96


Return on average tangible common equity (1)


19.54



15.24



12.20



14.74



17.95



15.75



20.03


Average equity to average assets


11.61



12.07



14.45



14.33



13.60



12.57



13.27


Stockholders' equity to assets


11.43



11.72



13.69



14.43



13.78



11.43



13.78


Tangible common equity to tangible assets (1)


7.99



8.41



9.70



10.27



10.28



7.99



10.28


Net interest margin


3.06



3.21



3.94



4.06



4.19



3.35



4.17


Efficiency ratio


46.18



55.69



57.16



57.57



55.19



52.71



60.27


Effective tax rate


26.19



25.21



23.73



31.41



25.27



25.27



20.20


Selected Asset Quality Information:















Nonaccrual loans


$

10,997



$

11,998



14,769



$

14,122



$

9,238



$

10,997



$

9,238


Other real estate owned


1,000



1,000



1,000



1,000



1,325



1,000



1,325


Nonperforming assets


$

11,997



$

12,998



$

15,769



$

15,122



$

10,563



$

11,997



$

10,563


Net loan charge-offs (recoveries)


$

743



$

71



$

55



$

(52)



$

351



$

869



$

433


Allowance for credit losses-loans to loans


1.08

%


1.03

%


1.00

%


0.54

%


0.61

%


1.08

%


0.61

%

Net loan charge-offs to average loans (2)


0.10



0.01



0.01



(0.01)



0.06



0.04



0.03


Nonperforming loans to total loans


0.38



0.43



0.57



0.55



0.41



0.38



0.41


Nonperforming assets to total assets


0.25



0.29



0.42



0.42



0.34



0.25



0.34


Selected Other Information:















Interest income resolved PCI loans (rounded)


N/A



N/A



N/A



$

1,400



$

1,800



N/A



$

3,300


Tax-equivalent adjustment net interest income


$

249



$

229



$

231



$

257



$

251



$

709



$

786


Tax benefit on stock-based compensation


$

(14)



$

(24)



$

(323)



$

(1,275)



$

(128)



$

(361)



$

(1,011)


Common stock repurchased (dollars) (3)


$

13,732



$



$

13,903



$

3,383



$

576



$

27,635



$

15,318


Common stock repurchased (full shares) (3)


234,914





206,833



47,728



9,300



441,747



263,053




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.

Nicolet Bankshares, Inc.









Net Interest Income and Net Interest Margin Analysis (Unaudited)
































At or for the Three Months Ended




September 30, 2020


June 30, 2020


September 30, 2019




Average




Average


Average




Average


Average




Average


(In thousands)


Balance


Interest


Rate


Balance


Interest


Rate


Balance


Interest


Rate


ASSETS




















PPP loans


$

332,816



$

2,477



2.91

%


$

264,705



$

1,786



2.67

%


$



$



%


Total loans ex PPP


2,538,440



31,598



4.89

%


2,559,161



32,008



4.96

%


2,218,307



31,380



5.56

%


Total loans (1) (2)


2,871,256



34,075



4.66

%


2,823,866



33,794



4.74

%


2,218,307



31,380



5.56

%


Investment securities (2)


496,153



2,764



2.23

%


489,597



2,752



2.25

%


399,090



2,612



2.62

%


Other interest-earning assets


848,697



680



0.32

%


604,036



575



0.38

%


146,600



926



2.49

%


Total interest-earning assets


4,216,106



37,519



3.50

%


3,917,499



37,121



3.76

%


2,763,997



34,918



4.97

%


Other assets, net


417,253







392,589







330,549







Total assets


$4,633,359






$4,310,088






$3,094,546






LIABILITIES AND STOCKHOLDERS' EQUITY














Interest-bearing core deposits


$

2,180,575



$

2,541



0.46

%


$

2,054,574



$

3,170



0.62

%


$

1,763,844



$

4,466



1.00

%


Brokered deposits


336,026



1,243



1.47

%


342,776



1,285



1.51

%


54,661



130



0.94

%


Total interest-bearing deposits


2,516,601



3,784



0.60

%


2,397,350



4,455



0.75

%


1,818,505



4,596



1.00

%


PPPLF


335,865



297



0.35

%


237,153



210



0.35

%






0.00

%


Other interest-bearing liabilities


81,271



629



3.05

%


106,696



730



2.71

%


77,249



881



4.48

%


Total interest-bearing liabilities


2,933,737



4,710



0.64

%


2,741,199



5,395



0.79

%


1,895,754



5,477



1.14

%


Noninterest-bearing demand deposits


1,119,659







1,005,838







745,316







Other liabilities


42,137







42,874







32,612







Stockholders' equity


537,826







520,177







420,864







Total liabilities and stockholders' equity


$

4,633,359







$

4,310,088







$

3,094,546







Net interest income and rate spread




$

32,809



2.86

%




$

31,726



2.97

%




$

29,441



3.83

%


Net interest margin






3.06

%






3.21

%






4.19

%
























At or for the Nine Months Ended










September 30, 2020


September 30, 2019










Average




Average


Average




Average








(In thousands)


Balance


Interest


Rate


Balance


Interest


Rate








ASSETS




















PPP loans


$

199,662



$

4,263



2.80

%


$



$



%








Total loans ex PPP


2,560,647



97,414



5.01

%


2,195,742



92,650



5.58

%








Total loans (1) (2)


2,760,309



101,677



4.85

%


2,195,742



92,650



5.58

%








Investment securities (2)


479,916



8,280



2.30

%


403,829



7,799



2.57

%








Other interest-earning assets


528,451



1,917



0.48

%


134,299



2,733



2.69

%








Total interest-earning assets


3,768,676



111,874



3.91

%


2,733,870



103,182



4.99

%








Other assets, net


399,226







320,970













Total assets


$

4,167,902







$

3,054,840













LIABILITIES AND STOCKHOLDERS' EQUITY














Interest-bearing core deposits


$

2,070,500



$

9,894



0.64

%


$

1,769,479



$

13,812



1.04

%








Brokered deposits


279,165



3,302



1.58

%


64,588



291



0.60

%








Total interest-bearing deposits


2,349,665



13,196



0.75

%


1,834,067



14,103



1.03

%








PPPLF


191,535



507



0.35

%






%








Other interest-bearing liabilities


91,080



2,142



3.10

%


77,328



2,684



4.59

%








Total interest-bearing liabilities


2,632,280



15,845



0.80

%


1,911,395



16,787



1.17

%








Noninterest-bearing demand deposits


971,329







710,950













Other liabilities


40,389







26,974













Stockholders' equity


523,904







405,521













Total liabilities and stockholders' equity


$

4,167,902







$

3,054,840













Net interest income and rate spread




$

96,029



3.11

%




$

86,395



3.82

%








Net interest margin






3.35

%






4.17

%










(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.

Cision
Cision

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SOURCE Nicolet Bankshares, Inc.