Financial Technology

NICOLET BANKSHARES, INC. ANNOUNCES 2022 EARNINGS

  • Net income of $28 million or adjusted net income (non-GAAP) of $28 million, compared to net income of $19 million or adjusted net income (non-GAAP) of $25 million in the prior quarter, and net income of $16 million or adjusted net income (non-GAAP) of $24 million in fourth quarter 2021, impacted by the Charter acquisition in third quarter 2022 and the County acquisition in fourth quarter 2021
  • Record net income of $94 million or adjusted net income (non-GAAP) of $99 million for 2022, compared to net income of $61 million or adjusted net income (non-GAAP) of $73 million for 2021
  • Earnings per diluted common share of $1.83 for fourth quarter and $6.56 for 2022, or adjusted earnings per diluted common share (non-GAAP) of $1.84 for fourth quarter and $6.90 for 2022
  • Return on average assets of 1.26% for fourth quarter and 1.20% for 2022

GREEN BAY, Wis., Jan. 17, 2023 /PRNewswire/ — Nicolet Bankshares, Inc. (NYSE: NIC) (“Nicolet” or the “Company”) announced fourth quarter 2022 net income of $28 million and earnings per diluted common share of $1.83, compared to $19 million and $1.29 for third quarter 2022, and $16 million and $1.25 for fourth quarter 2021, respectively.  Annualized quarterly return on average assets was 1.26%, 0.93% and 0.96%, for fourth quarter 2022, third quarter 2022 and fourth quarter 2021, respectively.

Net income for the year ended December 31, 2022 was $94 million and earnings per diluted common share was $6.56, compared to net income of $61 million and earnings per diluted common share of $5.44 for the year ended December 31, 2021.  Annualized return on average assets was 1.20% and 1.15% for 2022 and 2021, respectively.

Net income reflected non-core items and the related tax effect of each, including merger and integration related expenses, Day 2 credit provision expense required under the CECL model, branch optimization costs, contract negotiation expenses, and gains on other assets and investments.  These non-core items negatively impacted earnings per diluted common share $0.01 for fourth quarter 2022, $0.45 for third quarter 2022, and $0.58 for fourth quarter 2021.  For the full year, non-core items negatively impacted diluted earnings per common share $0.34 for 2022 and $1.13 for 2021.

On August 26, 2022, Nicolet completed its acquisition of Charter Bankshares, Inc. (“Charter”).  In the merger, Charter shareholders received approximately 1.26 million shares of Nicolet common stock (valued at $98 million) and cash consideration of $39 million, for a total purchase price of $137 million.  Upon consummation, Charter added total assets of $1.1 billion, loans of $827 million, deposits of $869 million, and preliminary goodwill of $50 million

“I know that most people reading this care more about what 2023 looks like; however, it is important to pause and reflect on another record quarter and year at Nicolet in 2022,”  said Mike Daniels, President and CEO of Nicolet.  “We made $94 million in net income and had exceptional loan growth while maintaining excellent credit quality.  We also added experience and depth to our management team, and we successfully integrated our acquisition of Charter.  All told, we are pleased with our 2022 results.”

“We go into 2023 with trust in our people and our operating history; that whatever macroeconomic conditions arise, we will find success.  The base of Nicolet has always been relationships, not transactions, which stand strong no matter the economic times. While many of our peers will focus on short-term solutions to gather deposits and sell loans, we will maintain our focus on building long-term relationships.  Our people and our customers understand and believe in shared success, and we’ve shown how this in turn benefits our shareholders.  Yes, we expect our deposits will reprice higher and our loan volume will soften.  These are the times in which we live, but we learned a long time ago that there has to be something that customers and employees can rally around.  Nicolet’s purpose of serving and creating shared success has shown to be that rallying point.  We look forward to proving this out in 2023,” Daniels added.

The Company’s financial performance and certain balance sheet line items were impacted by the timing and size of Nicolet’s 2022 and 2021 acquisitions.  In addition to the 2022 Charter acquisition, Nicolet acquired, Mackinac Financial Corporation (“Mackinac”) on September 3, 2021 and County Bancorp, Inc. (“County”) on December 3, 2021. Certain income statement results, average balances and related ratios for 2022 include partial contributions from Charter, while 2021 results include partial contributions from Mackinac and County, each from the respective acquisition date.  At acquisition, Mackinac added assets of $1.5 billion, loans of $0.9 billion, and deposits of $1.4 billion, while at acquisition County added assets of $1.4 billion, loans of $1.0 billion, and deposits of $1.0 billion.

Balance Sheet Review
At December 31, 2022, period end assets were $8.8 billion, a decrease of $0.1 billion (1%) from September 30, 2022, mostly in cash and cash equivalents from the net decline in deposits.  Total loans increased $0.2 billion (13% annualized) from September 30, 2022, on strong organic loan growth.  Total deposits of $7.2 billion at December 31, 2022, decreased $0.2 billion (3%) from September 30, 2022, while total borrowings increased $37 million from September 30, 2022 in short-term FHLB advances.  Total capital was $973 million at December 31, 2022, an increase of $34 million since September 30, 2022, mostly from solid earnings. 

Compared to December 31, 2021, period end assets increased $1.1 billion (14%), largely due to the Charter acquisition, which added total assets of $1.1 billion at acquisition.  Total loans of $6.2 billion at December 31, 2022 increased $1.6 billion (34%) from December 31, 2021, including the Charter acquisition and the repurchase of approximately $100 million previously participated agricultural loans, as well as strong organic loan growth.  Excluding the $827 million of loans acquired with Charter and the repurchased agricultural loans, organic loan growth was 14% from December 31, 2021.  Total deposits increased $0.7 billion from December 31, 2021, also largely due to the Charter acquisition, while total borrowings increased $325 million, with approximately half acquired with Charter and the remainder related to new FHLB advances.  Total capital increased $81 million from December 31, 2021, mostly from the common stock issued for the Charter acquisition, as well as solid earnings, offset by unfavorable changes in the fair value of available for sale securities and common stock repurchases executed early in 2022.

Asset Quality
Nonperforming assets were $40 million and represented 0.46% of total assets at December 31, 2022, compared to $40 million or 0.45% at September 30, 2022, and $56 million or 0.73% at December 31, 2021. The decline from year-end 2021 included a $6 million improvement in nonaccrual loans and a $10 million reduction in other real estate owned (primarily sales of closed bank branches).  The allowance for credit losses-loans was $62 million and represented 1.00% of total loans at December 31, 2022, compared to $60 million (or 1.01% of total loans) at September 30, 2022, and $50 million (or 1.07% of total loans) at December 31, 2021.  The growth in the allowance for credit losses-loans from third quarter was mostly due to strong loan growth, while the growth from year-end 2021 also included the $8 million Day 2 allowance increase from the acquisition of Charter.  Asset quality trends have been solid and net charge-offs were negligible.

Income Statement Review – Year
Net income for the year ended December 31, 2022 was $94 million, compared to net income of $61 million for the year ended December 31, 2021.

Net interest income was $240 million for the year ended December 31, 2022, up $82 million from the year ended December 31, 2021, the net of $102 million higher interest income and $20 million higher interest expense. The higher interest income was attributable to strong loan growth (both organic and acquired), new and renewed loans repricing higher from the Federal Reserve interest rate increases, and additional investment securities (acquired with Charter), while the higher interest expense was due to both higher average balances and higher rates (also related to the Federal Reserve interest rate increases). Average interest-earning assets of $7.1 billion for  full year 2022 grew $2.4 billion over full year 2021, mostly due to a $2.1 billion increase in average loans from solid organic loan growth and timing of the 2022 and 2021 acquisitions. Average interest-bearing liabilities of $4.8 billion increased $1.6 billion from full year 2021, also mostly due to the timing of the 2022 and 2021 acquisitions. 

The net interest margin for full year 2022 was 3.40%, up 3 bps from 3.37% for full year 2021. The yield on interest-earning assets increased 22 bps (to 3.88%) reflecting both the changing mix of interest-earning assets (which shifted to 74% loans and 26% non-loan earning assets for 2022, compared to 68% loans and 32% non-loan earning assets for 2021) and the rising interest rate environment.   The cost of funds increased 28 bps (to 0.71%) for 2022, attributable mainly to the repricing of deposits and funding in the higher interest rate environment.

Noninterest income was $58 million for full year 2022, down $9 million (14%) compared to full year 2021, primarily due to lower net mortgage income.  Net mortgage income declined $14 million mostly due to slow mortgage volumes from the rising interest rate environment. Total wealth revenue (trust services and brokerage fee income combined) increased $1 million, as growth in accounts and assets under management outpaced unfavorable market-related declines.  Service charges on deposit accounts and card interchange income each increased commensurate with the larger operating base, while the increase in BOLI income was mostly attributable to higher average balances from our recent acquisitions. Net asset gains of $3 million for full year 2022 were primarily related to sales of other real estate owned (mostly closed bank branch locations), while net asset gains of $4 million for full year 2021 were primarily attributable to favorable fair value marks on equity securities. Loan servicing rights (“LSR”) income, net (comprised of agricultural loan servicing fees net of the related LSR amortization), reflects an unfavorable $1 million as the LSR amortization is currently outpacing the loan servicing fees since new loans are not being added to this servicing portfolio. Other noninterest income was up $3 million, mostly revenue from crop insurance sales (acquired with County) and broker fees.

Noninterest expense of $161 million for full year 2022 increased $31 million (24%) over full year 2021. Personnel expense increased $18 million (26%) over full year 2021, including higher salaries and fringe benefits from the larger employee base (with average full-time equivalent employees up 41%, mostly due to the timing of the 2022 and 2021 acquisitions), merit increases between the years, and investments in our wealth team.  Salary expense also reflected increases in hourly pay and base salaries effective at the end of March 2022, which benefited the majority of our employee base.  Non-personnel expenses increased $13 million (23%), including $9 million higher occupancy, equipment, and office expense (largely the expanded branch network with our recent acquisitions, as well as additional expense for software and technology solutions), $3 million higher business development (additional marketing donations, promotions, and media to support our expanded branch network and community base), a $3 million increase in data processing (to support the larger operating base), and a $3 million increase in intangible amortization, partly offset by a $4 million reduction in merger-related expenses. 

Income Statement Review – Quarter
Net income for fourth quarter 2022 was $28 million, compared to net income of $19 million for third quarter 2022.

Net interest income was $68 million for fourth quarter 2022, up $5 million from third quarter 2022, the net of $15 million higher interest income and $10 million higher interest expense. The higher interest income was largely attributable to strong organic loan growth and a full quarter of Charter, as well as the repricing of new and renewed loans in a rising interest rate environment, while the higher interest expense was due to increases in both average balances (reflecting a full quarter of Charter and additional wholesale funding) and rates (also related to the rising interest rate environment). The net interest margin for fourth quarter 2022 was 3.39%, down 9 bps from 3.48% for third quarter 2022. The yield on interest-earning assets increased 36 bps (to 4.27%) mostly due to the rising interest rate environment, while the cost of funds increased 68 bps (to 1.33%) for fourth quarter 2022, attributable mainly to the repricing of deposits and funding in the higher interest rate environment.

Noninterest income was $15 million for fourth quarter 2022, up $2 million (14%) compared to third quarter 2022. The increase in noninterest income between the sequential quarters included higher wealth revenue, an increase in BOLI income (on higher average balances), a favorable change in the fair value of nonqualified deferred compensation plan assets, and an increase in other noninterest income (mostly crop insurance sales and broker fees), partly offset by lower net mortgage income. 

Noninterest expense of $44 million increased $1 million (3%) from third quarter 2022. Personnel expense decreased slightly (2%), while non-personnel expenses increased $2 million (10%) from third quarter 2022.  The increase in non-personnel expenses between the sequential quarters included higher occupancy, equipment, and office expense (mostly software and technology solutions), higher data processing (mostly volume-based core system processing), an increase in intangible amortization (related to the Charter acquisition), and higher other noninterest expense (mostly fraud losses). 

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.

Nicolet Bankshares, Inc.











Consolidated Balance Sheets (Unaudited)











(In thousands, except share data)


12/31/2022


09/30/2022


06/30/2022


03/31/2022


12/31/2021

Assets











Cash and due from banks


$            121,211


$            118,537


$              96,189


$            183,705


$            209,349

Interest-earning deposits


33,512


319,745


84,828


212,218


385,943

Cash and cash equivalents


154,723


438,282


181,017


395,923


595,292

Certificates of deposit in other banks


12,518


13,510


15,502


19,692


21,920

Securities available for sale, at fair value


917,618


949,597


813,248


852,331


921,661

Securities held to maturity, at amortized cost


679,128


686,424


695,812


684,991


651,803

Other investments


72,911


79,279


53,269


54,257


44,008

Loans held for sale


1,482


3,709


5,084


9,764


6,447

Other assets held for sale






199,833

Loans


6,180,499


5,984,437


4,978,654


4,683,315


4,621,836

Allowance for credit losses – loans


(61,829)


(60,348)


(50,655)


(49,906)


(49,672)

Loans, net


6,118,670


5,924,089


4,927,999


4,633,409


4,572,164

Premises and equipment, net


108,956


106,648


96,656


94,275


94,566

Bank owned life insurance (“BOLI”)


165,137


165,166


136,060


135,292


134,476

Goodwill and other intangibles, net


402,438


407,117


336,721


338,068


339,492

Accrued interest receivable and other assets


130,388


122,095


108,884


102,210


113,375

Total assets


$         8,763,969


$         8,895,916


$         7,370,252


$         7,320,212


$         7,695,037












Liabilities and Stockholders’ Equity











Liabilities:











Noninterest-bearing demand deposits


$         2,361,816


$         2,477,507


$         2,045,732


$         1,912,995


$         1,975,705

Interest-bearing deposits


4,817,105


4,918,395


4,240,534


4,318,125


4,490,211

Total deposits


7,178,921


7,395,902


6,286,266


6,231,120


6,465,916

Short-term borrowings


317,000


280,000




Long-term borrowings


225,342


225,236


196,963


206,946


216,915

Other liabilities held for sale






51,586

Accrued interest payable and other liabilities


70,177


56,315


47,636


45,836


68,729

Total liabilities


7,791,440


7,957,453


6,530,865


6,483,902


6,803,146

Stockholders’ Equity:











Common stock


147


147


134


135


140

Additional paid-in capital


621,988


620,392


520,741


524,478


575,045

Retained earnings


407,864


380,263


361,753


337,768


313,604

Accumulated other comprehensive income (loss)


(57,470)


(62,339)


(43,241)


(26,071)


3,102

Total Nicolet stockholders’ equity


972,529


938,463


839,387


836,310


891,891

Total liabilities and  stockholders’ equity


$         8,763,969


$         8,895,916


$         7,370,252


$         7,320,212


$         7,695,037












Common shares outstanding


14,690,614


14,673,197


13,407,375


13,456,741


13,994,079

Nicolet Bankshares, Inc.















Consolidated Statements of Income (Unaudited)













For the Three Months Ended


For the Years Ended

(In thousands, except per share data)


12/31/2022


09/30/2022


06/30/2022


03/31/2022


12/31/2021


12/31/2022


12/31/2021

Interest income:















Loans, including loan fees


$          76,367


$          63,060


$          52,954


$          51,299


$          52,292


$         243,680


$         156,559

Taxable investment securities


5,771


5,350


5,135


5,127


3,999


21,383


9,934

Tax-exempt investment securities


1,915


1,181


647


675


575


4,418


2,157

Other interest income


1,703


1,127


790


817


769


4,437


2,909

Total interest income


85,756


70,718


59,526


57,918


57,635


273,918


171,559

Interest expense:















Deposits


12,512


4,638


2,410


2,192


2,649


21,752


10,448

Short-term borrowings


2,624


594


28



1


3,246


1

Long-term borrowings


2,528


2,496


2,004


1,931


1,426


8,959


3,155

Total interest expense


17,664


7,728


4,442


4,123


4,076


33,957


13,604

Net interest income


68,092


62,990


55,084


53,795


53,559


239,961


157,955

Provision for credit losses


1,850


8,600


750


300


8,400


11,500


14,900

Net interest income after provision for credit losses


66,242


54,390


54,334


53,495


45,159


228,461


143,055

Noninterest income:















Trust services fee income


1,963


1,969


2,004


2,011


2,050


7,947


7,774

Brokerage fee income


3,207


3,040


2,988


3,688


3,205


12,923


12,143

Mortgage income, net


1,311


1,728


2,205


3,253


4,518


8,497


22,155

Service charges on deposit accounts


1,502


1,589


1,536


1,477


1,482


6,104


5,023

Card interchange income


3,100


3,012


2,950


2,581


2,671


11,643


9,163

BOLI income


1,151


966


768


933


722


3,818


2,380

Asset gains (losses), net


260


(46)


1,603


1,313


465


3,130


4,181

Deferred compensation plan asset

   market valuations


314


(571)


(1,316)


(467)


66


(2,040)


609

LSR income, net


(324)


(517)


(143)


(382)



(1,366)


Other noninterest income


2,362


1,830


1,536


1,536


885


7,264


3,936

Total noninterest income


14,846


13,000


14,131


15,943


16,064


57,920


67,364

Noninterest expense:















Personnel expense


23,705


24,136


19,681


21,191


21,491


88,713


70,618

Occupancy, equipment and office


8,246


7,641


6,891


6,944


7,119


29,722


21,058

Business development and marketing


2,303


2,281


2,057


1,831


1,550


8,472


5,403

Data processing


3,871


3,664


3,596


3,387


3,582


14,518


11,990

Intangibles amortization


2,217


1,628


1,347


1,424


1,094


6,616


3,494

FDIC assessments


480


480


480


480


480


1,920


2,035

Merger-related expense


492


519


555


98


2,202


1,664


5,651

Other noninterest expense


2,675


2,218


1,931


2,195


1,890


9,019


9,048

Total noninterest expense


43,989


42,567


36,538


37,550


39,408


160,644


129,297

Income before income tax expense


37,099


24,823


31,927


31,888


21,815


125,737


81,122

Income tax expense


9,498


6,313


7,942


7,724


5,510


31,477


20,470

Net income


$          27,601


$          18,510


$          23,985


$          24,164


$          16,305


$           94,260


$           60,652

Earnings per common share:















Basic


$             1.88


$             1.33


$             1.79


$             1.77


$             1.29


$               6.78


$               5.65

Diluted


$             1.83


$             1.29


$             1.73


$             1.70


$             1.25


$               6.56


$               5.44

Common shares outstanding:















Basic weighted average


14,685


13,890


13,402


13,649


12,626


13,909


10,736

Diluted weighted average


15,110


14,310


13,852


14,215


13,049


14,375


11,145

Nicolet Bankshares, Inc.















Consolidated Financial Summary (Unaudited)













For the Three Months Ended


For the Years Ended

(In thousands, except share & per share data)


12/31/2022


9/30/2022


6/30/2022


3/31/2022


12/31/2021


12/31/2022


12/31/2021

Selected Average Balances:















Loans


$  6,087,146


$  5,391,258


$  4,838,535


$  4,688,784


$  3,952,330


$    5,255,646


$    3,183,681

Investment securities


1,701,531


1,625,453


1,573,027


1,575,624


1,269,562


1,619,272


738,540

Interest-earning assets


7,963,485


7,161,120


6,579,644


6,711,191


5,923,581


7,107,449


4,719,417

Cash and cash equivalents


179,381


167,550


217,553


568,472


839,607


281,849


852,603

Goodwill and other intangibles, net


403,243


363,211


337,289


338,694


294,051


361,471


211,463

Total assets


8,688,741


7,856,131


7,273,219


7,519,636


6,772,363


7,837,695


5,271,463

Deposits


7,222,415


6,643,247


6,188,044


6,392,544


5,754,778


6,613,924


4,499,087

Interest-bearing liabilities


5,262,278


4,730,209


4,425,450


4,683,915


4,006,307


4,776,924


3,140,393

Stockholders’ equity (common)


954,970


890,205


837,975


861,319


784,666


886,385


622,903

Selected Ratios: (1)















Book value per common share


$         66.20


$         63.96


$         62.61


$         62.15


$         63.73


$          66.20


$          63.73

Tangible book value per common share (2)


$         38.81


$         36.21


$         37.49


$         37.03


$         39.47


$          38.81


$          39.47

Return on average assets


1.26 %


0.93 %


1.32 %


1.30 %


0.96 %


1.20 %


1.15 %

Return on average common equity


11.47


8.25


11.48


11.38


8.24


10.63


9.74

Return on average tangible common equity (2)


19.85


13.93


19.21


18.75


13.19


17.96


14.74

Average equity to average assets


10.99


11.33


11.52


11.45


11.59


11.31


11.82

Stockholders’ equity to assets


11.10


10.55


11.39


11.42


11.59


11.10


11.59

Tangible common equity to tangible assets (2)


6.82


6.26


7.15


7.14


7.51


6.82


7.51

Net interest margin


3.39


3.48


3.34


3.23


3.57


3.40


3.37

Efficiency ratio


52.79


55.62


53.74


54.56


56.73


54.15


58.20

Effective tax rate


25.60


25.43


24.88


24.22


25.26


25.03


25.23

Selected Asset Quality Information:















Nonaccrual loans


$       38,080


$       38,326


$       36,580


$       39,670


$       44,154


$        38,080


$        44,154

Other real estate owned – closed branches


1,347


1,506


4,378


9,019


10,307


1,347


10,307

Other real estate owned


628


628


628


797


1,648


628


1,648

Nonperforming assets


$       40,055


$       40,460


$       41,586


$       49,486


$       56,109


$        40,055


$        56,109

Net loan charge-offs (recoveries)


$           597


$           216


$          (149)


$             66


$            (10)


$             730


$             160

Allowance for credit losses-loans to loans


1.00 %


1.01 %


1.02 %


1.07 %


1.07 %


1.00 %


1.07 %

Net loan charge-offs to average loans (1)


0.04


0.02


(0.01)


0.01


0.00


0.01


0.01

Nonperforming loans to total loans


0.62


0.64


0.73


0.85


0.96


0.62


0.96

Nonperforming assets to total assets


0.46


0.45


0.56


0.68


0.73


0.46


0.73

Stock Repurchase Information:















Common stock repurchased (dollars) (3)


$           786


$             —


$         6,277


$       54,420


$       27,784


$        61,483


$        61,464

Common stock repurchased (full shares) (3)


10,000



67,949


593,713


345,166


671,662


793,064



(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.












Net Interest Income and Net Interest Margin Analysis (Unaudited)


































For the Three Months Ended




December 31, 2022


September 30, 2022


December 31, 2021




Average




Average


Average




Average


Average




Average


(In thousands)


Balance


Interest


Rate


Balance


Interest


Rate


Balance


Interest


Rate


ASSETS




















PPP loans


$          239


$           1


1.02 %


$          605


$           1


0.93 %


$      46,694


$     5,549


46.50 %


All other loans


6,086,907


76,405


4.93 %


5,390,653


63,094


4.60 %


3,905,636


46,770


4.70 %


Total loans (1) (2)


6,087,146


76,406


4.93 %


5,391,258


63,095


4.60 %


3,952,330


52,319


5.20 %


Investment securities (2)


1,701,531


8,302


1.95 %


1,625,453


6,989


1.72 %


1,269,562


4,860


1.53 %


Other interest-earning assets


174,808


1,703


3.85 %


144,409


1,127


3.09 %


701,689


769


0.43 %


Total interest-earning assets


7,963,485


$   86,411


4.27 %


7,161,120


$   71,211


3.91 %


5,923,581


$   57,948


3.85 %


Other assets, net


725,256






695,011






848,782






Total assets


$ 8,688,741






$ 7,856,131






$ 6,772,363






LIABILITIES AND STOCKHOLDERS’ EQUITY














Interest-bearing core deposits


$ 4,175,671


$     8,477


0.81 %


$ 3,974,448


$     3,353


0.33 %


$ 3,456,699


$     1,743


0.20 %


Brokered deposits


611,226


4,035


2.62 %


468,010


1,285


1.09 %


377,390


906


0.95 %


Total interest-bearing deposits


4,786,897


12,512


1.04 %


4,442,458


4,638


0.41 %


3,834,089


2,649


0.27 %


Wholesale funding


475,381


5,152


4.27 %


287,751


3,090


4.25 %


172,218


1,427


3.30 %


Total interest-bearing liabilities


5,262,278


$   17,664


1.33 %


4,730,209


$     7,728


0.65 %


4,006,307


$     4,076


0.40 %


Noninterest-bearing demand deposits


2,435,518






2,200,789






1,920,689






Other liabilities


35,975






34,928






60,701






Stockholders’ equity


954,970






890,205






784,666






Total liabilities and stockholders’ equity


$ 8,688,741






$ 7,856,131






$ 6,772,363






Net interest income and rate spread




$   68,747


2.94 %




$   63,483


3.26 %




$   53,872


3.45 %


Net interest margin






3.39 %






3.48 %






3.57 %


Loan purchase accounting accretion (3)




$     1,935


0.09 %




$     1,075


0.05 %




$        465


0.03 %
























For the Years Ended










December 31, 2022


December 31, 2021










Average




Average


Average




Average








(In thousands)


Balance


Interest


Rate


Balance


Interest


Rate








ASSETS




















PPP loans


$       4,872


$     1,392


28.57 %


$    141,510


$   16,672


11.78 %








All other loans


5,250,774


242,427


4.62 %


3,042,171


139,972


4.60 %








Total loans (1) (2)


5,255,646


243,819


4.64 %


3,183,681


156,644


4.92 %








Investment securities (2)


1,619,272


27,575


1.70 %


738,540


13,047


1.77 %








Other interest-earning assets


232,531


4,437


1.91 %


797,196


2,909


0.36 %








Total interest-earning assets


7,107,449


$ 275,831


3.88 %


4,719,417


$ 172,600


3.66 %








Other assets, net


730,246






552,046












Total assets


$ 7,837,695






$ 5,271,463












LIABILITIES AND STOCKHOLDERS’ EQUITY














Interest-bearing core deposits


$ 3,987,201


$   15,324


0.38 %


$ 2,729,146


$     6,657


0.24 %








Brokered deposits


490,871


6,428


1.31 %


308,091


3,791


1.23 %








Total interest-bearing deposits


4,478,072


21,752


0.49 %


3,037,237


10,448


0.34 %








Wholesale funding


298,852


12,205


4.08 %


103,156


3,156


3.06 %








Total interest-bearing liabilities


4,776,924


$   33,957


0.71 %


3,140,393


$   13,604


0.43 %








Noninterest-bearing demand deposits


2,135,852






1,461,850












Other liabilities


38,534






46,317












Stockholders’ equity


886,385






622,903












Total liabilities and stockholders’ equity


$ 7,837,695






$ 5,271,463












Net interest income and rate spread




$ 241,874


3.17 %




$ 158,996


3.23 %








Net interest margin






3.40 %






3.37 %








Loan purchase accounting accretion (3)




$     4,572


0.06 %




$     2,063


0.04 %










(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 All other 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 Years Ended

(In thousands, except per share data)


12/31/2022


9/30/2022


6/30/2022


3/31/2022


12/31/2021


12/31/2022


12/31/2021

Adjusted net income reconciliation: (1)















Net income (GAAP)


$          27,601


$          18,510


$          23,985


$          24,164


$          16,305


$           94,260


$           60,652

Adjustments:















Provision expense related to merger



8,000




8,400


8,000


14,400

Assets (gains) losses, net


(260)


46


(1,603)


(1,313)


(465)


(3,130)


(4,181)

Merger-related expense


492


519


555


98


2,202


1,664


5,651

Branch closure expense








944

Adjustments subtotal


232


8,565


(1,048)


(1,215)


10,137


6,534


16,814

Tax on Adjustments (25%)


58


2,141


(262)


(304)


2,534


1,634


4,204

Adjustments, net of tax


174


6,424


(786)


(911)


7,603


4,901


12,611

Adjusted net income (Non-GAAP)


$          27,775


$          24,934


$          23,199


$          23,253


$          23,908


$           99,161


$           73,263

Common shares outstanding:















Weighted average diluted common shares


15,110


14,310


13,852


14,215


13,049


14,375


11,145

Diluted earnings per common share:















Diluted earnings per common share (GAAP)


$             1.83


$             1.29


$             1.73


$             1.70


$             1.25


$               6.56


$               5.44

Adjusted Diluted earnings per common share (Non-GAAP)


$             1.84


$             1.74


$             1.67


$             1.64


$             1.83


$               6.90


$               6.57

Tangible assets: (2)















Total assets


$     8,763,969


$     8,895,916


$     7,370,252


$     7,320,212


$     7,695,037





Goodwill and other intangibles, net


402,438


407,117


336,721


338,068


339,492





Tangible assets


$     8,361,531


$     8,488,799


$     7,033,531


$     6,982,144


$     7,355,545





Tangible common equity: (2)















Stockholders’ equity


$        972,529


$        938,463


$        839,387


$        836,310


$        891,891





Goodwill and other intangibles, net


402,438


407,117


336,721


338,068


339,492





Tangible common equity


$        570,091


$        531,346


$        502,666


$        498,242


$        552,399





Tangible average common equity: (2)















Average stockholders’ equity (common)


$        954,970


$        890,205


$        837,975


$        861,319


$        784,666


$         886,385


$         622,903

Average goodwill and other intangibles, net


403,243


363,211


337,289


338,694


294,051


361,471


211,463

Average tangible common equity


$        551,727


$        526,994


$        500,686


$        522,625


$        490,615


$         524,914


$         411,440


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)

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.

SOURCE Nicolet Bankshares, Inc.

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