Nicolet Bankshares, Inc. Announces Third Quarter 2024 Results

By: Nicolet Bankshares, Inc. via Business Wire

October 15, 2024 at 16:05 PM EDT

Net income $33 million for third quarter 2024, compared to net income of $29 million in prior quarter, and net income of $17 million for third quarter 2023
Net income of $90 million or adjusted net income (non-GAAP) of $87 million for the first nine months of 2024, compared to net income of $31 million or adjusted net income (non-GAAP) of $73 million for the first nine months of 2023
Tangible common equity to tangible assets increased 64 bps to 9.21% at quarter end due to strong core earnings and a significant reduction in unrealized losses in the securities portfolio from lower expected interest rates
Asset quality remains solid, as nonperforming assets declined to 31 bps – the lowest level in more than three years; annualized net charge-offs remain negligible at 2 bps of loans

Nicolet Bankshares, Inc. (NYSE: NIC) (“Nicolet”) announced third quarter 2024 net income of $33 million and earnings per diluted common share of $2.10, compared to net income of $29 million and earnings per diluted common share of $1.92 for second quarter 2024, and net income of $17 million and earnings per diluted common share of $1.14 for third quarter 2023. Net income for the nine months ended September 30, 2024 was $90 million and earnings per diluted common share of $5.84, compared to net income of $31 million and earnings per diluted common share of $2.05 for the nine months ended September 30, 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 nine months ended September 30, 2024, these non-core items positively impacted earnings per diluted common share $0.19, and negatively impacted earnings per diluted common share $2.82 for the nine months ended September 30, 2023.

“The third quarter produced strong results across all revenue lines, and demonstrated what happens when almost 1,000 people show up every day to make a difference,” said Mike Daniels, Chairman, President, and CEO of Nicolet. “Financial results were impressive with quarterly return on average assets of 1.50% and return on average tangible common equity of 17.77%. We saw growth in loans and core deposits. Revenue was up across wealth, mortgage, and all other fee income areas. And our net interest margin continued its upward trajectory as we were able to keep deposit and funding costs relatively stable during the quarter.”

“Furthermore, our credit quality remains exceptional as nonperforming assets fell to their lowest level in years. This not only speaks to the team’s ability to execute within Nicolet’s consistent credit culture, but also to the strength and resilience of our commercial customer base across the Upper Midwest. Despite facing higher interest rates, rising input costs due to inflation, and the challenges of finding qualified workers, our customers have shown their ability to adapt in this economy. Nicolet’s message of shared success is resonating within our walls and in the communities we serve,” Daniels continued.

Balance Sheet Review

At September 30, 2024, period end assets were $8.6 billion, an increase of $80 million (1%) from June 30, 2024, mostly from loan growth and improvements in the fair value of the available for sale securities portfolio. Total loans increased $28 million from June 30, 2024, while the securities portfolio increased $26 million from June 30, 2024, mostly due to the positive fair value movements. Total deposits of $7.3 billion at September 30, 2024, increased $19 million from June 30, 2024, the net of a $75 million increase in noninterest-bearing demand and a $56 million decrease in interest-bearing deposits. Total capital was $1.1 billion at September 30, 2024, an increase of $58 million over June 30, 2024, with solid earnings and improvements in the securities portfolio valuation partly offset by the quarterly common stock dividend.

Asset Quality

Nonperforming assets were $26 million and represented 0.31% of total assets at September 30, 2024, compared to $29 million or 0.34% of total assets at June 30, 2024, and $32 million or 0.37% of total assets at September 30, 2023. The allowance for credit losses-loans was $66 million and represented 1.00% of total loans at September 30, 2024, compared to $65 million (or 1.00% of total loans) at June 30, 2024, and $63 million (or 1.01% of total loans) at September 30, 2023. Asset quality trends remain solid and loan net charge-offs were negligible.

Income Statement Review - Quarter

Net income was $33 million for third quarter 2024, compared to net income of $29 million for second quarter 2024.

Net interest income was $68 million for third quarter 2024, up $3 million from second quarter 2024. Interest income increased $4 million mostly due to the repricing of new and renewed loans in a higher interest rate environment, as well as solid loan growth, while interest expense increased $1 million due to both higher average balances and higher rates. The net interest margin for third quarter 2024 was 3.44%, up 9 bps from 3.35% for second quarter 2024. The yield on interest-earning assets increased 7 bps (to 5.68%) mostly due to higher average rates from the repricing of the loan portfolio, while the cost of funds increased 2 bps (to 3.11%) for third quarter 2024.

Noninterest income of $22 million for third quarter 2024 increased $3 million over second quarter 2024, with increases in most noninterest income categories. Wealth income increased $0.4 million on growth in assets under management (due to both net new accounts and positive fair value changes), while net mortgage income grew $0.2 million mostly from higher gains on sale. Net asset gains and deferred compensation plan asset market valuations during third quarter 2024 were attributable to positive movements in the market.

Noninterest expense of $49 million for third quarter 2024 increased $2 million over second quarter 2024. Personnel expense increased $3 million over second quarter 2024, including higher incentives commensurate with solid earnings, higher salaries, and the offsetting market value change in the deferred compensation plan liabilities. Non-personnel expenses combined decreased $0.4 million from second quarter 2024 on lower marketing (due to timing of marketing campaigns) and lower other noninterest expense (due to the board equity retainer granted in second quarter), partly offset by higher data processing.

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.

Nicolet Bankshares, Inc.
Consolidated Balance Sheets (Unaudited)
(In thousands, except share data)	9/30/2024			6/30/2024			3/31/2024			12/31/2023			9/30/2023
Assets
Cash and due from banks	$	124,076		$	109,674	��	$	81,677		$	129,898		$	109,414
Interest-earning deposits		303,908			298,856			345,747			361,533			436,466
Cash and cash equivalents		427,984			408,530			427,424			491,431			545,880
Certificates of deposit in other banks		3,189			3,924			5,639			6,374			7,598
Securities available for sale, at fair value		825,907			799,937			803,963			802,573			793,826
Other investments		60,443			60,796			60,464			57,560			58,367
Loans held for sale		11,121			9,450			5,022			4,160			6,500
Loans		6,556,840			6,529,134			6,397,617			6,353,942			6,239,257
Allowance for credit losses - loans		(65,785	)		(65,414	)		(64,347	)		(63,610	)		(63,160	)
Loans, net		6,491,055			6,463,720			6,333,270			6,290,332			6,176,097
Premises and equipment, net		123,585			120,988			119,962			118,756			117,744
Bank owned life insurance (“BOLI”)		185,011			171,972			170,746			169,392			168,223
Goodwill and other intangibles, net		389,727			391,421			393,183			394,366			396,208
Accrued interest receivable and other assets		119,096			126,279			126,989			133,734			145,719
Total assets	$	8,637,118		$	8,557,017		$	8,446,662		$	8,468,678		$	8,416,162

Liabilities and Stockholders' Equity
Liabilities:
Noninterest-bearing demand deposits	$	1,839,617		$	1,764,806		$	1,665,229		$	1,958,709		$	2,020,074
Interest-bearing deposits		5,420,380			5,476,272			5,500,503			5,239,091			5,162,314
Total deposits		7,259,997			7,241,078			7,165,732			7,197,800			7,182,388
Short-term borrowings		—			—			—			—			—
Long-term borrowings		161,210			162,433			162,257			166,930			197,754
Accrued interest payable and other liabilities		66,584			62,093			55,018			64,941			61,559
Total liabilities		7,487,791			7,465,604			7,383,007			7,429,671			7,441,701
Stockholders' Equity:
Common stock		151			150			149			149			147
Additional paid-in capital		647,934			639,159			636,621			633,770			626,348
Retained earnings		535,638			507,366			482,295			458,261			431,317
Accumulated other comprehensive income (loss)		(34,396	)		(55,262	)		(55,410	)		(53,173	)		(83,351	)
Total stockholders' equity		1,149,327			1,091,413			1,063,655			1,039,007			974,461
Total liabilities and stockholders' equity	$	8,637,118		$	8,557,017		$	8,446,662		$	8,468,678		$	8,416,162

Common shares outstanding		15,104,381			14,945,598			14,930,549			14,894,209			14,757,565

Nicolet Bankshares, Inc.
Consolidated Statements of Income (Unaudited)
	For the Three Months Ended											For the Nine Months Ended
(In thousands, except per share data)	9/30/2024		6/30/2024		3/31/2024		12/31/2023		9/30/2023			9/30/2024		9/30/2023
Interest income:
Loans, including loan fees	$	100,824	$	97,975	$	93,648	$	90,265	$	87,657		$	292,447	$	250,890
Taxable investment securities		5,211		5,056		4,557		4,737		4,351			14,824		13,445
Tax-exempt investment securities		1,095		1,152		1,238		1,394		1,424			3,485		4,637
Other interest income		5,492		4,695		4,588		7,149		6,452			14,775		10,345
Total interest income		112,622		108,878		104,031		103,545		99,884			325,531		279,317
Interest expense:
Deposits		42,060		41,386		38,990		36,583		34,964			122,436		89,241
Short-term borrowings		2		—		—		—		474			2		4,794
Long-term borrowings		2,194		2,150		2,234		2,680		2,972			6,578		8,048
Total interest expense		44,256		43,536		41,224		39,263		38,410			129,016		102,083
Net interest income		68,366		65,342		62,807		64,282		61,474			196,515		177,234
Provision for credit losses		750		1,350		750		1,000		450			2,850		3,990
Net interest income after provision for credit losses		67,616		63,992		62,057		63,282		61,024			193,665		173,244
Noninterest income:
Wealth management fee income		7,085		6,674		6,485		6,308		6,057			20,244		17,439
Mortgage income, net		2,853		2,634		1,364		1,856		2,020			6,851		5,308
Service charges on deposit accounts		1,913		1,813		1,581		1,475		1,492			5,307		4,501
Card interchange income		3,564		3,458		3,098		3,306		3,321			10,120		9,685
BOLI income		1,455		1,225		1,347		1,161		1,090			4,027		3,363
Asset gains (losses), net		1,177		616		1,909		5,947		31			3,702		(38,755	)
Deferred compensation plan asset market valuations		1,162		169		59		949		(457	)		1,390		988
LSR income, net		1,090		1,117		1,134		1,027		1,108			3,341		3,398
Other noninterest income		2,079		1,903		2,445		2,405		1,879			6,427		5,611
Total noninterest income		22,378		19,609		19,422		24,434		16,541			61,409		11,538
Noninterest expense:
Personnel expense		28,937		26,285		26,510		26,937		23,944			81,732		72,172
Occupancy, equipment and office		8,826		8,681		8,944		9,567		9,027			26,451		26,655
Business development and marketing		1,823		2,040		2,142		1,854		1,869			6,005		5,936
Data processing		4,535		4,281		4,270		7,043		4,643			13,086		12,849
Intangibles amortization		1,694		1,762		1,833		1,842		1,986			5,289		6,230
FDIC assessments		990		990		1,033		950		1,500			3,013		3,049
Merger-related expense		—		—		—		—		—			—		189
Other noninterest expense		2,343		2,814		2,415		2,103		2,769			7,572		8,490
Total noninterest expense		49,148		46,853		47,147		50,296		45,738			143,148		135,570
Income before income tax expense		40,846		36,748		34,332		37,420		31,827			111,926		49,212
Income tax expense		8,330		7,475		6,542		6,759		14,669			22,347		18,357
Net income	$	32,516	$	29,273	$	27,790	$	30,661	$	17,158		$	89,579	$	30,855
Earnings per common share:
Basic	$	2.16	$	1.96	$	1.86	$	2.07	$	1.16		$	5.99	$	2.10
Diluted	$	2.10	$	1.92	$	1.82	$	2.02	$	1.14		$	5.84	$	2.05
Common shares outstanding:
Basic weighted average		15,052		14,937		14,907		14,823		14,740			14,966		14,716
Diluted weighted average		15,479		15,276		15,249		15,142		15,100			15,330		15,044

Nicolet Bankshares, Inc.
Consolidated Financial Summary (Unaudited)
	For the Three Months Ended															For the Nine Months Ended
(In thousands, except share & per share data)	9/30/2024			6/30/2024			3/31/2024			12/31/2023			9/30/2023			9/30/2024			9/30/2023
Selected Average Balances:
Loans	$	6,542,532		$	6,496,732		$	6,398,838		$	6,263,971		$	6,230,336		$	6,479,598		$	6,223,396
Investment securities		873,212			881,190			884,775			897,437			962,607			879,701			1,177,762
Interest-earning assets		7,824,773			7,733,097			7,629,120			7,683,495			7,676,895			7,729,346			7,667,911
Cash and cash equivalents		431,632			374,176			364,375			558,473			513,250			390,213			283,032
Goodwill and other intangibles, net		390,453			392,171			393,961			395,158			397,052			392,189			399,100
Total assets		8,596,812			8,481,186			8,380,595			8,415,169			8,417,456			8,486,602			8,404,999
Deposits		7,247,321			7,183,777			7,112,971			7,189,650			7,156,577			7,181,597			7,052,978
Interest-bearing liabilities		5,653,259			5,658,642			5,509,882			5,358,445			5,385,292			5,607,430			5,329,540
Stockholders’ equity (common)		1,118,242			1,070,379			1,048,596			996,745			983,133			1,079,215			973,509
Selected Ratios: ⁽¹⁾
Book value per common share	$	76.09		$	73.03		$	71.24		$	69.76		$	66.03		$	76.09		$	66.03
Tangible book value per common share⁽²⁾	$	50.29		$	46.84		$	44.91		$	43.28		$	39.18		$	50.29		$	39.18
Return on average assets		1.50	%		1.39	%		1.33	%		1.45	%		0.81	%		1.41	%		0.49	%
Return on average common equity		11.57			11.00			10.66			12.20			6.92			11.09			4.24
Return on average tangible common equity ⁽²⁾		17.77			17.36			17.07			20.22			11.62			17.42			7.18
Average equity to average assets		13.01			12.62			12.51			11.84			11.68			12.72			11.58
Stockholders’ equity to assets		13.31			12.75			12.59			12.27			11.58			13.31			11.58
Tangible common equity to tangible assets⁽²⁾		9.21			8.57			8.33			7.98			7.21			9.21			7.21
Net interest margin		3.44			3.35			3.26			3.30			3.16			3.35			3.07
Efficiency ratio		54.57			55.24			58.34			60.41			58.27			55.98			59.16
Effective tax rate		20.39			20.34			19.06			18.06			46.09			19.97			37.30
Selected Asset Quality Information:
Nonaccrual loans	$	25,565		$	27,838		$	26,677		$	26,625		$	29,507		$	25,565		$	29,507
Other real estate owned		859			1,147			1,245			1,267			2,031			859			2,031
Nonperforming assets	$	26,424		$	28,985		$	27,922		$	27,892		$	31,538		$	26,424		$	31,538
Net loan charge-offs (recoveries)	$	379		$	283		$	13		$	550		$	101		$	675		$	319
Allowance for credit losses-loans to loans		1.00	%		1.00	%		1.01	%		1.00	%		1.01	%		1.00	%		1.01	%
Net charge-offs to average loans ⁽¹⁾		0.02			0.02			0.00			0.03			0.01			0.01			0.01
Nonperforming loans to total loans		0.39			0.43			0.42			0.42			0.47			0.39			0.47
Nonperforming assets to total assets		0.31			0.34			0.33			0.33			0.37			0.31			0.37
Stock Repurchase Information:
Common stock repurchased ($) ⁽³⁾	$	—		$	—		$	—		$	—		$	—		$	—		$	1,519
Common stock repurchased (shares) ⁽³⁾		—			—			—			—			—			—			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)	9/30/2024		6/30/2024		3/31/2024		12/31/2023		9/30/2023
Period End Loan Composition
Commercial & industrial	$	1,351,516	$	1,358,152	$	1,307,490	$	1,284,009	$	1,237,789
Owner-occupied commercial real estate (“CRE”)		920,533		941,137		955,786		956,594		971,397
Agricultural		1,261,152		1,224,885		1,190,371		1,161,531		1,108,261
Commercial		3,533,201		3,524,174		3,453,647		3,402,134		3,317,447
CRE investment		1,226,982		1,198,020		1,188,722		1,142,251		1,130,938
Construction & land development		231,694		247,565		241,730		310,110		326,747
Commercial real estate		1,458,676		1,445,585		1,430,452		1,452,361		1,457,685
Commercial-based loans		4,991,877		4,969,759		4,884,099		4,854,495		4,775,132
Residential construction		85,811		90,904		84,370		75,726		76,289
Residential first mortgage		1,194,574		1,190,790		1,167,069		1,167,109		1,136,748
Residential junior mortgage		223,456		218,512		206,434		200,884		195,432
Residential real estate		1,503,841		1,500,206		1,457,873		1,443,719		1,408,469
Retail & other		61,122		59,169		55,645		55,728		55,656
Retail-based loans		1,564,963		1,559,375		1,513,518		1,499,447		1,464,125
Total loans	$	6,556,840	$	6,529,134	$	6,397,617	$	6,353,942	$	6,239,257

Period End Deposit Composition
Noninterest-bearing demand	$	1,839,617	$	1,764,806	$	1,665,229	$	1,958,709	$	2,020,074
Interest-bearing demand		1,035,593		1,093,621		1,121,030		1,055,520		955,746
Money market		1,928,977		1,963,559		2,027,559		1,891,287		1,933,227
Savings		763,024		762,529		765,084		768,401		789,045
Time		1,692,786		1,656,563		1,586,830		1,523,883		1,484,296
Total deposits	$	7,259,997	$	7,241,078	$	7,165,732	$	7,197,800	$	7,182,388
Brokered transaction accounts	$	159,547	$	250,109	$	265,818	$	166,861	$	146,517
Brokered time deposits		549,907		557,657		517,190		448,582		457,433
Total brokered deposits	$	709,454	$	807,766	$	783,008	$	615,443	$	603,950
Customer transaction accounts	$	5,407,664	$	5,334,406	$	5,313,085	$	5,507,056	$	5,551,575
Customer time deposits		1,142,879		1,098,906		1,069,639		1,075,301		1,026,863
Total customer deposits (core)	$	6,550,543	$	6,433,312	$	6,382,724	$	6,582,357	$	6,578,438

Nicolet Bankshares, Inc.
Net Interest Income and Net Interest Margin Analysis (Unaudited)

	For the Three Months Ended
	September 30, 2024							June 30, 2024						September 30, 2023
	Average					Average		Average				Average		Average					Average
(In thousands)	Balance		Interest			Rate		Balance		Interest		Rate		Balance		Interest			Rate
ASSETS
Total loans ^{(1) (2)}	$	6,542,532	$	100,962		6.06	%	$	6,496,732	$	98,086	5.99	%	$	6,230,336	$	87,701		5.54	%
Investment securities ⁽²⁾		873,212		6,666		3.05	%		881,190		6,579	2.99	%		962,607		6,235		2.59	%
Other interest-earning assets		409,029		5,492		5.27	%		355,175		4,695	5.24	%		483,952		6,452		5.23	%
Total interest-earning assets		7,824,773	$	113,120		5.68	%		7,733,097	$	109,360	5.61	%		7,676,895	$	100,388		5.15	%
Other assets, net		772,039							748,089						740,561
Total assets	$	8,596,812						$	8,481,186					$	8,417,456
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing core deposits	$	4,723,464	$	32,952		2.78	%	$	4,665,195	$	31,713	2.73	%	$	4,491,858	$	27,628		2.44	%
Brokered deposits		768,058		9,108		4.72	%		831,100		9,673	4.68	%		651,745		7,336		4.47	%
Total interest-bearing deposits		5,491,522		42,060		3.05	%		5,496,295		41,386	3.03	%		5,143,603		34,964		2.70	%
Wholesale funding		161,737		2,196		5.31	%		162,347		2,150	5.24	%		241,689		3,446		5.58	%
Total interest-bearing liabilities		5,653,259	$	44,256		3.11	%		5,658,642	$	43,536	3.09	%		5,385,292	$	38,410		2.83	%
Noninterest-bearing demand deposits		1,755,799							1,687,482						2,012,974
Other liabilities		69,512							64,683						36,057
Stockholders' equity		1,118,242							1,070,379						983,133
Total liabilities and stockholders' equity	$	8,596,812						$	8,481,186					$	8,417,456
Net interest income and rate spread			$	68,864		2.57	%			$	65,824	2.52	%			$	61,978		2.32	%
Net interest margin						3.44	%					3.35	%						3.16	%
Loan purchase accounting accretion⁽³⁾			$	1,527		0.09	%			$	1,527	0.08	%			$	1,637		0.10	%
Loan nonaccrual interest ⁽⁴⁾			$	(48	)	0.00	%			$	329	0.02	%			$	(257	)	(0.02	)%

	For the Nine Months Ended
	September 30, 2024							September 30, 2023
	Average					Average		Average				Average
(In thousands)	Balance		Interest			Rate		Balance		Interest		Rate
ASSETS
Total loans ^{(1) (2)}	$	6,479,598	$	292,792		5.95	%	$	6,223,396	$	251,019	5.33	%
Investment securities ⁽²⁾		879,701		19,442		2.95	%		1,177,762		19,575	2.22	%
Other interest-earning assets		370,047		14,775		5.26	%		266,753		10,345	5.13	%
Total interest-earning assets		7,729,346	$	327,009		5.58	%		7,667,911	$	280,939	4.85	%
Other assets, net		757,256							737,088
Total assets	$	8,486,602						$	8,404,999
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing core deposits	$	4,684,586	$	95,921		2.74	%	$	4,365,843	$	69,943	2.14	%
Brokered deposits		759,791		26,515		4.66	%		619,870		19,298	4.16	%
Total interest-bearing deposits		5,444,377		122,436		3.00	%		4,985,713		89,241	2.39	%
Wholesale funding		163,053		6,580		5.30	%		343,827		12,842	4.93	%
Total interest-bearing liabilities		5,607,430	$	129,016		3.07	%		5,329,540	$	102,083	2.56	%
Noninterest-bearing demand deposits		1,737,220							2,067,265
Other liabilities		62,737							34,685
Stockholders' equity		1,079,215							973,509
Total liabilities and stockholders' equity	$	8,486,602						$	8,404,999
Net interest income and rate spread			$	197,993		2.51	%			$	178,856	2.29	%
Net interest margin						3.35	%					3.07	%
Loan purchase accounting accretion⁽³⁾			$	4,582		0.09	%			$	4,908	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 Nine Months Ended
(In thousands, except per share data)	9/30/2024			6/30/2024			3/31/2024			12/31/2023			9/30/2023			9/30/2024			9/30/2023
Adjusted net income reconciliation: ⁽¹⁾
Net income (GAAP)	$	32,516		$	29,273		$	27,790		$	30,661		$	17,158		$	89,579		$	30,855
Adjustments:
Provision expense ⁽²⁾		—			—			—			—			—			—			2,340
Assets (gains) losses, net ⁽³⁾		(1,177	)		(616	)		(1,909	)		(5,947	)		(31	)		(3,702	)		38,755
Merger-related expense		—			—			—			—			—			—			189
Contract termination charge		—			—			—			2,689			—			—			—
Adjustments subtotal		(1,177	)		(616	)		(1,909	)		(3,258	)		(31	)		(3,702	)		41,284
Tax on Adjustments ⁽⁴⁾		(230	)		(120	)		(372	)		(635	)		(6	)		(722	)		8,050
Tax - Wisconsin Tax Law Change ⁽⁴⁾		—			—			—			—			6,151			—			9,118
Adjusted net income (Non-GAAP)	$	31,569		$	28,777		$	26,253		$	28,038		$	23,284		$	86,599		$	73,207
Diluted earnings per common share:
Diluted earnings per common share (GAAP)	$	2.10		$	1.92		$	1.82		$	2.02		$	1.14		$	5.84		$	2.05
Adjusted Diluted earnings per common share (Non-GAAP)	$	2.04		$	1.88		$	1.72		$	1.85		$	1.54		$	5.65		$	4.87
Tangible assets: ⁽⁵⁾
Total assets	$	8,637,118		$	8,557,017		$	8,446,662		$	8,468,678		$	8,416,162
Goodwill and other intangibles, net		389,727			391,421			393,183			394,366			396,208
Tangible assets	$	8,247,391		$	8,165,596		$	8,053,479		$	8,074,312		$	8,019,954
Tangible common equity: ⁽⁵⁾
Stockholders’ equity (common)	$	1,149,327		$	1,091,413		$	1,063,655		$	1,039,007		$	974,461
Goodwill and other intangibles, net		389,727			391,421			393,183			394,366			396,208
Tangible common equity	$	759,600		$	699,992		$	670,472		$	644,641		$	578,253
Tangible average common equity: ⁽⁵⁾
Average stockholders’ equity (common)	$	1,118,242		$	1,070,379		$	1,048,596		$	996,745		$	983,133		$	1,079,215		$	973,509
Average goodwill and other intangibles, net		390,453			392,171			393,961			395,158			397,052			392,189			399,100
Average tangible common equity	$	727,789		$	678,208		$	654,635		$	601,587		$	586,081		$	687,026		$	574,409

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.