• Net income $29 million for second quarter 2024, compared to net income of $28 million in prior quarter, and net income of $23 million for second quarter 2023
• Net income of $57 million or adjusted net income (non-GAAP) of $55 million for first half 2024, compared to net income of $14 million or adjusted net income (non-GAAP) of $45 million for first half 2023
• Solid quarter-over-quarter loan growth of $132 million (2%) and growth in core deposits after experiencing seasonal lows in first quarter
• Quarterly cash dividend of $0.28 per common share paid during second quarter, a 12% increase over first quarter

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

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

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

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

Balance Sheet Review

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

Asset Quality

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

Income Statement Review - Quarter

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

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

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

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

About Nicolet Bankshares, Inc.

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

Use of Non-GAAP Financial Measures

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

Forward-Looking Statements “Safe Harbor” Statement Under the Private Securities Litigation Reform Act of 1995

Certain statements contained in this communication, which are not statements of historical fact, constitute “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act. Forward-looking statements generally can be identified by words or phrases such as, without limitation, “anticipate,” “believe,” “aim,” “can,” “conclude,” “continue,” “could,” “estimate,” “expect,” “foresee,” “goal,” “intend,” “may,” “might,” “outlook,” “possible,” “plan,” “predict,” “project,” “potential,” “seek,” “should,” “target,” “will,” “will likely,” “would,” or the negative of these terms or other comparable terminology, as well as similar expressions, and in this press release include our statements about our ability to produce peer-leading financial metrics and strategic optionality going forward.

Forward-looking statements are not historical facts but instead express only management’s beliefs regarding future results or events, many of which, by their nature, are inherently uncertain and outside of management’s control. It is possible that actual results and outcomes may differ, possibly materially, from the anticipated results or outcomes indicated in these forward-looking statements. Risks, uncertainties and other factors that could cause the actual results to differ materially from the statements, include, but are not limited to general competitive, economic, political, regulatory and market conditions. Additional factors which could affect the forward-looking statements contained in this press release can be found under the headings “Forward-Looking Statements” and “Risk Factors” in Nicolet’s 2023 Annual Report on Form 10-K, as well subsequent filings with the SEC and are available on the SEC’s website at www.sec.gov.

Many of these factors are beyond Nicolet’s ability to control or predict. If one or more events related to these or other risks or uncertainties materialize, or if the underlying assumptions prove to be incorrect, actual results may differ materially from the forward-looking statements. Accordingly, shareholders and investors should not place undue reliance on any such forward-looking statements. Any forward-looking statements included in this press release are made as of the date hereof and are based on information available to management at that time. Except as required by law, Nicolet disclaims any obligation to update or revise any forward-looking statement contained in this press release to reflect new information or events or circumstances that occur after the date the forward-looking statements were made. New risks and uncertainties may emerge from time to time, and it is not possible for Nicolet to predict their occurrence or how they will affect Nicolet.

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