Nicolet Bankshares, Inc. Announces 2024 Results

• Net income $34 million for fourth quarter 2024, compared to net income of $33 million in prior quarter, and net income of $31 million for fourth quarter 2023
• Net income of $124 million or adjusted net income (non-GAAP) of $121 million for 2024, compared to net income of $62 million or adjusted net income (non-GAAP) of $101 million for 2023
• Net interest margin of 3.47% for full year 2024 improved 29 bps over 2023
• Tangible common equity to tangible assets increased to 9.33% at year end 2024 due to strong core earnings
• Solid year-over-year asset growth of $328 million (4%) to $8.8 billion

Nicolet Bankshares, Inc. (NYSE:NIC) ("Nicolet") announced fourth quarter 2024 net income of $34 million and earnings per diluted common share of $2.19, compared to net income of $33 million and earnings per diluted common share of $2.10 for third quarter 2024, and net income of $31 million and earnings per diluted common share of $2.02 for fourth quarter 2023. Net income for the year ended December 31, 2024 was $124 million and earnings per diluted common share of $8.05, compared to net income of $62 million and earnings per diluted common share of $4.08 for the year ended December 31, 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 year ended December 31, 2024, these non-core items positively impacted earnings per diluted common share $0.22, and negatively impacted earnings per diluted common share $2.64 for the year ended December 31, 2023.

"I am pleased to report Nicolet produced its best quarterly earnings in its 24-year history, which caps off a record year for our Company," said Mike Daniels, Chairman, President, and CEO of Nicolet. "While we always are finding ways to improve, our 2024 financial results were impressive across the board. In addition to record profitability, we also saw a continued improvement in our net interest margin, solid loan and deposit growth, and are continuing to build capital that strengthens an already solid balance sheet. I am extremely proud of our team for making this year possible, and am excited by the opportunities before us in the years to come."

"I believe 2025 is exciting for Nicolet," Daniels continued. "Given our strong capital levels coupled with continued earnings performance that likely places us in the top quartile, if not decile, of performance among community banks, we think all organic and acquisition options remain on the table in the coming year. The focus will always be to take care of our current customers, and to continue to win business one customer at a time, but we hope to return to the M&A market in 2025 given our proven ability to create substantial shareholder value through acquisitions. The increase in bank valuations, likely change in the bank regulatory environment, and a resilient economy that looks to continue for the foreseeable future has led to an increase in M&A conversations, albeit in the early stages. In the meantime, we've been making one of the best acquisitions we can make by acquiring our own stock through share repurchases, which we have begun again this past quarter and will likely continue to some degree until we can find a better use of our capital. Whether we deploy capital through those share repurchases, or through M&A, increasing the dividend, funding organic growth, preserving capital, or all the above, the fundamental strength of our franchise, which is driven by 950 individuals that show up and care every day, afford us that luxury."

Balance Sheet Review

At December 31, 2024, period end assets were $8.8 billion, an increase of $160 million (2%) from September 30, 2024, mostly from loan growth and higher cash balances. Total loans increased $70 million from September 30, 2024, mostly in agricultural loans. Total deposits of $7.4 billion at December 31, 2024, increased $144 million from September 30, 2024, the net of a $48 million decrease in noninterest-bearing demand and a $192 million increase in interest-bearing deposits. Total capital was $1.2 billion at December 31, 2024, an increase of $24 million over September 30, 2024, with solid earnings and stock option exercises partly offset by the quarterly common stock dividend and unfavorable movements in the securities portfolio market valuation.

Asset Quality

Nonperforming assets were $29 million and represented 0.33% of total assets at December 31, 2024, compared to $26 million or 0.31% of total assets at September 30, 2024, and $28 million or 0.33% of total assets at December 31, 2023. The allowance for credit losses-loans was $66 million and represented 1.00% of total loans at December 31, 2024, compared to $66 million (or 1.00% of total loans) at September 30, 2024, and $64 million (or 1.00% of total loans) at December 31, 2023. Asset quality trends remain solid and loan net charge-offs were negligible.

Income Statement Review - Year

Net income was $124 million and adjusted net income (non-GAAP) was $121 million for the year ended December 31, 2024, compared to net income of $62 million and adjusted net income (non-GAAP) of $101 million for the year ended December 31, 2023.

Net interest income was $268 million for the year ended December 31, 2024, up $27 million from the year ended December 31, 2023. Interest income increased $56 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 $29 million due to both higher average balances and higher rates. The net interest margin for 2024 was 3.47%, up 29 bps from 3.18% for 2023. The yield on interest-earning assets increased 64 bps (to 5.66%) mostly due to higher average rates from the repricing of the loan portfolio, while the cost of funds increased 38 bps (to 3.03%) for 2024.

Noninterest income of $82 million for full year 2024 increased $46 million over full year 2023, significantly impacted by the 2023 balance sheet repositioning noted above. Excluding net asset gains (losses), noninterest income for 2024 was $78 million, a $9 million increase over 2023, with growth in most noninterest income categories. Wealth income increased $4 million on growth in assets under management (due to both net new accounts and positive market value changes), while net mortgage income grew $3 million mostly from higher gains on sale.

Noninterest expense of $191 million for full year 2024 increased $5 million over full year 2023. Personnel expense increased $9 million over 2023, including higher incentives commensurate with solid earnings as well as annual merit increases between the years. Non-personnel expenses combined decreased $4 million from full year 2023 mostly from lower data processing, as 2023 included a $3 million early contract termination charge.

Income tax expense was $31 million (effective tax rate of 20.03%) for the year ended December 31, 2024, compared to $25 million (effective tax rate of 28.99%) for the year ended December 31, 2023. The change in income tax expense was due to higher pretax income, partly offset by the impact of the 2023 Wisconsin tax law change noted above.

Income Statement Review - Quarter

Net income was $34 million for fourth quarter 2024, compared to net income of $33 million for third quarter 2024.

Net interest income was $72 million for fourth quarter 2024, up $3 million from third quarter 2024, due a reduction in interest expense from lower deposit rates. The net interest margin for fourth quarter 2024 was 3.61%, up 10 bps from 3.51% for third quarter 2024. The yield on interest-earning assets decreased 8 bps (to 5.68%) due to the impact of recent Federal Reserve interest reductions on new and variable rate assets, while the cost of funds decreased 21 bps (to 2.90%) for fourth quarter 2024 due to lower deposit costs.

Noninterest income of $21 million for fourth quarter 2024 decreased $2 million from third quarter 2024, mostly due to unfavorable changes in the deferred compensation plan asset market valuations. Wealth income increased $0.1 million, while net mortgage income grew $0.5 million.

Noninterest expense of $48 million for fourth quarter 2024 decreased $1 million from third quarter 2024. Personnel expense decreased $2 million from third quarter 2024, mostly due to the offsetting market value change in the deferred compensation plan liabilities. Non-personnel expenses combined increased $1 million from third quarter 2024 on higher marketing (due to donations to support capital campaigns within our communities) and higher other noninterest expense (mostly 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.