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Section 1: 8-K (FORM 8-K)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 
Date of Report (Date of earliest event reported): January 21, 2020
 
NICOLET BANKSHARES, INC.
(Exact name of registrant as specified in its charter)
Wisconsin
 
001-37700
 
47-0871001
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
 
111 North Washington Street
Green Bay, Wisconsin 54301
(Address of principal executive offices)
 
(920) 430-1400
(Registrant’s telephone number, including area code)
 
Not Applicable
(Former name or former address, if changed since last report)
  
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common stock, par value $0.01 per share
NCBS
The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter.)
 
Emerging Growth Company  ¨
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨








Item 2.02
Results of Operations and Financial Condition.
 
On January 21, 2020, Nicolet Bankshares, Inc. ("Nicolet"), announced its earnings for the quarter and year ended December 31, 2019. A copy of the press release is attached as Exhibit 99.1 to this Report on Form 8-K and is incorporated herein by reference.
 
Pursuant to General Instruction B.2 of Form 8-K, the information in this Item 2.02 and Exhibit 99.1 is being furnished to the Securities and Exchange Commission and shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities under that Section. Furthermore, the information in this Item 2.02 and Exhibit 99.1 shall not be deemed to be incorporated by reference into the filings of the Registrant under the Securities Act of 1933, as amended, or the Exchange Act.

Item 9.01
Financial Statements and Exhibits.
Exhibit No.
 
Description of Exhibit
99.1
 






Signatures
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 

Date:
January 21, 2020
NICOLET BANKSHARES, INC.
 
 
 
 
 
 
 
By: 
/s/ Ann K. Lawson
 
        
 
 
Ann K. Lawson
 
        
 
 
Chief Financial Officer
 



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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


402367990_nicoletbanksharesa05.jpg
Exhibit 99.1
 
 FOR IMMEDIATE RELEASE
 
NICOLET BANKSHARES, INC. ANNOUNCES RECORD 2019 EARNINGS

Net income of $12.3 million, 13% above fourth quarter 2018
Net income of $54.6 million for 2019, 33% higher than 2018
Earnings per diluted common share of $1.18 for fourth quarter and $5.52 for 2019
Return on average assets of 1.46% for fourth quarter and 1.75% for 2019
Acquisition of Choice Bancorp, Inc. consummated November 8, 2019

Green Bay, Wisconsin, January 21, 2020 - Nicolet Bankshares, Inc. (NASDAQ: NCBS) (“Nicolet”) announced fourth quarter 2019 net income of $12.3 million and earnings per diluted common share of $1.18, compared to $13.5 million and $1.40 for third quarter 2019, and $10.9 million and $1.11 for fourth quarter 2018, respectively. Annualized quarterly return on average assets was 1.46%, 1.73% and 1.44%, for fourth quarter 2019, third quarter 2019 and fourth quarter 2018, respectively.

Net income for the year ended December 31, 2019 was $54.6 million, 33% higher than $41.0 million for 2018. Earnings per diluted common share was $5.52, 34% higher than $4.12 for 2018. Return on average assets was 1.75% for 2019 and 1.38% for 2018.

The acquisition of Choice Bancorp, Inc. (“Choice”) was consummated on November 8, 2019, adding $457 million in assets, including $348 million in loans, $289 million in deposits, $2 million of core deposit intangible, and $45 million of goodwill. Pursuant to the agreed upon terms, the $82 million final purchase price consisted of issuing 1.2 million shares of common stock (given the final stock-for-stock exchange ratio of 0.497) valued at $80 million and $2 million in cash.

During second quarter 2019, net income favorably included $5.4 million (or $0.55 of diluted earnings per share) related to two actions combined, the sale of 80% of Nicolet's equity investment in a data processing entity ($7.4 million after-tax gain) and retirement-related compensation declared to benefit all employees after that sale ($2.0 million after-tax cost), impacting the 2019 year and quarter comparisons.

“2019 was an exceptional year, continuing our trend of strong performance. The results primarily reflect the maturation of our core strategies. Our profitable acquisition and integration actions have propelled our level of performance into an elite group,” said Bob Atwell, Chairman and CEO of Nicolet. “In addition to acquisitions, we have remained consistently focused on active balance sheet management, loan and deposit pricing, mortgage banking and wealth management revenue growth, and efficiencies.”

“The numbers speak for themselves and are the scorecard underlying the efforts of our 600 employees who execute every day,” said Mike Daniels, President and CEO of Nicolet National Bank. “Our people have done an excellent job adding value for customers, especially in mortgage banking, commercial lending and wealth management, where our relationship-based core values are differentiators. As well, we have worked hard to preserve a strong margin in a challenging rate environment.”

“For 2020, our focus will be on driving core earnings growth through our expanded customer base and capitalizing on our investments in technology and infrastructure for additional operating leverage,” Atwell said. “We are well positioned to increase shareholder value through prudent common stock repurchases and by leveraging our strength as a bank consolidator.”

Fourth quarter 2019 net interest income increased $1.3 million (4%) over third quarter, benefiting from growth in average interest-earnings assets, mostly from the inclusion of acquired assets during the quarter, and a resilient net interest margin. Fourth quarter noninterest income grew $1.0 million (8%) over third quarter, predominantly from strong net mortgage income. Noninterest expense increased $2.5 million (11%) from third quarter. Personnel costs were up $0.7 million (mainly from




timing of deferred compensation and equity awards) and non-personnel costs were up $1.8 million, mostly due to a $0.7 million lease termination charge for the closure of Nicolet's Oshkosh branch in conjunction with the Choice acquisition and a $0.8 million write-off of goodwill given a recent change in strategy.

Net interest income for 2019 increased $9.4 million (9%) over 2018 on disciplined rate management in a lower interest rate environment (as the Federal Reserve cut interest rates 75bps during the second half of 2019) and overcoming lower aggregate discount income (down $0.9 million from 2018). Noninterest income excluding net asset gains increased $7.1 million (19%) mostly from strong net mortgage income and growth in wealth fees. Noninterest expense grew $7.0 million (8%) over 2018. Personnel increased $5.0 million over 2018 from the $2.75 million of retirement-related compensation actions noted above, as well as merit increases between the years and overall higher incentive compensation. Non-personnel expenses increased $2.0 million, including the previously noted lease termination charge and goodwill write-off, and $0.4 million for accelerated depreciation given branch facility upgrades. Income tax expense increased $3.0 million over 2018 on higher pre-tax income and salary deduction limitations, partially offset by the favorable tax treatment of the equity investment sale and the tax benefit on stock-based compensation.

Asset quality remained exceptional, with nonperforming assets of only $15 million, representing 0.42% of total assets at December 31, 2019. The allowance for loan losses of $14 million represented 0.54% of total loans at December 31, 2019. The provision for loan losses was $1.2 million for the year ended December 31, 2019 (covering $0.4 million of net charge-offs), compared to $1.6 million (covering $1.1 million of net charge-offs) for the year ended December 31, 2018.

At December 31, 2019, assets were $3.6 billion (up 16% since December 31, 2018), loans were $2.6 billion (up 19%), and deposits were $3.0 billion (up 13%), largely due to the acquisition of Choice which was 12% of Nicolet's pre-merger size. Excluding the impact of Choice, loans increased 3% and deposits increased 2% since December 31, 2018. On average for 2019, loans of $2.3 billion were 6% stronger than 2018 (or up 4% excluding the acquisition), and deposits of $2.6 billion were 4% higher than 2018 (or up 2% excluding the acquisition).

Total capital was $516 million at December 31, 2019, an increase of $130 million since December 31, 2018, mostly due to stock issued in connection with the Choice acquisition and net income, partially offset by stock repurchases. We continue to be opportunistic with respect to such repurchases. At December 31, 2019, there remained $21.0 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.

The adoption of the current expected credit losses (“CECL”) model in 2020 is expected to increase the allowance for loan losses by 55-65%. This estimate considers our recently completed acquisition of Choice, as well as fourth quarter changes in current economic conditions, forecasts, and our existing loan portfolio.

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 federal securities law. Statements in this release that are not strictly historical are forward-looking and based upon current expectations that may differ materially from actual results. These forward-looking statements, identified by words such as “will”, “expect”, “believe”, “prospects”, or other words of similar meaning, involve risks and uncertainties that could cause actual results to differ materially from those anticipated by the statements made herein. These risks and uncertainties include, but are not limited to, general economic trends and changes in interest rates, increased competition, regulatory or legislative developments affecting the financial industry generally or Nicolet specifically, the interpretation of tax legislation, changes in consumer demand for financial services, the possibility of unforeseen events affecting the industry generally or Nicolet specifically, the uncertainties associated with newly developed or acquired operations and market disruptions. Nicolet undertakes no obligation to release revisions to these forward-looking statements publicly to reflect events or circumstances after the date hereof or to reflect the occurrence of unforeseen events, except as required to be reported under the rules and regulations of the Securities and Exchange Commission.




Nicolet Bankshares, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated Financial Summary (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
At or for the Three Months Ended
 
At or for the Year Ended
(In thousands, except per share data)
 
12/31/2019
 
9/30/2019
 
6/30/2019
 
3/31/2019
 
12/31/2018
 
12/31/2019
 
12/31/2018
Results of operations:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
 
$
36,192

 
$
34,667

 
$
34,570

 
$
33,159

 
$
32,327

 
$
138,588

 
$
125,537

Interest expense
 
5,723

 
5,477

 
5,626

 
5,684

 
5,298

 
22,510

 
18,889

Net interest income
 
30,469

 
29,190

 
28,944

 
27,475

 
27,029

 
116,078

 
106,648

Provision for loan losses
 
300

 
400

 
300

 
200

 
240

 
1,200

 
1,600

Net interest income after provision for loan losses
 
30,169

 
28,790

 
28,644

 
27,275

 
26,789

 
114,878

 
105,048

Noninterest income
 
13,309

 
12,312

 
18,560

 
9,186

 
9,797

 
53,367

 
39,509

Noninterest expense
 
25,426

 
22,887

 
25,727

 
22,759

 
21,621

 
96,799

 
89,758

Income before income tax expense
 
18,052

 
18,215

 
21,477

 
13,702

 
14,965

 
71,446

 
54,799

Income tax expense
 
5,670

 
4,603

 
2,833

 
3,352

 
4,015

 
16,458

 
13,446

Net income
 
12,382

 
13,612

 
18,644

 
10,350

 
10,950

 
54,988

 
41,353

Net income attributable to noncontrolling interest
 
87

 
82

 
95

 
83

 
87

 
347

 
317

Net income attributable to Nicolet Bankshares, Inc.
 
$
12,295

 
$
13,530

 
$
18,549

 
$
10,267

 
$
10,863

 
$
54,641

 
$
41,036

Earnings per common share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
$
1.22

 
$
1.45

 
$
1.98

 
$
1.09

 
$
1.14

 
$
5.71

 
$
4.26

Diluted
 
$
1.18

 
$
1.40

 
$
1.91

 
$
1.05

 
$
1.11

 
$
5.52

 
$
4.12

Common Shares:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic weighted average
 
10,061

 
9,347

 
9,374

 
9,461

 
9,526

 
9,562

 
9,640

Diluted weighted average
 
10,452

 
9,697

 
9,692

 
9,758

 
9,814

 
9,900

 
9,956

Outstanding
 
10,588

 
9,363

 
9,327

 
9,431

 
9,495

 
10,588

 
9,495

Noninterest Income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Trust services fee income
 
$
1,596

 
$
1,594

 
$
1,569

 
$
1,468

 
$
1,583

 
$
6,227

 
$
6,498

Brokerage fee income
 
2,190

 
2,113

 
2,002

 
1,810

 
1,968

 
8,115

 
7,042

Mortgage income, net
 
4,916

 
3,700

 
2,059

 
1,203

 
1,834

 
11,878

 
6,344

Service charges on deposit accounts
 
1,237

 
1,223

 
1,194

 
1,170

 
1,208

 
4,824

 
4,845

Card interchange income
 
1,683

 
1,735

 
1,660

 
1,420

 
1,583

 
6,498

 
5,665

BOLI income
 
535

 
495

 
880

 
459

 
489

 
2,369

 
2,418

Other noninterest income
 
1,285

 
1,166

 
1,624

 
1,484

 
1,285

 
5,559

 
5,528

Noninterest income without net gains
 
13,442

 
12,026

 
10,988

 
9,014

 
9,950

 
45,470

 
38,340

Asset gains (losses), net
 
(133
)
 
286

 
7,572

 
172

 
(153
)
 
7,897

 
1,169

Total noninterest income
 
$
13,309

 
$
12,312

 
$
18,560

 
$
9,186

 
$
9,797

 
$
53,367

 
$
39,509

Noninterest Expense:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Personnel expense
 
$
13,628

 
$
12,914

 
$
15,358

 
$
12,537

 
$
11,327

 
$
54,437

 
$
49,476

Occupancy, equipment and office
 
3,827

 
3,454

 
3,757

 
3,750

 
3,673

 
14,788

 
14,574

Business development and marketing
 
1,397

 
1,428

 
1,579

 
1,281

 
1,185

 
5,685

 
5,324

Data processing
 
2,730

 
2,515

 
2,350

 
2,355

 
2,420

 
9,950

 
9,514

Intangibles amortization
 
936

 
914

 
969

 
1,053

 
1,053

 
3,872

 
4,389

Other noninterest expense
 
2,908

 
1,662

 
1,714

 
1,783

 
1,963

 
8,067

 
6,481

Total noninterest expense
 
$
25,426

 
$
22,887

 
$
25,727

 
$
22,759

 
$
21,621

 
$
96,799

 
$
89,758


 
 




Nicolet Bankshares, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated Financial Summary (Unaudited) - Continued
 
 
 
 
 
 
 
 
 
 
 
 
At or for the Three Months Ended
 
At or for the Year Ended
(In thousands, except per share data)
 
12/31/2019
 
9/30/2019
 
6/30/2019
 
3/31/2019
 
12/31/2018
 
12/31/2019
 
12/31/2018
Period-End Balances:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans
 
$
2,573,751

 
$
2,242,931

 
$
2,203,273

 
$
2,189,688

 
$
2,166,181

 
$
2,573,751

 
$
2,166,181

Allowance for loan losses
 
13,972

 
13,620

 
13,571

 
13,370

 
13,153

 
13,972

 
13,153

Securities available for sale, at fair value
 
449,302

 
419,300

 
403,989

 
407,693

 
400,144

 
449,302

 
400,144

Goodwill and other intangibles, net
 
165,967

 
121,371

 
122,285

 
123,254

 
124,307

 
165,967

 
124,307

Total assets
 
3,577,260

 
3,105,671

 
3,054,813

 
3,041,091

 
3,096,535

 
3,577,260

 
3,096,535

Deposits
 
2,954,453

 
2,584,447

 
2,536,639

 
2,538,486

 
2,614,138

 
2,954,453

 
2,614,138

Stockholders’ equity
 
516,262

 
428,014

 
411,415

 
398,767

 
386,609

 
516,262

 
386,609

Book value per common share
 
48.76

 
45.71

 
44.11

 
42.28

 
40.72

 
48.76

 
40.72

Tangible book value per common share (1)
 
33.08

 
32.75

 
31.00

 
29.21

 
27.62

 
33.08

 
27.62

Average Balances:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans
 
$
2,438,908

 
$
2,218,307

 
$
2,189,070

 
$
2,179,420

 
$
2,142,870

 
$
2,257,033

 
$
2,127,470

Securities available for sale, at fair value
 
424,981

 
399,090

 
402,934

 
409,580

 
421,693

 
409,161

 
411,007

Interest-earning assets
 
2,974,974

 
2,763,997

 
2,702,357

 
2,734,936

 
2,693,752

 
2,794,641

 
2,671,560

Total assets
 
3,339,283

 
3,094,546

 
3,022,383

 
3,047,068

 
2,996,553

 
3,126,535

 
2,977,457

Deposits
 
2,756,295

 
2,563,821

 
2,514,226

 
2,556,927

 
2,518,378

 
2,598,271

 
2,508,952

Interest-bearing liabilities
 
2,023,448

 
1,895,754

 
1,892,775

 
1,946,210

 
1,867,327

 
1,939,639

 
1,951,846

Goodwill and other intangibles, net
 
147,636

 
121,895

 
122,841

 
123,892

 
124,930

 
129,112

 
126,284

Stockholders’ equity
 
478,645

 
420,864

 
404,345

 
391,027

 
379,846

 
423,952

 
371,635

Financial Ratios: (2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Return on average assets
 
1.46
 %
 
1.73
%
 
2.46
%
 
1.37
 %
 
1.44
%
 
1.75
%
 
1.38
%
Return on average common equity
 
10.19

 
12.75

 
18.40

 
10.65

 
11.35

 
12.89

 
11.04

Return on average tangible common equity (1)
 
14.74

 
17.95

 
26.43

 
15.59

 
16.91

 
18.53

 
16.73

Average equity to average assets
 
14.33

 
13.60

 
13.38

 
12.83

 
12.68

 
13.56

 
12.48

Stockholders’ equity to assets
 
14.43

 
13.78

 
13.47

 
13.11

 
12.49

 
14.43

 
12.49

Tangible common equity to tangible assets (1)
 
10.27

 
10.28

 
9.86

 
9.44

 
8.83

 
10.27

 
8.83

Loan yield
 
5.33

 
5.56

 
5.66

 
5.51

 
5.38

 
5.57

 
5.37

Earning asset yield
 
4.82

 
4.97

 
5.11

 
4.89

 
4.76

 
5.00

 
4.74

Cost of interest-bearing deposits
 
0.99

 
1.00

 
1.05

 
1.04

 
0.98

 
1.02

 
0.82

Cost of funds
 
1.12

 
1.14

 
1.19

 
1.18

 
1.12

 
1.16

 
0.97

Net interest margin
 
4.06

 
4.19

 
4.28

 
4.05

 
3.98

 
4.19

 
4.04

Net loan charge-offs to average loans
 
(0.01
)
 
0.06

 
0.02

 
(0.00
)
 
0.01

 
0.02

 
0.05

Nonperforming loans to total loans
 
0.55

 
0.41

 
0.35

 
0.40

 
0.25

 
0.55

 
0.25

Nonperforming assets to total assets
 
0.42

 
0.34

 
0.26

 
0.30

 
0.19

 
0.42

 
0.19

Allowance for loan losses to loans
 
0.54

 
0.61

 
0.62

 
0.61

 
0.61

 
0.54

 
0.61

Efficiency ratio
 
57.57

 
55.19

 
64.01

 
61.91

 
58.03

 
59.54

 
61.42

Effective tax rate
 
31.41

 
25.27

 
13.19

 
24.46

 
26.83

 
23.04

 
24.54

Selected Items:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income resolved PCI loans (rounded)
 
$
1,400

 
$
1,800

 
$
1,300

 
$
200

 
$
100

 
$
4,700

 
$
2,000

Tax-equivalent adjustment net interest income
 
257

 
251

 
263

 
272

 
278

 
1,043

 
1,150

Tax benefit on stock-based compensation
 
(1,275
)
 
(128
)
 
(739
)
 
(144
)
 
(23
)
 
(2,286
)
 
(182
)
Common stock repurchased (dollars) (3)
 
$
3,383

 
$
576

 
$
9,142

 
$
5,600

 
$
5,233

 
$
18,701

 
$
22,177

Common stock repurchased (full shares) (3)
 
47,728

 
9,300

 
151,098

 
102,655

 
100,245

 
310,781

 
408,071


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.


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