NICOLET BANKSHARES INC
For the period ended Sep 30, 2024. Filed Nov 1, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 1, 2024
NIC$173.12+0.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-05.
0001174850-24-000036
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-01.
0001174850-24-000046
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 148 previous paragraphs and 147 current paragraphs.
97 unchanged; 48 reworded; 2 added; 3 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 16 previous and 16 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (2)
Current report
At the beginning of 2024, there were serious concerns for a recession in 2024, which have since abated. Interest rates shifted higher after the Federal Reserve cut short-term interest rates 50 bps in mid-September, influenced by a strong employment report and higher than expected Consumer Price Index (“CPI” ) release. While labor market are cooling, some metrics continue to show strength and the latest employment report was stronger than expected. The CPI for September increased 0.2%, with shelter and food components driving much of this increase, and the CPI is expected to increase 2.6% (annualized) for the second half of 2024. The U.S. election will likely provide additional volatility to the economy over the coming weeks.
Current report
BOLI income was $4.0 million, a $0.7 million (20%) increase over the first nine months of 2023, on higher average balances from the $11.5 million new BOLI purchased in mid-2024 and improvements in BOLI assets linked to market performance.
Removed paragraphs (3)
Previous report
At the beginning of 2024, there were serious concerns for a recession in 2024. While the U.S. economy is slowing, with GDP anticipated to decline to approximately 2% for first half 2024, growth in second half 2024 is expected to remain positive as the propensity to spend remains high enough to keep the U.S. economy from spiraling down into negative growth. The labor markets are starting to show some signs of weakness as payroll growth has decreased and the unemployment rate has risen (from 3.6% in June 2023 to 4.1% in June 2024). Despite signs of a slowing U.S. economy, the S&P 500 index reached an all time high at mid-year 2024 and is expected to generate solid earnings growth for the year.
Previous report
Inflation showed improvement through mid-2023, before leveling off and recent months have reflected a slight uptick, coming in around 3% for June compared to the Federal Reserve goal of 2%. Shelter costs have kept prices higher than expected, but are projected to decrease in second half 2024. As a result, the Federal Reserve is pivoting the monetary policy towards lower overnight interest rates, and current projections indicate the Federal Reserve will likely cut overnight interest rates by 25 bps at the September meeting.
Previous report
Compared to June 30, 2023, assets increased $74 million (1%), with growth in loans partly offset by investment securities maturities and paydowns, as well as lower cash balances. Total loans increased $306 million (5%), primarily in residential mortgage and agricultural loans, while total deposits increased $42 million from June 30, 2023, with growth in time and money market deposits partly offset by lower noninterest-bearing demand deposits. Stockholders’ equity increased $114 million from June 30, 2023, with solid net income and favorable net fair value investment changes partly offset by dividend payments.
Reworded paragraphs (48)
Previous wording
The following discussion is management’s analysis of Nicolet’s consolidated financial condition as of June 30, 2024 and December 31, 2023 and results of operations for the three and six-month periods ended June 30, 2024 and 2023. It should be read in conjunction with our audited consolidated financial statements included in Nicolet’s 2023 Annual Report on Form 10-K.
Current wording
The following discussion is management’s analysis of Nicolet’s consolidated financial condition as of September 30, 2024 and December 31, 2023 and results of operations for the three and nine-month periods ended September 30, 2024 and 2023. It should be read in conjunction with our audited consolidated financial statements included in Nicolet’s 2023 Annual Report on Form 10-K.
Previous wording
Net income was $57 million (or earnings per diluted common share of $3.74) for the six months ended June 30, 2024, compared to net income of $14 million (or earnings per diluted common share of $0.91) for the six months ended June 30, 2023, with 2023 significantly impacted by the first quarter balance sheet repositioning (as detailed in Table 1A, Reconciliation of Non-GAAP Financial Measures above).
Current wording
Net income was $90 million (or earnings per diluted common share of $5.84) for the nine months ended September 30, 2024, compared to net income of $31 million (or earnings per diluted common share of $2.05) for the nine months ended September 30, 2023, with 2023 significantly impacted by the first quarter balance sheet repositioning (as detailed in Table 1A, Reconciliation of Non-GAAP Financial Measures above).
Previous wording
Net income reflected 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 tax law (as detailed in section Non-GAAP Financial Measures above), as well as gains / (losses) on other assets and investments in all periods. These non-core items positively impacted earnings per diluted common share $0.13 for the six months ended June 30, 2024 and negatively impacted earnings per diluted common share $2.07 for the six months ended June 30, 2023.
Current wording
Net income reflected 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 tax law (as detailed in section Non-GAAP Financial Measures above), as well as gains / (losses) on other assets and investments in all periods. These non-core items positively impacted earnings per diluted common share $0.19 for the nine months ended September 30, 2024 and negatively impacted earnings per diluted common share $2.82 for the nine months ended September 30, 2023.
Previous wording
•Net interest income was $128 million for the first six months of 2024, up $12 million (11%) over the first six months of 2023. Interest income grew $33 million mostly due to the repricing of new and renewed loans in a rising interest rate environment. Interest expense increased $21 million between the comparable six-month periods also mostly from the higher average funding costs. Net interest margin was 3.31% for the six months ended June 30, 2024, compared to 3.02% for the six months ended June 30, 2023. For additional information regarding net interest income, see “Income Statement Analysis — Net Interest Income.”
Current wording
•Net interest income was $197 million for the first nine months of 2024, up $19 million (11%) over the first nine months of 2023. Interest income grew $46 million mostly due to the repricing of new and renewed loans in a higher interest rate environment. Interest expense increased $27 million between the comparable nine-month periods also mostly from the higher average funding costs. Net interest margin was 3.35% for the nine months ended September 30, 2024, compared to 3.07% for the nine months ended September 30, 2023. For additional information regarding net interest income, see “Income Statement Analysis — Net Interest Income.”
Previous wording
•Noninterest income was $39 million for the first six months of 2024, a $44 million favorable change from the comparable 2023 period, primarily due to the first quarter 2023 balance sheet repositioning (noted above). Excluding net asset gains (losses), noninterest income for the first six months of 2024 was $37 million, a $3 million increase over the first six months of 2023. For additional information regarding noninterest income, see “Income Statement Analysis — Noninterest Income.”
Current wording
•Noninterest income was $61 million for the first nine months of 2024, a $50 million favorable change from the comparable 2023 period, primarily due to the first quarter 2023 balance sheet repositioning (noted above). Excluding net asset gains (losses), noninterest income for the first nine months of 2024 was $58 million, a $7 million increase over the first nine months of 2023. For additional information regarding noninterest income, see “Income Statement Analysis — Noninterest Income.”
Previous wording
•Noninterest expense was $94 million, $4 million (5%) higher than the first six months of 2023. Personnel costs increased $5 million, while non-personnel expenses combined decreased slightly (1%) from the comparable 2023 period. For additional information regarding noninterest expense, see “Income Statement Analysis — Noninterest Expense.”
Current wording
•Noninterest expense was $143 million, $8 million (6%) higher than the first nine months of 2023. Personnel costs increased $10 million, while non-personnel expenses combined decreased $2 million (3%) from the comparable 2023 period. For additional information regarding noninterest expense, see “Income Statement Analysis — Noninterest Expense.”
Previous wording
•Nonperforming assets were $29 million, representing 0.34% of total assets at June 30, 2024, compared to $28 million or 0.33% of total assets at December 31, 2023. For additional information regarding nonperforming assets, see “Balance Sheet Analysis – Nonperforming Assets.”
Current wording
•Nonperforming assets were $26 million, representing 0.31% of total assets at September 30, 2024, compared to $28 million or 0.33% of total assets at December 31, 2023. For additional information regarding nonperforming assets, see “Balance Sheet Analysis – Nonperforming Assets.”
Previous wording
•At June 30, 2024, assets were $8.6 billion, up $88 million (1%) from December 31, 2023, mostly from solid loan growth, partly offset by lower cash balances. For additional balance sheet discussion see “Balance Sheet Analysis.”
Current wording
•At September 30, 2024, assets were $8.6 billion, an increase of $168 million (2%) from December 31, 2023, mostly from solid loan growth, partly offset by lower cash balances. For additional balance sheet discussion see “Balance Sheet Analysis.”
Previous wording
•At June 30, 2024, loans were $6.5 billion, up $175 million from December 31, 2023, with growth in agricultural, commercial and industrial, and residential real estate loans. On average, loans grew $228 million (4%) over the first six months of 2023. For additional information regarding loans, see “Balance Sheet Analysis — Loans.”
Current wording
•At September 30, 2024, loans were $6.6 billion, an increase of $203 million from December 31, 2023, with growth in agricultural, commercial and industrial, and residential real estate loans. On average, loans grew $256 million (4%) over the first nine months of 2023. For additional information regarding loans, see “Balance Sheet Analysis — Loans.”
Previous wording
•Total deposits of $7.2 billion at June 30, 2024, increased $43 million from December 31, 2023, with growth in money market and time deposits, partly offset by lower noninterest-bearing demand deposits from seasonal trends as well as some migration to higher rate deposit products. Year-to-date average deposits were $148 million (2%) higher than the first six months of 2023. For additional information regarding deposits, see “Balance Sheet Analysis – Deposits.”
Current wording
•Total deposits of $7.3 billion at September 30, 2024, increased $62 million from December 31, 2023, with growth in money market and time deposits, partly offset by lower noninterest-bearing demand deposits from seasonal trends as well as some migration to higher rate deposit products. Year-to-date average deposits were $129 million (2%) higher than the first nine months of 2023. For additional information regarding deposits, see “Balance Sheet Analysis – Deposits.”
Previous wording
The Federal Reserve raised short-term interest rates a total of 425 bps during 2022, increasing the Federal Funds rate to a range of 4.25% to 4.50% as of December 31, 2022. Additional increases totaling 100 bps were made during 2023, resulting in a Federal Funds range of 5.25% to 5.50% as of December 31, 2023, which remained unchanged at June 30, 2024.
Current wording
The Federal Reserve raised short-term interest rates a total of 425 bps during 2022, increasing the Federal Funds rate to a range of 4.25% to 4.50% as of December 31, 2022. Additional increases totaling 100 bps were made during 2023, resulting in a Federal Funds range of 5.25% to 5.50% as of December 31, 2023, while the Federal Reserve decreased short-term interest rates in September 2024, resulting in a Federal Funds range of 4.75% to 5.00% at September 30, 2024.
Previous wording
Tax-equivalent net interest income was $129 million for the six months ended June 30, 2024, an increase of $12 million (10%) over the six months ended June 30, 2023. The $12 million increase in tax-equivalent net interest income was mostly attributable to favorable rates (which added $18 million to net interest income), partly offset by unfavorable volumes.
Current wording
Tax-equivalent net interest income was $198 million for the nine months ended September 30, 2024, an increase of $19 million (11%) over the nine months ended September 30, 2023. The $19 million increase in tax-equivalent net interest income was mostly attributable to favorable rates (which added $24 million to net interest income), partly offset by unfavorable volumes.
Previous wording
Average interest-earning assets increased $18 million to $7.7 billion over the comparable 2023 period, with solid loan growth partly offset by lower investment securities due to the first quarter 2023 balance sheet repositioning (as discussed in further detail under “Performance Summary” above). Between the comparable six-month periods, average loans increased $228 million (4%), on solid organic loan growth. Average investment securities decreased $404 million between the comparable six-month periods, while other interest-earning assets increased $194 million, with both attributable to the first quarter 2023 balance sheet repositioning. As a result, the mix of average interest-earning assets shifted to 84% loans, 11% investments and 5% other interest-earning assets (mostly cash) for the first half of 2024, compared to 81%, 17% and 2%, respectively, for the first half of 2023.
Current wording
Average interest-earning assets increased $61 million to $7.7 billion over the comparable 2023 period, with solid loan growth partly offset by lower investment securities due to the first quarter 2023 balance sheet repositioning (as discussed in further detail under “Performance Summary” above). Between the comparable nine-month periods, average loans increased $256 million (4%), on solid organic loan growth. Average investment securities decreased $298 million between the comparable nine-month periods, while other interest-earning assets increased $103 million, with both attributable to the first quarter 2023 balance sheet repositioning. As a result, the mix of average interest-earning assets shifted to 84% loans, 11% investments and 5% other interest-earning assets (mostly cash) for the first nine months of 2024, compared to 81%, 15% and 4%, respectively, for the first nine months of 2023.
Previous wording
Average interest-bearing liabilities were $5.6 billion for the first half of 2024, an increase of $283 million (5%) over the first half of 2023. Average interest-bearing core deposits increased $363 million and average brokered deposits increased $152 million between the comparable six-month periods, reflecting growth in higher cost deposit products. Wholesale funding decreased $232 million between the comparable six-month periods, mostly due to the repayment of FHLB borrowings as part of the first quarter 2023 balance sheet repositioning. The mix of average interest-bearing liabilities was 84% core deposits, 14% brokered deposits and 2% wholesale funding for the first half of 2024, compared to 81%, 11%, and 8%, respectively, for the first half of 2023.
Current wording
Average interest-bearing liabilities were $5.6 billion for the first nine months of 2024, an increase of $278 million (5%) over the first nine months of 2023. Average interest-bearing core deposits increased $319 million and average brokered deposits increased $140 million between the comparable nine-month periods, reflecting growth in higher cost deposit products and a shift in funding strategy. Wholesale funding decreased $181 million between the comparable nine-month periods, mostly due to the repayment of FHLB borrowings as part of the first quarter 2023 balance sheet repositioning. The mix of average interest-bearing liabilities was 84% core deposits, 14% brokered deposits and 2% wholesale funding for the first nine months of 2024, compared to 82%, 12%, and 6%, respectively, for the first nine months of 2023.
Previous wording
The interest rate spread increased 20 bps between the comparable six-month periods, as the repricing of liabilities has slowed (with fewer interest rate increases during 2023 and none in 2024), while new and renewed loans continue to reprice in a higher interest rate environment. The interest-earning asset yield increased 83 bps to 5.52% for the first six months of 2024, due to the changing mix of interest-earning assets (noted above), as well as the higher interest rate environment. The loan yield improved 67 bps to 5.90% between the comparable six-month periods, largely due to the repricing of new and renewed loans, while the yield on investment securities increased 82 bps to 2.89%. The cost of funds increased 63 bps to 3.05% for the first half of 2024, also reflecting the higher interest rate environment as well as a migration of customer deposits into higher rate deposit products. The contribution from net free funds increased 9 bps, mostly due to the higher value in the current interest rate environment. As a result, the tax-equivalent net interest margin was 3.31% for the first half of 2024, a 29 bps increase over 3.02% for the first half of 2023.
Current wording
The interest rate spread increased 22 bps between the comparable nine-month periods, as the repricing of liabilities has slowed, while new and renewed loans continue to reprice in a higher interest rate environment. The interest-earning asset yield increased 73 bps to 5.58% for the first nine months of 2024, due to the changing mix of interest-earning assets (noted above), as well as the higher interest rate environment. The loan yield improved 62 bps to 5.95% between the comparable nine-month periods, largely due to the repricing of new and renewed loans, while the yield on investment securities increased 73 bps to 2.95%. The cost of funds increased 51 bps to 3.07% for the first nine months of 2024, also reflecting the higher interest rate environment as well as a migration of customer deposits into higher rate deposit products. The contribution from net free funds increased 6 bps, mostly due to the higher value in the current interest rate environment. As a result, the tax-equivalent net interest margin was 3.35% for the first nine months of 2024, a 28 bps increase over 3.07% for the first nine months of 2023.
Previous wording
Tax-equivalent interest income was $214 million for the first half of 2024, up $33 million from the comparable period of 2023, comprised of $34 million higher average rates, partly offset by $1 million lower volume. Interest income on loans increased $29 million over the first half of 2023, mostly due to higher rates from the rising interest rate environment, as well as solid loan growth. Interest expense increased to $85 million for the first half of 2024, up $21 million compared to the first half of 2023, mostly due to a higher cost of funds, as well as growth in deposits.
Current wording
Tax-equivalent interest income was $327 million for the first nine months of 2024, up $46 million from the comparable period of 2023, comprised of $43 million higher average rates and $3 million higher average volume. Interest income on loans increased $42 million over the first nine months of 2023, mostly due to higher rates from the rising interest rate environment, as well as solid loan growth. Interest expense increased to $129 million for the first nine months of 2024, up $27 million compared to the first nine months of 2023, mostly due to a higher cost of funds, as well as growth in deposits.
Previous wording
The provision for credit losses was $2.1 million for the six months ended June 30, 2024 (entirely related to the ACL-Loans), compared to $3.5 million for the six months ended June 30, 2023 (comprised of $1.2 million related to the ACL-Loans and $2.3 million for the ACL on securities AFS). The provision for credit losses on loans was attributable to growth and changes in the underlying loan portfolio, while the 2023 provision for credit losses on securities AFS was due to the expected loss on a bank subordinated debt investment which was fully charged-off during first quarter 2023.
Current wording
The provision for credit losses was $2.9 million for the nine months ended September 30, 2024 (entirely related to the ACL-Loans), compared to $4.0 million for the nine months ended September 30, 2023 (comprised of $1.7 million related to the ACL-Loans and $2.3 million for the ACL on securities AFS). The provision for credit losses on loans was attributable to growth and changes in the underlying loan portfolio, while the 2023 provision for credit losses on securities AFS was due to the expected loss on a bank subordinated debt investment which was fully charged-off during first quarter 2023.
Previous wording
Noninterest income was $39.0 million for the first six months of 2024, a favorable change of $44.0 million compared to the first six months of 2023, primarily due to the 2023 balance sheet repositioning. Excluding net asset gains (losses), noninterest income for the first six months of 2024 was $36.5 million, a $2.7 million (8%) increase over the comparable period in 2023.
Current wording
Noninterest income was $61.4 million for the first nine months of 2024, a favorable change of $49.9 million compared to the first nine months of 2023, primarily due to the 2023 balance sheet repositioning. Noninterest income without net gains (losses) was $57.7 million for the first nine months of 2024, a $7.4 million (15%) increase over the comparable period in 2023.
Previous wording
Wealth management fee income was $13.2 million, up $1.8 million (16%) from the first six months of 2023, on growth in accounts and assets under management, including favorable market-related changes.
Current wording
Wealth management fee income was $20.2 million, up $2.8 million (16%) from the first nine months of 2023, including favorable market-related changes, as well as growth in accounts and assets under management.
Previous wording
Mortgage income includes net gains received from the sale of residential real estate loans into the secondary market, capitalized mortgage servicing rights (“MSR”), servicing fees net of MSR amortization, fair value marks on the mortgage interest rate lock commitments and forward commitments (“mortgage derivatives”), and MSR valuation changes, if any. Net mortgage income of $4.0 million, increased $0.7 million (22%) between the comparable six-month periods, mostly due to higher secondary market volumes and the related gains on sales, partly offset by changes in the MSR valuation (first half 2023 included a $0.5 million recovery to the MSR valuation versus none in first half 2024). See also Note 6, “Goodwill and Other Intangibles and Servicing Rights” of the Notes to Unaudited Consolidated Financial Statements under Part I, Item 1, for additional disclosures on the MSR asset.
Current wording
Mortgage income includes net gains received from the sale of residential real estate loans into the secondary market, capitalized mortgage servicing rights (“MSR”), servicing fees net of MSR amortization, fair value marks on the mortgage interest rate lock commitments and forward commitments (“mortgage derivatives”), and MSR valuation changes, if any. Net mortgage income of $6.9 million, increased $1.5 million (29%) between the comparable nine-month periods, mostly due to higher secondary market volumes and the related gains on sales, partly offset by changes in the MSR valuation (2023 included a $0.5 million recovery to the MSR valuation while 2024 included a $0.1 million addition to the MSR valuation). See also Note 6, “Goodwill and Other Intangibles and Servicing Rights” of the Notes to Unaudited Consolidated Financial Statements under Part I, Item 1, for additional disclosures on the MSR asset.
Previous wording
Services charges on deposit accounts were $3.4 million, up $0.4 million (13%) from the first six months of 2023, on growth in both accounts and account analysis fees.
Current wording
Services charges on deposit accounts were $5.3 million, up $0.8 million (18%) from the first nine months of 2023, on growth in both accounts and account analysis fees.
Previous wording
Other income of $4.3 million for the six months ended June 30, 2024 was up $0.6 million from the comparable 2023 period, largely due to card incentive income.
Current wording
Other income of $6.4 million for the nine months ended September 30, 2024 was up $0.8 million from the comparable 2023 period, largely due to card incentive income.
Previous wording
Net asset gains of $2.5 million for the first six months of 2024 were primarily attributable to gains of $1.6 million on sales of investments and $0.9 million gain on the early extinguishment of Nicolet subordinated notes, while net asset losses of $38.8 million for the first six months of 2023 were primarily attributable to losses on the sale of approximately $500 million (par value) U.S. Treasury held to maturity securities as part of a balance sheet repositioning.
Current wording
Net asset gains of $3.7 million for the first nine months of 2024 included gains of $1.6 million on sales of investments, a $1.3 million gain on the early extinguishment of Nicolet subordinated notes, and $0.7 million of favorable fair value marks on equity securities. Net asset losses of $38.8 million for the first nine months of 2023 were primarily attributable to losses on the sale of approximately $500 million (par value) U.S. Treasury held to maturity securities as part of a balance sheet repositioning.
Previous wording
Noninterest expense was $94.0 million, an increase of $4.2 million (5%) over the first six months of 2023. Personnel costs increased $4.6 million (9%), while non-personnel expenses combined decreased $0.4 million (1%) compared to the first six months of 2023.
Current wording
Noninterest expense was $143.1 million, an increase of $7.6 million (6%) over the first nine months of 2023. Personnel costs increased $9.6 million (13%), while non-personnel expenses combined decreased $2.0 million (3%) compared to the first nine months of 2023.
Previous wording
Personnel expense was $52.8 million for the six months ended June 30, 2024, an increase of $4.6 million from the comparable period in 2023. Salary expense increased $2.5 million (6%) over the first six months of 2023, reflecting merit increases between the years, higher incentives commensurate with current period earnings, and a slightly larger employee base (with average full-time equivalent employees up 1%). Fringe benefits increased $2.1 million over the first six months of 2023, mostly due to higher overall health care expenses. Salary expense was also impacted by the change in the fair value of nonqualified deferred compensation plan liabilities. See also “Noninterest Income” for the offsetting fair value change to the nonqualified deferred compensation plan assets.
Current wording
Personnel expense was $81.7 million for the nine months ended September 30, 2024, an increase of $9.6 million from the comparable period in 2023. Salary expense increased $6.8 million (11%) over the first nine months of 2023, reflecting merit increases between the years and higher incentives commensurate with current period earnings. Fringe benefits increased $2.8 million over the first nine months of 2023, mostly due to higher overall health care expenses. Salary expense was also impacted by the change in the fair value of nonqualified deferred compensation plan liabilities. See also “Noninterest Income” for the offsetting fair value change to the nonqualified deferred compensation plan assets.
Previous wording
Data processing expense was $8.6 million, up $0.3 million (4%) between the comparable six-month periods, mostly due to volume-based increases in core and brokerage processing charges.
Current wording
Data processing expense was $13.1 million, up $0.2 million (2%) between the comparable nine-month periods, mostly due to volume-based increases in core and brokerage processing charges.
Previous wording
Intangibles amortization decreased $0.6 million between the comparable six-month periods due to lower amortization from the aging intangibles.
Current wording
Intangibles amortization decreased $0.9 million between the comparable nine-month periods due to lower amortization from the aging intangibles.
Previous wording
Other expense was $5.2 million, down $0.5 million (9%) between the comparable six-month periods, mostly due to lower professional fees.
Current wording
Other expense was $7.6 million, down $0.9 million (11%) between the comparable nine-month periods, mostly due to lower professional fees.
Previous wording
Income tax expense was $14.0 million (effective tax rate of 19.7%) for the first six months of 2024, compared to income tax expense of $3.7 million (effective tax rate of 21.2%) for the comparable period of 2023. The change in income tax was mostly due to the lower pretax earnings in 2023, and also reflects the lower effective tax rate beginning in the second half of 2023 related to the Wisconsin tax law change noted above in the “Performance Summary” section.
Current wording
Income tax expense was $22.3 million (effective tax rate of 20.0%) for the first nine months of 2024, compared to income tax expense of $18.4 million (effective tax rate of 37.3%) for the comparable period of 2023. The change in income tax was mostly due to the lower pretax earnings in 2023, as well as the $9.1 million charge to income tax expense during 2023 to establish a tax valuation allowance related to the Wisconsin tax law change noted above in the “Performance Summary” section. In addition, the Wisconsin tax law change resulted in a lower effective tax rate beginning in the second half of 2023.
Previous wording
Net income was $29.3 million, or adjusted net income (non-GAAP) of $28.8 million, for the three months ended June 30, 2024, compared to net income of $22.6 million, or adjusted net income (non-GAAP) of $22.9 million for the three months ended June 30, 2023. Earnings per diluted common share was $1.92 for second quarter 2024, compared to $1.51 for second quarter 2023.
Current wording
Net income was $32.5 million, or adjusted net income (non-GAAP) of $31.6 million, for the three months ended September 30, 2024, compared to net income of $17.2 million, or adjusted net income (non-GAAP) of $23.3 million for the three months ended September 30, 2023. Earnings per diluted common share was $2.10 for third quarter 2024, compared to $1.14 for third quarter 2023.
Previous wording
Tax-equivalent net interest income was $65.8 million for second quarter 2024, an increase of $6.3 million from second quarter 2023. Interest income increased $16.8 million over second quarter 2023, while interest expense increased $10.5 million from second quarter 2023. The increase in interest income included $13.4 million from higher yields (reflecting the rising interest rate environment) and $3.4 million from stronger volumes (led by average loans which grew $259 million or 4% over second quarter 2023). Average investment securities decreased $187 million, while other interest-earning assets grew $163 million (primarily investable cash) between the comparable second quarter periods, mostly due to investment securities maturities and paydowns. Interest expense increased $10.5 million from second quarter 2023, mostly due to $6.3 million higher overall funding costs. For additional information regarding average balances, net interest income and net interest margin, see “INCOME STATEMENT ANALYSIS — Net Interest Income.”
Current wording
Tax-equivalent net interest income was $68.9 million for third quarter 2024, an increase of $6.9 million from third quarter 2023. Interest income increased $12.7 million over third quarter 2023, while interest expense increased $5.8 million from third quarter 2023. The increase in interest income included $9.7 million from higher yields (reflecting the rising interest rate environment) and $3.0 million from stronger volumes (led by average loans which grew $312 million or 5% over third quarter 2023). Average investment securities decreased $89 million between the comparable third quarter periods, mostly due to investment securities maturities and paydowns, while other interest-earning assets decreased $75 million (primarily investable cash) between the comparable third quarter periods. The $5.8 million increase in interest expense from third quarter 2023, included $3.3 million from higher overall funding costs and $2.6 million from growth in average funding. For additional information regarding average balances, net interest income and net interest margin, see “INCOME STATEMENT ANALYSIS — Net Interest Income.”
Previous wording
The net interest margin for second quarter 2024 was 3.35%, compared to 3.14% for second quarter 2023, impacted by the rising interest rate environment and the changing balance sheet mix. The mix of average interest-earning assets shifted from 83% loans, 14% investments and 3% other interest-earning assets (mostly investable cash) for second quarter 2023, to 84%, 11% and 5%, respectively, for second quarter 2024. The mix of average interest-bearing liabilities shifted from 82% core deposits, 12% brokered deposits, and 6% wholesale funding for second quarter 2023, to 82%, 15%, and 3%, respectively, for second quarter 2024, including a continued migration to higher rate deposit products. The yield on interest-earning assets of 5.61% increased 71 bps from second quarter 2023, while the cost of funds of 3.09% increased 55 bps between the comparable quarters.
Current wording
The net interest margin for third quarter 2024 was 3.44%, compared to 3.16% for third quarter 2023, impacted by the rising interest rate environment and the changing balance sheet mix. The mix of average interest-earning assets shifted from 81% loans, 13% investments and 6% other interest-earning assets (mostly investable cash) for third quarter 2023, to 84%, 11% and 5%, respectively, for third quarter 2024. The mix of average interest-bearing liabilities shifted from 83% core deposits, 12% brokered deposits, and 5% wholesale funding for third quarter 2023, to 83%, 14%, and 3%, respectively, for third quarter 2024, including a continued migration to higher rate deposit products. The yield on interest-earning assets of 5.68% increased 53 bps from third quarter 2023, while the cost of funds of 3.11% increased 28 bps between the comparable quarters.
Previous wording
Provision for credit losses was $1.4 million for second quarter 2024 (all related to the ACL-Loans), compared to $0.5 million provision for credit losses for second quarter 2023 (also all related to the ACL-Loans). For additional information regarding the allowance for credit losses-loans and asset quality, see “BALANCE SHEET ANALYSIS — Allowance for Credit Losses - Loans” and “BALANCE SHEET ANALYSIS — Nonperforming Assets.”
Current wording
Provision for credit losses was $0.8 million for third quarter 2024 (all related to the ACL-Loans), compared to $0.5 million provision for credit losses for third quarter 2023 (also all related to the ACL-Loans). For additional information regarding the allowance for credit losses-loans and asset quality, see “BALANCE SHEET ANALYSIS — Allowance for Credit Losses - Loans” and “BALANCE SHEET ANALYSIS — Nonperforming Assets.”
Previous wording
Noninterest income was $19.6 million for second quarter 2024, an increase of $2.8 million (16%) from second quarter 2023. Wealth management fee income grew $0.8 million (14%), including favorable market-related changes, as well as growth in accounts and assets under management. Net mortgage income of $2.6 million, increased $0.8 million (45%) between the comparable second quarter periods, mostly due to higher secondary market volumes and the related gains on sales. Services charges on deposit accounts were $1.8 million, up $0.3 million (19%) from second quarter 2023, on growth in both accounts and account analysis fees. For additional information regarding noninterest income, see “INCOME STATEMENT ANALYSIS — Noninterest Income.”
Current wording
Noninterest income was $22.4 million for third quarter 2024, an increase of $5.8 million (35%) from third quarter 2023. Wealth management fee income grew $1.0 million (17%), including favorable market-related changes, as well as growth in accounts and assets under management. Net mortgage income of $2.9 million, increased $0.8 million (41%) between the comparable third quarter periods, mostly due to higher secondary market volumes and the related gains on sales. Services charges on deposit accounts were $1.9 million, up $0.4 million (28%) from third quarter 2023, on growth in both accounts and account analysis fees. BOLI income was $1.5 million, a $0.4 million (33%) increase over third quarter 2023, on higher average balances from the $11.5 million new BOLI purchased in mid-2024 and improvements in BOLI assets linked to market performance. For additional information regarding noninterest income, see “INCOME STATEMENT ANALYSIS — Noninterest Income.”
Previous wording
Noninterest expense was $46.9 million for second quarter 2024, an increase of $1.9 million (4%) from second quarter 2023, including a $2.4 million increase in personnel expense and a $0.5 million decrease in non-personnel expenses. The increase in personnel was mostly due to higher salaries, incentives, and fringe benefits. The decrease in non-personnel expenses was mostly due to lower intangible amortization, office expense, and professional fees. For additional information regarding noninterest expense, see “INCOME STATEMENT ANALYSIS — Noninterest Expense.”
Current wording
Noninterest expense was $49.1 million for third quarter 2024, an increase of $3.4 million (7%) from third quarter 2023, including a $5.0 million increase in personnel expense and a $1.6 million decrease in non-personnel expenses. The increase in personnel was mostly due to higher salaries, incentives, and fringe benefits. The decrease in non-personnel expenses was mostly due to lower intangible amortization, office expense, and professional fees. For additional information regarding noninterest expense, see “INCOME STATEMENT ANALYSIS — Noninterest Expense.”
Previous wording
Income tax expense was $7.5 million (effective tax rate of 20.3%) for second quarter 2024, compared to $7.9 million (effective tax rate of 25.9%) for second quarter 2023. The change in income tax expense and the effective tax rate was primarily attributable to the Wisconsin tax law change noted above in the “Performance Summary” section.
Current wording
Income tax expense was $8.3 million (effective tax rate of 20.4%) for third quarter 2024, compared to $14.7 million (effective tax rate of 46.1%) for third quarter 2023. The change in income tax expense included a $9.1 million charge to income tax expense to establish a valuation allowance, partly offset by a $3.0 million reduction to income tax expense to reverse amounts recorded in the first half of 2023, both related to the Wisconsin tax law change noted above in the “Performance Summary” section.
Previous wording
At June 30, 2024, period end assets were $8.6 billion, an increase of $88 million (1.0%) from December 31, 2023, mostly from solid growth in loans, partly offset by lower cash balances. Total loans increased $175 million (3%) from December 31, 2023, with growth in agricultural, commercial and industrial, and residential real estate loans. Total deposits of $7.2 billion at June 30, 2024, increased $43 million from December 31, 2023, with growth in time and money market deposits partly offset by lower noninterest-bearing demand deposits. Total stockholders’ equity was $1.1 billion at June 30, 2024, an increase of $52 million over December 31, 2023, with strong earnings partly offset by the quarterly dividend payment.
Current wording
At September 30, 2024, period end assets were $8.6 billion, an increase of $168 million (2%) from December 31, 2023, mostly from solid growth in loans, partly offset by lower cash balances. Total loans increased $203 million (3%) from December 31, 2023, with growth in agricultural, commercial and industrial, and residential real estate loans. Total deposits of $7.3 billion at September 30, 2024, increased $62 million from December 31, 2023, with growth in time and money market deposits partly offset by lower noninterest-bearing demand deposits. Total stockholders’ equity was $1.1 billion at September 30, 2024, an increase of $110 million over December 31, 2023, with solid earnings and improvements in the securities portfolio valuation partly offset by the quarterly common stock dividend.
Previous wording
Total loans of $6.5 billion at June 30, 2024, increased $175 million (3%) from December 31, 2023, with growth in agricultural, commercial and industrial, and residential real estate loans. At June 30, 2024, commercial and industrial loans represented the largest segment of Nicolet’s loan portfolio at 21% of the total portfolio, followed by agricultural and CRE investment at 19% and 18%, respectively, of the loan portfolio. The loan portfolio is widely diversified and included the following industries: manufacturing, wholesaling, paper, packaging, food production and processing, agriculture, forest products, hospitality, retail, service, and businesses supporting the general building industry. The following chart provides the industry distribution of our commercial loan portfolio at June 30, 2024.
Current wording
Total loans of $6.6 billion at September 30, 2024, increased $203 million (3%) from December 31, 2023, with growth in agricultural, commercial and industrial, and residential real estate loans. At September 30, 2024, commercial and industrial loans represented the largest segment of Nicolet’s loan portfolio at 21% of the total portfolio, followed by agricultural and CRE investment at 19% of the loan portfolio. The loan portfolio is widely diversified and included the following industries: manufacturing, wholesaling, paper, packaging, food production and processing, agriculture, forest products, hospitality, retail, service, and businesses supporting the general building industry. The following chart provides the industry distribution of our commercial loan portfolio at September 30, 2024.
Previous wording
At June 30, 2024, the ACL-Loans was $65 million (representing 1.00% of period end loans), compared to $64 million (or 1.00% of period end loans) at December 31, 2023 and $63 million (or 1.01% of period end loans) at June 30, 2023. The components of the ACL-Loans are detailed further in Table 8 below.
Current wording
At September 30, 2024, the ACL-Loans was $66 million (representing 1.00% of period end loans), compared to $64 million (or 1.00% of period end loans) at December 31, 2023 and $63 million (or 1.01% of period end loans) at September 30, 2023. The components of the ACL-Loans are detailed further in Table 8 below.
Previous wording
Nonperforming loans are considered one indicator of potential future loan losses. Nonperforming loans are defined as nonaccrual loans and loans 90 days or more past due but still accruing interest. Loans are generally placed on nonaccrual status when contractually past due 90 days or more as to interest or principal payments. Additionally, whenever management becomes aware of facts or circumstances that may adversely impact the collectability of principal or interest on loans, it is management’s practice to place such loans on nonaccrual status immediately. Nonperforming assets include nonperforming loans and other real estate owned (“OREO”). At June 30, 2024, nonperforming assets were $29 million and represented 0.34% of total assets, compared to $28 million or 0.33% of total assets at December 31, 2023, and $27 million or 0.32% of total assets at June 30, 2023.
Current wording
Nonperforming loans are considered one indicator of potential future loan losses. Nonperforming loans are defined as nonaccrual loans and loans 90 days or more past due but still accruing interest. Loans are generally placed on nonaccrual status when contractually past due 90 days or more as to interest or principal payments. Additionally, whenever management becomes aware of facts or circumstances that may adversely impact the collectability of principal or interest on loans, it is management’s practice to place such loans on nonaccrual status immediately. Nonperforming assets include nonperforming loans and other real estate owned (“OREO”). At September 30, 2024, nonperforming assets were $26 million and represented 0.31% of total assets, compared to $28 million or 0.33% of total assets at December 31, 2023, and $32 million or 0.37% of total assets at September 30, 2023.
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