Bankshares, Inc. Announces Record 2019 Earnings

GREEN BAY, Wis., Jan. 21, 2020 /PRNewswire/ -- Nicolet Bankshares, Inc. 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.

Nicolet Bankshares, Inc. Logo (PRNewsFoto/Nicolet Bankshares, Inc.)

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.

 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/bankshares-inc-announces-record-2019-earnings-300990649.html

SOURCE Nicolet Bankshares, Inc.

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