Nicolet Bankshares Inc.
Annual Report 2013

Plain-text annual report

I n H a r m o n y W i t h t h e C o m m u n i t y I n H a r m o n y W i t h t h e C o m m u n i t y A N N U A L R E P O R T / 2 0 1 3 A N N U A L R E P O R T / 2 0 1 3 I n t r o Cover photo: Syble Hopp Singers at the first Nicolet Foundation Golf Outing L e t t e r T o S h a r e h o l d e r s Dear Shareholders, Since our inception, we have acted upon our belief that there is a tremendous opportunity for a highly-focused community bank. We wrote about this in our first annual report in 2001 and continue to believe that it is true to this day. For the past few years, we have said that we were going to run counter- cyclical to the industry, that we were going to invest rather than shrink, that we weren’t going to trade dollars in the future for pennies in the present. This optimism in and execution of our mission has produced great results for 2013. 2013 – A Look Back The numbers are strong and represent the achievement of a number of long term strategic goals for Nicolet. We have emerged from the Great Recession as a much larger, stronger and more profitable institution. We had a solid year of growth in our core franchise and completed two acquisitions which increased 3 both capital and earnings immediately. We posted record profits, increased book value by 23%, and continued our strategic investments in future growth and profitability. Here are some of the highlights of the year. - Net income of $16.1 million and $3.80 per diluted common share - Book value per common share increased from $15.45 to $18.97 per common share - Total assets grew from $745 million to $1.2 billion, making us the largest community bank in our market area - Solid asset quality with year-end nonperforming assets at 1.02% of assets - Branch locations increased from 11 to 23, with new reach into central Wisconsin Throughout the Great Recession, we focused on telling you what we were doing to address our issues and how we would continue to invest in our future. The investments we made during those tougher B o b & M i k e years bore fruit in 2013. Not everything we plan for happens, though in this past year, most did. crisis. Public anger at very real problems was harnessed to greatly expand the scope and depth of We study, think, plan, communicate and execute based on our understanding of the opportunities the Federal involvement in financial markets in general and banking in particular. The federalization of environment affords. We listen carefully to the economic concepts and ideas in play that affect our control, risk oversight and policy is driving the remarkably rapid concentration of banking assets. communities and our bank. Ideas about banking change frequently. We must understand what our Twenty years ago banks over $10 billion in assets controlled 24% of banking assets. This year banks industry thinks, not so we follow convention, but rather as a critical input to our competitive strategy. over $10 billion control over 80% of our industry’s assets. Community banking is not dead, but this You can trust that when we explain what is happening around us and what we intend to do about it, we environment is driving a fundamental realignment of community banking. Wisconsin has 260 banks or will mean what we say and that we intend to act. about 19,000 people per bank. There are many fine institutions with deep community roots. Management Current Macro Environment renewed leadership is inescapable. The pressure on community banks is both a problem and an Beneath a generalized sense of well-being, there are profound structural problems in our communities opportunity. We have completed three successful acquisitions in the last four years. We don’t have to and in the banking industry. Nationally, we are in a very unsettling process of re-establishing the acquire more, but where we can realize sound value on the investment of capital and management teams and boards are recovering from the industry crisis, but the drive for efficient scale and need for relationship between the Federal Government, communities and citizens. There is a strong impulse to resources, we will do so. centralize risk and control through legislative and regulatory actions—most apparent in health care and banking. The idea that relationships within communities must be intermediated through federal oversight 2014 – A Look Forward and control is fundamentally contrary to the heritage and purpose of community banking. The fundamental While the operational integration of our 2013 acquisitions is complete, there is still work to do on the value proposition of community banks is the intermediation of ideas, resources and trust among people. cultural integration of the 12 new locations and nearly 100 new people. We don’t need all 23 locations How do we compete effectively in an industry regulated in a manner that presumes that such localism to look exactly the same, but the customer experience of sincerity, warmth, knowledge and responsiveness is unnecessary if not undesirable? We have to make the compelling case that local intermediation must be consistent. among people who can be seen and known is more efficient, satisfying and sustainable than Government intermediation. Our brand is our promise delivered through people. We continue to gain market share in loans, deposits and services in existing markets. The lending Current Banking Environment to unhealthy loan pricing and terms, characteristic of those leading up to the recent crisis. We have seen The banking industry is undergoing a fundamental transformation revealed in the industry crisis that this movie before and know how to effectively operate in this environment. We will continue to pursue began in 2007. The public was shocked and disgusted by the banking practices revealed during the sound acquisitions, but we will not acquire just to get bigger. We will focus on situations where both business seems dangerously frothy right now, as we are definitely seeing many of our competitors return shareholder groups benefit through alignment in markets where we can have an impact. We are in a position where simply focusing on incremental growth, efficiency and profitability will bring attractive results to you, our shareholders. As a way for our shareholders to benefit immediately from the progress we have made, the Board of Directors took action in January 2014 and approved a common stock repurchase program, authorizing the use of up to $6 million to repurchase up to 350,000 shares of Nicolet common stock, from time to time, in the open market, in block trades or in private transactions. This reflects the simple conviction that the purchase of our shares represents a great investment and use of current capital. We remain cautiously opportunistic and optimistic. We are actively seeking new customers who understand the value that we can bring to their businesses and families. Business conditions are stable to improving and a buoyant stock market puts everyone in a better frame of mind. Real estate values have stabilized and are improving. The employment picture has improved somewhat. We and our customers are entering 2014 with a generally positive mindset. We do not know what the future holds, but we are certain, as we were when we founded the bank, that there is a tremendous opportunity for a highly-focused community bank. We are grateful for your investment in Nicolet Bank. We matter to the people we serve and that is the foundation of sustainable shareholder return. Sincerely, Robert B. Atwell Michael E. Daniels Chairman, President Executive Vice President and Chief Executive Officer and Secretary Dear Shareholders, Since our inception, we have acted upon our belief that there is a tremendous opportunity for a highly-focused community bank. We wrote about this in our first annual report in 2001 and continue to believe that it is true to this day. For the past few years, we have said that we were going to run counter- cyclical to the industry, that we were going to invest rather than shrink, that we weren’t going to trade dollars in the future for pennies in the present. This optimism in and execution of our mission has produced great results for 2013. 2013 – A Look Back The numbers are strong and represent the achievement of a number of long term strategic goals for Nicolet. We have emerged from the Great Recession as a much larger, stronger and more profitable institution. We had a solid year of growth in our core franchise and completed two acquisitions which increased both capital and earnings immediately. We posted record profits, increased book value by 23%, and continued our strategic investments in future growth and profitability. Here are some of the highlights of the year. market area - Net income of $16.1 million and $3.80 per diluted common share - Book value per common share increased from $15.45 to $18.97 per common share - Total assets grew from $745 million to $1.2 billion, making us the largest community bank in our - Solid asset quality with year-end nonperforming assets at 1.02% of assets - Branch locations increased from 11 to 23, with new reach into central Wisconsin Throughout the Great Recession, we focused on telling you what we were doing to address our issues and how we would continue to invest in our future. The investments we made during those tougher years bore fruit in 2013. Not everything we plan for happens, though in this past year, most did. crisis. Public anger at very real problems was harnessed to greatly expand the scope and depth of We study, think, plan, communicate and execute based on our understanding of the opportunities the Federal involvement in financial markets in general and banking in particular. The federalization of environment affords. We listen carefully to the economic concepts and ideas in play that affect our control, risk oversight and policy is driving the remarkably rapid concentration of banking assets. communities and our bank. Ideas about banking change frequently. We must understand what our Twenty years ago banks over $10 billion in assets controlled 24% of banking assets. This year banks industry thinks, not so we follow convention, but rather as a critical input to our competitive strategy. over $10 billion control over 80% of our industry’s assets. Community banking is not dead, but this You can trust that when we explain what is happening around us and what we intend to do about it, we environment is driving a fundamental realignment of community banking. Wisconsin has 260 banks or will mean what we say and that we intend to act. about 19,000 people per bank. There are many fine institutions with deep community roots. Management Current Macro Environment renewed leadership is inescapable. The pressure on community banks is both a problem and an Beneath a generalized sense of well-being, there are profound structural problems in our communities opportunity. We have completed three successful acquisitions in the last four years. We don’t have to and in the banking industry. Nationally, we are in a very unsettling process of re-establishing the acquire more, but where we can realize sound value on the investment of capital and management teams and boards are recovering from the industry crisis, but the drive for efficient scale and need for 4 relationship between the Federal Government, communities and citizens. There is a strong impulse to resources, we will do so. centralize risk and control through legislative and regulatory actions—most apparent in health care and banking. The idea that relationships within communities must be intermediated through federal oversight 2014 – A Look Forward 5 and control is fundamentally contrary to the heritage and purpose of community banking. The fundamental While the operational integration of our 2013 acquisitions is complete, there is still work to do on the value proposition of community banks is the intermediation of ideas, resources and trust among people. cultural integration of the 12 new locations and nearly 100 new people. We don’t need all 23 locations How do we compete effectively in an industry regulated in a manner that presumes that such localism to look exactly the same, but the customer experience of sincerity, warmth, knowledge and responsiveness is unnecessary if not undesirable? We have to make the compelling case that local intermediation must be consistent. among people who can be seen and known is more efficient, satisfying and sustainable than Government intermediation. Our brand is our promise delivered through people. We continue to gain market share in loans, deposits and services in existing markets. The lending Current Banking Environment to unhealthy loan pricing and terms, characteristic of those leading up to the recent crisis. We have seen The banking industry is undergoing a fundamental transformation revealed in the industry crisis that this movie before and know how to effectively operate in this environment. We will continue to pursue began in 2007. The public was shocked and disgusted by the banking practices revealed during the sound acquisitions, but we will not acquire just to get bigger. We will focus on situations where both business seems dangerously frothy right now, as we are definitely seeing many of our competitors return shareholder groups benefit through alignment in markets where we can have an impact. We are in a position where simply focusing on incremental growth, efficiency and profitability will bring attractive results to you, our shareholders. As a way for our shareholders to benefit immediately from the progress we have made, the Board of Directors took action in January 2014 and approved a common stock repurchase program, authorizing the use of up to $6 million to repurchase up to 350,000 shares of Nicolet common stock, from time to time, in the open market, in block trades or in private transactions. This reflects the simple conviction that the purchase of our shares represents a great investment and use of current capital. We remain cautiously opportunistic and optimistic. We are actively seeking new customers who understand the value that we can bring to their businesses and families. Business conditions are stable to improving and a buoyant stock market puts everyone in a better frame of mind. Real estate values have stabilized and are improving. The employment picture has improved somewhat. We and our customers are entering 2014 with a generally positive mindset. We do not know what the future holds, but we are certain, as we were when we founded the bank, that there is a tremendous opportunity for a highly-focused community bank. We are grateful for your investment in Nicolet Bank. We matter to the people we serve and that is the foundation of sustainable shareholder return. Sincerely, Robert B. Atwell Michael E. Daniels Chairman, President Executive Vice President and Chief Executive Officer and Secretary Dear Shareholders, Since our inception, we have acted upon our belief that there is a tremendous opportunity for a highly-focused community bank. We wrote about this in our first annual report in 2001 and continue to believe that it is true to this day. For the past few years, we have said that we were going to run counter- cyclical to the industry, that we were going to invest rather than shrink, that we weren’t going to trade dollars in the future for pennies in the present. This optimism in and execution of our mission has produced great results for 2013. 2013 – A Look Back The numbers are strong and represent the achievement of a number of long term strategic goals for Nicolet. We have emerged from the Great Recession as a much larger, stronger and more profitable institution. We had a solid year of growth in our core franchise and completed two acquisitions which increased both capital and earnings immediately. We posted record profits, increased book value by 23%, and continued our strategic investments in future growth and profitability. Here are some of the highlights of the year. market area - Net income of $16.1 million and $3.80 per diluted common share - Book value per common share increased from $15.45 to $18.97 per common share - Total assets grew from $745 million to $1.2 billion, making us the largest community bank in our - Solid asset quality with year-end nonperforming assets at 1.02% of assets - Branch locations increased from 11 to 23, with new reach into central Wisconsin Throughout the Great Recession, we focused on telling you what we were doing to address our issues and how we would continue to invest in our future. The investments we made during those tougher years bore fruit in 2013. Not everything we plan for happens, though in this past year, most did. crisis. Public anger at very real problems was harnessed to greatly expand the scope and depth of We study, think, plan, communicate and execute based on our understanding of the opportunities the Federal involvement in financial markets in general and banking in particular. The federalization of environment affords. We listen carefully to the economic concepts and ideas in play that affect our control, risk oversight and policy is driving the remarkably rapid concentration of banking assets. communities and our bank. Ideas about banking change frequently. We must understand what our Twenty years ago banks over $10 billion in assets controlled 24% of banking assets. This year banks industry thinks, not so we follow convention, but rather as a critical input to our competitive strategy. over $10 billion control over 80% of our industry’s assets. Community banking is not dead, but this You can trust that when we explain what is happening around us and what we intend to do about it, we environment is driving a fundamental realignment of community banking. Wisconsin has 260 banks or will mean what we say and that we intend to act. about 19,000 people per bank. There are many fine institutions with deep community roots. Management Current Macro Environment renewed leadership is inescapable. The pressure on community banks is both a problem and an Beneath a generalized sense of well-being, there are profound structural problems in our communities opportunity. We have completed three successful acquisitions in the last four years. We don’t have to and in the banking industry. Nationally, we are in a very unsettling process of re-establishing the acquire more, but where we can realize sound value on the investment of capital and management teams and boards are recovering from the industry crisis, but the drive for efficient scale and need for relationship between the Federal Government, communities and citizens. There is a strong impulse to resources, we will do so. centralize risk and control through legislative and regulatory actions—most apparent in health care and banking. The idea that relationships within communities must be intermediated through federal oversight 2014 – A Look Forward and control is fundamentally contrary to the heritage and purpose of community banking. The fundamental While the operational integration of our 2013 acquisitions is complete, there is still work to do on the value proposition of community banks is the intermediation of ideas, resources and trust among people. cultural integration of the 12 new locations and nearly 100 new people. We don’t need all 23 locations How do we compete effectively in an industry regulated in a manner that presumes that such localism to look exactly the same, but the customer experience of sincerity, warmth, knowledge and responsiveness is unnecessary if not undesirable? We have to make the compelling case that local intermediation must be consistent. among people who can be seen and known is more efficient, satisfying and sustainable than Government intermediation. Our brand is our promise delivered through people. We continue to gain market share in loans, deposits and services in existing markets. The lending Current Banking Environment to unhealthy loan pricing and terms, characteristic of those leading up to the recent crisis. We have seen The banking industry is undergoing a fundamental transformation revealed in the industry crisis that this movie before and know how to effectively operate in this environment. We will continue to pursue began in 2007. The public was shocked and disgusted by the banking practices revealed during the sound acquisitions, but we will not acquire just to get bigger. We will focus on situations where both business seems dangerously frothy right now, as we are definitely seeing many of our competitors return shareholder groups benefit through alignment in markets where we can have an impact. We are in a position where simply focusing on incremental growth, efficiency and profitability will bring attractive results to you, our shareholders. As a way for our shareholders to benefit immediately from the progress we have made, the Board of Directors took action in January 2014 and approved a common stock repurchase program, authorizing the use of up to $6 million to repurchase up to 350,000 shares of Nicolet common stock, from time to time, in the open market, in block trades or in private transactions. This reflects the simple conviction that the purchase of our shares represents a great investment and use of current capital. We remain cautiously opportunistic and optimistic. We are actively seeking new customers who 6 understand the value that we can bring to their businesses and families. Business conditions are stable to improving and a buoyant stock market puts everyone in a better frame of mind. Real estate values have stabilized and are improving. The employment picture has improved somewhat. We and our customers are entering 2014 with a generally positive mindset. We do not know what the future holds, but we are certain, as we were when we founded the bank, that there is a tremendous opportunity for a highly-focused community bank. We are grateful for your investment in Nicolet Bank. We matter to the people we serve and that is the foundation of sustainable shareholder return. Sincerely, Robert B. Atwell Chairman, President and Chief Executive Officer Michael E. Daniels Executive Vice President and Secretary Robert Atwell Chairman, President and Chief Executive Officer Nicolet Bankshares, Inc. Michael Daniels President and Chief Operating Officer Nicolet National Bank John Dykema President and Owner Campbell Wrapper Corp and Circle Packaging Machinery, Inc. Gary Fairchild President, Owner Fairchild Equipment, Inc. Michael Felhofer Owner Candleworks of Door County, Inc. Wendell Ellsworth Manager WEE Enterprises, LLC AHI Properties, LLC Deanna Favre CEO Favre 4 HOPE Foundation Jim Hager CEO Harmony Country Cooperatives D i r e c t o r s Chris Ghidorzi Director Ghidorzi Companies Dr. Kim Gowey Owner Cosmetic & Implant Dentistry of Wisconsin Andrew Hetzel, Jr. President and CEO NPS Corporation Donald Long, Jr. Former Owner and CEO Century Drill & ToolCo., Inc. Ben Meeuwsen President, Owner Fourinox, Inc. Susan Merkatoris Certified Public Accountant Owner and Managing Member Larboard Enterprises, LLC Therese Pandl President and CEO HSHS Division Eastern Wisconsin St. Mary’s Medical Center and St. Vincent Hospital Randy Rose Retired President and CEO Schwabe North America Robert Weyers Owner Commercial Horizons, Inc. 7 A d v i s o r y D i r e c t o r s Brian Hallgren Co-Owner Northern Lites Snowshoes Kurt Mertens Co-Owner Loos Machine & Automation, Inc. Philip Hendrickson Retired Chairman, CEO and President KI Krueger International Ronald Miller Retired Owner Four Corporation N i c o l e t B a n k s h a r e s , I n c . O f f i c e r s Robert Atwell Chairman, President and Chief Executive Officer Michael Daniels Executive Vice President and Secretary Ann K. Lawson Chief Financial Officer N i c o l e t N a t i o n a l B a n k O f f i c e r s Lynn Caelwaerts Executive Administrative Assistant Jean Franzen Vice President, Branch Manager Nicole Allen Branch Manager Robert Atwell Chairman and Chief Executive Officer Ranee Bahn Director Of Trust Operations Barbara Callahan Branch Manager Michael Daniels President and Chief Operating Officer 8 Dana Bald Branch Manager Douglas Daul Vice President, Cash Management Jo Beno Vice President, Private Banker Elizabeth Berdichevsky Vice President, Investment Operations Manager Eric DeJardine Assistant Vice President, Commercial Banker Scott DeMille Branch Manager Jon Biskner Vice President, Information Technology Manager Charles Dolsky Vice President, Retirement Plan Services Wayne Bouchonville Senior Vice President, Commercial Banker Susan Brugger Ag Banker JoAnn Draeger Vice President, Private Banker Lynn Dufrane Senior Vice President, Northern Market Executive Timothy Buttke Vice President, Commercial / Ag Banker Anthony Evans Vice President, Special Assets Jerry Bybee Vice President, Commercial Banker Angela Faber Branch Manager Jeff Gahnz Vice President, Marketing/Public Relations Brian Haddock Assistant Vice President, Commercial Banker Leonard Hamman Vice President, Commercial Banker Kristi Hansen Vice President, Operations & IT Manager Kriz Hernandez Vice President, Retail Banking Manager Brad Hutjens Senior Vice President, Chief Credit Officer Nancy Johnshoy Vice President, Portfolio Manager Scott King Senior Vice President, Community Relations Andrea Koch Assistant Vice President, Private Banker Kate Lombardi Vice President, Human Resources Tim Schinkten Branch Manager Amanda Krueger Branch Manager Jennifer Kujawa Commercial / Ag Banker Marc Lambrecht Controller Karen Lampereur Vice President, Branch Manager Ann Lawson Chief Financial Officer Amy Laxton Branch Manager Renee Leinfelder Branch Manager David Maguire Vice President, Trust Investment Officer Kathryn Maronek Lead Operations Officer Karin Mc Lean Branch Manager Mark McGee Assistant Vice President, Mortgage Lender Matt Meidl Assistant Vice President, Commercial Banker Gerald Mortell III Senior Vice President, Private Banker Paul Pagel Branch Manager Brian Paschen Vice President, Commercial Banker Charles Paulson Vice President, Commercial Banker Anita Resch Vice President, Trust Officer Kirk Uslabar Vice President, Compliance Manager Daniel Reynolds Jr. Vice President, Retirement Plan Services Officer and Brokerage Manager Jamie Rusch Branch Manager Mary Sarver Vice President, Trust Investment Officer Stephen Schahczenski Branch Manager Grant Schilling Vice President, Commercial Banker Corey Sherf Financial Consultant Michael Van Ermen Vice President, Retail Banker Michael Vogel Senior Vice President, Commercial Banking Manager Peter Warmenhoven Vice President, Loan Review Manager Leo Waters III Special Assets Collection Specialist Michael Waters Senior Vice President, Fox Cities Market Executive Jacob Weinand Commercial Banker Eric Witczak Executive Vice President, Eric Siudzinski Vice President, Commercial Banker Fredrick Wotruba Financial Consultant 9 Darlene York Vice President, Trust Investment Officer Karen Young Vice President, Internal Audit Manager Thomas Zellner Senior Vice President, Central Wisconsin Retail / Private Banking Manager Timothy Zeske Vice President, Commercial Banker Jason Smerchek Trust Officer Larry Snedden Vice President, Commercial Banker Gary Stanton Vice President, Commercial Banker Joan Steliga Trust Investment Officer Michael Steppe Chief Investment Officer Joseph Sturzl Vice President, Commercial Banker Connie Tilot Assistant Vice President, Retail Banker Eric Trousil Vice President, Trust Investment Officer S o l o “A community is a group that believes in looking out for one another. 11 By joining together, we can do great things .” T i m B u t t k e : V i c e P r e s i d e n t , C o m m e r c i a l & A g B a n k e r, Wa u s a u D u e t “A community is a bond which you can count on in time of need and celebration.” 13 L i s a C a r b a u g h : P e r s o n a l B a n k e r, M e d f o r d L i s a C a r b a u g h : L i s a C a r b a u g h : P e r s o n a l B a n k e r, M e d f o r d P e r s o n a l B a n k e r, M e d f o r d C h a r l i e P a u l s o n : V i c e P r e s i d e n t , C o m m e r c i a l B a n k e r, M e d f o r d T r i o / E n s e m b l e “Nicolet Bank has quickly become a true friend and partner 15 of the community.” J o e S t u r z l : V i c e P r e s i d e n t , C o m m e r c i a l B a n k e r, R h i n e l a n d e r J o e S t u r z l : V i c e P r e s i d e n t , C o m m e r c i a l B a n k e r, R h i n e l a n d e r J o e S t u r z l : J o e S t u r z l : V i c e P r e s i d e n t , C o m m e r c i a l B a n k e r, R h i n e l a n d e r A m y L a x t o n : B r a n c h M a n a g e r, R h i n e l a n d e r A m y L a x t o n : B r a n c h M a n a g e r, R h i n e l a n d e r A m y L a x t o n : B r a n c h M a n a g e r, R h i n e l a n d e r A m a n d a K r u e g e r : B r a n c h M a n a g e r, M i n o c q u a B r a n c h e s A c c o u n t a n t ’ s L e t t e r MINOCQUA PHILLIPS EAGLE RIVER RHINELANDER RIB LAKE MEDFORD PLAZA MEDFORD DOWNTOWN CRIVITZ MENOMINEE MARINETTE ABBOTSFORD COLBY WAUSAU RIB MOUNTAIN Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Nicolet Bankshares, Inc. Green Bay, Wisconsin We have audited, in accordance with standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Nicolet Bankshares, Inc. and subsidiaries as of December 31, 2013 and 2012, and the related consolidated statements of income, comprehensive income, changes in stockholders’ equity 17 16 FAIRCHILD NEILLSVILLE HOWARD GREEN BAY ASHWAUBENON DE PERE BELLEVUE WEST DE PERE GREEN BAY (area map lower left) and cash flows for each of the years in the two-year period ended December 31, 2013 (not presented herein); and in our report dated March 12, 2014, we expressed an unqualified opinion on those consolidated financial statements. APPLETON-KENSINGTON APPLETON In our opinion, the information set forth in the accompanying condensed financial statements is fairly stated, in all material respects, in relation to the financial statements from which it has been derived. Atlanta, Georgia March 12, 2014 C E R T I F I E D P U B L I C A C C O U N T A N T S C o n s o l i d a t e d B a l a n c e S h e e t s NICOLET BANKSHARES, INC. AND SUBSIDIARIES (December 31, 2013 and 2012) (In thousands, except share and per share data) 2013 2012 2013 2012 Assets Cash and due from banks Interest-earning deposits Federal funds sold Cash and cash equivalents Certificates of deposit in other banks 18 Securities available for sale Other investments Loans held for sale Loans Allowance for loan losses Loans, net Premises and equipment, net Bank owned life insurance Accrued interest receivable and other assets $ 26,556 $ 26,988 119,364 1,058 146,978 1,960 127,515 7,982 1,486 847,358 (9,232) 838,126 29,845 23,796 21,115 54,516 499 82,003 – 55,901 5,221 7,323 552,601 (7,120) 545,481 19,602 18,697 11,027 Total assets $ 1,198,803 $ 745,255 Liabilities and Stockholders’ Equity Liabilities: Demand Money market and NOW accounts Savings Time Total deposits Short-term borrowings Notes payable Junior subordinated debentures Accrued interest payable and other liabilities Total liabilities Stockholders’ Equity: Preferred equity Common stock Additional paid-in capital Retained earnings Accumulated other comprehensive income Total Nicolet Bankshares Inc. stockholders’ equity Noncontrolling interest Total stockholders’ equity and noncontrolling interest $ 171,321 $ 108,234 492,499 97,601 273,413 1,034,834 7,116 32,422 12,128 7,424 1,093,924 24,400 42 49,616 30,138 666 104,862 17 104,879 322,507 46,907 138,445 616,093 4,035 35,155 6,186 6,408 667,877 24,400 34 36,243 14,973 1,683 77,333 45 77,378 19 Total liabilities, noncontrolling interest and stockholders’ equity $ 1,198,803 $ 745,255 Preferred shares authorized (no par value) Preferred shares issued and outstanding Common shares authorized (par value $0.01 per share) Common shares outstanding Common shares issued 10,000,000 24,400 30,000,000 4,241,044 4,303,407 10,000,000 24,400 30,000,000 3,425,413 3,479,888 C o n s o l i d a t e d S t a t e m e n t s O f I n c o m e NICOLET BANKSHARES, INC. AND SUBSIDIARIES (Years Ended December 31, 2013 and 2012) (In thousands, except share and per share data) 2013 2012 $ 41,000 $ 27,145 Salaries and employee benefits Noninterest expense: Interest income: Loans, including loan fees Investment securities: Taxable Non-taxable Other interest income Total interest income Interest expense: Money market and NOW accounts Savings and time deposits Short-term borrowings Junior subordinated debentures 20 Notes payable Total interest expense Net interest income Provision for loan losses Net interest income after provision for loan losses Noninterest income: Service charges on deposit accounts Trust services fee income Mortgage income Brokerage fee income Gain on sale, disposal and writedown of assets, net Bank owned life insurance Rent income Investment advisory fees Bargain purchase gain Other income Total noninterest income 1,107 745 344 43,196 2,065 2,328 25 730 1,144 6,292 36,904 6,200 30,704 1,793 4,028 2,336 477 1,669 825 1,036 348 11,915 1,309 25,736 625 792 233 28,795 1,705 2,999 4 503 1,319 6,530 22,265 4,325 17,940 1,159 2,975 3,090 323 448 710 1,003 343 – 693 10,744 Occupancy, equipment and office Business development and marketing Data processing FDIC assessments Core deposit intangible amortization Other expense Total noninterest expense Income before income tax expense Income tax expense Net income Less: Net income attributable to noncontrolling interest Net income attributable to Nicolet Bankshares, Inc. Less: Preferred stock dividends and discount accretion 2013 19,615 6,407 2,348 2,477 700 1,111 3,773 36,431 20,009 3,837 16,172 31 16,141 976 2012 13,146 4,415 1,649 1,689 566 639 1,958 24,062 4,622 1,529 3,093 57 3,036 1,220 21 Net income available to common shareholders $ 15,165 $ 1,816 Basic earnings per common share Diluted earnings per common share $ 3.81 $ 3.80 $ 0.53 $ 0.53 Weighted average common shares outstanding: Basic Diluted 3,976,845 3,988,119 3,440,101 3,441,692 S h a r e h o l d e r I n f o r m a t i o n Annual Meeting Shareholders’ Meeting – Monday, May 12, 2014. (5:00 p.m.) Meyer Theatre 117 South Washington Street • Green Bay, WI 54301 Independent Auditor Porter Keadle Moore, LLC 235 Peachtree Street, NE • Suite 1800 • Atlanta, GA 30303 Transfer Agent Computershare 2 2 P.O. Box 30170 • College Station, TX 77842-3170 Overnight Delivery Computershare 211 Quality Circle, Suite 210 College Station, TX 77845 Shareholder website www.computershare.com/investor Shareholder online inquiries https://www-us.computershare.com/investor/Contact Toll free in the US + 1 800 962 4284 Outside the US + 781 575 3120 Fax + 312 604 2312 E n c o r e E n c o r e 23 We are optimistic about the future of community banking. f i n 111 N. Washington Street • P.O. Box 23900 • Green Bay, WI 54305-3900 920-430-1400 • 1-800-369-0226 www.nicoletbank.com Forward-looking Statements This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are typically identified by words such as “believe,” “expect”, “anticipate”, “intend”, “target”, “estimate”, “continue”, “positions”, “prospects”, “potential” “would”, “should”, “could” “will” or “may”. These forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time and these statements, may not be realized. Forward-looking statements speak only as of the date they are made and Nicolet Bankshares, Inc. (“Nicolet”) has no duty to update forward-looking statements. In addition to factors previously disclosed in Nicolet’s Registration Statement on Form S-4 filed with the Securities and Exchange Commission and those identified elsewhere in this document, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: difficulties, delays and unanticipated costs in integrating the merging organizations’ businesses or realizing expected cost savings and other benefits; business disruptions as a result of the integration of the merging organizations, including possible loss of customers; diversion of management time to address transaction related issues; changes in asset quality and credit risk as a result of the merger and otherwise; changes in customer borrowing, repayment, investment and deposit behaviors and practices; changes in interest rates, capital markets, and local economic and national economic conditions; the timing and success of new business initiatives; competitive conditions; and regulatory conditions. 

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