Nicolet Bankshares Inc.
Annual Report 2021

Plain-text annual report

www.ni co le tb ank .co m 111 N. Washington Street / P.O. Box 23900 / Green Bay, WI 54305 -3900 920-430-1400 / 1 -800-369-0226 Forward-looking Statements Statements made in this Annual Report which are not purely historical are forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. This includes any statements regarding management’s plans, objectives, or goals for future operations, products or services, and forecasts of its revenues, earnings, or other measures of performance. Such forward-looking statements may be identified by the use of words such as “believe,” “expect,” “anticipate,” “intend,” “target,” “estimate,” “continue,” “positions,” “prospects,” “potential,” “plan,” “outlook,” “would”, “should,” “could,” “will,” “may,” or similar expressions. 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. Forward-looking statements are based on current management expectations and, by their nature, are subject to risks and uncertainties. Actual results may differ materially from those contained in the forward-looking statements. Factors which may cause actual results to differ materially from those contained in such forward-looking statements include those identified in Nicolet’s most recent Form 10-K and subsequent SEC filings. 2021 ANNUAL REPORT The sign you see on the cover, which now hangs outside of our boardroom, takes us back to the genesis of Nicolet Bank. The sign was once a workbench (left photo) that repaired equipment at Algoma Hardwoods, a door factory in Algoma, WI. At one point in time, Wendell Ellsworth owned Algoma Hardwoods. Wendell was one of Nicolet’s early investors, as well as an original board member and one of our first customers. He believed in Bob and Mike’s vision that a start-up bank focused on service and relationships 1 could grow into something successful. His belief helped get Nicolet off the ground. As an homage to that relationship, we went to the now-closed Algoma Hardwoods and rescued a few things that were visual reminders of our beginnings. (All photos were taken at Algoma Hardwoods.) 3 MIKE AND BOB S H A R E H O L D E R S L E T T E R Dear shareholders, customers, employees, and the communities we serve: opportunity for Nicolet in the future. We are excited to grow this line of business and to round out Every year when we sit down to write this letter, it seems as if our audience has changed. Compared to relationships with Nicolet’s excellent retail and wealth management platforms. this time last year, we have a much larger shareholder base, more employees and customers, and a geographic The Company also positioned itself to maintain its strong earnings and growth trajectory by investing territory that has moved us solidly into Michigan and throughout much of Wisconsin. We always accept in existing people, attracting new talent, and implementing its executive succession plan. In May 2021, the challenge to say something meaningful in this letter, rather than keep it like a standard run-of-the-mill Mike Daniels assumed the role of CEO. Over the 21 years since he co-founded Nicolet he has led the shareholder letter. After all, we are shareholders too, and we would want to know what it’s like to have a Company in many ways. This title change is as much a recognition of his well-established leadership as it seat at the table. So, that’s what we will try to give you here. is the assumption of new responsibilities. In 2021, the Company had an outstanding year financially, strategically, and in the development of our We recognize the advantage of having the two founders still being active and in the bank on a daily future. Reported net income of $60.7 million, while strong in its own right, reflects the impact of basis, however, our executive succession goes well beyond Bob and Mike. In that light, we would like to merger-related expenses and substantial one-time charges related to the accounting methods required for introduce you to our Executive Vice Presidents—Phil Moore, Brad Hutjens, and Eric Witczak. Phil joined 5 acquisitions. In 2021, we announced and closed two acquisitions—Mackinac Financial Corporation and the Company as CFO in May after over 21 years of engagement with Nicolet as a strategic sounding County Bancorp, Inc. These two acquisitions added roughly $3 billion in assets, or 60% of Nicolet’s board and an external auditor. Brad, who has been with Nicolet since 2003 leads Credit, Operations, IT, previous size. We closed and converted these acquisitions while maintaining solid organic growth across Innovation, and Compliance. And Eric, who has been with Nicolet since the beginning, leads all revenue our core markets. When we started Nicolet in 2000 with a blank piece of paper, we didn’t anticipate lines—Commercial, Retail, and Wealth Management. In addition, all three are integral to our acquisition discussing how to matter to Manistique, Alpena, Marquette, Manitowoc, and other similar communities, strategy, performing due diligence and working on our integration team. While it looks like a traditional but we have those discussions now. Back then, we simply believed that having a strong purpose of serving “inside/outside” division of duties, they are skilled at every area of the bank and work well together. others and creating shared success for the bank, our employees, and our customers would be welcomed in For years now, the board assessed Nicolet’s performance based on growth, asset quality, and earnings. these communities. So far, the results have proven that to be true. As we have grown, and as different metrics have come in and out of favor, we find these to be the most accurate With the acquisition of County Bancorp, Inc., we jumped headfirst into the agriculture banking measure of what a strong community bank should be. We look at our history in three different phases: business. We already had this presence with two prior acquisitions, but County was the clear ag banking • organic growth in our first seven years, where growth was the defining metric leader in the state of Wisconsin. We look at ag banking like we do other lines of business, where we deliver • our success through the recession of 2008–10, when all investors wanted to discuss were asset quality metrics our value through people. Adding County’s ag banking team to our existing team should prove to be a solid • our growth-through-acquisition phase, where earnings is the lead metric. As Nicolet continues to evolve, the metrics of growth, asset quality, and earnings remain our key support good, profitable customer relationships. We know how to assess and price the value of the indicators, and each have played a role in our strong capital management that has led us to where we are today. relationships or organizations we acquire. We do that by having great frontline people who put their Nicolet was a high-quality, high-performance company in the years preceding the pandemic. The pandemic experience and initiative to work for our customers. As Mike frequently says, “We need to matter to our economic policy measures (low rates coupled with unprecedented fiscal and monetary stimulus) swelled customers, matter in our communities, and matter to each other.” our balance sheet with our customers’ cash. Cash increased to around 20% of our balance sheet distorting The community banking sector is experiencing sustained pressure from both large national banks and capital ratios and the traditional profitability metrics. These distortions left our earnings per share (“EPS”) the growth of non-bank fintech platforms. The national and regional banks have the scale to support higher momentum unaffected. As we moved through 2020 and 2021, we have focused on growth in our core tech investment. The fintech platforms benefit from lighter regulation, the absence of an investment in EPS as the most meaningful metric. Measures such as return on assets and return on equity matter, but physical locations, and lower earnings expectations from the capital markets. These macro factors are continued growth in EPS helps our share price, which is what is most impactful to shareholders. Our EPS accelerating consolidation among community banks with aging management and little succession talent. showed rapid year-over-year growth through our many acquisitions, as we proved we could negotiate and Shareholders and boards of smaller banks are experiencing stagnant profitability and an inability to invest execute profitable acquisitions while maintaining solid asset quality. In addition to the two acquisitions, in alternative revenue sources and delivery channels. While Nicolet experiences the pressures common to the complexities of loan loss accounting in acquisitions, and the continued drag of excess cash make our industry segment, we have effectively become the acquirer of choice for smaller institutions within a tracking core profitability in 2021 challenging even for industry experts. Our year-end earnings release relevant footprint. Our size does enable us to continue investing in innovation and digital efficiency. As we contains an effort to reconcile GAAP accounting with what we believe to be more meaningful non-GAAP grow, our target acquisition size has increased. The basic value proposition of an engaged community bank measures. Following the December closing of the County acquisition the board announced an aggressive with quality people remains attractive in our market, but with our growth comes the responsibility to stock repurchase plan. This, together with our announced year-end results, caused analysts’ expectations instill efficiency. As we acquire, we must have—and do have—the operating discipline to implement tough (and our stock price) to become more closely aligned with both current and future EPS. decisions on efficiency. When we map out cost savings, we promptly communicate and execute on the The core profitability of the Company was strong and growing before the pandemic and has accelerated tough decisions that go with preserving a strong, personal, and responsive community banking culture in throughout. We are, as the analysts now describe us, a high-performing organic growth story with a potent both our existing and acquired markets. In the last two years we have closed 24 branches in both our legacy currency and 10-year track record as the acquirer of choice of companies that enhance our earnings while and expansion markets. This isn’t always popular, but our customer retention is high because our value broadening and deepening our geographic impact. Our asset quality resilience during the financial crisis proposition is more about our people than about place. We have tended to grow in markets we have acquired, formed the basis of our asset quality throughout the last 10 years. We know how to acquire, enhance, and because we identify and empower the people who matter to the customers. Acquisitions are never without emotion and disruption. The drive for efficiency has the same effect. The community banking channel that wouldn’t be there if people had not invested their money and their trust in us. We have created wealth must gain efficiency in order to remain viable, profitable, and impactful for the people we serve. The basic regionally by harnessing local capital and driving accretion through shared success. There is a big difference strategy of sustained organic growth, innovation in delivery, and highly accretive acquisitions using the between a long-term, local owner and a passive investment fund that merely buys stock out of mathematical potent currency of a high-performance company holds rich opportunity in the coming years, and we are necessity, yet we serve them both passionately. investing in the right people and making the right decisions to continue this top-tier performance. People often ask us whether we can maintain the personalism, the sense of belonging, and the As 2021 ended, the Company’s market capitalization was over $1.2 billion. It is worth reflecting on entrepreneurial spirit at the heart of our work. While we have figured out how to be impactful and where that capital came from and what that means to the areas we serve. While we have been an SEC meaningful to our customers and communities in several of our northern markets, most larger institutions’ reporting, or “public,” company since 2013, we have never done an open-market equity issuance. Our equity business models do not have that focus. We need to invest in our future and keep our people growing and has been sold face-to-face to our initial investors and accepted by those who sell us their banks. The people developing. Above all, we need to remember the values and commitments that are resulting in better who believed in us when we were a blank sheet of paper are always close to our hearts, and rewarding those outcomes to our customers, our people, and our shareholders. High ideals must be made concrete in daily who entrust their banks to our ownership is always on our minds. Unlike most acquirers, our acquisitions actions. It is worth believing in, investing in, and communicating with people. It isn’t always easy, but it is have consistently enhanced the shareholder value of both legacy Nicolet shareholders and those shareholders worth it. Nicolet has grown and succeeded as an organization because of our values and the manner in of acquired companies who have become our shareholders through selling us their banks. Much like our which we work together and hold each other accountable. We have the leadership in place to continue as a approach to customers and employees, we consistently seek to create shared success through fair pricing high-impact, high-performing source of strength to the people and places we serve. and deep and resilient relationships. As we have grown and entered the Russell 2000 index, the major index funds have needed to acquire our stock. We have many active investment funds we have talked with Thank you for being a part of our journey. over the years, but they have tended to not buy our stock in the open market. We care about all of our shareholders, but we particularly cherish the thousands of long-term individual owners seeded across the cities and towns throughout Wisconsin and Michigan that we serve. They are strong brand advocates and have watched us live the values we profess. Much of our market capitalization represents real wealth accumulated through mutual trust and cooperation in the places we serve. This is how shared success has played out among our shareholders, and there is a tremendous amount of wealth spread across our footprint Robert B. Atwell Michael E. Daniels Dear shareholders, customers, employees, and the communities we serve: opportunity for Nicolet in the future. We are excited to grow this line of business and to round out Every year when we sit down to write this letter, it seems as if our audience has changed. Compared to relationships with Nicolet’s excellent retail and wealth management platforms. this time last year, we have a much larger shareholder base, more employees and customers, and a geographic The Company also positioned itself to maintain its strong earnings and growth trajectory by investing territory that has moved us solidly into Michigan and throughout much of Wisconsin. We always accept in existing people, attracting new talent, and implementing its executive succession plan. In May 2021, the challenge to say something meaningful in this letter, rather than keep it like a standard run-of-the-mill Mike Daniels assumed the role of CEO. Over the 21 years since he co-founded Nicolet he has led the shareholder letter. After all, we are shareholders too, and we would want to know what it’s like to have a Company in many ways. This title change is as much a recognition of his well-established leadership as it seat at the table. So, that’s what we will try to give you here. is the assumption of new responsibilities. In 2021, the Company had an outstanding year financially, strategically, and in the development of our We recognize the advantage of having the two founders still being active and in the bank on a daily future. Reported net income of $60.7 million, while strong in its own right, reflects the impact of basis, however, our executive succession goes well beyond Bob and Mike. In that light, we would like to merger-related expenses and substantial one-time charges related to the accounting methods required for introduce you to our Executive Vice Presidents—Phil Moore, Brad Hutjens, and Eric Witczak. Phil joined acquisitions. In 2021, we announced and closed two acquisitions—Mackinac Financial Corporation and the Company as CFO in May after over 21 years of engagement with Nicolet as a strategic sounding County Bancorp, Inc. These two acquisitions added roughly $3 billion in assets, or 60% of Nicolet’s board and an external auditor. Brad, who has been with Nicolet since 2003 leads Credit, Operations, IT, previous size. We closed and converted these acquisitions while maintaining solid organic growth across Innovation, and Compliance. And Eric, who has been with Nicolet since the beginning, leads all revenue our core markets. When we started Nicolet in 2000 with a blank piece of paper, we didn’t anticipate lines—Commercial, Retail, and Wealth Management. In addition, all three are integral to our acquisition discussing how to matter to Manistique, Alpena, Marquette, Manitowoc, and other similar communities, strategy, performing due diligence and working on our integration team. While it looks like a traditional but we have those discussions now. Back then, we simply believed that having a strong purpose of serving “inside/outside” division of duties, they are skilled at every area of the bank and work well together. others and creating shared success for the bank, our employees, and our customers would be welcomed in For years now, the board assessed Nicolet’s performance based on growth, asset quality, and earnings. these communities. So far, the results have proven that to be true. As we have grown, and as different metrics have come in and out of favor, we find these to be the most accurate With the acquisition of County Bancorp, Inc., we jumped headfirst into the agriculture banking measure of what a strong community bank should be. We look at our history in three different phases: business. We already had this presence with two prior acquisitions, but County was the clear ag banking • organic growth in our first seven years, where growth was the defining metric leader in the state of Wisconsin. We look at ag banking like we do other lines of business, where we deliver • our success through the recession of 2008–10, when all investors wanted to discuss were asset quality metrics our value through people. Adding County’s ag banking team to our existing team should prove to be a solid • our growth-through-acquisition phase, where earnings is the lead metric. As Nicolet continues to evolve, the metrics of growth, asset quality, and earnings remain our key support good, profitable customer relationships. We know how to assess and price the value of the indicators, and each have played a role in our strong capital management that has led us to where we are today. relationships or organizations we acquire. We do that by having great frontline people who put their Nicolet was a high-quality, high-performance company in the years preceding the pandemic. The pandemic experience and initiative to work for our customers. As Mike frequently says, “We need to matter to our economic policy measures (low rates coupled with unprecedented fiscal and monetary stimulus) swelled customers, matter in our communities, and matter to each other.” our balance sheet with our customers’ cash. Cash increased to around 20% of our balance sheet distorting The community banking sector is experiencing sustained pressure from both large national banks and capital ratios and the traditional profitability metrics. These distortions left our earnings per share (“EPS”) the growth of non-bank fintech platforms. The national and regional banks have the scale to support higher momentum unaffected. As we moved through 2020 and 2021, we have focused on growth in our core tech investment. The fintech platforms benefit from lighter regulation, the absence of an investment in EPS as the most meaningful metric. Measures such as return on assets and return on equity matter, but physical locations, and lower earnings expectations from the capital markets. These macro factors are continued growth in EPS helps our share price, which is what is most impactful to shareholders. Our EPS accelerating consolidation among community banks with aging management and little succession talent. showed rapid year-over-year growth through our many acquisitions, as we proved we could negotiate and Shareholders and boards of smaller banks are experiencing stagnant profitability and an inability to invest 7 execute profitable acquisitions while maintaining solid asset quality. In addition to the two acquisitions, in alternative revenue sources and delivery channels. While Nicolet experiences the pressures common to the complexities of loan loss accounting in acquisitions, and the continued drag of excess cash make our industry segment, we have effectively become the acquirer of choice for smaller institutions within a tracking core profitability in 2021 challenging even for industry experts. Our year-end earnings release relevant footprint. Our size does enable us to continue investing in innovation and digital efficiency. As we contains an effort to reconcile GAAP accounting with what we believe to be more meaningful non-GAAP grow, our target acquisition size has increased. The basic value proposition of an engaged community bank measures. Following the December closing of the County acquisition the board announced an aggressive with quality people remains attractive in our market, but with our growth comes the responsibility to stock repurchase plan. This, together with our announced year-end results, caused analysts’ expectations instill efficiency. As we acquire, we must have—and do have—the operating discipline to implement tough (and our stock price) to become more closely aligned with both current and future EPS. decisions on efficiency. When we map out cost savings, we promptly communicate and execute on the The core profitability of the Company was strong and growing before the pandemic and has accelerated tough decisions that go with preserving a strong, personal, and responsive community banking culture in throughout. We are, as the analysts now describe us, a high-performing organic growth story with a potent both our existing and acquired markets. In the last two years we have closed 24 branches in both our legacy currency and 10-year track record as the acquirer of choice of companies that enhance our earnings while and expansion markets. This isn’t always popular, but our customer retention is high because our value broadening and deepening our geographic impact. Our asset quality resilience during the financial crisis proposition is more about our people than about place. We have tended to grow in markets we have acquired, formed the basis of our asset quality throughout the last 10 years. We know how to acquire, enhance, and because we identify and empower the people who matter to the customers. Acquisitions are never without emotion and disruption. The drive for efficiency has the same effect. The community banking channel that wouldn’t be there if people had not invested their money and their trust in us. We have created wealth must gain efficiency in order to remain viable, profitable, and impactful for the people we serve. The basic regionally by harnessing local capital and driving accretion through shared success. There is a big difference strategy of sustained organic growth, innovation in delivery, and highly accretive acquisitions using the between a long-term, local owner and a passive investment fund that merely buys stock out of mathematical potent currency of a high-performance company holds rich opportunity in the coming years, and we are necessity, yet we serve them both passionately. investing in the right people and making the right decisions to continue this top-tier performance. People often ask us whether we can maintain the personalism, the sense of belonging, and the As 2021 ended, the Company’s market capitalization was over $1.2 billion. It is worth reflecting on entrepreneurial spirit at the heart of our work. While we have figured out how to be impactful and where that capital came from and what that means to the areas we serve. While we have been an SEC meaningful to our customers and communities in several of our northern markets, most larger institutions’ reporting, or “public,” company since 2013, we have never done an open-market equity issuance. Our equity business models do not have that focus. We need to invest in our future and keep our people growing and has been sold face-to-face to our initial investors and accepted by those who sell us their banks. The people developing. Above all, we need to remember the values and commitments that are resulting in better who believed in us when we were a blank sheet of paper are always close to our hearts, and rewarding those outcomes to our customers, our people, and our shareholders. High ideals must be made concrete in daily who entrust their banks to our ownership is always on our minds. Unlike most acquirers, our acquisitions actions. It is worth believing in, investing in, and communicating with people. It isn’t always easy, but it is have consistently enhanced the shareholder value of both legacy Nicolet shareholders and those shareholders worth it. Nicolet has grown and succeeded as an organization because of our values and the manner in of acquired companies who have become our shareholders through selling us their banks. Much like our which we work together and hold each other accountable. We have the leadership in place to continue as a approach to customers and employees, we consistently seek to create shared success through fair pricing high-impact, high-performing source of strength to the people and places we serve. and deep and resilient relationships. As we have grown and entered the Russell 2000 index, the major index funds have needed to acquire our stock. We have many active investment funds we have talked with Thank you for being a part of our journey. over the years, but they have tended to not buy our stock in the open market. We care about all of our shareholders, but we particularly cherish the thousands of long-term individual owners seeded across the cities and towns throughout Wisconsin and Michigan that we serve. They are strong brand advocates and have watched us live the values we profess. Much of our market capitalization represents real wealth accumulated through mutual trust and cooperation in the places we serve. This is how shared success has played out among our shareholders, and there is a tremendous amount of wealth spread across our footprint Robert B. Atwell Michael E. Daniels Dear shareholders, customers, employees, and the communities we serve: opportunity for Nicolet in the future. We are excited to grow this line of business and to round out Every year when we sit down to write this letter, it seems as if our audience has changed. Compared to relationships with Nicolet’s excellent retail and wealth management platforms. this time last year, we have a much larger shareholder base, more employees and customers, and a geographic The Company also positioned itself to maintain its strong earnings and growth trajectory by investing territory that has moved us solidly into Michigan and throughout much of Wisconsin. We always accept in existing people, attracting new talent, and implementing its executive succession plan. In May 2021, the challenge to say something meaningful in this letter, rather than keep it like a standard run-of-the-mill Mike Daniels assumed the role of CEO. Over the 21 years since he co-founded Nicolet he has led the shareholder letter. After all, we are shareholders too, and we would want to know what it’s like to have a Company in many ways. This title change is as much a recognition of his well-established leadership as it seat at the table. So, that’s what we will try to give you here. is the assumption of new responsibilities. In 2021, the Company had an outstanding year financially, strategically, and in the development of our We recognize the advantage of having the two founders still being active and in the bank on a daily future. Reported net income of $60.7 million, while strong in its own right, reflects the impact of basis, however, our executive succession goes well beyond Bob and Mike. In that light, we would like to merger-related expenses and substantial one-time charges related to the accounting methods required for introduce you to our Executive Vice Presidents—Phil Moore, Brad Hutjens, and Eric Witczak. Phil joined acquisitions. In 2021, we announced and closed two acquisitions—Mackinac Financial Corporation and the Company as CFO in May after over 21 years of engagement with Nicolet as a strategic sounding County Bancorp, Inc. These two acquisitions added roughly $3 billion in assets, or 60% of Nicolet’s board and an external auditor. Brad, who has been with Nicolet since 2003 leads Credit, Operations, IT, previous size. We closed and converted these acquisitions while maintaining solid organic growth across Innovation, and Compliance. And Eric, who has been with Nicolet since the beginning, leads all revenue our core markets. When we started Nicolet in 2000 with a blank piece of paper, we didn’t anticipate lines—Commercial, Retail, and Wealth Management. In addition, all three are integral to our acquisition discussing how to matter to Manistique, Alpena, Marquette, Manitowoc, and other similar communities, strategy, performing due diligence and working on our integration team. While it looks like a traditional but we have those discussions now. Back then, we simply believed that having a strong purpose of serving “inside/outside” division of duties, they are skilled at every area of the bank and work well together. others and creating shared success for the bank, our employees, and our customers would be welcomed in For years now, the board assessed Nicolet’s performance based on growth, asset quality, and earnings. these communities. So far, the results have proven that to be true. As we have grown, and as different metrics have come in and out of favor, we find these to be the most accurate With the acquisition of County Bancorp, Inc., we jumped headfirst into the agriculture banking measure of what a strong community bank should be. We look at our history in three different phases: business. We already had this presence with two prior acquisitions, but County was the clear ag banking • organic growth in our first seven years, where growth was the defining metric leader in the state of Wisconsin. We look at ag banking like we do other lines of business, where we deliver • our success through the recession of 2008–10, when all investors wanted to discuss were asset quality metrics our value through people. Adding County’s ag banking team to our existing team should prove to be a solid • our growth-through-acquisition phase, where earnings is the lead metric. As Nicolet continues to evolve, the metrics of growth, asset quality, and earnings remain our key support good, profitable customer relationships. We know how to assess and price the value of the indicators, and each have played a role in our strong capital management that has led us to where we are today. relationships or organizations we acquire. We do that by having great frontline people who put their Nicolet was a high-quality, high-performance company in the years preceding the pandemic. The pandemic experience and initiative to work for our customers. As Mike frequently says, “We need to matter to our economic policy measures (low rates coupled with unprecedented fiscal and monetary stimulus) swelled customers, matter in our communities, and matter to each other.” our balance sheet with our customers’ cash. Cash increased to around 20% of our balance sheet distorting The community banking sector is experiencing sustained pressure from both large national banks and capital ratios and the traditional profitability metrics. These distortions left our earnings per share (“EPS”) the growth of non-bank fintech platforms. The national and regional banks have the scale to support higher momentum unaffected. As we moved through 2020 and 2021, we have focused on growth in our core tech investment. The fintech platforms benefit from lighter regulation, the absence of an investment in EPS as the most meaningful metric. Measures such as return on assets and return on equity matter, but physical locations, and lower earnings expectations from the capital markets. These macro factors are continued growth in EPS helps our share price, which is what is most impactful to shareholders. Our EPS accelerating consolidation among community banks with aging management and little succession talent. showed rapid year-over-year growth through our many acquisitions, as we proved we could negotiate and Shareholders and boards of smaller banks are experiencing stagnant profitability and an inability to invest execute profitable acquisitions while maintaining solid asset quality. In addition to the two acquisitions, in alternative revenue sources and delivery channels. While Nicolet experiences the pressures common to the complexities of loan loss accounting in acquisitions, and the continued drag of excess cash make our industry segment, we have effectively become the acquirer of choice for smaller institutions within a tracking core profitability in 2021 challenging even for industry experts. Our year-end earnings release relevant footprint. Our size does enable us to continue investing in innovation and digital efficiency. As we contains an effort to reconcile GAAP accounting with what we believe to be more meaningful non-GAAP grow, our target acquisition size has increased. The basic value proposition of an engaged community bank measures. Following the December closing of the County acquisition the board announced an aggressive with quality people remains attractive in our market, but with our growth comes the responsibility to stock repurchase plan. This, together with our announced year-end results, caused analysts’ expectations instill efficiency. As we acquire, we must have—and do have—the operating discipline to implement tough (and our stock price) to become more closely aligned with both current and future EPS. decisions on efficiency. When we map out cost savings, we promptly communicate and execute on the The core profitability of the Company was strong and growing before the pandemic and has accelerated tough decisions that go with preserving a strong, personal, and responsive community banking culture in throughout. We are, as the analysts now describe us, a high-performing organic growth story with a potent both our existing and acquired markets. In the last two years we have closed 24 branches in both our legacy currency and 10-year track record as the acquirer of choice of companies that enhance our earnings while and expansion markets. This isn’t always popular, but our customer retention is high because our value broadening and deepening our geographic impact. Our asset quality resilience during the financial crisis proposition is more about our people than about place. We have tended to grow in markets we have acquired, formed the basis of our asset quality throughout the last 10 years. We know how to acquire, enhance, and because we identify and empower the people who matter to the customers. Acquisitions are never without emotion and disruption. The drive for efficiency has the same effect. The community banking channel that wouldn’t be there if people had not invested their money and their trust in us. We have created wealth must gain efficiency in order to remain viable, profitable, and impactful for the people we serve. The basic regionally by harnessing local capital and driving accretion through shared success. There is a big difference strategy of sustained organic growth, innovation in delivery, and highly accretive acquisitions using the between a long-term, local owner and a passive investment fund that merely buys stock out of mathematical potent currency of a high-performance company holds rich opportunity in the coming years, and we are necessity, yet we serve them both passionately. investing in the right people and making the right decisions to continue this top-tier performance. People often ask us whether we can maintain the personalism, the sense of belonging, and the As 2021 ended, the Company’s market capitalization was over $1.2 billion. It is worth reflecting on entrepreneurial spirit at the heart of our work. While we have figured out how to be impactful and where that capital came from and what that means to the areas we serve. While we have been an SEC meaningful to our customers and communities in several of our northern markets, most larger institutions’ reporting, or “public,” company since 2013, we have never done an open-market equity issuance. Our equity business models do not have that focus. We need to invest in our future and keep our people growing and has been sold face-to-face to our initial investors and accepted by those who sell us their banks. The people developing. Above all, we need to remember the values and commitments that are resulting in better who believed in us when we were a blank sheet of paper are always close to our hearts, and rewarding those outcomes to our customers, our people, and our shareholders. High ideals must be made concrete in daily 9 who entrust their banks to our ownership is always on our minds. Unlike most acquirers, our acquisitions actions. It is worth believing in, investing in, and communicating with people. It isn’t always easy, but it is have consistently enhanced the shareholder value of both legacy Nicolet shareholders and those shareholders worth it. Nicolet has grown and succeeded as an organization because of our values and the manner in of acquired companies who have become our shareholders through selling us their banks. Much like our which we work together and hold each other accountable. We have the leadership in place to continue as a approach to customers and employees, we consistently seek to create shared success through fair pricing high-impact, high-performing source of strength to the people and places we serve. and deep and resilient relationships. As we have grown and entered the Russell 2000 index, the major index funds have needed to acquire our stock. We have many active investment funds we have talked with Thank you for being a part of our journey. over the years, but they have tended to not buy our stock in the open market. We care about all of our shareholders, but we particularly cherish the thousands of long-term individual owners seeded across the cities and towns throughout Wisconsin and Michigan that we serve. They are strong brand advocates and have watched us live the values we profess. Much of our market capitalization represents real wealth accumulated through mutual trust and cooperation in the places we serve. This is how shared success has played out among our shareholders, and there is a tremendous amount of wealth spread across our footprint Robert B. Atwell Michael E. Daniels B O A R D O F D I R E C T O R S 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 Executive Chairman, Nicolet Bankshares, Inc. Michael Daniels President and Chief Executive Officer, Nicolet Bankshares, Inc. Héctor Colón President & CEO, Lutheran Social Services of Wisconsin & Upper Michigan, Inc. Lynn Davis, Ph.D. Founding Partner at Nutrition Professionals, Inc., Quality Roasting, Inc. and Breeze Dairy Group, LLC Rachel Campos-Duffy Media & Communications Consultant, FOX News Contributor John Dykema President and Owner, Campbell Wrapper Corp and Circle Packaging Machinery, Inc. Terrence Fulwiler Retired CEO, WS Packaging Group Chris Ghidorzi President of Property Development, Ghidorzi Companies Andrew Hetzel, Jr. CEO, FyterTech Nonwovens LLC Ann Lawson Retired CFO, Nicolet Bankshares, Inc. Donald Long, Jr. Former Owner and CEO, Century Drill and Tool Co., Inc. Dustin McClone President and CEO, McClone Insurance Group Susan Merkatoris Certified Public Accountant, Owner and Managing Member, Larboard Enterprises, LLC Pierce Smith Board of Directors of Menasha Corporation Paul Tobias Former Chairman and Chief Executive Officer of Mackinac Financial Corporation and Former Executive Chairman of mBank Robert Weyers Owner, Commercial Horizons, Inc. Robert Atwell Executive Chairman Michael Daniels President and Chief Executive Officer H. Phillip Moore, Jr. Chief Financial Officer Eric Witczak Executive Vice President and Secretary N I C O L E T N A T I O N A L B A N K E X E C U T I V E O F F I C E R S 11 Robert Atwell Executive Chairman Michael Daniels President and Chief Executive Officer Brad Hutjens Executive Vice President, Chief Credit Officer, Compliance and Risk Manager Patrick Madson Senior Vice President, Wealth Management H. Phillip Moore, Jr. Chief Financial Officer Eric Witczak Executive Vice President F I N A N C I A L S F I N A N C I A L S Nicolet Bankshares, Inc. (In thousands, except per share data) Nicolet Bankshares, Inc. (In thousands) Years Ended December 31, At December 31, Condensed Consolidated Statements of Income 2021 2020 % Change Condensed Consolidated Balance Sheets 2021 2020 % Change Interest income Interest expense Net interest income Provision for credit losses Noninterest income Noninterest expense Income before income tax expense Income tax expense Net income $171,559 $149,202 15% 13,604 19,864 -32% 157,955 129,338 14,900 10,300 67,364 62,626 22% 45% 8% 129,297 100,719 28% 81,122 80,945 20,470 20,476 60,652 60,469 0% 0% 0% Net income attributable to noncontrolling interest - 347 -100% Net income attributable to Nicolet Bankshares, Inc. $60,652 $60,122 1% Basic earnings per common share Diluted earnings per common share Basic weighted average common shares Diluted weighted average common shares $5.65 $5.44 $5.82 $5.70 10,736 10,337 11,145 10,541 -3% -5% 4% 6% Cash and cash equivalents Securities available for sale Securities held to maturity Loans Allowance for credit losses Goodwill and other intangibles All other assets Total assets Deposits Wholesale funding Other liabilities Common equity $595,292 $802,859 -26% 921,661 539,337 71% 651,803 - 100% 4,621,836 2,789,101 (49,672) (32,173) 339,492 175,353 66% 54% 94% 614,625 277,312 122% $7,695,037 $4,551,789 69% $6,465,916 $3,910,399 65% 216,915 53,869 303% 120,315 48,332 149% 13 Total liabilities and stockholders' equity $7,695,037 $4,551,789 891,891 539,189 65% 69% Outstanding common shares 13,994 10,011 40% S H A R E H O L D E R I N F O Annual Meeting Shareholders’ Meeting – Monday, May 9, 2022 (5:00 p.m.) Meyer Theatre 117 South Washington Street / Green Bay, WI 54301 Independent Auditor BKD LLP 910 E. St. Louis Street / Suite 200 / Springf ield, MO 65801 Transfer Agent Computershare C/O Shareholder Services P.O. Box 505000 / Louisville, KY 40233-5000, United States Overnight Delivery Computershare C/O Shareholder Services 462 South 4th Street / Suite 1600 / Louisville, KY 40202 Shareholder website: www.computershare.com/investor Shareholder online inquiries: https://www-us.computershare.com/investor/Contact Toll free in the US: 800.962.4284 / Outside the US: 781.575.3120 Fax: 312.604.2312 15 

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