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| 8-K - 8-K - NICOLET BANKSHARES INC | ncbs-12312018form8xkcover.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE
NICOLET BANKSHARES, INC. ANNOUNCES 2018 EARNINGS AND NEW BOARD MEMBER
•Net income of $10.9 million, 19% above fourth quarter 2017
•Net income of $41.0 million for 2018, 24% higher than 2017
•Earnings per diluted common share of $1.11 for fourth quarter and $4.12 for 2018
•Return on average assets of 1.44% for fourth quarter and 1.38% for 2018
•Growth of 4% in loans and 6% in deposits since year end 2017
•Continued exceptional asset quality
•Rachel Campos-Duffy joins the Board of Directors
Green Bay, Wisconsin, January 15, 2019 - Nicolet Bankshares, Inc. (NASDAQ: NCBS) (“Nicolet”) announced fourth quarter 2018 net income of $10.9 million and earnings per diluted common share of $1.11, compared to $10.9 million and $1.09 for third quarter 2018, and $9.1 million and $0.88 for fourth quarter 2017, respectively. Annualized quarterly return on average assets was 1.44%, 1.45% and 1.27%, for fourth quarter 2018, third quarter 2018 and fourth quarter 2017, respectively.
Net income for the year ended December 31, 2018 was $41.0 million, 24% higher than $33.1 million for 2017. Earnings per diluted common share were $4.12 for 2018, 24% higher than $3.33 for 2017. Return on average assets was 1.38% for 2018 and 1.25% for 2017.
“2018 was an exceptional year. Solid growth, margin discipline and sterling asset quality led the way,” said Bob Atwell, Chairman and CEO of Nicolet.
“The rapid pace of our acquisition activity between 2013 and 2017 caused some to wonder whether our exceptional profitability was sustainable without more deals,” Atwell reflected. “Our last acquisition closed in April 2017 and our profitability continues to surge. We have ongoing acquisition discussions, but our strategies remain focused and the terms of deals need to make sense for our shareholders. Substantial ownership interests of our leadership and board help us to remain disciplined.”
“The last 20 merger-free months have given us a very welcome opportunity to drive further excellence into our franchise. We are very pleased with our organic growth momentum across our locations and products,” Atwell said.
“We remained focused on customers and the customer experience, including website redesign, branch facility upgrades, and market leadership alignment,” said Mike Daniels, President and CEO of Nicolet National Bank. “We are especially proud of how our revenue line leaders managed the movement of deposit and loan rates in the consistently rising rate environment. With better predictive analytics, we have worked hard to preserve our margin consistent with our commitment to pricing integrity for our loyal customers,” Daniels said.
Today, the Board of Directors expanded its membership by one to sixteen total directors and named Rachel Campos-Duffy to fill the director position until she stands for election at the next annual shareholder meeting, currently set for May 13, 2019.
“We are very excited to have Rachel join our Board. Her background offers a unique perspective that will fit well with the culture we have built at Nicolet,” said Atwell. “As a national and cable television host and
commentator, she is an experienced public speaker. Rachel is also a published author, communications consultant, and media personality on politics, culture and parenting. She, her husband and eight children live in Wausau, Wisconsin.”
Net income was $10.9 million for fourth quarter 2018, level with third quarter 2018. For fourth quarter 2018, interest income increased $0.4 million (despite $0.3 million lower aggregate discount income on purchased loans) and interest expense increased $0.4 million, each primarily a result of rate changes between the linked quarters. Noninterest income decreased $0.9 million or 8% from third quarter, most notably due to lower BOLI income (down $0.5 million mainly from a death benefit received in third quarter) and a $0.3 million unfavorable swing in net asset gains (losses), partially offset by higher brokerage fee income (up $0.2 million). Between the linked quarters, noninterest expense decreased $1.4 million or 6% from third quarter 2018, led by a $1.7 million decrease in personnel expense (mostly due to adjustments in the wealth compensation structure and reductions in wealth staff later in the year, adjustments to target incentives, and market declines on deferred compensation liabilities), partly offset by a $0.3 million increase in all other noninterest expenses combined (which includes a $0.5 million fraud contingency loss in the fourth quarter). Tax expense increased $0.7 million between the linked quarters on higher pre-tax income and a higher effective tax rate, given the favorable tax treatment of the BOLI death proceeds received in the third quarter.
The timing of the April 2017 First Menasha Bancshares, Inc. acquisition (which was approximately 20% of Nicolet’s pre-merger asset size) impacts year-over-year financial comparisons. Certain income statement results, average balances and related ratios for 2018 include full period contributions from the acquisition, while 2017 includes eight months of contribution and reflects non-recurring other direct merger and integration pre-tax expenses of $0.5 million incurred in the first half of 2017.
Net income for 2018 increased $7.9 million or 24% over 2017. Interest income grew $16.3 million (despite $4.2 million lower aggregate discount income on purchased loans), aided by a 14% increase in average interest-earning assets and the elevated rate environment on new, renewed and variable rate loans. Interest expense increased $8.4 million primarily due to rising rates on a larger deposit base, up 13% on average over 2017. Noninterest income grew $4.9 million or 14%, with all categories except net asset gains up year-over-year, most notably trust and brokerage fees combined (up $1.8 million or 15%), card interchange income (up $1.0 million or 22%), net mortgage income (up $1.0 million or 18%), and BOLI income (up $0.6 million). Noninterest expense increased $8.4 million or 10%. Personnel expense increased $5.0 million or 11%, partly due to the full period contribution of the expanded workforce (with average full-time equivalent employees up 6% between the years), as well as merit increases between the years, additional competitive market-based wage increases made after tax reform was passed, cash and equity incentives, and higher health costs. Non-personnel expenses combined increased $3.4 million or 9% mostly due to the larger operating base, but also from $0.6 million higher charitable giving, $0.6 million accelerated depreciation given branch facility upgrades, and a $0.5 million fraud contingency loss in fourth quarter 2018. Tax expense declined $2.8 million despite the increase in pre-tax income, principally due to the lower corporate tax rate in effect for 2018 and the favorable tax treatment of the BOLI death proceeds received in 2018.
At December 31, 2018, assets were $3.1 billion, loans were $2.2 billion and deposits were $2.6 billion, up 6%, 4% and 6%, respectively over December 31, 2017. Since September 30, 2018, period end loans increased $23 million or 4% annualized, while deposits increased $92 million or 14% annualized, largely due to a customary rise in municipal deposits. On average, loans were $2.1 billion for 2018, 12% higher than last year and deposits were $2.5 billion, up 13% over 2017.
Asset quality remains exceptional. Nonperforming assets declined to $6 million, representing 0.19% of total assets at December 31, 2018, down favorably from 0.38% at September 30, 2018 and 0.49% at December 31, 2017. For 2018, the provision for loan losses was $1.6 million compared to net charge-offs of $1.1 million, consistent with the improving loan quality and minimal losses. The allowance for loan losses increased to $13.2 million, representing 0.61% of total loans at December 31, 2018, unchanged from both September 30, 2018 and December 31, 2017.
Total capital was $387 million at December 31, 2018, an increase of $22 million or 6% since December 31, 2017. During fourth quarter 2018, we utilized $5.2 million to repurchase and cancel approximately 100,200 shares of our common stock pursuant to our common stock repurchase program, bringing the 2018 year-to-date total to over 408,000 shares repurchased for $22.2 million. As of December 31, 2018, there remained $7.7 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.
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” and “prospects”, involve risks and uncertainties that could cause actual results to differ materially from those anticipated by the statement 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 interpretations and impact of the recently enacted 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) | 12/31/2018 | 9/30/2018 | 6/30/2018 | 3/31/2018 | 12/31/2017 | 12/31/2018 | 12/31/2017 | |||||||||||||||||||||
Results of operations: | ||||||||||||||||||||||||||||
Interest income | $ | 32,327 | $ | 31,880 | $ | 30,545 | $ | 30,785 | $ | 29,836 | $ | 125,537 | $ | 109,253 | ||||||||||||||
Interest expense | 5,298 | 4,938 | 4,742 | 3,911 | 3,329 | 18,889 | 10,511 | |||||||||||||||||||||
Net interest income | 27,029 | 26,942 | 25,803 | 26,874 | 26,507 | 106,648 | 98,742 | |||||||||||||||||||||
Provision for loan losses | 240 | 340 | 510 | 510 | 450 | 1,600 | 2,325 | |||||||||||||||||||||
Net interest income after provision for loan losses | 26,789 | 26,602 | 25,293 | 26,364 | 26,057 | 105,048 | 96,417 | |||||||||||||||||||||
Noninterest income | 9,797 | 10,649 | 10,239 | 8,824 | 8,621 | 39,509 | 34,639 | |||||||||||||||||||||
Noninterest expense | 21,621 | 23,044 | 22,451 | 22,642 | 21,858 | 89,758 | 81,356 | |||||||||||||||||||||
Income before income tax expense | 14,965 | 14,207 | 13,081 | 12,546 | 12,820 | 54,799 | 49,700 | |||||||||||||||||||||
Income tax expense | 4,015 | 3,268 | 3,255 | 2,908 | 3,662 | 13,446 | 16,267 | |||||||||||||||||||||
Net income | 10,950 | 10,939 | 9,826 | 9,638 | 9,158 | 41,353 | 33,433 | |||||||||||||||||||||
Net income attributable to noncontrolling interest | 87 | 80 | 89 | 61 | 55 | 317 | 283 | |||||||||||||||||||||
Net income attributable to Nicolet Bankshares, Inc. | $ | 10,863 | $ | 10,859 | $ | 9,737 | $ | 9,577 | $ | 9,103 | $ | 41,036 | $ | 33,150 | ||||||||||||||
Earnings per common share: | ||||||||||||||||||||||||||||
Basic | $ | 1.14 | $ | 1.13 | $ | 1.01 | $ | 0.98 | $ | 0.93 | $ | 4.26 | $ | 3.51 | ||||||||||||||
Diluted | $ | 1.11 | $ | 1.09 | $ | 0.98 | $ | 0.94 | $ | 0.88 | $ | 4.12 | $ | 3.33 | ||||||||||||||
Common Shares: | ||||||||||||||||||||||||||||
Basic weighted average | 9,526 | 9,633 | 9,639 | 9,765 | 9,805 | 9,640 | 9,440 | |||||||||||||||||||||
Diluted weighted average | 9,814 | 9,949 | 9,970 | 10,225 | 10,368 | 9,956 | 9,958 | |||||||||||||||||||||
Outstanding | 9,495 | 9,577 | 9,643 | 9,699 | 9,818 | 9,495 | 9,818 | |||||||||||||||||||||
Noninterest Income: | ||||||||||||||||||||||||||||
Trust services fee income | $ | 1,583 | $ | 1,638 | $ | 1,671 | $ | 1,606 | $ | 1,600 | $ | 6,498 | $ | 6,031 | ||||||||||||||
Brokerage fee income | 1,968 | 1,732 | 1,738 | 1,604 | 1,544 | 7,042 | 5,736 | |||||||||||||||||||||
Mortgage income, net | 1,834 | 1,902 | 1,528 | 1,080 | 1,339 | 6,344 | 5,361 | |||||||||||||||||||||
Service charges on deposit accounts | 1,208 | 1,247 | 1,200 | 1,190 | 1,237 | 4,845 | 4,604 | |||||||||||||||||||||
Card interchange income | 1,583 | 1,481 | 1,358 | 1,243 | 1,268 | 5,665 | 4,646 | |||||||||||||||||||||
Other noninterest income | 1,774 | 2,503 | 1,772 | 1,897 | 1,675 | 7,946 | 6,232 | |||||||||||||||||||||
Noninterest income without net gains | 9,950 | 10,503 | 9,267 | 8,620 | 8,663 | 38,340 | 32,610 | |||||||||||||||||||||
Asset gains (losses), net | (153 | ) | 146 | 972 | 204 | (42 | ) | 1,169 | 2,029 | |||||||||||||||||||
Total noninterest income | $ | 9,797 | $ | 10,649 | $ | 10,239 | $ | 8,824 | $ | 8,621 | $ | 39,509 | $ | 34,639 | ||||||||||||||
Noninterest Expense: | ||||||||||||||||||||||||||||
Personnel expense | $ | 11,327 | $ | 12,983 | $ | 12,674 | $ | 12,492 | $ | 12,054 | $ | 49,476 | $ | 44,458 | ||||||||||||||
Occupancy, equipment and office | 3,673 | 3,660 | 3,454 | 3,787 | 3,695 | 14,574 | 13,308 | |||||||||||||||||||||
Business development and marketing | 1,185 | 1,334 | 1,463 | 1,342 | 1,341 | 5,324 | 4,700 | |||||||||||||||||||||
Data processing | 2,420 | 2,375 | 2,399 | 2,320 | 2,287 | 9,514 | 8,715 | |||||||||||||||||||||
FDIC assessments | 246 | 245 | 282 | 273 | 205 | 1,046 | 787 | |||||||||||||||||||||
Intangibles amortization | 1,053 | 1,054 | 1,100 | 1,182 | 1,181 | 4,389 | 4,695 | |||||||||||||||||||||
Other noninterest expense | 1,717 | 1,393 | 1,079 | 1,246 | 1,095 | 5,435 | 4,693 | |||||||||||||||||||||
Total noninterest expense | $ | 21,621 | $ | 23,044 | $ | 22,451 | $ | 22,642 | $ | 21,858 | $ | 89,758 | $ | 81,356 | ||||||||||||||
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) | 12/31/2018 | 9/30/2018 | 6/30/2018 | 3/31/2018 | 12/31/2017 | 12/31/2018 | 12/31/2017 | |||||||||||||||||||||
Period-End Balances: | ||||||||||||||||||||||||||||
Loans | $ | 2,166,181 | $ | 2,143,457 | $ | 2,128,624 | $ | 2,100,597 | $ | 2,087,925 | $ | 2,166,181 | $ | 2,087,925 | ||||||||||||||
Allowance for loan losses | 13,153 | 12,992 | 12,875 | 12,765 | 12,653 | 13,153 | 12,653 | |||||||||||||||||||||
Investment securities available-for-sale, at fair value | 400,144 | 410,911 | 401,975 | 401,130 | 405,153 | 400,144 | 405,153 | |||||||||||||||||||||
Goodwill and other intangibles, net | 124,307 | 125,360 | 126,124 | 127,224 | 128,406 | 124,307 | 128,406 | |||||||||||||||||||||
Total assets | 3,096,535 | 3,000,902 | 2,922,151 | 3,223,935 | 2,932,433 | 3,096,535 | 2,932,433 | |||||||||||||||||||||
Deposits | 2,614,138 | 2,522,156 | 2,455,536 | 2,765,090 | 2,471,064 | 2,614,138 | 2,471,064 | |||||||||||||||||||||
Stockholders’ equity | 386,609 | 377,171 | 370,584 | 363,988 | 364,178 | 386,609 | 364,178 | |||||||||||||||||||||
Book value per common share | 40.72 | 39.38 | 38.43 | 37.53 | 37.09 | 40.72 | 37.09 | |||||||||||||||||||||
Tangible book value per common share | 27.62 | 26.29 | 25.35 | 24.41 | 24.01 | 27.62 | 24.01 | |||||||||||||||||||||
Average Balances: | ||||||||||||||||||||||||||||
Loans | $ | 2,142,870 | $ | 2,134,448 | $ | 2,117,828 | $ | 2,114,345 | $ | 2,066,974 | $ | 2,127,470 | $ | 1,899,225 | ||||||||||||||
Interest-earning assets | 2,693,752 | 2,664,316 | 2,742,976 | 2,584,070 | 2,531,066 | 2,671,560 | 2,351,451 | |||||||||||||||||||||
Total assets | 2,996,553 | 2,971,247 | 3,044,466 | 2,896,533 | 2,852,400 | 2,977,457 | 2,648,754 | |||||||||||||||||||||
Deposits | 2,518,378 | 2,497,439 | 2,583,112 | 2,436,103 | 2,385,821 | 2,508,952 | 2,228,408 | |||||||||||||||||||||
Interest-bearing liabilities | 1,867,327 | 1,931,119 | 2,084,361 | 1,925,443 | 1,835,375 | 1,951,846 | 1,750,099 | |||||||||||||||||||||
Goodwill and other intangibles, net | 124,930 | 125,798 | 126,646 | 127,801 | 128,980 | 126,284 | 115,447 | |||||||||||||||||||||
Stockholders’ equity | 379,846 | 375,507 | 364,988 | 366,002 | 361,455 | 371,635 | 332,897 | |||||||||||||||||||||
Financial Ratios*: | ||||||||||||||||||||||||||||
Return on average assets | 1.44 | % | 1.45 | % | 1.28 | % | 1.34 | % | 1.27 | % | 1.38 | % | 1.25 | % | ||||||||||||||
Return on average common equity | 11.35 | 11.47 | 10.70 | 10.61 | 9.99 | 11.04 | 9.96 | |||||||||||||||||||||
Return on average tangible common equity | 16.91 | 17.25 | 16.39 | 16.31 | 15.53 | 16.73 | 15.24 | |||||||||||||||||||||
Average equity to average assets | 12.68 | 12.64 | 11.99 | 12.64 | 12.67 | 12.48 | 12.57 | |||||||||||||||||||||
Stockholders’ equity to assets | 12.49 | 12.57 | 12.68 | 11.29 | 12.42 | 12.49 | 12.42 | |||||||||||||||||||||
Tangible equity to tangible assets | 8.83 | 8.76 | 8.74 | 7.65 | 8.41 | 8.83 | 8.41 | |||||||||||||||||||||
Loan yield | 5.38 | 5.35 | 5.10 | 5.39 | 5.23 | 5.37 | 5.31 | |||||||||||||||||||||
Earning asset yield | 4.76 | 4.75 | 4.46 | 4.81 | 4.73 | 4.74 | 4.75 | |||||||||||||||||||||
Cost of interest-bearing deposits | 0.98 | 0.87 | 0.77 | 0.68 | 0.56 | 0.82 | 0.46 | |||||||||||||||||||||
Cost of funds | 1.12 | 1.01 | 0.91 | 0.82 | 0.72 | 0.97 | 0.60 | |||||||||||||||||||||
Net interest margin | 3.98 | 4.02 | 3.77 | 4.20 | 4.21 | 4.04 | 4.30 | |||||||||||||||||||||
Net loan charge-offs to average loans | 0.01 | 0.04 | 0.08 | 0.08 | 0.08 | 0.05 | 0.08 | |||||||||||||||||||||
Nonperforming loans to total loans | 0.25 | 0.48 | 0.51 | 0.56 | 0.63 | 0.25 | 0.63 | |||||||||||||||||||||
Nonperforming assets to total assets | 0.19 | 0.38 | 0.41 | 0.40 | 0.49 | 0.19 | 0.49 | |||||||||||||||||||||
Allowance for loan losses to loans | 0.61 | 0.61 | 0.60 | 0.61 | 0.61 | 0.61 | 0.61 | |||||||||||||||||||||
Effective tax rate | 26.83 | 23.00 | 24.88 | 23.18 | 28.56 | 24.54 | 32.73 | |||||||||||||||||||||
Selected Items: | ||||||||||||||||||||||||||||
Interest income from resolving PCI loans (rounded) | $ | 100 | $ | 300 | $ | 100 | $ | 1,500 | $ | 2,100 | $ | 2,000 | $ | 8,000 | ||||||||||||||
Tax-equivalent adjustment on net interest income | 278 | 285 | 289 | 298 | 584 | 1,150 | 2,369 | |||||||||||||||||||||
Tax expense (benefit) on stock-based compensation | (23 | ) | — | — | (159 | ) | (1,678 | ) | (182 | ) | (1,854 | ) | ||||||||||||||||
Tax expense (benefit) of tax reform items | — | — | — | — | 896 | — | 896 | |||||||||||||||||||||
*Income statement-related ratios for partial-year periods are annualized.