Nicolet Bankshares Inc: Form 10-Q for the period ended Sep 30, 2026

Overview

Nicolet Bankshares, Inc. (the “Company” or “Nicolet”) is a bank holding company headquartered in Green Bay, Wisconsin. Nicolet provides a diversified range of traditional banking and wealth management services to individuals and businesses in its market area and through the branch offices of its banking subsidiary, Nicolet National Bank (the “Bank”), primarily in Wisconsin, Michigan, Iowa, and Minnesota. The following discussion is management’s analysis of Nicolet’s consolidated financial condition as of September 30, 2026 and December 31, 2025 and results of operations for the three and nine-month periods ended September 30, 2026 and 2025. It should be read in conjunction with our audited consolidated financial statements and related Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Nicolet’s 2025 Annual Report on Form 10-K.

In this Quarterly Report on Form 10-Q, unless the context indicates otherwise, all references to “we,” “us” and “our” refer to the Company.

Evaluation of financial performance and balance sheet line items is impacted both by the timing and size of the MidWestOne acquisition, which was completed on February 13, 2026. Certain income statement results, average balances, and related ratios for 2026 include partial contributions from MidWestOne from the acquisition date. In the acquisition, MidWestOne stockholders received 0.3175 shares of Nicolet common stock for each share of MidWestOne common stock owned, resulting in the issuance of approximately 6.6 million shares of Nicolet common stock valued at $1.0 billion (based upon the closing stock price of Nicolet’s common stock on February 13, 2026, of $155.19 per share).

Forward-Looking Statements

Statements made in this document and in any documents that are incorporated by reference which are not purely historical are forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995, including any descriptions of management’s plans, objectives, or goals for future operations, products or services, and forecasts of its revenues, earnings, or other measures of performance, or with respect to expectations regarding the economic factors such as inflation and changes in interest rates. Forward-looking statements are based on current management expectations and, by their nature, are subject to risks and uncertainties. These statements are neither statements of historical fact nor assurance of future performance and generally may be identified by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “estimate,” “should,” “will,” “intend,” or similar expressions. Forward-looking statements (including their underlying assumptions) should be viewed with caution. Investors should note that many factors, some of which are discussed elsewhere in this document, could affect the future financial results of Nicolet and could cause those results to differ materially from those implied or anticipated by any forward-looking statements. Except as required by law, we expressly disclaim any obligations to publicly update any forward-looking statements whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise. Important factors, many of which are beyond Nicolet’s control, that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements, in addition to those described in detail under Item 1A, “Risk Factors” of Nicolet’s 2025 Annual Report on Form 10-K include, but are not necessarily limited to the following:

• strategic, market, operating, legal and regulatory risks, including the effects of legislative or regulatory developments affecting the financial industry generally or Nicolet specifically;
• economic, market, political and competitive forces affecting Nicolet’s banking and wealth management businesses;
• potential fluctuations or unanticipated changes in the interest rate environment, monetary or tax policy or general economic conditions, including interest rate changes made by the Federal Reserve and the related cash flow reassessments, which may reduce Nicolet’s net interest income, net interest margin, and / or the volumes and values of loans made or held as well as the value of other financial assets;
• potential difficulties in identifying and completing future merger or acquisition opportunities, as well as our ability to successfully expand and integrate any businesses we acquire, such as the recently completed acquisition of MidWestOne;
• cybersecurity risks and the vulnerability of our network and online banking portals, and the systems or parties with whom we contract, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches that could adversely affect our business and financial performance or reputation;
• changes in accounting standards, rules and interpretations (including effects of assumptions underlying purchase accounting) and any resulting impact on Nicolet’s financial statements;
• compliance or operational risks related to new products, services, ventures, or lines of business, if any, that Nicolet may pursue or implement;
• the risk that we may be required to make substantial expenditures to keep pace with regulatory initiatives and the rapid technological changes in the financial services market;
• our ability to attract and retain key personnel;
• examinations by our regulatory authorities, including the possibility that the regulatory authorities may, among other things, require us to increase our allowance for credit losses, write-down assets, or take other actions;
• adverse results (including judgments, costs, fines, reputational harm, inability to obtain necessary approvals and / or other negative effects) from current or future litigation, legislation, regulatory proceedings, examinations, investigations, or similar matters or developments related thereto;
• the potential effects of events beyond our control that may have a destabilizing effect on financial markets and the economy, such as inflation and recessions, weather events, climate change, natural disasters, epidemics and pandemics, war or terrorist activities, disruptions in our customers’ supply chains, disruptions in transportation, essential utility outages or trade disputes and related tariffs; and
• the risk that Nicolet’s analysis of these risks and forces could be incorrect and/or that the strategies developed to address them could be unsuccessful.

These factors should be considered in evaluating the forward-looking statements, and you should not place undue reliance on such statements.

Earnings Summary

(In thousands, except per share data)

(1) The core net income and diluted EPS measures are non-GAAP financial measures that provide information that management believes is useful to investors in understanding our operating performance and trends and also aids investors in the comparison of our financial performance to the financial performance of peer banks. See section “Non-GAAP Financial Measures” below for a reconciliation of these financial measures.

(2) The ratios of tangible book value per common share, return on average tangible common equity, core return on average assets, core return on average common equity, core return on average tangible common equity, and tangible common equity to tangible assets are non-GAAP financial measures that exclude goodwill and other intangibles, net. These financial ratios have been included as management considers them to be useful metrics with which to analyze and evaluate financial condition and capital strength. See “Non-GAAP Financial Measures” below for a reconciliation of these financial measures.

(3) Income statement-related ratios for partial-year periods are annualized.

Non-GAAP Financial Measures

We identify “core net income,” “core diluted earnings per common share,” “core return on average assets,” “core return on average common equity,” “return on average tangible common equity,” “core return on average tangible common equity,” “tangible book value per common share,” and “tangible common equity to tangible assets” as “non-GAAP financial measures.” In accordance with the SEC’s rules, we identify certain financial measures as non-GAAP financial measures if such financial measures exclude or include amounts in the most directly comparable measures calculated and presented in accordance with generally accepted accounting principles (“GAAP”) in effect in the United States in our statements of income, balance sheets or statements of cash flows. Non-GAAP financial measures do not include operating and other statistical measures, ratios or statistical measures calculated using exclusively financial measures calculated in accordance with GAAP.

Management believes that the presentation of these non-GAAP financial measures (a) are important metrics used to analyze and evaluate our financial condition and capital strength and provide important supplemental information that contributes to a proper understanding of our operating performance and trends, (b) enables a more complete understanding of factors and trends affecting our business, and (c) allows investors to compare our financial performance to the financial performance of our peers and to evaluate our performance in a manner similar to management, the financial services industry, bank stock analysts, and bank regulators. Management uses non-GAAP measures as follows: in the preparation of our operating budgets, monthly financial performance reporting, and in our presentation to investors of our performance. However, we acknowledge that these non-GAAP financial measures have a number of limitations. Limitations associated with non-GAAP financial measures include the risk that persons might disagree as to the appropriateness of items comprising these measures and that different companies might calculate these measures differently. These disclosures should not be considered an alternative to our GAAP results. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures is presented in Table 1A below.

(In thousands, except per share data)

Note: Numbers may not sum due to rounding.

(1) The core net income measure and related reconciliation provide information useful to investors in understanding the operating performance and trends of Nicolet and also to aid investors in the comparison of Nicolet’s financial performance to the financial performance of peer banks.

(2) Includes the provision expense for the ACL on unfunded commitments related to the MidWestOne acquisition.

(3) Assumes an effective tax rate of 21.5% for 2026 and 19.5% for 2025.

(4) The ratios of core return on average assets and core return on average common equity use core net income as the numerator in place of net income (GAAP). These financial metrics have been included as they provide information useful to investors in understanding the operating performance and trends of Nicolet.

(5) The ratios of tangible book value per common share, return on average tangible common equity, core return on average tangible common equity, and tangible common equity to tangible assets exclude goodwill and other intangibles, net. In addition, the ratios of return on average tangible common equity and core return on average tangible common equity remove the intangibles amortization, net of tax, from the numerator. These financial measures have been included as they are considered to be critical metrics with which to analyze and evaluate financial condition and capital strength.

Performance Summary

Net income was $136 million (or earnings per diluted common share of $6.57) for the nine months ended September 30, 2026, compared to net income of $110 million (or earnings per diluted common share of $7.14) for the nine months ended September 30, 2025. The majority of the year-over-year fluctuations noted below are attributable to the MidWestOne acquisition.

• Net interest income was $393 million for the first nine months of 2026, up $168 million (74%) over the first nine months of 2025, mostly due to the MidWestOne acquisition. Interest income grew $209 million, while interest expense increased $41 million between the comparable nine-month periods. Net interest margin was 4.11% for the nine

months ended September 30, 2026, compared to 3.72% for the nine months ended September 30, 2025. For additional information regarding net interest income, see “Income Statement Analysis — Net Interest Income.”

• Noninterest income was $94 million for the nine months ended September 30, 2026, $31 million (50%) higher than the comparable period of 2025, with growth in most core noninterest income categories primarily due to the acquisition of MidWestOne. For additional information regarding noninterest income, see “Income Statement Analysis — Noninterest Income.”
• Noninterest expense was $305 million for the nine months ended September 30, 2026, an increase of $157 million (106%) over the comparable period of 2025. Personnel costs increased $51 million (60%), while non-personnel expenses combined increased $106 million (169%), primarily due to the acquisition of MidWestOne. For additional information regarding noninterest expense, see “Income Statement Analysis — Noninterest Expense.”
• Nonperforming assets were $78 million, and represented 0.52% of total assets at September 30, 2026, compared to $32 million or 0.35% of total assets at December 31, 2025. For additional information regarding nonperforming assets, see “Balance Sheet Analysis – Nonperforming Assets.”
• At September 30, 2026, assets were $15.1 billion, an increase of $5.9 billion (64%) from December 31, 2025, primarily due to the MidWestOne acquisition. For additional balance sheet discussion see “Balance Sheet Analysis.”
• At September 30, 2026, loans were $10.9 billion, an increase of $4.0 billion from December 31, 2025, primarily due to the MidWestOne acquisition. For additional information regarding loans, see “Balance Sheet Analysis — Loans.”
• Total deposits of $12.6 billion at September 30, 2026, increased $4.9 billion from December 31, 2025, primarily due to the MidWestOne acquisition. For additional information regarding deposits, see “Balance Sheet Analysis – Deposits.”

INCOME STATEMENT ANALYSIS

Net Interest Income

Tax-equivalent net interest income is a non-GAAP measure, but is a preferred industry measurement of net interest income (and its use in calculating a net interest margin) as it enhances the comparability of net interest income arising from taxable and tax-exempt sources. The tax-equivalent adjustments bring tax-exempt interest to a level that would yield the same after-tax income by applying the effective Federal corporate tax rates to the underlying assets. Tables 2 and 3 present information to facilitate the review and discussion of selected average balance sheet items, tax-equivalent net interest income, interest rate spread and net interest margin.

Table 2: Average Balance Sheet and Net Interest Income Analysis - Tax-Equivalent Basis

(in thousands)

* During first quarter 2026, Nicolet reclassified fully reciprocated deposit balances with ICS from brokered deposits to core deposits to be more consistent with the presentation typically used by peer banks. The ICS reciprocal deposits are part of the IntraFi Network Deposits program, which is used by financial institutions to distribute deposits that exceed FDIC insurance coverage limits to numerous institutions in order to provide insurance coverage for all participating deposits. Prior periods have been restated to reflect this change. There was no change to total deposits or the deposit categories resulting from the reclassification.

(1) Nonaccrual loans and loans held for sale are included in the daily average loan balances outstanding.

(2) The yield on tax-exempt loans and tax-exempt investment securities is computed on a tax-equivalent basis using a federal tax rate of 21% and adjusted for the disallowance of interest expense.

(3) Loan purchase accounting accretion and nonaccrual interest included in Total loans interest above, and the related impact to net interest margin.

Table 2: Average Balance Sheet and Net Interest Income Analysis - Tax-Equivalent Basis (Continued)

(in thousands)

* During first quarter 2026, Nicolet reclassified fully reciprocated deposit balances with ICS from brokered deposits to core deposits to be more consistent with the presentation typically used by peer banks. The ICS reciprocal deposits are part of the IntraFi Network Deposits program, which is used by financial institutions to distribute deposits that exceed FDIC insurance coverage limits to numerous institutions in order to provide insurance coverage for all participating deposits. Prior periods have been restated to reflect this change. There was no change to total deposits or the deposit categories resulting from the reclassification.

(1) Nonaccrual loans and loans held for sale are included in the daily average loan balances outstanding.

(2) The yield on tax-exempt loans and tax-exempt investment securities is computed on a tax-equivalent basis using a federal tax rate of 21% and adjusted for the disallowance of interest expense.

(3) Loan purchase accounting accretion and Loan nonaccrual interest included in Total loans interest above, and the related impact to net interest margin.

Table 3: Volume/Rate Variance - Tax-Equivalent Basis

(in thousands)

(1) The change in interest due to both rate and volume has been allocated in proportion to the relationship of dollar amount of change in each.

(2) The yield on tax-exempt loans and tax-exempt investment securities is computed on a tax-equivalent basis using a federal tax rate of 21% and adjusted for the disallowance of interest expense.

At the beginning of 2025, the Federal Funds range was 4.25% to 4.50%. During the second half of 2025, the Federal Reserve decreased short-term interest rates a total of 75 bps, resulting in a Federal Funds range of 3.50% to 3.75% at December 31, 2025. In comparison, the Federal Reserve increased short-term interest rates a total of 25 bps during third quarter 2026, resulting in a Federal Funds range of 3.75% to 4.00% at September 30, 2026.

Tax-equivalent net interest income was $397 million for the nine months ended September 30, 2026, an increase of $170 million (75%) over the nine months ended September 30, 2025. The $170 million increase in tax-equivalent net interest income was primarily attributable to increased volumes from the MidWestOne acquisition, as well as favorable changes in yield and rate. Favorable volume and rate changes added $147 million and $23 million, respectively, to net interest income.

Average interest-earning assets increased $4.8 billion (59%) to $12.9 billion over the comparable 2025 period, primarily due to the MidWestOne acquisition. Between the comparable nine-month periods, average loans increased $3.7 billion (54%), mostly due to the MidWestOne acquisition. Average investment securities increased $975 million between the comparable nine-month periods, while other interest-earning assets increased $106 million (mostly cash), both primarily due to the MidWestOne acquisition. The mix of average interest-earning assets was 81% loans, 15% investment securities, and 4% other interest-earning assets (mostly cash) for the first nine months of 2026, compared to 83%, 11%, and 6%, respectively, for the first nine months of 2025.

Average interest-bearing liabilities were $9.6 billion for the first nine months of 2026, an increase of $3.7 billion (61%) over the first nine months of 2025, primarily due to the MidWestOne acquisition. Average interest-bearing core deposits increased $3.8 billion, while average brokered deposits decreased $99 million between the comparable nine-month periods. The mix of average interest-bearing liabilities was comprised of 94% core deposits, 5% brokered deposits and 1% wholesale funding for the first nine months of 2026, compared to 88%, 10%, and 2% respectively, for the first nine months of 2025.

The interest rate spread increased 54 bps between the comparable nine-month periods. The loan yield improved 7 bps to 6.26% between the comparable nine-month periods, and included the impact of loan purchase accounting accretion as well as the repricing of new and renewed loans. The yield on investment securities increased 79 bps to 4.04%, also impacted by purchase accounting accretion as well as the discount accretion on the early call of a municipal bond, while the yield on other interest-earning assets (mostly cash) decreased 83 bps to 3.72%, consistent with Federal Reserve interest rate movements. The cost of interest-bearing liabilities decreased 49 bps to 2.32% for the first nine months of 2026, mostly due to lower deposit costs. As a result, the tax-equivalent net interest margin was 4.11% for the first nine months of 2026, a 39 bps increase over 3.72% for the first nine months of 2025.

Provision for Credit Losses

The provision for credit losses was $9.5 million for the nine months ended September 30, 2026, compared to $3.5 million for the nine months ended September 30, 2025. The increase was primarily driven by provision expense of $4.7 million for the ACL on unfunded commitments related to the MidWestOne acquisition.

The provision for credit losses is predominantly a function of Nicolet’s methodology and judgment as to qualitative and quantitative factors used to determine the appropriateness of the ACL. The appropriateness of the ACL-Loans is affected by changes in the size and character of the loan portfolio, changes in levels of collateral dependent and other nonperforming loans, historical losses and delinquencies in each portfolio segment, the risk inherent in specific loans, concentrations of loans to specific borrowers or industries, existing and future economic conditions, the fair value of underlying collateral, and other factors which could affect expected credit losses. The ACL for securities is affected by the risk of the underlying issuer, while the ACL for unfunded commitments is affected by many of the same factors as the ACL-Loans, as well as funding assumptions relative to lines of credit. See also Note 6, “Loans, Allowance for Credit Losses - Loans, and Credit Quality” of the Notes to Unaudited Consolidated Financial Statements under Part I, Item 1, for additional disclosures. For additional information regarding asset quality and the ACL-Loans, see “BALANCE SHEET ANALYSIS — Loans,” “— Allowance for Credit Losses - Loans,” and “— Nonperforming Assets.”

Noninterest Income

Table 4: Noninterest Income

(in thousands)

N/M means not meaningful.

Noninterest income was $94 million for the nine months ended September 30, 2026, $31 million (50%) higher than the comparable period of 2025, with growth in most core noninterest income categories primarily due to the acquisition of MidWestOne. Noninterest income excluding net asset gains (losses) for the first nine months of 2026 was $93 million, a $31 million (50%) increase over the first nine months of 2025.

Wealth management fee income was $35 million, up $14 million (63%) from the first nine months of 2025, with growth in accounts and assets under management primarily due to the MidWestOne acquisition.

Mortgage income includes net gains received from the sale of residential real estate loans into the secondary market, capitalized mortgage servicing rights (“MSR”), servicing fees net of MSR amortization, fair value marks on the mortgage interest rate lock commitments and forward commitments (“mortgage derivatives”), and MSR valuation changes, if any. Net mortgage income of $11 million increased $2 million (28%) between the comparable nine-month periods, mostly due to higher secondary market volumes and the related gains on sales. See also Note 7, “Goodwill and Other Intangibles and Servicing Rights” of the Notes to Unaudited Consolidated Financial Statements under Part I, Item 1, for additional disclosures on the MSR asset.

Service charges on deposit accounts were $11 million, up $5 million (87%) from the first nine months of 2025, on growth in both accounts and account analysis fees, mostly driven by the MidWestOne acquisition.

Card interchange income of $17 million increased $7 million (61%) and BOLI income of $7 million increased $2 million (46%) from the first nine months of 2025, both primarily due to the acquisition of MidWestOne.

Other income of $9 million for the nine months ended September 30, 2026 increased $3 million (56%) from the comparable 2025 period, primarily due to the acquisition of MidWestOne.

Net asset gains of $0.9 million for the first nine months of 2026 were primarily due to favorable fair value marks on an equity security partly offset by write-downs on other investments, while net asset gains of $0.7 million for the first nine months of 2025 were mostly due to favorable fair value marks on equity securities.

Noninterest Expense

Table 5: Noninterest Expense

($ in thousands)

Noninterest expense was $305 million for the nine months ended September 30, 2026, an increase of $157 million (106%) over the comparable period of 2025. Personnel costs increased $51 million (60%), while non-personnel expenses combined increased $106 million (169%), primarily due to the acquisition of MidWestOne.

Personnel expense was $136 million for the nine months ended September 30, 2026, an increase of $51 million (60%) from the comparable period in 2025, reflecting a larger employee base due to the acquisition of MidWestOne, as well as merit increases between the years.

Occupancy, equipment and office expense was $45 million for the nine months ended September 30, 2026, up $18 million (64%) from the comparable period in 2025, mostly due to an expanded footprint resulting from the acquisition of MidWestOne.

Data processing expense was $21 million, up $7 million (52%) between the comparable nine-month periods, mostly due to the MidWestOne acquisition.

Intangibles amortization increased $12 million between the comparable nine-month periods due to increased amortization on newly established intangibles from the MidWestOne acquisition.

Merger-related expense of $53 million for the nine months ended September 30, 2026, primarily included compensation for severance and contract termination charges, as well as legal and professional expenses.

Other expense was $20 million, up $12 million (153%) between the comparable nine-month periods, including a $5 million loss on the early redemption of junior subordinated debentures, as well as higher legal and professional expense and higher deposit earnings credit expense.

Income Taxes

Income tax expense was $37 million (effective tax rate of 21.3%) for the first nine months of 2026, compared to income tax expense of $26 million (effective tax rate of 19.3%) for the comparable period of 2025.

Income Statement Analysis – Three Months Ended September 30, 2026 versus Three Months Ended September 30, 2025

Net income was $64 million for the three months ended September 30, 2026, compared to net income of $42 million for the three months ended September 30, 2025. Earnings per diluted common share was $2.96 for third quarter 2026, compared to $2.73 for third quarter 2025.

Tax-equivalent net interest income was $144 million for third quarter 2026, an increase of $64 million from third quarter 2025. Interest income increased $81 million over third quarter 2025, while interest expense increased $17 million from third quarter 2025, primarily due to the MidWestOne acquisition. Average interest-earning assets increased $5.4 billion between the comparable third quarter periods, while average interest-bearing liabilities increased $4.1 billion, also primarily due to the acquisition of MidWestOne. For additional information regarding average balances, net interest income and net interest margin, see “INCOME STATEMENT ANALYSIS — Net Interest Income.”

The net interest margin for third quarter 2026 was 4.19%, up 33 bps compared to 3.86% for third quarter 2025, with a portion of the increase attributable to loan purchase accounting accretion (which added 23 bps and 7 bps to the comparable third quarter periods of 2026 and 2025, respectively). The yield on interest-earning assets of 5.88% increased 3 bps from third quarter 2025, while the cost of funds of 2.30% decreased 46 bps between the comparable quarters.

Provision for credit losses was $2.0 million for third quarter 2026, compared to $1.0 million provision for credit losses for third quarter 2025. For additional information regarding the allowance for credit losses-loans and asset quality, see “BALANCE SHEET ANALYSIS — Allowance for Credit Losses - Loans” and “BALANCE SHEET ANALYSIS — Nonperforming Assets.”

Noninterest income was $32 million for third quarter 2026, an increase of $9 million (36%) from third quarter 2025. Excluding net asset gains (losses), noninterest income was up $10 million (47%), including a $5 million increase in wealth management fee income, a $3 million increase in card interchange income, and a $2 million increase in service charges on deposit accounts, all mostly due to the MidWestOne acquisition. For additional information regarding noninterest income, see “INCOME STATEMENT ANALYSIS — Noninterest Income.”

Noninterest expense was $91 million for third quarter 2026, an increase of $41 million (82%) from third quarter 2025. Personnel expense increased $18 million, reflecting the larger employee base post-acquisition. Non-personnel expenses increased $24 million, including merger-related expenses of $5 million, as well as higher overall expense for the larger operating base post-acquisition. For additional information regarding noninterest expense, see “INCOME STATEMENT ANALYSIS — Noninterest Expense.”

Income tax expense was $17.5 million (effective tax rate of 21.5%) for third quarter 2026, compared to $10.1 million (effective tax rate of 19.5%) for third quarter 2025.

BALANCE SHEET ANALYSIS

At September 30, 2026, period end assets were $15.1 billion, an increase of $5.9 billion (64%) from December 31, 2025, primarily due to the MidWestOne acquisition. Total loans increased $4.0 billion (59%) from December 31, 2025, across various loan categories primarily due to the MidWestOne acquisition. Total deposits were $12.6 billion at September 30, 2026, an increase of $4.9 billion (63%) from December 31, 2025, including a $4.9 billion increase in customer (core) deposits and a $72 million decrease in brokered deposits, primarily due to the MidWestOne acquisition. Long-term borrowings decreased $42 million from December 31, 2025 due to the early redemption of junior subordinated debentures. Total stockholders’ equity was $2.2 billion at September 30, 2026, an increase of $1.0 billion over December 31, 2025, primarily due to the issuance of common stock in the MidWestOne acquisition and current earnings, partly offset by common stock repurchases, unfavorable market valuations on the investment portfolio from recent interest rate increases, and the quarterly common stock dividend.

Loans

Nicolet services a diverse customer base primarily throughout Wisconsin, Michigan, Iowa, and Minnesota. We concentrate on originating loans in our local markets and assisting current loan customers. Nicolet actively utilizes government loan programs such as those provided by the U.S. Small Business Administration (“SBA”) and the U.S. Department of Agriculture’s Farm Service Agency (“FSA”).

An active credit risk management process is used to ensure that sound and consistent credit decisions are made. The credit management process is regularly reviewed and has been modified over the past several years to further strengthen the controls. Factors that are important to managing overall credit quality are sound loan underwriting and administration, systematic monitoring of existing loans and commitments, effective loan review on an ongoing basis, early problem loan identification and remedial action to minimize losses, an appropriate ACL-Loans, and sound nonaccrual and charge-off policies.

For additional disclosures on loans, see also Note 6, “Loans, Allowance for Credit Losses - Loans, and Credit Quality,” in the Notes to Unaudited Consolidated Financial Statements under Part I, Item 1. For information regarding the allowance for credit losses and nonperforming assets see “BALANCE SHEET ANALYSIS – Allowance for Credit Losses - Loans” and “BALANCE SHEET ANALYSIS – Nonperforming Assets.” A detailed discussion of the loan portfolio accounting policies, general loan portfolio characteristics, and credit risk are described in Note 1, “Nature of Business and Significant Accounting Policies,” of the Notes to Consolidated Financial Statements, included in Part II, Item 8 of the Company’s 2025 Annual Report on Form 10-K.

Table 6: Period End Loan Composition

(in thousands)

As noted in Table 6 above, the loan portfolio at September 30, 2026, was 79% commercial-based and 21% retail-based. Commercial-based loans are considered to have more inherent risk of default than retail-based loans, in part because of the broader list of factors that could impact a commercial borrower negatively. In addition, the commercial balance per borrower is typically larger than that for retail-based loans, implying higher potential losses on an individual customer basis. Credit risk on commercial-based loans is largely influenced by general economic conditions and the resulting impact on a borrower’s operations or on the value of underlying collateral, if any.

Total loans of $10.9 billion at September 30, 2026, increased $4.0 billion (59%) from December 31, 2025, across various loan categories, primarily due to the MidWestOne acquisition. At September 30, 2026, commercial and industrial loans and CRE investment loans represented the largest segments of Nicolet’s loan portfolio, with each at 21% of the total portfolio. The next largest segment was agricultural, representing 17% of the total loan portfolio. The loan portfolio is widely diversified and included the following industries: manufacturing, wholesaling, paper, packaging, food production and processing, agriculture, forest products, hospitality, retail, service, and businesses supporting the general building industry. The following chart provides the distribution of our loan portfolio at September 30, 2026.

Total Loan Portfolio by Industry Type (based on NAICS codes)

The following tables present the maturity distribution of the loan portfolio.

Table 7**: Loan Maturity Distribution**

(in thousands)

(in thousands)

* The residential construction loans with a loan maturity after five years represent a construction to permanent loan product.

Allowance for Credit Losses - Loans

For the updated allowance for credit losses accounting policy, see Note 1, “Basis of Presentation” and for additional disclosures on the allowance for credit losses, see Note 6, “Loans, Allowance for Credit Losses - Loans, and Credit Quality,” in the Notes to Unaudited Consolidated Financial Statements under Part I, Item 1. A detailed discussion of the loan portfolio accounting policies, general loan portfolio characteristics, and credit risk are described in Note 1, “Nature of Business and Significant Accounting Policies,” of the Notes to Consolidated Financial Statements, included in Part II, Item 8 of the Company’s 2025 Annual Report on Form 10-K.

Credit risks within the loan portfolio are inherently different for each loan type. Credit risk is controlled and monitored through the use of lending standards, a thorough review of potential borrowers, and ongoing review of loan payment performance. Active asset quality administration, including early problem loan identification and timely resolution of problems, aids in the management of credit risk and minimization of loan losses. Loans charged off are subject to continuous review, and specific efforts are taken to achieve maximum recovery of principal, interest, and related expenses. For additional information regarding nonperforming assets see also “BALANCE SHEET ANALYSIS – Nonperforming Assets.”

Management performs ongoing intensive analysis of the loan portfolio to allow for early identification of customers experiencing financial difficulties, maintains prudent underwriting standards, understands the economy of its markets, and considers the trend of deterioration in loan quality in establishing the level of the ACL-Loans. In addition, various regulatory agencies periodically review the ACL-Loans, and may require the Company to make additions to the ACL-Loans or may require that certain loan balances be charged off or downgraded into classified loan categories when their credit evaluations differ from those of management based on their judgments of collectability from information available to them at the time of their examination.

At September 30, 2026, the ACL-Loans was $135 million and represented 1.24% of period end loans, compared to $69 million (or 1.01% of period end loans) at December 31, 2025 and $69 million (or 1.00% of period end loans) at September 30, 2025. The increase in the ACL-Loans was primarily due to the acquisition of MidWestOne. The components of the ACL-Loans are detailed further in Table 8 below.

Table 8: Allowance for Credit Losses - Loans

(in thousands)

44

Nonperforming Assets

As part of its overall credit risk management process, management is committed to an aggressive problem loan identification philosophy. This philosophy has been implemented through the ongoing monitoring and review of all pools of risk in the loan portfolio to identify problem loans early and minimize the risk of loss. For additional disclosures on credit quality, see Note 6, “Loans, Allowance for Credit Losses - Loans, and Credit Quality” of the Notes to Unaudited Consolidated Financial Statements under Part I, Item 1. For additional information on loans see “BALANCE SHEET ANALYSIS – Loans” and for additional information on the ACL-Loans see “BALANCE SHEET ANALYSIS – Allowance for Credit Losses-Loans.”

Nonperforming loans are considered one indicator of potential future loan losses. Nonperforming loans are defined as nonaccrual loans and loans 90 days or more past due but still accruing interest. Loans are generally placed on nonaccrual status when contractually past due 90 days or more as to interest or principal payments. Additionally, whenever management becomes aware of facts or circumstances that may adversely impact the collectability of principal or interest on loans, it is management’s practice to place such loans on nonaccrual status immediately. Nonperforming assets include nonperforming loans and other real estate owned (“OREO”). At September 30, 2026, nonperforming assets were $78 million and represented 0.52% of total assets, compared to 0.35% of total assets at December 31, 2025, and 0.31% of total assets at September 30, 2025, with the increase primarily due to the acquisition of MidWestOne.

The level of potential problem loans is another consideration in evaluating the relative level of risk in the loan portfolio and the appropriate level of the ACL-Loans. Potential problem loans are generally defined by management to include loans rated as Substandard by management but that are in performing status; however, there are circumstances present which might adversely affect the ability of the borrower to comply with present repayment terms. The decision of management to include performing loans in potential problem loans does not necessarily mean that Nicolet expects losses to occur, but that management recognizes a higher degree of risk associated with these loans. The loans that have been reported as potential problem loans are predominantly commercial-based loans covering a diverse range of businesses and real estate property types. Potential problem loans were $184 million (2% of loans) and $71 million (1% of loans) at September 30, 2026 and December 31, 2025, respectively, with the increase primarily due to the acquisition of MidWestOne. Potential problem loans require heightened management review given the pace at which a credit may deteriorate, the potential duration of asset quality stress, and uncertainty around the magnitude and scope of economic stress that may be felt by Nicolet’s customers and on the underlying real estate or collateral values.

Table 9: Nonperforming Assets

(in thousands)

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Deposits

Deposits represent Nicolet’s largest source of funds, and provide a stable, lower-cost funding source. Deposit levels may be impacted by competition with other bank and nonbank institutions, as well as with a number of non-deposit investment alternatives available to depositors. Deposit challenges include competitive deposit product features, price changes on deposit products given movements in the interest rate environment and other competitive pricing pressures, and customer preferences regarding higher rate deposit products or non-deposit investment alternatives.

Total deposits of $12.6 billion at September 30, 2026, increased $4.9 billion (63%) from December 31, 2025, due to the MidWestOne acquisition. Core deposit balances of $12.3 billion at September 30, 2026, increased $4.9 billion from December 31, 2025, while brokered deposits decreased $72 million. The deposit composition is presented in Table 10 below.

Table 10: Period End Deposit Composition

(in thousands)

* During first quarter 2026, Nicolet reclassified fully reciprocated deposit balances with ICS from brokered deposits to core deposits to be more consistent with the presentation typically used by peer banks. The ICS reciprocal deposits are part of the IntraFi Network Deposits program, which is used by financial institutions to distribute deposits that exceed FDIC insurance coverage limits to numerous institutions in order to provide insurance coverage for all participating deposits. Prior periods have been restated to reflect this change. There was no change to total deposits or the deposit categories resulting from the reclassification.

Total estimated uninsured deposits were $3.7 billion (representing 29% of total deposits) at September 30, 2026, compared to $2.5 billion (representing 32% of total deposits) at December 31, 2025.

Liquidity Management

Liquidity management refers to the ability to ensure that adequate liquid funds are available to meet the current and future cash flow obligations arising in the daily operations of the Company. These cash flow obligations include the ability to meet the commitments to borrowers for extensions of credit, accommodate deposit cycles and trends, fund capital expenditures, pay dividends to stockholders (if any), and satisfy other operating expenses. The Company’s most liquid assets are cash and due from banks and interest-earning deposits, which totaled $511 million and $660 million at September 30, 2026 and December 31, 2025, respectively. Balances of these liquid assets are dependent on our operating, investing, and financing activities during any given period.

The $150 million decrease in cash and cash equivalents since year-end 2025 included $182 million net cash provided by operating activities (mostly earnings), $21 million net cash provided by investing activities (with net cash acquired from MidWestOne and proceeds from investment sales, calls and maturities used to fund loan growth and new investment purchases), and $353 million net cash used in financing activities (mostly deposit declines, repayments of borrowings, and common stock repurchases). As of September 30, 2026, management believed that adequate liquidity existed to meet all projected cash flow obligations.

Nicolet’s primary sources of funds include the core deposit base, repayment and maturity of loans, investment securities calls, maturities, and sales, and procurement of brokered deposits or other wholesale funding. At September 30, 2026, approximately 30% of the investment securities portfolio was pledged as collateral to secure public deposits and borrowings, as applicable, and for liquidity or other purposes as required by regulation. Liquidity sources available to the Company at September 30, 2026, are presented in Table 11 below.

Table 11: Liquidity Sources

(in millions)

Management is committed to the Parent Company being a source of strength to the Bank and its other subsidiaries, and therefore, regularly evaluates capital and liquidity positions of the Parent Company in light of current and projected needs, growth or strategies. The Parent Company uses cash for normal expenses, dividend payments, debt service requirements, and, when opportune, for common stock repurchases, repayment of debt, or investment in other strategic actions such as mergers or acquisitions. At September 30, 2026, the Parent Company had $43 million in cash. Additional cash sources available to the Parent Company include access to the public or private markets to issue new equity, subordinated notes or other debt. Dividends from the Bank and, to a lesser extent, stock option exercises, represent significant sources of cash flows for the Parent Company. The Bank is required by federal law to obtain prior approval of the OCC for payments of dividends if the total of all dividends declared by the Bank in any year will exceed certain thresholds. Management does not believe that regulatory restrictions on dividends from the Bank will adversely affect its ability to meet its cash obligations.

Interest Rate Sensitivity Management and Impact of Inflation

A reasonable balance between interest rate risk, credit risk, liquidity risk and maintenance of yield, is highly important to Nicolet’s business success and profitability. As an ongoing part of our financial strategy and risk management, we attempt to understand and manage the impact of fluctuations in market interest rates on our net interest income. The consolidated balance sheet consists mainly of interest-earning assets (loans, investments and cash) which are primarily funded by interest-bearing liabilities (deposits and borrowings). Such financial instruments have varying levels of sensitivity to changes in market rates of interest. Market rates are highly sensitive to many factors beyond our control, including but not limited to general economic conditions and policies of government and regulatory authorities. Our operating income and net income depend, to a substantial extent, on “rate spread” (i.e., the difference between the income earned on loans, investments and other earning assets and the interest expense paid to obtain deposits and other funding liabilities).

Asset-liability management policies establish guidelines for acceptable limits on the sensitivity to changes in interest rates on earnings and market value of assets and liabilities. Such policies are set and monitored by management and the Board of Directors’ Asset and Liability Committee.

To understand and manage the impact of fluctuations in market interest rates on net interest income, we measure our overall interest rate sensitivity through a net interest income analysis, which calculates the change in net interest income in the event of hypothetical changes in interest rates under different scenarios versus a baseline scenario. Such scenarios can involve static balance sheets, balance sheets with projected growth, parallel (or non-parallel) yield curve slope changes, immediate or gradual changes in market interest rates, and one-year or longer time horizons. The simulation modeling uses assumptions involving market spreads, prepayments of rate-sensitive instruments, renewal rates on maturing or new loans, deposit retention rates, and other assumptions.

Among other scenarios, we assessed the impact on net interest income in the event of a gradual +/-100 bps and +/-200 bps change in market rates (parallel to the change in prime rate) over a one-year time horizon to a static (flat) balance sheet. The results provided include the liquidity measures mentioned above and reflect the current interest rate environment. The interest rate scenarios are used for analytical purposes only and do not necessarily represent management’s view of future market interest rate movements. Based on financial data at September 30, 2026 and December 31, 2025, the projected changes in net interest income over a one-year time horizon, versus the baseline, are presented in Table 12 below. The results are in compliance with Nicolet’s policy guidelines.

Table 12: Interest Rate Sensitivity

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Actual results may differ from these simulated results due to timing, magnitude and frequency of interest rate changes, as well as changes in market conditions and their impact on customer behavior and management strategies.

The effect of inflation on a financial institution differs significantly from the effect on an industrial company. While a financial institution’s operating expenses, particularly salary and employee benefits, are affected by general inflation, the asset and liability structure of a financial institution consists largely of monetary items. Monetary items, such as cash, investments, loans, deposits, and borrowings, are those assets and liabilities which are or will be converted into a fixed number of dollars regardless of changes in prices. As a result, changes in interest rates have a more significant impact on a financial institution’s performance than does general inflation. Inflation may also have impacts on the Bank’s customers, on businesses and consumers and their ability or willingness to invest, save or spend, and potentially on their ability to repay loans. As such, there would likely be impacts on the general appetite for banking products and the credit health of the Bank’s customer base.

Capital

Management regularly reviews the adequacy of its capital to ensure that sufficient capital is available for current and future needs and is in compliance with regulatory guidelines. The capital position and strategies are actively reviewed in light of perceived business risks associated with current and prospective earning levels, liquidity, asset quality, economic conditions in the markets served, and level of returns available to shareholders. Management intends to maintain an optimal capital and leverage mix for growth and shareholder return. For details on the change in capital see “BALANCE SHEET ANALYSIS.”

The Company’s and the Bank’s regulatory capital ratios remain above minimum regulatory ratios, including the capital conservation buffer. At September 30, 2026, the Bank’s regulatory capital ratios qualify the Bank as well-capitalized under the prompt-corrective action framework. This strong base of capital has allowed Nicolet to be opportunistic in strategic growth. A summary of the Company’s and the Bank’s regulatory capital amounts and ratios, as well as selected capital metrics are presented in the following table.

Table 13: Capital

($ in thousands)

In managing capital for optimal return, we evaluate capital sources and uses, pricing and availability of our stock in the market, and alternative uses of capital (such as the level of organic growth or acquisition opportunities, dividends, or repayment of equity-equivalent debt) in light of strategic plans. Through an ongoing repurchase program, the Board has authorized the repurchase of Nicolet’s common stock as an alternative use of capital. At September 30, 2026, there remained $127 million authorized under this 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.

Critical Accounting Policies and Estimates

Preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying disclosures. Material estimates may be used in accounting for, among other items, the allowance for credit losses, valuation of loans in acquisition transactions, useful lives for depreciation and amortization, fair value of financial instruments, impairment calculations, valuation of deferred tax assets, uncertain income tax positions, and contingencies. These estimates and assumptions are based on management’s knowledge of historical experience, current information, and other factors deemed to be relevant; accordingly, as this information changes, actual results could differ from those estimates. Factors that may cause sensitivity to the aforementioned estimates include but are not limited to: external market factors such as market interest rates and employment rates, changes to operating policies and procedures, changes in applicable banking or tax regulations, and changes to deferred tax estimates. Nicolet considers accounting estimates to be critical to reported financial results if the accounting estimate requires management to make assumptions about matters that are highly uncertain and different estimates that management reasonably could have used for the accounting estimate in the current period, or changes in the accounting estimate that are reasonably likely to occur from period to period, could have a material impact on the financial statements. The accounting estimates we consider to be critical are the determination of the allowance for credit losses and accounting for business combinations. The Company implemented a new model for the estimation of the allowance for credit losses - loans in first quarter 2026.

Allowance for Credit Losses - Loans

Management’s evaluation process used to determine the appropriateness of the Allowance for Credit Losses - Loans (“ACL-Loans”) is inherently subjective as it requires material estimates and assumptions. The ACL-Loans represents management's best estimate of lifetime credit losses for loans. Under the current expected credit losses (“CECL”) guidance, management has flexibility in selecting the methodology for estimating expected credit losses, which must be calculated over the asset’s contractual term, and adjusted for prepayments or curtailments, utilizing quantitative and qualitative factors. Management uses complex models to forecast future economic conditions based on specific macroeconomic variables for each loan pool.

The appropriateness of the ACL is monitored, considering factors such as: CECL model outputs; loan portfolio quality and risk ratings; economic conditions; loan concentrations and growth rates; past due and nonperforming trends; specific loss estimates for significant problem loans; historical charge-off and recovery experience. Nicolet uses economic projections from a reputable and independent third party to inform its loss driver forecasts over the forecast period. Other internal and external indicators of economic forecasts are also considered by management when developing the forecast metrics.

Since economic conditions and forecasts can change, and future events are inherently difficult to predict, the estimated credit losses on loans, and therefore the appropriateness of the ACL, could change significantly. It is challenging to estimate how changes in any single economic factor or input might affect the overall allowance, as many factors and inputs are considered. These changes may not occur at the same rate or be consistent across all product types. Additionally, improvements in one factor may offset deterioration in others.

Accounting for Business Combinations

We account for acquisitions under Financial Accounting Standards Board (“FASB”) ASC Topic 805, Business Combinations, which requires the use of the acquisition method of accounting. Assets acquired and liabilities assumed in a business combination are recorded at the estimated fair value on their purchase date. The fair value adjustments assigned to assets and liabilities, as well as their related useful lives, are subject to judgment and estimation by management. Valuation of intangible assets is generally based on the estimated cash flows related to those assets, while the initial value assigned to goodwill is the residual of the purchase price over the fair value of all identifiable assets acquired and liabilities assumed. When amounts allocated to assets acquired and liabilities assumed are greater than the purchase price, a bargain purchase gain is recognized. Useful lives are determined based on the expected future period of the benefit of the asset or liability, the assessment of which considers various characteristics of the asset or liability, including the historical cash flows.

There have been no material changes in our market risk at September 30, 2026, from that presented in our 2025 Annual Report on Form 10-K. See section “Interest Rate Sensitivity Management and Impact of Inflation” within Management’s Discussion and Analysis of Financial Condition and Results of Operations under Part I, Item 2, for our interest rate sensitivity position at September 30, 2026.

(a) Disclosure Controls and Procedures. Management, under the supervision, and with the participation, of our principal executive officer and principal financial officer, evaluated our disclosure controls and procedures (as such term is defined in Exchange Act Rule 13a-15(e)). Based upon that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

(b) Changes in Internal Control Over Financial Reporting. There were no changes in the Company’s internal control over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f)) during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.