Nicolet(US:NIC)2023-05-02 20:16Financial Performance - For Q1 2023, Nicolet reported a net interest income of $56.721 million, a decrease of 16.7% from $68.092 million in Q4 2022[133]. - Noninterest income for Q1 2023 was a loss of $21.844 million, a significant decline from a gain of $14.846 million in Q4 2022[133]. - Nicolet's net income for Q1 2023 was a loss of $8.898 million, compared to a profit of $27.601 million in Q4 2022[133]. - Nicolet reported a net loss of $9 million for Q1 2023, translating to a loss per diluted common share of $0.61, compared to a net income of $28 million (earnings per diluted common share of $1.83) in Q4 2022[139]. - The net interest margin for Q1 2023 was 2.91%, a decrease of 32 basis points from the same period in 2022, with net interest income increasing by $2.9 million (5%) year-over-year[144]. - Noninterest income was negative $21.8 million for Q1 2023, a $37.8 million unfavorable change compared to Q1 2022, while excluding net asset gains, it increased by $2.0 million[144]. - Noninterest expense rose to $44.9 million for Q1 2023, an increase of $7.3 million (20%) compared to Q1 2022, driven by higher personnel and non-personnel costs[144]. Asset and Liability Management - Total assets as of March 31, 2023, were $8.192 billion, down from $8.764 billion at the end of 2022[133]. - Loans increased to $6.224 billion as of March 31, 2023, from $6.180 billion at the end of 2022[133]. - Deposits decreased to $6.929 billion as of March 31, 2023, from $7.179 billion at the end of 2022[133]. - Total assets decreased by $572 million (7%) to $8.2 billion from December 31, 2022, but increased by $872 million (12%) compared to March 31, 2022, due to the acquisition of Charter and strong organic loan growth[141]. - Total loans increased by $43 million (3% annualized) to $6.2 billion from December 31, 2022, with commercial and industrial loans representing 21% of the total portfolio[179]. - Total deposits were $6.93 billion at March 31, 2023, down from $7.18 billion at December 31, 2022[195]. - Total uninsured deposits were $1.9 billion (27% of total deposits) at March 31, 2023, compared to $2.1 billion (29%) at December 31, 2022[195]. Credit Quality - The provision for credit losses increased to $3.090 million in Q1 2023, compared to $1.850 million in Q4 2022[133]. - The provision for credit losses was $3.1 million for Q1 2023, compared to $0.3 million in Q1 2022, reflecting growth and changes in the loan portfolio[156]. - Nonperforming assets totaled $41 million at March 31, 2023, representing 0.50% of total assets, compared to $40 million (0.46%) at December 31, 2022[190]. - Potential problem loans were $76 million (1% of loans) at March 31, 2023, an increase from $53 million (1% of loans) at December 31, 2022, primarily due to the downgrade of one commercial credit relationship[191]. - As of March 31, 2023, the Allowance for Credit Losses on Loans (ACL-Loans) was $62 million, representing 1.00% of period-end loans, unchanged from December 31, 2022, and up from $50 million (1.07%) at March 31, 2022[187]. Capital and Liquidity - The total risk-based capital for the Company is $886,051 thousand, with a total capital ratio of 12.3% as of March 31, 2023[214]. - The Bank's total risk-based capital is $813,992 thousand, maintaining a total capital ratio of 11.3%[214]. - The Company’s Tier 1 capital ratio is 9.4% as of March 31, 2023, slightly down from 9.5% at December 31, 2022[214]. - Management believes that adequate liquidity exists to meet all projected cash flow obligations as of March 31, 2023[200]. - As of March 31, 2023, the total contingent funding availability is $2,246 million, with short-term funding availability at $1,533 million[202]. - The Parent Company had $62 million in cash as of March 31, 2023, and has access to public or private markets for additional funding[204]. Economic Outlook - The economic outlook remains uncertain, with expectations of a mild recession over the next year, despite a strong labor market[131]. - Interest rate sensitivity analysis indicates a projected decrease in net interest income of 0.1% for a 100 bps decrease in interest rates over a one-year horizon[210]. - The cost of funds increased by 195 basis points to 2.30% for Q1 2023, reflecting the rising interest rate environment and a shift in the mix of interest-bearing liabilities[154]. - The interest rate spread decreased by 94 basis points year-over-year, as liabilities repriced faster than assets in a rising interest rate environment[154]. Operational Highlights - Core banking operations generated an adjusted net income of $22 million, driven by growth in loans and wealth management fee revenue, with nonperforming assets at 0.50% of total assets[140]. - Card interchange income grew by $0.5 million (18%) year-over-year due to higher volume and activity[162]. - Business development and marketing expenses increased by $0.3 million (16%) to $2.1 million, driven by marketing efforts to support the expanded branch network[170]. - Data processing expenses rose by $0.6 million (18%) to $4.0 million, largely due to volume-based increases from the Charter acquisition[170]. - Intangibles amortization increased by $0.7 million due to higher amortization from recent acquisitions[171].