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Nicolet Bankshares Q1 net income $10.3 million

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Christian Fernsby |
Nicolet Bankshares
Nicolet Bankshares   Annualized quarterly return on average assets was 1.37%, 1.44% and 1.34

Nicolet Bankshares announced first quarter 2019 net income of $10.3 million and earnings per diluted common share of $1.05, compared to $10.9 million and $1.11 for fourth quarter 2018, and $9.6 million and $0.94 for first quarter 2018, respectively.

Annualized quarterly return on average assets was 1.37%, 1.44% and 1.34%, for first quarter 2019, fourth quarter 2018 and first quarter 2018, respectively.

On March 31, 2019, assets were $3.0 billion and deposits were $2.5 billion, each down $0.2 billion compared to a year ago, with March 31, 2018 assets and deposits carrying a $0.3 billion short-term transaction deposit of a long-standing commercial customer.

Assets and deposits were both down slightly from December 31, 2018, reflecting a usual cyclical decline.

Loans were $2.2 billion at March 31, 2019, $89 million or 4% higher than a year ago and $24 million or 4% annualized over year-end 2018.

Quarterly average loans continued on a rising trend, up $65 million or 3% over first quarter 2018 and $37 million or 7% annualized over fourth quarter 2018, while quarterly average deposits funded the growth, increasing $121 million or 5% over the comparable quarter and $39 million or 6% annualized over the linked quarter.

Net income was $10.3 million for the three months ended March 31, 2019, up $0.7 million or 7% higher than the first quarter of 2018.

Net interest income increased $0.6 million or 2%, despite $1.6 million lower aggregate discount income, predominantly attributable to a favorably resolved impaired commercial credit in first quarter 2018.

Net interest income and margin improvements, excluding the aggregate discount income between the first quarter periods, benefited from higher average earning assets, improving yields from new and repricing assets in the rising rate environment, and pricing discipline on deposits.

Noninterest income increased $0.4 million (4%), provision for loan losses declined $0.3 million on stronger asset quality, and noninterest expense increased $0.1 million (under 1%) between the first quarter periods.

Net income for first quarter 2019 was down $0.6 million or 5% compared to fourth quarter 2018, largely due to the first quarter having fewer earning days, as well as slower mortgage business and higher expenses that reset in the new year.

Compared to fourth quarter 2018, net interest income increased $0.4 million (2%), with fewer earning days reducing net interest income $0.4 million, though more than offset by favorable volumes and rates, as well as $0.2 million higher aggregate discount income between the linked quarters.

Noninterest income was down $0.6 million or 6% from fourth quarter, led by seasonally lower mortgage volumes.

Noninterest expense increased $1.1 million or 5%, due principally to a $1.2 million (or 11%) increase in personnel expense, slightly offset by a $0.1 million decrease in all other noninterest expenses combined (which included fraud contingency expenses of $0.3 million in first quarter 2019 and $0.5 million in fourth quarter 2018).

The linked quarter increase in personnel expense was mostly due to salary merit increases of $0.2 million (3%), a $0.6 million increase in cash and equity incentives expense (largely resets, compared to adjustments in fourth quarter that lowered incentive amounts), and a $0.4 million increase in 401(k) expense.

Income tax expense decreased $0.7 million between the linked quarters, on lower pre-tax income and a lower effective tax rate.

Asset quality remains exceptional.

The allowance for loan losses remained at 0.61% of total loans at March 31, 2019.

The provision for loan losses was $0.2 million for first quarter 2019 (with negligible net recoveries), compared to $0.2 million (covering $0.1 million net charge-offs) and $0.5 million (covering $0.4 million net charge-offs) for the fourth and first quarters of 2018, respectively.

Nonperforming assets were $9 million, representing 0.30% of total assets at March 31, 2019.

Total capital was $399 million at March 31, 2019, an increase of $12 million or 3% since December 31, 2018, with first quarter earnings and net fair value investment changes partly offset by stock repurchases.

During first quarter 2019, we utilized $5.6 million to repurchase and cancel approximately 102,700 shares of our common stock pursuant to our common stock repurchase program, compared to full year 2018 repurchase activity of approximately 408,100 common shares for $22.2 million.

On February 19, 2019, our board authorized an increase to the program of $12 million.

As a result, at March 31, 2019, there remained $14.1 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.

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