NIC 10-K & 10-Q changes, risk factors and insider trading

Although our current strategy is expected to evolve as business conditions change, our current strategy is to continue to invest resources in expanding our banking businesses and operations as we continue the integration of the businesses and operations of recent acquisitions, and seek to exploit opportunities for cost and revenue synergies. In the future, we expect to continue to nurture profitable organic growth as well as pursue acquisitions or strategic transactions if appropriate opportunities, within or outside of our current markets, present themselves. Our failure or inability to successfully implement those strategies could have a material and adverse effect on our results of operation and financial condition.

Expanding in our current markets and selecting attractive new growth markets by opening additional branches and service locations or through acquisitions of all or part of other financial institutionsinstitutions, including MidWestOne, involve risks, any one of which could result in a material and adverse effect upon our results of operation or financial condition. These risks include, without limitation, the following:

•our inability to realize certain assumptions and estimates necessary to preserve the expected financial benefits of the transaction;

•any inability to retain core clients and key associates.associates of any business that we acquire.

•our inability to manage effectively and efficiently the changes and adaptations necessitated by a complex, burdensome, and evolving regulatory environment Although we have in place strategies designed to achieve those elements that are significant to us at present, our challenge is to execute those strategies and adjust them, or adopt new strategies, as conditions change.environment.

A number of recent technologies have worked with the existing financial system and traditional banks, such as the evolution of ATM cards into debit/credit cards and the evolution of debit/credit cards into smart phones. These sorts of technologies often have expanded the market for banking services overall while siphoning a portion of the revenues from those services away from banks and disrupting prior methods of delivering those services. Additionally, some recent innovations may tend to replace traditional banks as financial service providers rather than merely augmenting those services. For example, companies which claim to offer applications and services based on artificial intelligence are beginning to compete much more directly with traditional financial services companies in areas involving personal advice, including high-margin services such as financial planning and wealth management. The low-cost, high-speed nature of these “robo-advisor” services can be especially attractive to younger, less-affluent clients and potential clients, as well as persons interested in “self-service” investment management. The rapid growth of stablecoins, accelerated by regulatory frameworks like the Genius Act, has raised important questions about their impact on traditional banking. As these digital tokens gain mainstream acceptance, they could fundamentally reshape the structure and functions of banking and influence the established intermediation role of banks. Other industry changes, such as zero-commission trading offered by certain large firms able to use trading as a loss-leader, may amplify this trend. Similarly, inventions based on blockchain technology eventually may be the foundation for greatly enhancing transactional security throughout the banking industry, but also eventually may reduce the need for banks as secure deposit-keepers and intermediaries. Our success in the competitive environment in which we operate requires consistent investment of capital and human resources in innovation, particularly in light of the current “FinTech” environment, in which the financial services industry is undergoing rapid technological changes and financial institutions are investing significantly in evaluating new technologies, such as artificial intelligence, machine learning, digital assets, blockchain and other distributed ledger technologies, and developing potentially industry-changing new products, services and industry standards. Our investment is directed at generating new products and services, and adapting existing products and services to the evolving standards and demands of the marketplace. Among other things, investing in innovation helps us maintain a mix of products and services that keeps pace with our competitors and achieveachieves acceptable margins.

Our ability to conduct and grow our businesses dependdepends in part upon our ability to create, maintain, expand, and evolve an appropriate operational and organizational infrastructure, manage expenses, and recruit and retain personnel with the ability to manage a complex business.

Operational risk can arise in many ways, including: errors related to failed or inadequate physical, operational, information technology, or other processes; faulty or disabled computer or other technology systems; fraud, theft, physical security breaches, electronic data and related security breaches, or other criminal conduct by associates or third parties; and exposure to other external events. Inadequacies may present themselves in myriad ways. Actions taken to manage one risk may be ineffective against others. For example, information technology systems may be sufficiently redundant to withstand a fire, incursion, malware, or other major casualty, but they may be insufficiently adaptable to new business conditions or opportunities. Efforts to make systems more robust may make them less adaptable, and vice-versa. Also, our efforts to control expenses, which is a significant priority for us, increasesincrease our operational challenges as we strive to maintain high quality client service and compliance.

Cyber threats are rapidly evolvingevolving, and we may not be able to anticipate or prevent all such attacks. Among other things, damage can occur due to outright theft or extortion of our funds, fraud or identity theft perpetrated on clients, or adverse publicity associated with a breach and its potential effects. Perpetrators potentially can be associates, clients, and certain vendors, all of whom legitimately have access to some portion of our systems, as well as outsiders with no legitimate access. These risks are heightened through the increasing use of digital and mobile solutions which allow for rapid money movement and increase the difficulty to detect and prevent fraudulent transactions. Additionally, as the Company grows through acquisitions and pursues new initiatives that improve our operations and cost structure, the Company is also expanding and improving its information technologies, resulting in a larger technological presence, utilization of “cloud” computing services, and corresponding exposure to cybersecurity risk. Certain new technologies, such as use of artificial intelligence, present new and significant cybersecurity safety risks that must be analyzed and addressed before implementation. If we fail to assess and identify cybersecurity risks associated with acquisitions and new initiatives, we may become increasingly vulnerable to such risks. We may be required to spend significant capital and other resources to protect against the threat of security breaches and computer viruses, or to alleviate problems caused by security breaches or viruses. To the extent that our activities or the activities of our customers involve the storage and transmission of confidential information, security breaches (including breaches of security of customer systems and networks) and viruses could expose us to claims, litigation and other possible liabilities. Any inability to prevent security breaches or computer viruses could also cause existing customers to lose confidence in our systems and could adversely affect our reputation, results of operations and ability to attract and maintain customers and businesses. In addition, a security breach could also subject us to additional regulatory scrutiny, expose us to civil litigation and possible financial liability and cause reputational damage.

Our business is highly dependent on the successful and uninterrupted functioning of our information technology and telecommunications systems, third-party accounting systems and mobile and online banking platforms. We outsource many of our major systems, such as data processing, loan servicing and deposit processing systems and online banking platforms. While we have selected these vendors carefully, we do not control their actions. The failure of these systems, or the termination of a third-party software license or service agreement on which any of these systems is based, could interrupt our operations. Financial or operational difficulties of a vendor could also damage our operations if those difficulties interfere with the vendor’s ability to serve us. Furthermore, our vendors could also be sources of operational and information security risk to us, including from breakdowns or failures of their own systems or capacity constraints. Replacing these third-party vendors could also create significant delay and expense. Because our information technology and telecommunications systems interface with and depend on third-party systems, we could experience service denials if demand for such services exceeds capacity or such third-party systems fail or experience interruptions. If sustained or repeated, a system failure or service denial could result in a deterioration of our ability to process new and renewed loans, gather deposits and provide customer service, compromise our ability to operate effectively, damage our reputation, result in a loss of customer business and/or subject us to additional regulatory scrutiny and possible financial liability, any of which could have a material adverse effect on our financial condition and results of operations. Our ability to recoup our losses may be limited legally or practically in many situations.

Competition for management talent is substantial and increasing. Moreover, revenue growth in some business lines increasingly depends upon top talent.

The newcurrent Presidential administration has stated its intention to scrutinize the United States’ trade relationships with its economic partners, indicated an interest in renegotiating trade agreements, and stated a willingness to implement tariffs with some of the United States’ trade partners which could lead to trade wars. These statements by the administration have signaled a change in the United States’ economic policies, and it is not clear which policies, if any, will be implemented and what effect these policies may have on the local, national, and global economy. Trade wars and tariffs can affect the economy and stock prices in the United States and can impact the costs of goods paid by customers, which can affect our deposit levels and concentration, the demand for loans and other products and services and the ability of our customers to repay outstanding loans, which could adversely affect our financial condition and the results of operations.

The United States generally and the regions in which we operate specifically have recentlywithin the past few years experienced, for the first time in decades, significant inflationary pressures, evidenced by higher gas prices, higher food prices and other consumer items. While inflationary pressures lessened during 2025, the effects of inflation continue to present a risk to our borrowers and our customers. Inflation represents a loss in purchasing power because the value of investments often does not keep up with inflation and erodes the purchasing power of money and the potential value of investments over time. Accordingly, inflation can result in material adverse effects upon our customers, their businesses (as a result of rising costs, including labor) and, as a result, our financial position and results of operation. Inflation also can and does generally lead to higher interest rates, which have their own separate risks. See Risks Associated Withwith Monetary Events and Interest Rate and Yield Curve Risks in this Item 1A of this report.

Generally, in periods of economic downturns, including periods of rising interest rates and recessions, our realized credit losses increase, demand for our products and services declines, and the credit quality of our loan portfolio declines.

Our success depends significantly upon local, national and global economic and political conditions, as well as governmental monetary policies and trade relations. Our financial performance generally, and in particular the ability of borrowers to pay interest on and repay principal of outstanding loans and the value of collateral securing those loans, as well as demand for loans and other products and services we offer, is highly dependent upon the business environment in the markets where we operate and in the United States as a whole. Unlike banks that are more geographically diversified, we are a regional bank that provides services to customers primarily in Wisconsin, Michigan and Minnesota.Minnesota (and, following the acquisition of MidWestOne, Iowa). The market conditions in these markets may be different from, and could be worse than, the economic conditions in the United States as a whole. As discussed elsewhere in this Item 1A, inflationary pressures have lessened, which has caused the Federal Reserve to recently decrease interest rates. Decreases in interest rates in the past have led to increased consumer spending, which could lower consumer deposit amounts. Such a decrease in consumer deposits could cause one or more of the following negative developments:

The Federal Reserve has implemented significant economic strategies thatcan, haveand affectedoften are intended to, affect the domestic money supply, inflation, interest rates, inflation, asset values, and the shape of the yield curve. These strategies have had, and will continue to have, a significant impact on our business and on many of our clients.customers.

InAfter substantially increasing interest rates in 2022 and much of 2023, in response to inflationary pressures, thebeginning Federalwith Reservethird increased interest rates substantially. Inquarter 2024, in response to decreasing rates of inflation, the Federal Reserve decreasedbegan to decrease interest rates. Expected changes in the composition of the Federal Reserve Board, including its chairman, and continuing volatility in the economy, increases the uncertainty of future Federal Reserve actions with respect to interest rates. Fluctuations in interest rates have had and canmay continue to have significant and sometimes adverse effects upon our business as well as the business of many of our customers.

We maintain an ACL, which is a reserve established through a provision for credit losses charged to expense. The ACL reflects our assessment of the current expected losses over the life of the loan using historical experience, current conditions and reasonable and supportable forecasts. CECL has created more volatility in the level of our ACL because it relies on macroeconomic forecasts. It is possible that CECL may increase the cost of lending in the industry and result in slower loan growth and lower levels of net income. The level of the allowance reflects our continuing evaluation of factors including current economic forecasts, historical loss experience, the volume and types of loans, and specific credit risks. The determination of the appropriate level of the ACL inherently involves subjectivity in our modeling and requires us to make estimates of current credit risks and future trends, all of which may undergo material changes or vary from our historical experience. Deterioration in economic conditions affecting borrowers, changing economic forecasts, new information regarding existing loans, identification of additional problem loans and other factors, both within and outside of our control, may require an increase in the ACL. If we are required to materially increase our level of ACL for any reason, such increase could adversely affect our business, financial condition and results of operations.

We operate in heavily regulated industries. Our regulatory burdens, including both operating restrictions and ongoing compliance costs, are substantial. We are subject to many banking, deposit, insurance, securities brokerage and underwriting, and consumer lending regulations in addition to the rules applicable to all companies whose securities are publicly traded in the U.S. securities markets. Failure to comply with applicable regulations could result in financial, structural, and operational penalties. In addition, efforts to comply with applicable regulations may increase our costs and/or limit our ability to pursue certain business opportunities. See Supervision and Regulation in Item 1 of this report, for additional information concerning financial industry regulations. Federal and state regulations significantly limit the types of activities in which we, as a financial institution, may engage. In addition, we are subject to a wide array of other regulations that govern other aspects of how we conduct our business, such as in the areas of employment and intellectual property. Federal and state legislative and regulatory authorities often change these regulations or adopt new ones. Actions could be taken that would further limit the amount of interest or fees we can charge, further restrict our ability to collect loans or realize on collateral, affect the terms or profitability of the products and services we offer, or materially and adversely affect us in other ways. The following paragraphs highlight certain specific important risk areas related to regulatory matters currently. These paragraphs do not describe these risks exhaustively, and they do not describe all such risks that we face currently. Moreover, the importance of specific risks will grow or diminish as circumstances change.

We anticipate that theEach Presidential administration will seekseeks to implement a regulatory reform agenda that is potentially significantly different than that of the prior administration, impacting the rulemaking, supervision, examination and enforcement priorities of the federal banking agencies. While we do not specifically know what these changes will be, or what future administrations may seek to reverse, we may be required to implement different compliance procedures and modify our policies and activities to comply with changes set forth by the administration. This may cause us to incur additional costs and expenses, and dedicate additional resources, to achieve compliance with any changes from the Presidential administration, which can impact our financial condition and the results of our operations.

Certain of our operations and customers are dependent on the regular operation of the federal or state government or programs they administeradminister. For example, our SBA lending program depends on interaction with the SBA, an independent agency of the federal government. During a lapse in funding, such as has occurred during previous federal government “shutdowns”, the SBA may not be able to engage in such interaction. Similarly, loans we make through USDA lending programs may be delayed or adversely affected by lapses in funding for the USDA. In addition, customers who depend directly or indirectly on providing goods and services to federal or state governments or their agencies may reduce their business with us or delay repayment of loans due to lost or delayed revenue from those relationships. If funding for these lending programs or federal spending generally is reduced as part of the appropriations process or by administrative decision, demand for our services may be reduced. Any of these developments could have a material adverse effect on our financial condition, results of operations or liquidity.

Data privacy is becoming a major business and political concern. The laws governing it are new, and are likely to evolve and expand.

We anticipate we will continue to rely primarily on deposits, loan repayments, and cash flows from our investment securities to provide liquidity. Additionally, when necessary, the secondary sources of borrowed funds described above will be used to augment our primary funding sources. An inability to maintain or raise funds (including the inability to access secondary funding sources) in amounts necessary to meet our liquidity needs would have a substantial negative effect, individually or collectively, on our liquidity. Our access to funding sources in amounts adequate to finance our activities, or on terms attractive to us, could be impaired by factors that affect us specifically or the financial services industry in general. For example, factors that could detrimentally impact our access to liquidity sources include our financial results, a decrease in the level of our business activity due to a market downturn or adverse regulatory action against us, a reduction in our credit rating, any damage to our reputation, counterparty availability, changes in the activities of our business partners, changes affecting our loan portfolio or other assets, or any other event that could cause a decrease in depositor or investor confidence in our creditworthiness and business. Our access to liquidity could also be impaired by factors that are not specific to us, such as general business conditions, interest rate fluctuations, severe volatility or disruption of the financial markets or negative views and expectations about the prospects for the financial services industry as a whole, or legal, regulatory, accounting, and tax environments governing our funding transactions. In addition, our ability to raise funds is strongly affected by the general state of the U.S. and world economies and financial markets as well as the policies and capabilities of the U.S. government and its agencies, and may remain or become increasingly difficult due to economic and other factors beyond our control. Any such event or failure to manage our liquidity effectively could affect our competitive position, increase our borrowing costs and the interest rates we pay on deposits, limit our access to the capital markets and have a material adverse effect on our results of operations or financial condition. Changes associated with interest rate benchmarks also may impact our funding ability; see Interest Rate and Yield Curve Risks below.

If a significant portion of our deposits were to be withdrawn within a short period of time such that additional sources of funding would be required to meet withdrawal demands, we may be unable to obtain funding at favorable terms, which may have an adverse effect on our net interest margin. Moreover, obtaining adequate funding to meet our deposit obligations may be more challenging during periods of elevated prevailing interest rates, such as the present period.rates. Our ability to attract depositors during a time of actual or perceived distress or instability in the marketplace may be limited. Further, interest rates paid for borrowings generally exceed the interest rates paid on deposits. This spread may be exacerbated by higher prevailing interest rates. In addition, because our investment securities lose value when interest rates rise, after-tax proceeds resulting from the sale of such assets may be diminished during periods when interest rates are elevated. Under such circumstances, we may be required to access funding from sources such as the Federal Reserve’s discount window or the Bank Term Funding Program in order to manage our liquidity risk.

AsWe marketinvest interesta ratesportion of our assets in investment securities. Interest rate increases have increased,recently weresulted havein, experiencedand significantcould in the future result in unrealized losses on our available for sale securities portfolio. Unrealized losses related to available for sale securities are reflected in accumulated other comprehensive income in our consolidated balance sheets and reduce the level of our book capital and tangible common equity. However, such unrealized losses do not affect our regulatory capital ratios. We actively monitor our available for sale securities portfolio and we do not currently anticipate the need to realize material losses from the sale of securities for liquidity purposes. Furthermore, we believe it is unlikely that we would be required to sell any such securities before recovery of their amortized cost base, which may be at maturity. Nonetheless, our access to liquidity sources could be affected by unrealized losses if securities must be sold at a loss; tangible capital ratios continue to decline from an increase in unrealized losses or realized credit losses; the FHLB or other funding sources reduce capacity; or bank regulators impose restrictions on us that impact the level of interest rates we may pay on deposits or our ability to access brokered deposits. Additionally, significant unrealized losses could negatively impact market and/or customer perceptions of our Company, which could lead to a loss of depositor confidence and an increase in deposit withdrawals, particularly among those with uninsured deposits.

The yield curve is a reflection of interest rates applicable to short and long-term debt. The yield curve is steep when short-term rates are much lower than long-term rates; it is flat when short-term rates and long-term rates are nearly the same; and it is inverted when short-term rates exceed long-term rates. Historically, the yield curve is usually upward sloping (higher rates for longer terms). However, the yield curve can be relatively flat or inverted (downward sloping), which has happened several times in the past few years, which is often seen as a bad sign for the economy. A flat or inverted yield curve, which tends to decrease net interest margin, adversely impacts our lending businesses and investment portfolio. FromIn Octoberrecent 2022 through December 2024,years, the yield curve was inverted.inverted, but as of the end of 2025 it had returned to a positively sloped yield curve, reflecting favorable economic signs. However, the yield curve has not returned to historic norms and remains relatively flat. See Risks Associated with Monetary Events within this section of the Report for additional information.

Management must make significant assumptions and estimates and exercise significant judgment in selecting and applying accounting and reporting policies. In some cases, management must select a policy from two or more alternatives, any of which may be reasonable under the circumstances, which may result in reporting materially different results than would have been reported under a different alternative. The estimate that is consistently one of our most critical is the level of the allowance for credit losses. However, other estimates can be highly significant at discrete times or during periods of varying length, for example the valuation (or impairment) of our deferred tax assets. Estimates are made at specific points in time. As actual events unfold, estimates are adjusted accordingly. Due to the inherent nature of these estimates, it is possible that, at some time in the future, we may significantly increase the allowance for credit losses and/or sustain credit losses that are significantly higher than the provided allowance, or we may recognize a significant provision for impairment of assets, or we may make some other adjustment that will differ materially from the estimates that we make today. Moreover, in some cases, especially concerning litigation and other contingency matters where critical information is inadequate, often we are unable to make estimates until fairly late in a lengthy process.

Transition risks may arise from changes in regulations or market preferences toward a low-carbon economy, which in turn could have negative impacts on asset values, results of operations or our reputation or that of our customers and clients. For example, our corporate credit exposures include industries that may experience reduced demand for carbon-intensive products due to the transition to a low-carbon economy. Moreover, banking regulators and others are increasingly focusing on the issue of climate risk at financial institutions, both directly and with respect to their clients.

We have only recently begun to pay dividends; moreover, theThe inability of our subsidiariesbank subsidiary to declare and pay dividends or other distributions to the Holding Company could adversely affect its liquidity and ability to declare and pay dividends.

The holders of our common stock receive dividends only if and when declared by the Nicolet board of directors (the “Board”) out of legally available funds. PriorWhile toour Board, since 2023, has approved the Boardpayment had not declaredof a quarterly cash dividend on theour common stockstock, sincethere ourcan inceptionbe no assurance whether or when we may pay dividends in 2000. Any determination relating to the continuationfuture. orFuture anydividends, changeif in dividend policyany, will be madedeclared and paid at the Board’s discretion of the Board and will depend on a number of factors, including the Company’s future earnings, capital requirements, financial condition, future prospects, regulatory restrictions and other factors that the Board may deem relevant. Our principal source of funds used to pay cash dividends on our common and preferred stock is dividends that we receive from the Bank. As a national bank, the Bank is subject to limitations on the amount of dividends that it is permitted to pay, as described under “Regulation of Nicolet – Payment of Dividends” and “Regulation of the Bank – Payment of Dividends” in Part I, Item 1 of this Report. The federal banking agencies have also issued policy statements which provide that bank holding companies and insured banks should generally only pay dividends out of current earnings. The Federal Reserve may also prevent the payment of a dividend by the Bank if it determines that the payment would be an unsafe and unsound banking practice. The Holding Company and the Bank must also maintain the CET1 capital conservation buffer of 2.5% to avoid becoming subject to restrictions on capital distributions, including dividends. If the Bank is not permitted to pay cash dividends to the Holding Company, it is unlikely that we would be able to continue to pay dividends on our common stock or to pay interest on our indebtedness.

We have supported our continued growth by issuing subordinated notes and by assuming the subordinated notes and trust preferred securities and accompanying junior subordinated debentures issued by companies we have acquired. As of December 31, 2024,2025, we had outstanding subordinated notes of approximately $115.2$92.8 million and outstanding trust preferred securities and associated junior subordinated debentures with an aggregate par principal amount of approximately $1.8 million and $48.0 million, respectively. In connection with the consummation of the MidWestOne acquisition, we assumed additional outstanding trust preferred securities and associated junior subordinated debentures with an aggregate par principal amount of approximately $1.3 million and $44.8 million, respectively.

The subordinated notes are senior to our common stock. We have also unconditionally guaranteed the payment of principal and interest on our trust preferred securities, and the junior subordinated debentures issued to the special purpose trusts that relate to those trust preferred securities are senior to our common stock. As a result, we must make payments on the subordinated notes and the junior subordinated debentures before we can pay any dividends on our common stock, and in the event of our bankruptcy, dissolution or liquidation, holders of our subordinated notes and junior subordinated debentures must be satisfied before any distributions can be made on our common stock. We do have the right to defer distributions on our junior subordinated debentures (and related trust preferred securities) for up to five years, but during that time we would not be able to pay dividends on our common stock.

We may from time to timetime-to-time issue additional senior or subordinated indebtedness or preferred stock that would have to be repaid before our shareholders would be entitled to receive any of our assets.

Nicolet’s corporate organizational documents and the provisions of Wisconsin law to which we are subject contain certain provisions that could have an anti-takeover effect and may delay, make it more difficult or prevent an attempted acquisition of Nicolet that you may favor.

If we raise funds by issuing equity securities or instruments that are convertible into equity securities, the percentage ownership of our current common stockholders will be reduced, the new equity securities may have rights and preferences superior to those of our common or outstanding preferred stock, and additional issuances could be at a sales price which is dilutive to current stockholders. We may issue or be required to issue additional shares of common stock, or securities convertible into, exchangeable for or representing rights to acquire shares of common stock in order to maintain capital at desired or regulatory-required levels. We could also issue additional equity securities directly as consideration in acquisitions of other financial institutions (such as we have done in the recent MidWestOne acquisition) or other investments that we may make that would be dilutive to stockholders in terms of voting power and share-of-ownership, and could be dilutive financially or economically.

At December 31, 2024,2025, Nicolet had total assets of $8.8$9.2 billion, an increase of $328$388 million (4%) from December 31, 2023.2024. Total loans of $6.6$6.8 billion at December 31, 20242025, increased $273$210 million (3%) from December 31, 2024, while total deposits of $7.7 billion increased $327 million (4%) from December 31, 2023, while total deposits of $7.4 billion increased $206 million (3%) from December 31, 2023.2024. Total stockholders’ equity was $1.2$1.3 billion at December 31, 2024,2025, an increase of $134$85 million since December 31, 2023,2024, with solid earnings, stock option exercises,earnings and improvementfavorable movements in the securities portfolio market valuation, partly offset by payment of the quarterly common stock dividend and common stock repurchases.

(1) The adjusted net income and adjusted 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 Nicolet’s financial performance to the financial performance of peer banks. See section “Non-GAAP Financial Measures” below for a reconciliation of these financial measures.

(1) Provision expense for 2023 is attributable to the expected loss on a bank subordinated debt investment, and the provision expense for 2022 is attributable to the Day 2 allowance from an acquisition transaction.investment.

(3) In July 2023, a new Wisconsin tax law change was signed which provided financial institutions with an exemption from state taxable income for interest, fees, and penalties earned on specific loans to existing Wisconsin-based business or agriculture purpose loans. The effective tax rate for periods prior to July 1, 2023,effective2023, the effective date of this tax law change, assumed an effective tax rate of 25%, and periods subsequent to the effective date assumed an effective tax rate of 19.5%.

TheAt Federalthe Reserve raised short-term interest rates a totalbeginning of 4252024, bps during 2022, and additional increases totaling 100 bps were made during 2023, resulting in athe Federal Funds range ofwas 5.25% to 5.50%5.50%. as of December 31, 2023. In contrast, theThe Federal Reserve decreased short-term interest rates a total of 100 bps during the second half of 2024, resulting in a Federal Funds range of 4.25% to 4.50% as ofat December 31, 2024. 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.

Average interest-earning assets increased to $7.8$8.2 billion for 2024,2025, $112$419 million (1%5%) higher than 2023.2024. Average loans increased $271$307 million (4%5%) to $6.5$6.8 billion, on solid organic loan growth. Average investment securities decreasedincreased $226$17 million largely from the first quarter 2023 balance sheet repositioning,million, while other interest-earning assets increased $67$95 million, mostly investable cash.cash from strong deposit growth. As a result, the mix of average interest-earning assets shifted to 84%83% loans, 11% investment securities, and 5%6% other interest-earning assets (mostly cash) for 2024,2025, compared to 81%,84%, 15%,11%, and 4%,5%, respectively, for 2023.2024.

Average interest-bearing liabilities were $5.6$6.0 billion for 2024,2025, an increase of $286$334 million (5%6%) from 2023.2024. Average interest-bearing core deposits increased $292$387 million and(8%), while average brokered deposits grewdecreased $135$37 million, reflecting growth in higher cost deposit products and a shift in funding strategy. Wholesale funding decreased $142$16 million, mostly due to the repaymentearly redemption of FHLBsubordinated borrowings as part of the first quarter 2023 balance sheet repositioning.notes. The mix of average interest-bearing liabilities was 86% core deposits, 12% brokered deposits, and 2% other funding for 2025, compared to 84% core deposits, 13% brokered deposits, and 3% other funding for 2024, compared to 83% core deposits, 11% brokered deposits, and 6% other funding in 2023.2024.

The interest rate spread increased 2637 bps between the years, as the repricing of liabilities slowed, while new and renewed loans continued to reprice in a higher interest rate environment. The interest-earning asset yield increased 64 bps to 5.66% for 2024, due to the changing mix of interest-earning assets (noted above), as well as the higher interest rate environment.years. The loan yield improved 5714 bps to 6.05%6.19% for 2024,2025, largelymostly due tofrom the repricing of new and renewed loans,loans whileand the yield on investment securities increased 6230 bps to 2.98%.3.28%, while the yield on other interest-earning assets (mostly cash) decreased 77 bps, consistent with the Federal Reserve interest rate cuts. The cost of fundsinterest-bearing increasedliabilities 38decreased 27 bps to 3.03%2.76% for 2024,2025, also reflecting the risingFederal Reserve interest rate environment and the migration of customer deposits into higher rate deposit products.cuts. The contribution from net free funds increaseddecreased 38 bps, mostly due to the higherlower value in the current interest rate environment. As a result, the net interest margin was 3.47%3.76% for 2024,2025, up 29 bps compared to 3.18%3.47% for 2023.2024.

The provision for credit losses for 2025 was $4.3 million (comprised of $4.3 million related to the ACL-Loans, partly offset by a $0.1 million reduction related to the ACL on unfunded commitments). Comparatively, the 2024 provision for credit losses was $3.9 million (comprised of $3.8 million related to the ACL-Loans and $0.1 million for the ACL on unfunded commitments)., Theand the 2023 provision for credit losses was $5.0 million (comprised of $2.7 million related to the ACL-Loans and $2.3 million for the ACL on securities AFS). Comparatively, the 2022 provision for credit losses of $11.5 million was largely due to the required Day 2 ACL increase of $8 million from the acquisition of Charter, as well as solid loan growth. Asset quality trends have been solid and net charge-offs were negligible for all years.

Noninterest income was $82$86 million for 2024,2025, an increase of $46$3 million from 2023,2024, primarilywith due to the balance sheet repositioninggrowth in 2023most core noninterest income categories, partly offset by lower net asset gains (which included the sale of $500 million (par value) U.S. Treasury held to maturity securities for a pre-tax loss of $38 millionlosses). Excluding net asset gains (losses), noninterest income for 20242025 was $78$84 million, a $9$6 million (13%8%) increase over 2023.2024. Notable contributions to the change in noninterest income were:

•Wealth management fee income was $27$30 million for 2024,2025, up $4$2 million (16%8%) from 2023,2024, onincluding favorable market-related changes, as well as growth in accounts and assets under management.

•The Company sponsors a nonqualifednonqualified deferred compensation (“NQDC”) plan for certain employees, that fluctuates based upon market valuations of the underlying plan assets. See also “Noninterest Expense” for the offsetting fair value change to the NQDC plan liabilities and Note 10, “Employee and Director Benefit Plans” in the Notes to Consolidated Financial Statements, under Part II, Item 8, for additional information on the NQDC plan.

•Other income grewdeclined $1 million to $9$8 million for 2024,2025, largely due to timing of card incentive income, as well as lower swap and included increases in card incentives income and swapbroker fees.

•Net asset gains of $1 million in 2025 were primarily attributable to favorable fair value marks on equity securities. Net asset gains of $4 million in 2024 were primarily attributable to gains of $2 million on the sale of available for sale securities and other investments, $1 million of favorable fair value marks on equity securities, and a $1 million gain on the early extinguishment on Nicolet subordinated notes. Net asset losses of $33 million in 2023 were primarily attributable to losses of $38 million on the sale of approximately $500 million (par value) U.S. Treasury held to maturity securities executed in early March as part of a balance sheet repositioning, as well as net losses of $3 million on the sale of certain available for sale securities, partly offset by a $9 million gain on the sale of Nicolet’s member interest in UFS, LLC. Additional information on the net gains is also included in Note 16, “Asset Gains (Losses), Net,” in the Notes to Consolidated Financial Statements, under Part II, Item 8.

Noninterest expense was $191$201 million,million for 2025, an increase of $5$9 million (3%5%) over 2023.2024. Personnel costs increased $9$7 million (9%6%), while non-personnel expenses combined decreasedincreased $4$3 million (4%3%) from 2023.2024. Notable contributions to the change in noninterest expense were:

•Personnel expense was $108$115 million for 2024,2025, an increase of $9$7 million (9%6%) over 2023.2024. Salary expense increased $3$7 million (5%8%) over 2023,2024, reflecting merit increases between the years,years whileand higher incentive compensation increased $5 million over 2023, commensurate with current year earnings. Fringe benefits increasedwere $1minimally millionchanged (5%)with overlower 2023.health care costs offset by higher 401k expenses. Personnel expense was also impacted by the change in the fair value of the NQDC plan liabilities. See also “Noninterest Income” for the offsetting fair value change to the NQDC plan assets and Note 10, “Employee and Director Benefit Plans” in the Notes to Consolidated Financial Statements, under Part II, Item 8, for additional information on the NQDC plan.

•Occupancy, equipment and office expense was $35$37 million for 2024,2025, downup $1 million (3%4%) from 2023,2024, due to lowerhigher occupancyoccupancy-related expensecosts (including increases in cleaning, snowplowing, building depreciation), and timingoffice ofexpenses supply(mostly purchases.additional costs for software and technology solutions), as well as a $0.4 million lease termination charge.

•Data processing expense was $18$19 million for 2024,2025, downup $2$1 million (11%5%) from 2023,2024, mostly due to avolume-based $3 million early contract termination charge incurredincreases in 2023.core and card processing charges.

The accounting for income taxes requires deferred income taxes to be analyzed to determine if a valuation allowance is required. A valuation allowance is required if it is more likely than not that some portion of the deferred tax asset will not be realized. This analysis involves the use of estimates and assumptions concerning accounting pronouncements and federal and state tax codes; therefore, income taxes are considered a critical accounting estimate.codes. The Company had a $16$18 million valuation allowance at December 31, 2024,2025, compared to a valuation allowance of $9$16 million at December 31, 2023. Additional information on the subjectivity of income taxes is discussed further under “Critical Accounting Estimates-Income Taxes.”2024. The Company’s income taxes accounting policy is described in Note 1, “Nature of Business and Significant Accounting Policies,” and additional disclosures relative to income taxes are included in Note 13, “Income Taxes” in the Notes to Consolidated Financial Statements, under Part II, Item 8.

As noted in Table 6 above, the loan portfolio at December 31, 20242025 was 76%77% commercial-based and 24%23% retail-based, unchanged from December 31, 2023, with a slight shift in the underlying loan composition mix ofcompared each.to December 31, 2024. 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 were $6.6$6.8 billion at December 31, 2024,2025, an increase of $273$210 million (4%3%), compared to total loans of $6.4$6.6 billion at December 31, 2023,2024, with growth in agricultural, commercial and industrial, and residential real estateconstruction loans. At December 31, 2024,2025, agricultural and commercial and industrial loans represented the largest segments of Nicolet’s loan portfolio, with each at 20%21% and 20%, respectively, of the total loan portfolio. The next largest segments were CRE investment and residential first mortgage, with each representing 18%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 commercial loan portfolio at December 31, 2025.

Management performs ongoing intensive analysis of itsthe loan portfolio to allow for early identification of customers experiencing financial difficulties, maintains prudent underwriting standards, understands the economy in 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.ACL-Loans, Theseand agencies maycould 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.

The allocation of the ACL-Loans by loan category for each of the past three years is shown in Table 9. The largest portions of the ACL-Loans were allocated to commercial & industrial loans and CRE investment loans, representing 24%, and 22%, respectively, of the ACL-Loans at December 31, 2025, which was unchanged from December 31, 2024. InThe comparison, thenext largest portionsportion of the ACL-Loans werewas allocated to commercial & industrial loans, agricultural, and CRE investmentagricultural loans, representing 24%, 20%,14% and 20%, respectively,15%, of the ACL-Loans at December 31, 2023.2025 and December 31, 2024, respectively. This change in allocatedACL-Loans ACL-Loansallocation was attributable to changes in current and forecasted risk trends within loan categories, as well as changes in loan portfolio composition.

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. Management continues to actively work with customers and monitor credit risk from the ongoing macroeconomic challenges. In addition to the discussion that follows, accounting policies for loans and the ACL-Loans are described in Note 1, “Nature of Business and Significant Accounting Policies,” and additional credit quality disclosures are included in Note 4, “Loans, Allowance for Credit Losses - Loans, and Credit Quality,” in the Notes to Consolidated Financial Statements, under Part II, Item 8.

The level of potential problem loans is another predominant factor in determining the relative level of risk in the loan portfolio and in determining 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 $71 million and $68 million at both December 31, 20242025 and 2023,2024, respectively. 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 underlying real estate or collateral values.

At December 31, 2024,2025, the investment securities portfolio totaled $806$860 million (representing 9% of total assets), compared to investment securities of $803$806 million (representing 9% of total assets) at December 31, 2023,2024, all classified as securities AFS. The investment securities portfolio increased slightly$53 million (7%) from December 31, 2023,2024, and included a shift in mix, from corporate debt securities and state, county, and municipals to mortgage-backed securities. The fair value of the total securities AFS portfolio was an unrealized loss of $66$34 million at December 31, 2024,2025, compared to an unrealized loss of $73$66 million at December 31, 2023.2024.

Nicolet also had other investments of $61$63 million and $58$62 million at December 31, 20242025 and 2023,2024, respectively, consisting primarily of capital stock in the Federal Reserve and the Federal Home Loan Bank (“FHLB”) (required as members of the Federal Reserve Bank System and the FHLB System), equity securities with readily determinable fair values, and to a lesser degree equity investments in other private companies. The FHLB and Federal Reserve investments are “restricted” in that they can only be sold back to the respective institutions or another member institution at par, and are thus not liquid, have no ready market or quoted market value, and are carried at cost. The private company equity investments have no quoted market prices, and are carried at cost less impairment charges, if any. The other investments are evaluated periodically for impairment, considering financial condition and other available relevant information.

Total deposits were $7.7 billion at December 31, 2025, a $327 million (4%) increase over year-end 2024, including a $497 million (7%) increase in customer deposits (core), partly offset by a $170 million reduction in brokered deposits. On average, deposits grew $128$349 million (2%5%) between 20242025 and 20232024 (as detailed in Table 2), primarily in brokered funding.. Average customer deposits (core) decreasedincreased $8$386 million, while average brokered deposits increaseddecreased $135$37 million (22%) overfrom the prior year.

The $45$124 million increase in cash and cash equivalents since year-end 20232024 included $134$154 million net cash provided by operating activities (mostly earnings) and $199$201 million net cash provided by financing activities (mostly strong deposit growth partly offset by repayments of borrowings, common stock repurchases and cash dividends), partially offset by $288$231 million net cash used in investing activities (mostly to fund loan growth and investment purchases). As of December 31, 2024,2025, management believed that adequate liquidity existed to meet all projected cash flow obligations.

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 repurchasesrepurchases, repayment of debt, or investment in other strategic actions such as mergers or acquisitions. At December 31, 2024,2025, the Parent Company had $189$188 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, as more fully described in “Business—Regulation of the Bank – Payment of Dividends” under Part I, Item 1, and in Note 17, “Regulatory Capital Requirements,” in the Notes to the Consolidated Financial Statements under Part II, Item 8. Management does not believe that regulatory restrictions on dividends from the Bank will adversely affect its ability to meet its cash obligations.

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 its financial strategy and risk management, Nicolet attempts to understand and manage the impact of fluctuations in market interest rates on its 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 other 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 governmentalgovernment and regulatory authorities. Our operating income and net income depends,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 Asset and Liability Committee.

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 other 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 perhaps on their ability to repay loans. As such, there would likely be impacts on the general appetite of banking products and the credit health of the Bank’s customer base.

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 December 31, 2024,2025, there remained $36$19 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. Subsequently, on January 20, 2026, the Board approved a $60 million increase to the common stock repurchase authorization.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates, assumptions or judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates and assumptions are based on historical experience, current information, and other factors deemed to be relevant; accordingly, as this information changes, actual results could differ from those 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 estimatesestimate we consider to be critical includeis the determination of the allowance for credit losses and income taxes.losses. In addition to the discussion that follows, the accounting policies related to thesethis critical estimatesestimate areis included in Note 1, “Nature of Business and Significant Accounting Policies,” in the Notes to Consolidated Financial Statements, under Part II, Item 8.

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 MarchJune 31,30, 2026 and December 31, 2025 and results of operations for the three-monththree and six-month periods ended MarchJune 31,30, 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.

We identify “tangiblecore booknet valueincome,” “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” “core net income,” and “core diluted earnings per common share” 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 the followingtable table.below.

Nicolet recognized netNet income ofwas $15$72 million (or earnings per diluted common share of $0.81$3.56) for firstthe quartersix months ended June 30, 2026, compared to net income of $40$69 million (or earnings per diluted common share of $2.65$4.42) for fourththe quartersix 2025,months andended netJune income30, 2025. The majority of $33the millionyear-over-year (orfluctuations earningsnoted perbelow dilutedare commonattributable shareto ofthe $2.08)MidWestOne for first quarter 2025.acquisition.

•NoninterestNet interest income was $25$251 million for the first quartersix months of 2026, $7up $105 million higher(72%) thanover the first quartersix months of 2025, with growth in most core noninterest income categories primarilymostly due to the acquisitionMidWestOne ofacquisition. MidWestOne. The largest increases in noninterestInterest income weregrew wealth$129 managementmillion, feewhile incomeinterest andexpense netincreased mortgage income, $4$24 million andbetween $2the millioncomparable highersix-month thanperiods. firstNet quarterinterest 2025,margin respectively.was 4.07% for the six months ended June 30, 2026, compared to 3.65% for the six months ended June 30, 2025. For additional information regarding noninterestnet interest income, see “INCOMEIncome STATEMENTStatement ANALYSISAnalysis — NoninterestNet Interest Income.”

•Noninterest expenseincome was $110$62 million for firstthe quartersix months ended June 30, 2026, an increase of $62 million over first quarter 2025. Personnel costs increased $12$23 million (44%58%), whilehigher non-personnelthan expensesthe combinedcomparable increasedperiod $50of million,2025, with growth in most core noninterest income categories primarily drivendue byto merger-relatedthe expensesacquisition andof higher overall expense for a larger operating base.MidWestOne. For additional information regarding noninterest expense,income, see “INCOMEIncome STATEMENTStatement ANALYSISAnalysis — Noninterest Expense.Income.”

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

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. There were no changes to the Federal Funds range in first quarterduring 2026.

Tax-equivalent net interest income was $111$254 million for the threesix months ended MarchJune 31,30, 2026, an increase of $39$106 million (54%72%) over the threesix months ended MarchJune 31,30, 2025. The $39$106 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 changes and rate changes added $31$89 million and $8$18 million, respectively, to net interest income.

Average interest-earning assets increased $3.2$4.4 billion (39%55%) to $11.2$12.6 billion over the comparable 2025 period, primarily due to the MidWestOne acquisition. Between the comparable first quartersix-month periods, average loans increased $2.5$3.5 billion (37%51%), mostly due to the MidWestOne acquisition and organic loan growth.acquisition. Average investment securities increased $594$871 million between the comparable three-monthsix-month periods, while other interest-earning assets increased $78$112 million (mostly cash), both primarily due to the MidWestOne acquisition. The mix of average interest-earning assets was 82% loans, 13%14% investments and 5%4% other interest-earning assets (mostly cash) for first quarterhalf 2026, compared to 83%,84%, 11%, and 6%,5%, respectively, for first quarterhalf 2025 .2025.

Average interest-bearing liabilities were $8.4$9.4 billion for the first threesix months of 2026, an increase of $2.4$3.4 billion (40%57%) over the first threesix months of 2025, primarily due to the MidWestOne acquisition. Average interest-bearing core deposits increased $2.5$3.5 billion, while average brokered deposits decreased $110$112 million between the comparable three-monthsix-month periods. The mix of average interest-bearing liabilities was comprised of 92%93% core deposits, 6%5% brokered deposits and 2% wholesale funding for first quarterhalf 2026, compared to 87%, 10%, and 3% respectively, for first quarterhalf 2025.

The interest rate spread increased 5358 bps between the comparable three-monthsix-month periods. The loan yield improved 108 bps to 6.18%6.23% between the comparable three-monthsix-month periods, mostlyand fromincluded the impact of loan purchase accounting accretion as well as the repricing of new and renewed loans. The yield on investment securities increased 5777 bps to 3.71%,3.98%, 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 8983 bps to 3.69%,3.74%, consistent with Federal Reserve interest rate cuts. The cost of interest-bearing liabilities decreased 4752 bps to 2.36%2.32% for the first threesix months of 2026, mostly due to lower deposit costs. As a result, the tax-equivalent net interest margin was 3.98%4.07% for the first threesix months of 2026, a 4042 bps increase over 3.58%3.65% for the first threesix months of 2025.

The provision for credit losses was $6.1$7.6 million for the threesix months ended MarchJune 31,30, 2026, compared to $1.5$2.6 million for the threesix months ended MarchJune 31,30, 2025. The increase was primarily driven by provision expense of $4.7 million for the ACL on unfunded commitments related to the MidWestOne merger.acquisition.

Noninterest income was $25$62 million for the threesix months ended MarchJune 31,30, 2026, $7$23 million (39%58%) 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 three monthshalf of 2026 was $26$60 million, ana $8$21 million (41%52%) increase over the first three monthshalf of 2025.

Wealth management fee income was $11$22 million, up $4$9 million (53%62%) from the first threesix months of 2025, including favorable market-related changes, as well as growth in accounts and assets under management.management primarily from the MidWestOne acquisition, as well as favorable market-related changes.

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 $4$7 million increased $2 million (84%48%) between the comparable three-monthsix-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.

Services charges on deposit accounts were $3$7 million, up $1$3 million (56%83%) from the first threesix months of 2025, on growth in both accounts and account analysis fees, partiallymostly driven by the MidWestOne acquisition.

OtherCard interchange income of $2$11 million for the three months ended March 31, 2026 increased $0.5$4 million (27%50%) and BOLI income of $4 million increased $1 million (47%) from the comparablefirst 2025six period,months of 2025, both primarily due to the acquisition of MidWestOne.

Net asset lossesgains of $0.9$1.5 million for the first threesix months of 2026 were primarily due to favorable fair value marks on an equity security partly offset by the write-down of an other investment, while net asset losses of $0.4$0.6 million for the first threesix months of 2025 were mostly due to unfavorable fair value marks on equity securities.

Noninterest expense was $110$214 million for the threesix months ended MarchJune 31,30, 2026, an increase of $62$116 million (130%119%) over the comparable period of 2025. Personnel costs increased $12$33 million (44%60%), while non-personnel expenses combined increased $50$83 million (237%197%), primarily drivendue byto merger-relatedthe expenses.acquisition of MidWestOne.

Personnel expense was $38$89 million for the threesix months ended MarchJune 31,30, 2026, an increase of $12$33 million (44%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 $12$29 million for the threesix months ended MarchJune 31,30, 2026, up $3$10 million (33%56%) from the comparable period in 2025, mostly due to an expanded footprint resulting from the acquisition of MidWestOne.

Data processing expense was $6$14 million, up $2$5 million (37%51%) between the comparable three-monthsix-month periods, mostly due to the MidWestOne acquisition.

Intangibles amortization increased $3$7 million between the comparable three-monthsix-month periods due to increased amortization on newly established intangibles from the MidWestOne acquisition.

Other expense was $5$15 million, up $2$9 million (66%164%) between the comparable three-monthsix-month periods, primarilyincluding duea to$5 increasedmillion loss on the early redemption of junior subordinated debentures, as well as higher legal and professional expense,expense as well asand higher deposit earnings credit expense.

Income tax expense was $4$19 million (effective tax rate of 20.1%21.2%) for the first threesix months of 2026, compared to income tax expense of $8$16 million (effective tax rate of 18.8%19.2%) for the comparable period of 2025.

At MarchJune 31,30, 2026, period end assets were $15.6$15.4 billion, an increase of $6.4$6.2 billion (70%68%) 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$12.5 billion at MarchJune 31,30, 2026, an increase of $4.9$4.8 billion (63%62%) from December 31, 2025, primarilyincluding duea to$4.7 thebillion MidWestOne acquisition, which included growthincrease in customer (core) deposits and a $78 million increase in brokered depositsdeposits, primarily due to the MidWestOne acquisition. Long-term borrowings decreased $42 million from December 31, 2025 due to the early redemption of $4.7junior billionsubordinated and $178 million, respectively.debentures. Total stockholders’ equity was $2.3 billion at MarchJune 31,30, 2026, an increase of $1.0 billion over December 31, 2025, primarily due to the issuance of common stock in the MidWestOne acquisition.

Nicolet services a diverse customer base primarily throughout Wisconsin, Michigan, IowaIowa, 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”).

As noted in Table 6 above, the loan portfolio at MarchJune 31,30, 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$10.8 billion at MarchJune 31,30, 2026, increased $4.0 billion (59%) from December 31, 2025, across various loan categories. At MarchJune 31,30, 2026, commercial and industrial loans and CRE investment loans represented the largest segments of Nicolet’s loan portfolio, with each at 22% of the total portfolio. The next largest segments were agricultural and residential first mortgage, representing 16% and 15% of the total loan portfolio, respectively. 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.

At MarchJune 31,30, 2026, the ACL-Loans was $133$134 million and represented 1.23% of period end loans, compared to $69 million (or 1.01% of period end loans) at December 31, 2025 and $67$68 million (or 1.00% of period end loans) at MarchJune 31,30, 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.