Nicolet Bankshares, Inc. (NIC): Business Model Canvas [10-2024 Updated]

Nicolet Bankshares, Inc. (NIC) stands out in the financial landscape with a robust business model that emphasizes local engagement and comprehensive financial solutions. By leveraging key partnerships and resources, Nicolet Bankshares effectively caters to a diverse clientele, including small businesses and high-net-worth individuals. Explore the intricacies of their business model canvas below to discover how they deliver value and maintain strong customer relationships while navigating the competitive banking environment.

Nicolet Bankshares, Inc. (NIC) - Business Model: Key Partnerships

Local businesses and agricultural sectors

Nicolet Bankshares, Inc. actively collaborates with local businesses and agricultural sectors to enhance its service offerings and customer base. As of September 30, 2024, the bank's loan portfolio includes approximately $1.26 billion in agricultural loans, representing 19% of total loans. The bank focuses on providing tailored financial products suited for local farmers and agribusinesses, reflecting its commitment to supporting the regional economy.

Government agencies (SBA, FSA)

Nicolet Bankshares engages with government entities such as the U.S. Small Business Administration (SBA) and the Farm Service Agency (FSA) to facilitate access to funding for small businesses and farmers. The utilization of SBA and FSA loan programs helps mitigate risks associated with lending by providing guarantees on loans. This partnership not only enhances loan offerings but also strengthens the financial stability of borrowers, thereby reducing default risks associated with the bank's loan portfolio.

Financial technology providers

The bank collaborates with financial technology providers to enhance its digital banking services. This partnership allows Nicolet to offer improved online banking experiences, mobile payment solutions, and advanced cybersecurity measures. The integration of technology in banking operations has become increasingly vital, especially in the post-pandemic landscape, where digital transactions have surged. The bank's investment in fintech solutions is also aimed at streamlining operations and improving customer service efficiency.

Other financial institutions for liquidity

Nicolet Bankshares maintains partnerships with other financial institutions to ensure liquidity and manage its funding needs. As of September 30, 2024, the bank had $619 million available for Federal Home Loan Bank (FHLB) borrowings, alongside $175 million in Fed Funds lines. These partnerships are crucial for managing cash flow and supporting lending activities, especially during periods of increased demand for loans or economic uncertainty.

Partnership Type	Description	Financial Impact
Local Businesses & Agricultural Sectors	Collaboration with regional businesses and farmers	$1.26 billion in agricultural loans (19% of total loans)
Government Agencies (SBA, FSA)	Utilization of government loan programs for guarantees	Reduces default risk and enhances loan offerings
Financial Technology Providers	Enhancement of digital banking services	Improved customer experience and operational efficiency
Other Financial Institutions	Partnerships for liquidity management	$619 million in FHLB borrowings available

Nicolet Bankshares, Inc. (NIC) - Business Model: Key Activities

Loan Origination and Servicing

Nicolet Bankshares, Inc. focuses on originating loans primarily within its local markets, covering regions in Wisconsin, Michigan, and Minnesota. As of September 30, 2024, total loans amounted to $6.6 billion, reflecting an increase of $203 million (3%) from December 31, 2023. The loan portfolio includes a diverse range of products, such as:

• Commercial & Industrial Loans: $1.35 billion (21% of total loans)
• Agricultural Loans: $1.26 billion (19% of total loans)
• Owner-occupied Commercial Real Estate (CRE): $920 million (14% of total loans)
• Residential Mortgages: $1.19 billion (18% of total loans)

The bank actively utilizes government loan programs, such as those from the U.S. Small Business Administration (SBA), to enhance its lending capacity.

Wealth Management and Investment Services

Nicolet's wealth management services generated fee income of $20.2 million for the first nine months of 2024, marking an increase of $2.8 million (16%) from the same period in 2023. The growth in wealth management income is attributed to favorable market conditions and an increase in accounts and assets under management. Specific revenue streams include:

• Wealth Management Fees: $20.2 million (up 16% year-over-year)
• Brokerage Fee Income: $12.7 million (up 14% year-over-year)
• Net Mortgage Income: $6.9 million (up 29% year-over-year)

Overall, noninterest income was $61.4 million for the first nine months of 2024, a substantial increase of $49.9 million compared to the same period in 2023.

Risk Management and Compliance

Effective risk management is critical for Nicolet, particularly in maintaining a sound loan portfolio. The provision for credit losses was $2.9 million for the nine months ending September 30, 2024, down from $4.0 million for the prior year. Key metrics include:

• Nonperforming Assets: $26 million (0.31% of total assets)
• Provision for Credit Losses: $2.9 million (all related to loans)
• Allowance for Credit Losses on Loans: Managed through systematic monitoring and sound underwriting practices

Nicolet employs a robust credit risk management process that involves regular reviews and modifications to ensure sound decision-making.

Customer Service and Support

Customer service is a cornerstone of Nicolet's operational strategy. The bank has seen a significant increase in service charges on deposit accounts, which reached $5.3 million for the first nine months of 2024, an increase of $0.8 million (18%) from the previous year. The bank's approach includes:

• Dedicated customer support teams to assist with loan inquiries and account management
• Implementation of customer feedback mechanisms to enhance service quality
• Investment in digital banking platforms to improve customer accessibility

The focus on customer service is evident in the growth of accounts and account analysis fees, reflecting a commitment to meeting customer needs.

Key Activity	Metric	Value
Loan Origination	Total Loans	$6.6 billion
Wealth Management	Wealth Management Fee Income	$20.2 million
Risk Management	Provision for Credit Losses	$2.9 million
Customer Service	Service Charges on Deposit Accounts	$5.3 million

Nicolet Bankshares, Inc. (NIC) - Business Model: Key Resources

Core Deposit Base

Nicolet Bankshares has a robust core deposit base totaling $7.3 billion as of September 30, 2024, reflecting an increase of $62 million from December 31, 2023. This growth is attributed to increases in time and money market deposits, which helped mitigate declines in noninterest-bearing demand deposits.

The composition of the deposits indicates a strong reliance on core deposits, which account for approximately 90% of total customer deposits. As of September 30, 2024, the estimated uninsured deposits were $2.1 billion, representing 29% of total deposits.

Experienced Banking Staff

Nicolet Bankshares prides itself on its experienced banking staff, which is critical for maintaining high service levels and operational efficiency. The personnel costs for the first nine months of 2024 amounted to $81.7 million, reflecting a 13% increase from the previous year.

As of September 30, 2024, the total noninterest expense was $143 million, with personnel expenses accounting for a significant portion of this total.

Technological Infrastructure

Nicolet Bankshares has invested significantly in its technological infrastructure to enhance customer service and operational efficiency. This includes data processing expenses of $13.1 million for the first nine months of 2024, which reflects a 2% increase from the previous year.

The bank's focus on technology is evident in its growing wealth management and mortgage income, which increased to $20.2 million and $6.9 million respectively for the first nine months of 2024.

Regulatory Capital and Liquidity

Regulatory capital is a crucial resource for Nicolet Bankshares, ensuring compliance with federal requirements and maintaining a strong liquidity position. As of September 30, 2024, the total stockholders' equity was $1.1 billion, up $110 million from December 31, 2023.

The bank's liquidity management strategy includes maintaining adequate liquid funds, with cash and due from banks totaling $428 million as of September 30, 2024. Additionally, the bank has access to various funding sources, including:

Liquidity Source	Amount (in millions)
FHLB Borrowing Availability	$619
Fed Funds Lines	$175
Fed Discount Window	$12
Brokered Capacity	$1,105
Total Contingent Funding Availability	$1,911

This access to liquidity sources underscores Nicolet Bankshares' ability to meet both current and future financial obligations.

Nicolet Bankshares, Inc. (NIC) - Business Model: Value Propositions

Comprehensive financial solutions for individuals and businesses

Nicolet Bankshares, Inc. offers a diverse suite of financial products tailored for both individual and business clients. As of September 30, 2024, total loans amounted to $6.6 billion, reflecting a growth of $203 million (3%) from December 31, 2023. This growth is attributed to increased lending in agricultural, commercial, industrial, and residential real estate sectors.

Personalized customer service and local presence

Nicolet emphasizes personalized service through its local branches, primarily serving Wisconsin, Michigan, and Minnesota. The bank's strategy focuses on building relationships within local communities, which enhances customer loyalty and satisfaction. With total assets of $8.6 billion as of September 30, 2024, the bank continues to strengthen its local presence.

Competitive interest rates on loans and deposits

The bank provides competitive interest rates, which are crucial in attracting deposits and lending customers. As of September 30, 2024, the net interest margin was 3.35%, an increase of 28 basis points from the same period in 2023. The loan yield improved to 5.95%, up 62 basis points year-over-year, and the cost of funds increased to 3.07%, reflecting the current high-interest-rate environment.

Category	Current Rate (%)	Previous Year Rate (%)	Change (bps)
Loan Yield	5.95	5.33	62
Cost of Funds	3.07	2.56	51
Net Interest Margin	3.35	3.07	28

Wealth management expertise

Nicolet Bankshares also excels in wealth management services, with fee income reaching $20.2 million for the first nine months of 2024, marking a 16% increase from the previous year. The growth in accounts and assets under management reflects the bank's commitment to providing comprehensive wealth management solutions.

Type of Income	Current ($ in millions)	Previous Year ($ in millions)	Change (%)
Wealth Management Fee Income	20.2	17.4	16
Net Mortgage Income	6.9	5.3	30
Service Charges on Deposit Accounts	5.3	4.5	18

Nicolet Bankshares, Inc. (NIC) - Business Model: Customer Relationships

Relationship management approach

Nicolet Bankshares, Inc. emphasizes a customer-centric approach to relationship management by focusing on personalized service and community involvement. The bank has reported a total of $8.6 billion in assets as of September 30, 2024, showcasing its significant market presence. The bank leverages its extensive branch network and digital platforms to enhance customer interactions, aiming to create long-lasting relationships.

Ongoing support and advisory services

Nicolet provides comprehensive support through various advisory services, including wealth management and loan counseling. For the nine months ended September 30, 2024, the bank's noninterest income reached $61 million, a considerable increase from previous periods, indicating strong performance in advisory services. Additionally, wealth management fee income grew by 17% to $1 million.

Service Type	Income Generated (2024)	Growth Rate
Wealth Management	$1 million	17%
Mortgage Income	$2.9 million	41%
Service Charges	$5.3 million	18%

Community engagement and local events

Nicolet actively engages in community initiatives, enhancing its brand image and fostering customer loyalty. The bank participates in local events and sponsors community programs, which have proven effective in building relationships. As of September 30, 2024, total customer deposits were reported at $7.3 billion, reflecting a strong community presence and trust.

Feedback mechanisms for service improvement

The bank employs multiple feedback mechanisms, including customer surveys and direct interactions, to assess service quality and areas for improvement. With a focus on customer satisfaction, Nicolet has implemented changes based on feedback that have led to a 6% increase in noninterest expense to $143 million, indicating investment in service enhancements. The provision for credit losses was $2.9 million for the nine months ended September 30, 2024, underscoring the bank's proactive approach in addressing customer needs.

Nicolet Bankshares, Inc. (NIC) - Business Model: Channels

Physical bank branches across Wisconsin, Michigan, Minnesota

Nicolet Bankshares operates a network of 43 physical branches located primarily in Wisconsin, with additional branches in Michigan and Minnesota. As of September 30, 2024, the total assets of Nicolet Bankshares were approximately $8.6 billion, reflecting a 2% increase from December 31, 2023.

Online banking platform and mobile app

The online banking platform and mobile app provide customers with 24/7 access to their accounts, allowing for transactions, balance inquiries, and loan applications. In 2024, the bank reported a significant increase in digital engagement, with over 60% of customer transactions conducted through digital channels.

Direct marketing and referral programs

Nicolet Bankshares employs direct marketing strategies and referral programs to attract new customers. In the first nine months of 2024, the bank's marketing expenses totaled approximately $6 million, reflecting a 1% increase from the previous year. The bank also incentivizes existing customers to refer new clients, contributing to its customer acquisition strategy.

Community events and sponsorships

Community engagement is a key aspect of Nicolet's business model. The bank sponsors various local events and initiatives, which not only enhance brand visibility but also foster customer loyalty. For instance, during the first nine months of 2024, Nicolet Bankshares participated in over 50 community events across its service areas.

Channel	Description	Financial Impact (2024)
Physical Branches	43 branches in Wisconsin, Michigan, and Minnesota	$8.6 billion in total assets
Online Banking	24/7 access, with over 60% of transactions digital	Significant increase in customer engagement
Direct Marketing	Direct marketing and referral programs	$6 million in marketing expenses
Community Sponsorships	Participation in over 50 local events	Enhanced brand visibility and customer loyalty

Nicolet Bankshares, Inc. (NIC) - Business Model: Customer Segments

Small to medium-sized businesses

Nicolet Bankshares, Inc. primarily serves small to medium-sized businesses (SMBs) across Wisconsin, Michigan, and Minnesota. As of September 30, 2024, commercial and industrial loans represented approximately 21% of the total loan portfolio, amounting to $1.35 billion. This segment benefits from various government loan programs, including those from the U.S. Small Business Administration (SBA).

Loan Type	Amount (in thousands)	Percentage of Total Loans
Commercial & Industrial	1,351,516	21%
Owner-occupied CRE	920,533	14%
Agricultural	1,261,152	19%
Commercial	3,533,201	54%

Agricultural producers and enterprises

Nicolet Bankshares also focuses on agricultural producers and enterprises, which constitute a significant portion of its loan portfolio. As of September 30, 2024, agricultural loans accounted for 19%, or $1.26 billion, of total loans. The bank actively utilizes programs from the U.S. Department of Agriculture’s Farm Service Agency (FSA) to support this customer segment.

Retail banking customers

The retail banking segment includes individual consumers and families utilizing various banking services. Total deposits from retail banking customers were reported at $7.3 billion as of September 30, 2024, reflecting a growth of $62 million from the previous year. The bank's noninterest income from retail services, such as service charges on deposit accounts, reached $5.3 million, indicating an 18% increase from the previous period.

Income Source	Amount (in thousands)	Percentage Change
Service Charges on Deposit Accounts	5,307	18%
Wealth Management Fee Income	20,244	17%
Mortgage Income, Net	6,851	29%

High-net-worth individuals for wealth management

Nicolet Bankshares has established a strong wealth management service tailored for high-net-worth individuals. For the first nine months of 2024, wealth management fee income was reported at $20.2 million, reflecting a 17% increase from the previous year. The bank manages assets exceeding $1 billion for its wealth management clients.

Wealth Management Metrics	Amount (in millions)	Percentage Change
Wealth Management Fee Income	20.2	17%
Assets Under Management	1,000+	N/A

Nicolet Bankshares, Inc. (NIC) - Business Model: Cost Structure

Personnel expenses for banking staff

Personnel expenses for Nicolet Bankshares, Inc. totaled $81.7 million for the nine months ended September 30, 2024, representing an increase of $9.6 million (or 13%) compared to the same period in 2023. Salary expenses increased by $6.8 million (or 11%), while fringe benefits rose by $2.8 million.

Operational costs (branch maintenance, technology)

Operational costs, including branch maintenance and technology, amounted to $26.5 million for the first nine months of 2024, a slight decrease from $26.7 million in the same period of 2023. Data processing expenses accounted for $13.1 million, reflecting a 2% increase year-over-year.

Operational Cost Category	2024 (in millions)	2023 (in millions)	% Change
Branch Maintenance	$12.5	$12.3	1.6%
Technology	$13.1	$12.8	2.4%
Total Operational Costs	$26.5	$26.7	-0.7%

Marketing and business development expenses

Nicolet Bankshares allocated $6.0 million towards marketing and business development for the first nine months of 2024. This reflects a slight increase of $69,000 or 1% from the prior year.

Regulatory compliance costs

Regulatory compliance costs, including FDIC assessments, totaled $3.0 million for the first nine months of 2024, a decrease of $36,000 (or 1%) from $3.0 million in the same period of 2023. Compliance-related expenses are critical as they ensure adherence to federal and state regulations.

Cost Category	2024 (in millions)	2023 (in millions)	% Change
Regulatory Compliance	$3.0	$3.0	0%
FDIC Assessments	$0.99	$1.5	-34%

Nicolet Bankshares, Inc. (NIC) - Business Model: Revenue Streams

Interest income from loans

For the nine months ended September 30, 2024, Nicolet Bankshares reported tax-equivalent interest income of $327 million, a $46 million increase from the prior year, primarily driven by higher average rates and solid loan growth. Interest income on loans alone increased by $42 million over the same period in 2023, reflecting the rising interest rate environment and strong loan demand .

Noninterest income from fees and services

Noninterest income for the first nine months of 2024 totaled $61 million, representing a substantial increase of $50 million compared to the same period in 2023. This increase was primarily attributed to the repositioning of the balance sheet in early 2023. Excluding net asset gains and losses, noninterest income was $58 million, up $7 million year-over-year .

Category	Q3 2024	Q3 2023	Change
Wealth Management Fees	$7.1 million	$6.1 million	+17%
Net Mortgage Income	$2.9 million	$2.1 million	+41%
Service Charges on Deposit Accounts	$1.9 million	$1.5 million	+28%
BOLI Income	$1.5 million	$1.1 million	+33%

Wealth management fees

Wealth management fee income reached $20.2 million in the nine months ending September 30, 2024, an increase of $2.8 million (or 16%) from the prior year. This growth is attributed to favorable market changes and an increase in accounts and assets under management .

Gains from investment securities

Nicolet Bankshares experienced net asset gains of $3.7 million for the first nine months of 2024, which included a $1.6 million gain from sales of investments and a $1.3 million gain on the early extinguishment of subordinated notes . The overall investment securities portfolio had a fair value of $825.9 million at September 30, 2024 .

Article updated on 8 Nov 2024

Resources:

1. Nicolet Bankshares, Inc. (NIC) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Nicolet Bankshares, Inc. (NIC)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Nicolet Bankshares, Inc. (NIC)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.