Nicolet Bankshares (NIC)

Regional banking company Nicolet Bankshares (NYSE:NIC) reported Q3 CY2025 results topping the market’s revenue expectations, with sales up 13.2% year on year to $103.3 million. Its non-GAAP profit of $2.66 per share was 11.4% above analysts’ consensus estimates.

Company Overview

Starting as Green Bay Financial Corporation in 2000 before rebranding in 2002, Nicolet Bankshares (NYSE:NIC) is a regional bank holding company that provides commercial, agricultural, and consumer banking services primarily in Wisconsin, Michigan, and Minnesota.

Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.

Nicolet Bankshares competes with other regional banks operating in the Upper Midwest, including Associated Banc-Corp (NYSE:ASB), First Midwest Bancorp (NASDAQ:FMBI), and Old National Bancorp (NASDAQ:ONB), as well as larger national banks and local community banks throughout its service area.

In general, banks make money from two primary sources. The first is net interest income, which is interest earned on loans, mortgages, and investments in securities minus interest paid out on deposits. The second source is non-interest income, which can come from bank account, credit card, wealth management, investing banking, and trading fees. Thankfully, Nicolet Bankshares’s 15.5% annualized revenue growth over the last five years was impressive. Its growth surpassed the average banking company and shows its offerings resonate with customers, a great starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. Nicolet Bankshares’s annualized revenue growth of 18.1% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Nicolet Bankshares reported year-on-year revenue growth of 13.2%, and its $103.3 million of revenue exceeded Wall Street’s estimates by 6.5%.

Net interest income made up 79.5% of the company’s total revenue during the last five years, meaning lending operations are Nicolet Bankshares’s largest source of revenue.

Net interest income commands greater market attention due to its reliability and consistency, whereas non-interest income is often seen as lower-quality revenue that lacks the same dependable characteristics.

Topline growth is certainly important, but the overall profitability of this growth matters for the bottom line. For banks, we look at efficiency ratio, which is non-interest expense (salaries, rent, IT, marketing, excluding interest paid out to depositors) as a percentage of total revenue.

Markets understand that a bank’s expense base depends on its revenue mix and what mostly drives share price performance is the change in this ratio, rather than its absolute value. It’s somewhat counterintuitive, but a lower efficiency ratio is better.

Over the last five years, Nicolet Bankshares’s efficiency ratio has swelled by 3.3 percentage points, going from 55.9% to 51.6%. Said differently, the company’s expenses have grown at a slower rate than revenue, which typically signals prudent management.

In Q3, Nicolet Bankshares’s efficiency ratio was 48.7%, beating analysts’ expectations by 316.8 basis points (100 basis points = 1 percentage point). This result was 5.5 percentage points better than the same quarter last year.

For the next 12 months, Wall Street expects Nicolet Bankshares to become less profitable as it anticipates an efficiency ratio of 54.5%.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Nicolet Bankshares’s EPS grew at a solid 12.5% compounded annual growth rate over the last five years. However, this performance was lower than its 15.5% annualized revenue growth, telling us the company became less profitable on a per-share basis as it expanded.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Nicolet Bankshares, its two-year annual EPS growth of 20.8% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.

In Q3, Nicolet Bankshares reported adjusted EPS of $2.66, up from $2.04 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Nicolet Bankshares’s full-year EPS of $9.28 to grow 18.7%.

Banks are balance sheet-driven businesses because they generate earnings primarily through borrowing and lending. They’re also valued based on their balance sheet strength and ability to compound book value (another name for shareholders’ equity) over time.

When analyzing banks, tangible book value per share (TBVPS) takes precedence over many other metrics. This measure isolates genuine per-share value by removing intangible assets of debatable liquidation worth. EPS can become murky due to acquisition impacts or accounting flexibility around loan provisions, and TBVPS resists financial engineering manipulation.

Nicolet Bankshares’s TBVPS grew at an exceptional 9.6% annual clip over the last five years. TBVPS growth has also accelerated recently, growing by 19.7% annually over the last two years from $39.18 to $56.17 per share.

Over the next 12 months, Consensus estimates call for Nicolet Bankshares’s TBVPS to grow by 15.8% to $65.03, solid growth rate.

Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.

Over the last two years, Nicolet Bankshares has averaged a Tier 1 capital ratio of 10.9%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

Return on equity, or ROE, tells us how much profit a company generates for each dollar of shareholder equity, a key funding source for banks. Over a long period, banks with high ROE tend to compound shareholder wealth faster through retained earnings, buybacks, and dividends.

Over the last five years, Nicolet Bankshares has averaged an ROE of 10.1%, respectable for a company operating in a sector where the average shakes out around 7.5% and those putting up 15%+ are greatly admired. This shows Nicolet Bankshares has a narrow competitive moat.

We were impressed by how significantly Nicolet Bankshares blew past analysts’ revenue expectations this quarter. We were also glad its net interest income outperformed Wall Street’s estimates. Zooming out, we think this quarter featured some important positives. The stock remained flat at $130.41 immediately following the results.

Updated: December 18, 2025 at 12:05 AM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in Nicolet Bankshares.

There are multiple reasons why we think Nicolet Bankshares is an amazing business. To begin with, its revenue growth was impressive over the last five years, and its growth over the next 12 months is expected to accelerate. And while its anticipated efficiency ratio over the next year signals its day-to-day expenses will rise, its estimated net interest income growth for the next 12 months is great. On top of that, Nicolet Bankshares’s expanding net interest margin shows its loan book is becoming more profitable.

Nicolet Bankshares’s P/B ratio based on the next 12 months is 1.6x. Looking at the banking landscape today, Nicolet Bankshares’s fundamentals really stand out, and we like it at this price.

Wall Street analysts have a consensus one-year price target of $157.80 on the company (compared to the current share price of $130.41), implying they see 21% upside in buying Nicolet Bankshares in the short term.