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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
FORM 10-Q
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2020
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                           to                          
Commission file number: 001-37700
NICOLET BANKSHARES, INC.
(Exact Name of Registrant as Specified in its Charter)
Wisconsin47-0871001
(State or Other Jurisdiction of Incorporation or Organization)
(I.R.S. Employer Identification No.)
111 North Washington Street
Green Bay,Wisconsin54301
(Address of Principal Executive Offices) 
(Zip Code)
(920)430-1400
(Registrant’s Telephone Number, Including Area Code)
N/A
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareNCBSThe NASDAQ Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒
As of October 28, 2020 there were 10,085,569 shares of $0.01 par value common stock outstanding.



Nicolet Bankshares, Inc.
Quarterly Report on Form 10-Q
September 30, 2020
TABLE OF CONTENTS
PAGE
2


PART I – FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS:
NICOLET BANKSHARES, INC.
Consolidated Balance Sheets
(In thousands, except share and per share data)
September 30, 2020December 31, 2019
(Unaudited)(Audited)
Assets
Cash and due from banks$67,922 $75,433 
Interest-earning deposits785,642 106,626 
Cash and cash equivalents
853,564 182,059 
Certificates of deposit in other banks32,969 19,305 
Securities available for sale (“AFS”), at fair value535,351 449,302 
Other investments26,636 24,072 
Loans held for sale8,384 2,706 
Loans2,908,793 2,573,751 
Allowance for credit losses - loans (“ACL-Loans”)(31,388)(13,972)
Loans, net
2,877,405 2,559,779 
Premises and equipment, net64,184 56,469 
Bank owned life insurance (“BOLI”)82,905 78,140 
Goodwill and other intangibles, net176,213 165,967 
Accrued interest receivable and other assets48,764 39,461 
Total assets
$4,706,375 $3,577,260 
Liabilities and Stockholders’ Equity
Liabilities:
Noninterest-bearing demand deposits$1,135,384 $819,055 
Interest-bearing deposits2,577,424 2,135,398 
Total deposits
3,712,808 2,954,453 
Short-term borrowings  
Long-term borrowings405,826 67,629 
Accrued interest payable and other liabilities48,872 38,188 
Total liabilities
4,167,506 3,060,270 
Stockholders’ Equity:
Common stock102 106 
Additional paid-in capital289,536 312,733 
Retained earnings234,965 199,005 
Accumulated other comprehensive income (loss)13,465 4,418 
Total Nicolet Bankshares, Inc. stockholders’ equity
538,068 516,262 
Noncontrolling interest801 728 
Total stockholders’ equity and noncontrolling interest
538,869 516,990 
Total liabilities, noncontrolling interest and stockholders’ equity
$4,706,375 $3,577,260 
Preferred shares authorized (no par value)
10,000,000 10,000,000 
Preferred shares issued and outstanding  
Common shares authorized (par value $0.01 per share)
30,000,000 30,000,000 
Common shares outstanding10,196,228 10,587,738 
Common shares issued10,215,334 10,610,259 
See accompanying notes to unaudited consolidated financial statements.
3

ITEM 1. Financial Statements Continued:

NICOLET BANKSHARES, INC.
Consolidated Statements of Income
(In thousands, except share and per share data) (Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020201920202019
Interest income:
Loans, including loan fees$34,047 $31,334 $101,591 $92,511 
Investment securities:
Taxable
2,001 1,904 6,115 5,578 
Tax-exempt
542 503 1,542 1,574 
Other interest income680 926 1,917 2,733 
Total interest income
37,270 34,667 111,165 102,396 
Interest expense:
Deposits3,784 4,596 13,196 14,103 
Short-term borrowings  65  
Long-term borrowings926 881 2,584 2,684 
Total interest expense
4,710 5,477 15,845 16,787 
Net interest income
32,560 29,190 95,320 85,609 
Provision for credit losses3,000 400 9,000 900 
Net interest income after provision for credit losses
29,560 28,790 86,320 84,709 
Noninterest income:
Trust services fee income1,628 1,594 4,717 4,631 
Brokerage fee income2,489 2,113 7,080 5,925 
Mortgage income, net9,675 3,700 21,965 6,962 
Service charges on deposit accounts1,037 1,223 3,075 3,587 
Card interchange income1,877 1,735 5,076 4,815 
BOLI income531 495 1,774 1,834 
Asset gains (losses), net217 286 (1,185)8,030 
Other income1,237 1,166 3,245 4,274 
Total noninterest income
18,691 12,312 45,747 40,058 
Noninterest expense:
Personnel14,072 12,914 41,877 40,809 
Occupancy, equipment and office4,051 3,454 12,616 10,961 
Business development and marketing810 1,428 4,683 4,288 
Data processing2,658 2,515 7,620 7,220 
Intangibles amortization834 914 2,707 2,936 
Other expense1,260 1,662 5,849 5,159 
Total noninterest expense
23,685 22,887 75,352 71,373 
Income before income tax expense
24,566 18,215 56,715 53,394 
Income tax expense6,434 4,603 14,331 10,788 
Net income
18,132 13,612 42,384 42,606 
Less: Net income attributable to noncontrolling interest30 82 249 260 
Net income attributable to Nicolet Bankshares, Inc.$18,102 $13,530 $42,135 $42,346 
Earnings per common share:
Basic$1.75 $1.45 $4.04 $4.51 
Diluted$1.72 $1.40 $3.97 $4.36 
Weighted average common shares outstanding:
Basic10,348,862 9,346,814 10,426,228 9,393,795 
Diluted10,498,552 9,696,850 10,604,732 9,706,795 
See accompanying notes to unaudited consolidated financial statements.
4

ITEM 1. Financial Statements Continued:

NICOLET BANKSHARES, INC.
Consolidated Statements of Comprehensive Income
(In thousands) (Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020201920202019
Net income$18,132 $13,612 $42,384 $42,606 
Other comprehensive income (loss), net of tax:
Unrealized gains (losses) on securities AFS:
Net unrealized holding gains (losses)
394 2,053 12,708 14,165 
Net realized (gains) losses included in income
(151) (315)(32)
Income tax (expense) benefit(66)(555)(3,346)(3,817)
Total other comprehensive income (loss)177 1,498 9,047 10,316 
Comprehensive income$18,309 $15,110 $51,431 $52,922 
See accompanying notes to unaudited consolidated financial statements.
5

ITEM 1. Financial Statements Continued:

NICOLET BANKSHARES, INC.
Consolidated Statements of Stockholders’ Equity
(In thousands) (Unaudited)
Nicolet Bankshares, Inc. Stockholders’ Equity
Common
Stock
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Non-
controlling
Interest
Total
Balances at June 30, 2020$104 $301,778 $216,863 $13,288 $820 $532,853 
Comprehensive income:
Net income, three months ended September 30, 2020  18,102  30 18,132 
Other comprehensive income (loss)
   177  177 
Stock-based compensation expense 1,260    1,260 
Exercise of stock options, net 94    94 
Issuance of common stock 148    148 
Purchase and retirement of common stock(2)(13,744)   (13,746)
Distribution to noncontrolling interest    (49)(49)
Balances at September 30, 2020$102 $289,536 $234,965 $13,465 $801 $538,869 
Balances at June 30, 2019$94 $234,963 $173,180 $3,178 $733 $412,148 
Comprehensive income:
Net income, three months ended September 30, 2019— — 13,530 — 82 13,612 
Other comprehensive income (loss)
— — — 1,498 — 1,498 
Stock-based compensation expense— 1,144 — — — 1,144 
Exercise of stock options, net— 1,200 — — — 1,200 
Issuance of common stock— 166 — — — 166 
Purchase and retirement of common stock— (939)— — — (939)
Distribution to noncontrolling interest— — — — (87)(87)
Balances at September 30, 2019$94 $236,534 $186,710 $4,676 $728 $428,742 
Balances at December 31, 2019$106 $312,733 $199,005 $4,418 $728 $516,990 
Comprehensive income:
Net income, nine months ended September 30, 2020  42,135  249 42,384 
Other comprehensive income (loss)
   9,047  9,047 
Stock-based compensation expense 4,216    4,216 
Exercise of stock options, net 1,048    1,048 
Issuance of common stock 482    482 
Purchase and retirement of common stock(4)(28,943)   (28,947)
Distribution to noncontrolling interest    (176)(176)
Adoption of new accounting pronouncement (see Note 1)  (6,175)  (6,175)
Balances at September 30, 2020$102 $289,536 $234,965 $13,465 $801 $538,869 
Balances at December 31, 2018$95 $247,790 $144,364 $(5,640)$743 $387,352 
Comprehensive income:
Net income, nine months ended September 30, 2019— — 42,346 — 260 42,606 
Other comprehensive income (loss)
— — — 10,316 — 10,316 
Stock-based compensation expense— 3,643 — — — 3,643 
Exercise of stock options, net2 4,380 — — — 4,382 
Issuance of common stock— 449 — — — 449 
Purchase and retirement of common stock(3)(19,728)— — — (19,731)
Distribution to noncontrolling interest— — — — (275)(275)
Balances at September 30, 2019$94 $236,534 $186,710 $4,676 $728 $428,742 
See accompanying notes to unaudited consolidated financial statements.
6

ITEM 1. Financial Statements Continued:

NICOLET BANKSHARES, INC.
Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
Nine Months Ended September 30,
20202019
Cash Flows From Operating Activities:
Net income$42,384 $42,606 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and accretion7,564 5,260 
Provision for credit losses9,000 900 
Increase in cash surrender value of life insurance(1,647)(1,432)
Stock-based compensation expense4,216 3,643 
Asset (gains) losses, net1,185 (8,030)
Gain on sale of loans held for sale, net(22,217)(7,042)
Proceeds from sale of loans held for sale663,466 255,775 
Origination of loans held for sale(650,660)(259,465)
Net change in:
Accrued interest receivable and other assets
4,781 (5,020)
Accrued interest payable and other liabilities
6,200 9,310 
Net cash provided by (used in) operating activities
64,272 36,505 
Cash Flows From Investing Activities:
Net (increase) decrease in loans(244,751)(74,131)
Net (increase) decrease in certificates of deposit in other banks5,719 (4,402)
Purchases of securities AFS(128,661)(57,875)
Proceeds from sales of securities AFS14,864 13,240 
Proceeds from calls and maturities of securities AFS69,568 38,128 
Purchases of other investments(3,815)(1,941)
Proceeds from sales of other investments 17,144 
Purchases of BOLI (5,000)
Proceeds from redemption of BOLI245 1,348 
Net (increase) decrease in premises and equipment(9,708)(3,529)
Net (increase) decrease in other real estate and other assets 15 
Net cash (paid) received in business combination(21,820) 
Net cash provided by (used in) investing activities
(318,359)(77,003)
Cash Flows From Financing Activities:
Net increase (decrease) in deposits617,373 (29,691)
Proceeds from long-term borrowings367,841  
Repayments of long-term borrowings(32,029)(20,193)
Purchase and retirement of common stock(28,947)(19,731)
Proceeds from issuance of common stock482 449 
Proceeds from exercise of stock options1,048 4,382 
Distribution to noncontrolling interest(176)(275)
Net cash provided by (used in) financing activities
925,592 (65,059)
Net increase (decrease) in cash and cash equivalents
671,505 (105,557)
Cash and cash equivalents:
Beginning
182,059 249,526 
Ending *
$853,564 $143,969 
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest$18,130 $16,682 
Cash paid for taxes16,353 11,690 
Transfer of loans and bank premises to other real estate owned 1,025 
Capitalized mortgage servicing rights4,038 1,807 
* Cash and cash equivalents at September 30, 2020 include restricted cash of $1.9 million pledged as collateral on interest rate swaps and no reserve balance was required with the Federal Reserve Bank. At September 30, 2019, cash and cash equivalents include restricted cash of $1.3 million pledged as collateral on interest rate swaps and $6.3 million for the reserve balance required with the Federal Reserve Bank.
See accompanying notes to unaudited consolidated financial statements.
7


NICOLET BANKSHARES, INC.
Notes to Unaudited Consolidated Financial Statements

Note 1 – Basis of Presentation
General
In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the consolidated balance sheets, statements of income, comprehensive income, changes in stockholders’ equity and cash flows of Nicolet Bankshares, Inc. (the “Company” or “Nicolet”) and its subsidiaries, for the periods presented, and all such adjustments are of a normal recurring nature. All material intercompany transactions and balances have been eliminated. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the entire year.
These interim consolidated financial statements have been prepared according to the rules and regulations of the Securities and Exchange Commission and, therefore, certain information and footnote disclosures normally presented in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) have been omitted or abbreviated. These consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.
Critical Accounting Policies and Estimates
Preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying disclosures. These estimates are based on management’s best knowledge of current events and actions the Company may undertake in the future. Estimates are used in accounting for, among other items, the allowance for credit losses, valuation of loans in acquisition transactions, useful lives for depreciation and amortization, fair value of financial instruments, impairment calculations, valuation of deferred tax assets, uncertain income tax positions and contingencies. Estimates that are particularly susceptible to significant change for the Company include the determination of the allowance for credit losses, the determination and assessment of deferred tax assets and liabilities, and the valuation of loans acquired in acquisition transactions; therefore, these are critical accounting policies. Factors that may cause sensitivity to the aforementioned estimates include but are not limited to: external market factors such as market interest rates and employment rates, changes to operating policies and procedures, changes in applicable banking or tax regulations, and changes to deferred tax estimates. Actual results may ultimately differ from estimates, although management does not generally believe such differences would materially affect the consolidated financial statements in any individual reporting period presented.
There have been no material changes or developments with respect to the assumptions or methodologies that the Company uses when applying what management believes are critical accounting policies and developing critical accounting estimates as disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, except as disclosed in Updates to Significant Accounting Policies and Recent Accounting Developments Adopted below.
Updates to Significant Accounting Policies
Securities Available for Sale: Securities classified as AFS are those securities that the Company intends to hold for an indefinite period of time, but not necessarily to maturity. Any decision to sell a security classified as AFS would be based on various factors, including significant movements in interest rates, changes in the maturity mix of the Company’s assets and liabilities, liquidity needs, regulatory capital considerations, and other similar factors.

The Company evaluates securities AFS in unrealized loss positions on a quarterly basis to determine whether the decline in fair value below the amortized costs basis (impairment) is due to credit-related factors or noncredit-related factors. In making this evaluation, management considers the extent to which the fair value has been less than cost, the financial condition and near-term prospects of the issuer, and the intent and ability of the Company to hold the security for a period of time sufficient to allow for any anticipated recovery in fair value. Any impairment that is not credit-related is recognized in other comprehensive income, net of related deferred income taxes. Credit-related impairment is recognized as an allowance for credit losses (“ACL”) on the balance sheet based on the amount by which the amortized cost basis exceeds the fair value, with a corresponding charge to net income. Both the ACL and the charge to net income may be reversed if conditions change. However, if the Company intends to sell an impaired AFS security or more likely than not will be required to sell such a security before recovering its amortized cost basis, the entire impairment amount must be recognized in net income with a corresponding adjustment to the security's amortized cost basis rather than through the establishment of an ACL. See Note 5 for additional disclosures on AFS securities.

Loans – Originated: Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are carried at their amortized cost basis, which is the unpaid principal balance outstanding, net of deferred loan fees and costs and any direct principal charge-offs. The Company made an accounting policy election to exclude accrued interest from the amortized cost basis of loans and report such accrued interest as part of accrued interest receivable and other assets on the consolidated balance sheets.
8


Interest income is accrued on the unpaid principal balance using the simple interest method. The accrual of interest income on loans is discontinued when, in the opinion of management, there is reasonable doubt as to the borrower’s ability to meet payment of interest or principal when due. Loans are generally placed on nonaccrual status when contractually past due 90 days or more as to interest or principal, though may be placed in such status earlier based on the circumstances. Loans past due 90 days or more may continue on accrual only when they are well secured and/or in process of collection or renewal. When interest accrual is discontinued, all previously accrued but uncollected interest is reversed against current period interest income. Except in very limited circumstances, cash collections on nonaccrual loans are credited to the loan receivable balance and no interest income is recognized on those loans until the principal balance is paid in full. Accrual of interest may be resumed when the customer is current on all principal and interest payments and has been paying on a timely basis for a sustained period of time. See Note 6 for additional information and disclosures on loans.

Loans – Acquired: Loans purchased in acquisition transactions are acquired loans, and are recorded at their estimated fair value at the acquisition date.

Prior to January 1, 2020, as described in further detail in the Company’s 2019 Annual Report on Form 10-K, the Company initially classified acquired loans as either purchased credit impaired (“PCI”) loans (i.e., loans that reflect credit deterioration since origination and for which it is probable at acquisition that the Company will be unable to collect all contractually required payments) or purchased non-impaired loans (i.e., “performing acquired loans”). The Company estimated the fair value of PCI loans based on the amount and timing of expected principal, interest and other cash flows for each loan. The excess of the loan’s contractual principal and interest payments over all cash flows expected to be collected at acquisition was considered an amount that should not be accreted. These credit discounts (“nonaccretable marks”) were included in the determination of the initial fair value for acquired loans; therefore, no allowance for credit losses was recorded at the acquisition date. Differences between the estimated fair values and expected cash flows of acquired loans at the acquisition date that were not credit-based (“accretable marks”) were subsequently accreted to interest income over the estimated life of the loans. Subsequent to the acquisition date for PCI loans, increases in cash flows over those expected at the acquisition date resulted in a move of the discount from nonaccretable to accretable, while decreases in expected cash flows after the acquisition date were recognized through the provision for credit losses.

Subsequent to January 1, 2020, acquired loans that have evidence of more-than-insignificant deterioration in credit quality since origination are considered purchased credit deteriorated (“PCD”) loans. At acquisition, an estimate of expected credit losses is made for PCD loans. This initial allowance for credit losses is allocated to individual PCD loans and added to the purchase price or acquisition date fair value to establish the initial amortized cost basis of the PCD loans. Any difference between the unpaid principal balance of PCD loans and the amortized cost basis is considered to relate to noncredit factors, resulting in a discount or premium that is amortized to interest income. For acquired loans not deemed PCD loans at acquisition, the difference between the initial fair value mark and the unpaid principal balance are recognized in interest income over the estimated life of the loans. In addition, an initial allowance for expected credit losses is estimated and recorded as provision expense at the acquisition date. The subsequent measurement of expected credit losses for all acquired loans is the same as the subsequent measurement of expected credit losses for originated loans. See Note 6 for additional information and disclosures on loans.

Allowance for Credit Losses - Loans: The ACL-Loans represents management’s estimate of expected credit losses in the Company’s loan portfolio at the balance sheet date. The Company estimates the ACL-Loans based on the amortized cost basis of the underlying loan and has made an accounting policy election to exclude accrued interest from the loan’s amortized cost basis and the related measurement of the ACL-Loans. Estimating the amount of the ACL-Loans is a function of a number of factors, including but not limited to changes in the loan portfolio, net charge-offs, trends in past due and nonaccrual loans, and the level of potential problem loans, all of which may be susceptible to significant change.

Prior to January 1, 2020, as described in further detail in the Company’s 2019 Annual Report on Form 10-K, the Company used an incurred loss impairment model. This methodology assessed the overall appropriateness of the allowance for credit losses and included allocations for specifically identified impaired loans and loss factors for all remaining loans, with a component primarily based on historical loss rates and another component primarily based on other qualitative factors. Impaired loans were individually assessed and measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market price or the fair value of the collateral if the loan was collateral dependent. Loans that were determined not to be impaired were collectively evaluated for impairment, stratified by type and allocated loss ranges based on the Company’s actual historical loss ratios for each strata, and adjustments were also provided for certain environmental and other qualitative factors.

Subsequent to January 1, 2020, the Company uses a current expected credit loss model (“CECL”). This methodology also considers historical loss rates and other qualitative adjustments, as well as a new forward-looking component that considers reasonable and supportable forecasts over the expected life of each loan. To develop the ACL-Loans estimate under the CECL
9


model, the Company segments the loan portfolio into loan pools based on loan type and similar credit risk elements; performs an individual evaluation of PCD loans; calculates the historical loss rates for the segmented loan pools; applies the loss rates over the calculated life of the pooled loans; adjusts for forecasted macro-level economic conditions; and determines qualitative adjustments based on factors and conditions unique to Nicolet's portfolio.

Recent Accounting Developments Adopted
In August 2018, the FASB issued Accounting Standards Update (“ASU”) 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. This ASU modifies the disclosure requirements for fair value measurements by removing, modifying or adding certain disclosures. The updated guidance was effective for annual reporting periods, including interim periods within those fiscal years, beginning after December 15, 2019. The Company adopted the updated guidance effective January 1, 2020, with no material impact on its consolidated financial statements as the new ASU only revises disclosure requirements. See Note 9 for fair value disclosures.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments intended to improve the financial reporting by requiring earlier recognition of credit losses on loans and certain other financial assets. Topic 326 replaces the incurred loss impairment model (which recognizes losses when a probable threshold is met) with a requirement to recognize lifetime expected credit losses immediately when a financial asset is originated or purchased. The measurement of lifetime expected credit losses is based on historical experience, current conditions, and reasonable and supportable forecasts. The ASU was effective for SEC filers for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company adopted the new accounting standard on January 1, 2020, as required, and recorded a cumulative-effect adjustment of $6 million to retained earnings. See Updates to Significant Accounting Policies above for changes to accounting policies and see Notes 5 and 6 for additional disclosures related to this new accounting pronouncement.
Reclassifications
Certain amounts in the 2019 consolidated financial statements have been reclassified to conform to the 2020 presentation.

Note 2 – Acquisitions
Completed Acquisitions:
Choice Bancorp, Inc. (“Choice”): On November 8, 2019, the Company consummated its merger with Choice, pursuant to the terms of the Agreement and Plan of Merger dated June 26, 2019, (the “Choice Merger Agreement”), whereby Choice (at 12% of Nicolet’s then pre-merger asset size) was merged with and into Nicolet, and Choice Bank, the wholly owned bank subsidiary of Choice, was merged with and into the Company's banking subsidiary, Nicolet National Bank (the “Bank”). The system integration was completed, and the two branches of Choice opened on November 12, 2019, as Nicolet National Bank branches, expanding its presence in the Oshkosh marketplace. The Company closed its legacy Oshkosh location concurrently with the consummation of the Choice merger.

The purpose of the merger was to continue Nicolet’s interest in strategic growth, consistent with its plan to improve profitability through efficiency, leverage the strengths of each bank across the combined customer base, and add shareholder value. With the merger, Nicolet became the leading community bank to serve the Oshkosh marketplace.
Pursuant to the Choice Merger Agreement, the final purchase price consisted of issuing 1,184,102 shares of the Company's common stock (given the final stock-for-stock exchange ratio of 0.497, and not exchanging the Choice shares owned by the Company immediately prior to the time of the merger), for common stock consideration of $79.8 million (based on $67.39 per share, the volume weighted average closing price of the Company's common stock over the preceding 30 trading day period) plus cash consideration of $1.7 million. Approximately $0.2 million in direct stock issuance costs for the merger were incurred and charged against additional paid-in capital.
Upon consummation, the Company added $457 million in assets, including $348 million in loans, $289 million in deposits, $1.7 million in core deposit intangible, and $45 million of goodwill. The Company accounted for the transaction under the acquisition method of accounting, and thus, the financial position and results of operations of Choice prior to the consummation date were not included in the accompanying consolidated financial statements. The accounting required assets purchased and liabilities assumed to be recorded at their respective estimated fair values at the date of acquisition.
Advantage Community Bancshares, Inc. (“Advantage”): On August 21, 2020, Nicolet completed its merger with Advantage, pursuant to the terms of the definitive merger agreement dated March 2, 2020, whereby Advantage merged with and into Nicolet, and Advantage Community Bank, the wholly owned bank subsidiary of Advantage, was merged with and into the Bank. Advantage's four branches in Dorchester, Edgar, Mosinee, and Wausau opened as Nicolet National Bank branches on August 24, 2020, expanding our presence in Central Wisconsin and the Wausau area. Due to the small size of the transaction, terms of the all-cash deal were not disclosed.
10


Upon consummation, Advantage added total assets of approximately $172 million (representing approximately 4% of Nicolet's then pre-merger asset size), loans of $88 million, deposits of $141 million, core deposit intangible of $1 million, and goodwill of $12 million.

Terminated Acquisition:
Commerce Financial Holdings, Inc. (“Commerce”): On February 17, 2020, Nicolet entered into a definitive merger agreement (“Merger Agreement”) with Commerce Financial Holdings, Inc. (“Commerce”) pursuant to which Nicolet would acquire Commerce and its wholly-owned banking subsidiary, Commerce State Bank. On May 18, 2020, Nicolet and Commerce announced a mutual agreement to terminate their Merger Agreement. Nicolet paid Commerce $0.5 million and surrendered its $0.1 million of Commerce common stock.

Note 3 – Earnings per Common Share
Basic earnings per common share are calculated by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings per common share are calculated by dividing net income available to common shareholders by the weighted average number of shares adjusted for the dilutive effect of common stock awards (outstanding stock options and unvested restricted stock), if any. Presented below are the calculations for basic and diluted earnings per common share.
Three Months Ended September 30,Nine Months Ended September 30,
(In thousands, except per share data)2020201920202019
Net income attributable to Nicolet Bankshares, Inc.$18,102 $13,530 $42,135 $42,346 
Weighted average common shares outstanding10,349 9,347 10,426 9,394 
Effect of dilutive common stock awards150 350 179 313 
Diluted weighted average common shares outstanding10,499 9,697 10,605 9,707 
Basic earnings per common share*$1.75 $1.45 $4.04 $4.51 
Diluted earnings per common share*$1.72 $1.40 $3.97 $4.36 
*Cumulative quarterly per share performance may not equal annual per share totals due to the effects of the amount and timing of capital increases. When computing earnings per share for an interim period, the denominator is based on the weighted average shares outstanding during the interim period, and not on an annualized weighted average basis. Accordingly, the sum of the earnings per share data for the quarters will not necessarily equal the year to date earnings per share data.
For the three and nine months ended September 30, 2020, options to purchase approximately 0.2 million and 0.1 million shares, respectively, are excluded from the calculation of diluted earnings per common share as the effect of their exercise would have been anti-dilutive. For both the three and nine months ended September 30, 2019, options to purchase less than 0.1 million shares are excluded from the calculation of diluted earnings per common share as the effect of their exercise would have been anti-dilutive.

Note 4 – Stock-Based Compensation
The Company may grant stock options and restricted stock under its stock-based compensation plans to certain officers, employees and directors. These plans are administered by a committee of the Board of Directors, and at September 30, 2020, approximately 1.4 million shares were available for grant under these stock-based compensation plans.
A Black-Scholes model is utilized to estimate the fair value of stock option grants, while the market price of the Company’s stock at the date of grant is used to estimate the fair value of restricted stock awards. The weighted average assumptions used in the Black-Scholes model for valuing stock option grants were as follows.
Nine Months Ended September 30,
20202019
Dividend yield % %
Expected volatility25 %25 %
Risk-free interest rate1.72 %2.37 %
Expected average life7 years7 years
Weighted average per share fair value of options$23.74 $19.23 
11


A summary of the Company’s stock option activity is summarized below.
Stock OptionsOption Shares
Outstanding