NICOLET BANKSHARES INC (NIC)

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

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

In this Quarterly Report on Form 10-Q, unless the context indicates otherwise, all references to “we,” “us” and “our” refer to the Company.

Evaluation of financial performance and balance sheet line items is impacted both by the timing and size of the MidWestOne acquisition, which was completed on February 13, 2026. Certain income statement results, average balances, and related ratios for 2026 include partial contributions from MidWestOne from the acquisition date. In the acquisition, MidWestOne stockholders received 0.3175 shares of Nicolet common stock for each share of MidWestOne common stock owned, resulting in the issuance of approximately 6.6 million shares of Nicolet common stock valued at $1.0 billion (based upon the closing stock price of Nicolet’s common stock on February 13, 2026, of $155.19 per share).

Forward-Looking Statements

Statements made in this document and in any documents that are incorporated by reference which are not purely historical are forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995, including any descriptions of management’s plans, objectives, or goals for future operations, products or services, and forecasts of its revenues, earnings, or other measures of performance, or with respect to expectations regarding the economic factors such as inflation and changes in interest rates. Forward-looking statements are based on current management expectations and, by their nature, are subject to risks and uncertainties. These statements are neither statements of historical fact nor assurance of future performance and generally may be identified by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “estimate,” “should,” “will,” “intend,” or similar expressions. Forward-looking statements (including their underlying assumptions) should be viewed with caution. Investors should note that many factors, some of which are discussed elsewhere in this document, could affect the future financial results of Nicolet and could cause those results to differ materially from those implied or anticipated by any forward-looking statements. Except as required by law, we expressly disclaim any obligations to publicly update any forward-looking statements whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise. Important factors, many of which are beyond Nicolet’s control, that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements, in addition to those described in detail under Item 1A, “Risk Factors” of Nicolet’s 2025 Annual Report on Form 10-K include, but are not necessarily limited to the following:

•strategic, market, operating, legal and regulatory risks, including the effects of legislative or regulatory developments affecting the financial industry generally or Nicolet specifically;

•economic, market, political and competitive forces affecting Nicolet’s banking and wealth management businesses;

•potential fluctuations or unanticipated changes in the interest rate environment, monetary or tax policy or general economic conditions, including interest rate changes made by the Federal Reserve and the related cash flow reassessments, which may reduce Nicolet’s net interest income, net interest margin, and / or the volumes and values of loans made or held as well as the value of other financial assets;

•potential difficulties in identifying and completing future merger or acquisition opportunities, as well as our ability to successfully expand and integrate any businesses we acquire, such as the recently completed acquisition of MidWestOne;

•cybersecurity risks and the vulnerability of our network and online banking portals, and the systems or parties with whom we contract, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches that could adversely affect our business and financial performance or reputation;

•changes in accounting standards, rules and interpretations (including effects of assumptions underlying purchase accounting) and any resulting impact on Nicolet’s financial statements;

•compliance or operational risks related to new products, services, ventures, or lines of business, if any, that Nicolet may pursue or implement;

•the risk that we may be required to make substantial expenditures to keep pace with regulatory initiatives and the rapid technological changes in the financial services market;

•our ability to attract and retain key personnel;

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•examinations by our regulatory authorities, including the possibility that the regulatory authorities may, among other things, require us to increase our allowance for credit losses, write-down assets, or take other actions;

•adverse results (including judgments, costs, fines, reputational harm, inability to obtain necessary approvals and / or other negative effects) from current or future litigation, legislation, regulatory proceedings, examinations, investigations, or similar matters or developments related thereto;

•the potential effects of events beyond our control that may have a destabilizing effect on financial markets and the economy, such as inflation and recessions, weather events, climate change, natural disasters, epidemics and pandemics, war or terrorist activities, disruptions in our customers’ supply chains, disruptions in transportation, essential utility outages or trade disputes and related tariffs; and

•the risk that Nicolet’s analysis of these risks and forces could be incorrect and/or that the strategies developed to address them could be unsuccessful.

These factors should be considered in evaluating the forward-looking statements, and you should not place undue reliance on such statements.

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Earnings Summary

Note: Numbers may not sum due to rounding.

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

(2) The ratios of tangible book value per common share, return on average tangible common equity, core return on average assets, core return on average common equity, core return on average tangible common equity, and tangible common equity to tangible assets are non-GAAP financial measures that exclude goo

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Overview

Economic Outlook and Recent Industry Developments

The U.S. economy continued to demonstrate resilience through 2025, although growth moderated from the unexpectedly strong performance of 2024. Based on all indications, real GDP grew at just under 2% in 2025, reflecting a slight slowdown but still indicating a stable expansionary environment. Heading into 2026, GDP is expected to grow at a slightly slower pace than 2025, which is supported by tax policy, consumer spending, and productivity from advancements in artificial intelligence. Employment conditions softened somewhat in 2025, but the labor market remained fundamentally healthy. Nationwide unemployment is projected to rise only slightly in 2026 and stay below levels historically associated with recessionary conditions. Unemployment in our core markets in the Upper Midwest continue to remain below nationwide levels, which is driven by a strong base in manufacturing and healthcare, as well as a stronger labor participation rate than the rest of the country. Consumer spending in 2025 decelerated from 2024’s robust pace, influenced by higher borrowing costs and pockets of consumer caution, yet remained a key contributor to growth. Business investment continued to benefit from productivity gains—particularly in artificial intelligence and automation—though firms grew more selective amid policy uncertainty and tariff-related cost pressures.

After cutting rates three times in the back half of 2024, the Federal Reserve entered 2025 with a more cautious posture. Market expectations early in the year centered on several additional 25 or 50 bps cuts; however, firmer inflation readings and policy volatility—particularly around trade—led the Federal Reserve to signal a more measured approach, cutting rates by 25 bps three times during the year. At this point, the market is expecting two 25 bps rate cuts in 2026. However, stubbornly high inflation and continued strong consumer spending weigh against potentially higher unemployment and slower GDP growth. Additionally, a new Fed Chairman is expected to be appointed in May, which may also have a significant influence on interest rate policy.

The banking sector entered 2025 with renewed optimism. This bullish sentiment largely carried through 2025, though volatility persisted as policy details evolved. Credit losses did rise in 2025, particularly among institutions with heavy commercial real estate (“CRE”) exposure or concentrations in large urban markets. However, these pressures remained contained and did not pose systemic risk. Banks with diversified portfolios and limited investment CRE exposure, or that operate in non-major metro markets—such as Nicolet—were comparatively unaffected. Regulatory reform discussions gained momentum, with expectations of reduced compliance burdens and lower operating costs across the industry. M&A activity, which had been subdued for several years, began to accelerate as both regulatory signals and market conditions improved. Overall, the banking industry enters 2026 with improved sentiment, healthier balance sheets, robust capital levels, and a more favorable policy backdrop than in the years immediately following the regional banking stresses of years prior.

2025 Highlights

Nicolet announced record net income of $151 million for the year ended December 31, 2025, and earnings per diluted common share of $9.78, compared to net income of $124 million and earnings per diluted common share of $8.05 for 2024.

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

Nonperforming assets were $32 million and represented 0.35% of total assets at December 31, 2025, compared to $29 million or 0.33% at year-end 2024. The allowance for credit losses-loans was $69 million (1.01% of loans) at December 31, 2025, compared to $66 million (1.00% of loans) at December 31, 2024.

As noted last year, Nicolet’s Board and executive management viewed 2025 as a year of optionality for the Company. The financial performance of the core franchise placed Nicolet among the top decile of banks in the country, as measured by return on average

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assets and return on tangible common equity. This consistent performance kept all strategic options on the table throughout the year for Nicolet. The priorities, as laid out a year ago, and in no particular order, included (1) funding organic growth, (2) share repurchases, (3) increased dividends, and (4) M&A. We are pleased to say that all four of those priorities were accomplished in 2025, including (1) growth in our balance sheet by 4%, (2) repurchasing more than 646,000 shares in the open market, (3) increasing the dividend by 14%, and (4) capping off the year with the announced acquisition of MidWestOne.

The MidWestOne acquisition (which closed on February 13, 2026) marked a pivotal moment for Nicolet. It doubled the branch footprint to over 100 locations, as well as expanded our footprint to the state of Iowa, increased our presence in Western Wisconsin, and significantly increased our market share in the greater Twin Cities market. Additionally, MidWestOne answered the “$10 billion question” that management has been asked for the past several years. Following the 2022 Charter acquisition, when we ended the year close to $9 billion in assets, people have questioned if and how we planned to cross the $10 billion threshold. As a result of the 2010 Dodd-Frank Act, any bank with assets more than $10 billion is subject to increased regulation, and to more intense scrutiny by the banking regulators. This typically means that those banks must make substantial additional investments in compliance and risk management resources. Also, those banks become subject to the Durbin amendment, which limits how much banks can charge merchants for debit card transaction fees (or “card interchange income” noted on our income statement). In our case, it would mean our interchange income would be reduced by more than $5 million simply because we crossed this asset threshold. Banks that cross that threshold organically, or with a small acquisition typically are less profitable immediately after due to the increased expense and reduced revenues. MidWestOne, and its size ($6 billion), allows Nicolet to leap over the $10 billion threshold, thus realizing many of the operating efficiencies that may allow Nicolet the ability to retain its top quartile, if not top decile profitability going forward.

As we head into 2026, our primary focus will always remain on running a growing, highly profitable community bank that matters to the communities it serves. But following close behind will be what we expect to be the successful integration of MidWestOne. The legal closing of the merger was February 13, 2026 – only 113 days from the announcement. However, unlike each of the past acquisitions we have completed, the core system integration is purposely delayed by approximately six months. Due to the size of this acquisition, as well as working with Fiserv (our core processor), we made the decision to delay the systems conversion of MidWestOne until late summer 2026. Until then, MidWestOne locations will continue to operate under the same name, but as a division of Nicolet National Bank. Once the systems conversion is complete, all MidWestOne locations will carry the Nicolet Bank name and banner. In the interim, there is still much we can do, and have already done, to begin the cultural integration process with MidWestOne. Dozens of employees of both Nicolet and MidWestOne have been working for months on a number of fronts to prepare for the legal closing of the merger. These same people, as well as many more, will continue these efforts as we welcome the employees, customers, and communities of MidWestOne to Nicolet, and prepare for the systems integration later this year. The Board and executive management understand the importance of ensuring the integration efforts with MidWestOne are successful. One of the primary reasons why Nicolet carries the premium valuation it does is because we have been so successful with our past acquisitions – financially, culturally, and strategically. The MidWestOne merger is easily the largest Nicolet has completed in its 25 year history. In fact, the total assets of MidWestOne are approximately the same as Nicolet’s past nine bank acquisitions combined. Taking our time to ensure a successful integration is paramount to our future growth and success as a company.

Nicolet generates capital through its net income and retained earnings. Since organic growth will likely remain in the mid-single digits, we anticipate building capital very quickly. Additional M&A is unlikely in 2026 as we focus on MidWestOne. However, the Board still needs to decide how to allocate that capital, or to simply let it build. Share repurchases and increased dividends are two considerations for the Board (in fact, Nicolet began repurchasing stock in late January following the approval of the merger by MidWestOne shareholders). The Board and executive management believe that the intrinsic value of Nicolet is higher than the current share price, and as a result, believe repurchasing stock is an effective way of deploying capital to benefit existing shareholders.

The impact of the MidWestOne acquisition will certainly cause some additional noise in our financial results in 2026. The combination of merger accounting, one-time expenses, and some of the cost savings being delayed due to the systems integration mean the reported financial results may vary each quarter. However, we remain optimistic our core results (which remove the M&A noise) will continue to place us in the top quartile of publicly traded banks in the country. No matter which strategic paths Nicolet’s Board and executive team choose in 2026, the Company’s priority will always be to operate a highly profitable business that delivers meaningful value to its core stakeholders—customers, shareholders, and employees.

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Table 1: Earnings Summary and Selected Financial Data

(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.

(2) The ratios of tangible book value per common share, return on average tangible common equity, and tangible common equity to tangible assets are non-GAAP financial measures that exclude goodwill and other intangibles, net. These non-GAAP financial ratios have been included as management considers them to be useful metrics to analyze and evaluate financial condition and capital strength. See section “Non-GAAP Financial Measures” below for a reconciliation of these financial measures.

Non-GAAP Financial Measures

We identify “tangible book value per common share,” “return on average tangible common equity,” “tangible common equity to tangible assets” “adjusted net income,” and “adjusted 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, 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 table below.

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Table 1A: Reconciliation of Non-GAAP Financial Measures

Note: Numbers may not sum due to rounding.

(1) Provision expense for 2023 is attributable to the expected loss on a bank subordinated debt investment.

(2) Includes the gains / (losses) on other assets and investments, as well as the impact of the March 2023 balance sheet repositioning which included the sale of $500 million (par value) U.S. Treasury held to maturity securities for a pre-tax loss of $38 million or an after-tax loss of $28 million, with the net proceeds used to reduce FHLB borrowings and the remainder held in investable cash.

(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, 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%.

INCOME STATEMENT ANALYSIS

Net Interest Income

Net interest income is the primary source of Nicolet’s revenue, and is the difference between interest income on earning assets, such as loans and investment securities, and interest expense on interest-bearing liabilities, such as deposits and wholesale funding. Net interest income is directly impacted by the sensitivity of the balance sheet to changes in interest rates and by the amount, mix and composition of interest-earning assets and interest-bearing liabilities, including characteristics such as the fixed or variable nature of the financial instruments, contractual maturities, and repricing frequencies. Tax-equivalent net interest income is a non-GAAP measure, but is a preferred industry measurement of net interest income (and is used in calculating a net interest margin) as it enhances the comparability of net interest income arising from taxable and tax-exempt sources. Tables 2 and 3 present information to facilitate the review and discussion of selected average balance sheet items, tax-equivalent net interest income, interest rate spread, and net interest margin.

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Table 2: Average Balance Sheet and Net Interest Income Analysis - Tax-Equivalent Basis

(1)Nonaccrual loans and loans held for sale are included in the daily average loan balances outstanding.

(2)The yield on tax-exempt loans and tax-exempt investment securities is computed on a tax-equivalent basis using a federal tax rate of 21% and adjusted for the disallowance of interest expense.

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Table 3: Volume/Rate Variance - Tax-Equivalent Basis

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

(2)Nonaccrual loans and loans held for sale are included in the daily average loan balances outstanding.

(3)The yield on tax-exempt loans and tax-exempt investment securities is computed on a tax-equivalent basis using a federal tax rate of 21% and adjusted for the disallowance of interest expense.

Comparison of 2025 versus 2024

At the beginning of 2024, the Federal Funds range was 5.25% to 5.50%. The 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% at 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.

Tax-equivalent net interest income was $308 million for 2025, an increase of $38 million (14%) over 2024. The increase in tax-equivalent net interest income was attributable to net favorable volumes (which added $15 million) and net favorable rates (which increased net interest income $23 million).

Average interest-earning assets increased to $8.2 billion for 2025, $419 million (5%) higher than 2024. Average loans increased $307 million (5%) to $6.8 billion, on solid organic loan growth. Average investment securities increased $17 million, while other interest-earning assets increased $95 million, mostly investable cash from strong deposit growth. As a result, the mix of average interest-earning assets shifted to 83% loans, 11% investment securities, and 6% other interest-earning assets (mostly cash) for 2025, compared to 84%, 11%, and 5%, respectively, for 2024.

Average interest-bearing liabilities were $6.0 billion for 2025, an increase of $334 million (6%) from 2024. Average interest-bearing core deposits increased $387 million (8%), while average brokered deposits decreased $37 million, reflecting a shift in funding strategy. Wholesale funding decreased $16 million, mostly due to the early redemption of subordinated 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 in 2024.

The interest rate spread increased 37 bps between the years. The loan yield improved 14 bps to 6.19% for 2025, mostly from the repricing of new and renewed loans and the yield on investment securities increased 30 bps to 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 interest-bearing liabilities decreased 27 bps to 2.76% for 2025, also reflecting the Federal Reserve interest rate cuts. The contribution from net free funds decreased 8 bps, mostly due to the lower value in the current interest rate environment. As a result, the net interest margin was 3.76% for 2025, up 29 bps compared to 3.47% for 2024.

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Provision for Credit Losses

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), and 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). Asset quality trends have been solid and net charge-offs were negligible for all years.

The provision for credit losses is predominantly a function of Nicolet’s methodology and judgment as to qualitative and quantitative factors used to determine the appropriateness of the ACL-Loans. The appropriateness of the ACL-Loans is affected by changes in the size and character of the loan portfolio, changes in levels of collateral-dependent and other nonperforming loans, historical losses and delinquencies in each portfolio segment, the risk inherent in specific loans, concentrations of loans to specific borrowers or industries, existing and future economic conditions, the fair value of underlying collateral, and other factors which could affect potential credit losses. For additional information regarding asset quality and the ACL-Loans, see “BALANCE SHEET ANALYSIS — Loans,” and “— Allowance for Credit Losses - Loans” and “—Nonperforming Assets.”

Noninterest Income

Table 4: Noninterest Income

Comparison of 2025 versus 2024

Noninterest income was $86 million for 2025, an increase of $3 million from 2024, with growth in most core noninterest income categories, partly offset by lower net asset gains (losses). Excluding net asset gains (losses), noninterest income for 2025 was $84 million, a $6 million (8%) increase over 2024. Notable contributions to the change in noninterest income were:

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

•Mortgage income includes net gains received from the sale of residential real estate loans into the secondary market, capitalized mortgage servicing rights (“MSRs”), 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 was $12 million for 2025, up $2 million (18%) between the years, mostly due to higher secondary market volumes and the related gains on sales. See also “Off-Balance Sheet Arrangements, Lending-Related Commitments and Contractual Obligations” and Note 6, “Goodwill and Other Intangibles and Servicing Rights” in the Notes to Consolidated Financial Statements, under Part II, Item 8.

•Service charges on deposit accounts were $8 million, up $1 million (11%) over 2024, on growth in both accounts and account analysis fees.

•Card interchange income grew $1 million (7%) to $15 million in 2025 largely due to higher volume and activity.

•BOLI income increased $1 million (17%) to $6 million for 2025, attributable to higher average balances from the $11.5 million new BOLI purchased in mid-2024 and improvements in BOLI assets linked to market performance.

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•The Company sponsors a nonqualified 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 declined $1 million to $8 million for 2025, largely due to timing of card incentive income, as well as lower swap and broker 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. 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

Table 5: Noninterest Expense

Comparison of 2025 versus 2024

Noninterest expense was $201 million for 2025, an increase of $9 million (5%) over 2024. Personnel costs increased $7 million (6%), while non-personnel expenses combined increased $3 million (3%) from 2024. Notable contributions to the change in noninterest expense were:

•Personnel expense was $115 million for 2025, an increase of $7 million (6%) over 2024. Salary expense increased $7 million (8%) over 2024, reflecting merit increases between the years and higher incentive compensation commensurate with current year earnings. Fringe benefits were minimally changed with lower 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 $37 million for 2025, up $1 million (4%) from 2024, due to higher occupancy-related costs (including increases in cleaning, snowplowing, building depreciation), and office expenses (mostly additional costs for software and technology solutions), as well as a $0.4 million lease termination charge.

•Data processing expense was $19 million for 2025, up $1 million (5%) from 2024, mostly due to volume-based increases in core and card processing charges.

•Intangible amortization decreased $1 million (17%) between the years, due to lower amortization from the aging intangibles.

Income Taxes

Income tax expense was $36 million (effective tax rate of 19.4%) for 2025, compared to $31 million (effective tax rate of 20.0%) for 2024. The change in income tax was mostly due to higher pretax earnings.

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. The Company had a $18 million valuation allowance at December 31, 2025, compared to a valuation allowance of $16 million at

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December 31, 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.

BALANCE SHEET ANALYSIS

Loans

Nicolet services a diverse customer base primarily throughout Wisconsin, Michigan and Minnesota. The Company concentrates on originating loans in its 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”). In addition to the discussion that follows, accounting policies, general loan portfolio characteristics, and credit risk are described in Note 1, “Nature of Business and Significant Accounting Policies,” and additional loan related 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.

An active credit risk management process is used to ensure that sound and consistent credit decisions are made. The credit management process is regularly reviewed and has been modified over the past several years to further strengthen the controls. Factors that are important to managing overall credit quality are sound loan underwriting and administration, systematic monitoring of existing loans and commitments, effective loan review on an ongoing basis, early problem loan identification and remedial action to minimize losses, an appropriate ACL-Loans, and sound nonaccrual and charge-off policies.

Table 6: Period End Loan Composition

As noted in Table 6 above, the loan portfolio at December 31, 2025 was 77% commercial-based and 23% retail-based, a slight shift in the underlying loan composition mix compared 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.

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Total loans were $6.8 billion at December 31, 2025, an increase of $210 million (3%), compared to total loans of $6.6 billion at December 31, 2024, with growth in agricultural, commercial and industrial, and construction loans. At December 31, 2025, agricultural and commercial and industrial loans represented the largest segments of Nicolet’s loan portfolio, at 21% and 20%, respectively, of the total loan portfolio. The next largest segments were CRE investment and residential first mortgage, with each representing 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.

Commercial Loan Portfolio by Industry Type (based on NAICS codes)

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Table 7: Loan Maturity Distribution

The following table presents the maturity distribution of the loan portfolio at December 31, 2025.

* The residential construction loans with a loan maturity after five years represent a construction to permanent loan product.

Allowance for Credit Losses - Loans

In addition to the discussion that follows, accounting policies for the allowance for credit losses - loans are described in Note 1, “Nature of Business and Significant Accounting Policies,” and additional ACL-Loans 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.

Credit risks within the loan portfolio are inherently different for each loan type. Credit risk is controlled and monitored through the use of lending standards, a thorough review of potential borrowers, and ongoing review of loan payment performance. Active asset quality administration, including early problem loan identification and timely resolution of problems, aids in the management of credit risk and minimization of loan losses. Loans charged off are subject to continuous review, and specific efforts are taken to achieve maximum recovery of principal, interest, and related expenses. For additional information regarding nonperforming assets see “BALANCE SHEET ANALYSIS – Nonperforming Assets.”

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The ACL-Loans represents management’s estimate of expected credit losses in the Company’s loan portfolio at the balance sheet date. To assess the overall appropriateness of the ACL-Loans, management applies an allocation methodology which focuses on evaluation of qualitative and environmental factors, including but not limited to: (i) evaluation of facts and issues related to specific loans; (ii) management’s ongoing review and grading of the loan portfolio; (iii) consideration of historical loan loss and delinquency experience on each portfolio segment; (iv) trends in past due and nonaccrual loans; (v) the risk characteristics of the various loan segments; (vi) changes in the size and character of the loan portfolio; (vii) concentrations of loans to specific borrowers or industries; (viii) existing economic conditions; (ix) the fair value of underlying collateral; and (x) other qualitative and quantitative factors which could affect expected credit losses. Assessing these factors involves significant judgment; therefore, management considers the ACL-Loans a critical accounting estimate, as further discussed under “Critical Accounting Estimates – Allowance for Credit Losses - Loans.”

Management performs ongoing intensive analysis of the 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, and could require the Company to make additions to the ACL-Loans or 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.

At December 31, 2025, the ACL-Loans was $69 million (representing 1.01% of period end loans) compared to $66 million (representing 1.00% of period end loans) at December 31, 2024. The increase in the ACL-Loans during both 2025 and 2024 was due to solid organic loan growth. Net charge-offs remain negligible. The components of the ACL-Loans are detailed further in Tables 8 and 9 below.

Table 8: Allowance for Credit Losses - Loans

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. The next largest portion of the ACL-Loans was allocated to agricultural loans, representing 14% and 15%, of the ACL-Loans at December 31, 2025 and December 31, 2024, respectively. This change in ACL-Loans allocation was attributable to changes in current and forecasted risk trends within loan categories, as well as changes in loan portfolio composition.

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Table 9: Allocation of the Allowance for Credit Losses - Loans

Nonperforming Assets

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. 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.

Nonperforming loans are considered one indicator of potential future loan losses. Nonperforming loans are defined as nonaccrual loans and loans 90 days or more past due but still accruing interest. Loans are generally placed on nonaccrual status when contractually past due 90 days or more as to interest or principal payments. Additionally, whenever management becomes aware of facts or circumstances that may adversely impact the collectability of principal or interest on loans, it is management’s practice to place such loans on nonaccrual status immediately. Nonperforming assets include nonperforming loans and other real estate owned. At December 31, 2025, nonperforming assets were $32 million and represented 0.35% of total assets, compared to $29 million or 0.33% of total assets at December 31, 2024.

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 December 31, 2025 and 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.

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Table 10: Nonperforming Assets

Investment Securities Portfolio

The investment securities portfolio is intended to provide Nicolet with adequate liquidity, flexible asset/liability management and a source of stable income. The portfolio is structured with minimal credit exposure to Nicolet. All investment securities are classified at the time of purchase as available for sale (“AFS”) or held to maturity (“HTM”). In addition to the discussion that follows, the investment securities portfolio accounting policies are described in Note 1, “Nature of Business and Significant Accounting Policies,” and additional disclosures are included in Note 3, “Securities and Other Investments,” in the Notes to Consolidated Financial Statements, under Part II, Item 8.

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At December 31, 2025, the investment securities portfolio totaled $860 million (representing 9% of total assets), compared to investment securities of $806 million (representing 9% of total assets) at December 31, 2024, all classified as securities AFS. The investment securities portfolio increased $53 million (7%) from December 31, 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 $34 million at December 31, 2025, compared to an unrealized loss of $66 million at December 31, 2024.

Nicolet also had other investments of $63 million and $62 million at December 31, 2025 and 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.

Table 11: Investment Securities Portfolio Maturity Distribution (1)