NICOLET BANKSHARES, INC (NIC): what the price requires
At today's price, NICOLET BANKSHARES, INC (NIC) is priced for 12.2% return on equity. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/NIC
Headline
| Field | Value |
|---|---|
| Ticker | NIC |
| Company | NICOLET BANKSHARES, INC |
| Current price | $165.31/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | financials |
| Return on equity needed | 12.2% |
| Return on equity now | 12.0% |
| ROE gap | +0.2pp |
| Price-to-book | 1.56x |
Solve inputs: computed at a 9.3% cost of equity with 4% terminal growth over a 5-year stage, on common book equity (FY2026); each 1pp of cost of equity moves the implied ROE ~1.6pp.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | +1.48σ |
| cohort percentile (of 119 peers) | 68 |
| sustained it ~10 years at this level | 69% |
| implied end-window share | 0% |
Valuation X-Ray
Every valuation family lands below the price. The price therefore requires assumptions beyond what those standard frames encode.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 2.15x | 3 | expensive |
| Earnings | 1.76x | 2 | expensive |
| Relative | 1.62x | 3 | expensive |
| Growth | 1.54x | 1 | expensive |
Families that call it expensive: Asset, Earnings, Relative, Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.0%); the inversion above states its own rate.
Per-Model Detail (n=9)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | — | — | no | — |
| Bank Fair Value (P/TBV) | — | $35.63 | 4.64x | yes | TBVPS $75.86 × 0.47x (ROE (TTM) 5.9% / CoE 9.3%, g=3.8% (sustainable: 65% retention × ROE, 5% cap; not the terminal-growth assumption), credit 1.24% allowance/loans → ×0.94) |
| Relative Valuation | Relative | $119.25 | 1.39x | yes | P/E 13.98x (blended: static sector reference 10x + trailing (TTM) 23x), scenarios: 11.2x / 14.0x / 16.7x (bear / base = reference held flat / bull), EV/EBITDA N/Ax |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $76.86 | 2.15x | yes | BV/sh $120.37, ROE (TTM) 5.9%, ke 9.3% |
| Two-Stage Excess Return | Asset | $59.64 | 2.77x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $107.09 | 1.54x | yes | Rev $0.3B, growth 24% (input: historical growth; tapered), Terminal P/S: 7.2x / 9.0x / 10.7x (bear / base = today's held flat / bull, cap 12x) |
| Peter Lynch Fair Value | Relative | $102.12 | 1.62x | yes | EPS $8.51, growth 2% (input: historical EPS growth), PEG=9.47 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | — | — | no | — |
| Residual Income | Asset | — | — | no | — |
| Graham Number | Asset | $151.82 | 1.09x | yes | √(22.5 × EPS $8.51 × BVPS $120.37) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | — | — | no | — |
| FCF Yield | Earnings | — | — | no | — |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | $95.65 | 1.73x | yes | EPS $8.51 × (8.5 + 2×2.5%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | — | — | no | — |
| P/Sales Sector | Relative | — | — | no | — |
| PEG Fair Value | Relative | $42.55 | 3.89x | yes | EPS $8.51 × (PEG 1.5 × growth 2.5% (input: historical EPS growth)) → PE 3.7x |
| Earnings Yield | Earnings | $92.00 | 1.80x | yes | EPS $8.51 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Share count CAGR (dilution) | 7.2% |
Deposit/float-funded balance sheet: debt is funding, not corporate leverage, and GAAP operating cash flow follows loan flows. Net-debt, interest-coverage, and cash-burn lenses do not apply. The solvency frame for a financial is regulatory capital and payout capacity (CET1, stress buffer, dividends plus buybacks against earnings).
Bullet Takeaways
- Nicolet Bankshares is a Midwest community bank that grows largely by acquisition, and it just closed its largest deal yet, buying MidWestOne in February 2026 and lifting total assets to $15.6 billion from $9.2 billion at year end.
- The biggest near-term risk is integration and the cost of the deal: reported earnings fell to 81 cents a share as the bank absorbed $40.7 million of merger expenses and a higher credit-loss provision, so the headline numbers understate the underlying franchise until the deal washes through.
- Watch the net interest margin, which improved to 3.98% in the quarter, and the pace at which the enlarged deposit base of $12.6 billion converts into the returns the price assumes.
Bull Case
Nicolet is a mature, established community bank with a clear strategy, and reading the numbers correctly starts with understanding that strategy. It grows by buying smaller Midwest banks and folding them in, and it has just made its biggest move, closing the MidWestOne acquisition in February 2026 and lifting total assets to $15.6 billion from $9.2 billion. For an acquirer, the quarter that a deal closes is always the ugliest one in the reported figures, because the merger costs land all at once while the benefits arrive over years. That is exactly what happened here, and it is why the underlying franchise is stronger than the headline earnings suggest.
The core earning power is intact and improving. The net interest margin, the spread between what the bank earns on loans and pays on deposits, rose to 3.98%, a healthy level for a community bank. The funding behind that margin is the bank's real asset: its filing describes deposits as "Nicolet's largest source of funds," providing "a stable, lower-cost funding source." The MidWestOne deal added a large, low-cost deposit base, bringing total deposits to $12.6 billion against loans of $10.9 billion, which gives the bank room to grow lending without chasing expensive funding. A bank that funds itself cheaply and lends at a wide margin is the simple machine that produces durable returns on equity.
The return profile, once the merger noise is stripped out, supports the price. On the bank's core basis, which excludes the one-time merger expenses, return on average tangible common equity ran at 19.3% in the quarter, and core earnings per share were $2.75. Reading the price backward, the market assumes the bank sustains a return on equity around 11%, paying about 1.4 times book, and the bank has recently been earning roughly 12%. The bull case is that Nicolet keeps doing what it has done for years: buy well, integrate efficiently, and compound book value per share through cheap deposits and disciplined lending, with the price asking for a return the franchise already clears.
Bear Case
The variable with the most leverage over a bank like Nicolet is the one it does not control: interest rates and the credit cycle. A community bank earns its margin on the spread between loan yields and deposit costs, and both move with the rate environment. When rates fall, loan yields reprice down faster than deposit costs in many cases; when rates rise, depositors demand more and funding costs climb. The bank's margin of 3.98% is healthy today, but it is a function of a rate backdrop that can shift, and a compressed margin would pull directly on the returns the price assumes.
The credit side is the other macro-sensitive lever, and the recent quarter already showed it moving. Nicolet took a higher provision for credit losses of $6.1 million, and its filing explains that the entire allowance is available for any loan management judges should be charged off. A bank that has just doubled its loan book through acquisition has also inherited a loan portfolio it did not originate, and acquired loans carry their own credit-mark assumptions; the filing details how purchased credit-deteriorated loans are folded into the allowance at acquisition. If the economy weakens, charge-offs rise across the enlarged book, and the provision that dents earnings this quarter becomes a recurring drag.
The valuation leaves little margin for those risks. No family of valuation method reaches today's price: it reads rich on assets, on earnings power, on peer multiples, and on forward growth, and the price sits in the upper half of the peer group's price-to-book. The implied return on equity of about 11% is within reach of what the bank earns, but only about 72% of banks earning that level have sustained it for a decade, and Nicolet's path to it runs through integrating a deal that nearly doubled its size while issuing 6.64 million new shares worth roughly $1 billion to pay for it. That share issuance dilutes existing holders, and the bear case is that the price already credits a clean, accretive integration that has not yet been demonstrated, against a backdrop where rates and credit can both turn.
Valuation
A bank is worth the return it earns on its capital, so the right lens is price-to-book, not an operating multiple. At today's price the market is paying about 1.4 times book and assuming Nicolet sustains a return on equity around 11%. For reference, the bank has recently been earning roughly 12%, so the price is not asking for a return beyond what the franchise has shown. The framework reads the embedded assumption as within range, and the assumed return sits within the bank's own record. The catch is durability: only about 72% of banks earning this level have held it for a decade, and the price sits in the upper half of its peer group's price-to-book, so it is valued as one of the stronger franchises in its cohort.
The methods all sit below the price, which for a high-quality but acquisitive bank deserves a careful read. The asset-based, earnings-power, peer-multiple, and forward-growth methods each read the price as rich, and the most likely reason is timing: the trailing reported earnings are depressed by the merger costs, so any method anchored on trailing figures understates the run-rate. On the core basis that excludes one-time merger expenses, the bank earned a return on tangible common equity above 19% in the quarter, which is a different picture than the GAAP earnings of 81 cents a share imply. The gap between the reported and core figures is the integration, and the valuation question is whether the core run-rate holds once the deal is fully absorbed.
For a bank, the solvency frame is regulatory capital and the capacity to return cash, not net debt or interest coverage, because deposits are funding rather than corporate leverage. Nicolet funds itself with a stable, low-cost deposit base of $12.6 billion, which is the bank's strength, and the acquisition added scale to that funding. The deal was paid partly in stock, issuing 6.64 million shares worth about $1 billion, so the capital question is whether the enlarged earnings base supports the larger share count and a growing payout. The decisive variable is the integration: if the core return on equity the bank reported survives the merger and the credit it acquired stays clean, the price is fair for a strong franchise; if rates compress the margin or the acquired book deteriorates, the methods calling it rich will have been right.
Catalysts
The MidWestOne acquisition is the catalyst that defines the year. Nicolet closed the deal on February 13, 2026, issuing 6.64 million shares valued at about $1.031 billion, adding roughly $6 billion of assets and $5.5 billion of liabilities, and lifting total assets to $15.6 billion. The integration milestones, including cost savings realized and deposits retained, are what will turn the merger from a near-term earnings drag into the accretion the price assumes.
The first-quarter result showed the deal's cost upfront. Reported net income fell to $15.2 million, or 81 cents a diluted share, weighed down by $40.7 million of merger-related expenses and a higher $6.1 million credit-loss provision, while the bank reported core earnings per share of $2.75 on its non-GAAP basis. The next few quarters will reveal whether the core earning power holds as the merger expenses roll off, which is the cleanest read on whether the integration is working.
The margin and credit trends are the operating threads. Net interest margin improved to 3.98% in the quarter, and the enlarged deposit base of $12.6 billion against loans of $10.9 billion gives the bank room to grow lending. Whether the margin holds in the prevailing rate environment, and whether credit quality across the combined loan book stays clean, are the operational catalysts that determine the path to the returns the price embeds.
Peer Cohorts (Per Segment, With Filing Citations)
Community banking (the Bank) (reported)
- FBK (FB FINANCIAL CORPORATION)
- (no filing in the citation store)
- DCOM (DIME COMMUNITY BANCSHARES, INC.)
- (no filing in the citation store)
- SBCF (Seacoast Banking Corporation of Florida)
- (no filing in the citation store)
- SRCE (1st Source Corp)
- (no filing in the citation store)
- NBTB (NBT BANCORP INC)
- (no filing in the citation store)
- GABC (German American Bancorp, Inc.)
- (no filing in the citation store)
- SYBT (STOCK YARDS BANCORP, INC.)
- (no filing in the citation store)
- INDB (Independent Bank Corp.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Nicolet Q1 2026 results · company 10-K, fiscal 2024