NICOLET BANKSHARES INCNIC
NICOLET BANKSHARES INC Goodwill & Intangibles Disclosure
GOODWILL AND OTHER INTANGIBLES AND SERVICING RIGHTS
Other intangibles: Other intangible assets, consisting of core deposit intangibles and customer list intangibles, are amortized over their estimated finite lives. During first quarter 2024, Nicolet purchased a financial advisory book of business and established a corresponding customer list intangible. A summary of other intangibles was as follows.
Management periodically reviews the carrying value of its goodwill and other intangibles for potential impairment. In making such determination, management evaluates whether there are any adverse qualitative factors indicating that an impairment may exist, as well as the overall financial performance of the Company and the performance of the underlying operations or assets which give rise to the intangible. Management also regularly monitors economic factors for potential impairment indications on the value of our franchise, stability of deposits, and wealth client base, underlying our goodwill and other intangibles. Management concluded no impairment was indicated for 2025 or 2024. A summary of goodwill and other intangibles was as follows.
| (in thousands) | December 31, 2025 | December 31, 2024 | |||||||||
| Goodwill | $ | 367,387 | $ | 367,387 | |||||||
| Core deposit intangibles | 13,655 | 18,815 | |||||||||
| Customer list intangibles | 1,358 | 1,938 | |||||||||
| Other intangibles | 15,013 | 20,753 | |||||||||
| Goodwill and other intangibles, net | $ | 382,400 | $ | 388,140 | |||||||
Goodwill: Goodwill is not amortized but, instead, is subject to impairment tests on at least an annual basis or more frequently if certain events or circumstances occur. Goodwill was $367 million at both December 31, 2025 and December 31, 2024.
| (in thousands) | December 31, 2025 | December 31, 2024 | |||||||||
| Core deposit intangibles: | |||||||||||
| Gross carrying amount * | $ | 56,588 | $ | 60,724 | |||||||
| Accumulated amortization * | (42,933) | (41,909) | |||||||||
| Net book value | $ | 13,655 | $ | 18,815 | |||||||
| Amortization during the period | $ | 5,160 | $ | 6,297 | |||||||
| Customer list intangibles: | |||||||||||
| Gross carrying amount | $ | 6,173 | $ | 6,173 | |||||||
| Accumulated amortization | (4,815) | (4,235) | |||||||||
| Net book value | $ | 1,358 | $ | 1,938 | |||||||
| Additions during the period | $ | — | $ | 650 | |||||||
| Amortization during the period | $ | 580 | $ | 579 | |||||||
* Core deposit intangibles of $4.1 million were fully amortized during 2024 and have been removed from both the gross carrying amount and accumulated amortization for 2025.
Servicing rights: The Company has a servicing rights asset related to certain agricultural and residential mortgage loans sold.
Agricultural loan servicing rights: The Company acquired an agricultural LSR asset in December 2021 which is being amortized over the estimated remaining loan service period.
Mortgage servicing rights: The Company sells originated residential mortgage loans into the secondary market and retains the right to service these sold loans. The mortgage servicing rights asset is periodically evaluated for impairment. At each reporting date, impairment is assessed based on estimated fair value using estimated prepayment speeds of the underlying mortgage loans serviced and stratification based on the risk characteristics of the underlying loans (predominantly loan type and note interest rate).
A summary of the changes in the servicing rights asset was as follows.
| (in thousands) | December 31, 2025 | December 31, 2024 | |||||||||
| Servicing rights asset at beginning of year | $ | 18,954 | $ | 20,486 | |||||||
| Capitalized servicing rights | 3,771 | 2,750 | |||||||||
| Sale of servicing rights ^ | (64) | — | |||||||||
| Amortization during the period | (4,336) | (4,282) | |||||||||
| Servicing rights asset at end of year | $ | 18,325 | $ | 18,954 | |||||||
| Valuation allowance at beginning of year | $ | (120) | $ | — | |||||||
| (Additions) / Reversals to valuation allowance | 79 | (120) | |||||||||
| Charge-offs ^ | 41 | — | |||||||||
| Valuation allowance at end of year | $ | — | $ | (120) | |||||||
| Servicing rights asset, net | $ | 18,325 | $ | 18,834 | |||||||
| Residential mortgage loans serviced for others | $ | 1,676,738 | $ | 1,644,821 | |||||||
| Agricultural loans serviced for others | $ | 387,974 | $ | 438,954 | |||||||
^ During first quarter 2025, Nicolet sold mortgage servicing rights with a remaining carrying value of $64,000 for $23,000 and the difference of $41,000 was charged-off through the valuation allowance. These serviced loans had a remaining loan balance of approximately $30 million at the time of sale.
Estimated future amortization: The following table shows the estimated future amortization expense for amortizing intangible assets and servicing assets. The projections are based on existing asset balances, the current interest rate environment and prepayment speeds as of December 31, 2025. The actual amortization expense the Company recognizes in any given period may be significantly different depending upon acquisition or sale activities, changes in interest rates, prepayment speeds, market conditions, regulatory requirements and events or circumstances that indicate the carrying amount of an asset may not be recoverable.
| (in thousands) | Core deposit intangibles | Customer list intangibles | Servicing rights asset | ||||||||||||||
| Years Ending December 31, | |||||||||||||||||
| 2026 | $ | 3,983 | $ | 379 | $ | 3,845 | |||||||||||
| 2027 | 3,218 | 296 | 3,394 | ||||||||||||||
| 2028 | 2,622 | 296 | 3,022 | ||||||||||||||
| 2029 | 1,911 | 166 | 2,570 | ||||||||||||||
| 2030 | 1,219 | 166 | 1,973 | ||||||||||||||
| Thereafter | 702 | 55 | 3,521 | ||||||||||||||
| Total | $ | 13,655 | $ | 1,358 | $ | 18,325 | |||||||||||
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About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.