TABLE OF CONTENTS
As filed with the Securities and Exchange Commission on May 4, 2020August 23, 2021
Registration No. [•]333-258651​
​
​
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933​
​
NICOLET BANKSHARES, INC.
(Exact name of registrant as specified in its charter)
6021
(Primary Standard Industrial
Classification Code Number)​
​
Wisconsin
​​6021​​47-0871001​
​

(State or other jurisdiction of
incorporation or organization)
​​
(Primary Standard Industrial47-0871001
Classification Code Number)
​​
(I.R.S. Employer
Identification No.)
​
111 North Washington Street Green Bay,
Wisconsin 54301 (920) 430-1400
(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)​
Robert B. AtwellMichael E. Daniels
Chairman, President and Chief Executive Officer
Nicolet Bankshares, Inc.
111 North Washington Street
Green Bay, Wisconsin 54301
(920) 430-1400
(Name, address, including zip code, and telephone number, including area code, of agent for service)​
Copies to:
​Copies to:​
​
Robert D. Klingler, Esq.
Bryan Cave Leighton Paisner LLP
1201 West Peachtree Street, NW
Atlanta, Georgia 30309-3488
(404) 572-6600
​​
John T. Reichert,Emily N. Henkel, Esq.
Reinhart Boerner Van Deuren, s.c.Barack Ferrazzano Kirschbaum & Nagelberg LLP
N16 W23250 Stone Ridge Drive,200 W. Madison Street, Suite One3900
Waukesha, Wisconsin 53188Chicago, Illinois 60606
(414) 298-8445(312) 629-7329
​
Approximate Date of Commencement of Proposed Sale of the Securities to the Public:
As soon as practicable after the effective date of this Registration Statement.​
If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.   ☐
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or 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 filer
☐
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​​☐​​
Accelerated filer

☒
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​☑​
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Non-accelerated filer
☐
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​​☐​​
Smaller reporting company

☐
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​☐​
​​​​​​​
Emerging growth company

☐
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​☐​
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 7(a)(2)(B) of the Securities Act. ☐
If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:
Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)   ☐
Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)   ☐
CALCULATION OF REGISTRATION FEE​
Title of each class of securities to be registered​​​
Amount to be
registered(1)
​​​
Proposed maximum
offering price per unit
​​​
Proposed maximum
aggregate offering price(2)
​​​
Amount of
registration fee(3)
​
Common Stock, $0.01 par value​​​​​1,825,830​​​​​​Not applicable​​​​​$68,857,595​​​​​$8,938.03​​
​
(1)
The estimated maximum number of shares of Nicolet Bankshares, Inc. (“Nicolet”) common stock to be issuable upon completion of the merger of Nicolet and Commerce Financial Holdings, Inc. (“Commerce”), as described herein and pursuant to the terms of the Agreement and Plan of Merger by and between Nicolet and Commerce, dated as of February 17, 2020, and attached to the proxy statement-prospectus as Appendix A. Pursuant to Rule 416, this Registration Statement also covers an indeterminate number of shares of common stock as may become issuable as a result of stock splits, stock dividends or similar transactions.
​
(2)
The proposed maximum aggregate offering price of the registrant’s common stock was calculated based upon the market value of shares of Commerce common stock (the securities to be cancelled in the merger) in accordance with Rule 457(f) under the Securities Act as follows: the book value of Commerce common stock as of December 31, 2019, the latest practicable date prior to the filing of this Registration Statement, and (ii) the maximum number of shares of Commerce common stock that may be exchanged in the merger.
​
(3)
Estimated solely for the purpose of calculating the registration fee required by Section 6(b) of the Securities Act and computed pursuant to Rule 457(f) under the Securities Act, based on a rate of $129.80 per $1,000,000 of the proposed maximum aggregate offering price.
​
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
​
​
TABLE OF CONTENTS
The information in this joint proxy statement-prospectus is not complete and may be changed. WeThe securities described in this joint proxy statement-prospectus may not sell these securitiesbe issued until the registration statement filed with the Securities and Exchange Commission is effective. This joint proxy statement-prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
Preliminary — Subject to Completion Dated May 4, 2020August 23, 2021
​
[MISSING IMAGE: lg_commerce-fin.jpg]
​​
[MISSING IMAGE: lg_nicolet.jpg]
​​
[MISSING IMAGE: lg_countybancorp-4clr.jpg]
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​
PROXY STATEMENT AND PROSPECTUS
OF
NICOLET BANKSHARES, INC.
​​
PROXY STATEMENT
OF
COMMERCE FINANCIAL HOLDINGS, INC.
​​
PROSPECTUS
OF
NICOLET BANKSHARES,COUNTY BANCORP, INC.
​
PROPOSED MERGER — YOUR VOTE IS VERY IMPORTANT
The boards of directors of Commerce Financial Holdings, Inc. (“Commerce”) and Nicolet Bankshares, Inc. (“Nicolet”) and County Bancorp, Inc. (“County”) have each unanimously approved a transaction that will result in the merger of CommerceCounty with and into Nicolet. Nicolet will be the surviving bank holding company in the merger. If the merger is completed, CommerceCounty shareholders will receive, 1.15at the election of each holder, cash of  $37.18 or 0.48 shares of Nicolet common stock for each share of CommerceCounty common stock (the “exchange ratio”). The exchange ratio may fluctuate in, subject to proration procedures such that 1,237,000 shares of County common stock will be exchanged for cash, and the event that theremaining shares will be exchanged for Nicolet Common Stock Price, as defined in the merger agreement, is (a) greater than $82.00, in which case the exchange ratio would become floating at the quotient of $94.30 divided by the Nicolet Common Stock Price,common stock or (b) less than $62.00, in which case the exchange ratio would become floating at the quotient of $71.30 divided by the Nicolet Common Stock Price. In the event the Nicolet Common Stock Price is less than $62.00, in lieu of adjusting the exchange ratio, Nicolet may electcancelled pursuant to leave the exchange ratio unchanged and instead add additional cash consideration in an amount sufficient to bring the aggregate per share consideration to $71.30 per share or it may exercise its right to terminate the merger agreement. At this time, in the event the Nicolet Common Stock Price is less than $62.00, Nicolet intends to exercise its right to terminate the merger agreement. If the Nicolet Common Stock Price is less than $62.00 and Nicolet does not elect to increase the exchange ratio or add cash consideration, Commerce may elect to terminate the merger agreement. If and afterAfter the merger is completed, we expect that current CommerceCounty shareholders will own approximately [17]%19% of the outstanding shares of common stock of Nicolet. If, prior to completion of the County merger, Nicolet completes its previously announced merger with Mackinac Financial Corporation (“Mackinac”), we expect that current County shareholders will own approximately 16% of the outstanding shares of common stock of Nicolet assuming no adjustment toafter the exchange ratio.County merger is completed.
Nicolet’s common stock trades on the Nasdaq Capital Market under the symbol “NCBS.” The closing price of Nicolet common stock was $72.32$71.75 per share on February 14, 2020,June 21, 2021, the last trading day before public announcement of the merger. The closing price of Nicolet common stock was $[•]$75.50 per share on [•],August 20, 2021, the last practicable trading day before the date of this joint proxy statement-prospectus. If Nicolet’s stock price remains below $62.00 such that Nicolet Common Stock Price is below $62.00 at the time of closing, Nicolet intends to exercise its right to terminate the merger agreement. Commerce’sCounty’s common stock is privately held and not tradedcurrently trades on anythe Nasdaq Global Market under the symbol “ICBK.” The closing price of County common stock was $23.39 per share on June 21, 2021, the last trading day before public markets.announcement of the merger. The closing price of County common stock was $35.27 per share on August 20, 2021, the last practicable trading day before the date of this joint proxy statement-prospectus. The shares of Nicolet common stock issued pursuant to the merger will be registered under the Securities Act of 1933, as amended, and will trade on the Nasdaq Capital Market.
We cannot complete the merger unless we obtain the necessary governmental approvals and unless the shareholders of Commerceboth companies approve the merger agreement and the transactions contemplated thereby. Commercethereby (except that Nicolet shareholder approval may not be required if on the effective date of the merger such approval is not required under Wisconsin law or Nasdaq rules). Each of Nicolet and County is asking its shareholders to consider and vote on thisthe merger proposal at Commerce’sthe respective companies’ special meetingmeetings of shareholders. Whether or not you plan to attend theyour company’s special meeting, please take the time to vote by following the voting instructions included in the enclosed proxy card. If you sign, date and mail your proxy card without indicating how you want to vote, your proxy will be counted as a vote FOR the merger agreement and the transactions contemplated thereby. If you do not vote your shares as instructed in the enclosed proxy card, or if you do not instruct your broker how to vote any shares held for you in “street name,” the effect will be a vote against the merger.
The special meeting will be held on [•] at [•] [•].m., at [•]. Shareholders will be permitted to participate inplaces, dates and times of the special meeting via remote communication,shareholders’ meetings are as set forth in more detail under thefollows:
​
For shareholders of Nicolet:
Nicolet Bankshares, Inc.
111 North Washington St., Green Bay, WI 54301
Tuesday, October 5, 2021, 9:45 a.m., Central Time
​​
For shareholders of County:
www.virtualshareholdermeeting.com/ICBK2021SM
Tuesday, October 5, 2021, 2:00 p.m., Central Time
​
See “Information About the Special Shareholders’ Meeting” headingMeetings” on page 10.7 for additional information.
This documentjoint proxy statement-prospectus contains a more complete description of the special meetingmeetings and the terms of the merger. We urge you to review this entire document carefully. You may also obtain additional information about Nicolet and County from documents that Nicolet hasand County have filed with the Securities and Exchange Commission.
The CommerceNicolet board of directors recommends that Commercethe Nicolet shareholders vote FOR approval of the merger agreement and the transactions contemplated thereby, including the issuance of up to 2,452,665 shares of Nicolet common stock in the merger (which amount is subject to increase if Nicolet elects to increase the exchange ratio to avoid termination of the merger agreement under the double trigger termination right).
The County board of directors recommends that the County shareholders vote FOR approval of the merger agreement and the transactions contemplated thereby.
​
[MISSING IMAGE: sg_robertb-atwell.jpg]
Robert B. Atwell
Chairman, President and Chief Executive Officer
Nicolet Bankshares, Inc.
​​
[MISSING IMAGE: sg_josephfazio-k.jpg]

Joseph Fazio III
Chief Executive Officer
Commerce Financial Holdings, Inc.
​
You should read this entire joint proxy statement-prospectus carefully, because it contains important information about the merger. In particular, you should read carefully the information under the section entitled “Risk Factors,”Factors” beginning on page 1422.
Neither the Securities and Exchange Commission nor any state securities regulators have approved or disapproved of the securities to be issued in the merger or determined if this document is truthful or complete. Any representation to the contrary is a criminal offense.
The shares of Nicolet common stock to be issued in the merger are not deposits or savings accounts or other obligations of any bank or savings association and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.
This joint proxy statement-prospectus is dated August [•], 2021, and is first being mailed to Commerce’sNicolet’s and County’s respective shareholders on or about August [•]., 2021.
​Michael E. Daniels
President and Chief Executive Officer
Nicolet Bankshares, Inc.		​​Timothy J. Schneider
President
County Bancorp, Inc.		​
TABLE OF CONTENTS
 
PLEASE NOTE
The accompanying joint proxy statement-prospectus incorporates important business and financial information about Nicolet and County from other documents that are not included in or delivered with this document. This information is available to you without charge upon your written or oral request. You can obtain the documents incorporated by reference in this document through the Securities and Exchange Commission website at http://www.sec.gov or by requesting them in writing, by email or by telephone at the appropriate address below:
​If you are a Nicolet shareholder:​​If you are a County shareholder:​
​Nicolet Bankshares, Inc.​​County Bancorp, Inc.​
​111 North Washington Street​​2400 South 44th Street​
​Green Bay, Wisconsin 54301​​Manitowoc, WI 54221​
​(920) 430-1400​​(920) 686-5692​
​ir@nicoletbank.com​​mmiller@icbk.com​
You will not be charged for any of these documents that you request. To obtain timely delivery of these documents, you must request them no later than five (5) business days before the date of the applicable special meeting. This means that Nicolet shareholders requesting documents must do so by September 28, 2021, in order to receive them before the Nicolet special meeting, and County shareholders requesting documents must do so by September 28, 2021, in order to receive them before the County special meeting.
For a more detailed description of the information incorporated by reference in this joint proxy statement-prospectus and how you may obtain it, see “Where You Can Find Additional Information” beginning on page 101.
We have not authorized anyone to provide you with any information other than the information included in this joint proxy statement-prospectus and the documents to which we refer you herein. If someone provides you with other information, please do not rely on it as being authorized by us.
This joint proxy statement-prospectusstatement — prospectus has been prepared as of the date on the cover page. There may be changes since that date in the affairs of CommerceCounty or Nicolet that are not reflected in this document.
As used in this joint proxy statement-prospectus, the terms “Commerce”“County” and “Nicolet” refer to Commerce Financial Holdings,County Bancorp, Inc. and Nicolet Bankshares, Inc., respectively. Where the context requires, “Commerce”“County” may refer to Commerce Financial Holdings,County Bancorp, Inc. and its subsidiaries, including Commerce StateInvestors Community Bank. Similarly, “Nicolet” may refer to Nicolet Bankshares, Inc. and its subsidiaries, including Nicolet National Bank.
Unless the context indicates otherwise, all references to the “merger agreement” refer to the Agreement and Plan of Merger dated February 17, 2020,June 22, 2021, by and between Nicolet and Commerce,County, which is included in its entirety atas Appendix A. to this joint proxy statement-prospectus.
 
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[MISSING IMAGE: lg_nicolet.jpg]
Commerce Financial Holdings,Nicolet Bankshares, Inc.
1700 S. Silverbrook Drive111 North Washington Street
West Bend,Green Bay, Wisconsin 5309554301
​
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON [•], 2020
To the Shareholders of Commerce Financial Holdings,Nicolet Bankshares, Inc.:
Commerce Financial Holdings,Nicolet Bankshares, Inc. (“Nicolet”) will hold a special meeting of shareholders at [•]Nicolet’s offices at 111 North Washington St., Green Bay, Wisconsin 54301, on [•]Tuesday, October 5, 2021, at 9:45 a.m., 2020, at [•] [•].m., local time, forCentral Time, to consider and vote on the following purposes:matters:
1.•
Merger Agreement and Share Issuance..   To authorize,    A proposal to approve and adopt the Agreement and Plan of Merger by anddated June 22, 2021, as the same may from time to time be amended, between Nicolet Bankshares, Inc. and Commerce Financial Holdings,County Bancorp, Inc., pursuant to which CommerceCounty will merge with and into Nicolet, andincluding the other transactions contemplated byissuance of up to 2,452,665 shares of Nicolet common stock (which amount is subject to increase if Nicolet elects to increase the exchange ratio to avoid termination of the merger agreement.agreement under certain circumstances) in the merger (the “merger agreement”), as more fully described in the attached joint proxy statement-prospectus. A copy of the merger agreement is attached to the accompanying joint proxy statement-prospectus as Appendix A.
​
2.
Other business.   To transact such other business as may properly come before the special meeting or any adjournments or postponements of the special meeting.
​
3.•
Adjournment.    To adjournA proposal to approve the adjournment of the special meeting, to a later date or dates, if necessary or appropriate, including to solicit additional proxies to approve the merger agreement and the transactions contemplated by the merger agreement.
​
Only shareholdersNicolet’s board of record atdirectors has fixed the close of business on [•],August 19, 2021, as the record date for the Nicolet special meeting. Only Nicolet shareholders of record at that time are entitled to notice of, and to vote at, the special meeting, or any adjournmentsadjournment or postponementspostponement of the special meeting. The
Nicolet’s board of directors has unanimously approved the merger and the merger agreement and unanimously recommends that Nicolet shareholders vote FOR the approval of the merger agreement, requiresincluding Nicolet’s issuance of shares pursuant to the merger agreement, and FOR the approval of the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies in favor of approval of the merger proposal.
YOUR VOTE IS VERY IMPORTANT. We cannot complete the merger unless the holders of Nicolet common stock approve the merger proposal (except that Nicolet shareholder approval may not be required if, on the effective date of the merger, such approval is not required under Wisconsin law or Nasdaq rules). The affirmative vote of the holders of at least a majority of the shares of CommerceNicolet common stock issued, outstanding and entitled to vote on the record date.
After careful consideration,date is required to approve the Commerce board of directors supports theNicolet merger and unanimously recommends that you vote FOR approval of the Agreement and Plan of Merger and the transactions contemplated thereby and FOR the adjournment proposal.
YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend the special meeting, please takevote as soon as possible. If you hold stock in your name as a shareholder of record, you may vote your shares electronically via the time to voteInternet, by followingtelephone, or by completing, signing, dating and returning the instructionsaccompanying proxy card in the enclosed postage-paid return envelope. If you hold your stock in “street name” through a bank or broker, please follow the instructions on the voting instruction card furnished by your bank or broker.
The enclosed joint proxy card. You may revoke yourstatement-prospectus explains the merger agreement and the transactions contemplated thereby, as well as the proposals that will be considered at the Nicolet special meeting. We urge you to read the joint proxy atstatement-prospectus, its appendices and any time before it is voteddocuments incorporated by giving written noticereference therein carefully and in their entirety. If you have any questions concerning the merger or the joint proxy statement-prospectus, would like additional copies of revocation to Commerce’s Corporate Secretarythe joint proxy statement-prospectus or by filing a properly executed proxy card of a later date with Commerce’s Corporate Secretary at or before the meeting. You may also revoke your proxy by attending the meeting, giving oral notice of your revocation, andneed help voting your shares in personof Nicolet common stock, please contact our President and Chief Executive Officer, Michael E. Daniels, at the meeting.
Commerce shareholders have dissenters’ rights with respect to the merger under Wisconsin law. Shareholders who wish to assert their dissenters’ rights and comply with the procedural requirements of Subchapter XIII of the Wisconsin Business Corporation Law will be entitled to receive payment of the fair value of their shares in cash in accordance with Wisconsin law. A copy of Subchapter XIII of the Wisconsin Business Corporation Law is attached as Appendix C to the proxy statement-prospectus.
We do not know of any other matters to be presented at the special meeting, but if other matters are properly presented, the persons named as proxies will vote on such matters at their discretion.(920) 430-1400.
By Order of the Board of Directors
[•]Michael E. Daniels
Joseph Fazio III
President and Chief Executive Officer

West Bend, WisconsinNicolet Bankshares, Inc.
[•], 2021

TABLE OF CONTENTS

[MISSING IMAGE: lg_countybancorp-4clr.jpg]
County Bancorp, Inc.
2400 South 44th Street
Manitowoc, WI 54221
​
NOTICE OF VIRTUAL SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of County Bancorp, Inc.:
County Bancorp, Inc. (“County”) will virtually hold a special meeting of shareholders on Tuesday, October 5, 2021, at 2:00 p.m., Central Time. In light of the ongoing developments related to the COVID-19 pandemic and to protect the health of County’s shareholders and the community, the special meeting will be held in a virtual-only online format conducted via live webcast. You will be able to attend the special meeting by visiting www.virtualshareholdermeeting.com/ICBK2021SM and inserting the 16-digit control number included on your proxy card. You will be able to vote your shares electronically over the Internet and submit questions online during the meeting by logging onto www.virtualshareholdermeeting.com/ICBK2021SM and using the control number.
At the special meeting, you will be asked to consider and vote on the following matters:
•
Merger Agreement.    A proposal to approve the Agreement and Plan of Merger dated as of June 22, 2021, as the same may from time to time be amended, between County and Nicolet Bankshares, Inc. (“Nicolet”), pursuant to which County will merge with and into Nicolet (the “merger agreement”), as more fully described in the attached joint proxy statement-prospectus. A copy of the merger agreement is attached to the accompanying joint proxy statement-prospectus as Appendix A.
​
•
Compensation Matters.    A proposal to approve, on a non-binding, advisory basis, the compensation that may be paid or become payable to County’s named executive officers that is based on or otherwise relates to the merger.
​
•
Adjournment.    A proposal to approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies to approve the merger agreement and the transactions contemplated by the merger agreement.
​
County’s board of directors has fixed the close of business on August 19, 2021, as the record date for the County special meeting. Only County shareholders of record at that time are entitled to notice of, and to vote at, the special meeting, or any adjournment or postponement of the special meeting.
County’s board of directors has unanimously approved the merger and the merger agreement and unanimously recommends that County shareholders vote FOR the approval of the merger agreement, FOR the approval of the compensation proposal, and FOR the approval of the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies in favor of approval of the merger proposal.
YOUR VOTE IS VERY IMPORTANT. We cannot complete the merger unless the holders of County common stock approve the merger proposal. The affirmative vote of the holders of at least a majority of the shares of County common stock issued, outstanding and entitled to vote on the record date is required to approve the County merger proposal. Whether or not you plan to attend the special meeting, please vote as soon as possible. If you hold stock in your name as a shareholder of record, you may vote your shares electronically via the Internet, by telephone, or by completing, signing, dating and returning the accompanying proxy card in the enclosed postage-paid return envelope. If you hold your stock in “street name” through a bank or broker, please follow the instructions on the voting instruction card furnished by the record holder.
The enclosed joint proxy statement-prospectus explains the merger agreement and the transactions contemplated thereby, as well as the proposals that will be considered at the County special meeting. We urge you to read the joint proxy statement-prospectus, its appendices, and any documents incorporated by reference therein carefully and in their entirety. If you have any questions concerning the merger or the joint proxy statement-prospectus, would like additional copies of the joint proxy statement-prospectus or need help voting your shares of County common stock, please contact our President, Timothy J. Schneider, at (920) 686-5604.
By Order of the Board of Directors
Timothy J. Schneider
President
County Bancorp, Inc.
[•], 2021
 
TABLE OF CONTENTS​
 
TABLE OF CONTENTS
​​​Page​
QUESTIONS AND ANSWERS
​​​​1i​​
SUMMARY​​​​61​​
The Companies
​​​​61​​
The Merger Agreement
​​​​72​​
What YouCounty’s Shareholders Will Receive in the Merger
​​​​72​​
Effect of the Merger on Commerce Stock Options
​​​​8​​
No Dissenters’ Rights
​​​​85​​
Your Expected Tax Treatment as a Result of the Merger
​​​​85​​
Comparative Stock Prices
​​​​95​​
The Commerce BoardBoth Boards of Directors RecommendsRecommend Shareholder Approval of the Merger
​​​​95​​
Opinion of Commerce’sCounty’s Financial Advisor
​​​​106​​
Opinion of Nicolet’s Financial Advisor
​​​​7​​
Information About the Special Shareholders’ MeetingMeetings
​​​​107​​
Quorum and Vote Required at the MeetingMeetings
​​​​107​​
Share Ownership of ManagementOfficers and Directors
​​​​118​​
Structure of the Merger
​​​​118​​
We Must Obtain Regulatory Approval to Complete the Merger
​​​​119​​
We Must Meet Several Conditions to Complete the Merger
​​​​119​​
Termination and Termination Fee
​​​​129​​
Commerce’sCounty’s Directors and Executive Officers Have Interests in the Merger that Differ from its Shareholders’ Interests
​​​​129​​
Employee Benefits of CommerceCounty Employees after the Merger
​​​​1210​​
Differences in Rights of Commerce’sCounty’s Shareholders after the Merger
​​​​1210​​
Accounting Treatment
​​​​10​​
COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE DATA
​​​​11​​
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
​​​​13​​
PRO FORMA CONDENSED COMBINED BALANCE SHEET (Unaudited)
​​​​14​​
PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME (Unaudited)
​​​​15​​
NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
​​​​16​​
RISK FACTORS
​​​​1422​​
A WARNING ABOUT FORWARD-LOOKING STATEMENTS
​​​​1929​​
THE COMMERCENICOLET SPECIAL SHAREHOLDERS’ MEETING
​​​​2131​​
Purpose of Nicolet Special Meeting
​​​​2131​​
Nicolet Record Date; Quorum and Vote Required
​​​​2131​​
Solicitation and Revocation of Nicolet Proxies
​​​​2232​​
How to Vote Your Nicolet Shares
​​​​2232​​
No Dissenters’ Rights
​​​​2333​​
Recommendation of the Board of Directors of CommerceNicolet
​​​​2333​​
THE NICOLET PROPOSALS
​​​​2434​​
Proposal 1 —– Approval of the Merger Agreement, the Merger and the MergerStock Issuance
​​​​2434​​
Proposal 2 —– Adjournment of the Special Meeting
​​​​2434​​
THE MERGER
​​​​25​​
Structure of the Merger
​​​​25​​
Background of the Merger
​​​​25​​
Reasons for the Merger
​​​​26​​
Opinion of Commerce’s Financial Advisor
​​​​29​​
 
TABLE OF CONTENTS​
 
​​​Page​
Prospective Financial Information of CommerceTHE COUNTY SPECIAL SHAREHOLDERS’ MEETING
​​​​35​​
Date, Time and Place of Meeting
​​​​35​​
Matters to Be Considered
​​​​35​​
Recommendation of the Board of Directors of County
​​​​35​​
Record Date and Quorum
​​​​35​​
Vote Required; Treatment of Abstentions and Failure to Vote
​​​​36​​
Shares Held by Officers and Directors
​​​​36​​
Voting of Proxies; Incomplete Proxies
​​​​36​​
Shares Held in “Street Name”; Broker Non-Votes
​​​​37​​
Revocability of Proxies and Changes to a Shareholder’s Vote
​​​​37​​
No Dissenters’ Rights
​​​​37​​
Solicitation of Proxies
​​​​38​​
Attending the Meeting
​​​​38​​
Assistance
​​​​38​​
THE COUNTY PROPOSALS
​​​​39​​
Proposal 1 – Approval of the Merger Agreement and the Merger
​​​​39​​
Proposal 2 – Compensation Proposal
​​​​39​​
Proposal 3 – Adjournment of the Special Meeting
​​​​40​​
THE MERGER
​​​​41​​
Structure of the Merger
​​​​41​​
Background of the Merger
​​​​41​​
Reasons for the Merger
​​​​45​​
Opinion of County’s Financial Advisor
​​​​49​​
Opinion of Nicolet’s Financial Advisor
​​​​55​​
Certain Prospective Financial Information of County Provided to County’s Financial Advisor
​​​​67​​
Certain Prospective Financial Information of Nicolet
​​​​68​​
Interests of Certain Persons in the Merger
​​​​4070​​
Trading Market for Nicolet Stock
​​​​4273​​
Nicolet Dividends
​​​​4273​​
Potential Adjustment to Exchange RatioElection and Proration of Merger Consideration
​​​​4274​​
Surrender and Exchange of CommerceCounty Stock Certificates
​​​​4375​​
Procedures for Per Share Merger Consideration Payment
​​​​75​​
Resale of Nicolet Common Stock
​​​​4476​​
Regulatory and Other Required Approvals
​​​​4476​​
Status and Effect of Regulatory Approvals
​​​​4577​​
Status of Intentions to Consummate the Merger
​​​​46​​
Accounting Treatment of the Merger
​​​​4678​​
THE MERGER AGREEMENT
​​​​4778​​
General; Business and Operations after the Merger
​​​​4778​​
What Commerce’sCounty’s Shareholders Will Receive in the Merger
​​​​4778​​
Potential Adjustment of Exchange RatioTrust Preferred Securities and Subordinated Notes
​​​​4779​​
Dissenters’ Rights
​​​​48​​
Effect of the Merger on CommerceCounty Preferred Stock Options
​​​​4879​​
Effect of the Merger on Commerce Shares held in Commerce State Bank 401(k) & Profit Sharing PlanCounty Equity Awards
​​​​4880​​
No Dissenters’ Rights
​​​​80​​

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​​​Page​
Closing and Effective Time of the Merger
​​​​4980​​
Representations and Warranties in the Merger Agreement
​​​​4981​​
Conditions to the Merger
​​​​4981​​
Waiver and Amendment
​​​​5082​​
Business of CommerceCounty Pending the Merger
​​​​5183​​
Business of Nicolet Pending the Merger
​​​​5385​​
Covenants of the Parties
​​​​5385​​
No Solicitation of Alternative Transactions
​​​​5486​​
Indemnification and Insurance
​​​​5487​​
Termination of the Merger Agreement; Termination Fee
​​​​5587​​
Payment of Expenses Relating to the Merger
​​​​5688​​
Affiliate Agreements
​​​​5688​​
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
​​​​5788​​
U.S. Shareholders
​​​​5789​​
Qualification of the Merger as a Reorganization
​​​​5889​​
Tax Implications to U.S. Shareholders
​​​​5890​​
Tax Implications to Non-U.S. Shareholders
​​​​5991​​
Tax Consequences if the Merger Does Not Qualify as a Reorganization
​​​​6091​​
Backup Withholding and Information ReportingAdditional Federal Tax Considerations
​​​​60​​
Medicare Tax on Net Investment Income
​​​​6092​​
CERTAIN DIFFERENCES IN RIGHTS OF SHAREHOLDERS
​​​​6293​​
Authorized Capital Stock
​​​​62​​
Composition and Election of the Board of Directors
​​​​62​​

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​​​Page​
Director Nominations
​​​​63​​
Director Qualifications
​​​​63​​
Board Committees
​​​​63​​
Board Vacancies
​​​​64​​
Director Removal
​​​​64​​
Advance Notice of Shareholder Proposals
​​​​64​​
Meetings of Shareholders
​​​​65​​
Shareholder Vote Requirements
​​​​65​​
Mergers, Consolidations and Sales of Assets
​​​​65​​
Indemnification
​​​​66​​
Amendments to Articles of Incorporation and Bylaws
​​​​67​​
NO DISSENTERS’ RIGHTS
​​​​68100​​
General
​​​​68​​
Preliminary Procedural Steps
​​​​68​​
Written Dissent Demand
​​​​68​​
Dissenters’ Notice
​​​​68​​
Payment
​​​​69​​
Litigation
​​​​70​​
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF NICOLET
​​​​72​​
MARKET PRICE AND DIVIDEND INFORMATION
​​​​74​​
OTHER MATTERS
​​​​76100​​
EXPERTS​​​​76100​​
LEGAL MATTERS
​​​​76100​​
WHERE YOU CAN FIND ADDITIONAL INFORMATION
​​​​76101​​
​
APPENDIX A
AGREEMENT AND PLAN OF MERGER BY AND BETWEEN NICOLET BANKSHARES, INC. AND COMMERCE FINANCIAL HOLDINGS,COUNTY BANCORP, INC.
​
​​​​A-1​​
​
APPENDIX B
OPINION OF MAGSTAR CAPITAL, LLCSTEPHENS, INC.
​
​​​​B-1​​
​
APPENDIX C
SUBCHAPTER XIIIOPINION OF THE WISCONSIN BUSINESS CORPORATION LAWKEEFE, BRUYETTE & WOODS, INC.
​
​​​​C-1​​
APPENDIX D
(1) MACKINAC’S UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND (2) MACKINAC’S AUDITED CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED
DECEMBER 31, 2020
​
​​​​D-1​​
 
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QUESTIONS AND ANSWERS
The following are some questions that you may have about the merger, the Nicolet special meeting or the County special meeting and brief answers to those questions. We urge you to read carefully the remainder of this joint proxy statement-prospectus, because the information in this section does not provide all of the information that may be important to you with respect to the merger, the Nicolet special meeting or the County special meeting. Additional information is also contained in the documents incorporated by reference into this joint proxy statement-prospectus. See “Where You Can Find Additional Information” beginning on page 101.
Q:
On what am I being asked to vote?
​
A:
You are being asked to approve the Agreement and Plan of Merger by and between Nicolet and Commerce,County, which we may refer to as the merger agreement, which provides for the merger of CommerceCounty with and into Nicolet, and the other transactions contemplated thereby. YouAs part of their approval of the merger agreement and the merger, Nicolet shareholders are also being asked to approve the issuance of stock in the merger to County shareholders. In addition, County shareholders are being asked to approve, on a non-binding, advisory basis, the compensation that may be paid or become payable to County’s named executive officers that is based on or otherwise relates to the merger. Shareholders of both Nicolet and County are being asked to approve a proposal to adjourn thetheir respective special meeting,meetings, if necessary or appropriate, including to solicit additional proxies to approve the merger agreement and the transactions contemplated by the merger agreement.
​
Q:
Why have Nicolet and County decided to merge?
​
A:
Nicolet and County agreed to merge for strategic reasons that benefit both parties. Their respective boards of directors believe that the merger will provide the combined institution with opportunities for enhanced revenue growth.
​
Q:
How does the Nicolet board of directors recommend I vote onat the merger agreement?Nicolet special meeting?
​
A:
The board of directors of CommerceNicolet has unanimously approved and adopted the merger agreement and recommends that Commerceits shareholders vote “FOR”FOR approval of the merger agreement and the transactions contemplated thereby, including the issuance of up to 2,452,665 shares of Nicolet common stock in the merger, which amount is subject to increase if Nicolet elects to increase the exchange ratio to avoid termination of the merger agreement under certain circumstances (sometimes referred to as the “stock issuance” or “issuance of shares”) and recommends that you vote “FOR”FOR approval of the Nicolet adjournment proposal.
​
Q:
How does the County board of directors recommend I vote at the County special meeting?
​
A:
The board of directors of County has unanimously approved and adopted the merger agreement and recommends that you vote FOR approval of the merger agreement and the transactions contemplated thereby, FOR approval of the compensation that may be paid or become payable to County’s named executive officers that is based on or otherwise relates to the merger, and FOR the County adjournment proposal.
​
Q:
What will happen to Commerce StateNicolet National Bank and Investors Community Bank as a result of the merger?
​
A:
If the merger occurs, Commerce StateInvestors Community Bank, which is a wholly owned subsidiary of Commerce,County, will initially be operated as a standalone subsidiary of Nicolet. Subsequently, it is expected that Commerce State Bank would be merged with and into Nicolet National Bank, which is a wholly owned subsidiary of Nicolet, although no timeframe has been set for such merger.Nicolet. We may refer to this transaction as the “bank merger.” Nicolet National Bank will be the surviving entity in the bank merger if and when it occurs.
​
Q:
What vote is required to approve the merger agreement and the transactions contemplated thereby?
​
A:
The approval of the merger cannot be completed unlessagreement and the transactions contemplated thereby, including, in the case of Nicolet, the issuance of shares, requires the vote of a majority of the outstanding shares of Commerce vote to approve the merger agreement and the transactions contemplated thereby.
​
Q:
What will happen if Nicolet’s stock price does not increase?
​
A:
The closing price of Nicolet’s common stock price was $[•] per share on [•], the last day before the date of this proxy statement-prospectus. Under the terms of the merger agreement, if the Nicolet Common Stock Price (defined in the agreement as the volume weighted average closing priceeach of Nicolet common stock on the Nasdaq Capital Market over the twenty (20) trading day period immediately preceding the second (2nd) trading day prior to the closing date) is less than $62.00, Nicolet may elect to terminate the merger agreement. As of the date of the proxy statement-prospectus, Nicolet intends to exercise this right to terminate. In this event, the merger would not close, Nicolet would not be obligated to make any payment to Commerce, and Commerce shareholders will continue to hold shares of Commerce stock.
​
If the Nicolet Common Stock Price is below $62.00 at the time of measurement, and Nicolet does not exercise its right to terminate and does not elect to increase the exchange ratio or add cash consideration, Commerce’s board of directors will have the right and authority to elect whether to terminate or proceed based on its assessment of all information available at the time.
Q:
Why does Nicolet intend to exercise its right to terminate the merger agreement if its stock price is below $62.00 per share?
​
A:
Nicolet believes if its common stock price is below $62.00 per share, such pricing is a signal of the farther-reaching and prolonged impacts of the COVID-19 pandemic, which are still volatile and uncertain. If the Nicolet Common Stock Price is below $62.00, Nicolet believes that consummating a transaction at a fixed exchange ratio reflecting comparative valuations set before the onset of the COVID-19 pandemic is not prudent for Nicolet’s shareholders in today’s unsettled environment.County.
​
 
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Q:
What vote is required to approve the adjournment proposals and the compensation proposal?
​
A:
The approval of the adjournment proposal for each company, as well as the compensation proposal for County, requires that the votes cast for the proposal exceed the votes cast against the proposal.
​
Q:
What will Ishareholders of County receive in the merger?
​
A:
If the merger is completed, each share of CommerceCounty common stock (excluding treasury shares, shares held directly or indirectly by Nicolet (other than in a fiduciary capacity or in connection with debts previously contracted), and shares underlying restricted stock awards, and dissenting shares;options; all such shares are referred to herein as the “cancelled shares”) will be converted into the right to receive, 1.15at the holder’s election and subject to the proration procedures and the exceptions explained further below, cash of  $37.18 per share of County common stock (the “per share cash consideration”) or 0.48 shares of Nicolet common stock per share of County common stock (the “per share stock consideration”).
​
Adjustment of Exchange Ratio/Termination of the Merger AgreementConsideration Election Procedures
The merger agreement provides that theEach County shareholder may make an election to exchange ratio is fixed unless the Nicolet Common Stock Price (defined in the agreement as the volume weighted average closing price ofhis, her or its County shares for Nicolet common stock on(“stock election shares”), cash (“cash election shares”), or a mix of both. Nicolet or Computershare Trust Company, N.A. (the “exchange agent”) will mail to all shareholders an election form and customary transmittal materials following the Nasdaq Capital Market over the twenty (20) trading day period immediately preceding the second (2nd) trading daymailing of this joint proxy statement-prospectus. Completed election forms will be due five (5) business days prior to the closing date)of the merger (the “election deadline”). At this time, we expect the election deadline to be 5:00 p.m., Eastern Time, on November 29, 2021. Any shares for which a completed election form is (a) greater than $82.00, in which case the exchange ratio would become floating at the quotient of $94.30 dividednot received by the election deadline will be treated as shares not making an election preference for cash or stock (“no election shares”). Additionally, County shares exchanged in settlement or cancellation of County restricted stock, County restricted stock units and County deferred restricted stock units will be considered no election shares.
Merger Consideration Proration and Allocation Procedures
The total number of shares of County common stock that will be converted into the cash consideration will be equal to 1,237,000 shares (the “cash election threshold”), which represents approximately 20% of the aggregate amount of outstanding shares of County common stock and shares underlying unvested restricted stock awards, restricted stock units and deferred restricted stock units as of June 30, 2021, with the remaining shares being converted into the stock consideration. As a result, the total consideration to be paid in respect of County common stock will consist of approximately 20% cash and approximately 80% Nicolet Common Stock Price, or (b) less than $62.00,common stock. Any cash payments in which case the exchange ratio would become floating at the quotientrespect of $71.30 divided by the Nicolet Common Stock Price. If the Nicolet Common Stock Price is below $62.00 per share,(i) stock options, (ii) preferred stock and (iii) cash in lieu of adjustingfractional shares will not be counted in determining the exchange ratio, Nicolet may (a) elect to add a cash component to the merger consideration in an amount sufficient to make the aggregate per share consideration equal to $71.30 per share of Commerce Common Stock, (b) leave the exchange ratio unchanged (which would give Commerce the right to terminate the merger agreement), or (c) terminate the merger agreement. As of the date of this proxy statement-prospectus, if the Nicolet Common Stock Price is below $62.00, Nicolet does not intend to adjust the exchange ratio, does not intend to add cash consideration, and does intend to terminate the merger agreement. election threshold.
If the Nicolet Common Stock Price is below $62.00 per share, and Nicolet does not exercise its right to terminate and does not elect to increase the exchange ratio or add cash consideration, Commerce’s board of directors will have the right and authority to elect whether to terminate or proceed based on its assessment of all information available at the time. Additionally, under no circumstances shall the number of shares as to which holders elect to receive the cash consideration is below the cash election threshold, then certain no election shares and stock election shares may be exchanged for the cash consideration. Alternatively, if cash is oversubscribed, certain cash election shares may be exchanged for the stock consideration. See “Election and Proration of Nicolet common stock to be issued in the merger equal or exceed 19.9%Merger Consideration” beginning on page 74 of this joint proxy statement-prospectus for a more detailed description of the number of outstanding shares of Nicolet common stock such that Nasdaq rules would require approval of the merger by Nicolet’s shareholders. The parties agree to reduce the number of shares of Nicolet common stock to be issuedproration and to increase the cash to be issued pro rata to avoid such a shareholder vote.allocation procedures, including examples.
Cash in Lieu of Fractional Shares
In lieu of any fractional shares of Nicolet common stock, CommerceCounty shareholders who receive stock consideration in the merger will receive an amount in cash (without interest and rounded to the nearest whole cent) as determined by multiplying the Nicolet Common Stock Price“Nicolet common stock price” ​(as such term is defined in the merger agreement) by the fractional share of Nicolet common stock to which such holder would otherwise be entitled.
Cash for Cancelled Commerce Stock Options
Pursuant to Under the merger agreement, each Commerce Stock Option (whether vested or not) will be cancelled in exchange for cash in an amount equal“Nicolet common stock price” means the volume weighted average closing price of Nicolet common stock on the Nasdaq Capital Market over the 20 trading day period immediately preceding the second trading day prior to the productclosing date.
Dividends of County
The merger agreement allows County to continue paying (i) the numberits regular quarterly dividends of shares of Commerce common stock subject to such Commerce Stock Option and (ii) the excess of the product of (x) the Nicolet Common Stock Price and (y) the exchange ratio over the exercise price$0.10 per share of the Commerce common stock subjectprior to such Commerce Stock Option. Following the effective timeconsummation of the merger Commerce Stock Options will no longer be valid or exist.
Cash for Commerce Shares held in Commerce State Bank 401(k) & Profit Sharing Plan
Pursuant to the merger agreement, by virtue of the execution of the proposed merger, each share of Commerce common stock held in the Commerce State Bank 401(k) & Profit Sharing Plan will be converted into the right to receive a cash payment equal to the product of the exchange ratioconsistent with past practice and the Nicolet Common Stock Price.(ii) its regular
 
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quarterly dividends on County’s Series B Nonvoting Noncumulative Perpetual Preferred Stock, $0.01 par value per share, and a redemption price of $1,000.00 per share. Although County’s board of directors currently expects to pay its regular quarterly dividends, the payment of such dividends is not guaranteed, nor is it a condition to the closing of the merger.
Relative Ownership of Nicolet following Closing
AfterIf, prior to the completion of the County merger, Nicolet completes the Mackinac merger, we expect that after the County merger is completed, we expect that current Nicolet and Mackinac shareholders will own approximately [83]%84% of the outstanding shares of common stock of the combined company, and current CommerceCounty shareholders will own approximately [17]%16% of the outstanding shares of common stock of the combined company. If the Mackinac merger is not completed prior to the County merger, we expect that after the County merger is completed, current Nicolet shareholders will own approximately 81% of the outstanding shares of common stock of the combined company, assuming no adjustmentand current County shareholders will own approximately 19% of the outstanding shares of common stock of the combined company.
Q:
How will the merger impact my County preferred stock?
​
A:
Each share of County preferred stock issued and outstanding immediately prior to the effective date of the merger will be converted into the right to receive cash in an amount equal to the redemption price of such County preferred stock as of such date. County is required to redeem its preferred stock prior to the effective time of the merger.
​
Q:
How will the merger impact my County stock options?
​
A:
Each vested and unvested County stock option outstanding immediately prior to the effective date of the merger will be cancelled in exchange ratio.for the right to receive a cash payment in an amount determined by multiplying (i) the number of shares of County common stock subject to the stock option immediately prior to the effective date by (ii) the excess, if any, of (x) the Nicolet common stock price (as defined in the merger agreement) multiplied by the exchange ratio, over the exercise price per share of the County stock subject to the stock option immediately prior to the effective date. For this purpose, the merger agreement defines “Nicolet common stock price” as the volume weighted average closing price of Nicolet common stock on the Nasdaq Capital Market over the 20-day trading period immediately preceding the second trading day prior to the effective date.
​
Q:
How will the merger impact my County restricted stock awards?
​
A:
Each unvested County restricted stock award outstanding immediately prior to the effective date will become vested as a result of the merger. Each vested County restricted stock award will be exchanged for the number of shares of County common stock subject to such County restricted stock award immediately prior to the effective time. These shares are included in the number of issued shares of County common stock, do not count towards the cash election threshold, and are considered no election shares.
​
Q:
How will the merger impact my County restricted stock units?
​
A:
Each vested and unvested County restricted stock unit outstanding immediately prior to the effective time of the merger will either (i) become fully vested and settled per the terms of the award and applicable County equity plan, or (ii) be cancelled in consideration for the right to receive the number of shares of County common stock subject to the restricted stock unit award. In either case, such shares received in settlement or cancellation will be exchanged pursuant to the terms of the merger agreement but will not count towards the cash election threshold and will be considered no election shares.
​
Q:
How will the merger impact my County deferred restricted stock units?
​
A:
Each vested and unvested County deferred restricted stock unit outstanding immediately prior to the effective date of the merger will be cancelled (as permitted under applicable U.S. treasury regulations) in consideration for the right to receive the number of shares of County common stock subject to the
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deferred restricted stock unit award. Such shares received in cancellation will be exchanged pursuant to the terms of the merger agreement but will not count towards the cash election threshold and will be considered no election shares.
Q:
What will happen to County’s trust preferred securities and subordinated notes?
​
A:
Certain of County’s subsidiaries, namely County Bancorp Statutory Trust II, County Bancorp Statutory Trust III and Fox River Valley Capital Trust I (collectively, the “County Trusts”), have issued $15.5 million in trust preferred securities, and County has issued $15.982 million in related subordinated notes to the Company Trusts. County also has issued $51.4 million in principal amount of subordinated notes, $47.4 million of which were issued pursuant to Indentures, dated May 30, 2018 and June 30, 2020, by and between County and U.S. Bank National Association, as trustee. At the effective time of the merger, Nicolet will assume and discharge County’s covenants, agreements and obligations under and relating to the trust preferred securities and the subordinated notes, and Nicolet and County will execute and deliver supplemental indentures for such assumption.
​
Q:
What are the federal income tax consequences of the merger to me as a holder of CommerceCounty common stock?
​
A:
Bryan Cave Leighton Paisner LLP has issued an opinion, which it will confirm as of the effective date of the merger, that, subject to certain limitations, the merger will qualify as a reorganization under Section 368(a) of the Internal Revenue Code of 1986, as amended. CommerceCounty shareholders receiving Nicolet common stock in the merger will not recognize gain or loss for U.S. federal income tax purposes as a result of the surrender of CommerceCounty common stock for receipt of Nicolet common stock, except thatbut may recognize gain may be recognized with respect to any cash received in the merger (other than cash in lieu of fractional shares)shares, as discussed below). However, CommerceCounty shareholders receiving solely cash in the merger whether as a result of exercising dissenters’ rights or otherwise, will generally recognize gain or loss in an amount equal to the difference between the amount of cash received and the CommerceCounty shareholder’s aggregate tax basis in its CommerceCounty common stock surrendered or cancelled in exchange thereof. Commercetherefor. County shareholders may also recognize gain or loss for U.S. federal income tax purposes with respect to any cash received in lieu of fractional shares. Your tax treatment will depend on your specific situation, and many variables are not within our control. You should consult your own tax advisor for a full understanding of the tax consequences of the merger to you.
​
Q:
What are the federal income tax consequences of the merger to me as a holder of Commerce Stock Option?
​
A:
The receipt of cash by an employee that has his or her Commerce Stock Option cancelled in connection with the merger will be included as compensation in their Form W-2 for the year in which they receive the cash payment. The amount of the cash payment will be subject to and reduced by any applicable U.S. federal and state income tax withholding, social security (FICA) taxes, and other applicable taxes that Commerce, as an employer, is required to withhold with respect to the payment of wage income to employees. You should consult your own tax advisor for a full understanding of the tax consequences of the receipt of cash in cancellation of your Commerce Stock Option.
​
Q:
When do you expect the merger to be completed?
​
A:
We are working to complete the merger on [•],in the fourth quarter of 2021, after the special shareholders’ meetings are held, assuming CommerceNicolet and County shareholders and the applicable bank regulatory agencies approve the merger Nicolet’s stock price increases such thatand the Nicolet Common Stock Price is at least $62.00,transactions contemplated thereby and other conditions to closing are met. We could experience delays in meeting these conditions or be unable to meet them at all. If all other conditions to close have been satisfied, but the Nicolet Common Stock Price is below $62.00, Nicolet intends to terminate the merger agreement and the merger will not be completed. If all other conditions to close have been satisfied, but the Nicolet Common Stock Price is below $62.00 and Nicolet does not exercise its right to terminate and does not elect to increase the exchange ratio or add cash consideration, Commerce’s board of directors will have the right and authority to elect whether to terminate or proceed based on its assessment of all information available at the time. See “Risk Factors” beginning on page 1422 for a discussion of these and other risks relating to the merger.
​
Q:
WillWhy are County shareholders being asked to consider and vote on the compensation proposal?
​
A:
Under Securities and Exchange Commission rules, County is required to seek a non-binding, advisory vote with respect to the compensation that may be paid or become payable to County’s named executive officers that is based on or otherwise relates to the merger, or “golden parachute” compensation.
​
Q:
What happens if holders of County common stock do not approve, by non-binding, advisory vote, the compensation proposal?
​
A:
The vote on the proposal to approve the merger-related compensation arrangements for each of County’s named executive officers is separate and apart from the votes to approve the other proposals being presented at the County special meeting. Because the vote on the proposal to approve the merger-related executive compensation is advisory in nature only, it will not be binding upon County, Nicolet or the combined company in the merger. Accordingly, the merger-related compensation will be paid to County’s named executive officers to the extent payable in accordance with the terms of their compensation agreements and arrangements, even if the holders of County common stock do not approve the proposal to approve the merger-related executive compensation.
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Q:
If I am a County shareholder, will I be able to sell any shares of Nicolet common stock I receive pursuant to the merger?
​
A:
Yes. The Nicolet common stock issued pursuant to the merger will be registered under the Securities Act of 1933, as amended (the “Securities Act”), and Nicolet will cause the shares to be issued in the merger to be listed on the Nasdaq Capital Market. All shares of Nicolet common stock that you receive pursuant to the merger will be freely transferable unless you are deemed an affiliate of Nicolet. Affiliates of Nicolet will be able to sell the shares they receive pursuant to the merger subject to applicable securities regulations. See “Resale of Nicolet Common Stock” on page 44.76.
​

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Q:
What should I do now?
​
A:
After carefully reading and considering the information in this joint proxy statement-prospectus, follow the voting instructions included in the enclosed proxy card in order to vote your shares as soon as possible, so that your shares will be represented at theyour special meeting. You can vote by (i) accessing the internetInternet website specified on the enclosed proxy card for your company, (ii) voting by telephone by using the telephone number provided on the proxy card, (iii) completing, signing and dating the enclosed proxy card and returning it in the postage-paid envelope, or (iii)(iv) voting in person or remotely at the Nicolet special meeting or virtually at the County special meeting.
​
NOTE: If you sign and send in your proxy card and do not indicate how you want to vote, your proxy will be voted “FOR” the your company’s proposal to approve the merger agreement and the transactions contemplated thereby, and “including in the case of Nicolet shareholders, the issuance of up to 2,452,665 shares of Nicolet common stock in the merger (which amount is subject to increase if Nicolet elects to increase the exchange ratio to avoid termination of the merger agreement under certain circumstances), FOR” the County compensation proposal (in the case of County shareholders), and FOR your company’s adjournment proposal.
Q:
What if I do not vote?
​
A:
If you do not vote at your special meeting, it will have the same effect as voting your shares against the merger.
​
Q:
If my shares are held in “street name” by my broker, will my broker automatically vote my shares for me?
​
A:
No. Your broker will vote your shares of stock on thewith respect to your company’s merger agreement proposal only if you provide instructions on how to vote. You should instruct your broker on how to vote your shares, following the directions your broker provides. If you do not provide instructions to your broker, and your broker submits an unvoted proxy, the resulting broker nonvote“broker non-vote” will not be counted toward a quorum, and your shares will not be voted at your company’s special meeting, which will have the same effect as voting your shares against the merger.
​
Q:
Can I change my vote after I deliver my proxy?
​
A:
Yes. You can change your vote at any time before your proxy is voted at theyour company’s special meeting. You can do this in four ways. First, you can revoke your proxy by giving written notice of revocation to Commerce’syour company’s Corporate Secretary. Second, you can submit a new properly executed proxy with a later date to Commerce’syour company’s Corporate Secretary at or before theyour company’s special meeting. The latest proxy actually received before the meeting will be counted, and any earlier proxies will be revoked. Third, if you votedmay vote over the internet, you can vote again over the internetInternet by the applicable deadline described below or submit a proxy card and return it prior to the vote at the annualyour special meeting. Fourth, you can attend Commerce’syour company’s special meeting (either in-person(in-person for Nicolet shareholders or remotely)virtually for County shareholders), give oral notice of your revocation, and vote your shares in person.at the meeting. Any earlier proxy will be thereby revoked. Your last properly submitted vote will be the vote that is counted. However, simply attending the meeting (either in-person or remotely)virtually) without voting will not revoke your proxy. If you hold shares in “street name,” you must contact your broker prior to theyour company’s special meeting if you wish to revoke your proxy or change your vote.
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Q:
Are holders of Nicolet common stock entitled to dissenters’ rights?
​
A:
No. Holders of Nicolet common stock are not entitled to dissenters’ rights under Wisconsin law.
​
Q:
Are holders of County common stock entitled to dissenters’ rights?
​
A:
No. Holders of County common stock are not entitled to dissenters’ rights under Wisconsin law.
​
Q:
What is the deadline for voting?voting for Nicolet shareholders?
​
A:A.
If you are the record holder of shares of ourNicolet common stock on August 19, 2021, you may vote at the special meeting or by mail at any time prior to the annualNicolet special meeting as long as we receiveNicolet receives your proxy through the mail before the time of the annualspecial meeting, or [•] P.M. local timewhich is 9:45 a.m., Central Time, on [•], 2020.October 5, 2021. In addition, as a record holder, you may vote by internetInternet or by telephone until noon, local time,1:00 a.m., Central Time, on [•], 2020.October 5, 2021. If your shares are held in “street name,” you must vote your shares by the deadline set by your broker.
​
Q:
What is the deadline for voting for County shareholders?
​
A.
If you are the record holder of shares of County common stock on August 19, 2021, you may vote at the special meeting or by mail at any time prior to the County special meeting as long as County receives your proxy through the mail before the time of the special meeting, which is 2:00 p.m., Central Time, on October 5, 2021. In addition, as a record holder, you may vote by Internet or by telephone until 10:59 p.m., Central Time, on October 4, 2021. If your shares are held in accordance with the voting instruction form“street name,” you must vote your shares by the deadline set by your broker.
​
Q:
Should I send in my County stock certificates now?
​
A:
No. IfFollowing the merger is completed,mailing of the joint proxy statement-prospectus and the proxy, Nicolet or Nicolet’s exchange agent will send aan election form, letter of transmittal and other customary transmittal materials providing written instructions for making an election as to the form of merger consideration to be received and for exchanging CommerceCounty common stock certificates for the merger consideration in accordance with the merger agreement. In any event, do not send your stock certificates with your proxy card. If you hold your shares in “street name” or “book-entry form” through a broker, the broker will provide separate instructions for voting and for surrendering and exchanging your shares.
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Q:
Who can help answer my questions?
​
A:
If you would like additional copies of this document, or if you would like to ask any questions about the merger and related matters, you should contact:
​
​For Nicolet shareholders:​​For County shareholders:​
​Michael E. Daniels
Nicolet Bankshares, Inc.
111 North Washington Street
Green Bay, Wisconsin 54301
Telephone: (920) 430-1400		​​Timothy J. Schneider
County Bancorp, Inc.
2400 South 44th Street
Manitowoc, Wisconsin 54221
Telephone: (920) 686-5604		​
​
Joseph Fazio IIIQ:
Chief Executive Officer, Commerce State BankWhy is County holding a virtual meeting instead of a physical meeting?
​
A:
Due to the ongoing public health impact of the COVID-19 pandemic and to support the health and well-being of County’s shareholders and community, County’s board of directors determined that it would be in the best interests of its shareholders for County to hold its special meeting virtually rather than in person. County believes that hosting a virtual meeting will enable more of its shareholders to attend the meeting because it will limit contact with other individuals in light of COVID-19 concerns and it will allow County’s shareholders to participate from any location around the world with Internet access.
​
1700 S. Silverbrook DriveQ:
West Bend, Wisconsin 53095How can County’s shareholders attend the County special meeting?
​
A.
(262) 247-2802
jfazio@commercesb.com
County’s special meeting will be a completely virtual meeting of shareholders, which will be conducted
​
 
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exclusively by live webcast. There is no physical location for the special meeting. County shareholders will be able to attend the special meeting online, vote and submit questions prior to and during the meeting by visiting www.virtualshareholdermeeting.com/ICBK2021SM. County shareholders will need to have the 16-digit control number included on their respective proxy card to join the special meeting. If a County shareholder is a beneficial owner and a broker or other fiduciary is the record holder (which is usually referred to as “street name” ownership), such shareholders should follow the instructions for attending the special meeting provided by such broker or other fiduciary. If County shareholders do not comply with the procedures outlined above, they will not be admitted to the virtual special meeting.
Online check-in will start 15 minutes before the meeting. The virtual meeting platform is fully supported across browsers (Internet Explorer, Firefox, Chrome, and Safari) and devices (desktops, laptops, tablets, and cell phones) running the most updated version of applicable software and plugins. Participants should ensure that they have a strong Wi-Fi connection wherever they intend to participate in the meeting. Participants should also give themselves plenty of time to log in and ensure that they can hear streaming audio prior to the start of the meeting. Technical support will be available for shareholders who experience technical difficulties accessing the virtual special meeting.
Q:
How can County’s shareholders vote their shares and participate at the special meeting?
​
A:
County shareholders may participate in the special meeting by visiting the following website: www.virtualshareholdermeeting.com/ICBK2021SM. To participate in the special meeting, County shareholders will need the 16-digit control number included on their respective proxy card. Shares held in your name as the shareholder of record may be voted electronically during the special meeting. If County shareholders would like to vote during the special meeting, click on the “Voting” button at the bottom of the screen before the polls close for voting on any of the items being voted on at the special meeting.
​
Shares held in the name of a broker or other fiduciary (i.e., in street name) also may be voted electronically during the special meeting by following the instructions provided by your broker or other fiduciary. However, even if you plan to attend the special meeting, County recommends that its shareholders vote their shares in advance so that your vote will be counted if you later decide not to attend the special meeting.
Q:
How can County’s shareholders ask questions at the special meeting?
​
A:
To submit a question at County’s special meeting, County shareholders will need to log in to the meeting using the 16-digit control number included on their respective proxy. If County shareholders would like to ask a question prior to or during the meeting, click on the “Q&A” button at the bottom of the screen, type in the question in the field labeled “Submit a question”, and click “Submit”. County encourages its shareholders to submit any questions as soon as possible to ensure the question is received.
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SUMMARY
We have prepared this summary of certain material information to assist you in your review of this joint proxy statement-prospectus. It is necessarily general and abbreviated, and it is not intended to be a complete explanation of all of the matters covered in this joint proxy statement-prospectus. To understand the merger and the issuance of shares of Nicolet common stock in the merger, please see the more complete and detailed information in the sections that follow this summary, as well as the financial statements and appendices included in this joint proxy statement-prospectus or incorporated herein by reference. For more information about Nicolet or County, please see the section entitled “Where You Can Find Additional Information.”Information” beginning on page 101. We urge you to read all of these documents in their entirety prior to returning your proxy or voting at the special meeting of your company’s shareholders.
Each item in this summary refers to the page of this document on which that subject is discussed in more detail.
The Companies
NICOLET BANKSHARES, INC.
111 North Washington Street
Green Bay, Wisconsin 54301
(920) 430-1400
Nicolet is a Wisconsin corporation and was incorporated as Green Bay Financial Corporation, a Wisconsin corporation, on April 5, 2000, to serve as the holding company for and the sole shareholder of Nicolet National Bank. It amended and restated its articles of incorporation and changed its name to Nicolet Bankshares, Inc. on March 14, 2002. It subsequently became the holding company for Nicolet National Bank upon completion of Nicolet National Bank’s reorganization into a holding company structure on June 6, 2002.
Nicolet is a registered bank holding company under the Bank Holding Company Act of 1956, as amended. It conducts operations through its wholly owned subsidiary, Nicolet National Bank, which was organized in 2000 as a national bank under the laws of the United States and opened for business on November 1, 2000. Nicolet National Bank provides a full range of traditional banking services throughout northeastern Wisconsin and the upper peninsulaUpper Peninsula of Michigan. Nicolet offers commercial, retail and wealth management services through 3936 branch locations in Wisconsin and Menominee, Michigan, as of December 31, 2019.June 30, 2021.
As of December 31, 2019,At June 30, 2021, Nicolet had consolidated total assets of $3.6$4.6 billion, loans of approximately $2.6$2.8 billion, deposits of $3.0$3.9 billion, and consolidated shareholders’ equity of $516$559 million. At December 31, 2019,June 30, 2021, Nicolet had 10,610,2599,865,955 shares of common stock issued and 10,587,7389,843,141 shares outstanding, held by approximately 2,5002,200 shareholders of record.
COMMERCE FINANCIAL HOLDINGS, INC.
1700 S. Silverbrook Drive
West Bend,The principal executive offices of Nicolet are located at 111 North Washington Street, Green Bay, Wisconsin 53095
(262) 247-280054301, and its telephone number is (920) 430-1400. Nicolet’s website can be accessed at https://www.nicoletbank.com/. Information contained on Nicolet’s website does not constitute part of, and is not incorporated into, this joint proxy statement-prospectus. Nicolet’s common stock is traded on the Nasdaq Capital Market under the symbol “NCBS.”
CommerceNicolet announced the proposed acquisition of Mackinac Financial Corporation on April 12, 2021 (the “Mackinac merger”). Mackinac is a registered bank holding company headquarteredincorporated under Michigan law and is primarily engaged in West Bend, Wisconsin. Commerce State Bank (“Commerce State Bank”), Commerce’sthe business of planning, directing and coordinating the business activities of its wholly owned banking subsidiary, mBank, a Michigan state-chartered bank. mBank currently has 28 branch locations. The proposed Mackinac merger is a state-chartered banking institution undersubject to customary closing conditions, including receipt of regulatory approvals for the lawsMackinac merger, as well as approvals of the Stateshareholders of Wisconsin. Commerce State Bank offers a full rangeNicolet and of traditional banking services, including commercial and retail, through four retail banking locations in the Milwaukee-Waukesha-West Allis Metropolitan Statistical Area and Sheboygan Metropolitan Statistical Area.
Mackinac. As of December 31, 2019, Commerce had consolidated total assetsthe date of $713 million, loansthis joint proxy statement-prospectus, all such regulatory approvals, as well as the required approval of Nicolet’s and Mackinac’s shareholders, have been obtained. If, prior to completion of the County merger, Nicolet completes the Mackinac merger, we expect that, upon completion of the County merger, current County shareholders will own approximately $603 million, deposits16% of $610 million and consolidated shareholders’ equity of $66 million. At January 31, 2020, Commerce had 1,530,546the outstanding shares of common stock issued and outstanding, held by approximately 394 shareholders of record.Nicolet.
 
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On July 7, 2021, Nicolet issued and sold $100 million in aggregate principal amount of its 3.125% Fixed-to-Floating Rate Subordinated Notes due 2031 (the “July 2021 Nicolet Subordinated Debt Private Placement”). Nicolet intends to use the proceeds from the private placement for general corporate purposes, which may include funding additional loan growth, common stock share repurchases and acquisitions.
For more information about Nicolet and its subsidiaries, see “Where You Can Find Additional Information” on page 101.
COUNTY BANCORP, INC.
2400 South 44th Street
Manitowoc, Wisconsin, 54221
(920) 686-9998
County is a Wisconsin corporation founded in May 1996 and is registered as a bank holding company under the Bank Holding Company Act of 1956, as amended. County’s primary activities consist of holding the stock of its wholly owned subsidiary bank, Investors Community Bank, and providing a wide range of banking and related business activities through the Bank and its other subsidiaries.
Investors Community Bank is a Wisconsin state bank originally chartered in 1997, and headquartered in Manitowoc, Wisconsin. Investors Community Bank is an independent community bank offering a full range of financial services focusing on the needs of agricultural businesses statewide, with a primary focus on dairy-related lending. Its customers are served from full-service branches in Manitowoc, Appleton, Green Bay, and Stevens Point and its loan production offices in Darlington, Eau Claire, Fond du Lac and Sheboygan.
At June 30, 2021, County had consolidated total assets of approximately $1.5 billion, loans of approximately $1.0 billion, deposits of approximately $1.1 billion, and consolidated shareholders’ equity of approximately $174.8 million.
The principal executive offices of County are located at 2400 South 44th Street, Manitowoc, Wisconsin 54221, and its telephone number is (920) 686-9998. County’s website can be accessed at https://investors.icbk.com/. Information contained on County’s website does not constitute part of, and is not incorporated into, this joint proxy statement-prospectus. County’s common stock is traded on the Nasdaq Global Market under the symbol “ICBK.”
For more information about County and its subsidiaries, see “Where You Can Find Additional Information” beginning on page 101.
The Merger Agreement
(See page 47)78)
Under the terms of the merger agreement, and if the merger is completed, CommerceCounty will merge with and into Nicolet, with Nicolet being the surviving corporation. Following the merger of CommerceCounty with and into Nicolet, Commerce StateInvestors Community Bank will merge with and into Nicolet National Bank, with Nicolet National Bank being the surviving bank. Both Nicolet and Nicolet National Bank will continue their existence under Wisconsin law and the laws of the United States, respectively, while CommerceCounty and Commerce StateInvestors Community Bank will cease to exist. The merger agreement is attached to this documentjoint proxy statement-prospectus as Appendix A and is incorporated into this proxy statement-prospectusherein by reference. We encourage you to read the entire merger agreement carefully, as it is the legal document that governs the proposed merger.
What YouCounty’s Shareholders Will Receive in the Merger
(See page 47)78)
If the merger is completed, each share of CommerceCounty common stock (excluding treasury shares, shares held directly or indirectly by Nicolet (other than in a fiduciary capacity or in connection with debts previously contracted), and shares underlying Commerce Stock Options, and dissenting shares;stock options; all such shares are referred to herein as the “cancelled shares”) will be converted into the right to receive, the per share stock consideration of 1.15 shares of Nicolet common stock.
Adjustment of Exchange Ratio/Termination of the Agreement
The merger agreement provides that the exchange ratio is fixed unless the Nicolet Common Stock Price (defined in the agreement as the volume weighted average closing price of Nicolet common stock on the Nasdaq Capital Market over the twenty (20) trading day period immediately preceding the second (2nd) trading day prior to the closing date) is (a) greater than $82.00, in which case the exchange ratio would become floating at the quotient of $94.30 divided byholder’s election and subject to proration and the Nicolet Common Stock Price, or (b) less than $62.00, in which case the exchange ratio would become floating at the quotient of $71.30 divided by the Nicolet Common Stock Price.
If the Nicolet Common Stock Price isexceptions explained below, $62.00 per share, in lieu of adjusting the exchange ratio, Nicolet may (a) elect to add a cash component to the merger consideration in an amount sufficient to make the aggregate per share consideration equal to $71.30 per share of Commerce Common Stock, (b) leave the exchange ratio unchanged (which would give Commerce the right to terminate the merger agreement), or (c) terminate the merger agreement. As of the date of this proxy statement-prospectus, if the Nicolet Common Stock Price is below $62.00, Nicolet does not intend to adjust the exchange ratio, does not intend to add cash consideration, and does intend to terminate the merger agreement. If the Nicolet Common Stock Price is below $62.00 per share, and Nicolet does not exercise its right to terminate and does not elect to increase the exchange ratio or add cash consideration, Commerce’s board of directors will have the right and authority to elect whether to terminate or proceed based on its assessment of all information available at the time.
Additionally, under no circumstances shall the number of0.48 shares of Nicolet common stock (the “per share stock consideration”) or cash of  $37.18 per share of County common stock (the “per share cash consideration”).

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Merger Consideration Election Procedures
Each County shareholder may make an election to exchange such shareholder’s County shares for Nicolet common stock (“stock election shares”), cash (“cash election shares”), or a mix of both. Nicolet or Computershare Trust Company, N.A. (the “exchange agent”) will mail to all shareholders an election form and customary transmittal materials following the mailing of this joint proxy statement-prospectus. Completed election forms will be due five (5) business days prior to the closing of the merger (the “election deadline”). At this time, we expect the election deadline to be issued5:00 p.m., Eastern Time, on November 29, 2021. Any shares for which a completed election form is not received by the election deadline will be treated as shares not making an election preference for cash or stock (“no election shares”). Additionally, shares exchanged in settlement or cancellation of County restricted stock, County restricted stock units and County deferred restricted stock units will be considered no election shares.
Merger Consideration Proration and Allocation Procedures
The total number of shares of County common stock that will be converted into the mergercash consideration will be equal or exceed 19.9%to 1,237,000 shares (the “cash election threshold”), which represents approximately 20% of the numberaggregate amount of outstanding shares of County common stock and shares underlying unvested restricted stock awards, restricted stock units and deferred restricted stock units as of June 30, 2021, with the remaining shares being converted into stock consideration. As a result, the total consideration to be paid in respect of County common stock will consist of approximately 20% cash and approximately 80% Nicolet common stock. Any cash payments in respect of (i) stock suchoptions, (ii) preferred stock and (iii) cash in lieu of fractional shares will not be counted in determining the cash election threshold.
To the extent that Nasdaq rules would require approvalthe aggregate number of cash election shares falls below the cash election threshold, shareholders who elected the stock consideration will receive a mixture of both cash and stock consideration in accordance with the following proration procedures:
•
If the number of cash election shares is less than or equal to the cash election threshold, the merger by Nicolet’s shareholders. The parties agree consideration will be allocated as follows:
​
•
all cash election shares will be exchanged for the cash consideration;
​
•
to reducethe extent necessary to reach the cash election threshold, no election shares will be exchanged for the cash consideration (on a pro rata basis if excess shares are available); and
​
•
if additional cash elections are required to meet the cash election threshold, stock election shares will be allocated to receive the cash consideration on a pro rata basis until the number of shares of Nicolet common stock to be issued and to increasebeing exchanged for the cash consideration equals the cash election threshold.
​
To the extent that the aggregate number of cash election shares falls above the cash election threshold, shareholders who elected the cash consideration will receive a mixture of both cash and stock consideration in accordance with the following proration procedures:
•
If the number of cash election shares is greater than the cash election threshold, the merger consideration will be allocated as follows:
​
•
all stock election shares and no election shares will be exchanged for the stock consideration; and
​
•
cash election shares will be allocated to be issuedreceive the stock consideration on a pro rata to avoid suchbasis until the number of shares being exchanged for the cash consideration equals the cash election threshold.
​
See “Election and Proration of Merger Consideration” beginning on page 74 of this joint proxy statement-prospectus for a shareholder vote.more detailed description of the election, proration and allocation procedures, including examples.
Cash in Lieu of Fractional Shares
In lieu of any fractional shares of Nicolet common stock, CommerceCounty shareholders will receive an amount in cash (without interest and rounded to the nearest whole cent) as determined by multiplying the Nicolet Common Stock Price

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common stock price (as defined in the merger agreement), by the fractional share of Nicolet common stock to which such holder would otherwise be entitled.
Cash for Commerce Shares held in Commerce State Bank 401(k) & Profit Sharing PlanEffect of the Merger on County Preferred Stock
(See page 79)
EachPursuant to the merger agreement, each share of Commerce commonCounty preferred stock held inissued and outstanding immediately prior to the Commerce State Bank 401(k) & Profit Sharing Planeffective date will be converted into the right to receive cash in an amount equal to the redemption price of such County preferred stock as of the effective date. County is required to redeem its preferred stock prior to the effective time of the merger.
Effect of the Merger on County Equity Awards
(See page 79)
County Stock Options
Pursuant to the merger agreement, each vested and unvested County stock option outstanding immediately prior to the effective date of the merger will be cancelled as a result of the merger and without any action on the part of the holder. In consideration thereof, the holder will receive a cash payment equalin an amount determined by multiplying (i) the number of shares of County common stock subject to the productoption immediately prior to the effective date by (ii) the excess, if any, of the (x) the Nicolet common stock price (as defined in the merger agreement) multiplied by the exchange ratio, over the exercise price per share of the County common stock subject to the stock option immediately prior to the effective date. The merger agreement defines “Nicolet common stock price” as the volume weighted average closing price of Nicolet common stock on the Nasdaq Capital Market over the 20 trading day period immediately preceding the second trading day prior to the closing date.
County Restricted Stock Awards
As of June 30, 2021, there were 2,306 shares of County common stock underlying outstanding unvested restricted stock awards. Pursuant to the merger agreement, each unvested County restricted stock award outstanding immediately prior to the effective date shall become vested as a result of the merger. Each vested County restricted stock award shall be exchanged for the number of shares of County common stock subject to such County restricted stock award.
County Restricted Stock Units
As of June 30, 2021, there were 88,112 shares of County common stock underlying outstanding restricted stock units. Pursuant to the merger agreement, each vested and unvested County restricted stock unit outstanding immediately prior to the effective date will, as a result of the merger and without any action on the part of the holder, (i) become fully vested and settled per the terms of the award and the Nicolet Commonapplicable County equity plan or (ii) be cancelled in consideration for the right to receive the number of shares of County common stock subject to the restricted stock unit award. In either case, such shares will be exchanged pursuant to the terms of the merger agreement, treating each share of County common stock received in settlement or cancellation of the restricted stock units as a no election share for purposes of the merger consideration election.
County Deferred Restricted Stock Price.Units
As of June 30, 2021, there were 9,779 shares of County common stock underlying outstanding deferred restricted stock units. Pursuant to the merger agreement, each vested and unvested County deferred restricted stock unit outstanding immediately prior to the effective date will, as a result of the merger and without any action on the part of the holder, be cancelled (as permitted under applicable U.S. treasury regulations) in consideration for the right to receive the number of shares of County common stock subject to the deferred restricted stock unit award. Such shares will be exchanged pursuant to the terms of the merger agreement, treating each share of County common stock received or deemed received in cancellation of the deferred restricted stock units as a no election share for purposes of the merger consideration election.
 
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Relative Ownership of Nicolet following Closing
After the merger is completed, we expect that current Nicolet shareholders will own approximately [83]% of the outstanding shares of common stock of the combined company, and current Commerce shareholders will own approximately [17]% of the outstanding shares of common stock of the combined company, assuming no adjustment to the exchange ratio.
Effect of the Merger on Commerce Stock Options
(See page 48)
As of January 31, 2020, there were 57,132 shares of Commerce common stock underlying Commerce Stock Options. Pursuant to the merger agreement, each Commerce Stock Option outstanding immediately prior to the effective date (whether vested or not) shall be cancelled in exchange for a cash payment equal to the product of (i) the number of shares of Commerce common stock subject to such Commerce Stock Option immediately prior to the effective time of the merger and (ii) the excess, if any, of the product of (x) the Nicolet Common Stock Price and (y) the exchange ratio, subject to any adjustment, over the exercise price per share of Commerce common stock subject to such Commerce Stock Option immediately prior to the effective time of the merger.
No Dissenters’ Rights
(See page 48)80)
If the merger is completed, Commerce shareholders who doShareholders of Nicolet and County are not vote for the merger and who follow certain procedures as required by Wisconsin law and described in this proxy statement-prospectus will be entitled to exercise dissenters’ rights and receive the “fair value” of their shares in cash under Wisconsin law. If you assert and perfect your dissenters’ rights, you will not receive any merger consideration but will be entitled to receive the “fair value” of your shares of stock in cash as determined in accordance with Wisconsin law. The “fair value” of your shares may be more or less than the consideration to be paid in the merger. Appendix C includes the relevant provisions of Wisconsin law regarding these rights. See “Dissenters’ Rights” beginning on page 48 of this proxy statement-prospectus.
Your Expected Tax Treatment as a Result of the Merger
(See page [•])88)
We expect that the merger will qualify as a reorganization under Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and that CommerceCounty shareholders that receive Nicolet common stock in the merger will not recognize gain or loss for U.S. federal income tax purposes as a result of the surrender of CommerceCounty common stock for receipt of Nicolet common stock, except thatbut may recognize gain may be recognized with respect to any cash received in the merger (other than cash in lieu of fractional shares)shares, as discussed below). CommerceCounty shareholders receiving solely cash in the merger whether as a result of exercising dissenters’ rights or otherwise, will generally recognize gain or loss in an amount equal to the difference between the amount of cash received and the CommerceCounty shareholder’s aggregate tax basis in its CommerceCounty common stock surrendered or cancelled in exchange thereof. Commercetherefor. County shareholders may also recognize gain or loss for U.S. federal income tax purposes with respect to any cash received in lieu of fractional shares.
Commerce employees that have their Commerce Stock Options cancelled as a result of the merger and receive a cash payment (net of any applicable withholding and other payroll taxes due with respect to such payment) shall be considered to have received a payment of wages subject to U.S. federal and state income taxation in the same manner as other compensation paid to such employee.
The completion of the merger is conditioned on receipt of a tax opinion from Bryan Cave Leighton Paisner LLP that the merger qualifies as a tax-free reorganization under Section 368(a) of the Internal Revenue.Code. The opinion will not bind the Internal Revenue Service, which could take a different view of the tax consequences of the merger.
See “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 88 for a more detailed discussion of the tax consequences of the merger.merger to County shareholders. Determining the actual tax consequences of the merger to you as an individual taxpayer can be complicated. The tax treatment will depend on your specific situation and many

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variables not within our control. For these reasons, we recommend that you consult your tax advisor concerning the federal and any applicable state, local or other tax consequences of the merger to you.
Comparative Stock Prices
(See page [•])
Nicolet.   Nicolet common stock currently trades on the Nasdaq Capital Market under the ticker “NCBS.” The closing price of Nicolet common stock was $72.32$71.75 per share on February 14, 2020,June 21, 2021, the last trading day before public announcement of the merger. The closing price of Nicolet common stock was $[•]$75.50 per share on [•],August 20, 2021, the last practicable trading day before the date of this joint proxy statement-prospectus.
Commerce.County.   Commerce’sCounty common stock is privately held and not tradedcurrently trades on anythe Nasdaq Global Market under the ticker “ICBK.” The closing price of County common stock was $23.39 per share on June 21, 2021, the last trading day before public markets.announcement of the merger. The closing price of County common stock was $35.27 per share on August 20, 2021, the last practicable trading day before the date of this joint proxy statement-prospectus.
The Commerce BoardBoth Boards of Directors RecommendsRecommend Shareholder Approval of the Merger
(See page [•])33 for Nicolet; page 35 for County)
Nicolet.The board of directors of CommerceNicolet has unanimously approved the merger agreement and the transactions contemplated thereby and believes that the merger is in the best interests of Commerce’sNicolet’s shareholders. The Nicolet board unanimously recommends that youNicolet’s shareholders vote FOR approval of the merger proposalagreement and the transactions contemplated thereby, including the issuance of Nicolet shares contemplated by the merger.
In deciding to engage in the merger transaction with County, Nicolet’s management and board of directors noted, among other things, the following:
•
the complementary strengths of Nicolet and County, including a focus on commercial lending and core deposit gathering in their respective markets;
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•
the expected strengthened competitive positioning of the combined company throughout Northeast and Northcentral Wisconsin, which Nicolet expects will meaningfully enhance its ability to serve its customers;
​
•
County’s leading market position in agricultural lending throughout the state of Wisconsin;
​
•
Nicolet’s board of director’s belief that the merger represents a superior opportunity for increasing shareholder value compared to the other strategic alternatives available to Nicolet; and
​
•
the expectation that Nicolet shareholders will experience opportunities for share price growth driven by a more liquid publicly traded stock.
​
County.   County’s board of directors has unanimously approved the merger agreement and the transactions contemplated thereby, believes that the merger is in the best interests of County and its shareholders, and unanimously recommends that County’s shareholders vote FOR approval of the adjournment proposal.merger agreement and the transactions contemplated thereby.
In deciding to engage in the merger transaction with Nicolet, Commerce’sCounty’s management and board of directors consulted with its management, as well as its legal counsel and financial advisor, and considered numerous factors, includingnoted, among other things, the following:
•
the comparisonview that the merger is a strategically compelling transaction that will create a strong combined company, elevate growth and provide meaningful long-term value for the shareholders of the value of the consideration offered by Nicolet to the value of the consideration offered by other parties approached by Commerce;County;
​
•
the relationshipview that the combined company will be strategically positioned to capitalize on market opportunities and better serve its customers through the ability to make larger loans and provide a greater breadth of the consideration to be paid in the merger to market prices and the book value and earnings per share of Commerce and Nicolet;
​
•
Nicolet’s long term growth strategy;services;
​
•
the payment of the Merger Consideration primarily in the form of registered, freely tradeable stockstronger liquidity and historical trading multiples of Nicolet giving liquidity along with an opportunitycommon stock compared to defer taxes on gain;the historical profile of County common stock;
​
•
the belief that Commercenet interest margin compression and Nicolet share a similar strategic vision and a similar community banking philosophy;
​
•
the complementary aspects of the Commerce and Nicolet businesses, including customer focus, geographic coverage, business orientation, and compatibility of the companies’ management and operating styles;
​
•
the respective presentations by management and Commerce’s financial advisor concerning the operations, financial condition and prospects of Commerce and the expected financial impact of the merger on the combined company;
​
•
the potential expense-saving and revenue-enhancing opportunities in connection with the merger, the related potential impact on the combined company’s earnings and the fact that the Commerce shareholders will be able to participate as Nicolet shareholders in the benefits of such savings opportunities and the future performance of the combined company generally;
​
•
Nicolet’s history and reputation as an efficient and effective acquirer, and success in integrating acquired organizations into its own;
​
•
Nicolet’s access to internal and external resources to complete the merger processheadwinds facing County on a timelystand-alone basis;
​
•
the higher lending limits and greater breadth of products and services the merged banks will be abledesire to offer to Commerce customers;diversify County’s loan portfolio, which is concentrated in agricultural loans;
​
•
the terms ofcurrent and prospective environment in the merger agreement,financial services industry, including economic conditions and the presentation by Commerce’s outside legal advisors regardinginterest rate and regulatory environments, possible effects of scale, increased operating costs resulting from regulatory and compliance mandates, increasing competition from nationwide banks, non-bank financial and financial technology firms, and the mergerFarm Credit System, and merger agreement;current financial market conditions and the likely effects of these factors on County’s and the combined company’s potential growth, development productivity and strategic options, including the likely effect of these factors on County both with and without the proposed transaction;
​
•
the financial structure, resultsconsistency of operations,the transaction with County’s business strategies, including achieving strong earnings growth, reaching new markets, improving customer attraction and prospects of Commerceretention, developing technology capabilities and focusing on cost management; and
​
•
that County and Nicolet the capital adequacyare a complementary fit because of the resulting holding companynature of the markets served and products offered by County and Nicolet and the outlookexpectation that the transaction will provide economies of scale, enhanced ability to invest in technology and innovation, expanded product offerings, improved efficiencies, reduced costs and enhanced opportunities for growth.
​
For further discussion of the factors considered by the County board of directors in reaching its conclusion, see “The Merger  —  Background of the Merger” at page 41 and “The Merger  —  Reasons for the organizationsMerger” beginning on page 45. Shareholders should note that County’s directors have certain interests in, and may derive benefits as a result of, the merger that are in addition to their interests as shareholders of County. See “The Merger  —  Interests of Certain Persons in the rapidly changingMerger” beginning on page 70.
Opinion of County’s Financial Advisor
(See page 49)
In deciding to approve the merger, the board of directors of County considered the written opinion, dated June21, 2021, of its financial services industry;
​advisor, Stephens, Inc. (“Stephens”), an investment banking and financial
 
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•
the combined resources of the two holding companies are expected to improve the efficiencies associated with the development of new products and services to be offered by Nicolet and its subsidiary bank;
​
•
the size and capital structure of the resulting holding company following the merger, which are expected to provide greater capacity to weather adverse market events and opportunities and flexibility in responding to the rapidly changing industry for financial service providers;
​
•
the enhanced ability of the combined organization to take advantage of current and emerging opportunities for growth and profitability; and
​
•
the receipt by Commerce’s board of directors of the Magstar Capital, LLC opinion (discussed below) concerning the fairness, from a financial point of view, of the merger to holders of Commerce’s common stock.
​
Opinion of Commerce’s Financial Advisor
(See page 29)
In deciding to approve the merger, the board of directors of Commerce considered the opinion of its financial advisor, Magstar Capital, LLC, an investment banking and financial advisory firm. Magstar Capital, LLCStephens has given a fairness opinion to the CommerceCounty board of directors that, as of the date of the opinion, the merger consideration was fair, from a financial point of view, to the holders of CommerceCounty common stock. The opinion is based on and subject to the procedures, matters and limitations described in the opinion and other matters that Magstar Capital, LLCStephens considered relevant. The fairness opinion is attached to this proxy statement-prospectus as Appendix B. to this joint proxy statement-prospectus. We urge all shareholders of CommerceCounty to read the entire opinion, which describes the procedures followed, matters considered and limitations on the review undertaken by Magstar Capital, LLCStephens in providing its opinion. The opinion provided by Magstar Capital, LLC was prepared prior the coronavirus COVID-19 pandemic, and does not reflect the current financial conditions of Nicolet and Commerce, or the current market conditions. For further information, please see the section entitled “The Merger — Opinion of Commerce’sCounty’s Financial Advisor” beginning on page 49.29
. Opinion of Nicolet’s Financial Advisor
(See also “Risk Factors”page 56)
In connection with the merger, Nicolet’s financial advisor, Keefe, Bruyette & Woods, Inc. (“KBW”), delivered a written opinion, dated June 21, 2021, to the Nicolet board of directors as to the fairness, from a financial point of view and as of the date of the opinion, to Nicolet of the aggregate merger consideration in the merger. The full text of the opinion, which describes the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by KBW in preparing the opinion, is attached as Appendix C to this joint proxy statement-prospectus. The opinion was for the information of, and was directed to, the Nicolet board of directors (in its capacity as such) in connection with its consideration of the financial terms of the merger. The opinion did not address the underlying business decision of Nicolet to engage in the merger or enter into the merger agreement or constitute a recommendation to the Nicolet board of directors in connection with the merger, and it does not constitute a recommendation to any holder of Nicolet common stock or any shareholder of any other entity as to how to vote or act in connection with the merger or any other matter. For further information, please see the section entitled “The Merger — Opinion of Nicolet’s Financial Advisor” beginning on page 14 for a discussion of risks relating to the potential effects of the COVID-19 pandemic.56.
Information About the Special Shareholders’ MeetingMeetings
(See page 21)31 for Nicolet; page 35 for County)
A special meeting of the shareholders of CommerceNicolet will be held on [•]October 5, 2021, at 9:45 a.m., at [•].m., local time.Central Time. The meeting will be held at [•]. Due toNicolet’s offices at 111 North Washington St., Green Bay, Wisconsin 54301.
A special meeting of the COVID-19 pandemic, and outshareholders of an abundance of caution for your safety, weCounty will be allowing shareholders to participate in the specialheld on October 5, 2021, at 2:00 p.m., Central Time. The meeting via remote communication. If you join the meeting remotely, you will be able to hear and participate in the meeting.held virtually via live webcast at www.virtualshareholdermeeting.com/ICBK2021SM.
At the meeting,respective meetings, the shareholders of Commercethe company holding the meeting will vote on the merger agreement described herein and in the notice for the meeting.meeting and on each company’s respective adjournment proposal. In addition, County’s shareholders will vote on the County compensation proposal. If Commerce’seach company’s shareholders approve the merger agreement and the other conditions to completing the merger are satisfied, we expect to complete the merger on [•].
Instructions for joiningin the special meeting via remote communications are set forth below:
[To insert dial-in and pin information.]fourth quarter of 2021.
Quorum and Vote Required at the MeetingMeetings
(See page 21)31 for Nicolet; page 36 for County)
Nicolet.   Shareholders who own CommerceNicolet common stock at the close of business on [•],August 19, 2021, the record date, will be entitled to vote at the Nicolet special shareholders’ meeting. A majority of the outstanding shares of CommerceNicolet common stock, as of the record date for the meeting, must be present in person via remote communication or by proxy at the meeting in order for a quorum to be present. If a quorum is not present at the meeting, the meeting will be adjourned, and no vote will be taken until and unless a quorum is present. As of the record date, there were 9,660,243 shares of Nicolet common stock outstanding and entitled to vote at the meeting. As of such date, the outstanding shares were held by approximately 2,200 holders of record.
Each share of Nicolet common stock outstanding on the record date entitles its holder to one vote on the merger agreement and any other proposal that may properly come before the meeting.
Approval of the merger proposal requires the affirmative vote of a majority of the shares of CommerceNicolet common stock outstanding and entitled to vote on the record date. Abstentions, shares not voted, and broker nonvotesnon-votes will have the same effect as a vote against the merger proposal.
 
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the same effect as a vote against the merger proposal. Approval of the adjournment proposal requires that the votes cast for the proposal exceed the votes cast against the proposal. Abstentions and the failure to vote or failure to instruct your bank or broker how to vote with respect to the adjournment proposal will not be counted as votes cast and, therefore, have no effect on such proposal.
County.   The record date for the County special meeting is August 19, 2021. County’s shareholders of record of common stock as of the close of business on that day will receive notice of and will be entitled to vote at the special meeting. As of the record date, there were 6,031,190 shares of County common stock outstanding and entitled to vote at the meeting. As of such date, the outstanding shares were held by approximately 265 holders of record.
The presence, in person by attendance at the virtual meeting or by proxy, of holders of a majority of the shares entitled to vote on the merger agreement is necessary to constitute a quorum at the meeting. Each share of County common stock outstanding on the record date entitles its holder to one vote on the merger agreement, the compensation proposal, the adjournment proposal and any other proposal that may properly come before the meeting.
Based on the number of shares of County common stock outstanding as of the record date, at least 3,015,596 shares need to be present at the special meeting, whether in person by attendance at the virtual meeting or by proxy, to constitute a quorum.
Approval of the merger proposal requires the affirmative vote of a majority of shares of County common stock outstanding and entitled to vote on the record date. Abstentions, shares not voted, and broker non-votes will have the same effect as a vote against the merger proposal.
Approval of each of the compensation proposal and the adjournment proposal requires the votes cast for the proposal to exceed the votes cast against the proposal. Abstentions and the failure to vote or failure to instruct your bank or broker how to vote with respect to the compensation proposal or the adjournment proposal will not be counted as votes cast and, therefore, will have no effect on such proposal.
Share Ownership of Management
(See page [•])Officers and Directors
Nicolet.As of the record date for the Nicolet special meeting, directors and executive officers of CommerceNicolet had or shared voting or dispositive power over approximately 23%17% of the outstanding shares of CommerceNicolet common stock. It is anticipated that these individuals will vote their shares of CommerceNicolet common stock in favor of the merger agreement.
County.   As of the record date for the County special meeting, County’s directors and executive officers beneficially owned a total of 1,383,082 shares of County common stock, or approximately 22.9% of the shares entitled to vote on the merger. We anticipate that these individuals will vote their shares in favor of the merger agreement. Certain of these individuals, representing approximately 21.7% of the shares entitled to vote on the merger, have entered into a written agreement with Nicolet providing that they will vote thetheir shares over which they have voting power in favor of the merger agreement. A copy of the formagreement, except as may be limited by any existing fiduciary obligations to beneficial owners of such agreement is included as an exhibit to the merger agreement.shares.
As of the record date for the County special meeting, directors and executive officers of Nicolet had or shared no voting or dispositive power over any of the outstanding shares of Commerce common stock. Nicolet had voting and dispositive power over less than 1% of the outstanding shares of CommerceCounty common stock as of the record date.
Structure of the Merger
(See page 25)41)
•
Commerce Financial Holdings,County Bancorp, Inc. will cease to exist after the merger.
​
•
Initially, Commerce StateInvestors Community Bank will be operated as a standalone subsidiary of Nicolet.
​
•
Subsequently, it is expected that Commerce State Bank would be merged with and into Nicolet National Bank, and after such bank merger Commerce StateInvestors Community Bank will cease to exist.
​
•
Subsequent to the bank merger, the business of Commerce StateInvestors Community Bank will be conducted through Nicolet National Bank.
​

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•
Upon consummation of the merger and the bank merger, one person from the CommerceCounty board of directors, to be designated by CommerceCounty and reasonably acceptable to Nicolet (expected to be Joseph Fazio III)Lynn D. Davis), is anticipated to join the board of directors of each of Nicolet and Nicolet National Bank.
​
We Must Obtain Regulatory Approval to Complete the Merger
(See page [•])76)
We cannot complete the merger unless we receive the approval of the Board of Governors of the Federal Reserve System (the “Federal Reserve”), the Office of the Comptroller of the Currency (“OCC”) and the Wisconsin Department of Financial Institutions (the “WDFI”). All regulatory applications and notices required to be filed prior to the merger have been or will be filed.were filed on July 15, 2021. Although we do not know of any reason why we could not obtain the necessary regulatory approvals in a timely manner, we cannot be certain whether or when we will obtain them.
We Must Meet Several Conditions to Complete the Merger
(See page [•])81)
In addition to the required regulatory approvals, the merger will be completed only if certain conditions are met or waived, including the following:
•
approval by Commerce’seach company’s shareholders of the merger agreement and the transactions contemplated thereby by the required vote;vote (except that Nicolet shareholder approval will not be a condition to closing if on the effective date of the merger such approval is not required by the Wisconsin Business Corporation Law or Nasdaq rules);
​
•
receipt by CommerceCounty and Nicolet of an opinion from Bryan Cave Leighton Paisner LLP that the merger qualifies as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code;
​
•
CommerceCounty maintaining tangible common equity of at least $66.5 million (as defined in the merger agreement); of at least $163 million;
​
•
the Nicolet Common Stock Price is at least $62.00 (ifand County delivering supplemental indentures for Nicolet maintains its intent to terminate the agreement if the Nicolet Common Stock Price is below $62.00);assume County’s subordinated debt and trust preferred securities; and
​

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•
each party’s certification to the other as to the continued accuracy of the representations and warranties contained in the merger agreement, compliance with covenants and closing conditions, and the satisfaction of all other matters applicable to the transaction.
​
If all regulatory approvals are received and the other conditions to completion are satisfied, Nicolet and CommerceCounty contemplate that they will complete the merger on [•]. For a discussion of the intent of the parties to consummate the merger in the current environment, see “Statusfourth quarter of Intentions to Consummate the Merger” at page 46.2021.
Termination and Termination Fee
(See page 55)87)
The merger agreement may be terminated, either before or after shareholder approval, under certain circumstances described in detail later in this joint proxy statement-prospectus. If Nicolet terminates the merger agreement because Commerce’sCounty’s board withdraws or changes its recommendation of the merger agreement to its shareholders, if CommerceCounty terminates the merger agreement to accept an Acquisition Proposal it deems a Superior Proposal, as each term is defined in the merger agreement, or if either party terminates(i) an Acquisition Proposal is made with respect to County, (ii) the merger agreement under certain circumstancesis terminated as a result of the failure to obtain County’s shareholder approval, and within twelve months of such termination Commerce(iii) County enters into a definitivean agreement with respect to anfor such Acquisition Proposal within 12 months after the merger agreement is terminated, then Commerce (or its successor)County must pay Nicolet a termination fee of $5.0$10.0 million. For a discussion of the intent of the parties to consummate the merger in the current environment, see “Status of Intentions to Consummate the Merger” at page 46.
Commerce’sCounty’s Directors and Executive Officers Have Interests in the Merger that Differ from its Shareholders’ Interests
(See page [•])70)
The directors and executive officers and directors of CommerceCounty have interests in the merger in addition to their interests as shareholders of CommerceCounty generally. The members of the CommerceCounty board of directors knew about these additional interests and considered them when they adopted the merger agreement. Such interests include, among others:

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•
the potential continuation of employee benefits;
​
•
Commerce Stock Options;the acceleration of vesting of certain unvested equity awards per the terms of the merger agreement;
​
•
the potential payment of certain change in control benefits pursuant to the terms of employment agreements;agreements for executive officers;
​
•
provisions in the merger agreement relating to director and officer liability insurance and the indemnification of officers and directors of CommerceCounty for certain liabilities; and
​
•
the appointment of one CommerceCounty board member (expected to be Joseph Fazio III)Lynn D. Davis) to the boards of Nicolet and Nicolet National Bank.
​
These interests are more fully described in this joint proxy statement-prospectus under the heading “The Merger — Interests of Certain Persons in the Merger” at page 40.70.
Employee Benefits of CommerceCounty Employees after the Merger
(See page [•])
Nicolet has agreed to offer to all current employees of CommerceCounty and Commerce StateInvestors Community Bank who become Nicolet employees as a result of the merger substantially similar employee benefits to those that Nicolet offers to its employees in similar positions.
Differences in Rights of Commerce’sCounty’s Shareholders after the Merger
(See page [•])93)
To the extent that they receive Nicolet common stock as merger consideration, CommerceCounty shareholders will become Nicolet shareholders as a result of the merger. Their rights as shareholders after the merger will be governed by Nicolet’s articles of incorporation and bylaws. The rights of Nicolet shareholders are

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different in certain respects from the rights of Commerce’sCounty’s shareholders. The material differences are described later in this joint proxy statement-prospectus.
Accounting Treatment
(See page 46)78)
Nicolet is required to account for the merger as a purchasean acquisition transaction for accounting and financial reporting purposes under accounting principles generally accepted in the United States of America (“GAAP”). Under purchasethis accounting, the assets (including any identifiable intangible assets) and liabilities (including executory contracts and other commitments) of CommerceCounty at the effective time of the merger will be recorded at their respective fair values and added to those of Nicolet. Any excess of purchase price over the fair values is recorded as goodwill. Any excess of the fair values over the purchase price is recorded in earnings as a bargain purchase gain. Consolidated financial statements of Nicolet issued after the merger would reflect those fair values and would not be restated retroactively to reflect the historical consolidated financial position or results of operations of Commerce.County.

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COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE DATA
The following summary presents per share information for Nicolet and County, as well as for Mackinac, on a historical, pro forma combined and pro forma diluted equivalent basis for the periods and as of the dates indicated below. The pro forma information gives effect to the County and Mackinac mergers using the acquisition method of accounting. This information should be read in conjunction with the companies’ historical financial statements and related notes as well as financial data included elsewhere in or incorporated by reference into this joint proxy statement-prospectus. See “Where You Can Find Additional Information” beginning on page 101.
The pro forma information is presented for illustrative purposes only. The pro forma information should not be relied upon as being indicative of the historical results the companies would have had if the mergers had occurred before such periods or the future results that the companies will experience after the mergers. The pro forma information, although helpful in illustrating the financial characteristics of the combined company (i.e., Nicolet and County) and of the fully combined company (i.e., Nicolet, County and Mackinac) under one set of assumptions, does not reflect the benefits of expected cost savings, opportunities to earn additional revenue, the impact of restructuring and merger-related costs, or other factors that may result as a consequence of the mergers and, accordingly, does not attempt to predict or suggest future results. The unaudited pro forma combined per share data set forth below gives effect to the mergers as if they had occurred on January 1, 2020, the beginning of the earliest period presented, in the case of earnings per common share data, and as of June 30, 2021, in the case of book value per common share data.
The pro forma calculations reflect that all County shareholders will receive 0.48 shares of Nicolet common stock or $37.18 in cash for each issued and outstanding share of County common stock at the time of the County merger (other than certain cancelled shares). The pro forma combined earnings per diluted common share has been computed based on the diluted average number of outstanding common shares of Nicolet adjusted for the additional shares to be issued in connection with the County merger.
County paid quarterly per share cash dividends of $0.10 on its common stock for the six months ended June 30, 2021. County paid quarterly per share cash dividends on its preferred stock of $10.08 for the three months ended March 31, 2021 and $9.863 for the three months ended June 30, 2021. Mackinac paid quarterly per share cash dividends of $0.28 on its common stock for the six months ended June 30, 2021. Nicolet does not have a history of paying dividends on its common stock and does not intend to pay common stock dividends following the merger. Therefore, the pro forma dividend information has been omitted from the table below as it is not meaningful.
The pro forma combined net book value per common share is based upon the pro forma combined equity of Nicolet divided by the pro forma number of outstanding shares of the combined companies, giving effect to the County merger as if it had occurred on June 30, 2021. The County merger equivalent net book value per common share is based on the number of shares of Nicolet common stock into which each share of County common stock (other than certain cancelled shares) will be converted in the County merger, giving effect to the merger as if it had occurred on June 30, 2021.

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Comparative per share data​​
Six Months Ended
June 30, 2021
​​
Year Ended
December 31, 2020
​
Earnings per diluted common share​​​​​​​​​​​​​
Nicolet​​​$3.52​​​​$5.70​​
County​​​$1.69​​​​$0.79​​
Pro forma combined​​​$4.05​​​​$4.10​​
County merger equivalent *​​​$1.56​​​​$1.57​​
Mackinac​​​$0.65​​​​$1.27​​
Pro forma fully combined​​​$3.93​​​​$2.77​​
Book value per common share:​​​​​​​​​​​​​
Nicolet​​​$56.83​​​​​N/A​​
County​​​$27.68​​​​​N/A​​
Pro forma combined​​​$59.17​​​​​N/A​​
County merger equivalent *​​​$22.72​​​​​N/A​​
Mackinac​​​$16.30​​​​​N/A​​
Pro forma fully combined​​​$62.53​​​​​N/A​​
​
*
Calculated by multiplying the pro forma combined information by the exchange ratio of 0.384.
​

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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial information and accompanying notes show the impact on the historical financial conditions and results of operations of Nicolet, County and Mackinac and have been prepared to illustrate the effects of the proposed County and Mackinac mergers under the acquisition method of accounting.
The unaudited pro forma condensed combined balance sheet as of June 30, 2021 and unaudited pro forma combined statements of income for the six months ended June 30, 2021 and for the year ended December 31, 2020, have been prepared to reflect the mergers of Nicolet and County (the “combined company”), and of Nicolet, County and Mackinac (the “fully combined company”), after giving effect to the adjustments described in the notes to the pro forma condensed combined financial information. In the County merger, County common shareholders, in exchange for the shares of County shares of common stock they hold immediately prior to the merger (other than certain cancelled shares), will have the right to receive total consideration of approximately $45 million in cash and an aggregate of 2.3 million shares of Nicolet common stock, subject to adjustments as described herein, having an estimated aggregate value of approximately $169 million (based on the closing price of Nicolet common stock of $71.75 on June 21, 2021), representing an aggregate purchase price of approximately $214 million.
Each merger will be accounted for as an acquisition transaction. Under the acquisition method of accounting, Nicolet records the assets and liabilities of the acquired entities at their respective fair values on the respective closing dates of the mergers. The pro forma condensed consolidated balance sheet as of June 30, 2021 has been prepared based on the historical consolidated balance sheets of Nicolet, County and Mackinac, assuming the transactions were consummated on June 30, 2021. The pro forma condensed combined statements of income for the six months ended June 30, 2021 and for the year ended December 31, 2020 have been prepared based on the historical consolidated statements of income for Nicolet, County and Mackinac, assuming the transactions were consummated on January 1, 2020.
The selected unaudited pro forma condensed consolidated financial information is presented for illustrative purposes only and does not indicate either the operating results that would have occurred had the mergers been consummated as of the dates indicated, or future results of operations or financial condition. The selected unaudited pro forma condensed combined financial information is based upon assumptions and adjustments that Nicolet believes are reasonable. Only such adjustments as have been noted in the accompanying notes have been applied in order to give effect to the proposed transaction described in this joint proxy statement-prospectus. Such assumptions and adjustments are subject to change as future events materialize and fair value estimates are refined. Future results may vary significantly from the results reflected because of various factors, including those discussed in the section of this joint proxy statement-prospectus entitled “Risk Factors” beginning on page 22.
The unaudited pro forma condensed combined and fully combined consolidated financial information should be read in conjunction with:
•
the accompanying notes to the unaudited pro forma combined and fully combined consolidated financial statements;
​
•
Nicolet’s Annual Report on Form 10-K for the year ended December 31, 2020, and its Form 10-Q for the quarterly periods ended March 31, 2021, and June 30, 2021, each of which is incorporated by reference herein, as well as County’s Annual Report on Form 10-K for the year ended December 31, 2020, and its Form 10-Q for the quarterly periods ended March 31, 2021 and June 30, 2021, each of which is incorporated by reference herein;
​
•
Mackinac’s unaudited consolidated financial statements and accompanying notes as of and for the six months ended June 30, 2021, included in Mackinac’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021, as set forth in Appendix D to this joint proxy statement/​prospectus; and
​
•
Mackinac’s audited consolidated financial statements and accompanying notes as of and for the year ended December 31, 2020, included in Mackinac’s Annual Report on Form 10-K for the year ended December 31, 2020, as set forth in Appendix D to this joint proxy statement/prospectus.
​
See “Where You Can Find Additional Information” beginning on page 101.
 
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NICOLET BANKSHARES, INC.
COMBINED WITH COUNTY BANCORP, INC. and MACKINAC FINANCIAL CORPORATION
PRO FORMA CONDENSED COMBINED BALANCE SHEET (Unaudited)
As of June 30, 2021
(In thousands)​​Historical​​
Pro Forma
Adjustments
​​​​​​​​
Nicolet
and
County
Pro Forma
Combined
​​
Historical
Mackinac
​​
Pro Forma
Adjustments
​​​​​​​​
Nicolet, County
and Mackinac Pro
Forma Fully
Combined
​
​​​Nicolet​​County​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Cash and cash
equivalents, including
certificates of deposits
in other banks
​​​$815,793​​​​$72,745​​​​$45,374​​​​​A,B​​​​$933,912​​​​$353,904​​​​$(49,692)​​​​​N​​​​$1,238,124​​
Investment securities, including equity securities​​​​571,144​​​​​349,334​​​​​—​​​​​​​​​​​920,478​​​​​101,955​​​​​(593)​​​​​O​​​​​1,021,840​​
Loans held for sale​​​​11,235​​​​​15,805​​​​​—​​​​​​​​​​​27,040​​​​​1,535​​​​​—​​​​​​​​​​​28,575​​
Loans​​​​2,820,331​​​​​1,001,890​​​​​(400)​​​​​C​​​​​3,821,821​​​​​976,520​​​​​(7,387)​​​​​P​​​​​4,790,954​​
Allowance for credit losses​​​​(32,561)​​​​​(11,466)​​​​​(4,734)​​​​​D​​​​​(48,761)​​​​​(5,651)​​​​​(14,146)​​​​​Q​​​​​(68,558)​​
Other real estate owned,
net
​​​​2,895​​​​​914​​​​​(100)​​​​​E​​​​​3,709​​​​​1,343​​​​​(664)​​​​​R​​​​​4,388​​
Bank owned life insurance​​​​84,347​​​​​31,678​​​​​—​​​​​​​​​​​116,025​​​​​15,658​​​​​—​​​​​​​​​​​131,683​​
Goodwill​​​​163,151​​​​​—​​​​​68,556​​​​​F​​​​​231,707​​​​​19,574​​​​​98,170​​​​​S​​​​​349,450​​
Core deposit
intangible
​​​​10,560​​​​​12​​​​​3,188​​​​​G​​​​​13,760​​​​​4,031​​​​​769​​​​​T​​​​​18,560​​
Other assets​​​​140,452​​​​​56,160​​​​​3,220​​​​​H​​​​​199,832​​​​​50,083​​​​​5,019​​​​​O,U​​​​​254,934​​
Total Assets​​​$4,587,347​​​​$1,517,072​​​​$115,104​​​​​​​​​​$6,219,523​​​​$1,518,952​​​​$31,476​​​​​​​​​​$7,769,951​​
Deposits​​​$3,939,022​​​​$1,135,726​​​​$3,500​​​​​I​​​​$5,078,248​​​​$1,307,154​​​​$500​​​​​V​​​​$6,385,902​​
Short-term
borrowings
​​​​—​​​​​—​​​​​—​​​​​​​​​​​—​​​​​—​​​​​—​​​​​​​​​​​—​​
Long-term borrowings​​​​45,108​​​​​191,076​​​​​110,503​​​​​J​​​​​346,687​​​​​28,441​​​​​100​​​​​V​​​​​375,228​​
Other liabilities​​​​43,822​​​​​15,458​​​​​13,870​​​​​K​​​​​73,150​​​​​11,438​​​​​14,600​​��​​W​​​​​99,188​​
Total Liabilities​​​​4,027,952​​​​​1,342,260​​​​​127,873​​​​​​​​​​​5,498,085​​​​​1,347,033​​​​​15,200​​​​​​​​​​​6,860,318​​
Preferred equity​​​​—​​​​​8,000​​​​​(8,000)​​​​​L​​​​​—​​​​​—​​​​​—​​​​​​​​​​​—​​
Common stock & Additional paid-in capital​​​​261,194​​​​​33,955​​​​​134,585​​​​​A,M​​​​​429,734​​​​​127,624​​​​​71,145​​​​​N,X​​​​​628,503​​
Retained earnings​​​​289,475​​​​​127,992​​​​​(134,489)​​​​​A,M​​​​​282,978​​​​​43,189​​​​​(53,763)​​​​​N,X​​​​​272,404​​
Accumulated other comprehensive
income
​​​​8,726​​​​​4,865​​​​​(4,865)​​​​​M​​​​​8,726​​​​​1,106​​​​​(1,106)​​​​​X​​​​​8,726​​
Total Stockholders’ Equity
(Common)
​​​​559,395​​​​​166,812​​​​​(4,769)​​​​​​​​​​​721,438​​​​​171,919​​​​​16,276​​​​​​​​​​​909,633​​
Total Liabilities and Stockholders’ Equity​​​$4,587,347​​​​$1,517,072​​​​$115,104​​​​​​​​​​$6,219,523​​​​$1,518,952​​​​$31,476​​​​​​​​​​$7,769,951​​
Outstanding shares​​​​9,843​​​​​6,027​​​​​2,349​​​​​A​​​​​12,192​​​​​10,550​​​​​2,355​​​​​​​​​​​14,547​​
See accompanying Notes to the Unaudited Pro Forma Condensed Combined Financial Information.

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NICOLET BANKSHARES, INC.
COMBINED WITH COUNTY BANCORP, INC. and MACKINAC FINANCIAL CORPORATION
PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME (Unaudited)
(In thousands, except per share
data)		​​
Six Months Ended
June 30, 2021
​​
Pro Forma
Adjustments
​​​​​​​​
Nicolet
and
County
Pro Forma
Combined
​​
Mackinac
Six Months
Ended
June 30,
2021
​​
Pro Forma
Adjustments
​​​​​​​​
Nicolet,
County
and
Mackinac
Pro Forma Fully
Combined
​
​​​Nicolet​​County​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Interest income​​​$75,183​​​​$28,252​​​​$2,514​​​​​A​​​​$105,949​​​​$29,081​​​​$1,230​​​​​H​​​​$136,260​​
Interest expense​​​​5,971​​​​​6,596​​​​​(3,830)​​​​​B​​​​​8,737​​​​​2,037​​​​​(100)​​​​​I​​​​​10,674​​
Net interest income​​​​69,212​​​​​21,656​​​​​6,344​​​​​​​​​​​97,212​​​​​27,044​​​​​1,330​​​​​​​​​​​125,586​​
Provision for credit losses​​​​500​​​​​(4,036)​​​​​—​​​​​​​​​​​(3,536)​​​​​100​​​​​—​​​​​​​​​​​(3,436)​​
Noninterest income​​​​37,304​​​​​5,964​​​​​—​​​​​​​​​​​43,268​​​​​4,822​​​​​—​​​​​​​​​​​48,090​​
Noninterest expense​​​​56,828​​​​​17,530​​​​​390​​​​​D​​​​​74,748​​​​​23,760​​​​​56​​​​​K​​​​​98,564​​
Income before income tax expense​​​​49,188​​​​​14,126​​​​​5,953​​​​​​​​​​​69,267​​​​​8,006​​​​​1,275​​​​​​​​​​​78,548​​
Income tax expense​​​​12,665​​​​​3,455​​​​​1,488​​​​​F​​​​​17,608​​​​​1,181​​​​​319​​​​​M​​​​​19,108​​
Net income​​​​36,523​​​​​10,671​​​​​4,465​​​​​​​​​​​51,659​​​​​6,825​​​​​956​​​​​​​​​​​59,440​​
Less: dividends on preferred stock​​​​—​​​​​160​​​​​—​​​​​​​​​​​160​​​​​—​​​​​—​​​​​​​​​​​160​​
Net income to common​​​$36,523​​​​$10,511​​​​$4,465​​​​​​​​​​$51,499​​​​$6,825​​​​$956​​​​​​​​​​$59,280​​
Weighted average common shares outstanding​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Basic​​​​9,949​​​​​6,182​​​​​2,349​​​​​G​​​​​12,298​​​​​10,537​​​​​2,355​​​​​N​​​​​14,653​​
Diluted​​​​10,365​​​​​6,224​​​​​2,349​​​​​G​​​​​12,714​​​​​10,583​​​​​2,355​​​​​N​​​​​15,069​​
Earnings per common share​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Basic​​​$3.67​​​​$1.70​​​​​​​​​​​​​​​​$4.19​​​​$0.65​​​​​​​​​​​​​​​​$4.05​​
Diluted​​​$3.52​​​​$1.69​​​​​​​​​​​​​​​​$4.05​​​​$0.65​​​​​​​​​​​​​​​​$3.93​​
(In thousands, except per share
data)		​​
Year Ended
December 31, 2020
​​
Pro Forma
Adjustments
​​​​​​​​
Nicolet
and
County
Pro Forma
Combined
​​
Mackinac
Year
Ended
December 31,
2020
​​
Pro Forma
Adjustments
​​​​​​​​
Nicolet,
County
and
Mackinac
Pro Forma Fully
Combined
​
​​​Nicolet​​County​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Interest income​​​$149,202​​​​$55,475​​​​$4,442​​​​​A​​​​$209,119​​​​$62,029​​​​$1,876​​​​​H​​​​$273,024​​
Interest expense​​​​19,864​​​​​18,499​​​​​(7,660)​​​​​B​​​​​30,703​​​​​7,223​​​​​(200)​​​​​I​​​​​37,726​​
Net interest income​​​​129,338​​​​​36,976​​​​​12,102​​​​​​​​​​​178,416​​​​​54,806​​​​​2,076​​​​​​​​​​​235,298​​
Provision for credit losses​​​​10,300​​​​​2,984​​​​​8,900​​​​​C​​​​​22,184​​​​​1,000​​​​​13,892​​​​​J​​​​​37,076​​
Noninterest income​​​​62,626​​​​​14,250​​​​​—​​​​​​​​​​​76,876​​​​​10,199​​​​​—​​​​​​​​​​​87,075​​
Noninterest expense​​​​100,719​​​​​39,645​​​​​19,780​​​​​D,E​​​​​160,144​​​​​46,949​​​​​20,198​​​​​K,L​​​​​227,290​​
Income before income tax expense​​​​80,945​​​​​8,597​​​​​(16,577)​​​​​​​​​​​72,965​​​​​17,056​​​​​(32,014)​​​​​​​​​​​58,007​​
Income tax expense​​​​20,476​​​​​3,118​​​​​(4,144)​​​​​F​​​​​19,450​​​​​3,583​​​​​(8,004)​​​​​M​​​​​15,029​​
Net income​​​​60,469​​​​​5,479​​​​​(12,433)​​​​​​​​​​​53,515​​​​​13,473​​​​​(24,011)​​​​​​​​​​​42,978​​
Less: Net income attributable to noncontrolling interest​​​​347​​​​​—​​​​​—​​​​​​​​​​​347​​​​​—​​​​​—​​​​​​​​​​​347​​
Net income attributable to Nicolet​​​​60,122​​​​​5,479​​​​​(12,433)​​​​​​​​​​​53,168​​​​​13,473​​​​​(24,011)​​​​​​​​​​​42,631​​
Less: dividends on preferred stock​​​​—​​​​​368​​​​​—​​​​​​​​​​​368​​​​​—​​​​​—​​​​​​​​​​​368​​
Net income to common​​​$60,122​​​​$5,111​​​​$(12,433)​​​​​​​​​​$52,800​​​​$13,473​​​​$(24,011)​​​​​​​​​​$42,263​​
Weighted average common shares outstanding​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Basic​​​​10,337​​​​​6,477​​​​​2,349​​​​​G​​​​​12,686​​​​​10,580​​​​​2,355​​​​​N​​​​​15,041​​
Diluted​​​​10,541​​​​​6,505​​​​​2,349​​​​​G​​​​​12,890​​​​​10,580​​​​​2,355​​​​​N​​​​​15,245​​
Earnings per common share​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Basic​​​$5.82​​​​$0.79​​​​​​​​​​​​​​​​$4.16​​​​$1.27​​​​​​​​​​​​​​​​$2.81​​
Diluted​​​$5.70​​​​$0.79​​​​​​​​​​​​​​​​$4.10​​​​$1.27​​​​​​​​​​​​​​​​$2.77​​
See accompanying Notes to the Unaudited Pro Forma Condensed Combined Financial Information.

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TABLE OF CONTENTS​

NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Note 1.   Basis of Presentation
The accompanying unaudited pro form condensed combined financial information and related notes were prepared in accordance with Article 11 of Regulation S-X. The unaudited pro forma condensed combined income statement for the six months ended June 30, 2021, and for the year ended December 31, 2020, combine the historical consolidated statements of income of Nicolet, County, and Mackinac, giving effect to the merger as if it had been completed on January 1, 2020. The accompanying unaudited pro forma condensed combined balance sheet as of June 30, 2021 combines the historical consolidated balance sheets of Nicolet, County, and Mackinac, giving effect to the merger as if it had been completed on June 30, 2021.
The unaudited pro forma condensed combined financial information and explanatory notes have been prepared to illustrate the effects of the merger involving Nicolet, County, and Mackinac under the acquisition method of accounting with Nicolet treated as the acquirer. The unaudited pro forma condensed combined financial information is presented for illustrative purposes only and does not necessarily indicate the financial results of the combined company had the companies actually been combined at the beginning of each period presented, nor does it necessarily indicate the results of operations in future periods or the future financial position of the combined company. Under the acquisition method of accounting, the assets and liabilities of County and Mackinac, as of the effective time of the merger, will be recorded by Nicolet at their respective fair values, and the excess of the merger consideration over the fair value of the net assets acquired will be allocated to goodwill.
The merger provides for County common shareholders, in exchange for the shares of County common stock they hold immediately prior to the merger, at the election of each shareholder and subject to proration, to receive total consideration of approximately $45 million in cash and an aggregate of 2.3 million shares of Nicolet common stock, subject to adjustments as described herein, having an estimated aggregate value of approximately $169 million, which represents the 0.48 exchange ratio assuming approximately 80% will be paid in Nicolet common stock (or an estimated 0.384 exchange ratio) and the closing price of Nicolet Bankshares common stock of $71.75 on June 21, 2021, representing an aggregate purchase price of approximately $214 million.
The pro forma allocation of the purchase price reflected in the unaudited pro forma condensed combined financial information is subject to adjustment and may vary from the actual purchase price allocation that will be recorded at the time the merger is completed. The selected unaudited pro forma condensed combined financial information is based upon assumptions and adjustments that Nicolet believes are reasonable. Only such adjustments as have been noted in the accompanying footnotes have been applied in order to give effect to the proposed transaction described in this joint proxy statement-prospectus. Such assumptions and adjustments are subject to change as future events materialize and fair value estimates are refined.

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Note 2.   Preliminary Purchase Price Allocation for County
The following table summarizes the preliminary purchase price allocation for County.
(In thousands, except per share data)​​
County Net Assets
at Fair Value
​
Cash and cash equivalents​​​$64,745​​
Investment securities​​​​349,334​​
Loans held for sale​​​​15,805​​
Loans​​​​1,001,490​​
Allowance for credit losses​​​​(7,300)​​
Other real estate owned, net​​​​814​​
Bank owned life insurance​​​​31,378​​
Core deposit intangible​​​​3,200​​
Other assets​​​​56,977​​
Total Assets​​​$1,516,743​​
Deposits​​​$1,139,226​​
Short-term borrowings​​​​—​​
Holding company borrowings​​​​79,319​​
Other long-term borrowings​​​​123,557​​
Other liabilities​​​​29,328​​
Total Liabilities​​​$1,371,430​​
Net assets acquired​​​$145,313​​
Purchase price:​​​​​​​
Shares of County outstanding​​​​6,117​​
Exchange ratio​​​​0.384​​
Pro Forma Nicolet shares to be issued​​​​2,349​​
Nicolet closing stock price on June 21 2021​​​$71.75​​
Pro Forma stock consideration​​​$168,540​​
Pro Forma cash consideration (including $3.4 million to cash out stock options)​​​​45,329​​
Total Pro Forma purchase price​​​$213,869​​
Preliminary goodwill​​​$68,556​​

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Note 3.   Preliminary Purchase Price Allocation for Mackinac
The following table summarizes the preliminary purchase price allocation for Mackinac.
(In thousands, except per share data)​​
Mackinac Net Assets
at Fair Value
​
Cash and cash equivalents​​​$353,904​​
Investment securities​​​​101,955​​
Loans held for sale​​​​1,535​​
Loans​​​​969,133​​
Allowance for credit losses​​​​(5,905)​​
Other real estate owned, net​​​​679​​
Bank owned life insurance​​​​15,658​​
Core deposit intangible​​​​4,800​​
Other assets​​​​51,191​​
Total Assets​​​$1,492,950​​
Deposits​​​$1,307,654​​
Short-term borrowings​​​​—​​
Holding company borrowings​​​​—​​
Other long-term borrowings​​​​28,541​​
Other liabilities​​​​26,038​​
Total Liabilities​​​$1,362,233​​
Net assets acquired​​​$130,717​​
Purchase price:​​​​​​​
Shares of Mackinac outstanding​​​​10,705​​
Exchange ratio​​​​0.22​​
Pro Forma Nicolet shares to be issued​​​​2,355​​
Nicolet closing stock price on April 9, 2021​​​$84.40​​
Pro Forma stock consideration​​​$198,769​​
Pro Forma cash consideration​​​​49,692​​
Total Pro Forma purchase price​​​$248,461​​
Preliminary goodwill​​​$117,744​​
Note 4.   Pro Forma Adjustments to the Unaudited Condensed Combined Balance Sheet
The following pro forma adjustments have been reflected in the unaudited pro forma condensed combined financial information. All taxable adjustments were calculated using a 27% tax rate, which represents Nicolet’s statutory rate, to arrive at deferred tax asset or liability adjustments. All adjustments are based on preliminary assumptions and valuations, which are subject to change.
A.
Total pro forma purchase price consideration of $214 million comprised of the issuance of approximately 2.3 million shares of Nicolet common stock at a price of $71.75, based on the Nicolet closing stock price on June 21, 2021 (the last trading day immediately preceding the acquisition announcement), for pro forma stock consideration of $169 million and pro forma cash consideration of $45 million.
​

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B.
Total pro forma cash adjustment is comprised of the following.
​
(In thousands)​​June 30, 2021​
Pro forma cash consideration (as noted in A above)​​​$(45,329)​​
Redemption of County preferred equity (as noted in L below)​​​​(8,000)​​
Net proceeds from new issuance of subordinated notes by Nicolet on July 7, 2021​​​​98,703​​
Cumulative pro forma adjustments to cash​​​$45,374​​
​
C.
Adjustment to loans to reflect estimated fair value adjustments, which include lifetime credit loss expectations for loans, current interest rates and liquidity, as well as the gross up of purchased credit deteriorated (“PCD”) loans. The adjustment includes the following.
​
(In thousands)​​June 30, 2021​
Estimate of loan fair value adjustments​​​$(7,700)​​
Gross up of PCD loans for credit mark (see also D below)​​​​7,300​​
Cumulative pro forma adjustments to loans​​​$(400)​​
​
D.
Adjustments to the allowance for credit losses include the following.
​
(In thousands)​​June 30, 2021​
Reversal of historical County allowance for credit losses​​​$11,466​​
Estimate of lifetime credit losses for PCD loans (see also C above)​​​​(7,300)​​
Estimate of lifetime credit losses for non-PCD loans​​​​(8,900)​​
Cumulative pro forma adjustments to the allowance for credit losses​​​$(4,734)​​
​
E.
Adjustment of $100,000 to mark County’s other real estate owned to fair value, based on Nicolet’s assessment of property resolution.
​
F.
Adjustment to record estimated goodwill associated with the merger of $68.6 million.
​
G.
Adjustment to eliminate County’s existing core deposit intangible of $12,000 and record a new core deposit intangible of $3.2 million.
​
H.
Adjustment to deferred tax related to all fair value marks noted in these pro forma adjustments to the condensed combined balance sheet.
​
I.
Adjustment to reflect current market rate of interest on deposits of $3.5 million.
​
J.
Adjustment to mark County’s long-term borrowings to fair value by $11.8 million and reflect the new issuance of subordinated notes by Nicolet effective July 7, 2021. The total pro forma long-term borrowing adjustment is comprised of the following.
​
(In thousands)​​June 30, 2021​
Estimated fair value mark on long-term borrowings​​​$11,800​​
Net proceeds from new issuance of subordinated notes by Nicolet on July 7, 2021​​​​98,703​​
Cumulative pro forma adjustments to long-term borrowings​​​$110,503​​
​
K.
Adjustment to record estimated merger-related transaction costs of $19 million, net of deferred taxes of $5.1 million.
​
L.
Adjustment to reflect the redemption of County’s preferred equity.
​
M.
Adjustments to eliminate County’s common equity and record the issuance of Nicolet pro forma stock consideration (as noted in A above).
​
N.
Total pro forma purchase price consideration of $249 million comprised of the issuance of
​

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approximately 2.4 million shares of Nicolet common stock at a price of $84.40, based on the Nicolet closing stock price on April 9, 2021 (the last trading day immediately preceding the acquisition announcement), for pro forma stock consideration of $199 million and pro forma cash consideration of $50 million.
O.
Nicolet to write-off its investment holding of 30,000 shares of Mackinac common stock (carried at the Mackinac market price of $19.76 on June 30, 2021) for a reduction to investments of $593,000, a decrease of $160,000 to the deferred tax liability, and a $433,000 net equity reduction.
​
P.
Adjustment to loans to reflect estimated fair value adjustments, which include lifetime credit loss expectations for loans, current interest rates and liquidity, as well as the gross up of PCD loans. The adjustment includes the following.
​
(In thousands)​​June 30, 2021​
Reversal of historic Mackinac loan fair value adjustments​​​$1,391​​
Estimate of loan fair value adjustments​​​​(14,683)​​
Net pro forma fair value adjustments​​​​(13,292)​​
Gross up of PCD loans for credit mark (see also Q below)​​​​5,905​​
Cumulative pro forma adjustments to loans​​​$(7,387)​​
​
Q.
Adjustments to the allowance for credit losses include the following.
​
(In thousands)​​June 30, 2021​
Reversal of historical Mackinac allowance for credit losses​​​$5,651​​
Estimate of lifetime credit losses for PCD loans (see also P above)​​​​(5,905)​​
Estimate of lifetime credit losses for non-PCD loans​​​​(13,892)​​
Cumulative pro forma adjustments to the allowance for credit losses​​​$(14,146)​​
​
R.
Adjustment of $664,000 to mark Mackinac’s other real estate owned to fair value, based on Nicolet’s assessment of property resolution.
​
S.
Adjustment to eliminate Mackinac’s historical goodwill of $19.6 million and record estimated goodwill associated with the merger of $117.7 million.
​
T.
Adjustment to eliminate Mackinac’s existing core deposit intangible of $4.2 million and record a new core deposit intangible of $4.8 million.
​
U.
Adjustment to deferred tax related to all fair value marks noted in these pro forma adjustments to the condensed combined balance sheet.
​
V.
Adjustment to mark Mackinac’s Federal Home Loan Bank advances to fair value by $100,000 and to reflect current market rate of interest on deposits of $500,000.
​
W.
Adjustment to record estimated merger-related transaction costs of $20 million, net of deferred taxes of $5.4 million.
​
X.
Adjustments to eliminate Mackinac’s common equity and record the issuance of Nicolet pro forma stock consideration (as noted in N above).
​
Note 5.   Pro Forma Adjustments to the Unaudited Condensed Combined Statements of Income
Pro forma net income includes one-time estimated merger-related transaction costs (see item E and L below), as well as the Day 2 adjustment to record provision expense and the corresponding increase to the allowance for credit losses (see item C and J below, as well as Note 4 items D and Q above), but does not reflect potential synergies and other estimated cost savings that may arise from the combinations.
A.
Net fair value adjustments to interest income to record the estimated accretion of the net discount on acquired loans. For purposes of the pro forma impact, the net discount accretion was estimated using a period of 3 years.
​

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B.
Net fair value adjustments to interest expense for deposits and long-term borrowings assuming straight-line over a 3 year weighted average life for deposits and a 5 year weighted average life for long-term borrowings.
​
C.
Adjustment to record provision expense on County’s non-PCD loans, including adoption of the current expected credit losses (“CECL”) methodology for the County loan portfolio (Day 2).
​
D.
Net adjustment to core deposit intangible amortization to eliminate County core deposit intangible amortization and record estimated amortization of acquired core deposit intangible. Core deposit intangible will be amortized using the sum-of-the-years digits method over ten years.
​
E.
Adjustment to reflect the estimated merger-related transaction costs of $19 million.
​
F.
Adjustment to income tax expense to record the income tax effects of pro forma adjustments at the estimated statutory effective tax rate of 27%.
​
G.
Adjustments to weighted average shares to eliminate weighted average shares of Mackinac common stock outstanding, and record the issuance of Nicolet common stock, calculated using an exchange ratio of 0.384 per share.
​
H.
Net fair value adjustments to interest income to eliminate Mackinac accretion of discounts on previously acquired loans and record the estimated accretion of the net discount on acquired loans. For purposes of the pro forma impact, the net discount accretion was estimated using a period of 3 years.
​
I.
Net fair value adjustments to interest expense for deposits and FHLB advances assuming straight-line over a 3 year weighted average life.
​
J.
Adjustment to record provision expense on Mackinac’s non-PCD loans, including adoption of the CECL methodology for the Mackinac loan portfolio (Day 2).
​
K.
Net adjustment to core deposit intangible amortization to eliminate Mackinac core deposit intangible amortization and record estimated amortization of acquired core deposit intangible. Core deposit intangible will be amortized using the sum-of-the-years digits method over ten years.
​
L.
Adjustment to reflect the estimated merger-related transaction costs of $20 million.
​
M.
Adjustment to income tax expense to record the income tax effects of pro forma adjustments at the estimated statutory effective tax rate of 27%.
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N.
Adjustments to weighted average shares to eliminate weighted average shares of Mackinac common stock outstanding, and record the issuance of Nicolet common stock, calculated using an exchange ratio of 0.22 per share.
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RISK FACTORS
In addition to the other information included in or incorporated by reference into this joint proxy statement-prospectus, you should carefully consider the matters described below in determining whether to adopt and approve the merger agreement.agreement and the transactions contemplated thereby, including the stock issuance in the case of Nicolet. Additional risks and uncertainties, if they materialize, not presently known to Nicolet or County or that are not currently believed to be important to you also may adversely affect the merger and the combined company following the merger.
Risks Relating to the Merger
The recentmerger consideration is fixed despite any changes in Nicolet’s or County’s stock prices and, because the market price of Nicolet common stock may fluctuate, County shareholders cannot be certain of the market value of the merger consideration they will receive.
In the merger, each share of County common stock owned by County shareholders immediately prior to the effective time will be converted into the right to receive 0.48 shares of Nicolet common stock or $37.18 in cash (without interest), at the election of each holder and subject to proration as described elsewhere in this joint proxy statement-prospectus. County shareholder elections will be prorated to ensure the total consideration will consist of approximately 20% cash and approximately 80% Nicolet common stock. The exchange ratio is fixed and will not be adjusted for changes in the market price of either Nicolet common stock received or County common stock currently owned. Changes in the price of Nicolet common stock prior to the merger will affect the value that County shareholders receiving Nicolet common stock will receive in the merger. Under limited circumstances, County is permitted to terminate the merger agreement as a result of a decrease in the market price of Nicolet common stock. In any such instance, Nicolet may elect to negate County’s termination by increasing the exchange ratio pursuant to the formula specified in the merger agreement. See “The Merger Agreement — Termination of the Merger Agreement; Termination Fee” beginning on page 87.
Stock price changes between the date of this joint proxy statement-prospectus, the date of the companies’ special meetings and the closing of the merger may result from a variety of factors, including but not limited to general market and economic conditions, impacts and disruptions resulting from the COVID-19 pandemic, changes in Nicolet’s or County’s businesses, operations and prospects, and regulatory considerations, many of which are beyond Nicolet’s or County’s control. Therefore, at the time of the Nicolet special meeting and the County special meeting, Nicolet shareholders and County shareholders will not know the market value of the stock consideration to be received by holders of County common stock at the effective time. You should obtain current market quotations for shares of Nicolet common stock and for shares of County common stock.
County shareholders may receive a form of consideration different from what they elect.
While each County shareholder may elect to receive cash or Nicolet common stock in exchange for each share of County common stock that it holds, the total number of shares of County common stock that will be converted into the cash consideration will be equal to 1,237,000, and the remaining shares of County common stock will be converted into the stock consideration (excluding cancelled shares). As a result, if you choose an election that is oversubscribed, you may receive a portion of your consideration in the form you did not elect.
The global coronavirus outbreak may delay or adversely affect the completion of the merger and could harm the business and results of operations for each of Nicolet and CommerceCounty and the combined company following the completion of the merger.
In December 2019, a coronavirus (COVID-19) was reported in China, and has since spread to additional countries including the United States. In March 2020, the World Health Organization declared the coronavirus to be a pandemic. Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the impact of the coronavirusCOVID-19 pandemic on the businesses of Nicolet, CommerceCounty and the combined company, and there is no guarantee that efforts by Nicolet, CommerceCounty and the combined company to address the adverse impacts of the coronavirusCOVID-19 pandemic will be effective. The impact to date has included periods of significant volatility in financial,

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commodities and other markets. This volatility, if it continues, could have an adverse impact on Nicolet’s and Commerce’sCounty’s customers and on the companies’ business,respective businesses, financial condition and results of operations.
In addition, recent actions by USU.S. federal, state and foreign governments to address the pandemic, including travel bans and school, business and entertainment venue closures, may also have a significant adverse effect on the markets in which Nicolet and CommerceCounty conduct their businesses. The extent of impacts resulting from the coronavirusCOVID-19 pandemic and other events beyond the control of Nicolet, CommerceCounty and the combined company will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the coronavirusCOVID-19 pandemic and actions taken to contain the coronavirus or its impact, among others.
The coronavirusCOVID-19 pandemic has, and could result in further, business disruption to Nicolet and Commerce,County, and if either company is unable to recover from such a business disruption on a timely basis, the merger and the combined company’s business and financial conditions and results of operations following the completion of the merger would be adversely affected. TheCompletion of the merger, including obtaining regulatory approvals, and efforts to integrate the businesses of Nicolet and CommerceCounty may also be delayed and adversely affected by the coronavirusCOVID-19 pandemic, and become more costly. Each of Nicolet, CommerceCounty and the combined company may also incur additional costs to remedy damages caused by such disruptions, which could adversely affect its financial condition and results of operations.
The effectopinions of the coronavirus pandemic on Nicolet or Commerce may result in either party’s failure to meet the closing requirements contained in the merger agreement. PursuantKeefe, Bruyette & Woods, Inc. and Stephens, Inc. delivered to the termsrespective boards of the merger agreement, either Nicolet or Commerce may terminate the merger agreement at closing if certain conditions are not met. If coronavirus pandemic continues to affect either Nicolet or Commerce through the anticipated timedirectors of closing, the parties to the merger agreement may not be able to meet closing conditions. Accordingly, the merger agreement and the entire transaction may be terminated if such closing conditions are not met. For a discussion of the intent of the parties to consummate the merger in the current environment, see “Status of Intentions to Consummate the Merger” at page 46.
Uncertainty regarding the completion of the merger may harm the combined institution if the merger is consummated.
As reflected in this proxy statement-prospectus, if the Nicolet Common Stock Price is below $62.00, Nicolet intends to terminate the merger agreement. Neither Nicolet nor Commerce can predict whether the Nicolet Common Stock Price will be at least $62.00 at the time of the prospective closing of the merger. This uncertainty may cause Nicolet to experience further difficulties with the integration process or the retention of Commerce’s employees and customers. If Nicolet experiences difficulties with the integration process, Nicolet might not achieve some of the economic benefits expected to result from the merger.

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Nicolet’s position regarding the merger agreement with Commerce may negatively affect Nicolet’s ability to successfully acquire future merger targets.
As part of Nicolet’s growth strategy, Nicolet regularly evaluates merger and acquisition opportunities and conducts due diligence activities related to possible transactions with other financial institutions and financial services companies. Nicolet seeks merger or acquisition partners that are culturally similar, have experienced management, and possess either significant market presence or have potential for improved profitability through financial management, economies of scale, or expanded services. Each potential merger or acquisition partner must make an independent decision as to whether a transaction with Nicolet is appropriate and in the best interests of their constituencies. One of the rationales offered by Nicolet to potential targets is Nicolet’s historical ability to execute on merger transactions.
As reflected in this proxy statement-prospectus, if the Nicolet Common Stock Price is below $62.00, Nicolet intends to terminate the merger agreement. Nicolet believes if its common stock price is below $62.00 per share, such pricing is a signal of the farther-reaching and prolonged impacts of the COVID-19 pandemic, which are still volatile and uncertain. If the Nicolet Common Stock Price is below $62.00, Nicolet believes that consummating a transaction at a fixed exchange ratio reflecting comparative valuations set before the onset of the COVID-19 pandemic is not prudent for Nicolet’s shareholders in today’s unsettled environment. Nicolet’s ability to terminate the agreement in that circumstance is provided for in the terms of the merger agreement as negotiated between Nicolet and Commerce. However, Nicolet’s disclosure of its intent not to consummate the merger in the event that the Nicolet Common Stock Price remains below $62.00 may be perceived by other potential targets as reducing the assurances that Nicolet would be in position to close on future acquisitions. If Nicolet’s ability to attract future market targets is limited, Nicolet may not be able to sustain its historical rate of growth, or may encounter issues associated with its growth, either of which could adversely affect Nicolet’s financial condition, results of operations, and share price.
Because the market price of Nicolet common stock will fluctuate, Commerce shareholders cannot be sure of the exact value of the merger consideration they will receive.
If the merger is completed, each share of Commerce common stock issued and outstanding immediately prior to closing of the merger (excluding cancelled shares) will be converted into the right to receive the merger consideration, which shall consist of 1.15 shares of Nicolet common stock. The value of such shares of Nicolet common stock to be received will depend on the price per share of Nicolet common stock at the time the shares are actually received by a Commerce shareholder. The value of Nicolet common stock has fluctuated from the date the merger agreement was signed and publicly announced to the date this proxy statement-prospectus was prepared, and likely will continue to fluctuate until the date of the Commerce special shareholders’ meeting, and the date immediatelyCounty prior to the closingsigning of the merger. Accordingly, Commerce shareholders will not know or be able to calculate the value of any Nicolet common stock they are to receive in the merger at the time they submit their proxy or at the time of the special shareholders’ meeting. Stock price changes may result from a variety of factors, including but not limited to general market and economic conditions, the recent outbreak of COVID-19, changes in Nicolet’s businesses, operations and prospects, and regulatory considerations, among other things. Many of these factors are beyond the control of Nicolet and Commerce.
Further, the exchange ratio may adjust in the event that the Nicolet Common Stock Price (defined in the merger agreement as the volume weighted average closing price of Nicolet common stock on the Nasdaq Capital Market over the twenty (20) trading day period immediately preceding the second (2nd) trading day prior to the closing date) is greater than $82.00 or less than $62.00. In the event that the Nicolet Common Stock Price is below $62.00 per share, in lieu of adjusting the exchange ratio, Nicolet may (a) elect to add a cash component to the merger consideration in an amount sufficient to make the aggregate per share consideration equal to $71.30 per share of Commerce Common Stock, (b) leave the exchange ratio unchanged (which would give Commerce the right to terminate the merger agreement), or (c) terminate the merger agreement. As of the date of this proxy statement-prospectus, if the Nicolet Common Stock Price is below $62.00, Nicolet does not intend to adjust the exchange ratio, does not intend to add cash consideration, and does intend to terminate the merger agreement. If the Nicolet Common Stock Price is below $62.00 per share, and Nicolet does not exercise its right to terminate and does not elect to increase the exchange ratio or add cash consideration, Commerce’s board of directors will have the right and authority to elect whether to terminate or proceed based on its assessment of all information available at the time.

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Because Commerce common stock is privately held and not traded on any public markets, it is difficult to determine how the fair market value of Commerce common stock compares with the merger consideration.
Commerce common stock is not traded on any public trading markets. Accordingly, it is difficult to determine the fair market value of Commerce common stock and how such value compares with the merger consideration.
The fairness opinion delivered by Magstar Capital to Commerce’s board of directors prior to the entry into the merger agreement will not reflect changes in circumstances that have occurred sinceafter the dates of the opinions.
The CommercePrior to the execution of the merger agreement, Nicolet’s board of directors has not obtainedreceived an updatedopinion from Nicolet’s financial advisor and County’s board of directors received an opinion from County’s financial advisor, each regarding the fairness opinionof either the aggregate merger consideration or the exchange ratio, as the case may be, from a financial point of view and as of the daterespective dates of this proxy statement-prospectus or as of any other date subsequenteach opinion and subject to the date of such opinion from Magstar Capital, LLC, Commerce’s financial advisor. Changeslimitations and assumptions contained therein. Subsequent changes in the operations andor prospects of Commerce and/Nicolet or Nicolet,County, general market and economic conditions andor other factors whichthat may be beyond the control of Nicolet and Commerce, including the recent pandemic of COVID-19 that has caused higher than normal volatility in the financial markets generally, and the market prices of Nicolet and Commerce,or County, may have alteredsignificantly alter the value of Nicolet or CommerceCounty or the prices of the shares of Nicolet common stock and shares of Commerceor County common stock as of the date of this proxy statement-prospectus, or may alter such values and prices by the time the merger is completed. The opinion doesopinions do not speak as of the effective time or as of any other date other than its date.the respective dates of such opinions. For a description of the opinions received by the respective boards of directors of Nicolet and County, please refer to the sections entitled, respectively, “The Merger — Opinion of Nicolet’s Financial Advisor” and “The Merger — Opinion of County’s Financial Advisor.”
Nicolet’s integration of CommerceCounty may be more difficult, costly, or time-consuming than we expect.
Nicolet and CommerceCounty have operated, and, until completion of the merger, will continue to operate, independently. It is possible that the integration process could result in the loss of key employees, or disruption of each company’s ongoing business or inconsistencies in standards, procedures or policies, each of which could adversely affect the ability to maintain relationships with clients and employees or to achieve some of the anticipated benefits of the merger. Further, the COVID-19 pandemic may make it more costly or more difficult for Nicolet to effect the integration of County into its current operations or may cause Nicolet or CommerceCounty to reduce integration efforts in order to focus on internal operations to account for changes in the economic environment. If the merger is consummated, it is currently anticipated that, for a period of time, Commerce State Bank and Nicolet National Bank will each continue to operate independently. Nicolet has previously integrated acquired depository institutions concurrently with the legal closing of the holding company mergers, and may experience further difficulties with this integration process. If Nicolet experiences difficulties with the integration process, Nicolet might not achieve some of the economic benefits expected to result from the merger.merger in a timely manner or at all. As with any merger of banking institutions, there also may be business disruptions that cause the combined entity to lose customers or cause customers to take their deposits out of our banks and move their business to other financial institutions.
CommerceCounty and Nicolet will be subject to business uncertainties while the merger is pending, which could adversely affect their respective businesses.
Uncertainty about the consummation of the merger or the effect of the merger on employees and customers may have an adverse effect on CommerceCounty and Nicolet and consequently on the business and stock

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price of Nicolet after the merger. Although the parties intend to take steps to reduce any adverse effects, these uncertainties may impair their ability to attract, retain, and motivate key personnel until the merger is consummated and for a period of time thereafter, and such uncertainties could cause customers and others that deal with CommerceCounty or Nicolet to seek to change their existing business relationships. Employee retention could be particularly challenging during the merger, as employees may experience uncertainty about their roles in the combined company following the merger. If key employees depart because of issues relating to the perceived uncertainty and difficulty of integration or a desire not to remain with the combined company, the combined company’s business following the merger could be harmed and the market price of its common stock could decrease.
There is no assurance when or even if the merger will be completed.
Completion of the merger is subject to satisfaction or waiver of a number of conditions. See the section entitled “The Merger Agreement” beginning on page 78 of this joint proxy statement-prospectus. There can be no assurance that Nicolet and County will be able to satisfy the closing conditions or that closing conditions beyond their control will be satisfied or waived.
Regulatory approvals may not be received, may take longer than expected or may impose conditions that are not presently anticipated.
The merger must be approved by the Federal Reserve, the OCC and the WDFI. The Federal Reserve, the OCC and the WDFI will consider, among other factors, the competitive impact of the merger, ourNicolet’s and County’s financial and managerial resources and the convenience and needs of the communities to be served. As part

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of that consideration, we expect that the Federal Reserve, the OCC and the WDFI will review the capital position, safety and soundness, and legal and regulatory compliance matters and Community Reinvestment Act (“CRA”) matters. There can be no assurance as to whether otherany necessary approvals will be received, the timing of those approvals, or whether any conditions will be imposed. For a discussion of the status of the required regulatory approvals, see “Status and Effect of Approvals” at page 45.
The market price of Nicolet common stock after the merger may be affected by factors different from those currently affecting the market price of Commerce.County.
The businesses of Nicolet and CommerceCounty differ in some respects and, accordingly, the results of operations of Nicolet and the market price of Nicolet’s shares of common stock after the merger may be affected by factors different from those currently affecting Commerce’sCounty’s results of operations.operations and stock price. For a discussion of the businesses of Nicolet and CommerceCounty and of certain factors to consider in connection with thosetheir respective businesses, see “The Companies” at page 1 and the documents incorporated by reference referred to under the section entitled “Where You Can Find Additional Information” beginning on page 101, including, in particular, in the sections entitled “Risk Factors” in Nicolet’s 6Annual Report on Form 10-K for the year ended December 31, 2020. and in County’s Annual Report on Form 10-K for the year ended December 31, 2020.
The Merger Agreementmerger agreement limits Commerce’sCounty’s ability to pursue alternatives to the merger.
The merger agreement contains provisions that limit Commerce’sCounty’s ability to discuss any competing third-party proposals to acquire allit or a significant part of either party or any of its subsidiaries. In addition, CommerceCounty has agreed to pay Nicolet a fee of $5.0$10.0 million if Nicolet terminates the merger agreement after Commerce’sCounty’s board of directors withdraws or changes its recommendation of the merger agreement to its shareholders, if CommerceCounty terminates the merger agreement to accept an Acquisition Proposal that Commerce’sCounty’s board deems a Superior Proposal, as each term is defined in the merger agreement, or if either party terminates(i) an Acquisition Proposal is made with respect to County, (ii) the merger agreement either because Commerce’s shareholders did not approveis terminated as a result of the failure to obtain County’s shareholder approval, and (iii) County enters into an agreement for such Acquisition Proposal within 12 months after the merger agreement or because the merger was not consummated on or prior to February 17, 2021, and, within twelve months following such termination, Commerce enters into a definitive agreement with respect to an Acquisition Proposal.is terminated. These provisions might discourage a potential competing acquirer that might have an interest in acquiring all or a significant part of CommerceCounty from considering or proposing that acquisition, even if it were prepared to pay consideration with a higher per share price than that proposed in the merger, or might result in a potential competing acquirer proposing to pay a lower per share price to acquire CommerceCounty than it might otherwise have proposed to pay.

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The unaudited pro forma combined condensed financial information for Nicolet and County, and for Nicolet, County and Mackinac, included in this joint proxy statement-prospectus is preliminary, and the actual financial condition and results of operations of the combined company(ies) after the merger may differ materially.
The unaudited pro forma combined condensed financial information in this joint proxy statement-prospectus is presented for illustrative purposes only and is not necessarily indicative of what the combined companies’ actual financial condition or results of operations would have been had the merger been completed on the dates indicated. The unaudited pro forma combined condensed financial information reflects adjustments, which are based upon preliminary estimates, to record County and Mackinac identifiable assets acquired and liabilities assumed at fair value, and to record the resulting goodwill recognized. The fair value estimates reflected in this joint proxy statement-prospectus are preliminary, and final allocation of the County purchase price will be based upon the actual consideration paid and the fair value of the assets and liabilities of County as of the date of the completion of the merger. Accordingly, the final acquisition accounting adjustments may differ materially from the pro forma adjustments reflected in this joint proxy statement-prospectus. For more information, see “Unaudited Pro Forma Condensed Combined Financial Information” beginning on page 13.
The directors and executive officers of CommerceCounty have interests in the merger other than their interests as shareholders.
CertainThe directors and executive officers of CommerceCounty have interests in the merger other than their interests as shareholders. The board of directors of CommerceCounty was aware of these interests at the time it approved the merger. These interests may cause Commerce’sCounty’s directors and executive officers to view the merger proposal differently than you may view it. See “The Merger — Interests of Certain Persons in the Merger” at page 70.
County shareholders will have limited ability to exercise influence over management of the combined organization.40.
County shareholders currently have the right to vote in the election of the board of directors of County and on other matters affecting County. Upon the completion of the merger, each County shareholder will become a shareholder of Nicolet with a percentage ownership of the combined organization that is much smaller than the shareholder’s percentage ownership of County. It is expected that the former common shareholders of County as a group will receive shares in the merger constituting less than 19% of the outstanding shares of Nicolet common stock immediately after the merger or, if prior to such date Nicolet has completed its previously announced merger with Mackinac, less than 16% of such outstanding shares of Nicolet common stock. County shareholders will not have separate approval rights with respect to any actions or decisions of Nicolet or have separate representation on Nicolet’s board of directors. Because of this, County shareholders will have significantly less influence on the management and policies of Nicolet than they now have on the management and policies of County.
Failure to complete the merger could negatively impact the stock price and future business and financial results of Commerce.County.
If the merger is not completed for any reason, including CommerceCounty or Nicolet shareholders failing to approve the merger agreement and the merger, the ongoing business of CommerceCounty may be adversely affected and, without realizing any of the benefits of having completed the merger, CommerceCounty could be subject to a number of possible consequences, including the following:
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CommerceCounty may be required, under certain circumstances, to pay a termination fee to Nicolet;
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CommerceCounty is subject to certain restrictions on the conduct of business prior to completing the merger, which may adversely affect its ability to execute certain business strategies;
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Commerce’sCounty may experience negative reactions from the financial markets, including negative impacts on its stock price;
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County’s relationships with customers, regulators and employees may be negatively affected;
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CommerceCounty has incurred and will continue to incur certain costs and fees associated with the merger; and
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•
matters related to the merger (including integration planning) may require substantial commitments of time and resources by the management and employees of Commerce,County, which would otherwise have been devoted to day-to-day operations and other opportunities that may have been beneficial to CommerceCounty as an independent company.
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Nicolet may fail to realize some or all of the anticipated benefits of the merger.
The success of the merger will depend on, among other things, Nicolet’s ability to successfully combine the businesses of Nicolet and Commerce.County. If Nicolet is not able to successfully achieve this objective, the anticipated benefits of the merger may not be realized fully, or at all, or may take longer to realize than expected. Nicolet and CommerceCounty have operated and, until the consummation of the merger, will continue to operate independently. It is possible that the integration process or other factors could result in the disruption of the ongoing business of Nicolet or inconsistencies in standards, controls, procedures and policies. It is also possible that clients, customers, depositors and counterparties of Nicolet or CommerceCounty could choose to discontinue their relationships with the combined company post-merger because they prefer doing business with an independent company or for any other reason, which would adversely affect the future performance of the combined company. These transition matters could have an adverse effect on each of Nicolet and CommerceCounty during the pre-merger period and for an undetermined period of time after the consummation of the merger.
YouCounty is subject to specific market risks due to its focus on agricultural lending, an area of lending where Nicolet has historically only held a small portion of its loan portfolio.
County primarily concentrates its lending activities in the state of Wisconsin, which has a significant agricultural economy. Historically, County’s senior management’s primary business lending experience has been in agricultural lending, with a specific expertise in and focus on dairy and dairy-related businesses. Nicolet attempts to maintain a diversified customer base and a diversified loan portfolio, but the acquisition of County will experienceresult in Nicolet’s portfolio becoming more heavily dependent upon the agricultural economy than a typical commercial bank. Nicolet may fail to implement certain lending practices that maintain the health and growth of the agricultural loan portfolio. A prolonged period of weakness in the agricultural economy could result in a decrease in demand for loans or other products and services offered by County or the combined company, an increase in agricultural loan delinquencies and defaults, an increase in impaired assets and foreclosures, a decline in the value of loans secured by real estate, and an inability to sell foreclosed assets. The effects of a prolonged period of a weakened agricultural economy could have a material adverse effect on the business or results of operations of County or the combined company. At December 31, 2020, County’s agricultural loans comprised $606.9 million, or approximately 60.9%, of its total loan portfolio, and Investors Community Bank also serviced an additional $812.6 million of agricultural and commercial loans, which generated approximately $10.3 million of servicing fee income during 2020.
The agricultural economy is subject to certain risks that are either inherently volatile or are beyond County’s or Nicolet’s ability, or the ability of farmers or other participants in the agricultural economy, to predict or control. Some of these risks include, but are not limited to market prices, governmental policies and regulations, changing consumer preferences, weather-related risks, disease-related risks and real property value.
Litigation related to the merger may be filed against Nicolet, the Nicolet board of directors, County and/or the County board of directors, which could prevent or delay the completion of the merger or result in the payment of damages.
It is possible that litigation by shareholders of Nicolet and/or County may be filed against Nicolet, the Nicolet board of directors, County and/or the County board of directors. Among other remedies, the lawsuits could seek damages and/or to enjoin the merger or the other transactions contemplated by the merger agreement. The outcome of any litigation is uncertain, and any such lawsuits could prevent or delay the completion of the merger and result in substantial reduction in percentage ownershipcosts to Nicolet, County and votingthe combined company, including following consummation of the merger. Any such actions may create uncertainty relating to the merger and may be costly and distracting to management. Further, the defense or settlement of any lawsuit or claim that remains unresolved at the time the merger is completed may adversely affect the combined company’s business, financial condition and results of operations.

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There is no assurance that Nicolet will complete the Mackinac merger transaction.
Like this merger, the Mackinac merger is subject to customary conditions to closing, including the receipt of required regulatory approvals and the approval of Nicolet and Mackinac shareholders. If any conditions to the Mackinac merger are not satisfied or waived, to the extent permitted by law, the Mackinac merger will not be completed. In addition, Nicolet and Mackinac may terminate the Mackinac merger agreement under certain circumstances even though the Mackinac merger agreement has been approved by Nicolet’s shareholders and Mackinac’s shareholders. If Nicolet and Mackinac do not complete the Mackinac merger, Nicolet would not realize any of the expected benefits of having completed the Mackinac merger. There is no assurance that the Mackinac merger will be completed or, if it is completed, the timing of such completion.
If Nicolet’s stock price decreases below specified thresholds, then County has the right to terminate the merger agreement, and the merger would not occur unless Nicolet increases the merger consideration.
If for a specified period prior to completion of the merger Nicolet’s average stock price decreases below certain specified thresholds, then County may terminate the merger agreement subject to Nicolet’s right (but not obligation) to increase the merger consideration by increasing the exchange ratio. If Nicolet elects not to increase the merger consideration, County may then terminate the merger agreement.
As a result, even if County shareholders approve the merger agreement, the merger may ultimately not be completed. Although the Nicolet board of directors has the ability to increase the merger consideration and County’s board of directors has the power to choose not to terminate the merger agreement and proceed with respectthe merger if Nicolet does not increase the merger consideration, there is no obligation of either board to your sharesexercise such power.
Shares of Nicolet common stock to be received by County shareholders as a result of the merger.merger will have rights different from the shares of County common stock.
Upon completion of the merger, the rights of former County shareholders will be governed by the articles of incorporation and bylaws of Nicolet and by Wisconsin corporate law. Although the rights associated with Nicolet common stock and County common stock are both governed by the terms of Wisconsin corporate law, the County governing documents provide for different rights to its shareholders than the Nicolet governing documents. Please see the section entitled “Certain Differences in Rights of Shareholders” beginning on page 93 for a discussion of the different rights associated with Nicolet common stock.
Risks Relating to Nicolet’s Business
Commerce shareholders will experience a substantial reduction in their respective percentage ownership interests and effective voting power through their stock ownership in Nicolet after the merger relative to their percentage ownership interest in Commerce priorIn addition to the merger. Ifabove-described risks, you should read and consider risk factors specific to Nicolet’s business. These risks are described in the merger is consummated, current Commerce shareholders would own approximately [17]%sections entitled “Risk Factors” in Nicolet’s Annual Report on Form 10-K for the year ended December 31, 2020, and in other documents incorporated by reference into this joint proxy statement-prospectus. Please see the section entitled “Where You Can Find Additional Information” beginning on page 101 of Nicolet’s outstanding common stock, assuming no adjustmentsthis joint proxy statement-prospectus for the location of information incorporated by reference into this joint proxy statement-prospectus.
Risks Relating to County’s Business
In addition to the exchange ratio, while current Nicolet shareholders would own the remaining [83]%. Consequently, Commerce shareholders will have less voting power per share in Nicolet following the merger than they currently have in Commerce as an independent entity. See “The Merger Agreement — What Commerce Shareholders will Receiveabove-described risks, you should read and consider risk factors specific to County’s business. These risks are described in the Merger” atsections entitled “Risk Factors” in County’s Annual Report on Form 10-K for the year ended December 31, 2020, and in other documents incorporated by reference into this joint proxy statement-prospectus. Please see the section entitled “Where You Can Find Additional Information” beginning on page 47.101 of this joint proxy statement-prospectus for the location of information incorporated by reference into this joint proxy statement-prospectus.
 
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Risks Relating to the Mackinac Merger
Consummating the Mackinac merger and integrating Mackinac into Nicolet’s business could cause the County merger to take longer than expected or result in delays in obtaining regulatory approvals for the County merger.
Nicolet announced the proposed acquisition of Mackinac on April 12, 2021. Although the closing of the Mackinac merger is subject to customary closing conditions, as of the date of this joint proxy statement-prospectus, all regulatory and shareholder approvals required for that merger have been received. Nicolet currently expects to consummate the Mackinac merger in the third quarter of 2021.
Planning the integration of Mackinac into Nicolet, completing the Mackinac merger and integrating Mackinac into Nicolet’s business at the same time as Nicolet is obtaining regulatory approvals for the County merger and planning the integration of County into Nicolet is time consuming and could divert Nicolet management attention and resources away from the County merger. This could result in the County merger process taking longer than anticipated, which could be costly to both Nicolet and County, disrupt either or both of Nicolet’s and County’s ongoing business relationships with their respective clients, customers, depositors and employees, and/or result in a failure to achieve the anticipated benefits of the merger. It is also possible that because of the complexities involved in acquiring two financial institutions in close proximity, Nicolet could experience delays in obtaining regulatory approvals for the County merger.
Nicolet’s previously announced merger with Mackinac is subject to risks that are similar to the risks related to the County merger as described above. In addition you should review and consider risk factors specific to Mackinac’s business as described in the section entitled “Risk Factors” in Mackinac’s Annual Report on Form 10-K for the year ended December 31, 2020 and in its other filings with the SEC.

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A WARNING ABOUT FORWARD-LOOKING STATEMENTS
This joint proxy statement-prospectus includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements discuss future expectations, describe future plans and strategies, contain projections of results of operations or of financial condition or state other forward-looking information. Forward-looking statements are generally identifiable by the use of forward-looking terminology such as “anticipate,” “believe,” “continue,” “could,” “endeavor,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “objective,” “potential,” “predict,” “project,” “seek,” “should,” “will” and other similar words and expressions of future intent.
The ability of Nicolet and CommerceCounty to predict results or the actual effect of future plans or strategies is inherently uncertain. Although Nicolet and CommerceCounty believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, actual results and performance could differ materially from those set forth in the forward-looking statements. Factors that could cause actual results and performance to differ from those expressed in the forward-looking statements include, but are not limited to:
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the effects of the COVID-19 pandemic on the businesses, customers, employees and third-party services providers of Nicolet and Commerce;County;
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the businesses of Nicolet and CommerceCounty may not integrate successfully or the integration may be more difficult, time-consuming or costly than expected;
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the possibility that any of the anticipated benefits of the proposed merger will not be realized or will not be realized within the expected time period;
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the expected growth opportunities and cost savings from the transaction may not be fully realized or may take longer to realize than expected;
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revenues following the transaction may be lower than expected as a result of losses of customers or other reasons, including issues arising in connection with integration of the two banks;
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deposit attrition, operating costs, customer loss and business disruption following the transaction, including difficulties in maintaining relationships with employees, may be greater than expected;
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governmental approvals of the transaction may not be obtained on the proposed terms or expected timeframe;
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the terms of the proposed transaction may need to be modified to satisfy such approvals or conditions;
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Commerce’sCounty’s shareholders may fail to approve the transaction;
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Nicolet’s shareholders may fail to approve the transaction;
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reputational risks and the reaction of the companies’ customers to the transaction;
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diversion of management time on merger-related or pandemic-related issues;
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changes in asset quality and credit risk;
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adverse changes in the economic conditions of County’s market area and of the agriculture market generally, dairy in particular;
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the outcome of any legal proceedings that may be instituted against Nicolet or County;
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the outcome of the pending Mackinac merger;
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the cost and availability of capital;
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dilution caused by Nicolet’s issuance of additional shares of Nicolet common stock in connection with the merger;
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customer acceptance of the combined company’s products and services;
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customer borrowing, repayment, investment and deposit practices;
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the introduction, withdrawal, success and timing of business initiatives;
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the impact, extent, and timing of technological changes;
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severe catastrophic events in our geographic area;
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a weakening of the economies in which the combined company will conduct operations may adversely affect its operating results;
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changes to statutes, regulations, or regulatory policies or practices resulting from the COVID-19 pandemic;
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changes in the U.S. legal and regulatory framework;
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changes to tax legislation and their potential effects on the accounting for the merger;
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the impact of interest rates on margins and net interest income; and
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•
competition from other financial services companies in the companies’ markets could adversely affect operations.
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The cautionary statements in the “Risk Factors” section and elsewhere in this joint proxy statement-prospectus, and other risks detailed in the parties’ press releases, shareholder communications and other SEC filings, including the Form 10-K filed by Nicolet for the year ended December 31, 2019,2020, and the Form 10-K filed by County for the year ended December 31, 2020, identify important factors and possible events that involve risk and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. Nicolet and CommerceCounty do not intend to, and undertake no obligation to, update or revise any forward-looking statements, whether as a result of differences in actual results, changes in assumptions or changes in other factors affecting such statements.
 
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THE COMMERCENICOLET SPECIAL SHAREHOLDERS’ MEETING
Purpose of Nicolet Special Meeting
CommerceNicolet shareholders are receivinghave received this joint proxy statement-prospectus because on [•],August 19, 2021, the record date for a special meeting of Nicolet’s shareholders to be held on [•]October 5, 2021, at Nicolet’s office at 111 North Washington St., Green Bay, Wisconsin 54301 at [•] at [•] [•].m.9:45 a.m., Central Time, they owned shares of the common stock of Commerce,Nicolet, and the board of directors of CommerceNicolet is soliciting proxies for the matters to be voted on at this special meeting, as described in more detail below. A copy of thisThis joint proxy statement-prospectus was mailed to holders of CommerceNicolet common stock on [•],August 30, 2021, and was accompanied by a proxy card to vote for use at the meeting and at any adjournment(s) of the meeting.
At the special meeting, CommerceNicolet shareholders will consider and vote upon the merger agreement and the transactions contemplated thereby, including the issuance of up to 2,452,665 shares of Nicolet common stock in the merger (which amount is subject to increase if Nicolet elects to increase the exchange ratio to avoid termination of the merger agreement under certain circumstances), and the adjournment of the meeting, if necessary or appropriate, and any other matters that are properly brought before the meeting or any adjournments(s)adjournment(s) of the meeting.
When you sign the enclosed proxy card or otherwise vote pursuant to the instructions set forth on the proxy card, you appoint the proxy holder as your representative at the meeting. The proxy holder will vote your shares as you have instructed in the proxy card, thereby ensuring that your shares will be voted whether or not you attend the meeting. Even if you plan to attend the meeting, (including via remote communications), we ask that you instruct the proxies how to vote your shares in advance of the meeting just in case your plans change. In the event that other matters arise at the special meeting, the proxy holder will vote your shares according toin his or her discretion.
If you have not already done so, please complete, date and sign the accompanying proxy card and return it promptly in the enclosed, postage paid envelope or otherwise vote pursuant to the instructions set forth on the proxy card. If you do not vote your shares as instructed on the proxy card, or if you do not attend and cast your vote at the special meeting, the effect will be a vote against the merger agreement. Whether or not you plan to attend the special meeting, please complete, date, sign and return the enclosed proxy card or vote your proxy by internet or telephone as soon as possible.
Nicolet Record Date; Quorum and Vote Required
The record date for the CommerceNicolet special meeting is [•]. Commerce’sAugust 19, 2021. Nicolet’s shareholders of record as of the close of business on that day will receive notice of and will be entitled to vote at the special meeting. As of the record date, there were [•]9,660,243 shares of CommerceNicolet common stock outstanding and entitled to vote at the meeting. TheAs of such date, the outstanding shares arewere held by approximately [•]2,200 holders of record.
The presence, in person via remote communications or by proxy, of a majority of the shares of CommerceNicolet common stock entitled to vote on the merger agreement is necessary to constitute a quorum at the meeting. Each share of CommerceNicolet common stock outstanding on the record date entitles its holder to one vote on the merger agreement and any other proposal that may properly come before the meeting.
To determine the presence of a quorum at the meeting, CommerceNicolet will also count as present at the meeting the shares of CommerceNicolet common stock present in person or via remote communication but not voting, and the shares of common stock for which CommerceNicolet has received proxies but with respect to which the holders of such shares have abstained or signed without providing instructions as described in “Solicitation and Revocation of Nicolet Proxies” below. Based on the number of shares of CommerceNicolet common stock outstanding as of the record date, at least [•]4,830,122 shares need to be present at the special meeting, whether in person via remote communication or by proxy, to constitute a quorum.
Approval of the merger proposal and the transactions contemplated thereby, including the issuance of shares contemplated by the merger agreement, requires the affirmative vote of the holders of a majority of the outstanding shares of CommerceNicolet common stock as of the record date for the special meeting. Abstentions, shares not voted, and broker nonvotesnon-votes will have the same effect as a vote against the merger proposal.

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Approval of the adjournment proposal requires that more votes be cast in favor of the adjournment proposal than against it; abstentions, shares not voted, and broker nonvotesnon-votes will have no effect on this proposal.
As of the record date for the meeting, Commerce’sNicolet’s directors and executive officers beneficially owned a total of 357,3911,812,580 shares, or approximately 23.35%17% of the outstanding shares, entitled to vote on the merger, of CommerceNicolet common stock. TheseWe anticipate that these individuals have entered into a written agreement with Nicolet, as shareholders of Commerce, that they will vote their shares in favor of the merger agreement, except as may be limited by any

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existing fiduciary obligations to beneficial owners of such shares. In addition, Nicolet had voting power over less than 1% of the shares entitled to vote on the merger.proposal.
Solicitation and Revocation of Nicolet Proxies
If you have delivered a signed proxy card for the CommerceNicolet special meeting or otherwise voted pursuant to the instructions set forth on the proxy card, you may revoke it at any time before it is voted by:
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attending the meeting (in-person or remotely), giving oral notice of your revocation, and voting in person or over the internet;person;
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giving written notice revoking your proxy to Commerce’sNicolet’s Corporate Secretary prior to the date of the meeting;
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if you voted over the internet, voting again over the internet by the applicable deadline described below or submit a proxy card and return it prior to the vote at the annual meeting; or
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submitting a signed proxy card that is dated later than your initial proxy card to Commerce’sNicolet’s Corporate Secretary.
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The proxy holders will vote as directed on all valid proxies that are received at or prior to the meeting and that are not subsequently revoked. If you complete, date and sign your proxy card but do not provide instructions as to your vote, the proxy holders will vote your shares FOR approval of the merger proposal and the transactions contemplated thereby, including the issuance of shares contemplated by the merger agreement, and FOR the adjournment proposal. If any other matters are properly presented at the meeting for consideration, the persons named in the proxy card will have discretionary authority to vote your shares on those matters. Commerce’sNicolet’s board of directors is not aware of any matter to be presented at the meeting other than the merger proposal and the adjournment proposal.
If you hold shares in “street name” with a broker, bank or other fiduciary, you are the “beneficial owner” of those shares, and you will receive voting instructions from the holder of record of your shares. Under the rules of various national and regional securities exchanges, brokers, banks and other fiduciaries may generally vote your shares on routine matters, such as the ratification of an independent registered public accounting firm, even if you provide no instructions, but may not vote on non-routine matters, such as the matters being brought before the special meeting, unless you provide voting instructions. Shares for which a broker does not have the authority to vote are recorded as “broker nonvotes”non-votes” and are not counted in the vote by shareholders, but will count for purposes of a quorum.shareholders. As a result, any broker nonvotesnon-votes will have the practical effect of a vote against the merger proposal but will not affect the adjournment proposal. We therefore encourage you to provide directions to your broker as to how you want your shares voted on all matters to be brought before the special meeting. You should do this by carefully following the instructions your broker gives you concerning its procedures. If you hold shares in “street name” and wish to change your vote at any time, you must contact your broker.
CommerceNicolet will bear the cost of soliciting proxies from its shareholders. CommerceNicolet will solicit shareholder votes by mail and may also solicit certain shareholders by other means of communication, including telephone or in person. If anyone solicits your vote in person, by telephone, or by other means of communication, they will receive no additional compensation for doing so. CommerceNicolet will reimburse brokerage firms and other persons representing beneficial owners of shares for their reasonable expenses in forwarding solicitation material to those beneficial owners.
How to Vote Your Nicolet Shares
Shareholders of record (i.e., those who own shares in their own name) can vote by [internet],telephone, on the Internet, or by mail or in person as follows:
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Voting By Internetby Telephone..   Access    Call the internet website specifiedtoll-free number listed on the proxy card and follow the instructions. You will need to have your proxy card with you when you call.
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Voting on the Internet.    Go to www.investorvote.com/NCBS.com and follow the instructions. You will need to have your proxy card with you when you link to the website.
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•
Voting by Mail.    Complete, sign, date, and return the enclosed proxy card in the envelope provided.
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Voting at the Nicolet Special Meeting.    If you decide to attend the special meeting and vote in person, you may deposit your proxy card with a representative of Nicolet at the special meeting registration desk. You may also complete a ballot that will be distributed at the meeting. Whether or not you plan to attend the special meeting, please submit your proxy promptly in the enclosed envelope or vote telephonically or through the internet by following the instructions on the proxy card.
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If you vote using the internet or by telephone, please do not mail in your proxy card.
No Dissenters’ Rights
Nicolet’s shareholders do not have dissenters’ rights with respect to the merger under Wisconsin law.
Recommendation of the Board of Directors of Nicolet
Nicolet’s board of directors has unanimously approved the merger agreement and the transactions contemplated thereby, including the issuance of up to 2,452,665 shares of Nicolet common stock in the merger (which amount is subject to increase if Nicolet elects to increase the exchange ratio to avoid termination of the merger agreement under certain circumstances), believes that the merger is in the best interests of Nicolet and its shareholders, and recommends that you vote FOR approval of the merger agreement and the transactions contemplated thereby, including the issuance of shares contemplated by the merger, and FOR the adjournment proposal.
For a discussion of the factors considered by the board of directors in reaching its conclusion, see “The Merger — Background of the Merger” at page 41 and “The Merger — Reasons for the Merger” at page 45.

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THE NICOLET PROPOSALS
Proposal 1 — Approval of the Merger Agreement, the Merger and the Stock Issuance
At the Nicolet special meeting, shareholders of Nicolet will be asked to approve the Nicolet merger proposal providing for the merger of County with and into Nicolet and the issuance of up to 2,452,665 shares of Nicolet common stock to County shareholders (which amount is subject to increase if Nicolet elects to increase the exchange ratio to avoid termination of the merger agreement under certain circumstances). Shareholders of Nicolet should read this joint proxy statement-prospectus carefully and in its entirety, including the appendices, for more detailed information concerning the merger agreement and the merger. A copy of the merger agreement is attached to this joint proxy statement-prospectus as Appendix A.
After careful consideration, the Nicolet board of directors, by a unanimous vote of all directors, approved the merger agreement and the merger, including the issuance of shares contemplated by the merger, and determined it to be advisable and in the best interests of Nicolet and its shareholders. See “The Merger — Background of the Merger” and “The Merger — Reasons for the Merger” included elsewhere in this joint proxy statement-prospectus for a more detailed discussion of the Nicolet board’s recommendation.
THE NICOLET BOARD UNANIMOUSLY RECOMMENDS THAT NICOLET
SHAREHOLDERS VOTE FOR THE MERGER PROPOSAL, INCLUDING THE ISSUANCE OF SHARES CONTEMPLATED BY THE MERGER AGREEMENT.
Proposal 2 — Adjournment of the Special Meeting
If Nicolet does not receive a sufficient number of votes to constitute a quorum of the common stock or approve the merger agreement and the transactions contemplated thereby, it may propose to adjourn the special meeting for the purpose of soliciting additional proxies to establish such quorum or approve the merger. Nicolet does not currently intend to propose adjournment of the special meeting if there are sufficient votes to approve the merger agreement and the transactions contemplated thereby. If approval of the proposal to adjourn the special meeting for the purpose of soliciting additional proxies is submitted to the Nicolet shareholders for approval, approval will require that the number of votes cast for the adjournment proposal exceed the number of votes cast against the proposal, whether or not a quorum is present.
THE NICOLET BOARD UNANIMOUSLY RECOMMENDS THAT NICOLET
SHAREHOLDERS VOTE FOR THE ADJOURNMENT PROPOSAL.

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THE COUNTY SPECIAL SHAREHOLDERS’ MEETING
This section contains information for County shareholders about the special meeting that County’s board of directors has called to allow its shareholders to consider and approve the merger agreement. County is mailing this joint proxy statement-prospectus to you, as a shareholder, on or about August 30, 2021. Together with this joint proxy statement-prospectus, County is also sending to you a notice of its special meeting of shareholders and a form of proxy card that County’s boards of directors is soliciting for use at the special meeting and at any adjournments or postponements thereof.
Date, Time and Place of Meeting
The special meeting will be held virtually via live webcast by accessing www.virtualshareholdermeeting.com/ICBK2021SM on October 5, 2021, at 2:00 p.m., Central Time.
Matters to Be Considered
At the County special meeting, shareholders will be asked to consider and vote upon the following matters:
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a proposal to approve the merger agreement and the transactions contemplated by the merger agreement;
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a proposal to approve, on a non-binding, advisory basis, the compensation that may be paid or become payable to County’s named executive officers that is based on or otherwise relates to the merger; and
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a proposal to approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies to approve the merger agreement and the transactions contemplated by the merger agreement.
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When you sign the enclosed proxy card or otherwise vote pursuant to the instructions set forth on the proxy card, you appoint the proxy holder as your representative at the meeting. The proxy holder will vote your shares as you have instructed in the proxy card, thereby ensuring that your shares will be voted whether or not you attend the meeting. Even if you plan to attend the meeting virtually, we ask that you instruct the proxies how to vote your shares in advance of the meeting just in case your plans change. In the event that other matters arise at the special meeting, the proxy holder will vote your shares in his or her discretion.
If you have not already done so, please complete, date and sign the accompanying proxy card and return it promptly in the enclosed, postage paid envelope or otherwise vote pursuant to the instructions set forth on the proxy card. If you do not vote your shares as instructed on the proxy card, or if you do not attend and cast your vote at the special meeting, the effect will be a vote against the merger agreement. Whether or not you plan to attend the special meeting, please complete, date, sign and return the enclosed proxy card or vote your proxy by internet or telephone as soon as possible.
Recommendation of the Board of Directors of County
County’s board of directors determined that the merger, the merger agreement and the transactions contemplated by the merger agreement are advisable and in the best interests of County and its shareholders and has unanimously approved the merger and the merger agreement. County’s board of directors unanimously recommends that County shareholders vote FOR approval of the merger agreement, FOR approval of the compensation that may be paid or become payable to County’s named executive officers that is based on or otherwise relates to the merger, and FOR the adjournment proposal. See “The Merger — Reasons for the Merger — County” for a more detailed discussion of County’s board of directors’ recommendation.
Record Date and Quorum
County’s board of directors has fixed the close of business on August 19, 2021, as the record date for determining the holders of County common stock entitled to receive notice of and to vote at the County special meeting.

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As of the record date, there were 6,031,190 shares of County common stock outstanding and entitled to vote at the County special meeting held by approximately 265 shareholders of record. Each share of County common stock entitles the holder to one vote at the County special meeting on each proposal to be considered at the County special meeting.
The presence at the special meeting, in person by attendance at the virtual meeting or by proxy, of holders of a majority of the shares entitled to vote at the special meeting will constitute a quorum for the transaction of business. Based on the number of shares of County common stock outstanding as of the record date, at least 3,015,596 shares need to be present at the special meeting, whether in person by attendance at the virtual meeting or by proxy, to constitute a quorum. All shares of County common stock, whether present in person by attendance at the virtual meeting or represented by proxy, will be treated as present for purposes of determining the presence or absence of a quorum for all matters voted on at the County special meeting.
Vote Required; Treatment of Abstentions and Failure to Vote
Approval of the merger agreement and the transactions contemplated thereby requires the affirmative vote of a majority of the shares of County common stock outstanding and entitled to vote on the record date. You are entitled to one vote for each share of County common stock you held as of the record date. Abstentions, shares not voted and broker non-votes will have the same effect as a vote against the merger proposal.
Approval of each of the compensation proposal and the adjournment proposal requires the votes cast for the proposal to exceed the votes cast against the proposal. Abstentions or the failure to vote or failure to instruct your bank or broker how to vote with respect to the compensation proposal or the adjournment proposal will not be counted as votes cast and, therefore, will have no effect on such proposal.
Shares Held by Officers and Directors
As of the record date, directors and executive officers of County beneficially owned and were entitled to vote approximately 1,383,082 shares of County common stock, representing approximately 22.9% of the shares of County common stock outstanding on that date. The directors of County have entered into a voting and support agreement with Nicolet pursuant to which they have agreed, solely in their capacity as County shareholders, to vote all of their shares of County common stock in favor of the proposals to be presented at the special meeting. As of the record date, the directors were entitled to vote an aggregate of approximately 1,310,785 shares of County common stock, representing approximately 21.7% of the shares of County common stock outstanding on that date. As of the record date, Nicolet and its subsidiaries held no shares of County common stock. See “The Merger — Interests of Certain Persons in the Merger.”
Voting of Proxies; Incomplete Proxies
Each copy of this joint proxy statement-prospectus mailed to holders of County common stock is accompanied by a form of proxy with instructions for voting. If you hold stock in your name as a shareholder of record, you should complete and return the proxy card accompanying this joint proxy statement-prospectus, regardless of whether you plan to attend the special meeting, or you may vote your shares electronically via the Internet or by telephone.
If you hold your stock in “street name” through a bank or broker, you must direct your bank or broker to vote in accordance with the instructions you have received from your bank or broker.
All shares represented by valid proxies that County receives through this solicitation, and that are not revoked, will be voted in accordance with your instructions on the proxy card or your Internet or telephone vote. If you make no specification on your proxy card as to how you want your shares voted before signing, dating and returning it, your proxy will be voted FOR approval of the merger agreement, FOR approval of the compensation proposal, and FOR approval of the adjournment proposal. No matters other than the matters described in this joint proxy statement-prospectus are anticipated to be presented for action at the special meeting or at any adjournment or postponement of the special meeting.

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Shares Held in “Street Name”; Broker Non-Votes
Under stock exchange rules, banks, brokers and other nominees who hold shares of County common stock in “street name” for a beneficial owner of those shares typically have the authority to vote in their discretion on “routine” proposals when they have not received instructions from beneficial owners. However, banks, brokers and other nominees are not allowed to exercise their voting discretion with respect to the approval of matters determined to be “non-routine,” such as approval of the merger agreement proposal, the compensation proposal or the adjournment proposal, without specific instructions from the beneficial owner. Broker non-votes are shares held by a broker, bank or other nominee that are represented at the County special meeting, but with respect to which the broker or nominee is not instructed by the beneficial owner of such shares to vote on the particular proposal and for which the broker does not have discretionary voting power with respect to such proposal. Therefore, if your broker, bank or other nominee holds your shares of common stock in “street name,” your broker, bank or other nominee will vote your shares of common stock only if you provide instructions on how to vote by filling out the voter instruction form sent to you by your broker, bank or other nominee with this joint proxy statement-prospectus.
How to Vote Your County Shares
Shareholders of record (i.e., those who own shares in their own name) can vote as follows:
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Voting by Telephone.    Call the toll-free number listed on the proxy card and follow the instructions. You will need to have your proxy card with you when you call.
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Voting on the Internet.    Go to www.proxyvote.com and follow the instructions. You will need to have your proxy card with you when you link to the website.
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Voting by Mail.    Complete, sign, date, and return the enclosed proxy card in the envelope provided.
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Voting at the County Special Meeting.    If you decide toTo attend the special meeting and vote in person, you may deposit your proxy card with a representative of Commerce atvisit the following website: www.virtualshareholdermeeting.com/ICBK2021SM. To participate in the special meeting, registration desk. YouCounty shareholders will need the 16-digit control number included on their respective proxy card. Shares held in your name as the shareholder of record may also complete a ballot that will be distributedvoted electronically during the special meeting. If County shareholders would like to vote during the special meeting, click on the “Voting” button at the bottom of the screen before the polls close for voting on any of the items being voted on at the special meeting. Whether or not you plan
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to attend the special meeting, please submit your proxy promptly in the enclosed envelope. envelope or vote telephonically or through the internet by following the instructions on the proxy card.
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If you decidevote using the Internet or by telephone, please do not mail in your proxy card.
Revocability of Proxies and Changes to attenda Shareholder’s Vote
If you hold stock in your name as a shareholder of record, you may revoke any proxy at any time before it is voted by (1) signing and returning a proxy card with a later date, (2) giving written notice revoking your proxy to County’s Secretary prior to the date of the special meeting, via remote communication, you may vote remotely by accessing the internet website specified on the enclosed proxy card.
“Street name” shareholders (i.e., those who own their shares in the name of a broker, bank, or other fiduciary) should refer to the information you receive from your broker to see which voting methods are available to you. Please note, if you are a street name shareholder and wish to vote in person at(3) attending the special meeting you must obtain a proxy executed in your favor from your broker to be able to voteand voting online at the special meeting.
You should not send any stock certificates withWritten notices of revocation and other communications about revoking your proxy card. If the merger is completed, you will receive a letter of transmittal with instructions for exchanging your stock certificates.should be addressed to:
County Bancorp, Inc.
2400 South 44th Street
Manitowoc, WI 54221
Attention: Mark A. Miller
If your shares are held in “street name” by a bank or broker, you should follow the instructions of your bank or broker regarding the revocation of proxies.
No Dissenters’ Rights
Commerce’sCounty’s shareholders do not have dissenters’ rights with respect to the merger under Wisconsin law. Shareholders who wish to assert their dissenters’ rights and comply with the procedural requirements of Subchapter XIII of the Wisconsin Business Corporation Law (“WBCL”) will be entitled to receive payment of the fair value of their shares in cash in accordance with Wisconsin law. For more information regarding the exercise of these rights, see, “Dissenters’ Rights,” at page 48.
Recommendation of the Board of Directors of Commerce
Commerce’s board of directors has unanimously approved the merger agreement and the transactions contemplated thereby, believes that the merger is in the best interests of Commerce and its shareholders, and recommends that you vote FOR approval of the merger agreement and the transactions contemplated thereby and FOR the adjournment proposal.
For a discussion of the factors considered by the board of directors in reaching its conclusion, see “The Merger — Background of the Merger” at page 25 and “The Merger — Reasons for the Merger” at page 26.
Shareholders should note that Commerce’s directors have certain interests in, and may derive benefits as a result of, the merger that are in addition to their interests as shareholders of Commerce. See “The Merger — Interests of Certain Persons in the Merger” at page 40.
 
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Solicitation of Proxies
County’s board of directors is soliciting your proxy in conjunction with the merger agreement. County will bear the entire cost of soliciting proxies from its shareholders. County may use its directors, officers and employees, who will not be specially compensated, to solicit proxies from the County shareholders, either personally or by telephone, facsimile, mail, e-mail or other electronic means. In addition to solicitation of proxies by mail, County will request that banks, brokers and other record holders send proxies and proxy material to the beneficial owners of County common stock and secure their voting instructions. County will reimburse the record holders for their reasonable expenses in taking those actions.
Attending the Meeting
All holders of County common stock, including shareholders of record and shareholders who hold their shares through banks, brokers, nominees or any other holder of record, are invited to attend the special meeting. County shareholders will need to have the 16-digit control number included on their respective proxy card to join the special meeting. If a County shareholder is a beneficial owner and a broker or other fiduciary is the record holder, such shareholders should follow the instructions for attending the special meeting provided by such broker or other fiduciary. Shareholders of record can vote online at the special meeting. If you are not a shareholder of record, you must contact the record holder of your shares, such as a broker, bank or other nominee, to obtain instructions on how you can vote online at the special meeting.
Assistance
If you have any questions concerning the merger or this joint proxy statement-prospectus, would like additional copies of this joint proxy statement-prospectus or need help voting your shares of County common stock, please contact Mark A. Miller, Secretary of County, at (920) 686-5692.

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THE COUNTY PROPOSALS
Proposal 1 — Approval of the Merger Agreement and the Merger
At the County special meeting, the shareholders of CommerceCounty will be asked to approve the merger proposalagreement providing for the merger of CommerceCounty with and into Nicolet.Nicolet, and the transactions contemplated thereby. Shareholders of CommerceCounty should read this joint proxy statement-prospectus carefully and in its entirety, including the appendices, for more detailed information concerning the merger agreement and the merger. A copy of the merger agreement is attached to this joint proxy statement-prospectus as Appendix A.A.
After careful consideration, the CommerceCounty board of directors, by a unanimous vote of all directors, approved the merger agreement and the merger, and found them to be advisable and in the best interests of CommerceCounty and its shareholders. See “The Merger — Background of the Merger” and “The Merger — Reasons for the Merger” included elsewhere in this joint proxy statement-prospectus for a more detailed discussion of the CommerceCounty board’s recommendation.
THE COMMERCECOUNTY BOARD UNANIMOUSLY RECOMMENDS THAT
COMMERCECOUNTY SHAREHOLDERS VOTE “FOR”FOR THE MERGER PROPOSAL.AGREEMENT AND THE MERGER.
Proposal 2 — Compensation Proposal
Pursuant to Section 14A of the Exchange Act and Rule 14a-21(c) thereunder, County is seeking a non-binding, advisory shareholder approval of the compensation of County’s named executive officers that is based on or otherwise relates to the merger as disclosed in the section entitled “The Merger — Interests of Certain Persons in the Merger — Say-on-Pay” included elsewhere in this joint proxy statement-prospectus. The proposal gives holders of County common stock the opportunity to express their views on the merger-related compensation of County’s named executive officers.
Accordingly, County is asking holders of County common stock to vote FOR the adoption of the following resolution, on a non-binding advisory basis:
“RESOLVED, that the compensation that will or may be paid or become payable to the County named executive officers, in connection with the merger, and the agreements or understandings pursuant to which such compensation will or may be paid or become payable, in each case as disclosed pursuant to Item 402(t) of Regulation S-K in “The Merger — Interests of Certain Persons in the Merger — Say-on-Pay” are hereby APPROVED.”
The vote on the advisory compensation proposal is a vote separate and apart from the votes on the merger proposal and the adjournment proposal. Accordingly, if you are a holder of County common stock, you may vote to approve the merger proposal and/or the adjournment proposal and vote not to approve the compensation proposal, and vice versa. The approval of the compensation proposal by holders of County common stock is not a condition to the completion of the merger. If the merger is completed, the merger-related compensation will be paid to County’s named executive officers to the extent payable in accordance with the terms of the compensation agreements and arrangements even if holders of County common stock fail to approve the advisory vote regarding merger-related compensation.
THE COUNTY BOARD UNANIMOUSLY RECOMMENDS THAT COUNTY SHAREHOLDERS VOTE FOR THE ADVISORY COMPENSATION PROPOSAL.

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Proposal 3 — Adjournment of the Special Meeting
If CommerceCounty does not receive a sufficient number of votes to constitute a quorum of the common stock or approve the merger agreement and the transactions contemplated thereby, it may propose to adjourn the special meeting for the purpose of soliciting additional proxies to establish such quorum or approve the merger agreement. In that event, County will ask holders of County common stock to vote upon the adjournment proposal, but not the merger proposal or the compensation proposal. CommerceCounty does not currently intend to propose adjournment of the special meeting if there are sufficient votes to approve the merger agreement and the transactions contemplated thereby.
THE COMMERCECOUNTY BOARD UNANIMOUSLY RECOMMENDS THAT
COMMERCECOUNTY SHAREHOLDERS VOTE “FOR”FOR THE ADJOURNMENT PROPOSAL.
 
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THE MERGER
Structure of the Merger
The merger agreement provides for the merger of CommerceCounty with and into Nicolet, with Nicolet being the surviving entity in the merger. After the merger, Commerce StateInvestors Community Bank will merge with and into Nicolet National Bank, with Nicolet National Bank being the surviving bank. Each share of CommerceCounty common stock outstanding at the effective time of the merger, other than certain cancelled shares, at the election of each holder thereof and subject to proration, will be converted into the right to receive merger consideration consisting of 1.150.48 shares of Nicolet common stock or $37.18 in cash (without interest) per share of County common stock. The merger agreement provides that the exchange ratio is fixed unless the Nicolet Common Stock Price (as defined in the merger agreement) is (a) greater than $82.00, in which case the exchange ratio would become floating at the quotient of $94.30 divided by the Nicolet Common Stock Price, or (b) less than $62.00, in which case the exchange ratio would become floating at the quotient of $71.30 divided by the Nicolet Common Stock Price. If the Nicolet Common Stock Price is below $62.00 per share, in lieu of adjusting the exchange ratio, Nicolet may (a) elect to add a cash component to theand merger consideration in an amount sufficient to make the aggregate per share consideration equal to $71.30 per share of Commerce Common Stock, (b) leave the exchange ratio unchanged (which would give Commerce the right to terminate the merger agreement), or (c) terminate the merger agreement. As of the date of this proxy statement-prospectus, if the Nicolet Common Stock Price is below $62.00, Nicolet does not intend to adjust the exchange ratio, does not intend to add cash consideration, and does intend to terminate the merger agreement. If the Nicolet Common Stock Price is below $62.00 per share, and Nicolet does not exercise its right to terminate and does not elect to increase the exchange ratio or add cash consideration, Commerce’s board of directors will have the right and authority to elect whether to terminate or proceed based on its assessment of all information available at the time. Additionally, under no circumstances shall the number of shares of Nicolet common stock to be issued in the merger equal or exceed 19.9% of the number of outstanding shares of Nicolet common stock such that Nasdaq rules would require approval of the merger by Nicolet’s shareholders. The parties agree to reduce the number of shares of Nicolet common stock to be issued and to increase the cash to be issued pro rata to avoid such a shareholder vote.
are fixed. See “The Merger Agreement” on page 4778 for additional details regarding the structure of the merger.
Background of the Merger
Commerce’s boardNicolet’s and County’s respective boards of directors and senior management have regularly reviewedreview and evaluated itsevaluate their respective companies’ business, strategic direction, performance, prospects and strategic alternatives as part of Commerce’stheir ongoing efforts to strengthen itstheir businesses and improve its operations and financial performance to create value for itstheir respective shareholders, taking into account economic, regulatory, competitive and other conditions. In recent years, such strategic reviews by County’s board of directors and senior management have identified that County’s stock price has generally been undervalued compared to County’s peers. Management has believed that this was primarily a result County’s concentration in agricultural lending, and the pricingmarket not factoring in County’s expertise in agricultural lending and low loan loss history given this concentration, and lower loan growth in other categories of County’s loan portfolio.
As a part of this process, County’s management has routinely held discussions with management teams at other financial institutions regarding each organization’s interest in pursuing a strategic transaction, as well as the trends in the strategicmerger and acquisition market was peaking and such pricing may not be sustainable long term. To assistgenerally. In this regard, in the analysis, in August of 2019, the Commerce board approved the retention of Hillworth, LLC (“Hillworth”), an advisory firm specializing in community banks/late 2020, County’s management had several discussions with another bank holding company of a similar size to County regarding the possibility of a merger of equals between the two companies. The discussions were preliminary and broad regarding the strategic direction of the two companies and Magstar Capital, LLChow the two companies would be a good strategic fit, but the discussions had not progressed to providing a letter of intent.
In early December 2020, an executive officer of another bank holding company (“Magstar”Company A”), contacted, on an unsolicited basis, Timothy Schneider, President of County, and verbally indicated that Company A had an interest in discussing a registered FINRA-broker dealerpossible strategic transaction with County. During that provides investment banking advisory services,initial conversation, Company A’s executive indicated that a possible value of which Hillworth’s principals are registered representatives,County’s common stock would be at least $31.00 per share. Shortly following the discussion, Mr. Schneider informed County’s board of directors and through which broker-dealer and investment banking services are provided. Hillworth and MagstarCounty’s advisors about the indication of interest from Company A. At two board meetings held in December, Stephens provided the board with information about Company A’s financial position, the factors and analysis regarding County’s possible value as an overviewindependent entity, and various valuation metrics regarding recent merger transactions. In addition, at these meetings County’s legal counsel, Barack Ferrazzano Kirschbaum & Nagelberg LLP (“Barack Ferrazzano”), advised the board regarding its fiduciary duties in connection with the board’s evaluation of the market and information on possible transaction parties. Commerce management worked with Hillworth to prepare a company profile and a list of the most likely transaction parties. Over the next several months, Commerce management and/or Hillworth met with five financial institutions that had been identified, each of which executed confidentiality agreements and were provided access to confidential information concerning Commerce.
Late in 2019 or early 2020, Hillworth informed the identified financial institutions that Commerce was seeking initial indications of interest in a transaction by January 13, 2020. In response, three written and one verbal interest indications were received, including an initial offer from Nicolet of a stock for stock merger valuing Commerce at approximately $85 per share.
On January 15, 2020, the CommerceCounty’s strategic alternatives. County’s board of directors along with representativesdiscussed different valuations and analyses of HillworthCounty as an independent entity, County’s efforts to increase its valuation and outside counsel, discussed the indicationsstock price organically through its operations, and Company A’s financial position and culture. County’s board came to a consensus at these meetings to continue to explore Company A’s indication of interest received and evaluated them based on previously outlinedthe other options available to County, including acquiring other smaller bank holding companies, acquiring a larger bank holding company in a “merger of equals”, or remaining independent. County’s board determined that a valuation of County’s stock in a potential change in control transaction of $31.00 per share was inadequate. In addition, at the December 2020 meetings, County’s board of directors formed a strategic objectivescommittee to review and assess potential strategic transactions.
Representatives of Company A and Mr. Schneider continued discussions in January 2021 regarding Company A’s interest in acquiring County. As a result of these discussions, County’s board of directors decided to interview several financial advisors and formally engage an advisor to provide further advice to County’s board of directors regarding County’s value as an independent entity and the current market conditions. Following deliberations, the board directed Hillworth to solicit bestmerger and final bids from Nicolet and one other bidder. Joseph Fazio, the Commerce CEO,
 
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acquisition market generally. In February 2021, three financial advisors made presentations to County’s strategic committee, and the strategic committee recommended to the full County board, which County’s board accepted, that Stephens be formally retained as County’s financial advisor in connection with determining County’s value as an independent entity, to assist management in responding to Company A’s communications and otherwise assist with evaluating any possible strategic transaction. County’s board of directors also discussed the value of County on a standalone basis and the range of potential purchase prices that would need to be offered for County to agree to a change in control transaction.
Representatives of Stephens subsequently contacted Company A to discuss Company A’s valuation of County’s stock, and Company A and County entered into a mutual confidentiality agreement in connection with the two parties sharing confidential information. Following additional preliminary due diligence, Company A verbally indicated to Stephens that, pending further due diligence and negotiation, it would consider increasing its implied valuation of County to $32.50 per share. The representative of Company A indicated that it was not willing to increase its proposed valuation above that amount. After discussion between management of County and Stephens, and upon the direction of County’s board of directors, representatives of Stephens relayed to Company A that such valuation of County was still inadequate and that further discussions at that valuation were not warranted.
On March 2, 2021, Company A delivered an unsolicited written non-binding indication of interest to County to acquire County at a purchase price of $32.50 per share of County stock, with consideration in form of 25% cash and 75% Company A’s stock. County’s board of directors met on March 4, 2021, along with representatives of Stephens and Barack Ferrazzano, and reviewed the written indication of interest from Company A. County’s board of directors determined that the offer was inadequate based on County’s current trading price, Company A’s current trading price, and management’s projections of County’s financial position over the next year, and authorized management to reject the indication of interest. Management responded to the written indication of interest declining the proposal.
Company A’s management continued to contact County’s management reiterating their interest in acquiring County, and in mid-March 2021, both parties, along with their respective financial advisors, met to discuss Company A’s financial modeling of a transaction between Company A and County and estimates incorporated into the financial modeling for synergies, cost savings and loan credit marks. After this meeting, on March 21, 2021, Company A delivered a revised written non-binding indication of interest to County, reflecting a range of implied purchase prices between $35.00 and $40.00 per share of County stock, depending on the percentage of the merger consideration that would consist of stock and cash, with a price of $35.00 in the form of 20% cash and 80% Company A’s stock and a price of $40.00 in the form of 100% Company A’s stock. The dollar value was based on a fixed exchange ratio based on Company A’s recent closing stock price.
At a board meeting held on March 25, 2021, with representatives of Stephens and Barack Ferrazzano present, County’s board reviewed with Stephens and Barack Ferrazzano the revised written indication of interest and considered the material drop in Company A’s stock price from the price provided in the indication of interest and its impact on the merger consideration, the liquidity of Company A’s stock, and potential regulatory hurdles in connection with a transaction with Company A that could result in a delay in closing the transaction and additional expenses to resolve such hurdles. County’s advisors also discussed with the board County’s other strategic alternatives, including remaining independent, conducting a tender offer of County’s shares, and acquiring smaller financial institutions, although the board discussed the difficulties in identifying potential counterparties for an acquisition.
During this time period, Mr. Schneider had additional discussions with the financial institution he met with previously regarding exploring a possible merger of equals transaction. Representatives from the other organization indicated that the company was not in a position to pursue any further exploration of a transaction with County at that time.
Because of the potential regulatory impediments to a transaction with Company A and to provide a market check of Company A’s purchase price, County’s board directed Stephens to contact representatives of Nicolet to determine if Nicolet had interest in a potential strategic transaction with County. County’s board chose Nicolet as a potential transaction partner to provide a market check based on the board’s and management’s familiarity with Nicolet because the two companies operate in some of the same markets,

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share a similar culture and have loan participation transactions with each other so they are familiar with each other’s loan processes. County’s board also considered the liquidity of Nicolet’s stock, Nicolet’s history of successful acquisitions, and that a potential transaction with Nicolet would not present the same potential regulatory impediments that management believed existed with a transaction with Company A. Stephens had also previously provided County’s board with its analysis of Nicolet’s ability to pay in an acquisition of County, so with the advice of Stephens, County’s board believed that Nicolet had the ability to provide a competitive offer to acquire County.
Representatives of Stephens contacted management of Nicolet regarding discussing a potential strategic transaction with County, and Nicolet and County entered into a nondisclosure agreement on March 26, 2021. County subsequently provided Nicolet with certain high-level confidential information regarding County for its initial due diligence review and as a basis for providing an indication of interest in pursuing a transaction with County.
On April 6, 2021, Nicolet delivered a written nonbinding indication of interest to enter into a strategic transaction with County. Subject to due diligence and further negotiation, Nicolet’s indication provided for delivering between 0.445 shares and 0.475 shares of Nicolet common stock for each share of County common stock. This represented an implied valuation between $37.50 and $40.00 per share of County stock based on Nicolet’s 20-day volume weighted average share price as of April 5, 2021 of $84.23. In addition, the indication proposed merger consideration to be delivered in the form of 20% cash and 80% Nicolet stock. In the indication and in subsequent discussions between Nicolet’s management and County’s management, Nicolet discussed its interest in further developing and increasing Nicolet’s agricultural loan portfolio and that County’s expertise and concentration in agricultural loans would help Nicolet develop its agricultural lending platform.
On April 8, 2021, County’s board of directors held a meeting to discuss Nicolet’s indication of interest. Based on the similar ranges in purchase prices between the letters provided by Company A and Nicolet, County’s board of directors directed Stephens to provide additional due diligence information to Company A and Nicolet and request that both Company A and Nicolet provide their best and final indications.
On April 12, 2021, Nicolet announced that it had entered into an agreement and plan of merger to acquire Mackinac.
On April 12, 2021, Nicolet’s board of directors held a meeting at which a proposed transaction with County was discussed, including the nonbinding indication of interest that management had submitted to County on April 6, 2021 and possible next steps.
On April 20, 2021, Nicolet’s board of directors held a meeting at which the proposed transaction with County was further reviewed and discussed, including the results of management’s diligence to date and moving forward with an updated non-binding indication of interest.
On April 21, 2021, Company A submitted a further revised indication of interest reflecting a range of purchase prices between $32.96 and $37.09 per share of County stock, depending on the percentage of the merger consideration that would consist of stock and cash, with a purchase price of $32.96 in the form of 21% cash and 79% Company A’s stock and a purchase price of $37.09 in the form of 100% Company A’s stock. This indication of interest from Company A reflected no changes to the prior proposed fixed exchange ratios for Company A’s shares, but the lower range of purchase prices was the result of the decrease in Company A’s recent closing stock price compared to the stock price used in the prior indication of interest.
On April 23, 2021, Nicolet submitted a revised indication of interest to enter into a transaction with County with a proposal of 0.48 shares of Nicolet common stock for each share of County common stock, representing a value of $38.40 per share of County stock based on Nicolet’s 20-day volume weighted average share price as of April 22, 20221 of $80.00. In addition, the indication provided for the merger consideration to be delivered in the form of 20% cash and 80% Nicolet stock. Nicolet’s indication also provided that County would be entitled to appoint a representative to serve on the board of Nicolet and Nicolet National Bank. Nicolet’s indication also stated that it had held preliminary high-level discussions with its regulators regarding engaging in another transaction after the Mackinac transaction and that the regulators did not give an indication that the Mackinac transaction would cause a delay in the closing of a transaction with an entity the size and complexity of County.

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On April 26, 2021, County’s board of directors held a meeting, also attended by representatives of Stephens and Barack Ferrazzano, to review and discuss the updated proposals from both Company A and Nicolet. County’s board of directors reviewed an analysis prepared by Stephens regarding the potential exchange ratios and cash consideration provided by each of Company A and Nicolet. County’s board further reviewed and discussed certain preliminary financial analyses prepared by Stephens of a potential business combination of County and Company A and a potential business combination of County and Nicolet. The directors discussed and considered at length the value that each offer provided to County’s shareholders, the liquidity of Company A’s stock and Nicolet’s stock, the offered mix of cash and stock consideration, the current trading prices of Company A and Nicolet, the potential regulatory hurdles for a transaction with Company A and the potential time and expense of resolving those issues, and the impact of a potential transaction with Company A or Nicolet on County’s employees and customers. After a lengthy discussion, County’s board of directors authorized management to enter into the letter of intent with Nicolet and proceed with further due diligence and the negotiation of a definitive merger agreement and to reject the indication of interest from Company A. On April 27, 2021, County delivered the executed letter of intent to Nicolet, which contained exclusivity provisions prohibiting County from discussing a potential transaction with any other party.
Over the next several weeks, County provided due diligence information about its financial condition, operations, loans, investments, employee benefits, and other matters to Nicolet by providing such information in an electronic data room. Nicolet conducted an extensive due diligence review of County, with the information provided in the electronic data room supplemented by meetings between representatives of Nicolet and County. In addition, County and its advisors conducted reverse due diligence regarding Nicolet through review of Nicolet’s publicly filed information, employee benefits information, other documents and information provided by Nicolet, and a call with Nicolet’s management in early June 2021.
On June 1, 2021, Bryan Cave Leighton Paisner LLP provided Barack Ferrazzano with a first draft of the merger agreement, which draft contemplated mixed merger consideration of a fixed exchange ratio of 0.48 shares of Nicolet stock and a cash component to be calculated based Nicolet’s volume weighted average closing price over twenty trading days preceding the signing date of the merger agreement and election procedures for electing all cash consideration, all stock consideration or mixed consideration, subject to proration. Over the course of the following weeks, Nicolet, County and their respective legal advisors exchanged drafts of the merger agreement, disclosure schedules thereto, and voting and support agreement to be entered into between Nicolet and each of County’s directors. The parties negotiated the terms of the transaction, including: the representations and warranties to be given by the parties; the operational covenants regarding County’s actions between the signing of the merger agreement and the closing of the transaction; the level of severance and other rights of County’s employees in connection with the proposed transaction; closing conditions; calculation of minimum tangible equity capital to be delivered at closing; the treatment of County’s vested and unvested stock options, restricted stock awards and restricted stock units; and the imposition of a double-trigger termination right if Nicolet’s stock price prior to closing decreases significantly compared to a market index.
On June 15, 2021, County’s board of directors, together with representatives of Barack Ferrazzano and Stephens, met to discuss the proposed merger agreement and the ancillary agreements. County’s management reported to the board of directors the results of its due diligence investigation of Nicolet. Representatives of Barack Ferrazzano reviewed with County’s board of directors the terms and conditions of the merger agreement and ancillary agreements, copies of which had been delivered to the board members prior to the meeting. Barack Ferrazzano was asked and answered questions from County’s board. County’s directors also discussed the improvement of County’s credit quality and expectations that County would have a credit to its provision for loan losses in the second quarter of 2021. As a result of this expected improvement in County’s financial condition, County’s board of directors directed management to relay this information to Nicolet’s management and to ask for an increase in the merger consideration as a result of this improvement. Mr. Schneider subsequently held discussions with Nicolet’s management, and Nicolet expressed that County’s credit quality had already been taken into account in determining the total merger consideration and that Nicolet was unwilling to increase the amount of the merger consideration.
On June 15, 2021, Nicolet held a special meeting of its board of directors to discuss the definitive merger agreement. At this meeting, KBW reviewed the financial aspects of the proposed merger with Nicolet’s board

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met atof directors and informed Nicolet’s offices to discuss possible transaction terms with members of Nicolet’s senior management team, and discussions continued for the next few days, during which a tentative agreement was struck for Nicolet to acquire Commerce in an all-stock transaction based on an exchange ratio of 1.217 shares of Nicolet stock for each Commerce share outstanding, valuing Commerce at approximately $87 per share based on a price per Nicolet share of $71.50. These terms were incorporated in an updated letter of intent, which was approved by the Commerce board of directors at a telephonic meetingthat, assuming no material changes to the morning of January 24, 2020, and executed by both Commerce and Nicolet laterproposed merger or material developments that day.
Immediately following execution of the letter of intent, the drafting and negotiation of the Merger Agreement and related documents began and Nicolet conducted a detailed due diligence review. Based oncould affect its diligence review, particularly a review of the Commerce loan portfolio, Nicolet proposed a reduction in the exchange ratio to 1.15 shares of Nicolet stock for each share of Commerce. Following a review of supporting information provided by Nicolet and analysis by Commerce management, the Commerce board of directors participatedanalyses, KBW believed it would be in a telephonic meeting on February 12position to discuss Nicolet’s revised offer. Hillworth representatives participated on the call and expressed therender an opinion that even after the reduction in the exchange ratio, the Nicolet offer was superior to other offers received and compared favorably to other transactions. Following discussions, the board authorized management to continue negotiations on a definitive agreement.
Commerce scheduled a board of directors meeting to approve the Merger Agreement with Nicolet for the evening of Sunday, February 16,connection with the objective of having the agreement signed and announced on Monday February 17, a bank holiday. In advance of the meeting, each director was provided with the latest draftsigning of the merger agreement together with a memorandum from Commerce counsel summarizingas to the Merger Agreement provisions.
On February 14, 2020, the board of Nicolet met to discuss the terms of the merger. Management provided an in-depth analysis of the bid from a financial perspective. The board also reviewed the final draft of the definitive merger agreement and summarized terms and conditions. After a thorough discussion, the board of Nicolet voted unanimously to proceed with the transaction.
On February 16, 2020, the board of Commerce met again with its advisors from Hillworth, Magstar and Reinhart Boerner Van Deuren s.c., its legal counsel. Counsel reviewed the final draft of the definitive merger agreement and summarized the terms and conditions. On February 16, 2020, Magstar issued its fairness, opinion, from a financial point of view after considering a finalized draftand as of the definitivedate of the opinion, to Nicolet of the aggregate merger consideration in the merger. The Nicolet board of directors then considered the information presented to them at the meeting, together with the information presented at prior meetings of the board, and after deliberations, the board voted unanimously (i) that the merger with County is fair and in the best interests of Nicolet and its shareholders, (ii) to approve and adopt the merger agreement, (iii) to recommend that Nicolet’s shareholders approve the merger and (iv) to authorize the executive officers of Nicolet to sign and deliver the merger agreement. On June 21, 2021, KBW delivered its written opinion, dated June 21, 2021.
On June 21, 2021, County’s board of directors met again, together with representatives of Barack Ferrazzano and Stephens. Representatives of Barack Ferrazzano discussed the changes to the merger agreement since the last meeting. In addition, Stephens presented its financial analysis and opinion to County’s board of directors to the effect that, as of June 21, 2021, and subject to the assumptions made, matters considered and qualifications and limitations on the review undertaken by Stephens in rendering its opinion as set forth therein, the per share merger consideration was fair, from a financial point of view, to the common shareholders of County. See “Opinion of County’s Financial Advisor.” Among other matters, County’s board of directors reviewed the form and value of the consideration to be received by County’s shareholders, the election for cash or Nicolet stock, the price and historical performance of Nicolet common stock and the revisedimplications of the merger consideration. After a thorough discussion,to County’s and Investors Community Bank’s employees, customers and communities. Barack Ferrazzano also discussed various legal issues with the board members, including the board of Commerce voteddirectors’ fiduciary duties. Following further discussion, during which the directors considered the matters reviewed and discussed at that meeting and all prior meetings of County’s board of directors, and the factors listed below at “— Reasons for the Merger — County,” County’s board of directors unanimously to proceed with the transaction.
Nicolet and Commerce executed the merger agreement on February 17, 2020 and issued a joint press release announcing the execution ofdetermined that the merger agreement and the termstransactions contemplated by the merger agreement were in the best interests of County and its shareholders, approved the merger agreement, the merger and the other transactions contemplated by the merger agreement, and recommended that County’s shareholders approve the merger agreement.
On June 22, 2021, County and Nicolet executed and delivered the merger agreement and related transaction documents, including the voting and support agreements executed by County’s directors. Prior to the opening of the market on June 22, 2021, County and Nicolet publicly announced their entry into the merger on the same day.agreement by issuing a joint press release and each filing a Form 8-K.
Reasons for the Merger
General
The financial and other terms of the merger agreement resulted from arm’s-length negotiations between Nicolet’sNicolet and Commerce’sCounty and their respective representatives. The following discussion of the information and factors considered by the Nicolet and CommerceCounty boards of directors is not intended to be exhaustive, but includes all of the material factors the respective boards considered in determining whether to enter into the merger agreement. In reaching their determinations to approve the merger and to recommend that their respective shareholders approve the merger, neither the Nicolet board of directors nor the CommerceCounty board of directors assigned any relative or specific weight to the following factors, and individual directors may have assigned different weight to different factors.
Nicolet
Nicolet’s board of directors and senior management regularly evaluate and assess Nicolet’s strategy and opportunities to achieve profitable growth through various strategic initiatives and transactions, giving consideration to the context of developments in the industry, conditions in the geographic areas that Nicolet serves, competitive considerations and other factors. The board of directors of Nicolet has placed emphasis on achieving meaningful and profitable growth, either through organic or acquisitive means, especially following successful acquisitions of community banks and branches in the eight years prior. As

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such, the board has instructed senior management to continue to explore merger and acquisition opportunities that could expand and enhance the current Nicolet franchise and improve long term value for shareholders.
In deciding to pursue a merger with Commerce,County, Nicolet’s management and board of directors considered, among other things, the following:
•
the effectiveness of the merger in allowing Nicolet to expand its competitive position inprominently into the Milwaukee-Waukesha-West Allis Metropolitan Statistical Area and Sheboygan Metropolitan Statistical Area markets;
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agriculture lending markets throughout the fact that the mergerentire state of Wisconsin, which will allow Nicolet to make a marked entry intofor further diversification of the cities of West Bend, Cedarburg, Sheboygancombined loan portfolio across asset classes and Elm Grove, as compared to establishing a de novo branch office;markets;
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•
Nicolet’s belief that the expansion into the Milwaukee-Waukesha-West Allis Metropolitan Statistical AreaManitowoc and Sheboygan Metropolitan Statistical AreaStevens Point, Wisconsin areas will provide Nicolet entry into aadditional commercial and industrial hubhubs in the Great Lakes region;
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•
Commerce’sCounty’s strong reputation and successful track record of organic commercial loan generation abilities;
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the complementary fit of the businesses of Nicolet and County, which Nicolet’s belief thatmanagement believes will enable the proposed merger will be “geographically accretive”combined company to deliver improved services to customers to achieve stronger financial performance and enhance shareholder value;
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the surviving institution by moving into a higher growthability of Nicolet to cross sell its larger product base across County’s customer base and higher medium household income market;market primarily through its larger commercial lending platform and its wealth management and trust department;
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the fact that certain members of Nicolet’s and Commerce’sCounty’s respective boards of directors have long standing professional relationships and Nicolet’s belief that Commerce’sCounty’s business values, culturesculture and philosophies seem to align with those of Nicolet;
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•
Nicolet’s expectation that certain members of Commerce’sCounty’s executive management team and senior lenders will remain with Nicolet and will lead new markets, with the markets in West Bend, Cedarburg, Sheboygan and Elm Grove;addition of certain County leadership;
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•
Nicolet’s expectation that Nicolet will retain its strong capital position and asset quality upon completion of the transaction; and
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•
Nicolet’s expectations that the merger will offer cost savings opportunities, opportunities forand revenue growth through the ability to offer new products and services to Commerce customers,opportunities, and, as a result, be accretive to earnings per share within the first full year.
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The Nicolet board of directors approved the merger agreement after Nicolet’s senior management discussed with the Nicolet board of directors a number of factors, including those described above and the business, loan and deposit structure, assets, liabilities, results of operations, financial performance, geographic location and strategic direction of Commerce.County. The foregoing discussion of the information and factors considered by the Nicolet board of directors is not exhaustive, but includes the material factors considered by the Nicolet board of directors. In view of the wide variety of factors considered by the Nicolet board of directors in connection with its evaluation of the merger, the Nicolet board of directors did not consider it practicable to, and did not attempt to, quantify or otherwise assign relative weights to the specific factors it considered in reaching its determination. The Nicolet board of directors viewed its position as being based on all of the information and the factors presented to and considered by it. In addition, individual directors may have given different weights to different information and factors. The explanation of Nicolet’s reasons for the merger includes statements that are forward-looking in nature and, therefore, should be read in light of the factors discussed above under “A Warning About Forward-Looking Statements.” Following
County
After careful consideration, the effectsCounty board of directors, at a special meeting held on June 21, 2021, unanimously (i) determined that the merger agreement and the transactions contemplated thereby, including the merger, are in the best interests of County and its shareholders, (ii) declared the merger agreement advisable and (iii) approved the execution, delivery and performance of the COVID-19 pandemic, if all other closing conditions are met but Nicolet’s Common Stock Price is not above $62.00 atmerger agreement and the timeconsummation of closing, Nicolet does not intend to adjust the exchange ratio, does not intend to add cash consideration, and does intend to exercise its right to terminatetransactions contemplated thereby, including the merger. Accordingly, the County board of directors unanimously recommends that County shareholders vote FOR the approval of the merger agreement.agreement and the transactions contemplated thereby and FOR the County adjournment proposal.

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In decidingreaching its decision to pursueapprove the merger transaction with Nicolet, Commerce’sagreement and the transactions contemplated thereby, including the merger, and to recommend that County’s shareholders adopt the merger agreement, the County board of directors consulted with itsCounty management, as well as its financial and legal counsel and financial advisor,advisors, and considered numerousa number of factors, including the following:
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each of County’s and Nicolet’s business, operations, financial condition, asset quality, earnings and prospects. In reviewing these factors, the comparisonCounty board of directors considered the following:
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its view that the merger is a strategically compelling transaction that will create a stronger company, elevate growth and provide meaningful long-term value for the shareholders of County;
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its view that the consideration offeredcombined company would be strategically positioned to capitalize on market opportunities and better serve its customers through the ability to make larger loans and provide a greater breadth of services;
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that the combined company would have the scale to better invest, compete and perform by Nicolet to the value of the consideration offered by other parties approached by Commerce;leveraging leading market positions and complementary products;
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the relationshipstronger liquidity and historical trading multiples of Nicolet common stock compared to the historical profile of County common stock;
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net interest margin compression and earnings headwinds facing County on a stand-alone basis;
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the desire to diversify County’s loan portfolio, which is concentrated in agricultural loans;
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the anticipated impact of the consideration to be paid intransaction on the merger to market prices andcombined company, including the book value andexpected impact on financial metrics (including earnings per share, return on average assets, return on average tangible common equity and cash efficiency ratio);
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the historical performance of CommerceCounty and Nicolet common stock and Nicolet’s return on equity; and
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its review and discussions with Nicolet’s management and its legal advisors concerning the due diligence review of Nicolet;
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Nicolet’s long termits familiarity of the current and prospective environment in the financial services industry, including economic conditions and the interest rate and regulatory environments, possible effects of scale, increased operating costs resulting from regulatory and compliance mandates, increasing competition from nationwide banks, non-bank financial and financial technology firms, and the Farm Credit System, and current financial market conditions and the likely effects of these factors on County’s and the combined company’s potential growth, strategy;development productivity and strategic options, and the likely effect of these factors on County both with and without the proposed transaction;
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its views with respect to other strategic alternatives potentially available to County, including continuing as a standalone company focusing exclusively on organic growth, making smaller acquisitions of other banks, transformative transactions (including large acquisitions or a merger of equals) and a transaction involving the sale of County;
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the paymentconsistency of the Merger Consideration primarilytransaction with County’s business strategies, including achieving strong earnings growth, reaching new markets, improving customer attraction and retention, developing technology capabilities and focusing on cost management;
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its conclusion that County and Nicolet are a complementary fit because of the nature of the markets served and products offered by County and Nicolet and the expectation that the transaction would provide economies of scale, enhanced ability to invest in technology and innovation, expanded product offerings, improved efficiencies and reduced costs and enhanced opportunities for growth;
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County’s and Nicolet’s shared belief in a purpose-driven and thoughtful approach to the formcombination and the resulting company, structured to maximize the potential for synergies and positive impact to local communities, to minimize the loss of registered, freely tradeable stockcustomers and employees, to further diversify the combined company’s operating risk profile compared to the risk profile of Nicolet, giving liquidity alongCounty on a stand-alone basis, and to expand upon the combined company’s agricultural lending;
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County’s and Nicolet’s shared cultures with an opportunity to defer taxesfocuses on gain;a founder-entrepreneurial mindset;
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Nicolet’s history of successful acquisitions and the belief that Commerce and Nicolet share a similar strategic vision and a similar community banking philosophy;expected timing for the closing of the merger;
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the complementary aspectsexpectation that the transaction will be generally tax-free for U.S. federal income tax purposes to County shareholders with respect to the receipt of Nicolet common stock in exchange for the Commerce and Nicolet businesses, including customer focus, geographic coverage, business orientation, and compatibility of the companies’ management and operating styles;County common stock;
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the respectiveanalyses and presentations by managementStephens and Commerce’sits oral opinion to the County board of directors, which was subsequently confirmed in writing, to the effect that, as of June 21, 2021, and based upon and subject to the factors and assumptions set forth in its opinion, the merger consideration in the proposed merger was fair, from a financial advisor concerningpoint of view, to the operations,holders of County’s common stock. See “— Opinion of County’s Financial Advisor” beginning on page 49;
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the financial condition and prospects of Commerce and the expected financial impactother terms of the merger agreement, which County reviewed with its outside financial and legal advisors, including:
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the amount of the merger consideration in comparison to another indication of interest received by County;
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the fact that the exchange ratio is fixed, which the County board of directors believed was consistent with market practice for transactions of this type and with the strategic purpose of the transaction;
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the fact that the merger consideration consists of approximately 20% of cash;
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the fact that County’s shareholders will have the opportunity to elect which type of merger consideration to receive, subject to the limitations described herein.
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the fact that County’s shareholders will have an opportunity to vote on the combined company;adoption of the merger agreement; and
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the right of County to terminate the merger agreement in certain circumstances, subject to the payment of a termination fee of $10 million if terminated under the circumstances more fully described under “The Merger Agreement — Termination of the Merger Agreement; Termination Fee” beginning on page 87;
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the potential expense-saving and revenue-enhancing opportunities in connection withfor the value of the merger the related potential impact on the combined company’s earnings and the fact that the Commerce shareholders willconsideration to be ablereceived by holders of shares of County common stock to participate as Nicolet shareholdersbe adversely affected by a decrease in the benefitstrading price of such savings opportunities and the future performance of the combined company generally;
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Nicolet’s history and reputation as an efficient and effective acquirer, and success in integrating acquired organizations into its own;
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Nicolet’s access to internal and external resources to complete the merger process on a timely basis;Nicolet common stock;
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the higher lending limitspotential risks associated with achieving anticipated efficiency improvements and greater breadthcost reductions and savings and successfully integrating County’s business, operations and workforce with those of products and services the merged banks will be able to offer to Commerce customers;Nicolet;
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the termsnature and amount of payments and other benefits to be received by County management in connection with the merger agreement,pursuant to existing County plans and the presentation by Commerce’s outside legal advisors regarding the merger and merger agreement;employment agreements;
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the financial structure, results of operations, and prospects of Commerce and Nicolet, the capital adequacypotential effect of the resulting holding companymerger on County’s overall business, including its relationships with customers, employees, suppliers and the outlook for the organizations in the rapidly changing financial services industry;regulators;
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the combined resourcespotential for losing key County employees during the pendency of the two holding companies are expected to improve the efficiencies associated with the development of new productsmerger and services to be offered by Nicolet and its subsidiary bank;thereafter;
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the size and capital structure of the resulting holding company followingsubstantial costs to be incurred in connection with the merger, which are expected to provide greater capacity to weather adverse market eventsincluding the costs of integrating the businesses of County and opportunitiesNicolet, transaction fees, expenses and flexibility in responding toother payments that will or may arise from the rapidly changing industry for financial service providers;merger;
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the enhanced abilityrisk that Nicolet could terminate the merger agreement if County is unable to deliver the specified minimum tangible common equity set forth therein;
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that County’s directors and executive officers may have interests in the merger that are different from or in addition to those of its shareholders generally, as more fully described under “— Interests of Certain Persons in the combined organization to take advantage of current and emerging opportunities for growth and profitability; andMerger,” beginning on page 70;
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the receiptpotential of negative reaction in the communities served by Commerce’s boardCounty, including with respect to loss of directors of the Magstar Capital, LLC opinion (discussed below) concerning the fairness, from a financial point of view, of the merger to holders of Commerce’s common stock.
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The board also considered certain potential risks associated with the merger, including the following:
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the significant time and costs to be undertaken by management in completing the merger and the effort that could cause in disrupting Commerce normal business activities;employment;
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the conditionsrisks related to closing set forth in the Mackinac merger agreement and the likelihood such conditions will be satisfied, including therisks relating to receipt of the necessary regulatory approvals from government agencies;
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operating restrictions on Commerce and Commerce State Bank imposed by the Merger Agreement between signing and closing; and
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Commerce’s obligation to pay a termination fee of $5 million to Nicolet in certain circumstances.
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While each member of Commerce’s board of directors evaluated each of the foregoing as well as other factors, the board of directors collectively did not assign any specific or relative weights to the factors considered and did not make any determination with respect to any individual factor. The Commerce board of directors collectively made its determination with respect to the merger based on its unanimous conclusion thatfor the merger in light of the factors which each of them individually considered appropriate, ispending Mackinac merger;
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the risk that the merger may not be completed despite the combined efforts of County and Nicolet or that completion may be unduly delayed, even if the required regulatory approvals are obtained and the requisite approvals are obtained from County and Nicolet shareholders; and
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the other risks described under the sections entitled “Risk Factors” and “A Warning About Forward-Looking Statements” beginning on pages 22 and 29, respectively.
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This discussion of the information and factors considered by County’s board of directors in the best interest of Commerce’s shareholders. All members ofreaching its conclusions and recommendation includes principal factors considered by the board of directors, votedbut is not intended to approvebe exhaustive and may not include all of the factors considered by the County board of directors. In view of the wide variety of factors considered in connection with its evaluation of the merger and the other transactions contemplated by the merger agreement, and the merger.complexity of these matters, the County board of directors did not find it useful and did not attempt to quantify, rank or assign any relative or specific weights to the various factors that it considered in reaching its determination to approve the merger and the other transactions contemplated by the merger agreement, and to make its recommendation to County shareholders. Rather, the County board of directors viewed its decisions as being based on the totality of the information presented to it and the factors it considered. In addition, individual members of the County board of directors may have assigned different weights to different factors.
Certain of County’s directors and executive officers have other interests in the merger that are different from, or in addition to, those of County’s shareholders generally, as discussed under the caption “The Merger — Interests of Certain Persons in the Merger,” below. The County board of directors was aware of and considered these potential interests, among other matters, in evaluating the merger and in making its recommendation to County shareholders.
Opinion of Commerce’sCounty’s Financial Advisor
The fairness opinionCounty retained Stephens to act as financial advisor to County’s board of directors in connection with County’s consideration of a possible business combination with Nicolet. County selected Stephens to act as its financial advisor because Stephens is a nationally recognized investment banking firm whose principal business specialty is financial institutions. In the ordinary course of its investment banking business, Stephens is regularly engaged in the valuation of financial institutions and a summarytheir securities in connection with mergers and acquisitions and other corporate transactions.
Stephens acted as financial advisor to County’s board of directors in connection with the proposed merger and participated in certain of the underlying financial analysis of Commerce’s financial advisor, Magstar Capital, LLC, are described below.
The description contains projections, estimates and other forward-looking statements aboutnegotiations leading to the future earnings or other measuresexecution of the future performancemerger agreement. At the June 21, 2021 meeting at which County’s board of Commerce. directors considered the merger and the merger agreement, Stephens delivered to the board of directors its oral opinion, which was subsequently confirmed in writing on June 21, 2021, to the effect that, as of such date, the merger consideration was fair to the holders of County’s common stock from a financial point of view. The projections are based on numerous variables and assumptions, which are inherently uncertain, including factors related to general economic and competitive conditions. Accordingly, actual results could vary significantly from those set forth in the projections. These statements should not be relied on as having been made or adopted by Commerce or Nicolet. The copyfull text of the full fairnessStephens’s opinion is attached as Appendix B to this joint proxy statement-prospectus.
Magstar acted as Commerce’s financial advisor in connection with the proposed merger. Magstar is a nationally recognized investment banking firm with substantial experience in transactions similar to the merger and is familiar with Commerce and its operations. As part of its investment banking business, Magstar is continually engaged in the valuation of businesses and their securities in connection with, among other things, mergers and acquisitions.
Magstar reviewed the financial aspects of the proposed merger with Commerce’s board of directors and, on February 16, 2020, delivered a written The opinion to Commerce’s board of directors that, subject to the review, assumptions and limitations set forth in the opinion, the merger consideration to be received by the shareholders of Commerce in connection with the merger is fair to the shareholders of Commerce. In requesting Magstar’s advice and opinion, no limitations were imposed by Commerce upon Magstar with respect to the investigations made or procedures followed by Magstar in rendering its opinion.
The full text of Magstar’s written opinion is attached as Appendix B and is incorporated herein by reference. You are urged to read the opinion in its entirety for a description ofoutlines the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by Magstar.Stephens in rendering its opinion. The summarydescription of Magstar’sthe opinion included hereinset forth below is qualified in its entirety by reference to the full text of suchthe opinion.
Magstar’s Holders of County common stock are urged to read the entire opinion was directed to Commerce’s board of directors (solely in its capacity as such) and addresses only the fairness of the merger consideration to be paid to Commerce shareholders pursuant to the merger agreementcarefully in connection with their consideration of the proposed merger. Magstar did not opine on any individual stock, cash, or other components of consideration payable in
In connection with the merger. Magstar’sdeveloping its opinion did not constitute a recommendation to Commerce as to whether or not Commerce should enter into the merger agreement or to any shareholders of Commerce as to how such shareholders should vote at any special meeting of shareholders called to consider and vote upon the merger or any related matter. Magstar’s opinion does not address the underlying business decision to proceed with the merger or the fairness of the amount or nature of the compensation, if any, to be received by any of the officers, directors or employees of Commerce relative to the amount of consideration to be paid with respect to the merger. Magstar’s opinion should not be construed as implying that the value of the merger consideration is necessarily the highest or best price that could be obtained by Commerce in a sale, merger, or combination transaction with a third party. Other than as specifically set forth in the opinion, Magstar is not expressing any opinion with respect to the terms and provisions of the merger agreement or the enforceability of any such terms or provisions.
During the course of Magstar’s engagement and for the purposes of the opinion set forth herein, Magstar:Stephens:
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reviewed a draft of the Agreement dated February 13, 2020, as provided to Magstar by Commerce;
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reviewed unauditedcertain publicly available financial statements for Commerce, Commerce State Bank, Nicolet and Nicolet National Bank, as ofreports regarding County and for the year ending December 31, 2019;Nicolet;
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reviewed certain historical annualaudited financial statements and management reports of Commerce, Commerce State Bank, Nicoletregarding County and Nicolet National Bank, including for the year ending December 31, 2019;
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reviewed certain historical publicly available business and financial information concerning each of Commerce, Commerce State Bank, Nicolet and Nicolet National Bank;Nicolet;
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reviewed certain internal financial statements and other financial and operating data of Commerce, Commerce State Bank, Nicoletconcerning County and Nicolet National Bank including, without limitation, internal financial analyses and forecasts prepared by management of Commerce, Commerce State Bank, and held discussions with senior management of Commerce, Commerce State Bank, NicoletCounty and Nicolet, National Bank regarding recent developments and regulatory matters;respectively;
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reviewed, on a pro forma basis, in reliance upon consensus research estimates and upon financial projections preparedand other information and assumptions concerning Nicolet provided by certain membersthe management team of senior management of Commerce, Commerce State Bank;
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discussed with certain members of senior management of Commerce, Commerce State Bank, Nicolet, and Nicolet National Bank, the business, financial condition, results of operations and future prospects of Commerce, Commerce State Bank, Nicolet and Nicolet National Bank; the history and past and current operations of Commerce, Commerce State Bank, Nicolet and Nicolet National Bank; Commerce’s, Commerce State Bank’s, Nicolet’s and Nicolet National Bank’s historical financial performance; and their assessment of the rationale for the merger;
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reviewed and analyzed materials detailing the merger prepared by Commerce, Commerce State Bank, Nicolet and Nicolet National Bank including the estimated amount and timing of the cost savings and related expenses, certain purchase accounting adjustments and synergies expected to result from the merger (the “Synergies”);
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assessed general economic, market and financial conditions;
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analyzed the pro forma financial impacteffect of the merger on the combined company’sbalance sheet, capitalization ratios, earnings tangibleand book value financial ratios and other such metrics Magstar deemed relevant, giving effect to the merger based on assumptions relating to the Synergies;
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reviewed certain S&P CapIQ consensus income and balance sheet estimates for Nicolet for 2020 and 2021;
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reviewed historical market prices and trading volumes of Nicolet’s Common Stock;
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reviewed the certain publicly available financial information and stock market data related to selected public financial institutions/commercial banks that Magstar deemed relevant to its analysis;
reviewed the terms of recent merger, acquisition and control investment transactions, to the extent publicly available, involving financial institutions and financial institution holding companies that Magstar considered relevant;
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taken into consideration its experience in other similar transactions as well as its knowledge of the banking and financial services industry; and
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performed such other analyses and considered such other factors as Magstar deemed appropriate.
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Magstar also conducted meetings and had discussions with members of senior management of Commerce, Commerce State Bank, Nicolet and Nicolet National Bank for purposes of reviewing the business, financial condition, results of operations and future prospects of Commerce, Commerce State Bank, Nicolet and Nicolet National Bank; the history and past and current operations of Commerce, Commerce State Bank, Nicolet and Nicolet National Bank; and Commerce’s, Commerce State Bank’s, Nicolet’s and Nicolet National Bank’s historical financial performance. Magstar discussed with management of Commerce, Commerce State Bank, Nicolet and Nicolet National Bank their assessment of the rationale for the merger. Magstar also performed such other analyses and considered such other factors as Magstar deemed appropriate, and took into account its experience in other similar transaction and securities valuations, as well as its knowledge of the banking and financial services industry.
Magstar assumed, without investigation, that there have been, and from the date of its opinion through the effective date of the merger will be, no material changesboth in the financial conditionaggregate and, resultswhere applicable, on a per share basis of operations of Commerce, Commerce State Bank, Nicolet, or Nicolet National Bank since the date of the latest financial information described above. Magstar relied, without independent verification or investigation, on the assessments of the management of Commerce, Commerce State Bank, Nicolet, or Nicolet NationalNicolet;
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reviewed the reported prices and trading activity for the common stock of County and Nicolet;
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compared the financial performance of County and Nicolet with that of certain other publicly-traded companies and their securities that Stephens deemed relevant to its analysis of the merger;
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reviewed the financial terms, to the extent publicly available, of certain merger or acquisition transactions that Stephens deemed relevant to its analysis of the merger;
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reviewed the then most recent draft of the merger agreement and related documents provided to Stephens by County;
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discussed with management of County and Nicolet the operations of and future business prospects for County and Nicolet and the anticipated financial consequences of the merger to County and Nicolet;
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assisted in deliberations regarding the material terms of the merger and negotiations with Nicolet; and
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performed such other analyses and provided such other services as Stephens deemed appropriate.
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Stephens has relied on the accuracy and completeness of the information and financial data provided by County and Nicolet and of the other information reviewed by Stephens in connection with the preparation of Stephens’ opinion, and its opinion is based upon such information. Stephens has not assumed any responsibility for independent verification of the accuracy or completeness of any of such information or financial data. The managements of County and Nicolet have assured Stephens that they are not aware of any relevant information that has been omitted or remains undisclosed to Stephens. Stephens has not assumed any responsibility for making or undertaking an independent evaluation or appraisal of any of the assets or liabilities of County or of Nicolet, and Stephens has not been furnished with any such evaluations or appraisals; nor has Stephens evaluated the solvency or fair value of County or of Nicolet under any laws relating to bankruptcy, insolvency or similar matters. Stephens has not assumed any obligation to conduct any physical inspection of the properties or facilities of County or Nicolet. With respect to the financial forecasts prepared by County, including the forecasts of potential cost savings and potential synergies, Stephens has assumed that such financial forecasts have been reasonably prepared and reflect the best currently available estimates and judgments of the management of County as to their existingthe future financial performance of County and future relationships with key employees and partners, clients, products and services, and assumed, with Commerce’s consent, that therethe financial results reflected by such projections will be norealized as predicted. Stephens has not received or reviewed any individual credit files nor has Stephens made an independent evaluation of the adequacy of the allowance for loan losses of County and Nicolet. Stephens has not made an independent analysis of the effects of the COVID-19 pandemic or related market developments with respect toor disruptions, or of any such matters that would affect Magstar’s analysesother disaster or opinion. Magstar furtheradversity, on the business or prospects of County or Nicolet. Stephens has also assumed without independent verification, that the representations and warranties contained in the merger agreement and all related documents are true, correct and complete in all material respects.
Stephens does not provide legal, accounting, regulatory, or tax advice or expertise, and Stephens has relied solely, and without independent verification, on the assessments of County and its other advisors with respect to such matters. Stephens has assumed, with County’s consent, that the merger will not result in any materially adverse legal, regulatory, accounting or tax consequences for the shareholders of County (solely in their capacity as such, the “Shareholders”).
Stephens’ opinion is necessarily based upon market, economic and other conditions as they exist and can be evaluated on June 21, 2021, and on the information made available to Stephens as of June 21, 2021. It should be understood that subsequent developments may affect Stephens’ opinion and that Stephens does not have any obligation to update, revise or reaffirm its opinion. Stephens has assumed that the merger will be consummated on the terms of the latest draft of the merger agreement provided to Stephens prior to the delivery of its opinion, without material waiver or modification. Stephens has assumed that in the course of obtaining the necessary regulatory, lending or other consents or approvals (contractual or otherwise) for the merger, no restrictions, including any divestiture requirements or amendments or modifications, will be imposed that would have a material adverse effect on the contemplated benefits of the merger to the Shareholders. Stephens is not expressing any opinion herein as to the price at which the common stock or any other securities of County or Nicolet will trade following the announcement of the merger.

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The following is a summary of the material financial analyses performed and material factors considered by Stephens in connection with its opinion. The full text of the written opinion letter is attached as Appendix B to this document. The summary of Stephens’ opinion set forth in this document is qualified in its entirety by reference to the full text of such written opinion letter. Investors are urged to read this opinion letter in its entirety. Stephens performed certain procedures, including each of the financial analyses described below, and reviewed with County’s executive management and board of directors the assumptions upon which the analyses were based, as well as other factors. Although this summary does not purport to describe all of the analyses performed or factors considered by Stephens within this regard, it does set forth those considered by Stephens to be material in arriving at its opinion. The order of the summaries of analyses described does not represent the relative importance or weight given to those analyses by Stephens. It should be noted that in arriving at its opinion, Stephens did not attribute any particular weight to any analysis or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Accordingly, Stephens believes that its analysis must be considered as a whole and that considering any portion of such analyses and factors, without considering all analyses and factors as a whole, could create a misleading or incomplete view of the process underlying its opinion.
Summary of Proposed Transaction:    Pursuant to the merger agreement and for purposes of its opinion, Stephens assumed the consideration to be exchanged by Nicolet for the outstanding County common stock and common stock awards to have an aggregate value of $232.1 million, subject to potential adjustments as more fully defined in the merger agreement. At the time of Stephens’ opinion, the merger agreement provided that Nicolet will issue 0.48 shares of common stock or $37.18 in cash or a combination thereof, for each share of County common stock; provided, however, that the amount of cash issued by Nicolet may not be less than twenty-percent (20%) of the aggregate value of total consideration to be given by Nicolet in the merger. Based upon the unaudited financial information of County as of and for the twelve months ended March 31, 2021, Stephens calculated the following transaction multiples:
​Transaction Value / Tangible Book Value:​​​​1.47x​​
​Transaction Value / Last Twelve Months (“LTM”) Earnings:​​​​16.4x​​
​Transaction Value / 2022 Estimated Net Income:​​​​13.5x​​
​Core Deposit Premium:​​​​11.2%​​
Note: The last twelve months net income of County is based on the most recent available financial statements prior to announcement, and is adjusted for certain non-core items. Estimated 2022 net income based on assumptions provided by County management.
Relevant Public Companies Analysis:    Stephens considered the financial condition, operating statistics and market valuation of selected relevant public companies and their stock trading prices. Stephens selected the companies outlined below because their relative asset size and financial performance, among other factors, are reasonably similar to County; however, no selected company below is identical to County. A complete analysis involves complex considerations and qualitative judgments concerning differences in financial and operating characteristics and other factors that could affect the public trading values of the relevant public companies. Mathematical analysis (such as determining the mean or the median) is not in itself a meaningful method of using relevant public company data.
Relevant Public Companies — County:
Stephens selected the following relevant, major exchange-traded Midwest companies with assets between $1.0 million and $2.25 billion, excluding merger targets (total assets noted parenthetically):
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Ames National Corporation ($2.10 billion)
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ChoiceOne Financial Services, Inc. ($2.07 billion)
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LCNB Corp. ($1.82 billion)
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First Savings Financial Group, Inc. ($1.75 billion)
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Citizens Community Bancorp, Inc. ($1.73 billion)
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Hawthorn Bancshares, Inc. ($1.73 billion)
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BancFinancial Corporation ($1.62 billion)
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CF Bankshares Inc. ($1.61 billion)
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Middlefield Banc Corp. ($1.39 billion)
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Limestone Bancorp, Inc. ($1.36 billion)
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SB Financial Group, Inc. ($1.33 billion)
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Landmark Bancorp, Inc. ($1.25 billion)
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Guaranty Federal Bancshares, Inc. ($1.23 billion)
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Ohio Valley Banc Corp. ($1.23 billion)
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First Capital, Inc. ($1.06 billion)
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United Bancshares, Inc. ($1.03 billion)
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To perform this analysis, Stephens examined publicly available financial information as of and for the last twelve month period ended March 31, 2021, or the most recently reported period available, and the market trading multiples of the relevant public companies based on June 16, 2021 closing prices. The financial data included in the Agreementtable presented below may not correspond precisely to the data reported in historical financial statements as a result of the assumptions and allmethods used by Stephens to compute the financial data presented. The table below contains selected information utilized by Stephens in the analysis:
​​​County​​
25th
Percentile
​​Median​​
75th
Percentile
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LTM Core Return on Average Assets​​​​0.96%​​​​​0.93%​​​​​1.13%​​​​​1.70%​​
LTM Core Return on Average Tangible Common Equity​​​​8.8%​​​​​10.1%​​​​​12.4%​​​​​18.9%​​
Tangible Common Equity (excl. PPP)(1) / Tangible Assets
​​​​11.0%​​​​​8.1%​​​​​9.5%​​​​​10.3%​​
Non-Performing Assets (excl. PPP)(1)(2) / Assets
​​​​3.09%​​​​​0.91%​​​​​0.47%​​​​​0.25%​​
Loan Loss Reserves / Loans (excl. PPP)(1)
​​​​1.55%​​​​​1.18%​​​​​1.43%​​​​​1.51%​​
Price / Tangible Book Value​​​​0.96x​​​​​1.13x​​​​​1.20x​​​​​1.23x​​
Price / LTM Earnings Per Share​​​​11.2x​​​​​6.6x​​​​​10.0x​​​​​12.3x​​
Price / 2021 Estimated Earnings Per Share​​​​11.3x​​​​​8.3x​​​​​10.3x​​​​​13.7x​​
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Source: S&P Global Market Intelligence
(1)
Paycheck Protection Program Loans
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(2)
Non-Performing Assets excludes restructured loans
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Relevant Midwest Transactions Analysis:    Stephens analyzed selected transaction multiples and related financial data for relevant transactions in the Midwest announced since January 1, 2019 with target assets between $750 million and $3.0 billion. The following transactions were considered by Stephens because each acquired company’s relative asset size, financial performance and markets of operation, among other factors, is reasonably similar to County’s, though none is identical to County’s (in each case, the first named company was the acquirer and the second named company was the acquired company and the transaction announcement date is noted parenthetically):
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Equity Bancshares, Inc. / American State Bancshares, Inc. (5/17/21)
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Nicolet Bankshares, Inc. / Mackinac Financial Corporation (4/12/21)
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Stock Yards Bancorp, Inc. / Kentucky Bancshares, Inc. (1/27/21)
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First Busey Corporation / Cummins-American Corp. (1/19/21)
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First Mid Bancshares, Inc. / LINCO Bancshares, Inc. (9/28/20)
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Northwest Bancshares, Inc. / MutualFirst Financial, Inc. (10/29/19)
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First Defiance Financial Corp. / United Community Financial Corp. (9/9/19)
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First Midwest Bancorp, Inc. / Bankmanagers Corp. (8/28/19)
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First Financial Corporation / HopFed Bancorp, Inc. (1/7/19)
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Stephens considered these selected transactions to be reasonably similar, but not identical, to the merger. A complete analysis involves complex considerations and qualitative judgments concerning differences in the selected transactions and other factors that could affect the transaction values in those selected transactions to which the merger is being compared. Mathematical analysis (such as determining the mean or the median) is not in itself a meaningful method of using selected transaction data. Stephens compared certain proposed transaction multiples of the merger to the 25th percentile, median, and 75th percentile transaction multiples of the relevant transactions:
​​​County​​
25th Percentile
​​Median​​
75th Percentile
​
Target Total Assets ($000s)​​​$1,491​​​​$948​​​​$1,201​​​​$1,502​​
Target Tangible Common Equity / Tangible Assets​​​​10.6%​​​​​9.7%​​​​​10.3%​​​​​12.0%​​
Target LTM Return on Average Assets​​​​0.99%​​​​​0.59%​​​​​0.92%​​​​​1.09%​​
Target Non-Performing Assets / Assets​​​​3.90%​​​​​0.97%​​​​​0.87%​​​​​0.51%​​
Transaction Value / Tangible Book Value​​​​1.47x​​​​​1.13x​​​​​1.60x​​​​​1.69x​​
Transaction Value / LTM Earnings​​​​16.4x​​​​​16.0x​​​​​18.3x​​​​​21.6x​​
Core Deposit Premium​​​​11.2%​​​​​1.5%​​​​​8.9%​​​​​9.8%​​
​
Source: S&P Global Market Intelligence
Relevant Nationwide Transactions Analysis:    Stephens analyzed selected transaction multiples and related documentsfinancial data for relevant nationwide transactions announced since January 1, 2020 with target assets between $1.0 billion and instruments$3.5 billion. The following transactions were considered by Stephens because each acquired company’s relative asset size and financial performance, among other factors, is reasonably similar to County, though none is identical to County (in each case, the first named company was the acquirer and the second named company was the acquired company and the transaction announcement date is noted parenthetically):
•
United Bankshares, Inc. / Community Bankers Trust Corporation (6/3/21)
​
•
First Foundation, Inc. / TGR Financial, Inc. (6/3/21)
​
•
First Bancorp / Select Bancorp, Inc. (6/1/21)
​
•
Enterprise Financial Services Corp / First Choice Bancorp (4/26/21)
​
•
Nicolet Bankshares, Inc. / Mackinac Financial Corporation (4/12/21)
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•
VyStar Credit Union / Heritage Southeast Bancorporation Inc. (3/31/21)
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•
Peoples Bancorp Inc. / Premier Financial Bancorp, Inc. (3/29/21)
​
•
Banc of California, Inc. / Pacific Mercantile Bancorp (3/22/21)
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•
Stock Yards Bancorp, Inc. / Kentucky Bancshares, Inc. (1/27/21)
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•
First Busey Corporation / Cummins-American Corp. (1/19/21)
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•
First Mid Bancshares, Inc. / LINCO Bancshares, Inc. (9/28/20)
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•
Dollar Mutual Bancorp / Standard AVB Financial Corp. (9/25/20)
​
•
Enterprise Financial Services Corp / Seacoast Commerce Banc Holdings (8/20/20)
​
•
Blue Ridge Bankshares, Inc. / Bay Banks of Virginia, Inc. (8/13/20)
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Provident Financial Services, Inc. / SB One Bancorp (3/12/20)
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•
United Community Banks, Inc. / Three Shores Bancorporation, Inc. (3/9/20)
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•
LendingClub Corporation / Radius Bancorp, Inc. (2/18/20)
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•
Heartland Financial USA, Inc. / AIM Bancshares, Inc. (2/11/20)
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•
Business First Bancshares, Inc. / Pedestal Bancshares, Inc. (1/22/20)
​
Stephens considered these selected transactions to be reasonably similar, but not identical, to the merger. A complete analysis involves complex considerations and qualitative judgments concerning differences in the selected transactions and other factors that are referredcould affect the transaction values in those selected transactions to thereinwhich the merger is being compared. Mathematical analysis (such as determining the mean or the median) is not in itself a meaningful method of using selected transaction data. Stephens compared certain proposed transaction multiples of the merger to the 25th percentile, median, and 75th percentile transaction multiples of the relevant transactions:
​​​County​​
25th Percentile
​​Median​​
75th Percentile
​
Target Total Assets ($000s)​​​$1,491​​​​$1,266​​​​$1,571​​​​$1,853​​
Target Tangible Common Equity / Tangible Assets​​​​10.6%​​​​​8.7%​​​​​9.6%​​​​​10.6%​​
Target LTM Return on Average Assets​​​​0.99%​​​​​0.64%​​​​​0.89%​​​​​1.20%​​
Target Non-Performing Assets / Assets​​​​3.90%​​​​​1.04%​​​​​0.56%​​​​​0.37%​​
Transaction Value / Tangible Book Value​​​​1.47x​​​​​1.28x​​​​​1.56x​​​​​1.80x​​
Transaction Value / LTM Earnings​​​​16.4x​​​​​12.7x​​​​​14.2x​​​​​17.7x​​
Core Deposit Premium​​​​11.2%​​​​​4.9%​​​​​7.4%​​​​​9.6%​​
​
Source: S&P Global Market Intelligence
Discounted Cash Flow Analysis:    Stephens performed a discounted cash flow analysis using projections developed by County executive management. Stephens calculated a range of implied equity values for County based upon the discounted net present value of the projected after-tax free cash flows for the projected period. Stephens determined the amount of cash flow assuming (i) a terminal earnings multiple of 11.0x, (ii) dividend payments for earnings and excess capital above a tangible common equity to tangible asset ratio of 9.0% from the second half of 2021 to 2025 and (iii) the present value of County’s implied terminal value at the end of such period. Stephens calculated the terminal value of County based on 2025 estimated earnings and multiples of 10.0x to 12.0x. Stephens considered discount rates from 10.0% to 12.0%. Based on this analysis, Stephens derived a range for the implied equity value per share of County from $32.17 to $39.57.
Financial Impact Analysis:    Stephens analyzed the estimated merger consequences of certain pro forma combined income statement and balance sheet information of County and Nicolet. Stephens discussed key assumptions regarding the expected accounting treatment, potential cost savings and other acquisition adjustments resulting from the merger with management of County and Nicolet. Stephens’ analysis utilized consensus earnings estimates for Nicolet as of June 16, 2021, as well as earnings estimates for County provided by County executive management. Based on this analysis, Stephens estimated that the merger would likely be accretive to Nicolet’s consensus earnings per share following the closing of the merger and would be dilutive to Nicolet’s tangible book value per share. Stephens also estimated that Nicolet would maintain capital ratios in excess of those required by Nicolet to be considered well-capitalized under existing regulations. The actual results achieved by Nicolet following the merger will likely vary from these projected results analyzed by Stephens, and the variations may be material.
Miscellaneous:    As part of Stephens’ investment banking business, Stephens regularly issues fairness opinions and is continually engaged in the valuation of companies and their securities in connection with business reorganizations, private placements, negotiated underwritings, mergers and acquisitions and valuations for estate, corporate and other purposes.
Stephens is familiar with County and Nicolet. Stephens issues periodic research reports regarding the business and prospects of County and Nicolet, and Stephens makes a market in the stocks of County and Nicolet. During the two years preceding the date that Stephens provided its opinion letter to the Board of Directors of County regarding the merger (the “Opinion Letter”), Stephens served as a co-placement agent for County in an issuance of subordinated debt, and Stephens received customary fees in connection

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with such offerings. Stephens served as financial adviser to County in connection with the merger, and will receive from County a customary fee for its services as financial adviser to County, a significant portion of which is contingent upon the consummation of the merger. Stephens also received a fee from County for providing its opinion to the board of directors of County. County has also agreed to indemnify Stephens for certain liabilities arising out of its engagement, including certain liabilities that could arise out of providing its opinion. Stephens expects to pursue future investment banking services assignments with County and Nicolet. In the ordinary course of business, Stephens and its affiliates at any time may hold long or short positions, and may trade or otherwise providedeffect transactions as principal or for the accounts of customers, in debt, equity or derivative securities of County or Nicolet.
Conclusion:    Based on the foregoing and on Stephens’ general experience as investment bankers, and subject to Magstarthe assumptions and qualifications stated in the Opinion Letter, Stephens is of the opinion, on the date of the Opinion Letter, that the consideration expected to be received by Commerce, Commerce State Bank, the Shareholders in the merger transaction is fair to them from a financial point of view.
Each County shareholder is encouraged to read Stephens’ fairness opinion in its entirety. The full text of this fairness opinion is included as Appendix B to this joint proxy statement-prospectus.
Opinion of Nicolet’s Financial Advisor
Nicolet orengaged KBW to render financial advisory and investment banking services to Nicolet, National Bank are true and complete. Magstar relied uponincluding an opinion to the managementNicolet board of Commerce, Commerce State Bank, Nicolet, or Nicolet National Bankdirectors as to the reasonablenessfairness, from a financial point of view, to Nicolet of the aggregate merger consideration in the proposed merger. Nicolet selected KBW because KBW is a nationally recognized investment banking firm with substantial experience in transactions similar to the merger. As part of its investment banking business, KBW is continually engaged in the valuation of financial services businesses and achievabilitytheir securities in connection with mergers and acquisitions.
As part of its engagement, KBW rendered an opinion, dated June 21, 2021, to the Nicolet board of directors to the effect that, as of such date and subject to the procedures followed, assumptions made, matters considered, and qualifications and limitations on the review undertaken by KBW as set forth in such opinion, the aggregate merger consideration in the proposed merger was fair, from a financial point of view, to Nicolet. The Nicolet board approved the merger agreement at this meeting.
The description of the opinion set forth herein is qualified in its entirety by reference to the full text of the opinion, which is attached as Appendix C to this document and is incorporated herein by reference, and describes the procedures followed, assumptions made, matters considered, and qualifications and limitations on the review undertaken by KBW in preparing the opinion. Holders of Nicolet common stock are encouraged to review the copy of the opinion, which is included as Appendix C to this joint proxy statement-prospectus.
KBW’s opinion speaks only as of the date of the opinion. The opinion was for the information of, and was directed to, the Nicolet board (in its capacity as such) in connection with its consideration of the financial forecasts,terms of the merger. The opinion addressed only the fairness, from a financial point of view, of the aggregate merger consideration in the merger to Nicolet. It did not address the underlying business decision of Nicolet to engage in the merger or enter into the merger agreement or constitute a recommendation to the Nicolet board in connection with the merger, and projections, estimatesit does not constitute a recommendation to any holder of Nicolet common stock or any shareholder of any other entity as to how to vote or act in connection with the merger or any other matter (including, with respect to holders of County common stock, what election any such shareholder should make with respect to the stock consideration or the cash consideration), nor does it constitute a recommendation as to whether or not any such shareholder should enter into a voting, shareholders’, affiliates’ or other agreement with respect to the merger or exercise any dissenters’ or appraisal rights that may be available to such shareholder.
KBW’s opinion was reviewed and approved by KBW’s Fairness Opinion Committee in conformity with its policies and procedures established under the requirements of Rule 5150 of the Financial Industry Regulatory Authority.
In connection with the opinion, KBW reviewed, analyzed and relied upon material bearing upon the financial and operating condition of Nicolet and County and bearing upon the merger, including, among other things:

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a draft of the merger agreement, dated June 18, 2021 (the most recent draft then made available to KBW);
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the audited financial statements and the Annual Reports on Form 10-K for the three fiscal years ended December 31, 2020 of Nicolet;
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•
the unaudited quarterly financial statements and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 of Nicolet;
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•
the audited financial statements and the Annual Reports on Form 10-K for the three fiscal years ended December 31, 2020 of County;
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the unaudited quarterly financial statements and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 of County;
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•
certain regulatory filings of Nicolet and County and their respective subsidiaries, including the quarterly reports on Form FR Y-9C or FR Y-9SP and quarterly call reports filed with respect to each quarter during the three year period ended December 31, 2020 as well as the quarter ended March 31, 2021;
​
•
certain other interim reports and other forward-lookingcommunications of Nicolet and County to their respective shareholders; and
​
•
other financial information (includingconcerning the Synergies)respective businesses and operations of Nicolet and County that were furnished to KBW by Nicolet and County or that KBW was otherwise directed to use for purposes of its analysis.
​
KBW’s consideration of financial information and other factors that it deemed appropriate under the circumstances or relevant to its analyses included, among others, the following:
•
the historical and current financial position and results of operations of Nicolet and County;
​
•
the assets and liabilities of Nicolet and County;
​
•
the nature and terms of certain other merger transactions and business combinations in the banking industry;
​
•
a comparison of certain financial and stock market information of Nicolet and County with similar information for certain other companies, the securities of which were publicly traded;
​
•
publicly available consensus “street estimates” of County, as well as assumed County long-term growth rates provided to MagstarKBW by Commerce, Commerce State Bank, Nicolet management, all of which information was discussed with KBW by Nicolet management and used and relied upon by KBW at the direction of such management and with the consent of the Nicolet board;
​
•
certain publicly available research analyst “street estimates” of Nicolet (which estimates reflected the estimated pro forma impact of Nicolet’s pending acquisition of Mackinac Financial Corporation (the “Mackinac Acquisition”)), as well as assumed Nicolet long-term growth rates provided to KBW by Nicolet management, all of which information was discussed with KBW by Nicolet management and used and relied upon by KBW at the direction of such management and with the consent of the Nicolet board;
​
•
pro forma balance sheet and capital data of Nicolet as of March 31, 2021, as adjusted for the Mackinac Acquisition, which data was provided to and discussed with KBW by Nicolet management and used and relied upon by KBW at the direction of such management and with the consent of the Nicolet board; and
​
•
estimates regarding certain pro forma financial effects of the merger on Nicolet (including without limitation the cost savings and related expenses expected to result or Nicolet National Bank, and assumed such forecasts, projections, estimates and other forward-looking information (includingbe derived from the Synergies) have been reasonablymerger) that were prepared by Commerce, Commerce State Bank, Nicolet or Nicolet National Bank on a basis reflecting the best currently available informationmanagement, provided to and Commerce’s, Commerce State Bank’s, Nicolet’s, or Nicolet National Bank’s judgmentsdiscussed with KBW by such management, and estimates. Magstar assumed that such forecasts, projections, estimatesused and other forward-looking information (including the Synergies) would be realized in the amounts andrelied upon by KBW at the times contemplated thereby,direction of such management and does not,with the consent of the Nicolet board.
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KBW also performed such other studies and analyses as it considered appropriate and took into account its assessment of general economic, market and financial conditions and its experience in any respect, assume any responsibility forother transactions, as well as its experience in securities valuation and knowledge of the accuracy or reasonableness thereof. Magstar was authorized by Commercebanking industry generally. KBW also participated in discussions held with the respective managements of Nicolet and Commerce State BankCounty regarding the past and current business operations, regulatory relations, financial condition and future prospects of Nicolet and County and such other matters as KBW deemed relevant to rely upon such forecasts, projections, estimates and other information and data, and expresses no view as to any such forecasts, projections, estimates or other forward-looking information or data, or the bases or assumptions on which they were prepared.its inquiry.
In performingconducting its review Magstar assumed and arriving at its opinion, KBW relied upon and assumed the accuracy and completeness of all of the financial and other information provided to or discussed with it or that was publicly available and KBW did not independently verify the accuracy or completeness of any such information or assume any responsibility or liability for such verification, accuracy or completeness. KBW relied upon the management of Nicolet as to itthe reasonableness and achievability of the publicly available consensus “street estimates” of County, the publicly available research analyst “street estimates” of Nicolet, the assumed Nicolet and County long-term growth rates, and the estimates regarding certain pro forma financial effects of the merger on Nicolet (including, without limitation, the cost savings and related expenses expected to result or be derived from public sources,the merger), all as referred to above, and the assumptions and bases for all such information, and KBW assumed that all of the foregoing information was reasonably prepared and represented, or in the case of the publicly available “street estimates” referred to above that such estimates were consistent with, the best currently available estimates and judgments of Nicolet management and that the forecasts, projections and estimates reflected in such information would be realized in the amounts and in the time periods currently estimated. KBW expressed no view or opinion as to the Mackinac Acquisition (or any terms, aspects, effects or implications thereof) and, with the consent of Nicolet, assumed that the Mackinac Acquisition would be consummated as described to KBW by Nicolet management during the third quarter of 2021.
It is understood that the portion of the foregoing financial information of Nicolet and County that was provided to it by Commerce, Commerce State Bank,and discussed with KBW was not prepared with the expectation of public disclosure and that all of the foregoing financial information, including the publicly available consensus “street estimates” of County and research analyst “street estimates” of Nicolet referred to above, was based on numerous variables and assumptions that are inherently uncertain (including, without limitation, factors related to general economic and competitive conditions, and in particular, assumptions regarding the ongoing COVID-19 pandemic) and, accordingly, actual results could vary significantly from those set forth in such information. KBW assumed, based on discussions with the management of Nicolet and with the consent of the Nicolet National Bankboard, that all such information provided a reasonable basis upon which KBW could form its opinion and KBW expressed no view as to any such information or their respective representativesthe assumptions or bases therefor. Among other things, such information has assumed that was otherwise reviewed by it for purposes of rendering its opinion. Magstar furtherthe ongoing COVID-19 pandemic could have an adverse impact on Nicolet and County. KBW relied on the assurances of the respective management of Commerce, Commerce State Bank, Nicolet, and Nicolet National Bank and that they are not aware of any facts or circumstances that would make any ofall such information inaccurate or misleading. Magstar was not asked to and has not undertaken anwithout independent verification ofor analysis and did not in any of such information, and does notrespect assume any responsibility or liability for the accuracy or completeness thereof. Magstar
KBW also assumed that there were no material changes in the assets, liabilities, financial condition, results of operations, business or prospects of either Nicolet or County since the date of the last financial statements of each partysuch entity that were made available to the Agreement would advise it promptly if any information previously providedKBW and that KBW was directed to it became inaccurate or was required to be updated during the period of Magstar’s review.
Magstaruse. KBW is not an expert in the evaluationindependent verification of the adequacy of allowances for loan and lease portfolios for purposes of assessinglosses and KBW assumed, without independent verification and with Nicolet’s consent, that the adequacy of theaggregate allowances for loan and lease losses with respect thereto. Magstar assumed that such allowances for Commerceeach of Nicolet and NicoletCounty are in the aggregate, adequate to cover such losses and will be adequate on a pro forma basis for the combined entity. Magstar was not requested to make, andlosses. In rendering its opinion, KBW did not make an independent evaluation,or obtain any evaluations or appraisals or physical inspection or appraisal of the property, assets properties, facilities, or liabilities (contingent or otherwise) of CommerceNicolet or Nicolet,County, the collateral securing any of such assets or liabilities, or the collectability of any such assets, and Magstar was not furnished with any such evaluations or appraisals; nor did Magstar reviewKBW examine any individual loan or credit files, of Commerce or Nicolet.
Magstarnor did notit evaluate the solvency, financial capability or fair value of Commerce, Commerce State Bank, Nicolet or Nicolet National Bank,County under any state or federal lawlaws, including those relating to bankruptcy, insolvency or similarother matters. Accordingly, Magstar expresses no opinion regardingEstimates of values of companies and assets do not purport to be appraisals or necessarily reflect the liquidationprices at which companies or assets may actually be sold. Such estimates are inherently subject to uncertainty and should not be taken as KBW’s view of the actual value of Commerce, Commerce State Bank, Nicolet,any companies or Nicolet National Bank, or any other entity. Magstar alsoassets.

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KBW assumed, that Commerce, Commerce State Bank, Nicolet, and Nicolet National Bank would remain as a going concern forin all periods relevantrespects material to its analysis. Accordingly, Magstar expresses no opinion with respect to analyses:
•
the foregoing. Further,merger and any related transactions (including, without limitinglimitation, the generalitybank merger, the July 2021 Nicolet Subordinated Debt Private Placement and the redemption of all outstanding shares of the foregoing, Magstar undertook no independent analysispreferred stock of any pending or threatened litigation, regulatory action, possible unasserted claims or other contingent liabilities to which Commerce, Commerce State Bank, Nicolet, or Nicolet National Bank is a party or may be subject, and with Commerce’s consent, Magstar’s opinion makes no assumption concerning, and therefore does not consider, the possible assertion of claims, outcomes or damages arising out of any such matters. Magstar also assumed that neither Commerce, Commerce State Bank, Nicolet, nor Nicolet National Bank is a party to any material pending transaction, including without limitation any financing, recapitalization, acquisition or merger, divestiture or spin-off, other thanCounty provided for in the merger contemplated by the Agreement.
Magstar relied upon and assumed, with Commerce’s consent and without independent verification, that the merger willagreement (the “County Preferred Redemption”)) would be consummatedcompleted substantially in accordance with the terms set forth in the merger agreement (the final terms of which KBW assumed would not differ in any respect material to its analyses from the draft of the merger agreement reviewed by KBW and referred to above), with no adjustments to the aggregate merger consideration (including the allocation between cash and stock) and with no additional consideration or payments in respect of County common stock;
​
•
the representations and warranties of each party in the merger agreement and in all related documents and instruments referred to in the merger agreement were true and correct;
​
•
each party to the merger agreement or any of the related documents would perform all of the covenants and agreements required to be performed by such party under such documents;
​
•
there are no factors that would delay or subject to any adverse conditions, any necessary regulatory or governmental approval for the merger or any related transactions and all conditions to the completion of the merger and any related transactions would be satisfied without any waivers or modifications to the merger agreement or any of the related documents; and
​
•
in the course of obtaining the necessary regulatory, contractual, or other consents or approvals for the merger and any related transactions, no restrictions, including any divestiture requirements, termination or other payments or amendments or modifications, would be imposed that would have a material adverse effect on the future results of operations or financial condition of Nicolet, County or the pro forma entity or the contemplated benefits of the merger, including without limitation the cost savings and related expenses expected to result or be derived from the merger.
​
KBW assumed that the merger would be consummated in a manner that complied with the applicable provisions of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and all other applicable federal and state statutes, rules and regulations. KBW was further advised by representatives of Nicolet that Nicolet relied upon advice from its advisors (other than KBW) or other appropriate sources as to all legal, financial reporting, tax, accounting and regulatory matters with respect to Nicolet, County, the merger and any related transaction, the Mackinac Acquisition, and the merger agreement. KBW did not provide advice with respect to any such matters.
KBW’s opinion addressed only the fairness, from a financial point of view, as of the date of such opinion, of the aggregate merger consideration in the merger to Nicolet. KBW expressed no view or opinion as to any other terms or aspects of the merger or any term or aspect of any related transaction (including the bank merger, the July 2021 Nicolet Subordinated Debt Private Placement and the County Preferred Redemption), including without limitation, the form or structure of the merger (including the form of aggregate merger consideration or the allocation thereof between stock and cash) or any such related transaction, any consequences of the merger or any such related transaction to Nicolet, its shareholders, creditors or otherwise, or any terms, aspects, merits or implications of any employment, retention, non-compete, consulting, voting, support, cooperation, shareholder, escrow or other agreements, arrangements or understandings contemplated or entered into in connection with the merger, any such related transaction, or otherwise. KBW’s opinion was necessarily based upon conditions as they existed and could be evaluated on the date of such opinion and the information made available to KBW through such date. There has been widespread disruption, extraordinary uncertainty and unusual volatility arising from the effects of the COVID-19 pandemic, including the effect of evolving governmental interventions and non-interventions. Developments subsequent to the date of KBW’s opinion may have affected, and may affect, the conclusion reached in KBW’s opinion and KBW did not and does not have an obligation to update, revise or reaffirm its opinion. KBW’s opinion did not address, and KBW expressed no view or opinion with respect to:
•
the underlying business decision of Nicolet to engage in the merger or enter into the merger agreement;
​
•
the relative merits of the merger as compared to any strategic alternatives that are, have been or may be available to or contemplated by Nicolet or the Nicolet board;
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without •
any waiverbusiness, operational or other plans with respect to County or the pro forma entity that may be contemplated by Nicolet or the Nicolet board or that may be implemented by Nicolet or the Nicolet board subsequent to the closing of material termsthe merger;
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•
the fairness of the amount or conditionsnature of any compensation to any of Nicolet’s officers, directors or employees, or any class of such persons, relative to any compensation to the holders of Nicolet common stock or relative to the aggregate merger consideration;
​
•
the effect of the merger or any related transaction on, or the fairness of the consideration to be received by, Commerce,holders of any class of securities of Nicolet, County or any other party to any transaction contemplated by the merger agreement and that the final agreement will not differ materially from the draft Magstar reviewed. Magstar assumed thatagreement;
​
•
any adjustment (as provided in the merger willagreement) to the stock consideration assumed to be consummatedpaid in compliance with all applicable laws and regulations. Commerce advised Magstar that they were not aware of any factors that would impede any necessary regulatory or governmental approval of the merger. Magstar assumed that the necessary regulatory and governmental approvals as granted would not be subject to any conditions that would be unduly burdensome on Commerce or Nicolet or would have a material adverse effect on the contemplated benefits of the merger.
Magstar’s opinion does not consider, include or address: (i) any legal, tax, accounting, or regulatory consequences of the merger on Commerce or its shareholders; (ii) any advice or opinions provided by any other advisor to the boardfor purposes of directors of Commerce; (iii) any other strategic alternatives that might be available to Commerce; or (iv) KBW’s opinion;
​
•
whether Nicolet has sufficient cash, available lines of credit or other sources of funds to enable it to pay the aggregate cash consideration contemplatedat the closing of the merger;
​
•
the election by holders of County common stock to receive the merger.
Commerce engaged Magstar on August 20, 2019, to servestock consideration or the cash consideration, or any combination thereof, or the actual allocation between the stock consideration and the cash consideration among such holders (including, without limitation, any reallocation thereof as a financial advisorresult of proration pursuant to Commercethe merger agreement), or the relative fairness of the stock consideration and the cash consideration;
​
•
the actual value of Nicolet common stock to be issued in connection with the proposed mergers andmerger;
​
•
the prices, trading range or volume at which Nicolet common stock or County common stock would trade following the public announcement of the merger or the prices, trading range or volume at which Nicolet common stock would trade following the consummation of the merger;
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•
any advice or opinions provided by any other advisor to issue a fairness opinion to Commerce’s boardany of directors in connection with such proposed transaction. Pursuantthe parties to the terms of the engagement, Magstar received from Commerce an advisory fee for delivery of certainmerger or any other transaction advisory and analysis services, a fairness opinion fee due upon the delivery of the fairness opinion to Commerce, and at the timecontemplated by the merger is completed, Commerce will pay Magstar a completion fee, which is contingent upon the completionagreement; or
​
•
any legal, regulatory, accounting, tax or similar matters relating to Nicolet, County, any of the merger. Pursuanttheir respective shareholders, or relating to the engagement agreement, in addition to its fees and regardless of whether the merger is consummated, Commerce has agreed to reimburse Magstar for certain reasonable out-of-pocket expenses incurred in performing its services and to indemnify Magstar and its affiliates against certain claims, losses, liabilities and expensesor arising out of or as a consequence of the mergersmerger or Magstar’s engagement.any other related transaction (including the bank merger, the July 2021 Nicolet Subordinated Debt Private Placement and the County Preferred Redemption), including whether or not the merger would qualify as a tax-free reorganization for United States federal income tax purposes.
Other than in connection with this present engagement, during the two years preceding the date of its opinion, Magstar has not provided investment banking or financial advisory services to Commerce. During the past two years, certain registered representatives of Magstar, who are also separate owners and employees of Hillworth, have been engaged by, and provided services to the Commerce through Hillworth. During the two years preceding the date of its opinion Magstar has not provided any investment banking or financial advisory services to Nicolet for which it received a fee. Magstar or its affiliates, as well as Hillworth (whose principals are registered with Magstar) may presently or in the future seek or receive compensation from Nicolet in connection with future transactions, or in connection with potential advisory services and corporate transactions, although to Magstar’s knowledge none are expected at this time. Except for the foregoing, during the two years preceding the date of this opinion there have not been, and there currently are no mutual understandings contemplating in the future, any material relationships between Magstar and Commerce or Nicolet.​
In performing its analyses, MagstarKBW made numerous assumptions with respect to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the control of Magstar, Commerce, Commerce State Bank,KBW, Nicolet and Nicolet National Bank. Magstar’s opinion was necessarily based on financial, economic, market and other conditions and circumstances as they existed on, and on the information made available to Magstar as of, the dates used in its opinion.County. Any estimates contained in the analyses performed by MagstarKBW are not necessarily indicative of actual values or future results, which may be significantly more or less favorable than suggested by these analyses. Additionally, estimates of the value of businesses or securities do not purport to be appraisals or to reflect the prices at which such businesses or securities maymight actually be sold or the prices at which any securities may trade at any time in the future.sold. Accordingly, these analyses and estimates are inherently subject to substantial uncertainty. Magstar’s opinion does not address the relative merits of the mergers as compared to any other business combination in which Commerce might engage. In addition, Magstar’s fairnessthe KBW opinion was among several factors taken into consideration by Commerce’sthe Nicolet board of directors in making its determination to approve the merger agreement and the mergers.merger. Consequently, the analyses described below should not be viewed as solely determinative of the decision of Commerce’sthe Nicolet board of directors or Commerce’s management with respect to the fairness of the aggregate merger consideration. The type and amount of consideration to be received by Commerce’s shareholderspayable in connection with the merger.

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Magstar’s opinion was based solely upon the information available to Magstarmerger were determined through negotiation between Nicolet and described above,County and the economic, market and other circumstances as they existed asdecision of Nicolet to enter into the merger agreement was solely that of the date thereof. Events occurring and information that becomes available after the date thereof could materially affect the assumptions and analyses used in preparing its opinion. Magstar has not undertaken to update, revise, reaffirm or withdraw its opinion or to otherwise comment upon events occurring or information that becomes available after the date thereof.
In arriving at its opinion, Magstar did not attribute any particular weight to any single analysis or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Accordingly, Magstar believes that its analyses must be considered as a whole and that selecting portions of its analyses, without considering all analyses, would create an incomplete view of the process underlying its opinion.Nicolet board.
The following is a summary of the material financial analyses preparedperformed by Magstar and delivered to Commerce’s board of directors on February 16, 2020,KBW in connection with its opinion to the delivery of its fairness opinion. ThisNicolet board. The summary is not a complete description of the financial analyses underlying the fairness opinion orto the presentation prepared by Magstar,Nicolet board, but it summarizes the material analyses performed and presented in connection with such opinion. The financial analyses summarized below include information presented in tabular format. The tables alone do not constitute a complete description of the financial analyses. The preparation of a fairness opinion is a complex analyticalanalytic process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances of the contemplated merger.circumstances. Therefore, a fairness opinion is not readily susceptible to partial analysis or summary description. In

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arriving at its opinion, MagstarKBW did not attribute any particular weight to any analysis or factor that it considered, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. The financial analyses summarized below include information presented in tabular format. TheAccordingly, KBW believes that its analyses and the summary of theits analyses must be considered as a whole and that selecting portions of theits analyses and factors or focusing on the information presented below in tabular format, without considering all analyses and factors or the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of the process underlying theits analyses and opinion of Magstar. The tables alone are not a complete description of the financial analyses. opinion.
For purposes of the analysis, Deal Value is comprisedfinancial analyses described below, KBW utilized an implied transaction value for the proposed merger of Merger Consideration plus Option Consideration.$214.5 million in the aggregate (inclusive of the implied aggregate value of County options in the proposed merger), or $34.32 per outstanding share of County common stock, which reflected the implied value of the stock consideration of 0.4800 of a share of Nicolet common stock based on the closing price of Nicolet common stock on June 18, 2021, and an estimated 80% stock/20% cash merger consideration mix at the direction of Nicolet management. In addition to the financial analyses described below, KBW reviewed with the Nicolet board of directors for informational purposes, among other things, an implied transaction multiple for the proposed merger (based on the implied transaction value for the proposed merger of $34.32 per outstanding share of County common stock) of 16.3x County’s estimated calendar year 2021 earnings per share (“EPS”) and 18.2x County’s estimated calendar year 2022 earnings per share using publicly available consensus “street estimates” of County.
Market Approach — Comparable TransactionsNicolet Selected Companies Analysis.   As part of its analysis, Magstar reviewed    Using publicly available information, relatedKBW compared the financial performance, financial condition and market performance of Nicolet to two comparable groups (a “Regional Group” and a “Nationwide Group”) of select acquisition transactions of banks. The Regional Group consisted of acquisition transactions where targets were15 selected major exchange-traded banks that are headquartered in the U.S. Midwest Regionregion with total assets between $5.0 billion and $9.0 billion.
The selected companies were as follows:
1st Source Corporation
Byline Bancorp, Inc.
Community Trust Bancorp, Inc.
CrossFirst Bankshares, Inc.
First Mid Bancshares, Inc.
German American Bancorp, Inc.
Great Southern Bancorp, Inc.
Horizon Bancorp, Inc.
Lakeland Financial Corporation
Midland States Bancorp, Inc.
MidWestOne Financial Group, Inc.
Peoples Bancorp Inc.
Premier Financial Corp.
QCR Holdings, Inc.
Republic Bancorp, Inc.
To perform this analysis, KBW used profitability and other financial information for the latest 12 months (“LTM”) or most recent completed fiscal quarter (“MRQ”) available or as of the United States (consistingend of such periods and market price information as of June 18, 2021. KBW also used 2021 and 2022 EPS estimates taken from certain publicly available research analysts’ estimates of Nicolet (which estimates reflected the estimated pro forma impact of Nicolet’s pending acquisition of Mackinac Financial Corporation) and publicly available consensus “street estimates” for the selected companies. Where consolidated holding company level financial data was unreported, subsidiary bank level data was utilized to calculate ratios. Certain financial data prepared by KBW, and as referenced in the tables presented below, may not correspond to the data presented in Nicolet’s historical financial statements, or the data prepared by Stephens Inc. presented under the section “The Merger — Opinion of County’s Financial Advisor,” as a result of the states of Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakotadifferent assumptions and Wisconsin) announced since January 1, 2017, in whichmethods used by KBW to compute the target’s total assets were between $300 million and $1.5 billion, last-twelve-months (“LTM”) return on average assets (“ROAA”) was between 0.75% and 1.50%, and nonperforming assets were less than 2.0% of total assets. The Nationwide Group consisted of acquisition transactions of targets in the United States announced since January 1, 2018, in which the target’s total assets were between $500 million and $1.5 billion, LTM ROAA was between 0.85% and 1.35%, and nonperforming assets were less than 1.25% of total assets. Information for the target institutions was based on balance sheetfinancial data as of, and income statement data for, the twelve monthspresented.
 
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preceding the most recent quarter prior to announcement of the transactions. The resulting two groups consisted ofKBW’s analysis showed the following transactions (21 transactionsconcerning the financial performance of Nicolet and the selected companies:
​​​​​​​​​Selected Companies​
​​​Nicolet​​
25th
Percentile
​​Median​​Average​​
75th
Percentile
​
MRQ Pre-tax Pre-provision Return on Average Assets(1)
​​​​2.19%​​​​​1.61%​​​​​1.87%​​​​​1.90%​​​​​2.06%​​
MRQ Core Return on Average Assets(1)
​​​​1.68%​​​​​1.32%​​​​​1.46%​​​​​1.44%​​​​​1.65%​​
MRQ Core Return on Average Tangible Common
Equity(1)
​​​​20.47%​​​​​13.28%​​​​​14.45%​​​​​15.21%​​​​​17.51%​​
MRQ Net Interest Margin​​​​3.32%​​​​​3.14%​​​​​3.31%​​​​​3.37%​​​​​3.40%​​
MRQ Fee Income / Revenue Ratio(2)
​​​​33.7%​​​​​21.6%​​​​​26.5%​​​​​25.7%​​​​​31.2%​​
MRQ Efficiency Ratio​​​​49.5%​​​​​55.5%​​​​​52.7%​​​​​53.2%​​​​​49.7%​​
​
(1)
Core net income after taxes and before extraordinary items, excluding gain on the sale of available for the Regional Groupsale securities, amortization of intangibles, goodwill impairment and 14 transactions for the Nationwide Group):nonrecurring items as defined by S&P Global.
​
Regional Group:(2)
Buyer (State)​​Target (State)​
Arbor Bancorp, Inc. (MI)​​FNBH Bancorp, Inc. (MI)​
Level One Bancorp, Inc. (MI)​​Ann Arbor Bancorp, Inc. (MI)​
Associated Banc-Corp (WI)​​First Staunton Bancshares, Inc. (IL)​
Nicolet Bankshares, Inc. (WI)​​Choice Bancorp, Inc. (WI)​
ChoiceOne Financial Services, Inc. (MI)​​County Bank Corp (MI)​
German American Bancorp, Inc. (IN)​​Citizens First Corporation (KY)​
Bank First Corporation (WI)​​Partnership Community Bancshares, Inc. (WI)​
Peoples Bancorp Inc. (OH)​​First Prestonsburg Bancshares, Inc. (KY)​
First Merchants Corporation (IN)​​MBT Financial Corp. (MI)​
Stifel Financial Corp. (MO)​​Business Bancshares, Inc. (MO)​
CNB Bank Shares, Inc. (IL)​​Jacksonville Bancorp, Inc. (IL)​
LCNB Corp. (OH)​​Columbus First Bancorp, Inc. (OH)​
Equity Bancshares, Inc. (KS)​​Kansas Bank Corporation (KS)​
Independent Bank Corporation (MI)​​TCSB Bancorp, Inc. (MI)​
Midland States Bancorp, Inc. (IL)​​Alpine Bancorporation, Inc. (IL)​
MutualFirst Financial, Inc. (IN)​​Universal Bancorp (IN)​
Horizon Bancorp (IN)​​Wolverine Bancorp, Inc. (MI)​
First Busey Corporation (IL)​​Mid Illinois Bancorp, Inc. (IL)​
First Merchants Corporation (IN)​​Independent Alliance Banks, Inc. (IN)​
First Busey Corporation (IL)​​First Community Financial Partners, Inc. (IL)​
First Merchants Corporation (IN)​​Arlington Bank (OH)​
Excluded gain on sale of securities.
​
KBW’s analysis also showed the following concerning the financial condition of Nicolet and the selected companies:
​​​​​​Selected Companies​
​​​Nicolet​​
25th
Percentile
​​Median​​Average​​
75th
Percentile
​
Tangible Common Equity / Tangible Assets​​
8.60%/7.75%(1)
​​​​8.46%​​​​​9.42%​​​​​9.55%​​​​​10.78%​​
Total Capital Ratio​​
13.43%/12.00%(1)
​​​​13.75%​​​​​15.15%​​​​​15.64%​​​​​16.67%​​
Loans / Deposits​​
73.0%/75.4%(1)
​​​​81.2%​​​​​86.0%​​​​​84.9%​​​​​89.7%​​
Loan Loss Reserve / Loans​​
1.14%/1.17%(1)
​​​​1.36%​​​​​1.48%​​​​​1.55%​​​​​1.59%​​
Nonperforming Assets / Loans + OREO​​0.52%​​​​1.27%​​​​​0.98%​​​​​1.01%​​​​​0.70%​​
MRQ Net Charge-offs / Average Loans​​0.01%​​​​0.13%​​​​​0.04%​​​​​0.13%​​​​​0.02%​​
​
Nationwide Group:(1)
Buyer (State)​​Target (State)​
First Bancshares, Inc. (MS)​​Southwest Georgia Financial Corporation (GA)​
Citizens & Northern Corporation (PA)​​Covenant Financial Inc. (PA)​
Community Bank System, Inc. (NY)​​Steuben Trust Corporation (NY)​
Professional Holding Corp. (FL)​​Marquis Bancorp, Inc. (FL)​
OceanFirst Financial Corp. (NJ)​​Two River Bancorp (NJ)​
Associated Banc-Corp (WI)​​First Staunton Bancshares, Inc. (IL)​
S&T Bancorp, Inc. (PA)​​DNB Financial Corporation (PA)​
BancFirst Corporation (OK)​​Pegasus Bank (TX)​
First Merchants Corporation (IN)​​MBT Financial Corp. (MI)​
Banner Corporation (WA)​​Skagit Bancorp, Inc. (WA)​
Seacoast Banking Corporation of Florida (FL)​​First Green Bancorp, Inc. (FL)​
Stifel Financial Corp. (MO)​​Business Bancshares, Inc. (MO)​
Allegiance Bancshares, Inc. (TX)​​Post Oak Bancshares, Inc. (TX)​
RBB Bancorp (CA)​​First American International Corp. (NY)​
Second statistic adjusted pro forma for pending acquisition of Mackinac Financial Corporation.
​
In addition, KBW’s analysis showed the following concerning the market performance of Nicolet and the selected companies:
​​​​​​Selected Companies​
​​​Nicolet​​
25th
Percentile
​​Median​​Average​​
75th
Percentile
​
One-Year Stock Price Change​​27.8%​​​​34.8%​​​​​44.0%​​​​​47.2%​​​​​55.6%​​
One-Year Total Return​​27.8%​​​​38.6%​​​​​49.4%​​​​​51.7%​​​​​60.1%​​
Year-To-Date Stock Price Change​​5.5%​​​​10.3%​​​​​16.4%​​​​​19.7%​​​​​23.5%​​
Price / Tangible Book Value per Share​​
1.86x/1.92x(1)
​​​​1.21x​​​​​1.40x​​​​​1.46x​​​​​1.52x​​
Price / 2021 EPS Estimate​​
11.1x(2)
​​​​9.1x​​​​​10.5x​​​​​11.1x​​​​​12.8x​​
Price / 2022 EPS Estimate​​
11.3x(2)
​​​​9.8x​​​​​11.5x​​​​​12.0x​​​​​13.5x​​
Dividend Yield​​0.0%​​​​2.1%​​​​​2.6%​​​​​2.6%​​​​​3.4%​​
LTM Dividend Payout Ratio​​0.0%​​​​29.9%​​​​​32.1%​​​​​32.5%​​​​​37.1%​​
​
(1)
Second statistic adjusted pro forma for pending acquisition of Mackinac Financial Corporation.
​
 
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For each precedent transaction, Magstar compared the implied ratio of deal value to certain financial characteristics of Commerce as follows:
•
the multiple of the deal value to the acquired company’s tangible common book value (the “Price-to-Tangible Common Book Value Multiple”);
​
•
the multiple of the deal value to the acquired company’s LTM net earnings per share (the “Price-to-LTM Earnings Multiple”); and
​
•
the multiple of the difference between the deal value and the acquired company’s tangible book value to the acquired company’s core deposits (the “Premium-to-Core Deposits Multiple”).
​
The results of the analysis are set forth in the table below. Transaction multiples for the merger were based on the deal value assumed by Magstar of $129.9 million for Commerce and were based on December 31, 2019 financial results of Commerce.
Assumed Value for Commerce Based On:​​
Price-to-Tangible
Common Book Value
Multiple
​​
Price-to-LTM
Earnings Multiple
​​
Premium-to-Core
Deposits Multiple
​
Deal Value​​​​198%​​​​​18.0x​​​​​16.1%​​
Precedent Transactions Regional Group:​​​​​​​​​​​​​​​​​​​
Median​​​​173%​​​​​18.3x​​​​​12.7%​​
Minimum​​​​127%​​​​​12.9x​​​​​4.1%​​
Maximum​​​​265%​​​​​27.8x​​​​​22.6%​​
Precedent Transactions Nationwide Group:​​​​​​​​​​​​​​​​​​​
Median​​​​180%​​​​​18.3x​​​​​13.1%​​
Minimum​​​​127%​​​​​11.9x​​​​​4.1%​​
Maximum​​​​259%​​​​​35.8x​​​​​18.8%​​
Using publicly available information, Magstar compared the financial performance of Commerce with that of the median of the precedent transactions from both the Regional and Nationwide Groups. The performance highlights are based on December 31, 2019 financial results of Commerce.
​​​
Tangible
Equity/​
Tangible
Assets
​​
Core
Deposits
​​
LTM
ROAA(1)
​​
LTM
ROAE(2)
​​
Efficiency
Ratio
​​
NPAs/​
Assets(3)
​​
ALLL/​
NPLs (4)
​
Commerce​​​​9.23%​​​​​65.4%​​​​​1.06%​​​​​11.85%​​​​​52.9%​​​​​0.37%​​​​​180.4%​​
Precedent Transactions Regional Group:​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Median​​​​9.97%​​​​​83.9%​​​​​1.01%​​​​​10.12%​​​​​65.4%​​​​​0.52%​​​​​144.5%​​
Precedent Transactions Nationwide Group:​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Median​​​​9.27%​​​​​83.7%​​​​​1.01%​​​​​10.75%​​​​​61.9%​​​​​0.47%​​​​​185.0%​​
​
(1)
Last twelve months return on average assets.
​
(2)
Last twelve months return on average equity.
​
(3)
Non-performing assets as a percentExcluded research analysts’ estimates of total assets.
​
(4)
Allowance for loan and lease losses as a percentageNicolet not updated following the announcement of non-performing loans.pending acquisition of Mackinac Financial Corporation.
​
No company or transaction used as a comparison in the above transaction analysesselected companies analysis is identical to Commerce, and no transaction was consummated on terms identical to the terms of the merger agreement.Nicolet. Accordingly, an analysis of these results is not strictly mathematical. Rather, it involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies involved.
County Selected Companies Analysis.    Using publicly available information, KBW compared the financial performance, financial condition and market performance of County to 19 selected major exchange-traded banks that are headquartered in the U.S. Midwest region with total assets between $1.0 billion and $2.5 billion. Merger targets were excluded from the selected companies.
The resulting valuesselected companies were as follows:
Ames National Corporation
BankFinancial Corporation
CF Bankshares Inc.
ChoiceOne Financial Services, Inc.
Citizens Community Bancorp, Inc.
Farmers & Merchants Bancorp, Inc.
First Capital, Inc.
First Savings Financial Group, Inc.
Guaranty Federal Bancshares, Inc.
Hawthorn Bancshares, Inc.
Landmark Bancorp, Inc.
LCNB Corp.
Limestone Bancorp, Inc.
Middlefield Banc Corp.
Ohio Valley Banc Corp.
Richmond Mutual Bancorporation, Inc.
SB Financial Group, Inc.
United Bancshares, Inc.
Waterstone Financial, Inc.
To perform this analysis, KBW used profitability and other financial information for the latest 12 months or the most recent completed fiscal quarter available or as of the precedent transactions Regional Group usingend of such periods and market price information as of June 18, 2021. In addition, KBW used 2021 and 2022 EPS estimates taken from publicly available consensus “street estimates” for County and the median valuesselected companies to the extent publicly available (consensus “street” estimates were not publicly available for eight of the selected companies). Where consolidated holding company level financial data was unreported, subsidiary bank level data was utilized to calculate ratios. Subsidiary bank level data necessary to calculate Total Capital Ratio was also unreported for four of the selected companies. Certain financial data prepared by KBW, and as referenced in the tables presented below, may not correspond to the data presented in County’s historical financial statements, or the data prepared by Stephens Inc. presented under the section “The Merger — Opinion of County’s Financial Advisor,” as a result of the different assumptions and methods used by KBW to compute the financial data presented.
 
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indicated an implied aggregate valuation ranging between $114.0 millionKBW’s analysis showed the following concerning the financial performance of County and $132.0 million, with a three factor valuation averagethe selected companies:
​​​​​​​​​Selected Companies​
​​​County​​
25th
Percentile
​​Median​​Average​​
75th
Percentile
​
MRQ Pre-tax Pre-provision Return on Average Assets(1)
​​​​1.40%​​​​​1.39%​​​​​1.56%​​​​​1.84%​​​​​2.00%​​
MRQ Core Return on Average Assets(1)
​​​​1.07%​​​​​1.05%​​​​​1.21%​​​​​1.42%​​​​​1.55%​​
MRQ Core Return on Average Tangible Common
Equity(1)
​​​​9.81%​​​​​10.85%​​​​​12.97%​​​​​14.74%​​​​​19.20%​​
MRQ Net Interest Margin​​​​2.91%​​​​​2.90%​​​​​3.32%​​​​​3.28%​​​​​3.60%​​
MRQ Fee Income / Revenue Ratio(2)
​​​​26.6%​​​​​17.8%​​​​​23.9%​​​​​30.8%​​​​​38.5%​​
MRQ Efficiency Ratio​​​​62.4%​​​​​64.7%​​​​​61.2%​​​​​62.7%​​​​​58.2%​​
​
(1)
Core net income after taxes and before extraordinary items, excluding gain on the sale of $120.7 million comparedavailable for sale securities, amortization of intangibles, goodwill impairment and nonrecurring items as defined by S&P Global.
​
(2)
Excluded gains/losses on sale of securities.
​
KBW’s analysis also showed the following concerning the financial condition of County and the selected companies:
​​​​​​​​​Selected Companies​
​​​County​​
25th
Percentile
​​Median​​Average​​
75th
Percentile
​
Tangible Common Equity / Tangible Assets​​​​10.62%​​​​​7.94%​​​​​9.30%​​​​​9.83%​​​​​10.11%​​
Total Capital Ratio​​​​19.11%​​​​​13.46%​​​​​14.61%​​​​​16.02%​​​​​16.96%​​
Loans / Deposits​​​​92.1%​​​​​72.2%​​​​​79.7%​​​​​80.1%​​​​​88.5%​​
Loan Loss Reserve / Loans​​​​1.48%​​​​​1.06%​​​​​1.29%​​​​​1.19%​​​​​1.41%​​
Nonperforming Assets / Loans + OREO​​​​5.72%​​​​​1.54%​​​​​0.90%​​​​​1.17%​​​​​0.64%​​
MRQ Net Charge-offs / Average Loans​​​​(0.01%)​​​​​0.05%​​​​​0.01%​​​​​0.03%​​​​​(0.00%)​​
In addition, KBW’s analysis showed the following concerning the market performance of County and, to the estimated Deal Value of $129.9 million. The resulting values of the precedent transactions Nationwide Group median values indicated an implied aggregate valuation ranging between $118.1 million and $132.2 million, with a three factor valuation average of $122.8 million compared to the $129.9 million estimated deal value assumed by Magstar.
Income Approach — Discounted Cash Flow Analysis.   Taking into account various factors including, but not limited to, Commerce’s recent performance, the current banking environment and the local economy in which Commerce operates, Magstar utilized information provided by management of Commerce, net income estimates for Commerce over a forward looking five year period which formed the basis for the discounted cash flow analyses. The resulting projected Commerce net income numbers used for the basis of the discounted cash flow analysis were $8.1 million for 2020, $9.1 million for 2021, $10.1 million for 2022, $11.7 million for 2023, and $12.9 million for 2024. No dividends were assumed to be paid by Commerce over the projection period.
To determine present values of Commerce based on these projections, Magstar utilized three discounted cash flow models, each of which capitalized terminal values using a different methodology: (1) Perpetuity Model (“DCF Present Value of Future Free Cash Flow”); (2) Terminal Price/Earnings Multiple (“DCF Terminal P/E Multiple”); and, (3) Terminal Price/Tangible Book Value Multiple (“DCF Terminal P/TBV Multiple”).
In the DCF Present Value of Future Free Cash Flow analysis, a perpetuity model was used assuming Commerce’s assets increase perpetually at an annual growth rate of 4.0%. The terminal value was then calculated assuming a range of discount rates between 11.0% and 15.0%, with a midpoint of 13.0%. The resulting aggregate values of Commerce’s present value of future free cash flows ranged between $98.7 million and $154.7 million, with a midpoint of $123.8 million.
In the DCF Terminal P/E Multiple analysis, an estimated value of Commerce’s common stock was calculated based on the present value of Commerce’s after-tax net income based on Commerce management’s forward-looking projections over the five year projection period. The projected 2024 net income amount was $12.9 million and served as the basis of the terminal earnings value in the DCF Terminal P/E Multiple model. Magstar utilized a terminal value at the end of 2024 by applying a range of price-to-earnings multiples of 16.3x to 20.3x, with a midpoint of 18.3x, which is based around the median price-to-earnings multiple derived from transactions in the Nationwide Group. The present value of Commerce’s projected dividends, plus the terminal value was then calculated assuming a range of discount rates between 11.0% and 15.0%, with a midpoint of 13.0%. This range of discount rates was chosen to reflect different assumptions regarding the required rates of return of holders or prospective buyers of Commerce’s common stock. The resulting aggregate values of Commerce’s common stock of the DCF Terminal P/E Multiple ranged between $111.9 million and $163.5 million, with a midpoint of $136.0 million.
In the DCF Terminal P/TBV Multiple model analysis, the same earnings estimates and projected net income were used as in the preceding DCF Termination P/E Multiple Analysis model, however, in arriving at the terminal value at the end of 2024, Magstar applied a range of price-to-tangible book value multiples of 1.70x to 1.90x with the midpoint being 1.80x, which is based around the median price-to-tangible book value multiple derived from transactions in the Nationwide Group. The present value of projected dividends, plus the terminal value, was then calculated assuming a range of discount rates between 11.0% and 15.0%, with a midpoint of 13.0%. The resulting aggregate values of Commerce’s common stock of the DCF Terminal P/TBV Multiple ranged between $106.6 million and $139.8 million, with a midpoint of $122.2 million.

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These analyses and their underlying assumptions yielded a range of implied multiple values for Commerce, which are outlined in the table below:
Implied Value for Commerce Based On:​​
Price-to-Tangible
Book Value Multiple
​​
Price-to-LTM
Earnings Multiple
​​
Premium-to-Core
Deposits Multiple
​
Deal Value​​​​198%​​​​​18.0x​​​​​16.1%​​
DCF Analysis — Perpetuity Model​​​​​​​​​​​​​​​​​​​
Midpoint​​​​188%​​​​​17.1x​​​​​14.6%​​
DCF Analysis — Terminal P/E Multiple​​​​​​​​​​​​​​​​​​​
Midpoint​​​​207%​​​​​16.9x​​​​​14.2%​​
DCF Analysis — Terminal P/TBV Multiple​​​​​​​​​​​​​​​​​​​
Midpoint​​​​186%​​​​​18.8x​​​​​17.6%​​
Magstar noted that while the discounted cash flow present value analysis is a widely used valuation methodology, it relies on numerous assumptions, including asset and earnings growth rates, projected dividend payouts, terminal values and discount rates. Magstar’s analysis does not purport to be indicative of the actual values or expected values of Commerce’s common stock.
Nicolet Comparable Companies Analysis:   Magstar usedextent publicly available, information to comparethe selected financial and trading information for Nicolet and a group of 28 publicly-traded financial institutions selected by Magstar which was based on publicly-traded banks in the United States with total assets between $2.0 billion and $5.0 billion, LTM ROAA greater than 1.35%, and traded on a major exchange. The following publicly-traded financial institutions comprised the comparable peer group:companies:
​Atlantic Capital Bancshares, Inc.​​Heritage Commerce Corp​
​Bank First Corporation​​Home Bancorp, Inc.​
​Bank of Marin Bancorp​​Lakeland Financial Corporation​
​Bridgewater Bancshares, Inc.​​Macatawa Bank Corporation​
​Carolina Financial Corporation​​Mercantile Bank Corporation​
​CBTX, Inc.​​Old Second Bancorp, Inc.​
​Civista Bancshares, Inc.​​People’s Utah Bancorp​
​Community Trust Bancorp, Inc.​​Preferred Bank​
​Farmers National Banc Corp.​​Sierra Bancorp​
​First Community Bankshares, Inc.​​Silvergate Capital Corporation​
​First Defiance Financial Corp.​​Southern Missouri Bancorp, Inc.​
​First Financial Corporation​​Sterling Bancorp, Inc.​
​German American Bancorp, Inc.​​Stock Yards Bancorp, Inc.​
​HBT Financial, Inc.​​Summit Financial Group, Inc.​
​​​​​​​​​Selected Companies​
​​​
County(1)
​​
25th
Percentile
​​Median​​Average​​
75th
Percentile
​
One-Year Stock Price Change​​​​8.5%​​​​​10.9%​​​​​24.0%​​​​​28.4%​​​​​43.6%​​
One-Year Total Return​​​​10.3%​​​​​14.0%​​​​​30.0%​​​​​32.4%​​​​​50.6%​​
Year-To-Date Stock Price Change​​​​6.4%​​​​​2.7%​​​​​4.3%​​​​​8.6%​​​​​20.9%​​
Price / Tangible Book Value per Share​​​​0.90x​​​​​1.08x​​​​​1.16x​​​​​1.14x​​​​​1.22x​​
Price / 2021 EPS Estimate​​​​10.8x​​​​​8.3x​​​​​10.2x​​​​​10.3x​​​​​11.2x​​
Price / 2022 EPS Estimate​​​​11.4x​​​​​10.8x​​​​​11.1x​​​​​11.8x​​​​​12.1x​​
Dividend Yield​​​​1.7%​​​​​2.0%​​​​​2.7%​​​​​2.6%​​​​​3.6%​​
LTM Dividend Payout Ratio​​​​17.9%​​​​​15.9%​​​​​31.5%​​​​​27.1%​​​​​36.4%​​
The analysis compared publicly available financial and market trading information for Nicolet and the data for the 28 financial institutions identified above as of and for the most recent twelve-month period which was publicly available. The table below compares the data for Nicolet and the data for the 28 financial institutions identified above, with pricing data as of February 14, 2020.

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​​​
Market
Cap
($M)
​​
Price/​
Tangible
Book
Value
​​
Price/​
LTM
EPS
​​
Price/​
2020E
EPS
​​
Dividend
Yield
​​
YTD/Price
Change
​​
One
Year
Total
Return
​
Nicolet​​​$766​​​​​219%​​​​​13.1x​​​​​15.1x​​​​​0.00%​​​​​(2.1)%​​​​​28.8%​​
Comparable Companies:​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Median​​​$513​​​​​165%​​​​​12.0x​​​​​12.5x​​​​​2.28%​​​​​(5.3)%​​​​​6.5%​​
Minimum​​​$306​​​​​105%​​​​​5.3x​​​​​8.2x​​​​​0.00%​​​​​(11.2)%​​​​​(26.1)%​​
Maximum​​​$1,206​​​​​255%​​​​​17.9x​​​​​18.7x​​​​​4.46%​​​​​8.7%​​​​​35.9%​​
Nicolet fell within the range of pricing metrics of comparable companies. No company used as a comparison in the above analysesselected companies analysis is identical to Nicolet.County. Accordingly, an analysis of these results is not strictly mathematical. Rather, it involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies.companies involved.

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Selected Transactions Analysis.    Magstar compared selected financial information and the merger consideration of Commerce to selectedKBW reviewed publicly available financial and trading information for a group of 10 publicly-traded financial institutionsrelated to 16 selected by Magstar which was based on publicly-traded banks in the Southwest United StatesU.S. whole bank transactions announced since December 31, 2019 with total assetsannounced transaction values between $500$150 million and $2.0 billion, LTM ROAA between 0.5% and 2.0%, NPAs$400 million. Mergers of less than 1.0% of assets, and traded on a major exchange:equals were excluded from the selected transactions.
The selected transactions were as follows:
​Ames National CorporationAcquiror​​LCNB Corp.Acquired Company​
​BankFinancial CorporationUnited Bankshares, Inc.​​Level OneCommunity Bankers Trust Corporation​
First Foundation Inc.​​TGR Financial, Inc.​
First Bancorp​​Select Bancorp, Inc.​
​Central Federal CorporationHPS Investment Partners, LLC​​LimestoneMarlin Business Services Corp.​
Nicolet Bankshares, Inc.​​Mackinac Financial Corporation​
VyStar Credit Union​​Heritage Southeast Bancorporation Inc.​
Peoples Bancorp Inc.​​Premier Financial Bancorp, Inc.​
Banc of California, Inc.​First Capital,​Pacific Mercantile Bancorp​
Stock Yards Bancorp, Inc.​​Kentucky Bancshares, Inc.​
Dollar Mutual Bancorp​​Standard AVB Financial Corp.​
Enterprise Financial Services Corp​​Seacoast Commerce Banc Holdings​
Provident Financial Services, Inc.​​SB Financial Group,One Bancorp​
United Community Banks, Inc.​​Three Shores Bancorporation, Inc.​
LendingClub Corporation​Landmark​Radius Bancorp, Inc.​
Heartland Financial USA, Inc.​​UnitedAIM Bancshares, Inc.​
Business First Bancshares, Inc.​​Pedestal Bancshares, Inc.​
The analysis comparedFor each selected transaction, KBW derived the following implied transaction statistics, in each case based on the transaction consideration value paid for the acquired company and using financial information for Commerce todata based on the selectedacquired company’s then latest publicly available financial informationstatements prior to the announcement of the respective transaction:
•
Price per common share to tangible book value per share of the acquired company (in the case of selected transactions involving a private acquired company, this transaction statistic was calculated as total transaction consideration divided by total tangible common equity);
​
•
Price per common share to LTM EPS of the acquired company (in the case of selected transactions involving a private acquired company this transaction statistic was calculated as total transaction consideration divided by LTM earnings); and
​
•
Tangible equity premium to core deposits (total deposits less time deposits greater than $100,000) of the acquired company, referred to as core deposit premium,
​
KBW also reviewed the price per common share paid for the 10acquired company for the 13 selected transactions involving publicly traded acquired companies as a premium/(discount) to the closing stock price of the acquired company one day prior to the announcement of the acquisition (expressed as a percentage and referred to as the one day market premium). The resulting transaction statistics for the selected transactions were compared with the corresponding transaction statistics for the proposed merger based on the implied transaction value for the proposed merger of $214.5 million in the aggregate and using historical financial institutions identified aboveinformation of County as of andor for the most recent twelve-month period which was publicly available12 months ended March 31, 2021 and the closing price of County common stock on June 18, 2021.

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The results of the analysis are set forth in addition to analyzing the market trading information forfollowing table (excluding the 10 financial institutions. The table below showsimpact of the estimated deal value and impliedLTM EPS multiples for Commerce andthree of the market trading data and impliedselected transactions, which multiples for the 10 financial institutions identified above, with pricing data as of February 14, 2020.were considered not meaningful because they were greater than 35.0x):
​​​
Market
Cap
($M)
​​
Price/​
Tangible
Book
Value
​​
Price/​
LTM
EPS
​​
Price/​
2020E
EPS
​​
Dividend
Yield
​​
YTD/Price
Change
​​
One
Year
Total
Return
​
Deal Value​​​$130​​​​​198%​​​​​18.0x​​​​​NA​​​​​NA​​​​​NA​​​​​NA​​
Comparable Companies:​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Median​​​$172​​​​​131%​​​​​12.0x​​​​​NA​​​​​2.15%​​​​​(3.1)%​​​​​10.2%​​
Minimum​​​$76​​​​​100%​​​​​7.2x​​​​​NA​​​​​0.00%​​​​​(12.6)%​​​​​(16.7)%​​
Maximum​​​$250​​​​​255%​​​​​22.0x​​​​​NA​​​​​4.27%​​​​​7.3%​​​​​28.9%​​
​​​​​​​​​Selected Companies​
​​​
Nicolet /
County
​​
25th
Percentile
​​Median​​Average​​
75th
Percentile
​
Price / Tangible Book Value per Share​​​​1.36x​​​​​1.45x​​​​​1.62x​​​​​1.59x​​​​​1.80x​​
Price / LTM EPS​​​​15.0x​​​​​12.5x​​​​​14.2x​​​​​16.3x​​​​​18.3x​​
Core Deposit Premium​​​​6.2%​​​​​6.7%​​​​​8.5%​​​​​9.2%​​​​​10.0%​​
One-Day Market Premium​​​​46.1%​​​​​23.4%​​​​​31.1%​​​​​39.3%​​​​​68.8%​​
The estimated deal value to Commerce fell within the range of pricing metrics of comparable companies. No company or transaction used as a comparison in the above analysesselected transaction analysis is identical to Commerce.County or the proposed merger. Accordingly, an analysis of these results is not strictly mathematical. Rather, it involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies.companies involved.
Relative Contribution Analysis:Analysis.    MagstarKBW analyzed the relative standalone contribution of Nicolet and CommerceCounty to various pro forma balance sheet and income statement items and the combined market capitalization of the combined entity. This analysis did not include purchase accounting adjustments or synergies.cost savings. To perform this analysis, MagstarKBW used (i) pro forma balance sheet data for Nicolet as of March 31, 2021, as adjusted for the pending acquisition of Mackinac Financial Corporation, and historical balance sheet data for Nicolet and CommerceCounty as of DecemberMarch 31, 2019,2021, (ii) certain publicly available research analysts’ estimates of net income for 2020Nicolet (which estimates reflected the estimated pro forma impact of Nicolet’s pending acquisition of Mackinac Financial Corporation) and 2021 for Nicolet based on S&P CapIQ meanpublicly available consensus estimates,“street estimates” of County, and (iii) estimatesmarket price information as of net income for 2020 and 2021 for Commerce provided by Commerce management.June 18, 2021. The results of Magstar’s

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KBW’s analysis are set forth in the following table, which also compares the results of Magstar’sKBW’s analysis with the implied pro forma ownership percentages of Nicolet shareholders and Commerce stockholdersCounty shareholders in the combined company based on the 1.15x exchange ratioestimated stock portion of the aggregate merger consideration in the merger and also hypothetically assuming 100% stock consideration in the proposed merger:merger for illustrative purposes:
​​​
Commerce
as a % of
Total
​​
Nicolet
as a % of
Total
​
Pro Forma Common Stock Ownership​​​​14.3%​​​​​85.7%​​
Financial Characteristics:​​​​​​​​​​​​​
Total Assets​​​​16.6%​​​​​83.4%​​
Net Loans & Leases​​​​18.8%​​​​​81.2%​​
Core Deposits​​​​12.1%​​​​​87.9%​​
Tangible Equity​​​​16.2%​​​​​83.8%​​
LTM Net Income​​​​11.6%​​​​​88.4%​​
Est. 2020 Net Income​​​​13.5%​​​​​86.5%​​
Est. 2021 Net Income​​​​14.8%​​​​​85.2%​​
​​​Nicolet​​County​
​​​% of Total​​% of Total​
Ownership at Merger:​​​​84%​​​​​16%​​
Ownership at 100% stock:​​​​80%​​​​​20%​​
Market Information:​​​​​​​​​​​​​
Pre-Merger Market Capitalization​​​​86%​​​​​14%​​
Balance Sheet:​​​​​​​​​​​​​
Assets​​​​80%​​​​​20%​​
Gross Loans Held for Investment​​​​79%​​​​​21%​​
Deposits​​​​82%​​​​​18%​​
Tangible Common Equity​​​​74%​​​​​26%​​
Income Statement:​​​​​​​​​​​​​
2021 Earnings​​​​84%​​​​​16%​​
2022 Earnings​​​​87%​​​​​13%​​
2023 Earnings​​​​87%​​​​​13%​​
Accretion / Dilution Analysis:Pro Forma Financial Impact Analysis.    MagstarKBW performed a pro forma merger analysesfinancial impact analysis that combined projected income statement and balance sheet information of CommerceNicolet and Nicolet. Assumptions regardingCounty. Using (i) closing balance sheet estimates as of December 31, 2021 and EPS estimates of Nicolet taken from certain publicly available research analysts’ estimates of Nicolet (which estimates reflected the estimated pro forma impact of Nicolet’s pending acquisition of Mackinac Financial Corporation), (ii) closing balance sheet estimates as of December 31, 2021 and EPS estimates of County taken from publicly available consensus “street estimates”

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of County, and (iii) pro forma assumptions (including, without limitation, the cost savings and related expenses expected to result from the merger as well as certain purchase accounting treatment, acquisition adjustments and cost savings were used to calculateother merger-related adjustments and restructuring charges assumed with respect thereto) provided by Nicolet management, KBW analyzed the estimated financial impact thatof the merger would have on certain projected financial results of Nicolet. In the course of this analysis, Magstar used the median S&P CapIQ mean consensus estimates for earnings estimates for Nicolet for the years ending December 31, 2020 and December 31, 2021 and used earnings estimates provided by Commerce management for Commerce for the years ending December 31, 2020 and December 31, 2021.results. This analysis indicated that the merger is expected tocould be accretive to Nicolet’s consensus estimated earnings per share in 2021. The analysis also indicated that the merger is expected to be2022 and 2023 EPS and dilutive to Nicolet’s estimated tangible book value per share at closing as of December 31, 2021. Furthermore, the analysis indicated that, pro forma for Nicolet in 2020the merger, each of Nicolet’s tangible common equity to tangible assets ratio, Tier 1 Leverage ratio, Common Equity Tier 1 Ratio and that Nicolet would maintainTier 1 Capital Ratio could be lower at closing as of December 31, 2021 and Nicolet’s total risk-based capital ratios in excessratio could be higher at closing as of those required for Nicolet to be considered well-capitalized under existing regulations.December 31, 2021. For all of the above analyses,analysis, the actual results achieved by Commerce and Nicolet prior to and following the merger willmay vary from the projected results, and the variations may be material.
Other FactorsNicolet Dividend Discount Model Analysis.   KBW performed a dividend discount model analysis to estimate a range for the implied equity value of Nicolet. In this analysis, KBW used certain publicly available research analysts’ estimates of Nicolet (which estimates reflected the estimated pro forma impact of Nicolet’s pending acquisition of Mackinac Financial Corporation) and Analysesassumed long term growth rates for Nicolet provided by Nicolet management, and KBW assumed discount rates ranging from 9.0% to 13.0%. Magstar took into consideration various other factorsThe range of values was derived by adding (i) the present value of the implied future excess capital available for dividends that Nicolet could generate over the five-year period from December 31, 2021 through December 31, 2026 as a standalone company and analyses, including but not limited to: current market environment; merger(ii) the present value of Nicolet’s implied terminal value at the end of such period. KBW assumed that Nicolet would maintain a tangible common equity to tangible assets ratio of 8.0% and acquisition environment; movementswould retain sufficient earnings to maintain that level. In calculating the terminal value of Nicolet, KBW applied a range of 12.0x to 16.0x Nicolet’s estimated 2027 earnings. This dividend discount model analysis resulted in thea range of implied values per share of Nicolet common stock valuations of selected publicly-traded banking companies; and movements in the S&P 500 Index.$75.80 per share to $105.09 per share.
The dividend discount model analysis is a widely used valuation methodology, but the results of such methodology are highly dependent on the assumptions that must be made, including asset and earnings growth rates, terminal values, and discount rates. The analysis did not purport to be indicative of the actual values or expected values of Nicolet or the pro forma combined entity.
Conclusion.County Dividend Discount Model Analysis.   Based uponKBW performed a dividend discount model analysis to estimate a range for the foregoing analysesimplied equity value of County, taking into account the cost savings and other investigationsrelated expenses expected to result from the merger. In this analysis, KBW used publicly available consensus “street estimates” of County, assumed long term growth rates for County provided by Nicolet management, and assumptions set forth in its opinion, without giving specific weightingsregarding cost savings and related expenses expected to any one factor, analysis or comparison, Magstar determined that, asresult from the merger provided by Nicolet management, and KBW assumed discount rates ranging from 8.5% to 12.5%. The range of values was derived by adding (i) the present value of the dateimplied future excess capital available for dividends that County could generate over the five-year period from December 31, 2021 through December 31, 2026 as a standalone company and (ii) the present value of its opinion, subjectCounty’s implied terminal value at the end of such period, in each case applying estimated cost savings and related expenses. KBW assumed that County would maintain a tangible common equity to tangible assets ratio of 8.0% and would retain sufficient earnings to maintain that level. In calculating the review, assumptionsterminal value of County, KBW applied a range of 11.0x to 15.0x County’s estimated 2027 earnings (inclusive of estimated cost savings and limitations set forthrelated expenses). This dividend discount model analysis resulted in a range of implied values per share of County common stock, taking into account the opinion,cost savings and related expenses expected to result from the merger, considerationof $41.63 per share to $58.54 per share.
The dividend discount model analysis is a widely used valuation methodology, but the results of such methodology are highly dependent on the assumptions that must be made, including asset and earnings growth rates, terminal values, and discount rates. The analysis did not purport to be paid pursuantindicative of the actual values or expected values of County.
Miscellaneous.    KBW acted as financial advisor to the merger agreementNicolet in connection with the proposed merger and did not act as an advisor to or agent of any other person. As part of its investment banking business, KBW is faircontinually engaged in the valuation of bank and bank holding company securities in connection with acquisitions, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements and valuations for various other purposes. As specialists in the securities of banking companies,

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KBW has experience in, and knowledge of, the valuation of banking enterprises. KBW and its affiliates, in the ordinary course of its and their broker-dealer businesses, may from time to time purchase securities from, and sell securities to, Nicolet and County. In addition, as market makers in securities, KBW and its affiliates may from time to time have a long or short position in, and buy or sell, debt or equity securities of Nicolet or County for its and their own respective accounts and for the accounts of its and their respective customers and clients.
Pursuant to the KBW engagement agreement, Nicolet has agreed to pay KBW a total cash fee of $1,750,000, $350,000 of which became payable to KBW with the rendering of KBW’s opinion and the balance of which is contingent upon the consummation of the merger. Nicolet also has agreed to reimburse KBW for reasonable out-of-pocket expenses and disbursements incurred in connection with its engagement and to indemnify KBW against certain liabilities relating to or arising out of KBW’s engagement or KBW’s role in connection therewith. KBW acted as sole placement agent in connection with the July 2021 Nicolet Subordinated Debt Private Placement, the proceeds of which are contemplated to be used in part to fund a portion of the aggregate cash consideration. Other than the present engagement and acting as sole placement agent as described above, in the past two years preceding the date of the opinion, KBW did not provide investment banking or financial pointadvisory services to Nicolet. In the two years preceding the date of viewKBW’s opinion, KBW did not provide investment banking or financial advisory services to Commerce’s shareholders. Each shareholder is encouragedCounty. KBW may in the future provide investment banking and financial advisory services to read Magstar’s fairness opinion in its entirety. The full text of this fairness opinion is included as Appendix B.Nicolet or County and receive compensation for such services.
Certain Prospective Financial Information of CommerceCounty Provided to County’s Financial Advisor
CommerceCounty does not as a matter of course make public projections as to future sales, earnings or other results. However, the management of Commerce hasCounty prepared the prospective financial information set forth in this joint proxy statement-prospectus to present certain unaudited prospective financial information regarding Commerce’sCounty’s future operations for the years ending December 31, 2020 and2021 through December 31, 20212025 (which we refer to in this joint proxy statement-prospectus as the “Commerce“County projections”). The accompanying prospective financial information was not prepared with a view toward public disclosure or with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants with respect to prospective financial information, but, in the view of the Commerce’sCounty’s management, was prepared on a reasonable basis, reflects the best currently available estimates and judgments, and presents, to the best of County’s management’s knowledge and belief, the expected course of action and the expected future financial performance of Commerce.County. However, this information is not fact and should not be relied upon as being

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necessarily indicative of actual future results, and readers of this joint proxy statement-prospectus are cautioned not to place undue reliance on the prospective financial information.
Neither Commerce’sCounty’s independent auditors, nor any other independent accountants, have compiled, examined, or performed any procedures with respect to the prospective financial information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the prospective financial information.
The CommerceCounty projections, which were prepared by management of Commerce,County, were prepared solely for internal use and are subjective in many respects. The CommerceCounty projections reflect numerous estimates and assumptions made with respect to business, economic, market, competition, regulatory and financial conditions and matters specific to the business of Commerce,County, all of which are difficult to predict and many of which are beyond the control of Commerce.County. The CommerceCounty projections reflect assumptions as to certain business decisions that are subject to change and, in many respects, subjective judgment, and thus are susceptible to multiple interpretations and periodic revisions based on actual experience and business developments. CommerceCounty can give no assurance that the CommerceCounty projections and the underlying estimates and assumptions will be realized. In addition, because the CommerceCounty projections cover multiple years, the information by its nature becomes less predictive with each successive year. Actual results may differ materially from those set forth below, and important factors that may affect actual results and cause the CommerceCounty projections not to be realized include, but are not limited to, risks and uncertainties relating to the business of Commerce,County, industry performance, general business and economic conditions, the effects of the COVID-19 pandemic, customer requirements, competition and adverse changes in applicable laws, regulations or policies. Other factors

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that could cause actual results to differ are further described in the sections of this joint proxy statement-prospectus entitled “Risk Factors” and “A Warning About Forward-Looking Statements,” beginning on page 1422 and page 19,29, respectively.
Furthermore, the CommerceCounty projections do not take into account any circumstances or events occurring after the date they were prepared. CommerceCounty can give no assurance that, had the CommerceCounty projections been prepared as of the date of this joint proxy statement-prospectus, similar estimates and assumptions would be used. Neither Nicolet nor CommerceCounty intend to, and each disclaims any obligation to, make publicly available any update or other revision to the CommerceCounty projections to reflect circumstances existing since their preparation or to reflect the occurrence of unanticipated events, even in the event that any or all of the underlying assumptions are shown to be in error, or to reflect changes in general economic or industry conditions. The CommerceCounty projections do not give effect to the impact of negotiating or executing the merger agreement, the expenses that may be incurred in connection with consummating the merger, the effect of any business or strategic decision or action that has been or will be taken as a result of the merger agreement having been executed, or the effect on CommerceCounty of any business or strategic decisions or actions that would likely have been taken if the merger agreement had not been executed, but which were instead altered, accelerated, postponed or not taken in anticipation of the merger. Further, the CommerceCounty projections do not take into account the effect of any possible failure of the merger to occur. None of Commerce,County, Nicolet or their respective affiliates, officers, directors, advisors or other representatives has made, makes or is authorized in the future to make any representation to any shareholder of CommerceCounty or Nicolet, or any other person, regarding Nicolet’sCounty’s actual performance compared to the information contained in the CommerceCounty projections or that projected results will be achieved.
In light of the foregoing, and considering that the CommerceCounty special meeting will be held several months after the CommerceCounty projections were prepared, as well as the uncertainties inherent in any forecasted information, shareholders of CommerceCounty are cautioned not to place unwarranted reliance on such information in connection with their consideration of the merger.
As reflectedThe following prospective financial information was approved by County management for use by County’s financial advisor, Stephens, in connection with its financial analyses: (i) certain internal balance sheet and income statement projections for County for the years ending December 31, 2021 through December 31, 2025, which projections included net income to common shareholders of $13.32 million, $16.93 million, $20.36 million, $22.44 million and $23.98 million, respectively, for each such successive year and (ii) estimated dividends per share for County provided by senior management of $0.40 per share for each of the years ending December 31, 2021 through December 31, 2025. During this period total assets were projected to grow at a rate of approximately 6.5% annually.
Instead of the foregoing, Nicolet management directed Nicolet’s financial advisor, KBW, to use publicly available consensus “street estimates” of County, as well as assumed County long-term growth rates provided to KBW by Nicolet management, in performing financial analyses in connection with KBW’s opinion.
Certain Prospective Financial Information of Nicolet
Nicolet does not as a matter of course make public projections as to future sales, earnings, or other results. However, for purposes of extrapolating Nicolet’s financial results, Nicolet’s senior management provided to Nicolet’s financial advisor, KBW, and also to County’s financial advisor, Stephens, Nicolet management’s estimates of a long-term 5% annual earnings per share (“EPS”) growth rate for the years ending December 31, 2023 through December 31, 2027 and a long-term 2% annual asset growth rate for the years ending December 31, 2023 through December 31, 2026 (which we refer to in this joint proxy statement-prospectus as the “Nicolet projection”). That limited prospective financial information was not prepared with a view toward public disclosure or with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants with respect to prospective financial information, but, in the Opinionview of Commerce’s Financial Advisor, Commerce projected net income of approximately $8 million for 2020,Nicolet’s management, was estimated by management on a reasonable basis, reflects the best currently available estimates and approximately $9 million for 2021. These projections were prepared priorjudgments, and presents, to the onsetbest of management’s knowledge and belief, the expected course of action and the expected future financial performance of Nicolet. However, this information is not fact and should not be relied upon as being necessarily indicative of actual future

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results, and readers of this joint proxy statement-prospectus are cautioned not to place undue reliance on the prospective financial information.
Neither Nicolet’s independent auditors, nor any other independent accountants, have compiled, examined, or performed any procedures with respect to the prospective financial information of Nicolet contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the prospective financial information.
The Nicolet projection, which was prepared by management of Nicolet, was prepared solely for internal use and is subjective in many respects. The Nicolet projection reflects numerous estimates and assumptions made with respect to business, economic, market, competition, regulatory and financial conditions and matters specific to the business of Nicolet, all of which are difficult to predict and many of which are beyond the control of Nicolet. The Nicolet projection reflects assumptions as to certain business decisions that are subject to change and, in many respects, subjective judgment, and thus is susceptible to multiple interpretations and periodic revisions based on actual experience and business developments. Nicolet can give no assurance that the Nicolet projection and the underlying estimates and assumptions will be realized. In addition, because the Nicolet projection covers multiple years, the information by its nature becomes subject to greater uncertainty with each successive year. Actual results may differ materially from those set forth below, and important factors that may affect actual results and cause the Nicolet projection not to be realized include, but are not limited to, risks and uncertainties relating to the business of Nicolet, industry performance, general business and economic conditions, the effects of the coronavirus pandemic.COVID-19 pandemic, customer requirements, competition and adverse changes in applicable laws, regulations or policies. Other factors that could cause actual results to differ are further described in the sections of this joint proxy statement-prospectus entitled “Risk Factors” and “A Warning About Forward-Looking Statements,” beginning on page 22 and page 29, respectively.
Furthermore, the Nicolet projection does not take into account any circumstances or events occurring after the date it was prepared. Nicolet can give no assurance that, had the Nicolet projection been prepared as of the date of this joint proxy statement-prospectus, similar estimates and assumptions would be used. Nicolet does not intend to, and disclaims any obligation to, make publicly available any update or other revision to the Nicolet projection to reflect circumstances existing since its preparation or to reflect the occurrence of unanticipated events, even in the event that any or all of the underlying assumptions are shown to be in error, or to reflect changes in general economic or industry conditions. The Nicolet projection does not give effect to the impact of negotiating or executing the merger agreement, the expenses that may be incurred in connection with consummating the merger, the effect of any business or strategic decision or action that has been or will be taken as a result of the merger agreement having been executed, or the effect on Nicolet of any business or strategic decisions or actions that would likely have been taken if the merger agreement had not been executed, but which were instead altered, accelerated, postponed or not taken in anticipation of the merger. Further, the Nicolet projection does not take into account the effect of any possible failure of the merger to occur. None of Nicolet, County or their respective affiliates, officers, directors, advisors or other representatives has made, makes or is authorized in the future to make any representation to any shareholder of Nicolet or County, or any other person, regarding Nicolet’s actual performance compared to the Nicolet projection or that the projected EPS and asset growth rates will be achieved.
In light of the foregoing, and considering that the Nicolet special meeting will be held several months after the Nicolet projection was prepared, as well as the uncertainties inherent in any forecasted information, shareholders of Nicolet are cautioned not to place unwarranted reliance on such information in connection with their consideration of the merger.
The following prospective financial information was approved by Nicolet for use by the financial advisors in performing financial analyses in connection with their respective opinions: (i) as discussed above, an estimated long-term EPS annual growth rate for Nicolet of 5% for the years ending December 31, 2023 through December 31, 2027 and a long-term 2% annual asset growth rate for the years ending December 31, 2023 through December 31, 2026, and (ii) certain publicly available research analyst “street estimates” of Nicolet.

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Interests of Certain Persons in the Merger
General
The directors and executive officers of CommerceCounty have interests in the transaction in addition to their interests generally as shareholders of Commerce.County. These interests are described below. The board of directors

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of each of Nicolet and CommerceCounty was aware of these interests and considered them, in addition to other matters, in approving the merger agreement.
Appointment to the Boards of Directors of Nicolet and Nicolet National Bank.Bank; Continuing Employment
The merger agreement provides that one current member of the CommerceCounty board will be appointed to the boards of Nicolet and Nicolet National Bank, and such member is expected to be Joseph Fazio III.Lynn D. Davis. Nicolet directors may participate in a director deferred compensation plan, pursuant to which participating directors may defer up to 100% of their board compensation towardstoward the purchase of Nicolet common stock on a quarterly basis to be held in a trust and distributed when each participating director ends his or her service. Although directors are entitled to a separate fee for meetings of each of the boards of Nicolet and Nicolet National Bank, the boards typically meet jointly, and the directors are entitled to only one fee for such joint meetings.
Employment Agreements.   Commerce has entered into separate employment agreements with eachAdditionally, as of the following Commerce officers: Joseph Fazio III, David Borchardt, Thomas Hopp and Kevin Volm (the “Employment Agreements”). Each Employment Agreement provideseffective date, Mr. Schneider will join the senior management team of Nicolet as Senior Vice President, Agriculture Lending Manager. Although it is anticipated that Mr. Schneider’s employment with Nicolet may provide for severance benefits in the form ofan initial base salary continuation for twenty-four months, plusof $330,000, other key terms of such employment are subject to further negotiation.
Stock Option Awards
The merger agreement provides that each vested and unvested County stock option outstanding immediately prior to the bonuseffective date will be cancelled as a result of the merger and without any action on the part of the holder. In consideration therefor, the holder will be eligible to which the officer would have been entitled to receive for the bonus period in which the termination of employment occurred, and twenty-four months of continuation of coverage under benefit plans (or a cash payment equalin an amount calculated pursuant to the costmerger agreement, including each of obtaining such health, life, disabilityCounty’s executive officers, who are Tim J. Schneider, President of County, Chief Executive Officer of Investors Community Bank and other benefits)Director of County and Investors Community Bank; Mark R. Binversie, President of Investors Community Bank and Director of County and Investors Community Bank; Glen L. Stiteley, Treasurer and Chief Financial Officer of County and Executive Vice President — Treasurer and Chief Financial Officer of Investors Community Bank; David A. Coggins, Executive Vice President and Chief Banking Officer of Investors Community Bank; Mark A. Miller, Secretary of County and Executive Vice President, General Counsel, and Chief Risk Officer of Investors Community Bank; John R. Fillingim, Executive Vice President and Chief Credit Officer of Investors Community Bank; and Matthew R. Lemke, Executive Vice President — Chief Retail and Deposit Officer of Investors Community Bank.
In exchange for the cancelled stock options, the executives will receive estimated payments in the event such officer’s employment is terminated without “cause” orfollowing amounts, assuming all current options remain unexercised: Mr. Schneider, $351,344 (22,483 cancelled stock options); Mr. Binversie, $156,023 (11,311 cancelled stock options); Mr. Stiteley, $152,219 (11,606 cancelled stock options); Mr. Coggins, $433,131 (25,490 cancelled stock options); Mr. Miller, $53,288 (5,519 cancelled stock options); Mr. Fillingim, $135,554 (10,311 cancelled stock options); and Mr. Lemke, $88,773 (6,559 cancelled stock options). For purposes of providing these estimates, the officer resigns for “good reason” within two yearsforegoing estimates are based on a Nicolet share price of $71.43, the average closing price of Nicolet shares over the five trading days following the occurrenceannouncement of a “changethe merger. However, under the merger agreement, the Nicolet share price used in control.” The Employment Agreements limit thesedetermining the cash payments in exchange for cancelled stock options will be the volume weighted average closing price of Nicolet common stock on the Nasdaq Capital Market over the 20 trading day period immediately preceding the second trading day prior to the extent necessary soclosing date.
Stock Awards
The merger agreement provides that no portionCounty stock awards, consisting of the payments constitutes an “excess parachute payment”unvested restricted stock, unvested restricted stock units, and outstanding deferred restricted stock units under County’s equity plans, will, within the meaning of Section 280G of the Internal Revenue Code; provided, however, no reduction would be made if the net after-tax payment to an officer (taking into account all taxes) without a reduction is greater than the net after-tax payment to an officer (taking into account all taxes) with the reduction. Each officer also agreed not to compete and not to solicit customers for two years following termination of employment.
Supplemental Executive Retirement Plans.   Commerce has entered into a separate Supplemental Executive Retirement Benefits Agreement with each of the following Commerce officers: Joseph Fazio III, David Borchardt, Thomas Hopp and Kevin Volm (the “SERP Agreements”). Pursuantthirty days prior to the SERP Agreements,effective date, become vested or will be cancelled in exchange for the merger would trigger a “change in control,” which would result in a lump sum payment of the present value of the vested portion of the SERP account balance.
Split-Dollar Agreements.   Commerce has entered into a separate split-dollar life insurance agreement with each of the following Commerce officers: Joseph Fazio III, David Borchardt, Thomas Hopp and Kevin Volm (the “Split Dollar Agreements”). The Split Dollar Agreements provide for certain death benefits payable to an officer’s designated beneficiary following death of the officer. However, such Split Dollar Agreements terminate in full (without any payment due to the office or executive) upon termination of the officer’s employment with Commerce or surrender or termination of the life insurance policy by Commerce (in which case the officer has the opportunity to purchase the policy).
The following chart shows the potential contractual payments to Commerce’s executive officers pursuant to such Employment Agreements in the event of their severance of employment following consummation of the merger.
Executive Officer​​
Severance
Payment
​
Joseph Fazio III​​​$898,409​​
David Borchardt​​​$847,799​​
Thomas Hopp​​​$858,703​​
Kevin Volm​​​$580,109​​
Potential Employment or Consultation with Nicolet.   Nicolet has had preliminary discussions with certain Commerce executive officers about the possibility of the executives continuing employment with Nicolet, including preliminary discussions regarding base salary and other terms of potential employment agreements or providing consulting services pursuant to a consulting agreement. In recognition of the potential contractual obligations discussed above in the event of severance of employment following
 
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right to receive the number of shares of County common stock subject to the applicable award. Shares received as a result of this merger-related vesting will be treated as no election shares under the merger agreement.
Specifically, each unvested County restricted stock award will become vested as a result of the merger. As of the date hereof, only Mr. Binversie holds unvested restricted stock, and he will become vested in 121 shares.
Each unvested County restricted stock unit award will (i) become fully vested and settled per the terms of the applicable award or (ii) be cancelled in consideration for the right to receive the number of shares of County common stock subject to the award. Messrs. Schneider, Binversie, Stiteley, Coggins, Miller, Fillingim, and Lemke, and each of County’s directors, who are William C. Censky, Lynn D. Davis, Jacob B. Eisen, Robert E. Matzke, Wayne D. Mueller, Patrick J. Roe, Andrew J. Steimle, Vicki L. Tandeski, and Gary J. Ziegelbauer, holds as of the date hereof the following numbers of unvested restricted stock units that will be settled or cancelled: Mr. Schneider, 3,601; Mr. Binversie, 11,788; Mr. Stiteley, 8,650; Mr. Coggins, 349; Mr. Miller, 715; Mr. Fillingim, 7,700; Mr. Lemke, 3,782; Mr. Censky, 411; Dr. Davis, 411; Mr. Eisen, 411; Mr. Matzke, 411; Mr. Mueller, 411; Mr. Roe, 411; Mr. Steimle, 411; Ms. Tandeski, 411; and Mr. Ziegelbauer 411.
Each outstanding County deferred restricted stock unit award will be cancelled in accordance with applicable U.S. treasury regulations and in consideration for the right to receive the number of shares of County common stock subject to the award. Messrs. Schneider, Binversie, Stiteley, Coggins, and Miller have the following numbers of outstanding deferred restricted stock units that will be cancelled: Mr. Schneider, 393; Mr. Binversie, 6,961; Mr. Stiteley, 1,689; Mr. Coggins, 1,397; and Mr. Miller, 2,407.
Employment Agreements
County and Investors Community Bank have previously entered into employment agreements with Messrs. Schneider, Binversie, Stiteley, Coggins, Miller, Fillingim and Lemke (each, an “employment agreement,” and, collectively, the “employment agreements”). Under the terms of each employment agreement, the executive is entitled to certain payments if his employment is terminated other than for cause or if he resigns for good reason, in each case during the period beginning six months prior to and ending two years after a change in control.
In addition to earned but unpaid salary and benefits, value of unused sick time, and any other amounts required by law to be paid, each executive will be entitled to receive (i) a pro-rata bonus for the year of termination and (ii) a lump sum severance payment equal to the product of two (three for Messrs. Schneider and Binversie) times the sum of: (a) his annual base salary in effect immediately prior to termination plus (b) the greater of his most recent bonus or the average incentive bonus during the three most recent fiscal years. Each employment agreement also provides for an automatic reduction of the executive’s payments contingent upon a change in control if reduction is necessary to avoid the impact of the golden parachute payment provisions of Sections 280G and 4999 of the Internal Revenue Code. The employment agreements also contain post-employment non-competition and non-solicitation restrictions for a period of 12 months (24 months with respect to Messrs. Schneider and Binversie).
In accordance with the merger agreement, the employment agreements will be terminated immediately prior to the effective date. Consequently, prior to any application of the mandatory 280G cutback provision, and estimating the pro-rata bonuses based on projected Company performance and assuming an effective date in the fourth quarter of 2021, the executives would be entitled to the following estimated payments: Mr. Schneider, $2,382,487; Mr. Binversie, $1,460,433; Mr. Stiteley, $931,099; Mr. Coggins, $965,978; Mr. Miller, $951,107; Mr. Fillingim, $837,989; and Mr. Lemke, $600,390.
Annual Incentive Plan Payments
Under each executive’s employment agreement and the terms of County’s annual incentive plan, 15% and 10% of the annual bonuses earned by the executive for performance during 2020 and 2019, respectively, have not been paid and are not payable until 2022 and 2023, subject to his continuing employment through the date of payment. In accordance with the merger agreement, these held-back amounts will be paid prior to

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consummationthe effective date. Upon payment, the executives will receive the following amounts: Mr. Schneider, $116,238; Mr. Binversie, $41,147; Mr. Stiteley, $36,702; Mr. Coggins, $67,591; Mr. Miller, $67,591; Mr. Fillingim, $33,057; and Mr. Lemke, $20,727.
Salary Continuation Agreements
Each of Messrs. Schneider, Binversie, and Coggins is party to a salary continuation agreement with Investors Community Bank. In accordance with the merger agreement, Nicolet has agreed to assume the salary continuation agreements as of the merger,effective date.
The salary continuation agreements generally provide for an annual benefit, payable to each executive for a period of 15 years following a separation from service. Assuming the executive does not separate from service prior to attaining age 65, the annual benefit for each executive would be $60,000. In addition, each executive’s beneficiary would be entitled to an annual benefit of $60,000 for 15 years upon his death prior to a separation from service.
In the event the executive separates from service prior to attaining age 65 for any reason other than for cause (including following a change in control), he will be entitled to a reduced annual benefit based on the amount the Bank has accrued toward his salary continuation agreement benefit. Each executive is 100% vested in his reduced annual benefit, which, as of June 30, 2021, would be in an annual amount of $30,000, $48,000, and $48,000 for Messrs. Schneider, Binversie, and Coggins, respectively. Messrs. Binversie and Coggins will terminate from employment agreement for continued employment or consulting agreement for consulting services may include a signing bonus to offset all or someas of the lost severance payment. Theeffective date, which will result in Mr. Coggins receiving his full annual benefit (on account of his prior attainment of age 65) and Mr. Binversie receiving his reduced annual benefit.
Deferred Compensation Plan
County and Investors Community Bank maintain the Management Employees’ Elective Deferred Compensation Plan (the “plan”), in which Messrs. Schneider, Binversie, Stiteley, Miller, Fillingim and Lemke are participants. In accordance with the merger agreement, does not impose any requirement on Nicolet regarding retention or compensationthe terms of the Commerce executive officers. At this time,plan, and applicable U.S. treasury regulations, it is expectedanticipated that certain of Commerce’s executive officers may enter into employment or consulting agreements with Nicolet betweenCounty will terminate and liquidate the date of this proxy statement-prospectus and the closing of the merger. The terms of these potential employment or consulting agreements have not been finalized.
Payments in Respect of Commerce Stock Options.   Commerce has granted certain of its executive officers stock options under the Commerce 2005 Stock Incentive Compensation Plan. The merger agreement provides that, immediatelyplan within thirty days prior to the effective timedate. Upon such termination, each of Messrs. Stiteley, Miller, Fillingim and Lemke will become 100% vested in his unvested company contributions. Messrs. Schneider and Binversie are currently 100% vested in their plan accounts. In liquidation of the merger, each Commerce Stock Option (whether vested or not) shall be cancelled in exchange for cash in an amount equal toplan, it is anticipated the productexecutives will receive single lump-sum distributions of (i) the number of shares of Commerce common stock subject to such Commerce Stock Option and (ii) the excess of the product of (x) the Nicolet Common Stock Price and (y) the exchange ratio over the exercise price per share of the Commerce common stock subject to such Commerce Stock Option. The following chart shows the potential cash payments to Commerce’s executive officers pursuant to outstanding stock option awards (assuming, in each case, that the amount calculated as the product of (x) and (y)their plan accounts in the immediately foregoing sentence is $[•]).following estimated amounts: Mr. Schneider, $28,642; Mr. Binversie, $28,642; Mr. Stiteley, $61,796; Mr. Fillingim, $46,964; Mr. Miller, $69,321; and Mr. Lemke, $7,844.
Executive Officer​​Payment​
Joseph Fazio III​​​$[•]​​
David Borchardt​​​$[•]​​
Thomas Hopp​​​$[•]​​
Kevin Volm​​​$[•]​​
Indemnification and Insurance.Insurance
The merger agreement provides that certain indemnification and insurance arrangements for Commerce’sCounty’s current officers and directors will be continued for six years after the completion of the transactions. For a summary of the indemnification provisions, see the section entitled “The Merger Agreement — Indemnification and Insurance.Insurance” at page 86.
Say-on-Pay
The information below is intended to comply with Item 402(t) of Regulation S-K, which requires the disclosure of information regarding compensation related to the merger payable to County’s named executive officers, sometimes referred to as “golden parachute” compensation. The merger-related compensation payable to these individuals is subject to a non-binding advisory vote of County’s shareholders, as described above in “The County Proposals — Proposal 2 — Compensation Proposal.” County’s named executive officers for purposes of this disclosure are Tim J. Schneider, Mark R. Binversie, and Glen L. Stiteley. The estimated value of the payments and benefits that the County named executive officers may receive in connection with the merger is quantified in the table below, which amounts have been calculated based on the following estimates and assumptions, in addition to those described in the footnotes to the table:
•
each named executive officer terminates his employment without cause upon consummation of the merger; and
​

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•
the effective time of the merger is assumed to be August 20, 2021, the latest practicable date before the date of this joint proxy statement-prospectus.
​
The amounts below do not include compensation and benefits that are provided to the employees of County or Investors Community Bank generally. The amounts below do not reflect any reduction pursuant to the 280G cutback provisions described above in the “Employment Agreements” section. Additionally, the values provided in the table are estimates and would need to be verified and re-calculated upon the actual occurrence of a change in control and termination.
​​​
Cash(1)
​​
Equity(2)
​​
Pension/​
NQDC(3)
​​
Perquisites/​
Benefits
​​
Tax
Reimbursements
​​Other​​Total​
Tim J. Schneider​​​$2,498,724​​​​$153,154​​​​$—​​​​​—​​​​​—​​​​​—​​​​$3,101,878​​
Mark R. Binversie​​​$1,501,580​​​​$508,316​​​​$—​​​​​—​​​​​—​​​​​—​​​​$2,729,896​​
Glen L. Stiteley​​​$967,802​​​​$363,452​​​​$50,152​​​​​—​​​​​—​​​​​—​​​​$1,393,050​​
​
(1)
Represents the aggregate value of cash payments to each County named executive officer, including: (a) under the applicable employment agreement, (i) cash severance ($1,902,290, $1,161,112, and $763,731 for Messrs. Schneider, Binversie, and Stiteley, respectively), (ii) a pro-rata bonus ($342,448, $209,675, and $167,368 for Messrs. Schneider, Binversie, and Stiteley, respectively), and (iii) accrued and unused sick time ($137,749, $89,646, and $0 for Messrs. Schneider, Binversie, and Stiteley, respectively); and (b) under County’s annual incentive plan, portions of previously earned annual incentive bonuses subject to mandatory holdback ($116,238, $41,147, and $36,702 for Messrs. Schneider, Binversie, and Stiteley, respectively). Amounts in this column are “double trigger” in nature, which means that payment of these amounts is conditioned upon a change in control and a qualifying termination of employment, other than the holdback bonuses, which are “single trigger” in nature, which means that payment of these amounts is conditioned solely upon a change in control only.
​
(2)
Represents the aggregate dollar value of stock option, restricted stock, and restricted stock unit awards for which vesting would be accelerated in accordance with the merger agreement. The per share price, $34.39, is the average closing market price of County’s shares over the first five business days following the first public announcement of the transaction. Treatment of all options and restricted stock unit awards in the merger is described in greater detail above in the sections entitled “Stock Option Awards” and “Stock Awards.” Amounts represent: for Mr. Schneider, $29,316 for stock options and $123,838 for stock awards; for Mr. Binversie, $98,766 for stock options and $405,550 for stock awards; and for Mr. Stiteley, $65,978 for stock options and $297,474 for stock awards. Amounts in this column exclude the value of previously vested deferred stock unit awards that will be cancelled and exchange for County shares in accordance with the merger agreement. Amounts included in this column are all single trigger in nature.
​
(3)
Represents the aggregate value Mr. Stiteley would receive in connection with the accelerated vesting of his unvested company contributions in County’s nonqualified deferred compensation plan. The amount in this column is double trigger in nature. This column excludes the amounts of nonqualified deferred compensation payable to each executive that has previously vested.
​
Trading Market for Nicolet Stock
The shares of Nicolet common stock issued pursuant to the merger will be registered under the Securities Act of 1933, as amended, and will be freely transferable under applicable securities laws, except to the extent of any limitations or restrictions applicable to any shares received by any shareholder who may be deemed an affiliate of Nicolet following completion of the merger. See “Resale of Nicolet Common Stock” at page 44.76.
Nicolet’s common stock is currently traded on the Nasdaq Capital Market, and the merger agreement requires that the shares issued in the merger also be eligible for trading on the Nasdaq Capital Market. The trading volume of Nicolet’s common stock is less than that of other larger financial services companies, and there is no guarantee that a liquid market for shares of Nicolet common stock will exist in the future.
Nicolet Dividends
The holders of Nicolet common stock receive dividends if and when declared by the Nicolet board of directors out of legally available funds. Nicolet’s board of directors has not declared a dividend since its Nicolet’s

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inception in 2000. The board currently anticipates that all earnings, if any, will be used for working capital, to support Nicolet’s operations and to finance the growth and development of its business, including the merger and integration of Commerce.County. Any future determination relating to dividend policy will be made at the discretion of Nicolet’s board of directors and will depend on a number of factors, including the company’s future earnings, capital requirements, financial condition, future prospects, regulatory restrictions, stock repurchase strategy and other factors that the board of directors may deem relevant.
Potential AdjustmentElection and Proration of Merger Consideration
Each County shareholder may make an election to Exchange Ratioexchange his, her or its County shares for stock election shares, cash election shares, or a mix of both. Nicolet or Nicolet’s exchange agent, Computershare Trust Company, N.A., will mail to all shareholders an election form and customary transmittal materials following the mailing of this joint proxy statement-prospectus. Completed election forms will be due five business days prior to the election deadline. Any shares for which a completed election form is not received by the election deadline will be treated as no election shares. If you hold your shares in “street name” through a broker, the broker will provide instructions for making an election with respect to your shares. Your broker may impose a deadline that is earlier than the election deadline. As soon as practicable after the election deadline, the exchange agent is responsible for completing the allocation of the merger consideration.
The total number of shares of County common stock that will be converted into the cash consideration will be equal to the cash election threshold of 1,237,000 shares, with the remaining shares being converted into the stock consideration. As a result, the total consideration to be paid in respect of County common stock will consist of approximately 20% cash and approximately 80% Nicolet common stock. Any cash payments in respect of (i) stock options, (ii) preferred stock and (iii) cash in lieu of fractional shares will not be counted in determining the cash election threshold.
If the number of shares electing to receive the cash consideration is less than or equal to the cash election threshold, the merger consideration will be allocated as follows:
•
all cash election shares will be exchanged for the cash consideration;
​
•
to the extent necessary to reach the cash election threshold, no election shares will be exchanged for the cash consideration (on a pro rata basis if excess shares are available); and
​
•
if additional cash elections are required to meet the cash election threshold, stock election shares will be allocated to receive the cash consideration on a pro rata basis until the number of shares being exchanged for the cash consideration equals the cash election threshold.
​
To the extent that aggregate number of cash election shares falls above the cash election threshold, shareholders who elected the cash consideration will receive a mixture of both cash and stock consideration in accordance with the following proration procedures:
•
all stock election shares and no election shares will be exchanged for the stock consideration; and
​
•
cash election shares will be allocated to receive the stock consideration on a pro rata basis until the number of shares being exchanged for the cash consideration equals the cash election threshold
​
Illustrative Examples of Allocation of Merger Consideration.    For illustrative purposes only, the following examples describe the application of the allocation provisions of the merger agreement providesin the case of an undersubscription of cash election shares and in the case of an oversubscription of cash election shares. Solely for the purposes of these examples, it is assumed that:
•
there are 7,250,476 shares of County common stock issued, of which 1,223,728 held in treasury are cancelled, such that a total of 6,026,748 shares of County common stock will be converted into the right to receive the merger consideration;
​
•
the Nicolet common stock price (as defined in the merger agreement) is $37.18; and
​
•
the exchange ratio is fixed unless0.48.
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Scenario 1 (Undersubscription of cash election shares):   In the Nicolet Common Stock Price (defined in the agreement as the volume weighted average closing price of Nicolet commonevent that there are 900,000 cash election shares, 100,000 no election shares, and 5,026,748 stock on theelection shares:
 
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Nasdaq Capital Market over the twenty trading day period immediately preceding the second trading day prior to the closing date) is (a) greater than $82.00, in which case the exchange ratio would become floating at the quotient of $94.30 divided by the Nicolet Common Stock Price, or (b) less than $62.00, in which case the exchange ratio would become floating at the quotient of $71.30 divided by the Nicolet Common Stock Price.•
If the Nicolet Common Stock Price is below $62.00 per share, in lieu of adjusting the exchange ratio, Nicolet may (a) elect to add aAll 900,000 cash component to the merger consideration in an amount sufficient to make the aggregate per share consideration equal to $71.30 per share of Commerce Common Stock, (b) leave the exchange ratio unchanged (which would give Commerceelection shares are converted into the right to terminatereceive the merger agreement), or (c) terminatecash consideration;
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•
All 100,000 no election shares are converted into the merger agreement. As ofright to receive the date of this proxy statement-prospectus, ifcash consideration; and
​
•
Of the Nicolet Common Stock Price is below $62.00 Nicolet does not intend5,026,748 stock election shares, 237,000 shares are converted into the right to adjustreceive the exchange ratio, does not intend to add cash consideration, and does intend to terminate the merger agreement. Ifremaining 4,789,748 shares are converted into the Nicolet Common Stock Price is below $62.00 per share, and Nicolet does not exercise its right to terminate and does not electreceive the stock consideration.
​
•
A County shareholder who makes a stock election as to increase the exchange ratio or add cash consideration, Commerce’s board of directors will1,000 shares would have 47.1478 shares converted into the right to receive $1,752.95 in cash and authoritythe remaining 952.8522 shares converted into the right to elect whether to terminate or proceed based on its assessmentreceive stock consideration consisting of all information available at the time.
Additionally, under no circumstances shall the number of457 shares of Nicolet common stock (plus $13.72 cash in lieu of a fractional share of Nicolet common stock).
​
Scenario 2 (Oversubscription of cash election shares):   In the event that there are 2,000,000 cash election shares, 100,000 no election shares, and 3,926,748 stock election shares:
•
All 3,926,748 stock election shares are converted into the right to be issuedreceive the stock consideration;
​
•
All 100,000 no election shares are converted into the right to receive the stock consideration; and
​
•
Of the 2,000,000 cash election shares, 1,237,000 are converted into the right to receive the cash consideration and the remaining 763,000 are converted into the right to receive the stock consideration.
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•
A County shareholder who makes a cash election as to 1,000 shares would have 618.50 shares converted into the right to receive $22,995.83 in cash and the merger equal or exceed 19.9%remaining 381.50 shares converted into the right to receive stock consideration consisting of the number of outstanding183 shares of Nicolet common stock such that Nasdaq rules would require approval(plus $4.46 cash in lieu of the merger by Nicolet’s shareholders. The parties agree to reduce the number of sharesa fractional share of Nicolet common stock to be issued and to increase the cash to be issued pro rata to avoid such a shareholder vote.stock).
Based on 10,587,738 shares of Nicolet common stock outstanding at December 31, 2019, and an exchange ratio of 1.15 on Commerce common stock outstanding, the number of shares of Nicolet common stock to be issued in the merger would equal approximately [17]% of Nicolet’s outstanding shares of common stock following the merger.​
Surrender and Exchange of CommerceCounty Stock Certificates
At the effective time of the merger, CommerceCounty shareholders who will receive Nicolet common stock will automatically become entitled to all of the rights and privileges afforded to Nicolet shareholders as of that time. However, the actual physical exchangereceipt of Commerce common stock certificates representing shares of Nicolet common stock will occur after the merger. If you hold your shares in “street name” or “book-entry form” through a broker, the broker will provide separate instructions for surrendering and exchanging your shares.
IfFollowing the merger is completed,mailing of the joint proxy statement-prospectus and the proxy, Nicolet or Nicolet’s exchange agent will send or cause to be sent to each of Commerce’sCounty’s shareholders aan election form, letter of transmittal and other customary transmittal materials providing written instructions for making an election as to the form of merger consideration to be received and for exchanging CommerceCounty common stock certificates for the merger consideration in accordance with the merger agreement. If you hold your shares in “street name” through a broker, the broker will provide instructions for making an election with respect to your shares. Each CommerceCounty stock certificate or book-entry outstanding immediately prior to the effective time of the merger will be deemed for all purposes to evidence the right to receive the merger consideration to which such holder is entitled, regardless of when they are actually exchanged.
Procedures for Per Share Merger Consideration Payment
Nicolet will delay paying former shareholders of CommerceCounty who become holders of Nicolet common stock pursuant to the merger any dividends or other distributions that may become payable to holders of record of Nicolet common stock following the effective time of the merger until they have surrendered their certificates evidencing their CommerceCounty common stock, at which time Nicolet will pay any such dividends or other distributions without interest.
You should not send in your CommerceCounty stock certificate(s) until you have received the election form and letter of transmittal and further written instructions after the effective date of the merger.transmittal. Please do NOT send in your stock certificates with your proxy card.
Assuming the merger has been consummated, after the exchange agent receives your CommerceCounty certificate(s), together with a properly completed letter of transmittal, it will deliver to you the merger consideration to which you are entitled, consisting of Nicolet common stock (in certificated or book entry form, together with any withheld dividends or other distributions, but without interest thereon) and any cash due (whether as a result of exercising dissenters’ rights, cash in lieu of fractional shares or otherwise),
 
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without interest.lieu of fractional shares (without interest), or the per share cash consideration (without interest), depending on the type of consideration elected for each share of County common stock. Within five business days after consummation of the merger, the exchange agent will send a transmittal letter to all CommerceCounty shareholders who did not previously tender their shares.
Shareholders who cannot locate their stock certificates are urged to contact Commerce’sCounty’s transfer agent promptly:
[   ]First Illinois Shareholder Services
P.O. Box 2557
Decatur IL 62525-2557
(888) 740-5512
[Address]
Telephone Toll Free: [   ]
Telephone Local: [   ]
CommerceCounty will issue a new stock certificate (or provide book entry) to replace the lost certificate(s) only if the shareholder of CommerceCounty signs an affidavit certifying that his, her or its certificate(s) cannot be located and containing an agreement to indemnify CommerceCounty and Nicolet against any claim that may be made against CommerceCounty or Nicolet by the owner of the certificate(s) alleged to have been lost or destroyed. CommerceCounty or Nicolet may also require the shareholder to post a bond in an amount sufficient to support the shareholder’s agreement to indemnify CommerceCounty and Nicolet.
Resale of Nicolet Common Stock
The shares of Nicolet common stock to be issued in the merger will be registered under the Securities Act. CommerceCounty shareholders who are not affiliates of Nicolet may generally freely trade their Nicolet common stock upon completion of the merger. The term “affiliate” generally means each person who is an executive officer, director or 10% shareholder of Nicolet after the merger.
Those shareholders who are deemed to be affiliates of Nicolet may only sell their Nicolet common stock as provided by Rule 144 under the Securities Act or as otherwise permitted under the Securities Act. Rule 144 requires the availability of current public information about the issuer, a holding period for shares issued without registration with the SEC, volume limitations and other restrictions on the manner of sale of the shares.
Regulatory and Other Required Approvals
Federal Reserve
The Federal Reserve must approve the merger before it can be completed or waive the application. Nicolet filed ansubmitted a full application for approval of the merger with the Federal Reserve April 10, 2020.on July 15, 2021. In reviewing thethat application, the Federal Reserve iswill be required to consider the following:
•
competitive factors, such as whether the merger will result in a monopoly or whether the benefits of the merger to the public in meeting the needs and convenience of the community clearly outweigh the merger’s anticompetitive effects or restraints on trade; and
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•
banking and community factors, which includes an evaluation of:
​
•
the financial and managerial resources of Nicolet, including its subsidiaries, and of Commerce,County, and the effect of the proposed transaction on these resources;
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•
management expertise;
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•
internal control and risk management systems;
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•
the capital of Nicolet;
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•
the convenience and needs of the communities to be served; and
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•
the effectiveness of Nicolet and CommerceCounty in combating money laundering activities.
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The application process includes publication and opportunity for comment by the public. The Federal Reserve may receive, and must consider, properly filed comments and protests from community groups and
 
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others regarding (among other issues) each institution’s performance under the Community Reinvestment Act of 1977, as amended (the “CRA”).CRA. The Federal Reserve is also required to ensure that the proposed transaction would not violate Wisconsin law regarding the number of years a bank must be in operation before it can be acquired, deposit concentration limits, Wisconsin community reinvestment laws and any Wisconsin antitrust statutes.
OCC
The merger of Commerce StateInvestors Community Bank with and into Nicolet National Bank requires the approval of the OCC. Nicolet filed an Interagency Bank Merger Application for approval of the bank merger with the OCC received approval from the OCC on April 8, 2020.July 15, 2021. In evaluating the bank merger, the OCC must consider, among other factors, the financial and managerial resources and future prospects of the institutions and the convenience and needs of the communities to be served. The relevant statutes prohibit the OCC from approving the bank merger if:
•
it would result in a monopoly or be in furtherance of any combination or conspiracy to monopolize or attempt to monopolize the business of banking in any part of the United States; or
​
•
its effect in any section of the country could be to substantially lessen competition or to tend to create a monopoly, or if it would result in a restraint of trade in any other manner.
​
However, if the OCC should find that any anticompetitive effects are outweighed clearly by the public interest and the probable effect of the transaction in meeting the convenience and needs of the communities to be served, it may approve the bank merger. The bank merger may not be consummated until the 30th day (which the OCC may reduce to 15 days) following the later of the date of OCC approval, during which time the U.S. Department of Justice would be afforded the opportunity to challenge the transaction on antitrust grounds. The commencement of any antitrust action would stay the effectiveness of the approval of the agencies, unless a court of competent jurisdiction should specifically order otherwise.
WDFI
In addition to the required approvals of the Federal Reserve and OCC discussed above, the merger also requires the approval of the WDFI. Nicolet filed an application with the WDFI and received approval from the WDFI on April 30, 2020.July 15, 2021, pursuant to Section 221.0901 of Wisconsin banking law. In evaluating the application, the WDFI must consider various aspects of the proposed transaction and the parties thereto, including, among others, the financial and managerial resources and future prospects of the institutions involved, the best interests of their shareholders and customers, safety and soundness considerations, and the CRA compliance status of each bank. The relevant statutes prohibit the WDFI from approving the transaction if, following consummation, the combined institution would control more than 30 percent of the deposits in the state.
In connection with or as a result of the merger, Nicolet or CommerceCounty may be required, pursuant to other laws and regulations, either to notify or obtain the consent of other regulatory authorities and organizations to which such companies or subsidiaries of either or both of them may be subject. The Nicolet common stock to be issued in exchange for CommerceCounty common stock in the merger has been registered with the SEC and will be issued pursuant to available exemptions from registration under state securities laws.
Status and Effect of Regulatory Approvals
The OCC approved the transaction on April 8, 2020. All other regulatory applications and notices required to be filed prior to the merger are in process. Nicolet and CommerceCounty contemplate that they will complete the merger on [•],in the fourth quarter of 2021 assuming the receipt of all required regulatory approvals, approval by Commerceeach company’s shareholders, and the satisfaction or waiver of all other closing conditions.
Nicolet and CommerceCounty believe that the proposed merger is compatible with the regulatory requirements described in the preceding paragraphs; however, we cannot assure you that we will be able to comply with any required conditions or that compliance or noncompliance with any such conditions would not have adverse consequences for the combined company after the merger.
While Nicolet and CommerceCounty believe that the requisite regulatory approvals for the merger will be obtained, we can give you no assurance regarding the timing of the approvals, our ability to obtain the

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approvals on satisfactory terms or the absence of litigation challenging those approvals or otherwise.

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Similarly, we cannot assure you that any state attorney general or other regulatory authority will not attempt to challenge the merger on antitrust grounds or for other reasons, or, if such a challenge is made, project the result thereof. The merger is conditioned upon the receipt of all consents, approvals and actions of governmental authorities and the filing of all other notices with such authorities in respect of the merger.
We are not aware of any regulatory approvals that would be required for completion of the transactions contemplated by the merger agreement other than as described above. Should any other approvals be required, those approvals would be sought, but we cannot assure you that they will be obtained.
Status of Intentions to Consummate the Merger
Under the terms of the merger agreement, in the event the Nicolet Common Stock Price (defined in the merger agreement to equal the volume weighted average closing price of Nicolet common stock on the Nasdaq Capital Market over the twenty trading day period ending on the second trading day prior to the closing date) is below $62.00 per share at the time of closing, Nicolet has the contractual right to elect to terminate the merger agreement. In the weeks prior to the date of this proxy statement-prospectus, the Nicolet Common Stock Price has been below $62.00. The most recent closing price of Nicolet’s common stock as of the date immediately preceding this proxy statement-prospectus was $[•].
In the event that the Nicolet Common Stock Price rises to at least $62.00 per share, and all other conditions to closing are satisfied, Nicolet intends to consummate the merger with Commerce as of the intended legal closing date agreed to between the parties, set to be [•].
In the event that the Nicolet Common Stock Price remains below $62.00 per share, or any other condition to closing is not satisfied, as of the intended legal closing date agreed to between the parties, Nicolet intends to exercise its contractual right to terminate the merger agreement. If the Nicolet Common Stock Price is below $62.00 per share, and Nicolet does not exercise its right to terminate and does not elect to increase the exchange ratio or add cash consideration, Commerce’s board of directors will have the right and authority to elect whether to terminate or proceed based on its assessment of all information available at the time. Since March of 2020, Nicolet’s and Commerce’s senior executives have had multiple communications discussing each party’s position with regard to the status of the merger and the parties’ intentions.
Nicolet believes if its common stock price is below $62.00 per share, such pricing is a signal of the farther-reaching and prolonged impacts of the COVID-19 pandemic, which are still volatile and uncertain. If the Nicolet Common Stock Price is below $62.00, Nicolet believes that consummating a transaction at a fixed exchange ratio reflecting comparative valuations set before the onset of the COVID-19 pandemic is not prudent for Nicolet’s shareholders in today’s unsettled environment.
Accounting Treatment of the Merger
Nicolet is required to account for the merger as a purchasean acquisition transaction for accounting and financial reporting purposes under GAAP. Under purchasethis accounting, the assets (including any identifiable intangible assets) and liabilities (including executory contracts and other commitments) of CommerceCounty at the effective time of the merger will be recorded at their respective fair values and added to those of Nicolet. Any excess of purchase price over the fair values is recorded as goodwill. Any excess of the fair values over the purchase price is recorded in earnings as a bargain purchase gain. Consolidated financial statements of Nicolet issued after the merger would reflect those fair values and would not be restated retroactively to reflect the historical consolidated financial position or results of operations of Commerce.County.

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THE MERGER AGREEMENT
This section of the joint proxy statement-prospectus describes certain terms of the merger agreement. It is not intended to include every term of the merger, but rather addresses only the significant aspects of the merger. This discussion is qualified in its entirety by reference to the merger agreement, which is attached as Appendix A to this joint proxy statement-prospectus and is incorporated herein by reference.
General; Business and Operations after the Merger
If the shareholders of Commerceeach company approve the merger agreement and the other conditions to the consummation of the merger are satisfied, CommerceCounty will merge with and into Nicolet. Following the consummation of the merger, Commerce StateInvestors Community Bank will merge with and into Nicolet National Bank with Nicolet National Bank surviving the merger. Commerce Financial Holdings, Inc.County and Commerce StateInvestors Community Bank will cease to exist after the merger, and the business of Commerce StateInvestors Community Bank will be conducted through Nicolet National Bank.
What Commerce’sCounty’s Shareholders Will Receive in the Merger
If the merger is completed, Commerce shareholders will receive 1.15 shares of Nicolet common stock for each share of Commerce common stock.
The exchange ratio may fluctuate in the event that the Nicolet Common Stock Price (defined in the merger agreement to equal the volume weighted average closing price of NicoletCounty common stock on the Nasdaq Capital Market over the twenty trading day period ending on the second trading day prior to the closing date), is (a) greater than $82.00, in which case the exchange ratio would become floating at the quotient of $94.30 divided by the Nicolet Common Stock Price, or (b) less than $62.00, in which case the exchange ratio would become floating at the quotient of $71.30 divided by the Nicolet Common Stock Price. In the event that the Nicolet Common Stock Price is below $62.00 per share, in lieu of adjusting the exchange ratio, Nicolet may (a) elect to add a cash component to the merger consideration in an amount sufficient to make the aggregate per share consideration equal to $71.30 per share of Commerce Common Stock, (b) leave the exchange ratio unchanged (which would give Commerce the right to terminate the merger agreement), or (c) terminate the merger agreement. As of the date of this proxy statement-prospectus, if the Nicolet Common Stock Price is below $62.00, Nicolet does not intend to adjust the exchange ratio, does not intend to add cash consideration, and does intend to terminate the merger agreement. If the Nicolet Common Stock Price is below $62.00 per share, and Nicolet does not exercise its right to terminate and does not elect to increase the exchange ratio or add cash consideration, Commerce’s board of directors will have the right and authority to elect whether to terminate or proceed based on its assessment of all information available at the time.
No payment will be made with respect to(excluding treasury shares, of Commerce common stock held in the treasury of Commerce; shares held directly or indirectly by Nicolet (other than in a fiduciary capacity or in connection with debts previously contracted); and shares underlying Commerce Stock Options;stock options, all such shares are referred to herein as the “cancelled shares”) will be converted into the right to receive, at the holder’s election and dissentingsubject to the proration and the exceptions explained further below, 0.48 shares of Nicolet common stock (the “per share stock consideration”) or cash of  $37.18 per share of County common stock (the “per share cash consideration”).
Merger Consideration Election Procedures
Each County shareholder may make an election to exchange their County shares for Nicolet stock, cash or a mix of both. Nicolet or its exchange agent, Computershare Trust Company, N.A., will mail to all shareholders an election form and customary transmittal materials following the mailing of the joint proxy statement-prospectus. Completed election forms will be due five business days prior to the closing of the merger (the “election deadline”). At this time, we expect the election deadline to be 5:00 p.m., Eastern Time, on November 29, 2021. Any shares for which a completed election form is not received by the election deadline will be treated as no election shares.
Merger Consideration Proration and Allocation Procedures
The total number of shares of County common stock that will be converted into the cash consideration shall be equal to the cash election threshold of 1,237,000 shares, which is equal to approximately 20% of the

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aggregate amount of outstanding shares of County common stock and shares underlying unvested restricted stock awards, restricted stock units, and deferred restricted stock units as of June 30, 2021, with the remaining shares being converted into the stock consideration. As a result, the total consideration to be paid in respect of County common stock will consist of approximately 20% cash and approximately 80% Nicolet common stock. Any cash payments in respect of (i) stock options, (ii) preferred stock and (iii) cash in lieu of fractional shares, will not be counted in determining the cash election threshold.
If the number of shares electing to receive the cash consideration is below the cash election threshold, certain no election shares and stock election shares may be exchanged for the cash consideration. Alternatively, if cash is oversubscribed, certain cash election shares may be exchanged for the stock consideration. See page 74 of this joint proxy statement-prospectus for a complete description of the allocation procedures, including examples.
No payment will be made with respect to shares of County common stock held in the treasury of County and shares held directly or indirectly by Nicolet (other than in a fiduciary capacity or in connection with debts previously contracted). Upon consummation of the merger, all such shares referred to herein as the “cancelled shares,” will be canceled and extinguished.
No fractional shares of Nicolet common stock will be issued in connection with the merger. Instead, Nicolet will make a cash payment without interest to each shareholder of CommerceCounty who would otherwise receive a fractional share. The amount of such cash payment will be determined by multiplying the fraction of a share of Nicolet common stock otherwise issuable to such shareholder by the Nicolet Common Stock Price.
Each share of Commerce common stock held in the Commerce State Bank 401(k) & Profit Sharing Plan will be converted into the right to receive a cash payment equal to the product of the exchange ratio and the Nicolet Common Stock Price.
Potential Adjustment of Exchange Ratio
The merger agreement provides that the exchange ratio is fixed unless the Nicolet Common Stock Price (defined in the agreement as the volume weighted average closing price of Nicolet common stock on the

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Nasdaq Capital Market over the twenty (20) trading day period immediately preceding the second (2nd) trading day prior to the closing date) is (a) greater than $82.00, in which case the exchange ratio would become floating at the quotient of $94.30 divideddate, by the Nicolet Common Stock Price, or (b) less than $62.00, in which case the exchange ratio would become floating at the quotient of $71.30 divided by the Nicolet Common Stock Price. If the Nicolet Common Stock Price is below $62.00 perfractional share in lieu of adjusting the exchange ratio, Nicolet may (a) elect to add a cash component to the merger consideration in an amount sufficient to make the aggregate per share consideration equal to $71.30 per share of Commerce Common Stock, (b) leave the exchange ratio unchanged (which would give Commerce the right to terminate the merger agreement), or (c) terminate the merger agreement. As of the date of this proxy statement-prospectus, if the Nicolet Common Stock Price is below $62.00, Nicolet does not intend to adjust the exchange ratio, does not intend to add cash consideration, and does intend to terminate the merger agreement. If the Nicolet Common Stock Price is below $62.00 per share, and Nicolet does not exercise its right to terminate and does not elect to increase the exchange ratio or add cash consideration, Commerce’s board of directors will have the right and authority to elect whether to terminate or proceed based on its assessment of all information available at the time. Additionally, under no circumstances shall the number of shares of Nicolet common stock to which such shareholder would otherwise be issued in the merger equal or exceed 19.9% of the number of outstanding shares of Nicolet common stock such that Nasdaq rules would require approval of the merger by Nicolet’s shareholders. The parties agree to reduce the number of shares of Nicolet common stock to be issued and to increase the cash to be issued pro rata to avoid such a shareholder vote.entitled.
Based on 10,587,7389,843,141 shares of Nicolet common stock outstanding at December 31, 2019,June 30, 2021, and an exchange ratio of 1.150.48 on Commerce80% of 6,026,748 shares of County common stock outstanding at June 30, 2021, the number of shares of Nicolet common stock to be issued in the merger would equal approximately [17]%19% of Nicolet’s outstanding shares of common stock following the merger. If the Mackinac merger is completed prior to the County merger, the number of shares of Nicolet common stock to be issued to County shareholders in the merger would equal approximately 16% of Nicolet’s outstanding shares of common stock following the merger.
Dissenters’ RightsTrust Preferred Securities and Subordinated Notes
Holders of shares of Commerce common stock who properly elect to exerciseAt the dissenters’ rights provided for in Subchapter XIII of the WBCL will not have their shares converted into the right to receive merger consideration. If a holder’s dissenters’ rights are lost or withdrawn, such holder will receive his, hers or its pro rata portioneffective time of the merger, consideration. See “Dissenters’ Rights”Nicolet will assume and discharge County’s covenants, agreements and obligations under and relating to County’s trust preferred securities, including the due and punctual payment of interest on page 8all of the County’s obligations pursuant to the related subordinated notes issued by County. Nicolet will also cause the County Trusts to discharge County’s obligations arising after the effective time of the merger with respect to the trust preferred securities.
Additionally, Nicolet will assume and Appendix C for additional information.discharge County’s covenants, agreements and obligations under and relating to County’s subordinated note indentures, including the due and punctual payment of interest relating to the subordinated notes. Nicolet has also agreed to discharge any of its assumed obligations with regard to the County subordinated note indentures that arise after the effective time of the merger.
Finally, Nicolet and County will execute and deliver supplemental indentures, in a form satisfactory to the applicable trustees, to effectuate Nicolet’s assumption of County’s trust preferred securities and subordinated notes, whereby Nicolet will assume all of County’s covenants, agreements and obligations under and relating to County’s trust preferred securities and subordinated notes.
Effect of the Merger on CommerceCounty Preferred Stock Options
AsEach share of January 31, 2020, there were 57,132 shares of Commerce commonCounty preferred stock underlying Commerce Stock Options. Pursuant to the merger agreement, each Commerce Stock Optionissued and outstanding immediately prior to the effective date (whether vested or not) shallwill be cancelledconverted into the right to receive cash in exchange for a cash payment (without interest and less applicable withholding Taxes)an amount equal to the productredemption price of (i) the numbersuch County preferred stock as of shares of Commerce common stock subject to such Commerce Stock Option immediately prior to the effective time of the merger and (ii) the excess, if any, of the product of (x) the Nicolet Common Stock Price and (y) the exchange ratio, subjectdate. County is required to any adjustment, over the exercise price per share of Commerce commonredeem its preferred stock subject to such Commerce Stock Option immediately prior to the effective time of the merger.
Effect of the Merger on Commerce Shares held in the Commerce State Bank 401(k) & Profit Sharing Plan
At the closing of the proposed merger, each share of Commerce common stock held in the Commerce State Bank 401(k) & Profit Sharing Plan will be converted into the right to receive a cash payment equal to the product of the exchange ratio and the Nicolet Common Stock Price. One of the conditions of the transaction is the termination of the Commerce State Bank 401(k) and Profit Sharing Plan (the “Plan”). The Plan provides that any distributions, including upon termination, are paid in cash. Accordingly, to avoid requiring the Plan to sell Nicolet shares of common stock in connection with the liquidation of the Plan, the parties agreed to convert the Commerce shares held in the Plan to cash in the merger. As of March 20, 2020, 12,515 shares of Commerce common stock were held in the Plan.
 
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Effect of the Merger on County Equity Awards
County Stock Options
Each vested and unvested County stock option outstanding immediately prior to the effective date shall be cancelled in exchange for a cash payment as determined by multiplying (i) the number of shares of County common stock subject to the option immediately prior to the effective date by (ii) the excess, if any, of the (x) the Nicolet common stock price (as defined in the merger agreement) multiplied by the exchange ratio, over the exercise price per share of the applicable County common stock subject to the County stock option immediately prior to the effective date. The merger agreement defines the Nicolet common stock price as the volume weighted average closing price of Nicolet common stock on the Nasdaq Capital Market over the 20 trading day period immediately preceding the second trading day prior to the closing date.
County Restricted Stock Awards
As of June 30, 2021, there were 2,306 shares of County common stock underlying outstanding unvested restricted stock awards. Each unvested County restricted stock award outstanding immediately prior to the effective date will become vested as a result of the merger. Each such vested County restricted stock award will be exchanged for the number of shares of County common stock subject to such restricted stock award immediately prior to the effective time. These shares are included in the number of issued shares of County common stock, do not count towards the cash election minimum threshold and are considered no election shares.
County Restricted Stock Units
As of June 30, 2021, there were 88,112 shares of County common stock underlying outstanding restricted stock units. Each vested and unvested County restricted stock unit outstanding immediately prior to the effective date shall either (i) become fully vested and settled pursuant to the terms of the award and applicable County equity plan or (ii) be cancelled in consideration for the right to receive the number of shares of County common stock subject to the restricted stock unit award. In either case, such shares received in settlement or cancellation will be exchanged pursuant to the terms of the merger agreement, but they do not count towards the cash election minimum threshold and are considered no election shares.
County Deferred Restricted Stock Units
As of June 30, 2021, there were 9,779 shares of County common stock underlying outstanding deferred restricted stock units. Each vested and unvested County deferred restricted stock unit outstanding immediately prior to the effective date shall be cancelled (as permitted under applicable U.S. treasury regulations) in consideration for the right to receive the number of shares of County common stock subject to the deferred restricted stock unit award. Such shares received in cancellation will be exchanged pursuant to the terms of the merger agreement, but they do not count towards the cash election minimum threshold and are considered no election shares.
No Dissenters’ Rights
Holders of Nicolet common stock are not entitled to dissenters’ rights under Wisconsin law.
Holders of County common stock are not entitled to dissenters’ rights, because under the provisions of Wisconsin Business Corporation Law (“WBCL”), shareholders of a company whose common stock is registered on a national securities exchange or quoted on the National Association of Securities Dealers, Inc., automated quotations system are not entitled to dissenters’ rights in this type of transaction.
Closing and Effective Time of the Merger
The merger will be completed only if all of the following occur:
•
the merger agreement is approved by the holders of a majority of Commerce’s shareholders;each of Nicolet’s and County’s outstanding shares (except that Nicolet shareholder approval will not be a condition to closing if such approval is not required on the effective date of the merger by the WBCL or Nasdaq rules);
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•
all required regulatory consents and approvals are obtained;
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•
Nicolet and County delivered the supplemental indentures, whereby Nicolet Common Stock Price is at least $62.00 or, if less than $62.00, neither Commerce nor Nicolet exercise their respective rights to terminate;will assume County’s trust preferred securities and subordinated notes;
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•
County caused the redemption of all outstanding shares of County preferred stock; and
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•
all other conditions to the merger discussed in this joint proxy statement-prospectus and the merger agreement are either satisfied or waived.
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If all of these conditions are met, the closing of the merger is expected to occur on [•].in the fourth quarter of 2021.
Representations and Warranties in the Merger Agreement
CommerceCounty and Nicolet have made customary representations and warranties to each other as part of the merger agreement. Commerce’sCounty’s representations and warranties are contained in Article 3 of the merger agreement and relate to, among other things:
•
its organization and authority to enter into the merger agreement;
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its capitalization, subsidiaries, properties and financial statements;public filings with the SEC;
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pending and threatened litigation against CommerceCounty and its subsidiaries;
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Commerce Stateits internal reporting controls;
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Investor Community Bank’s loan portfolio and allowance for loan losses;
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its insurance, employee benefits, tax and environmental matters;
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its legal and regulatory compliance;
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its contractual obligations and contingent liabilities;
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its investments;
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its trust preferred securities;
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the licenses its subsidiaries maintain; and
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its financial statements and regulatory filings.
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Nicolet’s representations and warranties are contained in Article 4 of the merger agreement and relate to, among other things:
•
its organization and authority to enter into the merger agreement;
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its capitalization, subsidiaries, financial statements and public filings with the SEC;
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pending and threatened litigation against Nicolet and its subsidiaries;
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Nicolet National Bank’s loan portfolio and allowance for loancredit losses;
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its employee benefits, tax and environmental matters;
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legal and regulatory compliance; and
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the shares of Nicolet common stock to be issued in the merger.
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Each party’s representations and warranties are for the benefit of the other; they are not for the benefit of and may not be relied upon by shareholders. The representations and warranties of the parties will not survive the closing of the merger.
Conditions to the Merger
The merger agreement contains a number of conditions that must be satisfied or waived (if they are waivable) to complete the merger. The conditions include, among other things:

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•
the representations and warranties made by each party in the merger must be accurate as of the closing date of the merger;
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each party must have performed or complied in all material respects with all covenants and obligations as established in the merger agreement;
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•
approval by Commerce’seach of Nicolet’s and County’s shareholders of the merger agreement by the required vote;vote, provided that Nicolet shareholder approval will not be a condition to closing if the Nicolet shareholder approval is not required on the closing date by the WBCL or Nasdaq rules;
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an absence of any commenced or pending legal proceeding that challenges any of the contemplated transactions or that may have the effect of preventing, delaying or making illegal or otherwise interfering with any of the contemplated transactions;
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approval of the merger and the transactions contemplated thereby by the Federal Reserve, OCC and WDFI without imposing any restrictions that would have a “material adverse effect,” as defined in the merger agreement, on either Nicolet or Commerce;County;
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the registration statement has become effective under the Securities Act;
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the absence of a stop order suspending the effectiveness of Nicolet’s registration statement under the Securities Act with respect to the shares of Nicolet common stock to be issued to the CommerceCounty shareholders;
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both parties shall have received a certificate signed by an executive on behalf of the other party certifying that such party’s representations and warranties are accurate and that all covenants and obligations have been performed;
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receipt by CommerceCounty and Nicolet of a tax opinion from Bryan Cave Leighton Paisner LLP that the merger qualifies as a tax-free reorganization under Section 368(a) of the Internal Revenue Code;
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Nicolet shall have filed with the Nasdaq Stock Market, LLC a notification form for the listing of all shares of Nicolet common stock to be delivered in the merger, and the Nasdaq Stock Market, LLC shall not have objected to the listing of such shares of Nicolet common stock;
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•
as of the Closing Date, Commerceclosing date, County shall have Tangible Common Equitytangible common equity (as defined in the merger agreement) of no less than $66.5$163 million (Commerce’s(County’s tangible common equity was $[•]approximately $166.8 million as of December 31, 2019)June 30, 2021);
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the absence of any material adverse change in the financial condition, results of operations, business or prospects of either CommerceCounty or Nicolet;
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each party shall have obtained the written consents, permissions and approvals as required under any agreements, contracts, appointments, indentures, plans, trusts or other arrangements with third parties;
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the absence of an order, decree or injunction enjoining or prohibiting completiondelivery by County and Nicolet of the merger;supplemental indentures; and
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receiptredemption by NicoletCounty of documentation from Commerce evidencingall of the cancellationoutstanding shares of Commerce Stock Options.County preferred stock.
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The conditions to the merger are set forth in Articles 8 and 9 of the merger agreement.
In addition to the contractual conditions to close the transaction, the merger agreement also provides a variety of means for the merger agreement to be terminated prior to closing. If the merger agreement is terminated prior to closing, the merger will not be completed. For a discussion of the intent of the parties to consummate the merger in the current environment, see “Status of Intentions to Consummate the Merger” at page 46.
The parties intend to complete the merger on [•];in the fourth quarter of 2021; however, we cannot assure you that all conditions will be satisfied or waived.
Waiver and Amendment
Nearly all of the conditions to completing the merger may be waived at any time by the party for whose benefit they were created; however, the merger agreement provides that the parties may not waive any condition that would result in the violation of any law or regulation. Also, the parties may amend or

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supplement the merger agreement at any time by written agreement. Any material change in the terms of the merger agreement after the Commerce special shareholders’ meetingmeetings of the companies may require a re-solicitation of votes from Commerce’seach of Nicolet’s and County’s shareholders with respect to the amended merger agreement. Following the consummation of the proposed acquisition of Mackinac, Nicolet shareholder approval may no longer be required under the WBCL or applicable Nasdaq rules. In the event that the issuance of shares contemplated by this merger agreement with County no longer requires a Nicolet shareholder vote, such vote will not be a condition to closing.

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Business of CommerceCounty Pending the Merger
The merger agreement requires CommerceCounty to continue to operate its business as usual and to preserve its business organization, rights and franchises pending the merger and to refrain from taking any action that would materially adversely affect the receipt of required regulatory or other consents or materially adversely affect either party’s ability to perform its covenants and agreements under the merger agreement.
Among other things, and subject to certain specified exceptions, CommerceCounty may not, without Nicolet’s consent, take or agree to take any of the following actions:
•
conduct its business in any manner other than in the ordinary course of business in all material respects;
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take any action or make any decision in contravention of commercially reasonable efforts to maintain and preserve intact its business organization and advantageous business relationships;
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take any action that is intended to or would reasonably be expected to adversely affect or materially delay the ability of CommerceCounty or Nicolet to obtain any of the required regulatory approvals, to provide Commerce’sperform County’s covenants and agreements under the merger agreement, or to consummate the contemplated merger;
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other than pursuant to the terms of any contract to which CommerceCounty is a party that is outstanding on the date of the merger agreement: (i) issue, sell or otherwise permit to become outstanding, or dispose of or encumber or pledge, or authorize or propose the creation of, any additional shares of CommerceCounty capital stock or any security convertible into CommerceCounty capital stock; (ii) permit any additional shares of CommerceCounty capital stock to become subject to new grants; or (iii) grant any registration rights with respect to shares of CommerceCounty capital stock;
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except with respect to County’s regular quarterly dividend of $0.10 per share of County common stock or regular quarterly dividends on County preferred stock consistent with past practice, make, declare, pay or set aside for payment any dividend on or in respect of, or declare or make any distribution on any shares of CommerceCounty capital stock (other than dividends from its wholly owned subsidiary to it or another of its wholly owned subsidiaries);
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directly or indirectly adjust, split, combine, redeem, reclassify, purchase or otherwise acquire, any shares of CommerceCounty capital stock (other than repurchases of shares of CommerceCounty common stock in the ordinary course of business to satisfy obligations under CommerceCounty benefit plans)plans, any repurchases as a result of net exercise of stock options and County’s obligations to redeem its preferred stock prior to closing);
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amend the terms of, waive any rights under, terminate, knowingly violate the terms of or enter into: (i) any contract that is material to Commerce’sCounty’s operations; (ii) any material restriction on the ability of CommerceCounty or its subsidiaries to conduct itstheir business as it is presently being conducted; or (iii) any contract or other binding obligation relating to any class of CommerceCounty capital stock or rights associated therewith or any outstanding instrument of indebtedness;
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enter into loan transactions not in accordance with, or consistent with, past practices of Commerce State Bank or that are on terms and conditions that, to the knowledge of Commerce, are materially more favorable than those available to the borrower from competitive sources in arm’s-length transactions;Investors Community Bank;
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enter into any new credit or new lending relationships greater than $1,000,000 or that are not in compliance with the provisions of Commerce State Bank’s formal loan policy as in effect as of the date of the merger agreement;$10,000,000;
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other than incident to a reasonable loan restructuring, extend additional credit to any individual or entity, or any director or officer of, or any owner of a material interest in, such entity if such person or entity is the obligor under any indebtedness to CommerceCounty or any of its subsidiaries which constitutes a nonperforming
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classified loan or against any part of such indebtedness CommerceCounty or any of its subsidiaries has established loss reserves or any part of which has been charged-off by CommerceCounty or any of its subsidiaries;
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maintain an allowance for loan and lease losses which is not appropriate in all material respects under the requirements of GAAP to provide for possible losses, net of recoveries relating to CommerceCounty loans previously charged-off, on CommerceCounty loans and leases outstanding (including accrued interest receivable);
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•
fail to: (i) charge-off any CommerceCounty loans or leases that would be deemed uncollectible in accordance with GAAP or any applicable legal requirement; or (ii) place on nonaccrual any CommerceCounty loans or leases that are past due greater than ninety (90) days;days (it being understood that modifications of certain loans consistent with regulatory COVID-19 relief guidelines shall be permissible);
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sell, transfer, mortgage, encumber, license, let lapse, cancel, abandon or otherwise dispose of or discontinue any of its assets, deposits, business or properties, except for sales, transfers, mortgages, encumbrances, licenses, lapses, cancellations, abandonments or other dispositions or discontinuances in the ordinary course of business, including sales of County loans in the ordinary course of business, and in a transaction that, together with other such transactions, is not material to CommerceCounty and its subsidiaries, taken as a whole;
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acquire (other than by way of foreclosures or acquisitions of control in a fiduciary or similar capacity or in satisfaction of debts previously contracted in good faith, in each case in the ordinary course of business) all or any portion of the assets, business, deposits or properties of any other entity except in the ordinary course of business and in a transaction that, together with other such transactions, is not material to CommerceCounty and its subsidiaries, taken as a whole, and does not present a material risk that the closing date of the proposed merger will be materially delayed or that any approvals necessary to complete the merger or the other contemplated transactions will be more difficult to obtain;
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purchase any equity security for its investment portfolio that is inconsistent with Commerce StateInvestors Community Bank’s formal investment policy as in effect as of the date of the merger agreement or that are not in strict compliance with the provisions of such investment policy;
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•
amend its articles of incorporation or its bylaws, or similar governing documents of any of its subsidiaries;
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implement or adopt any change in its accounting principles, practices or methods, other than as may be required by GAAP or applicable regulatory accounting requirements;
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other than ordinary course base salary increases, incentive payments consistent with past practices and County contributions for 2021 to the deferred compensation plan on behalf of selected participants, increase in any manner the compensation or benefits of any of the current or former directors, officers, employees, consultants, independent contractors or other service providers of CommerceCounty or its subsidiaries;
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become a party to, establish, amend, commence participation in, terminate or commit itself to the adoption of any stock option plan or other stock-based compensation plan, compensation, severance, pension, consulting, non-competition, change in control, retirement, profit-sharing, welfare benefit, or other employee benefit plan or agreement or employment agreement with or for the benefit of any CommerceCounty employee (or newly hired employees), director or shareholder;
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accelerate the vesting of or lapsing of restrictions with respect to any stock-based compensation or other long-term incentive compensation under any CommerceCounty benefit plans;
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cause the funding of any rabbi trust or similar arrangement or provided that County may take any action to fund orfully vest participants in any other way secure the payment ofdeferred compensation or benefits under any Commerce benefit plan;plans;
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materially change any actuarial assumptions used to calculate funding obligations with respect to any CommerceCounty benefit plan that is required by applicable legal requirements to be funded or change the manner in which contributions to such plans are made or the basis on which such contributions are determined, except as may be required by GAAP or any applicable legal requirement;
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•
conduct the administration of the CommerceCounty benefit plan in any manner other than in the ordinary course of business;
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hire any new employees with an annual salary in excess of $75,000;$100,000;
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incur or guarantee any indebtedness for borrowed money other than deposits, overnight fed funds or Federal Home Loan Bank of Chicago advances not over six months in maturity, or advances from the Federal Reserve Bank of Chicago, or enter into any capital lease or leases; or, except in the ordinary course of business, (i) lend any money or pledge any of its credit in connection with any aspect of its business, whether as a guarantor, surety, issuer of a letter of credit or otherwise; (ii) mortgage or otherwise subject to any lien any of its assets or sell, assign or transfer any of its assets in excess of $100,000 in the aggregate; or (iii) incur any other liability or loss representing, individually or in the aggregate, over $100,000;
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•
enter into any new line of business or materially change its lending, investment, underwriting, risk and asset liability management and other banking and operating policies, except as required by applicable legal requirements or requested by any regulatory authority;
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settle any action, suit, claim or proceeding against it or any of its subsidiaries, except for an action, suit, claim or proceeding that is settled in an amount and for consideration not in excess of $150,000 and that would not: (i) impose any material restriction on the business of CommerceCounty or its subsidiaries; or (ii) create precedent for claims that is reasonably likely to be material to it or its subsidiaries;
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make application for the opening, relocation or closing of any, or open, relocate or close any, branch office, loan production office or other significant office or operations facility;facility, other than the relocation of Investors Community Bank’s Appleton branch;
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make or change any material tax elections, change or consent to any change in it or its subsidiaries’ method of accounting for tax purposes (except as required by applicable tax law), take any material position on any material tax return filed on or after the date of the merger agreement, settle or compromise any material tax liability, claim or assessment, enter into any closing agreement, waive or extend any statute of limitations with respect to a material amount of taxes, surrender any right to claim a refund for a material amount of taxes, or file any material amended tax return; or
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agree to take, make any commitment to take, or adopt any resolutions of the CommerceCounty board of directors in support of, any of the prohibited actions listed immediately above.
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The above restrictions on Commerce’sCounty’s business activities are set forth in Article V5 of the merger agreement.
Business of Nicolet Pending the Merger
The merger agreement requires Nicolet to continue to operate its business as usual and to preserve its business organization, rights and franchises pending the merger and to refrain from taking any action that would materially adversely affect the receipt of required regulatory or other consents or materially adversely affect either party’s ability to perform its covenants and agreements under the merger agreement.
As set forth in Section 6.1 of the merger agreement, Nicolet may not, without Commerce’sCounty’s consent, take any action that would reasonably be expected to (a) materially adversely affect the ability of Nicolet to obtain any consents required to consummate the proposed merger without imposition of a condition or restriction by regulatory authorities, or (b) that would reasonably be expected to materially adversely affect the ability of Nicolet to perform its covenants and agreements under the merger agreement.
Covenants of the Parties
In addition to the above restrictions on each party’s business activities prior to consummation of the merger and the covenants discussed elsewhere in this summary of the merger agreement, the parties have agreed to the following covenants:
•
the parties shall cooperate and use reasonable best efforts to obtain the required regulatory approvals;
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the parties are required to prepare and file a joint proxy statement-prospectus with the SEC, and Nicolet shall use reasonable best efforts to have such joint proxy statement-prospectus declared effective and to keep it effective as long as necessary to consummate the merger, and Commerceeach of Nicolet and County shall use its reasonable best efforts to cause the joint proxy statement-prospectus to be mailed to its shareholders;
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Commerceeach party has agreed that the information to be included in the joint proxy statement-prospectus shall not be false or misleading;
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Commerceeach party shall call a shareholders’ meeting for the purpose of approving the merger agreement and the merger, and Commerce’seach party’s board of directors shall use reasonable best efforts to obtain approval of the merger;
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each party shall give the other prompt notice of any changes that would constitute a material breach of the merger agreement;
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Nicolet shall cause one person from Commerce’s BoardCounty’s board (expected to be Joseph Fazio III)Lynn D. Davis) to be designated to the board of directors of Nicolet and Nicolet National Bank effective at the consummation of the merger;
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the parties shall use commercially reasonable efforts to cause the merger to qualify as a reorganization under the Internal Revenue Code, and shall deliver such certificates and other documents necessary for Nicolet’s counsel to issue its opinion that the merger qualifies as a reorganization;Code;
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Nicolet shall maintain employee benefit plans and compensation opportunities that, in the aggregate, are no less favorable than the employee benefit plans and compensation opportunities made available to similarly-situated Nicolet employees, and severance benefits as mutually agreed between Nicolet has agreed to credit Commerce employees for their years of service at Commerce to the same extent as if that service had been with Nicolet under the applicable Nicolet benefit plans;and County;
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CommerceCounty has agreed to take all appropriate actions, upon the request of Nicolet, to amend, suspend or terminate any benefit plans;
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CommerceNicolet has agreed if requested by Nicolet, to use commercially reasonable effortsmake certain change in control payments to repayeligible covered employees in fulllieu of severance payments;
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County has agreed to any lending partiescause the redemption of all indebtedness owing under any agreement representing indebtedness incurred by Commerce outstanding at the time of the merger agreement, which may include (i) paymentoutstanding shares of a dividend by Commerce State Bank inCounty preferred stock prior to the amount sufficienteffective time;
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County has agreed to enable Commercedeliver to make any requested repayments, and/or (ii) approval by regulatory authorities necessaryNicolet the tangible common equity calculation within five (5) business days prior to enable Commerce to make any requested repayments;the closing;
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Nicolet has agreed to authorize and reserve the number of shares of Nicolet common stock necessary to constituteconsummate the merger and to cause such shares to be approved for listing on the Nasdaq Capital Market;
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Nicolet shall take such action to cause the acquisition of Nicolet common stock in the merger to be exempt under Exchange Act Rule 16b-3;
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Nicolet has agreed to execute and deliver supplemental indentures and other instruments required for the assumption of County’s outstanding debt, subordinated debentures, guarantees, securities and other agreements to the extent required by such debt instruments, including in connection with the County trust preferred securities and County’s subordinates notes; and
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the parties shall consult concerning the defense of any shareholder litigation.
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No Solicitation of Alternative Transactions
CommerceCounty was required to immediately cease any negotiations with any person regarding any Acquisition Proposal, as defined in the merger agreement, existing at the time the merger agreement was executed. In addition, CommerceCounty may not solicit, directly or indirectly, inquiries or proposals with respect to, or, except to the extent determined by its board of directors in good faith, after consultation with its legal counsel, to be required to discharge properly the directors’ fiduciary duties, furnish any information relating to, or participate in any negotiations or discussions concerning, any sale of all or substantially all of its assets, any purchase of a substantial equity interest in it or any merger or other combination with Commerce.County. Subject to the same fiduciary duties, Commerce’sCounty’s board may not withdraw its recommendation to its shareholders of the merger or recommend to its shareholders any such other transaction.
CommerceCounty was also required to instruct its officers, directors, agents, and affiliates to refrain from taking such action prohibited by the merger agreement and is required to notify Nicolet immediately if it receives any inquiries from third parties. However, no director or officer of CommerceCounty is prohibited from taking any

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action that the board of directors determines in good faith, after consultation with counsel, is required by law or is required to discharge such director’s or officer’s fiduciary duties.
Indemnification and Insurance
Nicolet has agreed to provide certain indemnification in favor of the directors, officers and employees of CommerceCounty and its subsidiaries with respect to matters occurring prior to or at the effective time of the merger. Nicolet will cause the officers, directors and directors currentlyany employees covered by Commerce’sCounty’s directors’ and officers’ liability insurance policy as of the date of the merger agreement to be covered by a directors’ and officers’ liability insurance policy for six years following the effective time of the merger, subject to certain conditions provided in Section 6.36.4 of the merger agreement.

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Termination of the Merger Agreement; Termination Fee
The merger agreement specifies the circumstances under which the parties may terminate the agreement and abandon the merger. Those circumstances are:
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by mutual consent of Commerce’sCounty’s board of directors and Nicolet’s board of directors;
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•
by either party if the other party materially breaches any representation, warranty or covenant, such breach cannot be, or is not, cured within 30 days after written notice, subject to a requirement in certain circumstances that the existence of such breach would result in a “material adverse effect,” as defined in the merger agreement, on the breaching party;
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•
by either party if any regulatory authority that must grant a required approval has denied approval of any of the contemplated transactions and such denial has become final and nonappealable; provided, however, that the right to terminate the merger agreement shall not be available to a party whose failure (or the failure of any of its affiliates) to fulfill any of its obligations (excluding warranties and representations) under the merger agreement has been the cause of or resulted in the occurrence of a regulatory authority denial;
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by either party if any application, filing or notice for a required regulatory approval has been withdrawn at the request or recommendation of the applicable regulatory authority; provided, however, that the right to terminate the merger agreement shall not be available to a party whose failure (or the failure of any of its affiliates) to fulfill any of its obligations (excluding warranties and representations) under the merger agreement has been the cause of or resulted in the occurrence of a regulatory request for withdrawal;
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by either party if Commerce’seither company’s shareholders fail to approve the proposed merger;merger (assuming Nicolet shareholder approval is required on the closing date by the WBCL and Nasdaq rules); provided, however, that the right to terminate the merger agreement shall not be available to a party whose failure (or the failure of its affiliates) to fulfill any of its obligations (excluding warranties and representations) under the merger agreement has been the cause of or resulted in the failure to obtain the approval of Commerce’ssuch company’s shareholders;
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•
by either party if the merger is not consummated on or before February 17, 2021;June 22, 2022, provided, however, that the right to terminate the merger agreement will not be available to a party whose failure to fulfill any of its obligations (excluding warranties and representations) under the merger agreement has been the cause of or resulted in the failure of the merger to be consummated on or before June 22, 2022;
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by either party if any court of competent jurisdiction or other regulatory authority shall have issued a judgment, order, injunction, rule or decree, or taken any other action restraining, enjoining or otherwise prohibiting any of the contemplated transactions and such judgment, order, injunction, rule, decree or other action shall have become final and nonappealable;
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by Commerce,County, prior to receipt of its shareholders’ approval, to accept an Acquisition Proposal that Commerce’sCounty’s board of directors deems a Superior Proposal, as each term is defined in the merger agreement;
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by Nicolet,either party, if Commerce’sthe other party’s board of directors makes an adverse recommendation, whereby the Commercesuch other party’s board of directors withdraws, qualifies or adversely modifies its recommendation to Commerceits respective shareholders that they vote in favor of the adoption and approval of the merger agreement;
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by Nicolet,County, if at any time during the holders of more than 10% offive business day period commencing 15 days prior to the outstanding shares of Commerce common stock assert dissenters’ rights in compliance with Subchapter XIII of the WBCL;
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by Nicolet, ifscheduled closing date, (i) the Nicolet Common Stock PriceMarket Value (as defined in the merger agreement) is less than $62.00$65.83 per share; or
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•
share, and (ii) the number obtained by Commerce, ifdividing the Nicolet Common Stock PriceMarket Value (as defined in the merger agreement) by $77.45 is less than $62.00 per sharethe number obtained by subtracting 0.15 from the Index Ratio (as defined in the merger agreement); provided however that in the event the two circumstances of (i) and (ii) occur, Nicolet electsmay choose to leaveincrease the exchange ratio unchangedin accordance with the merger agreement, and does not supplementCounty will be prevented from terminating the consideration with a cash component sufficient to make the per share merger consideration equal to $71.30.transaction.
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If Nicolet terminates the merger agreement because Commerce’sCounty’s board withdraws or changes its recommendation of the merger agreement orto its shareholders, if CommerceCounty terminates the merger agreement to accept an Acquisition Proposal it deems a Superior Proposal, as each term is defined in the merger agreement, or if (i) an Acquisition Proposal is made with respect to County, (ii) the merger agreement is terminated as a result of the failure to obtain County’s shareholder approval, and (iii) County enters into an agreement for such Acquisition Proposal within 12 months after the merger agreement is terminated, then Commerce (or its successor)County must pay Nicolet a termination fee of $5.0 million. If an Acquisition Proposal is made, and if either party thereafter terminates the merger agreement either because the Commerce shareholder approval was not obtained or because the merger is not consummated by February 17, 2021,

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and within 12 months of such termination Commerce enters into a definitive agreement with respect to such Acquisition Proposal, then Commerce (or its successor) must pay Nicolet a termination fee of $5.0$10.0 million.
Provisions of the merger agreement regarding confidentiality and payment of the termination fee and indemnification of Commerce and its controlling persons will survive any termination of the merger agreement.
For a discussion of the intent of the parties to consummate the merger in the current environment, see “Status of Intentions to Consummate the Merger” at page 46.
Payment of Expenses Relating to the Merger
The parties will pay all of their own expenses related to negotiating and completing the merger, whether or not the merger is consummated, except that the expenses incurred in connection with the filing, printing and mailing of this joint proxy statement-prospectus, and all filing and other fees paid to the SEC, in each case in connection with the merger (other than attorneys’ fees, accountants’ fees and related expenses), shall be shared equally by Nicolet and Commerce.County.
Affiliate Agreements
Each director of CommerceCounty has executed a Voting and Support Agreement in which each suchthe director agrees to vote all of his her or itsher shares of CommerceCounty common stock in favor of the merger agreement.
FormsThe form of the Voting and Support Agreements areAgreement is attached as Exhibit B to the merger agreement, which is attached to this joint proxy statement-prospectus as Appendix A. These agreements may have the effect of discouraging third parties from making an Acquisition Proposal, as defined in the merger agreement. The following is a brief summary of the material provisions of the agreements:
•
The director agrees to vote, or cause to be voted, in person or by proxy, all of the shares of CommerceCounty common stock that the director owns beneficially or of record in favor of the merger agreement, unless Nicolet is then in material breach of the agreement.
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•
The director agrees, except for certain specific transfers set forth in the agreement, not to directly or indirectly transfer any of his, her or its CommerceCounty common stock until the closing date of the merger without the prior written consent of Nicolet.
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MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following is a summary description of the anticipated material U.S. federal income tax consequences of the merger generally applicable to U.S. Shareholders (as defined below) of CommerceCounty who hold the commonCounty stock as a capital assetsasset within the meaning of Section 1221 of the Internal Revenue Code (the “Code”). This discussion constitutes the tax opinion of Bryan Cave Leighton Paisner LLP, tax counsel to Nicolet, as to the material U.S. federal income tax consequences of the merger to the U.S. Shareholders of Commerce commonCounty stock. This discussion deals only with the U.S. federal income tax consequences of the merger. No information is provided regarding the tax consequences of the merger under state, local or foreign income tax laws or non-income tax laws. We do not intend this summary to be a complete description of the U.S. federal income tax laws applicable to all CommerceCounty shareholders in light of their particular circumstances or to CommerceCounty shareholders subject to special treatment under U.S. federal income tax laws, such as:
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Non-U.S. Shareholders (as defined below) (except to the extent discussed under the subheading “Tax Implications to Non-U.S. Shareholders” below);
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entities treated as partnerships or other flow-through entities for U.S. federal income tax purposes, or Commerce shareholders who hold their shares through entities treated as partnerships for U.S. federal income tax purposes;the owners thereof;
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qualified insurance plans;
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tax-exempt organizations;
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•
qualified retirement plans and individual retirement accounts;
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brokers or dealers in securities or currencies;
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traders in securities that elect to use a mark-to-market method of accounting;
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regulated investment companies;
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real estate investment trusts;
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persons whose functional currency is not the U.S. dollar;
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persons who received their stock upon the exercise of employee stock options, who receive payments in cancellation and in lieu of exercise of their stock option, or otherwise acquired their stock as compensation;
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persons who purchased or sell their shares of Commerce commonCounty stock as part of a wash sale; or
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persons who hold the commontheir County stock as part of a “hedge,” “straddle” or other risk reduction, “constructive sale,” or “conversion transaction,” as these terms are used in the Code.
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This discussion is based upon, and subject to, the Code, the Treasury regulations promulgated under the Code, existing interpretations, administrative rulings and judicial decisions, all of which are in effect as of the date of this statement, and all of which are subject to change, possibly with retroactive effect. Any such change could affect the continuing validity of this discussion. Tax laws are complex, and your individual circumstances may affect the tax consequences to you. We urge you to consult a tax advisor regarding the tax consequences of the merger to you.
U.S. Shareholders
For purposes of this discussion, the term “U.S. Shareholder” means a beneficial owner of Commerce commonCounty stock that is:
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a citizen or resident of the U.S.;
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a corporation (including any entity treated as a corporation for U.S. federal income tax purposes) created or organized under the laws of the U.S. or any of its political subdivisions;
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a trust that (i) is subject to both the primary supervision of a court within the U.S. and the control of one or more U.S. persons, or (ii) has a valid election in effect under applicable U.S. treasury regulations to be treated as a U.S. person; or
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an estate that is subject to U.S. federal income tax on its income regardless of its source.
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If a partnership (including any entity or arrangement, domestic or foreign, that is treated as a partnership for U.S. federal income tax purposes) holds Commerce commonCounty stock, the tax treatment of a partner will generally depend on the status of the partners and the activities of the partnership. Partnerships and partners in such a partnership should consult their tax advisors regarding the tax consequences of the merger to them.
Qualification of the Merger as a Reorganization
Subject to the limitations set forth herein, the merger will qualify as a reorganization within the meaning of Section 368(a) of the Code. The obligation of Nicolet and CommerceCounty to complete the merger is conditioned upon receipt of a tax opinion from Bryan Cave Leighton Paisner LLP to the effect that:
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the merger will constitute a “reorganization” within the meaning of Section 368(a) of the Code; and
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each of CommerceCounty and Nicolet will be a party to such reorganization within the meaning of Section 368(b) of the Code.
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The tax opinion is filed as Exhibit 8.1 to the registration statement of which this joint proxy statement-prospectus is a part. The tax opinion is based upon law existing on the date of the opinion and upon certain facts, assumptions, limitations, representations and covenants including those contained in representation letters executed by officers of CommerceCounty and Nicolet that, if incorrect in certain material respects, would jeopardize the conclusions reached by Bryan Cave Leighton Paisner LLP in its opinion. The tax opinion will not bind the Internal Revenue Service or prevent the Internal Revenue Service from successfully asserting a contrary opinion. No ruling will be requested from the Internal Revenue Service in connection with the merger.
Tax Implications to U.S. Shareholders
The following discussion summarizes the material U.S. federal income tax consequences of the merger to U.S. Shareholders.
The U.S. federal income tax consequences of the merger to an owner of Commerce commonCounty stock that is a U.S. Shareholder generally will depend on whether such U.S. Shareholder receives cash in exchange for all or a portion of its Commerce commonCounty stock in the merger (whether by receipt of cash in lieu of a fractional share of Nicolet common stock, exercise of dissenter’s rights or otherwise).merger.
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Exchange solely for Nicolet Common Stock. NoA U.S. Shareholder will not recognize gain or loss will be recognized by U.S. Shareholders uponwith respect to the exchange of shares of Commerce commonCounty stock solely for shares of Nicolet common stock, pursuant to the merger, except in respect of cash received in lieu of a fractional share (as discussed below).
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Exchange for Cash and Nicolet Common Stock. A U.S. Shareholder who receives a combination of cash (not including cash received in lieu of the issuance of a fractional share of Nicolet common stock) and Nicolet common stock (as discussed below).in exchange for County stock will generally recognize gain (but not loss) in an amount equal to the lesser of: (i) the excess, if any, of (a) the sum of the amount of cash treated as received in exchange for County stock in the merger (excluding cash received in lieu of a fractional share) plus the fair market value of Nicolet common stock (including the fair market value of any fractional share) received in the merger, over (b) the U.S. Shareholder’s adjusted tax basis in the shares of County stock exchanged, or (ii) the amount of cash (excluding cash received in lieu of a fractional share) received in the merger.
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Exchange of Cash in Lieu of Fractional Share. A U.S. Shareholder who receives cash in lieu of the issuance of a fractional share of Nicolet common stock will generally be treated as having received such fractional share pursuant to the merger and then as having received cash in exchange for the sale of such fractional share. Gain or loss generally will be recognized in an amount equal to the difference between the amount of cash received and the portion of the U.S. Shareholder’s aggregate adjusted tax basis of the CommerceCounty shares exchanged in the merger which would otherwise be allocable to such fractional share of Nicolet common stock.
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Exchange for Cash and Nicolet Common Stock. In the event that the Nicolet Common Stock Price is less than $62.00 and Nicolet elects to leave the exchange ratio unchanged and instead add additional cash consideration in an amount sufficient to bring the aggregate per share consideration to $71.30 per share, a U.S. Shareholder who receives a combination of cash (not including cash received in lieu of the issuance of a fractional share of Nicolet common stock) and Nicolet common stock in exchange for Commerce common stock will generally recognize gain (but not loss) in an amount equal to the lesser of: (i) the excess, if any, of (a) the sum of the amount of cash treated as received in exchange for Commerce common stock in the merger (excluding cash received in lieu of a fractional share) plus the fair market value of Nicolet common stock (including the fair market value of any fractional share) received in the merger, over (b) the U.S. Shareholder’s adjusted tax basis in the shares
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of Commerce common stock exchanged, or (ii) the amount of cash (excluding cash received in lieu of a fractional share) received in the merger.
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Any taxable gain to a U.S. Shareholder on the exchange of Commerce commonCounty stock generally will be treated as capital gain (either long-term capital gain if such shareholder has held such Commerce commonCounty stock for more than one year, or short-term capital gain if such shareholder has held such Commerce commonCounty stock for one year or less). If a U.S. Shareholder acquired different blocks of Commerce commonCounty stock at different times or at different prices, such U.S. Shareholder’s gain may need to be computed separately for each block of Commerce commonCounty stock. U.S. Shareholders should consult their individual tax advisors regarding the manner in which any gain or loss should be determined.
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Tax Basis of Nicolet Common Stock Received in the Merger. The aggregate tax basis of the Nicolet common stock (including a fractional share deemed received and sold for cash as described above) by those Commerce shareholders that receive only Nicolet common stock (and cash in lieu of a fractional share) in the merger will equal the aggregate tax basis of the Commerce common stock surrendered in the exchange. In the event that Commerce shareholders receive both cash and Nicolet common stock in the merger, the aggregate tax basis of the Nicolet common stock (including a fractional share deemed received and sold for cash as described above) will equal the aggregate tax basis of the Commerce commonCounty stock surrendered in the exchange decreased by the amount of cash received in the exchange (but not including cash received in lieu of a fractional share) and increased by gain recognized on the exchange (but not including gain attributable to the disposition of a fractional share).
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Holding Period of Nicolet Common Stock Received in the Merger. The holding period for any Nicolet common stock received in the merger will include the holding period of the Commerce commonCounty stock surrendered in the exchange.
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Exchange Solely for Cash. A U.S. Shareholder who receives solely cash in exchange for Commerce commonCounty stock as a result exercising dissenter’s rights generally will recognize gain or loss in an amount equal to the difference between the cash received and the U.S. Shareholder’s adjusted tax basis in the shares of Commerce commonCounty stock surrendered by such shareholder. Any taxable gain or loss to a U.S. Shareholder on the exchange of Commerce commonCounty stock will generally be treated as capital gain or loss, either long-term or short-term depending on such shareholder’s holding period for the Commerce commonCounty stock. If a U.S. Shareholder acquired different blocks of Commerce commonCounty stock at different times or at different prices, such U.S. Shareholder’s gain or loss may need to be computed separately for each block of Commerce commonCounty stock.
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Tax Consequences to Nicolet and Commerce.County.    Neither Nicolet nor CommerceCounty will recognize taxable gain or loss as a result of the merger, except for, in the case of Commerce,County, gain, if any, that has been deferred in accordance with the consolidated return regulations.
Tax Implications to Non-U.S. Shareholders
The following discussion summarizes the material U.S. federal income tax consequences of the merger to Non-U.S. Shareholders. For purposes of this discussion, the term “Non-U.S. Shareholder” means a beneficial owner of Commerce commonCounty stock (other than an entity treated as a partnership for U.S. federal income tax purposes) that is not a U.S. Shareholder. The rules governing the U.S. federal income taxation of Non-U.S. Shareholders are complex, and no attempt will be made herein to provide more than a limited summary of those rules.
Any gain a Non-U.S. Shareholder recognizes from the exchange of Commerce commonCounty stock for cash in the merger generally will not be subject to U.S. federal income taxation unless (a) the gain is effectively connected with a trade or business conducted by the Non-U.S. Shareholder in the United States (and, if required by an applicable income tax treaty, the Non-U.S. Shareholder has a permanent establishment in the United States to which such gain is attributable), or (b) the Non-U.S. Shareholder is a nonresident alien individual present in the United States for 183 days or more in the taxable year of the sale and other conditions are met. Non-U.S. Shareholders described in (a) above will be subject to U.S. federal income tax on gain recognized at regular graduated rates and, in addition, Non-U.S. Shareholders that are corporations (or

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treated as corporations for U.S. federal income tax purposes) may be subject to a branch profits tax equal to 30% (or a lesser rate under an applicable income tax treaty) on their effectively connected earnings and profits for the taxable year, which would include such gain. Non-U.S. Shareholders described in (b) above will be subject to a flat 30% tax on any gain recognized (or such lower rate specified by an applicable income tax treaty), which may be offset by U.S. source capital losses.
If a Non-U.S. Shareholder’s actual income tax liability is less than the amount withheld, due to withholding at a rate in excess of a reduced rate for which the Non-U.S. Shareholder may be eligible under a tax treaty or otherwise, the Non-U.S. Shareholder may be able to obtain a refund of or credit for any amounts withheld in excess of the applicable rate. Non-U.S. Shareholders are encouraged to consult with their own tax advisers regarding the possible implicationstax consequences to them as a result of these withholding requirements.the merger.
Tax Consequences if the Merger Does Not Qualify as a Reorganization
If the merger fails to qualify as a reorganization within the meaning of Section 368(a) of the Code, and if the parties to the merger elect to waive this condition to closing and consummate the merger, the merger will be a fully taxable transaction to CommerceCounty and the shareholders of Commerce commonCounty stock. For federal income tax purposes, the Mergermerger will be deemed to be a taxable sale of assets by CommerceCounty followed by a distribution of the sale proceeds by CommerceCounty to its shareholders in complete liquidation of Commerce.County. Accordingly, CommerceCounty will recognize, in the aggregate, gain or loss equal to the difference between (i) the sum of the total consideration received in the merger and Commerce’sCounty’s liabilities deemed assumed and (ii) Commerce’sCounty’s adjusted tax basis in its assets. A U.S. Shareholder will recognize gain or loss measured by the difference between the total consideration received by such shareholder in the merger (the amount of any cash received plus the fair market value of the Nicolet common stock received) and such shareholders’shareholder’s tax basis in the shares of Commerce commonCounty stock surrendered in the merger. Gain or loss will generally be treated as capital gain or loss (either long-term if such shareholder has held such Commerce commonCounty stock for more than one year, or short-term if such shareholder has held such Commerce commonCounty stock for one year or less). If a U.S. Shareholder acquired different blocks of Commerce commonCounty stock at different times or at different prices, such U.S. Shareholder’s gain may need to be computed separately for each block of Commerce commonCounty stock. Each shareholder of Commerce commonCounty stock is urged to consult his, hers or its tax advisor regarding the manner in which gain or loss should be calculated. The aggregate tax basis in the shares of Nicolet common stock received pursuant to the merger will be equal to the fair market value of such Nicolet common stock as of the closing date of the merger. The holding period of such shares of Nicolet common stock will begin on the date immediately following the closing date of the merger.

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Additional Federal Tax Considerations
Backup Withholding and Information Reporting
In general, information reporting requirements may apply to the cash payments made to shareholders of Commerce commonCounty stock in connection with the merger, unless an exemption applies. Backup withholding may be imposed on the above payments at a rate of 24% if a County shareholder (i) fails to provide a taxpayer identification number or appropriate certificates, or (ii) otherwise fails to comply with all applicable requirements of the backup withholding rules.
Any amounts withheld from payments to shareholders of Commerce commonCounty stock under the backup withholding rules are not an additional tax and will be allowed as a refund or credit against yoursuch shareholders’ applicable U.S. federal income tax liability, provided the required information is furnished to the Internal Revenue Service. Both U.S. Shareholders and Non-U.S. Shareholders should consult their own tax advisors regarding the application of backup withholding based on their particular circumstances and the availability and procedure for obtaining an exemption from backup withholding.
Medicare Tax on Net Investment Income
In addition to regular U.S. federal income tax, certain U.S. Shareholders that are individuals, estates or trusts are subject to a 3.8% Medicare tax on all or a portion of their net investment income, which may include gain recognized in connection with merger of Commerce and Nicolet.the merger. In the case of an individual, the tax will be imposed on the lesser of (i) the shareholder’s net investment income, or (ii) the amount by which the

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shareholder’s modified adjusted gross income exceeds a certain threshold (which is $250,000 in the case of married individuals filing jointly, $125,000 in the case of married individuals filing separately, and $200,000 in all other cases).
Nothing in the foregoing summary is intended to be, or should be construed as, tax advice. The United States federal income tax discussion set forth above is included for general information purposes only and is not a complete analysis or discussion of all potential tax consequences relevant to holders of Commerce commonCounty stock. Holders of Commerce commonCounty stock are strongly urged to consult their tax advisors to determine the federal, state, local and foreign tax consequences to them of the merger and the ownership and disposition of Nicolet common stock received in the merger in light of their own particular circumstances.
 
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CERTAIN DIFFERENCES IN RIGHTS OF SHAREHOLDERS
To the extent that they receive Nicolet common stock as merger consideration, Commerce’sCounty’s shareholders will become Nicolet shareholders following completion of the merger. Their rights as shareholders will then be governed by Nicolet’s articles of incorporation and bylaws rather than by Commerce’sCounty’s articles of incorporation and bylaws.
Nicolet and CommerceCounty are both corporations organized under the laws of the State of Wisconsin. The corporate affairs of Nicolet and CommerceCounty are governed generally by the provisions of the Wisconsin Business Corporation Law (the “WBCL”).WBCL. The following is a summary of certain differences between the rights of CommerceCounty shareholders and Nicolet shareholders not described elsewhere in this joint proxy statement-prospectus. The summary is necessarily general, and it is not intended to be a complete statement of all differences affecting the rights of shareholders. It is qualified in its entirety by reference to the WBCL, as well as the articles of incorporation and bylaws of each corporation. CommerceCounty shareholders should consult their own legal counsel with respect to specific differences and changes in their rights as shareholders that would result from the proposed merger.
Authorized Capital Stock
Nicolet.   Nicolet’s articles of incorporation authorize it to issue 30,000,000 shares of common stock, $0.01 par value, and 10,000,000 shares of preferred stock, no par value, with such preferences, limitations and relative rights as determined by the board of directors. As of January 31, 2020, 10,596,140June 30, 2021, 9,865,955 shares of Nicolet common stock were issued (including 24,52122,814 shares of restricted stock granted but not yet vested under the Nicolet Stock Plans)Nicolet’s equity incentive plans), 10,571,6199,843,141 shares of common stock were outstanding, and no shares were treasury shares; and (ii) 10,000,000 sharesshares. As of June 30, 2021, Nicolet’s preferred stock no par value per share,consists of which:the following: (i) 14,964 shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series A, are authorized, but no shares are outstanding; (ii) 748 shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series B, are authorized, but no shares are outstanding; and (iii) 24,400 shares of Non-Cumulative Perpetual Preferred Stock, Series C, are authorized, but no shares are outstanding.
As of January 31, 2020,June 30, 2021, no shares of Nicolet capital stock were reserved for issuance except for: (i) 1,372,166942,878 shares of Nicolet Common Stockcommon stock reserved for issuance pursuant to future awards under Nicolet Stock Plans,Nicolet’s equity incentive plans (other than its 2009 Deferred Compensation Plan for Non-Employee Directors), (ii) 1,478,9541,802,792 shares of Nicolet Common Stockcommon stock reserved for issuance in connection with outstanding stock options, restricted stock or other equity awards under a Nicolet Stock Plan;equity incentive plans; (iii) 141,082 shares of Nicolet Common Stockcommon stock reserved for issuance under Nicolet’s 401(k) plan; (iv) 64,35259,615 shares of Nicolet Common Stockcommon stock reserved for issuance pursuant to Nicolet’s 2009 Deferred Compensation Plan for Non-Employee Directors; and (v) 142,804131,835 shares of Nicolet Common Stockcommon stock reserved for issuance under the Nicolet Bankshares, Inc. Employee Stock Purchase Plan.
CommerceCounty.   Commerce’sCounty’s articles of incorporation authorize it to issue 10,000,00050,000,000 shares of common stock, $0.01 par value and 1,000,000per share, 15,000 shares of series B nonvoting noncumulative perpetual preferred stock, $0.01 par value.value per share, and 585,000 shares of unclassified preferred stock, $0.01 par value per share. As of January 31, 2020,June 30, 2021, there were 1,530,5467,250,476 shares of CommerceCounty common stock issued and 6,026,748 shares outstanding. As of June 30, 2021, 8,000 shares of series B nonvoting noncumulative perpetual preferred stock were issued and outstanding and no shares of the authorizedunclassified preferred stock were issued or outstanding.
As of January 31, 2020, there were 57,132June 30, 2021, no shares of CommerceCounty common stock were reserved for issuance except for: (i) 270,455 shares of County common stock reserved for issuance pursuant to outstanding or future awards under Company Stock Plans.County stock plans; and (ii) 319,971 shares of County common stock reserved for issuance in connection with outstanding stock options, unvested restricted stock or other equity awards under County stock plans. Other than (i) 97,891 shares of County common stock issued or issuable pursuant to restricted stock or restricted stock unit awards under County stock plans, and (ii) 222,080 shares of County common stock underlying stock options issued under County stock plans, no equity-based awards were outstanding as of June 30, 2021.
Composition and Election of the Board of Directors
Nicolet.Nicolet. Nicolet’s articles of incorporation and bylaws provide that the board of directors shall consist of not fewer than two nor more than 25 directors, with the exact number of directors to be set by resolution

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of the board. ItsAs of the date of this joint proxy statement-prospectus, Nicolet’s board of directors consists of 14 directors. Nicolet’s articles of incorporation provide for the election of directors by cumulative voting, which means that the number of votes each common shareholder may cast is determined by multiplying the number of shares he, she or it owns by the number of directors to be elected. Those votes may be cumulated and cast for a single candidate or may be distributed among two or more candidates in the manner selected by the shareholder.
Commerce.County   Commerce’s.   County’s bylaws and articles of incorporation provide that the number of directors shall not be less than four and shall not be greater than fifteen. Commerce’s bylaws provide that the number

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of directors shall be within the limits specified, but may be amendeddetermined from time to time by resolution adopted by eithera majority of the shareholders orthen authorized number of directors, but in no case shall the number of directors be less than ten. As of the date of this joint proxy statement-prospectus, County’s board of directors consists of 11 directors. Directors are elected by a plurality vote. The articles of incorporation do not provide for cumulative voting. Commerce’sCounty’s articles of incorporation and bylaws provide that each director serves for a term of three years and until his or her successor is elected and qualified, unless the director is removed, resigns, becomes unable to serve or dies. The articles of incorporation and bylaws also provide for a staggered board, comprised of three classes, with each class’s term expiring on the third succeeding annual meeting after their election.
Director Nominations
Nicolet.Nicolet.   Under Nicolet’s bylaws, either directors or shareholders may nominate persons for election as Nicolet directors.directors. Nominations that are not made by or on behalf of Nicolet’s management must be delivered in writing to Nicolet’s President no less than 14 and no more than 50 days before the meeting at which directors will be elected.elected. If less than 21 days’ notice of such meeting is given, then the delivery deadline for the shareholder’s written notice is the close of business on the seventh7th day after the date on which notice of the meeting was mailed. The shareholder’s nomination must specify (to the extent known to the shareholder) the nominee’s name, address and principal occupation; the number of shares of capital stock that will be voted in favor of the nominee; and the nominating shareholder’s name, address and beneficial ownership of Nicolet capital stock.
CommerceCounty.   Commerce’s articlesUnder County’s bylaws, nominations for the election of incorporationdirectors may be made or proposed by any shareholder entitled to vote for the election of directors. A shareholder entitled to vote for the election of directors at a meeting may nominate persons for election as directors only if written notice of such shareholder’s intent to make such nomination is given, either by personal delivery or by United States mail, postage prepaid, to the Secretary of County not later than (i) with respect to an election to be held at an annual meeting of shareholders, 90 days in advance of such meeting, or (ii) with respect to an election to be held at a special meeting of shareholders, the close of business on the 7th day following the date on which notice of such meeting is first given to shareholders. Such notice must contain the name and bylaws do not impose any specific qualification requirements for director nominations.address of the shareholder, the number of shares held of record by the shareholder, the date or dates on which the shareholder acquired such shares and background information about the proposed nominee or nominees.
Director Qualifications
Nicolet.Nicolet.   Under Nicolet’s bylaws, no person shall beis eligible to be elected a director at any meeting of shareholders held on or after the date he or she attains age 72. The board of directors, at its discretion, may waive the age limitation or establish a greater age from time to time. Nicolet’s bylaws do not impose any other specific qualification requirements on directors.
CommerceCounty.   Commerce’s articlesUnder County’s bylaws, directors are subject to mandatory retirement from the board of incorporationdirectors upon reaching the age of 72. Upon a director reaching the age of 72, such director must, prior to the date of the next annual meeting of shareholders, tender his or her resignation from the board of directors, which resignation shall be effective no later than the date of the next annual meeting of shareholders. County’s bylaws provide that directors need not be residents of the State of Wisconsin or shareholders of County and bylaws do not impose any other specific qualification requirements on directors.
Board Committees
Nicolet.   Under the WBCL, unless the articles of incorporation or bylaws provide otherwise, a board of directors may create one or more committees, appoint members of the board of directors to serve on the

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committees and designate other members of the board of directors to serve as alternates. The WBCL provides that a committee may exercise the authority of the full board of directors except that it cannot approve or recommend to shareholders matters that require shareholder approval under the WBCL, and it cannot adopt, amend or repeal a corporate bylaw. In addition to these restrictions, Nicolet’s bylaws provide that no board committee may approve dividends, fill board or committee vacancies without express authorization by the full board, amend the articles of incorporation, approve a plan of merger not requiring shareholder approval, approve the reacquisition of outstanding Nicolet capital stock except pursuant to parameters established by the full board, or approve the issuance of capital stock except to the extent authorized by the full board.
CommerceCounty.   Commerce’sUnder the WBCL, unless the articles of incorporation or bylaws allowprovide otherwise, a board of directors may create one or more committees, appoint members of the board of directors to create one or moreserve on the committees by a resolution approved by either a majority of directors in office at the time. Any committee created shall consist of two or more directors and shall, unless otherwise provided by the board of directors, serve at the pleasure of the board of directors. A committee may exercise, when the board of directors is not in session, any of the powersdesignate other members of the board of directors exceptto serve as alternates. The WBCL provides that a committee may not: (i)exercise the authority of the full board of directors except that it cannot approve or recommend to shareholders matters that require shareholder approval under the WBCL and it cannot adopt, amend or repeal a corporate bylaw. In addition to these restrictions, County’s bylaws provide that no board committee may authorize distributions, or dividends to shareholders; (ii) elect any of the principal officers; (iii) fill vacancies on the board of directors or any board committees; (iv) approve or propose to shareholders actionof its committees, except that the WBCL requires toboard of directors may provide by resolution that any vacancies on a committee shall be approvedfilled by shareholders; (v)the affirmative vote of a majority of the remaining committee members, amend theCounty’s articles of incorporation; (vi) adopt, amend or repeal the bylaws; (vii)incorporation, approve a plan of merger not requiring shareholder approval; (viii)approval, authorize or approve reacquisition of shares, except according to a formula or method prescribed by the Boardboard of Directors;directors, or (ix) authorize or approve the issuance or sale or contract for sale of shares, or determine the designation ofand relative rights,

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preferences and limitations of a class or series of shares, except that the board of directors may authorize a committee or a senior executive officer to do so within limits describedprescribed by the board of directors.
Board Vacancies
Nicolet.   The WBCL provides that unless the articles of incorporation provide otherwise, if a vacancy occurs on the board of directors it may filled by any of the following: (i) the shareholders; (ii) the board of directors; or (iii) if the directors remaining in office constitute fewer than a quorum of the board, the directors, by the affirmative vote of a majority of all directors remaining in office. If the vacant office was held by a director elected by a voting group of shareholders, only the holders of shares of that voting group may vote to fill the vacancy if it is filled by shareholders, and only the remaining directors elected by that voting group may vote to fill the vacancy if it is filled by the directors. A vacancy that will occur at a specific later date may be filled before the vacancy occurs, but the new directors may not take office until the vacancy occurs. Nicolet’s bylaws provide that any vacancy on the board, including a vacancy resulting from an increase in the number of directors, shall be filled by a majority of the board of directors then in office, although less than a quorum, and any directors so chosen shall hold office for the remaining term of directors of the class to which he or she has been elected and until election of his or her duly qualified successor.
CommerceCounty.   Commerce’s bylawsThe WBCL provides that unless the articles of incorporation provide that anyotherwise, if a vacancy occurs on the board including a vacancy created by an increase in the number of directors it may be filled untilby any of the next succeeding annual election by (a)following: (i) the shareholders; (ii) the board of directors; (b)or (iii) if the directors remaining in office constitute fewer than a quorum of the board, the directors, by the affirmative vote of a majority of the directors then in office, if theall directors remaining in office constitute less than a quorum ofoffice. If the board of directors; or (c) by vote of the shareholder. In the case of a vacancy created by the removal of a director by vote of the shareholders, the shareholders shall have the right to fill such vacancy at the same meeting or adjournment thereof. If a vacancyvacant office was held by a director elected by a voting group of shareholders, only the holders of shares of that voting group may vote to fill the vacancy.vacancy if it is filled by shareholders, and only the remaining directors elected by that voting group may vote to fill the vacancy if it is filled by the directors. A vacancy that will occur at a specific later date may be filled before the vacancy occurs, but the new directors may not take office until the vacancy occurs. County’s bylaws provide that any vacancy on the board of directors, whether resulting from an increase in the number of directors or resulting from death, resignation, disqualification, removal or otherwise, shall be filled by the vote of the majority of the directors then in office, even if less than a quorum, or by a sole remaining director. If no director remains in office, any vacancy may be filled by the shareholders. Any director so elected to fill any vacancy on the board of directors, including a vacancy created by an increase in the number of directors, shall hold office for the remaining term of directors of the class to which he has been elected and until his successor shall be elected and shall qualify. A vacancy that will occur at a specific later date (because of a resignation effective at a later date) may be filled before the vacancy occurs, but the new director may not take office until the vacancy occurs.

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Director Removal
Nicolet.Nicolet.   Directors may be removed for cause by the affirmative vote of the holders of a majority of the outstanding shares of Nicolet common stock entitled to vote in the election of directors, except that a director may not be removed if a number of cumulative votes sufficient to elect him or her is cast against his or her removal. Removal must be voted upon at a special shareholders’ meeting called for that purpose, and any vacancy so created may be filled by majority vote of the remaining directors. “Cause” is defined as conviction of a felony, a demand for removal by regulatory authorities or a determination by two-thirds of the directors then in office (excluding the director whose removal is being sought) that the director’s conduct was inimical to the best interests of Nicolet.
Commerce.County   Commerce’s.   County’s bylaws provide that any director or the entire board of directors may be removed, with or without cause, by the shareholders if the number of votes cast to remove the director(s) exceeds the number cast not to remove him or her. If a director is elected by a voting group of shareholders, only the shareholders of that voting group may participate in the vote to remove that director. A director may be removed from office prior to the expiration of his or her term of office at any time, but only for cause and only by the shareholders onlyaffirmative vote of a majority of the outstanding shares of County capital stock entitled to vote with respect to the election of such director at a meeting of the shareholders duly called for the purpose of removing a director, and the meeting notice shall state that the purpose, or one of the purposes, of the meeting is removal of the director.such purpose.
Advance Notice of Shareholder Proposals
Nicolet.Nicolet.   Nicolet’s bylaws provide that, in addition to any other requirements generally applicable to matters to be brought before an annual meeting of shareholders under Nicolet’s articles of incorporation or bylaws or the WBCL, a Nicolet shareholder who wishes to present a matter for consideration at such meeting must notify Nicolet’s Corporate Secretary in writing no later than 60 days before the meeting.meeting. The shareholder’s notice must specify the nature and reason for the business proposed to be conducted; the shareholder’s name, address and beneficial ownership of Nicolet stock; and any material interest of the shareholder in the matter proposed for consideration. See “Director Nominations” above for special provisions relating to shareholder nominations of candidates for the board of directors.

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Commerce.County   Commerce’s articles of incorporation and.   County’s bylaws do not imposeprovide that action proposed to be taken at a shareholders’ meeting may be made or proposed by any specific requirements onshareholder entitled to vote for such proposed action. A shareholder may propose action to be taken at a meeting only if written notice of such shareholder’s intent to make such proposal is given, either by personal delivery or by United States mail, postage prepaid, to the Secretary of County not later than (i) with respect to a proposal to be considered at an annual meeting of shareholders, 90 days in advance of such meeting, or (ii) with respect to a proposal to be considered at a special meeting of shareholders, the close of business on the 7th day following the date on which notice of such meeting is first given to shareholders. Such notice shall contain the name and address of the shareholder, proposals.the number of shares held of record by the shareholder, the date or dates on which the shareholder acquired such shares and a description of the proposed business to be brought before the shareholders’ meeting. See “Director Nominations” above for special provisions relating to shareholder nominations of candidates for the board of directors.
Meetings of Shareholders
Nicolet.Nicolet.   Nicolet’s bylaws provide that annual meetings of shareholders will be held at such date as may be specified by the board of directors or Corporate Secretary. Subject to any contrary requirements of the WBCL, special meetings of shareholders may be called by either Nicolet’s Chief Executive Officer or President at the direction of the board of directors or by the holder(s) of at least 10% of Nicolet’s outstanding stock. Nicolet’s bylaws require at least ten and not more than sixty days’ notice of any meeting of shareholders. Nicolet’s bylaws further authorize the board of directors, in its sole discretion, to determine that the annual meeting and/or any special meeting of the shareholders be held solely by means of remote communication as authorized under Wisconsin Statutes section 180.0709.
Commerce.County   Commerce’s.   County’s bylaws provide that the annual meeting of the shareholders shall be held on the secondthird Tuesday in the month of May of each year, or onat such other date within 30 days thereof as may be authorizedfixed by or under the authority of the board of directors and set forth in the notice of the meeting.directors. Special meetings of the shareholders may be called only by (i) the chairman, (ii) chief executive officer,Chairman of the board, the President, or (iii)by the board of directors. AIf and as required by the WBCL, a special meeting shall be called by the chief executive officer at theupon written request of (a) thedemand describing one or more purposes for which it is to be held by holders of not less than one tenthshares with at least 10% of allthe votes entitled to be cast on any issue proposed to be considered at the special meeting, if such holders sign, date and deliver a written request stating the purpose for such meeting, or (b) one third of the directors then in office.meeting.

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Shareholder Vote Requirements
Nicolet.Nicolet.   Except as described under “Board of Directors” above and “Mergers, Consolidations and Sales of Assets” below, and unless a greater number of votes is required under Nicolet’s articles of incorporation or the WBCL, a matter voted upon by Nicolet shareholders will be approved if more votes are cast in favor of a matter than against it, assuming a quorum is present.
Commerce.County.   Except as described under “Board of Directors” above, and “Mergers, Consolidations and Sales of Assets” below, and unless a greater number of votes is required under the WBCL or County’s articles of incorporation, a matter voted upon by a quorum of CommerceCounty shareholders will be approved if themore votes are cast within the voting group favoring the action exceed the votes cast opposing the action. A majorityin favor of the votes entitled to be cast by shares entitled to vote as a separate voting group on a matter whether represented in person or by proxy, constitutesthan against it, assuming a quorum. Additionally, Commerce shares owned by another corporation (directly or indirectly) are not entitled to vote if this corporation owns (directly or indirectly) sufficient shares to elect a majority of the directors of such other corporation.quorum is present.
Mergers, Consolidations and Sales of Assets
Nicolet.Nicolet.   Nicolet’s articles of incorporation provide that any merger or share exchange of Nicolet with or into any other corporation, or any sale, lease, exchange or other disposition of substantially all of its assets to any other person or entity will require the approval of either: (i) two-thirds of the directors then in office and a majority of the outstanding shares entitled to vote; or (ii) a majority of the directors then in office and two-thirds of the outstanding shares entitled to vote.
Nicolet’s articles of incorporation require that, in considering an offer of another party to make a tender or exchange offer for any equity security of Nicolet; to merge, effect a share exchange or otherwise combine Nicolet with any other corporation; or purchase or otherwise acquire all or substantially all of the assets of Nicolet, the board, in determining what is in the best interests of Nicolet and its shareholders, give due consideration to all relevant factors, including, without limitation, (a) the short-term and long-term social and economic effects on the employees, customers, shareholders and other constituents of Nicolet and its subsidiaries, and on the communities within which Nicolet and its subsidiaries operate (it being understood that Nicolet National Bank is charged with providing support to and being involved in the communities it serves); and (b) the consideration being offered by the other party in relation to the then-current value of Nicolet in a freely negotiated transaction and in relation to the board’s then-estimate of the future value of Nicolet as an independent entity.

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Commerce.County   Commerce’s.   County’s articles of incorporation andopt in to Sections 180.1140 through 180.1144 of the WBCL, which impose restrictions on a business combination of County with an interested stockholder, as such terms are defined in the WBCL. County’s bylaws provide that anyrequire at least 20 days’ notice of a meeting to be held to consider a plan of merger or consolidation of Commerce with oneshare exchange for which shareholder approval is required by law, or more other corporations (regardless of which is the surviving corporation) or any sale, lease, exchange or exchangeother disposition of all or substantially all of County’s property, with or without goodwill, otherwise than in the propertyusual and assetsregular course of Commerce to or with one or more other corporations, persons or other entities, shall require the affirmative vote of the holders of at least a majority of the outstanding shares of common stock of Commerce entitled to vote on the matter if such transaction is approved by a resolution adopted by the affirmative vote of a majority of the entire board of directors; provided however that if such transaction is not adopted by resolution of the majority of the entire board of directors, such transaction shall require an affirmative vote of at least 80% of the outstanding shares of Commerce common stock entitled to vote on the matter.business.
Indemnification
Nicolet.Nicolet.   Nicolet’s bylaws provide for the mandatory indemnification of a director, officer, employee or agent of Nicolet (or a person concurrently serving in such a capacity with another entity at Nicolet’s request), to the extent such person has been successful on the merits or otherwise in the defense of any threatened, pending or completed civil, criminal, administrative or investigative action, suit, arbitration or other proceeding brought by or in the right of Nicolet or by any other person or entity to which such person is a party because he or she is a director, officer, employee or agent, for all reasonable fees, costs, charges, disbursements, attorneys’ fees and other expenses incurred in connection with proceeding. In all other cases, Nicolet shall indemnify a director or officer of Nicolet, and may indemnify an employee or agent of Nicolet, against all liability and reasonable fees, costs, charges, disbursements, attorneys’ fees and other expenses incurred by such person in any proceeding brought by or in the right of Nicolet or by any other person or entity to which such person is a party because he or she is a director, officer, employee or agent, unless it has been proven by final adjudication that such person breached or failed to perform a duty owed to Nicolet that constituted:
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a willful failure to deal fairly with Nicolet or its shareholders in connection with a matter in which the director, officer, employee or agent has a material conflict of interest;
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•
a violation of criminal law, unless the director, officer, employee or agent had reasonable cause to believe his or her conduct was lawful or no reasonable cause to believe his or her conduct was unlawful;
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a transaction from which the director, officer, employee or agent derived an improper personal profit; or
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willful misconduct.
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Unless modified by written agreement, the determination as to whether indemnification is proper shall be made in accordance with the WBCL. The right to indemnification under Nicolet’s bylaws may only be amended by the vote of two-thirds of the outstanding shares of Nicolet capital stock entitled to vote on the matter. Nicolet is authorized to purchase and maintain insurance on behalf of its directors, officers, employees or agents in connection with the foregoing indemnification obligations.
Commerce.County   Commerce’s.   County’s articles of incorporation and bylaws provide in accordance with the WBCL, for the mandatory indemnification ofto the fullest permitted by WBCL in connection with any proceeding to which any director or officer is a party to because he or she is or was a director or officer employee or agent, toof County. To the extent that he or shesuch person has been successful on the merits or otherwise in the defense of a proceeding, County shall indemnify such person for all reasonable expenses incurred in the proceeding. In all other cases, County shall indemnify a director or officer against all liabilities and expenses incurred by the director or officer in a proceeding ifto which the director or officer was a party because he or she is or was a director, officer, employee or agent of the corporation. Commerce’s bylaws also provide for indemnification in other instances pursuant to but not required by the WBCL (with no requirement that the director or officer be successful on the merits or otherwise), unless the director, officer, employee or agent is personally liableliability was incurred because the director or officer breached or failed to perform a duty that he or she owes to the corporationCounty and the breach or failure to perform constitutes any of the following:
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a willful failure to deal fairly with the corporationCounty or its shareholders in connection with a matter in which the director officer, employee or agentofficer has a material conflict of interest;
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•
a violation of the criminal law, unless the director officer, employee or agentofficer had reasonable cause to believe that his or her conduct was lawful or no reasonable cause to believe that his or her conduct was unlawful;
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•
a transaction from which the director officer, employee or agentofficer derived an improper personal profit; or
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willful misconduct.
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The determination as toUnless otherwise provided by County’s articles of incorporation or by written agreement, the director or officer seeking indemnification shall select one of the following means for determining whether indemnification is proper shall be made in accordance with the WBCL. Commerce may grant additional rights to indemnification and reimbursementproper:
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By a majority vote of expenses. Indemnification in other circumstances shall be at the discretiona quorum of the board of directors consisting of directors not at the time parties to the same or related proceedings. If a quorum of disinterested directors cannot be obtained, by majority vote of a committee duly appointed by the board of directors and consisting solely of one or more directors who are not at the time parties to the same or related proceedings. Directors who are parties to the same or related proceedings may participate in accordance with the WBCL. Commercedesignation of members of the committee.
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By independent legal counsel selected by a quorum of the board of directors or its committee in the manner prescribed above or, if unable to obtain such a quorum or committee, by a majority vote of the full board of directors, including directors who are parties to the same or related proceedings.
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By a panel of three arbitrators consisting of one arbitrator selected by those directors entitled above to select independent legal counsel, one arbitrator selected by the director or officer seeking indemnification and one arbitrator selected by the two arbitrators previously selected.
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By an affirmative vote of shares represented at a meeting of shareholders at which a quorum of the voting group entitled to vote thereon is authorizedpresent. Shares owned by, or voted under the control of, persons who are at the time parties to the same or related proceedings, whether as plaintiffs or defendants or in any other capacity, may not be voted in making the determination.
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By a court.
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By any other method provided for in any additional right to indemnification permitted by the articles of incorporation, a resolution of the board of directors, or a resolution, after notice, adopted by a majority vote of all of County’s voting shares then issued and outstanding.
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County’s bylaws further authorize County to purchase and maintain insurance on behalf of its directors, officers, employeesan individual who is an employee, agent, director or agentsofficer of County against liability asserted against or incurred by the individual in connection withhis or her capacity as an employee, agent, director or officer, regardless of whether County is required or authorized to indemnify or allow expenses to the foregoing indemnification obligations. Commerce’s bylaws also provide for indemnification and allowance of expenses in connection with a proceeding involving securities regulation.individual against the same liability.
The merger agreement provides that Nicolet will assume Commerce’sCounty’s indemnification obligations after the merger.merger, and that Nicolet will provide indemnification insurance to officers and directors of County for a period of 6 years.
Amendments to Articles of Incorporation and Bylaws
Nicolet.Nicolet.   Nicolet’s articles of incorporation may be amended as provided in the WBCL, which provides that unless the articles of incorporation, bylaws or WBCL requires a higher vote, and subject to any rights of a class to vote separately on the amendment under the WBCL, an amendment to the articles of incorporation will be approved if the number of votes cast in favor of the amendment exceed the votes cast against it.
Nicolet’s bylaws may be amended by the shareholders or by majority vote of the board of directors, except as otherwise provided in the WBCL and except as specified under “Indemnification” above. The WBCL requires shareholder approval for an amendment to any shareholder-adopted bylaw that states that the board may not amend it. Additionally, a bylaw that fixes a greater or lower quorum requirement or a greater voting requirement for shareholders may not be adopted, amended or repealed by the board of directors. A bylaw that fixes a greater or lower quorum requirement or a greater voting requirement for the board of directors may be amended or repealed as follows: (i) if originally adopted by the shareholders, only by the shareholders, unless the bylaw also permits board approval of the amendment, or (ii) if originally adopted by the board of directors, either by the shareholders or by the board of directors.
Commerce.County   Commerce’s.   County’s articles of incorporation may onlybe amended as provided in the WBCL, which provides that unless the articles of incorporation, bylaws or WBCL requires a higher vote, and subject to any rights of a class to vote separately on the amendment under the WBCL, an amendment to the articles of incorporation will be approved if the number of votes cast in favor of the amendment exceed the votes cast against it.
County’s bylaws may be amended by the affirmativeshareholders by a majority vote at any regular meeting or special meeting of such shareholders or by majority vote of the holders of a majority of the stock entitled to vote; provided, however that any amendment to Article V (regarding the composition of the Commerce board of directors and its authority), Article VII (regarding shareholder approval ofpresent at a merger or sale of Commerce) or Article VII (regarding amendments tomeeting at which a quorum is present. However, no bylaw adopted by the articles of incorporation) require the affirmative vote of at least 80% of the outstanding shares of Commerce common stock entitled to vote on the matter.
Commerce’s bylawsshareholders may be amended, either by the shareholdersrepealed or to the extent permitted by WBCL, the articles of incorporation, or Article 10 of the bylaws, by the board of directors. Bylaws amendedreadopted by the board of directors may be altered, amended or repealed byif (i) the shareholders. Bylaws amended bybylaw so adopted so provides, (ii) the shareholders may only be altered, amended or repealed by the shareholders. The adoption or amendment of a bylaw that adds, changes or deletesfixes a greater or lower quorum requirement or a greater voting requirement for shareholders or voting groups of shareholders than otherwise is provided in the WBCL, or (iii) the bylaw was adopted or amended by the shareholders and fixes a greater or lower quorum requirement or a greater voting requirement for the board of directors than otherwise is provided in the WBCL unless such bylaw expressly provides that it may be amended or repealed by a specified vote of the board of directors. Any action by the board of directors to adopt or amend a bylaw that changes the quorum or voting requirement for the board of directors must meet the same quorum requirement and be adopted by the same vote and voting groups required to take action under the quorum and voting requirement then in effect.effect, unless a different voting requirement is specified.
County’s bylaws further provide for implied amendments. Any amendment toaction taken or authorized by the bylaws that amend, changeshareholders or repeal any of the provisions of Section 2.14 (regarding shareholder approval of a merger or sale of Commerce), Section 3.01 (regarding the number of members ofby the board of directors), Section 3.02 (regarding the class, tenure and removal of members of the board of directors), Section 3.14 (regarding conduct of board of directors, meetings and use of communications equipment) or Section 10.01 (regarding amendment of the bylaws) ofwhich would be inconsistent with the bylaws maythen in effect but is taken or authorized by a vote that would be amended only by the affirmative vote of a majority of the holders of Commerce common stock entitledsufficient to vote on the matter. If an amendment to any of the aforementioned sections ofamend the bylaws has not been approved bysuch that the affirmative vote of a majority of the entire board of directors, then the affirmative vote of at least 80% of the holders of Commerce common stock entitled to vote on the matterbylaws would be consistent with such action, shall be required for such amendment.given the same effect as though the bylaws had been temporarily amended or suspended so far, but only so far, as is necessary to permit the specific action so taken or authorized.
 
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DISSENTERS’ RIGHTS
The following discussion is not a complete description of the law relating to dissenters’ rights available to holders and beneficial holders of Commerce and Nicolet common stock under Wisconsin law. This description is qualified in its entirety by the full text of the relevant provisions of the WBCL, which are reprinted in their entirety as Appendix C to this proxy statement-prospectus. If you desire to exercise dissenters’ rights, you should review carefully the WBCL and consult a legal advisor before electing or attempting to exercise these rights.
General
Pursuant to the provisions of sections 180.1301 to 180.1331 of the WBCL, holders and beneficial holders of Commerce common stock have the right to dissent from the merger and to receive the fair value of their shares in cash. Holders and beneficial holders of Commerce common stock who fulfill the requirements of the WBCL summarized below and set forth in Appendix C will be entitled to assert dissenters’ rights in connection with the merger. Shareholders or beneficial shareholders considering initiation of a dissenters’ proceeding should review this section and should also review Appendix C in its entirety. A dissenters’ proceeding may involve litigation.
Preliminary Procedural Steps
Pursuant to the provisions of the WBCL, if the merger is consummated, in order to exercise dissenter’s rights you must have:
•
given to Commerce, prior to the vote at the special meeting with respect to the approval of the merger, written notice of your intent to demand payment for your shares of common stock (hereinafter referred to as “shares”);
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not voted in favor of the merger; and
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complied with the other statutory requirements summarized below.
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If you have perfected your dissenters’ rights and the merger is consummated, you will receive the fair value of your shares as of the effective date of the merger. A shareholder or beneficial shareholder who fails to deliver written notice of his, her or its intent to demand payment for his, her or its shares if the merger is consummated in accordance with the requirements of the WBCL is not entitled to payment for his or her shares pursuant to the provisions of the WBCL and will only be entitled to receive the merger consideration as provided in the merger agreement.
Brokers or others who hold shares in their name that are beneficially owned by others may assert dissenters’ rights as to fewer than all of the shares registered in your name only if they dissent with respect to all shares beneficially owned by any one person and notify Commerce in writing of the name and address of each person on whose behalf they are asserting dissenters’ rights. The rights of a shareholder who asserts dissenters’ rights as to fewer than all of the shares registered in his, her or its name are determined as if the shares as to which that holder dissents and that holder’s other shares were registered in the names of different shareholders.
Written Dissent Demand
Voting against the merger will not independently satisfy the written demand requirement. In addition to not voting in favor of the merger, if you wish to preserve the right to dissent and seek appraisal, you must give a separate written notice of your intent to demand payment for your shares if the merger is effected.
Any written notice of intent to dissent to the merger, satisfying the requirements discussed above, should be addressed to Commerce Financial Holdings, Inc., 1700 S. Silverbrook Drive, West Bend, Wisconsin 53202, Attn: Corporate Secretary. The written notice must be delivered to Commerce prior to the special meeting.
Dissenters’ Notice
If the shareholders of Commerce approve the merger at the special meeting, Commerce (or Nicolet as its successor) must deliver a written dissenters’ notice (the “Dissenters’ Notice”) to all Commerce shareholders

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who satisfy the foregoing requirements. The Dissenters’ Notice must be sent no later than ten days after the date that the merger is approved by Commerce’s shareholders and must:
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state where dissenting shareholders should send the demand for payment and where and when dissenting shareholders should deposit certificates for the shares;
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inform holders of uncertificated shares as to what extent transfer of these shares will be restricted after the demand for payment is received;
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include a form for demanding payment that includes the date of the first announcement to news media or to shareholders of the terms of the merger and requires the shareholder or beneficial shareholder asserting dissenters’ rights to certify whether he, she or it acquired beneficial ownership of the shares prior to that date;
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•
set a date by which Commerce (or Nicolet as its successor) must receive the demand for payment (which date may not be fewer than 30 nor more than 60 days after the Dissenters’ Notice is delivered); and
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be accompanied by a copy of sections 180.1301 to 180.1331 of the WBCL.
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A shareholder or beneficial shareholder who receives the Dissenters’ Notice or a beneficial shareholder whose shares are held by a nominee who is sent a Dissenters’ Notice must demand payment and certify as to his or her ownership of the shares in accordance with the Dissenters’ Notice. A shareholder or beneficial shareholder who holds certificated shares must also deposit his, her or its share certificates with Commerce (or Nicolet as its successor) in accordance with the terms of the Dissenters’ Notice.
A dissenting shareholder or beneficial shareholder who demands payment and deposits his, her or its share certificate in accordance with the terms of the Dissenters’ Notice will retain all of the rights of a shareholder or beneficial shareholder, respectively, until those rights are canceled or modified by the consummation of the merger. Commerce may restrict the transfer of uncertificated shares from the date that the demand for payment for those shares is received until the merger is effected or the restrictions released, in the event that it does not consummate the merger.
A shareholder or beneficial shareholder with certificated or uncertificated shares who does not demand payment by the date set forth in the Dissenters’ Notice is not entitled to payment for his, her or its shares under sections 180.1301 to 180.1331 of the WBCL. A shareholder or beneficial shareholder with certificated shares who does not deposit his, her or its share certificates where required and by the date set forth in the Dissenters’ Notice is not entitled to payment for his, her or its shares under sections 180.1301 to 180.1331 of the WBCL. Commerce (or Nicolet as its successor) may elect to withhold payment from a dissenter and instead make an offer of payment if that dissenter was not the beneficial owner of his, her or its shares prior to the date specified in the Dissenters’ Notice as the date on which the first announcement of the merger was made to the news media or to Commerce’s shareholders.
Payment
Except as described below, Commerce (or Nicolet as its successor) must, as soon as the merger is effected or upon receipt of a payment demand, whichever is later, pay each shareholder who has complied with the payment demand and deposit requirements described above the amount Commerce (or Nicolet as its successor) estimates to be the fair value of the shares, plus accrued interest. The offer of payment must be accompanied by:
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recent financial statements of Commerce;
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a statement of the estimate of the fair value of the shares;
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an explanation of how the interest was calculated;
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a statement of the dissenter’s right to demand payment under section 180.1328 of the WBCL if the dissenter is dissatisfied with the payment; and
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a copy of sections 180.1301 to 180.1331 of the WBCL.
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If the merger is not consummated within 60 days after the date set for demanding payment and depositing share certificates, Commerce must return the deposited certificates and release the transfer restrictions imposed on uncertificated shares. Commerce (or Nicolet as its successor) must send a new Dissenters’ Notice if the merger is consummated after the return of certificates and any dissenting shareholders must repeat the payment demand procedure described above.
Section 180.1328 of the WBCL provides that a dissenter may notify Commerce (or Nicolet as its successor) in writing of his, her or its own estimate of the fair value of such holder’s shares and the interest due, and may demand payment of such holder’s estimate, less any payment received from Commerce (or Nicolet as its successor), if:
•
he or she believes that the amount paid or offered by Commerce (or Nicolet as its successor) is less than the fair value of his or her shares or that Commerce (or Nicolet as its successor) has calculated incorrectly the interest due;
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Commerce (or Nicolet as its successor) fails to make payment within 60 days after the date set in the Dissenters’ Notice for demanding payment; or
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•
Commerce, having failed to consummate the merger, does not return the deposited certificates or release the transfer restrictions imposed on uncertificated shares within 60 days after the date set for demanding payment in the Dissenters’ Notice.
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A dissenting shareholder waives his, her or its right to demand payment of his, her or its own estimate of fair value and interest under sections 180.1328 unless such dissenting shareholder provides Commerce (or Nicolet as its successor) with notice of his, her or its demand, in conformance with the notice requirements of section 180.0141, within 30 days after Commerce (or Nicolet as its successor) making or offering of payment for the dissenting shareholder’s shares.
Litigation
If a demand for payment under section 180.1328 remains unsettled, Commerce (or Nicolet as its successor) must commence a nonjury equity valuation proceeding in the Circuit Court of Winnebago County, Wisconsin (in the case of Commerce) or Brown County, Wisconsin (in the case of Nicolet), within 60 days after having received the payment demand under section 180.1328 and must petition the court to determine the fair value of the shares and accrued interest. If Commerce (or Nicolet as its successor) does not commence the proceeding within those 60 days, the WBCL requires Commerce (or Nicolet as its successor) to pay each dissenting shareholder whose demand remains unsettled the amount demanded. Commerce (or Nicolet as its successor) is required to make all dissenting shareholders whose demands remain unsettled parties to the proceeding and to serve a copy of the petition upon each of them.
The jurisdiction of the court in which the proceeding is brought is plenary and exclusive. The court may appoint one or more appraisers to receive evidence and to recommend a decision on fair value. An appraiser has the powers delegated to such appraiser in the court order appointing him or her or in any amendment to the order. Dissenters are entitled to the same discovery rights as parties in other civil proceedings.
Each dissenting shareholder made a party to the proceeding is entitled to judgment for the amount, if any, by which the court finds the fair value of such holder’s shares, plus interest, exceeds the amount paid or offered, as applicable, by Commerce (or Nicolet as its successor).
The court in an appraisal proceeding commenced under the foregoing provision must determine the costs of the proceeding, excluding fees and expenses of attorneys and experts for the respective parties, and must assess those costs against Commerce (or Nicolet as its successor), except that the court may assess the costs against all or some of the dissenting shareholders to the extent the court finds they acted arbitrarily, vexatiously, or not in good faith in demanding payment under section 180.1328 of the WBCL. The court also may assess the fees and expenses of attorneys and experts for the respective parties against Commerce (or Nicolet as its successor) if the court finds Commerce (or Nicolet as its successor) did not substantially comply with the requirements of the WBCL, or against either Commerce (or Nicolet as its successor) or a dissenting shareholder if the court finds that such party acted arbitrarily, vexatiously, or not in good faith with respect to the rights provided by the WBCL.

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If the court finds that the services of attorneys or experts for any dissenter were of substantial benefit to other dissenters similarly situated, the court may award those attorneys’ reasonable fees out of the amounts awarded the dissenters who were benefited.
This is a summary of the material rights of a dissenting shareholder and is qualified in its entirety by reference to the applicable portions of the WBCL, which are included as Appendix C to this proxy statement-prospectus. If you intend to dissent from approval of the merger, you should review carefully the text of Appendix C and should also consult with your attorney. We will not give you any further notice of the events giving rise to dissenters’ rights or any steps associated with perfecting dissenters’ rights, except as indicated above or otherwise required by law.
We have not made any provision to grant you access to any of the corporate files of Nicolet or Commerce, except as may be required by the WBCL, or to obtain legal counsel or appraisal services at the expense of Commerce (or Nicolet as its successor).
Any dissenting shareholder who perfects his, her or its right to be paid the “fair value” of his, her or its shares will recognize taxable gain or loss upon receipt of cash for such shares for federal income tax purposes. See “Material U.S. Federal Income Tax Consequences of the Merger” at page 57.
You must do all of the things described in this section and as set forth in the WBCL in order to preserve your dissenters’ rights and to receive the fair value of your shares in cash (as determined in accordance with those provisions). If you do not follow each of the steps as described above, you will have no right to receive cash for your shares as provided in the WBCL and you will only be entitled to receive the merger consideration as provided in the merger agreement. In view of the complexity of these provisions of Wisconsin law, shareholders of Commerce who are considering exercising their dissenters’ rights should consult their legal advisors.

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF NICOLET
The following table presents Nicolet’s selected historical consolidated financial data as of and for the years ended December 31, 2015 through 2019. The selected financial data as of December 31, 2015 through 2019 is derived from Nicolet’s audited consolidated financial statements and related notes included in Nicolet’s Annual Report on Form 10-K for the year ended December 31, 2019 (the “Nicolet Form 10-K”) incorporated by reference into this proxy statement-prospectus and should be read in conjunction with the consolidated financial statements and related notes, along with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in the Nicolet Form 10-K. See “Where You Can Find Additional Information” on page 76.
The selected historical consolidated financial data of Nicolet includes the effect of mergers and other acquisition transactions from the date of each merger or other transaction, including the acquisitions of Choice Bancorp, Inc. on November 8, 2019, First Menasha Bancshares, Inc. on April 28, 2017 and Baylake Corp. on April 29, 2016.
​​​At and for the years ended December 31,​
(in thousands, except per share data)​​2019​​2018​​2017​​2016​​2015​
Results of operations:​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Interest income​​​$138,588​​​​$125,537​​​​$109,253​​​​$75,467​​​​$48,597​​
Interest expense​​​​22,510​​​​​18,889​​​​​10,511​​​​​7,334​​​​​7,213​​
Net interest income​​​​116,078​​​​​106,648​​​​​98,742​​​​​68,133​​​​​41,384​​
Provision for loan losses​​​​1,200​​​​​1,600​​​​​2,325​​​​​1,800​​​​​1,800​​
Net interest income after provision for loan losses​​​​114,878​​​​​105,048​​​​​96,417​​​​​66,333​​​​​39,584​​
Noninterest income​​​​53,367​​​​​39,509​​​​​34,639​​​​​26,674​​​​​17,708​​
Noninterest expense​​​​96,799​​​​​89,758​​​​​81,356​​​​​64,942​​​​​39,648​​
Income before income tax expense​​​​71,446​​​​​54,799​​​​​49,700​​​​​28,065​​​​​17,644​​
Income tax expense​​​​16,458​​​​​13,446​​​​​16,267​​​​​9,371​​​​​6,089​​
Net income​​​​54,988​​​​​41,353​​​​​33,433​​​​​18,694​​​​​11,555​​
Net income attributable to noncontrolling interest​​​​347​​​​​317​​​​​283​​​​​232​​​​​127​​
Net income attributable to Nicolet Bankshares, Inc.​​​​54,641​​​​​41,036​​​​​33,150​​​​​18,462​​​​​11,428​​
Preferred stock dividends​​​​—​​​​​—​​​​​—​​​​​633​​​​​212​​
Net income available to common
shareholders
​​​$54,641​​​​$41,036​​​​$33,150​​​​$17,829​​​​$11,216​​
Earnings per common share:​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Basic​​​$5.71​​​​$4.26​​​​$3.51​​​​$2.49​​​​$2.80​​
Diluted​​​$5.52​​​​$4.12​​​​$3.33​​​​$2.37​​​​$2.57​​
Common shares:​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Basic weighted average​​​​9,562​​​​​9,640​​​​​9,440​​​​​7,158​​​​​4,004​​
Diluted weighted average​​​​9,900​​​​​9,956​​​​​9,958​​​​​7,514​​​​​4,362​​
Outstanding​​​​10,588​​​​​9,495​​​​​9,818​​​​​8,553​​​​​4,154​​
Year-End Balances:​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Loans​​​$2,573,751​​​​$2,166,181​​​​$2,087,925​​​​$1,568,907​​​​$877,061​​
Allowance for loan losses (“ALLL”)​​​​13,972​​​​​13,153​​​​​12,653​​​​​11,820​​​​​10,307​​
Securities available for sale, at fair value​​​​449,302​​​​​400,144​​​​​405,153​​​​​365,287​​​​​172,596​​
Goodwill and other intangibles, net​​​​165,967​​​​​124,307​​​​​128,406​​​​​87,938​​​​​3,793​​
Total assets​​​​3,577,260​​​​​3,096,535​​​​​2,932,433​​​​​2,300,879​​​​​1,214,439​​
Deposits​​​​2,954,453​​​​​2,614,138​​​​​2,471,064​​​​​1,969,986​​​​​1,056,417​​
Short-term and long-term borrowings​​​​67,629​​​​​77,305​​​​​78,046​​​​​37,617​​​​​39,788​​
Common equity​​​​516,262​​​​​386,609​​​​​364,178​​​​​275,947​​​​​97,301​​

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​​​At and for the years ended December 31,​
(in thousands, except per share data)​​2019​​2018​​2017​​2016​​2015​
Stockholders’ equity​​​​516,262​​​​​386,609​​​​​364,178​​​​​275,947​​​​​109,501​​
Book value per common share​​​$48.76​​​​$40.72​​​​$37.09​​​​$32.26​​​​$23.42​​
Tangible book value per common share*​​​$33.08​​​​$27.62​​​​$24.01​​​​$21.98​​​​$22.51​​
Financial Ratios:​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Return on average assets​​​​1.75%​​​​​1.38%​​​​​1.25%​​​​​0.95%​​​​​0.96%​​
Return on average equity​​​​12.89​​​​​11.04​​​​​9.96​​​​​8.16​​​​​10.20​​
Return on average common equity​​​​12.89​​​​​11.04​​​​​9.96​​​​​8.20​​​​​12.35​​
Average equity to average assets​​​​13.56​​​​​12.48​​​​​12.57​​​​​11.69​​​​​9.45​​
Net interest margin​​​​4.19​​​​​4.04​​​​​4.30​​​​​4.01​​​​​3.88​​
Stockholders’ equity to assets​​​​14.43​​​​​12.49​​​​​12.42​​​​​11.99​​​​​9.02​​
Tangible common equity to tangible assets*​​​​10.27​​​​​8.83​​​​​8.41​​​​​8.50​​​​​7.72​​
Net loan charge-offs to average loans​​​​0.02​​​​​0.05​​​​​0.08​​​​​0.02​​​​​0.09​​
Nonperforming loans to total loans​​​​0.55​​​​​0.25​​​​​0.63​​​​​1.29​​​​​0.40​​
Nonperforming assets to total assets​​​​0.42​​​​​0.19​​​​​0.49​​​​​0.97​​​​​0.32​​
Allowance for loan losses to loans​​​​0.54​​​​​0.61​​​​​0.61​​​​​0.75​​​​​1.18​​
​
*
The ratios of tangible book value per common share, return on average tangible common equity, and tangible common equity to tangible assets exclude goodwill and other intangibles, net. These financial ratios have been included as they are considered to be critical metrics with which to analyze and evaluate financial condition and capital strength.
​

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MARKET PRICE AND DIVIDEND INFORMATION
Nicolet
Nicolet common stock is currently traded on the Nasdaq Capital Market under the symbol “NCBS.” As of February 27, 2020, Nicolet had approximately 2,500 shareholders of record. The closing price of Nicolet common stock was $72.32 per share on February 14, 2020, the last trading day before public announcement of the merger.
Nicolet has not paid any dividends on its common stock since its inception in 2000. Nicolet anticipates that its earnings, if any, will be held for purposes of enhancing its capital. No assurances can be given that any dividends on Nicolet’s common stock will be declared in the future or, if declared, what the amount of such dividends will be or whether such dividends will continue for future periods.
Commerce
Commerce’s common stock is privately held and not traded on any public market. The following table sets forth, for the periods indicated, the high and low known sale prices per share of Commerce common stock. The market for Commerce’s common stock has been illiquid and irregular, historical transactions in its stock have been sporadic and management may not be aware of all trades or the prices at which those trades occurred. Commerce has never paid dividends and none are contemplated.
​​​High​​Low​
2020​​​​​​​​​​​​​
First Quarter​​​$49.00​​​​$48.50​​
2019​​​​​​​​​​​​​
Fourth Quarter​​​$N/A​​​​$N/A​​
Third Quarter​​​​47.00​​​​​45.00​​
Second Quarter​​​​40.00​​​​​40.00​​
First Quarter​​​​47.00​​​​​47.00​​
2018​​​​​​​​​​​​​
Fourth Quarter​​​$46.50​​​​$40.00​​
Third Quarter​​​​42.00​​​​​42.00​​
Second Quarter​​​​41.50​​​​​41.50​​
First Quarter​​​​40.00​​​​​40.00​​

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COMMERCE SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth certain information regarding the beneficial ownership of Commerce common stock as of January 31, 2020 by (1) each director and executive officer of Commerce, (2) all directors and executive officers as a group, and (3) each person who is known by Commerce to own beneficially 5% or more of Commerce common stock. Unless otherwise indicated, based on information furnished by such stockholders, management of Commerce believes that each person has sole voting and dispositive power over the shares indicated as owned by such person.
Name​​Title​​
Common Stock
Beneficially
Owned(1)
​​
Percentage
Beneficially
Owned(2)
​
Kevin Allis​​Director​​​​480​​​​​*​​
David Borchardt​​Director, CFO & COO​​​​72,081(3)​​​​​4.71%​​
Cory Davis​​Director​​​​14,168(3)​​​​​*​​
Brian Dix​​Director​​​​2,583(3)​​​​​*​​
Jack Enea​​Director​​​​8,688(4)​​​​​*​​
Joseph Fazio​​Chairman of the Board, CEO​​​​111,245(3)​​​​​7.27%​​
Thomas Hopp​​Director, President​​​​73,809(3)​​​​​4.82%​​
Lori Stortz​​Director​​​​47​​​​​*​​
David Stroik​​Director​​​​6,868​​​​​*​​
Scott Tennies​​Director​​​​14,768(3)​​​​​*​​
James Testwuide​​Director​​​​94​​​​​*​​
Kevin Volm​​Director, CCO & Secretary​​​​52,560(3)​​​​​3.43%​​
All Directors and executive officers as a group,
consisting of 12 persons:
​​​​​​​357,391​​​​​
23.35%
​​
Forest County Potawatomi Community​​Greater than 5% owner​​​​132,000​​​​​8.50%​​
​
*
Less than 1%
​
(1)
For all persons listed, the number includes shares held directly by, jointly with, or in trust for the benefit of, the person’s spouse and dependent children, which are reported on the presumption that the individual may share voting and/or investment power because of the family relationship.
​
(2)
Shares subject to currently-exercisable stock options are treated as outstanding for the purpose of computing the number and percentage of outstanding securities of the class owned by each individual and for all directors and executive officers as a group, but not for the purpose of computing the percentage of class owned by any other person.
​
(3)
This number includes shares held in an IRA, 401(k) or other retirement plans for the benefit of the person or the person’s spouse,.
​
(4)
This number includes shares held in an IRA for the benefit of the person, and a limited liability company controlled by the person.
​
As reflected in the above table, the directors, director nominees and executive officers of Commerce represent 23.35% beneficial ownership of Commerce’s common stock as of January 31, 2020.

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NO DISSENTERS’ RIGHTS
Nicolet
Nicolet’s shareholders are not entitled to dissenters’ rights with respect to the merger under Wisconsin law.
County
County’s shareholders are not entitled to dissenters’ rights with respect to the merger under Wisconsin law.
OTHER MATTERS
Commerce’sThe management team isteams of both Nicolet and County are not aware of any other matters to be brought before their special shareholders’ meeting.meetings. However, if any other matters are properly brought before the meeting, the persons named in the enclosed proxy card will have discretionary authority to vote all proxies with respect to such matters in accordance with their judgment.
EXPERTS
The consolidated financial statements of Nicolet Bankshares, Inc. as of December 31, 20192020 and for theeach year in the one-yeartwo-year period ended December 31, 20192020 and the effectiveness of Nicolet’s internal control over financial reporting as of December 31, 20192020 incorporated in this Prospectusjoint proxy statement-prospectus by reference from the Nicolet’s Annual Report on Form 10-K for the year ended December 31, 20192020 have been audited by Wipfli LLP, an independent registered public accounting firm, as stated in their report thereon, incorporated herein by reference, and have been incorporated in this Prospectusjoint proxy statement-prospectus and Registration Statementregistration statement in reliance upon such report and upon the authority of such firm as experts in accounting and auditing. The consolidated financial statements of Nicolet Bankshares, Inc. as ofincome, comprehensive income, changes in stockholders’ equity and cash flows for the year ended December 31, 2018 and for each of the years in the two-year period ended December 31, 2018Nicolet were audited by Porter Keadle Moore, LLC, an independent registered public accounting firm, and are incorporated in this Prospectusjoint proxy statement-prospectus by reference from the Nicolet’s Annual Report on Form 10-K for the year ended December 31, 2019.2020.
The consolidated financial statements of County as of December 31, 2020 incorporated in this joint proxy statement-prospectus and registration statement by reference to County’s Annual Report on Form 10-K for the year ended December 31, 2020, have been audited by Plante & Moran, PLLC, an independent registered public accounting firm, as stated in their report incorporated by reference herein, and has been so incorporated in reliance upon such report and upon the authority of such firm as experts in accounting and auditing.
The consolidated financial statements of Mackinac as of December 31, 2020 included in this joint proxy statement-prospectus and registration statement have been audited by Plante & Moran, PLLC, an independent registered public accounting firm, as stated in their report incorporated by reference herein, and has been so incorporated in reliance upon such report and upon the authority of such firm as experts in accounting and auditing.
LEGAL MATTERS
Bryan Cave Leighton Paisner LLP will deliver prior to the effective time of the merger their opinionsits opinion to Nicolet and Commerce, respectively,County as to certain United States federal income tax consequences of the merger. Please see the section entitled “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 5788 of this joint proxy statement-prospectus. The validity of the Nicolet common stock to be issued in connection with the merger will be passed upon for Nicolet by Kate Lombardi,Michele McKinnon, Vice President Human Resources/Legal Counsel of Nicolet National Bank. As of December 31, 2019,June 30, 2021, Ms. LombardiMcKinnon beneficially owned shares of Nicolet common stock representing less than 1% of the total outstanding shares of Nicolet common stock. Certain additional legal matters relating to the merger will be passed upon for Nicolet by Bryan Cave Leighton Paisner LLP and for CommerceCounty by Reinhart Boerner Van Deuren, s.c.Barack Ferrazzano Kirschbaum & Nagelberg LLP.

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WHERE YOU CAN FIND ADDITIONAL INFORMATION
Nicolet has filed a registration statement on Form S-4 with the SEC that registers the Nicolet common stock to be issued in the merger to CommerceCounty shareholders. This joint proxy statement-prospectus is a part of that registration statement and constitutes a prospectus of Nicolet and a joint proxy statement of CommerceNicolet and County for itseach company’s special shareholders’ meeting. As allowed by SEC rules and regulations, this joint proxy statement-prospectus does not contain all of the information in the registration statement.
Each of Nicolet and County files reports, proxy statements, and other information with the SEC under the Exchange Act. Such information can be examined without charge on the website maintained by the Securities and Exchange CommissionSEC (http://www.sec.gov). The Securities and Exchange Commission’sSEC’s website contains reports, proxy and information statements includingand other information regarding registrants that file electronically with the SecuritiesSEC, including Nicolet and Exchange Commission, including Nicolet.County. The statements contained in this prospectusjoint proxy statement-prospectus as to the contents of any contract or other document filed or incorporated by reference as an exhibit to the registration statement are, of necessity, brief descriptions of the material terms of, and should be read in conjunction with, such contract or document. In addition, documents filed with the SEC by Nicolet, including the registration statement on Form S-4, of which this joint proxy statement-prospectus forms a part, will be available free of charge by accessing Nicolet’s website at https://www.nicoletbank.com or County’s website at https://investors.icbk.com/​documents. The web addresses of the SEC, Nicolet and County are included as inactive textual references only. Except as specifically incorporated by reference into this joint proxy statement-prospectus, information on those websites is not part of this joint proxy statement-prospectus.
The SEC allows each of Nicolet and County to “incorporate by reference” the information that it files with the SEC, which means that Nicolet and CommerceCounty can disclose important information to you by referring to Nicolet’stheir respective filings with the SEC. The information incorporated by reference is considered a part of this joint proxy statement-prospectus, and certain information that Nicolet files later with the SEC will automatically update and supersede the information in this joint proxy statement-prospectus.

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Nicolet (Commission File No. 001-37700) incorporates by reference the following documents Nicolet has filed with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, other than information in these documents that is not deemed to be filed with the SEC:
•
Nicolet’s Annual Report on Form 10-K for the year ended December 31, 2019,2020, filed with the SEC on February 28, 2020;26, 2021;
​
•
Nicolet’s Quarterly ReportReports on Form 10-Q for the periodquarterly periods ended March 31, 2020,2021 and June 30, 2021, filed with the SEC on April 30, 2020;2021 and July 30, 2021, respectively;
​
•
The description of Nicolet’s common stock contained in Nicolet’s registration statement on Form 8-A, as filed with the SEC on February 22, 2016, and any amendment or report filed for the purpose of updating such description;
​
•
Nicolet’s Current Reports on Form 8-K* filed with the SEC on January 21, 202019, 2021,, February 18, 2020, March 2, 202023, 2021,, March 25April 12, 2021,,April 20, 2021,April 26, 2021,May 11, 2021,May 12, 2021,June 3, 2021,June 9, 2021,June 22, 2021,July 7, 2021,July 16, 2021 and April 21, 2020July 20, 2021; and
​
•
Any document Nicolet may file* under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, after the date of this document.document and before the date of Nicolet’s special meeting.
​
County (Commission File No. 001-36808) incorporates by reference the following documents County has filed with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, other than information in these documents that is not deemed to be filed with the SEC:
•
County’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 12, 2021;
​
•
County’s Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2021 and June 30, 2021, filed with the SEC on May 7, 2021 and August 6, 2021, respectively;
​
​
*
We are not incorporating and will not incorporate by reference into this joint proxy statement-prospectus, past or future information on reports (or portions of reports) furnished or that will be furnished by Nicolet under Items 2.02 and/or 7.01 of, or otherwise with, Form 8-K.
​

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•
The description of County’s common stock contained in County’s registration statement on Form 8-A, filed with the SEC on January 13, 2015, as updated by Exhibit 4.3 of the County’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 13, 2020, and any further amendment or report filed for the purpose of updating such description;
​
•
County’s Current Reports on Form 8-K* filed with the SEC on January 11, 2021,January 21, 2021,February 17, 2021,March 31, 2021,April 22, 2021,April 22, 2021,May 19, 2021,June 21, 2021,June 22, 2021,July 22, 2021and August 18, 2021; and
​
•
Any document County may file* under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, after the date of this document and before the date of County’s special meeting.
​
If you would like to request documents, please do so by [•]September 28, 2021 to receive them before the CommerceNicolet or County special meeting.meeting, respectively.
Nicolet has supplied all of the information contained in this joint proxy statement-prospectus relating to Nicolet and its subsidiaries. CommerceCounty has supplied all of thesuch information relating to CommerceCounty and its subsidiaries.
Commerce shareholdersShareholders of Nicolet and County should rely only on the information contained or incorporated by reference in this joint proxy statement-prospectus to vote on the proposals in connection with the merger. We have not authorized anyone to provide you with information that is different from what is contained in this joint proxy statement-prospectus. This joint proxy statement-prospectus is dated August [•]., 2021. You should not assume that the information contained in this joint proxy statement-prospectus is accurate as of any other date other than such date, and neither the mailing of this joint proxy statement-prospectus nor the issuance of Nicolet common stock as contemplated by the merger agreement will create any implication to the contrary.
​
*
We are not incorporating and will not incorporate by reference into this joint proxy statement-prospectus, past or future information on reports (or portions of reports) furnished or that will be furnished by County under Items 2.02 and/or 7.01 of, or otherwise with, Form 8-K.
​
 
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Appendix A​
Execution CopyEXECUTION COPY​
Agreement and Plan of Merger
by and between
Nicolet Bankshares, Inc.
and
Commerceounty FBinancial Holdingsancorp, Inc.
FJebruaryune 17, 202022, 2021
 
A-1
TABLE OF CONTENTS​
 
TABLE OF CONTENTS
​
Article 1   THE MERGER
​​​​A-1​​
​
Section 1.1
The Merger
​
​​​​A-1​​
​
Section 1.2
Effective Time; Closing
​
​​​​A-1​​
​
Section 1.3
Effects of the Merger
​
​​​​A-1A-2​​
​
Section 1.4
Organizational Documents of the Surviving Entity
​
​​​​A-2​​
​
Section 1.5
Directors and Officers of the Surviving Entity
​
​​​​A-2​​
​
Section 1.6
Location of the Surviving Entity
​
​​​​A-2​​
​
Section 1.7
Bank Merger
​
​​​​A-2​​
​
Section 1.8
TRUPS and Subordinated Notes Assumption
​
​​​​A-2​​
​
Section 1.9
Absence of Control
​
​​​​A-2​​
​
Section 1.91.10
Alternative Structure
​
​​​​A-2A-3​​
​
Article 2   CONVERSION OF SECURITIES IN THE MERGER
​​​​A-2A-3​​
​
Section 2.1
Consideration
​
​​​​A-2A-3​​
​
Section 2.2
Exchange of Company Stock Certificates
​
​​​​A-3​​
​
Section 2.3
Maximum Nicolet Common Stock IssuanceElection and Allocation Procedures
​
​​​​A-4​​
​
Section 2.4
Cancellation of Shares
​
​​​​A-4A-6​​
​
Section 2.5
No Fractional Shares
​
​​​​A-5A-6​​
​
Section 2.6
Dissenting SharesCompany Preferred Stock
​
​​​​A-5A-6​​
​
Section 2.7
Nicolet Common Stock
​
​​​​A-5A-7​​
​
Section 2.8
Company Stock OptionsAwards
​
​​​​A-5A-7​​
​
Section 2.9
Company 401(k) Plan
​
​​​​A-5​​
​
Article 3   REPRESENTATIONS AND WARRANTIES OF THE COMPANY
​​​​A-5A-8​​
​
Section 3.1
Company Organization
​
​​​​A-5A-8​​
​
Section 3.2
Subsidiary Organizations
​
​​​​A-6A-8​​
​
Section 3.3
Authorization; Enforceability
​
​​​​A-6A-8​​
​
Section 3.4
No Conflict
​
​​​​A-6A-8​​
​
Section 3.5
Capitalization
​
​​​​A-7A-9​​
​
Section 3.6
Company Subsidiary Capitalization
​
​​​​A-7A-10​​
​
Section 3.7
Company SEC Reports; Financial Statements and Reports; Regulatory Filings
​
​​​​A-8A-10​​
​
Section 3.8
Books and Records
​
​​​​A-9A-12​​
​
Section 3.9
Properties
​
​​​​A-9A-12​​
​
Section 3.10
Loans; Loan Loss Reserve
​
​​​​A-10A-13​​
​
Section 3.11
Taxes
​
​​​​A-10A-13​​
​
Section 3.12
Employee Benefits
​
​​​​A-11A-14​​
​
Section 3.13
Compliance with Legal Requirements
​
​​​​A-14A-17​​
​
Section 3.14
Legal Proceedings; Orders
​
​​​​A-14A-17​​
​
Section 3.15
Absence of Certain Changes and Events
​
​​​​A-14A-17​​
​
Section 3.16
Material Contracts
​
​​​​A-15A-18​​
​
Section 3.17
No Defaults
​
​​​​A-16A-19​​
​
Section 3.18
Insurance
​
​​​​A-16A-19​​
​
Section 3.19
Compliance with Environmental Laws
​
​​​​A-16A-19​​
​
Section 3.20
Transactions with Affiliates
​
​​​​A-17A-20​​
​
Section 3.21
Brokers; Opinion of Financial Advisor
​
​​​​A-17A-20​​
 
A-i
TABLE OF CONTENTS​
 
​
Section 3.22
Approval Delays
​
​​​​A-17A-20​​
​
Section 3.23
Labor Matters
​
​​​​A-17A-20​​
​
Section 3.24
Intellectual Property
​
​​​​A-18A-20​​
​
Section 3.25
Investments
​
​​​​A-18A-21​​
​
Section 3.26
Absence of Undisclosed Liabilities
​
​​​​A-18A-21​​
​
Section 3.27
Bank Secrecy Act; PATRIOT Act; Anti-Money Laundering
​
​​​​A-19A-22​​
​
Section 3.28
Disaster Recovery and Business Continuity
​
​​​​A-19A-22​​
​
Section 3.29
Trust Preferred Securities
​
​​​​A-22​​
​
Section 3.30
Investors Insurance Services
​
​​​​A-22​​
​
Article 4   REPRESENTATIONS AND WARRANTIES OF NICOLET
​​​​A-19A-23​​
​
Section 4.1
Nicolet Organization
​
​​​​A-19A-23​​
​
Section 4.2
Nicolet Subsidiary Organizations
​
​​​​A-19A-23​​
​
Section 4.3
Authorization; Enforceability
​
​​​​A-20A-23​​
​
Section 4.4
No Conflict
​
​​​​A-20A-23​​
​
Section 4.5
Nicolet Capitalization
​
​​​​A-20A-24​​
​
Section 4.6
Nicolet Subsidiary Capitalization
​
​​​​A-21A-25​​
​
Section 4.7
Nicolet SEC Reports; Financial Statements and Reports; Regulatory Filings
​
​​​​A-21A-25​​
​
Section 4.8
Loans; Loan Loss Reserve
​
​​​​A-23A-26​​
​
Section 4.9
Taxes
​
​​​​A-23A-27​​
​
Section 4.10
Employee Benefits
​
​​​​A-24A-27​​
​
Section 4.11
Books and Records
​
​​​​A-24A-28​​
​
Section 4.12
Compliance with Legal Requirements
​
​​​​A-24A-28​​
​
Section 4.13
Legal Proceedings; Orders
​
​​​​A-24A-28​​
​
Section 4.14
Absence of Certain Changes and Events
​
​​​​A-25A-28​​
​
Section 4.15
No Defaults
​
​​​​A-25A-28​​
​
Section 4.16
Compliance with Environmental Laws
​
​​​​A-25A-29​​
​
Section 4.17
Transactions with Affiliates
​
​​​​A-25A-29​​
​
Section 4.18
Approval Delays
​
​​​​A-25A-29​​
​
Section 4.19
Labor Matters
​
​​​​A-25A-29​​
​
Article 5   THE COMPANY’S COVENANTS
​​​​A-26A-29​​
​
Section 5.1
Access and Investigation
​
​​​​A-26A-29​​
​
Section 5.2
Operation of the Company and the Bank
​
​​​​A-27A-30​​
​
Section 5.3
Notice of Changes
​
​​​​A-29A-33​​
​
Section 5.4
Shareholders Meeting
​
​​​​A-29A-33​​
​
Section 5.5
Information Provided to Nicolet
​
​​​​A-29A-33​​
​
Section 5.6
Operating Functions
​
​​​​A-30A-34​​
​
Section 5.7
Company Benefit Plans
​
​​​​A-30A-34​​
​
Section 5.8
Voting and Support Agreement
​
​​​​A-30A-35​​
​
Section 5.9
Acquisition Proposals
​
​​​​A-30A-35​​
​
Section 5.10
Company Preferred Stock
​
​​​​A-35​​
​
Section 5.11
Calculation of Tangible Common Equity
​
​​​​A-31A-35​​
​
Section 5.11
Audited Financial Statements
​
​​​​A-31​​
​
Section 5.12
Company Debt Agreements
​
​​​​A-31​​
​
Article 6   NICOLET’S COVENANTS
​​​​A-32A-35​​
​
Section 6.1
Operation of Nicolet and Nicolet Subsidiaries
​
​​​​A-32A-35​​
​
Section 6.2
Notice of Changes
​
​​​​A-32A-36​​
​
Section 6.3
Indemnification
​
​​​​A-32​​
 
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​
Section 6.3
Nicolet Shareholders Meeting
​
​​​​A-36​​
​
Section 6.4
Indemnification
​
​​​​A-36​​
​
Section 6.5
Board Representation
​
​​​​A-34A-38​​
​
Section 6.56.6
Authorization and Reservation of Nicolet Common Stock
​
​​​​A-34A-38​​
​
Section 6.66.7
Stock Exchange Listing
​
​​​​A-34A-39​​
​
Section 6.76.8
Assumption of Debt Instruments
​
​​​​A-35A-39​​
​
Article 7   COVENANTS OF ALL PARTIES
​​​​A-35A-39​​
​
Section 7.1
Regulatory Approvals
​
​​​​A-35A-39​​
​
Section 7.2
SEC Registration
​
​​​​A-35A-39​​
​
Section 7.3
Publicity
​
​​​​A-35A-40​​��
​
Section 7.4
Reasonable Best Efforts; Cooperation; Takeover Statutes
​
​​​​A-36A-40​​
​
Section 7.5
Tax Free Reorganization
​
​​​​A-36A-40​​
​
Section 7.6
Employees andEmployees; Employee Contracts; Employee Benefits
​
​​​​A-37A-41​​
​
Section 7.7
Section 16 Matters
​
​​​​A-38A-42​​
​
Section 7.8
Shareholder Litigation
​
​​​​A-38A-42​​
​
Article 8   CONDITIONS PRECEDENT TO OBLIGATIONS OF NICOLET
​​​​A-38A-42​​
​
Section 8.1
Accuracy of Representations and Warranties
​
​​​​A-38A-42​​
​
Section 8.2
Performance by the Company
​
​​​​A-38A-42​​
​
Section 8.3
Shareholder ApprovalApprovals
​
​​​​A-38A-42​​
​
Section 8.4
No Proceedings
​
​​​​A-38A-43​​
​
Section 8.5
Regulatory Approvals
​
​​​​A-38A-43​​
​
Section 8.6
Registration Statement
​
​​​​A-38A-43​​
​
Section 8.7
Officer’s Certificate
​
​​​​A-39A-43​​
​
Section 8.8
Tax Opinion
​
​​​​A-39A-43​​
​
Section 8.9
Stock Exchange Listing
​
​​​​A-39A-43​​
​
Section 8.10
Minimum Tangible Common Equity
​
​​​​A-39A-43​​
​
Section 8.11
No Material Adverse Effect
​
​​​​A-39A-43​​
​
Section 8.12
Consents
​
​​​​A-39A-43​​
​
Section 8.13
Cancellation of Company Stock OptionsSupplemental Indentures
​
​​​​A-39A-43​​
​
Section 8.14
Company Preferred Stock
​
​​​​A-43​​
​
Article 9   CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY
​​​​A-39A-43​​
​
Section 9.1
Accuracy of Representations and Warranties
​
​​​​A-39A-44​​
​
Section 9.2
Performance by Nicolet
​
​​​​A-39A-44​​
​
Section 9.3
Shareholder ApprovalApprovals
​
​​​​A-39A-44​​
​
Section 9.4
No Proceedings
​
​​​​A-40A-44​​
​
Section 9.5
Regulatory Approvals
​
​​​​A-40A-44​​
​
Section 9.6
Registration Statement
​
​​​​A-40A-44​​
​
Section 9.7
Officer’s Certificate
​
​​​​A-40A-44​​
​
Section 9.8
Tax Opinion
​
​​​​A-40A-44​​
​
Section 9.9
Stock Exchange Listing
​
​​​​A-40A-44​​
​
Section 9.10
Supplemental Indentures
​
​​​​A-44​​
​
Section 9.11
No Material Adverse Effect
​
​​​​A-40A-44​​
​
Article 10   TERMINATION
​​​​A-40A-45​​
​
Section 10.1
Termination of Agreement
​
​​​​A-40A-45​​

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​
Section 10.2
Effect of Termination or Abandonment
​
​​​​A-41A-47​​
​
Section 10.3
Fees and Expenses
​
​​​​A-41A-47​​
​
Article 11   MISCELLANEOUS
​​​​A-42A-47​​
​
Section 11.1
Survival
​
​​​​A-42A-47​​

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​
Section 11.2
Governing Law
​
​​​​A-42A-47​​
​
Section 11.3
Assignments, Successors and No Third Party Rights
​
​​​​A-42A-47​​
​
Section 11.4
Modification
​
​​​​A-42A-48​​
​
Section 11.5
Extension of Time; Waiver
​
​​​​A-43A-48​​
​
Section 11.6
Notices
​
​​​​A-43A-48​​
​
Section 11.7
Entire Agreement
​
​​​​A-44A-49​​
​
Section 11.8
Severability
​
​​​​A-44A-49​​
​
Section 11.9
Further Assurances
​
​​​​A-44A-49​​
​
Section 11.10
Counterparts
​
​​​​A-44A-49​​
​
Article 12   DEFINITIONS
​​​​A-44A-49​​
​
Section 12.1
Definitions
​
​​​​A-44A-49​​
​
Section 12.2
Principles of Construction
​
​​​​A-50A-55​​
​Exhibits​​
​
A
Form of Bank Plan of Merger
​
​​​​​​​
​
BA
Form of Voting and Support Agreement
​Bank Plan of Merger
​​​​A-59​​
​
B   Form of Voting and Support Agreement
​​​​A-61​​
 
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INDEX OF DEFINED TERMS
​Acquisition Proposal​​​​4449​​
​Adverse Recommendation​​​​2933​​
​Affiliate​​​​4450​​
​Agreement​​​​1​​
​Articles of Merger​​​​2​​
​Bank​​​​4450​​
​Bank Merger​​​​4450​​
​Bank Plan of Merger​​​​2​​
​Borrowing Affiliate​​​​27​​
​Business Day​​​​4450​​
​Cash Election​​​​5​​
​Cash Election Shares​​​​5​​
​Cash Election Threshold​​​​5​​
​CIC Payment​​​​41​​
​Closing​​​​1​​
​Closing Date​​​​12​​
​Code​​​​1​​
​Company​​​​1​​
​Company 401(k) Plan​​​​5​​
​Company Articles of Incorporation​​​​4450​​
​Company Benefit Plan​​​​4450​​
​Company Board​​​​4550​​
​Company Bylaws​​​​4550​​
​Company Capital Stock​​​​4550​​
​Company Capitalization Date​​​​79​​
​Company Common Stock​​​​4550​​
​Company Debt AgreementDeferred Restricted Stock Unit​​​​457​​
​Company Director​​​​2​​
​Company Disclosure Schedules​​​​5056​​
​Company Employees​​​​2831​​
​Company ERISA Affiliate​​​​4550​​
​Company Evaluation Date​​​​11​​
​Company Financial Statements​​​​810​​
​Company Investment Securities​​​​1821​​
​Company Loans​​​​1013​​
​Company Material Contract​​​​1518​​
​Company Permitted Exceptions​​​​912​​
​Company Preferred Stock​​​​79​​
​Company Regulatory Reports​​​​4550​​
​Company Restricted Stock Award​​​​7​​
​Company Restricted Stock Unit​​​​7​​
​Company SEC Reports​​​​51​​
​Company Shareholder Approval​​​​4551​​
​Company Shareholders Meeting​​​​2933​​

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​Company Stock Certificates​​​​34​​
​Company Stock Option​​​​457​​
​Company Stock Plans​​​​4551​​
​Company Subordinated Note Indentures​​​​51​​
​Company Trust Debentures​​​​1​​
​Company Trust Preferred Securities​​​​1​​
​Company Trusts​​​​51​​
​Confidentiality Agreement​​​​2630​​
​Contemplated Transactions​​​​4551​​
​Contract​​​​4551​​
​Control, Controlling or Controlled​​​​4551​​
​Conversion Fund​​​​3​​
​Covered Employees​​​​3640​​

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​CRA​​​​4551​​
​Deposit Insurance Fund​​​​4651​​
​Derivative TransactionsDerivatives Contract​​​​4621​​
​Dissenting SharesDetermination Date​​​​46​​
​DOL​​​​4651​​
​Effective Time​​​​2​​
​Election Deadline​​​​5​​
​Election Form​​​​5​​
​Environment​​​​4651​​
​Environmental Laws​​​​4651​​
​ERISA​​​​4651​​
​Exchange Act​​​​4651​​
​Exchange Agent​​​​3​​
​Exchange Ratio​​​​3​​
​Expenses​​​​3236​​
​FDIC​​​​4652​​
​Federal Reserve​​​​52​​
​Fill Option​​​​45​​
​Final Index Price​​​​46​​
​Final Price​​​​46​​
​GAAP​​​​4652​​
​Hazardous Materials​​​​4652​​
​IIS​​​​22​​
​Indemnification Proceeding​​​​3236​​
​Indemnified Employee​​​​3236​​
​Indemnified Party​​​​3236​​
​Index​​​​46​​
​Index Ratio​​​​46​​
​Initial Index Price​​​​46​​
​Initial Price​​​​46​​
​Intangible Assets​​​​4652​​

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​Internal Control Over Financial Reporting​​​​2211​​
​IRS​​​​4652​​
​IRS Guidelines​​​​3640​​
​Joint Proxy Statement​​​​52​​
​Knowledge​​​​4652​​
​Legal Requirement​​​​4652​​
​Letter of Transmittal​​​​34​​
​Material Adverse Effect​​​​4652​​
​Merger​​​​1​​
​Merger Consideration​​​​3​​
​Mixed Election​​​​5​​
​Nasdaq Rules​​​​4753​​
​New Plans​​​​3741​​
​Nicolet​​​​1​​
​Nicolet Articles of Incorporation​​​​4753​​
​Nicolet Bank​​​​4753​​
​Nicolet Benefit Plan​​​​4753​​
​Nicolet Board​​​​4753​​
​Nicolet Bylaws​​​​4753​​
​Nicolet Capital Stock​​​​4753​​
​Nicolet Capitalization Date​​​​2024​​
​Nicolet Common Stock​​​​4753​​
​Nicolet Common Stock Price​​​​4853​​
​Nicolet Disclosure Schedules​​​​5056​​
​Nicolet Equity Award​​​​4853​​
​Nicolet ERISA Affiliate​​​​4853​​
​Nicolet Evaluation Date​​​​2225​​
​Nicolet Financial Statements​​​​2125​​

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​Nicolet Loans​​​​2226​​
​Nicolet Market Value​​​​46​​
​Nicolet Material Contract​​​​4853​​
​Nicolet Preferred Stock​​​​2024​​
​Nicolet SEC Reports​​​​4853​​
​Nicolet Shareholder Approval​​​​53​​
​Nicolet Shareholders Meeting​​​​35​​
​Nicolet Stock Plans​​​​4854​​
​No-Election Shares​​​​5​​
​Non-Election​​​​5​​
​Old Plans​​​​3741​​
​Order​​​​4854​​
​Ordinary Course of Business​​​​4854​​
​OREO​​​​4854​​
​Outstanding Company Shares​​​​4854​​
​PATRIOT Act​​​​1922​​

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​PBGC​​​​4854​​
​Per Share Cash Consideration​​​​3​​
​Per Share Stock Consideration​​​​3​​
​Person​​​​4854​​
​Previously Disclosed​​​​5156​​
​Proceeding​​​​4854​​
​Proxy StatementReallocated Cash Election Shares​​​​486​​
​Reallocated Stock Election Shares​​​​6​​
​Registration Statement​​​​4954​​
​Regulatory Authority​​​​4954​​
​Representative​​​​4954​​
​Required Licenses​​​​22​​
​Requisite Regulatory Approvals​​​​4954​​
​Schedules​​​​5056​​
​SEC​​​​4954​​
​Securities Act​​​​4954​​
​Severance Costs​​​​4954​​
​Stock Election​​​​5​​
​Stock Election Shares​​​​5​​
​Subordinated Notes Assumption​​​​2​​
​Subsidiary​​​​4955​​
​Superior Proposal​​​​4955​​
​Supplemental Cash ConsiderationIndentures​​​​52​​
​Surviving Entity​​​​1​​
​Takeover Statutes​​​​4955​​
​Tangible Assets​​​​49​​
​Tangible Common Equity​​​​4955​​
​Tax​​​​5055​​
​Tax Return​​​​5055​​
​Termination Date​​​​4045​​
​Termination Fee​​​​4147​​
​Transaction Costs​​​​5055​​
​Transition Date​​​​5055​​
​TRUPS Assumption​​​​2​​
​U.S.​​​​5056​​
​WBCL​​​​5056​​
 
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (together with all exhibits and schedules, this “Agreement”) is entered into as of February 17, 2020,June 22, 2021, by and between Nicolet Bankshares, Inc., a Wisconsin corporation (“Nicolet”), and Commerce Financial Holdings,County Bancorp, Inc., a Wisconsin corporation (the “Company”).
RECITALS
A.   The parties to this Agreement desire to effect a merger of the Company with and into Nicolet (the “Merger”) in accordance with this Agreement and the applicable provisions of the WBCL, with Nicolet as the surviving entity in the Merger (sometimes referred to in such capacity as the “Surviving Entity”).
B.   The respective boards of directors of the Company and Nicolet have approved the Merger upon the terms and subject to the conditions of this Agreement and, in accordance with the applicable provisions of the WBCL, approved and declared the advisability of this Agreement and determined that consummation of the Merger in accordance with the terms of this Agreement is in the best interests of their respective companies and shareholders.
C.   The parties intend that the Merger qualify as a “reorganization” under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and that this Agreement be and hereby is adopted as a “plan of reorganization” within the meaning of Sections 354 and 361Section 1.368-2(g) of the Code.regulations of the U.S. Department of the Treasury promulgated thereunder.
D.   The parties desire to make certain representations, warranties and agreements in connection with the Merger and the other transactions contemplated by this Agreement, and the parties also agree to certain prescribed conditions to the Merger and other transactions.
E.    The Company wishes to transfer to Nicolet, and Nicolet wishes to assume, upon the terms and conditions set forth herein: (i) certain assets and certain liabilities related to the trust preferred securities (the “Company Trust Preferred Securities”) issued by the Company Trusts; (ii) the obligations of the Company pursuant to the subordinated notes issued by the Company to the Company Trusts (such obligations, the “Company Trust Debentures”); and (iii) the obligations of the Company pursuant to the subordinated notes issued by the Company pursuant to the Company Subordinated Note Indentures.
AGREEMENTS
In consideration of the foregoing premises and the following mutual promises, covenants and agreements, the parties hereby agree as follows:
ARTICLE 1
THE MERGER
Section 1.1   The Merger.   Upon the terms and subject to the conditions of this Agreement and in accordance with the applicable provisions of the WBCL, at the Effective Time, the Company shall be merged with and into Nicolet pursuant to the provisions of, and with the effects provided in, the WBCL, the separate corporate existence of the Company shall cease and Nicolet will be the Surviving Entity.
Section 1.2   Effective Time; Closing.
(a)   The closing of the Merger (the “Closing”) shall occur through the mail, by the exchange of documents electronically, or at a place that is mutually acceptable to Nicolet and the Company, or if they fail to agree, at the offices of Reinhart Boerner Van Deuren s.c., 1000 North WaterBryan Cave Leighton Paisner LLP, 1201 W. Peachtree Street, Suite 1700, Milwaukee, Wisconsin 53202,14th Floor, Atlanta, Georgia 30309, at 10:00 a.m., local time, on the date that is five (5) Business Days after the satisfaction or waiver (subject to applicable Legal Requirements) of the latest to occur of the conditions set forth in Article 8 and Article 9 (other than those conditions that by their nature are to be satisfied or waived at the Closing, but subject to the satisfaction or waiver of those conditions) or at such other time and place as Nicolet and the Company may agree in writing (the “Closing Date”). Subject to the provisions of Article 10, failure to consummate the Merger on the date and time and at the place determined pursuant to this Section 1.2 will not result in the termination of this Agreement and will not relieve any party of any obligation under this Agreement.

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(b)   The parties hereto agree to file on the Closing Date articles of merger with the Wisconsin Department of Financial Institutions (the “Articles of Merger”). The Merger shall become effective as of the date and time specified in the Articles of Merger (the “Effective Time”).
Section 1.3   Effects of the Merger.   At the Effective Time, the effects of the Merger shall be as provided in this Agreement, the Articles of Merger and the applicable provisions of the WBCL. Without limiting the generality of the foregoing, at the Effective Time, all of the property, rights, privileges, powers and

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franchises of the Company shall be vested in the Surviving Entity, and all debts, liabilities and duties of the Company shall become the debts, liabilities and duties of the Surviving Entity.
Section 1.4   Organizational Documents of the Surviving Entity.   The Nicolet Articles of Incorporation and the Nicolet Bylaws, as in effect immediately prior to the Effective Time, shall be the articles of incorporation and bylaws of the Surviving Entity until thereafter amended in accordance with the provisions thereof and applicable Legal Requirements.
Section 1.5   Directors and Officers of the Surviving Entity.   At the Effective Time, the directors of the Surviving Entity shall be the directors of Nicolet immediately prior to the Effective Time and one (1) person from the Company Board, to be designated by the Company and reasonably acceptable to Nicolet prior to the Effective Time (such person from the Company Board is expected to be Joseph Fazio, III) (the “Company Director”). At the Effective Time, the executive officers of the Surviving Entity shall be the executive officers of Nicolet immediately prior to the Effective Time. Such directors and executive officers shall serve until their resignation, removal or until their successors shall have been elected or appointed and shall have qualified in accordance with the laws and governing documents applicable to Nicolet or Nicolet Bank.
Section 1.6   Location of the Surviving Entity.   The principal offices of the Surviving Entity will be located at 111 N. Washington Street, Green Bay, Wisconsin 54301.
Section 1.7   Bank Merger.   Following the Effective Time of the Merger, the Bank shall be merged with and into Nicolet Bank in accordance with the provisions of the National Bank Act (12 U.S.C. § 215a), Section 18(c) of the Federal Deposit Insurance Act and Subchapter VII of the Wisconsin Banking Law and pursuant to the terms and conditions of the Plan of Merger by and between Nicolet Bank and the Bank, a form of which is attached as Exhibit A (the “Bank Plan of Merger”). Following the execution and delivery of this Agreement, the Company will cause the Bank, and Nicolet will cause Nicolet Bank, to execute and deliver the Bank Plan of Merger substantially in the form set forth in Exhibit A.
Section 1.8   TRUPS and Subordinated Notes Assumption.   As of the Effective Time and upon the terms and conditions set forth herein: (a) Nicolet will assume and discharge (i) all of the Company’s covenants, agreements and obligations under and relating to the Company Trust Preferred Securities, including (ii) the due and punctual payment of interest on all of the obligations of the Company pursuant to the Company Trust Debentures, and such transfer and assumption as described in clauses (i) and (ii), the “TRUPS Assumption”); (b) Nicolet will assume and discharge all of the Company’s covenants, agreements and obligations, including the due and punctual payment of interest, under and relating to the Company Subordinated Note Indentures (such transfer and assumption, the “Subordinated Notes Assumption”); (c) Nicolet will cause each of the Company Trusts to discharge its obligations with respect to the Company Trust Preferred Securities arising after the Effective Time in accordance with the terms and conditions of the agreements related to the Company Trust Preferred Securities and the TRUPS Assumption; (d) Nicolet shall discharge its obligations with regard to the Company Subordinated Note Indentures arising after the Effective Time in accordance with the terms and conditions of the agreements related to the Company Subordinated Note Indentures and the Subordinated Notes Assumption; (e) Nicolet and the Company shall execute and deliver, or cause to be delivered, one or more supplemental indentures, in a form satisfactory to the applicable trustee, to effectuate the TRUPS Assumption, for each Company Trust and the Subordinated Notes Assumption, whereby the Company shall assign, and Nicolet shall assume, all of the Company’s covenants, agreements and obligations under the Company Trust Debentures and the Company Subordinated Note Indentures (the “Supplemental Indentures”), signed by a duly authorized officer of each of the Company and Nicolet, and any and all other documentation and consents, including opinions of counsel, required by the trustee to make such assumptions effective.
Section 1.9   Absence of Control.   Subject to any specific provisions of this Agreement, it is the intent of the parties to this Agreement that neither Nicolet nor the Company by reason of this Agreement shall be

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deemed (until consummation of the Merger) to control, directly or indirectly, the other party or any of its respective Subsidiaries and shall not exercise, or be deemed to exercise, directly or indirectly, a controlling influence over the management or policies of such other party or any of its respective Subsidiaries.
Section 1.91.10   Alternative Structure.   Notwithstanding anything to the contrary contained in this Agreement, before the Effective Time, Nicolet may change the method of effecting the Contemplated Transactions if and to the extent that it concludes such a change to be desirable; provided, that: (a) any such change shall not affect the U.S. federal income tax consequences of the Merger to holders of Company Common Stock; and (b) no such change shall (i) alter or change the amount or kind of the consideration to be issued to holders of Company Common Stock as consideration in the Merger or (ii) materially impede or delay consummation of the Merger. If Nicolet elects to make such a change, the parties shall execute appropriate documents to reflect the change.
ARTICLE 2
CONVERSION OF SECURITIES IN THE MERGER
Section 2.1   Consideration.
(a)   At the Effective Time, by virtue of the Merger and without any action on the part of Nicolet, the Company, or the holder of any shares of Company Common Stock, each share of Company Common Stock issued and outstanding immediately prior to the Effective Time will be converted, subject to the maximum Nicolet Common Stock issuanceelection and allocation procedures in Section 2.3 and the fractional share procedures in Section 2.5 the dissenters rights provisions in Section 2.6 and the cash consideration provisions for shares held in the Company 401(k) Plan in Section 2.9,, into the right to receive:receive either:
(i)   1.150.48 fully paid and nonassessable shares (subject to any adjustment in Section 2.1(ii) or (iii), the(the “Exchange Ratio”) of Nicolet Common Stock (the “Per Share Stock Consideration”);, or
(ii)   IfCash in the Nicolet Common Stock Price is greater than $82.00amount of $37.18 per share the adjusted Exchange Ratio shall equal the quotient (rounded to the nearest thousandth of a share) obtained by dividing $94.30 by the Nicolet Common Stock Price;

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(iii)   If the Nicolet Common Stock Price is less than $62.00 per share, Nicolet shall have the option to: (a) increase the number of shares of Nicolet Common Stock to be contributed using an adjusted Exchange Ratio equal to the quotient (rounded to the nearest Thousandth of a share) obtained by dividing $71.30 by the Nicolet Common Stock Price subject to the limitations set forth in (the “Section 2.3; (b) leave the Exchange Ratio unchanged, but add additional cash consideration in an amount sufficient to bring the Per Share StockCash Consideration up to $71.30 per share; (c) leave the Exchange Ratio unchanged, or (d) terminate this Agreement. Likewise, if Nicolet fails to add additional stock or cash consideration as set forth in (a) and (b) of the preceding sentence, or if Nicolet elects to leave the Exchange Ratio unchanged as set forth in (c) of the preceding sentence, the Company shall have the right to terminate this Agreement.” ).
(b)   The total cash and stock consideration to be paid by Nicolet in respect of shares of Company Common Stock is referred to herein as the “Merger Consideration.” Notwithstanding anything in this Section 2.1 to the contrary, at the Effective Time and by virtue of the Merger, each share of Company Common Stock held in the Company’s treasury and each share of Company Common Stock owned directly or indirectly by Nicolet (other than shares held in a fiduciary capacity or in connection with debts previously contracted) will be cancelled and no shares of Nicolet Common Stock, cash, or other consideration will be issued or paid in exchange therefor.
Section 2.2   Exchange of Company Stock Certificates.
(a)   The parties to this Agreement agree: (i) that Computershare Trust Company, N.A. shall serve, pursuant to customary terms of an exchange agent agreement, as the exchange agent for purposes of this Agreement (the “Exchange Agent”); and (ii) to execute and deliver the exchange agent agreement at or prior to the Effective Time. Nicolet shall be solely responsible for the payment of any fees and expenses of the Exchange Agent.
(b)   At or prior to the Effective Time, Nicolet shall authorize the issuance of and shall make available to the Exchange Agent, for the benefit of the holders of Company Common Stock for exchange in accordance with this Article 2:2: (i) a sufficient number of shares of Nicolet Common Stock and cash for payment of the Merger Consideration pursuant to Section 2.1, and (ii) sufficient cash for payment of (A) Supplemental Cash Consideration in accordance with , if any Section 2.3, (B) cash in lieu of any fractional shares of Nicolet Common Stock in accordance with Section 2.5 and (C) cash for shares held in the Company 401(k) Plan in accordance with Section 2.9.. Such amount of cash in lieu of fractional shares and shares of Nicolet Common Stock, together with any dividends or distributions with respect thereto paid after the Effective Time, are referred to in this Article 2 as the “Conversion Fund.”
(c)   Within five (5) Business Days after the Closing Date, Nicolet shall cause the Exchange Agent to mail to each holder of record of one or more certificates or evidence of book-entry representing such shares of Company Common Stock (the “Company Stock Certificates”) who did not tender such Company Stock Certificate(s) on or before the Election Deadline pursuant to Section 2.3 the letter of transmittal and other appropriate and customary transmittal materials (which shall specify that delivery shall be effected, and risk of loss and title to the Company Stock Certificates shall pass, only upon proper delivery of such

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Company Stock Certificates to the Exchange Agent) (the “Letter of Transmittal” ) for use in effecting the surrender of Company Stock Certificates pursuant to this Agreement.
(d)   Upon the later of the Effective Time and proper surrender of a Company Stock Certificate for exchange to the Exchange Agent, together with a properly completed and duly executed Letter of Transmittal, the holder of such Company Stock Certificate shall be entitled to receive in exchange therefor his, her or its Merger Consideration as allocated per Section 2.3plus cash in lieu of any fractional shares of Nicolet Common Stock in accordance with Section 2.22.5 deliverable in respect of the shares of Company Common Stock represented by such Company Stock Certificate; thereupon such Company Stock Certificate shall forthwith be cancelled.
(e)   No interest will be paid or accrued on any portion of the Merger Consideration deliverable upon surrender of a Company Stock Certificate.
(f)   After the Effective Time, there shall be no transfers of Outstanding Company Shares on the stock transfer books of the Company.

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(g)   No dividends or other distributions declared with respect to Nicolet Common Stock and payable to the holders of record thereof after the Effective Time shall be paid to the holder of any unsurrendered Company Stock Certificate until the holder thereof shall surrender such Company Stock Certificate in accordance with this Article 2.2. Promptly after the surrender of a Company Stock Certificate in accordance with this Article 2, the record holder thereof shall be entitled to receive any such dividends or other distributions, without interest thereon, which theretofore had become payable with respect to shares of Nicolet Common Stock into which the shares of Company Common Stock represented by such Company Stock Certificate were converted at the Effective Time pursuant to Section 2.1.2.1. No holder of an unsurrendered Company Stock Certificate shall be entitled, until the surrender of such Company Stock Certificate, to vote the shares of Nicolet Common Stock into which such holder’s Company Common Stock shall have been converted.
(h)   Any portion of the Conversion Fund that remains unclaimed by the shareholdersholders of theOutstanding Company Shares twelve (12) months after the Effective Time shall be paid to the Surviving Entity, or its successors in interest. Any shareholdersholders of theOutstanding Company Shares who have not theretofore complied with this Article 2 shall thereafter look only to the Surviving Entity, or its successors in interest, for issuance of Nicolet Common stockStock and/or cash pursuant to the Merger Consideration and the payment of cash in lieu of any fractional shares deliverable in respect of such shareholders’ shares of Company Common Stock, as well as any accrued and unpaid dividends or distributions on shares of such Nicolet Common Stock. Notwithstanding the foregoing, none of the Surviving Entity, the Exchange Agent or any other person shall be liable to any former holderholders of shares ofOutstanding Company Common StockShares for any amount delivered in good faith to a public official pursuant to applicable abandoned property, escheat or similar laws.
(i)   In the event any Company Stock Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such Company Stock Certificate to be lost, stolen or destroyed and, if required by the Surviving Entity, the posting by such person of a bond in such amount as the Exchange Agent may determine is reasonably necessary as indemnity against any claim that may be made against it with respect to such Company Stock Certificate, the Exchange Agent will issue in exchange for such lost, stolen or destroyed Company Stock Certificate, and in accordance with this Article 2, shares of Nicolet Common Stock and/or cash pursuant to the Merger Consideration and cash in lieu of any fractional shares deliverable in respect thereof pursuant to this Agreement.
(j)   If, between the date of this Agreement and the Effective Time, the outstanding shares of Nicolet Common Stock shall have been changed into a different number of shares or into a different class by reason of any stock dividend, subdivision, reclassification, recapitalization, split, combination or exchange of shares, the Merger Consideration per share shall be adjusted appropriately to provide the holders of Company Common Stock the same economic effect as contemplated by this Agreement prior to such event.
Section 2.3   MaximumElection and Allocation Procedures.
(a)   Election.   Subject to the limitations set forth below, each holder of shares of Company Common Stock shall be provided an opportunity, (i) to elect to receive Nicolet Common Stock Issuancewith respect to all of

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such holder’s Company Common Stock (a “.   Stock ElectionNotwithstanding anything in this Article 2”); (ii) to the contrary, under no circumstances shall the numberelect to receive cash with respect to all of such holder’s Company Common Stock (a “Cash Election”); (iii) to elect to receive cash with respect to a portion of such holder’s Company Common Stock and shares of Nicolet Common Stock with respect to such holder’s remaining shares (a “Mixed Election”); or (iv) to indicate that such holder makes no such election with respect to such holder’s shares of Company Common Stock (a “Non-Election”). Shares of Company Common Stock as to which a Cash Election has been made (including pursuant to a Mixed Election) are referred to herein as “Cash Election Shares.” Shares of Company Common Stock as to which a Stock Election has been made (including pursuant to a Mixed Election) are referred to herein as “Stock Election Shares.” Shares of Company Common Stock as to which a Non-Election or no election has been made are referred to herein as “No-Election Shares.”
(i)   Nicolet and the Company shall cause to be issued as a resultmailed an election form, Letter of Transmittal and other appropriate and customary transmittal materials (which shall specify that delivery shall be effected, and risk of loss and title to the Company Stock Certificates shall pass, only upon proper delivery of such Company Stock Certificates to the Exchange Agent) (collectively, the “Election Form”) with or following the issuance of the Contemplated Transactions exceed 19.9%Joint Proxy Statement to each holder of record of Company Common Stock. Nicolet and the Company shall use all reasonable efforts to make available as promptly as possible an Election Form to any shareholder of the outstandingCompany who requests such Election Form following the initial mailing of the Election Form and prior to the Election Deadline (as defined below). Each Election Form shall permit a holder (or the beneficial owner through appropriate and customary documentation and instruction) of Company Common Stock to make a Stock Election, Cash Election, Mixed Election or Non-Election. Nominee record holders who hold Company Common Stock on behalf of multiple beneficial owners shall indicate how many of such shares held by them are Stock Election Shares, Cash Election Shares and No-Election Shares based upon the actions of the beneficial owners thereof.
(ii)   Any shares of NicoletCompany Common Stock with respect to which the holder shall not have submitted to the Exchange Agent an effective, properly completed, Election Form prior to 5:00 p.m. Eastern Time on the Business Day that is five (5) Business Days prior to the Effective Time (or such other time and date as Nicolet and the Company may mutually agree) (the “Election Deadline”) shall be treated as No-Election Shares.
(iii)   Any such election shall have been properly made only if the Exchange Agent shall have actually received a properly completed Election Form by the Election Deadline, together with all required accompanying documentation, Company Stock Certificates, and duly executed transmittal materials included with the Election Form, all as described in the instructions to the Election Form. Any Election Form may be revoked or changed by the Person submitting such Election Form (or the beneficial owner of the shares covered by such Election Form through appropriate and customary documentation and instruction) at or prior to the Election Deadline. In the event an Election Form is revoked prior to the Election Deadline and no other valid election is made, the shares of Company Common Stock represented by such Election Form shall be No-Election Shares. Subject to the terms of this Agreement and of the Election Form, the Exchange Agent shall have reasonable discretion to determine whether any election, revocation or change has been properly or timely made and to disregard immaterial defects in the Election Forms, and any good faith decisions of the Exchange Agent regarding such matters shall be binding and conclusive. None of Nicolet, the Company or the Exchange Agent shall be under any obligation to notify any Person of any defect in an Election Form prior to the Election Deadline.
(b)   Allocation.   As soon as practicable after the Election Deadline, Nicolet shall cause the Exchange Agent to allocate the Merger Consideration among the holders of Company Common Stock that was issued and outstanding immediately prior to the Effective Time in accordance with the terms of this Section. In order to ensure that the provisions of Nasdaq Listing Rule 5635 and/limits specified with respect to the cash consideration specified below are not exceeded, the parties hereby agree that the Exchange Agent, in applying the allocation rules set forth herein, shall have reasonable discretion to round calculations or the WBCL would require approval of the Contemplated Transactionsotherwise adjust results thereof in order to accomplish such purpose, and each good faith determination made by the shareholdersExchange Agent regarding such matters shall be binding and conclusive.

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(i)   Cash Consideration Undersubscribed.   If the number of Nicolet. ToCash Election Shares is less than or equal to 1,237,000 (the “Cash Election Threshold”), then, at the Effective Time:
(A)   each Cash Election Share will be converted into the right to receive the Per Share Cash Consideration;
(B)   No-Election Shares shall be deemed to be Cash Election Shares to the extent necessary to avoid a shareholder vote under Nasdaq Listing Rule 5635 and/orhave the WBCL,total number of Cash Election Shares equal the Cash Election Threshold. If less than all of the No-Election Shares are so required to be treated as Cash Election Shares, then the Exchange RatioAgent shall convert, on a pro rata basis, a sufficient number of No-Election Shares into Cash Election Shares, with all remaining No-Election Shares treated as Stock Election Shares;
(C)   If all of the No-Election Shares are converted to Cash Election Shares under the preceding subsection and the total number of Cash Election Shares remains below the Cash Election Threshold, then the Exchange Agent shall convert, on a pro rata basis, a sufficient number of Stock Election Shares into Cash Election Shares (the “Reallocated Cash Election Shares”) such that the sum of the number of Cash Election Shares plus the Reallocated Cash Election Shares equals the Cash Election Threshold and each Reallocated Cash Election Share shall be reducedconverted into the right to receive the maximum exchange ratio (roundedPer Share Cash Consideration; and
(D)   each Stock Election Share which is not a Reallocated Cash Election Share shall be converted into the right to the nearest Thousandth of a share) that would not cause need for a Nicolet shareholder vote, and Nicolet shall add additional cash consideration (the “Supplemental Cash Consideration”) in an amount sufficient to leave the value ofreceive the Per Share Stock Consideration.
(ii)   Cash Consideration unchanged asOversubscribed.   If the number of Cash Election Shares is greater than the Cash Election Threshold, then, at the Effective Time:
(A)each Stock Election Share and No-Election Share shall be converted into the right to receive the Per Share Stock Consideration;
(B)the Exchange Agent shall convert, on a resultpro rata basis, a sufficient number of Cash Election Shares into Stock Election Shares (the “Reallocated Stock Election Shares”) such adjustment.that the number of remaining Cash Election Shares does not exceed the Cash Election Threshold and all Reallocated Stock Election Shares shall be converted into the right to receive the Per Share Stock Consideration; and
(C)   each Cash Election Share which is not a Reallocated Stock Election Share shall be converted into the right to receive the Per Share Cash Consideration.
Section 2.4   Cancellation of Shares.   At the Effective Time, the shares of Company Common Stock will no longer be outstanding and will automatically be cancelled and will cease to exist. Company Stock Certificates that represented Company Common Stock before the Effective Time will be deemed for all purposes to represent the number of shares of Nicolet Common Stock or cash into which they were converted pursuant to this Article 2.2.

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Section 2.5   No Fractional Shares.   Notwithstanding anything to the contrary contained in this Agreement, no fractional shares of Nicolet Common Stock shall be issued as Merger Consideration in the Merger. Each holder of Company Common Stock who would otherwise be entitled to receive a fractional share of Nicolet Common Stock pursuant to this Article 2 shall instead be entitled to receive an amount in cash (without interest) rounded to the nearest whole cent, determined by multiplying Nicolet Common Stock Price by the fractional share of Nicolet Common Stock to which such former holder would otherwise be entitled.
Section 2.6   Dissenting SharesCompany Preferred Stock.Notwithstanding anything in this Article 2   At the Effective Time, by virtue of the Merger and without any action on the part of Nicolet, the Company, or the holder of any shares of Company Preferred Stock, each share of Company Preferred Stock issued and outstanding immediately prior to the contrary, no Dissenting Shares shallEffective Time, if any, will be converted into the right to receive cash in an amount equal to the Merger. All dissenting shares shall be cancelled, and the holders thereof shall thereafter be entitled only toredemption price of such rights as are granted by Subchapter XIII of the WBCL; provided, however, that if any such shareholder fails to perfect his, her or its rights as a dissenting shareholder with respect to his, her or its Dissenting Shares in accordance with Subchapter XIII of the WBCL or withdraws or loses such holder’s dissenter’s rights, such shares held by such shareholder shall be deemed to have been converted into, and become exchangeable for,Company Preferred Stock as of the Effective Time, the right to receive the Merger Consideration to which the holder of such shares would have been entitled as ofTime. At the Effective Time, without interest thereon.the shares of Company Preferred Stock will no longer be outstanding and will automatically be cancelled and will cease to exist. Stock certificates that represented Company Preferred Stock before the Effective Time will be deemed for all purposes to represent cash into which they were converted pursuant to this Article 2.

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Section 2.7   Nicolet Common Stock.At the Effective Time, by virtue of the Merger and without any action on the part of Nicolet, the Company, or the holder of any shares of Nicolet Common Stock, the shares of Nicolet Common Stock issued and outstanding immediately prior to the Effective Time shall remain issued and outstanding and shall not be affected by the Merger.
Section 2.8   Company Stock OptionsAwards.
(a)   Except as set forth in Article 2.8 of the Company Disclosure Schedules, immediatelyStock Options.   Immediately prior to the Effective Time, each option issued under the Company Stock OptionPlans that is outstanding immediately prior to the Effective Time (a “Company Stock Option”), whether vested or unvested, shall be cancelled, by virtue of the Merger and without any action on the part of the holder thereof, in consideration for the right to receive, as promptly as practicable (but no later than fifteen (15) calendar days) following the Effective Time, a cash payment (without interest and less applicable withholding Taxes) with respect thereto equal to the product of (i) the number of shares of Company Common Stock subject to such Company Stock Option immediately prior to the Effective Time and (ii) the excess, if any, of the product of (x) the Nicolet Common Stock Price and (y) the Exchange Ratio, subject to any adjustment, over the exercise price per share of Company Common Stock subject to such Company Stock Option immediately prior to the Effective Time.
(b)Company Restricted Stock Awards.   During the thirty (30) day period immediately preceding the Effective Time, each award of restricted stock issued under the Company Stock Plans that is outstanding immediately prior to the Effective Time (a “Company Restricted Stock Award”) that is then subject to forfeiture or other restrictions shall become vested as a result of the Merger. Each vested Company Restricted Stock Award shall be exchanged as the number of shares of Company Common Stock subject to each Company Restricted Stock Award immediately prior to the Effective Time in accordance with this Article 2, treating each such Company Restricted Stock Award as a No-Election Share under Section 2.3. If applicable, the Company will ensure that all withholding Taxes attributable to the vesting of the Company Restricted Stock Award are properly paid and reported.
(c)   Company Restricted Stock Units.   During the thirty (30) day period immediately preceding the Effective Time, each award of restricted stock units issued under the Company Stock Plans that is outstanding immediately prior to the Effective Time (a “Company Restricted Stock Unit”), whether vested or unvested, shall, by virtue of the Merger and without any action on the part of the holder thereof, be (i) fully vested and settled per the terms of the award and the applicable Company Stock Plan or (ii) cancelled in consideration for the right to receive the number of shares of Company Common Stock subject to such Company Restricted Stock Unit immediately prior to such cancellation, and in either case which shall then be exchanged in accordance this Article 2, treating each share of Company Common Stock received in settlement or cancellation of the Company Restricted Stock Unit as a No-Election Share under Section 2.3. If applicable, the Company will ensure that all withholding Taxes attributable to the vesting of the Company Restricted Stock Unit are properly paid and reported.
(d)   Company Deferred Restricted Stock Units.   During the thirty (30) day period immediately preceding the Effective Time, each award of deferred restricted stock units issued under the Company Stock Plans that is outstanding immediately prior to the Effective Time (a “Company Deferred Restricted Stock Unit”), whether vested or unvested, shall be cancelled (as permitted under Treasury Regulation Section 1.409A-3(j)(4)(ix)(B)), by virtue of the Merger and without any action on the part of the holder thereof, in consideration for the right to receive the number of shares of Company Common Stock subject to such Company Deferred Restricted Stock Unit immediately prior to such cancellation, which shall then be exchanged in accordance this Article 2, treating each share of Company Common Stock received in cancellation of the Company Deferred Restricted Stock Unit as a No-Election Share under Section 2.3. If applicable, the Company will ensure that all withholding Taxes attributable to the vesting of the Company Deferred Restricted Stock Unit are properly paid and reported.
(e)   At or prior to the Effective Time, the Company, the Company Board and its compensation committee, as applicable, shall adopt any resolutions and take any actions that are necessary (including obtaining any required consents from holders of such Company Restricted Stock Awards or Company Restricted Stock Units) to (i) effectuate the provisions of this .
Section 2.9   2.8 and (ii) cause the Company 401(k) Plan Shares.   AtStock Plans to terminate at or prior to the Effective Time by virtue of the Merger and without any action on the part of Nicolet, the Company or the holder of any shares of Company Common Stock, each share of Company Common Stock held.

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(f)   The transactions contemplated in the Commerce State Bank 401(k) & Profit Sharing Plan (the “this Company 401(k) PlanSection 2.8”) will shall, in all cases, be converted into the rightcarried out in such a manner designed to receive a cash payment equal to the product of the Exchange Ratio and the Nicolet Common Stock Price, rounded to the nearest $0.01, plus the Supplemental Cash Consideration, if any.comply with Code Section 409A.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as Previously Disclosed, the Company hereby represents and warrants to Nicolet as follows:
Section 3.1   Company Organization.   The Company: (a) is a corporation duly organized, validly existing and in good standing under the laws of the State of Wisconsin and is also in good standing in each other jurisdiction in which the nature of the business conducted or the properties or assets owned or leased by it makes such qualification necessary, except where the failure to be so qualified and in good standing would not have a Material Adverse Effect on the Company; (b) is registered with the Federal Reserve as a bank holding company under the Bank Holding Company Act of 1956, as amended; and (c) has full power and authority, corporate and otherwise, to operate as a bank holding company and to own, operate and lease its

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properties as presently owned, operated and leased, and to carry on its business as it is now being conducted. The Company has delivered or made available to Nicolet true, complete and correct copies of the Company Articles of Incorporation and the Company Bylaws and all amendments thereto set forth in the Company SEC Reports are true, complete and correct, and the Company Articles of Incorporation and the Company Bylaws are in full force and effect as of the date of this Agreement. Other than the Bank,Subsidiaries set forth in Section 3.1 of the Company Disclosure Schedules, the Company has no Subsidiaries.“Significant Subsidiary” as set forth in Rule 1-02 or Regulation S-X promulgated under the Exchange Act.
Section 3.2   Subsidiary Organizations.   The Bank is a Wisconsin state-chartered bank duly organized, validly existing and in good standing under the laws of the State of Wisconsin. The BankEach Subsidiary of the Company is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and is also in good standing in each other jurisdiction in which the nature of the business conducted or the properties or assets owned or leased by it makes such qualification necessary, except where the failure to be so qualified and in good standing would not have a Material Adverse Effect on the Company. The BankEach Subsidiary of the Company has full power and authority, corporate and otherwise, to own, operate and lease its properties as presently owned, operated and leased, and to carry on its business as it is now being conducted. The deposit accounts of the Bank are insured by the FDIC through the Deposit Insurance Fund to the fullest extent permitted by applicable Legal Requirements, and all premiums and assessments required to be paid in connection therewith have been paid when due. The Company has delivered or made available to Nicolet copies of the charter (or similar organizational documents) and bylaws of each Subsidiary of the BankCompany and all amendments thereto, each of which are true, complete and correct and in full force and effect as of the date of this Agreement.
Section 3.3   Authorization; Enforceability.   The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement.Agreement, subject to the Company Shareholder Approval. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by the Company Board. The Company Board has determined that the Merger, on substantially the terms and conditions set forth in this Agreement, is advisable and in the best interests of the Company and its shareholders, and that the Agreement and transactions contemplated hereby are in the best interests of the Company and its shareholders. The Company Board has directed the Merger, on substantially the terms and conditions set forth in this Agreement, be submitted to the Company’s shareholders for consideration at a duly held meeting of such shareholders and has resolved to recommend that the Company’s shareholders vote in favor of the adoption and approval of this Agreement and the transactions contemplated hereby. The execution, delivery and performance of this Agreement by the Company, and the consummation by it of its obligations under this Agreement, have been authorized by all necessary corporate action, subject to the Company Shareholder Approval, and, subject to the receipt of the Requisite Regulatory Approvals and assuming the due authorization, execution and delivery of this Agreement by Nicolet, this Agreement constitutes a legal, valid and binding obligation of the Company enforceable in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization or other Legal Requirements affecting creditors’ rights generally and subject to general principles of equity.
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or lapse of time): (a) contravene, conflict with or result in a violation of any provision of the certificatearticles of incorporation, certificate of formation or charter (or similar organizational documents) or bylaws or operating agreement, each as in effect on the date hereof, or any currently effective resolution adopted by the board of directors, shareholders, manager or members of, the Company or the Bank;any of its Subsidiaries; (b) assuming receipt of the Requisite Regulatory Approvals, contravene, conflict with or result in a violation of, or give any Regulatory Authority or other Person the valid and enforceable right to challenge any of the Contemplated Transactions or to exercise any remedy or obtain any relief under, any Legal Requirement or any Order to which the Company or the Bank,any of its Subsidiaries, or any of their respective assets that are owned or used by them, may be subject, except for any contravention, conflict or violation that is permissible by virtue of obtaining the Requisite Regulatory Approvals; (c) except as set forth in Section 3.4 of the Company Disclosure Schedules, contravene, conflict with or result in a violation or breach of any provision of, or give any Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate or modify any Company Material Contract; or (d) result in the creation of any material lien, charge or encumbrance upon or with respect to any of the assets owned or used by the Company or the Bank.any of its Subsidiaries. Except for the Requisite Regulatory Approvals, the Company Shareholder Approval, and the Registration Statement, and as set forth in Section 3.4 of the Company Disclosure Schedules, neither the Company nor the Bankany of its Subsidiaries is or will be required to give any notice to or obtain any consent from any Person in connection with the execution and delivery of this Agreement or the consummation or performance of any of the Contemplated Transactions.

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Section 3.5   Capitalization.
(a)   The authorized capital stock of the Company currently consists exclusively of (i) 10,000,00050,000,000 shares of Company Common Stock, $.01 par value, of which, as of JanuaryMarch 31, 20202021 (the “Company Capitalization Date”), 1,530,5467,226,232 shares were issued and 6,094,450 shares were outstanding, and (ii) 1,000,00015,000 shares of preferred stock,Series B Nonvoting Noncumulative Perpetual Preferred Stock, $0.01 par value per share and a redemption price of $1,000.00 per share (the “Company Preferred Stock”), of which, as of the Company Capitalization Date, 8,000 shares were issued and outstanding, and (iii) 585,000 shares of unclassified preferred stock, $0.01 par value per share, of which, as of the Company Capitalization Date, no shares were issued andor outstanding. The Company does not have outstanding any bonds, debentures, notes or other debt obligations having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) with the shareholders of the Company on any matter. All of the issued and outstanding shares of Company Common Stock have been duly authorized and validly issued and are fully paid and nonassessable. None of the outstanding shares of Company Common Stock were issued in violation of any preemptive rights.
(b)   As of the Company Capitalization Date, no shares of Company Capital Stock were reserved for issuance except for 57,132for: (i) 25,406 shares of Company Common Stock reserved for issuance pursuant to future awards under Company Stock Plans; and (ii) 322,468 shares of Company Common Stock reserved for issuance in connection with outstanding stock options, unvested restricted stock, or futureother equity awards under Company Stock Plans.
(c)   Other than 57,132(i) 86,804 shares of Company Common Stock issued or issuable pursuant to restricted stock or restricted stock unit awards under Company Stock Plans, and (ii) 235,664 shares of Company Common Stock underlying stock options issued under Company Stock Plans, no equity-based awards were outstanding as of the Company Capitalization Date. SinceExcept as set forth in Section 3.5(c) of the Company Disclosure Schedules, since the Company Capitalization Date through the date hereof, the Company has not: (i) issued or repurchased any shares of Company Common Stock or other equity securities of the Company; or (ii) issued or awarded any options, stock appreciation rights, restricted shares, restricted stock units, deferred equity units, awards based on the value of Company Common Stock or any other equity-based awards. From the Company Capitalization Date through the date of this Agreement, neither the Company nor the Bankany of its Subsidiaries has: (A) accelerated the vesting of or lapsing of restrictions with respect to any stock-based compensation awards or long-term incentive compensation awards; (B) with respect to executive officers of the Company or the Bank,its Subsidiaries, entered into or amended any employment, severance, change in control or similar agreement (including any agreement providing for the reimbursement of excise taxes under Section 4999 of the Code); or (C) adopted or materially amended any Company Stock Plan.
(d)   None of the shares of Company Common Stock were issued in violation of any federal or state securities laws or any other applicable Legal Requirement. As of the date of this Agreement, except as set

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forth in Section 3.5(d) of the Company Disclosure Schedules, there are: (i) no outstanding subscriptions, Contracts, conversion privileges, options, warrants, calls or other rights obligating the Company or the Bank to issue, sell or otherwise dispose of, or to purchase, redeem or otherwise acquire, any shares of capital stock of the Company or the Bank; and (ii) no contractual obligations of the Company or the Bank to repurchase, redeem or otherwise acquire any shares of Company Common Stock or any equity security of the Company or the Bank or any securities representing the right to purchase or otherwise receive any shares of capital stock or any other equity security of the Company or the Bank. Except as permitted by this Agreement and as set forth in Section 3.5(c) of the Company Disclosure Schedules, since the Company Capitalization Date, no shares of Company Common Stock have been purchased, redeemed or otherwise acquired, directly or indirectly, by the Company or the Bank and no dividends or other distributions payable in any equity securities of the Company or the Bank have been declared, set aside, made or paid to the shareholders of the Company. Other than the Bank and the Subsidiaries of the Company, the Company does not own, nor has any Contract to acquire, any equity interests or other securities of any Person or any direct or indirect equity or ownership interest in any other business.
Section 3.6   Company Subsidiary Capitalization.   Except as set forth in Section 3.6 of the Company Disclosure Schedules, all of the issued and outstanding shares of capital stock or other equity ownership interests of the BankSubsidiaries of the Company are owned by the Company, directly or indirectly, free and clear of any material liens, pledges, charges, claims and security interests and similar encumbrances, and all of such shares or equity ownership interests are duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights. The Bank neitherNo Subsidiary of the Company has nor is bound by any outstanding subscriptions, options, warrants, calls, commitments or agreements of any character calling for the purchase or issuance of any shares of capital stock or any other equity security of the Banksuch Subsidiary or any securities representing the right to purchase or otherwise receive any shares of capital stock or any other equity security of the Bank.such Subsidiary.

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Section 3.7   Company SEC Reports; Financial Statements and Reports; Regulatory Filings.
(a)   The Company has timely filed all Company SEC Reports, and all such Company SEC Reports have complied as to form in all material respects, as of their respective filing dates and effective dates, as the case may be, with all applicable requirements of the Securities Act and the Exchange Act, as the case may be, and the rules and regulations of the SEC thereunder. The Company SEC Reports were prepared in accordance with applicable Legal Requirements in all material respects. As of their respective filing dates, none of the Company SEC Reports contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, except that information filed as of a later date (but before the date of this Agreement) is deemed to modify information as of an earlier date. As of the date hereof, there are no outstanding comments from or unresolved issues raised by the SEC with respect to any of the Company SEC Reports. No Subsidiary of the Company is required to file periodic reports with the SEC pursuant to Section 13 or 15(d) of the Exchange Act.
(a)(b)   The financial statements providedpresented (or incorporated by reference) in the Company to Nicolet for the years ended December 31, 2017, 2018 and 2019SEC Reports (including the related notes, where applicable) have been prepared in conformity with GAAP, except in each case as indicated in such statements or the notes thereto, and comply in all material respects with all applicable Legal Requirements. Taken together, the financial statements presented in the Company SEC Reports (collectively, the “Company Financial Statements”) are complete and correct in all material respects and fairly and accurately present the respective financial position, assets, liabilities and results of operations of the Company and the Bankits Subsidiaries on a consolidated basis at the respective dates of and for the periods referred to in the Company Financial Statements, subject to normal year-end audit adjustments in the case of unaudited Company Financial Statements.Statements and subject to the critical audit matter referenced in audit reports contained in the Company SEC Reports. The Company Financial Statements do not include any assets or omit to state any liabilities, absolute or contingent, or other facts, which inclusion or omission would render the Company Financial Statements misleading in any material respect as of the respective dates thereof and for the periods referred to therein. As of the date hereof, Plante & Moran, PLLC has not resigned (or informed the Company that it intends to resign) or been dismissed as independent registered public accountant of the Company.

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(c)   The Company is in compliance in all material respects with all of the provisions of the Sarbanes-Oxley Act of 2002 that are applicable to it or any of its Subsidiaries. The Company maintains a system of disclosure controls and procedures as defined in Rule 13a-15 and 15d-15 under the Exchange Act that are designed to provide reasonable assurance that information required to be disclosed by the Company in reports that the Company is required to file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management to allow timely decisions regarding required disclosures. As of the Company Capitalization Date, to the Knowledge of the Company, such controls and procedures were effective, in all material respects, to provide such reasonable assurance.
(d)   The Company and its consolidated Subsidiaries have established and maintained a system of internal control over financial reporting (within the meaning of Rule 13a-15 and Rule 15d-15 under the Exchange Act) (“Internal Control Over Financial Reporting”). The Company’s certifying officers have evaluated the effectiveness of the Company’s Internal Control Over Financial Reporting as of the end of the period covered by the most recently filed quarterly report on Form 10-Q, or annual report on Form 10-K for the fourth quarter, under the Exchange Act (the “Company Evaluation Date”). The Company presented in such quarterly report the conclusions of the certifying officers about the effectiveness of the Company’s Internal Control Over Financial Reporting based on their evaluations as of the Company Evaluation Date. Since the Company Evaluation Date, there have been no changes in the Company’s Internal Control Over Financial Reporting that have materially affected, or are reasonably likely to materially affect, the Company’s Internal Control Over Financial Reporting. The Company has devised and maintains a system of internal accounting controls sufficient to provide reasonable assurances that: (i) transactions are executed in accordance with management’s general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
(b)(e)   The Company Regulatory Reports have been filed with the appropriate Regulatory Authority. The Company Regulatory Reports have been prepared in material compliance with the rules and regulations of the respective federal or state banking regulator with which they were filed, except as otherwise noted therein. Each Company Regulatory Report fairly presents, in all material respects, the financial position of the Company or the Bank, as appropriate, and the results of its operations at the date and for the period indicated in such Company Regulatory Report in conformity with the Instructions for the Preparation of Call Reports and other relevant guidance as promulgated by applicable regulatory authorities.Regulatory Authorities. None of the Company Regulatory Reports contains any material items of special or nonrecurring income or any other income not earned in the Ordinary Course of Business (it being understood that income relating to the Paycheck Protection Program is deemed earned in the Ordinary Course of Business), except as expressly specified therein.
(c)   The Company’s independent accountants, Wipfli LLP, which have expressed their opinion with respect to the Company Financial Statements (except those Company Financial Statements as of December 31, 2019, which are unaudited), are and have been throughout the periods covered by such Company Financial Statements an independent accounting firm. Section 3.7(e) of the Company Disclosure Schedules lists all non-audit services performed by Wipfli LLP for the Company and the Bank. As of the date hereof, Wipfli LLP has not resigned (or informed the Company that it intends to resign) or been dismissed as independent accountants of the Company.
(d)(f)   Each of the Company and the Bankits Subsidiaries has filed all forms, reports and documents required to be filed since January 1, 2018,2019, with all applicable federal or state securities or banking authorities except to the extent failure would not have a Material Adverse Effect on the Company and the Bank.its Subsidiaries taken as a whole. Such forms, reports and documents: (i) complied as to form in all material respects with applicable Legal Requirements; and (ii) did not at the time they were filed, after giving effect to any amendment thereto filed prior to the date hereof, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, except that information filed as of a later date (but before the date of this Agreement) is deemed to modify information as of an earlier date.
(e)(g)   Except for normal examinations conducted by a Regulatory Authority in the Ordinary Course of Business of the Company and the Bank,its Subsidiaries, no Regulatory Authority has initiated since January 1, 2018,2019, or has pending any public proceeding, formal enforcement action or to the Knowledge of the Company, public investigation into the business, disclosures or operations of the Company or the Bank. Since January 1, 2018,2019, no Regulatory Authority has resolved any public proceeding, formal enforcement action or, to the Knowledge of the Company, public investigation into the business, disclosures or operations of the Company or the Bank. The Company and the Bankits Subsidiaries have fully complied with, and there is no unresolved

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violation, criticism or exception by any Regulatory Authority with respect to, any report or statement relating to any examination or inspection of the Company or the Bank. Since January 1, 2018,2019, there have been no formal or informal inquiries by, or disagreements or disputes with, any Regulatory Authority with respect to the business, operations, policies or procedures of the Company or the Bank (other than normal examinations conducted by a Regulatory Authority in the Company’s Ordinary Course of Business). To the Knowledge of the Company, there has not been any event or occurrence since

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January 1, 2018 that would result in a determination that the Bank is not an eligible depository institution as defined in 12 C.F.R. § 303.2(r).
Section 3.8   Books and Records.   The books of account, minute books, stock record books and other records kept by the Company and the Bankeach of its Subsidiaries are in all material respects complete and accurate and have been maintained in accordance with applicable Legal Requirements and accounting requirements. The Company Financial Statements have been prepared from, and are in accordance with, the books and records of the Company and the Bank.its Subsidiaries. Each of the Company and the Bankits Subsidiaries maintains accurate books and records reflecting its assets and liabilities and maintains proper and adequate internal accounting controls that provide assurance that (a) transactions are executed with management’s general or specific authorizations; (b) transactions are recorded as necessary to permit preparation of the Company Financial Statements and the Company Regulatory Reports in accordance with GAAP or other regulatory accounting requirements, as applicable, and to maintain asset and liability accountability; (c) access to each Company asset and incurrence of each liability of the Company are permitted only in accordance with management’s specific or general authorizations; (d) the recorded accountability for assets and liabilities is compared with the existing assets and liabilities at reasonable intervals, and appropriate action is taken with respect to any difference; and (e) extensions of credit and other receivables are recorded accurately, and proper and adequate procedures are implemented to effect the collection thereof on a current and timely basis. None of the Company’s systems, controls, data or information are recorded, stored, maintained, operated or otherwise wholly or partly dependent on or held by any means (including any electronic, mechanical or photographic process, whether computerized or not) which (including all means of access thereto and therefrom) are not under the exclusive ownership and direct control of the Company, the Bankits Subsidiaries or their accountants, except as would not reasonably be expected to have a Material Adverse Effect on the Company. Neither the Company nor the Bankany of its Subsidiaries has been advised of any material deficiencies in the design or operation of internal controls over financial reporting which could reasonably be expected to adversely affect its ability to record, process, summarize and report financial data, or any fraud, whether or not material, that involves management. No material weakness in internal controls has been identified by the Company’s auditors, and there have been no significant changes in internal controls that could reasonably be expected to materially and adversely affect internal controls. The minute books of the Company and the Bankits Subsidiaries contain accurate and complete records in all material respects of all meetings held of, and corporate action taken by, its respective shareholders, boards of directors and committees of the boards of directors. At the Closing, all of those books and records will be in the possession of the Company and the Bank.its Subsidiaries.
Section 3.9   Properties.
(a)   Section 3.9 of the Company Disclosure Schedules lists or describes all interests in real property (other than as a mortgagee) owned by the Company and the Bank,each of its Subsidiaries, including OREO, as of the date of this Agreement and the principal buildings and structures located thereon, together with the address of such real estate, and each lease of real property to which it is a party, identifying the parties thereto, the annual rental payable, the expiration date thereof and a brief description of the property covered, and in each case of either owned or leased real property, the proper identification, if applicable, of each such property as a branch or main office or other office.
(b)   The Company and the Bankeach of its Subsidiaries has good and marketable title to all assets and properties, whether real or personal, tangible or intangible, that it purports to own, subject to no liens, mortgages, security interests, encumbrances or charges of any kind except: (i) as noted in the most recent Company Financial Statements; (ii) statutory liens for Taxes not yet delinquent or being contested in good faith by appropriate Proceedings and for which appropriate reserves have been established and reflected in the Company Financial Statements; (iii) pledges or liens required to be granted in connection with the acceptance of government deposits, granted in connection with repurchase or reverse repurchase agreements or otherwise incurred in the Ordinary Course of Business; (iv) easements, rights of way, and other similar encumbrances that do not materially affect the use of the properties or assets subject thereto or affected thereby or otherwise materially impair business operations at such properties; and (v) minor defects and

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irregularities in title and encumbrances that do not materially impair the use thereof for the purposes for which they are held (collectively, the “Company Permitted Exceptions”). Each of the Company and the Bankits Subsidiaries as lessee has the right under valid and existing leases to occupy, use, possess and control any and all of the respective property leased by it, and each such

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lease is valid and without default thereunder by the lessee or, to the Knowledge of the Company, the lessor. All buildings and structures owned by the Company and the Bankits Subsidiaries lie wholly within the boundaries of the real property owned or validly leased by it, and do not encroach upon the property of, or otherwise conflict with the property rights of, any other Person.
Section 3.10   Loans; Loan Loss Reserve.
(a)   Each loan, loan agreement, note, lease or other borrowing agreement by the Bank, any participation therein, and any guaranty, renewal or extension thereof (the “Company Loans”) reflected as an asset on any of the Company Financial Statements or reports filed with the Regulatory Authorities is evidenced by documentation that is customary and legally sufficient in all material respects and constitutes, to the Knowledge of the Company, the legal, valid and binding obligation of the obligor named therein, enforceable in accordance with its terms, except to the extent that the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors’ rights generally or equitable principles or doctrines.
(b)   All Company Loans originated or purchased by the Bank were made or purchased in accordance with the policies of the board of directors of the Bank and in the Ordinary Course of Business of the Bank. Except as set forth in Section 3.10(b) of the Company Disclosure Schedules, the Bank’s interest in all Company Loans is free and clear of any security interest, lien, encumbrance or other charge, and the Bank has complied in all material respects with all Legal Requirements relating to such Company Loans. There has been no default on, or forgiveness or waiver of, in whole or in part, any Company Loan made to an executive officer or director of the Bank or an entity controlled by an executive officer or director of the Bank during the three (3) years immediately preceding the date hereof.
(c)   Except as set forth in Section 3.10(a)3.10(c) of the Company Disclosure Schedules, as of the date of this Agreement,May 31, 2021, the Bank is not a party to any Company Loan: (i) under the terms of which the obligor is more than ninety (90) days delinquent in payment of principal or interest or in default of any other material provision as of the dates shown thereon or for which the Bank has discontinued the accrual of interest; (ii) that has been classified as “substandard,” “doubtful,” “loss,” “other loans especially mentioned” or any comparable classifications by the Bank; (iii) that has been listed on any “watch list” or similar internal report of the Bank; (iv) that has been the subject of any notice from any obligor of adverse environmental conditions potentially affecting the value of any collateral for such Company Loan; (v) with respect to which the Bank has Knowledge of potential violations of any Environmental Laws that may have occurred on the property serving as collateral for such Company Loan or by any obligor of such Company Loan; or (vi) that represents an extension of credit to an executive officer or director of the Bank or an entity controlled by an executive officer or director.
(d)   The Bank’s allowance for loan and lease losses reflected in the Company Financial Statements (including footnotes thereto) was determined on the basis of the Bank’s continuing review and evaluation of the portfolio of Company Loans under the requirements of GAAP and Legal Requirements, was established in a manner consistent with the Bank’s internal policies, and, in the reasonable judgment of the Bank, was adequateappropriate in all material respects under the requirements of GAAP and all Legal Requirements to provide for possible or specific losses, net of recoveries relating to Company Loans previously charged-off, on outstanding Company Loans.
Section 3.11    Taxes.
(a)   TheExcept as set forth in Section 3.11(a) of the Company Disclosure Schedules, the Company and the Bankeach of its Subsidiaries have duly and timely filed all Tax Returns required to be filed by them on or before the Closing Date for all taxable or reporting periods ending on or before the Closing Date, and each such Tax Return is true, correct and complete in all material respects. TheExcept as set forth in Section 3.11(a) of the Company Disclosure Schedules, the Company and the Bankits Subsidiaries have paid, or made adequate provision for the payment of, all Taxes (whether or not reflected in Tax Returns as filed or to be filed) due and payable by the Company and the Bank,each

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of its Subsidiaries, or claimed to be due and payable by any Regulatory Authority, and are not delinquent in the payment of any Tax, except such Taxes as are being contested in good faith and as to which adequate reserves have been provided. There are no liens for Taxes upon any of the assets of the Company or the Bank.

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(b)   There is no claim or assessment pending or, to the Knowledge of the Company, threatened against the Company and the Bankor its Subsidiaries for any Taxes that they owe. No audit, examination or investigation related to Taxes paid or payable by the Company and the Bankor any of its Subsidiaries is presently being conducted or, to the Knowledge of the Company, threatened by any Regulatory Authority. Except as set forth in Section 3.11(b) of the Company Disclosure Schedules, neitherNeither the Company nor the Bankany of its Subsidiaries are the beneficiary of any extension of time within which to file any Tax Return, and there are no liens for Taxes (other than Taxes not yet due and payable)delinquent) upon any of the Company’s or the Bank’sits Subsidiaries’ assets. Neither the Company nor the Bankany of its Subsidiaries has executed an extension or waiver of any statute of limitations on the assessment or collection of any Tax that is currently in effect.
(c)   The Company and the Bankeach of its Subsidiaries have delivered or made available to Nicolet true, correct and complete copies of all Tax Returns relating to income taxes and franchise taxes owed by the Company and the Bankits Subsidiaries with respect to the last two (2) fiscal years.
(d)   To the Knowledge of the Company, neither the Company nor the Bankany of its Subsidiaries has engaged in any transaction that could affect the Tax liability for any Tax Returns not closed by applicable statute of limitations: (i) which is a “reportable transaction” or a “listed transaction” or (ii) a “significant purpose of which is the avoidance or evasion of U.S. federal income tax” within the meaning of Sections 6662, 6662A, 6011, 6111 or 6707A of the Code or of the regulations of the U.S. Department of the Treasury promulgated thereunder or pursuant to notices or other guidance published by the IRS (irrespective of the effective dates).
(e)   The Company and the Bankeach of its Subsidiaries are in compliance with, and their records contain all information and documents (including properly completed IRS Forms W-9) necessary to comply with, all applicable information reporting and Tax withholding requirements under federal, state, and local Tax Legal Requirements, and such records identify with specificity all accounts subject to backup withholding under Section 3406 of the Code, except where any such failure to comply would not reasonably be expected to have a Material Adverse Effect on the Company.
(f)   Except as set forth in Section 3.11(f) of the Company Disclosure Schedules, neitherNeither the Company nor the Bankany of its Subsidiaries has experienced a change in ownership with respect to its stock, within the meaning of Section 382 of the Code, other than the ownership change that will occur as a result of the transactions contemplated by this Agreement.
(g)   There is no pending claim by any taxing authority of a jurisdiction where either the Company or the Bank has not filed Tax Returns that either the Company or Bank is subject to taxation in that jurisdiction.
(h)   Neither the Company nor the Bankany Subsidiary has ever been a member of an “affiliated group” within the meaning of Code Section 1504(a) filing a consolidated federal income tax return, other than any “affiliated group” of which the Company is the “common parent.” Except as set forth in Section 3.11(h) of the Company Disclosure Schedules, neither the Company nor the Bankany of its Subsidiaries is a party to any Tax sharing or Tax allocation agreement that will remain in effect after consummation to the Mergers contemplated by this Agreement.
(i)   Within the past two (2) years, neither the Company nor the Bankany of its Subsidiaries has distributed stock of another Person, nor has the stock of either the Company or the Bankany Subsidiary been distributed by another Person, in a transaction that was purported or intended to be governed in whole or in part by Section 355 of the Code.
(j)   The Company has not taken or agreed to take any action, and has no Knowledge of any fact or circumstance that is reasonably likely, to prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code.
Section 3.12    Employee Benefits.
(a)   Section 3.12(a) of the Company Disclosure Schedules includes a complete and correct list of each Company Benefit Plan. The Company has delivered or made available to Nicolet true and complete copies

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Benefit Plan (including a written description where no formal plan document exists), and all related plan descriptions and other material, non-routine written communications provided to participants of the Company Benefit Plans, as required by applicable law, or describing the Company Benefit Plan design changes or describing opportunities to enroll in the Company Benefit Plans;changes; (ii) to the extent applicable, the last three (3) years’ of annual reports on Form 5500, including all schedules thereto and the opinions of independent accountants; and (iii) such other material ancillary documents, including:as follows:
(i)   all contracts with third party administrators, actuaries, investment managers, consultants, insurers, and independent contractors;
(ii)   all non-routine notices and other communications that were given by the Company, the Bank,any Subsidiary, or any Company Benefit Plan to the IRS, the DOL or the PBGC pursuant to applicable law within the six (6)three (3) years preceding the date of this Agreement; and
(iii)   all notices or other communications that were given by the IRS, the PBGC, or the DOL to the Company, the Bank,any Subsidiary, or any Company Benefit Plan within the six (6)three (3) years preceding the date of this Agreement.
(b)   Except as set forth in Section 3.12(b)(i) of the Company Disclosure Schedules, neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby (including possible terminations of employment in connection therewith) will cause a payment, vesting, increase or acceleration of benefits or benefit entitlements under any Company Benefit Plan or any other increase in the liabilities of the Company or the Bankany subsidiary under any Company Benefit Plan as a result of the transactions contemplated by this Agreement. Except as set forth in Section 3.12(b) of the Company Disclosure Schedules, noPlan. No Company Benefit Plan provides for payment of any amount which, considered in the aggregate with amounts payable pursuant to all other Company Benefit Plans, would reasonably be expected to result in any amount being non-deductible for federal income tax purposes by virtue of Section 280G or 162(m) of the Code. Section 3.12(b)(ii) of the Company Disclosure Schedules sets forth the name of each Person who is or would be entitled pursuant to any Contract relating to employment or other services to the Company or the Bank or Company Benefit Plan to receive any payment from the Bank as a result of the consummation of the Contemplated Transactions (including any payment that is or would be due as a result of any actual or constructive termination of a Person’s employment or position following such consummation) and the maximum amount of such payment.
(c)   Except as set forth in Section 3.12(c) of the
(i)   No Company Disclosure Schedules,Benefit Plan is and neither the Company nor any of the Company ERISA Affiliates sponsors, maintains, administers or contributes to, or has ever sponsored, maintained, administered or contributed to, or has, has had or could have any liability with respect to, (i)(A) any “multiemployer plan” (as​(as defined in Section 3(37) of ERISA), (ii)(B) any “multiple employer welfare arrangement” (as​(as defined in Section 3(40) of ERISA), or (iii)(C) any self-insured plan (including any plan pursuant to which a stop loss policy or contract applies). With respect to any Company Benefit Plan that is a “multiple employer plan” (as defined in​(under Section 413(c) of the Code) or is provided by or through a professional employer organization, such Company Benefit Plan complies in all material respects with the requirements of the Code and ERISA and neither the Company nor any of the Company ERISA Affiliates has any liabilities other than the payment and/or remittance of premiums and/or required contributions on behalf of enrolled individuals. Except as set forth in Section 3.12(c) of the Company Disclosure Schedules, neither
(ii)   Neither the Company nor any of the Company ERISA Affiliates sponsors, maintains, administers or contributes to, or has ever sponsored, maintained, administered or contributed to, or has, has had or could have any liability with respect to, any Company Benefit Plan subject to Title IV of ERISA, Section 302 of ERISA or Section 412 of the Code, or any tax-qualified “defined benefit plan” (as​(as defined in Section 3(35) of ERISA). No Company Benefit Plan is underfunded when comparing the present value of accrued liabilities under such plan to the market value of plan assets.
(d)   Except as set forth in Section 3.12(d) of the Company Disclosure Schedules, eachEach Company Benefit Plan that is intended to qualify under Section 401 and related provisions of the Code is the subject of a favorable determination letter or may rely upon an opinion letter from the IRS to the effect that it is so qualified under the Code and that its related funding instrument is tax exempt under Section 501 of the Code (or the Company and the Bankits Subsidiaries are otherwise relying on an opinion letter

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issued to the prototype sponsor), and, to the Company’s Knowledge, there are no facts or circumstances that would adversely affect the qualified status of any Company Benefit Plan or the tax-exempt status of any related trust.

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(e)   Except as set forth in Section 3.12(e) of the Company Disclosure Schedules, each Company Benefit Plan is and has been administered in all material respects in compliance with its terms and with all applicable Legal Requirements.
(f)   Other than routine claims for benefits made in the Ordinary Course of Business, there is no litigation, claim or assessment pending or, to the Company’s Knowledge, threatened by, on behalf of, or against any Company Benefit Plan or against the administrators or trustees or other fiduciaries of any Company Benefit Plan that alleges a violation of applicable state or federal law or violation of any Company Benefit Plan document or related agreement.
(g)   No Company Benefit Plan fiduciary or, to the Knowledge of the Company, any other person has, or has had, any liability to any Company Benefit Plan participant, beneficiary or any other person under any provisions of ERISA or any other applicable law by reason ofLegal Requirement for any action or failure to act in connection with any Company Benefit Plan, including any liability by any reason of any payment of, or failure to pay, benefits or any other amounts or by reason of any credit or failure to give credit for any benefits or rights. Except as set forth in Section 3.12(g) of the Company Disclosure Schedules, toTo the Company’s Knowledge, no party in interest (as defined in Code Section 4975(e)(2)) of any Company Benefit Plan has engaged in any nonexempt prohibited transaction (as described in Code Section 4975(c) or ERISA Section 406).
(h)   AllAs required in accordance with GAAP, all accrued contributions and other payments to be made by the Company or the Bankany Subsidiary to any Company Benefit Plan (i) through the date hereof have been made or reserves adequate for such purposes have been set aside therefor and reflected in the Company Financial Statements, and (ii) through the Closing Date will have been made or reserves adequate for such purposes will have been set aside therefore and reflected in the Company Financial Statements.therefor.
(i)   Except as set forth in Section 3.12(i) of the Company Disclosure Schedules, there are no obligations under any Company Benefit Plan to provide health or other welfare benefits to retirees or other former employees, directors, consultants or their dependents (other than rights under Section 4980B of the Code or Section 601 of ERISA or comparable state laws).
(j)   No condition exists as a result of whichEach individual who is classified by the Company or the Bank would have any liability, whether absolute or contingent, under any Company Benefit Plan with respect to any misclassification of a person performing services for the Company or the BankSubsidiary as an independent contractor rather than as an employee. All individuals participating in the Company Benefit Plans are in fact eligiblehas been properly classified for purposes of participation and authorized to participate in suchbenefit accrual under each Company Benefit Plan.
(k)   Neither the Company nor the Bank have any liabilities to employees or former employees that are not reflected in the Company Benefit Plans.
(l)   Except as identified on Section 3.12(l)3.12(k) of the Company Disclosure Schedules, there are no surrender charges, penalties, or other costs or fees that would be imposed by any person against the Company, any Company Benefit Plan, or any other person, including any Company Benefit Plan participant or beneficiary, as a result of the hypothetical liquidation as of the Closing Date of any insurance, annuity, or investment contracts or any other similar investment held by any Company Benefit Plan.
(m)   The(l)   Except as set forth in Section 3.12(l) of the Company Disclosure Schedules, the Company may, at any time, amend or terminate any Company Benefit Plan that it sponsors or maintains and may withdraw from any Company Benefit Plan to which it contributes (but does not sponsor or maintain), without obtaining the consent of any third party, other than an insurance company in the case of any benefit underwritten by an insurance company, and without incurring liability except for unpaid premiums or contributions due for the pay period that includes the effective date of such amendment, withdrawal or termination and for customary termination expenses. From and after the Closing Date, Nicolet would have the same discretion to amend or terminate any Company Benefit Plan as successor to Company. AnyExcept as set forth in Section 3.12(l) of the Company Disclosure Schedules, any third party agreement pertaining to the

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maintenance of a Company Benefit Plan may be terminated upon the provision of ninety (90) days’ prior notice or less without penalty.
(m)   Each Company Benefit Plan which is a “nonqualified deferred compensation” plan within the meaning of Section 409A of the Code has been operated and administered in compliance with Section 409A of the Code and has been in documentary compliance with Section 409A of the Code. Neither the Company nor any of its Subsidiaries has any (i) liability for withholding taxes or penalties due under Code Section 409A or (ii) obligation to indemnify or gross-up for any Taxes imposed under Code Section 409A.

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Section 3.13    Compliance with Legal Requirements.The Company and the Bankeach of its Subsidiaries hold all material licenses, certificates, permits, franchises and rights from all appropriate Regulatory Authorities necessary for the conduct of their respective businesses. Each of the Company and the Bankits Subsidiaries is, and at all times since January 1, 2018,2019, has been, in compliance with each material Legal Requirement that is or was applicable to it or to the conduct or operation of its respective businesses or the ownership or use of any of its respective assets, except as set forth in Section 3.13 of the Company Disclosure Schedules. Except for issues identified in any periodic Reports of Examination from a Regulatory Authority or other nonpublic communications from a Regulatory Authority, neither the Company nor the Bank has received, at any time since January 1, 2018,2019, any notice or other communication (whether oral or written) from any Regulatory Authority or any other Person regarding: (a) any actual, alleged, possible, or potential violation of, or failure to comply with, any Legal Requirement; or (b) any actual, alleged, possible, or potential obligation on the part of the Company or the Bank to undertake, or to bear all or any portion of the cost of, any remedial action of any nature in connection with a failure to comply with any Legal Requirement. The Company has Previously Disclosed all internal investigations conducted since January 1, 20182019 that involved management or officers of either of the Company or the Bank.any Subsidiary.
Section 3.14    Legal Proceedings; Orders.
(a)   Except as set forth in Section 3.14(a) of the Company Disclosure Schedules, since January 1, 2018,2019, there have been, and currently are, no Proceedings or Orders pending, entered into or, to the Knowledge of the Company, threatened against or affecting the Company, the Bankits Subsidiaries or any of their respective assets, businesses, current or former directors or executive officers, or the Contemplated Transactions, that have not been fully satisfied, settled or terminated. No officer, director, employee or agent of the Company or the Bankits Subsidiaries is subject to any Order that prohibits such officer, director, employee or agent from engaging in or continuing any conduct, activity or practice relating to the businesses of the Company or the Bankany Subsidiary as currently conducted.
(b)   Neither the Company nor the Bank:any of its Subsidiaries: (i) is subject to any cease and desist or other Order or enforcement action issued by; (ii) is a party to any written agreement, consent agreement or memorandum of understanding with; (iii) is a party to any commitment letter or similar undertaking to; (iv) is subject to any order or directive by; (v) is subject to any supervisory letter from; (vi) has been ordered to pay any civil money penalty, which has not been paid, by; or (vii) has adopted any policies, procedures or board resolutions at the request of; any Regulatory Authority that currently restricts in any material respect the conduct of its business, in any manner relates to its capital adequacy, restricts its ability to pay dividends or interest or limits in any material manner its credit or risk management policies, its management or its business. To the Knowledge of the Company, none of the foregoing has beenis currently threatened by any Regulatory Authority.
Section 3.15    Absence of Certain Changes and Events.   Since December 31, 2019,2020, except as disclosed in the Company Financial Statements or in Section 3.15 of the Company Disclosure Schedules, (i) there have been no events, changes, or occurrences which have had, or are reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on the Company, (ii) the Company has not declared, set aside for payment or paid any dividend to holders of, or declared or made any distribution on, any shares of Company Common Stock and (iii) neither the Company nor the Bank has taken any action, or failed to take any action, prior to the date of this Agreement, which action or failure, if taken after the date of this Agreement, would represent or result in a material breach or violation of any of the covenants and agreements of the Company provided in Article 5. Except as may result from the transactions contemplated by this Agreement, or as set forth in Section 3.15 of the Company Disclosure Schedules, neither the Company nor the Bankany of its Subsidiaries has since December 31, 2019:2020:
(a)   borrowed any money, other than deposits, overnight fed funds, or Federal Home Loan Bank of Chicago advances not over six (6) months in maturity or advances from the Federal Reserve Bank of Chicago, or entered into any capital lease or leases; or, except in the Ordinary Course of Business: (i) lent any money or pledged any of its credit in connection with any aspect of its business whether as a guarantor, surety, issuer of a letter of credit or otherwise, (ii) mortgaged or otherwise subjected to any lien any of its assets, sold, assigned or transferred any of its

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assets in excess of $50,000$100,000 in the aggregate or (iii) incurred any other liability or loss representing, individually or in the aggregate, over $50,000;$100,000;

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(b)   suffered over $50,000$100,000 in damage, destruction or loss to immovable or movable property, whether or not covered by insurance;
(c)   failed to operate its business in the Ordinary Course of Business, or failed to use reasonable efforts to preserve its business or to preserve the goodwill of its customers and others with whom it has business relations;
(d)   forgiven any debt owed to it in excess of $50,000,$100,000, or cancelled any of its claims or paid any of its noncurrent obligations or Liabilities except in the Ordinary Course of Business;
(e)   made any capital expenditure or capital addition or betterment in excess of $50,000;$100,000;
(f)   entered into any agreement requiring the payment, conditionally or otherwise, of any salary, bonus, extra compensation (including payments for unused vacation or sick time), pension or severance payment to any of its present or former directors, officers or employees, except such agreements as are terminable at will without any penalty or other payment by it or increased (except for increases of not more than 5% consistent with past practices) the compensation (including salaries, fees, bonuses, profit sharing, incentive, pension, retirement or other similar payments) of any such person whose annual compensation would, following such increase, exceed $50,000;$100,000;
(g)   except as required in accordance with GAAP, changed any accounting practice followed or employed in preparing the Company Financial Statements;
(h)   authorized or issued any capital stock; granted any stock option or right to purchase shares of capital stock; declared or paid any dividend or other distribution or payment in respect of shares of capital stock;
(i)   amended its articles of incorporation, charter or bylaws;bylaws or adopted any resolutions by their board of directors or shareholders with respect to the same; or
(j)   entered into any agreement, contract or commitment to do any of the foregoing.
Section 3.16    Material Contracts.   Section 3.16 of Company Disclosure Schedules lists or describes the following with respect to the Company and the Bankits Subsidiaries (each such agreement or document, a “Company Material Contract”), as of the date of this Agreement, for which true, complete and correct copies of each have been delivered or made available to Nicolet:
(a)   each Contract relating to the borrowing of money by the Company or the guarantee by the Company of any such obligations (other than Contracts evidencing deposit liabilities, purchase of federal funds, repurchase agreements, trade payables, or Federal Home Loan Bank of Chicago advances)advances, or advances from the Federal Reserve Bank of Chicago);
(b)   each Contract that involves performance of services or delivery of goods or materials (other than Contracts entered into in the Ordinary Course of Business and involving payments under any individual Contract not in excess of $50,000)$100,000);
(c)   each Contract with respect to patents, trademarks, copyrights, or other intellectual property, including agreements with current or former employees, consultants or contractors regarding the appropriation or the nondisclosure of any of its intellectual property;
(d)   each collective bargaining agreement and other Contract to or with any labor union or other employee representative of a group of employees;
(e)   each joint venture, partnership and other Contract (however named) involving a sharing of profits, losses, costs or liabilities by it with any other Person;
(f)   each Contract containing covenants that in any way purport to restrict, in any material respect, the business activity of the Company or the Bankits Subsidiaries or limit, in any material respect, the ability of the Company or the Bankits Subsidiaries to engage in any line of business or to compete with any Person;
 
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(g)   each employment agreement, consulting agreement, non-competition, severance or change in control agreement or similar arrangement or plan with respect to any independent contractor or employee of the Bank;Company or its Subsidiaries;
(h)   each Contract relating to the provision of data processing or network communication services; and
(i)   each amendment, supplement and modification in respect of any of the foregoing.
Section 3.17    No Defaults.   Each Company Material Contract is in full force and effect and is valid and enforceable in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization or other Legal Requirements affecting creditors’ rights generally and subject to general principles of equity. To the Knowledge of the Company, no event has occurred or circumstance exists that (with or without notice or lapse of time) may contravene, conflict with or result in a material violation or breach of, or give the Company, the Bankany of its Subsidiaries or other Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate or modify, any Company Material Contract. Except in the Ordinary Course of Business with respect to any Company Loan, neither the Company nor the Bankany of its Subsidiaries has given to or received from any other Person, at any time since January 1, 2018,2019, any notice or other communication (whether oral or written) regarding any actual, alleged, possible or potential violation or breach of, or default under, any Company Material Contract, that has not been terminated or satisfied prior to the date of this Agreement. Other than in the Ordinary Course of Business, there are no renegotiations of, attempts to renegotiate or outstanding rights to renegotiate, any material amounts paid or payable to the Company or the Bankany of its Subsidiaries under current or completed Company Material Contracts with any Person, and no such Person has made written demand for such renegotiation.
Section 3.18    Insurance.   Section 3.18 of the Company Disclosure Schedules lists all insurance policies and bonds owned or held as of the date of this Agreement by the Company and the Bankits Subsidiaries with respect to their respective business, operations, properties or assets (including bankers’ blanket bond and insurance providing benefits for employees), true, complete and correct copies of each of which have been delivered or made available to Nicolet. The Company and the Bankits Subsidiaries are insured with reputable insurers against such risks and in such amounts as the management of the Company reasonably has determined to be prudent and consistent with industry practice. The Company and the Bankits Subsidiaries are in compliance in all material respects with their insurance policies and are not in default under any of the terms thereof. Each such policy is outstanding and in full force and effect and, except for policies insuring against potential liabilities of officers, directors and employees of the Company and the Bank,its Subsidiaries, the Company or the relevant Subsidiary thereof is the sole beneficiary of such policies. All premiums and other payments due under any such policy have been paid, and all claims thereunder have been filed in due and timely fashion. Section 3.18 of the Company Disclosure Schedules lists and briefly describes all claims that have been filed under such insurance policies and bonds within the past two (2) years prior to the date of this Agreement that individually or in the aggregate exceed $150,000 and the current status of such claims. All such claims have been filed in due and timely fashion. NeitherNone of the Company nor the Bankor any of its Subsidiaries has had any insurance policy or bond cancelled or nonrenewed by the issuer of the policy or bond within the past two (2) years.
Section 3.19   Compliance with Environmental Laws.   There are no actions, suits, investigations, liabilities, inquiries, Proceedings or Orders involving the Company or the Bankany of its Subsidiaries or any of their respective assets that are pending or, to the Knowledge of the Company, threatened, nor to the Knowledge of the Company, is there any factual basis for any of the foregoing, as a result of any asserted failure of the Company or the Bankany of its Subsidiaries of, or any predecessor thereof, to comply with any Environmental Law. No environmental clearances or other governmental approvals are required for the conduct of the business of the Company or the Bankany of its Subsidiaries or the consummation of the Contemplated Transactions. To the Knowledge of the Company, neither the Company nor the Bankany of its Subsidiaries is the owner of any interest in real estate on which any substances have been generated, used, stored, deposited, treated, recycled or disposed of, which substances if known to be present on, at or under such property, would require notification to any Regulatory Authority, clean up, removal or some other remedial action under any Environmental Law at such property or any impacted adjacent or down gradient property. EachThe Company

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and each Subsidiary of the Company and the Bank has complied in all material respects with all Environmental Laws applicable to it and its business operations.

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Section 3.20    Transactions with Affiliates.   Except for (a) deposits that are on terms and conditions comparableSince January 1, 2019, all transactions required to be disclosed by the Company pursuant to Item 404 of Regulation S-K promulgated under the Securities Act have been disclosed in all material respectsthe Company SEC Reports. No transaction, or series of related transactions, is currently proposed by the Company or any of its Subsidiaries or, to those made available to other nonaffiliated similarly situated customersthe Knowledge of the Company, at the time such deposits were entered into, (b) the loans listed on Section 3.20(b) ofby any other Person, to which the Company Disclosure Schedules, (c) the agreements designated on Section 3.20(c)or any of the Company Disclosure Schedules, (d) obligationsits Subsidiaries would be a participant that would be required to be disclosed under Item 404 of Regulation S-K promulgated under the Securities Act if consummated other than transactions of an ongoing nature included in past Company Benefit Plans set forth on Section 3.20(d) of the Company Disclosure Schedules, and (e) any items described on Section 3.20(e) of the Company Disclosure Schedules, there are no contracts with or commitments to present or former shareholders who own or owned more than one percent (1.0%) of Company Common Stock, directors, officers or employees (or their Affiliates) involving the expenditure of more than $1,000 as to any one individual (including any business directly or indirectly controlled by any such person) or more than $5,000 for all such contracts for commitments in the aggregate for all such individuals.SEC Reports.
Section 3.21   Brokers; Opinion of Financial Advisor.   Except for fees and other obligations owed pursuant to an engagement letter between the Company and Hillworth, LLC and the firm identifiedStephens, Inc. set forth in Section 3.21 of the Company Disclosure Schedules, that has been Previously Disclosed, neither the Company nor any of the Bank,Subsidiaries, nor any of their respective Representatives, has incurred any obligation or liability, contingent or otherwise, for brokerage or finders’ fees or agents’ commissions or other similar payment in connection with this Agreement. The Company Board has received the opinion of the firm identified in Section 3.21 of the Company Disclosure Schedules,Stephens, Inc., to the effect that, as of the date of such opinion, and based upon and subject to the factors and assumptions set forth therein, the Merger Consideration to be received by the holders of Company Common Stock in connection with the Merger is fair, from a financial point of view, to the holders of Company Common Stock.
Section 3.22   Approval Delays.   To the Knowledge of the Company, there is no reason why the granting of any of the Requisite Regulatory Approvals would be denied or unduly delayed. The Bank is an “eligible bank” (as​(as such term is defined at 12 C.F.R. § 5.3(g)), “well-capitalized” (as such term is defined at 12 C.F.R. § 225.2(r)) and “well managed” (as such term is defined at 12 C.F.R. § 225.2(s)), and the rating of the Bank under the CRA is no less than “satisfactory.”. The Bank has not been informed that its status as an “eligible bank,” “well-capitalized,” “well managed” or, for CRA purposes, “satisfactory,”bank” will change within one (1) year.
Section 3.23   Labor Matters.
(a)   There are no collective bargaining agreements or other labor union Contracts applicable to any employees of the Company or the Bank.any of its Subsidiaries. There is no labor dispute, strike, work stoppage or lockout, or, to the Knowledge of the Company, threat thereof, by or with respect to any employees of the Company or the Bank,any of its Subsidiaries, and there has been no labor dispute, strike, work stoppage or lockout in the previous three (3) years. There are no organizational efforts with respect to the formation of a collective bargaining unit presently being made, or to the Knowledge of the Company, threatened, involving employees of the Company or the Bank.any of its Subsidiaries. Neither the Company nor the Bankany of its Subsidiaries has engaged or is engaging in any unfair labor practice. The Company and the Bankits Subsidiaries are in compliance in all material respects with all applicable Legal Requirements respecting employment and employment practices, terms and conditions of employment, wages, hours of work and occupational safety and health. No Proceeding asserting that the Company or any of the Bankits Subsidiaries has committed an unfair labor practice (within the meaning of the National Labor Relations Act of 1935) or seeking to compel the Company or the Bankany of its Subsidiaries to bargain with any labor organization as to wages or conditions of employment is pending or, to the Knowledge of the Company, threatened with respect to the Company or the Bankits Subsidiaries before the National Labor Relations Board, the Equal Employment Opportunity Commission or any other Regulatory Authority.
(b)   Neither the Company nor the Bankany of its Subsidiaries is a party to, or otherwise bound by, any consent decree with, or citation by, any Regulatory Authority relating to employees or employment practices. None of the Company, the Bankany of its Subsidiaries or any of its or their executive officers has received within the past three (3) years any written notice of intent by any Regulatory Authority responsible for the enforcement of labor or employment laws to conduct an investigation relating to the Company or the Bankany of its Subsidiaries and, to the Knowledge of the Company, no such investigation is in progress.

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Section 3.24   Intellectual Property.Except as set forth inSection 3.24 of the Company Disclosure Schedules, each of the Company and the Bankits Subsidiaries has the unrestricted right and authority, and the Surviving Entity and the Bankits Subsidiaries will have the unrestricted right and authority from and after the Effective Time, to use all patents, trademarks, copyrights, service marks, trade names or other intellectual property owned by them as is necessary to enable them to conduct and to continue to conduct all material phases of the businesses of the Company and the Bankits Subsidiaries in the manner presently conducted by them, and, to the

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Knowledge of the Company, such use does not, and will not, conflict with, infringe on or violate any patent, trademark, copyright, service mark, trade name or any other intellectual property right of any Person.
Section 3.25    Investments.
(a)   Section 3.253.25(a) of the Company Disclosure Schedules includes a complete and correct list and description as of December 31, 2019,2020, of: (i) all investment and debt securities, mortgage-backed and related securities, marketable equity securities and securities purchased under agreements to resell that are owned by the Company or the Bank,any of its Subsidiaries, other than, with respect to the Bank, in a fiduciary or agency capacity (the “Company Investment Securities”); and (ii) any such Company Investment Securities that are pledged as collateral to another Person. Each of the Company and the Bankits Subsidiaries has good and marketable title to all Company Investment Securities held by it, free and clear of any liens, mortgages, security interests, encumbrances or charges, except for the Company Permitted Exceptions and except to the extent such Company Investment Securities are pledged in the Ordinary Course of Business consistent with prudent banking practices to secure obligations of the Company or the Bank. The Company Investment Securities are valued on the books of the Company and the Bankits Subsidiaries in accordance with GAAP.
(b)   Except as set forth in Section 3.25(b) of the Company Disclosure Schedules and as may be imposed by applicable securities laws and restrictions that may exist for securities that are classified as “held to maturity,” none of the Company Investment Securities is subject to any restriction, whether contractual or statutory, that materially impairs the ability of the Company or the Bankany of its Subsidiaries to dispose of such investment at any time. With respect to all material repurchase agreements to which the Company or the Bankany of its Subsidiaries is a party, the Company or such Subsidiary of the Company, as the case may be, has a valid, perfected first lien or security interest in the securities or other collateral securing each such repurchase agreement, and the value of the collateral securing each such repurchase agreement equals or exceeds the amount of the debt secured by such collateral under such agreement.
(c)   NeitherNone of the Company nor the Bankor any of its Subsidiaries has sold or otherwise disposed of any Company Investment Securities in a transaction in which the acquiror of such Company Investment Securities or other person has the right, either conditionally or absolutely, to require the Company or the Bankany of its Subsidiaries to repurchase or otherwise reacquire any such Company Investment Securities.
(d)   There are noExcept as set forth in Section 3.25(d) of the Company Disclosure Schedules, the Company is not a party to nor has it agreed to enter into an exchange traded or over-the-counter equity, interest rate, swaps, caps, floors, option agreementsforeign exchange or other swap, forward, future, option, cap, floor or collar or any other contract that is not included on the balance sheet and is a derivatives contract (including various combinations thereof) (each, a “Derivatives Contract”) or owns securities that (i) are referred to generically as “structured notes,” “high risk mortgage derivatives,” “capped floating rate notes” or “capped floating rate mortgage derivatives” or (ii) are likely to have changes in value as a result of interest or exchange rate risk management arrangements (other than loan capschanges that significantly exceed normal changes in value attributable to interest or floors contained withinexchange rate changes. All of such Derivatives Contracts or other instruments are legal, valid and binding obligations of the Company, Loansenforceable in accordance with their terms (except as enforcement may be limited by general principles of equity whether applied in a court of law or a court of equity and by bankruptcy, insolvency and similar laws affecting creditors’ rights and remedies generally), and are in full force and effect. All of such Derivatives Contracts were legally purchased or entered into in the Ordinary Course of Business)Business, consistent with safe and sound banking practices and regulatory guidance. The Company has duly performed in all material respects all of their material obligations thereunder to which the Companyextent that such obligations to perform have accrued; and, to its Knowledge, there are no breaches, violations or the Bank is bound.defaults or allegations or assertions of such by any party thereunder.
Section 3.26    Absence of Undisclosed Liabilities.   Other than unfunded loan commitments and letters of credit extended in the Ordinary Course of Business, neither the Company nor the Bankany of its Subsidiaries has any material liabilities, except liabilities which are accrued or reserved against in the balance sheets of the Company as of December 31, 2019,2020, included in the Company Financial Statements delivered prior to the date of this Agreement or reflected in the notes thereto. Neither the Company nor the Bankany of its Subsidiaries has incurred or paid any material liability since December 31, 2019,2020, except for such liabilities incurred or paid (a) in the Ordinary Course of Business consistent with past business practice or (b) in connection with the transactions contemplated by this Agreement. Neither the Company nor the Bankany of its Subsidiaries is directly or indirectly liable, by guarantee, indemnity, or otherwise, upon or with respect to, or obligated, by discount

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or repurchase agreement or in any other way, to provide funds in respect to, or obligated to guarantee or assume any liability of any Person for any amount in excess of $50,000. Except (x) as reflected in the Company’s unaudited balance sheet atFinancial Statements included in the From 10-K filed by the Company for the fiscal year ended on December 31, 2019 or liabilities described in any notes to the Company’s audited balance sheet as of December 31, 2018 (or liabilities for which neither accrual nor footnote disclosure is required pursuant to GAAP or any applicable Regulatory Authority)2020 or (y) for liabilities incurred in the Ordinary Course of Business since December 31, 20192020 or in connection with this Agreement or the transactions

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contemplated hereby, neither the Company nor the Bankany of its Subsidiaries has any material liabilities. Section 3.26of the Company Disclosure Schedules lists, and the Company has delivered to Nicolet copies of, the documentation creating or governing, all securitization transactions and off-balance sheet arrangements effected by the Company or the Bankany of its Subsidiaries other than letters of credit or unfunded loan commitments extended in the Ordinary Course of Business.
Section 3.27   Bank Secrecy Act; PATRIOT Act; Anti-Money Laundering.   Neither the Company nor the Bankany of its Subsidiaries has any reason to believe that any facts or circumstances exist, which would cause the Company or the Bank to be deemed to be operating in violation in any material respect of the Bank Secrecy Act of 1970, as amended and its implementing regulations (31 C.F.R. Part 103)1020), the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, as amended, and the regulations promulgated thereunder (the “PATRIOT Act”), any order issued with respect to anti-money laundering by the United States Department of the Treasury’s Office of Foreign Assets Control, or any other applicable anti-money laundering law. Furthermore, the Company Board has adopted, and the Company has implemented, an anti-money laundering program that contains adequate and appropriate customer identification verification procedures, that has not been deemed ineffective by any GovernmentalRegulatory Authority and that meets the requirements of Sections 326 and 352 of the PATRIOT Act.
Section 3.28   Disaster Recovery and Business Continuity.   The Company has developed and implemented a contingency planning program to evaluate the impact of significant events that may adversely affect Thethe Company’s or the Bank’s customers, assets, or employees. To the Company’s Knowledge, such program ensures that the Company and the Bank can recover their mission critical functions, and complies in all material respects with the requirements of the Federal Financial Institutions Examination Council and the FDIC.
Section 3.29   Trust Preferred Securities.   The Company has performed, or has caused each Company Trust to perform, all of the obligations required to be performed by it and is not in default under the terms of the Company Trust Debentures or the Company Trust Preferred Securities or any agreements related thereto.
Section 3.30   Investors Insurance Services.
(a)   Investors Insurance Services, LLC (“IIS”) and the employees of IIS own, hold or possess, all insurance agent, broker, and producer licenses and all other licenses, permits, certificates, registrations, accreditations, franchises, privileges, immunities and other authorizations required for the lawful conduct of the business of IIS (the “Required Licenses”). The Company has provided to Nicolet true, correct and complete copies of all Required Licenses. Each Required License is valid and in full force and effect. IIS has not received any written notice of, and IIS is not in, any violation of or default under any Required License in any material respect. No actions are pending, and, to the knowledge of the Company, no actions are threatened, that would result in the revocation, cancellation, suspension, termination, nonrenewal or adverse modification of any Required License. Neither the execution of this Agreement nor the consummation of the transactions contemplated hereby will result in the revocation, cancellation, suspension, termination, nonrenewal or other adverse modification of any Required License.
(b)   The insurance carrier appointments of IIS are valid and binding in accordance with their terms on the parties thereto, and the Company has not received notice that any such appointment will be, nor to the knowledge of the Company do any grounds exist that could reasonably be expected to result in any such appointment being, revoked, rescinded or terminated.
(c)   The Company has not received any notice that any customer of IIS: (i) has terminated, canceled or not renewed any policy, program, service or product placed through or provided by IIS, (ii) has terminated or intends to terminate, cancel or not renew any contract with IIS or any existing policy, program, service or product placed through or provided by IIS, insurance policy or insurance coverage placed by IIS, if

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applicable, (iii) intends to renegotiate any services performed by IIS, or (iv) intends to renegotiate the terms of any contract with IIS for which IIS produces or administers insurance.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF NICOLET
Except as Previously Disclosed, Nicolet hereby represents and warrants to the Company as follows:
Section 4.1   Nicolet Organization.   Nicolet: (a) is a corporation duly organized, validly existing and in good standing under the laws of the State of Wisconsin and is also in good standing in each other jurisdiction in which the nature of the business conducted or the properties or assets owned or leased by it makes such qualification necessary, except where the failure to be so qualified and in good standing would not have a Material Adverse Effect on Nicolet; (b) is registered with the Federal Reserve as a financial holding company under the Bank Holding Company Act of 1956, as amended; and (c) has full power and authority, corporate and otherwise, to operate as a bank holding company and to own, operate and lease its properties as presently owned, operated and leased, and to carry on its business as it is now being conducted. The copies of the Nicolet Articles of Incorporation and Nicolet Bylaws and all amendments thereto set forth in Nicolet SEC Reports are true, complete and correct, and the Nicolet Articles of Incorporation and Nicolet Bylaws are in full force and effect as of the date of this Agreement. Nicolet has no “Significant Subsidiary” as set forth in Rule 1-02 or Regulation S-X promulgated under the Exchange Act other than the Subsidiaries listed on Exhibit 21 to Nicolet’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018.2020.
Section 4.2   Nicolet Subsidiary Organizations.   Nicolet Bank is a national bank duly organized, validly existing and in good standing under the laws of the United States. Each Subsidiary of Nicolet Subsidiary is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and is also in good standing in each other jurisdiction in which the nature of the business conducted or the properties or assets owned or leased by it makes such qualification necessary, except where the failure to be so qualified and in good standing would not have a Material Adverse Effect on Nicolet. Each Subsidiary of Nicolet has full power and authority, corporate and otherwise, to own, operate and lease its properties as presently owned, operated and leased, and to carry on its business as it is now being conducted. The deposit accounts of Nicolet Bank are insured by the FDIC through the Deposit Insurance Fund to the fullest extent permitted by applicable Legal Requirements, and all premiums and assessments required to be paid in connection therewith have been paid when due. Nicolet has delivered or made available to the Company copies of the charter (or similar organizational documents) and bylaws of each Subsidiary of Nicolet and all amendments thereto, each of which are true, complete and correct and in full force and effect as of the date of this Agreement.

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Section 4.3   Authorization; Enforceability.   Nicolet has the requisite corporate power and authority to enter into and perform its obligations under this Agreement.Agreement, subject to the Nicolet Shareholder Approval. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by the Nicolet Board. The Nicolet Board has determined that the Merger, on substantially the terms and conditions set forth in this Agreement, is advisable and in the best interests of Nicolet and its shareholders, and that the Agreement and transactions contemplated hereby are in the best interests of Nicolet and its shareholders. The Nicolet Board has directed the Merger, on substantially the terms and conditions set forth in this Agreement, be submitted to Nicolet’s shareholders for consideration at a duly held meeting of such shareholders and has resolved to recommend that Nicolet’s shareholders vote in favor of the adoption and approval of this Agreement and the transactions contemplated hereby. The execution, delivery and performance of this Agreement by Nicolet, and the consummation by it of its obligations under this Agreement, have been authorized by all necessary corporate action, subject to Nicolet Shareholder Approval, and, subject to the receipt of the Requisite Regulatory Approvals and assuming the due authorization, execution and delivery of this Agreement by the Company, this Agreement constitutes a legal, valid and binding obligation of Nicolet enforceable in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization or other Legal Requirements affecting creditors’ rights generally and subject to general principles of equity.
Section 4.4   No Conflict.   Neither the execution nor delivery of this Agreement nor the consummation or performance of any of the Contemplated Transactions will, directly or indirectly (with or without notice

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or lapse of time): (a) contravene, conflict with or result in a violation of any provision of the certificate of incorporation, certificate of formation or charter (or similar organizational documents) or bylaws or operating agreement, each as in effect on the date hereof, or any currently effective resolution adopted by the board of directors, shareholders, manager or members of, Nicolet or any of its Subsidiaries; (b) assuming receipt of the Requisite Regulatory Approvals, contravene, conflict with or result in a violation of, or give any Regulatory Authority or other Person the valid and enforceable right to challenge any of the Contemplated Transactions or to exercise any remedy or obtain any relief under, any Legal Requirement or any Order to which Nicolet or any of its Subsidiaries, or any of their respective assets that are owned or used by them, may be subject, except for any contravention, conflict or violation that is permissible by virtue of obtaining the Requisite Regulatory Approvals; (c) contravene, conflict with or result in a violation or breach of any provision of, or give any Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate or modify any Nicolet Material Contract; or (d) result in the creation of any material lien, charge or encumbrance upon or with respect to any of the assets owned or used by Nicolet or any of its Subsidiaries. Except for the Requisite Regulatory Approvals, the Nicolet Shareholder Approval, the Registration Statement and the stock exchange listing required under Section 6.6,6.7, neither Nicolet nor any of its Subsidiaries is or will be required to give any notice to or obtain any consent from any Person in connection with the execution and delivery of this Agreement or the consummation or performance of any of the Contemplated Transactions.
Section 4.5   Nicolet Capitalization.
(a)   The authorized capital stock of Nicolet currently consists exclusively of: (i) 30,000,000 shares of Nicolet Common Stock, par value $0.01 per share, of which, as of DecemberMarch 31, 20192021 (the “Nicolet Capitalization Date”), 10,610,25910,002,322 shares were issued (including 22,52114,425 shares of restricted stock granted but not yet vested under the Nicolet Stock Plans), 10,587,7389,987,897 shares were outstanding, and no shares were treasury shares; and (ii) 10,000,000 shares of Nicolet’s preferred stock, no par value per share (the “Nicolet Preferred Stock”), of which: (i) 14,964 shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series A, are authorized, but no shares are outstanding; (ii) 748 shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series B, are authorized but no shares are outstanding; and (iii) 24,400 shares of Non-Cumulative Perpetual Preferred Stock, Series C, are authorized, but no shares are outstanding. Nicolet does not have outstanding any bonds, debentures, notes or other debt obligations having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) with the shareholders of Nicolet on any matter. All of the issued and outstanding shares of Nicolet Capital Stock have been, and those shares of Nicolet Common Stock to be issued pursuant to the Merger will be, duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights.
(b)   As of the Nicolet Capitalization Date, no shares of Nicolet Capital Stock were reserved for issuance except for:other than: (i) 1,414,1661,338,494 shares of Nicolet Common Stock reserved for issuance pursuant to future awards under Nicolet Stock plans,Plans, (ii) 1,466,2541,419,213 shares of Nicolet Common Stock reserved for issuance in connection with outstanding stock options, unvested restricted stock, or other equity awards under a Nicolet Stock Plan;Plans; (iii) 141,082 shares of Nicolet Common Stock reserved for issuance under Nicolet’s 401(k) plan; (iv) 64,63459,615 shares of Nicolet Common Stock reserved for issuance pursuant to

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Nicolet’s 2009 Deferred Compensation Plan for Non-Employee Directors; and (v) 142,344133,233 shares of Nicolet Common Stock reserved for issuance under the Nicolet Bankshares, Inc. Employee Stock Purchase Plan.
(c)   Since the Nicolet Capitalization Date through the date hereof, and except as set forth in Section 4.5(c) of the Nicolet Disclosure Schedules, Nicolet has not: (i) issued or repurchased any shares of Nicolet Common Stock or Nicolet Preferred Stock or other equity securities of Nicolet, other than in connection with the exercise of Nicolet Equity Awards that were outstanding on the Nicolet Capitalization Date or settlement thereof, in each case in accordance with the terms of the relevant Nicolet Stock Plan; or (ii) issued or awarded any options, stock appreciation rights, restricted shares, restricted stock units, deferred equity units, awards based on the value of Nicolet Common Stock or any other equity-based awards.
(d)   None of the shares of Nicolet Common Stock were issued in violation of any federal or state securities laws or any other applicable Legal Requirement. As of the date of this Agreement there are: (i) other than outstanding Nicolet Equity Awards, no outstanding subscriptions, Contracts, conversion privileges, options, warrants, calls or other rights obligating Nicolet or any of its Subsidiaries to issue, sell

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or otherwise dispose of, or to purchase, redeem or otherwise acquire, any shares of capital stock of Nicolet or any of its Subsidiaries; and (ii) no contractual obligations of Nicolet or any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of Nicolet Common Stock or any equity security of Nicolet or its Subsidiaries or any securities representing the right to purchase or otherwise receive any shares of capital stock or any other equity security of Nicolet or its Subsidiaries.
Section 4.6   Nicolet Subsidiary Capitalization.   All of the issued and outstanding shares of capital stock or other equity ownership interests of each Subsidiary of Nicolet are owned by Nicolet, directly or indirectly, free and clear of any material liens, pledges, charges, claims and security interests and similar encumbrances, and all of such shares or equity ownership interests are duly authorized and validly issued and are fully paid, nonassessable (except as provided in 12 U.S.C. § 55) and free of preemptive rights. No Subsidiary of Nicolet has or is bound by any outstanding subscriptions, options, warrants, calls, commitments or agreements of any character calling for the purchase or issuance of any shares of capital stock or any other equity security of such Subsidiary or any securities representing the right to purchase or otherwise receive any shares of capital stock or any other equity security of such Subsidiary.
Section 4.7   Nicolet SEC Reports; Financial Statements and Reports; Regulatory Filings.
(a)   Nicolet has timely filed all Nicolet SEC Reports, and all such Nicolet SEC Reports have complied as to form in all material respects, as of their respective filing dates and effective dates, as the case may be, with all applicable requirements of the Securities Act and the Exchange Act, as the case may be, and the rules and regulations of the SEC thereunder. The Nicolet SEC Reports were prepared in accordance with applicable Legal Requirements in all material respects. As of their respective filing dates, none of the Nicolet SEC Reports contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, except that information filed as of a later date (but before the date of this Agreement) is deemed to modify information as of an earlier date. As of the date hereof, there are no outstanding comments from or unresolved issues raised by the SEC with respect to any of the Nicolet SEC Reports. No Subsidiary of Nicolet is required to file periodic reports with the SEC pursuant to Section 13 or 15(d) of the Exchange Act.
(b)   The financial statements presented (or incorporated by reference) in the Nicolet SEC Reports (including the related notes, where applicable) have been prepared in conformity with GAAP, except in each case as indicated in such statements or the notes thereto, and comply in all material respects with all applicable Legal Requirements. Taken together, the financial statements presented in the Nicolet SEC Reports (collectively, the “Nicolet Financial Statements”) are complete and correct in all material respects and fairly and accurately present the respective financial position, assets, liabilities and results of operations of Nicolet and its Subsidiaries at the respective dates of and for the periods referred to in the Nicolet Financial Statements, subject to normal year-end audit adjustments in the case of unaudited Nicolet Financial Statements. The Nicolet Financial Statements do not include any assets or omit to

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state any liabilities, absolute or contingent, or other facts, which inclusion or omission would render the Nicolet Financial Statements misleading in any material respect as of the respective dates thereof and for the periods referred to therein. As of the date hereof, Wipfli, LLC has not resigned (or informed Nicolet that it intends to resign) or been dismissed as independent registered public accountants of Nicolet.
(c)   Nicolet is in compliance in all material respects with all of the provisions of the Sarbanes-Oxley Act of 2002 that are applicable to it or any of its Subsidiaries. Nicolet maintains a system of disclosure controls and procedures as defined in Rule 13a-15 and 15d-15 under the Exchange Act that are designed to provide reasonable assurance that information required to be disclosed by Nicolet in reports that Nicolet is required to file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to Nicolet’s management to allow timely decisions regarding required disclosures. As of the Nicolet Capitalization Date, to the Knowledge of Nicolet, such controls and procedures were effective, in all material respects, to provide such reasonable assurance.
(d)   Nicolet and its consolidated Subsidiaries have established and maintained a system of internal control over financial reporting (within the meaning of Rule 13a-15 and Rule 15d-15 under the Exchange Act) (“Internal Control Over Financial Reporting”).Reporting. Nicolet’s certifying officers have evaluated the effectiveness of Nicolet’s Internal Control Over Financial Reporting as of the end of the period covered by the most recently filed quarterly report on Form 10-Q, of Nicoletor annual report on Form 10-K for the fourth quarter, under the Exchange

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Act (the “Nicolet Evaluation Date”). Nicolet presented in such quarterly report the conclusions of the certifying officers about the effectiveness of Nicolet’s Internal Control Over Financial Reporting based on their evaluations as of the Nicolet Evaluation Date. Since the Nicolet Evaluation Date, there have been no changes in Nicolet’s Internal Control Over Financial Reporting that have materially affected, or are reasonably likely to materially affect, Nicolet’s Internal Control Over Financial Reporting. Nicolet has devised and maintains a system of internal accounting controls sufficient to provide reasonable assurances that: (i) transactions are executed in accordance with management’s general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
(e)   Nicolet and each of its Subsidiaries has filed all forms, reports and documents required to be filed since January 1, 2018,2019, with all applicable federal or state securities or banking authorities except to the extent failure would not have a Material Adverse Effect on Nicolet and its Subsidiaries. Such forms, reports and documents: (i) complied as to form in all material respects with applicable Legal Requirements; and (ii) did not at the time they were filed, after giving effect to any amendment thereto filed prior to the date hereof, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, except that information filed as of a later date (but before the date of this Agreement) is deemed to modify information as of an earlier date.
(f)   Except for normal examinations conducted by a Regulatory Authority in the Ordinary Course of Business of Nicolet and its Subsidiaries, no Regulatory Authority has initiated since January 1, 2018,2019, or has pending any proceeding, enforcement action or to the Knowledge of Nicolet, investigation into the business, disclosures or operations of Nicolet or its Subsidiaries. Since January 1, 2018,2019, no Regulatory Authority has resolved any proceeding, enforcement action or, to the Knowledge of Nicolet, investigation into the business, disclosures or operations of Nicolet or its Subsidiaries. Nicolet and its Subsidiaries have fully complied with, and there is no unresolved violation, criticism or exception by any Regulatory Authority with respect to, any report or statement relating to any examination or inspection of Nicolet or its Subsidiaries. Since January 1, 2018,2019, there have been no formal or informal inquiries by, or disagreements or disputes with, any Regulatory Authority with respect to the business, operations, policies or procedures of Nicolet or its Subsidiaries (other than normal examinations conducted by a Regulatory Authority in Nicolet’s Ordinary Course of Business). To the

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Knowledge of Nicolet, there has not been any event or occurrence since January 1, 2018 that would result in a determination that Nicolet Bank is not an eligible depository institution as defined in 12 C.F.R. § 303.2(r).
Section 4.8    Loans; Loan Loss Reserve.
(a)   Each loan, loan agreement, note, lease or other borrowing agreement by Nicolet Bank, any participation therein, and any guaranty, renewal or extension thereof (the “Nicolet Loans” ) reflected as an asset on any of the Nicolet Financial Statements or reports filed with the Regulatory Authorities is evidenced by documentation that is customary and legally sufficient in all material respects and constitutes, to the Knowledge of Nicolet, the legal, valid and binding obligation of the obligor named therein, enforceable in accordance with its terms, except to the extent that the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors’ rights generally or equitable principles or doctrines.
(b)   All Nicolet Loans originated or purchased by Nicolet Bank were made or purchased in accordance with the policies of the board of directors of Nicolet Bank and in the Ordinary Course of Business of Nicolet Bank.
(c)   Nicolet Bank’s allowance for loan and lease lossescredit losses-loans reflected in the Nicolet Financial Statements (including footnotes thereto) was determined on the basis of Nicolet Bank’s continuing review and evaluation of the portfolio of Nicolet Loans under the requirements of GAAP and Legal Requirements, was established in a manner consistent with Nicolet Bank’s internal policies, and, in the reasonable judgment of Nicolet Bank, was adequateappropriate in all material respects under the requirements of GAAP and all Legal Requirements to provide for possible or specific losses, net of recoveries relating to Nicolet Loans previously charged-off, on outstanding Nicolet Loans.

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Section 4.9    Taxes.
(a)   Nicolet and each of its Subsidiaries have duly and timely filed all Tax Returns required to be filed by them on or before the Closing Date for all taxable or reporting periods ending on or before the Closing Date, and each such Tax Return is true, correct and complete in all material respects. Nicolet and each of its Subsidiaries have paid, or made adequate provision for the payment of, all Taxes (whether or not reflected in Tax Returns as filed or to be filed) due and payable by Nicolet and each of its Subsidiaries, or claimed to be due and payable by any Regulatory Authority, and are not delinquent in the payment of any Tax, except such Taxes as are being contested in good faith and as to which adequate reserves have been provided. There are no liens for Taxes upon any of the assets of Nicolet or any of its Subsidiaries.
(b)   There is no claim or assessment pending or, to the Knowledge of Nicolet, threatened against Nicolet and its Subsidiaries for any Taxes that they owe. Except as disclosed in Section 4.9(b) of the Nicolet Disclosure Schedules, no audit, examination or investigation related to Taxes paid or payable by Nicolet and eachor any of its Subsidiaries is presently being conducted or, to the Knowledge of Nicolet, threatened by any Regulatory Authority. Neither Nicolet nor its Subsidiaries are the beneficiary of any extension of time within which to file any Tax Return, and there are no liens for Taxes (other than Taxes not yet due and payable)delinquent) upon any of Nicolet’s or its Subsidiaries’ assets. Neither Nicolet nor its Subsidiaries have executed an extension or waiver of any statute of limitations on the assessment or collection of any Tax that is currently in effect.
(c)   To the Knowledge of Nicolet, Nicolet and each of its Subsidiaries have not engaged in any transaction that could affect the Tax liability for any Tax Returns not closed by applicable statute of limitations: (i) which is a “reportable transaction” or a “listed transaction” or (ii) a “significant purpose of which is the avoidance or evasion of U.S. federal income tax” within the meaning of Sections 6662, 6662A, 6011, 6111 or 6707A of the Code or of the regulations of the U.S. Department of the Treasury promulgated thereunder or pursuant to notices or other guidance published by the IRS (irrespective of the effective dates).
(d)   It is the present intention of Nicolet to continue at least one significant historic business line of the Company, or to use at least a significant portion of the Company’s historic business assets in a business, in each case within the meaning of Treas. Reg. Section 1.368-1(d).
(e)   Nicolet has not taken or agreed to take any action, and has no Knowledge of any fact or circumstance that is reasonably likely, to prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code.

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Section 4.10   Employee Benefits.
(a)   Except as disclosed in Section 4.10(a) of the Nicolet Disclosure Schedules, each Nicolet Benefit Plan is and has been administered in all material respects in compliance with its terms and with all applicable Legal Requirements.
(b)   Other than routine claims for benefits made in the Ordinary Course of Business, there is no litigation, claim or assessment pending or, to Nicolet’s Knowledge, threatened by, on behalf of, or against any Nicolet Benefit Plan or against the administrators or trustees or other fiduciaries of any Nicolet Benefit Plan that alleges a violation of applicable state or federal law or violation of any Nicolet Benefit Plan document or related agreement.
(c)   NoNeither Nicolet nor, to Nicolet’s Knowledge, any of its directors, officers, employees or any Nicolet Benefit Plan fiduciary or any other person has or has had, any liability for failure to any Nicolet Benefit Plan participant, beneficiary or any other person under any provisions of ERISA or any othercomply with all applicable law by reason ofLegal Requirements for any action or failure to act in connection with the administration or investment of any Nicolet Benefit Plan, including any liability by any reason of any payment of, or failure to pay, benefits or any other amounts or by reason of any credit or failure to give credit for any benefits or rights.Plan. To Nicolet’s Knowledge, no party in interest (as defined in Code Section 4975(e)(2)) of any Nicolet Benefit Plan has engaged in any nonexempt prohibited transaction (as described in Code Section 4975(c) or ERISA Section 406).
(d)   AllAs required in accordance with GAAP, all accrued contributions and other payments to be made by Nicolet or any Subsidiary to any Nicolet Benefit Plan (i) through the date hereof have been made or reserves adequate for such purposes have been set aside therefor and reflected in the Nicolet Financial Statements, and (ii) through the Closing Date will have been made or reserves adequate for such purposes will have been set aside therefore and reflectedtherefor.

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(e)   Except as set forth inSection 4.10(e) of the Nicolet Financial Statements.Disclosure Schedules, each Nicolet Benefit Plan that is intended to qualify under Section 401 and related provisions of the Code is the subject of a favorable determination letter or may rely upon an opinion letter from the IRS to the effect that it is so qualified under the Code and that its related funding instrument is tax exempt under Section 501 of the Code (or the Company and its Subsidiaries are otherwise relying on an opinion letter issued to the prototype sponsor), and, to the Nicolet’s Knowledge, there are no facts or circumstances that would adversely affect the qualified status of any Nicolet Benefit Plan or the tax-exempt status of any related trust.
Section 4.11   Books and Records.   The books of account, minute books, stock record books and other records of Nicolet and its Subsidiaries are complete and correct in all material respects and have been maintained in accordance with Nicolet’s business practices and all applicable Legal Requirements, including the maintenance of an adequate system of internal controls required by such Legal Requirements. The minute books of Nicolet and each of its Subsidiaries contain accurate and complete records in all material respects of all meetings held of, and corporate action taken by, its respective shareholders, boards of directors and committees of the boards of directors. At the Closing, all of those books and records will be in the possession of Nicolet and its Subsidiaries.
Section 4.12   Compliance with Legal Requirements.   Nicolet and each of its Subsidiaries hold all material licenses, certificates, permits, franchises and rights from all appropriate Regulatory Authorities necessary for the conduct of their respective businesses. Nicolet and each of its Subsidiaries is, and at all times since January 1, 2018,2019, has been, in compliance with each material Legal Requirement that is or was applicable to it or to the conduct or operation of its respective businesses or the ownership or use of any of its respective assets. Neither Nicolet nor any of its Subsidiaries has received, at any time since January 1, 2018,2019, any notice or other communication (whether oral or written) from any Regulatory Authority or any other Person regarding: (a) any actual, alleged, possible, or potential violation of, or failure to comply with, any Legal Requirement; or (b) any actual, alleged, possible, or potential obligation on the part of Nicolet or any of its Subsidiaries to undertake, or to bear all or any portion of the cost of, any remedial action of any nature in connection with a failure to comply with any Legal Requirement.
Section 4.13   Legal Proceedings; Orders.
(a)   Except as set forth in Section 4.13(a) of the Nicolet Disclosure Schedules, since January 1, 2018,2019, there have been, and currently are, no Proceedings or Orders pending, entered into or, to the Knowledge of Nicolet, threatened against or affecting Nicolet, any of its Subsidiaries or any of their respective assets, businesses, current or former directors or executive officers, or the Contemplated Transactions, that have not been fully satisfied, settled or terminated. No officer, director, employee or agent of Nicolet or any of its Subsidiaries is subject to any Order that prohibits such officer, director, employee or agent from engaging in or continuing any conduct, activity or practice relating to the businesses of Nicolet or any of its Subsidiaries as currently conducted.

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(b)   Neither Nicolet nor any of its Subsidiaries: (i) is subject to any cease and desist or other Order or enforcement action issued by; (ii) is a party to any written agreement, consent agreement or memorandum of understanding with; (iii) is a party to any commitment letter or similar undertaking to; (iv) is subject to any order or directive by; (v) is subject to any supervisory letter from; (vi) has been ordered to pay any civil money penalty, which has not been paid, by; or (vii) has adopted any policies, procedures or board resolutions at the request of; any Regulatory Authority that currently restricts in any material respect the conduct of its business, in any manner relates to its capital adequacy, restricts its ability to pay dividends or interest or limits in any material manner its credit or risk management policies, its management or its business. To the Knowledge of Nicolet, none of the foregoing has been threatened by any Regulatory Authority.
Section 4.14   Absence of Certain Changes and Events.   Since December 31, 2019,2020, Nicolet and its Subsidiaries have conducted their respective businesses only in the Ordinary Course of Business, and without limiting the foregoing with respect to each, since December 31, 2019,2020, there has not been any event or events that have had or would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on Nicolet.
Section 4.15   No Defaults.   To the Knowledge of Nicolet, no event has occurred or circumstance exists that (with or without notice or lapse of time) may contravene, conflict with or result in a material

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violation or breach of, or give Nicolet, any of its Subsidiaries or other Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate or modify, any Nicolet Material Contract.
Section 4.16   Compliance with Environmental Laws.   Nicolet and each Subsidiary of Nicolet has complied in all material respects with all Environmental Laws applicable to it and its business operations.
Section 4.17   Transactions with Affiliates.   Since January 1, 2018,2019, all transactions required to be disclosed by Nicolet pursuant to Item 404 of Regulation S-K promulgated under the Securities Act have been disclosed in the Nicolet SEC Reports. No transaction, or series of related transactions, is currently proposed by Nicolet or any of its Subsidiaries or, to the Knowledge of Nicolet, by any other Person, to which Nicolet or any of its Subsidiaries would be a participant that would be required to be disclosed under Item 404 of Regulation S-K promulgated under the Securities Act if consummated.
Section 4.18   Approval Delays.   To the Knowledge of Nicolet, there is no reason why the granting of any of the Requisite Regulatory Approvals would be denied or unduly delayed. Nicolet Bank is an “eligible bank” (as​(as such term is defined at 12 C.F.R. § 5.3(g)), “well-capitalized” (as such term is defined at 12 C.F.R. § 225.2(r)) and “well managed” (as such term is defined at 12 C.F.R. § 225.2(s)), and the rating of Nicolet Bank under the CRA is no less than “satisfactory.”. Nicolet Bank has not been informed that its status as an “eligible bank,” “well-capitalized,” “well managed” or, for CRA purposes, “satisfactory,”bank” will change within one (1) year.
Section 4.19   Labor Matters.
(a)   There are no collective bargaining agreements or other labor union Contracts applicable to any employees of Nicolet or any of its Subsidiaries. There is no labor dispute, strike, work stoppage or lockout, or, to the Knowledge of Nicolet, threat thereof, by or with respect to any employees of Nicolet or any of its Subsidiaries, and there has been no labor dispute, strike, work stoppage or lockout in the previous three (3) years. There are no organizational efforts with respect to the formation of a collective bargaining unit presently being made, or to the Knowledge of Nicolet, threatened, involving employees of Nicolet or any of its Subsidiaries. Neither Nicolet nor any of its Subsidiaries has engaged or is engaging in any unfair labor practice. Nicolet and its Subsidiaries are in compliance in all material respects with all applicable Legal Requirements respecting employment and employment practices, terms and conditions of employment, wages, hours of work and occupational safety and health. No Proceeding asserting that Nicolet or any of its Subsidiaries has committed an unfair labor practice (within the meaning of the National Labor Relations Act of 1935) or seeking to compel Nicolet or any of its Subsidiaries to bargain with any labor organization as to wages or conditions of employment is pending or, to the Knowledge of Nicolet, threatened with respect to Nicolet or any of its Subsidiaries before the National Labor Relations Board, the Equal Employment Opportunity Commission or any other Regulatory Authority.

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(b)   Neither Nicolet nor any of its Subsidiaries is a party to, or otherwise bound by, any consent decree with, or citation by, any Regulatory Authority relating to employees or employment practices. None of Nicolet, any of its Subsidiaries or any of its or their executive officers has received within the past three (3) years any written notice of intent by any Regulatory Authority responsible for the enforcement of labor or employment laws to conduct an investigation relating to Nicolet or any of its Subsidiaries and, to the Knowledge of Nicolet, no such investigation is in progress.
ARTICLE 5
THE COMPANY’S COVENANTS
Section 5.1   Access and Investigation.
(a)   Subject to any applicable Legal Requirement, Nicolet and its Representatives shall, at all times during normal business hours and with reasonable advance notice, have such reasonable access to the facilities, operations, records and properties of the Company and the Bankeach of its Subsidiaries in accordance with the provisions of this Section 5.1(a) as shall be necessary for the purpose of determining the Company’s continued compliance with the terms and conditions of this Agreement and preparing for the integration of Nicolet and the Company following the Effective Time. Nicolet and its Representatives may, during such period, make or cause to be made such reasonable investigation of the operations, records and properties of the Company and the Bankeach of its Subsidiaries and of their respective financial and legal conditions as Nicolet shall deem necessary or advisable to familiarize itself with such records, properties and other matters; provided, however, that such access or investigation shall not interfere materially with the normal operations

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of the Company or the Bank.any of its Subsidiaries. Upon request, the Company and the Bankeach of its Subsidiaries will furnish Nicolet or its Representatives attorneys’ responses to auditors’ requests for information regarding the Company or the Bank,such Subsidiary, as the case may be, and such financial and operating data and other information reasonably requested by Nicolet (provided, such disclosure would not result in the waiver by the Company or the Bankany of its Subsidiaries of any claim of attorney-client privilege). No investigation by Nicolet or any of its Representatives shall affect the representations and warranties made by the Company in this Agreement.
(b)   From the date hereof until the earlier of the Closing Date or the termination of this Agreement in accordance with its terms, the Company shall promptly furnish to Nicolet: (i) a copy of each report, schedule, registration statement and other document filed, furnished or received by it during such period pursuant to the requirements of federal and state banking laws or federal or state securities laws that is not generally available on the SEC’s EDGAR internet database; and (ii) a copy of each report filed by it or any of its Subsidiaries with any Regulatory Authority; in each case other than portions of such documents relating to confidential supervisory or examination materials or the disclosure of which would violate any applicable Legal Requirement.
(c)   The Company shall provide, and cause each of its Subsidiaries to provide, to Nicolet all information provided to the directors on all such boards or members of such committees in connection with all meetings of the board of directors and committees of the board of directors of the Company and its Subsidiaries or otherwise provided to the directors or members, and to provide any other financial reports or other analysis prepared for senior management of the Company or its Subsidiaries; in each case other than portions of such documents relating to attorney-client privilege, confidential supervisory information or the disclosure of which would violate any applicable Legal Requirement.
(d)   All information obtained by Nicolet in accordance with this Section 5.1 shall be treated in confidence as provided in that certain confidentiality and non-disclosure agreement dated March 26, 2021, between Nicolet and the Company (the “Confidentiality Agreement”).
(e)   This Section 5.1(a)5.1 shall not require the disclosure of any information to Nicolet the disclosure of which, in the Company’s reasonable judgment: (i) would be prohibited by any applicable Legal Requirement, including the prohibitions on disclosure of confidential supervisory information (including confidential supervisory information as defined in 12 C.F.R. § 261.2); (ii) would result in the breach of any agreement with any third party in effect on the date of this Agreement; or (iii) relate to pending or threatened litigation or investigations, if disclosure might affect the confidential nature of, or any privilege relating to, the matters being discussed.discussed; (iv) could result in the waiver by the Company or any of its Subsidiaries of any claim of attorney-client privilege; or (v) relates to an Acquisition Proposal. If any of the restrictions in subsections (i) through (iv) of the preceding sentence shall apply, the Company and Nicolet will make, to the extent legally permissible, appropriate alternative disclosure arrangements, including adopting additional specific procedures to protect the confidentiality of sensitive material and to ensure compliance with any applicable Legal Requirement.
(b)   From the date hereof until the earlier of the Closing Date or the termination of this Agreement in accordance with its terms, the Company shall promptly furnish to Nicolet: (i) a copy of each report, schedule, registration statement and other document filed, furnished or received by it during such period pursuant to the requirements of federal and state banking laws or federal or state securities laws, which is not generally available on the SEC’s EDGAR internet database; and (ii) a copy of each report filed by it or the Bank with any Regulatory Authority; in each case other than portions of such documents relating to confidential supervisory or examination materials or the disclosure of which would violate any applicable Legal Requirement.
(c)   The Company shall provide, and cause the Bank to provide, to Nicolet all information provided to the directors on all such boards or members of such committees in connection with all meetings of the board of directors and committees of the board of directors of the Company or otherwise provided to the directors or members, and to provide any other financial reports or other analysis prepared for senior management of the Company or the Bank; in each case other than portions of such documents relating to confidential supervisory information or the disclosure of which would violate any applicable Legal Requirement.
(d)   All information obtained by Nicolet in accordance with this Section 5.1 shall be treated in confidence as provided in that certain confidentiality and non-disclosure agreement dated November 1, 2019, between Nicolet and the Company (the “Confidentiality Agreement”).

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Section 5.2   Operation of the Company and the BankCompany Subsidiaries.
(a)   Except as Previously Disclosed, as expressly contemplated by or permitted by this Agreement, as required by applicable Legal Requirement, or with the prior written consent of Nicolet, which shall not be unreasonably withheld, conditioned or delayed, during the period from the date of this Agreement to the earlier of the Closing Date or the termination of this Agreement pursuant to its terms, the Company shall, and shall cause the Bankeach of its Subsidiaries to: (i) conduct its business in the Ordinary Course of Business in all material respects; (ii) use commercially reasonable efforts to maintain and preserve intact its business organization and advantageous business relationships; and (iii) take no action that is intended to or would reasonably be expected to adversely affect or materially delay the ability of the Company or Nicolet to obtain any of the Requisite Regulatory Approvals, to perform its covenants and agreements under this Agreement or to consummate the Contemplated Transactions.
(b)   Except as Previously Disclosed, as expressly contemplated by or permitted by this Agreement, as required by applicable Legal Requirement, or with the prior written consent of Nicolet, which shall not be unreasonably withheld, conditioned or delayed, during the period from the date of this Agreement to the

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earlier of the Closing Date or the termination of this Agreement pursuant to its terms, the Company will not, and will cause the Bankeach of its Subsidiaries not to:
(i)   other than pursuant to the terms of any Contract to which the Company is a party that is outstanding on the date of this Agreement (as disclosed in Section 5.2(b)(i) of the Company Disclosure Schedules): (A) issue, sell or otherwise permit to become outstanding, or dispose of or encumber or pledge, or authorize or propose the creation of, any additional shares of Company Capital Stock or any security convertible into Company Capital Stock; (B) permit any additional shares of Company Capital Stock to become subject to new grants; or (C) grant any registration rights with respect to shares of Company Capital Stock;
(ii)   (A) make, declare, pay or set aside for payment any dividend on or in respect of, or declare or make any distribution on any shares of Company Capital Stock (other than dividends from its wholly owned Subsidiaries to it or another of its wholly owned Subsidiaries),; provided, however, the Company may continue paying its regular quarterly dividend of $0.10 per share of Company Common Stock consistent with past practice and its regular quarterly dividends on the Company Preferred Stock, or (B) directly or indirectly adjust, split, combine, redeem, reclassify, purchase or otherwise acquire, any shares of Company Capital Stock (other than repurchases of shares of Company Common Stock in the Ordinary Course of Business to satisfy obligations under the Company Benefit Plans)Plans and any repurchases as a result of net exercises of stock options);
(iii)   other than in the Ordinary Course of Business, amend the terms of, waive any rights under, terminate, knowingly violate the terms of or enter into: (A) any Company Material Contract (other than as permitted by Section 5.2(b)(xiii)); (B) any material restriction on the ability of the Company or the Bankits Subsidiaries to conduct its business as it is presently being conducted; or (C) any Contract or other binding obligation relating to any class of Company Capital Stock or rights associated therewith or any outstanding instrument of indebtedness;
(iv)   enter into loan transactions not in accordance with, or consistent with, past practices of the Bank or that are on terms and conditions that, to the Knowledge of the Company, are materially more favorable than those available to the borrower from competitive sources in arm’s-length transactions;Bank;
(v)   (A) enter into any new credit or new lending relationships greater than $1,000,000 or that are not in material compliance with the provisions of the Bank’s formal loan policy as in effect as of the date of this Agreement;$10,000,000; or (B) other than incident to a reasonable loan restructuring, extend additional credit to any Person and any director or officer of, or any owner of a material interest in, such Person (any of the foregoing with respect to a Person being referred to as a “Borrowing Affiliate”) if such Person or such Borrowing Affiliate is the obligor under any indebtedness to the Company or any of its Subsidiaries which constitutes a nonperformingclassified loan or against any part of such indebtedness the Company or any of its Subsidiaries has established loss reserves or any part of which has been charged-off by the Company or any of its Subsidiaries;
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to Company Loans previously charged off, on Company Loans and leases outstanding (including accrued interest receivable);
(vii) fail to: (A) charge-off any Company Loans or leases that would be deemed uncollectible in accordance with GAAP or any applicable Legal Requirement; or (B) place on non-accrual any Company Loans or leases that are past due greater than ninety (90) days;days (it being understood that modifications of such loans consistent with regulatory COVID-19 relief guidelines and consistent with past practice shall not be a violation of this Section 5.2(b)(vii));
(viii)   sell, transfer, mortgage, encumber, license, let lapse, cancel, abandon or otherwise dispose of or discontinue any of its assets, deposits, business or properties, except for sales, transfers, mortgages, encumbrances, licenses, lapses, cancellations, abandonments or other dispositions or discontinuances in the Ordinary Course of Business, including sales of Company Loans in the Ordinary Course of Business, and in a transaction that, together with other such transactions, is not material to the Company and the Bank,its Subsidiaries, taken as a whole;

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(ix)   acquire (other than by way of foreclosures or acquisitions of control in a fiduciary or similar capacity or in satisfaction of debts previously contracted in good faith, in each case in the Ordinary Course of Business) all or any portion of the assets, business, deposits or properties of any other entity except in the Ordinary Course of Business and in a transaction that, together with other such transactions, is not material to the Company and the Bank,its Subsidiaries, taken as a whole, and does not present a material risk that the Closing Date will be materially delayed or that any approvals necessary to complete the Merger or the other Contemplated Transactions will be more difficult to obtain;
(x)   purchase any equity security for its investment portfolio that is inconsistent with the Bank’s formal investment policy as in effect as of the date of this Agreement or that are not in strict compliance with the provisions of such investment policy;
(xi)   amend its articles of incorporation or its bylaws, or similar governing documents of the Bank;
(xii) implement or adopt any change in its accounting principles, practices or methods, other than as may be required by GAAP or applicable regulatory accounting requirements;
(xiii)   except as otherwise specifically provided herein, (A) except in the Ordinary Course of Business or as required by applicable Legal Requirements, materially increase in any manner the compensation or benefits of any of the current or former directors, officers, employees, consultants, independent contractors or other service providers of the Company or the Bank (collectively, the “Company Employees”);, other than (1) ordinary course base salary increases for Company Employees, (2) incentive payments consistent with past practice and payment of prorated bonuses prior to the Closing Date in amounts consistent with past practices, and (3) Company contributions for 2021 to the deferred compensation plan on behalf of selected participants, provided in each case that the Company properly accrues for such expenses; (B) become a party to, establish, amend, commence participation in, terminate or commit itself to the adoption of any stock option plan or other stock-based compensation plan, compensation, severance, pension, consulting, non-competition, change in control, retirement, profit-sharing, welfare benefit, or other employee benefit plan or agreement or employment agreement with or for the benefit of any Company Employee (or newly hired employees), director or shareholder; (C) accelerate the vesting of or lapsing of restrictions with respect to any stock-based compensation or other long-term incentive compensation under any Company Benefit Plans other than as contemplated by Section 2.8;2.8 or Section 5.7, provided that the Company may take appropriate action to fully vest participants in the deferred compensation plan in their accounts; (D) cause the funding of any rabbi trust or similar arrangement or take any action to fund or in any other way secure the payment of compensation or benefits under any Company Benefit Plan; (E) materially change any actuarial assumptions used to calculate funding obligations with respect to any Company Benefit Plan that is required by applicable Legal Requirements to be funded or change the manner in which contributions to such plans are made or the basis on which such contributions are determined, except as may be required by GAAP or any applicable Legal Requirement; or (F) conduct the administration of the Company Benefit Plans in any manner other than the Ordinary Course of Business;
(xiv)   hire any new employees with an annual salary in excess of $75,000;$100,000;
(xv)   incur or guarantee any indebtedness for borrowed money other than deposits, overnight fed funds, or Federal Home Loan Bank of Chicago advances not over six (6) months in maturity, or advances from the Federal Reserve Bank of Chicago, or enter into any capital lease or leases; or, except in the Ordinary Course of Business: (A) lend any money or pledge any of its credit in connection with any aspect of its business, whether as a guarantor, surety, issuer of a letter of credit or otherwise; (B) mortgage or otherwise subject to

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any lien any of its assets or sell, assign or transfer any of its assets in excess of $100,000 in the aggregate; or (C) incur any other liability or loss representing, individually or in the aggregate, over $100,000;
(xvi)   enter into any new line of business or materially change its lending, investment, underwriting, risk and asset liability management and other banking and operating policies, except as required by applicable Legal Requirements or requested by any Regulatory Authority;

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(xvii)   settle any action, suit, claim or proceeding against it or the Bank,any of its Subsidiaries, except for an action, suit, claim or proceeding that is settled in an amount and for consideration not in excess of $150,000 and that would not: (A) impose any material restriction on the business of the Company or the Bank;its Subsidiaries; or (B) create precedent for claims that is reasonably likely to be material to it or the Bank;its Subsidiaries;
(xviii)   make application for the opening, relocation or closing of any, or open, relocate or close any, branch office, loan production office or other significant office or operations facility;facility, other than the relocation of the Bank’s Appleton branch;
(xix)   make or change any material Tax elections, change or consent to any change in itits or the Bank’s method of accounting for Tax purposes (except as required by applicable Tax law), take any material position on any material Tax Return filed on or after the date of this Agreement, settle or compromise any material Tax liability, claim or assessment, enter into any closing agreement, waive or extend any statute of limitations with respect to a material amount of Taxes, surrender any right to claim a refund for a material amount of Taxes, or file any material amended Tax Return; or
(xx) agree to take, make any commitment to take, or adopt any resolutions of the Company Board in support of, any of the actions prohibited by this Section 5.2.
Section 5.3   Notice of Changes.   The Company will give prompt notice to Nicolet of any fact, event or circumstance known to it that: (a) is reasonably likely, individually or taken together with all other facts, events and circumstances known to it, to result in a Material Adverse Effect on the Company; or (b) would cause or constitute a material breach of any of the Company’s representations, warranties, covenants or agreements contained herein that reasonably could be expected to give rise, individually or in the aggregate, to the failure of a condition in Article 8;8; provided, however, that a failure to comply with this section shall not constitute a breach of this Agreement or the failure of any condition set forth in Article 8 to be satisfied unless the underlying Material Adverse Effect or material breach would independently result in the failure of a condition set forth inArticle 8 to be satisfied.
Section 5.4   Shareholders Meeting.   The Company shall, as promptly as reasonably practicable after the date the Registration Statement is declared effective, take all action necessary, including as required by and in accordance with the WBCL, the Company Articles of Incorporation and the Company Bylaws, to duly call, give notice of, convene and hold a meeting of its shareholders (the “Company Shareholders Meeting”) for the purpose of obtaining the Company Shareholder Approval. The Company and the Company Board will use their reasonable best efforts to obtain from its shareholders the votes in favor of the adoption of this Agreement required by the WBCL, including by recommending that its shareholders vote in favor of this Agreement, and the Company and the Company Board will not withdraw, qualify or adversely modify (or publicly propose or resolve to withdraw, qualify or adversely modify) the Company Board’s recommendation to the Company’s shareholders that the Company’s shareholders vote in favor of the adoption and approval of this Agreement (an “Adverse Recommendation”). However, if, prior to the time the Company Shareholder Approval is obtained, the Company Board, after consultation with its financial advisor and outside counsel, determines in good faith that (a) an Acquisition Proposal constitutes a Superior Proposal and (b) it is reasonably likely that to continue to recommend this Agreement to its shareholders in light of such Acquisition Proposal would result in a violation of its fiduciary duties under the WBCL, then, in submitting this Agreement at the Company Shareholders Meeting, the Company Board may make an Adverse Recommendation or publicly propose or resolve to make an Adverse Recommendation.
Section 5.5   Information Provided to Nicolet.   The Company agrees that the information concerning the Company or the Bankany of its Subsidiaries that is provided or to be provided by the Company in writing to Nicolet specifically for inclusion in the Registration Statement or Joint Proxy Statement and any other documents to be filed with any Regulatory Authority in connection with the Contemplated Transactions will: (a) at the respective times

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such documents are filed and, in the case of the Registration Statement, when it becomes effective and, with respect to the Joint Proxy Statement, when mailed, not be false or misleading with respect to any material fact, or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; or (b) in the case of the Joint Proxy Statement or any amendment thereof or supplement thereto, at the time of the Company Shareholders Meeting, not be false or misleading with respect to any material fact, or omit to state any

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material fact necessary to correct any statement in any earlier communication with respect to the solicitation of any proxy for the meeting in connection with which the Joint Proxy Statement shall be mailed. The Company will have a duty to correct any material misleading statement specified by the Company for inclusion, and so included, in the Registration Statement or Joint Proxy Statement and any other documents filed with any Regulatory Authority. Notwithstanding the foregoing, the Company shall have no responsibility for the truth or accuracy of any information with respect to Nicolet or any of its Subsidiaries or any of their Affiliates contained in the Registration Statement or the Joint Proxy Statement or in any document submitted to, or other communication with, any Regulatory Authority.
Section 5.6   Operating Functions.   The Company and the Bankits Subsidiaries shall cooperate with Nicolet and Nicolet Bank in connection with planning for the efficient and orderly combination of the parties and the operation of the Bank and Nicolet Bank, and in preparing for the consolidation of the banks’ appropriate operating functions to be effective on upon consummation of the Bank Plan of Merger; provided, however, that the foregoing actions shall not unduly interfere with the business operations of the Company or the Bank.its Subsidiaries. Without limiting the foregoing, the Company shall provide office space and support services (and other reasonably requested support and assistance) in connection with the foregoing, and senior officers of the Company and Nicolet shall meet from time to time as the Company or Nicolet may reasonably request, to review the financial and operational affairs of the Company and the Bank, and the Company shall give due consideration to Nicolet’s input on such matters,its Subsidiaries, with the understanding that, notwithstanding any other provision contained in this Agreement: (a) neither Nicolet nor Nicolet Bank shall under any circumstance be permitted to exercise control of the Company or the Bank or any of the Company’s other Subsidiaries prior to the Effective Time; (b) neither the Company nor the Bankany of its Subsidiaries shall be under any obligation to act in a manner that could reasonably be deemed to constitute anti-competitive behavior under federal or state antitrust laws; and (c) neither the Company nor the Bankany of its Subsidiaries shall be required to agree to any material obligation that is not contingent upon the consummation of the Merger.
Section 5.7   Company Benefit Plans.
(a)   AtIn order to facilitate a clean transition, following receipt of all Requisite Regulatory Approvals, upon the reasonable request ofin writing by Nicolet, and subject to the obligations of Nicolet pursuant to Section 7.6 below, the Company shall take all appropriate action prior to the Effective Time to amend, suspend or terminate as of the Effective Time any Company Benefit Plan.Plan, other than those set forth on Section 5.7 of the Company Disclosure Schedules, up to fourteen (14) days prior to the anticipated Effective Time.
(b)   Prior to the Effective Time, the Company shall, in accordance with GAAP, accrue the costs associated with any contingent payments due or that could become due in connection with the execution and delivery of this Agreement or the consummation of the Contemplated Transactions (including possibleknown terminations of employment in connection therewith) under any Company Benefit Plan, including without limitation any change of control or severance agreements, retention or stay bonus programs, or other similar arrangements.
(c)   Prior to the Effective Time, and notwithstanding any other provision of this Agreement, the Company shall have the right, in its sole discretion, to terminate and liquidate any of its non-qualified deferred compensation plans in accordance with Treas. Reg. § 1.409A-3(j)(4)(ix).
(d)   Immediately prior to the Effective Time, and notwithstanding any other provision of this Agreement, the Company will terminate the employment agreements and, in consideration therefor, pay the amounts set forth on Section 5.7(d) of the Company Disclosure Schedules, provided that the restrictive covenants contained therein shall continue in full force and effect for the specified post-employment periods
(e)   Immediately prior to the Effective Time, and notwithstanding any other provision of this Agreement, the Company will fully pay out all deferred annual bonuses and any earned commission-based compensation to employees and, in accordance with the Company’s regular practices, pay all 2021 annual bonuses, without proration, for calendar year 2021 performance; provided that all employees receiving such bonus payments for the 2021 calendar year immediately prior to the Effective Time shall not be eligible for an annual incentive payment for any period in calendar year 2021 following the Effective Date.
(f)   Prior to the Effective Time, and notwithstanding any other provision of this Agreement, the Company shall have the right, in its sole discretion, to amend the Company Stock Plans and/or the stock option award agreements thereunder to the extent necessary to permit net exercise.

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Section 5.8   Voting and Support Agreement.   Concurrently with the execution and delivery of this Agreement, the Company shall cause to be executed and delivered to Nicolet a voting and support agreement, in the form attached hereto as Exhibit B, approving this Agreement and the consummation of the Contemplated Transactions, executed by each director of the Company who holds Company Common Stock.
Section 5.9   Acquisition Proposals.
(a)   The Company will immediately cease and cause to be terminated any activities, discussions or negotiations with any Persons other than Nicolet with respect to any Acquisition Proposal and will use its reasonable best efforts to enforce any confidentiality or similar agreement relating to an Acquisition Proposal. The Company will within one (1) Business Day advise Nicolet of the receipt of any Acquisition Proposal and the substance thereof (including the identity of the Person making such

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Acquisition Proposal), and will keep Nicolet apprised of any related developments, discussions and negotiations (including the material terms and conditions of the Acquisition Proposal) on a reasonably current basis.
(b)   The Company agrees that it will not, and will cause the Bankits Subsidiaries and its and the Bank’sSubsidiaries’ officers, directors, agents, advisors and affiliates not to, initiate, solicit, encourage or knowingly facilitate inquiries or proposals with respect to, or engage in any negotiations concerning, or provide any confidential or nonpublic information or data to, or have any discussions with, any Person relating to, any Acquisition Proposal (other than contacting a Person for the sole purpose of seeking clarification of the terms and conditions of such Acquisition Proposal); provided that, in the event the Company receives an unsolicited bona fide Acquisition Proposal, from a Person other than Nicolet, after the execution of this Agreement and prior to the receipt of the Company Shareholder Approval, and the Company Board concludes in good faith, after consultation with its financial advisor and outside counsel, that such Acquisition Proposal constitutes a Superior Proposal or wouldcould reasonably be likely to result in a Superior Proposal and, after considering the advice of outside counsel, that failure to take such actions wouldcould be reasonably likely to result in a violation of the directors’ fiduciary duties under applicable law, the Company may: (i) furnish information with respect to it to such Person making such Acquisition Proposal pursuant to a customary confidentiality agreement (subject to the requirement that any such information not previously provided to Nicolet shall be promptly furnished to Nicolet); (ii) participate in discussions or negotiations regarding such Acquisition Proposal; and (iii) terminate this Agreement in order to concurrently enter into an agreement with respect to such Acquisition Proposal; provided, however, that the Company may not terminate this Agreement pursuant to this Section 5.9 unless and until (x) five (5) Business Days have elapsed following the delivery to Nicolet of a written notice of such determination by the Company Board and, during such five (5) Business-Day period, the parties cooperate with one another with the intent of enabling the parties to engage in good faith negotiations so that the Contemplated Transactions may be effected, and (y) at the end of such five (5) Business-Day period, the Company Board continues, in good faith and after consultation with outside legal counsel and financial advisors, to believe that a Superior Proposal continues to exist.
(c)   Nothing contained in this Agreement shall prevent the Company or the Company Board from complying with Rule 14d-9 and Rule 14e-2 under the Exchange Act with respect to an Acquisition Proposal, provided that such Rules will in no way eliminate or modify the effect that any action pursuant to such Rules would otherwise have under this Agreement.
Section 5.10   Company Preferred Stock.   The Company shall cause the redemption of all of the outstanding shares of Company Preferred Stock in accordance with the terms of the Company Preferred Stock set forth in the Company Articles of Incorporation so that no shares of Company Preferred Stock are outstanding no later than immediately prior to the Effective Time.
Section 5.11   Calculation of Tangible Common Equity.   The Company shall deliver the calculation of Tangible Common Equity to Nicolet, accompanied by appropriate supporting detail, no later than the close of business on the fifth (5th)(5th) Business Day preceding the Closing Date, and such calculation shall be subject to verification and approval by Nicolet and its independent auditors, which approval shall not be unreasonably withheld.
Section 5.11   Audited Financial Statements.   The Company shall deliver to Nicolet financial statements for the year ended December 31, 2019, which financial statements shall (a) be complete and correct in all material respects, (b) fairly and accurately present the respective financial position, assets, liabilities and results of operations of the Company and the Bank, (c) be prepared in conformity with GAAP, (d) comply in all material respects with all applicable Legal Requirements, and (e) be subject to and accompanied by the unmodified opinion of the Company’s independent public accountants, Wipfli, LLP.
Section 5.12   Company Debt Agreements.   If requested by Nicolet, the Company shall use commercially reasonable efforts to repay in full all indebtedness owing under any Company Debt Agreement, and to deliver to Nicolet prior to Closing evidence of such repayment and evidence of the release of any security interests in assets of the Company related thereto. If necessary, the Company shall use commercially reasonable efforts to (a) cause the Bank to pay a dividend to the Company in an amount sufficient to allow the Company to make any requested repayments and (b) obtain any required regulatory approvals necessary to enable the Company to pay any such requested payments and to enable the payment of the dividend by the Bank described in clause (a). For the avoidance of doubt, nothing in this Section 5.12 shall affect the obligation of the Company to obtain any consents set forth on Section 8.12 of the Company Disclosure Schedules relating to any indebtedness that remains outstanding as of the Effective Time.

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ARTICLE 6
NICOLET’S COVENANTS
Section 6.1   Operation of Nicolet and Nicolet Subsidiaries.   From the date of this Agreement until the earlier of the Effective Time or the termination of this Agreement, unless prior written consent of the

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Company shall have been obtained, and except as otherwise expressly contemplated herein, Nicolet covenants and agrees that it shall take no action that would reasonably be expected to (a) materially adversely affect the ability of Nicolet to obtain any ConsentsRequisite Regulatory Approvals required for the transactions contemplated hereby without imposition of a condition or restriction of the type referred to in Sections 8.5 and 9.5, or (b) that would reasonably be expected to materially adversely affect the ability of Nicolet to perform its covenants and agreements under this Agreement.
Section 6.2   Notice of Changes.   Nicolet will give prompt notice to the Company of any fact, event or circumstance known to it that: (a) is reasonably likely, individually or taken together with all other facts, events and circumstances known to it, to result in a Material Adverse Effect on Nicolet; or (b) would cause or constitute a material breach of any of Nicolet’s representations, warranties, covenants or agreements contained herein that reasonably could be expected to give rise, individually or in the aggregate, to the failure of a condition in Article 9; provided, however, that a failure to comply with this section shall not constitute a breach of this Agreement or the failure of any condition set forth in Article 9 to be satisfied unless the underlying Material Adverse Effect or material breach would independently result in the failure of a condition set forth in Article 9 to be satisfied.
Section 6.3Nicolet Shareholders Meeting.   Nicolet shall, as promptly as reasonably practicable after the date the Registration Statement is declared effective, take all action necessary, including as required by and in accordance with the WBCL, Nicolet Articles of Incorporation and Nicolet Bylaws, to duly call, give notice of, convene and hold a meeting of its shareholders (the “Nicolet Shareholders Meeting”) for the purpose of obtaining the Nicolet Shareholder Approval. Nicolet and Nicolet Board will use their reasonable best efforts to obtain from its shareholders the votes in favor of the adoption of this Agreement required by the WBCL, and in favor of the issuance of Nicolet Common Stock pursuant to this Agreement required by the Nasdaq Rules, including by recommending that its shareholders vote in favor of the adoption and approval of this Agreement and stock issuance, and Nicolet and Nicolet Board will not make an Adverse Recommendation. An Adverse Recommendation made by the Nicolet Board shall be deemed to be a material breach of this Agreement.
Section 6.4   Indemnification.
(a)   From and after the Effective Time, Nicolet shall, to the fullest extent permitted under applicable Legal Requirements, indemnify and hold harmless (1) any natural person who is or was a director or officer of the Company or any Subsidiary of the Company, (2) any natural person who, while a director or officer of the Company or any Subsidiary of the Company, is or was serving either pursuant to the Company’s or such Subsidiary’s specific request or as a result of the nature of such person’s duties to the Company or to such Subsidiary as a director, officer, partner, trustee, member of any governing or decision-making committee, manager, employee or agent of another corporation or foreign corporation, partnership joint venture, trust or other enterprise, and (3) any natural person who, while a director or officer of the Company or any Subsidiary of the Company, is or was serving an employee benefit plan because his or her duties to the Company or to such Subsidiary also imposed duties on, or otherwise involved services by, the person to the plan or to participants in or beneficiaries of the plan (each, an “Indemnified Party”), against any and all reasonable fees (including reasonable attorneys’ fees), costs, charges, disbursements and other expenses actually and reasonably incurred by the Indemnified Party (collectively, “Expenses”) in connection with any threatened, pending or completed civil, criminal, administrative or investigative action, suit, arbitration or other proceeding, whether formal or informal, which involves federal, state or local law and which is brought by or in the right of any Person (any such action, an “Indemnification Proceeding”) to which the Indemnified Party was made a party by virtue of his or her service in any of the capacities set forth above in clauses (1) through (3) of this Section 6.13(a)6.4(a), to the extent that such Indemnified Party has been successful on the merits or otherwise in the defense of such Indemnification Proceeding.
(b)   From and after the Effective Time, Nicolet shall, to the fullest extent permitted under applicable Legal Requirements, indemnify and hold harmless (1) any natural person who is or was an employee or agent of the Company or any Subsidiary of the Company, (2) any natural person who, while an employee or agent of the Company or any Subsidiary of the Company, is or was serving either pursuant to the Company’s or such Subsidiary’s specific request or as a result of the nature of such person’s duties to the Company or to such Subsidiary as a director, officer, partner, trustee, member of any governing or decision-making committee, manager, employee or agent of another corporation or foreign corporation, partnership

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joint venture, trust or other enterprise, and (3) any natural person who, while an employee or agent of the Company or any Subsidiary of the Company, is or was serving an employee benefit plan because his or her duties to the Company or to such Subsidiary also imposed duties on, or otherwise involved services by, the person to the plan or to participants in or beneficiaries of the plan (each, an “Indemnified Employee”), against any and all Expenses in connection with any Indemnification Proceeding to which the Indemnified Employee was made a party by virtue of his or

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her service in any of the capacities set forth above in clauses (1) through (3) of this Section 6.3(b)6.4(b), to the extent that such Indemnified Employee has been successful on the merits or otherwise in the defense of such Indemnification Proceeding.
(c)   From and after the Effective Time, Nicolet shall indemnify and hold harmless any Indemnified Party against any obligation to pay a judgment, penalty, assessment, forfeiture or fine, including an excise tax assessed with respect to an employee benefit plan, or the agreement to pay any amount in settlement of an Indemnification Proceeding, and pre- and post-judgment interest related thereto, and any Expenses incurred by such Indemnified Party in connection with an Indemnification Proceeding, unless it shall be proven by final judicial adjudication that such person breached or failed to perform a duty owed to the Company or to any Subsidiary of the Company which constituted: (1) a willful failure to deal fairly with the Company, any Subsidiary of the Company, or the respective shareholders thereof in connection with a matter in which the Indemnified Party had a material conflict of interest, (2) a violation of the criminal law, unless the Indemnified Party had reasonable cause to believe that his or her conduct was lawful or no reasonable cause to believe that his or her conduct was unlawful, (3) a transaction from which the Indemnified Party derived an improper personal benefit, or (4) willful misconduct.
(d)   From and after the Effective Time, Nicolet may indemnify and hold harmless any Indemnified Employee against any obligation to pay a judgment, penalty, assessment, forfeiture or fine, including an excise tax assessed with respect to an employee benefit plan, or the agreement to pay any amount in settlement of an Indemnification Proceeding, and pre- and post-judgment interest related thereto, and any Expenses incurred by such Indemnified Employee in connection with an Indemnification Proceeding, unless it shall be proven by final judicial adjudication that such person breached or failed to perform a duty owed to the Company or to any Subsidiary of the Company which constituted: (1) a willful failure to deal fairly with the Company, any Subsidiary of the Company, or the respective shareholders thereof in connection with a matter in which the Indemnified Employee had a material conflict of interest, (2) a violation of the criminal law, unless the Indemnified Employee had reasonable cause to believe that his or her conduct was lawful or no reasonable cause to believe that his or her conduct was unlawful, (3) a transaction from which the Indemnified Employee derived an improper personal benefit, or (4) willful misconduct. Any determination of whether an Indemnified Employee shall receive indemnification pursuant to this Section 6.3(d)6.4(d) shall be made at the sole and exclusive discretion of Nicolet.
(e)   Upon written request by an Indemnified Party who has been made party to an Indemnification Proceeding, Nicolet shall reimburse the Expenses of such Indemnified Party as incurred if the Indemnified Party provides Nicolet with all of the following: (1) a written affirmation of his or her good faith belief that he or she did not breach or fail to perform his or her duties to the Company and (2) a written undertaking, executed personally or on his or her behalf, to repay to Nicolet such reimbursements if and to the extent that it is ultimately determined that such Indemnified Party was not entitled to indemnification for such amounts under the terms of this Agreement.
(f)   Upon written request by an Indemnified Employee who has been made party to an Indemnification Proceeding, Nicolet may reimburse the Expenses of such Indemnified Employee as incurred if the Indemnified Employee provides Nicolet with all of the following: (1) a written affirmation of his or her good faith belief that he or she did not breach or fail to perform his or her duties to the Company or to any Subsidiary of the Company and (2) a written undertaking, executed personally or on his or her behalf, to repay to Nicolet such reimbursements if and to the extent that it is ultimately determined that such Indemnified Employee was not entitled to indemnification for such amounts under the terms of this Agreement. Any determination of whether an Indemnified Employee shall receive reimbursement for Expenses as such Expenses are incurred pursuant to this Section 6.3(f)6.4(f) shall be made at the sole and exclusive discretion of Nicolet.
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Indemnified Employee must make a written request to Nicolet. This written request shall contain a declaration that Nicolet shall have the right to exercise all rights and remedies available to such Indemnified Party or Indemnified Employee against any other Party arising out of or related to the

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Indemnification Proceeding for which indemnification is being sought and that the Indemnified Party or Indemnified Employee has assigned to Nicolet all such rights and remedies. Nicolet shall have no obligation to indemnify any Indemnified Party or Indemnified Employee under this Agreement if and to the extent that such Indemnified Party or Indemnified Employee has previously received indemnification or allowance for Expenses from any Party in connection with the same Indemnification Proceeding.
(h)   For a period of six (6) years after the Effective Time or, if such term coverage is not available, such other maximum period of coverage available, Nicolet shall maintain a directors’ and officers’ liability insurance policy or policies covering each Indemnified Party and Indemnified Employee covered by the Company’s directors’ and officers’ liability insurance policy in effect as of the date hereof, on and subject to terms and conditions no less advantageous to the insureds than the Company’s directors’ and officers’ liability insurance policy in effect as of the date hereof, for acts or omissions occurring prior to the Effective Time; provided, that in no event shall Nicolet be required to expend annually in the aggregate an amount in excess of 300%250% of the amount of the aggregate premiums paid by the Company for fiscal year 20192020 for such purpose and, if Nicolet is unable to maintain such policy (or substitute policy) as a result of this proviso, Nicolet shall obtain a policy or policies of insurance with substantially similar terms and conditions as may then be available, and with an equal or lesser claims reporting time period as may then be available for payment of such amount; provided further, that in lieu of the obligations of this subsection, Nicolet may request that the Company obtain, and upon such request the Company shall obtain, such extended reporting period coverage under the Company’s existing insurance programs (to be effective as of the Effective Time). at Nicolet’s sole expense.
(i)   If Nicolet or any of its successors or assigns shall (i) consolidate with or merge into any other Person and is not the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfer all or substantially all its properties and assets to any Person, then, and in each such case, Nicolet shall use commercially reasonable efforts to cause proper provision to be made so that the successor and assign of Nicolet assumes the obligations set forth in this Section 6.3.6.4.
(j)   The provisions of this Section 6.36.4 shall survive consummation of the Merger and the Bank Merger and are intended to be for the benefit of, and will be enforceable by, each Indemnified Party, each Indemnified Employee, his or her heirs, and his or her legal representatives.
Section 6.46.5   Board Representation.
(a)   On or prior to the Effective Time, Nicolet shall cause the Company Director (expected to be Joseph Fazio, III) to be added to the board of directors of the Surviving Entity and Nicolet Bank. No other directors or employees of the Company shall be designated to serve on the board of directors of the Surviving Entity or Nicolet Bank at the Effective Time. The appointment of the Company Director to the board of directors of the Surviving Entity and Nicolet Bank shall be subject to the bylaws of the Surviving Entity and Nicolet Bank, respectively, and the Company Director must (i) be reasonably acceptable to the Nominating Committee of the Surviving Entity or Nicolet Bank, as applicable, and (ii) satisfy and comply with the requirements regarding service as a member of the board of directors of the Surviving Entity or Nicolet Bank, as applicable, provided under applicable Legal Requirements and the practices and policies of such board that are generally applicable to its members.
(b)   Subject to and in accordance with the bylaws of the Surviving Entity, effective as of the Effective Time, the officers of Nicolet in office immediately prior to the Effective Time, together with such additional persons as may thereafter be elected, shall serve as the officers of the Surviving Entity from and after the Effective Time in accordance with the bylaws of the Surviving Entity.
Section 6.56.6   Authorization and Reservation of Nicolet Common Stock.   Nicolet Board shall, as of the date hereof, authorize and reserve the maximum number of shares of Nicolet Common Stock to be issued pursuant to this Agreement and take all other necessary corporate action to consummate the Contemplated Transactions.

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Section 6.66.7   Stock Exchange Listing.   Nicolet shall cause all shares of Nicolet Common Stock issuable or to be reserved for issuance under this Agreement to be approved for listing on the Nasdaq Capital Market prior to the Closing Date.

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Section 6.76.8   Assumption of Debt Instruments.   Nicolet agrees to execute and deliver, or cause to be executed and delivered, by or on behalf of the Surviving Entity, at or prior to the Effective Time, one or more supplemental indentures, guarantees, and other instruments required for the due assumption of the Company’s outstanding debt, subordinated debentures, guarantees, securities, and other agreements to the extent required by the terms of such debt, subordinated debentures, guarantees, securities, and other agreements that remains outstanding at Closing.Closing, including in connection with the TRUPS Assumption and the Subordinated Notes Assumption.
ARTICLE 7
COVENANTS OF ALL PARTIES
Section 7.1   Regulatory Approvals.   Nicolet and the Company and their respectiveits Subsidiaries will cooperate and use all reasonable best efforts to as promptly as possible prepare, file, effect and obtain all Requisite Regulatory Approvals, the Company will cooperate with Nicolet and its Subsidiaries with respect to the foregoing, and the parties will comply with the terms of such Requisite Regulatory Approvals. Each of Nicolet and the Company will have the right to review in advance, and to the extent practicable each will consult with the other, in each case subject to applicable Legal Requirements relating to the exchange of information, with respect to all substantive written information submitted to any Regulatory Authority in connection with the Requisite Regulatory Approvals. In exercising the foregoing right, each of the parties will act reasonably and as promptly as practicable. Each party agrees that it will consult with the other party with respect to obtaining all permits, consents, approvals and authorizations of all Regulatory Authorities necessary or advisable to consummate the Contemplated Transactions, and each party will keep the other party apprised of the status of material matters relating to completion of the Contemplated Transactions. Nicolet and the Company will, upon request, furnish the other party with all information concerning itself, its Subsidiaries, directors, officers and shareholders and such other matters as may be reasonably necessary or advisable in connection with any filing, notice or application made by or on behalf of such other party or any of its Subsidiaries with or to any Regulatory Authority in connection with the Contemplated Transactions.
Section 7.2   SEC Registration.   As soon as practicable following the date of this Agreement, the Company and Nicolet shall prepare and file with the SEC the Joint Proxy Statement and Nicolet shall prepare and file with the SEC the Registration Statement, in which the Joint Proxy Statement will be included. Nicolet shall use its reasonable best efforts to have the Registration Statement declared effective under the Securities Act as promptly as practicable after such filing and to keep the Registration Statement effective as long as is necessary to consummate the Merger and the Contemplated Transactions. The Company will use its reasonable best efforts to cause the Joint Proxy Statement to be mailed to the Company’s shareholders, and Nicolet will use its reasonable best efforts to cause the Joint Proxy Statement to be mailed to Nicolet’s shareholders, in each case as promptly as practicable after the Registration Statement is declared effective under the Securities Act. Nicolet will advise the Company, promptly after it receives notice thereof, of the time when the Registration Statement has become effective or any supplement or amendment has been filed, the issuance of any stop order, the suspension of the qualification of Nicolet Capital Stock issuable in connection with the Merger for offering or sale in any jurisdiction, or any request by the SEC to amend the Joint Proxy Statement or the Registration Statement or comments thereon and responses thereto or requests by the SEC for additional information, and the Company will advise Nicolet, promptly after it receives notice thereof, of any request by the SEC to amend the Joint Proxy Statement or comments thereon and responses thereto or requests by the SEC for additional information. The parties shall use reasonable best efforts to respond (with the assistance of the other party) as promptly as practicable to any comments of the SEC with respect thereto. If prior to the Effective Time any event occurs with respect to the Company, Nicolet or any Subsidiary of the Company or Nicolet, respectively, or any change occurs with respect to information supplied by or on behalf of the Company or Nicolet, respectively, for inclusion in the Joint Proxy Statement or the Registration Statement that, in each case, is required to be described in an amendment of, or a supplement to, the Joint Proxy Statement or the Registration Statement, the Company or Nicolet, as applicable, shall promptly notify the other of such event, and the Company or Nicolet, as applicable, shall cooperate in the prompt filing with the SEC of any necessary amendment or supplement to the Joint Proxy

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Statement and the Registration Statement and, as required by applicable Legal Requirements, in disseminating the information contained in such amendment or supplement to the Company’s shareholders and to Nicolet’s shareholders.
Section 7.3   Publicity.   Neither the Company nor Nicolet shall, and neither the Company nor Nicolet shall permit any of its Subsidiaries to, issue or cause the publication of any press release or other public announcement with respect to, or otherwise make any public statement or, except as otherwise specifically provided in this Agreement, any disclosure of nonpublic information to a third party, concerning, the Contemplated Transactions without the prior consent (which shall not be unreasonably withheld or delayed) of Nicolet, in the case of a proposed announcement, statement or disclosure by the Company, or the

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Company, in the case of a proposed announcement, statement or disclosure by Nicolet; provided, however, that either party may, without the prior consent of the other party (but after prior consultation with the other party to the extent practicable under the circumstances), issue or cause the publication of any press release or other public announcement to the extent required by applicable Legal Requirements or by the Nasdaq Rules. Subject to the foregoing, Nicolet and the Company agree that the press release announcing the execution and delivery of this Agreement shall be a joint press release of Nicolet and the Company, mutually agreed upon by both parties. Thereafter, and subject to the limitations of this paragraph, Nicolet and the Company shall each use their reasonable best efforts to develop a joint communications plan with respect to the Contemplated Transactions and to ensure that all press releases and other public statements with respect to the Contemplated Transactions shall be consistent with such joint communications plan.
Section 7.4   Reasonable Best Efforts; Cooperation; Takeover Statutes.   Each of Nicolet and the Company agrees to exercise good faith and use its reasonable best efforts to satisfy the various covenants and conditions to Closing in this Agreement, and to consummate the Contemplated Transactions as promptly as practicable. Neither Nicolet nor the Company will intentionally take or intentionally permit to be taken any action that would be a breach of the terms or provisions of this Agreement. Between the date of this Agreement and the Closing Date, each of Nicolet and the Company will, and will cause each Subsidiary of Nicolet and the Company, respectively, and all of their respective Affiliates and Representatives to, cooperate with respect to all filings that any party is required by any applicable Legal Requirements to make in connection with the Contemplated Transactions. Subject to applicable Legal Requirements and the instructions of any Regulatory Authority, each party shall keep the other party reasonably apprised of the status of matters relating to the completion of the Contemplated Transactions, including promptly furnishing the other party with copies of notices or other written communications received by it or any of its Subsidiaries from any Regulatory Authority with respect to such transactions. Without limiting the foregoing, none of Nicolet, the Company or their respective Boards of Directors shall take any action that would cause any Takeover Statute to become applicable to this Agreement or the Contemplated Transactions, and each shall take all necessary steps to exempt (or ensure the continued exemption of) the Contemplated Transactions from any applicable Takeover Statute now or hereafter in effect. If any Takeover Statute may become, or may purport to be, applicable to the Contemplated Transactions, each party and the members of their respective Boards of Directors will grant such approvals and take such actions as are necessary so that the Contemplated Transactions may be consummated as promptly as practicable on the terms contemplated hereby and thereby and otherwise act to eliminate or minimize the effects of any Takeover Statute on any of the Contemplated Transactions, including, if necessary, challenging the validity or applicability of any such Takeover Statute.
Section 7.5   Tax Free Reorganization.
(a)   The parties intend that the Merger qualify as a nontaxable reorganization within the meaning of Section 368(a) and related sections of the Code and that this Agreement constitute a “plan of reorganization” within the meaning of Section 1.368-2(g) of the income taxTreasury regulations promulgated under the Code.thereunder. From and after the date of this Agreement and until the Effective Time, each of the Company and Nicolet shall use its commercially reasonable efforts to cause the Merger to qualify as a reorganization within the meaning of Section 368(a) of the Code, and will not knowingly take any action, cause any action to be taken, fail to take any action or cause any action to fail to be taken which action or failure to act couldwould reasonably be expected to prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code. Following the Effective Time, neither Nicolet nor any Affiliate of Nicolet knowingly shall take any action, cause any action to be taken, fail to take any action, or cause any action to fail to be taken, which action or failure to act could

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would reasonably be expected to prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code.
(b)   As of the date hereof, the Company does not know of any reason why it would not be able to deliver to Nicolet’s counsel, as of the date of the legal opinion referred to in Sections 8.8 and 9.8, a certificate substantially in compliance with IRS published advance ruling guidelines, with reasonable or customary exceptions and modifications thereto (the “IRS Guidelines”), to enable counsel toof Nicolet to deliver the legal opinion contemplated by Sections 8.8 and 9.8, and the Company hereby agrees to deliver such certificate effective as of the date of such opinion to counsel toof Nicolet.

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(c)   As of the date hereof Nicolet does not know of any reason (i) why it would not be able to deliver to its counsel, as of the date of the legal opinion referred to in Sections 8.8 and 9.8, a certificate substantially in compliance with the IRS Guidelines, to enable counsel toof Nicolet to deliver the legal opinion contemplated by Sections 8.8 and 9.8, and Nicolet hereby agrees to deliver such certificates effective as of the date of such opinions;; or (ii) why counsel toof Nicolet would not be able to deliver the opinion required by Sections 8.8 and 9.8. Nicolet hereby agrees to deliver such certificate effective as of the date of such opinion to counsel toof Nicolet.
(d)   Following the Effective Time, Nicolet will continue at least one significant historic business line of the Company, or use at least a significant portion of the Company’s historic business assets in a business, in each case within the meaning of Treas. Reg. Section 1.368-1(d), except that Nicolet may transfer the Company’s historic business assets (i) to a corporation that is a member of Nicolet’s “qualified group,” within the meaning of Treas. Reg. Section 1.368-1(d)(4)(ii), or (ii) to a partnership if (A) one or more members of Nicolet’s “qualified group” have active and substantial management functions as a partner with respect to the Company’s historic business or (B) members of Nicolet’s “qualified group” in the aggregate own an interest in the partnership representing a significant interest in the Company’s historic business, in each case within the meaning of Treas. Reg. Section 1.368-1(d)(4)(iii).
Section 7.6   Employees andEmployees; Employee Contracts; Employee Benefits.
(a)   All individuals employed by the Company or the Bank immediately prior to the Closing (“Covered Employees”) shall automatically become employees of Nicolet as of the Closing. Following the Closing, Nicolet shall maintain employee benefit plans and compensation opportunities for the benefit of Covered Employees that provide employee benefits and compensation opportunities that, in the aggregate, are no less favorable than the employee benefits and compensation opportunities that are made available to similarly-situated employees of Nicolet under the Nicolet Benefit Plans;Plans, provided, however, that: (i) in no event shall any Covered Employee be eligible to participate in any closed or frozen Nicolet Benefit Plan; and (ii) until such time as Nicolet shall cause Covered Employees to participate in the Nicolet Benefit Plans, a Covered Employee’s continued participation in the Company Benefit Plans shall be deemed to satisfy the foregoing provisions of this sentence (it being understood that participation in the Nicolet Benefit Plans may commence at different times with respect to each Nicolet Benefit Plan).
(b)   For all purposes (other than purposes of benefit accruals and, for plan year 2021 only, allocations of employer contributions under Nicolet’s 401(k) Plan) under the Nicolet Benefit Plans providing benefits to the Covered Employees (the “New Plans”), each Covered Employee shall be credited with his or her years of service with the Company and the Bankits Subsidiaries and their respective predecessors to the same extent as such Covered Employee was entitled to credit for such service under any applicable Company Benefit Plan in which such Covered Employee participated or was eligible to participate immediately prior to the Transition Date; provided, however, that the foregoing shall not apply to the extent that its application would result in a duplication of benefits with respect to the same period of service.
(c)   In addition, and without limiting the generality of the foregoing, as of the Transition Date, Nicolet shall use commercially reasonable efforts to provide that: (i) each Covered Employee shall be immediately eligible to participate, without any waiting time, in any and all New Plans to the extent coverage under such New Plan is similar in type to an applicable Company Benefit Plan in which such Covered Employee was participating immediately prior to the Transition Date (such Company Benefit Plans prior to the Transition Date collectively, the “Old Plans”); (ii) for purposes of each New Plan providing medical, dental, pharmaceutical, vision or similar benefits to any Covered Employee, all pre-existing condition exclusions and actively-at-work requirements of such New Plan shall be waived for such Covered Employee

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and his or her covered dependents, unless such conditions would not have been waived under the Old Plan in which such Covered Employee, as applicable, participated or was eligible to participate immediately prior to the Transition Date; and (iii) any eligible expenses incurred by such Covered Employee and his or her covered dependents during the portion of the plan year of the Old Plan ending on the Transition Date shall be taken into account under such New Plan to the extent such eligible expenses were incurred during the plan year of the New Plan in which the Transition Date occurs for purposes of satisfying all deductible, coinsurance and maximum out-of-pocket

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requirements applicable to such Covered Employee and his or her covered dependents for the applicable plan year as if such amounts had been paid in accordance with such New Plan.
(d)   Section 7.6 of the Nicolet Disclosure Schedules sets forth the severance payments that will be paid with respect to any eligible Covered Employee (exempt and non-exempt) who incurs a qualifying involuntary termination of employment in accordance with such schedule. Notwithstanding the foregoing, no Covered Employee eligible to receive severance benefits or other payment triggered by the Merger under an employment, change in control, severance, salary continuation agreement or other similar agreement (a “CIC Payment”) shall be entitled to receive the severance benefits described in this Section 7.6(d) or to otherwise receive severance benefits from Nicolet. Any Company shall determine and establish a retention bonus program for certain employees of Nicolet and the Companyemployee who remain employed through the Closing, or at Nicolet for an interim period following Closing. The Company and Nicolet shall mutually agree as to each employeeis eligible to receive a retention bonus andCIC Payment shall not receive any severance benefits as provided in this Section 7.6(d) but rather will be entitled to the amountCIC Payment payable under the terms of each such retention bonus.the applicable agreement.
Section 7.7   Section 16 Matters.   Prior to the Effective Time, Nicoletthe parties will each take such steps as may be necessary or appropriate to cause any disposition of Company Capital Stock or conversion of any derivative securities in respect of shares of Company Capital Stock or acquisition of Nicolet Common Stock, as applicable, in connection with the consummation of the Contemplated Transactions to be exempt under Rule 16b-3 promulgated under the Exchange Act.
Section 7.8   Shareholder Litigation.   Each of the Company and Nicolet shall give the other the reasonable opportunity to consult concerning the defense of any shareholder litigation against the Company or Nicolet, as applicable, or any of their respective directors or officers relating to the Contemplated Transactions.
ARTICLE 8
CONDITIONS PRECEDENT TO OBLIGATIONS OF NICOLET
The obligations of Nicolet to consummate the Contemplated Transactions and to take the other actions required to be taken by Nicolet at the Closing are subject to the satisfaction, at or prior to the Closing, of each of the following conditions (any of which may be waived by Nicolet in whole or in part):
Section 8.1   Accuracy of Representations and Warranties.   For purposes of this Section 8.1, the accuracy of the representations and warranties of the Company set forth in this Agreement shall be assessed as of the date of this Agreement and as of the Closing Date (or such other date(s) as specified, to the extent any representation or warranty speaks as of a specific date). The representations and warranties set forth in Section 3.3 and Section 3.5(a) shall be true and correct (except for inaccuracies which are de minimisin amount and effect). There shall not exist inaccuracies in the representations and warranties of the Company set forth in this Agreement (including the representations set forth in Section 3.3 and Section 3.5(a)) such that the aggregate effect of such inaccuracies has, or is reasonably likely to have, a Material Adverse Effect;Effect on the Company; provided that, for purposes of this sentence only, those representations and warranties which are qualified by references to “material” or “Material Adverse Effect” or to the “Knowledge” of any Person shall be deemed not to include such qualifications.
Section 8.2   Performance by the Company.   The Company shall have performed or complied in all material respects with all of the covenants and obligations to be performed or complied with by it under the terms of this Agreement on or prior to the Closing Date.
Section 8.3   Shareholder ApprovalApprovals.   TheEach of the Company Shareholder Approval and the Nicolet Shareholder Approval shall have been obtained.obtained, provided however that Nicolet Shareholder Approval shall not be a condition to Closing if the Nicolet Shareholder Approval is not required on the Closing Date by the WBCL or Nasdaq Rules.

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Section 8.4   No Proceedings.   Since the date of this Agreement, there must not have been commenced or be pending any Proceeding: (a) involving any challenge to, or seeking damages or other relief in connection with, any of the Contemplated Transactions; or (b) that may have the effect of preventing, delaying, making illegal or otherwise interfering with any of the Contemplated Transactions, in either case that would reasonably be expected by the Nicolet Board to have a Material Adverse Effect on the Surviving Entity.
Section 8.5   Regulatory Approvals.   All Requisite Regulatory Approvals shall have been obtained and shall remain in full force and effect and all statutory waiting periods in respect thereof shall have expired or been terminated and there shall not be any action taken, or any Legal Requirement enacted, entered, enforced or deemed applicable to the Contemplated Transactions, by any Regulatory Authority, in connection with the grant of a Requisite Regulatory Approval, which shall have imposed a restriction or condition on, or requirement of, such approval that would, after the Effective Time, reasonably be expected by the Nicolet Board to have a Material Adverse Effect on the Surviving Entity.
Section 8.6   Registration Statement.   The Registration Statement shall have become effective under the Securities Act. No stop order shall have been issued or threatened by the SEC that suspends the

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effectiveness of the Registration Statement, and no Proceeding shall have been commenced or be pending or threatened for such purpose.
Section 8.7   Officer’s Certificate.   Nicolet shall have received a certificate signed on behalf of the Company by an executive officer of the Company certifying as to the matters set forth in Sections 8.1 and 8.2.
Section 8.8   Tax Opinion.   Nicolet shall have received a written opinion of Bryan Cave Leighton Paisner LLP, addressed to the Company and Nicolet, in form and substance reasonably satisfactory to the Company and Nicolet, dated as of the Closing Date, to the effect that: (a) the Merger will constitute a reorganization within the meaning of Section 368(a) of the Code; and (b) each of the Company and Nicolet will be a party to such reorganization within the meaning of Section 368(b) of the Code.
Section 8.9   Stock Exchange Listing.   Nicolet shall have filed with the Nasdaq Stock Market, LLC a notification form for the listing of all shares of Nicolet Common Stock to be delivered in the Merger, and the Nasdaq Stock Market, LLC shall not have objected to the listing of such shares of Nicolet Common Stock.
Section 8.10   Minimum Tangible Common Equity.   As of the Closing Date, the Company shall have Tangible Common Equity of no less than $66,500,000.$163,000,000.
Section 8.11   No Material Adverse Effect.   From the date of this Agreement to the Closing, there shall be and have been no change in the financial condition, assets or business of the Company or the Bank that has had or would reasonably be expected to have a Material Adverse Effect on the Company.
Section 8.12   Consents.   The Company shall have obtained or caused to be obtained the written consents, permissions and approvals as required under any agreements, contracts, appointments, indentures, plans, trusts or other arrangements with third parties as set forth on Section 8.12 of the Company Disclosure Schedules that are required to effect the Contemplated Transactions.
Section 8.13   CancellationSupplemental Indentures.   The Company and Nicolet shall deliver, or cause to be delivered, the Supplemental Indentures.
Section 8.14   Company Preferred Stock.   As of the Closing Date, the Company shall have caused the redemption of all outstanding shares of Company Stock Options.   Nicolet shall have received documentation (in a form satisfactory to Nicolet) from the Company as required by Section 2.8(b), and subject to the payments required by Section 2.8(a), evidencing the cancellation of Company Stock Options.Preferred Stock.
ARTICLE 9
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY
The obligations of the Company to consummate the Contemplated Transactions and to take the other actions required to be taken by the Company at the Closing are subject to the satisfaction, at or prior to the Closing, of each of the following conditions (any of which may be waived by the Company, in whole or in part):

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Section 9.1   Accuracy of Representations and Warranties.   For purposes of this Section 9.1, the accuracy of the representations and warranties of Nicolet set forth in this Agreement shall be assessed as of the date of this Agreement and as of the Closing Date (or such other date(s) as specified, to the extent any representation or warranty speaks as of a specific date). The representations and warranties set forth in Section 4.234.3 and Section 4.5(a) shall be true and correct (except for inaccuracies which are de minimis in amount and effect). There shall not exist inaccuracies in the representations and warranties of Nicolet set forth in this Agreement (including the representations set forth in Section 4.3 and Section 4.5(a)) such that the aggregate effect of such inaccuracies has, or is reasonably likely to have, a Material Adverse Effect;Effect on Nicolet; provided, that, for purposes of this sentence only, those representations and warranties which are qualified by references to “material” or “Material Adverse Effect” or to the “Knowledge” of any Person shall be deemed not to include such qualifications.
Section 9.2   Performance by Nicolet.   Nicolet shall have performed or complied in all material respects with all of the covenants and obligations to be performed or complied with by it under the terms of this Agreement on or prior to the Closing Date.
Section 9.3   Shareholder ApprovalApprovals.   TheEach of the Company Shareholder Approval and the Nicolet Shareholder Approval shall have been obtained.obtained, provided however that Nicolet Shareholder Approval shall not be a condition to Closing if the Nicolet Shareholder Approval is not required on the Closing Date by the WBCL or Nasdaq Rules.

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Section 9.4   No Proceedings.   Since the date of this Agreement, there must not have been commenced or be pending any Proceeding: (a) involving any challenge to, or seeking damages or other relief in connection with, any of the Contemplated Transactions; or (b) that may have the effect of preventing, delaying, making illegal or otherwise interfering with any of the Contemplated Transactions, in either case that would reasonably be expected by the Company Board to have a Material Adverse Effect on the Surviving Entity.
Section 9.5   Regulatory Approvals.   All Requisite Regulatory Approvals shall have been obtained and shall remain in full force and effect and all statutory waiting periods in respect thereof shall have expired or been terminated and there shall not be any action taken, or any Legal Requirement enacted, entered, enforced or deemed applicable to the Contemplated Transactions, by any Regulatory Authority, in connection with the grant of a Requisite Regulatory Approval, which shall have imposed a restriction or condition on, or requirement of, such approval that would, after the Effective Time, reasonably be expected by the Company Board to have a Material Adverse Effect on the Surviving Entity.
Section 9.6   Registration Statement.   The Registration Statement shall have become effective under the Securities Act. No stop order shall have been issued or threatened by the SEC that suspends the effectiveness of the Registration Statement, and no Proceeding shall have been commenced or be pending or threatened for such purpose.
Section 9.7   Officer’s Certificate.   The Company shall have received a certificate signed on behalf of Nicolet by an executive officer of Nicolet certifying as to the matters set forth in Sections 9.1and 9.2.
Section 9.8   Tax Opinion.   The Company shall have received a written opinion of Bryan Cave Leighton Paisner LLP, addressed to the Company and Nicolet, in form and substance reasonably satisfactory to the Company and Nicolet, dated as of the Closing Date, to the effect that: (a) the Merger will constitute a reorganization within the meaning of Section 368(a) of the Code; and (b) each of the Company and Nicolet will be a party to such reorganization within the meaning of Section 368(b) of the Code.
Section 9.9   Stock Exchange Listing.   Nicolet shall have filed with the Nasdaq Stock Market, LLC a notification form for the listing of all shares of Nicolet Common Stock to be delivered in the Merger, and the Nasdaq Stock Market, LLC shall not have objected to the listing of such shares of Nicolet Common Stock.
Section 9.10    Supplemental Indentures.   The Company and Nicolet shall deliver, or cause to be delivered, the Supplemental Indentures.
Section 9.11   No Material Adverse Effect.From the date of this Agreement to the Closing, there shall be and have been no change in the financial condition, assets or business of Nicolet or any of its Subsidiaries that has had or would reasonably be expected to have a Material Adverse Effect on Nicolet.

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ARTICLE 10
TERMINATION
Section 10.1   Termination of Agreement.   This Agreement may be terminated only as set forth below, whether before or after approval of the matters presented in connection with the Merger by the shareholders of the Company or Nicolet:
(a)   by mutual consent of the Nicolet Board and the Company Board, each evidenced by appropriate written resolutions;
(b)   by Nicolet, if the Company shall have breached or failed to perform any of its representations, warranties, covenants or agreements set forth in this Agreement, which breach or failure to perform, either individually or together with other such breaches, in the aggregate, if occurring or continuing on the date on which the Closing would otherwise occur would result in the failure of any of the conditions set forth in Section 8.1 and Section 8.2 and such breach or failure to perform has not been or cannot be cured within thirty (30) days following written notice to the party committing such breach, making such untrue representation and warranty or failing to perform; provided, that such breach or failure is not a result of the failure by Nicolet to perform and comply in all material respects with any of its obligations or representations and warranties under this Agreement that are to be performed or complied with by it prior to or on the date required hereunder;
(c)   by the Company, if Nicolet shall have breached or failed to perform any of its representations, warranties, covenants or agreements set forth in this Agreement which breach or failure to perform,

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either individually or together with other such breaches, in the aggregate, if occurring or continuing on the date on which the Closing would otherwise occur would result in the failure of any of the conditions set forth in Section 9.1 and Section 9.2 and such breach or failure to perform has not been or cannot be cured within thirty (30) days following written notice to the party committing such breach, making such untrue representation and warranty or failing to perform, provided, that such breach or failure is not a result of the failure by the Company to perform and comply in all material respects with any of its obligations or representations and warranties under this Agreement that are to be performed or complied with by it prior to or on the date required hereunder;
(d)   by Nicolet or the Company, if: (i) any Regulatory Authority that must grant a Requisite Regulatory Approval has denied approval of any of the Contemplated Transactions and such denial has become final and nonappealable; (ii) any application, filing or notice for a Requisite Regulatory Approval has been withdrawn at the request or recommendation of the applicable Regulatory Authority; or (iii) if the Company Shareholder Approval or the Nicolet Shareholder Approval (if the Nicolet Shareholder Approval is required on the Closing Date by the WBCL or Nasdaq Rules) is not obtained following the Company Shareholders Meeting;Meeting or the Nicolet Shareholders Meeting, respectively; provided, however, that the right to terminate this Agreement under this Section 10.1(d) shall not be available to a party whose failure (or the failure of any of its Affiliates) to fulfill any of its obligations (excluding warranties and representations) under this Agreement has been the cause of or resulted in the occurrence of any event described above;
(e)   by Nicolet or the Company, if the Effective Time shall not have occurred at or before February 17, 2021June 22, 2022 (the “Termination Date”); provided, however, that the right to terminate this Agreement under this Section 10.1(e) shall not be available to any party to this Agreement whose failure to fulfill any of its obligations (excluding warranties and representations) under this Agreement has been the cause of or resulted in the failure of the Effective Time to occur on or before such date;
(f)   by Nicolet or the Company, if any court of competent jurisdiction or other Regulatory Authority shall have issued a judgment, Order, injunction, rule or decree, or taken any other action restraining, enjoining or otherwise prohibiting any of the Contemplated Transactions and such judgment, Order, injunction, rule, decree or other action shall have become final and nonappealable;
(g)   by Nicolet, prior to receipt of the Company Shareholder Approval, if the Company Board makes an Adverse Recommendation;
(h)   by the Company, prior to receipt of the Company Shareholder Approval pursuant to Section 5.9;5.9;

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(i)   by the Company, prior to receipt of the Nicolet Shareholder Approval, if the holders of more than 10% in the aggregate of the outstanding shares of Company Common Stock assert dissenters’ rights in compliance with Subchapter XIII of the WBCL;Nicolet Board makes an Adverse Recommendation; or
(j)   by Company, at any time during the five (5) Business Day period commencing on the Determination Date, if and only if both of the following conditions are satisfied:
(i) the Nicolet Market Value as of the Determination Date is less than $65.83 per share; and
(ii) (A) the number obtained by dividing (I) the Nicolet Market Value as of the Determination Date, by (II) $77.45, is less than (B) the number obtained by subtracting 0.15 from the Index Ratio;
provided, however, that if Company elects to exercise its termination right pursuant to this Section 10.1(j), it shall give written notice to Nicolet. Within five (5) Business Days following receipt of such notice, Nicolet may, at its sole option (the “Fill Option”), offer to increase the Exchange Ratio to equal the lesser of:
(A) the product of (I) quotient obtained by dividing $77.45 by the Nicolet Market Value as of the Determination Date, (II) the Exchange Ratio, and (III) the Index Ratio minus 0.15 (rounded to the nearest ten-thousandth); or
(B) the product of (I) the quotient obtained by dividing $77.45 by the Nicolet Market Value as of the Determination Date, (II) the Exchange Ratio, and (III) 0.85 (rounded to the nearest ten-thousandth).
If Nicolet elects to exercise its Fill Option pursuant to this Section 10.1(j), it shall give prompt written notice to Company of such election and any references to “Merger Consideration” in this Agreement shall thereafter be deemed to refer to the Merger Consideration as adjusted pursuant to this Section 10.1(j). If Nicolet or any company belonging to the Index declares or effects a stock dividend, reclassification, recapitalization, split-up, combination, exchange of shares or similar transaction between the date of this Agreement and the Determination Date, the prices for the common stock of such company shall be appropriately adjusted for the purposes of applying this Section 10.1(j).
For purposes of this Section 10.1(j), the following definitions apply:
“Determination Date” means the fifteenth (15th) Business Day prior to the scheduled Closing Date, as extended from time to time.
“Final Index Price” means the sum of the Final Prices of each company comprising the Index.
“Final Price” with respect to any company included in the Index, means the volume weighted average closing price of a share of common stock of such company (and if there is no closing sales price on any such day, then the mean between the closing bid and the closing asked prices on that day), as reported on the consolidated transaction reporting system for the market or exchange on which such common stock is principally traded, for the twenty (20) trading day period immediately preceding the Determination Date.
“Index” means the SNL U.S. Bank $5B-$10B Index or, if such index is not available, such substitute or similar index as substantially replicates the SNL U.S. Bank $5B-$10B Index.
“Initial Index Price” means the sum of the Initial Prices of each company comprising the Index.
“Initial Price” with respect to any company included in the Index, means the volume weighted average closing price of a share of common stock of such company (and if there is no closing sales price on any such day, then the mean between the closing bid and the closing asked prices on that day), as reported on the consolidated transaction reporting system for the market or exchange on which such common stock is principally traded, for the twenty (20) trading day period immediately preceding the date of this Agreement.
“Index Ratio” means the Final Index Price divided by the Initial Index Price.
“Nicolet Market Value” means, as of any specified date, the volume weighted average closing price of Nicolet Common Stock Price is less than $62.00 per share and Nicolet elects its option set forth in Section 2.1(iii)(d); oron the Nasdaq Capital Market over the twenty (20) trading day period immediately preceding such specified date.
(k)   by the Company, if the Nicolet Common Stock Price is less than $62.00 per share and Nicolet elects its option set forth in Section 2.1(iii)(c).

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Section 10.2   Effect of Termination or Abandonment.   In the event of the termination of this Agreement and the abandonment of the Merger pursuant to Section 10.1, this Agreement shall become null and void, and there shall be no liability of one party to the other or any restrictions on the future activities on the part of any party to this Agreement, or its respective directors, officers or shareholders, except that: (i) the Confidentiality Agreement, this Section 10.2, Section 10.3 and Article 11 shall survive such termination and abandonment; and (ii) no such termination shall relieve the breaching party from liability resulting from any willful and material breach by that party of this Agreement.
Section 10.3   Fees and Expenses.
(a)   Except as otherwise provided in this Section 10.3, all fees and expenses incurred in connection with this Agreement, the Merger and the other Contemplated Transactions shall be paid by the party incurring such fees or expenses, whether or not the Merger is consummated, except that the expenses incurred in connection with the filing, printing and mailing of the Joint Proxy Statement, and all filing and

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other fees paid to the SEC, in each case in connection with the Merger (other than attorneys’ fees, accountants’ fees and related expenses), shall be shared equally by Nicolet and the Company.
(b)   If this Agreement is terminated by Nicolet pursuant to Section 10.1(g) or by the Company pursuant to Section 10.1(h), then the Company shall pay to Nicolet, within two (2) Business Days after such termination, the amount of $5,000,000$10,000,000 (the “Termination Fee”) by wire transfer of immediately available funds to such account as Nicolet shall designate.
(c)   If (i) an Acquisition Proposal with respect to the Company shall have been communicated to or otherwise made known to the Company shareholders or the Company Board, or any Person shall have publicly announced an intention (whether or not conditional) to make an Acquisition Proposal with respect to the Company after the date of this Agreement, (ii) thereafter this Agreement is terminated by the Company or Nicolet pursuant to (A) Section 10.1(c) (A) (if10.1(e) based on the failure to obtain the Company Shareholder Approval has not theretofore been obtained) or Section 10.1(d) (B) Section 10.1(d)(iii) based on the failure to obtain the Company Shareholder Approval, and (iii) prior to the date that is twelve (12) months after the date of such termination, the Company enters into a definitive written agreement with any Person with respect to such Acquisition Proposal referred to in Section 10.3(c)(i), then the Company shall pay to Nicolet, within two (2) Business Days after execution of such definitive written agreement, the Termination Fee by wire transfer of immediately available funds to such account as Nicolet shall designate.
(d)   All payments made pursuant to this Section 10.3 shall constitute liquidated damages and the receipt thereof shall be the sole and exclusive remedy of the receiving party against the party making such payment, its Affiliates and their respective directors, officers and shareholders for any claims arising out of or relating in any way to this Agreement or the transactions contemplated herein.
ARTICLE 11
MISCELLANEOUS
Section 11.1   Survival.   Except for covenants that are expressly to be performed after the Closing, none of the representations, warranties and covenants contained herein shall survive beyond the Closing.
Section 11.2   Governing Law.   All questions concerning the construction, validity and interpretation of this Agreement and the performance of the obligations imposed by this Agreement shall be governed by the internal laws of the State of Wisconsin applicable to Contracts made and wholly to be performed in such state without regard to conflicts of laws.
Section 11.3   Assignments, Successors and No Third Party Rights.   Neither party to this Agreement may assign any of its rights under this Agreement (whether by operation of law or otherwise) without the prior written consent of the other party. Any purported assignment in contravention hereof shall be null and void. Subject to the preceding sentence, this Agreement and every representation, warranty, covenant, agreement and provision hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Except for Section 6.3,6.4, nothing expressed or referred to in this Agreement will be construed to give any Person other than the parties to this Agreement any legal or equitable right, remedy or claim under or with respect to this Agreement or any provision of this Agreement. The representations and warranties in this Agreement are the product of negotiations among the parties

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hereto and are for the sole benefit of the parties. Any inaccuracies in such representations and warranties are subject to waiver by the parties hereto in accordance with Section 11.5 without notice or liability to any other Person. In some instances, the representations and warranties in this Agreement may represent an allocation among the parties hereto of risks associated with particular matters regardless of the knowledge of any of the parties hereto. Consequently, persons other than the parties may not rely upon the representations and warranties in this Agreement as characterizations of actual facts or circumstances as of the date of this Agreement or as of any other date.
Section 11.4   Modification.   This Agreement may be amended, modified or supplemented by the parties at any time before or after the Company Shareholder Approval and/or Nicolet Shareholder Approval is obtained; provided, however, that after the Company Shareholder Approval is obtained, there may not be, without further approval of the Company’s and Nicolet’s shareholders, respectively, any amendment of this Agreement that requires further approval under applicable

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Legal Requirements. This Agreement may not be amended, modified or supplemented except by an instrument in writing signed on behalf of each of the parties.
Section 11.5   Extension of Time; Waiver.   At any time prior to the Effective Time, the parties may, to the extent permitted by applicable Legal Requirements: (a) extend the time for the performance of any of the obligations or other acts of the other party; (b) waive any inaccuracies in the representations and warranties contained in this Agreement or in any document delivered pursuant to this Agreement; or (c) waive compliance with or amend, modify or supplement any of the agreements or conditions contained in this Agreement which are for the benefit of the waiving party. Any agreement on the part of a party to any such extension or waiver shall be valid only if set forth in a written instrument signed on behalf of such party. Neither the failure nor any delay by any party in exercising any right, power or privilege under this Agreement or the documents referred to in this Agreement will operate as a waiver of such right, power or privilege, and no single or partial exercise of any such right, power or privilege will preclude any other or further exercise of such right, power or privilege or the exercise of any other right, power or privilege. Except as provided in Article 10, the rights and remedies of the parties to this Agreement are cumulative and not alternative. To the maximum extent permitted by applicable Legal Requirements: (x) no claim or right arising out of this Agreement or the documents referred to in this Agreement can be discharged by one party, in whole or in part, by a waiver or renunciation of the claim or right unless in writing signed by the other party; (y) no waiver that may be given by a party will be applicable except in the specific instance for which it is given; and (z) no notice to or demand on one party will be deemed to be a waiver of any obligation of such party or of the right of the party giving such notice or demand to take further action without notice or demand as provided in this Agreement or the documents referred to in this Agreement.
Section 11.6   Notices.   All notices, consents, waivers and other communications under this Agreement shall be in writing (which shall include electronic mail) and shall be deemed to have been duly given if delivered by hand or by nationally recognized overnight delivery service (receipt requested), mailed by registered or certified U.S. mail (return receipt requested) postage prepaid or sent by electronic mail (with confirmation) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):
If to Nicolet, to:
Nicolet Bankshares, Inc.
111 N. Washington Street
Green Bay, WI 54301
Telephone:    (920) 430-7317430-7318
Email:         batwell@nicoletbank.commdaniels@nicoletbank.com
Attention:    Robert B. AtwellMichael E. Daniels
with copies to:
Bryan Cave Leighton Paisner LLP
One Atlantic Center, 14th Floor
1201 W. Peachtree Street, NW
Atlanta, GA 30309-3488
Telephone:   (404) 572-6810
Email:         Robert.Klingler@bclplaw.com
Attention:    Robert D. Klingler
If to the Company, to:
Commerce Financial Holdings, Inc.
1700 S. Silverbrook Drive
West Bend, WI 53095
Telephone:   (262) 247-2802
Email:         jfazio@commercesb.com
Attention:   Joseph Fazio, III
 
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Telephone:     (404) 572-6810
Email:          Robert.Klingler@bclplaw.com
Attention:     Robert D. Klingler
If to the Company, to:
County Bancorp, Inc.
2400 South 44th Street
Manitowoc, WI 54221
Telephone:    (920) 686-9998
Email:          tschneider@icbk.com
Attention:     Timothy J. Schneider
with copies to:
Reinhart Boerner Van Deuren, s.c.Barack Ferrazzano Kirschbaum & Nagelberg LLP
1000 North Water200 W. Madison Street, Suite 17003900
Milwaukee, WI 53202Chicago, Illinois 60606
Telephone:    (414) 298-8140(312) 629-7329
Email:          rhenkle@reinhartlaw.comrobert.fleetwood@bfkn.com
Attention:     Robert F. Henkle, Jr.M. Fleetwood
or to such other Person or place as the Company shall furnish to Nicolet or Nicolet shall furnish to the Company in writing. Except as otherwise provided herein, all such notices, consents, waivers and other communications shall be effective: (a) if delivered by hand, when delivered; (b) if delivered by overnight delivery service, on the next Business Day after deposit with such service; and (c) if mailed in the manner provided in this Section 11.6, five (5) Business Days after deposit with the U.S. Postal Service.Service; and (d) if sent by electronic mail, upon receipt.
Section 11.7   Entire Agreement.   This Agreement, the Schedules and any documents executed by the parties pursuant to this Agreement and referred to herein, together with the Confidentiality Agreement, constitute the entire understanding and agreement of the parties hereto and supersede all other prior agreements and understandings, written or oral, relating to such subject matter between the parties.
Section 11.8   Severability.   Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable Legal Requirements, but if any provision of this Agreement is held to be prohibited by or invalid under applicable Legal Requirements, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement unless the consummation of the Contemplated Transactions is adversely affected thereby.
Section 11.9   Further Assurances.   The parties agree: (a) to furnish upon request to each other such further information; (b) to execute and deliver to each other such other documents; and (c) to do such other acts and things; all as the other party may reasonably request for the purpose of carrying out the intent of this Agreement and the documents referred to in this Agreement.
Section 11.10   Counterparts.   This Agreement and any amendments thereto may be executed in any number of counterparts (including by electronic means), each of which shall be deemed an original, but all of which together shall constitute one and the same agreement and shall become effective when counterparts have been signed by each of the parties and delivered to the other party, it being understood that each party need not sign the same counterpart.
ARTICLE 12
DEFINITIONS
Section 12.1   Definitions.   In addition to those terms defined throughout this Agreement, the following terms, when used herein, shall have the following meanings:
(a)   “Acquisition Proposal” means a tender or exchange offer to acquire more than 25% of the voting power in the Company or the Bank, a proposal for a merger, consolidation or other business combination

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involving the Company or the Bank or any other proposal or offer to acquire in any manner more than 25% of the voting power in, or more than 25% of the business, assets or deposits of, the Company or the Bank, other than the transactions contemplated hereby and other than any sale of whole loans and securitizations in the Ordinary Course of Business.
(b)   “Affiliate” means, with respect to any specified Person, any other Person directly or indirectly Controlling, Controlled by or under common Control with, such specified Person.
(c)   “Bank” means Commerce StateInvestors Community Bank, a wholly-owned subsidiary of the Company.
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(e)   “Business Day” means any day except Saturday, Sunday and any day on which banks in Wisconsin are authorized or required by law or other government action to close.
(f)   “Company Articles of Incorporation” means the CertificateThird Amended and Restated Articles of Incorporation of the Company, as amended.Company.
(g)   “Company Benefit Plan” means any: (i) qualified or nonqualified “employee pension benefit plan” (as defined in Section 3(2) of ERISA) or other deferred compensation or retirement plan or arrangement; (ii) “employee welfare benefit plan” (as​(as defined in Section 3(1) of ERISA) or other health, welfare or similar plan or arrangement; (iii) “employee benefit plan” (as​(as defined in Section 3(3) of ERISA); (iv) equity-based compensation plan or arrangement (including any stock option, stock purchase, stock ownership, stock appreciation, restricted stock, restricted stock unit, phantom stock or similar plan, agreement or award); (v) other paid time off, compensation, severance, bonus, profit-sharing or incentive plan or arrangement; (vi) other employee benefit plan, practice, policy or arrangement of any kind, whether written or oral, and whether for the benefit of a single individual or more than one (1) individual;kind; or (vii) change in control agreement or employment or severance agreement,agreement; in each case, with respect to clauses (i) through (vii) of this definition, to which contributions have at any time been made by the Company or the Bank or any Company ERISA Affiliate or under which any current or former employee, director, agent or independent contractor of the Company or the Bank or any beneficiary thereof is covered, is eligible for coverage or has payment or other benefit rights, and for which the Company or the Bank has or may have liability, including by reason of having a Company ERISA Affiliate.
(h)   “Company Board” means the board of directors of the Company.
(i)   “Company Bylaws” means the Third Amended and Restated Bylaws of the Company, as amended.Company.
(j)   “Company Capital Stock” means Company Common Stock and Company Preferred Stock.
(k)   “Company Common Stock” means the common stock, $0.01 par value per share, of the Company.
(l)   “Company Debt Agreement” means any agreement or understanding, and any transaction documents pursuant thereto, representing a loan, credit facility or debt instrument or otherwise memorializing any indebtedness incurred by the Company and owing to any lending party or parties in effect or outstanding as of the time of this Agreement or at the Effective Time.
(m)   “Company ERISA Affiliate” means each “person” (as​(as defined in Section 3(9) of ERISA) that is treated as a single employer with the Company or the Bank for purposes of Section 414414(b), (c), (m) and (o) of the Code.
(n)(m)   “Company Regulatory Reports” means (i) the Consolidated Reports of Condition and Income for A Bank With Domestic Offices Only — FFIEC 041 of the Bank for the years endedperiods between January 1, 2019 and December 31, 2019, 2018 and 2017,2020, as filed with the FDIC; (ii) the Consolidated Reports of Condition and Income for A Bank With Domestic Offices Only — FFIEC 041 of the Bank with respect to periods ended subsequent to December 31, 2019,2020, as filed with the FDIC; (iii) the Parent Company Only Financial Statements for Small Holding Companies, Form FR Y-9SP, of the Company for the yearsperiods ended December 31, 2020, June 30, 2020, December 31, 2019 2018 and 2017;June 30, 2019; and (iv) the Parent Company Only Financial Statements for Small Holding Companies, Form FR Y-9SP, of the Company with respect to periods ended subsequent to December 31, 2020.
(n)   “Company SEC Reports” means the annual, quarterly and other reports, schedules, forms, statements and other documents (including exhibits and all other information incorporated therein) filed or furnished by the Company with the SEC under the Securities Act, the Exchange Act, or the rules and

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regulations of the SEC thereunder, since January 1, 2019. For the avoidance of doubt, Company SEC Reports shall not include filings made with the SEC pursuant to Section 13 or Section 16 by shareholders, directors or officers of the Company.
(o)   “Company Shareholder Approval” means the adoption and approval of this Agreement by the shareholders of the Company, in accordance with the WBCL and the Company Articles of Incorporation.
(p)   “Company Stock Option” means any outstanding Company Stock Option, stock appreciation right, restricted stock award, restricted stock unit, or other equity award granted under a Company Stock Plan.

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(q)   “Company Stock Plans” means the Commerce Financial Holdings,County Bancorp Inc. 2005 Stock2012 Equity Incentive Compensation Plan, the County Bancorp, Inc. 2016 Long Term Incentive Plan, and the County Bancorp, Inc. 2021 Long-Term Incentive Plan.
(q)   “Company Subordinated Note Indentures” means the Indenture, dated May 30, 2018, by and between the Company and U.S. Bank National Association, as amended.trustee, and the Indenture, dated June 30, 2020, by and between the Company and U.S. Bank National Association, as trustee.
(r)   “Company Trusts” means the County Bancorp Statutory Trust II, County Bancorp Statutory Trust III and Fox River Valley Capital Trust I.
(s)   “Contemplated Transactions” means all of the transactions contemplated by this Agreement, including: (i) the Merger; (ii) the Bank Merger, (iii) the performance by Nicolet and the Company of their respective covenants and obligations under this Agreement; and (iv) Nicolet’s issuance of shares of Nicolet Common Stock pursuant to the Registration Statement, the Per Share Cash Consideration, and cash in lieu of fractional shares, and for Supplemental Cash Consideration, if any, in exchange for shares of Company Common Stock.
(s)(t)   “Contract” means any agreement, contract, obligation, promise or understanding (whether written or oral and whether express or implied) that is legally binding: (i) under which a Person has or may acquire any rights; (ii) under which such Person has or may become subject to any obligation or liability; or (iii) by which such Person or any of the assets owned or used by such Person is or may become bound.
(t)(u)   “Control,” “Controlling” or “Controlled” when used with respect to any specified Person, means the power to vote 25 percent (25%) or more of any class of voting securities of a Person, the power to control in any manner the election of a majority of the directors or partners of such Person, or the power to exercise a controlling influence over the management or policies of such Person.
(u)(v)   “CRA” means the Community Reinvestment Act, as amended.
(v)(w)   “Deposit Insurance Fund” means the fund that is maintained by the FDIC to allow it to make up for any shortfalls from a failed depository institution’s assets.
(w)   “Derivative Transactions” means any swap transaction, option, warrant, forward purchase or sale, transaction, futures transaction, cap transaction, floor transaction or collar transaction relating to one or more currencies, commodities, bonds, equity, securities, loans, interest rates, prices, values, or other financial or nonfinancial assets, credit-related events or conditions or any indexes, or other similar transaction or combination of any of these transactions, including collateralized mortgage obligations or other similar instruments or any debt or equity instruments evidencing or embedding any such types of transactions, and any related credit support, collateral or other similar arrangements related to such transactions.
(x)“Dissenting Shares” shall mean shares with respect to which the holders thereof have perfected dissenters’ rights under Subchapter XIII of the WBCL.
(y)   “DOL” means the U.S. Department of Labor.
(z)(y)   “Environment” means surface or subsurface soil or strata, surface waters and sediments, navigable waters, groundwater, drinking water supply and ambient air.
(aa)(z)   “Environmental Laws” means any federal, state or local law, statute, ordinance, rule, regulation, code, order, permit or other legally binding requirement applicable to the business or assets of Nicolet, the Company or any of their respective Subsidiaries that imposes liability or standards of conduct with respect to the Environment and/or Hazardous Materials.
(bb)(aa)   “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
(cc)(bb)   “Exchange Act” means the Securities Exchange Act of 1934, as amended.
(dd)(cc)   “FDIC” means the Federal Deposit Insurance Corporation.
(ee)(dd)   “Federal Reserve” means the Board of Governors of the Federal Reserve System.
(ff)(ee)   “GAAP” means generally accepted accounting principles in the U.S., consistently applied.
(gg)(ff)   “Hazardous Materials” means any hazardous, toxic or dangerous substance, waste, contaminant, pollutant, gas or other material that is classified as such under Environmental Laws or is otherwise regulated under Environmental Laws.
 
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(hh)(gg)   “Intangible Assets” means any asset that is considered an intangible asset under GAAP, including, without limitation, any goodwill and any other identifiable intangible assets recorded in accordance with GAAP, but excluding any mortgage servicing assets recorded as an intangible asset.
(ii)(hh)   “IRS” means the U.S. Internal Revenue Service.
(ii)   “Joint Proxy Statement” means a joint proxy statement prepared by Nicolet and the Company for use in connection with the Company Shareholders Meeting and Nicolet Shareholders Meeting, all in accordance with the rules and regulations of the SEC.
(jj)   “Knowledge” means, assuming due inquiry under the facts or circumstances, the actual knowledge ofof: (i) with respect to Nicolet, the chief executive officer, president, chief financial officer, chief credit officer or general counsel of NicoletNicolet; or (ii) with respect to the Company, the president, chief financial officer or secretary of the Company or the Company, aschief banking officer of the context requires.Bank.
(kk)   “Legal Requirement” means any federal, state, local, municipal, foreign, international, multinational or other Order, constitution, law, ordinance, regulation, rule, policy statement, directive, statute or treaty.
(ll)   “Material Adverse Effect” as used with respect to a party, means an event, circumstance, change, effect or occurrence which, individually or together with any other event, circumstance, change, effect or occurrence: (i) is materially adverse to the business, condition (financial or otherwise), assets, liabilities or results of operations of such party and its Subsidiaries, taken as a whole; or (ii) materially impairs the ability of such party to perform its obligations under this Agreement or to consummate the Merger and the other Contemplated Transactions on a timely basis; provided that, in determining whether a Material Adverse Effect has occurred, there shall be excluded any effect to the extent attributable to or resulting from: (A) changes in Legal Requirements and the interpretation of such Legal Requirements by courts or governmental authorities; (B) changes in GAAP or regulatory accounting requirements; (C) changes or events generally affecting banks, bank holding companies or financial holding companies, or the economy or the financial, securities or credit markets, including changes in prevailing interest rates, liquidity and quality, currency exchange rates, price levels or trading volumes in the U.S. or foreign securities markets; (D) changes in national or international political or social conditions including the engagement by the United States in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon or within the United States; (E) the effects of any quarantine, “shelter in place”, “stay at home”, workforce reduction, social distancing, shut down, closure, safety or any other Law, order, directive, guideline, guidance or recommendation promulgated by any governmental entity, including the Centers for Disease Control and (E)Prevention and the World Health Organization, in response to or relating in any way to the novel coronavirus disease, COVID-19 virus (SARS-COV-2) (or any mutation or variation thereof or related health condition, or any related or associated epidemics, pandemics or disease outbreaks); and (F) the effects of the actions expressly permitted or required by this Agreement or that are taken with the prior written consent of the other party in contemplation of the Contemplated Transactions, including the costs and expenses associated therewith, including Transaction Costs, Severance Costs, and the response of customers, vendors, licensors, investors, or employees; except with respect to clauses (A), (B), (C), (D) and (D)(E), to the extent that the effects of such change are materially disproportionately adverse to the financial condition, results of operations or business of such party and its Subsidiaries, taken as a whole, as compared to other companies in the industry in which such party and its Subsidiaries operate.
(mm)   “Nasdaq Rules” means the listing rules of the Nasdaq Capital Market.
(nn)   “Nicolet Articles of Incorporation” means the Amended and Restated Articles of Incorporation of Nicolet, as amended.
(oo)   “Nicolet Bank” means Nicolet National Bank, and a wholly-owned subsidiary of Nicolet.
(pp)   “Nicolet Benefit Plan” means any: (i) qualified or nonqualified “employee pension benefit plan” (as defined in Section 3(2) of ERISA) or other deferred compensation or retirement plan or arrangement; (ii) “employee welfare benefit plan” (as​(as defined in Section 3(1) of ERISA) or other health, welfare or similar plan or arrangement; (iii) “employee benefit plan” (as​(as defined in Section 3(3) of ERISA); (iv) equity-based

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plan or arrangement (including any stock option, stock purchase, stock ownership, stock appreciation, restricted stock, restricted stock unit, phantom stock or similar plan, agreement or award); (v) other paid time off, compensation, severance, bonus, profit-sharing or incentive plan or arrangement; (vi) other employee benefit plan, practice, policy or arrangement of any kind, whether written or oral, and whether for the benefit of a single individual or more than one (1) individual;kind; or (vii) change in control agreement or employment or severance agreement, in each case with respect to clauses (i) through (vii) of this definition, to which contributions have at any time been made by Nicolet or any of its Subsidiaries or any Nicolet ERISA Affiliate or under which any employee, former employee, director, agent or independent contractor of Nicolet or any of its Subsidiaries or any

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beneficiary thereof is covered, is eligible for coverage or has benefit rights, and for which Nicolet or any of its Subsidiaries has or may have liability, including by reason of having a Nicolet ERISA Affiliate.
(qq)   “Nicolet Board” means the board of directors of Nicolet.
(rr)   “Nicolet Bylaws” means the Nicolet Amended and Restated Bylaws, as amended.
(ss)   “Nicolet Capital Stock” means Nicolet Common Stock and Nicolet Preferred Stock, collectively.
(tt)   “Nicolet Common Stock” means the common stock, $0.01 par value per share, of Nicolet.
(uu)   “Nicolet Common Stock Price” means the volume weighted average closing price of Nicolet Common Stock on the Nasdaq Capital Market over the twenty (20) trading day period immediately preceding the second (2nd)(2nd) trading day prior to the Closing Date.
(vv)   “Nicolet Equity Award” means any outstanding stock option, stock appreciation right, restricted stock award, restricted stock unit, or other equity award granted under a Nicolet Stock Plan.
(ww)   “Nicolet ERISA Affiliate” means each “person” (as​(as defined in Section 3(9) of ERISA) that is treated as a single employer with Nicolet or any of its Subsidiaries for purposes of Section 414414(b), (c), (m) or (o) of the Code.
(xx)   “Nicolet Material Contract” means any contract that is a “material contract” (as​(as such term is defined in Item 601(b)(10) of Regulation S-K promulgated under the Securities Act).
(yy)   “Nicolet Shareholder Approval” means the adoption and approval of this Agreement by the shareholders of Nicolet, in accordance with the WBCL and Nicolet Articles of Incorporation, and approval of the issuance of the Nicolet Common Stock pursuant to this Agreement by the shareholders of Nicolet, in accordance with Nasdaq Rules.
(zz)   “Nicolet SEC Reports” means the annual, quarterly and other reports, schedules, forms, statements and other documents (including exhibits and all other information incorporated therein) filed or furnished by Nicolet with the SEC under the Securities Act, the Exchange Act, or the regulations of the SEC thereunder, since January 1, 2017.2019. For the avoidance of doubt, Nicolet SEC Reports shall not include filings made with the SEC pursuant to Section 13 or Section 16 by shareholders, directors or officers of the Company.
(zz)(aaa)   “Nicolet Stock Plans” means any of the following:
Nicolet Bankshares, Inc. 2002 Stock Incentive Plan.
Nicolet Bankshares, Inc. 2010 Equity Incentive Plan.
Nicolet Bankshares, Inc. 2011 Long-Term Incentive Plan, as amended.
(aaa)(bbb)   “Order” means any award, decision, injunction, judgment, order, ruling, extraordinary supervisory letter, policy statement, memorandum of understanding, resolution, agreement, directive, subpoena or verdict entered, issued, made, rendered or required by any court, administrative or other governmental agency, including any Regulatory Authority, or by any arbitrator.
(bbb)(ccc)   “Ordinary Course of Business” shall include any action taken by a Person only if such action is consistent with the past practices of such Person and is similar in nature and magnitude to actions customarily taken in the ordinary course of the normal day-to-day operations of other Persons that are in the same line of business as such Person.

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(ddd)   “OREO” means real estate owned by a Person and designated as “other real estate owned.”
(ddd)(eee)   “Outstanding Company Shares” means the shares of Company Common Stock issued and outstanding immediately prior to the Effective Time.
(eee)(fff)   “PBGC” means the U.S. Pension Benefit Guaranty Corporation.
(fff)(ggg)   “Person” means any individual, corporation (including any non-profit corporation), general or limited partnership, limited liability company, foundation, joint venture, estate, trust, association, organization, labor union or other entity or Regulatory Authority.
(ggg)(hhh)   “Proceeding” means any action, arbitration, audit, hearing, investigation, litigation or suit (whether civil, criminal, administrative, investigative or informal) commenced, brought, conducted or

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heard by or before, or otherwise involving, any judicial or governmental authority, including a Regulatory Authority, or arbitrator.
(hhh)   “Proxy Statement” means a proxy statement prepared by Nicolet and the Company for use in connection with the Company Shareholders Meeting in accordance with the rules and regulations of the SEC.
(iii)   “Registration Statement” means a registration statement on Form S-4 or other applicable form under the Securities Act covering the shares of Nicolet Common Stock to be issued pursuant to this Agreement, which shall include the Joint Proxy Statement.
(jjj)   “Regulatory Authority” means any federal, state or local governmental body, agency, court or authority that, under applicable Legal Requirements: (i) has supervisory, judicial, administrative, police, enforcement, taxing or other power or authority over the Company, Nicolet, or any of their respective Subsidiaries; (ii) is required to approve, or give its consent to, the Contemplated Transactions; or (iii) with which a filing must be made in connection therewith.
(kkk)   “Representative” means with respect to a particular Person, any director, officer, manager, employee, agent, consultant, advisor or other representative of such Person, including legal counsel, accountants and financial advisors.
(lll)   “Requisite Regulatory Approvals” means all necessary documentation, applications, notices, petitions, filings, permits, consents, approvals and authorizations from all applicable Regulatory Authorities for approval of the Contemplated Transactions.
(mmm)   “SEC” means the Securities and Exchange Commission.
(nnn)   “Securities Act” means the Securities Act of 1933, as amended.
(ooo)   “Severance Costs” shall mean any and all amounts in the nature of compensation paid or payable pursuant to any agreement with any employee of the Company, the Bank or any other Subsidiary of the Company, as determined on an after-tax basis, that is contingent upon a change in control of the Company or a sale of a substantial portion of the assets of the Company, regardless of whether such payment is due or made before, on or after the Closing Date, and regardless of whether such payments are subject to termination of employment or other events that may occur after the Closing Date. For the avoidance of doubt, all such payments that could become due after a change in ownership upon voluntary termination of employment of an executive under any employment agreement would be considered a Severance Cost.
(ppp)   “Subsidiary” with respect to any Person means an affiliate controlled by such Person directly or indirectly through one or more intermediaries.
(qqq)   “Superior Proposal” means a bona fide written Acquisition Proposal which the Company Board concludes in good faith to be more favorable from a financial point of view to the Company shareholders than the Merger and the other transactions contemplated hereby, (i) after receiving the advice of its financial advisors (which shall be Hillworth, LLC,Stephens, Inc., or any nationally recognized investment banking firm), (ii) after taking into account the likelihood and timing of consummation of the proposed transaction on the terms set forth therein (as compared to, and with due regard for, the terms herein) and (iii) after taking into account all legal (with the advice of outside counsel), financial (including the financing terms of any such proposal), regulatory (including the advice of outside counsel regarding the potential for regulatory approval of any such proposal) and other aspects of such proposal and any other relevant factors permitted under applicable law.

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(rrr)   “Takeover Statutes” means any provisions of any potentially applicable “moratorium,” “control share,” “fair price,” “business combination,” “takeover” or “interested shareholder” law.
(sss)   “Tangible Assets” means, as of the Closing Date, the total assets of the Company, calculated in accordance with GAAP, consistently applied, less any Intangible Assets.
(ttt)   “Tangible Common Equity” means the excess of Tangible Assets over the total liabilities of the Company, calculated in accordance with GAAP (which calculation, for the avoidance of doubt, will include total assets minus only goodwill and deposit based intangibles) as of the Closing Date, as adjusted to exclude:

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(i) Transaction Costs; (ii) Severance Costs;Costs (to the extent such Transaction Costs and Severance Costs are set forth in Section 12.1(ttt) of the Company Disclosure Schedules); (iii) any changes to the valuation of the Company (or the Bank) investment portfolio attributed to ASC 320, whether upward or downward, from DecemberMarch 31, 2019 until2021; and (iv) any realized gains or losses on Company Investment Securities realized between March 31, 2021 and the calculationClosing Date in a trade that was not objected to in advance of the Tangible Common Equity pursuant to Section 5.10; and as set forth in Section 12.1(ttt) of the Company Disclosure Schedules.such trade by Nicolet.
(uuu)   “Tax” means any tax (including any income tax, franchise tax, capital gains tax, value-added tax, sales tax, property tax, escheat tax, use tax, payroll tax, gift tax or estate tax), levy, assessment, tariff, duty (including any customs duty), deficiency or other fee, and any related charge or amount (including any fine, penalty, interest or addition to tax), imposed, assessed or collected by or under the authority of any Regulatory Authority or payable pursuant to any tax-sharing agreement or any other Contract relating to the sharing or payment of any such tax, levy, assessment, tariff, duty, deficiency or fee.
(vvv)   “Tax Return” means any return (including any information return), report, statement, schedule, notice, form or other document or information filed with or submitted to, or required to be filed with or submitted to, any Regulatory Authority in connection with the determination, assessment, collection or payment of any Tax or in connection with the administration, implementation, or enforcement of or compliance with any Legal Requirement relating to any Tax.
(www)   “Transaction Costs” shall mean any and all amounts incurred by the Company or Nicolet, as determined on an after-tax basis, whether or not paid by the Company or Nicolet and whether incurred before, on or after the date of this Agreement, that arise out of or in connection with the negotiation and preparation of this Agreement and the consummation and performance of the transactions contemplated hereby.
(xxx)   “Transition Date” means, with respect to any Covered Employee, the date Nicolet commences providing benefits to such employee with respect to each New Plan.
(yyy)   “U.S.” means the United States of America.
(zzz)   “WBCL” means the Wisconsin Business Corporation Law, as amended.
Section 12.2   Principles of Construction.
(a)   In this Agreement, unless otherwise stated or the context otherwise requires, the following uses apply: (i) actions permitted under this Agreement may be taken at any time and from time to time in the actor’s sole discretion; (ii) references to a statute shall refer to the statute and any successor statute, and to all regulations promulgated under or implementing the statute or its successor, as in effect at the relevant time; (iii) in computing periods from a specified date to a later specified date, the words “from” and “commencing on” (and​(and the like) mean “from and including,” and the words “to,” “until” and “ending on” (and​(and the like) mean “to, but excluding”; (iv) references to a governmental or quasi-governmental agency, authority or instrumentality shall also refer to a regulatory body that succeeds to the functions of the agency, authority or instrumentality; (v) indications of time of day mean Central Time; (vi) “including” means “including, but not limited to”; (vii) all references to sections, schedules and exhibits are to sections, schedules and exhibits in or to this Agreement unless otherwise specified; (viii) all words used in this Agreement will be construed to be of such gender or number as the circumstances and context require; (ix) the captions and headings of articles, sections, schedules and exhibits appearing in or attached to this Agreement have been inserted solely for convenience of reference and shall not be considered a part of this Agreement nor shall any of them affect the meaning or interpretation of this Agreement or any of its provisions; and (x) any reference to a

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document or set of documents in this Agreement, and the rights and obligations of the parties under any such documents, means such document or documents as amended from time to time, and any and all modifications, extensions, renewals, substitutions or replacements thereof.
(b)   The schedules of each of the Company and Nicolet referred to in this Agreement (the “Company Disclosure Schedules” and the “Nicolet Disclosure Schedules,” respectively, and collectively the “Schedules”) shall consist of items, the disclosure of which with respect to a specific party is necessary or appropriate either in response to an express disclosure requirement contained in a provision hereof or as an exception to one or more representations or warranties contained herein or to one or more

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covenants contained herein, which Schedules were delivered by each of the Company and Nicolet to the other before the date of this Agreement. In the event of any inconsistency between the statements in the body of this Agreement and those in the Schedules (other than an exception expressly set forth as such in the Schedules), the statements in the body of this Agreement will control. For purposes of this Agreement, “Previously Disclosed” means information set forth by the Company or Nicolet in the applicable paragraph of its Schedules, or any other paragraph of its Schedules (so long as it is reasonably clear from the context that the disclosure in such other paragraph of its Schedule is also applicable to the section of this Agreement in question).
(c)   All accounting terms not specifically defined herein shall be construed in accordance with GAAP.
(d)   With regard to each and every term and condition of this Agreement and any and all agreements and instruments subject to the terms hereof, the parties hereto understand and agree that the same have or has been mutually negotiated, prepared and drafted, and that if at any time the parties hereto desire or are required to interpret or construe any such term or condition or any agreement or instrument subject hereto, no consideration shall be given to the issue of which party hereto actually prepared, drafted or requested any term or condition of this Agreement or any agreement or instrument subject hereto.
(e)   No disclosure, representation, or warranty shall be required to be made (or any other action taken) pursuant to this Agreement that would involve the disclosure of confidential supervisory information of any Regulatory Authority by any party hereto to the extent prohibited by a Legal Requirement, and, to the extent legally permissible, appropriate substitute disclosures or actions shall be made or taken under circumstances in which the limitations of this sentence apply.

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[Remainder of Page Intentionally Left Blank]
[Signature Page Follows]
 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers on the day and year first written above.
​Nicolet:​​Company:​
​Nicolet Bankshares, Inc.​​Commerceounty FBinancial Holdingsancorp, INC.Inc.​
​
By:
/s/
 /s/ Michael E. Daniels
​
​
Name:  Michael E. Daniels
Title:    Executive Vice President and Secretary
​​
By:
/s/ Joseph Fazio
​
​
 /s/ Timothy J. Schneider
​
​Name: Joseph Fazio, III
Michael E. Daniels		​​ Name: Timothy J. Schneider​
​Title: President and Chief Executive Officer​​ Title: President​
[Signature Page to Agreement and Plan of Merger]

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EXHIBIT A
FORM OF PLAN OF BANK MERGER
PLAN OF MERGER
BY AND BETWEEN
NICOLET NATIONAL BANK
AND
INVESTORS COMMUNITY BANK
This Plan of Merger (the “Plan”) is made and entered into as of the 22nd day of June, 2021, by and between Nicolet National Bank, a bank organized under the laws of the United States of America and located in Green Bay, Wisconsin, and Investors Community Bank, a bank organized under the laws of the State of Wisconsin and located in Manitowoc, Wisconsin (“Investors”).
W I T N E S S E T H:
WHEREAS, Nicolet Bankshares, Inc. (“Nicolet”) and County Bancorp, Inc. (the “Company”), entered into an Agreement and Plan of Merger (the “Agreement”) dated June 22, 2021, pursuant to which the Company will merge with and into Nicolet;
WHEREAS, pursuant to the Agreement and the terms of this Plan, Investors will merge with and into Nicolet National Bank (the “Bank Merger”);
NOW, THEREFORE, in consideration of the above premises and the mutual warranties, representations, covenants and agreements set forth herein, the parties agree as follows:
1.   Merger.   Pursuant to the provisions of Subchapter VII of the Wisconsin Banking Law and Section 215a of the National Bank Act, Investors shall be merged with and into Nicolet National Bank. Nicolet National Bank shall be the survivor of the Bank Merger (the “Resulting Bank”), and shall operate with the name “Nicolet National Bank.” The Resulting Bank shall be liable for all liabilities of Investors in accordance with the provisions of 12 USC 215a(a)(4).
2.   Effective Date of the Merger.   The Bank Merger shall become effective on the date that Articles of Merger reflecting the Bank Merger become effective with the Office of the Comptroller of the Currency (the “Effective Date”).
3.   Location, Articles and Bylaws and Directors and Executive Officers of the Resulting Bank.    On the Effective Date of the Bank Merger:
(a)   The main office of the Resulting Bank shall be located at the main office of Nicolet National Bank immediately prior to the Effective Date.
(b)   The Articles of Association of the Resulting Bank shall be the Articles of Association of Nicolet National Bank in effect immediately prior to the Effective Date. The Bylaws of the Resulting Bank shall be the Bylaws of Nicolet National Bank in effect immediately prior to the Effective Date of the Merger.
(c)   From and after the Effective Date, the executive officers of the Resulting Bank shall be the executive officers of Nicolet National Bank immediately prior to the Effective Date of the Merger. From and after the Effective Date, the directors of the Resulting Bank shall be (i) the directors of Nicolet National Bank immediately prior to the Effective Date of the Merger and (ii) one (1) person from the Investors board of directors, to be designated by Investors and reasonably acceptable to Nicolet National Bank prior to the Effective Date. Such directors and executive officers shall serve until their resignation, removal or until their successors shall have been elected or appointed and shall have been qualified in accordance with Articles of Association and Bylaws of Nicolet National Bank.

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4.   Manner of Converting Shares.
(a)   By virtue of the Bank Merger, automatically and without any action on the part of the holder thereof, each of the shares of Investors common stock issued and outstanding immediately prior to the Effective Date shall be cancelled and retired at the Effective Date, and no consideration shall be issued in exchange therefor.
(b)   Upon and after the Effective Date, each issued and outstanding share of Nicolet National Bank common stock shall remain unchanged and shall continue to evidence the same number of shares of Nicolet National Bank common stock.
5.   Conditions Precedent to Consummation.   Consummation of the Bank Merger herein provided for is conditioned upon (a) receipt of all necessary consents to the Bank Merger from applicable regulatory authorities, (b) approval of the Plan by the Company, as sole shareholder of Investors, (c) approval of the Plan by Nicolet, as sole shareholder of Nicolet National Bank, and (d) closing of the merger of the Company and Nicolet.
6.   Termination.   This Plan may be terminated by the mutual consent of the parties at any time prior to the Effective Date. The Plan shall also be terminated automatically in the event the Agreement is terminated pursuant to the provisions of Article 10 thereof.
7.   Counterparts, Headings, Governing Law.   This Plan may be executed simultaneously in any number of counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument. The title of this Plan and the headings herein are for convenience or reference only and shall not be deemed a part of this Plan. This Plan shall be governed by and construed in accordance with the laws of the State of Wisconsin and the National Bank Act.
[Signatures on Next Page]
 
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IN WITNESS WHEREOF, the parties hereto have caused this AgreementPlan of Merger to be executed by their respectiveduly authorized officers onand their seals to be affixed hereto, all as of the day and year first written above.above written.
​Nicolet:​​Company:​NICOLET NATIONAL BANK​
​Nicolet Bankshares, Inc.[BANK SEAL]​​Commerce Financial Holdings, INC.
By:
​
​
​​​​ Name: Michael E. Daniels​
​​​​ Title: President and Chief Executive Officer​
​ATTEST:​​
​
By:
​
​
Name:  Robert B. Atwell
Title:    Chairman and Chief Executive Officer
​​
By:
​
Eric J. Witczak​
Name:  Joseph Fazio, III
Title:   Chief Executive Officer
​
​Secretary​​
[Signature Page to Bank Plan of Merger]

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​​​​INVESTORS COMMUNITY BANK​
​[BANK SEAL]​​
By:
​
​
​​​​ Name: Timothy J. Schneider​
​​​​ Title: Chief Executive Officer​
​ATTEST:​​
​
​
​​
​Mark A. Miller​​
​Secretary​​
[Signature Page to Bank Plan of Merger]

TABLE OF CONTENTS​

EXHIBIT B
FORM OF VOTING AND SUPPORT AGREEMENT
Nicolet Bankshares, Inc.
Attention: Chief Executive Officer
Ladies and Gentlemen:
The undersigned is a shareholder of County Bancorp, Inc. (the “Company”), a Wisconsin corporation and a registered bank holding company under the Bank Holding Company Act of 1956, as amended. This Voting and Support Agreement relates to the Agreement and Plan of Merger]Merger, dated as of June 22, 2021 (the “Agreement”), between the Company and Nicolet Bankshares, Inc., a Wisconsin corporation (“Nicolet”). Under the terms of the Agreement, the Company will be merged into and with Nicolet (the “Merger”), and the shares of the Company’s common stock, $0.01 par value per share (the “Company Common Stock”) will be converted into and exchanged for the Merger Consideration pursuant to the Agreement. This Voting and Support Agreement represents an agreement between the undersigned and Nicolet regarding certain rights and obligations of the undersigned in connection with the Merger.
In consideration of the execution and delivery by Nicolet of the Agreement and the mutual covenants, conditions and agreements contained herein and therein, the receipt and sufficiency of which is hereby acknowledged, the undersigned and Nicolet, intending to be legally bound, hereby agree as follows:
1.   Vote on the Merger.   The undersigned agrees to vote all shares of Company Common Stock that the undersigned owns beneficially or of record in favor of approving the Agreement and the transactions contemplated thereby, unless Nicolet is then in breach or default in any material respect as regards any covenant, agreement, representation or warranty as to it contained in the Agreement; provided, however, that nothing in this sentence shall be deemed to require the undersigned to vote any shares of Company Common Stock over which the undersigned has or shares voting power solely in a fiduciary capacity on behalf of any person, if the undersigned determines, in good faith after consultation with legal counsel, that such a vote would cause a breach of fiduciary duty to such other person.
2.   Restriction on Transfer.   The undersigned further agrees that the undersigned will not, without the prior written consent of Nicolet, transfer any shares of Company Common Stock prior to the earlier of the Effective Time or the Termination Date, each such term as set forth in the Agreement, except (a) by operation of law, (b) by will, (c) under the laws of descent and distribution, (d) with the prior written consent of Nicolet, which consent shall not be unreasonably withheld, for any sales, assignments, transfers or other dispositions necessitated by hardship, (e) with the prior written consent of Nicolet, which consent shall not be unreasonably withheld, for any transfers related to estate planning, provided that the transferee agrees to be bound by the terms of this Voting and Support Agreement, or (f) as Nicolet may otherwise agree in writing.
3.   No Agreement as Director or Officer.   The undersigned makes no agreement or understanding in this Voting and Support Agreement in the undersigned’s capacity as a director or officer of the Company or any of its Subsidiaries, and nothing in this Voting and Support Agreement: (a) will limit or affect any actions or omissions taken by the undersigned in the undersigned’s capacity as such a director or officer, including exercising rights under the Agreement, and no such actions or omissions shall be deemed to be a breach of this Voting and Support Agreement, or (b) will be construed to prohibit, limit or restrict the undersigned from exercising the undersigned’s fiduciary duties as an officer or director to the Company or its shareholders.
4.   Miscellaneous.   This Voting and Support Agreement is the complete agreement between Nicolet and the undersigned concerning the subject matter hereof. Any notice required to be sent to any party hereunder shall be sent by registered or certified mail, return receipt requested, or electronic mail using the addresses set forth herein or such other address as shall be furnished in writing by the parties. This Voting and Support Agreement shall be governed by the laws of the State of Wisconsin.

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5.   Termination.   This Voting and Support Agreement shall terminate upon the earliest of (a) the mutual written agreement of the undersigned and Nicolet, (b) the Effective Time, (c) the termination of the Agreement in accordance with its terms, (d) any reduction in the Merger Consideration, extension of the Termination Date, change in the type of merger consideration, or other amendment, modification, waiver or change to the Agreement that is material and adverse to the undersigned and not consented to in advance in writing by the undersigned, and (e) December 31, 2024. For the avoidance of doubt, a decline in Nicolet’s stock price shall not be considered a reduction in the merger consideration.
6.   Capitalized Terms.   Unless otherwise defined herein, all capitalized terms in this Voting and Support Agreement shall have the same meaning as given such terms in the Agreement.
[Remainder of Page Intentionally Left Blank]
[Signature Page Follows]

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This Voting and Support Agreement is executed as of the 22nd day of June, 2021.
Very truly yours,
​
Signature
​
Print Name
​
​
​
Address
E-mail address   ​
[Signature Page to Voting and Support Agreement]

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AGREED TO AND ACCEPTED as of
June 22, 2021
NICOLET BANKSHARES, INC.
​
By:   
​​​​
​
Name:   
​​​​
​
Its:   
​​​​
​111 N. Washington Street
Green Bay, WI 54301		​​​​
​
E-mail address   
​​​​
[Signature Page to Voting and Support Agreement]
 
TABLE OF CONTENTS​
 
Appendix B​
[MISSING IMAGE: lg_magstarcapital-4clr.jpg][MISSING IMAGE: lg_stephens-4c.jpg]
February 16, 2020June 21, 2021
Board of Directors
Commerce Financial Holdings,County Bancorp, Inc.
17002400 South Silverbrook Drive44th Street
West Bend,Manitowoc, WI 5309554220
LadiesDear Members of the Board:
We have acted as your financial advisor in connection with the proposed merger of County Bancorp, Inc. (the “Company”) with and Gentlemen:
Magstar Capital, LLC (“we” or “Magstar”) understands thatinto Nicolet Bankshares, Inc., (the “Buyer”) (collectively, the “Transaction”). You have requested that we provide our opinion (the “Opinion”) to the Board of Directors of the Company (the “Board”) as to whether the consideration to be received by the shareholders of the Company (solely in their capacity as such, the “Shareholders”) in the Transaction is fair to them from a Wisconsin corporation (“Nicolet”)financial point of view.
The terms and Commerce Financial Holdings, Inc., a Wisconsin corporation (the “Company”)conditions of the Transaction are about to enter intomore fully set forth in an Agreement and Plan of Merger to be dated on or about February 17, 2020 (the “Agreement”“Agreement”). Pursuant to the Agreement, and subject to the terms, conditions and limitations set forth therein, the Company will be merged with and into Nicolet (the “Merger”), with Nicolet as the surviving entity in the Merger (the “Surviving Entity”). Following the Effective Time of the Merger, Commerce State Bank (the “Bank”), a wholly-owned subsidiary of the Company, shall be merged with and into Nicolet Bank, a wholly-owned subsidiary of Nicolet, pursuant to the terms and conditions of the Plan of Merger by and between Nicolet Bankthe Company and the Bank as set forth in the Agreement (the “Bank Plan of Merger”). Capitalized terms used herein that are not otherwise defined shall have the same meanings attributed to them in the Agreement.
Buyer. Pursuant and subject to the terms of the Agreement, at the Effective Time, by virtue of the Merger and without any action on the part of Nicolet, the Company, or the holder of any shares of Company Common Stock, each share of Company Common Stock issued and outstanding immediately prior to the Effective Time, will be converted (subject to the maximum Nicolet Common Stock issuance procedures in Section 2.3, the fractional share procedures in Section 2.5, the dissenters rights provisions in Section 2.6 and the cash consideration provisions for shares held in the Company 401(k) Plan in Section 2.9 of the Agreement), into the right to receive 1.15 fully paid and nonassessable shares (subject to any adjustment in Section 2.1(ii) or (iii) of the Agreement, the “Exchange Ratio”) of Nicolet Common Stock (the “Per Share Stock Consideration”). Furthermore, and pursuant to the Agreement and for purposes of our opinion,Opinion, we understand that if the Nicolet Common Stock Price (as defined in the Agreement) is greater than $82.00 per share, the adjusted Exchange Ratio shall equal the quotient (roundedconsideration expected to the nearest thousandth of a share) obtained by dividing $94.30be exchanged by the Nicolet CommonBuyer for the outstanding common stock and common stock awards of the Company has an aggregate value of approximately $232.1 million. The consideration consists of the obligation to exchange for each share of Company common stock either 0.48 shares of Buyer common stock (the “Per Share Stock Price and ifConsideration”) or $37.18 in cash (the Per Share Cash Consideration), or a combination thereof; provided, however, that the Nicolet Common Stock Price isamount of cash issued by the Buyer may not be less than $62.00 per share, Nicolet shall have the option to: (a) increase the number of shares of Nicolet Common Stock to be contributed using an adjusted Exchange Ratio equal to the quotient (rounded to the nearest thousandth of a share) obtained by dividing $71.30 by the Nicolet Common Stock Price subject to the limitations set forth in Section 2.3twenty-percent (20%) of the Agreement; (b) leaveaggregate value of the Exchange Ratio unchanged, but add additional cash consideration in an amount sufficient to bring the Per Share Stock Consideration up to $71.30 per share; (c) leave the Exchange Ratio unchanged, or (d) terminate the Agreement. The total stock consideration to be paidgiven by Nicoletthe Buyer in respectthe Transaction.
In connection with developing our Opinion we have:
(i)
reviewed certain publicly available financial statements and reports regarding the Company and the Buyer;
​
(ii)
reviewed certain audited financial statements and management reports regarding the Company and the Buyer;
​
(iii)
reviewed certain internal financial statements and other financial and operating data concerning the Company and the Buyer prepared by management of sharesthe Company and the Buyer, respectively;
​
(iv)
reviewed, on a pro forma basis, in reliance upon consensus research estimates and upon financial projections and other information and assumptions concerning the Buyer provided by the management team of Company Common Stock is referred to as the “Merger Consideration.”Buyer, the effect of the Transaction on the balance sheet, capitalization ratios, earnings and book value both in the aggregate and, where applicable, on a per share basis of the Buyer;
​
We note(v)
reviewed the reported prices and trading activity for the common stock of the Company and the Buyer;
​
(vi)
compared the financial performance of the Company and the Buyer with that pursuantof certain other publicly-traded companies and their securities that we deemed relevant to Section 2.3our analysis of the Transaction;
​
(vii)
reviewed the financial terms, to the extent publicly available, of certain merger or acquisition transactions that we deemed relevant to our analysis of the Transaction;
​
(viii)
reviewed the most recent draft of the Agreement under no circumstances shall the number of shares of Nicolet Common Stockand related documents provided to be issued as a result of the Contemplated Transactions exceed 19.9% of the outstanding shares of Nicolet Common Stock, such that the provisions of Nasdaq Listing Rule 5635 and/or the WBCL would require approval of the Contemplated Transactionsus by the shareholders of Nicolet. Accordingly, to the extent necessary to avoid a shareholder vote under Nasdaq Listing Rule 5635 and/or the WBCL, the Exchange Ratio shall be reduced to the maximum exchange ratio (rounded to the nearest Thousandth of a share) that would not cause need for a Nicolet shareholder vote, and Nicolet shall add additional cash consideration (the “Supplemental Cash Consideration”) in an amount sufficient to leave the value of the Per Share Stock Consideration unchanged as a result of such adjustment.Company;
​
 
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We further note that pursuant to Section 2.8 of the Agreement, except as set forth therein, immediately prior to the Effective Time, each Company Stock Option that is outstanding immediately prior to the Effective Time, whether vested or unvested, shall be cancelled, by virtue of the Merger and without any action on the part of the holder thereof, in consideration for the right to receive, as promptly as practicable (but no later than fifteen (15) calendar days) following the Effective Time, a cash payment (without interest and less applicable withholding Taxes)[MISSING IMAGE: ft_stephens-4c.jpg]
June 21, 2021
PAGE 2
(ix)
discussed with respect thereto equal to the product of (i) the number of shares of Company Common Stock subject to such Company Stock Option immediately prior to the Effective Time and (ii) the excess, if any, of the product of (x) the Nicolet Common Stock Price and (y) the Exchange Ratio, subject to any adjustment, over the exercise price per share of Company Common Stock subject to such Company Stock Option immediately prior to the Effective Time. You have advised us that as of the date hereof, the value of the Option Consideration is approximately $2.62 million (based on 57,132 options outstanding with a weighted average strike price of $37.31, and assuming a $72.30 closing price of Nicolet Common Stock as of February 14, 2020).
You have instructed us to assume for purposes of our analysis and opinion that the Company will have Tangible Common Equity of not less than $66.5 million as of the applicable determination date provided in the Agreement. Accordingly, based on the foregoing, and assuming no adjustments to the Merger Consideration under the terms of the Agreement, we have assumed for purposes of our opinion and analysis, and with your consent, that the holders of the Company Common Stock will have the right to receive Merger Consideration with an value of approximately $127,292,449 (based on 1,760,128 shares of Nicolet Common Stock issuable and a closing price of Nicolet Common Stock of $72.32 per share as of February 14, 2020).
You have requested our opinion as to the fairness, from a financial point of view, of the Merger Consideration to the shareholders of the Company. This opinion addresses only the fairness of the Merger Consideration to be paid in connection with the Merger and we are not opining on any individual cash, stock, option, or other components of the consideration.
During the course of our engagement and for the purposes of the opinion set forth herein, we have:
(i)   reviewed a draft of the Agreement provided on February 13, 2020, as provided to Magstar by the Company;
(ii)   reviewed unaudited financial statements for the Company, the Bank, Nicolet and Nicolet Bank, as of and for the year ending December 31, 2019;
(iii)   reviewed certain historical annual reports of, the Company, the Bank, and Nicolet, including for the year ending December 31, 2018;
(iv)   reviewed certain historical publicly available business and financial information concerning each of the Company, the Bank, Nicolet and Nicolet Bank;
(v)   reviewed certain internal financial statements and other financial and operating data of the Company, the Bank, Nicolet and Nicolet Bank including, without limitation, internal financial analyses and forecasts prepared by management of the Company and the Bank,Buyer the operations of and held discussionsfuture business prospects for the Company and the Buyer and the anticipated financial consequences of the Transaction to the Company and the Buyer;
​
(x)
assisted in your deliberations regarding the material terms of the Transaction and your negotiations with senior managementthe Buyer; and
​
(xi)
performed such other analyses and provided such other services as we have deemed appropriate.
​
We have relied on the accuracy and completeness of the information and financial data provided to us by the Company and the Buyer and of the other information reviewed by us in connection with the preparation of our Opinion, and our Opinion is based upon such information. We have not assumed any responsibility for independent verification of the accuracy or completeness of any of such information or financial data. The managements of the Company and the Bank, NicoletBuyer have assured us that they are not aware of any relevant information that has been omitted or remains undisclosed to us. We have not assumed any responsibility for making or undertaking an independent evaluation or appraisal of any of the assets or liabilities of the Company or of the Buyer, and Nicolet Bank regarding recent developments and regulatory matters;
(vi)   reviewedwe have not been furnished with any such evaluations or appraisals; nor have we evaluated the solvency or fair value of the Company or of the Buyer under any laws relating to bankruptcy, insolvency or similar matters. We have not assumed any obligation to conduct any physical inspection of the properties or facilities of the Company or Buyer. With respect to the financial projectionsforecasts prepared by certain membersthe Company, including the forecasts of seniorpotential cost savings and potential synergies, we have assumed that such financial forecasts have been reasonably prepared and reflect the best currently available estimates and judgments of the management of the Company and the Bank;
(vii)   discussed with certain members of senior managementBuyer as to the future financial performance of the Company and the Bank, NicoletBuyer and Nicolet Bank,that the financial results reflected by such projections will be realized as predicted. We have not received or reviewed any individual credit files nor have we made an independent evaluation of the adequacy of the allowance for loan losses of the Company or the Buyer. We have not made an independent analysis of the effects of the COVID-19 pandemic or related market developments or disruptions, or of any other disaster or adversity, on the business financial condition, results of operations and futureor prospects of the Company or the Bank, NicoletBuyer. We have also assumed that the representations and Nicolet Bank;warranties contained in the historyAgreement and pastall related documents are true, correct and current operationscomplete in all material respects.
As part of our investment banking business, we regularly issue fairness opinions and are continually engaged in the valuation of companies and their securities in connection with business reorganizations, private placements, negotiated underwritings, mergers and acquisitions and valuations for estate, corporate and other purposes. We are familiar with the Company and the Buyer. We issue periodic research reports regarding the business and prospects of the Company and the Bank, NicoletBuyer, and Nicolet Bank;we make a market in the stock of the Company and the Buyer. During the two years preceding the date of this letter, we served as co-placement agent in connection with the Company’s issuance of $17.4 million of subordinated notes due 2030, and we received customary fees in connection with such offering. We serve as financial adviser to the Bank’s, Nicolet’sCompany in connection with the Transaction, and Nicolet Bank’s historicalwe are entitled to receive from the Company reimbursement of our expenses and a fee for our services as financial performance; and their assessmentadviser to the Company, a significant portion of which is contingent upon the consummation of the rationaleTransaction. We are also entitled to receive a fee from the Company for providing our Opinion to the Board. The Company has also agreed to indemnify us for certain liabilities arising out of our engagement, including certain liabilities that could arise out of our providing this Opinion letter. We expect to pursue future investment banking services assignments from participants in this Transaction. In the ordinary course of business, Stephens Inc. and its affiliates at any time may hold long or short positions, and may trade or otherwise effect transactions as principal or for the Merger;accounts of customers, in debt, equity or derivative securities of the Company or of any other participant in the Transaction.
[MISSING IMAGE: lg_magstarcapllc-4clr.jpg]We are not legal, accounting, regulatory, or tax experts, and we have relied solely, and without independent verification, on the assessments of the Company and its other advisors with respect to such
 
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(viii)   reviewed and analyzed materials detailing the Merger prepared by the Company, the Bank, Nicolet and Nicolet Bank and by their respective legal and financial advisors including the estimated amount and timing of the cost savings and related expenses, purchase accounting adjustments and synergies expected to result from the Merger (the “Synergies”);
(ix)   assessed general economic, market and financial conditions;
(x)   analyzed the pro forma financial impact of the Merger on the combined company’s earnings, tangible book value, financial ratios and other such metrics we deemed relevant, giving effect to the Merger based on assumptions relating to the Synergies;
(xi)   reviewed certain S&P CapIQ consensus income and balance sheet estimates for Nicolet for 2020 and 2021;
(xii)   reviewed historical market prices and trading volumes of Nicolet’s Common Stock;
(xiii)   reviewed the certain publicly available financial information and stock market data related to selected public financial institutions/commercial banks that we deemed relevant to our analysis;
(xiii)   reviewed the terms of recent merger, acquisition and control investment transactions, to the extent publicly available, involving financial institutions and financial institution holding companies that we considered relevant;
(xv)   taken into consideration our experience in other similar transactions as well as our knowledge of the banking and financial services industry; and
(xvi)   performed such other analyses and considered such other factors as we have deemed appropriate.
matters. We have assumed, without investigation, that there have been, and from the date hereof through the Effective Date will be, no material changes in the financial condition and results of operations of the Company, the Bank, Nicolet, or Nicolet Bank since the date of the latest financial information described above. We have relied, without independent verification or investigation, on the assessments of the management of the Company, the Bank, Nicolet, or Nicolet Bank as to their existing and future relationships with key employees and partners, clients, products and services, and we have assumed, with your consent, that therethe Transaction will be no developments with respect tonot result in any such matters that would affect our analysesmaterially adverse legal, regulatory, accounting or opinion. We have further assumed, without independent verification, thattax consequences for the representations and financialShareholders.
June 21, 2021
PAGE 3
The Opinion is necessarily based upon market, economic and other conditions as they exist and can be evaluated on the date hereof and on the information included in the Agreement and all other related documents and instruments that are referred to therein or otherwise providedmade available to us by the Company, the Bank, Nicolet, or Nicolet Bank are true and complete. We have relied upon the managementas of the Company, the Bank, Nicolet,date hereof. It should be understood that subsequent developments may affect this Opinion and Nicolet Bank asthat we do not have any obligation to the reasonableness and achievability of the financial forecasts, and projections, estimates and other forward-looking information (including the Synergies) provided to us by the Company, the Bank, Nicolet, and Nicolet Bank, and we assumed such forecasts, projections, estimates and other forward-looking information (including the Synergies) have been reasonably prepared by the Company, the Bank, Nicolet, and Nicolet Bank on a basis reflecting the best currently available information and the Company’s, the Bank’s, Nicolet’s, and Nicolet Bank’s judgments and estimates.update, revise or reaffirm this Opinion. We have assumed that such forecasts, projections, estimates and other forward-looking information (including the Synergies) wouldTransaction will be realizedconsummated on the terms of the latest draft of the Agreement provided to us, without material waiver or modification. We have assumed that in the amounts and atcourse of obtaining the times contemplated thereby, and we do not, in any respect, assume any responsibilitynecessary regulatory, lending or other consents or approvals (contractual or otherwise) for the accuracyTransaction, no restrictions, including any divestiture requirements or reasonableness thereof.amendments or modifications, will be imposed that would have a material adverse effect on the contemplated benefits of the Transaction to the Shareholders. We have been authorizedare not expressing any opinion herein as to the price at which the common stock or any other securities of the Company or the Buyer will trade following the announcement of the Transaction.
This Opinion is for the use and benefit of the Board (in its capacity as such) solely for purposes of its evaluation of the Transaction. Our Opinion does not address the merits of the underlying decision by the Company andto engage in the BankTransaction, the merits of the Transaction as compared to rely upon such forecasts, projections, estimates and other information and data, and we express no viewalternatives potentially available to the Company or the relative effects of any alternative transaction in which the Company might engage, nor is it intended to be a recommendation to any person or entity as to any such forecasts, projections, estimatesspecific action that should be taken in connection with the Transaction. This Opinion is not intended to confer any rights or remedies upon any other person or entity. In addition, except as explicitly set forth in this letter, you have not asked us to address, and this Opinion does not address, the fairness to, or any other consideration of, the holders of any class of securities, creditors or other forward-looking informationconstituencies of the Company. We have not been asked to express any opinion, and do not express any opinion, as to the fairness of the amount or data,nature of the compensation to any of the Company’s officers, directors or employees, or to any group of such officers, directors or employees, whether relative to the basescompensation to other shareholders of the Company or otherwise. Our Fairness Opinion Committee has approved the Opinion set forth in this letter. Neither this Opinion nor its substance may be disclosed by you to anyone other than your advisors without our written permission. Notwithstanding the foregoing, this Opinion and a summary discussion of our underlying analyses and role as financial adviser to the Company may be included in communications to shareholders of the Company, provided that this Opinion letter is reproduced in its entirety, and we approve of the content of such disclosures prior to any filing, distribution or publication of such shareholder communications and prior to distribution of any amendments thereto.
Based on the foregoing and our general experience as investment bankers, and subject to the assumptions and qualifications stated herein, we are of the opinion, on which they were prepared.the date hereof, that the consideration to be received by the Shareholders in the Transaction is fair to them from a financial point of view.
[MISSING IMAGE: lg_magstarcapllc-4clr.jpg]Very truly yours,
STEPHENS INC.
​By:​​
[MISSING IMAGE: sg_stephensinc-bw.jpg]
​
 
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Appendix C​
[MISSING IMAGE: lg_kbwkeefebruyettewoods-4c.jpg]
June 21, 2021​
The Board of Directors
Nicolet Bankshares, Inc.
111 North Washington Street
Green Bay, WI 54301
Members of the Board:
You have requested the opinion of Keefe, Bruyette & Woods, Inc. (“KBW” or “we”) as investment bankers as to the fairness, from a financial point of view, to Nicolet Bankshares, Inc. (“Nicolet”) of the Aggregate Merger Consideration (as defined below) in the proposed merger of County Bancorp, Inc. (“County”) with and into Nicolet (the “Merger”) pursuant to the Agreement and Plan of Merger (the “Agreement”) to be entered into by and between Nicolet and County. Pursuant to the Agreement and subject to the terms, conditions and limitations set forth therein, at the Effective Time (as defined in the Agreement), by virtue of the Merger and without any action on the part of Nicolet, County, or the holder of any shares of common stock, $0.01 par value per share, of County (“County Common Stock”), each share of County Common Stock issued and outstanding immediately prior to the Effective Time shall be converted into the right to receive, at the election of the holder thereof (subject to proration and reallocation as set forth in the Agreement, as to which we express no opinion), either (i) 0.48 of a share of common stock, $0.01 par value per share, of Nicolet (“Nicolet Common Stock,” and such fraction of a share of Nicolet Common Stock, the “Stock Consideration”) or (ii) $37.18 in cash (the “Cash Consideration”); provided that, in the aggregate, no more than 1,237,000 shares of County Common Stock shall be converted into the right to receive the Cash Consideration and the remaining outstanding shares of County Common Stock shall be converted into the Stock Consideration. The aggregate Stock Consideration and the aggregate Cash Consideration, taken together, are referred to herein as the “Aggregate Merger Consideration.” The terms and conditions of the Merger are more fully set forth in the Agreement.
The Agreement further provides that, following the Effective Time, Investors Community Bank, a wholly-owned subsidiary of County, will merge with and into Nicolet National Bank, a wholly-owned subsidiary of Nicolet, pursuant to a separate plan of merger (such transaction, the “Bank Merger”).
KBW has acted as financial advisor to Nicolet and not as an advisor to or agent of any other person. As part of our investment banking business, we are continually engaged in the valuation of bank and bank holding company securities in connection with acquisitions, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements and valuations for various other purposes. As specialists in the securities of banking companies, we have experience in, and knowledge of, the valuation of banking enterprises. We and our affiliates, in the ordinary course of our and their broker-dealer businesses, may from time to time purchase securities from, and sell securities to, Nicolet and County. In performingaddition, as market makers in securities, we and our affiliates may from time to time have a long or short position in, and buy or sell debt or equity securities of, Nicolet or County for our and their own accounts and for the accounts of our and their respective customers and clients. We have acted exclusively for the board of directors of Nicolet (the “Board”) in rendering this opinion and will receive a fee from Nicolet for our services. A portion of our fee is payable upon the rendering of this opinion, and a significant portion is contingent upon the successful completion of the Merger. In addition, Nicolet has agreed to indemnify us for certain liabilities arising out of our engagement.
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The Board of Directors — Nicolet Bankshares, Inc.
June 21, 2021
Page 2 of 6
Other than in connection with the present engagement, in the past two years KBW has not provided investment banking or financial advisory services to Nicolet. In the past two years, KBW has not provided investment banking or financial advisory services to County. We may in the future provide investment banking and financial advisory services to Nicolet or County and receive compensation for such services. KBW is currently engaged to act as sole placement agent in connection with a private placement of Nicolet subordinated debt (the “Concurrent Nicolet Subordinated Debt Placement”), the proceeds of which are contemplated to be used in part to fund a portion of the aggregate Cash Consideration.
In connection with this opinion, we have reviewed, analyzed and relied upon material bearing upon the financial and operating condition of Nicolet and County and bearing upon the Merger, including among other things, the following: (i) a draft of the Agreement dated June 18, 2021 (the most recent draft made available to us); (ii) the audited financial statements and Annual Reports on Form 10-K for the three fiscal years ended December 31, 2020 of Nicolet; (iii) the unaudited quarterly financial statements and Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 of Nicolet; (iv) the audited financial statements and Annual Reports on Form 10-K for the three fiscal years ended December 31, 2020 of County; (v) the unaudited quarterly financial statements and Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 of County; (vi) certain regulatory filings of Nicolet and County and their respective subsidiaries, including the quarterly reports on Form FR Y-9C or FR Y-9SP and call reports filed with respect to each quarter during the three-year period ended December 31, 2020 as well as the quarter ended March 31, 2021; (vii) certain other interim reports and other communications of Nicolet and County to their respective shareholders; and (viii) other financial information concerning the respective businesses and operations of Nicolet and County that were furnished to us by Nicolet and County or that we were otherwise directed to use for purposes of our analysis. Our consideration of financial information and other factors that we deemed appropriate under the circumstances or relevant to our analyses included, among others, the following: (i) the historical and current financial position and results of operations of Nicolet and County; (ii) the assets and liabilities of Nicolet and County; (iii) the nature and terms of certain other merger transactions and business combinations in the banking industry; (iv) a comparison of certain financial and stock market information of Nicolet and County with similar information for certain other companies, the securities of which are publicly traded; (v) publicly available consensus “street estimates” of County, as well as assumed County long-term growth rates provided to us by Nicolet management, all of which information was discussed with us by Nicolet management and used and relied upon by us at the direction of such management and with the consent of the Board; (vi) certain publicly available research analyst “street estimates” of Nicolet (which estimates reflect the estimated pro forma impact of Nicolet’s pending acquisition of Mackinac Financial Corporation (the “Mackinac Acquisition”)), as well as assumed Nicolet long-term growth rates provided to us by Nicolet management, all of which information was discussed with us by Nicolet management and used and relied upon by us at the direction of such management and with the consent of the Board; (vii) pro forma balance sheet and capital data of Nicolet as of March 31, 2021, as adjusted for the Mackinac Acquisition, which data was provided to and discussed with us by Nicolet management and used and relied upon by us at the direction of such management and with the consent of the Board; and (viii) estimates regarding certain pro forma financial effects of the Merger on Nicolet (including without limitation the cost savings and related expenses expected to result or be derived from the Merger) that were prepared by Nicolet management, provided to and discussed with us by such management, and used and relied upon by us at the direction of such management and with the consent of the Board. We have also performed such other studies and analyses as we considered appropriate and have taken into account our assessment of general economic, market and financial conditions and our experience in other transactions, as well as our experience in securities valuation and knowledge of the banking industry generally. We have also participated in discussions held with the respective managements of Nicolet and County regarding the past and current business operations, regulatory relations, financial condition and future prospects of Nicolet and County and such other matters as we have deemed relevant to our inquiry.
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The Board of Directors — Nicolet Bankshares, Inc.
June 21, 2021
Page 3 of 6
In conducting our review and arriving at our opinion, we have assumedrelied upon and relied uponassumed the accuracy and completeness of all of the financial and other information provided to or discussed with us or that was publicly available and we have not independently verified the accuracy or completeness of any such information or assumed any responsibility or liability for such verification, accuracy or completeness. We have relied upon the management of Nicolet as to the reasonableness and achievability of the publicly available consensus “street estimates” of County, the publicly available research analyst “street estimates” of Nicolet, the assumed Nicolet and County long-term growth rates, and the estimates regarding certain pro forma financial effects of the Merger on Nicolet (including, without limitation, the cost savings and related expenses expected to result or be derived from the Merger), all as referred to above, and the assumptions and bases for all such information, and we have assumed that all of the foregoing information has been reasonably prepared and represents, or in the case of the publicly available “street estimates” referred to above that such estimates are consistent with, the best currently available estimates and judgments of Nicolet management and that the forecasts, projections and estimates reflected in such information will be realized in the amounts and in the time periods currently estimated. We express no view or opinion as to the Mackinac Acquisition (or any terms, aspects, effects or implications thereof) and, with the consent of Nicolet, have assumed that the Mackinac Acquisition will be consummated as described to us from public sources,by Nicolet management during the third quarter of 2021.
It is understood that the portion of the foregoing financial information of Nicolet and County that was provided to and discussed with us bywas not prepared with the Company,expectation of public disclosure and that all of the Bank,foregoing financial information, including the publicly available consensus “street estimates” of County and research analyst “street estimates” of Nicolet referred to above, is based on numerous variables and assumptions that are inherently uncertain (including, without limitation, factors related to general economic and competitive conditions, and in particular, assumptions regarding the ongoing COVID-19 pandemic) and, accordingly, actual results could vary significantly from those set forth in such information. We have assumed, based on discussions with the management of Nicolet and with the consent of the Board, that all such information provides a reasonable basis upon which we could form our opinion and we express no view as to any such information or the assumptions or bases therefor. Among other things, such information has assumed that the ongoing COVID-19 pandemic could have an adverse impact on Nicolet Bank or their respective representatives or that was otherwise reviewed by us for purposes of rendering this opinion.and County. We have further relied on the assurances of the respective management of the Company, the Bank, Nicolet, and Nicolet Bank and that they are not aware of any facts or circumstances that would make any ofall such information inaccurate or misleading. We have not been asked to and have not undertaken anwithout independent verification ofor analysis and do not in any of such information, and we do notrespect assume any responsibility or liability for the accuracy or completeness thereof. We also have assumed that there have been no material changes in the assets, liabilities, financial condition, results of operations, business or prospects of either Nicolet or County since the date of the last financial statements of each party to the Agreement would advise us promptly if any information previously providedsuch entity that were made available to us became inaccurate or was requiredand that we were directed to be updated during the period of our review.
use. We are not experts in the evaluationindependent verification of the adequacy of allowances for loan and lease portfolios for purposes of assessinglosses and we have assumed, without independent verification and with your consent, that the adequacy of theaggregate allowances for loan and lease losses with respect thereto or otherwise. We have assumed that such allowances for the Company, the Bank,each of Nicolet and Nicolet BankCounty are in the aggregate, adequate to cover such losses, and will be adequate on a pro forma basis for the combined entity. We were not requested to make, andlosses. In rendering our opinion, we have not made an independent evaluation,or obtained any evaluations or appraisals or physical inspection or appraisal of the property, assets properties, facilities, or liabilities (contingent or otherwise) of the Company, the Bank, Nicolet and Nicolet Bank,or County, the collateral securing any of such assets or liabilities, or the collectability of any such assets, andnor have we were not furnished withexamined any such evaluations or appraisals, nor did we review anyindividual loan or credit files, ofnor did we evaluate the Company, the Bank,solvency, financial capability or fair value of Nicolet or Nicolet Bank. We also did not conduct a review of any credit mark which may be taken in connection with the Merger nor have we evaluated the adequacy of any contemplated credit mark to be so taken.
In arriving at our opinion, we have not evaluated the solvency of the Company, the Bank, Nicolet, or Nicolet Bank,County under any state or federal lawlaws, including those relating to bankruptcy, insolvency or similarother matters. Accordingly, we express no opinion regardingEstimates of values of companies and assets do not purport to be appraisals or necessarily reflect the liquidationprices at which companies or assets may actually be sold. Such estimates are inherently subject to uncertainty and should not be taken as our view of the actual value of the Company, the Bank,any companies or assets.
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The Board of Directors — Nicolet or Nicolet Bank, or any other entity. We have also assumed that the Company, the Bank, Nicolet, and Nicolet Bank would remain as a going concern for all periods relevant to our analysis. Accordingly, we express no opinion with respect to the foregoing. Further, without limiting the generalityBankshares, Inc.
June 21, 2021
Page 4 of the foregoing, we have undertaken no independent analysis of any pending or threatened litigation, regulatory action, possible unasserted claims or other contingent liabilities to which the Company, the Bank, Nicolet, or Nicolet Bank is a party or may be subject, and with your consent, our opinion makes no assumption concerning, and therefore does not consider, the possible assertion of claims, outcomes or damages arising out of any such matters. We have also assumed that neither the Company, the Bank, Nicolet, nor Nicolet Bank is a party to any material pending transaction, including without limitation any financing, recapitalization, acquisition or merger, divestiture or spin-off, other than the Merger contemplated by the Agreement.6
We have relied upon and assumed, with your consent and without independent verification,in all respects material to our analyses, the following: (i) that the Merger and any related transactions (including, without limitation, the Bank Merger, the Concurrent Nicolet Subordinated Debt Placement and the redemption of all outstanding shares of the preferred stock of County provided for in the Agreement (the “County Preferred Redemption”)) will be consummatedcompleted substantially in accordance with the terms set forth in the Agreement without(the final terms of which we have assumed will not differ, in any waiverrespect material to our analyses, from the draft reviewed by us and referred to above) with no adjustments to the Aggregate Merger Consideration (including the allocation between cash and stock) and with no additional consideration or payments in respect of material terms or conditions byCounty Common Stock; (ii) that the Company, Nicolet or any otherrepresentations and warranties of each party in the Agreement and in all related documents and instruments referred to in the Agreement are true and correct; (iii) that each party to the Agreement or any of the related documents will perform all of the covenants and agreements required to be performed by such party under such documents; (iv) that there are no factors that would delay or subject to any adverse conditions, any necessary regulatory or governmental approval for the Merger or any related transactions and that all conditions to the finalcompletion of the Merger and any related transactions will be satisfied without any waivers or modifications to the Agreement or any of the related documents; and (v) that in the course of obtaining the necessary regulatory, contractual, or other consents or approvals for the Merger and any related transactions, no restrictions, including any divestiture requirements, termination or other payments or amendments or modifications, will not differ materiallybe imposed that will have a material adverse effect on the future results of operations or financial condition of Nicolet, County or the pro forma entity, or the contemplated benefits of the Merger, including without limitation the cost savings and related expenses expected to result or be derived from the draft we reviewed.Merger. We have assumed that the Merger will be consummated in compliancea manner that complies with the applicable provisions of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and all other applicable lawsfederal and state statutes, rules and regulations. The CompanyWe have further been advised by representatives of Nicolet that Nicolet has advised us that they arerelied upon advice from its advisors (other than KBW) or other appropriate sources as to all legal, financial reporting, tax, accounting and regulatory matters with respect to Nicolet, County, the Merger and any related transaction, the Mackinac Acquisition, and the Agreement. KBW has not awareprovided advice with respect to any such matters.
This opinion addresses only the fairness, from a financial point of view, as of the date hereof, of the Aggregate Merger Consideration in the Merger to Nicolet. We express no view or opinion as to any other terms or aspects of the Merger or any term or aspect of any factors that would impede any necessary regulatoryrelated transaction (including the Bank Merger, the Concurrent Nicolet Subordinated Debt Placement and the County Preferred Redemption), including without limitation, the form or governmental approvalstructure of the Merger. WeMerger (including the form of Aggregate Merger Consideration or the allocation thereof between stock and cash) or any such related transaction, any consequences of the Merger or any such related transaction to Nicolet, its shareholders, creditors or otherwise, or any terms, aspects, merits or implications of any employment, retention, non-compete, consulting, voting, support, cooperation, shareholder, escrow or other agreements, arrangements or understandings contemplated or entered into in connection with the Merger, any such related transaction, or otherwise. Our opinion is necessarily based upon conditions as they exist and can be evaluated on the date hereof and the information made available to us through the date hereof. As you are aware, there is currently widespread disruption, extraordinary uncertainty and unusual volatility arising from the effects of the COVID-19 pandemic, including the effect of evolving governmental interventions and non-interventions. It is understood that subsequent developments may affect the conclusion reached in this opinion and that KBW does not have assumed thatan obligation to update, revise or reaffirm this opinion. Our opinion does not address, and we express no view or opinion with respect to, (i) the necessary regulatory and governmental approvalsunderlying business decision of Nicolet to engage in the Merger or enter into the Agreement, (ii) the relative merits of the Merger as granted will not be subjectcompared to any conditionsstrategic alternatives that wouldare, have been or may be unduly burdensomeavailable to or contemplated by Nicolet or the Board, (iii) any business, operational or other plans with respect to County or the pro forma entity that may be currently contemplated by Nicolet or the Board or that may be implemented by Nicolet or the Board subsequent to the closing of the Merger, (iv) the fairness of the amount or nature of any compensation
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The Board of Directors — Nicolet Bankshares, Inc.
June 21, 2021
Page 5 of 6
to any of Nicolet’s officers, directors or employees, or any class of such persons, relative to any compensation to the holders of Nicolet Common Stock or relative to the Aggregate Merger Consideration, (v) the effect of the Merger or any related transaction on, or the Company,fairness of the consideration to be received by, holders of any class of securities of Nicolet, County or any other party to any transaction contemplated by the Agreement, (vi) any adjustment (as provided in the Agreement) to the Stock Consideration assumed to be paid in the Merger for purposes of our opinion, (vii) whether Nicolet has sufficient cash, available lines of credit or other sources of funds to enable it to pay the aggregate Cash Consideration at the closing of the Merger, (viii) the election by holders of County Common Stock to receive the Stock Consideration or the Cash Consideration, or any combination thereof, or the actual allocation between the Stock Consideration and the Cash Consideration among such holders (including, without limitation, any reallocation thereof as a result of proration pursuant to the Agreement), or the relative fairness of the Stock Consideration and the Cash Consideration; (ix) the actual value of Nicolet Common Stock to be issued in connection with the Merger, (x) the prices, trading range or volume at which Nicolet Common Stock or County Common Stock will trade following the public announcement of the Merger or the prices, trading range or volume at which Nicolet Common Stock will trade following the consummation of the Merger, (xi) any advice or opinions provided by any other advisor to any of the parties to the Merger or any other transaction contemplated by the Agreement, or (xii) any legal, regulatory, accounting, tax or similar matters relating to Nicolet, County, any of their respective shareholders, or relating to or arising out of or as a consequence of the Merger or any other related transaction (including the Bank Merger, the Concurrent Nicolet Subordinated Debt Placement and the County Preferred Redemption), including whether or Nicolet Bank, or would have a material adverse effect on the contemplated benefits of the Merger. We have also assumed thatnot the Merger will qualify as a tax-free reorganization for United States federal income tax purposes.
OurThis opinion does not consider, include or address: (i)is for the legal, tax, accounting, or regulatory consequencesinformation of, the Merger on the Company, Nicolet or their respective shareholders; (ii) any advice or opinions provided by any other advisorand is directed to, the Board of Directors(in its capacity as such) in connection with its consideration of the Company or Nicolet; (iii) any other strategic alternatives that might be available tofinancial terms of the Company; or (iv) whether Nicolet has sufficient cash or other sources of funds to enable it to pay any consideration contemplated by the Merger.
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Our This opinion does not constitute a recommendation to the CompanyBoard as to how it should vote on the Merger or to any holder of Nicolet Common Stock or any shareholder of any other entity as to how to vote or act in connection with the Merger or any other matter (including, with respect to holders of County Common Stock, what election any such stockholder should make with respect to the Stock Consideration or the Cash Consideration), nor does it constitute a recommendation as to whether or not itany such shareholder should enter into the Agreementa voting, shareholders’, affiliates’ or to any shareholders of the Company as to how such shareholders should vote at any meetings of shareholders called to consider and vote upon the Merger. Our opinion does not address the underlying business decision to proceed with the Merger or the fairness of the amount or nature of the compensation, if any, to be received by any of the officers, directors or employees of the Company or the Bank relative to the amount of consideration to be paidother agreement with respect to the Merger. Our opinion should not be construed as implying that the Merger Consideration is necessarily the highest or best price that could be obtained in the Merger or in an acquisition, sale, merger,exercise any dissenters’ or combination transaction with a third party. We do not express any opinion as to the prices, trading range or volume at which Nicolet Common Stock may trade following the announcement of the proposed Merger, following the consummation of the Merger, or the prices at which shares of Nicolet Common Stockappraisal rights that may be purchased or sold at any time. We render no opinion asavailable to the value of Nicolet Common Stock when such stock is actually received by shareholders of the Company. Other than as specifically set forth herein, we are not expressing any opinion with respect to the terms and provisions of the Agreement or the enforceability of any such terms or provisions. Our opinion is not a solvency opinion and does not in any way address the solvency or financial condition of the Company or Nicolet.shareholder.
This opinion washas been reviewed and approved by Magstar’s fairness opinion committee. This letter is directed solely toour Fairness Opinion Committee in conformity with our policies and procedures established under the Boardrequirements of DirectorsRule 5150 of the Company and is not to be used for any other purpose or quoted or referred to, in whole or in part, in any registration statement, prospectus, proxy statement, or any other document, except in each case in accordance with our prior written consent; provided, however, that we hereby consent to the inclusion and reference to this letter in any registration statement, proxy statement or information statement to be delivered to the holders of the Company’s common stock in connection with the Merger if, and only if, this letter is quoted in full or attached as an exhibit to such document, this letter has not been withdrawn prior to the date of such document, and any description of or reference to Magstar or the analyses performed by Magstar or any summary of this opinion in such filing is in a form acceptable to Magstar and its counsel in the exercise of their reasonable judgment.
Our opinion is based solely upon the information available to us and described above, and the economic, market and other circumstances as they exist as of the date hereof. Events occurring and information that becomes available after the date hereof could materially affect the assumptions and analyses used in preparing this opinion. We have not undertaken to update, revise, reaffirm or withdraw this opinion or otherwise comment upon events occurring or information that becomes available after the date hereof. No assurance can be given that downward adjustments to the consideration to be received in the Merger will not be required by the actual results of operations of the Company or the Bank after December 31, 2019.
In arriving at this opinion, Magstar did not attribute any particular weight to any analysis or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Accordingly, Magstar believes that its analyses must be considered as a whole and that selecting portions of its analyses, without considering all analyses, would create an incomplete view of the process underlying this opinion.
Magstar, as part of its investment banking business, performs valuations of businesses and their securities in connection with mergers and acquisitions and other corporate transactions. In addition to being retained to render this opinion letter, we and Hillworth, LLC (“Hillworth”), an advisory firm focused on community banks and thrifts, were retained by the Company to act as its financial advisor in connection with the Merger. Members of Hillworth, are registered representatives of Magstar and any securities transactions and investment banking services to be rendered to Hillworth’s clients are provided through Magstar.
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We have received compensation from the Company including an advisory fee for delivery of certain transaction advisory and analysis services in connection with our engagement, and in connection with our services, will also receive a fairness opinion fee that is contingent upon the issuance of this opinion letter, and a completion fee that is contingent upon the consummation of the Merger. The Company has also agreed to indemnify us, Hillworth and our affiliates for certain liabilities that may arise out of this engagement. In the past two years, Magstar has not provided investment banking or financial advisory services to the Company or the Bank. Magstar or its affiliates may in the future provide investment banking and financial advisory services to Nicolet and receive compensation for such services, although to our knowledge none are expected at this time. During the past two years, certain registered representatives of Magstar, who are also separate owners and employees of Hillworth, have been engaged by, and provided services to the Company through Hillworth.Financial Industry Regulatory Authority.
Based upon and subject to the foregoing, review, assumptions and limitations, we are of theit is our opinion that, as of the date hereof, that the Aggregate Merger Consideration to be paid in connection with the Merger is fair, to the holders of the Company Common Stock from a financial point of view.view, to Nicolet.
Sincerely,Very truly yours,
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[MISSING IMAGE: lg_magstarcapllc-4clr.jpg]Keefe, Bruyette & Woods, Inc.

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Appendix CAPPENDIX D​
SUBCHAPTER XIIIMACKINAC FINANCIAL CORPORATION
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS AND ACCOMPANYING NOTES
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2021
MACKINAC FINANCIAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
WISCONSIN BUSINESS CORPORATION LAW(Dollars in Thousands)
180.1301 Definitions.
In ss. 180.1301 to 180.1331:
(1)   “Beneficial shareholder” means a person who is a beneficial owner of shares held by a nominee as the shareholder.
(1m)   “Business combination” has the meaning given in s. 180.1130 (3).
(2)   “Corporation” means the issuer corporation or, if the corporate action giving rise to dissenters’ rights under s. 180.1302 is a merger or share exchange that has been effectuated, the surviving domestic corporation or foreign corporation of the merger or the acquiring domestic corporation or foreign corporation of the share exchange.
(3)   “Dissenter” means a shareholder or beneficial shareholder who is entitled to dissent from corporate action under s. 180.1302 and who exercises that right when and in the manner required by ss. 180.1320 to 180.1328.
(4)   “Fair value”, with respect to a dissenter’s shares other than in a business combination, means the value of the shares immediately before the effectuation of the corporate action to which the dissenter objects, excluding any appreciation or depreciation in anticipation of the corporate action unless exclusion would be inequitable. “Fair value”, with respect to a dissenter’s shares in a business combination, means market value, as defined in s. 180.1130 (9) (a) 1. to 4.
(5)   “Interest” means interest from the effectuation date of the corporate action until the date of payment, at the average rate currently paid by the corporation on its principal bank loans or, if none, at a rate that is fair and equitable under all of the circumstances.
(6)   “Issuer corporation” means a domestic corporation that is the issuer of the shares held by a dissenter before the corporate action.
History: 1989 a. 303; 1991 a. 16.
“Date of payment” in sub. (5) refers to the actual payment date by a corporation following a special proceeding, even if the payment occurs after a “verdict, decision or report,” within the meaning of s. 814.04 (4), or after “judgment,” within the meaning of s. 815.05 (8). Thus the definition of interest contained in sub. (5) applies to the time period following a court decision on fair value until final payment is made. HMO-W Incorporated v. SSM Health Care System, 2003 WI App 137, 266 Wis. 2d 69, 667 N.W.2d 733, 02-0042.
The phrase “rate that is fair and equitable under all of the circumstances” in sub. (5) directs the circuit court to consider the circumstances of the particular case in determining the interest rate to be paid. It was appropriate under this standard to look at the borrowing power of a parent corporation to determine if the rate the subsidiary would obtain would be the rate the parent could obtain. HMO-W Incorporated v. SSM Health Care System, 2003 WI App 137, 266 Wis. 2d 69, 667 N.W.2d 733, 02-0042.
180.1302 Right to dissent.
(1)   Except as provided in sub. (4) and s. 180.1008 (3), a shareholder or beneficial shareholder may dissent from, and obtain payment of the fair value of his or her shares in the event of, any of the following corporate actions:
(a)   Consummation of a plan of merger to which the issuer corporation is a party if any of the following applies:
​​​
June 30,
2021
​​
December 31,
2020
​
​​​(Unaudited)​
ASSETS​​​​​​​​​​​​​
Cash and due from banks​​​$341,436​​​​$218,901​​
Federal funds sold​​​​10,041​​​​​76​​
Cash and cash equivalents​​​​351,477​​​​​218,977​​
Interest-bearing deposits in other financial institutions​​​​2,427​​​​​2,917​​
Securities available for sale​​​​101,955​​​​​111,836​​
Federal Home Loan Bank stock​​​​4,473​​​​​4,924​​
Loans:​​​​​​​​​​​​​
Commercial​​​​738,429​​​​​819,907​​
Mortgage​​​​221,388​​​​​238,705​​
Consumer​​​​18,238​​​​​18,980​​
Total Loans​​​​978,055​​​​​1,077,592​​
Allowance for loan losses​​​​
(5,651)
​​​​​(5,816)​​
Net loans​​​​972,404​​​​​1,071,776​​
Premises and equipment​​​​24,533​​​​​25,518​​
Other real estate held for sale​​​​1,343​​​​​1,752​​
Deferred tax asset​​​​2,496​​​​​3,303​​
Deposit based intangibles​​​​4,031​​​​​4,368​​
Goodwill​​​​19,574​​​​​19,574​​
Other assets​​​​34,239​​​​​36,785​​
TOTAL ASSETS​​​$1,518,952​​​​$1,501,730​​
LIABILITIES AND SHAREHOLDERS’ EQUITY��​​​​​​​​​​​​
LIABILITIES:​​​​​​​​​​​​​
Deposits:​​​​​​​​​​​​​
Noninterest bearing deposits​​​$459,716​​​​$414,804​​
NOW, money market, interest checking​​​​501,251​​​​​450,556​​
Savings​​​​141,729​​​​​130,755​​
CDs<$250,000​​​​178,723​​​​​202,266​​
CDs>$250,000​​​​12,384​​​​​15,224​​
Brokered​​​​13,351​​​​​45,171​​
Total deposits​​​​1,307,154​​​​​1,258,776​​
Borrowings​​​​28,441​​​​​63,479​​
Other liabilities​​​​11,438​​​​​11,611​​
Total liabilities​​​​1,347,033​​​​​1,333,866​​
 
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​​​
June 30,
2021
​​
December 31,
2020
​
​​​(Unaudited)​
SHAREHOLDERS’ EQUITY:​​​​​​​​​​​​​
Common stock and additional paid in capital – No par value Authorized – 18,000,000 shares Issued and outstanding – 10,550,393 and 10,500,758 respectively​​​​127,624​​​​​127,164​​
Retained earnings​​​​43,189​​​​​39,318​​
Accumulated other comprehensive income​​​​​​​​​​​​​
Unrealized gains on available for sale securities​​​​1,689​​​​​1,965​​
Minimum pension liability​​​​
(583)
​​​​​(583)​​
Total shareholders’ equity​​​​171,919​​​​​167,864​​
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY​​​$1,518,952​​​​$1,501,730​​
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1.   Shareholder approval is required for the merger by s. 180.1103 or by the articles of incorporation.MACKINAC FINANCIAL CORPORATION
2.   The issuer corporation is a subsidiary that is merged with its parent under s. 180.1104.
3.   The issuer corporation is a parent that is merged with its subsidiary under s. 180.1104. This subdivision does not apply if all of the following are true:
a.   The articles of incorporation of the surviving corporation do not differ from the articles of incorporation of the parent before the merger, except for amendments specifiedCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in s. 180.1002 (1) to (9).
b.   Each shareholder of the parent whose shares were outstanding immediately before the effective time of the merger holds the same number of shares with identical designations, preferences, limitations, and relative rights, immediately after the merger.
c.   The number of voting shares, as defined in s. 180.1103 (5) (a) 2., outstanding immediately after the merger, plus the number of voting shares issuable as a result of the merger, either by the conversion of securities issued pursuant to the merger or the exercise of rights or warrants issued pursuant to the merger, do not exceed by more than 20 percent the total number of voting shares of the parent outstanding immediately before the merger.
d.   The number of participating shares, as defined in s. 180.1103 (5) (a) 1., outstanding immediately after the merger, plus the number of participating shares issuable as a result of the merger, either by the conversion of securities issued pursuant to the merger or the exercise of rights or warrants issued pursuant to the merger, do not exceed by more than 20 percent the total number of participating shares of the parent outstanding immediately before the merger.
(b)   Consummation of a plan of share exchange if the issuer corporation’s shares will be acquired, and the shareholder or the shareholder holding shares on behalf of the beneficial shareholder is entitled to vote on the plan.
(c)   Consummation of a sale or exchange of all, or substantially all, of the property of the issuer corporation other than in the usual and regular course of business, including a sale in dissolution, but not including any of the following:
1.   A sale pursuant to court order.
2.   A sale for cash pursuant to a plan by which all or substantially all of the net proceeds of the sale will be distributed to the shareholders within one year after the date of sale.
(cm)   Consummation of a plan of conversion.
(d)Thousands, Except as provided in sub. (2), any other corporate action taken pursuant to a shareholder vote to the extent that the articles of incorporation, bylaws or a resolution of the board of directors provides that the voting or nonvoting shareholder or beneficial shareholder may dissent and obtain payment for his or her shares.per Share Data)
(Unaudited)
(2)   Except as provided in sub. (4) and s. 180.1008 (3), the articles of incorporation may allow a shareholder or beneficial shareholder to dissent from an amendment of the articles of incorporation and obtain payment of the fair value of his or her shares if the amendment materially and adversely affects rights in respect of a dissenter’s shares because it does any of the following:
(a)   Alters or abolishes a preferential right of the shares.
(b)   Creates, alters or abolishes a right in respect of redemption, including a provision respecting a sinking fund for the redemption or repurchase, of the shares.
(c)   Alters or abolishes a preemptive right of the holder of shares to acquire shares or other securities.
​​​
Three Months Ended
June 30,
​​
Six Months Ended
June 30,
​
​​​2021​​2020​​2021​​2020​
INTEREST INCOME:​​​​​​​​​​​​​​​​​​​​​​​​​
Interest and fees on loans:​​​​​​​​​​​​​​​​​​​​​​​​​
Taxable​​​$13,414​​​​$15,549​​​​$27,535​​​​$30,162​​
Tax-exempt​​​​20​​​​​55​​​​​40​​​​​129​​
Interest on securities:​​​​​​​​​​​​​​​​​​​​​​​​​
Taxable​​​​503​​​​​560​​​​​1,028​​​​​1,181​​
Tax-exempt​​​​132​​​​​152​​​​​274​​​​​239​​
Other interest income​​​​120​​​​​125​​​​​204​​​​​395​​
Total interest income​​​​14,189​​​​​16,441​​​​​29,081​​​​​32,106​​
INTEREST EXPENSE:​​​​​​​​​​​​​​​​​​​​​​​​​
Deposits​​​​723​​​​​1,707​​​​​1,612​​​​​3,634​​
Borrowings​​​​200​​​​​276​​​​​425​​​​​617​​
Total interest expense​​​​923​​​​​1,983​​​​​2,037​​​​​4,251​​
Net interest income​​​​13,266​​​​​14,458​​​​​27,044​​​​​27,855​​
Provision for loan losses​​​​50​​​​​100​​​​​100​​​​​200​​
Net interest income after provision for loan losses​​​​13,216​​​​​14,358​​​​​26,944​​​​​27,655​​
OTHER INCOME:​​​​​​​​​​​​​​​​​​​​​​​​​
Deposit service fees​​​​265​​​​​237​​​​​522​​​​​640​​
Income from mortgage loans sold on the secondary market​​​​982​​​​​1,512​​​​​2,284​​​​​2,050​​
SBA/USDA loan sale gains​​​​869​​​​​274​​​​​1,302​​​​​984​​
Net mortgage servicing fees​​​​154​​​​​204​​​​​395​​​​​393​​
Realized security gains​​​​—​​​​​—​​​​​36​​​​​—​​
Other​​​​154​​​​​140​​​​​283​​​​​237​​
Total other income​​​​2,424​​​​​2,367​​​​​4,822​​​​​4,304​​
OTHER EXPENSE:​​​​​​​​​​​​​​​​​​​​​​​​​
Salaries and employee benefits​​​​6,306​​​​​7,009​​​​​13,130​​​​​13,060​​
Occupancy​​​​1,092​​​​​1,008​​​​​2,275​​​​​2,132​​
Furniture and equipment​​​​818​​​​​804​​​​​1,660​​​​​1,606​​
Data processing​​​​707​​​​​852​​​​​1,477​​​​​1,677​​
Advertising​​​​176​​​​​312​​​​​289​​​​​524​​
Professional service fees​​​​515​​​​​574​​​​​1,013​​​​​1,072​​
Loan origination expenses and deposit and card related fees​​​​419​​​​​406​​​​​869​​​​​787​​
Writedowns and losses on other real estate held for sale​​​​84​​​​​31​​​​​32​​​​​34​​
FDIC insurance assessment​​​​150​​​​​165​​​​​290​​​​​315​​
Communications​​​​259​​​​​224​​​​​500​​​​​437​​
Transaction related expenses​​​​495​​​​​—​​​​​495​​​​​—​​
Other​​​​891​​​​​967​​​​​1,730​​​​​2,080​​
Total other expenses​​​​11,912​​​​​12,352​​​​​23,760​​​​​23,724​​
 
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​​​
Three Months Ended
June 30,
​​
Six Months Ended
June 30,
​
​​​2021​​2020​​2021​​2020​
Income before provision for income taxes​​​​3,728​​​​​4,373​​​​​8,006​​​​​8,235​​
Provision for income taxes​​​​783​​​​​919​​​​​1,181​​​​​1,730​​
NET INCOME​​​$2,945​​​​$3,454​​​​$6,825​​​​$6,505​​
INCOME PER COMMON SHARE:​​​​​​​​​​​​​​​​​​​​​​​​​
Basic​​​$0.28​​​​$0.33​​​​$0.65​​​​$0.61​​
Diluted​​​$0.28​​​​$0.33​​​​$0.65​​​​$0.61​​
​

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(d)   Excludes or limits the right of the shares to vote on any matter or to cumulate votes, other than a limitation by dilution through issuance of shares or other securities with similar voting rights.
(e)   Reduces the number of shares owned by the shareholder or beneficial shareholder to a fraction of a share if the fractional share so created is to be acquired for cash under s. 180.0604.
(3)   Notwithstanding sub. (1) (a) to (c), if the issuer corporation is a statutory close corporation under ss. 180.1801 to 180.1837, a shareholder of the statutory close corporation may dissent from a corporate action and obtain payment of the fair value of his or her shares, to the extent permitted under sub. (1) (d) or (2) or s. 180.1803, 180.1813 (1) (d) or (2) (b), 180.1815 (3) or 180.1829 (1) (c).
(3m)   Notwithstanding any other provision of this section, if the issuer corporation has become a benefit corporation under s. 204.104(1) or (2), a shareholder of the benefit corporation may dissent from the amendment of the articles or the fundamental transaction to become a benefit corporation and obtain payment of the fair value of his or her shares, as provided in s. 204.104(3). “Fair value” as used in this subsection means the value of the shares immediately before the effectuation of the corporate action to which the dissenter objects, excluding any appreciation or depreciation in anticipation of the corporate action unless exclusion would be inequitable and not reduced by lack of marketability or minority discounts.
(4)   Unless the articles of incorporation provide otherwise, subs. (1) and (2) do not apply to the holders of shares of any class or series if the shares of the class or series are registered on a national securities exchange or quoted on the National Association of Securities Dealers, Inc., automated quotations system on the record date fixed to determine the shareholders entitled to notice of a shareholders meeting at which shareholders are to vote on the proposed corporate action.
(5)   Except as provided in s. 180.1833, a shareholder or beneficial shareholder entitled to dissent and obtain payment for his or her shares under ss. 180.1301 to 180.1331 may not challenge the corporate action creating his or her entitlement unless the action is unlawful or fraudulent with respect to the shareholder, beneficial shareholder or issuer corporation.
History: 1989 a. 303; 1991 a. 16; 2001 a. 44; 2005 a. 476.
Minority discounts are inappropriate under dissenters’ rights statutes and will not be applied in determining “fair value” under sub. (1). Each dissenting shareholder should be assigned the proportionate interest of his or her shares in the going interest in the entire company. HMO-W Incorporated v. SSM Health Care System, 2000 WI 46, 234 Wis. 2d 707, 611 N.W.2d 250, 98-2834.
The Role of Discounts in Determining “Fair Value” Under Wisconsin’s Dissenters’ Rights Statutes: The Case for Discounts. Emory. 1995 WLR 1155.MACKINAC FINANCIAL CORPORATION
180.1303 Dissent by shareholders and beneficial shareholders.CONDENSED CONSOLIDATED STATEMENTS COMPREHENSIVE INCOME
(Dollars in Thousands)
(Unaudited)
​​​
Three Months Ended
June 30,
​​
Six Months Ended
June 30,
​
​​​2021​​2020​​2021​​2020​
Net income​​​$2,945​​​​$3,454​​​​$6,825​​​​$6,505​​
Other comprehensive income​​​​​​​​​​​​​​​​​​​​​​​​​
Change in securities available for sale:​​​​​​​​​​​​​​​​​​​​​​​​​
Unrealized gains (losses) arising during the period​​​​61​​​​​2,415​​​​​
(349)
​​​​​1,309​​
Tax effect​​​​
(13)
​​​​​(507)​​​​​73​​​​​(275)​​
Net change in unrealized gains on available for sale securities​​​​48​​​​​1,908​​​​​
(276)
​​​​​1,034​​
Total comprehensive income​​​$2,993​​​​$5,362​​​​$6,549​​​​$7,539​​
(1)   A shareholder may assert dissenters’ rights as to fewer than all of the shares registered

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MACKINAC FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Dollars in his or her name only if the shareholder dissents with respect to all shares beneficially owned by any one person and notifies the corporationThousands)
(Unaudited)
​​​
Six Months Ended
June 30, 2021
​
​​​
Shares of
Common
Stock
​​
Common
Stock and
Additional
Paid in Capital
​​
Retained
Earnings
​​
Accumulated
Other
Comprehensive
Income (loss)
​​Total​
Balance, beginning of period​​​​10,500,758​​​​$127,164​​​​$39,318​​​​$1,382​​​​$167,864​​
Net income for period​​​​—​​​​​—​​​​​6,825​​​​​—​​​​​6,825​​
Other comprehensive income​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Net unrealized gain on securities available for sale​​​​—​​​​​—​​​​​—​​​​​
(276)
​​​​​
(276)
​​
Total comprehensive income​​​​—​​​​​—​​​​​6,825​​​​​
(276)
​​​​​6,549​​
Stock compensation​​​​—​​​​​460​​​​​—​​​​​—​​​​​460​​
Issuance of common stock:​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Restricted stock award vesting​​​​49,635​​​​​—​​​​​—​​​​​—​​​​​—​​
Dividend on common stock​​​​—​​​​​—​​​​​
(2,954)
​​​​​—​​​​​
(2,954)
​​
Balance, end of period​​​​10,550,393​​​​$127,624​​​​$43,189​​​​$1,106​​​​$171,919​​

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MACKINAC FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Dollars in writing of the name and address of each person on whose behalf he or she asserts dissenters’ rights. The rights of a shareholder who under this subsection asserts dissenters’ rights as to fewer than all of the shares registeredThousands)
(Unaudited)
​​​
Six Months Ended
June 30, 2020
​
​​​
Shares of
Common
Stock
​​
Common
Stock and
Additional
Paid in Capital
​​
Retained
Earnings
​​
Accumulated
Other
Comprehensive
Income (Loss)
​​Total​
Balance, beginning of period​​​​10,748,712​​​​$129,564​​​​$31,740​​​​$615​​​​$161,919​​
Net income for period​​​​—​​​​​—​​​​​6,505​​​​​—​​​​​6,505​​
Other comprehensive income​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Net unrealized gain on securities available for sale​​​​—​​​​​—​​​​​—​​​​​1,034​​​​​1,034​​
Total comprehensive income​​​​—​​​​​—​​​​​6,505​​​​​1,034​​​​​7,539​​
Stock compensation​​​​—​​​​​378​​​​​—​​​​​—​​​​​378​​
Issuance of common stock:​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Restricted stock award vesting​​​​25,521​​​​​—​​​​​—​​​​​—​​​​​—​​
Repurchase of common stock​​​​(240,644)​​​​​(2,729)​​​​​—​​​​​—​​​​​(2,729)​​
Dividend on common stock​​​​—​​​​​—​​​​​(2,950)​​​​​—​​​​​(2,950)​​
Balance, end of period​​​​10,533,589​​​​$127,213​​​​$35,295​​​​$1,649​​​​$164,157​​

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MACKINAC FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Dollars in his or her name are determined as if the shares as to which he or she dissents and his or her other shares were registered in the names of different shareholders.Thousands)
(Unaudited)
​​​
Three Months Ended
June 30, 2021
​
​​​
Shares of
Common
Stock
​​
Common
Stock and
Additional
Paid in Capital
​​
Retained
Earnings
​​
Accumulated
Other
Comprehensive
Income
​​Total​
Balance, beginning of period​​​​10,550,393​​​​$127,397​​​​$41,721​​​​$1,058​​​​$170,176​​
Net income for period​​​​—​​​​​—​​​​​2,945​​​​​—​​​​​2,945​​
Other comprehensive income​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Net unrealized gain on securities available for sale​​​​—​​​​​—​​​​​—​​​​​48​​​​​48​​
Total comprehensive income​​​​—​​​​​—​​​​​2,945​​​​​48​​​​​2,993​​
Stock compensation​​​​—​​​​​227​​​​​—​​​​​—​​​​​227​​
Dividend on common stock​​​​—​​​​​—​​​​​
(1,477)
​​​​​—​​​​​
(1,477)
​​
Balance, end of period​​​​10,550,393​​​​$127,624​​​​$43,189​​​​$1,106​​​​$171,919​​
(2)   A beneficial shareholder may assert dissenters’ rights as to shares held on his or her behalf only if the beneficial shareholder does all of the following:
(a)   Submits to the corporation the shareholder’s written consent to the dissent not later than the time that the beneficial shareholder asserts dissenters’ rights.
(b)   Submits the consent under par. (a) with respect to all shares of which he or she is the beneficial shareholder.
History: 1989 a. 303.
 
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MACKINAC FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Dollars in Thousands)
(Unaudited)
​​​
Three Months Ended
June 30, 2020
​
​​​
Shares of
Common
Stock
​​
Common
Stock and
Additional
Paid in Capital
​​
Retained
Earnings
​​
Accumulated
Other
Comprehensive
Income
​​Total​
Balance, beginning of period​​​​10,533,589​​​​$127,003​​​​$33,316​​​​$(259)​​​​$160,060​​
Net income for period​​​​—​​​​​—​​​​​3,454​​​​​—​​​​​3,454​​
Other comprehensive income​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Net unrealized gain on securities available for sale​​​​—​​​​​—​​​​​—​​​​​1,908​​​​​1,908​​
Total comprehensive income​​​​—​​​​​—​​​​​3,454​​​​​1,908​​​​​5,362​​
Stock compensation​​​​—​​​​​210​​​​​—​​​​​—​​​​​210​​
Dividend on common stock​​​​—​​​​​—​​​​​(1,475)​​​​​—​​​​​(1,475)​​
Balance, end of period​​​​10,533,589​​​​$127,213​​​​$35,295​​​​$1,649​​​​$164,157​​

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MACKINAC FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
​​​
Six Months Ended
June 30,
​
​​​2021​​2020​
Cash Flows from Operating Activities:​​​​​​​​​​​​​
Net income​​​$6,825​​​​$6,505​​
Adjustments to reconcile net income to net cash provided by operating activities:​​​​​​​​​​​​​
Depreciation and amortization​​​​1,311​​​​​1,407​​
Provision for loan losses​​​​100​​​​​200​​
Deferred tax expense, net​​​​1,330​​​​​866​​
Gain on sale of loans sold in the secondary market​​​​
(2,021)
​​​​​(1,744)​​
Origination of loans held for sale in the secondary market​​​​
(66,069)
​​​​​(86,389)​​
Proceeds from sale of loans in the secondary market​​​​67,986​​​​​87,517​​
Loss on sale other real estate held for sale and fixed assets​​​​235​​​​​—​​
Writedown of other real estate held for sale​​​​83​​​​​30​​
Stock compensation​​​​460​​​​​378​​
Change in other assets​​​​2,434​​​​​(319)​​
Change in other liabilities​​​​
(173)
​​​​​601​​
Net cash provided by operating activities​​​​12,501​​​​​9,052​​
Cash Flows from Investing Activities:​​​​​​​​​​​​​
Net decrease (increase) in loans​​​​98,776​​​​​(94,217)​​
Net decrease in interest bearing deposits in other financial institutions​​​​490​​​​​2,464​​
Purchase of securities available for sale​​​​
(4,338)
​​​​​(19,224)​​
Proceeds from maturities, sales, calls or paydowns of securities available for sale​​​​13,720​​​​​19,733​​
Redemption of FHLBI stock​​​​451​​​​​—​​
Capital expenditures​​​​
(463)
​​​​​(3,344)​​
Proceeds from sale of other real estate, premises and fixed assets​​​​977​​​​​332​​
Net cash provided by (used in) investing activities​​​​109,613​​​​​(94,256)​​
Cash Flows from Financing Activities:​​​​​​​​​​​​​
Net increase in deposits​​​​48,378​​​​​151,875​​
Net decrease in fed funds purchased​​​​—​​​​​(6,225)​​
New term debt issuance​​​​—​​​​​100,281​​
Principal payments on borrowings​​​​
(35,038)
​​​​​(50,366)​​
Repurchase of common stock​​​​—​​​​​(2,729)​​
Dividend on common stock​​​​
(2,954)
​​​​​(2,950)​​
Net cash provided by financing activities​​​​10,386​​​​​189,886​​
Net increase in cash and cash equivalents​​​​132,500​​​​​104,682​​
Cash and cash equivalents at beginning of period​​​​218,977​​​​​49,826​​
Cash and cash equivalents at end of period​​​$351,477​​​​$154,508​​
Supplemental Cash Flow Information:​​​​​​​​​​​​​
Cash paid during the six months for:​​​​​​​​​​​​​
Interest​​​$2,333​​​​$4,361​​
Noncash Investing and Financing Activities:​​​​​​​​​​​​​
Transfers of Foreclosures from Loans to Other Real Estate Held for Sale​​​​600​​​​​333​​

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MACKINAC FINANCIAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
​
Basis of Presentation
The unaudited condensed consolidated financial statements of Mackinac Financial Corporation (the “Corporation”) have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six month period ended June 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. The unaudited consolidated financial statements and footnotes thereto should be read in conjunction with the audited consolidated financial statements and footnotes thereto included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2020.
In order to properly reflect some categories of other income and other expenses, reclassifications of expense and income items have been made to prior period numbers. The “net” other income and other expenses were unchanged by these reclassifications.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, the valuation of investment securities, the valuation of foreclosed real estate, deferred tax assets, mortgage servicing rights, the assessment of goodwill for impairment, and the fair value of assets and liabilities acquired in business combinations.
Acquired Loans
Loans acquired with evidence of credit deterioration since inception and for which it is probable that all contractual payments will not be received are accounted for under ASC Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality (“ASC 310-30”). These loans are recorded at fair value at the time of acquisition, with no carryover of the related allowance for loan losses. Fair value of acquired loans is determined using a discounted cash flow methodology based on assumptions about the amount and timing of principal and interest payments, principal prepayments and principal defaults and losses, and current market rates.
In recording the fair values of acquired impaired loans at acquisition date, management calculates a non-accretable difference (the credit component of the purchased loans) and an accretable difference (the yield component of the purchased loans).
Over the life of the acquired loans, management continues to estimate cash flows expected to be collected. We evaluate at each balance sheet date whether it is probable that we will be unable to collect all cash flows expected at acquisition and if so, recognize a provision for loan loss in our consolidated statement of operations. For any significant increases in cash flows expected to be collected, we adjust the amount of the accretable yield recognized on a prospective basis over the pool’s remaining life.
Performing acquired loans are accounted for under Financial Accounting Standards Board (“FASB”) Topic 310-20, Receivables — Nonrefundable Fees and Other Costs. Performance of certain loans may be monitored and based on management’s assessment of the cash flows and other facts available, portions of the accretable difference may be delayed or suspended if management deems appropriate. The Corporation’s

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policy for determining when to discontinue accruing interest on performing acquired loans and the subsequent accounting for such loans is essentially the same as the policy for originated loans.
Allowance for Loan Losses
The allowance for loan losses includes specific allowances related to loans, when they have been judged to be impaired. A loan is impaired when, based on current information, it is probable that the Corporation will not collect all amounts due in accordance with the contractual terms of the loan agreement. These specific allowances are based on discounted cash flows of expected future payments using the loan’s initial effective interest rate or the fair value of the collateral if the loan is collateral dependent.
The Corporation also has an unallocated allowance for loan losses for loans not considered impaired. The allowance for loan losses is maintained at a level which management believes is adequate to provide for probable loan losses. Management periodically evaluates the adequacy of the allowance using the Corporation’s past loan loss experience, known and inherent risks in the portfolio, composition of the portfolio, current economic conditions, and other factors. The allowance does not include the effects of expected losses related to future events or future changes in economic conditions. This evaluation is inherently subjective since it requires material estimates that may be susceptible to significant change. Loans are charged against the allowance for loan losses when management believes the collectability of the principal is unlikely. In addition, various regulatory agencies periodically review the allowance for loan losses. These agencies may require additions to the allowance for loan losses based on their judgments of collectability.
In management’s opinion, the allowance for loan losses is adequate to cover probable losses relating to specifically identified loans, as well as probable losses inherent in the balance of the loan portfolio as of the balance sheet date.
Stock Compensation Plans
On May 22, 2012, the Corporation’s shareholders approved the Mackinac Financial Corporation 2012 Incentive Compensation Plan, under which current and prospective employees, non-employee directors and consultants may be awarded incentive stock options, non-statutory stock options, shares of restricted stock awards (“RSAs”), stock grants, or stock appreciation rights. The aggregate number of shares of the Corporation’s common stock issuable under the plan is 575,000. At June 30, 2021 there were 6,560 shares available for issuance under this plan. Awards are made to executive officers at the discretion of the compensation committee of the board of directors. Awards are made to certain other senior officers at the discretion of the Corporation’s management. Compensation cost equal to the fair value of the award is recognized over the vesting period.
2.
RECENT ACCOUNTING PRONOUNCEMENTS
​
In September 2016, the FASB issued ASU No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income.
ASU 2016-13 requires an entity to measure expected credit losses for financial assets over the estimated lifetime of expected credit loss and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. The standard includes the following core concepts in determining the expected credit loss. The estimate must: (a) be based on an asset’s amortized cost (including premiums or discounts, net deferred fees and costs, foreign exchange and fair value hedge accounting adjustments), (b) reflect losses expected over the remaining contractual life of an asset (considering the effect of voluntary prepayments), (c) consider available relevant information about the estimated collectability of cash flows (including information about past events, current conditions, and reasonable and supportable forecasts), and (d) reflect the risk of loss, even when that risk is remote.
ASU 2016-13 also amends the recording of purchased credit-deteriorated assets. Under the new guidance, an allowance will be recognized at acquisition through a gross-up approach whereby an entity will

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record as the initial amortized cost the sum of (a) the purchase price and (b) an estimate of credit losses as of the date of acquisition. In addition, the guidance also requires immediate recognition in earnings of any subsequent changes, both favorable and unfavorable, in expected cash flows by adjusting this allowance.
ASU 2016-13 also amends the impairment model for available-for-sale debt securities and requires entities to determine whether all or a portion of the unrealized loss on an available-for-sale debt security is a credit loss. Management may not use the length of time a security has been in an unrealized loss position as a factor in concluding whether a credit loss exists, as is currently permitted. In addition, an entity will recognize an allowance for credit losses on available-for-sale debt securities as a contra-account to the amortized cost basis rather than as a direct reduction of the amortized cost basis of the investment, as is currently required. As a result, entities will recognize improvements to credit losses on available-for-sale debt securities immediately in earnings rather than as interest income over time under current practice.
New disclosures required by ASU 2016-13 include: (a) for financial assets measured at amortized cost, an entity will be required to disclose information about how it developed its allowance, including changes in the factors that influenced management’s estimate of expected credit losses and the reasons for those changes, (b) for financial receivables and net investments in leases measured at amortized cost, an entity will be required to further disaggregate the information it currently discloses about the credit quality of these assets by year or the asset’s origination or vintage for as many as five annual periods, and (c) for available-for-sale debt securities, an entity will be required to provide a roll-forward of the allowance for credit losses and an aging analysis for securities that are past due.
Upon adoption of ASU 2016-13, a cumulative-effect adjustment to retained earnings will be recorded as of the beginning of the first reporting period in which the guidance is effective. The Corporation is currently evaluating the provisions of ASU 2016-13 to determine the potential impact on the Corporation’s consolidated financial condition and results of operations. The Corporation has formed a cross-functional implementation team consisting of individuals from finance, credit and information systems. A project plan and timeline has been developed and the implementation team meets regularly to assess the project status to ensure adherence to the timeline. The implementation team has also been working with a software vendor to assist in implementing required changes to credit loss estimation models and proceses, and is finalizing the historical data collected to be utilized in the credit loss models. The Corporation expects to recognize a cumulative effect adjustment to the opening balance of retained earnings as of the beginning of the first reporting period in which ASU 2016-13 is effective. The Corporation has not yet determined the magnitude of any such one-time adjustment or the potential impact of ASU 2016-13 on its condensed consolidated financial statements. In October 2019 the Financial Accounting Standards Board (FASB) voted to defer the effective date of ASU 2016-13 to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, for smaller reporting companies (as defined by the Securities Exchange Commission).
3.
EARNINGS PER SHARE
​
Diluted earnings per share, which reflects the potential dilution that could occur if stock awards were fully vested and resulted in the issuance of common stock that then shared in our earnings, is computed by dividing net income by the weighted average number of common shares outstanding and common stock equivalents, after giving effect for dilutive shares issued.

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The following shows the computation of basic and diluted earnings per share for the three and six months ended June 30, 2021 and 2020 (dollars in thousands, except per share data):
​​​Three Months Ended June 30,​​Six Months Ended June 30,​
​2021​​2020​​2021​​2020​
(Numerator):​​​​​​​​​​​​​​​​​​​​​​​​​
Net income​​​$2,945​​​​$3,454​​​​$6,825​​​​$6,505​​
(Denominator):​​​​​​​​​​​​​​​​​​​​​​​​​
Weighted average shares outstanding​​​​10,550,393​​​​​10,533,589​​​​​10,536,722​​​​​10,625,778​​
Effect of restricted stock awards​​​​67,029​​​​​—​​​​​45,875​​​​​—​​
Diluted weighted average shares outstanding​​​​10,617,422​​​​​10,533,589​​​​​10,582,597​​​​​10,625,778​​
Income per common share:​​​​​​​​​​​​​​​​​​​​​​​​​
Basic​​​$0.28​​​​$0.33​​​​$0.65​​​​$0.61​​
Diluted​​​$0.28​​​​$0.33​​​​$0.65​​​​$0.61​​
​
4.
INVESTMENT SECURITIES
​
At June 30, 2021, the Corporation had an investment security portfolio totaling $101.955 million, a decrease of $9.881 million from the December 31, 2020 balance of $111.836 million. The amortized cost and estimated fair value of investment securities available for sale as of June 30, 2021 and December 31, 2020 are as follows (dollars in thousands):
​​​
Amortized
Cost
​​
Gross
Unrealized
Gains
​​
Gross
Unrealized
Losses
​​
Estimated
Fair Value
​
June 30, 2021​​​​​​​​​​​​​​​​​​​​​​​​​
US Treasury​​​$1,064​​​​$2​​​​$—​​​​$1,066​​
Corporate​​​​29,006​​​​​497​​​​​(63)​​​​​29,440​​
US Agencies​​​​6,492​​​​​46​​​​​—​​​​​6,538​​
US Agencies – MBS​​​​27,924​​​​​789​​​​​(2)​​​​​28,711​​
Obligations of states and political subdivisions​​​​35,331​​​​​903​​​​​(34)​​​​​36,200​​
Total securities available for sale​​​$99,817​​​​$2,237​​​​$(99)​​​​$101,955​​
December 31, 2020​​​​​​​​​​​​​​​​​​​​​​​​​
US Treasury​​​$—​​​​$—​​​​$—​​​​$—​​
Corporate​​​​27,815​​​​​247​​​​​(19)​​​​​28,043​​
US Agencies​​​​6,480​​​​​109​​​​​—​​​​​6,589​​
US Agencies – MBS​​​​33,372​​​​​914​​​​​(6)​​​​​34,280​​
Obligations of states and political subdivisions​​​​41,682​​​​​1,242​​​​​—​​​​​42,924​​
Total securities available for sale​​​$109,349​​​​$2,512​​​​$(25)​​​​$111,836​​

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The following table presents the amortized cost and estimated fair value of investment securities by contractual maturity as of June 30, 2021 and December 31, 2020 (dollars in thousands):
​​​
June 30,
2021
​​
December 31,
2020
​
​​​
Amortized
Cost
​​
Estimated
Fair Value
​​
Amortized
Cost
​​
Estimated
Fair Value
​
Available -for-sale securities​​​​​​​​​​​​​​​​​​​​​​​​​
Under 1 year​​​$17,326​​​​$17,549​​​​$15,645​​​​$15,820​​
After 1 year through 5 years​​​​18,937​​​​​19,252​​​​​22,554​​​​​23,201​​
After 5 years through 10 years​​​​21,849​​​​​22,282​​​​​24,965​​​​​25,261​​
After 10 years​​​​13,781​​​​​14,161​​​​​12,813​​​​​13,274​​
Subtotal​​​​71,893​​​​​73,244​​​​​75,977​​​​​77,556​​
US Agencies – MBS​​​​27,924​​​​​28,711​​​​​33,372​​​​​34,280​​
Total available -for-sale securities​​​$99,817​​​​$101,955​​​​$109,349​​​​$111,836​​
The following is information pertaining to securities with gross unrealized losses at June 30, 2021 and December 31, 2020 (dollars in thousands):
June 30, 2021​​Less Than Twelve Months​​Over Twelve Months​​Total​
​
Number
of
Securities
​​
Fair
Value
​​
Gross
Unrealized
Loss
​​
Number
of
Securities
​​
Fair
Value
​​
Gross
Unrealized
Loss
​​
Number
of
Securities
​​
Fair
Value
​​
Gross
Unrealized
Loss
​
Corporate​​​​3​​​​​7,870​​​​$(63)​​​​​—​​​​​—​​​​$—​​​​​3​​​​$7,870​​​​$(63)​​
US Agencies​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​
US Agencies – MBS​​​​—​​​​​—​​​​​—​​​​​3​​​​​138​​​​​(2)​​​​​3​​​​​138​​​​​(2)​​
Obligations of states and political subdivisions​​​​2​​​​​1,387​​​​​(34)​​​​​—​​​​​—​​​​​—​​​​​2​​​​​1,387​​​​​(34)​​
Total​​​​5​​​​$9,257​​​​$(97)​​​​​3​​​​$138​​​​$(2)​​​​​8​​​​$9,395​​​​$(99)​​
December 31, 2020​​Less Than Twelve Months​​Over Twelve Months​​Total​
​
Number
of
Securities
​​
Fair
Value
​​
Gross
Unrealized
Loss
​​
Number
of
Securities
​​
Fair
Value
​​
Gross
Unrealized
Loss
​​
Number
of
Securities
​​
Fair
Value
​​
Gross
Unrealized
Loss
​
Corporate​​​​4​​​​$9,293​​​​$(19)​​​​​—​​​​$—​​​​$—​​​​​4​​​​$9,293​​​​$(19)​​
US Agencies​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​
US Agencies – MBS​​​​4​​​​​83​​​​​(2)​​​​​2​​​​​123​​​​​(4)​​​​​6​​​​​206​​​​​(6)​​
Obligations of states and political subdivisions​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​
Total​​​​8​​​​$9,376​​​​$(21)​​​​​2​​​​$123​​​​$(4)​​​​​10​​​​$9,499​​​​$(25)​​
The Corporation has evaluated gross unrealized losses that exist within the portfolio and considers them temporary in nature. The Corporation has both the ability and the intent to hold the investment securities until their respective maturities and therefore does not anticipate the realization of the temporary losses.
The amortized cost and estimated fair value of investment securities pledged to secure FHLB borrowings and customer relationships were $18.691 million and $19.162 million, respectively, at June 30, 2021.

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180.1320 Notice5.
LOANS
​
The composition of dissenters’ rights.loans is as follows (dollars in thousands):
​​​
June 30,
2021
​​
December 31,
2020
​
Commercial real estate​​​$480,477​​​​$498,450​​
Commercial, financial, and agricultural​​​​209,747​​​​​273,759​​
Commercial construction​​​​48,205​​​​​47,698​​
One to four family residential real estate​​​​210,364​​​​​227,044​​
Consumer​​​​18,238​​​​​18,980​​
Consumer construction​​​​11,024​​​​​11,661​​
Total loans​​​$978,055​​​​$1,077,592​​
The Corporation completed the acquisition of Peninsula Financial Corporation (“PFC”) on December 5, 2014, The First National Bank of Eagle River (“Eagle River”) on April 29, 2016, Niagara Bancorporation (“Niagara”) on August 31, 2016, First Federal of Northern Michigan Bancorp (“FFNM”) on May 18, 2018 and Lincoln Community Bank (“Lincoln”) on October 1, 2018. The PFC acquired impaired loans totaled $13.290 million, the Eagle River acquired impaired loans totaled $3.401 million, the Niagara acquired impaired loans totaled $2.105 million, the FFNM acquired impaired loans totaled $5.440 million, and the Lincoln acquired impaired loans totaled $1.901 million.
(1)   If proposed corporate action creating dissenters’ rights under s. 180.1302 is submitted to a vote at a shareholders’ meeting,The table below details the meeting notice shall state that shareholders and beneficial shareholders are or may be entitled to assert dissenters’ rights under ss. 180.1301 to 180.1331 and shall be accompanied by a copy of those sections.
(2)   If corporate action creating dissenters’ rights under s. 180.1302 is authorized without a vote of shareholders, the corporation shall notify, in writing and in accordance with s. 180.0141, all shareholders entitled to assert dissenters’ rights that the action was authorized and send them the dissenters’ notice described in s. 180.1322.
History: 1989 a. 303.
When the plaintiff was not a shareholder at the timeoutstanding balances of the complained of acts, it had no right to votePFC acquired portfolio and the fair value adjustments at acquisition date (dollars in dissent to a plan of liquidation and dissolution, and it could not be a dissenter entitled to notice of dissenters’ rights, as only one who can vote in dissent is entitled to such notice under this section. Borne v. Gonstead Advanced Techniques, Inc. 2003 WI App 135, 266 Wis. 2d 253, 667 N.W.2d 709, 01-2624.thousands):
​​​
Acquired
Impaired
​​
Acquired
Non-impaired
​​
Acquired
Total
​
Loans acquired – contractual payments​​​$13,290​​​​$53,849​​​​$67,139​​
Nonaccretable difference​​​​(2,234)​​​​​—​​​​​(2,234)​​
Expected cash flows​​​​11,056​​​​​53,849​​​​​64,905​​
Accretable yield​​​​(744)​​​​​(2,100)​​​​​(2,844)​​
Carrying balance at acquisition date​​​$10,312​​​​$51,749​​​​$62,061​​
180.1321 Notice of intent to demand payment.
(1)   If proposed corporate action creating dissenters’ rights under s. 180.1302 is submitted to a vote at a shareholders’ meeting, a shareholder or beneficial shareholder who wishes to assert dissenters’ rights shall do allThe table below details the outstanding balances of the following:
(a)   Deliver toEagle River acquired portfolio and the issuer corporation beforefair value adjustments at acquisition date (dollars in thousands):
​​​
Acquired
Impaired
​​
Acquired
Non-impaired
​​
Acquired
Total
​
Loans acquired – contractual payments​​​$3,401​​​​$80,737​​​​$84,138​​
Nonaccretable difference​​​​(1,172)​​​​​—​​​​​(1,172)​​
Expected cash flows​​​​2,229​​​​​80,737​​​​​82,966​​
Accretable yield​​​​(391)​​​​​(1,700)​​​​​(2,091)​​
Carrying balance at acquisition date​​​$1,838​​​​$79,037​​​​$80,875​​
The table below details the vote is taken written notice that complies with s. 180.0141outstanding balances of the shareholder’s or beneficial shareholder’s intent to demand payment for his or her shares ifNiagara acquired portfolio and the proposed action is effectuated.
(b)   Not vote his or her sharesfair value adjustments at acquisition date (dollars in favor of the proposed action.thousands):
(2)   A shareholder or beneficial shareholder who fails to satisfy sub. (1) is not entitled to payment for his or her shares under ss. 180.1301 to 180.1331.
History: 1989 a. 303.
180.1322 Dissenters’ notice.
(1)   If proposed corporate action creating dissenters’ rights under s. 180.1302 is authorized at a shareholders’ meeting, the corporation shall deliver a written dissenters’ notice to all shareholders and beneficial shareholders who satisfied s. 180.1321.
(2)   The dissenters’ notice shall be sent no later than 10 days after the corporate action is authorized at a shareholders’ meeting or without a vote of shareholders, whichever is applicable. The dissenters’ notice shall comply with s. 180.0141 and shall include or have attached all of the following:
(a)   A statement indicating where the shareholder or beneficial shareholder must send the payment demand and where and when certificates for certificated shares must be deposited.
(b)   For holders of uncertificated shares, an explanation of the extent to which transfer of the shares will be restricted after the payment demand is received.
(c)   A form for demanding payment that includes the date of the first announcement to news media or to shareholders of the terms of the proposed corporate action and that requires the shareholder or beneficial shareholder asserting dissenters’ rights to certify whether he or she acquired beneficial ownership of the shares before that date.
(d)   A date by which the corporation must receive the payment demand, which may not be fewer than 30 days nor more than 60 days after the date on which the dissenters’ notice is delivered.
(e)   A copy of ss. 180.1301 to 180.1331.
​​​
Acquired
Impaired
​​
Acquired
Non-impaired
​​
Acquired
Total
​
Loans acquired – contractual payments​​​$2,105​​​​$30,555​​​​$32,660​​
Nonaccretable difference​​​​(265)​​​​​—​​​​​(265)​​
Expected cash flows​​​​1,840​​​​​30,555​​​​​32,395​​
Accretable yield​​​​(88)​​​​​(600)​​​​​(688)​​
Carrying balance at acquisition date​​​$1,752​​​​$29,955​​​​$31,707​​
 
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History: 1989 a. 303.
180.1323 Duty to demand payment.
(1)   A shareholder or beneficial shareholder who is sent a dissenters’ notice described in s. 180.1322, or a beneficial shareholder whose shares are held by a nominee who is sent a dissenters’ notice described in s. 180.1322, must demand payment in writing and certify whether he or she acquired beneficial ownershipThe table below details the outstanding balances of the shares before the date specified in the dissenters’ notice under s. 180.1322 (2) (c). A shareholder or beneficial shareholder with certificated shares must also deposit his or her certificates in accordance with the terms of the notice.
(2)   A shareholder or beneficial shareholder with certificated shares who demands paymentFFNM acquired portfolio and deposits his or her share certificates under sub. (1) retains all other rights of a shareholder or beneficial shareholder until these rights are canceled or modified by the effectuation of the corporate action.
(3)   A shareholder or beneficial shareholder with certificated or uncertificated shares who does not demand payment by the date set in the dissenters’ notice, or a shareholder or beneficial shareholder with certificated shares who does not deposit his or her share certificates where required and by the date set in the dissenters’ notice, is not entitled to payment for his or her shares under ss. 180.1301 to 180.1331.
History: 1989 a. 303.
180.1324 Restrictions on uncertificated shares.
(1)   The issuer corporation may restrict the transfer of uncertificated shares from the date that the demand for payment for those shares is received until the corporate action is effectuated or the restrictions released under s. 180.1326.
(2)   The shareholder or beneficial shareholder who asserts dissenters’ rights as to uncertificated shares retains all of the rights of a shareholder or beneficial shareholder, other than those restricted under sub. (1), until these rights are canceled or modified by the effectuation of the corporate action.
History: 1989 a. 303.
180.1325 Payment.
(1)   Except as provided in s. 180.1327, as soon as the corporate action is effectuated or upon receipt of a payment demand, whichever is later, the corporation shall pay each shareholder or beneficial shareholder who has complied with s. 180.1323 the amount that the corporation estimates to be the fair value of his or her shares, plus accrued interest.adjustments at acquisition date (dollars in thousands):
​​​
Acquired
Impaired
​​
Acquired
Non-impaired
​​
Acquired
Total
​
Loans acquired – contractual payments​​​$5,440​​​​$187,302​​​​$192,742​​
Nonaccretable difference​​​​(2,100)​​​​​—​​​​​(2,100)​​
Expected cash flows​​​​3,340​​​​​187,302​​​​​190,642​​
Accretable yield​​​​(700)​​​​​(4,498)​​​​​(5,198)​​
Carrying balance at acquisition date​​​$2,640​​​​$182,804​​​​$185,444​​
(2)   The payment shall be accompanied by alltable below details the outstanding balances of the following:
(a)   The corporation’s latest available financial statements, auditedLincoln acquired portfolio and including footnote disclosure if available, but including not less than a balance sheet as of the end of a fiscal year ending not more than 16 months before the date of payment, an income statement for that year, a statement of changes in shareholders’ equity for that year and the latest available interim financial statements, if any.
(b)   A statement of the corporation’s estimate of the fair value adjustments at acquisition date (dollars in thousands):
​​​
Acquired
Impaired
​​
Acquired
Non-impaired
​​
Acquired
Total
​
Loans acquired – contractual payments​​​$1,901​​​​$37,700​​​​$39,601​​
Nonaccretable difference​​​​(421)​​​​​—​​​​​(421)​​
Expected cash flows​​​​1,480​​​​​37,700​​​​​39,180​​
Accretable yield​​​​(140)​​​​​(493)​​​​​(633)​​
Carrying balance at acquisition date​​​$1,340​​​​$37,207​​​​$38,547​​
The table below presents a rollforward of the shares.accretable yield on acquired loans for the six months ended June 30, 2021 (dollars in thousands):
​​​PFC​​Eagle River​
​
Acquired
Impaired
​​
Acquired
Non-impaired
​​
Acquired
Total
​​
Acquired
Impaired
​​
Acquired
Non-impaired
​​
Acquired
Total
​
Balance, December 31, 2020​​​$53​​​​$—​​​​$53​​​​$183​​​​$   —​​​​$183​​
Accretion​​​​
(12)
​​​​​—​​​​​
(12)
​​​​​
(153)
​​​​​—​​​​​
(153)
​​
Reclassification from nonaccretable difference​​​​9​​​​​—​​​​​9​​​​​114​​​​​—​​​​​114​​
Balance, June 30, 2021​​​$50​​​​$—​​​​$50​​​​$144​​​​$—​​​​$144​​
​​​Niagara​​First Federal Northern Michigan​
​
Acquired
Impaired
​​
Acquired
Non-impaired
​​
Acquired
Total
​​
Acquired
Impaired
​​
Acquired
Non-impaired
​​
Acquired
Total
​
Balance, December 31, 2020​​​$12​​​​$   —​​​​$12​​​​$292​​​​$869​​​​$1,161​​
Accretion​​​​
(1)
​​​​​—​​​​​
(1)
​​​​​
(276)
​​​​​
(384)
​​​​​
(660)
​​
Reclassification from nonaccretable difference​​​​1​​​​​—​​​​​1​​​​​207​​​​​—​​​​​207​​
Balance, June 30, 2021​​​$12​​​​$—​​​​$12​​​​$223​​​​$485​​​​$708​​
​​​Lincoln Community Bank​​Total​
​
Acquired
Impaired
​​
Acquired
Non-impaired
​​
Acquired
Total
​​
Acquired
Impaired
​​
Acquired
Non-impaired
​​
Acquired
Total
​
Balance, December 31, 2020​​​$85​​​​$130​​​​$215​​​​$625​​​​$999​​​​$1,624​​
Accretion​​​​
(109)
​​​​​
(50)
​​​​​
(159)
​​​​​
(551)
​​​​​
(434)
​​​​​
(985)
​​
Reclassification from nonaccretable difference​​​​81​​​​​—​​​​​81​​​​​412​​​​​—​​​​​412​​
Balance, June 30, 2021​​​$57​​​​$80​​​​$137​​​​$486​​​​$565​​​​$1,051​​
(c)   An explanation of how the interest was calculated.

(d)   A statement
D-17
TABLE OF CONTENTS

The table below presents a rollforward of the dissenter’s rightaccretable yield on acquired loans for the six months ended June 30, 2020 (dollars in thousands):
​​​PFC​​Eagle River​
​
Acquired
Impaired
​​
Acquired
Non-impaired
​​
Acquired
Total
​​
Acquired
Impaired
​​
Acquired
Non-impaired
​​
Acquired
Total
​
Balance, December 31, 2019​​​$105​​​​$—​​​​$105​​​​$209​​​​$—​​​​$209​​
Accretion​​​​(150)​​​​​—​​​​​(150)​​​​​(77)​​​​​—​​​​​(77)​​
Reclassification from nonaccretable difference​​​​113​​​​​—​​​​​113​​​​​58​​​​​—​​​​​58​​
Balance, June 30, 2020​​​$68​​​​$—​​​​$68​​​​$190​​​​$—​​​​$190​​
​​​Niagara​​First Federal Northern Michigan​
​
Acquired
Impaired
​​
Acquired
Non-impaired
​​
Acquired
Total
​​
Acquired
Impaired
​​
Acquired
Non-impaired
​​
Acquired
Total
​
Balance, December 31, 2019​​​$19​​​​$—​​​​$19​​​​$518​​​​$1,953​​​​$2,471​​
Accretion​​​​(4)​​​​​—​​​​​(4)​​​​​(237)​​​​​(595)​​​​​(832)​​
Reclassification from nonaccretable difference​​​​3​​​​​—​​​​​3​​​​​177​​​​​1​​​​​178​​
Balance, June 30, 2020​​​$18​​​​$—​​​​$18​​​​$458​​​​$1,359​​​​$1,817​​
​​​Lincoln Community Bank​​Total​
​
Acquired
Impaired
​​
Acquired
Non-impaired
​​
Acquired
Total
​​
Acquired
Impaired
​​
Acquired
Non-impaired
​​
Acquired
Total
​
Balance, December 31, 2019​​​$108​​​​$264​​​​$372​​​​$959​​​​$2,217​​​​$3,176​​
Accretion​​​​(3)​​​​​(73)​​​​​(76)​​​​​(471)​​​​​(668)​​​​​(1,139)​​
Reclassification from nonaccretable difference​​​​3​​​​​—​​​​​3​​​​​354​​​​​1​​​​​355​​
Balance, June 30, 2020​​​$108​​​​$191​​​​$299​​​​$842​​​​$1,550​​​​$2,392​​
Allowance for Loan Losses
An analysis of the allowance for loan losses for the six months ended June 30, 2021 and June 30, 2020 is as follows (dollars in thousands):
​​​
June 30,
2021
​​
June 30,
2020
​
Balance, January 1​​​$5,816​​​​$5,308​​
Recoveries on loans previously charged off​​​​45​​​​​139​​
Loans charged off​​​​
(310)
​​​​​(292)​​
Provision​​​​100​​​​​200​​
Balance at end of period​​​$5,651​​​​$5,355​​
In the first six months of 2021, net charge-offs were $265,000, compared to demand payment under s. 180.1328 ifnet charge-offs of $153,000 in the dissenter is dissatisfied withsame period in 2020. In the payment.
(e)   A copyfirst six months of ss. 180.13012021, the Corporation recorded a provision for loan loss of $100,000 compared to 180.1331.
History: 1989 a. 303.a $200,000 provision for loan losses in the first six months of 2020. The Corporation’s allowance for loan loss reserve policy calls for a measurement of the adequacy of the reserve at each quarter end. This process includes an analysis of the loan portfolio to take into account increases in loans outstanding and portfolio composition, historical loss rates, and specific reserve requirements of nonperforming loans.
 
C-5D-18
TABLE OF CONTENTS

A breakdown of the allowance for loan losses and recorded balances in loans at June 30, 2021 is as follows (dollars in thousands):
​​​
Commercial
real estate
​​
Commercial,
financial and
agricultural
​​
Commercial
construction
​​
One to four
family
residential
real estate
​​
Consumer
construction
​​Consumer​​Unallocated​​Total​​​
Three Months Ended June 30, 2021​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Allowance for loan loss reserve:​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Beginning balance ALLR​​​$2,738​​​​$2,076​​​​$209​​​​$560​​​​$8​​​​$6​​​​$245​​​​$5,842​​​​
Charge-offs​​​​—​​​​​(46)​​​​​—​​​​​(185)​​​​​—​​​​​(24)​​​​​—​​​​​(255)​​​​​​
Recoveries​​​​4​​​​​3​​​​​—​​​​​4​​​​​—​​​​​3​​​​​—​​​​​14​​​​
Provision​​​​(9)​​​​​(559)​​​​​(2)​​​​​202​​​​​(3)​​​​​23​​​​​398​​​​​50​​​​​​​​
Ending balance ALLR​​​$2,733​​​​$1,474​​​​$207​​​​$581​​​​$5​​​​$8​​​​$643​​​​$5,651​​​​
Six Months Ended June 30, 2021​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Allowance for loan loss reserve:​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Beginning balance ALLR​​​$2,983​​​​$1,734​​​​$209​​​​$605​​​​$5​​​​$8​​​​$272​​​​$5,816​​​​
Charge-offs​​​​(8)​​​​​(46)​​​​​—​​​​​(203)​​​​​—​​​​​(53)​​​​​—​​​​​(310)​​​​
Recoveries​​​​7​​​​​14​​​​​—​​​​​9​​​​​—​​​​​15​​​​​—​​​​​45​​​​
Provision​​​​(249)​​​​​(228)​​​​​(2)​​​​​170​​​​​—​​​​​38​​​​​371​​​​​100​​​​​​
Ending balance ALLR​​​$2,733​​​​$1,474​​​​$207​​​​$581​​​​$5​​​​$8​​​​$643​​​​$5,651​​​​
At June 30, 2021​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Loans:​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Ending balance​​​$480,477​​​​$209,747​​​​$48,205​​​​$210,364​​​​$11,024​​​​$18,238​​​​$—​​​​$978,055​​​​
Ending balance ALLR​​​​(2,733)​​​​​(1,474)​​​​​(207)​​​​​(581)​​​​​(5)​​​​​(8)​​​​​(643)​​​​​(5,651)​​​​​​
Net loans​​​$477,744​​​​$208,273​​​​$47,998​​​​$209,783​​​​$11,019​​​​$18,230​​​​$(643)​​​​$972,404​​​​
Ending balance ALLR:​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Individually evaluated​​​$258​​​​$302​​​​$—​​​​$—​​​​$—​​​​$—​​​​$—​​​​$560​​​​
Collectively evaluated​​​​2,475​​​​​1,172​​​​​207​​​​​581​​​​​5​​​​​8​​​​​643​​​​​5,091​​​​
Total​​​$2,733​​​​$1,474​​​​$207​​​​$581​​​​$5​​​​$8​​​​$643​​​​$5,651​​​​
Ending balance Loans:​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Individually evaluated​​​$1,957​​​​$3,421​​​​$359​​​​$—​​​​$—​​​​$—​​​​$—​​​​$5,737​​​​
Collectively evaluated​​​​477,550​​​​​206,198​​​​​47,761​​​​​209,667​​​​​11,024​​​​​18,223​​​​​—​​​​​970,423​​​​
Acquired with deteriorated credit quality ​​​​970​​​​​128​​​​​85​​​​​697​​​​​—​​​​​15​​​​​—​​​​​1,895​​​​
Total​​​$480,477​​​​$209,747​​​​$48,205​​​​$210,364​​​​$11,024​​​​$18,238​​​​$—​​​​$978,055​​​​
Impaired loans, by definition, are individually evaluated.
In the first six months of 2021, the Corporation booked a provision for loan losses of $100,000.
A breakdown of the allowance for loan losses and recorded balances in loans at June 30, 2020 is as follows (dollars in thousands):

D-19
TABLE OF CONTENTS

​​​
Commercial
real estate
​​
Commercial,
financial and
agricultural
​​
Commercial
construction
​​
One to four
family
residential
real estate
​​
Consumer
construction
​​Consumer​​Unallocated​​Total​​​
Three Months Ended June 30, 2020​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Allowance for loan loss reserve:​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Beginning balance ALLR​​​$1,818​​​​$1,633​​​​$98​​​​$427​​​​$10​​​​$10​​​​$1,296​​​​$5,292​​​​
Charge-offs​​​​—​​​​​(121)​​​​​—​​​​​(10)​​​​​—​​​​​(16)​​​​​—​​​​​(147)​​​​​​​​
Recoveries​​​​85​​​​​—​​​​​1​​​​​1​​​​​—​​​​​23​​​​​—​​​​​110​​​​
Provision​​​​(65)​​​​​347​​​​​21​​​​​(18)​​​​​—​​​​​(8)​​​​​(177)​​​​​100​​​​​​​​
Ending balance ALLR​​​$1,838​​​​$1,859​​​​$120​​​​$400​​​​$10​​​​$9​​​​$1,119​​​​$5,355​​​​
Six Months Ended June 30, 2020​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Allowance for loan loss reserve:​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Beginning balance ALLR​​​$1,189​​​​$1,197​​​​$71​​​​$148​​​​$11​​​​$13​​​​$2,679​​​​$5,308​​​​
Charge-offs​​​​—​​​​​(187)​​​​​—​​​​​(32)​​​​​(8)​​​​​(65)​​​​​—​​​​​(292)​​​​​​
Recoveries​​​​91​​​​​—​​​​​1​​​​​11​​​​​—​​​​​36​​​​​—​​​​​139​​​​
Provision​​​​558​​​​​849​​​​​48​​​​​273​​​​​7​​​​​25​​​​​(1,560)​​​​​200​​​​
Ending balance ALLR​​​$1,838​​​​$1,859​​​​$120​​​​$400​​​​$10​​​​$9​​​​$1,119​​​​$5,355​​​​
At June 30, 2020​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Loans:​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Ending balance​​​$507,530​​​​$332,279​​​​$38,712​​​​$235,467​​​​$20,057​​​​$19,745​​​​$—​​​​$1,153,790​​​​
Ending balance ALLR​​​​(1,838)​​​​​(1,859)​​​​​(120)​​​​​(400)​​​​​(10)​​​​​(9)​​​​​(1,119)​​​​​(5,355)​​​​​​
Net loans​​​$505,692​​​​$330,420​​​​$38,592​​​​$235,067​​​​$20,047​​​​$19,736​​​​$(1,119)​​​​$1,148,435​​​​
Ending balance ALLR:​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Individually evaluated​​​$914​​​​$527​​​​$—​​​​$—​​​​$—​​​​$—​​​​$—​​​​$1,441​​​​
Collectively evaluated​​​​924​​​​​1,332​​​​​120​​​​​400​​​​​10​​​​​9​​​​​1,119​​​​​3,914​​​​
Total​​​$1,838​​​​$1,859​​​​$120​​​​$400​​​​$10​​​​$9​​​​$1,119​​​​$5,355​​​​
Ending balance Loans:​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Individually evaluated​​​$2,436​​​​$1,589​​​​$—​​​​$—​​​​$—​​​​$—​​​​$—​​​​$4,025​​​​
Collectively evaluated​​​​503,233​​​​​330,433​​​​​38,531​​​​​234,576​​​​​20,057​​​​​19,723​​​​​—​​​​​1,146,553​​​​
Acquired with deteriorated credit quality​​​​1,861​​​​​257​​​​​181​​​​​891​​​​​—​​​​​22​​​​​—​​​​​3,212​​​​
Total​​​$507,530​​​​$332,279​​​​$38,712​​​​$235,467​​​​$20,057​​​​$19,745​​​​$—​​​​$1,153,790​​​​
As part of the management of the loan portfolio, risk ratings are assigned to all commercial loans. Through the loan review process, ratings are modified as believed to be appropriate to reflect changes in the credit. Our ability to manage credit risk depends in large part on our ability to properly identify and manage problem loans.
To do so, we operate a credit risk rating system under which our credit management personnel assign a credit risk rating to each loan at the time of origination and review loans on a regular basis to determine each loan’s credit risk rating on a scale of 1 through 8, with higher scores indicating higher risk. The credit risk rating structure used is shown below.
In the context of the credit risk rating structure, the term Classified is defined as a problem loan which may or may not be in a nonaccrual status, dependent upon current payment status and collectability.

D-20
TABLE OF CONTENTS
 
180.1326 FailureStrong (1)
Borrower is not vulnerable to take action.sudden economic or technological changes. They have “strong” balance sheets and are within an industry that is very typical for our markets or type of lending culture. Borrowers also have “strong” financial and cash flow performance and excellent collateral (low loan to value or readily available to liquidate collateral) in conjunction with an impeccable repayment history.
Good (2)
(1)   If an issuer corporation does not effectuate the corporate action within 60 days after the date set under s. 180.1322 for demanding payment, the issuer corporation shall return the deposited certificatesBorrower shows limited vulnerability to sudden economic change. These borrowers have “above average” financial and release the transfer restrictions imposed on uncertificated shares.
(2)   If after returning deposited certificatescash flow performance and releasing transfer restrictions, the issuer corporation effectuates the corporate action, the corporation shall deliver a new dissenters’ notice under s. 180.1322 and repeat the payment demand procedure.
History: 1989 a. 303.
180.1327 After-acquired shares.
(1)   A corporation may elect to withhold payment required by s. 180.1325 from a dissenter unless the dissenter was the beneficial ownervery good repayment history. The balance sheet of the shares beforecompany is also very good as compared to peer and the date specifiedcompany is in an industry that is familiar to our markets or our type of lending. The collateral securing the deal is also very good in terms of its type, loan to value, and other relevant characteristics.
Average (3)
Borrower is typically a well-seasoned business, however may be susceptible to unfavorable changes in the dissenters’ notice under s. 180.1322 (2) (c) aseconomy, and could be somewhat affected by seasonal factors. The borrowers within this category exhibit financial and cash flow performance that appear “average” to “slightly above average” when compared to peer standards and they show an adequate payment history. Collateral securing this type of credit is good, exhibiting above average loan to values, and other relevant characteristics.
Acceptable (4)
A borrower within this category exhibits financial and cash flow performance that appear adequate and satisfactory when compared to peer standards and they show a satisfactory payment history. The collateral securing the daterequest is within supervisory limits and overall is acceptable. Borrowers rated acceptable could also be newer businesses that are typically susceptible to unfavorable changes in the economy, and more than likely could be affected by seasonal factors.
Acceptable Watch (44)
The borrower may have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the first announcementrepayment prospects for the asset or in the institution’s credit position at some future date. Acceptable Watch assets are not adversely classified and do not expose an institution to news mediasufficient risk to warrant adverse classification. Examples of this type of credit include a start-up company fully based on projections, a documentation issue that needs to be corrected or a general market condition that the borrower is working through to shareholdersget corrected.
Substandard (6)
Substandard loans are classified assets exhibiting a number of well-defined weaknesses that jeopardize normal repayment. The assets are no longer adequately protected due to declining net worth, lack of earning capacity, or insufficient collateral offering the distinct possibility of the termsloss of a portion of the proposed corporate action.
(2)   To the extent that the corporation elects to withhold payment under sub. (1) after effectuating the corporate action, it shall estimate the fair value of the shares, plus accrued interest,loan principal. Loans classified as substandard clearly represent troubled and shall pay this amount to each dissenter who agrees to accept it in full satisfaction of his or her demand. The corporation shall send with its offer a statement of its estimate of the fair value of the shares, an explanation of how the interest was calculated, and a statement of the dissenter’s right to demand payment under s. 180.1328 if the dissenter is dissatisfied with the offer.
History: 1989 a. 303.deteriorating credit situations requiring constant supervision.
180.1328 ProcedureDoubtful (7)
Loans in this category exhibit the same, if dissenter dissatisfiednot more pronounced weaknesses used to describe the substandard credit. Loans are frozen with payment or offer.collection improbable. Such loans are not yet rated as Charge-off because certain actions may yet occur which would salvage the loan.
Charge-off/Loss (8)
(1)   A dissenter may,Loans in this category are largely uncollectible and should be charged against the manner provided in sub. (2), notify the corporation of the dissenter’s estimate of the fair value of his or her shares and amount of interest due, and demand payment of his or her estimate, less any payment received under s. 180.1325, or reject the offer under s. 180.1327 and demand payment of the fair value of his or her shares and interest due, if any of the following applies:
(a)   The dissenter believes that the amount paid under s. 180.1325 or offered under s. 180.1327 is less than the fair value of his or her shares or that the interest due is incorrectly calculated.
(b)   The corporation fails to make payment under s. 180.1325 within 60 days after the date set under s. 180.1322 for demanding payment.
(c)   The issuer corporation, having failed to effectuate the corporate action, does not return the deposited certificates or release the transfer restrictions imposed on uncertificated shares within 60 days after the date set under s. 180.1322 for demanding payment.
(2)   A dissenter waives his or her right to demand payment under this section unless the dissenter notifies the corporation of his or her demand under sub. (1) in writing within 30 days after the corporation made or offered payment for his or her shares. The notice shall comply with s. 180.0141.
History: 1989 a. 303.
When payment is made by check, the payment date under sub. (2) is the date the payee receives the check. Kohler Co. v. Sogen International Fund, Inc. 2000 WI App 60, 233 Wis. 2d 592, 608 N.W.2d 746, 99-0960.
180.1330 Court action.
(1)   If a demand for payment under s. 180.1328 remains unsettled, the corporation shall bring a special proceeding within 60 days after receiving the payment demand under s. 180.1328 and petition the court to determine the fair value of the shares and accrued interest. If the corporation does not bring the special proceeding within the 60-day period, it shall pay each dissenter whose demand remains unsettled the amount demanded.loan loss reserve immediately.
 
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TABLE OF CONTENTS
 
(2)General Reserves:
For loans with a credit risk rating of 44 or better and any loans with a risk rating of 6 or 7 not considered impaired, reserves are established based on the type of loan collateral, if any, and the assigned credit risk rating.
Determination of the allowance is inherently subjective as it requires significant estimates, including the amounts and timing of expected future cash flows on impaired loans, estimated losses on pools of homogenous loans based on historical loss experience, and consideration of current environmental factors and economic trends, all of which may be susceptible to significant change.
Using a historical average loss by loan type as a base, each loan graded as higher risk is assigned a specific percentage. The corporation shall bringresidential real estate and consumer loan portfolios are assigned a loss percentage as a homogenous group. If, however, on an individual loan the special proceedingprojected loss based on collateral value and payment histories is in excess of the computed allowance, the allocation is increased for the higher anticipated loss. These computations provide the basis for the allowance for loan losses as recorded by the Corporation.
Below is a breakdown of loans by risk category as of June 30, 2021 (dollars in thousands):
​​​
( 1)
Strong
​​
(2)
Good
​​
(3)
Average
​​
(4)
Acceptable
​​
(44)
Acceptable
Watch
​​
(6)
Substandard
​​
(7)
Doubtful
​​
Rating
Unassigned
​​Total​
Commercial real estate​​​$9,378​​​​$9,386​​​​$216,690​​​​$236,767​​​​$4,308​​​​$3,948​​​​$   —​​​​$—​​​​$480,477​​
Commercial, financial and agricultural ​​​​66,446​​​​​9,341​​​​​38,192​​​​​91,672​​​​​580​​​​​3,516​​​​​—​​​​​—​​​​​209,747​​
Commercial construction​​​​—​​​​​36​​​​​20,550​​​​​15,868​​​​​482​​​​​378​​​​​—​​​​​10,891​​​​​48,205​​
One-to-four family residential real estate​​​​—​​​​​607​​​​​4,783​​​​​19,124​​​​​361​​​​​1,607​​​​​—​​​​​183,882​​​​​210,364​​
Consumer construction​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​​​​11,024​​​​​11,024​​
Consumer​​​​—​​​​​49​​​​​100​​​​​1,548​​​​​—​​​​​30​​​​​—​​​​​16,511​​​​​18,238​​
Total loans​​​$75,824​​​​$19,419​​​​$280,315​​​​$364,979​​​​$5,731​​​​$9,479​​​​$—​​​​$222,308​​​​$978,055​​
At June 30, 2021, $55.384 million of Paycheck Protection Program (“PPP”) loans are included with a risk rating of “1” in the circuit court for the county where its principal office or, if none in this state, its registered office is located. If the corporationCommercial, financial and agricultural category.
Below is a foreign corporation without a registered officebreakdown of loans by risk category as of December 31, 2020 (dollars in this state, it shall bring the special proceeding in the county in this state inthousands):
​​​
( 1)
Strong
​​
(2)
Good
​​
(3)
Average
​​
(4)
Acceptable
​​
(44)
Acceptable
Watch
​​
(6)
Substandard
​​
(7)
Doubtful
​​
Rating
Unassigned
​​Total​
Commercial real estate​​​$7,425​​​​$10,521​​​​$223,875​​​​$249,159​​​​$3,352​​​​$4,118​​​​$   —​​​​$—​​​​$498,450​​
Commercial, financial and agricultural​​​​116,107​​​​​6,760​​​​​51,150​​​​​94,743​​​​​656​​​​​4,343​​​​​—​​​​​—​​​​​273,759​​
Commercial construction​​​​—​​​​​40​​​​​19,063​​​​​16,671​​​​​600​​​​​385​​​​​—​​​​​10,939​​​​​47,698​​
One-to-four family residential real estate​​​​—​​​​​3,139​​​​​5,614​​​​​18,864​​​​​369​​​​​1,814​​​​​—​​​​​197,244​​​​​227,044​​
Consumer construction​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​​​​11,661​​​​​11,661​​
Consumer​​​​—​​​​​79​​​​​128​​​​​1,141​​​​​—​​​​​67​​​​​—​​​​​17,565​​​​​18,980​​
Total loans​​​$123,532​​​​$20,539​​​​$299,830​​​​$380,578​​​​$4,977​​​​$10,727​​​​$—​​​​$237,409​​​​$1,077,592​​
Impaired Loans
Impaired loans are those which was located the registered office of the issuer corporation that merged with or whose shares were acquired by the foreign corporation.
(3)   The corporation shall make all dissenters, whether or not residents of this state, whose demands remain unsettled parties to the special proceeding. Each party to the special proceeding shall be served with a copy of the petition as provided in s. 801.14.
(4)   The jurisdiction of the court in which the special proceeding is brought under sub. (2) is plenary and exclusive. The court may appoint oneare contractually past due 90 days or more persons as appraisers to receive evidence and recommend decisioninterest or principal payments, on nonaccrual status, or loans, the questionterms of fair value. An appraiser has the power described in the order appointing himwhich have been renegotiated to provide a reduction or herdeferral on interest or in any amendment to the order. The dissenters are entitled to the same discovery rights as parties in other civil proceedings.
(5)   Each dissenter made a party to the special proceeding is entitled to judgment for any of the following:
(a)   The amount, if any, by which the court finds the fair value of his or her shares, plus interest, exceeds the amount paid by the corporation.
(b)   The fair value, plus accrued interest, of his or her shares acquired on or after the date specified in the dissenter’s notice under s. 180.1322 (2) (c), for which the corporation elected to withhold payment under s. 180.1327.
History: 1989 a. 303.
Because this section does not provide for different procedures, all procedural mechanisms under chs. 801 to 847 are available in an action under this section. Kohler Co. v. Sogen International Fund, Inc. 2000 WI App 60, 233 Wis. 2d 592, 608 N.W.2d 746, 99-0960.
Subs. (2) and (4) establish a rule of venue applicable within Wisconsin’s judicial system and do not attempt to block corporations from using federal diversity jurisdiction. Albert Trostel & Son v. Edward Notz, 679 F.3d 627 (2012).
180.1331 Court costs and counsel fees.
(1)
(a)   Notwithstanding ss. 814.01 to 814.04, the court in a special proceeding brought under s. 180.1330 shall determine all costs of the proceeding, including the reasonable compensation and expenses of appraisers appointed by the court and shall assess the costs against the corporation, except as provided in par. (b).
(b)   Notwithstanding ss. 814.01 and 814.04, the court may assess costs against all or some of the dissenters, in amounts that the court finds to be equitable, to the extent that the court finds the dissenters acted arbitrarily, vexatiously or not in good faith in demanding payment under s. 180.1328.
(2)   The parties shall bear their own expenses of the proceeding, except that, notwithstanding ss. 814.01 to 814.04, the court may also assess the fees and expenses of counsel and experts for the respective parties, in amounts that the court finds to be equitable, as follows:
(a)   Against the corporation and in favor of any dissenter if the court finds that the corporation did not substantially comply with ss. 180.1320 to 180.1328.
(b)   Against the corporation or against a dissenter, in favor of any other party, if the court finds that the party against whom the fees and expenses are assessed acted arbitrarily, vexatiously or not in good faith with respect to the rights provided by this chapter.principal.
 
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(3)   Notwithstanding ss. 814.01Loans are considered impaired when, based on current information and events, it is probable the Corporation will be unable to 814.04,collect all amounts due in accordance with the original contractual terms of the loan agreement, including scheduled principal and interest payments. Impairment is evaluated in total for smaller-balance loans of a similar nature and on an individual loan basis for other loans. If a loan is impaired, a specific valuation allowance is allocated, if the court findsnecessary, so that the servicesloan is reported net, at the present value of counselestimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Interest payments on impaired loans are typically applied to principal unless collectability of the principal amount is reasonably assured, in which case interest is recognized on a cash basis. Impaired loans, or portions thereof, are charged off when deemed uncollectible.
The following is a summary of impaired loans and experts for any dissenter weretheir effect on interest income (dollars in thousands):
​​​
Impaired Loans
with No Related
Allowance
​​
Impaired Loans
with Related
Allowance
​​
Total
Impaired
Loans
​​
Unpaid
Principal
Balance
​​
Related
Allowance for
Loan Losses
​
June 30, 2021​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Commercial real estate​​​$2,159​​​​$768​​​​$2,927​​​​$4,776​​​​$258​​
Commercial, financial and agricultural​​​​2,023​​​​​1,526​​​​​3,549​​​​​3,658​​​​​302​​
Commercial construction​​​​444​​​​​—​​​​​444​​​​​578​​​​​—​​
One to four family residential real estate​​​​697​​​​​—​​​​​697​​​​​1,903​​​​​—​​
Consumer construction​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​
Consumer​​​​15​​​​​—​​​​​15​​​​​15​​​​​—​​
Total​​​$5,338​​​​$2,294​​​​$7,632​​​​$10,930​​​​$560​​
December 31, 2020​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Commercial real estate​​​$1,251​​​​$2,309​​​​$3,560​​​​$5,786​​​​$476​​
Commercial, financial and agricultural​​​​2,423​​​​​1,445​​​​​3,868​​​​​3,946​​​​​679​​
Commercial construction​​​​537​​​​​—​​​​​537​​​​​678​​​​​—​​
One to four family residential real estate​​​​869​​​​​—​​​​​869​​​​​1,993​​​​​—​​
Consumer construction​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​
Consumer​​​​16​​​​​—​​​​​16​​​​​19​​​​​—​​
Total​​​$5,096​​​​$3,754​​​​$8,850​​​​$12,422​​​​$1,155​​
​​​Individually Evaluated Impaired Loans​
​June 30, 2021​​December 31, 2020​
​
Average
Balance for
the Period
​​
Interest Income
Recognized for
the Period
​​
Average
Balance for
the Period
​​
Interest Income
Recognized for
the Period
​
Commercial real estate​​​$5,022​​​​$111​​​​$6,860​​​​$270​​
Commercial, financial and agricultural​​​​944​​​​​7​​​​​1,204​​​​​13​​
Commercial construction​​​​168​​​​​9​​​​​541​​​​​27​​
One to four family residential real estate​​​​2,237​​​​​58​​​​​3,064​​​​​135​​
Consumer construction​​​​—​​​​​—​​​​​—​​​​​—​​
Consumer​​​​22​​​​​1​​​​​37​​​​​1​​
Total​​​$8,393​​​​$186​​​​$11,706​​​​$446​​

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A summary of substantial benefitpast due loans at June 30, 2021 and December 31, 2020 is as follows (dollars in thousands):
​​​June 30, 2021​​December 31, 2020​
​​​
30-89 days
Past Due
(accruing)
​​
90+ days
Past Due
(accruing)
​​Nonaccrual​​Total​​
30-89 days
Past Due
(accruing)
​​
90+ days
Past Due
(accruing)
​​Nonaccrual​​Total​
Commercial real estate​​​$147​​​​$   —​​​​$1,530​​​​$1,677​​​​$24​​​​$—​​​​$1,481​​​​$1,505​​
Commercial, financial and agricultural​​​​33​​​​​—​​​​​359​​​​​392​​​​​42​​​​​—​​​​​478​​​​​520​​
Commercial construction​​​​—​​​​​—​​​​​59​​​​​59​​​​​—​​​​​—​​​​​79​​​​​79​​
One to four family residential real estate​​​​742​​​​​6​​​​​2,964​​​​​3,712​​​​​1,925​​​​​3,371​​​​​5,296​​​​​​​​
Consumer construction​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​
Consumer​​​​44​​​​​—​​​​​15​​​​​59​​​​​78​​​​​—​​​​​49​​​​​127​​
Total past due loans​​​$966​​​​$6​​​​$4,927​​​​$5,899​​​​$2,069​​​​$—​​​​$5,458​​​​$7,527​​
Troubled Debt Restructuring
Troubled debt restructurings (“TDR”) are determined on a loan-by-loan basis. Generally restructurings are related to other dissenters similarly situated,interest rate reductions, loan term extensions and short term payment forbearance as a means to maximize collectability of troubled credits. If a portion of the court may awardTDR loan is uncollectible (including forgiveness of principal), the uncollectible amount will be charged off against the allowance at the time of the restructuring. In general, a borrower must make at least six consecutive timely payments before the Corporation would consider a return of a restructured loan to these counselaccruing status in accordance with FDIC guidelines regarding restoration of credits to accrual status. More recent regulatory guidelines and experts reasonable feesaccounting standards indicate that loan modifications or forbearances related to the COVID-19 pandemic will generally not be considered TDRs.
The Corporation has, in accordance with generally accepted accounting principles and applicable accounting standard updates, evaluated all loan modifications to determine the fair value impact of the underlying asset. The carrying amount of the loan is compared to the expected payments to be paid outreceived, discounted at the loan’s original rate, or for collateral dependent loans, to the fair value of the amounts awardedcollateral.
There were no TDRs that occurred during the dissenters whosix months ended June 30, 2021 and 3 TDRs during the six months ended June 30, 2020. The balance of these restructured loans pre-modification was $.504 million. Post-modification balances as of June 30. 2020 were benefited.$.476 million. The three TDRs are not COVID-19 related.
History: 1989 a. 303.Insider Loans
The Bank, in the ordinary course of business, grants loans to the Corporation’s executive officers and directors, including their families and firms in which they are principal owners. Activity in such loans is summarized below (dollars in thousands):
​​​
Six Months Ended
June 30, 2021
​​
Six Months Ended
June 30, 2020
​
Loans outstanding, January 1​​​$11,778​​​​$12,196​​
New loans​​​​—​​​​​—​​
Net activity on revolving lines of credit​​​​1,464​​​​​(354)​​
Change in status of insiders​​​​
(9,869)
​​​​​—​​
Repayment​​​​
(15)
​​​​​(100)​​
Loans outstanding at end of period​​​$3,358​​​​$11,742​​

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There were no loans to related parties classified as substandard as of June 30, 2021 or June 30, 2020. In addition to the outstanding balances above, there were no unfunded commitments to related parties at June 30, 2021.
6.
GOODWILL AND OTHER INTANGIBLE ASSETS
​
The Corporation through the acquisition of Peninsula in 2014, Eagle River and Niagara in 2016, and FFNM and Lincoln in 2018, has recorded goodwill and core deposit intangibles as presented below (dollars in thousands):
​​​
Deposit Based
Intangible
June 30, 2021
Balance
​​
Amortization Expense
for the period end
June 30, 2021
​​
Future Annual
Amortization
Expense
​
Peninsula​​​$413​​​​$60​​​​$121​​
Eagle River​​​​480​​​​​49​​​​​99​​
Niagara​​​​155​​​​​15​​​​​30​​
FFNM​​​​2,002​​​​​145​​​​​290​​
Lincoln​​​​981​​​​​68​​​​​135​​
Total​​​$4,031​​​​$337​​​​$675​​
​​​
Deposit Based
Intangible
December 31, 2020
Balance
​​
2020
Amortization
Expense
​
Peninsula​​​$473​​​​$121​​
Eagle River​​​​529​​​​​99​​
Niagara​​​​170​​​​​30​​
FFNM​​​​2,147​​​​​290​​
Lincoln​​​​1,049​​​​​135​​
Total​​​$4,368​​​​$675​​
The deposit based intangible asset is reported net of accumulated amortization at $4.031 million at June 30, 2021. Amortization expense in the first six months of 2021 is $.337 million. Amortization expense for the next five years is expected to be at $.675 million per year.
The Corporation, in accordance with GAAP, evaluates goodwill annually for impairment.
7.
SERVICING RIGHTS
​
Mortgage Loans
Mortgage servicing rights (“MSRs”) are recorded when loans are sold in the secondary market with servicing retained. As of June 30, 2021, the Corporation had obligations to service approximately $179.491 million of residential first mortgage loans. The valuation of MSRs is based upon the net present value of the projected revenues over the expected life of the loans being serviced, as reduced by estimated internal costs to service these loans. On a quarterly basis, management evaluates the MSRs for impairment. The key economic assumptions used in determining the fair value of the MSRs include an annual constant prepayment speed of 19.01% and a discount rate of 7.75% as of June 30, 2021.
 
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The following table summarizes MSRs capitalized and amortized (dollars in thousands) for the six month periods ending June 30, 2021 and June 30, 2020:
​​​
June 30,
2021
​​
June 30,
2020
​
Balance at beginning of period​​​$1,359​​​​$1,499​​
Amortization​​​​
(7)
​​​​​(70)​​
Balance at end of period​​​$1,352​​​​$1,429​​
Balance of loan servicing portfolio​​​$179,491​​​​$232,345​​
Mortgage servicing rights as % of portfolio​​​​
.75%
​​​​​.62%​​
Fair value of servicing rights​​​​1,436​​​​​1,746​​
Commercial Loans
The Corporation periodically retains the servicing on certain commercial loans that have been sold. These loans were originated and underwritten under the SBA and USDA government guarantee programs, in which the guaranteed portion of the loan was sold to a third party with servicing retained. The balance of these sold loans with servicing retained at June 30, 2021 was approximately $57 million. The Corporation valued these servicing rights at $5,000 as of June 30, 2021 and at $35,000 as of June 30, 2020. This valuation was established in consideration of the discounted cash flow of net expected servicing income over the life of the loans.
8.
BORROWINGS
​
Borrowings consist of the following at June 30, 2021 and December 31, 2020 (dollars in thousands):
​​​
June 30,
2021
​​
December 31,
2020
​
Federal Home Loan Bank fixed rate advances​​​$28,117​​​​$63,155​​
USDA Rural Development note​​​​324​​​​​324​​
​​​​$28,441​​​​$63,479​​
The Federal Home Loan Bank borrowings bear a weighted average rate of 1.47% and mature at various dates through 2026. They are collateralized at June 30, 2021 by the following: a collateral agreement on the Corporation’s one to four family residential real estate loans with a book value of approximately $63.235 million; mortgage related and municipal securities with an amortized cost and estimated fair value of $18.691 million and $19.162 million, respectively; and Federal Home Loan Bank stock owned by the Bank totaling $4.473 million. Prepayment of the advances is subject to the provisions and conditions of the credit policy of the Federal Home Loan Bank of Indianapolis in effect as of June 30, 2021.
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), created the Paycheck Protection Program to support lending to small businesses that have been affected by the disruption caused by COVID-19. The Federal Reserve created the Paycheck Protection Program Lending Facility (PPPLF) to offer a source of liquidity to the financial institution lenders who lend to small businesses through the Small Business Administration’s (SBA) Paycheck Protection Program. The PPPLF bears an interest rate of 0.35% and is collateralized by the PPP loans pledged. There were no PPP loans pledged as of June 30, 2021 as the PPPLF was repaid during the third quarter of 2020.
The Corporation currently has one correspondent banking borrowing relationship. As of June 30, 2021 the relationship consisted of a $15.0 million revolving line of credit, which had no balance. The line of credit bears an interest rate of LIBOR plus 2.00%, with a floor rate of 3.00% and a ceiling of 22%. The line of credit expires April 30, 2022. LIBOR at June 30, 2021 was 0.15%. This relationship is secured by all of the outstanding mBank stock.
The USDA Rural Development borrowing bears an interest rate of 1.00% and matures in August, 2024. It is collateralized by an assignment of a demand deposit account held by the Corporation’s wholly owned subsidiary, First Rural Relending, in the amount of $.389 million, and guaranteed by the Corporation.

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9.
DEFINED BENEFIT PENSION PLAN
​
The Corporation acquired the Peninsula Financial Corporation noncontributory defined benefit pension plan in 2014. Effective December 31, 2005, the plan was amended to freeze participation in the plan; therefore, no additional employees are eligible to become participants in the plan. The benefits are based on years of service and the employee’s compensation at the time of retirement. The Plan was amended effective December 31, 2010, to freeze benefit accrual for all participants. Expected contributions to the Plan in 2021 are $57,000.
The anticipated distributions over the next five years and through December 31, 2030 are detailed in the table below (dollars in thousands):
​2021​​​$133​​
​2022​​​​140​​
​2023​​​​144​​
​2024​​​​142​​
​2025​​​​157​​
​2026-2030​​​​901​​
​Total​​​$1,617​​
The Corporation receives a valuation of the Plan annually. As such, at June 30, 2021, the plan’s assets had a fair value of $2.264 million and the Corporation had a net unfunded liability of $1.370 million. The accumulated benefit obligation at June 30, 2021 was $3.634 million.
Assumptions in the actuarial valuation are:
​​​2021​​2020​
Weighted average discount rate​​​​2.45%​​​​​2.45%​​
Rate of increase in future compensation levels​​​​N/A​​​​​N/A​​
Expected long-term rate of return on plan assets​​​​2.00%​​​​​2.00%​​
The expected long-term rate of return on plan assets reflects management’s expectations of long-term average rates of return on funds invested to provide for benefits included in the projected benefit obligation. The expected return is based on the outlook for inflation, fixed income returns and equity returns, while also considering historical returns, asset allocation and investment strategy. The discount rate assumption is based on investment yields available on AA rated long-term corporate bonds.
The primary investment objective is to maximize growth of the pension plan assets to meet the projected obligations to the beneficiaries over a long period of time, and to do so in a manner that is consistent with the Corporation’s risk tolerance. The intention of the plan sponsor is to invest the plan assets in mutual funds with the following asset allocation; which was in place at both June 30, 2021 and December 31, 2020.
​​​
Target
Allocation
​​
Actual
Allocation
​
Equity securities​​50% to 70%​​​​36%​​
Fixed income securities​​30% to 50%​​​​64%​​
​
10.
STOCK COMPENSATION PLANS
​
Restricted Stock Awards
The Corporation’s restricted stock awards are service-based and awarded based on performance. Each award has a vesting period of four years. Compensation expense is recognized on a straight-line basis over the vesting period. Shares are subject to certain restrictions and risk of forfeiture by the participants.

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TABLE OF CONTENTS

The Corporation has historically granted RSAs to members of the Board of Directors and management. Awards granted are set to vest equally over their award terms and are issued at no cost to the recipient. The table below summarizes each of the grant awards:
Date of Award​​Units Granted​​
Market Value at
grant date
​​Vesting Term​
February, 2018​​​​18,643​​​​​16.30​​​4 years​
April, 2018​​​​8,000​​​​​16.00​​​Immediate​
February, 2019​​​​27,790​​​​​15.70​​​4 years​
October, 2019​​​​8,000​​​​​15.40​​​Immediate​
February, 2020​​​​132,000​​​​​15.46​​​4 years​
October, 2020​​​​8,000​​​​​9.46​​​Immediate​
January, 2021​​​​64,000​​​​​13.43​​​4 years​
In the first six months of 2021, the Corporation issued 49,635 shares of its common stock for vested RSAs. In the first six months of 2020, the Corporation issued 25,521 shares of its common stock for vested RSAs.
A summary of changes in our nonvested shares for the period follows:
​​​
Number
Outstanding
​​
Weighted Average
Grant Date
Fair Value
​
Nonvested balance at January 1, 2021​​​​170,153​​​​$14.90​​
Granted during the period​​​​64,000​​​​​13.43​​
Vested during the period​​​​(49,635)​​​​​12.91​​
Nonvested balance at June 30, 2021​​​​184,518​​​​$14.94​​
​
11.
INCOME TAXES
​
The Corporation has reported deferred tax assets of $2.496 million at June 30, 2021.
A valuation allowance is provided against deferred tax assets when it is more likely than not that some or all of the deferred tax asset will not be realized. The Corporation, as of June 30, 2021 had a net operating loss carryforwards for tax purposes of approximately $8.0 million. The carryforwards, if not utilized, will begin to expire in the year 2023. A portion of the NOL and credit carryforwards are subject to the limitations for utilization as set forth in Section 382 of the Internal Revenue Code. The annual limitation is $2.0 million for the NOL and the equivalent value of tax credits, which is approximately $.420 million. These limitations for use were established in conjunction with the recapitalization of the Corporation in December 2004. The Corporation will continue to evaluate the future benefits from these carryforwards in order to determine if any adjustment to the deferred tax asset is warranted.
The Corporation recognized a federal income tax expense of approximately $1.181 million for the six months ended June 30, 2021 and $1.730 million for the six months ended June 30, 2020.
12.
FAIR VALUE MEASUREMENTS
​
Fair value estimates, methods, and assumptions are set forth below for the Corporation’s financial instruments.
Cash, cash equivalents, and interest-bearing deposits — The carrying values approximate the fair values for these assets.
Securities — Fair values are based on quoted market prices where available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals.

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Federal Home Loan Bank stock — Federal Home Loan Bank stock is carried at cost, which is its redeemable value and approximates its fair value, since the market for this stock is limited.
Loans — Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type such as commercial, residential mortgage, and other consumer. The fair value of loans is calculated by discounting scheduled cash flows using discount rates reflecting the credit and interest rate risk inherent in the loan.
The methodology in determining fair value of nonaccrual loans is to average them into the blended interest rate at 0% interest. This has the effect of decreasing the carrying amount below the risk-free rate amount and, therefore, discounts the estimated fair value.
Impaired loans are measured at the estimated fair value of the expected future cash flows at the loan’s effective interest rate or the fair value of the collateral for loans which are collateral dependent. Therefore, the carrying values of impaired loans approximate the estimated fair values for these assets.
Deposits — The fair value of deposits with no stated maturity, such as noninterest-bearing demand deposits and savings, is equal to the amount payable on demand at the reporting date. The fair value of time deposits is based on the discounted value of contractual cash flows applying interest rates currently being offered on similar time deposits.
Borrowings — Rates currently available for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt. The fair value of borrowed funds due on demand is the amount payable at the reporting date.
Accrued interest — The carrying amount of accrued interest approximates fair value.
Off-balance-sheet instruments — The fair value of commitments is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements, the current interest rates, and the present creditworthiness of the counterparties. Since the differences in the current fees and those reflected to the off-balance-sheet instruments at year-end are immaterial, no amounts for fair value are presented.
The following table presents information for financial instruments at June 30, 2021 and December 31, 2020 (dollars in thousands):
​​​​​​June 30, 2021​​December 31, 2020​
​
Level in Fair
Value Hierarchy
​​
Carrying
Amount
​​
Estimated
Fair Value
​​
Carrying
Amount
​​
Estimated
Fair Value
​
Financial assets:​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Cash and cash equivalents​​Level 1​​​$351,477​​​​$351,477​​​​$218,977​​​​$218,977​​
Interest-bearing deposits​​Level 2​​​​2,427​​​​​2,427​​​​​2,917​​​​​2,917​​
Securities available for sale​​Level 2​​​​100,686​​​​​100,686​​​​​110,505​​​​​110,505​​
Securities available for sale​​Level 3​​​​1,269​​​​​1,269​​​​​1,331​​​​​1,331​​
Federal Home Loan Bank stock​​Level 2​​​​4,473​​​​​4,473​​​​​4,924​​​​​4,924​​
Net loans​​Level 3​​​​972,404​​​​​969,195​​​​​1,071,776​​​​​1,072,770​​
Accrued interest receivable​​Level 3​​​​3,635​​​​​3,635​​​​​4,310​​​​​4,310​​
Total financial assets​​​​​​$1,436,371​​​​$1,433,162​​​​$1,414,740​​​​$1,415,734​​
Financial liabilities:​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Deposits​​Level 2​​​$1,307,154​​​​$1,329,943​​​​$1,258,776​​​​$1,262,930​​
Borrowings​​Level 2​​​​28,441​​​​​27,605​​​​​63,479​​​​​61,975​​
Accrued interest payable​​Level 3​​​​157​​​​​157​​​​​453​​​​​453​​
Total financial liabilities​​​​​​$1,335,752​​​​$1,357,705​​​​$1,322,708​​​​$1,325,358​​
Limitations— Fair value estimates are made at a specific point in time based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or

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discount that could result from offering for sale at one time the Corporation’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Corporation’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Fair value estimates are based on existing on-and off-balance-sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Significant assets and liabilities that are not considered financial assets or liabilities include premises and equipment, other assets, and other liabilities. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.
The following is information about the Corporation’s assets and liabilities measured at fair value on a recurring basis at June 30, 2021, and the valuation techniques used by the Corporation to determine those fair values.
Level 1:
In general, fair values determined by Level 1 inputs use quoted prices in active markets for identical assets or liabilities that the Corporation has the ability to access.
​
Level 2:
Fair values determined by Level 2 inputs use other inputs that are observable, either directly or indirectly. These Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals.
​
Level 3:
Level 3 inputs are unobservable inputs, including inputs available in situations where there is little, if any, market activity for the related asset or liability.
​
The fair value of all investment securities at June 30, 2021 and December 31, 2020 were based on level 2 and level 3 inputs. There are no other assets or liabilities measured on a recurring basis at fair value. For additional information regarding investment securities, please refer to “Note 4 — Investment Securities.”
The table below shows investment securities measured at fair value on a recurring basis (dollars in thousands):
(dollars in thousands)​​
Balance at
June 30, 2021
​​
Quoted Prices
in Active Markets
for Identical Assets
(Level 1)
​​
Significant
Other Observable
Inputs
(Level 2)
​​
Significant
Unobservable
Inputs
(Level 3)
​​
Total (Gains)
Losses for
Three Months Ended
June 30, 2021
​​
Total (Gains)
Losses for
Six Months Ended
June 30, 2021
​
Assets​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Corporate​​​$29,440​​​​$—​​​​$28,940​​​​$500​​​​$—​​​​$—​​
US Treasury​​​​1,066​​​​​—​​​​​1,066​​​​​—​​​​​—​​​​​—​​
US Agencies​​​​6,538​​​​​—​​​​​6,538​​​​​—​​​​​—​​​​​—​​
US Agencies – MBS​​​​28,711​​​​​—​​​​​28,711​​​​​—​​​​​—​​​​​—​​
Obligations of state and political subdivisions​​​​36,200​​​​​—​​​​​35,431​​​​​769​​​​​—​​​​​—​​
​​​​$101,955​​​​​​​​​​​​​​​​​​​​​​$—​​​​​—​​

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(dollars in thousands)​​
Balance at
December 31, 2020
​​
Quoted Prices
in Active Markets
for Identical Assets
(Level 1)
​​
Significant
Other Observable
Inputs
(Level 2)
​​
Significant
Unobservable
Inputs
(Level 3)
​​
Total (Gains) Losses for
Twelve Months Ended
December 31, 2020
​
Assets​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Corporate​​​$28,043​​​​$—​​​​$27,543​​​​$500​​​​$—​​
US Agencies​​​​6,589​​​​​—​​​​​6,589​​​​​—​​​​​—​​
US Agencies – MBS​​​​34,280​​​​​—​​​​​34,280​​​​​—​​​​​—​​
Obligations of state and political subdivisions​​​​42,924​​​​​—​​​​​42,093​​​​​831​​​​​2​​
​​​​$111,836​​​​​​​​​​​​​​​​​​​​​​$2​​
The Corporation had no Level 3 assets or liabilities measured at fair value on a recurring basis as of June 30, 2021, or December 31, 2020 other than as described above.
In instances where inputs used to measure fair value fall into different levels in the above fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The Corporation’s assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability.
The Corporation also has assets that under certain conditions are subject to measurement at fair value on a non-recurring basis. These assets include certain impaired loans and other real estate owned. The Corporation has estimated the fair values of these assets using Level 3 inputs, specifically discounted cash flow projections.
Assets Measured at Fair Value on a Nonrecurring Basis at June 30, 2021
(dollars in thousands)​​
Balance at
June 30, 2021
​​
Quoted Prices
in Active Markets
for Identical Assets
(Level 1)
​​
Significant
Other Observable
Inputs
(Level 2)
​​
Significant
Unobservable
Inputs
(Level 3)
​​
Total (Gains)
Losses for
Three Months Ended
June 30, 2021
​​
Total (Gains)
Losses for
Six Months Ended
June 30, 2021
​
Assets​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Impaired loans​​​$7,632​​​​$—​​​​$—​​​​$7,632​​​​$—​​​​$—​​
Other real estate owned​​​​1,343​​​​​—​​​​​—​​​​​1,343​​​​​84​​​​​32​​
​​​​​​​​​​​​​​​​​​​​​​​​​​​​$84​​​​​32​​
Assets Measured at Fair Value on a Nonrecurring Basis at December 31, 2020
(dollars in thousands)​​
Balance at
December 31, 2020
​​
Quoted Prices
in Active Markets
for Identical Assets
(Level 1)
​​
Significant
Other Observable
Inputs
(Level 2)
​​
Significant
Unobservable
Inputs
(Level 3)
​​
Total (Gains) Losses for
Year Ended
December 31, 2020
​
Assets​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Impaired loans​​​$8,850​​​​$—​​​​$—​​​​$8,850​​​​$186​​
Other real estate held for sale​​​​1,752​​​​​—​​​​​—​​​​​1,752​​​​​(22)​​
​​​​​​​​​​​​​​​​​​​​​​​​​​​​$164​​
Impaired loans categorized as Level 3 assets consist of non-homogeneous loans that are considered impaired. The Corporation estimates the fair value of the loans based on the present value of expected future cash flows using management’s best estimate of key assumptions. These assumptions include future payment ability, timing of payment streams, and estimated realizable values of available collateral (typically based on outside appraisals).

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13.
SHAREHOLDERS’ EQUITY
​
The Corporation currently has one active share repurchase program and one repurchase program that has since expired. All share repurchase programs are conducted under authorizations by the Board of Directors. Under the now expired program, the Corporation repurchased 1,661 shares in 2020, 14,000 shares in 2016, 102,455 shares in 2015, 13,700 shares in 2014 and 55,594 shares in 2013. The share repurchases were conducted under Board authorizations made and publicly announced of $.600 million on February 27, 2013, $.600 million on December 17, 2013 and an additional $.750 million on April 28, 2015.
On August 28, 2019, the Corporation, under the authorization of the Board of Directors announced a new common stock repurchase program. Under the Repurchase Program, the Company is authorized to repurchase up to approximately 5% of the Company’s outstanding common stock, and has no expiration date. During 2020, the Corporation repurchased 283,779 shares under this plan. The Corporation has formally paused any repurchase activity, with no repurchases made during 2021.
14.
COMMITMENTS, CONTINGENCIES AND CREDIT RISK
​
Financial Instruments With Off-Balance-Sheet Risk
The Corporation is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the consolidated balance sheets.
The Corporation’s exposure to credit loss, in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit, is represented by the contractual amount of those instruments. The Corporation uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments. These commitments are as follows (dollars in thousands):
​​​
June 30,
2021
​​
December 31,
2020
​
Commitments to extend credit:​​​​​​​​​​​​​
Variable rate​​​$108,865​​​​$114,458​​
Fixed rate​​​​49,881​​​​​58,175​​
Standby letters of credit – Variable rate​​​​7,896​​​​​8,781​​
Credit card commitments – Fixed rate​​​​7,798​​​​​7,136​​
​​​​$174,440​​​​$188,550​​
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Corporation evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Corporation upon extension of credit, is based on management’s credit evaluation of the party. Collateral held varies, but may include accounts receivable, inventory, property, plant and equipment, and income-producing commercial properties.
Standby letters of credit are conditional commitments issued by the Corporation to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The commitments are structured to allow for 100% collateralization on all standby letters of credit.
Credit card commitments are commitments on credit cards issued by the Corporation’s subsidiary and serviced by other companies. These commitments are unsecured.

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Legal Proceedings and Contingencies
In the normal course of business, the Corporation is involved in various legal proceedings. For an expanded discussion on the Corporation’s legal proceedings, see Part II, Item 1, “Legal Proceedings” in this report.
Concentration of Credit Risk
The Bank grants commercial, residential, agricultural, and consumer loans throughout Michigan and Northeastern Wisconsin. The Bank’s most prominent concentration in the loan portfolio relates to commercial real estate loans to operators of nonresidential buildings. This concentration at June 30, 2021 represents $130.222 million, or 17.64%, compared to $138.992 million, or 16.95%, of the commercial loan portfolio on December 31, 2020. The remainder of the commercial loan portfolio is diversified in such categories as hospitality and tourism, real estate agents and managers, new car dealers, gas stations and convenience stores, petroleum, forestry, agriculture and construction. Due to the diversity of the Bank’s locations, the ability of debtors of residential and consumer loans to honor their obligations is not tied to any particular economic sector.
NOTE 15 — BUSINESS COMBINATION
On April 12, 2021, the Corporation announced that it entered into an Agreement and Plan of Merger (“the Merger Agreement”) with Nicolet Bankshares, Inc. (“Nicolet”). Pursuant to the terms of the agreement, the Corporation’s shareholders will receive 0.22 shares of Nicolet common stock and $4.64 in cash for each share of the Corporation common stock with total consideration to consist of approximately 80% stock and 20% cash. Further pursuant to the Agreement, the Corporation’s wholly owned subsidiary, mBank, will merge with and into Nicolet National Bank, which will be the surviving bank, with all bank branches operating under the Nicolet National Bank brand. On July 15, 2021, the Corporation’s shareholders approved the Merger. As all necessary regulatory and shareholder approvals have been received, the consummation of this transaction will occur on September 3, 2021.

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MACKINAC FINANCIAL CORPORATION’S AUDITED CONSOLIDATED FINANCIAL STATEMENTS AND ACCOMPANYING NOTES
AS OF AND FOR THE YEAR ENDED December 31, 2020
Report of Independent Registered Public Accounting Firm
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors of Mackinac Financial Corporation
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Mackinac Financial Corporation (the “Company”) as of December 31, 2020, and 2019, the related statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2020, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and 2019, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2020, and 2019, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
The Company’s management is responsible for these financial statements. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.
Allowance for Loan Losses — Qualitative Factors — Refer to Notes 1 and 4 to the consolidated financial statements
Critical Audit Matter Description
Management’s estimate of the general portion of the allowance relates to non-impaired loans and is based on historical loss experience adjusted for qualitative factors. These qualitative factors include:

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(1) changes in the nature, volume and terms of loans, (2) changes in lending personnel, (3) changes in the quality of the loan review function, (4) changes in nature and volume of past-due, nonaccrual and/or classified loans, (5) changes in concentration of credit risk, (6) changes in economic and industry conditions, (7) changes in legal and regulatory requirements, (8) unemployment and inflation statistics, (9) underlying collateral values, and (10) estimated impact of the COVID-19 pandemic not already reflected in other factors. Management periodically evaluates the qualitative factors based on known and inherent risks in the portfolio, composition of the portfolio, current economic conditions, and other factors.
Given the significant estimates and assumptions management makes in establishing qualitative factor adjustments within the allowance for loan losses and the sensitivity of the Corporation’s operations to changes in certain market conditions, performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to the inherent risks in the portfolio, current economic conditions, and the selection of weighting of these qualitative factors required a high degree of auditor judgement and an increased extent of effort.
How the Critical Audit Matter was Addressed in the Audit
Our audit procedures related to the qualitative factors used in the estimate of the allowance for loan losses included the following, among others:
•
We assessed management’s determination of qualitative factor adjustments to the allowance for loan losses, which included a comparison of factors considered by management to other sources to evaluate reasonableness and completeness of factors considered.
​
•
We gained an understanding of management’s basis for the application and weighting of the qualitative factors.
​
•
We reviewed the overall trends in credit quality to understand the known and inherent risks in the portfolio and the portfolio composition. This included reviewing changes year-over-year in the qualitative factors and management’s commentary on the rationale for the weighting applied to each factor for reasonableness.
​
Goodwill — Impairment Assessment — Refer to Notes 1 and 8 to the consolidated financial statements
Critical Audit Matter Description
The Corporation, in accordance with GAAP, evaluates goodwill annually for impairment. As a result of the economic uncertainty and volatility surrounding COVID-19 during the year, the Corporation assessed whether there were triggering events during the interim periods between the annual goodwill assessment during 2020. The Corporation determined that there is currently no impairment of its goodwill. In the assessment of goodwill for impairment, management considers fair value inputs such as discounted future earnings and observations from recent bank mergers and acquisitions.
Given the significant estimates and assumptions management makes to assess goodwill for impairment, performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions required a high degree of auditor judgement and an increased extent of effort.
How the Critical Audit Matter was Addressed in the Audit
Our audit procedures related to management’s assessment of goodwill for impairment included the following, among others:
•
We reviewed management’s evaluation on whether a triggering event occurred during the interim periods between the annual goodwill impairment assessment.
​
•
We tested the effectiveness of controls over management’s goodwill impairment assessment.
​
•
We evaluated the reasonableness of management’s assumptions regarding future earnings by comparing the assumptions to (1) historical results (2) internal communications to management and the Board of Directors, and (3) external information.
​

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•
We evaluated the reasonableness of management’s selection of a discount rate by comparing inputs to external sources.
​
•
We independently obtained statistics from bank mergers and acquisitions to test the completeness and accuracy of the population obtained by management, and we assessed the reasonableness of the comparable transactions by comparing statistical information of the targets selected by management to statistical information of the Corporation.
​
/s/Plante & Moran, PLLC
We have served as the Company’s auditor since 2002.
Grand Rapids, MI
March 11, 2021

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MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 2020 and 2019
(Dollars in Thousands)
​​​
December 31,
2020
​​
December 31,
2019
​
ASSETS​​​​​​​​​​​​​
Cash and due from banks​​​$218,901​​​​$49,794​​
Federal funds sold​​​​76​​​​​32​​
Cash and cash equivalents​​​​218,977​​​​​49,826​​
Interest-bearing deposits in other financial institutions​​​​2,917​​​​​10,295​​
Securities available for sale​​​​111,836​​​​​107,972​​
Federal Home Loan Bank stock​​​​4,924​​​​​4,924​​
Loans:​​​​​​​​​​​​​
Commercial​​​​819,907​​​​​765,524​​
Mortgage​​​​238,705​​​​​272,014​​
Consumer​​​​18,980​​​​​21,238​​
Total Loans​​​​1,077,592​​​​​1,058,776​​
Allowance for loan losses​​​​
(5,816)
​​​​​(5,308)​​
Net loans​​​​1,071,776​​​​​1,053,468​​
Premises and equipment​​​​25,518​​​​​23,608​​
Other real estate held for sale​​​​1,752​​​​​2,194​​
Deferred tax asset​​​​3,303​​​​​3,732​​
Deposit based intangibles​​​​4,368​​​​​5,043​​
Goodwill​​​​19,574​​​​​19,574​​
Other assets​​​​36,785​​​​​39,433​​
TOTAL ASSETS​​​$1,501,730​​​​$1,320,069​​
LIABILITIES AND SHAREHOLDERS’ EQUITY​​​​​​​​​​​​​
LIABILITIES:​​​​​​​​​​​​​
Deposits:​​​​​​​​​​​​​
Noninterest bearing deposits​​​$414,804​​​​$287,611​​
NOW, money market, interest checking​​​​450,556​​​​​373,165​​
Savings​​​​130,755​​​​​109,548​​
CDs<$250,000​​​​202,266​​​​​233,956​​
CDs>$250,000​​​​15,224​​​​​12,775​​
Brokered​​​​45,171​​​​​58,622​​
Total deposits​​​​1,258,776​​​​​1,075,677​​
Federal funds purchased​​​​—​​​​​6,225​​
Borrowings​​​​63,479​​​​​64,551​​
Other liabilities​​​​11,611​​​​​11,697​​
Total liabilities​​​​1,333,866​​​​​1,158,150​​
SHAREHOLDERS’ EQUITY:​​​​​​​​​​​​​
Common stock and additional paid in capital — No par value
Authorized — 18,000,000 shares Issued and outstanding — 10,500,758 and
10,748,712 respectively
​​​​127,164​​​​​129,564​​
Retained earnings​​​​39,318​​​​​31,740​​
Accumulated other comprehensive income​​​​​​​​​​​​​
Unrealized gains on available for sale securities​​​​1,965​​​​​1,025​​
Minimum pension liability​​​​
(583)
​​​​​(410)​​
Total shareholders’ equity​​​​167,864​​​​​161,919​​
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY​​​$1,501,730​​​​$1,320,069​​
See accompanying notes to consolidated financial statements.
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MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31, 2020 and 2019
(Dollars in Thousands, Except Per Share Data)
​​​
Year Ended
December 31,
​
​​​2020​​2019​
INTEREST INCOME:​​​​​​​​​​​​​
Interest and fees on loans:​​​​​​​​​​​​​
Taxable​​​$58,412​​​​$59,673​​
Tax-exempt​​​​201​​​​​187​​
Interest on securities:​​​​​​​​​​​​​
Taxable​​​​2,255​​​​​2,708​​
Tax-exempt​​​​535​​​​​343​​
Other interest income​​​​626​​​​​1,473​​
Total interest income​​​​62,029​​​​​64,384​​
INTEREST EXPENSE:​​​​​​​​​​​​​
Deposits​​​​6,052​​​​​9,436​​
Borrowings​​​​1,171​​​​​1,041​​
Total interest expense​​​​7,223​​​​​10,477​​
Net interest income​​​​54,806​​​​​53,907​​
Provision for loan losses​​​​1,000​​​​​385​​
Net interest income after provision for loan losses​​​​53,806​​​​​53,522​​
OTHER INCOME:​​​​​​​​​​​​​
Deposit service fees​​​​1,133​​​​​1,586​​
Income from mortgage loans sold on the secondary market​​​​5,935​​​​​1,889​​
SBA/USDA loan sale gains​​​​1,729​​​​​908​​
Net mortgage servicing fees​​​​838​​​​​693​​
Realized security gains​​​​2​​​​​208​​
Other​​​​562​​​​​669​​
Total other income​​​​10,199​​​​​5,953​​
OTHER EXPENSE:​​​​​​​​​​​​​
Salaries and employee benefits​​​​26,081​​​​​22,743​​
Occupancy​​​​4,370​​​​​4,069​​
Furniture and equipment​​​​3,347​​​​​3,000​​
Data processing​​​​3,093​​​​​2,717​​
Advertising​​​​912​​​​​889​​
Professional service fees​​​​1,842​​​​​2,100​​
Loan origination expenses and deposit and card related fees​​​​1,965​​​​​1,546​​
Writedowns and (gains) losses on other real exstate held for sale​​​​
(22)
​​​​​212​​
FDIC insurance assessment​​​​578​​​​​70​​
Communications​​​​935​​​​​885​​
Other​​​​3,848​​​​​3,534​​
Total other expenses​​​​46,949​​​​​41,765​​
Income before provision for income taxes​​​​17,056​​​​​17,710​​
Provision for income taxes​​​​3,583​​​​​3,860​​
NET INCOME​​​$13,473​​​​$13,850​​
INCOME PER COMMON SHARE:​​​​​​​​​​​​​
Basic​​​$1.27​​​​$1.29​​
Diluted​​​$1.27​​​​$1.29​​
See accompanying notes to consolidated financial statements.
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MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Years Ended December 31, 2020 and 2019
(Dollars in Thousands)
​​​
Year Ended
December 31,
​
​​​2020​​2019​
Net income​​​$13,473​​​​$13,850​​
Other comprehensive income​​​​​​​​​​​​​
Change in securities available for sale:​​​​​​​​​​​​​
Unrealized gains arising during the period​​​​1,192​​​​​1,816​​
Reclassification adjustment for securities gains included in net income​​​​
(2)
​​​​​(208)​​
Tax effect​​​​
(250)
​​​​​(338)​​
Net change in unrealized gains on available for sale securities​​​​940​​​​​1,270​​
Defined benefit pension plan:​​​​​​​​​​​​​
Net unrealized actuarial gain (loss) on defined benefit pension obligation​​​​
(219)
​​​​​(243)​​
Tax effect​​​​46​​​​​51​​
Changes from defined benefit pension plan​​​​
(173)
​​​​​(192)​​
Other comprehensive loss, net of tax​​​​767​​​​​1,078​​
Total comprehensive income​​​$14,240​​​​$14,928​​
See accompanying notes to consolidated financial statements.
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MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
Years Ended December 31, 2020 and 2019
(Dollars in Thousands)
​​​
Shares of
Common
Stock
​​
Common Stock
and Additional
Paid in Capital
​​
Retained
Earnings
​​
Accumulated
Other
Comprehensive
Income (Loss)
​​Total​
Balance, December 31, 2018​​​​10,712,745​​​​$129,066​​​​$23,466​​​​$(463)​​​​$152,069​​
Net income​​​​—​​​​​—​​​​​13,850​​​​​—​​​​​13,850​​
Other comprehensive income (loss):​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Net change in unrealized gain on securities available for sale​​​​—​​​​​—​​​​​—​​​​​1,270​​​​​1,270​​
Actuarial loss on defined benefit pension obligation​​​​—​​​​​—​​​​​—​​​​​(192)​​​​​(192)​​
Total comprehensive income​​​​1,078​​​​​14,928​​​​​​​​​​​​​​​​​​​​
Stock compensation​​​​—​​​​​498​​​​​—​​​​​—​​​​​498​​
Restricted stock award vesting​​​​35,967​​​​​—​​​​​—​​​​​—​​​​​—​​
Dividend on common stock​​​​—​​​​​—​​​​​(5,576)​​​​​—​​​​​(5,576)​​
Balance, December 31, 2019​​​​10,748,712​​​​$129,564​​​​$31,740​​​​$615​​​​$161,919​​
Net income​​​​—​​​​​—​​​​​13,473​​​​​—​​​​​13,473​​
Other comprehensive income (loss):​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Net change in unrealized gain on securities available for sale​​​​—​​​​​—​​​​​—​​​​​940​​​​​940​​
Actuarial loss on defined benefit pension
obligation
​​​​—​​​​​—​​​​​—​​​​​(173)​​​​​(173)​​
Total comprehensive income​​​​767​​​​​14,240​​​​​​​​​​​​​​​​​​​​
Stock compensation​​​​—​​​​​878​​​​​—​​​​​—​​​​​878​​
Restricted stock award vesting​​​​35,825​​​​​—​​​​​—​​​​​—​​​​​—​​
Repurchase of common stock​​​​(283,779)​​​​​(3,278)​​​​​(3,278)​​​​​​​​​​​​​​
Dividend on common stock​​​​—​​​​​—​​​​​(5,895)​​​​​—​​​​​(5,895)​​
Balance, December 31, 2020​​​​10,500,758​​​​$127,164​​​​$39,318​​​​$1,382​​​​$167,864​​
See accompanying notes to consolidated financial statements.
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MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS CASH FLOWS
Years Ended December 31, 2020 and 2019
(Dollars in Thousands)
​​​For the year ended December 31,​
​​​2020​​2019​
Cash Flows from Operating Activities:​​​​​​​​​​​​​
Net income​​​$13,473​​​​$13,850​​
Adjustments to reconcile net income to net cash provided by operating activities:​​​​​​​​​​​​​
Depreciation and amortization​​​​2,897​​​​​2,880​​
Provision for loan losses​​​​1,000​​​​​385​​
Deferred tax expense​​​​629​​​​​1,347​​
Net realized security gains​​​​
(2)
​​​​​(208)​​
Gain on sale of loans sold in the secondary market​​​​
(5,205)
​​​​​(1,544)​​
Origination of loans held for sale in secondary market​​​​
(205,398)
​​​​​(89,546)​​
Proceeds from sale of loans in the secondary market​​​​208,677​​​​​86,926​​
(Gain) loss on sale other real estate held for sale and fixed assets​​​​
(161)
​​​​​31​​
Writedown of other real estate held for sale​​​​65​​​​​181​​
Stock compensation​​​​878​​​​​498​​
Change in other assets​​​​1,575​​​​​(10,907)​​
Change in other liabilities​​​​
(86)
​​​​​3,704​​
Net cash provided by operating activities​​​​18,342​​​​​7,597​​
Cash Flows from Investing Activities:​​​​​​​​​​​​​
Net increase in loans​​​​
(16,508)
​​​​​(17,649)​​
Net decrease in interest-bearing deposits in other financial institutions​​​​7,378​​​​​3,157​​
Purchase of securities available for sale​​​​
(40,180)
​​​​​(18,839)​​
Proceeds from maturities, sales, calls or paydowns of securities available
for sale
​​​​37,391​​​​​29,374​​
Capital expenditures​​​​
(5,063)
​​​​​(2,737)​​
Proceeds from sale of premises, equipment, and other real estate​​​​1,162​​​​​1,867​​
Net cash used in investing activities​​​​
(15,820)
​​​​​(4,827)​​
Cash Flows from Financing Activities:​​​​​​​​​​​​​
Net increase (decrease) increase in deposits​​​​183,099​​​​​(21,860)​​
(Decrease) increase in fed funds purchased​​​​
(6,225)
​​​​​3,320​​
Repurchase of common stock​​​​
(3,278)
​​​​​—​​
Dividend on common stock​​​​
(5,895)
​​​​​(5,576)​​
Proceeds from FHLB borrowing​​​​—​​​​​25,000​​
Proceeds from term borrowing​​​​100,281​​​​​—​​
Principal payments on borrowings​​​​
(101,353)
​​​​​(17,985)​​
Net cash provided by (used in) financing activities​​​​166,629​​​​​(17,101)​​
Net (decrease) increase in cash and cash equivalents​​​​169,151​​​​​(14,331)​​
Cash and cash equivalents at beginning of period​​​​49,826​​​​​64,157​​
Cash and cash equivalents at end of period​​​$218,977​​​​$49,826​​
Supplemental Cash Flow Information:​​​​​​​​​​​​​
Cash paid during the year for:​​​​​​​​​​​​​
Interest​​​$7,329​​​​$10,320​​
Income taxes​​​​1,700​​​​​1,500​​
Noncash Investing and Financing Activities:​​​​​​​​​​​​​
Transfers of Foreclosures from Loans to Other Real Estate Held for Sale​​​$874​​​​$1,629​​
Transfers of Other Real Estate Held for Sale to Fixed Assets​​​$—​​​​$1,013​​
See accompanying notes to consolidated financial statements.
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NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies of Mackinac Financial Corporation (the “Corporation”) and Subsidiaries conform to accounting principles generally accepted in the United States and prevailing practices within the banking industry. Significant accounting policies are summarized below.
Principles of Consolidation
The consolidated financial statements include the accounts of the Corporation and its wholly owned subsidiaries, mBank (the “Bank”) and other minor subsidiaries, after elimination of intercompany transactions and accounts.
Nature of Operations
The Corporation’s and the Bank’s revenues and assets are derived primarily from banking activities. The Bank’s primary market area is the Upper Peninsula, the northern portion of the Lower Peninsula of Michigan, Northeastern Wisconsin and Oakland County in Lower Michigan. The Bank provides to its customers commercial, real estate, agricultural, and consumer loans, as well as a variety of traditional deposit products. Less than 1.0% of the Corporation’s business activity is with Canadian customers and denominated in Canadian dollars.
While the Corporation’s chief decision makers monitor the revenue streams of the various Corporation products and services, operations are managed and financial performance is evaluated on a Corporation-wide basis. Accordingly, all of the Corporation’s banking operations are considered by management to be aggregated in one reportable operating segment.
Use of Estimates in Preparation of Financial Statements
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates.
Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, the valuation of investment securities, and the assessment of goodwill for impairment.
Cash and Cash Equivalents
For purposes of reporting cash flows, cash and cash equivalents include cash on hand, noninterest-bearing deposits in correspondent banks, and federal funds sold. Generally, federal funds are purchased and sold for one-day periods.
Securities
The Corporation’s debt securities are classified and accounted for as securities available for sale. These securities are stated at fair value. Premiums and discounts are recognized in interest income using the interest method over the period to maturity. Unrealized holding gains and losses on securities available for sale are reported as accumulated other comprehensive income within shareholders’ equity until realized. When it is determined that securities or other investments are impaired and the impairment is other than temporary, an impairment loss is recognized in earnings and a new basis in the affected security is established. Gains and losses on the sale of securities are recorded on the trade date and determined using the specific-identification method.
Federal Home Loan Bank Stock
As a member of the Federal Home Loan Bank (FHLB) system, the Bank is required to hold stock in the FHLB based on the anticipated level of borrowings to be advanced. This stock is recorded at cost, which approximates fair value. Transfer of the stock is substantially restricted.

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Interest Income and Fees on Loans
Interest income on loans is reported on the level-yield method and includes amortization of deferred loan fees and costs over the loan term. Net loan commitment fees or costs for commitment periods greater than one year are deferred and amortized into fee income or other expense on a straight-line basis over the commitment period. The accrual of interest on loans is discontinued when, in the opinion of management, it is probable that the borrower may be unable to meet payments as they become due as well as when required by regulatory provisions. Upon such discontinuance, all unpaid accrued interest is reversed. Loans are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured. Interest income on impaired and nonaccrual loans is recorded on a cash basis.
During 2020, the Corporation funded loans under the Small Business Administration’s (SBA) Paycheck Protection Program (PPP) to provide liquidity to small businesses during the COVID-19 pandemic. The loans are guaranteed by the SBA and loan proceeds to borrowers are forgivable by the SBA if certain criteria are met. The Corporation originated PPP loans totaling $152.506 during the year. PPP processing fees received from the SBA totaling $5.18 were deferred along with loan origination costs and recognized as interest income using the effective yield method. Upon forgiveness of a loan and resulting repayment by the SBA, any unrecognized net fee for a given loan is recognized as interest income. Fees of $4.030 were recognized in 2020.
Acquired Loans
Loans acquired with evidence of credit deterioration since inception and for which it is probable that all contractual payments will not be received are accounted for under ASC Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality (“ASC 310-30”). These loans are recorded at fair value at the time of acquisition, with no carryover of the related allowance for loan losses. Fair value of acquired loans is determined based on the present value of amounts expected to be received, which incorporates assumptions about the amount and timing of principal and interest payments, principal prepayments and principal defaults and losses, collateral values, and current market rates.      In recording the fair values of acquired impaired loans at acquisition date, management calculates a non-accretable difference (the credit component of the purchased loans) and an accretable difference (the yield component of the purchased loans).
Over the life of the acquired loans, management continues to estimate cash flows expected to be collected. We evaluate at each balance sheet date whether it is probable that we will be unable to collect all cash flows expected at acquisition and if so, recognize a provision for loan loss in our consolidated statement of operations. For any significant increases in cash flows expected to be collected, we adjust the amount of the accretable yield recognized on a prospective basis over the pool’s remaining life.
Performing acquired loans are accounted for under ASC Topic 310-20, Receivables — Nonrefundable Fees and Other Costs. Performance of certain loans may be monitored and based on management’s assessment of the cash flows and other facts available, portions of the accretable difference may be delayed or suspended if management deems appropriate. The Corporation’s policy for determining when to discontinue accruing interest on performing acquired loans and the subsequent accounting for such loans is essentially the same as the policy for originated loans.
Servicing Rights
Servicing assets are recognized as separate assets when rights are acquired through purchase or through sale of financial assets. Capitalized servicing rights are reported in other assets and are amortized into noninterest income in proportion to, and over the period of, the estimated future net servicing income of the underlying financial assets. Servicing assets are evaluated for impairment based on the fair value of the rights compared to amortized cost. Impairment is determined by using prices for similar assets with similar characteristics, such as interest rates and terms. Fair value is determined by using prices for similar assets with similar characteristics, when available, or based on discounted cash flows using market-based assumptions. Impairment is recognized through a valuation allowance for an individual stratum, to the extent that fair value is less than the capitalized amount for the stratum.

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Allowance for Loan Losses
The allowance for loan losses includes specific allowances related to loans which have been judged to be impaired. A loan is impaired when, based on current information, it is probable that the Corporation will not collect all amounts due in accordance with the contractual terms of the loan agreement. These specific allowances are based on discounted cash flows of expected future payments using the loan’s initial effective interest rate or the fair value of the collateral if the loan is collateral dependent.
The Corporation also has a general allowance for loan losses for loans not considered impaired. The allowance for loan losses is maintained at a level which management believes is adequate to provide for probable loan losses. Management periodically evaluates the adequacy of the allowance using the Corporation’s past loan loss experience, known and inherent risks in the portfolio, composition of the portfolio, current economic conditions, and other factors. The allowance does not include the effects of expected losses related to future events or future changes in economic conditions. This evaluation is inherently subjective since it requires material estimates that may be susceptible to significant change. Loans are charged against the allowance for loan losses when management believes the collectability of the principal is unlikely. In addition, various regulatory agencies periodically review the allowance for loan losses. These agencies may require additions to the allowance for loan losses based on their judgments of collectability.
In management’s opinion, the allowance for loan losses is adequate to cover probable losses relating to specifically identified loans, as well as probable losses inherent in the balance of the loan portfolio as of the balance sheet date.
Troubled Debt Restructuring
Troubled debt restructuring of loans is undertaken to improve the likelihood that the loan will be repaid in full under the modified terms in accordance with a reasonable repayment schedule. All modified loans are evaluated to determine whether the loans should be reported as a Troubled Debt Restructure (TDR). A loan is a TDR when the Corporation, for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower by modifying or renewing a loan that the Corporation would not otherwise consider. To make this determination, the Corporation must determine whether (a) the borrower is experiencing financial difficulties and (b) the Corporation granted the borrower a concession. This determination requires consideration of all of the facts and circumstances surrounding the modification. An overall general decline in the economy or some deterioration in a borrower’s financial condition does not automatically mean the borrower is experiencing financial difficulties.
Other Real Estate Held for Sale
Other real estate held for sale consists of assets acquired through, or in lieu of, foreclosure and other long-lived assets to be disposed of by sale, whether previously held and used or newly acquired. Other real estate held for sale is initially recorded at fair value, less costs to sell, establishing a new cost basis. Valuations are periodically performed by management or a third party, and the assets’ carrying values are adjusted to the lower of cost basis or fair value less costs to sell. Impairment losses are recognized for any initial or subsequent write-downs. Net revenue and expenses from operations of other real estate held for sale are included in other expense.
Premises and Equipment
Premises and equipment are stated at cost less accumulated depreciation. Maintenance and repair costs are charged to expense as incurred. Gains or losses on disposition of premises and equipment are reflected in income. Depreciation is computed on the straight-line method over the estimated useful lives of the assets.
Goodwill and Other Intangible Assets
The excess of the cost of acquired entities over the fair value of identifiable assets acquired less liabilities assumed is recorded as goodwill. In accordance with ASC 350, amortization of goodwill and indefinite-lived assets is not recorded. However, the recoverability of goodwill is annually tested for impairment

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and between annual tests in certain circumstances. The Corporation’s core deposit intangible is currently being amortized over its estimated useful life of ten years.
Stock Compensation Plans
On May 22, 2012, the Corporation’s shareholders approved the Mackinac Financial Corporation 2012 Incentive Compensation Plan, under which current and prospective employees, non-employee directors and consultants may be awarded incentive stock options, non-statutory stock options, shares of restricted stock awards (“RSAs”), or stock appreciation rights. The aggregate number of shares of the Corporation’s common stock issuable under the plan is 575,000. Awards are made to certain other senior officers at the discretion of the Corporation’s management. Compensation cost equal to the fair value of the award is recognized over the vesting period.
Comprehensive Income (Loss)
Comprehensive income (loss) consists of net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) is composed of unrealized gains and losses on securities available for sale, and unrecognized actuarial gains and losses in the defined benefit pension plan, arising during the period. These gains and losses for the period are shown as a component of other comprehensive income. The accumulated gains and losses are reported as a component of equity, net of any tax effect. At December 31, 2020, the balance in accumulated other comprehensive income consisted of unrealized gains on available for sales securities of $1.965 million (net of income tax of $.522 million) and actuarial losses on the defined benefit pension obligation of $.583 million (net of income tax of $.139 million). At December 31, 2019, the balance in accumulated other comprehensive income consisted of unrealized losses on available for sale securities of $1.025 million (net of income tax of $.273 million) and actuarial losses on the defined benefit pension obligation of $.410 million (net of income tax of $.147 million).
Earnings per Common Share
Diluted earnings per share, which reflects the potential dilution that could occur if outstanding stock options and warrants were exercised and stock awards were fully vested and resulted in the issuance of common stock that then shared in our earnings, is computed by dividing net income by the weighted average number of common shares outstanding and common stock equivalents, after giving effect for dilutive shares issued.
The following shows the computation of basic and diluted earnings per share for the years ended December 31, 2020 and 2019 (dollars in thousands, except per share data):
​​​Year Ended December 31,​
​​​2020​​2019​
(Numerator):​​​​​​​​​​​​​
Net income​​​$13,473​​​​$13,850​​
(Denominator):​​​​​​​​​​​​​
Weighted average shares outstanding​​​​10,580,044​​​​​10,737,653​​
Effect of restricted stock awards​​​​—​​​​​19,854​​
Diluted weighted average shares outstanding​​​​10,580,044​​​​​10,757,507​​
Income per common share:​​​​​​​​​​​​​
Basic​​​$1.27​​​​$1.29​​
Diluted​​​$1.27​​​​$1.29​​
Income Taxes
Deferred income taxes have been provided under the balance sheet method. Deferred tax assets and liabilities are determined based upon the difference between the financial statement and tax bases of assets and liabilities as measured by the enacted tax rates which will be in effect when these differences are expected

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to reverse. Deferred tax expense (benefit) is the result of changes in the deferred tax asset and liability. A valuation allowance is provided against deferred tax assets when it is more likely than not that some or all of the deferred asset will not be realized.
Off-Balance-Sheet Financial Instruments
In the ordinary course of business, the Corporation has entered into off-balance-sheet financial instruments consisting of commitments to extend credit, commitments under credit card arrangements, commercial letters of credit, and standby letters of credit. For letters of credit, the Corporation recognizes a liability for the fair market value of the obligations it assumes under that guarantee.
Recent Developments
In September 2016, the FASB issued ASU No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income.
ASU 2016-13 requires an entity to measure expected credit losses for financial assets over the estimated lifetime of expected credit loss and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. The standard includes the following core concepts in determining the expected credit loss. The estimate must: (a) be based on an asset’s amortized cost (including premiums or discounts, net deferred fees and costs, foreign exchange and fair value hedge accounting adjustments), (b) reflect losses expected over the remaining contractual life of an asset (considering the effect of voluntary prepayments), (c) consider available relevant information about the estimated collectability of cash flows (including information about past events, current conditions, and reasonable and supportable forecasts), and (d) reflect the risk of loss, even when that risk is remote.
ASU 2016-13 also amends the recording of purchased credit-deteriorated assets. Under the new guidance, an allowance will be recognized at acquisition through a gross-up approach whereby an entity will record as the initial amortized cost the sum of (a) the purchase price and (b) an estimate of credit losses as of the date of acquisition. In addition, the guidance also requires immediate recognition in earnings of any subsequent changes, both favorable and unfavorable, in expected cash flows by adjusting this allowance.
ASU 2016-13 also amends the impairment model for available-for-sale debt securities and requires entities to determine whether all or a portion of the unrealized loss on an available-for-sale debt security is a credit loss. Management may not use the length of time a security has been in an unrealized loss position as a factor in concluding whether a credit loss exists, as is currently permitted. In addition, an entity will recognize an allowance for credit losses on available-for-sale debt securities as a contra-account to the amortized cost basis rather than as a direct reduction of the amortized cost basis of the investment, as is currently required. As a result, entities will recognize improvements to credit losses on available-for-sale debt securities immediately in earnings rather than as interest income over time under current practice.
New disclosures required by ASU 2016-13 include: (a) for financial assets measured at amortized cost, an entity will be required to disclose information about how it developed its allowance, including changes in the factors that influenced management’s estimate of expected credit losses and the reasons for those changes, (b) for financial receivables and net investments in leases measured at amortized cost, an entity will be required to further disaggregate the information it currently discloses about the credit quality of these assets by year or the asset’s origination or vintage for as many as five annual periods, and (c) for available-for-sale debt securities, an entity will be required to provide a roll-forward of the allowance for credit losses and an aging analysis for securities that are past due.
Upon adoption of ASU 2016-13, a cumulative-effect adjustment to retained earnings will be recorded as of the beginning of the first reporting period in which the guidance is effective. The Corporation is currently evaluating the provisions of ASU 2016-13 to determine the potential impact on the Corporation’s consolidated financial condition and result of operations. The Corporation has formed a cross-functional implementation team consisting of individuals from finance, credit and information systems. A project plan

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and timeline has been developed and the implementation team meets regularly to assess the project status to ensure adherence to the timeline. The implementation team has also been working with a software vendor to assist in implementing required changes to credit loss estimation models and processes, and is finalizing the historical data collected to be utilized in the credit loss models. The Corporation expects to recognize a cumulative effect adjustment to the opening balance of retained earnings as of the beginning of the first reporting period in which ASU 2016-13 is effective. The Corporation has not yet determined the magnitude of any such one-time adjustment or the potential impact of ASU 2016-13 on its condensed consolidated financial statements. In October 2019 the Financial Accounting Standards Board (FASB) voted to defer the effective date of ASU 2016-13 to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, for smaller reporting companies (as defined by the Securities Exchange Commission). As the Corporation qualifies as a smaller reporting company, management plans to delay the implementation of CECL beyond 2021 and adjust the timetable of the various CECL implementation tasks. Management believes that the Corporation will benefit from additional time to parallel testing and refine credit loss estimation models.
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) — Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The standard provides optional guidance for a limited period of time to ease the potential burden in accounting for and recognizing the effects of reference rate reform on financial reporting by offering expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform under certain criteria. The updated guidance is effective as of March 12, 2020 through December 31, 2022. The Corporation is currently assessing the impact this new standard will have on its financial statements.
Reclassifications
Certain amounts in the 2019 consolidated financial statements have been reclassified to conform to the 2020 presentation.
NOTE 2 — RESTRICTIONS ON CASH AND CASH EQUIVALENTS
Effective March 24, 2020, the Federal Reserve announced the reduction of reserve requirement ratios to zero percent in an effort to free up liquidity in the banking system to support lending to households and businesses. As such, as of December 31, 2020, the Corporation had no restrictions on cash and cash equivalents. In the normal course of business, the Corporation maintains cash and due from bank balances with correspondent banks. Balances in these accounts may exceed the Federal Deposit Insurance Corporation’s insured limit of $250,000. Management believes that these financial institutions have strong credit ratings and the credit risk related to these deposits is minimal.
NOTE 3 — SECURITIES AVAILABLE FOR SALE
The carrying value and estimated fair value of securities available for sale are as follows (dollars in thousands):

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​​​
Amortized
Cost
​​
Unrealized
Gains
​​
Unrealized
Losses
​​
Estimated
Fair Value
​
December 31, 2020​​​​​​​​​​​​​​​​​​​​​​​​​
Corporate​​​$27,815​​​​$247​​​​$(19)​​​​$28,043​​
US Agencies​​​​6,480​​​​​109​​​​​—​​​​​6,589​​
US Agencies – MBS​​​​33,372​​​​​914​​​​​(6)​​​​​34,280​​
Obligations of states and political subdivisions​​​​41,682​​​​​1,242​​​​​—​​​​​42,924​​
Total securities available for sale​​​$109,349​​​​$2,512​​​​$(25)​​​​$111,836​​
December 31, 2019​​​​​​​​​​​​​​​​​​​​​​​​​
Corporate​​​$20,779​​​​$160​​​​$(1)​​​​$20,938​​
US Agencies​​​​14,450​​​​​47​​​​​(1)​​​​​14,496​​
US Agencies – MBS​​​​34,063​​​​​492​​​​​(29)​​​​​34,526​​
Obligations of states and political subdivisions​​​​37,382​​​​​630​​​​​—​​​​​38,012​​
Total securities available for sale​​​$106,674​​​​$1,329​​​​$(31)​​​​$107,972​​
Following is information pertaining to securities with gross unrealized losses at December 31, 2020 and 2019 aggregated by investment category and length of time these individual securities have been in a loss position (dollars in thousands):
​​​Less Than Twelve Months​​Over Twelve Months​​
​​​
Gross
Unrealized
Losses
​​
Fair
Value
​​
Gross
Unrealized
Losses
​​
Fair
Value
​​
December 31, 2020​​​​​​​​​​​​​​​​​​​​​​​​​​
Corporate​​​$(19)​​​​$9,293​​​​$—​​​​$—​​​
US Agencies​​​​—​​​​​—​​​​​—​​​​​—​​​
US Agencies – MBS​​​​(2)​​​​​83​​​​​(4)​​​​​123​​​​​
Obligations of states and political subdivisions​​​​—​​​​​—​​​​​—​​​​​—​​​
Total securities available for sale​​​$(21)​​​​$9,376​​​​$(4)​​​​$123​​​
December 31, 2019​​​​​​​​​​​​​​​​​​​​​​​​​​
Corporate​​​​(1)​​​​​2,502​​​​​—​​​​​—​​​
US Agencies​​​​—​​​​​—​​​​​(1)​​​​​500​​​
US Agencies – MBS​​​​(9)​​​​​6,966​​​​​(20)​​​​​1,233​​​
Obligations of states and political subdivisions​​​​—​​​​​—​​​​​—​​​​​—​​​
Total securities available for sale​​​$(10)​​​​$9,468​​​​$(21)​​​​$1,733​​​
There were 10 securities in an unrealized loss position in 2020 and 26 in 2019. The gross unrealized losses in the current portfolio are considered temporary in nature and related to interest rate fluctuations. The Corporation has both the ability and intent to hold the investment securities until their respective maturities and therefore does not anticipate the realization of the temporary losses.
Following is a summary of the proceeds from sales and calls of securities available for sale, as well as gross gains and losses for the years ended December 31 (dollars in thousands):
​​​2020​​2019​
Proceeds from sales and calls​​​$9,560​​​​$5,805​​
Gross gains on sales and calls​​​​2​​​​​208​​
The carrying value and estimated fair value of securities available for sale at December 31, 2020, by contractual maturity, are shown below (dollars in thousands):

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​​​
Amortized
Cost
​​
Estimated
Fair Value
​
Due in one year or less​​​$15,645​​​​$15,820​​
Due after one year through five years​​​​22,554​​​​​23,201​​
Due after five years through ten years​​​​24,965​​​​​25,261​​
Due after ten years​​​​12,813​​​​​13,274​​
Subtotal​​​​75,977​​​​​77,556​​
US Agencies — MBS​​​​33,372​​​​​34,280​​
Total​​​$109,349​​​​$111,836​​
Contractual maturities may differ from expected maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities with a market value of $22.438 million are pledged as collateral to the Federal Home Loan Bank and $3.752 million are pledged to certain customer relationships. See Note 10 for information on securities pledged to secure borrowings from the Federal Home Loan Bank.
The following is information pertaining to securities with gross unrealized losses at December 31, 2020 and 2019 (dollars in thousands):
​​​Less Than Twelve Months​​Over Twelve Months​​Total​​​​
December 31, 2020​​
Number
of
Securities
​​
Fair
Value
​​
Gross
Unrealized
Loss
​​
Number
of
Securities
​​
Fair
Value
​​
Gross
Unrealized
Loss
​​
Number
of
Securities
​​
Fair
Value
​​
Gross
Unrealized
Loss
​​​​
Corporate​​​​4​​​​$9,293​​​​$(19)​​​​​—​​​​$—​​​​$—​​​​​4​​​​$9,293​​​​$(19)​​​​​
US Agencies​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​​​​
US Agencies – MBS​​​​4​​​​​83​​​​​(2)​​​​​2​​​​​123​​​​​(4)​​​​​6​​​​​206​​​​​(6)​​​​​​​​​​​
Obligations of states and political subdivisions​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​​​​
Total​​​​8​​​​$9,376​​​​$(21)​​​​​2​​​​$123​​​​$(4)​​​​​10​​​​$9,499​​​​$(25)​​​​​
​​​Less Than Twelve Months​​Over Twelve Months​​Total​
December 31, 2019​​
Number
of
Securities
​​
Fair
Value
​​
Gross
Unrealized
Loss
​​
Number
of
Securities
​​
Gross
Fair
Value
​​
Number
Unrealized
Loss
​​
Gross
of
Securities
​​
Fair
Value
​​
Unrealized
Loss
​
Corporate​​​​1​​​​$2,502​​​​$(1)​​​​​—​​​​$—​​​​$—​​​​​1​​​​$2,502​​​​$(1)​​
US Agencies​​​​—​​​​​—​​​​​—​​​​​1​​​​​500​​​​​(1)​​​​​1​​​​​500​​​​​(1)​​
US Agencies – MBS​​​​10​​​​​6,966​​​​​(9)​​​​​13​​​​​1,233​​​​​(20)​​​​​23​​​​​8,199​​​​​(29)​​
Obligations of states and
political subdivisions
​​​​—​​​​​—​​​​​—​​​​​1​​​​​115​​​​​—​​​​​1​​​​​115​​​​​—​​
Total​​​​11​​​​$9,468​​​​$(10)​​​​​15​​​​$1,848​​​​$(21)​​​​​26​​​​$11,316​​​​$(31)​​

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NOTE 4 — LOANS
The composition of loans at December 31 is as follows (dollars in thousands):
​​​
December 31,
2020
​​
December 31,
2019
​
Commercial real estate​​​$498,450​​​​$514,394​​
Commercial, financial, and agricultural​​​​273,759​​​​​211,023​​
Commercial construction​​​​47,698​​​​​40,107​​
One to four family residential real estate​​​​227,044​​​​​253,918​​
Consumer​​​​18,980​​​​​21,238​​
Consumer construction​​​​11,661​​​​​18,096​​
Total loans​​​$1,077,592​​​​$1,058,776​​
The Corporation completed the acquisition of Peninsula Financial Corporation, (“PFC”), on December 5, 2014, The First National Bank of Eagle River (“Eagle River”) on April 29, 2016, Niagara Bancorporation (“Niagara”) on August 31, 2016, First Federal of Northern Michigan Bancorp, Inc. (“FFNM”) on May 18, 2018, and Lincoln Community Bank (“Lincoln”) on October 1, 2018. The PFC acquired impaired loans totaled $13.290 million, the Eagle River acquired impaired loans totaled $3.401 million, and the Niagara acquired impaired loans totaled $2.105 million. The FFNM impaired loans totaled $5.440 million and the Lincoln impaired loans totaled $1.901 million. In 2020, the Corporation had positive resolution of acquired nonperforming loans, which resulted in the recognition of accretable interest of approximately $1.006 million. In 2019, The Corporation had positive resolution of acquired nonperforming loans, which resulted in the recognition of approximately $.404 million of accretable interest.
The table below details the outstanding balances of the PFC acquired portfolio and the acquisition fair value adjustments at acquisition date (dollars in thousands):
​​​
Acquired
Impaired
​​
Acquired
Non-impaired
​​
Acquired
Total
​
​​​​​
Loans acquired — contractual payments​​​$13,290​​​​$53,849​​​​$67,139​​
Nonaccretable difference​​​​(2,234)​​​​​—​​​​​(2,234)​​
Expected cash flows​​​​11,056​​​​​53,849​​​​​64,905​​
Accretable yield​​​​(744)​​​​​(2,100)​​​​​(2,844)​​
Carrying balance at acquisition date​​​$10,312​​​​$51,749​​​​$62,061​​
Loans acquired with deteriorated credit quality in the PFC transaction carried a balance of $.793 million at December 31, 2020 and $1.718 million at December 31, 2019.
The table below details the outstanding balances of the Eagle River acquired portfolio and the acquisition fair value adjustments at acquisition date (dollars in thousands):
​​​
Acquired
Impaired
​​
Acquired
Non-impaired
​​
Acquired
Total
​
Loans acquired — contractual payments​​​$3,401​​​​$80,737​​​​$84,138​​
Nonaccretable difference​​​​(1,172)​​​​​—​​​​​(1,172)​​
Expected cash flows​​​​2,229​​​​​80,737​​​​​82,966​​
Accretable yield​​​​(391)​​​​​(1,700)​​​​​(2,091)​​
Carrying balance at acquisition date​​​$1,838​​​​$79,037​​​​$80,875​​
Loans acquired with deteriorated credit quality in the Eagle River transaction carried a balance of $1.273 million at December 31, 2020 and $1.716 million at December 31, 2019.

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The table below details the outstanding balances of the Niagara acquired portfolio and the acquisition fair value adjustments at acquisition date (dollars in thousands):
​​​
Acquired
Impaired
​​
Acquired
Non-impaired
​​
Acquired
Total
​
Loans acquired — contractual payments​​​$2,105​​​​$30,555​​​​$32,660​​
Nonaccretable difference​​​​(265)​​​​​—​​​​​(265)​​
Expected cash flows​​​​1,840​​​​​30,555​​​​​32,395​​
Accretable yield​​​​(88)​​​​​(600)​​​​​(688)​​
Carrying balance at acquisition date​​​$1,752​​​​$29,955​​​​$31,707​​
Loans acquired with deteriorated credit quality in the Niagara transaction carried a balance of $.048 million at December 31, 2020 and $.075 million at December 31, 2019.
The table below details the outstanding balances of the FFNM acquired portfolio and the acquisition fair value adjustments at acquisition date (dollars in thousands):
​​​
Acquired
Impaired
​​
Acquired
Non-impaired
​​
Acquired
Total
​
Loans acquired — contractual payments​​​$5,440​​​​$187,302​​​​$192,742​​
Nonaccretable difference​​​​(2,100)​​​​​—​​​​​(2,100)​​
Expected cash flows​​​​3,340​​​​​187,302​​​​​190,642​​
Accretable yield​​​​(700)​​​​​(4,498)​​​​​(5,198)​​
Carrying balance at acquisition date​​​$2,640​​​​$182,804​​​​$185,444​​
Loans acquired with deteriorated credit quality in the FFNM transaction carried a balance of $3.369 million at December 31, 2020 and $5.119 million at December 31, 2019.
The table below details the outstanding balances of the Lincoln acquired portfolio and the acquisition fair value adjustments at acquisition date (dollars in thousands):
​​​
Acquired
Impaired
​​
Acquired
Non-impaired
​​
Acquired
Total
​
Loans acquired — contractual payments​​​$1,901​​​​$37,700​​​​$39,601​​
Nonaccretable difference​​​​(421)​​​​​—​​​​​(421)​​
Expected cash flows​​​​1,480​​​​​37,700​​​​​39,180​​
Accretable yield​​​​(140)​​​​​(493)​​​​​(633)​​
Carrying balance at acquisition date​​​$1,340​​​​$37,207​​​​$38,547​​
Loans acquired with deteriorated credit quality in the Lincoln transaction carried a balance of $.548 million at December 31, 2020 and $.897 million at December 31, 2019.
The table below presents a rollforward of the accretable yield on acquired loans for year ended December 31, 2020 (dollars in thousands):
​​​PFC​​Eagle River​
​​​
Acquired
Impaired
​​
Acquired
Non-impaired
​​
Acquired
Total
​​
Acquired
Impaired
​​
Acquired
Non-impaired
​​
Acquired
Total
​
Balance, December 31, 2019​​​$105​​​​$—​​​​$105​​​​$209​​​​$—​​​​$209​​
Accretion​​​​(207)​​​​​—​​​​​(207)​​​​​(104)​​​​​—​​​​​(104)​​
Reclassification from nonaccretable difference​​​​155​​​​​—​​​​​155​​​​​78​​​​​—​​​​​78​​
Balance, December 31, 2020​​​$53​​​​$—​​​​$53​​​​$183​​​​$—​​​​$183​​

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​​​Niagara​​First Federal Northern Michigan​
​​​
Acquired
Impaired
​​
Acquired
Non-impaired
​​
Acquired
Total
​​
Acquired
Impaired
​​
Acquired
Non-impaired
​​
Acquired
Total
​
Balance, December 31, 2019​​​$19​​​​$—​​​​$19​​​​$518​​​​$1,953​​​​$2,471​​
Accretion​​​​(27)​​​​​—​​​​​(27)​​​​​(903)​​​​​(1,085)​​​​​(1,988)​​
Reclassification from nonaccretable difference​​​​20​​​​​—​​​​​20​​​​​677​​​​​1​​​​​678​​
Balance, December 31, 2020​​​$12​​​​$ —​​​​$12​​​​$292​​​​$869​​​​$1,161​​
​​​Lincoln Community Bank​​Total​
​​​
Acquired
Impaired
​​
Acquired
Non-impaired
​​
Acquired
Total
​​
Acquired
Impaired
​​
Acquired
Non-impaired
​​
Acquired
Total
​
Balance, December 31, 2019​​​$108​​​​$264​​​​$372​​​​$959​​​​$2,217​​​​$3,176​​
Accretion​​​​(95)​​​​​(134)​​​​​(229)​​​​​(1,336)​​​​​(1,219)​​​​​(2,555)​​
Reclassification from nonaccretable difference​​​​72​​​​​—​​​​​72​​​​​1,002​​​​​1​​​​​1,003​​
Balance, December 31, 2020​​​$85​​​​$130​​​​$215​​​​$625​​​​$999​​​​$1,624​​
The table below presents a rollforward of the accretable yield on acquired loans for year ended December 31, 2019 (dollars in thousands):
​​​PFC​​Eagle River​
​​​
Acquired
Impaired
​​
Acquired
Non-impaired
​​
Acquired
Total
​​
Acquired
Impaired
​​
Acquired
Non-impaired
​​
Acquired
Total
​
Balance, December 31, 2018​​​$128​​​​$—​​​​$128​​​​$213​​​​$16​​​​$229​​
Accretion​​​​(90)​​​​​—​​​​​(90)(17)​​​​​(16)​​​​​(33)​​​​​​​​
Reclassification from nonaccretable difference​​​​67​​​​​—​​​​​67​​​​​13​​​​​—​​​​​13​​
Balance, December 31, 2019​​​$105​​​​$ —​​​​$105​​​​$209​​​​$—​​​​$209​​
​​​Niagara​​First Federal Northern Michigan​
​​​
Acquired
Impaired
​​
Acquired
Non-impaired
​​
Acquired
Total
​​
Acquired
Impaired
​​
Acquired
Non-impaired
​​
Acquired
Total
​
Balance, December 31, 2018​​​$26​​​​$69​​​​$95​​​​$571​​​​$3,446​​​​$4,017​​
Accretion​​​​(30)​​​​​(69)​​​​​(99)​​​​​(214)​​​​​(1,493)​​​​​(1,707)​​
Reclassification from nonaccretable difference​​​​23​​​​​—​​​​​23​​​​​161​​​​​—​​​​​161​​
Balance, December 31, 2019​​​$19​​​​$—​​​​$19​​​​$518​​​​$1,953​​​​$2,471​​
​​​Lincoln Community Bank​​Total​
​​​
Acquired
Impaired
​​
Acquired
Non-impaired
​​
Acquired
Total
​​
Acquired
Impaired
​​
Acquired
Non-impaired
​​
Acquired
Total
​
Balance, December 31, 2018​​​$140​​​​$442​​​​$582​​​​$1,078​​​​$3,973​​​​$5,051​​
Accretion​​​​(128)​​​​​(178)​​​​​(306)​​​​​(479)​​​​​(1,756)​​​​​(2,235)​​
Reclassification from nonaccretable difference​​​​96​​​​​—​​​​​96​​​​​360​​​​​—​​​​​360​​
Balance, December 31, 2019​​​$108​​​​$264​​​​$372​​​​$959​​​​$2,217​​​​$3,176​​
A breakdown of the allowance for loan losses and recorded balances in loans at December 31, 2020 is as follows (dollars in thousands):

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​​​
Commercial
real estate
​​
Commercial,
financial and
agricultural
​​
Commercial
construction
​​
One to four
family
residential
real estate
​​
Consumer
construction
​​Consumer​​Unallocated​​Total​​
Allowance for loan loss reserve:​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Beginning balance ALLR​​​$1,189​​​​$1,197​​​​$71​​​​$148​​​​$11​​​​$13​​​​$2,679​​​​$5,308​​​
Charge-offs​​​​(17)​​​​​(500)​​​​​(8)​​​​​(117)​​​​​—​​​​​(117)​​​​​—​​​​​(759)​​​
Recoveries​​​​105​​​​​1​���​​​81​​​​​19​​​​​—​​​​​61​​​​​—​​​​​267​​​
Provision​​​​1,706​​​​​1,036​​​​​65​​​​​555​​​​​(6)​​​​​51​​​​​(2,407)​​​​​1,000​​​
Ending balance ALLR​​​$2,983​​​​$1,734​​​​$209​​​​$605​​​​$5​​​​$8​​​​$272​​​​$5,816​​​
Loans:​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Ending balance​​​$498,450​​​​$273,759​​​​$47,698​​​​$227,044​​​​$11,661​​​​$18,980​​​​$—​​​​$1,077,592​​​
Ending balance ALLR​​​​(2,983)​​​​​(1,734)​​​​​(209)​​​​​(605)​​​​​(5)​​​​​(8)​​​​​(272)​​​​​(5,816)​​​​​
Net loans​​​$495,467​​​​$272,025​​​​$47,489​​​​$226,439​​​​$11,656​​​​$18,972​​​​$(272)​​​​$1,071,776​​​
Ending balance ALLR:​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Individually evaluated​​​$476​​​​$703​​​​$—​​​​$—​​​​$—​​​​$—​​​​$—​​​​$1,179​​​
Collectively evaluated​​​​2,507​​​​​1,031​​​​​209​​​​​605​​​​​5​​​​​8​​​​​272​​​​​4,637​​​
Total​​​$2,983​​​​$1,734​​​​$209​​​​$605​​​​$5​​​​$8​​​​$272​​​​$5,816​​​
Ending balance Loans:​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Individually evaluated​​​$2,396​​​​$3,633​​​​$362​​​​$—​​​​$—​​​​$—​​​​$—​​​​$6,391​​​
Collectively evaluated​​​​494,890​​​​​269,891​​​​​47,161​​​​​226,175​​​​​11,661​​​​​18,964​​​​​—​​​​​1,068,742​​​
Acquired with deteriorated credit quality​​​​1,164​​​​​235​​​​​175​​​​​869​​​​​—​​​​​16​​​​​—​​​​​2,459​​​
Total​​​$498,450​​​​$273,759​​​​$47,698​​​​$227,044​​​​$11,661​​​​$18,980​​​​$—​​​​$1,077,592​​​
Impaired loans, by definition, are individually evaluated.
A breakdown of the allowance for loan losses and recorded balances in loans at December 31, 2019 is as follows (dollars in thousands):
​​​
Commercial
real estate
​​
Commercial,
financial and
agricultural
​​
Commercial
construction
​​
One to four
family
residential
real estate
​​
Consumer
construction
​​Consumer​​Unallocated​​Total​
Allowance for loan loss reserve:​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Beginning balance ALLR​​​$1,682​​​​$648​​​​$101​​​​$199​​​​$6​​​​$8​​​​$2,539​​​​$5,183​​
Charge-offs​​​​(27)​​​​​(103)​​​​​—​​​​​(152)​​​​​—​​​​​(228)​​​​​—​​​​​(510)​​
Recoveries​​​​159​​​​​4​​​​​2​​​​​49​​​​​—​​​​​36​​​​​—​​​​​250​​
Provision​​​​(625)​​​​​648​​​​​(32)​​​​​52​​​​​5​​​​​197​​​​​140​​​​​385​​
Ending balance ALLR​​​$1,189​​​​$1,197​​​​$71​​​​$148​​​​$11​​​​$13​​​​$2,679​​​​$5,308​​
Loans:​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Ending balance​​​$514,394​​​​$211,023​​​​$40,107​​​​$253,918​​​​$18,096​​​​$21,238​​​​$—​​​​$1,058,776​​
Ending balance ALLR​​​​(1,189)​​​​​(1,197)​​​​​(71)​​​​​(148)​​​​​(11)​​​​​(13)​​​​​(2,679)​​​​​(5,308)​​
Net loans​​​$513,205​​​​$209,826​​​​$40,036​​​​$253,770​​​​$18,085​​​​$21,225​​​​$(2,679)​​​​$1,053,468​​
Ending balance ALLR:​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Individually evaluated​​​$497​​​​$770​​​​$—​​​​$—​​​​$—​​​​$—​​​​$—​​​​$1,267​​
Collectively evaluated​​​​692​​​​​427​​​​​71​​​​​148​​​​​11​​​​​13​​​​​2,679​​​​​4,041​​
Total​​​$1,189​​​​$1,197​​​​$71​​​​$148​​​​$11​​​​$13​​​​$2,679​​​​$5,308​​
Ending balance Loans:​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Individually evaluated​​​$2,374​​​​$1,475​​​​$—​​​​$—​​​​$—​​​​$—​​​​$—​​​​$3,849​​
Collectively evaluated​​​​507,702​​​​​207,194​​​​​39,734​​​​​251,998​​​​​18,096​​​​​21,229​​​​​—​​​​​1,045,953​​
Acquired with deteriorated credit quality​​​​4,318​​​​​2,354​​​​​373​​​​​1,920​​​​​—​​​​​9​​​​​—​​​​​8,974​​
Total​​​$514,394​​​​$211,023​​​​$40,107​​​​$253,918​​​​$18,096​​​​$21,238​​​​$—​​​​$1,058,776​​

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Impaired loans, by definition, are individually evaluated.
As part of the management of the loan portfolio, risk ratings are assigned to all commercial loans. Through the loan review process, ratings are modified as believed to be appropriate to reflect changes in the credit. Our ability to manage credit risk depends in large part on our ability to properly identify and manage problem loans.
To do so, we operate a credit risk rating system under which our credit management personnel assign a credit risk rating to each loan at the time of origination and review loans on a regular basis to determine each loan’s credit risk rating on a scale of 1 through 8, with higher scores indicating higher risk. The credit risk rating structure used is shown below.
In the context of the credit risk rating structure, the term Classified is defined as a problem loan which may or may not be in a nonaccrual status, dependent upon current payment status and collectability.
Strong (1)
Borrower is not vulnerable to sudden economic or technological changes. They have “strong” balance sheets and are within an industry that is very typical for our markets or type of lending culture. Borrowers also have “strong” financial and cash flow performance and excellent collateral (low loan to value or readily available to liquidate collateral) in conjunction with an impeccable repayment history.
Good (2)
Borrower shows limited vulnerability to sudden economic change. These borrowers have “above average” financial and cash flow performance and a very good repayment history. The balance sheet of the company is also very good as compared to peer and the company is in an industry that is familiar to our markets or our type of lending. The collateral securing the deal is also very good in terms of its type, loan to value, etc.
Average (3)
Borrower is typically a well-seasoned business, however may be susceptible to unfavorable changes in the economy, and could be somewhat affected by seasonal factors. The borrowers within this category exhibit financial and cash flow performance that appear “average” to “slightly above average” when compared to peer standards and they show an adequate payment history. Collateral securing this type of credit is good, exhibiting above average loan to values, etc.
Acceptable (4)
A borrower within this category exhibits financial and cash flow performance that appear adequate and satisfactory when compared to peer standards and they show a satisfactory payment history. The collateral securing the request is within supervisory limits and overall is acceptable. Borrowers rated acceptable could also be newer businesses that are typically susceptible to unfavorable changes in the economy, and more than likely could be affected by seasonal factors.
Acceptable Watch (44)
The borrower may have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution’s credit position at some future date. Acceptable watch assets are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification. Examples of this type of credit include a start-up company fully based on projections, a documentation issue that needs to be corrected or a general market condition that the borrower is working through to get corrected.
Substandard (6)
Substandard loans are classified assets exhibiting a number of well-defined weaknesses that jeopardize normal repayment. The assets are no longer adequately protected due to declining net worth, lack of earning

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capacity, or insufficient collateral offering the distinct possibility of the loss of a portion of the loan principal. Loans classified as substandard clearly represent troubled and deteriorating credit situations requiring constant supervision.
Doubtful (7)
Loans in this category exhibit the same, if not more pronounced weaknesses used to describe the substandard credit. Loans are frozen with collection improbable. Such loans are not yet rated as Charge-off because certain actions may yet occur which would salvage the loan.
Charge-off/Loss (8)
Loans in this category are largely uncollectible and should be charged against the loan loss reserve immediately.
General Reserves:
For loans with a credit risk rating of 44 or better and any loans with a risk rating of 6 or 7 not considered impaired, reserves are established based on the type of loan collateral, if any, and the assigned credit risk rating. Determination of the allowance is inherently subjective as it requires significant estimates, including the amounts and timing of expected future cash flows on impaired loans, estimated losses on pools of homogenous loans based on historical loss experience, and consideration of current environmental factors and economic trends, all of which may be susceptible to significant change.
Using a historical average loss by loan type as a base, each loan graded as higher risk is assigned a specific percentage. The residential real estate and consumer loan portfolios are assigned a loss percentage as a homogenous group. If, however, on an individual loan the projected loss based on collateral value and payment histories are in excess of the computed allowance, the allocation is increased for the higher anticipated loss. These computations provide the basis for the allowance for loan losses as recorded by the Corporation.
Commercial construction loans in the amount of $10.939 million and $3.525 million at December 31, 2020, and 2019, respectively did not receive a specific risk rating. These amounts represent loans made for land development and unimproved land purchases.
Below is a breakdown of loans by risk category as of December 31, 2020 (dollars in thousands):
​​​
(1)
Strong
​​
(2)
Good
​​
(3)
Average
​​
(4)
Acceptable
​​
(44)
Acceptable Watch
​​
(6)
Substandard
​​
(7)
Doubtful
​​
Rating
Unassigned
​​Total​
Commercial real estate​​​$7,425​​​​$10,521​​​​$223,875​​​​$249,159​​​​$3,352​​​​$4,118​​​​$—​​​​$—​​​​$498,450​​
Commercial, financial and agricultural​​​​116,107​​​​​6,760​​​​​51,150​​​​​94,743​​​​​656​​​​​4,343​​​​​—​​​​​—​​​​​273,759​​
Commercial construction​​​​—​​​​​40​​​​​19,063​​​​​16,671​​​​​600​​​​​385​​​​​—​​​​​10,939​​​​​47,698​​
One-to-four family residential
real estate
​​​​—​​​​​3,139​​​​​5,614​​​​​18,864​​​​​369​​​​​1,814​​​​​—​​​​​197,244​​​​​227,044​​
Consumer construction​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​​​​11,661​​​​​11,661​​
Consumer​​​​—​​​​​79​​​​​128​​​​​1,141​​​​​—​​​​​67​​​​​—​​​​​17,565​​​​​18,980​​
Total loans​​​$123,532​​​​$20,539​​​​$299,830​​​​$380,578​​​​$4,977​​​​$10,727​​​​$—​​​​$237,409​​​​$1,077,592​​
At December 31, 2020, $105.492 million of Paycheck Protection Program (“PPP”) loans are included with a risk rating of “1” in the Commercial, financial and agricultural category.
Below is a breakdown of loans by risk category as of December 31, 2019 (dollars in thousands)
​​​
(1)
Strong
​​
(2)
Good
​​
(3)
Average
​​
(4)
Acceptable
​​
(44)
Acceptable Watch
​​
(6)
Substandard
​​
(7)
Doubtful
​​
Rating
Unassigned
​​Total​
Commercial real estate​​​$9,979​​​​$17,516​​​​$228,962​​​​$248,177​​​​$4,468​​​​$5,292​​​​$—​​​​$—​​​​$514,394​​

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​​​
(1)
Strong
​​
(2)
Good
​​
(3)
Average
​​
(4)
Acceptable
​​
(44)
Acceptable Watch
​​
(6)
Substandard
​​
(7)
Doubtful
​​
Rating
Unassigned
​​Total​
Commercial, financial and agricultural​​​​15,126​​​​​4,510​​​​​70,748​​​​​115,229​​​​​930​​​​​4,480​​​​​—​​​​​—​​​​​211,023​​
Commercial construction​​​​—​​​​​292​​​​​6,390​​​​​28,893​​​​​400​​​​​607​​​​​—​​​​​3,525​​​​​40,107​​
One-to-four family residential
real estate
​​​​40​​​​​2,145​​​​​4,937​​​​​15,168​​​​​634​​​​​2,632​​​​​—​​​​​228,362​​​​​253,918​​
Consumer construction​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​​​​18,096​​​​​18,096​​
Consumer​​​​—​​​​​158​​​​​250​​​​​640​​​​​—​​​​​41​​​​​—​​​​​20,149​​​​​21,238​​
Total loans​​​$25,145​​​​$24,621​​​​$311,287​​​​$408,107​​​​$6,432​​​​$13,052​​​​$—​​​​$270,132​​​​$1,058,776​​
​
Impaired Loans
Impaired loans are those which are contractually past due 90 days or more as to interest or principal payments, on nonaccrual status, or loans, the terms of which have been renegotiated to provide a reduction or deferral on interest or principal.
Loans are considered impaired when, based on current information and events, it is probable the Corporation will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreement, including scheduled principal and interest payments. Impairment is evaluated in total for smaller-balance loans of a similar nature and on an individual loans basis for other loans. If a loan is impaired, a specific valuation allowance is allocated, if necessary, so that the loan is reported net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Interest payments on impaired loans are typically applied to principal unless collectability of the principal amount is reasonably assured, in which case interest is recognized on a cash basis. Impaired loans, or portions thereof, are charged off when deemed uncollectible.
The following is a summary of impaired loans and their effect on interest income (dollars in thousands):
​​​
Impaired Loans
with No Related
Allowance
​​
Impaired Loans
with Related
Allowance
​​
Total
Impaired
Loans
​​
Unpaid
Principal
Balance
​​
Related
Allowance for
Loan Losses
​
December 31, 2020​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Commercial real estate​​​$1,251​​​​$2,309​​​​$3,560​​​​$5,786​​​​$476​​
Commercial, financial and agricultural​​​​2,423​​​​​1,445​​​​​3,868​​​​​3,946​​​​​679​​
Commercial construction​​​​537​​​​​—​​​​​537​​​​​678​​​​​—​​
One to four family residential real estate​​​​869​​​​​—​​​​​869​​​​​1,993​​​​​—​​
Consumer construction​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​
Consumer​​​​16​​​​​—​​​​​16​​​​​19​​​​​—​​
Total​​​$5,096​​​​$3,754​​​​$8,850​​​​$12,422​​​​$1,155​​
December 31, 2019​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Commercial real estate​​​$4,318​​​​$2,374​​​​$6,692​​​​$7,937​​​​$497​​
Commercial, financial and agricultural​​​​2,354​​​​​1,475​​​​​3,829​​​​​4,892​​​​​770​​
Commercial construction​​​​373​​​​​—​​​​​373​​​​​386​​​​​—​​
One to four family residential real estate​​​​1,920​​​​​—​​​​​1,920​​​​​2,881​​​​​—​​
Consumer construction​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​
Consumer​​​​9​​​​​—​​​​​9​​​​​33​​​​​—​​
Total​​​$8,974​​​​$3,849​​​​$12,823​​​​$16,129​​​​$1,267​​

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​​​Individually Evaluated Impaired Loans​
​​​December 31, 2020​​December 31, 2019​
​​​
Average
Balance for
the Period
​​
Interest Income
Recognized for
the Period
​​
Average
Balance for
the Period
​​
Interest Income
Recognized for
the Period
​
Commercial real estate​​​$6,860​​​​$270​​​​$8,374​​​​$301​​
Commercial, financial and agricultural​​​​1,204​​​​​13​​​​​1,144​​​​​2​​
Commercial construction​​​​541​​​​​27​​​​​396​​​​​—​​
One to four family residential real estate​​​​3,064​​​​​135​​​​​3,508​​​​​219​​
Consumer construction​​​​—​​​​​—​​​​​—​​​​​—​​
Consumer​​​​37​​​​​1​​​​​44​​​​​2​​
Total​​​$11,706​​​​$446​​​​$13,466​​​​$524​​
A summary of past due loans at December 31, is as follows (dollars in thousands):
​​​December 31,​​December 31,​
​​​2020​​2019​
​​​
30-89 days
Past Due
(accruing)
​​
90+ days
Past Due
(accruing)
​​Nonaccrual​​Total​​
30-89 days
Past Due
(accruing)
​​
90+ days
Past Due
(accruing)
​​Nonaccrual​​Total​
Commercial real estate​​​$24​​​​$—​​​​$1,481​​​​$1,505​​​​$1,055​​​​$—​​​​$671​​​​$1,726​​
Commercial, financial and agricultural​​​​42​​​​​—​​​​​478​​​​​520​​​​​829​​​​​—​​​​​527​​​​​1,356​​
Commercial construction​​​​—​​​​​—​​​​​79​​​​​79​​​​​59​​​​​—​​​​​105​​​​​164​​
One to four family residential real estate​​​​1,925​​​​​—​​​​​3,371​​​​​5,296​​​​​4,357​​​​​11​​​​​3,850​​​​​8,218​​
Consumer construction​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​​​​—​​
Consumer​​​​78​​​​​—​​​​​49​​​​​127​​​​​83​​​​​—​​​​​19​​​​​102​​
Total past due loans​​​$2,069​​​​$—​​​​$5,458​​​​$7,527​​​​$6,383​​​​$11​​​​$5,172​​​​$11,566​​
Troubled Debt Restructuring
Troubled debt restructurings (“TDR”) are determined on a loan-by-loan basis. Generally, restructurings are related to interest rate reductions, loan term extensions and short term payment forbearance as means to maximize collectability of troubled credits. If a portion of the TDR loan is uncollectible (including forgiveness of principal), the uncollectible amount will be charged off against the allowance at the time of the restructuring. In general, a borrower must make at least six consecutive timely payments before the Corporation would consider a return of a restructured loan to accruing status in accordance with FDIC guidelines regarding restoration of credits to accrual status. More recent regulatory guidelines and accounting standards indicate that loan modifications or forbearances related to the COVID-19 pandemic will generally not be considered TDRs. COVID-19 loan modifications resided at a nominal $2.4 million, or .25% of total loans with no commercial loans remaining in total payment deferral at December 31, 2020. This is compared to peak levels of $201 million in the second quarter of 2020. Subsequent to the end of 2020, the bank has modified an additional $16 million of commercial loans under the COVID framework. All modifications still require interest payments and there were no changes to interest rate. The modification period of the loans is expected to be completed before the end of the first quarter of 2021.
The Corporation has, in accordance with generally accepted accounting principles and per recently enacted accounting standard updates, evaluated all loan modifications to determine the fair value impact of the underlying asset. The carrying amount of the loan is compared to the expected payments to be received, discounted at the loan’s original rate, or for collateral dependent loans, to the fair value of the collateral.
There were four new troubled debt restructuring that occurred during the year ended December 31, 2020 with a balance of $.535 million, and four new troubled debt restructurings for the year ended

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December 31, 2019 with a balance of $1.952 million. There are no existing troubled debt restructurings that have defaulted as of December 31, 2020 and 2019. The four TDRs are not COVID-19 related.
Insider Loans
The Bank, in the ordinary course of business, grants loans to the Corporation’s executive officers and directors, including their families and firms in which they are principal owners. Activity in such loans is summarized below (dollars in thousands):
​​​
Year Ended
December 31,
2020
​​
Year Ended
December 31,
2019
​
Loans outstanding, January 1​​​$12,196​​​​$9,817​​
New loans​​​​500​​​​​1,872​​
Net activity on revolving lines of credit​​​​
(764)
​​​​​1,200​​
Change in status of insiders​​​​—​​​​​(289)​​
Repayment​​​​
(154)
​​​​​(404)​​
Loans outstanding at end of period​​​$11,778​​​​$12,196​​
There were no loans to related-parties classified substandard as of December 31, 2020 and 2019. In addition to the outstanding balances above, there were unfunded commitments of $.500 million to related parties at December 31, 2020.
NOTE 5 — PREMISES AND EQUIPMENT
Details of premises and equipment at December 31 are as follows (dollars in thousands):
​​​2020​​2019​
Land​​​$4,286​​​​$4,349​​
Buildings and improvements​​​​30,637​​​​​26,711​​
Furniture, fixtures, and equipment​​​​17,230​​​​​15,483​​
Construction in progress​​​​186​​​​​1,555​​
Total cost basis​​​​52,339​​​​​48,098​​
Less — accumulated depreciation​​​​26,821​​​​​24,490​​
Net book value​​​$25,518​​​​$23,608​​
Depreciation of premises and equipment charged to operating expenses amounted to $2.798 million in 2020 and $2.684 million in 2019.
NOTE 6 — OTHER REAL ESTATE HELD FOR SALE
An analysis of other real estate held for sale for the years ended December 31 is as follows (dollars in thousands):
​​​2020​​2019​
Balance, January 1​​​$2,194​​​​$3,119​​
Other real estate transferred from loans due to foreclosure​​​​874​​​​​1,629​​
Proceeds from other real estate sold​​​​
(1,338)
​​​​​(1,329)​​
Transfer to premise and equipment​​​​—​​​​​(1,013)​​
Writedowns of other real estate held for sale​​​​
(65)
​​​​​(347)​​
Gain on sale of other real estate held for sale​​​​87​​​​​135​​
Total other real estate held for sale​​​$1,752​​​​$2,194​​

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Foreclosed residential real estate property of $.453 million is included in other real estate as of December 31, 2020. The recorded investment in consumer mortgage loans secured by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdictions was $.151 million as of December 31, 2020.
NOTE 7 — DEPOSITS
The distribution of deposits at December 31 is as follows (dollars in thousands):
​​​2020​​2019​
Noninterest bearing deposits​​​$414,804​​​​$287,611​​
NOW, money market, interest checking​​​​450,556​​​​​373,165​​
Savings​​​​130,755​​​​​109,548​​
CDs <$250,000​​​​202,266​​​​​233,956​​
CDs >$250,000​​​​15,224​​​​​12,775​​
Brokered​​​​45,171​​​​​58,622​​
Total deposits​​​$1,258,776​​​​$1,075,677​​
Maturities of non-brokered time deposits outstanding at December 31, 2020 are as follows (dollars in thousands):
​2021​​​$137,497​​
​2022​​​​48,023​​
​2023​​​​14,759​​
​2024​​​​11,260​​
​2025​​​​5,251​​
​Thereafter​​​​700​​
​Total​​​$217,490​​
NOTE 8 — GOODWILL AND OTHER INTANGIBLE ASSETS
The Corporation through the acquisition of Peninsula in 2014, Eagle River and Niagara in 2016, and FFNM and Lincoln in 2018, has recorded goodwill and core deposit intangibles as presented below (dollars in thousands). During 2019, the Corporation recorded period adjustments to both FFNM and Lincoln goodwill as it concluded its business combination and purchase accounting. Adjustments for the FFNM transaction resulted in an increase in the deferred tax asset of $1.950 million, an increase to MSRs of $.500 million and a decrease in goodwill of $2.450 million. Adjustments for the Lincoln transaction resulted in a decrease in the deferred tax liability of $.163 million, and a corresponding decrease in goodwill.
​​​
Deposit Based
Intangible
December 31,
2020
Balance
​​
Amortization
Expense
for the
year ended
December 31,
2020
​​
Future Annual
Amortization
Expense
​
Peninsula​​​$473​​​​$121​​​​$121​​
Eagle River​​​​529​​​​​99​​​​​99​​
Niagara​​​​170​​​​​30​​​​​30​​
FFNM​​​​2,147​​​​​290​​​​​290​​
Lincoln​​​​1,049​​​​​135​​​​​135​​
Total​​​$4,368​​​​$675​​​​$675​​

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​​​
Deposit Based
Intangible
December 31,
2019
Balance
​​
2019
Amortization
Expense
​
Peninsula​​​$594​​​​$121​​
Eagle River​​​​629​​​​​99​​
Niagara​​​​200​​​​​30​​
FFNM​​​​2,436​​​​​299​​
Lincoln​​​​1,184​​​​​128​​
Total​​​$5,043​​​​$677​​
The deposit based intangible is reported net of accumulated amortization at $4.368 million at December 31, 2020, compared to $5.043 million at December 31, 2019. Amortization expense in 2020 is $.675 million compared to $.677 million in 2019. Amortization expense for the next five years is expected to be at $.675 million per year. The Corporation, in accordance with GAAP, evaluates goodwill annually for impairment. The Corporation has determined no impairment to goodwill exists.
NOTE 9 — SERVICING RIGHTS
Mortgage Loans
Mortgage servicing rights (“MSRs”) are recorded when loans are sold in the secondary market with servicing retained. As of December 31, 2020, the Corporation had rights to service $204.548 million of residential first mortgage loans. The valuation of MSRs is based upon the net present value of the projected revenues over the expected life of the loans being serviced, as reduced by estimated internal costs to service these loans. The key economic assumptions used in determining the fair value of the mortgage servicing rights include an annual constant prepayment speed of 19.01% and a discount rate of 7.75% for December 31, 2020, which resulted in a fair value of $1.436 million. In 2019, the fair value was $2.159 million.
The following summarizes the fair value and net present value of the mortgage servicing rights capitalized and amortized. There was no valuation allowance required (dollars in thousands):
​​​
December 31,
2020
​​
December 31,
2019
​
Balance at beginning of period​​​$1,499​​​​$1,144​​
Final purchase accounting entry for FFNM​​​​—​​​​​500​​
Additions from loans sold with servicing retained​​​​—​​​​​95​​
Amortization​​​​
(140)
​​​​​(240)​​
Balance at end of period​​​$1,359​​​​$1,499​​
Balance of loan servicing portfolio​​​$204,548​​​​$255,757​​
Mortgage servicing rights as % of portfolio​​​​
.66%
​​​​​.59%​​
Fair value of servicing rights​​​​1,436​​​​​2,159​​
Commercial Loans
The Corporation also retains the servicing on commercial loans that have been sold that were originated and underwritten under the SBA and USDA government guarantee programs, in which the guaranteed portion of the loan was sold to a third party with servicing retained. The balance of these sold loans with servicing retained at December 31, 2020 and December 31, 2019 was approximately $53 million and $41 million, respectively. The Corporation valued these servicing rights at $311,000 as of December 31, 2020 and $218,000 at December 31, 2019. This valuation was established in consideration of the discounted cash flow of expected servicing income over the life of the loans.

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NOTE 10 — BORROWINGS
Borrowings consist of the following at December 31 (dollars in thousands):
​​​
December 31,
2020
​​
December 31,
2019
​
Federal Home Loan Bank fixed rate advances​​​$63,155​​​​$64,148​​
USDA Rural Development note​​​​324​​​​​403​​
​​​​$63,479​​​​$64,551​​
The Federal Home Loan Bank borrowings bear a weighted average rate of 1.67% and mature in 2021, 2023, 2024, and 2026. They are collateralized at December 31, 2020 by the following: a collateral agreement on the Corporation’s one to four family residential real estate loans with a book value of approximately $73.005 million; mortgage related and municipal securities with an amortized cost and estimated fair value of $21.840 million and $22.438 million, respectively; and Federal Home Loan Bank stock owned by the Bank totaling $4.924 million. Prepayment of the advances is subject to the provisions and conditions of the credit policies of the Federal Home Loan Bank of Indianapolis in effect as of December 31, 2020.
The Corporation currently has one correspondent banking borrowing relationship. The relationship consists of a $15.0 million revolving line of credit, which had no outstanding balance at December 31, 2020 and December 31, 2019. The line of credit bears interest at a rate of LIBOR plus 2.00%, with a floor rate of 3.00% and a ceiling of 22%. The line of credit expires on April 30, 2022. LIBOR was 0.24% at December 31, 2020. The relationship is secured by all of the outstanding common stock of mBank.
The USDA Rural Development borrowing bears an interest rate of 1.00% and matures in August, 2024. It is collateralized by loans totaling $.324 million originated and held by the Corporation’s wholly owned subsidiary, First Rural Relending, and an assignment of a demand deposit account in the amount of $.374 million, and guaranteed by the Corporation.
Maturities and principal payments of borrowings outstanding at December 31, 2020 are as follows (dollars in thousands):
​2021​​​$35,082​​
​2022​​​​80​​
​2023​​​​236​​
​2024​​​​25,081​​
​2025​​​​—​​
​Thereafter​​​​3,000​​
​Total​​​$63,479​​
NOTE 11 — INCOME TAXES
The components of the federal income tax provision (credit) for the years ended December 31 are as follows (dollars in thousands):
​​​2020​​2019​
Current tax expense​​​$2,954​​​​$2,513​​
Deferred tax expense​​​​629​​​​​1,347​​
Provision for income taxes​​​$3,583​​​​$3,860​​
A summary of the source of differences between income taxes at the federal statutory rate and the provision (credit) for income taxes for the years ended December 31 is as follows (dollars in thousands):

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​​​2020​​2019​
Tax expense at statutory rate​​​$3,357​​​​$3,719​​
Increase (decrease) in taxes resulting from:​​​​​​​​​​​​​
Tax-exempt interest​​​​
(154)
​​​​​(110)​​
Nondeductible expenses​​​​249​​​​​251​​
Wisconsin income tax expense, net of federal impact​​​​131​​​​​—​​
Provision for income taxes, as reported​​​$3,583​​​​$3,860​​
Deferred income taxes are provided for the temporary differences between the financial reporting and tax bases of the Corporation’s assets and liabilities. The major components of net deferred tax assets at December 31 are as follows (dollars in thousands):
​​​2020​​2019​
Deferred tax assets:​​​​​​​​​​​​​
NOL carryforward​​​$1,671​​​​$2,147​​
Allowance for loan losses​​​​1,277​​​​​1,144​​
OREO​​​​157​​​​​177​​
Deferred compensation​​​​198​​​​​253​​
Pension liability​​​​139​​​​​147​​
Stock compensation​​​​159​​​​​75​​
Purchase accounting adjustments​​​​832​​​​​1,507​​
Lease liability​​​​928​​​​​980​​
Other​​​​785​​​​​442​​
Total deferred tax assets​​​​6,146​​​​​6,872​​
Deferred tax liabilities:​​​​​​​​​​​​​
Core deposit premium​​​​
(959)
​​​​​(1,108)​​
FHLB stock dividend​​​​
(73)
​​​​​(73)​​
Right of use asset​​​​
(928)
​​​​​(980)​​
Unrealized gain on securities​​​​
(522)
​​​​​(273)​​
Other​​​​
(361)
​​​​​(706)​​
Total deferred tax liabilities​​​​
(2,843)
​​​​​(3,140)​​
Net deferred tax asset​​​$3,303​​​​$3,732​​
A valuation allowance is provided against deferred tax assets when it is more likely than not that some or all of the deferred tax asset will not be realized. The Corporation, as of December 31, 2020 had a net operating loss carryforwards for tax purposes of approximately $8.0 million. The net operating loss carryforwards expire twenty years from the date they originated. These carryforwards, if not utilized, will begin to expire in the year 2023. A portion of the NOL and credit carryforwards are subject to the limitations for utilization as set forth in Section 382 of the Internal Revenue Code. The annual limitation is $2.0 million for the NOL and the equivalent value of tax credits, which is approximately $.420 million. These limitations for use were established in conjunction with the recapitalization of the Corporation in December 2004. The Corporation will continue to evaluate the future benefits from these carryforwards in order to determine if any adjustment to the deferred tax asset is warranted.
NOTE 12 — LEASES
The Corporation currently maintains four operating leases for branch locations in Birmingham, Marquette, Negaunee and Traverse City.
Future minimum payments for base rent, by year and in the aggregate, under the initial terms of the operating lease agreements, consist of the following (dollars in thousands):

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Years Ending December 31​​
Related Party
Amount
​​
Unrelated Party
Amount
​
2021​​​$477​​​​$359​​
2022​​​​486​​​​​202​​
2023​​​​496​​​​​—​​
2024​​​​506​​​​​—​​
2025​​​​516​​​​​—​​
Thereafter​​​​1,564​​​​​—​​
Subtotal​​​$4,045​​​​$561​​
Less: imputed interest​​​​
(374)
​​​​​
(7)
​​
Net lease liabilities​​​$3,671​​​​$554​​
Rent expense for all operating leases amounted to $1.062 million in amortization of the right-of-use asset and $.102 million of interest on the lease liability in 2020. In 2019, the amortization of the right-of-use asset was $1.021 million and the interest on the lease liability was $.111 million.
NOTE 13 — RETIREMENT PLAN
The Corporation has established a 401(k) profit sharing plan. Employees who have completed three months of service and attained the age of 18 are eligible to participate in the plan. Eligible employees can elect to have a portion, not to exceed 80%, of their annual compensation paid into the plan. In addition, the Corporation may make discretionary contributions into the plan. Retirement plan contributions charged to operations totaled $.469 million and $.370 million in 2020 and 2019 respectively.
NOTE 14 — DEFINED BENEFIT PENSION PLAN
The Corporation acquired the Peninsula Financial Corporation noncontributory defined benefit pension plan. Effective December 31, 2005, the plan was amended to freeze participation in the plan; therefore, no additional employees are eligible to become participants in the plan. The benefits are based on years of service and the employee’s compensation at the time of retirement. The Plan was amended effective December 31, 2010, to freeze benefit accrual for all participants. Expected contributions to the Plan in 2021 are $57,000.
The anticipated distributions over the next five years and through December 31, 2030 are detailed in the table below (dollars in thousands):
​2021​​​$133​​
​2022​​​​140​​
​2023​​​​144​​
​2024​​​​142​​
​2025​​​​157​​
​2026-2030​​​​901​​
​Total​​​$1,617​​

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The following table sets forth the plan’s funded status and amounts recognized in the Corporation’s balance sheets and the activity from date of acquisition (dollars in thousands):
​​​2020​​2019​
Change in benefit obligation:​​​​​​​​​​​​​
Benefit obligation, beginning of year​​​$3,447​​​​$2,991​​
Interest cost​​​​99​​​​​117​​
Actuarial (gain) loss​​​​220​​​​​469​​
Benefits paid​​​​
(132)
​​​​​(130)​​
Benefit obligation at end of year​​​​3,634​​​​​3,447​​
Change in plan assets:​​​​​​​​​​​​​
Fair value of plan assets, beginning of year​​​​2,259​​​​​1,987​​
Actual return on plan assets​​​​29​​​​​381​​
Employer contributions​​​​108​​​​​22​​
Benefits paid​​​​
(132)
​​​​​(131)​​
Fair value of plan assets at end of year​​​​2,264​​​​​2,259​​
Funded status, included with other liabilities​​​$
(1,370)
​​​​$(1,188)​​
Net pension costs included in the Corporation’s results of operations was immaterial.
Assumptions in the actuarial valuation were:
​​​2020​​2019​
Weighted average discount rate​​​​2.45%​​​​​2.92%​​
Rate of increase in future compensation levels​​​​N/A​​​​​N/A​​
Expected long-term rate of return on plan assets​​​​2.00%​​​​​8.00%​​
The expected long-term rate of return on plan assets reflects management’s expectations of long-term average rates of return on funds invested to provide for benefits included in the projected benefit obligation. The expected return is based on the outlook for inflation, fixed income returns and equity returns, while also considering historical returns, asset allocation and investment strategy. The discount rate assumption is based on investment yields available on AA rated long-term corporate bonds.
The primary investment objective is to maximize growth of the pension plan assets to meet the projected obligations to the beneficiaries over a long period of time, and to do so in a manner that is consistent with the Corporation’s risk tolerance. The intention of the plan sponsor is to invest the plan assets in mutual funds with the following asset allocation, which was in place at both December 31, 2020 and December 31, 2019:
​​​
Target
Allocation
​​
Actual
Allocation
​
Equity securities​​50% to 70%​​​​0%​​
Fixed income securities​​30% to 50%​​​​100%​​
NOTE 15 — DEFERRED COMPENSATION PLAN
Prior to the recapitalization in 2004, as an incentive to retain key members of management and directors, the Corporation established a deferred compensation plan, with benefits based on the number of years the individuals have served the Corporation. This plan was discontinued and no longer applies to current officers and directors. A liability was recorded on a present value basis and discounted using the rates in effect at the time the deferred compensation agreement was entered into. The liability may change depending upon changes in long-term interest rates. The liability at December 31, 2020 and 2019, for vested benefits under this plan, was $27,000 and $51,000, respectively. These benefits were originally contracted

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to be paid over a ten to fifteen-year period. The final payment is scheduled to occur in 2023. The deferred compensation plan is unfunded; however, the Bank maintains life insurance policies on the majority of the plan participants. The cash surrender value of the policies was $1.554 million and $1.498 million at December 31, 2020 and 2019, respectively.
Peninsula Financial Corporation, acquired by the Corporation in December 2014, also had a deferred compensation plan, which was similar in nature to the Corporation’s discontinued plan. The liability for this plan at December 31, 2020 and 2019, for vested benefits under this plan was $.605 million and $.757 million, respectively. The bank owned life insurance policy as of December 31, 2020 and 2019 had cash surrender values of $1.781 million and $1.773 million, respectively. This Plan was also discontinued by the Corporation and will not apply to future employees or directors of the Corporation.
First Federal of Northern Michigan, acquired in May 2018 had a deferred compensation plan, which was similar in nature to the Corporation’s discontinued plan. The liability for this plan at December 31, 2020 and December 31, 2019, for vested benefits under this plan was $.272 million and $.343 million respectively. The bank owned life insurance policy as of December 31, 2020 and December 31, 2019 had a cash surrender value of $5.441 million and $5.320 million respectively. This Plan was also discontinued by the Corporation and will not apply to future employees or directors of the Corporation.
Deferred compensation expense for the three plans was $84,000 and $99,000 for 2020 and 2019 respectively.
NOTE 16 — REGULATORY MATTERS
The Corporation is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory — and possibly additional discretionary — actions by regulators that, if undertaken, could have a direct material effect on the Corporation’s consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Corporation must meet specific capital guidelines that involve quantitative measures of the Corporation’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Corporation’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy require the Corporation to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital to risk-weighted assets and of Tier 1 capital to average assets. Management has determined that, as of December 31, 2020, the Corporation is well capitalized.
The tables below do not include the 2.5% capital conservation buffer requirement. A bank with a capital conservation buffer greater than 2.5% of risk-weighted assets would not be restricted by payout limitations. However, if the 2.5% threshold is not met, the Bank would be subject to increasing limitations on capital distributions and discretionary bonus payments to executive officers as the capital conservation buffer approaches zero. The Corporation’s and the Bank’s actual capital and ratios compared to generally applicable regulatory requirements as of December 31, 2020 are as follows (dollars in thousands):

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​​​Actual​​​​​​​​Adequacy Purposes​​​​​​​​Well-Capitalized​
​​​Amount​​Ratio​​​​​​​​Amount​​​​​​​​Ratio​​​​​​​​Amount​​Ratio​
Total capital to risk weighted assets:​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Consolidated​​​$145,054​​​​​14.8%​​​​​≥​​​​$78,577​​​​​≥​​​​​8.0%​​​​​≥​​​​​N/A​​​​​N/A​​
mBank​​​$139,844​​​​​14.2%​​​​​≥​​​​$78,530​​​​​​​​​​​8.0%​​​​​≥​​​​$98,163​​​​​10.0%​​
Tier 1 capital to risk weighted assets:​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Consolidated​​​$139,238​​​​​14.2%​​​​​≥​​​​$58,933​​​​​≥​​​​​6.0%​​​​​≥​​​​​N/A​​​​​N/A​​
mBank​​​$134,069​​​​​13.7%​​​​​≥​​​​$58,898​​​​​≥​​​​​6.0%​​​​​≥​​​​$78,530​​​​​8.0%​​
Common equity Tier 1 capital to risk weighted assets​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Consolidated​​​$139,238​​​​​14.2%​​​​​≥​​​​$44,199​​​​​≥​​​​​4.5%​​​​​≥​​​​​N/A​​​​​N/A​​
mBank​​​$134,069​​​​​13.7%​​​​​≥​​​​$44,173​​​​​≥​​​​​4.5%​​​​​≥​​​​$63,806​​​​​6.5%​​
Tier 1 capital to average assets:​​​​​​​​​​​​​​​​​​​​���​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Consolidated​​​$139,238​​​​​9.4%​​​​​≥​​​​$59,048​​​​​≥​​​​​4.0%​​​​​≥​​​​​N/A​​​​​N/A​​
mBank​​​$134,069​​​​​9.1%​​​​​≥​​​​$58,787​​​​​≥​​​​​4.0%​​​​​≥​​​​$73,483​​​​​5.0%​​
The Corporation’s and the Bank’s actual capital and ratios compared to generally applicable regulatory requirements as of December 31, 2019 are as follows (dollars in thousands):
​​​Actual​​​​​​​​Adequacy Purposes​​​​​​​​Well-Capitalized​
​​​Amount​​Ratio​​​​​​​​Amount​​​​​​​​Ratio​​​​​​​​Amount​​Ratio​
Total capital to risk weighted assets:​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Consolidated​​​$138,263​​​​​13.2%​​​​​≥​​​​$83,696​​​​​≥​​​​​8.0%​​​​​≥​​​​​N/A​​​​​N/A​​
mBank​​​$136,578​​​​​13.1%​​​​​≥​​​​$83,681​​​​​≥​​​​​8.0%​​​​​≥​​​​$104,601​​​​​10.0%​​
Tier 1 capital to risk weighted assets:​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Consolidated​​​$132,955​​​​​12.7%​​​​​≥​​​​$62,772​​​​​≥​​​​​6.0%​​​​​≥​​​​​N/A​​​​​N/A​​
mBank​​​$131,311​​​​​12.6%​​​​​≥​​​​$62,761​​​​​≥​​​​​6.0%​​​​​≥​​​​$83,681​​​​​8.0%​​
Common equity Tier 1 capital to risk weighted assets​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Consolidated​​​$132,955​​​​​12.7%​​​​​≥​​​​$47,079​​​​​≥​​​​​4.5%​​​​​≥​​​​​N/A​​​​​N/A​​
mBank​​​$131,311​​​​​12.6%​​​​​≥​​​​$47,071​​​​​≥​​​​​4.5%​​​​​≥​​​​$67,991​​​​​6.5%​​
Tier 1 capital to average assets:​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Consolidated​​​$132,955​​​​​10.1%​​​​​≥​​​​$52,724​​​​​≥​​​​​4.0%​​​​​≥​​​​​N/A​​​​​N/A​​
mBank​​​$131,311​​​​​10.0%​​​​​≥​​​​$52,728​​​​​≥​​​​​4.0%​​​​​≥​​​​$65,910​​​​​5.0%​​
NOTE 17 — STOCK COMPENSATION PLANS
Restricted Stock Awards
The Corporation’s restricted stock awards (“RSAs”) require certain service-based or performance requirements and have a vesting period of four years. Compensation expense is recognized on a straight-line basis over the vesting period. Shares are subject to certain restrictions and risk of forfeiture by the participants.
The Corporation has historically granted RSAs to members of the Board of Directors and management. Awards granted are set to vest equally over their award terms and are issued at no cost to the recipient. The table below summarizes each of the grant awards.

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Date of Award​​Units Granted​​
Market Value at
grant date
​​Vesting Term​
February, 2017​​​​28,427​​​​​13.39​​​4 years​
February, 2018​​​​18,643​​​​​16.30​​​4 years​
April, 2018​​​​8,000​​​​​16.00​​​Immediate​
February, 2019​​​​27,790​​​​​15.70​​​4 years​
October, 2019​​​​8,000​​​​​15.40​​​Immediate​
February, 2020​​​​132,000​​​​​15.46​​​4 years​
October, 2020​​​​8,000​​​​​9.46​​​Immediate​
In 2019, the Corporation issued 35,967 shares for vested RSAs. In 2020, the Corporation issued 35,825 shares for vested RSAs.
The Corporation recognized annual compensation expense of $.878 million in 2020 and $.498 million in 2019. Unrecognized compensation expense at the end of 2020 was $1.914 million.
A summary of changes in our nonvested awards for the year follows:
​​​
Number
Outstanding
​​
Weighted Average
Grant Date
Fair Value
​
Nonvested balance at January 1, 2020​​​​69,145​​​​$14.52​​
Granted during the period​​​​140,000​​​​​15.12​​
Forfeited during the period​​​​(3,167)​​​​​15.46​​
Vested during the period​​​​(35,825)​​​​​14.99​​
Nonvested balance at December 31, 2020​​​​170,153​​​​$14.90​​
NOTE 18 — SHAREHOLDERS’ EQUITY
The Corporation currently has one active share repurchase program and one repurchase plan that has since expired. All share repurchase programs are conducted under authorizations by the Board of Directors. Under the now expired program, the Corporation repurchased 1,661 shares in 2020, 14,000 shares in 2016, 102,455 shares in 2015, 13,700 shares in 2014 and 55,594 shares in 2013. The share repurchases were conducted under Board authorizations made and publicly announced of $.600 million on February 27, 2013, $.600 million on December 17, 2013 and an additional $750,000 on April 28, 2015.
On August 28, 2019, the Corporation, under the authorization of the Board of Directors announced a new common stock repurchase program. Under the Repurchase Program, the Company is authorized to repurchase up to approximately 5% of the Company’s outstanding common stock, and has no expiration date. During 2020, the Corporation repurchased 283,779 shares under this plan.
NOTE 19 — COMMITMENTS, CONTINGENCIES, AND CREDIT RISK
Financial Instruments with Off-Balance-Sheet Risk
The Corporation is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the consolidated balance sheets.
The Corporation’s exposure to credit loss, in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit, is represented by the contractual amount of those instruments. The Corporation uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments. These commitments at December 31 are as follows (dollars in thousands):

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​​​
December 31,
2020
​​
December 31,
2019
​
Commitments to extend credit:​​​​​​​​​​​​​
Variable rate​​​$114,458​​​​$106,278​​
Fixed rate​​​​58,175​​​​​50,796​​
Standby letters of credit – Variable rate​​​​8,781​​​​​5,441​​
Credit card commitments – Fixed rate​​​​7,136​​​​​5,841​​
​​​​$188,550​​​​$168,356​​
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Corporation evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Corporation upon extension of credit, is based on management’s credit evaluation of the party. Collateral held varies, but may include accounts receivable, inventory, property, plant and equipment, and income-producing commercial properties.
Standby letters of credit are conditional commitments issued by the Corporation to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The commitments are structured to allow for 100% collateralization on all standby letters of credit.
Credit card commitments are commitments on credit cards issued by the Corporation’s subsidiary and serviced by other companies. These commitments are unsecured.
Legal Proceedings and Contingencies
At December 31, 2020, there were no pending material legal proceedings to which the Corporation is a party or to which any of its property was subject, except for proceedings which arise in the ordinary course of business. In the opinion of management, pending legal proceedings will not have a material effect on the consolidated financial position or results of operations of the Corporation.
Concentration of Credit Risk
The Bank grants commercial, residential, agricultural, and consumer loans throughout Michigan and Northeastern Wisconsin. The Bank’s most prominent concentration in the loan portfolio relates to commercial real estate loans to operators of nonresidential buildings. This concentration at December 31, 2020 represents $138.992 million, or 16.95%, compared to $141.965 million, or 18.54%, of the commercial loan portfolio on December 31, 2019. The remainder of the commercial loan portfolio is diversified in such categories as hospitality and tourism, real estate agents and managers, new car dealers, gas stations and convenience stores, petroleum, forestry, agriculture, and construction. Due to the diversity of the Bank’s locations, the ability of debtors of residential and consumer loans to honor their obligations is not tied to any particular economic sector.
NOTE 20 — FAIR VALUE
Fair value estimates, methods, and assumptions are set forth below for the Corporation’s financial instruments:
Cash, cash equivalents, and interest-bearing deposits — The carrying values approximate the fair values for these assets.
Securities — Fair values are based on quoted market prices where available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals.

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Federal Home Loan Bank stock — Federal Home Loan Bank stock is carried at cost, which is its redeemable value and approximates its fair value, since the market for this stock is limited.
Loans — Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type such as commercial, residential mortgage, and other consumer. The fair value of loans is calculated by discounting scheduled cash flows using discount rates reflecting the credit and interest rate risk inherent in the loan using an exit notion.
The methodology in determining fair value of nonaccrual loans is to average them into the blended interest rate at 0% interest. This has the effect of decreasing the carrying amount below the risk-free rate amount and, therefore, discounts the estimated fair value.
Impaired loans are measured at the estimated fair value of the expected future cash flows at the loan’s effective interest rate or the fair value of the collateral for loans which are collateral dependent. Therefore, the carrying values of impaired loans approximate the estimated fair values for these assets.
Deposits — The fair value of deposits with no stated maturity, such as noninterest-bearing demand deposits and savings, is equal to the amount payable on demand at the reporting date. The fair value of time deposits is based on the discounted value of contractual cash flows applying interest rates currently being offered on similar time deposits.
Borrowings — Rates currently available for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt. The fair value of borrowed funds due on demand is the amount payable at the reporting date.
Accrued interest — The carrying amount of accrued interest approximates fair value.
Off-balance-sheet instruments — The fair value of commitments is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements, the current interest rates, and the present creditworthiness of the counterparties. Since the differences in the current fees and those reflected to the off-balance-sheet instruments at year-end are immaterial, no amounts for fair value are presented.
The following table presents information for financial instruments at December 31 (dollars in thousands):
​​​​​​December 31, 2020​​December 31, 2019​
​​​
Level in Fair
Value Hierarchy
​​
Carrying
Amount
​​
Estimated
Fair Value
​​
Carrying
Amount
​​
Estimated
Fair Value
​
Financial assets:​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Cash and cash equivalents​​Level 1​​​$218,977​​​​$218,977​​​​$49,826​​​​$49,826​​
Interest-bearing deposits​​Level 2​​​​2,917​​​​​2,917​​​​​10,295​​​​​10,295​​
Securities available for sale​​Level 2​​​​110,505​​​​​110,505​​​​​106,569​​​​​106,569​​
Securities available for sale​​Level 3​​​​1,331​​​​​1,331​​​​​1,403​​​​​1,403​​
Federal Home Loan Bank stock​​Level 2​​​​4,924​​​​​4,924​​​​​4,924​​​​​4,924​​
Net loans​​Level 3​​​​1,071,776​​​​​1,072,770​​​​​1,053,468​​​​​1,055,985​​
Accrued interest receivable​​Level 3​​​​4,310​​​​​4,310​​​​​3,751​​​​​3,751​​
Total financial assets​​​​​​$1,414,740​​​​$1,415,734​​​​$1,230,236​​​​$1,232,753​​
Financial liabilities:​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Deposits​​Level 2​​​$1,258,776​​​​$1,262,930​​​​$1,075,677​​​​$1,044,267​​
Borrowings​​Level 2​​​​63,479​​​​​61,975​​​​​64,551​​​​​64,403​​
Accrued interest payable​​Level 3​​​​453​​​​​453​​​​​569​​​​​569​​
Total financial liabilities​​​​​​$1,322,708​​​​$1,325,358​​​​$1,140,797​​​​$1,109,239​​
Limitations— Fair value estimates are made at a specific point in time based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or

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discount that could result from offering for sale at one time the Corporation’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Corporation’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Fair value estimates are based on existing on-and off-balance-sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Significant assets and liabilities that are not considered financial assets or liabilities include premises and equipment, other assets, and other liabilities. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.
The following is information about the Corporation’s assets and liabilities measured at fair value on a recurring basis at December 31, 2020 and the valuation techniques used by the Corporation to determine those fair values.
Level 1: In general, fair values determined by Level 1 inputs use quoted prices in active markets for identical assets or liabilities that the Corporation has the ability to access.
Level 2: Fair values determined by Level 2 inputs use other inputs that are observable, either directly or indirectly. These Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals.
Level 3: Level 3 inputs are unobservable inputs, including inputs available in situations where there is little, if any, market activity for the related asset or liability.
The fair value of all investment securities at December 31, 2020 and 2019 were based on level 2 and level 3 inputs. There are no other assets or liabilities measured on a recurring basis at fair value. For additional information regarding investment securities, please refer to “Note 3 — Investment Securities.” The table below shows investment securities measured at fair value on a recurring basis (dollars in thousands):
(dollars in thousands)​​
Balance at
December 31,
2020
​​
Quoted
Prices
in Active
Markets
for Identical
Assets
(Level 1)
​​
Significant
Other
Observable
Inputs
(Level 2)
​​
Significant
Unobservable
Inputs
(Level 3)
​​
Total (Gains)
Losses for
Year Ended
December 31,
2020
​
Assets​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Corporate​​​$28,043​​​​$—​​​​$27,543​​​​$500​​​​$—​​
US Agencies​​​​6,589​​​​​—​​​​​6,589​​​​​—​​​​​—​​
US Agencies – MBS​​​​34,280​​​​​—​​​​​34,280​​​​​—​​​​​—​​
Obligations of state and political subdivisions​​​​42,924​​​​​—​​​​​42,093​​​​​831​​​​​2​​
​​​​$111,836​​​​​​​​​​​​​​​​​​​​​​$2​​

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(dollars in thousands)​​
Balance at
December 31, 2019
​​
Quoted Prices
in Active Markets
for Identical Assets
(Level 1)
​​
Significant
Other Observable
Inputs
(Level 2)
​​
Significant
Unobservable
Inputs
(Level 3)
​​
Total Losses for
Year Ended
December 31,
2019
​
Assets​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Corporate​​​$20,938​​​​$—​​​​$20,438​​​​$500​​​​$35​​
US Agencies​​​​14,496​​​​​—​​​​​14,496​​​​​—​​​​​9​​
US Agencies – MBS​​​​34,526​​​​​—​​​​​34,526​​​​​—​​​​​—​​
Obligations of state and political subdivisions​​​​38,012​​​​​—​​​​​37,109​​​​​903​​​​​164​​
​​​​$107,972​​​​​​​​​​​​​​​​​​​​​​$208​​
The Corporation had no other Level 3 assets or liabilities on a recurring basis as of December 31, 2020.
In instances where inputs used to measure fair value fall into different levels in the above fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The Corporation’s assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability.
The Corporation also has assets that under certain conditions are subject to measurement at fair value on a non-recurring basis. These assets include loans and other real estate held for sale. The Corporation has estimated the fair values of these assets using Level 3 inputs, specifically discounted cash flow projections.
The table below shows the activity in level three assets for the years ended, December 31, 2020 and 2019 (dollars in thousands):
​​​
Balance at
Beginning
of Period
​​​​​​​​​​​​​​
Transfers
in (out) of
Level 3
​​​​​​​​​​​​​​
Balance
at end
of Period
​
​​​Net Gains (losses)​​​​​​​​​​​​​
​​​Realized​​Unrealized​​Purchases​​Sales​
Year Ended December 31, 2020​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Corporate​​​$500​​​​$—​​​​$—​​​​$—​​​​$—​​​​$—​​​​$500​​
Obligations of state and political subdivisions​​​​903​​​​​—​​​​​—​​​​​(72)​​​​​—​​​​​—​​​​​831​​
​​​
Balance at
Beginning
of Period
​​​​​​​​​​​​​​
Transfers
in (out) of
Level 3
​​​​​​​​​​​​​​
Balance
at end
of Period
​
​​​Net Gains (losses)​​​​​​​​​​​​​
​​​Realized​​Unrealized​​Purchases​​Sales​
Year Ended December 31, 2019​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Corporate​​​$500​​​​$—​​​​$—​​​​$—​​​​$—​​​​$—​​​​$500​​
Obligations of state and political subdivisions​​​​988​​​​​—​​​​​—​​​​​(85)​​​​​—​​​​​—​​​​​903​​

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Assets Measured at Fair Value on a Nonrecurring Basis at December 31, 2020
(dollars in thousands)​​
Balance at
December 31, 2020
​​
Quoted Prices
in Active Markets
for Identical Assets
(Level 1)
​​
Significant
Other Observable
Inputs
(Level 2)
​​
Significant
Unobservable
Inputs
(Level 3)
​​
Total (Gains) Losses for
Year Ended
December 31, 2020
​
Assets​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Impaired loans​​​$8,850​​​​$  —​​​​$ —​​​​$8,850​​​​$186​​
Other real estate held for sale​​​​1,752​​​​​—​​​​​—​​​​​1,752​​​​​(22)​​
​​​​​​​​​​​​​​​​​​​​​​​​​​​​$164​​
Assets Measured at Fair Value on a Nonrecurring Basis at December 31, 2019
(dollars in thousands)​​
Balance at
December 31, 2019
​​
Quoted Prices
in Active Markets
for Identical Assets
(Level 1)
​​
Significant
Other Observable
Inputs
(Level 2)
​​
Significant
Unobservable
Inputs
(Level 3)
​​
Total Losses for
Year Ended
December 31, 2019
​
Assets​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
Impaired loans​​​$12,823​​​​$ —​​​​$ —​​​​$12,823​​​​$280​​
Other real estate held for sale​​​​2,194​​​​​—​​​​​—​​​​​2,194​​​​​212​​
​​​​​​​​​​​​​​​​​​​​​​​​​​​​$492​​
The Corporation had no investments subject to fair value measurement on a nonrecurring basis.
Impaired loans categorized as Level 3 assets consist of non-homogeneous loans that are considered impaired. The Corporation estimates the fair value of the loans based on the present value of expected future cash flows or collateral values using management’s best estimate of key assumptions. These assumptions include future payment ability, timing of payment streams, and estimated realizable values of available collateral (typically based on outside appraisals).

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NOTE 21 — PARENT COMPANY ONLY FINANCIAL STATEMENTS
BALANCE SHEETS
December 31, 2020 and 2019
(Dollars in Thousands)
​​​2020​​2019​
ASSETS​​​​​​​​​​​​​
Cash and cash equivalents​​​$4,226​​​​$490​​
Investment in subsidiaries​​​​161,438​​​​​157,156​​
Other assets​​​​3,727​​​​​5,764​​
TOTAL ASSETS​​​$169,391​​​​$163,410​​
LIABILITIES AND SHAREHOLDERS’ EQUITY​​​​​​​​​​​​​
Other liabilities​​​​1,527​​​​​1,491​​
Total liabilities​​​​1,527​​​​​1,491​​
Shareholders’ equity:​​​​​​​​​​​​​
Common stock and additional paid in capital – no par value​​​​​​​​​​​​​
Authorized 18,000,000 shares​​​​​​​​​​​​​
Issued and outstanding – 10,500,758 and 10,748,712 shares respectively
​​​​127,164​​​​​129,564​​
Retained earnings​​​​39,318​​​​​31,740​​
Accumulated other comprehensive income​​​​1,382​​​​​615​​
Total shareholders’ equity​​​​167,864​​​​​161,919​​
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY​​​$169,391​​​​$163,410​​
STATEMENTS OF OPERATIONS
Years Ended December 31, 2020 and 2019
(Dollars in Thousands)
​​​2020​​2019​
INCOME:​​​​​​​​​​​​​
Interest income​​​$—​​​​$—​​
Miscellaneous income​​​​1​​​​​1​​
Total income​​​$1​​​​$1​​
EXPENSES:​​​​​​​​​​​​​
Interest expense on borrowings​​​​7​​​​​—​​
Salaries and benefits​​​​1,298​​​​​858​​
Professional service fees​​​​289​​​​​301​​
Other​​​​355​​​​​376​​
Total expenses​​​​1,949​​​​​1,535​​
Loss before income taxes and equity in net income of subsidiaries​​​​
(1,948)
​​​​​(1,534)​​
Provision for (benefit of) income taxes​​​​
(409)
​​​​​(322)​​
Loss before equity in net income of subsidiaries​​​​
(1,539)
​​​​​(1,212)​​
Equity in net income of subsidiaries​​​​15,012​​​​​15,062​​
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS​​​$13,473​​​​$13,850​​

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STATEMENTS OF CASH FLOWS
Years Ended December 31, 2020 and 2019
(Dollars in Thousands)
​​​2020​​2019​
Cash Flows from Operating Activities:​​​​​​​​​​​​​
Net income​​​$13,473​​​​$13,850​​
Adjustments to reconcile net income to net cash provided by operating activities:​​​​​​​​​​​​​
Equity in net (income) of subsidiaries​​​​
(15,012)
​​​​​(15,062)​​
Increase in capital from stock based compensation​​​​878​​​​​498​​
Change in other assets​​​​2,035​​​​​(1,458)​​
Change in other liabilities​​​​36​​​​​268​​
Net cash provided by (used in) operating activities​​​​1,410​​​​​(1,904)​​
Cash Flows from Investing Activities:​​​​​​​​​​​​​
Investments in subsidiaries​​​​11,500​​​​​5,500​​
Net cash provided by used in investing activities​​​​11,500​​​​​5,500​​
Cash Flows from Financing Activities:​​​​​​​​​​​​​
Repurchase of common stock​​​​
(3,279)
​​​​​—​​
Dividend on common stock​​​​
(5,895)
​​​​​(5,576)​​
Net cash (used in) financing activities​​​​
(9,174)
​​​​​(5,576)​​
Net increase (decrease) in cash and cash equivalents​​​​3,736​​​​​(1,980)​​
Cash and cash equivalents at beginning of period​​​​490​​​​​2,470​​
Cash and cash equivalents at end of period​​​$4,226​​​​$490​​

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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20.
Indemnification of Directors and Officers
​
The Registrant’s bylaws provide for the mandatory indemnification of a director, officer, employee or agent of the Registrant (or a person concurrently serving in such a capacity with another entity at the Registrant’s request), to the extent such person has been successful on the merits or otherwise in the defense of any threatened, pending or completed civil, criminal, administrative or investigative action, suit, arbitration or other proceeding brought by or in the right of the Registrant or by any other person or entity to which such person is a party because he or she is a director, officer, employee or agent, for all reasonable fees, costs, charges, disbursements, attorneys’ fees and other expenses incurred in connection with proceeding. In all other cases, the Registrant shall indemnify a director or officer, and may indemnify an employee or agent, of the Registrant against all liability and reasonable fees, costs, charges, disbursements, attorneys’ fees and other expenses incurred by such person in any proceeding brought by or in the right of the Registrant or by any other person or entity to which such person is a party because he or she is a director, officer, employee or agent, unless it has been proven by final adjudication that such person breached or failed to perform a duty owed to Nicolet that constituted:
•
a willful failure to deal fairly with the Registrant or its shareholders in connection with a matter in which the director, officer, employee or agent has a material conflict of interest;
​
•
a violation of criminal law, unless the director, officer, employee or agent had reasonable cause to believe his or her conduct was lawful or no reasonable cause to believe his or her conduct was unlawful;
​
•
a transaction from which the director, officer, employee or agent derived an improper personal profit; or
​
•
willful misconduct.
​
Unless modified by written agreement, the determination as to whether indemnification is proper shall be made in accordance with the Wisconsin Business Corporation Law. The right to indemnification under the Registrant’s bylaws may only be amended by the vote of two-thirds of the outstanding shares of the Registrant’s capital stock entitled to vote on the matter. The Registrant is authorized to purchase and maintain insurance on behalf of its directors, officers, employees or agents in connection with the foregoing indemnification obligations.
Item 21.
Exhibits and Financial Statement Schedules
​
(a) List of Exhibits
​
Exhibit 
No.
​​Description​
​
2.1
​​​​Agreement and Plan of Merger by and between Nicolet Bankshares, Inc. and Commerce Financial Holdings,County Bancorp, Inc., dated February 17, 2020 (attachedJune 22, 2021 (included asAppendix Ato the joint proxy statement-prospectus, which is part of this registration statement and incorporated herein by reference).+​
​
5.1
​​Opinion of Kate Lombardi,Michele McKinnon, Vice President Human Resources/Legal Counsel of Nicolet National Bank regarding legality of securities being registered (including her consent).*​
​8.1​​Opinion of Bryan Cave Leighton Paisner LLP regarding certain tax matters (including its consent).*​
​23.1​​
23.1
​​Consent of Kate LombardiMichele McKinnon (included as part of Exhibit 5.1).*​
​23.2​​
Consent of Bryan Cave Leighton Paisner LLP (included as part of Exhibit 8.1).*
​
​23.3​​
Consent of Wipfli LLP.LLP (with respect to Nicolet).
​
​23.4​​
23.4
​​Consent of Porter Keadle Moore, LLC.LLC (with respect to Nicolet).​
​23.5​​
24.1
​​Power of Attorney (included in the signature pages to the Registration Statement on Form S-4).​
​
99.1
​​Consent of Magstar Capital, LLC (included as part of Appendix B)Plante & Moran, PLLC (with respect to County).​
 
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​
Exhibit 
No.
​​Description​
​23.6​​
Consent of Plante & Moran, PLLC (with respect to Mackinac).
​
​24.1​​
Power of Attorney.*
​
​99.1​​Consent of Stephens, Inc. (included as part of Appendix Battached to the joint proxy statement-prospectus, which is part of this registration statement and incorporated herein by reference).​
​99.2​​
Consent of Keefe, Bruyette & Woods, Inc.
​
​99.3​​Lynn D. Davis — Consent to be Named as a Director Nominee.​
​99.4​​
Form of Proxy Card of Commerce.*Nicolet.
​
​99.5​​Form of Proxy Card of County.​
​99.6​​
Form of Election Form and Letter of Transmittal.
​
​���
+
Certain schedules and attachments to the merger agreement have been omitted from this filing pursuant to Item 601(b)(2) of Regulation S-K. Nicolet Bankshares, Inc. agrees to furnish a supplemental copy of any omitted schedule or attachment to the SEC upon request.
​
*
To be filed by amendment.Previously Filed.
​
(b) Financial Statement Schedules
None. All other schedules for which provision is made in Regulation S-X of the Securities and Exchange Commission are either not required under the related restrictions, are inapplicable or the required information has been incorporated by reference into the joint proxy statement-prospectus, and, therefore, have been omitted.
(c) Opinion of Magstar Capital, LLC has been furnished as Appendix B to the proxy statement-prospectus.
Item 22.
Undertakings
​
The undersigned registrant hereby undertakes:
(a)
(a) (1)
To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement:
​
(i)
To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;
​
(ii)
To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a twenty percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective Registration Statement; and
​
(iii)
To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement.
​
(2)
That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
​
(3)
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
​

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(4)
That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of securities, in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: (i) any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; (ii) any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; (iii) the portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and (iv) any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
​
(b)
The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
​

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(g)(1)(c)
(1) The undersigned registrant hereby undertakes as follows: that prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form.
​
(2)
The registrant undertakes that every prospectus (i) that is filed pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet the requirements of section 10(a)(3) of the Act and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
​
(h)(d)
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
​
(e)
The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.
​

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The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.
 
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Green Bay, State of Wisconsin, on May 4, 2020.August 23, 2021.
NICOLET BANKSHARES, INC.
By:   /s/ Robert B. Atwell
/s/ Michael E. Daniels
​
​
Robert B. Atwell, Chairman, President and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the persons whose signature appears below appoints and constitutes Robert B. Atwell and Michael E. Daniels, or either of them, his or her truePresident and lawful attorney-in-fact and agent, acting alone, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to execute any and all amendments (including post-effective amendments) to the within registration statement (as well as any registration statement for the same offering covered by this registration statement that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933), and to file the same, together with all exhibits thereto and all other documents in connection therewith, with the Securities and Exchange Commission and such other agencies, offices and persons as may be required by applicable law, granting unto said attorneys-in-fact and agents, or either of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or either of them, may lawfully do or cause to be done by virtue hereof.
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities stated and on the fourth23rd day of May, 2020.August, 2021.
​
/s/ Robert B. AtwellMichael E. Daniels
​
Robert B. AtwellMichael E. Daniels
Chairman, President, and Chief Executive Officer, Director
(Principal Executive Officer)
​​
/s/ Andrew F. Hetzel, Jr.*
​
Andrew F. Hetzel, Jr.Robert B. Atwell
Executive Chairman, Director
​
​
/s/ Ann K. LawsonH. Phillip Moore, Jr.
​
Ann K. Lawson
Chief Financial OfficerH. Phillip Moore, Jr.
(Principal Financial and Accounting Officer)
​​
/s/ Donald J. Long, Jr.
​
Donald J. Long, Jr.
Director
​
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/s/ Michael E. Daniels*
​
Michael E. DanielsAndrew F. Hetzel, Jr.
Executive Vice President and Secretary, Director
​​
/s/ Dustin J. McClone
​
Dustin J. McClone
Director
​
​
*
​
Rachel Campos-Duffy
Director
​​
/s/ Susan L. Merkatoris*
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Susan L. Merkatoris
Director
​
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/s/ John N. Dykema*
​
John N. Dykema
Director
​​
/s/ Randy J. Rose
​
Randy J. Rose
Director
​

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TABLE OF CONTENTS

​
/s/ Terrence R. Fulwiler*
​
Terrence R. Fulwiler
Director
​
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/s/ Oliver Pierce Smith
​
Oliver Pierce Smith
Director
​
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/s/ Christopher Ghidorzi
​
Christopher Ghidorzi
Director
​
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/s/ Robert J. Weyers*
​
Robert J. Weyers
Director
​​
*
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Ann K. Lawson
Director
​
​
*
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Héctor Colón
Director
​​​​
​*By:​​
/s/ Michael E. Daniels
​
​​​​
​ Name:​​   Michael E. Daniels​​​​
​ Title:​​   Attorney-In-Fact​​​​
 
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TABLE OF CONTENTS

EXHIBIT INDEX
​
Exhibit
No.
​​Description​
​​​2.1​​​Agreement and Plan of Merger by and between Nicolet Bankshares, Inc. and Commerce Financial
Holdings, Inc., dated February 17, 2020 (attached as Appendix A to the proxy statement-
prospectus, which is part of this registration statement and incorporated herein by reference).+		​
​​​5.1​​​Opinion of Kate Lombardi, Vice President Human Resources/Legal Counsel of Nicolet National Bank regarding legality of securities being registered (including her consent).​
​​​8.1​​​Opinion of Bryan Cave Leighton Paisner LLP regarding certain tax matters (including its consent).*​
​​​23.1​​​Consent of Kate Lombardi (included as part of Exhibit 5.1).​
​​​23.2​​​Consent of Bryan Cave Leighton Paisner LLP (included as part of Exhibit 8.1).*​
​​​23.3​​​Consent of Wipfli LLP.​
​​​23.4​​​Consent of Porter Keadle Moore, LLC.​
​​​24.1​​​Power of Attorney (included in the signature pages to the Registration Statement on Form S- 4).​
​​​99.1​​​Consent of Magstar Capital, LLC (included as part of Appendix B).​
​​​99.2​​​Form of Proxy Card of Commerce.*​
​
+
Certain schedules and attachments to the merger agreement have been omitted from this filing pursuant to Item 601(b)(2) of Regulation S-K. Nicolet Bankshares, Inc. agrees to furnish a supplemental copy of any omitted schedule or attachment to the SEC upon request.
​
*
To be filed by amendment.
​