NICOLET BANKSHARES, INC.
110 South Washington Street
Green Bay, Wisconsin 54301

, 2005
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Dear Shareholder:

You are cordially invited to attend a special meeting of shareholders,
which will be held at , on , 2005, at Nicolet National Bank,
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110 South Washington Street, Green Bay, Wisconsin. I hope that you will be able
to attend the meeting, and I look forward to seeing you.

At the meeting, you will be asked to vote on an Agreement and Plan of
Reorganization (the "Plan") that is designed to take Nicolet private by reducing
its number of shareholders of record below 300. Once Nicolet is a private
company, it will realize significant cost savings resulting from the termination
of its reporting obligations under the Securities Exchange Act of 1934.

The Plan provides for the merger of Nicolet Interim Corporation ("Interim")
with and into Nicolet, with Nicolet surviving the merger (the "Reorganization").
Interim is a new Wisconsin corporation formed solely to effect the
Reorganization. If the Plan is approved by our shareholders, it will affect
them as follows:

If you are a record shareholder with: Effect:
------------------------------------- -------
More than 1,500 shares: Will continue to hold the same number of
shares

1,500 or fewer shares: Will be entitled to $18.25 in cash,
without interest, per share

We are proposing this transaction because our board has concluded, after
careful consideration, that the costs and other disadvantages associated with
being a public company outweigh the advantages. The reasons for the
Reorganization include:

- our estimation that we will eliminate costs and avoid immediately
anticipated future costs of approximately $514,500 per year by
eliminating the requirement to file SEC reports and reducing our
shareholder communications expenses;

- our relatively thin trading market, which we believe does not provide
a benefit typically associated with status as a public company; and

- the increased time and flexibility that will be available for our
management team to consider and initiate actions designed to produce
long-term benefits and growth.

We plan to effect the Reorganization by filing articles of merger as soon
as possible after we obtain shareholder approval of the Plan. The date on which
we file the articles of merger will serve as the record date for determining the
ownership of shares for purposes of the Reorganization.

The board of directors has established , 2005, as the record
------------
date for determining shareholders who are entitled to notice of the special
meeting and to vote on the matters presented at the meeting. Whether or not you
plan to attend the special meeting, please complete, sign and date the proxy
card and return it in the envelope provided in time for it to be received by
, 2005. If you attend the meeting, you may vote in person, even if you
----------
have previously returned your proxy card.

The board of directors has unanimously determined that the Plan is fair to
Nicolet's unaffiliated shareholders, and has voted unanimously in favor of the
Plan. On behalf of the board of directors, I urge you to vote FOR approval of
the Plan.

Sincerely,

/s/ Robert B. Atwell
President and Chief Executive Officer

NICOLET BANKSHARES, INC.
110 South Washington Street
Green Bay, Wisconsin 54301
(920) 430-1400

NOTICE OF THE SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD , 2005
----------

A special meeting of shareholders of Nicolet Bankshares, Inc. will be held
on , 2005, at Nicolet National Bank, 110 South Washington Street,
----------
Green Bay, Wisconsin, for the following purposes:

(1) To vote on an Agreement and Plan of Reorganization (the "Plan")
providing for the merger of Nicolet Interim Corporation with and into
Nicolet, with Nicolet surviving the merger and the holders of 1,500 or
fewer shares of Nicolet common stock receiving $18.25 in cash in
exchange for each of their shares of such stock. The text of the Plan
is set forth in Appendix A to the enclosed Proxy Statement.
----------

(2) To transact any other business as may properly come before the meeting
or any adjournment of the meeting.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE
APPROVAL OF THE PLAN.

Nicolet's shareholders are entitled to statutory dissenters' rights under
the Plan. If Nicolet's shareholders approve the Plan, shareholders who elect to
dissent from approval of the Plan are entitled to receive the "fair value" of
their shares of common stock if they comply with the provisions of Subchapter
XIII of the Wisconsin Business Corporation Law regarding the rights of
dissenting shareholders. We have attached a copy of Subchapter XIII of the
Wisconsin Business Corporation Law as Appendix B to the accompanying Proxy
-----------
Statement.

The board of directors has set the close of business on , 2005,
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as the record date for determining the shareholders who are entitled to notice
of, and to vote at, the meeting or any adjournment of the meeting.

We hope that you will be able to attend the meeting. We ask, however,
whether or not you plan to attend the meeting, that you mark, date, sign, and
return the enclosed form of proxy as soon as possible. Promptly returning your
form of proxy will help ensure the greatest number of shareholders are present
whether in person or by proxy.

If you attend the meeting in person, you may revoke your proxy at the
meeting and vote your shares in person. You may revoke your proxy at any time
before the proxy is exercised.

By Order of the Board of Directors,

/s/ Robert B. Atwell
President and Chief Executive Officer

, 2005
------------

NICOLET BANKSHARES, INC.
110 South Washington Street
Green Bay, Wisconsin 54301
(920) 430-1400

--------------------------------------------------------------------------------

PROXY STATEMENT
FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON , 2005
----------
--------------------------------------------------------------------------------

The board of directors of Nicolet Bankshares, Inc. ("Nicolet" or the
"Company") has determined that it is in the best interests of Nicolet and its
shareholders to effect a reorganization that will permit Nicolet to become a
private company by reducing its number of shareholders of record below 300.
Once private, Nicolet will realize significant cost savings by terminating the
registration of its common stock under the Securities Exchange Act of 1934, as
amended (the "Securities Exchange Act"), and its related reporting obligations.

The Plan provides for the merger of Nicolet Interim Corporation ("Interim")
with and into Nicolet, with Nicolet surviving the merger. Interim is a new
Wisconsin corporation formed solely to effect the Reorganization. In the
Reorganization, shareholders owning 1,500 shares or less of Nicolet common stock
of record will receive $18.25 in cash for each share that they own on the
effective date of the Reorganization. All other shares will remain outstanding
and be unaffected by the Reorganization. Because the purpose of Reorganization
is to reduce the number of shareholders of record below 300, the Plan permits
our board of directors to increase the 1,500-share threshold prior to the date
of the special shareholders' meeting to the extent necessary to ensure that the
number of record shareholders will be less than 300 upon effectiveness of the
Reorganization. If such action is necessary, we will notify our shareholders
through a supplement to this Proxy Statement and will postpone the special
shareholders' meeting to the extent necessary to allow shareholders to consider
such action and change their votes if they so desire.

This Proxy Statement provides you with detailed information about the
proposed Reorganization. We encourage you to read this entire document
carefully.

The board of directors has determined that the Plan is fair to Nicolet's
unaffiliated shareholders. Additionally, all of the directors, including those
who are not employees of Nicolet, have unanimously approved the Plan. The
Reorganization cannot be completed, however, unless the Plan is approved by the
holders of a majority of the issued and outstanding shares of common stock. The
current directors and executive officers of Nicolet beneficially own
approximately 40% of the outstanding shares and have indicated that they intend
to vote their shares in favor of the Plan.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THE RECAPITALIZATION PLAN OR THE
TRANSACTIONS CONTEMPLATED THEREBY OR DETERMINED IF THIS PROXY STATEMENT IS
TRUTHFUL OR COMPLETE. THE COMMISSION HAS NOT PASSED UPON THE FAIRNESS OR MERITS
OF THE PLAN OR THE TRANSACTIONS CONTEMPLATED THEREBY NOR UPON THE ACCURACY OR
ADEQUACY OF THE INFORMATION CONTAINED IN THIS PROXY STATEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

THE DATE OF THIS PROXY STATEMENT IS , 2005. WE FIRST MAILED
------------
THIS PROXY STATEMENT TO THE SHAREHOLDERS OF NICOLET ON OR ABOUT THAT DATE.

IMPORTANT NOTICES

Our common stock is not a deposit or bank account and is not insured by the
Federal Deposit Insurance Corporation or any other governmental agency.

We have not authorized any person to give any information or to make any
representations other than the information and statements included in this Proxy
Statement. You should not rely on any other information. The information
contained in this Proxy Statement is correct only as of the date of this Proxy
Statement, regardless of the date it is delivered or when the Reorganization is
effected. By accepting receipt of this Proxy Statement, you agree not to permit
any reproduction or distribution of its contents in whole or in part.

We will update this Proxy Statement to reflect any factors or events
arising after its date that individually or together represent a material change
in the information included in this document.

We make forward-looking statements in this Proxy Statement that are subject
to risks and uncertainties. Forward-looking statements include information
about possible or assumed future results of the operations or our performance
after the Reorganization is accomplished. When we use words such as "believes,"
"anticipates," "expects," "intends," "targeted," and similar expressions, we are
making forward-looking statements that are subject to risks and uncertainties.
Various future events or factors may cause our results of operations or
performance to differ materially from those expressed in our forward-looking
statements. These factors include:

(1) changes in economic conditions, both nationally and in our primary
market area;

(2) changes in governmental monetary and fiscal policies, as well as
legislative and regulatory changes;

(3) the effect of changes in interest rates on the level and composition
of deposits, loan demand, and the values of loan collateral,
securities and interest rate protection agreements;

(4) the effects of competition from other financial service providers
operating in our primary market area and elsewhere; and

(5) the failure of assumptions underlying the establishment of reserves
for possible loan losses and estimations of values of collateral and
various financial assets and liabilities.

The words "we," "our," and "us," as used in this Proxy Statement, refer to
Nicolet and its wholly owned subsidiaries, collectively, unless the context
indicates otherwise.

TABLE OF CONTENTS

PAGE

SUMMARY TERM SHEET . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

QUESTIONS AND ANSWERS ABOUT THE REORGANIZATION . . . . . . . . . . . . . . 6

SPECIAL FACTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
PURPOSE OF THE REORGANIZATION. . . . . . . . . . . . . . . . . . . . . . 9
ALTERNATIVES CONSIDERED. . . . . . . . . . . . . . . . . . . . . . . . . 10
BACKGROUND OF THE REORGANIZATION . . . . . . . . . . . . . . . . . . . . 11
REASONS FOR THE REORGANIZATION . . . . . . . . . . . . . . . . . . . . . 13
POTENTIAL DISADVANTAGES OF THE REORGANIZATION. . . . . . . . . . . . . . 14
EFFECTS OF THE REORGANIZATION ON NICOLET . . . . . . . . . . . . . . . . 15
EFFECTS OF THE REORGANIZATION ON AFFILIATES. . . . . . . . . . . . . . . 16
EFFECTS OF THE REORGANIZATION ON SHAREHOLDERS GENERALLY. . . . . . . . . 17
FEDERAL INCOME TAX CONSEQUENCES OF THE REORGANIZATION. . . . . . . . . . 18
PRO FORMA EFFECT OF THE REORGANIZATION . . . . . . . . . . . . . . . . . 21
SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA. . . . . . 21
RECOMMENDATION OF THE BOARD OF DIRECTORS; FAIRNESS OF THE REORGANIZATION 22
DETERMINATION BY INTERIM AND OTHER NICOLET AFFILIATES. . . . . . . . . . 27
OPINION OF INDEPENDENT FINANCIAL ADVISOR . . . . . . . . . . . . . . . . 27

INFORMATION REGARDING THE SPECIAL MEETING OF SHAREHOLDERS. . . . . . . . . 39
TIME AND PLACE OF MEETING. . . . . . . . . . . . . . . . . . . . . . . . 39
RECORD DATE AND MAILING DATE . . . . . . . . . . . . . . . . . . . . . . 39
NUMBER OF SHARES OUTSTANDING . . . . . . . . . . . . . . . . . . . . . . 39
PURPOSE OF SPECIAL MEETING . . . . . . . . . . . . . . . . . . . . . . . 39
DISSENTERS' RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
PROCEDURES FOR VOTING BY PROXY . . . . . . . . . . . . . . . . . . . . . 39
REQUIREMENTS FOR SHAREHOLDER APPROVAL. . . . . . . . . . . . . . . . . . 40
SOLICITATION OF PROXIES. . . . . . . . . . . . . . . . . . . . . . . . . 40

DESCRIPTION OF THE PLAN. . . . . . . . . . . . . . . . . . . . . . . . . . 41
THE REORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SOURCE OF FUNDS AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . 44
DISSENTERS' RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

INFORMATION ABOUT NICOLET AND ITS AFFILIATES . . . . . . . . . . . . . . . 48
DIRECTORS AND EXECUTIVE OFFICERS . . . . . . . . . . . . . . . . . . . . 48
STOCK OWNERSHIP BY AFFILIATES. . . . . . . . . . . . . . . . . . . . . . 50
RECENT AFFILIATE TRANSACTIONS IN NICOLET STOCK . . . . . . . . . . . . . 51
RELATED PARTY TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . 52
MARKET FOR COMMON STOCK AND DIVIDENDS. . . . . . . . . . . . . . . . . . 52
DESCRIPTION OF COMMON STOCK. . . . . . . . . . . . . . . . . . . . . . . 52
SHAREHOLDER PROPOSALS. . . . . . . . . . . . . . . . . . . . . . . . . . 55

SELECTED HISTORICAL FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . 57

PRO FORMA CONSOLIDATED FINANCIAL INFORMATION . . . . . . . . . . . . . . . 59

WHERE YOU CAN FIND MORE INFORMATION. . . . . . . . . . . . . . . . . . . . 64

APPENDIX A AGREEMENT AND PLAN OF REORGANIZATION . . . . . . . . . . . . . A-1

APPENDIX B SUBCHAPTER XIII OF THE WISCONSIN BUSINESS CORPORATION LAW. . . B-1

APPENDIX C OPINION OF RYAN BECK & CO.. . . . . . . . . . . . . . . . . . . C-1

APPENDIX D FINANCIAL STATEMENTS AND MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004. . . . . . . . . . D-1

APPENDIX E FINANCIAL STATEMENTS AND MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 2003. . . . . . . . . . . . . . E-1

SUMMARY TERM SHEET

The following is a summary of the material terms of the Plan. This summary
is qualified in its entirety by reference to the more detailed information
appearing elsewhere in or accompanying this Proxy Statement, including the
financial information and appendices. We urge you to review the entire Proxy
Statement and accompanying materials carefully.

- STRUCTURE OF THE REORGANIZATION: The Plan provides for the merger of
Nicolet Interim Corporation ("Interim") with and into Nicolet, with
Nicolet surviving the merger. Interim is a new Wisconsin corporation
formed solely to effect the Reorganization. In the Reorganization,
shareholders owning 1,500 shares or less of Nicolet common stock of
record as of the date of the special shareholders' meeting will
receive $18.25 in cash for each share that they hold on the effective
date of the Reorganization. All other shares will remain outstanding
and be unaffected by the Reorganization.

Because the purpose of Reorganization is to reduce the number of
shareholders of record below 300, we may increase the 1,500-share
threshold prior to the date of the special shareholders' meeting to
the extent necessary to ensure that the number of record shareholders
will be less than 300 upon effectiveness of the Reorganization. If
such action is necessary, we will notify our shareholders through a
supplement to this Proxy Statement and will postpone the special
shareholders' meeting to the extent necessary to allow shareholders to
consider such action and change their votes if they so desire.

- DETERMINATION OF SHARES HELD OF RECORD: A shareholder who owns 1,500
shares or less of Nicolet common stock "of record" will receive $18.25
per share in cash in the Reorganization, while a record holder of over
1,500 shares will be unaffected. A shareholder "of record" is the
shareholder whose name is listed on the front of the stock
certificate, regardless of who ultimately has the power to vote or
transfer the shares. For example, four separate certificates issued to
a shareholder individually, as a joint tenant with someone else, as
trustee, and in an IRA represent shares held by four different record
holders, even though a single shareholder might control the voting or
transfer of all of the shares. Because SEC rules require that we count
"record holders" for purposes of determining our reporting
obligations, the Plan is based on the number of shares held of record
without regard to the ultimate control of the shares. As a result, a
single shareholder with over 1,500 shares held in various accounts
could receive cash in the Reorganization for all of his or her shares
if those accounts individually hold 1,500 shares or less. To avoid
this, the shareholder would need to:

- consolidate his or her ownership into a single holder of record
owning over 1,500 shares;

- acquire additional shares prior to the effective date of the
Reorganization;

- deposit his or her shares into a brokerage account to be held in
"street name," so long as the broker will own more than 1,500
shares in all of its street name accounts when we close the
Reorganization. See "Shares Held in Street Name" below.

- SHARES HELD IN STREET NAME. It is important that our shareholders
understand how shares that are held by them in "street name" will be
treated. Shareholders who have transferred their shares of Nicolet
common stock into a brokerage or custodial account are no longer shown
on our shareholder records as the record holder of these shares.
Instead, each brokerage firm or custodian typically holds all shares
of Nicolet common stock that its clients have deposited with it
through a single nominee; this is what is meant by "street name." If
that single nominee is the record shareholder for one or more accounts
representing collectively more than 1,500 shares, then the stock
registered in that nominee's name will be completely unaffected by the
Reorganization. Because the Reorganization only affects record
shareholders, it does not matter whether any of the underlying
beneficial owners for whom that nominee acts own 1,500 shares or less.
At the end of this transaction, these beneficial owners will continue
to beneficially own the same number of shares of our stock as they did
at the start of this transaction, even if the number of shares they
own is 1,500 or less.

If you hold your shares in "street name," you should talk to your
broker, nominee or agent to determine how they expect the
Reorganization to affect you. Because other "street name" holders who
hold through your broker, agent or nominee may adjust their holdings
prior to the Reorganization, you may have no way of knowing whether
you will be cashed out in the transaction until it is completed.
However, because we think it is likely that many brokerage firms or
other nominees will hold more than 1,500 shares in any one account, we
think it is likely that "street name" holders will remain continuing
shareholders.

- EFFECTS OF THE REORGANIZATION ON SHAREHOLDERS. See "Special
Factors-Effects of the Reorganization on Affiliates" and "-Effects of
the Reorganization on Shareholders Generally" on pages __ and __ for
additional information about the effects of the Reorganization on
shareholders, including:

For shareholders who retain their shares in the Reorganization:

- decreased liquidity in our common stock;
- decreased access to information about our company;
- immediate reductions in book value and earnings per share,
followed by anticipated increases over the long term, as
described in "Effects of the Reorganization on our Company"
below; and
- a slight increase in their percentage ownership of our
common stock.

For shareholders receiving cash in the Reorganization:

- receipt of $18.25 per share in cash;
- loss of their equity and voting interest in our company;
- federal income tax liability for any cash received in the
Reorganization in excess of original cost; and
- liquidation of a relatively illiquid ownership interest in
our company without incurring brokerage costs.

Additional effects on affiliated shareholders (directors, executive
officers and 10% shareholders):
- elimination of individual reporting obligations under
federal securities laws;
- elimination of a "safe harbor" for dispositions of their
shares under federal securities laws; and
- slight consolidation of management ownership (from
approximately 40.3% to 43.4% of shares outstanding).

- EFFECTS OF THE REORGANIZATION ON OUR COMPANY:

- our number of record shareholders, measured as of September 30,
2004, will be reduced from approximately 499 to approximately 233
and the number of outstanding shares of Nicolet common stock will
decrease from approximately 2,957,654 to approximately 2,726,425,
resulting in a slight decrease in the number of shares that will
be available for purchase and sale in the market;

- we will be entitled to suspend the registration of our common
stock under the Securities Exchange Act of 1934, as amended,
which will mean that we will no longer be required to file
reports with the Securities and Exchange Commission (the "SEC")
or be classified as a public company;

- the book value per share of Nicolet common stock as of September
30, 2004 on a historical basis will be reduced by approximately
5.8%, from approximately $11.23 on a historical basis to
approximately $10.58 on a pro forma basis;

- our diluted earnings per share as of September 30, 2004 and
December 31, 2003 on a historical basis will decrease by
approximately 3.1%, from approximately $0.32 to $0.31 on a pro
forma basis;

- our book value and earnings per share are likely to increase over
the long term as a result of our anticipated expense savings and
reduction in the number of outstanding shares;

- the percentage ownership of Nicolet common stock beneficially
owned by its executive officers and directors as a group will
increase slightly from approximately 40.25% to 43.68%; and

- our capital will be reduced, including a decrease in Tier I
capital as of September 30, 2004, from approximately $35 million
on a historical basis to approximately $31 million on a pro forma
basis.

See page for a more detailed description of these effects.
--

- REASONS FOR THE REORGANIZATION: Our principal reasons for effecting
the Reorganization are:

- the cost savings of approximately $514,500 per year that we
expect to experience as a result of the deregistration of our
common stock under the

Securities Exchange Act of 1934, as amended, and the anticipated
decrease in expenses relating to servicing a relatively large
number of shareholders holding small positions in our common
stock;

- our belief that our shareholders have not benefited
proportionately from the costs relating to the registration of
our common stock, principally as a result of the thin trading
market for our stock; and

- increased time and flexibility for our management team to focus
on our customers and communities and to consider and initiate
actions designed to produce long-term benefits and growth.

See page for more detailed information.
--

- FAIRNESS OF THE REORGANIZATION: We believe that the Reorganization is
fair to our unaffiliated shareholders who will receive cash in the
Reorganization and to our unaffiliated shareholders who will retain
their shares. The board of directors has unanimously approved the Plan
and the transactions contemplated thereby. The board's opinion is
based on several factors, which are summarized beginning on page __.
These factors include:

- Report and Opinion of Independent Financial Advisor: Ryan Beck &
Co., an independent financial advisor to the board of directors,
has delivered a report that a range of $17.25 to $18.75 per share
represents the range of fair value of the Nicolet common stock to
be exchanged for cash in the Reorganization and its opinion that
the price of $18.25 per share chosen by the board to be paid in
the Reorganization is fair, from a financial point of view, to
Nicolet's shareholders who will be cashed out under the Plan. See
"Opinion of Independent Financial Advisor" on page __ for more
information relating to the report and related financial
analyses.

- Historical Market Prices of the Nicolet Common Stock: Our stock
is not listed on an exchange, and there is not an organized
trading market for our common stock. To our knowledge, the
trading prices for our common stock during the past two years
have ranged from $12.50 to $15.00 per share. We have never
repurchased any shares of our common stock. The price per share
to be paid in the Reorganization represents a 22% premium over
the last known trading price for our common stock prior to our
announcement of the Reorganization and over the average trading
price for our common stock for 2004.

- Earnings Multiple: The price per share that will be paid in the
Reorganization reflects a multiple of 55.3 times Nicolet's
earnings per share for the year ended December 31, 2003 and 42.8
times its annualized earnings for the 12 months ended September
30, 2004.

- Premium to Book Value: The price per share to be paid in the
Reorganization reflects a multiple of 1.62 times Nicolet's
September 30, 2004 book value per share, representing a 62%
premium.

- EFFECTIVENESS OF THE REORGANIZATION: The Reorganization will not be
effected unless and until Nicolet's shareholders approve the
Reorganization. Assuming these events occur, and as shortly thereafter
as is practicable, Nicolet will file articles of merger with the
Wisconsin Department of Financial Institutions and thereby effect the
Reorganization. We anticipate that the Reorganization will be effected
in March of 2005. See page __ for more detailed information.

- FINANCING FOR THE REORGANIZATION: We estimate that approximately
$4,256,429 will be required to pay for the shares of Nicolet common
stock exchanged for cash in the Reorganization and that we will incur
approximately $125,000 in transaction expenses. We intend to finance
the Reorganization through a $5,000,000 line of credit. See "Source of
Funds and Expenses" on page for additional information.
---

- DISSENTERS' RIGHTS: Shareholders are entitled to dissenters' rights in
connection with the approval of the Plan. See page and Appendix B
-- ---------
for additional information.

QUESTIONS AND ANSWERS ABOUT THE REORGANIZATION

Q: WHY DID YOU SEND ME THIS PROXY STATEMENT?

A: We sent you this Proxy Statement and the enclosed proxy card because our
board of directors is soliciting your votes for use at our special meeting
of shareholders.

This Proxy Statement summarizes information that you need to know in order
to cast an informed vote at the meeting. However, you do not need to attend
the meeting to vote your shares. Instead, you may simply complete, sign and
return the enclosed proxy card.

We first sent this Proxy Statement, notice of special meeting and the
enclosed proxy card on or about , 2005 to all shareholders
------------
entitled to vote. The record date for those entitled to vote is ,
----------
2005. On that date, there were shares of our common stock
----------
outstanding. Shareholders are entitled to one vote for each share of common
stock held as of the record date.

Q: WHAT IS THE TIME AND PLACE OF THE SPECIAL MEETING?

A: The special meeting will be held on , 2005, at Nicolet National
----------
Bank, 110 South Washington Street, Green Bay, Wisconsin, at a.m./p.m.
----

Q: WHO MAY BE PRESENT AT THE SPECIAL MEETING AND WHO MAY VOTE?

A: All holders of our common stock may attend the special meeting in person.
However, only holders of our common stock of record as of __________, 2005
may cast their votes in person or by proxy at the special meeting.

Q: WHAT IS THE VOTE REQUIRED?

A: The proposal to approve the Plan must receive the affirmative vote of the
holders of a majority of the issued and outstanding shares of common stock.
If you do not vote your shares, either in person or by proxy, or if you
abstain from voting on the proposal, it has the same effect as if you voted
against the proposal to approve the Plan. In addition, if your shares are
held in a brokerage account and you do not instruct your broker on how to
vote on the proposal, your broker will not be able to vote for you. This
will have the same effect as a vote against the proposal to approve the
Plan.

Q: WHAT IS THE PROPOSED REORGANIZATION?

A: We are proposing that our shareholders approve a merger with an affiliated
interim corporation in which holders of 1,500 or fewer shares of Nicolet
common stock will receive the fair value of their shares in cash, while
holders of more than 1,500 shares will be unaffected. The purpose of the
transaction is to allow us to terminate our SEC reporting obligations
(referred to as "going private") by reducing the number of our record
shareholders to less than 300. This will allow us to suspend our
registration under the Securities Exchange Act of 1934, as amended, and
relieve us of the costs typically associated with the preparation and
filing of public reports and other documents.

Q: WHAT WILL I RECEIVE IN THE REORGANIZATION?

A: If you own in record name 1,500 or fewer shares of our common stock on the
date of the Reorganization, you will receive $18.25 in cash from us for
each effective share you own. If you own in record name more than 1,500
shares of our common stock on the date of the Reorganization, you will not
receive any cash for your shares and will continue to hold the same number
of shares of our common stock as you did before the transaction.

Q: WHY IS 1,500 SHARES THE "THRESHOLD' NUMBER FOR DETERMINING WHICH
SHAREHOLDERS WILL BE CASHED OUT AND WHICH SHAREHOLDERS WILL REMAIN AS
SHAREHOLDERS?

A: The purpose of the Reorganization is to reduce the number of our record
shareholders to fewer than 300, which will allow us to de-register as an
SEC reporting company. Our board selected 1,500 shares as the "threshold"
to ensure that after the Reorganization, if approved, we will have fewer
than 300 record shareholders.

Q: MAY I BUY ADDITIONAL SHARES IN ORDER TO REMAIN A NICOLET SHAREHOLDER?

A: Yes. The key date for acquiring additional shares is the date of our
shareholders' meeting, , 2005. This is because we anticipate
-------------
effecting the Reorganization on or very shortly after that date. So long as
you are able to acquire a sufficient number of shares to ensure that you
are the record owner of more than 1,500 shares by the time we effect the
Reorganization, your shares of common stock will not be cashed out in the
Reorganization.

Q: WHAT IF I HOLD MY SHARES IN "STREET NAME"?

A: The Reorganization will be effected at the record shareholder level. This
means that we will look at the number of shares registered in the name of a
single holder to determine if that holder's shares will be cashed out. For
shares held in "street name," if your brokerage firm holds more than 1,500
shares in total, you will not be cashed out, even if 1,500 or fewer shares
are held on your behalf. If you hold shares in "street name," you should
talk to your broker, nominee or agent to determine how the Reorganization
will affect you. Q: WHAT IS THE RECOMMENDATION OF OUR BOARD OF DIRECTORS
REGARDING THE PROPOSAL?

A: Our board of directors has determined that the Plan is fair to our
unaffiliated shareholders, both those who will continue as shareholders and
those who will receive cash, and that it is advisable and in the best
interests of Nicolet and its shareholders as a whole. Our board of
directors has therefore unanimously approved the Plan and all transactions
contemplated thereby and recommends that you vote "FOR" approval of the
Plan.

Q: WHAT DO I NEED TO DO NOW?

A: Please sign, date, and complete your proxy card and promptly return it in
the enclosed, self-addressed, postage-paid envelope so that your shares can
be represented at the special meeting.

Q: MAY I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY CARD?

A: Yes. Just send by mail a written revocation or a new, later-dated,
completed and signed proxy card before the special meeting or attend the
special meeting and vote in person. You may not change your vote by
facsimile or telephone.

Q: WHAT IF I DON'T RETURN A PROXY CARD OR VOTE MY SHARES IN PERSON AT THE
SPECIAL MEETING?

A: If you don't return your proxy card or vote your shares in person at the
special meeting, each of those shares will be treated as a non-vote and
will have the same effect as a vote against approval of the Plan.

Q: IF MY BROKER HOLDS MY SHARES IN "STREET NAME," WILL MY BROKER VOTE MY
SHARES FOR ME?

A: Your broker will vote your shares for you ONLY if you instruct your broker
how to vote for you. Your broker will mail information to you that will
explain how to give these instructions.

Q: WILL MY SHARES HELD IN "STREET NAME" OR ANOTHER FORM OF RECORD OWNERSHIP BE
COMBINED FOR VOTING PURPOSES WITH SHARES I HOLD OF RECORD?

A: No. Because any shares you may hold in street name will be deemed to be
held by a different shareholder than any shares you hold of record, any
shares so held will not be combined for voting purposes with shares you
hold of record. Similarly, if you own shares in various registered forms,
such as jointly with your spouse, as trustee of a trust or as custodian for
a minor, you will receive, and will need to sign and return, a separate
proxy card for those shares because they are held in a different form of
record ownership. Shares held by a corporation or business entity must be
voted by an authorized officer of the entity, and shares held in an IRA
must be voted under the rules governing the account.

Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?

A: No. After the Reorganization is completed, we will send instructions on how
to receive any cash payments that you may be entitled to receive.

Q: Will I have dissenters' rights in connection with the Reorganization?

A: Yes. Please see page and Appendix B for a discussion of dissenters'
-- ----------
rights in connection with the Reorganization.

Q: WHAT IF I HAVE QUESTIONS ABOUT REORGANIZATION OR THE VOTING PROCESS?

A: Please direct any questions about the Reorganization or the voting process
to our Chief Financial Officer, Jacqui A. Engebos, Nicolet National Bank,
110 South Washington Street, Green Bay, Wisconsin 54301, telephone (920)
430-1400.

SPECIAL FACTORS

PURPOSE OF THE REORGANIZATION

The primary purpose of the Reorganization is to enable us to suspend the
registration of our common stock under Section 12(g) of the Securities Exchange
Act, which will result in the elimination of the expenses related to our
disclosure and reporting requirements under the Act. It is also likely to
decrease the administrative expense we incur in servicing a large number of
record shareholders who own relatively small numbers of shares. Finally, we
expect that it will reduce the amount of time and attention our management team
will be required to devote to SEC reporting and compliance activities. This
will then enable them to focus more fully on serving our customers and
communities and initiating actions designed to produce long-term benefits and
growth.

As of September 30, 2004, fewer than 300 shareholders held approximately
92% of our outstanding shares of common stock. As a result, there is a limited
market for our shares and the board of directors believes there is little
likelihood that a more active market will develop. However, because we have
more than 300 shareholders of record and our common stock is registered under
Section 12(g) of the Securities Exchange Act, we are required to comply with the
disclosure and reporting requirements under the Securities Exchange Act and the
Sarbanes-Oxley Act of 2004 (the "Sarbanes-Oxley Act"). These requirements
include preparing and filing current and periodic reports with the SEC regarding
our business, financial condition, board of directors and management team and
having these reports reviewed by outside counsel and independent auditors. We
expect a significant increase in the cost of remaining a public company as a
result of the additional requirements prescribed by Section 404 of the
Sarbanes-Oxley Act, which will require documentation, testing and auditing of
our internal controls and is expected to place a significant burden on our
management team, given our relatively limited resources to fulfill this
compliance obligation.

The cost of complying with all of these requirements is substantial,
representing an estimated annual cost to us of approximately $514,500, which
includes the ongoing expense of $315,000 related to our preparation of the
internal controls report described above. In light of this expense and the lack
of an organized trading market for our common stock, the board believes we
receive little relative benefit from being registered under the Securities
Exchange Act. We also incur printing, postage, data entry, stock transfer and
other administrative expenses related to servicing shareholders who are record
holders of relatively small numbers of shares.

In view of this cost, particularly in light of the relatively small benefit
we believe our shareholders have received as a result of our status as a public
company, we believe the Reorganization will provide a more efficient means of
using our capital to benefit our shareholders. At present, we believe that our
thin trading market and the resulting inability of our shareholders to realize
the full value of their investment in our common stock through an efficient
market has resulted in little relative benefit for our shareholders as compared
to the costs of maintaining our registration.

The Plan is designed to substantially reduce the number of Nicolet's
shareholders of record. As of September 30, 2004, approximately 53% of our
shareholders owned 1,500 shares or less. The Reorganization will allow us to
pay these shareholders a fair price for their shares in a limited trading market
while eliminating the costs associated with servicing shareholders of record who
own relatively small numbers of shares and saving the significant
administrative, accounting, and legal

expenses incurred in complying with disclosure, reporting and compliance
requirements under the Securities Exchange Act and the Sarbanes-Oxley Act.

ALTERNATIVES CONSIDERED

In making our determination to proceed with the Reorganization, we
considered other alternatives. We rejected these alternatives because we
believed the Reorganization would be the simplest and most cost-effective manner
in which to achieve the purposes described above. These alternatives included:

Reverse Stock Split. We considered declaring a reverse stock split at a
ratio of 1-for-1,500, with cash payments to shareholders who would hold less
than a whole share on a post-split basis. This alternative would also have the
effect of reducing the number of shareholders, but would require us either to
account for outstanding fractional shares after the transaction or engage in a
subsequent forward stock split at the reverse split ratio. A reverse stock split
is also less flexible than a cash-out merger, which permits the company to make
special provisions for the treatment of certain shares, if desired. Although the
Plan does not contain any provisions that are materially inconsistent with the
effects of a reverse stock split, we believed it was important to select a
structure at the outset that would permit flexibility to address specific
situations to the extent consistent with the purpose of the Plan. In view of
this increased flexibility and the administrative inconvenience involved in the
issuance of fractional shares or in adding the additional step of a forward
stock split, the board determined that the Plan would be a more effective method
of reducing the number of shareholders and rejected the reverse stock split
alternative.

Issuer Tender Offer. We also considered an issuer tender offer to
repurchase shares of our outstanding common stock. The results of an issuer
tender offer would be unpredictable, however, due to its voluntary nature. We
were uncertain as to whether this alternative would result in shares being
tendered by a sufficient number of shareholders so as to result in our common
stock being held by fewer than 300 shareholders of record. As a result, we
rejected this alternative.

Expense Reductions in Other Areas. While we might be able to offset the
expenses relating to SEC registration and a large shareholder base by reducing
expenses in other areas, we have not pursued such an alternative because there
are no areas in which we could achieve comparable savings without adversely
affecting a vital part of our business or required compliance and internal
control expenses in other areas. Our most significant area of potential savings
would involve personnel costs, which would further burden the remaining
employees, many of whom are already tasked with increasing regulatory compliance
and reporting responsibilities. We believe that the expense savings that the
Reorganization will enable us to accomplish will not adversely affect our
ability to execute our business plan, but will instead position us to execute it
more efficiently. For these reasons, we did not analyze cost reductions in
other areas as an alternative to the Reorganization.

Business Combination. We have not sought, and have not received, any
proposals from third parties for any business combination transactions, such as
a merger, consolidation or sale of all or substantially all of our assets. Our
board did not seek any such proposals because these types of transactions are
inconsistent with the narrower purpose of the proposed transaction, which is to
discontinue our SEC reporting obligations. The board believes that by
implementing a deregistration transaction, expenses will be reduced and our
management will be better positioned to focus its attention on our core business
and on activities that build shareholder value.

Maintaining the Status Quo. The board considered maintaining the status
quo. In that case, we would continue to incur the significant expenses, as
outlined above, of being an SEC reporting company without the expected
commensurate benefits. As a result, the board considered maintaining the status
quo not to be in our best interests or the best interests of our unaffiliated
shareholders and rejected this alternative.

BACKGROUND OF THE REORGANIZATION

During our May 2003 strategic planning sessions, our directors and
executive officers discussed the topic of "going private" as part of our capital
planning session. Although the group viewed it favorably, the subject was not
pursued immediately in view of more urgent strategic business initiatives.

The topic resurfaced during a discussion between our President, Robert B.
Atwell and a representative from our external audit firm in September 2004.
During this discussion, our auditor questioned whether the current and
prospective costs of SEC compliance were offset by a corresponding benefit to
our shareholders. For example, our "hard costs" of compliance (legal, audit and
consulting fees related directly to SEC compliance activities) may not be
balanced in our case by the typical benefits of status as a public company, such
as an active, liquid trading market or the ability to use our stock as
acquisition currency. Discussion centered around the fact that the costs
incurred did not represent a proportionate shareholder benefit and that the
board needed to consider alternatives as a matter of exercising its fiduciary
duty to the Company and its shareholders. Management had previously discussed
the additional costs associated with internal controls documentation, testing,
reporting and auditing requirements that would begin to affect us during the
next year as a result of the Sarbanes Oxley Act and related SEC regulations. We
were anticipating a significant increase in compliance and audit expenses as a
result of these requirements, particularly in 2005, which would be the year for
which we would first be required to produce an attested report.

This meeting prompted subsequent discussion during late September 2004
among Mr. Atwell and our Executive Vice President, Michael E. Daniels, and our
Chief Financial Officer, Jacqui A. Engebos, regarding these issues. They also
discussed them with Susan Merkatoris, the Chair of the Company's audit
committee, particularly with respect to the prospective costs and procedures
involved in complying with the upcoming internal controls report under Section
404 of the Sarbanes-Oxley Act. In view of these issues, Ms. Merkatoris
recommended further consideration of a going-private transaction.

On October 18, 2004, Mr. Atwell requested that the Executive Committee
discuss a possible going-private transaction at its October 22, 2004 meeting. At
that meeting, the Executive Committee, consisting of Messrs. Atwell, Daniels,
Ellsworth, Hendrickson, Hetzel and Long discussed the advantages and
disadvantages of a going-private transaction, as more fully described in
"-Purpose of the Reorganization;" "-Reasons for the Reorganization;" and
"-Potential Disadvantages of the Reorganization."

In view of these advantages and disadvantages, the Committee considered the
following threshold issues: (i) the Company's short-term and long-term strategic
objectives; (ii) the role the Company's stock plays in the community and in the
marketplace; (iii) the extent to which the Company's shareholders are also
customers and promoters of the Bank's business; and (iv) whether financing could
be obtained on acceptable terms in order to finance a going-private transaction.
After discussion, the Committee placed a further discussion of these issues on
the agenda for the

November 16, 2004 board meeting. The Committee also decided, based upon
counsel's recommendation, that the Company should engage an independent
financial advisor to advise the Board with respect to the consideration to be
paid in the contemplated transaction. Ms. Engebos then interviewed three firms
that had been recommended by counsel and members of the Committee. After
presenting the results of these interviews to management and the Board, Ryan,
Beck & Co., Inc. was chosen as the financial advisor for the proposed
transaction. The Board's selection was based on Ryan Beck's reputation and
experiences in rendering valuation and fairness opinions, both generally and in
the context of going-private transactions, and its knowledge of the financial
services industry and the Company's business.

Between October 22, 2004 and November 16, 2004, Ms. Engebos reviewed the
shareholder list and discussed with Messrs. Atwell and Daniels the appropriate
cash-out threshold to present for consideration by the Board. They determined
that a 1,500-share threshold would enable the Company to reduce its number of
record shareholders to approximately 233, which they believed provided an
appropriate margin to allow for stock option exercises and other means of
creating new shareholders without jeopardizing the requirement to remain below
300 shareholders of record. They also consulted with counsel regarding the
terms of the Plan, and counsel prepared a draft of the Plan for consideration by
the Board.

On November 16, 2004, the Board of Directors met with counsel and
representatives of Ryan Beck and the Company's financial consulting firm to
discuss the potential going-private transaction. They discussed the effect of
the 1,500 share threshold recommended by management, issues that had been
considered by the Executive Committee and the matters that would be considered
by Ryan Beck in preparing an independent valuation of the common stock and a
fairness opinion relating to the cash-out price to be selected by the Board.
Following this discussion, the board decided to approve the plan in
substantially the form submitted by counsel with a 1,500 share cash-out
threshold but without a cash-out price. The board authorized Ryan Beck to
prepare an independent valuation of the common stock and to reconvene on
December 9, 2004 for Ryan Beck's presentation of its report and for discussion
of the appropriate cash-out price under the Plan. The Board withheld its
determination of the substantive fairness of the Plan but, based on the factors
discussed in "-Recommendation of the Board of Directors; Fairness of the
Reorganization-Procedural Fairness," determined that the Plan was procedurally
fair to unaffiliated shareholders, both those receiving cash under the Plan and
those retaining their shares.

Between November 16, 2004 and December 9, 2004, Ryan Beck reviewed data
provided by management regarding Nicolet's performance, held various discussions
with members of the management team and conducted the analyses supporting the
valuation report. These activities are described in more detail in the "Opinion
of the Financial Advisor" section of this proxy statement. Included in the
information provided by management were net income projections of $3.0 million
for 2005, $3.5 million for 2006, $4.0 million for 2007, $4.6 million for 2008
and $5.3 million for 2009. These projections assume asset growth of 12.0% per
year for the years 2005 to 2009 and a tax rate of 28% per year for the years
2005 to 2009. They also assume that Nicolet has reached the age and asset size
necessary to properly leverage its infrastructure. Management also considered
the capacity of Nicolet's marketplace, the strength of its infrastructure,
Nicolet's maturity and Nicolet's past investment in growth opportunities in
formulating its projections.

On the morning of December 9, 2004, the Board reconvened to consider the
financial terms of the Plan. They discussed the price to be offered to
unaffiliated shareholders receiving cash under the Plan, both from the
standpoint of a fairness to those receiving cash and those retaining their
shares, based on the multiples and market price information described under
"---Recommendation of the Board of Directors; Fairness of the
Reorganization-Substantive Fairness." The Board then authorized the Executive
Committee to meet with the representative of Ryan Beck later that day to review
the independent valuation report, with the non-management members of the
committee (Messrs. Ellsworth, Hendrickson, Hetzel and Long) being directed to
set the cash-out price based on the Board's discussions as well as the contents
of the valuation report. The price and the Plan would then be submitted to the
full Board for ratification and approval.

Pursuant to the authorization described above, the Executive Committee met
on the afternoon of December 9, 2004 and reviewed with Ryan Beck the independent
valuation report. The Committee discussed the report and the other pricing
factors considered by the Board earlier that day. Following such discussion,
the non-management members of the Committee selected a price of $18.25 as the
cash-out price and Ryan Beck delivered its opinion that such price was fair,
from a financial point of view, to shareholders who would be cashed out under
the Plan. The Committee then determined that the Plan was substantively fair to
unaffiliated shareholders who would receive cash and to those who would retain
their shares and presented the Plan and its fairness determinations to the Board
for ratification and approval, which the Board provided the next day.

REASONS FOR THE REORGANIZATION

As described above in "-Purpose of the Reorganization," the Reorganization
will allow us to:

- save the administrative, accounting and legal expenses incurred in
complying with the disclosure and reporting requirements under the
Securities Exchange Act;

- eliminate the costs associated with servicing shareholders who own
relatively small numbers of shares; and

- provide additional time and flexibility for our management team to
focus on our core business and on increasing shareholder value.

We estimate that we will save approximately $514,500 per year in the
following areas as a result of the reduction in the number of shareholders and
the elimination of the registration of our common stock under the Securities
Exchange Act.

Legal fees $ 35,000
Independent auditor fees 101,000
Accounting/internal controls
consulting fees 30,000
Edgar conversion, printing and
mailing expenses 33,5000
Section 404 Compliance Costs 315,000
--------

Total Costs $514,500
========

We also incur substantial indirect costs in management time spent in
securities compliance activities. Although it is impossible to quantify these
costs specifically, we have one vice president who spends an average of
approximately 50% of her time on these activities, with a significant proportion
of that time occurring during the first quarter of each year. These activities
include preparing and reviewing SEC-compliant financial statements and periodic
reports, maintaining and overseeing our disclosure and internal controls,
monitoring and reporting transactions and other data relating to insiders' stock
ownership, and consulting with external auditors and counsel on compliance
issues. We expect that the amount of time spent in compliance-related
activities would increase in 2005, principally in connection with the
preparation of management's report on internal controls under Section 404 of the
Sarbanes-Oxley Act.

Eliminating the registration of our common stock under the Securities
Exchange Act will also:

- reduce significantly our legal, accounting, and other compliance costs
relating to the requirements of the Sarbanes-Oxley Act and the
Securities Exchange Act described in "-Background of the
Reorganization" above.

- reduce significantly the amount of information we are required to
furnish to its shareholders and the public generally; and

- eliminate the information we are required to furnish to the Securities
and Exchange Commission.

In addition, our common stock is not listed on an exchange and has
historically been very thinly traded, which can make it difficult for our
shareholders to buy or sell our stock efficiently. We also do not have
sufficient liquidity in our common stock to enable us to use it as potential
acquisition currency. As a result, we do not believe that the registration of
our common stock under the Securities Exchange Act of 1934 has benefited our
shareholders in proportion to the costs we have incurred as a result of this
registration.

Although our SEC reporting obligations and the illiquid nature of our
trading market have existed since we began filing reports with the SEC in 2002
and the Sarbanes-Oxley Act was enacted shortly thereafter, we are undertaking a
going-private transaction at this point in our history principally in view of
the significant increase in our reporting obligations resulting from our
analysis of the nature, extent and additional expense of the internal control
documentation and audit requirements that will begin to affect us in 2005.
Furthermore, given the numerous legislative and regulatory changes that have
arisen since the Act became law, such as accelerated and expanded current
reporting obligations, and in view of the evolving nature of disclosure and
compliance standards generally, we cannot predict that our compliance costs or
obligations will remain stable in future years. After considering the increasing
and unpredictable nature of these costs, the relative difficulty of controlling
them in the face of dynamic and challenging legal requirements, and, in
particular, the absence of a meaningful corresponding benefit, the board
determined that the Reorganization would serve the Company's long-term best
interests.

POTENTIAL DISADVANTAGES OF THE REORGANIZATION

Our board considered that some shareholders may prefer to continue as
Nicolet shareholders of an SEC reporting company, which is a factor weighing
against the Reorganization. We believe, however, that the disadvantages of
remaining a public company subject to the registration and reporting
requirements of the SEC outweigh any advantages. For example, we have no
present intention to raise capital through sales of securities in a public
offering in the future or to acquire other business entities using stock as the
consideration for such acquisition. Accordingly, we are not likely to make use
of any advantage that our status as a public company may offer.

In addition, our market liquidity after the Reorganization could be even
less than it is now because the number of shares of Nicolet common stock
available to be traded will decrease. A further decrease in market liquidity may
cause a decrease in the value of the shares. Conversely, however, a more limited
supply of our common stock could also prompt a corresponding increase in its
market price assuming stable or increased demand for the stock.

After the Reorganization, we will no longer be required to file public
reports of our financial condition and other aspects of our business with the
SEC. As a result, shareholders will have less legally mandated access to
information about our business and results of operations than they had prior to
the Reorganization. We do, however, plan to continue to provide annual and
quarterly reports to shareholders after the Reorganization. By deregistering
with the SEC, however, we will be able to produce these reports at a lower cost,
given that the disclosure requirements will be less extensive. We will also
continue to file publicly available regulatory financial reports with The Office
of the Comptroller of the Currency and the Federal Reserve Bank, which are our
primary banking regulators.

Finally, the Reorganization will require that we incur additional
indebtedness and will reduce our capital. However, we believe that we will be
able to service our debt and continue to be "well

capitalized" for regulatory purposes and that we will have sufficient capital to
support our anticipated growth.

EFFECTS OF THE REORGANIZATION ON NICOLET

Reduction in the Number of Shareholders of Record and the Number of
Outstanding Shares. Based on information as of September 30, 2004, we believe
that the Reorganization will reduce our number of record shareholders from
approximately 499 to approximately 233. We estimate that approximately 233,229
shares held by approximately 266 shareholders of record will be exchanged for
cash in the Reorganization. The number of outstanding shares of common stock as
of September 30, 2004 will decrease from approximately 2,957,654 to
approximately 2,726,425, representing a reduction of approximately 8%.

Transfer of Book Value. Because (1) the price to be paid to holders of
1,500 or fewer shares of common stock will be $18.25 per share, (2) the number
of shares of common stock expected to be cashed out as a result of the
Reorganization is estimated to be approximately 233,229, (3) the total cost to
Nicolet (including expenses) of effecting the Reorganization is expected to be
approximately $4,381,429, and (4) at September 30, 2004, our aggregate
shareholders' equity was approximately $33.2 million, or $11.23 per share, we
expect that, as a result of the Reorganization, the book value per share of
common stock as of September 30, 2004 will be decreased by approximately 5.8%,
from approximately $11.23 per share on a historical basis to approximately
$10.58 per share on a pro forma basis. We expect book value per share to
increase over the long term, however, given that fewer shares will be
outstanding.

Decrease in Capital. As a result of the Reorganization, our capital will
be reduced as of September 30, 2004 from approximately $33.2 million on a
historical basis to approximately $28.8 million on a pro forma basis. We
anticipate, however, that we will be "well capitalized" for bank regulatory
purposes and that our subsidiary, Nicolet National Bank, will remain "well
capitalized" for bank regulatory purposes.

Decrease in Earnings per Share. We anticipate an immediate reduction in
earnings per share as a result of the Reorganization. For example, we reported
the same $0.32 in diluted earnings per share for the first nine months of 2004,
as compared to $0.31 on a pro forma basis, representing a 3.1% decrease. Because
we will have fewer shares outstanding after the Reorganization and anticipate
significant future cost savings, however, our earnings per share are likely to
increase on a pro forma basis over the long term.

Elimination of Securities Exchange Act Registration. Our common stock is
currently registered under the Securities Exchange Act. After the
Reorganization, our common stock will not be registered under the Securities
Exchange Act, nor will we be subject to any reporting requirements under the
Securities Exchange Act. As a result, we expect to eliminate costs and expenses
associated with the Securities Exchange Act registration, which we estimate to
be approximately $514,500 on an annual basis. See "-Background of the
Reorganization" and "-Reasons for the Reorganization" for a discussion of the
nature of the information we will no longer be required to provide.

Effect on Market for Shares. Our common stock is not listed on an
exchange, nor will it be listed after the Reorganization. The failure to be
listed on an exchange, together with the reduction in public information
concerning Nicolet as a result of its not being required to file reports under
the Securities Exchange Act, could have an adverse effect on the liquidity of
our common stock. We

believe, however, that the incremental effect would be minimal in view of the
current lack of an organized trading market for our stock.

Financial Effects of the Reorganization. We estimate that approximately
$4,256,429 will be required to pay for the shares of Nicolet common stock
exchanged for cash in the Reorganization. Additionally, we estimate that
professional fees and other expenses related to the transaction will total
approximately $125,000. We do not expect that the payment to shareholders
receiving cash in the Reorganization and the payment of expenses will have a
material adverse effect on our capital adequacy, liquidity, and results of
operations or cash flow. Because we do not currently know the actual number of
shares that will be cashed out in the Reorganization, we do not know the net
amount of cash to be paid to shareholders in the Reorganization. You should
read the discussion under "Description of the Plan-Sources of Funds and
Expenses" for a description of the sources of funds for the Reorganization and
the fees and expenses we expect to incur in connection with the transaction.

EFFECTS OF THE REORGANIZATION ON AFFILIATES

In addition to the effects the Reorganization will have on shareholders
generally, which are described in the next section, the Reorganization will have
some additional specific effects on our executive officers and directors, each
of whom may, as a result of his position, be deemed to be an affiliate of
Nicolet. As used in this Proxy Statement, the term "affiliated shareholder"
means any shareholder who is a director or executive officer of Nicolet or the
beneficial owner of 10% or more of Nicolet's outstanding shares, and the term
"unaffiliated shareholder" means any shareholder other than an affiliated
shareholder.

Reductions in Book Value and Earnings per Share. Assuming the
Reorganization had been completed as of September 30, 2004, our affiliated
shareholders, including Messrs. Atwell and Daniels, would experience the same
changes in book value and earnings per share as our unaffiliated shareholders
who will be retaining their equity interest in our company: (i) a 5.8% decrease
in book value per share from $11.23 on a historical basis to $10.58 on a pro
forma basis; and (ii) a 3.1% decrease in diluted earnings per share for the
first nine months of 2004 from $0.32 on a historical basis to $0.31 on a pro
forma basis. If the Reorganization had been effected on December 31, 2003, their
2003 earnings per share would be the same amount on a pro forma basis. We
anticipate, however, that these amounts will increase over the long term as a
result of reductions in compliance expenses and total shares outstanding. See
"Information About Nicolet and its Affiliates-Stock Ownership by Affiliates" for
information about the number of shares of Nicolet common stock held by Messrs.
Atwell and Daniels and our other affiliates.

No Further Reporting Obligations Under the Securities Exchange Act. After
the Reorganization, our common stock will not be registered under the Securities
Exchange Act. As a result, our executive officers, directors and other
affiliates will no longer be subject to many of the reporting requirements and
restrictions of the Securities Exchange Act, including the reporting and
short-swing profit provisions of Section 16, and information about their
compensation and stock ownership will not be publicly available.

Consolidation of Management Ownership. As a result of the Reorganization,
we expect that the percentage of beneficial ownership of Nicolet common stock
held by our executive officers and directors as a group will increase slightly
from approximately 40.3% before the Reorganization to

approximately 43.4% after the Reorganization. None of the affiliated
shareholders will receive cash in the Reorganization because they each own more
than 1,500 shares of Nicolet common stock.

Rule 144 Not Available. Because our common stock will not be registered
under the Securities Exchange Act after the Reorganization, our executive
officers and directors may be deprived of the ability to dispose of their shares
of Nicolet common stock under Rule 144 under the Securities Act of 1933, which
provides a "safe harbor" for resales of stock by affiliates of an issuer.
Although they will continue to be able to sell their shares, the circumstances
of such sales will need to be examined by counsel on a case-by-case basis to
ensure compliance with federal securities laws.

EFFECTS OF THE REORGANIZATION ON SHAREHOLDERS GENERALLY

The Reorganization will have the following effects on shareholders
regardless of whether they are affiliated or unaffiliated shareholders. The
effects will vary depending on whether the shareholder (i) receives cash for all
of his or her shares, (ii) receives cash for some, but not all, of his or her
shares and remains a shareholder, or (iii) does not receive cash for any of his
or her shares and continues to hold the same number of shares following the
Reorganization. Because a shareholder may own shares in more than one capacity
(for example, individually and through an individual retirement account), a
shareholder may receive cash for some of his or her shares while retaining
ownership of the remaining shares following the Reorganization.

The following sections describe the material effects that we expect to
result from the Reorganization with respect to shares that are exchanged for
cash and shares that are unaffected by the Reorganization. You may experience a
combination of these effects if you receive cash for some of your shares while
retaining ownership of other shares. The effects described below assume that
233,229 shares are exchanged for cash in the Reorganization.

Cashed-out Shareholders. As to shares of our common stock that are
exchanged in the Reorganization for cash, shareholders will experience the
following effects:

- Receipt of Cash. Shareholders will receive $18.25 in cash per share,
without interest.

- Loss of Ownership Interest. Shareholders will no longer have any
equity or voting interest in Nicolet and will not participate in any
future potential earnings or growth of the company or in any
shareholder votes.

- Taxes. Shareholders likely will be required to pay federal and, if
applicable, state and local income taxes on cash received in the
Reorganization. See "-Federal Income Tax Consequences of the
Reorganization."

- No Trading Costs. Shareholders will be able to liquidate their
ownership interests without incurring brokerage costs.

Remaining Shareholders. As to shares of our common stock that are not
exchanged for cash in the Reorganization, shareholders will experience the
following effects:

- Continuing Interest. Shareholders will retain an ongoing equity
interest in Nicolet and the ability to participate in any future
potential earnings or growth.

- Decreased Liquidity. We anticipate that the liquidity of our common
stock will decrease as a result of the reduction in the number of
shareholders from approximately 499 to approximately 233. The absence
of a larger shareholder base and an organized trading market may
restrict your ability to transfer your shares of stock following the
Reorganization. See "-Effects of the Reorganization on Nicolet-Effect
on Market for Shares."

- Decreased Access to Information. If the Reorganization is completed,
we intend to suspend the registration of our common stock under the
Securities Exchange Act. As a result, we would no longer be required
to file periodic reports with the Securities and Exchange Commission.
See "-Effects of the Reorganization on Nicolet-Elimination of
Securities Exchange Act Registration."

- Reduction in Book Value per Share. Assuming the Reorganization had
been completed as of September 30, 2004, the book value per share of
our common stock as of September 30, 2004 would have been reduced from
approximately $11.23 per share on a historical basis to approximately
$10.58 per share on a pro forma basis, representing a 5.8% decrease.
We expect book value per share to increase over the long term,
however, given that fewer shares will be outstanding.

- Decrease in Earnings per Share. Assuming the Reorganization had been
completed as of December 31, 2003, our diluted earnings per share
would have decreased 3.1% from $0.32 per share on a historical basis
as of December 31, 2003 to approximately $0.31 per share on a pro
forma basis. Had the Reorganization been completed as of September 30,
2004, the decrease would have been the same on a pro forma basis. We
anticipate, however, that our earnings per share will increase over
the long term as a result of the reduction in expenses and in total
shares outstanding.

- Slight Increase in Percentage Interest. Shareholders will experience a
slight increase in their respective ownership percentages because
there will be fewer shares outstanding.

FEDERAL INCOME TAX CONSEQUENCES OF THE REORGANIZATION

Presented below are the material federal income tax consequences of the
Reorganization to: (i) shareholders (including any affiliated shareholders) who
will receive cash in the Reorganization; (ii) Messrs. Atwell, Daniels and all
other shareholders who will retain shares of Nicolet common stock after the
Reorganization; and (iii) Nicolet itself.

The discussion does not address all U.S. federal income tax considerations
that may be relevant to certain Nicolet shareholders in light of their
particular circumstances. The discussion assumes that the Nicolet shareholders
hold their shares of Nicolet common stock as capital assets (generally for
investment). In addition, the discussion does not address any foreign, state or
local income tax consequences of the Reorganization. The following summary does
not address all U.S. federal income tax considerations applicable to certain
classes of shareholders, including:

- financial institutions;
- insurance companies;
- tax-exempt organizations;

- dealers in securities or currencies;
- traders in securities that elect to mark-to-market;
- persons that hold Nicolet common stock as part of a hedge, straddle or
conversion transaction;
- persons who are considered foreign persons for U.S. federal income tax
purposes;
- persons who acquired or acquire shares of Nicolet common stock
pursuant to the exercise of employee stock options or otherwise as
compensation; and
- persons who do not hold their shares of Nicolet common stock as a
capital asset.

ACCORDINGLY, WE RECOMMEND THAT NICOLET SHAREHOLDERS CONSULT THEIR OWN TAX
ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE
REORGANIZATION BASED ON THEIR SPECIFIC SITUATIONS, INCLUDING APPLICABLE FEDERAL,
FOREIGN, STATE AND LOCAL TAX CONSEQUENCES.

The receipt by a shareholder of cash in the Reorganization will be a
taxable transaction for federal income tax purposes under the United States
Internal Revenue Code of 1986, as amended (the "Code").

Federal Income Tax Consequences to Shareholders Receiving Cash in the
Reorganization

Under Section 302 of the Code, a shareholder will recognize gain or loss
upon receiving cash in the Reorganization if:

- the Reorganization results in a "complete redemption" of all of the
shares held by a shareholder immediately prior to the Reorganization;
- the receipt of cash is "substantially disproportionate" with respect
to the shareholder; or
- the receipt of cash is "not essentially equivalent to a dividend" with
respect to the shareholder.

These three tests are applied by taking into account not only shares that a
shareholder actually owns, but also shares that the shareholder constructively
owns pursuant to Section 318 of the Code, as described below.

If any one of the three tests is satisfied, the shareholder will recognize
gain or loss on the difference between the amount of cash received by the
shareholder pursuant to the Reorganization and the tax basis in the shares held
by such shareholder immediately prior to the Reorganization. Provided that
these shares constitute a capital asset in the hands of the shareholder, this
gain or loss will be long-term capital gain or loss if the eligible shares are
held for more than one year and will be short-term capital gain or loss if such
shares are held for one year or less.

Under the constructive ownership rules of Section 318 of the Code, a
shareholder is deemed to constructively own shares owned by certain related
individuals and entities in addition to shares directly owned by the
shareholder. For example, an individual shareholder is considered to own shares
owned by or for his or her spouse and his or her children, grandchildren and
parents ("family attribution"). In addition, a shareholder is considered to own
a proportionate number of shares owned by estates or certain trusts in which the
shareholder has a beneficial interest, by partnerships in which the shareholder
is a partner, and by corporations in which 50% or more in value of the stock

Is owned directly or indirectly by or for such shareholder. Similarly, shares
directly or indirectly owned by beneficiaries of estates of certain trusts, by
partners of partnerships and, under certain circumstances, by shareholders of
corporations may be considered owned by these entities ("entity attribution").
A shareholder is also deemed to own shares which the shareholder has the right
to acquire by exercise of an option.

The receipt of cash by a shareholder in the Reorganization will result in a
"complete redemption" of all of the shareholder's shares held immediately prior
to the Reorganization as long as the shareholder does not constructively own any
shares of common stock immediately after the Reorganization. However, a
shareholder may qualify for gain or loss treatment under the "complete
redemption" test even though such shareholder constructively owns shares of
common stock provided that (1) the shareholder constructively owns shares of
common stock as a result of the family attribution rules (or, in some cases, as
a result of a combination of the family and entity attribution rules), and (2)
the shareholder qualifies for a waiver of the family attribution rules (such
waiver being subject to several conditions, one of which is that the shareholder
has no interest in Nicolet immediately after the Reorganization, including as an
officer, director or employee, other than an interest as a creditor).

It is anticipated that most shareholders who receive cash in the
Reorganization will qualify for capital gain or loss treatment as a result of
satisfying the "complete redemption" requirements. However, if the constructive
ownership rules prevent compliance with these requirements, such shareholder may
nonetheless qualify for capital gain or loss treatment by satisfying either the
"substantially disproportionate" or the "not essentially equivalent to a
dividend" requirements. In general, the receipt of cash in the Reorganization
will be "substantially disproportionate" with respect to the shareholder if the
percentage of shares of common stock owned by the shareholder immediately after
the Reorganization is less than 80% of the percentage of shares directly and
constructively owned by the shareholder immediately before the Reorganization
(giving effect to the difference in number of outstanding shares due to the
Reorganization), and the shareholder does not own directly and constructively
50% or more of Nicolet's outstanding common stock after the Reorganization.
Alternatively, the receipt of cash in the Reorganization will, in general, be
"not essentially equivalent to a dividend" if the Reorganization results in a
"meaningful reduction" in the shareholder's proportionate interest in Nicolet.

If none of the three tests described above is satisfied, the shareholder
will be treated as having received a taxable dividend in an amount equal to the
entire amount of cash received by the shareholder pursuant to the
Reorganization.

No ruling has been or will be obtained from the Internal Revenue Service in
connection with the Reorganization.

Federal Income Tax Consequences to Shareholders Who Do Not Receive Cash in the
---
Reorganization

Messrs. Atwell and Daniels and other affiliated and unaffiliated
shareholders who remain Nicolet shareholders following the Reorganization and do
not receive any cash in the Reorganization will not recognize gain or loss as a
result of the Reorganization. The Reorganization will not affect the adjusted
tax basis or holding period of any shares of Nicolet common stock that a
shareholder continues to own after the Reorganization.

Federal Income Tax Consequences to Nicolet and Nicolet National Bank

Neither Nicolet nor Nicolet National Bank will recognize gain or loss for
U.S. federal income tax purposes as a result of the Reorganization.

Non-corporate shareholders of Nicolet may be subject to backup withholding
at a rate of 28% on cash payments received in the Reorganization. Backup
withholding will not apply, however, to a shareholder who (1) furnishes a
correct taxpayer identification number and certifies that he or she is not
subject to backup withholding on the substitute Form W-9 included in the letter
of transmittal, (2) who provides a certificate of foreign status on an
appropriate Form W-8, or (3) who is otherwise exempt from backup withholding. A
shareholder who fails to provide the correct taxpayer identification number on
Form W-9 may be subject to a $50 penalty imposed by the Internal Revenue
Service.

THE PRECEDING DISCUSSION DOES NOT PURPORT TO BE A COMPLETE ANALYSIS OR
DISCUSSION OF ALL POTENTIAL TAX EFFECTS RELEVANT TO THE REORGANIZATION. THUS, WE
RECOMMEND THAT NICOLET SHAREHOLDERS CONSULT THEIR OWN TAX ADVISORS AS TO THE
PARTICULAR TAX CONSEQUENCES TO THEM OF THE REORGANIZATION BASED ON THEIR
SPECIFIC SITUATIONS, INCLUDING TAX RETURN REPORTING REQUIREMENTS, THE
APPLICABILITY AND EFFECT OF FOREIGN, FEDERAL, STATE, LOCAL AND OTHER APPLICABLE
TAX LAWS AND THE EFFECT OF ANY PROPOSED CHANGES IN THE TAX LAWS.

PRO FORMA EFFECT OF THE REORGANIZATION

The following selected pro forma financial data illustrates the pro forma
effect of the Reorganization on Nicolet's financial statements as of September
30, 2004, for the nine months ended September 30, 2004 and for the year ended
December 31, 2003. Management has prepared this information based on its
estimate that Nicolet will pay $4,256,429 to shareholders in the Reorganization
and approximately $125,000 in transaction expenses, for a total cost of
$4,381,429. Please see "Pro Forma Consolidated Financial Information" for the
complete pro forma financial information relating to this transaction.

SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA

(In thousands except per share data) As of and for the nine As of and
months ended for the year ended
September 30, 2004 December 31, 2003
------------------------- -------------------------
Actual Pro Forma Actual Pro Forma
------------ ----------- ------------ -----------

Net interest income $ 7,522 7,377 $ 7,747 7,554
Provision for loan losses 2,300 2,300 2,335 2,335
Noninterest income 2,621 2,621 3,198 3,198
Noninterest expense 6,550 6,550 7,211 7,211
Income tax (expense) 354 299 421 348
Net income $ 940 849 $ 978 858

PER COMMON SHARE
Basic earnings per share $ .32 .31 .33 .32
Diluted earnings per share .32 .31 .32 .31
Book value $ 11.23 10.58 10.92 10.24

AT PERIOD END
Assets $ 373,673 373,673 337,395 337,395
Stockholders' equity 33,216 28,835 32,229 27,848
Common shares outstanding 2,958 2,724 2,951 2,718

Weighted average shares outstanding 2,953 2,720 2,949 2,715

RECOMMENDATION OF THE BOARD OF DIRECTORS; FAIRNESS OF THE REORGANIZATION

The board has determined that the Plan is substantively and procedurally
fair to our unaffiliated shareholders who will receive cash in the
Reorganization. It has also determined that the Plan is substantively and
procedurally fair to unaffiliated shareholders who will retain their shares
following the Reorganization. The board of directors, including those directors
who are not employees of Nicolet, have unanimously approved the Plan, and the
board unanimously recommends that the shareholders vote for approval of the
Plan, which will effect the Reorganization. The board has also approved, and
unanimously recommends that the shareholders approve, the adjournment proposal
relating to our ability to obtain shareholder approval of the Plan.

All of our directors and executive officers have indicated that they intend
to vote their shares of common stock (and any shares with respect to which they
have or share voting power) in favor of the Plan and the adjournment proposal.
Our directors and executive officers beneficially owned approximately 40.3% of
the shares outstanding as of December 31, 2004. Although the board as a whole
recommends that the shareholders vote in favor of the Plan for the reasons set
forth in "-Reasons for the Reorganization," no director or executive officer is
making any recommendation to the shareholders in his or her individual capacity.

We considered a number of factors in determining to approve the
Reorganization, including the effects described under "-Effects of the
Reorganization on Nicolet," "-Effects of the Reorganization on Affiliates" and
"Effects of the Reorganization on Shareholders Generally" and the relative
advantages and disadvantages described under "-Reasons for the Reorganization"
and "-Potential Disadvantages of the Reorganization." The board also reviewed
the tax and pro forma financial effects of the Reorganization on Nicolet and its
shareholders.

After the Reorganization, our common stock will not be registered under the
Securities Exchange Act. The board considered the views of management regarding
the cost savings to be achieved by eliminating the reporting and disclosure
requirements related to the registration of the common stock under the
Securities Exchange Act. Similarly, the board also considered the prospective
decrease in the expenses related to servicing shareholders holding small
positions in our stock. Management determined that deregistration would result
in cost savings of approximately $514,500 per year.

Additionally, the board considered the effect that terminating the
registration of the common stock would have on the market for the common stock
and the ability of shareholders to buy and sell shares. However, the board
determined that, even as a public company, Nicolet has not had an

organized trading market for its common stock and that shareholders derive
little relative benefit from our status as a public company. The board
determined that the cost savings and reduced management time to be achieved by
terminating registration of the common stock under the Securities Exchange Act
outweighed any potential detriment from eliminating the registration.

We considered alternatives to the proposed going-private transaction but
ultimately approved the Reorganization proposal. Please read the discussion
under "-Alternatives Considered" for a description of these alternatives.

Substantive Fairness. The board considered numerous factors, discussed
below, in reaching its conclusions that the Plan is substantively fair to our
unaffiliated shareholders who will receive cash in the Reorganization and to our
unaffiliated shareholders who will retain their shares. In reaching these
conclusions, the board considered the following effects on these constituencies:

- Independent Valuation: According to a report delivered to the
board by Ryan Beck & Co., Inc., the range of fair value of the
Nicolet common stock as of December 9, 2004 was between $17.25
and $18.75 per share. The board considered this report as well as
the underlying factors and methodologies as factors in support of
its recommendation to approve the Plan and its conclusion as to
the fairness in relation to Nicolet's "going concern" value of
the proposed cash consideration to unaffiliated shareholders. In
determining the fairness of the transaction in relation to the
"going concern" value, our board relied upon the factors,
analyses and conclusions set forth by Ryan Beck & Co. in its
report and adopted these factors, analyses and conclusions as its
own. The board did not consider the amount per share that might
be realized in a sale of 100% of the stock of Nicolet because the
board determined that consideration of such an amount was
inappropriate in the context of a transaction that would not
result in a change of control. The board determined specifically
a price of $18.25 per share, which was within Ryan Beck & Co.'s
valuation range, was fair to cashed-out shareholders. The board
selected a price above the midpoint of that range in view of the
involuntary nature of the transaction for those receiving cash
and the relatively small incremental effect of the selected price
on those retaining their shares. See "Opinion of Financial
Advisor" for additional information.

- Opinion of Independent Financial Advisor: Ryan Beck & Co., Inc.,
an independent financial advisor to the board of directors, has
delivered its opinion that the $18.25 per share to be paid in the
Reorganization is fair to Nicolet's shareholders who will be
cashed out under the Plan. The board reviewed and considered the
financial analyses presented to the board in connection with the
opinion and adopted the advisor's conclusions and analyses as its
own. The board considered the conclusions drawn in the fairness
opinion as factors supporting its recommendation to approve the
Plan and its conclusion as to the fairness of the cash
consideration to unaffiliated shareholders who would receive cash
for their shares. Because the fairness opinion did not address
the fairness to unaffiliated shareholders retaining their shares
in the Reorganization, the board did not rely on the fairness
opinion in determining the fairness of the $18.25 price per share
to that group of shareholders. A copy of the opinion is attached
as Appendix C. See "Opinion of Independent Financial Advisor" for
-----------
additional information.

- Historical Market Prices of our Common Stock: Our stock is not
listed on an exchange, and there is not an organized trading
market for our common stock. To our knowledge, the trading prices
for the common stock during the past two years have ranged from
$12.50 to $15.00 per share. We have never repurchased any shares
of our common stock. The price per share to be paid in the
Reorganization represents a 22% premium over the last known
trading price for our common stock prior to announcement of the
Reorganization and over the average trading price for 2004. The
board considered the recent trading history of our common stock
in comparison to the cash consideration offered in the
Reorganization as a factor supporting its recommendation to
approve the Plan and its conclusion as to the fairness of the
cash consideration to unaffiliated shareholders, including those
who would receive cash and those who would retain their shares
following the Reorganization.

- Earnings: The price per share that will be paid in the
Reorganization reflects a multiple of 55 times Nicolet's earnings
per share for the year ended December 31, 2003 and 57 times its
annualized earnings per share for the 9 months ended September
30, 2004. The board viewed these multiples as factors supporting
its decision to approve the Plan and its conclusion as to the
fairness of the cash consideration to unaffiliated shareholders,
including those who would receive cash for their shares and those
who would retain their shares following the Reorganization.

- Book Value: The price per share to be paid in the Reorganization
reflects a multiple of 1.62 times Nicolet's September 30, 2004
book value per share. Although book value was a factor, among
others, that the board considered in determining the cash
consideration to be paid in the Reorganization, the board
determined that it was not directly relevant because book value
is a historical number that may not reflect the fair market
values of our assets and liabilities.

- Liquidity Provided: The Reorganization will provide liquidity,
without brokerage costs, to shareholders who will receive cash
for their shares in the Reorganization. We believe this provides
a significant benefit to investors seeking a more liquid
investment alternative, given the lack of an organized market for
our stock. The board considered the opportunity to provide this
liquidity as a factor supporting its recommendation to approve
the Plan and its conclusion as to the fairness of the cash
consideration to unaffiliated shareholders receiving cash in the
Reorganization.

- Tax Consequences: The board noted that the Reorganization would
not result in a taxable event for shareholders retaining their
shares in the Reorganization, as Messrs. Atwell and Daniels and
all of our directors are entitled to do. The board also
considered that, except with respect to shareholders who have
acquired their shares within the prior 12 months, the cash
consideration offered in the Reorganization would be taxed as a
long-term capital gain for shareholders terminating their actual
and constructive stock ownership in the Company. The facts that
the transaction would not result in a taxable event to
shareholders retaining their shares following the Reorganization
contributed to the board's recommendation and conclusion as

to the fairness of the transaction to unaffiliated shareholders
who would retain their shares following the Reorganization.
Although the transaction would result in a taxable event to
unaffiliated shareholders receiving cash in the Reorganization,
the board determined that this negative factor was mitigated
somewhat by the positive factor that the cash to be received by
these shareholders would likely receive tax-advantaged long-term
capital gains treatment.

- Absence of Firm Offers: The board considered the absence of any
firm offers for the acquisition of our company, the fact that the
board has no plans to seek an acquisition of our company in the
foreseeable future and its opinion that firm offers are not
likely to be forthcoming as factors tending to support its
recommendation to approve the Reorganization and its conclusion
as to the fairness of the cash consideration to unaffiliated
shareholders, including those who would receive cash for their
shares and those who would retain their shares following the
Reorganization.

In connection with its fairness determination, and given its determination
that the $18.25 per share cash consideration represented a premium over book
value, the board did not consider Nicolet's liquidation value in light of the
following reasons. First, because the vast majority of a bank's assets and
liabilities are monetary assets whose book values generally approximate their
fair market values, the liquidation values of these assets and liabilities would
generally command material discounts both to fair market value and, accordingly,
book value. In addition to the liquidation discounts, because the liquidation
of a financial institution is an extremely expensive and time-consuming process
involving significant regulatory procedures and numerous regulatory approvals,
the costs of the liquidation of a financial institution further reduce any net
assets that would otherwise be available to shareholders following liquidation.
In light of these factors, and because the Reorganization consideration was
greater than Nicolet's book value, the board of directors concluded that the
determination of a liquidation value was not material to the financial fairness
of the transaction. However, it is not possible to predict with certainty the
future value of our assets or liabilities or the intrinsic value that those
assets or liabilities may have to a specific buyer that has not been identified.
As a result, although we believe the possibility is remote, the liquidation of
our assets and liabilities could conceivably produce a higher value than our
value as a going concern.

After consideration of all of the foregoing information, the board
determined that a fair price to be paid to cashed-out shareholders in the
Reorganization is $18.25 per share. The board is not aware of any material
contracts, negotiations or transactions, other than in conjunction with the
Reorganization as described in "-Background of the Reorganization," during the
preceding two years for (1) the merger or consolidation of Nicolet into or with
another person or entity, (2) the sale or other transfer of all or any
substantial part of the assets of Nicolet, (3) a tender offer for any
outstanding shares of Nicolet common stock, or (4) the election of directors to
our board.

Procedural Fairness. The board of directors is seeking shareholder approval
of the transactions contemplated by the Plan. The vote of a majority of the
issued and outstanding shares of Nicolet common stock will be required to
approve it. Approval by a majority of unaffiliated shareholders is not required.
The board determined that such a voting requirement was unnecessary in view of
the relatively high vote required to approve the Plan under Wisconsin law, the
equal

application of the Plan's provisions to affiliated and unaffiliated
shareholders, and each shareholder's right to dissent from the Plan and obtain
the fair value of his or her shares under Wisconsin law.

In addition, the board noted that shareholders who wish to increase their
record holdings in order to avoid being cashed out may do so by consolidating
their ownership, if applicable, or purchasing shares of Nicolet common stock
from other shareholders prior to the effective time of the Reorganization. The
Reorganization will also provide liquidity, without brokerage costs, to
shareholders receiving cash in the Reorganization.

No unaffiliated representative acting solely on behalf of unaffiliated
shareholders for the purpose of negotiating the terms of the Reorganization or
preparing a report covering its fairness was retained by Nicolet or by a
majority of directors who are not employees of Nicolet. In rendering its
fairness determination, the board concluded that the Reorganization is fair
regardless of whether certain other procedural safeguards were used, such as the
retention of an unaffiliated shareholder representative, because the Plan treats
affiliated and unaffiliated shareholders identically. In making its
determination of fairness, the board also considered the other procedural
safeguards that were implemented. In that regard, the board noted that an
independent financial advisor had been engaged and had considered and rendered
its opinion as to the fairness of the consideration payable in the
Reorganization, from a financial point of view, to shareholders who will be
cashed out under the Plan. Because the board obtained an independent valuation
report and fairness opinion from an unaffiliated entity, the board determined
that the cost of obtaining an additional fairness opinion or valuation from
another unaffiliated representative would not provide any meaningful additional
benefit. The board also considered that the transaction was approved by all of
the directors who are not employees of Nicolet. After consideration of the
factors described above, the board believes that the Reorganization is
procedurally fair notwithstanding the absence of such an unaffiliated
shareholder approval requirement or unaffiliated representative.

We have not made any provision in connection with the Reorganization to
grant unaffiliated shareholders access to our corporate files, except as
provided under the Wisconsin Business Corporation Law, or to obtain legal
counsel or appraisal services at our expense. With respect to unaffiliated
shareholders' access to our corporate files, the board determined that this
Proxy Statement, together with our other filings with the SEC, provide adequate
information for unaffiliated shareholders to make an informed decision with
respect to the Plan. The board also considered the fact that under the Wisconsin
Business Corporation Law, and subject to specified conditions set forth under
Wisconsin law, shareholders have the right to review Nicolet's relevant books
and records of account. As for obtaining legal counsel or appraisal services for
unaffiliated shareholders at Nicolet's expense, the board did not consider these
necessary or customary. In deciding not to adopt these additional procedures,
the board also took into account factors such as Nicolet's size and the cost of
such procedures.

After consideration of the factors described above, the board of directors
has determined that the Plan is procedurally fair, notwithstanding the absence
of an unaffiliated shareholder approval requirement, an unaffiliated shareholder
representative and the provision of legal counsel or appraisal services at our
expense, to unaffiliated shareholders who will receive cash in the
Reorganization. The board has also determined that the Plan is procedurally
fair to unaffiliated shareholders who will retain their shares. Finally, it has
determined that the Plan is substantively and procedurally fair to affiliated
shareholders for the same reasons specified as to unaffiliated shareholders,
given that the Plan does not distinguish between these groups.

DETERMINATION BY INTERIM AND OTHER NICOLET AFFILIATES

Interim was organized for the sole purpose of facilitating the
Reorganization. Its sole shareholder, director and executive officer is Robert
B. Atwell, who is also Nicolet's President and Chief Executive Officer. Our
affiliates consist of our directors and executive officers, Robert B. Atwell,
Michael E. Daniels, Wendell E. Ellsworth, Jacqui A. Engebos, Deanna L. Favre,
Michael F. Felhofer, James M. Halron, Phillip J. Hendrickson, Andrew F. Hetzel,
Jr., Terrence J. Lemerond, Donald J. Long, Jr., Susan L Merkatoris, Wade T.
Micoley, Ronald C. Miller, Sandra A. Renard and Robert J. Myers. These
affiliates, in addition to Interim, are deemed to be "filing persons" for
purposes of this transaction.

For Interim and each of Nicolet's affiliates, its purpose and reasons for
engaging in the Reorganization, alternatives considered, and analyses regarding
financial and procedural fairness of the Reorganization to unaffiliated
shareholders receiving cash in the Reorganization and to those retaining their
shares were the same as those of the Board of Directors. Based on the factors
and analyses. Interim and each of the Nicolet's affiliates concluded that the
Reorganization is procedurally and substantively fair to Nicolet's unaffiliated
shareholders who will receive cash in the Reorganization and that is
procedurally and substantively fair to unaffiliated shareholders who will retain
their shares.

OPINION OF INDEPENDENT FINANCIAL ADVISOR

Ryan Beck & Co., Inc. ("Ryan Beck") acted as financial advisor to Nicolet
Bankshares, Inc. ("Nicolet" or the "Company") in connection with the planned
de-registration of its common stock from the Securities and Exchange Commission
("SEC"). On December 1, 2004, Nicolet formally retained Ryan Beck to act as its
financial advisor with respect to the going private transaction. Ryan Beck's
financial advisory role included providing a valuation range of Nicolet's common
shares to be cashed-out as part of the Agreement and Plan of Reorganization (the
"Plan") and issuing an opinion as to the fairness, from a financial point of
view, of the per share price offered to its shareholders who will be cashed-out
as a result of the Plan. Once the Plan has been effected, Nicolet will
de-register its common stock from the SEC. The 233,229 shares, the amount to be
cashed-out as part of the Plan, which are referred to in this summary as the
"cash-out merger shares," will be retired through an interim bank merger. Ryan
Beck was advised that neither existing Wisconsin statutes nor any published
court decisions have specifically addressed the applicability of a control
premium in connection with the determination of fair value under Wisconsin law.
In conducting its analysis and arriving at its opinion as to the fair value of
the Nicolet common stock, Ryan Beck assumed a control premium but not an
acquisition premium.

Ryan Beck, as a customary part of its investment banking business, is
continually engaged in the valuation of financial institutions and their
securities in connection with mergers, acquisitions and other securities-related
transactions. Ryan Beck is a nationally recognized advisor to firms in the
financial services industry. Ryan Beck has knowledge of, and experience with,
the banking market in which Nicolet operates and banking organizations within
this market, and was selected by Nicolet because of Ryan Beck's knowledge of,
experience with, and reputation in the financial services industry.

Ryan Beck prepared its valuation report as of December 9, 2004 (the
"Valuation Date"), and determined that the fair value range of the cash-out
merger shares was between $17.25 and $18.75 per share. Ryan Beck presented the
valuation report to Nicolet's executive committee of the board of directors at a
meeting held on December 9, 2004. After the presentation, the executive
committee of the board discussed the valuation report with and without Ryan
Beck's participation. Following the discussion, the non-management members of
the executive committee of the board of directors set the price for the shares
in the Plan at $18.25 per share, which was within the range of values indicated
in the presentation by Ryan Beck. Subsequent to the executive committee meeting,
the board unanimously approved the $18.25 cash-out share price chosen. The
ultimate decision and responsibility as to the pricing of the shares was made by
the board of Nicolet. Ryan Beck delivered to Nicolet its oral opinion that based
on and subject to the assumptions, factors, and limitations as set forth in the
attached opinion and as referred to herein, that the $18.25 per share price to
be offered by Nicolet is fair from a financial point of view to the Nicolet
shareholders who will be cashed-out as a result of the Plan. See "-Background of
the Reorganization" for further discussion of this meeting. Ryan Beck's opinion
may not be quoted, used or circulated for any other purpose without its prior
written consent, except for inclusion in this proxy statement.

On December 10, 2004 Ryan Beck presented Nicolet with its written fairness
opinion, dated December 9, 2004 (a copy of which is attached as Appendix C). No
limitations were imposed by Nicolet's board of directors upon Ryan Beck with
respect to the investigations made or procedures followed by it in rendering its
opinion.

The full text of Ryan Beck's fairness opinion, which sets forth the
procedures followed, assumptions made, matters considered, and qualifications
and limitations on the review undertaken by Ryan Beck, is attached as Appendix C
to this proxy statement. Shareholders of Nicolet are urged to read the attached
Ryan Beck fairness opinion in its entirety. The Ryan Beck fairness opinion is
directed to Nicolet's board of directors and is directed only to the per share
price offered to shareholders who will be cashed-out as a result of the Plan.
The fairness opinion does not address Nicolet's underlying business decision to
effect the proposed Plan, nor does it constitute a recommendation to any
shareholder as to how such shareholder should vote with respect to the proposed
Plan at the special meeting or as to any other matter. The Ryan Beck fairness
opinion was among many factors taken into consideration by Nicolet's board of
directors in making its determination of the cash-out price. The fairness
opinion does not address the relative merits of the Plan as compared to any
alternative business strategies that might exist for Nicolet or the effect of
any other strategy in which Nicolet might engage. The summary of the Ryan Beck
opinion set forth in this proxy statement is qualified in its entirety by
reference to the full text of the document. In rendering its opinion, Ryan Beck
does not admit that it is an expert within the meaning of the term "expert" as
used within the Securities Act and the rules and regulations promulgated
thereunder, or that its fairness opinion constitutes a report or valuation
within the meaning of Section 11 of the Securities Act and the rules and
regulations promulgated thereunder.

In connection with rendering its opinion to Nicolet's board of directors,
Ryan Beck performed a variety of financial analyses. In conducting its analyses
and arriving at its opinion as expressed herein, Ryan Beck considered such
financial and other factors as it deemed appropriate under the circumstances
including the following:

- Nicolet's Annual Reports on Form 10-K for the years ended December 31,
2003 and 2002;
- Nicolet's Quarterly Reports on Form 10-Q for the periods ended
September 30, 2004, June 30, 2004 and March 31, 2004;
- Nicolet's Proxy Statements dated March 23, 2004 and March 26, 2003;

- Data provided by Nicolet with respect to historical stock prices and
trading volume of Nicolet's common stock;
- Financial forecasts and projections of Nicolet prepared by its
management and described in the "Background of the Reorganization"
section on page 12.
- Other operating and financial information provided to Ryan Beck by the
management of Nicolet relating to its business and prospects; and
- The publicly available financial data of commercial banking
organizations which Ryan Beck deemed generally comparable to Nicolet.

Additionally, Ryan Beck:

- Conducted or reviewed such other studies, analyses, inquiries and
examinations as it deemed appropriate;

- Analyzed the impact of the Plan on Nicolet and its continuing
shareholders as if the transaction occurred on January 1, 2005;

- Discussed with management the financial condition, businesses, assets,
earnings and management's views about the future performance of
Nicolet;

- Reviewed the nature and terms of certain other "going-private"
transactions that it believed to be relevant; and

- Reviewed the draft of the proxy statement with respect to the cash-out
merger transaction's terms and conditions.

Even though the draft of the proxy statement was revised after Ryan Beck's
review, the revisions were primarily stylistic and did not relate to the terms
and conditions of the cash-out merger. Ryan Beck also considered its assessment
of general economic, market, financial and regulatory conditions and trends, as
well as its knowledge of the financial institutions industry, its knowledge of
securities valuation generally, and its knowledge of "going-private"
transactions in the financial services industry.

In connection with its review, Ryan Beck relied upon and assumed, without
independent verification, the accuracy and completeness of the financial and
other information regarding Nicolet and its banking subsidiary that was publicly
available or provided to Ryan Beck by Nicolet and its representatives. Ryan Beck
is not an expert in the evaluation of allowance for loan losses. Therefore, Ryan
Beck did not assume any responsibility for making an independent evaluation of
the adequacy of the allowance for loan losses set forth in the consolidated
balance sheet of Nicolet at September 30, 2004, and Ryan Beck assumed such
allowances were adequate and complied fully with applicable law, regulatory
policy, sound banking practice and policies of the SEC as of that date. Ryan
Beck discussed certain operating forecasts and financial projections (and the
assumptions and basis therefore) with the management of Nicolet. Ryan Beck
assumed that such forecasts and projections reflected the best currently
available estimates and judgments of management. Ryan Beck was not retained to
nor did it make any independent evaluation or appraisal of the assets or
liabilities of Nicolet or its banking subsidiary nor did Ryan Beck review any
loan files of Nicolet or its banking subsidiary. Ryan Beck also assumed that the
transaction in all respects is, and will be, undertaken and consummated in
compliance with all laws and regulations that are applicable to Nicolet.

The preparation of a valuation involves various determinations as to the
most appropriate and

relevant methods of financial analysis and the application of those methods to
the particular circumstances. Therefore, Ryan Beck's opinion is not readily
susceptible to partial analysis or summary description. In arriving at its
opinion, Ryan Beck performed a variety of financial analyses. Ryan Beck believes
that its analyses must be considered as a whole and the consideration of
portions of such analyses and the factors considered therein, or any one method
of analysis, without considering all factors and analyses, could create an
incomplete view of the analyses and the evaluation process underlying Ryan
Beck's opinion.

THE FORECASTS AND PROJECTIONS DISCUSSED WITH RYAN BECK WERE PREPARED BY THE
MANAGEMENT OF NICOLET WITHOUT INPUT OR GUIDANCE FROM RYAN BECK. NICOLET
NORMALLY DOES NOT PUBLICLY DISCLOSE INTERNAL MANAGEMENT PROJECTIONS OF THE TYPE
PROVIDED TO RYAN BECK IN CONNECTION WITH THE OPINION. ACTUAL RESULTS COULD VARY
SIGNIFICANTLY FROM THOSE SET FORTH IN SUCH PROJECTIONS.

In its analyses, Ryan Beck made numerous assumptions with respect to
industry performance, general business and economic conditions, and other
matters, many of which are beyond the control of Nicolet. Any estimates
contained in Ryan Beck's analyses are not necessarily indicative of future
results or values, which may be significantly more or less favorable than such
estimates. Estimates of values of companies do not purport to be appraisals nor
do they necessarily reflect the prices at which companies or their securities
may actually be sold. In rendering its opinion, Ryan Beck assumed that, in the
course of obtaining the necessary approvals for the transaction, no conditions
would be imposed that will have a material adverse effect on the contemplated
benefits of the transaction.

Ryan Beck's opinion was based solely upon the information available to it
and the economic, market and other circumstances, as they existed as of the date
of the opinion. Ryan Beck did not and does not express any opinion as to the
price or range of prices at which Nicolet's common stock might trade subsequent
to the cash-out merger transaction. Events occurring after the date of the
opinion could materially affect the assumptions and conclusions contained in
Ryan Beck's opinion. Ryan Beck has not undertaken to reaffirm or revise its
opinion or otherwise comment upon any events occurring after the date of its
opinion.

The following is a brief summary of the analyses and procedures performed
by Ryan Beck in the course of arriving at its opinion. The summary does not
purport to be a complete description, but is a brief summary of the material
analyses and procedures performed by Ryan Beck in the course of arriving at its
opinion.

Analysis of Recent Trading Activity. Ryan Beck noted that Nicolet does not
trade on any exchange, the OTC Bulletin Board or the Pink Sheets. Nicolet's
management provided a record of trades, of which it is aware, that occurred
during the twelve months ended November 30, 2004. The total number of shares
traded during this time period was 25,660, representing 0.87% of the current
outstanding shares. All shares were traded at $15.00 per share.

Analysis of Selected Publicly Traded Companies and Determination of Implied
Trading Value. Ryan Beck compared Nicolet's financial data and performance as
of September 30, 2004, to a peer group of 16 selected publicly traded commercial
banking organizations with assets between $200 million and $700 million, return
on average assets between 0 and 50 basis points, nonperforming loans as a
percentage of total loans less than 50 basis points, located in United States.
Ryan Beck, in its judgment, deemed this group to be generally comparable to
Nicolet. The peer group companies are listed in the table below.

Name Ticker State
======================================================

Bank Holdings (The) TBHS NV
Carrollton Bancorp CRRB MD
Community Bank Shares of Indiana, Inc. CBIN IN
Community Bank, National Association CMYC PA
Community Shores Bank Corporation CSHB MI
Cowlitz Bancorporation CWLZ WA
FirstFed Bancorp, Inc. FFDB AL
Long Island Financial Corporation LICB NY
Millennium Bankshares Corporation MBVA VA
Monarch Bank MNRK VA
National Mercantile Bancorp MBLA CA
North State Bancorp NSBC NC
Old Florida Bankshares, Inc. OFBS FL
Rancho Bank RBSD CA
Sterling Bank STNJ NJ
Vail Banks, Inc. VAIL CO

The results of Ryan Beck's comparisons are reflected in the following
table. The financial data and ratios shown in the table are as of or for the
twelve months ended September 30, 2004, and the market valuation multiples are
based on market prices as of November 30, 2004.

NICOLET
BANKSHARES, PEER
INC. (1) MEDIAN (1)
--------------- -----------

CAPITALIZATION
-------------------------------------------------
Total Assets (000s) $373,673 $293,770
Total Deposits (000s) 326,697 233,219
Total Shareholders' Equity (000s) 33,217 26,696
Total Equity / Assets 8.89 % 8.51 %
Tangible Equity / Tangible Assets 8.82 7.43
Leverage Ratio 10.45 9.17
Tier I Capital / Risk-Adj Assets 12.38 10.70
Total Capital / Risk-Adj Assets 13.57 11.69

ASSET QUALITY
-------------------------------------------------
Non-Performing Loans / Loans 0.33 0.14
Non-Performing Loans + 90 Days Past Due / Loans 0.33 0.19
Loan Loss Reserves / NPLs 373.63 481.09
Loan Loss Reserves / NPLs + 90 Days Past Due 373.63 526.18
Loan Loss Reserves / Loans 1.22 1.13
Non-Performing Assets / Assets 0.28 0.20
Non-Performing Assets + 90 Days Past Due / Asset 0.28 0.20
Non-Performing Assets / Equity 3.10 1.89

LOAN & DEPOSIT COMPOSITION
-------------------------------------------------
Total Loans / Total Assets 81.01 69.18
Total Loans / Deposits 92.65 91.68
1-4 Family Loans / Total Loans 18.22 17.24
5+ Family Loans / Total Loans 0.05 0.99
Construction & Development Loans / Total Loans 15.34 14.46
Other Real Estate Loans / Total Loans 24.71 38.17
Real Estate Loans / Total Loans 58.32 72.28
Consumer Loans / Total Loans 2.08 1.95
Commercial Loans / Total Loans 39.59 18.70
Non-Interest Bearing Deposits / Total Deposits 10.66 22.05
Transaction Accounts / Total Deposits 34.18 68.15
Total CD's/Total Deposits 65.82 31.85
Time Deposits > $100,000 / Total Deposits 58.43 12.93

PERFORMANCE
-------------------------------------------------
Return on Average Assets 0.31 0.34
Return on Average Equity 3.25 4.64
Net Interest Margin 2.91 3.54
Non Interest Income / Average Assets 0.94 0.64
Non Interest Expense / Avg Assets 2.51 3.42
Salary Expense / Total Revenue 36.10 43.58
Efficiency Ratio 64.57 83.48

GROWTH RATES
-------------------------------------------------
Asset Growth 20.84 12.13
Loan Growth Rate 17.62 22.19
Deposit Growth Rate 19.98 11.56
Revenue Growth Rate 28.35 5.62
EPS Growth Rate 11.87 (36.25)

MARKET STATISTICS
-------------------------------------------------
Stock Price at November 30, 2004 $15.00
Price / LTM EPS 41.66 x 30.38 x
Price / 2004E EPS 30.00 34.87
Price / 2005E EPS 15.00 24.74
Price / Book Value 133.56 % 138.89 %
Price / Tangible Book Value 134.77 150.43
Market Capitalization ($M) $44.36 $36.26
Dividend Yield 0.00 % 0.00 %

(1) As of or for the latest twelve-month period ending September 30, 2004.

Ryan Beck noted that on an overall basis, Nicolet's balance sheet
statistics and performance measures were in line with the peer medians. Nicolet
was slightly larger than the peer group with $374 million in assets compared to
peer group median of $294 million. The Company had equity capital of $33 million
compared to $27 million for the peer group. Equity to assets for Nicolet was
8.89% compared to 8.51% for the peer median. Tangible equity to tangible assets
was 8.82% for the Company compared to 7.43% for the peer median. Tier 1 capital
and total capital to risk-adjusted assets were 12.38% and 13.57%, respectively,
for Nicolet, higher than the peer medians of 10.70% and 11.69%.

Ryan Beck noted that Nicolet's loan portfolio represents 81.01% of its
assets, higher than the peer group median of 69.18%. Ryan Beck also noted the
following about Nicolet:

- Its loan portfolio has a smaller real estate orientation, with real
estate loans to total loans at 58.32% compared to the peer group
median at 72.28%.

- Its commercial real estate loans, including construction and
development and multi-family loans, account for 40.10% of Nicolet's
total loan portfolio versus 53.62% for the median of the peer group.

- Its 1-4 family residential loans represent 18.22% of total loans, in
line with the peer median of 17.24%.

- Its consumer and commercial & industrial loans, at 2.08% and 39.59% of
total loans, respectively, represent a significantly larger portion of
Nicolet's total loan portfolio than that of the peer group, which had
medians of 1.95% and 18.70%, respectively.

- It has generated a significantly lower level of transaction account
deposits at 34.18% of total deposits, including non-interest bearing
demand deposits of 10.66%, than its peer group median with 68.15% and
22.05%, respectively.

Ryan Beck also noted Nicolet's asset quality as measured by non-performing
loans to total loans and non-performing assets to total assets (0.33% and 0.28%
respectively) was higher than the peer group medians (0.14% and 0.20%,
respectively). The Company's ratio of reserves to non-performing loans of
373.63% is below the peer median of 481.09%, yet its loan loss reserves as a
percentage of total loans of 1.22% is slightly higher than the peer median of
1.13%.

Additionally, Ryan Beck noted the following:

- The last twelve month performance of Nicolet as measured by return on
average assets and return on average equity (0.31% and 3.25%,
respectively) was in line with that of the peer group median (0.34%
and 4.64%, respectively).

- Nicolet's net interest margin at 2.91% was lower than the peer median
of 3.54% due in part to its lower percentage of transaction deposits
as percentage of total deposits (34.18%) versus the peer median of
68.15%.

- Nicolet's non-interest income to average assets ratio at 0.94% was
higher than the peer median of 0.64%. The efficiency ratio and
non-interest expense as a percentage of average

assets of 64.57% and 2.51%, respectively, was better than the peer group median
of 83.48% and 3.42%.

- Nicolet's asset and deposit growth rates over the past twelve months
were significantly greater than the peer medians. Over the same
period, revenue grew 28.35% compared to 5.62% for the peer median.
Earnings per share growth was 11.87% compared to a decline of 36.25%
for the peer group median.

Lastly, Ryan Beck noted that based on Nicolet's most recent reported stock
price of $15.00, the Company was trading at a higher multiple to its latest
twelve-month earnings per share of 41.66x compared to the peer median of 30.38x.
Nicolet's shares trade slightly lower than the peer median as a percentage of
book value (133.56% versus the peer median of 138.89%) and significantly lower
as a percentage of tangible book value (134.77% versus the peer median of
150.43%). Nicolet is not publicly traded on an exchange, the OTC Bulletin
Board or the Pink Sheets. Management of Nicolet is aware of 25,660 shares that
were traded during twelve months ended November 30, 2004.

The following table displays Ryan Beck's determination of the range of
implied trading values of Nicolet based upon the peer group trading multiples
and Nicolet's valuation indicators:

Nicolet Valuation Median Peer Group Nicolet Implied
Indicator Valuation Multiple Value Per Share

Price/ LTM EPS $ 0.36 30.38x $ 10.94
Price/ Book Value $ 11.23 138.89% $ 15.60
Price/ Tangible Book Value $ 11.13 150.43% $ 16.74
-------------------------------------------------------------------------------------
Average $ 14.43
-------------------------------------------------------------------------------------

Ryan Beck noted that there were only two estimates in the peer group for
2004 EPS and three estimates for 2005 EPS. Accordingly, Ryan Beck did not
consider these to be meaningful because of the limited data.

Ryan Beck noted that Nicolet's overall financial performance was in line
with the peer group and therefore believes that the average of the implied
trading values per share based on price to latest twelve months earnings per
share, price to book value per share and price to tangible book value per share
accurately reflects the trading value of the Company. Ryan Beck noted that the
average value of $14.43 per share was below the most recent reported stock price
of $15.00.

No company used in the Analysis of Selected Publicly Traded Companies and
Determination of Implied Trading Value is identical to Nicolet. Accordingly, an
analysis of the results involves complex considerations and judgments concerning
differences in financial and operating characteristics of the companies
involved, market areas in which the companies operate and other factors that
could affect the trading values of the securities of the company or companies to
which they are being compared.

Discounted Dividend Analysis. Using a discounted dividend analysis, Ryan
Beck estimated the present value of the future dividend stream that Nicolet
could produce in perpetuity.

As a basis for performing this analysis, Ryan Beck utilized 2005 to 2009
earnings per share estimates for Nicolet, which were based on projections
provided by management. These projections are based upon various factors and
assumptions, many of which are beyond the control of the

Company. These projections are, by their nature, forward-looking and may differ
materially from the actual future values or actual future results for the
reasons discussed above. Actual future values or results may be significantly
more or less favorable than suggested by such projections. In producing a range
of per share Nicolet common stock values, Ryan Beck utilized several assumptions
that, in its judgment, it considered appropriate, relating to the discount
rates, terminal year multiples, asset growth rates, tangible equity to tangible
asset ratios and earnings projections. Ryan Beck noted that Nicolet's first
operating profit occurred in 2003 and that there are no relevant historical
earnings per share growth rates to compare with the projected growth rates.
Additionally, we found that utilizing Nicolet's historical return on average
equity range as a proxy to determine the discount rate range was not appropriate
due to their lack of profitability. Nicolet's latest twelve months return on
average equity was 3.25%. To arrive at an appropriate discount rate, Ryan Beck
reviewed the return on average equity range of publicly traded commercial banks
with assets between $200 million and $1 billion. The median return on average
equity range for the group was 11% to 13%. The terminal year price to earnings
multiples, based on historical trading multiples of the banking industry, range
from 13x to 15x (which, when applied to terminal year estimated earnings,
produces a value which approximates the net present value of the dividends in
perpetuity, given certain assumptions regarding growth rates and discount
rates).

The discounted dividend analysis produced the range of net present values
per share of Nicolet common stock illustrated in the chart below:

DISCOUNT RATE: 11.00% 12.00% 13.00%
-------------- =========================
Terminal Year 13.00 $15.61 $15.06 $14.53
Multiple of 14.00 $16.58 $15.99 $15.42
Earnings 15.00 $17.56 $16.91 $16.31
=========================

This analysis is intended to estimate the fair market value of Nicolet
common stock due to its limited trading activity. Ryan Beck noted that the
$15.99 per share midpoint value was above the most recent reported stock price
for Nicolet of $15.00 per share.

THESE ANALYSES DO NOT PURPORT TO BE INDICATIVE OF ACTUAL VALUES OR EXPECTED
VALUES OR AN APPRAISAL RANGE OF THE SHARES OF NICOLET COMMON STOCK. THE
DISCOUNTED DIVIDEND ANALYSIS IS A WIDELY USED VALUATION METHODOLOGY, BUT RYAN
BECK NOTED THAT IT RELIES ON NUMEROUS ASSUMPTIONS, INCLUDING EARNINGS
PROJECTIONS, TERMINAL VALUES AND DISCOUNT RATES, THE FUTURE VALUES OF WHICH MAY
BE SIGNIFICANTLY MORE OR LESS THAN SUCH ASSUMPTIONS. ANY VARIATION FROM THESE
ASSUMPTIONS WOULD LIKELY PRODUCE DIFFERENT RESULTS.

Fair Market Value Analysis. Ryan Beck determined the fair market value of
Nicolet's common stock by averaging the values derived from the Analysis of
Recent Trading Activity, the implied value from the Analysis of Selected
Publicly Traded Companies and Determination of Implied Trading Value and the
midpoint value of the Discounted Dividend Analysis. The average of the three
values produced a fair market value of Nicolet's common stock of $15.14 per
share, slightly higher than the most recent reported common stock price. The
following table summarizes the fair market value of Nicolet Bankshares, Inc.

IMPLIED FAIR MARKET VALUE PER SHARE
-----------------------------------

DISCOUNTED DIVIDEND ANALYSIS $15.99

PEER GROUP ANALYSIS $14.43

TRADING HISTORY $15.00

-------------------------------------------
AVERAGE $15.14
-------------------------------------------

Control Premium Analysis. In determining the control premium valuation,
Ryan Beck used two methodologies: A control premium range of 10%-20% above
Nicolet's fair market value and a dividend discount analysis with a control
premium incorporated.

Control Premium Valuation. Based upon historical analysis and experience,
Ryan Beck concluded that control premium valuations generally ranged from 10.0%
to 20.0% over the fair market value of the common stock of a company. To
determine the control premium values for Nicolet, Ryan Beck applied the range to
Nicolet's fair market value of $15.14. The table below presents the implied fair
market value with a control premium of 10%, 15% and 20%, respectively.

------------------------------------------------------------
PREMIUM OVER FAIR MARKET VALUE
------------------------------
10% 15% 20%
------- ------- -------

Fair Market Value - $15.14 $16.65 $17.41 $18.17
------------------------------------------------------------

Control Premium Valuation - Dividend Discount Analysis. To incorporate a
control premium in the Dividend Discount Analysis, Ryan Beck made the following
assumptions:

- Changed the terminal year multiple range from 13.0x to 15.0x to 15.5x
to 17.5x, representing a 16.7%-19.2% premium to the historical
multiple range. Increasing the terminal year multiple results in a
higher valuation and provides a control premium.
- All other assumptions previously discussed remained the same.

The discounted dividend analysis incorporating a control premium produced
the range of values per share of Nicolet Bankshares, Inc. common stock
illustrated in the chart below:

DISCOUNT RATE: 11.00% 12.00% 13.00%
-------------- =========================
Terminal Year 15.50 $18.04 $17.38 $16.75
Multiple of 16.50 $19.01 $18.31 $17.64
Earnings 17.50 $19.98 $19.24 $18.53
=========================

Summary of Control Premium Valuation and Dividend Discount Analysis. Ryan
Beck determined that an equal weighting for each valuation methodology was
appropriate. Based upon the control premium valuation and dividend discount
analysis, Ryan Beck believes that the cash-out merger range should be $17.25 to
$18.75. Listed below are the implied values per share determined by the
analyses.

-------------------------------------------------------------
HIGH LOW MIDPOINT
------- ------- --------
DISCOUNTED DIVIDEND ANALYSIS $19.98 $16.75 $ 18.31
-------------------------------------------------------------

-------------------------------------------------------------
PREMIUM OVER FAIR MARKET VALUE
------------------------------
10% 15% 20%
------- ------- --------

Fair Market Value - $15.14 $16.65 $17.41 $ 18.17
-------------------------------------------------------------

Comparison of Current Market Price. Ryan Beck's range of $17.25 to $18.75
per share is a 15.0% and 25.0% premium, respectively, to the current market
price of Nicolet's common stock of $15.00 per share. The $18.25 per share value
chosen by Nicolet's board of directors is a 21.7% premium to the current market
price.

Financial Impact Analysis. In order to measure the impact of the cash-out
merger transaction on Nicolet's operating results, financial condition and
capital ratios, Ryan Beck analyzed the pro forma effects of the cash-out merger
transaction on 2005 operating results (assuming the cash-out merger transaction
had been completed as of January 1, 2005). In performing this analysis, Ryan
Beck utilized September 30, 2004, balance sheet and income statement data and
relied on certain assumptions provided by the management of Nicolet relating to
earnings projections, as well as the structure and costs associated with the
transaction. Ryan Beck, based upon representations from the management of
Nicolet, assumed the Company will raise $5.0 million of new senior debt to
finance the Plan and related expenses, estimated to be $125 thousand. Ryan Beck
based the cost of that capital of the senior debt on the three-year forward
yield curve of the 1-month LIBOR rate as of November 30, 2004, plus a credit
spread of 200 basis points (6.40%). Nicolet estimated the range of cost savings
related to the de-registration of its securities to be between $400 thousand and
$700 thousand pre-tax. To be conservative, Ryan Beck has assumed pre-tax cost
savings of $400 thousand in its analysis.

Based on the $17.25 to $18.75 per share valuation range, the following
table highlights the expected pro forma impact on Nicolet. The actual results
achieved may vary materially from the projected results.

---------------------------------------------------
$17.25 $18.75
----------------
2004 Estimated EPS Accretion 11.09% 10.77%
Book Value Dilution 5.00% 6.14%
Tangible Book Value Dilution 5.12% 6.27%
Leverage Ratio 8.03% 7.94%
---------------------------------------------------

Conclusion

Ryan Beck, in its valuation report, provided the executive committee of the
board of directors of Nicolet with a valuation range for the Plan of $17.25 to
$18.75 per share. The executive committee of the board of directors decided to
offer $18.25 per share to all shareholders affected by the Plan. Noting that
the $18.25 per share price offered falls in the valuation range of $17.25 to
$18.75 per share and considering all other relevant factors, Ryan Beck gave
Nicolet's board of directors its opinion that the $18.25 per share price offered
by the Company pursuant to the Plan is

fair from a financial point of view to Nicolet's shareholders who will be cashed
out as a result of the Plan.

With regard to Ryan Beck's services in connection with Nicolet's
de-registration, Nicolet will pay Ryan Beck a retainer of $20,000. Upon
delivery of the valuation report and the opinion, Ryan Beck will receive a fee
of $45,000. Nicolet has agreed to reimburse Ryan Beck for reasonable
out-of-pocket expenses. Such out-of-pocket expenses shall include travel, legal
and other miscellaneous expenses and shall not, in the aggregate, exceed $10,000
without the prior consent of Nicolet. Nicolet has agreed to indemnify Ryan Beck
against certain liabilities, including certain liabilities under federal
securities laws.

* RYAN BECK HAS NOT HAD A PRIOR INVESTMENT BANKING RELATIONSHIP WITH NICOLET.
RYAN BECK'S RESEARCH DEPARTMENT DOES NOT PROVIDE PUBLISHED INVESTMENT ANALYSIS
ON NICOLET. RYAN BECK DOES NOT ACT AS A MARKET MAKER IN NICOLET COMMON STOCK. IN
THE ORDINARY COURSE OF RYAN BECK'S BUSINESS AS A BROKER-DEALER, RYAN BECK MAY
ACTIVELY TRADE EQUITY SECURITIES OF NICOLET FOR THE ACCOUNT OF ITS CUSTOMERS.

INFORMATION REGARDING THE
SPECIAL MEETING OF SHAREHOLDERS

TIME AND PLACE OF MEETING

We are soliciting proxies through this Proxy Statement for use at a special
meeting of Nicolet shareholders. The special meeting will be held at
----------
on , 2005, at Nicolet National Bank, 110 South Washington Street,
----------
Green Bay, Wisconsin.

RECORD DATE AND MAILING DATE

The close of business on , 2005, is the record date for the
----------
determination of shareholders entitled to notice of and to vote at the special
meeting. We first mailed the Proxy Statement and the accompanying form of proxy
to shareholders on or about , 2005.
------------

NUMBER OF SHARES OUTSTANDING

As of the close of business on the record date, Nicolet had 30,000,000
shares of common stock, $.01 par value, authorized, of which shares
----------
were issued and outstanding. Each outstanding share is entitled to one vote on
all matters presented at the meeting.

PURPOSE OF SPECIAL MEETING

The purpose of the special meeting is for shareholders to vote on an
Agreement and Plan of Reorganization (the "Plan") providing for the merger of
Nicolet Interim Corporation with and into Nicolet, with Nicolet surviving the
merger and the holders of 1,500 shares or less of Nicolet common stock receiving
$18.25 in cash in exchange for each of their shares of such stock. The text of
the Plan is set forth in Appendix A to the enclosed Proxy Statement. The
-----------
Reorganization is designed to take Nicolet private by reducing its number of
shareholders of record below 300.

DISSENTERS' RIGHTS

Shareholders are entitled to dissenters' rights in connection with the
Plan. See "Description of the Plan-Dissenters' Rights."

PROCEDURES FOR VOTING BY PROXY

If you properly sign, return and do not revoke your proxy, the persons
appointed as proxies will vote your shares according to the instructions you
have specified on the proxy. If you sign and return your proxy but do not
specify how the persons appointed as proxies are to vote your shares, your proxy
will be voted FOR the approval of the Plan and in the best judgment of the
persons appointed as proxies on all other matters that are unknown to us as of a
reasonable time prior to this solicitation and that are properly brought before
the special meeting.

You can revoke your proxy at any time before it is voted by delivering to
Nicolet's Corporate Secretary, at 110 South Washington Street, Green Bay,
Wisconsin 54301, either a written revocation of the proxy or a duly signed proxy
bearing a later date or by attending the special meeting and voting in person.

REQUIREMENTS FOR SHAREHOLDER APPROVAL

A quorum will be present at the meeting if a majority of the votes entitled
to be cast are represented in person or by valid proxy. We will count
abstentions and broker non-votes, which are described below, in determining
whether a quorum exists. Approval of the Plan requires the affirmative vote of a
majority of the issued and outstanding shares of common stock. Any other matter
that may properly come before the special meeting generally requires that more
shares be voted in favor of the matter than are voted against the matter. As of
December 31, 2004, Nicolet's directors and executive officers owned, directly or
indirectly, 1,291,316 shares, representing approximately 40.3%, of the
outstanding shares of common stock as of that date. Each of the directors and
executive officers has indicated that he intends to vote his shares in favor of
the Plan and the adjournment proposal.

Abstentions. A shareholder who is present in person or by proxy at the
special meeting and who abstains from voting on any or all proposals will be
included in the number of shareholders present at the special meeting for the
purpose of determining the presence of a quorum. Abstentions do not count as
votes in favor of or against a given matter. Based on the 2,957,654 shares
outstanding as of the record date, a quorum will consist of 1,478,828 shares
represented either in person or by proxy. This also represents the minimum
number of votes required to be cast in favor of the Plan in order to approve it.
Assuming only the minimum number of shares necessary to constitute a quorum are
present in person or by proxy at the special meeting, and assuming one of those
shares is subject to a proxy marked as an abstention, the Plan proposal would
not pass because it would not have received the affirmative vote of a majority
of the votes entitled to be cast at the meeting. As a result, such an abstention
would effectively function as a vote against the Plan, even though it would not
be counted in the voting tally as such. On the other hand, abstentions will not
affect the outcome of any other proposal properly brought before the meeting
because only a majority of the votes actually cast must be voted in favor of
such a proposal.

Broker Non-Votes. Brokers who hold shares for the accounts of their
clients may vote these shares either as directed by their clients or in their
own discretion if permitted by the exchange or other organization of which they
are members. Proxies that contain a broker vote on one or more proposal but no
vote on others are referred to as "broker non-votes" with respect to the
proposal(s) not voted upon. Broker non-votes are included in determining the
presence of a quorum. A broker non-vote, however, does not count as a vote in
favor of or against a particular proposal for which the broker has no
discretionary voting authority. Based on the same reasoning that applies to
abstentions as discussed above, broker non-votes will effectively function as
votes against the Plan but will not affect the outcome of any other proposal(s)
at the special meeting.

SOLICITATION OF PROXIES

Proxies are being solicited by our board of directors, and Nicolet will pay
the cost of the proxy solicitation. In addition, our directors, officers and
employees may, without additional compensation, solicit proxies by personal
interview, telephone or fax. We will direct brokerage firms or other
custodians, nominees or fiduciaries to forward our proxy solicitation material
to the beneficial owners of common stock held of record by these institutions
and will reimburse them for the reasonable out-of-pocket expenses they incur in
connection with this process.

DESCRIPTION OF THE PLAN

THE REORGANIZATION

Structure

Because the purpose of Reorganization is to reduce the number of
shareholders of record below 300, the Plan permits our board of directors to
increase the 1,500-share threshold prior to the date of the special
shareholders' meeting to the extent necessary to ensure that the number of
record shareholders will be less than 300 upon effectiveness of the
Reorganization. If such action is necessary, we will notify our shareholders
through a supplement to this Proxy Statement and will postpone the special
shareholders' meeting to the extent necessary to allow shareholders to consider
such action and change their votes if they so desire.

Determination of Shares Held of Record

A shareholder who owns 1,500 or fewer shares of Nicolet common stock "of
record" will receive $18.25 per share in cash in the Reorganization, while a
record holder of more than 1,500 shares will be unaffected. A shareholder "of
record" is the shareholder whose name is listed on the front of the stock
certificate, regardless of who ultimately has the power to vote or transfer the
shares. For example, four separate certificates issued to a shareholder
individually, as a joint tenant with someone else, as trustee, and in an IRA
represent shares held by four different record holders, even though a single
shareholder might control the voting or transfer of all of the shares. Because
SEC rules require that we count "record holders" for purposes of determining our
reporting obligations, the Plan is based on the number of shares held of record
without regard to the ultimate control of the shares. As a result, a single
shareholder with more than 1,500 shares held in various accounts could receive
cash in the Reorganization for all of his or her shares if those accounts
individually hold 1,500 or fewer shares. To avoid this, the shareholder would
need to consolidate his or her ownership into a single certificate representing
more than 1,500 shares. The acquisition of additional shares prior to the
effective date of the Reorganization is also permitted.

Shares Held in Street Name

It is important that our shareholders understand how shares that are held
by them in "street name" will be treated. Shareholders who have transferred
their shares of Nicolet common stock into a brokerage or custodial account are
no longer shown on our shareholder records as the record holder of these shares.
Instead, each brokerage firm or custodian typically holds all shares of Nicolet
common stock that its clients have deposited with it through a single nominee;
this is what is meant by "street name." If that single nominee is the record
shareholder for one or more accounts representing collectively more than 1,500
shares, then the stock registered in that nominee's name will be completely
unaffected by the Reorganization. Because the Reorganization only affects record
shareholders, it does not matter whether any of the underlying beneficial owners
for whom that nominee acts own fewer than 1,500 shares. At the end of this
transaction, these beneficial owners

will continue to beneficially own the same number of shares of our stock as they
did at the start of this transaction, even if the number of shares they own is
1,500 or less.

If you hold your shares in "street name," you should talk to your broker,
nominee or agent to determine how they expect the Reorganization to affect you.
Because other "street name" holders who hold through your broker, agent or
nominee may adjust their holdings prior to the Reorganization, you may have no
way of knowing whether you will be cashed out in the transaction until it is
completed. However, because we think it is likely that many brokerage firms or
other nominees will hold more than 1,500 shares in their "street name" accounts,
we think it is likely that "street name" holders will remain continuing
shareholders.

Examples

The following table illustrates some examples of how the Reorganization, if
approved, will affect shareholders:

HYPOTHETICAL SCENARIO RESULT

Mr. Black is a registered shareholder who holds 1,000 shares of Mr. Black's shares will be converted into the right to receive
common stock in his own name prior to the Reorganization. cash. Mr. Black would receive $18,250 ($18.25 x 1,000
shares).

Note: If Mr. Black wants to continue his investment in
theCompany, prior to the effective time, he can buy more than
500 shares or move his shares into a "street name" account with a
brokerage firm that holds more than 1,500 shares in such form.
Mr. Black would have to act far enough in advance of the
Reorganization so that the transaction is completed and the
shares are credited in his account by the effective date of the
Reorganization.

Ms. Hall has two separate record accounts. As of the effective
time, she holds 500 shares of common stock in her own name and Ms. Hall will receive cash payments equal to the cash-out
1,500 shares of common stock in her IRA. All of her shares are price of her common stock in each record account. Ms. Hall
registered in her name only. would receive two checks totaling $36,500 ($18.25 x 500 =
9,125 and $18.25 x 1,500 = $27,375).

Note: If Ms. Hall wants to continue her investment in Nicolet,
she can consolidate or transfer her two record accounts prior to
the effective time into an account with 2,000 shares of common
stock. Alternatively, she can buy more than 1,000 shares for the
first account or at least one more share for the second account or
move all of her shares into a "street name" account. Ms. Hall
would have to act far enough in advance of the Reorganization so
that the consolidation or the purchase is completed by the
effective date of the Reorganization.

Mr. Brady holds 2,500 shares of common stock as of the After the Reorganization, Mr. Brady will continue to hold
effective time. 2,500 shares of common stock.

Ms. Reed holds 500 shares of common stock in her name in a Nicolet intends for the Reorganization to be effected at the
brokerage account through ABC Bank as of the effective time. record-holder level. Because ABC Bank is the record holder of
She is the sole beneficial owner holding shares in this account, fewer than 1,500 shares, Ms. Reed will receive, through her
and ABC Bank does not hold any other shares of Nicolet broker, a check for $9,125 ($18.25 x 500 = $9,125).
common stock for other beneficial owners

Mr. Carver holds 750 shares of common stock in "street name" Because the Reorganization will be effected at the record-
through XYZ Brokerage as of the effective time. XYZ holder level, Mr. Carver will continue to hold 750 shares of
Brokerage also holds a total of 1,000 shares for ten other common stock in "street name" through XYZ Brokerage,
beneficial owners. which is considered the record holder. The other beneficial
owners will likewise continue to own their shares in "street
name."

Note: If Mr. Carver wants to be cashed out in the
Reorganization, he can transfer his shares out of "street name"
into his own name. Mr. Carver would have to act far enough in
advance of the Reorganization so that the transfer is completed
by effective date of the Reorganization.

Legal Effectiveness

As soon as practicable after shareholder approval of the Plan, we will file
articles of merger with the Wisconsin Department of Financial Institutions and
will send a Letter of Transmittal to all record holders of Nicolet common stock
who are entitled to receive cash in the Reorganization. The Reorganization will
be effective upon filing of the articles or certificate of merger with the
Wisconsin Department of Financial Institutions. We anticipate that this will
occur in March of 2005.

On the effective date of the Reorganization, each shareholder who owns
1,500 shares or less of record immediately prior to the Reorganization will not
have any rights as a Nicolet shareholder and will have only the right to receive
cash as provided under the Plan.

Exchange of Stock Certificates for Cash

A Letter of Transmittal, which will be mailed to cashed-out shareholders
after the Reorganization has been completed, will provide the means by which
shareholders will surrender their Nicolet stock certificates and obtain the cash
to which they are entitled. If certificates evidencing Nicolet common stock
have been lost or destroyed, we may, in our full discretion, accept a duly
executed affidavit and indemnity agreement of loss or destruction in a form
satisfactory to us in lieu of the lost or destroyed certificate. If a
certificate is lost or destroyed, the shareholder may be required to submit, in
addition to other documents, a bond or other security, satisfactory to the
board, indemnifying Nicolet and all other persons against any losses occurred as
a consequence of the issuance of a new stock certificate. Shareholders whose
certificates have been lost or destroyed should contact us. Additional
instructions regarding lost or destroyed stock certificates will be included in
the Letter of Transmittal.

Except as described above with respect to lost stock certificates, there
will be no service charges or costs payable by shareholders in connection with
the exchange of their certificates for cash in the Reorganization. Nicolet will
bear these costs.

THE LETTER OF TRANSMITTAL WILL BE SENT TO SHAREHOLDERS PROMPTLY AFTER THE
EFFECTIVE DATE OF THE REORGANIZATION. DO NOT SEND IN YOUR STOCK CERTIFICATE(S)
UNTIL YOU HAVE RECEIVED THE LETTER OF TRANSMITTAL. ASSUMING YOU SUBMIT YOUR
STOCK CERTIFICATE(S) PROMPTLY THEREAFTER, WE EXPECT THAT YOU WILL RECEIVE YOUR
CASH PAYMENT WITHIN APPROXIMATELY FOUR TO SIX WEEKS AFTER THE EFFECTIVE DATE OF
THE REORGANIZATION.

Conditions and Regulatory Approvals

Consummation of the Reorganization is subject to the approval of our
shareholders at the special meeting, the absence of any required consents or
approvals that remain outstanding, and the absence of any other circumstances
(such as a large number of dissenters) that in the board's view make it
inadvisable to proceed with the transaction. Approval from the Federal Reserve
Bank is also required to incur the debt needed to finance the transaction. See
"Source of Funds and Expenses."

Termination of Securities Exchange Act Registration

Nicolet's common stock is currently registered under the Securities
Exchange Act. We will be permitted to terminate our registration once we can
certify that Nicolet has fewer than 300 shareholders of record. Upon the
completion of the Reorganization, Nicolet will have approximately 241
shareholders of record. We intend to apply for termination of the registration
of Nicolet's common stock under the Securities Exchange Act as promptly as
possible after the effective date of the Reorganization.

SOURCE OF FUNDS AND EXPENSES

We estimate that approximately $4,256,429 will be required to pay for the
shares of Nicolet common stock exchanged for cash in the Reorganization. We
intend to finance the Reorganization by means of a new unsecured, 364 day line
of credit in the principal amount of $5,000,000 with M & I Bank with a floating
interest rate, reset monthly, equal to 30 day LIBOR plus 200 basis points.
Interest on the principal balance is payable monthly, and the entire principal
amount is due on July 31, 2005. At September 30, 2004, we had approximately $3.3
million in cash and cash equivalents.

Obtaining the line of credit is subject to the approval of the Federal
Reserve Bank, which we have requested. If such approval is not granted, we will
consider and disclose to shareholders alternative means of financing or, if no
reasonable alternative is available, terminate the Reorganization.

Additionally, Nicolet will pay all of the expenses related to the
Reorganization. We estimate that these expenses will be as follows:

SEC filing fees $ 851
Legal fees 35,000
Accounting fees 5,000
Financial advisory fees 65,000
Proxy solicitation fee 10,000
Printing costs 5,000
Other 4,149
----------------
Total $ 125,000
================

DISSENTERS' RIGHTS

Pursuant to the provisions of Wisconsin Business Corporation Law, Nicolet's
shareholders have the right to dissent from the Plan and to receive the fair
value of their shares in cash. THIS VALUE MAY BE MORE OR LESS THAN THE $18.25
PER SHARE THAT WE ARE PAYING IN THE REORGANIZATION. Holders of Nicolet common
stock who fulfill the requirements described below will be entitled to assert
dissenters' rights.

Pursuant to the provisions of Sections 180.1301 et seq. of the Wisconsin
Business Corporation Law, if the Reorganization is consummated, you must:

- give to Nicolet, prior to the vote at the special meeting with respect
to the approval of the Plan, written notice of your intent to demand
payment for your shares of Nicolet common stock (hereinafter referred
to as "shares") if the proposed action is effected;

- not vote in favor of the Plan; and

- comply with the statutory requirements summarized below. If you
perfect your dissenters' rights, you will receive the fair value of
your shares as of the effective date of the Reorganization.

You may assert dissenters' rights as to fewer than all of the shares
registered in your name only if you dissent with respect to all shares
beneficially owned by any one beneficial shareholder and you notify Nicolet in
writing of the name and address of each person on whose behalf you are asserting
dissenters' rights. The rights of a partial dissenter 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.

Voting against the Plan will not satisfy the written demand requirement. In
addition to not voting in favor of the Plan, 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 Reorganization is effected. Any
shareholder who returns a signed proxy but fails to provide instructions as to
the manner in which such shares are to be voted will be deemed to have voted in
favor of the Plan and will not be entitled to assert dissenters' rights.

Any written objection to the Plan satisfying the requirements discussed
above should be addressed to Nicolet National Bankshares, Inc., 110 South
Washington Street, Green Bay, Wisconsin 54301, Attention: Robert B. Atwell,
President and Chief Executive Officer.

If the shareholders of Nicolet approve the Plan at the special meeting,
Nicolet must deliver a written dissenters' notice (the "Dissenters' Notice") to
all of its shareholders who satisfied the foregoing requirements. The
Dissenters' Notice must be sent within 10 days after the effective date of the
Reorganization and must:

- state where dissenting shareholders should send the demand for payment
and where and when dissenting shareholders should deposit certificates
for the shares;

- inform holders of uncertificated shares to what extent transfer of
these shares will be restricted after the demand for payment is
received;

- supply holders with a form for demanding payment that includes the
date of the first announcement of the terms of the Plan and requires
the holder (or the beneficial shareholder on whose behalf he is
asserting dissenters' rights) to certify whether or not he acquired
beneficial ownership of the shares prior to the announcement date;

- set a date by which Nicolet 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 set a date by which certificates
for certificated shares must be deposited, which may not be earlier
than 20 days after the demand date; and

- be accompanied by a copy of Sections 180.1301 et seq. of the Wisconsin
Business Corporation Law.

A record shareholder who receives the Dissenters' Notice must demand
payment, certify whether he (or the beneficial shareholder on whose behalf he is
asserting dissenters' rights) acquired beneficial ownership of the shares before
the date set forth in the dissenters' notice pursuant to Section 180.1322(2)(c)
of the Wisconsin Business Corporation Law and deposit such holder's certificates
in accordance with the Dissenters' Notice. Dissenting shareholders will retain
all other rights of a shareholder until those rights are canceled or modified by
the consummation of the Reorganization. A shareholder who does not comply
substantially with the requirements that he demand payment and deposit his share
certificates where required, each by the date set in the dissenters' notice, is
not entitled to payment for his shares under Sections 180.1301 et seq. of the
Wisconsin Business Corporation Law.

Except as described below, Nicolet must upon the effective date of the
Reorganization, or upon receipt of a payment demand, pay each dissenting
shareholder who substantially complied with the payment demand and deposit
requirements described above the amount Nicolet estimates to be the fair value
of the shares, plus accrued interest from the effective date of the Plan.
Nicolet's offer of payment under Section 33-13-250 of the Wisconsin Business
Corporation Law must be accompanied by:

- recent financial statements of Nicolet;

- Nicolet's estimate of the fair value of the shares and an explanation
of how the fair value was calculated;

- an explanation of how the interest was calculated;

- a statement of the dissenter's right to demand additional payment
under the Wisconsin Business Corporation Law; and

- a copy of Sections 180.1301 et seq. of the Wisconsin Business
Corporation Law.

If the Reorganization is not consummated within 60 days after the date set
forth demanding payment and depositing share certificates, Nicolet must return
the deposited certificates and release the transfer restrictions imposed on
uncertificated shares. Nicolet must send a new Dissenters' Notice if the
Reorganization is consummated after the return of certificates and repeat the
payment demand procedure described above.

Section 180.1328 of the Wisconsin Business Corporation Law provides that a
dissenting shareholder may notify Nicolet in writing of his or her 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 made under the procedure
described above), if:

- he or she believes that the amount paid by Nicolet is less than the
fair value of his or her shares or that Nicolet has calculated
incorrectly the interest due;

- Nicolet fails to make payment under Section 180.1325 within 60 days
after the date set for demanding payment; or

- Nicolet, having failed to consummate the Reorganization, 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.

A dissenting shareholder waives his or her right to demand payment under
Section 33-13-280 unless he or she notifies Nicolet of his or her demand in
writing within 30 days after Nicolet makes or offers payment for his or her
shares.

If a demand for payment under Section 180.1328 remains unsettled, Nicolet
must commence a special proceeding in the Court of Common Pleas of Wisconsin,
within 60 days after receiving the payment demand and must petition the court to
determine the fair value of the shares and accrued interest. If Nicolet does not
commence the proceeding within those 60 days, the Wisconsin Business Corporation
Law requires Nicolet to pay each dissenting shareholder whose demand remains
unsettled the amount demanded. Nicolet 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 court may appoint appraisers
to receive evidence and to recommend a decision on fair value. Each dissenting
shareholder made a party to the proceeding is entitled to judgment for the fair
value of such holder's shares plus interest to the date of judgment.

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 Nicolet, 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, capriciously, or not in good faith in demanding payment under
Section 180.1328. The court also may assess the fees and expenses of attorneys
and experts for the respective parties against Nicolet if the court finds
Nicolet did not substantially comply with the requirements of specified
provisions of the Wisconsin Business Corporation Law, or against either Nicolet
or a dissenting shareholder if the court finds that such party acted
arbitrarily, capriciously, or not in good faith with respect to the dissenters'
rights provided by the Wisconsin Business Corporation Law.

If the court finds that the services of attorneys for any dissenting
shareholder were of substantial benefit to other dissenting shareholders
similarly situated, and that the fees for those services should be not assessed
against Nicolet, the court may award those attorneys reasonable fees out of the
amounts awarded the dissenting shareholders who were benefited. In a proceeding
commenced by dissenters to enforce the statutory liability of Nicolet in the
event Nicolet fails to commence an appraisal within the sixty day period
described above, the court will assess costs of the proceeding and fees and
expenses of dissenters' counsel against the corporation.

This is a summary of the material rights of a dissenting shareholder and is
qualified in its entirety by reference to Sections 180.1301 et. seq. of the
Wisconsin Business Corporation Law, included as Appendix B to this Proxy
----------
Statement. If you intend to dissent from approval of the Plan, you should review
carefully the text of Appendix B 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, except as may be required by the Wisconsin Business
Corporation Law, or to obtain legal counsel or appraisal services at the expense
of Nicolet.

Any dissenting shareholder who perfects his or her right to be paid the
"fair value" of his or her shares will recognize taxable gain or loss upon
receipt of cash for such shares for federal income tax purposes. See "Special
Factors-Federal Income Tax Consequences of the Reorganization."

INFORMATION ABOUT NICOLET AND ITS AFFILIATES

DIRECTORS AND EXECUTIVE OFFICERS

All of the directors listed below are also directors of Nicolet National
Bank, a wholly-owned subsidiary of the Company ("Nicolet National"). Except as
otherwise indicated, each of the named persons has been engaged in his or her
present principal occupation for more than five years. The ages shown are as of
December 31, 2003.

POSITIONS AND
NAME (AGE) DIRECTOR SINCE BUSINESS EXPERIENCE
-------------------------- -------------- ---------------------------------------------------

Robert B. Atwell (46) 2000 Chairman of the Company since 2002; President
and chief executive officer of the Company and
Nicolet National since 2000; previously employed
by Associated Bank Green Bay from 1987 to 2000
in various capacities, most recently serving as
executive vice president and senior lending
officer.

Michael E. Daniels (39) 2000 Executive vice president and chief lending officer
of Nicolet National since 2000 and Secretary of
the Company since 2002; previously employed by
Associated Bank Green Bay from 1995 to 2000 as
senior vice president and metro group manager for
business banking.

Wendell E. Ellsworth (63) 2000 Owner and chief executive officer, Algoma
Hardwoods, Inc., Appalachian Door, LLC and
Algoma Door, Inc., door manufacturers; and WEE
Enterprises, a real estate company.

Deanna L. Favre (35) 2000 Chief executive officer, Favre Forward
Foundation, which supports disadvantaged and
disabled children's causes.

Michael F. Felhofer (46) 2000 President, Candleworks of Door County, Inc., a
candle manufacturer and retailer. Previously,
advisor, Lang Candles, Ltd., a candle company.

James M. Halron (50) 2000 Co-owner, Halron Oil Company, Inc., a gas and
oil distributor; co-owner of Halco Barge Lines,
Inc, Halco Terminals, Inc., and Halron Brothers
LLP, and Halron Partnership LLP, real estate
partnerships.

POSITIONS AND
NAME (AGE) DIRECTOR SINCE BUSINESS EXPERIENCE
-------------------------- -------------- ---------------------------------------------------

Philip J. Hendrickson (83) 2000 Retired; former chairman, chief executive officer
and president of KI Krueger International, a
manufacturer of office, commercial, institutional
and educational furniture. Also a director of
Ariens Co., Brillion, Wisconsin and Trudell
Trailer Co., DePere, Wisconsin.

President of NPS Corp., a manufacturer and
marketer of spill control and protection packaging
products; managing member of Hetzel Enterprises
LLC, a real estate company.

Andrew F. Hetzel, Jr. (47) 2001 Owner and President, Euro Pharma Inc., a
distributor of therapeutic skin care products,
exclusive personal care products and unique
natural remedies. Former owner and founder of

Terrence J. Lemerond (65) 2000 Enzymatic Therapy, a vitamin and health
supplement manufacturer.

Donald J. Long, Jr. (46) 2000 Owner and president, Century Drill & Tool Co.,
Inc., an expediter of power tool accessories.

Susan L. Merkatoris (40) 2003 Owner and President of Susan L. Merkatoris,
CPS, SC, a consulting business specializing in
small business accounting and management
issues; Co-owner Larboard Enterprises, LLC, a
packing and shipping franchise doing business as
The UPS Stores; Co-owner and Vice President,
Midwest Stihl Inc., a distributor of Stihl power
products; Previously, Manager of Accounting and
Finance, Claim Management Service, Inc.

Wade T. Micoley (43) 2000 Owner, Re/Max 1st Advantage, a real estate
brokerage franchise; partner, Whirthington
Estates, Inc., a real estate development company;
and owner, Tycore Built LLC, a residential and
commercial contracting company.

Ronald C. Miller (66) 2000 Retired president and chief executive officer, Four
Corporation, an automated welding equipment
and custom fabricating/machining business.

Sandra A. Renard (64) 2001 President and owner, Renco Machine Company,
Inc., a manufacturer of equipment for the paper
making industry and foundries.

POSITIONS AND
NAME (AGE) DIRECTOR SINCE BUSINESS EXPERIENCE
-------------------------- -------------- ---------------------------------------------------

Robert J. Weyers (39) 2000 Co-owner, Weyers Group, a private equity
investment firm and Commercial Horizons, Inc., a
commercial property development company.

STOCK OWNERSHIP BY AFFILIATES

The following table sets forth the number and the percentage ownership of
shares of Nicolet common stock beneficially owned by each director and executive
officer of Nicolet and by all current directors and executive officers as a
group as of December 31, 2004. We are unaware of any shareholder who owns more
than 5% of our outstanding shares of common stock.

The table also sets forth the number and approximate percentage of shares
of Nicolet common stock that the persons named in the table would beneficially
own after the effective date of the Reorganization on a pro forma basis,
assuming no changes in ownership between December 31, 2004 and the effective
date of the Reorganization.

Under SEC rules, a person is deemed to be a "beneficial owner" of a
security if that person has or shares "voting power," which includes the power
to vote or to direct the voting of such security, or "investment power" which
includes the power to dispose or to direct the disposition of such security.
The number of shares beneficially owned also includes any shares the person has
the right to acquire within the next 60 days. Unless otherwise indicated, each
person is the record owner of and has sole voting and investment power over his
or her shares.

Percent Beneficial Ownership
----------------------------
Name Amount and
---- Nature of
Beneficial Before the After the
Ownership Reorganization Reorganization
--------- -------------- --------------

Robert B. Atwell 104,600(2) 3.3 3.5
Michael E. Daniels 102,789(3) 3.2 3.5
Wendell E. Ellsworth 97,577(4) 3.0 3.3
Jacqui A. Engebos 25,000(5) * *
Deanna L. Favre 87,500(8) 2.7 2.9
Michael F. Felhofer 67,500(7) 2.1 2.3
James M. Halron 57,500(7) 1.8 1.9
Philip J. Hendrickson 105,000(8) 3.3 3.5
Andrew F. Hetzel, Jr. 101,000 3.2 3.4
Terrence J. Lemerond 117,500(7) 3.7 4.0
Donald J. Long, Jr. 71,900(7) 2.2 2.4
Susan L. Merkatoris 2,000(9) * *
Wade T. Micoley 107,450(10) 3.4 3.6
Ronald C. Miller 77,500(7) 2.4 2.6
Sandra A. Renard 101,000(11) 3.2 3.4
Robert J. Weyers 65,500(7) 2.0 2.2

All Directors and Executive Officers
as a Group (16 persons) 1,291,316(12) 40.3 43.4
<FN>
*Represents less than one percent.

1 For purposes of this table, percentages shown treat all shares subject to
exercisable warrants and options held by directors and executive officers as if
they were issued and outstanding.

2 Includes exercisable option to purchase 61,200 shares of common stock
granted to Mr. Atwell under his employment agreement and an exercisable warrant
for 7,500 shares granted to Mr. Atwell as an organizer of Nicolet National.

3 Includes 11,000 shares held jointly with his spouse, 2,420 shares held by
minor children, 9,803 shares held in his spouse's IRA, an exercisable option to
purchase 57,500 shares of common stock granted to Mr. Daniels under his
employment agreement and an exercisable warrant for 7,500 shares granted to Mr.
Daniels as an organizer of Nicolet National.

4 Includes 35,100 shares held jointly with his spouse, 16,000 shares held in
trusts for the benefit of grandchildren and an exercisable warrant for 7,500
shares granted to Mr. Ellsworth as an organizer of Nicolet National.

5 Includes exercisable options to purchase 20,000 shares of common stock.

6 Includes 80,000 shares held jointly with her spouse and an exercisable
warrant for 7,500 shares granted to Ms. Favre as an organizer of Nicolet
National.

7 Includes an exercisable warrant for 7,500 shares granted to each organizer
of Nicolet National.

8 Includes 75,000 shares held jointly with his spouse; 22,500 shares held in
a trust for the benefit of his children, as to which his spouse serves as
trustee; and an exercisable warrant for 7,500 shares granted to Mr. Hendrickson
as an organizer of Nicolet National.

9 Includes 2,000 shares held jointly with her spouse.

10 Includes 70,550 shares held in a joint trust, 4,700 shares held in each
of two children's names, 1,000 shares held in his spouse's IRA, and an
exercisable warrant for 7,500 shares granted to Mr. Micoley as an organizer of
Nicolet National.

11 Includes 100,000 shares held as trustee for a joint trust and options to
purchase 1,000 shares of common stock.

12 Includes exercisable options to purchase 140,700 shares of common stock
and 90,000 shares subject to exercisable warrants granted to the organizers of
Nicolet National.

RECENT AFFILIATE TRANSACTIONS IN NICOLET STOCK

The following table shows all purchases of Nicolet common stock by the
filing persons during the past two years and all transactions in Nicolet common
stock by Nicolet and its executive officers, directors and affiliates during the
past 60 days. Nicolet has never repurchased any of its outstanding shares of
common stock.

Name Date No of Shares Price per Share How Effected
---- ---- ------------ --------------- ------------

Robert B. Atwell 12/31/03 1,000 $ 10 Option Exercise
11/15/04 9,300 10 Option Exercise

12/17/04 100 - Donation to
Various Charities

12/30/04 700 - Donation to
Various Charities

Andrew F. Hetzel, Jr. 11/17/04 1,000 12.50 Option Exercise

In addition to the transactions listed above, on December 9, 2004, Nicolet
granted options to purchase a total of 4,000 shares of common stock to 4
persons, none of whom are affiliates of the Company, at an exercise price of
$15.00 per share.

RELATED PARTY TRANSACTIONS

Other than ordinary lending transactions between Nicolet National Bank on
standard commercially available terms, made in compliance with Federal Reserve
Regulation O, there have been no transactions since June 30, 2002 between the
Company and any current affiliate involving more than $60,000 or 1% of Nicolet's
revenues for the year.

MARKET FOR COMMON STOCK AND DIVIDENDS

There is not an organized trading market for Nicolet's common stock, and we
do not expect that an active market for Nicolet common stock will develop after
the Reorganization. The common stock has never been listed on an exchange or
quotation system. To our knowledge, our stock has traded at prices ranging from
$12.50 to $15.00 per share since June 30, 2002. We will not take any steps to
cause the shares of Nicolet common stock to become eligible for trading on an
exchange or automated quotation system after the Reorganization, and Nicolet
will not be required to file reports under the Securities Exchange Act of 1934.

We have not paid and do not anticipate paying dividends on our common stock
in the immediate future. At present, the only source of funds from which we
could pay dividends would be dividends paid to us by Nicolet National Bank. The
Bank is required by federal law to obtain prior approval of the Office of the
Comptroller of the Currency for payments of dividends if the total of all
dividends declared by our board of directors in any year will exceed (1) the
total of the Bank's net profits for that year, plus (2) the Bank's retained net
profits of the preceding two years, less any required transfers to surplus. No
assurance can be given that we will declare dividends in the future, or if we do
so, what the amount of the dividends will be or whether such dividends, once
declared, would continue.

DESCRIPTION OF COMMON STOCK

Common Stock. Nicolet is authorized by its articles of incorporation to
issue 30,000,000 shares of common stock, par value, $.01 per share. As of the
record date, Nicolet had shares of common stock issued and outstanding and
held by approximately 499 shareholders of record.

All shares of common stock are entitled to share equally in dividends from
funds legally available therefor, when, as and if declared by the board of
directors, and upon liquidation or

dissolution of the corporation, whether voluntary or involuntary, to share
equally in the assets of the corporation available for distribution to
shareholders. Each holder of common stock is entitled to one vote for each share
on all matters submitted to the shareholders.

There is no redemption right, sinking fund provision, or right of
conversion in existence with respect to the common stock. Our articles of
incorporation do not provide for preemptive rights to acquire additional shares
of common stock when issued. All of the outstanding shares of common stock are
fully paid and non-assessable.

Warrants. In connection with the organization of Nicolet National Bank,
the organizers of the bank received a total of 90,000 warrants to purchase
common stock at a price of $10.00 per share. These warrants were assumed by
Nicolet Bankshares in its acquisition of Nicolet National Bank in the
reorganization. The warrants vest in one-third annual increments over a period
of three years, beginning on September 30, 2001. As a result, all of the
outstanding warrants are currently vested. The warrants are exercisable for a
ten-year period that expires on September 30, 2010. If Nicolet National Bank's
capital falls below the minimum level required by the Office of the Comptroller
of the Currency, we may be directed to require the holders to exercise or
forfeit their warrants.

Anti-Takeover Provisions

The provisions of our articles of incorporation and bylaws summarized in
the following paragraphs may be deemed to have anti-takeover effects and may
delay, defer, or prevent a tender offer or takeover attempt that a shareholder
might consider to be in his or her best interest, including those attempts that
might result in a premium over the market price for the shares held by
shareholders, and may make removal of management more difficult.

Approval of Significant Corporate Transactions. Our articles of
--------------------------------------------------
incorporation require the affirmative vote of either (1) a majority of the board
of directors and shareholders owning at least two-thirds of the issued and
outstanding shares of the corporation or (2) two-thirds of the board of
directors and shareholders owning at least a majority of the issued and
outstanding shares of the corporation in order to approve a merger or share
exchange, or a sale of all or substantially all of the corporation's assets.

Number of Directors. Our bylaws provide that the board of directors shall
-------------------
have not less than two nor more than twenty-five members. The number of
directors may be fixed from time to time by the affirmative vote of board of
directors. A director is elected for a one-year term or until his or her
successor is elected.

Our articles of incorporation also permit cumulative voting in the election
of directors. Accordingly, a shareholder may cast all of his or her total
number of votes for a single director nominee, or may distribute his or her
votes in any manner among two or more of the director nominees. To be elected,
a director nominee must receive more votes than any other nominee for the same
seat on our board of directors.

Removal of Directors and Filling Vacancies. Our bylaws provide that a
-----------------------------------------------
director may be removed by shareholders at a meeting called to remove him or her
for cause. A director may not be removed, however, if the number of votes
sufficient to elect him or her under cumulative voting is voted against his or
her removal.

Authorized but Unissued Stock. The authorized but unissued shares of
--------------------------------
common stock will be available for future issuance without shareholder approval.
These additional shares may be used for a variety of corporate purposes,
including future public offerings to raise additional capital, corporate
acquisitions, and employee benefit plans. The existence of authorized but
unissued and unreserved shares of common stock may enable the board of directors
to issue shares to persons friendly to current management, which could render
more difficult or discourage any attempt to obtain control of our corporation by
means of a proxy contest, tender offer, merger or otherwise, and thereby protect
the continuity of our management.

Limitation of Liability

Our articles of incorporation and bylaws contain no provisions that limit
the personal liability of a director to the shareholders for monetary damages
for breach of his or her duty as a director. However, the Wisconsin Business
Corporation Law limits the personal liability of a director to the shareholders
of a Wisconsin corporation for monetary damages for breach of his or her duty as
a director, except in the following instances:

- a willful failure to deal fairly with the corporation or its
shareholders in connection with a matter in which the director has a
material conflict of interest;

- a violation of criminal law, unless the director 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;

- a transaction from which the director derived an improper personal
profit; or

- willful misconduct.

The limitation on director liability, however, does not apply to any action
brought by or on behalf of a governmental entity, receiver, conservator, or
depositor of any banking institution, as defined by Wisconsin law, or any
subsidiary of a banking institution.

SHAREHOLDER PROPOSALS

Proposals by shareholders for consideration at our 2005 Annual Meeting of
Shareholders must be received at our offices at 110 South Washington Street,
Green Bay, Wisconsin 54301 no later than November 23, 2004 if any such proposal
is to be eligible for inclusion in our proxy materials for our 2005 Annual
Meeting. Proposals by shareholders received after that date will not be
included in our proxy materials for the 2005 Annual Meeting. Until we complete
the Reorganization, shareholders submitting proposals for inclusion in our proxy
statement and form of proxy must comply with the proxy rules under the
Securities Exchange Act of 1934, as amended. Under applicable regulations, we
are not required to include shareholder proposals in our proxy materials unless
certain other conditions specified in those regulations are satisfied.

Although shareholders may still submit proposals in accordance with our
bylaws, even if the proposals are not included in the proxy statement, the
persons named as proxies in the Company's proxy statement for the meeting will
have discretionary authority to vote the proxies they have received as they see
fit with respect to any proposals received less than 60 days prior to the
meeting date. Our bylaws require that the notice describe: (i) the proposal and
the reason it is being brought before the meeting; (ii) the proponent's name and
address and the number of shares he or she beneficially owns; and (iii) any
material interest of the proponent in the proposal. SEC Rule 14a-8

provides additional information regarding the content and procedure applicable
to the submission of shareholder proposals.

SELECTED HISTORICAL FINANCIAL DATA

The following selected historical financial data is derived from, and
qualified by reference to, Nicolet's Consolidated Financial Statements and the
Notes thereto included in its Annual Report on Form 10-KSB for the year ended
December 31, 2003 and its Quarterly Report on Form 10-QSB for the quarter ended
September 30, 2004. You should read the selected financial data set forth below
in conjunction with the foregoing financial statements and notes and in the
context of "Management's Discussion and Analysis of Financial Condition and
Results of Operations" attached as Appendices D and E to this proxy statement.
------------------

---------------------------------
(In thousands except per share data) 2003 2002 2001
---- ---- ----

Net interest income $ 7,747 5,084 3,380
Provision for loan losses 2,335 1,308 1,200
Noninterest income 3,198 1,575 673
Noninterest expense 7,211 5,148 3,454
Income taxes 421 145 (670)
Net earnings $ 978 58 70

PER COMMON SHARE
Basic earnings per share $ .33 .03 .04
Diluted earnings per share .32 .03 .04
Book value $ 10.92 10.60 9.37

AT YEAR END
Loans, net $ 258,660 209,926 122,660
Earning assets
Assets 337,395 250,005 171,612
Deposits 289,080 206,731 150,066
Stockholders' equity $ 32,229 31,249 17,300
Common shares outstanding 2,951,154 2,946,820 1,845,987

AVERAGE BALANCES
Loans $ 249,045 171,441 90,904
Earning assets 279,078 198,446 113,338
Assets 293,110 208,603 116,910
Deposits 254,253 180,876 98,498
Stockholders' equity $ 29,331 19,977 16,935
Weighted average shares outstanding 2,956,923 2,948,668 2,130,730

KEY PERFORMANCE RATIOS
Return on average assets .33 .03 .06
Return on average stockholders' equity 3.33 .29 .41
Average equity to average assets 10.01 9.60 14.50

For the Nine months
Ended September 30,
---------------------

(In thousands except per share data) 2004 2003
---------- ---------

Net interest income $ 7,522 5,568
Provision for loan losses 2,300 1,723
Noninterest income 2,621 2,627
Noninterest expense 6,550 5,197
Income taxes 354 419
Net earnings $ 940 855

PER COMMON SHARE
Basic earnings per share $ .32 0.29
Diluted earnings per share .32 0.29
Book value $ 23.93 10.89

AT PERIOD END
Loans, net $ 296,967 252,904
Earning assets 350,129 290,794
Assets 373,673 309,881
Deposits 326,697 272,799
Stockholders' equity $ 33,217 32,124
Common shares outstanding 2,957,654 2,946,820

AVERAGE BALANCES
Loans $ 295,646 218,698
Earning assets 331,865 247,705
Assets 353,700 258,778
Deposits 311,009 230,031
Stockholders' equity $ 32,961 29,453
Weighted average shares outstanding 2,956,923 2,947,472

KEY PERFORMANCE RATIOS
Return on average assets (annualized) .35 .44
Return on average stockholders' equity (annualized) 3.80 3.87
Average equity to average assets 9.32 11.38

PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

The following unaudited pro forma consolidated balance sheet as of
September 30, 2004 (the "Pro Forma Balance Sheet"), and the unaudited pro forma
consolidated statements of earnings for the nine months ended September 30,
2004, and for the year ended December 31, 2003 (collectively, the "Pro Forma
Statements of Earnings"), show the pro forma effect of the Reorganization. Pro
forma adjustments to the Pro Forma Balance Sheet are computed as if the
Reorganization occurred at September 30, 2004, while the pro forma adjustments
to the Pro Forma Statements of Earnings are computed as if the Reorganization
were consummated on January 1, 2003, the earliest period presented. The
following financial statements do not reflect any anticipated cost savings that
may be realized by Nicolet after consummation of the Reorganization.

The pro forma information does not purport to represent what Nicolet's
results of operations actually would have been if the Reorganization had
occurred on January 1, 2003.

NICOLET BANKSHARES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2004
(DOLLARS IN THOUSANDS)
(UNAUDITED)

Pro Forma Pro Forma
------------
Historical Adjustments Combined
---------- ------------ --------

ASSETS
--
Cash and due from banks $ 8,428 8,428
Federal funds sold 13,924 13,924
------------- ----------
Cash and cash equivalents 22,352 22,352
Interest-bearing deposits 746 746
Securities available for sale 31,204 31,204
Other investments 1,556 1,556
Mortgage loans held for sale 2,026 2,026
Loans, net 296,967 296,967
Premises and equipment 7,855 7,855
Bank owned life insurance 7,363 7,363
Other assets 3,604 3,604
------------- ----------
Total assets $ 373,673 373,673
============= ==========

LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Non-interest bearing $ 34,841 34,841
Interest bearing 291,586 291,586
------------- ----------
Total deposits 326,697 326,697

Short term borrowings 2,188 2,188
Junior subordinated debentures 6,186 6,186
Note payable 3,045 4,381 7,426
Accrued expenses and other liabilities 1,841 - 1,841
------------- ------------ ----------

Total liabilities 339,957 4,381 344,338
------------- ------------ ----------

Minority interest in joint venture 500 500

Shareholders' equity:
Common stock 30 (2) 28
Additional paid-in capital 32,170 (4,379) 27,791
Retained earnings 864 864
Accumulated other comprehensive income 152 - 152
------------- ------------ ----------

Total stockholders' equity 33,216 (4,381) 28,835
------------- ----------

Total liabilities and equity $ 373,673 - 373,673
============= ============ ==========
Common stock

-------------------------------------------
(1) Retirement of 233,229 shares at $18.25
plus $125,000 in transaction costs,
financed by note payable to a bank
-------------------------------------------

Shares outstanding 2,957,654 2,724,425
Book value per share $ 11.23 $ 10.58
<FN>
See accompanying notes to pro forma consolidated financial statements.

NICOLET BANKSHARES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Pro Forma
------------
Historical Adjustments Pro Forma
-- ------------ ----------

Interest income $ 12,968 12,968
Interest expense 5,446 (1) 145 5,591
-------------- ------------ ----------
Net interest income 7,522 (145) 7,377

Provision for loan losses 2,300 2,300
Noninterest income 2,621 2,621
Noninterest expense 6,550 - 6,550
-------------- ------------ ----------
Earnings before taxes 1,293 (145) 1,148

Income tax expense 354 (2) (55) 299
-------------- ----------

Net earnings $ 939 (90) 849
============== ==========

(1) Increase in interest expense on bank borrowings at 4.4%
(2) Income tax effect of reduced income at 38%

Basic earnings per share $ .32 $ .31
Diluted earnings per share $ .32 $ .31

Weighted average shares:
Basic 2,953,077 (233,229) 2,719,848
Diluted 2,948,109 (233,229) 2,714,880
<FN>
See accompanying notes to pro forma consolidated financial statements.

NICOLET BANKSHARES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 2003
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

Historical Pro Forma Pro Forma
-- ---------- ----------

Interest income $ 14,962 14,962
Interest expense 7,215 (1) 193 7,408
-------------- ---------- ----------
Net interest income 7,747 (193) 7,554

Provision for loan losses 2,335 2,335
Noninterest income 3,198 3,198
Noninterest expense 7,211 - 7,211
-------------- ---------- ----------
Earnings before income taxes 1,399 (193) 1,206

Income tax expense 421 (2) (73) 348
-------------- ----------

Net earnings $ 978 (120) 858
============== ========== ==========

(1) Increase in interest expense on bank borrowings at 4.4%
(2) Income tax effect of reduced income at 38%

Basic earnings per share $ .33 $ .32
Diluted earnings per share $ .32 $ .31

Weighted average shares:
Basic 2,948,668 (233,229) 2,715,439
Diluted 3,042,218 (233,229) 2,808,989
<FN>
See accompanying notes to pro forma consolidated financial statements.

NICOLET BANKSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS

(1) The unaudited pro forma consolidated balance sheet as of September 30, 2004
and consolidated statements of earnings for the nine months ended September
30, 2004 and for the year ended December 31, 2003 have been prepared based
on the historical consolidated balance sheets and statements of earnings,
which give effect to the Reorganization as if it had occurred on the
earliest date presented.

(2) In the opinion of management, all adjustments considered necessary for a
fair presentation of the financial position and results for the period
presented have been included. Adjustments, if any, are normal and of a
recurring nature.

WHERE YOU CAN FIND MORE INFORMATION

We file reports, Proxy Statements and other information with the SEC.
Copies of these reports and other information may be inspected and copied at the
SEC's public reference facilities located at 450 Fifth Street, NW, Washington,
D.C. 20549. Copies of these reports and other information can also be obtained
by mail at prescribed rates from the SEC at the address provided above, by
telephone from the SEC at 1-800-SEC-0330, or via the SEC's website at
www.sec.gov.

APPENDIX A
----------

AGREEMENT AND PLAN OF REORGANIZATION

A-1

AGREEMENT AND PLAN OF REORGANIZATION

THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Plan of Reorganization") is
made and entered into as of the 15th day of December, 2004, by and between
Nicolet Bancshares, Inc. ("Nicolet"), a bank holding company organized under the
laws of the State of Wisconsin, and Nicolet Interim Corporation ("Interim"), a
Wisconsin corporation.

WITNESSETH
----------

WHEREAS, Nicolet and Interim have determined that in order to effect a
recapitalization of Nicolet resulting in the suspension of its duties to file
reports with the Securities and Exchange Commission, Nicolet should cause
Interim to be organized as a Wisconsin corporation for the sole purpose of
merging with and into Nicolet, with Nicolet being the surviving corporation;

WHEREAS, the authorized capital stock of Nicolet consists of 30,000,000
shares of common stock ("Nicolet Common Stock"), $0.01 par value, of which
2,975,454 shares are issued and outstanding;

WHEREAS, the authorized capital stock of Interim consists of 1,000 shares
of common stock ("Interim Common Stock"), $0.01 par value, of which 100 shares
are issued and outstanding;

WHEREAS, the respective Boards of Directors of Nicolet and Interim deem it
advisable and in the best interests of Nicolet and Interim and their respective
shareholders that Interim be merged with and into Nicolet;

WHEREAS, the respective Boards of Directors of Nicolet and Interim, by
resolutions duly adopted, have approved and adopted this Plan of Reorganization
and directed that it be submitted to the respective shareholders of Nicolet and
Interim for their approval; and

NOW, THEREFORE, in consideration of the premises, mutual covenants and
agreements herein contained, and for the purpose of stating the method, terms
and conditions of the merger provided for herein, the mode of carrying the same
into effect, the manner and basis of converting and exchanging the shares of
Nicolet Common Stock and Interim Common Stock as hereinafter provided, and such
other provisions relating to the reorganization and merger as the parties deem
necessary or desirable, the parties hereto agree as follows:

SECTION 1

REORGANIZATION
--------------

Pursuant to the applicable provisions of Wisconsin law, Interim shall be
merged with and into Nicolet (the "Reorganization"). Nicolet shall be the
survivor of the merger (the "Surviving Corporation").

A-2

SECTION 2

EFFECTIVE DATE OF THE REORGANIZATION
------------------------------------

The merger of Interim with and into Nicolet shall be effective as of the
date (the "Effective Date") specified in the articles or certificate of merger
relating to the Reorganization as filed with the Wisconsin Secretary of State.

SECTION 3

LOCATION, ARTICLES AND BYLAWS, AND MANAGEMENT
---------------------------------------------

On the Effective Date:

(a) The principal office of the Surviving Corporation shall be located
at 110 South Washington Street, Green Bay, Wisconsin 54301, or such other
location where Nicolet is located on the Effective Date of the Reorganization.

(b) The Articles of Incorporation and Bylaws of the Surviving
Corporation shall be the same Articles of Incorporation and Bylaws of Nicolet as
are in effect on the Effective Date of the Reorganization.

(c) The directors and officers of the Surviving Corporation shall be
the directors and officers of Nicolet on the Effective Date of the
Reorganization. All such directors and officers of the Surviving Corporation
shall serve until their respective successors are elected or appointed pursuant
to the applicable provisions of the Articles and Bylaws of the Surviving
Corporation.

SECTION 4

EXISTENCE, RIGHTS, DUTIES, ASSETS, AND LIABILITIES
--------------------------------------------------

(a) As of the Effective Date of the Reorganization, the existence of
Nicolet shall continue in the Surviving Corporation.

(b) As of the Effective Date of the Reorganization, the Surviving
Corporation shall have, without further act or deed, all of the properties,
rights, powers, trusts, duties and obligations of Nicolet and Interim.

(c) As of the Effective Date of the Reorganization, the Surviving
Corporation shall have the authority to engage only in such businesses and to
exercise only such powers as are provided for in the Articles of Incorporation
of the Surviving Corporation, and the Surviving Corporation shall be subject to
the same prohibitions and limitations to which it would be subject upon original
incorporation, except that the Surviving Corporation may engage in any business
and may exercise any right that Nicolet or Interim could lawfully have exercised
or engaged in immediately prior to the Effective Date of the Reorganization.

(d) No liability of Nicolet or Interim or of any of their shareholders,
directors or officers shall be affected by the Reorganization, nor shall any
lien on any property of Nicolet or Interim be impaired by the Reorganization.
Any claim existing or any action pending by or against Nicolet

A-3

or Interim may be prosecuted to judgment as if the Reorganization had not taken
place, or the Surviving Corporation may be substituted in place of Nicolet or
Interim.

SECTION 5

EFFECT OF MERGER ON INTERIM SHAREHOLDERS
----------------------------------------

Each share of Interim Common Stock outstanding immediately prior to the
Effective Date of the Reorganization shall be cancelled and shall no longer be
outstanding.

SECTION 6

MANNER AND BASIS OF CONVERTING SHARES
-------------------------------------
OFNICOLETCOMMON STOCK
---------------------

(a) Conversion of Shares. The shares of Nicolet Common Stock that are
---------------------
outstanding on the Effective Date of the Reorganization, excluding those shares
of Nicolet Common Stock held by shareholders who have perfected dissenters'
rights of appraisal under the applicable provisions of Wisconsin law (the
"Dissenters' Rights Provisions"), shall be converted or retained as follows:

(1) Each share of Nicolet Common Stock held by a shareholder who is
the record holder of 1,500 or fewer shares of Nicolet Common Stock shall be
converted into the right to receive cash, payable by the Surviving
Corporation, in the amount of $18.25 per share of Nicolet Common Stock.

(2) Each share of Nicolet Common Stock held of record by a shareholder
who is the holder of more than 1,500 shares of Nicolet Common Stock shall
remain outstanding and held by such shareholder.

(3) All treasury stock held by the Company shall remain treasury stock
and shall be unaffected by this Plan of Reorganization.

(b) Failure to Surrender Nicolet Common Stock Certificates. Until a
---------------------------------------------------------
Nicolet shareholder receiving cash in the Reorganization surrenders his or her
Nicolet Common Stock certificate or certificates to Nicolet (or suitable
arrangements are made to account for any lost, stolen or destroyed certificates
according to Nicolet's usual procedures), the shareholder shall not be issued
the cash (or any interest thereon) that such Nicolet Common Stock certificate
entitles the shareholder to receive.

SECTION 7

ACQUISITION OF DISSENTERS' STOCK
--------------------------------

Nicolet shall pay to any shareholder of Nicolet who complies fully with the
Dissenters' Rights Provisions an amount of cash (as determined and paid under
the terms of such Provisions) for his or her shares of Nicolet Common Stock.
The shares of Nicolet Common Stock so acquired shall be cancelled.

A-4

SECTION 8

FURTHER ACTIONS
---------------

From time to time, as and when requested by the Surviving Corporation, or
by its successors or assigns, Nicolet shall execute and deliver or cause to be
executed and delivered all such deeds and other instruments, and shall take or
cause to be taken all such other actions, as the Surviving Corporation, or its
successors and assigns, may deem necessary or desirable in order to vest in and
confirm to the Surviving Corporation, and its successors and assigns, title to
and possession of all the property, rights, powers, trusts, duties and
obligations referred to in Section 4 hereof and otherwise to carry out the
intent and purposes of this Plan of Reorganization.

SECTION 9

CONDITIONS PRECEDENT TO CONSUMMATION OF THE REORGANIZATION
----------------------------------------------------------

This Plan of Reorganization is subject to, and consummation of the
Reorganization herein provided for is conditioned upon, the fulfillment prior to
the Effective Date of the Reorganization of each of the following conditions:

(a) Approval of the Plan of Reorganization by the shareholders of each
of Nicolet and Interim in accordance with the provisions of applicable law and
the provisions of the applicable constituent's articles of incorporation, bylaws
and other governing instruments;

(b) The number of shares held by persons who have perfected dissenters'
rights of appraisal pursuant to the Dissenters' Rights Provisions shall not be
deemed by the Board of Directors to make consummation of this Plan of
Reorganization inadvisable;

(c) Procurement of any action, consent, approval or ruling,
governmental or otherwise, which is, or in the opinion of counsel for Nicolet
and Interim may be, necessary to permit or enable the Surviving Corporation,
upon and after the Reorganization, to conduct all or any part of the business
and activities conducted by the Nicolet prior to the Reorganization.

SECTION 10

TERMINATION
-----------

In the event that:

(a) The number of shares of Interim Common Stock or Nicolet Common
Stock voted against the Reorganization shall make consummation of the
Reorganization inadvisable in the opinion of the Board of Directors of Nicolet
or Interim;

(b) Any action, consent, approval, opinion, or ruling required to be
provided by Section 9 of this Plan of Reorganization shall not have been
obtained; or

(c) For any other reason consummation of the Reorganization is deemed
inadvisable in the opinion of the Board of Directors of Nicolet or Interim;

A-5

then this Plan of Reorganization may be terminated at any time before
consummation of the Reorganization by written notice, approved or authorized by
the Board of Directors of the party wishing to terminate, to the other party.
Upon termination by written notice as provided by this Section 10, this Plan of
Reorganization shall be void and of no further effect, and there shall be no
liability by reason of this Plan of Reorganization or the termination hereof on
the part of Nicolet, Interim, or their directors, officers, employees, agents or
shareholders.

SECTION 11

AMENDMENT; WAIVER
-----------------

(a) At any time before or after approval and adoption hereof by the
respective shareholders of Nicolet and Interim, this Plan of Reorganization may
be amended by written agreement by Nicolet and Interim; provided, however, that
after the approval and adoption of this Plan of Reorganization by the
shareholders of Nicolet and Interim, no amendment reducing the consideration
payable to Nicolet shareholders shall be valid without having been approved by
the Nicolet shareholders in the manner required for approval of this Plan of
Reorganization. In particular, in the event that the consummation of the Plan
of Reorganization would yield more than 300 shareholders of record, the
President and Chief Executive Officer may amend the Plan of Reorganization to
increase the 1,500-share threshold described in Section 6(a) to the minimum
threshold necessary to ensure that the Company will have fewer than 300
shareholders of record as a result of the transactions contemplated by this Plan
of Reorganization.

(b) A waiver by any party hereto of any breach of a term or condition
of this Plan of Reorganization shall not operate as a waiver of any other breach
of such term or condition or of other terms or conditions, nor shall failure to
enforce any term or condition operate as a waiver or release of any other right,
in law or in equity, or claim which any party may have against another party for
anything arising out of, connected with or based upon this Plan of
Reorganization. A waiver shall be effective only if evidenced by a writing
signed by the party who is entitled to the benefit of the term or condition of
this Plan of Reorganization which is to be waived. A waiver of a term or
condition on one occasion shall not be deemed to be a waiver of the same or of
any other term or condition on a future occasion.

SECTION 12

BINDING EFFECT; COUNTERPARTS; HEADINGS; GOVERNING LAW
-----------------------------------------------------

This Plan of Reorganization is binding upon the parties hereto and upon
their successors and assigns. This Plan of Reorganization 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 of Reorganization and the headings herein set out are for
convenience or reference only and shall not be deemed a part of this Plan of
Reorganization. This Plan of Reorganization shall be governed by and construed
in accordance with the laws of the State of Wisconsin.

A-6

IN WITNESS WHEREOF, the parties hereto have caused this Plan of
Reorganization to be executed by their duly authorized officers and their
corporate seals to be affixed hereto all as of the day and year first above
written.

NICOLET BANKSHARES, INC.

By: /s/ Robert B. Atwell
-----------------------------

Name: Robert B. Atwell
---------------------------

Title: President and Chief Executive Officer
------------------------------------------

ATTEST:

/s/ Jacqui A. Engebos
------------------------

NICOLET INTERIM CORPORATION

By: /s/ Robert B. Atwell
----------------------------

Name: Robert B. Atwell
--------------------------

Title: President
--------------------------------

ATTEST:

/s/ Jacqui A. Engebos
------------------------

A-7

APPENDIX B
----------

SUBCHAPTER XIII
OF THE WISCONSIN BUSINESS CORPORATION LAW

B-1

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.

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:

1. Shareholder approval is required for the merger by s. 180. 1103
or by the articles of incorporation.

2. The issuer corporation is a subsidiary that is merged with its
parent under s. 180.1104.

B-2

(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) 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.

(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.

(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).

B-3

(4) Except in a business combination or 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.

180.1303 DISSENT BY SHAREHOLDERS AND BENEFICIAL SHAREHOLDERS.

(1) A shareholder may assert dissenters' rights as to fewer than all of the
shares registered in his or her name only if the shareholder dissents with
respect to all shares beneficially owned by any one person and notifies the
corporation 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 registered 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.

(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. 180.1320 NOTICE OF
DISSENTERS' RIGHTS.

(1) If proposed corporate action creating dissenters' rights under s. 180.1302
is submitted to a vote at a shareholders' meeting, 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.

B-4

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 all
of the following:

(a) Deliver to the issuer corporation before the vote is taken written
notice that complies with s. 180.0141 of the shareholder's or
beneficial shareholder's intent to demand payment for his or her
shares if the proposed action is effectuated.

(b) Not vote his or her shares in favor of the proposed action.

(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.

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.

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 ownership of the shares before the date specified in the
dissenters' notice under s. 180.1322 (2) (c). A shareholder or beneficial
shareholder

B-5

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 payment 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.

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.

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.

(2) The payment shall be accompanied by all of the following:

(a) The corporation's latest available financial statements, audited 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 of the
shares.

(d) A statement of the dissenter's right to demand payment under s.
180.1328 if the dissenter is dissatisfied with the payment. (e) A copy
of ss. 180.1301 to 180.1331.

B-6

180.1326 FAILURE TO TAKE ACTION.

(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 certificates and release the
transfer restrictions imposed on uncertificated shares.

(2) If after returning deposited certificates 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.

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 owner of the shares
before the date specified in the dissenters' notice under s. 180.1322 (2)
(c) as the date of the first announcement to news media or to shareholders
of the terms 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, 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.

180.1328 PROCEDURE IF DISSENTER DISSATISFIED WITH PAYMENT OR OFFER.

(1) A dissenter may, in 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.

B-7

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.

(2) The corporation shall bring the special proceeding in the circuit court for
the county where its principal office or, if none in this state, its
registered office is located. If the corporation is a foreign corporation
without a registered office in this state, it shall bring the special
proceeding in the county in this state in 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 one or more
persons as appraisers to receive evidence and recommend decision on the
question of fair value. An appraiser has the power described in the order
appointing him or her 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.

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.

B-8

(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.

(3) Notwithstanding ss. 814.01 to 814.04, if the court finds that the services
of counsel and experts for any dissenter were of substantial benefit to
other dissenters similarly situated, the court may award to these counsel
and experts reasonable fees to be paid out of the amounts awarded the
dissenters who were benefited.

B-9

APPENDIX C
----------

FAIRNESS OPINION OF RYAN BECK & CO., INC.

C-1

December 9, 2004

The Board of Directors
Nicolet Bankshares, Inc.
110 South Washington Street
Green Bay, WI 54301

Members of the Board:

You have requested our opinion as investment bankers as to the fairness
from a financial point of view of the share price offered by Nicolet Bankshares,
Inc. ("Nicolet") to its shareholders who will be cashed out as a result of the
cash-out merger to be effected as part of the plan to de-register the common
stock (the "Shares") of Nicolet from the Securities and Exchange Commission (the
"SEC"). All data used in our analysis is as of November 30, 2004 ("Valuation
Date"). You have requested that, in rendering this opinion, we consider among
other things, the historical financial performance of Nicolet and the market
price of Nicolet common stock as of the Valuation Date.

Ryan Beck & Co. ("Ryan Beck") is engaged in the business of providing
certain professional consulting services and as a customary part of its
investment banking business engages in the valuation of financial institutions
and their securities in connection with mergers and acquisitions and other
corporate transactions. In conducting our investigation and analysis of the fair
value of the shares as of the Valuation Date, we have met with members of senior
management of Nicolet to discuss their operations, historical financial
statements, strategic plans and future prospects. We have reviewed and analyzed
certain publicly available information in connection with the valuation,
including but not limited to the following: (i) Nicolet's Annual Reports on Form
10-K for the years ended December 31, 2003 and 2002, Nicolet's Quarterly Reports
on Form 10-Q for the periods ended September 30, 2004, June 30, 2004 and March
31, 2004, as well as Nicolet's Proxy Statements dated March 23, 2004 and March
26, 2003; (ii) the historical stock prices and trading volume of Nicolet common
stock provided to us by management; (iii) certain operating and financial
information provided to Ryan Beck by the management of Nicolet relating to its
business and prospects; and (iv) the publicly available financial data of
commercial banking organizations which Ryan Beck deemed generally comparable to
Nicolet. We also conducted or reviewed such other studies, analyses, inquiries
and examinations, as we deemed appropriate.

While we have taken care in our investigation and analyses, we have relied
upon and assumed the accuracy, completeness and fairness of the financial and
other information provided to us by Nicolet or which was publicly available and
have not assumed any responsibility for independently verifying such
information. We have also relied upon the management of Nicolet as to the
reasonableness and achievability of the financial and operating forecasts and
projections (and the assumptions and basis therefor) provided to us. In
addition, we have assumed with your consent that such forecasts and projections
reflect the best currently available estimates and judgments of management. Ryan
Beck is not an expert in evaluating loan and lease portfolios for purposes of
assessing the adequacy of the allowances for losses. Therefore, Ryan Beck has
not assumed any responsibility for making an independent evaluation of the
adequacy of the allowance for loan losses set forth in the balance sheet

C-2

of Nicolet at September 30, 2004, and Ryan Beck assumed such allowances were
adequate and complied fully with applicable law, regulatory policy, sound
banking practice and policies of the Securities and Exchange Commission as of
the date of such financial statements. We have not made or obtained any
independent evaluations or appraisals of the assets and liabilities of Nicolet,
nor have we reviewed any individual loan files of Nicolet or its subsidiary.

In conducting our analysis and arriving at our opinion as expressed herein,
we have considered such financial and other factors, as we have deemed
appropriate in the circumstances. Our opinion is necessarily based on economic,
market and other conditions and projections as they exist and can be evaluated
on the date hereof. In conducting our analysis and arriving at our opinion as to
the fair value of the Nicolet common stock, we have assumed a control premium
but not an acquisition premium.

We have been retained by the Board of Directors of Nicolet as an
independent contractor to act as financial advisor to Nicolet with respect to
the fairness, from a financial point of view, of the per share price offered to
its shareholders who will be partially or fully cashed-out as a result of the
cash-out merger to be effected as part of the plan to de-register from the SEC.
We will receive a fee for our services. Ryan Beck has not had a prior investment
banking relationship with Nicolet. Ryan Beck's research department does not
provide published investment analysis on Nicolet and Ryan Beck does not act as a
market maker in Nicolet common stock. In the ordinary course of our business as
a broker-dealer, we may actively trade equity securities of Nicolet for the
account of our customers.

Our opinion is directed to the Board of Directors of Nicolet solely for
their use in valuing Nicolet common stock. We have not considered, nor are we
expressing any opinion herein with respect to the price at which Nicolet common
stock will trade subsequent to the cash-out merger and de-registration from the
SEC. Our opinion may not be quoted, used or circulated for any other purpose
without our prior written consent, except for inclusion in the cash-out merger
proxy statement issued by Nicolet relating to the cash-out merger described in
this opinion.

Based upon and subject to the foregoing, it is our opinion as investment
bankers that the $18.25 share price offered by Nicolet is fair from a financial
point of view.

Very truly yours,

/S/ RYAN BECK & CO., INC.

C-3

APPENDIX D
----------

FINANCIAL STATEMENTS AND MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 2004

NICOLET BANKSHARES, INC.
Unaudited Consolidated Balance Sheets
September 30, 2004 and December 31, 2003

Assets
------

September 30, December 31
2004 2003
---- ----

Cash and due from banks $ 8,427,939 18,099,866
Interest bearing deposits 745,964 223,487
Federal funds sold 13,924,000 14,663,000
-------------- ------------

Cash and cash equivalents 23,097,903 32,986,353

Investment securities available for sale 31,204,036 29,470,177
Other investments 1,556,200 1,371,850
Loans held for sale 2,025,800 1,824,469
Loans, net of allowance for loan losses of $3,706,399
and $3,109,527, respectively 296,966,596 258,659,867
Premises and equipment, net 7,854,802 2,890,851
Bank owned life insurance 7,363,144 7,085,249
Accrued interest receivable and other assets 3,604,586 3,105,932
-------------- ------------

$ 373,673,067 337,394,748
============== ============

Liabilities and Stockholders' Equity
------------------------------------

Liabilities:
Deposits:
Noninterest-bearing $ 34,840,635 41,549,434
Interest-bearing 291,856,032 247,530,328
-------------- ------------

Total deposits 326,696,667 289,079,762

Short term borrowings 2,187,949 14,590,810
Notes payable 3,045,415 -
Junior subordinated debentures 6,185,568 -
Accrued interest payable and other liabilities 1,840,920 1,495,370
-------------- ------------

Total liabilities 339,956,519 305,165,942

Minority interest in joint venture 500,000 -

Shareholders' equity:
Common stock, $.01 par value; 30,000,000 shares authorized;
2,957,654 and 2,951,154 shares issued and 29,576 29,511
outstanding in 2004 and 2003, respectively
Additional paid-in capital 32,170,378 32,105,443
Retained earnings (accumulated deficit) 863,885 (75,772)
Accumulated other comprehensive income 152,709 169,624
-------------- ------------

Total shareholders' equity 33,216,548 32,228,806
-------------- ------------

$ 373,673,067 337,394,748
============== ============
<FN>
See accompanying notes to unaudited consolidated financial statements

NICOLET BANKSHARES, INC.

Unaudited Consolidated Statements of Income

For the Three Months and Nine Months Ended September 30, 2004 and 2003

Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2004 2003 2004 2003
---- ---- ---- ----

Interest income:
Loans $ 4,311,233 3,590,935 12,092,516 10,352,618
Federal funds sold 28,649 21,598 53,139 37,703
Investment securities
Taxable 163,972 170,874 524,333 601,471
Tax- exempt 93,212 11,237 228,105 39,671
Other 26,556 68 70,328 15,397
-------------- ------------- ------------- -------------
Total interest income 4,623,622 3,794,712 12,968,421 11,046,860
-------------- ------------- ------------- -------------
Interest expense:
Deposits 1,796,175 1,826,907 5,272,700 5,417,354
Junior subordinated debentures 105,842 - 105,842 -
Short term borrowings 17,185 10,574 67,641 61,963
-------------- ------------- ------------- -------------
Total interest expense 1,919,202 1,837,481 5,446,183 5,479,317
-------------- ------------- ------------- -------------
Net interest income 2,704,420 1,957,231 7,522,238 5,567,543
Provision for loan losses 675,000 612,500 2,300,000 1,722,500
-------------- ------------- ------------- -------------
Net interest income after provision
for loan losses 2,029,420 1,344,731 5,222,238 3,845,043
-------------- ------------- ------------- -------------
Other income:
Service charges on deposit accounts 90,497 115,602 314,849 323,660
Mortgage origination fees 175,929 440,850 844,137 1,289,527
Trust department fees 268,323 162,457 741,627 402,737
Securities gains /(losses) - - 76,426 295,282
Other operating income 172,719 137,625 644,279 315,854
-------------- ------------- ------------- -------------
Total other income 707,468 856,534 2,621,318 2,627,060
-------------- ------------- ------------- -------------
Other expense:
Salaries and other personnel expense 1,246,639 1,094,995 3,661,764 2,809,451
Net occupancy and equipment expense 348,067 188,200 1,014,800 494,920
Other operating expense 629,030 621,837 1,873,336 1,892,924
-------------- ------------- ------------- -------------
Total other expense 2,223,736 1,905,032 6,549,900 5,197,295
-------------- ------------- ------------- -------------

Net income before tax expense 513,152 296,233 1,293,656 1,274,808
Income tax expense 152,266 79,352 353,999 419,441
-------------- ------------- ------------- -------------
Net income $ 360,886 216,881 939,657 855,367
============== ============= ============= =============
Basic earnings per share based on
average outstanding shares of 2,956,923; 2,947,472;
2,953,077; and 2,947,040; respectively $ .12 .07 .32 .29
============== ============= ============= =============

Diluted earnings per share based on average
common stock equivalents outstanding of 2,963,316;
2,952,888; 2,948,109; and 2,962,982; respectively $ .12 .07 .32 .29
============== ============= ============= =============
<FN>
See accompanying notes to unaudited consolidated financial statements.

NICOLET BANKSHARES, INC.

Unaudited Consolidated Statements of Comprehensive Income

For the Three Months and Nine Months Ended September 30, 2004 and 2003

Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
September September September September
30, 2004 30, 2003 30, 2004 30, 2003
------------- ------------- ------------ ------------

Net income 360,886 216,881 939,657 855,367
------------- ------------- ------------ ------------

Other comprehensive (loss) income, net of tax:

Unrealized (losses) gains on securities available
for sale, net of tax of $257,149, ($54,459),
$59,878 and $109,335, respectively 385,723 (81,688) 89,817 164,002

Reclassification adjustment for gains on securities
available for sale, net of tax of, $0, $0, ($30,570),
and ($118,113), respectively
- - (45,856) (177,169)

Unrealized (losses) gains on derivative financial
Instruments qualifying as a cash flow hedge for
sale, net of tax of, $40,749, $0 , ($3,197) and $0,
respectively 61,124 - (4,796) -

Realized adjustment for gains on derivative
financial instruments qualifying as cash flow
hedges included in net earnings, net of tax of,
($14,833), $0, ($14,833), and $0, respectively
(22,250) - (22,250) -
------------- ------------- ------------ ------------

Total other comprehensive (loss) income, net of tax 424,597 (81,688) 16,915 (13,167)
------------- ------------- ------------ ------------

Comprehensive income 785,483 135,193 956,572 842,200
============= ============= ============ ============
<FN>
See accompanying notes to unaudited consolidated financial statements.

NICOLET BANKSHARES, INC.
Unaudited Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2004 and 2003

2004 2003
---- ----

Cash flows from operating activities:
Net income $ 939,657 855,367
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 2,300,000 1,722,500
Depreciation, amortization and accretion 430,582 475,246
Gain on sale of securities (76,426) (295,282)
Change in:
Loans held for sale (201,331) 1,710,729
Cash surrender value of life insurance (277,895) -
Accrued interest receivable and other assets (296) (1,257,666)
Accrued interest payable and other liabilities 345,550 371,435
------------- ------------

Net cash provided by operating activities 3,459,841 3,582,329
------------- ------------

Cash flows from investing activities:
Proceeds from calls, maturities and paydowns
of investment securities available for sale 4,681,655 1,036,355
Purchases of investment securities available for sale (8,888,396) (16,169,472)
Sale of investment securities available for sale 2,484,688 6,473,179
Purchases of other investments (184,350) (170,600)
Change in loans (40,869,012) (44,699,788)
Purchases of premises and equipment (5,358,104) (401,438)
Proceeds from sale of other assets (224,799) -
------------- ------------

Net cash used in investing activities (48,358,318) (53,931,764)

Cash flows from financing activities:
Net change in deposits 37,616,905 66,068,004
Net change in short term borrowings (12,402,861) (7,430,088)
Proceeds from issuance of notes payable 3,045,415 -
Proceeds from exercise of stock options 65,000 33,341
Proceeds from issuance of junior subordinated debentures 6,185,568 -
Proceeds from investors related to Joint Venture 500,000 -
------------- ------------
Net cash provided by financing activities 35,010,027 58,671,257
------------- ------------

Net increase (decrease) in cash and cash equivalents (9,888,450) 8,321,822

Cash and cash equivalents at beginning of the period 32,986,353 7,011,732
------------- ------------

Cash and cash equivalents at end of period $ 23,097,903 15,333,554
============= ============

Supplemental schedule of noncash investing activities:
Change in unrealized gain on securities available for sale, net of tax $ 16,915 (13,167)

Supplemental disclosure of cash flow information:
Interest paid $ 5,331,743 5,238,281
Taxes paid $ 147,500 822,327
<FN>
See accompanying notes to unaudited consolidated financial statements.

NICOLET BANKSHARES, INC.
Notes to Consolidated Financial Statements
(Unaudited)

(1) Nature of Operations
----------------------
Nicolet Bankshares, Inc. was incorporated on April 5, 2000. Effective June
6, 2002, Nicolet Bankshares, Inc. received approval to become a one-bank
holding company owning 100% of the stock of Nicolet National Bank.

Nicolet National Bank opened for business on October 31, 2000, and prior to
that date activities of the entity were devoted solely to securing banking
facilities, raising capital and procuring management and other personnel.
Nicolet National Bank is a community-oriented commercial bank with its
emphasis on commercial banking. Nicolet National Bank operates out of its
main office in Brown County, Wisconsin in the downtown area of Green Bay,
and has a branch facility in Marinette, Wisconsin and Menominee, Michigan.

(2) Principles of Consolidation
-----------------------------
The unaudited consolidated financial statements include the accounts of
Nicolet Bankshares, Inc. and its wholly owned subsidiaries, Nicolet
National Bank and beginning in the third quarter of 2004, fifty percent
owned entity, Nicolet Joint Ventures, LLC (collectively called "Nicolet").
All significant intercompany balances and transactions have been eliminated
in consolidation.

(3) Basis of Presentation
-----------------------
The accounting principles followed by Nicolet and the methods of applying
these principles conform with accounting principles generally accepted in
the United States of America (GAAP) and with general practices within the
banking industry. In preparing financial statements in conformity with
GAAP, management is required to make estimates and assumptions that affect
the reported amounts in the financial statements. Actual results could
differ significantly from those estimates. Material estimates common to the
banking industry that are particularly susceptible to significant change in
the near term include, but are not limited to, the determinations of the
allowance for loan losses, the valuation of investment securities
available-for-sale, the valuation of real estate acquired in connection
with or in lieu of foreclosure on loans, and valuation allowances
associated with deferred tax assets, the recognition of which are based on
future taxable income.

The accompanying unaudited consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and with the
instructions to Form 10-QSB. Accordingly, they do not include all the
information and footnotes required by GAAP 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 nine month and three month
period ended September 30, 2004 are not necessarily indicative of the
results that may be expected for the year ended December 31, 2004. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's Form 10-KSB for the fiscal year
ended December 31, 2003 as filed with the Securities and Exchange
Commission.

(4) Rate Sensitivity
-----------------
Asset/liability management is the process by which we monitor and control
the mix and maturities of our assets and liabilities. The essential
purposes of asset/liability management are to ensure adequate liquidity and
to maintain an appropriate balance between interest sensitive assets and
interest sensitive liabilities to minimize potentially adverse impacts on
earnings from changes in market interest rates.

Committee ("ALCO") of the Bank. ALCO measures interest rate risk so that we
can evaluate the impact of various interest rate scenarios on the net
income of the Bank. ALCO determines the most appropriate amounts of
on-balance sheet and off-balance sheet items. Measurements, which we use to
help us manage interest rate sensitivity, include an earnings simulation
model and gap analysis computations.

Earnings simulation model. We believe that interest rate risk is best
measured by our dynamic earnings simulation modeling. Forecasted levels of
assets, liabilities, and off-balance sheet financial instruments are
combined with ALCO forecasts of interest rates for the next 12 months and
are combined with other factors in order to produce various earnings
simulations. To limit interest rate risk, we have guidelines for our
earnings at risk which seek to limit the variance of net income to less
than 10 percent for a 200 basis point change up or down in rates from
management's most likely interest rate forecast over the next twelve
months.

Gap analysis. An asset or liability is considered to be interest
rate-sensitive if it will reprice or mature within the time period
analyzed; for example, within three months or one year. The interest
rate-sensitivity gap is the difference between the interest-earning assets
and interest-bearing liabilities scheduled to mature or reprice within such
time period. A gap is considered positive when the amount of interest
rate-sensitive assets exceeds the amount of interest rate-sensitive
liabilities. A gap is considered negative when the amount of interest
rate-sensitive liabilities exceeds the interest rate-sensitive assets.
During a period of rising interest rates, a negative gap would tend to
adversely affect net interest income, while a positive gap would tend to
result in an increase in net interest income. Conversely, during a period
of falling interest rates, a negative gap would tend to result in an
increase in net interest income, while a positive gap would tend to
adversely affect net interest income. If our assets and liabilities were
equally flexible and moved concurrently, the impact of any increase or
decrease in interest rates on net interest income would be minimal.

(5) Off Balance Sheet Items and Contingencies
----------------------------------------------
Off-balance sheet items consist of commitments to originate loans, unused
lines of credit and standby letters of credit totaling approximately
$72,889,000 as of September 30, 2004. This compares to $63,711,000 at
December 31, 2003. Our commitments to originate loans are on a best effort
basis; therefore there are no contingent liabilities associated with them.
We have historically funded off-balance sheet commitments with our primary
sources of funds and we anticipate that this will continue.

Nicolet Joint Ventures (see note #9) has an arrangement in which, the
Company and the other joint venture partners guarantee the facility's
construction financing of approximately $10.5 million from a third party
bank. The project is anticipated to be completed in the third quarter of
2005.

(6) Stock-Based Compensation
As of September 30, 2004, we sponsor two stock-based compensation plans.
During 2000, we adopted a Stock Incentive Plan covering up to 285,000
shares of our common stock. During 2002, we adopted a second Stock
Incentive Plan covering up to 125,000 shares of our common stock. These
Plans are administered by the Administrative Committee of the Board of
Directors and provide for the granting of options to purchase shares of the
common stock to officers, directors and key employees of Nicolet. The
exercise price of each option granted under the Plan will not be less than
the fair market value of the shares of common stock subject to the option
on the date of grant as determined by the Administrative Committee of the
Board of Directors. Options will be exercisable in whole or in part upon
such terms as may be determined by the Committee. Options expire ten years
after the date of grant. As of September 30, 2004, a total of 45,166 shares
are available for grant from these plans.

We account for these plans under the recognition and measurement principles
of APB Opinion No. 25, "Accounting for Stock Issued to Employees", and
related Interpretations. No stock-based employee compensation cost is
reflected in net income, as all options granted under those plans had an
exercise price equal to the market value of the underlying common stock on
the date of grant. The following table illustrates the effect on net income
and earnings (loss) per share if we had applied the fair value recognition
provisions of

Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting
for Stock-Based Compensation", to stock-based employee compensation.

For the Three For the Three For the Nine For the Nine
Months Ended Months Ended Months Ended Months Ended
September 30, September 30, September 30, September 30,
-------------- -------------- ------------- -------------
2004 2003 2004 2003
-------------- -------------- ------------- -------------

Net income as reported $ 360,886 216,881 939,657 855,367

Deduct: Total stock-based employee
compensation expense determined
under fair-value based method for all
awards, net of tax 19,914 19,327 19,963 52,208
-------------- -------------- ------------- -------------

Pro forma net income $ 340,972 197,554 919,694 803,159
============== ============== ============= =============

Basic earnings per share:

As reported $ .12 .07 .32 .29
============== ============== ============= =============

Pro forma $ .12 $ .07 .31 .27
============== ============== ============= =============

Diluted earnings per share

As reported $ .12 $ .07 .32 .29
============== ============== ============= =============

Pro forma $ .12 $ .07 .31 .27
============== ============== ============= =============

The fair value of each option is estimated on the date of grant using the
Minimum Value pricing model with the following weighted average assumptions
for 2004 and 2003: dividend yield of 0%; risk free interest rate of 4.5%
and 3.41% and an expected life of 7 years. For disclosure purposes, we
immediately recognized the expense associated with option grants assuming
all awards will vest. The weighted average grant-date fair value of options
granted in 2004 and 2003 was $3.90 and $2.58, respectively.

(7) Net Earnings (Loss) Per Share
-----------------------------
Basic earnings per share are based on the weighted average number of common
shares outstanding during the period while the effects of potential common
shares outstanding during the period are included in diluted earnings per
share. The presentation of earnings per share is required on the face of
the statement of operations with and without the dilutive effects of
potential common stock issuances from instruments such as options,
convertible securities and warrants.

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004
Net Earnings Common Shares
------------- --------------

Basic earnings per share $ 939,657 2,953,077
Effect of dilutive securities - stock options - (4,479)
------------- --------------
Diluted earnings per share $ 939,657 2,948,598
==============

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003
Net Earnings Common Shares
------------- --------------

Basic earnings per share $ 855,367 2,947,040
Effect of dilutive securities - stock options - 15,942
------------- --------------
Diluted earnings per share $ 855,367 2,962,982
==============

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2004
Net Earnings Common Shares
------------- --------------
Basic earnings per share $ 360,886 2,956,923
Effect of dilutive securities - stock options - 183
------------- --------------
Diluted earnings per share $ 360,886 2,957,106
==============

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2003
Net Earnings Common Shares
------------- --------------
Basic earnings per share $ 216,881 2,947,472
Effect of dilutive securities - stock options - 5,416
------------- --------------
Diluted earnings per share $ 216,881 2,952,888
==============

(8) Junior Subordinated Debentures (related to Trust Preferred Securities)
----------------------------------------------------------------------
In July 2004 the Company formed a wholly owned Delaware statutory trust,
Nicolet Bankshares Statutory Trust I (the "Trust"), which issued $6.0
million of guaranteed preferred beneficial interests in the Company's
junior subordinated deferrable interest debentures that qualify as Tier 1
capital under Federal Reserve Board guidelines. All of the common
securities of the Trust are owned by the Company. The proceeds from the
issuance of the common securities and the trust preferred securities were
used by the Trust to purchase $6.2 million of junior subordinated
debentures of the Company, which pay a rate equal to 8%. Interest on the
debentures may be deferred for a period not exceeding 20 consecutive
quarterly payments (5 years), provided there is no event of default. The
proceeds received by the Company from the sale of the junior subordinated
debentures were used for general purposes, primarily to provide capital to
the Bank. The debentures represent the sole asset of the Trust. The Trust
is not included in the consolidated financial statements.

The trust preferred securities accrue and pay quarterly distributions based
on the liquidation value of $1,000 per capital security at a rate of 8%.
The Company has guaranteed distributions and other payments due on the
trust preferred securities to the extent the Trust has funds with which to
make the distributions and other payments. The net combined effect of all
the documents entered into in connection with the trust preferred
securities is that the Company is liable to make the distributions and
other payments required on the trust preferred securities.

The trust preferred securities are mandatorily redeemable upon maturity of
the debentures on the 30-year anniversary of issuance, or upon earlier
redemption as provided in the indenture. Subject to prior Federal Reserve
Board approval to the extent then required, the Company has the right to
redeem the debentures purchased by the Trust, in whole or in part, on or
after the five year anniversary of issuance. As specified in the indenture,
if the debentures are redeemed prior to maturity, the redemption price will
be the principal amount and any accrued but unpaid interest.

(9) Building Joint Venture
------------------------
During 2004, the Company entered into a joint venture, Nicolet Joint
Ventures, LLC (the "JV"), with a real estate development and investment
firm in connection with the selection and development of a site for a new
headquarters facility. The firm that is the joint venture party is
considered a related party, as one of its principals is a Board member and
shareholder of the Company. The JV involves a 50% ownership by the Company
and an investment of approximately $500,000. Additionally, as part of the
joint venture arrangement, the Company and the other joint venture partners
guarantee the facility's construction financing of approximately $10.5
million from a third party bank. The project is anticipated to be completed
in the third quarter of 2005.

For financial reporting purposes, the JV is being consolidated into the
Company's consolidated financial statements based on the elements of
ownership and control of the Company. The resulting minority interest in
the consolidated financial statements represents the interests of the joint
venture partners.

(10) Derivatives and Hedging Transactions
---------------------------------------

The Company has an overall interest rate risk management strategy that
incorporates the use of derivative instruments to minimize significant
unplanned fluctuations in earnings that are caused by interest rate
volatility. By using derivative instruments, the Company is exposed to
credit and market risk. If the counterparty fails to perform, credit risk
is equal to the extent of the fair-value gain in the derivative. The
Company minimizes the credit risk in derivative instruments by entering
into transactions with high-quality counterparties that are reviewed
periodically by the Company.

In November 2003 and May 2004, the Bank entered into interest rate swap
agreements related to floating loans. The swaps are utilized to manage
interest rate exposures and are designated as a highly effective cash flow
hedges. The differential to be paid or received on the swap agreements is
accrued as interest rates change and is recognized over the lives of the
agreements in interest income/expense. The swap agreement entered into in
November 2003 expires in November 2005 and has a rate of 5.06%. The
notional amount is $15,000,000. The swap agreement entered into in May 2004
expires in May 2007 and has a rate of 6.00%. The notional amount is
$10,000,000. As these instruments age toward maturity and/or the interest
rates increase, the gain or loss will be reclassified from accumulated
other comprehensive income into earnings.

In September 2004, the Company sold the swap with the notional amount of
$10,000,000 scheduled to mature in May 2007 for a gain of $37,083.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
PLAN OF OPERATION

CRITICAL ACCOUNTING POLICIES

The accounting principles we follow and our methods of applying these principles
conform with accounting principles generally accepted in the United States of
America (GAAP) and with general practices within the banking industry. In
connection with the application of those principles, we have made judgments and
estimates in connection with the determination of our allowance for loan losses
that have been critical to the determination of our financial position, results
of operations and cash flows. Because the allowance is replenished by means of
a provision for loan losses that is charged as an expense against net income,
our estimation of the allowance affects our earnings directly.

Management's judgment in determining the adequacy of the allowance for loan
losses is based on evaluations of the collectibility of loans in the portfolio.
These evaluations take into consideration such factors as changes in the nature
and volume of the loan portfolio, current economic conditions that may affect a
borrower's ability to pay, overall portfolio quality, and reviews of specific
problem loans. In determining the adequacy of the allowance for loan losses,
management uses a loan grading system that rates loans in eight different
categories. Grades six, seven and eight, which represent criticized loans (loans
with greater risk of loss potential), are assigned allocations of loss based on
published regulatory guidelines. These loans are inadequately protected by the
current net worth or paying capacity of the borrower or the collateral pledged.
Loans classified in this manner have well-defined weaknesses that jeopardize
liquidation of the debt. Loans graded one through four are stratified by type
and allocated loss ranges based on management's perception of the inherent loss
for the strata. The combination of these results are compared quarterly to the
recorded allowance for loan losses and material differences are adjusted by
increasing or decreasing the provision for loan losses.

The bank also uses a methodology, which incorporates accounting (GAAP)
methodologies. Under GAAP, Statement of Financial Accounting Standards No. 5,
Accounting for Contingencies (FAS 5), provides the basic guidance for
recognition of a loss contingency, such as the collectibility of loans
(receivables), when it is probable that a loss has been incurred and the amount
can be reasonably estimated. Statement of Financial Accounting Standards No.
114, Accounting by Creditors for Impairment of a Loan (FAS 114) provides more
specific guidance about the measurement and disclosure of impairment for certain
types of loans. Specifically, FAS 114 applies to loans that are identified for
evaluation on an individual basis

Loans that have been individually reviewed, impairment is identified and
quantified. Impairment occurs when it is probable that the bank will be unable
to collect all amounts due (including principal and interest) according to the
contractual terms of the loan agreement. Generally, a loan is impaired if it
exhibits the same level of weaknesses and probabilities of loss as loans
classified as doubtful or loss. In practice, it is perfectly reasonable and
appropriate to consider a loan impaired if it is on non-accrual.

While it is our policy to charge off in the current period loans for which a
loss is considered probable, there are additional risks of future losses which
cannot be quantified precisely or attributed to particular loans or classes of
loans. Because these risks include the state of the economy, management's
judgment as to the adequacy of the allowance is necessarily approximate and
imprecise. After review of all relevant matters affecting loan collectibility,
management believes that the allowance for loan losses is appropriate given
their analysis of incurred loan losses.

We use an internal loan review function to place loans into various loan grading
categories, which assists in developing lists of potential problem loans. These
loans are constantly monitored by the loan review function to ensure early
identification of any deterioration. Our current practice is to have the reserve
level reviewed by the board on a quarterly basis in compliance with regulatory
requirements. In addition, any adversely rated loans will receive allocations
consistent with recommended regulatory percentages.

CHANGES IN FINANCIAL CONDITION

Total assets at September 30, 2004 were $374 million representing a $36
million (11%) increase from December 31, 2003. Deposits increased $38 million
(13%) from December 31, 2003. Non-interest bearing deposits decreased $7 million
due to large decreases in a few corporate customer accounts that were the
collateral on a short term loan that matured in July 2004 as expected. Brokered
CD's totaled $167 million, or 51% of total deposits, as of September 30, 2004,
compared to $147 million, or 51% of total deposits, as of December 31, 2003. Net
loans increased $38 million from December 31, 2003.

The allowance for loan losses at September 30, 2004 totaled $3.7 million,
representing 1.23% of total loans compared to the December 31, 2003 total of
$3.1 million, which represented 1.19% of total loans. Non-performing loans are
defined as loans greater than 90 days past due, non-accrual and restructured
loans. As of September 30, 2004, non-performing loans totaled $1.0 million
compared to $2.4 million at December 31, 2003. Management attempts to maintain
an allowance that is deemed adequate based on the evaluation of specific credits
along with the overall condition of the portfolio. See "Critical Account
Policies" above.

RESULTS OF OPERATIONS

Overall Year to Date. Our results for the nine months ended September 30,
2004, when compared to the nine months ended September 30, 2003, were
highlighted by the continued growth of our earning assets which resulted in
increased net interest income. Our overall results of operations are materially
consistent with our year to date planned/budgeted operations. Total revenues,
which are comprised of interest income and noninterest income, for the nine
months ended September 30, 2004 were $15.6 million, compared to total revenues
for the nine months ended September 30, 2003 of $13.7 million. The provision for
loan losses was $2.3 million for the first nine months of 2004 compared to $1.7
million in the first nine months of 2003, with both of these amounts
attributable to the growth in loans in the respective periods. Noninterest
expenses were $6.5 million for the nine months ended September 30, 2004,
compared to $5.2 million for the nine months ended September 30, 2003. On a
pre-tax basis net income for the nine months ended September 30, 2004 was $1.3
million compared to a pre-tax net income of $1.3 million, which was the same as
the corresponding 2003 period. Net income for the nine months ended September
30, 2004 was $940,000 compared to a net income of $855,000 for the nine months
ended September 30, 2003.

Overall Current Quarter. Total revenues for the three months ended
September 30, 2004 were $5.3 million, compared to total revenues for the three
months ended September 30, 2003 of $4.7 million. The provision for loan losses
was $675,000 for the third quarter of 2004 compared to $612,500 in the third
quarter of 2003. Noninterest expenses were $2.2 million for the three months
ended September 30, 2004, compared to $1.9 million for the three months ended
September 30, 2003. For the quarter ended September 30, 2004, we recorded net
income of $361,000 compared to net income of $217,000 for the three months ended
September 30, 2003.

Net Interest Income. For the nine months ended September 30, 2004, we
reported net interest income of $7.5 million, a 35% increase over the $5.6
million reported for the nine-month period ended September 30, 2003. For the
three months ended September 30, 2004, we reported net interest income of
approximately $2.7 million a 38% increase over the $2.0 million for the same
three-month period in 2003.

Our yield on interest earning assets for the nine months ended September
30, 2004 was 5.21% while our cost of funding sources was 2.45%. While net
interest spread was 2.76%, net interest margin, which considers the effect of
noninterest bearing deposits, was 3.03%. For the nine months ended September
30, 2003, our yield on interest earning assets was 5.32% and our cost of funding
sources was 3.17%, creating a net interest spread of 2.15% and a net interest
margin of 2.72%. Our yield on interest earning assets for the three months ended
September 30, 2004 was 5.28% while the cost of funding sources was 2.43%. While
net interest spread was 2.85%, net interest margin was 3.24%. For the three
months ended September 30, 2003, our yield on interest earning assets was 5.04%
and our cost of funding sources was 2.93%, creating a net interest spread of
2.11% and a net interest margin of 2.63%.

Noninterest Income. Noninterest income consists predominately of service
charges on deposit accounts, secondary market mortgage origination fees; trust
department fees, brokerage commissions and other miscellaneous revenues and
fees. Because fees from the origination of mortgage loans, as well as various
other components of noninterest income, often reflect market conditions, our
noninterest income may tend to have more fluctuations on a quarter to quarter
basis than does net interest income, since net interest income is the result of
interest income from earning assets offset by interest expense from
interest-bearing liabilities.

For the nine months ended September 30, 2004, our noninterest income was
$2.6 million, which was a decrease of $6,000 or 0.2%, when compared to the nine
months ended September 30, 2003. For the three months ended September 30, 2004,
our noninterest income was $707,000, which was a decrease of approximately
$149,000, or 17% when compared to the three months ended September 30, 2003.
Noninterest income comprised 26% of our total revenues (net interest income plus
noninterest income) for the first nine months of 2004 compared to 32% for the
first nine months of 2003. For the three months ended September 30, 2004
non-interest income comprised 21% of our total revenues, compared to 30% for the
same period in 2003. Primary decreases in this area were in mortgage
origination fees (due to the reduction in refinancing activity in the home
mortgage sector) as well as reduction in gains from the sale of investment
securities available for sale.

Noninterest expense. Noninterest expense consists of salaries and employee
benefits, equipment and occupancy expenses, and other operating expenses. For
the nine months ended September 30, 2004, we incurred approximately $6.5 million
in noninterest expenses compared to $5.2 million for the nine months ended
September 30, 2003. For the three months ended September 30, 2004, we incurred
approximately $2.2 million in noninterest expenses compared to $1.9 million for
the same three-month period in 2003. Our primary component of noninterest
expense continues to be salaries and employee benefits, and the increases
described above are attributable principally to our employment of additional
personnel and the related overhead expenses to accommodate our growth.

Income taxes. Income tax expense was $354,000 for the nine months ended
September 30, 2004 compared to $419,000 for the nine months ended September 30,
2003. Our effective tax rate for the nine months ended September 30, 2004 was
27.4% as compared to 32.9% for the nine months ended September 30, 2003. For
the three months ended September 30, 2004, income tax expense was $152,000 as
compared to $79,000 for the three months ended September 30, 2003. Our
effective tax rate for the three months ended September 30, 2004 was 29.7% as
compared to 26.8% for the three months ended September 30, 2003. The decrease
in the effective tax rate for 2004 was primarily due to the higher percentage of
tax-exempt income from municipal securities and bank owned life insurance as
compared to net income before tax expense.

LIQUIDITY

We must maintain, on a daily basis, sufficient funds to cover the
withdrawals from depositors' accounts and to supply new borrowers with funds.
To meet these obligations, we keep cash on hand, maintain account balances with
correspondent banks, and purchase and sell federal funds and other short-term
investments. Asset and liability maturities are monitored in an attempt to
match these maturities to meet liquidity needs. It is our policy to monitor our
liquidity to meet regulatory requirements and local funding requirements.

Our primary source of liquidity is a stable base of deposits. We raise
deposits by providing deposit services in our market and through our network of
deposit brokers. Additional sources of liquidity include scheduled repayments on
loans and interest and maturities of our investments. All of our securities
have been classified as available-for-sale. If necessary, we have the ability
to sell a portion of our investment securities to manage our interest
sensitivity gap or liquidity. We may also utilize cash and due from banks and
federal funds sold to meet liquidity needs.

At September 30, 2004, we had arrangements with various commercial banks
for short term unsecured advances up to $36 million. As of September 30, 2004,
we had no outstanding balances under these arrangements.

Our cash flows are composed of three classifications: cash flows from
operating activities, cash flows from investing activities, and cash flows from
financing activities. Cash and cash equivalents decreased by $7.8 million to
$23.1 million during the nine months ended September 30, 2004. Cash provided by
operations approximated $3.5 million for the nine months ended September 30,
2004 compared to $3.6 million of cash provided by operations for the same nine
month period in 2003. Net cash provided by financing activities for the nine
months ended September 30, 2004 totaled $35.0 million, which was primarily made
up of $37.6 million of increased deposits along with the increase in junior
subordinated debentures of $6.2 million and an increase in $3.0 million in notes
payable related to the building construction offset by $12.4 million of
decreased short term borrowings, compared to cash provided by financing
activities of $58.7 million for the same nine month period in 2003, which was
primarily made up of $66.1 million of increased deposits and $7.4 million of
decreased short term borrowings. Outflows from investing activities for the
nine months ended September 30, 2004 totaled $48.4 million, most of which was
attributed to increases in loans of $40.9 million, purchases of investment
securities available-for-sale of $8.9 million net of proceeds from sales of
investment securities available-for-sale of $2.5 million. For the same nine
month period in 2003, our outflows from investing activities totaled $53.9
million, which was mostly comprised of increases in loans of $44.7 million and
purchases of investment securities available-for-sale of $16.2 million, net of
proceeds from sales of investment securities available-for-sale of $6.5 million.

CAPITAL

The following tables present the Company's regulatory capital position as
of September 30, 2004 and December 31, 2003:

Risk-Based Capital Ratios
-------------------------
September30,2004 December31,2003
----------------- ----------------

Tier 1 Tangible Capital, Actual 12.38% 11.60%
Tier 1 Tangible Capital minimum requirement 4.00% 4.00%
----------------- ----------------

Excess 8.38% 7.60%
================= ================

Total Capital, Actual 13.57% 12.70%
Total Capital minimum requirement 8.00% 8.00%
----------------- ----------------

Excess 5.57% 4.7%
================= ================

Leverage Ratio
--------------

Tier 1 Tangible Capital to adjusted total assets, Actual 10.45% 9.90%
Minimum leverage requirement 4.00% 4.00%
----------------- ----------------

Excess 6.45% 5.90%
================= ================

We have started construction of a full service branch facility in DePere,
Wisconsin, with anticipation that the project cost will be approximately
$2.2 million, with project completion expected to be in the fourth quarter
of 2004.

Additionally, through a joint venture we are progressing on the facility,
which will serve as the main office for the Bank and the Company. Through
September 30, 2004 we have expended $4 million of the approximate $12
million total construction costs associated with this project, with
borrowings from a third party bank of $3 million. We anticipate completion
of this project in the third quarter of 2005. See Note 9 to Consolidated
Financial Statements.

APPENDIX E
FINANCIAL STATEMENTS AND MANAGEMENT'S
DISCUSSION AND ANALYSIS FOR THE
YEAR ENDED DECEMBER 31, 2003

MCGLADREY & PULLEN
Certified Public Accountants

NICOLET BANKSHARES, INC.
AND SUBSIDIARY

Consolidated Financial Statements
12.31.2003

McGladrey & Pullen, LLP is a member firm of RSM International,
an affiliation of separate and independent legal entities.

NICOLET BANKSHARES, INC. AND SUBSIDIARY

CONTENTS

Independent Auditor's Report 1-2

Financial Statements

Consolidated Balance Sheets 3
Consolidated Statements of Operations 4
Consolidated Statements of Changes in Stockholders' Equity 5
Consolidated Statements of Cash Flows 6-7
Notes to Consolidated Financial Statements 8-29

MCGLADREY & PULLEN
Certified Public Accountants

INDEPENDENT AUDITOR'S REPORT

To the Stockholders and Board of Directors
Nicolet Bankshares, Inc. and Subsidiary
Green Bay, Wisconsin

We have audited the accompanying consolidated balance sheet of Nicolet
Bankshares, Inc. and subsidiary as of December 31, 2003, and the related
consolidated statements of operations, changes in stockholders' equity, and cash
flows for the year then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Nicolet Bankshares,
Inc. and subsidiary as of December 31, 2003, and the results of their operations
and its cash flows for the year then ended in conformity with accounting
principles generally accepted in the United States of America.

/s/ Mc Gladrey & Pullen, LLP

Madison, Wisconsin
February 5, 2004

McGladrey & Pullen, LLP is a member firm of RSM International,
an affiliation of separate and independent legal entities.

[GRAPHIC OMITED]
Porter Keadle Moore, LLP

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Stockholders and Board of Directors
Nicolet Bankshares, Inc.
Green Bay, Wisconsin

We have audited the accompanying consolidated balance sheet of Nicolet
Bankshares, Inc. and subsidiary as of December 31, 2002, and the related
consolidated statements of operations, changes in stockholders' equity, and cash
flows for the years ended December 31, 2002 and 2001. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Nicolet Bankshares,
Inc. and subsidiary as of December 31, 2002, and the results of their operations
and their cash flows for the years ended December 31, 2002 and 2001 in
conformity with accounting principles generally accepted in the United States of
America.

/s/ Porter Keadle Moore, LLP
Atlanta, Georgia
January 31, 2003

NICOLET BANKSHARES, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2003 AND 2002

ASSETS 2003 2002
--------------------------------------------------------------------------------------------------------

Cash and due from banks, including reserve requirements
of $882,000 and $426,000 $ 18,099,866 $ 5,886,787
Interest-bearing deposits 223,487 738,945
Federal funds sold 14,663,000 386,000
----------------------------

Cash and cash equivalents 32,986,353 7,011,732

Investment securities available for sale 29,470,177 20,895,945
Other investments 1,371,850 1,084,908
Loans held for sale 1,824,469 2,811,129
Loans, net 258,659,867 209,926,688
Premises and equipment, net 2,890,851 2,478,148
Bank owned life insurance 7,085,249 3,841,551
Accrued interest receivable and other assets 3,105,932 1,955,284
----------------------------

$337,394,748 $250,005,385
============================

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
Deposits:
Demand $ 41,549,434 $ 17,602,152
Money market and NOW accounts 47,429,460 25,226,094
Savings 4,544,131 1,353,903
Time 195,556,737 162,549,183
----------------------------
Total deposits 289,079,762 206,731,332

Repurchase agreements 14,590,810 10,831,089
Accrued interest payable and other liabilities 1,495,370 1,194,439
----------------------------

TOTAL LIABILITIES 305,165,942 218,756,860
----------------------------

Stockholders' equity:
Common stock, $0.01 par value, 30,000,000 shares authorized;
2,951,154 and 2,946,820 shares issued and outstanding at December 31,
2003 and 2002, respectively 29,511 29,468
Additional paid-in capital 32,105,443 32,062,146
Accumulated (deficit) (75,772) (1,053,741)
Accumulated other comprehensive income 169,624 210,652
----------------------------

TOTAL STOCKHOLDERSEQUITY 32,228,806 31,248,525
----------------------------

TOTAL LIABILITIES AND STOCKHOLDERSEQUITY $337,394,748 $250,005,385
============================
<FN>
See Notes to Consolidated Financial Statements.

NICOLET BANKSHARES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2003, 2002, AND 2001

2003 2002 2001
--------------------------------------------------------------------------------------------------

Interest income:
Loans, including loan fees $14,006,460 $10,937,269 $7,189,015
Investment securities 877,319 821,347 615,904
Interest-bearing deposits 29,504 15,104 -
Federal funds sold 49,035 82,670 414,219
Other - 8,006 62,593
--------------------------------------
TOTAL INTEREST INCOME 14,962,318 11,864,396 8,281,731
--------------------------------------

Interest expense:
Money market and NOW accounts 492,804 363,477 521,946
Savings and time deposits 6,643,416 6,308,352 4,353,893
Other 79,245 108,492 25,454
--------------------------------------
TOTAL INTEREST EXPENSE 7,215,465 6,780,321 4,901,293
--------------------------------------

NET INTEREST INCOME 7,746,853 5,084,075 3,380,438

Provision for loan losses 2,335,000 1,308,250 1,200,000
--------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 5,411,853 3,775,825 2,180,438
--------------------------------------

Other income:
Service charges on deposit accounts 505,292 254,528 119,334
Fees from trust services 608,499 351,196 81,776
Mortgage fee income 1,415,042 708,366 348,280
Brokerage fee income 119,845 - -
Securities gains (losses), net 295,282 (3,144) 121,895
Other 254,253 264,398 1,867
--------------------------------------
TOTAL OTHER INCOME 3,198,213 1,575,344 673,152
--------------------------------------

Other expenses:
Salaries and employee benefits 3,839,630 2,703,548 1,803,851
Occupancy and equipment 853,456 698,271 438,588
Data processing fees 382,021 357,561 235,764
Professional fees 297,235 215,821 64,595
Advertising and marketing 199,646 156,560 185,174
Other operating 1,638,925 1,016,516 725,899
--------------------------------------
TOTAL OTHER EXPENSES 7,210,913 5,148,277 3,453,871
--------------------------------------

INCOME (LOSS) BEFORE INCOME TAX EXPENSE (BENEFIT) 1,399,153 202,892 (600,281)

Income tax expense (benefit) 421,184 144,644 (670,467)
--------------------------------------

NET INCOME $ 977,969 $ 58,248 $ 70,186
======================================

Basic earnings per share $ 0.33 $ 0.03 $ 0.04
======================================

Diluted earnings per share $ 0.32 $ 0.03 $ 0.04
======================================

Weighted average shares outstanding 2,948,668 2,130,730 1,845,987
======================================

Weighted average common and equivalent common
shares outstanding 3,042,218 2,175,241 1,845,987
======================================
<FN>
See Notes to Consolidated Financial Statements.

NICOLET BANKSHARES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 2003, 2002, AND 2001

Accumulated
Additional Other
Common Paid-In Accumulated Comprehensive
Stock Capital (Deficit) Income (Loss) Total
----------------------------------------------------------------------------------------------------------------------

Balance, December 31, 2000 $18,460 $18,441,410 $ (1,182,175) $ 11,911 $17,289,606
------------
Comprehensive income:
Net income - - 70,186 - 70,186
Change in net unrealized gains (losses) on
securities available for sale, net of tax - - - (133,718) (133,718)
Reclassification adjustment for gains (losses)
included in income, net of tax - - - 73,625 73,625
------------
COMPREHENSIVE INCOME 10,093
------------

------------------------------------------------------------------
Balance, December 31, 2001 18,460 18,441,410 (1,111,989) (48,182) 17,299,699
------------
Comprehensive income:
Net income - - 58,248 - 58,248
Change in net unrealized gains on
securities available for sale, net of tax - - - 260,733 260,733
Reclassification adjustment for gains
included in income, net of tax - - - (1,899) (1,899)
------------
COMPREHENSIVE INCOME 317,082
------------
Exercise of stock options 8 8,322 - - 8,330
Proceeds from stock offering, net of
offering costs of $126,586 11,000 13,612,414 - - 13,623,414
------------------------------------------------------------------

Balance, December 31, 2002 29,468 32,062,146 (1,053,741) 210,652 31,248,525
------------
Comprehensive income
Net income - - 977,969 - 977,969
Change in net unrealized gains (losses) on
securities available for sale, net of tax - - - (218,197) (218,197)
Reclassification adjustment for gains (losses)
included in income, net of tax - - - 177,169 177,169
------------
COMPREHENSIVE INCOME 936,941
------------
Exercise of stock options 43 43,297 - - 43,340
------------------------------------------------------------------

BALANCE, DECEMBER 31, 2003 $29,511 $32,105,443 $ (75,772) $ 169,624 $32,228,806
==================================================================
<FN>
See Notes to Consolidated Financial Statements.

NICOLET BANKSHARES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2003, 2002, AND 2001

2003 2002 2001
--------------------------------------------------------------------------------------------------------------------------

Cash Flows From Operating Activities:
Net income $ 977,969 $ 58,248 $ 70,186
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation, amortization, and accretion 633,945 563,542 291,923
Provision for loan losses 2,335,000 1,308,250 1,200,000
Provision for deferred taxes 132,990 (278,975) (701,191)
Securities (gains) losses, net (295,282) 3,144 (121,895)
Stock dividends (25,192) - -
Increase in cash surrender value of bank owned life insurance (243,698) (199,758) -
Increase (decrease) in:
Accrued interest receivable and other assets (906,098) (34,205) (1,179,263)
Accrued interest payable and other liabilities 299,867 905,683 392,856
Loans held for sale 986,660 (603,479) (2,207,650)
--------------------------------------------

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 3,896,161 1,722,450 (2,255,034)
--------------------------------------------

Cash Flows From Investing Activities (net of effect of branch acquisition):
Purchases of investment securities available for sale (16,169,472) (13,450,240) (28,608,434)
Proceeds from sales in investment securities available for sale 6,473,179 9,724,844 7,147,872
Proceeds from calls and maturities of investment securities
available for sale 1,283,478 6,161,321 4,468,822
Purchases of other investments (261,750) (279,908) (250,000)
Net change in loans (51,068,179) (88,574,714) (98,678,418)
Purchase of bank owned life insurance (3,000,000) (3,641,793) -
Purchase of premises and equipment (566,164) (601,282) (1,750,969)
Cash acquired in branch acquisition, net of premium paid 10,782,922 - -
--------------------------------------------

NET CASH USED IN INVESTING ACTIVITIES (52,525,986) (90,661,772) (117,671,127)
--------------------------------------------

Cash Flows From Financing Activities:
Net increase in deposits 70,801,385 56,665,137 122,869,536
Net increase in repurchase agreements 3,759,721 7,152,310 3,678,779
Exercise of stock options 43,340 8,330 -
Proceeds from the sale of common stock - 13,623,414 -
--------------------------------------------

NET CASH PROVIDED BY FINANCING ACTIVITIES 74,604,446 77,449,191 126,548,315
--------------------------------------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 25,974,621 (11,490,131) 6,622,154

Cash and cash equivalents
Beginning 7,011,732 18,501,863 11,879,709
--------------------------------------------

Ending $ 32,986,353 $ 7,011,732 $ 18,501,863
============================================

(Continued)

NICOLET BANKSHARES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
YEARS ENDED DECEMBER 31, 2003, 2002, AND 2001

2003 2002 2001
--------------------------------------------------------------------------------------------------------

Supplemental Disclosures of Cash Flow Information,
cash paid during the year for:
Interest $ 7,036,225 $6,289,998 $4,617,268
Income taxes 825,302 211,500 19,512

Supplemental Schedules of Noncash Investing Activities:
Change in accumulated other comprehensive income,
unrealized gains (losses) on available-for-sale securities $ (41,028) $ 258,834 $ (60,093)
Deposit liabilities assumed in branch acquisition 11,547,045 - -
Assets acquired in branch acquisition, other than cash and cash 764,123 - -
Equivalents

See Notes to Consolidated Financial Statements.

NICOLET BANKSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Banking Activities: Nicolet Bankshares, Inc. was incorporated on
----------------------------
April 5, 2000. Effective June 6, 2002, Nicolet Bankshares received approval to
become a one-bank holding company owning 100% of the stock of Nicolet National
Bank.

The consolidated income of Nicolet Bankshares, Inc. (the Company) is principally
from the income of its wholly owned subsidiary, Nicolet National Bank (the
Bank). The Bank grants primarily commercial loans in its trade area of
northeastern Wisconsin, but also grants residential and consumer loans, accepts
deposits and provides trust services to its customers. The Bank is subject to
competition from other financial institutions and nonfinancial institutions
providing financial products. Additionally the Company and the Bank are subject
to the regulations of certain regulatory agencies and undergo periodic
examination by those regulatory agencies.

Consolidation: The consolidated financial statements of the Company include the
-------------
accounts of the Bank. The consolidated financial statements have been prepared
in conformity with accounting principles generally accepted in the United States
of America and conform to general practices within the banking industry. All
significant intercompany accounts and transactions have been eliminated in the
consolidated financial statements.

Use of Estimates: In preparing consolidated financial statements in conformity
----------------
with accounting principles generally accepted in the United States of America,
management is required to make estimates and assumptions that affect the
reported amounts of assets and liabilities as of the date of the balance sheet
and reported amounts of revenues 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, and the valuation of foreclosed
real estate and deferred tax assets. The fair value disclosure of financial
instruments is an estimate that can be computed within a range.

Presentation of Cash Flows: For purposes of reporting cash flows, cash includes
--------------------------
cash on hand, amounts due from banks and federal funds sold. Cash flows from
loans, deposits, and short-term borrowings are treated as net increases or
decreases.

Cash and Due From Banks: The Bank maintains amounts due from banks which, at
-----------------------
times, may exceed federally insured limits. Management monitors these
correspondent relationships. The Bank has not experienced any losses in such
accounts.

Available-for-Sale Securities: Securities classified as available-for-sale are
-----------------------------
those debt securities that the Bank intends to hold for an indefinite period of
time, but not necessarily to maturity. Any decision to sell a security
classified as available-for-sale would be based on various factors, including
significant movements in interest rates, changes in the maturity mix of the
Bank's assets and liabilities, liquidity needs, regulatory capital
consideration, and other similar factors. Securities classified as
available-for-sale are carried at fair value. Unrealized gains or losses are
reported as increases or decreases in accumulated other comprehensive income,
net of the related deferred tax effect. Realized gains or losses, determined on
the basis of the cost of specific securities sold, are included in earnings.

NICOLET BANKSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Available-for-Sale Securities (Continued): Declines in the fair value of
-----------------------------------------
available-for-sale securities below their cost that are deemed to be other than
temporary are reflected in earnings as realized losses. In estimating
other-than-temporary impairment losses, management considers (1) the length of
time and the extent to which the fair value has been less than cost, (2) the
financial condition and near-term prospects of the issuer, and (3) the intent
and ability of the Corporation to retain its investment in the issuer for a
period of time sufficient to allow for any anticipated recovery in fair value.
Gains and losses on the sale of securities recorded on the trade date and are
determined using the specific identification method.

Premiums and discounts are amortized or accreted over the life of the related
securities as adjustments to the yield. Realized gains and losses for securities
classified as available-for-sale are included in earnings and are derived using
the specific identification method for determining the cost of securities sold.

Other Investments: As a member of the Federal Reserve Bank System and the
-----------------
Federal Home Loan Bank System, the Bank is required to maintain an investment in
the capital stock of these entities. As no ready market exists for these stocks,
and they have no quoted market value, these investments are carried at cost.

Loans: Loans are stated at the amount of unpaid principal, reduced by an
-----
allowance for loan losses. Interest income is accrued on the unpaid principal
balance. The accrual of interest income on loans is discontinued when, in the
opinion of management, there is reasonable doubt as to the borrower's ability to
meet payment of interest or principal when they become due. When interest
accrual is discontinued, all unpaid accrued interest is reversed. Accrual of
interest is generally resumed when the customer is current on all principal and
interest payments and has been paying on a timely basis for a period of time.

Mortgage Loans Held for Sale: Mortgage loans originated and intended for sale
----------------------------
in the secondary market are carried at the lower of cost or estimated market
value in the aggregate. All sales are made without recourse. The amount by
which cost exceeds market value is accounted for as a valuation allowance.
Changes, if any, in the valuation allowance are included in the determination of
net income in the period in which the change occurs. The Bank has recorded no
valuation allowance related to its mortgage loans held for sale as their cost
approximates the market value.

Mortgage banking income represents net gains from the sale of mortgage loans and
fees received from borrowers and loan investors related to the Company's
origination of single-family residential mortgage loans. Gains and losses from
the sale of loans are determined using the specific identification method.

Allowance for Loan Losses: The allowance for loan losses is established through
-------------------------
a provision for loan losses charged to expense. Loans are charged against the
allowance for loan losses when management believes that the collectibility of
the principal is unlikely. Subsequent recoveries, if any, are credited to the
allowance. The allowance for loan losses is adequate to cover probable credit
losses relating to specifically identified loans, as well as probable credit
losses inherent in the balance of the loan portfolio. The allowance is based on
past events and current economic conditions, and does not include the effects of
expected losses on specific loans or groups of loans that are related to future
events or expected changes in economic conditions. While management uses the
best information available to make its evaluation, future adjustments to the
allowance may be necessary if there are significant changes in economic
conditions.

NICOLET BANKSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Allowance for Loan Losses (Continued): Impaired loans are measured based on the
-------------------------------------
present value of expected future cash flows discounted at the loan's effective
interest rate or, as a practical expedient, at the loan's observable market
price or the fair value of the collateral if the loan is collateral dependent.
A loan is impaired when it is probable the creditor will be unable to collect
all contractual principal and interest payments due in accordance with the terms
of the loan agreement. Cash collections on impaired loans are credited to the
loan receivable balance and no interest income is recognized on those loans
until the principal balance is current.

In determining the adequacy of the allowance for loan losses, management uses a
loan grading system that rates loans in eight different categories. Grades
five, six and seven, which represent criticized or classified loans (loans with
greater risk of loss potential), are assigned allocations of loss based on
published regulatory guidelines. These loans are inadequately protected by the
current net worth or paying capacity of the borrower or the collateral pledged.
Loans classified in this manner have well-defined weaknesses that jeopardize
liquidation of the debt. Loans graded one through four are stratified by type
and allocated loss ranges based on management's perception of the inherent loss
for the strata. The combination of these results are compared monthly to the
recorded allowance for loan losses and material differences are adjusted by
increasing or decreasing the provision for loan losses. Management uses an
internal loan review function to place loans into various loan grading
categories, which assists in developing lists of potential problem loans. These
loans are constantly monitored by the loan review function to ensure early
identification of any deterioration. The reserve level is reviewed by the board
on a quarterly basis in compliance with regulatory requirements. In addition,
any adversely rated loans will receive allocations consistent with recommended
regulatory percentages. As the loan portfolio matures, a more comprehensive
methodology, which considers risk by loan types, will be employed.

In addition, various regulatory agencies periodically review the allowance for
loan losses. These agencies may require the Bank to make additions to the
allowance for loan losses based on their judgments of collectibility based on
information available to them at the time of their examination.

Credit Related Financial Instruments: In the ordinary course of business the
------------------------------------
Bank has entered into off-balance-sheet financial instruments consisting of
commitments to extend credit and standby letters of credit. Such financial
instruments are recorded in the financial statements when they are funded.

Transfers of Financial Assets: Transfers of financial assets are accounted for
-----------------------------
as sales, only when control over the assets has been surrendered. Control over
transferred assets is deemed to be surrendered when (1) the assets have been
isolated from the Company, (2) the transferee obtains the right (free of
conditions that constrain it from taking advantage of the right) to pledge or
exchange the transferred assets, and (3) the Company does not maintain effective
control over the transferred assets through an agreement to repurchase them
before their maturity or the ability to unilaterally cause the holder to return
specific assets.

NICOLET BANKSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Derivative Financial Instruments and Hedging Activities: In the normal course
-------------------------------------------------------
of business, the Company enters into derivative contracts to manage interest
rate risk by modifying the characteristics of the related balance sheet
instruments in order to reduce the adverse effect of changes in interest rates.
All derivative financial instruments are recorded at fair value in the financial
statements.

On the date a derivative contract is entered into, the Company designates the
derivative as a fair value hedge, a cash flow hedge, or a trading instrument.
Changes in the fair value of instruments used as fair value hedges are accounted
for in the earnings of the period simultaneous with accounting for the fair
value change of the item being hedged. Changes in the fair value of the
effective portion of cash flow hedges are accounted for in other comprehensive
income rather than earnings. Changes in fair value of instruments that are not
intended as a hedge are accounted for in the earnings of the period of the
change.

The Company formally documents all hedging relationships, including an
assessment that the derivative instruments are expected to be highly effective
in offsetting the changes in fair values or cash flows of the hedged items.

Premises and Equipment: Premises and equipment are stated at cost, less
----------------------
accumulated depreciation. Provisions for depreciation are computed on
straight-line and accelerated methods over the estimated useful lives of the
assets. Leasehold improvements are amortized on the straight-line method over
the shorter of the estimated useful lives of the improvements or the terms of
the related leases. Cost incurred for maintenance and repairs are expensed
currently.

Other Real Estate Owned: Other real estate owned, acquired through partial or
-----------------------
total satisfaction of loans, is carried at the lower of cost or fair value less
cost to sell. At the date of acquisition, losses are charged to the allowance
for loan losses. Revenue and expenses from operations and changes in the
valuation allowance are included in loss on foreclosed real estate.

Intangible Assets: Deposit base premiums, representing the cost of acquiring
-----------------
deposits from other financial institutions, are being amortized by charges to
earnings over five years using the straight-line method. Amortization of deposit
base premiums for 2003 was minimal.

NICOLET BANKSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Repurchase Agreements: Repurchase agreements are with commercial deposit
---------------------
customers, and are treated as financing activities and are carried at the
amounts that will be subsequently repurchased as specified in the respective
agreements.

Stock-based Compensation Plan: At December 31, 2003, the Company sponsors
-----------------------------
stock-based compensation plans, which is described more fully in Note 7. The
Company accounts for these plans under the recognition and measurement
principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and
related Interpretations. No stock-based employee compensation cost is reflected
in the net income, as all options granted under those plans had an exercise
price equal to the market value of the underlying common stock on the date of
grant. The following table illustrates the effect on net income and earnings
per share if the Company had applied the fair value recognition provisions of
Financial Accounting Standards Board (FASB) Statement No. 123, Accounting for
Stock-Based Compensation, to stock-based employee compensation.

--------------------------
2003 2002 2001
--------------------------

Net income, as reported $977,969 $58,248 $70,186
Deduct total stock-based employee compensation
expense determined under fair-value based
method for all awards, net of tax effects 66,520 34,774 66,524
--------------------------

PRO FORMA NET INCOME $911,449 $23,474 $ 3,662
==========================

Basic earnings per share:
As reported $ 0.33 $ 0.03 $ 0.04
Pro forma 0.31 0.01 -
Diluted earnings per share:
As reported $ 0.32 $ 0.03 $ 0.04
Pro forma 0.30 0.01 -

In determining compensation cost using the Minimum Value method prescribed in
Statement No. 123, the value of each grant is estimated at the grant date with
the following weighted-average assumptions used for grants in 2003, 2002, and
2001, respectively: dividend yield of 0 percent for all three years; blended
risk-free interest rates of 3.5 percent, 3 percent, and 3 percent; and expected
lives of 7 years, respectively.

Income Taxes: The Company files a consolidated federal income tax return and
------------
individual subsidiary state income tax returns. Accordingly, amounts equal to
tax benefits of those companies having taxable federal losses or credits are
reimbursed by the other companies that incur federal tax liabilities.

NICOLET BANKSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Amounts provided for income tax expense are based on income reported for
financial statement purposes and do not necessarily represent amounts currently
payable under tax laws. Deferred income tax assets and liabilities are computed
annually for differences between the financial statement and tax bases of assets
and liabilities that will result in taxable or deductible amounts in the future
based on enacted tax laws and rates applicable to the periods in which the
differences are expected to affect taxable income. As changes in tax laws or
rates are enacted, deferred tax assets and liabilities are adjusted through the
provision for income taxes. Valuation allowances are established when necessary
to reduce deferred tax assets to the amount expected to be realized.

Trust Assets: Property held for customers in fiduciary or agency capacities,
------------
other than cash on deposit at the Bank, is not included in the accompanying
balance sheets, since such items are not assets of the Company.

Comprehensive Income: Accounting principles generally require that recognized
--------------------
revenue, expenses, gains, and losses be included in net income. Although
certain changes in assets and liabilities, such as unrealized gains and losses
on available-for-sale securities, are reported as a separate component of the
equity section of the balance sheet, such items, along with net income, are
components of comprehensive income.

Earnings Per Share: Basic earnings per share are based on the weighted average
------------------
number of common shares outstanding during the period while the effects of
potential common shares outstanding during the period are included in diluted
earnings per share. The presentation of earnings per share is required on the
face of the statement of operations with and without the dilutive effects of
potential common stock issuances from instruments such as options, convertible
securities and warrants.

Per Share
Income Shares Amount
-------------------------------

2003
Earnings per share - basic $977,969 2,948,668 $ 0.33
==========
Effect of options - 93,550
-------------------

Earnings per share - diluted $977,969 3,042,218 $ 0.32
===============================

2002
Earnings per share - basic $ 58,248 2,130,730 $ 0.03
==========
Effect of options - 44,511
-------------------

Earnings per share - diluted $ 58,248 2,175,241 $ 0.03
===============================

For 2001, net earnings per share equaled diluted earnings per share, as there
were no common stock equivalents outstanding during the year, since the exercise
price for the stock options equaled the estimated market value of the stock
throughout the year. Potential dilutive options and warrants totaled 359,500 as
of December 31, 2001.

NICOLET BANKSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 2. BUSINESS COMBINATION

On December 5, 2003, Nicolet National Bank acquired the Menominee, Michigan
banking facility of Republic Bank, headquartered in Lansing, Michigan (the
"Republic Branch") for a total purchase price of $765,187, which was all paid in
cash. The resulting net assumption of liabilities was funded by cash transferred
from Republic Bank to Nicolet National Bank. The results of the Republic Branch
have been included in the consolidated financial statements since December 5,
2003.

The following table summarizes the estimated fair values of the assets acquired
and the liabilities assumed at the date of acquisition:

Cash $ 81,386
Premises and equipment 415,000
Deposit intangible 350,187
-----------

Total assets acquired 846,573
-----------

Deposits 11,547,045
Other liabilities 1,064
-----------

Total liabilities assumed 11,548,109
-----------

Net liabilities assumed $10,701,536
===========

The deposit intangible is subject to amortization and has a weighted-average
useful life of approximately 5 years. There was no goodwill recorded for this
transaction.

NOTE 3. INVESTMENT SECURITIES AVAILABLE-FOR-SALE

Amortized costs and fair values of investment securities available-for-sale are
summarized on the following page.

NICOLET BANKSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 3. INVESTMENT SECURITIES AVAILABLE-FOR-SALE

Amortized costs and fair values of investment securities available-for-sale are
summarized as follows:

December 31, 2003
---------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains (Losses) Value
---------------------------------------------------

U.S. Treasury securities $14,152,953 $ 123,932 $ (16,721) $14,260,164
U.S. government agencies 3,949,392 55,608 - 4,005,000
State, county, and municipal securities 7,491,510 84,467 - 7,575,977
Mortgage-backed securities 3,093,615 38,010 (2,589) 3,129,036
Trust preferred securities 500,000 - - 500,000
---------------------------------------------------

$29,187,470 $ 302,017 $ (19,310) $29,470,177
===================================================

December 31, 2002
---------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains (Losses) Value
---------------------------------------------------
U.S. Treasury securities $ 9,747,688 $ 225,368 $ - $ 9,973,056
U.S. government agencies 2,077,940 13,310 - 2,091,250
State, county, and municipal securities 825,833 1,309 (1,883) 825,259
Mortgage-backed securities 7,393,397 112,983 - 7,506,380
Trust preferred securities 500,000 - - 500,000
---------------------------------------------------

$20,544,858 $ 352,970 $ (1,883) $20,895,945
===================================================

In 2003, the FASB Emerging Issues Task Force released Issue 03-01, The Meaning
of Other-Than-Temporary Impairment and Its Application to Certain Investments.
The issue requires disclosure of certain information about other than temporary
impairments in the market value of investment securities. The market value of
investment securities is based on quoted market values and is significantly
affected by the interest rate environment. At December 31, 2003, all unrealized
losses in the investment securities portfolio were for debt securities. From
the December 31, 2003 tables above, none of the 11 securities issued by state
and political subdivisions contained unrealized losses and 6 out of 17
securities issued by U.S. Government agencies and Government sponsored
corporations, including mortgage-backed securities, contained unrealized losses.
One of the securities with an unrealized loss as of December 31, 2003 was
purchased during 2003 and the other five securities were in an unrealized gain
position at December 31, 2002; therefore, all unrealized losses at December 31,
2003 have been continuous for less than twelve months. These unrealized losses
are considered temporary because of acceptable investment grades on each
security and the repayment sources of principal and interest are government
backed.

NICOLET BANKSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 3. INVESTMENT SECURITIES AVAILABLE-FOR-SALE (CONTINUED)

The amortized cost and fair value of investment securities available-for-sale by
contractual maturity at December 31, 2003 are shown below. Maturities may
differ from contractual maturities in mortgage-backed securities because the
mortgages underlying the securities may be called or prepaid without any
penalties. Therefore, these securities are not included in the maturity
categories in the following summary.

Amortized Fair
Cost Value
(Amounts in thousands)
--------------------------

Due in less than one year $ 3,999,527 $ 4,000,000
Due in one year through five years 14,928,103 15,100,039
Due after five years through ten years 6,666,225 6,741,102
Due after ten years 500,000 500,000
Mortgage-backed securities 3,093,615 3,129,036
--------------------------

$ 29,187,470 $ 29,470,177
==========================

Securities with a carrying value of $14,853,000 and $20,060,000 as of December
31, 2003 and 2002, respectively, were pledged as collateral on public deposits
and for other purposes as required or permitted by law.

Proceeds from sales of securities available-for-sale during 2003, 2002 and 2001
were $6,473,179, $9,724,844 and $7,147,872, respectively. Gross gains of
$295,282, $3,218, and $121,895 were realized on these sales in 2003, 2002 and
2001, respectively, and gross losses of $6,362 were realized on these sales for
2002.

NICOLET BANKSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 4. LOANS

Major classifications of loans as of December 31 were as follows:

2003 2002
------------ ------------

Commercial, financial, and agricultural $148,974,730 $132,041,541
Commercial real estate 59,201,490 45,946,139
Real estate 44,900,383 28,872,949
Consumer 8,692,791 5,719,049
------------ ------------
261,769,394 212,579,678
Less allowance for loan losses 3,109,527 2,652,990
------------ ------------

Net loans $258,659,867 $209,926,688
============ ============

Practically all of the Bank's loans, commitments, and standby letters of credit
have been granted to customers in the Bank's market area. Although the Bank has
a diversified loan portfolio, the ability of their debtors to honor their
contracts is dependent on the economic conditions of the counties surrounding
the Bank.

Changes in the allowance for loan losses for the years ended December 31, are
presented as follows:

2003 2002 2001
------------ ----------- ----------

Balance at beginning of year $ 2,652,990 $1,600,000 $ 400,000
Provision charged to operations 2,335,000 1,308,250 1,200,000
Loans charged off (1,956,649) (255,330) -
Recoveries on loans previously charged off 78,186 70 -
------------ ----------- ----------

Balance at end of year $ 3,109,527 $2,652,990 $1,600,000
============ =========== ==========

The following is a summary of information pertaining to impaired loans as of
December 31:

2003 2002
---------- ----------

Impaired loans for which an allowance has been
provided $4,241,168 $1,892,748
Impaired loans for which no allowance has been
provided - -
---------- ----------

Total loans determined to be impaired $4,241,168 $1,892,748
========== ==========

Allowance provided for impaired loans, included
in the allowance for loan losses $1,680,000 $ 300,000
========== ==========

NICOLET BANKSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 4. LOANS (CONTINUED)

2003 2002
---------- ----------

Average investment in impaired loans $7,596,054 $1,960,184
========== ==========

Interest income recognized and collected on a
cash basis on impaired loans $ - $ -
========== ==========

It is management's policy to place loans (commercial, residential, and or
installment) on nonaccrual when principal and interest is past due 90 days or
more. Such loans may continue on accrual only when they are both well secured
and in the process of collection. Nonaccruing loans totaled $2,417,000 and
$2,263,000 as of December 31, 2003 and 2002, respectively. Interest income in
the amount of $187,144, $47,182 and none would have been earned on the
nonaccrual loans had they been performing in accordance with their original
terms during the years ended December 31, 2003, 2002,and 2001 respectively. No
interest was collected on nonaccrual loans and included in income for the years
ended December 31, 2003, 2002, and 2001. Additionally, there were no loans past
due 90 days or more and still accruing interest at December 31, 2003, 2002 and
2001.

The Company conducts transactions with its directors and officers, including
companies in which they have a beneficial interest, in the normal course of
business. It is policy to comply with federal regulations that require that
these transactions with directors and executive officers be made on
substantially the same terms as those prevailing at the time made for comparable
loans to other persons.

The following is a summary of activity for these loans for 2003 and 2002:

2003 2002
------------ ------------

Beginning balance $ 6,796,657 $ 2,940,323
Advances 7,089,369 6,594,903
Repayments (9,475,475) (2,738,569)
------------ ------------

Ending balance $ 4,410,551 $ 6,796,657
============ ============

NICOLET BANKSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 5. PREMISES AND EQUIPMENT

Premises and equipment are stated at cost, less accumulated depreciation as of
December 31, are summarized as follows:

2003 2002
----------------------

Land $ 263,110 $ 113,110
Building 1,075,502 855,502
Leasehold improvements 635,082 547,878
Furniture and equipment 2,228,541 1,704,581
----------------------
4,202,235 3,221,071
Less accumulated depreciation 1,311,384 742,923
----------------------

Total premises and equipment $2,890,851 $2,478,148
======================

Depreciation expense amounts to approximately $568,000, $458,000, and $294,000
in 2003, 2002, and 2001, respectively.

NOTE 6. DEPOSITS

The aggregate amount of time deposits, each with a minimum denomination of
$100,000, was approximately $174,169,000 and $148,898,000 at December 31, 2003
and 2002, respectively. For each of these years, approximately $146,778,000 and
$123,730,000, respectively, represented brokered deposits.

At December 31, 2003, the scheduled maturities of time deposits were as follows:

Years Ending December 31,
-------------------------

2004 $110,786,932
2005 58,997,747
2006 25,036,364
2007 469,417
2008 243,014
Thereafter 23,263
------------

$195,556,737
============

NICOLET BANKSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 7. STOCK BASED COMPENSATION

In connection with the Company formation and initial offering, warrants were
issued to the organizers. The warrants allow each holder to purchase one
additional share of common stock for each share purchased in connection with the
initial offering up to a maximum of 7,500 shares. The warrants vest evenly over
a three-year period beginning with the date the stock offering was completed and
are exercisable for a period of ten years following issuance, but generally no
later than three months after ceasing to serve as a director, at the initial
offering price of $10 per share. Warrants relating to a total of 90,000 shares
were issued and outstanding at both December 31, 2003 and 2002.

During 2000, the Company adopted a Stock Incentive Plan covering up to 285,000
shares of the Company's common stock. During 2002, the Company adopted a second
Stock Incentive Plan covering up to 125,000 shares of the Company's common
stock. These plans are administered by the Administrative Committee of the
Board of Directors and provides for the granting of options to purchase shares
of the common stock to officers, directors, and key employees of the Company.
The exercise price of each option granted under the plan will not be less than
the fair market value of the shares of common stock subject to the option on the
date of grant as determined by the Administrative Committee of the Board of
Directors. Options will be exercisable in whole or in part upon such terms as
may be determined by the committee. Options expire ten years after the date of
grant. As of December 31, 2003, a total of 74,333 shares are available for
grant from these plans.

Activity of the Incentive Stock Option Plan is summarized in the following
table:

Weighted- Weighted-
Average Average
Fair Value of Options Exercise
Option Granted Outstanding Exercisable Price
------------------------------------------------------

Balance - December 31, 2000 209,000 - $ 10.00
Granted $ 1.84 71,250 10.00
Exercise of stock options - -
Canceled (9,250) 10.00
------------

Balance - December 31, 2001 271,000 66,833 $ 10.00
Granted $ 2.31 34,500 12.07
Exercise of stock options (833) 10.00
Canceled (3,167) 10.00
------------

Balance - December 31, 2002 301,500 155,000 $ 10.28
Granted $ 2.65 45,500 12.50
Exercise of stock options (4,334) 10.00
Canceled (4,166) 10.00
------------

Balance - December 31, 2003 338,500 246,425 $ 10.55
============

These options have a weighted average remaining contractual life of
approximately 8 and 9 years as of December 31, 2003.

NICOLET BANKSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 8. INCOME TAXES

The provision for income taxes included in the accompanying consolidated
financial statements for the years ended December 31, consisted of the
following:

2003 2002 2001
--------------------------------

Currently payable $288,194 $ 423,619 $ 30,724
Deferred tax expense 132,990 (278,975) (258,037)
Change in valuation allowance - - (443,154)
--------------------------------

$421,184 $ 144,644 $(670,467)
================================

The differences between the income tax benefit and the amount computed by
applying the statutory federal income tax rate to the earnings before income
taxes for the years ended December 31, 2003, 2002 and 2001 are included below.

2003 2002 2001
--------------------------------

Tax on pretax income at statutory rates $475,712 $ 68,983 $ 23,863
State income taxes, net of federal effect 52,780 46,351 -
Utilization of net operating loss carryforward - - (269,535)
Change in valuation allowance - - (443,154)
Tax-exempt interest income (32,386) (1,314) -
Non-deductible interest disallowance 6,960 340 -
Increase in cash surrender value of bank owned life insurance (82,857) - -
Non-deductible business entertainment 40,579 35,747 18,359
Other, net (39,604) (5,463)
--------------------------------

$421,184 $144,644 $(670,467)
================================

NICOLET BANKSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 8. INCOME TAXES (CONTINUED)

The net deferred tax asset included with other assets in the accompanying
consolidated balance sheets include the following amounts of deferred tax assets
and liabilities:

2003 2002
---------- ----------

Deferred tax assets:
Allowance for loan losses $ 889,982 $ 967,346
Pre-opening expenses 65,546 93,712
Charitable contributions - 21,037
Non-accrual loan interest 37,004 18,502

Deferred tax liabilities:
Premises and equipment (144,288) (120,431)
Unrealized gain on securities available for sale (113,083) (140,435)
Other (1,068) -
---------- ----------

Net deferred tax asset $ 734,093 $ 839,731
========== ==========

NOTE 9. COMMITMENTS AND CONTINGENCIES

In the normal course of business, the Company is involved in various legal
proceedings. In the opinion of management, any liability resulting from such
proceedings would not have a material adverse effect on the consolidated
financial statements.

The Company is 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, financial
guarantees, and standby letters of credit. They involve, to varying degrees,
elements of credit risk in excess of amounts recognized on the consolidated
balance sheets.

The Company'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 notional amount of
those instruments. The Company uses the same credit policies in making
commitments and issuing letters of credit as they do for on-balance-sheet
instruments.

A summary of the contract or notional amount of the Company's exposure to
off-balance-sheet risk as of December 31 is as follows:

2003 2002
----------- -----------

Financial instruments whose contract
amounts represent credit risk:
Commitments to extend credit $92,195,000 $52,661,000
Standby letters of credit 5,943,000 4,003,000

NICOLET BANKSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 9. COMMITMENTS AND CONTINGENCIES (CONTINUED)

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. Standby letters of credit are conditional
commitments issued 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 Company evaluates each customer's credit worthiness on a case-by-case basis.
The amount of collateral obtained, if deemed necessary by the Company upon
extension of credit, is based on management's credit evaluation of the
counterparty. Collateral held varies but may include accounts receivable,
inventory, property and equipment, and income-producing commercial properties.
Credit card commitments are unsecured.

Standby letters of credit are conditional commitments issued by the Bank to
guarantee the performance of a customer to a third-party. Those guarantees are
primarily issued to support public and private borrowing arrangements and,
generally, have terms of one year or less. The credit risk involved in issuing
letters of credit is essentially the same as that involved in extending loan
facilities to customers. The Bank holds collateral, which may include accounts
receivable, inventory, property, equipment, and income-producing properties,
supporting those commitments if deemed necessary. In the event the customer
does not perform in accordance with the terms of the agreement with the
third-party, the Bank would be required to fund the commitment. The maximum
potential amount of future payments the Bank could be required to make is
represented by the contractual amount shown in the summary on the previous page.
If the commitment is funded the Bank would be entitled to seek recovery from the
customer. At December 31, 2003 and 2002, no amounts have been recorded as
liabilities for the Bank's potential obligations under these guarantees.

NOTE 10. DERIVATIVES AND HEDGING TRANSACTIONS

The Company has an overall interest rate risk management strategy that
incorporates the use of derivative instruments to minimize significant unplanned
fluctuations in earnings that are caused by interest rate volatility. By using
derivative instruments, the Company is exposed to credit and market risk. If
the counterparty fails to perform, credit risk is equal to the extent of the
fair-value gain in the derivative. The Company minimizes the credit risk in
derivative instruments by entering into transactions with high-quality
counterparties that are reviewed periodically by the Company.

In November 2003, the Bank entered into an interest rate swap agreement related
to floating loans. The swap is utilized to manage interest rate exposures and
is designated as a highly effective cash flow hedge. The differential to be
paid or received on the swap agreement is accrued as interest rates change and
is recognized over the lives of the agreements in interest income/expense. The
swap agreement expires in November 2005 and has a rate of 5.06%. The notional
amount is $15,000,000. As these instruments age toward maturity and/or the
interest rates increase, the loss will be reclassified from accumulated other
comprehensive income into earnings. The fair value of the swap agreement as of
December 31, 2003 was insignificant, and therefore, has not been recorded in
these financial statements.

NICOLET BANKSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 11. REGULATORY CAPITAL REQUIREMENTS AND RESTRICTIONS OF DIVIDENDS

The Company (on a consolidated basis) and the Bank are 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 Company and the Bank's financial
statements. Under capital adequacy guidelines and the regulatory framework for
prompt corrective action, the Company and the Bank must meet specific capital
guidelines that involve quantitative measures of their assets, liabilities, and
certain off-balance-sheet items as calculated under regulatory accounting
practices. The capital amounts and classification are also subject to
qualitative judgments by the regulators about components, risk-weightings, and
other factors. Prompt corrective action provisions are not applicable to bank
holding companies.

Quantitative measures established by regulation to ensure capital adequacy
requires the Company and the Bank to maintain minimum amounts and ratios (set
forth in the table on the following page) of total and Tier 1 capital (as
defined in the regulations) to risk-weighted assets (as defined), and Tier 1
capital (as defined) to average assets (as defined). Management believes, as of
December 31, 2003 and 2002, that the Company and the Bank met all capital
adequacy requirements to which they are subject.

As of December 31, 2003, the most recent notification from the regulatory
agencies categorized the Bank as well-capitalized under the regulatory framework
for prompt corrective action. To be categorized as well-capitalized, an
institution must maintain minimum total risk-based, Tier I risk-based, and Tier
1 leverage ratios as set forth in the following table. There are no conditions
or events since these notifications that management believes have changed the
Bank's category.

The Company's and the Bank's actual capital amounts and ratios as of December
31, 2003 and 2002 are presented in the table on the following page.

NICOLET BANKSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

For Capital Capitalized Under
Adequacy Prompt Corrective
Actual Purposes Action Provisions
-----------------------------------------------------------------
Amount Ratio Amount Ratio Amount Ratio
-----------------------------------------------------------------

As of December 31, 2003: Amounts in Thousands
Total capital
(to risk-weighted assets):
Company $35,169 12.7% $ 22,110 8.0% N/A
Bank 34,088 12.3 22,110 8.0 $ 27,638 10.0%
Tier I capital
(to risk-weighted assets):
Company 32,059 11.6 11,055 4.0 N/A
Bank 30,978 11.2 11,055 4.0 16,583 6.0
Tier I capital
(to average assets):
Company 32,059 9.9 13,016 4.0 N/A
Bank 30,978 9.5 13,016 4.0 16,270 5.0

As of December 31, 2002:
Total capital
(to risk-weighted assets):
Company $33,691 15.1% $ 17,791 8.0% N/A
Bank 30,109 13.5 17,791 8.0 $ 22,238 10.0%
Tier I capital
(to risk-weighted assets):
Company 31,038 14.1 8,895 4.0 N/A
Bank 27,456 12.3 8,895 4.0 13,343 6.0
Tier I capital
(to average assets):
Company 31,038 14.9 8,339 4.0 N/A
Bank 27,456 13.2 8,339 4.0 10,423 5.0

A source of income and funds of the Company are dividends from the Bank.
Dividends declared by the Bank that exceed the retained net income for the most
current year plus retained net income for the preceding two years must be
approved by Federal and State regulatory agencies.

NICOLET BANKSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 12. FAIR VALUE OF FINANCIAL INSTRUMENTS

FASB Statement No. 107, Disclosures About Fair Value of Financial Instruments,
requires disclosure of fair value information about financial instruments,
whether recognized or not recognized in the balance sheet, for which it is
practicable to estimate that value. The fair value of a financial instrument is
the current amount that would be exchanged between willing parties, other than a
forced liquidation. Fair value is best-determined base upon quoted market
prices. However, in many instances, there are no quoted market prices for the
Company's various financial instruments. In cases where quoted market prices
are not available, fair values are based on estimates using present value or
other valuation techniques. Those techniques are significantly affected by
assumptions used, including the discount rate and estimates of future cash
flows. Accordingly, the fair value estimates may not be realized in an
immediate settlement of the instrument. Statement No. 107 excludes certain
financial instruments and all nonfinancial instruments from its disclosure
requirements. Accordingly, the aggregate fair value amounts presented may not
necessarily represent the underlying fair value of the Company.

The following methods and assumptions were used by the Company in estimating
fair value disclosures for financial instruments:

Cash and due from banks: The carrying amounts of cash and due from banks equal
their fair values.

Federal funds sold: The carrying amounts of Federal funds sold equal their fair
values.

Interest-bearing deposits: The carrying amounts of interest-bearing deposits
equal their fair values.

Available-for-sale securities: Fair values for securities are based on quoted
market prices.

Other Investments: The carrying amounts of other investments equal their fair
values.

Loans: For variable-rate loans that reprice frequently and with no significant
change in credit risk, fair values are based on carrying values. Fair values
for all other loans are estimated by discounting contractual cash flows using
estimated market discount rates, which reflect the credit and interest rate risk
inherent in the loan.

Accrued interest receivable and payable: The carrying amounts of accrued
interest receivable and payable equal their fair values.

Deposits: The fair values disclosed for demand deposits (interest and
non-interest checking, passbook savings and certain types of money market
accounts) are, by definition, equal to the amount payable on demand at the
reporting date. Fair values for fixed-rate certificates of deposit are
estimated using a discounted cash flow calculation that applies interest rates
currently being offered on certificates within the market place.

NICOLET BANKSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 12. FAIR VALUE OF FINANCIAL INFORMATION (CONTINUED)

Short-term borrowings: The carrying amounts of short-term borrowings equal
their fair values.

Other borrowings: The fair values of other borrowings are estimated using
discounted cash flow analysis based on current interest rates being offered by
instruments with similar terms and credit quality.

Off-balance-sheet instruments: The estimated fair value on letters of credit at
December 31, 2003 and 2002 was insignificant. Loan commitments on which the
committed interest rate is less than the current market rate are also
insignificant at December 31, 2003 and 2002.

The estimated fair values of the Company's financial instruments were as
follows:

2003 2002
----------------------------------------------
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
----------------------------------------------
(Amounts in thousands)

Financial assets:
Cash and cash equivalents $ 32,986 $ 32,986 $ 7,012 $ 7,012
Investment securities available for sale 29,470 29,470 20,896 20,896
Other investments 1,372 1,372 1,085 1,085
Loans held for sale 1,824 1,824 2,811 2,811
Loans, net 258,660 259,253 209,927 211,213
Accrued interest receivable 1,363 1,363 859 859

Financial liabilities:
Deposits 289,080 290,388 206,731 209,108
Repurchase agreements 14,591 14,591 10,831 10,831
Accrued interest payable 975 975 796 796

Unrecognized financial instruments:
Commitments to extend credit - - - -
Standby letters of credit - - - -
Guarantees - - - -

NICOLET BANKSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 13. PARENT COMPANY ONLY FINANCIAL INFORMATION

The following reflects the Condensed Financial Statements (Parent Company Only)
of Nicolet Bankshares, Inc.:

BALANCE SHEETS
(Parent Company Only)

December 31,
--------------------------
2003 2002
--------------------------

ASSETS
Cash and due from subsidiary $ 1,035,994 $ 3,581,663
Investment in subsidiary 31,148,364 27,666,862
Other assets 44,448 -
--------------------------

TOTAL ASSETS $ 32,228,806 $31,248,525
==========================

LIABILITIES AND STOCKHOLDERS' EQUITY

Stockholders' equity $ 32,228,806 $31,248,525
--------------------------

TOTAL STOCKHOLDERS' EQUITY $ 32,228,806 $31,248,525
==========================

STATEMENTS OF INCOME
(Parent Company Only)

December 31,
-------------------------
2003 2002
-------------------------

Operating expense $ 89,009 $ 50,081
Income tax benefit (44,448) -
-------------------------
Loss before equity in undistributed
earnings of subsidiary (44,561) (50,081)
Equity in undistributed earnings of subsidiary 1,022,530 108,329
-------------------------

NET INCOME $ 977,969 $ 58,248
=========================

NICOLET BANKSHARES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 13. PARENT COMPANY ONLY FINANCIAL INFORMATION (CONTINUED)

STATEMENTS OF CASH FLOWS
(Parent Company Only)
December 31,
-----------------------------
2003 2002
-----------------------------

Cash Flows From Operating Activities:
Net income $ 977,969 $ 58,248
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Increase in other assets (44,448) -
Equity in undistributed income of subsidiary (1,022,530) (108,329)
-----------------------------

NET CASH USED IN OPERATING ACTIVITIES (89,009) (50,081)
-----------------------------
Cash Flows From Investing Activities, consisting of
capital infusion to subsidiary (2,500,000) (10,000,000)
-----------------------------

Cash Flows From Financing Activities:
Exercise of stock options 43,340 8,330
Proceeds from sale of common stock - 13,623,414
-----------------------------

NET CASH PROVIDED BY FINANCING ACTIVITIES 43,340 13,631,744
-----------------------------

NET INCREASE (DECREASE) IN CASH (2,545,669) 3,581,663
Cash:
Beginning 3,581,663 -
-----------------------------

Ending $ 1,035,994 $ 3,581,663
=============================

SELECTED FINANCIAL DATA

The following table sets forth certain selected financial data concerning the
Company as of and for the years ended December 31, 2003, 2002 and 2001. The
selected financial data has been derived from the financial statements that have
been audited by McGladrey & Pullen, LLP and Porter Keadle Moore, LLP,
independent certified public accountants. This information should be read in
conjunction with management's discussion and analysis of financial condition and
results of operation.

2003 2002 2001
----------------------------------------------------
AT YEAR END: (in thousands, except share and per share data)

Securities available for sale $ 29,470 $ 20,896 $ 22,984
Loans, net 258,660 209,926 122,660
Loans held for sale 1,824 2,811 2,208
Total assets 337,395 250,005 171,612
Deposits 289,080 206,731 150,066
Total shareholders' equity 32,229 31,249 17,300

AVERAGE BALANCES:
Loans 249,045 171,441 90,904
Earning assets 279,078 198,466 113,338
Assets 293,110 208,603 116,910
Deposits 254,253 180,876 98,498
Shareholders' equity 29,331 19,977 16,935

RESULTS OF OPERATIONS:
Net interest income 7,747 5,084 3,380
Provision for loan losses 2,335 1,308 1,200
Other income 3,198 1,575 673
Other expenses 7,211 5,148 3,454
Net earnings 978 58 70

PER SHARE DATA:
Net earnings per share $ 0.33 $ 0.03 $ 0.04
Diluted net earnings per share 0.32 0.03 0.04

KEY PERFORMANCE RATIOS:
Return on average equity 3.33% 0.29% 0.41%
Return on average assets 0.33% 0.03% 0.06%
Average equity to average assets 10.01% 9.60% 14.50%
Average loans to average deposits 97.95% 94.80% 92.30%
Net spread 2.32% 2.06% 1.98%
Net interest margin 2.78% 2.56% 2.98%

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

This discussion and analysis is intended to assist the reader in understanding
the financial condition and results of operations of Nicolet Bankshares, Inc.
(referred to herein as "Nicolet") and its subsidiary Nicolet National Bank ("the
Bank"), collectively during the three years ended December 31, 2003. This
commentary should be read in conjunction with the financial statements and the
related notes and the other statistical information included elsewhere in this
report, as well as with an understanding of Nicolet's short operating history.

EXECUTIVE SUMMARY

The year 2003 was an exciting year for Nicolet as we continued our growth in
assets, earnings and people. Total assets increased from $250 million to $337
million and net earnings increased from $58,000 to $978,000. We also added 21
employees during 2003 to bring the total to an equivalent of 65 employees. Our
investment in high quality banking professionals in our northeastern Wisconsin
banking marketplace has allowed us to position Nicolet as a well respected
financial service provider and competitor. Our growth also allowed us to further
leverage our existing capital.

Our earnings showed improvement in 2003 as we made significant progress in
managing our net interest income. We reduced our cost of funds 86 basis points
by increasing core deposits and repricing brokered deposits, which assisted in
raising our net interest margin 22 basis points. Additionally, we enjoyed
strong performance from our non-interest income contributors, including an
outstanding year in the mortgage lending area, continued core growth and
profitability in the trust area, and earnings contribution from initiating
brokerage services. We believe, however, that we are likely to experience a
decrease in mortgage lending volume and associated non-interest income in 2004
as a result of the stabilized or increased mortgage interest rates.

An area of improvement needed in our core banking activities relates to asset
quality. In 2003, we dealt with several credit-related issues that were
generated during the early phases of our start-up. The impact in 2003 resulted
in provisions for loan losses of $2.3 million and net charge-offs of $1.9
million, or .75% of average loans outstanding during the year, representing an
increase of $1.0 million, or 79%, in the provision for loan losses, compared to
2002. While we have been operating in a less than positive and vibrant economic
environment, these percentage losses are higher than we should expect to
experience in the future, given our focus on strict underwriting standards,
continuous management and monitoring of our portfolio, and expansion of our
lending and risk management staff.

Finally, our increased investment in human capital in 2003 should enable us to
further expand our physical presence in 2004. Using our December 2003
acquisition of our Menominee, Michigan branch as a base, we plan to bolster our
presence in our northern Michigan market area. In our Brown County, Wisconsin
market, we plan to add a full service branch facility in a dynamic DePere
location, and we are designing and building a new downtown facility in Green
Bay, Wisconsin.

CRITICAL ACCOUNTING POLICIES

Our accounting and financial reporting policies conform to accounting principles
generally accepted in the United States of America and to general practices
within the banking industry. Following is a description of the accounting
policies that we have deemed "critical". In determining which accounting
policies are "critical" in nature, we have identified the policies that require
significant judgment or involve complex estimates. The application of these
policies has a significant impact on our consolidated financial statements.
Financial results could differ significantly if different judgments or estimates
are applied.

ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses is an estimate of the losses that may be sustained
in our loan portfolio. The allowance is based on two basic principles of
accounting: (1) Statement of Financial Accounting Standards ("SFAS") No. 5
"Accounting for Contingencies," which requires that losses be accrued when they
are probable of occurring and estimable, and (2) SFAS No. 114, "Accounting by
Creditors for Impairment of a Loan," which requires that losses be accrued based
on the differences between the value of collateral, present value of future cash
flows or values that are observable in the secondary market and the loan
balance. The use of these values is inherently subjective and our actual losses
could be greater or less than the estimates.

Our allowance for loan losses has two basic components: (1) specific loss
estimates for individually classified and impaired loans, and (2) general loss
estimates on loans for which no impairment has been identified and large groups
of smaller balance homogeneous loans. Specific loss estimates on individual
loans include subjective evaluations related to secondary sources of repayment
for the loan, which are principally collateral liquidation. The general loss
allocations use historical loss ratio experience, which may not be indicative of
the actual losses present in the loan portfolio at a given point in time.

While the basic methodology of our loan loss allowance estimation process has
not changed, we continuously re-evaluate the use of historical loss factors,
national and local economic trends, credit concentrations and other relevant
factors in determining the adequacy of the allowance for loan loss. Because
Nicolet has a relatively short operating history, historical trends specific to
the Company do not necessarily provide sufficient information to judge the
adequacy of the allowance for loan losses. Therefore, management considers
industry trends, peer comparisons and regulatory position in addition to
historical experience in its evaluation.

This estimation process associated with the allowance for loan losses can have
significant effects in the estimated loan loss expense of a given period.
Generally, the allowance for loan losses increases as the outstanding balance of
loans increase or the level of classified or impaired loans increases. Loans or
portions of loans that are deemed uncollectible are charged against and reduce
the allowance. The allowance is replenished by means of a provision for loan
losses that is charged as an expense against net interest income. As a result,
our estimate of the allowance for loan losses affects our earnings directly.

See "Provision and Allowance for Loan Losses" below for additional information
on the calculation of the allowance for loan losses.

BACKGROUND

The Bank opened on November 1, 2000 with a single office in Green Bay,
Wisconsin. The Bank has experienced extraordinary growth in Green Bay, growing
to $337 million in assets by December 31, 2003. As a result of this success,
management chose to expand the Bank's product lines, geographic areas and
employee base. Toward that end, the Bank opened an office in Marinette,
Wisconsin on October 15, 2001, offering community banking and full trust and
investment management services. The Bank also added employees in lending and
infrastructure roles to support this growth, and in 2003 further diversified its
product offerings by initiating brokerage services and acquiring a branch in
Menominee, Michigan . While these strategic moves have had an adverse financial
impact in the short term, they should provide for earnings enhancement in the
long term.

The Bank reorganized into a holding company structure on June 6, 2002 and
subsequently raised an additional $13.6 million in a follow-on offering.
Nicolet contributed the proceeds of the offering to the Bank to support the
expansion activities described above.

INCOME STATEMENT REVIEW

Nicolet reported net earnings for the year ended December 31, 2003 of $978,000
as compared to $58,000 for the year ended December 31, 2002. Pretax earnings
increased $1.2 million to $1.4 million for 2003, compared to 2002. Nicolet's
improved pretax performance was reflective of the growth in earning assets, an
increase in net interest income, secondary market mortgage fee income, fees
from trust services, and gains from sales of investment securities, offset by
the impact of providing for future losses associated with current loan growth as
well as certain current problem credits, along with general growth in overhead
expenses. Net interest income was $ 7.7 million in 2003 compared to $5.1
million in 2002. Other income increased approximately $1.6 million to $3.2
million for the year ended December 31, 2003. Other expenses for the year ended
2003 totaled $7.2 million compared to $5.1 million in 2002.

In 2003, average earning assets increased to $279 million, or 95% of total
average assets. This increase was primarily due to the increase in loans
outstanding. Average loans outstanding for 2003 were $249 million, while
average interest bearing liabilities for 2003 increased to $236 million.

Net interest income is the single largest contributor to Nicolet's earnings.
Net interest income is the interest Nicolet earns on loans and investments
reduced by the interest paid on deposit accounts. The banking industry uses two
key ratios to measure relative profitability of net interest income, net
interest rate spread and net interest margin. The net interest rate spread
measures the difference between the average yield on earning assets and the
average rate paid on interest bearing liabilities. The interest rate spread
eliminates the impact of non-interest bearing deposits and gives a direct
perspective on the effect of market interest rate movements. The net interest
margin is defined as net interest income as a percent of average total earning
assets and takes into account the positive impact of investing non-interest
bearing deposits.

Nicolet's net interest spread was 2.32% in 2003, while the net interest margin
was 2.78%, compared to a net interest spread of 2.06% and a net interest margin
of 2.56% in 2002. The increase in both spread and margin reflect significant
effort extended in making improvements in this area. Nicolet's increase in the
net interest margin was primarily attributable to the reduction in its cost of
funding sources, as the average cost of interest bearing liabilities decreased
from 3.92% in 2002 to 3.06% in 2003. This decline was reflective of the change
in the mix of our deposit base as we grew the percentage of core deposits to
total deposits as well as certain larger brokered deposits issued at higher
rates being replaced with lower cost funds associated with a different interest
rate environment. The following table shows the relationship between interest
income and expense and the average balances of interest earning assets and
interest bearing liabilities.

TABLE 1
AVERAGE BALANCE SHEETS AND NET INTEREST ANALYSIS
(in thousands)
2003 2002 2001
------------------------------ ---------------------------- ---------------------------
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
BALANCE EXPENSE RATE BALANCE EXPENSE RATE BALANCE EXPENSE RATE
--------- ---------- ------- -------- --------- ------- -------- -------- -------

ASSETS:
Federal funds sold $ 5,004 49 0.98% $ 5,604 91 1.62% - - -
Interest bearing deposits 1,200 30 2.50% 1,178 15 1.27% - - -
Investment securities
Taxable 20,569 781 3.80% 20,085 817 4.07% 12,092 616 5.09%
Tax-exempt 3,260 145 4.45% 158 6 4.08% - - -
Loans 249,045 14,006 5.62% 171,441 10,937 6.38% 90,904 7,189 7.91%
--------- ---------- ------- -------- --------- ------- -------- -------- -------
Total interest earning assets 279,078 15,011 5.38% 198,446 11,866 5.98% 113,338 8,282 7.31%
---------- --------- ---------
All other assets 14,032 10,137 3,572
--------- -------- --------
Total assets $ 293,110 $208,603 116,910
========= ======== ========

LIABILITIES AND SHAREHOLDERS' EQUITY:
Interest bearing demand and money
market deposits $ 35,353 $ 493 1.39% $ 20,293 364 1.79% 13,826 522 3.78%
Saving deposits 1,881 17 0.90% 1,272 16 1.26% 436 9 2.06%
Time deposits 191,151 6,626 3.47% 143,924 6,292 4.37% 76,727 4,345 5.66%
Repurchase agreements and Federal
funds purchased 7,599 79 1.04% 7,408 108 1.46% 1,025 25 2.43%
--------- ---------- ------- -------- --------- ------- -------- -------- -------
Total interest bearing liabilities 235,984 7,215 3.06% 172,897 6,780 3.92% 92,014 4,901 5.33%
---------- --------- ---------
Noninterest-bearing deposits 25,868 15,388 7,509
Other liabilities 1,927 341 452
Shareholders' equity 29,331 19,977 16,935
--------- -------- --------

Total liabilities and
shareholders' equity $ 293,110 $208,603 $116,910
========= ======== ========
Net interest spread $ 7,796 2.32% $ 5,086 2.06% $ 3,381 1.98%

Net interest margin on average 2.78% 2.56% 2.98%
earning assets

Tax equivalent adjustment on $ (49) $ (2)
investments

Net interest income/margin $ 7,747 $ 5,084 $ 3,381

Non-accrual loans and the interest income that was recorded on these loans, if
any, are included in the yield calculation for all periods reported.

Nicolet purchased tax-exempt securities in 2002. As such, yields are presented
on a tax equivalent basis for 2003 and 2002. Nicolet had no tax-exempt
securities in 2001 and, as such, pre-tax yields equal tax equivalent yields.

The following table shows the relative impact on net income of changes in the
average balances (volume) of interest earning assets and interest bearing
liabilities and the rates earned and paid by Nicolet on such assets and
liabilities. Variances resulting from a combination of changes in rate and
volume are allocated in proportion to the absolute dollar amounts of the change
in such category.

TABLE 2
CHANGES IN INTEREST INCOME AND EXPENSE
(in thousands)
INCREASE (DECREASE) DUE TO CHANGES IN:
2003 OVER 2002 2002 OVER 2001
--------------------------------- -----------------------------
VOLUME RATE TOTAL VOLUME RATE TOTAL
----------------------------------------------------------------

INTEREST INCOME ON:
Loans (including loan fees) $ 4,343 $ (1,274) $ 3,069 $ 5,358 $ (1,610) $3,748
Investment securities:
Taxable (1) (35) (36) 344 (143) 201
Tax-exempt 88 4 92 15 - 15
Interest-bearing deposits 12 3 15 4 - 4
Federal funds sold and commercial paper (9) (33) (42) (160) (226) (386)
----------------------------------------------------------------
Total interest earning assets 4,433 (1,335) 3,098 5,561 (1,979) 3,582
----------------------------------------------------------------

INTEREST EXPENSE ON:
Deposits:
Interest-bearing demand and money market 224 (95) 129 184 (342) (158)
Savings 6 (5) 1 12 (5) 7
Time 1,803 (1,469) 334 3,117 (1,170) 1,947
Federal funds purchased repurchase agreements 3 (32) (29) 97 (14) 83
----------------------------------------------------------------
Total interest-bearing liabilities 2,036 (1,601) 435 3,410 (1,531) 1,879
----------------------------------------------------------------
INCREASE IN NET INTEREST INCOME $ 2,397 $ 266 $ 2,663 $ 2,151 $ (448) $1,703
================================================================

OTHER INCOME AND EXPENSES

For the years ended December 31, 2003 and 2002, other income totaled $3.2
million and $1.6 million, respectively. The primary components of other income
in 2003 are the secondary market mortgage fee income totaling $1.4 million which
represented an increase of $700,000 when compared to 2002; fees from trust
services totaling $608,000, which represented an increase of $257,000 when
compared to 2002; fees from service charges on deposit accounts totaling
$506,000, which represented an increase of $251,000 when compared to 2002; and
gains from the sale of investment securities in 2003 totaling $295,000, compared
to a net loss of $3,000 in 2002. The increase experienced as a result of the
strong mortgage originations and refinances was due to the attractive home
mortgage interest rate environment, while the other increases were more
indicative of Nicolet's efforts at successfully expanding its product line,
specifically in the trust, investment management and brokerage business lines.

Other expenses totaled $7.2 million and $5.1 million for the years ended
December 31, 2003 and 2002, respectively. The primary component of other
expense was salary and employee benefits expense, which totaled $3.8 million and
$2.7 million for the same respective periods. The increase in salary and
employee benefit expense is attributable to the efforts associated with our
expansion of our human capital in the additional personnel hired to accommodate
the growth in assets. Additionally, occupancy and equipment expense increased
in 2003 by $155,000 when compared to 2002, largely as a result of the increased
costs for the additional office space needed for the Green Bay facility. Other
operating expense totaled $1.6 million for the year ended December 31, 2003 as
compared to $1.0 million for the year ended December 31, 2002, which is in line
with Nicolet's growth.

The provision for loan losses of $2.3 million was a significant increase over
the $1.3 million allocated in 2002. While core loan growth was partially
responsible for this increase, the recognition and resolution of certain problem
credits largely contributed to the increase. However, Nicolet's approach to
identifying and dealing with problem credits on a proactive basis is deemed to
be more beneficial on a long-term basis. (See discussion in Provision and
Allowance for Loan Losses below)

INCOME TAXES

Total income tax expense was $421,000 in 2003 compared with $145,000 in 2002.
The primary reason for the increase in taxes was the increase in pretax income
from $203,000 in 2002 to $1.4 million in 2003. The Company's effective tax rate
was 30.09% in 2003.

BALANCE SHEET OVERVIEW

During 2003, average total assets increased $85 million (41%) over 2002.
Average deposits increased $73 million (41%) in 2003 over 2002. Average loans
increased $78 million (45%) in 2003 over 2002.

At December 31, 2003, assets totaled $337 million as compared to $250 million as
of December 31, 2002. For the same periods, total deposits increased to $289
million from $207 million, respectively, while gross loans increased to $262
million from $213 million, respectively. Shareholders' equity totaled $32
million at December 31, 2003, an increase of $1 million when compared to the
balance as of December 31, 2002.

INVESTMENTS

The investment portfolio consists of debt securities and to a lesser extent
equity securities, which provide Nicolet with a source of liquidity and a
long-term, relatively stable source of income. Additionally, the investment
portfolio provides a balance to interest rate and credit risk with other
categories of the balance sheet while providing a vehicle for the investment of
available funds, furnishing liquidity and supplying securities to pledge as
required collateral for certain deposits.

The following table shows the carrying value of securities, by security type, as
of December 31, 2003, 2002, and 2001:

TABLE 3
INVESTMENT PORTFOLIO
(in thousands)
2003 2002 2001
-------------------------

United States treasuries and agencies $18,265 $12,064 $15,316
Mortgage-backed securities 3,129 7,507 7,168
Municipal securities 7,576 825 -
Trust Preferred securities 500 500 500
-------------------------

$29,470 $20,896 $22,984
=========================

The following table presents the expected maturity of the total securities
portfolio by maturity date and average yields based on amortized cost at
December 31, 2003. The composition and maturity/repricing distribution of the
securities portfolio is subject to change depending on rate sensitivity, capital
and liquidity needs.

TABLE 4
EXPECTED MATURITY OF SECURITIES
(in thousands)

UNITED STATES MORTGAGE- TRUST WEIGHTED
TREASURIES AND BACKED MUNICIPAL PREFERRED AVERAGE
MATURITIES AT DECEMBER 31, 2003: AGENCIES SECURITIES SECURITIES SECURITIES YIELDS
----------------------------------------------------------------------------------------------------

Within 1 year $ 4,000 $ - $ - $ - 3.41%
After 1 through 5 years 14,265 - 835 - 2.94%
After 5 through 10 years - - 6,741 - 4.46%
After 10 years - 3,129 - 500 4.74%
-----------------------------------------------------------------

$ 18,265 $ 3,129 $ 7,576 $ 500 3.57%
=================================================================

Mortgage backed securities are included in the maturities categories in which
they are anticipated to be repaid based on scheduled maturities. Yields are
calculated on a tax equivalent yield basis.

At December 31, 2003, there were no investment securities of any issuer other
than the U.S. government or its agencies or corporations that were in excess of
10% of stockholders' equity.

LOAN PORTFOLIO

Since loans typically provide higher interest yields than do other types of
earning assets, Nicolet's intent is to channel a substantial percentage of its
earning assets into loans. Nicolet separates its loans into two categories:
portfolio loans and loans held for sale. Portfolio loans are permanent loans
booked, serviced, and held to maturity. Loans held for sale are originated and
presold to institutional investors. Loans held for sale typically remain on
Nicolet's books for two to three weeks. Total net portfolio loans outstanding
at December 31, 2003 and 2002 were $259 million and $210 million, respectively.

Major classifications of portfolio loans (in thousands) as of December 31, 2003,
2002, 2001 and 2000 are summarized as follows:

TABLE 5
LOAN PORTFOLIO
(in thousands)
2003 2002 2001 2000
---------------------------------------------------------------------------------
PERCENT PERCENT PERCENT PERCENT
AMOUNT OF TOTAL AMOUNT OF TOTAL AMOUNT OF TOTAL AMOUNT OF TOTAL
---------------------------------------------------------------------------------

Commercial, financial and agricultural $148,975 56.91% $132,042 62.11% $ 71,753 57.74% $20,114 78.63%
Commercial real estate 59,201 22.62% 45,946 21.62% 35,279 28.39% 3,561 13.92%
Real estate 44,900 17.15% 28,873 13.58% 13,205 10.63% 1,411 5.52%
Consumer 8,693 3.32% 5,719 2.69% 4,023 3.24% 496 1.93%
---------------------------------------------------------------------------------

Total loans 261,769 100.00% 212,580 100.00% 124,260 100.00% 25,582 100.00%
========= ========= ========= =========
Less: Allowance for loan losses 3,109 2,653 1,600 400
-------- -------- -------- -------

$258,660 $209,927 $122,660 $25,182
======== ======== ======== =======

The major component of Nicolet's loan portfolio was commercial loans, which
represented 79.5% and 83.7% of the loan portfolio as of December 31, 2003 and
2002, respectively.

Our loan portfolio, which equaled 89% of average earnings assets during 2003, is
primarily comprised of commercial loans. Constituting 80% of average loans and
growing by $30 million during 2003, the commercial loan portfolio represents
loans to business interests generally located within our market area.
Approximately 72% of the commercial loan portfolio is primarily secured by
business assets such as accounts receivable, inventory, and equipment, with the
remaining generally secured by real estate properties. The continued
significant concentration of the loan portfolio in commercial loans and the
overall rapid growth of this portion of our lending business is consistent with
our strategy of focusing a substantial amount of our efforts on "business"
banking. Corporate and business lending continues to be an area of expertise for
our senior management team and our commercial lenders. Of each of the loan
categories that we originate, commercial loans are most efficiently originated
and managed, thus limiting overhead costs by necessitating the attention of
fewer full-time employees. Our commercial lending business also affords us the
greatest opportunity to generate the greatest amount of local deposits and serve
as a significant source of core demand deposits.

Table 6 identifies the maturities of commercial loans as of December 31, 2003
and addresses the sensitivity of these loans to changes in interest rates.

TABLE 6
LOAN PORTFOLIO MATURITY
(in thousands)
FIXED VARIABLE
INTEREST INTEREST
RATES RATES TOTAL
-------- -------- -------

COMMERCIAL:
Within 1 year 19,810 67,578 87,388
1 to 5 years 24,788 36,199 60,988
After 5 years - 599 599
---------------------------

44,598 104,376 148,975
===========================

COMMERCIAL REAL ESTATE:
Within 1 year 5,661 24,044 29,705
1 to 5 years 17,161 11,455 28,616
After 5 years - 881 881
---------------------------

22,822 36,380 59,201
===========================

Impaired loans are measured based on the present value of expected future cash
flows discounted at the loan's effective interest rate or, as a practical
expedient, at the loan's observable market price or the fair value of the
collateral if the loan is collateral dependent. A loan is impaired when it is
probable the creditor will be unable to collect all contractual principal and
interest payments due in accordance with the terms of the loan agreement. Cash
collections on impaired loans are credited to the loan receivable balance and no
interest income is recognized on those loans until the principal balance is
current. It is our policy to classify loans as non-accrual generally when they
are past due in principal or interest payments for more than 90 days or it is
otherwise not reasonable to expect collection of principal and interest under
the original terms. Exceptions are allowed for 90 day past due loans when such
loans are well secured and in process of collection. Generally, payments
received on non-accrual loans are applied directly to principal.

TABLE 7- NON-PERFORMING IMPAIRED ASSETS
(Dollars in thousands)
2003 2002 2001 2000
-----------------------------------------------------------------------------------

Impaired loans $4,241 1,893 - -
Loans 90 days or more past due and still accruing - - - -
-----------------------------

Total non-performing impaired loans 4,241 1,893 - -
All other real estate owned - - - -
All other repossessed assets - - - -
-----------------------------

Total non-performing impaired assets $4,241 1,893 - -
=============================

Allowance provided for impaired loans $1,680 300 - -

Average investment in impaired loans $7,596 1,960 - -

AS A PERCENT OF TOTAL LOANS AT YEAR END:
Impaired loans 1.62% 0.90% 0.00% 0.00%
Loans 90 days or more past due and still accruing 0.00% 0.00% 0.00% 0.00%
Total non-performing impaired assets 1.62% 0.90% 0.00% 0.00%

NONACCRUAL LOANS:
Outstanding balance $2,417 2,263 - -
Interest income, if recognized on contractual terms $ 187 47 - -
Interest income recognized and collected $ - - - -

Four loan relationships totaling $4.19 million account for most of the impaired
loans. Management is actively pursing remedies to eliminate and/or otherwise
minimize any additional negative financial impact that might occur from these
and any other nonaccrual loans.

Management continually monitors the loan portfolio to ensure that all loans
potentially having a material adverse impact on future operating results,
liquidity or capital resources have been classified as non-performing. Should
economic conditions deteriorate, the inability of distressed customers to
service their existing debt could cause higher levels of non-performing loans.

To the best of management's knowledge, there are no significant potential
problem loans that have not been disclosed in the table above. The negative
trend noted in nonperforming impaired loans is primarily related to four loans
and is not considered a systemic problem in the loan portfolio.

PROVISION AND ALLOWANCE FOR LOAN LOSSES

Nicolet has developed policies and procedures for evaluating the overall quality
of its credit portfolio and the timely identification of potential credit
problems. Additions to the allowance for loan losses are made to maintain the
allowance at an appropriate level based on management's analysis of the
potential risk in the loan portfolio.

Approximately 80% of our loan portfolio at December 31, 2003 consisted of
commercial loans, compared to 83% at December 31, 2002. Using standard industry
codes, we periodically analyze our loan position with respect to our borrowers'
industries to determine if a concentration of credit risk exists to any one or
more industries. We do have a meaningful credit exposure of loans outstanding,
plus unfunded lines of credit, to operators of nonresidential buildings at
December 31, 2003 and 2002. Credit exposure to operators of

nonresidential buildings approximated $38.5 million at December 31, 2003 and
$39.7 million at December 31, 2002. The $38.5 million concentration at December
31, 2003 included approximately 75 relationships whose owners are well-known to
Nicolet and its management team. We evaluate our exposure level to these
industry groups periodically in order to determine if additional allowance
allocations are warranted. At December 31, 2003 and December 31, 2002, we
determined that we did not have any excessive exposure to any single industry
which would warrant additional allowance allocations.

As of December 31, 2003, the allowance for loan losses was $3.1 million, or
1.19% of outstanding portfolio loans, as compared to $2.7 million or 1.25% of
outstanding portfolio loans as of December 31, 2002. Management attempts to
maintain an allowance that is deemed adequate based on the evaluation of
specific credits along with the overall condition of the portfolio.

Management's judgment in determining the adequacy of the allowance is based on
evaluations of the collectibility of loans in the portfolio. These evaluations
take into consideration such factors as changes in the nature and volume of the
loan portfolio, current economic conditions that may affect the borrower's
ability to pay, overall portfolio quality, and reviews of specific problem
loans. In determining the adequacy of the allowance for loan losses, management
uses a loan grading system that rates loans in eight different categories.
Grades five, six and seven which represent criticized or classified loans (loans
with greater risk of loss potential) are assigned allocations of loss based on
published regulatory guidelines. These loans are inadequately protected by the
current net worth or paying capacity of the borrower or the collateral pledged.
Loans classified in this manner have well-defined weaknesses that jeopardize
liquidation of the debt. Loans graded one through four are stratified by type
and allocated loss ranges based on management's perceived inherent loss for the
strata. The combination of these results are compared monthly to the recorded
allowance for loan losses and material differences are adjusted by increasing or
decreasing the provision for loan losses.

While it is Nicolet's policy to charge off in the current period loans for which
a loss is considered probable, there are additional risks of future losses which
cannot be quantified precisely or attributed to particular loans or classes of
loans. Because these risks include the state of the economy, management's
judgment as to the adequacy of the allowance is necessarily approximate and
imprecise. After review of all relevant matters affecting loan collectibility,
management believes that the allowance for loan losses is appropriate given
their analysis of incurred loan losses.

Nicolet utilizes an internal loan review function to place loans into various
loan grading categories which assists in developing lists of potential problem
loans. These loans are constantly monitored by the loan review function to
ensure early identification of deterioration. Our credit policies establish
guidelines to manage credit risk and asset quality. These guidelines include
loan review and early identification of problem loans to provide effective loan
portfolio administration. The credit policies and procedures are meant to
minimize the risk and uncertainties inherent in lending. In following these
policies and procedures, we must rely on estimates, appraisals and evaluations
of loans and the possibility that changes in these could occur quickly because
of changing economic conditions. Identified problem loans, which exhibit
characteristics (financial or otherwise) that could cause the loans to become
nonperforming or require restructuring in the future, are included on the
internal "Watch List." Senior management reviews this list regularly, and the
resulting information is reviewed with the Board monthly.

An analysis of the overall credit quality of the loan portfolio and the adequacy
of the allowance for loan losses is prepared by the Bank's credit administration
personnel and presented to the Bank's Loan Committee and Board of Directors on a
regular basis. The allowance is the total of specific reserves allocated to
significant individual credits plus a general reserve. After individual loans
with specific allocations have been deducted, the general reserve is calculated
by applying general reserve percentages to risk grades within the portfolio.
The general reserve percentages are determined by management based on its
evaluation of losses inherent in the various risk grades of loans. The
allowance for loan losses is established through charges to expense in the form
of a provision for loan losses. Loan losses and recoveries are charged and
credited directly to the allowance.

The provision for loan losses was $2.3 million, $1.3 million and $1.2 million
for the years ended December 31, 2003, 2002 and 2001, respectively. For the
year ended December 31, 2003, Nicolet experienced approximately $1.96 million of
charge-offs, net of recoveries of $78,000.

The following table presents a summary of changes in the allowance for loan
losses for each of the past four years:

TABLE 8
ALLOWANCE FOR LOAN LOSSES
(in thousands)
DECEMBER 31,
----------------------------------
2003 2002 2001 2000
----------------------------------

Balance at beginning of year $ 2,653 $1,600 $ 400 $ -
Charge-offs:
Commercial, financial and agricultural 1,796 37 - -
Commercial real estate - 175 - -
Real estate - - - -
Consumer 161 43 - -
----------------------------------

1,957 255 - -
----------------------------------
Recoveries:
Commercial, financial and agricultural 51 - - -
Commercial real estate - - - -
Real estate - - - -
Consumer 27 - - -
----------------------------------

78 - - -
----------------------------------

Net charge-offs (1,878) (255) - -
----------------------------------

Additions charged to operations 2,335 1,308 1,200 400
----------------------------------

Balance at end of year $ 3,110 $2,653 $ 1,600 $ 400
======== ======= ======== =====

Ratio of net charge-offs during the 0.75% 0.15% 0 0
period to average loans outstanding
during the period

Management charged off loans totaling $1.9 million and $255,000, net of
recoveries, as uncollectible during 2003 and 2002, respectively. The large
increase in the 2003 amount was the result of four large commercial loan
relationships that totaled $1.7 million, or 86% of the total amount charged off,
as well as continued softening in the economy and isolated instances of specific
business problems.

ALLOCATION OF ALLOWANCE FOR LOAN LOSSES

The following table shows the allocation of the allowance for loan losses as of
December 31, 2003 to the extent specific allocations have been determined
relative to particular loans.

TABLE 9
ALLOCATION OF ALLOWANCE FOR LOAN LOSSES
(in thousands)
% OF EACH
CATEGORY
ALLOWANCE TO TOTAL
AMOUNT LOANS
----------------------

Commercial, financial and agricultural $ 1,582 56.91%
Commercial real estate 638 22.62%
Real estate 472 17.15%
Consumer 83 3.32%
----------

2,775
Unallocated $ 335
----------------------

$ 3,110 100.00%
======================

The above allocations are not intended to imply limitations on usage of the
allowance. The entire allowance is available for any loan losses without regard
to loan type. The allocated portion of the allowance amounted to $2.8 million
at December 31, 2003. Of this total, 61.5% related to specific allocations and
39.5% related to formula allocations. Prior to 2003, Nicolet had chosen not to
specifically identify and allocate portions of the allowance based on the lack
of seasoning of its loan portfolio.

LOANS AVAILABLE FOR SALE

In order to minimize Nicolet's exposure on available for sale loans, Nicolet
pre-sells all of its available for sale mortgage loans to investors prior to
funding. At December 31, 2003, Nicolet had total loans available for sale of
$1.8 million compared to $2.8 million at December 31, 2002. All loans
classified as available for sale are recorded at the lower of cost or market.

BANK OWNED LIFE INSURANCE

Bank owned life insurance ("BOLI") policies increased from $3.8 million at
December 31, 2002 to $7.1 million on December 31, 2003, an increase of $3.3
million. Approximately $3.0 million of the increase is due to the purchase of
bank owned life insurance policies for selected officers during 2003, with the
remainder of the increase associated with the increased value in cash surrender
value of the policies during the year. These single premium whole life
insurance policies have a positive impact on noninterest income due to the
income recognition relating to the increase in cash surrender value

DEPOSITS

Core deposits, which exclude time deposits of $100,000 or more and brokered
deposits, provide a relatively stable funding source for Nicolet's loan
portfolio and other earning assets. Nicolet's core deposits as of December 31,
2003 were $115 million, an increase over the $60 million as of December 31,
2002.

The maturity distribution of Nicolet's time deposits of $100,000 or more as of
December 31, 2003 is as follows (in thousands):

TABLE 10
TIME DEPOSITS $100,000 AND GREATER
(in thousands)

Three months or less $ 26,528
Over three through twelve months 71,305
Over twelve months 76,336
--------

Total $ 174,169
========

During 2003 certificates of deposit obtained from customers located outside of
our market area increased by $23 million, and represented 50.6% of average total
liabilities during 2003. At December 31, 2003, out-of-area deposits totaled
$146.8 million. Out-of-area deposits consist primarily of certificates of
deposit placed by deposit brokers for a fee, but also include certificates of
deposit obtained from the deposit owners directly. The owners of the
out-of-area deposits include individuals, businesses and governmental units
located throughout the country. Out-of-area deposits are utilized to support our
asset growth, and are generally a lower cost source of funds when compared to
the interest rates that would have to be offered in the local market to generate
a sufficient level of funds. During most of 2003, rates paid on new out-of-area
deposits were slightly below rates paid on new certificates of deposit issued to
local customers. In addition, the overhead costs associated with the
out-of-area deposits are considerably less than the overhead costs that would be
incurred to administer a similar level of local deposits. Although local
deposits have and are expected to increase as new business, consumer and
governmental deposit relationships are established and as existing customers
increase the balances in their deposit accounts, our relatively high reliance on
out-of-area deposits will likely remain.

Securities sold under agreements to repurchase ("repurchase agreements")
increased $3.8 million and equaled 2.4% of average total liabilities during
2003. As part of our sweep account program, collected funds from certain
business noninterest-bearing checking accounts are invested in overnight
interest-bearing repurchase agreements. Although not considered a deposit
account and therefore not afforded federal deposit insurance, the repurchase
agreements have characteristics very similar to those of interest-bearing
checking deposit accounts.

Information concerning securities sold under agreements to repurchase is
--------------------------------------------------------------------------------
summarized as follows:
------------------------

2003 2002
--------------------------
(Amounts in thousands)

Average daily balance during year $ 6,353 $ 6,391
Average daily interest rate 0.93% 1.38%

Maximum month-end balance during the year $ 14,591 $ 12,178
Weighted average rate as of Dec 31 0.76% 1.01%

Fair value of securities underlying the agreements
at year end $ 12,207 $ 8,118

LIQUIDITY

Nicolet must maintain, on a daily basis, sufficient funds to cover the
withdrawals from depositors' accounts and to supply new borrowers with funds.
To meet these obligations, Nicolet keeps cash on hand, maintains account
balances with its correspondent banks, and purchases and sells federal funds and
other short-term investments. Asset and liability maturities are monitored in
an attempt to match these to meet liquidity needs. It is the policy of Nicolet
to monitor its liquidity to meet regulatory requirements and their local funding
requirements. Management believes the current level of liquidity is adequate to
meet its needs.

Primary sources of liquidity are a stable base of deposits, Nicolet's ability to
raise deposits through its network of deposit brokers, our borrowing ability
through the Federal Home Loan Bank, scheduled repayments on loans, and interest
and maturities of investments. All securities have been classified as
available-for-sale. If necessary, Nicolet has the ability to sell a portion of
its investment securities to manage its interest sensitivity gap or liquidity.
Nicolet also may utilize its cash and due from banks and federal funds sold to
meet liquidity needs.

At December 31, 2003, Nicolet had arrangements with a correspondent and
commercial banks for short term unsecured advances up to $20.5 million. As of
December 31, 2003, Nicolet had no outstanding balances under these arrangements.

At December 31, 2003, brokered certificates of deposit approximated $146.8
million. We issue these brokered certificates through several different
brokerage houses based on competitive bid. Typically, these funds are for
varying maturities from six months to three years and are issued at rates which
are competitive to rates we would be required to pay to attract similar deposits
from the local market as well as rates for Federal Home Loan Bank advances of
similar maturities. We consider these deposits to be a ready source of
liquidity under current market conditions.

Nicolet's cash flows are composed of three classifications: cash flows from
operating activities, cash flows from investing activities, and cash flows from
financing activities. Cash and cash equivalents increased $26 million for a
total of $33 million at December 31, 2003, compared with a decrease of $11.5
million for December 31, 2002. The increase is primarily attributable to the
acquisition of the Menominee, Michigan branch that generated $10.8 million in
cash, along with overall balance sheet growth. Cash provided by operations
totaled $3.9 million in 2003, representing an increase of $2.2 million compared
to 2002, as a result primarily of increased earnings as well as increases in
other operating activities such as the allowance for loan losses that doesn't
require a current outlay of cash. Net cash provided by financing activities in
2003 totaled $74.6 million, which was primarily made up of $70.8 million of
increased deposits. Outflows from investing activities totaled $52.5 million,
most of which was net loan increases and purchases of investment securities
available for sale during 2003 of $51.1 million and $16.2 million, respectively.

CAPITAL ADEQUACY

Nicolet is subject to various regulatory capital requirements administered by
the federal banking agencies. As of December 31, 2003, Nicolet maintained
capital ratios in the "well capitalized" classification. Additionally, based on
Nicolet's most recent notification from the regulators, Nicolet was deemed to be
well capitalized. For additional information, see footnote 11 of Nicolet's
audited consolidated financial statements.

The following tables present Nicolet Bankshares, Inc. and Nicolet National
Bank's regulatory capital position at December 31, 2003 and 2002.

TABLE 11
CAPITAL RATIOS
2003 2002 2001
---------------------------- ---------------------------- -------------
CONSOLIDATED BANK CONSOLIDATED BANK BANK ONLY
------------- ------------- ------------- ------------- -------------

Tier 1 Capital 11.60% 11.20% 14.10% 12.30% 12.60%
Tier 1 Capital minimum requirement 4.00% 4.00% 4.00% 4.00% 4.00%
------------- ------------- ------------- ------------- -------------

Excess 7.60% 7.20% 10.10% 8.30% 8.60%
============= ============= ============= ============= =============

Total Capital 12.70% 12.30% 15.10% 13.50% 13.80%
Total Capital minimum requirement 8.00% 8.00% 8.00% 8.00% 8.00%
------------- ------------- ------------- ------------- -------------

Excess 4.70% 4.30% 7.10% 5.50% 5.80%
============= ============= ============= ============= =============

Tier 1 Capital to adjusted total assets
("Leverage Ratio") 9.90% 9.50% 14.90% 13.20% 10.70%
Minimum leverage requirement 4.00% 4.00% 4.00% 4.00% 4.00%
------------- ------------- ------------- ------------- -------------

5.90% 5.50% 10.90% 9.20% 6.70%
============= ============= ============= ============= =============

We are contemplating a joint venture with a real estate development and
investment firm in connection with the selection and development of a site for a
new headquarters facility. Although the terms of this arrangement have not yet
been negotiated, we anticipate that the joint venture would involve a 50%
ownership and an investment of approximately $500,000 on standard commercial
terms, reached through arms-length negotiation. We anticipate that the project
will be complete in the second quarter of 2005.

RETURN ON ASSETS AND STOCKHOLDERS' EQUITY
The following table shows return on assets (net income divided by average total
assets), return on equity (net income divided by average stockholders' equity),
dividend payout ratio (dividends declared per share divided by net income per
share) and stockholders' equity to asset ratio (average stockholders' equity
divided by average total assets) for the years ended December 31, 2003, 2002 and
2001.

TABLE 12 - EQUITY RATIOS
YEARS ENDED DECEMBER 31,
2003 2002 2001
----------------------------------------------------------

Return on average assets 0.33% 0.03% 0.06%
Return on average equity 3.33% 0.29% 0.41%
Dividend payout ratio 0.00% 0.00% 0.00%
Average equity to average assets 10.01% 9.60% 14.50%

RATE SENSITIVITY

Asset/liability management is the process by which Nicolet monitors and controls
the mix and maturities of its assets and liabilities. The essential purposes of
asset/liability management are to ensure adequate liquidity and to maintain an
appropriate balance between interest sensitive assets and interest sensitive
liabilities to minimize potentially adverse impacts on earnings from changes in
market interest rates.

In the normal course of business, we are exposed to market risk arising from
fluctuations in interest rates. Nicolet manages its exposure to fluctuations in
interest rates through policies established by the Asset/Liability Committee
("ALCO") of the Bank. ALCO measures and evaluates the interest rate risk so
that we can meet customer demands for various types of loans and deposits. ALCO
determines the most appropriate amounts of on-balance sheet and off-balance
sheet items. Measurements which we use to help us manage interest rate
sensitivity include an earnings simulation model and gap analysis computations.
These measurements are used in conjunction with competitive pricing analysis.

Earnings simulation model. We believe that interest rate risk is best
measured by our earnings simulation modeling. Forecasted levels of earning
assets, interest-bearing liabilities, and off-balance sheet financial
instruments are combined with ALCO forecasts of interest rates for the next
12 months and are combined with other factors in order to produce various
earnings simulations. To limit interest rate risk, we have guidelines for
our earnings at risk which seek to limit the variance of net income to less
than 10 percent for a 200 basis point change up or down in rates from
management's most likely interest rate forecast over the next twelve
months.

Each of the above analyses may not, on its own, be an accurate indicator of how
our net interest income will be affected by changes in interest rates. Income
associated with interest-earning assets and costs associated with
interest-bearing liabilities may not be affected uniformly by changes in
interest rates. In addition, the magnitude and duration of changes in interest
rates may have a significant impact on net interest income. For example,
although certain assets and liabilities may have similar maturities or periods
of repricing, they may react in different degrees to changes in market interest
rates. Interest rates on certain types of assets and liabilities fluctuate in
advance of changes in general market rates, while interest rates on other types
may lag behind changes in general market rates. In addition, certain assets,
such as adjustable rate mortgage loans, have features (generally referred to as
"interest rate caps and floors") which limit changes in interest rates.
Prepayment and early withdrawal levels also could deviate significantly from
those assumed in calculating the maturity of certain instruments. The ability
of many borrowers to service their debts also may decrease during periods of
rising interest rates. ALCO reviews each of the above interest rate sensitivity
analysis along with several different interest rate scenarios as part of its
responsibility to provide a satisfactory, consistent level of profitability
within the framework of established liquidity, loan, investment, borrowing, and
capital policies.

INTEREST RATE SENSITIVITY ANALYSIS

The asset mix of the balance sheet is continually evaluated in terms of several
variables: yield, credit quality, appropriate funding sources and liquidity.
To effectively manage the liability mix of the balance sheet, there should be a
focus on expanding the various funding sources. The interest rate sensitivity
position as of December 31, 2003 is presented in the following table. The
difference between rate sensitive assets and rate sensitive liabilities, or the
interest rate sensitivity gap, is shown at the bottom of the table. Since all
interest rates and yields do not adjust at the same velocity, the gap is only a
general indicator of rate sensitivity. The table may not be indicative of
Nicolet's rate sensitivity position at other points in time.

TABLE 13
INTEREST RATE GAP SENSITIVITY
(in thousands)

AT DEC EMBER 31, 2003
MATURING OR REPRICING IN
---------------------------------------------------------------------
THREE FOUR
MONTHS OR MONTHS TO 1 TO 5 OVER 5
IMMEDIATE LESS 12 MONTHS YEARS YEARS TOTAL
---------------------------------------------------------------------

INTEREST-EARNING ASSETS:
Interest-bearing deposits with
other banks $ 223 $ - - - - $ 223
Federal funds sold 14,663 - - - 14,663
Investment securities - - 4,000 15,100 10,370 29,470
Loans held for sale 1,824 - - - - 1,824
Loans 175,033 15,948 34,799 35,989 - 261,769
Other investments - - - - 1,372 1,372
---------------------------------------------------------------------

Total interest-earning assets 191,743 15,948 38,799 51,089 11,742 309,321
---------------------------------------------------------------------
INTEREST-BEARING LIABILITIES:
Demand and savings deposits 51,973 - - - - 51,973
Time deposits - 30,446 80,912 84,084 115 195,557
Federal funds purchased and retail repurchase 14,591 - - - - 14,591
agreements
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Total interest-bearing liabilities 66,564 30,446 80,912 84,084 115 262,121
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Interest sensitive difference per period 125,179 (14,498) (42,113) (32,995) 11,627 47,200
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Cumulative interest sensitivity difference $ 125,179 $ 110,681 $ 68,568 $ 35,573 $47,200
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Cumulative difference to total assets 37.10% 32.80% 20.32% 10.54% 13.99%
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As indicated in the table above, during the first year approximately 68% of the
interest bearing liabilities will reprice within one year while 80% of the
interest earning assets will reprice within the same period. The table also
highlights that Nicolet is asset sensitive in the first 12 months (as indicated
by a positive gap) and cumulatively asset sensitive for the remainder of the
periods (as indicated by a positive gap). This means that during a period of
rising interest rates, Nicolet's net interest income would tend to increase.
Nicolet relies on brokered deposits as a core funding source. Rates paid on
such accounts are viewed by management as significantly less expensive over time
than market-based rates such as those paid on non-core deposits.

Nicolet's gap analysis is not a precise indicator of its interest sensitivity
position. The analysis presents only a static view of the timing of maturities
and repricing opportunities, without taking into consideration that changes in
interest rates do not affect all assets and liabilities equally. Varying
interest rate environments can create unexpected changes in the prepayment of
assets and liabilities that are not reflected in the interest rate sensitivity
analysis. These prepayments may have a significant impact on the net interest
margin of Nicolet.

INTEREST RATE MANAGEMENT

The objective of Nicolet's interest rate risk management strategies is to
identify and manage the sensitivity of net interest income to changing interest
rates, in order to achieve the overall financial goals.

Nicolet manages its exposure to fluctuations in interest rates through policies
established by ALCO. ALCO meets monthly and has the responsibility for
approving asset/liability management policies, formulating and implementing
strategies to improve balance sheet positioning and/or earnings and reviewing
the interest rate sensitivity of Nicolet.

OFF-BALANCE SHEET COMMITMENTS

Nicolet also uses derivative financial instruments to improve the balance
between interest-sensitive assets and interest-sensitive liabilities and as one
tool to manage our interest rate sensitivity while continuing to meet the credit
and deposit needs of our customers. In order to assist in achieving the desired
level of interest rate sensitivity, the Bank entered into off-balance sheet
contracts during 2003 that are considered derivative financial instruments. The
contract consists of an interest rate swap agreement under which the Bank pays a
variable rate and receives a fixed rate. At December 31, 2003, the interest
rate swap contract outstanding was accounted for as a cash flow hedge. Under
the agreement, the Bank receives 5.06% and pays 4.25% (based on the prime rate
at December 31, 2003) on a notional amount of $15 million. The swap agreement
matures in November 2005. Management believes that the risk associated with
using this type of derivative financial instrument to mitigate interest rate
risk should not have any material unintended impact on Nicolet's financial
condition or results of operations.

For other off-balance sheet commitments, see Note 9 to the Consolidated
Financial Statements.

IMPACT OF INFLATION AND CHANGING PRICES

The effect of relative purchasing power over time due to inflation has not been
taken into effect in the financial statements of Nicolet. Rather, the
statements have been prepared on an historical cost basis in accordance with
generally accepted accounting principles.

Since most of the assets and liabilities of a financial institution are monetary
in nature, the effect of changes in interest rates will have a more significant
impact on Nicolet's performance than will the effect of changing prices and
inflation in general. Interest rates may generally increase as the rate of
inflation increases, although not necessarily in the same magnitude.

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Preliminary
Copy
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PROXY
NICOLET BANKSHARES, INC.
SPECIAL MEETING OF SHAREHOLDERS

The undersigned hereby constitutes and appoints Robert B. Atwell, Michael
E. Daniels and Jacqui A. Engebos, or any of them, as proxies, each with full
power of substitution, to vote the number of shares of common stock of Nicolet
Bankshares, Inc. ("Nicolet"), which the undersigned would be entitled to vote if
personally present at the Special Meeting of Shareholders to be held at Nicolet
National Bank, 110 South Washington Street, Green Bay, Wisconsin on ,
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2005 at , local time, and at any adjournment or postponement thereof
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(the "Special Meeting") upon the proposal described in the Proxy Statement and
the Notice of Special Meeting of Shareholders, dated , 2005, the
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receipt of which is acknowledged in the manner specified below.

1. To vote on an Agreement and Plan of Reorganization (the "Plan")
providing for the merger of Nicolet Interim Corporation with and into
Nicolet, with Nicolet surviving the merger and the holders of 1,500 or
fewer shares of Nicolet common stock receiving $18.25 in cash in
exchange for each of their shares of such stock.
FOR [ ] AGAINST [ ] ABSTAIN [ ]

2. In the discretion of the proxies on such other matters that are
unknown to us as of a reasonable time prior to this solicitation and
that properly come before the Special Meeting or any adjournments
thereof.

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE PROPOSAL ABOVE AND IN THE DISCRETION OF THE PROXIES ON SUCH
OTHER MATTERS THAT ARE UNKNOWN TO US AS OF A REASONABLE TIME PRIOR TO THIS
SOLICITATION AND THAT PROPERLY COME BEFORE THE SPECIAL MEETING OR ANY
ADJOURNMENTS THEREOF.

Please sign this proxy exactly as your name appears herein. When shares are
held jointly, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized person.

DATED: , 2005
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--------------------------------
Signature

--------------------------------
Signature if held jointly

THIS PROXY IS SOLICITED BY NICOLET'S BOARD OF DIRECTORS AND MAY
BE REVOKED PRIOR TO ITS EXERCISE.

Optional: I do do not plan to attend the Special Meeting.
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