Nicolet Bankshares (NIC) risk factors, FY2024 10-K

Other

1. 01We are subject to intense competition for clients and the nature of that competition is rapidly evolving

Strategic and Macro Risks

1. 02We may be unable to successfully implement our strategy to grow our commercial and consumer banking businesses
2. 03Failure to achieve one or more key elements needed for successful business acquisitions (including the integration of those businesses) could adversely affect our business and earnings
3. 04Failure to achieve one or more key elements needed for successful organic growth could adversely affect our business and earnings
4. 05Failure to keep pace with technological changes could adversely affect our business
5. 06Failure to keep pace with evolving habits of customers in how they use financial services could hinder ongoing customer acquisition and retention efforts
6. 07The nature of technology-driven disruption to our industry is changing, in some cases seeking to displace traditional financial service providers rather than merely enhance traditional services or their delivery

Operational Risks

1. 08Fraud is a major, and increasing, operational risk for us and all banks
2. 09Our ability to conduct and grow our businesses depend in part upon our ability to create, maintain, expand, and evolve an appropriate operational and organizational infrastructure, manage expenses, and recruit and retain personnel with the ability to manage a complex business
3. 10A serious information technology security (cybersecurity) breach can cause significant damage and at the same time be difficult to detect even after it occurs
4. 11We rely on information technology and telecommunications systems and certain third-party service providers, the operational functions of which may experience disruptions that could adversely affect us and over which we may have limited or no control
5. 12Our risk management framework may not be effective in mitigating risks and/or losses
6. 13Competition for talent is substantial and increasing. Moreover, revenue growth in some business lines increasingly depends upon top talent
7. 14Our accounting estimates and risk management processes rely on analytical and forecasting models
8. 15Weakness in the economy and governmental policies, whether or not adopted in response to economic conditions such as inflation, may adversely affect us
9. 16Inflationary pressures present a potential threat to our results of operations and financial condition
10. 17Generally, in periods of economic downturns, including periods of rising interest rates and recessions, our realized credit losses increase, demand for our products and services declines, and the credit quality of our loan portfolio declines
11. 18The Federal Reserve has implemented significant economic strategies that have affected interest rates, inflation, asset values, and the shape of the yield curve. These strategies have had, and will continue to have, a significant impact on our business and on many of our clients
12. 19Federal Reserve strategies can, and often are intended to, affect the domestic money supply, inflation, interest rates, and the shape of the yield curve
13. 20Our ability to conduct and grow our businesses, and to obtain and retain clients, is highly dependent upon external perceptions of our business practices and financial stability
14. 21We face the risk that our clients may not repay their loans or other obligations and that the realizable value of collateral may be insufficient to avoid a charge-off
15. 22We are exposed to higher credit and concentration risk from our commercial-related lending
16. 23If our allowance for credit losses was required to be increased because it is not large enough to cover actual losses in our loan portfolio, our results of operations and financial condition could be materially and adversely affected

Risks Related to Public Health Issues

1. 24Pandemics and outbreaks of communicable diseases may lead to periods of significant volatility in financial and other markets, and could adversely affect our ability to conduct normal business, our clients, and could harm our businesses, financial condition and results of operations

Regulatory, Legislative and Legal Risks

1. 25We are subject to a challenging regulatory environment that restricts our activities
2. 26Failure to maintain certain regulatory capital levels and ratios could result in regulatory actions that would be materially adverse to our shareholders
3. 27Legal disputes are an unavoidable part of business, and the outcome of pending or threatened litigation cannot be predicted with any certainty
4. 28Data privacy is becoming a major political concern. The laws governing it are new, and are likely to evolve and expand
5. 29Liquidity is essential to our business model and a lack of liquidity, or an increase in the cost of liquidity could materially impair our ability to fund our operations and jeopardize our results of operation, financial condition and cash flows
6. 30The proportion of our deposit account balances that exceed FDIC insurance limits may expose us to enhanced liquidity risk in times of financial distress
7. 31Unrealized losses in our securities portfolio could negatively affect our liquidity
8. 32Maintaining liquidity could increase our interest expense
9. 33We are subject to interest rate risk because a significant portion of our business involves borrowing and lending money, and investing in financial instruments
10. 34A flat or inverted yield curve may reduce our net interest margin and adversely affect our loan and investment portfolios
11. 35The preparation of our consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make significant assumptions, estimates and judgments that affect the financial statements
12. 36In addition, changes in accounting standards or interpretations could negatively impact our reported earnings and financial condition
13. 37We could be subject to changes in tax laws, regulations and interpretations or challenges to our income tax provision
14. 38Our internal controls and procedures may fail or be circumvented
15. 39We are subject to risks of operating in various jurisdictions
16. 40Natural disasters and weather-related events exacerbated by climate change could have a negative impact on our results of operations and financial condition
17. 41The markets in which we operate also are exposed to the adverse impacts of climate change, as well as uncertainties related to the transition to a low-carbon economy. Climate change presents both immediate and long-term risks to us and our customers and clients, with the risks expected to increase over time

Stock Holding and Governance Risks

1. 42We have only recently begun to pay dividends; moreover, the inability of our subsidiaries to declare and pay dividends or other distributions to the Holding Company could adversely affect its liquidity and ability to declare and pay dividends
2. 43Holders of our indebtedness have rights that are senior to those of our common shareholders
3. 44Our stock price can be volatile
4. 45Nicolet’s corporate organizational documents and the provisions of Wisconsin law to which we are subject contain certain provisions that could have an anti-takeover effect and may delay, make more difficult or prevent an attempted acquisition of Nicolet that you may favor
5. 46Our stockholders may suffer dilution if we raise capital through public or private equity financings to fund our operations, to increase our capital, or to expand
6. 47Nicolet’s securities are not FDIC insured