11-K 1 t1700324_11k.htm FORM 11-K

 

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM 11-K

 

 

 

þ   ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended December 31, 2016

 

or

 

¨   TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                      to                     

 

Commission file number 001-37700 (Nicolet Bankshares, Inc.)

 

 

 

A. Full title of the Plan and address of the Plan, if different from that of the issuer named below:

 

NICOLET NATIONAL BANK 401(k) PLAN

 

B. Name of the issuer of the securities held pursuant to the plan and the address of the principal executive office:

 

Nicolet Bankshares, Inc.

111 N. Washington Street

Green Bay, WI 54301

 

 

 

   

 

 

NICOLET NATIONAL BANK 401(k) PLAN

 

December 31, 2016 and 2015

 

TABLE OF CONTENTS

 

Report of Independent Registered Public Accounting Firm 1
   
Financial Statements  
   
Statements of Net Assets Available for Benefits 2
   
Statements of Changes in Net Assets Available for Benefits 3
   
Notes to Financial Statements 4 – 9
   
Supplementary Information  
   
Schedule H, line 4i – Schedule of Assets (Held at End of Year) 10

 

   

 

 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

Plan Administrator

Nicolet National Bank 401(k) Plan

Green Bay, Wisconsin

 

We have audited the accompanying statements of net assets available for benefits of the Nicolet National Bank 401(k) Plan (the Plan) as of December 31, 2016 and 2015, and the related statement of changes in net assets available for benefits for the year ended December 31, 2016. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the 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 financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2016 and 2015, and the changes in net assets available for benefits for the year ended December 31, 2016, in conformity with accounting principles generally accepted in the United States of America.

 

The supplemental information in the accompanying Supplemental Schedule of Assets (Held as of End of Year), has been subjected to audit procedures performed in conjunction with the audit of the Plan’s financial statements. The supplemental information is presented for the purpose of additional analysis and is not a required part of the financial statements but includes supplemental information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental information is the responsibility of the Plan's management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information in the accompanying schedule, we evaluated whether the supplemental information, including its form and content, is presented in conformity with the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the supplemental information in the accompanying schedule is fairly stated in all material respects in relation to the financial statements as a whole.

 

 

Atlanta, Georgia
May 17, 2017

 

 

   

 

 

NICOLET NATIONAL BANK 401(k) PLAN

 

Statements of Net Assets Available for Benefits

 

December 31, 2016 and 2015

 

   2016   2015 
Assets:        
Investments at fair value  $37,607,920   $28,642,424 
Receivables:          
Employer   1,295,860    854,836 
Employee   -    40 
Notes receivable from participants   493,168    405,578 
Total receivables   1,789,028    1,260,454 
Net assets available for benefits  $39,396,948   $29,902,878 

 

See accompanying notes to financial statements.

 

 2 

 

 

NICOLET NATIONAL BANK 401(k) PLAN

 

Statement of Changes in Net Assets Available for Benefits

 

For the Year Ended December 31, 2016

 

Additions:     
Investment income:     
Interest and dividends  $1,298,549 
Net appreciation in fair value of investments   3,184,956 
Total investment income   4,483,505 
      
Interest income on notes receivable from participants   22,807 
      
Contributions:     
Employer   1,295,860 
Participant   2,001,052 
Rollover   3,651,175 
Total contributions   6,948,087 
Net additions   11,454,399 
      
Deductions:     
Benefits paid to participants   2,178,897 
Administrative expenses   1,465 
Total deductions   2,180,362 
      
Net increase before transfer   9,274,037 
      
Transfer from Baylake Bank 401(k) Savings Plan   220,033 
      
Net increase in net assets available for benefits   9,494,070 
      
Net assets available for plan benefits:     
Beginning of year   29,902,878 
End of year  $39,396,948 

 

See accompanying notes to financial statements.

 

 3 

 

 

NICOLET NATIONAL BANK 401(k) PLAN

 

Notes to Financial Statements

 

(1)Description of the Plan

 

The following description of the Nicolet National Bank 401(k) Plan (the “Plan”) provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan’s provisions.

 

General

 

The Plan is a defined contribution profit sharing plan covering substantially all full-time employees of Nicolet National Bank (the “Bank”). Eligible employees are employees who have been employed for one month and are at least 18 years of age. Part-time, temporary, or seasonal employees need to reach 1,000 hours and be at least 18 years of age to become eligible. Upon satisfying the eligibility requirements, an employee is eligible to participate in the Plan on the first day of the month. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA) as amended. The Plan is administered at the direction of the Bank. The Trustees are responsible for the oversight of the Plan determining the appropriateness of the Plan’s investment offerings and monitoring investment performance.

 

Plan Transfer In

 

Effective May 24, 2016, attributable to the merger of Nicolet National Bank and Baylake Bank, notes receivable from participants from the Baylake Bank 401(k) Savings Plan in the amount of $220,033 were transferred into the Plan.

 

Contributions

 

Participants may elect to defer from 0% up to 100% of their eligible compensation, not to exceed the amount allowed by the Internal Revenue Service (IRS). Employees are automatically entered into the Plan, after becoming eligible, with a participant deferral of 6% of their eligible compensation, unless their election form indicates a different deferral percentage. Participants who have attained the age of 50 before the end of the plan year are eligible to make catch-up contributions, subject to IRS limitations. Participants are also allowed to make rollover contributions from other qualified plans.

 

The Bank makes a matching contribution equal to 100% of the participant’s elective deferral not to exceed 6% of eligible compensation for all participants that are employed on the last day of the Plan year. Rollover contributions are not eligible for the employer match. The Bank’s contribution was $1,295,860 for 2016. In addition, the Bank has the option to make a discretionary profit sharing contribution each year. The Bank did not make discretionary profit sharing contributions for the year ended December 31, 2016.

 

Participant Accounts

 

All investments in the participants’ accounts are participant directed. The Plan allows participants to select from a variety of investment options including mutual funds, a common/collective trust and Nicolet Bankshares, Inc. common stock.

 

Each participant’s account is credited with the participant’s contributions and allocations of (a) the Bank’s contributions (b) plan earnings or losses and (c) forfeitures of terminated participants’ nonvested accounts and reduced by any withdrawals and charged with loan setup and loan maintenance fees incurred by the individual participants. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.

 

Vesting

 

Participants are immediately vested in their contributions plus actual earnings thereon. The employer’s matching and discretionary profit sharing contributions and related earnings become 25% vested after two years of credited service. The vesting percentage increases an additional 25% each year thereafter, with 100% vesting after five years of credited service.

 

 4 

 

 

NICOLET NATIONAL BANK 401(k) PLAN

 

Notes to Financial Statements, continued

 

(1)Description of the Plan, continued

 

Notes Receivable from Participants

 

Participants may borrow from their account in accordance with the provisions under the Plan. A participant may borrow a minimum of $1,000 and a maximum equal to the lesser of: (1) $50,000, reduced by the highest outstanding loan balance in the previous 12 months, or (2) 50% of the participant’s vested account balance. A participant can have up to one loan outstanding at any given time.

 

The notes bear a fixed interest rate of the prime rate plus 1%. Loans transferred from the Baylake Bank Plan bear a fixed interest rate of the prime rate plus 2%. Interest rates for outstanding loans range from 4.25% to 10.25% as of December 31, 2016. Principal and interest are paid ratably through biweekly payroll deductions.

 

Payment of Benefits

 

Plan benefits are available at normal retirement (age 59 1/2), disability retirement, financial hardship withdrawal, death and termination of employment with vested interests. Benefits are paid in a lump sum payment. The Plan also allows for in-service distributions upon attaining age 59 1/2. Benefits are recorded when paid.

 

Administrative Expenses

 

Substantially all of the administrative expenses incurred in conjunction with the Plan are paid by the Bank and are excluded from these financial statements. Notes receivable issuance and maintenance expenses are charged directly to the participant’s account and are included in administrative expenses.

 

Forfeited Accounts

 

Upon termination, the non-vested portion of employer contributions and the earnings thereon become subject to forfeiture. At December 31, 2016 and 2015, forfeited non-vested accounts totaled $26,893 and $40,953, respectively. Forfeitures surrendered during the year ended December 31, 2016 will be used to reduce the employer match contribution; forfeitures surrendered during the year ended December 31, 2015 were allocated to participants as an additional employer contribution.

 

Plan Termination

 

Although it has not expressed any intent to do so, the Bank has the right to discontinue its contributions and to terminate the Plan subject to the provisions of ERISA. In the event of a termination, all participants will immediately become 100% vested in their accounts for all sources of contributions and distributed in accordance with the Plan’s provisions.

 

 5 

 

 

NICOLET NATIONAL BANK 401(k) PLAN

 

Notes to Financial Statements, continued

 

(2)Summary of Significant Accounting Policies and Recent Accounting Pronouncements

 

Basis of Accounting

 

The financial statements of the Plan are prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (GAAP).

 

Use of Estimates

 

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and changes therein and disclosure of contingent assets and liabilities. Actual results could differ from those estimates.

 

Investment Valuation

 

The Plan’s investments are stated at fair value. Fair value of mutual funds and common stock fund is based on quoted market prices. The investments in units of the common/collective trust funds are carried at the net asset value (NAV), which is the value at which units in the funds can be withdrawn and approximates fair value as a practical expedient. See Note 3 for further discussion and disclosures related to fair value measurements.

 

Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Net appreciation includes the Plan’s gains and losses on investments bought and sold as well as unrealized gains and losses on investments held during the year.

 

 6 

 

 

NICOLET NATIONAL BANK 401(k) PLAN

 

Notes to Financial Statements, continued

 

(3)Fair Value Measurements

 

GAAP establishes a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under ASC 820 are described as follows:

 

Level 1 – Inputs to the valuation are based upon (unadjusted) quoted prices in active markets that the Plan has the ability to access.

 

Level 2 – Inputs to the valuation are based upon quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in inactive markets as well as inputs (other than quoted prices) that are observable for the asset or liability.

 

Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

 

Mutual funds: Valued at the daily closing price as reported by the fund. Mutual funds held by the Plan are open-ended mutual funds that are registered with the Securities and Exchange Commission. These funds are required to publish their daily NAV and to transact at that price. The mutual funds held by the Plan are deemed to be actively traded.

 

Common/collective trust: Valued at the NAV of shares held by the Plan at year-end, provided by the administrator of the fund. The NAV is based on the value of the underlying assets of the fund minus its liabilities, and then divided by the number of shares outstanding. The NAV’s share price is quoted on a private market that is not actively traded; however the share price is based on underlying investments which are traded on an active market. The NAV is used as the practical expedient to estimate fair value.

 

Nicolet Bankshares, Inc. common stock: Valued at the closing price reported on the active market on which the individual securities are traded.

 

 7 

 

 

NICOLET NATIONAL BANK 401(k) PLAN

 

Notes to Financial Statements, continued

 

(3)Fair Value Measurements, continued

 

The following tables set forth by level within the fair value hierarchy a summary of the Plan’s investments measured at fair value on a recurring basis at December 31, 2016 and 2015.

 

December 31, 2016  Level 1   Level 2   Level 3   Total 
Mutual funds  $30,633,815   $-   $-   $30,633,815 
Nicolet Bankshares, Inc. common stock   4,582,389    -    -    4,582,389 
Total assets in the fair value hierarchy   35,216,204    -    -    35,216,204 
Investments measured at NAV(a)                  2,391,716 
Investments at fair value  $35,216,204   $-   $-   $37,607,920 
                     
December 31, 2015   Level 1    Level 2    Level 3    Total 
Mutual funds  $23,332,561   $-   $-   $23,332,561 
Nicolet Bankshares, Inc. common stock   3,077,367    -    -    3,077,367 
Total assets in the fair value hierarchy   26,409,928    -    -    26,409,928 
Investments measured at NAV(a)                  2,232,496 
Investments at fair value  $26,409,928   $-   $-   $28,642,424 

 

(a)In accordance with Subtopic 820-10, certain investments that were measured at net asset value per share (or its equivalent) have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the line items presented in the statement of net assets available for benefits.

 

(4)Tax Status

 

The Plan Administrator has received a favorable tax determination letter, dated March 31, 2014, from the IRS indicating that the Plan qualifies under the provisions of Section 401(a) of the Code, and the related trust is, therefore, exempt from tax under section 501(a). Therefore, a provision for income taxes has not been included in the Plan’s financial statements. The Plan has been amended since receiving the determination letter. However, in the opinion of the Plan administrator, the Plan and its underlying trust have operated within the terms of the Plan and remain qualified under the applicable provisions of the Code.

 

Participants in the Plan are not subject to federal income taxes until they receive a distribution from the Plan. GAAP requires plan management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS. The Plan Administrator has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2016, there are no uncertain positions taken or expected to be taken that would require recognition of a liability (or asset) or disclosure in the financial statements. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. The Plan Administrator believes it is no longer subject to income tax examinations for years prior to 2014.

 

 8 

 

 

NICOLET NATIONAL BANK 401(k) PLAN

 

Notes to Financial Statements, continued

 

(5)Party-In-Interest Transactions

 

During the course of the year, the Plan may enter into certain party-in-interest transactions with the Bank or its holding company, Nicolet Bankshares, Inc. The Bank may provide a discretionary contribution to the Plan’s participants, which is based on the earnings of Nicolet Bankshares, Inc. No discretionary contribution was made for the 2016 plan year.

 

Effective January 1, 2016, the Plan was amended and restated disallowing the purchase of additional shares of Nicolet Bankshares, Inc. common stock through the Plan. Participants may continue to hold shares already in the Plan or may sell or take an in-kind distribution of the shares. The Plan had the following transactions for the years ended December 31:

 

  2016     2015  
           
Purchases of stock:              
Number of shares   -       3,514  
Value of shares on transaction dates $ -     $ 114,275  
               
Sales of stock:            
Number of shares   716       2,551  
Value of shares on transaction dates $  30,901     $ 82,959  

 

The third-party administrator for the Plan is Alerus Retirement Solutions and the costs for the services related to Plan administration (which qualify as party-in-interest transactions) paid for by the Plan amounted to $1,465 for the year ended December 31, 2016.

 

(6)Risks and Uncertainties

 

The Plan, at the direction of its participants, invests in various investment securities. The Plan’s investment securities are exposed to various risks such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the values of investments, it is at least reasonably possible that changes in risks in the near term could materially affect participants’ account balances and the amounts reported in the statements of net assets available for benefits.

 

 9 

 

 

NICOLET NATIONAL BANK 401(k) PLAN

 

Schedule H, Part IV, Line 4i:

 

Schedule of Assets (Held at End of Year)

 

December 31, 2016

 

Employer Identification Number: 39-1990426

 

Plan Number: 001

 

    Identity of issuer, borrower or  similar party  Description of assets  Shares Cost   Fair Value  
                   
    American Funds  Money Market Fund  339,382 (a)   $339,382  
    American Funds  EuroPacific Growth Fund  54,130 (a)    2,395,235  
    American Funds  Growth Fund of America  94,050 (a)    3,920,962  
    American Funds  Investment Company of America  79,899 (a)    2,887,541  
    American Funds  New World Fund  27,396 (a)    1,401,851  
    Artisan  Mid Cap Value Fund  69,627 (a)    1,556,156  
    Dodge & Cox  Income Fund  302,540 (a)    4,111,517  
    Dodge & Cox  Stock Fund  22,213 (a)    4,093,885  
    Fidelity  Strategic Income Fund  182,612 (a)    1,946,648  
    Harbor  International Fund - Admin  44,937 (a)    2,618,016  
    Primecap Odyssey  Aggressive Growth Fund  57,030 (a)    1,908,808  
    Royce  Pennsylvania Fund  153,967 (a)    1,696,716  
    Vanguard  500 Index Fund  8,506 (a)    1,757,098  
    Total mutual funds            30,633,815  
                    
    Wells Fargo  Stable Value Fund - M  48,455 (a)    2,391,716  
*   Nicolet Bankshares, Inc.  Common stock  96,087 (a)    4,582,389  
    Total investments per Statement of Net Assets            37,607,920  
                    
*   Participant loans  4.25% to 10.25% notes, maturing through 2042         493,168  
                    
    Total investments (held at end of year)            38,101,088  
                    
*   Party-in-interest                
(a)  

Cost information is not required for participant directed investments

             

 

 

 10 

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Nicolet National Bank 401(k) Plan

 

By:   /s/ Ann Lawson  
  Title: Chief Financial Officer
          Nicolet National Bank		    

 

Date: May 17, 2017

 

 11 

 

 

EXHIBIT INDEX

 

Exhibit No.   Description
     
23   Consent of Independent Registered Public Accounting Firm

 

 12