Nicolet Bankshares, Inc. (NCBS), the holding company of Nicolet National Bank, has executed a merger agreement with Charter Bankshares, Inc., under which the former will acquire the latter along with its wholly-owned subsidiary, Charter Bank.
The combined entity will have total assets of $8.8 billion, loans of $5.4 billion, and deposits of $7.3 billion.
Management Weighs In
The CEO of Charter Bankshares, Jeff Halloin, commented, “As big banks have increasingly focused their attention on bigger customers and big cities, we were impressed that Nicolet has chosen to expand in places with similar strengths and needs to the markets Charter serves. While Nicolet is certainly a bigger bank than we are with great resources that come with added size, they don’t think like a big bank. Local size matters to them just as it does to us, and we are confident that will resonate here.”
Under the terms, investors in Charter will receive ~1.26 million Nicolet shares along with ~$38.8 million in cash payments. The total transaction consideration is about $158 million.
Further, the move is expected to be accretive to Nicolet’s tangible book value per share while also contributing to earnings per share (EPS) accretion in the high-single digits in the first full year itself. The expected closing of the merger is in Q3 2022.
Hedge Fund Activity
TipRanks data points that Wall Street’s top hedge funds have increased holdings in Nicolet by 106,900 shares in the last quarter, indicating a very positive hedge fund confidence signal in the stock based on activities by the two hedge funds.
Valuation Speaks
Let us consider some key metrics for Nicolet and how it fares against the broader industry.
It has a net margin of 28.8%, which compared to the industry median of 30.6%, indicates that the company has legroom to drive margins. Additionally, a return on common equity of 8.5% pales in comparison to the industry median of 12.8%, meaning Nicolet’s peers are better utilizing their funds.
On the other hand, Nicolet’s acquisition strategy is evident in its CAPEX-to-Sales ratio of 6%, which is higher than the industry median of 1.6%, implying that the company is spending more on growth for each dollar generated via sales as compared to the broader industry. Shares are up 13.7% over the past 12 months.
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