Since July 2021, the S&P 500 has delivered a total return of 77.6%. But one standout stock has nearly doubled the market - over the past five years, Nicolet Bankshares has surged 150% to $171.90 per share. Its momentum hasn’t stopped as it’s also gained 30.8% in the last six months thanks to its solid quarterly results, beating the S&P by 19.4%.

Is now still a good time to buy NIC? Or is this a case of a company fueled by heightened investor enthusiasm? Find out in our full research report, it’s free.

Why Is NIC a Good Business?

Starting as Green Bay Financial Corporation in 2000 before rebranding in 2002, Nicolet Bankshares (NYSE: NIC) is a regional bank holding company that provides commercial, agricultural, and consumer banking services primarily in Wisconsin, Michigan, and Minnesota.

1. Net Interest Income Skyrockets, Fueling Growth Opportunities

Our experience and research show the market cares primarily about a bank’s net interest income growth as one-time fees are considered a lower-quality and non-recurring revenue source.

Nicolet Bankshares’s net interest income has grown at a 21.9% annualized rate over the last five years, much better than the broader banking industry and faster than its total revenue.

2. Increasing Net Interest Margin Juices Financials

Net interest margin (NIM) represents the unit economics of a bank by measuring the profitability of its interest-bearing assets relative to its interest-bearing liabilities. It’s a fundamental metric that investors use to assess lending premiums and returns.

Over the past two years, Nicolet Bankshares’s net interest margin averaged 3.6%, climbing by 65 basis points (100 basis points = 1 percentage point) over that period.

This expansion was a tailwind for its net interest income, and while prevailing interest rates matter the most for industry net interest margins, banks that consistently increase this figure generally boast higher-earning loan books (all else equal such as the risk of those loans) or provide differentiated services that give them the ability to charge higher rates (pricing power).

3. Growing TBVPS Reflects Strong Asset Base

In the banking industry, tangible book value per share (TBVPS) provides the clearest picture of shareholder value, as it focuses on concrete assets while excluding intangible items that may not hold value during challenging times.

Nicolet Bankshares’s TBVPS increased by 10.2% annually over the last five years, and growth has recently accelerated as TBVPS grew at an excellent 17% annual clip over the past two years (from $43.28 to $59.21 per share).

Final Judgment

These are just a few reasons why we think Nicolet Bankshares is a high-quality business, and with its shares beating the market recently, the stock trades at 1.5× forward P/B (or $171.90 per share). Is now a good time to initiate a position? See for yourself in our full research report, it’s free.

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