Hey, how nice it is to be together on behalf of all of us, to be back here at the Meyer Theatre. We missed you during the last year. I guess we all missed a lot of people. We're grateful for your attendance this evening, and we especially appreciate those who've traveled to be here.
I guess and also on behalf of everyone in the room here, Mike and myself, I think we'd like to extend a thank you to to our senior leadership team for an outstanding job in a very challenging year. We're very proud of the team and we're proud of the leadership that you as senior leaders provided especially during 2020. Your efforts were noticed greatly by the get stuff done kind of attitude. And I think, it wasn't just the $1, 000, 000, 000 of mortgage volume or the PPP loans or the almost $1, 300, 000 micro grants we did to the really small businesses sort of in the mess of COVID, it was that we were there. And, in some way, in addition to just being there to provide Competent advice.
We were just present in a
way that I think a lot
of people needed, whether it was by Zoom or in person, either in our office or in our customers' offices. And so really appreciate the presence. And I'd like to think, we've always kind of intended that Nicolet would be a place where we would not only do what we do well and serve the communities, but maybe would be kind of a help and encouragement to businesses and people as to how to do things better. So we're going to start the business portion of the meeting first. Here's how the meeting breaks down, pretty much the same as always.
We're going to have the business portion first. Then we're going to hear from Ann Lawson, our CFO, her reflections on the year. Then Mike will present his thoughts as CEO. And then Mike and I are going to take questions and answers together because, guess that's the most fun part of the meeting, that we've had over time. So you guys, I think, know my name is Bob Atwell.
I'm the Executive Chairman of Nicolet Bancshares. And I welcome you to the 2021 meeting. The purpose of this meeting is to elect the directors to ratify the appointment of our independent registered accounting firm, Wipfli LLP and to approve through an advisory vote, Nikolay's named executive officer compensation. Copies of the notice of this meeting, the proxy statement in the form of the proxy were sent to shareholders on or about March 17, 2021 and only shareholders of record as of March 1, 2021, which is the record date for this meeting are entitled to vote on matters presented for approval. The first order of business is to see if we have a quorum.
Anne Lawson, our CFO, will serve as Inspector of Elections and she has informed me that the company has received proxies representing over 7, 500, 000 shares more than 74% of the company's outstanding common stock. Because that number is in excess of the number necessary to constitute a quorum, this meeting is properly convened. There are copies of the minutes from the 2020 Annual Meeting held May 11, 2020 that will be available after this meeting if you are interested. And at this point, I'd like to ask for a motion to dispense with the reading of the minutes of the 2020 meeting. Could I have a motion?
Whitey Ellsworth. Okay. And could we have a second, Terry? Would those in favor of the motion indicate by saying aye? With those opposed to the motion indicate by saying no.
The motion has carried and I will now entertain a motion to approve the minutes from the 2020 meeting of the shareholders. Bob Wires showed up, usually you're the guy for seconds, but I'm looking for a second. Is there a second to the motion? Wow! Okay.
Got it. Motion to approve the minutes of the 2020 Annual Meeting of the Shareholders has been made and seconded. With those in favor of the motion indicate by saying aye. Aye. With those opposed to the motion indicate by saying no.
The motion has carried. The next order of business is a description of the proposals to be voted on at today's meeting. The first proposal is for the election of directors and I would now ask that the following 13 nominees please stand as we call your name. Myself, Rachel Campus Duffy, Mike Daniels, John Dykema, Terry Fulweiler, please remain standing. Chris Gadorsey, Andrew Hetzel Junior, DJ Long, Jr, Dustin McClone, I think Dustin didn't make to that tonight.
Sumer Katoras, I saw you over there somewhere, Sue. Pierce Smith and Robert J. Wiers. Thank you guys. You may sit down.
I'm advised that Northern nominations may properly come before this meeting and the results of the voting will be announced shortly. Proposal 2 is the ratification of the appointment of our independent registered public accounting firm. The ratification vote is described in detail in the proxy statement for the meeting, and I will now entertain a motion that the following resolution be adopted. Result, that the shareholders approve the appointment of Wipfli LLP as the independent registered accounting firm for the company for the fiscal year ending December 31, 2021 as described in proposal 2 of the company's 2021 proxy statement. Could I have a motion on that resolution?
Terry Bullgren. Is that did we get a second? Bob Agnew, okay. And seconded. And again, once again the vote, the tabulation of the votes will be reported shortly.
And then the third is the advisory vote to approve Nikolay's named executive officer compensation, which is proposal number 3. Proposal 3 is a non binding advisory vote required by the Exchange Act to approve Nikolay's named executive officers' compensation. Full details of Nikolay's named executive officers' compensation can be found in the Executive Compensation Discussion and Analysis section, the compensation tables and the narrative discussion in our proxy statement. The compensation committee will take into account the outcome of this advisory vote when considering future executive compensation agreements. And I will now entertain a motion that the following resolution be adopted.
Resolve that the shareholders approve the compensation of Nikolay's named executive officers as disclosed pursuant to the compensation rules of the SEC in the compensation discussion and analysis, the compensation tables and the narrative discussion. Could I have a motion on that resolution? So. Pierce, is there a second? Bob Wires, is that you?
We can now complete the voting on the election of directors, the ratification vote on the appointment of our independent registered accounting firm and the advisory vote to approve Nikolay's name executive officers compensation. If you have already returned to proxy, your votes have been tabulated. If there is anyone who has not yet voted and would like to do so, please raise your hand. Ballots are available for shareholders who prefer to vote by ballot. Since I don't see any hands up, the results of the voting are now available.
And I can report that 13 the 13 nominees all received votes in excess of 94% of the outstanding shares voted and that there were no competing nominees for any given seat on the Board. The ratification vote on the appointment of our independent registered accounting firm received in excess of 98% of the shares that voted. Advisory approval of the named executive officers received in excess of 88 percent of the shares that voted. Therefore, all director nominees are elected. The appointments of Wifli LLP as our independent registered accounting firm is approved and ratified and the advisory vote on Nikolay's named executive officers' compensation is approved.
Unless there's other business to discuss, this concludes the business portion to be transacted at this meeting. And I will now entertain a motion to adjourn the formal part of the meeting, not the meeting itself. So Andy, is there a second? 2nd. A motion to adjourn has been made and seconded.
With those in favor of the motion indicate by saying aye. With those opposed to the motion indicate by saying no. And the motion has carried and this concludes the meeting of the shareholders. So next what happens is Anne will give a report. We'll have a few things to say about Anne perhaps later.
Anne has resigned as CFO and she has just been elected to serve on the Board of Directors of Nicolet Bancshares. And so this presentation will be her swan song as CFO. Just a little side note, when Anne started, she was mortified of public speaking. And now I think she's not quite at my level, but don't get between her and a microphone. And then as you as I think you know, Mike is newly appointed CEO of Nikolay Bank Shares.
He was previously CEO of Nikolay Bank and we've been partners for a long, long time. And I'll make this short, you hope. When you work with someone through thick and thin for 34 years, you get to know each other pretty well, especially the thin part. And you hopefully appreciate many aspects of who they are and what they do. And perhaps, however, there are certain things that you find kind of annoying.
So, most of us understands Mike's many strengths and I won't go through them all, but he's exceptionally gifted at organizing, motivating and directing people. He's extraordinary at attracting and developing excellent talent, people that is possibly the best salesperson I've ever met. I think there's a couple other candidates who would vie for that honor. And, near and dear to my heart is when there's a significant problem, you want Mike in the room, whether it's a bar fight, a lawsuit or a squirrely borrower. His insight, creativity, mental quickness and infectious confidence, consistently make mountains in the mole hills, which is a great skill.
So I could go on and on, but Mike's self confidence hardly needs augmentation. And there honestly aren't too many annoying or irritating characteristics, but I'd like to focus on just 1. It really gets to me. Over the years, I think I've done quite a few things pretty well. And the thing that irritates me is the things that I know I have done quite well, he figures out how to do better.
And I know this will be the case in the coming years. And I know that you join me in expressing our hope and our expectation that he annoys me even more as CEO in that regard. And I look forward to pitching in when needed and staying out of the way when not. So, we're going to hear from Dan in a little bit, but Mike has a great team around him and he will challenge and build and carry on. They all will challenge, build and carry on the work of Nicolet.
So how about a round of applause for Mike? Okay. Anne, get up here. Do I stand between you and the microphone?
Sure. You want to just read it? No. All right. All right.
Well, first off, all of that small print that Eric put up there is basically saying that if we say anything forward looking, it's really only good for tonight because stuff changes. With that, I guess I get to say, hello, and it is nice to be here in person. It has been a very different year than our last meeting. So we entered 2020 with great momentum and we were advancing progress on our active strategic plan, which we started about 5 years ago. That was to profitably double in size through targeted growth and to continue to work on our leadership, succession plans.
But the year became strange and trying on many levels and our 5 core values drove our actions and decisions in what was a turbulent and non normal environment. As Bob mentioned, being present, flexible and adaptable added in the end to the most profitable year in Nikolay's 20 year history, allowing us to again serve all 3 circles. So the key themes of the year were pandemic responses and efficiencies, the Paycheck Protection Plan and a lot of liquidity, asset quality, mortgage revenues on extremely high mortgage activity. And we completed a smaller complementary acquisition of Advantage Community Bank, which added about $170, 000, 000 assets in our central region and about 20 people to our team. I'm going to discuss those from the numbers standpoint.
And Mike, our CEO, will describe them through the lens of the company's character and actions. So I'm going to start with profitability because the trends were fantastic. We made $60, 100, 000 10 percent over last year, which was already a banner year. Our 2020 earnings absorbed a dramatically high loan loss provision and almost $4, 000, 000 of costs that were tied to our actions around the pandemic all incurred in the Q2. But it also benefited from those exceptional mortgage revenues, the PPP loan income and operational efficiencies.
We earned $5.70 per share, which is 3% stronger than last year. It was aided by that 10% increase in earnings, but it did have to cover an increase in our share denominator, which was from our Oshkosh transaction in late of 2019. Our return on average assets was great at 1.41 percent, but less than last year, predominantly because our assets are inflated by cash. And our return to you, the shareholder, was an 11.4% return on equity and 16.8% return on tangible common equity. Our stock price trend eventually reflected these good results.
We started the year above $70 As you can see, we, like the rest of the market, did fall as the pandemic hit. However, as we continue to execute and perform, our stock price recovered off of those lows later in the year. And we have now been trading in the $75 to $85 band for quite a while. This leads me to capital. Capital is the reserve buffer that helps us weather through riskier times.
And the pandemic was a real stress test. Our capital is strong at $539, 000, 000 which is about 12% of our asset base. And our regulatory ratios exceed the well capitalized hurdles. During these riskier times, our actions to do the right things still produced that $60, 000, 000 of earnings, which is the best source of new capital. And because our capital strength going into and through the year, we used $40, 000, 000 to buy back over 5% of our outstanding shares, especially while our stock was low.
Fewer shares, remember, improves your earnings per share and EPS is 1 of the main drivers of stock price on the long term. So continuing with our balance sheet, we ended the year at $4, 600, 000, 000 in assets, up 27%, dollars 3, 900, 000, 000 in deposits, up 33% and $2, 800, 000, 000 in loans, up 8% over year end 2019. Very notably on the asset chart, cash was over $800, 000, 000 or 18% of our year end assets, when most years we carry about a third of that level. The complexion of our balance sheet was mirroring the changes in customer needs and the desire for safety. Everyone hunkered down and held on to cash.
That includes the PPP funds that were taken by commercial customers, government stimulus for our consumers and even our own liquidity build at the start of the pandemic, which actually was not needed, as we found out later. But that is the increase in the deposits and that corresponding cash. Digging into our 8% loan growth and loan mix, you can see the impact of the PPP, which is circled in the bottom of the charts. Because of the low coupon and the forgiveness features, most businesses who qualified took the PPP funds. For us, we processed over 2, 700 loans and we channeled $351, 000, 000 into the deposit accounts of our commercial customers.
This significantly replaced or reduced their need for traditional loans, which we mostly saw in the C and I lines, those commercial lines of credit. For the first time in recent history, those declined between year end periods, down almost a third and replaced by those PPP funds. But despite that and the new loans, if you exclude those new loans that we made through the PPP, all other loans combined still grew 6% over the end of the year. And even if we adjust for the Advantage transaction, we were up 2% over the prior year. This growth is actually very worth celebrating in such a weird year.
On the asset quality front, we went from kind of a, oh my goodness, who knows to really not so bad kind of environment. When the pandemic emerged, no 1 would or could fathom just how bad it might be. And whether really loan losses were going to soar. We expensed $10, 300, 000 to boost our allowance for loan losses against only $1, 400, 000 of net charge offs, with the majority of that provision occurring in the 1st 9 months of the year. What we saw in our commercial customers with time was resilience and effective adaptability.
We offered early on some relief through temporary payment modifications. And those who took the PPP funds were basically now having a capital boost. So by Q4, the potential deterioration that we initially anticipated was not materializing and we reduced our 4th quarter position provision. So our allowance ended at a healthy 1.15% of loans and our non performing asset levels at year end were very low and remain so today. Moving to another positive, let's talk mortgage.
It's another time to say what a year. As Bob mentioned, over $1, 000, 000, 000 in mortgages originated. That was more than 4, 300 loans. For many consumers, the most important thing we could do for them last year was to refinance their mortgage loan or help them trade up and build or build for a larger home. There was a dramatic fall in the mortgage rates to take advantage of and families were dealing with job issues or work in school at home.
So we were there. Closed loans under very unusual abnormal conditions and with greater automation, and it paid off that $30, 000, 000 of revenues into our earnings. So in summary, I'm going to brag just a little bit since it's my swan song time or whatever. You own a top performing bank. We got to say that last year even though it was under different conditions.
But we are a top performing bank. We were very proactive for our customers originating PPP and mortgage loans. We were a safe place for their deposits and transactions and we counseled folks through a very volatile market. We made tough decisions on branches but also improved the automation and efficiency. And we provided for the uncertainty around loan quality.
In the end, we responded as a team to the pandemic. But as importantly, we stayed focused on our long term and completed a merger. We grew organically and we maintained our strong capital. For Q1, I'm glad to report we're seeing more of the same. This is the 3rd consecutive quarter where we have had net income atorabove $18, 000, 000 EPS and our returns on assets and equity are still remaining exceptional.
Our mortgage revenues have tapered a little, but they're still very notable. Asset quality remains stellar and allowed for yet another lower provision this past quarter. And while the balance sheet appears minimally changed positively, we continue to grow loans and cash is down a bit. And we do remain acquisitive. We announced in April our plan to acquire a $1, 500, 000, 000 bank out of Michigan and has Northern Wisconsin presence and Mike's going to address that more.
So I'd like to finish with this last slide. These are just a few of the recognitions in the past year that we are very proud to share. And as Bob mentioned, since this is my last meeting as your CFO, I did want to throw out a couple of thank yous. To our investors, I hope over at least my time through here as well as since the inception of the bank, you realize how seriously we take your ownership. And I do look forward to, serving as a new director this year.
To co workers, my big thanks to my excellent team, some of the hardest working folks and to all of our team out there. There's a great drive in everybody here. And they really execute on our mission with a lot of uniformity in our culture. And of course, to these guys over here, to Bob and Mike, I really do appreciate your confidence in me and your inclusion always. And for the absolute fun wild ride of growth that I've had over 12.5 years.
So thank you. Now you get up
Well, hello, everybody. Can you hear me? So 1 thing over 20 years that I've realized is whether it's Bob or whether it's now me, we're standing between you and the bar. So we'll try not to to make this last. But 1 of the things I wanted to do was draw you into the conversation of why of why we are all here.
And this is the 1 meeting a year we talk about what we did, and that's the results. But if we go back 20 years to a person, anybody who invested in us 20 years ago when we had this idea at Nikolay Bank didn't invest in financials. They didn't invest in anything. They invested in an idea and a mission. Along the way, whether it was mid Wisconsin, whether it was Bay Lake, whether it was FNB, whether it was Choice or Advantage, 1 of the things that stood out was, of course, always what are the economics of the deal.
But what really stood out was what are we joining? What are we becoming? And what's the mission? And that's the result, But it's not what we do. And it's not who we are.
And it's not what we stand for. What we are right now are 550 people who show up every day and Bob alluded to it, but I'll say it because it's become a catchphrase at Nicolet. And we get shit done. I mean, we get it done day in and day out. It takes 5 50 people showing up and caring enough about their community, their customers, and 1 another that produce results like that.
People ask Bob and I all the time as we're talking to them about whether we're looking into buy their bank or acquire their bank. How do we ensure the larger we get that we don't lose that community bank feel? How do we make sure we don't forget what makes us different? And the answer is simple. It is whether that's 550 people, 7.50 people, 1100 people or whatever the number potentially becomes, depending on how much runway we all have as a group, it's that those people believe the same thing.
That their commitment to their customers, their commitment to the community in which we operate, wherever that may be, and the commitment to 1 another is the reason to show up every day. And as long as we do that, and as long as we execute on that, and as long as we hold each other accountable, I can't see around every corner. None of us can. But the results ought to keep showing up like that because it's the work of people. There's no nobody shows up every day and says, I wonder what our, I wonder how much money we can make today.
How can we make a difference to our customers across all of our revenue lines? Do we matter in our community? Because this bank can only be as healthy as the communities in which we operate and as healthy as our customer base. And it's when things go wrong, are we willing to have the conversation? Will we have the conversation with them?
Will we do it humanely? Will we do with empathy and compassion and say, Hey, I understand things are going, but what are we going to to make it better? We did it in 'eight, 'nine when we came to the recession. This year when things got weird, I mean, 1 of the reasons I think largely is because all of those people started showing up May 26. We're the only bank around that said, we're not staying at home anymore.
We're going to show up. We're going to open our doors. We're going to open our lobby. We're going to invest in the PPE and make sure that we are here because our customers were showing up. They had I mean, most of them were essential businesses.
They had to keep working. And it just seemed disingenuous to what we stood for to say, yeah, we'll talk to you on the phone or we'll talk to you from home. I mean, I don't know about you, but I, you know, the fewer Zoom meetings we can ever have again is I mean, that's on the top of my list even though, you know, I mean, if you can turn your camera off, you know, I got a face for radio, so that helps a lot. But nothing can beat the in person interaction. And actually being there and your customers know when you're there, and your communities know when you're there and the investments we made in our non profits and things like that.
And that's no matter what size we look to grow to and we'll talk a little bit about the Mackinac thing in a little while. That's the conversation we can't lose. We can't lose it as a management team. And we definitely don't want any of you to forget why you still hold the stock. Maybe some of you are in it for it's turned into just a financial play.
But for many of us and for many of you, you hold it for a reason. And hopefully, it's the reason that we always try to do the right thing. I mean, we screw some things up. I mean, but it's like we tell, make a mistake, apologize if you need to, but move forward. And as long as we can continue to communicate that message throughout the organization, throughout whatever geography we end up operating in.
And the people believe it and it resonates with them. And the communities believe it and the communities find value and validity in that message and that it's not a hollow message, It doesn't matter whether there's 21 people across the street on Washington Street with an idea, 550 now or 750, a1000 people. That doesn't matter. So we have a tendency not to talk about battle the numbers a lot. This is a 1 time a year we get to do it publicly.
We do our press releases quarterly being a public company. But we never want to have that become the focus as to why we show up. Because as soon as that happens, what's our value proposition to 1 another? And I think it diminishes the value proposition of the investment. You've entrusted in us as we look to move forward.
So yes, the exciting thing is the Mackinac deal. It's $1, 500, 000, 000 Eric's put a little slide up here. People say, what do you the UP, Michigan? Well, 1 of our philosophies has always been we are going to be lead local wherever we are, meaning we want to be the predominant community bank in all the markets we serve. We try to get to that space.
We're not there in every market, but we continue to try to. This opportunity makes us the largest community bank in the UP. M Bank is a franchise that's done a number of smaller acquisitions. But they look very similar to us primarily in the terms of its commercial composition. They're C and I customers in those towns that they serve, primarily UP, Northern Lower and then up in the Northwoods where we do have a little overlap.
The crazy part is Bob and I were talking about it the other day. Somebody said, well, your market cap is going to be $1, 000, 000, 000 Did you guys ever think 21 years ago when you had this idea? We didn't know what we thought. I just knew that Walmart probably wouldn't hire me as a greeter. So failure wasn't an option.
So we better make this thing work. And our team and probably the biggest nuance of this is Michigan is running a little further behind in opening than Wisconsin is. But we've started the interaction. Our team is up there talking to people and figuring out how to integrate this thing in September and close and integrate. And I am very confident that we will get that done.
We also believe actually that, given the year we just came off and as people sit around and try to figure out what their strategic alternatives are, particularly if all you do is make loans and take deposits that the low rate environment will have a lot of people probably sit around and say, what's our strategic advantage? Is it time to look? So we're hoping, maybe hoping is a bad word, but maybe not hoping is a good word and expecting there to be increased M and A activity over the next couple of years. So what does that mean for us? We have absolutely no idea.
We know that if invited to a conversation, we certainly want to show up, put our best foot forward if it makes sense for all of us as shareholders and if it makes sense as we fill as we look to complete and fill out our footprint. So thank you, whatever your reason was for becoming a shareholder of Nikolay Bank. Whether you were a former Board member, a current Board member, an employee or you owned us through 1 of our other acquisitions, we hope we've made you proud. We try to make every decision we make through the lens of ownership and true to our core values and the 3 circles, which are shareholders, customers and employees.