2006 ANNUAL REPORT

WHERE WE’VE BEEN... WHERE WE’RE GOING...

We are a

R

focused organization

delivering exceptional

S throughout our

resulting in

sustained creation

for customers and shareholders.

MISSION

RELATIONSHIP

SERVICE

COMMUNITY

VALUE

Dear Shareholders,We are pleased to report a very strong year for NicoletBankshares, Inc. in 2006. Net income of $3.8 million generatedearnings per share of $1.27, representing a 22 percent increaseover 2005 results. We continue to achieve strong relationship-based growth in commercial banking, retail banking and wealthmanagement. Total assets were $514 million and assets undermanagement in our Trust area exceeded $530 million at year end.Our return on average assets of 0.82 percent was a significant stepforward toward a mature level of profitability.

Nicolet achieved both earnings and asset growth, while asset quality continued to show positivetrends. Several factors contributed to the increase in net income, including asset growth, improvedasset quality and growth in our fee income revenue, principally trust revenue.

We opened our Crivitz, Wis., office in July 2006 and are very excited about entering the Appletonmarket during 2007. We continue to invest in people-centered strategic growth opportunities,while managing for growth in both assets and earnings.

We definitely experienced a tightening of competitive conditions within the commercial bankingsegment in 2006 – particularly in the second half of the year – but Nicolet was not alone in thisreality. Industry literature reports that most banks are struggling with rising funding costs, soft loandemand and some deterioration in asset quality.

I have cautioned against simply laying a ruler on our positive trend lines and assuming they willcontinue at that pace into the future. Despite these challenging conditions, we are entering 2007with strong momentum and intend to make continued progress toward our long-term goals.

We would like to thank you for your investment in our mission, and we are very grateful for thebusiness you do with Nicolet. For those of you who are not yet customers, please give us a try. Wehope we have the opportunity to serve you.

Bob AtwellChairman, President &Chief Executive Officer

LETTER TO OUR SHAREHOLDERS

Bob Atwell, President/CEO

Q. In a business some view as numbers-driven, how is Nicolet’s focus on relationships a benefit for customers?

A. There’s no question an enhanced bottom line is a goal of anyfinancial arrangement; however, a lot more goes into attaining thatobjective than simply watching the numbers. At Nicolet, we believethe more we can learn about our customers’ businesses and overallfinancial picture, the more we can bring to the table in terms ofappropriate products, services and risk management strategies.

Banking professionals and customers alike need an amount of trust tofacilitate the free exchange of information necessary to generategrowth. Our role as an advisor requires that we clearly understandthe ups and downs, as well as the goals and objectives, of ourcustomers’ financial pictures. That demands a deeper answer thannumbers alone can provide.

Q. Everyone talks about the necessity of good service. What is Nicolet’sdefinition of providing service to its customers?

A. Service is as much a mindset as it is an action. Our core promise is to do the right thing forcustomers today and every day. When we talk about service, we’re referring to helping ourcustomers attain their goals, not the other way around.

One of the ways Nicolet helps its customers move forward is by empowering our people to makedecisions. Without the multiple layers of bureaucracy present in many banks, critical decisions canbe made quickly, allowing customers to be more nimble in their financial affairs.

To that end, Nicolet has assembled a team of experienced bankers, highly trained andprogressive thinkers. Our hiring practices are stringent, and we promote from within toencourage consistency throughout the Nicolet team.

Q. Consolidation has been a trend in the banking industry over the past several years.What advantage does Nicolet bring with its local leadership structure?

A. Perhaps Nicolet’s greatest differentiating strength is our ability to make decisions locally forlocal customers. Who better than the people with whom you share cultural values to have asay in your financial future than a community banker? Nicolet bankers live and work in thecommunities in which we operate — a fact that’s even more valued by customers thatpatronize our branch locations.

Nicolet is dedicated to contributing to our communities both on the job and off. You’ll see our people participatingin a number of events and organizations around town.We see it as our responsibility, and our privilege.

Q. How important are intangible attributes such asintegrity and dependability to the overall valueequation of doing business with Nicolet?

A. Extremely important. Competitive and fair rates,offered every day to every customer, are thefoundation of Nicolet’s value equation. However,our reputation is built on the fact that we regardtrust, honesty and integrity as basic elements towho we are as an organization. In banking, as inany business, reputation is everything.

NICOLET Q&AWith Mike Daniels, Executive Vice President

Mike Daniels, Executive VicePresident/Senior Lending Officer

Deanna L. FavreChief Executive Officer

Favre Fourward FoundationHOPE Foundation

BOARD OF DIRECTORS

Robert B. AtwellChairman, President &Chief Executive Officer

Michael E. DanielsExecutive Vice President &

Senior Lending Officer

Daniel T. AriensPresident & CEOAriens Company

John N. DykemaPresident & CEO

Campbell Wrapper Corp.& Circle Packaging

Machinery, Inc.

Wendell E. EllsworthAdvisory Director

Former Owner & CEOAlgoma Hardwoods, Inc.

Michael F. FelhoferOwner

Candleworks of DoorCounty, Inc.

James M. HalronCo-owner

Halron Lubricants, Inc.

Philip J. HendricksonRetired Chairman, CEO &

PresidentKI Krueger International

Andrew F. Hetzel, Jr.President

National PackagingServices, Inc.

Donald J. Long, Jr.Owner & CEO

Century Drill & Tool Co.,Inc.

Susan L. MerkatorisCertified Public

Accountant

Wade T. MicoleyOwner

Micoley & Co. Realty

Ronald C. MillerRetired Owner

Four Corporation

Sandra A. RenardOwner & President

Renco Machine Co., Inc.

Robert J. WeyersOwner

Commercial Horizons, Inc.

Terrence J. LemerondAdvisory Director

Owner & PresidentEuro Pharma, Inc.

Terry Naturally

Eugene C. SitAdvisory DirectorChairman & CEO

Sit Investment Associates

NICOLET BANKSHARES INC. OFFICERS

NICOLET NATIONAL BANK OFFICERS

Robert B. Atwell Michael E. Daniels Jacqui A. EngebosChairman, President Executive Vice President Vice PresidentChief Executive Officer Secretary Chief Financial Officer

Stephen J. AlbersSenior Vice PresidentTrust and Investment

Manager

Robert B. AtwellChairman, PresidentChief Executive Officer

Jo A. BenoVice PresidentPrivate Client Services

Jon A. BisknerAsst. Vice PresidentInformation Technology

Sharla R. BorgVice PresidentOperations/IT Manager

Lynn M. CaelwaertsExecutive Administrative

Assistant

Michael E. DanielsExecutive Vice PresidentSenior Lending Officer

Charles E. DolskyVice PresidentEmployee Benefit Manager

Jacqui A. EngebosVice PresidentChief Financial Officer

Jean S. FranzenVice PresidentOffice Manager

Deborah E. FrederiksenAsst. Vice PresidentAsst. Office Manager

Brad V. HutjensCommercial Banker

Peggy A. JenkinsAsst. Vice President Office Manager

Nancy E. JohnshoyVice President Senior Market Manager

W. Scott KingSenior Vice PresidentCommercial BankingManager

Philip J. KloidaAsst. Vice PresidentRetail Banker

Karen A. LampereurVice PresidentOffice Manager

David B. MaguireVice PresidentTrust Officer

Gerald J. Mortell IIISenior Vice PresidentPrivate Banker

Christopher K. MossVice President Trust Officer

Katherine L. PlegerHuman Resources Director

Daniel K. Reynolds, Jr.Vice PresidentTrust Operations Manager

Dawn M. RostController

Kathy L. Simon-KasteinEmployee Benefit Trust

Officer

Eric M. SiudzinskiAsst. Vice PresidentCommercial Banker

Kirk R. UslabarCompliance Officer

Michael K. Van ErmenVice PresidentRetail Banker

Michael J. VogelVice PresidentCommercial Banker

Peter F. WarmenhovenVice PresidentCredit Administration

Manager

Eric J. WitczakSenior Vice PresidentRetail Banking Manager

Daniel J. WotrubaVice PresidentTrust Officer

Timothy J. ZeskeCommunity Market President

FINANCIAL HIGHLIGHTS

At year end 2000 2001 2002 2003 2004 2005 2006

Total Assets $44,731,285 $171,612,404 $250,005,385 $337,394,748 $389,902,885 $470,517,140 $514,464,060Total Deposits 27,196,659 150,066,195 206,731,332 289,079,762 332,804,934 408,018,302 389,915,003Total Loans 25,581,806 126,467,874 215,390,807 263,593,863 312,113,685 347,274,520 396,795,780Net Income (1,182,175) 70,186 58,248 977,969 1,347,204 3,021,038 3,797,684Non-Interest 3,425 673,152 1,575,344 3,198,213 3,467,638 4,423,133 5,006,303

Revenue

The year in review

Nicolet Bankshares posted another strong year in 2006, featuring a 25 percent increase inearnings on net income of $3.798 million. Net income has grown more than 180 percentsince 2004, while non-interest revenue continues to make a positive impact onprofitability, highlighted by a 39 percent increase in asset management revenue in thepast year. Assets grew approximately 9 percent in 2006 to more than $514 million,representing a nearly 32 percent increase in the past two years.

Our pledge at Nicolet is to do the right thing for customers today and in the future,offering industry-leading products and services that put our customers in position toachieve their financial goals.

‘00

45 514

‘06

Total Assets

‘00

26 397

‘06

Total Loans

Other Revenue

Secondary Market Mortgage Revenue

Asset Management Revenue

Chart data represents figures in millions.

As we grow, we remain committed to building relationshipsSome banks lose their focus on the people aspect of banking as they get bigger. Nicolet isn’t one of those banks.

Our commitment to building and sustaining long-term relationships won’t diminish as we continue to grow. If anything, this cornerstone of our philosophy becomes even more important as we distinguish ourselves in the marketplace.

Customer focus isn’t just a convenient catch phrase at Nicolet. It’s the essence of who we are.

RELATIONSHIP-FOCUSED

The Business News,Jerry Mader

Professional Fabrications, left Bill Hoffmann;right Terry Brusda.

La Force, left to right: Ken Metzler, President;Brian Mannering, Vice President; Jill Pruski, Treasurer and

John MacMullen, Chairman/CEO

Q. Why is doing business with Nicolet important for yourcompany?

A. John MacMullen, Chairman and CEO, La Force: “Ourmanagement group knew Nicolet’s local leadership team,and felt that going forward we wanted to be associatedwith people whom we’ve personally known for a longtime. We have a comfort level in the personal relationshipswe have with the people at Nicolet.”

Q. How has Nicolet positively impacted your bottom line?

A. Bill Hoffmann, Co-owner, Professional Fabrications, Inc.:“Nicolet tailored a program for us that reduces our debt ata much faster pace than other banks with traditional debt-reduction programs. The immediate, personal service wereceive makes it very easy to do our business banking withNicolet.”

Q. What was your first impression of Nicolet as you looked tostart your company?

A. Jerry Mader, Publisher, The Business News: “Shortly afterwalking into the bank, I was talking to people empoweredto make decisions. That made me feel good, and I don’tknow if that would have happened at almost any otherbank. I’m greeted by name every time I walk in the door— which always amazes me — and I receive great serviceeven though we’re a very small customer.

Business Q&A

Q. What is it about Nicolet that made you feelcomfortable moving your personal and corporatebanking business?

A. I wanted a local bank that’s focused on our area ratherthan a national bank. When I spoke with Bob Atwell andEric Siudzinski and the rest of the Nicolet team, I reallyliked their approach to business banking. Their focus onlocal and regional business is really important to me.

Q. How is Nicolet able to meet your business banking needs?

A. In our business — Fourinox does custom fabrication ofprocess and pressure vessels for the pharmaceuticaland chemical industries — it’s not uncommon to havedramatic cash flow differences from day to day. We’vegot a revolving line of credit that covers any temporaryshortfalls in our checking account, and it replenishesautomatically when funds become available again. Wedon’t have to do anything manually, which makesthings very easy on our end.

Q. Do you get a prompt response to any bankingquestions that come up?

A. Absolutely. If I ever need anything, I know I can callmy Nicolet contacts directly.

Our people understand one size doesn’t fit all when it comes to banking solutions. That’s why Nicolet offersa wide range of products and services, and we’re committed to finding the best answers for your situation.

Listening is an underappreciated skill, and one we take seriously at Nicolet. Our people are empowered tomake decisions, meaning your message is heard by someone capable of taking action.

Nicolet’s commitment to doing the right thing isn’t based on profit; it’s based on principle.

CUSTOMER SERVICE

We’ll find solutions that work best for you

Q&A With Ben Meeuwsen, President,Fourinox Inc., Green Bay, Wis.

Meeuwsen familyTop row, left to right: Ben, Max, Quinn

Bottom row, left to right: Darci, Ella

Left to right: Max Meeuwsen; Allison Tuttle, Personal Banker;Ella Meeuwsen; Darci Meeuwsen

Our advertising is focused on the theme, “Banking. We take it personally.” Nowhere is this more apparent thanin the time and talents contributed by members of the Nicolet family toward a multitude of community causes.

Nicolet is a community bank, rooted in the texture of our culture and the people who make it special. We’re committed to improving our world, because we live in it, too.

Making a difference

COMMUNITY

“What I’ve learned is there are a phenomenal number of livestouched on a daily basis by the shelter. Not only touched, butimproved. I’ve gained in knowledge, appreciation and respectfor what the shelter provides to the area’s homeless population.”

– Eric Siudzinski, Assistant Vice President/Commercial Lender

“The parade was a fun community event we could do as a family.”– Megan Ripley, Customer Service Specialist

Far right, Bob Atwell hands out chocolate “money”during the Green Bay Holiday Parade

You’ll see Nicolet people making a difference in avariety of organizations — from non-profits such asNEW Community Shelter, to local churches, youth-focused groups such as Optimist clubs and sports teams,even participating in events such as the Green BayHoliday Parade or the Breast Cancer Awareness Walk.

Megan Ripley and her two daughters participated inthe Green Bay Holiday Parade along with about 20other members of the Nicolet family. The Ripleysvolunteered their time by dressing as NativeAmericans on the Nicolet float depicting explorerJean Nicolet’s landing on the shores of Green Bay.

Eric Siudzinski became acquainted with the work done at the NEW Community Shelter in Green Bay through itsformer board president, Scott King, another member of

the Nicolet family. Scott eventually transitioned into anemeritus role with the board, while Eric became a fullboard member in January 2006.

One of the shelter’s biggest efforts is its communitymeal program, which serves 365 days a year topeople in need, regardless of whether they’reresidents of the shelter.

“Scott made us aware of how big of an issue homelessnessis in our area,” Eric says. “Most people probably don’trealize there’s such a big need in our community.”

We also take our communities personally

Nicolet’s Eric Siudzinski participates in the NEW Community Shelter Bowl-A-Thon.

Value is a feeling as much as a numberValue means different things to different people.

Trust, honesty and dependability are intangible qualities, yet you can feel them as surelyas the warmth of a roaring fire. Pair them with more measurable Nicolet features such ascompetitive and fair rates, and together they produce that unmistakable, secure feeling sonecessary for a long-term banking relationship.

We understand Nicolet must work every day to deserve your business. Creating valuethroughout the banking cycle is how we generate the unseen, yet powerful force thatkeeps us moving forward together.

VALUE

Top row, left to right: Steve Albers, Senior Vice President/Trust Officer; Sharla Borg, Vice President Operations/IT Manager;Scott King, Senior Vice President/Commercial Banking Officer; Kate Pleger, Human Resource Director;

Eric Witczak, Senior Vice President/Retail Banking ManagerBottom row, left to right: Jacqui Engebos, Vice President/Chief Financial Officer;

Bob Atwell, Chairman/President/Chief Executive Officer; Mike Daniels, Executive Vice President/Senior Lending Officer

As a community bank, it’s only natural our customer base includes many locallyowned businesses. These important drivers of our local economies appreciate thefact that Nicolet’s business decisions are made locally — oftentimes by peoplethese business owners know personally.

Nicolet’s commercial bankers take the time to truly understand your business andyour goals. Their focus is on recommending the appropriate products and services,aided by the latest in banking technology, to positively impact your bottom line.

We’re committed to providing the support systems local businesses need to keepour communities thriving and growing.

COMMERCIAL BANKING

Top row, left to right: Eric Siudzinski, Assistant Vice President/Commercial Banker;Brad Hutjens, Commercial Banker;

Bottom row, left to right: Scott King, Senior Vice President/Commercial Banking Manager;Jerry Mortell, Senior Vice President/Private Banker; Mike Vogel, Vice President/Commercial Banker

Few aspects of your life are more personal than yourfinancial picture. Sharing your goals with a memberof Nicolet’s personal banking team can be the firststep in turning those dreams into reality.

The long-term relationships and customer-focusedattention you receive from the Nicolet team are justpart of the personal banking success story. Armedwith industry-leading products, tools and services;you’ll be equipped to make decisions that will impactthe way your future unfolds.

PERSONAL BANKING

Left to right: Eric Witczak, Senior Vice President/Retail Banking Manager;Mike Van Ermen, Vice President/Retail Banker; Jo Beno, Vice President/Private Client

Services; Scott Jacobson, Retail Banker

Top row, left to right: Green Bay – Chris Moss, Vice President/InvestmentManagement & Trust Officer;Dan Wotruba, Vice President/Trust &Investment Officer;Appleton – Nancy Johnshoy, VicePresident/Senior Market Manager;Marinette/Menominee – David Maguire,Vice President/Trust & Investment OfficerBottom row, left to right: Steve Albers,Senior Vice President/Trust Officer;Jason Smerchek, Trust Account Manager;

Jeanie Danielak, Trust Relationship Manager

PERSONAL TRUST

Strategies for long-term wealth creation and preservation can becomplicated by nature, and Nicolet’s team of experienced professionalscan help make that path a little more user-friendly.

Whether you’re the beneficiary of successful long-term planning by your family or you want to create your own legacy for futuregenerations, our experts can personalize a program down to the most intricate of details to meet your goals.

Nicolet’s employee benefits team knows the fiercest competition yourbusiness faces is a quality workforce. Your employees provide the biggestadvantage over your competition, and your company’s benefits package isthe single biggest factor impacting employee turnover.

Our experienced team will research the most appropriate benefits plan design and investment choices to meet your objectives, and just asimportantly, satisfy your fiduciary responsibilities. Nicolet’s advisors haveno restrictions mandating the use of proprietary funds, meaning they’refree to recommend unbiased investment options from the completespectrum available.

Left to right: Green Bay – Chuck Dolsky, Vice President/Employee Benefit Manager;Central Wisconsin – Kathy Simon-Kastein, Employee Benefit Trust Officer;

Green Bay – Dan Reynolds, Vice President/Trust Operations Manager

EMPLOYEE BENEFITS

Depending on your personal investmentobjectives, traditional banking products aren’talways the most effective tools for creating wealth.Products that fall outside of the traditional bankingrealm can play an important role in your overallfinancial picture.

Our registered investment professionals* will assist you in selecting investment options that are appropriate for your risk tolerance level and the timeframe of your objectives. Theirrecommendations will reflect your individualsituation, not a preset formula.

There are no guarantees with securities, yet youcan count on our Investment Center team to beyour guide throughout your investment journey.

Not FDIC insuredNot a depositMay go down in valueNot bank guaranteedNot insured by any federal government agency

Registered investment professionals offersecurities and related services throughPFIC Securities Corporation, memberNASD & SIPC; not affiliated with NicoletNational Bank or Nicolet Bankshares Inc.

Left to right: Corey Sherf, Financial Consultant;Ann Kasten, Investment Account Manager

INVESTMENT CENTER

Navigating through the multitude of products and services offered by afull-service bank like Nicolet can be challenging, even for the savviestof customers. Some of our customers appreciate the assistance of adedicated coordinator to help them identify appropriate solutions fortheir banking needs.

Nicolet’s private banking professionals pull together the appropriatepeople and products to meet complex challenges, providing a safetynet of expertise beneath a diverse financial portfolio.

PRIVATE BANKING

Jerry Mortell, Senior Vice President/Private Banking;Jo Beno, Vice President/Private Client Services

It’s important for a community bank like Nicolet to recognize thesubtle differences between the various areas our customers callhome. Karen Lampereur and her team provide that level of comfortfor our customers in De Pere.

Karen has been a recognizable face in the De Pere banking marketfor about 20 years, and customers at this quickly growing officetrust their needs will be met by her customer-focused team.

DE PERE

Karen Lampereur, Manager/Vice President

1011 N. BroadwayDe Pere, WI 54115920-425-1400

Nicolet’s Marinette and Menominee offices serve a diverse customer basein Northern Wisconsin and Upper Michigan. Led by Tim Zeske, our teamoffers a diverse line of products and services backed by a growing regionalbank, combined with the personal attention you’d expect from acommunity bank.

Tim and his team members are integral parts of the communities in whichthey live and work, and their knowledge of the local business landscape isa valuable asset for their customers.

MARINETTE/MENOMINEE

Far right: Tim Zeske, Community MarketPresident, Marinette/Menominee

Debbie Frederiksen, Assistant Vice President

Peggy Jenkins, Assistant Vice President/OfficeManager; Phil Kloida, Assistant VicePresident/Retail Lender

1015 10th AvenueMenominee, MI 49858906-863-4407

2009 Hall AvenueMarinette, WI 54143

715-732-2600

CRIVITZ

315 U.S. Hwy 141 NCrivitz, WI 54114

715-854-7400

Jean Franzen leads Nicolet’s newest location in Crivitz.While Nicolet as an institution is new to the area, localcustomers there know Jean through her more than 20 years of banking experience.

Jean’s relationship-building skills are invaluable in anarea where people know each other on a first-namebasis. The ability of Jean and her team to continue thecommunity banking tradition that’s been so effective in a tight-knit area like Crivitz is a benefit for customersand Nicolet alike.

Jean Franzen, Vice President/Manager

Left to right: Jeanine Kowalski, Personal Banker;Gwen Zimmerman, Teller; Denise Kahles, Teller;Jean Franzen, Manager/Vice President; Jill Bader, Teller Supervisor;Claudia Kohn, Personal Banker; Kay Langer, Assistant Manager

You’ll continue to see our people based ina growing number of strategic locations asNicolet expands its ability to servecustomers throughout NortheasternWisconsin and Upper Michigan. TheAppleton and Fox Cities areas provideexciting opportunities for growth, andNancy Johnshoy is leading Nicolet’s entryinto this market in 2007.

Nancy has worked in the investmentindustry for almost 25 years andcontributes a wealth of knowledge andrelationship skills for the benefit ofcustomers. It’s the people that make Nicoletthe bank of choice for so many, and we’reexcited that Nancy provides a qualitypresence for our newest market.

WHERE WE’RE HEADED NEXT

Nancy Johnshoy, Vice President/Senior Market Manager

Altrusa HouseAmerican Cancer SocietyBay Area Medical CenterBoys & Girls Club of Green BayBrett Favre Fourward FoundationBrian LaViolette Scholarship FoundationCenter for Childhood SafetyCerebral Palsy Inc.Deanna Favre HOPE FoundationGreen Bay Area Chamber of CommerceHeritage Hill State Historical Park

M&M Community FoundationMayor's Neighborhood Leadership CouncilMenominee Business Development Corp.Meyer TheaterMiracle League of Green BayN.E.W. Curative RehabilitationNeighborhood Housing ServicesNEW Community ShelterNew North Inc.Rotary Club of Green Bay – Healthy

Teeth, Healthy Kids

St. Francis Xavier CathedralSt Mary's Hospital Medical CenterSt. Norbert College AthleticsThe Salvation Army – Kroc CenterSyble Hopp ProgramsTitletown Bike TourUnity HospiceUWGB Athletic CenterUWGB Founders Association YMCAYWCA

4-H USAAll Gods Children (Low income tuition

assistance)American Red CrossAppleton Library FoundationAshwaubenon High School Track Bay Beach Wildlife SanctuaryBellin RunBig Brothers Big SistersBoy Scouts of AmericaBoys and Girls Club of the Fox ValleyCerebral Palsy, Inc.Children’s HospitalCoats For KidsCommunity Blood CenterCommunity Development Council

ASPIROCommunity Lutheran Church of

McAllisterCrivitz Business AssociationCrivitz Fire DepartmentCrivitz Food PantryCrivitz Recreation AssociationCrivitz Ski Cats Water Ski TeamCrivitz Youth Inc.Current – Green Bay Area Chamber of

CommerceDe Pere Business AllianceDe Pere Business AssociationDe Pere Business Grant CommitteeDe Pere Little LeagueDe Pere Redbird Basketball Booster ClubDuck Creek Pop Warner

East River Pop WarnerEmmanuel Lutheran ChurchEncompass Early Education and Care Finance Council Holy Cross ParishFirst Presbyterian ChurchFox Valley Family Practice General Federation of Women's ClubGive-a-Kid-a-BookGreater Green Bay Optimist ClubGreen Bay Civic SymphonyHoly Family SchoolHoward Fire DepartmentIntegrated Community ServicesInternational Order of the Kings Daughter

and SonsJunior AchievementLiteracy Council of Brown CountyManagement WomenMarinette and Menominee Community

FoundationMarinette and Menominee Youth BaseballMarinette and Menominee Youth HockeyMarinette and Menominee Youth SoccerMarinette County Board of RealtorsMarinette/Menominee Chamber of

CommerceMarinette/Menominee Chamber

Waterfront Festival Menominee Historic CommissionMenominee Historical SocietyMenominee Rotary ClubNeighborhood Housing ServicesNEW Community Shelter

NEW Curative RehabilitationNorthland Lutheran FoundationNotre Dame Academy (Golf Outing)Notre Dame Academy (Tritonfest Auction)Notre Dame High School Key ClubNortheast Wisconsin Technical College

FoundationOur Saviours Lutheran ChurchPromotion Management, Inc.Relevant RadioRoman Fendryk BenefitRotary Club of AppletonRotary Club of De PereRotary Club of MenomineeService League of Green BaySt. Bernard Athletic ClubSt. Philip Football/Falcon FootballSt. Vincent Hospital FoundationSt. Joseph ParishThe Angel FundThe Congressional Medal of Honor

Society WisconsinThe Salvation ArmyTwin Bridge Water Ski TeamTwin City Service ClubUnity University of Wisconsin Foundation

BoardUW Alumni Club of Brown CountyUniversity of Wisconsin Green Bay

Phoenix FundWisconsin Mortgage Bankers Board

COMMUNITYINVOLVEMENT

Nicolet is a contributing partner to the following organizations:

Nicolet supports community involvement of its employeesthrough monetary contribution and employee volunteerism:

Report of Independent Certified Public Accounting Firm

To the Stockholders and Board of Directors Nicolet Bankshares, Inc. Green Bay, Wisconsin

We have audited, in accordance with auditing standards generally accepted in the United States ofAmerica, the balance sheets of Nicolet Bankshares, Inc. as of December 31, 2006 and 2005, and the related statements of income, changes in stockholders’ equity and cash flows for the year then ended (not presented herein); and in our report dated February 28, 2007, we expressed an unqualified opinion on those financial statements.

In our opinion, the information set forth in the accompanying condensed financial statements isfairly stated, in all material respects, in relation to the financial statements from which it has been derived.

Atlanta, Georgia February 28, 2007

Porter Keadle Moore, L L P

ACCOUNTANTS’ LETTER

Certified Public Accountants

CONSOLIDATEDBalance Sheet

Nicolet Bankshares, Inc. and SubsidiariesDecember 31, 2006 and 2005

2006 2005AssetsCash and due from banks $11,965,208 $13,415,604 Interest-bearing deposits 659,040 468,429 Federal funds sold - 31,785,000

Cash and cash equivalents 12,624,248 45,669,033

Securities available for sale 67,119,435 46,321,673 Other investments 3,489,800 1,896,494 Loans held for sale 5,151,500 932,800 Loans, net 386,690,506 341,506,671 Premises and equipment, net 21,430,929 20,361,773 Bank owned life insurance 11,327,624 7,852,392 Accrued interest receivable and other assets 6,630,018 5,976,304

$514,464,060 $ 470,517,140

Liabilities and Stockholders' EquityLiabilities: Deposits:

Demand $49,206,638 $ 40,182,925 Money market and NOW accounts 82,350,014 93,951,326 Savings 6,716,997 4,983,374 Time 251,641,354 268,900,677

Total deposits 389,915,003 408,018,302

Federal funds purchased 28,193,000 -Securities sold under agreements to repurchase 18,441,274 5,725,719 Notes payable 27,341,220 10,500,000 Junior subordinated debentures 6,185,568 6,185,568 Accrued interest payable and other liabilities 4,025,419 4,754,735

Total liabilities 474,101,484 435,184,324

Minority interest in joint venture 67,314 322,363

Stockholders’ equity: Common stock, $0.01 par value, 30,000,000 shares authorized; 3,021,473 and 2,931,590 shares issued 30,215 29,316 Additional paid-in capital 32,629,577 31,143,954Treasury stock, at cost (7,500 shares) (165,000) -Retained earnings 8,090,154 4,292,470 Accumulated other comprehensive income (289,684) (455,287) Total stockholders’ equity 40,295,262 35,010,453

$514,464,060 $470,517,140

CONSOLIDATED Statements of Income

Nicolet Bankshares, Inc. and SubsidiariesYears Ended December 31, 2006, 2005 and 2004

2006 2005 2004Interest income: Loans, including loan fees $27,880,391 $22,016,836 $16,526,600 Investment securities:

Taxable 931,875 907,714 690,054 Non-taxable 774,254 419,268 321,510 Other investments 82,887 91,086 90,379

Federal funds sold 333,930 643,735 82,939 Other 56,895 33,787 5,040

Total interest income 30,060,232 24,112,426 17,716,522

Interest expense: Money market and NOW accounts 2,912,616 1,644,616 955,224 Savings and time deposits 11,161,575 9,037,899 6,148,190Federal funds purchased 322,710 7,067 19,211Securities under agreement to repurchase 396,170 89,483 62,557 Junior subordinated debentures 501,718 501,718 232,302 Notes payable 928,049 332,948 12,773 Other 1,277 776 1,010

Total interest expense 16,224,115 11,614,507 7,431,267

Net interest income 13,836,117 12,497,919 10,285,255 Provision for loan losses 840,000 1,680,000 2,975,000

Net interest income after provision for loan losses 12,996,117 10,817,919 7,310,255 Other income: Service charges on deposit accounts 440,879 421,292 409,073 Fees from trust services 2,403,072 1,726,964 1,047,968 Mortgage fee income 788,524 1,083,441 1,104,375 Brokerage fee income 190,051 322,710 312,431 Gain (loss) on sale of securities, net (1,814) 13,056 76,426 Other 1,185,591 855,670 517,365

Total other income 5,006,303 4,423,133 3,467,638

Other expenses: Salaries and employee benefits 6,545,057 5,940,218 5,116,739 Occupancy and equipment 973,880 1,472,750 946,958 Other operating 4,993,816 3,300,576 2,858,596

Total other expenses 12,512,753 10,713,544 8,922,293

Minority interest in joint venture loss (325,038) (107,647) -Income before income tax expense 5,814,705 4,635,155 1,855,600 Income tax expense 2,017,021 1,614,117 508,396

Net income 3,797,684 3,021,038 1,347,204Net earnings per share $1.27 $ 1.04 $ 0.46

Diluted earnings per share $1.20 $ 0.98 $ 0.44

Weighted average shares outstanding 2,980,422 2,913,267 2,956,899

SHAREHOLDERINFORMATION

Annual MeetingShareholders’ MeetingTuesday, May 1, 2007Meyer Theatre117 South Washington StreetGreen Bay, Wisconsin 54301

Independent AuditorPorter Keadle Moore, LLP235 Peachtree Street, NESuite 1800Atlanta, Georgia 30303

Legal CounselGodfrey & Kahn, S.C. 780 North Water Street Milwaukee, Wisconsin 53202-3590

Powell, Goldstein LLPOne Atlantic CenterFourteenth Floor1201 West Peachtree Street, NWAtlanta, Georgia 30309-3488

Transfer Agent Computershare2 North La Salle StreetChicago, Illinois 60602

111 N. Washington Street • PO Box 23900 • Green Bay, WI 54305-3900 • 920-430-1400 • 1-800-369-0226

www.nicoletbank.com