- Net income of $14.8 million
and $39.6 million for the three and
nine months ended September 30, 2023,
respectively
- Earnings per common share of $1.43 and $3.89 for
the three and nine months ended September
30, 2023, respectively
- Annualized return on average assets of 1.44% and 1.31% for
the three and nine months ended September
30, 2023, respectively
- Quarterly cash dividend of $0.30 per share declared, matching the prior
quarter and a 20.0% increase from the prior-year third
quarter
MANITOWOC, Wis., Oct. 17,
2023 /PRNewswire/ -- Bank First Corporation (NASDAQ:
BFC) ("Bank First" or the "Bank"), the holding company for Bank
First, N.A., reported net income of $14.8
million, or $1.43 per share,
for the third quarter of 2023, compared with net income of
$10.5 million, or $1.26 per share, for the prior-year third
quarter. For the nine months ended September
30, 2023, Bank First earned $39.6
million, or $3.89 per share,
compared to $32.4 million, or
$4.15 per share for the same period
in 2022. After removing the impact of one-time expenses related to
acquisitions as well as gains and losses on sales of securities and
other real estate owned ("OREO"), the Bank reported adjusted net
income (non-GAAP) of $15.1 million,
or $1.46 per share, for the third
quarter of 2023, compared with $14.0
million, or $1.70 per share,
for the prior-year third quarter. For the first nine months of
2023, adjusted net income (non-GAAP) totaled $44.4 million, or $4.38 per share, compared to $36.6 million, or $4.69 per share for the same period in 2022.
Operating Results
Net interest income ("NII") during
the third quarter of 2023 was $34.1
million, down $0.2 million
from the previous quarter but up $6.4
million from the third quarter of 2022. The impact of
purchase accounting increased NII by $1.8
million, or $0.13 per share
after tax, during the third quarter of 2023, compared to
$2.5 million, or $0.18 per share after tax, during the previous
quarter and $0.7 million, or
$0.07 per share after tax, during the
third quarter of 2022.
Net interest margin ("NIM") was 3.71% for the third quarter of
2023, compared to 3.77% for the previous quarter and 3.63% for the
third quarter of 2022. NII from purchase accounting increased NIM
by 0.19%, 0.27% and 0.10% for each of these periods, respectively.
While the Bank's average rate paid on interest-bearing liabilities
has continued to rise throughout 2023, increasing average rates
earned on interest-earning assets as well as the beneficial impact
of the Bank's continuing high percentage of noninterest-bearing
deposits (32.1% of the Bank's total core deposits at September 30, 2023) have allowed the Bank's net
interest margin, excluding purchase accounting impacts, to expand
quarter-over-quarter for the last two quarters.
Bank First did not record a provision for credit losses during
the third quarter of 2023, matching the previous quarter and the
third quarter of 2022. Provision expense was $4.2 million for the first nine months of 2023
compared to $1.7 million for the same
period during 2022. The acquisition of the loan portfolio of
Hometown Bancorp, Ltd. ("Hometown") during the first quarter of
2023 resulted in a day 1 provision for credit losses expense of
$3.6 million as required under the
Current Expected Credit Losses ("CECL") methodology, which the Bank
adopted on January 1, 2023. The lack
of a provision for credit losses during the second and third
quarter of 2023 was the result of continued strong asset quality
metrics discussed later in this release. Recoveries of previously
charged-off loans exceeded currently charged-off loans by
$0.1 million through the first nine
months of 2023, compared to recoveries exceeding charge-offs by
$1.0 million through the first nine
months of 2022.
Noninterest income was $5.3
million for the third quarter of 2023, compared to
$4.6 million and $5.2 million for the prior quarter and third
quarter of 2022, respectively. Service charge income increased by
$0.1 million, or 3.1%, and
$0.4 million, or 31.7%, from the
prior quarter and prior-year third quarter, respectively, as a
result of the added scale from the acquisitions of Denmark
Bancshares, Inc. ("Denmark") and
Hometown. Income provided by the Bank's investment in Ansay &
Associates increased by $0.1 million
from the prior-year third quarter while declining $0.2 million from the prior quarter. Income from
this investment increased by $0.5
million, or 21.4%, through the first nine months of 2023
compared to the same period in 2022. Loan servicing income from
loans previously sold to the secondary market with servicing
rights, and therefore servicing income, retained by the Bank
matched the prior quarter but increased by $0.2 million, or 49.5% from the prior-year third
quarter. Sold but serviced loan portfolios acquired from
Denmark and Hometown totaled
$159.5 million and $343.6 million, respectively, leading to this
increase in loan servicing income. The Bank experienced a
$0.2 million positive valuation
adjustment to its mortgage servicing rights asset during the third
quarter of 2023 which compared favorably to a $0.5 million negative adjustment in the prior
quarter, but unfavorably to a $0.9
million positive adjustment during the prior-year third
quarter.
Noninterest expense was $19.6
million in the third quarter of 2023, compared to
$19.9 million during the prior
quarter and $18.9 million during the
third quarter of 2022. Most areas of noninterest expense have
increased over the past five quarters as a result of added
operational scale from the acquisitions of Denmark and Hometown, which increased the
Bank's total assets by $1.13 billion,
or 38.0%, from the end of the second quarter of 2022 to the end of
the third quarter of 2023. Expenses directly attributable to these
acquisitions have also caused volatility in several noninterest
expense areas, most notably personnel, occupancy and outside
service fee expenses during the third quarter of 2022 and the first
quarter of 2023. Core deposit intangible assets of $15.1 million and $16.5
million created by the Denmark and Hometown acquisitions,
respectively, have also created an increase in amortization of
intangible assets expense over the last five quarters. Finally, net
losses on sales of OREO totaled $0.1
million during the third quarter of 2023 compared to
$0.5 million during the prior quarter
and no loss during the third quarter of 2022. All losses noted in
the current and prior quarter related to operating locations
acquired from Hometown and Denmark, as well as one from a previously
acquired institution, which were not utilized as operating
locations by Bank First. At the start of the second quarter of 2023
Bank First held nine such buildings, but finished the third quarter
with only two as a result of these sales.
The current Wisconsin state
budget, signed by Governor Evers on July 5,
2023, included a provision offering an income tax exclusion
on income earned from commercial loans of $5
million or less, originated for business or agricultural
purposes to borrowers who reside or are located in the state of
Wisconsin. This exclusion is
retroactive to January 1, 2023. As a
result of this provision, Bank First reversed $2.4 million in income tax expense which had been
recorded during the first two quarters of 2023. Also as a result of
this provision, Bank First's lower anticipated future effective tax
rate required an allowance to be made against the Bank's deferred
tax asset, which increased income tax expense by $2.9 million. These two entries netted to a
one-time $0.5 million increase to
income tax expense for the third quarter of 2023.
Balance Sheet
Total assets were $4.09 billion at September
30, 2023, a $427.1 million
increase from December 31, 2022, and
a $446.8 million increase from
September 30, 2022. The preliminary
fair value of assets acquired in the Hometown acquisition during
the first quarter of 2023 totaled approximately $614.4 million.
Total loans were $3.36 billion at
September 30, 2023, up $416.6 million from December 31, 2022, and up $496.3 million from September 30, 2022. Loans grew 5.0% on an
annualized basis during the third quarter of 2023.
Total deposits, nearly all of which remain core deposits, were
$3.40 billion at September 30, 2023, up $338.1 million from December 31, 2022, and up $260.1 million from September 30, 2022. As mentioned earlier in this
release, noninterest-bearing demand deposits comprised 32.1% of the
Bank's total core deposits at September 30,
2023, compared to 31.1% and 31.3% at December 31 and September
30, 2022, respectively.
Asset Quality
Nonperforming assets at September 30, 2023 remained negligible, totaling
$5.2 million compared to $6.7 million and $6.2
million at the end of the fourth and third quarters of 2022,
respectively. Nonperforming assets to total assets ended the third
quarter of 2023 at 0.13%, down from 0.18% at the end of the fourth
and third quarters of 2022. Nonperforming assets at September 30, 2023 included two properties valued
at $1.8 million that were previously
operating branch locations of acquired institutions which are no
longer part of the Bank's branch network. These properties have all
been listed for sale.
Capital Position
Stockholders' equity totaled
$577.3 million at September 30, 2023, an increase of $124.2 million from the end of 2022 and
$137.9 million from September 30, 2022. The acquisition of Hometown
during the first quarter of 2023 increased total stockholders'
equity by $115.1 million. Bank
First's tangible common equity (non-GAAP) increased by $47.6 million and $63.6
million during the first nine months of 2023 and trailing
twelve months, respectively. The Bank's book value per common share
totaled $55.62 at September 30, 2023 compared to $50.22 at December 31,
2022 and $48.67 at
September 30, 2022. Tangible book
value per common share (non-GAAP) totaled $36.00 at September 30,
2023 compared to $36.14 at
December 31, 2022 and $34.34 at September 30,
2022.
Dividend Declaration
Bank First's Board of Directors
approved a quarterly cash dividend of $0.30 per common share, payable on January 10, 2024, to shareholders of record as of
December 27, 2023. This dividend
represents a 20.0% increase over the dividend declared one year
earlier.
Subsequent Transactions
The Bank sold 100% of its
member interest in UFS, LLC in a transaction which closed on
October 1, 2023. This transaction
resulted in proceeds of $52.2 million
and a pre-tax gain of $39.3 million
which will be realized during the fourth quarter of 2023.
On October 2, 2023, the Bank
repaid $11.5 million in subordinated
debt owed to three financial institutions. Interest expense related
to this debt, each of which carried an interest rate of 9.0%,
totaled over $1.0 million
annually.
Bank First Corporation provides financial services through its
subsidiary, Bank First, N.A., which was incorporated in
1894. Bank First offers loan, deposit and treasury management
products at each of its 26 banking locations in Wisconsin. The Bank has grown through both
acquisitions and de novo branch expansion. The Bank employs
approximately 385 full-time equivalent staff and has assets of
approximately $4.1
billion. Insurance services are available through our
bond with Ansay & Associates, LLC. Trust, investment advisory
and other financial services are offered through the Bank's
partnership with Legacy Private Trust and an alliance with Morgan
Stanley. Prior to October 1, 2023,
the Bank was a co-owner of a bank technology outfitter, UFS, LLC,
which provides digital, core, cybersecurity, managed information
technology and private cloud services. Further information about
Bank First Corporation is available by clicking on the Shareholder
Services tab at www.bankfirst.com.
For further information, contact:
Kevin M LeMahieu,
Chief Financial Officer
Phone: (920) 652-3200 / klemahieu@bankfirst.com
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SOURCE Bank First Corporation
