Bank First Corp [BFC] Filings

10-Q 1 bfc-20220930x10q.htm 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022


	☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission file number: 001-38676

BANK FIRST CORPORATION

(Exact name of registrant as specified in its charter)


WISCONSIN		39-1435359
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)


402 North 8^th Street, Manitowoc, Wisconsin		54220
(Address of principal executive offices)		(Zip Code)

(920) 652-3100

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically, if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☒
Non-accelerated filer ☐	Smaller reporting company ☐
	Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name on each exchange on which registered
Common Stock, par value $0.01 per share	BFC	The Nasdaq Stock Market LLC

The number of shares of the issuer’s common stock, par value $0.01, outstanding as of November 9, 2022 was 9,028,991 shares.

Table of Contents

TABLE OF CONTENTS


		Page Number
Part I. Financial Information		3
ITEM 1.	Financial Statements	3
	Consolidated Balance Sheets – September 30, 2022 (unaudited) and December 31, 2021	3
	Consolidated Statements of Income – Three and Nine months Ended September 30, 2022 and 2021 (unaudited)	4
	Consolidated Statements of Comprehensive Income – Three and Nine months Ended September 30, 2022 and 2021 (unaudited)	5
	Consolidated Statements of Changes in Stockholders’ Equity – Three and Nine months Ended September 30, 2022 and 2021 (unaudited)	6
	Consolidated Statements of Cash Flows – Nine months Ended September 30, 2022 and 2021 (unaudited)	7
	Notes to Unaudited Consolidated Financial Statements	9
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	56
ITEM 4.	Controls and Procedures	58
Part II. Other Information		58
ITEM 1.	Legal Proceedings	58
ITEM 1A.	Risk Factors	58
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	59
ITEM 3.	Defaults Upon Senior Securities	59
ITEM 4.	Mine Safety Disclosures	59
ITEM 5.	Other Information	59
ITEM 6.	Exhibits	60
Signatures		61

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS:

BANK FIRST CORPORATION

Consolidated Balance Sheets

(In thousands, except share and per share data)


	September 30, 2022		December 31, 2021
	(Unaudited)		(Audited)
Assets
Cash and due from banks	$	45,780	$	29,171
Interest-bearing deposits		97,661		267,689
Cash and cash equivalents		143,441		296,860
Securities held to maturity, at amortized cost ($39,134 and $5,922 fair value at September 30, 2022 and December 31, 2021, respectively)		40,826		5,911
Securities available for sale, at fair value		303,280		212,689
Loans held for sale		1,253		786
Loans, net		2,835,022		2,215,199
Premises and equipment, net		57,019		49,461
Goodwill		111,551		55,357
Other investments		14,905		9,004
Cash value of life insurance		45,761		31,897
Core deposit intangibles, net		17,810		4,035
Mortgage servicing rights ("MSR")		9,563		5,016
Other real estate owned (“OREO”)		1,405		150
Investment in minority-owned subsidiaries		44,146		42,935
Other assets		14,772		8,252
TOTAL ASSETS	$	3,640,754	$	2,937,552
Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Interest-bearing deposits	$	2,166,398	$	1,728,504
Noninterest-bearing deposits		971,803		799,936
Total deposits		3,138,201		2,528,440
Securities sold under repurchase agreements		21,963		41,122
Notes payable		2,569		8,011
Subordinated notes		23,500		17,500
Other liabilities		15,106		19,826
Total liabilities		3,201,339		2,614,899
Stockholders’ equity:
Serial preferred stock - $0.01 par value
Authorized - 5,000,000 shares		—		—
Common stock - $0.01 par value
Authorized - 20,000,000 shares
Issued - 10,064,858 and 8,478,383 shares as of September 30, 2022 and December 31, 2021, respectively
Outstanding - 9,028,630 and 7,616,540 shares as of September 30, 2022 and December 31, 2021, respectively		101		85
Additional paid-in capital		218,365		93,149
Retained earnings		284,907		258,104
Treasury stock, at cost - 1,036,228 and 861,843 shares as of September 30, 2022 and December 31, 2021, respectively		(45,219)		(32,294)
Accumulated other comprehensive income (loss)		(18,739)		3,609
Total stockholders’ equity		439,415		322,653
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	3,640,754	$	2,937,552

See accompanying notes to consolidated financial statements.

Table of Contents

ITEM 1. Financial Statements Continued:

BANK FIRST CORPORATION

Consolidated Statements of Income

(In thousands, except per share data) (Unaudited)


	Three months ended September 30,				Nine months ended September 30,
	2022		2021		2022		2021

Interest income:
Loans, including fees	$	28,353	$	23,584	$	74,131	$	69,792
Securities:
Taxable		1,590		739		4,266		1,953
Tax-exempt		453		465		1,339		1,402
Other		344		110		1,044		196
Total interest income		30,740		24,898		80,780		73,343
Interest expense:
Deposits		2,637		1,769		5,939		5,906
Securities sold under repurchase agreements		100		3		104		8
Borrowed funds		310		192		1,274		578
Total interest expense		3,047		1,964		7,317		6,492
Net interest income		27,693		22,934		73,463		66,851
Provision for loan losses		—		650		1,700		2,500
Net interest income after provision for loan losses		27,693		22,284		71,763		64,351
Noninterest income:
Service charges		1,383		1,491		4,246		4,554
Income from Ansay and Associates, LLC (“Ansay”)		671		756		2,316		2,204
Income from UFS, LLC (“UFS”)		852		751		2,120		1,780
Loan servicing income		1,673		599		4,841		2,282
Net gain on sales of mortgage loans		264		1,206		1,338		6,204
Net gain on sales and valuations of OREO		—		—		146		206
Other		323		228		944		791
Total noninterest income		5,166		5,031		15,951		18,021
Noninterest expense:
Salaries, commissions, and employee benefits		10,812		6,996		24,993		21,208
Occupancy		1,176		1,070		3,505		3,248
Data processing		1,577		1,259		4,353		4,010
Postage, stationery, and supplies		215		204		542		532
Net loss on sale of other investments		—		3		—		3
Advertising		61		50		205		152
Charitable contributions		150		121		553		399
Outside service fees		2,538		741		5,096		2,300
Amortization of intangibles		751		351		1,338		1,053
Other		1,615		1,674		4,260		4,216
Total noninterest expense		18,895		12,469		44,845		37,121
Income before provision for income taxes		13,964		14,846		42,869		45,251
Provision for income taxes		3,431		3,628		10,499		10,971
Net Income	$	10,533	$	11,218	$	32,370	$	34,280
Earnings per share - basic	$	1.26	$	1.46	$	4.15	$	4.45
Earnings per share - diluted	$	1.26	$	1.46	$	4.15	$	4.45
Dividends per share	$	0.25	$	0.50	$	0.69	$	0.92

See accompanying notes to unaudited consolidated financial statements

Table of Contents

ITEM 1. Financial Statements Continued:

BANK FIRST CORPORATION

Consolidated Statements of Comprehensive Income

(In thousands) (Unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021

Net Income	$	10,533	$	11,218	$	32,370	$	34,280
Other comprehensive income (loss):
Unrealized gains (losses) on available for sale securities:
Unrealized holding losses arising during period		(9,188)		(931)		(30,613)		(1,902)
Amortization of unrealized holding gains on securities transferred from available for sale to held to maturity		—		—		(1)		(1)
Reclassification adjustment for losses included in net income		—		3		—		3
Income tax benefit		2,480		250		8,266		512
Total other comprehensive loss		(6,708)		(678)		(22,348)		(1,388)
Comprehensive income	$	3,825	$	10,540	$	10,022	$	32,892

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

ITEM 1. Financial Statements Continued:

BANK FIRST CORPORATION

Consolidated Statement of Stockholders’ Equity

(In thousands, except share and per share data) (Unaudited)


											Accumulated
	Serial				Additional						Other		Total
	Preferred		Common		Paid-in		Retained		Treasury		Comprehensive		Stockholders'
	Stock		Stock		Capital		Earnings		Stock		Income (loss)		Equity

Balance at January 1, 2021	$	—	$	85	$	92,847	$	221,393	$	(25,227)	$	5,759	$	294,857
Net income		—		—		—		11,514		—		—		11,514
Other comprehensive loss		—		—		—		—		—		(1,236)		(1,236)
Purchase of treasury stock		—		—		—		—		(402)		—		(402)
Sale of treasury stock		—		—		—		—		23		—		23
Cash dividends ($0.21 per share)		—		—		—		(1,618)		—		—		(1,618)
Amortization of stock-based compensation		—		—		304		—		—		—		304
Vesting of restricted stock awards		—		—		(1,046)		—		1,046		—		—

Balance at March 31, 2021		—		85		92,105		231,289		(24,560)		4,523		303,442
Net income		—		—		—		11,548		—		—		11,548
Other comprehensive income		—		—		—		—		—		526		526
Purchase of treasury stock		—		—		—		—		(2,858)		—		(2,858)
Sale of treasury stock		—		—		—		—		21		—		21
Cash dividends ($0.21 per share)		—		—		—		(1,615)		—		—		(1,615)
Amortization of stock-based compensation		—		—		366		—		—		—		366
Vesting of restricted stock awards		—		—		(45)		—		45		—		—

Balance at June 30, 2021		—		85		92,426		241,222		(27,352)		5,049		311,430
Net income		—		—		—		11,218		—		—		11,218
Other comprehensive loss		—		—		—		—		—		(678)		(678)
Purchase of treasury stock		—		—		—		—		(3,271)		—		(3,271)
Sale of treasury stock		—		—		—		—		21		—		21
Cash dividends ($0.50 per share)		—		—		—		(3,821)		—		—		(3,821)
Amortization of stock-based compensation		—		—		363		—		—		—		363

Balance at September 30, 2021	$	—	$	85	$	92,789	$	248,619	$	(30,602)	$	4,371	$	315,262

Balance at January 1, 2022	$	—	$	85	$	93,149	$	258,104	$	(32,294)	$	3,609	$	322,653
Net income		—		—		—		10,183		—		—		10,183
Other comprehensive loss		—		—		—		—		—		(8,199)		(8,199)
Purchase of treasury stock		—		—		—		—		(5,018)		—		(5,018)
Sale of treasury stock		—		—		—		—		37		—		37
Cash dividends ($0.22 per share)		—		—		—		(1,673)		—		—		(1,673)
Amortization of stock-based compensation		—		—		320		—		—		—		320
Vesting of restricted stock awards		—		—		(1,303)		—		1,303		—		—

Balance at March 31, 2022		—		85		92,166		266,614		(35,972)		(4,590)		318,303
Net income		—		—		—		11,654		—		—		11,654
Other comprehensive loss		—		—		—		—		—		(7,441)		(7,441)
Purchase of treasury stock		—		—		—		—		(7,186)		—		(7,186)
Sale of treasury stock		—		—		—		—		23		—		23
Cash dividends ($0.22 per share)		—		—		—		(1,638)		—		—		(1,638)
Amortization of stock-based compensation		—		—		447		—		—		—		447

Balance at June 30, 2022		—		85		92,613		276,630		(43,135)		(12,031)		314,162
Net income		—		—		—		10,533		—		—		10,533
Other comprehensive loss		—		—		—		—		—		(6,708)		(6,708)
Purchase of treasury stock		—		—		—		—		(2,109)		—		(2,109)
Sale of treasury stock		—		—		—		—		25		—		25
Cash dividends ($0.25 per share)		—		—		—		(2,256)		—		—		(2,256)
Amortization of stock-based compensation		—		—		448		—		—		—		448
Shares issued in the acquisition of Denmark Bancshares, Inc. (1,586,475 shares)		—		16		125,304		—		—		—		125,320

Balance at September 30, 2022	$	—	$	101	$	218,365	$	284,907	$	(45,219)	$	(18,739)	$	439,415

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

ITEM 1. Financial Statements Continued:

BANK FIRST CORPORATION

Consolidated Statements of Cash Flows

(In thousands) (Unaudited)


	Nine Months Ended September 30,
	2022		2021


Cash flows from operating activities:
Net income	$	32,370	$	34,280
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		1,700		2,500
Depreciation and amortization of premises and equipment		1,209		1,384
Amortization of intangibles		1,338		1,053
Net amortization of securities		337		586
Amortization of stock-based compensation		1,215		1,033
Accretion of purchase accounting valuations		(962)		(750)
Net change in deferred loan fees and costs		(946)		(99)
Change in fair value of MSR and other investments		(3,010)		728

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