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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

OR

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 8th 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

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

2

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.

3

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

4

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.

5

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.

6

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)

 

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