Net income of $10.7 million and adjusted net income (non-GAAP) of $14.7 million for the three months ended March 31, 2023
Earnings per common share of $1.09 and adjusted earnings per common share (non-GAAP) of $1.50 for the three months ended March 31, 2023
Annualized return on average assets of 1.11% and annualized return of adjusted earnings on average assets (non-GAAP) of 1.53% for the three months ended March 31, 2023
Quarterly cash dividend of $0.30 per share declared, an increase of 20.0% from the prior-quarter and 36.4% from the prior-year first quarter

MANITOWOC, Wis., April 18, 2023 /PRNewswire/ -- Bank First Corporation (NASDAQ:BFC) ("Bank First" or the "Bank"), the holding company for Bank First, N.A., reported net income of $10.7 million, or $1.09 per share, for the first quarter of 2023, compared with net income of $10.2 million, or $1.34 per share, for the prior-year first quarter. 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 $14.7 million, or $1.50 per share, for the first quarter of 2023, compared with $10.5 million, or $1.38 for the prior-year first quarter.

Operating Results

Net interest income ("NII") during the first quarter of 2023 was $32.2 million, up $1.6 million from the previous quarter and up $9.9 million from the first quarter of 2022. The impact of purchase accounting increased NII by $2.2 million, or $0.17 per share after tax, during the first quarter of 2023, compared to $1.2 million, or $0.10 per share after tax, during the previous quarter and $0.3 million, or $0.03 per share after tax, during the first quarter of 2022.

Net interest margin ("NIM") was 3.74% for the first quarter of 2023, compared to 3.71% for the previous quarter and 3.06% for the first quarter of 2022. NII from purchase accounting increased NIM by 0.26%, 0.15% and 0.04% for each of these periods, respectively.

Bank First recorded a provision for credit losses of $4.2 million during the first quarter of 2023, compared to $0.5 million during the previous quarter and $1.2 million during the first quarter of 2022. On January 1, 2023, the Bank adopted the Current Expected Credit Losses methodology, commonly referred to as CECL, for estimating allowances for credit losses. The adoption of this new methodology increased the Bank's allowance for credit losses related to both loans and unfunded loan commitments by $13.9 million. The Bank recognized this increase through an adjustment to retained earnings on January 1, 2023, net of deferred taxes of $3.9 million. Loans purchased through the acquisition of another institution are treated differently under CECL than they were under Bank First's former methodology. 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 CECL.

Noninterest income was $5.8 million for the first quarter of 2023, compared to $5.2 million for the first quarter of 2022. Service charge income increased by $0.2 million, or 12.5%, from the prior-year first quarter as a result of the added scale from the acquisitions of Denmark Bancshares, Inc. ("Denmark") and Hometown. Income provided by the Bank's investments in Ansay and UFS increased by $0.2 million each from the prior-year first quarter, representing 30.0% and 26.2% increases, respectively. Loan servicing income from loans that have been sold to the secondary market with servicing rights, and therefore servicing income, retained by the Bank increased by $0.2 million, or 45.2%, from the prior-year first quarter. Loan portfolios previously sold to the secondary market with servicing rights retained acquired from Denmark and Hometown totaled $159.5 million and $343.6 million, respectively, leading to this increase in loan servicing income. Gains on the sale of secondary market mortgage loans declined from $0.7 million during the first quarter of 2022 to $0.1 million during the first quarter of 2023 as a result of a significant industry-wide slowdown in residential mortgage lending year-over-year.

Noninterest expense was $19.7 million in the first quarter of 2023, compared to $17.3 million during the prior quarter and $12.7 million during the first quarter of 2022. Most areas of noninterest expense have increased over the past four quarters as a result of added operational scale from the acquisitions of Denmark and Hometown, which increased the Bank's total assets by $1.24 billion, or 42.5%, from the end of the first quarter of 2022 to the end of the first quarter of 2023. In addition to this trend, expenses directly attributable to these acquisitions totaling $1.3 million, $1.4 million and $0.5 million during the first quarter of 2023 and fourth and first quarters of 2022, respectively, have caused volatility in several noninterest expense areas, most notably personnel, occupancy and outside service fee expenses. Core deposit intangible assets of $15.1 million and $16.5 million created by the Denmark and Hometown acquisitions, respectively, created an increase in amortization of intangible assets expense over the last several quarters.

Balance Sheet

Total assets were $4.17 billion at March 31, 2023, a $506.8 million increase from December 31, 2022, and a $1.24 billion increase from March 31, 2022. The preliminary fair value of assets acquired in the Denmark acquisition during the third quarter of 2022 and the Hometown acquisition during the first quarter of 2023 totaled approximately $687.5 million and $614.4 million, respectively.

Total loans were $3.32 billion at March 31, 2023, up $429.3 million from December 31, 2022, and up $1.01 billion from March 31, 2022. Excluding the impact of loans acquired from Denmark and Hometown, loans grew by 7.6% from March 31, 2022 to March 31, 2023. Annualized loan growth during the first quarter of 2023, removing the impact of loans acquired from Hometown, amounted to 5.0%. As discussed in Bank First's release of results for the previous two quarters, management made the decision early in the third quarter of 2022 to slow loan growth while concentrating more aggressive rate offerings on customers who maintain their full banking relationship with the Bank. This decision, predicated on management's forecast of a tightening liquidity environment, was intended to conserve the Bank's liquidity until competitors better aligned rate offerings with movements in the interest rate environment. Bank First continues to exhibit strong liquidity metrics and management believes the Bank is well positioned to support our customers' growth as well as continue to cultivate new relationships.

Total deposits, nearly all of which remain core deposits, were $3.46 billion at March 31, 2023, up $403.0 million from December 31, 2022, and up $906.1 million from March 31, 2022. The preliminary fair value of deposits acquired in the Denmark and Hometown acquisitions totaled $606.5 million and $532.4 million, respectively. Noninterest-bearing demand deposits comprised 32.0% of the Bank's total core deposits at March 31, 2023, compared to 31.4% at March 31, 2022. The high-quality deposit portfolio mix acquired from Denmark and Hometown allowed this critical component of the Bank's profitability to remain strong subsequent to those transactions.

Asset Quality

Nonperforming assets at March 31, 2023, totaled $9.1 million, up from $6.7 million and $5.4 million at the end of the fourth and first quarters of 2022, respectively. Nonperforming assets to total assets ended the first quarter of 2023 at 0.22%, up from 0.18% at the end of the prior quarter and 0.19% from the end of the prior-year first quarter. Nonperforming assets at March 31, 2023 include eight properties valued at $3.9 million that were previously operating branch locations of Bank First, Denmark or Hometown which are no longer part of the Bank's branch network. These properties have all been listed for sale.

Capital Position

Stockholders' equity totaled $562.4 million at March 31, 2023, an increase of $109.3 million and $244.1 million from the end of the fourth and first quarters of 2022. The acquisitions of Denmark and Hometown increased total stockholders' equity by $124.8 million and $115.1 million, respectively. Dividends totaling $2.6 million and $8.8 million during the first quarter of 2023 and trailing twelve months, respectively, reduced capital. Repurchases of BFC common stock totaling $6.1 million and $15.5 million, at an average per share price of $74.36 and $73.73, further reduced capital during the first quarter of 2023 and trailing twelve months, respectively. Bank First's tangible book value increased by $29.3 million and $96.1 million during the first quarter of 2023 and trailing twelve months, respectively, and tangible book value per common share outstanding totaled $34.14 at March 31, 2023 compared to $36.14 at December 31, 2022 and $34.24 at March 31, 2022.

Dividend Declaration

Bank First's Board of Directors approved a quarterly cash dividend of $0.30 per common share, payable on July 5, 2023, to shareholders of record as of June 21, 2023.

Bank First Corporation provides financial services through its subsidiary, Bank First, which was incorporated in 1894. Bank First offers loan, deposit and treasury management products at each of its 28 banking locations in Wisconsin. The bank has grown through both acquisitions and de novo branch expansion. The bank employs approximately 389 full-time equivalent staff and has assets of approximately $4.2 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 partnerships with Legacy Private Trust and an alliance with Morgan Stanley. The bank is 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

Bank First Announces Net Income for the First Quarter of 2023