- Net income of $14.1 million and $24.8 million for the three and six months ended June 30, 2023, respectively
- Earnings per common share of $1.37 and $2.46 for the three and six months ended June 30, 2023, respectively
- Annualized return on average assets of 1.38% and 1.25% for the three and six months ended June 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 second quarter
MANITOWOC, Wis., July 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 $14.1 million, or $1.37 per share, for the second quarter of 2023, compared with net income of $11.7 million, or $1.55 per share, for the prior-year second quarter. For the six months ended June 30, 2023, Bank First earned $24.8 million, or $2.46 per share, compared to $21.8 million, or $2.89 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 $14.6 million, or $1.41 per share, for the second quarter of 2023, compared with $12.1 million, or $1.61 per share, for the prior-year second quarter. For the first six months of 2023 adjusted net income (non-GAAP) totaled $29.3 million, or $2.91 per share, compared to $22.6 million, or $2.99 per share for the same period in 2022.
Operating Results
Net interest income ("NII") during the second quarter of 2023 was $34.3 million, up $2.0 million from the previous quarter and up $10.8 million from the second quarter of 2022. The impact of purchase accounting increased NII by $2.5 million, or $0.18 per share after tax, during the second quarter of 2023, compared to $2.2 million, or $0.17 per share after tax, during the previous quarter and $0.4 million, or $0.04 per share after tax, during the second quarter of 2022.
Net interest margin ("NIM") was 3.77% for the second quarter of 2023, compared to 3.74% for the previous quarter and 3.21% for the second quarter of 2022. NII from purchase accounting increased NIM by 0.27%, 0.26% and 0.05% for each of these periods, respectively. While the Bank's average rate paid on interest-bearing liabilities continued to rise during the second quarter of 2023, average rates earned on interest-earning assets also saw a significant increase due to continual repricing of variable-rate loans as well as fixed-rate loans which matured and were renewed during the quarter. The beneficial impact of the Bank's continuing high percentage of noninterest-bearing deposits (32.3% of the Bank's total core deposits at June 30, 2023) also had a positive impact, adding 65 basis points to NIM during the second quarter of 2023 compared to 51 basis points and 14 basis points for the prior quarter and second quarter of 2022, respectively.
Bank First did not record a provision for credit losses during the second quarter of 2023, compared to recording a provision of $4.2 million during the previous quarter and $0.5 million during the second quarter of 2022. Provision expense was $4.2 million for the first six 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 quarter of 2023 was the result of a negligible contraction in the Bank's loan portfolio during that quarter as well as 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 six months of 2023, compared to recoveries exceeding charge-offs by $0.7 million through the first six months of 2022.
Noninterest income was $4.1 million for the second quarter of 2023, compared to $5.8 million and $5.6 million for the prior quarter and second quarter of 2022, respectively. Service charge income increased by $0.2 million, or 10.4%, and $0.3 million, or 22.6%, from the prior quarter and prior-year second 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 investments in Ansay & Associates and UFS increased by $0.1 million and $0.2 million from the prior-year second quarter, representing 16.0% and 36.8% increases, respectively, while each declined $0.1 million from the prior quarter. Loan servicing income from loans previously sold to the secondary market with servicing rights, and therefore servicing income, retained by the Bank increased by $0.1 million, or 17.8%, and $0.3 million, or 67.2%, from the prior quarter and prior-year second quarter, respectively. 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 $0.5 million negative valuation adjustment to its mortgage servicing rights asset during the second quarter of 2023 which compared unfavorably to $0.8 million and $1.5 million positive valuation adjustments during the prior quarter and prior-year second quarter, respectively. Finally, net losses on sales of OREO totaled $0.5 million during the second quarter of 2023 compared to no corresponding loss in the prior quarter and a negligible loss during the second quarter of 2022. These current quarter losses 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 quarter with only four as a result of these sales.
Noninterest expense was $19.5 million in the second quarter of 2023, compared to $19.7 million during the prior quarter and $13.2 million during the second 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 $1.13 billion, or 38.2%, from the end of the second quarter of 2022 to the end of the second quarter of 2023. In addition to this trend, expenses directly attributable to these acquisitions totaling $0.2 million, $1.3 million and $0.6 million during the second and first quarters of 2023 and second quarter 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 $4.09 billion at June 30, 2023, a $431.6 million increase from December 31, 2022, and a $1.13 billion increase from June 30, 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 $3.31 billion at June 30, 2023, up $420.5 million from December 31, 2022, and up $926.9 million from June 30, 2022.
Total deposits, nearly all of which remain core deposits, were $3.41 billion at June 30, 2023, up $345.5 million from December 31, 2022, and up $804.3 million from June 30, 2022. As mentioned earlier in this release, noninterest-bearing demand deposits comprised 32.3% of the Bank's total core deposits at June 30, 2023, compared to 31.1% and 31.7% at December 31 and June 30, 2022, respectively.
Asset Quality
Nonperforming assets at June 30, 2023 remained negligible, totaling $7.2 million compared to $6.7 million and $5.3 million at the end of the fourth and second quarters of 2022, respectively. Nonperforming assets to total assets ended the second quarter of 2023 at 0.18%, matching the level from the end of the fourth and second quarters of 2022. Nonperforming assets at June 30, 2023 included four properties valued at $2.2 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 $570.9 million at June 30, 2023, an increase of $117.8 million from the end of 2022 and $256.7 million from June 30, 2022. The acquisitions of Denmark and Hometown increased total stockholders' equity by $124.8 million and $115.1 million, respectively. Bank First's tangible common equity (non-GAAP) increased by $39.5 million and $110.2 million during the first half of 2023 and trailing twelve months, respectively. The Bank's book value per common share totaled $54.95 at June 30, 2023 compared to $50.22 at December 31, 2022 and $42.06 at June 30, 2022. Tangible book value per common share (non-GAAP) totaled $35.18 at June 30, 2023 compared to $36.14 at December 31, 2022 and $34.18 at June 30, 2022.
Dividend Declaration
Bank First's Board of Directors approved a quarterly cash dividend of $0.30 per common share, payable on October 4, 2023, to shareholders of record as of September 20, 2023. This dividend represents a 20.0% increase over the dividend declared one year earlier.
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