- Successfully closed acquisition of Denmark Bancshares, Inc.
during the quarter impacting quarterly results and period-end
balances
- Net income of $10.5 and
$32.4 million for the three and nine
months ended September 30, 2022,
respectively
- Earnings per common share of $1.26 and $4.15 for
the three and nine months ended September
30, 2022, respectively
- Quarterly cash dividend of $0.25 per share declared, matching the prior
quarter and a 13.6% increase from the prior-year third
quarter
MANITOWOC, Wis., Oct. 18,
2022 /PRNewswire/ -- Bank First Corporation (NASDAQ:
BFC) ("Bank First" or the "Bank"), the holding company for Bank
First, N.A., reported net income of $10.5
million, or $1.26 per share,
for the third quarter of 2022, compared with net income of
$11.2 million, or $1.46 per share, for the prior-year third
quarter. For the nine months ended September
30, 2022, Bank First earned $32.4
million, or $4.15 per share,
compared to $34.3 million, or
$4.45 per share for the same period
in 2021. Pre-tax expenses related to the Bank's acquisition of
Denmark Bancshares, Inc. ("Denmark") and planned acquisition of Hometown
Bancorp, Ltd. totaled $4.6 million
during the third quarter of 2022, reducing after-tax earnings per
share by approximately $0.43.
Year-to-date these expenses have reduced after-tax earnings per
share by $0.57.
Operating Results
Net interest income ("NII") during
the third quarter of 2022 was $27.7
million, up $4.2 million from
the previous quarter and up $4.8
million from the third quarter of 2021. Interest income on
loans originated through the Small Business Administration's
Paycheck Protection Program ("PPP") totaled $0.1 million during the third quarter of 2022,
compared to $0.4 million during the
previous quarter and $2.3 million
during the third quarter of 2021.
Purchase accounting entries, resulting from our acquisition of
Denmark during the third quarter
of 2022, as well as acquisitions of other institutions over the
last several years, increased NII during the third quarter of 2022
by $0.7 million, or $0.07 per share after tax, compared to
$0.4 million and $0.3 million, or $0.04 and $0.03 per
share after tax, for the previous quarter and third quarter of
2021, respectively. For the first nine months of 2022 and 2021 the
impact of these purchase accounting entries increased NII by
$1.4 million, or $0.13 per share after tax, and $1.2 million, or $0.12 per share after tax, respectively.
Net interest margin ("NIM") was 3.63% for the third quarter of
2022, compared to 3.21% for the previous quarter and 3.47% for the
third quarter of 2021. Purchase accounting entries added 0.10%,
0.05% and 0.04% to NIM for each of these periods, respectively.
During much of the first half of 2022 the Bank engaged in a
strategy to enhance NII, utilizing $300.0
million in short-term borrowings from the Federal Home Loan
Bank and investing these funds in short-term, liquid, risk-free,
interest-earning assets. This strategy was discontinued during the
third quarter of 2022 contributing approximately 0.27% to the
increase in NIM quarter-over-quarter.
Bank First did not record a provision for loan losses during the
third quarter of 2022, compared to a provision of $0.5 million during the previous quarter and
$0.7 million during the third quarter
of 2021. Provision expense was $1.7
million for the first nine months of 2022 compared to
$2.5 million for the same period
during 2021. Recoveries of previously charged-off loans exceeded
currently charged-off loans by $0.3
million during the third quarter of 2022 and $1.0 million through the first nine months of
2022. These net recoveries along with continued strong asset
quality metrics in the Bank's loan portfolio led to management's
decision that there was not a need for provision expense during the
third quarter of 2022.
Noninterest income was $5.2
million for the third quarter of 2022, compared to
$5.6 million during the previous
quarter and $5.0 million for the
third quarter of 2021. As noted in recent quarters, noninterest
income for the Bank during 2022 has been negatively impacted by an
industry-wide slowdown in residential mortgage lending, leading to
a decline in gains on sales of mortgage loans to the secondary
market of $0.9 million in the third
quarter of 2022 compared to the prior-year third quarter. Through
the first nine months of 2022, these gains were $4.9 million less than the first nine months of
2021. Offsetting these declines, the Bank experienced a
$1.1 million increase in loan
servicing income during the third quarter of 2022 compared to the
prior-year third quarter and an increase of $2.6 million through the first nine months of
2022 compared to the first nine months of 2021. These increases
resulted from a combination of higher overall balances of
sold-but-serviced loans and increased valuations of mortgage
servicing rights on the Bank's balance sheet. The Bank's
acquisition of Denmark included
approximately $159.5 million in loans
sold-but-serviced, bringing the Bank's total sold-but-serviced loan
portfolio to approximately $873.4
million.
Noninterest expense was $18.9
million in the third quarter of 2022, compared to
$13.2 million during the previous
quarter and $12.5 million during the
third quarter of 2021. As noted earlier, the elevated level of
noninterest expense during the third quarter of 2022 was primarily
a result of one-time acquisition expenses. To a lesser extent,
added scale for approximately half of the third quarter of 2022
resulting from the Denmark
acquisition and inflationary pressures also increased noninterest
expense. Personnel expense for the third quarter of 2022 was
$3.8 million higher than the prior
quarter and prior-year third quarter, primarily the result of
$3.0 million in one-time severance
and employment agreement payments resulting from the Denmark transaction. Data processing expense,
which included $0.1 million in
expenses during the third quarter of 2022 directly linked to
acquisitions, was $0.1 million higher
than the prior quarter and $0.3
million higher than the prior-year third quarter. Outside
services fees, which included $1.5
million in expenses during the third quarter of 2022
directly linked to acquisitions, was $1.2
million higher than the prior quarter (which also included
$0.4 million in expenses directly
linked to acquisitions) and $1.8
million higher than the prior-year third quarter. Finally,
amortization expense related to core deposit intangibles on the
Bank's balance sheet increased $0.5
million from the prior quarter and $0.4 million from the prior-year third quarter.
The acquisition of Denmark created
a core deposit intangible of approximately $15.1 million (3.1% of core deposits acquired).
Amortization of this core deposit intangible, which began during
the third quarter of 2022, added $0.5
million in amortization expense for the quarter.
Balance Sheet
Total assets were $3.64 billion at September
30, 2022, a $703.2 million
increase from December 31, 2021, and
up $794.1 million from September 30, 2021. The preliminary fair value of
assets acquired in the Denmark
acquisition during the third quarter of 2022 totaled approximately
$687.5 million.
Total loans were $2.86 billion at
September 30, 2022, up $623.8 million from December 31, 2021, and up $650.4 million from June
30, 2021. Excluding the impact of PPP repayments or
forgiveness as well as approximately $458.1
million in loans acquired from Denmark as of September
30, 2022, loans grew by 12.2% over the trailing twelve
months. Annualized loan growth during the third quarter of 2022 and
first nine months of 2022, also excluding PPP activity and acquired
loans from Denmark, amounted to
4.8% and 12.5%, respectively. The Federal Reserve Board has made
several significant increases to the effective Federal Funds rate
during 2022, causing significant volatility in financial markets
and generally an increasing overall rate environment. Competitors
in the Bank's markets have been slow to raise loan offering rates
with many remaining at or near the US Treasury yield curve.
Management has elected to raise loan offering rates more
proportionate to the overall rising yield curve while reserving the
most aggressive rate offerings for customers who maintain their
full banking relationship with Bank First. This decision is
intended to conserve the Bank's liquidity until market competition
better aligns with recent rate environment movements. Management
anticipates that year-to-date and anticipated future rate increases
by the Federal Reserve Board will minimize the impact of this
decision on the Bank's overall NII and NIM.
Total deposits, nearly all of which remain core deposits, were
$3.14 billion at September 30, 2022, up $609.8 million from December 31, 2021, and up $665.9 million from September 30, 2021. The preliminary fair value of
deposits acquired in the Denmark
acquisition totaled $606.5 million.
Noninterest-bearing demand deposits comprised 31.3% of the Bank's
total core deposits at September 30,
2022, compared to 32.1% at September
30, 2021. The high-quality deposit portfolio mix acquired
from Denmark allowed this critical
component of the Bank's profitability to remain strong subsequent
to that transaction.
Asset Quality
Nonperforming assets at September 30, 2022, totaled $6.2 million, down $1.6
million and $5.4 million from
the end of the fourth and third quarters of 2021, respectively.
Nonperforming assets to total assets ended the third quarter of
2022 at 0.18%, down from 0.28% and 0.42% at the end of the fourth
and third quarters of 2021, respectively. Nonperforming assets at
September 30, 2022, include
$1.4 million in properties acquired
from Denmark which will not be
utilized by the Bank and have been listed for sale.
Capital Position
Stockholders' equity totaled
$439.4 million at September 30, 2022, an increase of $116.8 million from the end of 2021 and an
increase of $124.2 million from
September 30, 2021. Interest rate
movements during the first nine months of 2022 impacted the value
of investments in the Bank's available-for-sale investment
portfolio, creating a loss in other comprehensive income which
reduced stockholders' equity by $6.7
million during the third quarter of 2022 and $22.3 million year-to-date. Dividends totaling
$5.6 million and share repurchases
totaling $13.8 million further
reduced capital through the first nine months of 2022. Strong
earnings served to partially offset these items, increasing capital
by $32.4 million. Finally, the
acquisition of Denmark increased
total stockholders' equity by $125.3
million. Tangible book value increased by $46.8 million through the first nine months of
2022 and $54.5 million for the
trailing twelve months ending September 30,
2022. Tangible book value per common share outstanding
totaled $34.34 at September 30, 2022 compared to $34.56 and $33.44
at December 31 and September 30, 2021, respectively.
Dividend Declaration
Bank First's Board of Directors
approved a quarterly cash dividend of $0.25 per common share, payable on January 4, 2023, to shareholders of record as of
December 21, 2022. This dividend
matches the previous quarter's dividend and represents a 13.6%
increase over the dividend declared one year earlier.
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 26 banking locations in Wisconsin. The bank has grown through both
acquisitions and de novo branch expansion. The company employs
approximately 335 full-time equivalent staff and has assets of
approximately $3.6 billion. Insurance
services are available through its 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. The bank is a
co-owner of a bank technology outfitter, UFS, LLC, which provides
digital, core, cybersecurity, managed IT, and 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
