- Net income of $34.9 million
and $74.5 million for the three
months and year ended December 31,
2023, respectively
- Earnings per common share of $3.39 and $7.28 for
the three months and year ended December 31,
2023, respectively
- Annualized return on average assets of 3.34% and 1.83% for
the three months and year ended December 31,
2023, respectively
- $38.9 million pre-tax gain on
sale of member interest in UFS, LLC, contributing to $4.18, or 7.50%, and $4.30, or 11.95%, growth in book value per common
share and tangible book value per common share (non-GAAP),
respectively, during the fourth quarter of 2023
- Quarterly cash dividend of $0.35 per share declared, an increase of 16.7%
from the prior-quarter and 40.0% from the prior-year fourth
quarter
MANITOWOC, Wis., Jan. 16,
2024 /PRNewswire/ -- Bank First Corporation (NASDAQ:
BFC) ("Bank First" or the "Bank"), the holding company for Bank
First, N.A., reported net income of $34.9
million, or $3.39 per common
share, for the fourth quarter of 2023, compared with net income of
$12.8 million, or $1.43 per share, for the prior-year fourth
quarter. For the year ended December 31,
2023, Bank First earned $74.5
million, or $7.28 per common
share, compared to $45.2 million, or
$5.58 per share for the full year of
2022.
Financial results for the fourth quarter of 2023 included
several significant one-time transactions:
- The Bank sold 100% of its member interest in UFS, LLC ("UFS")
in a transaction which closed on October 1,
2023, resulting in a pre-tax gain on sale of $38.9 million.
- The Bank repaid $11.5 million in
subordinated debt owed to three financial institutions, reducing
future interest expense for the Bank by over $1.0 million annually.
- The Bank redeemed $8.3 million in
debt securities related to the Hometown Bancorp, Ltd. Capital Trust
II ("Trust II") in the fourth quarter of 2023 and informed holders
of securities of Hometown Bancorp, Ltd. Capital Trust I ("Trust I")
of its intent to redeem $4.1 million
in debt securities related to that trust on January 7, 2024. These redemptions reduce future
interest expense for the Bank by over $1.1
million annually, but also led to the accelerated
amortization of $1.4 million in fair
value adjustments assigned to these liabilities when they were
acquired along with Hometown Bancorp Ltd. ("Hometown") earlier in
2023. The impact of this acceleration was recorded in interest
expense for the fourth quarter of 2023.
- The Bank sold available for sale US Treasury securities with a
par value of $50.0 million resulting
in a realized loss on sale totaling $7.8
million, recorded in noninterest expense. These securities
had an average yield of 1.36%. Proceeds of these sales were
reinvested in a combination of short and long-term investments with
an average yield of 4.98%, increasing future interest income by
over $1.8 million annually.
- The Bank vacated the former corporate headquarters of Hometown,
moving this building to other real estate owned ("OREO"), and
revalued four other OREO properties (all former bank branches)
leading to a combined loss on OREO valuations of $1.6 million.
- The Bank will be closing a branch location during the first
quarter of 2024 concurrent with opening a new flagship location in
its Green Bay, WI market. The
closed branch will be moved to OREO at an expected valuation
significantly below its carrying value, leading the Bank to impair
the cost basis of this branch building by $0.4 million. This impairment expense is included
in "other noninterest expense" in the financial reports attached to
this release.
After removing the impact of these one-time transactions as well
as a severance charge discussed later in this release, the Bank
reported adjusted net income (non-GAAP) of $14.8 million, or $1.44 per share, for the fourth quarter of 2024,
compared with $13.9 million, or
$1.54 per share, for the prior-year
fourth quarter. For the year ended December
31, 2023, adjusted net income (non-GAAP) totaled
$59.2 million, or $5.82 per share, compared to $50.5 million, or $6.28 per share for the full year of 2022.
Operating Results
Net interest income ("NII") during
the fourth quarter of 2023 was $32.9
million, down $1.1 million
from the previous quarter but up $2.3
million from the fourth quarter of 2022. The previously
mentioned accelerated fair value amortization related to the
redemption of Trust I and Trust II led to a one-time $1.4 million reduction in NII in the fourth
quarter of 2023. The impact of purchase accounting (including the
$1.4 million reduction related to
Trust I and Trust II) increased NII by $0.3
million, or $0.03 per share
after tax, during the fourth quarter of 2023, compared to
$1.3 million, or $0.13 per share after tax, during the previous
quarter and $0.9 million, or
$0.10 per share after tax, during the
fourth quarter of 2022.
Net interest margin ("NIM") was 3.53% for the fourth quarter of
2023, compared to 3.71% for the previous quarter and the fourth
quarter of 2022. NII from purchase accounting increased NIM by
0.01% during the fourth quarter of 2023, compared to 0.19% and
0.15% for the previous quarter and fourth quarter of 2022,
respectively. While the Bank's average rate paid on
interest-bearing liabilities rose throughout 2023, increasing
average rates earned on interest-earning assets as well as the
beneficial impact of the Bank's continuing high percentage of
noninterest-bearing deposits (31.7% of the Bank's total core
deposits at December 31, 2023) have
allowed the Bank's net interest margin, excluding purchase
accounting impacts, to expand quarter-over-quarter for the second
and third quarter of 2023 and remain level from the third to the
fourth quarter.
Bank First recorded a provision for credit losses totaling
$0.5 million during the fourth
quarter of 2023, matching the fourth quarter of 2022. $0.2 million of this fourth quarter 2023
provision related to potential credit losses in the loan portfolio
and $0.3 million related to potential
credit losses in unfunded loan commitments. No provision for credit
losses was recorded during the previous two quarters. Provision
expense was $4.7 million for the full
year of 2023 compared to $2.2 million
for the full year of 2022. The acquisition of the loan portfolio of
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 minimal provisions for
credit losses during the final three quarters of 2023 was the
result of 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 during the year ended December 31, 2023, compared to recoveries
exceeding charge-offs by $0.2 million
during the previous year.
Noninterest income was $42.5
million for the fourth quarter of 2023, compared to
$5.3 million and $3.9 million for the prior quarter and fourth
quarter of 2022, respectively. The largest differentiator in
quarterly noninterest income during the fourth quarter of 2023 was
the aforementioned gain on sale of UFS, which totaled $38.9 million. Service charge income totaled
$1.8 million during the fourth
quarter of 2023, matching the prior quarter but increasing by
$0.3 million, or 18.1%, from the
prior-year fourth quarter as a result of the added scale from the
acquisitions of Denmark Bancshares, Inc. ("Denmark") during 2022 and Hometown earlier in
2023. Income provided by the Bank's investment in Ansay &
Associates, which typically reaches its seasonal low during the
fourth quarter of each year, decreased by $0.1 million from the prior-year fourth quarter
while declining $0.7 million from the
prior quarter. Income from this investment increased by
$0.4 million, or 14.2%, for the full
year of 2023 compared to the full year of 2022. Income from UFS was
overestimated by $0.2 million during
the third quarter of 2023 requiring an immaterial adjustment in the
fourth quarter. Loan servicing income from loans previously sold to
the secondary market with servicing rights, and therefore servicing
income, retained by the Bank matched the prior quarter but
increased by $0.2 million, or 36.0%
from the prior-year fourth quarter. Sold but serviced loan
portfolios acquired from Hometown totaled $343.6 million, leading to this increase in loan
servicing income. The Bank experienced a $0.1 million negative valuation adjustment to its
mortgage servicing rights asset during the fourth quarter of 2023
which compared unfavorably to a $0.2
million positive adjustment in the prior quarter and a
negligible adjustment during the prior-year fourth quarter.
Noninterest expense was $28.9
million for the fourth quarter of 2023, compared to
$19.6 million during the prior
quarter and $17.3 million during the
fourth quarter of 2022. The previously mentioned loss on sale of
available for sale US Treasury securities and various valuation
adjustments to OREO (including $0.4
million recorded in "other noninterest expense") elevated
noninterest expense during the fourth quarter of 2023 by
$9.8 million. A reorganization of the
management structure over commercial banking, intended to improve
operating efficiency and consistency across the Bank, led to a
one-time severance expense of $0.4
million during the fourth quarter of 2023, recorded in
personnel expense. Outside of these events, most areas of
noninterest expense have increased over the past five quarters as a
result of added operational scale from the acquisitions of
Denmark and Hometown. Expenses
directly attributable to these acquisitions have also caused
volatility in several noninterest expense areas, most notably
occupancy and outside service fee expenses during the fourth
quarter of 2022 and the first quarter of 2023. Core deposit
intangible assets of $15.1 million
and $16.5 million created by the
Denmark and Hometown acquisitions,
respectively, have also created an increase in amortization of
intangible assets expense over the last six quarters which totaled
$6.3 million during the full year
2023 compared to $2.3 million for the
prior-year.
While we anticipate a decrease in the Bank's effective income
tax rate in future quarters as a result of the current Wisconsin state budget, signed by Governor
Evers on July 5, 2023, which included
a provision offering an income tax exclusion on certain commercial
and agricultural loans to borrowers who reside or are located in
the state of Wisconsin, the large
gain on sale of UFS in the current quarter pushed total income
before income tax expense well beyond any significant impact of the
tax benefit from this income exclusion.
Balance Sheet
Total assets were $4.22 billion at December
31, 2023, a $561.4 million
increase from December 31, 2022. The
preliminary fair value of assets acquired in the Hometown
acquisition during the first quarter of 2023 totaled approximately
$614.4 million.
Total loans were $3.34 billion at
December 31, 2023, up $449.0 million from December 31, 2022. Loans contracted slightly
during the fourth quarter of 2023.
Total deposits, nearly all of which remain core deposits, were
$3.43 billion at December 31, 2023, up $372.7 million from December 31, 2022. As mentioned earlier in this
release, noninterest-bearing demand deposits comprised 31.7% of the
Bank's total core deposits at December 31,
2023, compared to 31.1% at December
31, 2022.
Asset Quality
Nonperforming assets at December 31, 2023 totaled $9.1 million compared to $6.7 million at the end of the prior year.
Nonperforming assets to total assets ended the fourth quarter of
2023 at 0.21%, up slightly from 0.18% at the end of the prior year.
Nonperforming assets at December 31,
2023 included five properties valued at $2.5 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
$619.8 million at December 31, 2023, an increase of $166.7 million from the end of 2022. The
acquisition of Hometown during the first quarter of 2023 increased
total stockholders' equity by $115.1
million. Strong earnings along with a significant reduction
in unrealized losses in the Bank's available-for-sale securities
led to a $42.5 million increase in
total stockholders' equity during the fourth quarter of 2023. Bank
First's tangible common equity (non-GAAP) increased by $91.6 million during the full year of 2023. The
Bank's book value per common share totaled $59.80 at December 31,
2023 compared to $50.22 at
December 31, 2022. Tangible book
value per common share (non-GAAP) totaled $40.30 at December 31,
2023 compared to $36.14 at
December 31, 2022.
Dividend Declaration
Bank First's Board of Directors
approved a quarterly cash dividend of $0.35 per common share, payable on April 10, 2024, to shareholders of record as of
March 27, 2024. This dividend
represents a 16.7% and 40.0% increase over the dividend declared
for the prior quarter and one year earlier, respectively.
Bank First Corporation provides financial services through its
subsidiary, Bank First, N.A., 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 Bank employs
approximately 379 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 in collaboration with
several regional partners. 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