Bank First(BFC) - 2021 Q2 - Quarterly Report

Loan and Financial Performance - Bank First Corporation secured approximately 1,875 loans totaling approximately $279.6 million under the Payroll Protection Program (PPP) during 2020[120] - An additional 1,132 loans totaling approximately $98.2 million were secured under a new round of PPP funding during the first six months of 2021[120] - The Bank's primary source of income is derived from interest on loans and investments, with a focus on maximizing net interest income[114] - The Bank's financial performance is highly dependent on borrowers' ability to repay loans and the demand for its products and services[120] - Net interest income for the period was $21,814 million, with a provision for loan losses of $950 million[121] - Noninterest income totaled $6,574 million, showing an increase from $6,210 million in the previous period[121] - Total noninterest expense was $12,221 million, slightly down from $12,225 million[121] - Earnings per common share (basic) was $1.50, consistent with the previous period[121] - Loans at period-end amounted to $2,225,217 million, compared to $2,228,892 million in the prior period[121] - Total assets were reported at $2,818,950 million, a decrease from $2,846,199 million[121] - Stockholders' equity increased to $311,430 million, up from $303,442 million[121] - Return on average assets was 1.63%, slightly down from 1.67%[121] - Return on average common equity was 14.99%, compared to 15.34% in the previous period[121] - Tangible book value per common share increased to $32.69 from $31.42[121] - Net income increased by $3.2 million to $11.5 million for the three months ended June 30, 2021, compared to $8.3 million for the same period in 2020[130] - Net interest income rose by $1.0 million to $21.8 million for the three months ended June 30, 2021, compared to $20.8 million for the same period in 2020[132] - Total interest income decreased by $0.4 million, or 1.6%, to $24.0 million for the three months ended June 30, 2021, compared to $24.4 million for the same period in 2020[133] - Interest expense decreased by $1.4 million, or 39.0%, to $2.2 million for the three months ended June 30, 2021, compared to $3.6 million for the same period in 2020[134] - Provision for loan losses recorded was $1.0 million for the three months ended June 30, 2021, compared to $3.2 million for the same period in 2020[137] - Noninterest income decreased by $1.2 million to $6.6 million for the three months ended June 30, 2021, compared to $7.8 million for the same period in 2020[140] - Income from service charges increased by 37.8% due to an expanded base of customer relationships resulting from the Timberwood acquisition[140] - Loan servicing income increased by 421.2% due to significant additions to the Company's serviced portfolios[140] - Net income increased by $7.5 million to $23.1 million for the six months ended June 30, 2021, compared to $15.6 million for the same period in 2020[144] - Net interest income rose by $4.5 million to $43.9 million for the six months ended June 30, 2021, driven by the Timberwood acquisition and reduced funding costs[145] - Noninterest income increased by $1.1 million to $12.8 million for the six months ended June 30, 2021, with service charges up by 47.7%[150] - Loan servicing income surged by 145% to $1.683 million for the six months ended June 30, 2021, compared to $688,000 for the same period in 2020[151] - Total noninterest expenses decreased by $2.7 million to $24.5 million for the six months ended June 30, 2021, compared to $27.2 million for the same period in 2020[151] - Provision for loan losses was recorded at $1.9 million for the six months ended June 30, 2021, down from $4.1 million for the same period in 2020[149] - Interest expense decreased by $3.7 million, or 45.0%, to $4.5 million for the six months ended June 30, 2021, compared to $8.2 million for the same period in 2020[147] Asset and Liability Management - Total assets increased to $2,835,580,000 from $2,520,882,000 year-over-year[157] - Total liabilities rose to $2,527,379,000, compared to $2,264,353,000 in the previous year[157] - Interest-bearing deposits totaled $1,661,092,000, with an average rate paid of 0.48%[157] - The average rate earned on interest-earning assets was 3.71%, down from 4.29% year-over-year[157] - Total loans increased by $33.8 million, or 1.5%, to $2.23 billion as of June 30, 2021, from $2.19 billion at December 31, 2020[169] - The commercial and industrial loan portfolio decreased by $40.6 million, or 9.1%, to $404.4 million as of June 30, 2021, representing 18% of total loans[172] - The commercial real estate loan portfolio increased by $49.9 million, or 5.0%, to $1.04 billion as of June 30, 2021, representing 47% of total loans[174] - Residential 1-4 family loans increased by $26.4 million, or 4.8%, to $572.2 million as of June 30, 2021, representing 26% of total loans[178] - Consumer loans totaled $33.5 million as of June 30, 2021, representing 2% of total loans, an increase from $30.5 million at December 31, 2020[183] - The loan portfolio comprised 78.9% of total assets as of June 30, 2021, down from 80.6% at December 31, 2020[168] - Total loans outstanding to directors and officers and their associates were $67.7 million as of June 30, 2021, compared to $67.1 million at December 31, 2020[171] - The construction and development loan portfolio remained stable at $140.7 million as of June 30, 2021, representing 6% of total loans[176] - As of June 30, 2021, total loans amounted to $2,225,217,000, with $1,587,521,000 having predetermined interest rates and $637,696,000 with floating or adjustable interest rates[189] - Nonperforming loans totaled $12,359,000 as of June 30, 2021, representing 0.55% of gross loans and 0.44% of total assets[192] - The total amount of loans maturing in one year or less was $237,117,000 as of June 30, 2021[189] - The total loans pledged as collateral were $831.6 million at June 30, 2021, compared to $825.3 million at December 31, 2020[220] Capital Management and Regulatory Compliance - The Bank was well capitalized as of June 30, 2021, with total capital to risk-weighted assets at 12.2% and Tier 1 capital at 10.6%[246] - The Bank's Common Equity Tier 1 capital ratio was 10.6%, exceeding the minimum required ratio of 6.5%[247] - Total capital for Bank First Corporation was $283,332 thousand, while Tier 1 capital was $246,285 thousand as of June 30, 2021[253] - The Bank's regulatory capital ratios were above the applicable well-capitalized standards and capital conservation buffer, indicating strong capital adequacy[248] - The Economic Growth Act raised the asset threshold for bank holding companies subject to the Federal Reserve's Small Bank Holding Company Policy Statement to $3 billion, providing regulatory relief[250] - The minimum capital for the new Community Bank Leverage Ratio was set at 9%, but the Bank does not intend to opt into this framework[251] - The Bank's Tier 1 capital to average assets ratio was 8.9% as of June 30, 2021, above the minimum required leverage ratio of 5.0%[253] - The Bank's total capital to risk-weighted assets ratio was 12.1% for Bank First, N.A., exceeding the minimum required ratio of 10.0%[253] Risk Management - The company has significant off-balance-sheet arrangements, including unused lines of credit and standby letters of credit, which involve credit and interest rate risk[256] - The Company uses the same credit policies for off-balance-sheet instruments as it does for on-balance-sheet instruments, ensuring consistent risk management[255] - The company actively manages its interest rate sensitivity position to control exposure to risks associated with interest rate movements[265] - Interest rate risk management tools include interest rate sensitivity analysis and net interest margin reports, with adjustments made if results exceed established limits[266] - The company’s asset-liability structure is configured to maximize yield-cost spread while minimizing adverse impacts from interest rate changes[262] - The company’s profitability is significantly affected by fluctuations in interest rates, necessitating active monitoring and management[261] Operational and Regulatory Environment - The Bank operates 21 banking locations across multiple counties in Wisconsin, enhancing its regional presence[112] - The Company completed several mergers, including with Waupaca, Partnership, and Timberwood, expanding its market reach[115][116][117] - The COVID-19 pandemic has impacted economic activity, potentially affecting the Bank's financial condition and results of operations[119] - The Company maintains liquidity through its investment portfolio, deposits, borrowings from the FHLB, and lines available from correspondent banks[240] - The company is involved in various litigation, but management believes any resulting liability will not materially affect its financial position[276]