Bank First(BFC) - 2021 Q1 - Quarterly Report

Company Overview - Bank First Corporation operates as a holding company for Bank First, N.A., which has 21 banking locations across multiple counties in Wisconsin[123]. - The bank has completed several mergers, including with Waupaca, Partnership, and Timberwood, expanding its presence in various counties in Wisconsin[127][128][129]. - The bank is a 49.8% member of a data processing subsidiary, UFS, which provides various services to over 50 Midwest banks, contributing to noninterest income[126]. Financial Performance - The bank's primary income source is interest from loans and investments, with a focus on maximizing net interest income through effective management of interest-earning assets and liabilities[125]. - Interest income for the period was $24,442 million, a decrease from $27,094 million in the previous period[133]. - Net interest income after provision for loan losses was $22,103 million, compared to $24,471 million last period[133]. - Noninterest income totaled $6,210 million, down from $6,744 million in the prior period[133]. - Net income for the period was $11,514 million, slightly down from $11,530 million in the previous period[133]. - Earnings per common share (basic) remained stable at $1.49, consistent with the previous period[133]. - Total assets increased to $2,846,199 million from $2,718,016 million in the prior period[133]. - Deposits rose to $2,448,035 million, up from $2,320,963 million last period[133]. - Return on average assets was 1.67%, a slight decrease from 1.71% in the previous period[133]. - Nonperforming loans to total loans ratio increased to 0.63% from 0.57% in the prior period[133]. - Tangible book value per common share increased to $31.42 from $30.35 in the previous period[133]. Loan Portfolio - The bank maintains an allowance for loan losses to account for credit risk, which is charged against operating earnings[125]. - The loan portfolio composition is well-balanced, with a focus on quality commercial and consumer loans that align with credit policies[168]. - Total loans outstanding to directors and officers and their associates were $65.6 million as of March 31, 2021, with all loans performing according to original terms[170]. - The company services mortgage loans sold to others without recourse amounting to approximately $632.2 million as of March 31, 2021[181]. - As of March 31, 2021, total loans amounted to $2,228,892 thousand, a slight decrease from $2,191,460 thousand as of December 31, 2020, reflecting a growth of approximately 1.7% year-over-year[187][199]. - Nonperforming loans as a percentage of gross loans increased to 0.63% as of March 31, 2021, compared to 0.57% as of December 31, 2020[191]. - The company granted payment deferrals to over 625 customers on loans totaling over $271.5 million during the COVID-19 pandemic, with deferrals primarily for lengths between 60 to 180 days[196]. - Total nonperforming loans reached $13,793 thousand as of March 31, 2021, up from $12,534 thousand as of December 31, 2020[191]. - The company classified loans totaling $54.1 million as substandard as of March 31, 2021, compared to $50.1 million as of December 31, 2020[198]. Interest Rate Management - The company aims to minimize the adverse impact of interest rate changes on net interest income and capital while maximizing yield-cost spread through its asset-liability structure[264]. - Interest rate risk arises from repricing risk, option risk, yield curve risk, and basis risk, affecting earnings and value[265]. - An asset sensitive position is expected to generate higher net interest income with rising short-term interest rates, while a liability sensitive position would generate lower net interest income[266]. - The company actively manages its interest rate sensitivity position to achieve sustainable growth in net interest income[268]. - Interest rate simulations indicate that a 400 basis point increase in interest rates could lead to a 5.9% increase in net interest income over the next 12 months[273]. - The economic value of equity analysis estimates a 15.4% increase in economic value with a 200 basis point increase in interest rates, while a 100 basis point decrease could result in a 1.1% decrease[276]. Regulatory and Capital Management - The bank's operations are regulated by the Office of the Comptroller of the Currency (OCC) and it is a member of the Federal Reserve System[123]. - The leverage capital ratio, a minimum capital standard, is the ratio of Tier 1 capital to quarterly average assets, with a required minimum of 4%[242]. - The company is subject to various regulatory capital requirements, including common equity Tier 1 (CET1) and total capital ratios[241]. - The Bank's total capital to risk-weighted assets ratio was 12.0% as of March 31, 2021, exceeding the minimum required capital[253]. - Tier I capital to risk-weighted assets ratio was 10.4% for Bank First Corporation, which is above the well-capitalized standard[253]. - The Bank's Common Equity Tier I capital to risk-weighted assets ratio was 11.3%, exceeding the minimum requirement of 6.5%[253]. - The company continuously monitors its liquidity position to meet both short-term and long-term cash requirements[237]. - The capital management strategy aims to provide adequate equity to support current and future operations, adhering to regulatory capital requirements[240].