Bank First(BFC) - 2024 Q1 - Quarterly Results

Executive Summary Bank First Corporation achieved strong Q1 2024 financial performance, marked by significant net income and EPS growth, stable dividends, and substantial share repurchases Key Financial Highlights Bank First Corporation reported strong Q1 2024 net income and EPS growth, alongside a stable dividend and significant share repurchases, demonstrating solid financial performance Q1 2024 Key Financial Highlights: | Metric | Q1 2024 | Q1 2023 | YoY Change | | :-------------------------- | :------ | :------ | :--------- | | Net Income ($M) | 15.4 | 10.7 | +43.9% | | EPS ($) | 1.51 | 1.09 | +38.5% | | Annualized Return on Average Assets | 1.50% | - | - | | Quarterly Cash Dividend per Share | $0.35 | $0.30 | +16.7% | | Common Shares Repurchased | 261,340 | - | - | Operating Performance Operating performance in Q1 2024 was characterized by increased net income and net interest income, partially offset by lower noninterest income, while credit loss provisions significantly decreased Net Income and Earnings Per Share Net income for Q1 2024 increased significantly year-over-year, both on a GAAP and adjusted non-GAAP basis, driven by higher net interest income and lower provision for credit losses, despite a decrease in noninterest income Net Income and EPS (GAAP): | Period | Net Income ($M) | EPS ($) | | :----- | :-------------- | :------ | | Q1 2024 | 15.4 | 1.51 | | Q1 2023 | 10.7 | 1.09 | | YoY Change | +43.9% | +38.5% | Adjusted Net Income and EPS (Non-GAAP): | Period | Adjusted Net Income ($M) | Adjusted EPS ($) | | :----- | :----------------------- | :--------------- | | Q1 2024 | 15.4 | 1.51 | | Q1 2023 | 14.7 | 1.50 | | YoY Change | +4.8% | +0.7% | Net Interest Income and Margin Net interest income saw a modest increase year-over-year and quarter-over-quarter, with net interest margin slightly improving QoQ but decreasing YoY. Purchase accounting significantly contributed to NII and NIM Net Interest Income (NII): | Period | NII ($M) | | :----- | :------- | | Q1 2024 | 33.3 | | Q4 2023 | 32.9 | | Q1 2023 | 32.2 | | QoQ Change | +1.2% | | YoY Change | +3.4% | Net Interest Margin (NIM): | Period | NIM (%) | | :----- | :------ | | Q1 2024 | 3.62 | | Q4 2023 | 3.53 | | Q1 2023 | 3.74 | | QoQ Change | +0.09 pp | | YoY Change | -0.12 pp | - Purchase accounting increased NII by $1.2 million (Q1 2024) and NIM by 0.13% (Q1 2024)[9][18] Noninterest Income Noninterest income decreased year-over-year, primarily due to the absence of income from UFS, LLC following its sale in October 2023, and a negative valuation adjustment to mortgage servicing rights Noninterest Income: | Period | Noninterest Income ($M) | | :----- | :---------------------- | | Q1 2024 | 4.4 | | Q1 2023 | 5.8 | | YoY Change | -24.1% | - Key Differentiators YoY: * Absence of UFS income in Q1 2024 (vs. $0.9 million in Q1 2023) due to sale on October 1, 2023[2][30] * Negative valuation adjustment of $0.3 million to mortgage servicing rights in Q1 2024 (vs. $0.8 million favorable adjustment in Q1 2023)[2][30] Noninterest Expense Noninterest expense increased year-over-year, mainly due to higher personnel expenses from the Hometown acquisition and increased data processing costs for platform upgrades, partially offset by lower acquisition-related expenses Noninterest Expense: | Period | Noninterest Expense ($M) | | :----- | :----------------------- | | Q1 2024 | 20.3 | | Q1 2023 | 19.7 | | YoY Change | +3.0% | - Key Drivers of Increase: * Personnel expense increased by $1.0 million YoY due to additional staff from the Hometown acquisition[34] * Data processing expenses increased by $0.5 million YoY, including $0.3 million for online customer platform upgrades[34] - Offsetting Factors: Postage, stationery, supplies, and outside service fees saw YoY reductions due to one-time acquisition expenses from the Hometown acquisition in Q1 2023[34] Provision for Credit Losses The provision for credit losses significantly decreased year-over-year, primarily due to a large day-one provision related to the Hometown acquisition in Q1 2023, with Q1 2024 seeing net recoveries contributing to the credit loss reserve Provision for Credit Losses: | Period | Provision for Credit Losses ($M) | | :----- | :------------------------------- | | Q1 2024 | 0.2 | | Q4 2023 | 0.5 | | Q1 2023 | 4.2 | | YoY Change | -95.2% | - The significant YoY variance is due to a $3.6 million day-one provision for credit losses from the Hometown acquisition in Q1 2023[25] - Net recoveries of previously charged-off loan balances totaled $0.6 million during Q1 2024, contributing to the credit loss reserve[25] Income Tax Expense Income tax expense in Q1 2024 was influenced by an additional $1.3 million benefit recorded due to the finalization of rules for a Wisconsin state income tax exclusion on certain commercial and agricultural loans from 2023 Income Tax Expense: | Period | Income Tax Expense ($M) | | :----- | :---------------------- | | Q1 2024 | 1.8 | | Q1 2023 | 3.6 | | YoY Change | -50.0% | - An additional benefit of $1.3 million was recorded in Q1 2024 as a refinement to 2023 income tax provisions, following the finalization of rules for a Wisconsin state income tax exclusion on certain commercial and agricultural loans[10] Financial Position The company's financial position at Q1 2024 showed a decrease in total assets and deposits, alongside growth in total loans Total Assets Total assets decreased both quarter-over-quarter and year-over-year, standing at $4.10 billion at March 31, 2024 Total Assets: | Period | Total Assets ($B) | | :----------- | :---------------- | | Mar 31, 2024 | 4.10 | | Dec 31, 2023 | 4.22 | | Mar 31, 2023 | 4.17 | | QoQ Change | -$121.9M | | YoY Change | -$67.3M | Deposits Total deposits experienced a slight decrease quarter-over-quarter and year-over-year, with a modest shift from noninterest-bearing to interest-bearing balances Total Deposits: | Period | Total Deposits ($B) | | :----------- | :------------------ | | Mar 31, 2024 | 3.42 | | Dec 31, 2023 | 3.43 | | Mar 31, 2023 | 3.46 | | QoQ Change | -$16.9M | | YoY Change | -$47.2M | - Noninterest-bearing demand deposits comprised 29.0% of total deposits at March 31, 2024, down from 31.8% at March 31, 2023, indicating a modest shift towards interest-bearing balances[11] Loans Total loans showed growth both quarter-over-quarter and year-over-year, with significant annualized growth in Q1 2024, expected to benefit future earnings Total Loans: | Period | Total Loans ($B) | | :----------- | :--------------- | | Mar 31, 2024 | 3.38 | | Dec 31, 2023 | 3.34 | | Mar 31, 2023 | 3.32 | | QoQ Change | +$40.4M | | YoY Change | +$60.1M | - Loans grew by 4.9% annualized during Q1 2024, with most growth occurring later in the quarter, expected to benefit future earnings[35] Asset Quality Asset quality metrics in Q1 2024 indicated an increase in nonperforming assets, primarily due to a single large loan moving to nonaccrual status Nonperforming Assets Nonperforming assets increased quarter-over-quarter and year-over-year, primarily due to one large loan from previous acquisitions moving to nonaccrual status Nonperforming Assets: | Period | Nonperforming Assets ($M) | Nonperforming Assets to Total Assets (%) | | :----------- | :------------------------ | :--------------------------------------- | | Mar 31, 2024 | 12.5 | 0.31 | | Dec 31, 2023 | 9.1 | 0.21 | | Mar 31, 2023 | 9.1 | 0.22 | | QoQ Change | +$3.4M | +0.10 pp | | YoY Change | +$3.4M | +0.09 pp | - The increase in nonperforming assets resulted from one loan totaling $3.6 million, primarily from previous acquisitions, which was moved to nonaccrual status[4] Capital and Shareholder Returns Capital and shareholder returns in Q1 2024 reflected increased book values, substantial share repurchases, and a stable dividend, despite a slight quarter-over-quarter decrease in stockholders' equity Stockholders' Equity Stockholders' equity increased year-over-year but decreased quarter-over-quarter, as dividends and share repurchases outpaced earnings during the quarter Stockholders' Equity: | Period | Stockholders' Equity ($M) | | :----------- | :------------------------ | | Mar 31, 2024 | 609.3 | | Dec 31, 2023 | 619.8 | | Mar 31, 2023 | 562.4 | | QoQ Change | -$10.5M | | YoY Change | +$47.0M | - The quarter-over-quarter decline in capital was due to dividends totaling $3.5 million and share repurchases of $22.3 million outpacing earnings of $15.4 million[12] Book Value and Tangible Book Value Per Share Both book value and tangible book value per common share increased year-over-year and slightly quarter-over-quarter, reflecting overall capital growth Book Value Per Common Share: | Period | Book Value Per Share ($) | | :----------- | :----------------------- | | Mar 31, 2024 | 60.16 | | Dec 31, 2023 | 59.80 | | Mar 31, 2023 | 54.04 | Tangible Book Value Per Common Share (Non-GAAP): | Period | Tangible Book Value Per Share ($) | | :----------- | :-------------------------------- | | Mar 31, 2024 | 40.35 | | Dec 31, 2023 | 40.30 | | Mar 31, 2023 | 34.14 | Dividends and Share Repurchases Bank First declared a quarterly cash dividend matching the prior quarter and significantly higher than the prior year, while also executing substantial share repurchases during Q1 2024 - A quarterly cash dividend of $0.35 per common share was declared, payable on July 10, 2024[24][36] - The declared dividend matches the prior quarter and is 16.7% higher than the prior-year first quarter[24] - 261,340 common shares were repurchased during Q1 2024, representing 2.5% of outstanding shares as of the beginning of the period[24][33] Company Information Bank First Corporation is a Wisconsin-based financial services provider, established in 1894, offering comprehensive banking products through 26 locations with approximately $4.1 billion in assets About Bank First Corporation Bank First Corporation, established in 1894, is a Wisconsin-based financial services provider offering a range of banking products through 26 locations, with approximately $4.1 billion in assets and 361 full-time equivalent staff - Incorporated in 1894, Bank First, N.A. operates 26 banking locations in Wisconsin[5] - Offers loan, deposit, and treasury management products, and has grown through acquisitions and de novo branch expansion[5] - Employs approximately 361 full-time equivalent staff and manages assets of approximately $4.1 billion[5] Non-GAAP Financial Measures Management utilizes non-GAAP financial measures, such as adjusted net income and tangible book value, to provide additional insights into the company's operating performance, financial position, and for peer comparison, while also emphasizing their limitations - Non-GAAP measures (e.g., adjusted net income, tangible book value per common share) are used by management and investors to understand operating performance, financial position, and for peer comparison[6] - Comparable GAAP measures and reconciliations are provided, and non-GAAP measures should not be considered in isolation or as a substitute for GAAP results due to their limitations[6] Forward-Looking Statements The report contains forward-looking statements regarding future performance, financial condition, and strategic plans, which are subject to inherent uncertainties and risks that could cause actual results to differ materially - Statements relate to projected growth, anticipated future financial performance, financial condition, credit quality, management's long-term goals, and anticipated effects of developments or events[13] - These statements are based on current expectations, estimates, and projections, which are inherently uncertain and beyond Bank First's control[29] - Actual results may differ materially due to various factors, including business and economic conditions, interest rate policies, credit management, acquisition risks, and general market conditions[29] Consolidated Financial Summary (Unaudited) This section provides detailed unaudited consolidated financial statements, including results of operations, period-end balances, key financial ratios, and reconciliations of non-GAAP measures across multiple quarters Results of Operations This section provides a detailed breakdown of Bank First Corporation's interest income, interest expense, net interest income, provision for credit losses, noninterest income, noninterest expense, and net income over the past five quarters Results of Operations (in thousands): | Metric | 3/31/2024 | 12/31/2023 | 9/30/2023 | 6/30/2023 | 3/31/2023 | | :------------------------------------- | :-------- | :--------- | :-------- | :-------- | :-------- | | Interest income | $49,272 | $48,663 | $46,989 | $45,929 | $40,902 | | Interest expense | $15,923 | $15,747 | $12,931 | $11,657 | $8,668 | | Net interest income | $33,349 | $32,916 | $34,058 | $34,272 | $32,234 | | Provision for credit losses | $200 | $500 | $- | $- | $4,182 | | Noninterest income | $4,397 | $42,458 | $5,254 | $4,554 | $5,849 | | Noninterest expense | $20,324 | $28,862 | $19,647 | $19,946 | $19,664 | | Net income | $15,412 | $34,898 | $14,804 | $14,132 | $10,680 | | Earnings per common share - basic | $1.51 | $3.39 | $1.43 | $1.37 | $1.09 | Period-End Balances This section provides a snapshot of key balance sheet items at the end of each of the last five quarters, including cash, investment securities, loans, total assets, deposits, and stockholders' equity Period-End Balances (in thousands): | Metric | 3/31/2024 | 12/31/2023 | 9/30/2023 | 6/30/2023 | 3/31/2023 | | :------------------------------------- | :-------- | :--------- | :-------- | :-------- | :-------- | | Cash and cash equivalents | $83,374 | $247,468 | $75,776 | $111,326 | $169,691 | | Investment securities available-for-sale | $138,420 | $142,197 | $179,046 | $191,303 | $197,895 | | Loans | $3,383,395 | $3,342,974 | $3,355,549 | $3,314,481 | $3,323,296 | | Total assets | $4,099,924 | $4,221,842 | $4,087,519 | $4,092,071 | $4,167,228 | | Deposits | $3,416,039 | $3,432,920 | $3,398,293 | $3,405,736 | $3,463,235 | | Stockholders' equity | $609,330 | $619,798 | $577,329 | $570,872 | $562,372 | Financial Ratios This section presents key financial ratios, including profitability, capital adequacy, asset quality, and interest rate metrics, for the last five quarters, providing a comprehensive view of the bank's performance and health Financial Ratios: | Metric | 3/31/2024 | 12/31/2023 | 9/30/2023 | 6/30/2023 | 3/31/2023 | | :------------------------------------- | :-------- | :--------- | :-------- | :-------- | :-------- | | Return on average assets * | 1.50% | 3.34% | 1.44% | 1.38% | 1.11% | | Return on average common equity * | 10.11% | 22.58% | 10.19% | 9.99% | 8.33% | | Stockholders' equity to assets | 14.86% | 14.68% | 14.12% | 13.95% | 13.50% | | Tangible equity to tangible assets (non-GAAP) | 10.48% | 10.39% | 9.62% | 9.40% | 8.97% | | Net interest margin, taxable equivalent * | 3.62% | 3.53% | 3.71% | 3.77% | 3.74% | | Nonperforming loans to total loans | 0.29% | 0.20% | 0.10% | 0.15% | 0.14% | | Nonperforming assets to total assets | 0.31% | 0.21% | 0.13% | 0.18% | 0.22% | | Allowance for credit losses - loans to total loans | 1.31% | 1.30% | 1.29% | 1.31% | 1.30% | Adjusted Net Income Reconciliation This section provides a reconciliation of GAAP net income to non-GAAP adjusted net income, detailing adjustments for acquisition-related expenses, gains/losses on sales of securities, and other non-recurring items across multiple quarters Adjusted Net Income Reconciliation (in thousands): | Metric | 3/31/2024 | 12/31/2023 | 9/30/2023 | 6/30/2023 | 3/31/2023 | | :------------------------------------- | :-------- | :--------- | :-------- | :-------- | :-------- | | Net income (GAAP) | $15,412 | $34,898 | $14,804 | $14,132 | $10,680 | | Acquisition related expenses | $- | $29 | $312 | $171 | $1,342 | | Provision for credit losses related to acquisition | $- | $- | $- | $- | $3,552 | | Gain on sale of UFS | $- | $(38,904) | $- | $- | $- | | Losses (gains) on sales of securities and OREO valuations | $(13) | $9,780 | $53 | $489 | $75 | | Adjusted net income (non-GAAP) | $15,396 | $14,792 | $15,092 | $14,627 | $14,678 | | Adjusted earnings per share (non-GAAP) | $1.51 | $1.44 | $1.46 | $1.42 | $1.50 | Tangible Assets Reconciliation This section provides a reconciliation of GAAP total assets to non-GAAP tangible assets by deducting goodwill and core deposit intangibles for the past five quarters Tangible Assets Reconciliation (in thousands): | Metric | 3/31/2024 | 12/31/2023 | 9/30/2023 | 6/30/2023 | 3/31/2023 | | :------------------------------------- | :-------- | :--------- | :-------- | :-------- | :-------- | | Total assets (GAAP) | $4,099,924 | $4,221,842 | $4,087,519 | $4,092,071 | $4,167,228 | | Goodwill | $(175,106) | $(175,106) | $(175,106) | $(175,104) | $(175,125) | | Core deposit intangible, net of amortization | $(25,496) | $(26,996) | $(28,599) | $(30,225) | $(31,897) | | Tangible assets (non-GAAP) | $3,899,322 | $4,019,740 | $3,883,814 | $3,886,742 | $3,960,206 | Tangible Common Equity Reconciliation This section provides a reconciliation of GAAP total stockholders' equity to non-GAAP tangible common equity by deducting goodwill and core deposit intangibles for the past five quarters Tangible Common Equity Reconciliation (in thousands): | Metric | 3/31/2024 | 12/31/2023 | 9/30/2023 | 6/30/2023 | 3/31/2023 | | :------------------------------------- | :-------- | :--------- | :-------- | :-------- | :-------- | | Total stockholders' equity (GAAP) | $609,330 | $619,798 | $577,329 | $570,872 | $562,372 | | Goodwill | $(175,106) | $(175,106) | $(175,106) | $(175,104) | $(175,125) | | Core deposit intangible, net of amortization | $(25,496) | $(26,996) | $(28,599) | $(30,225) | $(31,897) | | Tangible common equity (non-GAAP) | $408,728 | $417,696 | $373,624 | $365,543 | $355,350 | Tangible Book Value Per Common Share Calculation This section details the calculation of non-GAAP tangible book value per common share using tangible common equity and common shares outstanding for the past five quarters Tangible Book Value Per Common Share Calculation: | Metric | 3/31/2024 | 12/31/2023 | 9/30/2023 | 6/30/2023 | 3/31/2023 | | :------------------------------------- | :-------- | :--------- | :-------- | :-------- | :-------- | | Tangible common equity (non-GAAP) | $408,728 | $417,696 | $373,624 | $365,543 | $355,350 | | Common shares outstanding at period end | 10,129,190 | 10,365,131 | 10,379,071 | 10,389,240 | 10,407,114 | | Tangible book value per common share (non-GAAP) | $40.35 | $40.30 | $36.00 | $35.18 | $34.14 | Average Assets, Liabilities and Stockholders' Equity, and Average Rates Earned or Paid This section provides a detailed breakdown of average balances for interest-earning assets, liabilities, and stockholders' equity, along with average rates earned or paid, offering insights into the bank's interest rate sensitivity and profitability for Q1 2024 and Q1 2023 Average Balances and Rates (in thousands, except rates): | Metric | 3/31/2024 | 3/31/2023 | | :------------------------------------- | :-------- | :-------- | | ASSETS | | | | Total interest-earning assets | $3,741,498 | $3,524,672 | | Total assets | $4,144,896 | $3,901,713 | | LIABILITIES AND SHAREHOLDERS' EQUITY | | | | Total interest-bearing deposits | $2,463,041 | $2,240,368 | | Total interest-bearing liabilities | $2,512,304 | $2,334,956 | | Shareholders' equity | $613,190 | $520,212 | | RATES | | | | Total interest-earning assets yield | 5.33% | 4.74% | | Total interest-bearing liabilities cost | 2.55% | 1.51% | | Net interest spread | 2.78% | 3.24% | | Net interest margin | 3.62% | 3.74% |