Bank First : Announces Net Income for the Fourth Quarter of 2021 - Form 8-K

Bank First Announces Net Income for the Fourth Quarter of 2021

·	Net income of $11.2 and $45.4 million for the three months and year ended December 31, 2021

·	Earnings per common share of $1.46 and $5.92 for the three months and year ended December 31, 2021

·	Annualized return on average assets of 1.53% and 1.60% for the three months and year ended December 31, 2021

·	Quarterly cash dividend of $0.22 per share declared, an increase of 4.8% from prior-year fourth quarter quarterly cash dividend

MANITOWOC, Wis, January 18, 2022 -- Bank First Corporation (NASDAQ: BFC) ("Bank First" or the "Bank"), the holding company for Bank First, N.A., reported net income of $11.2 million, or $1.46 per share, for the fourth quarter of 2021, compared with net income of $11.5 million, or $1.49 per share, for the prior-year fourth quarter. For the year ended December 31, 2021, Bank First earned $45.4 million, or $5.92 per share, compared to $38.0 million, or $5.07 per share for the year ended December 31, 2020.

Operating Results

Net interest income ("NII") during the fourth quarter of 2021 was $23.2 million, up $0.3 million from the previous quarter but down $1.2 million from the fourth quarter of 2020. NII for the year ended December 31, 2021 was $90.1 million, up from $86.8 million during the prior year.

As mentioned in previous releases, Bank First was a very active participant in the Paycheck Protection Program ("PPP"), a Small Business Administration ("SBA") loan program aimed at supporting small business through the turbulent economic environment created by the COVID-19 pandemic ("COVID"). Bank First originated over $381.3 million in loans to new and existing customers under this program, $31.1 million of which remained unpaid and unforgiven as of December 31, 2021. Origination fees collected from PPP loan originations totaled over $14.6 million. Under accounting rules, the Bank recognizes these fees as an addition to NII over the contractual life of the related loan, with any remaining fee being fully recognized into NII if the loan is paid off or forgiven prior to the original maturity date. As is the case with any institution participating in PPP originations, this accounting treatment has caused significant variations in the Bank's NII and interest margins quarter-to-quarter based on how many PPP loans are forgiven during the period. Unrecognized PPP origination fees totaled $1.1 million at December 31, 2021, compared to $2.2 million and $2.6 million at September 30, 2021 and December 31, 2020, respectively.

NII related to purchase accounting entries, resulting from our acquisitions of other institutions over the last several years, increased net income (after tax) during the fourth quarter of 2021 by $0.6 million, or $0.07 per share, compared to $0.5 million, or $0.07 per share, for the fourth quarter of 2020. For the years ended December 31, 2021 and 2020, the impact of these purchase accounting entries increased net income (after tax) by $1.5 million, or $0.19 per share, and $3.1 million, or $0.41 per share, respectively.

Net interest margin ("NIM") was 3.47% for the fourth quarter of 2021, matching the prior quarter and lower than 4.01% for the fourth quarter of 2020. The aforementioned purchase accounting entries added 0.11%, 0.04% and 0.12% to NIM for each of these periods, respectively. NIM created by the presence of PPP activity during these periods added approximately 0.12%, 0.21% and 0.29%, respectively. NIM was 3.47% for the year ended December 31, 2021, including 0.08% from the impact of purchase accounting entries, compared to 3.84%, including 0.19% from the impact of purchase accounting entries, for the year ended December 31, 2020.

Bank First recorded a provision for loan losses of $0.6 million during the fourth quarter of 2021, compared to $1.7 million during the fourth quarter of 2020. Provision expense was $3.1 million for the year ended December 31, 2021 compared to $7.1 million for the year ended December 31, 2020. While provision expense was elevated during 2020 in response to uncertainty created by COVID and society's response to it, actual asset quality metrics during the course of 2021, as further discussed later in this release, have remained strong and allowed for a reduction in provision expense during the current year.

Noninterest income was $5.7 million for the fourth quarter of 2021, compared to $6.7 million for the fourth quarter of 2020. Loan servicing income, which includes the impact of changes in the valuation of mortgage servicing rights ("MSR") on the Bank's balance sheet, totaled $1.6 million for the fourth quarter of 2021, comparing favorably to $0.2 million during the prior-year fourth quarter. During the fourth quarter of 2021 the Bank experienced a positive valuation adjustment to its MSR of $0.6 million compared to a negative valuation adjustment of $0.4 million during the fourth quarter of 2020, leading to much of the improvement year-over-year in this noninterest income classification. Gains on the sale of secondary market mortgage loans declined from $2.2 million during the fourth quarter of 2020 to $1.2 million during the fourth quarter of 2021. While these gains remained elevated through the final two quarters of 2021, they have declined from unprecedented profitability in this area between the fourth quarter of 2020 and the second quarter of 2021. Finally, the Bank recognized a $1.7 million gain due to the sale of a branch location during the fourth quarter of 2020. There was no similar event during 2021, leading to a decrease in other noninterest income.

Noninterest expense was $13.6 million in the fourth quarter of 2021, compared to $14.0 million during the fourth quarter of 2020. Occupancy, equipment and office expenses decreased by $0.4 million from elevated levels during the prior-year fourth quarter as the Bank completed several large scale remodel projects during that quarter. Data processing expense decreased $0.2 million from the prior-year fourth quarter, primarily due to expense incurred during the fourth quarter of 2020 from the significant PPP activity during that year. During the fourth quarter of 2021 the Bank incurred a $0.2 million charge-down on its sole foreclosed property owned, leaving a value of $10,000 on that property. This charge-down compared unfavorably to minor gains on sales of foreclosed property during the prior-year fourth quarter, leading to a negative $0.2 million variance year-over-year. Finally, other noninterest expense increased by $0.8 million, or 56.7%, from the prior-year fourth quarter. During the fourth quarter of 2021, Bank First incurred a one-time expense when it purchased a domain name from another institution for $0.8 million as part of a rebranding initiative.

Balance Sheet

Total assets were $2.94 billion at December 31, 2021, a $219.5 million increase from December 31, 2020. Total loans were $2.24 billion at December 31, 2021, up $44.8 million from December 31, 2020. Excluding PPP originations and repayments or forgiveness, loans grew by 9.1% over the trailing twelve months, including annualized growth of 10.5% during the fourth quarter. Total deposits, nearly all of which remain core deposits, were $2.53 billion at December 31, 2021, up $207.5 million from December 31, 2020. Noninterest-bearing demand deposits comprised 32.0% of the Bank's total core deposits at December 31, 2021, compared to 31.2% at December 31, 2020. Time deposits, which typically carry the highest interest rates of all deposit products, comprised 10.1% of the Bank's total core deposits at December 31, 2021, compared to 14.8% at December 31, 2020.

Asset Quality

Nonperforming assets at December 31, 2021 totaled $8.2 million, down from $12.1 million at the end of the previous quarter and $14.0 million at the end of 2020. Nonperforming assets to total assets ended 2021 at 0.28%, down from 0.42% at the end of the previous quarter and 0.52% at the end of 2020.

Capital Position

Stockholders' equity totaled $322.7 million at December 31, 2021, an increase of $27.8 million from the end of 2020. Strong earnings served to increase capital while being offset by dividends totaling $8.7 million during the year ended December 31, 2021. Further reducing capital during 2021 was $7.9 million used to repurchase 112,141 shares of common stock. Tangible book value per share of Bank First's common stock experienced an increase of 13.9% during the trailing twelve months.

Dividend Declaration

Bank First's Board of Directors approved a quarterly cash dividend of $0.22 per common share, payable on April 6, 2022, to shareholders of record as of March 23, 2022.

Bank First Corporation provides financial services through its subsidiary, Bank First, which was incorporated in 1894. The bank is an independent community bank with 21 banking locations in Wisconsin. The bank has grown through both acquisitions and de novo branch expansion. The company employs approximately 287 full-time equivalent staff and has assets of approximately $2.9 billion. Bank First offers loan, deposit and treasury management products at each of its banking offices. Insurance services are available through our bond with Ansay & Associates, LLC. Trust, investment advisory and other financial services are offered through the bank's partnership with Legacy Private Trust, an alliance with Morgan Stanley and an affiliation with McKenzie Financial Services, LLC. 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 Investor Relations tab at www.BankFirstWI.bank.

# # #

Forward Looking Statements: This news release may contain certain "forward-looking statements" that represent Bank First Corporation's expectations or beliefs concerning future events. Such forward-looking statements are about matters that are inherently subject to risks and uncertainties. Because of the risks and uncertainties inherent in forward looking statements, readers are cautioned not to place undue reliance on them, whether included in this news release or made elsewhere from time to time by Bank First Corporation or on its behalf. Bank First Corporation disclaims any obligation to update such forward-looking statements. In addition, statements regarding historical stock price performance are not indicative of or guarantees of future price performance.

Bank First Corporation

Consolidated Financial Summary (Unaudited)

(In thousands, except per share data)		At or for the Three Months Ended			At or for the Year Ended
		12/31/2021			9/30/2021			6/30/2021			3/31/2021			12/31/2020			12/31/2021			12/31/2020
Results of Operations:
Interest income		$	25,043			$	24,898			$	24,003			$	24,442			$	27,094			$	98,386			$	100,700
Interest expense			1,812				1,964				2,189				2,339				2,623				8,304				13,865
Net interest income			23,231				22,934				21,814				22,103				24,471				90,082				86,835
Provision for loan losses			600				650				950				900				1,650				3,100				7,125
Net interest income after provision for loan losses			22,631				22,284				20,864				21,203				22,821				86,982				79,710
Noninterest income			5,706				5,028				6,574				6,210				6,744				23,518				23,520
Noninterest expense			13,621				12,466				12,221				12,225				13,972				50,533				53,353
Income before income tax expense			14,716				14,846				15,217				15,188				15,593				59,967				49,877
Income tax expense			3,552				3,628				3,669				3,674				4,063				14,523				11,831
Net income		$	11,164			$	11,218			$	11,548			$	11,514			$	11,530			$	45,444			$	38,046
Earnings per common share - basic		$	1.46			$	1.46			$	1.50			$	1.49			$	1.49			$	5.92			$	5.07
Earnings per common share - diluted			1.46				1.46				1.50				1.49				1.49				5.92				5.07
Common Shares:
Basic weighted average			7,570,128				7,605,541				7,653,317				7,657,301				7,659,904				7,621,632				7,441,256
Diluted weighted average			7,595,052				7,624,791				7,668,740				7,677,976				7,682,101				7,643,167				7,481,077
Outstanding			7,616,540				7,641,771				7,688,795				7,729,216				7,709,497				7,616,540				7,709,497
Noninterest income / noninterest expense:
Service charges		$	1,574			$	1,491			$	1,596			$	1,467			$	1,586			$	6,128			$	5,003
Income from Ansay			383				756				723				725				169				2,587				2,740
Income from UFS			776				751				663				366				599				2,556				3,066
Loan servicing income			1,557				599				1,178				505				194				3,839				1,420
Net gain on sales of mortgage loans			1,167				1,206				2,187				2,811				2,214				7,371				5,310
Net gain (loss) on sales of securities			-				(3	)			-				-				-				(3	)			3,233
Other noninterest income			249				228				227				336				1,982				1,040				2,748
Total noninterest income		$	5,706			$	5,028			$	6,574			$	6,210			$	6,744			$	23,518			$	23,520
Personnel expense		$	7,307			$	6,996			$	7,121			$	7,091			$	7,604			$	28,515			$	27,273
Occupancy, equipment and office			950				1,070				968				1,210				1,352				4,198				4,719
Data processing			1,334				1,259				1,358				1,393				1,519				5,344				5,515
Postage, stationery and supplies			181				204				131				197				204				713				872
Net (gain) loss on other real estate owned			186				-				(73	)			(133	)			(16	)			(20	)			1,395
Advertising			75				50				53				49				61				227				226
Charitable contributions			135				121				152				126				214				534				574
Outside service fees			776				741				804				755				1,029				3,076				4,112
Amortization of intangibles			352				351				351				351				522				1,405				1,636
Penalty for early extinguishment of debt			-				-				-				-				-				-				1,323
Other noninterest expense			2,325				1,674				1,356				1,186				1,483				6,541				5,708
Total noninterest expense		$	13,621			$	12,466			$	12,221			$	12,225			$	13,972			$	50,533			$	53,353

Bank First Corporation

Consolidated Financial Summary (Unaudited)

(In thousands, except per share data)		At or for the Three Months Ended			At or for the Year Ended
		12/31/2021			9/30/2021			6/30/2021			3/31/2021			12/31/2020			12/31/2021			12/31/2020
Period-end balances:
Cash and cash equivalents		$	296,860			$	299,953			$	251,071			$	261,174			$	170,219			$	296,860			$	170,219
Investment securities available-for-sale, at fair value			212,689				148,376				153,818				167,940				165,039				212,689				165,039
Investment securities held-to-maturity, at cost			5,911				5,912				5,912				5,934				6,669				5,911				6,669
Loans			2,235,515				2,208,915				2,225,217				2,228,892				2,191,460				2,235,515				2,191,460
Allowance for loan losses			(20,315	)			(20,237	)			(19,547	)			(18,531	)			(17,658	)			(20,315	)			(17,658	)
Premises and equipment			49,461				44,181				43,503				43,606				43,183				49,461				43,183
Goodwill and other intangibles, net			59,392				59,743				60,095				60,561				60,912				59,392				60,912
Other assets			98,039				99,762				98,881				96,623				98,192				98,039				98,192
Total assets			2,937,552				2,846,605				2,818,950				2,846,199				2,718,016				2,937,552				2,718,016
																							-
Deposits			2,528,440				2,472,258				2,446,654				2,448,035				2,320,963				2,528,440				2,320,963
Securities sold under repurchase agreements			41,122				17,402				21,679				47,631				36,377				41,122				36,377
Borrowings			25,511				26,679				26,697				30,467				40,969				25,511				40,969
Other liabilities			19,826				15,004				12,490				16,624				24,850				19,826				24,850
Total liabilities			2,614,899				2,531,343				2,507,520				2,542,757				2,423,159				2,614,899				2,423,159
Stockholders' equity			322,653				315,262				311,430				303,442				294,857				322,653				294,857
Book value per common share			42.36				41.26				40.50				39.26				38.25				42.36				38.25
Tangible book value per common share			34.56				33.44				32.69				31.42				30.35				34.56				30.35
Average balances:
Loans		$	2,207,615			$	2,218,324			$	2,247,026			$	2,196,142			$	2,206,207			$	2,217,305			$	2,032,157
Interest-earning assets			2,695,175				2,659,584				2,633,850				2,547,783				2,465,713				2,634,565				2,308,095
Total assets			2,901,685				2,861,959				2,835,580				2,750,471				2,671,967				2,837,793				2,504,682
Deposits			2,513,918				2,479,799				2,453,156				2,355,888				2,316,793				2,451,203				2,135,107
Interest-bearing liabilities			1,759,437				1,738,895				1,723,395				1,694,711				1,663,642				1,729,313				1,588,650
Goodwill and other intangibles, net			59,614				59,969				60,363				60,782				60,836				60,178				56,191
Stockholders' equity			318,837				313,868				308,201				300,331				289,916				310,370				265,504
Paycheck Protection Program ("PPP") loan information
PPP Loans (period end)		$	31,100			$	62,639			$	127,277			$	188,221			$	172,424			$	31,100			$	172,424
PPP Loan Deferred Origination Fees (period end)			1,080				2,243				4,252				4,552				2,573				1,080				2,573
PPP Loans (average during the period)			50,602				95,645				171,036				174,242				235,325				122,468				183,950
Interest income recognized during the period (includes
recognized origination fees)			1,290				2,251				1,922				2,368				3,833				7,831				8,739
Financial ratios:
Return on average assets			1.53	%			1.57	%			1.63	%			1.67	%			1.71	%			1.60	%			1.52	%
Return on average common equity			13.89	%			14.30	%			14.99	%			15.34	%			15.78	%			14.64	%			14.33	%
Average equity to average assets			10.99	%			10.97	%			10.87	%			10.92	%			10.85	%			10.94	%			10.60	%
Stockholders' equity to assets			10.98	%			11.08	%			11.05	%			10.66	%			10.85	%			10.98	%			10.85	%
Tangible equity to tangible assets			9.15	%			9.17	%			9.11	%			8.72	%			8.80	%			9.15	%			8.80	%
Loan yield			4.25	%			4.25	%			4.13	%			4.34	%			4.62	%			4.21	%			4.69	%
Earning asset yield			3.74	%			3.76	%			3.71	%			3.95	%			4.44	%			3.79	%			4.44	%
Cost of funds			0.41	%			0.45	%			0.51	%			0.56	%			0.63	%			0.48	%			0.87	%
Net interest margin, taxable equivalent			3.47	%			3.47	%			3.37	%			3.57	%			4.01	%			3.47	%			3.84	%
Net loan charge-offs to average loans			0.02	%			-0.01	%			-0.01	%			0.00	%			0.01	%			0.02	%			0.04	%
Nonperforming loans to total loans			0.37	%			0.53	%			0.55	%			0.63	%			0.57	%			0.37	%			0.57	%
Nonperforming assets to total assets			0.28	%			0.42	%			0.45	%			0.52	%			0.52	%			0.28	%			0.52	%
Allowance for loan losses to loans			0.91	%			0.92	%			0.88	%			0.83	%			0.81	%			0.91	%			0.81	%

Bank First Corporation

Average assets, liabilities and stockholders' equity, and average rates earned or paid

		Three Months Ended
		December 31, 2021			December 31, 2020
		Average Balance			Interest Income/ Expenses (1)			Rate Earned/ Paid (1)			Average Balance			Interest Income/ Expenses (1)			Rate Earned/ Paid (1)
		(dollars in thousands)
ASSETS
Interest-earning assets
Loans (2)
Taxable		$	2,117,319			$	90,468				4.27	%		$	2,100,764			$	97,767				4.65	%
Tax-exempt			90,296				4,152				4.60	%			105,443				5,286				5.01	%
Securities
Taxable (available for sale)			119,901				3,311				2.76	%			107,224				3,840				3.58	%
Tax-exempt (available for sale)			71,804				2,179				3.03	%			73,094				2,276				3.11	%
Tax-exempt (held to maturity)			5,912				151				2.55	%			6,669				163				2.44	%
Cash and due from banks			289,943				454				0.16	%			72,519				76				0.10	%
Total interest-earning assets			2,695,175				100,715				3.74	%			2,465,713				109,408				4.44	%
Non interest-earning assets			226,891												223,179
Allowance for loan losses			(20,381	)											(16,925	)
Total assets		$	2,901,685											$	2,671,967
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits
Checking accounts		$	203,363			$	253				0.12	%		$	195,094			$	295				0.15	%
Savings accounts			550,402				1,835				0.33	%			407,287				1,426				0.35	%
Money market accounts			687,353				1,911				0.28	%			625,958				2,143				0.34	%
Certificates of deposit			248,318				2,082				0.84	%			354,797				5,248				1.48	%
Brokered Deposits			12,079				349				2.89	%			19,435				556				2.86	%
Total interest bearing deposits			1,701,515				6,430				0.38	%			1,602,571				9,668				0.60	%
Other borrowed funds			57,922				759				1.31	%			61,071				766				1.25	%
Total interest-bearing liabilities			1,759,437				7,189				0.41	%			1,663,642				10,434				0.63	%
Non-interest bearing liabilities
Demand Deposits			812,403												714,222
Other liabilities			11,008												4,187
Total Liabilities			2,582,848												2,382,051
Shareholders' equity			318,837												289,916
Total liabilities & sharesholders' equity		$	2,901,685											$	2,671,967
Net interest income on a fully taxable equivalent basis							93,526												98,974
Less taxable equivalent adjustment							(1,361	)											(1,622	)
Net interest income						$	92,165											$	97,352
Net interest spread (3)											3.33	%											3.81	%
Net interest margin (4)											3.47	%											4.01	%

(1)	Annualized on a fully taxable equivalent basis calculated using a federal tax rate of 21%.

(2)	Nonaccrual loans are included in average amounts outstanding.

(3)	Represents the difference between the weighted average yield on interest-earning assets and cost of interest-bearing liabilities.

(4)	Represents net interest income on a fully tax equivalent basis as a percentage of average interest-earning assets.

Bank First Corporation

Average assets, liabilities and stockholders' equity, and average rates earned or paid

		For the Year Ended
		December 31, 2021			December 31, 2020
		Average Balance			Interest Income/ Expenses (1)			Rate Earned/ Paid (1)			Average Balance			Interest Income/ Expenses (1)			Rate Earned/ Paid (1)
		(dollars in thousands)
ASSETS
Interest-earning assets
Loans (2)
Taxable		$	2,128,327			$	90,172				4.24	%		$	1,918,490			$	90,698				4.73	%
Tax-exempt			88,978				4,113				4.62	%			113,667				5,791				5.09	%
Securities
Taxable (available for sale)			103,277				2,788				2.70	%			114,392				3,142				2.75	%
Tax-exempt (available for sale)			70,864				2,207				3.11	%			67,903				2,170				3.20	%
Taxable (held to maturity)			-				-				-				9,068				216				2.38	%
Tax-exempt (held to maturity)			6,098				155				2.54	%			8,422				220				2.61	%
Cash and due from banks			237,021				310				0.13	%			76,153				181				0.24	%
Total interest-earning assets			2,634,565				99,745				3.79	%			2,308,095				102,418				4.44	%
Non interest-earning assets			222,548												211,387
Allowance for loan losses			(19,320	)											(14,800	)
Total assets		$	2,837,793											$	2,504,682
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits
Checking accounts		$	209,970			$	252				0.12	%		$	194,718			$	669				0.34	%
Savings accounts			497,958				1,773				0.36	%			356,091				1,792				0.50	%
Money market accounts			664,591				2,115				0.32	%			563,847				3,076				0.55	%
Certificates of deposit			278,602				2,967				1.06	%			367,054				6,405				1.74	%
Brokered Deposits			14,718				420				2.85	%			18,428				531				2.88	%
Total interest bearing deposits			1,665,839				7,527				0.45	%			1,500,138				12,473				0.83	%
Other borrowed funds			63,474				777				1.22	%			88,512				1,392				1.57	%
Total interest-bearing liabilities			1,729,313				8,304				0.48	%			1,588,650				13,865				0.87	%
Non-interest bearing liabilities
Demand Deposits			785,364												634,969
Other liabilities			12,746												15,559
Total Liabilities			2,527,423												2,239,178
Shareholders' equity			310,370												265,504
Total liabilities & sharesholders' equity		$	2,837,793											$	2,504,682
Net interest income on a fully taxable equivalent basis							91,441												88,553
Less taxable equivalent adjustment							(1,359	)											(1,718	)
Net interest income						$	90,082											$	86,835
Net interest spread (3)											3.31	%											3.56	%
Net interest margin (4)											3.47	%											3.84	%

(1)	Annualized on a fully taxable equivalent basis calculated using a federal tax rate of 21%.

(2)	Nonaccrual loans are included in average amounts outstanding.

(3)	Represents the difference between the weighted average yield on interest-earning assets and cost of interest-bearing liabilities.

(4)	Represents net interest income on a fully tax equivalent basis as a percentage of average interest-earning assets.