Bank First Announces Net Income for the Third Quarter of 2020

MANITOWOC, Wis., Oct. 20, 2020 /PRNewswire/ -- Bank First Corporation (NASDAQ: BFC) ("Bank First"), the holding company for Bank First, N.A., reported net income of $11.0 million, or $1.42 per share, for the third quarter of 2020, compared with net income of $6.7 million, or $0.95 per share, for the respective prior-year period. For the nine months ended September 30, 2020, Bank First earned $26.5 million, or $3.57 per share, compared to $19.2 million, or $2.86 per share for the same period in 2019.

Operating Results
Net interest income ("NII") during the third quarter of 2020 was $22.9 million, up $2.1 million from the previous quarter and up $2.6 million from the third quarter of 2019. NII for the first nine months of 2020 was $62.4 million, up from $50.9 million for the first nine months of 2019.

NII related to purchase accounting entries, resulting from Bank First's purchases of Waupaca Bancorporation, Inc. ("Waupaca") during the fourth quarter of 2017, Partnership Community Bancshares, Inc. ("Partnership") during the third quarter of 2019, and Tomah Bancshares, Inc. ("Tomah") during the second quarter of 2020  increased net income (after tax) during the third quarter of 2020 by $1.1 million, or $0.15 per share, compared to $2.6 million, or $0.37 per share, for the third quarter of 2019. For the first nine months of 2020 and 2019 the impact of these purchase accounting entries increased net income (after tax) by $2.5 million, or $0.34 per share, and $4.0 million, or $0.58 per share, respectively.

Net interest margin ("NIM") was 3.84% for the third quarter of 2020, compared to 4.30% for the third quarter of 2019. The aforementioned purchase accounting entries added 0.26% and 0.70% to NIM for each of these periods, respectively. NIM was 3.77% for the first nine months of 2020, including 0.21% from the impact of purchase accounting entries, compared to 3.98%, including 0.40% from the impact of purchase accounting entries, for the first nine months of 2019. Bank First's ability to aggressively manage its cost of funds throughout the downturn in the overall interest rate environment caused by the economic fallout of the COVID-19 pandemic ("COVID") has allowed it to experience only 0.02% deterioration in NIM during these periods, net of purchase accounting impacts. Cost of funds on interest bearing liabilities totaled 0.73% for the third quarter of 2020, down 0.84% from 1.57% for the third quarter or 2019. Bank First's low reliance on time deposits compared to peers allowed for this swift response without the need to wait for the maturity of significant levels of high-rate time deposits entered into in prior periods.

Bank First recorded a provision for loan losses of $1.4 million during the third quarter of 2020, compared to $3.0 million during the third quarter of 2019. Provision expense was $5.5 million for the first nine months of 2020 compared to $4.1 million for the same period during 2019. Net loan charge-offs totaled $1.1 million during the third quarter of 2020. One charge-off during the quarter, totaling $0.6 million, resulted from the transfer of $2.1 million in loans from a relationship acquired in the Tomah acquisition to other real estate owned ("OREO"). This relationship had been identified as credit-impaired at the time the Tomah acquisition closed, and a reserve against these balances of $0.7 million had been established at that time. Management continues to monitor the stress on the overall economy caused by COVID as well as specific impacts on Bank First's customers, which have been limited to date, and these factors will guide assessments of the adequacy of the allowance for loan losses in future quarters.

Noninterest income was $5.1 million for the third quarter of 2020, compared to $3.1 million for the third quarter of 2019. As in other recent quarters, the largest change in noninterest income from a year-over-year quarter comparison was net gains on sales of mortgage loans to the secondary market which totaled $1.3 million during the third quarter of 2020, compared to $0.5 million during the third quarter of 2019.  Income from Bank First's ownership in Ansay & Associates, LLC, totaled $1.0 million during the third quarter of 2020, comparing favorably to $0.3 million during the prior-year third quarter. Finally, service charges earned by Bank First increased from $0.9 million during the third quarter of 2019 to $1.3 million during the third quarter of 2020, reflecting the increased scale resulting from the acquisition of Tomah as well as lower current quarter earnings credit rates which are used to offset service charges on certain larger depository relationships.

Noninterest expense was $12.2 million in the third quarter of 2020, compared to $14.4 million during the previous quarter and $12.1 million during the third quarter of 2019. Data processing expense increased $0.1 million and $0.3 million from the prior quarter and prior-year third quarter, respectively. These increases were primarily the result of higher "per-account" charges as a result of additional customer relationships from the acquisitions of Partnership and Tomah as well as relationships added during the origination of Paycheck Protection Program ("PPP") loans primarily during the second quarter of 2020. Minimal net gains on sales and valuations of OREO during the third quarter of 2020 compared favorably to net losses of $0.5 million during the prior quarter. Finally, outside service fee expense decreased by $0.5 million from the prior quarter and $0.3 million from the prior-year third quarter. Expenses related to the closing of the Partnership and Tomah acquisitions in each of those previous quarters along with no acquisitions closing during the current quarter led to the favorable comparison. Trailing acquisition expenses related to Bank First's acquisition of Tomah, which closed on May 15, 2020, totaled $0.1 million during the third quarter of 2020, compared to acquisition expenses of $0.8 million during the prior quarter and $0.9 million in the prior-year third quarter.

Balance Sheet
Total assets were $2.64 billion at September 30, 2020, up $429.0 million from December 31, 2019, and $475.7 million from September 30, 2019. Total loans were $2.19 billion at September 30, 2020, up $456.9 million from December 31, 2019, and $479.0 million from September 30, 2019. Purchased loan balances included in the acquisition of Tomah during May 2020 totaled $111.9 million. Bank First originated PPP loans totaling $278.1 million and $1.5 million during the second and third quarters of 2020, respectively. Bank First experienced 16.8% annualized loan growth during the third quarter of 2020, gaining market share in its communities by capitalizing on new relationships formed through its ability to assist businesses during the first half of 2020 when their former financial institutions were unresponsive. Total deposits, nearly all of which remain core deposits, were $2.27 billion at September 30, 2020, up $427.7 million from December 31, 2019, and up $433.0 million from September 30, 2019. Deposit balances assumed during the acquisition of Tomah in May 2020 totaled $171.1 million. Noninterest-bearing demand deposits increased $124.7 million year-over-year, comprising 30.4% of total deposits at September 30, 2020 compared to 30.8% one year earlier.

Asset Quality
Nonperforming assets at September 30, 2020 totaled $20.8 million, down from $25.0 million at the end of the prior quarter, and up from $11.5 million and $11.3 million at the end of the fourth and third quarters of 2019, respectively. Nonperforming assets to total assets ended the third quarter of 2020 at 0.79%, down from 0.94% at the end of the prior quarter, and up from 0.52% at the end of both the fourth and third quarters of 2019. A majority of the increase in non-performing assets during the first nine months of 2020 relate to one commercial real estate loan totaling $7.5 million which was moved to nonaccrual status during June 2020. While payments have remained current on this loan, the move to nonaccrual status was deemed prudent by management due to the loss of a significant tenant in the underlying commercial property.

Since the inception of the COVID-19 pandemic, Bank First has proactively worked with its customers to ensure that, consistent with the guidance of the Coronavirus Aid, Relief, and Economic Security ("CARES") Act, it is partnering with them to navigate the economic shocks resulting from legislative actions intended to slow the spread of the virus. As part of this process, payment deferrals were granted to over 625 Bank First customers on loans totaling over $271.5 million. These deferrals were primarily for lengths in the range of 60 to 180 days, and were a combination of deferrals of principal payments only (89.7% by dollar value) or both principal and interest payments (10.3% by dollar value). At June 30, 2020, Bank First had 482 loans totaling $221.1 million that were in some stage of deferral in coordination with the CARES Act. As of September 30, 2020, these totals had decreased to 383 loans totaling $187.3 million. Based on current projections, and subject to change based on future identified customer needs, it is anticipated that these numbers will further decrease to approximately 110 loans totaling $57.5 million as of October 31, 2020, and 30 loans totaling $22.5 million by December 31, 2020. In total Bank First has approved 17 loans totaling $14.1 million for secondary deferrals when the original deferral period had expired.

Capital Position
Stockholders' equity totaled $286.1 million at September 30, 2020, an increase of $55.9 million from the end of 2019 and $60.8 million from September 30, 2019. The acquisition of Tomah during May 2020 added $29.4 million to capital while continued strong earnings offset by dividends totaling $4.5 million through the first nine months of 2020 led to a majority of the remaining increase in capital year-to-date. Tangible book value per share of Bank First's common stock saw an annualized increase of 19.6% during the third quarter of 2020, and has seen an annualized increase of 18.3% through the first nine months of 2020.

Dividend Declaration
Bank First's Board of Directors approved a quarterly cash dividend of $0.21 per common share, payable on January 6, 2021, to shareholders of record as of December 23, 2020.

Bank First Corporation provides financial services through its subsidiary, Bank First, which was incorporated in 1894. The Bank is an independent community bank with 24 banking locations in Wisconsin. The Bank has grown through both acquisitions and de novo branch expansion. The Bank 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 data processing subsidiary, UFS, LLC, which provides data and technology services to banks in the Midwest. The Company employs approximately 311 full-time equivalent staff and has assets of approximately $2.6 billion. Further information about Bank First Corporation is available by clicking on the Investor Relations tab at www.BankFirstWI.bank.

For further information, contact:
Kevin M LeMahieu, Chief Financial Officer
Phone: (920) 652-3200  /  klemahieu@bankfirstwi.bank

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SOURCE Bank First Corporation