Bank First Corp
For the period ended Mar 31, 2025. Filed May 9, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 9, 2025
BFC$147.89+0.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-12.
0001558370-24-015290
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-09.
0001558370-25-007166
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 151 previous paragraphs and 128 current paragraphs.
84 unchanged; 40 reworded; 4 added; 21 removed; 6 previous and 0 current paragraphs rearranged.
Tables are not compared: 38 previous and 29 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (4)
Current report
Noninterest income increased $2.2 million to $6.6 million for the three months ended March 31, 2025 compared to$4.4 million for the same period in 2024. Service charges increased by 23.0% from the prior-year first quarter as the Bank continues to benefit from a renegotiated vendor incentive program related to credit and debit card payments processing. Positive valuation adjustments to the Bank’s MSRs totaling $0.2 million during the first quarter of 2025 compared favorably to $0.3 million in negative valuation adjustments during the first quarter of 2024. Finally, the Bank received a $2.3 million death benefit related to its bank-owned life insurance portfolio. The underlying policies had a cash value of $1.3 million, leading to a gain of $1.0 million which is recorded in other noninterest income.
Current report
Noninterest Expense. Noninterest expense increased $0.3 million to $20.6 million for the three months ended March 31, 2025 compared to $20.3 million for the same period in 2024. Most noninterest expenses have remained well-controlled over the past five quarters. Due to the gain on bank-owned life insurance noted earlier, the Bank accelerated some charitable giving which had been planned for later in the year into the first quarter. Also, federal deposit insurance increased primarily due to elevated deposit levels which were developed late in the fourth quarter of 2024 and persisted through the first quarter of 2025.
Current report
Cash and Cash Equivalents. Cash and cash equivalents increased by $39.5 million to $300.9 million at March 31, 2025, from $261.3 million at December 31, 2024.
Current report
Deposits. Deposits increased $13.1 million, or 0.4%, to $3.67 billion at March 31, 2025 from $3.66 billion at December 31, 2024.
Removed paragraphs (21)
Previous report
On February 10, 2023, the Company consummated its merger with Hometown pursuant to the Agreement and Plan of Bank Merger, dated as of July 25, 2022, by and among the Company and Hometown, whereby Hometown was merged with and into the Company, and Hometown Bank, Hometown’s wholly owned banking subsidiary, was merged with and into the Bank. The system integration was completed, and six branches of Hometown Bank opened on February 13, 2023 as branches of the Bank, expanding the Bank’s presence in Fond du Lac, Columbia, Dane and Waushara County.
Previous report
The Company accounted for this transaction under the acquisition method of accounting, and thus, the financial position and results of operations of Hometown prior to the consummation date are not included in the accompanying consolidated financial statements. The acquisition method of accounting required assets purchased and liabilities assumed to be recorded at their respective fair values at the date of acquisition. The Company determines the fair value of core deposit intangibles, securities, premises and equipment, loans, other assets and liabilities, deposits and borrowings with the assistance of third-party valuations, appraisals, and third-party advisors. The estimated fair values were subject to refinement for up to one year after the consummation as additional information becomes available relative to the closing date fair values.
Previous report
associated purchase accounting adjustments of $0.6 million was fully repaid before maturity during the third quarter of 2024, leading to an elevated impact of purchase accounting during the quarter.
Previous report
Noninterest income decreased $0.4 million to $4.9 million for the three months ended September 30, 2024 compared to$5.3 million for the same period in 2023. Service charges increased by 20.0% from the prior-year third quarter primarily due to prepayment and referral fees on loans. Net gains on the sales of mortgage loans increased by 52.0% from the third quarter of 2023 to the third quarter of 2024, attributed to a rise in secondary market loan origination activity resulting from declining interest rates. Due to the sale of 100% of the Bank’s member interest in UFS on October 1, 2023, no income from UFS was recorded in the third quarter of 2024, compared to income of $0.8 million during the third quarter of 2023. Negative valuation adjustments to the Bank’s MSRs totaling $0.3 million during the third quarter of 2024 compared unfavorably to $0.2 million in positive valuation adjustments during the third quarter of 2023.
Previous report
Noninterest Expense. Noninterest expense increased $0.5 million to $20.1 million for the three months ended September 30, 2024 compared to $19.6 million for the same period in 2023. Most noninterest expenses have remained well-controlled over the past five quarters. However, occupancy, equipment, and office expenses increased this quarter, primarily due to $0.2 million in losses from disposing of outdated equipment. Additionally, data processing expenses included $0.4 million in project-related costs tied to the Bank's ongoing upgrade of its online customer platform.
Previous report
Income Tax Expense. We recorded a provision for income taxes of $4.1 million for the three months ended September 30, 2024 compared to a provision of $4.9 million for the same period during 2023, reflecting effective tax rates of 19.9% and 24.7%, respectively. As previously noted, the Company’s home state passed tax legislation during the third quarter of 2023 which exempted income from a significant portion of the Company’s loans from taxation in Wisconsin. This change allowed the Company to reverse $2.4 million in state related income tax expense which had been recorded during the first two quarters of 2023. As a result of the lower anticipated future effective tax rate, the Company determined that a $2.9 million allowance was required to be made against its deferred tax asset. The net impact of these two items was an increase in income tax expenses of $0.5 million during the third quarter of 2023.
Previous report
General**.** Net income increased $8.4 million to $48.0 million for nine months ended September 30, 2024, comparedto $39.6 million for the same period in 2023. This increase was partially due to the added scale of operations resulting from the Hometown acquisition during the first quarter of 2023. Further, average rates on interest-earning assets have consistently risen, while the rise in rates paid on deposit accounts has started to decelerate. The first nine months of 2023 was also negatively impacted by $1.8 million in acquisition expenses and a $3.6 million provision for credit losses related to the acquired loans from Hometown. The absence of income from UFS during the first nine months of 2024 compared to $2.4 million in income provided by UFS during the first nine months of 2023.
Previous report
Interest Income. Total interest income increased $18.9 million, or 14.1%, to $152.7 million for the nine months ended September 30, 2024 compared to $133.8 million for the same period in 2023. The increase in total interest income was primarily due to the aforementioned increase in rates earned on interest-earning assets over recent quarters. The average balance of interest-earning assets increased by $130.5 million during the first nine months of 2024 compared to the same period in 2023 and the average interest rate earned on these assets increased from 4.97% for the first three quarters of 2023 to 5.46% during the first three quarters of 2024.
Previous report
Interest Expense. Interest expense increased $17.1 million, or 51.6%, to $50.4 million for the nine months ended September 30, 2024 compared to $33.3 million for the same period in 2023. The increase in interest expense was primarily due to elevated crediting rates on interest-bearing liabilities. The average balance of interest-bearing liabilities increased by $126.4 million during the first nine months of 2024 compared to the same period in 2023 and the average interest rate paid on these balances was 1.86% for the first three quarters of 2023 compared to 2.67% for the first three quarters of 2024.
Previous report
Interest expense on interest-bearing deposits totaled $47.7 million and $29.2 million for the nine months ended September 30, 2024 and 2023, respectively. The average cost of interest-bearing deposits was 2.61% for the nine months ended September 30, 2024, compared to 1.70% for the same period in 2023.
Previous report
Provision for Credit Losses. We recorded a provision for credit losses of $0.2 million for the nine months ended September 30, 2024 compared to $4.2 million for the same period in 2023. The increased provision for the first nine months of 2023 was primarily related to loans acquired from Hometown. We recorded net recoveries of $0.5 million for the nine months ended September 30, 2024 compared to net recoveries of $0.1 million for the same period in 2023. Also, due to a reduction in unfunded loan commitments and an increase in outstanding loans, the Bank moved $0.9 million from its ACL-Unfunded Commitments to its ACL – Loans during the first nine months of 2024. The ACL was $45.2 million, or 1.30% of total loans, at September 30, 2024 compared to $43.4 million, or 1.29% of total loans at September 30, 2023.
Previous report
Noninterest income decreased $0.5 million to $15.2 million for the nine months ended September 30, 2024 compared to $15.7 million for the same period in 2023. Service charges and income provided by the Bank’s member interest in Ansay increased $0.7 million and $0.6 million, respectively, for the first nine months of 2024 compared to the same period in 2023. Offsetting these increases, the sale of 100% of the Bank’s member interest in UFS on October 1, 2023, lead to no income from UFS being recorded in the first three quarters of 2024, compared to income of $2.4 million during the first three quarters of 2023. Negative valuation
Previous report
adjustments to the Bank’s MSR totaling $0.3 million during the first nine months of 2024 also compared unfavorably to $0.5 million in positive valuation adjustments during the first nine months of 2023.
Previous report
Noninterest Expense. Noninterest expense increased $0.2 million to $59.5 million for the nine months ended September 30, 2024 compared to $59.3 million for the same period in 2023. Data processing expense increased by $0.9 million, or 14.6%, over the first three quarters of 2024 compared to the first three quarters of 2023 due to the aforementioned project-related costs for upgrading the Bank’s online customer platform and the increased scale from the acquisition of Hometown, completed in February of 2023. Expenses related to this acquisition totaled $1.8 million during the first nine months of 2023. The lack of a similar acquisition during the first three quarters of 2024 caused decreases in the areas of postage, stationary, supplies and outside service fees expense period-over-period. Finally, gains on sales and valuations of OREO totaling $0.5 million during the first three quarters of 2024 compared favorably to losses of $0.5 million during the first three quarters of 2023.
Previous report
Cash and Cash Equivalents. Cash and cash equivalents decreased by $43.1 million to $204.4 million at September 30, 2024, from $247.5 million at December 31, 2023. This decline was primarily the result of funds being invested in growth in the Bank’s loan portfolio as well as a reduction in deposits and securities sold under repurchase agreements. Securities sold under repurchase agreements reported in prior periods related to one customer who discontinued this arrangement during the first quarter of 2024. These declines were partially offset by increases in notes payable through the first nine months of 2024.
Previous report
Deposits. Deposits increased $51.8 million, or 1.5%, to $3.48 billion at September 30, 2024 from $3.43 billion at December 31, 2023.
Previous report
Our directors and officers and their associates are customers of, and have other transactions with, the Bank in the normal course of business. All loans and commitments included in such transactions were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and do not involve more than normal risk of collection or present other unfavorable features. At September 30, 2024 and December 31, 2023, total loans outstanding to such directors and officers and their associates were $79.8 million and $63.9 million, respectively. During the nine months ended September 30, 2024, $17.7 million in additions due to director and officer updates, $41.9 million of additions and $43.7 million of repayments were made to these loans. At September 30, 2024 and December 31, 2023, all of the loans to directors and officers were performing according to their original terms.
Previous report
Securities sold under repurchase agreements
Previous report
The Company had securities sold under repurchase agreements which had contractual maturities up to one year from the transaction date with variable and fixed rate terms. The agreements to repurchase required that the Company (seller) repurchase identical securities as those that were sold. The securities underlying the agreements were under the Company’s control. The Company redeemed all securities sold under repurchase agreements during the first quarter of 2024.
Previous report
Borrowings
Previous report
As a result of the acquisition of Hometown during February 2023, the Company acquired all of the common securities of Hometown’s wholly-owned subsidiaries, Hometown Bancorp, Ltd. Capital Trust I (“Trust I”) and Hometown Bancorp, Ltd. Capital Trust II (“Trust II”). The Company also assumed adjustable rate junior subordinated debentures issued to these trusts. The junior subordinated debentures issued to Trust I and Trust II totaled $4.1 million and $8.2 million, respectively, carried interest at floating rates resetting on each quarterly payment date, and were due on January 7, 2034 and December 15, 2036, respectively. Applicable discounts originally totaling $1.5 million were recorded to carry the assumed debentures at their then estimated fair value and were being accreted to interest expense over the remaining life of the debentures. Both junior subordinated debentures were redeemable by the Company, subject to prior approval by the Federal Reserve Bank, on any quarterly payment date. The junior subordinated debentures represented the sole asset of Trust I and Trust II. The trusts were not included in the Company’s consolidated financial statements. The net effect of all agreements assumed with respect to Trust I and Trust II is that the Company, through payments on its debentures, was liable for the distributions and other payments required on the trusts’ preferred securities. Trust I and Trust II also provided the Company with $12.0 million in Tier 1 capital for regulatory capital purposes. The Company redeemed the junior subordinated debenture related to Trust II during December 2023 and Trust I during January 2024, resulting in these trusts’ dissolution. As a result of the redemption of the junior subordinated debenture related to Trust II and notification of the Company’s intent to redeem the junior subordinated debenture of Trust I prior to December 31, 2023, the Company amortized the remaining original fair value discounts into interest expense during 2023.
Reworded paragraphs (40)
Previous wording
General**.** Net income increased $1.8 million to $16.6 million for three months ended September 30, 2024, comparedto $14.8 million for the same period in 2023. This increase is primarily driven by the repricing of new and renewed loans in a higher rate environment, along with steady growth in interest-bearing assets. In addition, due to tax legislation in the Company’s home state, the effective tax rate decreased from 24.7% for the third quarter of 2023 to 19.9% for the third quarter of 2024.
Current wording
General**.** Net income increased $2.8 million to $18.2 million for three months ended March 31, 2025, comparedto $15.4 million for the same period in 2024. This increase is primarily driven by the repricing of new and renewed loans in a higher rate environment, along with steady growth in interest-bearing assets.
Previous wording
Net interest and dividend income increased by $1.8 million to $35.9 million for the three months ended September 30, 2024 compared to $34.1 million for three months ended September 30, 2023. The increase in net interest income was primarily due to repricing of new and renewed loans in a higher interest rate environment, as well as steady growth in interest-bearing assets. Total average interest-earning assets were $3.83 billion for the three months ended September 30, 2024, up from $3.67 billion for the same period in 2023. Net interest margin and net interest income are influenced by internal and external factors. Internal factors include balance sheet changes on both volume and mix and pricing decisions, and external factors include changes in market interest rates, competition and the shape of the interest rate yield curve.
Current wording
Net interest and dividend income increased by $3.2 million to $36.5 million for the three months ended March 31, 2025 compared to $33.3 million for three months ended March 31, 2024. The increase in net interest income was primarily due to repricing of new and renewed loans in a higher interest rate environment, as well as steady growth in interest-bearing assets. Total average interest-earning assets were $4.10 billion for the three months ended March 31, 2025, up from $3.74 billion for the same period in 2024. Net interest margin and net interest income are influenced by internal and external factors. Internal factors include balance sheet changes on both volume and mix and pricing decisions, and external factors include changes in market interest rates, competition and the shape of the interest rate yield curve.
Previous wording
Interest Income. Total interest income increased $7.0 million, or 15.0%, to $54.0 million for the three months ended September 30, 2024 compared to $47.0 million for the same period in 2023. The increase in total interest income was primarily due to an increase in the average interest rate earned on interest-earning assets. The average balance of interest-earning assets increased by $162.3 million during the three months ended September 30, 2024 compared to the same period in 2023 and the average interest rate earned on these assets increased by 0.53% in the year-over-year third quarters. Further, a previously purchased loan with remaining
Current wording
Interest Income. Total interest income increased $5.7 million, or 11.7%, to $55.0 million for the three months ended March 31, 2025 compared to $49.3 million for the same period in 2024. The increase in total interest income was primarily due to an increase in in interest-earning assets coupled with higher average interest rates earned on interest-earning assets. The average balance of interest-earning assets increased by $359.3 million during the three months ended March 31, 2025 compared to the same period in 2024 and the average interest rate earned on these assets increased by 0.16% in the year-over-year first quarters.
Previous wording
Interest Expense. Interest expense increased $5.2 million, or 40.4%, to $18.1 million for the three months ended September 30, 2024 compared to $12.9 million for the same period in 2023. The increase in interest expense was primarily due to higher crediting interest rates on interest-bearing liabilities.
Current wording
Interest Expense. Interest expense increased $2.6 million, or 16.3%, to $18.5 million for the three months ended March 31, 2025 compared to $15.9 million for the same period in 2024. The increase in interest expense was primarily due to higher crediting interest rates on also higher levels of interest-bearing liabilities.
Previous wording
Interest expense on interest-bearing deposits increased by $4.9 million to $16.5 million for the three months ended September 30, 2024 compared to $11.6 million for the same period in 2023. The average balance and rate of interest-bearing deposits was $2.44 billion and 2.69% for the three months ended September 30, 2024, compared to $2.32 billion and 1.99% for the same period in 2023.
Current wording
Interest expense on interest-bearing deposits increased by $1.5 million to $16.9 million for the three months ended March 31, 2025 compared to $15.4 million for the same period in 2024. The average balance and rate of interest-bearing deposits was $2.69 billion and 2.54% for the three months ended March 31, 2025, compared to $2.46 billion and 2.51% for the same period in 2024. The Bank's cost of funds decreased by 0.08% from the fourth quarter of 2024, including a decrease of 0.18% in the average rate paid on the Bank's non-brokered certificates of deposit.
Previous wording
We did not record a provision for credit loss during the three months ended September 30, 2024 or 2023. Economic forecasts, primarily US gross domestic product and unemployment projections, were little changed during the third quarter of 2024 resulting in consistent economic and qualitative factors in the Current Expected Credit Losses (“CECL”) methodology. We recorded net charge offs of $0.3 million during the three months ended September 30, 2024 compared to net recoveries of $0.1 million during the three months ended September 30, 2023. Other than a $0.3 million charge-off during the third quarter of 2024, related to a single customer relationship, the Bank’s loan portfolio continues to exhibit very little credit stress. Due to a reduction in unfunded loan commitments and an increase in outstanding loans, the Bank moved $0.4 million from its ACL-Unfunded Commitments to its ACL – Loans during the third quarter of 2024. While this move had no impact on the Bank’s profitability for the quarter, it did increase the allowance for potential loan credit losses to correspond with the increase in overall loan portfolio balances. The ACL - Loans was $45.2 million, or 1.30% of total loans, at September 30, 2024 compared to $43.4 million, or 1.29% of total loans at September 30, 2023.
Current wording
We recorded a provision of $0.4 million for credit loss during the three months ended March 31, 2025 compared to a provision of $0.2 million for credit loss during the same period in 2024. Economic forecasts, primarily US gross domestic product projections, decreased slightly during the first quarter of 2025 while projections for unemployment increased. We recorded net charge offs of $0.8 million during the three months ended March 31, 2025 compared to net recoveries of $0.6 million during the three months ended March 31, 2024. Other than a $0.8 million charge-off during the first quarter of 2025, related to a single customer relationship, the Bank’s loan portfolio continues to exhibit very little credit stress. The ACL - Loans was $43.7 million, or 1.23% of total loans, at March 31, 2025 compared to $44.4 million, or 1.31% of total loans at March 31, 2024.
Previous wording
Noninterest Income. Noninterest income is an important component of our total revenues. A significant portion of our noninterest income has historically been associated with service charges and income from the Bank’s unconsolidated subsidiaries, Ansay and UFS. Other sources of noninterest income include loan servicing fees and gains on sales of mortgage loans.
Current wording
Noninterest Income. Noninterest income is an important component of our total revenues. A significant portion of our noninterest income has historically been associated with service charges and income from the Bank’s unconsolidated subsidiary, Ansay. Other sources of noninterest income include loan servicing fees and gains on sales of mortgage loans.
Previous wording
Income Tax Expense. We recorded a provision for income taxes of $9.7 million for the nine months ended September 30, 2024 compared to a provision of $13.2 million for the same period during 2023, reflecting effective tax rates of 16.8% and 24.9%, respectively. As previously noted, the Company’s home state passed tax legislation during the third quarter of 2023 which exempted income from a significant portion of the Company’s loans from taxation in Wisconsin. As a result of the lower anticipated future effective tax rate, the Company determined that a $2.9 million allowance was required to be made against its deferred tax asset during the third quarter of 2023. . Final rules relating to qualifying loans under this legislation were not published until the first quarter of 2024. Based on these final rules, the Company was able to further reduce its estimated tax liability from 2023 by $1.3 million, resulting in the lower provision for income taxes and effective tax rate during the first nine months of 2024. The effective tax rates were reduced from the statutory federal and state income tax rates during both periods as a result of tax-exempt interest income produced by certain qualifying loans and investments in the Bank’s portfolios.
Current wording
Income Tax Expense. We recorded a provision for income taxes of $3.9 million for the three months ended March 31, 2025 compared to a provision of $1.8 million for the same period during 2024, reflecting effective tax rates of 17.5% and 10.5%, respectively. The Company’s home state passed tax legislation during the third quarter of 2023 which exempted income from a significant portion of the Company’s loans from taxation in Wisconsin. As a result of this legislation, income from a significant portion of the Company’s loans will no longer be subject to taxation in its home state. Final rules relating to qualifying loans under this legislation were not published until the first quarter of 2024. Based on these final rules, the Company was able to further reduce its estimated tax liability from 2023 by $1.3 million, resulting in the lower provision for income taxes and effective tax rate during the first quarter of 2024. Although not as impactful as this event in the first quarter of 2024, tax-exempt income during the first quarter of 2025 resulting from a death benefit on life insurance lowered the effective tax rate for the most recent quarter from levels seen in the final three quarters of 2024.
Previous wording
Total Assets. Total assets increased $72.6 million, or 1.7%, to $4.29 billion at September 30, 2024, from $4.22 billion at December 31, 2023.
Current wording
Total Assets. Total assets increased $11.4 million, or 0.3%, to $4.51 billion at March 31, 2025, from $4.50 billion at December 31, 2024.
Previous wording
Investment Securities. The carrying value of total investment securities decreased by $7.8 million to $237.7 million at September 30, 2024, from $245.5 million at December 31, 2023.
Current wording
Investment Securities. The carrying value of total investment securities decreased by $59.8 million to $274.0 million at March 31, 2025, from $333.8 million at December 31, 2024. The quarter-over-quarter decrease in investments was primarily attributed to the maturity of short-duration securities during the most recent quarter. These investments were acquired during the fourth quarter of 2024 to meet heightened needs for collateral due to a seasonal collateralized deposit increase during the fourth quarter of 2024.
Previous wording
Loans. Net loans increased by $126.3 million, totaling $3.43 billion at September 30, 2024 compared to $3.30 billion at December 31, 2023.
Current wording
Loans. Net loans increased by $31.3 million, totaling $3.50 billion at March 31, 2025 compared to $3.47 billion at December 31, 2024.
Previous wording
Borrowings. At September 30, 2024, borrowings consisted of advances from the FHLB of Chicago and subordinated debt to other banks and an individual. FHLB borrowings increased $100.0 million, or 283.7%, to $135.3 million at September 30, 2024 from $35.3 million at December 31, 2023. These additional borrowings are intended to provide liquidity to support near-term loan growth. Subordinated debt remained stable at $12.0 million at September 30, 2024 and December 31, 2023. A junior subordinated debenture totaling $4.1 million, which was part of the acquisition of Hometown, was repaid in full during the first quarter of 2024.
Current wording
Borrowings. At March 31, 2025, borrowings consisted of advances from the FHLB of Chicago and subordinated debt to other banks and an individual. FHLB borrowings decreased $0.5 million, or 0.4%, to $134.9 million at March 31, 2025 from $135.4 million at December 31, 2024. Subordinated debt remained stable at $12.0 million at March 31, 2025 and December 31, 2024.
Previous wording
Stockholders’ Equity. Total stockholders’ equity increased $9.1 million, or 1.5%, to $628.9 million at September 30, 2024 from $619.8 million at December 31, 2023. Repurchases of the Company’s common stock totaling $31.7 million and dividends declared totaling $11.1 million offset the positive impact of earnings totaling $48.0 million during the first nine months of the year.
Current wording
Stockholders’ Equity. Total stockholders’ equity increased $8.7 million, or 1.4%, to $648.4 million at March 31, 2025 from $639.7 million at December 31, 2024. Repurchases of the Company’s common stock totaling $6.4 million and dividends declared totaling $4.5 million offset the positive impact of earnings totaling $18.2 million during the first three months of the year.
Previous wording
Our loan portfolio is our most significant earning asset, comprising 80.9% and 79.2% of our total assets as of September 30, 2024 and December 31, 2023, respectively. Our strategy is to grow our loan portfolio by originating quality commercial and consumer loans that comply with our credit policies and that produce revenues consistent with our financial objectives. We believe our loan portfolio is well-balanced, which provides us with the opportunity to grow while monitoring our loan concentrations.
Current wording
Our loan portfolio is our most significant earning asset, comprising 78.8% and 78.3% of our total assets as of March 31, 2025 and December 31, 2024, respectively. Our strategy is to grow our loan portfolio by originating quality commercial and consumer loans that comply with our credit policies and that produce revenues consistent with our financial objectives. We believe our loan portfolio is well-balanced, which provides us with the opportunity to grow while monitoring our loan concentrations.
Previous wording
Loans increased $127.9 million, or 3.8%, to $3.47 billion as of September 30, 2024 as compared to $3.34 billion as of December 31, 2023. This increase during the first nine months of 2024 was primarily driven by solid demand for new credit from our existing customer relationships. This growth was comprised of an increase of $29.9 million or 6.1% in commercial and industrial loans, an increase of $44.1 million or 4.9% in owner occupied commercial real estate loans, a decrease of $9.0 million or 1.9% in non-owner occupied commercial real estate, a decrease of $3.3 million or 1.0% in multi-family loans, an increase of $45.6 million or 22.7% in construction and development loans, an increase of $15.6 million or 1.8% in residential 1-4 family loans and an increase of $4.9 million or 7.5% in consumer and other loans.
Current wording
Loans increased $30.9 million, or 0.9%, to $3.55 billion as of March 31, 2025 compared to $3.52 billion as of December 31, 2024. This increase during the first three months of 2025 was primarily driven by solid demand for new credit from our existing customer relationships. This growth was comprised of an increase of $7.5 million or 1.5% in commercial and industrial loans, an increase of $4.8 million or 0.5% in owner occupied commercial real estate loans, an increase of $0.6 million or 0.1% in non-owner occupied commercial real estate, an increase of $28.6 million or 8.8% in multi-family loans, an increase of $0.5 million or 0.2% in construction and development loans, a decrease of $9.9 million or 1.1% in residential 1-4 family loans and a decrease of $1.2 million or 1.7% in consumer and other loans.
Previous wording
Commercial and Industrial (C&I). Our C&I portfolio totaled $517.8 million and $487.9 million at September 30, 2024 and December 31, 2023, respectively, and represented 15% of our total loans at both of those dates.
Current wording
Commercial and Industrial (C&I). Our C&I portfolio totaled $507.9 million and $500.4 million at March 31, 2025 and December 31, 2024, respectively, and represented 14% of our total loans at both dates.
Previous wording
Our C&I loan customers represent various small and middle-market established businesses involved in professional services, accommodation and food services, health care, financial services, wholesale trade, manufacturing, distribution, retailing and non-profits. Most clients are privately owned with markets that range from local to national in scope. Many of the loans to this segment are secured by liens on corporate assets and the personal guarantees of the principals. The regional economic strength or weakness impacts the relative risks in this loan category. There is little concentration in any one business sector, and loan risks are generally diversified among many borrowers.
Current wording
Our C&I loan customers represent various small and middle-market established businesses involved in professional services, accommodation and food services, health care, financial services, wholesale trade, manufacturing, distribution, retailing and non-profits. Most clients are privately owned with markets that range from local to national in scope. Many of the loans to this segment are secured by liens on corporate assets and the personal guarantees of the principals. The regional economic strength or weakness impacts the relative risks in this loan category. There is little concentration in any one business sector, and loan risks are generally diversified among many borrowers. We actively communicate with our C&I loan customers regarding their operations, including the impacts of recently implemented tariffs on their input costs and customer relationships. We have not noted significant pressure on our customer base from the current uncertain economic environment, but we will continue to monitor the impact of these items on our loan portfolio and its credit quality.
Previous wording
Commercial Real Estate (CRE). Our CRE loan portfolio totaled $1.73 billion and $1.70 billion at September 30, 2024 and December 31, 2023, respectively, and represented 50% of our total loans at both of those dates. The growth in our CRE loan portfolio through the first nine months of 2024 consisted primarily of owner occupied commercial real estate while non-owner occupied commercial real estate and multi-family real estate, typically perceived as containing a higher risk of credit losses, declined slightly. Management views owner occupied CRE as an extension of C&I lending as typically the primary repayment source on these loans is operating profits from the underlying business.
Current wording
Commercial Real Estate (CRE). Our CRE loan portfolio totaled $1.79 billion and $1.75 billion at March 31, 2025 and December 31, 2024, respectively, and represented 50% of our total loans at those dates. The growth in our CRE loan portfolio through the first three months of 2025 consisted primarily of multi-family real estate as developers respond to a shortage of available dwellings in our markets. Management views owner occupied CRE, which expanded marginally during the quarter, as an extension of C&I lending as typically the primary repayment source on these loans is operating profits from the underlying business.
Previous wording
Construction and Development (C&D). Our C&D loan portfolio totaled $246.4 million and $200.8 million at September 30, 2024 and December 31, 2023, respectively, and represented 7% and 6% of our total loans at September 30, 2024 and December 31, 2023, respectively.
Current wording
Construction and Development (C&D). Our C&D loan portfolio totaled $278.5 million and $278.0 million at March 31, 2025 and December 31, 2024, respectively, and represented 8% of our total loans at those dates.
Previous wording
Residential 1 – 4 Family. Residential 1 – 4 family loans held in portfolio amounted to $904.3 million and $888.6 million at September 30, 2024 and December 31, 2023, respectively, and represented 26% and 27% of our total loans at those dates.
Current wording
Residential 1 – 4 Family. Residential 1 – 4 family loans held in portfolio amounted to $903.3 million and $913.2 million at March 31, 2025 and December 31, 2024, respectively, and represented 26% of our total loans at those dates.
Previous wording
We were servicing mortgage loans sold to others without recourse of approximately $1.17 billion at September 30, 2024 and $1.18 billion at December 31, 2023.
Current wording
We were servicing mortgage loans sold to others without recourse of approximately $1.17 billion at March 31, 2025 and December 31, 2024.
Previous wording
Loans sold with the retention of servicing assets result in the capitalization of servicing rights. Loan servicing rights are carried at fair value. The net balance of capitalized servicing rights amounted to $13.4 million and $13.7 million at September 30, 2024 and December 31, 2023, respectively.
Current wording
Loans sold with the retention of servicing assets result in the capitalization of servicing rights. Loan servicing rights are carried at fair value. The net balance of capitalized servicing rights amounted to $13.5 million and $13.4 million at March 31, 2025 and December 31, 2024, respectively.
Previous wording
Consumer Loans. Our consumer loan portfolio totaled $55.6 million and $51.0 million at September 30, 2024 and December 31, 2023, respectively, and represented 2% of our total loans at those dates. Consumer loans include secured and unsecured loans, lines of credit and personal installment loans.
Current wording
Consumer Loans. Our consumer loan portfolio totaled $54.8 million and $55.4 million at March 31, 2025 and December 31, 2024, respectively, and represented 2% of our total loans at those dates. Consumer loans include secured and unsecured loans, lines of credit and personal installment loans.
Previous wording
Other Loans. Our other loans totaled $15.2 million and $15.0 million at September 30, 2024 and December 31, 2023, respectively, and are immaterial to the overall loan portfolio. The other loans category consists primarily of over-drafted depository accounts, loans utilized to purchase or carry securities and loans to nonprofit organizations.
Current wording
Other Loans. Our other loans totaled $15.0 million and $15.6 million at March 31, 2025 and December 31, 2024, respectively, and are immaterial to the overall loan portfolio. The other loans category consists primarily of over-drafted depository accounts, loans utilized to purchase or carry securities and loans to nonprofit organizations.
Previous wording
Loans are typically placed on nonaccrual status when any payment of principal and/or interest is 90 days or more past due, unless the collateral is sufficient to cover both principal and interest and the loan is in the process of collection. Loans are also placed on nonaccrual status when management believes, after considering economic and business conditions, that the principal or interest will not be collectible in the normal course of business. We monitor closely the performance of our loan portfolio. In addition to the monitoring and review of loan performance internally, we have also contracted with an independent organization to review our commercial and retail loan portfolios. The status of delinquent loans, as well as situations identified as potential problems, are reviewed on a regular basis by senior management. The increase in nonaccrual loans during the first nine months of 2024 primarily related to one customer relationship, acquired as part of the Hometown acquisition, that was moved from accrual status during the first quarter.
Current wording
Loans are typically placed on nonaccrual status when any payment of principal and/or interest is 90 days or more past due, unless the collateral is sufficient to cover both principal and interest and the loan is in the process of collection. Loans are also placed on nonaccrual status when management believes, after considering economic and business conditions, that the principal or interest will not be collectible in the normal course of business. We monitor closely the performance of our loan portfolio. In addition to the monitoring and review of loan performance internally, we have also contracted with an independent organization to review our commercial and retail loan portfolios. The status of delinquent loans, as well as situations identified as potential problems, are reviewed on a regular basis by senior management. The decrease in the amount of nonaccrual loans was primarily due to the improvement in one customer relationship, which resulted in the loan being returned to accrual status.
Previous wording
At September 30, 2024, the ACL - Loans was $45.2 million (representing 1.30% of period end loans). The ACL– Loans has remained consistent over recent quarters as economic conditions and the Company’s overall asset quality remain strong. As previously mentioned, the Bank reallocated $0.9 million of ACL from unfunded commitments to ACL for loans in response to a decrease in unfunded loan commitments and an increase in loan balances. The Company recorded net recoveries totaling $0.5 million during the first nine months of 2024.
Current wording
At March 31, 2025, the ACL - Loans was $43.7 million (representing 1.23% of period end loans). Bank First recorded a provision for credit losses of $0.4 million during the first three quarters of 2025. The ACL– Loans has remained consistent over recent quarters as economic conditions have remained stable and the Company’s overall asset quality remain strong. The Company recorded net charge-offs totaling $0.8 million during the first three months of 2025.
Previous wording
Deposits. Our current deposit products include non-interest bearing and interest-bearing checking accounts, savings accounts, money market accounts, and certificate of deposits. As of September 30, 2024, deposit liabilities accounted for approximately 81.1% of our total liabilities and equity. We accept deposits primarily from customers in the communities in which our branches and offices are located, as well as from small businesses and other customers throughout our lending area. We rely on our competitive pricing and products, quality customer service, and convenient locations and hours to attract and retain deposits. Deposit rates and terms are based primarily on current business strategies, market interest rates, liquidity requirements and our deposit growth goals.
Current wording
Deposits. Our current deposit products include non-interest bearing and interest-bearing checking accounts, savings accounts, money market accounts, and certificate of deposits. As of March 31, 2025, deposit liabilities accounted for approximately 81.6% of our total liabilities and equity. We accept deposits primarily from customers in the communities in which our branches and offices are located, as well as from small businesses and other customers throughout our lending area. We rely on our competitive pricing and products, quality customer service, and convenient locations and hours to attract and retain deposits. Deposit rates and terms are based primarily on current business strategies, market interest rates, liquidity requirements and our deposit growth goals.
Previous wording
Total deposits were $3.48 billion and $3.43 billion as of September 30, 2024 and December 31, 2023, respectively. Noninterest-bearing deposits at September 30, 2024 and December 31, 2023, were $1.02 billion and $1.05 billion, respectively, while interest-bearing deposits were $2.46 billion and $2.38 billion at September 30, 2024 and December 31, 2023, respectively. Like most in the banking industry, the Bank has seen a shift in its deposit portfolio from noninterest-bearing deposits to interest-bearing deposits as prevailing interest rates have increased over the last several quarters.
Current wording
Total deposits were $3.67 billion and $3.66 billion as of March 31, 2025 and December 31, 2024, respectively. Noninterest-bearing deposits at March 31, 2025 and December 31, 2024, were $993.8 million and $1.02 billion, respectively, while interest-bearing deposits were $2.68 billion and $2.64 billion at March 31, 2025 and December 31, 2024, respectively. The Bank continue to see a shift in its deposit portfolio from noninterest-bearing deposits to interest-bearing deposits as prevailing interest rates have increased over the last several years.
Previous wording
At September 30, 2024, we had a total of $649.7 million in certificates of deposit, including $20.1 million of brokered deposits. Based on historical experience and our current pricing strategy, we believe we will retain a majority of these accounts upon maturity, although our long-term strategy is to minimize reliance on certificates of deposits by increasing relationship deposits in lower earning savings and demand deposit accounts.
Current wording
At March 31, 2025, we had a total of $662.5 million in certificates of deposit, including $20.1 million of brokered deposits. Based on historical experience and our current pricing strategy, we believe we will retain a majority of these accounts upon maturity, although our long-term strategy is to minimize reliance on certificates of deposits by increasing relationship deposits in lower earning savings and demand deposit accounts.
Previous wording
The Company’s borrowings have historically consisted primarily of FHLB of Chicago advances collateralized by a blanket pledge agreement on the Company’s FHLB capital stock and retail and commercial loans held in the Company’s portfolio. There were $135.3 million and $35.3 million of advances outstanding from the FHLB at September 30, 2024 and December 31, 2023, respectively.
Current wording
The Company’s borrowings have historically consisted primarily of FHLB of Chicago advances collateralized by a blanket pledge agreement on the Company’s FHLB capital stock and retail and commercial loans held in the Company’s portfolio. There were $134.9 million and $135.4 million of advances outstanding from the FHLB at March 31, 2025 and December 31, 2024, respectively.
Previous wording
The total loans pledged as collateral were $1.45 billion and $1.49 billion at September 30, 2024 and December 31, 2023. There were no outstanding letters of credit from the FHLB at September 30, 2024 or December 31, 2023.
Current wording
The total loans pledged as collateral were $1.14 billion and $1.47 billion at March 31, 2025 and December 31, 2024. There were no outstanding letters of credit from the FHLB at March 31, 2025 or December 31, 2024.
Previous wording
Securities available for sale consist of U.S. government sponsored agencies, obligations of states and political subdivision, mortgage-backed securities, and corporate notes. Securities classified as available for sale, which management has the intent and ability to hold for an indefinite period of time, but not necessarily to maturity, are carried at fair value, with unrealized gains and losses, net of related deferred income taxes, included in stockholders’ equity as a separate component of other comprehensive income. The fair value of securities available for sale totaled $128.4 million and included $0.2 gross unrealized gains and gross unrealized losses of $9.4 million at September 30, 2024. At December 31, 2023, the fair value of securities available for sale totaled $142.2 million and included gross unrealized gains of $0.1 million and gross unrealized losses of $12.2 million.
Current wording
Securities available for sale consist of U.S. government sponsored agencies, obligations of states and political subdivision, mortgage-backed securities, and corporate notes. Securities classified as available for sale, which management has the intent and ability to hold for an indefinite period of time, but not necessarily to maturity, are carried at fair value, with unrealized gains and losses, net of related deferred income taxes, included in stockholders’ equity as a separate component of other comprehensive income. The fair value of securities available for sale totaled $163.7 million and included negligible gross unrealized gains and gross unrealized losses of $11.9 million at March 31, 2025. At December 31, 2024, the fair value of securities available for sale totaled $223.1 million and included negligible gross unrealized gains and gross unrealized losses of $12.9 million.
Previous wording
Securities classified as held to maturity consist of U.S. treasury securities and obligations of states and political subdivisions. These securities, which management has the intent and ability to hold to maturity, are reported at amortized cost. Securities held to maturity totaled $109.2 million at September 30, 2024 and $103.3 million at December 31, 2023.
Current wording
Securities classified as held to maturity consist of U.S. treasury securities and obligations of states and political subdivisions. These securities, which management has the intent and ability to hold to maturity, are reported at amortized cost. Securities held to maturity totaled $110.2 million at March 31, 2025 and $110.8 million at December 31, 2024.
Previous wording
The Company had recognized minimal net losses on sales of securities during the nine months ended September 30, 2024. The Company had recognized net losses on sales of securities of $0.1 million during the nine months ended September 30, 2023.
Current wording
The Company had recognized no net losses on sales of securities during the three months ended March 31, 2025. The Company had recognized net losses on sales of securities of $0.03 million during the three months ended March 31, 2024.
Previous wording
As of September 30, 2024, 184 debt securities had gross unrealized losses, with an aggregate depreciation of 3.0% from our amortized cost basis. The largest unrealized loss percentage of any single security was 20.1% (or $0.8 million) of its amortized cost. The largest unrealized dollar loss of any security was $0.8 million (or 20.1%).
Current wording
As of March 31, 2025, 203 debt securities had gross unrealized losses, with an aggregate depreciation of 4.2% from our amortized cost basis. The largest unrealized loss percentage of any single security was 23.4% (or $0.5 million) of its amortized cost. The largest unrealized dollar loss of any security was $0.8 million (or 22.1%).
Previous wording
As of December 31, 2023, 204 debt securities had gross unrealized losses, with an aggregate depreciation of 4.6% from our amortized cost basis. The largest unrealized loss percentage of any single security was 26.5% (or $0.5 million) of its amortized cost. The largest unrealized dollar loss of any single security was $1.0 million (or 16.1%).
Current wording
As of December 31, 2024, 210 debt securities had gross unrealized losses, with an aggregate depreciation of 4.1% from our amortized cost basis. The largest unrealized loss percentage of any single security was 24.6% (or $0.5 million) of its amortized cost. The largest unrealized dollar loss of any single security was $0.9 million (or 23.5%).
Previous wording
Our liquidity is maintained through our investment portfolio, deposits, borrowings from the FHLB, and lines available from correspondent banks. Our highest priority is placed on growing noninterest bearing deposits through strong community involvement in the markets that we serve. Borrowings and brokered deposits are considered short-term supplements to our overall liquidity but are not intended to be relied upon for long-term needs. The Company currently has $1.67 billion in availability between borrowings and brokered deposits for future funding if liquidity needs were to develop. We believe that our present position is adequate to meet our current and future liquidity needs, and management knows of no trend or event that will have a material impact on the Company’s ability to maintain liquidity at satisfactory levels.
Current wording
Our liquidity is maintained through our investment portfolio, deposits, borrowings from the FHLB, and lines available from correspondent banks. Our highest priority is placed on growing noninterest bearing deposits through strong community involvement in the markets that we serve. Borrowings and brokered deposits are considered short-term supplements to our overall liquidity but are not intended to be relied upon for long-term needs. The Company currently has $1.54 billion in availability between borrowings and brokered deposits for future funding if liquidity needs were to develop. We believe that our present position is adequate to meet our current and future liquidity needs, and management knows of no trend or event that will have a material impact on the Company’s ability to maintain liquidity at satisfactory levels.
Previous wording
Capital Adequacy. Total stockholders’ equity was $628.9 million at September 30, 2024 compared to $619.8 million at December 31, 2023.
Current wording
Capital Adequacy. Total stockholders’ equity was $648.4 million at March 31, 2025 compared to $639.7 million at December 31, 2024.
Previous wording
As previously mentioned, the Company carried $12.0 million of subordinated debt as of September 30, 2024 and December 31, 2023, which qualifies as Tier II capital, and $4.0 million of junior subordinated debt as of December 31, 2023, which qualified as Tier I capital. These amounts are included in total capital for the Company in the tables above.
Current wording
As previously mentioned, the Company carried $12.0 million of subordinated debt as of March 31, 2025 and December 31, 2024, which qualifies as Tier II capital. These amounts are included in total capital for the Company in the tables above.
Previous wording
Loan commitments and standby and direct pay letters of credit do not necessarily represent our future cash requirements because while the borrower has the ability to draw upon these commitments at any time, these commitments often expire without being drawn upon. Our off-balance sheet arrangements at the dates indicated were as follows:
Current wording
Loan commitments and standby and direct pay letters of credit do not necessarily represent our future cash requirements because while the borrower has the ability to draw upon these commitments at any time, these commitments often expire without being drawn upon. Our off-balance sheet arrangements as of March 31, 2025, were as follows:
Rearranged previous paragraphs (6)
Previous report — wording carried elsewhere
Results of Operations for the Nine Months Ended September 30, 2024 and September 30, 2023
Previous report — wording carried elsewhere
Net Interest Income**.** Net interest and dividend income increased by $1.6 million to $102.2 million for the nine months ended September 30, 2024 compared to $100.6 million for nine months ended September 30, 2023. As discussed earlier, the rise in net interest income was mainly driven by the repricing of new and renewed loans in a higher interest rate environment and overall growth in interest-earning assets. Comparing the first nine months of 2024 to the first nine months of 2023, rates earned on interest-earning assets increased by 0.49% while rates paid on interest-bearing liabilities increased by 0.81%. Tax equivalent net interest margin decreased 0.07% to 3.67% for the nine months ended September 30, 2024, down from 3.74% for the same period in 2023. Net interest margin and net interest income are influenced by internal and external factors. Internal factors include balance sheet changes on both volume and mix and pricing decisions, and external factors include changes in market interest rates, competition and the shape of the interest rate yield curve.
Previous report — wording carried elsewhere
Noninterest Income. Noninterest income is an important component of our total revenues. A significant portion of our noninterest income has historically been associated with service charges and income from the Bank’s unconsolidated subsidiaries, Ansay and UFS. Other sources of noninterest income include loan servicing fees and gains on sales of mortgage loans.
Previous report — wording carried elsewhere
The major components of our noninterest income are listed below:
Previous report — wording carried elsewhere
The major components of our noninterest expense are listed below:
Previous report — wording carried elsewhere
The following table summarizes securities sold under repurchase agreements, and the weighted average interest rates paid: