BFC

Bank First Corp 2025 Q2 Filing Summary

Business Context and Reporting Period

This Form 10-Q covers the quarterly period ended June 30, 2025. Bank First Corporation is a Wisconsin-based holding company for Bank First, N.A., a full-service financial institution with 27 locations across Wisconsin. The company operates as a non-accelerated filer and is not a shell company.

Key Financial Metrics

Material Changes vs. Prior Period

• Profitability: Net income increased $0.8 million (5.1%) for Q2 2025 compared to Q2 2024, and $3.6 million (11.6%) for the six-month period. This growth was driven by higher loan yields and loan volume growth, partially offset by increased interest expense on liabilities.
• Net Interest Income: Increased $3.7 million in Q2 and $6.8 million YTD compared to the prior year, reflecting a 9 basis point expansion in net interest margin for the quarter.
• Expense Management: Noninterest expense increased $1.7 million in Q2 and $2.0 million YTD. Increases were primarily due to occupancy costs (branch remodels and a new branch in Sturgeon Bay) and data processing expenses (digital banking platform upgrades).
• Balance Sheet: Total assets decreased $130 million from year-end 2024, primarily due to a $141 million decline in cash and cash equivalents and a $57 million reduction in investment securities. Conversely, the loan portfolio grew by $63 million.
• Asset Quality: Nonperforming loans increased to $13.6 million (0.38% of total loans) from $8.5 million at year-end 2024, largely due to the deterioration of a single customer relationship. Net charge-offs were $0.8 million for the six months ended June 30, 2025.

Guidance, Outlook, and Risks

• Merger Activity: On July 18, 2025, the Company entered into a merger agreement with Centre 1 Bancorp, Inc. (parent of First National Bank and Trust Company). The transaction is expected to close on January 1, 2026, creating a combined entity with approximately $5.9 billion in assets.
• Capital Position: The Bank remains "well-capitalized" under regulatory standards. As of June 30, 2025, the Common Equity Tier 1 ratio was 11.03% and the Total Capital ratio was 12.19%, significantly exceeding the 7.0% and 10.5% requirements for well-capitalized status.
• Dividends and Buybacks: The Company declared a quarterly dividend of $0.45 per share (increased from $0.35 in the prior year). Additionally, the Company repurchased $22.0 million of common stock during the first six months of 2025 under a renewed $50 million program.
• Risks: Primary risks include interest rate sensitivity (the company is currently liability-sensitive in certain rate shock scenarios), credit quality deterioration in the commercial real estate and multi-family sectors, and the execution risks associated with the pending merger.

Investor Verification Checklist

• Merger Terms: Verify the final exchange ratio and closing conditions for the Centre 1 Bancorp merger, as consideration is based on fair market value at closing.
• Nonperforming Loans: Investigate the specific details of the single customer relationship that drove the increase in nonaccrual loans to $13.6 million.
• Expense Run Rate: Assess whether the elevated occupancy and data processing expenses are one-time costs or indicative of a higher permanent expense base.
• Deposit Stability: Monitor the shift from noninterest-bearing to interest-bearing deposits and the impact on future net interest margins as rates reprice.
• Capital Ratios: Confirm that the merger will not dilute the Company's current "well-capitalized" regulatory status.