Bank First Announces Net Income for the Fourth Quarter of 2019

MANITOWOC, Wis., Jan. 21, 2020 /PRNewswire/ -- Bank First Corporation BFC ("Bank First" or the "Company"), the holding company for Bank First, N.A., reported net income of $7.5 million, or $1.05 per share, for the fourth quarter of 2019, compared with net income of $6.1 million, or $0.91 per share, for the respective prior-year period. For the year ended December 31, 2019, Bank First earned $26.7 million, or $3.91 per share, compared to $25.5 million, or $3.81 per share for the same period in 2018.

Operating Results

Net interest income during the fourth quarter of 2019 was $18.8 million, down $1.5 million from the previous quarter and $3.3 million higher than the fourth quarter of 2018. Included in net interest income for the third quarter of 2019 was a $1.2 million acceleration of accretion of loan fair value marks and a $0.6 million reversal of a specific purchase credit impaired loan reserve which served to increase interest income for that quarter and created the negative quarter-over-quarter comparison. These items were both due to early pay-offs of purchased loans acquired from Waupaca Bancorporation, Inc. ("Waupaca"). Net interest income for the year ended December 31, 2019 was $69.7 million, up from $63.1 million for the year ended December 31, 2018.

Interest income related to purchase accounting entries, resulting from purchases of Waupaca during the fourth quarter of 2017 and Partnership Community Bancshares, Inc. ("Partnership") during the third quarter of 2019, increased net income (after tax) during the fourth quarter of 2019 by $1.1 million, or $0.16 per share, compared to $0.8 million, or $0.13 per share, for the fourth quarter of 2018. For the years ended December 31, 2019 and 2018, the impact of these purchase accounting entries increased net income (after tax) by $5.1 million, or $0.74 per share, and $4.5 million, or $0.68 per share, respectively.

Net interest margin was 3.85% for the fourth quarter of 2019, matching the fourth quarter of 2018. The aforementioned purchase accounting entries added 0.30% and 0.27% to net interest margin for each of these periods, respectively. Net interest margin was 3.95% for the year ended December 31, 2019, including 0.37% from the impact of purchase accounting entries, compared to 3.88%, including 0.36% from the impact of purchase accounting entries, for the year ended December 31, 2018.

Bank First recorded a provision for loan losses of $1.1 million during the fourth quarter of 2019, compared to $0.8 million during the fourth quarter of 2018. Provision expense was $5.3 million for the year ended December 31, 2019, compared to $2.9 million for the year ended December 31, 2018. The heightened provision during 2019 was heavily impacted by the aforementioned effort during the third quarter of 2019 to exit several relationships acquired in the Waupaca transaction, resulting in the Company incurring net loan charge-offs in excess of $5.0 million during that quarter. These loans included several out-of-market hospitality loans that were poorly collateralized and lacked sufficient repayment sources, and they were never anticipated to be a long-term part of the Company. This action had been foreshadowed in quarterly releases since the Waupaca transaction occurred.

Noninterest income was $3.2 million during the fourth quarter of 2019, compared to $2.6 million during the fourth quarter of 2018. Income from service charges saw an increase of $0.2 million, or 25%, between these two periods due to the Company's increased scale from the current year acquisition of Partnership. Income received from the Company's investments in unconsolidated subsidiaries UFS, LLC and Ansay & Associates, LLC totaled $0.9 million during the fourth quarter of 2019, matching the year earlier fourth quarter. Net gains on the sale of mortgage loans to the secondary market totaled $0.6 million for the fourth quarter of 2019 compared to $0.2 million for the fourth quarter of 2018 as the Company continued to experience a strong year in retail mortgage loan originations. Servicing income from the Company's off-balance sheet serviced loan portfolio saw a significant decrease from both the prior quarter and prior-year fourth quarter, the result of a $0.7 million reduction in the valuation of a servicing rights asset on the Company's balance sheet. During periods of active residential mortgage loan refinancing, as was experienced during 2019, the assumption of loan duration in the fair value modeling of this asset shortens, causing a reduction in projected servicing revenue and a corresponding reduction in fair value of the asset. Historically, when this valuation trend has occurred it has reversed itself in subsequent periods leading to an increase in the valuation of this asset over time, though this is not a future certainty. Finally, during the fourth quarter of 2019, the Company repositioned portions of its investment portfolio, creating a net gain on sale of securities of $0.6 million.

Noninterest expense was $11.2 million for the fourth quarter of 2019, compared to $12.1 million for the prior quarter and $9.9 million for the fourth quarter of 2018. Trailing one-time expenses related to Bank First's acquisition of Partnership, as well as expenses related to the Company's planned acquisition of Tomah Bancshares, Inc., projected to close in the second quarter of 2020, amounted to $0.2 million during the fourth quarter of 2019, primarily impacting data processing expense. Most areas of noninterest expense for the fourth quarter of 2019 saw increases from the prior-year fourth quarter due to the added scale from the addition of four new locations as a result of the Partnership acquisition. Like most banks with total assets under $10 billion, Bank First received an assessment credit from the Federal Deposit Insurance Corporation ("FDIC") Deposit Insurance Fund. The application of this credit resulted in a reversal of a previous FDIC assessment accrual totaling $0.3 million during the fourth quarter of 2019, positively impacting outside service fees.

Balance Sheet

Total assets were $2.21 billion at December 31, 2019, up $417.0 million from December 31, 2018. Total loans were $1.74 billion at December 31, 2019, up $307.9 million from December 31, 2018. Total deposits, nearly all of which remain core deposits, were $1.84 billion at December 31, 2019, up $286.1 million from December 31, 2018. The Partnership acquisition during the third quarter of 2019 added $275.3 million in loans, $268.8 million in deposits and $307.3 million in total assets to the Company's balance sheet at deal close. Annualized loan growth for the fourth quarter of 2019 was nearly 5.2%.

Asset Quality

Nonperforming assets at December 31, 2019 totaled $11.5 million, down $11.8 million from $23.3 million at December 31, 2018. Nonperforming assets to total assets ended the fourth quarter of 2019 at 0.52%, down from 1.30% at the end of the fourth quarter of 2018.

Capital Position

Stockholders' equity totaled $230.2 million at December 31, 2019, an increase of $55.9 million from the end of 2018.

Dividend Declaration

Bank First's Board of Directors approved a quarterly cash dividend of $0.20 per common share, payable on April 7, 2020, to shareholders of record as of March 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 23 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 284 full-time equivalent staff and has assets of approximately $2.2 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) 652-3100 / klemahieu@bankfirstwi.bank

SOURCE Bank First Corporation