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Item 2. Management’s Discussion and Analysis

2026-08-07 compared with 2026-05-11 · 248 added, 115 removed, 676 unchanged (35% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 2025, included in our Annual Report and with our unaudited condensed accompanying notes set forth in this Quarterly Report on Form 10-Q for the quarterly period March 31, 2026.

FORWARD-LOOKING STATEMENTS

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Although the Company believes that the expectations reflected in these forward-looking statements are reasonable as of the date of this report, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.

A number of factors could cause actual results to differ materially from those contemplated by the forward-looking statement in this report including, without limitation, the risks and other factors set forth in the Company’s Registration Statements under the captions “Cautionary Note Regarding Forward-Looking Statements” and “Risk factors.” Many of these factors are beyond the Company’s ability to control or predict.

A number of factors could cause actual results to differ materially from those contemplated by the forward-looking statement in this report including, without limitation, the risks and other factors set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 and the Company’s Registration Statements under the captions “Cautionary Note Regarding Forward-Looking Statements” and “Risk factors.” Many of these factors are beyond the Company’s ability to control or predict.

If one or more events related to these or other risks or uncertainties materialize, or if the Company’s underlying assumptions prove to be incorrect, actual results may differ materially from the forward-looking statements.

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New risks and uncertainties may emerge from time to time, and it is not possible for the Company to predict their occurrence or how they will affect the Company.

A number of important factors could cause our actual results to differ materially from those indicated in these forward-looking statements, including those factors discussed elsewhere in this Quarterly Report on Form 10-Q and the following:

● the risks related to the proposed merger of PSB Holdings, Inc.

(“ Peoples ”) with the Company (the “Proposed Merger”) and expectations with regard to the benefits of the Proposed Merger , without limitation:

(a) the risk that the cost savings and any revenue synergies from the Proposed Merger is less than or different from expectations, (b) disruption from the Proposed Merger with customer, supplier, or employee relationships, (c) the occurrence of any event, change, or other circumstances that could give rise to the termination of the Agreement and Plan of Merger by and between the Company and Peoples , (d) the failure to obtain necessary regulatory approvals for the Proposed Merger, (e) the failure to obtain the approval of the Peoples’ shareholders in connection with the Proposed Merger, (f) the possibility that the costs, fees, expenses and charges related to the Proposed Merger may be greater than anticipated, including as a result of unexpected or unknown factors, events, or liabilities, (g) the failure of the conditions to the Proposed Merger to be satisfied, (h) the risks related to the integration of the combined businesses, including the risk that the integration will be materially delayed or will be more costly or difficult than expected, (i) the diversion of management time on merger-related issues, (j) the ability of the Company to effectively manage the larger and more complex operations of the combined company following the Proposed Merger, (k) the risks associated with the Company's pursuit of future acquisitions, (l) the risk of expansion into new geographic or product markets, (m) reputational risk and the reaction of the parties ’ customers to the Proposed Merger, (n) the Company's ability to successfully execute its various business strategies, including its ability to execute on potential acquisition opportunities, (o) the risk of potential litigation or regulatory action related to the Proposed Merger, and (p) general competitive, economic, political, and market conditions;

● risks relating to bank acquisitions, including the recent acquisition of Centre 1 Bancorp , including, without limitation;

the diversion of management’s time on issues related to the integration;

unexpected transaction costs, including the costs of integrating operations;

the risks that the businesses will not be integrated successfully or that such integration may be more difficult, time-consuming or costly than expected;

the potential failure to fully or timely realize expected revenues and revenue synergies, including as the result of revenues following acquisitions being lower than expected;

the risk of deposit and customer attrition;

regulatory enforcement and litigation risk;

any changes in deposit mix;

unexpected operating and other costs, which may differ or change from expectations;

the risks of customer and employee loss and business disruptions, including, without limitation, as the result of difficulties in maintaining relationships with employees;

increased competitive pressures and solicitations of customers by competitors;

as well as the difficulties and risks inherent with entering new markets .

We qualify all of our forward-looking statements by these cautionary statements.

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Eleven branches of First National Bank and Trust opened on January 2, 2026, operating under the First National Bank and Trust name as a division of Bank First, expanding the Bank’s presence in Rock County in Wisconsin and Winnebago County in Illinois.

These branches will be rebranded under the Bank First name when core systems are consolidated during the second quarter of 2026.

These branches were rebranded under the Bank First name when the core systems were consolidated during the second quarter of 2026.

The Company accounted for this transaction under the acquisition method of accounting, and thus, the financial position and results of operations of the acquired institution prior to the consummation date are not included in the accompanying consolidated financial statements.

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The acquisition accounting is provisional for up to one year after the acquisition and could be adjusted in subsequent quarters during 2026 if additional relevant information to the fair values becomes available.

On May 19, 2026, the Company entered into an Agreement and Plan of Merger with Peoples, pursuant to which Peoples will merge with and into the Company and Peoples banking subsidiary, Peoples State Bank, will merge with and into the Bank.

The transaction is expected to close during the fourth quarter of 2026 and is subject to, among other items, approval by the shareholders of Peoples and regulatory agencies.

Merger consideration will consist of 100% common stock of the Company, and will total approximately $202.9 million, subject to the fair market value of the Company's common stock on the date of closing.

Based on combined results as of June 30, 2026, the merged entity would have total assets of approximately $7.5 billion, loans of approximately $5.6 billion, and deposits of approximately $6.2 billion.

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

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At or for the Three Months Ended

At or for the Six Months Ended

(In thousands, except per share data)

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Tangible book value per common share (1)

At or for the Three Months Ended

At or for the Six Months Ended

(In thousands, except per share data)

Average balances:

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At or for the Three Months Ended

At or for the Six Months Ended

(In thousands, except per share data)

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RESULTS OF OPERATIONS

Results of Operations for the Three Months Ended March 31, 2026 and March 31, 2025

Net income increased $1.8 million to $20.0 million for three months ended March 31, 2026, compared to $18.2 million for the same period in 2025.

Results of Operations for the Three Months Ended June 30, 2026 and June 30, 2025

Net income increased $7.8 million to $24.7 million for three months ended June 30, 2026, compared to $16.9 million for the same period in 2025.

This increase is primarily due to the added scale of operations resulting from the Centre acquisition at the beginning of the first quarter of 2026.

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Our net interest margin can also be adversely impacted by the reversal of interest on nonaccrual loans and the reinvestment of loan payoffs into lower yielding investment securities and other short-term investments.

Net interest and dividend income increased by $16.7 million to $53.2 million for the three months ended March 31, 2026 compared to $36.5 million for three months ended March 31, 2025.

The increase in net interest income was primarily due to growth in interest earning assets over the last three months, resulting from the acquisition of Centre.

Total average interest-earning assets were $5.49 billion for the three months ended March 31, 2026, up from $4.10 billion for the same period in 2025.

In addition, growth of $0.9 million in interest-bearing liabilities, from $2.84 billion for the three months ended March 31, 2025 to $3.75 billion for the three months ended March 31, 2026, was partially offset by average rates paid on these liabilities declining from 2.65% for the three months ended March 31, 2025, to 2.20% for the three months ended March 31, 2026.

Bank First repaid $65.0 million in FHLB borrowings assumed from Centre during the first quarter of 2026, triggering the recognition of $1.3 million in purchase accounting fair value adjustments, reducing interest expense and causing the rate paid on other borrowings to decrease to 0.95% on an annualized basis during the first quarter of 2026.

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.

Net interest and dividend income increased by $18.3 million to $55.0 million for the three months ended June 30, 2026 compared to $36.7 million for three months ended June 30, 2025.

The increase in net interest income was primarily due to growth in interest earning assets over the last three months, resulting from the acquisition of Centre, as well as increasing net interest margin in the year-over-year second quarter.

Total average interest-earning assets were $5.39 billion for the three months ended June 30, 2026, up from $4.01 billion for the same period in 2025.

In addition, growth of $846.4 million in interest-bearing liabilities, from $2.76 billion for the three months ended June 30, 2025 to $3.61 billion for the three months ended June 30, 2026, was partially offset by average rates paid on these liabilities declining from 2.59% for the three months ended June 30, 2025, to 2.30% for the three months ended June 30, 2026.

Interest Income.

Total interest income increased $18.6 million, or 33.7%, to $73.6 million for the three months ended March 31, 2026 compared to $55.0 million for the same period in 2025.

The increase in total interest income was primarily due to the aforementioned growth in interest earnings assets resulting from the acquisition of Centre.

The average balance of interest-earning assets increased by $1.39 billion during the three months ended March 31, 2026 compared to the same period in 2025.

Interest income from the accretion of purchase accounting fair value marks increased by $2.7 million in the first quarter of 2026 compared to the prior-year first quarter.

Total interest income increased $21.1 million, or 38.7%, to $75.7 million for the three months ended June 30, 2026 compared to $54.6 million for the same period in 2025.

The increase in total interest income was primarily due to the aforementioned growth in interest earning assets resulting from the acquisition of Centre as well as increasing rates earned on these balances.

The average balance of interest-earning assets increased by $1.38 billion during the three months ended June 30, 2026 compared to the same period in 2025 and the average rate earned on these balances increased from 5.50% for the quarter ended June 30 2025 to 5.67% for the quarter ended June 30, 2026 .

Interest income from the accretion of purchase accounting fair value marks increased by $3.0 million in the second quarter of 2026 compared to the prior-year second quarter.

Interest Expense.

Interest expense increased $1.9 million, or 10.2%, to $20.4 million for the three months ended March 31, 2026 compared to $18.5 million for the same period in 2025.

Interest expense on interest-bearing deposits increased by $3.2 million to $20.0 million for the three months ended March 31, 2026 compared to $16.9 million for the same period in 2025.

The increase in interest expense was primarily due to elevated interest-bearing liabilities from the Centre acquisition.

The average balance and rate of interest-bearing deposits was $3.61 billion and 2.26% for the three months ended March 31, 2026, compared to $2.69 billion and 2.54% for the same period in 2025.

Other borrowed funds, the Company’s highest-cost source of funding, saw average balances decline by $2.3 million to $144.6 million during the first quarter of 2026 compared to $147.0 million during the same period in the prior year.

Rates paid on these funds declined due to the aforementioned recognition of $1.3 million in purchase accounting fair value adjustments on acquired balances that were paid off prior to contractual maturity.

Interest expense increased $2.8 million, or 15.7%, to $20.7 million for the three months ended June 30, 2026 compared to $17.9 million for the same period in 2025.

Interest expense on interest-bearing deposits increased by $3.0 million to $19.2 million for the three months ended June 30, 2026 compared to $16.2 million for the same period in 2025.

The increase in interest expense was primarily due to elevated interest-bearing liabilities from the Centre acquisition, offset partially by lower crediting rates on these balances.

The average balance and rate of interest-bearing deposits was $3.49 billion and 2.21% for the three months ended June 30, 2026, compared to $2.62 billion and 2.48% for the same period in 2025.

Other borrowed funds, the Company’s highest-cost source of funding, saw average balances decline by $24.5 million to $122.1 million during the second quarter of 2026 compared to $146.6 million during the same period in the prior year.

Provision for Credit Losses.

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The determination of the amount is complex and involves a high degree of judgment and subjectivity.

We did not record a provision for credit loss during the three months ended March 31, 2026 compared to recording a $0.4 million provision for credit loss during the same period in 2025.

Economic forecasts, primarily US gross domestic product projections, increased slightly during the first quarter of 2026 while projections for unemployment also increased.

We incurred $0.1 million net charge-offs during the three months ended March 31, 2026 compared to net charge-offs of $0.8 million during the three months ended March 31, 2025.

We did not record a provision for credit loss during the three months ended June 30, 2026 compared to recording a $0.2 million provision for credit loss during the same period in 2025.

Economic forecasts, primarily US gross domestic product projections, decreased during the second quarter of 2026 while projections for unemployment remained consistent.

We incurred $1.0 million net charge-offs during the three months ended June 30, 2026 compared to minimal net charge-offs during the three months ended June 30, 2025.

The Bank’s loan portfolio continues to exhibit very little credit stress.

The acquisition of Centre led to an increase of $12.8 million of ACL – Loans related to the acquired portfolio.

The ACL - Loans was $57.1 million, or 1.26% of total loans, at March 31, 2026 compared to $43.7 million, or 1.23% of total loans at March 31, 2025.

The ACL - Loans was $56.0 million, or 1.24% of total loans, at June 30, 2026 compared to $44.3 million, or 1.24% of total loans at June 30, 2025.

Noninterest Income.

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Other sources of noninterest income include loan servicing fees and gains on sales of mortgage loans.

Noninterest income increased $3.9 million to $10.5 million for the three months ended March 31, 2026 compared to $6.6 million for the same period in 2025.

Noninterest income increased $5.1 million to $10.0 million for the three months ended June 30, 2026 compared to $4.9 million for the same period in 2025.

This increase was primarily the result of higher service charge and loan servicing income provided by added operational scale from the acquisition of Centre.

Income provided by the Bank’s investment in Ansay totaled $1.0 million during the first quarter of 2026, down $0.2 million from the prior-year first quarter.

Income provided by Trust and Wealth Management was $1.6 million during the first quarter of 2026.

Assets under management of this department totaled $798.4 million as of March 31, 2026.

Finally, gains on sales of mortgage loans totaled $1.1 million during the first quarter of 2026, up from $0.3 million in the prior-year first quarter.

Income provided by the Bank’s investment in Ansay totaled $0.9 million during the second quarter of 2026, down $0.3 million from the prior-year second quarter.

Income provided by Trust and Wealth Management was $1.6 million during the second quarter of 2026.

Assets under management of this department totaled $873.9 million as of June 30, 2026.

The rising interest rate environment during the first half of 2026 resulted in a $0.5 million positive valuation adjustment to the Bank’s mortgage servicing rights during the second quarter of 2026, compared to a $0.1 million negative valuation adjustment in the prior-year second quarter.

Higher mortgage rates generally reduce expected mortgage prepayment speeds, which increases the value of mortgage servicing rights.

Finally, gains on sales of mortgage loans totaled $0.7 million during the second quarter of 2026, up from $0.3 million in the prior-year second quarter.

The major components of our noninterest income are listed below:

Three Months Ended March 31,

Three Months Ended June 30,

(in thousands)

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Noninterest Expense.

Noninterest expense increased $18.5 million to $39.1 million for the three months ended March 31, 2026 compared to $20.6 million for the same period in 2025.

Most areas of noninterest expense were elevated in the most recent quarter due to the added operating scale from Centre acquisition.

Expenses directly related to the Bank’s acquisition of Centre totaled $6.5 million during the first quarter of 2026.

These expenses were primarily incurred in the areas of personnel expense, outside service fees and data processing.

Noninterest expense increased $13.6 million to $34.4 million for the three months ended June 30, 2026 compared to $20.8 million for the same period in 2025.

Most areas of noninterest expense were elevated in the most recent quarter due to the added operating scale from Centre acquisition as well as expenses directly related to this transaction, which totaled $3.2 million during the second quarter of 2026.

These expenses were primarily incurred in the areas of personnel expense, outside service fees, supplies expense, and data processing.

Occupancy expense was significantly elevated due to eleven new operating locations added to the Bank’s footprint as part of the Centre acquisition.

This acquisition also created a core deposit intangible asset of $31.9 million.

Amortization related to this intangible asset, which will be amortized over the next 10 years, led to the elevated amortization expense during the first quarter of 2026.

As mentioned, the Bank incurred a $1.1 million prepayment penalty when it repaid $65.0 million in FHLB borrowings during the first quarter of 2026.

Amortization related to this intangible asset, which will be amortized over the next 10 years, led to the elevated amortization expense during the second quarter of 2026.

The major components of our noninterest expense are listed below:

Three Months Ended March 31,

Three Months Ended June 30,

(In thousands)

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Net gain on sales and valuations of other real estate owned

Charitable contributions

Federal deposit insurance

Outside service fees

Amortization of intangibles

Total noninterest expenses

Income Tax Expense.

We recorded a provision for income taxes of $5.9 million for the three months ended June 30, 2026 compared to a provision of $3.8 million for the same period during 2025, reflecting effective tax rates of 19.4% for the second quarter of 2026 compared to 18.3% during second quarter 2025.

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.

Additional tax-exempt income during the second quarter of 2025 resulted from a death benefit on life insurance, further reducing the effective tax rate for that quarter.

Results of Operations for the Six Months Ended June 30, 2026 and June 30, 2025

Net income increased $9.6 million to $44.7 million for the six months ended June 30, 2026, compared to $35.1 million for the same period in 2025.

This increase was primarily due to the added scale of operations resulting from the Centre acquisition during the first quarter of 2026.

Additionally, the Bank’s net income continues to benefit from new and renewed loans being priced at higher yields, while deposits continue to reprice lower.

Net Interest Income .

Net interest and dividend income increased by $35.0 million to $108.2 million for the six months ended

June 30, 2026 compared to $73.2 million for six months ended June 30, 2025.

The increase in net interest income was primarily due to growth in interest earning assets over the last six months, resulting from the acquisition of Centre, as well as increasing net interest margin in the first six months of 2026 compared to the same period in 2025.Comparing the first six months of 2026 to the first six months of 2025, rates earned on interest-earning assets increased by 0.07% while average interest-earning assets increased by $1.39 billion.

Tax equivalent net interest margin increased 35 basis points to 4.04% for the six months ended June 30, 2026, up from 3.69% for the same period in 2025.

Bank First repaid $65.0 million in FHLB borrowings assumed from Centre prior to contractual maturity during the first quarter of 2026, triggering the recognition of $1.3 million in purchase accounting fair value adjustments, reducing interest expense and elevating net interest margin during that period.

Net interest margin and net interest income are influenced by internal and external factors.

Interest Income.

Total interest income increased $39.7 million, or 36.2%, to $149.3 million for the six months ended June 30, 2026 compared to $109.6 million for the same period in 2025.

The increase in total interest income was primarily due to the aforementioned growth in interest earnings assets over the last six months along with an increase in the average interest rate earned on these assets.

Interest Expense.

Interest expense increased $4.7 million, or 12.9%, to $41.1 million for the six months ended June 30, 2026 compared to $36.4 million for the same period in 2025.

The increase in interest expense was primarily due to elevated interest bearing liabilities from the Centre acquisition.

The average balance of interest-bearing liabilities increased by $838.3 million during the first six months of 2026 compared to the same period in 2025.

Offsetting the cost of these higher levels of average interest-bearing liabilities was a decline in the average interest rate paid on these balances which declined from 2.62% for the first two quarters of 2025 to 2.28% for the first two quarters of 2026.

Interest expense on interest-bearing deposits totaled $39.2 million and $33.1 million for the six months ended June 30, 2026 and 2025, respectively.

The average cost of interest-bearing deposits was 2.26% for the six months ended June 30, 2026, compared to 2.51% for the same period in 2025.

Provision for Credit Losses.

We did not record a provision for credit losses for the six months ended June 30, 2026 compared to $0.6 million for the same period in 2025.

We recorded net charge-offs of $1.2 million for the six months ended June 30, 2026 compared to net charge-offs of $0.8 million for the same period in 2025.

The ACL - Loans was $56.0 million, or 1.24% of total loans, at June 30, 2026 compared to $44.3 million, or 1.24% of total loans at June 30, 2025.

Noninterest Income.

Noninterest income is an important component of our total revenues.

Noninterest income increased $9.0 million to $20.5 million for the six months ended June 30, 2026 compared to $11.5 million for the same period in 2025.

This increase was primarily the result of higher service charge and loan servicing income provided by added operational scale from the acquisition of Centre.

Income provided by Trust and Wealth Management was $3.2 million during the first six months of 2026.

Income provided by the Bank’s investment in Ansay & Associates, LLC totaled $1.8 million through the second quarter of 2026, down $0.5 million from the first six months of the prior year.

Positive valuation adjustments to the Bank’s MSRs totaling $0.6 million during the first two quarters of 2026 compared favorably to $0.1 million in positive valuation adjustments during the first two quarters of 2025.

Net gain on sales of mortgage loans totaled $1.7 million through the first six months of 2026, up $1.1 million from the first six months of 2025.

The major components of our noninterest income are listed below:

Six Months Ended June 30,

(In thousands)

Noninterest Income

Service Charges

Income from Ansay

Loan Servicing income

Valuation adjustment on MSR

Net gain on sales of mortgage loans

Trust and wealth management

Total noninterest income

Noninterest Expense.

Noninterest expense increased $32.1 million to $73.5 million for the six months ended June 30, 2026 compared to $41.4 million for the same period in 2025.

Most areas of noninterest expense increased over the past two quarters as a result of added operational scale from the acquisition of Centre.

Significant transaction related expenses from the Company’s acquisition of Centre during the first half of 2026 caused large increases in salaries, data processing, supplies, and outside service fees.

Expenses directly related to the Bank’s acquisition of Centre totaled $9.5 million during the first six months of 2026.

Amortization of the core deposit intangible asset associated with the acquisition contributed to the higher amortization expense recorded during the first half of 2026.

As earlier mentioned, the Bank incurred a $1.1 million prepayment penalty when it repaid $65.0 million in FHLB borrowings during the first quarter of 2026, which was recorded in other noninterest expense.

The major components of our noninterest expense are listed below:

Six Months Ended June 30,

(In thousands)

Noninterest Expense

Salaries, commissions, and employee benefits

Data processing

Postage, stationary, and supplies

Net gain on sales and valuations of other real estate owned

Net loss on sales of securities

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Income Tax Expense.

We recorded a provision for income taxes of $4.7 million for the three months ended March 31, 2026 compared to a provision of $3.9 million for the same period during 2025, reflecting effective tax rates of 19.1% for the first quarter of 2026 compared to 17.5% during first quarter 2025.

We recorded a provision for income taxes of $10.6 million for the six months ended June 30, 2026 compared to a provision of $7.7 million for the same period during 2025, reflecting effective tax rates of 19.3% and 17.9%, respectively.

Tax-exempt income during the first quarter of 2025 resulted from a death benefit on life insurance, further reducing the effective tax rate for that quarter.

Additional tax-exempt income during the first half of 2025 resulted from death benefits on life insurance, further reducing the effective tax rate for that period.

NET INTEREST MARGIN

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Three Months Ended

March 31, 2026

March 31, 2025

June 30, 2026

June 30, 2025

Rate Earned/ Paid

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Net interest margin (4)

Annualized on a fully taxable equivalent basis calculated using a federal tax rate of 21% for the three months ended March 31, 2026 and 2025.

Annualized on a fully taxable equivalent basis calculated using a federal tax rate of 21% for the three months ended June 30, 2026 and 2025.

Nonaccrual loans are included in average amounts outstanding.

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Net interest margin represents net interest income on a fully tax equivalent basis as a percentage of average interest-earning assets.

Six Months Ended

June 30, 2026

June 30, 2025

(dollars in thousands)

Interest-earning assets

Taxable (available for sale)

Tax-exempt (available for sale)

Taxable (held to maturity)

Tax-exempt (held to maturity)

Cash and due from banks

Total interest-earning assets

Non interest-earning assets

Allowance for loan losses

LIABILITIES AND SHAREHOLDERS’ EQUITY

Interest-bearing deposits

Checking accounts

Savings accounts

Money market accounts

Certificates of deposit

Brokered deposits

Total interest-bearing deposits

Other borrowed funds

Total interest-bearing liabilities

Non-interest bearing liabilities

Demand deposits

Other liabilities

Total liabilities

Shareholders’ equity

Total liabilities & shareholders' equity

Net interest income on a fully taxable equivalent basis

Less taxable equivalent adjustment

Net interest income

Net interest spread (3)

Net interest margin (4)

Annualized on a fully taxable equivalent basis calculated using a federal tax rate of 21% for the six months ended June 30, 2026 and 2025.

Nonaccrual loans are included in average amounts outstanding.

Interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.

Net interest margin represents net interest income on a fully tax equivalent basis as a percentage of average interest-earning assets.

Rate/Volume Analysis

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(i) changes attributable to changes in volumes (changes in average balance multiplied by prior year average rate) and (ii) changes attributable to changes in rate (change in average interest rate multiplied by prior year average balance), while (iii) changes attributable to the combined impact of volumes and rates have been allocated proportionately to separate volume and rate categories.

Three Months Ended March 31, 2026

Three Months Ended June 30, 2026

Six Months Ended June 30, 2026

Compared with

Three Months Ended March 31, 2025

Compared with

Three Months Ended June 30, 2025

Six Months Ended June 30, 2025

Increase/(Decrease) Due to Change in

(dollars in thousands)

Interest income

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Total Assets.

Total assets increased $1.56 billion, or 34.7%, to $6.07 billion at March 31, 2026, from $4.51 billion at December 31, 2025, primarily as a result of the Centre acquisition on January 1, 2026.

Total assets increased $1.44 billion, or 32.0%, to $5.95 billion at June 30, 2026, from $4.51 billion at December 31, 2025, primarily as a result of the Centre acquisition on January 1, 2026.

Cash and Cash Equivalents.

Cash and cash equivalents increased by $155.4 million to $398.6 million at March 31, 2026, from $243.2 million at December 31, 2025.

Cash and cash equivalents increased by $23.3 million to $266.5 million at June 30, 2026, from $243.2 million at December 31, 2025.

Investment Securities.

The carrying value of total investment securities increased by $333.0 million to $601.2 million at March 31, 2026, from $268.1 million at December 31, 2025.

The carrying value of total investment securities increased by $340.5 million to $608.6 million at June 30, 2026, from $268.1 million at December 31, 2025.

The increase in investments was primarily attributed to the investment portfolio acquired from Centre during the first quarter of 2026.

Net loans increased by $898.3 million, totaling $4.46 billion at March 31, 2026 compared to $3.56 billion at December 31, 2025.

Net loans increased by $905.4 million, totaling $4.47 billion at June 30, 2026 compared to $3.56 billion at December 31, 2025.

The fair value of loans acquired as part of the acquisition of Centre at the beginning of the first quarter of 2026 totaled $968.7 million.

Deposits increased $1.39 billion, or 37.6%, to $5.09 billion at March 31, 2026 from $3.70 billion at December 31, 2025.

Deposits increased $1.29 billion, or 34.9%, to $4.99 billion at June 30, 2026 from $3.70 billion at December 31, 2025.

The fair value of deposits acquired as part of the acquisition of Centre at the beginning of the first quarter of 2026 totaled $1.38 billion.

At March 31, 2026, borrowings consisted of advances from the FHLB and subordinated debt to other banks and an individual.

FHLB borrowings decreased $10.0 million, or 9.1%, to $100.0 million at March 31, 2026 from $110.0 million at December 31, 2025.

Junior subordinated debentures, all of which were assumed as part of the acquisition of Centre, totaled $8.3 million at March 31, 2026.

The Company assumed $4.5 million of subordinated debt at fair value in the Centre transaction, increasing total subordinated debt to $16.6 million at March 31, 2026, up from $12.0 million at December 31, 2025.

At June 30, 2026, borrowings consisted of advances from the FHLB and subordinated debt to other banks and an individual.

FHLB borrowings decreased $30.0 million, or 27.3%, to $80.0 million at June 30, 2026 from $110.0 million at December 31, 2025.

Junior subordinated debentures, all of which were assumed as part of the acquisition of Centre, totaled $8.3 million at June 30, 2026.

The Company assumed $4.6 million of subordinated debt at fair value in the Centre transaction, increasing total subordinated debt to $16.6 million at June 30, 2026, up from $12.0 million at December 31, 2025.

Stockholders’ Equity.

Total stockholders’ equity increased $176.0 million, or 27.3%, to $819.9 million at March 31, 2026 from $643.8 million at December 31, 2025.

Repurchases of the Company’s common stock totaling $3.1 million and dividends declared totaling $5.6 million offset the positive impact of earnings totaling $20.0 million during the first three months of the 2026.

The largest contributor to this increase was the Centre acquisition, which added $168.5 million to stockholders’ equity.

Total stockholders’ equity increased $175.5 million, or 27.3%, to $819.3 million at June 30, 2026 from $643.8 million at December 31, 2025.

Repurchases of the Company’s common stock totaling $23.4 million and dividends declared totaling $11.7 million offset the positive impact of earnings totaling $44.7 million during the first six months of 2026.

The largest contributor to the increase in stockholder’s equity during the first half of 2026 was the Centre acquisition, which added $168.5 million.

Our lending activities are principally conducted in the states of Wisconsin and Illinois.

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Repayment of the Bank’s residential loans are generally dependent on the health of the employment market in the borrowers’ geographic areas and that of the general economy with liquidation of the underlying real estate collateral being typically viewed as the primary source of repayment in the event of borrower default.

Our loan portfolio is our most significant earning asset, comprising 74.6% and 80.1% of our total assets as of March 31, 2026 and December 31, 2025, respectively.

Our loan portfolio is our most significant earning asset, comprising 76.1% and 80.1% of our total assets as of June 30, 2026 and December 31, 2025, 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.

Loans increased $911.0 million, or 25.3%, to $4.51 billion as of March 31, 2026, compared to $3.60 billion as of December 31, 2025.

This increase was primarily driven by the acquisition of Centre, which included approximately $1.0 billion in loan balances, and was comprised of an increase of $157.2 million or 24.3% in commercial and industrial loans, an increase of $76.6 million or 8.7% in owner occupied commercial real estate loans, an increase of $209.9 million or 42.6% in non-owner occupied commercial real estate loans, an increase of $240.1 million or 59.7% in multifamily loans, an increase of $40.4 million or 18.8% in construction and development loans, an increase of $262.6 million or 29.3% in residential 1-4 family loans and an increase of $11.9 million or 16.6% in consumer and other loans.

Loans increased $917.0 million, or 25.4%, to $4.52 billion as of June 30, 2026, compared to $3.60 billion as of December 31, 2025.

This increase was primarily driven by the acquisition of Centre, which included at acquisition date approximately $968.7 million in loan balances, and was comprised of an increase of $157.2 million or 24.3% in commercial and industrial loans, an increase of $76.6 million or 8.7% in owner occupied commercial real estate loans, an increase of $209.9 million or 42.6% in non-owner occupied commercial real estate loans, an increase of $240.1 million or 59.7% in multifamily loans, an increase of $40.4 million or 18.8% in construction and development loans, an increase of $262.6 million or 29.3% in residential 1-4 family loans and an increase of $11.9 million or 16.6% in consumer and other loans.

The following table presents the balance and associated percentage of each major category in our loan portfolio:

March 31, 2026

June 30, 2026

December 31, 2025

March 31, 2025

June 30, 2025

(dollars in thousands)

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Commercial and Industrial (C&I).

Our C&I portfolio totaled $821.2 million and $647.1 million at March 31, 2026 and December 31, 2025, respectively, and represented 18% of our total loans as of March 31, 2026 and December 31, 2025.

Our C&I portfolio totaled $848.6 million and $647.1 million and represented 19% and 18% of our total loans as of June 30, 2026 and December 31, 2025, respectively.

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.

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Commercial Real Estate (CRE).

Our CRE loan portfolio totaled $2.25 billion and $1.78 billion at March 31, 2026 and December 31, 2025, respectively, and represented 50% and 49% of our total loans at those dates

Our CRE loan portfolio totaled $2.25 billion and $1.78 billion at June 30, 2026 and December 31, 2025, respectively, and represented 50% and 49% of our total loans at those dates

Our CRE loans are secured by a variety of property types including multi-family dwellings, retail facilities, office buildings, commercial mixed use, lodging and industrial and warehouse properties.

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Construction and Development (C&D).

Our C&D loan portfolio totaled $259.4 million and $215.5 million at March 31, 2026 and December 31, 2025, respectively, and represented 6% of our total loans as of March 31, 2026 and December 31, 2025.

Our C&D loan portfolio totaled $241.9 million and $215.5 million at June 30, 2026 and December 31, 2025, respectively, and represented 5% of our total loans as of June 30, 2026 and 6% of our total loans as of December 31, 2025.

Our C&D loans are generally for the purpose of creating value out of real estate through construction and development work, and also include loans used to purchase recreational use land.

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Residential 1 – 4 Family.

Residential 1 – 4 family loans held in portfolio amounted to $1.10 billion and $895.0 million at March 31, 2026 and December 31, 2025, respectively, and represented 24% of our total loans as of March 31, 2026 and 25% of our total loans as of December 31, 2025.

Residential 1 – 4 family loans held in portfolio amounted to $1.10 billion and $895.0 million at June 30, 2026 and December 31, 2025, respectively, and represented 24% of our total loans as of June 30, 2026 and 25% of our total loans as of December 31, 2025.

We offer fixed and adjustable-rate residential mortgage loans with maturities up to 30 years.

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Servicing rights are retained on all loans sold to the secondary market.

We were servicing mortgage loans sold to others without recourse of approximately $1.54 billion and $1.20 billion at March 31, 2026 and December 31, 2025, respectively.

We were servicing mortgage loans sold to others without recourse of approximately $1.55 billion and $1.20 billion at June 30, 2026 and December 31, 2025, respectively.

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 $17.5 million at March 31, 2026 and $13.7 million December 31, 2025.

The net balance of capitalized servicing rights amounted to $18.0 million at June 30, 2026 and $13.7 million December 31, 2025.

Consumer Loans.

Our consumer loan portfolio totaled $61.4 million and $54.8 million at March 31, 2026 and December 31, 2025, respectively, and represented 1% of our total loans as of March 31, 2026 and 2% of our total loans as of December 31, 2025.

Our consumer loan portfolio totaled $60.7 million and $54.8 million at June 30, 2026 and December 31, 2025, respectively, and represented 1% of our total loans as of June 30, 2026 and 2% of our total loans as of December 31, 2025.

Consumer loans include secured and unsecured loans, lines of credit and personal installment loans.

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As a result, consumer loan repayments are dependent on the borrower’s continuing financial stability and thus are more likely to be adversely affected by job loss, divorce, illness or personal bankruptcy.

Our other loans totaled $22.4 million and $16.9 million at March 31, 2026 and December 31, 2025, respectively, and are immaterial to the overall loan portfolio.

Our other loans totaled $19.6 million and $16.9 million at June 30, 2026 and December 31, 2025, 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.

Loan Portfolio Maturities.

The following tables summarize the dollar amount of loans maturing in our portfolio based on their loan type, fixed or variable rate of interest, and contractual terms to maturity at March 31, 2026.

The following tables summarize the dollar amount of loans maturing in our portfolio based on their loan type, fixed or variable rate of interest, and contractual terms to maturity at June 30, 2026.

The tables do not include any estimate of prepayments, which can significantly shorten the average life of all loans and may cause our actual repayment experience to differ from that shown below.

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The composition of our nonperforming assets is as follows:

As of March 31,

As of June 30,

As of December 31,

As of March 31,

As of June 30,

(dollars in thousands)

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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 through the first three months of 2026 was primarily due to the deterioration of one customer relationship, which resulted in several loans being moved to nonaccrual status.

The increase in nonaccrual loans through the first six months of 2026 was primarily due to the deterioration of one customer relationship, which resulted in several loans being moved to nonaccrual status.

ALLOWANCE FOR CREDIT LOSSES - LOANS

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For further details on the Company’s ACL – Loans, refer to the footnotes along with the consolidated financial statements elsewhere in this report.

At March 31, 2026, the ACL - Loans was $57.1 million (representing 1.26% of period end loans).

The Bank did not record a provision for credit losses during the first quarter of 2026.

At June 30, 2026, the ACL - Loans was $56.0 million (representing 1.2% of period end loans).

The Bank did not record a provision for credit losses during the second quarter of 2026.

In addition, the ACL - Loans increased due to the acquisition of Centre, which required a $7.8 million allowance for credit losses on non-PCD loans and a $5.0 million reserve related to PCD loans.

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 $0.1 million during the first three months of 2026.

The Company recorded net charge-offs totaling $1.2 million during the first six months of 2026.

The following table summarizes the changes in our ACL - Loans for the periods indicated:

Three months ended

Six months ended

(dollars in thousands)

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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, 2026, deposit liabilities accounted for approximately 83.8% of our total liabilities and equity.

As of June 30, 2026, deposit liabilities accounted for approximately 83.9% 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.

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Deposit rates and terms are based primarily on current business strategies, market interest rates, liquidity requirements and our deposit growth goals.

Total deposits were $5.09 billion and $3.70 billion as of March 31, 2026 and December 31, 2025, respectively.

Noninterest-bearing deposits at March 31, 2026 and December 31, 2025, were $1.50 billion and $1.00 billion, respectively, while interest-bearing deposits were $3.59 billion and $2.69 billion at March 31, 2026 and December 31, 2025, respectively.

At March 31, 2026, we had a total of $822.4 million in certificates of deposit, including $15.1 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.

Total deposits were $4.99 billion and $3.70 billion as of June 30, 2026 and December 31, 2025, respectively.

Noninterest-bearing deposits at June 30, 2026 and December 31, 2025, were $1.50 billion and $1.00 billion, respectively, while interest-bearing deposits were $3.49 billion and $2.69 billion at June 30, 2026 and December 31, 2025, respectively.

At June 30, 2026, we had a total of $813.2 million in certificates of deposit, including $15.1 million of brokered deposits.

Based on historical experience and our current pricing strategy, we believe we will retain a majority of the non-brokered 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.

The following tables set forth the average balances of our deposits for the periods indicated:

Three months ended

March 31, 2026

Six months ended

June 30, 2026

December 31, 2025

March 31, 2025

June 30, 2025

(dollars in thousands)

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Brokered deposits

The following table provides information on maturities of certificates of deposits which exceed FDIC insurance limits of $250,000 as of March 31, 2026:

The following table provides information on maturities of certificates of deposits which exceed FDIC insurance limits of $250,000 as of June 30, 2026:

Time Deposits over FDIC

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The Company’s borrowings have historically consisted primarily of FHLB 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 $100.0 million and $110.0 million of advances outstanding from the FHLB at March 31, 2026 and December 31, 2025, respectively.

The total loans pledged as collateral were $839.3 million and $1.10 billion at March 31, 2026 and December 31, 2025.

There were $102.8 million letters of credit from the FHLB at March 31, 2026 compared to no letters of credit at December 31, 2025.

There were $80.0 million and $110.0 million of advances outstanding from the FHLB at June 30, 2026 and December 31, 2025, respectively.

The total loans pledged as collateral were $1.36 billion and $1.10 billion at June 30, 2026 and December 31, 2025.

There were $35.8 million letters of credit from the FHLB at June 30, 2026 compared to no letters of credit at December 31, 2025.

The following table summarizes borrowings from the FHLB, and the weighted average interest rates paid:

Three months ended

Six months ended

(dollars in thousands)

March 31, 2026

June 30, 2026

December 31, 2025

March 31, 2025

June 30, 2025

Average daily amount of borrowings outstanding during the period

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During July 2020, the Company entered into subordinated note agreements with two separate commercial banks.

As of March 31, 2026 and December 31, 2025, outstanding balances under these agreements totaled $6.0 million.

As of June 30, 2026 and December 31, 2025, outstanding balances under these agreements totaled $6.0 million.

These notes were issued with 10-year maturities, carried interest at a fixed rate of 5.0% through June 30, 2025, and carry a variable rate, payable quarterly.

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During August 2022, the Company entered into subordinated note agreements with an individual.

As of March 31, 2026 and December 31, 2025, outstanding balances under these agreements totaled $6.0 million.

As of June 30, 2026 and December 31, 2025, outstanding balances under these agreements totaled $6.0 million.

These notes were issued with 10-year maturities, will carry interest at a fixed rate of 5.25% through August 6, 2027, and at a variable rate thereafter, payable quarterly.

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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 $483.2 million and included negligible gross unrealized gains and gross unrealized losses of $13.0 million at March 31, 2026.

The fair value of securities available for sale totaled $494.6 million and included $0.1 million gross unrealized gains and gross unrealized losses of $12.4 million at June 30, 2026.

At December 31, 2025, the fair value of securities available for sale totaled $164.4 million and included $0.4 million gross unrealized gains and gross unrealized losses of $7.8 million.

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These securities, which management has the intent and ability to hold to maturity, are reported at amortized cost.

Securities held to maturity totaled $117.9 million at March 31, 2026 and $103.7 million at December 31, 2025.

The Company had recognized net losses of $0.03 million on sales of securities during the three months ended March 31, 2026.

The Company had recognized net losses on sales of securities of zero during the three months ended March 31, 2025.

The following tables set forth the composition and maturities of investment securities as of March 31, 2026 and December 31, 2025.

Securities held to maturity totaled $114.1 million at June 30, 2026 and $103.7 million at December 31, 2025.

The Company had negligible recognized net losses on sales of securities during the six months ended June 30, 2026.

The Company did not have any sales of securities during the six months ended June 30, 2025.

The following tables set forth the composition and maturities of investment securities as of June 30, 2026 and December 31, 2025.

Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

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After Ten Years

At March 31, 2026

At June 30, 2026

(dollars in thousands)

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Weighted Average Yield is shown on a fully taxable equivalent basis using a federal tax rate of 21% and includes the amortization of premiums and discounts.

As of March 31, 2026 and December 31, 2025, no allowance for credit losses on securities AFS was recognized.

As of June 30, 2026 and December 31, 2025, no allowance for credit losses on securities AFS was recognized.

The Company does not consider its securities AFS with unrealized losses to be attributable to credit-related factors, as the unrealized losses in each category have occurred as a result of changes in noncredit-related factors such as changes in interest rates, market spreads and market conditions subsequent to purchase, not credit deterioration.

Furthermore, as of March 31, 2026, the Company did not have the intent to sell any of these securities AFS and believes that it is more likely than not that we will not have to sell any such securities before a recovery of cost.

The Company does not believe there are any expected credit losses in its HTM securities portfolio at March 31, 2026 or December 31, 2025.

Furthermore, as of June 30, 2026, the Company did not have the intent to sell any of these securities AFS and believes that it is more likely than not that we will not have to sell any such securities before a recovery of cost.

The Company does not believe there are any expected credit losses in its HTM securities portfolio at June 30, 2026 or December 31, 2025.

Treasury securities have the full faith and credit backing of the United States government.

As of March 31, 2026, 278 debt securities had gross unrealized losses, with an aggregate depreciation of 2.2% from our amortized cost basis.

As of June 30, 2026, 259 debt securities had gross unrealized losses, with an aggregate depreciation of 2.0% from our amortized cost basis.

The largest unrealized loss percentage of any single security was 20.7% (or $0.4 million) of its amortized cost.

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Capital Adequacy.

Total stockholders’ equity was $819.9 million at March 31, 2026 compared to $643.8 million at December 31, 2025.

Total stockholders’ equity was $819.3 million at June 30, 2026 compared to $643.8 million at December 31, 2025.

Our capital management consists of providing adequate equity to support our current and future operations.

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All of the federal bank regulatory agencies have adopted regulations establishing relevant capital measures and relevant capital levels for federally insured depository institutions.

The Bank was well capitalized at March 31, 2026, and brokered deposits are not restricted.

The Bank was well capitalized at June 30, 2026, and brokered deposits are not restricted.

To be well-capitalized, the Bank must maintain at least a 6.5% CET1 to risk-weighted assets ratio, an 8.0% Tier 1 capital to risk-weighted assets ratio, a 10.0% Total capital to risk-weighted assets ratio, and a 5.0% leverage ratio.

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(dollars in thousands)

At March 31, 2026

At June 30, 2026

Bank First Corporation:

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Tier I capital (to average assets)

As previously mentioned, the Company carried $16.6 million of subordinated debt as of March 31, 2026 and December 31, 2025, which qualifies as Tier II capital.

As previously mentioned, the Company carried $16.6 million of subordinated debt as of June 30, 2026 and December 31, 2025, which qualifies as Tier II capital.

These amounts are included in total capital for the Company in the tables above.

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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, 2026, were as follows:

Amounts of Commitments Expiring - By Period as of March 31, 2026

Our off-balance sheet arrangements as of June 30, 2026, were as follows:

Amounts of Commitments Expiring - By Period as of June 30, 2026

Less Than One

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis