What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-03-16 compared with 2021-03-12 · 101 added, 165 removed, 1226 unchanged (18% of the section changed)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Management ’ s Assessment of Internal Controls Over Financial Statements

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Financial Statements:

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Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Bank First Corporation and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for the years then ended and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of their operations and their cash flows for the periods then ended, in conformity with U.S.

We have audited the accompanying consolidated balance sheets of Bank First Corporation and Subsidiaries (the "Company") as of December 31, 2021 and 2020, the related consolidated statements of income, stockholders ’ equity, and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2021, in conformity with U.S.

generally accepted accounting principles.

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We believe that our audits provide a reasonable basis for our opinion.

/s/ Dixon Hughes Goodman LLP We have served as the

Company's auditor since 2019.

Atlanta, Georgia March

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors

Bank First Corporation

Manitowoc, Wisconsin

Opinion on the Financial Statements

We have audited the accompanying consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for the year ended December 31, 2018 of Bank First Corporation and its subsidiaries (the “Company”) and the related notes to the consolidated financial statements (collectively, the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the results of the Company’s operations and their cash flows for the year ended December 31, 2018, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ PORTER KEADLE MOORE, LLC

/s/ Dixon Hughes Goodman LLP

We have served as the Company's auditor since 2019.

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Interest-bearing deposits

Federal funds sold

Cash and cash equivalents

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Cash value of life insurance

Identifiable intangible assets, net

Other real estate owned ("OREO")

Core deposit intangibles, net

Mortgage Servicing Rights ("MSR")

Other real estate owned (“OREO”)

Investment in minority-owned subsidiaries

13 unchanged sentences

Authorized - 20,000,000 shares

Issued - 8,478,383 and 7,902,742 shares as of December 31, 2020 and 2019, respectively

Issued - 8,478,383 shares as of December 31, 2021 and 2020

Outstanding - 7,616,540 and 7,709,497 shares as of December 31, 2021 and 2020, respectively

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Service charges

Income from Ansay and Associates, LLC ("Ansay")

Income from UFS, LLC ("UFS")

Income from Ansay and Associates, LLC (“Ansay”)

Income from UFS, LLC (“UFS”)

Loan servicing income

Net gain on sales of mortgage loans

Net gain (loss) on sales of securities

Net (loss) gain on sales of securities

Net gain on sale of other investments

Noninterest income from strategic alliances

Total noninterest income

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Postage, stationery, and supplies

Net loss (gain) on sales and valuations of OREO

Net (gain) loss on sales and valuations of OREO

Charitable contributions

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(In Thousands)

Other comprehensive income (loss):

Unrealized gains (losses) on available for sale securities:

Unrealized holding gains (losses) arising during period

Other comprehensive (loss) income:

Unrealized (losses) gains on available for sale securities:

Unrealized holding (losses) gains arising during period

Amortization of unrealized holding gains on securities transferred from available for sale to held to maturity

Reclassification adjustment for (gains) losses included in net income

Income tax (expense) benefit

Total other comprehensive income (loss)

Reclassification adjustment for losses (gains) included in net income

Income tax benefit (expense)

Total other comprehensive (loss) income

Comprehensive income

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Change in accounting principle in unconsolidated subsidiary

Other comprehensive loss

Purchase of treasury stock

Sale of treasury stock

Cash dividends ($ 0.68 per share)

Amortization of stock-based compensation

Vesting of restricted stock awards

Balance at December 31, 2018

Change in accounting principle in unconsolidated subsidiary

Other comprehensive income

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Balance at December 31, 2020

Other comprehensive loss

Purchase of treasury stock

Sale of treasury stock

Cash dividends ($ 1.14 per share)

Amortization of stock-based compensation

Vesting of restricted stock awards

Balance at December 31, 2021

See accompanying notes to consolidated financial statements.

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(Benefit) expense for deferred income taxes

Change in fair value of mortgage servicing rights ("MSR") and other investments

Loss from sale and disposal of premises and equipment

Loss (gain) on sale of OREO and valuation allowance

Change in fair value of MSR and other investments

(Gain) loss from sale and disposal of premises and equipment

(Gain) loss on sale of OREO and valuation allowance

Proceeds from sales of mortgage loans

5 unchanged sentences

Net earnings on life insurance

(Increase) decrease in other assets

Increase in other liabilities

Decrease (increase) in other assets

(Decrease) increase in other liabilities

Net cash provided by operating activities

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Proceeds from sales of other investments

Net purchases of Federal Home Loan Bank ("FHLB") stock

Net purchases of Federal Reserve Bank ("FRB") stock

Net purchases of Federal Home Loan Bank (“FHLB”) stock

Net purchases of Federal Reserve Bank (“FRB”) stock

Proceeds from life insurance

4 unchanged sentences

Net cash used in investing activities

See accompanying notes to consolidated financial statements.

Bank First Corporation and Subsidiaries

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Repayment of notes payable

( 1,222,700 )

Proceeds from subordinated debt

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Loans transferred to OREO

Closed branch building transferred to OREO

MSR resulting from sale of loans

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The Bank’s wholly owned subsidiaries are Bank First Investments, Inc., TVG Holdings, Inc.

( “TVG") and BFC Title LLC.(organized during 2020).

( “TVG") and BFC Title LLC.

All significant intercompany balances and transactions have been eliminated.

3 unchanged sentences

The Corporation provides a variety of financial services to individual and business customers, primarily located in Wisconsin, through the Bank.

The Bank is subject to competition from other traditional and nontraditional financial institutions and is also subject to the regulations of certain federal agencies and undergoes periodic examinations by those regulatory authorities including the Office of the Comptroller of the Currency and the Federal Reserve Bank.

The Bank is subject to competition from other traditional and nontraditional financial institutions and is also subjectone to the regulations of certain federal agencies and undergoes periodic examinations by those regulatory authorities including the Office of the Comptroller of the Currency and the Federal Reserve Bank.

Use of Estimates in Preparation of Financial Statements

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The Bank is required to maintain deposits on hand or with the FRB to meet specific reserve requirements.

During 2020, in response to liquidity concerns resulting from the COVID-19 pandemic (“COVID”), this reserve requirement was reduced to zero by the FRB.

For December 31, 2019, those required reserves were approximately $ 26,184,000 .

During 2021 and 2020, in response to liquidity concerns resulting from the COVID-19 pandemic (“COVID”), this reserve requirement was reduced to zero by the FRB.

Securities are classified as held to maturity or available for sale at the time of purchase.

17 unchanged sentences

Other Investments

Other investments are carried at cost, or, where available, recently observable market prices, which approximates fair value, and consist of FHLB stock, FRB stock, Bankers’ Bancorporation stock and preferred stock in a community development project.

Other investments are evaluated for impairment at least on an annual basis.

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(2) executed on a loan that was not more than 30 days past due as of December 31, 2019;

and (3) executed between March 1, 2020 and the earlier of (A) 60 days after the date of termination of the national emergency declaration or (B) December 31, 2020.

and (3) executed between March 1, 2020 and the earlier of (A) 60 days after the date of termination of the national emergency declaration or (B) January 1, 2022.

Additionally, in accordance with the lnteragency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (Revised), other short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief are not TDRs under ASC Subtopic 310-40.

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If the present value of the expected cash flows for a loan is greater than its carrying value, any previously established ALL is reversed and any remaining difference increases the accretable yield which will be taken into income over the remaining life of the loan.

Loans which were considered troubled debt restructurings by Partnership Community Bancshares, Inc.

and Tomah Bancshares, Inc.

prior to the acquisition are not required to be classified as troubled debt restructurings in the Corporation’s consolidated financial statements unless or until such loans would subsequently meet criteria to be classified as such, since acquired loans were recorded at their estimated fair values at the time of the acquisition.

Loans which were considered troubled debt restructurings by an acquired institution prior to the acquisition are not required to be classified as troubled debt restructurings in the Corporation’s consolidated financial statements unless or until such loans would subsequently meet criteria to be classified as such, since acquired loans were recorded at their estimated fair values at the time of the acquisition.

Premises and Equipment

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Intangible Assets and Goodwill

Intangible assets consist of the value of core deposits and mortgage servicing assets and the excess of purchase price over fair value of net assets (goodwill).

Intangible assets consist of the value of core deposits, mortgage servicing assets and the excess of purchase price over fair value of net assets (goodwill).

Core deposits are stated at cost less accumulated amortization and are amortized on a sum of the year’s digits basis over a period of one to ten years .

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There were 59,264 , 56,606 , and 51,226 average shares of dilutive instruments outstanding during the years ended December 31, 2021, 2020, and 2019.

There were no dilutive instruments outstanding during 2018.

Loss Contingencies

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as defined in Rule 12b-2 of the Exchange Act as of the date ASU 2019-10 was enacted.

The Corporation is currently evaluating the impact of ASU 2016-13 on the consolidated financial statements, although the general expectation in the banking industry is that the implementation of this standard will result in higher required balances in the allowance for loan losses.

In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill Impairment .

The amendments in this ASU were issued to address concerns over the cost and complexity of the two-step goodwill impairment test and resulted in the removal of the second step of the test.

The amendments require an entity to apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit.

The new guidance did not amend the optional qualitative assessment of goodwill impairment.

This ASU is intended to reduce the cost and complexity of the two-step goodwill impairment test and was effective for annual and interim goodwill impairment tests in fiscal years beginning after December 15, 2019.

Upon adoption, the amendments were to be applied on a prospective basis and the entity was required to disclose the nature of and reason for the change in accounting principle upon transition.

The adoption of this guidance did not have a significant impact on the Corporation’s consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

This ASU provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting.

It provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

The updated guidance is effective for all entities from March 12, 2020 through December 31, 2022.

The Corporation has been diligent in responding to reference rate reform and does not anticipate a significant impact to its financial statements as a result.

In October 2020, the FASB issued ASU 2020-08, Codification Improvements to Subtopic 310-20, Receivables-Nonrefundable Fees and Other Costs .

This ASU clarifies the requirements for entities to reevaluate whether a callable debt security is within the scope of paragraph 310-20-35-33 of the stated subtopic for each reporting period.

The ASU was published to clarify the Codification and correct its unintended application and will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 31, 2020.

The adoption of this guidance is not expected to have an impact on the Corporation’s consolidated financial statements as all premiums within its securities portfolio were already being amortized to the earliest call date prior to implementation as required under subtopic 310-20.

The ASU was published to clarify the Codification and correct its unintended application and was effective for fiscal years, and interim periods within those fiscal years, beginning after December 31, 2020.

The adoption of this guidance did not have an impact on the Corporation’s consolidated financial statements as all premiums within its securities portfolio were already being amortized to the earliest call date prior to implementation as required under subtopic 310-20.

Note 2 Acquisitions

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(in thousands)

Cash, cash equivelants and securities

Cash, cash equivalents and securities

Other investments

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Total liabilities assumed

Excess of assets acquired over liabilties assumed

Excess of assets acquired over liabilities assumed

purchase price

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Partnership’s principal activity was the ownership and operation of Partnership Bank, a state-chartered banking institution that operated four branches in Wisconsin at the time of closing.

The merger consideration totalled approximately $ 49,589,000 .

The merger consideration totaled approximately $ 49,589,000 .

Pursuant to the terms of the Merger Agreement, Partnership shareholders had the option to receive either 0.34879 shares of the Corporation’s common stock or $ 17.3001 in cash for each outstanding share of Partnership common stock, and cash in lieu of any remaining fractional share.

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(in thousands)

Cash, cash equivelants and securities

Cash, cash equivalents and securities

Other investments

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Total liabilities assumed

Excess of assets acquired over liabilties assumed

Excess of assets acquired over liabilities assumed

purchase price

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December 31, 2021

Treasury securities

Obligations of U.S.

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Corporate notes

Certificates of deposit

Total available for sale securities

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December 31, 2020

Treasury securities

Obligations of states and political subdivisions

Total held to maturity securities

At December 31, 2021, unrealized losses in the investment securities portfolio related to debt securities.

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From the December 31, 2021 tables above, 7 out of 9 U.S.

Government sponsored agency securities and 2 out of 12 corporate notes contained unrealized losses.

Treasury securities, 2 out of 75 mortgage-backed securities, 5 out of 10 obligations of U.S.

Government sponsored agency securities, 7 out of 16 corporate notes and 5 out of 121 obligations of states and political subdivisions contained unrealized losses.

At December 31, 2021 and 2020, management has both the intent and ability to hold securities containing unrealized losses.

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December 31, 2021 - Available for Sale

Treasury securities

Obligations of U.S.

Government sponsored agencies

Obligations of states and political subdivisions

Mortgage-backed securities

Corporate notes

2 unchanged sentences

Government sponsored agencies

Obligations of states and political subdivisions

Mortgage-backed securities

Corporate notes

December 31, 2019 - Held to Maturity

Treasury securities

Contractual maturities will differ from expected maturities for mortgage-backed securities because borrowers may have the right to call or prepay obligations without penalties.

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Interest income recognized

Reduction in interest income

(Increase) Reduction in interest income

The following table presents loans acquired with deteriorated credit quality as of December 31, 2021 and 2020.

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December 31, 2020

Unpaid Principal

Commercial & Industrial

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If a TDR is placed on nonaccrual status, it remains there until a sufficient period of performance under the restructured terms has occurred at which time it is returned to accrual status, generally six months.

As of December 31, 2020 and 2019 the Corporation had no specific reserves for TDR’s.

As of December 31, 2021 and 2020 the Corporation had specific reserves of $ 7,000 and $ 0 related to TDR’s, respectively.

Loans modified under the guidance of the Cares Act are not considered TDRs and as such are not included in the tables below.

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Outstanding Recorded

Commercial & Industrial

Commercial Real Estate

Residential 1-4 Family

The following table presents the troubled debt restructurings during the year ended December 31, 2020 (dollar amounts in thousands):

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Post-Modification

Commercial & Industrial

Outstanding Recorded

Commercial Real Estate

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During the years ended December 31, 2021 and 2020, the Corporation utilized economic assumptions in measuring the initial value of MSRs for loans sold whereby servicing is retained by the Corporation.

The economic assumptions used at December 31, 2020 and 2019 included constant prepayment speed of 16.3 and 12.1 months, respectively, and a discount rate of 10.28 % and 10.00 %, respectively.

The economic assumptions used at December 31, 2021 and 2020 included constant prepayment speed of 13.8 and 16.3 months, respectively, and a discount rate of 10.28 % at the end of both years.

The constant prepayment speeds are obtained from publicly available sources for each of the Federal National Mortgage Association and Federal Home Loan Mortgage Corporation loan programs that the Corporation originates under.

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The Corporation’s methodology for estimating the fair value of MSRs is highly sensitive to changes in assumptions.

The carrying value of the mortgage servicing rights is included with intangible assets and approximates fair market value at December 31, 2020 and 2019.

The carrying value of the mortgage servicing rights approximates fair market value at December 31, 2021 and 2020.

Changes in fair value are recognized through the income statement as loan servicing income.

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During 2021, 2020 and 2019, the Corporation received $ 2,646,000 , $ 2,103,000 and $ 2,108,000 in dividends from UFS, respectively.

TVG, the insurance subsidiary of the Bank, maintained a 40.0 %investment in Ansay at December 31, 2020 and 2019, an increase from 30.0% prior to a purchase of member interest on October 1, 2019.

TVG, the insurance subsidiary of the Bank, maintained a 40.0 %investment in Ansay at December 31, 2021 and 2020.

Ansay is an independent insurance agency that has operated in southeastern Wisconsin since 1946, managing the insurance and risk needs of commercial and personal insurance clients in Wisconsin and the Midwest.

3 unchanged sentences

As of December 31, 2021 and 2020, Ansay had term loans with the Bank totaling approximately $ 16,936,000 and $ 15,241,000 , respectively.

Ansay also has two available revolving lines of credit totaling $ 15,475,000 with the Corporation.

There were no outstanding balances under these lines as of December 31, 2020.

Ansay also has available revolving lines of credit totaling $ 18,940,000 with the Corporation, under which there were outstanding balances of $ 1,944,000 as of December 31, 2021.

There were no balances outstanding under these revolving lines as of December 31, 2020.

Ansay maintained deposits at the Bank totaling $ 10,304,000 and $ 12,924,000 as of December 31, 2021 and 2020, respectively.

1 unchanged sentence

Ansay, serves as Chairman of the Board of the Corporation.

As a related party, during 2020, 2019 and 2018 the Corporation purchased director and officer fidelity bond and commercial insurance coverage through Ansay spending approximately $ 261,000 , $ 225,000 and $ 165,000 , respectively.

As a related party, during 2021, 2020 and 2019 the Corporation received insurance consulting services and purchased director and officer fidelity bond and commercial insurance coverage through Ansay spending approximately $ 329,000 , $ 261,000 and $ 225,000 , respectively.

The Corporation’s proportionate share of earnings of Ansay flow through to its tax return.

Deferred income taxes of approximately $ 1,192,000 and $ 1,235,000 were provided to account for the difference in the tax and book basis of assets and liabilities held at Ansay as of December 31, 2021 and 2020, respectively.

Note 10 Identifiable Intangible Assets

The gross carrying amount and accumulated amortization of intangible assets (excluding goodwill) for the years ended December 31 are as follows (dollar amounts in thousands):

Note 10 Core Deposit Intangibles

The gross carrying amount and accumulated amortization of core deposit intangibles for the years ended December 31 are as follows (dollar amounts in thousands):

Core deposit intangible

Mortgage servicing rights

Amortization expense was $ 1,405,000 , $ 1,636,000 and $ 1,069,000 for the years ended December 31, 2021, 2020 and 2019, respectively.

Mortgage servicing rights are carried at fair value;

therefore, there is no amortization expense.

The following table shows the estimated future amortization expense of amortizing intangible assets.

The following table shows the estimated future amortization expense of core deposit intangibles.

The projections of amortization expense are based on existing asset balances as of December 31, 2021 (dollar amounts in thousands):

1 unchanged sentence

Goodwill was $ 55,357,000 and $ 55,472,000 at December 31, 2021 and 2020, respectively.

As detailed in Note 2, there were additions of approximately $ 12,015,000 to the carrying amount of goodwill in 2020 related to the Timberwood acquisition.

Note 12 Deposits

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Fixed rate, fixed term

Purchase accounting adjustment

Total notes payable

Future maturities of borrowings were as follows (dollars in thousands):

1 unchanged sentence

At December 31, 2021 and 2020, respectively, total loans available to be pledged as collateral on FHLB borrowings were approximately $ 915,512,000 and $ 825,300,000 and, of that total, $ 527,199,000 and $ 374,100,000 qualified as eligible collateral.

The Bank owned $ 3,353,000 and $ 2,230,000 of FHLB stock at December 31, 2020 and 2019, respectively.

In addition to the fixed rate, fixed term advances noted above, as of December 31, 2020 and 2019, the Bank had $ 800,000 and $ 14,400,000 of credit outstanding from the FHLB, respectively, which consisted entirely of letters of credit.

The Bank owned $ 3,353,000 of FHLB stock at December 31, 2021 and 2020.

In addition to the fixed rate, fixed term advances noted above, as of December 31, 2020, the Bank had $ 800,000 of credit outstanding from the FHLB which consisted entirely of letters of credit.

There were no such letters of credit as of December 31, 2021.

At December 31, 2021 and 2020, the Bank had available liquidity of $ 519,242,000 and $ 350,000,000 for future draws, respectively.

1 unchanged sentence

This stock is recorded at cost, which approximates fair value.

The Corporation maintained a $ 5,000,000 line of credit with a commercial bank.

At December 31, 2019 the Corporation had outstanding balances on this note of $ 5,000,000 .

The note required monthly payments of interest at a variable rate, and was due in full on May 25, 2021.

This agreement was terminated on July 22, 2020.

The Corporation maintained a $ 5,000,000 line of credit with another commercial bank.

At December 31, 2019 the Corporation had outstanding balances on this note of $ 5,000,000 .

This note was not renewed when it matured on May 19, 2020.

The Corporation maintains a $ 7,500,000 line of credit with another commercial bank, which was entered into on May 15, 2020.

The Corporation maintains a $ 7,500,000 line of credit with a commercial bank, which was entered into on May 15, 2021.

There were no outstanding balances on this note at December 31, 2021.

5 unchanged sentences

These notes were all issued with 10 -year maturities, carry interest at a variable rate payable quarterly, are callable on or after the sixth anniversary of their issuance dates, and qualify for Tier 2 capital for regulatory purposes.

As part of the Partnership acquisition, the Corporation assumed a subordinated note agreement with an outstanding balance of $ 7,000,000 , and a fair market value adjustment of $ 195,000 .

The note was set to mature on October 1, 2025, required quarterly interest-only payments at a rate of 7.1 % prior to maturity, and could be prepaid without penalty on or after October 1, 2020.

This note qualified for Tier 2 capital for regulatory purposes.

This note was prepaid in full on October 1, 2020.

On July 22, 2020, the Company entered into subordinated note agreements with two separate commercial banks.

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

The Company had through December 31, 2020, to borrow funds up to a maximum availability of $ 6,000,000 under each agreement, or $ 12,000,000 total.

1 unchanged sentence

These notes are callable on or after January 1, 2026 and qualify for Tier 2 capital for regulatory purposes.

The Company had outstanding balances of $6,000,000 under these agreements at December 31, 2020.

The Company had outstanding balances of $ 6,000,000 under these agreements at December 31, 2021 and 2020.

Note 16 Income Taxes

26 unchanged sentences

Investment in acquisition and discount accretion

Premises and equipment

Mortgage servicing rights

27 unchanged sentences

Share-based Compensation

The Corporation has made restricted share grants during 2020, 2019 and 2018 pursuant to the Bank First National Corporation 2011 Equity Plan and the Bank First Corporation 2020 Equity Plan, which replaced the 2011 Plan.The purpose of the Plan is to provide financial incentives for selected employees and for the non-employee Directors of the Corporation, thereby promoting the long-term growth and financial success of the Corporation.

The Corporation has made restricted share grants during 2021,2020 and 2019 pursuant to the Bank First National Corporation 2011 Equity Plan and the Bank First Corporation 2020 Equity Plan, which replaced the 2011 Plan.

The purpose of the Plan is to provide financial incentives for selected employees and for the non-employee Directors of the Corporation, thereby promoting the long-term growth and financial success of the Corporation.

The Corporation stock to be offered under the Plan pursuant to Stock Appreciation Rights, performance unit awards, and restricted stock and unrestricted Corporation stock awards must be Corporation stock previously issued and outstanding and reacquired by the Corporation.

25 unchanged sentences

Related expense for this agreement was approximately $ 15,000 , $ 19,000 , and $ 23,000 for the years ended December 31, 2021, 2020 and 2019, respectively.

The vested present value of future payments of approximately $ 348,000 and $ 437,000 at December 31, 2020 and

2019, respectively, is included in other liabilities.

The vested present value of future payments of approximately $ 255,000 and $ 348,000 at December 31, 2021 and 2020, respectively, is included in other liabilities.

During 2021 and 2020 the discount rate used to present value the future payments of this obligation was 4.95 %.

The Corporation had a nonqualified deferred compensation plan which permitted eligible participants to defer a portion of their compensation.

There was no expense associated with this plan during 2020 or 2019.

On February 19, 2019, the Board of Directors of Bank First Corporation approved the termination of the Bank First National Amended and Restated Nonqualified Deferred Compensation Plan, effective March 1, 2019.

As a result of this termination, all benefits owed were to be paid no sooner than one year and no later than two years following the termination.

All benefits owed under this plan were paid during March 2020.

As of December 31, 2019, the obligations under this plan were valued at $ 3,368,000 , and were included in other liabilities.

Note 18 Stockholders’ Equity and Regulatory Matters

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Capitalized Under

Adeqaucy with

Adequacy with

Prompt Corrective

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Securities available for sale

Obligations of U.S.Government sponsored agencies

Treasury securities

Obligations of U.S.

Government sponsored agencies

Obligations of states and political subdivisions

10 unchanged sentences

Corporate notes

Certificates of deposit

Mortgage servicing rights

Fair value of assets measured on a recurring basis using significant unobservable inputs (Level 3) are as follows (dollar amounts in thousands):

Total securities at beginning of year

Included in earnings

Included in other comprehensive income

Purchases, issuance, and settlements

Transfer in and/or out of level 3

Total securities at end of year

There were no assets measured on a recurring basis using significant unobservable inputs (Level 3) during these periods.

Information regarding the fair value of assets measured at fair value on a non-recurring basis is as follows (dollar amounts in thousands):

11 unchanged sentences

As of December 31, 2021

Third party appraisals, sales contracts or brokered price opinions

Collateral discounts and estimated costs to sell

Impaired loans

Third party appraisals and discounted cash flows

Collateral discounts and discount rates

As of December 31, 2019

Third party appraisals, sales contracts or brokered price opinions

Other real estate owned

Third party appraisals, sales contracts or brokered price options

Collateral discounts and estimated costs to sell

73 unchanged sentences

Liabilities and Stockholders’ Equity

Notes payable

Subordinated notes

94 unchanged sentences

Earnings per share, diluted

Note 26 Pending Merger Transaction

On January 18, 2022, the Corporation entered into an Agreement and Plan of Merger with Denmark Bancshares, Inc.

(“Denmark”), a Wisconsin Corporation, under which Denmark will merge with and into the Corporation and Denmark’s banking subsidiary, Denmark State Bank, will merge with and into the Bank.

The transaction is expected to close during the third quarter of 2022 and is subject to, among other items, approval by the shareholders of both institutions and regulatory agencies.

Merger consideration will consist of up to 20 % cash and no less than 80 % of common stock of the Corporation, and will total approximately $ 119 million, subject to the fair market value of the Corporation’s common stock on the date of closing.

Based on results as of December 31, 2021, the combined company would have total assets of approximately $ 3.6 billion, loans of approximately $ 2.7 billion, and deposits of approximately $ 3.1 billion.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

As previously disclosed by the Company in a Current Report on Form 8-K filed with the SEC on October 11, 2019, on October 1, 2019, Porter Keadle Moore, LLC (“PKM”) informed the Audit Committee of the Company that due to a practice combination with Wipfli, LLC, PKM had decided to resign as the Company’s independent registered public accounting firm, effective as of October 11, 2019.

On October 11, 2019, the Audit Committee of the Company engaged Dixon Hughes Goodman, LLP (“DHG”) as the Company’s independent registered public accounting firm.

The reports of PKM on the financial statements of the Company for the years ended December 31, 2018 and 2017 contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles.

During the Company's fiscal years ended December 31, 2018 and 2017 and the subsequent interim periods through October 11, 2019, (1) there were not disagreements with PKM on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of PKM, would have caused PKM to make reference to the subject matter of the disagreements in their reports on the Company's consolidated financial statements for such periods, and (2) there were no “reportable events” as defined in Item 304(a)(1)(v) of Regulation S-K.

Also, during the interim period from October 11, 2019 through the filing of this annual report (1) the Company has consulted DHG regarding the application of accounting principles to a number of transactions and audit opinions on the Company’s financial statements, and DHG has provided written reports and/or oral advice to the Company that DHG concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issues, and (2)(i) the Company did not have any disagreements with DHG on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of DHG, would have caused DHG to make reference to the subject matter of the disagreements in connection with its report on the consolidated financial statements for such periods, and (ii) there were no “reportable events” as defined in Item 304(a)(1)(v) of Regulation S-K.

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-K

Item 8. Financial Statements and Supplementary Data