Bank First Corp 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ​ ​ ​ Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 686 ) ​ 70 ​ ​ ​ Consolidated Financial Statements: ​ ​ Consolidated balance sheets ​ 71 Consolidated statements of income ​ 72 Consolidated statements of comprehensive income ​ 73 Consolidated statements of changes in shareholders’ equity ​ 74 Consolidated statements of cash flows ​ 75-76 Notes to consolidated financial statements ​ 77-111 ​ ​ ​ 68 Table of Contents Bank First Corporation and Subsidiaries Manitowoc, Wisconsin Consolidated Financial Statements Years Ended December 31, 2022, 2021 and 2020 ​ ​ ​ TABLE OF CONTENTS ​ ​ ​ ​ ​ Report of Independent Registered Public Accounting Firm ​ 70 ​ ​ ​ Consolidated Financial Statements: ​ ​ Consolidated Balance Sheets ​ 71 Consolidated Statements of Income ​ 72 Consolidated Statements of Comprehensive Income ​ 73 Consolidated Statements of Stockholders’ Equity ​ 74 Consolidated Statements of Cash Flows ​ 75-76 Notes to Consolidated Financial Statements ​ 77-111 ​ ​ ​ ​ 69 Table of Contents Report of Independent Registered Public Accounting Firm Board of Directors and Stockholders Bank First Corporation ​ 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, 2022 and 2021, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2022, 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 audits. 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 audits 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. Our audits 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 include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits 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 audits provide a reasonable basis for our opinion. ​ /s/ FORVIS, LLP (Formerly, Dixon Hughes Goodman LLP) ​ We have served as the Company's auditor since 2019. Atlanta, GA March 10, 2023 FORVIS is a trademark of FORVIS, LLP, registration of which is pending with the U.S. Patent and Trademark Office. ​ 70 Table of Contents Bank First Corporation and Subsidiaries Consolidated Balance Sheets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31 ​ ​ 2022 2021 ​ ​ (In Thousands, except share and per share data) ​ ​ ​ ​ ​ ​ ​ Assets ​ ​ ​ ​ ​ ​ Cash and due from banks ​ $ 51,524 ​ $ 29,171 Interest-bearing deposits ​ 67,827 ​ 267,689 Cash and cash equivalents ​ 119,351 ​ 296,860 Securities held to maturity, at amortized cost ( $ 43,770 and $ 5,922 fair value at December 31, 2022 and December 31, 2021, respectively) ​ 45,097 ​ 5,911 Securities available for sale, at fair value ​ 304,637 ​ 212,689 Loans held for sale ​ ​ 648 ​ ​ 786 Loans, net ​ 2,871,298 ​ 2,215,199 Premises and equipment, net ​ 56,448 ​ 49,461 Goodwill ​ 110,206 ​ 55,357 Other investments ​ 16,495 ​ 9,004 Cash value of life insurance ​ 46,050 ​ 31,897 Core deposit intangibles, net ​ 16,829 ​ 4,035 Mortgage servicing rights ("MSR") ​ ​ 9,582 ​ ​ 5,016 Other real estate owned (“OREO”) ​ 2,520 ​ 150 Investment in minority-owned subsidiaries ​ 44,180 ​ 42,935 Other assets ​ 17,091 ​ 8,252 TOTAL ASSETS ​ $ 3,660,432 ​ $ 2,937,552 Liabilities and Stockholders’ Equity ​ ​ ​ Liabilities: ​ ​ Deposits: ​ ​ Interest-bearing deposits ​ $ 2,126,137 ​ $ 1,728,504 Noninterest-bearing deposits ​ 934,092 ​ 799,936 Total deposits ​ 3,060,229 ​ 2,528,440 Securities sold under repurchase agreements ​ 97,196 ​ 41,122 Notes payable ​ 1,929 ​ 8,011 Subordinated notes ​ 23,500 ​ 17,500 Other liabilities ​ 24,475 ​ 19,826 Total liabilities ​ 3,207,329 ​ 2,614,899 Stockholders’ equity: ​ ​ Serial preferred stock - $ 0.01 par value ​ ​ Authorized - 5,000,000 shares ​ — ​ — Common stock - $ 0.01 par value ​ ​ Authorized - 20,000,000 shares ​ ​ Issued - 10,064,858 and 8,478,383 shares as of December 31, 2022 and December 31, 2021, respectively ​ ​ Outstanding - 9,021,697 and 7,616,540 shares as of December 31, 2022 and December 31, 2021, respectively ​ 101 ​ 85 Additional paid-in capital ​ 218,263 ​ 93,149 Retained earnings ​ 295,496 ​ 258,104 Treasury stock, at cost - 1,043,161 and 861,843 shares as of December 31, 2022 and December 31, 2021, respectively ​ ( 45,191 ) ​ ( 32,294 ) Accumulated other comprehensive income (loss) ​ ( 15,566 ) ​ 3,609 Total stockholders’ equity ​ 453,103 ​ 322,653 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY ​ $ 3,660,432 ​ $ 2,937,552 ​ See accompanying notes to consolidated financial statements. ​ 71 Table of Contents Bank First Corporation and Subsidiaries Consolidated Statements of Income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31 ​ ​ 2022 2021 2020 ​ ​ (In Thousands, except per share amounts) Interest income: ​ ​ ​ ​ ​ ​ ​ Loans, including fees ​ $ 106,951 ​ $ 93,422 ​ $ 95,273 Securities: ​ ​ ​ ​ ​ ​ Taxable ​ 5,887 ​ 2,788 ​ 3,358 Tax-exempt ​ 1,801 ​ 1,866 ​ 1,888 Other ​ 1,895 ​ 310 ​ 181 Total interest income ​ 116,534 ​ 98,386 ​ 100,700 Interest expense: ​ ​ ​ Deposits ​ 10,268 ​ 7,527 ​ 12,473 Securities sold under repurchase agreements ​ 542 ​ 10 ​ 114 Borrowed funds ​ 1,639 ​ 767 ​ 1,278 Total interest expense ​ 12,449 ​ 8,304 ​ 13,865 Net interest income ​ 104,085 ​ 90,082 ​ 86,835 Provision for loan losses ​ 2,200 ​ 3,100 ​ 7,125 Net interest income after provision for loan losses ​ 101,885 ​ 86,982 ​ 79,710 Noninterest income: ​ ​ ​ ​ ​ ​ Service charges ​ 5,810 ​ 6,128 ​ 5,003 Income from Ansay and Associates, LLC (“Ansay”) ​ 2,558 ​ 2,587 ​ 2,740 Income from UFS, LLC (“UFS”) ​ 3,055 ​ 2,556 ​ 3,066 Loan servicing income ​ 1,922 ​ 1,622 ​ 1,488 Valuation adjustment on MSR ​ ​ 2,865 ​ ​ 1,290 ​ ​ ( 945 ) Net gain on sales of mortgage loans ​ 1,560 ​ 7,371 ​ 5,310 Net gain (loss) on sales and valuations of OREO ​ 146 ​ 20 ​ ( 1,395 ) Other ​ 1,931 ​ 1,967 ​ 3,625 Total noninterest income ​ 19,847 ​ 23,541 ​ 18,892 Noninterest expense: ​ ​ ​ ​ ​ ​ Salaries, commissions, and employee benefits ​ 33,155 ​ 28,515 ​ 27,273 Occupancy ​ 5,467 ​ 4,198 ​ 4,719 Data processing ​ 6,324 ​ 5,344 ​ 5,515 Postage, stationery, and supplies ​ 771 ​ 713 ​ 872 Net loss (gain) on sale of securities ​ ​ — ​ ​ 3 ​ ​ ( 3,233 ) Advertising ​ 271 ​ 227 ​ 226 Charitable contributions ​ 718 ​ 534 ​ 574 Outside service fees ​ 6,727 ​ 3,076 ​ 4,112 Amortization of intangibles ​ 2,318 ​ 1,405 ​ 1,636 Penalty for early extinguishment of debt ​ ​ — ​ ​ — ​ ​ 1,323 Other ​ 6,348 ​ 6,541 ​ 5,708 Total noninterest expense ​ 62,099 ​ 50,556 ​ 48,725 Income before provision for income taxes ​ 59,633 ​ 59,967 ​ 49,877 Provision for income taxes ​ 14,419 ​ 14,523 ​ 11,831 Net Income ​ $ 45,214 ​ $ 45,444 ​ $ 38,046 Earnings per share - basic ​ $ 5.58 ​ $ 5.92 ​ $ 5.07 Earnings per share - diluted ​ $ 5.58 ​ $ 5.92 ​ $ 5.07 Dividends per share ​ $ 0.94 ​ $ 1.14 ​ $ 0.81 ​ See accompanying notes to consolidated financial statements ​ 72 Table of Contents Bank First Corporation and Subsidiaries Consolidated Statements of Comprehensive Income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31 ​ ​ 2022 2021 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (In Thousands) Net Income ​ $ 45,214 ​ $ 45,444 ​ $ 38,046 Other comprehensive income (loss): ​ ​ ​ Unrealized gains (losses) on available for sale securities: ​ ​ ​ Unrealized holding (losses) gains arising during period ​ ( 26,266 ) ​ ( 2,946 ) ​ 7,987 Amortization of unrealized holding gains on securities transferred from available for sale to held to maturity ​ ( 1 ) ​ ( 2 ) ​ ( 102 ) Reclassification adjustment for losses (gains) included in net income ​ — ​ 3 ​ ( 3,233 ) Income tax benefit (expense) ​ 7,092 ​ 795 ​ ( 1,387 ) Total other comprehensive (loss) income ​ ( 19,175 ) ​ ( 2,150 ) ​ 3,265 Comprehensive income ​ $ 26,039 ​ $ 43,294 ​ $ 41,311 ​ See accompanying notes to consolidated financial statements. ​ 73 Table of Contents Bank First Corporation and Subsidiaries Consolidated Statements of Stockholders’ Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ Serial ​ ​ ​ ​ Additional ​ ​ ​ ​ ​ ​ ​ Other ​ Total ​ ​ Preferred ​ Common ​ Paid-in ​ Retained ​ Treasury ​ Comprehensive ​ Stockholders’ ​ ​ Stock ​ Stock ​ Capital ​ Earnings ​ Stock ​ Income (loss) ​ Equity (dollars in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at January 1, 2020 ​ $ — ​ $ 79 ​ $ 63,085 ​ $ 189,494 ​ $ ( 24,941 ) ​ $ 2,494 ​ $ 230,211 Net income ​ — ​ — ​ — ​ 38,046 ​ — ​ — ​ 38,046 Other comprehensive income ​ — ​ — ​ — ​ — ​ — ​ 3,265 ​ 3,265 Purchase of treasury stock ​ — ​ — ​ — ​ — ​ ( 4,367 ) ​ — ​ ( 4,367 ) Sale of treasury stock ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 19 ​ ​ — ​ ​ 19 Issuance of treasury stock as deferred compensation payout ​ — ​ — ​ — ​ — ​ 3,368 ​ — ​ 3,368 Cash dividends ( $ 0.81 per share) ​ — ​ — ​ — ​ ( 6,147 ) ​ — ​ — ​ ( 6,147 ) Amortization of stock-based compensation ​ — ​ — ​ 1,081 ​ — ​ — ​ — ​ 1,081 Vesting of restricted stock awards ​ — ​ — ​ ( 694 ) ​ — ​ 694 ​ — ​ — Shares issued in the acquisition of Tomah Bancshares, Inc. ( 575,641 shares) ​ ​ ​ ​ ​ 6 ​ ​ 29,375 ​ ​ — ​ ​ — ​ ​ — ​ ​ 29,381 Balance at December 31, 2020 ​ $ — ​ $ 85 ​ $ 92,847 ​ $ 221,393 ​ $ ( 25,227 ) ​ $ 5,759 ​ $ 294,857 Net income ​ — ​ — ​ — ​ 45,444 ​ — ​ — ​ 45,444 Other comprehensive loss ​ — ​ — ​ — ​ — ​ — ​ ( 2,150 ) ​ ( 2,150 ) Purchase of treasury stock ​ — ​ — ​ — ​ — ​ ( 8,272 ) ​ — ​ ( 8,272 ) Sale of treasury stock ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 114 ​ ​ — ​ ​ 114 Cash dividends ( $ 1.14 per share) ​ — ​ — ​ — ​ ( 8,733 ) ​ — ​ — ​ ( 8,733 ) Amortization of stock-based compensation ​ — ​ — ​ 1,393 ​ — ​ — ​ — ​ 1,393 Vesting of restricted stock awards ​ — ​ — ​ ( 1,091 ) ​ — ​ 1,091 ​ — ​ — Balance at December 31, 2021 ​ $ — ​ $ 85 ​ $ 93,149 ​ $ 258,104 ​ $ ( 32,294 ) ​ $ 3,609 ​ $ 322,653 Net income ​ — ​ — ​ — ​ 45,214 ​ — ​ — ​ 45,214 Other comprehensive loss ​ — ​ — ​ — ​ — ​ — ​ ( 19,175 ) ​ ( 19,175 ) Purchase of treasury stock ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 14,314 ) ​ — ​ ( 14,314 ) Sale of treasury stock ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 114 ​ ​ — ​ ​ 114 Cash dividends ( $ 0.94 per share) ​ — ​ — ​ — ​ ( 7,822 ) ​ — ​ — ​ ( 7,822 ) Amortization of stock-based compensation ​ — ​ — ​ 1,662 ​ — ​ — ​ — ​ 1,662 Vesting of restricted stock awards ​ ​ — ​ — ​ ( 1,303 ) ​ — ​ 1,303 ​ — ​ — Shares issued in the acquisition of Denmark Bancshares, Inc. ( 1,579,530 shares) ​ ​ — ​ ​ 16 ​ ​ 124,755 ​ ​ — ​ ​ — ​ ​ — ​ ​ 124,771 Balance at December 31, 2022 ​ $ — ​ $ 101 ​ $ 218,263 ​ $ 295,496 ​ $ ( 45,191 ) ​ $ ( 15,566 ) ​ $ 453,103 ​ See accompanying notes to consolidated financial statements. ​ 74 Table of Contents Bank First Corporation and Subsidiaries Consolidated Statements of Cash Flows ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31 ​ ​ 2022 2021 2020 ​ ​ ​ (In Thousands) Cash flows from operating activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ ​ $ 45,214 ​ $ 45,444 ​ $ 38,046 Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ ​ ​ ​ ​ ​ Provision for loan losses ​ ​ 2,200 ​ 3,100 ​ 7,125 Depreciation and amortization of premises and equipment ​ ​ 1,656 ​ 1,780 ​ 1,536 Amortization of intangibles ​ ​ 2,318 ​ 1,405 ​ 1,636 Net amortization of securities ​ ​ 315 ​ 807 ​ 689 Amortization of stock-based compensation ​ ​ 1,662 ​ 1,393 ​ 1,081 Accretion of purchase accounting valuations ​ ​ ( 2,559 ) ​ ( 1,947 ) ​ ( 5,473 ) Net change in deferred loan fees and costs ​ ​ ( 881 ) ​ ( 1,208 ) ​ 2,417 Benefit from deferred income taxes ​ ​ ​ ( 869 ) ​ ​ ( 1 ) ​ ​ ( 116 ) Change in fair value of MSR and other investments ​ ​ ( 3,028 ) ​ 465 ​ 2,262 (Gain) loss from sale and disposal of premises and equipment ​ ​ 57 ​ ( 37 ) ​ 178 (Gain) loss on sale of OREO and valuation allowance ​ ​ ( 146 ) ​ ( 20 ) ​ 1,395 Proceeds from sales of mortgage loans ​ ​ 85,471 ​ 295,904 ​ 215,903 Originations of mortgage loans held for sale ​ ​ ( 83,774 ) ​ ( 290,372 ) ​ ( 212,190 ) Gain on sales of mortgage loans ​ ​ ( 1,560 ) ​ ( 7,371 ) ​ ( 5,310 ) Realized loss (gain) on sale of securities ​ ​ — ​ 3 ​ ( 3,233 ) Undistributed income of UFS joint venture ​ ​ ( 3,055 ) ​ ( 2,556 ) ​ ( 3,066 ) Undistributed income of Ansay joint venture ​ ​ ( 2,558 ) ​ ( 2,587 ) ​ ( 2,740 ) Net earnings on life insurance ​ ​ ( 925 ) ​ ( 768 ) ​ ( 741 ) Decrease in other assets ​ ​ 2,877 ​ 1,862 ​ ( 1,876 ) Decrease in other liabilities ​ ​ ( 2,407 ) ​ ( 5,013 ) ​ 6,440 Net cash provided by operating activities ​ ​ 40,008 ​ 40,283 ​ 43,963 Cash flows from investing activities, net of effects of business combination: ​ ​ ​ ​ Activity in securities available for sale and held to maturity: ​ ​ ​ ​ Sales ​ ​ — ​ 9,087 ​ 59,697 Maturities, prepayments, and calls ​ ​ 14,690 ​ 34,033 ​ 73,524 Purchases ​ ​ ( 142,414 ) ​ ( 93,767 ) ​ ( 28,764 ) Net increase in loans ​ ​ ( 198,000 ) ​ ( 41,713 ) ​ ( 343,581 ) Dividends received from UFS ​ ​ 2,408 ​ 2,646 ​ 2,103 Dividends received from Ansay ​ ​ 1,960 ​ 1,840 ​ 1,712 Proceeds from sale of OREO ​ ​ 320 ​ 1,893 ​ 5,472 Net purchases of Federal Home Loan Bank (“FHLB”) stock ​ ​ ( 635 ) ​ — ​ ( 640 ) Net purchases of Federal Reserve Bank (“FRB”) stock ​ ​ ​ ( 3,627 ) ​ ​ — ​ ​ ( 2,760 ) Proceeds from life insurance ​ ​ — ​ 265 ​ — Proceeds from sale of premises and equipment ​ ​ — ​ 548 ​ 284 Purchases of premises and equipment ​ ​ ( 6,872 ) ​ ( 8,718 ) ​ ( 8,371 ) Net cash received in business combination ​ ​ 154,364 ​ — ​ 35,296 Net cash used in investing activities ​ ​ ( 177,806 ) ​ ( 93,886 ) ​ ( 206,028 ) ​ ​ 75 Table of Contents Bank First Corporation and Subsidiaries Consolidated Statements of Cash Flows - (continued) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31 ​ ​ 2022 2021 2020 ​ ​ ​ (In Thousands) Cash flows from financing activities, net of effects of business combination: ​ ​ ​ ​ ​ Net increase (decrease) in deposits ​ ​ $ ( 72,879 ) ​ $ 207,770 ​ $ 307,032 Net increase (decrease) in securities sold under repurchase agreements ​ ​ 56,074 ​ 4,745 ​ ( 10,305 ) Proceeds from advances of notes payable ​ ​ 3,122,700 ​ 5,000 ​ 88,000 Repayment of notes payable ​ ​ ( 3,129,584 ) ​ ( 20,380 ) ​ ( 127,400 ) Proceeds from subordinated debt ​ ​ ​ 6,000 ​ ​ — ​ ​ 6,000 Repayment of subordinated debt ​ ​ ​ — ​ ​ — ​ ​ ( 7,000 ) Dividends paid ​ ​ ( 7,822 ) ​ ( 8,733 ) ​ ( 6,147 ) Proceeds from sales of common stock ​ ​ 114 ​ 114 ​ 19 Repurchase of common stock ​ ​ ( 14,314 ) ​ ( 8,272 ) ​ ( 4,367 ) Net cash provided by (used in) financing activities ​ ​ ( 39,711 ) ​ 180,244 ​ 245,832 Net increase (decrease) in cash and cash equivalents ​ ​ ( 177,509 ) ​ 126,641 ​ 83,767 Cash and cash equivalents at beginning of year ​ ​ 296,860 ​ 170,219 ​ 86,452 Cash and cash equivalents at end of year ​ ​ $ 119,351 ​ $ 296,860 ​ $ 170,219 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Supplemental disclosures of cash flow information: ​ ​ ​ ​ Cash paid during the period for: ​ ​ ​ ​ Interest ​ ​ $ 11,311 ​ $ 7,064 ​ $ 14,972 Income taxes ​ ​ 14,135 ​ 16,760 ​ 10,181 Supplemental schedule of noncash activities: ​ ​ ​ ​ ​ ​ ​ Loans transferred to OREO ​ ​ 24 ​ — ​ 1,892 Closed branch building transferred to OREO ​ ​ ​ 1,115 ​ ​ 140 ​ ​ — MSR resulting from sale of loans ​ ​ 771 ​ 1,862 ​ 1,375 Amortization of unrealized holding gains on securities transferred from available for sale to held to maturity recognized in other comprehensive income, net of tax ​ ​ ( 1 ) ​ ( 2 ) ​ ( 81 ) Change in unrealized gains and losses on investment securities available for sale, net of tax ​ ​ ( 19,174 ) ​ ​ ( 2,148 ) ​ ​ 3,346 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Acquisition: ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair value of assets acquired ​ ​ $ 685,840 ​ $ — ​ $ 209,918 Fair value of liabilities assumed ​ ​ 612,700 ​ — ​ 191,701 Net assets acquired ​ ​ $ 73,140 ​ $ — ​ $ 18,217 Common stock issued in acquisition ​ ​ $ 124,771 ​ $ — ​ $ 29,381 ​ See accompanying notes to consolidated financial statements. ​ 76 Table of Contents Bank First Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 1 Summary of Significant Accounting Policies The accounting and reporting policies of Bank First Corporation and Subsidiaries (“Corporation”) conform to generally accepted accounting principles (“GAAP”) in the United States and general practices within the financial institution industry. Significant accounting and reporting policies are summarized below. Principles of Consolidation The consolidated financial statements include the accounts of the Corporation and its wholly owned subsidiaries, Veritas Asset Holdings, LLC (“Veritas”) and Bank First, National Association (“Bank”). The Bank’s wholly owned subsidiaries are Bank First Investments, Inc., TVG Holdings, Inc. (“TVG") and BFC Title LLC. All significant intercompany balances and transactions have been eliminated. The Bank and TVG have investments in minority-owned subsidiaries that are accounted for using the equity method in the consolidated financial statements. The Bank owns 49.8 % of UFS which provides data processing solutions to over 60 banks in the Midwest. TVG owns 40.0 % of Ansay providing clients throughout the Midwest with superior insurance and risk management solutions. Organization 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. Use of Estimates in Preparation of Financial Statements The preparation of the accompanying consolidated financial statements in conformity with GAAP in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results may differ from these estimates. The allowance for loan losses, carrying value of real estate owned, carrying value of goodwill, fair value of mortgage servicing rights, and fair values of financial instruments are inherently subjective and are susceptible to significant change. Business Combinations The Corporation accounts for business combinations under the acquisition method of accounting in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805, Business Combinations. The Corporation recognizes the full fair value of the assets acquired and liabilities assumed and immediately expenses transaction costs. There is no separate recognition of the acquired allowance for loan losses on the acquirer’s balance sheet as credit related factors are incorporated directly into the fair value of the net tangible and intangible assets acquired. If the amount of consideration exceeds the fair value of assets purchased less the fair value of liabilities assumed, goodwill is recorded. Alternatively, if the amount by which the fair value of assets purchased exceeds the fair value of liabilities assumed and consideration paid, a gain (bargain purchase gain) is recorded. Fair values are subject to refinement for up to one year after the closing date of an acquisition as information relative to closing date fair values becomes available. Results of operations of the acquired business are included in the statement of income from the effective date of the acquisition. Additional information regarding acquisitions is provided in Note 2. Cash and Cash Equivalents For purposes of reporting cash flows in the consolidated financial statements, cash and cash equivalents include cash on hand, interest-bearing and noninterest-bearing accounts in other financial institutions, and federal funds sold, all of which have original maturities of three months or less. Generally, federal funds are purchased and sold for one day periods. In the normal course of business, the Corporation maintains cash and due from bank balances with correspondent banks. Accounts at each institution that are insured by the Federal Deposit Insurance Corporation have up to $250,000 of insurance. Total uninsured balances held at December 31, 2022 and 2021 were approximately $ 2.9 million and $ 1.0 million, respectively. The Bank is required to maintain deposits on hand or with the FRB to meet specific reserve requirements. During 2022 and 2021, in response to liquidity concerns resulting from the COVID-19 pandemic (“COVID”), this reserve requirement was reduced to zero by the FRB. 77 Table of Contents Securities Securities are classified as held to maturity or available for sale at the time of purchase. Investment securities classified as held to maturity, which management has the intent and ability to hold to maturity, are reported at amortized cost. Investment 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 net carrying value of debt securities classified as held to maturity or available for sale is adjusted for amortization of premiums and accretion of discounts utilizing the effective interest method over the expected estimated maturity. Such amortization and accretion is included as an adjustment to interest income from securities. Interest and dividends are included in interest income from securities. Transfers of debt securities into the held to maturity classification from the available for sale classification are made at fair value as of the date of transfer. The unrealized holding gain or loss as of the date of transfer is retained in other comprehensive income and in the carrying value of the held to maturity securities, establishing the amortized cost of the security. These unrealized holding gains and losses as of the date of transfer are amortized or accreted over the remaining life of the security. Unrealized gains or losses considered temporary and the noncredit portion of unrealized losses deemed other-than-temporary are reported as an increase or decrease in accumulated other comprehensive income. The credit related portion of unrealized losses deemed other-than-temporary is recorded in current period earnings. Realized gains or losses, determined on the basis of the cost of specific securities sold, are included in earnings. The Bank evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. As part of such monitoring, the credit quality of individual securities and their issuers are assessed. In addition, management considers the length of time and extent that fair value has been less than cost, the financial condition and near-term prospects of the issuer, and that the Corporation does not have the intent to sell the security and it is more likely than not that it will not have to sell the security before recovery of its cost basis. Adjustments to market value that are considered temporary are recorded as a separate component of equity, net of tax. If an impairment of security is identified as other-than-temporary based on information available such as the decline in the credit worthiness of the issuer, external market ratings or the anticipated or realized elimination of associated dividends, such impairments are further analyzed to determine if a credit loss exists. If there is a credit loss, it will be recorded in the consolidated statement of income in the period of identification. 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 and Bankers’ Bancorporation stock. Other investments are evaluated for impairment at least on an annual basis. Loans Held for Sale Loans originated and intended for sale in the secondary market, consisting of the current origination of certain fixed-rate mortgage loans, are carried at the lower of cost or estimated fair value in the aggregate. A gain or loss is recognized at the time of the sale reflecting the present value of the difference between the contractual interest rate of the loans sold and the yield to the investor, adjusted for the initial value of mortgage servicing rights associated with loans sold with servicing retained. Net unrealized losses, if any, are recorded as a valuation allowance and charged to earnings. Loans and Related Interest Income - Originated Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoffs are generally reported at their outstanding unpaid principal balances adjusted for charge-offs and the allowance for loan losses. The accrual of interest on loans is calculated using the simple interest method on daily balances of the principal amount outstanding and is recognized in the period earned utilizing the loan convention applicable by loan type. Loan origination fees, net of certain direct loan origination costs, are deferred and recognized in interest income using the effective interest method over the estimated life of the loan. 78 Table of Contents The accrual of interest is discontinued when a loan becomes 90 days past due and is not both well collateralized and in the process of collection, or when management believes, after considering economic and business conditions and collection efforts, that the principal or interest will not be collectible in the normal course of business. When loans are placed on nonaccrual or charged off, all unpaid accrued interest is reversed and additional income is recorded only to the extent that payments are received and the collection of principal is reasonably assured. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current, when the obligation has performed in accordance with the contractual terms for a reasonable period of time, and future payments of principal and interest are reasonably assured. Loans are considered impaired if it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement. Total impaired loans are evaluated based on the fair value of the collateral rather than on discounted cash flow basis. In response to the COVID-19 pandemic, the CARES Act was signed into law. Under the CARES Act, banks may elect to deem that loan modifications do not result in troubled debt restructurings ("TDRs") if they are (1) related to COVID-19; (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) 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. This includes short-term (e.g. up to six months) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or delays in payment that are insignificant. Borrowers considered current are those that are less than 30 days past due on their contractual payments at the time a modification program is implemented. Loans modified under this guidance are not considered TDRs. Loans and Related Interest Income - Acquired Acquired loans are recorded at their estimated fair value at the acquisition date, and are initially classified as either purchase credit impaired ( “PCI” ) loans (i.e. loans that reflect credit deterioration since origination and it is probable at acquisition that the Corporation will be unable to collect all contractually required payments) or purchased non-impaired loans (i.e. performing acquired loans). PCI loans are accounted for under the accounting guidance for loans and debt securities acquired with deteriorated credit quality, found in FASB ASC Topic 310-30, Receivables— Loans and Debt Securities Acquired with Deteriorated Credit Quality. The Corporation estimates the amount and timing of expected principal, interest and other cash flows for each loan or pool of loans meeting the criteria above, and determines the excess of the loan’s scheduled contractual principal and contractual interest payments over all cash flows expected to be collected at acquisition as an amount that should not be accreted. These credit discounts (nonaccretable marks) are included in the determination of the initial fair value for acquired loans; therefore, an allowance for loan losses is not recorded at the acquisition date. Differences between the estimated fair values and expected cash flows of acquired loans at the acquisition date that are not credit-based (accretable marks) are subsequently accreted to interest income over the estimated life of the loans using a method that approximates a level yield method if the timing and amount of the future cash flows is reasonably estimable. Subsequent to the acquisition date for PCI loans, increases in cash flows over those expected at the acquisition date result in a move of the discount from nonaccretable to accretable. Decreases in expected cash flows after the acquisition date are recognized through the provision for loan losses. Performing acquired loans are accounted for under FASB ASC Topic 310-20, Receivables—Nonrefundable Fees and Other Costs. Performance of certain loans may be monitored and based on management’s assessment of the cash flows and other facts available, portions of the accretable difference may be delayed or suspended if management deems appropriate. The Corporation’s policy for determining when to discontinue accruing interest on performing acquired loans and the subsequent accounting for such loans is essentially the same as the policy for originated loans described above. Allowance for Loan Losses - Originated The allowance for loan losses (“ALL”) is established through a provision for loan losses charged to expense as losses are estimated to have occurred. Loan losses are charged against the allowance when management believes that the collectability of the principal is unlikely. Subsequent recoveries, if any, are credited to the allowance. 79 Table of Contents Management regularly evaluates the allowance for loan losses using general economic conditions, the Corporation’s past loan loss experience, composition of the portfolio, and other relevant factors. This evaluation is inherently subjective since it requires material estimates that may be susceptible to significant change. The ALL consists of specific reserves for certain impaired loans and general reserves for non-impaired loans. Specific reserves reflect estimated losses on impaired loans from management’s analyses developed through specific credit allocations. The specific credit reserves are based on regular analyses of impaired non-homogenous loans greater than $250,000. These analyses involve a high degree of judgment in estimating the amount of loss associated with specific loans, including estimating the amount and timing of future cash flows and collateral values. The general reserve is based on the Bank’s historical loss experience which is updated quarterly. The general reserve portion of the ALL also includes consideration of certain qualitative factors such as 1) changes in lending policies and/or underwriting practices, 2) national and local economic conditions 3) changes in portfolio volume and nature, 4) experience, ability and depth of lending management and other relevant staff, 5) levels of and trends in past-due and nonaccrual loans and quality, 6) changes in loan review and oversight, 7) impact and effects of concentrations and 8) other issues deemed relevant. Management believes that the allowance for loan losses is adequate. While management uses available information to recognize losses on loans, future additions to the allowance may be necessary based on changes in economic conditions. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the allowance for loan losses. Such agencies may require the Bank to recognize additions to the allowance based on their judgments of information available to them at the time of their examination. Allowance for Loan Losses - Acquired An ALL is calculated using a methodology similar to that described for originated loans. Performing acquired loans are subsequently evaluated for any required allowance at each reporting date. Such required allowance for each loan pool is compared to the remaining fair value discount for that pool. If greater, the excess is recognized as an addition to the allowance through a provision for loan losses. If less than the discount, no additional allowance is recorded. Charge-offs and losses first reduce any remaining fair value discount for the loan pool and once the discount is depleted, losses are applied against the allowance established for that pool. For PCI loans after acquisition, cash flows expected to be collected are recast for each loan periodically as determined appropriate by management. If the present value of expected cash flows for a loan is less than its carrying value, impairment is reflected by an increase in the ALL and a charge to the provision for loan losses. 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 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 Premises and equipment are stated at cost less accumulated depreciation computed on the straight-line method over the estimated useful lives of the assets. Premises and equipment acquired in corporate acquisitions are recorded at estimated fair value on the date of acquisition. Maintenance and repair costs are charged to expense as incurred. Gains or losses on disposition of premises and equipment are reflected in income. Premises and equipment, and other long-term assets, are reviewed for impairment when events indicate their carrying amount may not be recoverable from future undiscounted cash flows. If impaired, the assets are recorded at fair value. Depreciation expense is computed using the straight-line method over the following estimated useful lives. ​ ​ ​ ​ Buildings and improvements 40 years Land improvements 20 years Furniture, fixtures and equipment 2 - 7 years ​ 80 Table of Contents Other Real Estate Owned Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at fair value at the date of foreclosure less estimated costs to sell the asset, establishing a new cost basis. Any write downs at the time of foreclosure are charged to the allowance for loan loss. OREO properties acquired in conjunction with corporate acquisitions are recorded at fair value on the date of acquisition. Subsequent to foreclosure, valuations are periodically performed by management, and a valuation allowance is established if fair value declines below carrying value. Costs relating to the development and improvement of the property are capitalized. Revenue and expenses from operations and changes in the valuation allowance are included in other expenses. Intangible Assets and 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 . See Note 2 for additional information on acquisitions completed in 2022 and 2020. Mortgage servicing rights are recognized as separate assets when rights are acquired through purchase or through sale of mortgage loans with servicing retained. Servicing rights acquired through sale of financial assets are recorded based on the fair value of the servicing right. The determination of fair value is based on a valuation model and includes stratifying the mortgage servicing rights by predominant characteristics, such as interest rates and terms, and estimating the fair value of each stratum based on the present value of estimated future net servicing income. The valuation model incorporates assumptions that market participants would use in estimating future net servicing income, such as costs to service, a discount rate, and prepayment speeds. Changes in fair value are recorded as an adjustment to earnings. The Corporation performs a “qualitative” assessment of goodwill to determine whether further impairment testing of indefinite-lived intangible assets is necessary on at least an annual basis. If it is determined, as a result of performing a qualitative assessment over goodwill, that it is more likely than not that goodwill is impaired, management will perform an impairment test to determine if the carrying value of goodwill is realizable. The Corporation evaluated goodwill and core deposit intangibles for impairment during 2022, 2021 and 2020, determining that there was no goodwill or core deposit intangible impairment. Income Taxes The Corporation files one consolidated federal income tax return and two state returns. Federal income tax expense is allocated to each subsidiary based on an intercompany tax sharing agreement. Deferred tax assets and liabilities have been determined using the liability method. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities and the current enacted tax rates which will be in effect when these differences are expected to reverse. Provision (benefit) for deferred taxes is the result of changes in the deferred tax assets and liabilities. Treasury Stock Common stock shares repurchased by the Corporation are recorded as treasury stock at cost. Securities Sold Under Repurchase Agreements The Corporation sells securities under repurchase agreements. These transactions are accounted for as collateralized financing transactions and are recorded at the amounts at which the securities were sold. The Corporation may have to provide additional collateral to the counterparty, as necessary. Off-Balance-Sheet Financial Instruments In the ordinary course of business, the Corporation has entered into off-balance-sheet financial instruments including commitments to extend credit, unfunded commitments under lines of credit, and letters of credit. Such financial instruments are recorded in the consolidated financial statements when they are funded. Advertising Advertising costs are generally expensed as incurred. 81 Table of Contents Per Share Computations Weighted average shares outstanding were 8,104,117 , 7,680,896 , and 7,497,862 for the years ended December 31, 2022, 2021 and 2020, respectively. All outstanding unvested share-based payment awards that contain rights to non-forfeitable dividends are considered participating securities for basic and diluted earnings per share calculations. There were 59,211 , 59,264 , and 56,606 average shares of dilutive instruments outstanding during the years ended December 31, 2022, 2021, and 2020. Loss Contingencies Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe that there are any such matters that will have a material effect on the consolidated financial statements at December 31, 2022 and 2021. Transfers of Financial Assets Transfers of financial assets are accounted for as sales when control over the assets has been relinquished. Control over transferred assets is deemed to be surrendered when the assets have been isolated from the Bank, the transferee obtains the right, free of conditions that constrain it from taking advantage of that right, to pledge or exchange the transferred assets and the Bank does not maintain effective control over the transferred assets through an agreement to repurchase them before maturity. Comprehensive Income GAAP normally requires that recognized revenues, expenses, gains and losses be included in net income. In addition to net income, another component of comprehensive income includes the after-tax effect of changes in unrealized gains and losses on available for sale securities. This item is reported as a separate component of stockholders’ equity. The Corporation presents comprehensive income in the statement of comprehensive income. Stock-based Compensation The Corporation uses the fair value method of recognizing expense for stock-based compensation based on the fair value of restricted stock awards at the date of grant as prescribed by accounting standards codification Topic 781-10 Compensation/Stock Compensation. Mortgage Banking Derivatives Commitments to fund mortgage loans, at a set interest rate, (interest rate locks) to be sold into the secondary market and forward commitments for the future delivery of these mortgage loans are accounted for as free standing derivatives. Fair values of these mortgage derivatives are estimated based on changes in mortgage interest rates from the date the interest rate on the loan is locked. The Bank enters into forward commitments for the future delivery of mortgage loans when interest rate locks are entered into in order to hedge the change in interest rates resulting from its commitments to fund loans. The forward commitments for the future delivery of mortgage loans are based on the Bank’s “best efforts” and therefore the Bank is not penalized if a loan is not delivered to the investor if the loan did not get originated. Changes in the fair values of these derivatives generally offset each other and are included in “other income” in the consolidated statements of income. Reclassifications Certain 2021 and 2020 amounts have been reclassified to conform to the presentation used in 2022. These reclassifications had no effect on the operations, financial condition or cash flows of the Corporation. 82 Table of Contents New Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. Certain aspects of this ASU were updated in November 2018 by the issuance of ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses . The main objective of the ASU is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. To achieve this objective, the amendments in the ASU replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. During 2019 FASB issued ASU 2019-10 which delayed the effective date of ASU 2016-13 for smaller, publicly traded companies, until interim and annual periods beginning after December 15, 2022. This delay applies to the Corporation as it was classified as a "Smaller reporting company" as defined in Rule 12b-2 of the Exchange Act as of the date ASU 2019-10 was enacted. During the first half of 2019 the Corporation engaged a third-party partner to assist in its implementation of this standard. Over the last three years significant progress has been made working through the assumptions, drivers, documentation and other mechanics for the calculation of the Corporation’s ALL under ASU 2016-13. Throughout 2022, management ran a calculation of its allowance under ASU 2016-13 parallel to its current modeling to assess the functioning of the ASU 2016-13 model while also documenting the controls that will be in place around the process when the Corporation implements this standard. Results of these parallel runs indicate that the Bank’s ALL to total loans coverage ratio will increase from 0.78 % as of December 31, 2022, to 1.10 % - 1.20 % upon implementation of ASU 2016-13 on January 1, 2023. 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 was originally effective for all entities from March 12, 2020 through December 31, 2022. In December 2022, the FASB issued ASU 2022-06 which deferred the sunset date of Topic 848 from December 31, 2022 to December 31, 2024. 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 March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. This ASU provides guidance on eliminating the requirement for classification of and disclosures around troubled debt restructurings. The purpose of this guidance is to eliminate unnecessary and overly-complex disclosures of loans that are already incorporated into the allowance for credit losses and related disclosures. This ASU further requires the disclosure of current-period gross charge-offs by year of origination. The updated guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, for all entities which have implemented ASU 2016-13. The Corporation has historically had very few credit relationships classified as troubled debt restructurings, and as such does not anticipate that the elimination of accounting for and disclosure of these types of credit relationships will have a significant impact to its financial statements upon implementation of ASU 2016-13 beginning with the first quarter of 2023. ​ Note 2 Acquisitions ​ Denmark Bancshares, Inc. On August 12, 2022, the Corporation completed a merger with Denmark Bancshares, Inc. (“Denmark”), a bank holding company headquartered in Denmark, Wisconsin, pursuant to the Agreement and Plan of Bank Merger, dated as of January 18, 2022 by and between the Corporation and Denmark, whereby Denmark merged with and into the Corporation, and Denmark State Bank, Denmark’s wholly-owned banking subsidiary, merged with and into the Bank. Denmark’s principal activity was the ownership and operation of Denmark State Bank, a state-chartered banking institution that operated seven ( 7 ) branches in Wisconsin at the time of closing. The merger consideration totaled approximately $ 128.8 million. Pursuant to the terms of the merger agreement, Denmark shareholders could elect to receive either 0.5276 of a share of the Corporation’s common stock or $ 38.10 in cash for each outstanding share of Denmark common stock, subject to a maximum of 20 % cash consideration in total, with cash paid in lieu of any remaining fractional share. Corporation stock issued totaled 1,579,530 shares valued at approximately $ 124.8 million, with cash of $ 4.0 million comprising the remainder of merger consideration. 83 Table of Contents The Corporation accounted for the transaction under the acquisition method of accounting, and thus, the financial position and results of operations of Denmark prior to the consummation date were not included in the accompanying consolidated financial statements. The accounting required assets purchased and liabilities assumed to be recorded at their respective fair values at the date of acquisition. The Corporation determined the fair value of core deposit intangibles, securities, premises and equipment, loans, other assets and liabilities and deposits with the assistance of third party valuations, appraisals and third party advisors. The estimated fair values will be subject to refinement for up to one year after deal consummation as additional information becomes available relative to the closing date fair values. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As Recorded by Fair Value ​ As Recorded by (in thousands) ​ Denmark Adjustments the Corporation Cash, cash equivalents and securities ​ $ 188,017 ​ $ ( 148 ) ​ $ 187,869 Other investments ​ 3,566 ​ — ​ ​ 3,566 Loans, net ​ 459,413 ​ ( 2,358 ) ​ ​ 457,055 Premises and equipment, net ​ 5,980 ​ ( 1,635 ) ​ ​ 4,345 Core deposit intangible ​ — ​ 15,112 ​ ​ 15,112 Other assets ​ 17,704 ​ 189 ​ ​ 17,893 Total assets acquired ​ $ 674,680 ​ $ 11,160 ​ $ 685,840 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deposits ​ $ 604,636 ​ $ 166 ​ $ 604,802 Other borrowings ​ 842 ​ — ​ 842 Other liabilities ​ 3,951 ​ 3,105 ​ 7,056 Total liabilities assumed ​ $ 609,429 ​ $ 3,271 ​ $ 612,700 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Excess of assets acquired over liabilities assumed ​ $ 65,251 ​ $ 7,889 ​ $ 73,140 Less: purchase price ​ ​ ​ 128,781 Goodwill ​ ​ ​ ​ ​ ​ ​ $ 55,641 Refinement to fair value estimates (1) ​ ​ ​ ​ ​ ​ ​ ​ ( 792 ) Goodwill (after refinement) ​ ​ ​ $ 54,849 (1) Refinement consists of adjustments to the initial fair value estimates of other assets and liabilities, primarily related to accrued and deferred income taxes. ​ The following unaudited pro forma information is presented for illustrative purposes only. The pro forma information should not be relied upon as being indicative of the historical results of operations the companies would have had if the merger had occurred before such periods or the future results of operations that the companies will experience as a result of the merger. The pro forma information, although helpful in illustrating the financial characteristics of the combined company under one set of assumptions, does not reflect the benefits of expected cost savings, opportunities to earn additional revenue, the impact of restructuring and merger-related expenses, or other factors that may result as a consequence of the merger and, accordingly, does not attempt to predict or suggest future results. The unaudited pro forma information set forth below gives effect to the merger as if it had occurred on January 1, 2021, the beginning of the earliest period presented. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended Year Ended (in thousands, except per share data) ​ December 31, 2022 December 31, 2021 Total revenue, net of interest expense ​ $ 139,617 ​ $ 140,904 Net income ​ $ 47,416 ​ $ 49,589 Diluted earnings per common share ​ 5.21 ​ 5.35 ​ Tomah Bancshares, Inc. On May 15, 2020, the Corporation completed a merger with Tomah Bancshares, Inc. (“Timberwood”), a bank holding company headquartered in Tomah, Wisconsin, pursuant to the Agreement and Plan of Bank Merger, dated as of November 20, 2019, by and between the Corporation and Timberwood, whereby Timberwood merged with and into the Corporation, and Timberwood Bank, Timberwood’s wholly-owned banking subsidiary, merged with and into the Bank. Timberwood’s principal activity was the ownership and operation of Timberwood Bank, a state-chartered banking institution that operated one ( 1 ) branch in Wisconsin at the time of closing. The merger consideration totaled approximately $ 29.8 million. 84 Table of Contents ​ Pursuant to the terms of the merger agreement, Timberwood shareholders received 5.1445 shares of the Corporation’s common stock for each outstanding share of Timberwood common stock, and cash in lieu of any remaining fractional share. Corporation stock issued totaled 575,641 shares valued at approximately $ 29.4 million, with cash of $ 0.4 million comprising the remainder of merger consideration. ​ The Corporation accounted for the transaction under the acquisition method of accounting, and thus, the financial position and results of operations of Timberwood prior to the consummation date were not included in the accompanying consolidated financial statements. The accounting required assets purchased and liabilities assumed to be recorded at their respective fair values at the date of acquisition. The Corporation determined the fair value of core deposit intangibles, securities, premises and equipment, loans, other assets and liabilities, deposits and borrowings with the assistance of third party valuations, appraisals, and third party advisors. The estimated fair values will be subject to refinement for up to one year after deal consummation as additional information becomes available relative to the closing date fair values. ​ The fair value of the assets acquired and liabilities assumed on May 15, 2020 was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As Recorded by Fair Value ​ As Recorded by ​ ​ Timberwood Adjustments the Corporation (in thousands) ​ Cash, cash equivalents and securities ​ $ 79,614 ​ $ ( 656 ) ​ $ 78,958 Other investments ​ ​ 533 ​ — ​ ​ 533 Loans ​ 117,343 ​ 1,068 ​ ​ 118,411 Premises and equipment, net ​ 2,538 ​ ( 1,006 ) ​ ​ 1,532 Core deposit intangible ​ — ​ 1,697 ​ ​ 1,697 Other assets ​ ​ 11,392 ​ ( 2,605 ) ​ ​ 8,787 Total assets acquired ​ $ 211,420 ​ $ ( 1,502 ) ​ $ 209,918 Deposits ​ $ 170,362 ​ $ 742 ​ $ 171,104 Subordinated debt ​ ​ 6,500 ​ — ​ 6,500 Other borrowings ​ 12,938 ​ 210 ​ 13,148 Other liabilities ​ ​ 1,923 ​ ( 974 ) ​ 949 Total liabilities assumed ​ $ 191,723 ​ $ ( 22 ) ​ $ 191,701 Excess of assets acquired over liabilities assumed ​ $ 19,697 ​ $ ( 1,480 ) ​ $ 18,217 Less: purchase price ​ ​ ​ ​ 29,812 Goodwill ​ ​ ​ ​ $ 11,595 Refinement to fair value estimates ​ ​ ​ ​ ​ ​ ​ ​ 305 Goodwill (after refinement) ​ ​ ​ ​ ​ ​ ​ $ 11,900 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 85 Table of Contents Note 3 Securities The following is a summary of available for sale securities (dollar amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross Gross ​ ​ ​ ​ ​ Amortized ​ Unrealized ​ Unrealized ​ Estimated ​ ​ ​ Cost ​ Gains ​ Losses ​ Fair Value ​ December 31, 2022 ​ ​ ​ ​ ​ U.S. Treasury securities ​ $ 149,614 ​ $ — ​ $ ( 7,517 ) ​ $ 142,097 ​ Obligations of U.S. Government sponsored agencies ​ 24,935 ​ — ​ ( 3,186 ) ​ 21,749 ​ Obligations of states and political subdivisions ​ ​ 90,701 ​ ​ 88 ​ ​ ( 7,603 ) ​ ​ 83,186 ​ Mortgage-backed securities ​ ​ 38,701 ​ ​ — ​ ​ ( 2,064 ) ​ ​ 36,637 ​ Corporate notes ​ 21,005 ​ 381 ​ ( 1,392 ) ​ 19,994 ​ Certificates of deposit ​ ​ 1,004 ​ ​ — ​ ​ ( 30 ) ​ ​ 974 ​ Total available for sale securities ​ $ 325,960 ​ $ 469 ​ $ ( 21,792 ) ​ $ 304,637 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. Treasury securities ​ $ 49,574 ​ $ 121 ​ $ ( 193 ) ​ $ 49,502 ​ Obligations of U.S. Government sponsored agencies ​ ​ 26,722 ​ ​ 165 ​ ​ ( 341 ) ​ ​ 26,546 ​ Obligations of states and political subdivisions ​ ​ 83,019 ​ ​ 3,786 ​ ​ ( 67 ) ​ ​ 86,738 ​ Mortgage-backed securities ​ 26,143 ​ 1,117 ​ ( 1 ) ​ 27,259 ​ Corporate notes ​ 20,760 ​ 436 ​ ( 94 ) ​ 21,102 ​ Certificates of deposit ​ ​ 1,529 ​ ​ 13 ​ ​ — ​ ​ 1,542 ​ Total available for sale securities ​ $ 207,747 ​ $ 5,638 ​ $ ( 696 ) ​ $ 212,689 ​ ​ The following is a summary of held to maturity securities (dollar amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross Gross ​ ​ ​ ​ Amortized ​ Unrealized ​ Unrealized ​ Estimated ​ ​ Cost ​ Gains ​ Losses ​ Fair Value December 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. Treasury securities ​ $ 39,902 ​ $ 115 ​ $ ( 1,440 ) ​ $ 38,577 Obligations of states and political subdivisions ​ ​ 5,195 ​ ​ — ​ ​ ( 2 ) ​ ​ 5,193 Total held to maturity securities ​ $ 45,097 ​ $ 115 ​ $ ( 1,442 ) ​ $ 43,770 December 31, 2021 ​ ​ ​ ​ Obligations of states and political subdivisions ​ $ 5,911 ​ $ 11 ​ $ — ​ $ 5,922 ​ At December 31, 2022, unrealized losses in the investment securities portfolio related to debt securities. The unrealized losses on these debt securities arose primarily due to changing interest rates and are considered to be temporary. From the December 31, 2022 tables above, 27 out of 28 U.S. Treasury securities, 107 out of 109 mortgage-backed securities, 16 out of 16 obligations of U.S. Government sponsored agency securities, 8 out of 16 corporate notes, 105 out of 135 obligations of states and political subdivisions and 4 out of 4 certificates of deposit contained unrealized losses. At December 31, 2022 and 2021, management has both the intent and ability to hold securities containing material unrealized losses. 86 Table of Contents The following table shows the fair value and gross unrealized losses of securities with unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position (dollar amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less Than 12 Months ​ Greater Than 12 Months ​ Total ​ Fair Unrealized Fair Unrealized Fair Unrealized ​ ​ Value ​ Losses ​ Value ​ Losses ​ Value ​ Losses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 - Available for Sale ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. Treasury securities ​ $ 99,433 ​ $ ( 559 ) ​ $ 42,664 ​ $ ( 6,958 ) ​ $ 142,097 ​ $ ( 7,517 ) Obligations of U.S. Government sponsored agencies ​ ​ 6,735 ​ ​ ( 652 ) ​ ​ 15,014 ​ ​ ( 2,534 ) ​ ​ 21,749 ​ ​ ( 3,186 ) Obligations of states and political subdivisions ​ ​ 50,839 ​ ​ ( 2,650 ) ​ ​ 15,933 ​ ​ ( 4,953 ) ​ ​ 66,772 ​ ​ ( 7,603 ) Mortgage-backed securities ​ 35,731 ​ ( 1,993 ) ​ 879 ​ ( 71 ) ​ 36,610 ​ ( 2,064 ) Corporate notes ​ 9,701 ​ ( 920 ) ​ 3,080 ​ ( 472 ) ​ 12,781 ​ ( 1,392 ) Certificate of Deposits ​ ​ 974 ​ ​ ( 30 ) ​ ​ — ​ ​ — ​ ​ 974 ​ ​ ( 30 ) Totals ​ $ 203,413 ​ $ ( 6,804 ) ​ $ 77,570 ​ $ ( 14,988 ) ​ $ 280,983 ​ $ ( 21,792 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 - Held to Maturity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. Treasury securities ​ $ 29,464 ​ $ ( 1,306 ) ​ $ 4,868 ​ $ ( 134 ) ​ $ 34,332 ​ $ ( 1,440 ) Obligations of states and political subdivisions ​ ​ 417 ​ ​ ( 2 ) ​ ​ — ​ ​ — ​ ​ 417 ​ ​ ( 2 ) ​ ​ $ 29,881 ​ $ ( 1,308 ) ​ $ 4,868 ​ $ ( 134 ) ​ $ 34,749 ​ $ ( 1,442 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2021 - Available for Sale ​ ​ ​ ​ ​ ​ U.S. Treasury securities ​ $ 34,746 ​ $ ( 193 ) ​ $ — ​ $ — ​ $ 34,746 ​ $ ( 193 ) Obligations of U.S. Government sponsored agencies ​ ​ 13,185 ​ ​ ( 86 ) ​ ​ 4,558 ​ ​ ( 255 ) ​ ​ 17,743 ​ ​ ( 341 ) Obligations of states and political subdivisions ​ ​ 8,624 ​ ​ ( 67 ) ​ ​ — ​ ​ — ​ ​ 8,624 ​ ​ ( 67 ) Mortgage-backed securities ​ 254 ​ ( 1 ) ​ — ​ — ​ 254 ​ ( 1 ) Corporate notes ​ 8,973 ​ ( 94 ) ​ — ​ — ​ 8,973 ​ ( 94 ) Totals ​ $ 65,782 ​ $ ( 441 ) ​ $ 4,558 ​ $ ( 255 ) ​ $ 70,340 ​ $ ( 696 ) ​ Contractual maturities will differ from expected maturities for mortgage-backed securities because borrowers may have the right to call or prepay obligations without penalties. The following is a summary of amortized cost and estimated fair value of securities, by contractual maturity, as of December 31, 2022 (dollar amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Available for Sale ​ Held to Maturity ​ Amortized Estimated Amortized Estimated ​ ​ Cost ​ Fair Value ​ Cost ​ Fair Value Due in one year or less ​ $ 104,421 ​ $ 103,838 ​ $ 389 ​ $ 389 Due after one year through 5 years ​ 20,882 ​ 20,021 ​ ​ 39,707 ​ ​ 38,265 Due after 5 years through ten years ​ 91,624 ​ 82,568 ​ ​ 5,001 ​ ​ 5,116 Due after 10 years ​ 70,332 ​ 61,573 ​ ​ — ​ ​ — Subtotal ​ 287,259 ​ 268,000 ​ ​ 45,097 ​ ​ 43,770 Mortgage-backed securities ​ 38,701 ​ 36,637 ​ ​ — ​ ​ — Total ​ $ 325,960 ​ $ 304,637 ​ $ 45,097 ​ $ 43,770 ​ Following is a summary of the proceeds from sales of securities available for sale, as well as gross gains and losses, from the years ended December 31 (dollar amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 Proceeds from sales of securities ​ $ — ​ $ 9,087 ​ $ 59,697 Gross gains on sales ​ — ​ — ​ 3,284 Gross losses on sales ​ — ​ ( 3 ) ​ ( 51 ) ​ 87 Table of Contents As of December 31, 2022 and 2021, the carrying values of securities pledged to secure public deposits, securities sold under repurchase agreements, and for other purposes required or permitted by law were approximately $ 226,892,000 and $ 134,299,000 , respectively. ​ Note 4 Loans The composition of loans at December 31 is as follows (dollar amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Commercial/industrial ​ $ 492,563 ​ $ 367,284 Commercial real estate - owner occupied ​ 717,401 ​ 574,960 Commercial real estate - non-owner occupied ​ 681,783 ​ 537,077 Construction and development ​ 200,022 ​ 132,675 Residential 1 ‑ 4 family ​ 739,339 ​ 571,749 Consumer ​ 44,796 ​ 31,992 Other ​ 18,905 ​ 21,489 Subtotals ​ 2,894,809 ​ 2,237,226 ALL ​ ( 22,680 ) ​ ( 20,315 ) Loans, net of ALL ​ 2,872,129 ​ 2,216,911 Deferred loan fees and costs ​ ( 831 ) ​ ( 1,712 ) Loans, net ​ $ 2,871,298 ​ $ 2,215,199 ​ A summary of the activity in the allowance for loan losses by loan type as of December 31, 2022 and December 31, 2021 is as follows (dollar amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial Commercial ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Real Estate - ​ Real Estate  - ​ Construction ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial / ​ Owner ​ Non - Owner ​ and ​ Residential ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Industrial ​ Occupied ​ Occupied ​ Development ​ 1-4 Family ​ Consumer ​ Other ​ Total ALL - January 1, 2022 ​ $ 3,699 ​ $ 5,633 ​ $ 5,151 ​ $ 984 ​ $ 4,445 ​ $ 224 ​ $ 179 ​ $ 20,315 Charge-offs ​ — ​ ​ ( 890 ) ​ ​ — ​ — ​ ( 40 ) ​ ( 27 ) ​ ( 48 ) ​ ( 1,005 ) Recoveries ​ 499 ​ ​ 74 ​ ​ 360 ​ 152 ​ 14 ​ 6 ​ 65 ​ 1,170 Provision ​ ( 127 ) ​ ​ 387 ​ ​ ( 106 ) ​ 456 ​ 1,525 ​ 111 ​ ( 46 ) ​ 2,200 ALL - December 31, 2022 ​ 4,071 ​ ​ 5,204 ​ ​ 5,405 ​ 1,592 ​ 5,944 ​ 314 ​ 150 ​ 22,680 ALL ending balance individually evaluated for impairment ​ — ​ ​ — ​ ​ 8 ​ — ​ — ​ — ​ — ​ 8 ALL ending balance collectively evaluated for impairment ​ $ 4,071 ​ $ 5,204 ​ $ 5,397 ​ $ 1,592 ​ $ 5,944 ​ $ 314 ​ $ 150 ​ $ 22,672 Loans outstanding - December 31, 2022 ​ $ 492,563 ​ $ 717,401 ​ $ 681,783 ​ $ 200,022 ​ $ 739,339 ​ $ 44,796 ​ $ 18,905 ​ $ 2,894,809 Loans ending balance individually evaluated for impairment ​ 284 ​ ​ 2,487 ​ ​ 514 ​ — ​ 201 ​ — ​ — ​ 3,486 Loans ending balance collectively evaluated for impairment ​ $ 492,279 ​ $ 714,914 ​ $ 681,269 ​ $ 200,022 ​ $ 739,138 ​ $ 44,796 ​ $ 18,905 ​ $ 2,891,323 ​ 88 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial Commercial ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Real Estate - ​ Real Estate - ​ Construction ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial / ​ Owner ​ Non - Owner ​ and ​ Residential ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Industrial ​ Occupied ​ Occupied ​ Development ​ 1-4 Family ​ Consumer ​ Other ​ Total ALL - January 1, 2021 ​ $ 2,049 ​ $ 6,108 ​ $ 3,904 ​ $ 1,027 ​ $ 3,960 ​ $ 201 ​ $ 409 ​ $ 17,658 Charge-offs ​ ( 233 ) ​ ​ ( 618 ) ​ ​ — ​ — ​ ( 125 ) ​ ( 7 ) ​ ( 36 ) ​ ( 1,019 ) Recoveries ​ 53 ​ ​ 343 ​ ​ 5 ​ 143 ​ 15 ​ 1 ​ 16 ​ 576 Provision ​ 1,830 ​ ​ ( 200 ) ​ ​ 1,242 ​ ( 186 ) ​ 595 ​ 29 ​ ( 210 ) ​ 3,100 ALL - December 31, 2021 ​ 3,699 ​ ​ 5,633 ​ ​ 5,151 ​ 984 ​ 4,445 ​ 224 ​ 179 ​ 20,315 ALL ending balance individually evaluated for impairment ​ 70 ​ ​ — ​ ​ 894 ​ — ​ — ​ — ​ — ​ 964 ALL ending balance collectively evaluated for impairment ​ $ 3,629 ​ $ 5,633 ​ $ 4,257 ​ $ 984 ​ $ 4,445 ​ $ 224 ​ $ 179 ​ $ 19,351 Loans outstanding - December 31, 2021 ​ $ 367,284 ​ $ 574,960 ​ $ 537,077 ​ $ 132,675 ​ $ 571,749 ​ $ 31,992 ​ $ 21,489 ​ $ 2,237,226 Loans ending balance individually evaluated for impairment ​ 439 ​ ​ 4,966 ​ ​ 1,519 ​ — ​ 273 ​ — ​ — ​ 7,197 Loans ending balance collectively evaluated for impairment ​ $ 366,845 ​ $ 569,994 ​ $ 535,558 ​ $ 132,675 ​ $ 571,476 ​ $ 31,992 ​ $ 21,489 ​ $ 2,230,029 ​ A summary of past due loans as of December 31, 2022 are as follows (dollar amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 90 Days ​ ​ ​ ​ ​ ​ 30-89 Days ​ or more ​ ​ ​ ​ ​ ​ ​ ​ Past Due ​ Past Due ​ ​ ​ ​ ​ ​ ​ Accruing ​ and Accruing ​ Non-Accrual ​ Total Commercial/industrial ​ $ 192 ​ $ — ​ $ 418 ​ $ 610 Commercial real estate - owner occupied ​ 1,301 ​ — ​ 2,688 ​ 3,989 Commercial real estate - non-owner occupied ​ — ​ — ​ — ​ — Construction and development ​ 237 ​ — ​ 17 ​ 254 Residential 1 ‑ 4 family ​ 774 ​ 268 ​ 505 ​ 1,547 Consumer ​ 19 ​ 5 ​ — ​ 24 Other ​ — ​ — ​ — ​ — ​ ​ $ 2,523 ​ $ 273 ​ $ 3,628 ​ $ 6,424 ​ A summary of past due loans as of December 31, 2021 are as follows (dollar amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 90 Days ​ ​ ​ ​ ​ ​ 30-89 Days ​ or more ​ ​ ​ ​ ​ ​ ​ ​ Past Due ​ Past Due ​ ​ ​ ​ ​ ​ Accruing ​ and Accruing ​ Non-Accrual ​ Total Commercial/industrial ​ $ 12 ​ $ 738 ​ $ 247 ​ $ 997 Commercial real estate - owner occupied ​ — ​ — ​ 5,884 ​ 5,884 Commercial real estate - non-owner occupied ​ 65 ​ — ​ 650 ​ 715 Construction and development ​ — ​ — ​ 19 ​ 19 Residential 1 ‑ 4 family ​ 2,002 ​ 245 ​ 439 ​ 2,686 Consumer ​ 2 ​ 16 ​ 2 ​ 20 Other ​ — ​ — ​ — ​ — ​ ​ $ 2,081 ​ $ 999 ​ $ 7,241 ​ $ 10,321 ​ Credit Quality: We utilize a numerical risk rating system for commercial relationships whose total indebtedness equals $ 250,000 or more. All other types of relationships (ex: residential, consumer, commercial under $ 250,000 of indebtedness) are assigned a “Pass” rating, unless they have fallen 90 days past due or more, at which time they receive a rating of 7. The Corporation uses split ratings for government guaranties on loans. The portion of a loan that is supported by a government guaranty is included with other Pass credits. The determination of a commercial loan risk rating begins with completion of a matrix, which assigns scores based on the strength of the borrower’s debt service coverage, collateral coverage, balance sheet leverage, industry outlook, and customer concentration. A weighted average is taken of these individual scores to arrive at the overall rating. This rating is 89 Table of Contents subject to adjustment by the loan officer based on facts and circumstances pertaining to the borrower. Risk ratings are subject to independent review. Commercial borrowers with ratings between 1 and 5 are considered Pass credits, with 1 being most acceptable and 5 being just above the minimum level of acceptance. Commercial borrowers rated 6 have potential weaknesses which may jeopardize repayment ability. Borrowers rated 7 have a well-defined weakness or weaknesses such as the inability to demonstrate significant cash flow for debt service based on analysis of the company’s financial information. These loans remain on accrual status provided full collection of principal and interest is reasonably expected. Otherwise they are deemed impaired and placed on nonaccrual status. Borrowers rated 8 are the same as 7 rated credits with one exception: collection or liquidation in full is not probable. The breakdown of loans by risk rating as of December 31, 2022 is as follows (dollar amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass (1-5) 6 7 8 Total Commercial/industrial ​ $ 474,699 ​ $ 3,708 ​ $ 14,156 ​ $ — ​ $ 492,563 Commercial real estate - owner occupied ​ 666,424 ​ 8,031 ​ 42,946 ​ — ​ 717,401 Commercial real estate - non-owner occupied ​ 677,466 ​ — ​ 4,317 ​ — ​ 681,783 Construction and development ​ 198,895 ​ — ​ 1,127 ​ — ​ 200,022 Residential 1 ‑ 4 family ​ 735,971 ​ 151 ​ 3,217 ​ — ​ 739,339 Consumer ​ 44,794 ​ — ​ 2 ​ — ​ 44,796 Other ​ 18,905 ​ — ​ — ​ — ​ 18,905 ​ ​ $ 2,817,154 ​ $ 11,890 ​ $ 65,765 ​ $ — ​ $ 2,894,809 ​ The breakdown of loans by risk rating as of December 31, 2021 is as follows (dollar amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass (1-5) 6 7 8 Total Commercial/industrial ​ $ 355,469 ​ $ — ​ $ 11,815 ​ $ — ​ $ 367,284 Commercial real estate - owner occupied ​ 551,801 ​ — ​ 23,159 ​ — ​ 574,960 Commercial real estate - non-owner occupied ​ 532,077 ​ — ​ 5,000 ​ — ​ 537,077 Construction and development ​ 131,429 ​ — ​ 1,246 ​ — ​ 132,675 Residential 1 ‑ 4 family ​ 570,022 ​ 83 ​ 1,644 ​ — ​ 571,749 Consumer ​ 31,988 ​ — ​ 4 ​ — ​ 31,992 Other ​ 21,489 ​ — ​ — ​ — ​ 21,489 ​ ​ $ 2,194,275 ​ $ 83 ​ $ 42,868 ​ $ — ​ $ 2,237,226 ​ The ALL represents management’s estimate of probable and inherent credit losses in the loan portfolio. Estimating the amount of the ALL requires the exercise of significant judgment and the use of estimates related to the amount and timing of expected future cash flows on impaired loans, estimated losses on pools of homogenous loans based on historical loss experience, and consideration of other qualitative factors such as current economic trends and conditions, all of which may be susceptible to significant change. The loan portfolio also represents the largest asset on the consolidated balance sheets. Loan losses are charged off against the ALL, while recoveries of amounts previously charged off are credited to the ALL. A provision for loan losses (“PFLL”) is charged to operations based on management’s periodic evaluation of the factors previously mentioned, as well as other pertinent factors. The ALL consists of specific reserves for certain individually evaluated impaired loans and general reserves for collectively evaluated non-impaired loans. Specific reserves reflect estimated losses on impaired loans from management’s analyses developed through specific credit allocations. The specific reserves are based on regular analyses of impaired, non-homogenous loans greater than $ 250,000 . These analyses involve a high degree of judgment in estimating the amount of loss associated with specific loans, including estimating the amount and timing of future cash flows and collateral values. The general reserve is based in part on the Bank’s historical loss experience which is updated quarterly. The general 90 Table of Contents reserve portion of the ALL also includes consideration of certain qualitative factors such as 1) changes in lending policies and/or underwriting practices, 2) national and local economic conditions, 3) changes in portfolio volume and nature, 4) experience, ability and depth of lending management and other relevant staff, 5) levels of and trends in past-due and nonaccrual loans and quality, 6) changes in loan review and oversight, 7) impact and effects of concentrations and 8) other issues deemed relevant. There are many factors affecting ALL; some are quantitative while others require qualitative judgment. The process for determining the ALL (which management believes adequately considers potential factors which might possibly result in credit losses) includes subjective elements and, therefore, may be susceptible to significant change. To the extent actual outcomes differ from management estimates, additional PFLL could be required that could adversely affect the Corporation’s earnings or financial position in future periods. Allocations of the ALL may be made for specific loans but the entire ALL is available for any loan that, in management’s judgment, should be charged off or for which an actual loss is realized. As an integral part of their examination process, various regulatory agencies review the ALL as well. Such agencies may require that changes in the ALL be recognized when such regulators’ credit evaluations differ from those of management based on information available to the regulators at the time of their examinations. A summary of impaired loans individually evaluated as of December 31, 2022 is as follows (dollar amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial Commercial ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Real Estate - ​ Real Estate - ​ Construction ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial/ ​ Owner ​ Non - Owner ​ and ​ Residential ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Industrial ​ Occupied ​ Occupied ​ Development ​ 1-4 Family ​ Consumer ​ Other ​ Total With an allowance recorded: ​ ​ ​ ​ ​ ​ ​ ​ Recorded investment ​ $ — ​ $ — ​ $ 18 ​ $ — ​ $ — ​ $ — ​ $ — ​ $ 18 Unpaid principal balance ​ — ​ — ​ 18 ​ — ​ — ​ — ​ — ​ 18 Related allowance ​ — ​ — ​ 8 ​ — ​ — ​ — ​ — ​ 8 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ With no related allowance recorded: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Recorded investment ​ $ 284 ​ $ 2,487 ​ $ 497 ​ $ — ​ $ 200 ​ $ — ​ $ — ​ $ 3,468 Unpaid principal balance ​ 284 ​ 2,487 ​ 497 ​ — ​ 200 ​ — ​ — ​ 3,468 Related allowance ​ — ​ — ​ — ​ — ​ — ​ — ​ — ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Recorded investment ​ $ 284 ​ $ 2,487 ​ $ 515 ​ $ — ​ $ 200 ​ $ — ​ $ — ​ $ 3,486 Unpaid principal balance ​ 284 ​ 2,487 ​ 515 ​ — ​ 200 ​ — ​ — ​ 3,486 Related allowance ​ — ​ — ​ 8 ​ — ​ — ​ — ​ — ​ 8 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average recorded investment ​ $ 361 ​ $ 3,726 ​ $ 1,017 ​ $ — ​ $ 237 ​ $ — ​ $ — ​ $ 5,341 ​ 91 Table of Contents A summary of impaired loans individually evaluated as of December 31, 2021 is as follows (dollar amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial Commercial ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Real Estate - ​ Real Estate - ​ Construction ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial/ ​ Owner ​ Non - Owner ​ and ​ Residential ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Industrial ​ Occupied ​ Occupied ​ Development ​ 1 ‑ 4 Family ​ Consumer ​ Other ​ Total With an allowance recorded: ​ ​ ​ ​ ​ ​ ​ ​ ​ Recorded investment ​ $ 357 ​ $ — ​ $ 1,406 ​ $ — ​ $ — ​ $ — ​ $ — ​ $ 1,763 Unpaid principal balance ​ 357 ​ — ​ 1,406 ​ — ​ — ​ — ​ — ​ 1,763 Related allowance ​ 70 ​ — ​ 894 ​ — ​ — ​ — ​ — ​ 964 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ With no related allowance recorded: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Recorded investment ​ $ 82 ​ $ 4,966 ​ $ 113 ​ $ — ​ $ 273 ​ $ — ​ $ — ​ $ 5,434 Unpaid principal balance ​ 82 ​ 4,966 ​ 113 ​ — ​ 273 ​ — ​ — ​ 5,434 Related allowance ​ — ​ — ​ — ​ — ​ — ​ — ​ — ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Recorded investment ​ $ 439 ​ $ 4,966 ​ $ 1,519 ​ $ — ​ $ 273 ​ $ — ​ $ — ​ $ 7,197 Unpaid principal balance ​ 439 ​ 4,966 ​ 1,519 ​ — ​ 273 ​ — ​ — ​ 7,197 Related allowance ​ 70 ​ — ​ 894 ​ — ​ — ​ — ​ — ​ 964 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average recorded investment ​ $ 459 ​ $ 3,069 ​ $ 5,098 ​ $ — ​ $ 267 ​ $ — ​ $ — ​ $ 8,893 ​ An analysis of interest income on impaired loans for the years ended December 31 follows (dollar amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 Interest income in accordance with original terms ​ $ 262 ​ $ 679 ​ $ 683 Interest income recognized ​ ( 253 ) ​ ( 720 ) ​ ( 519 ) (Increase) Reduction in interest income ​ $ 9 ​ $ ( 41 ) ​ $ 164 ​ The following table presents loans acquired with deteriorated credit quality. No loans in this table had a related allowance at December 31, 2022 and 2021, and therefore, the below disclosures were not expanded to include loans with and without a related allowance (dollar amounts in thousands). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ December 31, 2021 ​ ​ ​ ​ ​ Unpaid ​ ​ ​ ​ Unpaid ​ ​ Recorded ​ Principal ​ Recorded ​ Principal ​ Investment Balance Investment Balance Commercial & Industrial ​ $ 712 ​ $ 1,091 ​ $ 596 ​ $ 685 Commercial real estate - owner occupied ​ 2,539 ​ 2,843 ​ 2,664 ​ 3,146 Commercial real estate - non-owner occupied ​ — ​ — ​ 1,018 ​ 1,150 Construction and development ​ — ​ — ​ — ​ — Residential 1 ‑ 4 family ​ 824 ​ 1,045 ​ 863 ​ 1,124 Consumer ​ — ​ — ​ — ​ — Other ​ — ​ — ​ — ​ — ​ ​ $ 4,075 ​ $ 4,979 ​ $ 5,141 ​ $ 6,105 ​ Due to the nature of these loan relationships, prepayment expectations have not been considered in the determination of future cash flows. Management regularly monitors these loan relationships, and if information becomes available that indicates expected cash flows will differ from initial expectations, it may necessitate reclassification between accretable and non-accretable components of the original discount calculation. 92 Table of Contents The following table represents the change in the accretable and non-accretable components of discounts on loans acquired with deteriorated credit quality (dollar amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ December 31, 2021 ​ ​ Accretable ​ Non-accretable ​ Accretable ​ Non-accretable ​ discount discount discount discount Balance at beginning of year ​ $ 813 ​ $ 149 ​ $ 1,250 ​ $ 176 Acquired balance, net ​ 292 ​ 211 ​ — ​ — Reclassifications between accretable and non-accretable ​ 135 ​ ( 135 ) ​ 27 ​ ( 27 ) Accretion to loan interest income ​ ( 561 ) ​ — ​ ( 464 ) ​ — Balance at end of year ​ $ 679 ​ $ 225 ​ $ 813 ​ $ 149 ​ A TDR includes a loan modification where a borrower is experiencing financial difficulty and we grant a concession to that borrower that we would not otherwise consider except for the borrower’s financial difficulties. A TDR may be either on accrual or nonaccrual status based upon the performance of the borrower and management’s assessment of collectability. 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, 2022 and 2021 the Corporation had specific reserves of $ 8,000 and $ 7,000 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. The Corporation had no new troubled debt restructurings during the year ended December 31, 2022. ​ The following table presents the troubled debt restructurings during the year ended December 31, 2021 (dollar amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pre-Modification ​ ​ Post-Modification ​ ​ Number of ​ ​ Outstanding Recorded ​ ​ Outstanding Recorded ​ Contracts ​ Investment ​ Investment Commercial/ industrial ​ 1 ​ $ 8 ​ $ 8 Commercial Real Estate ​ 2 ​ $ 131 ​ $ 131 Totals ​ ​ ​ $ 139 ​ $ 139 ​ ​ Note 5 Related Party Matters Directors, executive officers, and principal shareholders of the Corporation, including their families and firms in which they are principal owners, are considered to be related parties. Loans to officers, directors, and shareholders owning 10% or more of the Corporation, that we are aware of, were made on the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with others and did not involve more than the normal risk of collectability or present other unfavorable features. ​ A summary of loans to directors, executive officers, principal shareholders, and their affiliates for the years ended December 31 is as follows (dollar amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Balances at beginning ​ $ 73,498 ​ $ 67,131 New loans and advances ​ 46,528 ​ 24,723 Repayments ​ ( 49,875 ) ​ ( 18,356 ) Balance at end ​ $ 70,151 ​ $ 73,498 ​ Deposits from directors, executive officers, principal shareholders, and their affiliates totaled approximately $ 27,524,000 and $ 22,665,000 as of December 31, 2022 and 2021, respectively. ​ Note 6 Mortgage Servicing Rights Loans serviced for others are not included in the accompanying consolidated balance sheets. MSRs are recognized as separate assets when loans sold in the secondary market are sold with servicing retained. The Corporation utilizes a third party consulting firm to determine an accurate assessment of the mortgage servicing rights fair value. The third party firm collects relevant data points from numerous sources. Some of these data points relate directly to the pricing level or relative 93 Table of Contents value of the mortgage servicing while other data points relate to the assumptions used to derive fair value. In addition, the valuation evaluates specific collateral types, and current and historical performance of the collateral in question. The valuation process focuses on the non-distressed secondary servicing market, common industry practices and current regulatory standards. The primary determinants of the fair value of mortgage servicing rights are servicing fee percentage, ancillary income, expected loan life or prepayment speeds, discount rates, costs to service, delinquency rates, foreclosure losses and recourse obligations. The valuation data also contains interest rate shock analyses for monitoring fair value changes in differing interest rate environments. Following is an analysis of activity in servicing rights assets that are measured at fair value (dollar amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended Year Ended ​ ​ December 31, 2022 ​ December 31, 2021 Fair value at beginning of period ​ $ 5,016 ​ $ 3,726 ​ ​ ​ ​ ​ ​ ​ Servicing asset additions ​ 771 ​ 1,862 Loan payments and payoffs ​ ( 918 ) ​ ( 1,319 ) Changes in valuation inputs and assumptions used in the valuation model ​ 3,012 ​ 747 Amount recognized through earnings ​ ​ 2,865 ​ ​ 1,290 MSR asset acquired ​ 1,701 ​ — Fair value at end of period ​ $ 9,582 ​ $ 5,016 ​ ​ ​ ​ ​ ​ ​ Unpaid principal balance of loans serviced for others ​ $ 866,941 ​ $ 705,462 Mortgage servicing rights as a percent of loans serviced for others ​ 1.11 ​ 0.71 ​ During the years ended December 31, 2022 and 2021, 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, 2022 and 2021 included constant prepayment speed of 7.5 and 13.8 months and a discount rate of 10.21 % and 10.28 %, respectively. 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. The assumptions used by the Corporation are hypothetical and supported by a third party valuation. 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 approximates fair market value at December 31, 2022 and 2021. Changes in fair value are recognized through the income statement as loan servicing income. ​ Note 7 Premises and Equipment An analysis of premises and equipment at December 31 follows (dollar amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Land and land improvements ​ $ 9,539 ​ $ 9,763 Buildings and building improvements ​ 50,215 ​ 42,470 Furniture and equipment ​ 6,495 ​ 5,955 Totals ​ 66,249 ​ 58,188 Less accumulated depreciation ​ 11,383 ​ 10,307 Right-of-use lease asset (see Note 21) ​ ​ 1,582 ​ ​ 1,580 Premises and equipment, net ​ $ 56,448 ​ $ 49,461 ​ Included in buildings and improvements at December 31, 2022 and 2021, is $ 190,000 and $ 1,110,000 , respectively, in construction in progress. These amounts relate to branch locations which were under construction. These balances begin accumulating depreciation upon being placed in service. Depreciation and amortization of premises and equipment charged to operating expense totaled approximately $ 1,657,000 , $ 1,778,000 , and $ 1,508,000 for the years ended December 31, 2022, 2021, and 2020, respectively. ​ 94 Table of Contents Note 8 Other Real Estate Owned Changes in OREO for the years ended December 31 were as follows (dollar amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Beginning of year ​ $ 150 ​ $ 1,885 Transfers in ​ 1,139 ​ 140 Assets Acquired ​ ​ 1,405 ​ ​ — Depreciation ​ — ​ ( 2 ) (Loss) gain on sale of OREO and valuation allowance ​ 146 ​ 20 Sales ​ ( 320 ) ​ ( 1,893 ) End of year ​ $ 2,520 ​ $ 150 ​ Activity in the valuation allowance for the years ended December 31 was as follows (dollar amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 Beginning of year ​ $ 187 ​ $ 112 ​ $ 2,121 Additions charged to expense ​ 24 ​ 217 ​ 356 Valuation relieved due to sale of OREO ​ — ​ ( 142 ) ​ ( 2,365 ) End of year ​ $ 211 ​ $ 187 ​ $ 112 ​ ​ ​ ​ ​ Note 9 Investment in Minority-owned Subsidiaries The Corporation has a 49.8 % membership interest in UFS. The business operations of UFS consist of providing data processing and other information technology services to the Corporation and other financial institutions. As of December 31, 2022 and 2021, UFS had total assets of $ 31,309,000 and $ 27,914,000 and liabilities of $ 6,680,000 and $ 4,493,000 , respectively. The Corporation’s investment in UFS was $ 12,252,000 and $ 11,605,000 at December 31, 2022 and 2021, respectively. The investment is accounted for on the equity method. The Corporation’s undistributed earnings from its investment in UFS were approximately $ 3,055,000 , $ 2,556,000 , and $ 3,066,000 for the years ended December 31, 2022, 2021 and 2020, respectively. Data processing service fees paid by the Corporation to UFS were approximately $ 4,348,000 , $ 3,754,000 , and $ 3,664,000 for the years ended December 31, 2022, 2021 and 2020, respectively. The Corporation has a contract with UFS that was renewed for five years on January 1, 2023. The Corporation’s proportionate share of earnings of UFS flow through to its tax return. Deferred income taxes of approximately $ 1,509,000 and $ 1,671,000 were provided to account for the difference in the tax and book basis of assets and liabilities held at UFS at December 31, 2022 and 2021, respectively. During 2022, 2021 and 2020, the Corporation received $ 2,408,000 , $ 2,646,000 and $ 2,103,000 in dividends from UFS, respectively. TVG, the insurance subsidiary of the Bank, maintained a 40.0 % investment in Ansay at December 31, 2022 and 2021. 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. As of December 31, 2022 and 2021, Ansay had total assets of $ 87,271,000 and $ 80,612,000 and liabilities of $ 44,178,000 and $ 39,135,000 , respectively. The Corporation’s investment in Ansay, which is accounted for using the equity method, was $ 31,928,000 and $ 31,330,000 at December 31, 2022 and 2021, respectively. The Corporation recognized undistributed earnings of approximately $ 2,558,000 , $ 2,587,000 and $ 2,740,000 and received dividends of $ 1,960,000 , $ 1,840,000 and $ 1,712,000 from its investment in Ansay during the years ended December 31, 2022, 2021 and 2020, respectively. As of December 31, 2022 and 2021, Ansay had term loans with the Bank totaling approximately $ 19,838,000 and $ 16,936,000 , respectively. Ansay also has available revolving lines of credit totaling $ 18,010,000 with the Corporation, under which there were no outstanding balances as of December 31, 2022. Outstanding balances under these lines totaled $ 1,944,000 as of December 31, 2021. Ansay maintained deposits at the Bank totaling $ 10,797,000 and $ 10,304,000 as of December 31, 2022 and 2021, respectively. 95 Table of Contents The CEO of Ansay, Michael G. Ansay, serves as Chairman of the Board of the Corporation. As a related party, during 2022, 2021 and 2020 the Corporation received insurance consulting services and purchased director and officer fidelity bond and commercial insurance coverage through Ansay spending approximately $ 357,000 , $ 329,000 and $ 261,000 , respectively. The Corporation’s proportionate share of earnings of Ansay flow through to its tax return. Deferred income taxes of approximately $ 1,125,000 and $ 1,192,000 were provided to account for the difference in the tax and book basis of assets and liabilities held at Ansay as of December 31, 2022 and 2021, respectively. ​ 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): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 ​ 2021 ​ Gross Intangible Gross Intangible ​ ​ Carrying ​ Accumulated ​ Carrying ​ Accumulated ​ ​ Amount ​ Amortization ​ Amount ​ Amortization Core deposit intangible ​ $ 23,979 ​ $ 7,150 ​ $ 9,030 ​ $ 4,995 ​ Amortization expense was $ 2,318,000 , $ 1,405,000 and $ 1,636,000 for the years ended December 31, 2022, 2021 and 2020, respectively. 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, 2022 (dollar amounts in thousands): ​ ​ ​ ​ ​ ​ Core ​ ​ Deposit ​ ​ Intangible 2023 ​ $ 3,575 2024 ​ 3,069 2025 ​ 2,580 2026 ​ 2,173 2027 ​ 1,767 Thereafter ​ 3,665 Total ​ $ 16,829 ​ ​ Note 11 Goodwill Goodwill was $ 110,206,000 and $ 55,357,000 at December 31, 2022 and 2021, respectively. ​ Note 12 Deposits The composition of deposits at December 31 is as follows (dollar amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Noninterest-bearing demand deposits ​ $ 934,092 ​ $ 799,936 Interest-bearing demand deposits ​ 344,560 ​ 286,606 Savings deposits ​ 1,357,571 ​ 1,185,727 Time deposits ​ 417,285 ​ 244,477 Brokered certificates of deposit ​ 6,721 ​ 11,694 Total deposits ​ $ 3,060,229 ​ $ 2,528,440 ​ Time deposits of $250,000 or more were approximately $ 47,192,000 and $ 36,788,000 at December 31, 2022 and 2021, respectively. 96 Table of Contents The scheduled maturities of time deposits at December 31, 2022, are summarized as follows (dollar amounts in thousands): ​ ​ ​ ​ ​ 2023 $ 267,973 2024 ​ 116,351 2025 ​ 15,697 2026 ​ 7,939 2027 ​ 3,722 Thereafter ​ 12,324 Total ​ $ 424,006 ​ ​ Note 13 Securities Sold Under Repurchase Agreements Securities sold under repurchase agreements have contractual maturities up to one year from the transaction date with variable and fixed rate terms. The agreements to repurchase securities require that the Corporation (seller) repurchase identical securities as those that are sold. The securities underlying the agreements were under the Corporation’s control. Information concerning securities sold under repurchase agreements at December 31 consists of the following (dollar amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 Outstanding balance at the end of the year ​ $ 97,196 ​ $ 41,122 ​ $ 36,377 ​ Weighted average interest rate at the end of the year ​ 4.31 % 0.02 % 0.04 % Average balance during the year ​ $ 25,749 ​ $ 34,637 ​ $ 34,984 ​ Average interest rate during the year ​ 2.11 % 0.03 % 0.32 % Maximum month end balance during the year ​ $ 97,196 ​ $ 57,915 ​ $ 79,718 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Note 14 Notes Payable There were $ 1,915,000 and $ 7,958,000 of advances outstanding from the FHLB at December 31, 2022 and 2021, respectively. From time to time the Bank utilized short-term FHLB advances to fund liquidity during these years. The advances, rate, and maturities of FHLB advances as of December 31 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Maturity Rate ​ 2022 2021 ​ ​ ​ ​ ​ ​ ​ (dollars in thousands) Fixed rate, fixed term ​ 01/24/2022 ​ 2.51 % ​ — ​ ​ 250 Fixed rate, fixed term ​ 05/02/2022 ​ 2.98 % ​ — ​ ​ 500 Fixed rate, fixed term ​ 05/16/2022 ​ 0.00 % ​ — ​ ​ 5,000 Fixed rate, fixed term ​ 06/08/2022 ​ 2.92 % ​ — ​ ​ 500 Fixed rate, fixed term 11/21/2022 3.02 % — ​ 600 Fixed rate, fixed term ​ 06/01/2023 ​ 1.79 % ​ 807 ​ ​ — Fixed rate, fixed term 11/21/2023 3.06 % 600 ​ 600 Fixed rate, fixed term 04/22/2030 0.00 % 508 ​ 508 ​ ​ ​ ​ ​ ​ ​ 1,915 ​ ​ 7,958 Purchase accounting adjustment ​ ​ ​ ​ ​ ​ 14 ​ ​ 53 Total notes payable ​ ​ ​ ​ ​ $ 1,929 ​ $ 8,011 ​ 97 Table of Contents Future maturities of borrowings were as follows (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ 2022 ​ 2021 ​ ​ ​ ​ ​ ​ ​ 1 year or less $ 1,407 ​ $ 6,850 1 to 2 years ​ ​ — ​ 600 2 to 3 years ​ ​ — ​ — 3 to 4 years ​ ​ — ​ — 4 to 5 years ​ ​ — ​ — Over 5 years ​ ​ 508 ​ ​ 508 ​ ​ $ 1,915 ​ $ 7,958 ​ At December 31, 2022 and 2021, respectively, total loans available to be pledged as collateral on FHLB borrowings were approximately $ 1,152,655,000 and $ 915,512,000 and, of that total, $ 668,328,000 and $ 527,199,000 qualified as eligible collateral. The Bank owned $ 4,645,000 and $ 3,353,000 of FHLB stock at December 31, 2022 and 2021, respectively. At December 31, 2022 and 2021, the Bank had available liquidity of $ 666,424,000 and $ 519,242,000 for future draws, respectively. FHLB stock is included in other investments at December 31, 2022 and 2021. This stock is recorded at cost, which approximates fair value. The Corporation maintains a $ 7,500,000 line of credit with a commercial bank, which was entered into on May 15, 2022. There were no outstanding balances on this note at December 31, 2022. Any future borrowings will require monthly payments of interest at a variable rate, and will be due in full on May 15, 2024. ​ Note 15 Subordinated Debt During September 2017, the Corporation entered into subordinated note agreements with three separate commercial banks. The Corporation had up to twelve months from entering these agreements to borrow funds up to a maximum availability of $ 22,500,000 . As of December 31, 2022 and 2021, the Corporation had borrowed $ 11,500,000 under these agreements. 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. During July 2020, the Corporation entered into subordinated note agreements with two separate commercial banks. The Corporation 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. These notes were issued with 10 -year maturities, carry interest at a fixed rate of 5.0 % through June 30, 2025, and at a variable rate thereafter, payable quarterly. These notes are callable on or after January 1, 2026 and qualify for Tier 2 capital for regulatory purposes. The Corporation had outstanding balances of $ 6,000,000 under these agreements at December 31, 2022 and 2021. ​ During August 2022, the Corporation entered into subordinated note agreements with an individual. The Corporation had outstanding balances of $ 6,000,000 under these agreements as of December 31, 2022. These notes were issued with 10 -year maturities, carry interest at a fixed rate of 5.25 % through August 6, 2027, and at a variable rate thereafter, payable quarterly. These notes are callable on or after August 6, 2027 and qualify for Tier 2 capital for regulatory purposes. ​ 98 Table of Contents Note 16 Income Taxes The components of the provision for income taxes for the years ended December 31 are as follows (dollar amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 Current tax expense: ​ ​ ​ Federal ​ $ 10,328 ​ $ 9,898 ​ $ 8,181 State ​ 4,960 ​ 4,626 ​ 3,766 Total current ​ 15,288 ​ 14,524 ​ 11,947 Deferred tax benefit: ​ ​ ​ ​ ​ ​ Federal ​ ( 617 ) ​ ( 1 ) ​ ( 82 ) State ​ ( 252 ) ​ — ​ ( 34 ) Total deferred ​ ( 869 ) ​ ( 1 ) ​ ( 116 ) Total provision for income taxes ​ $ 14,419 ​ $ 14,523 ​ $ 11,831 ​ A summary of the sources of differences between income taxes at the federal statutory rate and the provision for income taxes for the years ended December 31 follows (dollar amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 Tax expense at statutory rate ​ $ 12,523 ​ $ 12,593 ​ $ 10,474 Increase (decrease) in taxes resulting from: ​ ​ ​ ​ ​ ​ Tax-exempt interest ​ ( 1,079 ) ​ ( 1,074 ) ​ ( 1,369 ) State taxes (net of Federal benefit) ​ 3,719 ​ 3,666 ​ 2,987 Cash surrender value of life insurance ​ ( 194 ) ​ ( 161 ) ​ ( 156 ) ESOP dividend ​ ( 77 ) ​ ( 98 ) ​ ( 78 ) Nondeductible expenses associated with acquisition ​ 189 ​ — ​ 71 Other ​ ( 662 ) ​ ( 403 ) ​ ( 98 ) Total provision for income taxes ​ $ 14,419 ​ $ 14,523 ​ $ 11,831 ​ Deferred income taxes are provided for the temporary differences between the financial reporting basis and the tax basis of the Corporation’s assets and liabilities. Deferred taxes are included in other liabilities of the balance sheet. The major components of the net deferred tax asset (liability) as of December 31 are presented below (dollar amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Deferred tax assets: ​ ​ Deferred compensation ​ $ 43 ​ $ 69 Premises and equipment ​ 439 ​ — Allowance for loan losses ​ 6,178 ​ 5,534 Accrued vacation and severance ​ 6 ​ 36 Other real estate owned ​ — ​ 51 Unrealized loss on securities available for sale ​ 5,757 ​ — Other ​ 589 ​ 454 Total deferred tax assets ​ 13,012 ​ 6,144 Deferred tax liabilities: ​ ​ ​ ​ Investment in acquisition and discount accretion ​ ( 624 ) ​ ( 69 ) Premises and equipment ​ ​ — ​ ​ ( 179 ) Mortgage servicing rights ​ ( 2,610 ) ​ ( 1,366 ) Other investments ​ ( 84 ) ​ ( 323 ) Prepaid expenses ​ — ​ ( 71 ) Investment in minority owned subsidiaries ​ ( 2,635 ) ​ ( 2,867 ) Goodwill and other intangibles ​ — ​ ( 753 ) Purchase accounting ​ ( 2,394 ) ​ ( 697 ) Unrealized gain on securities available for sale ​ — ​ ( 1,335 ) Total deferred tax liabilities ​ ( 8,347 ) ​ ( 7,660 ) Net deferred tax asset (liability) ​ $ 4,665 ​ $ ( 1,516 ) ​ 99 Table of Contents Tax effects from an uncertain tax position can be recognized in the financial statements only if the position is more likely than not to be sustained on audit, based on the technical merits of the position. The Corporation recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more likely than not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. When applicable, interest and penalties on uncertain tax positions are calculated based on the guidance from the relevant tax authority and included in income tax expense. At December 31, 2022 and 2021, there was no liability for uncertain tax positions. Federal income tax returns for 4 years ended December 31, 2019 through 2022 remain open and subject to review by applicable tax authorities. State income tax returns for 5 years ended December 31, 2018 through 2022 remain open and subject to review by applicable tax authorities. Note 17 Employee Benefit Plans Employee Stock Ownership Plan The Corporation has a defined contribution profit sharing 401(k) plan which includes the provisions for an employee stock ownership plan (“ESOP”). The plan is available to all employees over 18 years of age after completion of three months of service. Employees participating in the plan may elect to defer a minimum of 2 % of compensation up to the limits specified by law. All participants of the 401(k) plan are eligible for the ESOP and may allocate their contributions to purchase shares of the Corporation’s stock. As of December 31, 2022 and 2021, the plan held 322,020 and 340,131 shares, respectively. These shares are included in the calculation of the Corporation’s earnings per share. The Corporation may make discretionary contributions up to the limits established by IRS regulations. The discretionary match was 35 % of participant contributions up to 10 % of the employee’s salary in 2022, 2021, and 2020. The Corporation made additional discretionary contributions to the plan of $ 591,000 , $ 600,000 , $ 733,000 in 2022, 2021 and 2020, respectively. Total expense associated with the plans was approximately $ 1,197,000 , $ 1,169,000 and $ 1,272,000 in 2022, 2021 and 2020, respectively Share-based Compensation The Corporation has made restricted share grants during 2022, 2021 and 2020 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. The number of shares of Corporation stock that may be issued pursuant to awards under the 2020 Plan shall not exceed, in the aggregate, 700,000 . As of December 31, 2022, 51,266 shares of Corporation stock has been awarded under the 2020 Plan. Compensation expense for restricted stock is based on the fair value of the awards of Bank First Corporation common stock at the time of grant. The value of restricted stock grants that are expected to vest is amortized into expense over the vesting periods of the respective grants. For the year ended December 31, 2022, 2021 and 2020, compensation expense of $ 1,662,000 , $ 1,393,000 and $ 1,081,000 , respectively, was recognized related to restricted stock awards. As of December 31, 2022, there was $ 2,145,000 of unrecognized compensation cost related to non-vested restricted stock awards granted under the plan. That cost is expected to be recognized over a weighted average period of 1.49 years. The aggregate grant date fair value of restricted stock awards that vested during 2022 was approximately $ 1,258,000 . ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended ​ For the year ended ​ ​ December 31, 2022 ​ December 31, 2021 ​ ​ Weighted- ​ Weighted- ​ ​ ​ ​ Average Grant- ​ ​ ​ Average Grant- ​ ​ Shares ​ Date Fair Value ​ Shares ​ Date Fair Value Restricted Stock ​ ​ Outstanding at beginning of year 58,611 ​ $ 61.44 57,175 ​ $ 53.08 Granted 25,451 ​ 69.73 25,416 ​ 70.67 Vested ( 20,785 ) ​ 60.52 ( 21,755 ) ​ 50.15 Forfeited or cancelled ( 4,005 ) ​ 60.50 ( 2,225 ) ​ 62.40 Outstanding at end of year 59,272 ​ $ 65.85 58,611 ​ $ 61.44 100 Table of Contents ​ Deferred Compensation Plan The Corporation has a deferred compensation agreement with one of its former executive officers. The benefits were payable beginning June 30, 2009, the date of termination of employment with the Corporation via retirement. The estimated annual cash benefit payment upon retirement at the age of 70 under the salary continuation plan is $ 108,011 . The payoff is for the participant’s lifetime and is guaranteed to the participant or their surviving beneficiary for a minimum of 15 years . Related expense for this agreement was approximately $ 10,000 , $ 15,000 , and $ 19,000 for the years ended December 31, 2022, 2021 and 2020, respectively. The vested present value of future payments of approximately $ 156,000 and $ 255,000 at December 31, 2022 and 2021, respectively, is included in other liabilities. During 2022 and 2021 the discount rate used to present value the future payments of this obligation was 4.95 %. ​ Note 18 Stockholders’ Equity and Regulatory Matters The Bank, as a national bank, is subject to the dividend restrictions set forth by the Office of the Comptroller of the Currency. Under such restrictions, the Bank may not, without the prior approval of the Office of the Comptroller of the Currency, declare dividends in excess of the sum of the current year’s earnings (as defined) plus the retained earnings (as defined) from the prior two years. The dividends that the Bank could declare without the prior approval of the Office of the Comptroller of the Currency as of December 31, 2022 totaled approximately $ 69,257,000 . The payment of dividends may be further limited because of the need for the Bank to maintain capital ratios satisfactory to applicable regulatory agencies. Banks and certain bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. The Economic Growth, Regulatory Relief, and Consumer Protection Act, signed into law in May 2018 raised the threshold for those bank holding companies subject to the Federal Reserve's Small Bank Holding Company Policy Statement to $ 3 billion. As a result, as of the effective date of that change in 2018, the Corporation was no longer required to comply with the risk-based capital rules applicable to the Bank. The Federal Reserve may, however, require smaller bank holding companies to maintain certain minimum capital levels, depending upon general economic conditions and a bank holding company's particular condition, risk profile and growth plans. Due to the acquisition of Denmark, the Corporation became subject to compliance with risk-based capital rules beginning with the third quarter of 2022, and will remain so as long as it remains above the $ 3 billion threshold. Under regulatory guidance for non-advanced approaches institutions, the Bank and Corporation are required to maintain minimum amounts and ratios of common equity Tier I capital to risk-weighted assets, including an additional conservation buffer determined by banking regulators. As of December 31, 2022 and 2021, this buffer was 2.50 %. As of December 31, 2022 and 2021, the Bank and Corporation met all capital adequacy requirements to which they are subject. ​ Actual and required capital amounts and ratios are presented below (dollar amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ To Be Well ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Minimum Capital ​ Capitalized Under ​ ​ ​ ​ ​ ​ ​ For Capital ​ Adequacy with ​ Prompt Corrective ​ ​ Actual ​ Adequacy Purposes ​ Capital Buffer ​ Action Provisions ​ Amount Ratio Amount Ratio Amount Ratio Amount Ratio December 31, 2022 ​ ​ ​ ​ ​ Total capital (to risk-weighted assets): ​ ​ ​ ​ ​ Corporation ​ $ 387,814 12.23 % $ 253,689 8.00 % $ 332,967 10.50 % ​ NA NA ​ Bank ​ $ 372,312 11.75 % $ 253,504 8.00 % $ 332,724 10.50 % $ 316,880 10.00 % Tier 1 capital (to risk-weighted assets): ​ ​ ​ ​ ​ ​ ​ Corporation ​ $ 341,634 10.77 % $ 190,627 6.00 % $ 269,545 8.50 % ​ NA NA ​ Bank ​ $ 349,632 11.03 % $ 190,128 6.00 % $ 269,348 8.50 % $ 253,504 8.00 % Common Equity Tier 1 capital (to risk-weighted assets): ​ ​ ​ ​ ​ ​ ​ Corporation ​ $ 341,634 10.77 % $ 142,700 4.50 % $ 221,978 7.00 % ​ NA NA ​ Bank ​ $ 349,632 11.03 % $ 142,596 4.50 % $ 221,816 7.00 % $ 205,972 6.50 % Tier 1 capital (to average assets): ​ ​ ​ ​ ​ ​ ​ Corporation ​ $ 341,634 9.69 % $ 140,992 4.00 % $ 140,992 4.00 % ​ NA NA ​ Bank ​ $ 349,632 9.93 % $ 140,887 4.00 % $ 140,887 4.00 % $ 176,108 5.00 % ​ 101 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ To Be Well ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Minimum Capital ​ Capitalized Under ​ ​ ​ ​ ​ ​ ​ For Capital ​ Adequacy with ​ Prompt Corrective ​ ​ Actual ​ Adequacy Purposes ​ Capital Buffer ​ Action Provisions ​ Amount Ratio Amount Ratio Amount Ratio Amount Ratio December 31, 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total capital (to risk-weighted assets): ​ ​ ​ ​ ​ Corporation ​ $ 297,467 12.44 % ​ NA NA ​ ​ NA NA ​ ​ NA NA ​ Bank ​ $ 291,994 12.21 % $ 191,339 8.00 % $ 251,133 10.50 % $ 239,174 10.00 % Tier 1 capital (to risk-weighted assets): ​ ​ ​ ​ ​ ​ Corporation ​ $ 259,652 10.86 % ​ NA NA ​ ​ NA NA ​ NA NA ​ Bank ​ $ 271,679 11.36 % $ 143,505 6.00 % $ 203,298 8.50 % $ 191,339 8.00 % Common Equity Tier 1 capital (to risk-weighted assets): ​ ​ ​ ​ ​ Corporation ​ $ 259,652 10.86 % ​ NA NA ​ ​ NA NA ​ NA NA ​ Bank ​ $ 271,679 11.36 % $ 107,628 4.50 % $ 167,422 7.00 % $ 155,463 6.50 % Tier 1 capital (to average assets): ​ ​ ​ ​ ​ ​ ​ Corporation ​ $ 259,652 9.29 % ​ NA NA ​ NA NA ​ NA NA ​ Bank ​ $ 271,679 9.72 % $ 111,825 4.00 % $ 111,825 4.00 % $ 139,781 5.00 % ​ ​ Note 19 Segment Information The Corporation, through the branch network of its subsidiary, the Bank, provides a full range of consumer and commercial financial institution services to individuals and businesses in Wisconsin. These services include credit cards; secured and unsecured consumer, commercial, and real estate loans; demand, time, and savings deposits; and ATM processing. The Corporation also offers a full-line of insurance services through its equity investment in Ansay and offers data processing services through its equity investment in UFS. While the Corporation’s chief decision makers monitor the revenue streams of various Corporation products and services, operations are managed and financial performance is evaluated on a Corporation-wide basis. Accordingly, all of the Corporation’s financial institution operations are considered by management to be aggregated in one reportable operating segment. ​ Note 20 Commitments and Contingencies The Corporation enters into commitments to originate loans whereby the interest rate on the loan is determined prior to funding (rate lock commitments). Rate lock commitments on mortgage loans that are intended to be sold are considered to be derivatives. Accordingly, such commitments, along with any related fees received from potential borrowers, are recorded at fair value in derivative assets or liabilities, with changes in fair value recorded in the net gain or loss on sale of mortgage loans. Fair value is based on fees currently charged to enter into similar agreements and for fixed rate commitments also considers the difference between current levels of interest rates and committed rates. The notional amount of rate lock commitments at December 31, 2022 and 2021, respectively, was $ 3,736,000 and $ 21,921,000 . The Bank is party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the consolidated balance sheets. The Bank’s exposure to credit loss is represented by the contractual or notional amount of these commitments. The Bank follows the same credit policies in making commitments as it does for on-balance-sheet instruments. Since some of the commitments are expected to expire without being drawn upon and some of the commitments may not be drawn upon to the total extent of the commitment, the notional amount of these commitments does not necessarily represent future cash requirements. 102 Table of Contents The following commitments were outstanding at December 31 (dollar amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Notional Amount ​ December 31, 2022 ​ December 31, 2021 ​ ​ ​ ​ ​ ​ ​ Commitments to extend credit: ​ ​ Fixed ​ $ 120,906 ​ $ 90,036 Variable ​ 539,658 ​ 412,095 Credit card arrangements ​ 17,364 ​ 10,916 Letters of credit ​ 10,343 ​ 9,062 ​ Commitments to extend credit are agreements to lend to a customer at fixed or variable rates as long as there is no violation of any condition established in the contract. Commitments have fixed expiration dates or other termination clauses and may require payment of a fee. The amount of collateral obtained upon extension of credit is based on management’s credit evaluation of the customer. Collateral held varies but may include accounts receivable; inventory; property, plant, and equipment; real estate; and stocks and bonds. Letters of credit include $ 10,343,000 of standby letters of credit and no direct pay letters of credit and. Standby letters of credit are conditional lending commitments issued by the Corporation to guaranty the performance of a customer to a third party. Direct pay letters of credit generally are issued to support the marketing of industrial development revenue and housing bonds and provide that all debt service payments will be paid by drawing on the letter of credit. The letter of credit draws are then repaid by draws from the customer’s bank account. Generally, all standby letters of credit issued have expiration dates within one year. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Corporation generally holds collateral supporting these commitments. The majority of the Corporation’s loans, commitments, and letters of credit have been granted to customers in the Corporation’s market area. The concentrations of credit by type are set forth in Note 4. Standby letters of credit were granted primarily to commercial borrowers. Management believes the diversity of the local economy will prevent significant losses in the event of an economic downturn. ​ Note 21 Leases In accordance with GAAP, leases where the Corporation is the lessee are recognized on-balance sheet through a right-of-use (“ROU”) model that requires recognition of a ROU lease asset and liability on the balance sheet for all leases with a term longer than 12 months. Leases are classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. The Corporation leases certain properties under operating leases that resulted in the recognition of ROU lease assets of approximately $ 1,582,000 and $ 1,580,000 and corresponding lease liabilities of similar value on the Corporation’s Consolidated Balance Sheets as of December 31, 2022 and 2021, respectively. GAAP provides a number of optional practical expedients in transition. The Corporation has elected the “ package of practical expedients,” which permits the Corporation not to reassess under the new standard the prior conclusions about lease identification, lease classification and initial direct costs. The Corporation also elected the use of the hindsight , a practical expedient which permits the use of information available after lease inception to determine the lease term via the knowledge of renewal options exercised not available as of the leases inception. The Corporation elected the short-term lease recognition exemption for all leases that qualify, meaning those with terms under twelve months. ROU assets or lease liabilities are not to be recognized for short-term leases. The Corporation also elected the practical expedient to not separate lease and non-lease components for all leases, the majority of which consist of real estate common area maintenance expenses. However, since these non-lease items are subject to change, they are treated and disclosed as variable payments in the quantitative disclosures below. 103 Table of Contents Lessee Leases The Corporation’s lessee leases are operating leases, and consist of leased real estate for branches. Options to extend and renew leases are generally exercised under normal circumstances. Advance notification is required prior to termination, and any noticing period is often limited to the months prior to renewal. Rent escalations are generally specified by a payment schedule, or are subject to a defined formula. The Corporation also elected the practical expedient to not separate lease and non-lease components for all leases, the majority of which consist of real estate common area maintenance expenses. Generally, leases do not include guaranteed residual values, but instead typically specify that the leased premises are to be returned in satisfactory condition with the Corporation liable for damages. For operating leases, the lease liability and ROU asset (before adjustments) are recorded at the present value of future lease payments. The Corporation is electing to utilize the Wall Street Journal Prime Rate on the date of lease commencement as the lease interest rate. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended (dollars in thousands) December 31, 2022 December 31, 2021 Amortization of ROU Assets - Operating Leases ​ $ ( 1 ) ​ $ 11 ​ Interest on Lease Liabilities - Operating Leases ​ 96 ​ ​ 87 ​ Operating Lease Cost (Cost resulting from lease payments) ​ 95 ​ ​ 98 ​ Weighted Average Lease Term (Years) - Operating Leases ​ 31.00 ​ ​ 32.00 ​ Weighted Average Discount Rate - Operating Leases ​ 5.50 % ​ 5.50 % ​ A maturity analysis of operating lease liabilities and reconciliation of the undiscounted cash flows to the total operating lease liabilities is as follows (dollar amounts in thousands): ​ ​ ​ ​ ​ ​ December 31, 2022 Operating lease payments due: ​ ​ Within one year ​ $ 85 After one but within two years ​ ​ 86 After two but within three years ​ ​ 86 After three but within four years ​ ​ 94 After four years but within five years ​ ​ 94 After five years ​ ​ 3,137 Total undiscounted cash flows ​ ​ 3,582 Discount on cash flows ​ ​ ( 2,000 ) Total operating lease liabilities ​ $ 1,582 ​ ​ Note 22 Fair Value of Financial Instruments Accounting guidance establishes a fair value hierarchy to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value. ​ ​ ​ Level 1: Quoted prices (unadjusted) or identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. ​ ​ Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. ​ ​ Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. ​ 104 Table of Contents Information regarding the fair value of assets measured at fair value on a recurring basis is as follows (dollar amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Instruments Markets Other Significant ​ ​ Measured ​ for Identical ​ Observable ​ Unobservable ​ ​ At Fair ​ Assets ​ Inputs ​ Inputs ​ ​ Value ​ (Level 1) ​ (Level 2) ​ (Level 3) December 31, 2022 ​ ​ ​ ​ Assets ​ ​ ​ ​ Securities available for sale ​ ​ ​ ​ ​ U.S. Treasury securities ​ $ 142,097 ​ $ — ​ $ 142,097 ​ $ — Obligations of U.S. Government sponsored agencies ​ 21,749 ​ — ​ 21,749 ​ — Obligations of states and political subdivisions ​ 83,186 ​ — ​ 83,186 ​ — Mortgage-backed securities ​ ​ 36,637 ​ ​ — ​ ​ 36,637 ​ ​ — Corporate notes ​ 19,994 ​ — ​ 19,994 ​ — Certificates of deposit ​ ​ 974 ​ ​ — ​ ​ 974 ​ ​ — Mortgage servicing rights ​ 9,582 ​ — ​ 9,582 ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2021 ​ ​ ​ ​ Assets ​ ​ ​ ​ Securities available for sale ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. Treasury securities ​ $ 49,502 ​ $ — ​ $ 49,502 ​ $ — Obligations of U.S. Government sponsored agencies ​ 26,546 ​ — ​ 26,546 ​ — Obligations of states and political subdivisions ​ 86,738 ​ — ​ 86,738 ​ — Mortgage-backed securities ​ ​ 27,259 ​ ​ — ​ ​ 27,259 ​ ​ — Corporate notes ​ 21,102 ​ — ​ 21,102 ​ — Certificates of deposit ​ ​ 1,542 ​ ​ — ​ ​ 1,542 ​ ​ — Mortgage servicing rights ​ 5,016 ​ — ​ 5,016 ​ — ​ 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): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Quoted Prices ​ ​ ​ ​ ​ ​ ​ ​ ​ In Active ​ Significant ​ ​ ​ ​ ​ Assets ​ Markets ​ Other ​ Significant ​ ​ Measured ​ for Identical ​ Observable ​ Unobservable ​ ​ At Fair ​ Assets ​ Inputs ​ Inputs ​ ​ Value ​ (Level 1) ​ (Level 2) ​ (Level 3) December 31, 2022 ​ ​ ​ ​ OREO ​ $ 2,520 ​ $ — ​ $ — ​ $ 2,520 Impaired Loans, net of impairment reserve ​ ​ 3,478 ​ ​ — ​ ​ — ​ ​ 3,478 ​ ​ $ 5,998 ​ $ — ​ $ — ​ $ 5,998 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2021 ​ ​ ​ ​ OREO ​ $ 150 ​ $ — ​ $ — ​ $ 150 Impaired Loans, net of impairment reserve ​ 6,233 ​ — ​ — ​ 6,233 ​ ​ $ 6,383 ​ $ — ​ $ — ​ $ 6,383 ​ 105 Table of Contents The following is a description of the valuation methodologies used by the Corporation for the items noted in the table above, including the general classification of such instruments in the fair value hierarchy. For individually evaluated impaired loans, the amount of impairment is based upon the present value of expected future cash flows discounted at the loan’s effective interest rate, the estimated fair value of the underlying collateral for collateral-dependent loans, or the estimated liquidity of the note. For OREO, the fair value is based upon the estimated fair value of the underlying collateral adjusted for the expected costs to sell. The following table shows significant unobservable inputs used in the fair value measurement of Level 3 assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ Unobservable ​ Range of ​ Average ​ ​ Valuation Technique ​ Inputs ​ Discounts Discount ​ As of December 31, 2022 ​ Other real estate owned Third party appraisals, sales contracts or brokered price options Collateral discounts and estimated costs to sell 0 % 0 % Impaired loans Third party appraisals and discounted cash flows Collateral discounts and discount rates 0 % - 71 % 25.5 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2021 ​ Other real estate owned Third party appraisals, sales contracts or brokered price options Collateral discounts and estimated costs to sell 18 % - 97 % 18.0 % Impaired loans Third party appraisals and discounted cash flows Collateral discounts and discount rates 0 % - 100 % 7.4 % ​ The following methods and assumptions were used by the Corporation to estimate fair value of financial instruments. Cash and cash equivalents - Fair value approximates the carrying amount. Securities - The fair value measurement is obtained from an independent pricing service and is based on recent sales of similar securities and other observable market data. Loans held for sale - Fair value is based on commitments on hand from investors or prevailing market prices. Loans - Fair value of variable rate loans that reprice frequently are based on carrying value. Fair value of other loans is estimated by discounting future cash flows using current rates at which similar loans would be made to borrowers with similar credit ratings. Fair value of impaired and other nonperforming loans are estimated using discounted expected future cash flows or the fair value of the underlying collateral, if applicable. Other investments - The carrying amount reported in the consolidated balance sheets for other investments approximates the fair value of these assets. Mortgage servicing rights - Fair values were determined using the present value of future cash flows. Cash value of life insurance - The carrying amount approximates its fair value. Deposits - Fair value of deposits with no stated maturity, such as demand deposits, savings, and money market accounts, by definition, is the amount payable on demand on the reporting date. Fair value of fixed-rate time deposits is estimated using discounted cash flows applying interest rates currently offered on similar time deposits. Securities sold under repurchase agreements - The fair value of securities sold under repurchase agreements with variable rates or due on demand is the amount payable at the reporting date. The fair value of securities sold under repurchase 106 Table of Contents agreements with fixed terms is estimated using discounted cash flows with discount rates at interest rates currently offered for securities sold under repurchase agreements of similar remaining values. Notes payable and Subordinated notes - Rates currently available to the Corporation for debt with similar terms and remaining maturities are used to estimate fair value of existing debt. Fair value of borrowings is estimated by discounting future cash flows using the current rates at which similar borrowings would be made. Fair value of borrowed funds due on demand is the amount payable at the reporting date. Off-balance-sheet instruments - Fair value is based on quoted market prices of similar financial instruments where available. If a quoted market price is not available, fair value is based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreement and the company’s credit standing. Since this amount is immaterial, no amounts for fair value are presented. The carrying value and estimated fair value of financial instruments at December 31 follows (dollar amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Carrying ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 amount Level 1 Level 2 Level 3 Total ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Financial assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 119,351 ​ $ 119,351 ​ $ — ​ $ — ​ $ 119,351 Securities held to maturity ​ 45,097 ​ — ​ 43,770 ​ — ​ 43,770 Securities available for sale ​ 304,637 ​ — ​ 304,637 ​ — ​ 304,637 Loans held for sale ​ 648 ​ — ​ — ​ 648 ​ 648 Loans, net ​ 2,871,298 ​ — ​ — ​ 2,832,454 ​ 2,832,454 Other investments, at cost ​ 16,495 ​ — ​ — ​ 16,495 ​ 16,495 Mortgage servicing rights ​ 9,582 ​ — ​ 9,582 ​ — ​ 9,582 Cash surrender value of life insurance ​ 46,050 ​ 46,050 ​ — ​ — ​ 46,050 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Financial liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deposits ​ $ 3,060,229 ​ $ — ​ $ — ​ $ 2,732,007 ​ $ 2,732,007 Securities sold under repurchase agreements ​ 97,196 ​ — ​ 97,196 ​ — ​ ​ 97,196 Notes payable ​ ​ 1,929 ​ ​ — ​ ​ 1,929 ​ ​ — ​ ​ 1,929 Subordinated notes ​ 23,500 ​ ​ — ​ ​ 23,500 ​ ​ — ​ ​ 23,500 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Carrying ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2021 ​ amount ​ Level 1 ​ Level 2 ​ Level 3 ​ Total Financial assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 296,860 ​ $ 296,860 ​ $ — ​ $ — ​ $ 296,860 Securities held to maturity ​ 5,911 ​ — ​ 5,922 ​ — ​ 5,922 Securities available for sale ​ 212,689 ​ — ​ 212,689 ​ — ​ 212,689 Loans held for sale ​ 786 ​ — ​ — ​ 786 ​ 786 Loans, net ​ 2,215,199 ​ — ​ — ​ 2,210,593 ​ 2,210,593 Other investments, at cost ​ 9,004 ​ — ​ — ​ 9,004 ​ 9,004 Mortgage servicing rights ​ 5,016 ​ — ​ 5,016 ​ — ​ 5,016 Cash surrender value of life insurance ​ ​ 31,897 ​ 31,897 ​ — ​ — ​ 31,897 Financial liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deposits ​ $ 2,528,440 ​ $ — ​ $ — ​ $ 2,457,287 ​ $ 2,457,287 Securities sold under repurchase agreements ​ ​ 41,122 ​ — ​ 41,122 ​ — ​ ​ 41,122 Notes payable ​ 8,011 ​ ​ — ​ ​ 8,011 ​ ​ — ​ ​ 8,011 Subordinated notes ​ 17,500 ​ ​ — ​ ​ 17,500 ​ ​ — ​ ​ 17,500 ​ The fair value of a financial instrument is the current amount that would be exchanged between willing parties, other than in a forced liquidation. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Corporation’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, 107 Table of Contents the fair value estimates may not be realized in an immediate settlement of the instrument. Consequently, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Corporation. Fair value estimates are made at a specific point in time based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Corporation’s entire holdings of a particular instrument. Because no market exists for a significant portion of the Corporation’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters that could affect the estimates. Fair value estimates are based on existing on- and off-balance-sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. ​ Deposits with no stated maturities are defined as having a fair value equivalent to the amount payable on demand. This prohibits adjusting fair value derived from retaining those deposits for an expected future period of time. This component, commonly referred to as a deposit base intangible, is neither considered in the above amounts nor is it recorded as an intangible asset on the consolidated balance sheet. Significant assets and liabilities that are not considered financial assets and liabilities include premises and equipment. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates. ​ Note 23 Parent Company Only Financial Statements Balance Sheets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31 ​ 2022 2021 ​ ​ (In Thousands) Assets ​ ​ ​ ​ Cash and cash equivalents ​ $ 14,760 ​ $ 6,183 Securities ​ ​ 1,851 ​ ​ — Investment in Bank ​ 461,101 ​ 334,680 Investment in Veritas ​ 39 ​ 39 Other assets ​ 462 ​ 7 TOTAL ASSETS ​ $ 478,213 ​ $ 340,909 Liabilities and Stockholders’ Equity ​ ​ Liabilities ​ ​ Subordinated notes ​ $ 23,500 ​ $ 17,500 Other liabilities ​ 1,610 ​ 756 Total liabilities ​ 25,110 ​ 18,256 Stockholders’ equity: ​ ​ Common stock ​ 101 ​ 85 Additional paid-in capital ​ 218,263 ​ 93,149 Retained earnings ​ 295,496 ​ 258,104 Treasury stock, at cost ​ ( 45,191 ) ​ ( 32,294 ) Accumulated other comprehensive income (loss) ​ ( 15,566 ) ​ 3,609 Total stockholders’ equity ​ 453,103 ​ 322,653 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY ​ $ 478,213 ​ $ 340,909 ​ ​ 108 Table of Contents Statements of Income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31 ​ 2022 2021 2020 ​ ​ (In Thousands) Income: ​ ​ ​ ​ ​ ​ ​ ​ ​ Dividends received from Bank ​ $ 22,281 ​ $ 22,361 ​ $ 21,406 Equity in undistributed earnings of subsidiaries ​ 25,258 ​ 24,687 ​ 18,104 Other income ​ 9 ​ — ​ ( 7 ) Total income ​ 47,548 ​ 47,048 ​ 39,503 Other expenses ​ 3,204 ​ 2,205 ​ 2,005 Benefit for income taxes ​ ( 870 ) ​ ( 601 ) ​ ( 548 ) Net income ​ $ 45,214 ​ $ 45,444 ​ $ 38,046 ​ Statements of Cash Flows ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2022 2021 2020 ​ ​ (In thousands) Cash flow from operating activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 45,214 ​ $ 45,444 ​ $ 38,046 Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ ​ ​ ​ ​ Stock compensation ​ 1,662 ​ 1,393 ​ 1,081 Equity in earnings of subsidiaries (includes dividends) ​ ( 47,539 ) ​ ( 47,048 ) ​ ( 39,410 ) Changes in other assets and liabilities: ​ ​ ​ ​ ​ ​ Other assets ​ ( 772 ) ​ 1 ​ 606 Other liabilities ​ ( 2,054 ) ​ ( 660 ) ​ 478 Net cash provided by (used in) operating activities ​ ( 3,489 ) ​ ( 870 ) ​ 801 Cash flows from investing activities, net of effects of business combination: ​ ​ ​ ​ Dividends received from Bank ​ 22,355 ​ 22,360 ​ 21,406 Dividends received from Veritas ​ — ​ — ​ 2,121 Net cash used in business combination ​ 5,159 ​ — ​ ( 4,474 ) Contribution to subsidiaries ​ — ​ — ​ ( 65 ) Net cash provided by investing activities ​ 27,514 ​ 22,360 ​ 18,988 Cash flows from financing activities, net of effects of business combination: ​ ​ ​ ​ Repayment of notes payable ​ — ​ — ​ ( 10,000 ) Proceeds from notes payable ​ ​ — ​ ​ — ​ ​ — Repayment of subordinate notes ​ — ​ — ​ ( 7,122 ) Proceeds from subordinated notes ​ 6,000 ​ — ​ 6,000 Cash dividends paid ​ ( 7,248 ) ​ ( 8,733 ) ​ ( 6,147 ) Issuance of common stock ​ 114 ​ — ​ 3,368 Repurchase of common stock ​ ( 14,314 ) ​ ( 8,158 ) ​ ( 4,367 ) Net cash (used in) provided by financing activities ​ ( 15,448 ) ​ ( 16,891 ) ​ ( 18,268 ) Net increase (decrease) in cash and cash equivalents ​ 8,577 ​ 4,599 ​ 1,521 Cash and cash equivalents at beginning ​ 6,183 ​ 1,584 ​ 63 Cash and cash equivalents at end ​ $ 14,760 ​ $ 6,183 ​ $ 1,584 ​ ​ 109 Table of Contents Note 24 Earnings Per Common Share See Note 1 for the Corporation’s accounting policy regarding per share computations. Earnings per common share, earnings per share assuming dilution, and related information are summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, (in thousands, except per share data) 2022 2021 2020 Basic ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income available to common shareholders ​ $ 45,214 ​ $ 45,444 ​ $ 38,046 Less: Earnings allocated to participating securities ​ ​ ( 330 ) ​ $ ( 351 ) ​ ​ ( 287 ) Net income allocated to common shareholders ​ $ 44,884 ​ $ 45,093 ​ $ 37,759 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average common shares outstanding including participating securities ​ ​ 8,104,117 ​ ​ 7,680,896 ​ ​ 7,497,862 Less: Participating securities ​ ​ ( 59,211 ) ​ ​ ( 59,264 ) ​ ​ ( 56,606 ) Average shares ​ ​ 8,044,906 ​ ​ 7,621,632 ​ ​ 7,441,256 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic earnings per common shares ​ $ 5.58 ​ $ 5.92 ​ $ 5.07 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Diluted ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income available to common shareholders ​ $ 45,214 ​ $ 45,444 ​ $ 38,046 Weighted average common shares outstanding for basic earnings per common share ​ ​ 8,044,906 ​ ​ 7,621,632 ​ ​ 7,441,256 Add: Dilutive effects of stock based compensation awards ​ ​ 24,354 ​ ​ 21,535 ​ ​ 39,821 Average shares and dilutive potential common shares ​ ​ 8,069,260 ​ ​ 7,643,167 ​ ​ 7,481,077 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Diluted earnings per common share ​ $ 5.58 ​ $ 5.92 ​ $ 5.07 ​ ​ ​ Note 25 Quarterly Results of Operations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 Quarters Fourth Third Second First ​ ​ (dollars in thousands, except share and per share data) Interest income ​ $ 35,754 ​ $ 30,740 ​ $ 25,820 ​ $ 24,220 Interest expense ​ 5,132 ​ 3,047 ​ 2,340 ​ 1,930 Net interest and dividend income ​ 30,622 ​ 27,693 ​ 23,480 ​ 22,290 Provision for loan losses ​ 500 ​ — ​ 500 ​ 1,200 Net interest and dividend income after provision for loan losses ​ 30,122 ​ 27,693 ​ 22,980 ​ 21,090 Noninterest income ​ 3,896 ​ 5,166 ​ 5,551 ​ 5,234 Noninterest expense ​ 17,254 ​ 18,895 ​ 13,219 ​ 12,731 Income before provision for income taxes ​ 16,764 ​ 13,964 ​ 15,312 ​ 13,593 Provision for income taxes ​ 3,920 ​ 3,431 ​ 3,658 ​ 3,410 Net income ​ $ 12,844 ​ $ 10,533 ​ $ 11,654 ​ $ 10,183 Share data ​ ​ ​ ​ Average shares outstanding, basic ​ 8,962,400 ​ 8,205,914 ​ 7,457,443 ​ 7,540,264 Average shares outstanding, diluted ​ ​ 8,993,685 ​ ​ 8,228,197 ​ ​ 7,472,561 ​ ​ 7,559,844 Earnings per share, basic ​ $ 1.43 ​ $ 1.26 ​ $ 1.55 ​ $ 1.34 Earnings per share, diluted ​ $ 1.43 ​ $ 1.26 ​ $ 1.55 ​ $ 1.34 ​ 110 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2021 Quarters Fourth Third Second First ​ ​ (dollars in thousands, except share and per share data) Interest income ​ $ 25,043 ​ $ 24,898 ​ $ 24,003 ​ $ 24,442 Interest expense ​ 1,812 ​ 1,964 ​ 2,189 ​ 2,339 Net interest and dividend income ​ 23,231 ​ 22,934 ​ 21,814 ​ 22,103 Provision for loan losses ​ 600 ​ 650 ​ 950 ​ 900 Net interest and dividend income after provision for loan losses ​ 22,631 ​ 22,284 ​ 20,864 ​ 21,203 Noninterest income ​ 5,520 ​ 5,031 ​ 6,647 ​ 6,343 Noninterest expense ​ 13,435 ​ 12,469 ​ 12,294 ​ 12,358 Income before provision for income taxes ​ 14,716 ​ 14,846 ​ 15,217 ​ 15,188 Provision for income taxes ​ 3,553 ​ 3,628 ​ 3,669 ​ 3,673 Net income ​ $ 11,163 ​ $ 11,218 ​ $ 11,548 ​ $ 11,515 Share data ​ ​ ​ ​ Average shares outstanding, basic ​ 7,570,128 ​ 7,605,541 ​ 7,653,317 ​ 7,657,301 Average shares outstanding, diluted ​ ​ 7,595,052 ​ ​ 7,624,791 ​ ​ 7,668,740 ​ ​ 7,677,976 Earnings per share, basic ​ $ 1.47 ​ $ 1.46 ​ $ 1.50 ​ $ 1.49 Earnings per share, diluted ​ $ 1.47 ​ $ 1.46 ​ $ 1.50 ​ $ 1.49 ​ Note 26 Subsequent Merger Transaction ​ On February 10, 2023, the Corporation completed a merger with Hometown Bancorp, Ltd. ("Hometown"), a bank holding company headquartered in Fond Du Lac, Wisconsin, pursuant to the Agreement and Plan of Bank Merger, dated as of July 25, 2022, by and between the Corporation and Hometown, whereby Hometown merged with and into the Corporation, and Hometown Bank, Hometown's wholly-owned banking subsidiary, merged with and into the Bank. Hometown's principal activity was the ownership and operation of Hometown Bank, a state-chartered banking institution. The merger consideration totaled approximately $ 130.5 million. Pursuant to the terms of the merger agreement, Hometown shareholders could elect to receive either 0.3962 of a share of the Corporation’s common stock or $ 29.16 in cash for each outstanding share of Hometown common stock, subject to a maximum of 30 % cash consideration in total, and cash in lieu of any remaining fractional share. Corporation stock issued totaled 1,450,272 shares valued at approximately $ 115.1 million, with cash of $ 15.4 million comprising the remainder of merger consideration. At close, the combined company had total assets of approximately $ 4.2 billion, loans of approximately $ 3.3 billion and deposits of approximately $ 3.5 billion. ​ ​ ​ 111 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None ​