What changed in this filing

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Item 1. Financial Statements

2024-08-07 compared with 2024-05-09 · 86 added, 97 removed, 483 unchanged (27% of the section changed)

3 unchanged sentences

(In thousands) (Unaudited)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from financing activities, net of effects of business combination:

8 unchanged sentences

Net cash used in financing activities

Net increase (decrease) in cash and cash equivalents

Net decrease in cash and cash equivalents

Cash and cash equivalents at beginning of period

45 unchanged sentences

The Company does not anticipate a significant impact to its financial statement disclosures as a result of this ASU.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

This ASU is intended to improve the disclosures about a public entity’s reportable segments and addresses requests from investors and other decision makers for additional, more detailed information about a reportable segment’s expenses.

The amendment applies to all public entities that are required to report segment information in accordance with Topic 280.

This update is effective for annual periods beginning after December 15, 2023, applied retrospectively to all periods presented.

The Company does not currently expect adoption of the amendment to have a material impact on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

42 unchanged sentences

Under the two-class method, earnings available to common shareholders for the period are allocated between common shareholders and participating securities according to dividends declared (or accumulated) and participation rights in undistributed earnings.

There were no anti-dilutive stock options for the three months ended March 31, 2024 or 2023.

There were no anti-dilutive stock options for the six months ended June 30, 2024 or 2023.

The following table presents the factors used in the earnings per share computations for the period indicated:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Net income available to common shareholders

13 unchanged sentences

The following is a summary of available for sale securities:

March 31, 2024

June 30, 2024

Obligations of U.S.

13 unchanged sentences

The following is a summary of held to maturity securities:

March 31, 2024

June 30, 2024

Treasury securities

8 unchanged sentences

Greater Than 12 Months

March 31, 2024 - Available for Sale

June 30, 2024 - Available for Sale

Obligations of U.S.

3 unchanged sentences

Corporate notes

March 31, 2024 - Held to Maturity

June 30, 2024 - Held to Maturity

Treasury securities

9 unchanged sentences

Obligations of states and political subdivisions

As of March 31, 2024, no allowance for credit losses has been recognized on available for sale securities in an unrealized loss position as the Company does not believe any of the debt securities are credit impaired.

As of June 30, 2024, no allowance for credit losses has been recognized on available for sale securities in an unrealized loss position as the Company does not believe any of the debt securities are credit impaired.

This is based on the Company’s analysis of the risk characteristics, including credit ratings, and other qualitative factors related to these securities.

The issuers of these securities continue to make timely principal and interest payments under the contractual terms of the securities.

As of March 31, 2024, the Company did not intend to sell these securities and it was more likely than not that the Company would not be required to sell the debt securities before recovery of their amortized cost, which may be at maturity.

As of June 30, 2024, the Company did not intend to sell these securities and it was more likely than not that the Company would not be required to sell the debt securities before recovery of their amortized cost, which may be at maturity.

The unrealized losses have occurred as a result of changes in interest rates, market spreads and market conditions subsequent to purchase, not credit deterioration.

1 unchanged sentence

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

The following is a summary of amortized cost and estimated fair value of securities by contractual maturity as of March 31, 2024.

The following is a summary of amortized cost and estimated fair value of securities by contractual maturity as of June 30, 2024.

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

6 unchanged sentences

Mortgage-backed securities

As of March 31, 2024 and December 31, 2023, 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 $ 203.8 million and $ 204.8 million, respectively.

Sales of securities available for sale produced $ 10.2 million in proceeds with immaterial gross losses for three months ended March 31, 2024.

Sales of securities available for sale produced $ 34.2 million in proceeds, $ 0.1 million in gross gains and $ 0.2 million in gross losses for the three months ended March 31, 2023.

As of June 30, 2024 and December 31, 2023, 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 $ 160.4 million and $ 204.8 million, respectively.

There were no sales of securities available for sale during the three months ended June 30, 2024 or 2023.

Sales of securities available for sale produced $ 10.2 million in proceeds with immaterial gross losses for the six months ended June 30, 2024.

Sales of securities available for sale produced $ 34.2 million in proceeds, $ 0.1 million in gross gains and $ 0.2 million in gross losses for the six months ended June 30, 2023.

NOTE 5 – LOANS, ALLOWANCE FOR CREDIT LOSSES, AND CREDIT QUALITY

The following table presents total loans by portfolio segment and class of loan as of March 31, 2024 and December 31, 2023:

The following table presents total loans by portfolio segment and class of loan as of June 30, 2024 and December 31, 2023:

Commercial/industrial

7 unchanged sentences

More information regarding the Company’s methodology related to the ACL-Loans can be found in the Company’s Annual Report.

The Company utilized the high-end range of the Federal Reserve Bank Open Market Committee forecast for national unemployment and the low-end range for national GDP growth at March 31, 2024 and December 31, 2023.

As of March 31, 2024, the Company anticipates the national unemployment rate to rise during the forecast period and the national GDP growth rate to decline.

The Company utilized the high-end range of the Federal Reserve Bank Open Market Committee forecast for national unemployment and the low-end range for national GDP growth at June 30, 2024 and December 31, 2023.

As of June 30, 2024, the Company anticipates the national unemployment rate to rise during the forecast period and the national GDP growth rate to decline.

Due to recent volatility in forecasts, the Company utilized long-term averages for the remaining loss drivers.

A summary of the activity in the ACL - Loans by loan type for the three months ended March 31, 2024 is summarized as follows:

A roll forward of the ACL-Loans is summarized as follows:

Three Months Ended

Six Months Ended

June 30, 2024

June 30, 2023

June 30, 2024

June 30, 2023

December 31, 2023

Beginning Balance

Adoption of ASU 2016-13

ACL on PCD loans acquired

Provision for credit losses

Net recoveries

Ending Balance

A summary of the activity in the ACL - Loans by loan type for the six months ended June 30, 2024 is summarized as follows:

Real Estate -

1 unchanged sentence

ACL - Loans - January 1, 2024

ACL - Loans - March 31, 2024

A summary of the activity in the ACL – Loans by loan type for the three months ended March 31, 2023 is summarized as follows:

ACL - Loans - June 30, 2024

A summary of the activity in the ACL – Loans by loan type for the six months ended June 30, 2023 is summarized as follows:

Real Estate -

1 unchanged sentence

ACL - Loans - January 1, 2023

Adoption of CECL

Adoption of ASU 2016-13

ACL - Loans on PCD loans acquired

ACL - Loans - March 31, 2023

In addition to the ACL-Loans, the Company has established an ACL-Unfunded Commitments, classified in other liabilities on the consolidated balance sheets.

ACL - Loans - June 30, 2023

In addition to the ACL-Loans, the Company has established an allowance for credit losses on unfunded commitments (“ACL-Unfunded Commitments”), classified in other liabilities on the consolidated balance sheets.

This allowance is maintained to absorb losses arising from unfunded loan commitments, and is determined quarterly based on methodology similar to the methodology for determining the ACL-Loans.

The ACL - Unfunded Commitments was $ 3.8 million at March 31, 2024 and December 31, 2023.

The ACL - Unfunded Commitments was $ 3.3 million and $ 3.8 million at June 30, 2024 and December 31, 2023, respectively.

See Note 10 for further information on commitments.

2 unchanged sentences

Three Months Ended

March 31, 2024

March 31, 2023

Six Months Ended

June 30, 2024

June 30, 2023

June 30, 2024

June 30, 2023

December 31, 2023

2 unchanged sentences

Total provision for credit losses

The Company’s past due and non-accrual loans as of March 31, 2024 is summarized as follows:

The Company’s past due and non-accrual loans as of June 30, 2024 is summarized as follows:

allocated ACL

11 unchanged sentences

Residential 1‑4 family

Interest recognized on non-accrual loans is considered immaterial to the consolidated financial statements for the three months ended March 31, 2024 and 2023.

Interest recognized on non-accrual loans is considered immaterial to the consolidated financial statements for the six months ended June 30, 2024 and 2023.

A loan is considered to be collateral dependent when, based upon management’s assessment, the borrower is experiencing financial

difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral.

For collateral dependent loans, expected credit losses are based on the estimated fair value of the collateral at the balance sheet date, with consideration for estimated selling costs if satisfaction of the loan depends on the sale of the collateral.

For collateral dependent loans, expected credit losses are based on amortized cost of the loan less the estimated fair value of the collateral at the balance sheet date, with consideration for estimated selling costs if satisfaction of the loan depends on the sale of the collateral.

The following tables present collateral dependent loans by portfolio segment and collateral type, including those loans with and without a related allowance allocation.

3 unchanged sentences

Collateral Type

As of March 31, 2024

As of June 30, 2024

Business Assets

14 unchanged sentences

All other types of relationships (ex:

residential, consumer, other) are assigned a “Pass” rating, unless they have fallen 90 days past due or more, at which time they receive a rating of 7.

residential, consumer, other) are assigned a “Pass” rating, unless they have fallen 90 days past due or more, at which time they are assessed for a rating of 5, 6 or 7.

The Company uses split ratings for government guaranties on loans.

14 unchanged sentences

Amortized Cost Basis by Origination Year

As of March 31, 2024

As of June 30, 2024

Commercial/industrial

29 unchanged sentences

Total current-period gross charge-offs

Loans that were both experiencing financial difficulty and were modified during the three months ended March 31, 2024 and 2023, were insignificant to these consolidated financial statements.

Loans that were both experiencing financial difficulty and were modified during the six months ended June 30, 2024 and 2023, were insignificant to these consolidated financial statements.

NOTE 6 – MORTGAGE SERVICING RIGHTS

9 unchanged sentences

Following is an analysis of activity in the MSR asset:

Three Months Ended

March 31, 2024

Six Months Ended

June 30, 2024

December 31, 2023

8 unchanged sentences

Mortgage servicing rights as a percent of loans serviced for others

The primary economic assumptions utilized by the Company in measuring the value of MSRs were constant prepayment speeds of 8.0 and 7.5 months as of March 31, 2024 and December 31, 2023, respectively, and discount rates of 10.19 % as of each of those periods.

The primary economic assumptions utilized by the Company in measuring the value of MSRs were constant prepayment speeds of 7.8 and 7.5 months as of June 30, 2024 and December 31, 2023, respectively, and discount rates of 10.19 % as of each of those periods.

The constant prepayment speeds are obtained from publicly available sources for each of the loan programs the Company originates under.

1 unchanged sentence

The Company utilizes FHLB advances to fund liquidity.

The Company had outstanding balances borrowed from the FHLB of $ 35.5 million at March 31, 2024 and December 31, 2023.

The Company had outstanding balances borrowed from the FHLB of $ 90.5 million at June 30, 2024 and $ 35.5 million as of December 31, 2023.

The advances, rate, and maturities of FHLB advances were as follows:

4 unchanged sentences

Fixed rate, fixed term

Adjustment due to purchase accounting

1 unchanged sentence

1 year or less

As of March 31, 2024, the Company had borrowing availability at the FHLB totaling $ 805.7 million in addition to the existing borrowings noted in the tables above.

The Company maintains a $ 7.5 million line of credit with a commercial bank, which was entered into on May 15, 2022.

There were no outstanding balances on this note at March 31, 2024 or December 31, 2023.

Any future borrowings will require monthly payments of interest at a variable rate, and will be due in full on May 15, 2024.

As of June 30, 2024, the Company had borrowing availability at the FHLB totaling $ 737.1 million in addition to the existing borrowings noted in the tables above.

NOTE 8 – SUBORDINATED NOTES AND JUNIOR SUBORDINATED DEBENTURES

3 unchanged sentences

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

The Company had outstanding balances of $ 6.0 million under these agreements at March 31, 2024 and December 31, 2023.

The Company had outstanding balances of $ 6.0 million under these agreements at June 30, 2024 and December 31, 2023.

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

The Company had outstanding balances of $ 6.0 million under these agreements as of March 31, 2024 and December 31, 2023.

The Company had outstanding balances of $ 6.0 million under these agreements as of June 30, 2024 and December 31, 2023.

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.

19 unchanged sentences

Under regulatory guidance for non-advanced approaches institutions, the Bank and Company 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 March 31, 2024 and December 31, 2023, this buffer was 2.5 %.

The Bank met all capital adequacy requirements to which they are subject as of March 31, 2024 and December 31, 2023.

As of June 30, 2024 and December 31, 2023, this buffer was 2.5 %.

The Bank met all capital adequacy requirements to which they are subject as of June 30, 2024 and December 31, 2023.

Actual and required capital amounts and ratios are presented below at period-end:

6 unchanged sentences

Action Provisions

March 31, 2024

June 30, 2024

Total capital (to risk-weighted assets):

12 unchanged sentences

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 March 31, 2024 and December 31, 2023 was approximately $ 7.4 million and $ 5.9 million, respectively.

The notional amount of rate-lock commitments at June 30, 2024 and December 31, 2023 was approximately $ 13.2 million and $ 5.9 million, respectively.

The fair value of these rate-lock commitments are not material to these financial statements and have not been recorded.

The Company is party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers.

5 unchanged sentences

Notional Amount

March 31, 2024

June 30, 2024

December 31, 2023

12 unchanged sentences

for Identical

March 31, 2024

June 30, 2024

Securities available for sale

19 unchanged sentences

for Identical

March 31, 2024

June 30, 2024

Loans individually evaluated, net of reserve

6 unchanged sentences

Valuation Technique

As of March 31, 2024

Other real estate owned

As of June 30, 2024

Third party appraisals, sales contracts or brokered price options

4 unchanged sentences

As of December 31, 2023

Other real estate owned

Third party appraisals, sales contracts or brokered price options

3 unchanged sentences

Collateral discounts and discount rates

The carrying value and estimated fair value of financial instruments not measured and reported at fair value on a recurring or non-recurring basis at March 31, 2024 and December 31, 2023 are as follows:

March 31, 2024

The carrying value and estimated fair value of financial instruments not measured and reported at fair value on a recurring or non-recurring basis at June 30, 2024 and December 31, 2023 are as follows:

June 30, 2024

Financial assets:

40 unchanged sentences

The number of shares of Company stock that may be issued pursuant to awards under the 2020 Plan shall not exceed, in the aggregate, 700,000 .

As of March 31, 2024, 100,954 shares of Company stock have been awarded under the 2020 Plan.

As of June 30, 2024, 100,954 shares of Company stock have 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.

For the three months ended March 31, 2024 and 2023, compensation expense of $ 0.6 million and $ 0.5 million, respectively, was recognized related to restricted stock awards.

As of March 31, 2024, there was $ 3.5 million of unrecognized compensation cost related to non-vested restricted stock awards granted under the plan.

For the three months ended June 30, 2024 and 2023, compensation expense of $ 0.5 million and $ 0.6 million, respectively, was recognized related to restricted stock awards.

For the six months ended June 30, 2024 and 2023, compensation expense of $ 1.1 million and $ 1.0 million, respectively, was recognized related to restricted stock awards.

As of June 30, 2024, there was $ 3.0 million 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 1.66 years.

The aggregate grant date fair value of restricted stock awards that vested during the three months ended March 31, 2024, was approximately $ 2.1 million.

The aggregate grant date fair value of restricted stock awards that vested during the six months ended June 30, 2024, was approximately $ 2.1 million.

For the period ended

March 31, 2024

March 31, 2023

June 30, 2024

June 30, 2023

Average Grant-

6 unchanged sentences

Outstanding at end of period

NOTE 13 – LEASES

Accounting standards require lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements, establishing a right-of-use (“ROU”) model that requires a lessee to recognize 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.

Lessee Leases

The Company’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 Company 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 Company liable for damages.

For operating leases, the lease liability and ROU asset (before adjustments) are recorded at the present value of future lease payments.

Accounting standards require the use of the lease interest rate;

however, this rate is typically not known.

As an alternative, the use of an entity’s fully secured incremental borrowing rate is permitted.

The Company is electing to utilize the Wall Street Journal Prime Rate on the date of lease commencement.

Three Months Ended

(dollars in thousands)

March 31, 2024

March 31, 2023

Amortization of ROU Assets - Operating Leases

Interest on Lease Liabilities - Operating Leases

Operating Lease Cost (Cost resulting from lease payments)

Weighted Average Lease Term (Years) - Operating Leases

Weighted Average Discount Rate - Operating Leases

A maturity analysis of operating lease liabilities and reconciliation of the undiscounted cash flows to the total operating lease liabilities as of March 31, 2024 is as follows:

March 31, 2024

Operating lease payments due:

Within one year

After one but within two years

After two but within three years

After three but within four years

After four years but within five years

After five years

Total undiscounted cash flows

Discount on cash flows

Total operating lease liabilities

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

What changed 10-Q

Item 1. Financial Statements