Bank First Announces Net Income for the Second Quarter of 2021
MANITOWOC, Wis., July 20, 2021 /PRNewswire/ -- Bank First Corporation (NASDAQ: BFC) ("Bank First" or the "Bank"), the holding company for Bank First, N.A., reported net income of $11.5 million, or $1.50 per share, for the second quarter of 2021, compared with net income of $8.3 million, or $1.11 per share, for the prior-year second quarter. For the six months ended June 30, 2021, Bank First earned $23.1 million, or $2.99 per share, compared to $15.6 million, or $2.14 per share for the same period in 2020.
Operating Results
Net interest income ("NII") during the second quarter of 2021 was $21.8 million, down $0.3 million from the previous quarter but up $1.0 million from the second quarter of 2020. The quarter-over-quarter decline in NII was related entirely to interest income recognized on Paycheck Protection Program ("PPP") loans. These loans produce volatile recognition of NII as discussed in the following paragraph. NII for the first six months of 2021 was $43.9 million, up from $39.4 million for the first six months of 2020.
Throughout the previous fifteen months Bank First was a very active participant in the PPP, a Small Business Administration ("SBA") loan program aimed at supporting small business through the turbulent economic environment created by the COVID-19 pandemic ("COVID"). This program provided funds to small businesses with very favorable loan terms and allowed for forgiveness by the SBA provided the funds are utilized by the companies as stipulated by the program. Bank First originated over $381.3 million in loans to new and existing customers under this program, $127.3 million of which remained unpaid and unforgiven as of June 30, 2021. In addition to providing much needed support to these small businesses, this program produced significant income for the Bank. Origination fees collected from PPP loan originations totaled over $14.6 million. Under accounting rules, the Bank recognizes these fees as an addition to NII over the contractual life of the related loan, with any remaining fee being fully recognized into NII if the loan is paid off or forgiven prior to the original maturity date. As is the case with any institution participating in PPP originations, this accounting treatment has caused significant variations in the Bank's NII and interest margins quarter-to-quarter based on how many PPP loans are forgiven during the period. Unrecognized PPP origination fees totaled $4.3 million at June 30, 2021, compared to $2.6 million and $7.5 million at December 31 and June 30, 2020, respectively.
NII related to purchase accounting entries, resulting from our acquisitions of other institutions over the last several years, increased net income (after tax) during the second quarter of 2021 by $0.3 million, or $0.04 per share, compared to $0.7 million, or $0.09 per share, for the second quarter of 2020. For the first six months of 2021 and 2020 the impact of these purchase loan accounting entries increased net income (after tax) by $0.7 million, or $0.09 per share, and $1.4 million, or $0.20 per share, respectively.
Net interest margin ("NIM") was 3.37% for the second quarter of 2021, compared to 3.67% for the second quarter of 2020. The aforementioned purchase loan accounting entries added 0.08% and 0.16% to NIM for each of these periods, respectively. NIM was 3.47% for the first six months of 2021, including 0.08% from the impact of purchase accounting entries, compared to 3.74%, including 0.19% from the impact of purchase accounting entries, for the first six months of 2020.
Bank First recorded a provision for loan losses of $1.0 million during the second quarter of 2021, compared to $3.2 million during the second quarter of 2020. Provision expense was $1.9 million for the first six months of 2021 compared to $4.1 million for the same period during 2020. Recoveries of previously charged-off loans negligibly exceeded currently charged-off loans through the first six months of 2021, compared to a net recovery of previously charged-off loans totaling $0.6 million during the first six months of 2020. The provision expense recorded during the most recent quarter was primarily driven by solid loan growth, excluding reductions in PPP loan balances, during the period.
Noninterest income was $6.6 million for the second quarter of 2021, compared to $7.8 million for the second quarter of 2020. The year-over-year decline in quarterly noninterest income was driven by the sale of $36.6 million of U.S. Treasury notes during the second quarter of 2020, generating a gain on sale of $3.1 million. No similar gain occurred during the second quarter of 2021. Following the trend of the last several quarters, service charge income was strong at $1.6 million, an increase of 37.8% over the prior year second quarter. Loan servicing income totaled $1.2 million, compared to $0.2 million in the prior year second quarter. The current year second quarter included a $0.6 million positive adjustment to the value of the Bank's mortgage servicing rights, compared to a $0.5 million negative adjustment to these rights in the prior year second quarter. Finally, net gains on sales of mortgage loans to the secondary market totaled $2.2 million during the second quarter of 2021, comparing favorably to $1.3 million during the second quarter of 2020.
Noninterest expense was $12.2 million in the second quarter of 2021, compared to $14.4 million during the second quarter of 2020. The year-over-year decline in quarterly noninterest expense was principally related to expenses resulting from Bank First's acquisition of Tomah Bancshares, Inc., totaling $0.8 million, and the recognition of a prepayment penalty related to early repayment of $30.0 million in borrowings from the Federal Home Loan Bank of Chicago, totaling $1.3 million, both of which were one-time expenses occurring during the second quarter of 2020. Net gains on sales and valuations of other real estate owned during the second quarter of 2021 totaled $0.1 million, comparing favorably to net losses of $0.5 million during the second quarter of 2020.
Balance Sheet
Total assets were $2.82 billion at June 30, 2021, a $100.9 million increase from December 31, 2020, and up $161.0 million from June 30, 2020. Total loans were $2.23 billion at June 30, 2021, up $33.8 million from December 31, 2020, and up $110.2 million from June 30, 2020. Excluding PPP originations and repayments or forgiveness, loans grew by 14.4% over the trailing twelve months. Annualized loan growth during the second quarter of 2021, also excluding PPP activity, amounted to 12.1%. Total deposits, nearly all of which remain core deposits, were $2.45 billion at June 30, 2021, up $125.7 million from December 31, 2020, and up $183.5 million from June 30, 2020. Noninterest-bearing demand deposits comprised 32.1% of the Bank's total core deposits at June 30, 2021, compared to 31.2% and 31.4% at December 31 and June 30, 2020, respectively.
Asset Quality
Nonperforming assets at June 30, 2021, totaled $12.6 million, down from $14.0 million and $25.0 million at the end of the fourth and second quarters of 2020, respectively. Nonperforming assets to total assets ending the second quarter of 2021 at 0.45%, down from 0.52% and 0.94% at the end of the fourth and second quarters of 2020, respectively.
Capital Position
Stockholders' equity totaled $311.4 million at June 30, 2021, an increase of $16.6 million from the end of 2020 and $35.3 million from June 30, 2020. Strong earnings served to increase capital while being offset by dividends totaling $3.2 million during the first half of 2021 and $6.4 million during the trailing twelve months. Further reducing capital was $2.9 million used to repurchase 40,000 shares of common stock during the second quarter of 2021. Tangible book value per share of Bank First's common stock experienced an annualized increase of 16.2% during the second quarter of 2021 and an increase during the trailing twelve months of 17.8%.
Dividend Declaration
Bank First's Board of Directors approved both a quarterly cash dividend of $0.21 per common share and a special one-time cash dividend of $0.29 per common share. These dividends will be payable on October 6, 2021, to shareholders of record as of September 22, 2021. The special dividend was declared in response to record earnings in recent quarters which has resulted in a declining dividend payout ratio. The one-time nature of this dividend allows for flexibility moving forward if capital is required for other strategic initiatives of Bank First.
Bank First Corporation provides financial services through its subsidiary, Bank First, which was incorporated in 1894. The Bank is an independent community bank with 21 banking locations in Wisconsin. The Bank has grown through both acquisitions and de novo branch expansion. The Bank offers loan, deposit and treasury management products at each of its banking offices. Insurance services are available through our bond with Ansay & Associates, LLC. Trust, investment advisory and other financial services are offered through the Bank's partnership with Legacy Private Trust, an alliance with Morgan Stanley and an affiliation with McKenzie Financial Services, LLC. The Bank is a co-owner of a data processing subsidiary, UFS, LLC, which provides data and technology services to banks in the Midwest. The Company employs approximately 302 full-time equivalent staff and has assets of approximately $2.8 billion. Further information about Bank First Corporation is available by clicking on the Investor Relations tab at www.BankFirstWI.bank.
For further information, contact:
Kevin M LeMahieu, Chief Financial Officer
Phone: (920) 652-3200 / klemahieu@bankfirstwi.bank
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SOURCE Bank First Corporation
