Business Overview and History
Bank First Corporation (BFC) is a Wisconsin-based bank holding company that has served its local communities for over a century. Established in 1894, the company has grown to become a prominent financial institution in the Midwest, providing a wide range of banking services to businesses, professionals, and consumers. With a focus on building strong customer relationships and delivering innovative solutions, Bank First has navigated the challenges of the banking industry with a steadfast commitment to prudent management and sustainable growth.
Bank First Corporation was founded in Manitowoc, Wisconsin, in 1894 as a national banking association. The company has since expanded its footprint, operating 26 branch locations across 14 counties in Wisconsin as of December 31, 2024. Throughout its long history, Bank First has maintained a strong focus on serving the financial needs of its local communities, building a reputation for personalized service and innovative product offerings.
In 1982, the holding company structure was established with the formation of Bank First Corporation, providing the Bank with additional flexibility and resources to support its continued growth and expansion. This strategic move has played a crucial role in the company's ability to adapt to changing market conditions and pursue growth opportunities.
During the 2008 financial crisis, Bank First demonstrated its resilience by maintaining strong asset quality and capital levels, allowing it to successfully navigate through the economic turmoil. This ability to weather significant economic challenges has been a testament to the bank's conservative underwriting practices and prudent risk management approach.
In 2023, Bank First completed a significant acquisition, merging with Hometown Bancorp, Ltd., a bank holding company headquartered in Fond du Lac, Wisconsin. This strategic move expanded the company's presence in the state, adding 10 additional branch locations and enhancing its market share. The successful integration of Hometown Bank's operations has strengthened Bank First's position as a leading community bank in Wisconsin.
Bank First operates through two main business segments: Banking Operations and Insurance Services. The Banking Operations segment forms the core of BFC's business, comprising the majority of the company's assets, revenues, and net income. This segment includes a wide range of lending and deposit products and services offered through Bank First, N.A., the company's national banking subsidiary.
The company has three wholly-owned subsidiaries - Bank First Investments, Inc., TVG Holdings, Inc., and BFC Title, LLC. TVG Holdings owns a 40% equity investment in Ansay Associates, LLC, an insurance agency. As of December 31, 2024, Bank First employed approximately 366 full-time equivalent employees.
Financial Performance and Ratios
As of December 31, 2024, Bank First reported total assets of $4.50 billion, a 6.50% increase from the previous year. The company's loan portfolio grew to $3.52 billion, a 5.20% year-over-year increase, reflecting the bank's ability to meet the lending needs of its customers. The bank's deposit base also experienced growth, reaching $3.66 billion, a 6.70% increase compared to 2023.
Bank First's financial ratios demonstrate its strong financial position and prudent risk management. As of December 31, 2024, the company's common equity Tier 1 capital ratio was 12.70%, well above the regulatory minimum requirement of 4.50%. The bank's total capital ratio stood at 14.14%, also exceeding the 8.00% minimum. These ratios indicate that Bank First maintains a robust capital base to support its operations and withstand potential economic challenges.
The company's net interest margin, a key measure of profitability, was 3.65% in 2024, a slight decrease from 3.69% in the previous year. This decline was primarily due to the rising interest rate environment, which put pressure on the bank's funding costs. However, Bank First's management team has proactively adapted its strategies to mitigate the impact of the interest rate changes, leveraging its strong deposit base and diversified loan portfolio to maintain its overall financial performance.
For the fiscal year 2024, Bank First reported annual revenue of $206.41 million and annual net income of $65.56 million. The company's annual operating cash flow stood at $65.85 million, while annual free cash flow was $58.62 million. In the most recent quarter (Q4 2024), quarterly revenue was $40.18 million, with quarterly net income of $17.54 million.
Diversified Loan Portfolio and Asset Quality
Bank First's loan portfolio is well-diversified, with commercial and industrial loans, commercial real estate loans, construction and development loans, residential mortgages, and consumer loans all contributing to the bank's total lending activities. As of December 31, 2024, commercial and industrial loans accounted for 14.00% of the total loan portfolio, totaling $500.35 million. Commercial real estate loans made up 50.00% of the portfolio, amounting to $1.75 billion. Residential mortgages and home equity loans represented 26.00% of the total, reaching $913.19 million, while consumer loans accounted for 2.00%, totaling $55.39 million.
The bank's asset quality metrics remain strong, with nonperforming assets accounting for only 0.21% of total assets as of December 31, 2024. The allowance for credit losses stood at 1.26% of total loans, a testament to the bank's proactive approach to risk management and its commitment to maintaining a high-quality loan portfolio.
Liquidity and Funding
Bank First's liquidity position is robust, with a cash and cash equivalents balance of $261.33 million as of December 31, 2024. The bank's loan-to-deposit ratio, a measure of its funding sources, stood at 96.24% at the end of 2024, indicating a balanced and stable funding structure.
The company's primary source of funding is its deposit base, which grew to $3.66 billion as of December 31, 2024, a 6.70% increase from the previous year. Bank First has been successful in attracting and retaining a diversified deposit mix, including noninterest-bearing demand deposits, savings accounts, and time deposits, providing a stable and cost-effective funding source for its lending activities. Noninterest-bearing demand deposits comprised $1.02 billion of the total deposits, while interest-bearing deposits made up the remaining $2.64 billion.
In addition to its deposit base, Bank First also utilizes borrowings from the Federal Home Loan Bank of Chicago to supplement its funding needs and manage its interest rate risk exposure. As of December 31, 2024, the bank had $135.40 million in FHLB advances outstanding, providing additional liquidity to support its growth strategies. Furthermore, Bank First had $682.60 million in available liquidity for future draws from the FHLB as of December 31, 2024.
The company's debt-to-equity ratio stood at 0.23, indicating a conservative approach to leverage and a strong financial position.
Dividend and Capital Allocation
Bank First has a strong track record of returning capital to its shareholders through regular cash dividends. In 2024, the company declared a quarterly cash dividend of $0.45 per share, a 28.6% increase from the prior-year fourth quarter. This consistent dividend payout demonstrates the bank's commitment to delivering value to its shareholders while maintaining a prudent capital management strategy.
In addition to its dividend program, Bank First has also been active in repurchasing its common stock. During 2024, the company repurchased $31.93 million worth of its shares, underscoring its confidence in the long-term prospects of the business and its belief that the stock was trading at an attractive valuation.
Insurance Services Segment
Through its wholly-owned subsidiary TVG Holdings, Inc., Bank First maintains a 40.0% ownership stake in Ansay Associates, LLC, a leading independent insurance agency in Wisconsin. Ansay provides a range of commercial and personal insurance solutions to clients primarily located in the Midwest.
For the year ended December 31, 2024, Bank First recognized $3.50 million in equity earnings from its investment in Ansay, up from $2.92 million in 2023. Ansay also utilized $19.00 million in term loans and had $8.50 million in deposit balances with Bank First as of the end of 2024.
Risks and Challenges
Like any financial institution, Bank First faces a range of risks and challenges that it must navigate. The company's geographic concentration in Wisconsin, while providing a strong foothold in its local markets, also exposes it to regional economic conditions and regulatory changes specific to the state.
Additionally, the ongoing threat of cyber attacks and the need to continuously invest in technology to enhance the customer experience and maintain operational efficiency pose risks that Bank First must proactively address. The company's management team remains vigilant in monitoring these risks and implementing robust security measures and IT infrastructure upgrades to mitigate potential threats.
The rising interest rate environment, as witnessed in recent years, can also present challenges for Bank First, as it may impact the bank's net interest margin and funding costs. However, the company's experienced management team has demonstrated its ability to adapt to these changing market conditions, adjusting its strategies to maintain profitability and deliver value to its shareholders.
Conclusion
Bank First Corporation has established itself as a resilient community bank, navigating the challenges of the banking industry with a prudent and disciplined approach. With a strong focus on building customer relationships, delivering innovative products and services, and maintaining a high-quality loan portfolio, the company has demonstrated its ability to generate consistent financial performance and create long-term value for its shareholders.
The diversified business model of Banking Operations and Insurance Services has allowed Bank First to generate consistent profitability, with net income of $65.56 million in 2024 on total assets of $4.50 billion as of December 31, 2024. The company's solid financial position, experienced management team, and commitment to its local communities position Bank First as a compelling investment opportunity in the Midwest banking sector.
As Bank First continues to expand its footprint and explore strategic growth opportunities, investors should closely monitor the company's ability to adapt to the evolving market landscape, manage its risks effectively, and capitalize on the unique strengths of its community banking model.