Bank First Corp

Bank First Corporation (the "Company") operates as a bank holding company, with its primary business conducted through its wholly-owned subsidiary, Bank First, N.A. (the "Bank"), a national banking association founded in 1894 and headquartered in Manitowoc, Wisconsin. The Bank is a relationship-based community bank offering a wide array of financial services, including retail and commercial banking products such as checking and savings accounts, money market accounts, certificates of deposit, commercial and industrial loans, commercial real estate loans, construction and development loans, residential mortgages, consumer loans, credit cards, and digital banking services. The Company's strategic vision is to maintain its independence by being a top-performing financial services provider, focusing on creating value for customers and shareholders through strong relationships and personalized solutions. The Bank has thirty-eight (38) offices across nineteen counties in Wisconsin and one county in Illinois, serving an estimated aggregate population of 2,560,274 with total deposits of approximately $81 billion as of June 30, 2025 ¹.

The banking industry is highly competitive, with the Company facing competition from local, regional, and national financial institutions, including commercial banks, credit unions, savings institutions, mortgage banking firms, consumer finance companies, securities brokerage firms, insurance companies, money market funds, mutual funds, and fintech companies. Larger competitors often possess greater resources for extensive advertising campaigns and technology investments, while non-traditional institutions may operate with greater flexibility and lower cost structures due to fewer regulatory constraints. The Company differentiates itself by emphasizing its independent community bank status, leveraging local market knowledge, local decision-making, and personal relationships with customers, offering innovative and value-driven products, and cultivating long-standing connections within its communities.

The Company generates revenue primarily through net interest income, which is the difference between interest earned on interest-earning assets (loans and investments) and interest paid on interest-bearing liabilities (deposits and borrowings). Noninterest income, derived from sources such as service charges, income from its investment in Ansay & Associates, LLC ("Ansay"), loan servicing fees, and gains on sales of mortgage loans, also contributes significantly to total revenue. The core business model is centered on relationship-based banking, targeting individuals, small to medium-sized businesses, and professional firms within its market areas. The Company also has a 40% ownership interest in Ansay, one of the nation's largest independent insurance providers, held through its wholly-owned subsidiary TVG Holdings, Inc. ("TVG"), which allows for diversified services without an in-house insurance department.

The Company's loan portfolio, comprising approximately 80.1% of total assets as of December 31, 2025 ², is diversified across several categories. Commercial real estate (CRE) loans constitute the largest segment at $1.78 billion, or 49.3% of the loan portfolio ³, with an emphasis on owner-occupied industrial, office, and retail buildings. Residential mortgage loans and home equity loans totaled approximately $895.0 million, representing 24.8% of the loan portfolio ⁴. Commercial and industrial (C&I) loans amounted to approximately $647.1 million, or 18.0% of the loan portfolio ⁵, extended to small- and medium-sized businesses for various purposes. Construction and development (C&D) loans were approximately $215.5 million, or 6.0% of the loan portfolio ⁶. Consumer loans, including secured and unsecured installment loans and revolving lines of credit, made up approximately $54.8 million, or 1.5% of the loan portfolio ⁷. The Company also engages in mortgage banking activities, including correspondent or secondary market lending and in-house mortgage lending, retaining servicing rights on all loans sold to the secondary market, with a net balance of capitalized servicing rights of $13.7 million at December 31, 2025 ⁸.

For the fiscal year ended December 31, 2025, the Company reported net income of $71.5 million ⁹, an increase of 9.0% from $65.6 million in 2024 ¹⁰. Total interest income increased by $15.3 million, or 7.4%, to $221.7 million ¹¹, while total interest expense increased by $1.5 million, or 2.1%, to $70.1 million ¹². This resulted in a net interest income of $151.7 million ¹³, up from $137.8 million in 2024 ¹⁴, and a net interest margin of 3.82% ¹⁵, an increase of seventeen basis points from 3.65% in 2024 ¹⁶. The provision for credit losses was $1.3 million ¹⁷, compared to a negative provision of $0.8 million in 2024 ¹⁸. Noninterest income increased by $2.5 million, or 12.9%, to $22.2 million ¹⁹, and noninterest expense increased by $5.7 million to $84.5 million ²⁰. The provision for income taxes was $16.7 million ²¹, reflecting an effective tax rate of 18.9% ²². As of December 31, 2025, total consolidated assets were $4.51 billion ²³, total loans were $3.60 billion ²⁴, total deposits were $3.70 billion ²⁵, and total stockholders' equity was $643.8 million ²⁶.

Year-over-year, total assets increased by $11.0 million, or 0.3%, to $4.51 billion at December 31, 2025, from $4.50 billion at December 31, 2024 ²⁷. Net loans increased by $87.3 million, or 2.5%, to $3.56 billion ²⁸, driven by a $56.9 million, or 9.6%, increase in commercial and industrial loans ²⁹, and a $93.2 million, or 5.5%, increase in commercial real estate loans ³⁰. This was partially offset by a $62.5 million, or 22.5%, decrease in construction and development loans ³¹, and a $0.9 million, or 0.1%, decrease in residential 1-4 family loans ³². Total deposits increased by $34.7 million, or 1.0%, to $3.70 billion ³³. Interest expense on interest-bearing deposits decreased by $0.5 million to $63.7 million ³⁴, despite a $163.2 million increase in average interest-bearing deposits ³⁵, due to a lower average rate paid of 2.43% in 2025 compared to 2.61% in 2024 ³⁶. Noninterest income saw increases in service charge income by $0.4 million ³⁷, income from Ansay by $0.4 million, or 11.8% ³⁸, and net gains on sale of mortgage loans by $0.5 million ³⁹. Occupancy expense increased by $1.9 million, or 31.8% ⁴⁰, due to new branch construction and rebuilding efforts, including a $0.9 million loss from razing a former branch ⁴¹. Amortization of intangibles decreased by $0.8 million ⁴².

A significant operational development was the completion of a merger with Centre 1 Bancorp, Inc. ("Centre") on January 1, 2026. Centre, a bank holding company headquartered in Beloit, Wisconsin, and its wholly-owned banking subsidiary, First National Bank and Trust, merged with the Company and the Bank, respectively. The merger consideration totaled approximately $168.8 million ⁴³, consisting of 1,382,940 shares of the Company's common stock valued at approximately $168.5 million ⁴⁴ and $0.3 million in cash ⁴⁵. This acquisition expanded the Company's presence in Wisconsin and Illinois and added trust and wealth management capabilities. The Company also sold 100% of its member interest in UFS, LLC ("UFS") to a third party on October 1, 2023 ⁴⁶.

Management's strategic plan is structured around the CAMELS ratings, encompassing Capital, Asset Quality, Management, Earnings, Liquidity, and Sensitivity to Market Risk, with an additional focus on Information Technology. The Company aims to deploy capital in the best interest of its shareholders. For Asset Quality, priorities include maintaining strong credit administration, managing loan portfolio concentration exposure, and automating manual processes. Management goals focus on improving processes and procedures to enhance frontline employee service.

To continue growing Earnings, the Company will emphasize strengthening existing customer relationships and building new ones. A key growth vector is the continued pursuit of selective acquisition opportunities, exemplified by the recently completed Centre acquisition on January 1, 2026. This acquisition is expected to further strengthen the Company's market presence and relationship-based banking model, expanding its footprint in Wisconsin and Illinois and adding trust and wealth management capabilities. Full integration and system conversion activities for the Centre acquisition are anticipated to be completed in the second quarter of 2026.

The Company plans to maintain strong Liquidity ratios by focusing on growing its customer base, one relationship at a time. Regarding Sensitivity to Market Risk, priorities remain on minimizing optionality and maintaining interest rate neutrality. The Information Technology strategic initiatives include continually enhancing the cybersecurity environment, improving training for customers and employees, transforming data into more accessible and actionable formats, and providing a world-class digital banking experience.

Planned capital allocation includes managing capital to support current and future operations and meeting regulatory capital requirements. The Company reactivated its share repurchase program on February 18, 2025, authorizing the repurchase of up to $50 million of its common stock for a period of one year ending on February 17, 2026 ⁴⁷. During 2025, the Company repurchased $22.0 million of its common stock ⁴⁸. Dividends paid to common shareholders totaled $52.5 million during 2025 ⁴⁹.

Management explicitly flagged several structural headwinds and execution risks. The Company is operating in an uncertain economic environment, with potential for weak economic conditions, inflationary pressures, changes in interest rates, and slowdowns in economic growth, which could lead to increased loan delinquencies, problem assets, foreclosures, and lower demand for products and services. The financial markets and global economy may also be adversely affected by military conflicts or trade wars. Changes in interest rates, particularly the Federal Reserve's monetary policies, can significantly impact net interest income, deposit costs, loan demand, liquidity, and asset values. The Company is also subject to lending concentration risk, particularly in real estate loans, which could lead regulators to restrict growth. The financial services industry's rapid technological changes and increasing competition from fintech companies pose a challenge, requiring continuous investment in technology. The development and use of artificial intelligence (AI) also presents risks, including legal and regulatory uncertainties, potential for incorrect or biased output, and infringement on intellectual property rights.

The Company faces material risks from volatile economic conditions, including inflationary pressures and interest rate fluctuations, which can lead to increased loan delinquencies, problem assets, foreclosures, and reduced demand for services, particularly given its geographic concentration in Wisconsin and Illinois. Changes in interest rates, influenced by Federal Reserve policies, can adversely affect net interest income, deposit costs, and the value of assets like mortgage servicing rights, which are sensitive to prepayment speeds. The Company is exposed to credit risk, with approximately 74.1% of its loan portfolio secured by real estate ⁵⁰, making it vulnerable to declines in real estate values and liquidity, potentially necessitating increased allowances for credit losses. Competition from larger financial institutions and less-regulated fintech companies, coupled with rapid technological changes, could hinder growth and profitability. Operational risks, including client or employee fraud and system failures, are significant, especially with increasing reliance on information technology and the emerging risks associated with artificial intelligence. Regulatory scrutiny is extensive, with potential for new or changed laws, such as those related to anti-money laundering, fair lending, and capital requirements, including the Community Reinvestment Act (CRA) and the Economic Growth, Regulatory Relief, and Consumer Protection Act (Economic Growth Act), which could impose additional costs or restrict business activities. The Federal Reserve may also require capital injections to support the Bank, impacting the Company's financial resources. Tax law changes, such as the 2025 One Big Beautiful Bill Act, could negatively impact earnings.

Management's message to shareholders conveys a commitment to sustaining independence as a top-performing financial services provider through a relationship-based community banking model. They emphasize creating value for customers and shareholders by fostering strong relationships and offering personalized solutions, supported by a culture that values curiosity, creativity, responsiveness, ethical standards, and employee development. Strategic priorities are organized around the CAMELS ratings, with a focus on deploying capital in shareholders' best interest, maintaining strong credit administration and managing loan portfolio concentration for asset quality, improving processes for enhanced customer service, and strengthening existing and building new customer relationships to grow earnings. A key strategic priority is the selective pursuit of acquisition opportunities, as demonstrated by the Centre acquisition completed on January 1, 2026, which expanded the Company's market presence and capabilities. Management also stresses maintaining strong liquidity ratios by growing the customer base, minimizing optionality and maintaining interest rate neutrality for market risk sensitivity, and continually enhancing cybersecurity, data accessibility, and digital banking experiences through information technology initiatives. The Company reactivated its share repurchase program on February 18, 2025, authorizing up to $50 million in common stock repurchases ⁵¹ for one year, and paid cash dividends of $5.30 per share during 2025 ⁵².